url stringlengths 54 59 | text stringlengths 0 3.41M | downloaded_timestamp stringclasses 1 value | created_timestamp stringlengths 10 10 |
|---|---|---|---|
https://www.courtlistener.com/api/rest/v3/opinions/2366927/ | 53 Md. App. 379 (1983)
454 A.2d 367
CAVALIER MOBILE HOMES, INC. ET AL.
v.
LIBERTY HOMES, INC.
No. 280, September Term, 1982.
Court of Special Appeals of Maryland.
Decided January 5, 1983.
*380 The cause was argued before MASON, GARRITY and ALPERT, JJ.
E. Fremont Magee, with whom were Thomas E. Plank and David H. Bamberger on the brief, for appellants.
Edward F. Canfield, with whom were Christopher A. Hansen and Robert E. Heggestad on the brief, for appellee.
ALPERT, J., delivered the opinion of the Court.
This appeal from judgments in the Circuit Court for Baltimore County (Raine, C.J. presiding with a jury) involves claims under the Maryland Antitrust Act and for breach of contract. Cavalier Mobile Homes, Inc. ("Cavalier"),[1] a retail seller of mobile homes, charged Liberty Homes, Inc. ("Liberty"), a manufacturer of mobile homes, with participating in a conspiracy, the effect of which was to tie the leasing of mobile home parking spaces to the purchase of mobile homes sold by an alleged co-conspiring retail *381 seller. Cavalier also alleged that Liberty breached its franchise and distributorship agreements which contained a 30-day notice provision for termination, in that Liberty refused to sell Cavalier a number of mobile homes allegedly ordered after the required 30 days notice had been given. At the end of plaintiff/appellant's case, the trial judge granted a motion to direct the verdict as to the four antitrust counts. The remaining breach of contract claim was submitted to the jury, which returned a verdict in Cavalier's favor in the amount of $30,386. Cavalier appeals from the directed verdicts as to the antitrust claims while Liberty has cross-appealed from the judgment entered on the jury's verdict as to the breach of contract claim.
I. The Antitrust Claim
Appellant raises five issues on appeal. For reasons which will become apparent, we need only decide one of these questions, namely:
3. Did the circuit court err in ruling that there was no evidence from which the jury could infer that Liberty had knowledge of the contracts, combinations and conspiracies between the mobile home park and the mobile home dealer and that Liberty took actions in furtherance of those contracts, combinations and conspiracies?
Inasmuch as our decision on this issue renders moot the remaining issues, we need not and therefore do not reach them.[2]
*382 The Facts
The mobile homes in which the parties to this action deal, are factory built residences designed to be towed by truck to a lot and set up on large cinder blocks. If the homeowner wishes to move thereafter, he may take his mobile home with him by removing the cinder blocks and attaching the mobile home to a truck. The home may then be towed on its own wheels to a new location.
The record indicates that because of zoning restrictions, consumers in the Baltimore metropolitan area may place their mobile homes only in specially zoned mobile home parks. Additionally, since it has been very difficult to obtain zoning to establish mobile home parks, there is a shortage of available parking spaces. This limitation directly affects the quantity of sales made by retail mobile home dealers since without a properly zoned space to park the mobile home, there generally is no possibility of a sale.
From 1973 through 1976 Liberty entered into annual agreements authorizing Cavalier to sell Liberty homes. The agreement provided that the authorization could be terminated for any reason by either party following 30 days notice. Cavalier asserts that although it was not contained in the written agreement, Liberty granted Cavalier the Baltimore metropolitan area as an "exclusive territory".
In September of 1976, Liberty gave Cavalier notice that it was terminating Cavalier as a Liberty dealer. During the *383 same month, Liberty authorized Chesapeake Mobile Homes, Inc. ("Chesapeake"), a competitor of Cavalier, to represent it in the Baltimore market.
The appellant argued that Liberty terminated it as an authorized dealer in order to further a conspiracy to restrain trade in violation of the Maryland antitrust laws. The primary participants in the alleged conspiracy were Chesapeake and the owners of Harford Mobile Village ("Harford"). Harford was a highly desirable mobile home park which first opened in the early 1970's and continued developing in sections through 1977. Harford leased several acres of land in front of the park to Chesapeake for use as a mobile home sales lot. They also entered into agreements wherein a fee plus monthly "rent" was paid by Chesapeake to Harford to reserve vacant lots in the park for Chesapeake's customers. The same deal was offered to other mobile home dealers, several of whom paid to reserve spaces for their customers. In 1975, Harford offered Cavalier 20 lots at the then standard rate, but Cavalier refused to pay the reservation fee. Throughout this period, the record indicates that although Chesapeake had the lion's share of placements within Harford, Cavalier managed to place 47 homes in the park without paying to reserve those spaces, and that a host of other dealers, some of whom paid the reservation fee, also placed homes in not insubstantial numbers.
Cavalier attributes its termination as a Liberty dealer to the realization by Liberty that Chesapeake had valuable unlawful access to Harford which Cavalier maintained was facilitated by an illegal conspiracy. Appellant argued that evidence of meetings in 1976 between Chesapeake and Liberty's sales representative indicate that Liberty joined the conspiracy and withdrew from its dealership agreement, thereby damaging Cavalier in two ways: First, by denying it the sales of Liberty mobile homes, and; Second, by participating in the conspiracy to keep Harford a "closed-park."[3]
*384 The Maryland Antitrust Act
Counts IV, V, VII and VIII of Cavalier's second amended complaint charge Liberty with conspiracy and unfair competition violative of Md. Com. Law Code Ann. § 11-204 (a) (1) and (6) which provide
(a) Prohibited conduct. A person may not:
(1) By contract, combination, or conspiracy with one or more other persons, unreasonably restrain trade or commerce;
* * *
(6) Lease or make a sale or contract for the sale of a patented or unpatented commodity or service for use, consumption, enjoyment, or resale, or set a price charged for the commodity or service or discount from or rebate on the price, on the condition, agreement, or understanding that the lessee or purchaser will not use or deal in the commodity or service of a competitor of the lessor or seller, if the effect of the lease, sale, or contract for sale or the condition, agreement, or understanding may:
(i) Substantially lessen competition; or
(ii) Tend to create a monoply in any line of trade or commerce.
Section 11-204 (a) (1) is the Maryland analogue to section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Quality Discount Tires, Inc. v. Firestone Tire & Rubber Co., 282 Md. 7, 11, 382 A.2d 867 (1978); Greenbelt Homes, Inc. v. Nyman Realty, Inc., 48 Md. App. 42, 48, 426 A.2d 394 (1981). Similarly, section 11-204 (a) (6) is the Maryland equivalent of section 3 of the Clayton Antitrust Act, 15 U.S.C. § 14.
We note that § 11-202 (a) (2) provides that when *385 interpreting the Maryland Antitrust Act, we are to be guided, but not bound, by the construction given the analogous federal statutes by the federal courts. Cities Service Oil Co. v. Burch, 29 Md. App. 430, 436, 349 A.2d 279 (1975).
Application of the Law
Turning to the facts of the case at bar, we find that the appellant appeals from a directed verdict as to the antitrust claims. A directed verdict is inappropriate where there is any legally relevant and competent evidence, however slight, from which a rational mind could infer a fact which if found to exist would prevent judgment for the moving party. Impala Platinum, Ltd. v. Impala Sales (U.S.A.), Inc., 283 Md. 296, 328-29, 389 A.2d 887 (1978). All facts and the inferences reasonably deducible therefrom must be considered in the light most favorable to the party against whom the motion for a directed verdict is made. United Bank & Trust Co. of Maryland v. Schaeffer, 280 Md. 10, 12, 370 A.2d 1138 (1977). Only when the facts or inferences drawn therefrom lead to but one conclusion is a court justified in directing a verdict. Snoots v. Demorest, 254 Md. 572, 255 A.2d 12 (1969); Smack v. Jackson, 238 Md. 35, 207 A.2d 511 (1965). Even against this extremely strict standard there are nevertheless circumstances in which a directed verdict is appropriate. Whenever the facts, and any rational inferences which may be drawn from them, point so strongly toward the non-existence of an essential element of a party's cause of action or defense that no reasonable man could find for its existence, the appropriate level of non-persuasion has been reached and a directed verdict is proper.
The trial judge concluded that in order to make out its case under the Maryland Antitrust Act, Cavalier had to establish two essential facts. First, Cavalier would have to put forward proof of a conspiracy or combination between Harford and Chesapeake to "tie" illegally their products. Second, Cavalier would have to establish some participation in the conspiracy by Liberty.
*386 Following a proper review of the facts, the trial judge found that neither fact had been proved sufficiently to withstand the motion for a directed verdict. First, the court found that there was no tie-in because there was no proof of exclusivity.[4] Second, he found the evidence was not legally sufficient to prove that Liberty had knowledge of or participated in an illegal conspiracy. Under the facts of this case, it is the decision regarding the second fact which ultimately determines the outcome. Even if Cavalier had proved that there was an illegal conspiracy between Harford and Chesapeake, without legally sufficient evidence that Liberty had knowledge of or was a participant in the alleged conspiracy, Cavalier cannot prevail.
To establish knowlege of or participation in the conspiracy by Liberty, Cavalier need not show a contract expressly imposing a legal obligation on the part of Liberty to participate or facilitate the conspiracy. The illegal condition, agreement, or understanding (to use § 11-204 (a) (6) language) or the contract, combination or conspiracy (to use § 11-204 (a) (1) terminology) can be implied from the course of dealing between the parties or it may be inferred from all the circumstances. A plaintiff must establish "a unity of purpose or a common design and understanding, or a meeting of the minds in an unlawful arrangement." American Tobacco Co. v. United States, 328 U.S. 781, 810, 66 S. Ct. 1125, 1139 (1946).
In Overseas Motors, Inc. v. Import Motors Limited, Inc., 375 F. Supp. 499 (E.D.Mich. 1974), aff'd, 519 F.2d 119 (6th Cir.1975), cert. denied, 423 U.S. 987, 96 S. Ct. 395 (1975), the court states that "[t]here is a limit, however, to the degree of indirection and innuendo which the law will tolerate. *387 Where ... the plaintiff's case is based entirely on such circumstantial evidence, the court must be especially vigilant to insure that liberal modes of proof do not become the pretext for unfounded speculation." 375 F. Supp. at 531. Similarly, we stated in Walker v. Hall, 34 Md. App. 571, 369 A.2d 105 (1977) that "[i]n order to withstand a motion for directed verdict, the evidence must amount to more than a `mere scintilla of evidence, amounting to no more than surmise, possibility or conjecture.'" Id. at 582.
Chief Judge Raine's oral opinion indicates to this court that he followed this standard. His review of all the evidence in the appellant's case disclosed a dearth of facts relating to knowledge or participation by Liberty in the alleged conspiracy. The appellant showed that in 1976 Liberty, through its sales representative, had frequent meetings with Chesapeake. The testimony indicates only that Liberty's sales representative concluded that Chesapeake could place its customers into Harford. There was no evidence offered from which a rational inference could be drawn which tended to establish the required "meeting of the minds in an unlawful purpose." Neither the court nor the jury can be permitted to speculate as to what transpired at those meetings without some basis in the evidence.[5] The only *388 other evidence arguably related to Liberty's knowledge of the illegal arrangement is that Cavalier may have told Liberty that it was having difficulty in placing homes in Harford. Given these elements of evidence as the only possible proof of Liberty's knowledge of the illegal arrangements, we cannot say that the trial judge erred when he found that Cavalier failed to present sufficient evidence to prove Liberty's knowledge of an unlawful scheme by Harford and Chesapeake, much less that Liberty took any action in furtherance of the alleged conspiracy.
Inasmuch as we agree with the trial court that Liberty was not shown to be a participant in the conspiracy, it is irrelevant to this decision and therefore we do not reach the *389 question of whether there was an illegal tying arrangement between Harford and Chesapeake.[6]
It follows from our conclusions above that Cavalier has also failed to produce sufficient evidence in support of its claims based on unfair competition and civil conspiracy. Unfair competition is generally defined in Maryland as, "damaging or jeopardizing another's business by fraud, deceit, trickery or unfair methods.... What constitutes unfair competition in a given case is governed by its own particular facts and circumstances." Baltimore Bedding Corp. v. Moses, 182 Md. 229, 237, 34 A.2d 338 (1943). Cavalier contends that it presented sufficient evidence from which a jury could infer that the alleged conspiracy among Liberty, Chesapeake, and Harford Mobile Village, and Liberty's termination of Cavalier constituted unfair competition. Since Cavalier failed to present evidence establishing a connection between Liberty and a violation of the antitrust laws, under the facts of this case Liberty's conduct could not constitute unfair competition.
Since common law conspiracy requires collusive conduct to accomplish an unlawful act which injures the plaintiff, Green v. Washington Suburban Sanitary Commission, 259 Md. 206, 221, 269 A.2d 815 (1970), the short answer to Cavalier's claim that it was injured by a common law conspiracy *390 is that there was insufficient evidence produced to establish that Liberty was engaged in collusive conduct. Accordingly, we affirm the trial judge's ruling granting a directed verdict on Counts IV, V, VII and VIII.
II. The Breach of Contract Claim
Liberty, as cross-appellant, raises three issues:
1. Whether a dealer's claims for breach of an alleged contract for the sale of mobile homes are barred by the statute of frauds, where no evidence was introduced of a writing conforming to U.C.C. § 2-201.
2. Whether, as a matter of law, a seller has reasonable grounds for insecurity under U.C.C. § 2-609, where the buyer has repeatedly made late payments in the past, has failed to improve its payment record after being warned to do so, has been given a 30-day notice of termination, and is in failing financial condition.
3. Whether the jury's verdict (a) that Liberty breached an alleged contract with Cavalier, and (b) that Cavalier suffered damages due to the alleged breach of contract was clearly erroneous, contrary to the great weight of the evidence, and unsupported by the record.
The breach of contract aspect of this controversy arose following Liberty's September 17, 1976 notice to Cavalier that it was being terminated as an authorized dealer. The distributorship agreement provided for a 30 day "wrapping-up" period which began to run on the date Cavalier was notified of the termination.
What transpired during those 30 days is somewhat murky. Viewed in the light most favorable to the plaintiff/cross-appellee, it appears that Cavalier called Liberty late in September and attempted to order 14 mobile homes. Cavalier's president, Chester Foreman, testified that these homes were for stock and inventory, as well as for prospective customers. He further testified that Liberty *391 would not accept his order and stipulated that it would accept future orders only if they met certain new conditions. The essence of the new terms was that Liberty would ship to Cavalier only if the home was to satisfy a pre-existing sale by Cavalier to a consumer pursuant to a contract with the customer and that full payment to Liberty in advance or a certified check upon delivery must be assured.
Liberty did, in fact, ship three homes after the termination date which were sold by Cavalier prior to that date. Of the 14 additional homes which Cavalier contends that it attempted to order, it is clear that 13 of them were not under contract. There is apparently a question as to whether one of the fourteen was under such contract.[7] In any event, none of the 14 homes was ever shipped. This failure is the basis for Cavalier's claim that Liberty breached its contract and caused damage to Cavalier in the amount of the lost profits on the 14 homes.
The trial judge overruled Liberty's motion for a directed verdict on this issue and submitted it to the jury. The jury found in Cavalier's favor and judgment was entered against Liberty in the amount of $30,386.
In support of its contention that Liberty was obligated to supply homes to Cavalier, Cavalier produced what it termed a "franchise letter". This letter provided:
To Whom it May Concern:
Cavalier Mobile Homes, Inc., P.O. Box 887, Glen Burnie, Maryland 21061, is an authorized Liberty dealer for the year of 1976.
They are authorized to sell Liberty products from Liberty Homes, Inc., Leola, Pennsylvania.
This authorization may be terminated by either party given thirty days notice.
*392 Because of Liberty's alleged refusal to fill its orders pursuant to this agreement, Cavalier argued that it was entitled to a judgment. This court holds that as a matter of law Cavalier failed to produce evidence of an agreement which complied with the requirements of the Statute of Frauds and consequently there was no enforceable contractual relationship between the parties whereby Liberty was obligated to supply the disputed mobile homes.
Cavalier contends that Liberty failed to raise the Statute of Frauds issue before the trial court and that consequently the issue was not decided by the court below. As a result, Cavalier urges that Liberty should not be permitted to raise this issue on appeal.
In Lewis v. Hughes, 276 Md. 247, 251-52, 346 A.2d 231 (1975), Judge Digges speaking for the Court of Appeals stated:
... Considering at the outset appellee's Rule 885 contention, it is true that in Laporte Corp. v. Cement Corp., 164 Md. 642, 645-46, 165 A. 195 (1933) our predecessors held that when a defendant pleads the general issue and asks for a directed verdict on the grounds of legally insufficient evidence, without pleading the Statute of Frauds below or objecting to the alleged contract on the basis of it, the statute may not be raised for the first time on appeal. On a motion for reargument in Laporte, 164 Md. at 651-53, which is also reported in 168 A. 844 (1933), the Court reaffirmed its decision, declining to follow the rule of prior cases, e.g., Morgart v. Smouse, 103 Md. 463, 467, 63 A. 1070 *393 (1906); Hamilton v. Thirston, 93 Md. 213, 220, 48 A. 709 (1901); Semmes v. Worthington, 38 Md. 298, 317 (1873); Billingslea v. Ward, 33 Md. 48, 51 (1870), that the filing of a general issue plea preserves for appeal the question of whether the Statute of Frauds has been satisfied. The decision in Laporte was later adhered to by this Court in Friedman v. Clark, 252 Md. 26, 31, 248 A.2d 867 (1969) and Dove v. White, 211 Md. 228, 234-37, 126 A.2d 835 (1956). But see Smith v. Biddle, 188 Md. 315, 318, 52 A.2d 473 (1947).
Neither Lewis nor the cases cited therein preclude raising the Statute of Frauds on appeal where the statute has been specifically pleaded as in the instant case.
In Smith v. Biddle, 188 Md. 315, 318, 52 A.2d 473 (1947) the Court of Appeals seemed to disregard Laporte when it stated:
Appellee seems to think that Rule 9 of this Court, relating to appeals generally, and Section 40 of Article 5, Code, 1939, bar the appellants from raising in this court matters not presented and argued before the chancellor, but we will pass the matter with the comment that this court will always inquire into the question of whether a contract sought to be specifically enforced is in form that the law requires. Certainly our rule, and the provisions of the code cited, would not bar this court in an inquiry as to whether a contract for the sale of land was violative of the Statute of Frauds, or whether a third party had authority to sign a contract on behalf of the vendor; or whether the contract was so uncertain and duplicitous as to be unenforceable.
Cavalier relies on Gadekar v. Phillips, 36 Md. App. 715, 375 A.2d 248 (1977) as authority that Liberty did not preserve the Statute of Frauds issue. In Gadekar, the defendant asserted the defense of laches in her amended answer but *394 failed to pursue that defense during the course of trial. Unlike the procedural defense of laches, the issue of the Statute of Frauds goes to the very heart of Cavalier's claim and Liberty's substantive defense: the existence or non-existence of a valid and enforceable contract. The trial court in overruling Liberty's motion for directed verdict implicitly ruled on this issue by deciding there was legally sufficient evidence of a contract.
The record indicates that the Statute of Frauds issue was presented to the court through the Special Plea and was necessarily decided by the trial court when it denied Liberty's Motion for a Directed Verdict. Assuming arguendo that the issue was not decided below, this court could still consider it under the circumstances of the instant case. See, Smith v. Biddle, supra, and also Tuxedo Cheverly Vol. Fire v. Prince George's County, 39 Md. App. 322, 327, 385 A.2d 819 (1978). We now consider this question.
The Maryland Uniform Commercial Code, Md. Com. Law Code Ann. § 2-106 (1975) defines "contract for sale" to include both a "present sale of goods and a contract to sell goods at a future time." It follows therefrom that dealership or distributorship contracts fall within the sales provisions of the U.C.C. Artman v. International Harvester Co., 355 F. Supp. 482, 486 (W.D.Pa. 1973). It also follows that the Article II Statute of Frauds, found at § 2-201, applies to such agreements. That section provides in pertinent part:
[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 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.
*395 The Official Comment to § 2-201, as well as the case law, provides that a writing satisfies the requirements of the Statute of Frauds if: (1) it evidences a contract for the sale of goods; (2) it is signed by the party against whom it is to be enforced; and (3) it specifies the quantity of goods to be sold. Fortune Furniture Manufacturing Co., Inc. v. Mid South Plastic Fabric Co., 310 So. 2d 725, 728 (Miss. 1975); Veik v. Tilden Bank, 200 Neb. 705, 708, 265 N.W.2d 214 (1978); Alaska Independent Fishermen's Marketing Association v. New England Fish Co., 15 Wash. App. 154, 157, 548 P.2d 348 (1976). The Official Comments describe these requirements as "definite and invariable."
There are three writings in evidence which Cavalier asserts are memoranda of the purported agreement: the dealership letter; the invoices generally; and the termination letter. Each of these, however, fails to overcome the Statute of Frauds and may not be enforced against Liberty with regard to a failure to provide a certain number of homes.
The dealership letter lacks terms as to price and delivery conditions, as well as quantity, which would indicate no contractual obligation on the part of Liberty to supply Cavalier with mobile homes. The arrangement was clearly not a requirements contract. The Statute of Frauds requires that even where the quantity term is not numerically stated, there must be some writing which indicates that the quantity to be delivered under the contract is a party's requirements. Cox Caulking & Insulating Co. v. Brockett Distributing Co., 150 Ga. App. 424, 258 S.E.2d 51 (1979); 3 U.C.C. § 2.04 & n. 27.2 [Bender] (citing cases).
The invoices in evidence indicate a course of dealings between the parties. Our view of this distributorship is that each time Cavalier ordered a home from Liberty, a separate contract of sale was entered into by the parties. This series of contracts, evidenced by invoices, does not indicate that a requirements contract existed, i.e., that there was a contract to fill Cavalier's requirements. Each invoice solely reflects the terms and quantity of individual transactions. There is no indication that quantity is to be measured by *396 requirements. Accordingly, this course of dealing cannot supply the quantity term to satisfy the Statute of Frauds. Eastern Dental Corp. v. Isaac Masel Co., Inc., 502 F. Supp. 1354, 1364 (E.D. Pa. 1980).
Finally, for the same reasons, the termination letter is not evidence of an agreement between the parties as to quantity. Since Cavalier put forward no competent evidence of a contract for the sale of the 14 disputed mobile homes, the trial court should have held as a matter of law that there was no contract and therefore nothing to go to the jury. Md. Rule 552. It was error for the trial court to deny the motion for directed verdict.
Cavalier asserted that a statement made by Liberty's attorney had the effect of admitting that there was sufficient evidence to go to the jury with regard to the 30 day "winding up" period. We agree with the trial judge's analysis of the statement at issue to the effect that Liberty was "not conceding anything." Additionally, Liberty's attorney renewed its motion for directed verdict at the end of the case, clearly indicating that Liberty was not conceding its right to have the trial judge decide the sufficiency of the evidence.
In conclusion, we shall reverse the trial judge's denial of a directed verdict.
Judgments on Counts IV, V, VII and VIII affirmed; judgment on Count I reversed; case remanded to the Circuit Court for Baltimore County with instructions to enter judgment for cross-appellant (Liberty); costs to be paid by appellant-cross appellee (Cavalier).
NOTES
[1] Suit was brought in the names of three corporations: Cavalier Mobile Homes, Inc.; Cavalier Mobile Homes East, Inc.; and Cavalier Mobile Homes North, Inc. Noting that Chester Foreman was the sole stockholder and president of all three corporations and that the defendant/appellee treated the three corporations as one entity maintaining three sales locations, the trial judge ruled as a matter of law that they are all one corporation and granted a motion for a directed verdict with respect to counts II and III which were identical to count I except that they were brought in a different corporate name.
[2] The questions presented but not reached are:
1. Did the circuit court err in ruling that there was no evidence from which the jury could infer that contracts, combinations and conspiracies that limited the leasing of vacant mobile home parking spaces in a mobile home park to consumers who purchased mobile homes from a particular dealer constituted unreasonable restraints of trade and illegal tying arrangements in violation of the Maryland Antitrust Act?
2. Did the circuit court err in ruling as a matter of law that Cavalier could not prevail on its antitrust claims because Cavalier's customers were not totally excluded from the mobile home park and because Cavalier was offered the opportunity to join the illegal contracts, combinations and conspiracies, which it declined?
* * *
4. Did the circuit court err in ruling that there was no evidence from which the jury could infer that Liberty's unjustified termination of one of its top dealers and giving a franchise to a competitor who had tied up scarce mobile home lots constituted unfair competition?
5. Did the circuit court err in ruling that there was no evidence from which the jury could infer that Liberty participated in and is liable for civil conspiracy?
[3] A "closed-park" was defined as a park which entered into arrangements in which vacant spaces in the parks are reserved for consumers who purchase a mobile home from one of a few select dealers. An "open-park" operates simply on a first come, first served basis, regardless of where the consumer purchased the mobile home.
[4] Judge Raine relied on McElhenney Co. v. Western Auto Supply Company, 269 F.2d 332 (4th Cir.1959), in which C.J. Sobeloff stated:
The gravamen of a Section 3 violation is the forbidden condition, agreement or understanding of exclusivity, and a proper pleading should assert this ultimate fact. It makes no difference whether this is voluntary or is imposed by coercion, but without such agreement, condition or understanding, there can be no statutory infraction. 269 F.2d at 338.
[5] Appellant argues that "the jury could infer that Liberty stopped selling to Cavalier and began selling to Chesapeake so that Liberty could utilize Chesapeake's control of mobile home parking spaces to its own advantage." Liberty unilaterally elected not to do business with Cavalier. This is permissible under the antitrust laws unless it has the proscribed effect on competition, that is, the substantial lessening of competition, or is for the purpose of creating or maintaining a monopoly. U.S. v. Colgate & Co., 250 U.S. 300, 39 S. Ct. 465 (1919). This principle has been qualified several times by the Supreme Court. F.T.C. v. Texaco, Inc., 393 U.S. 223, 89 S. Ct. 429 (1968); Albrecht v. The Herald Co., 390 U.S. 145, 88 S. Ct. 869 (1968); U.S. v. Park, Davis & Co., 362 U.S. 29, 80 S. Ct. 503 (1960); U.S. v. Bausch & Lomb Optical Co., 321 U.S. 707, 64 S. Ct. 805 (1943). As we read the subsequent applications, however, they have not prohibited a manufacturer from consulting with its new distributor regarding continued sales to a terminated distributor. Quality Mercury, Inc. v. Ford Motor Co., 542 F.2d 466 (8th Cir.1976); Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 416 F.2d 71 (9th Cir.1969), cert. denied, 396 U.S. 1062, 90 S. Ct. 752 (1970); Packard Motor Car Co. v. Webster Motor Car Co., 100 U.S. App. D.C. 161, 243 F.2d 418 (1957); Schwing Motor Co. v. Hudson Sales Corp., 138 F. Supp. 899 (D.Md. 1950), aff'd 239 F.2d 176 (4th Cir.1956), cert. denied, 355 U.S. 823, 78 S. Ct. 30 (1957).
In a vertical relationship such as between a manufacturer and distributor, the parties cannot do business without an agreement and such an agreement is not evidence of a conspiracy. Moreover, there was such an agreement between Cavalier and Liberty prior to the termination. Certainly, a manufacturer can decide to do business with someone else and there is nothing which leads us to presume that the existence of such an agreement is a violation of the antitrust laws. Even if Liberty, pursuant to an agreement with its new dealer, Chesapeake, refused to continue sales to Cavalier, that does not, by itself, constitute an unreasonable restraint of trade. Schwing Motor Co. v. Hudson Sales Corp., supra. But see, Cernuto v. United Cabinet Corp., 595 F.2d 164 (3d Cir.1979). In Ace Beer Distributors, Inc. v. Kohn, Inc., 318 F.2d 283 (6th Cir.1963), cert. denied, 375 U.S. 922, 84 S. Ct. 267 (1964), reh'g denied, 375 U.S. 982, 84 S. Ct. 479 (1964), a brewer allegedly conspired to destroy one distributor's business by terminating its franchise as exclusive distributor of that brewery's products and conducting its business through another distributor. The court held that:
The fact that a refusal to deal with a particular buyer without more, may have an adverse effect upon the buyer's business does not make the refusal to deal a violation of the Sherman Act. Damage alone does not constitute liability under the Act.
* * *
Unless it can be said that the refusal to deal with... [the distributor] had the result of suppressing competition and thus constituted "restraint of trade" within the meaning of Section 1 of the Sherman Act, there is no violation of the Act. 318 F.2d at 287. In Richardson v. Chrysler Motors Corp., 257 F. Supp. 547 (S.D.Tex. 1966), the court after reviewing the case law held that the substitution of one distributor for another is not an unreasonable restraint of trade. Consequently, as there was no evidence of a substantial lessening of competition or that Liberty had "a purpose to create or maintain a monopoly," its refusal to sell to Cavalier was not an act in restraint of trade.
[6] The case of Suburban Mobile Homes, Inc. v. AMFAC Communities, Inc., 101 Cal. App. 3d 532, 161 Cal. Rptr. 811 (Dist. Ct. App. 1980), relied on by appellants is factually inapposite to the instant case. In Suburban, a California appellate court reversed a directed verdict in favor of a mobile home park owner and three mobile home dealers, holding that an agreement between the park owner and the dealers to tie the rental of a substantial number of mobile home parking spaces to the sale of mobile homes by the dealers was an illegal tying arrangement. Significantly, the plaintiff Suburban brought suit against the developer of the mobile home park, and three other mobile home dealers. In the case at bar, suit is against a mobile home manufacturer whose connection to the alleged conspiracy was not proved.
For tying cases generally, see Greenbelt Homes, Inc. v. Nyman Realty, Inc., 48 Md. App. 42, 426 A.2d 394 (1981); Fortner Enterprises, Inc. v. United States Steel Corp., 394 U.S. 495, 89 S. Ct. 1252 (1969); F.T.C. v. Texaco, 393 U.S. 223, 89 S. Ct. 429 (1968); Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 78 S. Ct. 514 (1958); Phillips v. Crown Central Petroleum Corp., 602 F.2d 616 (4th Cir.1979), cert. denied, 444 U.S. 1074, 100 S. Ct. 1021 (1980); and Osborn v. Sinclair Refining Co., 286 F.2d 832 (4th Cir.1960), cert. denied, 366 U.S. 963, 81 S. Ct. 1924 (1961).
[7] Although there was no specific argument before this Court as to the Statute of Frauds implications of the disputed "Skalski home" we believe this issue merits comment. There is a memo in evidence from Liberty to Cavalier in which Liberty indicates that it will not supply Cavalier with this particular mobile home allegedly ordered during the 30-day close out period, because "To do so would be forfeiting our agreement with the new dealer." It is arguable that this memo satisfies the Statute of Frauds requirements.
The writing in question does not evidence a contract for the sale of goods. When Cavalier phoned in the order to Liberty, that action constituted an offer. Liberty responded not with an acceptance but instead with a counter-offer containing two required conditions. Cavalier responded by meeting only one of the two conditions. That response constituted a new offer which revoked all prior offers. Liberty's memo rejected the new offer. Thus, there was no contract for the sale of the "Skalski home." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1522399/ | 582 S.W.2d 813 (1979)
Julio Cabrera SANCHEZ, Appellant,
v.
The STATE of Texas, Appellee.
No. 55657.
Court of Criminal Appeals of Texas, Panel No. 3.
February 21, 1979.
Rehearing Denied June 6, 1979.
*814 Richard D. Woods, San Antonio, for appellant.
Alger Kendall, Jr., Dist. Atty. and Barry Brown, Asst. Dist. Atty., Karnes City, for the State.
Before DOUGLAS and TOM G. DAVIS, JJ., and WILLIAM J. CORNELIUS, Commissioner.
Rehearing En Banc Denied June 6, 1979.
OPINION
WILLIAM J. CORNELIUS, Commissioner.
In a jury trial, Julio Sanchez was convicted of the offense of possession of more than four ounces of marihuana, a third degree felony. Punishment was set at four years' confinement.
The sufficiency of the evidence is not challenged. Sanchez's sole ground of error is that the trial court should have granted his motion to suppress evidence of the contraband because it was obtained by an illegal search.
At about 1:30 a. m. on the day in question, United States Border Patrol Agents Melton and Weinbrenner observed a vehicle traveling on Highway 35 at a high rate of speed. Only one person was in the automobile. The officers gave chase but were unable to overtake the vehicle. A few minutes later they came upon the same car stopped on the highway. Sanchez was at the front of the automobile looking under the hood. The officers asked what was wrong and he answered that he was having carburetor trouble. The officers smelled a strong odor of alcohol and decided that Sanchez was intoxicated. They had also noticed that his automobile trunk appeared to be heavily loaded, and they asked if he would allow them to look in the trunk. He refused. The officers then detained him and called the sheriff's department. Shortly thereafter, Sheriff Deputies Sanders and Martinez arrived. They arrested Sanchez and took him to the sheriff's office. Agent Melton testified that, while waiting for the deputies to arrive, he allowed Sanchez to sit in the back seat of the automobile in order to keep warm, and that as he opened the door to let Sanchez in the automobile he smelled a sweet, musty odor which he could not smell in the front seat. When they arrived at the sheriff's department headquarters, Sanchez was charged with the offense of driving while intoxicated. Agent Melton told Deputy Martinez of the smell which he had noticed, and they examined the back seat of the car with the aid of a flashlight. Through two stereo speaker holes in the back of the car, they could see something behind the seat in the trunk which looked like large burlap bags which are commonly used to transport marihuana. They forcibly opened the trunk and discovered that the bags contained approximately five kilo bricks of marihuana. The trial court overruled the motion to suppress.
Sanchez attacks the validity of the search on several grounds. First, he asserts that his detention was illegal because the United States Border Patrol agents, not being Texas peace officers,[1] did not have the authority to arrest or detain him except for an offense against the immigration laws. We overrule this contention. The border patrolmen did not stop Sanchez. They did, however, detain him after they encountered him stopped on the highway. They testified that, based upon the smell of *815 alcohol and the suspect's actions, it was their opinion that he was intoxicated. Public drunkenness, to the extent that one may endanger himself or another, is an offense against the public peace. V.T.C.A., Penal Code, Sec. 42.08; Heck v. State, 507 S.W.2d 737 (Tex.Cr.App.1974); McEathron v. State, 163 Tex.Cr.R. 619, 294 S.W.2d 822 (1956). A private citizen may, without warrant, arrest a person found drunk in a public place. Art. 14.01, V.A.C.C.P.; Heck v. State, supra; McEathron v. State, supra. Sanchez's detention by the border patrolmen until they could deliver him to the duly constituted peace officers of Frio County was proper.
Officer Melton had observed that the trunk of Sanchez's automobile appeared to be heavily loaded. Before going to the sheriff's office he noticed, in the vehicle's rear, an odor of a substance which he later decided was marihuana. When the officers arrived only a few minutes later at the sheriff's department, Patrolman Melton advised Deputy Martinez of the odor. Together they looked into the back seat and saw, through the speaker holes, burlap bags of the type commonly used to transport marihuana. Those circumstances were sufficient to constitute probable cause to search the trunk of the automobile. It was not necessary that exigent circumstances exist. The fact that the automobile was being held at the sheriff's department and could have been held there long enough to secure a warrant before conducting the search does not make the search unlawful or unreasonable. Texas v. White, 423 U.S. 67, 96 S.Ct. 304, 46 L.Ed.2d 209, reh. den., 423 U.S. 1081, 96 S.Ct. 869, 47 L.Ed.2d 91 (1975); Chambers v. Maroney, 399 U.S. 42, 90 S.Ct. 1975, 26 L.Ed.2d 419, reh. den., 400 U.S. 856, 91 S.Ct. 23, 27 L.Ed.2d 94 (1970). For constitutional purposes, there is no difference between seizing and holding an automobile while securing a search warrant and in conducting an immediate search without a warrant. If probable cause to search exists, either course is reasonable under the Fourth Amendment. Chambers v. Maroney, supra.
Lastly, it is argued that the motion to suppress should have been granted because defense testimony proved that the speakers in the rear of the automobile were in place, both before and after the search, thus casting doubt upon the officers' testimony that they saw the burlap bags through the speaker holes. We cannot agree. There was no conclusive proof that the speakers were in place at all times, or at the very time of the search. The conflicts in the testimony were for the resolution of the trial judge, and his findings of the facts will not be overturned if they are supported by sufficient evidence. Furthermore, it was not necessary that the officers be able to see into the trunk for the search to be justified. The smell of marihuana in the rear of the automobile, coupled with an absence of any contraband in view in the back seat, would have been sufficient probable cause, under all of the circumstances here, to justify a search of the trunk.
The judgment of the trial court is affirmed.
Opinion approved by the Court.
NOTES
[1] Art. 2.12, V.A.C.C.P. The statute was amended by the 65th Legislature to provide that U. S. Border Patrolmen, although not peace officers of the State, shall have the power of arrest, search and seizure as to felony offenses only. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1695021/ | 426 So.2d 585 (1982)
SUCCESSION OF Viola Alexander CLIVENS.
No. 82-C-0125.
Supreme Court of Louisiana.
July 2, 1982.
On Rehearing January 10, 1983.
Rehearing Denied February 11, 1983.
Additional Reasons for Denying Rehearing February 17, 1983.
*586 Nils R. Douglas, John A. Hollister, McNulty, OConnor, Stakelum & Anderson, New Orleans, for applicant.
Roger R. Roy, Franklin V. Endom, Jr., Polack, Rosenberg, Rittenberg & Endom, New Orleans, for respondents.
WATSON, Justice.
The issues are:
(1) Should the decision in Succession of Brown[1] be retrospective or prospective?
(2) If prospective, from what date?[2] and,
(3) What exceptions should be made to a prospective application to preserve the rights of litigants similarly situated to those in Brown?
George Clivens died on September 24, 1971. His widow, Viola Alexander Clivens, received a judgment giving her possession of his estate on December 17, 1974. The widow died October 19, 1978, leaving collateral relatives but no children. A sister was appointed administratrix of the succession. Dorothy Clivens Joseph Vantress, born June 18, 1928, intervened in the succession on July 20, 1979, contending that she was the acknowledged illegitimate daughter of George Clivens and entitled to his half of the estate. The trial court sustained an exception of no cause of action to the intervention. The court of appeal affirmed the trial court judgment, holding that Succession of Brown should be applied prospectively from its September 3, 1980, date. Succession of Clivens, 406 So.2d 790 (La. App. 4 Cir.1981). The court relied on its earlier decision in Succession of Ross, 397 So.2d 830 (La.App. 4 Cir.1981). A writ was granted to review the judgment. 411 So.2d 47 (La., 1982).
Succession of Brown, supra, held that Civil Code art. 919[3] denied equal protection to illegitimates in violation of Art. 1, § 3 of the 1974 Louisiana Constitution and the United States Constitution. Brown followed Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977). Trimble held that an illegitimate who has proven filiation must have the same status as a legitimate heir in a state's intestate succession law.[4]Brown has been applied retroactively. See Succession of Richardson, 392 So.2d 105 (La.App. 1 Cir.1980), writ denied 396 So.2d 1324 (La.1981).
New case law has traditionally had retroactive effect, but retroaction is not required by the United States Constitution. Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965).[5] The states are free to limit the retroactivity of their civil decisional law. Sunburst Oil & Refining Co. v. Great Northern Railway, 91 Mont. 216, 7 P.2d 927 (1932), affirmed 287 U.S. 358, 53 S.Ct. 145, 77 L.Ed. 360 (1932). Legislation usually has only prospective effect. LSAC.C. art. 8 provides:
*587 "A law can prescribe only for the future; it can have no retrospective operation, nor can it impair the obligation of contracts."
In the judicial area, "[P]rospective overruling is a simple matter of facing up to the reality that things change, even fundamental things, and effecting change in a deliberate and rational manner rather than pretending that things were always the way they are now." 51 Va.L.Rev. 204. Generally, unless a decision specifies otherwise, it is given both retrospective and prospective effect.[6] See Peterson v. Superior Court of Ventura County, 31 Cal.3d 147, 181 Cal. Rptr. 784, 642 P.2d 1305 (1982).
Two competing interests are involved: (1) the property rights which have been acquired on the basis of the laws denying inheritance rights to illegitimates; and, (2) the unequal treatment that prospective application of Brown will cause to those illegitimates in the same situation as the Brown plaintiffs. These interests must be weighed to decide whether "the hardship on a party who has relied on the old rule outweighs the hardship on the party denied the benefit of the new rule." 28 Hastings Law Journal 561.
Judicial decisions are denied retroactive effect either to protect people who have relied on the former law and/or to preserve stability in an area where stability is of particular importance. Brown overruled a Civil Code article upon which individuals had relied for generations. Legitimate children have been placed into possession of estates, sold, mortgaged and, in some cases, dissipated them. Substantial uncertainty and confusion would result if those who have relied to their detriment on prior law became subject to the claims of illegitimate heirs. However, with intestate successions, the element of detrimental reliance is generally present only as to third parties. Brown mandates vast changes in estate and property ownership. The importance of stability in land titles and the reliance on the former law in property transactions favor prospective application.[7]
Weighing against these factors is the unequal treatment which has been afforded illegitimates disinherited by operation of C.C. art. 919. Where there has been infringement of constitutional rights, a beneficent rule righting the wrong should generally be retroactive.
Lovell v. Lovell, 378 So.2d 418 (La., 1979) declared C.C. art. 160 unconstitutional but held that the decision was not retroactive. However, the rights involved in Lovell were less fundamental than those here. Lovell relied on Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). Chevron holds that a decision should be applied prospectively when: (1) there is a new principle of law not foreshadowed by past cases; (2) the purpose of the new rule is promoted; and (3) injustice or hardship will result from retroactivity.
In Gross v. Harris, 664 F.2d 667 (8th Cir.1981) the court considered the criteria in Chevron with respect to Trimble. The court stated:
"In applying this test to the instant appeals we observe that the first element of the Chevron test is present, because Trimble was not foreshadowed by previous Supreme Court decisions. Indeed, the prior decisions in Mathews v. Lucas, 427 U.S. 495, 96 S.Ct. 2755, 49 L.Ed.2d 651 (1976) and Labine v. Vincent, 401 U.S. 532, 91 S.Ct. 1017, 28 L.Ed.2d 288 (1971), would appear to have indicated that a contrary result might be reached in Trimble." 664 F.2d 671.
Here, the resolution in Succession of Brown was certainly foreshadowed by the decision in Trimble. Therefore, the first element of the Chevron test is not present.
*588 The court in Gross found the second element of Chevron missing:
"... It is self evident that the purpose of the Trimble decision was to prevent constitutionally impermissible discrimination against illegitimates. Retrospective application of Trimble would thus further the Trimble purpose. See Jimenez v. Weinberger, 523 F.2d 689, 703 (7th Cir. 1975), cert. denied, 427 U.S. 912, 96 S.Ct. 3200, 49 L.Ed.2d 1204 (1976)." 664 F.2d at 671.
Similarly, retrospective application of Brown would further the Brown purpose of preventing discrimination against illegitimates. Judge Schott's dissenting opinion in the Court of Appeal correctly analyzed this point:
"The purpose of the rule announced in Succession of Brown, supra was to remove the unconstitutional discrimination against illegitimates imposed by C.C. Art. 919. Among the rights of legitimate children, of which acknowledged illegitimates were deprived by Art. 919, was the right to assert a claim as an heir long after a judgment of possession was rendered, C.C. Art. 1030. By refusing to apply the rule of Succession of Brown retroactively, the primary purpose of the decision, i.e., putting an end to the discrimination against acknowledged illegitimates, is defeated. Thus, I have concluded that a consideration of the second factor of the Chevron Oil Company case dictates the opposite conclusion than that reached by my colleagues in Succession of Ross." 406 So.2d at 792.
Third, the Gross court found no impermissible injustice or hardship from a limited retroactive application of Trimble. Finding two of the three elements favoring prospectivity not present, the Gross court made a limited retrospective application of Trimble. Here, if claims against third parties and testate successions are excluded, no impermissible hardship will result from retroactive application of Brown. Thus, unlike Lovell, all three Chevron factors favor limited retroactivity.
Brown affects not only Civil Code article 919, but other articles governing Louisiana successions. Because of the far reaching effect of the decision and the uncertainty it has engendered in many areas, it is essential that its complete implementation be prospective. This does not, however, prevent certain limited retroactive exceptions. A new rule "may be retrospective, partially retrospective, or prospective." Myers v. Drozda, 180 Neb. 183, 141 N.W.2d 852 at 854 (1966). "Definitions of past transactions to which a new rule applies may ... vary in detail." Aldisert, The Judicial Process, "Prospectivity or Retrospectivity?", at page 900.
The rights of third parties can be fully protected if Brown is made prospective as to all third parties' interests. Third parties are governed by the declared law at the time they acquired their interests. Lyons v. Veith, 170 La. 915, 129 So. 528 (1930).
Limiting the retroactive effect of Brown to rights against coheirs in intestate successions would best balance the equities involved. An heir who has acquired title through the law regulating intestate successions must yield to a later interpretation of that law. 47 Harvard Law Review 1409. See Pierce v. Pierce, 46 Ind. 86 (1874) and Jackson v. Harris, 43 F.2d 513 (10 Cir.1930). Hence, Brown will be retroactive as to coheirs in intestate successions and prospective as to third parties and testate successions. This is consistent with Trimble, which concerns intestate successions.
Since Brown relied on the Louisiana Constitution, it is arguable that it should be prospective from the Constitution's effective date. However, it is doubtful that the constitutional provision prohibiting discrimination on the basis of birth was intended to apply to inheritance by illegitimates. The equal protection guarantee in the Louisiana Constitution "... is probably best understood in light of the federal equal protection analysis which provided the background for the debate." 35 La.L.Rev. 8.[8]*589 The debate indicates that the language of the article, although more specific than the federal, was intended to embody federal constitutional standards. Labine v. Vincent, 401 U.S. 532, 91 S.Ct. 1017, 28 L.Ed.2d 288, rehearing denied 402 U.S. 990, 91 S.Ct. 1672, 29 L.Ed.2d 156 (1971) held that Louisiana Civil Code article 919 did not violate constitutional guarantees. Trimble, which cast doubt on Labine, was decided after January 1, 1975, the effective date of the Louisiana Constitution of 1974. Thus, the federal jurisprudence relating to illegitimates at the time indicates the Louisiana constitutional provision did not necessarily envision inheritance rights by illegitimates. The effective date of the Louisiana Constitution of 1974 would not be appropriate as a point of demarcation between prospective and retroactive application of Brown. Also, since Trimble did not specifically overrule Labine, Trimble's date is inappropriate. See 42 La.L.Rev. 468.
When a judgment of a court changes a rule, "the date of that opinion is the crucial date". Linkletter v. Walker, supra, 381 U.S. at 639, 85 S.Ct. 1743, 14 L.Ed.2d at 614 (1965). Therefore, the prospective full implementation of Brown applies to causes of action arising after its decision date of September 3, 1980.
Prior to September 3, 1980, acknowledged illegitimates or those who have proven filiation do not have the status of forced heirs in testate succession. Any claims against third parties by illegitimates based on Brown arising before that date are barred. In the interest of preserving the stability of land titles, all third parties are protected. Transferees, mortgagees, and succession debtors who acted in good faith reliance on the prior law are not subject to retroactive claims by illegitimates.
An acknowledged illegitimate or one who proves filiation has, under Brown, the same rights as a legal heir. However, those rights are only partially retroactive. Retroactive claims against third parties and testate successions are precluded. In the interest of justice and equal treatment, Brown is to be retroactive in intestate successions where the rights of third parties are not involved.
Plaintiff's claim is not barred. Her suit has never been considered, much less decided. Were she a legitimate heir, her suit would not have prescribed. A succession judgment of possession is subject to amendment. Since plaintiff is alleged to be an acknowledged illegitimate, the problem of proving filiation apparently does not arise. LSA-C.C. art. 203.[9] Act 549 of 1980[10] appears inapplicable.
*590 An acknowledged illegitimate, like plaintiff, whose rights have not previously been litigated, can assert those rights against other heirs in an intestate succession. Any inheritance claims of plaintiff lie solely against her father's other heir, his wife. Since the estate of the wife is intact, under administration, plaintiff retains a cause of action against that estate.[11]
For the foregoing reasons, the judgment is reversed and the matter is remanded for further proceedings.
REVERSED AND REMANDED.
MARCUS and DENNIS, JJ., dissent and assign reasons.
CALOGERO, J., dissents for reasons assigned by DENNIS, J.
MARCUS, Justice (dissenting).
I do not consider that Succession of Brown should be applied retroactively to co-heirs in intestate successions. In my view, Succession of Brown should only be applied prospectively from September 3, 1980, the date the decision was rendered. Hence, plaintiff's claim in the instant case would be barred. Accordingly, I respectfully dissent.
DENNIS, Justice, dissenting.
I respectfully dissent.
The majority opinion declares that article 919 of the Civil Code never existed for some illegitimates, yet governed for over a hundred years for others. At the same time, my brethren have simply disregarded the deliberate mandates of our state constitution and the recent jurisprudence of this Court to devise their own rules regulating the property rights of illegitimates.
The majority opinion ignores the clear words of our state charter and previous *591 decisions of this court in assuming that Article 1, § 3 of our 1974 constitution merely codifies federal jurisprudence. Article 1, § 3 of our state constitution prohibits laws which "unreasonably discriminate against a person because of [his] birth * * *." In the constitutional debates, both proponents and opponents of the provision noted that it included within its scope unreasonable discrimination against persons because of illegitimacy.[1]Succession of Robins, 349 So.2d 276 (La.1977). After a previous review of the proceedings of the convention, this Court rejected the argument that the provision was aimed only at discrimination in aid to dependent children programs, and held that "the entire range of discriminatory practices based on illegitimacy was encompassed by the section." Succession of Thompson, 367 So.2d 796, 798 (La.1979). The holding that "[t]he members of the constitutional convention intended this article to include within its scope unreasonable discrimination based upon illegitimacy" was reaffirmed by a five member majority of this Court last term. Succession of Brown, 388 So.2d 1151 (La.1980).
The majority is mistaken in concluding that the effective date of our state constitution is not an appropriate point of demarcation in the existence of Article 919 of the Civil Code. In Succession of Brown, supra, a five member majority of this present court during its 1980-81 term held that Article 919 of the Civil Code, which denies inheritance rights to acknowledged illegitimates in the succession of a father who is survived by other relatives, conflicts with Article 1, § 3 of our state constitution because it arbitrarily, capriciously or unreasonably discriminates against a person because of his birth. Since laws which were in conflict with the 1974 Louisiana Constitution ceased upon its effective date, Article 919 was repealed at midnight on December 31, 1974. La. Const.1974, art. 14 §§ 18(B), 35.
This court has on at least two other occasions construed Article 14 § 18(B) of the constitution to repeal statutes in conflict with the constitution upon its effective date. State v. James, 329 So.2d 713 (La. 1976); Civil Service Commission of N.O. v. Foti, 349 So.2d 305 (La.1977). The constitutional history of Article 14 § 18(B) which was first placed in a Louisiana constitution to automatically repeal Reconstruction legislation, indicates that it means what it says and that laws in conflict with self executing provisions of the new constitution are thereby repealed. E.S. Smith, "If Words Mean What They Say," unpublished manuscript, Louisiana Constitutional Law Seminar, L.S.U. Law Center (1981); Vol. IX Records of La. Const. of 1973; Convention Manuscripts p. 3484, T.J. Kernan, The Constitutional Convention of 1898 and its Work, Report to the La. Bar Assn., 1898, 1899, p. 55. Article 1, § 3, which prohibits discriminatory laws based on a person's birth, is clear, express and self executing, and this court should hold that Article 919 of the Civil Code ceased upon its effective date of December 31, 1974 at midnight.
On the other hand, except as otherwise specifically provided in the constitution, the constitution is not retroactive and does not create any right which did not exist under the constitution of 1921 based upon actions or matters occurring prior to the effective date of the 1974 constitution. Id. art. 14, § 26. Since there is no specific provision to the contrary in the 1974 constitution, and since the 1921 constitution did not prohibit laws which discriminate on the basis of birth, Article 919 was valid and effective insofar as state constitutional law is concerned until its repeal or cessation at midnight on December 31, 1974 as to matters or actions accruing prior to that date.
The intervenor's cause of action, which arose upon the death of her father on September 24, 1971, is a matter or action which occurred before the 1974 constitution's effective date. Accordingly, the 1974 constitution did not prevent the application of Act 919 of the Civil Code to it. Since Article 919 excludes acknowledged illegitimates *592 from participating in the succession of their father when he is survived by a spouse, it effectively barred intervenor's action unless it was invalid under the federal constitution at the time the action arose.
The United States Supreme Court, on March 29, 1971, held that there is "nothing in the vague generalities of the Equal Protection and Due Process Clauses which empower this court to nullify the deliberate choices of the elected representatives of the people of Louisiana" in enacting Article 919 of the Civil Code. Labine v. Vincent, 401 U.S. 532, 91 S.Ct. 1017, 28 L.Ed.2d 288 (1971). Petition for rehearing was denied May 17, 1971, 402 U.S. 990, 91 S.Ct. 1672, 29 L.Ed.2d 156 (1971). In rejecting the attack on Article 919, the high court recognized that the "power to make rules to establish, protect, and strengthen family life as well as to regulate the disposition of property" is committed to the state legislature. Id. 401 U.S. at 538, 91 S.Ct. at 1021. It was not until April 26, 1977 in Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977), that the Supreme Court clearly adopted a different analysis with respect to illegitimates' property rights. The court held that Illinois' distinction between legitimate and illegitimate children for purposes of intestate successions could not be justified on the bases of the state's interest in promoting legitimate family relationships or the state's interest in establishing a method of property disposition, but it did not expressly overrule Labine or make its decision in Trimble specifically retrospective. Instead, it merely recognized that Labine "is difficult to place in the pattern of this Court's equal protection decisions, and subsequent cases have limited its force as a precedent." Id. n. 12.
George Clivens died on September 24, 1971 some four months after Labine became final and over five and one-half years before Trimble was decided. During the interim Louisiana adopted its 1974 constitution which specifically prohibits discrimination on the basis of birth. Thus, Louisiana reformulated its basic view of the rights of illegitimates during the same period that the Supreme Court recast its own analysis. In Trimble the high court saw its judicial task as "one of vindicating constitutional rights without interfering unduly with the State's primary responsibility in this area." Id. 430 U.S. at 771, 97 S.Ct. at 1465. Consequently, since Louisiana actually anticipated the Supreme Court in fulfilling its responsibility, I do not think that Trimble compels us to declare Article 919 unconstitutional as of a date earlier than our own 1974 constitution.
Certainly the expressions of Trimble, which at least one member of the court now considers to be a "derelict," Lalli v. Lalli, 439 U.S. 259, 277, 99 S.Ct. 518, 529, 58 L.Ed.2d 503, 516 (1978) (Blackmun, J., concurring), do not require us to make the United States Supreme Court rulings retroactive as to a succession opened in 1971 a few months after its decision in Labine, and much less do they require absolute retroactivity as the majority opinion dictates. All other state supreme courts which have considered the issue have applied Trimble prospectively, although some have given it limited retroactivity to actions pending at the time the state case or Trimble was decided. See cases cited in the majority opinion at fn. 4.
In addition to there being no necessity for an absolute retrospective declaration of Article 919's unconstitutionality, the majority opinion's disparate treatment of illegitimates according to whether their parent's property is in the possession of an intestate or testate succession, or a third party raises further equal protection questions. A plurality of the United States Supreme Court in Lalli v. Lalli, supra, approved a carefully considered procedural statute which seeks to grant to illegitimates insofar as practicable rights of inheritance on a par with those enjoyed by legitimate children while protecting the important state interest in the just and orderly disposition of decedents' estates. The Louisiana legislature has already adopted similar procedural legislation designed to further these purposes. The majority opinion goes much further and completely excludes the substantive rights of certain illegitimates to claim under their *593 parents' estates. This was the feature of the Illinois statute declared unconstitutional in Trimble which distinguished it from the New York law, i.e., "[T]he Illinois statute was constitutionally unacceptable because it effected a total statutory disinheritance of children born out of wedlock who were not legitimated by the subsequent marriage of their parents. The reach of the statute was far in excess of its justifiable purposes." Lalli, 439 U.S. at 273, 99 S.Ct. at 527. Because of our statutory law establishing procedural safeguards, the majority's disparate retroactivity rule reaches far in excess of its justifiable purposes and will fall unfairly and unequally upon illegitimates according to the situations in which they find themselves.
For all of these reasons, I believe the more just and legally justifiable solution to the problems presented by the expansion of illegitimates' property rights in Louisiana is to adhere to the rule of our state constitution under which Article 919 of the Civil Code regulated the inheritance of natural children from their natural fathers until the article ceased to exist on the effective date of the 1974 Louisiana Constitution.
On Rehearing
CALOGERO, Justice.
Louisiana Civil Code article 919, enacted in 1908, and repealed in 1981, barred illegitimate children from inheriting from their natural fathers in the same manner as legitimate children. In Succession of Brown, 388 So.2d 1151 (La.1980), we affirmed a Court of Appeal judgment holding that La. C.C. art. 919 was unconstitutional. On original hearing in the present case, we held that Succession of Brown would be applied retroactively as to co-heirs in intestate successions, and prospectively from the date of its rendition, September 3, 1980, in testate successions and as to third parties. We were prompted to grant this rehearing by the argument, among others, that our original opinion creates more problems than it solves.
The issue, whether Brown should be applied retroactively, and if so, to what extent, arises essentially in the following context. The acknowledged illegitimate daughter of George Clivens, one Dorothy Clivens Vantress, brought an action against her father's widow, Viola Alexander Clivens, who had been placed in possession of George Clivens' property after his September 24, 1971 death.[1] Vantress contends that she is legally entitled to the property because she was her father's sole descendant.
The trial court sustained an exception of no cause of action to Vantress' claim and the Court of Appeal affirmed that ruling, holding that Succession of Brown should be applied prospectively only from the date of its rendition.
After reversing the Court of Appeal on original hearing we granted this rehearing because of concern over the following arguments: (1) unlimited retroactive application of Brown as against co-heirs in intestate successions would work a substantial injustice, especially in cases from years past where the heir has either already disposed of his inheritance or relied on his ownership of the property to his detriment; (2) the disparate treatment between testate and intestate successions has no reasonable basis. Denial of an heir's forced portion (which is constitutionally provided, La. Const. art. XII, § 5) is no less discriminating than denial of heirship rights in intestate successions; (3) future determinations of just who are "third parties" is problematic, extending rather than shortening the disruptive effect on land titles. And allowing the legal heir/vendor to be called to account for the proceeds of a sale of his ancestor's property (a distinct possibility under the original opinion) imposes the same inequitable considerations that exist in unlimited retroactive application of Brown in intestate successions; and (4) the combined effect of these problems is that the state's interest in quieting or minimizing *594 disruptive land title disputes is hindered rather than furthered by such a resolution of the retroactivity issue.
For the reasons which follow, we now hold that Succession of Brown, holding La.C.C. art. 919 unconstitutional, is to be applied retroactively, as relates to testate as well as intestate successions, to January 1, 1975, the effective date of the Louisiana Constitution of 1974, as well as prospectively.
Sydney Brown died intestate on January 1, 1978. He was survived by four acknowledged illegitimate children and one adopted child. In the succession proceedings a judgment of possession was rendered in favor of the adopted child. His illegitimate children brought suit to have the judgment of possession annulled. The trial court, following La.C.C. art. 919, ruled against the illegitimate children, refusing to nullify the judgment of possession.[2]
In affirming the Court of Appeal judgment, we held that La.C.C. art. 919 was unconstitutional in that it unreasonably discriminated against illegitimate children by denying them the same inheritance rights in the successions of their fathers, under any circumstances, as was enjoyed by their legitimate counterparts. In doing so, we relied upon the United States Supreme Court case of Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977), and Article I, Section 3 of the Louisiana Constitution of 1974.
The question of whether the decision in Succession of Brown would be applied retroactively was left unanswered in that opinion.[3] The dispute in this litigation requires that that question now be answered.
As correctly pointed out in our opinion on original hearing, generally, unless a decision specifies otherwise, it is to be given prospective and retroactive effect. However, retroactivity is not constitutionally required and states are free to limit the retroactivity of their civil decisional law when necessary or advisable. We have previously held that "where a decision could produce substantial inequitable results if applied retroactively, there is ample basis for avoiding the `injustice or hardship' by a holding of nonretroactivity. Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969)." Lovell v. Lovell, 378 So.2d 418 (La.1979). The United States Supreme Court itself described its task in Trimble as "one of vindicating constitutional rights without interfering unduly with the State's primary responsibility in this area." Trimble v. Gordon, 430 U.S. at 771, 97 S.Ct. at 1465. Consequently we must weigh and balance the competing interests involved. The vindication of the illegitimate child's constitutional right to inherit from his natural parents in the same manner as his legitimate siblings must be weighed against inequities which might result from affording them an ownership interest, and against the state's interest in maintaining the stability of land titles.
In Lovell v. Lovell, supra, this Court, relying on Chevron Oil Company v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), noted the factors which should be considered in determining whether a decision should be made nonretroactive. We stated:
(1) 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; (2) the merits and demerits must be weighed in each case by looking to the prior history of the rule in question, *595 its purpose and effect and whether retrospective application will further or retard its operation; and (3) the inequity imposed by retroactive application must be weighed.
We will consider these three factors in light of the Louisiana constitutional provision upon which we relied in Succession of Brown to find that La.C.C. art. 919 was unconstitutional.
Article I, Section 3 of the Louisiana Constitution, adopted by the people of Louisiana in 1974 and effective January 1, 1975 provides in pertinent part:
No law shall arbitrarily, capriciously, or unreasonably discriminate against a person because of birth ....
As noted in Brown, in the constitutional debates over this provision, both proponents and opponents noted that it included within its scope unreasonable discrimination against a person because of illegitimacy.[4]Succession of Thompson, 367 So.2d 796 (La. 1979); Succession of Robins, 349 So.2d 276 (La.1977). We have previously spoken on the meaning of this constitutional provision. After reviewing the proceedings of the convention, we determined that "the entire range of discriminatory practices based on illegitimacy was encompassed by the section." Succession of Thompson, supra.
Accordingly, in considering, under the Lovell-Chevron factors, whether the decision in Succession of Brown was one of first impression whose resolution was not clearly foreshadowed, we conclude that at a minimum it was clearly foreshadowed. Article I, Section 3 of the 1974 Constitution specifically prohibits arbitrary discrimination against a person because of birth. In our constitution, we intentionally went further in our expressions of equality for all persons, than is provided in the United States Constitution or in the 1921 Louisiana Constitution. To say now that the decision in Brown was not foreshadowed by the 1974 Louisiana Constitutional provision is to ignore its existence.
Furthermore, we have previously utilized this very provision to find unconstitutional other statutes which unreasonably discriminated against illegitimates. Succession of Thompson, supra; Succession of Robins, supra.[5] The provision, thus, has not been ignored. Rather, it has been consistently applied by this Court as intended, clearly foreshadowing the result reached in Brown.
As relates to the second prong of the Lovell-Chevron test, whether a holding of retroactive application will further or retard the purpose and effect of the rule fashioned in the judicial decision, we conclude that the retroactive application of Brown will surely further its holding, and a prospective application would just as surely retard it. As stated above, Brown held that La.C.C. art. 919 was unconstitutional under La. Const. art. I, § 3. To apply that holding only prospectively from the date of its rendition, September 3, 1980, is to ignore the constitutional proscription effective in the state since January 1, 1975.
The 1974 Constitution is a recent expression of the will of the people, and its operation and effect is only served by recognizing its provisions and enforcing them.
The holding in Brown, insofar as it relied on Article I, section 3 of the 1974 Constitution, was an acknowledgement of the rights *596 of illegitimates and an expression by the Court that arbitrary discrimination, as is implicit in La.C.C. art. 919, is constitutionally prohibited. Therefore, the purpose and effect of that holding can only be furthered by a retroactive application of the decision to the effective date of the constitution.
As pointed out in dissent by Judge Schott to the Court of Appeal opinion in this case (406 So.2d 790), we are not here confronted with the same considerations as were presented to the United States Supreme Court in Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), wherein the Court was faced with the question of whether Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961), was to be applied retroactively. In Mapp, the Court had held that the exclusionary rule would be applicable to the states.[6] The primary purpose of the exclusionary rule was to deter lawless action. That purpose would clearly not be furthered by retroactive application to an act that had already taken place, nor would the purpose be retarded by only prospective application. Thus the Court in Linkletter chose to apply Mapp only prospectively. However, in the present case, the purpose of our ruling in Brown is to vindicate and recognize the constitutional rights of illegitimates. Thus, unlike Linkletter, that purpose is both furthered by a retroactive application and retarded by simply a prospective application.
Finally, we consider the third prong of the Lovell-Chevron test, the weighing of inequities which will result from a retroactive application. Primarily we are here concerned with the overall stability of land titles, as well as co-heirs who have relied on their ownership of property, perhaps to their detriment, and third parties who have bought property ignorant of the existence of illegitimates in successions forming part of the chain of title.
First, it must be pointed out that, because of prompt action by our Legislature in this area, instances in which land titles are likely to be adversely affected have been minimized. In fact, as will be discussed below, any actions by unacknowledged illegitimates to prove their filiation or any claims against third parties, made viable by a retroactive application of Succession of Brown, must have already been filed, or are now prescribed.
Cognizant of the Court of Appeal decision in Succession of Brown, holding that La. C.C. art. 919 was unconstitutional, and anticipating our affirming that decision, the Legislature passed Act No. 549 of 1980, amending Civil Code articles 208 and 209 on proof of filiation of unacknowledged illegitimates.
These articles were again amended by Act No. 720, of 1981 and La.C.C. art. 209 now provides in pertinent part as follows:
The proceedings required by this Article [proof of filiation] must be brought within one year of the death of the alleged parent or within nineteen years of the child's birth, whichever first occurs. This time limitation shall run against all persons, including minors and interdicts. If the proceeding is not timely instituted, the child may not thereafter establish his filiation.
* * * * * *
Section 2. Any person against whom the time period provided in this Act would otherwise have accrued except for the provisions of this Section shall have one year from its effective date to bring a proceeding to establish filiation of a child. If no such proceeding is timely instituted, such filiation may not thereafter be established.
The effective date of the provision was September 11, 1981. Thus unacknowledged illegitimate children who were otherwise prohibited from bringing an action to prove filiation by this statute, were given until September 11, 1982 to file such an action. If such a lawsuit has not been filed prior to *597 that date, "filiation may not thereafter be established." Therefore, the feared onslaught of endless claims that would be made if Succession of Brown is applied retroactively will not occur. For an unacknowledged illegitimate to gain the advantage of a retroactive application of Brown, he must have at least filed a lawsuit asserting his filiation on or prior to September 11, 1982. It is unlikely there exists a multitude of such pending lawsuits in our state court system. And in any event, all such live efforts to prove filiation are determinable.
As has been properly pointed out, the filiation amendments to articles 208 and 209 apply only to unacknowledged illegitimates. Acknowledged illegitimates are under no similar compulsion to sue within a time frame to establish filiation.
However, the Legislature also passed Act No. 721 of 1981, amending La.R.S. 9:5630, reducing from ten to two years the time within which a judgment of possession may be challenged once property passes into the hands of a "third person." La.R.S. 9:5630 provides:
A. An action by a person who is a successor of a deceased person, and who has not been recognized as such in the judgment of possession rendered by a court of competent jurisdiction, to assert an interest in an immovable formerly owned by the deceased, against a third person who has acquired an interest in the immovable by onerous title from a person recognized as an heir or legatee of the deceased in the judgment of possession, or his successors, is prescribed in two years from the date of the finality of the judgment of possession.
B. This Section established a liberative prescription, and shall be applied both retrospectively and prospectively; however, any person whose rights would be adversely affected by the passage of this Section, shall have one year from the effective date of this Section within which to assert the action described in Subsection A of this Section and if no such action is instituted within that time, such claims shall be forever barred.
C. "Third person" means a person other than one recognized as an heir or legatee of the deceased in the judgment of possession. (Emphasis provided)
The effective date of this provision was also September 11, 1981. Therefore, all third parties who have purchased property in reliance on prior judgments of possession and who would otherwise be adversely affected by a retroactive application of Succession of Brown are protected if no suit was filed before September 11, 1982.
In light of these two provisions, La.C.C. art. 209 and La.R.S. 9:5630, the argument that retroactive application of Succession of Brown will seriously disrupt land titles for a prolonged period of time has no merit. Any actions by unacknowledged illegitimates to establish their filiation or any claims against third parties, made viable by a retroactive application of Brown, must already have been filed, or they have prescribed. Additionally, if Brown is given only a limited retroactive application to January 1, 1975, the effective date of the 1974 Louisiana Constitution, the effects of the decision on co-heirs and third parties will be further minimized. Thus the combined effect of a limited retroactive application and the above statutory provisions, is to make it the rare case in which land titles will be upset.[7]
*598 Therefore, in weighing the possible inequities of retroactive application against the need to recognize and vindicate the illegitimate's constitutional rights, it appears that a limited retroactive application of Succession of Brown to the effective date of the new constitution, January 1, 1975, best strikes the balance between these competing interests.
It has been argued that the Legislature might grant illegitimates another grace period, as they did in the second amendment to La.C.C. art. 209 (Act No. 720 of 1981)[8] and thus the claims which might be asserted by illegitimates could in fact be endless. We find no merit in that argument.
The Legislature granted a second grace period in Act No. 720 of 1981 because of the inadequacies present in the grace period provision of Act No. 549 which, perhaps, threatened the constitutionality of the entire statute. The amendment was not motivated simply by legislative whim and we find nothing to support the argument that another grace period will be enacted. Furthermore, a strong argument can be made that such a provision, granting another grace period for illegitimates to bring a filiation suit, would be invalid. See, Spaht, Establishing the Filiation of Illegitimate Children, 42 La.L.Rev. 403 (1982).
As stated earlier, we were prompted to grant the rehearing by arguments relating to certain aspects of our original opinion.
In our original opinion, we drew a distinction between testate and intestate successions. It was argued on rehearing that such a distinction does not fully rectify the unconstitutional discrimination against illegitimates that has existed. There is, of course, merit in this argument.
Because of the unique nature of Louisiana succession law, which constitutionally requires forced heirship (La.Const. art. XII, § 5), a testator is not free to bequeath all his property to whomever he pleases if he leaves descendants. Descendants have a constitutional, as well as a statutory, right to a forced portion. To deny an illegitimate descendant a forced portion in a testate succession, while affording a legitimate descendant such a right, is as constitutionally impermissible as denying an illegitimate child his right in an intestate succession. There is no basis for making such a distinction and such a holding fosters rather than remedies discrimination against illegitimates.
Again, as stated above, because of La. C.C. art. 209 and La.R.S. 9:5630, the treatment of testate successions in the same manner as intestate successions will not foster a significant amount of litigation. And *599 in any event, an illegitimate descendant who does bring such a claim (in a testate succession) has only an action for a forced portion.
It has also been argued on rehearing that our original determination that Brown should be applied retroactively without limit in intestate successions will seriously prejudice persons who were placed in possession of property many years ago and have relied on their ownership interests in the property to their detriment. Further, it has been argued that such a far reaching retroactive application is not constitutionally required and may very well be constitutionally prohibited. Finding merit in this argument, we likewise renounce that holding.
As pointed out in Justice Dennis' dissent to our original opinion, the constitutionality of La.C.C. art. 919 was expressly upheld by the United States Supreme Court in 1971 in Labine v. Vincent, 401 U.S. 532, 91 S.Ct. 1017, 28 L.Ed.2d 288 (1971). Thus, clearly, prior to the date of that opinion, as well as for a time thereafter, the contrary holding of Succession of Brown was not foreshadowed.[9] Thus the first prong of the Lovell-Chevron test is not met insofar as a retroactive application of Brown prior to 1971 is concerned.
The second and third prongs of the Lovell-Chevron test essentially require a weighing of the purpose and effect of the decision and its furtherance or retardation by retrospective application, against the inequities which may be imposed by retroactive application. Applying Brown only prospectively seriously retards rather than furthers the purpose of the decision, which is to vindicate the constitutional rights of illegitimates, although it fully avoids inequities to those who may be affected by a retroactive application. Conversely, applying Brown retroactively without limit fully vindicates the constitutional rights of the illegitimates, but it gives full sway to potential inequities as concern parties who may have inherited or otherwise acquired property prior to Brown. We thus find that the balance between the vindication and recognition of illegitimates' constitutional rights, on the one hand, and the state's interest in the stability of land titles and preventing prejudice or inequities to gratuitous and onerous acquirers of property, on the other hand, is better struck by a limited retroactive application of the Brown decision to January 1, 1975, the effective date of the new constitution, and no further.
Additionally, as relates to applying Brown retroactively without limit, there is a serious constitutional argument that property rights acquired through inheritance (or otherwise) prior to the opinion in Labine v. Vincent, which specifically upheld the constitutionality of La.C.C. art. 919, vested with the rendition of that opinion in 1971, and that the divesting of those rights is unconstitutional.
A third argument on rehearing which concerned this Court was the potential effect of our original opinion in carving out an exception for "third parties." It was not clear from our original opinion whether only those who acquired by onerous title were included in that appellation or whether some who took by gratuitous title might also be included. It has also been pointed out that the original opinion did not address the problem of whether the illegitimate, who did not have an action against a "third party", would nevertheless have an action against the heir who sold the property, for all or a portion of the proceeds from the sale. These concerns are well taken. Such an exception carved out for "third parties" is likely to foster litigation over the problems noted above and extend rather than settle the disrupting effect on land titles.
*600 Thus, in our judgment, the above discussed concerns regarding our original opinion outweigh other arguments which support an unlimited retroactive application of the Brown decision with exceptions for testate successions and "third parties."
Therefore, after considering all the factors in determining whether Succession of Brown should not be applied retroactively, we find that the balance between all such factors is best struck by a limited retroactive application of the decision to the effective date of the 1974 Louisiana Constitution, January 1, 1975. Although there will be no exception for either third parties or testate successions in our holding, we nonetheless believe that with the statutory limitations imposed by La.C.C. art. 209 and La.R.S. 9:5630 any disruption in land titles which might result will be minor in scope. Thus, on balance and guided by the Lovell-Chevron principles (foreshadowing, resulting retardation of the operation of the rule, inequities, etc.), a limited retroactive application of Succession of Brown to January 1, 1975 is, we determine, the preferable determination.
Were we in this case not to decide the retroactivity issue as we have, there would nevertheless be no plausible support for not applying Succession of Brown retroactively to the date of the rendition of the United States Supreme Court decision in Trimble v. Gordon, supra.
That decision even more than foreshadowed the result in Succession of Brown. It dictated the Brown holding. Trimble did not specifically declare La.C.C. art. 919 unconstitutional, but only because it dealt with an Illinois statute instead of our own. (The two statutes are very similar and only differ in that the Illinois statute designates the specific persons who are entitled to inherit whereas our statute dictates an order of succession. Nevertheless, both discriminate against illegitimate children.) And while Trimble did not expressly overrule Labine v. Vincent, supra (which upheld the constitutionality of La.C.C. art. 919 against an equal protection attack), it effectively did so by overruling the Labine standard of scrutiny and replacing it with a more stringent one.[10]See, Comment, Can Louisiana's Succession Laws Survive in Light of the Supreme Court's Recent Recognition of Illegitimates' Rights, 39 La.L. Rev. 1132 (1979).
Furthermore, no other state of which we are aware, has applied Trimble v. Gordon, in a succession case, from a point later than Trimble's rendition date. Ford v. King, 268 Ark. 128, 594 S.W.2d 227 (1980); Stewart v. Smith, 269 Ark. 363, 601 S.W. 837 (1980); Frakes v. Hunt, 266 Ark. 171, 583 S.W.2d 497 (1979); In Re Rudder's Estate, 78 Ill. App.3d 517, 34 Ill.Dec. 100, 397 N.E.2d 556 (1979); Pendleton v. Pendleton, 560 S.W.2d 538 (Ky.1977); Murray v. Murray, 564 S.W.2d 5 (Ky.1978); Matter of Sharp's Estate, 151 N.J.Super. 579, 377 A.2d 730 (1977); Allen v. Harvey, 568 S.W.2d 829 (Tenn.1978); Winn v. Lackey, 618 S.W.2d 910 (Tex.Civ.App.1981). Therefore, even were we not to find the date of the 1974 Louisiana Constitution controlling, a retroactive application of Brown back to the date Trimble v. Gordon was rendered, would be necessary.
For all the above reasons, we conclude that Succession of Brown's declaration of unconstitutionality of La.C.C. art. 919 is retroactive to January 1, 1975, the effective date of the 1974 Louisiana Constitution.
That being the case, the petition of Dorothy Clivens Vantress, whose father died on September 24, 1971 and as to whom our holding of limited retroactive application of Succession of Brown does not apply, states no cause of action. The rulings of *601 the district court and the Court of Appeal sustaining the exception of no cause of action will therefore be affirmed.
Decree
For the foregoing reasons, our original decree is vacated. We affirm the judgments of the Court of Appeal and the trial court sustaining the exception of no cause of action to Dorothy Clivens Vantress' claim.
ORIGINAL DECREE VACATED; JUDGMENTS OF THE DISTRICT COURT AND THE COURT OF APPEAL AFFIRMED.
DIXON, C.J., dissents.
MARCUS, J., concurs and assigns reasons.
WATSON, J., dissents and will assign reasons.
LEMMON, J., dissents, believing that Succession of Brown should be applied retroactively without any limitation applicable in this case.
MARCUS, Justice (concurring).
I consider that Succession of Brown should only be applied prospectively from September 3, 1980, the date the decision was rendered. Hence, plaintiff's claim in the instant case would be barred. Accordingly, I concur in the result reached in this case.
WATSON, Justice, dissenting.
The original opinion represents the fairest and most equitable resolution of the problems created by Succession of Brown, 388 So.2d 1151 (La.1980).
The majority errs in stating that the original resolution of the retroactivity question in Clivens creates problems which are contrary to the state's interest in quieting or minimizing disruptive land title disputes. Brown, a decision in which the writer dissented, created whatever problems there are. However, after Brown was decided, its only logical extension was to make it retroactive but not effective as to third parties. If there really are formidable problems, the proper remedy is not retroactivity to the effective date of the Louisiana Constitution of 1974, but prospective application from the effective date of the decision in Brown. The majority on rehearing ignores problems in land titles for the period from 1975 to Brown.
The majority overlooks the fact that applying different rules to belated claims of heirship depending on whether the claimants are legitimate or illegitimate constitutes a clear present discrimination against illegitimates contrary to the holding of the United States Supreme Court in Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977).
While Art. 1, § 3 of the Louisiana Constitution provides that "[n]o law shall arbitrarily, capriciously or unreasonably discriminate against a person because of birth...", it is clear from the transcripts of the convention, quoted in part in footnote 8 of the original opinion, that the constitutional delegates did not intend to grant illegitimates any rights greater than those accorded by the federal jurisprudence at the time.
If an arbitrary line is to be drawn for the retroactive application of Brown, the decision date in Trimble is more appropriate than that of the 1974 Louisiana Constitution. Without the decision in Trimble, Succession of Brown would have been decided otherwise, despite the language of the 1974 Constitution.
I respectfully dissent for these reasons and adhere to the views expressed in the original opinion.
DENNIS, Justice, assigning additional reasons for denying a rehearing.
In our opinion on rehearing, we held that Article I, Section 3 of the Louisiana Constitution of 1974 foreshadowed the United States Supreme Court decision in Trimble v. Gordon, 430 U.S. 762, 97 S.Ct. 1459, 52 L.Ed.2d 31 (1977). We held that our constitution intentionally went further in our expression of equality for all persons than is explicitly provided in the United States *602 Constitution or in the 1921 Louisiana Constitution.
In so doing, we have partially vindicated the rights of Louisiana Citizens who adopted a constitution in 1974 which was drafted and ratified with the intention of guaranteeing to Louisianians a heightened degree of liberty and protection in certain categories of rights than those recognized under the United States Constitution.
Under our analysis, it is only logical that the effective date of the 1974 Constitution would serve as the date from which application of Succession of Brown, 388 So.2d 1151 (La.1980) would begin, since on that date Article 919 of our Civil Code was automatically repealed, La. Const. Art. 14, §§ 18(B), 35, whereas it had previously been operative and constitutional. Labine v. Vincent, 401 U.S. 532, 91 S.Ct. 1017, 28 L.Ed.2d 288 (1971).
NOTES
[1] 388 So.2d 1151 (La., 1980). This author dissented.
[2] Since Brown was retroactive as to the litigants, the question is not one of pure prospectivity.
[3] This article has been repealed by Act 1981, No. 919, § 8.
[4] Some states have denied retroactive effect to Trimble. An Arkansas court in Frakes v. Hunt, 266 Ark. 171, 583 S.W.2d 497 (1979) cert. denied 444 U.S. 942, 100 S.Ct. 297, 62 L.Ed.2d 309, refused to apply Trimble v. Gordon retroactively "to prevent chaotic conditions arising from the lack of title to real property", 583 S.W.2d at 499. Cited in Frakes is the Kentucky case of Pendleton v. Pendleton, 560 S.W.2d 538 (1968) which refused to apply Trimble prior to its effective date of April 26, 1977, "except for those specific instances in which the dispositive constitutional issue raised in this case was then in the process of litigation". Also cited is the Tennessee case of Allen v. Harvey, 568 S.W.2d 829 (Tenn., 1978) which allowed illegitimates to inherit only prospectively except for "any cases pending in the courts of Tennessee on the date this opinion is released." Illinois and Texas hold that Trimble does not require retroactive application. In Re Estate of Rudder, 397 N.E.2d 556, 78 Ill.App.3d 517, 34 Ill. Dec. 100 (1979); Winn v. Lackey, 618 S.W.2d 910 (Tex.Civ.App.1981).
[5] "In France ... the retroactivite des nouvelles jurisprudences has been considered as une infirmite du systeme jurisprudentiel." 8 Israel Law Review 173.
[6] "[T]he legislature anticipated that Succession of Brown might be retroactive." 41 La.L.Rev. 387.
[7] Kirchberg v. Feenstra, 609 F.2d 727 (5th Cir. 1979); affirmed 450 U.S. 455, 101 S.Ct. 1195, 67 L.Ed.2d 428 (1981) held that LSA-C.C. art. 2404 violated the constitutional guarantee of equal protection. The decision was applied prospectively, save for the litigants, because retroactivity "would create a substantial hardship with respect to property rights and obligations." 609 F.2d 735.
[8] The transcripts of the 1973 Louisiana Constitutional Convention for August 29, reflect that delegate Roy was asked about discrimination on the basis of birth and answered:
"We mention birth because in the past the state has discriminated against legitimate and illegitimate children with respect to aid to dependent children. We felt that we wanted that clearly understood, that in certain categories, whether you're legitimate or illegitimate should not allow state discriminatory practices against you." (Pages 62-63)
Delegate Pugh later noted that:
"I suggest to you that the language relating to birth, to race, to age, to sex, to social origin, to physical condition, to political, religious ideas, has each and everyone been already considered and found to be viable under the Fourteenth Amendment to the Constitution of the United States." (Pages 97-98)
[9] LSA-C.C. art. 203 provides:
"The acknowledgement of an illegitimate child shall be made by a declaration executed before a notary public, in the presence of two witnesses, by the father and mother or either of them, or it may be made in the registering of the birth or baptism of such child."
[10] Act 549 of 1980 provides:
"To amend and reenact Articles 208 and 209 of the Louisiana Civil Code and to repeal Articles 210 and 212 of the Louisiana Civil Code to provide for proof of filation by illegitimate children, or presumption of filation on their behalf; to provide a procedure and time limitations for proceedings to establish filiation; to provide for the method and standard of proof in such actions; to provide that failure to institute timely such a proceeding shall bar the claims of such persons in the successions of their alleged parents; and to provide otherwise with respect thereto.
"Be it enacted by the Legislature of Louisiana:
"Section 1. Articles 208 and 209 of the Louisiana Civil Code are hereby amended and reenacted to read as follows:
"Art. 208. Authorization to prove filiation. Illegitimate children, who have not been acknowledged as provided in Article 203, may be allowed to prove their filiation.
"Art. 209. Methods of proving filiation. 1. An illegitimate child may be entitled to a rebuttable presumption of filiation under the provisions of this Article. Or any child may establish filiation, regardless of the circumstances of conception, by a civil proceeding instituted by the child or on his behalf in the parish of his birth, or other proper venue as provided by law, within the time limitation prescribed in this Article.
"2. A child who is shown to be the child of a woman on an original certificate of birth is presumed to be the child of that woman, though the contrary may be shown by a preponderance of the evidence.
"3. An illegitimate child not shown as the child of a woman on an original certificate of birth may prove filiation by any means which establish, by a preponderance of the evidence, including acknowledgment in a testament, that he is the illegitimate child of that woman.
"4. A child of a man may prove filiation by any means which establish, by a preponderance of the evidence, including acknowledgement in a testament, that he is the child of that man. Evidence that the mother and alleged father were known as living in a state of concubinage and resided as such at the time when the child was conceived creates a rebuttable presumption of filiation between the child and the alleged father.
"5. Proof of filiation must be made by evidence of events, conduct, or other information which occurred during the lifetime of the alleged parent. A civil proceeding to establish filiation must be brought within six months after the death of the alleged parent, or within nineteen years of the illegitimate child's birth, whichever occurs first. If an illegitimate child is born posthumously, a civil proceeding to establish filiation must be instituted within six months of its birth, unless there is a presumption of filiation as set forth in Section 2 above. If no proceeding is timely instituted, the claim of an illegitimate child or on its behalf to rights in the succession of the alleged parent shall be forever barred. The time limitation provided in this Article shall run against all persons, including minors and interdicts.
"Section 2. Articles 210 and 212 of the Louisiana Civil Code are hereby repealed.
"Section 3. This Act shall become effective upon signature by the governor or, if not signed by the governor, upon expiration of the time for bills to become law without signature by the governor, as provided by Article III, Section 18 of the Louisiana Constitution of 1974.
"Section 4. Any illegitimate child nineteen years of age or older shall have one year from the effective date of this Act to bring a civil proceeding to establish filiation under the provisions of this Act and if no such proceeding is instituted within such time, the claim of such an illegitimate child shall be forever barred."
[11] It is alleged that certain real property has been mortgaged. If so, the mortgage holder is fully protected under this decision.
[1] State of Louisiana, Constitutional Convention of 1973, Verbatim Transcripts (39 Volumes; 1973-1974) at 12 Proceedings (38th day, August 29) 57, 62, 63, 76, 90.
[1] The action brought by Dorothy Clivens Vantress was, more precisely, an intervention in Viola Clivens' succession proceedings, but the exact procedural posture of the case is not pertinent to our consideration of the legal issue.
[2] La.C.C. art. 919, before its repeal in 1981, provided:
Natural children are called to the inheritance of their natural father, who has duly acknowledged them, when he has left no descendants nor ascendants, nor collateral relations, nor surviving wife, and to the exclusion only of the State.
In all other cases, they can only bring an action against their natural father or his heirs for alimony, the amount of which shall be determined, as directed in the title: Of Father and Child
[3] The holding in Brown was however made applicable to the litigants in that case.
[4] State of Louisiana, Constitutional Convention of 1973, Verbatim Transcripts (39 Volumes; 1973-1974) at 12 Proceedings (38th day, August 29) 57, 62, 63, 76, 90.
[5] Neither Succession of Thompson nor Succession of Robins dealt with the same codal article that we dealt with in Succession of Brown, but they did both deal with discrimination against illegitimates.
In Succession of Thompson, we held that La.C.C. art. 1483, which prohibited an acknowledged illegitimate child from being a legatee of his mother if she had other legitimate children, was unconstitutional under La. Const. art. I, § 3.
In Succession of Robins, La.C.C. art. 1488 was held constitutionally infirm under La. Const. art. I, § 3, because it prohibited a natural parent from bequeathing any substantial part of his estate to a child (more than what was necessary for sustenance or to procure an occupation or profession) if the child's conception resulted from the parent's adultery.
[6] The exclusionary rule is essentially a rule that provides for the exclusion from a criminal prosecution of evidence obtained in violation of the Constitution. It was deemed the only effective means of preventing actions by law enforcement personnel which violated one's constitutional rights.
[7] Another fact worth noting, although not dispositive, is that knowledgeable attorneys handling successions have been alert to the possible rights of non-legitimates, and have, accordingly, required that affidavits of death and heirship in successions exclude the existence of non-legitimate children. Chiefly, they were alerted by the 1959 decision of this Court in Henry v. Jean, 238 La. 314, 115 So.2d 363 (1959). That case dealt with a 1944 amendment to La.C.C. art. 198, which provided an additional method of legitimating children, and its effect on a child's status as related to heirship. The amendment provided that a child could be legitimated by the subsequent marriage of his parents whenever the child had been either formally or informally acknowledged by them. Prior to the amendment a child could only be legitimated if formally acknowledged either before the subsequent marriage of his parents or in the marriage contract itself. The facts in the case involved a situation where the parents had married in 1900. The father had died in 1939 and the mother died after the 1944 amendment, in 1949. The illegitimate child was successful in arguing that he was legitimated by the 1944 amendment to La.C.C. art. 198, notwithstanding that his father had died prior to the amendment, and was entitled to share in his mother's succession as a legitimated child.
[8] La.C.C. art. 209 was originally amended in 1980 by Act No. 549. The main provisions of the act were essentially the same as those of Act No. 720, with the exception that the illegitimate was given only six months after the death of the alleged parent to bring his filiation action instead of one year as provided in Act No. 720. However the grace period provided in Act No. 549 was substantially different from the one provided in Act No. 720 and provided:
Any illegitimate child nineteen years of age or older shall have one year from the effective date of this Act to bring a civil proceeding to establish filiation under the provisions of this Act and if no such proceeding is instituted within such time, the claim of such an illegitimate shall be forever barred.
As is apparent, the meaning of the provision is not clear. It has been argued that the provision only extends a grace period to those over nineteen whose alleged parent is still living. On the other hand, from a literal reading of the provision, it also extends the one year grace period to illegitimates over nineteen regardless of when their alleged parent died. Obviously, there is no rational reason for allowing an illegitimate over nineteen whose alleged parent died ten years ago, one year to bring an action, and to deny the one year period to an illegitimate who is under nineteen and whose alleged parent may have died only one year ago.
Therefore, because of the ambiguities in the provision, the Legislature granted another one year grace period in Act No. 720 of 1981, granting the grace period to all illegitimates adversely affected by the Act.
[9] While it has been argued that Labine v. Vincent, supra, was incorrect, it was nonetheless a decision of the United States Supreme Court, interpreting the United States Constitution's equal protection clause. Labine v. Vincent had the force of law. It should be noted also that even when the Court rendered what has been viewed as a contrary decision in Trimble v. Gordon, supra, it expressly did not overrule Labine v. Vincent. Thus, although perhaps an erroneous decision, Labine v. Vincent was a binding one.
[10] Applying Succession of Brown retroactively at least to April 26, 1977, the date of the rendition of Trimble v. Gordon, surely would come as no surprise to anyone. In the October 1977 issue of The Louisiana Estate Planner, Professor Gerald LeVan, while noting that Succession of Robins and the 1974 Louisiana Constitutional provision may well "point the way" for the Louisiana Supreme Court's setting the effective date for the application of Trimble v. Gordon, observed that the effective date for applying Trimble "could be no earlier than April 26, 1977, the date Trimble was decided." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326629/ | Kinder, C. Jeffrey, J.
INTRODUCTION
Plaintiff Regional Home Care, Inc., doing business as North Atlantic Medical Services, Inc. (“NAM”), brought this action alleging breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment and unfair and deceptive business practice in violation of G.L. Chapter 93A. Specifically, NAM alleges that IKON failed to deliver the Patient File Archiving System that NAM paid for and that IKON breached or threatened to breach other contracts with NAM in an effort to gain leverage in the dispute. IKON claims that it has fully performed the contract and counterclaims that NAM is in breach for failing to make full payment. Further, IKON claims that NAM violated Chapter 93A by using non-payment as leverage to obtain additional services. A 3-day jury-waived trial concluded on September 9, 2011. For the reasons that follow, judgment will enter for NAM on its claims of breach of contract and unfair and deceptive business practice. As to IKON’s counterclaims, judgment will enter for NAM.
FINDINGS OF FACT
Based upon the relevant, credible evidence admitted at trial and the reasonable inferences drawn therefrom, I find the following facts. Additional facts are reserved as necessary for the rulings of law.
1. The Parties
NAM is in the business of providing sleep apnea, oxygen, and respiratory supplies. It has been in business for 30 years, has 150 employees, and serves the greater New England area.
IKON is an international provider of document management systems and services.
NAM and IKON had a business relationship prior to the contracts at issue in this lawsuit. Since 2003, NAM worked with IKON to lease office equipment, and entered into maintenance agreements with IKON to have that equipment serviced. IKON had previously developed and implemented a so-called “File Magic System” to sort and file various insurance benefit explanations and information. Prior to the disputes at issue in this lawsuit, the relationship between NAM and IKON was satisfactoiy.
2. The Patient File Archiving Project
In April 2007, NAM contacted IKON to solicit its help in developing a solution for archiving patient files. NAM expressed an interest in scanning the files into an electronic system to create more storage space and make filing more efficient. To pursue these goals NAM contacted IKON employee Walter Alves (“Alves”).
In preparation for a meeting with Alves, Cabot Car-abott (“Carabott”), NAM’s President, created a flowchart depicting the forms contained within sleep apnea patient files and showing the workflow, from receiving an order for supplies through conclusion (the “Flowchart”). In the sleep apnea program, three of the documents in each patient’s file are physician-generated; the balance of several documents are internal NAM forms.
Following the late April 2007 meeting with NAM, Alves reviewed the Flowchart and asked to spend a day on-site reviewing NAM’s goals and needs. Following that site visit, on May 2, 2007, NAM and IKON entered into an agreement for IKON to develop proposed solutions. IKON representatives visited NAM’s office and conducted an evaluation. They met with NAM employees and learned NAM’s objectives in implementing a Patient File Archiving System (the “System”).
Matthew Kollmorgen (“Kollmorgen”) of IKON prepared and made a power-point presentation to NAM in August 2007 outlining IKON’s design for the System. While there is a dispute on this point, I conclude that this power-point document was the so-called “Design Document” for the System. Kollmorgen reviewed the Design Document with NAM’s employees *145on a page by page basis. It was prepared entirely by IKON and was never modified.
The power point presentation provided that separator sheets would be utilized only for the physician-generated forms that are part of each patient’s file, and that IKON would “have control over the layout of the [non-physician-generated] form[s] and can make changes to enable better scanning.” Trial Ex. Nos. 5-5A. The Design Document further states that the non-physician-generated forms “will be redesigned to have bar codes printed on them.” Trial Ex. Nos. 5-5A.
Illustrations in the Design Document show bar codes placed directly on NAM’s forms. Separator sheets would be used only for documents over which NAM had no control, i.e., referrals, prescriptions, and patient demographics. When Kollmorgen reviewed the Design Document with NAM, he told NAM representatives that the documents over which NAM had control would have bar codes on them.
3. The Statement of Work Dispute
IKON prepared a contract known as the Statement of Work (the “SOWj. The SOW incorporated and relied upon the Design Document. It provided, inter alia, that IKON would:
install, configure, and test the solution as defined in the Design Document;
configure all... components according to the specifications in the Design Document;
install, configure, and test all components according to the specifications in the Design Document; and
demonstrate compliance with requirements from the Design Document.
Trial Ex. No. 6. Any changes to the SOW required “a change order executed by both parties.”
The SOW was to include two (2) appendices, the second of which was a “Workflow Design.” There is no Workflow Design appended to the SOW. Other than the Design Document, NAM never saw any document which could be characterized as the Workflow Design. Although the use of bar codes and separator sheets was not set forth in the SOW, that information was contained in the Design Document. The costs associated with the System, as set forth in the Design Document and the SOW, are identical.
In December 2007, IKON representative Brian Kelley (“Kelley”) contacted Kyle Pelletier (“Pelletier”) of NAM to arrange a demonstration of the System, as it then existed. Kelley told Pelletier that the bar coding had not been completed, but they could demonstrate the System using separator sheets for all documents, so NAM could get a sense of how the System was going to work. Following the demonstration on December 18, 2007, Kelley asked Pelletier, as a favor, to sign a Solutions Delivery and Acceptance Form (“SDA”) regarding the SOW. He told Pelletier that if he did not get the SDA signed, he could not get paid, and promised that the bar coding would be placed on NAM’s documents as required by the SOW. Pelletier signed the SDA as a favor to Kelley, relying on his promise.
In January 2008, Carabott inspected the System and observed that it did not comply with the Design Document, as IKON still had not bar coded NAMs internally-generated forms. Instead, the System still required the use of separator sheets for all forms. Carabott brought his concern about this issue to Kelley’s attention.
In March 2008, Don Roche (“Roche”) of IKON contacted Carabott to request a meeting. Roche asked Car-abott to sign a document regarding the System. Carabott stated at the meeting that he had not received the System that NAM had contracted for, citing the fact that bar codes had not been applied to the NAM-controlled forms. Car-abott asked Roche why he should sign off on a document relating to the System when the System did not work. Roche indicated he was getting pressure from his superiors, and asked Carabott to do him a favor by signing the form, promising to get the bar coding done if Carabott would just sign off on the form. IKON conceded that it promised NAM it would look into the bar coding issue following the March 31,2008 meeting. In fact, on April 8, 2008, Roche sent an email to Carabott and Pelletier stating that he had not forgotten about them and was “doing tests ... for barcodes to be incorporated into [NAMs] internal forms design.” Trial Ex. No. 9.
Roche had no further communications with NAM in April or May 2008. In June 2008, Carabott e-mailed Roche, inquiring as to the status of the System, but got no response. In July 2008, Carabott again e-mailed Roche regarding the problem, but received no response. On September 2, 2008, Carabott sent a fax to IKON Financial Services (“IFS”) to seek its help in obtaining completion of the System, and sent a copy of the fax to David Pennie at IKON. Roche responded the same day, apologizing for the delay. Carabott replied the next day, reminding Roche of the promise he made 6 months prior to deliver the System as contracted-for. Roche did not respond.
IKON never presented NAM with a Change Order to provide that separator sheets would be used instead of bar codes on the NAM-controlled forms. IKON has not completed the bar coding and NAM has discarded the System, considering it incomplete and inefficient. NAM has paid IKON $35,050.00 for the System.
5. The Change Order
On December 19, 2007, NAM signed a Change Order for the deliveiy and installation of ten additional FORTIS seats or licenses at NAM (the “Second Change Order”). These additional seats or licenses were necessary to add the workstations necessary for efficient use of the System. The Second Change Order indicated that the cost to NAM for the acquisition and installation of the ten FORTIS licenses was $11,574.00. In January 2008, pursuant to the Second Change Order, IKON acquired and installed at NAM the ten additional *146FORTIS licenses. On March 31, 2008, NAM signed a document acknowledging that IKON installed the ten additional FORTIS licenses and authorizing IKON to invoice NAM for the purchase and installation of those licenses. On March 31, 2008, IKON issued an invoice to NAM in the amount of $11,574.00 for the work performed pursuant to the Second Change Order (the “Second Change Order Invoice”). NAM never paid the Second Change Order Invoice because IKON did not redesign its forms to include bar codes and the System did not function as described in the Design Document.
6. The Maintenance Agreement
Separate and apart from the SOW and unrelated to the System, NAM and IKON had a contract for the maintenance and servicing of various office copiers (the “Maintenance Agreement”). In the Maintenance Agreement, IKON agreed to service four Ricoh and one Canon copier beginning May 11, 2008 and ending May 10, 2009. NAM leased the five copiers that IKON agreed to service from IKON Financial Services, Inc. (“IFS”), which is a subsidiary of General Electric. In exchange, NAM agreed to make monthly payments to IKON of $864.00 plus any applicable tax. The Maintenance Agreement stated that “Payment terms are net ten days.” Tr. Ex. 7.
The Maintenance Agreement contains the following provision: “Either party may terminate the ‘master’ arrangement contemplated by this Agreement at any time upon prior written notice to the other.” Tr. Ex. 7. IKON issued monthly invoices to NAM pursuant to the Maintenance Agreement beginning on May 11, 2008. In a September 2, 2008, letter NAM faxed to IKON, Carabott wrote: “Having paid $36,142.51 for software and project services and have [sic] not received the patient file archiving system, I will be applying the lease payments of $864 beginning September 1, 2008, until I recover the $36,142.51.” Tr. Ex. 23. In a September 3, 2008 e-mail to Roche, Carabott wrote: “Until IKON provides me with the Patient File Archiving System that I have paid for and that we discussed 6 months ago, all lease payments are on hold.” Tr. Ex. 11. I find that by “lease payments,” Carabott meant the $864 monthly payments that NAM was required to pay IKON pursuant to the Maintenance Agreement. I further find that by these letters Carabott communicated to IKON that until he recovered the amount he felt he was owed under the separate SOW, he would no longer make the $864 monthly payments required under the Maintenance Agreement.
7. The Credit Hold
In September 2008, Joseph Capitummino (“Capitummino”) was the Area Director of Finance for the New England Marketplace at IKON. As of September 2008, NAM was 100 days past due on the Second Change Order Invoice. In September 2008, IKON placed the NAM account on credit hold because NAM was 100 days past due on the Second Change Order Invoice. A “credit hold” is a temporary solution whereby IKON basically freezes an account. Capitummino made the decision to place NAM’s account on credit hold. At the time that he made the decision to place NAM’s account on credit hold, Capitummino was unaware that IKON and NAM were parties to the Maintenance Agreement. The credit Hold had the effect of freezing services under the Maintenance Agreement.
On September 11, 2008, IKON issued an invoice to' NAM for $907.20 pursuant to the Maintenance Agreement. Payment of the September 11, 2008 invoice was due on or before September 21, 2008. NAM did not pay the September 11, 2008 invoice on or before the due date of September 21, 2008. IKON did not issue any invoices to NAM pursuant to the Maintenance Agreement after September 11, 2008.
Rather than hiring another vendor to service the copiers that NAM leased from IFS, NAM leased entirely new copiers from another vendor. After NAM leased copiers from a vendor other than IFS, NAM stopped using the copiers that it leased from IFS and stopped making lease payments to IFS. Between September 29, 2008 and December 8, 2008, NAM sent four checks to IKON, each in the amount of $907.20. NAM received a return payment from IKON of $1,848.40. IKON applied to NAM’s outstanding balance two of the payments that it received from NAM dated between September 29, 2008 and December 8, 2008.
Because NAM secured replacement copiers, the lease agreement with IFS was not paid in full. NAM is claimed to owe approximately $34,000.00 under its lease agreement with IFS.
CONCLUSIONS OF LAW
1. NAM’s Claims
a. Breach of the SOW
NAM claims that it never got what it paid for under the SOW because IKON breached its contractual obligation to redesign NAM’s own forms to include bar codes. IKON concedes that there were discussions of redesigning NAM’s forms to include bar codes, but claims those discussions were not made part of the final contract and are therefore not binding. According to IKON, those discussions are inadmissible parole evidence and the contract’s integration clause precludes consideration of anything beyond the four comers of the final written agreement. I am not persuaded by IKON’S argument.
The parties agree that Pennsylvania law applies as set forth in the SOW. Under Pennsylvania law “the proper construction of a contract does not depend upon the name given it by the parties nor upon any one provision but upon the body of the contract in its entirely and its legal effect as a whole.” Pappas v. Lucas, 181 Pa.Super. 194, 198 (1956), citing Selig v. Phila. Title Ins. Co., 380 Pa. 264 (1955), and Smith-Farms Co. v. Hospital Assn. et al., 313 Pa. 254 (1933). In construing a contract the court will look to its purpose, giving effect to all of its terms. See Pappas v. UNUM Life Ins. Co. of America, 2004 Pa.Super. 310, 856 A.2d 183, 189 (2004); Pappas v. Lucas, 181 Pa.Super. at 198. Justice, common sense, and the probable intention of the parties are guides to the construction of a written *147contract. See Roth v. Roth, 413 Pa.Super. 88, 91 (1992); Lohmann v. Piczon, 338 Pa.Super. 485, 488 (1985).
In this case the SOW makes numerous references to a “Design Document.” IKON’s obligation under the SOW was to provide hardware, software and services consistent with the Design Document. I conclude from all the evidence that the Design Document referred to in the SOW was the Power Point presentation IKON used to explain to NAM exactly the services and products it intended to provide. Tr. Ex. 5. This construction is consistent with the contemporaneous and uncontroverted statements made during IKON’s presentation of the design of the System. I further condude that IKON intended to incorporate this document in the SOW by referencing it and attaching it as Appendix 2. Their failure to do so does not absolve them of contractual liability. Taken as a whole, the evidence is clear that IKON promised to redesign NAM’s internal documents to include bar codes on the documents. Their written illustrations and verbal explanations of the System communicated this intent directly to NAM. NAM was entitled to rely on these verbal and written promises, and they did, to their detriment.
In order to state a claim for breach of contract under Pennsylvania law, the plaintiff must demonstrate: (1) the existence of a contract to which the plaintiff and defendant are parties; (2) breach of a duty imposed by the contract; and (3) that the plaintiff suffered damages as a result of the breach. See Liss & Marion v. Recordex Acquisition, 603 Pa. 198, 221 (2009). The dispute here is not about the existence of a contract, but about its breach. I conclude that IKON breached the SOW by failing to redesign NAM’s forms to include bar codes and deliver the System in accordance with the SOW and the Design Document.
Under Pennsylvania law, the purpose of damages is to place the non-breaching party “as nearly as possible in the same position [it] would have occupied had there been no breach.” Lambert v. Durallium Products Corp., 72 A.2d 66, 67 (Pa. 1950). The measure of damages is compensation for the loss sustained. See id. I find, from all of the evidence, that the redesign of NAM’s own forms to include bar codes was an integral part of the System that NAM bargained for and, that without the redesign of NAM’s own documents, the System did not function as anticipated. Accordingly, Nam did not receive the functioning system it paid for and was never able to meet its goals of increased storage space and more efficient filing. Therefore, in my judgment, its damages are the $35,050 it paid to IKON for the System.
b.Breach of the Maintenance Agreement
NAM’s September 2 and September 3 communications to IKON in which Carabott clearly stated that he would not make payments under the Maintenance Agreement until the SOW dispute was resolved constituted an anticipatory breach of the Maintenance Agreement and thereby excused IKON’s further performance. The Maintenance Agreement contains a Georgia choice of law provision and the parties agree that Georgia law is controlling. Georgia recognizes the doctrine of anticipatory breach. “The rule is: An absolute refusal by one party to perform an executory contract containing mutual obligations, prior to the date or dates fixed for performance, if such repudiation goes to the whole contract, amounts to a tender of a breach of the contract; and if accepted as such by the opposite party to the contract, it constitutes an anticipatory breach . . .” Jinright v. Russel, 123 Ga.App. 706 (1971). Here, NAM committed an anticipatory breach of the Maintenance Agreement on September 2 and September 3 when it stated that it would no longer perform its primary obligation under the Maintenance Agreement, namely to make monthly payments to IKON. The breach of a material provision of a contract by one party excuses the other from performance. Accordingly, IKON was excused from performance under the Maintenance Agreement after September 2 or September 3 and cannot be liable for breaching the Maintenance Agreement after those dates.
c.Unjust Enrichment
Unjust enrichment is a claim for equitable relief available only in the absence of an adequate remedy at law. See Smith v. Jenkins, 626 F.Sup.2d 155, 170 (D.Mass. 2009) (identifying “the absence of a remedy provided by law” as an element of a claim for unjust enrichment). See also Zarum v. Brass Mill Materials Corp., 334 Mass. 81, 85 (1956) (“The law will not imply a contract where there is an existing express contract covering the same subject matter”). Because I have determined that IKON has breached its contract with NAM and money damages are available as a remedy at law, judgment will enter against NAM on its unjust enrichment claim. Santagate v. Tower, 64 Mass.App.Ct. 324, 329 (2005) (“An equitable remedy for unjust enrichment is not available to a party with an adequate remedy at law”).
d.Unfair and Deceptive Business Practice
Unfair and deceptive conduct is discerned from the circumstances of each particular case. See Kattar v. Demoulas, 433 Mass. 1, 14 (2000). A violation of G.L.c. 93A, §11 will be found if the acts complained of fall within the penumbra of some common law, statutory, or other established concept of unfairness, or are immoral, unethical, oppressive, or unscrupulous. See Massachusetts Farm Bureau Federation, Inc. v. Blue Cross of Massachusetts, Inc., 403 Mass. 722 (1989); Guity v. Commerce Ins. Co., 36 Mass.App.Ct. 339 (1994) (absence of good faith and presence of extortionate tactics). In deciding questions of unfairness, the Court focuses on the nature of the challenged conduct and on the purpose and effect of that conduct. See Massachusetts Employers Ins. Exchange v. Propac-Mass, Inc., 420 Mass. 39, 42-43 (1995). Here NAM claims that IKON violated G.L.c. 93A in several ways: (1) by promising to complete work it never intended to finish; (2) by inducing NAM to sign documents which it intended to use to justify non-performance of its contractual obligations; (3) by refusing to provide maintenance services under *148the Maintenance Agreement; and (4) by using a “credit hold” as leverage against NAM. I need address only one. I credit Pelletier’s testimony that when IKON representative Kelley met with her in December 2007 for the purpose of demonstrating the System, Kelley acknowledged that the bar coding of NAM’s documents had not yet been completed, but promised that it would be. Despite his acknowledgment that the work was incomplete, Kelley asked Pelletier, as a favor, to sign a Solutions Delivery and Acceptance Form (“SDA”) regarding the SOW. He told Pelletier that if he did not get the SDA signed, he could not get paid. The SDA contained the following language;
By signing below, Client acknowledges and confirms that the deliverable milestone and/or project referenced above has been completed and all testing and acceptance criteria have been satisfied in all respects as of the date of .this form. Accordingly, IKON is authorized to invoice Client. . .
Tr. Ex. 9. The milestone referred to in the SDA was the “completed installation of the Patient File Archiving System UAT Milestone.” Pelletier signed the SDA as a favor to Kelley, relying on his promise that the bar coding would be completed. I also credit Carabott’s testimony that in another meeting in March 2008, after Carabott’s continued complaints that the bar coding of NAMs documents was not complete, Roche asked him to sign another SDA regarding the System, this one related to the installation of the ten FORTIS seats. When Carabott asked Roche why he should sign off on a document relating to the System when the System did not work, Roche indicated he was getting pressure from his superiors, and asked Carabott to do him a favor by signing the form, promising to get the bar coding done if Carabott would sign off.
Thus, on two separate occasions IKON representatives induced NAM to sign documents that they knew were false. IKON knew that the SDAs were false because Kelley and Roche knew that NAM had not, in fact, “acknowledge(d) and confirmed] that the deliverable milestone and/or project referenced above has been completed and all testing and acceptance criteria have been satisfied in all respects as of the date.” Carabott and Pelletier so certified at the request of IKON’s employees only to move the project to completion. Under these circumstances, IKON’s subsequent reliance on the SDAs to support their position that they had fully performed under the SOW, was unfair and deceptive within the meaning of c. 93A.
To meet the willful or knowing components of the statute for purposes of multiple damages, NAM has the burden of proving that IKON held a subjectively culpable state of mind, which requires more than mere negligence. It contemplates a more purposeful level of culpa-bilily, that is, a conscious disregard for the likely results, and the intentional employment of sharp practices. Whelihan v. Markowski, 37 Mass.App.Ct. 209, 212 (1994); Wasserman v. Agnoastopoulos, 22 Mass.App.Ct. 672, 680-81 (1986). Based on the evidence before me, I am not convinced that either Kelly or Roche knew at the time they induced the execution of the false SDAs that IKON would never complete the bar coding of NAM’s documents. However, IKON acts through its agents and is bound by their knowledge. Accordingly, at the time this dispute came to a head, IKON knew that: (1) IKON had promised that it would redesign NAM’s forms to include bar codes; (2) the bar coding had never been completed; and (3) both Kelley and Roche induced NAM to execute documents they knew to be false with false promises that the bar coding would be completed. And yet IKON relies, in large part, on these documents to justify the position that their obligations under the contract are complete. In my judgment, this is the kind of sharp practice that violates Chapter 93A. I conclude that this conduct was not only unfair and deceptive, it was knowing and willful. NAM is therefore entitled to double damages and attorneys fees.
2. IKON’s Counterclaims a. Breach of the SOW
IKON claims that NAM breached the SOW by failing to pay the Second Change Order Invoice of $11,574 for the ten FORTIS seats. Because I have found that IKON breached the SOW by failing to redesign NAM’s forms to include bar codes as promised, NAM’s performance under the contract was excused as a matter of law. Accordingly, judgment will enter for NAM on this claim.
b. Unfair and Deceptive Practice
IKON claims that NAM’s failure to pay the Second Change Order Invoice of $11,574 for the ten FORTIS seats was solely for the purpose of coercing IKON into redesigning NAM’s forms without charge. Because I have found that NAM’s non-payment was legally justified, I conclude that the failure to pay the Second Change Order Invoice was not an unfair and deceptive practice within the meaning of G.L.c. 93A.
ORDER
For the foregoing reasons, it is ORDERED that judgment shall enter for the plaintiff on its breach of contract claim in the amount of $35,050. Judgment shall enter for the plaintiff on its claim that the defendant committed an unfair and deceptive business practice in violation of G.L.c. 93A. The damages of $35,050 will be doubled and the plaintiff is entitled to recover its attorneys fees. Plaintiffs Counsel will serve its motion for attorneys fees pursuant to Superior Court Rule 9A within 30 days of this order. It is ORDERED that judgment will enter for the defendants on the plaintiffs remaining claims.
It is further ORDERED that judgment will enter for the plaintiffs on the defendant’s counterclaims. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2305519/ | 652 F.Supp. 40 (1986)
MAINE CENTRAL RAILROAD COMPANY and Portland Terminal Company, Plaintiffs,
v.
BROTHERHOOD OF MAINTENANCE OF WAY EMPLOYEES, Defendant.
Civ. No. 86-0083 P.
United States District Court, D. Maine.
March 5, 1986.
*41 Charles S. Einsiedler, Portland, Me., William F. Sheehan, Ralph H. Moore, Jr., Washington, D.C., for plaintiff.
Craig J. Rancourt, Biddeford, Me., John O'B. Clarke, Jr., Thomas P. Murphy, Washington, D.C., for defendant.
MEMORANDUM OF DECISION DENYING MOTION FOR PRELIMINARY INJUNCTION
GENE CARTER, District Judge.
In this action Plaintiffs seek to enjoin Defendant union from striking over the inclusion of certain job protection provisions in their contract. Currently before the Court is Plaintiffs' motion for a preliminary injunction.[1] In order for Plaintiffs to prevail on their claim for such relief, the Court must find (1) that the Plaintiff will suffer irreparable injury if the injunction is not granted; (2) that such injury outweighs any harm which the granting of injunctive relief would inflict on the Defendant; (3) that Plaintiffs have exhibited a likelihood of success on the merits; and (4) that the *42 public interest will not be adversely affected by the granting of the injunction. Stanton v. Brunswick School Department, 577 F.Supp. 1560, 1566-67 (D.Me.1984). After reviewing the written submissions of Plaintiffs and considering the oral presentations of both parties, the Court finds that Plaintiffs have failed to show a likelihood of success on the merits.
Plaintiffs argue that the union's protection demands conflict with protection provisions imposed by the Interstate Commerce Commission under 49 U.S.C. § 11347 in its orders approving consolidation of the Maine Central Railroad Company, Boston & Maine Corporation, and the Delaware & Hudson Railway Company under the control of Guilford Transportation Industries. They further contend that under the Interstate Commerce Act, job protection provisions imposed by the Commission preclude a strike on the issue of job protection because, under 49 U.S.C. § 11341(a), carriers participating in transactions approved by the Commission are exempt from all other laws "as necessary to let [them] carry out the transaction, ... and exercise control acquired through the transaction."
It is clear that the ICC did in fact issue orders approving Guilford Transportation's control over Plaintiff Railroad and others that included the so-called "New York Dock" job protection conditions.[2] Such orders relate to disputes arising directly out of the transaction approved by the order. International Association of Machinists v. Northeast Airlines, 473 F.2d 549, 559-60 (1st Cir.1972); Brotherhood of Locomotive Engineers v. Chicago & North Western Railway, 314 F.2d 424 (8th Cir.1963). The record before the Court does not show that the job protections that are the subject of the strike which Plaintiffs seek to enjoin relate to the transaction that was the subject of the ICC orders. It is not clear that the union's demands relate to employees covered by the New York Dock conditions.[3] Neither is there any evidence to establish that the job protection provisions sought in the negotiations by the maintenance of way employees represented by the Defendant would in any way interfere with or defeat the carrier's efforts to complete the approved transaction.
Plaintiffs also argue that the union is not free to strike under the Railway Labor Act because it has not "exert[ed] every reasonable effort to make and maintain agreements ... and to settle all disputes ... in order to avoid any interruption to commerce or to the operation of any carrier growing out of any dispute...." 45 U.S.C. § 152 First. Again the Court finds that Plaintiffs have not met their burden of showing likelihood of success on the merits. They base their contention on allegations in the complaint that Defendant, with only one exception, has refused to bargain on any issue other than job protection. Plaintiffs conceded at oral argument that Defendant has complied with the exhaustive requirements of the Railway Labor Act and that job protection is indeed an issue of vital importance to the union. Under certain factual circumtances, insisting on resolution of one issue before bargaining on others could possibly violate the duty set forth in section 2 First. See, e.g., Eastern Maine Medical Center v. NLRB, 658 F.2d 1, 10-12 (1st Cir.1981). On the present record, however, the Court cannot conclude that the union has failed to satisfy its duty to "exert every reasonable effort to make and maintain agreements ... and to settle all disputes."
The reasonableness of the union's position is to be judged by whether it reflects sufficient indicia of flexibility to justify the conclusion that the union still desires to achieve agreement. Eastern Maine Medical Center, 658 F.2d 1. That *43 issue is to be determined not on broad allegations but by viewing the context and the course of discussions. For example, the union's bargaining position on the initial issue may well have been precipitated by a harsh bargaining stance on the part of the Railroad. In order to assess reasonableness, therefore, the Court must have before it evidence of what transpired in bargaining and the tenor of both parties in expressing their positions. No such evidence has been presented. The Court cannot conclude from the record made in these proceedings that the union's position in respect to bargaining on issues besides job protection has hardened to an unacceptable level of inflexibility.
Accordingly, it is ORDERED that Plaintiffs' Motion for a Preliminary Injunction be, and it is hereby, DENIED.
NOTES
[1] Although initially filed as a motion for a temporary restraining order, Defendant received notice and a hearing was held. The Court will, therefore, treat the motion for a temporary restraining order as a motion for a preliminary injunction. Stanton v. Brunswick School Department, 577 F.Supp. 1560, 1562 (D.Me.1984).
[2] New York Dock Ry. v. United States, 609 F.2d 83 (2d Cir.1979).
[3] There remains a substantial legal question whether, even if the demands being pressed by the union were indeed covered by the ICC order, the union is precluded from striking. The Court need not resolve this issue in light of the lack of factual support for the Plaintiffs' position that the strike relates to issues covered by the ICC orders. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2402963/ | 760 S.W.2d 345 (1988)
Michael William BURKETT, Jr., Appellant,
v.
The STATE of Texas, Appellee.
No. 01-87-00630-CR.
Court of Appeals of Texas, Houston (1st Dist.).
October 27, 1988.
William M. Hicks, Dickinson, for appellant.
Michael J. Guarino, Criminal Dist. Atty. Galveston County, for appellee.
Before JACK SMITH, DUGGAN and DUNN, JJ.
OPINION
JACK SMITH, Justice.
A jury found appellant guilty of burglary of a vehicle, a tugboat, and the trial court, after finding two enhancement allegations to be true, assessed his punishment at 40 years confinement.
Appellant's sole point of error contends that the trial court erred in failing to grant his motion to suppress.
At a hearing held outside the presence of the jury, Officer Donald Trahan testified that he was dispatched to dock 15 in Texas City after receiving a radio call about a prowler on one of the tugboats. When Trahan arrived, appellant was escorted out of the crews' quarters by two deckhands. Appellant was then arrested, but he contended that the crew had robbed and beaten him.
Harold Leon McDaniel, the chief engineer on the Mark K tugboat, testified that he was awakened about 2:30 a.m. and saw the appellant standing in the doorway of the boat. Two men from another boat appeared behind appellant, preventing his exit from the boat. Appellant told McDaniel that he was looking for a friend named Jamie Sanders. Appellant was then escorted to the galley, and McDaniel realized that his cash was missing from his pant's pocket. He stated that he had six dollars, which was folded in a particular fashion. McDaniel asked appellant to empty his pockets, and as soon as appellant put down the six dollars, which was folded double, the money immediately folded back into the previous folds made by McDaniel. McDaniel testified that he did not rob appellant, but he did take back his six dollars.
David W. Green, Jr., captain of the Mark K, testified that he did not give appellant permission to come aboard the boat and that the boat was clearly posted with a "No Visitors" sign.
Richard P. Utley, an engineer on the tugboat, W.D. Hayden II, testified that he was awakened by a noise on the boat. *346 When he observed appellant on the passageway, he stopped him, and asked him what he was doing on the boat. Appellant told him that he was looking for someone. Utley told appellant to get off the boat. Utley then went to the wheelhouse to observe appellant as he left dock 14. He awakened deckhand Robert Delaware, and they went to find appellant. They located him on another boat, the Mark K, and surrounded him at the door of McDaniel's cabin. When Utley asked appellant for identification, he produced his social security card.
Appellant testified that he was at the docks to catch a boat back to Florida. He went onboard the W.D. Hayden II looking for his friends. When Utley told him that only the crew was aboard, he left and went to the Mark K. At the Mark K, he stated that he tried to wake up a deckhand when Utley came up behind him and put a knife into his stomach. Appellant testified that he told the men to call the police. When they asked him to empty his pockets, he complied, and one deckhand claimed that the money belonged to him. Appellant admitted on cross-examination that he had previous felony convictions for receiving stolen property and burglary of a vehicle, as well as several theft convictions.
Appellant moved to suppress the testimony and the physical evidence relating to the six dollars that resulted from his alleged illegal arrest by private citizens. He contends that the search was illegal and in violation of the U.S. Constitution, the Texas Constitution, and Tex.Code Crim.P.Ann. art. 38.23 (Vernon Supp.1988). Because the physical evidence was not admitted at the trial, the point of error will be limited to the trial court's admission of the testimony regarding the money.
The trial court is the sole trier of fact at a suppression hearing, and this Court is not at liberty to disturb any finding that is supported by the record. Green v. State, 615 S.W.2d 700, 707 (Tex.Crim.App.), cert. denied, 454 U.S. 952, 102 S.Ct. 490, 70 L.Ed.2d 258 (1981).
The Fourth Amendment does not require the exclusion of incriminating evidence illegally obtained through a search by a private citizen. Burdeau v. McDowell, 256 U.S. 465, 475, 41 S.Ct. 574, 576, 65 L.Ed. 1048 (1921). However, the Texas statute, article 38.23, is more restrictive because it prohibits the use of evidence illegally obtained by "an officer or other person." (Emphasis added.)
The State contends that the citizen's arrest of appellant was legal under either Tex.Code Crim.P.Ann. art. 14.01 (Vernon 1977) or Tex.Code Crim.P.Ann. art. 18.16 (Vernon 1977). Article 14.01 permits a warrantless arrest by a citizen "when the offense is committed in his presence or within his view, if the offense is one classed as a felony or as an offense against public peace." Article 18.16 states that all persons have a right "to prevent the consequences of theft by seizing any personal property which had been stolen and bringing it, with the supposed offender, if he can be taken, before a magistrate for examination, or delivering the same to a peace officer for that purpose."
Tex.Penal Code Ann. sec. 30.04(a) (Vernon 1974) defines the felony of burglary of a vehicle as breaking or entering a vehicle or any part of a vehicle, without the effective consent of the owner, with the intent to commit any felony or theft. Tex.Penal Code Ann. sec. 30.01(3) (Vernon 1974) defines "vehicle" as "any device in, on, or by which any person or property is or may be propelled, moved, or drawn in the normal course of commerce or transportation...."
The record reflects that neither the captain nor the deckhands consented to appellant's entry onto the boat. Moreover, appellant was put on notice that entry to the boat was forbidden by the "No Visitors" sign posted on the boat. Appellant entered the Mark K at 2:30 a.m. after being ordered off another boat. An entry made without consent during the nighttime is a circumstance indicating his guilt, from which the trier of fact may or may not infer an intent to commit theft. Aguilar v. State, 682 S.W.2d 556, 558 (Tex.Crim.App.1985). McDaniel testified that he realized that the cash was missing out of his pants *347 pocket, and after appellant emptied his pockets, the stolen cash was recovered.
We hold that appellant's warrantless arrest was lawful under article 14.01 because probable cause existed for his detention, and that the trial court properly overruled his motion to suppress.
Point of error one is overruled.
Appellant, who is represented by counsel on appeal, has filed a pro se request for this Court to include an additional point of error. There is no statutory or constitutional right to hybrid representation in Texas. Landers v. State, 550 S.W.2d 272 (Tex. Crim.App.1977). Thus, we decline to rule on the point of error.
The judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3347194/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]
MEMORANDUM OF DECISION RE: MOTION TO STRIKE (NO. 107)
Plaintiff's second revised complaint alleges that defendant Connecticut National Bank (CNB) terminated employee Peter Turzer (plaintiff) on October 13, 1989. Count two of the complaint alleges that, between October 13, 1989 and July, 1991, plaintiff has on numerous occasions requested that defendant CNB provide plaintiff with a copy of all or part of his personnel file pursuant to Connecticut General Statutes 31-128g, which states:
Each employer shall, within a reasonable time after receipt of a written request from an employee, provide such employee with a copy of all or part of his personnel file or provide such employee's physician with a copy of such employee's medical records, provided such request reasonably identifies the materials to be copied. Such employer may charge a reasonable fee for copying such file or records or any part of such file or records. Such fee shall be reasonably related to the cost of supplying the requested documents.
Count two alleges that despite plaintiff's numerous oral and written requests, CNB has knowingly, intentionally, and wrongfully refused to provide the plaintiff with his personnel file and continues to refuse in violation of the above statute. The plaintiff seeks damages alleging that, as a direct and proximate result of CNB's violation of Connecticut General Statutes 31-128g, plaintiff has suffered "financial and emotional damages."
CNB filed a motion to strike count two of plaintiff's revised complaint claiming that Connecticut General Statutes31-128g does not provide for a private cause of action.
A motion to strike is the proper mechanism for contesting the legal sufficiency of a pleading. Mingachos v. CT Page 8990 CBS, Inc., 196 Conn. 91, 108, 419 A.2d 368 (1985).
Connecticut General Statutes 31-128g is part of Title 31, Chapter 563(a), termed the "Personnel Files Act." The issue at hand has not been addressed by Connecticut courts. The way to remedy grievances under Connecticut General Statutes 31-18g may, however, be gleaned from the legislative intent of the statute:
Rep. Smith: (149th)
. . .if, let's say, an employer has 5,000 employees and each of them sent in a written request to inspect his or her personnel [sic] files at the same time . . . who would be [the] determinant of what is a reasonable time [in accordance with the wording of 31-128g, for the processing of employees' requests]. . . .
Rep. Balducci: (27th)
Yes, Mr. Speaker. The Commissioner, Labor Commissioner, would have that discretion, and if something like that were to happen, that's one of the reasons I think we discussed leaving the word, maybe for legislative intent to make sure we understand that idea, reasonable, would be just for that purpose. And if there was a problem . . . with the magnitude of employees and where their files are kept, yes, I'm sure he would take that into consideration. It's the discretion we would hope the Labor Commissioner would have in that particular instance, sir.
22 H.R. Proc., Pt. 15, 1979 Sess., p. 32, 33 (emphasis added).
Disputes arising under 32-128g can be dealt with by the Labor Commissioner pursuant to powers under Connecticut General Statutes 31-2 (a).
Sec. 31-2. Powers and duties of commissioner. (a) The labor commissioner shall collect information upon the subject of labor, its relation to capital, the hours of labor, the earnings of laboring men and women and the means of promoting their material, social, intellectual and moral CT Page 8991 prosperity, and shall have power to summon and examine under oath such witnesses and may direct the production of, and examine or cause to be produced and examined, such books, records, vouchers, memoranda, documents, letters, contracts or other papers in relation thereto as he deems necessary, and shall have the same powers in relation thereto as are vested in magistrates in taking depositions, but for this purpose persons shall not be required to leave the vicinity of their residences or places of business. . . . (Emphasis added.)
Though the legislative intent militates in favor of the Labor Commissioner's handling potential violations of31-128g, the issue remains as to whether this court should entertain this claim notwithstanding that intent. The doctrine of primary jurisdiction militates against the court taking jurisdiction.
"It is well established that resort to the administrative process is generally a prerequisite to involving the jurisdiction of a court." Sharkey v. Stamford, 196 Conn. 253,255, 492 A.2d 508 (1985). "[P]rimary jurisdiction situations arise in cases where a plaintiff, in the absence of pending administrative proceedings, involves the original jurisdiction of a court to decide the merits of a controversy. Id. at 256. The purpose of the doctrine is to foster an orderly process of administrative adjudication and judicial review in which a reviewing court will have the benefit of an agency's findings and conclusions. Id., 256. Ordinarily, a court should not act upon subject matter that is peculiarly within the agency's specialized field without giving the agency an opportunity to apply its expertise, for otherwise parties who are subject to the agency's continuous regulation may become the victims of uncoordinated and conflicting requirements. 4 Davis, Administrative Law 22.1, p. 81 (1983). The doctrine of primary jurisdiction militates in favor of this claim going first to the Labor Commissioner.
Based on a consideration of (1) the legislative intent of General Statutes 31-128g, and (2), the doctrine of primary jurisdiction, the defendant's motion to strike count two of plaintiff's revised complaint is granted.
E. EUGENE SPEAR, JUDGE CT Page 8992 | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/1409303/ | 199 Kan. 728 (1967)
433 P.2d 344
AUGUST C. HENSLEY, Appellant,
v.
THE STATE OF KANSAS, Appellee.
No. 44,935
Supreme Court of Kansas.
Opinion filed November 13, 1967.
Forrest E. Short, of Fort Scott, argued the cause, and Joel B. Short, of Fort Scott, was with him on the brief for the appellant.
Charles M. Warren, county attorney, argued the cause, and Robert C. Londerholm, attorney general, was with him on the brief for the appellee.
The opinion of the court was delivered by
HARMAN, C.:
This is an appeal from an order denying post-conviction relief.
Appellant-petitioner, upon his plea of guilty, was convicted July 2, 1951, of the crime of bank robbery, and received the statutory sentence (G.S. 1949 [now K.S.A.] 21-531). Still confined in the penitentiary under this sentence, he filed in the sentencing court his motion to vacate the judgment pursuant to K.S.A. 60-1507.
In his motion, filed pro se on a printed form as prescribed in the appendix to Rule No. 121 of this court, appellant stated in paragraph 10 as grounds for attacking his sentence that (a) he did not have the assistance of counsel at all stages of the criminal proceedings and (b) his plea of guilty was coerced in that he was not advised of his legal right to remain silent. These grounds were amplified in an argument made a part of the motion, as hereinafter related. In paragraph 11 of the motion, still following the prescribed form, wherein the facts supporting each ground set out in paragraph 10 are to be stated and the names of witnesses or other evidence relied upon are to be listed, appellant stated he relied upon the transcript of the justice of peace and the journal entry of judgment of his conviction. Noteworthy is the fact appellant named no witness upon whom he intended to rely in support of his application.
The trial judge, successor in office to the sentencing judge, on May 9, 1966, without appointment of counsel or plenary hearing, *729 denied relief. In his consideration of the motion the trial judge had before him both documents relied upon by appellant as evidence.
The transcript of the justice of the peace, who acted as examining magistrate, disclosed the following: A complaint was filed in that court June 29, 1951, by the then county attorney of Bourbon county charging appellant with the armed robbery of the Bank of Bronson, Bronson, Kansas, on June 28, 1951. Warrant for appellant was issued, executed and returned June 29, 1951. Appellant was "arraigned" in the magistrate court June 29, 1951, he "entered a plea of not guilty as charged in the complaint and waived his preliminary hearing." The magistrate found that the offense of bank robbery had been committed, that there were probable grounds to believe appellant committed the offense charged, and he bound appellant over to the district court of Bourbon county for trial, committing him to jail in default of the bail fixed.
On the same day, June 29, 1951, the Bourbon county attorney filed in the district court an information charging appellant with the same offense.
The journal entry of judgment of appellant's conviction disclosed the following: Appellant appeared in person before the district court of Bourbon county on June 29, 1951. He was then "formally arraigned" and the information was read to him. In response to inquiry by the court appellant stated he did not have counsel and had no money to employ an attorney. The court then appointed Fred W. Bayless, a practicing attorney of Fort Scott, Kansas, as attorney to represent appellant. On July 2, 1951, appellant again appeared before the district court, accompanied by his court-appointed attorney. The journal entry then recited:
"WHEREUPON, the said defendant, August C. Hensley was questioned by the Court as to whether or not that he had conferred with his attorney, Fred W. Bayless and whether or not he was ready to plead to the Information filed in said above entitled action and the said defendant, August C. Hensley having informed the Court that he had conferred with his attorney and was ready to plead to the Information, the Court caused the defendant to stand and inquired of him as how he pled to the Information filed in said above entitled action."
Appellant thereupon pleaded guilty, he was afforded the right to allocution and was sentenced.
As elaborated by his argument accompanying his motion, appellant's principal contention to the trial court was that he had no counsel at his preliminary examination. The trial court, in accord *730 with oft-repeated authority, correctly ruled an accused has no constitutional right to appointed counsel at preliminary examination and that failure to provide an accused such counsel does not constitute error in the absence of prejudice to his substantial rights, and the court further ruled no prejudice was shown. Although the magistrate had no power to entertain a formal plea to the complaint as was done, and the action with regard thereto was a nullity, the plea entered was one of not guilty and no prejudice resulted from the irregularity.
Appellant expands his argument as to his right to counsel to encompass the accusatory stage made famous by the names Escobedo and Miranda. The doctrine of those cases, decided in 1964 and 1966, will not be retroactively applied to a prior Kansas conviction (Addington v. State, 198 Kan. 228, 424 P.2d 871).
Appellant further contends his plea of guilty was coerced because at the time he entered it he was not advised of his right to remain silent (stand mute) when called upon to plead. In Allen v. State, 199 Kan. 147, 427 P.2d 598, we stated:
"In a 60-1507 proceeding, in the absence of evidence other than petitioner's uncorroborated statements, it must be assumed that counsel fairly and fully advised him of his rights...." (Syl. ¶ 2.)
Assuming appellant was not so advised and that he was not otherwise aware he could stand mute, the validity of the proceedings is in nowise affected. We know of no requirement, statutory or otherwise, that a court must advise an accused about to be arraigned that he may refuse to answer or plead particularly where the accused is represented by counsel (see Crabtree v. Boles, 229 F. Supp. 427, affirmed 339 F.2d 22). K.S.A. (formerly G.S. 1949) 62-1305, provides:
"When any person shall be arraigned upon any indictment or information, it shall not be necessary to ask him how he will be tried; and if he deny the charge in any form, or require a trial, or if he refuse to plead or answer, and in all cases when he does not confess the indictment or information to be true, a plea of not guilty shall be entered, and the same proceedings shall be had in all respects as if he had formally pleaded not guilty."
Standing mute, with certain exceptions not here material, is thus consequentially equivalent to pleading not guilty. Appellant could have pleaded not guilty and he does not contend otherwise. Instead, he pleaded guilty. Conceding an inherent privilege to stand mute, he could not possibly be prejudiced on the basis asserted here *731 coerced plea of guilty by lack of knowledge as to such right; his contention of compulsion based on any such lack is frivolous.
This disposes of the complaints made before the trial court and hence properly before this court on appeal, and the opinion might well end here.
However, appellant has sought upon appeal to include additional grounds for relief not presented to the trial court. If these matters were properly before us for review and they are not relief could not be granted. Upon the showing made, the sentencing court did not err in not extending appellant another preliminary examination after he had waived that right. Nor did it err, as belatedly alleged, in not allowing appellant more time to confer with counsel appointed for him on Friday, June 29, 1951, prior to his arraignment and sentencing Monday, July 2, 1951. As already related, the record affirmatively reveals the sentencing court specifically inquired into this subject prior to the plea and sentencing, and wholly refutes any contention of insufficient time.
As stated in Thompson v. State, 197 Kan. 630, 419 P.2d 891:
"A judgment of conviction of crime carries with it a presumption of regularity, and where one convicted of a crime attacks such a judgment pursuant to K.S.A. 60-1507, on the ground that his constitutional rights were violated, he has the burden of proof to establish such fact by a preponderance of the evidence, and such burden is not sustained by unsupported and uncorroborated statements by the plaintiff." (Syl. ¶ 2.)
Judgment affirmed.
APPROVED BY THE COURT. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1408491/ | 880 F. Supp. 319 (1994)
John T.P. CALLAHAN and Linda R. Callahan, husband and wife, Plaintiffs,
v.
LANCASTER-LEBANON INTERMEDIATE UNIT 13, Lancaster County Children and Youth Social Service Agency, Dr. Richard Sherr, individually and as Executive Director of Lancaster-Lebanon Intermediate Unit 13, Stephen Sohonyay, individually and as Director of Lancaster County Children and Youth Social Service Agency, Kerry Stauffer, Curtis Elledge, Lisa Lantz, individually and in their official capacities as employees *320 of Lancaster-Lebanon Intermediate Unit 13, Greg Landis and James Laughman, individually and in their official capacities as employees of Lancaster County Children and Youth Social Service Agency, Defendants.
Civ. A. No. 93-CV-4250.
United States District Court, E.D. Pennsylvania.
December 5, 1994.
*321 *322 *323 Steven P. O'Day, Lancaster, PA, for plaintiffs.
Stuart L. Knade, Harrisburg, PA, for defendants Lancaster-Lebanon Intermediate Unit 13, Sherr, Stauffer, Elledge, and Lantz.
Paul E. Smith, Wilkes-Barre, PA, for defendants Lancaster County Children & Youth Social Service Agency, Sohonyay, Landis and Laughman.
OPINION AND ORDER
VAN ANTWERPEN, District Judge.
On August 6, 1993, plaintiffs, John and Linda Callahan, filed this action, individually and on behalf of their son Michael, alleging violations of 42 U.S.C. § 1983 ("§ 1983") and various state law tort claims[1] against all defendants. The gravamen of their charges is that they were temporarily wrongly deprived of custody of Michael because of unsubstantiated allegations of child abuse. The allegations were based on information obtained primarily through facilitative communication, a method of communicating with autistic children. The defendants are the Lancaster-Lebanon Intermediate Unit 13, Dr. Richard Sherr, Executive Director of School; Kerry Stauffer, teacher; Lisa Lantz, teacher; and Curtis Elledge, teaching assistant. Other defendants are the Lancaster County Children and Youth Social Service Agency; Stephen Sohonyay, Director of Agency; Greg Landis, caseworker supervisor; and James Laughman, caseworker. All individual defendants are being sued both in their individual and official capacities. On November 15, 1993, Lancaster-Lebanon Intermediate Unit 13, and the individual teacher defendants, filed a Motion to Dismiss all charges against them, which this court denied in an order dated December 10, 1993. Presently before the court are the Motions of all defendants for Summary Judgment, filed on September 9 and 12, 1994, and the plaintiffs' responses to these motions, filed on September 20 and 26, 1994. This court has jurisdiction pursuant to 28 U.S.C. § 1331.
I. FACTUAL BACKGROUND
Discovery in this matter is complete, and the essentially undisputed facts are as follows.[2]
Plaintiffs' son, Michael C. Callahan ("Michael"), has been diagnosed with severe autism and mental retardation. He is almost completely nonverbal in his communication. At the time of the events in question, Michael was 16 years of age and a student at defendant Lancaster-Lebanon Intermediate Unit 13 ("IU 13"). Defendant Lantz was Michael's teacher during the summer of 1992 and defendant Stauffer had been Michael's school year teacher since fall 1990. Defendant Elledge was the teaching assistant assigned to Michael during the 1992-93 school year while Michael was in Stauffer's class.[3]
In early 1992, several of the teachers and teaching assistants at IU-13, including defendants *324 Lantz, Stauffer, and Elledge, received training in a technique for working with persons suffering from autism called "facilitated communication" ("FC").[4] At the June 1992 Individualized Education Plan meeting, plaintiffs approved the use of FC with Michael.
During the summer of 1992, Michael's teacher, defendant Lantz, utilized FC to communicate with him. She believed during this time that Michael communicated to her through FC that his father was abusing him. During the fall of 1992, through further communication with Michael utilizing FC, Lantz came to believe that the alleged abuse was sexual in nature. At some point in the fall, she relayed her thoughts to Rita Foster, the school social worker, who relayed the information to defendant Stauffer. Stauffer apparently thought that there was not enough information at that point to warrant a report to the Lancaster County Children and Youth Social Service Agency ("Agency") pursuant to the Pennsylvania Child Protective Services Law, 23 Pa.C.S.A. § 6311(a) and (b).[5] At Stauffer's direction, the teaching assistant, defendant Elledge, became the primary facilitator with Michael when FC was used with him. Defendants maintain that Elledge's facilitation with Michael led Elledge also to suspect, by early 1993, sexual abuse of Michael by his father, although the statements Michael made to Elledge were apparently somewhat inconsistent with those made to Lantz.[6]
Near the end of 1992, because other teachers at IU 13 had received reports of child abuse through FC from other students, Rita Foster contacted the defendant Lancaster County Children and Youth Social Service Agency to request clarification on when reports of abuse, particularly those obtained through FC, should be made pursuant to 23 Pa.C.S.A. § 6311. An Agency representative advised school personnel that information received through FC regarding possible abuse should be reported provided that it met several criteria. She indicated first that the communication should describe the alleged abuse in a somewhat detailed manner with regard to such particulars as time, place, or body parts involved. Second, the child should be able to convey the information consistently through more than one facilitator. The Agency also provided the school with anatomically correct drawings so school personnel could attempt to confirm any allegations of abuse independent of FC.
On February 9, 1993, Michael apparently came to school in an agitated state. In an attempt to elicit information from him through FC about what was troubling him, *325 defendants Elledge and Lantz[7] came to believe that Michael was distressed because he was in pain and that the cause of the pain allegedly was sexual abuse by Michael's father.[8] School personnel decided it was time to report the allegations, and Rita Foster relayed them to the Agency that day.
After receiving the phone call from Foster, Agency personnel discussed the situation with Judge James P. Cullen of the Lancaster County Juvenile Court.[9] Pursuant to the telephone conference, defendant caseworker James Laughman filed an emergency petition for Temporary Custody/Custody with Judge Cullen, and it was approved that same day. Michael was taken from his parents' home and into protective custody that evening.[10]
On February 11 and 12, 1993, at a hearing conducted by Judge Cullen, the court received testimony from defendants Lantz and Elledge and observed them facilitate with Michael. A medical examination conducted soon after Michael was taken into custody did not indicate any signs of abuse. The court decided, however, that Michael would remain in the custody of the Agency, pending another hearing. On April 13, 1993, the court conducted a hearing, at the request of the plaintiffs, to determine the admissibility of statements made through FC. Plaintiffs presented expert testimony challenging the validity of FC. At the close of the hearing, with the agreement of all parties, the Agency's petition for temporary custody was withdrawn and Michael was returned to the custody of his parents.
II. STANDARD OF REVIEW
Rule 56(c) of the Federal Rules of Civil Procedure provides for summary judgment where the:
pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.
"The party moving for summary judgment must demonstrate that, under the undisputed facts, the non-movant has failed to introduce evidence supporting a necessary element of his case." In Re Phillips Petroleum Sec. Litig., 881 F.2d 1236, 1243 (3d Cir.1989). To defeat summary judgment, the non-moving party must respond with facts of record that contradict the facts identified by the movant and may not rest on mere denials. See Celotex Corp. v. Catrett, 477 U.S. 317, 321 n. 3, 106 S. Ct. 2548, 2552 n. 3, 91 L. Ed. 2d 265 (1986) (quoting Fed.R.Civ.P. 56(e)); see also First Nat'l Bank v. Lincoln Nat'l Life Ins. Co., 824 F.2d 277, 282 (3d Cir.1987). The non-moving party must demonstrate the existence of evidence that would support a jury finding in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S. Ct. 2505, 2510-11, 91 L. Ed. 2d 202 (1986).
III. DISCUSSION
Section 1983 provides for the imposition of liability on any person who, acting under color of state law, deprives another of rights, privileges, or immunities secured by the Constitution or the laws of the United States. To state a claim under § 1983, the plaintiffs must show both that (1) the offending conduct was committed by a person acting under color of state law, and (2) that such conduct deprived the plaintiffs of rights secured by the Constitution of the United States. Parratt v. Taylor, 451 U.S. 527, 535, 101 S.Ct. *326 1908, 1912-13, 68 L. Ed. 2d 420 (1981), overruled in part on other grounds, Daniels v. Williams, 474 U.S. 327, 106 S. Ct. 662, 88 L. Ed. 2d 662 (1986). In this case, no party disputes that defendants were acting under color of state law.
As an initial matter, we note that plaintiffs have brought claims against the individual defendants in both their official and individual capacities. Individual capacity suits seek to impose personal liability upon a government official; damages are recoverable from the official's personal assets. See Kentucky v. Graham, 473 U.S. 159, 166, 105 S. Ct. 3099, 3105, 87 L. Ed. 2d 114 (1985). To the extent that plaintiffs are suing the individual defendants in their official capacities, the claims are the equivalent of claims against the municipal agencies themselves. Will v. Michigan Dept. of State Police, 491 U.S. 58, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989). Accordingly, we will discuss claims against the individual defendants in their individual capacities separately, while reserving discussion of their liability in their official capacities until the liability of the respective municipal agencies is discussed.
Generally, in a § 1983 action, the first issue to be determined is whether the plaintiff has sufficiently alleged a deprivation of a right secured by the Constitution. See Baker v. McCollan, 443 U.S. 137, 140, 99 S. Ct. 2689, 2692, 61 L. Ed. 2d 433 (1979). However, when defendants assert the affirmative defense of immunity, as the defendants in this case have done, we must first determine whether they are entitled to such that defense.[11]See Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S. Ct. 2727, 2738, 73 L. Ed. 2d 396 (1982); D.R. By L.R. v. Middle Bucks Area Vo. Tech. School, 972 F.2d 1364, 1368 (3d Cir.1992), cert. denied, ___ U.S. ___, 113 S. Ct. 1045, 122 L. Ed. 2d 354 (1993). Qualified immunity is ordinarily an issue of law to be determined by a court on a motion to dismiss or a motion for summary judgment. See Anderson, 483 U.S. at 646, 107 S.Ct. at 3042 ("... we have emphasized that qualified immunity questions should be resolved at the earliest possible stage of a litigation."); Harlow, 457 U.S. at 818, 102 S.Ct. at 2738; Czurlanis v. Albanese, 721 F.2d 98, 108 (3d Cir.1983). This approach allows for the elimination of "meritless actions against public officials at the earliest possible stage in the litigation." See Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S. Ct. 2806, 2817, 86 L. Ed. 2d 411 (1985).
A. QUALIFIED IMMUNITY
State officials performing discretionary functions are shielded from liability for civil damages insofar as their conduct does not violate clearly established constitutional rights of which a reasonable person would have known. See Harlow v. Fitzgerald, 457 U.S. at 818, 102 S.Ct. at 2738. The immunity is not absolute but rather balances the interest in allowing public officials to perform their discretionary functions without fear of suit against the public's interest in vindicating important federal rights. See Lee v. Mihalich, 847 F.2d 66, 69 (3d Cir.1988).
"[W]hether an official protected by qualified immunity may be held personally liable for an allegedly unlawful official action generally turns on the `objective legal reasonableness' of the action ... assessed in light of the legal rules that were `clearly established at the time it was taken.'" Anderson v. Creighton, 483 U.S. 635, 639, 107 S. Ct. 3034, 97 L. Ed. 2d 523 (1987) (quoting Harlow, 457 U.S. at 818, 102 S.Ct. at 2738). The Court in Anderson explained that:
The contours of the right must be sufficiently clear that a reasonable official would understand what he is doing violates that right. This is not to say that an *327 official action is protected by qualified immunity unless the very action in question has been declared unlawful, but it is to say the unlawfulness must be apparent.
Anderson, 483 U.S. at 635, 107 S.Ct. at 3037. The Third Circuit has not required a strict factual congruence between previous cases and the circumstances in which the defendant official acted, holding instead that,
... [s]ome but not precise factual correspondence to precedent would be required.... We expect officials to apply general, well-developed legal principles.... We have established that we have adopted a broad view of what constitutes an established right of which a reasonable person would have known, which requires us to undertake an inquiry into the general legal principles governing analogous factual situations, if any, and a subsequent determination whether the official should have related this established law to the instant situation.
Stoneking v. Bradford Area School District, 882 F.2d 720, 726 (3d Cir.1989), cert. denied, 493 U.S. 1044, 110 S. Ct. 840, 107 L. Ed. 2d 835 (1990) (internal citations omitted); see also Hicks v. Feeney, 770 F.2d 375, 379-80 (3d Cir.1985), cert. denied, 488 U.S. 1005, 109 S. Ct. 786, 102 L. Ed. 2d 777 (1986). "The ultimate issue is whether, despite the absence of a case applying established principles to the same facts, reasonable officials in defendants' position at the relevant time could have believed, in light of what was in the decided case law, that their conduct would be lawful." See Good, 891 F.2d at 1092. Furthermore, "even where the officials clearly should have been aware of the governing legal principles, they are nevertheless entitled to immunity if based on the information available to them they could have believed their conduct would be consistent with those principles." Id. Qualified immunity is applicable even where officials "of reasonable competence could disagree" that such acts were objectively reasonable, See Malley v. Briggs, 475 U.S. 335, 341, 106 S. Ct. 1092, 1096, 89 L. Ed. 2d 271 (1986), and "as the qualified immunity defense has evolved, it provides ample protection to all but the plainly incompetent or those who knowingly violate the law." Id.
1. Clearly Established Rights of Plaintiff
Section 1983 "is not itself a source of substantive rights," but merely provides "a method for vindicating federal rights elsewhere conferred." Graham v. Connor, 490 U.S. 386, 393-94, 109 S. Ct. 1865, 1870, 104 L. Ed. 2d 443 (1989). In combination with the Due Process Clause of the Fourteenth Amendment, § 1983 allows plaintiffs to assert three kinds of federal claims: (1) claims for the deprivation by state officials of any of the specific protections defined in the Bill of Rights; (2) claims under the substantive component of the Due Process Clause "that bars certain arbitrary, wrongful government actions, regardless of the fairness of the procedures used to implement them;" and (3) claims under the procedural component of the Due Process Clause relating to deprivations of life, liberty, or property without due process of law. See Zinermon v. Burch, 494 U.S. 113, 125, 110 S. Ct. 975, 983, 108 L. Ed. 2d 100 (1990) (internal citations omitted).
In the body of their complaint, plaintiffs allege that all defendants violated essentially the same Constitutional rights. Specifically, plaintiffs allege that defendants' conduct:
a. constituted an unreasonable search and seizure in violation of the Fourth and Fourteenth Amendments;
b. constituted an invasion of plaintiffs Michael and Mr. and Mrs. Callahan's right of privacy in violation of the Fourth, Ninth, and Fourteenth Amendments; and
c. denied plaintiffs Michael and Mr. and Mrs. Callahan due process of law in violation of the Fourteenth Amendment by conduct that shocks the conscience.
See Complaint at ¶ 34. Plaintiffs' first claim appears to be of the first variety discussed above; that is, a claim alleging a deprivation by a state official of a specific protection defined in the Bill of Rights. Their third claim appears to allege a substantive due process violation. As to the second claim, we note that neither plaintiffs' complaint nor their subsequent pleadings give us any indication what specific principles of privacy may *328 be implicated. If plaintiffs meant to implicate their right of privacy with regard to the care and custody of Michael, we find this to be intertwined with their substantive due process claim. However, if it was plaintiffs' intention to convey that their interest in personal reputation was violated, this claim would probably be analyzed under the realm of procedural due process. See Hodge v. Carroll County Department of Social Services, 812 F. Supp. 593, 600 (D.Md.1992), rev'd in part on other grounds, Hodge v. Jones, 31 F.3d 157 (4th Cir.1994).
Since the determination of whether defendants are entitled to qualified immunity turns on plaintiffs' clearly established Constitutional and statutory rights at the time of the alleged violation, we will briefly discuss the legal standard behind each of these allegations in turn, although not in the order that they have been alleged. In the interest of thoroughness, we will analyze plaintiffs' privacy claim under a procedural due process framework, while noting that the substantive due process discussion is equally applicable. Furthermore, because plaintiffs have not alleged with more particularity than noted above the specifics regarding their Constitutional allegations, we will attempt to fill in the gaps.[12]
a. Substantive Due Process
The substantive component of the due process clause "bars certain government actions regardless of the fairness of the procedures used to implement them ... [and thereby] serves to prevent governmental power from being `used for purposes of oppression.'" Daniels v. Williams, 474 U.S. at 332, 106 S.Ct. at 665 (internal citations omitted). When determining whether an action violates a right protected by this element of the due process clause, the court must balance "the liberty of the individual" and "the demands of an organized society." In re Scott County Master Docket, 672 F. Supp. 1152 (D.Minn.1987), quoting Youngberg v. Romeo, 457 U.S. 307, 320, 102 S. Ct. 2452, 2460, 73 L. Ed. 2d 28 (1982).
Although plaintiffs have not specified, we infer that the substantive due process right to which they refer is the right to familial integrity. The Supreme Court has recognized an abstract fundamental liberty interest in familial integrity and privacy. See Stanley v. Illinois, 405 U.S. 645, 92 S. Ct. 1208, 31 L. Ed. 2d 551 (1972) (unwed father has fundamental right in the care and custody of children born out of wedlock with whom he maintained strong parental relationship); Santosky v. Kramer, 455 U.S. 745, 102 S. Ct. 1388, 71 L. Ed. 2d 599 (1982) ("[F]reedom of personal choice in matters of family life is a fundamental liberty interest protected by the Fourteenth Amendment."); see also Prince v. Massachusetts, 321 U.S. 158, 64 S. Ct. 438, 88 L. Ed. 645 (1944) (parents have fundamental interest in the religious upbringing of children); Meyer v. Nebraska, 262 U.S. 390, 43 S. Ct. 625, 67 L. Ed. 1042 (1923) (parents have a fundamental interest in the education of their children).
However, the Court has never held this right to be absolute or unqualified, see, e.g., Lehr v. Robertson, 463 U.S. 248, 256, 103 S. Ct. 2985, 2990, 77 L. Ed. 2d 614 (1983) (relationship between parent and child merits constitutional protection in "appropriate cases"), and it has balanced it against the compelling government interest in the health, education, and welfare of children as future citizens. See Santosky, 455 U.S. at 766, 102 S.Ct. at 1401-02 (state has parens patriae interest in welfare of child); Stanley, 405 U.S. at 645, 92 S.Ct. at 1209-10 (state has the *329 "right" and "duty" to protect minor children); Lassiter v. Department of Social Serv., 452 U.S. 18, 27, 101 S. Ct. 2153, 2159, 68 L. Ed. 2d 640 (1981) (state has an "urgent interest" in the welfare of the child); Myers v. Morris, 810 F.2d 1437, 1462 (8th Cir.1987), cert. denied, 484 U.S. 828, 108 S. Ct. 97, 98 L. Ed. 2d 58 (1987) (constitutionally protected interest in family relations is limited by compelling government interest in protection of minor children, particularly in circumstances where protection may be necessary as against the parents themselves); Lossman v. Pekarske, 707 F.2d 288, 291 (7th Cir.1983) ("When a child's safety is threatened, that is justification enough for action first and hearing afterward.").
The weight of parents' interest in the care and custody of their child balanced against the state's interest in the protection of the child from harm naturally leaves a court engaged in this type of inquiry in a quandary as to what plaintiffs' clearly established rights may be in a particular situation. See Anderson, 483 U.S. at 639, 107 S.Ct. at 3038-39 (many general Constitutional rights, such as the right to due process of law, are clearly established and yet so general that it often will be unclear whether particular conduct violates the right). It is for this reason that many courts have found that, in the context of child care workers investigating and bringing child abuse proceedings, there are no "clearly established" substantive due process rights held by parents.
In Frazier v. Bailey, 957 F.2d 920 (1st Cir.1992), the First Circuit noted that, since Harlow, "lower courts that have applied this [qualified immunity] doctrine in cases involving alleged child abuse have concluded that it cannot be `objectively reasonable' to expect public officials to know that their conduct violated a generalized right to `familial integrity.'" Id. at 931. The court continued, stating,
[s]uch cases require a more fact-specific inquiry into whether the defendants' actions violated a particularized, `clearly established' constitutional right.... The courts have also emphasized the amorphous nature of a liberty interest in familial relationships. Because this interest must always be balanced against the government interest involved, it is difficult, if not impossible, for officials to know when they have violated `clearly established' law.
Id. (internal citations omitted). The First Circuit concluded that "the dimensions" of the right of family integrity "have yet to be clearly established." Id. Therefore, because the defendants were not on notice of the reaches of the right, they were entitled to qualified immunity as a matter of law. Id.
In Hodorowski v. Ray, 844 F.2d 1210 (5th Cir.1988), plaintiffs also argued that child care workers were not entitled to qualified immunity because the workers' removal of plaintiffs' children from their home without a prior court order violated the plaintiffs' right to familial integrity. The Fifth Circuit squarely rejected this argument, noting the "nebulous" nature of the constitutional right of family integrity:
It is beyond dispute that many aspects of family integrity possess constitutional stature. But reasonable government officials, knowing only that they must not infringe on family integrity, would not necessarily know just what conduct was prohibited. In particular, in the absence of any more fact-specific authority, we do not think that appellants in this case should have known that their conduct in removing the Hodorowski children from the home violated the nebulous right of family integrity.
Id.; see also Hodge v. Jones, 31 F.3d 157, 167 (4th Cir.1994) ("To expect Defendants to resolve what reasonable jurists have long debated namely the precise strictures of the penumbral right of familial privacy, cast in the sweeping language of the Supreme Court cases cited by the district court, especially in the face of a legitimate state interest such as the effective detection and prevention of child abuse is to impose burdens and expectations well beyond their reasonable capacities"); Doe v. State of Louisiana, 2 F.3d 1412, 1418 (5th Cir.1993), cert. denied, ___ U.S. ___, 114 S. Ct. 1189, 127 L. Ed. 2d 539 (1994) (social workers entitled to qualified immunity because rights of family integrity under the Fourteenth Amendment not clearly established); Landstrom, 892 F.2d at 676 (defendants entitled to qualified immunity *330 because plaintiffs cite no cases indicating what clearly established rights have been violated); Hidahl v. Gilpin County DSS, 938 F.2d 1150, 1155 (10th Cir.1991) (defendants entitled to qualified immunity because plaintiffs have presented no case law to support their contention that conduct of defendants violated a clearly established constitutional or statutory right); Stem v. Ahearn, 908 F.2d 1 (5th Cir.1990), cert. denied, 498 U.S. 1069, 111 S. Ct. 788, 112 L. Ed. 2d 850 (defendants entitled to qualified immunity because plaintiffs have not established that any clearly established right was violated); Myers, 810 F.2d at 1461, n. 18 (stating that "neither the Supreme Court nor any other circuit has addressed the application of the fourth or fourteenth amendments in the context of a child abuse investigation" and holding that defendants were therefore entitled to qualified immunity); Fittanto v. Klein, 788 F. Supp. 1451, 1458 (N.D.Ill.1992) (law concerning child abuse workers and children who may have been sexually abused is no clearer today than when Myers decided; consequently, defendants entitled to qualified immunity); Daryl H. v. Coler, 801 F.2d 893, 908 (7th Cir.1986) (holding that where the constitutionality of child abuse workers procedures cannot be determined, plaintiffs cannot maintain that defendants should have known that their actions violated a clearly established constitutional right).
As we indicated earlier, plaintiffs cite to no case law, in their response to summary judgment, to support their contention that any "clearly established" rights of theirs were violated.[13] Instead, the gravamen of their complaint appears to be that their clearly established rights were violated because defendants "improperly rel[ied] on an alleged method of communication not generally accepted within the scientific, educational, or psychological communities....," see Complaint at ¶ 34, when they relied upon information obtained through FC in taking the actions that they did.
While we take note of the fact that FC has recently come under strong criticism in the scientific community,[14] it is not within the purview of this court to take that information into account at this time. Our sole task is to determine if there were any legally established norms at the time defendants took action that would have indicated to them that their reliance on FC in reporting child abuse would be a violation of plaintiffs' Constitutional or statutory rights.
An exhaustive search of the case law has revealed to us no even remotely analogous circumstances that would have put defendants on notice that their conduct at that stage of the proceedings might be violative of clearly established rights. In fact, if anything, the case law surveyed would benefit the defendants. It is well-established in the case law that child care workers are entitled to qualified immunity in the performance of discretionary functions. See Robison v. Via, 821 F.2d 913 (2d Cir.1987) (state trooper and assistant state attorney who removed child from home because of suspected abuse entitled *331 to qualified immunity because it was objectively reasonable for them to believe that they violated no clearly established rights); Frazier v. Bailey, 957 F.2d 920 (1st Cir.1992) (child care workers entitled to qualified immunity because no clearly established rights of plaintiff violated); Hidahl v. Gilpin County DSS, 938 F.2d 1150 (10th Cir.1991) (social workers who filed a dependency and neglect proceeding were entitled to qualified immunity because allegations set forth in the complaint were not sufficient to show that defendants conduct violated clearly established rights); Caldwell v. LeFaver, 928 F.2d 331 (9th Cir.1991) (social worker and supervisor who removed children from father's custody because of suspected abuse and placed them in the temporary custody of mother in another state entitled to qualified immunity); Stem v. Ahearn, 908 F.2d 1 (5th Cir.1990) (child protective services workers were entitled to qualified immunity in action because plaintiff failed to show that workers had breached any clearly established constitutional or statutory right); Daryl H. v. Coler, 801 F.2d 893 (7th Cir.1986) (where constitutionality of child abuse workers' procedures cannot be determined, plaintiffs cannot maintain that defendants should have known that their actions violated clearly established rights; therefore, workers entitled to qualified immunity); Hodorowski v. Ray, 844 F.2d 1210 (5th Cir.1988) (child care worker who removed child from parents' custody due to suspected abuse entitled to qualified immunity because no clearly established rights existed); Doe v. Hennepin, 858 F.2d 1325 (8th Cir.1988), cert. denied, 490 U.S. 1108, 109 S. Ct. 3161, 104 L. Ed. 2d 1023 (1989) (absent showing of "malice or improper motives," county welfare agency officials entitled to qualified immunity from damages claims arising out of the removal of plaintiffs' children from their home for 16 days due to suspected child abuse); van Emrick v. Chemung County Dept. of Social Serv., 911 F.2d 863 (2d Cir.1990) (caseworkers who removed child from custody of parents pursuant to court order during child abuse and then allowed x-rays of child to be taken entitled to qualified immunity because no clearly established rights existed); Doe v. State of Louisiana, 2 F.3d 1412 (5th Cir.1993), cert. denied, ___ U.S. ___, 114 S. Ct. 1189, 127 L. Ed. 2d 539 (1994) (case worker and supervisor entitled to qualified immunity because case law in area not clearly established); Doe v. Connecticut Dept. of Children and Youth Services, 712 F. Supp. 277 (D.Conn.1989), aff'd, 911 F.2d 868 (2d Cir.1990) (social workers who initiated child abuse investigation and removed child from parents' custody were entitled to qualified immunity because they had a reasonable basis to believe that there was ongoing abuse); Pauli v. Farmington Cent. Com. School Dist. 265, 841 F. Supp. 840 (C.D.Ill.1994) (school officials entitled to qualified immunity with regard to claim that officials' placement of son in foster home violated parent's constitutional rights); Fittanto v. Klein, 788 F. Supp. 1451 (N.D.Ill. 1992) (social workers entitled to qualified immunity because child was removed from home on a good faith belief that he was being abused); Millspaugh v. Wabash County Dept. Public Welfare, 746 F. Supp. 832 (N.D.Ind.1990), aff'd, 937 F.2d 1172 (7th Cir. 1991) (county child welfare worker who initiated petitions for removal of child from mother's custody entitled to qualified immunity because plaintiff did not identify what clearly established rights had been violated); Roman v. Appleby, 558 F. Supp. 449 (E.D.Pa. 1983) (school personnel who conducted interviews with student and thereafter reported matter to county services entitled to qualified immunity); Landstrom v. Illinois Department of Children and Family Services, 699 F. Supp. 1270 (N.D.Ill.1988), aff'd 892 F.2d 670 (7th Cir.1990) (school employees who removed child from classroom to both question her about possible child abuse and to give her a physical examination were nevertheless entitled to qualified immunity); Chayo v. Kaladjian, 844 F. Supp. 163 (S.D.N.Y.1994) (child care workers who removed children from home based on allegations of abuse and allowed medical exam with x-rays to be conducted, entitled to qualified immunity).
The only case we have found that has more specific applicability to the unique situation before us also dictates against the plaintiffs' position. In Myers v. Morris, supra, the Eighth Circuit discussed the issue of techniques used to interview children that had allegedly been sexually abused. Plaintiffs in *332 Myers alleged that defendants, among other things, used interviewing methods so flawed that they inevitably produced false and misleading accusations. Id. at 1444-45. The Eighth Circuit found that the "interviewing conduct occurred in a grey area of investigative procedure as to which there were, and probably still are, less than clearly established legal norms...."[15] and noted that "[t]he nature and extent of permissible interrogation is but one of many unsettled questions in the context of a child abuse investigative procedures." Id. at 1461. See also Hodge, 31 F.3d at 167 ("this would be a proper case for the application of qualified immunity because officials are not liable for bad guesses in gray areas; they are liable for transgressing bright lines.") (internal citations omitted). The court thus concluded that since the standards for the interrogation of juvenile witnesses and victims in the area of child abuse were not clearly established, defendants were entitled to qualified immunity. Id.
We find the policy of the general case law and more specific holding in Myers to be applicable to our case. As in Myers, we have at issue a technique of questionable validity utilized in the context of child abuse investigations. We believe that when it was employed by defendants, FC has its share of critics and supporters, and thus presented a seminal "grey area" situation. Finding no case law regarding its use, and given the unsettled nature of the method in general, we find that at the time in question there existed no clearly established substantive due process right that could have been violated.
b. Procedural Due Process
Since we have already discussed plaintiffs' right to privacy under the substantive component of the Due Process Clause, we will briefly analyze it under a procedural due process framework. In order to allege a claim under the procedural arm of the Due Process Clause, plaintiffs must demonstrate that: (1) there has been a deprivation of liberty or property in the constitutional sense; and (2) the procedures used by the state to effect this deprivation were constitutionally inadequate. In Re Scott County Master Docket, 672 F. Supp. 1152, 1169 (D.Minn.1987), aff'd, Myers v. Scott County, 868 F.2d 1017 (8th Cir.1989). Procedural due process, then, is unlike substantive due process in that the constitutional violation "is not complete unless and until the State fails to provide due process." Zinermon, 494 U.S. at 125, 110 S.Ct. at 983. It is therefore necessary to inquire into the constitutional adequacy of the State's procedural safeguards. Id.
In determining the amount of process that a state must give, courts have consistently looked to the three-part test of Mathews v. Eldridge, 424 U.S. 319, 335, 96 S. Ct. 893, 903, 47 L. Ed. 2d 18 (1970), as their guide:
First, the private interest that will be affected by the initial action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal administrative burden that the additional or substitute procedural requirement would entail.
Applying these principles to the situation before us, there is no dispute that plaintiffs have a protected liberty interest in familial privacy. See In re Scott County Master Docket, 672 F.Supp. at 1169; Hodge, 31 F.3d at 163; Bohn v. County of Dakota, 772 F.2d 1433, 1435 (8th Cir.1985), cert. denied, 475 U.S. 1014, 106 S. Ct. 1192, 89 L. Ed. 2d 307 (1986). As in the substantive due process context, however, this right is obviously not absolute and is balanced against the state's interest in protecting children reasonably suspected of being abused. See Millspaugh, 746 F.Supp. at 848; In re Scott County Master Docket, 672 F.Supp. at 1169.
*333 The gist of plaintiffs' allegations in a procedural due process context, as we understand it, would be that they were deprived of their right of familial privacy without due process since their child was removed from them without any inquiry into the validity of FC as a reliable source of information. Plaintiffs can allege no Constitutional violation, however, unless the procedural safeguards offered by the state did not adequately protect their interests. We find that plaintiffs' interest were adequately protected and they therefore cannot allege a procedural due process violation.
Procedural due process is satisfied by the "opportunity to be heard `at a meaningful time and in a meaningful manner.'" Mathews, 424 U.S. at 333, 96 S.Ct. at 902. First, we generally note that the procedural safeguards afforded by the Pennsylvania Child Protective Services Law, 23 Pa.C.S.A. § 6301 et seq., adequately protect the interests of parents. See Fanning v. Montgomery County Children and Youth Services, 702 F. Supp. 1184, 1189 (E.D.Pa.1988) (23 Pa.C.S.A. § 6301 et seq., affects "a constitutionally sufficient balance of the strong interest of parents in the custody of their children and the risk of erroneous interference with that custody, on the one hand, and the state's interest in protecting minors from a potentially abusive environment on the other.").
Specific to plaintiffs' contention regarding the lack of due process vis-a-vis FC, we note that it is precisely the function of these procedural safeguards to protect against errors that were made in judgment during the investigation process. See Ellis v. Hamilton, 669 F.2d 510, 515 (7th Cir.1981), cert. denied, 459 U.S. 1069, 103 S. Ct. 488, 74 L. Ed. 2d 631 (1982) (Due Process not violated "if the state provides reasonable remedies for preventing families from being arbitrarily broken up by local domestic relations officers."). For instance, a child may not be held for more than 24 hours without a court order, see 23 Pa. C.S.A. § 6315(b), and a detention hearing must be held within 72 hours to determine whether protective custody is further warranted. See 23 Pa.C.S.A. § 6315(d). Michael was taken into protective custody pursuant to a court order and within 72 hours a hearing was held, with plaintiffs present, where it was determined that he would remain in protective custody. Furthermore, at plaintiffs' request, a hearing on the admissibility of allegations received through FC was held and the petition for custody was withdrawn by the Agency. See Ellis, 669 F.2d at 514 (Due Process is not violated if state procedures exist to correct "inevitable errors" or "blunders" of local officials regarding custody matters). That the hearing was post-deprivation as opposed to pre-deprivation is not a violation of due process in this context. See Id. at 515; In re Scott County Master Docket, 672 F.Supp. at 1170. Nor is any general embarrassment suffered by plaintiffs during the course of the proceedings. See Roman, 558 F.Supp. at 461.
c. Fourth Amendment
Plaintiffs also claim that the removal of Michael from parental custody was an unreasonable search and seizure in violation of established Constitutional principles under the Fourth and Fourteenth Amendments.[16] Plaintiffs only support for this contention is that which has already been discussed above; that is, defendants' reliance on the use of allegations obtained through FC in requesting a custody order from the court. The question before us is: Was it clearly established, at the time of defendants' actions, that it was unreasonable under the Fourth Amendment for defendants to apply for and then execute a court order for temporary custody based on information obtained through FC?
Turning to the specific context of child care workers, we find no Fourth Amendment case law, and plaintiffs have cited none, that would have put defendants on notice that their actions would violate any existing clearly established rights. First, as we have already noted, we have found no case law that *334 would even remotely indicate that defendants' reliance on FC in obtaining a custody order would violate any clearly established Constitutional principles.
Second, the weight of the law in the Fourth Amendment context, in fact, generally balances in favor of the defendants. Defendants in this case obtained a court order from the Juvenile Court, pursuant to which they took custody of Michael. Our survey of the law reveals that courts have regularly granted qualified immunity to child care workers who initially remove a child from the home without a court order. See Robison, 821 F.2d at 921 ("It is well established that officials may temporarily deprive a parent of custody in `emergency circumstances' without parental consent or a prior court order.") (emphasis in original); Lossman, 707 F.2d at 291 ("When a child's safety is threatened, that is justification enough for action first and hearing afterward.").
Even analogizing the situation at hand, that of a child care worker seeking, obtaining, and executing a temporary custody order, to a police officer seeking, obtaining, and executing an arrest warrant, we find no clearly established Fourth Amendment principles that would have indicated to the defendants that their actions were Constitutionally improper. See Good, 891 F.2d at 1094 ("The Fourth Amendment case law has developed in a myriad of situations involving very serious threats to individuals and society and we find no suggestion that the governing principles should vary depending upon the court's assessment of the gravity of the societal risk involved."); Austin v. Borel, 830 F.2d 1356, 1361 (5th Cir.1987); Doe, 712 F.Supp. at 282. It is well-settled that probable cause to arrest generally exists when a police officer makes an arrest pursuant to a warrant that meets the requirements of the Fourth Amendment. See Baker, 443 U.S. at 144, 99 S.Ct. at 2694; Graham, 490 U.S. at 389, 109 S.Ct. at 1868. Furthermore, law enforcement officers who arrest on the basis of such a warrant are usually immune from suits alleging a Constitutional violation. Baker, 443 U.S. at 143-44, 99 S.Ct. at 2694; Graham, 490 U.S. at 395, 109 S.Ct. at 1871; Druckenmiller v. United States, 548 F. Supp. 193, 194-95 (E.D.Pa.1982) ("The law is clearly established that law enforcement officers who effect an arrest pursuant to a facially valid arrest warrant are immune from suit alleging a constitutional deprivation.").
The only exception to this general rule is where the warrant application is so lacking in indicia of probable cause as to render official belief in its existence unreasonable. In this case, the "shield of immunity" will be lost and the officer will be liable for damages under § 1983. See Malley, 475 U.S. at 344, 106 S.Ct. at 1097-98; see also Lippay v. Christos, 996 F.2d 1490 (3d Cir.1993) (where police officer submits affidavit in support of arrest warrant containing statements he knows to be false or would know to be false if he had not recklessly disregarded the truth, officer fails to observe right that was clearly established, and is not entitled to qualified immunity). Furthermore, even if "officers of reasonable competence could disagree on this issue, immunity should be recognized." Malley, 475 U.S. at 341, 106 S.Ct. at 1096.
In the case at hand, a temporary custody order was obtained by defendants from the Court of Common Pleas of Lancaster County. There have been no substantiated allegations made by plaintiffs that this order was obtained in bad faith or with "reckless disregard for the truth."[17] Consequently, we find that there existed no clearly established rights under the Fourth Amendment at the time of defendants' actions that would have put them on notice that their decision to apply for a custody order based on information obtained through FC, and their subsequent execution of that order, was wrongful.
*335 In sum, we hold that defendants are entitled to qualified immunity as a matter of law since our analysis has revealed that the Constitutional principles that govern the situation at hand are not clearly established.
2. Objective Reasonableness of Defendants' Actions
Even if the contours of plaintiffs' federal rights were clearly delineated at the time of the acts complained of, defendants may enjoy qualified immunity if it was objectively reasonable for them to believe that their acts did not violate those rights. See generally Hidahl, 938 F.2d at 1154 ("A defendant in a § 1983 action is not required to anticipate changes in the law, and the reasonableness of his conduct is to be judged by the state of the law at the time of his conduct."). Although we have found that the individual defendants would be entitled to qualified immunity as a matter of law, we find on alternative grounds that even if plaintiffs did possess such rights, defendants would nevertheless be entitled to qualified immunity because their actions were objectively reasonable.
a. Reasonableness of Defendants' Reliance on FC
We first address the issue of FC. Plaintiffs argue that defendants' reliance on any information received through FC was objectively unreasonable since FC is "unreliable and invalid." See Complaint at ¶ 34. While it is not our function to express any scientific opinion as to the validity or invalidity of FC as a reliable means of communication, we do find from a legal perspective that, at the time in question, it was objectively reasonable for all defendants to have relied on allegations of child abuse received through FC. Our reasons for so finding are three-fold.
First, we note that when making a determination regarding the narrow issue of qualified immunity, it is our task to focus solely on the "objective legal reasonableness" of the defendants actions in light of existing case law. See Harlow, 457 U.S. at 819, 102 S.Ct. at 2738-39 (emphasis added). As we have already stated, an exhaustive search of the case law has turned up absolutely no cases that would even remotely indicate to defendants that it was not legally reasonable for them to rely on information obtained through FC at their stage of the proceedings.
Second, although evidence obtained through FC has been deemed inadmissible in many state courts, the reporting requirements of the Pennsylvania Child Protective Services Law do not indicate that only reports based on evidence admissible in court can be made. In fact, the intent of the Law goes against that contention:
Undoubtedly the purpose of the Child Protective Services Law is to bring about quick and effective reporting of suspected child abuse so as to serve as a means for providing protective services competently and to prevent further abuse of the children while providing rehabilitative services for them and the parents.... The law does not provide for legal determinations of abuse; it is mainly a vehicle for reporting abuse and bringing quickly into play those services (including court hearings) available through county protective service facilities for the care of the child.
In Interest of J.R.W., 428 Pa.Super. 597, 631 A.2d 1019, 1022 (1993); see generally Myers, 810 F.2d at 1463 ("The `reasonable belief' standard reflects a legislative policy in favor of vigorous and immediate child protection endeavors.").
Third, there is no dispute that plaintiffs gave permission for FC to be used with Michael in accordance with his Individualized Education Plan ("IEP").[18] Lantz and Elledge were trained, as were many other teachers who deal with autistic children, in the technique of facilitative communication at a seminar in early 1992. See Affidavit of Lisa Lantz. The use of FC with Michael was discussed with Michael's parents at a meeting in June of 1992 regarding his IEP. Michael's parents approved the use of FC with *336 Michael at that meeting. See IEP Report. Accordingly, Lantz and Elledge were using FC with Michael in accordance with his IEP.
b. Defendants Lantz, Elledge, and Laughman
Plaintiffs allege that defendants Laughman, Lantz, and Elledge improperly relied "on an alleged method of communication not generally accepted within the scientific, educational, or psychological communities, thereby making said method unreliable and invalid. ..." See Complaint at ¶ 34.
As to Lantz and Elledge, we find that their actions were objectively reasonable and proper in light of their obligations under Pennsylvania law as child care workers. See Caldwell, 928 F.2d at 333 (defendants adherence to state statute has bearing on their objective reasonableness). Pursuant to the Pennsylvania Child Protective Services Law, 23 Pa.C.S.A. § 6311, certain persons, including school teachers, "who ... come into contact with children shall report or cause a report to be made ... when they have reason to believe, on the basis of their medical, professional, or other training and experience, that a child coming before them in their professional or official capacity is an abused child." 23 Pa.C.S.A. § 6311(a) (emphasis added). Defendants correctly point out that it is "suspected" rather than verified reports of child abuse that must be reported. See Stoneking v. Bradford Area School District, 856 F.2d 594, 600 (3d Cir.1988), vacated on other grounds, Smith v. Stoneking, 489 U.S. 1062, 109 S. Ct. 1333, 103 L. Ed. 2d 804 (1989) (Act "reflects the state's broad policy `to encourage more complete reporting of suspected child abuse and ... to provide protection for children from further abuse'"); Brozovich v. Circle C Group Homes, Inc., 120 Pa.Cmwlth. 417, 548 A.2d 698, 700 (1988) (emphasis in original) ("[T]he Law requires the Circle C Appellees to immediately report suspected abuse.... The urgency of prompt reporting is stressed throughout the Law's provisions"). Furthermore, the policy behind the statute dictates that a person making a report is not required to have probable cause; rather, a "lesser quantum of evidence" is all that is necessary, Roman, 558 F.Supp. at 459, and there is no requirement of pre-report verification. See Brozovich, 548 A.2d at 700 (verification of allegations of abuse before reporting runs contrary to express purpose of the law).
Based on their FC training, Lantz and Elledge certainly had "reason to believe," then, that Michael was a possible victim of child abuse and, pursuant to the statute, were obligated to report the abuse. Furthermore, if they suspected abuse and failed to report it, they may have faced criminal penalties. See 23 Pa.C.S.A. § 6319.[19]See also Chrissy F. By Medley v. Mississippi DPW, 925 F.2d 844, 851 (5th Cir.1991) (allegation that welfare department workers failed to report or investigate allegations of child abuse was sufficient to charge violation of child's clearly established right of access to courts).
Lantz and Elledge properly reported the allegations to the appropriate school personnel. See 23 Pa.C.S.A. § 6311(c).[20] On February 9, they again facilitated with Michael *337 to determine what was troubling him. It is there that their involvement essentially ended, although defendant Lantz was asked to accompany Agency personnel to the Callahan household to facilitate with Michael if necessary. Lantz and Elledge did not make the report to the Agency but properly deferred this decision to their superiors. The information before us indicates, and plaintiffs have presented no evidence to the contrary, that, other than merely reporting their allegations to superiors, Lantz and Elledge had no involvement in the decision by the Agency to file for an emergency custody petition. Absent a showing of bad faith or malice on the part of the defendants in making the initial reports, which we do not believe plaintiffs have alleged,[21] we hold that defendants Lantz's and Elledge's actions were certainly objectively legally reasonable and hold them entitled to qualified immunity.
With regard to defendant Laughman, we hold that, at the time in question, his actions were also objectively reasonable. Defendant Laughman was the social worker who filed for a temporary custody order with the Juvenile Court. He received information from IU 13 indicating that Michael Callahan had alleged, through facilitative communication, that he was the subject of sexual abuse by his father. His supervisor and the Agency attorney were then parties to a phone conference with the Honorable James P. Cullen of the Juvenile Court of Lancaster County. Based on this conference, defendant Laughman was apparently asked to prepare and file with Judge Cullen a Petition for Temporary Custody/Custody. After the granting of the petition by Judge Cullen, defendant Laughman, along with defendant Lantz and two state troopers, went to plaintiffs' home and took Michael into protective custody.
Defendant Laughman acted pursuant to the Pennsylvania Child Protective Services Law. Based on its duties under 23 Pa.C.S.A. § 6368(a),[22] the Agency made a determination that Michael should not be left in the custody of his parents. Reports of child abuse must be investigated immediately by the Agency receiving the report. See Id. It was decided that a temporary custody petition would be filed. See 23 Pa.C.S.A. § 6370(b).[23] Michael was then removed from his home pursuant to 23 Pa.C.S.A. § 6369.[24]*338 In appropriately carrying out the dictates of the state law, the decision was made to remove Michael immediately from his home. This obviously is the decision that plaintiffs question.
In van Emrick, a situation similar to ours, caseworkers determined that there was a possible child abuse situation, discussed it with superiors, obtained a court order and executed it. The Second Circuit determined that the caseworkers were entitled to qualified immunity and stated that "[t]he issue is not whether it was absolutely essential to remove the child or whether a more sensitive course would have been to leave the child hospitalized pending further investigation. The issue is whether it was objectively reasonable for the defendants to make the decision they made, and no rational jury could find that it was not." van Emrick, 911 F.2d at 866.
While in the situation at hand, defendant Laughman might have waited or pursued other investigative alternatives before making the decision to file for a temporary custody order, his actions cannot be viewed as objectively unreasonable under the circumstances. "It is precisely the function of qualified immunity to protect state officials in choosing between such alternatives, provided that there is an objectively reasonable basis for their decision whichever way they make it." Id.; see also In re Scott County Master Docket, 672 F.Supp. at 1166-67, n. 2 ("[T]he Court will not blind itself to the fact that child protection workers are under pressure to act quickly to remove children from homes where abuse is suspected. Given this pressure, it would be anomalous indeed to hold that child protection workers who do not act quickly are subject to suit for damages."); Myers, 810 F.2d at 1463 ("Nor is there any legal precedent which suggests that acting upon a reasonable belief that children are endangered by their continued presence in their homes must be deferred until the completion of additional investigation."). We believe that the information that was presented to Laughman by the school was compelling, and it was thus objectively reasonable for him to believe that there existed a threat to Michael's safety that warranted the filing of an emergency custody petition.[25]
While we are certainly most sympathetic with plaintiffs and other parents in their position who feel that they have been wrongly accused of child abuse, we simply cannot ignore the confines of the law. Under the law, teachers must report, and child service agencies must investigate, all suspected allegations of child abuse. This reporting requirement is all the more compelling when the children at issue suffer from some form of mental disability. Not only may they have difficulty communicating, but they are in the highest risk category for child abuse. We certainly appreciate the difficulties child care *339 workers face today when investigating child abuse: "If they err in interrupting parental custody, they may be accused of infringing the parents' constitutional rights. If they err in not removing the child, they risk injury to the child." Van Emrick, 911 F.2d at 866. It is precisely this type of damned if you do, damned if you don't, discretionary decision-making on the part of government officials that the doctrine of qualified immunity doctrine was meant to protect.
c. Defendant Stauffer
Plaintiffs allege against defendant Stauffer that he failed to "adequately monitor, supervise, and train defendants Lantz and Elledge in the provision of educational services and the use, validity, and reliability of `facilitated communication'...." See Complaint at ¶ 35.
Defendant Stauffer was Michael's school year teacher at the time of the events in question. As far as we can ascertain, he engaged in no communication through FC with Michael on a regular basis, although he had been trained in its use along with other teachers at IU 13. After hearing of Lantz's suspicions of abuse in the fall of 1992, Stauffer apparently determined that not enough information existed at that point to report the child abuse allegations and directed that Elledge should be the primary facilitator with Michael when FC was used with him. Furthermore, Stauffer was present on February 9, 1993, when Michael facilitated his allegations again to both Lantz and Elledge, and we assume he participated in the decision to report the abuse although the person who made the actual report was Rita Foster.
We initially note that plaintiffs appear to allege a failure to train theory against defendant Stauffer that would fail on several grounds. First, aside from plaintiffs' statements in the complaint, there is no indication that Stauffer ever formally exercised any supervisory authority over defendants Lantz and Elledge since he himself was a teacher at IU 13. Second, since we previously found that it was objectively reasonable, at the time in question, for defendants to have relied on communications obtained through FC, the crux of plaintiffs' argument against Stauffer, failure to train and supervise in the use of FC, is deflated. See Sample v. Diecks, 885 F.2d 1099, 1118 (3d Cir.1989) ("[A] person is not the `moving force [behind] the constitutional violation' of a subordinate, unless that `person' ... has exhibited a deliberate indifference to the plight of the person deprived.").
These arguments are tangential, however, since based on the above facts, we find that Stauffer's actions were objectively reasonable. Stauffer acted in accordance with the dictates of the Child Protective Services Law as described above. Furthermore, Stauffer did not report the allegations of abuse the first time he heard them in the fall of 1992 from Lantz, but waited until there was confirmation from another facilitator before reaching the conclusion that a report should be made.
d. Defendant Landis
Plaintiffs allege against defendant Landis that he failed to "adequately monitor, supervise, and train defendant Laughman in the provision of child protective services and the investigation of allegations of sexual and physical abuse,...." See Complaint at ¶ 38. Landis initially spoke with Judge Cullen on the telephone regarding the allegations made by Michael and apparently participated in the decision to file for a custody petition with the court.
Based on the same reasoning we engaged in with regard to defendant Laughman above, we find that defendant Landis's actions with regard to this case were objectively reasonable.
e. Defendants Sohonyay and Sherr
Plaintiffs also allege against defendants Sohonyay and Sherr a general theory of failure to "monitor, supervise, and train" defendants Laughman, Landis, Elledge, Lantz, and Stauffer. Defendant Sherr is the Executive Director of IU 13 and defendant Sohonyay is the Director of the Agency.
We note first that plaintiffs' complaint and subsequent pleadings are void of specific allegations against either of these defendants. Nowhere is it indicated that *340 either defendant personally participated in the events, and thus their only potential liability arises under a theory of respondeat superior. It is well established in § 1983 case law that a supervisor cannot be held liable merely on a theory of respondeat superior, but that a plaintiff must allege some affirmative conduct on the part of the supervisor. See Rizzo v. Goode, 423 U.S. 362, 96 S. Ct. 598, 46 L. Ed. 2d 561 (1976). A plaintiff may establish such conduct either through "allegations of personal direction or of actual knowledge and acquiescence" or through proof of direct discrimination by the supervisor. See Keenan v. City of Philadelphia, 983 F.2d 459 (3d Cir.1992); Andrews v. City of Philadelphia, 895 F.2d 1469, 1478 (3d Cir. 1990) (citations omitted). Accordingly, since plaintiffs' have not alleged such involvement, we grant summary judgment in favor of defendants Sohonyay and Sherr.[26]See Myers, 810 F.2d at 1464-65 (no supervisory liability for sheriff when no clearly established law existed, deputies' actions were objectively reasonable, and there were no allegations of personal involvement).
B. MUNICIPAL LIABILITY
Local governments may be held to answer for Constitutional violations caused by official policy or custom of the municipality. See Monell v. Department of Social Services, 436 U.S. 658, 694, 98 S. Ct. 2018, 2037-38, 56 L. Ed. 2d 611 (1978). The Supreme Court defined such a municipal policy as a "statement, ordinance, regulation, or decision officially adopted and promulgated by [a local governing] body's officers." Id. at 690, 98 S.Ct. at 2036. A municipal custom for § 1983 purposes is "such practices of state officials ... [as are] so permanent and well-settled as to constitute a `custom or usage' with the force of law." Id. at 691, 98 S.Ct. at 2036 (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 167-68, 90 S. Ct. 1598, 1613, 26 L. Ed. 2d 142 (1970)); see City of Oklahoma City v. Tuttle, 471 U.S. 808, 820-24, 105 S. Ct. 2427, 2434-37, 85 L. Ed. 2d 791 (1985) (policy must be "moving force" behind Constitutional violation)." Municipal entities are not entitled to the defense of qualified immunity. See Owens v. City of Independence, 445 U.S. 622, 100 S. Ct. 1398, 63 L. Ed. 2d 673 (1980).
Plaintiffs allege against defendant IU 13 that since "defendants Lantz, Elledge, Stauffer, and Sherr were acting within the scope of their employment at, and according to the policies and procedures of, defendant IU 13, ... said acts were ratified by defendant IU 13. As a result, defendant IU 13 is liable for the acts of defendants Lantz, Elledge, Stauffer, and Sherr, as described in this complaint." See Complaint at ¶ 37. Plaintiffs similarly allege against defendant Agency that since "defendants Laughman, Landis, and Sohonyay were acting within the scope of their employment at, and according to the policies and procedures of, defendant CYA, and as such, said acts were ratified by defendant CYA. As a result, defendant CYA is liable for the acts of defendants Laughman, Landis, and Sohonyay, as described in the complaint." See Complaint at ¶ 40.
We first note that plaintiffs essentially allege a theory of respondeat superior liability against defendants IU 13 and Agency. However, a municipality cannot be held liable under this type of theory. See Monell, 436 U.S. at 694, 98 S.Ct. at 2037-38. Plaintiffs argue, however, in their response to defendants' Motions for Summary Judgment, *341 that the decision to use FC was indeed one of policy:
... the reliance upon that which was obtained through Facilitated Communication in pursuing this matter originally was not a decision left to the individual employees of the Agency. In other words, reliance upon Facilitated Communications by the Agency and the apparent failure to consider the complete absence of any other evidence which would corroborate the contents of the Facilitated Communications is a direct result of the execution of a governmental policy, regulation, or officially adopted decision.
See Plaintiff's Response to Summary Judgment at 4.
We find that since we held individual defendants actions vis-a-vis use of FC to be objectively reasonable, and thus entitled to qualified immunity, there can be no basis of recovery against the municipal agencies. See City of Los Angeles v. Heller, 475 U.S. 796, 106 S. Ct. 1571, 89 L. Ed. 2d 806 (1986) (per curiam) (holding that a municipal entity cannot be held liable for failing to train or supervise an officer where there is no underlying Constitutional violation by the officer); Frazier, 957 F.2d at 931 (no basis of recovery in civil rights action against agencies investigating allegations of child abuse, where only possible liability of agencies would derive from the culpability of their respective employees, and those employees were entitled to defense of qualified immunity); Williams v. Borough of West Chester, 891 F.2d 458 (3d Cir.1989) (where a plaintiff's claims focus on harm caused by the actions of municipal employees, rather than harm directly traceable to a municipal policy, municipal liability claims must be dismissed where the individual officer is exonerated). Cf. Fagan v. City of Vineland, 22 F.3d 1283 (3d Cir.1994) (municipality may be held independently liable even if no individual liability found if claims "based on different theories and require proof of different actions and mental states ...").
Even if we had not so found, however, defendants Agency and School would nevertheless be entitled to dismissal of the claims against them. This is because, beyond the allegations quoted above, plaintiffs offer no support for their contention that the use of information received through FC was the result of a "policy" or "custom" on the part of the municipal defendants. Generally, proof of a single incident of unconstitutional activity is insufficient to impose municipal liability unless there is proof that it was caused by an existing municipal policy attributable to municipal policy-makers. See City of Oklahoma City, 471 U.S. at 823-24, 105 S.Ct. at 2436-37; Pembaur v. City of Cincinnati, 475 U.S. 469, 480, 106 S. Ct. 1292, 1298, 89 L. Ed. 2d 452 (1986) (municipal liability may be imposed for a single decision by municipal policymakers under appropriate circumstances); see also Reynolds By Reynolds v. Strunk, 688 F. Supp. 950 (S.D.N.Y. 1988) (county social service agency not liable under § 1983 absent allegation that its actions were the product of official government policy); Millspaugh, 746 F.Supp. at 848 (social service department not liable under § 1983 because plaintiffs failed to demonstrate any causal connection between the department's policies and the alleged deprivations). Consequently, we dismiss all claims against defendants IU 13 and Agency.[27]
IV. PENDENT STATE LAW CLAIMS
Since we have dismissed all of plaintiffs' federal claims against defendants, the determination of whether to entertain or dismiss the pendent state claims is within our discretion.[28] The Supreme Court has indicated, *342 however, that "if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well." United States Mineworkers v. Gibbs, 383 U.S. 715, 726, 86 S. Ct. 1130, 1139, 16 L. Ed. 2d 218 (1966); See Robison, 821 F.2d at 925 ("When the federal claim must be dismissed, it may be an abuse of discretion to take pendent jurisdiction of a claim that depends on novel questions of state law."). Accordingly, since we have dismissed all federal claims against all defendants in this action, we exercise our discretion to dismiss the pendent state claims.[29]
V. CONCLUSION
For the reasons outlined in the foregoing memorandum, we grant summary judgment in favor of all defendants. An appropriate order follows.
NOTES
[1] Plaintiffs allege the following state law claims: negligence, intentional infliction of emotional distress, invasion of privacy, interference with the parent-child relationship, false imprisonment, and assault and battery.
[2] Plaintiffs have no direct knowledge of many of the facts preceding February 9, 1993, when their child Michael was taken into protective custody and they have not disputed defendants' version of these facts. We have noted any conflicts which do exist and resolved them in favor of plaintiffs.
[3] At a meeting in June 1992 to discuss Michael's Individualized Education Plan, Michael's parents and school personnel agreed that Michael would be assigned a one-on-one assistant who would remain with him throughout the day.
[4] FC is a technique by which a person, called a "facilitator," supports the hand or arm of a communicatively impaired individual, enabling the person to extend an index finger in order to point to or press the keys of a typing device and thus to communicate. It has been used primarily as a tool to communicate with people afflicted with autism, cerebral palsy and Down's Syndrome, as well as others labelled "intellectually or developmentally impaired." The technique was apparently first introduced in the United States in 1989. See "Facilitated Communication," Autism Society of America (September 1993).
[5] The text of 23 Pa.C.S.A. § 6311(a) and (b) reads as follows:
§ 6311. Persons required to report suspected child abuse
(a) General rule. Persons who, in the course of their employment, occupation or practice of their profession, come into contact with children shall report or cause a report to be made in accordance with section 6313 (relating to reporting procedure) when they have reason to believe, on the basis of their medical, professional or other training and experience, that a child coming before them in their professional or official capacity is an abused child. The privileged communication between any professional person required to report and the patient or client of that person shall not apply to situations involving child abuse and shall not constitute grounds for failure to report as is required by this chapter.
(b) Enumeration of persons required to report. Persons required to report under subsection (a) include, but are not limited to, any licensed physician, osteopath, medical examiner, coroner, funeral director, dentist, optometrist, chiropractor, podiatrist, intern, registered nurse, licensed practical nurse, hospital personnel engaged in the admission, examination, care or treatment of persons, a Christian Science practitioner, school administrator, school teacher, school nurse, social services worker, day-care center worker or any other child-care or foster-care worker, mental health professional, peace officer or law enforcement official.
[6] Rita Foster also maintains that at some point during this period Michael made statements of abuse to her when she facilitated with him.
[7] School defendants maintain that Elledge and Lantz facilitated with Michael separately that day with Foster and Stauffer as observers.
[8] According to defendants, Michael allegedly communicated to school staff that he felt sore and stated, "John stuck d--k in my butt, want to go to hospital, I need a nurse." Defendants also allege that they used the anatomically correct pictures to confirm his allegations. They claim that Michael pointed several times to the buttocks area of a man in a picture when asked where he hurt.
[9] The Agency personnel who spoke with Judge Cullen were defendant caseworker supervisor Greg Landis and Agency attorney David E. Alspach.
[10] Defendant Laughman executed the Temporary Custody order, accompanied by two state troopers. Defendant teacher Lantz was also asked to accompany them in case it was necessary to facilitate with Michael.
[11] Several of the individual defendants have raised the defense of Good Faith Immunity pursuant to the Pennsylvania Child Protective Services Law, 23 Pa.C.S.A. § 6318. While this may be a defense to state law claims, it cannot immunize governmental employees from liability resulting from alleged violations of federal law. See Good v. Dauphin County Social Services, 891 F.2d 1087, 1091 (3d Cir.1989) (Pennsylvania Child Protective Services Law cannot be the basis for summary judgment in the defendants favor when liability is based on federal law); Wade v. City of Pittsburgh, 765 F.2d 405, 407-08 (3d Cir.1985). Therefore, our discussion regarding § 1983 will be limited to the applicability of the federal immunity doctrines raised by the defendants.
[12] We also note that neither defendants nor plaintiffs engaged in any discussion of what plaintiffs' clearly established rights may have been at the time of this incident, so we will attempt to discuss the scope of the rights as best we can. See Davis v. Scherer, 468 U.S. 183, 197, 104 S. Ct. 3012, 3020, 82 L. Ed. 2d 139 (1984) (plaintiffs may overcome defendants qualified immunity only by showing that their rights were clearly established at the time of the conduct in issue); Landstrom v. Illinois Department of Children and Family Services, 892 F.2d 670, 675 (7th Cir.1991) (It is plaintiff's burden to demonstrate that a Constitutional right was clearly established).
Furthermore, the determination of qualified immunity in the context of a § 1983 action is determined by the defendants' knowledge and compliance with federal Constitutional and statutory rights, not state statutes. See Cleveland Board of Education v. Loudermill, 470 U.S. 532, 540-41, 105 S. Ct. 1487, 84 L. Ed. 2d 494 (1985).
[13] We note that many courts have held that this alone is sufficient basis for finding that no clearly established law exists. See Hodge, 31 F.3d 157, 167; Hidahl, 938 F.2d at 1155; Frazier, 957 F.2d at 931; Landstrom, 892 F.2d at 676.
[14] See Dr. Bernard Rimland, Facilitated Communication: Problems, Puzzles and Paradoxes: Six Challenges for Researchers, Autism Research Review International, vol. 5, no. 4 (1991); Dr. Bernard Rimland, Facilitated Communication: Now the Bad News, Autism Research Review International, vol. 5, no. 4 (1991); Dr. Patrick J. Rydell, Facilitated Communication: A Reason for Cautious Optimism, The Autism Quarterly, 1st Quarter (1992); Michael Eberlin, et. al., Facilitated Communication: A Failure to Replicate the Phenomenon, 23 Journal of Autism and Developmental Disorders 507 (1993); Alan Hudson, et. al., Brief Report: A Case Study Assessing the Validity of Facilitated Communication, 23 Journal of Autism and Developmental Disorders 165 (1993).
The American Academy of Child and Adolescent Psychiatry has issued the following policy statement on FC:
Facilitated Communication (FC) is a process by which a `facilitator' supports the hand or arm of a communicatively impaired individual while using a keyboard or typing device. It has been claimed that this process enables persons with autism or mental retardation to communicate. Studies have repeatedly demonstrated that FC is not a scientifically valid technique for individuals with autism or mental retardation. In particular, information obtained via (FC) should not be used to confirm or deny allegations of abuse or to make diagnostic or treatment decisions.
Approved by Council, October 20, 1993.
[15] "The grey area referred to involves the extent to which juvenile suspected child abuse victims may reasonably be questioned, particularly if they initially deny abuse, and the extent to which leading questions, confrontation with reports by others and photographs of suspects may be used." Myers, 810 F.2d at 1461.
[16] The Supreme Court has expressed a preference that all cases arising under § 1983 that deal with the violation of plaintiffs' Constitutional rights that pertain to unreasonable search and seizure or arrest be dealt with exclusively under the Fourth Amendment. Graham v. Connor, 490 U.S. at 395, 109 S.Ct. at 1871; Albright v. Oliver, ___ U.S. ___, 114 S. Ct. 807, 809, 127 L. Ed. 2d 114 (1994).
[17] The plaintiffs, in paragraph 42 of their complaint, generally allege maliciousness and "bad faith" on the part of all defendants. However, they fail to substantiate or further elaborate on these allegations in any way. The Supreme Court has held that unsupported allegations in pleadings are insufficient to raise a genuine issue of material fact and prevent grant of summary judgment. Celotex Corp. v. Cattrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986). See also Appelmans v. City of Philadelphia, 826 F.2d 214 (3d Cir.1987); Falcone v. Columbia Pictures, 805 F.2d 115 (3d Cir.1986).
[18] There is also no dispute as to whether the alleged communications between Michael and his facilitators actually took place.
[19] The text of 23 Pa.C.S.A. § 6319 reads as follows:
§ 6319. Penalties for failure to report
A person or official required by this chapter to report a case of suspected child abuse who willfully fails to do so commits a summary offense for the first violation and a misdemeanor of the third degree for a second or subsequent violation.
[20] The text of 23 Pa.C.S.A. § 6311(c) reads in pertinent part:
§ 6311. Persons required to report suspected child abuse
* * * * * *
(c) Staff members of institutions, etc. Whenever a person is required to report under subsection (b) in the capacity as a member of the staff of a medical or other public or private institution, school, facility or agency, that person shall immediately notify the person in charge of the institution, school, facility or agency or the designated agent of the person in charge. Upon notification, the person in charge or the designated agent, if any, shall assume the responsibility and have the legal obligation to report or cause a report to be made in accordance with section 6313. This chapter does not require more than one report from any such institution, school, facility or agency.
[21] Plaintiffs have intimated in various post-complaint pleadings an allegation of bad faith on the part of defendant Elledge. Specifically, plaintiffs hint that because they had not allowed Michael to accompany Elledge and other children to a community play shortly before February 9, there may have been some bad faith on the part of Elledge when he facilitated with Michael on February 9. See Deposition of John Callahan at 49-52.
We do not find that this intimation is sufficient to create a material issue of fact. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553; Hidahl, 938 F.2d at 1154 ("Under Harlow, even an allegation of malice ... is insufficient to subject a defendant in a proceeding of this sort `to the costs of trial or to the burdens of a broad reaching discovery.'").
[22] The text of 23 Pa.C.S.A. § 6368(a) reads in pertinent part:
§ 6368. Investigation of reports
(a) General rule. Upon receipt of each report of suspected child abuse, the child protective service
shall commence within 24 hours an appropriate investigation which shall include a determination of the risk to the child or children if they continue to remain in the existing home environment as well as a determination of the nature, extent and cause of any condition enumerated in the report and, after seeing to the safety of the child or children, immediately notify the subjects of the report in writing of the existence of the report and their rights pursuant to this chapter in regard to amendment or expungement.
* * * * * *
[23] The text of 23 Pa.C.S.A. § 6370(b) reads in pertinent part:
§ 6370. Services for protection of child at home or in custody
* * * * * *
(b) Initiation of court proceedings. In those cases in which an appropriate offer of service is refused and the child protective service determines, or if the service for any other appropriate reason determines, that the best interests of the child require court action, the child protective service shall initiate the appropriate court proceeding. The child protective service shall assist the court during all stages of the court proceeding in accordance with the purposes of this chapter.
[24] The text of 23 Pa.C.S.A. § 6369 reads as follows:
§ 6369. Taking a child into protective custody
Pursuant to the provisions of section 6315 (relating to taking child into protective custody) and after court order, the child protective service shall take a child into protective custody for protection from further abuse. No child protective service worker may enter the home of any individual for this purpose without judicial authorization.
The text of 23 Pa.C.S.A. § 6315 reads in pertinent part:
§ 6315. Taking a child into protective custody
(a) General rule. A child may be taken into protective custody:
(1) As provided by 42 Pa.C.S. § 6324 (relating to taking into custody).
* * * * * *
The text of 42 Pa.C.S. § 6324 reads in pertinent part:
§ 6324. Taking into custody
A child may be taken into custody:
(1) Pursuant to an order of the court under this chapter.
(2) Pursuant to the laws of arrest.
(3) By a law enforcement officer or duly authorized officer of the court if there are reasonable grounds to believe that the child is suffering from illness or injury or is in imminent danger from his surroundings, and that his removal is necessary.
* * * * * *
[25] The information before Laughman was as follows:
a) Michael appeared at school in a highly agitated state and made allegations of sexual abuse by his father to two separate facilitators. He appeared to confirm these allegations, as best he could, through anatomically correct drawings. b) Michael had previously alleged sexual abuse several times to both facilitators. c) Michael's autism and mental retardation prevented him from significantly communicating or confirming his allegations in any other manner. See Affidavit of Rita Foster.
[26] We note that Agency defendants have also raised the defense of absolute immunity. While we recognize that lower courts have often granted absolute immunity to social workers for their actions involving the initiation and prosecution of child custody proceedings, see Meyer v. Contra Costa County Dept. of Social Service, 812 F.2d 1154 (9th Cir.), cert. denied, 484 U.S. 829, 108 S. Ct. 98, 98 L. Ed. 2d 59 (1987); Fanning v. Montgomery County Children and Youth Service, 702 F. Supp. 1184 (E.D.Pa.1988); Mazor v. Shelton, 637 F. Supp. 330 (N.D.Cal.1986); Whelehan v. County of Monrow, 558 F. Supp. 1093 (W.D.N.Y. 1983), we need not address the issue at this point since we have already granted defendants qualified immunity. We are mindful, however, of the warning of the Second Circuit in counseling against such an extension of absolute immunity:
[W]e think the strong emotional response provoked in anyone hearing an allegation of child abuse counsels against according an official absolute immunity for a taking in the wake of any and every such allegation, lest the official power itself become more likely to be abused.
Robison, 821 F.2d at 920.
[27] We note that IU 13 has also raised the defense of immunity pursuant to the 11th Amendment to the Constitution, alleging that it is a "state agency." The 11th Amendment generally divests federal courts of jurisdiction to entertain suits directly against states. See Edelman v. Jordan, 415 U.S. 651, 662-63, 94 S. Ct. 1347, 1355-56, 39 L. Ed. 2d 662 (1974). The court must examine the essential nature of an entity to determine whether it is a "state agency" under state law. See Mt. Healthy City Bd. of Education v. Doyle, 429 U.S. 274, 280, 97 S. Ct. 568, 572-73, 50 L. Ed. 2d 471 (1977). Since defendants do not support their defense with any evidence or case law, we will treat this defense as merely hortatory and decline to address it at this time.
[28] 28 U.S.C. § 1367 codified the common law abstention doctrines and reads in relevant part: (c) The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if ... (3) the district court has dismissed all claims over which it has original jurisdiction.
[29] This dismissal is without prejudice to plaintiffs' rights to present their claims in state court, although we note some doubt as to the validity of those claims. See footnote 11, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1497998/ | 548 S.W.2d 884 (1977)
Joyce HOBBS, Appellant,
v.
The STATE of Texas, Appellee.
No. 52787.
Court of Criminal Appeals of Texas.
February 9, 1977.
Rehearing Granted in Part April 6, 1977.
*885 F. L. Garrison, Gilmer, for appellant.
J. Michael Smith, Dist. Atty., Gilmer, Jim D. Vollers, State's Atty., David S. McAngus, Asst. State's Atty., Austin, for the State.
OPINION
DAVIS, Commissioner.
Appeal is taken from a conviction for attempted capital murder. Punishment was assessed by the jury at twenty-eight years.
Appellant contends that the indictment was fatally defective. The indictment alleges in pertinent part:
"That Joyce Hobbs on or about the 25 day of July, A.D. 1975 ... did then and there attempt knowingly to cause the death of James Leon Hobbs by promising remuneration, to-wit: promising to pay Virgil McCuller $100.00 to kill the said James Leon Hobbs by shooting him with a gun."
If the charging instrument does not allege that an offense was committed by the accused, it is insufficient in law to support a verdict of guilty and any conviction based thereon is void and may be challenged at any time. American Plant Food Corporation v. State, Tex.Cr.App., 508 S.W.2d 598.
"Attempt" is defined by V.T.C.A. Penal Code, Sec. 15.01, as follows:
"(a) A person commits an offense if, with specific intent to commit an offense, he does an act amounting to more than mere preparation that tends but fails to effect the commission of the offense intended."
"Murder" is defined by V.T.C.A. Penal Code, Sec. 19.02, in pertinent part:
"(a) A person commits an offense if he:
(1) intentionally or knowingly causes the death of an individual."
"Capital murder" is defined by V.T.C.A. Penal Code, Sec. 19.03, in pertinent part:
"(a) A person commits an offense if he commits murder as defined under Section 19.02(a)(1) of this code and:
* * * * * *
(3) the person commits the murder for remuneration or the promise of *886 remuneration or employs another to commit the murder for remuneration or the promise of remuneration." [Emphasis supplied.]
In the recent case of Colman v. State, Tex.Cr.App., 542 S.W.2d 144, it was contended that the indictment upon which an attempted capital murder conviction was based was fatally defective. The indictment, in pertinent part, read:
"... then and there, with the specific intent to commit the offense of capital murder, attempt to cause the death of Terry L. Graves, hereinafter called complainant, by shooting the said Terry L. Graves with a pistol and the said complainant was a peace officer then and there acting in the lawful discharge of an official duty to-wit: attempting to arrest said defendant and the said defendant then and there knew the said complainant to be a peace officer."[1]
This Court held that the indictment was not fatally defective for failure to allege the phrase in Sec. 15.01, supra, "amounting to more than mere preparation that tends but fails to effect the commission of the offense intended." The indictment in Colman clearly alleged facts which showed "more than mere preparation" in committing the offense of attempted capital murder.
The facts constituting an offense denounced by a statute should be alleged so that the conclusion of law may be arrived at from the facts stated. Posey v. State, 545 S.W.2d 162 (1977), and numerous cases cited therein. Does the instant indictment allege facts which would lead to the legal conclusion that appellant did "more than mere preparation" in committing the offense of attempted capital murder?
The indictment does nothing more than aver a promise to pay a named individual to kill James Leon Hobbs by shooting him with a gun. This factual allegation is not such as would lead to the legal conclusion that the accused committed acts "amounting to more than mere preparation that tends but fails to effect the commission of the offense intended."
We note that the allegation of "promise to pay" set forth in the indictment does not meet the requirement of Section 19.03(a)(3) that the accused ". . . employs another to commit the murder for remuneration or the promise of remuneration." The term "employ" is defined to be equivalent to "hiring" or "to engage the services of another, usually by contract or agreement for the performance of the services and the payment of a compensation therefor." Ballentine's Law Dictionary (3rd ed. 1969); see Black's Law Dictionary (4th ed. 1968). The indictment purports to charge appellant with attempted capital murder on the basis of a promise to pay McCuller $100.00 to kill Hobbs, without reciting that appellant hired or employed McCuller[2] or that McCuller accepted the offer of employment or that McCuller did any act demonstrating that he relied on the promise. Thus, the indictment alleges only a unilateral act by appellant, the promise to pay for the killing of Hobbs.
The State points to the fact that appellant had filed a motion to quash the indictment and that the State had advised appellant in open court that it was going to request permission from the court to withdraw its announcement of ready unless appellant withdrew her motion to quash. The appellant then announced to the court that she was willing to waive any defect in the indictment. On the basis of this waiver, the State urges that this Court "can do nothing more than conclude that the appellant was well aware of the charges pending against her." Notice to appellant of the charges pending against her is not the problem. The deficiency in the instant indictment is a fundamental one, the failure of the charging instrument to allege the offense *887 upon which appellant was convicted. See American Plant Food Corporation v. State, supra. Appellant's waiver does not cure this fundamental impediment.
The judgment is reversed and the prosecution ordered dismissed.
Opinion approved by the Court.
DOUGLAS, Judge, dissenting.
The majority reverses the case on the insufficiency of the indictment. Appellant specifically withdrew any objection to the indictment. She knew what she was charged with. The majority holds that that part of the indictment that appellant "did then and there attempt knowingly to cause the death of James Leon Hobbs by promising remuneration, to-wit: promising to pay Virgil McCuller $100.00 to kill the said James Leon Hobbs by shooting him with a gun" is not sufficient because it does not show that appellant hired McCuller or that McCuller accepted the offer or employment or that McCuller did any act demonstrating that he relied on the promise.
It should be noted that the indictment alleges a "promising to pay." It does not allege an offer to pay.
This allegation is sufficient, especially absent an exception or motion to set aside the indictment, to show that there was an agreement by appellant's offering to pay to have Leon Hobbs killed.
There was no more that appellant had to do to attempt to get Leon Hobbs killed. The balance was up to McCuller.
The indictment sufficiently alleges an attempt on the part of appellant to have the murder committed.
The judgment should be affirmed.
OPINION ON STATE'S MOTION FOR REHEARING
PHILLIPS, Judge.
The State's motion for rehearing asserts the indictment is not fundamentally defective because it alleges the offense of criminal solicitation, which is defined in V.C. T.A., Penal Code, Sec. 15.03 as follows:
"(a) A person commits an offense if, with intent that a capital felony or felony of the first degree be committed, he requests, commands, or attempts to induce another to engage in specific conduct that, under the circumstances surrounding his conduct as the actor believes them to be, would constitute the felony or make the other a party to its commission."
Although not a model pleading, the instant indictment substantially alleges all of the elements of criminal solicitation. The instant indictment alleges appellant "did then and there attempt knowingly to cause the death of James Leon Hobbs", and this is sufficient to allege appellant acted with intent that a felony be committed. The indictment further alleges appellant promised to pay $100.00 to another "to kill the said James Leon Hobbs by shooting him with a gun", and this is sufficient to allege that appellant requested, commanded or attempted to induce another to engage in specific conduct that would constitute the intended felony.
In our opinion on original submission we noted that the indictment does not allege attempted capital murder under V.C. T.A., Penal Code, Sec. 19.03(a)(3), because the indictment alleges only a unilateral act by appellant, without reciting that appellant hired or employed another to kill Hobbs. While we adhere to that holding, we note that to determine the intended felony under Sec. 15.03, supra, we must look to the specific conduct appellant requested, including the circumstances surrounding the conduct as appellant believed them to be. The indictment alleges appellant promised remuneration to another to kill Hobbs. Sec. 19.03(a)(3), supra, defines capital murder as the commission of murder for remuneration or the promise of remuneration. Thus, the instant indictment alleges appellant solicited another to commit capital murder.
Although the indictment sufficiently alleges appellant committed criminal solicitation, this theory was not submitted to the jury in the court's charge.
*888 "The rule is universal and has been emphasized frequently by appellate courts, and in a great number of cases by the appellate courts of this state, that the charge must be limited to the allegations in the indictment. A jury would not be authorized to convict appellant of any other offense than that specifically charged, and the court should confine the consideration of the jury in the charge to the allegation contained in the indictment."
Emerson v. State, 54 Tex. Crim. 628, 114 S.W. 834, 835 (1908). See also Bodine v. State, 76 Tex. Crim. 314, 174 S.W. 609 (1915); Price v. State, 81 Tex. Crim. 208, 194 S.W. 827 (1917); Booker v. State, Tex.Cr.App., 523 S.W.2d 413 and cases cited therein.
The charge authorized the jury to convict appellant of attempted capital murder or attempted murder, theories not charged in the indictment. See Ross v. State, Tex.Cr. App., 487 S.W.2d 744; Windham v. State, Tex.Cr.App., 530 S.W.2d 111; Williams v. State, Tex.Cr.App., 535 S.W.2d 352.
The foregoing errors in the court's charge were fundamental and calculated to injure the rights of the appellant to the extent she was denied a fair and impartial trial. See Art. 36.19, V.A.C.C.P.
The State's motion for rehearing is granted in part, and the judgment is reversed and the cause remanded.
NOTES
[1] See V.T.C.A. Penal Code, Sec. 19.03(a)(1).
[2] See New Texas Penal Code Forms, Sec. 1903C (W. Morrison and T. Blackwell); 2 Branch's Annotated Penal Statutes, Sec. 1903 (3rd ed. 1974). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1647452/ | 429 So. 2d 574 (1983)
Bernard W.N. CHILL, Sr., Administrator of the Estate of Ernest B. Covington, Deceased.
v.
MISSISSIPPI HOSPITAL REIMBURSEMENT COMMISSION.
No. 53668.
Supreme Court of Mississippi.
March 30, 1983.
*576 Chill, Chill & Dove, Bernard W.N. Chill, Sr., Jackson, for appellant.
Sanford R. Horton, Jr., Jackson, for appellee.
En banc.
ROBERTSON, Justice, for the Court:
This case presents important questions of first impression in this state regarding state power versus individual rights: whether, under what circumstances, and with what procedural safeguards, may the state demand of the estate of one involuntarily civilly committed to the Mississippi State Hospital (MSH) at Whitfield reimbursement for all or part of the cost of care and treatment there rendered? We hold that under carefully limited circumstances the state has the power to require such reimbursement, that the legislature has by appropriate enactment vested this power in Mississippi Hospital Reimbursement Commission and in the chancery courts of this state, and that the estate of the deceased incompetent has been afforded full due process. We affirm the order of the court below directing reimbursement.
I.
On December 18, 1979, Ernest B. Covington, then 66 years of age, departed this life intestate. On January 22, 1980, Bernard W.N. Chill, Sr., appellant here, petitioned the Chancery Court of the First Judicial District of Hinds County, Mississippi for appointment as Administrator of Covington's Estate. In routine fashion, the order of appointment was entered and the administrator fully qualified for the issuance of letters of administration. In due course notice to creditors was published.
On March 3, 1980, the Mississippi Hospital Reimbursement Commission (MHRC), claimant below and appellee here, probated a claim against the Estate of Ernest B. Covington in the amount of $46,373.72. The claim was based upon care and treatment services rendered to Covington by MSH beginning July 1, 1962, and continuing through and including the date of Covington's death. Administrator Chill contested the claim. After plenary trial on the merits, the Chancery Court on September 11, 1981, released a memorandum opinion allowing MHRC's claim in the amount of *577 $16,230.80, or 35% of the amount originally claimed. An appropriate decree was thereafter filed on September 29, 1981.
Administrator Chill timely perfected his appeal to this Court, challenging in its entirety this final decree. The case has been thoroughly briefed by the parties, and the Court has received oral argument. The important issues tendered are now ripe for decision.
II.
Ernest B. Covington entered this life in the year 1913. He apparently served approximately one year in the United States Army. At the beginning of the year 1951, he was married and the father of two children. He was employed as a bus driver in the City of Jackson. Beginning in that year and continuing for the next 28 years, little went well.
On March 30, 1951, Covington was involuntarily committed to the Mississippi State Hospital at Whitfield, Mississippi via proceedings had in the Chancery Court of the First Judicial District of Hinds County, Mississippi. According to the record, Covington had made threats of physical harm to various persons. The commitment papers reflect that he was examined by two physicians as then required by law and assigned a diagnosis "paranoid psychosis". The diagnosis made by the professional staff at MSH was "Schizophrenia, paranoid type". Between April 6, 1951, and May 11, 1951, Covington received electroshock therapy 16 times.
It is not clear from the record whether Covington was released, escaped, or, as suggested at oral argument, "simply walked off". In any event, Covington was back on the streets of Jackson in early July of 1953. On July 7, a new civil commitment proceeding was instituted, again in the Chancery Court of the First Judicial District of Hinds County, Mississippi. The examining physicians gave a diagnosis of schizophrenia, paranoid type, and the Chancery Court promptly entered the commitment order.
The voluminous record of Covington's experiences at MSH was introduced in the court below. Suffice it to say that in the early years of his commitment, Covington vehemently and consistently demanded that he be released. The hospital progress notes on Covington reflect constant fears that he would be given more shock treatments as he ultimately was. After several years the MSH staff described Covington as possessing "terrific hostility" and a "great potential for homicide" and ordered a prefrontal lobotomy, which was performed on January 18, 1957.
A progress note of February 21, 1962, says of Covington: "He remains quiet most of the time and causes no real disturbance. However, it is felt that he is still potentially quite dangerous. He refuses his medication much of the time and it is suspected that he doesn't take it at times when he appears to do so." A progress note of January 20, 1964, indicates that Covington had been taken off electric shock treatments for approximately three months, but that his attending physician had decided to resume shock treatments "once weekly or twice weekly". By October of 1964, Covington was being shocked once weekly and "at this time is being considered for another lobotomy".
There are few happy moments that followed. Suffice it to say that on July 9, 1979, some 26 years after his second commitment, Covington was described as "quiet, withdrawn, ... sits almost immobile with schizophrenic posturing. He covers his face and eyes with his hands and sits this way for long periods of time... . His voice is a very constant monotone when he speaks and if not prodded, stimulated and assisted in meeting his basic personal needs, these would be virtually totally neglected by him." On December 18, 1979, Covington died peacefully.
III.
A.
The claim at issue has been asserted under the authority of the Mississippi Hospital Reimbursement Commission Act, which became law on July 1, 1962. See Miss.Code *578 Ann. §§ 41-7-71 et seq. (1972). This Act begins in Section 41-7-71 with an important declaration of policy. It provides, in pertinent part, that free hospitalization and treatment shall be available to Mississippi residents at various state institutions where those individuals are not financially able to afford such hospitalization or treatment. The statute goes on to provide, in pertinent part, that
"no person shall be deemed entitled to free hospitalization or treatment offered by any such state institution who shall possess a sufficient estate or be entitled to receive sufficient income to cover all or a part of his or her maintenance and support as a patient or inmate of any institution, or who has a person or persons legally chargeable with his or her support who is or are financially able to pay for the maintenance and support of the said person as a patient." [Emphasis added]
Section 41-7-73 then makes it clear that the Mississippi State Hospital at Whitfield is an institution within the meaning of this Act.
The Act then creates the Mississippi Hospital Reimbursement Commission, appellee here, and empowers it, inter alia,
"to assess and collect charges from patients, patients' estates and from all persons legally liable for the cost or care of such patients in any state institution."
Section 41-7-79 further provides, in pertinent part, that
"The Commission shall investigate or cause to be investigated the financial ability of each patient, his or her estate, and all other persons legally liable for the cost or care of the patient, and the charges assessed shall be in accordance with the ability of the person assessed to pay... . The commission shall adopt policies which will not work an undue hardship on any patient or person legally responsible for such a patient. ... [Emphasis added]
The statute then empowers MHRC to institute suits against persons legally liable to collect for care and treatment rendered patients at state institutions. It is under this statute, Section 41-7-79, that MHRC probated the claim which has given rise to the instant appeal.
B.
The evidence at the hearing below established without contradiction several important matters. First, without doubt, Ernest B. Covington was a patient at the Mississippi State Hospital from July 7, 1953, until his death on December 18, 1979. He was certainly a patient for the period July 1, 1962 to December 18, 1979, the period for which claim has been made here. Second, Covington was severely mentally ill during most, if not all, of this period of time. Third, the State of Mississippi through the personnel and facilities at the Mississippi State Hospital did in fact render care and treatment to Covington during all of this period of time. Finally, without doubt, the sum originally claimed by MHRC, let alone the much lower sum actually allowed by the Chancery Court, was substantially below the actual cost to the State of Mississippi of the care and treatment rendered to Covington.
By virtue of his having been a veteran, Covington was entitled to and did receive certain benefits from the Veterans Administration. These benefits were received into a guardianship created by decree of the Chancery Court of the First Judicial District of Hinds County, Mississippi. Deposit Guaranty National Bank of Jackson, Mississippi served as guardian through 1974 when it resigned. Thereafter, Bernard W.N. Chill, Sr., appellant here in his capacity as Administrator, was appointed guardian and he served in that capacity until Covington's death.
Over the years out of the funds received from the Veterans Administration into the guardianship, an aggregate of $7,438.00 was paid by the guardian to MSH for the care and treatment of Covington. These payments were made $80.00 here, $100.00 there, over a substantial period of time. MHRC claims that, pursuant to its regulations adopted in accordance with § 41-7-79, Covington's estate owed $53,811.72. After giving *579 credit for the $7,438.00 paid over the years, MHRC in fact claims $46,373.72.
At the time of his death, Covington's estate had accumulated some $25,000.00. Presumably, most, if not all, of this money came from the Veterans Administration. Pursuant to order entered June 10, 1980, the Chancery Court set aside the sum of $5,000.00 for Mrs. Carrie Crittendon Covington as her widow's allowance. Additional sums have been paid out of the estate for attorneys fees and legal expenses, primarily to finance the instant litigation. In this context, the Chancellor determined that
"This estate is liable for a part of the claim probated by the State of Mississippi through the Hospital Reimbursement Commission and that a payment of Thirty-Five (35%) percent of the claim filed, or $16,230.80 would be fair and equitable in the premises."
The amount of the claim thus allowed, if our arithmetic abilities do not fail us, will, when added to the other sums expended or set aside by the administrator, just about exhaust the assets of the Estate of Ernest B. Covington.
IV.
A.
The first question presented is whether the state has the power to establish a reimbursement scheme and exact from involuntarily committed patients, their estates and from those legally liable for their care, all or part of the expenses of care and treatment. Clearly, the state can establish such a reimbursement scheme where the patients are voluntarily admitted. But where the patient has been civilly committed against his will, where he insists that he does not want the care and treatment the state wishes to provide him, does the state not only have the power to commit him and deprive him of his liberty but also to send him a bill for its trouble? We answer in the affirmative.
The people who created this state's organic law have signified their interest in the care and treatment of the mentally ill. They have vested in the legislature the duty to provide for such care and treatment. Miss. Const. (1890), Art. 4, § 86. It is regrettable but undeniably true that some mentally ill persons, because of their illnesses, present a threat of harm to persons and property of others as well as to themselves. Under the doctrine of parens patriae the state has necessarily and legitimately assumed a responsibility as guardian of the mentally ill. In Re Oakes, 8 Law Rep. 122 (Mass. 1845); In Re Ballay, 482 F.2d 648, 658-659 (D.C. Cir.1973).
Performing this guardianship function, even and perhaps particularly when done in an enlightened and humane manner, is expensive. The state must support its mental health services; they do not come free. It may secure these funds from general revenues (including for a while federal revenues), or it may assess the costs directly against the beneficiaries of such services, or some combination of the two. Of course, under the rationale posited above, both the individual patient and the people in general are beneficiaries of involuntary civil commitments. As long as the State of Mississippi limits such commitments to those, and only those, truly in need of mental treatment, and as long as the state confines its mental patients under humane conditions and provides minimally adequate care and treatment, it is not unreasonable to require the patient, his family or his estate to pay at least a part of the bill.
The fact that other states have been empowered under their constitutions and laws to exercise a particular power, of course, does not establish that the State of Mississippi has such a power. Our research has revealed, however, that a vast number of states do in fact exercise the power invoked by MHRC here. Without intending to be exhaustive, a sampling of states so empowered and the cases in which those powers have been exercised include Florida: Department of Health and Rehabilitative Services v. Harrell, 258 So. 2d 340 (Fla.App. 1972), affirmed 272 So. 2d 151 (Fla. 1973); Maryland: Koyce v. State, 422 A.2d 1017, 1021 (Md. 1980); New York: In Re Hessney's Will, 177 Misc. 781, 31 N.Y.S.2d 980, *580 985 (1941); Texas: State v. Morris, 303 S.W.2d 802, 803 (Tex.Civ.App. 1957); and Wisconsin: Bank of Sturgeon Bay v. Department of Health and Social Services; 98 Wis. 2d 261, 296 N.W.2d 736, 741 (1980); see also, Developments in the Law, Civil Commitment of the Mentally Ill, 87 Harv.L.Rev. 1190, 1365-1372 (1974); and 44 C.J.S. Insane Persons § 75b(2). Constitutional attacks upon these statutes in other states have generally failed. See Annotation, Constitutionality of Statute Imposing Liability Upon Estate or Relatives of Insane Persons for His Support in Asylum, 20 A.L.R. 3d 363, 366-369 (1968).
We hold that the State of Mississippi has the constitutional power to provide that a citizen who is mentally ill or in substantial need of mental treatment may be involuntary committed for care and treatment to an institution such as the Mississippi State Hospital at Whitfield and that thereafter the state may charge that person, his estate or persons legally responsible for him with all or a part of the reasonable costs of necessary care, custody and treatment services actually rendered. This power, of course, is exercisable only by the legislature.
B.
Our next question is whether the state has exercised this constitutional power. More specifically, has the Legislature of the State of Mississippi enacted that persons involuntarily committed, as distinguished from voluntarily admitted patients, are so liable?
We note that the Mississippi Hospital Reimbursement Commission Act, Miss. Code Ann. §§ 41-7-71 et seq. (1972) fails to provide an unequivocal answer. Because the statute does not by clear provision empower MHRC to seek reimbursement from involuntarily committed patients or their estates, Administrator Chill argues that MHRC's claim here must fail. Acceding to the proposition that the state has the power, the argument is that the legislature has failed to enact a statute expressly vesting that power in MHRC and subjecting involuntarily committed patients such as Covington (and their estates) to an obligation of reimbursement.
At common law the maintenance of the mentally ill by the public created no obligation upon private parties. District of Columbia v. H.J.B., 359 A.2d 285, 292 (D.C. App. 1976); see also, 44 C.J.S., Insane Persons § 75b(1). A state's right to reimbursement for maintenance and treatment of mentally ill persons exists only by virtue of statutory grant of that right. State v. Morris, 303 S.W.2d 802, 803 (Tex.Civ.App. 1957). If the legislature of the State of Mississippi has enacted no statute which vests this power in MHRC, Administrator must prevail on this appeal.
In the statute creating and authorizing the Mississippi State Hospital at Whitfield, the legislature has expressly provided that the hospital has been
"established for the care and treatment of lunatics and insane persons, free of charge, except as otherwise provided." Miss. Code Ann. (1972) § 41-17-1. [Emphasis added].
The only statute the legislature has passed which might arguably be held to "otherwise provide" is the Mississippi Hospital Reimbursement Commission Act, cited above. The act expressly provides that
"no person shall be deemed entitled to free hospitalization or treatment offered by any such state institution [including the Mississippi State Hospital at Whitfield] who shall possess a sufficient estate or be entitled to receive sufficient income to cover all or a part of his or her maintenance and support as a patient or inmate of any institution, ...."
Our question is whether these words properly should be construed to include persons involuntarily committed to any such state institution. For the reasons explained below, we find this construction proper.
First, at the time this statute was enacted in 1962, the legislature was surely aware that a substantial percentage of the persons who were patients at the Mississippi State Hospital at Whitfield had been *581 involuntarily committed. In this context, the statute should be construed to cover all patients at MSH absent an express exclusion. No such exclusion or intent to exclude may be found.
Second, the statute uses the phrase "a patient or inmate of any institution, ... ." To be sure, the word "inmate" is highly inappropriate, no doubt a product of the insensitivity of the time, two decades ago. Nevertheless, the word "inmate" connotes a person who has been sent to the Mississippi State Hospial at Whitfield against his will. The use of the wording, "patient or inmate" may sensibly be read as the legislature's signal that it intended to include voluntary and involuntary patients.
We recognize further a substantial and legitimate public purpose in requiring reimbursement of and from involuntarily committed patients and their estates. In-patient care of mentally ill persons is quite costly to the State of Mississippi. Not only must the patient be housed, clothed and fed, he must be provided care and treatment. Great expense is involved in rendering these services effectively. True, the involuntarily committed patient has in part been institutionalized for the protection and safety of society. But today there can be no doubt that a necessary predicate to involuntary civil commitment is a determination that the person is seriously mentally ill and in substantial need of professional care and treatment. In substantial part he is hospitalized for his own good. Seen in this context, the legislature may reasonably have enacted that the state may seek to recoup a small portion of the expense it has incurred. We find that it has done so.
On the basis of the evidence thus available to us and on the basis of sound principles of statutory construction, we hold that the Mississippi Hospital Reimbursement Commission Act, Miss. Code Ann. (1972) §§ 41-7-71 et seq. includes both voluntary and involuntary patients at the state institutions named in the Act, specifically including MSH. The Act thus constitutes an exception to the general rule of Section 41-17-1 that persons shall be entitled to treatment at MSH "free of charge."
If the legislature should be of the opinion that we have incorrectly construed its enactment, it has full power to eviscerate this portion of our decision. By the same token, if the legislature should agree that we have correctly construed the act but desire to change the law to provide that involuntarily committed persons may not be subjected to payment of all or part of the cost of care, custody and treatment they do not wish, it has full power to so provide. Unless and until the legislature acts, however, the word "patient" and other synonymous words used in the Act are construed to include both persons voluntarily admitted and those involuntarily committed.
C.
Next Administrator Chill urges that, as applied in this case, the Mississippi Hospital Reimbursement Commission Act is an ex post facto law. Covington's second involuntary commitment occurred in July of 1953. The act on the authority of which reimbursement is here sought was not placed in our statute books until 1962, some nine years later. Administrator argues that the act can only apply to patients civilly committed after the effective date of the act, July 1, 1962. The argument must be rejected for two reasons.
First, it is true that the present Act did not become effective until July 1, 1962. A previous act, however, requiring reimbursement from solvent incompetent persons for care and treatment at state mental hospitals was in effect at the time of both commitments. See Miss. Code Ann. § 6909-13 (1942).
Second, the courts of other states have confronted this same question. With the exception of one case now arguably overruled, the authorities seem unanimous in holding that legislatures have the power to permit recovery of expenses incurred in the maintenance, care and treatment of an incompetent person from him or his estate, etc., and that such recovery may constitutionally be had with respect to persons committed *582 prior to the passage of the act. See, e.g., State v. Romme, 93 Conn. 571, 107 A. 519 (1919); Department of Public Welfare v. A'Hern, 14 Ill. 2d 575, 153 N.E.2d 22 (1958); Department of Mental Health v. Salmar, 82 Ill. App. 2d 450, 226 N.E.2d 511 (1967); and Department of Health and Rehabilitative Services v. Harrell, 258 So. 2d 340 (Fla.App. 1972), affirmed 272 So. 2d 151 (Fla. 1973).
In any event, the claim probated by MHRC against the Estate of Ernest B. Covington on its face begins July 1, 1962. MHRC has made no attempt whatsoever to recover any sums for care, treatment or custody prior to July 1, 1962. Beyond that, the chancellor's allowance of only 35% of the claim reinforces the conclusion that nothing is claimed against the estate for anything occurring before the effective date of the Act. There is no merit to this assignment of error.
V.
A.
Administrator Chill argues here, as he did below, that MHRC's mulcting of the Estate of Ernest B. Covington may not withstand scrutiny under due process clauses of Amendment XIV, § 1 of the Constitution of the United States and of Article 3, § 14 of the Mississippi Constitution of 1890.
Administrator focuses his thrust on the proposition that Covington's procedural due process rights were violated at the time of his commitment in July of 1953. The argument then takes a quantum leap. Assuming arguendo that Covington was not afforded procedural due process at the time of commitment, does it flow inexorably that the reimbursement claim submitted by MHRC cannot withstand due process scrutiny and thus must be denied in its entirety? We think not.
B.
There has within the past decade been an explosion of litigation regarding the substantive and procedural rights of persons suffering from mental illness or defects. This litigation has sensitized us to the fact that there were indeed gross constitutional deficiencies in our civil commitment procedures authorized and employed in the 1950s and before. But none of this sheds much light on the question properly tendered here.
The rights of mental patients generally find their content in two sources. First, there is a federal constitutional minimum. The most basic liberty interests of persons have been given substantive protections by the due process clause of the Fourteenth Amendment. Translated into the present context, a person may not be involuntarily committed to a state mental institution (a) without there being clear and convincing evidence that the person is indeed in substantial need of mental treatment and (b) without the state in fact rendering to such individual a minimally adequate course of care and treatment. See Wyatt v. Stickney, 334 F. Supp. 1341 (M.D. Ala. 1971); enforced 344 F. Supp. 373 and 387, affirmed 503 F.2d 1305 (5th Cir.1974); Vecchione v. Wohlgemuth, 377 F. Supp. 1361 (E.D.Pa. 1974); Colyar v. Third Judicial District Court for Salt Lake County, 469 F. Supp. 424 (D.Utah 1979). See also, Mills v. Rogers, ___ U.S. ___, ___-___ fn. 16, 102 S. Ct. 2442, 2448 fn. 16, 73 L. Ed. 2d 16, 22-23 fn. 16 (1982); Youngberg v. Romeo, ___ U.S. ___, ___-___, 102 S. Ct. 2452, 2457-58, 73 L. Ed. 2d 28, 36-37 (1982).
Second, any higher or broader state created rights afforded the mentally ill must be identified. The federal constitutional protections represent only a minimum. Without doubt the State of Mississippi, particularly with the enactment of the new civil commitment act effective July 1, 1976, has vested rights in the mentally ill substantially in excess of those minimum protections required by the federal constitution. See Miss. Code Ann. §§ 41-21-61 et seq. (1972), as amended. Pre-existing that enactment were the basic liberty interests described in the preceding paragraph secured as rights by virtue of this state's due process clause. Art. 3, § 14, Miss. Const. (1890).
*583 No person may be deprived of his substantive rights those grounded in the federal constitutional minimums or in the expanded constitutional or statutory creations of the state without due process of law. Without hesitation we recognize the procedural due process rights of the mentally ill when faced with the loss of their substantive rights via involuntary commitment and maintenance.[1] See, e.g., Baxstrom v. Herold, 383 U.S. 107, 86 S. Ct. 760, 15 L. Ed. 2d 620 (1966); O'Connor v. Donaldson, 422 U.S. 563, 95 S. Ct. 2486, 45 L. Ed. 2d 396 (1975); Addington v. Texas, 441 U.S. 418, 425-426, 99 S. Ct. 1804, 1808-09, 60 L. Ed. 2d 323, 330-331 (1979); Parham v. J.R., 442 U.S. 584, 99 S. Ct. 2493, 61 L. Ed. 2d 101 (1979). Upon these authorities Administrator Chill places great reliance in his due process argument here. Had he in his former capacity as guardian invoked these cases in support of a habeas corpus application, he no doubt would have been entitled to relief.[2] In the present context, however, they do not carry him far.
C.
Careful attention to the two step analysis described above charts our resolution of the issue tendered here. First, what is the substantive right at stake? Second, has procedural due process been afforded in connection with the state's taking of that right?
A critical reading of Administrator Chill's brief may suggest that he has misperceived the substantive right identification step in the analysis. He talks at length about denials of procedural due process. But the substantive right denied thereby is [was (?)] Covington's right to personal liberty. The substantive rights actually at stake in the instant litigation are quite different.
We are concerned with Administrator Chill's duty to collect and administer the assets of the Covington estate and, after payment of just debts, to distribute those assets to his heirs at law, juxtaposed against MHRC's allegation that its reimbursement claim is one of those just debts. The positive law provides certain conditions which must be met before MHRC's claim may be allowed. To be sure one of those conditions that Covington was substantially mentally ill and in need of mental treatment overlaps with that required for civil commitment. But the substantive rules of law applicable today, those rules which vest substantive rights in Administrator Chill which may not be abridged without due process of law, those rules upon the basis of which MHRC asserts its reimbursement claim, are different, different from the rules applicable back on July 7, 1953, and even different from those potentially applicable any day thereafter Covington may have sought release via habeas corpus.
Substantively speaking, Ernest B. Covington during his lifetime had a right not to be involuntarily committed to and *584 maintained and treated at the Mississippi State Hospital at Whitfield unless he was in fact mentally ill and in substantial need of mental treatment. Art. 3, § 14, Miss. Const. (1890). Beyond that, once involuntarily committed, Covington had a substantive right not to be "warehoused". If he was indeed substantially mentally ill, the state had a right to commit him involuntarily only on the condition that it afforded him minimally adequate care and treatment. Art. 3, § 14, Miss. Const. (1890); Miss. Code Ann. §§ 41-21-61 et seq. (1972) as amended.
We have held in Section IV(A), where these substantive rights of persons such as Covington have been respected, the state has the constitutional power to require reimbursement of or from him or his estate for the reasonable cost of care and treatment necessarily rendered. We have likewise held in Section IV(B) that the legislature has enacted that the state shall indeed, via the Mississippi Hospital Reimbursement Commission, appellee here, have and exercise the right to demand reimbursements.
The true question tendered by Administrator Chill's due process point is whether, in its attempt to exact from the Covington estate the cost of care and treatment, MHRC, or the court below, has trampled upon any due process rights vested in appellant Chill, as administrator of Covington's estate. Without doubt Covington was denied both substantive and procedural due process at the time of his commitment in 1953. That merely means that MHRC must prove the legitimacy of its reimbursement claim. MHRC cannot in the present context rely on any notion of collateral estoppel to establish that Covington was in fact mentally ill and in substantial need of institutionalization. MHRC was required to prove that fact anew. This it did in the proceedings below.
We hold that, in the context of the case at bar, the only procedural due process rights of relevance were those of appellant Chill, as administrator of Covington's estate, that, before the estate could be depleted at the hands of MHRC, the estate had to be afforded a reasonably adequate adversary hearing before an impartial judicial officer, at which time MHRC had to prove by a preponderance of the evidence each factual point requisite to the substantive validity of its reimbursement claim. See, e.g., Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970); Bell v. Burson, 402 U.S. 535, 91 S. Ct. 1586, 29 L. Ed. 2d 90 (1971); Fuentes v. Shevin, 407 U.S. 67, 92 S. Ct. 1983, 37 L. Ed. 2d 556 (1972); North Georgia Finishing, Inc. v. DiChem, Inc., 419 U.S. 601, 95 S. Ct. 719, 42 L. Ed. 2d 751 (1975).
That the general contours of procedural due process as fleshed out in the cases just cited apply to the sort of reimbursement claim being made here has been recognized in Fayle v. Stapley, 607 F.2d 858, 861 fn. 2 (9th Cir.1979); Vecchione v. Wohlgemuth, 377 F. Supp. 1361, 1370-1371 (E.D.Pa. 1974); and McConaghley v. City of New York, 60 Misc. 2d 825, 304 N.Y.S.2d 136 (1969). What is clear from these cases is that the state agency, such as MHRC, may not merely indulge in self help with respect to the funds or estate of involuntarily committed patients.[3]
Here full due process has been afforded the state and its Administrator. Reasonable advance notice and opportunity to be heard was afforded both sides in the proceedings in chancery court below, and at a hearing held June 11, 1981, in every respect conforming to the procedural due process requirements of the cases cited above, it was established beyond peradventure:
(a) that Ernest B. Covington suffered from serious mental illness at all times pertinent hereto,
(b) that the Mississippi State Hospital at Whitfield administered minimally adequate care and treatment to Covington,
(c) specifically, that the treatment services rendered after July 1, 1962, were reasonably necessary under the circumstances as were the care and custodial services; and
*585 (d) that the sum for which reimbursement has been allowed is reasonable and, in fact, represents only a fraction of the actual cost of the State of Mississippi in maintaining and providing such care, custody and treatment services.
In short, Administrator was provided a full and adequate hearing. If he could have proved that Ernest B. Covington was not mentally ill, that would have been a defense to the claim at bar. If he had proved that Covington was not in fact treated, or that the treatment services rendered were not minimally adequate, that would have been a defense to the claim at bar. If he could have proved[4] that the treatment rendered was not reasonably necessary, i.e., was not reasonably related to the mental illness or defect Covington suffered, that would have been a defense. These things he did not do, in spite of the fact that on these and other points, Administrator Chill had full and fair opportunity to resist the claim. He had full procedural due process. At the conclusion of the hearing of June 11, 1981, the chancellor took the matter under advisement and three months later released his decision allowing the claim in the amount of $16,230.80.
We hold that, under the foregoing facts and circumstances, the State of Mississippi via MHRC had no power to exact the aforesaid sum from the Estate of Ernest B. Covington except under those substantive conditions prescribed by the positive law the constitution and laws of the State of Mississippi, at all times undergirded by federal constitutional minimums. We further hold that MHRC could not constitutionally obtain this reimbursement without first establishing that these substantive conditions had been met at a hearing affording Covington's estate's administrator full procedural due process. We further hold that under the facts and circumstances cited above, Administrator Chill, in his official capacity and on behalf of the heirs and survivors of Ernest B. Covington, received full procedural due process. All substantive conditions prerequisite to the reimbursement claim having been established, the assignment of error on this point is not well taken and will be denied.
VI.
Administrator Chill argues further that the State of Mississippi has waived its claim, if any, to seek reimbursement here. The theory has been stated variously in the prior proceedings. Below, Administrator Chill pleaded limitations and laches. Perhaps sensing that limitations and laches do not run against agencies of the state,[5] here he argues waiver and estoppel. However, phrased or labeled, the point is the same.
The factual predicate here is Chill's insistence that Mississippi State Hospital never sent the guardian any bill for care and treatment services rendered over the 28-odd years that Covington was an involuntary patient at MSH. He contends that MHRC cannot now at this late date, upon discovery that there are some assets in the Covington Estate, assert this claim and wipe out the estate.
On distinguishable facts, there is indeed some precedent for such a waiver claim. At least two New York cases hold that the state cannot allow years and years to roll by without making claim and then, suddenly, upon the patient's discharge or death, demand his estate. Matter of Cross's Estate, 99 Misc. 199, 165 N.Y.S. 710, 711 (1917); In Re Hessney's Will, 177 Misc. 781, 31 N.Y.S.2d 980, 985 (1941).
Here, the facts are wholly inconsistent with Administrator's waiver or estoppel theory. For years Covington's guardian was making modest periodic payments to *586 Mississippi State Hospital at Whitfield for Covington's care, custody and treatment. The payments actually made, at rates of $80.00 to $100.00 a month, totalled $7,438.00. Absent evidence to the contrary, we will assume that these payments were made pursuant to lawful authority given by the Chancery Court to the guardian. We will assume further that these payments were reported on the annual accountings and were ratified and approved by the court. Seen in this light, Administrator Chill's waiver argument evaporates.
If anything, Chill is the one who is estopped. We will not allow a guardian to make regular payments under these circumstances for a period of years and then claim surprise and waiver and estoppel when at the patient's death the state makes a claim for "the balance". Beyond that, there is nothing in the Mississippi Hospital Reimbursement Commission Act which requires that the claim of MHRC be asserted before the death of the patient. That it may be so asserted in no way imports a requirement that it must be.
Notice to creditors was originally published by Administrator Chill on January 23, 1980. MHRC probated its claim on March 3, 1980. Having done so, it was well within the 90 day limitation prescribed by law. This was the only timeliness requirement MHRC was required to meet under the circumstances. The assignment of error based upon waiver and estoppel, laches and limitations is denied.
VII.
Our next question is whether the allowance made by the chancery court of some $16,230.80 is in any way subject to attack. In this context, we emphasize the strong public policy of providing free care and treatment for persons financially unable to pay for such treatment. See Miss. Code Ann. §§ 41-17-1 and 41-7-71 (1972). Nevertheless, as indicated above, the legislature has provided that patients will be expected to pay their own way to the extent that they are financially able to do so.
The provisions of Mississippi law and the policy undergirding same are quite comparable to that of our sister states. In the State of New York, for example, we find the court in In Re Hessney's Will, supra, stating
"I do not believe it was the intention of the legislature to provide that the estate of any deceased person should be charged ... to such an amount as to leave his surviving widow and children penniless." 31 N.Y.S.2d at 985.
A Texas case, State v. Morris, 303 S.W.2d 802, 803 (Tex.Civ.App. 1957), is also instructive. In Morris a mentally ill person was committed in 1933. Twenty years later he inherited some $10,000.00. The State of Texas immediately sued to get the money for reimbursement of past treatment and services rendered. The court denied the claim but made it clear that the money could be seized to pay for treatment services rendered after the date of inheritance.
We emphasize a salient feature of the legislative scheme. The general policy of this state is that care and treatment at MSH shall be free of charge. Miss. Code Ann. § 41-17-1 (1972). Only those financially able to pay may be charged. Miss. Code Ann. § 41-7-71 (1972). MHRC may not assert reimbursement claims beyond ability to pay. Miss. Code Ann. § 41-7-79 (1972). The plight of relatives or dependents must be considered in determining ability to pay. Miss. Code Ann. § 41-7-79 (1972). In general MHRC has been charged to perform its duties in such a way that no undue hardship shall be worked on any patient or person legally responsible for such patient. Miss. Code Ann. § 41-7-79 (1972).
The legislative policy embodied in these statutes must be taken seriously by chancery courts entertaining MHRC's reimbursement claims. We construe the statutes discussed above to provide that the legitimate needs and comforts of the patient and his or her dependents or surviving *587 relatives hold an absolute priority over MHRC reimbursement claims. These claims may be allowed only where, and only to the extent that, such will not prejudice or hinder the patient or his or her dependent or surviving relatives in providing for their legitimate needs and comforts.
Of course, where a reimbursement claim would run afoul of these standards, it is incumbent upon someone to say so. The needs of the patient or his surviving or dependent relatives are an appropriate subject for proof at trial. Other resources independently available to such persons should also be shown and considered. The source of the assets comprising the estate is also relevant.
Based on the facts in the record before us, a substantial part, if not all, of the funds in the Estate of Ernest B. Covington were received from the Veterans Administration. We find that the chancellor allowed out of the estate $5,000.00 as a widow's allowance. See Miss. Code Ann. § 91-7-135 (1972). He also has allowed certain administrative expenses, attorneys fees and legal expenses. While the point could have been spelled out more fully, the chancellor's determination of the amount of the claim to be allowed is obviously consistent with the policy articulated above to the effect that reimbursement claims shall be allowed to the extent, and only to the extent, that the patient or his estate is financially able to make such reimbursement without substantial hardship.
In view of the fact that this entire estate was built up from benefits "earned" by the veteran, the fact that a $5,000.00 widow's allowance was made, and the absence of any evidence in the record of the condition or needs of the widow or children of the deceased nor of the means or other resources which may be available to the widow or children, the chancellor was well within his discretion in the allowance he made.
AFFIRMED.
PATTERSON, C.J., WALKER and BROOM, P.JJ., and ROY NOBLE LEE, HAWKINS, DAN M. LEE and PRATHER, JJ., concur.
BOWLING, J., not participating.
NOTES
[1] Relating more specifically to some of the facts of this case, we find an increasing tendency on the part of courts to recognize both substantive and procedural due process rights vested in mental patients faced with electroshock therapy [see Bell v. Wayne County General Hospital, 384 F. Supp. 1085, 1099 (E.D. Mich. 1974)], prefrontal lobotomies, [Romeo v. Youngberg, 644 F.2d 147, 166 (3d Cir.1980), vacated on other grounds, supra] or the administration of unwanted antipsychotic drugs [Mills v. Rogers, supra, ___ U.S. at ___-___, 102 S.Ct. at 2448, 73 L.Ed.2d at 22-23; Rennie v. Klein, 653 F.2d 836, 843-844 (3d Cir.1980)]. Here again these due process rights assume meaning only in the context of a correct identification and perception of the individual's substantive rights under the positive law to be free from unreasonable unwanted intrusions upon his person.
[2] What happens if a person has been involuntarily committed without having been afforded procedural due process? Is he entitled to absolute and permanent discharge? Absolutely not! He is entitled to a hearing. He is entitled to that which he has been denied procedural due process. At that hearing, to be sure, he may assert his substantive rights mentioned above the federal constitutional minimums as well as state created rights. But if it is established, at a hearing conforming to all of the constitutionally mandated requisites of procedural due process, by clear and convincing evidence, that the person is substantially mentally ill and that he is a person in need of mental treatment [see Miss. Code Ann. § 41-21-61(c) (1972), as amended], back to MSH he goes.
[3] Suffice it to say that, under the authority of these cases, the self help provisions of Miss. Code Ann. § 41-7-90(2) (1972) are constitutionally suspect.
[4] The "if he could have proved" phraseology should not be taken as an indication that Administrator Chill bore the burden of proof on these issues. To the contrary, when asserting reimbursement claims, MHRC must prove by a preponderance of the evidence the required factual bases of its claim.
[5] See, e.g., Gibson v. State Land Commissioner, 374 So. 2d 212, 217 (Miss. 1979); Board of Education of Itawamba County v. Loague, 405 So. 2d 122, 124-125 (Miss. 1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1716621/ | 332 So. 2d 834 (1975)
T. L. JAMES & CO., INC., et al.
v.
Mrs. Goldie Greig MONTGOMERY et al.
Mrs. Goldie Greig MONTGOMERY, Administratrix of the Succession of Thomas William Montgomery, Jr.
v.
Thomas William MONTGOMERY.
No. 56138.
Supreme Court of Louisiana.
December 8, 1975.
Dissenting Opinion December 23, 1975.
On Rehearing May 17, 1976.
Concurring Opinion on Rehearing May 18, 1976.
Concurring in Part and Dissenting in Part June 2, 1976.
*837 Pittman and Matheny, Hammond, by Iddo Pittman, Jr., James D. Johnson, Jr., and Eric L. Pittman, for Mrs. Goldie Greig Montgomery and Monty George Montgomery, applicants.
M. Truman Woodward, Jr., Kennedy J. Gilly, David Conroy, Hilton S. Bell, David L. Sigler, Milling, Benson, Woodward, Hillyer & Pierson, New Orleans, for amici curiae.
Charles O. Dupont, Allen M. Edwards, Plaquemine, William L. Kimball, Port Allen, for Thomas Wm. Montgomery, III, and Mrs. Sybil C. Montgomery, respondents.
Gerald Le Van, Baton Rouge, for amicus curiae.
SUMMERS, Justice.
Certiorari was granted, La., 310 So. 2d 850, in these consolidated cases to review a decision of the trial court and Court of Appeal, First Circuit, 308 So. 2d 481, holding that employee retirement and profitsharing plans with a named beneficiary are payable at death of the employee to the named beneficiary, and the value of the employee's interest in the plans at the time of his death are not subject to the claims of the surviving widow in community or the claims of forced heirs. The writ was also granted to review the decisions of this Court, holding that proceeds of a group term insurance policy payable to the beneficiary named by the insured are neither a part of the community property of the insured nor are its proceeds subject to the claims of forced heirs.
I.
Thomas W. Montgomery, Jr., was married to Sybil Chauvin on October 12, 1935. One child was born of this union on March 5, 1940, a son named Thomas W., III. Montgomery was employed by T. L. James & Company, Inc., on September 15, 1946. As an employee of the company, Montgomery became a participant in the company retirement plan for employees on December 31, 1949 and in the profit-sharing plan for employees on January 1, 1950. A group term life insurance policy insuring his life with Aetna Life Insurance Co. as an employee of T. L. James & Co. was issued on May 1, 1950. The marriage to Sybil Chauvin was dissolved by divorce on May 27, 1958, after which a partition and settlement of the community property was entered into between the parties on December 10, 1958.
Montgomery was married a second time to Goldie Greig on June 6, 1958, and one child was born of this marriage on March 25, 1960, a boy named Monty George. This second marriage was marked by several separations, one of which resulted in suit and a judgment of separation from bed and board on October 25, 1968. A reconciliation was brought about, however, and on September 3, 1969 the parties reestablished the community.
*838 Thereafter the parties separated again. During this last separation, on August 28, 1970, Montgomery delivered $11,940 in cash to his son Thomas III. The funds were deposited in a safety deposit box rented in the son's name. In quick succession, on August 31, 1970 Montgomery designated his son as beneficiary of the group term life insurance policy on his life which was issued to him by Aetna Life Insurance Co. as an employee of T. L. James & Company, Inc. He then designated Thomas III as beneficiary of the company retirement plan on September 2, 1970, and as beneficiary of the profit-sharing plan on September 24, 1970. Each of these latter designations superseded prior designations of Thomas III as beneficiary of the retirement and profit-sharing plans, which had been executed on August 26, 1968 and September 2, 1970, respectively. He then executed an act of donation to Thomas III of the insurance policy, his interest in the employee's profit-sharing plan and the retirement plan. This donation, executed before a Notary Public and two witnesses was never accepted by Thomas as donee. While Montgomery was bringing about these designations, suit was again instituted against him by Goldie Greig seeking a separation from bed and board. The matter was never brought to judgment, however, for on January 23, 1971 Montgomery committed suicide.
On April 19, 1971 T. L. James & Company, Inc., as administrator of the group term life insurance policy insuring the life of Montgomery, paid Thomas III $22,500 as named beneficiary, that amount being the policy's value at the time of Montgomery's death.
Then, on September 24, 1971, T. L. James & Company, Inc., having been informed that a disagreement had arisen between Thomas III, Sybil Chauvin, Goldie Greig and Monty George over the right to the benefits due under Montgomery's accounts in the employees' profit-sharing and retirement plans, provoked a concursus proceeding and deposited the sum of $63,875.44 in the registry of the court $26,330.14 of this amount represented proceeds from the profit-sharing trust, and $37,545.30 represented proceeds from the retirement plan for employees.
Subsequently Goldie Greig, as administratrix of the succession of the deceased Thomas William Montgomery, Jr., instituted suit on January 11, 1972 against Thomas III to recover the sum of $11,940, the cash given by the decedent to his son Thomas III; and for the sum of $22,500, the proceeds of the group term life insurance paid to Thomas III as beneficiary on account of the death of his father. In the alternative, she prayed for judgment in the amount of the premiums paid by the community of acquets and gains between herself and decedent, or, in the further alternative, that decedent's interest in these funds be decreed to belong to his estate.
The controversy involving the $11,940 in cash given to Thomas III has been resolved by a final judgment decreeing that those funds belonged to decedent's estate. The other issues are presented for decision.
II.
The Profit-sharing Plan
T. L. James & Company, Inc., first established a profit-sharing plan for its employees on January 1, 1945. The plan was restated in its entirety on December 31, 1955. It is designated as the T. L. James & Company, Inc., Employees' Profit-Sharing Plan.
The plan, insofar as it is pertinent here, was established and maintained for the purpose of enabling employees of the company, who are eligible to participate, to share in the profits of the company through the distribution to them or their beneficiaries of the corpus and income of a trust fund established and maintained in conjunction with the plan.
Only those persons whose customary employment with the company calls for not less than 20 hours of work in any one week *839 for not less than six months in any calendar year are eligible. They are referred to as participants.
Based upon a schedule established in the plan, the company obligated itself to contribute to the trust from the net profit a percentage progressing from 5% not in excess of $100,000 to 30% in excess of $500,000. The plan was amended in 1966 to provide for a company contribution of 20% of net profits after deducting 5% after taxes of the net worth of the company under conditions set forth in the amendment. The employee makes no contribution to the plan.
An advisory committee established by the plan is charged with maintaining a separate account for each participant. Each account is periodically adjusted on the basis of the fair market value of assets in the trust fund. The method of accounting is set forth.
Retirement or death brings about a determination of the percentage of the participant's account which is then vested. A schedule for this calculation graduates until after 20 years or more 100% of the account is vested in the participant. The funds are, in effect, dedicated to the employee, but are held in trust by the trustee. However, the funds cannot be withdrawn until resignation, retirement or death.
In conjunction with the establishment of the plan, the company entered into a trust agreement with a Shreveport bank, the trust to be administered in accordance with the trust agreement which is subject to amendment. Under the terms of the trust agreement the company may remove the trustee and appoint a successor. All contributions made by the company under the plan are paid into the trust fund established under the trust agreement, and all benefits payable under the plan are paid from the trust fund. The company has no right, title or interest in the trust fund or in any part thereof, and no part reverts to the company.
Company officers and employees are appointed as the advisory committee and administer the trust. They may direct the trustee to make loans to the employee participants under uniform terms to the value of the participants vested interest in his account. Loans may be made to participants to enable them to meet emergency conditions in their finances, on account of illness, disability, to preserve their home, or for the schooling of their children.
A participant may designate, revoke or change a beneficiary or beneficiaries. If a participant dies without designating a beneficiary, the committee may distribute the credit balance of his account to the next of kin or the legal representative or representatives of the estate of the last to die of the participant or the beneficiary.
No participant or other person shall have any interest in, or right to, any part of the trust fund, or in any of the assets thereof, except as provided in the plan.
No account in the fund is subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be null and void; nor shall any such account be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of the person entitled to the account.
The plan is subject to termination by the company at any time, and it may amend the plan in any respect at any time, provided that no part of the trust fund may be diverted from the exclusive benefit of the participants, their beneficiaries or their estates.
III.
The Retirement Plan for Employees
To implement the revision of the company's retirement plan T. L. James & Company, Inc., resolved on August 7, 1967 to adopt a new plan effective January 1, 1967, and directed that the company officers continue contributions to the trust for the plan. The new plan was a restatement and *840 continuation of the existing plan adopted by the company as of January 1, 1955 and the trust agreement entered into with a Shreveport bank at that time; the plan having been previously established on December 31, 1949. The plan is applicable to each employee in the active service of the company on and after January 1, 1967.
Employees are persons whose customary employment with the company calls for at least 20 hours of work per week for at least six months per year.
The monthly retirement income is based on the participant's final monthly compensation on his credited service. Normal retirement is retirement from the service of the company. Retirement pay, computed according to rules established in the plan, is payable, in the event of the employee's death after retirement, to his beneficiary or to the employee on retirement whether voluntary or because of disability.
Upon termination of service because of deathbefore retirement is otherwise due the retirement benefits are payable to the designated beneficiary and are calculated on the employee's earnings over five consecutive years of the last ten he worked to arrive at an average monthly salary.
Ragan Odom, Personnel Manager of the company, explained that, like in the profit-sharing plan, all expenses, costs and investments in the retirement plan are paid by the company, but it is paid by the company because the participant is an employee of T. L. James. Only employees are included. Participation is based upon the employee's earnings and length of service. The funds are paid by the company "for his benefit"; the funds are "designated" to the employees.
The company actually takes tax deductions for the contributions it makes to the plan, a practice approved by the Internal Revenue Service and the Department of Labor. Once the contribution is made by the company, it is irrevocable.
As in the profit-sharing plan it is declared that no participant shall have any interest or right to or under the trust fund, except to the extent expressly provided in the plan.
Each participant may designate a beneficiary but if a deceased participant has not done so, the benefits are payable, in the discretion of the retirement committee, to the participant's surviving spouse, his descendants, parents, or heirs-at-law, or it may apportion the benefits among the group as the committee sees fit, or pay to the estate of the participant in its discretion.
IV.
The claims asserted here represent conflicts between the principles of community property and forced heirship on one hand and the contemporary pressures for freedom of disposition on the other.
The Community Property Claim
At the time of Montgomery's death he was married to Goldie Greig. The separation suit, although pending, had not been reduced to judgment. The community regime, then, was viable and in full force and effect. Joint tax returns for the years 1958 to the date of Montgomery's death indicate the earnings of both spouses increased during the marriage, the wife being employed as a librarian at Southeastern Louisiana University. She and Monty George, the son of the second marriage, both contend that all funds in both plans belonged to the community of acquets and gains and should be divided one-half to Goldie Greig and one-fourth each to Thomas III and Monty George.
It is fair to say from our resume of the plans that they represent compensation from the employer to the employee diverted to a trust fund and held for payment on death, retirement or disability. Inducements to adopt these plans usually arise because an employer has received loyal service over an employee's productive lifetime, *841 and the employer may feel constrained by human or moral considerations to offer him additional support during retirement years, or a trade union may seek and obtain these benefits as an additional compensation for services, a "fringe benefit."
Only the employer contributes to the plans, but the contribution is not without reciprocal contribution on the part of the employee, although these are intangible and difficult to evaluate. It is a reward by the company to promote loyal and efficient service on the part of the employee. The plans are, moreover, an inducement to employees to remain in the service of the company to enjoy the benefits the plans promised. In short, the contribution of the employer is not a purely gratuitous act, but it is in the nature of additional remuneration to the employee who meets the conditions of the plan. The employer expects and receives something in return for his contribution, while the employee, in complying, earns the reward. The benefits to the employee are, therefore, earned incomeproperty within legal contemplation. Langlinais v. David, 289 So. 2d 343 (La.App.1974); Hamilton v. Hamilton, 258 So. 2d 661 (La.App.1972); Laffitte v. Laffitte, 232 So. 2d 92 (La.App.1970).
In both plans the employer retains considerable control by its authority to amend the trust agreement; to remove the trustee and appoint his successor; and by the appointment of the committee member who administers the plans. Significantly, however, once the employer's contributions to the plans are made they become irrevocably dedicated to the employee and, according to a schedule, vested in the employee. On the facts of this case, 100% of the account designated to Montgomery, because of the length of his service and his pay, was vested in him at the time of his death. The value of the proceeds at his death are the sums deposited in the registry of court. There is no dispute on this issue.
Any resolution of the problem must take into consideration the principles of community property so fundamental to Louisiana law. For "[e]very marriage contracted in this State, superinduces of right partnership or community of acquets or gains, if there be no stipulation to the contrary." La.Civil Code art. 2399. The partnership extends so far as to include nonresident married persons who acquire property in this State. La.Civil Code art. 2400.
Other principles established by the Civil Code are:
"This partnership or community consists of the profits of all effects of which the husband has the administration and enjoyment, either of right or in fact, of the produce of the reciprocal industry and labor of both husband and wife, and of the estate which they may acquire during the marriage, either by donations made jointly to them both, or by purchase, or in any other similar way, even though the purchase be only in the name of one of the two and not of both, because in that case the period of time when the purchase is made is alone attended to, and not the person who made the purchase. . . ." La.Civil Code art. 2402.
"At the time of the dissolution of the marriage, all effects which both husband and wife reciprocally possess, are presumed common effects or gains, unless it be satisfactorily proved which of such effects they brought in marriage, or which have been given them separately, or which they have respectively inherited. La.Civil Code art. 2405.
"The effects which compose the partnership or community of gains, are divided into two equal portions between the husband and wife, or between their heirs, at the dissolution of the marriage; and it is the same with respect to the profits arising from the effects which both husband and wife brought reciprocally in marriage, and which have been administered by the husband, or by husband and wife conjointly, although what has been thus brought in marriage, by *842 either the husband or the wife, be more considerable than what has been brought by the other, or even although one of the two did not bring anything at all." La.Civil Code art. 2406.
"When the separate property of either the husband or the wife has been increased or improved during the marriage, the other spouse, or his or her heirs, shall be entitled to the reward of one half of the value of the increase or ameliorations, if it be proved that the increase or ameliorations be the result of the common labor, expenses or industry; but there shall be no reward due, if it be proved that the increase is due only to the ordinary course of things, to the rise in the value of property, or to the chances of trade." La.Civil Code art. 2408.
These articles of the Civil Code represent distinctive and enduring principles of our Civil Law system, a highly developed and more evolved concept of the rules regulating the marriage relation than almost any other body of laws on the subject.
"The Civil Law ideal of the marital relation, far kinder than the Common Law notion of a merged personality represented by the husband, has throughout the regulations of the community kept a more perfect balance between the rights of the spouses in their accumulations through the years. Furthermore, the strong framework which supports the community property edifice will permit of the minor adjustments necessary for perfect alignment with changing conditions." Daggett, The Community Property System of Louisiana. Chapter 1 (La.State Univ.Press 1945).
Until now, of the community property systems existing in the United States, that of Louisiana seems most basically sound, most equitable in its variations, possibly because it is true parent stock and has been least weakened by the influence of the Common Law idea of marital rights. Daggett, ibid.
Some historians believe the principle of community property originated in the ancient Germanic tribes when women fought by the side of men and for that reason were believed to be entitled to part of the spoils of war.
Even if the ancient causes which brought about the community property system as it exists in Louisiana no longer exist and are incompatible with the stresses for change, the existence of these stresses would not authorize courts of justice to refuse giving effect to the law. But fortunately this is not the case. Indeed, in this day and time women have to a great extent, because of economic and social changes, entered into industry and business, often sharing the burden of providing for the needs of the marital partnership. This change provides a cause, more prevalent than before, attesting to the relevance, and supporting the continuation and preservation, of the community property system.
In a case involving a controversy between a husband and wife over a partition in kind of shares of stock standing in the husband's name, the husband contended the stock should not be divided in kind, but that he should be allowed to retain all of the stock and pay to his wife one-half of its book value. To support his contention he refers to a provision of the charter of the company issuing the stock which requires that before the stock is transferred it be first offered to the shareholders of the company or its officers, a provision designed to restrict ownership of the shares to the employees and officers of the company.
In denying the husband the right to the stock to the exclusion of the wife, and after quoting Articles 2399 and 2402 of the Civil Code, this Court in Messersmith v. Messersmith, 229 La. 495, 86 So. 2d 169 (1956), said:
"There is nothing more fundamental in our law than the rule of property which declares that this community is a partnership in which the husband and wife own equal shares, their title thereto *843 vesting at the very instant such property is acquired. (citations omitted).
"We have repeatedly adhered to the doctrine that the half ownership of the wife in the community effects, its status not resting upon the mere gratuity of the husband, is entitled to a dignity equal to that of the husband's; and upon its dissolution and liquidation the wife is entitled to secure the delivery of this one-half right and ownership into her own exclusive management and control; and the courts have no discretion or power whatever to award her less.
"Our codal laws also declare that after the marriage the spouses can do nothing to alter the effect between themselves of our community laws. LSA-C.C. 2329."
The case also stands for the proposition that the restrictive provisions of the company charter cannot affect the status of the stock purchased during the existence of the community or the rights of the wife which flow from the partnership or community of acquets and gains created by the marriage, the Court saying:
"Such a restriction cannot negative the wife's present interest as a co-owner, and as a co-owner in community she is clearly entitled to be recognized as such and obtain the exclusive management and control of her vested interest."
This holding means that in the case at bar the stipulations of the plans cannot alter the wife's rights as a partner in community.
The Messersmith Case also involved classification of an individual employee's certificate issued by Equitable Life Assurance Society, the certificate being identified with a group annuity plan of the company. Notwithstanding that the certificate had no cash surrender or loan value on the date of dissolution of the community, and would never have a cash or loan value until resignation, retirement or death of the employee, this Court found the certificate to be an asset of the community, an incorporeal moveable from which benefits flow, which must be inventoried and in time partitioned between the spouses.
In Bender v. Pfaff, 282 U.S. 127, 51 S. Ct. 64, 75 L. Ed. 252 (1930), the United States Supreme Court recognized that under the law of Louisiana the wife is not only vested with the ownership of half of the community property from the moment it is acquired, but is likewise the owner of half of the community income. See also Succession of Wiener, 203 La. 649, 14 So. 2d 475 (1943).
Article 2334 of the Civil Code reinforces the doctrine expressed in the articles and decisions already referred to:
"The property of married persons is divided into separate and common property.
"Separate property is that which either party brings into the marriage, or acquires during the marriage with separate funds, or by inheritance, or by donation made to him or her particularly.
. . . . . .
"Common property is that which is acquired by the husband and wife during marriage, in any manner different from that above declared. . . ."
Although the husband is, by the articles of the Code, placed at the head of the partnership, the status of the wife as a partner and her ownership of half of the community property from the instant of its acquisition is unaffected. Succession of Wiener, supra. As expressed in Poe v. Seaborn, 282 U.S. 101, 51 S. Ct. 58, 75 L. Ed. 239 (1930), "The law's investiture of the husband with broad powers, by no means negatives the wife's present interest as a co-owner."
The theory of this community partnership is that necessity and order require that it be placed in charge of a managing partner. For one thing, dealings with third persons, when community property is involved, had to be protected from the nullifying actions of the other spouse, or the stalemate otherwise resulting from disagreement between the partners. In effect, *844 the confusion resulting from dual control had to be avoided.
"It is obvious, therefore, that the wife's interest in the community property in Louisiana does not spring from any fiction of the law or from any gift or act of generosity on the part of the husband but, instead, from an express legal contract of partnership entered into at the time of the marriage." Succession of Wiener, supra.
Notwithstanding that the husband is by law the head and master of the marital relationship and is charged with the management and control of the community of acquets and gains, the wife's one-half interest is at all times real, vesting in her the right to dispose of her interest by will and giving her the right to demand her one-half interest upon dissolution of the marriage for any cause, even though she is at fault in the separation or divorce.
It must be recognized, therefore, that plans or devices between employer and employee cannot have the effect of nullifying the wife's rights. There is no intimation in the case at bar, however, that the employer sought by the profit-sharing or retirement plan to nullify the law designed for the protection of the wife or of forced heirs. To the contrary, it seems apparent that the plans recognize the contribution the wife makes to the employee's contentment, stability and efficiency in his employment, and the design of the plan is to foster and encourage the employee's security. Expediency or simplicity of procedure in the settlement of the benefits upon the beneficiary at the death of the employee is the objective of the designation of beneficiary provision of the plans and the reason for granting authority to the committees to make the distribution in the absence of a designated beneficiary.
But, as we have seen, this Court has heretofore decided, that restrictive provisions in corporate charters, and, by analogy, in profit-sharing and retirement plans of the employer, "cannot negative the wife's present interest as a co-owner." Messersmith v. Messersmith, 229 La. 495, 86 So. 2d 169 (1956)
Demands for efficient and expeditious settlement under these plans cannot outweigh or have the effect of nullifying the strongly entrenched and viable community property system existing in this State. These demands overlook fundamental principles of our law, which, if disregarded, can only lead to the erosion and eventual nullification of community property and forced heirship principles. Piecemeal adjudications based upon demands for expediency and freedom of disposition will result in confusion and instability in the law. If this result is to be brought about, the Legislature must undertake the change, not courts.
Moreover, nothing in the community property system is found which encumbers or deters the operation of the plans before us. When questions arise over the disposition of the proceeds after the death of the employee or upon termination of the marriage, the matter can be resolved as in other cases of controversy which are resolved by the courts. In the case at bar the employer properly provoked this concursus to resolve the question.
We recognize the prior jurisprudence of this Court, and its incorporation in Section 647 of Title 22 of the Revised Statutes, which holds, in life insurance cases, that the right to receive benefits is an incorporeal thing, La.Civil Code art. 770, and the proceeds of life insurance are therefore payable to an insured's estate as separate property if the policy was brought into the marriage, In re: Moseman's Estate, 38 La.Ann. 219 (1886), or community property if the policy was acquired during the marriage. Sizeler v. Sizeler, 170 La. 128, 127 So. 388 (1930); Succession of Rabouin, 201 La. 227, 9 So. 2d 529 (1942); Succession of Buddig, 108 La. 406, 32 So. 361 (1902).
*845 It is the reasoning in these cases that this right to receive benefits constitutes an interest in the insurance contract which becomes vested at the moment the contract comes into existence. Succession of Verneuille, 120 La. 605, 45 So. 520 (1908). Nevertheless, when the insured names a beneficiary, the proceeds do not form any part of the insured's estate at his death. Succession of LeBlanc, 142 La. 27, 76 So. 223 (1917); Succession of Mendoza, 288 So. 2d 673 (La.App.1974) (Lemmon, Jr., concurring).
However, life insurance has always been treated as sui generis in this State. For this reason this Court has established a theory that the rules of law found in our Civil Code and the principles of forced heirship found in our Constitution and in the Civil Code do not apply to life insurance. The concept, as already pointed out, has been embodied in our statutory law. La.R.S. 22:647; Oppenheim, The Donation Inter Vivos, 43 Tul.L.Rev. 737 (1969). Clearly the theory of these cases establishing the proposition that the proceeds of an insurance policy are not subject to collation make it possible to favor one forced heir over another, La. Const. art. IV, 116 (1921); La.Const. art. XII, § 5 (1974); Vinson v. Vinson, 105 La. 30, 29 So. 701 (1901), and sanction a life insurance device which may, when properly employed, nullify the effects of the community of acquets and gains. Succession of Geagan, 212 La. 574, 33 So. 2d 118 (1947).
But this Court has refused to extend the rationale of the cases dealing with life insurance to other problems where the conflict is between the urge to bring about freedom of disposition and the fundamental and elementary principles of forced heirship and the community property system embodied in our Constitution and Civil Code.
Thus, where a decedent purchased United States Series "G" Savings Bonds and designated his brother as payee on death, and upon his death left a widow and posthumous child, and the widow sued for delivery of the proceeds or judgment for the value of the bonds, we granted judgment in favor of the widow, saying the designation of the brother constituted a donation mortis causa, as defined by Article 1469 of the Civil Code. As such it was a gift in contemplation of death and subject to State Inheritance Tax. Winsberg v. Winsberg, 220 La. 398, 56 So. 2d 730 (1952).
The decision in the Winsberg Case found that, whereas such a gift was a disposition mortis causa, it has no standing under our law as it does not comply with any of the forms prescribed for testaments by Articles 1574-95 of the Civil Code, concluding:
"Accordingly, it would be absolutely null but for the vitality given it by law under which the bonds were issued. This Federal contract, which is a recognition by the Government of its obligation to the purchaser of the bond for a sum certain in money to be paid on his death to a designated person, is, of course, enforceable between the parties thereto in accordance with the conditions stated therein. And, obviously, we think, Louisiana is without right to change the beneficiary of the contract or to insist that the Federal Government recognize someone other than the payee as the owner of the bonds. . . .
"But though these contracts are entitled to recognition as another way to dispose of property in prospect of death, it does not follow that they may be employed so as to nullify the laws applicable to the devolution of property or to confer upon the donees greater rights than they would have had if the devise has been in the form of a last will and testament. It is apt to observe that the Federal Government is neither concerned with nor interested in the application and enforcement of State laws respecting succession or inheritance of property. . . .
*846 "So we say in this case the defendant cannot be accorded greater rights, merely because the donation is in the form of a Federal contract, than he would have had it been by last will and testament as prescribed by our law. And, while Louisiana may not require that bonds be paid to anyone other than the named beneficiary, it undoubtedly has the power, which was reserved to it by the Tenth Amendment of the Federal Constitution, to decree that the beneficiary or payee is indebted to the estate of the former owner, or his heirs, in an amount equal to the value of the gift."
The principle has been upheld by decisions of our Nation's highest court. They concede that while Federal law may govern as to form, Federal law cannot be used as a means of defrauding heirs under state law. Yiatchos v. Yiatchos, 376 U.S. 306, 84 S. Ct. 742, 11 L. Ed. 2d 724 (1964); Free v. Bland, 369 U.S. 663, 82 S. Ct. 1089, 8 L. Ed. 2d 180 (1962).
Life insurance is distinctive both in its confection and in its effect. For instance, "An examination of the authorities does not warrant the conclusion that an annuity contract is an insurance contract . . . An annuity comprehends few of the elements of an insurance contract." Carroll v. Equitable Life Assurance Society of United States, 9 F.Supp. 223, 224 (W.D.Mo.1934); Succession of Rabouin, 201 La. 227, 9 So. 2d 529 (1942). Annuity contracts are recognized as investments rather than as insurance. Appleman on Insurance, Section 83.
Considering Louisiana's long and steadfast commitment to the principles of forced heirship and community property, this Court is unable, even if it thought a better result would be to consider profit-sharing and retirement plans analogous to insurance, to adopt any theory of decision which would erode those principles, and, under certain circumstances, nullify them.
Thus, under the facts of this case, the benefits or proceeds of the profit-sharing and retirement plans are, in effect, and in reality, principally earnings of the deceased employee Montgomery. As such the proceeds of these plans were "the produce of the reciprocal industry and labor of both husband and wife." La.Civil Code art. 2402.
At the time of the dissolution of the marriage by Montgomery's death, therefore, these benefits were "presumed community effects or gains," ibid. art. 2405, and are to be divided into two equal portions between the surviving wife and the heirs of the deceased husband. Ibid. art. 2406. To bring about this result the proceeds of these plans are payable to Goldie Greig as administratrix of the succession of the deceased Montgomery.
However, the forced heirs of the decedent and his first wife are entitled to an accounting to support any claim that some value of these benefits existed prior to the second marriage. In the event such a contention is supported, the claims of the forced heirs and the first wife that this value is attributable to the first community must be given effect. This accounting is to be based upon the value, if any, of the account designated for Montgomery which had vested prior to the second marriage. Daigre v. Daigre, 228 La. 682, 83 So. 2d 900 (1955), opinion on rehearing, holding that if a pension is part of the consideration for services of the employee, "then it unquestionably becomes a community asset." See also Succession of Lewis, 192 La. 734, 189 So. 118 (1939).
V.
Although the question does not seem to be contested, the record shows that Montgomery had designated his older son as the beneficiary of the proceeds of both plans on a written form provided by the committee, the designations were not in testamentary form. These are undoubtedly dispositions in contemplation of death. This being so, the question arises whether such a gift is unlawful in Louisiana since it is not in the form of a will, nor is it a part of a life insurance contract, for Article *847 1570 of the Civil Code provides that all dispositions mortis causa be made by testament and abrogates all other forms. See also La.Civil Code arts. 1571-95. No law is found which permits superimposing this form for the disposition of Montgomery's property after death over the forms prescribed by the Code for dispositions mortis causa. Therefore, the designation of Thomas III as beneficiary of the two plans is without effect.
Nor can the law give effect to the donation inter vivos executed by Montgomery in which he gave his interest in the plans and insurance policy to his son Thomas III. Aside from the fact that the donations were never accepted by the donee as the law requires, La.Civil Code art. 1540, the question arises whether Montgomery could then dispose of the plan benefits which could only be availed of upon resignation, retirement or death. Houghton v. Houghton, 165 La. 1019, 116 So. 493 (1928).
VI.
The Life Insurance Policy
The life insurance policy in question is a term policy with no cash surrender value, furnished to decedent as an incident of his employment under a group plan with Aetna Life Insurance Company. Both the employee and the employer made payments of premiums, the company's records indicating that the decedent paid $.50 per month for each $1,000.00 unit of coverage since 1965. (The records prior to 1965 were unavailable.) In 1965, the coverage amounted to $15,000.00. It was changed in 1970 to $22,500.00.
The proceeds were paid to the older son as designated beneficiary. In this lawsuit, the second wife seeks their recovery.
It is well-settled in Louisiana that the proceeds of life insurance, if payable to a named beneficiary other than the estate of the insured, are not considered to be a part of the estate of the insured. They do not come into existence during his life, never belong to him, and pass by virtue of the contractual agreement between the insured and the insurer to the named beneficiary. Succession of Rabouin, 201 La. 227, 9 So. 2d 529 (1942); Sizeler v. Sizeler, 170 La. 128, 127 So. 388 (1930). Life insurance proceeds are not subject to the Civil Code articles relating to donations inter vivos or mortis causa, nor are they subject to community claims or the laws regarding forced heirship.
The second wife of decedent, Goldie Greig, urges this Court to re-examine these rules. She contends that they provide a vehicle whereby a husband can separate life insurance proceeds from his estate, thus circumventing the laws relating to community property and forced heirship.
The jurisprudential rule has now been incorporated in our statutory law. See La.R.S. 22:647. It can no longer be changed by court decision, even if we were inclined to do so.
As already noted, this insurance policy was acquired before decedent's marriage to his second wife, and thus was part of his separate estate. No restitution is due the community for the premiums paid by decedent. In such a case, a community claim is supportable only when the cash value of the policy has increased during the community's existence, and then only for one-half the extent of the increase in value. The policy before us is a term insurance policy, which never had a cash surrender value. Therefore, no accounting is due the community. Butler v. Butler, La.App., 228 So. 2d 339 (1969).
The wife's claim to the insurance proceeds is without merit.
For the reasons assigned, the judgment of the Court of Appeal is reversed in the concursus proceeding involving the status of the proceeds of the profit-sharing and retirement plans, and it is ordered that the *848 funds on deposit in the registry of the court be delivered to the administratrix of the estate of Thomas W. Montgomery, Jr., to be divided one-half to Goldie Greig, the surviving spouse in community, and one-fourth each to Thomas W. Montgomery III and Monty George Montgomery, subject to such adjustments as are warranted by an accounting to Sybil Chauvin, the wife of the first marriage, and to the forced heirs for the value of the plans which was vested during the first marriage. In the consolidated suit involving the claim of the administratrix for return of the proceeds of the life insurance policy to the estate of the deceased, the judgment of the Court of Appeal is affirmed.
SANDERS, C.J., concurs in part and dissents in part and assigns written reasons.
MARCUS, J., concurs in part and dissents in part.
SANDERS, Chief Justice (concurring in part and dissenting in part).
The issues before us in these consolidated cases are: (1) whether the proceeds from profit-sharing and retirement plans are payable to a named beneficiary other than the surviving spouse, and (2) whether the proceeds of a life insurance policy provided in connection with employment are payable to the named beneficiary who is not the surviving spouse.
I agree with the majority that the proceeds of the life insurance policy are payable to the named beneficiary.
I disagree, however, with the disposition of the proceeds of the profit-sharing and retirement plans. I would likewise hold that the proceeds of these plans are payable to the designated beneficiary.
The leading case on this issue is Succession of Rockvoan, La.App., 141 So. 2d 438 (1962). In Rockvoan, the decedent designated his son by his first marriage as the beneficiary of the death benefits of his retirement plan; the litigation arose when his second wife, who was the administratrix of his succession, contended that the payment belonged to the community of acquets and gains between the decedent and herself. As in the present case, decedent had entered into the plan prior to his second marriage.
The court in Rockvoan rendered judgment in favor of the designated beneficiary, basing its decision on the rationale that the death benefit provision of the retirement fund was so closely analogous to life insurance as to render the law relative to life insurance applicable. The court found especially significant the fact that the proceeds of the fund did not come into existence during the lifetime of the employee, and thus did not at any time belong to him so as to form a part of his estate, either separate or community. I think the court's reasoning in Rockvoam is correct.
In the present case, I note that the funds were actually owned by the trust which was administered by the bank as trustee; neither the employer nor the employee at any time had a right of ownership in the funds. The employee's right was solely a contractual right against his employer, subject to the contingencies of retirement, disability, or death. The contractual right remained unenforceable until the happening of one of those contingencies.
Appellant argues that the fact that decedent had control over at least one of the contingencies which would have rendered his contractual right enforceable, i.e., the date of his retirement, should alter the result because his rights of the funds had thus already "vested" in him. The decision in Succession of Mendoza, La.App., 288 So. 2d 673 (1973), turned on this distinction. However, I find the distinction to be insupportable. The approach used by the Fourth Circuit Court of Appeal in Lynch v. Lawrence, La.App., 293 So. 2d 598, writs refused, La., 295 So. 2d 809, 814 (1974), is more consistent with my view. In Lynch, the circumstances which gave rise to the *849 litigation were different, being the partition of the community pursuant to a divorce decree. Additionally, the plan in Lynch was acquired during the marriage and was community rather than separate property. The court held that the wife had a right to an undivided one-half interest in the deferred pension plan that had vested prior to the dissolution of the community, but that the husband was not required to begin paying this indebtedness until he began to receive the payments himself. Furthermore, the court held that the amount of the wife's portion of the monthly pension payments could be substantially reduced or extinguished by the husband's death. In Lynch, the husband had reached the age at which he could retire at any time at full pension before the dissolution of the community.
Applying the reasoning of Lynch to the instant case, the wife's right to an accounting for the enhancement of the decedent's separate estate through its receipt of pension payments never came into existence, and was prevented from ever reaching fruition by his death.
In most, if not all, of the other states, employee benefits pass by contract right, never becoming a part of the employee's succession. See, e.g., Buehler v. Buehler, Tex.Civ.App., 323 S.W.2d 67 (1959); Kansas City Life Insurance Co. v. Rainey, 353 Mo. 477, 182 S.W.2d 624 (1944); Toulouse v. New York Life Insurance Co., 40 Wash.2d 538, 245 P.2d 205 (1952); In re Koss' Estate, 106 N.J.Eq. 323, 150 A. 360 (1930). The theories most often relied upon in other jurisdictions are: (1) the designated party is a third party beneficiary of the contract between the employer and employee, or (2) such pension funds create valid inter vivos trusts. See Hart v. Savings and Proft Sharing Fund of Sears, Roebuck & Co., 291 F. Supp. 95 (E.D.Va. 1968).
Apparently, the majority holds that the profit-sharing and retirement plans are assets of the second community, though the plans were established during the first community. In so holding, the majority deviates from the jurisprudence that the time the plan is taken out is controlling. See Daigre v. Daigre, 228 La. 682, 83 So. 2d 900 (1955); Succession of Mendoza, La.App., 288 So. 2d 673 (1973); Langlinais v. David, La.App., 289 So. 2d 343 (1974). If I were to reach the question, I would adhere to the existing jurisprudence.
Admittedly, the present case is difficult because of a collision between the Louisiana Civil Code concepts and the widely used contractual employee systems. I greatly fear that the majority decision will impair the operation of these systems, as well as subject the benefits to the federal estate tax contrary to the salutary purpose of the systems.
For the reasons assigned, I respectfully dissent.
ON REHEARING
TATE, Justice.
We granted rehearing primarily to reconsider what effect, if any, should be given to the contractual designation of a beneficiary to the profit-sharing and retirement fund proceeds. We held these proceeds by our opinion to be in the nature of deferred compensation (additional remuneration) to the employee for his labors during his working lifetime. (That last holding we reiterate and amplify by our present opinion on rehearing.)
Procedural Context
This issue arises in a concursus proceeding, La.C.Civ.P. art. 4651. It was filed by the employer (T. L. James) and by those administering retirement and profit-sharing plans existing by contractual agreement between T. L. James and its employees.
The plaintiffs deposited into court $26,330.14 proceeds from the profit-sharing trust and $37,345.30 proceeds from the *850 retirement plan, a total of $63,875.44. These sums represent the total value of the credits in the respective plans to the accounts of T. W. Montgomery, Jr., deceased, a former long-time employee of T. L. James.
Cited as defendants were: the contractually-designated beneficiary (T. W. Montgomery, III) of the plans; the decedent's surviving spouse (Mrs. Goldie Greig Montgomery); Monty George Montgomery, a minor forced heir (through a curator); Mrs. Sybil Montgomery, the decedent's former wife by the first marriage which ended in divorce; and the succession of the decedent (through its administratrix). All were cited as having opposing claims to such proceeds.[1]
By our original opinion, we reversed the decisions of the district and intermediate courts. These previous decisions had recognized the contractual beneficiary's rights to receive the proceeds, free and clear of any claim that his receipt of them infringed upon the rights of forced heirs or of the present and former spouses who had lived in community with the decedent.
In this opinion on rehearing, we do not depart from the basic rationale of our original opinion, which held that the contractual agreement between T. L. James and its employee could not prejudice the community rights of the decedent's spouses, nor the rights of his forced heirs to their legitime. However, we do clarify the respective rights of the contractual beneficiary, the forced heirs, and the former spouses to the value of the funds attributable to their respective communities.
Factual Context
The facts are more fully set forth in our original opinion. Insofar as relevant to our discussion, they may be summarized as follows:
The decedent, Thomas W. Montgomery, Jr., was married to Sybil Chauvin (former spouse) from 1935 to their divorce in 1958, and to Goldie Greig (surviving widow) from 1958 to his death in 1971. One son, Thomas III, was born during the first marriage and another, Monty George, during the second.
The decedent was employed by T. L. James from 1946 to his death. During his first marriage, he became a participant in the company's retirement and profit-sharing plans, which apply to all employees. At the time of dissolution by divorce of the first community, the wife's interest in the funds, if any, was not partitioned or settled between the spouses.
In 1970, his first son Thomas III was named the beneficiary of both plans. However, because a dispute arose as to who was entitled to the proceeds of the plan, T. L. James provoked a concursus proceeding and deposited the proceeds in the court registry.
Under the terms of the decedent's contracts with the respective group plans, the right of the decedent or his beneficiaries to receive any proceeds do not contractually vest until his death, retirement, or resignation from company employment. A separate account for each employee is maintained, to which annual increments are paid by the company based upon employment. At any given time, each employee's account is valued according to its share in the assets of the respective plans, based upon contractual formulae applicable to all employees.
The employee is given the right to designate a contractual beneficiary to whom *851 the proceeds are to be paid. The plans further provide that no person shall have a right to the funds except as provided by the plan, which further prohibits anticipatory assignment, sale, or pledge.
Summary of our Original Holding
For the reasons stated at greater length in our original opinion, we adopt and affirm its conclusions, and their necessary implications, in the following respects:
1. The contribution of the employer into these plans is not a purely gratuitous act, but it is in the nature of additional remuneration to the employee who meets the conditions of the plan. The employer expects and receives something in return for his contribution, while the employee, in complying, earns the reward. The credits to these plans, when made, are in the nature of compensation (although deferred until contractually payable).
2. Each contribution of the employer to the funds entitles the employee or his beneficiary to share subsequently in the funds' proceeds; when made during the community, the property right to share ultimately in the proceeds thereby acquired by the wage earner, is "acquire[d] during the marriage", Civil Code Article 2402 and is thus a community asset. Civil Code Article 2334; Messersmith v. Messersmith, 229 La. 495, 86 So. 2d 169 (1956). Therefore, the value of the right to share proportionately in the fund, which right is contractually acquired by virtue of each contribution, falls into the community during which the contribution is made; for by each contribution, when made, the employee (or his beneficiary or estate) has acquired a right to share pro rata in the proceeds ultimately payable from the funds to the employee or his contractual beneficiary or his estate.
3. The value of the right to share in the retirement and profit-sharing funds is an incorporeal, movable right. When acquired during the existence of a marriage, the right-to-share is a community asset which, at the dissolution of the community, must be so classifiedeven though at the time acquired or at the time of dissolution of a community, the right has no marketable or redeemable cash value, and even though the contractual right to receive money or other benefits is due in the future and is contingent upon the happening of an event at an uncertain time. Messersmith v. Messersmith, 229 La. 495, 86 So. 2d 169, 174-75 (1956). When a community is dissolved, the employee's spouse is thus entitled to be recognized as the owner of one-half the value of the right-to-share, insofar as attributable to the contributions paid into the fund as deferred compensation to the employee during the existence of the community (i.e., even though it may not by the contract be payable at that time).[2] Id.; Laffitte v. Laffitte, 253 So. 2d 120 (La.App.2d Cir. 1971), noted 33 La.L.Rev. 222-23 (1973). However, when the proceeds do become payable under the contract to the employee or his beneficiary or estate, the spouse is entitled at that time to receive payment as owner of her share of the proceeds, based upon the value of the right-to-share acquired *852 during the community formerly existing between her and the wage earner.
4. For the reasons more fully set forth in our original opinion, we are unwilling to extend by analogy the principles applicable to the purchase of life insurance policies to the acquisition of community interests in retirement or profit-sharing funds such as those at issue. Jurisprudentially, as confirmed legislatively, life insurance interests are treated sui generis as an exception to the usual rules of acquisition of property interests during a community.[3]
5. Therefore, we cannot recognize a contractual agreement (the plans in question) between the wage earner and a third person (his employer and the plans in question) to pay a contractual beneficiary the proceeds, insofar as such payment would (in the absence of legislative authorization) divest the employee's spouse of a present interest as a co-owner of the right to share in the proceeds acquired during the community.
6. For similar reasons, we cannot recognize such a contractual agreement insofar as, by recognizing it, the payment to the beneficiary would infringe upon the legitime of a forced heir. See: Succession of Rabouin, 201 La. 227, 9 So. 2d 529 (1942). See also Jochum v. Estate of Favre, 313 So. 2d 870 (La.App.4th Cir. 1975).
7. The decedent's attempt by notarial act of donation to donate his entire interest in the funds to his son by his first marriage is ineffective. It is invalid, not only because of the contractual prohibition in the plans which prevent such divestiture but also because the donation was not accepted by the son during the decedent's lifetime. Civil Code Articles 1536, 1540; 1 Litvinoff on Obligations, Section 164 (6 Civil Law Treatise, 1969). See also Planiol, Civil Law Treatise, Volume 3, Section 2567 (LSLI translation, 1959).
Apportionment of the ownership of the proceeds when they become contractually payable
In our original opinion, we did not specifically set forth the method of determining what share of the funds was attributable to each of the communities with an ownership interest in them. As noted, the right-to-share acquired during the community (arising from each contribution made during the marriage) does not contractually vest until the employee's death, retirement, or withdrawal from employment. At that time, however, when under the plans a contractual right vests in the employee or his beneficiary or estate to receive proceeds from funds, the following method of apportionment to the respective communities and to the employee's separate estate is implicit in our original opinion: The value of each contribution paid into the fund shall be a share of the fund of the same proportion that the contribution's amount bears to the total amount of all contributions paid into the fund to the employee's account.
With regard to the present case, what this means is that the total contributions paid into the employee's accounts shall be divided into three classifications: (a) those made during the first community; (b) those made when the deceased employee was not married; and (c) those made during the second community.
In accord with these classifications, when the proceeds of the fund become payable (to the employee, his beneficiary, or his estate) under the contract, the proceeds attributable to the employee's account shall *853 (if adverse claim is made against the beneficiary) be apportioned as
(a) owned by the first community (one-half to each spouse),
(b) owned by the husband's separate estate, and
(c) owned by the second community (one-half to each spouse),
in the same proportions that the original contributions made during the respective classification periods bear to the total contributions made during the decedent's lifetime.
This, we believe, is in accord with jurisprudential principles developed by the intermediate courts in apportioning each spouse's ownership rights in plans funded similarly to the presentin which, similarly, by way of deferred compensation for his services, the employee (or his beneficiary or estate) received the right to share in the proceeds at some future event, such as at his death or retirement. These intermediate decisions have received approval by way of scholarly commentary, and they are based upon the civil code articles regulating community property and upon our decisions, such as Messersmith above-cited, applying them to analogous property rights. These decisions and their approving scholarly commentary include: Lynch v. Lawrence, 293 So. 2d 598 (La.App.4th Cir. 1974), certiorari denied ("no error of law"), 295 So. 2d 809 (La.1974), noted approvingly by Professor Robert A. Pascal, 35 La.L.Rev. 208-09 (1975); Langlinais v. David, 289 So. 2d 343 (La.App.3d Cir. 1974); Hamilton v. Hamilton, 258 So. 2d 661 (La.App.3d Cir. 1972); Laffitte v. Laffitte, 253 So. 2d 120 (La.App.2d Cir. 1971) (on further review) and 232 So. 2d 92 (La.App.2d Cir. 1970), noted approvingly (Professor Pascal) 33 La.L.Re v. 222-23 (1973) and 31 La.L.Rev. 253-54 (1971); Howard v. Ingle, 180 So. 248 (La.App.2d Cir. 1938). See also Comment, 25 La.L. Rev. 108, 137-43 (1964). Similarly consistent with these holdings are the recent decisions in Swope v. Mitchell, 324 So. 2d 461 (La.App.3d.Cir. 1975) and Berry v. Equitable Life Assurance Society, 316 So. 2d 399 (La.App.1st Cir. 1975).[4]
Effect of contractual designation of a beneficiary to the decedent's interest in their funds of the plans
Having amplified and reaffirmed the essential holding of our original opinion, we now approach a supplementary issue (to reconsider which, was the primary purpose of granting rehearing): What is the effect, if any, of the decedent's contractual designation of a beneficiary to the now-payable proceeds attributable to his account in the funds?
This contractual agreement, as we have held, cannot (in the absence of legislation so authorizing) prejudice the rights of forced heirs or the community ownership of spouses of the wage earner, essentially, because rights of forced heirship and of spouses in community acquisitions are fundamental concepts of our legal system.
In our original opinion, however, we went further: We held that the contractual designation of a beneficiary was a complete nullity which transferred no property interest to the beneficiary, because it did not meet the requirements of the civil code for a valid testamentary disposition nor for a valid donation inter vivos.
*854 Upon reconsideration, for reasons to be elaborated, we now conclude that, so long as the constractual devolution of the decedent's interest to the beneficiary does not infringe upon the legitime of a complaining forced heir nor upon the community ownership of a complaining spouse, no prohibition of law prevents the courts from recognizing the contractual rights of the beneficiary to the ownership of the proceeds (so acquired by reason of the contract between the deceased employee, his employer, and the respective plans). We are re-enforced in this conclusion by the legislative recognition of such a contractual right in two relatively recent legislative acts, La.R.S. 23:638 (as amended in 1966) and La.R.S. 47:2404 C (as amended in 1968 and 1972).
The first of these statutes, La.R.S. 23:638[5], was originally enacted in 1954. By amendments in 1960 and 1966, it was broadened. The effect of the statute is to permit a full discharge from any adverse claim to any employer or trustee who makes a payment or refund pursuant to a written retirement or employee benefit plan "unless, before such payment or refund is made, the employer [etc.] . . . has received . . . written notice by or on behalf of some other person that such other person claims to be entitled to such payment or refund * * *." (We note, however, that this legally protected right to pay the contractual beneficiary was not legislatively intended to permit the contractual beneficiary to receive the proceeds free and clear of adverse claims, such as by the forced heir or spouse in community.[6] Contrast this with La.R.S. 22:647'[7] which expressly recognizes the contractual right of the beneficiary or payee *855 of a life insurance policy to receive the proceeds as even against the estate, heirs, and legatees of the insured.)
By the second of these enactments, La. R.S. 47:2404 C[8], the legislature specifically exempted from the state inheritance tax any proceeds payable to a beneficiary by reason of "any retirement or pension plan, trust, system or policy", which latter terms are broadly defined by the act. Implicit, if not explicit, by this provision is legislative recognition of the concept that the contractual beneficiary acquires an ownership right to the proceeds by virtue of the contract, not by virtue of inheritance or gift. (However, as in the case of the first cited statute the statutory recognition of the contractual right so legislatively recognized does not exclude any duty the beneficiary may have to account to forced heirs if their rights of inheritance are infringed by the contract, nor to spouses if their community ownership is violated by the contractual designation of a beneficiary.)
This legislative recognition of the contractual right of the beneficiary to receive the proceedswithout an equivalent legislative recognition of his right to do so free of his duty to account to forced heirs for invasion of their legitime, or to spouses in community for the share of the funds attributable to the latters' ownership interest in thempresents questions not expressly provided for by statute, insofar as the interests of forced heirs and of spouses for community ownerships. As in other unprovided-for situations, Civil Code Article 21 enjoins the judiciary: "In all civil matters, where there is no express law, the judge is bound to proceed and decide according to equity. To decide equitably, an appeal is to be made to natural law and reason, or received usages, where positive law is silent." See (concerning another area of law) Minyard v. Curtis Products, Inc., 251 La. 624, 205 So. 2d 422 (1968).
We thus hold, consistent with the views expressed in the earlier part of this opinion (reaffirming the rationale of our original opinion as to these issues), that, although the contractual beneficiary may receive in full ownership the share of the funds passing to him by virtue of the decedent's contractual designation of him as beneficiary, he does so with the obligation to account to any complaining forced heir or spouse in community if his receipt of proceeds violates either the former's legitime or the latter's community ownership rights (as set forth more fully in the earlier part of this opinion). Where, before the disbursement to the beneficiary, the payors (as here) have received written notice of opposing claims of the estate or of a surviving spouse, they may provoke a concursus in which the claims of the beneficiary, of the estate (in which claims of forced heirs may be adjudicated), and of the surviving spouse to the proceeds may be apportioned in accordance with the views above set forth.
We thus adopt a judicial resolution of the competing legal interests analogous to that developed by our state courts in resolving the somewhat similar issues arising in federal savings bond caseswhere likewise, by statute, a form of devolution of a property interest was recognized as valid, but was nevertheless subjected to the *856 judicial requirement of an accounting, where requested, to the claims of any forced heir whose legitime was thereby prejudiced or of any spouse whose community ownership interests was thereby violated. See: Winsberg v. Winsberg, 220 La. 398, 56 So. 2d 730 (1952); Succession of Guerre, 197 So. 2d 738 (La.App.4th Cir. 1967); Succession of Videau, 197 So. 2d 655 (La. App.4th Cir. 1967); Comment, 25 La.L. Rev. 108, 108-19 (1964).
The claimants in the concursus
Upon the remand to the district court, the funds on deposit are to be apportioned, in accordance with the above principles, to: (a) T. W. Montgomery, III, the contractual beneficiary, receiving them as owner by virtue of the contract; less (b) funds due to the surviving (or second) spouse, Mrs. Goldie Greig Montgomery, arising out of her community ownership arising from contributions to the funds made during the existence of the second community; and also less (c) funds due, if any, to the other forced heir, the minor, Monty George Montgomery (cited through a curator ad hoc), if (and only to the extent that) his legitime has been invaded by the otherwise-valid contractual disposition of the funds to T. W. Montgomery, III. Since the decedent's estate is also a party to this proceeding, determination of the latter's claim, if any, may be accomplished on the remand of the present proceedings.
Mrs. Sybil Chauvin Montgomery, the decedent's divorced wife by his first marriage was also impleaded as a claimant to the fund.
Had she asserted any claim, her community ownership rights to share in the funds would be recognized on the basis of the contributions made to the funds during the existence of the first community. However, by answer to the petition, she specifically prays for recognition of the claim of the contractual beneficiary (T. W. Mont-gomery, III), her son; only in the alternative does she assert her own claim.
We have recognized the claim of the contractual beneficiary to receive the funds as owner by virtue of the contractual designation (less sums due to the surviving spouse of the second community; and to the other forced heir, the minor Monty George Montgomery, if the latter's legitime is invaded by the contractual disposition). Accordingly, Mrs. Sybil Chauvin Montgomery is dismissed from the concursus.
Decree
For the reasons assigned, therefore, we reverse the judgment of the district and intermediate courts recognizing T. W. Montgomery, III, as the full owner of the funds in dispute, and we remand this case to the district court for it to apportion the funds involved, in accordance with the principles set forth in this opinion, as between (a) the contractual beneficiary, (b) the surviving spouse in community, and (c) the minor forced heir (Monty George Montgomery) (ifand only to the extent thatthe latter's legitime has been invaded by the contractual devolution of the funds to the contractual beneficiary). All costs of these proceedings are to be taxed against the funds deposited into court. La. C.Civ.P. art. 4659.
The right of all parties to apply for further rehearing is expressly reserved. Rules of Supreme Court of Louisiana (1973), Rule 9, Section 5.
REVERSED AND REMANDED TO THE DISTRICT COURT.
SUMMERS, J., concurs and assigns reasons.
SANDERS, C.J., concurs in part and dissents in part and will assign written reasons.
SUMMERS, Justice (concurring).
Inasmuch as the ultimate result under this opinion on rehearing will be the same *857 as the result which would follow under the original opinion, I am concurring in this opinion on rehearing.
However, the opinion on rehearing erroneously holds that the beneficiary named in the plans receives the benefits in full ownership, the share of the funds passing to him by virtue of the decedent's contractual designation of him as beneficiary. Notwithstanding that the opinion on rehearing imposes upon the beneficiary the obligation to account to any complaining forced heir or spouse in community if his receipt of proceeds violates either the former's legitime or the latter's community ownership rights, the principles of forced heirship and community property are violated by vesting full ownership in the beneficiary.
The authority relied upon to bring about the vesting of full ownership in the beneficiary is Section 638A of Title 23 of the Revised Statutes. Under this enactment, whenever payment or refund is made to an employee or his beneficiary pursuant to a designation in a plan, such payment or refund shall discharge the employer and any trustee or insurance company making such payment or refund from all adverse claims thereto and from all liability for inheritance taxes due the State, provided the payment is made before the employer or former employer receives written notice on behalf of some other person of a claim or entitlement to the payment or refund.
This statute is designed solely and exclusively to protect employers and any trustee or insurance company making such payments from liabilitynothing more. It does not purport to endow the payments made with any other legality. Especially the statute does not say or infer that the payment vests the beneficiary receiving the payment with full ownership of the funds. Yet the majority so holds. This holding is doubly erroneous under the facts of this case because the statute provides that the protection of the employer, trustee or insurance company does not result where they have received written notice of a claim before the payment is made. In that event, which is the case here, the payment to the beneficiary is not authorized. That is to say, under these circumstances payment is to be made to the parties entitled to the funds in accordance with the law of forced heirship or community property as the case may be.
In substance, it is my view that the majority has improperly relied on Section 638A to circumventalbeit temporarily the law of forced heirship and community property; indeed, the law which pertains to the formalities for donations mortis causa also.
I subscribe to the opinion on rehearing, however, wherein it adopts and affirms the original opinion.
SANDERS, Chief Justice (concurring in part and dissenting in part).
I agree with the majority that the benefits of the profit-sharing and retirement plans are payable to the designated beneficiary.
I disagree, however, with the holding as to apportionment. As I pointed out in my dissent on original hearing, I would adhere to the principles announced in Succession of Rockvoan, La.App., 141 So. 2d 438 (1962). In that case, the Court held that the benefits of such a plan were governed by life insurance principles.
The apportionment system announced in the majority opinion is both unsound and unworkable. It is based upon "the value of each contribution paid into the fund" for the employee's account.
In the retirement plan, separate employee accounts are not maintained. The employer's contributions are to the total pension fund, determined by actuarial calculations.
*858 No portion of the contribution is allocated to a specific employee.
Although Lynch v. Lawrence, La.App. 293 So. 2d 598 (1974) is cited with approval, the "benefits earned" principle announced in that decision is not followed.
In the profit-sharing plan also, contributions are an unreliable basis for apportionment, since the holding does not take into account the provisions for "gradual vesting" stipulated in the plan.
In my opinion, the majority holding unnecessarily hampers the operation of employee-plans in Louisiana.
For the reasons assigned, I concur in part and dissent in part.
NOTES
[1] In a companion suit, Mrs. Goldie Greig Montgomery et al. v. T. W. Montgomery, III, the widow-administratrix, sought recovery from the defendant son, inter alia, of certain proceeds of an insurance policy (alternatively, of the value of community premiums paid for this term policy, which had no cash surrender value). For the reasons stated by our original opinion, we affirm the rejection in that suit of the widow-administratrix's demand upon the insurance policy claims.
[2] Although at the time of dissolution of the community, the right to share in the funds' proceeds may be a mere expectancy without marketable order or redeemable cash value, the wage earner and his spouse may at that time agree upon its value and partition it, along with the other assets of the community. In practice, usually this is done, after a separation or divorce, by the wage earner paying his spouse for the discounted value of her half of this community asset, either by cash or by the spouse receiving in exchange an agreed-upon equivalent share of the other community assets. See Comment, 25 La.L. Rev. 108, 140-41 (1964).
In the present case, however, the husband did not settle with his first wife for her interest in the contractual right to receive these proceeds eventually; and therefore, to the extent of the value of the contribution of the first community in these funds, the first community's interest remains an unpartitioned assets of that community. See Langlinais v. David, 289 So. 2d 343 (La.App.3d Cir. 1974).
[3] Likewise inapplicable, and inappropriate to extend by analogy (since the subject of special legislation), are the decisions holding that teachers' retirement benefits are the separate property of the teacher rather than a community asset and are receivable by the contractual beneficiary, not the heir. Teachers' Retirement System v. Vial, 317 So. 2d 179 (La.1975). See also 27 La.L.Rev. 457-58 (1967).
[4] Succession of Mendoza, 288 So. 2d 673 (La. App.4th Cir. 1974) and Succession of Rockvoan, 141 So. 2d 438 (La.App.4th Cir. 1962) analogized such funds to life insurance contracts, and these decisions permitted the contractual beneficiary to receive the proceeds, free and clear of the rights of forced heirs and of the communities during which an interest was acquired. As Professor Pascal pointed out, 35 La.L.Rev. 309 (1974), this result is not authorized by legislation and violates fundamental concepts of community property. These decisions are overruled, insofar as inconsistent with the views expressed by this opinion.
[5] La.R.S. 23:638, subd. A, as amended, now provides in full:
"Whenever payment or refund is made to any employee, former employee or his beneficiary or estate pursuant to a written retirement, death or other employee benefit plan or savings plan, such payment or refund shall fully discharge the employer and any trustee or insurance company making such payment or refund from all adverse claims thereto and from all liability for inheritance taxes due the state, unless, before such payment or refund is made, the employer or former employer, where the payment is made by the employer or former employer, has received at its principal place of business within this state, written notice by or on behalf of some other person that such other person claims to be entitled to such payment or refund or some part thereof or where a trustee or insurance company is making the payment, such notice has been delivered by the employer to the home office of such trustee or such insurance company or has otherwise been received by said parties. In the event the employee is deceased and a judgment of possession has been entered in his or her succession, payment of such money, or portions thereof, pursuant to the terms of the judgment of possession shall likewise fully protect the employer and any trustee or insurance company making such payment unless before such payment is made written notice of an adverse claim is received as provided herein."
[6] We are reinforced in this view by Sub-Section B of La.R.S. 23:638, which specifically provides that the payment by the employer, etc., shall not affect the inheritance tax liability "as between all persons" other than the employer, etc.
The provision in full provides: "B. Nothing contained in this Section shall affect any claim or right or inheritance tax to or on any such payment or refund or part thereof as between all persons other than the employer and the trustee or insurance company making such payment or refund."
[7] La.R.S. 22:647 provides, insofar as pertinent:
"A. The lawful beneficiary, assignee, or payee, including the insured's estate, of a life insurance policy or endowment policy, heretofore or hereafter effected shall be entitled to the proceeds and avails of the policy against the creditors and representatives of the insured and of the person effecting the policy or the estate of either, and against the heirs and legatees of either such person, and such proceeds and avails shall also be exempt from all liability for any debt of such beneficiary, payee, or assignee or estate, existing at the time the proceeds or avails are made available for his own use.
"B. The lawful beneficiary, assignee, or payee, including the annuitant's estate, of an annuity contract, heretofore or hereafter effected, shall be entitled to the proceeds and avails of the contract against the creditors and representatives of the annuitant or the person effecting the contract, or the estate of either, and against the heirs and legatees of either such person, saving the rights of forced heirs, and such proceeds and avails shall also be exempt from all liability for any debt of such beneficiary, payee, or assignee or estate, existing at the time the proceeds or avails are made available for his own use. * * *"
[8] La.R.S. 47:2404 C provides in full:
"Notwithstanding the provisions of this section or of any provision of law, there shall be excluded from the property subject to the tax imposed in this part any proceeds receivable by any beneficiary, other than the estate of the decedent, under any life insurance policy, or any retirement or pension plan, trust, system or policy. Retirement or pension plan, trust, system or policy, as used in this subsection, means and includes any contract, agreement or arrangement under which an annuity or other payment was payable to the decedent or which the decedent possessed the right to receive, either alone or in conjunction with another, for his life." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1130897/ | 496 So. 2d 360 (1986)
William D. HUTSON, Jr., Plaintiff-Appellee-Appellant,
v.
MADISON PARISH POLICE JURY, Defendant-Appellee-Appellant.
Daniel E. MIZE, Plaintiff-Appellee-Appellant,
v.
MADISON PARISH POLICE JURY, Defendant-Appellee-Appellant.
Nos. 17909-CA, 17910-CA.
Court of Appeal of Louisiana, Second Circuit.
August 20, 1986.
Rehearing Denied September 18, 1986.
On Rehearing October 29, 1986.
Writ Denied December 19, 1986.
*361 C. Calvin Adams, Jr., Tallulah, James C. Crigler, Jr., Lake Providence, for William D. Hutson, Jr.
Sevier, Yerger & Bishop, by Thomas W. Bishop, Tallulah, for Daniel E. Mize.
William J. Guste, Atty. Gen., Baton Rouge, James David Caldwell, Dist. Atty., Tallulah, for defendant-appellee-appellant.
Before HALL, SEXTON and LINDSAY, JJ.
SEXTON, Judge.
This action arises as the result of a one car automobile accident which occurred on April 20, 1974 at a T-shaped intersection in rural Madison Parish. Both the driver, William D. Hutson, and the passenger, Daniel E. Mize, were seriously injured. As a consequence, each instituted an action against the Madison Parish Police Jury, which filed a third party demand against the State of Louisiana through the Department of Highways (DOTD). In turn, the DOTD third partied Walker and Wells, contractors, who performed contract work on behalf of the state at the intersection in question. Additionally, Daniel E. Mize named William D. Hutson as defendant, and Hutson reconvened against Mize for his failure to inform Hutson of the approaching intersection. Both the DOTD and Walker and Wells were dismissed from the suit on exceptions of prescription. The cases were consolidated and after a trial, judgment was rendered in favor of Hutson and Mize and against the Madison Parish Police Jury. However, each award was reduced by fifty percent due to the Madison Parish Police Jury's inability to adequately respond in damages. Hutson, Mize and the Madison Parish Police Jury have appealed. We reverse in part, amend and, as amended, affirm in part.
FACTS
The accident in question occurred at the intersection of Parish Roads E-8, the Stockland Road, which runs from east to west, and E-9, the Stockland Road North, which runs from north to south. The roads intersect in a T-shape, twenty-six degrees short of being perpendicular. The Stockland Road is the superior road.
The plaintiffs encountered this intersection as they traveled from Indianola, Mississippi to Tallulah, Louisiana. The driver apparently did not perceive the intersection in time to negotiate the required turn onto Stockland Road and the vehicle crashed into the ditch running parallel to that road. That the accident occurred at approximately 9:45 p.m. on Saturday, April 20, 1974 is undisputed. Additionally, as counsel for the police jury concedes in brief, the record evidence preponderates against the existence of a stop sign at the intersection at the time of the collision.
Most of the other salient facts concerning the length of time plaintiffs had been traveling, the number of stops they made, the amount of alcoholic beverages they had consumed, the speed at which they traveled, the existence of a culvert near the ditch, the length of skid marks, and whether *362 the vehicle became airborne upon leaving the roadway prior to the collision are facts which were seriously contested at trial. The testimony forming these disputes is more appropriately compared and contrasted below in the discussion of victim fault.
VICTIM FAULT
The defendant, Madison Parish Police Jury, strenuously argues that the trial court manifestly erred in its conclusion that the plaintiffs were not barred from recovery because of victim fault. The defendant argues that the excessive speed of the plaintiffs' vehicle and the intoxicated condition of plaintiff Hutson were the causes of the accident. Furthermore, although this argument is less than well defined, defendant argues that plaintiff Mize is barred by failing to keep a proper lookout and failing to warn the driver of the impending intersection, of which he was aware, in time to avoid the consequences. It is now axiomatic that in order to recover under a strict liability theory grounded in LSA-C.C. Art. 2317, the injured plaintiff must show that a defective aspect of the thing in defendant's custody posed an unreasonable risk of injury to others, and that his damage occurred through that risk. Loescher v. Parr, 324 So. 2d 441 (La.1975); McCart v. Sears, Roebuck and Company, 460 So. 2d 1104 (La.App. 2d Cir.1984), writ denied 462 So. 2d 1265 (La.1985).
A public body can escape strict liability only by showing that the harm was caused by the fault of the victim, by fault of a third party, or by an irresistible force. Loescher v. Parr, supra; Tappel v. Vidros, 407 So. 2d 789 (La.App. 4th Cir.1981).
Fault of the victim sufficient to preclude recovery is conduct of such a nature and to such an extent as to constitute a cause in fact of the accident. Hayes v. State Through the Department of Transportation and Development, 467 So. 2d 604 (La.App. 3d Cir.1985), writ denied 475 So. 2d 354 (La.1985).
In Hayes, the court noted the following with respect to the definition of cause in fact:
In Dixie Drive It Yourself System v. American Beverage Co., 242 La. 471, 137 So. 2d 298 (1962), cause-in-fact was explained as follows:
"Negligent conduct is a cause-in-fact of harm to another if it was a substantial factor in bringing about that harm.... [T]he negligent conduct is undoubtedly a substantial factor in bringing about the collision if the collision would not have occurred without it. A cause-in-fact is a necessary antecedent. If the collision would have occurred irrespective of the negligence ... then his negligence was not a substantial factor or cause-in-fact...." (Footnotes omitted.)
In Ganey v. Beatty, 391 So. 2d 545 (La.App. 3rd Cir.1980), writ denied, 396 So. 2d 1325 (La.1981) we stated:
"To determine cause-in-fact, courts will carefully scrutinize all the evidence, and those acts will be adjudged causes-in-fact when it is found that more probably than not they were necessary ingredients of the accident. Stated otherwise, an act will be deemed a cause-in-fact of an accident only when, viewed in the light of all the evidence, it is concluded that it is a substantial factor without which the accident would not have happened." (Emphasis added.)
LSA-R.S. 32:235 makes a police jury or parish authority responsible for placing and maintaining traffic control devices upon highways under its jurisdiction. McCoy v. Franklin Parish Police Jury, 414 So. 2d 1369 (La.App. 2d Cir.1982). Consequently, the parish road in this case was a thing under the care of the police jury. The unmarked "T" intersection constituted an unreasonable risk of harm to the motoring public.
Although it is unclear whether the basis of the trial court's finding of liability was grounded in LSA-C.C. Arts. 2315 or 2317, the facts clearly support plaintiffs' position *363 that the police jury is strictly liable unless they were barred by their own victim fault. As to plaintiffs Hutson and Mize, the pivotal issue then is whether their injuries resulted from the risk posed or from their own fault as victims.
According to plaintiff William D. Hutson's version of events, which basically harmonizes with plaintiff Daniel Mize's testimony, Hutson and Mize left Indianola at approximately 6:00 to 6:30 p.m. on the evening of the accident. Hutson related that the first stop the men made was at Sonny's Place, a lounge on the Alsatia Road. He stated that he and Mize were there only a matter of moments as they had only stopped there to look for Mize's wife so that she might take Mize home from that point, saving Hutson the additional trip. Both Hutson and Mize testified that they consumed no alcoholic beverages on the premises. Mize's wife was not at Sonny's Place; consequently, the men resumed their journey.
Hutson testified that as they traveled down Stockland Road North, he needed to relieve himself and was therefore looking for a place to stop. Hutson stated that the car was traveling 40-45 miles per hour before he slowed to 25 miles per hour as he searched for a private spot. They passed the residence of Lottie Westmoreland, and he noticed that there were people outside in the yard so he elected to proceed down the road out of their view before stopping. Hutson also remembers that he might have waved to the people as the car passed. Mize stated that he did not wave or speak. According to Hutson, he stopped the car further down the road for a period of time sufficient to urinate and then proceeded toward the intersection at a speed of 40-45 miles per hour. Hutson stated that just as he got "in" the intersection, Mize told him to turn. He cut his steering wheel to the left and applied the brakes. The car skidded down into the ditch and then slid to the east, hitting a culvert before coming to rest. Following the collision, Danny Mize was unconscious, but Hutson was alert and in pain.
Hutson testified that on the day of the accident, he bought a half-pint bottle of whiskey at about 1:00 o'clock p.m. Shortly thereafter, he mixed one drink out of the bottle with 7-up. He stated that he and Mize had another drink out of the bottle at approximately 5:00 to 5:30 p.m. and that they each had another drink at 6:00 to 6:30 p.m. Plaintiff Hutson stated that he may have had one other drink out of the half pint bottle prior to the accident.
Lottie Westmoreland testified that on the night of the accident, her daughters, Doris Westmoreland Glass and Delores Cole, her son-in-law, George Cole, and her daughter-in-law, Mary Westmoreland, were in her yard barbecuing while she remained inside. As she looked through her kitchen window which faced north, she saw the approaching car slow down and the occupants yell to her family in the yard. She stated that when the car slowed, it was traveling approximately 35 to 40 miles per hour. When Mrs. Westmoreland was recalled as a witness on rebuttal, she stated that she did not know the speed of the car. Counsel for plaintiffs were allowed over an objection by counsel for defendant to play the tape of Mrs. Westmoreland's deposition. On the tape the witness stated that the car was going slow and that she thought it would stop before it passed the house. She noted, however, that a time period of only a few seconds elapsed before the car crashed. She also noted that Doris and Mary who were in her yard had a better vantage point than she.
Mary Westmoreland, who was in the yard, heard the car going by at a high rate of speed. She observed two men hanging out of the window and yelling to the people in the yard. Mrs. Westmoreland stated that her sister-in-law, Doris, said, "They'll never be able to stop at the intersection," then ten or fifteen seconds later she heard the car crash. She stated that the time elapsed was seconds, and definitely less than one minute.
Doris Westmoreland Glass was also in the yard. Like her sister-in-law, Mary, she heard the car approaching and saw Danny *364 Mize and Billy Hutson, both of whom she knew, in the car. She stated that they were hollering, "Hey, baby," and that their voices seemed slurred. She testified that the car went by at a fairly high rate of speed and within five to six seconds she heard the car crash. Mrs. Glass stated that she could not have counted to ten before the car crashed. She said that she could observe the car as it passed the house and that the car made no stop before reaching the intersection. She remembered telling her sister-in-law that the car was going too fast for the driver to be able to turn at the intersection.
Ludie Westmoreland, Lottie's son, resides on the Stockland Road. Mr. Westmoreland heard the crash from his home and went to the scene. There he found Danny Mize unconscious and Billy Hutson holding his back stating that he thought it was broken. Westmoreland testified that he could smell whiskey everywhere and that he found a bottle in the car. Westmoreland said that Billy Hutson asked him to get rid of it, stating that he was in enough trouble. The witness said emphatically that the whiskey bottle was a pint sized bottle with, at the most, an inch of liquid left in the bottom. He also noted that the bottle had a cap on it. Ludie Westmoreland noticed skid marks at the scene of the accident which he said looked like the car slid sideways and went into the ditch.
Carlos Glass, who was at Lottie Westmoreland's house when the wreck occurred, went with George Cole to the scene of the accident. Although Glass testified that he could not say Billy Hutson was drunk, he testified that Hutson appeared to have been drinking. Glass testified that the odor of alcohol was so strong in the car that he assumed that the bottle had spilled. Mr. Glass stated that he was unsure what size the bottle of whiskey found in the car was; however, he heard William Hutson state, "Men, ya'll know the situation here. Would ya'll dispose of the evidence...." Thereafter, Ludie Westmoreland threw the bottle across a bean field. William Hutson categorically denied asking anyone at the scene to throw away the bottle. Glass also noticed that the skid marks left by the car covered approximately 100 to 150 feet.
Another witness, Gillis Acreman, testified that he heard about the accident and went to the site the morning after it occurred to satisfy his own curiosity. Acreman described the skid marks as short, like the vehicle was at the end of the road before the driver perceived that the road ended.
Both the ambulance driver and the emergency medical technician who worked the accident with the ambulance testified that the odor of alcohol was noticeable. Phillip Crothers, the ambulance driver, stated that he noted the smell of whiskey in the vehicle but was unsure whether he smelled it on the occupants of the car. Tressie Whitley, the E.M.T., stated that the odor of alcohol in the ambulance was "real strong" but that she could not tell from where it emanated. She also noted that Mize appeared to be snoring and that she could not tell whether he was unconscious, asleep, or in a coma.
Trooper Claude Mercer testified that he received the accident call at approximately 9:45 p.m. He testified that the road was dry and that there did not seem to be a stop sign in place. He noted that the vehicle struck the embankment at an angle, with the point of impact with the car being the right middle. He determined that the skid marks measured 127 feet from the south side of the Stockland Road. The skid marks began approximately at a point where a telephone pole stood. Considering the speed of the vehicle and the damage, the trooper estimated the speed of the vehicle at 65 miles per hour in a 55 mile per hour zone. The trooper also opined that the vehicle became airborne after leaving the roadway because he specifically remembered that the grass in the ditch was undisturbed and bore no evidence that the car had traveled through it. Additionally, the trooper recalled a strong smell of alcohol in the car and on the driver. He therefore ordered that blood be drawn for blood *365 alcohol tests at the hospital where the victims were taken.
The defendant offered the testimony of Ray Herd, supervisor of the Northwest Louisiana Criminalistics Laboratory Commission and self-employed as an accident reconstructionist, to rebut the testimony of plaintiffs. Herd investigated the scene of the accident on April 18, 1981 with the aid of Claude Mercer, the state trooper, and Ludie Westmoreland. He concluded that the vehicle did indeed become airborne and did not touch any part of the ditch before hitting the embankment on the other side. Extrapolating from the length of the skidmarks and the distance the car was airborne, Herd calculated that the vehicle was going 71 miles per hour when the driver reacted to the perceived danger. Herd testified further that if the driver had been driving 45 miles per hour and reacted at the same distance, the actual skidding distance would have been 103 feet, and the driver would have stopped 50 feet before the south edge of the roadway. He also calculated that if driven at 71 miles per hour, the vehicle would have crashed in 11.9 seconds after passing Lottie Westmoreland's residence. Additionally, Herd was asked to view the photographs of the damage sustained by the car and he remarked that the damage was consistent with the 71 mile per hour figure, and that he was in fact surprised at how much damage the accident caused to the vehicle.
Although the trial court sustained an objection to the admissibility of the results of blood alcohol tests, they were entered into evidence by stipulation at another point in the trial. The results revealed that at approximately 11:30 p.m. Hutson's blood alcohol level was .08, and Mize's was .10.
Jimmy Barnhill, an expert in the field of analysis of blood for alcoholic content, testified that the elimination rate for alcohol ranged from .015 to .025 grams percent per hour. He testified that if Hutson had consumed alcohol at the times and in the amounts he testified to, his blood alcohol level would be .0. Furthermore, this expert testified that if a person's blood alcohol level was .0, the only way his breath would have an alcoholic odor is if he rinsed his mouth out with an alcoholic beverage but did not swallow it.
The trial court weighed the conflicting testimony and resolved the dispute in favor of plaintiffs. In so doing, the court placed particular emphasis on the recorded testimony of Lottie Westmoreland, since that testimony was taken more closely in time to the accident than any other before the court. The court discounted Herd's testimony relative to the speed of the vehicle because it was based in part on the Trooper's measurements and recollections provided nearly seven years after the accident. Additionally, the court found that there was no evidence to indicate that plaintiff Hutson's admitted alcohol consumption on the day of the accident in any way affected his control of the vehicle.
The trial court found that the facts of this case bore a striking similarity to the facts of McCoy v. Franklin Parish Police Jury, supra. In that case, plaintiff encountered an unmarked "T" intersection, skidding across the road into a ditch and suffering injuries. The plaintiff in McCoy was generally unfamiliar with the thoroughfare, but was aware that she needed to turn right, although she did not know exactly where. She further acknowledged that she knew the road was going to end but was unsure at exactly what point. She was proceeding with her eyes on the road at a speed of 15 to 25 miles per hour on a dark, foggy night looking for some sign or indication of where to turn. Given those facts, the court concluded that she had no duty to anticipate that the "T" intersection that terminated in a ditch would be unmarked and devoid of any warning whatsoever. The court found that her conduct was in accord with that of a reasonably prudent person faced with similar conditions and circumstances. Consequently, the court found that the trial court clearly erred in finding that plaintiff driver was contributorily negligent.
We believe that the facts of the instant case make it clearly distinct from the situation *366 existing in McCoy as well as the other cases cited therein. Although the trial court relied heavily on the testimony of Lottie Westmoreland in order to conclude that the vehicle was proceeding at a slow rate of speed prior to the crash, this testimony also establishes that Mrs. Westmoreland could not see the car after it passed her house from her vantage point. Moreover, Mrs. Westmoreland admitted that her daughter and daughter-in-law, who were in the yard, could see more clearly than she. The testimony of these disinterested witnesses, who admittedly had a better opportunity to view the actions of plaintiffs prior to the crash, are corroborated by the expert extrapolation of speed from the physical evidence. Although the expert reconstructed the accident some seven years after it occurred, the preponderance of the evidence indicates that the vehicle was traveling at an excessive rate of speed.
Furthermore, the blood alcohol levels of plaintiffs Hutson and Mize indicate that they had consumed considerably more alcohol prior to the accident than they admitted at trial. This fact is given particular credence by the testimony of Ludie Westmoreland, whom plaintiff Hutson asked to get rid of the whiskey bottle for him, realizing its incriminating nature.
We are strengthened in our conclusion by the following case results. In Holmes v. State Through the Department of Highways, 466 So. 2d 811 (La.App. 3d Cir.1985), writ denied 472 So. 2d 31 (La.1985), the court concluded in an action grounded on LSA-C.C. Art. 2317 that the Highway Department's duty to maintain a safe shoulder does not encompass a foreseeable risk of injury to a motorist who strays completely off the traveled portion of the highway because his driving ability was impaired by reason of intoxication. The First Circuit in Efferson v. State Through the Department of Transportation and Development, 463 So. 2d 1342 (La.App. 1st Cir.1984), writ denied 465 So. 2d 722 (La.1985), held that a motorist who had been drinking earlier on the evening of an accident and who encountered a curb at an excessive rate of speed was contributorily negligent and, thus, the DOTD's responsibility under Art. 2317 for a defective road shoulder was not the sole cause of the accident. Likewise, in Kennison v. State Through the Department of Transportation and Development, 486 So. 2d 267 (La.App. 3d Cir.1986), the state's failure to warn an intoxicated motorist traveling at an excessive rate of speed around a curve of which he had prior knowledge, was not the cause in fact of the plaintiff's harm, but, rather, the motorist's fault was the sole cause of the collision. In Hayes, supra, the court concluded that plaintiff's conduct substantially contributed to her single vehicular accident, in that the driver was driving 40 m.p.h. on a curb with a posted advisory speed limit of 20 m.p.h. and was additionally straddling the center line.
While we are cognizant of the principle that factual findings of the trial judge will not be disturbed in the absence of evidence of manifest error, we are not required by the manifest error principle to affirm a trier of fact's refusal to accept as credible uncontradicted testimony or greatly preponderant objectively corroborated testimony where the record indicates that there was no sound reason for the rejection and where the finding was reached by overlooking applicable legal principles. McCoy v. Franklin Parish Police Jury, supra. See also Arceneaux v. Domingue, 365 So. 2d 1330 (La.1978), and West v. Bayou Vista Manor, Inc., 371 So. 2d 1146 (La.1979).
Consequently, we have little difficulty in concluding that the totality of evidence considered, Hutson's injuries were caused by his operation of the vehicle in an intoxicated condition at an excessive rate of speed. Stated differently, the police jury's duty to post warning signs at this intersection did not encompass the risk of injury to an intoxicated defendant traveling at an excessive rate of speed. Therefore, Hutson's conduct was a cause-in-fact of the accident *367 amounting to victim fault thus operating to preclude Hutson's recovery.[1]
While the police jury has not assigned the question of plaintiff Mize's fault as error, we treat that fault because the brief can arguably be said to present that issue.
The law with respect to the contributory negligence of a guest passenger was accurately summarized in McCoy v. Franklin Parish Police Jury, supra, as follows:
White v. State Farm Mut. Auto. Ins. Co., 222 La. 994, 64 So. 2d 245 (1953), sets forth the often quoted rule regarding contributory negligence of a guest passenger:
Contributory negligence is, as the phrase signifies, negligence which contributes to the accident, that is, negligence having causal connection with it and but for which the accident would not have occurred. Insofar as the rights of a guest in an automobile are concerned, it is settled that, in actions against third persons, the negligence of the host driver does not bar recovery because his negligence cannot be imputed to the guest. Lawrason v. Richard, 172 La. 696, 135 So. 29 [1931]; Lorance v. Smith, 173 La. 883, 138 So. 871 [1931]. (Footnote omitted.) However, a guest may be denied recovery on the ground of contributory negligence in instances where he is guilty on his own part of independent negligence of such a nature, that, but for which, his injuries would not have been sustained. Lorance v. Smith, supra; Churchill v. Texas & Pac. Ry. Co., 151 La. 726, 92 So. 314 [1922]; Delaune v. Breaux, 174 La. 43, 139 So. 753 [1932]; Squyres v. Baldwin, 191 La. 249, 185 So. 14 [1938]. But in determining whether the asserted fault of a guest has been a contributing factor in bringing about his injuries, it is first necessary to ascertain what duties are imposed upon him as pertain to the operation of the vehicle and the safety of the journey. It is firmly established by the above cited authorities of this Court and others of the Courts of Appeal of this State, too numerous to mention, that a guest is under no duty to supervise the driving of the vehicle and he is not obliged to look out for sudden or unexpected dangers that may arise. Albeit, he has the right to place reliance upon the driver to discharge that obligation and, as aptly expressed by the Court of Appeal, Second Circuit, in Singley v. Thomas, 49 So. 2d 465, 469 [La.App.1950], "* * * is not required to monitor the operation or to pay attention to the road and other traffic conditions" in the absence of a showing that he has actual or constructive knowledge that the driver is incompetent or unfit to operate the vehicle.
On the other hand, the jurisprudence has imposed upon the guest an obligation to avoid an accident or injury to himself under certain conditions. That duty has been tersely said by this Court, in Delaune v. Breaux, supra, to exist in cases where the guest "* * * is aware of the fact that there is danger ahead, which apparently is unknown to the driver or may be unknown to him, or where a sudden or unexpected danger arises to the knowledge of the guest, apparently not observed by the driver * * *." 174 La. at page 47, 139 So. at page 755. In such situations, it is incumbent on the guest to warn the driver of the danger and, if he fails to do so at a time when the driver is able to avert it, his dereliction may be said to be a contributing cause of any injury he may sustain. 64 So. 2d 249, 250.
[footnote omitted]
The evidence established that Daniel Mize had lived in the vicinity of the intersection previously for a period of years prior to the incident. While he may have been aware of the impending intersection, *368 we conclude that the evidence does not establish that he had a duty to watch for a sudden and unexpected danger such as the unmarked intersection. The evidence was conflicting as to whether the intersection had been marked with a stop sign in the past. Had the intersection been previously marked, Danny Mize may have been relying on the driver's perception of that stop sign in order to warn the driver of the impending danger. Thus, the facts simply do not bear out that plaintiff Mize was guilty of victim fault in failing to alert the driver.
DENIAL OF NEW TRIAL
Defendant Madison Parish Police Jury asserts that the trial court erred in failing to grant a motion for new trial based on newly discovered evidence, and in failing to allow a proffer of testimony relative to that claim. In brief, counsel for the police jury states that the trial court refused to allow the police jury to call a witness to the stand, Jimmy Ezell, whose testimony it claimed was necessary to corroborate another witness's testimony that both plaintiffs were in Sonny's Place at Alsatia, Louisiana, not only for five minutes the night of the accident, but actually for several hours, and that Ezell's companion, Sonny Powers, bought Danny Mize drinks while he was there, and sat down at the table with him.
A new trial based on newly discovered evidence must be granted where (1) such evidence is not merely cumulative, (2) it would tend to change the results of the case; and (3) it could not, with due diligence, have been obtained before or during trial. Thomas v. Smith, 463 So. 2d 971 (La.App. 3d Cir.1985); Chauvin v. Chauvin, 297 So. 2d 234 (La.App. 3d Cir.1974).
Moreover, a new trial may not be granted for newly discovered evidence which is not material to issues of the case and only has a tendency to discredit or impeach a witness. Young v. Clement, 359 So. 2d 1070 (La.App. 3d Cir.1978), writ granted, 362 So. 2d 798 (La.1978), affirmed in part and reversed in part on other grounds, 367 So. 2d 828 (La.1979).
Here, the evidence was clearly targeted at the credibility of plaintiffs generally, and specifically as to the length of time they spent in Sonny's Place and whether they consumed any alcohol there. That they remained in the lounge for a longer period of time than that testified to would clearly be impeachment as to a collateral matter. Furthermore, any testimony relating to their alcohol consumption would tend to be cumulative considering the introduction of the blood alcohol test results and the testimony of witnesses at the scene. Consequently, the trial court did not err in denying a new trial.
DAMAGES
Having concluded that victim fault barred plaintiff Hutson's claim, it is unnecessary that we address the sufficiency of his damages.
The police jury perfunctorily challenges the amount of future lost wages awarded plaintiff Mize. Of the $116,000 awarded Mize for lost wages, only $44,000 was allowed for future lost wages based on the trial court's determination that Mize failed to show consistent remunerative employment before the accident. The trial court thus allowed $4,000 per year for a remaining work expectancy term of eleven years. We find no error in the award of this minimal sum.
Plaintiff Mize does not take issue with the amount of damages awarded by the trial court but claims that the trial court incorrectly applied the "inability to pay" rule, reducing his damages by fifty percent.
After trial and while this case was under advisement, the Supreme Court handed down the decision of Rodriguez v. Traylor, 468 So. 2d 1186 (La.1985), which abolished the long standing jurisprudential defense of a defendant's inpecunious condition. In so doing, the court stated:
While we are hesitant to overrule a longstanding jurisprudential rule, after careful *369 consideration, we feel that the wealth or poverty of a party to a lawsuit is not a proper consideration in the determination of compensatory damages. Each litigant should stand equal in the eyes of the law regardless of his financial standing. When the inability to pay rule originated in this State there were no bankruptcy laws in effect and a defendant was subject to losing virtually everything he owned. While the policy behind the inability to pay rule, to prevent the bankruptcy of a defendant, is still a valid concern, with todays modern bankruptcy courts and extensive protections to defendants by virtue of the bankruptcy laws, we feel that this is a more proper consideration for bankruptcy courts and experienced bankruptcy judges rather than a jury which has no expertise in the modern day protections for those who are forced to declare bankruptcy. See La.R.S. 13:3881. We therefore conclude that the trial court should not have permitted the jury to hear evidence of the defendant's inability to pay.
In the case sub judice, the trial court was not unmindful of the Rodriguez v. Traylor decision but elected not to give its holding retroactive effect.
Generally, unless a decision specifies otherwise, it is to be given prospective and retrospective effect. Succession of Clivens, 426 So. 2d 585 (La.1983) on rehearing. Rodriguez v. Traylor, supra, has specifically been given retroactive effect in Friday v. Mutz, 483 So. 2d 1269 (La.App. 4th Cir.1986), and Marshall v. Beno Truck Equipment, Inc., 481 So. 2d 1022 (La.App. 1st Cir.1985) on rehearing, writ denied, 482 So. 2d 620 (La.1986).
The trial court clearly erred in failing to apply Rodriguez. Therefore, the portion of the award reducing plaintiff Mize's recovery by fifty percent because of the police jury's inability to pay must be vacated to award the full sum as assessed by the trial court.[2]
For the reasons expressed herein, the judgment of the trial court is reversed insofar as it allows plaintiff Hutson to recover from defendant, Madison Parish Police Jury. The judgment of the trial court is amended to delete the provision reducing plaintiff Mize's award by fifty percent (50%) due to the police jury's inability to pay the judgment. In all other respects, the judgment of the trial court is affirmed. All costs of this appeal are assessed equally between plaintiff Mize and defendant insofar as such costs are appropriate.
REVERSED IN PART, AMENDED and, AS AMENDED, AFFIRMED IN PART.
Before HALL, MARVIN, FRED W. JONES, Jr., SEXTON and LINDSAY, JJ.
ON REHEARING
PER CURIAM.
We find that the rehearing applications of the plaintiff, Hutson, and the defendant, Madison Parish Police Jury, are without merit.
However, we determine that we should address plaintiff Hutson's contention that we relied on blood alcohol results which the trial court excluded from evidence to find that the plaintiff Hutson was intoxicated and thus negligent.
The record is confusing on this issue. A complicating feature is that the defendant police jury's brief complained of this ruling obliquely rather than directly. Nevertheless, upon reconsideration, we determine that plaintiff Hutson is correct that in the final analysis the trial court rejected the blood alcohol result at issue.
We have no doubt that the trial court erred in this regard. The trooper testified *370 that he specifically ordered blood alcohol samples to be drawn. The lab technician identified her lab records and testified that these records showed that she drew blood from this plaintiff shortly after the accident. While there was some minor confusion at the coroner's office over the labeling of the blood samples, a comparison of the testimony of the coroner's secretary with the state police lab records shows that it is clearly more likely than not that the blood samples the lab reported on were those drawn from these plaintiffs.
More importantly, however, we note that the blood alcohol level of plaintiff Hutson was only one of the factors which caused us to conclude he was operating his vehicle in a negligent manner. There is extensive other evidence indicating his intoxication as we detailed in the original opinion, as well as significant evidence showing his excessive speed.
We regret the error but determine upon a reconsideration of the pertinent evidence that our original result is correct.
NOTES
[1] Of course, the facts of this cause preceded the inception of the doctrine of comparative negligence in Louisiana. See LSA-C.C. Art. 2323 as amended by Acts 1979, No. 431 § 1, effective August 1, 1980.
[2] Defendant also complains that the trial court erred in granting a dismissal of the State of Louisiana, through the Department of Highways on an exception of prescription. The minutes and reasons for judgment indicate that an exception of no cause of action was maintained on behalf of the state. However, no signed judgment appears in the record. Since there is no signed final judgment, this claim is not in a proper posture for review. See generally Hughes v. Hughes, 448 So. 2d 263 (La.App. 2d Cir.1984), which holds that an appeal before a signed final judgment is premature and must be dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1690645/ | 354 So. 2d 114 (1978)
BARNETT BANK OF MIAMI, Appellant,
v.
MUTUAL OF OMAHA INSURANCE COMPANY, Appellee.
No. 76-602.
District Court of Appeal of Florida, Third District.
January 18, 1978.
High, Stack, Davis & Lazenby and Alan R. Dakan, Miami, for appellant.
George V. Lanza, Coral Gables and John A. Finn, Sam Daniels, Ehrich & Zuckerman, Miami, for appellee.
Before HENDRY and NATHAN, JJ., and CHARLES CARROLL (Ret.) Associate Judge.
NATHAN, Judge.
Barnett Bank of Miami, third party defendant and lessee of parking lot, appeals from an adverse summary judgment establishing liability for indemnity in favor of its *115 landlord, third party plaintiff Mutual of Omaha Insurance Company.
This suit was initially brought by an employee of Barnett against Mutual for personal injuries sustained when a guard rail fell on her. The employee's complaint alleged active negligence by Mutual. Mutual's third party complaint against Barnett alleged that Mutual was only passively negligent. At the time of the filing of this appeal the main action between the plaintiff-employee and Mutual was still pending.
Barnett, by lease with Mutual, agreed to indemnify Mutual for any loss, claim and attorneys fees arising out of any injury received in or about the premises and arising out of any failure of Barnett to comply with the terms of the lease, as well as costs and attorneys fees in any litigation in which Barnett caused Mutual without its fault, to become involved.
The general rule is that where each tortfeasor is chargeable with active negligence contributing to the injury for which recovery was had, neither is entitled to indemnity from the other. Armor Elevator Company, Inc. v. Elevator Sales & Service, Inc., 309 So. 2d 44 (Fla.3d DCA 1975).
Barnett argues that it was solely negligent and that since the employee's complaint alleges that Mutual was actively negligent and since the lease provides for indemnity for the acts of a passive tortfeasor only, summary judgment was improperly entered. We do not agree that Mutual is bound by the employee's complaint against Mutual or what Barnett considers exculpatory terms of the lease agreement. A tortfeasor is not "locked in" by allegations in the original complaint that it was an active tortfeasor. Central Truck Lines, Inc. v. White Motor Corporation, 316 So. 2d 579 (Fla.3d DCA 1975).
The obligation to indemnify need not solely be based upon an express contract of indemnification, but may arise out of a liability imposed by law, Stuart v. Hertz Corporation, 351 So. 2d 703, 705 (Fla. 1977), and "... has been said to exist whenever the relation between the parties is such that either in law or in equity there is an obligation on one party to indemnify the other, as where one person is exposed to liability by the wrongful act of another in which he does not join." 41 Am.Jur.2d, Indemnity § 2, cited in Stuart v. Hertz Corporation, supra at 705.
Given the fact that Mutual alleged in its third party complaint that it was but a passive tortfeasor, and since the evidence adduced shows that there is a genuine issue of material fact as to whether an active/passive relationship of tortfeasors exists between Barnett and Mutual, summary judgment was precluded.
Earlier in the course of these proceedings, it was ordered by this court that ruling on this interlocutory appeal be reserved until determination of the main action. The main action was concluded by judgment entered in favor of plaintiff-employee against Mutual pursuant to an offer of judgment under Fla.R.Civ.P. 1.442, made by Mutual and accepted by the employee.
Barnett now contends that, not only should the summary judgment against it be reversed, but summary judgment should be entered in favor of Barnett because the offer of judgment and judgment thereon amounted to an admission and adjudication of Mutual's liability for active negligence. We disagree. While counsel has failed to provide us with, and we have been unable to find a case on point under the Florida or Federal offer of judgment rules, we are of the opinion that where a non-litigated offer of compromise is accepted and judgment entered thereon pursuant to the offer of judgment rule, it does not operate as an estoppel by judgment or admission of the facts contained in a complaint in a suit not between the parties to the judgment. Cf. Seaboard Air Line Railroad Company v. George F. McCourt Trucking, Inc., 277 F.2d 593, 597 (5th Cir.1960). The purpose of the offer of judgment rule is to induce or influence a party to settle litigation and obviate the necessity of a trial. Santiesteban v. McGrath, 320 So. 2d 476 (Fla.3d DCA 1975); Hernandez v. Travelers *116 Insurance Company, 331 So. 2d 329 (Fla.3d DCA 1976).
The summary judgment is reversed and the cause is remanded for trial on the third party complaint and answer thereto.
Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2429053/ | 986 S.W.2d 772 (1999)
E.D. HAY, Olivia Hahn Hay, Scott D. Hay, ADA Lanelle Hay, and Joyce Ann Hay Bower, Appellants,
v.
SHELL OIL COMPANY, Appellee.
No. 13-97-333-CV.
Court of Appeals of Texas, Corpus Christi.
February 4, 1999.
Rehearing Overruled March 11, 1999.
*774 Steven A. Fleckman, Fleckman & McGlynn, Julia Beck Kenner, Austin, amicus curiae.
David B. McCall, Tom C. McCall, Wesley G. Ritchie, Diane W. Sanders, McCall & Ritchie, Austin, for appellants.
Eugene M. Nettles, Porter & Hedges, L.L.P., C. Denise Dillard, Houston, Robert P. Houston, Houston, Marek & Griffin, Victoria, Mitchell E. Ayer, Morris & Campbell, P.C., Houston, Robert L. Page, Conroe, Kevin D. Cullen, Cullen, Carsner, Seerden & Cullen, Victoria, W. Mark Cotham, David A. Furlow, Morris & Campbell, Houston, Thomas J. Barry, Yorktown, for appellees.
Before Justices DORSEY, HINOJOSA, and RODRIGUEZ.
OPINION ON MOTION FOR REHEARING
HINOJOSA, Justice.
We issued our original opinion in this case on August 13, 1998. Appellants subsequently filed a motion for rehearing. We deny appellants' motion for rehearing, withdraw our opinion of August 13, 1998, and substitute the following as the opinion of the Court.
This is an appeal of a summary judgment granted in favor of appellee, Shell Oil Company. Appellants, E.D. Hay, Olivia Hahn Hay, Scott D. Hay, Ada Lanelle Hay, and Joyce Ann Hay Bower (collectively the "Hays") sued Shell for damages allegedly caused by the improper inclusion of non-productive acreage in a pooled unit known as the E.D. Hay No. 1 Gas Unit ("Hay Unit"). Shell moved for summary judgment on the grounds of limitations, waiver, estoppel, ratification, and no bad faith in forming the unit. In addition, Shell contended the express language of the lease barred the Hays' claims. Without stating a reason, the trial court granted Shell's motion. By six points of error, the Hays contend the trial court erred in granting Shell's motion for summary judgment. We affirm.
Background
On June 13, 1974, E.D. and Olivia entered into an oil, gas, and mineral lease with Russell Vaught covering approximately 240 acres out of the Indianola Railroad Survey, A-245, DeWitt County, Texas. The next day, Scott and Ada also entered into a lease with Vaught covering approximately four acres *775 out of the same survey. Shell succeeded to Vaught's interests under these leases.
The leases allowed Shell to pool the acreage with any other land or leases in the immediate vicinity. Pooling was permissible:
when in [Shell's] judgment it is necessary or advisable to do so in order properly to explore, or to develop and operate said leased premises in compliance with the spacing rules of the Railroad Commission of Texas, or other lawful authority, or when to do so would, in the judgment of [Shell], promote the conservation of oil and gas in and under and that may be produced from said premises.
Units pooled for gas could not substantially exceed an area of 640 acres, plus a tolerance of ten percent, or 704 acres.
After Shell began production in August 1976 from the Fort Worth National Bank Gas Unit No. 1, a well to the east of the Hays' land, the Hays demanded that Shell drill a well on their property to offset drainage. The offset well was completed in December 1976. On January 20, 1977, Shell filed a Designation of Pooled Gas Unit for the E.D. Hay No. 1 Gas Well. The pool combined adjoining leases and acreage to form a 704 acre pooled unit. In February 1977, Shell completed the Hay Unit as a commercial producer of gas. The Hays learned of the unit's formation in March 1977, when they reviewed their division orders. On July 14, 1977, Shell filed a "P-15" form, as required by the Texas Railroad Commission, swearing under penalty of perjury that all of the acreage in the Hay Unit was reasonably productive of gas.
Shell sold all of its ownership interest in the leases to HCW Oil Income Fund on November 1, 1984, and the Hays executed new division orders in 1985. Parker & Parsley Petroleum Company ("Parker") subsequently acquired the leases and was the operator at the time this suit commenced. After a series of hearings in 1989, the Railroad Commission approved Parker's request to reduce the Hay Unit from 704 acres to 160 acres. Parker filed a "P-15" form on November 14, 1989, swearing that the 160 acres were reasonably productive of hydrocarbons.
In May 1992, after reviewing and obtaining Railroad Commission records, apparently for the first time since the unit formation in 1977, the Hays learned that the production acreage had been reduced to 160 acres. Shell's 1977 "P-15" form declaring the acreage in the Hay Unit reasonably productive was also in the records which the Hays obtained. Almost immediately, the Hays began to question whether they were wrongly sharing royalties with other lessors who were outside the 160 acre unit. This questioning ultimately led the Hays to believe that the original 704 acre unit, formed by Shell, included non-productive acreage in violation of state law and the leases.
The Hays filed suit against Parker[1] on February 21, 1995. On August 15, 1996, the Hays amended their pleadings to include Shell as a defendant.[2] The Hays' causes of action included breach of contract, breach of marketing obligation, failure to develop, and fraud. The Hays also sought an accounting for the full royalty share they should have received from the beginning and a declaratory judgment that the Hay Unit was improperly formed from its inception and that Shell failed to act as a prudent operator. The Hays further pleaded fraudulent concealment and the discovery rule in an effort to toll the statute of limitations. Shell generally denied the allegations and pleaded the affirmative defenses of limitations, ratification, waiver, estoppel, quasi-estoppel, laches, and no liability after November 1, 1984.
Shell moved for summary judgment on its affirmative defenses. The company contended the Hays could not toll limitations by relying on fraudulent concealment or the discovery rule. Shell argued that because as a matter of law it had no duty to disclose, there could be no fraudulent concealment. Shell also argued that the Hays could not prove *776 the applicability of the discovery rule because their injuries were not inherently undiscoverable or objectively verifiable.
The Hays filed a response to the motion for summary judgment and attempted to raise issues of material fact concerning Shell's affirmative defenses as well as their own claims of fraudulent concealment and the discovery rule. The trial court granted Shell's motion without stating a reason and twenty-eight days later severed the Hays' claims against the other defendants into a separate cause number.[3] On appeal, the Hays contend the trial court erred by granting Shell's motion for summary judgment.
Standard of Review
The proper inquiry on appeal is whether the defendant, in seeking summary judgment, fulfilled his initial burden to: (1) establish as a matter of law that there remains no genuine issue of material fact as to one or more essential elements of the plaintiff's cause of action, or (2) establish his affirmative defense to the plaintiff's cause of action as a matter of law. Casso v. Brand, 776 S.W.2d 551, 556 (Tex.1989); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972). In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant must be taken as true. Nixon, 690 S.W.2d at 549. Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in his favor. Id. Once the movant establishes an affirmative defense which would bar the suit as a matter of law, the non-movant must produce summary judgment proof raising a fact issue in avoidance of the affirmative defense. Gonzalez v. City of Harlingen, 814 S.W.2d 109, 112 (Tex. App.Corpus Christi 1991, writ denied). When a party moves for summary judgment on several theories, we affirm the summary judgment if any one of the theories advanced is meritorious. Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 625-26 (Tex.1996).
Limitations and the Discovery Rule
Shell moved for summary judgment on the ground the Hays' causes of action are barred by limitations. Shell contended the discovery rule did not apply to the Hays' claims because the alleged injury was not inherently undiscoverable and could not be objectively verified.
The four-year statute of limitations applies to actions for the recovery of royalty payments. Koch Oil Co. v. Wilber, 895 S.W.2d 854, 864 (Tex.App.Beaumont 1995, writ denied); Dvorken v. Lone Star Indus. Inc., 740 S.W.2d 565, 566 (Tex.App.Fort Worth 1987, no writ). As a rule, a cause of action accrues when a wrongful act causes some legal injury, even if the fact of injury is not discovered until later, and even if all resulting damages have not yet occurred. S.V. v. R.V., 933 S.W.2d 1, 4 (Tex.1996); Trinity River Auth. v. URS Consultants, Inc., 889 S.W.2d 259, 262 (Tex.1994); Quinn v. Press, 135 Tex. 60, 140 S.W.2d 438, 440 (Tex.1940). However, this rule has not been applied without exception. S.V., 933 S.W.2d at 4. In some instances the discovery rule will toll the limitations period until the plaintiff knows, or in the exercise of reasonable diligence should have known, of the wrongful act and resulting injury. Id.
If, as alleged, Shell pooled the Hays' productive property with non-productive land, the act causing the legal injury occurred in 1977 when the 704 acre Hay Unit was formed. Unless the discovery rule applies, the trial court did not err in granting Shell's motion for summary judgment on the ground that limitations barred the Hays' claims.
Shell argues that the discovery rule does not apply in this case because the supreme court has not explicitly adopted the discovery rule for causes of action such as those at issue. In support of this argument, Shell cites our opinion in Harrison v. Bass Enter. Prod. Co., 888 S.W.2d 532, 537 (Tex. App.Corpus Christi 1994, no writ).
The supreme court recently considered the issue of whether the discovery rule *777 applies in a royalty case. HECI Exploration Co. v. Neel, 982 S.W.2d 881, 886 (1998). The discovery rule applies to a category of cases when the injury complained of is inherently undiscoverable and is objectively verifiable. HECI Exploration Co., 982 S.W.2d at 886; S.V., 933 S.W.2d at 5-6; Computer Assoc. Int'l, Inc. v. Altai, Inc., 918 S.W.2d 453, 455-56 (Tex.1996).
An injury is objectively verifiable if the presence of injury and the producing wrongful act cannot be disputed, and the facts upon which liability is asserted are demonstrated by direct, physical evidence. S.V., 933 S.W.2d at 6-7; Altai, 918 S.W.2d at 455. Compare Gaddis v. Smith, 417 S.W.2d 577, 578 (Tex.1967) (presence of sponge in plaintiff's body and how it got there were undisputable) with Robinson v. Weaver, 550 S.W.2d 18, 21-22 (Tex.1977) (negligent diagnosis is subject to proof only by expert hindsight, and therefore discovery rule does not apply). While expert testimony alone, which amounts to a "swearing match between experts over opinions," does not suffice, "recognized expert opinion on a particular subject [could] be so near consensus that, in conjunction with objective evidence," it could provide the verification required. S.V., 933 S.W.2d at 15.
The Hays contend that Shell's "P-15" form, filed in 1977 and subsequently refiled by Parker, is some evidence the injury was inherently undiscoverable. While this contention may be correct, at least until the time that Parker requested the productive acreage be reduced to 160 acres, the Hays' response to Shell's motion for summary judgment does not address the issue of whether the injury is objectively verifiable. Because this issue is not specifically presented in the Hays' response, we cannot look at the Hays' evidence to determine whether the issue would preclude summary judgment. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993).
However, the Hays' failure to raise the issue of objective verifiability does not relieve Shell of its burden to establish that, as a matter of law, the discovery rule does not apply in this case. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979). Shell's summary judgment evidence included the unobjected-to affidavit of petroleum consultant, Dorothy Level, who testified that petroleum engineering is not an exact science. Level explained that the professional judgment of petroleum engineers often differs as to "their interpretations of the nature, location, amount of discoverable reserves, and drainage areas." The accuracy of this explanation is aptly demonstrated by the expert affidavits attached to the Hays' response, which express opinions opposite of those held by Level.[4] Level also testified that petroleum engineering is an evolving science as reflected by the increased science and technology in the years since the Hay Unit was formed in 1977 and by increased information garnered from the drilling of additional wells, the analysis of subsequent testing and decline curves, the results of reworking operations, and production records. Given the increased technology, the chances for a successful wildcat well have been increased from "one in ten" wells to "one in six," clearly a statistic reflecting the uncertainty of petroleum exploration.
Level opined that the nonproductivity of acreage included in the Hay Unit is not objectively verifiable. The productivity of deep formations, such as the one at issue, could only be verified in 1977 by drilling and completing wells. The uncertainty of drilling oil and gas wells is evidenced by the fact that prior to drilling the well in the Hay Unit, Shell believed from seismic data available that the Edwards formation was on a different side of a fault and 200 feet higher than it actually was. In addition, Shell spent $1.2 million dollars in 1980 in an unsuccessful attempt to drill a well in a gas unit immediately to the south of the Hay Unit. Using hindsight offered by recent maps and seismic data, Level opined that the acreage in the Hay Unit could still reasonably be considered productive. No additional wells have been completed in the Hay Unit to disprove the productivity of the acreage.
*778 Because this unchallenged testimony establishes the type of injury the Hays complain of is not objectively verifiable by any existing physical evidence, we hold the trial court did not err in granting Shell's motion for summary judgment on the ground the discovery rule did not apply to the Hays' causes of action. Appellants' third and fourth points of error are overruled.
Fraudulent Concealment
As we previously stated, the Hays' injury would have accrued at the time the unit was formed to include allegedly non-productive leases. The Hays contend their claims are not barred by limitations, however, because Shell fraudulently concealed facts giving rise to their causes of action. The Hays maintain that Shell actively sought to cover-up the improper pooling by filing a false "P-15" form with the Railroad Commission in 1977. In addition, the Hays assert Shell had a duty to disclose information peculiarly within Shell's knowledge or that there was a duty to pool in good faith.[5]
Fraudulent concealment is an equitable doctrine that provides an affirmative defense to the plea of limitations. Santanna Natural Gas Corp. v. Hamon Operating Co., 954 S.W.2d 885, 890 (Tex.App.Austin, 1997, writ denied); see American Petrofina, Inc. v. Allen, 887 S.W.2d 829, 830 (Tex.1994); Arabian Shield Dev. Co. v. Hunt, 808 S.W.2d 577, 584 (Tex.App.Dallas 1991, writ denied). Under the doctrine of fraudulent concealment, the accrual of the plaintiff's cause of action is deferred because a defendant cannot be permitted to avoid liability for its actions by deceitfully concealing wrongdoing until the statute of limitations has run. See S.V., 933 S.W.2d at 6. On summary judgment, the non-movant has the burden to come forward with proof raising an issue of fact on fraudulent concealment. See Ryland Group, Inc. v. Hood, 924 S.W.2d 120, 121 (Tex.1996); American Petrofina, Inc., 887 S.W.2d at 830.
To defeat summary judgment based on fraudulent concealment, the non-movant must establish: (1) an underlying tort, (2) the movant's knowledge of the tort, (3) the movant's use of deception to conceal the tort, and (4) the non-movant's reasonable reliance on the tort. Mitchell Energy Corp. v. Bartlett, 958 S.W.2d 430, 439 (Tex.App. Fort Worth 1997, pet. denied); DiGrazia v. Old, 900 S.W.2d 499, 502 (Tex.App.Texarkana 1995, no writ); Arabian Shield, 808 S.W.2d at 585. The gist of the fraudulent concealment defense is the defendant's active suppression of the truth or its failure to disclose the truth when it is under a duty to speak. Mitchell Energy Corp., 958 S.W.2d at 439; Leonard v. Eskew, 731 S.W.2d 124, 128 (Tex.App.Austin 1987, writ ref'd n.r.e.).
Regardless of whether the Hays attempted to defeat summary judgment by showing Shell's active suppression of the truth or by its breached duty to disclose, we conclude the evidence does not raise a material issue of fact regarding Shell's actual knowledge that non-productive leases were pooled. At best, the evidence attached to the Hays' response expresses expert opinions concerning what Shell might have or should have known in 1977 and not what Shell actually knew.
One cannot fraudulently conceal facts of which one has no actual knowledge. DiGrazia, 900 S.W.2d at 503; Baskin v. Mortgage & Trust, Inc., 837 S.W.2d 743, 746 (Tex.App.Houston [14th Dist.] 1992, writ denied); Nichols v. Smith, 489 S.W.2d 719, 723 (Tex.Civ.App.Fort Worth 1973), aff'd, 507 S.W.2d 518 (1974). Even viewing the record in favor of the Hays, we find the evidence in this case does little more than demonstrate the speculative nature of petroleum exploration. Accordingly, we overrule appellants' fifth point of error.
Because the Hays did not raise a fact issue concerning the tolling of limitations, we hold the trial court did not err in granting Shell's motion for summary judgment on the ground that, as a matter of law, limitations barred the Hays' causes of action against Shell. The second point of error is overruled.
By their sixth point of error, the Hays contend the trial court erred in granting *779 summary judgment in favor of the Royalty Defendants because they did not move for summary judgment.
The trial court's order granting Shell's motion for summary judgment contains a "mother hubbard" clause which appears to dispose of all parties and claims, including the Royalty Defendants who did not join Shell in the motion for summary judgment. While it is true a trial court errs if it grants a summary judgment in favor of a defendant who does not seek such relief and the judgment as to that defendant must be reversed and remanded, see Mafrige v. Ross, 866 S.W.2d 590, 592 (Tex.1993), we conclude that rule does not apply to the facts of this case.
Twenty-eight days after the trial court signed the order granting Shell's motion for summary judgment, the court signed a second order severing the Hays' claims against Shell and assigning a new cause number to those claims. The Hays' claims against the Royalty Defendants remained in the original case. Because the trial court continued to have plenary power at the time the severance order was signed, we conclude the trial court's actions were proper and had the same effect as if this Court were to reverse the summary judgment as to the Royalty Defendants and remand all claims against them to the trial court for further proceedings. Appellants' sixth point of error is overruled.
Because the trial court did not err in granting Shell's motion for summary judgment, we overrule appellants' first point of error.
We affirm the trial court's order granting Shell's motion for summary judgment.
NOTES
[1] The original defendants were Parker & Parsley Petroleum Company and Parker & Parsley Development, L.P.
[2] Other defendants added by this amended pleading were Albert Alex, Valeria Alex, Rolf R. Lippke, Hagen Lippke, and Lawrence Lippke (the "Royalty Defendants").
[3] The claims against Parker have been settled.
[4] Exactly the "swearing match" the supreme court determined was not objectively verifiable evidence of an injury. See S.V., 933 S.W.2d at 15.
[5] On appeal, the Hays contend the pooling clause made Shell its agent. We do not address this contention because it was not raised before the trial court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2416706/ | 979 S.W.2d 56 (1998)
Raymond Dale LIGGINS, Appellant,
v.
The STATE of Texas, Appellee.
No. 10-97-247-CR.
Court of Appeals of Texas, Waco.
October 28, 1998.
*58 Thomas D. Whitworth, Law Offices of Thomas D. Whitworth, Rita K. Papajohn, Cleburne, for appellant.
*59 Dale S. Hanna, District Attorney, David W. Vernon, Asst. District Attorney, Cleburne, for appellee.
Before Chief Justice DAVIS, Justice CUMMINGS and Justice VANCE.
OPINION
DAVIS, Chief Justice.
A jury convicted Raymond Dale Liggins of delivery of cocaine in the amount of one gram or more but less than four grams. See TEX. HEALTH & SAFETY CODE ANN. § 481.112(c) (Vernon Supp.1998). The jury found that Liggins had been previously convicted of forgery and sentenced him to twenty years' imprisonment and no fine.
Liggins presents twelve points of error on appeal. His points relate to the jury's implied finding that he was not entrapped; the alleged outrageousness of the undercover officers' conduct in persuading him to sell them cocaine; the court's admission of allegedly "speculative and prejudicial opinion testimony"; the jury's viewing of a videotape during deliberations; the admissibility of certain prior misdemeanor convictions offered in the punishment stage of his trial; and the State's argument concerning those prior misdemeanor convictions. We will affirm the judgment.
FACTUAL BACKGROUND
Liggins' indictment originally alleged three counts of delivery of cocaine on or about April 8, April 9, and April 15, 1996 respectively. The State elected to proceed to trial on only the April 9 allegation. The record reflects that Alan Cartwright, an investigator with the S.T.O.P. Narcotics Task Force, enlisted Liggins' cousin Johnny Shipman as a confidential informant to aid in locating drug dealers and arranging sales to undercover officers.[1] Cartwright testified that he had targeted a suspected dealer for an undercover purchase on April 8, but the suspect would not deal with him.[2] When this deal did not materialize, Shipman directed Cartwright to Liggins' residence.
Cartwright testified that Liggins appeared to be engaged in a drug transaction as they approached. Cartwright told Liggins he wanted to purchase five rocks of crack cocaine. Liggins went and talked with a man sitting on the front porch of his home. He then took Cartwright's money to the man on the porch and obtained the cocaine in return. He delivered the cocaine to Cartwright.
Cartwright returned on April 9 with another undercover officer. He asked Liggins for sixteen rocks on this occasion. Liggins got in Cartwright's truck and directed him to a neighborhood park. Liggins approached a man in the park about the proposed deal. He then returned to the truck for Cartwright's money. He took the money, exchanged it for fifteen rocks, and delivered the cocaine to Cartwright. Cartwright noted the shortage, and Liggins went back to question the man in the park about it. He shortly returned to report that the man had no more rocks to sell. The officers returned Liggins to his home.
Two or three days later, the officers returned to Liggins' home in an attempt to allay any concerns that they were actually law enforcement officials. They brought beer and applications for employment with a purported fencing company in Fort Worth for which they claimed to work. They stayed for a brief social visit and encouraged Liggins to give applications to any of his friends or acquaintances who might be looking for work. They did not seek to purchase any cocaine during this visit.
On April 15 the officers returned for another purchase. According to the officers, Liggins introduced them to a man from whom they could purchase cocaine. According to Liggins, this man just happened to drive by at the time the officers arrived, and *60 the officers dealt directly with him. Liggins rode with the other man, and the parties met at the park. The officers negotiated directly with the other man for the purchase of cocaine. After the transaction was consummated, the seller left. The officers gave Liggins a ride back to his house.
According to Liggins, Shipman told him about Cartwright several weeks before they actually met. Liggins testified that Shipman told him Cartwright would offer him a job with a fencing company. He recalled that on April 8 Shipman approached him and introduced Cartwright to him as the man he had previously told him about who could give him a job. Liggins told the jury that he only arranged the drug transactions because he understood that the officers would give him a good-paying job with their fencing company if he could provide the cocaine they needed. This formed the basis of Liggins' entrapment defense. Shipman's and the officers' versions of these conversations varied significantly from Liggins.' The jury rejected the entrapment defense; found Liggins guilty; and sentenced him as indicated above.
ENTRAPMENT
Liggins' first point asserts that the evidence establishes entrapment as a matter of law. His second and third points respectively challenge the legal and factual sufficiency of the evidence to support the jury's rejection of his entrapment defense.
The State responds that defenses such as entrapment are not subject to a factual sufficiency challenge. However, this Court has already determined that the entrapment defense is subject to a factual sufficiency challenge. See Hernandez v. State, 938 S.W.2d 503, 509-10 & n. 11 (Tex.App.Waco 1997, pet. ref'd). Other courts have considered factual sufficiency challenges in cases where juries rejected self-defense, which carries the same procedural consequences as entrapment under section 2.03 of the Penal Code.[3]See Juarez v. State, 961 S.W.2d 378, 385 (Tex.App.Houston [1st Dist.] 1997, pet. ref'd); Jones v. State, 951 S.W.2d 522, 526-27 (Tex.App.Beaumont 1997, pet. ref'd); Ojeda v. State, 945 S.W.2d 197, 200-01 (Tex. App.San Antonio 1997, no pet.). We will follow these authorities and analyze the factual sufficiency of the evidence to support the verdict.
APPLICABLE LAW
To raise entrapment, an accused must produce evidence that: (1) he was actually induced to commit the offense; and (2) the inducement "was such as to cause an ordinarily lawabiding person of average resistance nevertheless to commit the offense." England v. State, 887 S.W.2d 902, 913-14 (Tex.Crim.App.1994). Once the accused has presented such evidence, the State must disprove the defense beyond a reasonable doubt. Hernandez, 938 S.W.2d at 510; accord Saxton v. State, 804 S.W.2d 910, 913 (Tex.Crim.App.1991).
Matter of Law
Entrapment is generally a question for the jury unless the accused establishes the defense as a matter of law. Melton v. State, 713 S.W.2d 107, 113 (Tex.Crim.App. 1986); Redman v. State, 533 S.W.2d 29, 31 (Tex.Crim.App.1976). This is nothing more than a recognition that the accused is entitled to an instructed verdict of acquittal if the State fails to disprove his defense beyond a reasonable doubt. See Riley v. State, 953 S.W.2d 354, 357-59 (Tex.App.Austin 1997, pet. ref'd) (holding promiscuity defense not established as a matter of law); cf. Harris v. State, 790 S.W.2d 778, 779-80 (Tex.App. Houston [14th Dist.] 1990, pet. ref'd) (reversing judgment and directing entry of acquittal order where State failed to introduce any evidence to prove an element of offense).
We treat a motion for an instructed verdict as a challenge to the legal sufficiency of the evidence. Cook v. State, 858 S.W.2d 467, 470 (Tex.Crim.App.1993). Thus, we will consider Liggins' first point concerning his assertion that he established entrapment as a matter of law together with his second point *61 challenging the legal sufficiency of the evidence to support the jury's rejection of his entrapment defense.
Legal Sufficiency
A challenge to the legal sufficiency of the evidence supporting a verdict which has implicitly rejected a defense requires us to view the evidence in the light most favorable to the implicit rejection of the defense. Adelman v. State, 828 S.W.2d 418, 421 (Tex. Crim.App.1992). We resolve any inconsistencies in the evidence in favor of the verdict. Id. at 423; Matson v. State, 819 S.W.2d 839, 843 (Tex.Crim.App.1991).
Factual Sufficiency
When presented with a factual insufficiency claim, we discard the prism of the light most favorable to the verdict. Clewis v. State, 922 S.W.2d 126, 134 (Tex.Crim.App. 1996). We reverse "only if [the implicit rejection of the defense] is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust." Id.; Hernandez, 938 S.W.2d at 512.
We consider all the evidence in the record related to the contested issue, "not just the evidence which supports the verdict." Santellan v. State, 939 S.W.2d 155, 164 (Tex.Crim.App.1997). We review the evidence tending to prove the issue, "and compare[] it to the evidence which tends to disprove that [issue]." Id. We give appropriate deference to the jury's decision and do not substitute our judgment for theirs. Clewis, 922 S.W.2d at 135; Hernandez, 938 S.W.2d at 512. We do not set aside the "verdict merely because [we] feel that a different result is more reasonable." Clewis, 922 S.W.2d at 135 (quoting Pool v. Ford Motor Co., 715 S.W.2d 629, 634 (Tex.1986)).
PERTINENT FACTS
Cartwright testified that Shipman directed him to Liggins' home on April 8 because the initially targeted suspect would not deal with him. Shipman told Cartwright he could probably get some cocaine from Liggins. As they approached, Cartwright observed Liggins apparently selling drugs to another person. He told Liggins he needed five rocks of crack cocaine. Liggins took Cartwright's money, exchanged it with another man sitting on the front porch of his house for the requested cocaine, and delivered the rocks to Cartwright. He asked Cartwright for one of the rocks which he had just delivered. Cartwright explained that this is a typical manner in which "middlemen" collect a "brokerage fee." Cartwright would not give Liggins a rock but permitted him to keep ten dollars as his fee. Liggins responded affirmatively when Cartwright asked if he would be there the next day at about the same time. Cartwright denied mentioning a job or making any job offers to Liggins on April 8.[4]
Cartwright returned the next day with another officer. He told Liggins that he wanted to buy sixteen rocks on this occasion. Liggins got in Cartwright's truck and directed him to drive to a neighborhood park. At the park, Liggins left the truck and went to talk with a person playing basketball. He promptly returned to get Cartwright's money. He took Cartwright's money, exchanged it with the person in the park for the requested cocaine, and delivered the rocks to Cartwright. Liggins again requested a rock. Cartwright did not give him a rock but permitted him to keep ten dollars. Cartwright then returned Liggins to his house. He denied discussing a job with Liggins on this occasion as well.
Cartwright explained that he and the other officer returned two or three days later for a social visit because some of Liggins' friends suspected that they were undercover officers. They brought beer and job applications with them. According to Cartwright, they used this opportunity to explain that they worked for a fencing company and to distribute generic employment applications to Liggins and his acquaintances. He explained that they hoped to identify other acquaintances of Liggins who might be selling drugs. If any returned completed applications, they intended to take a photograph to assist in identification under the guise that their company *62 required a photograph to accompany job applications. Cartwright testified that even though he did not mention drugs on this occasion, Liggins offered to sell some to him.
Cartwright told the jury that Liggins introduced him to another dealer on April 15 who drove up to Liggins house. He told Liggins he needed a larger quantity of cocaine on this occasion. Liggins and the other man left in the other's car, and Cartwright and his fellow undercover officer met them at the park thereafter. Cartwright negotiated the deal with the other man and purchased cocaine directly from him. Liggins got in Cartwright's truck, and Cartwright drove him home. Cartwright gave Liggins twenty dollars for this deal.
On the way home, Liggins told the officers he had completed his job application. When they asked about obtaining even more cocaine, he told them he knew a supplier in Fort Worth who could provide what they needed. When they arrived at Liggins' house, they waited as he went inside to get the application. According to Cartwright, they waited five or ten minutes. He did not recall Liggins ever returning with an application.
The officer who accompanied Cartwright on April 9, during the social visit, and on April 15 confirmed Cartwright's recollection of the pertinent events. He testified that Liggins helped them obtain the requested rocks without any hesitation. He agreed that neither Cartwright nor he discussed any possible job with Liggins until the social visit.
Liggins testified that he saw Shipman at their grandmother's house in mid-March. On this occasion, Shipman told him of a person with a fencing company who had a job for him that paid seven dollars an hour. According to Liggins, Shipman introduced Cartwright to him on April 8 as the person with the job opportunity. Liggins admitted that he provided Cartwright the drugs on April 8 and 9 substantially as Cartwright testified. He testified that Cartwright gave him a job application on April 9. He confirmed that some of his acquaintances were suspicious of Cartwright and that Cartwright paid a social call two or three days later. He agreed that Cartwright brought job applications when he came on this social visit. Liggins denied any involvement in the April 15 transaction. He claimed that he did not introduce Cartwright to the man from whom he purchased the drugs. He explained that Cartwright met the other man because they both happened to drive by Liggins' house at the same time. He testified that he rode with the other man to some location where the other person got the drugs he intended to sell and then to the park where they met back with Cartwright.
Liggins agreed that he had asked for a rock on the first two occasions and had accepted money on each of the three occasions when Cartwright purchased cocaine. He explained that he had a "drug habit" but his habit was not a "drug problem" because he did not steal things or commit other crimes to obtain whatever controlled substances he used. He admitted to the jury that he did on April 9 exactly what the State alleged but only because he desperately wanted a good-paying job to better provide for his young daughter. As Liggins put it:
I know I was wrong for doing what I did, but that obligation to me was like putting a carrot in front of a mule. And I was willing to sacrifice that for the job, but I know'd it was wrong.
I admit, you know to saying that I went over there and I got the dope from them for them. I admit to that. I can accept my punishment on that right there. But what ya'll are trying to say is that he get up in front of the jury, make me look like this big-time dope dealer. He's got all the crack in Cleburne, he's supplying all these people and all this, and that's wrong. And he knows it's wrong.
Constructive delivery is what you can get me of, but ya'll got me deliveryI'm delivering straight to them, this is my own dope. That's what I want the jury to understand. And I was entrapped into this.
But the way the situation is, you know, I take time, you know, for what I said, constructive delivery. But as far as you saying I'm all this big-time dope dealer, I'm *63 this and that, they nothing but lies and accusations.
Shipman denied ever speaking to Liggins about a potential job. His recollection of the details of the April 8 transaction varied significantly from both Cartwright's and Liggins' versions. Liggins' sister testified that she overheard Shipman telling Liggins of the potential job. She recalled that Shipman told Liggins he would have to put the potential employer in touch with someone else but nothing illegal was involved. Liggins' grandmother testified that he lived with her at the home where Cartwright and Shipman approached him. She had never seen any drug transactions taking place outside her home. She did not see Shipman around her home at any time during the months leading up to April 1996. She could not recall any specific job offer Liggins was contemplating.
ANALYSIS
When the evidence is viewed in the light most favorable to the verdict, the testimony of Cartwright, Shipman, and the other undercover officer provided sufficient evidence from which the jury could conclude Liggins was not entrapped. Accordingly, the evidence is legally sufficient to support the verdict. See Adelman, 828 S.W.2d at 423. Therefore, we overrule Liggins' first and second points.
The testimony of Liggins and his sister created a fact issue on the entrapment defense. However, we must give due deference to the jury's assessment of the credibility of the witnesses and the weight to be given their testimony. See Clewis, 922 S.W.2d at 135; Hernandez, 938 S.W.2d at 512. From our review of the evidence, we cannot say that the verdict "is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust." Clewis, 922 S.W.2d at 134; Hernandez, 938 S.W.2d at 512. Thus, we conclude that the evidence is factually sufficient to support the verdict. Accordingly, we overrule Liggins' third point.
OUTRAGEOUS POLICE CONDUCT
Liggins contends in his fourth point that the officers' conduct in making the alleged job offer was so outrageous as to deny him due process of law. See United States v. Russell, 411 U.S. 423, 431-32, 93 S. Ct. 1637, 1642-43, 36 L. Ed. 2d 366 (1973). In Russell, the defendant asserted an unsuccessful entrapment defense based on an undercover officer providing him a difficult-to-obtain chemical necessary for the manufacture of methamphetamine. He also claimed that his prosecution should be barred due to the outrageous nature of the officer's conduct because commission of the offense would not have been possible if the officer had not "supplied an indispensable means to the commission of the crime that could not have been obtained otherwise, through legal or illegal channels." Id. 411 U.S. at 431, 93 S. Ct. at 1642.
The Court reviewed the evidence and observed that the defendant possessed several bottles of the chemical which he had obtained from some source other than the undercover officer. The Court's comments suggest that even if the officer had been the sole source for the chemical, his conduct would not have been so outrageous as to require reversal of the conviction because possession of the substance in question was legal. The Court held:
While we may some day be presented with a situation in which the conduct of law enforcement agents is so outrageous that due process principles would absolutely bar the government from invoking judicial processes to obtain a conviction, the instant case is distinctly not of that breed.... The law enforcement conduct here stops far short of violating that "fundamental fairness, shocking to the universal sense of justice," mandated by the Due Process Clause of the Fifth Amendment.
Russell, 411 U.S. at 431-32, 93 S. Ct. at 1643 (quoting Kinsella v. United States ex rel. Singleton, 361 U.S. 234, 246, 80 S. Ct. 297, 304, 4 L. Ed. 2d 268 (1960)) (other citation omitted).
According to our research, Texas appellate courts have addressed the "outrageous conduct" defense on five occasions. See Armendarez v. State, 822 S.W.2d 321, 322 (Tex. App.Fort Worth 1992, pet. ref'd); Ramirez v. State, 822 S.W.2d 240, 248 (Tex.App. *64 Houston [1st Dist.] 1991, pet. ref'd); Hubbard v. State, 770 S.W.2d 31, 39-41 (Tex. App.Dallas 1989, pet. ref'd); Beck v. State, 741 S.W.2d 516, 524 (Tex.App.Corpus Christi 1987, pet. ref'd); Satterwhite v. State, 697 S.W.2d 774, 776 (Tex.App.Corpus Christi 1985, pet. ref'd). In none of these cases has the police conduct been found to be so outrageous as to require reversal. As the Dallas court observed, "Although the boundaries of the outrageous conduct defense remain poorly defined, the subsequent cases have clearly limited it to instances of the rarest and most egregious government misconduct." Hubbard, 770 S.W.2d at 39.
Liggins' allegations of "outrageous conduct" rest on disputed facts. Even if the allegations were true, we cannot say they rise to the level of "egregious government misconduct" which violates due process. Hubbard, 770 S.W.2d at 39. Accordingly, we overrule Liggins' fourth point.
OPINION TESTIMONY
Liggins contends in his fifth point that the court erred in admitting "speculative and prejudicial opinion testimony." Specifically, Liggins complains that Cartwright gave speculative and unfairly prejudicial testimony when he explained to the jury that "middlemen" who deliver narcotics in the way Liggins did are "typically" paid by the person from whom they purchase the drugs for delivery to the ultimate buyer.
A defendant cannot complain of the admission of evidence when "other evidence of substantially the same facts" is admitted without objection. McGlothlin v. State, 896 S.W.2d 183, 189 n. 9 (Tex.Crim.App.1995) (quoting Nicholas v. State, 502 S.W.2d 169, 174 (Tex.Crim.App.1973) (on rehearing)). On cross-examination of Cartwright, Liggins' counsel asserted that his client did not facilitate the drug purchases "for a monetary motive" and invited Cartwright to speculate that Liggins perhaps filled his order to help Shipman. Cartwright responded without objection that he felt Liggins was brokering the deal for the seller and that he assumed the seller later paid Liggins for the deal.
During Cartwright's cross-examination, evidence of substantially the same facts as those of which Liggins now complains was admitted before the jury without objection. Accordingly, any error arising from the original admission of this evidence was rendered harmless. Nicholas, 502 S.W.2d at 174. Thus, we overrule Liggins' fifth point.
VIDEOTAPE EVIDENCE
Liggins' sixth, seventh, and eleventh points complain about the manner in which the court permitted the jury to review a videotape exhibit during deliberations. His sixth point contends that the court erred in permitting the jury to view the exhibit in its entirety because only a portion of the video had been shown to the jury during trial and because he had objected to the remainder of the video prior to its admission in evidence. He argues in his seventh point that permitting the jury to view this objected-to portion of the exhibit denied him the opportunity to cross-examine the State's witnesses on the content of this portion of the video. His eleventh point avers that the court erred in permitting the jury to view the exhibit at all because it constitutes testimonial evidence and the jury had not indicated any dispute concerning the testimony contained in the video. See TEX.CODE CRIM. PROC. ANN. art. 36.28 (Vernon 1981). We address the eleventh point first because it goes to the propriety of the jury viewing the exhibit at all.
Article 36.25 provides that the trial court shall furnish to the jury any exhibits admitted in evidence upon request.[5] TEX.CODE CRIM. PROC. ANN. art. 36.25 (Vernon 1981). Compliance with the statute is mandatory. Parker v. State, 745 S.W.2d 934, 936 (Tex.App.Houston [1st Dist.] 1988, pet. ref'd); accord Lopez v. State, 628 S.W.2d 82, 85 (Tex.Crim.App. [Panel Op.] 1982); Weatherred v. State, 833 S.W.2d 341, 355-56 (Tex. App.Beaumont 1992, pet. ref'd).
*65 Conversely, article 36.28 allows the jury to rehear any portion of a witness' testimony concerning which the jurors disagree. TEX. CODE CRIM. PROC. ANN. art. 36.28. Liggins argues that the exhibit in issue falls within the ambit of article 36.28 because it is a recording of statements made by the parties to the April 8 transaction. According to our research however, at least three appellate courts have rejected Liggins' interpretation of the statute. See Weatherred, 833 S.W.2d at 355-56; Parker, 745 S.W.2d at 936; Chennault v. State, 667 S.W.2d 299, 302 (Tex. App.Dallas 1984, pet. ref'd).
Liggins asks us to adopt the reasoning of the dissent in Parker. Parker, 745 S.W.2d at 938-39 (Smith, J., dissenting). In Parker, the jury requested to review a videotape which had been admitted in evidence. The trial court essentially instructed the jury that it could not review the evidence unless a dispute existed about the contents of the exhibit. Apparently, the jury decided not to view the exhibit. Id. at 936.
The Parker majority determined that article 36.28 only applies to the testimony of witnesses who appear in court and not to physical exhibits admitted in evidence. Id. Justice Smith dissented, concluding that the jury should not be permitted to view videotape evidence during deliberations unless the jury first certifies that it has a dispute about specific portions of the exhibit. Id. at 938. We are more persuaded by the reasoning of the majority.
Although a recording undoubtedly contains statements of persons who may ultimately be witnesses at trial, such statements are essentially declarations of those persons' perceptions as they existed at the time of the occurrence being recorded. They are not statements under oath made before a finder of fact. Since they are not, they should not be considered testimonial in nature.
Both sides agree that article 36.28 applies only to testimonial evidence. Because the videotape in question is not testimonial, the requirements of article 36.25 (rather than article 36.28) apply. See Weatherred, 833 S.W.2d at 355-56; Parker, 745 S.W.2d at 936; Chennault, 667 S.W.2d at 302. Accordingly, the court acted appropriately in allowing the jury to view the exhibit even though the jurors did not indicate any disagreement about its contents. Thus, we overrule Liggins' eleventh point.
The exhibit in dispute is the videotaped recording of the April 8 transaction between Liggins, Shipman, and Cartwright. The portion of the videotape in dispute is as follows:
Here Alan Cartwright returned to the S.T.O.P. Task Force office. I want to make mention that the time on the videotape showed to be 1600 hours, which indicates 4:00 P.M. Daylight Savings Time changed on Sunday, April the 7th, and today is April the 8th, and we did not change our clock, so the correct time on the tape should be 1700 hours, which would be 5:00 P.M.
And now that we got that out of the way, here is the five dime rocks of crack cocaine that I bought from Raymond. Can you see those? I gave $50 for that. Raymond wanted to take one of them for setting upor a piece of one for setting up the transaction, so I gave him a $10 tip. So that was $60 in U.S. currency that I paid for the crack cocaine, and it was S.T.O.P. Task Force funding.
Now, I will try to go back tomorrow, which is April the 9th. Try to make another purchase from Raymond. And that's all for now.
This portion of the videotape was apparently not played for the jury during the presentation of the evidence. However, these comments by Cartwright are nearly identical to his testimony describing the April 8 transaction. Accordingly, Liggins was not harmed by the court's decision to play the entirety of the exhibit to the jury. See Nicholas, 502 S.W.2d at 174. Thus, we overrule Liggins' sixth and seventh points.
PRIOR CONVICTIONS
Liggins' eighth, ninth, and tenth points challenge the court's admission of evidence of three prior misdemeanor convictions during the punishment phase of trial. He avers in his eighth point that the court improperly admitted evidence of a prior evading arrest *66 conviction because the State produced no evidence that he voluntarily waived his right to jury trial in that case. His ninth point suggests that the court erred in admitting evidence of a prior marihuana possession conviction because he did not intelligently and knowingly waive counsel before pleading guilty in that case. His tenth point claims that the court improperly admitted these two convictions and one other which were not shown to be "final convictions."
WAIVER OF JURY TRIAL
Liggins' eighth point complains that the court erred in admitting a prior evading arrest conviction because the State failed to establish that he had voluntarily waived his right to trial by jury in that case. The State offered in evidence a "Probation Order" which contains no recitals about Liggins having waived a jury. The State also offered a docket sheet for the evading arrest case which contains the notation "Waive jury."
The Court of Criminal Appeals has held that a prior conviction may be held void on collateral attack if the accused pleaded guilty without first waiving his right to jury trial pursuant to article 1.13.[6]Robinson v. State, 739 S.W.2d 795, 798 (Tex.Crim.App.1987). However, the Court has more recently decided that when an accused:
does not claim he desired and was deprived of his constitutional right to a trial by jury, that he did not intend to waive a jury trial or that he was otherwise harmed, and the record reflects that the [appellant] agreed to the waiver, we will not set aside a conviction by habeas corpus or collateral attack due to the [accused's] failure to sign a written jury form pursuant to article 1.13.
Ex parte Sadberry, 864 S.W.2d 541, 543 (Tex. Crim.App.1993).
"Recitations in the records of the trial court, such as a formal judgment, are binding in the absence of direct proof of their falsity." Breazeale v. State, 683 S.W.2d 446, 450 (Tex.Crim.App.1985) (on rehearing). Such records carry "a presumption of regularity and truthfulness." Id. at 450-51. Thus, when an official record of the court recites that a defendant waived his right to jury trial, "such presumption attains until and unless the contrary is made to appear." Id. at 450. On the other hand, "a silent record cannot support a presumption that the defendant formally waived his right to trial by jury." Id.
The docket notation indicates that Liggins waived a jury in the evading arrest case. This creates a presumption that he in fact waived his right to trial by jury. Id. Liggins argues that this prior conviction is void because "the records do not affirmatively reflect an intentional relinquishment of [his right to jury trial]." He does not contend that "he desired and was deprived of his constitutional right to a trial by jury, that he did not intend to waive a jury trial, or that he was otherwise harmed." Sadberry, 864 S.W.2d at 543. Accordingly, we conclude that he may not collaterally attack this prior conviction on this basis. Id. Thus, we overrule his eighth point.
WAIVER OF COUNSEL
Liggins' contends in his ninth point that the court erred in admitting a prior possession of marihuana conviction because the State failed to establish that he had knowingly and intelligently waived his right to counsel in that case. A document filed in the marihuana case and signed by Liggins recites that he "waives his right to counsel and does so knowingly, intelligently and voluntarily after having his rights to representation by counsel explained to him and after the Court duly admonished the Defendant as to the range of punishment attached to the offense."[7]
To collaterally attack the validity of prior convictions on the basis of a denial of the right to counsel, the accused must prove that "he did not voluntarily, knowingly, and *67 intelligently waive his right to counsel." Garcia v. State, 909 S.W.2d 563, 566 (Tex. App.Corpus Christi 1995, pet. ref'd). As we have already stated, when prior convictions are collaterally attacked, the judgments reflecting those convictions are presumed to be regular, and the accused bears the burden of defeating that presumption. Breazeale, 683 S.W.2d at 450; Williams v. State, 946 S.W.2d 886, 900 (Tex.App.Waco 1997, no pet.).
Liggins suggests that he has overcome the presumption of regularity by virtue of the fact the trial court in the marihuana case failed to admonish him that his guilty plea could serve as a basis to revoke a DWI probation he was serving at that time. The State's extraneous-offense notice reflects that Liggins' DWI probation was revoked on the same day he pleaded guilty to the marihuana charge.
Before accepting a defendant's guilty plea, a trial court must satisfy itself that the accused understands "the consequences of his plea." TEX.CODE CRIM. PROC. ANN. art. 26.13(c) (Vernon 1989). The court is not required, however, to insure that the accused understands the collateral consequences of the plea. See Ex parte Dumitru, 850 S.W.2d 243, 244-45 (Tex.App.Houston [1st Dist.] 1993, no pet.); accord Cooper v. State, 492 S.W.2d 545, 547 (Tex.Crim.App. 1973); Shepherd v. State, 673 S.W.2d 263, 268 (Tex.App.Houston [1st Dist.] 1984, no pet.).
The fact that a conviction ensuing from a guilty plea can be used against an accused in a separate proceeding is a collateral consequence of that plea. See Dumitru, 850 S.W.2d at 245; Shepherd, 673 S.W.2d at 268. Thus, the court which accepted Liggins' plea in the marihuana case was under no obligation to admonish him that his conviction could serve as a basis to revoke his DWI probation. Accordingly, Liggins failed to defeat the presumption of regularity which attaches to the recital in the records of the marihuana case that he "knowingly, intelligently and voluntarily" waived his right to counsel. Breazeale, 683 S.W.2d at 450; Williams, 946 S.W.2d at 900. For this reason, we overrule his ninth point.
FINALITY OF PRIOR CONVICTIONS
Liggins' tenth point avers that the court erred in admitting evidence of the evading arrest, marihuana, and DWI convictions discussed above during the punishment phase of trial because the State failed to prove these were "final convictions." The evidence offered by the State reflects that Liggins received probation in each of these cases. The State offered no evidence before the jury that his probation was revoked in any of the cases.
Article 37.07, section 3(a) provides that during the punishment phase of trial the court may admit:
any matter the court deems relevant to sentencing, including but not limited to the prior criminal record of the defendant ... and, notwithstanding Rules 404 and 405, Texas Rules of Criminal Evidence, any other evidence of an extraneous crime or bad act that is shown beyond a reasonable doubt to have been committed by the defendant or for which he could be held criminally responsible, regardless of whether he has previously been charged with or finally convicted of the crime or act.
TEX.CODE CRIM. PROC. ANN. art. 37.07, § 3(a) (Vernon Supp.1998). Prior to September 1, 1993, the statute specifically defined "prior criminal record" to include "a probated or suspended sentence." See Act of May 19, 1967, 60th Leg. R.S., ch. 659, § 22, 1967 Tex. Gen. Laws 1732, 1740, amended by Act of May 29, 1993, 73d Leg., R.S., ch. 900, § 5.05, 1993 Tex. Gen. Laws 3586, 3759. In the 1993 Act however, the Legislature deleted the sentence defining the term "prior criminal record" but added language permitting the introduction during the punishment phase of extraneous offenses committed by the accused, "regardless of whether" the accused was "charged with or finally convicted of the crime or act." TEX.CODE CRIM. PROC. ANN. art. 37.07, § 3(a).
It can be argued that the phrase "prior criminal record" no longer includes convictions for which an accused received a suspended sentence because of the Legislature's *68 deletion of the definition of the phrase formerly provided. Nevertheless, the phraseology adopted permits evidence of prior criminal acts "regardless of whether" the accused was "charged with or finally convicted of the crime." Id. A plain reading of the phrase "regardless of whether" contemplates introduction of, among other things, crimes: (1) for which the accused was "finally convicted"; (2) for which the accused was convicted and given a suspended sentence; or (3) which the accused committed but was not charged with or convicted of. Id.[8]
Under this reading of article 37.07, section 3(a), the State may properly introduce, during the punishment phase, evidence of a defendant's prior conviction for which he received probation or community supervision, regardless of whether the sentence was subsequently imposed. In this case, the State offered evidence of Liggins' three prior convictions for which he received probation. Article 37.07, section 3(a) permits the admission of such evidence. Thus, we overrule Liggins' tenth point.
JURY ARGUMENT
Liggins argues in his twelfth point that the State made impermissible jury argument during the punishment phase of trial. During the argument, the prosecutor stated, " His misdemeanors, all probations. And never in any of these did the Defendant comply or fulfill his probation." Liggins contends that this argument injected facts outside the record because the State offered no evidence that any of the misdemeanor probations had been revoked. However, Liggins failed to object when the State made this argument.
A defendant must make a timely objection to improper jury argument to preserve the complaint for appellate review. Banda v. State, 890 S.W.2d 42, 62 (Tex.Crim.App. 1994); TEX.R.APP. P. 33.1(a)(1). If he fails to do so, he forfeits the right to complain about the argument on appeal. Cockrell v. State, 933 S.W.2d 73, 89 (Tex.Crim.App.1996).
Liggins concedes that he did not object to the argument. Accordingly, we overrule Liggins' twelfth point because he failed to properly preserve it for our review. Id.
We affirm the judgment.
NOTES
[1] According to the record, the S.T.O.P. Narcotics Task Force is a multi-jurisdictional narcotics task force which operates in Johnson, Hood, and Somervell Counties.
[2] Cartwright initially testified on direct examination about the April 9 transaction which was the one for which the State sought a conviction. Liggins' counsel elicited information about the April 8 and April 15 transactions during cross examination. The State offered further evidence regarding these extraneous transactions during redirect.
[3] Entrapment and self-defense are both defenses to prosecution. See TEX. PEN.CODE ANN. §§ 8.06(a), 9.02, 9.31(a) (Vernon 1994). As such, both have the procedural consequences provided by section 2.03 of the Penal Code. Id. § 2.03 (Vernon 1994).
[4] Cartwright also denied ever discussing "job offers" with Shipman, whom Liggins testified had initially told him about a possible job several weeks before the April 8 meeting.
[5] Every reference to an "article" in this opinion refers to an article of the Code of Criminal Procedure unless otherwise indicated.
[6] Article 1.13 provides in pertinent part that a defendant's jury waiver "must be made in person by the defendant in writing in open court." TEX. CODE CRIM. PROC. ANN. art. 1.13(a) (Vernon Supp. 1998).
[7] The document also contains Liggins' waiver of trial by jury and waiver of a record.
[8] This listing should not be considered exhaustive. See, e.g., Davis v. State, 968 S.W.2d 368, 372 (Tex.Crim.App.1998) (evidence of prior unadjudicated community supervision admissible under article 37.07, § 3(a)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2758702/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00533-CR
Pablo Reyna, Jr. § From the 213th District Court
§ of Tarrant County (1301204D)
v. § December 4, 2014
§ Opinion by Justice McCoy
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
SECOND DISTRICT COURT OF APPEALS
By /s/ Bob McCoy_________________
Justice Bob McCoy | 01-03-2023 | 12-09-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/3347195/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION RE MOTION FOR SUMMARY JUDGMENT (No. 152)
This motion for summary judgment is the second such motion in this case to come before me. On February 3, 1998, I granted a motion for summary judgment (no. 134) filed by the defendant M. H. Chodos Insurance Agency on statute of limitations grounds.Grant v. City of New Haven, 21 Conn. L. Rptr. No. 10, 340 (April 20, 1998) (the "Chodos decision"). Familiarity with the Chodos
decision is assumed. The present motion for summary judgment is pursued by two other defendants: Nicholas Pastore ("Pastore"), the Police Chief of the City of New Haven at the time of the events in question, and the City of New Haven (the "City") itself. This motion presents questions, which turn out to be CT Page 9146 intertwined, concerning both the running of the statute of limitations and the question of whether Pastore violated any duty owed to the plaintiff, Tyrone Grant ("Grant"), in the first place. For the reasons set forth below, the motion must be granted.
As the Chodos decision describes, Grant was injured by an employee of Fountain's Garage ("Fountain's") on June 22, 1992, while attempting to reclaim a car that Fountain's had towed pursuant to a contract with the City. Grant subsequently obtained a substantial judgment against Fountain's. On May 12, 1995, however, Fountain's insurer denied coverage for the incident in question for a variety of reasons, including its assertion that Grant's injury was caused by an intentional act.
Grant commenced the present action on December 12, 1995 by service of process against several defendants, including Pastore and the City. His amended complaint of July 3, 1998, contains two counts that are relevant to the motion now before me. The first count, directed against Pastore, alleges that Pastore "was negligent in failing to require Fountain's to obtain appropriate insurance coverage." The second count., directed against the City, seeks indemnification pursuant to Conn. Gen. Stat. §7-465. Grant alleges no independent breach of duty by the City. Because the viability of the second count necessarily turns on the viability of the first, only the first count need be discussed here.
On March 20, 1998, Pastore and the City filed the motion for summary judgment now before me. The motion claims both the
running of the statute of limitations and the absence of any duty owed by Pastore to Grant. The motion was heard on July 13, 1998.
Grant's first problem is a problem of substantive law. The gravamen of the first count of Grant's complaint is that Pastore negligently failed to enforce New Haven Ordinances § 29-109. That ordinance provides, in pertinent part, that, "No license shall be issue to an applicant [for a towing license] until he shall have deposited with the chief of police. . .(b). . .[a] garage liability policy, covering the operation of applicant's business, equipment, or vehicles, for any bodily injury or property damage. This policy shall be in an amount acceptable to the board of police commissioners." CT Page 9147
As described in the Chodos decision, Fountain's was covered by a policy with Progressive Casualty Insurance Co. The problem,.from Grant's point of view, is that the Progressive policy had certain exclusions, including an exclusion for intentional acts. (The actual policy, which is not itself in evidence, may have had other exclusions as well, but since the exclusion for intentional acts was sufficient to deny coverage for Grant's injuries, the possibility of other exclusions need not be discussed.) In Grant's view, these exclusions were inconsistent with the requirement of § 29-109 (b) that a garage liability policy cover "the operation of applicant's business. . . for any bodily injury." But although Grant's plight necessarily arouses sympathy, his legal position is unpersuasive.
Grant's difficulty is that the ordinance in question, properly construed, has not been violated. His contention, as mentioned, is that the intentional act exclusion in Fountain's policy is inconsistent with the ordinance's requirement that a garage liability policy cover "any bodily injury " This argument, however, overlooks both the context of the cited phrase and the requirements of public policy. The ordinance requires "[a] garage liability policy, covering the operation of applicant'sbusiness. . . for any bodily injury." (Emphasis added.) The term "business" is an important limitation of the requirements of the ordinance. The construction of this ordinance is an issue of law.
The "business" of a licensed tower is the towing and storage of automobiles. It is not the beating of its customers. The ordinance does not, even facially, require liability insurance for intentional assaults. This construction is fatal to Grant's case, because he was injured by a brutal assault rather than by
the towing or storage of his car.
Although this construction of the term "business" is necessarily detrimental to the interests of innocent victims of violent assaults, it is required by an important consideration of public policy. "As a general rule, one cannot insure himself against the consequences of his wilful acts, committed with the intent to inflict injury." 6B John Alan Appleman Jean Appleman,Insurance Law and Practice § 4252 at 7 (1979) ("Appleman"). No person in our society, however well insured, can expect his insurance policy to pay for the consequences of an intentional beating. Yount v. Maisano, 627 So. 2d 148, 153 (La. 1993). This policy is necessary in a society governed by the rule of law. CT Page 9148 "Otherwise, a liability policy, could be used as a license to wreak havoc at will." Tennessee Farmers Mutual Insurance Co. v.Evans, 814 S.W.2d 49, 54 (Tenn. 1991). As Appleman explains, all liability insurance policies have an exclusion for intentional acts. "The intentional exclusion is necessary to the insurer to enable it to set rates and supply coverage only if losses under policies are uncertain from the standpoint of any single policyholder, and if a single insured is allowed through intentional or reckless acts to consciously control risks covered by policy, the central concept of insurance is violated." 7A Appleman, supra, § 4492.01 at 21.
For this reason, the ordinance in question must be construed so as not to require liability insurance for intentional acts. Although this construction necessarily denies victims of intentional assaults a potential source of compensation for their injuries, it does so by placing both moral and economic liability on the persons responsible for those assaults. At the end of the day, it is this latter consideration that must prevail. The ordinance, thus construed, has not been violated, and Grant's case must necessarily fail.
In addition to this substantive barrier, Grant faces an insuperable problem of timing. Assuming, for purposes of argument, that the foregoing analysis is in error and that a violation of the ordinance did, in fact, occur, that violation occurred in April of 1992, when Fountain's license was issued. (Although the exact date of the licensing is not in evidence, the arguments of the parties make it clear that this event occurred in about April of 1992. It is undisputed that Fountain's policy was issued on April 24, 1992. Grant's amended complaint alleges that the licensing occurred "[o]n or before June 22, 1992." On any construction, this crucial event occurred well before December of 1992.) This action, as mentioned, was commenced on December 12, 1995.
Conn. Gen. Stat. § 52-584 provides that, "No action to recover damages for injury to the person, or to real or personal property, caused by negligence. . . shall be brought but within two years from the date when the injury is first sustained or discovered or in the exercise of reasonable care should have been discovered, and except that no such action may be brought more than three years from the date of the act or omission complained of" This is the applicable statute of limitations for purposes of the motion now before me, since the first count of Grant's CT Page 9149 complaint sounds in negligence and the injury complained of which, as the Chodos decision explains, is an injury to Grant's financial interests caused by underinsurance -is an injury to "personal property" in the broad sense that that term has acquired in the law. See 63C Am.Jur.2d Property § 18 (1997).
"[A] lawsuit commenced more than three years from the date of the negligent act or omission complained of is barred by the statute of limitations, § 52-584, regardless of whether the plaintiff had not or, in the exercise of care, could not reasonably have discovered the nature of the injuries within that time period." Blanchette v. Barrett, 229 Conn. 256, 265,640 A.2d 74 (1994). With this doctrine in mind, it is crucial to identify the negligent act or omission complained of. To the extent that the negligent conduct complained of in this case occurred prior to December 1992 (the exact date is unimportant for present purposes), the first count of Grant's complaint is barred by the statute of limitations.
In this case, the principal conduct complained of — i.e. the issuance of a license to Fountain's — plainly occurred prior to December 1992. Grant, recognizing this difficulty, contends that the statute of limitations is tolled by the continuing course of conduct doctrine. As our Supreme Court has explained, however:
To support a finding of a "continuing course of conduct" that may toll the statute of limitations there must be evidence of the breach of duty that remained in existence after commission of the original wrong related thereto. Tat duty must not have terminated prior to commencement of the period allowed for bringing an action for such a wrong. . . .
Where we have upheld a finding that a duty continued to exist after the cessation of the "act or omission" relied upon, there has been evidence of either a special relationship between the parties giving rise to such a continuing duty or some later wrongful conduct of a defendant related to the prior act.
Fichera v. Minc Hill Corp. , 207 Conn. 204, 209-10, 541 A.2d 472
(1988). Accord Blanchette v. Barrett, supra, 229 Conn. at 275.
In this case neither of the alternative Fichera requirements for the application of the continuing course of conduct doctrine CT Page 9150 has been satisfied. There is plainly no "special relationship," such as a physician-patient or lawyer-client relationship, between Pastore and Grant giving rise to a continuing duty toward Grant on Pastore's part. There is also no evidence of some later "wrongful conduct" on Pastore's part, assuming, for purposes of argument, that the initial issuance of a license to Fountain's was wrongful.
The question of how, if at all, Pastore's conduct following the issuance of Fountain's license could be termed wrongful conduct was much mooted during argument. Grant contends, as he must, that, following the issuance of a license that he views as wrongful, Pastore had a duty to subsequently revisit the situation and demand that Fountain's acquire additional liability insurance retroactive to June 22, 1992. Grant further contends, as again he must, that this duty continued at least until December 1992. But from whence does this duty arise? After considerable argument, Grant conceded that this duty, if it exists, does not come from the ordinance. The ordinance imposes no retroactive obligations on the chief of police. Grant argued instead that the duty was a duty of care required by the common law. Suffice it to say, however, that there is no authority suggesting the existence of a common law duty of care requiring public officials to command private parties to obtain retroactive insurance. To recognize the existence of such a duty on the part of public officials would expand their liability enormously with no compelling policy justification. There is simply no evidence of a wrongful act on Pastore's part following the issuance of the license in question.
For the reasons stated above, Grant's action against Pastore and the City is both devoid of substantive merit and precluded by the statute of limitations. The motion for summary judgment is granted.
Jon C. Blue Judge of the Superior Court | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/3347197/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION
The plaintiff brought a three count complaint against the defendant on February 3, 2001, alleging the following:
(1) that pursuant to an agreement between the parties the defendant took possession of the plaintiff's condominium unit and failed to pay the outstanding rental balance after credits for payments and legal set offs; (2) that the plaintiff left personal property and household goods for the defendant's use which the defendant converted and removed same when she vacated the condominium unit. The plaintiff further claims that the defendant is still in possession and control of that property; and (3)that the defendant arranged for telephone service at the unit, placed the account in the plaintiff's name without her authorization or consent, and there is a balance owed of $585.94. The defendant denies each claim and filed a pre-trial memorandum dated April 11, 2000. The plaintiff is seeking monetary damages, interest and any other relief allowed at law and in equity.
After a three day trial the following facts are not in dispute. The plaintiff owned a condominium unit [hereafter unit] located at 30 Woodland Street, Unit 11-C, Hartford, Connecticut. The plaintiff had lived in the unit for more than ten (10) years and moved out at the the end of 1994. The plaintiff was having difficulty finding a tenant to rent the unit and the Condominium Associates had brought a foreclosure action for non payment of condominium fees. The unit was in need of repairs.
The plaintiff and the defendants met in 1993 and formed a professional and personal relationship. The parties talked in November or December of 1995 through January 1996. The defendant was looking to move and the plaintiff was still looking for a tenant. The foreclosure action was also pending.
The parties entered into an informal agreement the terms of which are in dispute. The plaintiff believes that she had agreed to rent the unit to the defendant for $650.001 per month and the defendant would do the repairs in lieu of paying rent for three months.2 The plaintiff CT Page 3132-ek believed that the needed repairs were as follows: bathroom tile and shower wall and in the kitchen the garbage disposal had to be repaired. The plaintiff stated that the repairs started in February 1996 and the defendant was expected to start paying rent in March of 1996. The plaintiff also authorized the defendant to make changes in the unit, including painting and furnishings as long as the changes did not decrease the value of the unit and she did not have to pay for them.
The defendant hired Lucien Grener to do the repairs. The cost and extent of the needed repairs far exceeded the expectations of either party. The defendant told the plaintiff about the additional cost before moving in. There was no objection. The following repairs were done in the bathroom by Mr. Grener; he replaced the tile, the plumbing, the sink and a wall. He also filled and taped holes and cracks and fixed corners and doors and painted. He made the following repairs in the kitchen: replaced the garbage disposal, the dish washer and the track lighting. Mr. Grener also replaced rotted areas on the floor which appeared to be the result of the problem with the garbage disposal. Mr. Grener further testified that the defendant assisted and that all the repairs were necessary and there was nothing special done. The defendant notified the plaintiff of the repairs and there is no evidence that the plaintiff objected.
There were additional repairs and changes made to the unit. The defendant painted and sheet rocked the wall in the bedroom. There was a leak from the unit on the floor above this unit which caused damage to three areas in the living room. The recessed lighting was replaced by a ceiling fan and light combination. A wall was fixed and the wall paper was replaced. The condominium association found asbestos and replaced the carpet, the sliding glass door and the windows in the living room. There is no dispute that the repairs were done. The plaintiff thinks some may have been cosmetic but Mr. Grener said they were necessary. The disagreement is about the amount of the cost that should be credited against the rent.
The plaintiff was represented on the foreclosure action against her by Attorney Mumford who became ill in 1997. The defendant, who is an attorney agreed to represent the plaintiff. The defendant had been helping on this matter since the summer of 1996. The defendant had been helpful to the plaintiff in other cases. However, there hasn't been any claim made as to those services. The parties agreed that the defendant would pay the current condominium fees in lieu of paying rent. The defendant negotiated a settlement with the condominium association on the foreclosure and the reduced rate for her services was $135.00 per hour. CT Page 3132-el
The defendant vacated the unit the first week of September 1998. The plaintiff went to the unit one week later. The plaintiff is seeking reimbursement and/or replacement value for personal property alleged to be taken by the defendant and still in her possession.
The missing items are identified as follows:
1. Miniblinds from the bedroom. The blinds were in the unit at the time the plaintiff took possession and she believes were valued at $300.00. The defendant says she does not recall seeing the blinds in the unit.
2. Vertical blinds for the dining room which the plaintiff says she purchased for $350.00. After the damage to the living room the condominium association replaced the glass door and windows and the blinds were thrown on the floor.
3. Recessed lighting in the dining room. The defendant replaced this with a ceiling fan and light combination.
4. Track lighting in the kitchen. Mr. Grener and the defendant stated that this was replaced.
5. Two antique tables. Mr. Grener stated that he purchased two tables from the plaintiff.
6. Cherry gate like table. The defendant admits to taking this table believing that the plaintiff had abandoned it.
7. Velveteen oak love seat valued between $400.00 and $500.00. The defendant believed that this item was a gift from the plaintiff and she paid $350.00 to have it redone.
8. Pink love seat. The defendant believed that the plaintiff had left this love seat for her to use and the defendant left it in the unit when she vacated the premises.
9. Rocking chair. The defendant claims she never saw the rocking chair.
10. Set of bankers lamps (reproductions) valued at between $100.00 to $150.00. The defendant claims that the lamps were damaged and she had them repaired. They lasted for one year after that. CT Page 3132-em
11. Marble inset coffee table. The defendant claims she never saw this table.
12. Piano. The defendant believes this was a gift from the plaintiff.
13. Hall tree. The defendant denies ever seeing a hall tree.
14. Music stand. No value given.
The plaintiff did not present any evidence as to what items were in the unit when the defendant moved in. The plaintiff also did not present any evidence as to the cost or replacement value of the items. She gave a guess as to what she thought it would be. The defendant and Mr. Grener stated that property left in the unit was all pushed together in the middle of the room. No one seems to know exactly what items were there.
Findings
Count I
Judgment for the defendant. The amount of rent due from March 15, 1996 to September 15, 1998 was $18,000.00.3 As a natter of equity the defendant is entitled to credits and legal set-offs which exceed $18,000.00. The plaintiff has benefitted greatly from the services of the defendant whereby the foreclosure matter with the condominium association was resolved and there were substantial repairs to the unit which has enhanced the value of the unit.4 This value would be making it realized by the plaintiff at the time of sale or rental. To order any payments by the defendant would result in the plaintiff being unjustly enriched.
Count II
Partial judgment for the plaintiff.
Item #1
The mini blinds in the bedroom were over (10) ten years old when the defendant moved in and would have been over fourteen (14) years old when the defendant moved out. If you assume that the blinds were there when the defendant moved in, with normal wear and tear it would not be equitable to require payment of CT Page 3132-en $300.00 to replace them.
Item #2
It appears that the vertical blinds were removed to facilitate the repairs, some of which were done by the Condominium Association, including replacing the sliding glass door. The blinds were thrown on the floor. The defendant is partially responsible and is ordered to reimburse the plaintiff $175.00.
Items #3 and 4 (lighting)
These items were replaced. It would be inequitable to require payment.
Item #5
It appears that these items were purchased by Mr. Grener.
Item #6
The defendant is ordered to return the Cherry gate like table or reimburse the plaintiff $500.00.
Item #7
The defendant is ordered to return the Velveteen oak love seat to the plaintiff and the plaintiff shall reimburse the defendant $350.00, the amount paid to have it redone. If the defendant is no longer in possession of the love seat she must reimburse the plaintiff $450.00.
Item #8
There is no evidence that the defendant is in possession of the pink love seat, The defendant says she left it when she vacated the unit. There was at least a week between that date and when the plaintiff went to the unit and no evidence was presented for the court to conclude that it is in the defendant's possession. It would be inequitable to order CT Page 3132-eo reimbursement for this item.
Items #9 and #11 and 13
There is no evidence that the items were in the unit when defendant moved in or that they are now in her possession. It would be inequitable to order reimbursement for these items.
Item #10
The defendant claims the bankers lamps were damaged and she paid to have them repaired and then they broke again. Since the defendant had the use of the lamps for some time, defendant is ordered to reimburse the plaintiff $100.00.
Item #14
The defendant is ordered to return the music stand.
Count III
Judgment for the defendant The plaintiff did not present any evidence on this count.
The orders as to Count 2 are to be complied with within thirty days of receipt of the order.
Crawford, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2610791/ | 799 P.2d 371 (1990)
FIBREGLAS FABRICATORS, INC., Petitioner,
v.
Richard L. KYLBERG, and Edgewater Redevelopment Authority, a Colorado Urban Renewal Authority, a body corporate and politic, Respondents.
No. 89SC228.
Supreme Court of Colorado, En Banc.
September 24, 1990.
Rehearing Denied November 13, 1990.
*373 Chrisman, Bynum & Johnson, P.C., Robert L. Matthews, Ann E. Byrne, Boulder, for petitioner.
Faegre & Benson, Joseph M. Montano, Leslie A. Fields, Denver, for respondent Richard L. Kylberg.
No appearance on behalf of Edgewater Redevelopment Authority.
Justice VOLLACK delivered the Opinion of the Court.
Fibreglas Fabricators, Inc. (Fibreglas), petitioned for certiorari review of the court of appeals decision in Edgewater Redevelopment Authority v. Fibreglas Fabricators, Inc., 773 P.2d 617 (Colo.App.1989). In Edgewater Redevelopment Authority, the court of appeals reversed the trial court's ruling that Fibreglas as lessee was entitled to share in the condemnation proceeds that were to be paid to Richard L. Kylberg (Kylberg), the respondent in this case and the former owner and lessor of the property acquired by Edgewater Redevelopment Authority in a condemnation action. We affirm the court of appeals in part and reverse in part.
I.
In May 1982, Kylberg entered into an agreement with Fibreglas to lease property he owned in Edgewater, Colorado, to Fibreglas. The lease agreement provided for a five-year primary term with three unconditional renewal options of five years each. The primary term was to end April 30, 1987, "unless this Lease Agreement shall be canceled or sooner terminated as hereinafter provided." The agreement also provided for a "condemnation clause," which stated:
10.1 Full CondemnationTermination. If, during the term of this Lease Agreement, the entire Leased Premises shall be taken as a result of the exercise of the power of eminent domain or sold to the governmental authority in lieu of condemnation (hereinafter in this Article called a "Proceeding"), this Lease Agreement shall terminate and the rent shall be apportioned as of the date the governmental authority takes possession of the Leased Premises pursuant to such Proceeding.
In April 1986, the Edgewater Redevelopment Authority (Authority) initiated a condemnation action[1] to acquire, among other properties, the property Kylberg had leased to Fibreglas. Kylberg and the Authority subsequently stipulated to the validity of the condemnation action, and the Authority deposited $1,900,000[2] with the court as preliminary compensation to Kylberg. See § 38-1-105(6)(a), 16A C.R.S. (1982). On August 20, 1986, the court ordered that title to the condemned property be vested in the Authority.
During the condemnation proceedings, Fibreglas asserted an interest in the condemnation proceeds of not less than $600,000, which Fibreglas stated was the fair market value of its leasehold interest in the property. Kylberg objected to Fibreglas's sharing in the condemnation proceeds. After concluding that the lease agreement was ambiguous on the issue of whether the parties intended Fibreglas to share in condemnation proceeds, the trial court held hearings on the issue.
Following the hearings, the court in January 1987 ruled that Fibreglas was entitled to a portion of the condemnation proceeds. Fibreglas's portion of the condemnation proceeds would be based on the remaining value of the primary term of the leaseto be measured from August 20, 1986, the date Fibreglas's leasehold interest terminated pursuant to the condemnation proceedings, to April 30, 1987, the date the primary term would have ended under the lease agreement.[3] Thus, under the court's *374 order, Fibreglas would receive no compensation for its lease renewal options.
After the court's ruling, Kylberg filed three separate motions for assessment of attorney fees and costs against Fibreglas, pursuant to section 13-17-101, 6A C.R.S. (1987) (providing for assessment of attorney fees against a party suing or defending against an action in bad faith), and pursuant to the lease agreement. The lease agreement provided in relevant part:
12.6 Indemnification. ... [Fibreglas] shall pay, and indemnify [Kylberg] against, all legal costs and charges, including attorneys' fees and expenses, lawfully and reasonably incurred in obtaining possession of the Leased Premises after default by [Fibreglas] hereunder or upon expiration or any earlier termination of this Lease Agreement (if [Fibreglas] wrongfully holds over) or in enforcing any covenant or agreement of [Fibreglas] contained in this Lease Agreement.
The court denied the motions for assessment of attorney fees and costs against Fibreglas.
Kylberg appealed the court's ruling that Fibreglas could share in the condemnation proceeds, and the court's ruling on attorney fees and costs.[4] Fibreglas appealed the court's ruling that Fibreglas was not entitled to compensation for its renewal options. After the appeals were consolidated, the court of appeals held that the lease agreement was not ambiguous, and that because the lease terminated when title to the property was vested in the Authority on August 20, 1986, Fibreglas had no compensable interest in the property after August 20, 1986. Edgewater Redev. Auth. v. Fibreglas Fabricators, Inc., 773 P.2d 617, 618-19 (Colo.App.1989). The court of appeals also held that pursuant to the lease agreement Kylberg was entitled to attorney fees and costs.
II.
Fibreglas and Kylberg have maintained throughout this case that the condemnation clause is unambiguous, but each argues that the condemnation clause results in a different legal effect. The trial court found that the condemnation clause was ambiguous because the clause could have more than one legal effect. We conclude that the condemnation clause is not ambiguous.
Interpretation of a written contract and the determination of whether a provision in the contract is ambiguous are questions of law, and this court need not defer to the trial court's interpretation of the contract. See, e.g., Pepcol Mfg. Co. v. Denver Union Corp., 687 P.2d 1310, 1313 (Colo.1984); Buckley Bros. Motors v. Grand Prix Imports, 633 P.2d 1081, 1083 (Colo.1981); Radiology Professional Corp. v. Trinidad Health Ass'n, 195 Colo. 253, 256, 577 P.2d 748, 750 (1978).
In determining whether a provision in a contract is ambiguous, the instrument's language must be examined and construed in harmony with the plain and generally accepted meaning of the words used, and reference must be made to all the agreement's provisions. Radiology Professional Corp., 195 Colo. at 256, 577 P.2d at 750. The mere fact that the parties differ on their interpretations of an instrument does not of itself create an ambiguity. E.g., id. at 256-57, 577 P.2d at 750. A provision in a lease agreement is ambiguous if it is fairly susceptible to more than one interpretation. See Davis v. M.L.G. Corp., 712 P.2d 985, 989 (Colo.1986). If a contract is not ambiguous, extrinsic evidence is not admissible to prove the parties' intent, and the parties' intent must be determined from the terms of the contract. Buckley Bros. Motors, 633 P.2d at 1083; Radiology Professional Corp., 195 Colo. at 256, 577 P.2d at 750.
*375 The condemnation clause unambiguously states in relevant part that if, during the term of the lease agreement, "the entire Leased Premises shall be taken as a result of the exercise of the power of eminent domain or sold to the governmental authority in lieu of condemnation ..., this Lease Agreement shall terminate and the rent shall be apportioned as of the date the governmental authority takes possession" of the premises. The clause is not reasonably susceptible to an interpretation other than that the lease agreement "terminates" when the "governmental authority" takes possession. Neither party suggests that the condemnation clause may be reasonably interpreted in more than one way; rather, the parties disagree only on the legal effect of the clause.
Although the clause may have different legal effects in different jurisdictions, as the trial court noted, the existence of such different legal effects does not render the clause ambiguous for purposes of interpreting the clause. See, e.g., Weil v. Colorado Livestock Prod. Credit Ass'n, 30 Colo. App. 301, 302, 494 P.2d 134, 136 (1971), cert. denied (1972); accord Ryan v. Harrison, 40 Wash.App. 395, 396, 699 P.2d 230, 232 (1985), review denied (1985). Similarly, the absence of a provision in the condemnation clause specifying whether Fibreglas is entitled to share in the condemnation proceeds does not render the clause ambiguous.[5]
III.
The parties dispute the legal effect that should be given the lease agreement. Fibreglas argues that because the clause, and the lease agreement in general, does not specifically exclude Fibreglas from sharing in the condemnation proceeds, as a matter of law Fibreglas is entitled to a portion of the proceeds for compensation for loss of its leasehold interest in the property. Kylberg argues that when the Authority gained title to the property, under the terms of the condemnation clause any leasehold interest Fibreglas held in the property was terminated, and Fibreglas thereafter held no compensable interest in the property.
A lessee generally is entitled to compensation for the condemnation of the lessee's unexpired leasehold interest in property. See Colo. Const. art. II, § 15; Roth v. Wilkie, 143 Colo. 519, 522, 354 P.2d 510, 512 (1960); Alamo Land & Cattle Co. v. Arizona, 424 U.S. 295, 303, 96 S. Ct. 910, 916, 47 L. Ed. 2d 1 (1976). However, it is well established that a lessee may forego his or her right to compensationand permit the landlord to receive all the condemnation proceedswhere the lease agreement contains a legally adequate "condemnation clause" or "automatic termination clause." E.g., United States v. Petty Motor Co., 327 U.S. 372, 376, 66 S. Ct. 596, 599, 90 L. Ed. 729 (1946); see generally 2 Nichols' The Law of Eminent Domain § 5.06, at 5-97 to 5-101 (J. Sackman rev. 3d ed. 1989) (hereinafter Law of Eminent Domain); Restatement (Second) of Property § 8.2 & comment f at 273-74, app. at 285 (1976). A condemnation clause operates to terminate the lease agreement between the landlord and lessee upon the taking of the leased premises through eminent domain. See 2 Law of Eminent Domain, supra, § 5.06[2], at 5-113. The condemnation clause in this caseproviding that if "the entire Leased Premises shall be taken as a result of the exercise of the power of eminent domain or sold to the governmental authority in lieu of condemnation ..., this Lease Agreement shall terminate"approximates typical condemnation clauses. See, e.g., Capitol Monument Co. v. State Capitol Grounds Comm'n, 220 Ark. 946, 948, 251 S.W.2d 473, 475 (1952); State v. LeBlanc, 319 So. 2d 817, 820 (La.Ct.App. 1975); 2 Law of Eminent Domain, supra, § 5.06[2], at 5-113.
Most jurisdictions that have considered the legal effect of a condemnation clause providing only for automatic termination of *376 the lease upon condemnation have held that because the lessee's leasehold interest is destroyed at the time of condemnation, the lessee no longer has any interest in the condemned property for which he or she should be compensated, and the lessee is foreclosed from sharing in the condemnation proceeds. See United States v. Right to Use and Occupy 3.38 Acres of Land, 484 F.2d 1140, 1144 (4th Cir.1973); Select Lake City Theatre Operating Co. v. Central Nat'l Bank in Chicago, 277 F.2d 814, 817-18 (7th Cir.1960); Wessells v. State, 562 P.2d 1042, 1050 n. 30 (Alaska 1977); Capitol Monument Co., 220 Ark. at 948, 251 S.W.2d at 475; City and County of Honolulu v. Market Place, Ltd., 55 Haw. 226, 234, 517 P.2d 7, 15 (1973); State v. Heslar, 257 Ind. 307, 310, 274 N.E.2d 261, 264 (Ind.1971) (dictum); State v. Starzinger, 179 N.W.2d 761, 765 (Iowa 1970); LeBlanc, 319 So.2d at 820; Riedel v. Plymouth Redev. Auth., 354 Mass. 664, 665 n. 2, 241 N.E.2d 852, 853 n. 2 (1968); In re Site for Library in City of Minneapolis, 254 Minn. 358, 361-63, 95 N.W.2d 112, 115-16 (1959); Carroll Weir Funeral Home v. Miller, 2 Ohio St. 2d 189, 193, 207 N.E.2d 747, 750 (1965); Appeal of Scholl, 292 Pa. 262, 264-69, 141 A. 44, 45-46 (1928); J.R. Skillern, Inc. v. leVison, 591 S.W.2d 598, 599-600 (Tex.Ct.Civ.App.1979), review denied (1980); Norfolk S. Ry. Co. v. American Oil Co., 214 Va. 194, 196-200, 198 S.E.2d 607, 609-11 (1973) (dictum); American Creameries Co. v. Armour & Co., 149 Wash. 690, 691, 271 P. 896, 896 (1928); accord 2 Law of Eminent Domain, supra, § 5.06[2], at 5-113 to 5-114; Restatement, supra, § 8.2 comment f, at 274, app. at 285; see also Petty Motor Co., 327 U.S. at 375-76, 66 S. Ct. at 598-99 (Court relied on automatic termination clause to conclude that lessee had no right to share in condemnation proceeds).
This court has not specifically addressed the legal effect of a condemnation clause in a lease agreement providing for the automatic termination of the lease agreement upon condemnation of the leased premises. However, in Leach v. LaGuardia, 163 Colo. 225, 429 P.2d 623 (1967), we considered the effect of a termination clause analogous to a condemnation clause on the right of a lessee to share in condemnation proceeds. In Leach, the lessees asserted that they were entitled to share in the condemnation proceeds awarded by the city and county of Denver after the city and county condemned the leased property sometime after November 7, 1963. The lease agreement, executed in December 1962, provided in relevant part:
[I]t is understood and agreed that in the event the landlord enters into a lease of 25 years or longer [covering the entire demised premises] or in the event the landlord decides to raze the building in which the demised premises are located, this lease may be terminated on ________, or any time thereafter, ... upon giving not less than three months written notice, and said date for said termination under said notice shall be the date of the end of the terms of the lease....
And the Lessor or Lessee is hereby granted the right to terminate this lease upon three (3) months notice in writing to the Lessor at anytime after the first day of January 1963.
Id. at 227, 429 P.2d at 624. The lessees did not dispute that the landlord had given notice to terminate the lease in accordance with the lease agreement, and that the lease was terminated pursuant to the lease agreement on November 7, 1963, prior to the condemnation of the property. This court held that because the lease agreement ended on November 7, 1963, the lessees at the time of condemnation "held no right or interest in the property in question and were not entitled to any portion of the proceeds." Id. at 228, 429 P.2d at 624.
A.
Fibreglas argues that this court should adopt the "modern trend" of cases that have refused to foreclose a lessee from sharing in the condemnation proceeds solely on the basis of a condemnation clause that provides only that the lease terminates upon condemnation (hereinafter "automatic termination clause").
*377 Although Fibreglas asserts that "numerous" cases have joined the "modern trend," Fibreglas cites only two cases, Beaverton Urban Renewal Agency v. Koning, 53 Or. App. 842, 847-49, 632 P.2d 1359, 1362-63 (1981), and Maxey v. Redevelopment Authority of Racine, 94 Wis. 2d 375, 400-04, 288 N.W.2d 794, 806-07 (1980).
In Koning, the applicable lease provision stated that upon condemnation of the leased premises, "this lease may be terminated at the option of either party hereto upon written notice to the other." 53 Or. App. at 845, 632 P.2d at 1361 (emphasis supplied). The court found that neither party had exercised the option to terminate the lease, and applied the well established common-law rule that the lessee is entitled to share in the condemnation proceeds unless the lessee has waived that right in the lease agreement. Id. at 847, 849, 632 P.2d at 1362, 1363.
In Maxey, the lease provision stated in relevant part that if all the "rights, titles, interests and estates" of the lessors and lessees in the demised premises are sold in condemnation proceedings, "such condemnation shall terminate the further liabilities of both the lessors and lessees under this lease." 94 Wis. 2d at 400, 288 N.W.2d at 806 (emphasis supplied). The court held that because the lease agreement did not "explicitly" provide that the lessees would be foreclosed from sharing in the condemnation proceeds, the lessees were entitled to share in the proceeds. Id. at 402, 288 N.W.2d at 807.
Neither case is applicable here. Koning and Maxey did not concern automatic termination clauses. In Koning, the court found that the lease agreement did not terminate until the condemnation because neither party had exercised its right to terminate the agreement prior to the condemnation. In Maxey, the court found that the condemnation terminated only the lessors' and lessees' "liabilities." We can find no holding in either case justifying a departure from the rule of law that an automatic termination clause effects the loss of a lessee's right to share in condemnation proceeds.
B.
Fibreglas next argues that the cases holding that an automatic termination clause validly forecloses a lessee's right to share in condemnation proceeds have "no rational basis and should not be followed." Fibreglas argues specifically that an automatic termination clause is nothing more than a recitation of the common-law rule that the effect of a complete condemnation is to divest both a lessor and lessee of their rights to the property at the time of condemnation, and the recitation of the common-law rule in the lease agreement should not deprive the lessee of the common-law right to share in the condemnation proceeds.
The principles guiding our construction of the lease agreement require that we give effect to each part of the agreement that is capable of rational meaning. See, e.g., Grimes v. Barndollar, 58 Colo. 421, 434-35, 148 P. 256, 261 (1914). While it is true that the common-law rule permits the lessee to share in condemnation proceeds to the extent of his or her leasehold interest, see Roth, 143 Colo. at 522, 354 P.2d at 512 (1960), 2 Law of Eminent Domain, supra, § 5.06[2], at 5-115 n. 44, the parties to a lease agreement may properly agree that the lease agreement shall terminate upon condemnation, and that as a result the lessee shall not be entitled to share in the condemnation proceeds. We thus cannot conclude that the automatic termination clause in the lease agreement between Fibreglas and Kylberg has no effect.
We find it significant that the lease agreement provided that the lease agreement would terminate upon condemnation. By agreeing to this automatic termination clause, Fibreglas contracted away its common-law right to share in the condemnation proceeds. In accordance with the rule followed by a majority of the jurisdictions that have considered similar automatic termination clauses, Fibreglas's leasehold interest in the leased premises terminated at the time of condemnation, and Kylberg was not obligated to share the proceeds with Fibreglas.
*378 We conclude that the court of appeals did not err in holding that Fibreglas is not entitled to share in the condemnation proceeds.[6]
IV.
Fibreglas argues finally that the court of appeals erred in awarding Kylberg attorney fees pursuant to the lease agreement. We agree.
The lease agreement provides that Fibreglas shall pay and indemnify Kylberg for legal costs and charges, including attorney fees, "lawfully and reasonably incurred in obtaining possession of the Leased Premises if, upon expiration or termination of this Lease Agreement Tenant wrongfully holds over or in enforcing any covenant or agreement of Tenant contained in this Lease Agreement." According to this provision, Kylberg was entitled to attorney fees if Kylberg incurred legal expenses in obtaining possession of the "Leased Premises," or in "enforcing any covenant or agreement" contained in the lease.
It is clear that Kylberg did not incur legal expenses in obtaining possession of the "Leased Premises." The term "Leased Premises" is carefully defined in the lease to include the described parcels of land and the buildings and improvements thereon. The lease makes no mention of condemnation proceeds paid as compensation for the leased premises. Furthermore, Kylberg's attorney fees were not incurred because Fibreglas held over. A holdover tenant is one who remains in possession of the premises beyond the expiration of the lease. See Mattas Motors v. Heritage Homes of Nebraska, 749 P.2d 458, 459 (Colo.App.1987); Black's Law Dictionary 658 (5th ed.1979). Fibreglas did not hold over, but immediately surrendered possession of the premises upon condemnation. Therefore, Fibreglas's claim to a portion of the condemnation proceeds did not constitute a holding over.
Kylberg did not incur legal expenses "enforcing [a] covenant or agreement of [Fibreglas]." The covenant in question provided that the lease would terminate upon condemnation of the premises. Fibreglas did not bring suit to challenge the termination of the lease. Fibreglas brought suit to determine the legal effect of the termination on its right to share in the condemnation award. The lease did not specify whether its termination precluded Fibreglas from sharing in a condemnation award, and there is a split of authority on the issue. Compare Pennsylvania Ave. Dev. Corp. v. One Parcel of Land, 670 F.2d 289, 292 (D.C.Cir.1981) and Maxey v. Redev. Auth. of Racine, 94 Wis. 2d 375, 400, 288 N.W.2d 794, 806 (1980) with Direct Mail Servs. v. State of Colorado, 557 F. Supp. 851, 854 (D.Colo.1983), aff'd, 729 F.2d 672 (10th Cir.1984) and Wessells v. State, 562 P.2d 1042, 1052 (Alaska 1977). Because Fibreglas did not agree to refrain from claiming a share of the condemnation award, Kylberg's legal expenses were not incurred enforcing a covenant or agreement of Fibreglas. The court of appeals erred in awarding Kylberg attorney fees pursuant to the lease agreement.
Judgment affirmed in part and reversed in part and case remanded to vacate judgment for attorney fees.
NOTES
[1] See § 31-25-105(1)(e), 12B C.R.S. (1986); §§ 38-7-101 to 38-7-107, 16A C.R.S. (1982 & 1989 Supp.).
[2] Kylberg eventually was awarded $2,265,600 in compensation for the property. See §§ 38-7-102, 38-1-105(3), and 38-1-107, 16A C.R.S. (1982).
[3] The trial court found that the value of the lease for the eight months remaining in the primary term was $24,000, and that Fibreglas was entitled to this amount from the condemnation proceeds.
[4] Kylberg separately appealed the trial court's ruling on assessment of attorney fees and costs because he had already appealed the trial court's ruling on the condemnation-proceeds issue.
[5] Because the clause is not ambiguous, the trial court erred in admitting extrinsic evidence on the issue of whether the parties had intended to share in the condemnation proceedings, and we do not consider the extrinsic evidence in the disposition of this case. See, e.g., Buckley Bros. Motors, 633 P.2d at 1083; Radiology Professional Corp., 195 Colo. at 256, 577 P.2d at 750.
[6] Our holding precluding Fibreglas from sharing in the condemnation proceeds disposes of a related issue on which we granted certiorari whether the trial court erred in allowing compensation only for the primary term of the lease. Because Fibreglas was not entitled to share in the condemnation proceeds, the trial court did not err in ruling that Fibreglas did not have a compensable interest in the renewal options to which it was entitled under the lease agreement. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1887142/ | 316 So. 2d 907 (1975)
Ross CATES, Individually, etc., Plaintiff and Appellant,
v.
BEAUREGARD ELECTRIC COOPERATIVE, INC., et al., Defendants and Appellees.
No. 5061.
Court of Appeal of Louisiana, Third Circuit.
July 30, 1975.
Rehearing Denied August 28, 1975.
*909 John J. Cummings, III, New Orleans, for plaintiff and appellant.
Jones, Kimball, Patin, Harper, Tete & Wetherill by Carl H. Hanchey, Lake Charles, Aycock, Home, Caldwell, Coleman & Duncan by L. E. Hawsey, III, Franklin, John Henry LeBleu, Lake Charles, for defendants and appellees.
Before HOOD, CULPEPPER and WATSON, JJ.
CULPEPPER, Judge.
This suit was originally filed by Ross Cates, individually and on behalf of his minor son, Larry G. Cates, seeking damages for personal injuries sustained by Larry when he came in contact with an energized electric wire on a utility pole owned by the defendant, Beauregard Electric Cooperative, Inc., and situated on the property of the defendant, Cecil Ribbeck. After suit was filed on September 19, 1973, Larry G. Cates became 18 years of age on February 2, 1974, and he was named a party plaintiff. The district judge granted motions for summary judgment in favor of both the electric company and the landowner. Plaintiffs appealed.
*910 The decisive issue is whether defendants are entitled to summary judgment on the grounds that Larry G. Cates was contributorily negligent.
The facts, as shown by the pleadings, depositions, affidavits and other documents, which may be considered for purposes of the summary judgment, are as follows: The defendant, Cecil Ribbeck, owns approximately 70 acres of piney woods land in a rural area near Moss Bluff, Louisiana. The property is bound on the west by a blacktop highway, Perkins Ferry Road, and on the north by Joe Miller Road. There are barbed wire fences along the roads, but none on the other boundaries. On the land is an old farm house, which has been abandoned for 15 or 20 years. The property is uninhabited and unused. It is grown up in bushes, briars and trees.
When the old farm house was in use, the defendant, Beauregard Electric Cooperative, Inc., had erected an uninsulated 7620 volt feeder line from Perkins Ferry Road a distance of about 800 feet to the house. The line was supported by four wooden poles about 28 feet in height, the last pole being near the house. A transformer was attached to the pole near the house at an elevation of about 22 feet. Two insulated copper wires for 110 volt service ran from this transformer to the house.
When the farm house was abandoned in about 1957, the service wires from the transformer to the house were cut, and they hung down from the pole to an elevation of about 10 feet from the ground. The stinger line from the transformer up to the 7620 volt line on top of the pole was disconnected by opening a hot line clamp. The 7620 volt primary line on the top of the pole remained energized. This was the condition of the electrical equipment on September 30, 1972, the time of the accident with which we are involved in this case.
On the date of the accident, the plaintiff, Larry Cates, who was then 16 years of age, and his brother, Ronald B. Cates, 9 years of age, and his friend, Kent Guy, 16 years of age, were riding horses in the area, as they had done many times before. They entered Ribbeck's property through an unfenced portion of the boundary. Their purpose was to pick up some copper wire which they had seen lying on the ground on a previous visit. The shop teacher at their high school had asked the class to bring in copper wire for sale for the benefit of The Future Farmers of America.
The boys first rode to the area where they had previously seen the copper wire lying on the ground, but it was gone. They then went to the old farm house and decided to try to remove the two insulated copper wires hanging down from the transformer. Once before, Kent Guy had tried to shinny up this pole to get these copper wires but he was unable to climb the pole.
Larry Cates decided to climb the pole and get the wire. The deposition of his brother, Ronald Cates, describes what happened as follows:
"Well, once before Kent had tried to climb up a pole and get the copper wire but he couldn't so we were just riding along and they decided they wanted to go over and so then they looked up there and saw that copper wire. So Larry started over there towards the pole and stood up on the saddle and climbed up. And he stuck his left foot on the transformer and his right foot on the bottom ring and he wenthe held around the pole with his right arm, and he reached in his pocket to get the pliers to cut the copper, and he started slipping and he reached up there and grabbed it."
Kent Guy stated in his deposition that after Larry shinnied up the pole and got on the transformer, he heard something cracking and popping and heard Ronnie *911 scream, and then he looked to the top of the pole. Kent describes what he saw as follows:
"Q. What was happening on the pole?
"A. He had his left hand on the wire and the sparks were flying.
"Q. Which wire are you talking about now that he had his hand on?
"A. The wire that goes from pole to pole.
"Q. It would be the wire closest to the top of the pole?
"A. Yes."
As a result of burns received in the accident, Larry Cates lost his left arm at the shoulder, his right arm near the wrist and his left leg. He is scarred over most of his body and he is paralyzed, from the 5th thoracic vertebra down.
Plaintiffs' principal contention is that summary judgment is inappropriate because there are genuine issues as to material facts within the meaning of LSA-C. C.P. Article 966. In their brief, plaintiffs list these issues of fact as follows:
"(1) Status of Larry Cates with reference to the power company;
"(2) Status of Larry Cates with reference to the landowner;
"(3) Negligence of Cecil Ribbeck;
"(4) Negligence of Beauregard Electric Cooperative, Inc.;
"(5) Proximate cause of injury;
"(6) Negligence of Larry Cates;
"(7) Applicability of the doctrine of `attractive nuisance;' and
"(8) Wanton negligence of either defendants."
We will discuss these alleged genuine issues of material facts in the order in which they are listed above.
STATUS AS TO POWER COMPANY
The first alleged issue is the status of Larry Cates with reference to the Power Company. Plaintiffs say there is a fact issue as to whether Larry was a trespasser, a licensee or an invitee, and that this issue is material because the duty of the Power Company toward Larry varies according to his status.
The plaintiff, Mr. Ross Cates, filed in the record his affidavit stating that the property owned by Cecil Ribbeck was used as a "recreational area" by numbers of people who engaged in such activities as picnicking, hunting, fishing, swimming, blackberry picking, horseback riding, hiking and even motorcycle racing. Mr. Cates states in his affidavit that he could produce 50 witnesses who actually used the property for these purposes prior to the date of the accident in 1972. Plaintiffs contend that this affidavit, together with the depositions of Kent Guy and Ronald Cates that they had been on the property many times for the purpose of horseback riding and hunting, are sufficient to show that this was a "recreational area" frequented by children and other people and that there was an implied invitation or at least implied permission by the owner for such use.
Even if the affidavits and depositions are sufficient to raise an issue of fact as to whether young Cates entered the premises as an invitee or a licensee, there is no question that he exceeded the scope of any such implied invitation or permission and became a trespasser, when he began to climb the service pole for the purpose of taking copper wire which he knew was the property of another. The law is that an invitee or licensee loses this status when he goes outside the portion of the premises covered by the invitation or permission, Comment, Land Occupiers Liability to Trespassers, 18 La.L.Rev. 716 (1957); Prosser, Law of Torts, Section 61, at pages 391-92, 4th Ed. (1971); Restatement, 2d, Torts, Section 341, Comments *912 (a)-(c) (1965). In Louisiana this principle has been applied to deny recovery by a tavern patron who entered a wareroom in the rear of defendant's saloon and sat down on a barrel covered with lye, Foshee v. Grant, 152 La. 308, 93 So. 102 (1922); by a super market customer who slipped and fell behind a meat counter, Clement v. Bohning, 159 So. 2d 495 (La.App., 4th Cir. 1964); and by a maid who fell through a sky light in an apartment she was not supposed to clean, Gray v. Elgutter, 5 La.App. 315 (1st Cir. 1926).
In the early case of Lapouyade v. New Orleans Railway & Light Company, 138 La. 237, 70 So. 110 (1915), plaintiff's 17 year old boy was killed by an electric shock when he reached more than six feet up defendant's wooden lamp post on the public street and jerked a wire hanging down from an arc light, his intent being to brighten the light. The court denied recovery on the grounds that the boy was a trespasser, even though he did not climb the pole, as in the present case. The court held:
"We do not think the case is one exactly of contributory negligence. The young man's act was not one of negligence, but of trespass. If a man climbs one of the posts of the defendant company, and lays his bare hand upon a naked wire, and receives a fatal shock, the defense to a suit for his death will not be contributory negligence, but that he was a trespasser, and that his own act caused his death. Stansfield v. Chesapeake Telephone Co., 123 Md. 120, 91 A. 149, 52 L.R.A.(N.S.) 1170. The present case is not so flagrant a one as that. The young man did not climb the post. He only went out of his way to it, and reached up to where the danger lurked; and the danger was not equally evident. But the two cases are analogous in that in both the party injured was a trespasser, and that the proximate cause of his injury was his own voluntary act. In the case supposed, of a person climbing one of the posts, the trespass would be of a more pronounced character than in the present one, and the imprudence greater; but the act in the present case was, none the less, a trespass. Not a trespass, perhaps, for which an action would lie in favor of the defendant company, but still a meddling without right with the property of another, and therefore a trespass. And it was the proximate cause of the injury, for it was the voluntary, unlawful act of a rational person operating upon an already existing condition."
When the hypothetical case suggested by the court in Lapouyade finally arose more than a half century later, the court reached the result suggested, and held that a 14 year old boy who entered an electric sub station, climbed a tower and came into contact with an energized wire was a trespasser, Tooraen v. New Orleans Public Service, Inc., 243 So. 2d 312 (La.App., 4th Cir. 1971).
The courts of other jurisdictions have also concluded that persons who have a right to be on the ground near an electric utility pole become trespassers when they exceed the scope of their invitation or permission by climbing the pole. See Ryckeley v. Georgia Power Company, 122 Ga. App. 107, 176 S.E.2d 493 (1970) (tower on right of way used by children); Crosby v. Savannah Electric & Power Company, 114 Ga.App. 193, 150 S.E.2d 563 (1966) (a pole near vacant lot where children played); Moseley v. Kansas, 170 Kan. 585, 228 P.2d 699 (1951) (pole on city street corner); Urban v. Central Massachusetts Electric Company, 301 Mass. 519, 17 N.E.2d 718 (1938) (pole on playground); Texas Power & Light Company v. Burt, 104 S.W.2d 941 (Texas Civ.App.1937) (tower in public park); Miller v. Suburban Power Company, 41 Ohio App. 70, 179 N.E. 202 (1930) (pole on deceased child's playground); Brown v. American Manufacturing Company, 209 A.D. 621, 205 N.Y.S. 331 (1924) (tower in yard of tenement houses). The rationale of these decisions is *913 concisely stated in Crosby v. Savannah Electric & Power Company, supra, where the court sustained a demurrer by defendant:
"A trespasser is one who, though peaceably, wrongfully enters upon the property of another. In the context here it is one who wrongfully goes upon or climbs the pole of the defendant; or, to state it differently, one who, without authority or permission from the owner, does so. Permission or consent to climb the pole can not be implied, even if the owner may have knowledge that it was customary for children to play in the area where it was located. (citation omitted) Nor would it matter that the children may have been licensees as to the ground where they played, for extension of permission (express or implied) by the owner of the ground to play upon it could not include an extension of permission by the owner of the pole to climb it. . . It could not be assumed that a permission to play upon the land area in the vicinity of the pole would extend to the climbing of the pole to highly dangerous wires some twenty feet above, even if the land and the pole were under common ownership, and much less so when it appears, as here, that the land and the pole were under separate ownership."
Applying these rules of law to the present case, it is clear that even assuming young Cates enjoyed the status of an invitee or a licensee when he entered upon the Ribbeck premises, he lost this status and became a trespasser when he shinnied up the electric utility pole, for the purpose of taking copper wire which he knew belonged to another.
STATUS AS TO LANDOWNER
The next alleged issue of fact is the status of Larry Cates with reference to the landowner. For the reasons stated above, even assuming Larry was an invitee or a licensee when he entered the premises, there is no question that he became a trespasser when he climbed the pole. Therefore, this is not a genuine issue of material fact.
NEGLIGENCE OF CECIL RIBBECK
The next alleged issue of material fact is the negligence of Cecil Ribbeck. Even assuming for purposes of the motion for summary judgment that the landowner, Cecil Ribbeck, was negligent in allowing this unused but energized electric line to remain on his property, or even assuming that he was negligent in any other respect, this issue is not material because we ultimately decide that young Cates, as a matter of law, was guilty of contributory negligence barring plaintiffs' recovery.
NEGLIGENCE OF THE POWER COMPANY
The next alleged issue of fact is the negligence of Beauregard Electric Cooperative, Inc. This defendant has admitted negligence for the purpose of the summary judgment. Its negligence is therefore not a material issue.
PROXIMATE CAUSE OF INJURY
The next alleged issue of fact is the proximate cause of the injury. Assuming, as we have done, for the limited purpose of the summary judgment, that both the Power Company and the landowner were negligent, in leaving this unused 7620 volt line energized from the public road to the pole at the house, after electric service to the house had been discontinued, then there is no question that this negligence was a legal cause of the accident. Larry Cates received the electric shock when he grabbed the 7620 volt line. Hence, this causation issue is not material for the purpose of our consideration of the summary judgment.
*914 CONTRIBUTORY NEGLIGENCE OF LARRY CATES
The next alleged issue of fact is the contributory negligence of Larry Cates. This presents the most serious question for our consideration. In the recent case of Campbell v. American Home Assurance Company, 260 La. 1047, 258 So. 2d 81 (1972) our Supreme Court defined contributory negligence generally as follows:
"Contributory negligence is conduct on the part of a plaintiff in a negligence action that falls below the standard to which a reasonable man should conform for his own protection."
At the time of the accident, Larry Cates was 16 years and 8 months of age. He was in the ninth grade of high school, made average grades and was of normal intelligence. There is no question that under the jurisprudence of Louisiana a youth of this age and intelligence is capable of contributory negligence. Children as young as nine or ten years of age have been held capable of contributory negligence, Young v. Grant, 290 So. 2d 706 (La. App., 1st Cir. 1974).
In deciding whether a 16-year old youth is guilty of contributory negligence, the same rules are applicable as in the case of ordinary negligence, i.e., consideration is given to the youth's age, background, intelligence and all of the surrounding circumstances of the particular case, Butler v. City of Bogalusa, 258 So. 2d 599 (La.App. 1st Cir. 1972), writ denied, 261 La. 544, 260 So. 2d 323.
In the present case it is not necessary for us to consider the fine line of distinction between contributory negligence and assumption of the risk, as the courts have done in some cases. See the recent case of Langlois v. Allied Chemical Corporation, 258 La. 1067, 249 So. 2d 133 (1971), where the court stated that generally a determination of whether a plaintiff has assumed a risk is made by subjective inquiry, whereas contributory negligence is determined objectively under the reasonable man standard. Here, regardless of whether young Cates actually knew or appreciated the danger, there is no question that he did not comply with the reasonable man standard as established in Louisiana jurisprudence for persons who come in contact with electric utility lines. The Louisiana courts have repeatedly held that, in the absence of unusual circumstances, a person who voluntarily places himself in contact with an obvious uninsulated electric line is guilty of contributory negligence, Hebert v. Coca Cola Bottling Company, 272 So. 2d 737 (La.App., 3rd Cir. 1973); Bordelon v. Continental Casualty Company, 229 So. 2d 761 (La.App., 3rd Cir. 1969); Thomas v. Gulf States Utilities Company, 128 So. 2d 323 (La.App., 1st Cir. 1963); Coulon v. City of Alexandria, 44 So. 2d 171 (La.App., 2d Cir. 1950); Nesmith v. Central Louisiana Electric Company, 257 So. 2d 744 (La. App., 3rd Cir. 1972).
There are cases where the person who came in contact with the energized wire was excused from contributory negligence, where the importance and utility of that which he was seeking to accomplish was weighed against the probability of injury to himself, this being one of the broad standards for determining whether he acted as a reasonable man. For instance, in Whitworth v. Shreveport Belt Railroad Company, 112 La. 363, 36 So. 414 (1904) the injured person was excused where he came in contact with a wire while attempting to rescue another; and in several cases workmen have been excused where they were required to work in close proximity to energized lines, Shreveport v. Southwestern Gas & Electric Company, 145 La. 680, 82 So. 785 (1919); Harper v. New Orleans Public Service, Inc., 300 So. 2d 546 (La.App., 4th Cir. 1974); Boure v. New Orleans Service, Inc., 255 So. 2d 776 (La. App., 4th Cir. 1972). The foreman of a crew working on the electric company's substation was excused where previously *915 the work which he had been directed to perform was on de-energized equipment, and he was justified in believing that the work which he was doing was "cold", Cooksey v. Central Louisiana Electric Company, 279 So. 2d 242 (La.App., 3rd Cir. 1973).
In the present case, there were no such exculpating circumstances as those involved in the cases cited above. Here, young Cates was not seeking as an invitee or a licensee to perform some useful purpose, the importance of which can be weighed against the probability of anticipated harm to himself. For the reasons stated in detail above, Cates was a trespasser, who climbed a utility pole for the purpose of taking copper wire which was the property of another. This case falls squarely within the rulings in Lapouyade v. New Orleans Railway & Light Company, supra; Tooraen v. New Orleans Public Service, Inc., supra; and the many cases cited above from other jurisdictions holding that where a person climbs a utility pole with no authority, permission or invitation whatever, he is a trespasser. We find no Louisiana case involving a person who was injured while attempting to appropriate wire from a utility pole. But in Steele v. Lynches River Electric Cooperative, Inc., 259 S.C. 239, 191 S.E.2d 253 (1972), the court, in granting a motion for directed verdict, held as follows in a situation almost exactly like that involved in the present case:
"Respondent was nineteen years of age, married, and had completed the tenth grade. The evidence, viewed in the light most favorable to him, simply shows that he was injured while attempting to cut a short section from electric wires which had been left hanging from a transformer located on one of appellant's transmission poles. There is no testimony that the wires posed any danger to one merely passing by. Respondent came in contact with them only after climbing and standing on top of a nearby barbed wire fence. In doing so, he was attempting to take the wire, which belonged to appellant, for his own use.
"Respondent was an intelligent person and was charged with knowledge that contact with a wire charged with electric current is attended with danger. Under the circumstances, the fact that respondent may not have known the electric wires were actually charged with current does not relieve him of the responsibility for intentionally coming in contact with the wire. The wire which he intentionally caught was hanging from an electric transmission line. This fact was open and apparent, and gave warning of the likelihood that the wires were charged with current. In spite of this fact, respondent stood on top of the fence and caught hold of the wire. His purposeful action in so doing constituted contributory negligence, as a matter of law, and barred him of recovery." (emphasis supplied)
Plaintiffs argue there are circumstances which raise a factual issue as to whether Larry Cates was guilty of contributory negligence, and therefore this issue should be tried on the merits by a jury. Plaintiffs point to the fact that Larry Cates stated in his deposition he had no knowledge that the line was energized. They point to the statements of Larry Cates and Kent Guy that six weeks before the accident they had found some copper wire laying on the ground in the area and had actually touched the wire and moved it from the path of their horses. However, the boys state that on the date of the accident when they went back to pick up this particular copper wire that was on the ground, it was gone. Whether such a copper wire was ever actually on the ground or not, this was not a circumstance on which Larry Cates had a right to rely in assuming, if he did so, that the 7620 volt line on the top of the poles was not energized.
Plaintiffs also rely on the circumstance that Kent Guy says he believed that *916 the lines were de-energized. Guy stated in his deposition that about six weeks prior to the accident, on the occasion when he tried to shinny up the pole but could not do so, he held in his hands the two insulated copper wires which hung down from the transformer, and they were de-energized. Guy stated that on the date of the accident he again held the two insulated lines and they were de-energized. We conclude as a matter of law that the fact that the two insulated copper wires hanging down from the transformer were de-energized, and that Kent Guy and Larry Cates knew this, would not give these youths the right to assume that the 7620 volt primary line above the transformer on top of the poles was also de-energized. The mere existence of an uninsulated electric transmission line on top of these poles constituted adequate notice to Larry Cates, a trespasser, that the line might be energized, Nesmith v. Central Louisiana Electric Company, 257 So. 2d 744 (La.App., 3rd Cir. 1972).
ATTRACTIVE NUISANCE
The next alleged issue of material fact is the applicability of the doctrine of attractive nuisance. This doctrine applies only to children of tender years, who are too young to appreciate the danger, Butler v. City of Bogalusa, 258 So. 2d 599 (La. App., 1st Cir. 1972). It does not apply to a normal youth 16 years of age, Tooraen v. New Orleans Public Service, Inc., 243 So. 2d 312 (La.App., 4th Cir. 1971). Therefore, there is not an issue of fact or law as to the applicability of the doctrine of attractive nuisance. As a matter of law, the doctrine cannot be applicable here.
WANTON NEGLIGENCE OF EITHER DEFENDANT
The last alleged issue of material fact is whether either defendant was guilty of wanton negligence. Of course, even though young Cates was a trespasser, the defendant power company and the defendant landowner owed him the negative duty not to willfully or wantonly injure him, Gotreaux v. Travelers Insurance Company, 299 So. 2d 466 (La.App., 3rd Cir. 1974); Wannage v. Marcantel, 176 So. 2d 5 (La.App., 3rd Cir. 1965); Prosser, Law of Torts, Section 64, at page 436 (3d Ed. 1964). The terms "willful", "wanton", and "reckless" have been applied to that degree of fault which lies between intent to do wrong, and the mere reasonable risk of harm involved in ordinary negligence. These terms apply to conduct which is still merely negligent, rather than actually intended to do harm, but which is so far from a proper state of mind that it is treated in many respects as if harm was intended. The usual meaning assigned to do the terms is that the actor has intentionally done an act of unreasonable character in reckless disregard of the risk known to him, or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow. It usually is accompanied by a conscious indifference to consequences, amounting almost to a willingness that harm should follow. See Prosser, Law of Torts, Section 34, at pages 187-189 (3d Ed. 1964). See also Sullivan v. Hartford Accident & Indemnity Company, 155 So. 2d 432 (La.App., 2d Cir. 1963); Lipscomb v. New Star World Publishing Corporation, 5 So. 2d 41 (La.App., 1st Cir. 1941); Jefferson v. King, 12 La.App. 249, 124 So. 589 (2d Cir. 1929).
As to licensees, the only duty owed by the occupier of the premises is to warn him of any latent, non-apparent dangers or defects which are actually known to the occupier, Gotreaux v. Travelers Insurance Company, 299 So. 2d 466 (3rd Cir. 1974); Cothern v. LaRocca, 255 La. 673, 232 So. 2d 473 (1970). However, no such duty is owed to the treaspasser to warn him of latent, non-apparent dangers or defects in the premises that are known to the occupier. See the cases cited above in our discussion of the status of young Cates as *917 to the power company. Lapouyade v. New Orleans Railway & Light Company, supra and Tooraen v. New Orleans Public Service, Inc., supra, are specific authority for the proposition that there is no duty to warn trespassers of the obvious danger of climbing electric utility poles and coming in contact with uninsulated wires.
Under the undisputed facts of the present case, the strongest argument which could be made that either the power company or the landowner were guilty of wanton negligence is that they knew this electric line on top of the poles was energized and failed to remedy the hazard or to give warning of its presence. Of course, this hazard was not a latent, non-apparent danger, as to which the defendants owed even a licensee the duty of warning. It necessarily follows that there was no duty to warn trespassers of the danger.
Plaintiffs argue that the hazard here was sufficient to constitute a trap. There is authority for the proposition that the occupier of premises cannot deliberately set out traps or spring guns for trespassers who might come on the premises. See the Comment, Land Occupiers Liability to Trespassers, 18 La.L.Rev. 716. It cannot be argued that the hazard in the present case was a trap. This energized wire was 28 feet above the ground and could be reached only by those with the great physical agility and strength necessary to shinny up the pole. And, as stated above, it was not a latent, non-apparent hazard. It was an obvious danger which any reasonable person should have seen and avoided.
IS SUMMARY JUDGMENT APPROPRIATE?
Summary judgment is appropriate when 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." LSA-C.C.P. Article 966. Comment (a) under Article 966 states that the summary judgment procedure was adopted for "its potential for expeditious disposition of frivolous, but well pleaded, demands and defenses."
Of course, we are aware of the jurisprudence under Article 966 et seq. which holds that summary judgments should not be used as a substitute for trial on the merits, and that in case of doubt the motion for summary judgment should be denied, Kay v. Carter, 243 La. 1095, 150 So. 2d 27 (1963) and its progeny.
We are also aware of the general rule that in negligence actions where the question is whether the conduct meets the reasonable man standard, the courts have usually denied motions for summary judgment. See Wright & Miller, Fed. Practice & Procedure, Civil, Section 2729 (Fed. Rule 56).
Whether the reasonable man test presents an issue of fact or an issue of law has been the subject of much discussion in the jurisprudence and by legal scholars. The test for determining whether reasonableness is an issue of fact or an issue of law is that if men of reasonable minds could differ as to the conclusion to be drawn, it is an issue of fact, but if reasonable minds could not differ, then it is a question of law. See Prosser, Law of Torts, 2d Ed., Sec. 36 at pages 208-209.
For the reasons discussed in detail above, we have concluded there is no genuine issue of material fact as to the occurrence of the accident itself. Larry Cates shinnied more than twenty feet up a bare electric utility pole, a feat which required great physical agility. He was a normal intelligent youth, 16 years and 8 months of age. He was charged with knowledge that contact with the electric line on top of the pole could be dangerous. The hazard was open and apparent. When Larry climbed *918 the pole, he was a trespasser, whose conduct had no useful purpose. Under these undisputed facts as to the occurrence of the accident, it is our view that reasonable minds could not differ from a finding that Larry Cates fell below the standard to which a reasonable man must conform for his own protection, and that he was therefore, as a matter of law, guilty of contributory negligence.
For the reasons assigned, the judgment appealed is affirmed. All costs of this appeal are assessed against the plaintiffs appellants.
Affirmed.
WATSON, J., dissents and assigns written reasons.
WATSON, Judge (dissenting):
I cannot agree with the majority opinion which affirms a summary judgment in favor of defendants on the basis of contributory negligence.
Contributory Negligence
First, I do not agree that the question of contributory negligence can be properly decided on a motion for summary judgment.
". . . existence vel non of contributory negligence is a question of fact, and. . . the arbiter of such fact is judge or jury." Odom v. Hooper, 273 So. 2d 510 at 514, 515 (La., 1973).
Odom v. Hooper is particularly apropos since it involves a summary judgment granted on a finding that plaintiff was guilty of contributory negligence as a matter of law. The Court of Appeal affirmed the summary judgment and the Supreme Court reversed, stating:
"Only a trial on the merits will reveal the true facts of an accident; in other words, plaintiff and defendant must have their day in court." 273 So. 2d 515
On the question of whether "reasonableness" is a question of law or fact, Odom v. Hooper bluntly says:
"The reasonableness and prudence of the deceased is a factual matter and must be tried on the merits of this case." 273 So. 2d 515
The majority opinion paraphrases Dean Prosser to the effect that the test of reasonableness, as a question of fact or law, is whether reasonable minds could differ in the conclusion to be drawn. (Does this beg the question?) I note that Dean Prosser was speaking of proof of negligence, not contributory negligence and that he adds, later in his treatise, the following:
"The result of all this is that, while the theory is the same, and the formula put to the jury is the same, the practical application of both is not the same for negligence and for contributory negligence. As to the latter, in part because of these differentiating factors, and in part, perhaps, because of the healthy dislike and distaste which nearly all courts have developed for this defense, the marked tendency has been to let the issue go to the jury whenever it is at all possible."[1]
Therefore, I conclude that the general rule in Louisiana, as announced by the Supreme Court in 1973, is that contributory negligence and "reasonableness" are factual questions to be decided by trial on the merits.
Also, the case before us concerns not a reasonable man, but a reasonable 16-year-old boy who, I submit, might be much more likely to climb a tree or an abandoned pole to collect scrapwire for his school. While a 16-year-old boy may be contributorily negligent, he is not held to the same ". . . degree of prescience, caution and intelligence of an adult," Shally v. N. O. Public Service, Etc., Board, 1 La.App. 770 at 777, affirmed, 159 La. 519, 105 So. 606.
*919 Status of the Boy
Second, the issue of the boy's status as to: (a) the electric company; and (b) the landowner, involves questions of both fact and law.
The majority opinion cites Tooraen v. New Orleans Public Service, Inc., 243 So. 2d 312 (La.App. 4 Cir. 1971) which held that a 14-year-old boy who climbed a seven-foot chain link fence with three strands of barbed wire at the top, embellished with signs reading "Danger High Voltage", and who then climbed a structure inside the fence some 20 feet high was contributorily negligent and could not take advantage of the attractive nuisance doctrine. The instant case, where a youth climbed what may have appeared to him to be an abandoned electric pole, with only one wire still strung and two or three wires dangling down the pole, adjacent to an abandoned farmhouse, presents a considerably different situation factually from Tooraen.
It is significant that Tooraen, on which the majority relies heavily, was not a summary judgment case, but was a review of a case tried on the merits.
The other case on which the majority relies is the 1915 decision of Lapouyade v. New Orleans Railway & Light Company, 138 La. 237, 70 So. 110, which involved not an abandoned pole but a pole on a public street. I note that Justice O'Niell dissented in Lapouyade and I suggest the case does not represent current legal thought.
I think there is a serious question as to whether young Cates was a trespasser as the majority concludes.
I am not certain that the majority considers the difference in status that the boy had as to the power company and the landowner. Can the power company claim he was a trespasser as to an abandoned pole located on someone else's property? Does the trespasser theory under the cases cited by the majority relate to abandoned poles and wires still charged with high voltage? Cf. Langazo v. San Joaquin Light & Power Corporation, 32 Cal. App. 2d 678, 90 P.2d 825 (1939).
In summary, I think it is far from clear that defendants are entitled to summary judgment. Any doubt as to summary judgment is to be resolved in favor of trial on the merits. Moreaux v. American Mutual Insurance Co., 302 So. 2d 686 (La.App. 3 Cir. 1974); Vidrine v. White, 306 So. 2d 465 (La.App. 3 Cir. 1975); writ granted, La., 309 So. 2d 679. The plaintiff may have only a slim chance on the merits, but this Court must not overlook the fact that we are not deciding (or even reviewing) the merits. Summary judgment is not to substitute for trial.
I respectfully suggest that the majority makes a serious mistake in approving a summary judgment in not just a negligence case, but in a contributory negligence case.
For these reasons, I dissent.
NOTES
[1] Prosser, Law of Torts, 4th Ed., § 65, p. 420. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1453336/ | 819 P.2d 1306 (1991)
112 N.M. 748
ECONOMY RENTALS, INC., Plaintiff-Counterdefendant-Appellant,
v.
Sheilah P. GARCIA, individually and as Personal Representative of the Estate of Julian N. Garcia, Deceased, Defendant-Counterclaimant-Crossclaimant-Appellee,
v.
AMERICAN TOYOTA, INC., and Beatriz Rivera, Defendants-Crossdefendants-Appellants.
Nos. 19135, 19136.
Supreme Court of New Mexico.
September 24, 1991.
Rehearings Denied October 21 and November 21, 1991.
*1309 Paul A. Phillips, Albuquerque, for appellant Economy Rentals.
Kemp, Smith, Duncan & Hammond, John P. Eastham, Albuquerque, for appellants American Toyota and Rivera.
The Poole Law Firm, Jason W. Kent, Alma Reyes, Albuquerque, for appellee Garcia.
OPINION
MONTGOMERY, Justice.
The principal issue on this appeal is whether Economy Rentals, Inc., a lessor of real property in Albuquerque, New Mexico, breached its lease by unreasonably withholding consent to its lessee's request for approval of a sublease and then terminating the lease when the lessee failed to cure an alleged default. Resolution of this issue requires us to articulate standards for a determination of what constitutes "reasonable" grounds for withholding consent to a lessee's proposed assignment or sublease. We hold that the trial court properly determined that the lessor's refusal to consent was unreasonable.
This resolution does not, however, dispose of this appeal. Several issues relating to the relief afforded the lessee by the trial court for the lessor's breach, and for the sublessee's concomitant breach of its obligations under the sublease, are raised by the appellants, including issues relating to the compensatory damages awarded the lessee against both the lessor and the sublessee and whether those parties could properly be held "jointly and severally" liable for those damages. In the course of our opinion, we also discuss issues relating to prejudgment interest, punitive damages, and determination of attorney's fees, along with certain other issues of which we dispose summarily. We affirm in part, reverse in part, and remand for further proceedings.
I. Facts and Issues
Effective April 1, 1977, Julian Garcia, an automobile dealer in Albuquerque, leased from Economy Rentals, Inc. ("Economy"), certain premises at 725 Wyoming Boulevard, N.E. (the "Economy property"), for a ten-year period at an escalating rent, reaching $3,000 per month from April 1982 through March 1987. Although effective in April 1977, the lease was not actually signed by Economy and Garcia until June 14, 1979. Contemporaneously with executing *1310 the lease, the parties also executed an "amendment" to the document, under which the lessee could not assign or sublet the premises without the written consent of the lessor, "which consent shall not be unreasonably withheld."
When the lease became effective and for some time before, the Economy property was occupied by American Toyota, Inc. ("American"). American had been formed in 1976 to enable Garcia to acquire a second automobile franchise from Toyota Motors; at that time Garcia already owned and operated another Toyota dealership in Albuquerque. Initially, Garcia owned 90% of the stock in American; the remaining 10% was owned by his cousin, Beatriz Rivera, who was named president and general manager. Pursuant to Toyota Motors' requirement, Rivera also held an option to acquire sufficient additional stock to become the majority stockholder.
Garcia had first acquired a lease on the Economy property in 1976 by assignment (with Economy's consent) from the previous tenant and had placed American in possession under an oral sublease at that time. Thus, when Economy and Garcia executed the new ten-year lease in 1979, American had been occupying the Economy property for at least two years, with Economy's full knowledge and consent. The parties confirmed this arrangement in writing when the lease and the amendment were executed, with Economy consenting to the subleasing of the premises to American on the understanding that Garcia was not relieved of his obligations under the lease.
In 1983 a dispute arose between Rivera and Garcia over Rivera's option to acquire control of American. The dispute apparently was protracted and bitter.[1] It was finally resolved in May 1984 by execution of a series of documents under which Rivera, through American, purchased all of Garcia's stock in American and thereby acquired full ownership of the corporation, and under which Garcia conveyed to American his interest in the Economy leasehold and a related leasehold of adjoining property to the south.[2] This conveyance was effected through a document entitled "Grant of Leaseholds," which provided for American to have possession of each of the two leased tracts for a period of twenty months from May 2, 1984, to December 31, 1985, with the right to extend its possessory interests for not more than an additional six months to June 30, 1986.[3] In exchange *1311 for this transfer of the right to possession, American obligated itself to pay $7,500 per month, with a bonus of an additional $7,500 for the first month, for the period in which it had the right to possession, including any extension. This obligation was represented by a promissory note and provision for another note to cover the extension period. Rivera endorsed both notes as personal guarantor.
The document by which American acquired the Garcias' stock in the corporation, and which outlined the terms of the overall transaction through which the Rivera-Garcia dispute was settled in May 1984, and to which the "Grant of Leaseholds" was an exhibit, was an agreement called the "buy-sell agreement." This document contained various provisions relating to the transaction setting forth the terms of the promissory notes, describing the Grant of Leaseholds, establishing an escrow, providing for mutual releases, and so forth most of which are not material to this lawsuit. One paragraph of the buy-sell agreement, however, warranted that American would pay all rents due to the lessors under the Economy and Rogers leases "and will continue to perform all such other obligations of Lessee [Garcia] as are set forth in said leases as it has performed said obligations in the past." American had always paid the monthly rent (by then $3,000) to Economy under the Economy lease, as well as the $540 per month rent to Rogers under the Rogers lease. The same paragraph also warranted that American and Rivera would not compete with the Garcias if the Garcias attempted to lease or purchase at some future time the properties on which American was currently doing business. American also warranted that at the end of the sublease it would assign to the Garcias any interest it might have in a lease with the owner of a third parcel of land, called the "Janpol property," adjoining the Economy property on the north.
Several months after the May 1984 transaction had closed, Rivera advised Economy that she had become the sole stockholder of American and had obtained a written sublease of the property. Economy apparently then reviewed the Grant of Leaseholds and the buy-sell agreement and notified Garcia on November 2, 1984, that the sublease agreement constituted a breach of the primary lease since it had been entered into without Economy's consent. Three weeks before this notification, Julian Garcia died, survived by his wife and sole beneficiary of his estate, Sheilah Garcia.[4]
Sheilah Garcia responded to the notification, stating that Economy's previous written consent to American as sublessee was still effective, but also asking Economy to reconfirm that consent. Economy refused, without giving any specific reason for its nonconsent at that time. Whether the three reasons ultimately advanced by Economy at trial were reasonable bases for refusing consent is discussed below. Meanwhile, Economy and Garcia remained at loggerheads, and in February 1985 Economy advised Garcia and Rivera that the attempted sublease constituted a breach of the lease and gave Garcia thirty days to cure the alleged default. Garcia insisted that she was not in default; however, on March 13, 1985, Economy declared the lease terminated and informed American that it was in possession of the property as a tenant at sufferance.
One month later, on April 19, 1985, Economy instituted the present action by suing Garcia, American, and Rivera for a declaratory judgment that the lease had been properly terminated. Garcia counterclaimed for a declaration that the termination *1312 was wrongful and crossclaimed for damages from American and Rivera. In June 1986 Garcia amended and supplemented her answer, counterclaim, and crossclaim, seeking damages from Economy as well as American and Rivera. Shortly thereafter, Garcia filed her own action against American and Rivera in an attempt to evict American from the Rogers property and to obtain damages for American's continued occupancy of that property. The two suits were consolidated in April 1988, by which time American had long since vacated both properties and Garcia no longer claimed a right to possession beyond the April 1, 1987, termination date of the original lease.
Meanwhile, after Economy declared the lease terminated in March 1985, American established an escrow account with a local bank, into which it deposited the installment payments due under the promissory notes provided for in the buy-sell agreement as consideration for the Grant of Leaseholds. American expressed concern that it might be exposed to double liability to both Economy and Garcia, so it notified Garcia that she could withdraw the funds on deposit by obtaining Economy's written consent to the sublease. American continued to make the $7,500 monthly payments into the escrow account until June 1986. By then it had deposited a total of $112,500, representing the installments due for the fifteen months (from April 1985 to June 1986) after Economy's purported termination of the lease. During this period, American paid both the primary lease rental of $3,000 per month to Economy and the sublease rental of $7,500 per month to the escrow agent. In July and August 1986, American and Rivera withdrew the funds on deposit and then closed the escrow account.
After expiration of the agreed term of the sublease as provided in the Grant of Leaseholds, American continued to occupy the Economy property under a lease negotiated directly with Economy for the nine-month period beginning July 1, 1986, and ending March 31, 1987. The rent on this lease was $7,000 per month, which American paid directly to Economy. American vacated the Property on March 31, 1987; Garcia was then in the process of locating her businesses elsewhere. Thus, after April 1, 1987, when the Economy-Garcia lease expired and neither Garcia nor American was claiming a right to possession, the only issues remaining among the parties were determination of Garcia's claims for damages against Economy and American/Rivera.
A bench trial of the consolidated actions[5] was conducted in two sessions over six days in November 1988 and August 1989. The court rendered its decision in September 1989, holding generally in favor of Garcia and against both Economy and American/Rivera. The court determined that Economy and American/Rivera were each jointly and severally liable for Garcia's total damages of $271,125, of which $180,000 ($7,500 X 24 months) represented unpaid sublease rent and $91,125 represented prejudgment interest. Prejudgment interest was calculated at the statutory rate of 15 percent annually[6] for each unpaid sublease payment for the period in which the installment was unpaid to the time of trial. The court also awarded punitive damages of $5,000 against Economy and $50,000 against American. In addition to these amounts, the court awarded attorney's fees of $73,000 against American, representing the fees which the court found Garcia had incurred in recovering on the promissory notes, which provided for attorney's fees in the event of default. Rivera, as American's guarantor, was held liable for all amounts awarded against American except the $50,000 punitive damages.
On appeal, Economy and American first join forces to argue that Economy's termination *1313 of the lease was permissible because Economy reasonably withheld consent to the sublease. At first blush, it is not entirely clear why American takes this position, since it acknowledges liability to Garcia in any event for the delinquent $112,500 in promissory note installments from April 1985 to June 1986. American asserts in its brief, and took the position in its requested findings below, that it had always stood ready, willing and able to pay the $112,500 to Garcia if only she would obtain consent to the sublease. On consideration of the period after June 30, 1986, however, it becomes clearer why American claims that Economy properly terminated the lease: If Economy's grounds for refusing consent were unreasonable and its termination of the lease therefore wrongful, the lease remained in effect until April 1, 1987; and, since American's sublease ended on June 31, 1986 (after the six-month extension) but American remained in possession, American was a holdover subtenant and therefore arguably liable for the sublease rent from July 1, 1986, to March 31, 1987.
Economy also urges on appeal that, even if this Court should hold that its termination of the lease was wrongful, there is no basis for the trial court's holding Economy jointly and severally liable for the same damages as those assessed against American.
Both appellants attack the trial court's awards of prejudgment interest and punitive damages, asserting that the promissory notes to Garcia did not provide for interest and that there was no substantial evidence to support the court's findings that Economy's breach of the lease and American's breach of the sublease were willful, in bad faith, and in reckless disregard of Garcia's rights. Additionally, American challenges the trial court's award of attorney's fees, contending that the court's determination of $73,000 as the amount incurred for enforcing the promissory notes was arbitrary, unsupported by substantial evidence, and not based on the applicable law governing an award of attorney's fees.
Both appellants also claim that the trial judge should have recused himself for reasons set out later in this opinion. In addition to this point, American asserts as errors the court's admission of certain evidence and its refusal to rule that the Garcias' unexecuted assignment of the lease in 1983 divested them of any further interest in the property. These issues will be considered summarily toward the end of this opinion.
We turn first to the question whether Economy unreasonably withheld consent to the 1984 Grant of Leaseholds.
II. Breach
Economy's claimed reasons for withholding consent were based on the fact that the sublease ended on June 30, 1986 nine months before the prime lease terminated on April 1, 1987 and on two provisions in the buy-sell agreement: the provision obligating American to refrain from competing with Garcia if the latter attempted to lease or purchase either the Economy property or the Rogers property and the provision requiring American to assign to Garcia at the end of the sublease any interest it might have in the adjoining Janpol property. We shall consider the reasonableness of these objections to the terms of the sublease shortly; first, we examine the law in New Mexico on the subject, with an eye toward any standards of reasonableness it may provide.
In Boss Barbara, Inc. v. Newbill, 97 N.M. 239, 638 P.2d 1084 (1982), this Court first considered a lease provision obligating the tenant not to assign or sublease the leased premises without the landlord's consent. We held, following the minority rule in this country, that even though the lease might not require the landlord's reasons for withholding consent to be reasonable, such a requirement would be read into the lease as part of each party's obligation to deal with the other in good faith and in a commercially reasonable manner. See id. at 241, 638 P.2d at 1086. The landlord in *1314 that case admitted that the proposed subtenant was commercially reasonable and no other reason for the landlord's refusal to consent to the sublease appears in the opinion. We did not articulate any standard of reasonableness except to say, in dictum, that "consent is not to be withheld unless the prospective tenant is unacceptable, using the same standards applied in the acceptance of the original tenant." Id.
Shortly after deciding Boss Barbara, we issued our opinion in Cowan v. Chalamidas, 98 N.M. 14, 644 P.2d 528 (1982). As in Boss Barbara, we held in Cowan that the lessor's withholding of consent to a transfer of the lessee's leasehold interest (there, a proposed assignment) was unreasonable. In Cowan, the lease expressly provided that the lessor's consent should not be unreasonably withheld, and we reiterated that consent was not to be withheld unless the prospective tenant was unacceptable under the standards applied in entering into the original lease. Id. at 17, 644 P.2d at 531. Although in Cowan the lessor claimed that the proposed assignees were financially unstable, we noted that the lessor directly leased the premises to the same "unstable" party within one week of the lessee's abandonment of the premises. Accordingly, the case stands as authority for the proposition that if a claimed reason for refusing consent is merely pretextual, the court will look through the asserted reason to the true motivation and assess the reasonableness of that motivation in light of the facts in the case.
Economy earnestly contends that its claimed reasons for refusing consent were reasonable. It argues that the termination date in the "Grant of Leaseholds" presented it with the very real possibility that American would vacate the premises nine months before the prime lease was to expire, with the result that the property almost certainly would have ceased being used as the site for a new-car dealership. The premises had always (since before the lease began in April 1977) been used for that purpose, and the lease itself provided that "[t]he premises are rented for an automobile showroom, sales and service facility." Economy maintains that it derived maximum economic benefit from the property by devoting it to this use and that the value of the property was jeopardized by the near certainty that, once the sublease ended, the property's use as the location for a new-car dealership would be discontinued.
American reinforces Economy's arguments in this regard, and both appellants join in advancing similar arguments with respect to the other two objectionable (from Economy's standpoint) features of the sublease, found in the buy-sell agreement. The value of the property to Economy, say appellants, was threatened by the non-competition provision in the buy-sell agreement, because American was the most likely party to occupy the property after Garcia's lease had expired. To prevent American from competing with Garcia for a new lease deprived Economy of the opportunity to lease the property to a likely lessee on the most favorable terms. Similarly, the value of Economy's property was enhanced by its proximity to the Janpol property adjoining it on the north; American's agreement to transfer its interest in this property to Garcia at the end of the sublease deprived Economy of the opportunity to consolidate its property with the adjoining tract and thereby assure itself of this enhanced value.
The trial court was not persuaded by these reasons. It found: "Economy had no right in its lease or otherwise to withhold consent for these reasons... . Economy Rentals was not entitled to any of the three privileges or rights ... under its original lease to Garcia * * *." Although the court did not expressly find that Economy's three "reasons" were pretextual, it did find: "A substantial motivation in Economy's refusal to consent to the 1984 sublease was its resentment that the Garcias were to receive $7,500 per month in excess sublease *1315 rental over and above the base rental payable to Economy; Economy wanted to share in the sublease rental." Accordingly, it found, "Economy's attempt to withhold consent to the 1984 sublease was unreasonable and its termination of the Garcia lease was wrongful."
We are required on appeal to indulge all reasonable inferences in support of the verdict or (in a nonjury case) the decision below. Cowan, 98 N.M. at 15, 644 P.2d at 529; Tapia v. Panhandle Steel Erectors Co., 78 N.M. 86, 89, 428 P.2d 625, 628 (1967). We think that a reasonable inference in support of the trial court's decision is that Economy's predominant motive for refusing consent was to share in the increased rental value of its property it wanted to improve its economic position and increase the return it was receiving on the value of the property. Contrary to Economy and American's position on appeal, this inference was supported by substantial evidence. Although the new, direct nine-month lease between Economy and American did not become effective until July 1, 1986, it was negotiated at an earlier time, and something like it could well have been contemplated when Economy terminated the Garcia lease. During the period from Economy's purported termination of the Garcia lease until June 30, 1986, American was paying Economy $3,000 and another, $7,500 into escrow. But thereafter, Economy more than doubled its rent from the property and received $7,000 per month directly from American. Economy's president, Mrs. Kelly, testified that she "always felt [the Garcia lease] was too low a lease." When she offered to settle with Garcia in November 1985, she proposed a new lease, under which Garcia's rent would be increased from $3,000 per month to $6,000 per month and then to $7,200 per month. Clearly there was no objection to American as the subtenant; Economy had unconditionally consented to the oral sublease in 1979 and had consented again to a proposed (but unconsummated) assignment of the lease from Garcia to American in 1983. Economy did not inquire into the terms of the arrangement between Garcia and American on these occasions, and Economy's three professed reasons for objecting to the sublease in 1984 may have appeared to be after-the-fact justifications of its action. In any event, the question is not whether on this record we would have arrived at the same conclusion concerning the operative facts as did the trial court; we must decide whether there was substantial evidence to support the court's findings, and we hold that there was.
This does not mean that we agree with all of the trial court's reasons for finding that Economy's objections to the sublease were unreasonable. In noting that Economy was not entitled under the prime lease to any of the three "rights" or "privileges" on which it relied in objecting to the sublease, the trial court appears to have adopted the view, vigorously pressed on us by Garcia, that the lease itself defines what is a reasonable ground for objecting to an assignment or sublease, and only when a proposed transfer of the lessee's interest would be in violation of the basic lease can the lessor object to the transfer. Garcia relies on our statements in Boss Barbara and Cowan that consent is not to be withheld unless the prospective tenant is unacceptable under the same standards as were applied in accepting the original tenant. She also relies on the following statement from an important case in this area, 1010 Potomac Associates v. Grocery Manufacturers of America, Inc., 485 A.2d 199, 210 (D.C.App. 1984):
[I]t is unreasonable for a landlord to withhold consent to a sublease solely to extract an economic concession or to improve its economic position. The purpose of the consent clause is protection of the landlord in its ownership and operation of the particular property, not protection of the landlord's general economic condition. The landlord has no reasonable basis for withholding consent if the landlord remains assured of all the benefits bargained for in the prime lease.
*1316 [Citations omitted.]
Although we agree with much of the language in the foregoing quotation, we think Garcia's proposed limitation on the right to withhold consent is too narrow. The statement in Boss Barbara, reiterated in Cowan, that a tenant's acceptability must be gauged by the same standards as were applied when the original lease was entered into was not meant to limit all bases for refusing consent to those expressed or implied in the original lease. Many circumstances may change; many conditions originally unforeseen may arise; many facts may develop from the time the original lease is signed to the time of a proposed assignment or sublease that may well justify a lessor's withholding of consent in light of the circumstances obtaining at the time of the proposed transfer and in light of the terms of the transfer itself.
We know of no authority expressly holding that the reasonableness of a refusal to consent to a proposed transfer can only be measured by looking at the terms of the original lease. 1010 Potomac certainly does not so hold. In that case one of the lessors admitted that the sole basis for withholding consent was "essentially economic in nature" i.e., a desire that the lessee split with them the difference between the rent due under the prime lease and that to be received by the lessee under the proposed sublease. 485 A.2d at 204. It was entirely understandable, then, that the court would hold:
In refusing to consent to the sublease, the landlord sought merely to improve upon the bargain negotiated in the prime lease. The original negotiations having established the balance of risks accepted by both the landlord and [the tenant] * * *, the landlord cannot reasonably demand that [the tenant] alter that balance to the landlord's advantage and [the tenant's] disadvantage as the price for the landlord's consent to a sublease to an admittedly suitable subtenant, under conditions that fully protect the landlord's bargain under the prime lease.
Id. at 210.
However, when the landlord refuses consent, not because of a desire to "extract an economic concession or to improve its economic position," but to avoid some threatened economic injury to guard against some deterioration in its economic position the refusal might well be justified and reasonable. Just as there are numerous cases holding, consistently with 1010 Potomac, that securing an economic benefit is not a proper reason for withholding consent e.g., Kendall v. Ernest Pestana, Inc., 40 Cal. 3d 488, 220 Cal. Rptr. 818, 709 P.2d 837 (1985) (in bank); Ringwood Assocs., Ltd. v. Jack's of Route 23, Inc., 153 N.J. Super. 294, 379 A.2d 508 (1977); Krieger v. Helmsley-Spear, Inc., 62 N.J. 423, 302 A.2d 129 (1973) so also are there many cases holding that the landlord's interest in protecting itself from economic disadvantage is legitimate and may furnish a reasonable basis for withholding consent. E.g., United States v. Toulmin, 253 F.2d 347 (D.C. Cir.1958) (insolvent tenant would retain legal title to fixtures already partially paid for by landlord); Fourchon Docks, Inc. v. Milchem, Inc., 849 F.2d 1561 (5th Cir.1988) (lessor would sustain economic loss from lessee's termination of lease on adjoining property and possible devaluation of leased property from short-term sublease); Warmack v. Merchants Nat'l Bank of Ft. Smith, 272 Ark. 166, 612 S.W.2d 733 (1981) (shopping center lessor's acceptance of bank tenant's proposed substitution of savings and loan association would have been to shopping center's disadvantage); Time, Inc. v. Tager, 46 Misc. 2d 658, 260 N.Y.S.2d 413 (1965) ("Balkanization" of leased premises through multiple subtenancies could have been to landlord's disadvantage).
Economy and American rely on Kendall v. Ernest Pestana, Inc. as support for a general standard of "commercial reasonableness" in deciding whether the lessor has unreasonably withheld consent. See Kendall, 40 Cal.3d at 502, 220 Cal. Rptr. at 827, 709 P.2d at 846 (referring to rule that lessor may refuse consent on any commercially reasonable ground). In Kendall, the California Supreme Court followed *1317 Boss Barbara in adopting the minority rule that consent, even apart from a clause in a lease, may not be unreasonably withheld and relied in part, as we did in Boss Barbara, on the covenant of good faith and fair dealing implied in a lease. As we have seen, the court held it was not reasonable for the landlord to deny consent in order to charge a rent higher than that originally contracted for. Id. at 501, 220 Cal. Rptr. at 826, 709 P.2d at 845. The court also took note, however, of another implied covenant in leases that "`neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.'" Id. at 500, 220 Cal. Rptr. at 825, 709 P.2d at 842 (quoting Universal Sales Corp. v. California Press Mfg. Co., 20 Cal. 2d 751, 771, 128 P.2d 665, 677 (1942)). The court in Kendall enumerated several factors to be considered in deciding whether a refusal to consent is reasonable, see id. at 501-02, 220 Cal. Rptr. at 826-27, 709 P.2d at 845-46, such as the proposed assignee or subtenant's financial responsibility, the suitability of the proposed use, the need for alteration of the premises, and the nature of the occupancy. The court did not, however, attempt to formulate a comprehensive test.
The test proposed by Economy and American that a reasonable ground for refusing consent is any ground which is commercially reasonable is obviously unsatisfactory; not only does it beg the question, it also is too broad. Under the decided cases and in light of the applicable implied covenants in a commercial lease, we believe a fair formulation of an appropriate test is the following: A lessor may refuse consent when the proposed assignment or sublease would injure or impair the lessor's interest in the leased property, such as by devaluing it (and thereby reducing the benefits bargained for in the original lease), but not when the lessor seeks to improve its economic position, such as by sharing in the sublease rent or by securing a benefit not bargained for in the original lease. And, in light of existing caselaw and considering the disfavor in which restraints on alienation are viewed,[7] the lessor's interest to be protected by refusing consent must relate to the ownership and operation of the leased property, not the lessor's general economic interest. See Kendall, 40 Cal.3d at 501, 220 Cal. Rptr. at 826, 709 P.2d at 845 ("`[T]he clause is for the protection of the landlord in its ownership and operation of the particular property not for its general economic protection.'") (emphasis omitted) (quoting Ringwood Associates, 153 N.J. Super. at 303, 379 A.2d at 512, and Krieger, 62 N.J. at 423, 302 A.2d at 129).
It is not necessary for us to decide whether any of Economy's professed reasons for refusing consent to the Garcia-American sublease were reasonable under the foregoing standard. At least one of those reasons the short term of the sublease in relation to the remaining term of the prime lease, along with the probable discontinuation of a new-car dealership on the premises would appear to fall within the concern reflected in the standard for the lessor's legitimate interests in maintaining the value of the leased property. However, the trial court found, as we read its findings, that this was not the real or predominant motivation behind Economy's refusal; the real or primary motivation was the forbidden one of increasing the economic benefit from the lease. As such, it was unreasonable. Economy's consequent termination of the lease was therefore wrongful, and Economy thereby breached the lease. We affirm the trial court's decision on this point.[8]
*1318 III. Relief
A. Compensatory Damages for the Sublease Period
Economy vehemently argues that, even if the trial court properly ruled that it had unreasonably withheld consent to the sublease, there was no basis for the court's award of damages to Garcia of $180,000, which represented the monthly sublease rent of $7,500 for the twenty-four months from April 1985 through March 1987. Economy particularly attacks the court's imposition of a judgment decreeing that Economy was jointly and severally liable with American for this $180,000 (plus, as will be discussed below, $91,125 of prejudgment interest). Its argument, however, on this point is rather scant; its sum and substance is: "The Court's Conclusions of Law Nos. 4 and 9 [holding Economy jointly and severally liable for Garcia's compensatory damages] transform the admitted liability of American Toyota on its promissory notes into a joint and several liability of Economy Rentals along with American Toyota. Strange alchemy!"
Analytically, the court may have incorrectly measured the damages sustained by Garcia from Economy's breach of the lease. In the absence of other elements of damage, the tenant is entitled to recover from the landlord the reasonable rental value of the leased premises, less the rent payable to the landlord. See Barfield v. Damon, 56 N.M. 515, 523, 245 P.2d 1032, 1037 (1952); Restatement (Second) of Property § 10.2(1) (1976). Here, the reasonable rental value of the premises was not the $7,500 per month payable by American under the sublease (plus the $3,000 per month that American agreed to pay directly to Economy), because the sublease covered both the Economy property and the Rogers property. Thus, the trial court arguably should have determined the reasonable rental value of the Economy property alone and used that as the measure of the rental value of which Garcia was deprived by Economy's wrongful termination of the lease.[9]
However, the trial court found that Garcia suffered an additional element of damage besides the loss of the property's rental value namely, "American's nonpayment of sublease rental to Garcia." The court found that Economy's termination of the Garcia lease and its later direct lease with American were proximate causes of American's refusal to vacate the property when its sublease expired on June 30, 1986, and proximate causes of American's withholding the sublease rent. The court also found that Economy and American acted "in concert with one another." These findings invoke the additional rule as to measure of damages in Barfield v. Damon that "special damages which are within the contemplation of the parties and resulting directly and proximately from the breach, are recoverable if they can be established with reasonable certainty." 56 N.M. at 523, 245 P.2d at 1037. The rule as stated in the Restatement is that, when the leased property is used for business purposes, damages include "loss of anticipated business profits proven to a reasonable degree of certainty, which resulted from the landlord's default, and which the landlord at the time the lease was made could reasonably have foreseen would be caused by the default[.]" Restatement (Second) of Property § 10.2(5). Although there was no explicit finding that, when the lease was executed in 1977, the parties contemplated that a breach by Economy would result in *1319 American's withholding its sublease (then an oral sublease) payments to Garcia, such a finding would have been well within the evidence; Economy knew from the outset that American occupied the property as Garcia's subtenant, and it was easily foreseeable that a termination by Economy of Garcia's right to possession could result in American's ceasing to pay rent to its sublessor Garcia.
The trial court's finding that Economy's breach proximately caused American's nonpayment of sublease rent was supported by substantial evidence. Among other things, Rivera testified that American withheld the rent because of Economy's termination of the lease, and a statement to the same effect appeared in the escrow agreement between American and the bank. Had Economy not declared the lease terminated, American would have had no excuse for failing to honor the promissory notes and comply with the Grant of Leaseholds obligating it to pay Garcia $7,500 per month. Economy was therefore liable for this item of "special damage" or "loss of profits."
B. Compensatory Damages for the Holdover Period
Both Economy and American argue that the trial court had no basis for awarding compensatory damages of $67,500 against them. This amount represents the monthly sublease rental of $7,500 times the nine months during which American remained in possession after termination of the sublease (from July 1, 1986, to March 31, 1987). American, however, does not seriously dispute that the relationship between it and Garcia after the sublease ended (assuming the primary lease was still in effect) was a holdover tenancy, continuing from month to month. See Hofmann v. McCanlies, 76 N.M. 218, 413 P.2d 697 (1966). As a holdover sublessee, American was obligated to pay the reasonable rental value to its sublessor, Garcia, for the time it held over. Strauss v. Boatright, 160 Colo. 581, 587, 418 P.2d 878, 881 (1966); see T.W.I.W., Inc. v. Rhudy, 96 N.M. 354, 359, 630 P.2d 753, 758 (1981) (owner entitled to fair rental value of leased premises during holdover period). To determine the reasonable rental value, a court can properly use the rental payment in a lease. Didamo v. Tyrol Sport Arms Co., 680 P.2d 1328 (Colo. App. 1984). Here, the sublease rental was $7,500 per month, and the court found that this was in fact the fair rental value of the property.[10] American, therefore, was obligated to Garcia for this amount until it vacated the property it previously had subleased.
As to Economy, the same analysis applies to its liability to Garcia for this nine-month period as has been applied above to its liability for the sublease period. That is, the trial court found that a proximate result of Economy's attempted termination of the lease was American's withholding rental payments that otherwise would have gone to Garcia. This finding together with the fact that Garcia was entitled to possession under the lease and to the reasonable rental value of the leased property until termination of the lease on March 31, 1987 supports the trial court's award of compensatory damages of $67,500 against Economy.
C. Prejudgment Interest
Economy and American attack the trial court's award of prejudgment interest at the statutory rate of 15 percent from the date each $7,500 payment was due to the date of trial. Both appellants base their argument primarily on the fact that the promissory notes under which American was to pay $7,500 per month to Garcia provided for no interest. They contend *1320 that "when an express provision of a contract stipulates that a payment obligation is to bear no interest, there can be no implied contract to pay the interest under [the] statute[,]" citing NMSA 1978, Section 56-8-3 (Repl. Pamp. 1986), and Murdock v. Pure-Lively Energy 1981-A, Ltd., 108 N.M. 575, 775 P.2d 1292 (1989).
The difficulty with this argument is that the obligation to pay prejudgment interest, at least in a case like this, is not based on a contract; it arises by operation of law and consists of damages "to compensate a plaintiff for injuries resulting from the defendant's failure to pay and the loss of use and earning power of plaintiff's funds expended as a result of the defendant's breach." Kueffer v. Kueffer, 110 N.M. 10, 12, 791 P.2d 461, 463 (1990); see also United Nuclear Corp. v. Allendale Mut. Ins. Co., 103 N.M. 480, 488, 709 P.2d 649, 657 (1985); Shaeffer v. Kelton, 95 N.M. 182, 187-88, 619 P.2d 1226, 1231-32 (1980); C. McCormick, Handbook on the Law of Damages § 50 (1935) ("`Interest as damages' is allowed by law, in the absence of any promise to pay it, as compensation for delay in the payment of a fixed sum or delay in the assessment and payment of damages.").
The fact that Section 56-8-3(A) fixes a statutory rate of 15 percent for interest "on money due by contract" does not preclude use of that rate in computing prejudgment interest as damages; the same rate is fixed for interest "on money received to the use of another and retained without the owner's consent expressed or implied[.]" Section 56-8-3(B). Interest as damages is computed at the statutory rate, C. McCormick, supra, § 52, and finding an implied contract to pay interest is not necessary in order to apply Section 56-8-3(B).
The trial court found that the $7,500 monthly payments under the promissory notes were readily ascertainable at the time each became due, which they clearly were. Garcia was therefore entitled to prejudgment interest as a matter of right from American. Kueffer, 110 N.M. at 12, 791 P.2d at 463; Bill McCarty Constr. Co. v. Seegee Eng'g Co., 106 N.M. 781, 783, 750 P.2d 1107, 1109 (1988). Since we have held that Economy was liable for the same damages as American, and since those damages were equally ascertainable by Economy as by American, it follows that the prejudgment interest award against Economy should also be sustained.
D. Joint and Several Liability
Economy objects to the trial court's adjudication of its liability to Garcia as joint and several with that of American. Economy's cryptic comment, however, about this adjudication ("Strange alchemy!") does not enlighten us as to the basis for the objection. In any event, we conclude that the court's declaration of joint and several liability, while perhaps technically not strictly correct, has no practical consequence, at least at present, and provides no basis to upset the court's judgment.
"Joint and several liability" is a term that is used most often in tort law and denotes the kind of liability imposed against multiple actors who, for public policy reasons, are held liable to a victim for all of the victim's damages. See, e.g., NMSA 1978, § 41-3A-1(C) (Repl. Pamp. 1989) (imposing joint and several liability for intentional harm, in situations involving vicarious liability or strict liability for a defective product, or for other public policy reasons). Each actor, however, shares that liability with all other actors, so that the victim may proceed against any of the actors for all of his or her damages but may not have more than a single recovery. Powell v. Powell, 370 P.2d 909, 911 (Okla. 1962). In the law of contracts, joint and several liability usually arises when two or more promisors in the same contract promise the same or different performances to the same promisee. See Restatement (Second) of Contracts §§ 288, 289 (1981). In New Mexico, contractual obligations which *1321 by the common law would be joint only are now by statute joint and several obligations, NMSA 1978, Section 38-4-3 (Repl. Pamp. 1987), and so it may not make much practical difference whether an obligation is described as "joint," "several," or "joint and several."
In the present case, the promises of Economy and American to Garcia appeared in different contracts and promised different performances. Economy promised Garcia the right to possession of the Economy property; American promised, by the Grant of Leaseholds and the promissory notes, to pay sublease rent of $7,500 per month. These promises therefore probably gave rise, technically, to the "several" liability of each promisor, not "joint and several" liability. However, from a nontechnical standpoint, the judgment adjudicating the liability of each promisor established that both parties shared the same liability, and that while Garcia could proceed against either to enforce its liability, she could have but a single satisfaction. From that standpoint, the judgment can be correctly described as adjudicating the joint and several liability of each defendant.
A practical consequence of classifying each defendant's liability could be to determine whether either of them will have the right of contribution or indemnity from the other if one pays all or a portion of the judgment. At common law, parties who are jointly and severally liable on a judgment have no right of contribution; any right of indemnity arises from a suretyship relation established by contract or imposed by law. See Rio Grande Gas Co. v. Stahmann Farms, Inc. 80 N.M. 432, 434, 436, 457 P.2d 364, 366, 368 (1969); see also Restatement of Restitution § 102 & comment a (1937) (tortfeasor cannot obtain contribution from another tortfeasor). Because neither party raises this point, we shall not deal with it, except to express some doubt that Economy could properly be held to pay the entire judgment without a right of indemnity from American. American had the benefit of the sublease, including the holdover tenancy; it seems only fair that it should pay not only the $112,500 as to which it admits liability but also the $67,500 for the holdover rent and the prejudgment interest obligation attached to both amounts.
E. Punitive Damages
The trial court made identical findings with respect to Economy and American's respective breaches of the lease and the sublease that each breach was "willful, in bad faith, and done in reckless disregard of Garcia's rights, thereby entitling Garcia to an award of punitive damages" of $5,000 from Economy and $50,000 from American. Appellants attack these findings as unsupported by substantial evidence.
We have already reviewed the court's findings that a substantial motivation of Economy's refusal to consent to the sublease was its "resentment" that Garcia was to receive $7,500 per month over and above the base rental payable to Economy and that Economy wanted to share in this increased rent. We have also reviewed the court's finding that Economy's termination of the prime lease and new direct lease with American after the sublease expired were proximate causes of American's refusal to vacate at the end of the sublease and of American's nonpayment of the sublease rental and the finding that Economy and American wrongfully acted "in concert" with one another. In addition, the court was entitled to infer from all these facts and from the new direct lease following the sublease, under which American reduced its monthly obligation for occupancy of the Economy property from $10,500 to $7,000, that American had a motive similar to Economy's to improve its economic position. The court did not expressly find that Economy and American colluded to cut Garcia out of the middle and to increase the rent (in Economy's case) or decrease the rental expense (in American's case), but this inference follows readily from the facts it did find.
*1322 As noted above, we indulge on appeal all reasonable inferences in support of the trial court's decision. An award of punitive damages is discretionary and will be upheld if substantial evidence supports the award. Thompson v. Ruidoso-Sunland, Inc., 105 N.M. 487, 493, 734 P.2d 267, 273 (Ct.App. 1987). Of course, the trial court's factual findings must satisfy the legal standard or standards for a punitive damage award.
We recently canvassed the standards in New Mexico for punitive damages in a breach of contract case. Construction Contracting & Management, Inc. v. McConnell, 112 N.M. 371, 375, 815 P.2d. 1161, 1165 (1991). We shall not reiterate those standards here. As we observed there, an intention to inflict harm on the nonbreaching party or conduct which violates community standards of decency (usually manifested by a culpable mental state such as malice, reckless disregard of another's rights, etc.) is a prerequisite for imposition of punitive damages, even when the breach is intentional. Here, there is no evidence that Economy and American breached their respective contracts out of a desire to harm Garcia, but their conduct acting in collusion to improve their economic position can be said to violate community standards of decency, involving as it did the lessor and sublessee's joining forces to exclude the lessee. The trial court acted within its discretion and within the law in awarding punitive damages.
F. Attorney's Fees
The trial court correctly found that Garcia was entitled to recover attorney's fees from American under the promissory notes embodying the sublease rental obligation. The court found that approximately half of the fees incurred by Garcia in the case were necessary to recover the withheld note payments. It therefore halved Garcia's total attorney's fees through the trial, which equaled $146,000 and consisted of $136,000 actually expended plus an estimated $10,000 for preparation and trial. The amount of fees awarded was thus $73,000.
American challenges this award as unsupported by any evidence. American points to cases in which we have enumerated the factors (the so-called "Fryar" factors, from Fryar v. Johnsen, 93 N.M. 485, 488, 601 P.2d 718, 721 (1979)) to be applied in determining the reasonableness of a fee awarded a party in litigation. See, e.g., Lenz v. Chalamidas, 109 N.M. 113, 118, 782 P.2d 85, 90 (1989); Ulibarri v. Gee, 106 N.M. 637, 639, 748 P.2d 10, 12 (1987); Budagher v. Sunnyland Enters. Inc., 93 N.M. 640, 641, 603 P.2d 1097, 1098 (1979). American correctly asserts that the court's determination must be based on substantial evidence, citing Maynard v. Western Bank, 99 N.M. 135, 138, 654 P.2d 1035, 1038 (1982), and argues that the trial court's fee award in the present case was arbitrary and capricious for essentially two reasons: First, there was no evidence addressing the Fryar factors and, second, there was no correlation between the amount awarded and the services necessary to collect on the promissory notes. On the latter point, American insists that it has always acknowledged liability on the notes and that, therefore, very little if any of Garcia's actual fees were incurred in order to enforce payment of the notes.
Garcia responds, first, that the trial court had before it everything necessary to consider the appropriate factors the voluminous record of the pretrial proceedings and the record of the six-day trial itself and, second, that American's acknowledgment of liability rings hollow because Garcia has yet to collect any of the money promised in the notes. Litigation to enforce payment of the notes was necessary, says Garcia, because American had steadfastly refused to pay.
In our view, both parties' positions have some merit. We are reluctant to foster satellite litigation over attorney's fees, and we certainly are prepared to defer to the trial court's discretion in fixing amounts *1323 based on the court's observations of the attorneys before it and the conduct of the trial itself. However, merely halving the total amount of fees incurred in litigation and assigning one of those halves to collection of the promissory notes, without any further explanation, smacks of an arbitrary, "eyeball" estimate. The trial court need not hold an extensive hearing for the purpose of taking evidence on factors already known to it from the trial, such as the time and labor required and the novelty and difficulty of the questions involved; but the court should receive evidence, if offered, on other factors that may not have emerged from the trial, such as the likelihood that the particular employment precluded the lawyer's other employment and the fee customarily charged in the locality for similar services.
Similarly, when the attorney's services are rendered in pursuit of multiple objectives, some of which permit an award of fees and some of which do not, the court must make a reasoned estimate, based either on evidence or on its familiarity with the case at trial, of the proportion or quantum of services that are compensable and award fees only for those services. See Ulibarri, 106 N.M. at 639, 748 P.2d at 12 (award of fees associated with counterclaims and other questions collateral to enforcement of lien for which fees are recoverable must be closely scrutinized and is the exception, not the rule). In this case, the trial court might have found that American's payment of promissory notes was not forthcoming until the reasonableness of Economy's refusal to consent to the sublease was determined; on the other hand, the court might have found that payment of the notes to Garcia would have been made in all events once the possibility of duplicate liability to Economy was eliminated. Some of the issues, such as American's liability for rent during the holdover period, had nothing to do with its liability under the notes. Despite the potential for satellite litigation, such issues cannot be cursorily treated and decided by stroking with a broad brush.
Finally, to ensure that the court does indeed base its determination on evidence adduced or on factors brought out at the trial, to enable the parties to understand the basis for the award, and to permit this Court to perform its reviewing function, the trial court should make findings of fact on those factors established by evidence or developed at trial. See Lenz, 109 N.M. at 118, 782 P.2d at 90. The court's "finding" in this case was too cursory, and too much unrelated to anything developed at trial, to facilitate meaningful review. Accordingly, we reverse the award of attorney's fees and remand to the trial court for a new hearing on the issue of reasonable fees to be awarded Garcia for the services of her attorneys in enforcing the promissory notes. See id. at 119, 782 P.2d at 91. In this hearing, the trial court should also receive evidence on the amount of a reasonable fee to be awarded Garcia for the services of her attorneys on this appeal, insofar as those services relate to enforcement of the notes.
IV. Other Issues
American raises two issues on which it claims to be entitled to reversal. The first relates to the trial court's admission of "parol evidence" on the subject of who was supposed to obtain Economy's consent to the Grant of Leaseholds. The subject arose at the closing of the buy-sell agreement in 1984, when one of American's attorneys allegedly stated that American would "take care" of obtaining Economy's consent to the sublease, despite the provision in the agreement that Garcia would obtain the consent. The trial court made several findings to the effect that American waived this requirement, relying in part on the alleged statement by American's attorney. We, however, have not relied on these findings for our conclusion that Economy, not Garcia, breached the lease. The fact that, as between Garcia and American, Garcia was obligated to obtain Economy's consent does not mean that when Garcia failed to do so i.e., failed to *1324 obtain a consent which Economy was not, on these facts, legally entitled to withhold Garcia thereby breached the lease. The issue is irrelevant to our disposition of this appeal; and if there was error in the admission of this "parol evidence" which we doubt the error was harmless. See SCRA 1986, 1-061.
American's second issue relates to the effect of the 1983 "assignment" of Garcia's interest in the Economy property. This was the document, signed by Economy but not by Garcia, under which Economy consented for a second time to American's possession of the Economy property. American contends that the document, though not signed by Garcia, was nevertheless effective, based in part upon one of Garcia's attorney's statements that Garcia's failure to sign the document did not affect the substantial rights of the parties. However that may have been, the subsequent 1984 transaction, in which the parties' (Garcia and American's) antecedent claims were compromised and released, clearly superseded their prior dealings and negotiations. By the Grant of Leaseholds, both parties Garcia and American reaffirmed the status quo ante: that Garcia was lessee and sublessor and American was sublessee of the Economy property. As with the question of who was to obtain Economy's consent, the question on the effectiveness of the 1983 "assignment" is irrelevant.
Finally, both Economy and American assert error because the trial judge refused to recuse himself when, after the trial, Garcia remarked to the judge that he might acquire an interest in some property involved in another case over which the judge was presiding and to which Garcia was a party. After this incident, Economy and American moved that the judge recuse himself; the court then held a hearing and entered findings of fact and conclusions of law, ruling that Garcia's remark was intended by her to be, and was understood by the judge to be, facetious. The court ruled that under all of the circumstances surrounding the remark an informal posttrial conference, the presence of adverse parties, the understanding on the part of everyone who heard it that the remark was intended as facetious and part of the good-natured bantering in which everyone was engaged the remark did not create an appearance of impropriety and that there would be an unnecessary waste of judicial resources if the court's decision, which had already been announced, were vacated.
The court did not abuse its discretion. See State v. Fero, 105 N.M. 339, 343, 732 P.2d 866, 880 (1987); Martinez v. Carmona, 95 N.M. 545, 550, 624 P.2d 54, 59 (Ct.App. 1980), cert. quashed, 95 N.M. 593, 624 P.2d 535 (1981).
The judgment is affirmed in part and reversed in part, and the cause is remanded to the district court for further proceedings in conformity with this opinion.
IT IS SO ORDERED.
SOSA, C.J., and RANSOM, J., concur.
NOTES
[1] In connection with the parties' efforts to resolve the dispute, American and Rivera in June of 1983 submitted to Garcia a proposed assignment of Garcia's interest in the Economy lease, consented to by Economy. However, Garcia refused to execute this assignment and subsequently notified Rivera that the rent on the oral sublease would be increased. The dispute continued, with Garcia terminating American's oral sublease in March 1984. Shortly thereafter, the dispute was resolved by execution of the documents described in the text.
[2] This related leasehold on the south existed by virtue of another lease to Garcia from the owners of the premises at 707 Wyoming Boulevard, N.E., Mr. and Mrs. Rogers (the "Rogers property"). Garcia had leased the Rogers property in 1976 for approximately a ten-year period (expiring simultaneously with the Economy lease on April 1, 1987) for $540 per month. American's Toyota dealership occupied both the Economy property and the adjoining Rogers property.
[3] The parties disagree over the proper characterization of this "Grant of Leaseholds" i.e., whether it was a transfer of the Garcias' leasehold rights in exchange for the "business loan" reflected in the promissory notes, or whether it was a sublease of the premises with the rent payable as stipulated in the promissory notes. The trial court held that the document created a sublease, and we think this was clearly correct. Since the Garcias transferred less than their entire leasehold interest in each property, by granting American the right to possession for less than the full term of the primary lease, the transfer was a sublease, not an assignment. See R. Schoshinski, American Law of Landlord and Tenant § 8.11 (1980). The consideration for the transfer was the first promissory note (for $157,500), which was payable in installments, the first installment being $15,000 and each of the remaining nineteen installments being $7,500, for the duration of the initial twenty-month period of the grant. The installment payments did not bear interest. The "Grant of Leaseholds" provided for an extension of the leasehold estate for up to six months for an additional price equal to $7,500 times the number of months of the extension, the additional price also payable in monthly installments of $7,500 each, without interest. The substance of the transaction was clearly to confer on American the Garcias' right to possession under the Economy lease; as such (and not being an assignment), it was a sublease. The parties' briefs do not explain why the transaction was structured in this particular way.
[4] References in this opinion to "Garcia" are either to Julian, before his death on October 11, 1984, or to Sheilah thereafter, as the context may require.
[5] Garcia's claims in the second action, involving her claimed right to possession of the Rogers property, were moot at this point.
[6] Under NMSA 1978, § 56-8-3 (Repl. Pamp. 1986).
[7] See Boss Barbara, 97 N.M. at 241, 638 P.2d at 1086 (reasonable restraints upon alienation of property are to be strictly construed).
[8] This disposition makes it unnecessary for us to rule on the trial court's other reasons, argued at some length in the parties' briefs, for its holding that Economy improperly withheld consent to the sublease.
[9] There was evidence that that rental value was probably about $7,000 per month. The sublease rent was $7,500 per month, and the rent payable for the Rogers property was $540 per month. In her settlement proposal to Garcia in November 1985, Mrs. Kelly proposed that the rent on the Economy property be increased over time to $7,200 per month. And in the agreement negotiated directly between Economy and American for the nine months after June 30, 1986, the rent was fixed at $7,000 per month. The evidence easily would have supported a finding that Garcia's damages flowing from Economy's breach were $4,000 per month ($7,000 rental value less $3,000 rent payable), rather than the $7,500 per month actually awarded by the trial court.
[10] Once again, since the sublease covered both the Economy property and the Rogers property, it is not entirely accurate to say that $7,500 was the fair rental value for American's holdover on the Economy property. However, the parties make no mention of this distinction and, in any event, American's right to possession derived from the preexisting sublease with Garcia; the rent under that sublease was $7,500 per month. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2456899/ | 308 S.W.2d 39 (1957)
Francis RODRIGUES, Appellant,
v.
The STATE of Texas, Appellee.
No. 29193.
Court of Criminal Appeals of Texas.
November 6, 1957.
Rehearing Denied January 8, 1958.
J. B. Sallas, Crockett, A. L. Lowrey, Marion G. Holt, Nacogdoches, for appellant.
Bob Murphey, Nacogdoches, Leon B. Douglas, State's Atty., Austin, for the State.
WOODLEY, Judge.
The offense is rape; the punishment, 25 years.
The indictment alleged that appellant made an assault upon the prosecutrix who was under 18 years of age, and did ravish and have carnal knowledge of her, she not being his wife.
The prosecutrix testified that she did not consent to the act of intercourse, while appellant denied the act.
In his charge to the jury, a conviction was authorized upon a finding that appellant obtained carnal knowledge of the girl with or without her consent, she being under 18 years of age and not being his wife.
The evidence established the age of the prosecutrix as 15 years. Testimony was offered in appellant's behalf which, if accepted by the jury, was sufficient to show or raise a reasonable doubt as to her previous chastity, and the State countered with proof of her good reputation for virtue and chastity.
Appellant objected to the charge because the court failed to submit to the jury as an affirmative defense the provision of Art. 1183, P.C., "* * * provided that if she is 15 years of age or over the defendant may show in consent cases she was not of previous chaste character as a defense."
*40 We have concluded that the charge omitted should have been given, and that the court's failure to do so was error calculated to injure the rights of appellant.
Whenever the State seeks a conviction for the offense of rape of a female between the age of 15 and 18 years, not the wife of the accused, without allegation and proof that carnal knowledge was obtained without her consent by force, threats or fraud, then the prior unchastity of the prosecutrix is available to the defendant and is a defense under Art. 1183, P.C. This we understand to be what the statute refers to as "in consent cases."
It is true that the prosecutrix denied that she consented to the act of intercourse, but the court authorized a conviction without any finding as to force being used and whether the prosecutrix consented or not. To such a charge previous unchastity of the prosecutrix was a defense and should have been so submitted. Norman v. State, 91 Tex. Crim. 486, 239 S.W. 976; Stewart v. State, 148 Tex. Crim. 480, 188 S.W.2d 167; Graves v. State, 161 Tex. Crim. 16, 274 S.W.2d 555.
The judgment is reversed and the cause remanded.
On State's Motion for Rehearing
DAVIDSON, Judge.
The state insists that the use of the word "ravish" in the indictment in connection with the allegation of carnal knowledge of the prosecutrix was sufficient to support a conviction for the offense of rape by force, and that we erred in holding that the unchastity of the prosecutrix was a defense in the case.
The word "ravish" implies force and want of consent, and its use in the indictment in connection with the allegation of rape of a female between the ages of 15 and 18 years, as here, renders the indictment sufficient to support a conviction for rape by force as well as for statutory rape. Dyer v. State, Tex.Cr.App., 283 S.W. 820; Patton v. State, 105 Tex. Crim. 128, 287 S.W. 51; France v. State, 148 Tex. Crim. 341, 187 S.W.2d 80.
The word "ravish" is not, however, descriptive of the offense, and it is therefore not necessary that force be proven in order to sustain a conviction under such indictment. Id.
The use of the word "ravish" by no means precluded a conviction for statutory rape, under the indictment. A conviction could be had thereunder for either rape by force or for statutory rape. Dyer v. State, supra.
Where the indictment alleges statutory rape and the charge authorizes a conviction for that offense and the facts show that the prosecutrix was between the ages of 15 and 18 years, the previous unchastity of the prosecutrix may be shown as a defense.
We remain convinced of the correctness of our original holding.
The state's motion for rehearing is overruled. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1133867/ | 430 P.2d 781 (1967)
78 N.M. App. 284
STATE of New Mexico, Plaintiff-Appellee,
v.
Tommy SANCHEZ, Defendant-Appellant.
No. 43.
Court of Appeals of New Mexico.
June 30, 1967.
James A. Parker, Albuquerque, for appellant.
Boston E. Witt, Atty. Gen., Donald W. Miller, Asst. Atty. Gen., Santa Fe, for appellee.
OPINION
WOOD, Judge.
A jury convicted defendant of unarmed robbery. His appeal raises three issues; one is dispositive. That issue is whether defendant's motion for a directed verdict should have been sustained.
Juan Marrujo was using a restroom in a bar. Defendant entered the restroom, took a wallet containing money from Mr. Marrujo's pocket and backed out of the restroom. Defendant started running when the victim yelled.
No weapon was used. No blows were struck. No artifice was employed to obtain the wallet. Mr. Marrujo knew the defendant; however, no words were spoken.
Mr. Marrujo testified that defendant "* * * put his hand in back of me and took my purse, put his hand in my pocket."
The victim testified that in taking the wallet, defendant put his fist against Mr. Marrujo's back; he also testified that he didn't know whether a fist was made because defendant was behind him.
As defined in § 40A-16-2, N.M.S.A. 1953:
"Robbery consists of the theft of anything of value from the person of another or from the immediate control of another, by use or threatened use of force or violence."
Thus, robbery may be committed (1) by use of force or violence or (2) by threatened use of force or violence. As explained *782 in 2 Wharton's Criminal Law and Procedure, § 554:
"It is essential that the defendant accomplish the taking of the property by means of force or violence or by intimidating or putting the victim in fear. The requirement is stated in the disjunctive so that the offense is committed if either force or fear is present though not both. * * *"
The force or intimidation is the gist of the offense. Mitchell v. State, 408 P.2d 566 (Okl.Crim. 1965).
Defendant contends that the evidence fails to establish that either force or fear was used, that his crime, if any, was larceny rather than robbery.
The only evidence bearing on the question of force or fear is the testimony that defendant put his fist against the victim's back. We do not know the manner in which this was done; we do not know the victim's reaction to this act. Does the fist against the back, without more, constitute the force or fear sufficient to sustain a robbery conviction?
Where force is charged, the issue is not how much force was used, but whether the force was sufficient to compel the victim to part with his property. 2 Wharton, supra, § 555.
Where fear or intimidation is charged, "* * * It is necessary to show that the circumstances were such as to cause a reasonable man to apprehend danger and that he could be reasonably expected to give up his property in order to protect himself. * * * That is, it is essential to show that the defendant did acts or said things which reasonably induced fear, and that the victim gave up his property because of the apprehension of danger caused by the defendant." 2 Wharton, supra, § 557.
Thus, the force or fear must be the moving cause inducing the victim to part unwillingly with his property. State v. Parsons, 44 Wash. 299, 87 P. 349, 7 L.R.A., N.S., 566 (1906). It must overcome the victim's resistance. Montsdoca v. State, 84 Fla. 82, 93 So. 157, 27 A.L.R. 1291 (1922). It must compel one to part with his property. Harris v. State, 118 Tex.Cr.R. 597, 39 S.W.2d 888 (1931). It must be such that the power of the owner to retain his property is overcome. People v. Williams, 23 Ill.2d 295, 178 N.E.2d 372 (1961).
There is no direct evidence that the fist in the back caused the victim to part with his property. From the fist in the back, we cannot infer that the victim was compelled to part with his wallet or that he apprehended danger. See Gonzales v. Shoprite Foods, Inc., 69 N.M. 95, 364 P.2d 352 (1961).
The situation here is comparable to those pickpocket or purse snatching cases, where even though there was some touching or jostling involved as the property was taken, the crime was larceny because of the absence of force or fear. See McClendon v. State, 319 P.2d 333 (Okl.Crim. 1957); Harris v. State, supra; Polk v. State, 157 Tex.Cr.R. 75, 246 S.W.2d 879 (1952); Hammond v. State, 121 Tex.Cr.R. 596, 49 S.W.2d 779 (1931); Jones v. Commonwealth, 115 Ky. 592, 74 S.W. 263 (1903); Colby v. State, 46 Fla. 112, 35 So. 189 (1903). Compare State v. Parsons, supra; Montsdoca v. State, supra.
The motion for directed verdict questioned the evidence to support the charge of unarmed robbery. The motion is to be determined by viewing the evidence in the light most favorable to the State. State v. Hinojos, 78 N.M. 32, 427 P.2d 683 (1967). So viewed, the motion should have been sustained. There is neither evidence nor inference that the wallet was obtained by use or threatened use of force or violence.
The judgment and sentence is reversed. The cause is remanded with instructions to set aside the judgment, dismiss the charge of unarmed robbery and discharge the defendant from custody.
It is so ordered.
HENSLEY, C.J., and SPIESS, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1133869/ | 941 So.2d 1214 (2006)
Frank BARANEK, et al., Appellants
v.
AMERICAN OPTICAL CORPORATION, et al., Appellees.
Nos. 4D05-9 to 4D05-94.
District Court of Appeal of Florida, Fourth District.
November 15, 2006.
*1215 David A. Jagolinzer, Case A. Dam and James L. Ferraro of The Ferraro Law Firm, Miami, for appellants.
Albert H. Parnell, Nathan M. Thompson and Evelyn M. Fletcher of Hawkins & Parnell, LLP, Atlanta, Georgia, for appellees Bayer Cropscience, Inc., Dana Corp., Dow Chemical Co., Ericsson, Inc., Flowserve Corp., Maremont Corp., Union Carbide Corp., and Zurn Industries, Inc.
STEVENSON, C.J.
Frank Baranek and more than eighty others filed suits in Palm Beach County against more than fifty defendants, seeking damages for injuries associated with asbestos exposure. The trial court dismissed the claims on forum non conveniens grounds. In this consolidated appeal, the plaintiffs/appellants challenge the manner in which the trial court conducted its analysis under Florida Rule of Civil Procedure 1.061 and Kinney System, Inc. v. Continental Insurance Co., 674 So.2d 86 (Fla. 1996), and the sufficiency of the evidence supporting that analysis. For the reasons discussed below, we reverse the order of dismissal and remand for further proceedings consistent with this opinion.
Forum Non Conveniens Generally
"Forum non conveniens is a common law doctrine addressing the problem that arises when a local court technically has jurisdiction over a suit but the cause of action may be fairly and more conveniently litigated elsewhere." Kinney, 674 So.2d at 87 (footnote omitted). The doctrine "serves as a brake on the tendency of some plaintiffs to shop for the `best' jurisdiction in which to bring suit." Id. In Kinney, our supreme court found that the demands being placed on Florida's courts by the bringing of claims that did not have a substantial connection to the state warranted modification of Florida forum non conveniens law. Id. at 88. Thus, the supreme court adopted the four-part federal standard:
"[1] As a prerequisite, the court must establish whether an adequate alternative forum exists which possesses jurisdiction over the whole case. [2] Next, the trial judge must consider all relevant factors of private interest, weighing in the balance a strong presumption against disturbing plaintiffs' initial forum choice. [3] If the trial judge finds this balance of private interests in equipoise or near equipoise, he must then determine whether or not factors of public interest tip the balance in favor of a trial in [another] forum. [4] If he decides that the balance favors such a . . . forum, the trial judge must finally ensure that plaintiffs can reinstate their suit in the alternative forum without undue inconvenience or prejudice."
Id. at 90 (quoting Pain v. United Technologies Corp., 637 F.2d 775, 784-85 (D.C.Cir. *1216 1980)). This four-part test now appears in Florida Rule of Civil Procedure 1.061.
The Proceedings Below
More than ninety complaints against the same fifty-three defendants, seeking damages for asbestos-related injuries, had been filed in the asbestos division of the Palm Beach County circuit court. Counsel for the plaintiffs was the same in all of these cases. Four of the defendants filed an untimely motion to dismiss on forum non conveniens grounds and a fifth defendant joined in the motion. Around this same time, Judge McCarthy, who was in the midst of a trial involving an asbestos claim brought by an Alabama resident for exposure that took place outside of Florida, became concerned about the number of out-of-state asbestos filings. Before the untimely motion to dismiss could be heard, Judge McCarthy sua sponte issued an order directing the plaintiffs to show cause as to why their cases should not be dismissed on forum non conveniens grounds. Following the hearing, the trial court retained jurisdiction over the one case alleging exposure in Palm Beach County, transferred eleven cases to other Florida counties, and dismissed eighty-three cases. This appeal involves only the eighty-three dismissed cases.
The bulk of the information concerning the plaintiffs comes from the "exposure sheets" appended to the complaints. Of the eighty-three plaintiffs, none reside in Florida. Thirty-five are Alabama residents who suffered all their asbestos exposure in Alabama. Twenty-one are Alabama residents who suffered most of their exposure in Alabama and none in Florida. Three are Alabama residents who suffered substantial exposure outside of Alabama, but none in Florida. Thirteen are Alabama residents who suffered some exposure in Florida. Four are Wisconsin residents who suffered all their exposure in Wisconsin. One is a Wisconsin resident who alleges exposure in Wisconsin from 1973 to 1990 and exposure in California, Illinois, and Jacksonville, Florida, during the years 1969-1973. Four reside in Maine, Rhode Island, and Pennsylvania and suffered all or most of their exposure in the northeast, but none in Florida. Two are Kentucky residents who suffered most of their exposure in Kentucky, but none in Florida.
The plaintiffs' complaints allege the defendants are foreign corporations, amenable to service in Florida. And, in opposing dismissal, the plaintiffs asserted five of the defendants, Bigham Insulation and Supply Company ("Bigham"), Metropolitan Life, Goodyear Tire & Rubber Company, Exxon Mobil, and Westinghouse Electric Corporation, had business locations in Palm Beach County, offering web site print-outs reflecting Palm Beach County addresses. Additionally, during the hearing precipitating the dismissal, an objection filed by Bigham's counsel, asserting the company conducted its business entirely within the State of Florida and was not amenable to service elsewhere, was offered. Bigham's counsel was not, however, present for the hearing or, for that matter, any other hearing during the preceding four years of litigation. The "exposure sheets" of a number of plaintiffs, however, alleged exposure to Bigham products in states other than Florida.
With this evidence before him, the trial judge determined dismissal was appropriate as to the eighty-three cases. As for the first Kinney factor, adequate, alternative forum, the order of dismissal details the law governing amenability to service of process and personal jurisdiction for the states of Alabama, Wisconsin, Rhode Island, Kentucky, Pennsylvania, California, New Jersey, New Hampshire, and Massachusetts and concludes an adequate, alternative *1217 forum exists for each of the eighty-three cases dismissed. The lower court next found the "private interests" factor favored dismissal as access to evidence was no greater in Palm Beach County, and to the contrary, access to witnesses, job sites, and treating medical providers would be greater in the alternative forums. With respect to the "public interests," the trial judge found that the cases had no connection to Palm Beach County and yet trials in the myriad pending cases would consume enormous judicial resources at the expense of Palm Beach County taxpayers. Finally, the court concluded the eighty-three plaintiffs could reinstate their claims in the alternative forums without undue prejudice, relying upon that portion of Kinney providing that a party moving for dismissal on forum non conveniens grounds will be deemed to have stipulated that, in the alternative forum, the action will be treated as though it had been filed on the date it was filed in Florida. Despite the discretion afforded trial judges in this arena, we are obliged to reverse the dismissal of the eighty-three cases as the evidence before the lower court was insufficient to support a finding that an adequate, alternative forum, wherein the claims could be re-instituted, existed. See Fla. R. Civ. P. 1.061(a) (stating that "decision to grant or deny the motion for dismissal rests in the sound discretion of the trial court, subject to review for abuse of discretion"); Ira Mex, Inc. v. Se. Interior Constr., Inc., 777 So.2d 1107, 1108-09 (Fla. 4th DCA 2001).
The existence of an adequate, alternative forum is critical to the forum non conveniens analysis; if there is no adequate, alternative forum, the inquiry ends and dismissal is not proper. See, e.g., Sanwa Bank, Ltd. v. Kato, 734 So.2d 557, 562 (Fla. 5th DCA 1999). "Ordinarily, this requirement will be satisfied when the defendant is `amenable to process' in the other jurisdiction." Kinney, 674 So.2d at 90 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 506-07, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)). Here, though, there are fifty-three defendants; thus, in order for the case to be dismissed from the Palm Beach County circuit court's docket, there must be another jurisdiction that is able to exercise personal jurisdiction over all the defendants named by the plaintiff. See Fla. R. Civ. P. 1.061(a)(1); Kinney, 674 So.2d at 90. The trial judge found Alabama would provide an alternative forum for seventy-two of the cases, Wisconsin an alternative forum for five, Rhode Island an alternative forum for two, Kentucky an alternative forum for two, and Pennsylvania, California, New Jersey, New Hampshire, and Massachusetts an alternative forum for one each.[1] In so doing, the trial judge made no specific findings regarding the defendants' activities or actions in the proposed forum state; rather, each paragraph addressing the respective state's long-arm statutes and requirements for the exercise of personal jurisdiction simply begins with the finding "[u]nder the allegations of the plaintiffs' complaints, defendants are amenable to service of process in [insert state] and subject to the jurisdiction of the [insert state] courts."
The difficulty with the trial court's conclusion that these states will provide an adequate, alternative forum is that there was simply insufficient evidence before the court to permit a conclusion that the plaintiff would be able to bring suit against each of the fifty-three defendants in that alternative forum. The defendants/appellees suggest the exposure sheets attached *1218 to each complaint provide sufficient information to demonstrate each defendant is amenable to service of process in these other states as the "allegations of widespread, repeated exposure to [d]efendants' products in the alternative jurisdiction were a reasonable basis on which to find that these alleged exposures were not isolated or unusual incidents but were instead indicative of purposeful activity directed toward the alternative forums." The exposure sheets for each plaintiff list the defendant's name, the type of product, the location of the job site where the exposure occurred, and the time frame during which the exposure occurred. This information, though, tells us only where the products wound upnot how they got there. And, without knowing the nature of the business activities that resulted in a product's presence in a particular location, there is simply not enough evidentiary support to find that all the defendants purposefully availed themselves of the markets of the alternative forum states and all will be amenable to process in those states. See, e.g., World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (addressing "purposeful availment" and looking to whether product's being in forum state is the result of the defendant's efforts to serve, directly or indirectly, that market); Paz v. Brush Engineered Materials, Inc., 445 F.3d 809, 813 (5th Cir.2006) (discussing "purposeful availment" in terms of whether defendant sold product knowing it would be used in the forum state); Ruiz de Molina v. Merritt & Furman Ins. Agency, Inc., 207 F.3d 1351, 1357 (11th Cir.2000) ("The stream of commerce test for jurisdiction is met if the nonresident's product is purchased by or delivered to a consumer in the forum state, so long as the nonresident's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there for claims arising out of that conduct.").
The case of Dennis Boyd, a Maine resident for whom the trial court found New Hampshire to be an alternative forum, is illustrative. Boyd's exposure sheet reflects he was exposed to "asbestos containing packing and gaskets" manufactured by A.W. Chesterton Company while on board the USS Independence in Norfolk, Virginia, and while at Simplex Wire & Cable in Newington, New Hampshire. His exposure at Simplex began in January 1979 and ended in December 1980, and only it can provide support for the trial court's inherent finding that the New Hampshire courts may assert jurisdiction over A.W. Chesterton Company. The trial court's order provides the following with respect to New Hampshire law:
A court must engage in a two-step analysis to determine whether jurisdiction over a nonresident defendant comports with due process: first, does the defendant have "minimum contacts" with the forum state, and, second, does assertion of personal jurisdiction offend traditional notions of fair play and substantial justice. Lex Computer & Management Corp. v. Eslinger & Pelton, P.C., 676 F.Supp. 399 (D.N.H.1987).
For purposes of jurisdiction under a long-arm statute, minimum contacts are established when a defendant "purposefully directs" his activities to residents of the forum state, and the litigation results from alleged injuries that "arise out of or relate to" those activities. Id.
All we know from the exposure sheet is that a product made by A.W. Chesterton Company found its way into a building in Newington, New Hampshire, and that plaintiff Boyd was in that building. We do not know whether A.W. Chesterton Company ever engaged in business in New Hampshire, marketed to New Hampshire, *1219 or engaged in business with some other party and placed its product into the stream of commerce knowing the product would likely end up in New Hampshire. Consequently, the information supplied by the exposure sheet is insufficient to conduct the analysis required under the very New Hampshire law the court found applicable.[2]
The parties' arguments concerning Bigham and even some of the authority cited in the trial court's order further illustrate the point. The plaintiffs/appellants insist Bigham is not subject to personal jurisdiction in any state other than Florida, pointing to an objection filed by its counsel attesting the company does not do business in any state other than Florida and has no offices outside of Florida. The defendants/appellees insist, and the trial court found, that this is inconsistent with the allegations of the plaintiffs' complaints alleging exposure in Alabama and other states. These arguments, though, beg the questionhow did Bigham's products wind up in these other states? There is no evidence on this issue and this is the critical issue for assessing whether Bigham can be sued in Alabama and these other states, i.e., whether Bigham purposefully availed itself of the privilege of doing business in these other forums or engaged in activity such that it was foreseeable that its product would enter these other forums. Page nine of the order appealed cites Sells v. International Harvester Co., 513 F.2d 762 (5th Cir.1975), for the proposition that "it did not violate due process to require a manufacturer to defend a products liability action in Alabama because the manufacturer sold its product to a national distributor knowing the product would be used in all states." Here, neither the allegations of the complaint nor the exposure sheets provide any indication that the defendant companies sold their product to a national distributor knowing the product would be used in all states.
Apart from the lack of evidence supporting a finding that each of the fifty-three defendants will be amenable to service of process in the alternative forum, there is another obstacle to dismissal in this case. The plaintiffs/appellants argue that the alternative states will not provide an "adequate" forum due to the running of the relevant statutes of limitation. The trial court addressed this matter in factor four, which requires the judge to ensure that the suit can be reinstated "without undue inconvenience or prejudice," see Fla. R. Civ. P. 1.061(a)(4), and concluded such factor did not preclude dismissal as Kinney holds that every motion for dismissal on forum non conveniens grounds will be deemed to stipulate that the action will be treated as though it had been filed in the alternative forum on the date it was filed in Florida. Here, though, the dismissal on forum non conveniens grounds was not precipitated by a motion filed by the defendantsrather, it was brought about by the judge. And, while a few defendants had earlier filed an untimely motion for dismissal on forum non conveniens grounds, not all defendants joined in the motion. In fact, defendant Bigham objected. The trial court's order fails to address this issue and nothing in Kinney or rule 1.061 purports to authorize the trial court to require a non-moving, objecting defendant to waive a statute of limitations defense or to stipulate that it will treat the claim, once re-filed in the alternative forum, as filed on the same date it was filed in Florida. Indeed, subsection (b) of rule *1220 1.061 provides that "[a] forum-non-conveniens dismissal shall not be granted unless all defendants agree to the stipulations required by subdivision (c) and any additional stipulations required by the court." (emphasis added).
For the reasons discussed, the order of dismissal is hereby reversed and the matter remanded for further proceedings. Our reversal is without prejudice to the trial court's right to revisit this issue and, again, order dismissal provided that the parties present evidence establishing the individual plaintiffs can bring suit against all of the defendants in the alternative forums and that the statute of limitations issue is adequately addressed to ensure the plaintiffs are not denied a remedy. As a consequence of the possibility that these issues will again be before the trial court, we note that we find no fault with the trial court's analysis regarding the second and third Kinney factors nor do we find merit in any other issues raised and not specifically addressed in this opinion.
Reversed and Remanded.
SHAHOOD and MAY, JJ., concur.
NOTES
[1] These numbers add up to more than the eighty-three dismissed cases as the trial court found that, for some plaintiffs, there was more than one possible alternative forum.
[2] We should also point out that Boyd's exposure sheet does not reflect exposure in New Hampshire as to all defendants. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1135565/ | 698 So.2d 730 (1997)
Joseph C. KAVANAUGH, et ux., Plaintiffs-Appellants,
v.
Warren LONG, M.D., Defendant-Appellee.
No. 29380-CA.
Court of Appeal of Louisiana, Second Circuit.
August 20, 1997.
*732 Nelson, Hammons & Self by John L. Hammons, Shreveport, for Plaintiffs-Appellants.
Blanchard, Walker, O'Quin & Roberts by Lawrence C. Pettiette, Jr., Joseph S. Woodley, Shreveport, for Defendant-Appellee.
Before NORRIS, BROWN and STEWART, JJ.
NORRIS, Judge.
The plaintiff, Joseph Kavanaugh, appeals a judgment based on a jury verdict that dismissed his medical malpractice and intentional tort claims against Dr. Warren Long. For the reasons expressed, we affirm.
Factual synopsis
Kavanaugh sustained an on-the-job neck injury in March 1983.[1] This resulted in pain in his neck and pain radiating down his left arm. His treating physician, Dr. Thomas Edwards, admitted him to Bossier Medical Center and secured the defendant, Dr. Long, for consultation. Dr. Long performed a myelogram which showed a "large defect at C5-6 on the left"; he diagnosed a ruptured disk and recommended a diskectomy with a fusion of the C5 and C6 vertebrae. Kavanaugh eventually scheduled this surgery for April 19, 1983, to be performed by Dr. Long at Bossier Medical Center.
Prior to surgery, Dr. Long wrote a progress note stating that he was admitting the patient for a C-HNP (cervical herniated nucleus pulposus) at C5-6, and Kavanaugh testified that he understood he was to have an operation at that level. The admission summary sheet also shows that the procedure was to be performed at C5-6.
Dr. Long later admitted, however, that the marker needle was inadvertently placed in Kavanaugh's C6-7 interspace (as noted in a pre-operative X-ray interpreted by radiologist Dr. Bruce Brian); he removed that disk instead of C5-6, and fused the C6 and C7 vertebrae. On the date of surgery he dictated the following records: an admit history referring to a soft disk at C6-7; a physical report referring to an anterior cervical fusion and diskectomy at C6-7 (also mentioning a problem at C5); and an operative report listing the diagnosis of a disk at C6-7 and describing the procedure he utilized to remove that disk and fuse the vertebrae. Dr. Long sent a specimen identified as "herniated disk C6-C7" to pathology and wrote an operative progress note stating that he performed an ACF (anterior cervical fusion) at C6-7. Post-operative X-rays by Dr. Brian and Dr. B.R. Siebenlist confirmed that the disk removed was C6-7. Dr. Long admitted that his office received these radiology reports, as well as the operative report, within a week, but he did not advise Kavanaugh, either in the hospital or at any subsequent time, that he had operated on the wrong disk.
Dr. Long dictated his discharge summary on June 4. He testified that on that date, he finally reviewed and signed his prior reports that were included in Kavanaugh's hospital chart and altered several (the history, progress reports, and portions of the operative report) to read "C5-6," the intended surgical site, instead of "C6-7," the actual site. He also altered Dr. Brian's X-ray report of April 19, without that doctor's consent. Dr. Long testified that he thought he was correcting these records to reflect the actual site. However, he did not correct the physical report, the anesthesia record or the nurses' notes; these still accurately reported that the operation *733 was at C6-7. The discharge summary, dictated after he had reviewed these records and altered some of them, erroneously states the operation was at C5-6.
At his first two post-operative office visits, Kavanaugh reported relief from his arm pain, but lingering paresthesia in his left thumb; on his final post-op visit in late August, he complained of neck pain.[2] Because he was dissatisfied with Dr. Long, Kavanaugh skipped a September post-op visit and never returned. Dr. Long's office records include a notation that the office phoned him on September 23, 1983, but this was not really corroborated.[3] Kavanaugh's last documented communication with Dr. Long's office is a May 1984 letter requesting a worker compensation form.[4] Dr. Long subsequently maintained he was unaware that he had operated at the wrong level until he gave a deposition in 1991.
Kavanaugh went back to his original treating physician, Dr. Edwards, in July 1984, over a year after surgery. At this time he was still having neck and shoulder pain, the same complaints as before surgery; nevertheless, he had resumed his work as a heating and air contractor at Barksdale AFB. Dr. Edwards ordered a "cervical series" and, later, a CT scan, neither of which showed any evidence of a fusion at C5-6; he advised Kavanaugh on July 20, 1984, that apparently the fusion had been "absorbed." In spite of X-rays and the CT scan inconsistent with the history of a fusion, Dr. Edwards maintained he did not contact Dr. Long or review the hospital records.[5]
Because of continued symptoms, Dr. Edwards referred Kavanaugh to Dr. Donald Ray Smith in September 1984. Dr. Smith testified that at the time, the patient gave him a history of surgery at C6-7, and that he discussed this fact with Kavanaugh; however, Dr. Smith's contemporaneous notes do not refer to any particular level. Dr. Smith's September 18 letter to Dr. Edwards stated, based on the patient's comments and review of Dr. Edwards's July 1984 X-ray, that the surgery was probably at C6-7, but there were still osteophytes at the C5-6 level. Kavanaugh testified that in the September 1984 visit, Dr. Smith discussed the problems at C5-6, where Kavanaugh always thought his problems were, and that the doctor's dictation referring to C6-7 was wrong.
Kavanaugh continued to work but his condition gradually deteriorated. For several years he treated regularly with Dr. Edwards, who ordered an MRI in late August 1989. Kavanaugh returned to Dr. Smith on September 8, 1989. Dr. Smith testified that he reviewed the MRI and report and discussed the findings fully with the patient. He testified that advised Kavanaugh that he definitely had a fusion at C6-7, that he could not discern any evidence of a fusion at C5-6, and that there were osteophytes at C5-6 which could be remedied by fusion. Dr. Smith essentially corroborated this in a letter to Kavanaugh's employer, in which he recommended an anterior cervical diskectomy and fusion. In November 1989 Dr. Edwards declared Kavanaugh totally disabled, and he has not worked since then.
*734 Kavanaugh testified that after he left his job, the Office of Workers' Compensation wanted the test results and reports regarding his disability. He testified that he went to Dr. Edwards's office and collected his file on November 30, 1989, intending to deliver it the next day. That evening, however, he opened the file and read the August 1989 MRI radiology report, which found "solid bony fusion at C6-7, disk herniation at C5-6." He testified that only then did he realize that he had received a fusion at C6-7 in 1983, and still had a herniated disk at C5-6.
Procedural history
Kavanaugh filed his petition for a Medical Review Panel in Bossier Parish on October 22, 1990.[6] Dr. Long urged that the request came over three years after the alleged malpractice occurred and was therefore barred by La. R.S. 9:5628. The Bossier Parish District Court, however, overruled the exception, citing evidence that Dr. Long concealed his error from the patient as sufficient to invoke the doctrine of contra non valentem.[7] The MRP decided in February 1993 that Dr. Long breached the appropriate standard of care by failing to assure that he operated on the right level and by not advising Kavanaugh that the operation was wrong. The MRP could not decide, however, whether Kavanaugh was disabled or permanently impaired as a result of Dr. Long's conduct.
The instant suit against Dr. Long followed in April 1993. The petition alleged both malpractice (operating at the wrong level, failing to detect the error, failing to treat the ruptured disk at C5-6) and intentional tort (altering medical records, concealing the error from the patient, misleading the patient as to his condition). Joseph Kavanaugh claimed damages for pain and suffering, mental distress, residual and permanent injury and disability, loss of income and earning capacity, and past and future medicals. Dorothy Kavanaugh claimed damages for loss of consortium, loss of support, and interference and impairment of the marital relationship. Dr. Long requested a jury trial on all issues.
The matter was tried over five days in November 1994. In opening remarks counsel conceded, and in testimony Dr. Long admitted, that he breached the standard of care by operating at the wrong level; however, they steadfastly denied concealment. During trial, the plaintiffs filed a motion for directed verdict on the issue of liability, an exception of res judicata, and motions to enforce and make executory the Bossier Parish judgment that overruled the exception of prescription.[8] The District Court denied these motions except to say that the prior ruling on the exception was "recognized in accordance with the law." The District Court also ruled that the "fact sensitive issue of prescription and contra non valentem "should go to the jury.
In response to special interrogatories, the jury found:
(1) Do you find that Dr. Long knew that he operated at the wrong level and intentionally kept that information from Joseph Kavanaugh? No.
(1A) Do you find that Joseph Kavanaugh brought this action within one year from the date he knew or should have reasonably known that Dr. Long performed surgery at the wrong level? No. * * *
(6, 7)Do you find that Dr. Long committed an intentional act that caused damage to Joseph Kavanaugh? No. * * *[9]
The District Court rendered judgment in accord with these interrogatories, dismissing the malpractice claim as prescribed, and dismissing the intentional tort claim on its merits. The plaintiffs' motion for JNOV or a new trial was denied with written reasons.
*735 Discussion: Trial of peremptory exception
By his eleventh and twelfth assignments of error Kavanaugh urges the District Court erred in permitting the jury to decide Dr. Long's exception of prescription.[10] He contends that matters raised by the exception are not part of the merits of the case and thus must be resolved by the court alone, not the jury; in support he cites Elzy v. ABC Ins. Co., 472 So.2d 205 (La.App. 4th Cir.), writ denied 475 So.2d 361 (1985). He adds that the court does not invade the province of the jury by making a factual determination on the trial of the exception. McGehee v. Brown, 3 La. Ann. 272 (1848). Dr. Long argues that when the facts raised by the plaintiff's case in chief and by the defendant's exception are identical, those facts can be decided by the jury. Anderson v. Collins, 26,142 (La.App.2d Cir. 1/6/95), 648 So.2d 1371, writs denied 95-0629, 95-0783 (La.4/21/95), 653 So.2d 576.
If the peremptory exception has been pleaded in the answer, or subsequently, but at or prior to the trial of the case, it shall be tried and disposed of either in advance of or on the trial of the case. La. C.C.P. art. 929 B. In such a case the district court has discretion to refer the exception of prescription to the merits. American Bank v. Saxena, 553 So.2d 836, 842 (La.1989); Knighten v. Knighten, 447 So.2d 534 (La.App. 2d Cir. 1984). By contrast, if the exception is pleaded before the answer, it must be tried in advance of the trial of the case. La. C.C.P. art. 929 A; Babineaux v. Pernie-Bailey Drilling Co., 261 La. 1080, 262 So.2d 328 (1972); Martinez v. Breaux Mart Inc., 93-2257 (La.App. 4th Cir. 1/13/94), 631 So.2d 471; but see Short v. Griffin, 95-0680 (La.6/16/95), 656 So.2d 635.
Dr. Long raised prescription as an affirmative defense in his answer to the instant petition. The case is therefore distinguished from Elzy v. ABC Ins. Co., supra, as that opinion states that the exception was filed prior to answer.
The recent case of Short v. Griffin, supra, was a claim for accountant malpractice, to which all defendants filed exceptions of prescription, some prior to and others after their answers. The district court referred all the exceptions to the merits. On supervisory writs, the court of appeal ruled that those exceptions filed prior to answer could not be referred to the merits. On review, the Supreme Court held that the district court has the discretion to refer to the merits even those exceptions of prescription filed prior to the answer. Describing the trial court's discretion as "long-recognized," the court stated, "`the evidence on prescription is so intertwined with the evidence of the merits' that it would be a waste of judicial economy to try the two matters in separate proceedings."[11]
This reasoning applies a fortiori in the instant situation, when the contested exception was raised in the answer. In fact, the rationale of Short v. Griffin is essentially the same as this court applied in Anderson v. Collins, supra, when we reversed a trial judge's decision to withhold a peremptory exception of res judicata from the jury. We stated:
These allegations formed part of the plaintiff's case against the defendant attorneys for malpractice and wrongdoing. The factual proof necessary to sustain these allegations substantially overlapped the proof which plaintiffs would have to have made as a defense to the exception of res judicata. Thus, the question is raised whether these factual issues should have been placed before the jury on the merits, or before the judge pursuant to the "motion in limine." Under these circumstances, *736 and considering the well established principle that the right to a jury trial is fundamental and favored, we hold that the trial court erred in taking these factual issues away from the jury and deciding them in advance of trial[.] 26,142 at p. 13, 648 So.2d at 1381.
In the instant case the District Court ruled that the "fact sensitive issue of prescription and contra non valentem" should go to the jury. This is consistent with the Supreme Court's analysis in Short v. Griffin, supra, and this court's analysis in Anderson v. Collins, supra, and is not an abuse of discretion. The factual issues of concealment and discovery are closely intertwined and completely overlap the issue of prescription. We perceive no abuse of discretion in the District Court's action. These assignments lack merit.
Application of contra non valentem
By his first assignment Kavanaugh urges the district court and the jury erred in failing to conclude that contra non valentem should apply to Dr. Long's exception of prescription. We note, however, that the court substantially instructed the jury that contra non valentem applies:
[A]n exception may exist to the time limitations if the defendant has intentionally concealed an act of malpractice. In considering whether the defendant intentionally concealed malpractice, you may consider such factors as: fraud, misrepresentation, breach of duty to disclose or ill practice.
In medical malpractice cases which are filed more than three years from the date of the alleged malpractice, the plaintiff bears the burden of proving that the case has not been filed too late. The plaintiff can only prove that the case has not been filed too late if he proves that the physician intentionally concealed the facts necessary for plaintiff to recognize that he may have a medical problem related to Dr. Long's treatment.
R.p. 152.
The jury verdict form tracks these instructions. Although we find the court properly charged the jury, we note that the law in this area is not entirely settled.
The statute creating time limits for medical malpractice actions is La. R.S. 9:5628, and it provides in pertinent part:
A. No action for damages for injury or death against any physician * * * whether based upon tort, 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 latest within a period of three years from the date of the alleged act, omission, or neglect.
B. The provisions of this Section shall apply to all persons whether or not infirm or under disability of any kind and including minors and interdicts.
Despite statutory time limits, the jurisprudence has held that prescription does not run against a person who is unable to act ("contra non valentem agere nulla currit praescriptio"). The doctrine interrupts or suspends prescription in four general situations:
(1) Some legal cause prevents the courts or their officers from taking cognizance of the plaintiff's action;
(2) Some condition coupled with the contract or connected with the proceedings prevented the creditor from suing;
(3) The debtor himself has done some act effectually to prevent the creditor from availing himself of his cause of action; and
(4) The cause of action is not known or reasonably knowable by the plaintiff, even though his ignorance is not induced by the defendant.
Corsey v. State, 375 So.2d 1319 (La.1979); Whitnell v. Menville, 540 So.2d 304 (La. 1989). Notably, R.S. 9:5628 expressly prohibits the application of the fourth category of contra non valentem to medical malpractice cases. Whitnell v. Menville, supra.
In Rajnowski v. St. Patrick's Hosp., 564 So.2d 671 (La.1990), a plurality declined to *737 apply the third category of contra non valentem to a malpractice case because it found the defendant doctor's failure to disclose test results did not constitute material misrepresentation. The concurring justice stated that even if the test results were material information and the doctor's action prevented the plaintiff from timely filing suit, the doctrine of contra non valentem could not be invoked because the doctor did not intentionally conceal the information. In short, the majority did not find the necessary factual background to justify an application of the third category of contra non valentem.
The Supreme Court recently reiterated this in Fontenot v. ABC Ins. Co., 95-1707 (La.6/7/96), 674 So.2d 960, by stating:
Heretofore, this court has failed to expressly and directly declare that the third category of contra non valentem applies to medical malpractice cases. * * * The court has nevertheless examined the applicability of the third category to facts in medical malpractice cases. * * * Assuming that the third category of contra non valentem does apply to medical malpractice actions under La. R.S. 9:5628, the court will determine whether its application has been triggered under the facts and circumstances of the present case.
95-1707, at p. 5; 674 So.2d at 963 (citations omitted).
The court in Fontenot proceeded to find that the doctor's conduct (telling the plaintiff that the numbness in her leg would resolve by itself) did not amount to concealment. The Supreme Court has never actually applied the third category of contra non valentem to suspend or interrupt R.S. 9:5628 prescription because it has never found facts to support a finding that the defendant concealed material information from the patient. See also Whitnell v. Silverman, 95-0112 (La.12/6/96), 686 So.2d 23.[12]
While the Supreme Court has "assumed" that the third category would apply to concealment cases, this does not mean that prescription is suspended indefinitely. The statute still requires that petition be filed within one year from the discovery of the malpractice or concealment. Dissenting from the denial of a remand in Whitnell v. Silverman, supra, Justice Lemmon explained the relationship between concealment and discovery:
The doctrine of contra non valentem is based on the principle that prescription does not run against a party who is unable to act. The doctrine prevents the commencement or the running of liberative prescription under certain circumstances. While the fourth category of contra non valentem focuses on the reasonableness of the creditor's inaction, * * * the third category focuses on the conduct of the debtor that effectually prevents the creditor from asserting a cause of action timely. There is a vast difference between the situation in which a doctor negligently fails to learn material information about the patient's condition and the situation in which the doctor knows material information and breaches his or her duty to disclose the information to the patient. In the former situation, the doctor commits a single breach of duty to diagnose correctly the patient's condition which is known neither by the doctor nor the patient, and the fourth category of contra non valentem would apply but for R.S. 9:5628. In the latter situation, the doctor, who is in a fiduciary relationship with the plaintiff, has a continuing duty to disclose the known material information, not only on the day that the doctor learns the information, but also on every day thereafter until the patient learns the information from another source. Breach of this continuing duty is analogous to a continuing tort, and a new cause of action (with a new prescriptive or peremptive period) arises each day that the doctor fails to disclose, either intentionally or negligently, the material information known by the doctor but not by the patient, and therefore effectually prevents the patient from availing himself or herself of the cause of action.
*738 95-0112, dissent at p. 5-6, 686 So.2d at 34 (emphasis added).[13]
Thus in a medical malpractice case in which the health care provider intentionally conceals or withholds material information with which the patient could learn of the malpractice, the third category of contra non valentem applies to suspend the three-year prescriptive period of R.S. 9:5628, but only until the patient knew or should have known of the malpractice or concealment from other sources; at that point, the one-year prescriptive period of R.S. 9:5628 applies. The one-year period is the same as that imposed on all tort victims under La. C.C. art. 3492; cf. Taylor v. Giddens, 92-3054 (La.5/24/93), 618 So.2d 834.
The one-year prescriptive period begins to run when the patient discovers, or should have discovered, the facts upon which the cause of action is based. In re Medical Review Panel of Howard, 573 So.2d 472 (La. 1991). Constructive knowledge sufficient to begin the running of prescription requires more than a mere apprehension that something might be wrong, but "a reasonable basis for filing suit against a certain defendant" is sufficient. Fontenot v. ABC Ins. Co., supra. In other words, the simple knowledge that "an undesirable condition has developed at some time after the medical treatment" does not equate to knowledge of everything to which inquiry may lead. Griffin v. Kinberger, 507 So.2d 821 (La.1987); Harlan v. Roberts, 565 So.2d 482 (La.App. 2d Cir.), writ denied 567 So.2d 1126 (1990). The issue is the reasonableness of the patient's action or inaction, in light of his education and intelligence, severity of symptoms, and the nature of the defendant's conduct. See Griffin v. Kinberger, supra; Harlan v. Roberts, supra; Lambert v. Metrailer, 485 So.2d 69 (La.App. 1st Cir.), writ denied 488 So.2d 1023 (1986).
Manifest error
By his second assignment of error Kavanaugh urges the jury was plainly wrong to conclude that Dr. Long did not know that he operated at the wrong level and did not intentionally keep this information from the plaintiff. Because the case is ultimately resolved on the question of whether Kavanaugh filed his claim within one year of when he knew or should have known of the malpractice or concealment, we will assume that Dr. Long concealed material information from the plaintiff.[14]
By his third assignment of error, Kavanaugh urges the jury was plainly wrong to find that he failed to bring his action within one year from the date that he knew or should have known that Dr. Long operated at the wrong level. He contends that he did not know until November 30, 1989, when he read the radiology report of his August 1989 MRI, that Dr. Long had operated on C6-7 instead of C5-6, and that his petition for a Medical Review Panel, filed on October 22, 1990, was timely. Dr. Long argues that there is sufficient record evidence to support the jury's finding that Kavanaugh had actual or constructive knowledge of the erroneous surgery far more than one year prior to petition.
An appellate court may not set aside a jury's finding of fact in the absence of manifest error or unless it is clearly wrong. Stobart v. State, 617 So.2d 880 (La.1993); Rosell v. ESCO, 549 So.2d 840 (La.1989). The Supreme Court has stated a two-tier test for reversal on appeal. First, the appellate court must find from the record that a reasonable *739 factual basis does not exist for the finding of the trial court and, second, the appellate court must further determine that the record establishes that the finding is clearly wrong (manifestly erroneous). Mart v. Hill, 505 So.2d 1120 (La.1987); Lewis v. State, 94-2370 (La.4/21/95), 654 So.2d 311. Mere disagreement with the fact finder's finding is not, by itself, ground for the appellate court to substitute its own judgment for that of the trial court. Lewis v. State, supra. Reversal is warranted only when the record in its entirety shows that the verdict is clearly wrong. Stobart v. State, supra.
Where documents or objective evidence so contradict a witness's story, or the story itself is so internally inconsistent or implausible on its face that a reasonable fact finder would not believe it, the court of appeal may find manifest error or clear wrongness even in a finding purportedly based on a credibility determination. Rosell v. ESCO, supra. However, the fact finder's reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed on appeal where conflict exists in the testimony. Stobart v. State, supra. Where there are two permissible views of the evidence, the fact finder's choice between them cannot be manifestly erroneous or clearly wrong. Lewis v. State, supra.
We have closely examined the record for the evidence regarding Kavanaugh's actual or constructive knowledge that surgery was performed at the wrong level. He steadfastly and resolutely maintained that prior to surgery in April 1983 he knew his neck problem was at C5-6 and that he would have surgery there. See, e.g., R.pp. 581-582. He also testified that during his hospital stay, Dr. Long advised him the operation had been at C5-6. R.p. 583. He generally testified that after his hospital stay, he believed the operation had been at C5-6 and that Dr. Long never informed him otherwise. R.pp. 584-585. He also testified that Dr. Edwards told him the C5-6 fusion had been "absorbed." However, he admitted that Dr. Edwards's letter of May 17, 1983 Department of Labor ("work-up revealed a herniated C6-7 disk which was removed by Dr. Warren Long") shows that a copy was sent to him. R.p. 607.
Moreover, despite Kavanaugh's claim that Dr. Long did not advise him of any possible error, the following colloquy occurred on direct examination:
Q. The jury has seen this before [Dr. Long's office notes, listing the diagnosis of "soft disk defect, C6-7"]. I'm going to just ask you, did Dr. Long ever tell you when you were in his office on May 20, 1983, on June 14, 1983, or on August 25, 1983, that his diagnosis was soft disk defect, C6-7 limit?
A. Yes.
Q. He told you that's what it was. What did he tell you?
A. He told me that hewhen I went back he told me that his had operated on it. I believe he said C-6, C-7. I'm not for sure. That's been a long time ago but we did discuss it. I had a lot of complaints and everything and the last time we was back we got into an argument about my condition.
R.p. 592 (emphasis added).
The specter of Kavanaugh's actual or constructive knowledge of the surgical error rises higher with his visit to Dr. Smith in September 1984. Dr. Smith wrote a letter to Dr. Edwards on September 18 stating that "the patient thinks that his surgical level was C6-7," and he testified at trial that this was what Kavanaugh reported to him. R.p. 780. Dr. Smith also testified that he discussed his findings with the plaintiff:
I discussed basically the things that we have already reviewed. I discussed the fact that it appeared to me that surgery had taken place at C6-7. This was what Mr. Kavanaugh had told me also to be his impression. But that was my impression not only from what he told me but from the appearance of the X-rays.
I also told him that I thought there were problems at C5-6, and that I thought probably that all of this is inexact; sometimes it's difficult to determine clinically the difference between a nerve root at C6 and a nerve root at C7 that may be producing *740 problems. But on the basis of the indications that I've already indicated and the location of the problems and the findings on the X-ray, I felt it most likely that his symptoms were coming from the impingement at C5 and C6
R.p. 785-786.
Kavanaugh testified that Dr. Smith's dictation was wrong, that he told Dr. Smith his problems were at C5-6, and that the doctor did not advise him of any possible error. R.p. 612.
Perhaps the most impressive evidence of Kavanaugh's knowledge is the September 8, 1989 visit to Dr. Smith. The doctor testified that on that occasion he reviewed the film and report from the August 1989 MRI, which Kavanaugh had likely carried to him. R.pp. 822-823. He described on cross examination his findings and his conversation with the patient:
Q. Well, after Mr. Kavanaugh came to see you and you saw this report, which clearly shows fusion at C6-C7, did you tell him Dr. Long did surgery at the wrong level?
A. I never used the words "wrong level" to Mr. Kavanaugh; however, we discussed this study in great detail being as plain as I could that he definitely had had surgery at C6-7. I couldn't tell whether he had surgery at C5-C6 or not but there was a large defect at C5-C6 which had been present before, and that I thought C6-C7 looked fine; that I did not think there was any pain on the basis of C6-C7; that I thought the current pain of which he was complaining in 1989 was on the basis of C5-C6.
R.p. 818 (emphasis added).
On redirect Dr. Smith again emphasized that he had tried to impress on Kavanaugh that his medical condition was a good fusion at C6-7, and a problem at C5-6. R.p. 826. His letter of September 8 does not refer to the earlier fusion, only to the MRI report showing osteophytes at C5-6. Kavanaugh testified, regarding this office visit, "I knew something was wrong somewhere or another." R.p. 616.
Kavanaugh admitted that on November 30, 1989, he opened his file and read the MRI report which clearly disclosed that surgery had been at C6-7. R.pp. 600-601. He argues that when he "read the report, he immediately knew what two neurosurgeons and one orthopedic surgeon had withheld from him, i.e., that Dr. Long had performed the fusion at the wrong level and failed to surgically address Mr. Kavanaugh's herniated disk at C5-6." Br., 7. This realization arose from reading the exact same film and report which Dr. Smith testified that he reviewed and discussed "in great detail" with Kavanaugh on September 8, and which Kavanaugh may have carried to his office.
We are constrained to hold that this evidence is a classic case of conflicting testimony. Kavanaugh generally denied that Dr. Long, or any other doctor, told him that the operation had been at C6-7, and he always believed it had been at C5-6; however, he did state at the beginning of his direct examination that on August 25, 1983, "I believe he [Dr. Long] said C-6, C-7." This testimony may have impacted the plaintiff's credibility in the jury's mind. Dr. Smith and the plaintiff gave conflicting accounts of the September 1984 office visit; Dr. Smith's account, however, is corroborated by his letter to Dr. Edwards written the same day as the examination. If the jury accepted the doctor's testimony that Kavanaugh related a history of a C6-7 operation, then this would be sufficient to charge Kavanaugh with knowing at that time that his surgery was not where he clearly understood it was supposed to be. See Fontenot v. ABC Ins. Co., 95-1707, at p. 8, 674 So.2d at 964. Dr. Smith is emphatic that he advised Kavanaugh in September 1989 that the surgery had been at C6-7, the fusion was present at that level, and there were still problems at the original site, C5-6; although this testimony is not entirely corroborated by his September 8 letter to the Department of Labor, it is not inconsistent with the letter.
In short, this is a case of conflicting testimony which can only be resolved by an assessment of the witnesses' credibility. The jury obviously rejected the plaintiff's contention that he was unaware of the error until *741 November 30, 1989, and accepted the record evidence that he knew or reasonably should have known of it in September 1984 or September 1989, over a year before the instant petition for MRP was filed in October 1990. We are unable to find in Dr. Smith's testimony any internal inconsistencies or the kind of variance from the documentary and objective evidence that would make it unacceptable to a reasonable fact finder. Rosell v. ESCO, supra. The jury made a credibility call which is reasonably based on the evidence and we are powerless to disturb. Stobart v. State, supra. We are unable to declare that their finding is plainly wrong or manifestly erroneous. This assignment of error lacks merit.
At the same time that he knew or should have known of the malpractice, Kavanaugh also knew or should have known, on the facts presented, that Dr. Long had intentionally withheld information from him; Dr. Long never admitted, until 1991, that he operated on the wrong level. Kavanaugh had one year from the date he knew or should have known of the malpractice or concealment to bring his action "whether based upon tort, breach of contract, or otherwise." La. R.S. 9:5628 A. The intentional tort claim is therefore prescribed, although the judgment dismissed it "on the merits." Appeal lies from the judgment itself, not the reasons therefor. Hardin v. Munchies Food Store, 510 So.2d 33 (La.App. 2d Cir.1987). The judgment is not plainly wrong, even though the reasons are perhaps inaccurate. The judgment will be affirmed in its entirety, to dismiss both the malpractice and the intentional tort claims.
Conclusion
Kavanaugh's remaining assignments of error address the District Court's failure to grant his motion for JNOV or new trial, the issue of quantum, and the rejection of Mrs. Kavanaugh's claims for damages. Because we conclude that all claims have prescribed, we find no error in the denial of JNOV or new trial, and we pretermit all consideration of damages.
For the reasons expressed, the judgment dismissing all the plaintiffs' claims is AFFIRMED. Costs are assessed to the appellants, Joseph C. Kavanaugh and Dorothy Kavanaugh.
AFFIRMED.
STEWART, J., dissents and assigns written reasons.
STEWART, Judge, dissenting.
Because I disagree with the majority's analysis on the issue of prescription and contra non valentem, I respectfully dissent.
Considering pertinent authority, I find that the trial judge erred as a matter of law by allowing the jury to decide the issue of prescription. The majority opinion distinguishes Elzy v. ABC Ins. Co., 472 So.2d 205 (La.App. 4 Cir.1985), as the exception at issue in Elzy was filed prior to answer whereas Dr. Long pleaded the exception of prescription in his answer. However, the court of appeal clearly rejected the argument that disputed facts relating to an exception of prescription can only be decided by a jury, as follows:
One entitled to jury trial is entitled only to have the facts relative to the merits of the case decided by a jury, and matters raised by exception are not part of the merits. One whose claim has prescribed in not entitled to have a trial on the merits of the case, not by jury and not by judge. One is not entitled to have the jury decide a fact-based exception, just as one is not entitled to have the jury decide a fact-based exception to the jurisdiction of the court. McGehee v. Brown, 3 La.Ann. 272 (1848). The judge does not invade the province of the jury by making factual determinations on the trial of exceptions.
Elzy v. ABC Ins. Co., 472 So.2d at 207. The Louisiana Supreme Court's holding in McGehee v. Brown, supra, that a plaintiff cannot require that an exception be submitted to the jury has not been overruled, criticized, distinguished, limited or questioned by any subsequent cases.
Although reaching a different conclusion in Anderson v. Collins, 26,142 (La.App. 2 Cir. 1/6/95), 648 So.2d 1371, this court noted that, ordinarily, a judge does not invade the province of a jury by making factual determinations *742 on the trial of exceptions. However, this court held that, under the very unique circumstances presented by Anderson, the general rule does not apply. The morning a jury trial was to begin, defendants filed a motion in limine seeking recognition of a summary judgment rendered by an Arkansas court. Finding that the trial court erred in taking factual issues presented by a "motion in limine" away from the jury, this court determined that the motion in limine was in the nature of an exception of res judicata and that the factual proof necessary to sustain the allegations of the petition overlapped the proof which plaintiffs would have to show as a defense to an exception of res judicata. Plaintiffs' allegations of fraud and ill practices with respect to the procuring of the Arkansas summary judgment formed a part of plaintiffs' case against defendant attorneys for malpractice and wrongdoing.
In a more recent case, the Louisiana Supreme Court interpreted La. C.C.P. articles 929 and 1001 together to mean that a peremptory exception pleaded before answer must be scheduled for trial in advance of trial on the merits, but that the judge's options in deciding the trial of the exception include referring the exception to the merits in appropriate cases. When the evidence on prescription is so intertwined with the evidence of the merits, the trial court is not required to try an exception on merits prior to trial on merits as it would be a waste of judicial economy. Short v. Griffin, 95-0680 (La.6/16/95), 656 So.2d 635. In that case, the trial court referred the exceptions to the merits, noting that the evidence to be presented at the anticipated three-day trial of the exceptions would have to be repeated at the trial on the merits. The opinion did not mention whether that case was to be tried by a jury. Even were the matter to be tried by a jury, the trial court retains the power and duty to rule on questions of law, including exceptions. Although finding that referral of the exception to the merits was proper, the Louisiana Supreme Court did not hold that an exception should be decided by the jury.
In the instant case, the trial judge ruled that the "fact sensitive issue of prescription and contra non valentem" should go to the jury. Although the trial judge's decision appears to be consistent with this court's analysis in Anderson, that case was decided on unique and complex facts and should not be read to supplant the general rule, as stated in that case and in McGehee v. Brown, supra, and Elzy v. ABC Ins. Co., supra, that a party "is not entitled to have the jury decide facts bearing on an exception." Anderson v. Collins, 648 So.2d at 1381. The trial judge erred as a matter of law by allowing the issue of prescription and contra non valentem to be decided by the jury.
The manifest error standard is not applicable where legal errors taint the fact-finding process. Ferrell v. Fireman's Fund Insurance Co., 94-1252 (La.2/20/95), 650 So.2d 742. Generally, if the record is otherwise complete, an appellate court should, if it can, render judgment on the record where the trial court has made an erroneous ruling. Gonzales v. Xerox, 320 So.2d 163 (La.1975). However, when the weight of the evidence is so roughly equal that "a first-hand view of the witnesses is essential to a fair resolution of the issues," the case should be remanded for new trial. Ragas v. Argonaut Southwest Ins. Co., 388 So.2d 707, 708 (La.1980). See also Jones v. Black, 95-2530 (La.6/28/96), 676 So.2d 1067.
Upon review of the entire record, including the voluminous transcript, the testimony on the issues of prescription and contra non valentem is so close that a view of the witnesses is necessary to resolve the conflicting evidence. For that reason, I would remand this matter for new trial.
NOTES
[1] Kavanaugh also sustained a work-related injury to his lower back and shoulders in 1981; he treated with Dr. Edwards fairly continuously for this injury until the instant accident on March 4, 1983.
[2] For each of these post-op office visits, Dr. Long's office reports state that the diagnosis was a soft disk defect at C6-7 left.
[3] Dr. Long's office manager, Mrs. Bailey, wrote the note stating that she phoned Kavanaugh on September 23, 1983 to advise that he needed additional surgery which Dr. Long would provide at no cost. She testified, however, that if she phoned a patient she had authority only to ask him to come to the office and, perhaps, to take a second myelogram. Kavanaugh denied receiving any call from Mrs. Bailey.
[4] Kavanaugh testified that Dr. Long phoned him sometime after July 20, 1984, to say that after a chance meeting with Dr. Edwards at Bossier Medical Center, he (Dr. Long) believed that Kavanaugh had apparently "absorbed a fusion" and needed surgery; and that a new operation was necessary. Both Dr. Long and Dr. Edwards denied this incident.
[5] Dr. Edwards never advised Kavanaugh that the surgery may have been performed at the wrong level, claiming he himself was unaware of this until after an MRI was performed five years later. The instant record, however, includes a letter from Dr. Edwards to the U.S. Department of Labor dated May 17, 1983, in which he states that Dr. Long removed a herniated C6-7 disk. Ex. P-4, p. 67. Kavanaugh has a separate action pending against Dr. Edwards.
[6] This is the date of certified mailing of the petition for MRP. See La. R.S. 40:1299.47 A(2)(b).
[7] This court denied Dr. Long's writ application on May 7, 1992, in an unpublished opinion.
[8] The instant suit was filed in Dr. Long's domicile, Caddo Parish. La. C.C.P. art. 42(1).
[9] By other interrogatories the jury found that the breach of the standard of care by Dr. Long caused $150,000 damage to Joseph Kavanaugh, but that the doctor's conduct caused no harm to Dorothy Kavanaugh.
[10] The court's ruling does not appear in the trial transcript but is stated in the written opinion on the plaintiff's motion for JNOV or new trial, R.p. 239.
[11] Although the Supreme Court's opinion in Short does not state whether "trial on the merits" would be by jury or judge, its broad language regarding trial of the exception would appear to apply to either situation. More recent cases favor allowing the jury to decide prescription if the evidence on the exception and on the merits would be the same. See, e.g., Anderson v. Collins, supra; Williams v. American Family Mut. Ins. Co., 520 So.2d 1082 (La.App. 3d Cir. 1987); Harvey v. Amoco Prod. Co., 96-1714 (La.App. 1st Cir. 6/20/97), 696 So.2d 672; see also Tichenor v. Roman Catholic Church, 95-0930 (La.App. 4th Cir. 12/14/95), 665 So.2d 1307, writ denied 96-0183 (La.3/15/96), 669 So.2d 424.
[12] A federal court has held that the three-year limitation for malpractice claims applies even to bar suits for intentional acts. Montagino v. Canale, 792 F.2d 554 (5th Cir. 1986). We find Montagino unpersuasive, however, in that it predates the assumption of Rajnowski and its progeny that the third category of contra non valentem will apply to medical malpractice cases.
[13] Justice Dennis voiced a similar view in his concurrence to the denial of rehearing in Rajnowski v. St. Patrick's Hosp., 564 So.2d at 682: "Specifically, the statute [9:5628] should be read to * * * leave intact our traditional rules of tolling or contra non valentem with respect to cases in which the doctor concealed or intentionally failed to disclose facts which would have given a patient notice of malpractice[.]"
[14] The jury's conclusion to the contrary is manifestly erroneous. The record is unequivocal that Dr. Long intended to operate at C5-6, but negligently operated at C6-7 instead; on the date of surgery he dictated several medical records plainly stating that he operated at C6-7; however, on June 4, after he reviewed the entire record, he changed several of the documents to conform to the original surgical plan. This is a strong showing that Dr. Long intentionally changed the records to conceal his error, and is not overcome by his denial of any knowledge of the error until 1991. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1853850/ | 191 B.R. 577 (1996)
In re Petition of Herbert H. DAVIS, Trustee for Polinex Plastic Products Canada, Ltd., Debtor in a foreign proceeding.
In re Petition of Herbert H. DAVIS, Trustee for Packman Packaging Supplies, Inc., Debtor in a foreign proceeding.
Bankruptcy Nos. 95-B-42923, 95-B-42924.
United States Bankruptcy Court, S.D. New York.
February 1, 1996.
As Corrected February 20, 1996.
*578 *579 Hebb & Gitlin, A Professional Corporation, Hartford, CT, for Herbert H. Davis, Trustee for Polinex Plastic Products Canada, Ltd., and Packman Packaging Supplies, Inc.
*580 Rosner, Bresler, Goodman & Bucholz, New York City, for World Hangers, Inc., and Nicholas Glorioso.
MEMORANDUM DECISION ON PETITIONER'S MOTION FOR SUMMARY JUDGMENT
JAMES L. GARRITY, Jr., Bankruptcy Judge.
Polinex Plastic Products Canada, Ltd. ("Polinex") and Packman Packaging Supplies, Inc. ("Packman") are affiliated Canadian corporations which are the subject of separate bankruptcy cases pending in Canada under the Canadian Bankruptcy and Insolvency Act. Herbert H. Davis ("Davis" or "Petitioner") is the court appointed trustee in each case. In 1995, World Hangers, Inc. and Nicholas Glorioso (collectively "Glorioso") sued Petitioner, Packman and others in the United States District Court for the Southern District of New York (the "Action"). Among other things, the underlying complaint ("Amended Complaint") seeks damages from Petitioner and Packman on account of their alleged involvement in a scheme to defraud Glorioso. Although not a party to the litigation, Polinex is alleged to have been involved in that scheme. On or about July 3, 1995, Davis filed petitions (the "Petition(s)") under ง 304 of the Bankruptcy Code ("Code") on behalf of Packman and Polinex, respectively, seeking judgment (i) pursuant to ง 304(a) of the Code on the commencement of these cases, and (ii) granting him relief pursuant to งง 304(b)(1) and 105 of the Code permanently enjoining Glorioso from commencing or continuing any action, litigation or proceeding, including discovery, against himself, Packman or Polinex anywhere in the United States. After the commencement of the ancillary cases, and in response to the motion filed by Petitioner on behalf of himself and Packman in the district court to dismiss the Action, Glorioso voluntarily discontinued that litigation, without prejudice, pursuant to Fed.R.Civ.P. 41(a). In doing so, Glorioso informally acknowledged that under Canadian law it is stayed from commencing or continuing litigation against Polinex or Packman and cannot sue Petitioner on account of actions taken by him subsequent to his appointment as trustee in the bankruptcy cases by the Canadian court without first obtaining leave from that court. However, Glorioso made it clear that it intends to bring suit against Petitioner in the United States on account of certain wrongs alleged against Petitioner in the Amended Complaint, to the extent that they purportedly relate to actions taken by him prior to his appointment by the Canadian court.
Petitioner seeks summary judgment on the Petitions. Glorioso objects to the motion and contends that the Petitions must be dismissed because that there is no justiciable case or controversy upon which we can act due to the voluntary discontinuance of the Action. For the reasons stated herein, Glorioso's objection is overruled and its request to dismiss the Petitions is denied. Petitioner's motion for summary judgment is granted.
Facts
Polinex and Packman are the subject of separate proceedings pending under the Canadian Bankruptcy and Insolvency Act ("BIA") in the Quebec Superior Court, District of Montreal, Canada. Hong Kong Bank of Canada (the "Bank") is a secured creditor of Polinex and Packman. On January 4, 1995, the Bank retained Petitioner as a consultant to evaluate the corporations, their indebtedness to the Bank, and the Bank's collateral, and to report to the Bank on those items. On January 18, 1995, Polinex filed a "Notice of Intention To Make a Proposal" ("Notice of Intention") pursuant to BIA ง 50.4 with the Office of the Superintendent of Bankruptcy (the "Superintendent"). On February 10, 1995, Packman did the same. Both notices identify Petitioner as "Trustee Under the Proposal". By Certificates of Assignment of the Superintendent dated April 7, 1995, and pursuant to BIA งง 49 and 50.4(8), Polinex and Packman were deemed bankrupt retroactive to January 18, and February 10, 1995, respectively. After creditor meetings held in each case, on April 28, 1995, Petitioner was approved by the Canadian court as trustee for each debtor. On April 12, 1995, Petitioner gave notice to Glorioso and other creditors of the Polinex bankruptcy case.
*581 On April 21, 1995, Glorioso filed an Amended Complaint in the Action. Petitioner and Packman are among the defendants therein. Although Polinex is not named as a defendant, Glorioso alleges, among other things, that Petitioner, Packman and Polinex participated in an intricate, continuing scheme to defraud Glorioso giving rise to causes of action in tort for fraud and pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. งง 1961 et seq.
On or about July 3, 1995, Petitioner commenced separate ancillary proceedings herein under ง 304 of the Code on behalf of the corporations. By court order, those cases have been consolidated for administrative purposes only.
On or about July 24, 1995, Petitioner and Packman moved the United States District Court to dismiss the Action. Thereupon, Glorioso voluntarily dismissed it without prejudice pursuant to a Notice of Dismissal filed under Fed.R.Civ.P. 41(a). By letter dated on August 3, 1995, Glorioso's counsel advised that notwithstanding the voluntary dismissal of the Action, Glorioso would pursue, in the United States, the claims purportedly alleged in the Amended Complaint against Petitioner in his individual capacity. On or about August 9, 1995, Glorioso answered each Petition. As and for its first defense to the Petitions, Glorioso contends that because it filed the Notice of Dismissal, no case or controversy exists upon which this Court can act.
Discussion
Fed.R.Civ.P. 56(c) states that summary judgment "`shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law.'" See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In considering a summary judgment motion, "the court's responsibility is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Movant bears the burden of establishing the absence of a genuine issue as to any material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). In support of this motion, Davis has submitted a memorandum of law, an affidavit ("Davis Affidavit") and a Statement of Material Facts Pursuant to Local Rule of Bankruptcy Procedure 13(h). He is also relying on the Petitions and the identical affidavit of Mark Schrager, Esq., ("Schrager Affidavit"), his Canadian counsel, submitted with each Petition. Because Glorioso failed to challenge any portion of Petitioner's 13(h) statement, the facts therein are deemed admitted. See Local Rule 13(h) ("[a]ll material facts set forth in the moving party's [Rule 13(h) statement] are deemed admitted unless controverted by the opposing party's statement"); see also In re Operation Open City, 148 B.R. 184, 188 n. 3 (Bankr.S.D.N.Y.1992), aff'd, 170 B.R. 818 (S.D.N.Y.1994). A review of those facts, the Petitions, Glorioso's answers to the Petitions, and the Schrager and Davis Affidavits reveals that there is no genuine issue as to any material fact.
Glorioso does not dispute, among other things, that the filing of Notices of Intention (i) automatically stayed the commencement or continuation of all suits, actions and proceedings against Polinex and Packman respectively, see BIA งง 69, 69.3, and barred the commencement of litigation against Petitioner in his official capacity, except by leave of the Canadian court. See BIA ง 215. Glorioso maintains that notwithstanding the pendency of the foreign proceedings, it may sue Petitioner in the United States on account of wrongs complained of in the Amended Complaint and allegedly committed by him prior to his appointment as trustee in the Canadian proceedings. Petitioner argues that pursuant to งง 105 and 304(b) of the Code, we should enjoin Glorioso from suing the debtors or himself in the United *582 States, irrespective of whether the litigation against Petitioner purports to seek relief against him individually or in his official capacity. He argues that by dismissing the Action without prejudice, and expressly, but informally, reserving the right to sue Petitioner in his individual capacity, Glorioso is having a significant disruptive effect on the Canadian bankruptcy cases due to the contingent liability of the Canadian estates for Glorioso's claims. Thus, Petitioner contends that in the interests of comity and the other factors enumerated under ง 304(c) of the Code, we should acknowledge the pendency of the Canadian automatic stay and the protection afforded Petitioner and debtors under Canadian law, grant him judgment in each case and require Glorioso to assert any claims it may have against Packman, Polinex and Petitioner, or otherwise seek relief against them, in the Canadian courts.
Glorioso does not challenge Petitioner's proposed application of งง 105 and 304(b). It contends that Petitioner's motion must be denied, and the Petitions dismissed, because by discontinuing the Action, Glorioso eliminated any case or controversy between itself, Packman, Polinex and/or Petitioner, thereby divesting this court of the power to adjudicate the merits of the Petitions.
A case under ง 304 of the Code is not a full scale bankruptcy case. It is "a limited one, designed to function in aid of a proceeding pending in a foreign court." Universal Casualty & Surety Co. Ltd. v. Gee (In re Gee), 53 B.R. 891, 898 (Bankr.S.D.N.Y. 1985) (citations omitted). See also In re Lines, 81 B.R. 267, 271 (Bankr.S.D.N.Y. 1988). Pursuant to ง 304(a) of the Code, "[a] case ancillary to a foreign proceeding is commenced by the filing with a bankruptcy court of a petition under [ง 304] by a foreign representative." 11 U.S.C. ง 304(a). Petitioner is eligible to seek relief herein because the pending Canadian bankruptcy cases are "foreign proceedings", see 11 U.S.C. ง 101(23), and Petitioner is a "foreign representative." See 11 U.S.C. ง 101(24). Our jurisdiction of the subject matter of this contested matter is predicated on 28 U.S.C. งง 1334 and 157 and the "Standing Order of Referral of Cases to Bankruptcy Judges" of the United States District Court for the Southern District of New York, dated July 10, 1984 (Ward, Acting C.J.). This is a core proceeding. See 28 U.S.C. ง 157(b)(2)(A). Venue is proper in this district pursuant to 28 U.S.C. ง 1410(a) because the Petitions were filed to enjoin continued prosecution of the Action.
The "case or controversy" limitation in Article III, section 2 of the United States Constitution is intended to
limit[] the business of the federal courts to `questions presented in an adversary context and in a form historically viewed as capable of resolution through the judicial process,' and it defines the `role assigned to the judiciary in a tripartite allocation of power to assure that the federal courts will not intrude into areas committed to the other branches of the government.'
U.S. Parole Commission v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 1202, 1208, 63 L.Ed.2d 479 (1980). "Justiciability" is the term "employed to give expression to the dual limitation placed upon federal courts by the case-and-controversy doctrine." Flast v. Cohen, 392 U.S. 83, 95, 88 S.Ct. 1942, 1950, 20 L.Ed.2d 947 (1968). Among other things, "justiciability" embodies the doctrines of standing, ripeness and mootness. 392 U.S. at 94-97, 88 S.Ct. at 1949-51. We read Glorioso's objection to raise issues of mootness and ripeness.
The principal goal of a ง 304 case is to permit foreign debtors "to prevent the piecemeal distribution of assets in the United States by means of legal proceedings initiated in domestic courts by local creditors." Koreag, Controle et Revision, S.A. v. Refco F/X Assocs., Inc. (In re Koreag, Controle et Revision, S.A.), 961 F.2d 341, 348 (2d Cir.) (citations omitted), cert. denied, 506 U.S. 865, 113 S.Ct. 188, 121 L.Ed.2d 132 (1992); In re Rubin, 160 B.R. 269, 274 (Bankr.S.D.N.Y. 1993); In re Lines, 81 B.R. at 271 (same). Among other things, pursuant ง 304(b) of the Code, a court is empowered to enjoin the commencement or continuation of litigation against a foreign debtor, see 11 U.S.C. ง 304(b)(1)(A), provided the petitioner "establishes that the factors contained in ง 304(c) militate in favor of granting an ancillary petition to best assure an economical *583 and expeditious administration of the foreign estate . . ." In re Rubin, 160 B.R. at 281. See also In re Banco Nacional de Obras y Servicios Publicos, 91 B.R. 661, 664 (Bankr. S.D.N.Y.1988) (the injunctive relief available under ง 304(b) "is not unlike the injunction which is automatic in a chapter 7 or 11 case pursuant to section 362 of the Code") (citation omitted). This furthers Congress' goal of providing "a mechanism for the courts in this country to aid foreign courts and accommodate the increasing number of foreign insolvency proceedings having extraterritorial effects within the United States." In re Gee, 53 B.R. at 896 (citations omitted); In re Rubin, 160 B.R. at 275 (same). Thus, Glorioso's objection to Petitioner's motion and to the Petitions ignores the plain language of the statute, Congressional intent in enacting ง 304 and settled case law. See, e.g., In re Lines, 81 B.R. 267 (under ง 304(b), court preliminarily enjoined commencement or continuation of any action or proceeding against assets of a foreign debtor); see generally In re Culmer, 25 B.R. 621, 624 (Bankr. S.D.N.Y.1982) (ง 304(b) enables bankruptcy court "to broadly mold appropriate relief in near blank check fashion . . . ").
Moreover, on the facts of these cases, neither ancillary case is moot and both are ripe for adjudication. A case is moot "when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome." Powell v. McCormack, 395 U.S. 486, 496, 89 S.Ct. 1944, 1951, 23 L.Ed.2d 491 (1969); see United States Parole Commission, et al. v. Geraghty, 445 U.S. 388, 396, 100 S.Ct. 1202, 1208, 63 L.Ed.2d 479 (1980). The dismissal of the Action does not moot the relief sought in the Petitions because the dismissal was without prejudice and Glorioso concedes that it intends to litigate against Petitioner in the United States on matters raised in the Amended Complaint, albeit purportedly against Petitioner in his unofficial capacity. Petitioner need not await the commencement of that litigation to seek an injunction under ง 304(b). Pennsylvania v. West Virginia, 262 U.S. 553, 593, 43 S.Ct. 658, 663, 67 L.Ed. 1117 (1923); see Babbitt v. United Farm Workers Nat. Union, 442 U.S. 289, 298, 99 S.Ct. 2301, 2308, 60 L.Ed.2d 895 (1979). See also Northeastern Florida Chapter of Associated General Contractors of America v. City of Jacksonville, 508 U.S. 656, ___, 113 S.Ct. 2297, 2301, 124 L.Ed.2d 586 (1993) (case not mooted by defendant's voluntary cessation of allegedly wrongful conduct where there was a reasonable expectation that defendant could simply repeat the conduct after the case was dismissed); City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289, 102 S.Ct. 1070, 1074, 71 L.Ed.2d 152 (1982) ("a defendant's voluntary cessation of a challenged practice does not deprive a federal court of its power to determine the legality of the practice"); compare United States v. W.T. Grant Co., 345 U.S. 629, 632-33, 73 S.Ct. 894, 897, 97 L.Ed. 1303 (1953) (case may be mooted by voluntary cessation of alleged misconduct where defendant can demonstrate no reasonable expectation that wrong will be repeated).
A case that "present[s] a real, substantial controversy between parties having adverse legal interests, a dispute definite and concrete, not hypothetical or abstract" is ripe for adjudication. Railway Mail Ass'n v. Corsi, 326 U.S. 88, 93, 65 S.Ct. 1483, 1487, 89 L.Ed. 2072 (1945); see also Goetz v. Crosson, 728 F.Supp. 995, 998-99 (S.D.N.Y.1990) (ripeness doctrine requires that action in federal court be matured to a point that warrants decision). In determining whether a matter is ripe for adjudication, we must consider the hardship to the parties of withholding a judicial decision. Thus, "the question of ripeness turns on `the fitness of the issues for judicial decision' and `the hardship to the parties of withholding court consideration'." Pacific Gas and Elec. Co. v. State Energy Resources Conserv. and Dev. Comm'n, 461 U.S. 190, 201, 103 S.Ct. 1713, 1720, 75 L.Ed.2d 752 (1983) (quoting Abbott Laboratories v. Gardner, 387 U.S. 136, 149, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967)). The undisputed goals of the Canadian bankruptcy law are to: (i) provide for the orderly and fair distribution of the property of a bankrupt amongst its creditors in an expeditious and inexpensive manner; (ii) ensure the orderly and fair administration of the bankrupt's assets; and (iii) ensure equal treatment of creditors. Schrager Affidavit ถ 4. To further those *584 ends, the BIA imposes the following duties upon the Petitioner, as trustee of the Packman and Polinex estates:
(a) to take possession of all the bankrupt's property, see BIA ง 16(3);
(b) to dispose of the bankrupt's property; see BIA ง 30(1)(a);
(c) to convene meetings of creditors; see BIA ง 102(1);
(d) to receive and examine proofs of claim received from creditors of the bankruptcy; see BIA ง 135;
(e) to deal with claims of the creditors in accordance with the priorities established under the Canadian bankruptcy law; see BIA งง 136, 148.
Although the BIA contemplates treatment of unsecured claims on a pari passu basis, see Schrager Affidavit ถ 15, under that statute, as under the Code, administrative expenses are paid ahead of unsecured claims and immediately after secured claims. Compare BIA ง 136, with 11 U.S.C. งง 503, 507(a)(1). Those expenses include the expenses, fees and costs incurred by Petitioner in performing his duties. See BIA ง 136(1)(b)(i), (ii). Among those are the costs of defending litigation brought against him in his official capacity, and any judgment against him in that litigation. Schrager Affidavit ถ 16. The Bank, which appears to be a fully secured creditor of Polinex and Packman, is obligated to indemnify Davis for actions taken by him while serving as its consultant, prior to his appointment as trustee. Schrager Affidavit ถ 19. To the extent the Bank does so, it can recover any payments as part of its fully secured claims in each case. Id. The pendency of the Action prevented Davis from making distributions to creditors and has increased administrative expenses in these cases. See Davis Affidavit ถถ 5-6. A delay in adjudicating the merits of the Petitions will compound that harm because Davis cannot make distributions in these cases until Glorioso's claims against him, Polinex and Packman are resolved. We find that the Petitions present justiciable issues, we overrule Glorioso's objection to the summary judgment motion and deny its motion to dismiss the Petitions.
Section 304(c) directs that in determining whether to grant relief under ง 304(b), "the court shall be guided by what will best assure an economical and expeditious administration of such estate, consistent with โ
(1) just treatment of all holders of claims against or interests in such estate;
(2) protection of claim holders in the United States against prejudice and inconvenience in the processing of claims in such foreign proceeding;
(3) prevention of preferential or fraudulent dispositions of property of such estate;
(4) distribution of proceeds of such estate substantially in accordance with the order prescribed by this title;
(5) comity; and
(6) if appropriate, the provision of an opportunity for a fresh start for the individual that such foreign proceeding concerns."
11 U.S.C. ง 304(c). Section 304(c)(6) is irrelevant because the foreign debtors are not individuals. Glorioso has not challenged the merits of Petitioner's summary judgment motion. Application of งง 304(c)(1)-(5) to the facts of these cases mandates that Petitioner be granted judgment under each Petition.
Denial of the injunction could result in Glorioso obtaining a preferential position vis เ vis other creditors, at least with respect to Packman's estate. In contrast, by enjoining Glorioso from commencing or continuing litigation against debtors and the Petitioner, we will promote just treatment of all creditors by preventing the so-called "race to the courthouse" and preserve estate assets for the benefit of all creditors. See In re Culmer, 25 B.R. at 629 (bankruptcy court is "not obligated to protect the interests of fast moving American and foreign attachment creditors over the policy favoring uniform administration in a foreign court.") Given the debtor's contingent liability for any judgment taken by Glorioso against Petitioner, it is appropriate for any such litigation to go forward in Canada. See In re Rubin, 160 B.R. at 283 ("there is a distinct judicial preference for deferring to the foreign tribunal litigation respecting the validity of the amount of the claims against the foreign debtor") (citation *585 omitted). In his August 3, 1995 letter, Glorioso's counsel advised Petitioner's United States bankruptcy counsel that while Petitioner may "wish to cloak his conduct before the January 18, 1995 . . . filing [of the Polinex Notice of Intention] with the limited immunity afforded him as Trustee" he would advise his client against "indulging [Davis] in that luxury." Thus, the scope of the protection afforded Petitioner under BIA ง 215 is likely to be an issue in any litigation brought by Glorioso against Petitioner. The Canadian court is best able to determine the extent to which Petitioner's actions will be immunized by BIA ง 215 and to balance Glorioso's rights against the impact of their exercise on the debtors' estates and other creditors. That is another reason why it is appropriate to enjoin litigation in the United States against Petitioner. See In re Gercke, 122 B.R. at 626-27 (English court best able to determine when and where claim determination should go forward). See also Caddel v. Clairton Corp., 105 B.R. 366, 367 (N.D.Tex. 1989) (dismissing suit filed in violation of Canadian court-ordered stay of litigation against Canadian bank and court-appointed liquidator; observance of Canadian stay found to "further the same policies as those established by the automatic stay in 11 U.S.C. ง 362"). Finally, in light of the disruptive effect that litigation is likely to have on the administration of the Packman and Polinex estates, we would frustrate the purpose of granting comity to the Canadian bankruptcy cases if we did not enjoin Glorioso from suing Petitioner in the United States. See Allstate Life Insurance Co. v. Linter Group, Ltd., 994 F.2d 996, 1000 (2d Cir.1993) (affirming district court's dismissal of securities fraud suit against non-debtor individuals, as well as foreign corporate debtor, on grounds of comity because failure to dismiss case against individuals would undermine effect of granting comity to the debtor). By granting Petitioner the injunctive relief he is seeking herein, we will facilitate a prompt and efficient resolution of all claims against the debtors and an equitable distribution of assets to all creditors. That will ensure the just treatment of all claimants and interest holders, see 11 U.S.C. ง 304(c)(1), and is consistent with the underlying policy of equality of distribution of assets to similarly situated creditors, which is promoted in the Bankruptcy Code. See Cunard S.S. Co., Ltd. v. Salen Reefer Servs. A.B., 773 F.2d 452, 459 (2d Cir.1985); Israel-British Bank (London), Ltd. v. Federal Deposit Ins. Corp., 536 F.2d 509, 513 (2d Cir.), cert. denied, 429 U.S. 978, 97 S.Ct. 486, 487, 50 L.Ed.2d 585 (1976); In re Rubin, 160 B.R. at 281.
The mere fact that Glorioso would have to litigate its claims against debtors in Canada is not sufficient prejudice in and of itself to deny the relief sought in the Petitions. Such "prejudice" is typical of what any United States creditor in a sizeable domestic case would encounter when forced to litigate its claim in the bankruptcy forum. In re Brierley, 145 B.R. 151, 163 (Bankr. S.D.N.Y.1992). Courts in the United States require foreign creditors to litigate here when seeking distributions in a United States bankruptcy case. "It is thus difficult to label as so prejudicial and inconvenient to U.S. creditors as to warrant denial of injunctive relief that which we require of foreign creditors in our own cases." Id. See also In re Rubin, 160 B.R. at 282. The Canadian statutes accord creditors rights akin to what they would receive under the Code. For example, BIA งง 124, 135 and 192 provide a claim filing and allowance procedure similar to that found under the Code. Compare 11 U.S.C. ง 501 and Bankruptcy Rules 3001 and 3002. Moreover, "[t]here is no statutory provision which prefers the claims of [Canadian] citizens or residents or disfavors the claims of [non Canadian] citizens or residents." In re Gee, 53 B.R. at 903 (footnote omitted). See Schrager Affidavit ถ 15. There is no dispute that the debtors may be liable for some or all of any judgment taken by Glorioso against Petitioner. There is also no dispute that if Glorioso continues its litigation against Petitioner individually, Petitioner's ability to perform his duties in the Canadian proceedings will be impaired to the detriment of all creditors. Petitioner's proposal that the Canadian court first address whether the Glorioso litigation should be continued does not impose any hardship on Glorioso that it might not experience in a *586 United States bankruptcy proceeding. Pursuant to งง 362 and 105 United States courts will stay litigation against non-debtors not otherwise protected by the automatic stay when a failure to do so will work irreparable harm on the debtor's estate and creditors. In those cases one factor considered is whether the estate will bear the cost of any judgment taken against the non-debtor. E.g., A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1007-08 (4th Cir.) (key personnel were unconditionally entitled to indemnification and additionally were insureds under debtor's insurance policy), cert. denied, 479 U.S. 876, 107 S.Ct. 251, 93 L.Ed.2d 177 (1986); In re North-Star Contracting Corp., 125 B.R. 368, 371 (S.D.N.Y.1991) (president of debtor entitled to indemnification such that any recovery by plaintiff would diminish debtor's assets). See also Johns-Manville Corp. v. Asbestos Litig. Group (In re Johns-Manville Corp.), 26 B.R. 420, 436 (Bankr.S.D.N.Y. 1983) ("[p]ursuant to ง 105(a), the Bankruptcy Court may extend the automatic stay under ง 362 of the Code and enjoin proceedings or acts against non-debtors where such actions would interfere with, deplete, or adversely affect property of Manville's estates or which would frustrate the statutory scheme of chapter 11 or diminish Manville's ability to formulate a plan of reorganization"). Courts have also extended the automatic stay to non-debtors where failure to extend the stay would jeopardize the success of the bankruptcy process. E.g., A.H. Robins v. Piccinin, 788 F.2d at 1008 (if lawsuits were allowed to proceed, efforts to comply with discovery requests would sidetrack management from the reorganization process); In re Ionosphere Clubs, Inc., 124 B.R. 635, 642 (S.D.N.Y.1991) (stay may properly be extended to parties in interest to the reorganization where failure to do so would frustrate reorganization attempts); In re Lomas Financial Corp., 117 B.R. 64, 67 (S.D.N.Y.1990) (stay of litigation proper where reorganization efforts would be stymied by distraction of key personnel who were targets of litigation); In re Johns-Manville Corp., 26 B.R. at 426 (stay extended where targets of litigation were key operating personnel responsible for formulating plan of reorganization). Thus, Glorioso is not prejudiced by being required to seek relief against Petitioner in the Canadian court, and ง 304(c)(2) is satisfied.
Sections 304(c)(3) and (4) likewise are satisfied because the powers of the trustee to avoid preferences and fraudulent transfers under BIA งง 95 and 96 are similar to those contained in งง 547 and 548 of the Code, and the priority and distribution scheme under the BIA is akin to that contained in the Code. Compare BIA งง 136, 148, with 11 U.S.C. งง 507, 726.
Finally, the principles of comity dictate that we defer to the Canadian cases and grant Petitioner judgment in these ancillary cases. See 11 U.S.C. ง 304(c)(5). Comity is the "recognition which one nation allows within its territory to the legislative, executive, or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Hilton v. Guyot, 159 U.S. 113, 163, 16 S.Ct. 139, 143, 40 L.Ed. 95 (1895). The purpose of according comity to a foreign insolvency proceeding is to enable "the assets of a debtor to be disbursed in an equitable, orderly, and systematic manner, rather than in a haphazard, erratic or piecemeal fashion." Cunard S.S. Co., Ltd. v. Salen Reefer Servs. A.B., 773 F.2d at 457-58. Comity is a discretionary principle of courtesy and expedience. See Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 937 (2d Cir.1984). "[U]nder general principles of comity as well as the specific provisions of section 304, federal courts will recognize foreign bankruptcy proceedings provided the foreign laws comport with due process and fairly treat the claims of local creditors." Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709, 714 (2d Cir. 1987). See also The Clarkson Co., Ltd. v. Shaheen, 544 F.2d 624, 629 (2d Cir.1976) (New York State courts will recognize the statutory title of an alien trustee in bankruptcy so long as the foreign court has jurisdiction over the bankrupt and the foreign proceeding has not caused injustice to New York citizens or prejudiced their statutory remedies, or violates laws or public policy); Somportex, Ltd. v. Philadelphia Chewing *587 Gum Corp., 453 F.2d 435, 440 (3d Cir.1971) (comity should be withheld only "when its acceptance would be contrary or prejudicial to the interest of the nation called upon to give it effect"), cert. denied, 405 U.S. 1017, 92 S.Ct. 1294, 31 L.Ed.2d 479 (1972).
In determining whether to accord comity to a foreign bankruptcy case, we need not find that the foreign law is identical to our own. It is enough that it is not repugnant to American laws and policies. In re Brierley, 145 B.R. at 166; In re Gee, 53 B.R. at 904. The BIA contains a comprehensive procedure for the orderly marshalling and equitable distribution of a Canadian debtor's assets which closely resembles that available under the Code. For example, the principal duties of a trustee under the BIA mirror those imposed upon a chapter 7 or 11 trustee under the Code. See 11 U.S.C. งง 704, 1106. Likewise, the automatic stay under the BIA ง 69 is similar to that imposed by ง 362 of the Code. Like the Code, the BIA recognizes the rights of secured creditors to realize on their collateral, protects that collateral from the claims of unsecured creditors and preserves the right of an undersecured creditor to assert a deficiency claim. It makes provision for the avoidance of fraudulent transfers or preferential payments, see BIA งง 95, 96, and contains a comprehensive distribution scheme similar to that under the Code. Compare BIA ง 69.3(2) (determination of secured status), ง 127 (recognizing right to assert deficiency claim) and งง 136-147 (priority of claims and scheme of distribution), with 11 U.S.C. ง 506 (determination of secured status), ง 507 (priorities) and ง 726 (distribution).
Courts in the United States uniformly grant comity to Canadian proceedings. See, e.g., Canada Southern R. Co. v. Gebhard, 109 U.S. 527, 539-40, 3 S.Ct. 363, 371, 27 L.Ed. 1020 (1883); Cornfeld v. Investors Overseas Servs., Ltd., 471 F.Supp. 1255, 1260-62 (S.D.N.Y.), aff'd, 614 F.2d 1286 (2d Cir.1979); Caddel v. Clairton Corp., 105 B.R. 366 (N.D.Tex.1989). This is consistent with the treatment accorded by federal courts to foreign proceedings in "sister common law jurisdictions". See, e.g., In re Brierley, 145 B.R. 151 (British proceeding); In re Gercke, 122 B.R. 621 (same); Matter of Axona Int'l Credit & Commerce, Ltd., 88 B.R. 597, 609 (Bankr.S.D.N.Y.1988), aff'd, 115 B.R. 442 (S.D.N.Y.1990), appeal dismissed, 924 F.2d 31 (2d Cir.1991) (Hong-Kong proceeding); In re Gee, 53 B.R. 891 (Cayman Islands proceeding); In re Culmer, 25 B.R. 621 (Bahamian proceeding).
Section 304 does not specify irreparable injury as a predicate to the issuance of an injunction. "Arguably, comity โ including consideration of upholding of international duty and convenience โ may permit injunctive relief without the showing of irreparable injury to the debtor." In re Rubin, 160 B.R. at 283 (citing In re Gercke, 122 B.R. at 628). As noted, the prosecution of the Action already has prevented Petitioner from effectively administering these estates by, among other things, delaying distributions to creditors. Estate assets will be wasted if litigation proceeds against the debtors or Petitioner outside of Canada. Thus, Petitioner has demonstrated that the estates of Packman and Polinex will be irreparably harmed if injunctions are not issued. See Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709 (2d Cir.1987) (harm to the estate exists in the form of disruption of orderly determination of claims and the fair distribution of assets in a single case).
Conclusion
Based on the foregoing, Petitioner is granted judgment on both Petitions. Glorioso is permanently enjoined from commencing or continuing any action, litigation or proceeding, including discovery, against Packman, Polinex and Petitioner, either in his official or individual capacity, anywhere in the United States.
SETTLE ORDER ON NOTICE. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1930629/ | 495 So.2d 1008 (1986)
Florence Streater TAUSSIG, et al., Plaintiffs-Appellees,
v.
GOLDKING PROPERTIES CO., et al., Defendants-Appellants.
No. 84-1020.
Court of Appeal of Louisiana, Third Circuit.
October 15, 1986.
Rehearing Denied October 30, 1986.
*1009 Gordon, Arata, Etc., John M. McCollam, New Orleans, Jones, Jones and Alexander, Jerry G. Jones, Cameron, Liskow and Lewis, Robert T. Jorden and Patrick W. Gray, Lafayette, for defendants-appellants.
Stockwell and Associates, William E. Shaddock, Lake Charles, for plaintiffs-appellees.
Before FORET, KNOLL, and MOUSER,[*] JJ.
KNOLL, Judge.
GoldKing Properties Company (GoldKing), American Petrofina Company of Texas (American Petrofina), Mobile Oil Exploration & Producing Southeast, Inc. (MOEPSI) and Sun Exploration and Production Company (Sun Exploration), together with other lessee-owners of minority mineral interests (hereafter collectively referred to as appellants), appeal the trial court's judgment partially cancelling an oil, gas, and mineral lease (hereafter Mallett Bay Lease), dated March 20, 1941, covering a mineral servitude in their favor as lessees which encompasses one-half (½) the minerals owned by the plaintiffs, Florence Streater Taussig, et al. (hereafter plaintiffs), affecting 1500 acres of land located in Cameron Parish. The trial court ruled that American Petrofina, the appointed operator of the lease, actively breached the lease, entitling plaintiffs to receive a partial cancellation of the Mallett Bay Lease, damages of $263,718.88 for their inability to enter a new oil, gas and mineral lease when defendants refused to grant a release, and attorneys' fees and expenses of $175,000.
Defendants contend that the trial court erred: (1) in denying defendants' dilatory exception of prematurity, holding plaintiffs were not required to place defendants in default as a prerequisite to a suit for lease cancellation; (2) when it rejected defendants' plea of estoppel and waiver based on the failure of the Mallett Bay owners to timely protest the lack of development of the Mallett Bay lease; (3) in granting the Mallett Bay lessors lease cancellation on the basis that the lease was outdated and economically disadvantageous to the lessors; (4) in awarding the Mallett Bay lessors damages of $236,718.88 plus interest from the date of judicial demand based on the assumption that the lessors lost the ability to enter into new oil, gas and mineral leases covering their one-half interest in the mineral servitude covered by the 1941 Mallett Bay lease; (5) in awarding lessors and their attorneys reimbursement for attorneys' fees and expenses totaling $175,000; (6) in concluding GoldKing and its co-venturers were not entitled to rely on the public records which showed that *1010 American Petrofina held a valid mineral lease from the Mallett Bay lessors; (7) in casting GoldKing solely liable for all damages, expenses and attorneys' fees; and (8) in assessing all costs of litigation to GoldKing and its co-defendants.
FACTS
On January 12, 1933, Mallett Bay Land Company, Inc. (Mallett Bay Company) conveyed 1500 acres located in Cameron Parish, Louisiana (hereafter subject lands) to Andrew S. White, reserving one-half (½) of the oil, gas and minerals. On March 20, 1941, Mallett Bay Company granted a mineral lease to L.L. Beeson covering its one-half (½) mineral interest in the subject lands. On March 25, 1941, Andrew S. White separately granted a mineral lease to L.L. Beeson covering his one-half (½) mineral interest. Each lease provided lessors with a one-eighth (1/8) royalty interest, and neither lease contained a Pugh clause.
In 1951 the Mallett Bay Company was liquidated and its stockholders acquired the mineral rights previously owned by the company to the subject lands.
Through the years various lessees acquired the two Beeson leases through assignment. Eventually American Petrofina became operator of the Beeson leases in 1966 as part of a purchase and assignment of mineral interests from Graridge Corporation. In addition to American Petrofina, the major co-owners of the leases were Transocean Oil, Inc., whose interest was later acquired by MOEPSI, and Texas Pacific Oil Company, Inc., whose mineral interest was later acquired by Sun Exploration. Nineteen persons and entities actually owned the working interest of the two Beeson leases at the time of this litigation, but the major owners were American Petrofina, MOEPSI and Sun Exploration.
In 1975 a thirty (30) acre portion of the subject lands covered by the two Beeson leases was unitized within the "L" Sand, Reservoir A by order of the Louisiana Office of Conservation. This unit was created for a well physically located on property adjoining the subject lands which was producing gas and condensate in commercial quantities. At the time of this unitization order there were five (5) commercially producing wells on the premises covered by the Beeson leases which were developed between 1941 and the early 1970s. In March 1977 the five wells on the subject lands ceased production, and only that thirty (30) acre portion of the leased premises which was part of the compulsory unit remained under production. In 1979 the five non-producing wells (the A.S. White Wells Nos. 1-5) on the land covered by the two Beeson leases, all lying outside the compulsory unit, were plugged and abandoned. After the five A.S. White wells were plugged and abandoned, the remaining acreage covered by the Beeson leases was maintained by production from the thirty (30) acre tract which formed part of the compulsory unit.
On May 22, 1979, James M. Burlingame, a Louisiana attorney, wrote American Petrofina on behalf of Mrs. Andrew S. White and Cornell University, heirs and legatees of Andrew S. White, demanding a release of the original Andrew S. White lease because of the mineral lessees' failure to develop the leased premises. After Burlingame sent a second demand on August 3, 1979, American Petrofina, as lease operator, recommended to its major co-owners that they grant a partial release of the original White lease of all the non-unitized acreage to avoid possible litigation. On September 4, 1979, American Petrofina and its major co-owners executed a release of the original Andrew S. White lease, excluding the thirty (30) unitized acres.
On January 25, 1980, GoldKing, operating through its representative, Raymond J. Dixon, Jr., acquired a new mineral lease from Mrs. Andrew S. White and Cornell University covering the mineral interest earlier released by American Petrofina and its mineral co-owners. This new lease granted the lessees a one-quarter (¼) royalty and contained a Pugh clause.
In July 1980 GoldKing initiated conversations with American Petrofina to obtain a farmout agreement covering the original *1011 Mallett Bay lease still held by American Petrofina and its co-owners.
Meanwhile, on June 19, 1981, Duncan M. Smith, Jr., an attorney representing Ronald Shultz and James Pharis, two individuals who owned a fractional share of the lessors' interest in the original Mallett Bay Company-Beeson lease, demanded in writing that American Petrofina provide them with a recordable release on the subject lands not included in the producing compulsory unit. As a result of GoldKing's interest in obtaining a farmout from American Petrofina, et al., it intervened in the negotiations with Shultz and Pharis. GoldKing's agreement to grant Shultz and Pharis a new lease (with a one-quarter royalty and certain bonus payments) on their mineral interest in the Mallett Bay property, coupled with GoldKing's efforts to obtain from American Petrofina a recordable release of the interest of Shultz and Pharis from the original Mallett Bay-Beeson lease, culminated on June 30, 1982, with the execution by American Petrofina and its major co-owners of a partial release as demanded by Attorney Smith only as to the mineral interests of Shultz and Pharis.
On June 1, 1982, American Petrofina, MOEPSI and Sun Exploration assigned the Mallett Bay-Beeson lease, excluding the thirty (30) acre compulsory unit and the interests of Shultz and Pharis, to GoldKing as a part of a farmout agreement. Under the farmout agreement GoldKing was obligated to drill a 12,000 foot well on the leased property on or before January 25, 1983, under penalty of forfeiture of the lease assignment and the farmout agreement.
On October 25, 1982, I.P. Saal, Jr., an attorney representing most of the remaining owners of the lessors' mineral interests in the original Mallett Bay lease, demanded a release from American Petrofina, et al., of the original Mallett Bay-Beeson lease. American Petrofina referred the Saal demand to GoldKing who advised Saal of the farmout agreement from American Petrofina. Because of its pending plans to drill a well on the subject lands, GoldKing asked that Saal's release demands be withdrawn. Saal's clients refused.
As operator and working interest partner with GoldKing and The Stone Petroleum Corporation (Stone), Lamson Onshore Petroleum Corporation (Lamson Onshore) drilled the Lamson/Onshore A.S. White No. 1 Well on December 6, 1982, on the subject lands, which cost $3,362,300. On March 14, 1983, this well was plugged and abandoned as a dry hole. Thereafter, on May 13, 1983, GoldKing in participation with Lamson Onshore, drilled the Lamson/Onshore Clair Marceaux Well No. 1 on adjoining property to the north of the subject lands. This well was completed as a well capable of producing gas and condensate in commercial quantities, and on December 18, 1983, a geographical unit was formed which included a portion of the subject land equal to 42% of the total unit area.
Those persons represented by I.P. Saal, Jr. initiated this litigation on March 15, 1983, seeking partial cancellation of the original Mallett Bay-Beeson lease, damages and attorneys' fees.
PREMATURITY
American Petrofina, its co-owners and assignees contend that they neither abandoned nor failed to develop the original Mallett Bay lease. They argue that plaintiffs' action was premature because a necessary predicate to their action, a placing in default as contemplated by LSA-R.S. 31:135, was not effected prior to the initiation of this suit.
They filed a dilatory exception of prematurity which was overruled by the trial court. In its oral reasons for judgment on the dilatory exception, the trial court stated:
"Thus, if the landowner is going to file a suit to cancel because of the mere failure to develop, it must be shown that he had put the leaseholder on notice that he did not agree with the progress of development or absence of any development. The phrase `mere failure to develop' in this rule is significant. *1012 This is not what we have in this case.... The facts show that here Petrofina was in a situation at one time when its management of the lease could have been characterized as a mere failure to develop. But things began to happen. The wells which were on the property just weren't paying off, so Petrofina went in and plugged the wells. An then, of course, Mr. Burlingame wrote them for the White and the Cornell University interest, and Petrofina divested itself of one-half of the rights they had on this property.... Petrofina's action was a significant change of position, and although there may be some argument, and maybe good argument, produced later that it could have developed the property even though it only owned the one-half or it could have made arrangements with the other new lessees of the White and Cornell interests, nevertheless, Petrofina certainly placed itself in a disadvantageous position; because now it has to rely upon the goodwill and the actions of other parties. It made its task of development more difficult by reducing its leasehold to one-half of the mineral estate. This is an act which, if actionable, is not a passive breach, and should be the basis for the landowners to test Petrofina's failure to develop without the prerequsite [sic] of the technical putting in default. In this case it becomes supertechnical to say please now develop the land, when what Petrofina has done is apparently put themselves in a situation where further development was highly unlikely. And, of course, the subsequent incident with Pharis and Schultz [sic] underscores Petrofina's problems created by the divestiture... [T]he releases upon demand definitely constitute positive action and are active and not passive. The exception of prematurity is not well taken."
In its written reasons for judgment rendered after trial on the merits, the trial court stated:
"In an oft-quoted opinion of 1948 the Louisiana Supreme Court stated:
`the law of this state is well settled that the main consideration of a mineral lease is the development of the leased premises for minerals, and that the lease [sic] must develop with reasonable diligence or give up the contract; ... having due regard for the interest of both contracting parties.' Carter v. Arkansas Louisiana Gas Company [213 La. 1028], 36 So.2d, 26 (La.1948).
It is equally well settled that the breach of the obligation to reasonably develop a mineral lease, whether the obligation is implied or express, does not result in the automatic termination of the lease. As the court stated in the Carter case, a suit based upon the failure to reasonably develop is subject to a determination based upon the particular circumstances of each case. Furthermore, what constitutes a reasonable development is governed by what ordinarily prudent persons under similar circumstances would expect. In the case of Waseco Chemical and Supply Company v. Bayou State Corporation, 371 So.2d 305 (2d Circuit, 1979), the Court quoted extensively from Professor Litvinoff from the work 7 Litvinoff, Louisiana Civil Code Treatise, Book Two. It pointed out that the cancellation of a lease is a harsh remedy not to be granted without serious considerations. Those considerations which the Court should make before pronouncing dissolution are: 1) extent and gravity of the failure to perform, 2) nature of the obligor's fault, 3) good or bad faith of the parties, and 4) surrounding economic circumstances....
On February 2, 1979 C.R. Carswell, district manager for Fina, was given a written `request for authority to plug and abandon' form which affected the existing wells on the subject property. In the portion of that office form which provides for a narrative on the detailed reasons for the action, the following language is typewritten:
*1013 `No possibilities of commercial oil or gas production. Wells should be plugged and abandoned. This will be a lease abandonment-not under oil payment.'
Right below this within the same space is the writing in long hand:
`acreage will be held by LRASUA.'
Defendants contend that the phrase `lease abandonment' does not mean what it says and that there was no intention on the part of Fina to halt development of the subject property. It was suggested that the term `lease abandonment' really was a loose term synonymous with the plugging of the existing wells which were no longer producing at a profitable level. Defendants take the same position regarding other references to an abandonment made in some of Fina's interoffice memos which were filed into evidence.
The language of these communications is not conclusive on the issue of non-development of the lease. But a review of the total case leads the court to the conclusion that Fina had, in fact, abandoned the property in question and the accumulated actions of this operator constituted a breach for which the plaintiffs are entitled to relief.
Our Supreme Court addressed this issue in Middleton v. California Company [237 La. 1039], 112 So.2d 704 (La.Sp. Ct., 1959). It stated that when an operator has concluded that development in an area is unprofitable and no plans for development are contemplated:
`... it is settled that the lessee is bound to release all acreage which he does not intend to develop'. (id. [112 So.2d] at pg. 709)
While it may be true that others were viewing the subject property with some interest toward mineral development, Fina and its partners intended to hold the leased acreage without a plan of development as early as March 1977 when all production ceased and, evidently, for some time before that.
Of course, the existing law did not impose a positive duty upon Fina to record releases in favor of all of the lessors until demand was made. Nevertheless, the obligation to develop remained and was breached by Fina's actions and lack of action in regards to the property.
The incident of the Burlingame letter and the subsequent release which reduced the mineral lessee's holdings by one-half was consistent with Fina's official position at that time. It was a ratification through company actions of its position regarding the acreage at that time.
Fina's reluctance to make an immediate release of the interest owned by Shultz and Pharis is understandable because, by that time, possibilities of joint development had gained the attention of Fina's personnel. But again, the release issued to Pharis and Shultz constituted a corporate acknowledgement by Fina regarding the lease. What was acknowledged was that the rights of the lessors under the Mallett Bay Lease were no different from the rights of the lessors under the original A.S. White Lease. The method by which the Pharis-Shultz release was handled revealed the activities by Goldking and others to put together a plan of development involving this property. Nevertheless, the court is of the opinion that the breach of the contract had already occurred through the neglect and eventual abandonment of the lease and neither the efforts by Fina nor its assigns could revitalize the lease and deny to the plaintiffs their remedy."
Pertinent to this case are the following articles of the Mineral Code:
LSA-R.S. 31:122
"A mineral lessee is not under a fiduciary obligation to his lessor, but he is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of *1014 himself and his lessor. Parties may stipulate what shall constitute reasonably prudent conduct on the part of the lessee."
LSA-R.S. 31:135
"The provisions of the Louisiana Civil Code concerning putting in default are applicable to mineral leases subject to the following modifications."
As a necessary corollary to R.S. 31:135 the following Civil Code articles are also applicable:
LSA-C.C. Art. 1931
"A contract may be violated, either actively by doing something inconsistent with the obligation it has proposed or passively by not doing what was covenanted to be done, or not doing it at the time, or in the manner stipulated or implied from the nature of the contract."
LSA-C.C. Art. 1932
"When there is an active violation of the contract, damages are due from the moment the act of contravention has been done, and the creditor is under no obligation to put the debtor in default, in order to entitle him to his action."
LSA-C.C. Art. 1933
"When the breach has been passive only, damages are due from the time the debtor has been put in default, in the manner directed in this chapter...."
We have carefully reviewed the trial court's reasons for judgment, which reflect thorough and conscientious reasons. However, in some portions of the court's reasons it based its decision to cancel the Mallett Bay lease on American Petrofina's non-development of the lease, culminating with its release of the original A.S. White lease; in other portions, it characterized American Petrofina's actions as an abandonment of the original Mallett Bay lease. In an attempt to clarify its holding, the trial court stated, "The court has characterized Fina's handling of the leased premises as an abandonment. Nevertheless, the abandonment which the court described was simply an extreme example of the failure to develop and does not fall into a separate legal category." (Emphasis added.) Therefore, we perceive the trial court's reasons for ordering a partial lease cancellation because American Petrofina's failure to develop coupled with its voluntary release of the original White lease, transformed its passive breach of the implied obligation to develop the subject lands into an active one. Therefore, the trial court concluded that it was not necessary for the plaintiffs to place the appellants in default before seeking judicial cancellation of the Mallett Bay lease. This we hold was erroneous.
After production in paying quantities has been obtained from a mineral formation, it is the duty of the lessee to develop the producing formation as a reasonably prudent operator, taking into consideration both his own interests and those of the lessor. To fulfill the development duty under the law, a lessee has the obligation to develop known mineral producing formations in the manner of a reasonable, prudent operator and to explore and test all portions of the leased premises after discovery of minerals in paying quantities in the manner of a reasonable, prudent operator. Vetter v. Morrow, 361 So.2d 898 (La. App. 2nd Cir.1978). Public policy dictates the necessity of the principle of "reasonable development" to give effect to the parties' intent in confecting a mineral lease, to assure the reasonable development of Louisiana's natural resources, and to prevent the removal of property from commerce. Dawes v. Hale, 421 So.2d 1208 (La.App. 2nd Cir.1982). Therefore, under R.S. 31:122 there is an implied covenant of every mineral lease that the lessee has a duty to develop the leased premises.
Since the duty to develop is an implied obligation, the jurisprudence has consistently held that a breach of this duty is passive, and a formal placing in default is required before judicial intervention may be sought. Trinidad Petroleum v. Pioneer Natural Gas, 416 So.2d 290 (La.App. 3rd Cir.1982), writ denied, 422 So.2d 154 *1015 (La.1982); Pipes v. Payne, 156 La. 791, 101 So. 144 (1924). In Pipes, supra, a landmark case in the area of non-development of the lease, the court stated:
"Under these circumstances, we think that plaintiff, before suing to have the contract declared forfeited, should have made demand on defendants to further develop the property, and should have given them a reasonable time within which to have done so. In other words, plaintiff should have put defendants in default. In this connection, it may be observed that it is said in Thornton on Oil and Gas (3d Ed.) Sec. 182, p. 302, that:
`If the lessor desires to declare a forfeiture of the lease for the reason that the land has not been fully developed, although the lessee has entered and developed a part of it, he must give notice to such lessee of his intention to declare a forfeiture if the lease is not fully developed, and reasonable time must be given for the development.'"
The purpose of the default requirement in this context is to provide the lessee notice that the lessor considers the lessee's actions (or inaction) as violative of the implied obligation to develop the leased premises, and to afford the lessee a reasonable opportunity to perform its development obligations. Pipes, supra.
In the present case we must consider the following issues relative to development: (1) is a demand to cancel a mineral lease sufficient to constitute a putting in default; and (2) did American Petrofina's actions in granting the release of the original White lease constitute abandonment or an active breach of its duty to develop the leased premises?
The demands of I.P. Saal on October 25, 1982, and Duncan Smith on June 19, 1981, were for cancellation of the Mallett Bay lease rather than lease development. Louisiana jurisprudence has consistently held that a demand for cancellation is not a substitute for a placing in default. In Brown v. Sugar Creek Syndicate, 195 La. 865, 197 So. 583 (1940), the court disposed of the issue and stated:
"The record shows that the defendant lessees are in possession of the property and are operating one producing oil well. Plaintiffs do not allege that they made any demand for further development or that they put the defendant lessees in default. In the absence of allegations and proof to that effect, plaintiffs are not entitled to have the leases cancelled on the grounds of failure to reasonably and further develop the leased premises. Pipes v. Payne, 156 La. 791, 101 So. 144 [1924]; Hiller v. Humphreys Carbon Company, 165 La. 370, 115 So. 623 [1928]; and Temple v. Lindsay, 182 La. 22, 23, 161 So. 8 [1935]. Plaintiffs contend that it was unnecessary to prove that demand was made for further development and that the defendants were placed in default, because their attorney, on October 11, 1937, wrote the defendants a letter demanding a release of the oil and gas leases held by them, citing Stockelback v. Bradley, 159 La. 336, 105 So. 363, 364 [1924]. The letter demanded the cancellation of the leases and made no request for reasonable development of the land. In the above case cited by counsel, the court stated: ` * * * It is well settled that where a party refuses, and does not merely fail or neglect, to comply with his obligation, the other party need not formally put him in default.' In the instant case, defendant lessees have not refused to comply with any implied obligations but have simply refused to cancel the leases." (Emphasis added.)
Accordingly, we conclude that the lessors under the original Mallett Bay lease did not place appellants in default on the strength of the Smith and Saal letters which demanded a release.
The plaintiffs persuasively argued to the trial court that American Petrofina abandoned the Mallett Bay lease when it "plugged and abandoned" the five non-producing A.S. White wells, and when it released the one-half mineral interest to the subject lands it held under the original A.S. White lease.
*1016 Though there is no provision in the Mineral Code which directly addresses "abandonment" in the context of mineral law, Bickham v. Bussa Oil and Gas Co., 152 So. 393 (La.App. 2nd Cir.1934), held that the party asserting abandonment must prove (1) an act of abandonment and (2) the intent to abandon the property. Since there is no provision in the mineral code for abandonment, we may look to the Civil Code for its general treatment of abandonment. LSA-R.S. 31:2; see also Milling v. Collector of Revenue, 220 La. 773, 57 So.2d 679 (1952).
Abandonment was defined in Salim v. Louisiana State Board of Education, 289 So.2d 554 (La.App. 3rd Cir.1974), writ denied, 293 So.2d 177 (La.1974), as follows:
"`Abandonment' of property or of a right is the voluntary relinquishment thereof by its owner or holder, with the intention of terminating his ownership, possession and control, and without vesting ownership in any other person. Powell v. Cox [92 So.2d 739 (La. App. 2 Cir.1957)], supra; New Orleans Bank & Trust Co. v. City of New Orleans, 176 La. 946, 147 So. 42 (1933)."
Plaintiffs based their abandonment argument on the physical plugging of the five A.S. White wells in 1979, the accompanying internal memoranda of American Petrofina regarding such activity, and the release granted to Mrs. A.S. White and Cornell University.
We find that the physical plugging and abandonment of the five wells does not constitute proof of abandonment of the Mallett Bay lease. These wells were required to be plugged and abandoned by the regulations of the Louisiana Department of Conservation because they no longer produced condensates and hydrocarbons in paying quantities. Therefore, we conclude that the physical plugging of the wells does not support any elements of abandonment.
To further strengthen their argument that the plugging of the defunct A.S. White wells constituted legal abandonment of the Mallett Bay lease, plaintiffs call attention to two American Petrofina interoffice memos. The first typewritten memo dated February 2, 1979, from W.F. Barthelemy to C.R. Carswell, American Petrofina's general manager of drilling and production, stated, "No possibilities of commercial oil or gas production. Wells should be plugged and abandoned. This will be a lease abandonment. LEASE ABANDONMENTNOT UNDER OIL PAYMENT." Just below that handwriting was the statement, "Acreage will be held by LRASUA [the 30 acre portion of the subject land which formed part of the off-site compulsory unit]." The second memo dated February 9, 1979, an "Authority for Retirement of Capital Assets" states, "Lease abandonmentNot under oil payment. Wells are TA and have no possibilities for recompletion in other zones. Recommend wells be plugged and lease abandoned."
In response to plaintiffs' assertions, C.R. Carswell testified that it was the intent of the memos that only the wells were to be abandoned, not the leases; as evidence of that intent he pointed out the handwritten section in the first memo which stated that the leases would be maintained by the 30 acres of the subject lands included in the compulsory unit. He explained that persons in different sections of the oil industry often use the term "lease" loosely "referring to a geographical location and the physical property, the wells, the tank battery, etc. And [it was] the context of this... we were talking about the physical presence of those wells, that equipment and that geographical location."
After considering this evidence, the trial court stated that these internal communications were inconclusive on the issue of lease non-development. We agree.
Against this backdrop, however, the trial court injected the September 4, 1979, release American Petrofina granted Mrs. A.S. White and Cornell University, and concluded that this action evidenced its intention to abandon the original Mallett Bay lease. The trial court opined that American Petrofina placed itself in a situation that by voluntarily releasing one-half the minerals, it made it highly unlikely for development to take place because now it *1017 had to rely on third parties to accomplish this task. Thus the trial court concluded American Petrofina actively breached the original Mallett Bay lease, abandoning it. In all due deference to the learned trial court, we disagree with its conclusion.
It cannot be ignored that the mineral servitudes granted originally by A.S. White and the Mallett Bay Company were separate contracts which contained no self-operating resolutory conditions regarding the lessee's development obligations or the interconexity of the two leases. When American Petrofina and its major co-owners relinquished their rights to the original A.S. White lease they did not per se forfeit their rights established by the separate mineral contract granted by the Mallett Bay Company in 1941. Frank Carr, American Petrofina's director of special projects, interpreted the Burlingame demand on behalf of Mrs. A.S. White and Cornell University and its resulting release as strictly a relinquishment of their rights to the A.S. White lease. C.R. Carswell, American Petrofina's director of drilling and production, further testified about his discussions with Carr regarding the effect that the White release would have on the Mallett Bay lease. They concluded, as evidenced by correspondence between them, that they wanted to maintain their undivided one-half (½) mineral interest held through the Mallett Bay lease, and that the 1975 compulsory unit would hold the Mallett Bay lease until they could conclude their ongoing plans to drill a deep well on the subject property through a farmout agreement. In the context of legal abandonment, the element of an intent to abandon the separate lease obligations of the Mallett Bay agreement is glaringly absent.
The same reasoning holds true regarding American Petrofina's subsequent release of Shultz and Pharis. The record supports that there was no intent to abandon the Mallett Bay lease. When Shultz and Pharis made demand for a release, American Petrofina was processing the GoldKing farmout. Only in an attempt to salvage this development effort through a farmout to GoldKing were Shultz and Pharis released from the original Mallett Bay lease.
Underlying the trial court's opinion is an ever pervasive argument that American Petrofina's relinquishment of the A.S. White lease made its ability to perform under the Mallett Bay lease more difficult because it no longer was the leaseholder of 100% of the mineral interests in the subject lands. The trial court concluded that to require plaintiffs to place appellants into default would have been a vain and useless gesture. This reasoning is based on an exception to the default requirements recognized in the comments to R.S. 31:135. The comments state in part:
"[I]f a party who has breached a contract and would otherwise be entitled to be placed in default either denies the existence of his obligation or refuses to perform it, the damaged party is not required to place him in default as a prerequisite to an action for dissolution or damages, or both. The expression of the decisions is that to require a putting in default in these circumstances would be requiring `a vain and useless thing.' This exception is specifically recognized as applicable in mineral lease cases. E.g., Eota Realty Co. v. Carter Oil Co., 225 La. 790, 74 So.2d 30 (1954); Wadkins v. Wilson Oil Corp., 199 La. 656, 6 So.2d 720 (1942)." (Emphasis added.)
Accordingly, the trial court deemed American Petrofina's actions an active breach of the Mallett Bay lease, i.e., it did something voluntarily which placed them in a situation where further development of the Mallett Bay lease was highly unlikely.
In granting the A.S. White release, American Petrofina neither denied its obligations to develop the Mallett Bay lease nor evidenced a refusal on its part to perform its contractual obligations. Although we agree that American Petrofina placed itself in a more difficult position because it was no longer the leaseholder of 100% of the mineral interests, the record does not support that this made American Petrofina's development of the lease highly unlikely. The trial court's reasoning fails to account for the ability of American Petrofina to jointly develop the leased premises *1018 through a cooperative farmout with the new lessees of the A.S. White mineral interests. See Frazier v. Justiss Mears Oil Co., Inc., 391 So.2d 485 (La.App. 2nd Cir. 1980), writ denied, 395 So.2d 340 (La.1980).
In plaintiff's brief, they contend that American Petrofina failed to act as a prudent operator pursuant to LSA-R.S. 31:122. In view of this contention, we feel compelled to address whether American Petrofina breached its duty to act as a prudent operator of the subject lands to such an extent that a judicial dissolution of the Mallett Bay lease was in order, without the necessity of the prerequisite demand to develop. Such a dissolution has its roots in LSA-C.C. Art. 2047 which provides:
"In all cases the dissolution of a contract may be demanded by suit or by exception; and when the resolutory condition is an event, not depending on the will of either party, the contract is dissolved of right; but, in other cases, it must be sued for, and the party in default may, according to circumstances, have a future time allowed for the performance of the condition."
The right to dissolve a mineral lease is subject to judicial control according to the factual circumstances of each case. Rudnick v. Union Producing Co., 209 La. 943, 25 So.2d 906 (1946). In order to dissolve a mineral lease the breach must be shown to be substantial. Cox v. Cardinal Drilling Company, 188 So.2d 667 (La.App. 2nd Cir. 1966). In Simmons v. Pure Oil Company, 124 So.2d 161 (La.App. 2nd Cir.1960), affirmed, 241 La. 592, 129 So.2d 786 (1961), the court stated:
"Doubtless it is an obligation of the lessee to operate the lease premises to the mutual advantage of itself and the lessor. LSA-C.C. Art. 2710; Prince v. Standard Oil Co. of Louisiana, 1920, 147 La. 283, 84 So. 657; and in a proper case a lessor may maintain an action for dissolution of the contract of lease against his lessee who has failed to act as a prudent administrator of the leased premises. LSA-C.C. Arts. 1926, 2046, 2711 and 2729. Bloom v. Southern Amusement Co., 1955, 228 La. 44, 81 So.2d 763.
Manifestly, every act of omission or commission, no matter how small, will not justify cancellation of a lease on grounds of imprudent administration. The dereliction of duty must be of a substantial nature and cause injury to the lessor."
The record supports that the acts relied upon by plaintiffs are insufficient to justify the dissolution of the Mallett Bay lease on grounds that American Petrofina breached its duty to act as a prudent operator. Under the facts of this case we cannot say that American Petrofina and its co-owners failed to prudently administer the Mallett Bay lease. There were no stated self-operating resolutory conditions in the two leases which exempted either from the demand requirement established by the mineral and civil codes of Louisiana. American Petrofina's actions regarding the release of the A.S. White lease in 1979 were forthright and promptly recorded in the public records of Cameron Parish. Despite this, plaintiffs failed to make demand for development of the subject lands, and further did not make their release demands until October 1982, just prior to the actual drilling of the Lamson/Onshore A.S. White Number 1 Well on the subject lands. American Petrofina developed the subject lands through the implementation of a farmout agreement with GoldKing, and its co-venturers, resulting in the drilling of a deep test well in 1982 on the subject lands which revealed significant geological information, and led to the successful drilling of an off-site producing deep well which benefited the Mallett Bay lessors.
For the foregoing reasons, the judgment of the trial court is reversed and set aside. Appellants' exception of prematurity is sustained, and plaintiffs' action for partial lease cancellation and damages is dismissed. Costs of this appeal are assessed to plaintiffs-appellees.
REVERSED.
NOTES
[*] Judge Edward M. Mouser of the Thirty-Third Judicial District Court 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/1722578/ | 849 S.W.2d 447 (1993)
Mario URIBE, Appellant,
v.
HOUSTON GENERAL INSURANCE COMPANY, Appellee,
No. 04-92-00382-CV.
Court of Appeals of Texas, San Antonio.
February 26, 1993.
*448 Phil Hardberger, Hardberger & Rodriguez, Inc., Larry Zinn, San Antonio, for appellant.
John Milano, Jr., Thornton, Summers, Biechlin, Dunham & Brown, Inc., San Antonio, for appellee.
Before PEEPLES, BIERY and GARCIA, JJ.
OPINION
BIERY, Justice.
This is an appeal of a summary judgment granted in favor of the defendant, Houston General Insurance Company [Houston General] and against the plaintiff, Mario Uribe, on the plaintiff's claims of violations of Tex.Ins.Code Ann. art. 21.21, §§ 4, 16 (Vernon Supp.1993); State Bd. of Ins., 28 Tex.Admin.Code §§ 21.3(a), 21.4 (West October 10, 1988) (Unfair Competition and Unfair Practices of Insurers, and Misrepresentation of Policies); Tex.Ins.Code Ann. art. 21.21-2, § 2(g) (Vernon 1981); State Bd. of Ins., 28 Tex.Admin.Code § 21.203 (West October 10, 1988) (Unfair Claims Settlement Practices); Tex.Bus. & Com.Code Ann. § 17.50(a) (Vernon 1987); and breach of the duty of good faith and fair dealing.[1] The trial judge granted a general summary judgment on all of Mr. Uribe's causes of actions. In one point of error, Mr. Uribe contends the general summary judgment as to all six causes of action was erroneously granted. We reverse and remand.
The standard for appellate review of a summary judgment for a defendant is whether the summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact as to one or more of the essential elements of each of the plaintiff's causes of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). The movant has the burden to show there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985); Tex.R.Civ.P. 166(a), (c).
A defendant may not be granted summary judgment on a cause of action not addressed in the summary judgment proceeding. Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983). Motions for summary judgment "stand or fall on the grounds specifically set forth in the motion(s)." Ortiz v. Spann, 671 S.W.2d 909, 914 (Tex.App. Corpus Christi 1984, writ ref'd n.r.e.) (opinion on rehearing) (emphasis added). As stated by the Texas Supreme Court:
It is axiomatic that one may not be granted judgment as a matter of law on a cause of action not addressed in a summary judgment proceeding. In City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979), we wrote, "The movant ... must establish his entitlement to a summary judgment on the issues expressly presented to the trial court by conclusively proving all essential elements of his cause of action or defense as a matter of law."
Chessher, 658 S.W.2d at 564 (alteration in original). If a summary judgment is erroneously rendered when under the record of the summary judgment proceeding one or more causes of action were not addressed in the movant's motion for summary judgment, we must reverse the judgment of the trial court and remand the case for determination of the untried issues. See Teer v. Duddlesten, 664 S.W.2d 702, 703-04 (Tex. 1984); Chessher, 658 S.W.2d at 564; Schlipf v. Exxon Corp., 644 S.W.2d 453, 454-55 (Tex.1982).[2] This is because the *449 trial court should have rendered a partial and interlocutory summary judgment, not a final judgment disposing of all issues and parties in the case. Teer, 664 S.W.2d at 705; Chessher, 658 S.W.2d at 564. The merits of the appeal are not reached because, in the absence of an order of severance, a partial or interlocutory summary judgment is appealable only "when and not before the same is merged in a final judgment disposing of the whole case." Pan Am. Petroleum Corp. v. Texas Pac. Coal & Oil Co., 159 Tex. 550, 324 S.W.2d 200, 201 (1959); see also Teer, 664 S.W.2d at 704-05.
For example, in Teer, 664 S.W.2d at 702, landowners brought an action against the City of Bellaire, Wayne Duddlesten and R-D-37, Ltd. seeking declaration of the invalidity of certain city zoning ordinances. Two of the defendants, Duddlesten and R-D-37, Ltd., moved for a summary judgment. The trial court entered a final summary judgment in favor of all the defendants, even though the City was not a party to the summary judgment proceedings. In affirming the trial court, the court of appeals declared the City's ordinances valid. Teer v. Duddlesten, 641 S.W.2d 569, 573-76 (Tex.App.Houston [14th Dist.] 1982). The supreme court reversed the judgment of the lower courts and remanded the entire cause to the trial court without addressing the merits of the landowners' appealthe validity of the zoning ordinances. Teer, 664 S.W.2d at 705. In a dissenting opinion, Justice Robertson suggested:
In remanding this cause we will needlessly waste the time and effort of the parties and courts involved in this litigation. The merits of this cause, brought forward by Plaintiffs' appeal of their declaratory judgment action, are properly before the court and should be passed on.
Id. (Robertson, J., dissenting). However, in declining to review the merits of the appeal as to the parties properly before the court, the majority stressed the importance of obtaining a proper summary judgment:
The judgment in the summary judgment proceeding erroneously included City of Bellaire. The correct judgment was one that did not adjudicate plaintiffs' rights against City. It should have been an interlocutory or partial summary judgment. We reverse the judgments of the courts below and remand the cause to the trial court for a trial of the action against City of Bellaire.
Id. at 705. (emphasis added)
Chessher v. Southwestern Bell Telephone Co., 658 S.W.2d 563 (Tex.1983) is also instructive. Plaintiff instituted suit against the telephone utility to recover damages for alleged breach of employment contract, wrongful discharge, fraud and misrepresentation. Id. at 564. The defendant moved for summary judgment solely on the plaintiff's breach of contract claim; the trial court rendered a final summary judgment in its favor. The supreme court reversed and remanded the cause to the trial court:
Because Southwestern Bell moved for summary judgment on only one of Chessher's four causes of action, the court of appeals' affirmation of this judgment was improper as to the other causes of action alleged by Chessher. Griffin v. Rowden, 654 S.W.2d 435 (Tex. 1983); Puga v. Donna Fruit Co., Inc. 634 S.W.2d 677 (Tex. 1982); Missouri-Kan.-Tex. R.R. Co. v. City of Dallas, 623 S.W.2d 296 (Tex. 1981). Pursuant to Tex.R.Civ.P. 483, the application for writ of error is granted, ... the judgments of the courts below are reversed ...
Id. at 564 (emphasis added). As in Teer, the supreme court did not review the merits of the plaintiff's appeal. Therefore, a motion for summary judgment which challenges *450 less than all causes of action pled and an erroneous final general summary judgment which has been entered by the trial court requires reversal and remand of the entire cause to the trial court without considering the merits of the appeal. See Johnson v. Rollen, 818 S.W.2d 180, 182 (Tex.AppHouston [1st Dist] 1991, no writ); Whiddon v. Metni, 650 S.W.2d 904, 906 (Tex.App.Dallas 1983, writ refd n.r.e.).[3]
This case began as a worker's compensation claim filed by appellant Uribe claiming compensation for personal injuries sustained at work on January 23, 1990. By March 1990, appellee Houston General refused to pay any weekly compensation or medical benefits to appellant. On May 9, 1990, the Texas Compensation Commission awarded Uribe $32,079.77 in benefits from Houston General and ordered Houston General to pay all related medical bills. On May 30, 1990, with the advice of his attorneys, Uribe entered into a compromise settlement agreement (CSA) with Houston General to settle his claim for $30,000 and related medical expenses. As required by the statute in effect at that time, the form contained the following language:
The Board finds the liability of the carrier or the extent of the injures is uncertain indefinite or incapable of being satisfactorily established.... It is ordered that the compromise agreement be and same is hereby approved.
Tex.Rev.Civ.Stat.Ann. art. 8307, § 12 (Vernon 1967).[4] After Houston General paid appellant the $30,000 pursuant to the CSA, Uribe filed suit alleging violations of the Texas Insurance Code, the Texas Administrative Code and the Texas Deceptive Trade Practices Act. Mr. Uribe also alleged Houston General violated its common law duty of good faith and fair dealing by mishandling and wrongfully denying his claim.
Regarding Houston General's motion for summary judgment, the record reveals the motion is based on the argument the summary judgment proof establishes, as a matter of law, there is no genuine issue of fact about one or more of the essential elements of appellant's common law cause of action: Houston General contends the "finding of uncertainty" language printed on the CSA constitutes a bar to any subsequent cause of action for breach of the duty of good faith and fair dealing. The motion, however, does not *451 speak to the remaining statutory causes of action raised by appellant's pleadings. Under this record, the trial court could only address the breach of duty of good faith and fair dealing cause of action specifically presented in the motion for summary judgment. Additionally, because the summary judgment order was general, we cannot determine from the record whether the additional causes of action were considered. Because of the requirement that all causes be specifically addressed in the movant's motion for summary judgment, a final summary judgment was improper. Accordingly, we reverse and remand the cause to the trial court for further proceedings consistent with this opinion.
PEEPLES, Justice, concurring.
I concur but with some reluctance.
Here the trial court rendered a takenothing summary judgment on six causes of action even though the motion addressed only one. Plaintiff properly attacks that action in this court. In these circumstances, the sensible course of action for appellate courts is to review the propriety of the ruling on the one cause of action properly addressed in the motion and remand as to the others.
The supreme court cases on this issue seem to me a little ambiguous about the proper approach because the court's judgments have not always corresponded precisely to its language. In Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563 (Tex.1983), the court said it was improper for the court of appeals to affirm as to the unaddressed causes of action. Id. at 564. But the court did not discuss the merits of the properly addressed cause of action; it reversed and remanded the entire case to the trial court. In Teer v. Duddlesten, 664 S.W.2d 702 (Tex. 1984), the summary judgment adjudicated the rights of a defendant, the City of Bellaire, which was not even mentioned in the summary judgment motion. The court reversed the entire cause (involving all parties) and remanded "for a trial of the action against City of Bellaire." Id. at 705. But the court earlier said the correct approach in such cases is to "remand for a trial of the untried [i.e. unaddressed] issue." Id. at 704. That language seems to say that an appellate court should review the issues that were properly joined and litigated, but remand for trial of the other issues.
The whole problem can be avoided at the trial level by ensuring that the relief granted does not exceed the relief requested. If partial relief is requested and granted, either party may ask for a severance to make that action final and appealable. But when the trial court grants a final summary judgment even though the motion requested only partial relief, the question on appeal is whether to decide the correctness of the partial relief that was requested and granted (remanding the remainder of the case), or whether to send the entire case back without any appellate decision at all. Since the latter approach corresponds with the supreme court's actions, though not its language, I concur.
NOTES
[1] Although Plaintiffs First Amended Petition refers to Title 28 of the Texas Administrative Code § 21.2(a), the language quoted is actually located at § 21.3(a).
[2] A final judgment is one disposing of all issues and parties in the case. North E. Indep. Sch. Dist. v. Aldridge, 400 S.W.2d 893, 895-96 (Tex. 1966). In this case, the "Order Granting Summary Judgment" states, "IT IS THEREFORE ORDERED, ADJUDGED and DECREED that the Defendant, HOUSTON GENERAL INSURANCE COMPANY'S Motion for Summary Judgment should be, and the same is hereby granted in its entirety." Although the judgment does not include the "simple statement that all relief not expressly granted is denied" we hold the judgment disposes of all the issues and parties in this case and is, therefore, a final judgment. Schlipf, 644 S.W.2d at 454 (citing Aldridge).
[3] As non-movant, a plaintiff/appellant must nevertheless assign as error the failure of the defendant's motion for summary judgment to address all causes of action alleged. In Yiamouyiannis v. Thompson, 764 S.W.2d 338, 342 (Tex. App.San Antonio 1988, writ denied), cert, denied, 493 U.S. 1021, 110 S. Ct. 722, 107 L. Ed. 2d 742 (1990), this court held that the plaintiff must specifically assign that failure as error or the complaint will be waived. There, the opponent of drinking water fluoridation appealed a summary judgment granted in favor of the defendant newspaper, columnist, medical society and its spokesman. Id. at 339-40. Although the defendants failed to move for summary judgment on all pleaded causes of action, this court did not reverse and remand the entire cause to the trial court. Instead, the merits of the appeal were addressed:
In addition to the libel-related claims, plaintiff pleaded that the defendants used "official oppression" to keep him off radio and television. This, plaintiffs petition contends, violates section 39.02 of the Penal Code and 42 U.S.C. § 1983, and constitutes a tortious interference with his right to free speech. The summary judgment before us orders that plaintiff take nothing on the entire case, including these three non-defamation counts, even though they were not addressed by any of the motions for summary judgment. The court erred in ruling on these unchallenged causes of action. Chessher v. Southwestern Bell Tel. Co., 658 S.W.2d 563, 564 (Tex. 1983) (Because motion for summary judgment challenged only one of four pleaded causes of action, take-nothing judgment on the three unchallenged causes was improper. But plaintiff has not assigned these adverse rulings as error in this court, and therefore we cannot disturb them. Prudential Ins. Co. v. J.R. Franclen, Inc., 710 S.W.2d 568, 569 (Tex.1986); Gulf Consol. Int'l, Inc. v. Murphy, 658 S.W.2d 565, 566 (Tex. 1983).
Id. at 341-42 (emphasis added). In this case, however, appellant presents arguments concerning the failure of the motion for summary judgment to address all causes of action.
[4] Repealed by Act of Dec. 11, 1989, 71st Leg., 2nd C.S.. ch. 1, § 16.01(10), 1989 Tex.Gen.Laws 1, 114 (eff. Jan. 1, 1991). Under the current statutory scheme, former 8307, § 12 is now codified at Tex.Rev.Civ.Stat.Ann. art. 8308-4.33 (Vernon Supp.Pamphlet 1993). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1221941/ | 289 S.E.2d 186 (1982)
S. H.
v.
R. L. H.
No. 15449.
Supreme Court of Appeals of West Virginia.
March 18, 1982.
*188 Thomas R. Parks, Logan, for appellant.
John R. Glenn, Logan, for appellee.
NEELY, Justice:
We granted this appeal in order to illuminate further syl. pt. 7 of Garska v. McCoy, W.Va., 278 S.E.2d 357 (1981) that establishes principles for the award of child custody in domestic relations cases. That syllabus provides:
The concept of a "child of tender years" is somewhat elastic; obviously an infant in the suckling stages is of tender years, while an adolescent fourteen years of age or older is not, as he has an absolute right under W.Va.Code, 44-10-4 [1923] to nominate his own guardian. Where there is a child under fourteen years of age, but sufficiently mature that he can intelligently express a voluntary preference for one parent, the trial judge is entitled to give that preference such weight as circumstances warrant, and where such child demonstrates a preference for the parent who is not the primary caretaker, the trial judge is entitled to conclude that the presumption in favor of the primary caretaker is rebutted.
In the case before us the appellee father sought modification of a custody order on the grounds that the children wanted to live with him. There are three children involved in this case, J. H., age fourteen, R. L. H., age thirteen, and R. H., age eleven.
The trial court's findings of fact in this case were as follows:
1. [S. H.] and her present husband did live together for a period of time before they were married.
2. There is some resentment of the children of their new stepfather.
3. The oldest child, [J. H.], exercises considerable influence over the two younger children.
4. The oldest child, [J. H.], has been having sexual relations with older men, when she is able, and desires to live with her father because she believes that her mother is too restrictive in not approving of her relations with older men, and that she could have more freedom with her father. [J. H.] is fourteen (14) years of age.
5. The two younger children indicate the same preference as [J. H.], but primarily because of [J. H.'s] preference and, in any event, want to stay with their older sister, whichever parent she stays with.
6. [S. H.] has done an excellent job in caring for the children, and motivating them in school.
7. The father, [R. L. H.] has not been the primary custodian of the children for the past number of years, and the primary custodian of the infant children for the past several years has been [S. H.], the mother.
8. The father, [R. L. H.], is not an unfit person to have custody of the infant children, but has not had the experience or understanding of children of this age that [S. H.] has had.
9. The unquestionable best interests of the infant children and particularly the eldest child, [J. H.], would be best served by their remaining in the custody of their mother, [S. H.].
In deference to our syl. pt. 7 in Garska, supra, the court awarded the custody of the children to the appellee father but indicated on the record that he hoped this Court would grant an appeal and reevaluate the holding in syl. pt. 7 of Garska. After a *189 detailed review of the transcript of the proceedings before the trial court, we conclude that the trial court's order is entirely correct and we affirm the decision below awarding custody to the father.
I
There are a number of considerations that emerge from the factual record in this case that justify the continued rule that a child over the age of fourteen years has a right to nominate his or her own guardian and that younger children are entitled to express a preference about their guardian that the court must take into consideration. In the case before us the elder daughter, J. H. is a straight "A" student, is a member of her school honor society, and is active in extracurricular activities such as band and cheerleading. Furthermore, and more to the point, she has undertaken substantial child care duties with regard to her younger siblings and those children have expressed a primary preference to remain with their older sister regardless of which parent she chooses as her guardian. In addition, all things being equal, the younger children would prefer to live with their father.
It appears from the record that the appellant mother had an affair with a man who is now her husband before she married him and that the elder daughter, among other things, was responsible for waking the family up in the morning on occasions when the appellant's fiancé was spending the night. While the Court found as a fact that the elder daughter had become prematurely sexually active, it is also apparent from the record that she was not presented with a female model of chastity to imitate. While we do not either condemn or even judge the conduct of the mother, we find that any inference that the father would condone sexual activity more than the mother is unfounded.
The record indicates that the appellee father had custody of the children only one weekend a month and there was no evidence that the father encouraged the elder daughter to consort with older males or that he countenanced such a course of conduct to a greater extent than the mother. There is evidence that the children thought that their mother was too strict and that they contemplated relief from such strictness by living with their father; yet, there is no evidence that their father would not have exerted adequate discipline in an intelligent and competent manner. In fact, the court found specifically that the father was a fit parent. The evidence reveals that the appellee father had remarried, that his wife loved the three children and got alone well with them, and that there was substantial harmony in the father's house when the children visited there.
II
Since the trial court concluded that the appellant mother was, on balance, a materially better parent than the appellee father, and that the best interests of the children would be served by their continuing to live with the mother, this case squarely presents the question of what this Court meant in syl. pt. 7 of Garska, supra, when we said "... an adolescent fourteen years of age or older ... has an absolute right under W.Va.Code, 44-10-4 [1923] to nominate his own guardian." Initially, it must be pointed out that W.Va.Code, 44-10-4 [1923] does not directly apply to the award of guardianship among natural parents, but rather to circumstances where a guardian must be appointed for a child in lieu of natural parents. In the context before us, the statute is merely evidence of the legislature's conclusion concerning the age at which an adolescent should be given some substantial say in his own affairs. Some arbitrary age in this regard must be set, and since in a related context the legislature has drawn a line, we concluded in Garska, supra, that for purposes of consistency we should observe the same line.
The use of the word "nominate" in Code, 44-10-4 [1923] means that unless the court finds the nominee unfit to serve as guardian, the nominee should be confirmed by the court. See J. B. v. A. B., W.Va., 242 S.E.2d 248 (1978). This meaning should likewise be accorded our word "nominate" *190 from Garska, supra, in the context of an award of child custody of an adolescent over the age of fourteen to a natural parent. Certainly the court is not required to confirm a child's nomination of an "unfit" parent as his guardian, and when a child nominates an unfit parent as his guardian it is the obligation of the court to award the custody to the other parent. Where, for example, the record demonstrates that a parent is unreasonably lax in the maintenance of discipline, indifferent to the parental obligation to give direction and provide control for an adolescent, or follows a lifestyle that inevitably sets a licentious or immoral example, the court may reasonably conclude that such parent is an unfit guardian for an adolescent and decline to confirm the nomination by the child of that parent.
III
The facts of the case before us provide an opportunity to speak to an issue that we have not previously addressed, namely the relationship between minor children and the new spouse or regular companion of the parent originally awarded custody in a divorce decree. Literature is replete with examples of the wicked stepfather or stepmother we have all been raised on Snow White and our experience in these matters leads us to conclude that the relationship between children and a new stepfather or stepmother may create an abusive physical or emotional environment. In the case before us all three children are thriving in school and appear to be among the more successful children in their community. Their primary reason for preferring their father over their mother is the relationship that they have with their current stepfather. Apparently, the conflict in their mother's house emanates from their reluctance to accept their stepfather in the role of authority that they reserve for their natural father. This Court finds that their feelings in this regard are entirely justified.
In our leading cases on child custody in recent years, J. B. v. A. B., W.Va., 242 S.E.2d 248 (1978) and Garska v. McCoy, supra, we established a strong presumption in favor of the award of custody of children of tender years to the primary caretaker parent. We illuminated our reasons for this presumption in Garska, supra, where we said:
"Syl. pt. 2 of J. B. v. A. B., supra, attempted to remove from most run-of-the-mine divorce cases the entire issue of child custody. Certainly if we believed from our experience that full-blown hearings on child custody between two fit parents would afford more intelligent child placement than an arbitrary rule, we would not have adopted an arbitrary rule. However, it is emphatically the case that hearings do not enhance justice, particularly since custody fights are highly destructive to the emotional health of children. Furthermore, our mechanical rule was really quite narrowly drawn to apply only to those cases where voluminous evidence would inevitably be unenlightening. We limited the mechanical rule to the custody of children who are too young to formulate an opinion concerning their own custody and, further, we limited it to cases where initial determination had been made that the mother was, indeed, a fit parent."
In both J. B. v. A. B., supra, and Garska, supra, we discussed at length the inadequacy of the judicial process to make fine distinctions about relative degrees of parental competence between two fit parents. More importantly, however, we pointed out that the most persuasive evidence illuminating which parent will do the better job as guardian comes from the children themselves. Consequently, we provided an escape valve in domestic relations cases that permits the trial court to award custody to a parent who has not been the primary caretaker in those circumstances where the child articulates intelligent reasons for wishing to be with the other parent.
In the cases of child abuse that come before this Court we have noticed a remarkably high incidence of situations where the abusing adult is not a natural parent but rather either a stepparent or just a person of the opposite sex sharing living quarters with the natural parent. With *191 regard to children of tender years it is difficult to inquire into the facts and circumstances that surround the relationship between a child and his new stepparent or another adult sharing the residence. Nonetheless, when children get old enough that they can talk intelligently and formulate reasonable opinions, their feelings concerning a stepparent or an adult sharing living quarters should be taken very seriously by a trial court judge. In this regard we expressly hold today that the remarriage of a child's guardian or a permanent relationship in which a child's guardian and another adult share living quarters constitutes a significant change in circumstances and upon proper motion, warrants inquiry by the trial court into the relationship between the child and the new adult with particular attention to the child's preference for where he or she wishes to live if the child is capable of articulating an intelligent opinion on the subject. However, remarriage or a relationship with another adult, per se, raises no presumption against continued custody in the parent who was originally awarded custody.
On the record before us we find that the trial court correctly applied Garska v. McCoy, supra, to the facts of the case before him and accordingly the judgment of the Circuit Court of Logan County is affirmed.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2043672/ | 154 Ill. App. 3d 336 (1987)
507 N.E.2d 114
NEAL L. RUBIN, Plaintiff-Appellant,
v.
YELLOW CAB COMPANY et al., Defendants (Yellow Cab Company, Defendant-Appellee).
No. 85-2124.
Illinois Appellate Court First District (5th Division).
Opinion filed March 27, 1987.
*337 Bruce M. Briedman and Melbourne A. Noel, Jr., both of Laser, Schostock, Kolman & Frank, of Chicago, for appellant.
Jesmer & Harris, of Chicago (Allen L. Wiederer, of counsel), for appellee.
Judgment affirmed.
JUSTICE LORENZ delivered the opinion of the court:
Plaintiff filed a nine-count complaint against defendants after suffering an alleged battery in the hands of defendant cab driver. The trial court dismissed counts VII, VIII, and IX of plaintiff's fourth amended complaint for failure to state a cause of action against defendant cab company. On appeal, plaintiff argues that the trial court's dismissal was improper as (1) count IX alleged sufficient facts to render defendant cab company vicariously liable for battery under a theory of respondeat superior, and (2) counts VII and VIII each stated a cause of action for negligent or wilful and wanton supervision.
We affirm.
Plaintiff was driving on one of the city's streets when he inadvertently obstructed the path of a taxi, causing the latter to swerve and come into contact with plaintiff's vehicle. Angered by plaintiff's sudden blocking of his traffic lane, defendant driver proceeded to exit his cab, approach plaintiff, and strike him about the head and shoulder with a metal pipe.
*338 Plaintiff subsequently filed suit against Robert C. Ball (Ball), the cab driver, and Yellow Cab Company (Yellow Cab), the owner of the taxi, to recover damages for bodily injuries sustained as a result of the altercation. On defendant Yellow Cab's motion, the trial court dismissed seven of nine counts included in plaintiff's fourth amended complaint for failure to state a cause of action. Counts VII, VIII, and IX charged Yellow Cab with vicarious liability for battery and with negligent and/or wilful and wanton failure to supervise and inspect. This appeal concerns only the sufficiency of these three counts as they pertain to defendant Yellow Cab.
OPINION
1, 2 We initially consider whether the subject complaint states a cause of action under the doctrine of respondeat superior.
It is well established that an employer may be held liable for the negligent, wilful, malicious, or criminal acts of its employees where such acts are committed in the course of employment and in furtherance of the business of the employer. (Webb v. Jewel Cos. (1985), 137 Ill. App. 3d 1004, 485 N.E.2d 409.) However, where the acts complained of are committed solely for the benefit of the employee, the employer will not be held liable to an injured third party. See Awe v. Striker (1970), 129 Ill. App. 2d 478, 263 N.E.2d 345.
Plaintiff in the instant case maintains that his fourth amended complaint alleges sufficient facts to show that Ball committed the battery within the course and scope of his duties as a cab driver. According to plaintiff, Ball's acts were designed to further the business purposes of Yellow Cab by virtue of the fact that they: (1) fulfilled his obligation to investigate and report any accidents damaging property owned by Yellow Cab; (2) were performed pursuant to his obligation to protect property owned by Yellow Cab; and (3) were meant to prevent plaintiff and others from delaying his progress to obtain fares. We disagree.
First, the complaint in question contains no allegation that plaintiff was interfering with Ball's investigation or attempt to report the accident or, for that matter, that Ball was even attempting to investigate or report the incident at the time he struck plaintiff with the pipe. Rather, the subject complaint merely states that Ball got out of his cab, walked over to plaintiff, and proceeded to hit him over the head with a pipe. This act patently has no relation to the business of driving a cab. In view of their duties, cab drivers are not expected to strike individuals on the street with metal pipes. Second, the battery could have no relation to Yellow Cab's interest in protecting its property *339 since the contact between the two vehicles had already occurred. Lastly, the battery could not have prevented plaintiff from delaying Ball's progress to the airport to obtain passengers as a delay had already occurred before Ball got out of his cab to strike plaintiff.
While we accept the principles stated in the cases primarily relied on by plaintiff, their factual inappositeness makes their application improper in the resolution of the instant case. Gregor v. Kleiser (1982), 111 Ill. App. 3d 333, 443 N.E.2d 1162, Sunseri v. Puccia (1981), 97 Ill. App. 3d 488, 422 N.E.2d 925, and Parsons v. Weinstein Enterprises, Inc. (Fla. App. 1980), 387 So. 2d 1044, all present situations in which bartenders or bouncers endeavored to maintain order or protect the property of their employees. The nature of a bartender's or bouncer's job makes the use of force during the course of his employment highly probable. A cab driver, on the other hand, is basically relegated to transporting individuals from one destination to another and, as such, it is unlikely that he will undertake to attack a person that is neither a passenger nor is connected with the cab company. In Metzler v. Layton (1939), 373 Ill. 88, 25 N.E.2d 60, an employee holding the position of office manager in a finance company mistakenly shot plaintiff while in the pursuit of robbers. Likewise, the court found the employee to have acted within his managerial capacity and in accordance with his duty to protect the property and business of his employer.
The assault on plaintiff in the instant case amounted to a deviation from the conduct generally associated with the enterprise of cab driving. Accordingly, we find the facts before us to be more akin to those in Webb v. Jewel Cos. (1985), 137 Ill. App. 3d 1004, 485 N.E.2d 409, and Awe v. Striker (1970), 129 Ill. App. 2d 478, 263 N.E.2d 345. In Webb, plaintiff sought to hold Jewel liable for a sexual assault committed by one of its security guards. This court held at that time that it was impossible to interpret such act as one undertaken for the purpose of furthering Jewel's business. Similarly, plaintiff in Awe sought to hold the operators of a carnival liable for the battery committed on his person by several employees. Upon losing a carnival game, plaintiff had complained to the employees of crookedness and threatened to notify the sheriff. Angered by the threats, the employees proceeded to jump on plaintiff and beat him with their fists and a hammer. In dismissing the counts brought under the doctrine of respondeat superior for failure to state a cause of action, the court held that since the game played by plaintiff had been completed and the carnival employees had performed the duties for which they had been hired, the subsequent attack was outside the scope and not in furtherance *340 of their employment.
As Ball's assault on plaintiff was clearly not an act undertaken to further Yellow Cab's business but rather one propelled singularly by anger and frustration, the trial court properly dismissed count IX of plaintiff's fourth amended complaint for failure to state a cause of action under the doctrine of respondeat superior.
3 Counts VII and VIII of the subject complaint were also correctly dismissed. Said counts seek to charge Yellow Cab with a breach of their duty to supervise Ball on account of his alleged vicious disposition and to inspect the taxicab for the presence of weapons. With respect to the duty to supervise, however, plaintiff in the instant case fails to allege that Yellow Cab had knowledge that one of its drivers was assaulting plaintiff and stood by without taking any action to stop such conduct. Instead, plaintiff pleads bare conclusions regarding Ball's supposedly vicious disposition. Furthermore, charging Yellow Cab with a breach of duty to inspect cabs to ensure that weapons are never present in the vehicles is nonsensical when there is no allegation that the object with which plaintiff was hit was ever within the taxicab. Absent such an allegation, it is difficult to conclude that any failure on the part of Yellow Cab to inspect for weapons could have caused plaintiff's injuries.
4 The Illinois Supreme Court has firmly established that a motion to dismiss "`does not admit conclusions or inferences by the pleader, such as conclusions of law or of fact unsupported by allegations of specific facts on which the conclusions must rest.'" (Knox College v. Celotex Corp. (1981), 88 Ill. 2d 407, 426, 430 N.E.2d 976, 985, quoting Richardson v. Eichhorn (1958), 18 Ill. App. 2d 273, 276.) Under the circumstances presented in the instant case, the trial court correctly dismissed counts VII and VIII of plaintiff's fourth amended complaint.
The judgment of the trial court is affirmed.
Affirmed.
SULLIVAN, P.J., and MURRAY, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1467704/ | 967 F. Supp. 775 (1997)
Howard HUGHES, Petitioner,
v.
Frank IRVIN, Supt., Wende Correctional Facility, Respondent.
No. CV 97 0365 (RJD).
United States District Court, E.D. New York.
June 25, 1997.
*776 Howard Hughes, Alden, NY, for petitioner.
David O. Leiwant, District Attorney's Office of Kings County, Brooklyn, NY, for respondent.
MEMORANDUM & ORDER
DEARIE, District Judge.
Pro se petitioner Howard Hughes filed this habeas petition pursuant to 28 U.S.C. § 2254, challenging his 1980 judgment of conviction for second degree murder, first degree manslaughter, and second degree criminal possession of a weapon. Respondent moves to dismiss the petition as untimely and as barred by laches. The Court denies respondent's motion.
Procedural History
On the night of December 22, 1977, petitioner Hughes and another man shot a candy store owner in the course of a robbery attempt. The prosecution case consisted of the testimony of several eyewitnesses and a witness who testified that Hughes confessed to him on the night of the shooting. On May 2, 1980, after a jury trial conviction, petitioner was adjudicated a second felony offender and sentenced. So began a marathon of seventeen years of petitioner's direct appeals and collateral attacks, concluding with the instant petition for habeas relief
Petitioner timely appealed his conviction, but due to replacement of appellate counsel and misplaced records, petitioner's brief was not filed until November 1986. Pet. Mem. Of Law at 19. During the six-year delay, Hughes continually inquired about the status of his appeal. See Appendix to Pet. Mem. Of Law ("Mem. Appendix"), Exs. 9-11. Upon pro se petitioner's motion, the Appellate Division ordered the People to file their opposition brief by January 15, 1988, or be precluded from filing a response. Decision & Order 12/21/87, App. Div., 2d Dep't (Mem. Appendix, Ex. 13). The Appellate Division affirmed the judgment of conviction on March 14, 1988. People v. Hughes, 138 A.D.2d 523, 526 N.Y.S.2d 130 (2d Dept 1988). On May 11, 1988, the Appellate Division denied petitioner leave to appeal to the New York Court of Appeals. On September 16, 1988, the Court of Appeals dismissed petitioner's motion for leave to appeal to the state's highest court. People v. Hughes, 72 N.Y.2d 957, 534 N.Y.S.2d 671, 531 N.E.2d 303 (1988).
Beginning in December 1980, several months after his conviction, Hughes filed a stream of collateral attacks in New York state courts. Between 1980 and 1984 petitioner filed a total of nine motions to vacate his conviction pursuant to New York Criminal Procedure Law § 440.10 and a motion for a writ of error coram nobis.[1] Several of his motions were repetitive. Since the conclusion of direct review in 1988, petitioner has had collateral review motions pending before New York state courts continuously until August 5, 1996 (leave to appeal denied on petitioner's seventh motion to vacate), with the exception of a four-month gap between September 12, 1989 (denial of petitioner's sixth motion to vacate) and January 11, 1990 (petitioner *777 files seventh motion to vacate).[2]
Petitioner's seventh motion to vacate, filed on January 11, 1990, bears separate mention. Hughes claimed that the prosecution failed to disclose Rosario[3] material an allegedly authentic police report that memorialized a key prosecution witness' statement that persons other than Hughes confessed to the witness that they killed the candy store owner.[4] Petition Appendix, Ex. A; Resp. Aff. at 5. On March 23, 1990, petitioner's motion was denied without a hearing. Resp. Aff. at 5. Hughes appealed, and the Appellate Division reversed and remanded the motion to the lower court for an evidentiary hearing on whether the police report at issue was authentic, and if so, whether Hughes was prejudiced by its nondisclosure. People v. Hughes, 181 A.D.2d 912, 581 N.Y.S.2d 838 (2d Dep't 1992). On February 9, 1993, a hearing was held on petitioner's seventh § 440 motion, at the conclusion of which the court held that Hughes had failed to prove that the document at issue was authentic, The judge credited the police detective who testified that he never prepared the report proffered by the defendant, and declined to accept the defendant's testimony as to the manner in which he allegedly received the police report. Resp. Brief 8/31/95 at 15 (citing to 2/9/93 hearing minutes). The lower court also issued a written Decision and Order dated April 12, 1993, reiterating its finding that Hughes had failed to prove that the police report was authentic. Id. at 14. The Appellate Division granted leave to appeal on June 16, 1993. Resp. Aff. 5/26/94.
There followed a three-year delay in the appeal process. Petitioner states that he filed his appeal brief on March 21, 1994, and launched his "crusade to compel the Respondents to file their answer." Pet. Men. Of Law at 15. From September 1994 to October 1995, petitioner wrote numerous letters to his counsel and to the Appellate Division inquiring about the status of his appeal and the state's delay. See Mem. Appendix, Exs. 6-7. Upon advice from the Appellate Division, petitioner moved to preclude the People from replying. See id., Ex. 7. The People finally filed their brief on August 31, 1995, seventeen months after Hughes' submission. On January 22, 1996, the Appellate Division affirmed the lower court's conclusion. People v. Hughes, 223 A.D.2d 654, 637 N.Y.S.2d 21 (2d Dep't 1996). On August 5, 1996, the Court of Appeals denied leave to appeal. People v. Hughes, 89 N.Y.2d 865, 653 N.Y.S.2d 288, 675 N.E.2d 1241 (1996).
Hughes' habeas petition, dated December 30, 1996 and filed in this Court on January 23, 1997, raises twenty-four claims by way of a voluminous appendix containing his submissions to New York state courts on direct and collateral appeals during a period of fourteen years. Petitioner's grounds for habeas relief include the failure to disclose exculpatory evidence, ineffective assistance of trial and appellate counsel, a Fourth Amendment violation, the use of perjured testimony, and a Batson claim. Petitioner also moves for appointment of counsel pursuant to 18 U.S.C. § 3006A.
Discussion
Respondent does not address the merits of petitioner's claims, but urges the Court to dismiss Hughes' petition as untimely and as barred by the doctrine of laches.
1. Statute of Limitations
The Antiterrorism and Effective Death Penalty Act of 1996 ("AEDPA"), which became effective on April 24, 1996, establishes a one-year statute of limitations from "the date on which the judgment became final by the conclusion of direct review or the expiration of the time for seeking such review" for the filing of a habeas application seeking relief from a state court conviction. *778 28 U.S.C. § 2244(d)(1)(A).[5] The running of the limitations period is tolled for the time period during which "a properly filed application" for collateral review is pending in state court. Id. § 2244(d)(2).
The New York Court of Appeals denied petitioner leave to appeal his conviction on September 16, 1988. In petitioner's case, the one-year time limit would have begun to accrue on December 16, 1988, at the conclusion of the ninety days during which he could have sought certiorari in the United States Supreme Court. See Rule 13 of Rules of the Supreme Court of the United States. But as of December 16, 1988, Hughes' fifth § 440 motion was already pending in state court, which operated to immediately toll the running of the statute of limitations. Until September 12, 1989, when petitioner's sixth motion was denied, Hughes had a continuous stream of post-conviction applications pending in state courts. From September 12, 1989, the statute of limitations ran for four months, until January 11, 1990, when Hughes filed his seventh application for collateral review, thereby restarting the tolling provision. That motion was finally resolved against petitioner on August 5, 1996. Thus, on August 5, 1996, Hughes had eight months remaining, until April 1997, to file his habeas petition in compliance with the one-year time limit. Hughes is deemed to have filed the instant application when he delivered it to prison officials. See Houston v. Lack, 487 U.S. 266, 273, 108 S. Ct. 2379, 2383, 101 L. Ed. 2d 245 (1988). Thus, Hughes "filed" his habeas petition sometime between December 26, 1996, the date he signed his petition, and January 23, 1997, the date the action was filed with the Court, well before the application would have been time-barred.
Respondent acknowledges that Hughes filed numerous collateral review motions, beginning long before the completion of direct review of his conviction, but argues that some of these motions should not toll the statute of limitations because they were not "properly filed." Respondent focuses on the seventh § 440 motion, arguing that it cannot be considered a "properly filed" collateral application because the state court found that Hughes did not meet his burden of establishing that the police report underlying that application was authentic. Resp. Mem. Of Law at 5.
The Court rejects respondent's argument. The Court's research failed to unearth any case law construing "a properly filed application," as that term is used in § 2244(d)(2). Nor does legislative history shed any light on what Congress intended by that restriction. See S.Rep. No. 104-179 (1995), reprinted in 1996 U.S.C.C.A.N. 924; H.R. Conf. Rep. No. 104-518 (1996), reprinted in 1996 U.S.C.C.A.N. 944. In other contexts, the term "properly filed" refers to satisfying procedural requirements, such as timeliness and proper place of filing. See, e.g., 37 C.F.R. § 252.4(e) ("properly filed" refers to timeliness of filing claims with Copyright Office); Rothman v. United States, 508 F.2d 648, 651 (3d Cir.1975) ("properly filed" notice of appeal discussed in terms of place, time, procedural requirements), Cohen v. S.U.P.A. Inc., 814 F. Supp. 251, 258-59 (.D.N.Y.1993) (discussing requirements for "properly filed" EEOC complaint); Dells, Inc. v. Mundt, 400 F. Supp. 1293, 1295 (S.D.N.Y.1975) (addressing procedural requirements for "proper filing" under Fed. R. Civ. Pro. 15). The Court is persuaded that "properly filed," as used in § 2244(d)(2), means that in order to trigger the tolling mechanism, a petitioner's collateral review application must be submitted in accordance with any applicable procedural requirements, such as notice to the respondent, correct place of filing, and timeliness of the motion.
The Court rejects the proposition that a seemingly frivolous collateral attack is not "properly filed" for purposes of tolling the one-year statute of limitations. While the lower court first denied petitioner's seventh motion without a hearing, the Appellate Division reversed and remanded for an evidentiary hearing. Subsequently, the lower court found that Hughes failed to establish that the *779 proffered police report was authentic. While that factual determination would be entitled to a presumption of correctness in this Court, petitioner could rebut the finding by "clear and convincing evidence." See 28 U.S.C. § 2254(e)(1). It is illogical not to toll the statute of limitations, and thus dismiss a habeas petition as untimely, during the pendency of a collateral motion on a matter that could entitle a petitioner to habeas relief. The writ of habeas corpus would be emasculated if the factual determination of a state court could preclude a petitioner's access to federal court to challenge that very finding. Moreover, according to respondent's argument, it is unclear at what point Hughes' seventh § 440 motion no longer qualified as "properly filed." Would it be on January 11, 1990, when the motion was filed? On March 23, 1990, when the lower court denied it without a hearing? Did the motion become "properly filed" after the Appellate Division reversed and remanded, only to revert to "improperly filed" status on February 9, 1993, when the lower court found that the document was not authentic? The Court finds that Hughes' seventh § 440 motion was "a properly filed application" for collateral review within the meaning of § 2244(d)(2), thus triggering the tolling mechanism and rendering the instant habeas petition timely.[6]
2. Rule 9(a)
Respondent argues that the doctrine of laches, as codified in Rule 9(a) of the Rules Governing § 2254 Cases, operates to bar petitioner's habeas petition. Respondent misstates the burden of production and proof in a Rule 9(a) application, and does not even come close to meeting the requisite burden.
Rule 9(a) provides, in relevant part, that "[a] petition may be dismissed if it appears that the [respondent] has been prejudiced in its ability to respond to the petition by delay in its filing." Rule 9(a) of Rules Governing § 2254 Cases (emphasis added). The Advisory Committee Notes emphasize that the decision to dismiss pursuant to the equitable doctrine of laches rests with the court's discretion. See Hill v. Linahan, 697 F.2d 1032, 1035 (11th Cir.1983). In order to satisfy its "heavy burden" in seeking the application of Rule 9(a), the respondent must "(1) make a particularized showing of prejudice, (2) show that the prejudice was caused by the petitioner having filed a late petition, and (3) show that the petitioner has not acted with reasonable diligence as a matter of law." Walters v. Scott, 21 F.3d 683, 686-87 (5th Cir.1994); see also Hill, 697 F.2d at 1035; Honeycutt v. Ward, 612 F.2d 36, 41 (2d Cir.1979), cert. denied, 446 U.S. 985, 100 S. Ct. 2969, 64 L. Ed. 2d 843 (1980); Hodge v. Walker, No. 95-CV-2873, 1996 WL 363181, *2 (S.D.N.Y. July 1, 1996); Moseley v. Scully, 908 F. Supp. 1120, 1130 (E.D.N.Y.1995), aff'd, 104 F.3d 356 (2d Cir.1996). The state must show that prejudice flows from the specific claims raised in the petition, not from the "mere passage of time alone." Walters, 21 F.3d at 687. Only after satisfying these requirements does the burden shift to the petitioner to rebut the respondent's claim. Id.
Respondent relies on a portion of the Advisory Committee Notes that mistakenly states that a presumption of prejudice applies if the petition is filed more than five years after conviction. While the original proposed text of Rule 9(a) included such a presumption, Congress deleted this language from the final version of the rule, noting that placing the burden of rebutting prejudice on the petitioner is "unsound policy" and is inconsistent with the equitable principles governing habeas relief. Hill, 697 F.2d at 1035 n. 3 (citing H.R. No. 1471, 94th Cong., 2d Sess. 1, 5, reprinted in 1976 U.S.C.C.A.N. 2478, 2481); see also Moseley, 908 F.Supp. at 1130 & n. 8 (noting that Advisory Committee comment is in error) (citing LaLande v. Spalding, 651 F.2d 643, 644 (9th Cir.) ("That statement [in Advisory Committee Notes] ... is in error."), cert. denied, 452 U.S. 965, 101 S. Ct. 3119, 69 L. Ed. 2d 978 (1981)).
*780 Respondent utterly fails to satisfy its burden of demonstrating "particularized prejudice," that such prejudice was caused by petitioner's unreasonable delay, and that petitioner was not reasonably diligent. Respondent states that the District Attorney's Office has been unsuccessful in obtaining the trial transcript from the New York Supreme Court, that the original trial folder of Hughes' case has been lost, and that most of the documents pertaining to petitioner's postconviction litigation are also missing.[7] Respondent argues in mostly general terms that without the underlying record, petitioner's claims are difficult to answer. Surely, this assertion does not rise to the level of a showing of "particularized prejudice." First, the case file should be archived in the New York Supreme Court, and the District Attorney's Office can obtain it. Second, petitioner states in a footnote the he possesses "a complete set of trial transcript, and all of Respondents answers throughout the entire proceedings (sic)." Pet. Mem. Of Law at 21 n. 7. Third, as respondent acknowledges, Hughes' petition consists of his previously filed motions in state courts, to all of which the People had responded in the past. As often is the case, a respondent's opposition on the merits to a habeas petition consists merely of restating the arguments previously made to state courts. Thus, even if the "original trial folder" is irretrievably lost, the District Attorney's Office is not significantly hampered in its ability to address petitioner's claims.
Respondent also fails to show that whatever prejudice it allegedly suffers resulted from petitioner's unreasonable delay in bringing his habeas petition. There is no indication that the case file would have been readily available had Hughes filed his habeas application earlier. As recently as August 31, 1995, when the People finally filed their appeal brief on Hughes' seventh 440 motion, there is no mention of missing records.
Finally, it cannot be said that petitioner has not been diligent with respect to his case. He wrote numerous letters in exasperation over the delay in state courts, and litigated in state courts for almost seventeen years after his conviction. It is worth noting that the People are responsible for a chunk of the sixteen-and-one-half years that elapsed between Hughes' conviction and the filing of this petition. The state took over a year to respond to petitioner's direct appeal brief, filing a response only after the Appellate Division imposed a deadline. On Hughes' seventh motion to vacate, the People took almost one-and-one-half years to file its brief to the Appellate Division, again after petitioner moved to preclude the state's reply. Part of the delay in this case is simply the result of the exhaustion requirement, coupled with the length of time it takes to litigate a post-conviction claim in the overburdened New York state court system. Moreover, through no fault of petitioner, it took over six years for his appellate counsel to locate the trial transcript and file his direct appeal brief The Court denies respondent's motion to dismiss on the basis of Rule 9(a) because respondent clearly has not satisfied its burden.
For the foregoing reasons, respondent's motion to dismiss is denied. Petitioner's application for appointment of counsel is denied, with leave to renew after respondent files its opposition on the merits. Respondent is directed to obtain the necessary trial and post-conviction documents from the archives or from petitioner. Respondent's opposition to petitioner's application for a writ of habeas corpus is due no later than August 8, 1997.
SO ORDERED.
NOTES
[1] Petitioner also filed an action in this Court in 1992, which was deemed a habeas petition, and was voluntarily dismissed without prejudice to allow petitioner an opportunity to exhaust all of his claims. See Order dated March 26, 1992, Howard Hughes v. Supreme Court of the State of New York, 92-CV-1017 (RJD).
[2] While Hughes' seventh motion to vacate was pending, petitioner filed his eighth § 440 motion on January 30, 1992, his ninth collateral attack in the form of a motion for a writ of error coram nobis on April 9, 1992, and his tenth collateral attack on May 21, 1993. Petitioner was denied leave to appeal the denial of his tenth motion on October 7, 1994.
[3] People v. Rosario, 9 N.Y.2d 286, 213 N.Y.S.2d 448, 173 N.E.2d 881 (1961).
[4] At trial, this witness testified that on the night of the shooting, Hughes confessed to him that he was responsible for the murder. Resp. Aff. in Opp. ("Resp. Aff.") at 5 n. 1.
[5] The amended habeas corpus statute clearly applies to Hughes' petition since it was filed after the effective date of the AEDPA. See Reyes v. Keane, 90 F.3d 676, 679 (2d Cir.1996) (holding that one-year statute of limitation did not apply to petition filed before April 24, 1996).
[6] Respondent also argues that petitioner's eighth and ninth collateral applications were not "properly filed" because they reiterated previously raised claims. Resp. Mem. Of Law at 3, 5. The Court need not consider this contention because the Court's conclusion with respect to the seventh § 440 motion renders Hughes' habeas petition timely regardless of whether the pendency of the eighth and/or ninth motions toll the statute of limitations.
[7] The District Attorney's Office ordered Hughes' court file from the trial court, but it had not been produced as of March 31, 1997. Resp. Mem. Of Law at 8-9 & n. 9. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2443805/ | 571 S.W.2d 395 (1978)
Oscar E. REED and Doris E. Reed, Appellants,
v.
WHITE, WELD & COMPANY, INC., Appellee.
No. 8592.
Court of Civil Appeals of Texas, Texarkana.
September 12, 1978.
*396 Oscar E. Reed, pro se.
John Andrew Martin, Carrington, Coleman, Sloman, Johnson & Blumenthal, Dallas, for appellee.
CORNELIUS, Chief Justice.
Oscar Reed and Doris Reed brought suit against Charles Townsend, Jr., White, Weld & Company, Inc. and others for damages. They alleged that White, Weld & Company, on the order of Townsend, wrongfully sold certain securities. The district court rendered interlocutory summary judgment in favor of White, Weld & Company and all other defendants except Townsend. The claim against Townsend proceeded to trial, and the jury, having been charged by the court that Townsend did not have authority to order the sale of the securities, found that he acted maliciously in doing so, but also found that the Reeds suffered no damage. In this appeal the Reeds complain only of the denial of their claim against White, Weld & Company. It is urged that they were entitled to a trial of that claim because material issues of fact existed as to whether White, Weld & Company was negligent in selling the securities on the instructions of Townsend.
The Reeds, along with several other persons, were named as devisees and legatees in the will of Albert L. Reed. Upon Albert Reed's death, Charles N. Townsend, Jr., Charles B. Reed and the appellant, Oscar Reed, were appointed joint independent executors as provided by the will. The assets of the estate included several stocks and bonds of the Missouri-Pacific Railroad Company, St. Louis & San Francisco Railroad Company and Sante Fe Industries. The will provided that securities could not be sold except upon the consent of all three of the joint independent executors. Sometime after probate of the will, the three executors decided that it was necessary to sell some of the stocks and bonds to pay taxes, attorneys fees and other expenses, and they engaged White, Weld & Company to act as broker in the sale. In addition, and apparently as a partial partition and distribution of the assets, the executors instructed White, Weld & Company to transfer title to the securities in question to Oscar and Doris Reed. To effect the transfer to the Reeds, it was necessary that White, Weld & Company be furnished with a tax waiver, an affidavit of domicile, a power of attorney and letters testamentary. Before these were supplied, however, Townsend changed the instructions, and without the joinder of the other executors, ordered White, Weld & Company to proceed with the sale of the securities, including those involved here which had been set aside to the Reeds and which Townsend had previously instructed be transferred to them. White, Weld & Company sold the securities on July 2, 1975. The proceeds were deposited to the account *397 of the Albert L. Reed Estate and apparently distributed to the beneficiaries.
The Reeds make no claim for the value of the stock, but seek to recover only the amount of interest which the securities would have earned them during their life expectancy had they not been sold, which is represented to be the sum of $24,000.00. In their brief, the Reeds make the following statement:
"The action is limited to the income for the reason that the market value of the stocks and bonds sold by the Defendant, and the cash obtained from the sale thereof was paid to Charles N. Townsend, Jr., ... and distributed to the beneficiaries of Albert L. Reed under the terms of his will."
The Reeds were entitled to a trial of their claim unless the pleadings, summary judgment affidavits and the answers to interrogatories on file demonstrated conclusively that one or more of the essential elements of their cause of action was lacking, and that consequently White, Weld & Company was entitled to judgment as a matter of law. Tex.R.Civ.P. 166-A; 4 McDonald's, Texas Civil Practice, Sec. 17.26.2, p. 133.
White, Weld & Company contends that the cause of action was precluded for several reasons, but we find it unnecessary to discuss all of the contentions because the record reveals that, even though the sale of the securities was wrongful, the Reeds have been paid all damages legally recoverable by the cause of action they pleaded.
The measure of damages for the conversion of personal property, where the property is shown to have a market value, is the market value at the time of the conversion, plus interest from said date and, in some cases, special damages resulting from the withholding of the property or properly incurred by the owner in the pursuit of it. American Surety Co. v. Hill County, 254 S.W. 241 (Tex.Civ.App. Dallas 1923), affirmed, 267 S.W. 265 (Tex.Com. App.1924, judgmt. adopted); Lincoln v. Packard, 25 Tex. Civ. App. 22, 60 S.W. 682 (1900, no writ); 14 Tex.Jur.2d, Conversion, Sec. 24, pp. 27, 28; C. McCormick, Law of Damages, Sec. 123, at 463, 464 (1935). The injured party is thus fully compensated, because he can go into the market and make himself whole by purchasing property of like character as that of which he has been wrongfully deprived. Lincoln v. Packard, supra; Griffith v. Burden, 35 Iowa 138. With specific reference to the wrongful sale of stocks or bonds, and because of their fluctuating value, the prevailing view modifies the rule somewhat, and holds that the true and just measure of damages is the highest intermediate value of the stock between the time of its conversion and a reasonable time after the owner has received notice of the conversion to enable him to replace the stock. Galigher v. Jones, 129 U.S. 193, 9 S. Ct. 335, 32 L. Ed. 658 (1889); In re Salmon Weed & Co., 53 F.2d 335 (2d Cir. 1931); 79 A.L.R. 379 (1932); Gervis v. Kay, 294 Pa. 518, 144 A. 529 (1929); 63 A.L.R. 297 (1929); Annot., 31 A.L.R. 3d 1286 (1970); 63 A.L.R. 305 (1929). And if the conversion is willful, fraudulent or attended with gross negligence, the owner may recover the highest value between the date of conversion and the filing of suit. De Shazo v. Wool Growers Central Storage Co., 139 Tex. 143, 162 S.W.2d 401 (1942); Ligon v. E. F. Hutton & Company, 428 S.W.2d 434 (Tex.Civ.App. Dallas 1968, writ ref'd n. r. e.); Patterson v. Wizowaty, 505 S.W.2d 425 (Tex.Civ.App. Houston-14th Dist. 1974, no writ).
In this case, it is undisputed that the securities had a market value, but the Reeds have not sought to recover that value. Indeed, they concede that such value has been paid. There is no pleading for special damages of any kind, but only for interest which, it is said, the Reeds could have earned if they still held the securities.
In the absence of special circumstances which might dictate otherwise, the owner of a converted security is not entitled to recover either its face value or the interest or dividends which might have been earned upon holding it to maturity. Memphis v. Brown, 20 Wall. 289, 87 U.S. 264, 22 L. Ed. 264 (1874). If the owner desires to *398 receive earnings or recover the full matured value, he has the obligation to replace the lost security and hold the wrongdoer responsible for any proper loss in making the replacement. Memphis v. Brown, supra; Gervis v. Kay, supra; Baker v. Drake, 53 N.Y. 211 (1873).
It follows that the Reeds' cause of action was lacking in the essential element of damage. Under the circumstances, the district court properly rendered summary judgment denying them a recovery.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2286620/ | 993 F. Supp. 884 (1996)
Valoris HAMILTON, et al., Plaintiffs,
v.
BOARD OF SCHOOL COMMISSIONERS OF MOBILE COUNTY, ALABAMA, Paul J. Sousa, Sally Johnson, Gertrude N. Baker, Jimmy Knight, Charles Jordan, John Holland, David Thomas, Hazel Fornier, and Jeanne Andrews, Defendants.
Civil Action No. 93-0997-CB-S.
United States District Court, S.D. Alabama, Southern Division.
June 19, 1996.
*885 Stephen M. Tunstall, Mobile, AL, Jim Sears, Mobile, AL, for Plaintiffs.
Robert C. Campbell, III, Mobile, AL, Steven L. Terry, Sintz, Campbell, Duke & Taylor, Mobile, AL, Mark S. Boardman, Edward M. Weed, Boardman & Tyra, P.C., Birmingham, AL, for Defendants.
OPINION AND ORDER
BUTLER, Chief Judge.
This matter is before the Court on motions for summary judgment filed by defendants Board of School Commissioners of Mobile County and Paul Sousa (doc. # 67) and by defendants Sally Johnson, Gertrude Baker and Jimmy Knight (doc. # 71). After careful consideration of the issues presented and the applicable law, the Court enters the following findings of fact and conclusions of law.
Findings of Fact
John Doe, whose date of birth is August 14, 1984, is a child who is mentally retarded and is eligible to receive special education and related services from the Mobile County Public School System. Valoris Hamilton is the mother of John Doe.
Defendant Paul Sousa is the Superintendent of Education for defendant Board of School Commissioners of Mobile County ("the Board") which is responsible for the Mobile County School System ("School System"). Defendant Sally Johnson is employed by the Board as the coordinator of Special Education. Defendant Gertrude N. Baker is the principal of Holloway Elementary School, which is part of the Mobile County School System. Defendant Jimmy Knight is an Assistant Superintendent of Education employed by the Board and is responsible for overseeing student services, including special education. Defendants Hazel Fornier, Jeanne Andrews, Charles Jordan, John Holland, and David Thomas are elected members of the Board.
John Doe is enrolled in the Mobile County Public School System which receives federal funds. In July of 1992, Mrs. Hamilton applied with the School System to have John Doe transferred from Whistler Elementary (which was the school within the district where Mrs. Hamilton and John Doe resided) to Holloway Elementary. Mrs. Holloway applied for the transfer at the recommendation of a counselor at the LeMoyne Center[1] where John Doe was also receiving instruction. The instructor believed that Doe would benefit from satellite classes offered by the LeMoyne Center at Holloway.
The transfer form filled out by Mrs. Hamilton permitted two types of transfer "majority to minority" and "extreme hardship". Mrs. Hamilton indicated that her request was based on "extreme hardship" and explained the reason for her request was that a transfer would be in the best interest of her child because Holloway had a LeMoyne satellite program. This transfer was approved on August 18, 1992, for the 1992-93 school year. The letter granting the transfer indicated that it applied only to the 1992-93 year and that it was dependent upon the student's satisfactory attendance and discipline and upon space availability.
On March 15, 1993, Holloway principal Gertrude Baker requested that John Doe's transfer be revoked due to poor attendance, discipline problems and overcrowded classrooms. In a letter dated March 22, Knight informed Mrs. Hamilton and her husband *886 that the Doe's transfer to Holloway was revoked for failing to comply with the transfer requirements which include satisfactory attendance and discipline. The letter specifically states that Doe may attend the school that serves the residence of the parents. On April 1, 1993, Principal Baker wrote Mrs. Hamilton reminding her that Doe's transfer revocation would become effective on April 2, 1993.
After receiving these letters, Mrs. Hamilton began taking action to prevent the transfer revocation. She wrote a complaint letter to the United States Department of Education, Office of Civil Rights in Atlanta. She also wrote a letter to Mrs. Baker requesting that Doe "stay put," i.e., remain at Holloway, during the resolution of this matter. Because Mrs. Hamilton was under the impression that her "stay put" request would allow Doe to stay at Holloway until the dispute was resolved, she returned him to Holloway when school resumed after spring break. Doe attended school as usual for a few days. Then, on April 12, either Principal Baker or her secretary contacted Mrs. Hamilton and informed her that John Doe was being sent home in a taxi cab because he was no longer enrolled at Holloway. According to Mrs. Hamilton, Doe did not arrive home until an hour later.
Within a day or two, Mrs. Hamilton met with Assistant Superintendent Knight but nothing was resolved. Knight told her to keep Doe home until she heard from him regarding where to send him. According to Mrs. Hamilton, she subsequently received separate letters from Knight and Baker, each telling her to send Doe to a different school. One stated Doe was to attend Whistler while the other stated he was to attend W.D. Robbins. Mrs. Hamilton made no inquiries about where to send him but, instead, chose to keep Doe home in hopes that he could return to Holloway.[2]
On April 21, 1993, Mrs. Hamilton was informed by the School System that a juvenile petition was being filed regarding John Doe due to his failure to enroll in and failure to attend school. On May 14, 1993, Mrs. Hamilton was charged with contributing to the delinquency of a minor due to Doe's nonattendance.
On or about May 17, Mrs. Hamilton and the School System reached an agreement through the OCR's Early Complaint Resolution procedure wherein the transfer revocation was rescinded and John Doe was permitted to return to Holloway.
On August 24, 1993, Knight notified Mrs. Hamilton by letter that John Doe should be enrolled in Whistler Elementary for the 1993-94 school year. Mrs. Hamilton had not filled out a request for transfer for John Doe for that school year. On September 13, 1993, Mr. and Mrs. Hamilton, through their attorney, filed a request with the Alabama State Department of Education for an administrative due process hearing before an impartial hearing officer. In their letter, the Hamiltons alleged, among other things, that John Doe had been deprived of appropriate educational evaluation and placement and of an appropriate individual education plan.
On October 13, before a hearing could be conducted, the Hamiltons and the School System entered into a settlement agreement wherein the parties agreed that John Doe would be allowed to return to Holloway. Doe was also to be provided compensatory education for the time missed during the 1992-93 school year. In addition, the parties agreed that the School System would request the dismissal of the charges against Doe and Hamilton arising from the Doe's failure to enroll or attend school in April and May of 1993. Finally, the parties agreed that the School System would immediately formulate and institute an individual educational plan ("IEP") for John Doe.
*887 Pursuant to the agreement, John Doe was re-enrolled in Holloway. The charges against Doe and Hamilton were dismissed. It appears that attempts to schedule a meeting of all interested parties regarding Doe's IEP following the settlement were unsuccessful due to the scheduling conflicts of the Hamilton's attorney.
After he returned to Holloway in the Fall of 1993, John Doe received nineteen discipline referrals. On December 10, 1993, plaintiffs filed the instant action, without again requesting an administrative due process hearing. On December 17, 1993, Doe brought a toy gun to school and, according to his teacher, threatened another child with it. As a result, Doe was suspended from Holloway for a period of three days. According to Mrs. Hamilton, Doe had received the gun has a Christmas gift from another student and was, upon her instruction, returning it to the person who gave it to him. Shortly thereafter, Knight informed Mrs. Hamilton that John Doe would not be allowed to return to Holloway due to excessive discipline referrals.
CONCLUSIONS OF LAW
Issues Presented
The Court cannot address the legal issues without first pointing out the difficulties it has faced in identifying those issues. In their complaint, plaintiffs have set forth pages of factual allegations in support of their claims. These factual allegations are followed by a laundry list of federal statutes and state laws which defendants have allegedly violated. The difficulty is that there is no explanation of the correlation between the facts and the legal violations alleged, nor is there any explanation as to which claims apply to which defendants.[3] In other words, the Court is left to guess as to which facts support which claims and to assume that all claims relate to all defendants.[4]
The "Triable Issues" section of the original Pretrial Order did little to clarify plaintiffs' claims. Consequently, the parties were required to resubmit that section. Although the Amended Pretrial Order does narrow the legal issues, it does not set forth the specific facts or law giving rise to each cause of action. Based on the Pretrial Order, the motions for summary judgment and plaintiffs' response thereto, it appears that plaintiffs' primary claims are: (1) that John Doe was deprived of free appropriate education due to the lack of, or inappropriate, evaluation, programming and placement and that such deprivation was the result of his disability; (2) that Doe was deprived of an equal educational opportunity because of his disability in violation of the Fourteenth Amendment's due process and equal protection clauses; (3) that the defendants retaliated against John Doe for asserting his due process rights, (4) that defendants' actions amounted to malicious prosecution (in violation of state law); and (5) that defendants committed the tort of outrage (in violation of state law).[5] Although plaintiffs have not delineated *888 the specific statutory basis for the first three claims, they have generally asserted federal claims arising under Individuals with Disability Education Act ("IDEA"), 20 U.S.C. § 1400, et seq., § 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, et seq., the Americans with Disabilities Act, 42 U.S.C. 12101, et seq., and 42 U.S.C. § 1983 and have also asserted a state law claim under the Alabama Exceptional Child Education Act ("AECEA"), Ala.Code §§ 16-39-1, et seq. (1975).[6]
Based on the motions for summary judgment and plaintiffs' responses thereto, the Court has gleaned enough information to conclude that exhaustion of administrative remedies is required before plaintiffs can pursue claims which are cognizable both under IDEA and other federal statutes. Since plaintiff has failed to exhaust her administrative remedies as required by the Individuals with Disabilities Education Act ("IDEA"), 20 U.S.C. § 1415 or to demonstrate why exhaustion should not be required, defendants are entitled to summary judgment on these claims. Furthermore, defendants are also entitled to judgment as a matter of law as to those claims for which exhaustion is not required because plaintiffs have failed to present sufficient evidence to support those claims.
Summary Judgment Analysis
Summary judgment should be granted only if "there is no 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(c). The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). Once the moving party has satisfied his responsibility, the burden shifts to the nonmoving party to show the existence of a genuine issue of material fact. Id. "If the nonmoving party fails to make `a sufficient showing on an essential element of [his] case with respect to which she has the burden of proof,' the moving party is entitled to summary judgment." 941 F.2d 1428 (11th Cir. 1991) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)) (footnote omitted). "In reviewing whether the nonmoving party has met [his] burden, the court must not weigh the evidence or make credibility determinations and must draw all inferences in favor of the nonmoving party." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir. 1992), cert. denied, 507 U.S. 911, 113 S. Ct. 1259, 122 L. Ed. 2d 657 (1993).
IDEA Preemption of Other Federal Claims
Defendants argue that IDEA is the exclusive remedy for claims by the disabled based on the denial of a free appropriate public education. Thus, according to defendants, plaintiffs have no right of action under 42 U.S.C. § 1983 or § 1985, the ADA or the Rehabilitation Act. Defendants base this argument on Ft. Zumwalt School District v. Missouri State Bd. of Education, 865 F. Supp. 604 (E.D.Mo.1994). The Ft. Zumwalt opinion, in turn, relies upon a United States Supreme Court case, Smith v. Robinson, 468 U.S. 992, 104 S. Ct. 3457, 82 L. Ed. 2d 746 (1984), which has long since been superseded by statute.
In 1986, Congress amended the IDEA by adding § 1415(f) which specifically states that remedies under the Rehabilitation Act, the constitution and other federal statutes remain available notwithstanding the remedies provided by IDEA. See Handicapped Children's Protection Act of 1986, P.L. 99-372 § 3, 100 Stat. 796 (1986); see also Pihl v. Massachusetts Dept. of Education, 9 F.3d 184, 190 n. 9 (1st Cir.1993); Mrs. W. v. Tirozzi, 832 F.2d 748, 751 (2nd Cir.1987). Since the Ft. Zumwalt court did not discuss the superseding amendment to the statute, the Court can only assume that it was unaware of the amendment. Based on the plain language of the statute, the Court finds that IDEA does not preempt other federal statutory or constitutional causes of action.
*889 IDEA's Exhaustion Requirement
The purpose of the Individuals with Disability Education Act, 20 U.S.C. §§ 1401 et seq., ("IDEA") is to "provide[ ] public school districts with federal funding for the education of handicapped children so long as the `[s]tate has in effect a policy that assures all handicapped children the right to a free appropriate public education[.]'" Association for Retarded Citizens of Alabama v. Teague, 830 F.2d 158, 159 (11th Cir.1987). To that end, IDEA (formerly known as the Education for All Handicapped Children Act or "EHA") sets forth mandates for special education and related services and establishes certain procedural safeguards, including the requirement that parents be given the opportunity to contest any matter concerning the provision of a free appropriate public education. Id. at 160. The state must provide an impartial due process hearing to an aggrieved parent. 20 U.S.C. § 1415(b)(2). Only after this administrative review process is completed, may the parent, or the state, file an action in federal district court. 20 U.S.C. § 1415(e).
This exhaustion of administrative remedies requirement applies not only to claims brought under the IDEA but also to claims brought under "the Constitution, title V of the Rehabilitation Act of 1973, or other Federal statutes protecting the rights of handicapped children and youth" if those constitutional and statutory provisions are used as remedies to enforce IDEA educational rights. 20 U.S.C. § 1415(f); see also Association for Community Living v. Romer, 992 F.2d 1040, 1043-44 (10th Cir.1993); Mrs. W., 832 F.2d at 751; Waterman ex rel. Waterman v. Marquette-Alger Intermediate School Dist., 739 F. Supp. 361, 365 (W.D.Mich.1990). In Teague, the Eleventh Circuit recognized that the exhaustion requirement serves a number of important purposes, such as:
(1) permitting the exercise of agency discretion and expertise on issues requiring these characteristics; (2) allowing the full development of technical issues and a factual record prior to court review; (3) preventing deliberate disregard and circumvention of agency procedures established by Congress; and (4) avoiding unnecessary judicial decisions by giving the agency the first opportunity to correct any error.
Teague, 830 F.2d at 160.
The exhaustion requirement is not, however, without exception. Id. Exhaustion is not required where resort to the administrative process would be futile or inadequate or where the question presented is purely a legal one. Komninos v. Upper Saddle River Bd. of Education, 13 F.3d 775, 778 (3d Cir. 1994) (also recognizing additional exception where exhaustion would cause severe and irreparable harm to the litigant); Pihl, 9 F.3d at 190 (1st Cir.1993); Teague, 830 F.2d at 160-61. The plaintiffs bear the burden of demonstrating that their claims fall into one of the exceptions to the exhaustion requirement. See Gardner v. School Bd. Caddo Parish, 958 F.2d 108, 110 (5th Cir.1992) (plaintiff bears burden of proving that exhaustion would be futile).
Plaintiffs argue that they have exhausted their administrative remedies because they dismissed their request for a due process hearing pursuant to a stipulation of settlement with the School Board. Plaintiff's rely on Woods ex rel. T.W. v. New Jersey Dept. of Education, 796 F. Supp. 767 (D.N.J. 1992), in support of their contention that a settlement agreement is tantamount to exhaustion. In Woods the parties reached a settlement several days into the due process hearing before an administrative law judge. In approving the settlement, the ALJ stated on the record that the decision was final and appealable to the United States District Court. The instant case is readily distinguishable from Woods. The settlement in this case occurred before the due process hearing was ever begun, and there was no stipulation that the settlement amounted to an appealable decision.
Moreover, to consider settlement tantamount to exhaustion would undermine the purposes of the exhaustion requirement. This case is the perfect illustration of the problems created when a plaintiff circumvents the administrative review process. The crux of the problem in this case is a basic disagreement over whether John Doe's *890 right to a free appropriate public education requires that he be allowed to attend school at Holloway. Unquestionably, attendance at Holloway has never been made a part of his individual education plant ("IEP"). Plaintiffs argue that defendants have denied John Doe's right to a free appropriate public education by failing to develop an appropriate IEP. Defendants, on the other hand, argue that they have developed an IEP in conformance with the law and that they have acted properly in revoking Doe's transfer to Holloway, notwithstanding his disability.
These are certainly issues best resolved by the expertise of someone familiar with the educational needs of the disabled and with the resources best suited to meet those needs. Furthermore, there would be no logic in allowing a case where settlement had been reached prior to administrative review to circumvent exhaustion, while requiring exhaustion in other cases. There is nothing inherent in a settlement agreement that might fulfill the purposes otherwise satisfied by administrative review. Failure to require exhaustion would also encourage parties to circumvent administrative review by entering into, then disregarding, settlement agreements in order to go directly to federal court. Finally, holding that settlement is equivalent to exhaustion would prevent school systems and education departments from correcting their own errors without interference from the courts.
Plaintiffs attempt to assert that this case falls within an exception to the exhaustion requirement, although their argument on this point is much like their complaint a shotgun approach. Plaintiffs have devoted pages of discussion to cases where exhaustion was not required for a myriad of reasons. The cases generally fall within the exhaustion exceptions noted above. For the most part, however, plaintiffs have failed to demonstrate how those cases are applicable here.
Instead, plaintiffs state simply that exhaustion would be futile because the following allegations are beyond the jurisdiction of an impartial due process hearing officer: (1) that Defendants acted in a retaliatory manner; (2) that they sent John Doe, who was then eight years old home in a taxi without supervision; (3) that they entered into a conspiracy to deprive John Doe of a free appropriate public education; (4) that defendants conduct amounted to intentional or reckless infliction of severe emotional distress; and (5) that defendants' conduct leading to charges against Mrs. Hamilton and John Doe based on his failure to attend or enroll in school during the Spring of 1993 amounted to abuse of process.
There is no need to speculate whether an allegation of retaliatory conduct is beyond the purview of the hearing officer. Plaintiffs have not identified the conduct which they contend amounted to retaliation. Having failed to do so, they have failed to meet their burden on summary judgment on this issue. Plaintiff's allegation that John Doe was sent home in a taxi cab is not only outside jurisdiction of the hearing officer, but it is also outside the jurisdiction of the Court. Plaintiffs have failed to inform the Court of what federal law such conduct might violate.
Plaintiffs' assertions of a conspiracy do not amount to proof that exhaustion is futile for two reasons. First, plaintiffs reliance on the conspiracy claim is quite illusory since plaintiffs (elsewhere in the same brief) also agree that the conspiracy claim is due to be dismissed. Second, even if conspiracy were a viable theory, the conspiracy alleged is one to deny John Doe educational benefits. Since these educational benefits are also the subject of plaintiffs IDEA claim, the conspiracy claim would also be subject to the IDEA exhaustion requirements. See, e.g., Association for Community Living v. Romer, 992 F.2d at 1043-44.
In sum, plaintiffs have failed to establish either that they have satisfied the exhaustion requirement or that their federal claims fall within any exception to exhaustion. Although plaintiffs argue that they have asserted federal claims for which no remedy is available under IDEA, those claims cited by plaintiff have either no factual basis or no legal basis.
Finally, plaintiffs are correct in their assertion that their state law claims for outrage and abuse of process are not subject to the exhaustion requirement. By its terms, *891 that requirement applies only to claims under the laws and constitution of the United States. See 20 U.S.C. § 1415(f). It does not apply to state laws. However, as discussed below, those claims do not survive summary judgment on the merits.
State Law Claims
Plaintiffs have asserted three state law claims: (1) violation of the Alabama Exceptional Child Education Act ("AECEA"), (2) outrage and (3) abuse of process. Defendants assert that no private right of action exists under the AECEA and that the facts fail to support plaintiffs' outrage and abuse of process claims. After reviewing the facts and the applicable law, the Court agrees with defendants' assessment with respect to the claims for outrage and abuse of process. However, because the determination of whether an implied private right of action exists under AECEA is best left to state courts, the Court declines to exercise supplemental jurisdiction over this claim.
A federal district court may decline to exercise supplemental jurisdiction over any state law claim that "raises a novel or complex issue of State law." 28 U.S.C. § 1367. Without doubt, whether a plaintiff may assert a private cause of action under a state statute which creates no express right of action is a novel question of state law. Not only has no Alabama state court decided whether the AECEA creates a private right of action, there are few Alabama decisions addressing generally when a private right of action may be inferred from a statute which is otherwise silent as to its enforcement. See Allen Trucking Co., Inc. v. Blakely Peanut Co., 340 So. 2d 452, 454 (Ala.Civ.App.1976) (deciding whether statute created implied right of action for negligence per se "can only be answered with a court construction of the purpose and intent of the statute"); C.B. v. Bobo, 659 So. 2d 98 (Ala.1995) (relying on legislative intent and case law from other states to find no implied right of action under Alabama Child Abuse Reporting Act). Under these circumstances, whether the AECEA provides a remedy for plaintiffs is a question best left to the state courts. See Campbell v. Talladega County Bd. of Education, 518 F. Supp. 47, 48 n. 1 (N.D.Ala.1981) (declining to exercise pendent jurisdiction over AECEA claim).
In their abuse of process claim, plaintiffs allege that the defendants "maliciously and without probable cause, therefore [sic], filed a petition with the juvenile court of Mobile County ..." against the plaintiffs. Compl. ¶¶ 22 & 30. The elements of a cause of action for abuse of process under Alabama law are: (1) malice, (2) the existence of an ulterior purpose and (3) wrongful use of process. Triple J Cattle, Inc. v. Chambers, 621 So. 2d 1221, 1223 (Ala.1993). Lack of probable cause is not an element. Drill Parts & Serv. Co. v. Joy Mfg. Co., 619 So. 2d 1280 (Ala.1993). In responding to the motion for summary judgment as to this claim, plaintiff sets out a litany of facts without ever setting forth the elements of a cause of action for abuse of process, much less explaining how these facts satisfy those elements. These facts, when, viewed most favorably to plaintiffs reveal that there initially was confusion regarding where John Doe should attend school until the first complaint regarding the transfer revocation was resolved, that Assistant Superintendent Knight told Mrs. Hamilton to keep John Doe home until he notified her where to send the child, and that he did, in fact, send her a letter shortly thereafter instructing her to send her John Doe to Whistler.
Plaintiffs place much emphasis on the fact that Mrs. Hamilton also received a letter from Principal Baker which stated that John Doe should attend W.D. Robbins Elementary. The issue, however, is not Mrs. Hamilton's state of mind, but that of the person or persons who allegedly committed the abuse of process. Since Knight appears to be the only individual defendant who was actually involved in referring the matter of non-attendance for investigation, the issue is whether he acted with malice, for a wrongful purpose and with an ulterior motive. There is no evidence that he knew of Mrs. Hamilton's confusion regarding where to send John Doe during this period. No reasonable jury could infer from these facts that Knight acted with malice, that process was used for a wrongful purpose or that Knight had any *892 ulterior motive for reporting John Doe's absences pursuant to the Alabama's compulsory attendance law.[7]
Finally, the facts of this case do not establish a cause of action for the tort of outrage. The tort of outrage, or intentional infliction or emotional distress, prohibits "conduct so outrageous in character and so extreme in degree as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civil society." American Road Service Co. v. Inmon, 394 So. 2d 361, 365 (Ala.1980). The elements of a claim for outrage are: (1) intentional or reckless conduct; (2) which is extreme or outrageous; and (3) causes emotional distress so severe that no reasonable person could be expected to endure it. Thomas v. BSE Industrial Contractors, Inc., 624 So. 2d 1041 (Ala.1993). The tort of outrage is a very limited cause of action that is available only in the most egregious of circumstances and has been applied only in the following types of cases: (1) wrongful conduct with respect to burials; (2) cases where insurance agents "employed heavy-handed, barbaric tactics" to coerce settlement of an insurance claim; (3) cases involving egregious sexual harassment. Id. at 1044.
In support of their outrage claim, plaintiffs cite virtually everything that took place between plaintiffs and the School System from March 1993 through December 1993, including sending John Doe home from school in a taxi cab, filing charges against John Doe and Mrs. Hamilton as a result of the child's non-attendance, failing to schedule IEP meetings, suspending Doe as a result of the toy gun incident and revoking John Doe's transfer. None these incidents individually, nor as a whole, amount to the type of conduct that "goes beyond all possible bounds of decency."[8] Furthermore, much of the conduct complained of results from a legitimate dispute between plaintiffs and defendants over the appropriate educational placement for John Doe.
Not only have plaintiffs failed to persuade the Court that defendants' conduct was extreme or outrageous, plaintiffs have also failed to meet the third element of outrage. That is, plaintiffs have pointed to no evidence regarding emotional distress. See id. at 1045-46 (upholding summary judgment on outrage claim based on plaintiffs failure to prove severe emotional distress).
Conclusion
This is not an action ripe for federal court review. To avoid this stumblingblock, plaintiffs have attempted to assert numerous non-existent and factually unsupported claims. Those claims which may have a basis both in law and fact arise from the educational evaluation, placement and program for John Doe. In the Individuals with Disability Education Act, Congress has provided an administrative review mechanism which must be exhausted prior to filing any federal claim arising from such a dispute. Because plaintiffs have failed to exhaust those remedies, their federal claims in this regard are due to be dismissed.[9] Defendants' are entitled to judgment as a matter of law as to any federal claims which do not arise from the educational evaluation and placement of John Doe due to plaintiffs' failure to point facts which would support such claims.
Defendants are also entitled to summary judgment on the merits of plaintiffs' state law claims for the tort of outrage and abuse of process. Finally, because the Court declines to exercise supplemental jurisdiction over plaintiffs' state law claim under the *893 AECEA, that claim is dismissed without prejudice.
In accordance with the foregoing findings of fact and conclusions of law, it is hereby ORDERED that defendants' motions for summary judgment be and hereby are GRANTED. Judgment shall be entered by separate order.
FINAL JUDGMENT
Pursuant to separate order on defendants' motions for summary judgment entered this date, it is hereby ORDERED, ADJUDGED and DECREED that plaintiffs' claims under the Individuals with Disabilities Education Act, § 504 of the Rehabilitation Act of, the Americans with Disabilities Act and 42 U.S.C. § 1983 arising from the educational evaluation and placement of John Doe be and hereby are DISMISSED, without prejudice, based on plaintiffs' failure to exhaust administrative remedies.
It is FURTHER ORDERED, ADJUDGED and DECREED that judgment be entered in favor of the defendants both as to any federal law claims other than those stated above and as to plaintiffs' state law claims for abuse of process and outrage and that plaintiffs recover nothing.
It is FURTHER ORDERED, ADJUDGED and DECREED that plaintiffs' claim under the Alabama Exceptional Children Education Act be and hereby is DISMISSED, without prejudice.
NOTES
[1] Based on the briefs and evidence presented, it does not appear that the LeMoyne Center is a part of the School System although it offered satellite classes on at least one school campus.
[2] Plaintiffs rather disingenuously argue that Knight did not tell Mrs. Hamilton where to send John Doe until May 17, 1993. In support of this proposition, plaintiffs cite Knight's deposition testimony wherein he was asked whether anyone had informed Mrs. Hamilton prior to filing juvenile and criminal proceedings whether Doe could return to Holloway. Knight depo. pp. 75-76. Plaintiffs note that the letter from Knight allowing Doe to return to Holloway was written on May 17. However, plaintiffs conveniently ignore Knight's letter of April 15, informing Mrs. Hamilton to enroll Doe at Whistler, a letter Mrs. Hamilton admits receiving. School Bd.'s Ex. I.
[3] Although plaintiffs have filed an "Amendment to the Complaint," that amendment fails to clarify plaintiffs' claims. Instead, the Amendment simply employs legal phraseology which often accompanies civil rights claims. For example, almost every paragraph alleges either the defendants acted pursuant to a "custom and/or policy" or that the defendants "conspired."
[4] This is a textbook example of shotgun pleading. Such a complaint violates Fed.R.Civ.P. 10(b) which requires that claims be set forth in separately numbered paragraphs, that each paragraph be limited to a statement of a single set of circumstances and that claims founded upon separate transactions or occurrences be stated in separate counts. See Anderson v. District Bd. of Trustees of Central Florida Community College, 77 F.3d 364 (11th Cir.1996). When, as here, plaintiffs fail to adhere to that duty, it is incumbent upon the defendants to move for a more definite statement pursuant to Fed.R.Civ.P. 12(e). Id.
[5] Plaintiffs have also asserted defendant's failure to comply with the settlement agreement as a triable issue. The Court fails to see how such action in itself amounts to a violation of any of the state or federal laws at issue in this case. Plaintiffs also allege as a triable issue whether defendants placed individuals in administrative and supervisory positions who did not have the requisite knowledge or training regarding special education laws. Again, as far as the Court is aware, none of the laws at issue provide a cause of action for inadequate training of personnel. Thus, the Court finds that these triable issues do not state a claim which would entitle plaintiffs to relief.
[6] Originally, plaintiffs also asserted a claim under 42 U.S.C. § 1985, but in their responses to defendants summary judgment motions plaintiffs have agreed that this claim is due to be dismissed.
[7] Alabama law requires that every child between the ages of seven and sixteen attend school. Ala. Code § 16-28-3 (1975). A parent may be found guilty of a misdemeanor for his or her failure to send a child of compulsory attendance age to school. Id. § 16-28-12. The local board of education and the juvenile court system are responsible for enforcing this law. Id. § 16-28-2.1 (1991).
[8] Granted, sending a mentally retarded child home in a taxi cab may not be the best exercise of judgment, but it is not so extreme or outrageous as to rise to the level of actionable conduct.
[9] In addition, the Court notes that plaintiffs have agreed that defendants are entitled to summary judgment on plaintiffs' § 1985 claim and that the individual defendants are entitled to summary judgment as to plaintiff's Americans with Disabilities Act claim. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1925639/ | 198 B.R. 557 (1996)
In re Jerome BERG, Debtor.
Jerome BERG, Appellant,
v.
GOOD SAMARITAN HOSPITAL, Appellee.
BAP No. NC-95-1537-RMuMe. Bankruptcy No. 93-32500-DM.
United States Bankruptcy Appellate Panel of the Ninth Circuit.
Argued and Submitted on March 15, 1996.
Decided April 11, 1996.
*558 Jerome Berg, San Francisco, CA, for appellant.
Mike C. Buckley, Oakland, CA, for appellee.
Before RUSSELL, MUND[1], and MEYERS, Bankruptcy Judges.
OPINION
RUSSELL, Bankruptcy Judge:
The district court for the Northern District of California dismissed the plaintiff's case on summary judgment, awarded the defendants (appellees) their costs and attorneys' fees in defending the lawsuit and sanctioned the plaintiff's attorney (appellant/debtor) pursuant to Fed.R.Civ.P. 11.[2] The plaintiff's attorney appealed all four (4) orders. During the pendency of the appeal, the plaintiff's attorney filed for chapter 11[3] relief.
The Ninth Circuit Court of Appeals affirmed the district court and sua sponte ordered the plaintiff's attorney to pay the defendants' fees and costs in connection with the appeal pursuant to Fed.R.App.P. 38.[4]
*559 One of the defendants moved for relief from the stay to liquidate its claim arising from the sanctions. The bankruptcy court determined that the stay did not apply to the appellate court's imposition of sanctions pursuant to § 362(b)(4)[5] and, alternatively, granted the defendant's motion for relief from the stay on the ground that there was sufficient cause to retroactively annul the stay and to permit the defendant to liquidate its claim. The debtor appeals. We AFFIRM.
I. FACTS
On August 29, 1988, the Medical Staff Executive Committee of The Good Samaritan Hospital of the Santa Clara Valley ("Hospital") terminated the medical practice privileges of Dr. John Smith. Smith sued the Hospital and twenty-six (26) other defendants, including the Hospital's Board of Directors, for alleged violations of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2, and the Clayton Antitrust Act, 15 U.S.C. § 15. Attorney Jerome Berg ("Berg" or "debtor") represented Smith in the lawsuit.
In a published opinion, Smith v. Ricks, 798 F. Supp. 605 (N.D.Cal.1992), aff'd, 31 F.3d 1478 (9th Cir.1994), cert. denied, ___ U.S. ___, 115 S. Ct. 1400, 131 L. Ed. 2d 287 (1995), the United States District Court for the Northern District of California ("district court") granted summary judgment in favor of the defendants, holding that the defendants were immune from antitrust liability pursuant to the Health Care Quality Improvement Act of 1986 ("Act"), 42 U.S.C. §§ 11101-11152 (West 1988 & Supp.1993). Pursuant to § 11113[6] of the Act, the defendants requested their attorneys' fees and costs in defending the lawsuit.
In June 1992 and October 1992, the district court issued separate orders awarding the defendants' attorneys' fees and costs in defending the action and referred the matter to a Magistrate Judge to determine the amount of fees and costs. On February 17, 1993, the district court also sanctioned Berg $2,000 pursuant to Fed.R.Civ.P. 11 for filing a frivolous pleading. Berg appealed all four of the district court's orders (collectively "appeal") to the Ninth Circuit Court of Appeals.
On September 9, 1993, Berg filed for chapter 11 bankruptcy relief and shortly thereafter converted his bankruptcy case to chapter 13. Berg sent the Hospital a copy of the face page of his bankruptcy petition. However, Berg did not notify the Ninth Circuit or any other court of his bankruptcy filing. The appeal proceeded through the briefing stage and oral argument was held in April 1994.
On August 11, 1994, the Ninth Circuit affirmed the district court in a published opinion, Smith v. Ricks, 31 F.3d 1478 (9th Cir.1994). The Hospital requested fees and costs against Smith in connection with the appeal pursuant to § 11113 of the Act which authorized the court to award fees and costs against another party. After concluding that Berg, not the plaintiff, was at fault for prosecuting the frivolous appeal, the Ninth Circuit sua sponte imposed sanctions against Berg pursuant to Fed.R.App.P. 38. The Ninth Circuit remanded the matter to the district *560 court to determine the amount of fees and costs to be awarded.[7]
The debtor filed numerous applications contesting the imposition of sanctions by the Ninth Circuit, including a request for a hearing en banc. In response, the Ninth Circuit reconsidered its order and reaffirmed the sanctions. On December 30, 1994, the debtor filed a petition for a writ of certiorari with the United States Supreme Court. On March 27, 1995, the writ was denied.
It is undisputed that Berg did not disclose in any of his pleadings to either the Ninth Circuit or to the Supreme Court that he had filed bankruptcy, nor did he argue that the sanctions had been imposed in violation of the stay.
On April 20, 1995, before the district court entered a final judgment on the amount of the sanctions, the Hospital filed a motion seeking relief from the stay. Specifically, the Hospital requested nunc pro tunc relief to validate the Ninth Circuit's imposition of sanctions and permission to liquidate its claim by allowing the district court to enter a final order on the amount of the fees and costs. The debtor filed an opposition and a motion to vacate the sanctions order on the grounds that the Ninth Circuit's order imposing sanctions was entered in violation of the stay.
After a hearing on May 11, 1995, the bankruptcy court entered its order granting the Hospital's motion. The debtor appeals in propria persona.
II. ISSUES
A. Whether the imposition of sanctions by a court pursuant to Fed.R.App.P. 38 is exempted from the stay under § 362(b)(4).
B. Whether the bankruptcy court abused its discretion in granting the Hospital nunc pro tunc relief from the stay and allowing the Hospital to liquidate its claim.
III. STANDARD OF REVIEW
The determination that a particular action is exempt from the stay is a question of law reviewed de novo. In re Wade, 115 B.R. 222, 225 (9th Cir. BAP 1990), aff'd, 948 F.2d 1122 (9th Cir.1991).
The bankruptcy court's decision to grant relief from the stay is reviewed for an abuse of discretion. In re Jewett, 146 B.R. 250, 251 (9th Cir. BAP 1992).
IV. DISCUSSION
The debtor's principal argument is that he was denied his rights to due process because the Ninth Circuit violated its General Order 10.9[8] by not allowing the debtor an opportunity *561 to defend against the sanctions. The debtor argues that to remedy this situation, this Panel should conduct a de novo hearing on the Fed.R.App.P. 38 sanctions. According to the debtor, the Panel has jurisdiction to conduct such a review because it is a court of equity and should have the authority to review any order that has an impact upon the bankruptcy system. The debtor contends that the impact in this case will be particularly egregious because the sanctions will allegedly result in an overwhelmingly large administrative expense to the estate.
The debtor also argues that the bankruptcy court erred in determining that the imposition of sanctions by a court is exempted from the stay pursuant to § 362(b)(4) because the sanctions imposed by the Ninth Circuit served a private pecuniary purpose and, therefore, the § 362(b)(4) exception to the stay does not apply. Assuming arguendo that the stay applied, the debtor asserts that the bankruptcy court abused its discretion in granting the Hospital retroactive relief from the stay because the debtor would be distracted from reorganizing if the defendant were allowed to liquidate its claim.
In response to the debtor's due process argument, the Hospital contends that the award was proper and the debtor was not denied due process. Moreover, the Hospital asserts that the debtor has exhausted his opportunity for review of the Ninth Circuit's order imposing the sanctions.
The Hospital also contends that the court's imposition of sanctions falls within the § 362(b)(4) exception to the stay. In the alternative, the Hospital argues that the bankruptcy court did not abuse its discretion in annulling the stay nunc pro tunc and allowing the Hospital to liquidate its claim, given that the violation of the stay, if any, was the result of a sua sponte action by the Ninth Circuit, not the result of any action by the Hospital. In addition, the Hospital notes that the debtor did not inform the Ninth Circuit of his bankruptcy filing until after he had lost the appeal and he did not argue that the sanctions were imposed in violation of the stay until after the Hospital sought permission from the bankruptcy court to liquidate its claim.
A. Sanctions Imposed by a Court Pursuant to Fed.R.App.P. 38
1. Exemption From the Stay Pursuant to § 362(b)(4)
Section 362(b)(4) exempts from the automatic stay, imposed pursuant to § 362(a), the commencement or continuation of an action or proceeding by a governmental unit to enforce a police or regulatory power. In determining whether a particular action falls within the government police or regulatory power exception, courts generally apply the "public policy test" and the "pecuniary purpose test". N.L.R.B. v. Continental Hagen Corp., 932 F.2d 828, 833 (9th Cir.1991); see also In re Commerce Oil Co., 847 F.2d 291, 295 (6th Cir.1988).
The "public policy exception" requires the bankruptcy court to distinguish between proceedings that effectuate public policy and those that adjudicate private rights. N.L.R.B., 932 F.2d at 833. Under the "pecuniary purpose test" the bankruptcy court's inquiry is whether the action relates to a matter of public safety and health or primarily to the protection of the government's pecuniary interest in the debtor's property. Id.
Relying on the (b)(4) exception, several courts have held that a court's imposition of sanctions against an attorney is not stayed by the debtor's bankruptcy filing. Alpern v. Lieb, 11 F.3d 689 (7th Cir.1993) (Fed. R.Civ.P. 11 sanctions not stayed); O'Brien v. Fischel, 74 B.R. 546, 551 (D.Haw.1987) (same); In re Betts, 165 B.R. 233, 241 (Bankr.N.D.Ill.1994) (same); Papadakis v. Zelis, 230 Cal. App. 3d 1385, 1389, 282 Cal. Rptr. 18 (1991) (same).
In the instant case, the bankruptcy court concluded that the stay did not apply to the Ninth Circuit's sua sponte imposition of sanctions pursuant to § 362(b)(4) and relied, in *562 part, on the opinion of the Seventh Circuit Court of Appeals ("Seventh Circuit") in Alpern v. Lieb, 11 F.3d 689 (7th Cir.1993).[9]
In Alpern, the district court dismissed the plaintiff's lawsuit as frivolous. Thereafter, the defendants filed a motion for sanctions pursuant to Fed.R.Civ.P. 11. The district court granted the motion for sanctions. The plaintiff appealed both the order of dismissal and the order imposing sanctions. During the pendency of the appeals, the plaintiff filed for chapter 7 relief and filed a motion to stay the appeal of the district court's order of dismissal and the separate order imposing sanctions.
The Seventh Circuit determined that the appeal from the dismissal of the debtor's suit was not subject to the stay because the debtor (i.e., plaintiff) had initiated the lawsuit. Alpern, 11 F.3d at 690. With respect to the appeal of the sanctions order, the Court of Appeals held that a proceeding to impose Fed.R.Civ.P. 11 sanctions was exempt from the stay under § 362(b)(4) as an act performed pursuant to governmental police or regulatory power even though the district court ordered the debtor to pay the sanctions directly to his opponent and the sanctions were entirely pecuniary. Id. (citing In re Commonwealth Cos., Inc., 913 F.2d 518, 522-23 (8th Cir.1990) (applying § 362(b)(4) even if money damages are the only relief sought)).
The Seventh Circuit also stated that even though money damages were the only remedy sought or the only sanction imposed, this fact did not take the court's action out of the government exception to the stay. Id. In addition, the Court noted that despite the fact that the sanctioned party may have been required to pay attorney's fees and costs to a private individual, it remained that the order imposing the sanctions was meted out by a government unit for the purpose of combating attorney misconduct and did not serve to adjudicate private rights. Id.
Similar to the district court's (i.e., the sanctioning court's) order which was on appeal in Alpern, the Ninth Circuit's order imposed only monetary sanctions and required Berg to pay the Hospital directly. The debtor contends these facts indicate that the sanctions served a private pecuniary purpose and, therefore, the action did not fall within the (b)(4) exception. We disagree with the debtor and adopt the reasoning in Alpern.[10]
Despite the monetary nature of the sanctions and the fact that the sanctions were paid to a private individual, the (b)(4) exception still applies.[11]Alpern, 11 F.3d at 690 *563 (citing Commonwealth Cos., 913 F.2d at 522-23). The Ninth Circuit ordered the Fed. R.App.P. 38 sanctions as a means of reprimanding what the Court perceived as attorney misconduct in an effort to uphold the integrity of the judicial system. This action fell squarely within the police or regulatory function of the Court and, therefore, is not subject to the stay. Alpern, 11 F.3d at 690; see also Wade, 948 F.2d at 1124 (proceedings by a state bar association aimed at disciplining attorneys are exempted from the stay as an exercise of a police or regulatory function); In re McAtee, 162 B.R. 574, 578 (Bankr.N.D.Fla.1993) (same).
2. Due Process Considerations
Instead of discussing the merits of whether the stay applied to the Ninth Circuit's sanctions order and the application of Alpern to the instant case, the debtor persistently contends that he was sanctioned without notice and, therefore, he was denied due process. This argument is based on the debtor's assertion that the Ninth Circuit failed to comply with its General Order 10.9 concerning the sua sponte imposition of sanctions.
Review of an order of the Ninth Circuit by this Panel or the bankruptcy court would be, as the bankruptcy court stated, "the ultimate presumption", and it is beyond our jurisdiction to conduct a de novo review of that order. Under the structure of our court system, review of an unfavorable Circuit Court of Appeals decision may only be reviewed by either the Circuit voting to hear the case en banc or by the Supreme Court granting a writ of certiorari. The record reflects that the debtor has already sought both of these opportunities for review and, therefore, he has exhausted his opportunity for appealing the Fed.R.App.P. 38 sanctions.
B. Retroactive Relief From the Stay Pursuant to § 362(d)(1)
After notice and a hearing, a bankruptcy court has the authority to terminate, annul, or modify the stay for cause on request of a party in interest. § 362(d)(1). This authority may be exercised retroactively to validate actions taken by a party at a time when it was unaware of the stay. In re Schwartz, 954 F.2d 569, 572 (9th Cir.1992). In the instant case, the bankruptcy court alternatively granted the Hospital nunc pro tunc relief from the stay to validate the sanctions order imposed by the Ninth Circuit.
On appeal, the debtor contends that allowing the Hospital to liquidate its claim could potentially distract the debtor from the task of reorganizing. According to the debtor, the bankruptcy court abused its discretion in granting the Hospital's motion for relief from the stay by failing to adequately consider that the Hospital's liquidation of its claim would be a distraction to the debtor's attempts to reorganize. In support of his "distraction factor" argument, the debtor relies on Celotex Corp. v. Edwards, ___ U.S. ___, 115 S. Ct. 1493, 131 L. Ed. 2d 403 (1995).
Although the bankruptcy court issued an alternative ruling and granted the Hospital retroactive relief from the stay, we decline to address that ruling here in view of the fact that we have determined that the stay did not apply pursuant to § 362(b)(4).[12]
V. CONCLUSION
The Ninth Circuit's imposition of sanctions against a debtor attorney pursuant to Fed. R.App.P. 38 falls within the governmental police or regulatory power exception to the stay pursuant to § 362(b)(4). Accordingly, we AFFIRM.
NOTES
[1] Hon. Geraldine Mund, Bankruptcy Judge for the Central District of California, sitting by designation.
[2] Fed.R.Civ.P. 11 provides in relevant part:
Rule 11. Signing of Pleadings, Motions, and Other Papers; Representations to Court; Sanctions
. . . .
(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.
[3] Unless otherwise indicated, all Chapter, Section and Rule references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1330 and to the Federal Rules of Bankruptcy Procedure, Rules XXXX-XXXX.
[4] Rule 38. Damages and Costs for Frivolous Appeals
If a court of appeals determines that an appeal is frivolous, it may, after a separately filed motion or notice from the court and reasonable opportunity to respond, award just damages and single or double costs to the appellee.
[5] § 362. Automatic stay.
. . . .
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application under section 5(a)(3) of the Securities Investor Protection Act of 1970, does not operate as a stay
. . . .
(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power;
. . . .
[6] § 11113. Payment of reasonable attorneys' fees and costs in defense of suit
In any suit brought against a defendant, to the extent that a defendant has met the standards set forth under section 11112(a) of this title and the defendant substantially prevails, the court shall, at the conclusion of the action, award to a substantially prevailing party defending against any such claim the cost of the suit attributable to such claim, including a reasonable attorney's fee, if the claim, or the claimant's conduct during the litigation of the claim, was frivolous, unreasonable, without foundation, or in bad faith. For the purposes of this section, a defendant shall not be considered to have substantially prevailed when the plaintiff obtains an award for damages or permanent injunctive or declaratory relief.
[7] The district court awarded the defendants $107,743.00 in fees and $3,166.21 in costs. Thus, the total amount of Fed.R.App.P. 38 sanctions imposed against Berg was $110,909.21.
[8] General Order 10.9 of the United States Court of Appeals for the Ninth Circuit provides in relevant part:
10.9. Sua Sponte Imposition of Sanctions
a. Sanctions Imposed Against Counsel or a Party
Sanctions may be imposed against counsel or a party for conduct that violates the Federal Rules of Appellate Procedure, the Circuit Rules, orders or other instructions of the court, the rules of professional conduct or responsibility in effect where counsel maintains his or her principal office or as authorized by statute. If sanctions appear to be warranted, the following procedures shall apply.
The duty judge may issue an order to show cause that directs the litigant to pay a sanction in the amount determined by the court or to show cause why such sanctions would be unwarranted. The order shall state the grounds for such sanctions, the authority under which such sanctions are authorized, whether the sanction would be imposed against counsel, a party or both, and the date upon which a response shall be filed. Any reply to a response shall be filed within seven days from service of the response. Upon review of the response and reply, if any, the judge may deem the order to be discharged or may refer the response to the merits panel or motions panel for an evaluation as to the propriety of sanctions. All dispositions in which orders to show cause have been issued shall specifically address any response or failure to respond to the order.
A motions or merits panel may issue an order to show cause that directs a litigant to pay a sanction in the amount determined by the court or to show cause why such sanctions would be unwarranted. The order shall state the grounds for such sanctions, the authority under which such sanctions are authorized, whether the sanction would be imposed against counsel, a party or both, and the date upon which a response shall be filed. Any reply to a response shall be filed within seven days from service of the response. Upon review of the response and reply, if any, the panel may deem the order to be discharged or may impose the sanction. No order to show cause need be issued if a party requests the imposition of sanctions in a motion or brief to which the party opposing sanctions has an opportunity to respond.
[9] We note that the bankruptcy court also expressed an alternative ruling that the stay did not apply to Hospital's attempt to liquidate its claim because the claim arose post-petition.
The critical date for determining whether the Hospital's claim arose prepetition is the date the debtor filed the notices of appeal. In this case, the debtor appealed four (4) separate district court orders. It is not clear from the record whether all the notices were filed before the debtor filed his bankruptcy petition on September 9, 1993.
While the issue of when the Hospital's claim arose may become relevant in the context of a dischargeability proceeding, it is not germane to the outcome of this Panel's decision. If the notices of appeal were filed before the debtor filed bankruptcy, this would give the Hospital a prepetition claim and the stay would not apply because the Ninth Circuit's imposition of sanctions would fall within the § 362(b)(4) exception. Alternatively, if the notices of appeal were filed after the debtor filed his chapter 11 petition, then the claim would have arisen postpetition and the stay would not apply.
[10] Although we recognize that certain factors distinguish the instant case from Alpern, these differences are not material to our holding in this case.
Specifically, this case is distinguishable from Alpern because Alpern involved a motion for sanctions brought by one of the parties. Here, the Ninth Circuit imposed the sanctions against the debtor sua sponte. However, this distinction makes the instant case an even stronger example of a government action than Alpern.
In addition, the instant sanctions were imposed pursuant to Fed.R.App.P. 38 as opposed to the sanctions in Alpern which were imposed pursuant to Fed.R.Civ.P. 11. However, due to the similarity between Fed.R.Civ.P. 11 and Fed. R.App.P. 38, this distinction is immaterial to our analysis. See Lyddon v. Geothermal Properties, Inc., 996 F.2d 212, 214 (9th Cir.1993).
[11] Not all sanctions or civil penalties imposed by a government unit pass the pecuniary purpose test. Sanctions which are essentially a restitution order may not be within the § 362(b)(4) public policy exception. In re Poule, 91 B.R., 83, 87 (9th Cir. BAP 1988) (concluding that the Registrar of Construction's assessment of civil penalties against the debtor was within the § 362(b)(4) exception, but that the agency's order of correction was not).
[12] We note, however, that these facts appear to present a strong case for annulling the stay nunc pro tunc given that the debtor had the opportunity to inform the Ninth Circuit that he had filed for bankruptcy relief, but failed to do so until after the Court had imposed the Fed.R.App.P. 38 sanctions. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2440777/ | 508 S.W.2d 686 (1974)
LONE STAR BEER, INC., Appellant,
v.
REPUBLIC NATIONAL BANK OF DALLAS, Appellee.
No. 18318.
Court of Civil Appeals of Texas, Dallas.
April 11, 1974.
Rehearing Denied May 9, 1974.
Cecil D. Elfenbein, Clark, West, Keller, Sanders & Ginsberg, Dallas, for appellant.
Gordon H. Rowe, Jr., Gardere, Porter & DeHay, Dallas, for appellee.
BATEMAN, Justice.
Lone Star Beer, Inc. appeals from a take-nothing summary judgment in its suit against appellee Republic National Bank of Dallas for conversion of two checks totaling $11,017.24. Appellant was named as payee in both checks, and its name was endorsed on each of them. They were then endorsed for deposit by Warren Wholesale, Inc. and deposited to its credit in appellee bank. Appellee had filed a third party complaint against D. D. Warren, Jr., and Warren Wholesale, Inc., praying for judgment over against them in the event any judgment should be rendered against it. *687 When appellee's motion for summary judgment was sustained the third party complaint was dismissed without prejudice.
D. D. Warren, Jr. was president and a substantial stockholder in appellant, as well as sole owner of Warren Wholesale, Inc., and by agreement with appellant he continued to haul beer to various customers he had in West Texas before he became a stockholder in and president of appellant. However, he did not have the required license to do so. Appellant had such a license but did not operate in West Texas. It was therefore agreed between them that Warren would buy beer in wholesale quantities from Lone Star Brewing Company, of San Antonio, Texas, but in the name and under the license of appellant. Appellant would forward to Warren the invoices and statements it received from Lone Star Brewing Company for such beer and Warren would issue his check in payment therefor. Warren was thus enabled to augment his income by buying and hauling beer to West Texas under the license of appellant. Checks that would come to appellant from these sales in West Texas would immediately be delivered to Warren. The two checks in question were given by Caprock Beverages, Inc. in payment for beer sold to it by Warren. Appellant had no claim to these checks; they belonged to Warren. Caprock Beverages, Inc. was not a customer of appellant, and the checks represented payment to Warren for beer that his trucks had hauled from the brewery in San Antonio to Caprock in West Texas.
The facts of this case are quite similar to those involved in Lone Star Beer, Inc. v. First National Bank of Odessa, 468 S.W.2d 930 (Tex.Civ.App.El Paso 1971, no writ). That case involved similar operations by D. D. Warren, Jr. in the Odessa area of West Texas, under an arrangement with Lone Star Beer, Inc. identical to the one involved here; and, as held by the El Paso Court of Civil Appeals in that case, we hold that appellee carried its burden of showing the absence of any genuine issue of material fact and that it was entitled to judgment as a matter of law. The following language of the El Paso court in that case at 933-934 is applicable and controlling here:
Conversion has been defined in various ways. Basically, conversion is a wrongful deprivation of property. Bradley v. McKinzie, 226 S.W.2d 458 (Tex. Civ.App. NWH). There can be no conversion where the owner has expressly or impliedly assented to the taking or disposition. Terry v. Witherspoon, Tex. Civ.App., 255 S.W. 471; Tex.Com.App., 267 S.W. 973. Conversion may be committed against one who has legal possession regardless of the question of title. First National Bank of Colorado v. Brown, 85 Tex. 80, 23 S.W. 862 (1892). In order to recover on a theory of conversion, it is necessary that Lone Star Beer allege and prove one of three things, that being, that it is the owner of the property converted or that it had legal possession of the property so taken or that it is entitled to possession. The testimony of Lone Star Beer's officers and directors expressly negate each proposition necessary to so sustain its allegations of conversion.
The undisputed summary-judgment evidence in the record before us shows clearly that the checks in question actually belonged to Warren; regardless of whether he had authority to endorse appellant's name thereon, the checks were his. That being true, appellee could not be guilty of converting these checks when it collected them and placed the money to the credit of Warren's corporation.
Appellant points to evidence that the Lone Star Brewing Company sued appellant in the district court at San Antonio for approximately $80,000 for beer allegedly sold to appellant but delivered to Warren, that appellant compromised this suit *688 by paying $40,000 to Lone Star Brewing Company. From these facts appellant reasons that it became the owner of the beer for which the checks were given and, consequently, of the checks themselves. In its first two points of error appellant asserts that issues of fact existed as to ownership of both the checks and the beer. We do not agree with this argument. Appellee is not sued herein for converting beer, but only for converting checks, and Warren's ownership of the checks and his right to possession thereof appear without dispute. Moreover, it appears from the summary-judgment evidence that the filing of the $80,000 suit and the compromise settlement thereof occurred long after the issuance and deposit of the two checks involved here.
For these reasons, we overrule appellant's first two points of error.
By its third, fourth and fifth points of error, appellant asserts that in buying beer and selling it in wholesale quantities without a license Warren was violating the Texas Liquor Control Act.[*] These points are also overruled. In the first place, appellant's acquiescence and participation in the allegedly illegal acts of Warren preclude it from recovering damages from appellee. The policy of the law in such cases is to leave the parties where they have placed themselves. First Nat. Bank of Breckenridge v. First Nat. Bank of Stamford, 53 S.W.2d 75, 76 (Tex.Civ.App. Eastland 1932, writ dism'd). In the second place, appellee had no contractual relations with appellant, legal or illegal. If Warren's sale of the beer to Caprock Beverages, Inc. was illegal that circumstance would not create liability on the part of appellee for converting the checks, especially at the behest of one who was a participant in the allegedly illegal activity.
The summary judgment was correct and is affirmed.
NOTES
[*] Tex. Penal Code Ann. art. 666-1 et seq. (Vernon 1952). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2576775/ | 490 F. Supp. 2d 142 (2007)
In re BOSTON SCIENTIFIC CORPORATION SECURITIES LITIGATION.
No. 05-11934-JLT.
United States District Court, D. Massachusetts.
June 21, 2007.
*143 *144 Carolyn G. Anderson, Timothy J. Becker, Robert C. Moilanen, Anne T. Regan, Zimmerman Reed, PLLP, Gregg M. Fishbein, Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, John C. Martland, Mart-land & Brooks LLP, Saugus, MA, David S. Nalven, Thomas M. Sobol, Hagens Berman Sobol Shapiro LLP, Cambridge, MA, David Pastor, Gilman and Pastor, LLP, Boston, MA, for Plaintiff, Consolidated Plaintiff.
Stuart J. Baskin, John Gueli, William A. Haddad, Kirsten M. Nelson, Michael T. Rasnick, Shearman & Sterling LLP, New York, NY, Miranda Hooker, William H. Paine, Timothy J. Perla, Wilmer, Cutler Pickering Hale and Dorr LLP, Boston, MA, for Defendant.
Nancy F. Gans, Moulton & Gans, P.C., Wellesley, MA, Andrew C. Griesinger, Griesinger, Tighe & Maffei, LLP, Boston, MA, Stephen V. Saia, Law Offices of Stephen V. Saia, Pembroke, MA, for Movant.
City of Pontiac Policemen's and Firemen's Retirement System, pro se.
Locals 302 and 612 of the International Union of Operating Engineers-Employers Construction Industry Retirement Trust, pro se.
New England Health Care Employees Pension Fund, pro se.
Plumbers and Pipefitters Local No. 502 & 633 Pension Trust Fund, pro se.
City of Pontiac Policemen's and Firemen's Retirement System, pro se.
MEMORANDUM
TAURO, District Judge.
Lead Plaintiff, the Public Employees' Retirement System of Mississippi ("PERS") brings this action against Boston Scientific Corporation ("BSC"), and its executives, James R. Tobin, Paul A. La-Violette, Fredericus A. Colen, Lawrence C. Best, Stephen F. Moreci, Robert Mac-Lean, Peter M. Nicholas, Paul Sandman, and James H. Taylor, Jr. for (1) violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and (2) violations of Section 20(a) of the Exchange Act. Defendants move to dismiss all counts. Presently at issue is Defendants' Motion to Dismiss [# 50].
Background
The following background facts are taken as stated in Lead Plaintiffs Consolidated Amended Complaint ("CAC"), as well as publicly filed documents.[1]
Boston Scientific Corporation, headquartered in Natick, Massachusetts, manufactures medical device products in the areas of cardiovascular and endosurgery. Lead Plaintiff PERS brings this action on behalf of entities and individuals who purchased equity securities in Boston Scientific between *145 March 31, 2003, and August 23, 2005 (the "Class Period"). In its 102-page Consolidated Amended Complaint, Lead Plaintiff alleges that the Defendants made false statements and concealed material information about BSC from the investment community, causing the market price of the BSC's securities to artificially inflate during the Class Period, and enabling the individual defendants to enrich themselves by an amount in excess of $332 million.
Lead Plaintiff asserts that Defendants' material misstatements and omissions can be broken into four areas: (1) Civil lawsuit with Medinol Ltd. ("Medinol"); (2) Department of Justice ("DOJ") investigation; (3) rush of TAXUS stents to market; and (4) Food and Drug Administration ("FDA") investigations and warnings.
(1) Civil Lawsuit with Medinol
Lead Plaintiff alleges that Defendants artificially inflated BSC's stock price by purposefully misleading investors about the nature, scope and severity of ongoing litigation with Medinol which settled after five years of litigation; and resulted in BSC paying Medinol $750 million.
In 1995, BSC entered into an agreement with Medinol in which BSC took a 22% interest in Medinol. Medinol agreed to be responsible for developing and manufacturing stents, and BSC agreed to bring the stents to the market.
In a 2001 lawsuit filed in the Southern District of New York (two years before the class period began), Medinol asserted that BSC had engaged in a "multi-year scheme to defraud" by trying to copy Medinol's stent designs.[2] BSC counter-claimed against Medinol for failing to meet BSC's stent demand requirements.
Lead Plaintiff alleges that in BSC's Report on Form 10-K for the year ending December 31, 2003, BSC failed to discuss the New York litigation in the narrative section of the reports and, instead, buried it deep within the report in a note.
The discussion of the Medinol litigation in BSC's annual Form 10-K is as follows:
On April 5, 2001, Medinol Ltd. (Medinol) filed a complaint against the Company and certain of its current and former employees alleging breaches of contract, fraud and other claims. The suit was filed in the U.S. District Court for the Southern District of New York seeking monetary and injunctive relief. On April 26, 2001, Medinol amended its complaint to add claims alleging misappropriation of trade secrets in relation to the Company's Express(TM) stent development program. Medinol seeks monetary and injunctive relief, as well as an end to the Company's right to distribute Medinol stents and to gain access to certain Company intellectual property. On April 30, 2001, the Company answered and countersued Medinol and its principals, seeking monetary and injunctive relief.[3]
BSC's public filings set forth the Medinol litigation as a "risk." The public filings stated,
Forward-looking statements discussed in the report include, but are not limited to, statements with respect to, and the Company's performance may be effected by:
The impact of stockholder, patent, product liability, Medinol Ltd. and other litigation. . . . [4]
This statement was misleading, Lead Plaintiff submits, because it understated *146 the severity of the litigation. According to Lead Plaintiff, "[i]t was never a matter of whether the company would pay Medinol for the illegal conduct engaged in by individual Defendants Nicholas, Best, and others . . . It was only a question of when and how much."[5] In support of this claim, Lead Plaintiff notes that in 2000, Defendant Tobin admitted privately to Medinol officers that he was unaware when he joined BSC that he was involved with "such crooks" and that he was "ashamed to represent such a dishonest company."[6]
Lead Plaintiff asserts that Defendants made other misleading and false statements about the status of the Medinol litigation.
In an April 5, 2001, press release about the Medinol litigation, BSC Vice President of Corporate Communications Paul Donovan ("Donovan") said, "Medinol's complaint alleges breaches of contract, fraud and other claims . . . These claims have no merit."[7]
On April 11, 2001, Defendant Tobin at the Company's Annual Meeting of Securities Analysts said about the Medinol litigation,
The bottom line about this lawsuit is that the party in the wrong is Medinol.
It was Medinol that could not or would not fill our orders . . .
It was Medinol that consistently refused to provide us with enough stents
It was Medinol that at least a dozen separate times threatened to cut off its supply of stents
This is all about leverage, plain and simple.[8]
In a July 22, 2003, meeting with analysts, Defendant Sandman said, in reference to the Medinol litigation, "I don't frankly think that theory [Medinol's trade secret theory] is going to hold up."[9] Lead Plaintiff says this statement was false because Defendant Sandman knew that Medinol's underlying theory would prevail.
On December 2, 2004, BSC spokesman Donovan, under the direction of Defendants Tobin and Nicholas, issued a press release in response to an eighty-four page Medinol litigation summary judgment ruling[10] issued that same day from the court in New York. The press release included the following language: "As the ruling states, this is essentially a breach of contract case, which alleges `grandiose estimates of damage' that are unlikely to succeed."[11] Lead Plaintiff says this statement was false because at the time Defendants made positive statements about the Medinol litigation, they knew that insiders within the company had engaged in a scheme to defraud Medinol, and they knew that those acts exposed BSC to significant liability.
At a January 10, 2005, conference call with analysts, Defendant Tobin said in regards to the New York litigation, "Medinol, that thing has been brought down to this thing which is a contract dispute. So sooner or later that will get solved."[12]
At a June 15, 2005, Goldman Sachs Healthcare Conference, Defendant Best, in response to an inquiry asking for litigation updates, stated:
We also have a Medinol case dealing with our failed partnership with Medinol *147 back in XXXX-XX-XX around there, and it's not a patent issue, it's not [an] intellectual property issue, it's primarily a straight out contract, breach of contract issue. We're not before a jury, we're before a judge, and we expect to go to trial in the next 4 or 5 weeks I think.[13]
Lead Plaintiff says this statement was misleading because when Defendant Best made this statement he knew as a result of ongoing settlement discussions that BSC was going to pay Medinol millions of dollars for the fraud that BSC had perpetrated on Medinol.
Settlement discussions with Medinol took place in early 2005.
On August 16, 2005, an Israeli newspaper reported the preliminary terms of the settlement as including a large payment to Medinol. The price of BSC securities then dropped 32 cents, or 1.30%.
On August 17, 2005, an analyst leaked the terms of the settlement on Bloomberg, and the stock dropped another 37¢ or 1.82%.
BSC ultimately settled with Medinol in September of 2005. In the settlement, BSC gave up its 22% equity interest in Medinol, paid Medinol $750 million and Medinol preserved for arbitration proceedings its intellectual property claims against BSC. In announcing the settlement, BSC spokesman Donovan said "[w]e're pleased to close this chapter, and put this matter behind us."[14]
Ultimately, the $750 million settlement was reflected in a special charge taken by the company which Defendant Best estimated cost shareholders about $.75 per share.
(2) Department of Justice Investigation
Lead Plaintiff asserts that the Defendants made material misrepresentations and omissions about an ongoing DOJ investigation.
In August 1998, more than four years before the class period, BSC introduced its "NORS" coronary stents. In October of that year, BSC voluntarily recalled certain of those stents following reports of balloon leaks.
In November 1998, DOJ began an investigation of the NORS recall. The investigation concerned whether BSC "took an improper risk" in marketing its NORS stents, and whether BSC officials knowingly released adulterated medical devices into the marketplace. The investigation continued for many years, and both BSC and two of its senior officers were named as targets of the investigation.
Lead Plaintiff alleges that as part of the DOJ investigation, grand jury proceedings during the Class Period revealed that senior officials of BSC, including Defendant Nicholas, knew that the NORS stents had experienced a catastrophic failure rate in clinical trials, but continued shipping them, in total disregard of public safety.
Lead Plaintiff charges that Defendants misled the investment community by downplaying the gravity and merits of this investigation. During the class period, the DOJ investigation and the risk of an adverse outcome were mentioned in Boston Scientific's 10-K filings.[15] BSC's 10-K filings throughout the class period also disclosed that "[t]here can be no assurance that the [DOJ] investigation will result in an outcome favorable to the Company. . . ."[16] And BSC's SEC filings stated *148 that the outcome of the DOJ investigation "may" adversely affect the company.
The annual Form 10-K for the years ending 2002, 2004 and 2005 stated that the, company had "acted responsibly and appropriately" with respect to the matter under investigation.[17] Lead Plaintiff maintains that these statements were false and that the Defendants knew they had acted neither responsibly nor appropriately.
As further proof that the Defendants acted neither responsibly nor appropriately, Lead Plaintiff points out that BSC executives (not the defendants) repeatedly asserted their Fifth Amendment privilege when being deposed as part of the Medinol litigation.
In February 2005, an expected settlement of the matter was announced. In June 2005, a civil settlement was reached in which BSC agreed to pay $74 million. Lead Plaintiff submits that this settlement adversely affected the market price of BSC's stock. The settlement did not involve any admission of liability or wrong-doing by BSC, and the DOJ did not bring any criminal charges against BSC or any of its officers.
After the settlement, BSC issued a June 24, 2005, press release in which Defendant Tobin announced, "We believe that Boston Scientific and its employees acted legally, responsibly and appropriately at all times.[18] Lead Plaintiff says this statement was false and misleading because the Defendants knew that they had not acted appropriately or responsibly. As further proof, Lead Plaintiff points to a June 24, 2005, DOJ press release:
This case represents a failure by Boston Scientific to take the most appropriate steps in a timely manner to ensure that the devices it was distributing to hospoitals performed properly.
. . .
The company identified the problem through its own internal testing and took a risk that those same problems would not occur in the marketplace. This type of behavior by a major medical device manufacturer is unacceptable.[19]
(3) Recall of TAXUS Stents
Lead Plaintiff asserts that while Boston Scientific was launching its new drug-eluting TAXUS stent during the Class Period, it knew and withheld information that the product was fraught with problems and was being released prematurely. Lead Plaintiff submits that BSC selectively disclosed positive news about TAXUS while hiding material information about problems with the product.
In September 2003, BSC released data showing the efficacy and safety of TAXUS, but did failed to disclose that it had received an FDA major deficiency letter raising concerns related to its manufacture[20]
On March 4, 20104, the FDA approved the marketing and distribution of TAXES in the United States. Lead Plaintiff asserts that BSC rushed TAXES to market and trumpeted its immediate impact on BSC's effort to take over market share for stents.
The individual Defendants provided the investment community a "drum roll leading up to the FDA's approval of TAXES which was deafening."[21] And by March 2004, this carefully orchestrated positive message about TAXES caused the trading *149 price of BSC securities to hit an all-time high on the New York Stock Exchange.
Prior to the release of TAXUS into the U.S. marketplace, BSC had received adverse reports out of Europe, where TAXUS had already been released.[22] Some European physicians were complaining that the balloon used to insert the stent would not deflate after insertion and that the balloon was sticking. Lead Plaintiff says that Defendants minimized and misrepresented the problems they were hearing from the field.
Lead Plaintiff alleges that Defendants further downplayed the complaints in discussions with analysts. In an April 20, 2004 call with analysts, Defendant LaViolette said, "[t]his issue [problems with TAXUS] surfaced in the first few months and then as physicians got used to TAXUS, essentially all complaint activity subsided and if you look at international utilization today, and if you look at complaints for any kind of removal difficulty, there are virtually no ongoing complaints."[23]
In a Boston Globe article dated April 24, 2004, BSC spokesman Donovan said that the number of problem cases involving TAXUS was minor relative to the 84,000 TAXUS stents implanted in American patients since the FDA approved the device March 4, 2004. Donovan also said that a few doctors in Europe reported similar problems when TAXUS was initially approved for use there last year, but the complaints ended as doctors become more comfortable with the stents.
Lead Plaintiff asserts that Defendants knew at that time that the problems with TAXUS were much more significant, based on the complaints they had received from European doctors and the complaints which were rolling in as a result of the March 2004 TAXUS release in the United States.[24] Lead Plaintiff further submits that BSC covertly implemented a TAXUS manufacturing change to address the balloon deflation problem, but failed to disclose this change to the public.
According to Lead Plaintiff, in April and May of 2004, Defendants simultaneously placed good news in the market about the rollout of TAXUS while stalling any meaningful disclosure about the complaints received about TAXUS. As the stock price rose, Lead Plaintiff alleges that the Defendants began to sell millions of dollars of BSC stock.
In its Report on Form 10-Q for the period ending March 31, 2004, which was filed with the SEC on May 7, 2004, BSC stated that its success with drug-eluting stents could be adversely impacted by "unexpected variations in clinical results or product performance," and disclosed that "[t]he Company is currently reviewing a limited number of reports related to balloon withdrawal difficulty during TAXUS angioplasty procedures."[25]
Four months after receiving FDA approval, on July 2, 2004, BSC announced its first recall of two lots of TAXUS stents, which constituted 200 stents. The company issued the following press release:
FDA has received reports of one death and 16 serious injuries associated with balloon deflation. In addition, the agency has received eight reports of balloon malfunction that were not associated with patient injury[26]
*150 Lead Plaintiff says that the Company tried to minimize the problem by attributing it to only "two batches [of TAXUS stents] out of 1,200 and some we produced so far" and that BSC maintained that the problem had been addressed with a manufacturing change that had implemented before BSC launched TAXUS[27]
Lead Plaintiff notes that BSC did not disclose the TAXUS manufacturing change in its Form 10-Q for the Quarter ending March 31, 2004, which was filed with the SEC on May 7, 2004. But after the recall, BSC revealed the manufacturing change in its Form 10-Q filed with the SEC on August 9, 2004. Lead Plaintiff asserts that this manufacturing change was material information that the market had a right to know about.
On July 16, 2004, Boston Scientific expanded its recall to 85,000 TAXUS stents and 11,000 other stents. The stock dropped 83.09 per share or 7.6% to $37.40.
Throughout this period, the Defendants tried to reassure the market about the safety of the Company's products. On July 29, 2004, Defendant LaViolette said the Company had "identified and fixed the problem."[28] Lead Plaintiff says this was false, as demonstrated by a subsequent recall.
On August 4, 2004, BSC announced a further recall of 3,000 TAXUS stents. BSC stock promptly dropped $2.41 or 6.6%.
From July 2, 2004, when Defendants first disclosed the problems with TAXUS, to August 5, 2004, when Boston Scientific expanded the TAXUS recall for a second time, the stock price of Boston Scientific dropped 21%.
On August 4, 2004, Defendant LaViolette called the recall a "nuisance."[29] Lead Plaintiff maintains that this was far more than a "nuisance" the faulty product had resulted in a number of serious injuries and the defective stents recall cost BSC $57 million.
(4) The FDA Investigations and Warnings
Lead Plaintiff asserts that Defendants made intentional, material misrepresentations and omissions about BSC's quality control.
The medical devices manufactured by BSC are subject to regulation by the FDA, and the FDA periodically conducts field inspections. Lead Plaintiff asserts that BSC touted the occasions in which it complied with FDA rules, but remained silent when it received bad news. For example, on September 8, 2004, BSC issued a press release announcing that the FDA had inspected its Galway, Ireland facility and reported no violations. And on April 5, 2005, a BSC press release touted its "rigorous laboratory testing."[30]
Between March 9 and April 7 of 2005, the FDA conducted an inspection of BSC's Watertown, Massachusetts manufacturing facility. On May 18, 2005, the FDA wrote BSC a letter, noting regulatory deficiencies at the Watertown facility. This letter, which was published on the FDA website on June 7, 2006, noted that BSC "fails to address specific systemwide corrective actions that are necessary to bring your facility into compliance."[31] The letter then stated that certain devices manufactured by BSC were adulterated and outlined "significant deficiencies" which the inspectors uncovered.[32] Lead Plaintiff asserts *151 that this FDA letter was disseminated among BSC insiders, but that none of the individual Defendants publicly reported this regulatory warning. Defendant Moreci, who had been copied on the FDA letter, sold $1.4 million of BSC stock on May 31, 2005.
In a June 15, 2005, presentation to Goldman Sachs, Defendant Best did not disclose the FDA warning letter and told the audience that BSC "is really burdened today by its enormous success" and that "we basically have a set of cards that really are second to no one else."[33]
On August 1, 2005, BSC received a warning letter from the FDA concerning certain deficiencies at its Glens Falls, New York facility. This letter was also posted on the FDA website, although the actual date of posting is unknown. The FDA's letter informed BSC of violations found during the Glens Falls inspection and noted that "[t]hese violations cause the aforementioned medical devices at your firm to be adulterated. . . . "[34]
Lead Plaintiff charges that the Defendants made no effort to inform the investment community of this second letter,[35] and that BSC's website contained a material misrepresentation by describing the manufacturing facility at Glens Falls, New York as "world class."[36]
The Company's Report on Form 10-Q for the quarter ending June 30, 2005, which was filed with the SEC on August 9, 2005, stated that the company was committed to "quality."[37] Lead Plaintiff says this was a false statement, as evidenced by the FDA warnings letters.
On August 10, 2005, Boston Scientific received a third warning letter from the FDA, this one related to a facility in Quincy, Massachusetts. The letter detailed "serious regulatory problems" at the Quincy facility.[38] The letter included the following warning:
You should know that these serious violations of the law may result in FDA taking regulatory action without further notice to you. These actions include, but are not limited to, seizing your product inventory, obtaining a court injunction against further marketing of the product, or assessing civil money penalties.[39]
Defendants did not disclose this letter to the investment community. The letter was published on the FDA website on August 23, 2005. On August 23, 2005, TheStreet.com also reported the letter under the headline FDA Scolds Boston Scientific. In response to this news, Lead Plaintiff maintains that the price of Boston Scientific stock dropped $1.23 or 4.5% to $25.92. This was a 43.4% decline from BSC's class period high of $45.81 on April 5, 2004.
*152 In Reports on Form 10-K filed with the SEC for the year ending December 31, 2003, BSC stated that "EtJhe Company is committed to providing high quality products to its customers. To meet this commitment, the Company has implemented state-of-the-art quality systems and concepts throughout the organization."[40] Lead Plaintiff submits that this statement was untrue and misleading as demonstrated by the FDA warning letters.
Lead Plaintiff asserts that the Defendants sold substantial shares of B SC during the class period, while knowingly or recklessly engaging in acts that operated as a fraud and deceit upon Lead Plaintiff and other members of the Class. Lead Plaintiff, on behalf of itself and others similarly situated, advances two causes of action: (1) violations of Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and (2) violations of Section 20(a) of the Exchange Act.
Discussion
I. Legal Standards
A. Motion to Dismiss
In considering a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), the court takes all well-pleaded facts stated in the complaint as true, and draws all reasonable inferences in favor of the plaintiff[41] The court may consider the entirety of relevant documents that are integral to or relied upon in the complaint without converting the motion to dismiss into one for summary judgment.[42]
The court will not credit "bald assertions, unsupportable conclusions, and opprobrious epithets."[43] A motion to dismiss a complaint under Fed.R.Civ.P. 12(b)(6) will be granted only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."[44]
B. Heightened Standard Under the PSLRA
The Private Securities Litigation Reform Act ("PSLRA") requires that a complaint alleging securities fraud based on misstatements or omissions of material fact specify "each statement alleged to have been misleading, the reason or reasons why the statement is misleading, and, if an allegation regarding the statement or omission is made on information and belief, the complaint shall state with particularity all facts on which that belief is formed."[45] The PSLRA also requires that the complaint "state with particularity facts giving rise to a strong inference" that the defendant acted with scienter.[46] The Supreme Court defines scienter as "a mental state embracing intent to deceive, manipulate, or defraud."[47]
*153 C. Securities Fraud
Section 10(b) of the Securities Exchange Act of 1934 makes it unlawful to "use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of rules promulgated by the SEC.[48] Rule 10b-5, which is promulgated under Section 10(b), prohibits making any untrue statement of material fact or omitting a material fact that is necessary to correct an otherwise misleading statement.[49] A 10-b5 complaint should not be judged on the "general flavor" of the collective challenged statements.[50] Instead, each alleged material omission or misstatement shall be viewed independently.[51]
The elements of securities fraud are: (1) a false statement or omission of material fact, (2) made with scienter, (3) in connection with the purchase or sale of a security, (4) upon which plaintiff relied, (5) an economic loss suffered by plaintiff, and (6) caused by the misrepresentation or omission.[52]
II. Analysis
A. Civil lawsuit with Medinol
In its Consolidated Amended Complaint, Lead Plaintiff alleges that during the Class Period, Defendants duped the investment community with a series of misleading statements and omissions about BSC's ongoing litigation with Medinol. Lead Plaintiff charges that Defendants downplayed the seriousness of the Medinol litigation despite knowledge that the litigation would end poorly for BSC. Ultimately, BSC settled with Medinol for $750 million.
As discussed below, BSC fulfilled its disclosure requirements regarding the Medinol litigation. In another securities fraud case before Judge Woodlock, plaintiffs alleged that the defendant corporation made affirmatively misleading statements about its prospects in a pending civil trial for patent infringement where the company knew with a "high degree of certainty" that it would receive an adverse jury verdict, which would adversely affect the company's business.[53] When the company lost the jury trial, shareholders filed suit. In granting a motion to dismiss in that case, the court held that the company was only obligated to mention the litigation in general descriptive terms, as required by Item 103 of Regulation S-K.[54] But the company "was not obligated to predict the outcome or estimate the impact" of the litigation.[55] The court also noted that "[w]hile a company that chooses to reveal material information, even though it had no duty to do so, *154 must disclose the whole truth, it need not disclose everything it knows; rather, the company is required only to make additional disclosures to keep the information from being materially misleading.[56]
Similarly, in the case now before this court, BSC met the requirements of Item 103 of Regulation S-K by disclosing the potential risk of the pending Medinol litigation. BSC's Form 10-K and BSC's public filings expressly disclosed that "the Company's performance may be effected by . . . The impact of stockholder, patent, product liability, Medinol Ltd. and other litigation. . . ."[57] Having met this requirement, BSC was under no duty to inform the investment community of its own internal assessments of its prospects for settling the Medinol litigation.
Nor does BSC face liability for the results of the Medinol litigation merely because the settlement required BSC to pay Medinol millions of dollars. As the Second Circuit has noted, loss resulting from the materialization of a disclosed risk does not support a claim of securities fraud.[58] Here, BSC repeatedly informed the investment community that Medinol had filed suit against BSC and was seeking "monetary and injunctive relief, as well as an end to the Company's right to distribute Medinol stents and to gain access to certain Company intellectual property."[59]
Lead Plaintiff also fails to allege with particularity any actionable misstatement regarding the Medinol litigation. The challenged statements cannot serve as the basis for a securities claim because they are corporate puffery,[60] statements of truth, or forward looking statements.[61]
This court need not consider BSC's April 5, 2001 press release that Medinol's claims against BSC "have no merit"[62] because that statement occurred two years prior to the commencement of the class period, and statements made before the beginning of the class period cannot serve as the basis for liability.[63]
*155 The statements in Donovan's December 2, 2004, press release do not support a claim upon which relief can be granted. This statement was merely a condensed version of the district court's summary judgment opinion, which had been issued earlier that day. According to the press release, the Medinol litigation "is essentially a breach of contract case, which alleges `grandiose estimates of damage' that are unlikely to succeed."[64] This statement is inactionable because it is not false, misleading, or made with scienter. The district court stated that "[e]ssentially, this is a breach of contract case . . . The parties have strained to enlarge this case, alleging in their complaint and counterclaims many varieties of tort and grandiose estimates of damage. It is unlikely that these claims can succeed. . . . "[65]
Lead Plaintiff also challenges the following statements:
"[the New York litigation with] Medinol, that thing has been brought down to this thing which is a contract dispute."[66]
"[I]ts not a patent issue, it's not an intellectual property issue, it's primarily a straight out contract, breach of contract issue."[67]
Neither of these statements support a claim of securities fraud because they were both accurate. In the New York litigation between Medinol and Boston Scientific, the district court dismissed Medinol's claim for misappropriation of trade secrets, leaving the breach of contract claim as the central remaining dispute.[68] Although some non-contract claims remained, the judge stated that "[e]ssentially, this is a breach of contract case . . ." and "[m]any of Medinol's and Boston Scientific's claims against each other are . . . dismissed. A core number, largely involving their disputed contentions as to their contractual relations, remain for trial."[69] Accordingly, there is no basis to believe that Defendants' statements were false, nor that they knew the statements were false when made.
At oral arguments, counsel for the Lead Plaintiff conceded that the claims involving the Medinol litigation were not his strongest. "[I]n the context of the allegations set out in the complaint, there are some that are obviously strong and some that are not as strong. I think the Medinol question is one that is close to the wire."[70]
Counsel for Lead Plaintiff rely heavily on Defendant Tobin's private remark to Medinol representatives that his company was run by a bunch of "crooks" as a basis for a securities fraud claim.[71] At oral arguments, counsel took the position that "[h]ad Mr. Tobin not said anything, . . . this [claim about the Medinol litigation] would be a very, very difficult case."[72]
Defendant Tobin's remarks that his company had been run by "crooks" and that he was "ashamed to represent such a dishonest company" suggest that Tobin thought poorly of his predecessors, but are insufficient to support a claim of securities fraud. Defendant Tobin was not addressing the legal merits of the Medinol litigation because he made these remarks in *156 2000, and the litigation didn't begin until 2001. And his private remarks, made three years prior to the beginning of the Class Period, did not mean that Defendants knew that they would incur massive liability from the Medinol litigation and should inform the market while the litigation was still pending.
Lead Plaintiff fails to allege sufficient facts about the Medinol litigation to survive a motion to dismiss. Because this court has determined that the complaint does not identify an actionable misstatement or omission regarding Medinol, it need not consider Defendants' alternative argument that Lead Plaintiffs claim fails because the truth about the Medinol litigation was on the market.
B. Department of Justice investigation
Lead Plaintiff charges that Defendants misled the investment community about the ongoing DOJ investigation. This claim fails for many of the same reasons that the claims about the Medinol litigation fail. BSC fulfilled its obligations by disclosing the potential risk of an adverse outcome in the DOJ investigation in BSC's 10-K filings during the class period. The form 10-K stated that "[t]here can be no assurance that the investigation will result in an outcome favorable to the Company. . . ."[73] The public filings also stated that "two senior officials have been advised that they are targets of the federal grand jury investigation"[74] and that "the Company's performance may be effected by:. . . . the ultimate outcome of the U.S. Department of Justice investigation."[75]
Defendants had no duty to confess guilt. "The federal securities laws do not require a company to accuse itself of wrongdoing."[76] 76 BSC had a duty to disclose the investigation, which it did. Although Defendants had a duty to disclose all underlying material facts that would adversely affect its business, that duty did not extend to pronouncing wrongdoing while the DOJ investigation was ongoing.[77]
BSC's disclosures of the ongoing DOJ investigation were also consistent with SEC regulations.[78] SEC proxy rules require additional disclosure where a director or executive officer was convicted in a criminal proceeding or is a named subject *157 of a pending criminal proceeding.[79] But neither of these scenarios was present. And as another district court has noted, "the SEC's proxy disclosures do not require a company's management to confess guilt to uncharged crimes or to accuse itself of antisocial or illegal policies. . . . There is no reason why a different rule should apply under § 10(b)"[80]
Roeder v. Alpha Industries Inc., upon which Lead Plaintiff relies for the proposition that Defendants had a duty to disclose additional information about the DOJ investigation, is inapposite.[81] There, the Defendant corporation did not disclose that one of its vice presidents would be indicted for bribery, and the Court of Appeals found that such information could be material.[82] In contrast, BSC repeatedly disclosed that it was under investigation by the DOJ, and no executives were ever indicted.
Lead Plaintiffs claim also falls short because it fails to allege loss causation, which requires that the loss be caused by a concealed risk.[83] Here, Lead Plaintiffs loss was caused by the materialization of a risk that BSC had adequately disclosed.
Lead Plaintiff asserts that the statement that BSC may be adversely effected by the DOJ investigation was materially false because Defendants knew that the DOJ investigation had merit and that BSC would be adversely effected by the DOJ investigation. This argument is unpersuasive. Lead Plaintiff fails to allege facts that create a strong inference that the challenged statement was made with scienter. No criminal charges were ever filed, the grand jury did not return an indictment, and the settlement did not involve any admission of liability or wrongdoing by BSC.
Defendant Tobin's comment that, "We believe that Boston Scientific and its employees acted legally, responsibly and appropriately at all times"[84] is also not actionable. The challenged statement fails because Defendant Tobin's statement is one of opinion and "no reasonable investor could find [it] important to the total mix of information available."[85] Statements of opinion are actionable where the plaintiff pleads facts to indicate that the speaker did not actually believe the statements.[86] But here, Lead Plaintiff fails to meet this standard. The settlement with DOJ did not require BSC to admit any liability or wrongdoing, and Lead Plaintiff has not alleged facts to create a strong inference that the Defendant did not believe his own words. Defendant Tobin's private remark that his company had been run by "crooks," which he made in 2000 to Medinol officials carries no probative weight as to what he thought of the DOJ investigation, and is insufficient to create a strong inference that his 2005 statement regarding the DOJ investigation was subjectively false.
Lead Plaintiff also challenges the following statement made during a July 22, 2003 analyst call about the NORS stent and DOJ investigation: "There's never been any assertion by a patient or physician that the product was anything but okay . . . There's never been any assertion of harm to a patient, by a patient or a physician[.]"[87] This statement is also inactionable *158 because Lead Plaintiff fails to allege facts to create a strong inference that Defendants knew that the statement was false when made. The DOJ press release, stated that "[t]his case does not involve any risk to those patients who had one of these stents implanted in their bodies. The issue is not, and was never, whether the stent performed properly.[88]
Defendants knew that the DOJ investigation had merit, Lead Plaintiff asserts, because BSC executives, none of whom are the Defendants in this case, invoked their Fifth Amendment rights when asked in depositions about the Medinol litigation. Lead Plaintiff's position is unsupported by precedent. The privilege against self-incrimination in the Fifth Amendment, "while sometimes `a shelter to the guilty,' is often `a protection to the innocent."[89] And the Fifth Amendment also guarantees a defendant that no adverse inferences may be drawn from his exercise of this right.[90] Accordingly, whether BSC executives invoked their Fifth Amendment rights has no bearing on the case currently before the court.
C Rush of TAXUS Stents to Market
Lead Plaintiff contends that Defendants knew about problems with the TAUS stent prior to the three 2004 product recalls, withheld this information from the public, and made misleading statements. To support its claim that Defendants knew that TAXUS was fundamentally flawed, Lead Plaintiff points to the major deficiency letter that the FDA wrote BSC in 2003, adverse reports from doctors in 2003 and 2004, and a manufacturing change that BSC implemented in 2004.
The major deficiency letter, which BSC received in September 2003, put BSC on notice that the FDA needed more information before it could proceed in evaluating TAXUS for FDA approval.[91] BSC provided this information, and on March 4, 2004, the FDA approved TAXUS for release in the United States.[92] The FDA's request for additional information, which BSC supplied, does not support Lead Plaintiffs contention that Defendants knew that TAXUS was defective, or that TAXUS was "broken on day one."[93] Rather, the letter was a step in the FDA approval process which BSC had no duty to disclose.[94]
Lead Plaintiff asserts that Defendants also learned that TAXUS was defective from adverse reports from doctors that it received prior to the TAXUS recalls. After TAXUS's European release in the spring of 2003, BSC received a number of complaints from European doctors that the balloon would not deflate after insertion, and that the balloon was sticking.[95] The total number of complaints from European doctors was very small, roughly forty out *159 of 350,000 TAXUS stents, and BSC attributed these problems to lack of doctor familiarity.[96] with TAXUS, rather than product defect." According to BSC, these complaints subsided as doctors became comfortable with TAXUS.[97]
After BSC's domestic release of TAXUS in March 2004, it received some complaints from American doctors. BSC made statements that these new complaints about TAXUS were equivalent to the complaints it received in Europe.[98] Lead Plaintiff asserts that these statements were false and that the Defendants knew that the problems in Europe and in America were the result of a flawed product rather than doctor unfamiliarity. But the Consolidated Amended Complaint provides little in the way of facts to support this claim. Lead Plaintiff pleads no facts to suggest that the complaints BSC received from American doctors were different than those it received from European doctors. And Lead Plaintiff does not charge falsity in Defendants' remarks that the complaints from European doctors declined over time. If the TAXUS stents released in Europe were truly defective, the rate of complaints should have remained constant.
The European doctors' diminishing number of complaints is consistent with Defendants' stated belief that the complaints derived from doctors becoming accustomed to the product rather than product defect. This is also consistent with Defendants' remarks in the spring of 2004 that the complaints they were receiving in America were similar in nature to those received from Europe. Lead Plaintiff does not plead facts to provide a strong inference that Defendants knew that these statements were false when made. Accordingly, such remarks do not support a claim of securities fraud.[99]
The court notes that BSC disclosed that it received complaints and that it was reviewing them. In its Report on Form 10-Q for the period ending March 31, 2004, which was released on May 7, 2004, BSC stated that it was "reviewing a limited number of reports related to balloon withdrawal difficulty during TAXUS angioplasty procedures."[100]
Lead Plaintiff also points to the manufacturing change that BSC implemented prior to the domestic launch of TAXUS as evidence that Defendants knew that TAXUS was defective. Lead Plaintiff alleges that the manufacturing change was "material information that the market had a right to know."[101] In hindsight, as discussed below, it appears that this manufacturing change may indeed have been material. But a plaintiff in a securities case "does not satisfy the requirements of Rule 9(b) merely by pleading fraud by hindsight."[102]
A manufacturing change does not necessarily mean that a product is defective, or that a company knows that a product is defective. Companies frequently adjust and change their products, and no rule requires a company to inform the public every time it modifies its manufacturing process. Such changes are often for purely innocuous reasons, such as to enhance or fine tune an already successful product.
*160 Here, the manufacturing change was conducted with the knowledge and approval of the FDA, and at a time when BSC had received only a limited number of complaints from Europe which had tapered off after the product's release. And Lead Plaintiff does not dispute that BSC's manufacturing change occurred before it launched TAXUS in the United States and that the change "would have been submitted whether [BSC] got a complaint or not."[103] Under these circumstances, Lead Plaintiff fails to allege facts that provide a strong inference that at the time of the manufacturing change, Defendants knew that TAXUS was defective or that the product would later be recalled.
In the summer of 2004, BSC recalled a total of 99,200 stents.[104] The recalls were limited, and only applied to a fraction of the TAXUS stents released on the domestic market. After the recalls, BSC disclosed in its Form-10K that it had implemented an FDA-approved modification to the manufacturing process for TAXUS and that this measure, in combination with other measures, "will be effective in reducing the occurrence of balloon non-deflation."[105] This statement in the Form 10-K connects the manufacturing change with balloon non-deflation. But a "reasonable inference [of scienter] is insufficient to survive a motion to dismiss."[106] Though BSC may have been able to say after the recalls that the manufacturing change would help redress the problem that led to the recalls, it does not follow that BSC, or its executives, knew at the time of the manufacturing change that the problem was sufficiently bad so as to lead to a recall. For this reason, the asserted facts do not create a strong inference that TAXUS was defective before the manufacturing change, or that Defendants knew that TAXUS was defective.
Lead Plaintiff also takes issue with Defendant LaViolette's July 29, 2004, remarks that BSC had identified and fixed the problem with TAXUS. Shortly after LaViolette's statement, BSC initiated a third TAXUS recall of 3,000 stents. But no liability exists where a plaintiff's claim rests on the assumption that the defendants "must have known of the severity of their problems earlier because conditions became so bad later on."[107] Here, Lead Plaintiff fails to allege facts that provide a strong inference that Defendant LaViolette knew that an additional recall was necessary or that his remarks were false when he made them. Accordingly, Defendant LaViolette's remark is inactionable fraud by hindsight.
Plaintiff asserts that its complaint resembles the complaint before Judge Young in Allaire and therefore does not rely on classic `fraud by hindsight.'[108] In that securities fraud case, the court denied a motion to dismiss where a software manufacturer made many positive statements about its computer software and then released software that was so defective that it was inoperable.[109] The court held that the product was so severely flawed that it supported the strong inference that the *161 product had also been flawed at the time that defendants made positive statements about it.[110] The facts of Allaire are plainly distinguishable. There, the product was such a complete dud that the court noted that it would have been "inconceivable" that management could not have known that the program did not work.[111] Here, the TAXUS stent was not inoperable and only a fraction of the product was ever recalled.
D. FDA investigations and warnings
Next, Lead Plaintiff contends that Defendants made intentionally misleading statements about BSC's quality control and failed to inform the market about the three FDA warning letters BSC received in the Spring and Summer of 2005. The warning letters outlined significant deficiencies or regulatory problems that inspectors discovered at BSC plants.
It is this court's view that the FDA letters were not material and that BSC had no affirmative duty to discloe them.[112] In reaching this conclusion, this court notes that the three letters were "informal and advisory,"[113] resulted in no enforcement action against the company and involved only `three of BSC's twenty-six facilities.
Other courts have dismissed similar securities fraud claims involving failure to disclose FDA warning letters. In Acito v. IMCERA Group, Inc., the Second Circuit affirmed a district court's determination that a series of FDA warning letters were not material and did not need to be disclosed.[114] In upholding the district court's dismissal of a Section 10(b) claim, the court noted that the defendant corporation was a world-wide company that engaged in heavily regulated businesses and that it would be "unduly burdensome and impractical to publicly disseminate the results of every inspection of every plant."[115] Likewise, BSC is a global corporation that operates in a regulated industry.
And in Anderson v. Abbott Laboratories, a district court dismissed a Section 10(b) claim where defendant, a medical systems manufacturing company, did not disclose an FDA warning letter.[116] In doing so, the *162 court noted that "[t]here is nothing magical about [an FDA] warning letter. Although the language sounds ominous, it really is rather boilerplate.[117]
This case is distinguishable from Mallozzi v. Zoll Medical Corp, upon which Lead Plaintiff relies. In that case, the district court denied Defendants' motion to dismiss a Section 10(b) claim where defendants did disclose an FDA warning letter, but failed to disclose a series of FDA reports, disguised the scope of an ongoing FDA investigation, and made false and misleading statements about an FDA-prompted product recall.[118] Here, the FDA warning letters were unrelated to any product recall or enforcement report, and resulted in no adverse action against BSC.
Lead Plaintiff takes issue with statements that BSC implemented "state-ofthe-art quality systems," that its Glen Falls facility is "world class," and "cutting edge" and that within "the device community . . . [BSC] basically ha[s] a set of cards that really are second to no one else."[119] Every company praise its products and its objectives, and these statements are nothing more than corporate puffery.[120] No reasonable investor would find these remarks important in the total mix of information available.[121] `"[A] claim that a fraud was perpetrated on the market can draw no sustenance from allegations that defendants made overly-optimistic statements, if those statements are ones that any reasonable investor (ergo, the market) would easily recognize as nothing more than a kind of self-directed corporate puffery. The market is not so easily duped, even granted that individual investors sometimes are.'"[122]
In addition, the challenged statement from BSC's April 5, 2005, press release that touted BSC's "rigorous laboratory testing" fails to support a securities fraud claim because it was issued prior to the receipt of the May 18, 2005, FDA warning letter.
E. Violations of Section 20(a) of the Exchange Act
Lead Plaintiff also asserts claims for violations of Section 20(a) of the Exchange Act. This provision authorizes a cause of action against any person who exerts direct or indirect control over a corporation that acts in violation of the securities laws.[123]*163 But as previously detailed, Lead Plaintiff has failed to adequately allege a Section 10(b) violation. Accordingly, Lead Plaintiffs Section 20(a) claim for control person liability also fails.[124]
Conclusion
For these reasons, Defendants' Motion to Dismiss [# 50] is ALLOWED. This case is closed. An order has issued.
NOTES
[1] See In re Colonial Mortgage Bankers Corp., 324 F.3d 12, 19 (1st Cir.2003) ("[M]atters of public record are fair game in adjudicating Rule 12(b)(6) motions, and a court's reference to such matters does not convert a motion to dismiss into a motion fur summary judgment.").
[2] CAC ¶ 57.
[3] App. of Public Rs. Submitted in Supp. of Defs.' Mot. to Dismiss, Paper # 53 (hereinafter App. Public Rs.), Ex. A. at Exhibit 13. 1, p. 41; Ex. B at Exhibit 13. 1, p. 67; Ex. C at p. 65.
[4] CAC ¶ 61.
[5] Id. ¶ 62.
[6] CAC ¶¶ 57, 62.
[7] Id. ¶ 59.
[8] Id.
[9] Id. 1163.
[10] Medinol Ltd. v. Boston Scientific Corp., 346 F. Supp. 2d 575, 627 (S.D.N.Y.2004).
[11] CAC ¶ 68.
[12] Id. ¶ 64.
[13] Id. ¶ 65.
[14] Id. ¶ 72.
[15] See Id. ¶ 61 ("[T]he Company's performance may be effected by: . . . the ultimate outcome of the U.S. Department of Justice investigation.").
[16] App. Public Rs. Ex. A, p. 42, Ex. B, p. 68-69, Ex. C, p. 67.
[17] CAC ¶ 75.
[18] Id. ¶ 83.
[19] Id. ¶ 84.
[20] Id. ¶¶ 88-89.
[21] Id. ¶ 89.
[22] TAXUS was released in Europe in January of 2003. Id. ¶ 87. BSC received roughly forty complaints from the 350,000 TAXUS stents it released. Id. ¶ 93.
[23] CAC ¶ 93.
[24] Id. ¶ 95.
[25] Id. ¶ 93; App. Public Rs., Ex A at Exhibit 13. 1, p. 15-16; Ex. B at Exhibit 13. 1, p. 30-31; Ex. C, p. 15-16.
[26] CAC ¶ 97.
[27] Id. 98.
[28] Id. ¶ 101.
[29] Id.
[30] Id. ¶ 108.
[31] Id. & 110.
[32] Id.
[33] Id. ¶ 115.
[34] Id. ¶ 119.
[35] On August 16, 2005, Reuters published a news article that discussed this second FDA letter. The article noted that,
in the latest FDA warning letter, dated Aug. 1, the agency said the company's reply was lacking. "Several responses provide little detail regarding how your firm will achieve the desired corrections," the agency said. Boston Scientific shares were off 25 cents to $28.15 on Tuesday on the New York Stock Exchange.
The FDA sends dozens of warning letters each year. Many companies fix problems without further penalty, but the warnings can lead to product seizures, injunctions or fines.
Id. ¶ 122.
[36] Id. ¶ 119.
[37] Id. ¶ 116.
[38] Id. ¶ 121.
[39] Id.
[40] Id. ¶ 132. BSC's Report of Form 10-K for year ended December 31, 2004, uses very similar language.
[41] Langadinos v. Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir.2000).
[42] In re Credit Suisse-AOL Sec. Litig., 465 F. Supp. 2d 34, 38 (D.Mass.2006) (citation omitted).
[43] Educadores Puertorriquenos en Accion v. Hernandez, 367 F.3d 61, 67 (1st Cir.2004) (citation omitted).
[44] Leet v. Cellco P'ship, 480 F. Supp. 2d 422, 427-28 (D.Mass.2007) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957)).
[45] 15 U.S.C. § 78u-4(b)(1) (2007).
[46] 15 U.S.C. § 78u-4(b)(2); In re Cabletron Sys., Inc., 311 F.3d 11, 28 (1st Cir.2002) (the complaint must "state with particularity facts that give rise to a strong inference of scienter rather than merely a reasonable inference." (internal quotation omitted)); Credit Suisse-AOL, 465 F.Supp.2d at 39.
[47] Greebel v. FTP Software, Inc., 194 F.3d 185, 194 (1st Cir.1999) (quoting Ernst & Ernst v. Hochfelder, 425 U.S. 185, 193 n. 12, 96 S. Ct. 1375, 47 L. Ed. 2d 668 (1976)).
[48] 15 U.S.C. § 78j(b).
[49] 17 C.F.R. § 240.10b-5 (2007);
[50] In re Boston Tech., Inc. Sec. Litig., 8 F. Supp. 2d 43, 55 (D.Mass.1998).
[51] Id. ("10b-5 allegations must be organized into discrete units that are, standing alone, each capable of evaluation.") (quoting Shapiro v. UJB Fin. Corp., 964 F.2d 272, 284 (3d Cir.1992)).
[52] Dura Pharms., Inc. v. Broudo, 544 U.S. 336, 341, 125 S. Ct. 1627, 161 L. Ed. 2d 577 (2005).
[53] See In re SeaChange Intl, Inc., No. 02-12116-DPW, 2004 WL 240317, at *7 (D.Mass. Feb.6, 2004).
[54] Item 103 of Regulation S-K establishes the requirements a company must follow in disclosing pending litigation. Item 103 states the following:
Describe briefly any material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the registrant or any of its subsidiaries is a party or of which any of their property is the subject. Include the name of the court or agency in which the proceedings are pending, the date instituted, the principal parties thereto, a description of the factual basis alleged to underlie the proceeding and-the relief sought. Include similar information as to any such proceedings known to be contemplated by governmental authorities.
17 C.F.R. § 229.103 (2007).
[55] SeaChange, 2004 WL 240317, at *8 ("[The prospectus] contained no statements suggesting that SeaChange would prevail in the litigation or implying that the impact of the litigation on the company would be positive.").
[56] Id.
[57] CAC ¶ 61.
[58] Lentell v. Merrill Lynch & Co., Inc., 396 F.3d 161, 173 (2d Cir.2005) (requiring in a securities fraud case that "the loss be foreseeable and that the loss be caused by the materialization of the concealed risk") (emphasis in original).
[59] App. Public Rs., Ex. A, p. 41; Ex. B, p. 67; Ex. C, p. 65.
[60] Statements of corporate puffery are immaterial as a matter of law. Rosenbaum Capital LLC v. Boston Commc'ns Group, Inc., 445 F. Supp. 2d 170, 176 (D.Mass.2006) (quoting Shaw v. Digital Equip. Coip., 82 F.3d 1194, 1217 (1st Cir.1996) ("[C]ourts have demonstrated a willingness to find immaterial as a matter of law a certain kind of rosy affirmation commonly heard from corporate managers and numbingly familiar to the marketplace-loosely optimistic statements that are so vague, so lacking in specificity, or so clearly constituting the opinions of the speaker, that no reasonable investor could find them important to the total mix of information available.")).
[61] A person is not liable for any forwardlooking statement that is identified as forward-looking and "is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially. . . ." 15 U.S.C. § 78u-5(c)(1)(A).
[62] CAC ¶ 59.
[63] See In re Ibis Tech. Sec. Litig. 422 F. Supp. 2d 294, 313 n. 19 (D.Mass.2006) (citing In re Int'l Bus. Mach. Corp. Sec. Litig., 163 F.3d 102, 107 (2d Cir.1998) ("A defendant, however, is liable only for those statements made during the class period.")). The court also discards Defendant Tobin's April 11, 2001, statement on identical grounds.
[64] CAC ¶ 68
[65] Medinol Ltd. v. Boston Scientific Corp., 346 F. Supp. 2d 575, 627 (S.D.N.Y.2004).
[66] CAC ¶ 64.
[67] Id. § 65.
[68] See Medinol, 346 F.Supp.2d at 606.
[69] Id. at 627.
[70] Mot. Dismiss Hr'g Tr. 5:1-5, Jan. 30, 2007 (Paper # 65).
[71] See CAC ¶¶ 57, 62.
[72] Mot. Dismiss Hr'g Tr. 7:14-15, Jan. 30, 2007.
[73] App. Public Rs., Ex. A, p. 42, Ex. B, p. 68-69, Ex. C, p. 67.
[74] Id.
[75] CAC ¶ 61.
[76] In re Citigroup, Inc. Sec. Litig., 330 F. Supp. 2d 367, 377 (S.D.N.Y.2004) (finding that plaintiff's claim that Citigroup violated securities laws by failing to disclose that its revenues were derived from allegedly unsustainable and illegitimate sources, including Enron-related activities, did not support a section 10(b) action); see also Iron Workers Local 16 Pension Fund v. Hilb Rogal & Hobbs Co., 432 F. Supp. 2d 571, 586 (E.D.Va.2006) (holding that defendants in securities fraud case had no duty to disclose that defendant insurance company employed practices which illicitly and improperly relied on non-standard commissions). That court also noted that "Rule 10b-5 was not intended to provide shareholders with an avenue for relief against executives for alleged illegal practices or corporate mismanagement. . . ." Id. at 586 (quoting Galati v. Commerce Bancorp, Inc., No. 04-3252, 2005 WL 3797764, at *8 (D.N.J. Nov.7, 2005) (unpublished));
[77] See Ballan v. Wilfred Am. Educ. Corp., 720 F. Supp. 241, 249 (E.D.N.Y.1989) (internal quotations omitted) (holding in securities fraud case that defendants who were the subject of criminal investigation were not bound to predict the likelihood that they would be indicted, but were required to disclose material facts that would potentially endanger the company's future financial performance). In that case, the Defendants were indicted, and the court determined that whether the facts underlying the indictment were material and thus needed to be disclosed was a question for the jury.
[78] See 17 C.F.R. § 229.401(f)(2).
[79] Id.
[80] Ballan, 720 F.Supp. at 249.
[81] See 814 F.2d 22 (1st Cir.1987).
[82] Id. at 25.
[83] See Lentell, 396 F.3d at 173.
[84] CAC ¶ 83.
[85] See Shaw, 82 F.3d at 1217.
[86] In re Credit Suisse First Boston Corp., 431 F.3d 36, 47 (1st Cir.2005).
[87] CAC ¶ 81
[88] App. Public Rs., Ex. W, p. 2.
[89] Carter v. Kentucky, 450 U.S. 288, 300, 101 S. Ct. 1112, 67 L. Ed. 2d 241 (1981) (quoting Murphy v. Waterfront Comm'n, 378 U.S. 52, 55, 84 S. Ct. 1594, 12 L. Ed. 2d 678 (1964)).
[90] United States v. Brand, 80 F.3d 560, 567 (1st Cir.1996) (citing Carter, 450 U.S. at 305, 101 S. Ct. 1112).
[91] See 21 C.F.R. § 814.37(b) ("A major deficiency letter informs the applicant that its PMA [Premarket Approval Application] lacks significant information needed for FDA to complete the scientific review of, and render a final decision on, the PMA.").
[92] CAC ¶ 92.
[93] Mot. Dismiss H'rg Tr. 24:9-12, Jan. 30, 2007.
[94] See In re Alkermes Sec. Litig., No. 03-12091-RCL, 2005 WL 2848341, at *16 (D.Mass.2005) ("The Defendants had no duty to disclose that the FDA had requested additional studies because they had never guaranteed FDA approval.").
[95] CAC ¶ 93.
[96] Id.
[97] Id.
[98] "[Donovan] said a few doctors in Europe reported similar problems when TAXUS was initially approved for use there last year, but the complaints ended as doctors became more comfortable with the stents." Id.
[99] See 15 U.S.C. § 78u-4(b)(2).
[100] CAC ¶ 93.
[101] Id. ¶ 99.
[102] Gross v. Summa Four, Inc., 93 F.3d 987, 991 (1st Cir.1996) (internal quotations and citations omitted).
[103] CAC ¶ 98.
[104] BSC recalled 200 stents on July 2, 2004, 96,000 stents on July 16, 2004, and 3,000 stents on August 4, 2004. CAC ¶¶ 97, 100,-102.
[105] Aff. of Anne T. Regan in Opp. to Defs.' Mot. to Dismiss the Consolidated Am. Compl. (Paper # 57), Ex. D, Excerpts of August 9, 2004 Form 10-Q, at 30.
[106] Greebel v. FTP Software, Inc., 194 F.3d 185, 197 (1st Cir.1999).
[107] In re Boston Technology, Inc. Sec. Litig., 8 F. Supp. 2d 43, 53 (D.Mass.1998) (quoting Serabian v. Amoskeag Bank Shares, Inc., 24 F.3d 357, 367 (1st Cir.1994)).
[108] See Lead Pl.'s Mem. of Law in Opp. to Defs.' Mot. to Dismiss the Consolidated Amended Compl. 14 (Paper # 56).
[109] In re Allaire Corp. Sec. Litig., 224 F. Supp. 2d 319, 329 (D.Mass.2002).
[110] Allaire, 224 F.Supp.2d at 330.
[111] Id. at 329.
[112] The First Circuit has defined materiality as follows:
The boundaries of materiality in the securities context are clearly enunciated in our case law. The mere fact that an investor might find information interesting or desirable is not sufficient to satisfy the materiality requirement. Rather, information is "material" only if its disclosure would alter the "total mix" of facts available to the investor and "if there is a substantial likelihood that a reasonable shareholder would consider it important" to the investment decision.
Lucia v. Prospect St. High Income Portfolio, Inc., 36 F.3d 170, 175 (1st Cir.I994) (quoting Milton v. Van Dorn Co., 961 F.2d 965, 969 (1st Cir.1992)). Generally, materiality is a question of fact that proceeds to the jury, rather than being resolved by the court on a motion to dismiss. In re Cabletron Sys., Inc., 311 F.3d 11, 34 (1st Cir.2002). But the court must determine whether the complaint presents a "plausible jury question of materiality." Id.
Having concluded that the warning letters were not material, this court need not address Defendants' argument that the warning letters were also not actionable because they were publicly available on the FDA's website.
[113] App. Public Rs., Ex. R, 4-2 ("A Warning Letter is informal and advisory. It communicates the Agency's position on a matter, but it does not commit FDA to taking enforcement action.").
[114] 47 F.3d 47, 52 (2d Cir.1995).
[115] Id. at 52-53.
[116] Anderson v. Abbott Labs., 140 F. Supp. 2d 894, 902 (N.D.Ill.2001) ("Given the repeating cycle of inspections, findings and negotiations, without any FDA sanctions, plaintiffs must give us a reason to believe this time was different-something that shows Abbott's prospects had genuinely changed or something from the FDA that said, `This time we're serious.' This plaintiffs have failed to do.").
[117] Id. at 902.
[118] Mallozzi v. Zoll Med. Corp., No. 94-11579-NG, 1996 WL 392146, at *4-5 (D.Mass. Mar.5, 1996).
[119] CAC ¶ 115.
[120] See In re Ford Motor Co. Sec. Litig., 381 F.3d 563, 570 (6th Cir.2004) (finding statements such as "at Ford quality comes first," "Ford has its best quality ever," "Ford is a worldwide leader in automotive safety," and "Ford has made quality a top priority" inactionable. In reaching this conclusion, the court noted that the statements "are either mere corporate puffery or hyperbole that a reasonable investor would not view as significantly changing the general gist of available information, and thus, are not material, even if they were misleading.").
[121] See Shaw, 82 F.3d at 1217.
[122] In re Pharms., Inc. Sec. Litig., No. 04-12581 GAO, 2007 WL 951695, at *8 (D.Mass. Mar.28, 2007) (quoting Shaw, 82 F.3d at 1218.).
[123] See 15 U.S.C. § 78t(a); In re Parametric Tech. Corp., 300 F. Supp. 2d 206, 223 (D.Mass. 2001).
[124] Parametric, 300 F.Supp.2d at 224 ("[W]here there is no liability under Section 10(b), it must follow that there is none under Section 20(a), regardless of an individual defendant's position or influence within a company."). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1659285/ | 224 So. 2d 565 (1969)
Josie E. SMITH
v.
Edward SIMON, Jr. and F.L. Cappaert.
No. 45374.
Supreme Court of Mississippi.
June 9, 1969.
Watkins & Eager, W. Thad Cochran, Jackson, for appellant.
William W. Ramsey, Vicksburg, for appellees.
GILLESPIE, Presiding Justice.
Mrs. Josie E. Smith (hereinafter Lessor) leased certain premises situated in Warren County, Mississippi, to Edward Simon, Jr., (hereinafter Lessee) together with the fixtures located in the premises. F.L. Cappaert, (hereinafter Guarantor) guaranteed the payment of all rents accruing under the lease. The Lessee and Guarantor defaulted in the payment of the rents and Lessor brought suit in the Circuit Court of Warren County to recover the rent and damages for failure to surrender the leased premises and the personal property in the same condition as received.
Lessee and the Guarantor raised the issue that the lease was void and unenforceable because it furnished aid and protection to the business of selling intoxicating liquors on the premises in violation of the statutes of the State of Mississippi.
The issue of illegality was separately heard as authorized by Mississippi Code 1942 Annotated, Section 1475.5 (1956). The trial judge heard the evidence on this issue and dismissed the suit. Lessor appealed.
The question is whether the facts justified the court in adjudging the lease void for being in violation of law and in contravention of the public policy of the state.
At the time the lease was executed and during the primary term thereof the sale of liquor was illegal in this state and the statutes provided that there were no property rights in intoxicating liquors and all obligations given for intoxicating liquors *566 were void and unenforceable. The leased premises consisted of a restaurant and bar and certain personal property therein described, such as champagne coolers and whisky glasses. Lessee was an experienced restaurateur, and was operating another restaurant at the time the lease was executed. The lease as originally written contained a paragraph concerning the purchase by Lessee of "merchandise" from Lessor's husband. It was admitted that this "merchandise" meant intoxicating liquor. However, this paragraph was striken from the lease before execution. The premises had been used by Lessor for the operation of a restaurant and intoxicating liquors were also served. After Lessee began operating the restaurant he continued serving intoxicating liquor. There was no provision in the lease that intoxicating liquor would be served or sold on the premises, and there was no discussion of liquor between Lessor and Lessee. However, the evidence justified the trial court in finding that the parties contemplated that Lessee would serve liquor to his customers as Lessor had done when she operated the restaurant. The rental was $800 per month or ten percent of the gross proceeds, whichever was the larger. It is agreed that ten percent of the gross proceeds never exceeded $800. It was not shown how much intoxicating liquor was sold by Lessee.
There is no doubt that the courts have the duty and the power to declare void and unenforceable contracts made in violation of law or in contravention of the public policy of the state. This Court has exercised this power in several classes of illegal contracts, including the following: (1) when the principal purpose of the contract directly furnishes aid and protection to an illegal enterprise, Smith v. Maryland Casualty Co., 252 Miss. 81, 172 So. 2d 574 (1965), involving fidelity bond covering employees who misappropriated illegal liquor; (2) when in order to enforce the contract a party must base his cause of action on his own illegal act, Capps v. Postal Telegraph-Cable Co., 197 Miss. 118, 19 So. 2d 491 (1944), involving failure to deliver a telegram concerning a gambling contract; (3) where the contract itself is unlawful, Powelson v. National Airlines, 220 Miss. 595, 71 So. 2d 467 (1954), involving a contract to purchase stock in violation of a federal statute, and Morrissey v. Bologna, 240 Miss. 284, 123 So. 2d 537 (1960), involving an indebtedness for illegal liquor.
But not every contract with some illegal aspect is void and unenforceable. The right to contract and have contracts enforced is a basic one guaranteed by the Constitutions. The function of the courts is to enforce contracts rather than enable parties to escape their obligation upon the pretext of public policy. This Court has adjudged contracts void only when the illegality is clearly shown. In Conithan v. Royal Ins. Co., 91 Miss. 386, 45 So. 361, 18 L.R.A.,N.S., 214 (1908), the Court declined to hold illegal an insurance policy on property used for purposes of operating a house of prostitution and said that to defeat action on the policy it is necessary to hold that the policy itself is an immoral contract, and that the policy was good although the insured property was illegally used. In Edwards House v. Davis, 124 Miss. 485, 86 So. 849 (1921), the Court held that an action could be maintained by the hotel guest against the hotel for loss of a suitcase and contents when the suitcase contained a bottle of intoxicating liquor. The statutes made possession of the liquor a crime and further provided there was no property rights in liquor or anything in which intoxicating liquor was kept. In declining to hold that the bottle of liquor in the suitcase was sufficient to deprive the plaintiff of his property rights in the suitcase and other contents, the Court noted that the statute was highly penal and drastic, and that its terms would not be extended by construction to embrace property not clearly within the terms and purview of the statute. In American Equitable Assur. Co. v. McWhirter, 160 Miss. 216, 133 So. 664 (1931), the Court again declined to adjudge invalid *567 a fire insurance policy insuring furniture used in a house of prostitution; the basis of the decision being that the connection between the policy and the business of keeping a house of prostitution was negligible in character and too remote to require the Court to hold the policy unenforceable.
The lease did not require the Lessee to sell liquor. It made no provision with regard to illegal liquor. The parties did not discuss the question of the illegal sale of liquor at any time. They signed the lease at different times and apparently did not meet and discuss it together. The Lessee was under no contractual obligation to Lessor in regard to the liquor business. Lessor's case is not based on any illegal act of hers, and in order for her to recover it is not necessary to make proof of any illegal aspect of Lessee's operation on the leased premises. In our opinion any connection between the lease and the illegal sale of intoxicating liquor by Lessee is incidental to the lawful restaurant business and is not shown to be of such significance as to require the court to deprive Lessor of her property rights in the lease.
We are not persuaded that Lavecchia v. Tillman, 115 Miss. 288, 76 So. 266 (1917), is authority for Lessee's argument that the lease is an illegal contract. That case turned on a demurrer to a plea. For the purpose of the demurrer it was admitted that the purpose of the lease was to conduct the illegal business of selling intoxicating liquor on the leased premises.
The order of dismissal is reversed and the case is remanded for trial on any issue the pleading may raise except the issue of illegality, which we decide here in favor of Lessor.
Reversed, rendered and remanded.
RODGERS, JONES, BRADY, and SMITH, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1662482/ | 329 So. 2d 719 (1976)
Moise S. STEEG, Jr., d/b/a Orleans Title Agency, et al., Plaintiffs-Respondents,
v.
LAWYERS TITLE INSURANCE CORPORATION and Lawyers Title of Louisiana, Inc., Defendants-Relators.
No. 57344.
Supreme Court of Louisiana.
March 29, 1976.
*720 Gordon A. Pugh, F. Charles McMains, Jr., Breazeale, Sachse & Wilson, Baton Rouge, for defendants-applicants.
Phillip A. Wittmann, Clinton W. Shinn, Stone, Pigman, Walther, Wittmann & Hutchinson, New Orleans, for plaintiffs-respondents.
TATE, Justice.
The agents of several title insurers sue to enjoin the defendant competitor, a title insurer and its agent, from furnishing title insurance at a lower and allegedly illegal rate.
The trial court sustained exceptions and dismissed the suit upon several grounds, the most important of which (prematurity) involves the plaintiffs' alleged failure to exhaust administrative remedies.
Granting certiorari, the court of appeal reversed. 323 So. 2d 236 (La.App. 4th Cir. 1975). The court concluded that, because of the inadequacy of any administrative remedy, the plaintiffs were entitled to secure a judicial determination of the legality or not of their competitor's lower rates, without first resorting to administrative relief.
We granted certiorari, 325 So. 2d 275 (1975), because of the urgent need in the present litigation to settle this issue, as well as in order to clarify the procedure by which the issue may be raised.
(1)
The defense that the plaintiff is not entitled to judicial relief because he has not exhausted his administrative remedies, may be raised to the merits, either by the exception pleading no cause of action, La.C.Civ.P. art. 927(4) (if such defense is affirmatively shown by the petition without resort to objected-to evidence, La.C.Civ.P. art. 931), or by answer so pleading it. See O'Meara v. Union Oil Co., 212 La. 745, 33 So. 2d 506 (1947).
The defense may also be raised, as it was here, by the dilatory exception pleading prematurity, La.C.Civ.P. art. 926 (1), which is determined on the basis of the showing made at the in-limine trial of the exception, including evidence introduced at the trial thereof. La.C.Civ.P. arts. 929, 930. The functions of the exception permit raising the issue that the judicial cause of action has not come into existence because some prerequisite condition has not been fulfilled. I McMahon, Louisiana Practice 341-49 (1939).
When (as here) the issue is raised by the exception pleading prematurity, the defendant pleading the exception has the initial burden of showing that an administrative remedy is available, by reason of which the judicial action is premature. Upon such showing, the burden then shifts to the plaintiff to show or prove that the present is one of the exceptional situations where the plaintiff is entitled to judicial relief because any administrative remedy is irreparably inadequate. See O'Meara v. Union Oil Co., 212 La. 745, 33 So. 2d 506, 510 (1947).
(2)
In the instant case, the court of appeal opinion recognized that, despite the failure *721 to exhaust administrative remedies, judicial proceedings may sometimes be used when irreparable injury might otherwise result. The court held that irreparable injury may here result from a competitor's use of illegal rates, since no administrative remedies cited to it were applicable or adequate.
The central substantive issue is whether the defendant title insurer is bound (as are the plaintiffs) by the rates filed by the title insurance rating bureau. La.R.S. 22:1406 C. The defendant insurer contends that, instead, it may charge the lower rates filed by it with the administrative agency, La.R.S. 22:1407, which rates allegedly became valid and authorized by law after the expiration of fifteen days, La.R.S. 22:1407 D.
The court of appeal overruled the exception pleading prematurity and held that, in the present circumstances, a judicial remedy might be necessary to prevent irreparable injury to the plaintiffs, to be determined at the trial on the merits. In doing so, our brethren of the court of appeal essentially held that the insurance code did not provide an administrative remedy to one aggrieved by an illegal rate colorably contended to be valid by operation of law.
Our intermediate brethren held that therefore no remedy for the present complaint is provided by La.R.S. 22:1408 D:
"Any person or organization aggrieved with respect to any filing which is in effect may make written application to the division for a hearing thereon * * *." (Italics ours.) (The statute further provides for expeditious hearing within thirty days of receipt of the application.[1])
The effect of the interpretation given is to permit the administrative remedy provided by the quoted section to be available only with regard to filings of rates which are validly "in effect", but to deprive the administrative agency of authority to determine complaints with regard to rate filings which are alleged to be invalid or illegal and therefore not "in effect".
We deem a more realistic and practical interpretation of this statute to be that it affords an administrative remedy to any person aggrieved by rates charged by virtue of the colorable effectiveness of a filing. That is, the statute provides a remedy for one adversely affected by a filing "in effect", in the common everyday sense of a filing that is in fact the basis of rates which are actually being charged.[2]
By our interpretation, the statutory provision affords an administrative remedy to any person aggrieved by a filing with adverse practical effects, whether or not the rating is technically valid or not. To hold otherwise, is to permit an administrative remedy only to one aggrieved by a valid filing and to deprive an aggrieved person of an administrative remedy by which to test the validity of a filing which affects him adversely.
The interpretation adopted by us provides an administrative remedy to anyone adversely affected by the practical effects of a rate-filing. It avoids a bifurcation of remedy, as either administrative or instead judicial, depending upon whether the complaint is based upon the adverse effects caused by a valid filing or instead based upon the adverse effects caused by an invalid filing. Our interpretation, we believe, is in better accord with the general legislative intent of entrusting to an administrative agency initial determinations with regard to regulation of insurance rate-making *722 and to disposition of disputes in connection therewith.
(3)
Thus, an administrative remedy is here provided by which the plaintiffs may contest the validity of the rate filed, an attack primarily based on the administrative procedures by which the defendant contends the filing became legally effective. On the basis of the contentions made and the evidence (documentary) received at the trial of the exception pleading prematurity, the administrative procedure is not shown to be inadequate.
Under these circumstances, we are unwilling to hold that a judicial claim for injunctive relief is necessarily available to enjoin an administrative action or rate alleged to be invalid or illegal. As we held in O'Meara v. Union Oil Co., 212 La. 745, 33 So. 2d 506 (1947), disputes as to matters within the administrative regulation and expertise should ordinarily first be addressed for determination to the administrative tribunals legislatively intended to decide them, rather than to the courts. See also Davis, Administrative Law Treatise, Section 20.01 (1958), including 1970 supplement.
In view of the adequacy under present circumstances of the administrative relief available, we do not find it necessary to discuss or distinguish holdings such as in West v. Town of Winnsboro, 252 La. 605, 211 So. 2d 665 (1968), which may support an interpretation that, when a plaintiff is threatened with irreparable loss, a requirement that administrative remedies be exhausted does not necessarily apply.
Decree
For the reasons assigned, therefore, we set aside the judgment of the court of appeal, and we affirm the judgment of the district court insofar as it dismissed the plaintiffs' suit upon sustaining the exception pleading prematurity. All costs of these proceedings are taxed against the plaintiffs-respondents.
COURT OF APPEAL JUDGMENT SET ASIDE AND PLAINTIFFS' SUIT DISMISSED.
NOTES
[1] We are unable to agree with the suggestion that this procedure is not adequate because no judicial remedy is provided for an administrative refusal to afford the expeditious hearing mandated by the statute. See La.C.Civ.P. arts. 3861-63.
[2] See Webster's Third New International Dictionary Unabridged, verbo "effect", p. 724: in "effect" means, in "reality", in "fact". | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1735581/ | 106 So. 2d 831 (1958)
Sheldon W. WILSON, Plaintiff-Appellant,
v.
Earl SAWYER, Defendant-Appellee.
No. 8846.
Court of Appeal of Louisiana, Second Circuit.
October 30, 1958.
Rehearing Denied November 25, 1958.
Writ of Certiorari Denied December 15, 1958.
Goff & Caskey, Arcadia, for appellant.
Love & Rigby, Shreveport, for appellee.
AYRES, Judge.
Plaintiff seeks to recover of defendant $1,400, with 8% per annum interest thereon, from January 1, 1951, until paid, together with 10% additional on principal and interest as attorney's fees, less a credit of $200 paid January 20, 1953. This claim *832 is predicated upon two promissory notes, each for the sum of $700, executed and signed by defendant January 1, 1951, and payable to plaintiff, the first January 1, 1953, and the second January 1, 1954.
The defense is that the notes represent the balance of a gambling debt due by defendant to plaintiff as the result of a loss sustained by defendant in a dice game about a year or more prior to the execution of the notes, and that, as such, the object of the transaction was unlawful and contrary to public policy and good morals. On trial, this defense was sustained, and from the judgment rendered, plaintiff appealed.
The jurisprudence is well settled in this State that the courts will not entertain actions to recover what has been either won or lost in gambling. Sampson v. Whitney, 27 La.Ann. 294; Bagneris v. Smoot, 159 La. 1049, 106 So. 561; Nielsen v. Planters Trust & Savings Bank of Opelousas, 183 La. 645, 164 So. 613; Stewart Bros. v. Beeson, 177 La. 543, 148 So. 703; Russo v. Mula, La.App., 49 So. 2d 622. Accordingly, no action will be maintained on a check given in payment of gambling losses. Russo v. Mula, supra; Friel v. Murchison, 8 La.App. 354. Neither will the courts entertain demands for collection of notes given for gambling debts. Whitesides v. McGrath, 15 La.Ann. 401; Bagneris v. Smoot, supra; Keen v. Butterworth, La.App., 185 So. 37.
The statutory basis for this line of jurisprudence is found in the provisions of the Louisiana Constitution of 1921, LSA, Art. 19, § 8, which, so far as pertinent, provides:
"Gambling is a vice and the Legislature shall pass laws to suppress it,"
and in the provisions of the LSA-Civil Code. For instance, LSA-C.C. Art. 2983 provides, in part:
"The law grants no action for the payment of what has been won at gaming or by a bet * * *."
Moreover, all contracts which have as their object that which is forbidden by law or contrary to good morals are void. LSA-C.C. Art. 1892. By the "cause" of a contract is meant the motive or consideration for making it. LSA-C.C. Art. 1896.
"An obligation without a cause, or with a false or unlawful cause, can have no effect." LSA-C.C. Art. 1893.
"The cause is unlawful, when it is forbidden by law, when it is contra bonos mores (contrary to moral conduct) or to public order." LSA-C.C. Art. 1895.
Thus, it is well settled that the courts will not entertain demands for the collection of notes or other obligations which have been given for a gambling debt or for a cause or consideration which is unlawful or contrary to public order or morals. Bagneris v. Smoot, supra; Martin v. Seabaugh, 128 La. 442, 54 So. 935; Bank of New Orleans v. Frantom, 22 La. Ann. 462.
In the light of the aforesaid constitutional and statutory rules and the jurisprudence of this State, the decisive question is whether the notes sued upon represent gambling losses of defendant to plaintiff. This, of course, presents a factual issue. Important, however, to its determination is a legal question as to the burden of proof, which question should be resolved prior to a discussion of the facts.
The law presumes that men in their business transactions do not intend to violate the law or to make contracts, the enforcement of which the law refuses a remedy. Therefore, where a party asserts a contract is illegal, he has the burden to establish that defense or contention. Conner & Hare v. Robertson, 37 La.Ann. 814, 55 Am.Rep. 521; Baucum & Kimball v. Garrett Mercantile Co., 188 La. 728, 178 So. 256; Stewart Bros. v. Beeson, supra.
*833 Therefore, a legal presumption exists, in effect, in favor of the validity of contracts. The law does not assume an intention on the part of the contracting parties to violate its provisions nor will their agreement be decreed illegal where a reasonable construction supports its validity. J. P. Barnett Co. v. Ludeau, 171 La. 21, 129 So. 655. Moreover, to sustain a defense of the illegality of a contract, the illegality must be clearly shown. Tuckermann v. Jackson, 3 Orl.App. 399; Carlton v. Rice, 5 Orl.App. 19. It may be appropriate here to observe that the defense to the recovery on the notes is strictly not a want or failure of consideration but that the contract or notes themselves are illegal by virtue of their execution and delivery to pay a gambling obligation of defendant to plaintiff.
A consideration of the evidence is now in order. A brief résumé thereof will suffice. The documentary evidence consists of the two notes to which defendant admitted executing and signing. Only three witnesses testified, plaintiff and his wife on his behalf, and only the defendant in his behalf. The evidence establishes that plaintiff and defendant had known each other for several years. Defendant was engaged in an oil tool business in Bossier Parish, in which he was one of the two larger stockholders. Plaintiff was engaged in a mercantile and filling station business, in connection with which he loaned money and financed automobiles and other personal property. His business was located at Ringgold, Louisiana.
During the period of their acquaintance both parties readily admitted they engaged in social gambling, in which the amounts wagered, won and lost were not inconsiderable and ranged as high as $3,000. The outcome of their entertainment was not one-sided. Fortunes and misfortunes were visited upon both indiscriminately, and, at times, each was frequently a loser and, on occasions, one or the other became "busted", whereupon the loser would borrow from the other. The faithfulness and honesty with which these obligations were kept between them engendered a degree of confidence, one in the other.
As to the particular transaction, plaintiff insists that he made a bona fide loan of $1,400 to the defendant; that it was upon the insistence of the defendant, who related circumstances of adversity, such as that, at the time, his was a struggling business, that his father was ill in the hospital and that a member of his family experienced difficulties which necessitated his acquisition of a loan. Plaintiff says that defendant came to his place of business in Ringgold two or three times and discussed with him the matter of a loan; that after having given the matter consideration and deciding to make the loan, he and his wife drove to Bossier City and to defendant's place of business; that plaintiff went in said place, following which plaintiff and defendant came out, crossed the street to the Kickapoo Cafe, where they occupied a booth and drank coffee. Defendant prepared and signed the two notes and delivered them to plaintiff, who thereupon delivered or paid over to defendant in cash the $1,400. On leaving the cafe plaintiff delivered the notes for safe keeping to his wife to be placed in their safe at their residence.
Defendant testified that he never made any trip to Ringgold to borrow money; that he did not borrow the money, as plaintiff asserts, but that he gave the notes in settlement of a gambling loss of $3,000 which he had sustained a year or more prior to that time and which he had reduced, by payments, to $1,400. This the plaintiff denies and says that defendant did not owe him any gambling obligation at the time the notes were executed and signed. The defendant, moreover, contends that the reason he did not pay this debt was because the game was "crooked". This explanation, however, is unconvincing in that, if it be true, he would have paid $1,600 prior to the execution of the notes and then, more than two years thereafter, $200 on the notes. His belated actions apparently are afterthoughts. Defendant's lack of recollection as to important facts and circumstances surrounding *834 the game in which he claims to have lost substantially only adds to the unconvincing character of his story. Too, he named three or four others who were supposedly present and engaged in the game, most, if not all, of whom, were residents of either Bossier City or Bossier Parish, yet none of them were produced as witnesses.
The trial court was of the opinion, that, on account of defendant's business, there was no need for him to borrow $1,400 of plaintiff. In this connection, the evidence discloses that it was only some four or five years prior to the trial in February of 1958 that defendant's business had prospered; in fact, defendant testified that his was a struggling concern at the time the notes were executed and that, although plaintiff had insisted upon his payment of the notes and made demands therefor, he was really without available funds for that purpose. Defendant was of the opinion plaintiff was unaware of his financial circumstances at the time.
Mrs. Wilson, in her testimony, corroborated her husband. Remaining in the car while plaintiff and defendant were in the cafe, she did not actually see the delivery of the money. However, the notes were delivered to her when her husband returned to the car.
Plaintiff contends that the defendant has not borne the burden of proof of his special defense of the illegality of the transaction. Our review of the entire record convinces us of the correctness of plaintiff's position. The record could not, with any degree of certainty, be said to preponderate in defendant's favor, nor does it cast a reasonable doubt as to the legality of the notes sued upon. The conclusions reached by the trial court to the contrary constitute, in our opinion, manifest error.
Accordingly, for the reasons assigned, the judgment appealed is annulled, avoided, reversed and set aside, and it is now ordered, adjudged and decreed that there be judgment herein in favor of the plaintiff, Sheldon W. Wilson, against the defendant, Earl Sawyer, for the full sum of $1,400, with 8% per annum interest thereon from January 1, 1951, until paid, together with 10% additional on both principal and interest as attorney's fees, and for all costs of this suit, including the cost of this appeal, less a credit of $200 paid January 20, 1953.
Reversed and rendered.
On Rehearing
PER CURIAM.
In presenting an application for rehearing, defendant-appellee complains this Court committed error, inter alia, in the allowance of interest from the date of the notes. Appellee's obligation was the payment of the principal of the notes "with interest at the rate of eight (8) per cent. per annum, after ...... until paid * * *." Therefore, that the notes do not recite any date from which interest is payable is obvious from a mere inspection of the notes themselves.
However, the contention is without merit. The Negotiable Instruments Law, Act 64, Sec. 17 of 1904 (LSA-R.S. 7:17) states:
"Where the language of the instrument is ambiguous, or there are omissions therein, the following rules of construction apply: * * *
"(2) Where the instrument provides for the payment of interest, without specifying the date from which interest is to run, the interest runs from the date of the instrument, and if the instrument is undated, from the issue thereof." (Emphasis supplied.)
For these reasons, recovery of interest was properly allowed.
The motion for rehearing is, therefore, denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1745337/ | 998 So. 2d 168 (2008)
Chalander SMITH
v.
AFS, INC. d/b/a Mr. Fixit's Joseph Anderson and ABC Insurance Company.
No. 08-CA-332.
Court of Appeal of Louisiana, Fifth Circuit.
October 28, 2008.
*169 Carl A. Butler, Gloria T. Lastra, Attorneys at Law, Metairie, LA, for Plaintiff/Appellant.
James M. Benson, Attorney at Law, Metairie, LA, for Defendant/Appellee.
Panel composed of Judges SUSAN M. CHEHARDY, WALTER J. ROTHSCHILD, and FREDERICKA HOMBERG WICKER.
WALTER J. ROTHSCHILD, Judge.
In this negligence case, plaintiff appeals from a judgment of the trial court granting defendant's motion for directed verdict/involuntary dismissal.[1] For the reasons stated herein, we affirm.
In May of 2006, Chalander Smith brought her 1993 Toyota Corolla to Mr. Fixit's in Laplace, Louisiana for repairs. While in the care of the repair shop, the vehicle was stolen and allegedly vandalized by an unknown third party. The vehicle was subsequently located by the sheriff's department and was eventually returned to Ms. Smith.
Plaintiff subsequently filed the present petition for damages against Mr. Fixit's, its owner, Joseph Anderson, and their insurance company. Defendants answered the petition with a general denial, and the matter proceeded to a bench trial. Following the presentation of plaintiff's case, defendant moved for a directed verdict on the grounds that plaintiff did not prove with sufficient evidence her claims for damages. After a recess in the trial, the trial court granted the motion, dismissed plaintiff's case at her costs and assigned written reasons for judgment.
By this appeal, plaintiff contends that the trial court erred in its ruling as the evidence presented shows plaintiff met her burden of proving defendant's liability and her entitlement to damages. She contends the trial court's judgment should be reversed and judgment should be entered in her favor.
The trial court granted judgment on the basis of La. C.C.P. art. 1672, which provides in pertinent part:
B. In an action tried by the court without a jury, after the plaintiff has completed the presentation of his evidence, any party, without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal of the action as to him on the ground that upon the facts and law, the plaintiff has shown no right to relief. The court may then determine the facts and render judgment against the plaintiff and in favor of the moving party or may decline to render any judgment until the close of all the evidence.
When a motion for dismissal at the close of plaintiffs evidence is made, the trial court should apply the preponderance of the evidence standard in weighing and evaluating the evidence. Mott v. Babin Motors, Inc., 451 So. 2d 632, 637 (La. App. 3d Cir.1984). Proof by a preponderance of the evidence means that, taking the evidence as a whole, such proof shows that a fact sought to be proved is more probable than not. Fuller v. Wal-Mart Stores, Inc., 519 So. 2d 366, 369 (La.App. 2d Cir.1988).
In the present case, plaintiff's cause of action was based on a theory of negligence which requires a duty/risk analysis. A duty-risk analysis involves five elements which must be proved by the plaintiff: (1) proof that the defendant had *170 a duty to conform his conduct to a specific standard (the duty element); (2) proof that the defendant's conduct failed to conform to the appropriate standard (the breach element); (3) proof that the defendant's substandard conduct was a cause-in-fact of the plaintiffs injuries (the cause-in-fact element); (4) proof that the defendant's substandard conduct was a legal cause of the plaintiffs injuries (the scope of liability or scope of protection element); and (5) proof of actual damages (the damages element). Long v. State ex rel. Dept. of Transp. and Development, 04-485 (La.6/29/05), 916 So. 2d 87, 101.
After hearing plaintiff's case, the trial court determined that plaintiff's burden of proof of the elements regarding duty, breach and cause were satisfied at trial. However, the court granted the involuntary dismissal on the basis that plaintiff failed to submit competent proof that she sustained actual damages as a result of the theft of her vehicle from defendant's place of business. As this is an element of a cause of action in negligence, the trial court concluded that failure to prove actual damages in a negligence case is fatal to her cause of action. We agree.
Plaintiff presented the following testimony at trial:
Ronald Nicholas, plaintiff's husband, testified that plaintiff's 1993 Toyota Corolla was taken to Mr. Fixit's on May 1, 2006 to repair the radiator because the car "was running hot." Mr. Nicholas stated he had just put a new engine in the car, but he did not have records to support this. He also stated he put new tires on the vehicle and that the car was in good shape. Mr. Nicholas also stated that his wife was having problems with the air conditioner in the vehicle and that the thermostat needed to be replaced. Mr. Nicholas did not get this information from Mr. Fixit's, but from his cousin who was a licensed mechanic.
Mr. Nicholas stated that after the vehicle was stolen, it was in worse condition than when the vehicle was brought to the repair shop on May 1, 2006. He stated there was a bullet hole in the vehicle that had not been there previously.
Plaintiff, Chalander Smith, testified that she brought her vehicle to Mr. Fixit's on May 1, 2006 for a brake job. She paid for the repairs when the work was completed. She testified she brought the vehicle back to the shop a few days later because the air conditioning was not working properly, and she was told she needed to replace the thermostat for a cost of $36.00. The next thing she heard was that the car had been located by a police officer in Reserve. The vehicle was towed back to Mr. Fixit's, but no further repairs were made. Plaintiff testified that she received an offer from Mr. Fixit's to repair the vehicle for the cost of the parts, but she refused because she believed the damage to the vehicle was caused by defendant's negligence in allowing the vehicle to be stolen. The vehicle was then moved to Firestone, and documentation admitted into evidence indicates the radiator, the fan, the shroud and the thermostat were found in the back seat of the vehicle.
Plaintiff testified that after the vehicle was stolen, she used her brother's truck to travel to work. She stated that she purchased a new vehicle for $5400 in January of 2007. Up until this time, she paid her brother $100 per week including gas for the use of the truck for transportation to and from work, although she had no receipts or other documentation to support this. At the time, she was employed as a home health nurse and earned $17 per patient plus mileage, usually seeing 4-5 patients per day. She stated she missed a "couple of days" of work because she did not have transportation. She stated she *171 had trouble getting to work for about 30 days and had to reschedule some appointments. When she missed an appointment, she was required to complete a form, but she was unable to produce any of those forms at trial because they were turned in to her employer. On cross-examination, she acknowledged her deposition testimony in which she stated she did not miss any visits, but she believed at trial that she missed some. She also stated that the loss of her vehicle and her inability to work as a result caused her to have marital problems. Finally, Ms. Smith testified that the vehicle was in excellent condition when it was brought to the repair shop.
On cross-examination, plaintiff testified that she brought her vehicle to the shop to have the air conditioner repaired, and that she agreed to replace the thermostat. She was informed by the sheriff's department that her vehicle had been located, and Mr. Fixit's confirmed that it had been taken from their establishment.
Joseph Anderson, the manager of Mr. Fixit's and the father of the business owner, testified that plaintiff's vehicle was brought to the shop in May of 2006 for a brake repair job. Following the completion of the work, plaintiff paid the invoice in the amount of $889.70. Mr. Anderson stated that plaintiff brought the car back to the shop on May 9, 2006 because the air conditioner was not working properly. Mr. Anderson also discovered the car was running hot, and he called plaintiff to give her an estimate of the repairs. An invoice admitted into evidence indicates that the estimate to repair the air conditioner was $977.03 and the estimate to repair the cooling system was $327.25. Plaintiff rejected these repairs, but agreed to have the thermostat replaced at a cost of $45.00. The thermostat was replaced and plaintiff was told to pick up the vehicle. Thereafter, plaintiff phoned Mr. Anderson to inform him the vehicle had been removed from the repair shop and had been discovered by the sheriff's office in Reserve. Mr. Anderson had the vehicle towed back to his shop. He did not recall whether there was additional body damage to the car which was not present when plaintiff brought the car to the shop. Mr. Anderson inspected the vehicle and found that the car was running hot and offered to repair the vehicle without charging plaintiff for his labor costs. Plaintiff rejected this offer, and someone picked up the car and brought it to Firestone. Mr. Anderson testified that the repairs that needed to be done to the vehicle before the theft were the same repairs that were necessary after the car was returned.
Chris Cleaver testified that he was a service advisor and lead technician at Mr. Fixit's at the time of this incident. He stated he performed the brake repairs on plaintiff's vehicle and he also gave plaintiff an estimate of repairs to the air conditioning system and the cooling system. He stated plaintiff declined the work, and opted to replace the thermostat. Mr. Cleaver stated that as long as the vehicle was moving and not idling for a period of time, the car would not overheat. Mr. Cleaver also stated that after the thermostat was replaced, plaintiff's husband brought the vehicle back again because the vehicle was overheating. He said the car was left at the shop overnight and it was stolen that night. He also testified that when the vehicle was returned to the shop after the theft, it was in the same condition as when it had been originally brought in. He stated the vehicle was in bad shape when it was brought to the shop. Mr. Cleaver also submitted a written narrative he prepared of the events surrounding this incident and the document was admitted into evidence.
*172 Plaintiff also submitted the testimony of Bernard Smith who was the individual who discovered plaintiff's vehicle in Reserve after it was stolen from the repair shop. He stated that it was apparent that the vehicle had overheated as smoke was coming from the hood, and he called plaintiff to report the situation. He also stated the vehicle was brought back to Mr. Fixit's. He also stated he saw the car later at Firestone and it looked like it had been taken apart.
After the conclusion of this testimony, plaintiff rested her case. At this point, counsel for defendant moved for a directed verdict on the basis that there was no proof that the vehicle had been converted by defendant or that plaintiff sustained any damage as a result of the theft. Defendant argued that plaintiff failed to submit competent evidence of the value of the vehicle before or after the theft. Plaintiff argued that the court could take notice of what the vehicle was worth and find it only became inoperable after the theft of the vehicle which was due to defendant's negligence. After a brief recess, the court ruled in favor of defendant on the motion for directed verdict. On October 11, 2007, the court signed a judgment granting an involuntary dismissal in favor of defendant and assigned written reasons for the judgment.
By this appeal, plaintiff argues that she submitted sufficient proof of the damages to her vehicle which were due to defendant's negligence or unlawful conversion. She also submits that the record supports an award for damages for loss of use of the vehicle, lost wages and mental anguish damages.
After a careful review of the testimony in the record and the documentary evidence submitted, we fail to find sufficient competent proof that plaintiff sustained actual damages as a result of the theft of her vehicle from defendant's repair shop. First, plaintiff failed to present documentation or expert testimony regarding the value of the vehicle. Although plaintiff and her husband both testified that vehicle repairs had been made prior to the theft, this testimony fails to present competent proof of the value of the vehicle sufficient to support a finding of actual damages. There was no evidence presented that the vehicle was a total loss after the theft or that there was damage to those portions of the vehicle which were repaired by plaintiff prior to the theft.
Further, the evidence indicates that the vehicle was returned soon after the theft, and the overwhelming bulk of the testimony indicates that the vehicle was in the same condition after the theft as it was prior to the theft. Although plaintiff contends that the estimate contained in the record for repair of the air conditioner and the cooling system was prepared after the car was stolen and was caused by the theft, the record indicates otherwise.
The record contains an estimate dated May 9, 2006 for the air conditioner and the cooling system, which is prior to the date of the theft. Further, plaintiff's husband testified the vehicle was "running hot" before it was brought in for repairs. At the time of the theft of the vehicle, these repairs were already necessary on the vehicle, and plaintiff failed to prove additional repairs were made necessary due to the theft of the vehicle. Thus, the record fails to contain any competent proof that the theft of the vehicle caused any actual damage to plaintiff's vehicle.
We find no evidence in the record that the vehicle was deemed a total loss. Plaintiff rests her claim on the fact that the vehicle was inoperable after the theft, but no evidence in the record supports the claim. Although plaintiff contends the record contains an invoice from Firestone for repairs to the vehicle, a review of this *173 document indicates it sets forth the general status of the vehicle, but no evidence of an estimate for repairs was included. There was testimony that a bullet hole was found in the car which was not present before the theft, but the record fails to contain an estimate to repair such damage.
With regard to loss of use, plaintiff testified she paid her brother $100 per week for use of his vehicle, but she failed to offer any documentation in the form of receipts or check stubs indicating such payments were made. Further, she testified that the payments included money for gasoline for the vehicle, and on the basis of her own testimony, there is no specific indication of the amount she paid her brother for the use of his vehicle.
In addition, although plaintiff claimed she lost wages as a result of the loss of use of her vehicle, her testimony on this claim in inconsistent and is not supported by documentation supporting her claim. She testified that she was required to complete a form for her employer if she missed an appointment, but she failed to submit copies of any such forms to substantiate such a claim. Proof of a claim for lost wages can be based on a plaintiffs own reasonable testimony absent contradiction or impeachment. Abadie v. City of Westwego, 94-536 (La.App. 5 Cir. 11/29/94), 646 So. 2d 1229, 1236. Based on plaintiff's inconsistent and unsubstantiated testimony, there is no basis for an award for lost wages due to the theft of her vehicle.
Under the circumstances presented here, where the record is void of any competent proof of actual damage sustained by plaintiff as a result of defendant's negligence, we find no error in the trial court's ruling granting an involuntary dismissal of her claim. It was plaintiff's burden to submit competent proof at trial to substantiate her claim, and based on the evidence contained in the record before us, plaintiff has shown no right to relief. Accordingly, the judgment of the trial court is hereby affirmed. Plaintiff is to bear all costs of this appeal.
AFFIRMED.
NOTES
[1] Although defendants moved for a directed verdict under La. C.C.P.art. 1810, the trial court granted an involuntary dismissal pursuant to La. C.C. P. art. 1672. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1841779/ | 246 B.R. 837 (2000)
In re Ace H. PARK, Debtor.
Bankruptcy No. 97-41034-DRS.
United States Bankruptcy Court, E.D. Texas, Sherman Division.
March 17, 2000.
*838 Reedy Macque Spigner, Plano, TX, for debtor.
Joyce Lindauer, Dallas, TX, trustee.
OPINION
DONALD R. SHARP, Chief Judge.
NOW before the Court is the Trustee's Objection To Debtor's Property Claimed As Exempt ("Objection") filed by Joyce Lindauer, the duly-appointed Chapter 7 Trustee of the above-captioned Bankruptcy Estate and Amended Creditor's Objection To Exemption filed by Michael Maniscalco, a creditor and party-in-interest. This opinion constitutes the Court's findings of fact and conclusions of law required by Fed.R.Bankr.Proc. 7052 and disposes of all issues before the Court.
FACTUAL AND PROCEDURAL BACKGROUND
The Debtor filed for relief under Chapter 7 on March 31, 1997 and Joyce Lindauer was appointed Chapter 7 Trustee to administer the assets of the case (the "Trustee"). Included among his Schedules and Statement of Financial Affairs was Schedule C his schedule of property claimed as exempt ("Schedules"). The Debtor elected the State of Texas exemptions pursuant to 11 U.S.C. § 522(b)(2) and the Texas Property Code, Sections 41 and 42. The Debtor's originally filed Schedule C lists only his homestead. No value for same or for the debtor's interest in it appeared. No party filed an objection to the Debtor's claim of exemptions. At the May 23, 1997 § 341 meeting of creditors, according to the records provided to this Court, the Debtor indicated that his residence was owned by a living trust known *839 as the Ace Park Living Trust and that the house was so encumbered as to be of no value to the bankruptcy estate. Of even date with the § 341 meeting of creditors, the Court's docket reveals that the Debtor amended his Schedules, including Schedule C ("Amended Schedules"). The Amended Schedules mysteriously disappeared from the Court's files at some time prior to the hearing on the Trustee's Amended Motion To Reopen the case. On June 25, 1997, Michael Maniscalco, a creditor and party-in-interest ("Maniscalco"), filed an Objection to Exemption objecting to the Debtor's claim of the homestead as exempt property on the grounds that the homestead was "part of a spendthrift trust and is not part of the estate". The objection was served upon the Trustee and a hearing was set. In the interim, on July 28, 1997, the Court entered an order of discharge under § 727 and the case was closed. There were no appearances at the August 13, 1997 hearing on the Objection to Exemption and the Court dismissed it[1]. Thereafter, the Trustee discovered that the Trust also owned shares of stock in various corporations, bank accounts, vehicles, a boat and insurance policies and moved the Court to reopen the case pending investigation into the possible concealment or transfer of assets by the Debtor both before and after the filing of the Chapter 7 petition. The motion was granted, following a trial on the merits. The United States Trustee re-appointed Joyce Lindauer, as Trustee. Thereupon, the Debtor amended his schedules for the third time, including Schedule C, adding the Debtor's interest in the following:
(1) his homestead valued at $95,000;
(2) a computer and adding machine (debtor's interest) valued at $225.00;
(3) an IRA account (debtor's interest) valued at $6,000.00;
(4) household goods (debtor's interest) valued at $125.00;
(5) wearing apparel (debtor's interest) valued at $50.00; and
(6) sports equipment (debtor's interest) valued at $120.00.
The Debtor also added life insurance benefits payable in the event of his death in an unknown amount, two life insurance policies also valued as "unknown" amounts and, under Texas Property Code § 41.00211, the Ace Park Living Trust valued at $10,012.90. Both the Trustee and Maniscalco objected to the Debtor's claim of exemptions. In particular, the Trustee objected to the Debtor's claimed exemption of the residential property on the grounds that the Debtor could not claim as exempt property he did not own, the Debtor having also claimed the property was owned by the Ace Park Living Trust. Such an asset, she opined, failed to meet the qualifications of the Texas Property Code for property claimed as exempt. The Trustee also objected to the Debtor's claim of stock in his various closely held corporations. Maniscalco objected to the exemption of the residential property on the same grounds as the Trustee and objected to the exemption of the Trust property on the theory that the Debtor was estopped from claiming as exempt property that had not been scheduled.
Prior to trial, Mike Maniscalco, as pre-petition judgment creditor of the Debtor, filed a Complaint to revoke the Debtor's discharge under § 727(d), alleging that Debtor shifted funds and assets employing the Debtor's business entities, both before and after the petition date, in order to defraud the bankruptcy estate and its creditors. As a result, the Debtor's discharge was revoked.[2] In the interim, this matter came before the Court pursuant to regular setting. At that time, the parties *840 agreed that the objections could be ruled upon based upon the briefs filed and the matter was taken under advisement.
Subsequent to the trial, but absent leave of the Court to do so[3], the Debtor filed his Fourth and Fifth Amended Schedules.[4] Schedule C in the Fourth Amended Schedules differs substantially from all previous incarnations. The Ace Park Living Trust has been removed. The homestead is valued at $107,000 with the Debtor's interest in same being valued at $25,000.00. An IRA account with Charles Schwab valued at $9,600.00 has appeared accompanied by horses (number and values unknown), cameras valued at $120.00, a wedding ring valued at $150.00, a term policy at Trans-America, additional office equipment and a fur valued at $125. Household furnishings which were previously valued at $125.00 were revised to $6,500.00. The Trustee filed an objection to the foregoing exemptions claimed by the Debtor based upon concealment, bad faith, prejudice to the creditors of the estate and the Debtor's interference with the administration of the estate.
DISCUSSION
A debtor may not claim as exempt property which he knowingly concealed and failed to disclose to trustee which normally would be exempt had it been properly scheduled and claimed. To allow the debtor to claim exemptions out of such property would contravene the intentions of Congress set forth in section 522(g)(1) of the Bankruptcy Code. Matter of Dorricott, 5 B.R. 192, 194 (Bankr. N.D.Ohio 1980).
Federal Rule of Bankruptcy Procedure 4003(c) provides that "[t]he objecting party has the burden of proving that the exemptions are not properly claimed. After hearing on notice, the court shall determine the issues presented by the objections." As the objecting parties, the Trustee and Maniscalco have the burden of showing that the Debtor is improperly claiming property as exempt. See, Shelley v. Kendall (In re Shelley), 184 B.R. 356, 360 (9th Cir. BAP 1995). However, as one court suggested in dicta: "while the Trustee has the burden of proving that exemptions are not properly claimed, the initial burden is with the Debtor to establish that the exemption, as claimed, is of the type covered by the statute." In re Gregoire, 210 B.R. 432, 436 (Bankr.D.R.I.1997).[5] "If the trustee fails to carry the burden of proving by a preponderance of the evidence that the exemption should be disallowed, the exemption will stand." In re Ciotta, 222 B.R. 626, 629 (Bankr.C.D.Cal. 1998).
In this case, the Court finds based upon the pleadings and the record in this case that the Trustee has demonstrated by a significant preponderance of the evidence the Debtor's blatant dishonesty in preparing his schedules from which may be inferred an attempt to hinder the *841 Trustee's administration of assets of the estate and any distribution to creditors.[6] The Court has examined the Debtor's schedules dated March 31, 1997, May 23, 1997[7], both of which were not objected to by any party, as well as the Debtor's schedules dated July 10, 1998 (which were objected to timely, giving rise to the trial). The Court has also examined the Debtor's Fourth and Fifth Amended Schedules in the record filed after the trial date. The Court acknowledges that amendments to a debtor's schedules are to be liberally allowed when required in the interest of justice. In re Seeley Tube & Box Co., 219 F.2d 389 (C.A.N.J.1955), cert. denied 350 U.S. 821, 76 S. Ct. 46, 100 L. Ed. 734. See also Federal Rule of Bankruptcy Procedure 1009.[8] Therefore, the mere number of amendments alone does not impugn the Debtor's veracity.[9] However, in the case before this Court, the Debtor's schedules appear as a constantly shifting landscape. The Court cannot impute any level of accuracy or truth to them. The Court concludes that the Debtor has filed whatever appeared to him as being in his best interest as the case developed. See In re Talmo, 185 B.R. 637 (Bankr.S.D.Fla.1995).[10] Previously, the Debtor's discharge was revoked, following a full trial on the merits which revealed fundamental inaccuracies in the Debtor's schedules. The revocation of discharge is, nonetheless, an issue apart from that before this Court and not dispositive of the Debtor's entitlement to his exemptions.
Under 11 U.S.C. § 521, a debtor is required, among other duties, to file schedules of assets and liabilities. One seeking benefits under Title 11 of the Bankruptcy Code has a positive duty to disclose for the benefit of one's creditors all of one's interest and property rights. *842 See In re Hannan, 127 F.2d 894 (7th Cir.1942) and Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414, 416 (3rd Cir.), cert. denied 488 U.S. 967, 109 S. Ct. 495, 102 L. Ed. 2d 532 (1988). The debtor is required to file comprehensive schedules of creditors, assets and liabilities, current income and expenditures, and a statement of financial affairs, § 521(1), either with the petition or within 15 days thereafter, unless the time is extended for cause shown, Bankruptcy Rule 1007(c). In re Timbers of Inwood Forest Assoc., Ltd., 793 F.2d 1380, 1409.[11] The obligation is strict and the law requires such schedules to be as complete and accurate as possible. The burden is on the debtors to complete their schedules accurately. In re Faden, 96 F.3d 792 (5th Cir.1996) [reh. denied] citing to Matter of Springer, 127 B.R. 702, 707 (Bankr.M.D.Fla.1991).
The Court in In re Mohring, a lien avoidance case, described the debtor's duty to file complete and accurate schedules as "paramount". In re Mohring, 142 B.R. 389, 394 (Bankr.E.D.Cal.1992). A paramount duty of the debtor is the duty to file a list of creditors, schedules of assets, liabilities, income, and expenditures, and a statement of financial affairs. 11 U.S.C. § 521(1). The debtor must file a list of property claimed as exempt. 11 U.S.C. § 522(1). And in a chapter 7 case, the debtor must cooperate with the trustee in preparing a "complete inventory of the property of the debtor . . ., unless such an inventory has already been filed." Fed. R.Bankr.P. 2015(a) and 4002(4); 11 U.S.C. § 521(3) (duty to cooperate with trustee in preparing inventory). These matters are at the heart of the bankruptcy system, and their importance can hardly be understated [SIC]. The proper "operation of the bankruptcy system depends on honest reporting." Payne v. Wood, 775 F.2d 202, 205 (7th Cir.1985), cert. denied 475 U.S. 1085, 106 S. Ct. 1466, 89 L. Ed. 2d 722 (1986). In re Mohring, 142 B.R. 389, 394 (Bankr.E.D.Ca.1992). Numerous cases hold that the debtor has a duty to prepare schedules carefully, completely, and accurately. E.g., In re Jones, 134 B.R. 274, 279 (N.D.Ill.1991); In re Baumgartner, 57 B.R. 513, 516 (Bankr.N.D.Ohio 1986); In re Mazzola, 4 B.R. 179, 182 (Bankr. D.Mass.1980). Mohring, Ibid.
The required degree of specificity increases when itemizing property that is claimed as exempt under section 522. Two purposes are served by detailed lists of property claimed as exempt. First, claims of title are easily established on the day of discharge. Second, parties in interest are able to decide which claims to challenge. Mohring, Supra at 395, citing to Payne v. Wood, 775 F.2d at 206 and Hyman v. Plotkin (In re Hyman), 967 F.2d 1316, 1319-20 at n. 6.
As the Mohring Court noted:
The Seventh Circuit discussed why the debtor must claim exemptions with specificity as follows:
The requirement that the debtor list the property [on the schedules] serves at least two functions. One is to settle claims of title, so that on the day of discharge everyone knows who owns what. The other is to allow the trustee to decide which claims to challenge. Debtors are not perfectly trustworthy, and unless the claim of exemption contains sufficient detail to put the trustee on notice of questionable assertions, it will not be possible to administer the statutory scheme.
Payne v. Wood, 775 F.2d 202 (1985) (emphasis added). This approach is consonant with that of the Ninth Circuit. Hyman, 967 F.2d 1316, at 1319-20.[12]
*843 Non-compliance with mandated disclosure may result in dismissal of a case, non-dischargeability of unscheduled debts, judicial estoppel with respect to claims, or the complete loss of the debtor's discharge.[13] The law is profuse with precedent that bankruptcy debtors have an express, affirmative duty to disclose all assets, including contingent and unliquidated claims. Bankr.Code, 11 U.S.C.A. § 521(1). In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir.1999). Viewed against the backdrop of the bankruptcy system and the ends it seeks to achieve, the importance of this disclosure duty cannot be overemphasized. See generally Oneida Motor Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir.1988). See also Ryan Operations, G.P. v. Santiam-Midwest Lumber Co. (In re Ryan), 81 F.3d 355, 362 (3rd Cir.1996) ("disclosure requirements are crucial to the effective functioning of the federal bankruptcy system"); Louden v. Federal Land Bank of Louisville (In re Louden), 106 B.R. 109, 112 (Bankr.E.D.Ky.1989) ("[w]ithout . . . disclosure [required by 11 U.S.C. § 521], the basic system of marshalling of assets and the resulting distribution of proceeds to creditors would be an impossible task"). Coastal Plains, Ibid. at 208. In this case, it is clear that Debtor's failure to properly disclose his interests in the Trust and meaningfully represent the values of his assets is not due to inadvertence or mistake[14], rather he has attempted "to play fast and loose" with the disclosure requirements of the Code, this Court and, particularly, his creditors.
The facts of the case at bar are similar to those in In re St. Angelo, in which a Chapter 7 debtor's omission of his personal injury claim from three sets of bankruptcy schedules and his failure to amend his schedules to reflect such claim until after the Chapter 7 trustee actually came into possession of previously concealed settlement monies was found to be a willful and fraudulent attempt to conceal estate property and was an absolute bar to the debtor's exemption claim in the proceeds. In St. Angelo's case, "the debtor's `coy' reference to his personal injury claim in the second statement of affairs as `not being pursued' was so misleading that the reference itself amounted to actual fraud." In re St. Angelo, 189 B.R. 24 (Bkrtcy.D.R.I. 1995). The St. Angelo Court denied the debtor's claim of exemptions following the precedent set forth in Payne v. Wood, Supra. ["The operation of the bankruptcy system depends on honest reporting."] Like St. Angelo, the Debtor here initially *844 concealed the Trust in his first schedules and failed to provide values respecting his interest in his residence. He "coyly" or evasively responded to the Trustee's inquiries at the § 341 meeting that the Trust assets were of "no significant value" [Trustee's Memorandum, p. 2]; the Trustee learned after the case was closed of the shares of stock, bank accounts, vehicles, boat, etc.
"The law is abundantly clear that the burden is on the debtors to list the asset and/or amend their schedules [. . . ]." Trowbridge v. Fascio, 718 So. 2d 1025, 1028 (La.App. 4th Cir.1998) citing to Jeffrey v. Desmond, 70 F.3d 183, 186 (1st Cir.1995) and that the Court should not condone or reward a debtor's failure to comply. Like the Payne v. Wood, St. Angelo and other courts faced with the issue of a deceitful schedules, this Court must deny the Debtor's claim of exemptions. Even if this Court were to be persuaded that the Debtor's Third or Fourth Amended Schedules were accurate, no greater relief would be afforded to the Debtor. Late amendments to false schedules will not salvage an errant debtor's rights under the Bankruptcy Code.[15]
CONCLUSION
The Court has scrutinized the Debtor's numerous schedules. From its review of all of the Debtor's schedules, the Court finds one fact indisputable: the Debtor has wholly failed to meet his obligation to file accurate and complete schedules (timely or otherwise). There is ample proof of bad faith[16] throughout this bankruptcy case.[17] As a result of the Debtor's failure to disclose information on the schedules respecting available assets, the Court, as a trier of fact, cannot determine which exemptions the Debtor would be entitled to had he undertaken his duties properly initially in his case.[18] Accordingly, the Trustee has demonstrated that the Debtor has not met his burden in fulfilling his duties as a debtor under the Code and is not entitled to claim his exemptions or any of the benefits of the Bankruptcy Code. All of the Debtor's exemptions must be disallowed based upon the Debtor's own disregard of his duties under the Code. This Court sits in equity as well as in law and a debtor, including this Debtor, is under a duty to do equity before he can claim his right to exemptions. See Matter of Dorricott, 5 B.R. 192 (Bankr.N.D.Ohio 1980) citing to Stewart v. Ganey, 116 F.2d 1010, 1011 (5th Cir.1940).
*845 An order in conformity with this opinion shall be issued contemporaneously herewith.
NOTES
[1] At this point in time, the debtor is discharged, the case is closed, there are no objections to the exemptions hence the property on Amended Schedule C would leave the estate by operation of law and revert in the debtor pursuant to Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280, 26 C.B.C.2d 487 (1992).
[2] The Debtor's appeal of the order revoking discharge was denied.
[3] The Fourth and Fifth amended schedules fall under the restrictions imposed by Federal Rule of Civil Procedure 15. F.R.Civ.P. 15(a) Amendments. A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be the longer, unless the court otherwise orders.
[4] The fifth amendment amends Schedule F only.
[5] In Gregoire, the debtor's exemption on account of personal bodily injury was denied because he failed to present sufficient evidence that he had suffered a permanent injury. Id. Gregoire unwisely reallocates the burden prescribed by Rule 4003(c) and reverses the presumptive validity of the scheduled exemption. The prima facie presumption is that a claimed exemption is correct. In re Ciotta, Supra citing to In re Dunn, 215 B.R. 121, 130 (Bankr.E.D.Mich.1997).
[6] The Court distinguishes the evidence respecting the individual values of the items of property listed in the Schedules from the evidence respecting the credibility of the Schedules overall. The evidence before this Court consists of copies of portions of the Debtor's various schedules and an uncertified copy of the A.H. Park Living Trust Agreement. There is no evidence from which this Court can ascertain the value of any of the property listed on the Debtor's schedules beyond those values assigned by the Debtor. One fact that weighs against the Trustee is that no evidence was adduced from which this Court can ascertain ownership, liens against or interests in the Debtor's residential property/homestead e.g. deed records, etc., or any of the other property subject to the Debtor's claims of exemption and the objections.
[7] The Second Amended Schedules appear on the Court's docket indicating that they were filed. They disappeared from the Court's files. The Court has reviewed copies of the Debtor's Second Amended Schedules which appear in the Court's record as exhibits provided by the Debtor.
[8] Amendment to schedules will not be permitted where it does not appear that error or mistake was made, or where failure was intentional, or where it is apparent that exemption, if included in schedules, will be of no value to bankrupt. In re Powers, 339 F. Supp. 1068 (W.D.Ark.1972). Bankruptcy rule providing for amendments of voluntary petition, list, schedule, or statement as matter of course at any time before case is closed is permissive one, with amendment disallowed in limited instances of bad faith by debtor or where there is prejudice to creditors. In re Butcher, 189 B.R. 357 (Bkrtcy.D.Md.1995), affirmed 125 F.3d 238. In a Chapter 11 case converted to a Chapter 7, the Court ruled that despite the permissive language of the rule allowing amendments to bankruptcy schedules without court permission at any time during case, the court has discretion to deny leave to amend if the proposed amendment would prejudice a creditor; if the debtor has acted in bad faith; or if the debtor has concealed assets. Any one of the foregoing factors standing alone would be sufficient grounds to strike an amended claim of exemption. In re Talmo, 185 B.R. 637 (Bkrtcy. S.D.Fla.1995).
[9] Indeed, amended exemption claims are generally allowed, absent bad faith, concealment of property, or prejudice to creditors. In re Fournier, 169 B.R. 282 (Bankr.D.Conn.1994).
[10] The "`now you see it, now you don't'" exemption strategy was described by the Talmo Court. In In re Talmo, the debtor sought to amend his schedules to claim assets previously concealed and the Court struck the amendment from the record and denied the debtor the exemption sought.
[11] Cert. granted and judgment aff'd. in United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S. Ct. 626, 98 L. Ed. 2d 740, 56 USLW 4107, 17 Collier Bankr.Cas.2d 1368, 16 Bankr.Ct.Dec. 1369, Bankr.L.Rep.P 72, 113 (1988).
[12] The Mohring Court relied upon Payne v. Wood and the Hyman Court for its rationale:
[t]he importance of providing detail sufficient to enable parties to decide whether to object is a corollary of the Supreme Court's decision in Taylor [Taylor v. Freeland & Kronz, 503 U.S. 638, 112 S. Ct. 1644, 118 L. Ed. 2d 280, 26 C.B.C.2d 487 (1992)]. The premium on timely objection heightens the demand for accurate and complete lists and schedules. Ambiguities in matters of claims of exemption will be construed against the debtor because "it is important that trustees and creditors be able to determine precisely whether a listed asset is validly exempt simply by reading a debtor's schedules." Mohring, Ibid. at 395 citing to Hyman, 967 F.2d 1316, at 1319-20.
[13] Many Courts dealing with issues of nondisclosure in the context of denial or revocation of discharge describe the relationship between the debtor and its creditors in terms of a quid pro quo. A similar theory could be applied to any benefit one receives under the Bankruptcy Code, given that there is no Constitutional right to a discharge of one's debts. "A chapter 7 case involves a quid pro quo: debtors receive a discharge and, in exchange, make full disclosure about their financial affairs, especially their assets, and surrender their nonexempt assets to the trustee for liquidation and distribution among creditors. * * * Having received a discharge, they cannot now ignore their obligation to surrender their assets for the benefit of creditors." In re Mosby, 244 B.R. 79, 85 (Bankr.E.D.Va.2000.) "Disclosure is part of the quid pro quo exchange for a bankruptcy discharge. Intentional concealment of assets and liabilities frustrates this policy." A.V. Reilly International v. Rosenzweig, 239 B.R. 905, 910 (Bankr.N.D.Ill.1999). See also, In re Hicks, 184 B.R. 954, 957 (Bankr.C.D.Cal.1995) and In re Katz, 203 B.R. 227, 233 (Bankr.E.D.Pa. 1996).
[14] A "debtor's failure to satisfy its statutory disclosure duty is `inadvertent' only when, in general, the debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment." Coastal Plains, Ibid. at 210, n. 9.
[15] Untimely filed schedules waive a debtor's exemption unless the untimely filing is permitted by the bankruptcy judge in his discretion for cause shown or excusable neglect. "Cause shown" is a liberal standard investing the bankruptcy judge with considerable flexibility. The same might also be said for "excusable neglect" which "encompasses both simple, faultless omissions to act and, more commonly, omissions caused by carelessness." Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, 507 U.S. 380, 388, 113 S. Ct. 1489, 1495, 123 L. Ed. 2d 74 (1993) and Bryant v. Smith, 165 B.R. 176, 181-182 (W.D.Va.1994). Chapter 7 debtor's claim of exemption in proceeds from settlement of personal injury claim could be denied as not timely made, where personal injury cause of action to which exemption claim related was not accurately disclosed as "personal injury" rather than as "workers' compensation" claim until more than one year after first meeting of creditors, despite awareness by debtor's attorney of erroneous characterization of claim in schedules, and where attorney did not meet ten-day deadline imposed by court order on any amendment of schedules to assert exemption claim. Bankr.Code, 11 U.S.C.A. § 522(d)(11)(E). See In re Gregoire, Supra.
[16] "[B]ad faith generally requires concealment of asset or exemption of which creditors have no knowledge, and thus no opportunity to investigate asset or its exempt status . . . there must be some form of deception." McFatter v. Cage, 204 B.R. 503, 508 (S.D.Tex. 1996).
[17] On May 20, 1999, after a full trial on the merits with respect to the revocation of discharge, the Court found "affirmative fraud" and "obvious, open and flagrant attempts to hide assets and keep them from the hands of the trustee for the distribution to creditors."
[18] Value and status of exempt property in bankruptcy is determined as of the date that the petition is filed. Armstrong v. Hursman, 106 B.R. 625 (Bankr.D.N.D.1988). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1843041/ | 307 B.R. 568 (2004)
Juan PEQUENO, Appellant,
v.
Michael B. SCHMIDT, Trustee, Appellee.
No. CIV. B-03-029.
United States District Court, S.D. Texas, Brownsville Division.
March 31, 2004.
*569 *570 Richard D. Schell, Law Offices of Richard D. Schell, McAllen, TX, for Petitioner.
Michael B. Schmidt, Attorney at Law, Corpus Christi, TX, for Respondents.
ORDER
HANEN, District Judge.
This case is an appeal from the Bankruptcy Court's order prohibiting the debtor, Juan Pequeno (hereinafter "Pequeno" or "debtor"), from converting his Chapter 7 bankruptcy case to one under Chapter 13. Pequeno filed a motion to convert pursuant to 11 U.S.C. § 706(a), and it was opposed by Michael B. Schmidt, the Chapter 7 Trustee (hereinafter "Trustee" or "Schmidt"). The Bankruptcy Court found that the debtor had previously acted in bad faith and, therefore, denied the conversion motion. The debtor questions on appeal: 1) whether the Bankruptcy Court had the power to deny his motion to convert; and 2) assuming the Court had such power, whether the debtor's conduct warranted such a holding.[1] This court holds that, pursuant to 11 U.S.C. § 706(a), Pequeno had an absolute right to convert; therefore, the Bankruptcy Court did not possess the power to deny conversion.
I. FACTUAL AND PROCEDURAL HISTORY
The factual and procedural background in this case is a little out of the ordinary, primarily because while Pequeno had counsel in his suit against the City of Brownsville ("the City"), he represented himself in the entire bankruptcy proceeding until he reached this court. The evidence shows that Pequeno filed pro se a petition for relief under Chapter 7 of the Bankruptcy Code on December 31, 2001.[2] According to Pequeno, the reason he filed was because he had no viable income due to losing his job in 1998, and he was facing foreclosure on his home.[3] Schmidt was appointed Trustee of the bankruptcy estate on January 4, 2002.[4] Pequeno almost immediately filed a motion to dismiss his Chapter 7 case on January 16, 2002, and Schmidt objected to Pequeno's motion to dismiss on February 14, 2002.[5] Though a hearing on the matter was scheduled for March 6, 2002, it was continued until April 10, 2002.[6]
Prior to filing bankruptcy, Pequeno had instituted a lawsuit against the City for violating his First Amendment right to free speech.[7] Schmidt's counsel was notified of Pequeno's pending lawsuit against the City by the attorney representing the City on February 8, 2002, and subsequently advised Schmidt of same several days *571 later.[8] A verdict was entered in favor of Pequeno on February 15, 2002, and on March 26th of that year, he was awarded a judgment in the amount of $400,359 plus $20,385 in attorneys' fees.[9] On April 5, 2002, Pequeno filed a motion in the District Court requesting the court to amend his judgment to award more damages to compensate him for future loss of income.[10] The motion was denied. The City subsequently appealed, and the Fifth Circuit Court of Appeals ordered the parties to the judgment to mediation.[11]
Although Pequeno was required to file his bankruptcy schedules listing all of his assets and debts within fifteen days after filing his Chapter 7 petition on December 31, 2001, he failed to do so. In March 2002, Schmidt served Pequeno with a subpoena seeking documents from which to determine such assets and debts.[12] In May, in response to Pequeno's failure to comply, Schmidt filed a motion to compel Pequeno to file his schedules, along with his Statement of Financial Affairs.[13] In June, the Bankruptcy Court ultimately ordered Pequeno to comply, and he filed these documents on June 17, 2002.[14] On his schedules, he listed neither the judgment nor the $61,000 he had received in February 1999 from a retirement fund after being fired from his place of employment.[15] Nevertheless, both of these assets were listed on the Statement of Financial Affairs.[16]
With regard to the $61,000, Schmidt claimed that Pequeno produced only one month's bank statement at his oral deposition despite the fact that the applicable subpoena covered all bank records. Pequeno claimed that he submitted numerous documents at the deposition. While the record is silent as to exactly what, if any, documents were actually presented, Pequeno filed with this court on September 10, 2003, copies of checks and money orders written between February 1999 and December 1999 that reflected payment of various expenses and copies of his checking account withdrawal receipts showing the balance between these dates.[17] These documents reflect that his checking account balance on February 15, 1999, was $59,848.42, and in September 1999, the balance was $4,296.32.[18] According to Pequeno, these copies were forwarded to Schmidt on December 5, 2002.[19]
One of Pequeno's creditors, Aurora Loan Services, Inc. ("Aurora"), filed a motion on March 14, 2002, in the Bankruptcy Court to lift the automatic stay, and a hearing on the matter was scheduled for April 10th.[20] A second creditor, Alejandro Tapiero ("Tapiero"), also filed a motion to lift the stay on March 29, 2002, and a hearing concerning same was scheduled for May 8.[21] Both Pequeno and Schmidt *572 failed to appear at the April 10th hearing; however, the attorneys for Aurora and Tapiero were present.[22] The Bankruptcy Court considered Pequeno's motion to dismiss his Chapter 7 case, and both attorneys objected to dismissal based upon Pequeno's judgment against the City. The Court, having questions concerning whether any part of the judgment was for lost future wages and thus exempt from the bankruptcy estate and receiving no answers from either attorneys, orally denied Pequeno's motion to dismiss. The Court, however, granted Aurora's motion to lift the stay.[23]
On April 23, 2002, Pequeno filed a motion to reconsider the lifting of the stay as to Aurora.[24] On May 8, 2002, the hearing was held concerning Tapiero's motion to lift the stay; the Court granted the motion.[25] On May 23, 2002, Pequeno filed a motion to reconsider lifting the stay as to Tapiero.[26] A hearing was held on June 5, 2002, regarding Pequeno's motion to reconsider lifting the stay as to Aurora, and the Bankruptcy Court agreed to reconsider the motion.[27] The Court set a hearing on the reconsideration of lifting the stay for August 7, 2002.[28] It was at this June hearing that the Court ordered Pequeno to file his bankruptcy schedules by June 17, 2002, and Pequeno mentioned to the Court that he planned to convert his case from a Chapter 7 to a Chapter 13.[29]
On June 14, 2002, Pequeno attended the creditors' meeting and requested an adjournment.[30] Though the meeting was rescheduled for June 28th at his request, Pequeno did not attend, and it was again rescheduled for September 26, 2002.[31] On September 25th, Pequeno filed a motion to excuse his personal appearance and to permit him to appear via telephone or video conference, claiming mechanical difficulties with his car.[32] The Bankruptcy Court denied his motion.[33] Pequeno filed a second motion; the Court again denied it.[34] Pequeno ultimately did not attend the September meeting, and it was rescheduled for October 31, 2002.[35]
On July 18, 2002, Pequeno filed a motion to convert his case to Chapter 13, claiming that he did so in order to save his home from foreclosure.[36] Pequeno asserted that he had originally filed a Chapter 7 petition because he had lost his job and he was facing foreclosure on his home.[37] Pequeno maintained that, after referencing a bankruptcy book, he mistakenly believed that filing Chapter 7 would halt the foreclosure.[38] He claimed that the attorney representing him in the lawsuit against the *573 City advised him that he should not have a Chapter 7 bankruptcy at that time, as any judgment in his favor would become property of the estate.[39] Pequeno maintained that, based on that advice, he moved to dismiss his Chapter 7 case rather than file his schedules.[40] After the Bankruptcy Court denied his motion, Pequeno began planning to convert his case to Chapter 13 in order to save his home and ultimately filed the motion on July 18, 2002.[41]
On August 7, 2002, a hearing concerning reconsideration of the lifting of the stay as to Aurora was held.[42] At the hearing, the Bankruptcy Court was advised that Pequeno had filed a motion to convert, and the court orally granted the motion.[43] The Court, however, never addressed the lifting of the stay.[44] On August 14, 2002, Pequeno's debts were discharged because the automatic discharge was unopposed.
Schmidt filed an objection to Pequeno's conversion attempt on July 22, 2002.[45] The Bankruptcy Court, after it had already granted Pequeno's motion to convert, scheduled a hearing on the issue to be held on October 9, 2002. Pequeno filed amended schedules listing the judgment on September 3, 2002, and claimed it was exempt from the estate pursuant to 11 U.S.C. § 522(d)(11)(E).[46] On September 6, 2002, Schmidt objected to Pequeno's claimed exemption, asserting the monies represented compensation for lost past earnings and mental anguish.[47] Schmidt also filed an emergency motion for authority to mediate and settle the judgment and a motion to expedite the hearing regarding that motion.[48]
A hearing was held on September 10, 2002, concerning Schmidt's motion for authority to mediate, and the Bankruptcy Court granted the motion.[49] The Court also scheduled Schmidt's objection to Pequeno's claimed exemption to be heard at the October 9 hearing.[50] Pequeno objected and filed a motion to vacate the order, claiming Schmidt did not own the judgment, because it was compensation for lost future wages and thus exempt from the bankruptcy estate.[51] Subject to the Bankruptcy Court's final ruling on Pequeno's motion to convert, which did not occur until November 7, 2002, the Court permitted Schmidt to move forward with the mediation, which resulted in an agreement to settle the suit for $140,000.[52] The Bankruptcy Court approved the settlement on September 25, 2002.[53]
At the October 9, 2002 hearing, the Bankruptcy Court heard oral argument concerning Schmidt's objections to Pequeno's motion to convert, Pequeno's claimed *574 exemption, and Pequeno's objection to the mediation and settling of the lawsuit.[54] On November 7, 2002, the Court denied Pequeno's motion to convert.[55] The Court also held that the entire judgment against the City was compensation for lost past earnings and mental anguish not lost future wages and thus property of the bankruptcy estate and under Schmidt's control.[56] The Court further ruled that Schmidt had the authority to mediate and settle the judgment.[57]
II. STANDARD OF REVIEW
A District Court functions as an appellate court in an appeal of a Bankruptcy Court decision.[58] Accordingly, this court must apply a de novo standard to the Bankruptcy Court's conclusions of law and a clearly erroneous standard of review to the Bankruptcy Court's findings of fact.[59]
III. DISCUSSION
A. Motion to Convert
This case presents questions which, compared to many presented to this court, are simple and succinct. They are: 1) does 11 U.S.C. § 706(a) give a debtor an absolute and unfettered right to convert a Chapter 7 bankruptcy case to one under Chapter 13; and 2) if the right to convert is not absolute, do the circumstances in this case warrant the Bankruptcy Court's denial of the motion to convert. Also of importance is the question of whether the primary asset at issue, a $400,000 plus jury verdict, is an exempt asset under 11 U.S.C. § 522(d)(11)(E). As in many instances, however, the answers to seemingly simple questions are not quite so simple. This case is one of those instances. The problem is that both sides are claiming the right to prevail based upon the same Fifth Circuit case. That opinion, In re Martin, 880 F.2d 857 (5th Cir.1989), not only has the litigants in this case somewhat at odds, but has also generated controversy among many other courts and commentators.
1. In re Martin
In Martin, the debtor had attempted to convert from Chapter 7 to Chapter 13.[60] The Bankruptcy Court denied the request for conversion, and the District Court reversed the denial.[61] The issue on appeal in Martin was whether the Bankruptcy Court had erroneously denied the debtor's motion to convert her case.[62] The Fifth Circuit found that the Bankruptcy Court had erred and affirmed the District Court.[63] It is the manner in which it affirmed, or at least the language the Martin Court employed, that is the genesis of the problem faced by courts in the past and the problem with which this court is currently confronted.
The controlling statute under examination in Martin was Section 706(a) of the Bankruptcy Code, which provides that "[t]he debtor may convert a case under this Chapter to a case under Chapter 11, 12, or 13 of this title at any time, if the *575 case has not been converted under section 1112, 1307, or 1208 of this title. Any waiver of the right to convert a case under this section is unenforceable."[64] In supporting its holding that a post-discharge conversion should be permitted, the Fifth Circuit opined that Section 706(a) spoke "in absolute terms" and was "unequivocal in its statement of the right to convert."[65] The Court also reviewed the statute's legislative history and found that it made clear that Congress had intended "to encourage such conversions and to give the debtor an absolute one-time right to convert."[66] The Fifth Circuit further noted that "an exhaustive review of the legislative history reveals nothing which would indicate that a post-discharge request[67] to convert should be treated any differently from any other."[68] Additionally, the court cited In re Kleber, 81 B.R. 726 (Bankr.N.D.Ga.1987), for the principle that a judge has no discretion to determine whether a debtor should be allowed to convert and In re Easley, 72 B.R. 948 (Bankr.M.D.Tenn.1987), as well as several other cases, for the proposition that a debtor "must be allowed to convert."[69]
2. Post-Martin Decisions
Subsequent to Martin, many courts and commentators have cited the decision as authority that a request to convert is an absolute right that must be granted.[70] Additionally, another Texas Bankruptcy Court has also read Martin as interpreting Section 706(a) to give a debtor an absolute, non-discretionary right to convert from Chapter 7. In re Porras, 188 B.R. 375 (Bankr.W.D.Tex.1995). In Porras, the Court relied on the statutory language of Section 706(a), the legislative history of that provision, and Martin to support holding that even allegations of fraud and/or bad faith could not be used to carve an exception to an absolute statute such as the one in question.[71]
If the analysis could end here, obviously this court would not have a concern. The Martin opinion, however, contains conflicting language. The Court, in writing that a court does not have discretion to block a conversion, noted in a footnote that:
[t]here are, however, some cases which block the conversion, but only in extreme circumstances, see In re Calder, 93 B.R. 739, 740 (Bankr.D.Utah 1988) (debtor was a practicing bankruptcy attorney who had filed three Chapter 13 petitions in past seven years, two of which were dismissed on ground of bad faith filing; debtor had also made "minimal *576 effort" during those seven years to repay creditors), or bad faith and an unfeasible plan, see In re Straugh, 41 B.R. 757, 759 (Bankr.W.D.Penn.[Pa.]1984) (debtor's plan not feasible even using his best estimate of future income; plan also bad faith because it failed to provide for payment of possibly preferential transfer).[72]
In the very next paragraph, the Court holds the right to convert to be absolute, but then again cites Calder as authority that courts can interfere with that right if exceptional circumstances exist:
[t]hus, the cases also support our conclusion that a debtor's right to convert under section 706(a) is, as indicated by the statute and its legislative history, an absolute one. The courts refuse to interfere with that right in the absence of extreme circumstances. Calder, 93 B.R. at 740. Because Martin does not allege facts which if true would provide an adequate ground to deny the debtor's motion to convert, we agree with the district court's conclusion that the bankruptcy court erred in denying the conversion.[73]
The above-quoted language is hard to reconcile. The Court states that conversion is an absolute right, but in the dicta in the next sentence literally suggests that there might be exceptions to that right. Further, the consequence of this inconsistent language is that Martin has been cited by many courts for the proposition that the right to convert a Chapter 7 case to one under Chapter 13 is not absolute and that courts can carve out exceptions.[74] Secondary sources have also cited Martin for the proposition that courts can carve out an exception to the otherwise plain language of Section 706(a).[75]
These courts recognize an exception to conversion for a variety of laudable reasons: 1) the debtor lacked good faith; 2) the debtor was incapable of proposing a confirmable plan; 3) the debtors' control under Chapter 11 or 13 would prejudice other parties or creditors; 4) the debtor abused the bankruptcy process; or 5) conversion would result in a gross inequity.[76] In determining the merits of a conversion motion, these courts have employed myriad factors, including: 1) whether the debtor was represented by an attorney during the bankruptcy proceeding; 2) whether conversion was sought in bad faith; 3) whether the debtor proposed a confirmable plan; 4) the impact on the debtor by denying conversion weighed against the prejudice to creditors caused by allowing the conversion; 5) the effect of conversion on the efficient administration of the bankruptcy estate, including the likelihood of reconversion to Chapter 7; and/or 6) whether conversion would result in further abuse of the bankruptcy system and thus serve to pervert, rather than implement, *577 congressional policy.[77] Additionally, when analyzing whether a debtor was seeking to convert in bad faith, several courts examine the timing of the conversion filing, the motive for conversion, and whether the debtor deliberately attempted to conceal assets.[78]
In "bad faith" exception cases, courts have denied conversion where the debtor hid or fraudulently transferred assets[79] or just generally abused the bankruptcy system.[80] Other courts have denied conversion under a "bad faith" label, but have described the issue in terms of whether the debtor had a confirmable plan,[81] a reasonable chance or actual assets to pay creditors,[82] or was attempting to avoid all repayment given that a discharge had already been issued.[83]
A more traditional approach to the bad faith issue applied by courts analyzes the debtor's intent. Indeed, at least one court has looked not only at the subjective intent of the debtor to convert, but also at the debtor's intent in filing the bankruptcy itself.[84] Other courts have just generally ruled that conversion was not available because it would not serve the goals of the bankruptcy system.[85] At least one court, relying on 11 U.S.C. § 105(a),[86] has held that its power to protect the integrity of the court and the bankruptcy system was both inherent and statutory and used that power to deny an attempted conversion.[87]
*578 Regardless of the label given or the means used, the courts were all struggling with the same issue: how to treat a request made under a seemingly mandatory statute where the result may be damaging to the bankruptcy system or the creditors in the individual case. This struggle has been characterized by many courts. For example, one court described the dilemma as follows: "[t]his Court respects, and has every intention of enforcing the intent of Congress in all respects. This Court will grant conversion under § 706(a) readily but not so readily as to allow and condone abuse."[88]
3. Application of the Law to the Instant Case
Such was the dilemma faced by the Bankruptcy Court in the present case. The Trustee, concerned about the outcome on appeal of the debtor's case against the City, wished to settle the lawsuit at a sum well under the verdict the debtor received at trial. The proceeds of this lawsuit may represent the only meaningful way that some of the creditors receive any payment especially should the judgment be reversed on appeal. The debtor, on the other hand, opposes this action and wants to maximize the lawsuit recovery.[89] The Bankruptcy Court, like the courts described above, was also faced with a statute previously described by the Fifth Circuit, and others, as being absolute, while at the same time it had what it believed was a debtor who had acted in bad faith. One can also easily assume, given a review of the record, that the Court knew the trend in other jurisdictions, if indeed one is discernable, is to judicially recognize an exception to the right to convert in situations of bad faith. That being the case, it chose to follow those cases which have permitted courts to create exceptions to Section 706(a).
*579 Nonetheless, this court holds that Pequeno had a right to convert and should have been allowed to convert his Chapter 7 case regardless of the conclusion reached by the Bankruptcy Court. As this court has painstakingly detailed, there are no simple answers in this area, nor any controlling authority which can be read as an absolute road map. However, the Fifth Circuit's opinion in Martin, even considering the reference to exceptions recognized by other courts, should be the best guide. That opinion in at least five different places states that the right to convert is absolute (or uses words to that effect).[90] A statutory right that is absolute cannot have court-made exceptions. If that were the case, it would not be an absolute right. Such an interpretation would be the statutory or judicial equivalent of being somewhat pregnant. One is either pregnant or not. A right is either absolute or it is not.
Most instructive is the opinion of Judge Clark in Porras. In that case, as in the present case, a motion to convert was opposed by the Trustee, who cited the dicta contained in the Martin opinion.[91] The Court granted the motion to convert despite the opposition and despite the debtor's failure to disclosure various assets and evasive discovery responses.[92] The Court noted that Martin had ruled that Section 706(a) gave the debtor an absolute right to convert and that both the wording of the statute and the legislative history were in accord that such a right be absolute.[93] In responding to the language in Martin which notes the exceptions recognized by various courts, the Court stated:
[t]he Fifth Circuit in Martin gives but a nod to the existence of case law support for an exception on the way to noting that no evidence was presented by the trustee of any such "extreme circumstances" in the case sub judice. That is hardly the stuff of which a recognized exception is made, especially in view of the strongly stated proposition just a few sentences later in the decision that "[t]he statute itself . . . speaks in absolute terms."[94]
The Court in Porras also looked at the procedural rules specified for handling a Section 706(a) motion to convert and noted that Congress had taken great pains to exclude these conversion motions from Bankruptcy Rule 9014, which governs contested motions.[95] This exclusion clearly buoys the conclusion that these motions were intended to be uncontestable matters.
As stated above, numerous courts for many laudable reasons have chosen to engraft their own judicially created exceptions to this otherwise mandatory statute. This court refuses to do so for several reasons. First, the clear language of the statute is phrased in such a way as to give the option to convert to the debtor. Congress *580 created no exceptions (unless the case had been converted previously under sections 1112, 1307, or 1208). Second, the legislative history (as detailed by the Fifth Circuit in Martin and by other courts in many other cases) clearly evidences Congress' intent to make this conversion right mandatory. Third, while acknowledging that other courts from other circuits have chosen to create exceptions, the Fifth Circuit in Martin did not adopt and has not subsequently adopted those decisions. Accordingly, this court given the clear language of the statute, its unambiguous legislative history, and the pronouncement by the Fifth Circuit in Martin that the right to convert is absolute does not consider that it is within its province to create a statutory exception where none before existed. Finally, this court's reluctance to so hold is also supported by the fact that it would require one to take a position that is logically inconsistent i.e., to hold a right is "absolute" except when it is not absolute or, to paraphrase George Orwell, to hold that all rights to convert are absolute, but some are more absolute than others.
This court is sensitive to the need to ensure the integrity of the bankruptcy system. Nevertheless, there are many alternative means for policing the conduct of the lawyers and litigants that are authorized by the rules and statutes. For example, as many courts have pointed out, the case may always be reconverted to Chapter 7, and this reconversion can be because of a debtor's bad faith.[96] While one might consider it frivolous to convert only to reconvert,[97] such a procedure allows one to comply with both the Congressional mandate of Section 706(a) and the duty to protect the bankruptcy process from abuse.[98]
Additionally, a bankruptcy court always can police the conduct in its court by the sanction provisions that are available in the Code,[99] by referral to the United States Attorney's Office for investigation and/or prosecution under 18 U.S.C. §§ 151-57, by the refusal to grant a discharge, or by the general sanction provisions that are available to prevent misconduct. Additionally, a court could craft protections using its power under Section 105, as long as it does not directly contravene a statute.[100] Indeed, at least one court has concluded that the issues of the debtor's bad faith, abuse of process and any possible costs and damages owed the Chapter 7 Trustee can be resolved in the Chapter 13 proceeding.[101] Accordingly, notwithstanding the reason for the denial and the merits of such a denial, this court holds that the Bankruptcy Court's denial should not have been made and hereby grants Pequeno's appeal on this point.
*581 4. The Underlying Factual Basis to the Bad Faith Finding
Due to the fact that this court holds that a debtor's right to convert is absolute, it does not reach the issue whether the Bankruptcy Court's factual conclusions are clearly erroneous. Nevertheless, it cannot say that it necessarily would have found the debtor's conduct (especially given the fact that Pequeno was pro se for all of the time period in question) to be the kind of exceptional circumstances contemplated by the Fifth Circuit in its brief reference to "exception circumstances" in Martin. The Bankruptcy Court did not file any Findings of Fact or Conclusions of Law, but wrote in its Order that it denied Pequeno's motion to convert upon finding that he "acted in bad faith evidencing an intent to evade Creditors and the Trustee" and that "conversion would prejudice the Creditors."[102] Evidence of the court's reasoning, however, is found in the transcript of the final hearing held on November 7, 2002, in which the court orally recounted that it denied the conversion motion because Pequeno had failed to timely file his schedules, to attend creditors' meetings, and to disclose the judgment.[103] Specifically, the Court opined that:
The law provides the law encourages the filing of Chapter 13 and in future amendments, perhaps, there will be requirements to file Chapter 13 under certain circumstances. The however, the law does provide a safeguard in there that the that conversion is not automatic. Conversion can be if it's in the best interest of the system and for various reasons, the Court has discretion whether or not to convert a case from Chapter 7 to Chapter 13. In this particular in this particular case, there have been repeated attempts to have a 341 meeting that have been missed. While there have been excuses for them, I cannot I cannot fail to be concerned about the fact that there were four 341 meetings set. One was passed and three were missed . . . In addition to that, there were there were no Schedule filed in this case for six months. That's another problem that . . . that again, while there excuses perhaps have been made for filing the Schedules wrong, it still continues to bring concern to the Court when Schedules are late. In addition to that, there is a significant asset that was not disclosed until after it became apparent it had to be disclosed . . . This was a lawsuit involving the City of Brownsville that ultimately led to a $400,000 judgment. That's a significant asset. The failure to disclose that could be a violation of criminal law, as well as bankruptcy law and really smacks of bad faith. All of this conduct, taken together, it seems to me it would be it would be inappropriate under the circumstances for me to convert this case to 13 under the circumstances, especially when we consider what all has gone on. And for all those reasons, I will not convert the case to 13. The lawsuit in reviewing the lawsuit, it appears perhaps from everything that was presented to me and all I can do is look at the facts that were presented to me, that there was a lawsuit based on the First Amendment . . . The law is complex in that area . . . [T]he evidence before me was that there that there is a possibility of overturning this on appeal . . . We don't even know whether or not the appeals will be the case could get could get thrown out during the appeal procedure and the point being that a settlement after negotiation was reached *582 in the amount of 120,000 $140,000 and under the circumstances with a $400,000 Judgment, a cash payment of $140,000 does to me seem to be appropriate.[104]
Further, though the Court stated in the above-referenced pronouncement and in its written Order that it found that Pequeno had acted in bad faith, and the Court orally concluded that Pequeno's conduct was not fraudulent:
. . . [n]ow, again, I am not finding that you have fraudulently done all that. I'm finding that there is sufficient there are sufficient problems that it does not appear equitable to me to reconvert to convert this to Chapter 13. It was started as a 7. You chose 7. There's a lot of harm that can be done to a lot of people by converting this to 13. It may turn out that everybody gets paid off paid everything if I converted to 13. I mean, but on the other hand, it may turn out that nobody gets anything if I convert his to 13. You may even lose the Judgment. It may be better for the City of Brownsville if I convert this to 13 because then they go on and they win the appeal. I don't know. But based on the evidence before me, I believe it's in the best interest of everyone in this case to leave it where it is. . . . [105]
The Bankruptcy Court's ruling regarding Pequeno's motion to convert highlights one of the most troubling aspects of the body of cases which allow courts to carve out exceptions to Section 706(a). Though the Bankruptcy Court's ruling is supported by some of the decisions already referenced above, other cases previously mentioned would hold that mere misconduct (short of fraud) was not of such significance as to be an "extreme circumstance" and therefore an exception to Section 706(a). Pequeno was not represented by an attorney during the bankruptcy proceeding.[106] The record also contains some evidence showing that Pequeno did not deliberately attempt to conceal his assets. While the burden is on the debtor to complete his schedules accurately[107] and Pequeno did not disclose the judgment or the retirement funds on the schedules themselves, he did note them on his Statement of Financial Affairs, which he filed simultaneously with his schedules.[108] This court also notes that the Trustee learned of Pequeno's lawsuit against the City in February 2002 from the Trustee's counsel.[109] It is somewhat disingenuous for the Trustee to complain that Pequeno's failure to disclose the judgment resulted in any harm to the creditors when he had knowledge of the asset. Further, the record reveals that, while Pequeno certainly wants to maximize his own recovery from the lawsuit, his initial motive for conversion may have been to save his home from foreclosure, not to hide the judgment proceeds from creditors, as Schmidt alleged.[110]*583 Further, Pequeno's assets were disclosed prior to his motion to convert,[111] and the motion was filed before his debts were discharged.[112]
What also gives this court cause for concern is the fact that all of Pequeno's behavior that the Bankruptcy Court cited as the reason for denying conversion the failure to disclose assets, the failure to timely file his schedules, the missed creditor's meetings had already occurred when the Court originally granted Pequeno's conversion motion at the August 7th hearing.[113] In March, post-petition, Schmidt served Pequeno with a subpoena seeking documents from which to determine Pequeno's assets and debts.[114] In May, upon Pequeno's failure to comply, Schmidt filed a motion to compel Pequeno to file his schedules and Statement of Financial Affairs.[115] Upon the Bankruptcy Court's Order for Pequeno to comply, he filed his schedules on June 17, 2002.[116] Though Pequeno did attend the first creditors' meeting held on June 14, 2002, he asked for an adjournment, and subsequently did not attend meetings scheduled for June 28th and in September.[117] Thus, the Bankruptcy Court had full knowledge of Pequeno's actions when he submitted his motion to convert on July 18, 2002. Faced with this conduct, the Bankruptcy Court nonetheless orally stated at the hearing held on August 7, 2002, that it would convert Pequeno's case to one under Chapter 13.[118]
Subsequent to the Bankruptcy Court's oral ruling, Schmidt filed an objection to Pequeno's motion to convert, and the Court set a hearing for October 9.[119] Schmidt then filed an emergency motion for authority to mediate and settle the judgment on September 6, 2001.[120] The Court granted the motion on September 10th.[121] Schmidt settled the judgment for $140,000, and the Bankruptcy Court approved it on September 25th.[122] When the Court held a hearing on October 9th to address Schmidt's objection to conversion, among other things, Schmidt presented as evidence of bad faith the same behavior discussed above and of which the Court was already aware when it originally permitted conversion.[123] The Court then reversed *584 its prior oral pronouncement and denied Pequeno's request for conversion.[124] Seemingly, the only new factor was the settlement which could provide funds to help pay some of the outstanding sums owed to creditors. This very well may have been the best course of action for most, if not all, of the parties involved in the case, but again the question should be whether it rises to the level of "extreme circumstances."
B. Pequeno's Claim That The Proceeds From The Lawsuit Are Exempt
A debtor may claim as exempt monies received in remuneration for loss of future earnings. 11 U.S.C. § 522(d)(11)(E). Once the property is claimed to be exempt, there is a presumption that the exemption has been correctly claimed.[125] Therefore any party contesting the exemption has the burden to show that it was improperly claimed. Once the objecting party has satisfied this burden, the debtor must come forward with unequivocal evidence that the exemption is proper.[126] Pequeno attempted to claim that the proceeds from his lawsuit against the City of Brownsville are exempt because they are, in effect, compensation for future earnings pursuant to 11 U.S.C. § 522(d)(11)(E). Schmidt objected and claimed that just the opposite is true that the lawsuit was not compensation for future earnings, but instead was for past earnings that Pequeno had lost. The Bankruptcy Court held that the judgment was not exempt, and the record clearly supports the Court's decision in that regard.
Following the verdict of over $400,000.00, Pequeno interviewed the jurors who informed him that they made no award for future losses (perhaps wrongfully assuming he would regain his job). After these discussions, Pequeno filed a pro se motion with the District Court to increase the judgment in his favor. (Although represented by counsel, Pequeno's lawyers felt that there was no legal basis for filing such a motion and so refused to file it on his behalf.) Pequeno used as his basis for the motion the very facts that he now seeks to deny. Pequeno even went further and wrote the Trustee detailing his conversations with jurors and pleaded with the Trustee not to oppose his motion. This evidence was adduced at the hearing in the Bankruptcy Court without objection.
When a party fails to object, an appellate court reviews the admission of such evidence for plain error.[127] Pequeno has no claim before this court that the admittance of these statements fall into this category. While the jury instructions in the Debtor's underlying case did include instructions on past and future earnings, the verdict was rendered in a lump sum. Consequently, it is arguably impossible to determine solely from that how much, if any, of the money awarded was for future wages. That being said, the best evidence on the topic comes from Pequeno himself. All of his motions and correspondence at the time in question stressed the fact that the jurors had told him no award was made for future lost wages. Having taken that position before the District Court several months earlier, he cannot now take an *585 opposite stance. Schmidt adduced this evidence before the Bankruptcy Court, and Pequeno provided no evidence to the contrary. Schmidt satisfied his burden of proof and rebutted the prevailing presumption in Pequeno's favor.
This Court would go further and hold that Pequeno's conduct and representations in the District Court during the pending of the motion to increase the judgment are clearly judicial admissions of the kind that he cannot now disavow. Accordingly, this court finds that the Bankruptcy Court correctly found this judgment to be non-exempt.
C. The Effect of Discharge
While not raised by the parties in their briefing, a remand of this case will by necessity raise not only the issue of exemption, but also may compel the Bankruptcy Court to address the discharge which went into effect prior to the ruling on the motion to convert. The Fifth Circuit in Martin did not discuss in detail the issue of whether a discharged debtor could move to convert, but it did allow the conversion after the debtor (Martin) had been discharged. That being the case, this court certainly would not presume to disallow a conversion based upon a prior discharge. Nevertheless, in its discussion of the right to convert, the Fifth Circuit specifically reserved the question "of what happens to the discharge or the underlying debt when the motion to convert is granted after discharge."[128] As with most issues in this case, there seems to be little in the way of a general rule. Some courts have also allowed the conversion regardless of discharge.[129] Other courts have denied the right to convert based primarily on the legislative intent behind the statute. For example, the Lesniak Court noted that:
[t]he sole expressed policy of Section 706(a) in the Legislative history is to give the debtor an opportunity to repay his debts. Consider how feebly, if at all, that policy would be accomplished in this case. In In re Spencer, 137 B.R. 506 (Bankr.N.D.Okla.1992), the Court noted that the absolute nature of Section 706(a) ends "[w]here a conversion to Ch. 13 amounts to an attempt to escape debts rather than repay them."[130]
Other courts have just practically concluded that ". . . there is no reason to convert to a Chapter 13 after having received a discharge in Chapter 7 because the debts have been discharged, and therefore there are no longer debts to repay."[131] Indeed courts have denied a conversion to Chapter 13 from Chapter 7 where the apparent purpose like the admitted purpose in this case is to regain control of a certain piece of litigation.[132]
Inasmuch as the Fifth Circuit made no attempt to resolve the question of what happens to the discharge or the underlying debt, it has seemingly left the appropriate course to the sound discretion of the Bankruptcy Court. There are several options which various courts and parties have used to allow the conversion mandated by the Congress while not thwarting the very goal intended by Section 706(a). For example, as stated above the court can reconvert the case back to Chapter 7 to prevent fraud, abuse of the bankruptcy process, or bad faith. Bad faith might include the abuse of creditors or an attempt by the debtor to escape the obligations mandated by the Bankruptcy Code. Further, a creditor or the trustee *586 could move to set aside the discharge under 11 U.S.C. § 727(d) and (e). Additionally, a debtor may move under F.R.Civ.P. 60(b) or Bankruptcy Rule 9024 to set aside the discharge so as to assuage the worries that the court might be entertaining regarding the debtor's good faith or the motive underlying the conversion motion.[133] For instance, the Court in Hauswirth, sua sponte, ruled that the debtor would not be allowed two discharges and allowed the debtor twenty days to file a motion to reconvert her case to Chapter 7 and retain her Chapter 7 discharge.[134] Otherwise, the court ruled it would vacate the discharge.[135] Since it is generally agreed that a debtor is not entitled to two discharges in the same case under two mutually exclusive chapters[136] and since it is the goal of Congress in enacting Section 706(a) to give debtors an opportunity to repay creditors, this may be one among many avenues for the Bankruptcy Court to consider upon remand. This court, much like the Fifth Circuit, has confidence that the Bankruptcy Court in this case will fashion a remedy which will satisfy both the needs of the parties and the mandates of Congress.
Accordingly, for the reasons stated above, this case is remanded to the Bankruptcy Court.[137]
NOTES
[1] Also raised are two points concerning the right of the Trustee to compromise a lawsuit in which Pequeno had prevailed in the District Court and which is being appealed to the Fifth Circuit Court of Appeals. These issues are totally dependent upon the answers to two of the issues described in the text and, as such, need not be ruled upon in this appeal. This court does, however, find it necessary to rule on the characterization of the property, as it is essential to any final resolution of this case.
[2] Docket No. 1.
[3] Appellant Brief at 2; Docket No. 149 at 19.
[4] Docket No. 4.
[5] Docket No. 9.
[6] Schmidt's Response Brief, Exhibit R at 2.
[7] Pequeno v. City of Brownsville, Cause No. B-00-180 (Southern District of Texas-Brownsville Division), Judge Tagle presiding. The proceeds of the judgment from this lawsuit constitute one, if not the largest, of the assets of the debtor's estate.
[8] Docket Nos. 9 & 15.
[9] Schmidt's Response Brief, Exhibit A.
[10] Id. at Exhibit D.
[11] Appellant Brief at 4.
[12] Schmidt's Response Brief, Exhibit I.
[13] Docket No. 28.
[14] Docket No. 58.
[15] Id. Schmidt misstated in his brief that the value of the fund was $60,000. Schmidt's Response Brief at 3.
[16] Id.
[17] These documents were assigned Docket No. 33.
[18] Id.
[19] Id.
[20] Schmidt's Response Brief, Exhibit R at 2.
[21] Id. at 2-3.
[22] Though a transcript of this hearing was not included in the record, this court obtained a taped recording of the proceeding.
[23] Debtor's Exhibits, Exhibit IIIC.
[24] Debtor's Exhibits; Exhibit IIID.
[25] Schmidt's Response Brief, Exhibit R at 3.
[26] Id. at 4.
[27] Docket No. 148.
[28] Id.
[29] Id.
[30] Docket No. 149 at 21.
[31] Id.
[32] Schmidt's Response Brief, Exhibit N.
[33] Docket No. 149 at 21.
[34] Schmidt's Response Brief, Exhibit O.
[35] Docket No. 149 at 21.
[36] Schmidt's Response Brief, Exhibit P; Docket No. 149 at 19.
[37] Docket No. 149 at 19.
[38] Id. at 30.
[39] Id.
[40] Docket No. 9.
[41] Schmidt's Response Brief, Exhibit P.
[42] Docket No. 106.
[43] Id.
[44] Id.
[45] Docket No. 51.
[46] Docket No. 59. 11 U.S.C. § 522(d)(11)(E) permits a debtor to exempt "[a] payment in compensation of loss of future earnings . . . to the extent reasonably needed for the support of the debtor and any dependent of the debtor."
[47] Docket No. 63.
[48] Schmidt's Response Brief, Exhibit R at 7.
[49] Docket No. 130.
[50] Id.
[51] Appellant Brief at 3.
[52] Docket No. 130.
[53] Docket No. 75.
[54] Docket No. 149.
[55] Docket No. 150; Schmidt's Response Brief, Exhibit U.
[56] Docket No. 150; Schmidt's Response Brief, Exhibit V.
[57] Id.
[58] See Matter of Haber Oil, 12 F.3d 426, 434 (5th Cir.1994).
[59] Id.
[60] Id. at 858.
[61] Id.
[62] Id. at 859.
[63] Id. at 860.
[64] 11 U.S.C. § 706(a).
[65] Martin, 880 F.2d at 859.
[66] Id. (emphasis added).
[67] While Pequeno's request to convert was filed pre-discharge, the motion was not ruled upon until after the discharge had taken effect.
[68] Martin, 880 F.2d at 859.
[69] Id.
[70] See, e.g., In re Carter, 285 B.R. 61 (Bankr.N.D.Ga.2002); In re Gallagher, 283 B.R. 604 (Bankr.M.D.Fla.2002); In re Lesniak, 208 B.R. 902 (Bankr.N.D.Ill.1997); In re Hauswirth, 242 B.R. 95 (Bankr.N.D.Ga.1999), In re Pakuris, 262 B.R. 330 (Bankr.E.D.Pa.2001), In re Brown, 293 B.R. 865 (Bankr.W.D.Mich.2003); In re Little, 245 B.R. 351 (Bankr.E.D.Mo.2000); see also Schecter, "Does the Debtor have the Absolute Right to Convert a Chapter 7 Case?" 8th Annual Central States Bankruptcy Institute (June 2001), (concluding that "[t]he Fifth Circuit Court of Appeals in Matter of Martin, 880 F.2d at 859 (1989) agreed with decisions that the court had no discretion to block the conversion"); 4 Bankr Service L.Ed. § 37:171; Norton, Norton Bankruptcy Law and Practice 2d Ed. § 125.7. "Conversion from Chapter 7 or Chapter 11 to Chapter 13."
[71] Id. at 377-80.
[72] Martin, 880 F.2d at 859 n. 2.
[73] Id. at 859.
[74] See, e.g., In re Starkey, 179 B.R. 687 (Bankr.N.D.Okla.1995); In re Tardiff, 145 B.R. 357 (Bankr.D.Me.1992); In re Kuntz, 233 B.R. 580 (1st Cir. BAP (Mass.)1999); In re Widdicombe, 269 B.R. 803 (Bankr.W.D.Ark.2001); In re Johnson, 262 B.R. 75 (Bankr.E.D.Ark.2001); In re Porter, 276 B.R. 32 (Bankr.D.Mass.2002); In re Jeffrey, 176 B.R. 4 (Bankr.D.Mass.1994); In re Young, 269 B.R. 816 (Bankr.W.D.Mo.2001); In re Thornton, 203 B.R. 648 (Bankr.S.D.Ohio 1996); In re Spencer, 137 B.R. 506 (Bankr.N.D.Okla.1992).
[75] See Cochran, Texas Practice Series: Consumer Rights and Remedies (3rd ed.), 28 TXPRAC § 16.9 (citing Martin when describing the right to convert as absolute "only in the absence of `extreme circumstances'" and being "subject to review by the court for bad faith").
[76] See, e.g., Kuntz, 233 B.R. at 585; Spencer, 137 B.R. at 511; In re Sully, 223 B.R. 582, 584 (Bankr.M.D.Fla.1998).
[77] See Pakuris, supra (citing cases that consider these various factors when analyzing a conversion motion).
[78] Id.
[79] Finney v. Smith, 141 B.R. 94 (E.D.Va.1992) (transfer of assets to girlfriend); Thornton, supra (Bankr.S.D.Ohio1996) (debtor had assets and lied about assets when questioned).
[80] Calder, 93 B.R. at 740 (attorney/debtor filed and dismissed three prior bankruptcy cases and made a false oath precluding discharge); In re Ponzini, 277 B.R. 399 (Bankr.E.D.Ark.2002) (debtor filed Chapter 7 solely to avoid state court discovery, failed to follow court orders, and failed to cooperate with the Trustee).
[81] In re Straugh, 41 B.R. 757 (Bankr.W.D.Pa.1984).
[82] Lesniak, supra; In re McNallen, 197 B.R. 215 (Bankr.E.D.Va.1995).
[83] In re Safley, 132 B.R. 397 (Bankr.E.D.Ark.1991); In re Jones, 111 B.R. 674 (Bankr.E.D.Tenn.1990).
[84] Many courts have looked at the motivation for the conversion. See, e.g., Tardiff, supra (debtor's motivation was to avoid paying creditors); Thornton, supra. One Oklahoma court has even looked at the debtor's pre-bankruptcy conduct to determine his motivation. See Spencer, supra (debtor's problems existed from his own attempts to circumvent his divorce decree).
[85] Pakuris, supra (conversion would interfere with the "prompt" administration of the three-year-old Chapter 7 proceeding with pending settlement proposal); Young, supra (debtor's conversion was an attempt to thwart liquidation provisions of the Bankruptcy Code).
[86] Section 105(a) provides that "[t]he court may issue any order, process or judgment that is necessary or appropriate to carry out the provisions of this title. No provision of this title providing for the raising of an issue by a party in interest shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." 11 U.S.C. § 105(a) (West Supp.1991).
[87] See Calder, 93 B.R. at 740. Not all courts agree with the Calder Court's understanding of Section 105(a). For instance the Court in In re Barbieri noted that:
[i]n addition, the District Court's reliance on 11 U.S.C. § 105(a) is misplaced. The equitable powers emanating from § 105(a) are not a license for a court to disregard the clear language and meaning of the bankruptcy statutes and rules. In short, although § 105(a) grants a Bankruptcy Court broad powers, it does not authorize the Court to disregard the plain language of § 1307(b).
We are mindful that the purpose of the bankruptcy code is to afford the honest but unfortunate debtor a fresh start, not to shield those who abuse the bankruptcy process in order to avoid paying their debts. Nevertheless, our concerns about abuse of the bankruptcy system do not license us to redraft the statute.
199 F.3d 616, 620-21 (2nd Cir.1999) (internal quotations and citations omitted) (analyzing Section 1307(b), which requires that if a debtor at any time moves to dismiss a case that has not previously been converted the court shall dismiss the action, and which is a statute with language similar to that of Section 706(a)).
[88] Starkey, 179 B.R. at 694.
[89] Pequeno is very much in the same position as the debtor in In re Bowman, 181 B.R. 836 (Bankr.D.Md.1995). The debtor in Bowman had one primary asset: the proceeds from a claim. Id. at 841. The debtor fought against a proposed $500,000 settlement because it left little for her once the creditors were paid. Id. She not only objected to the proposed settlement, but moved to convert the bankruptcy from Chapter 7 to 11. Id. In that case, it was found by the Court that the debtor had failed to disclose the asset until after discharge and waited to file a motion to convert until just after the Trustee filed notice that he might accept the settlement offer. Id. at 842. The Bowman Court granted the motion to convert based upon the language of Section 706(a) despite the conduct of the debtor, which it described as troubling. Id. The Court further held that the debtor in possession could not shift the risk of loss to the creditors while retaining all of the potential benefits for herself. Id. at 844. In other words, she could not "roll the dice" to maximize her chance of recovery and gamble away the creditors' chance of being paid. Ultimately, the Court ordered reconversion back to Chapter 7 because there was no ability for the debtor to reorganize and to avoid the inherent conflict she had between her own self interest and that of the creditors. Id. at 845-46.
[90] The Martin Court writes that:
1. § 706(a) is ". . . unequivocal in its statement of the right to convert . . ." Martin, 880 F.2d. at 858.
2. ". . . Congress intended to encourage such conversions and to give the debtor an absolute one-time right to convert." Id. at 859.
3. "The Courts have broadly construed the right of a debtor to convert and have held that the Court does not have the discretion to block the conversion." Id.
4. "a debtors right to convert under Section 706(a) is . . . an absolute one." Id.
5. "The statute itself, as we have noted above, speaks . . . absolute terms." Id.
[91] Porras, 188 B.R. at 378.
[92] Id. at 380.
[93] Id.
[94] Id. at 378 (emphasis added) (citation omitted).
[95] Id. at 377 (citing Fed.R.Bankr.P. 1017(d)).
[96] See Little, supra; McNallen, supra; see also In re Finney, 992 F.2d 43, 45 (4th Cir.1993) ("While Finney's actions do not justify an equitable override of his `one-time absolute right' to convert the case under § 706(a), they do justify the bankruptcy's court's sua sponte consideration of whether immediate reconversion under § 1112(b) is appropriate."); In re Jennings, 31 B.R. 378 (Bankr.S.D.Ohio 1983); In re Barnes, 275 B.R. 889 (Bankr.E.D.Cal.2002);
[97] See Thornton, supra.
[98] See Little, supra; McNallen, supra (noting that if this extra-procedural step needs to be eliminated, it needs to be done by Congressional amendment to the statute, not by judicial fiat).
[99] See Fed.R.Bankr.P. 9011(c).
[100] See Finney, 141 B.R. at 98 ("Although § 105(a) does grant the bankruptcy court general equitable powers to issue necessary and appropriate orders, these powers are not a license for a court to disregard the clear language and meaning of the bankruptcy statutes and rules.") (citation omitted).
[101] Spencer, supra.
[102] Schmidt's Response Brief, Exhibit U.
[103] Docket No. 150 at 38-41.
[104] Docket No. 150 at 38-41.
[105] Id. at 49-50.
[106] See Kuntz, 233 B.R. at 584-85 (acknowledging that a three-month delay in disclosure by the debtor, who was also a lawyer, very well may have been an indication of bad faith, but ultimately finding that the delay was tempered by the fact that the debtor did disclose the asset before the bankruptcy court ordered a discharge and bankruptcy law was not the debtor's area of expertise).
[107] In re Park, 246 B.R. 837, 841-842 (Bankr.E.D.Tex.2000).
[108] Docket No. 58.
[109] Docket Nos. 9 & 51.
[110] Docket No. 149 at 19. Pequeno maintained that he filed a Chapter 7 bankruptcy petition because he was unemployed at that time and was thus not eligible for Chapter 13. Id. Consequently, he filed Chapter 7 to stop foreclosure on his home. Id. However, he claimed that, because the lawsuit against the City was pending and he had approximately $30,000 in equity in his home, his attorney representing him in that suit informed him that he should not be in Chapter 7. Id. Consequently, he attempted to dismiss his case on January 16, 2002, before the judgment had been awarded on February 15 and entered on March 26. Id.
[111] Docket No. 58.
[112] See, e.g., Jeffrey, 176 B.R. at 6 (refusing to allow the debtors, having already received a discharge, to avoid their obligation to surrender their assets for the benefit of their creditors); Pakuris, 262 B.R. at 336 (finding that the timing of the conversion motion subsequent to the court revoking the discharge after the trustee learned that the debtor had failed to list all of her assets in the bankruptcy proceeding and the sole motivation being to regain control of the debtor's divorce proceeding demonstrated bad faith).
[113] Docket No. 106.
[114] Schmidt's Response Brief, Exhibit I.
[115] Id. at Exhibit J.
[116] Id. at Exhibit L.
[117] Docket No. 149 at 21.
[118] Docket No. 106.
[119] Docket No. 51.
[120] Schmidt's Response Brief, Exhibit R at 7.
[121] Docket No. 68.
[122] Docket No. 75.
[123] Docket No. 149.
[124] Docket No. 150.
[125] In re Sherk, 918 F.2d 1170, 1173 (5th Cir.1990).
[126] In re Carter, 182 F.3d 1027, 1029 (9th Cir.1999).
[127] Peaches Entertainment Corp. v. Entertainment Repertoire, 62 F.3d 690, 694 (5th Cir.1995).
[128] Martin, 880 F.2d at 859-60
[129] McNallen, supra.
[130] Lesniak, 208 B.R. at 905 (citation omitted).
[131] Id. at 906 (citing Jeffrey, 176 B.R. at 6).
[132] Pakuris, supra; Tardiff, supra
[133] See, e.g., In re Caldwell, 67 B.R. 296 (Bankr.E.D.Tenn.1986); Jones, supra.
[134] Hauswirth, supra.
[135] Id.
[136] Most courts that have considered the issue have concluded that a debtor cannot obtain two discharges in the same case under two mutually exclusive chapters of the Bankruptcy Code. See Jones, supra; Safley, supra; Tardiff, supra; see also In re Kilker, 155 B.R. 201 (Bankr.W.D.Ark.1993); In re Wyciskalla, 156 B.R. 579 (Bankr.S.D.Ill.1993); In re Schwartz, 178 B.R. 340 (Bankr.E.D.N.Y.1995); Markovich v. Samson, 207 B.R. 909 (9th Cir. BAP 1997).
[137] This court had previously implicitly granted at the Pretrial Conference held last September and hereby explicitly grants the Trustee's unopposed motion for leave to file a response (Docket No. 29) and has taken that brief (Docket No. 30) into consideration in this appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1867527/ | 312 B.R. 832 (2004)
In re Willadeen REED, Debtor.
Max R. Tarbox, Chapter 7 Trustee, Appellant,
v.
United States Trustee for the Northern District of Texas, Appellee.
Bankruptcy No. 99-50598-RLJ-7, CIV.A. 5:03-CV-188-C.
United States District Court, N.D. Texas, Lubbock Division.
February 9, 2004.
*833 William S. Parkinson, U.S. Department of Justice, Office of Trustee, Dallas, TX, for U.S. Trustee for the Northern District of Texas.
Max R. Tarbox, Tarbox & Miller, Lubbock, TX, pro se.
ORDER
CUMMINGS, District Judge.
BEFORE THIS COURT FOR COSIDERATION is the appeal of MAX R. TARBOX ("Trustee"), Chapter 7 Trustee for the bankruptcy estate of WILLDEEN REED, Debtor, from an order in a bankruptcy proceeding in the Bankruptcy Court for the Northern District of Texas, Lubbock Division, in the above-referenced case. The Court, having carefully considered the brief of Appellant, filed on August 29, 2003, the brief of the United States Trustee ("UST"), filed on September 17, 2003, and the record in this case, is of the opinion that the decision of the bankruptcy court should be affirmed. There is no reversible error in the conclusions of law.
It is, accordingly, ordered that the decision of the bankruptcy court is, in all things, AFFIRMED.
I.
JURISDICTION
This is an appeal from a final order in a bankruptcy proceeding in the Bankruptcy Court for the Northern District of Texas, Lubbock Division. A timely notice of appeal was filed on June 23, 2003, under Bankruptcy Rules 8001(a) and 8002(a). This Court has appellate jurisdiction pursuant to 28 U.S.C. § 158(a).
II.
STANDARD OF REVIEW
In an appeal from a bankruptcy proceeding, questions of law are subject to de novo review by the district court. In re Hinsley, 201 F.3d 638, 642 (5th Cir.2000). When examining provisions of the Bankruptcy Code, appellate courts are instructed to begin with a construction of the statute's language. CompuAdd Corp. v. Tex. Instruments, Inc. (In re CompuAdd Corp.), 137 F.3d 880, 882 (5th Cir.1998). "In a statutory construction case, the beginning point must be the language of the statute, and when a statute speaks with clarity to an issue, judicial inquiry into the statute's meaning, in all but the most extraordinary circumstance, is finished." Estate of Cowart v. Nicklos Drilling Co., 505 U.S. 469, 475, 112 S. Ct. 2589, 2594, 120 L. Ed. 2d 379 (1992). Absent an express, contrary definition of a certain term in the Bankruptcy Code, "Congress intends the words in its enactments to carry their ordinary, contemporary, common meaning." Pioneer Inv. Servs. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 388, 113 S. Ct. 1489, 123 L. Ed. 2d 74 (1993), cited in Boyce v. Greenway (In re Greenway), 71 F.3d 1177, 1179 (5th Cir.1996) (internal quotations and citations omitted). As a part of that analysis, however, the United States Supreme Court cautioned that "we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy." In re CompuAdd, 137 F.3d at 882 (citations omitted). As a result, "[t]he plain meaning of legislation should be conclusive, except in the rare *834 cases [in which] the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242, 109 S. Ct. 1026, 103 L. Ed. 2d 290 (1989) (alterations in original) (internal quotations omitted).
III.
BACKGROUND
Debtor, Willadeen Reed, filed her petition for relief under Chapter 7 of the Bankruptcy Code on May 14, 1999. Max R. Tarbox was subsequently appointed Trustee of the bankruptcy estate. In one of those rare occurrences under the bankruptcy laws, this turned out to be a surplus case in which, after distribution of funds from the estate in payment of creditors, there remained $10,702.47 for distribution to the Debtor. The Trustee's Application for Compensation and Report of Proposed Distribution (the "Final Report"), filed on December 27, 2002, proposed to pay interest on administrative claims from the date of the filing of the petition, arguing that such is required in surplus cases by § 726(a)(5).[1] The UST objected to the Trustee's Final Report on January 6, 2003, arguing that accruing interest from the date of petition permits payment of money from the estate for a claim during a time period when no claim in fact existed. The UST argued that interest should accrue from the date the bankruptcy court awards compensation to the trustee. The bankruptcy judge, in an opinion filed on May 16, 2003, followed a third path that reads the relevant statute as denying interest on administrative fees and expenses in toto, determining that they are not within the provision for interest on claims allowed by § 726(a)(5).
IV.
ANALYSIS
This case involves statutory construction of 11 U.S.C. § 726(a)(5), and the courts that have attempted to interpret it are like Homer's Odysseus, attempting to navigate between Scylla and Charybdis.[2] To the one side stands visible and distinct the plain meaning of the statute, offering the certainty of a strict application that nevertheless, because of its hard and unforgiving character, can often yield inequitable results. To the other side opens the wide and inviting gulf of judicial interpretation that seemingly offers more room for maneuvering yet hides a bottomless vortex that can envelop a court which too easily veers into substituting its own understanding of congressional intent for the plain meaning of the language as written. The course charted by these courts has seemed to tack in the direction of one or the other, foundering on the inequities or sinking into the uncertainties.
This Court begins its analysis, as it must, with the statute. Section 726(a)(5) provides in a surplus case for "payment of interest at the legal rate from the date of the filing of the petition, on any claim paid under paragraph (1)...." 11 U.S.C. § 726(a)(5) (2002). Paragraph (1) includes "claims of the kind specified in, and in the order specified in, section 507 of this title, proof of which is timely filed under section 501 of this title or tardily filed before the date on which the trustee commences distribution under this section." § 726(a)(1). *835 Among the claims specified in section 507 are "administrative expenses allowed under section 503(b) of this title...." § 507(a)(1). Continuing to follow the statutory thread, § 503(b) allows administrative expenses for "compensation and reimbursement awarded under § 330(a) of this title." § 503(b)(2). Turning to § 330(a), one finds that "the court may award to a trustee, an examiner, a professional person... reasonable compensation for actual, necessary services rendered ... and reimbursement for actual, necessary expenses." § 330(a)(1)(A)-(B). Finally, an award under § 330(a) is subject to a limitation provided by § 326, which caps the trustee's compensation by means of a percentage formula applied to the amounts disbursed to the estate's claimants, exclusive of the debtor. § 326(a).
As the bankruptcy court below noted in its opinion, most courts that have addressed the issue of administrative claims in a surplus case have agreed that interest on such claims is payable under § 726(a)(5), but are in disagreement over whether such interest begins to accrue as of the date of the trustee's award for fees and expenses, or, as the language of the statute plainly states, "from the date of the filing of the petition." Compare, e.g., U.S. Trustee v. Fishback (In re Glados, Inc.), 83 F.3d 1360 (11th Cir.1996); Boldt v. Crake (hi re Riverside-Linden Inv. Co.), 945 F.2d 320 (9th Cir.1991) (holding that interest accrues from the date of the award of trustee fees and expenses), with, e.g., In re Smith, 267 B.R. 770 (Bankr. W.D.Tex.2001); In re Vogt, 250 B.R. 250 (Bankr.M.D.La.2000) (holding that interest accrues from the date of the petition). Courts in the Fifth Circuit, including the Smith and Vogt courts and the bankruptcy court below, have favored the plain meaning and strict application rule that, although a minority view, is nevertheless favored by this Court in principle and in practice. Nevertheless, implementation of the plain meaning rule for statutory construction has yielded two entirely inconsistent results. As noted, the Smith and Vogt courts' interpretation of the plain language allows for interest on administrative fees and expenses from the date of the petition. However, according to the court below, the plain meaning of the statute denies interest for any administrative fees or expenses whatsoever.
The inconsistency results, as this Court sees it, from a lacuna in the Smith and Vogt courts' analysis of the progression in the statutory thread involved in identifying the plain meaning of § 726(a).[3] Both courts begin with the provision in § 726(a)(5) for interest "from the date of the filing of the petition, on any claim paid under paragraph (1)." From there, the analysis proceeds to paragraph (1) as directed, concluding that, since paragraph (1) allows claims of the kind specified in § 507, and since § 507 includes administrative expenses under § 503(b) (among other claims), therefore administrative expenses are permitted to accrue interest from the date the petition is filed. See Vogt, 250 B.R. at 266; Smith, 267 B.R. at 772. In the view of the Vogt court, this analytical progression fully reveals "[t]he only pre-condition to qualification as a claim entitled to be paid interest from the petition date...." Vogt, 250 B.R. at 266. *836 In the analysis of the Smith court, there are no other "limitations or exceptions carved out in the statute with respect to this interest payment, and the language of the statute is both straightforward and plain.... The trustee's commission and expense claims are two of the allowed claims that are satisfied with a distribution of estate assets, pursuant to section 726(a)(1)." Smith, 267 B.R. at 772.
Although the opinions of both the Vogt and Smith courts follow the thread of the statute's plain language, the premature abandonment of that task in both instances yields a result this Court finds unpalatable, namely, that interest is accrued on the trustee's administrative fees and expenses from the date of the filing of the petition, even though the services and expenditures meriting such fees and expenses occur post-petition, often even years after the filing of the petition. The Smith court seems untroubled at all by such a result. But the Vogt court, like Odysseus following Circe's advice, finds that navigating close to the certainty of plain meaning is preferable to the total oblivion of being swept into the swirling uncertainty of judicial interpretation, even if that course results in an inevitable and inequitable loss to the surplus available to the debtor by paying interest on services before they are even rendered.[4] In the Vogt court's words, "[t]he answer to the problem lies ... in a wider read of the statute," and supplies a reading that admittedly softens the inequity of the result somewhat.[5]Vogt, 250 B.R. at 282. That court interprets the language as reserving interest only for the trustee's administrative fees, and then only for those fees submitted through the final report process, and not to interim trustee fee requests brought under § 503(b) or to other professional fees submitted under § 330(a). Id. at 282-84.
The Vogt court recognizes that "[t]he more difficult problem ... albeit not one that shakes us, is that of reimbursement of trustee expenses ... [where] it is possible, if not probable, that a trustee may earn interest on an expense claim for a period of time before the actual expenses were incurred." Id. at 285. While noting that "the effect of interest accruing from the petition date upon a trustee expense reimbursement claim probably does require that interest accrue in a way that applicable non-bankruptcy law probably doesn't provide," the Vogt court nevertheless finds such a result required by the plain language of the statute. Id. at 292. But again, the Vogt court finds solace in this inequitable loss to the surplus available to the debtor by opining that Congress clearly must have intended "to provide an easily calculable interest overlay upon all claims prior to distribution to the debtor, [that] would be thwarted if the trustee would have to accrue interest on the expense *837 claim from the date of the incurrence of each expense. There can be no question but that the cost of such a calculation would exceed the ... interest incurred" in most instances. Id. at 293.
Not content to justify the inequity solely by reference to what it surmises was Congress' intent to provide for easy calculations and cost-effective assessments of interest, the Vogt court goes on to make an a fortiori argument based on Griffin v. Oceanic Contractors, Inc., a Supreme Court case involving the assessment of a penalty for withholding of a seaman's wages. In Griffin, the Supreme Court reversed the appellate court's determination that the trial court had not abused its discretion when it refused to assess a penalty in excess of $300,000.00, as required by construction of a statute's plain language, for failure to pay wages in the amount of $412.50, even though the seaman was able to find gainful re-employment within five weeks. Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102 S. Ct. 3245, 73 L. Ed. 2d 973 (1982). In the view of the Vogt court, if an award of such magnitude, not at all warranted by the equities of the case, is found proper by the Supreme Court based on a literal application of the plain meaning and language of the relevant statute, then there is no justification for not applying the bankruptcy statute as written. Such references to the equities and "common sense of the nonbankruptcy world[,]" even though it "makes non-bankruptcy sense[,] ... is irrelevant to a question of Congressional power. If Congress intends for interest to accrue though services had not yet been performed, it certainly has the power to enact such legislation if the legislation is not otherwise constitutionally impermissible. If Congress says it does, it does." Vogt, 250 B.R. at 287 n. 89. While not attempting to gainsay the Vogt court's assertions regarding congressional power, this Court simply notes that the statute involved in Griffin was "not exclusively compensatory, but designed to prevent, by coercive effect, arbitrary refusals to pay wages, and to induce prompt payment when payment is possible. Thus, although the sure purpose of the statute is remedial, Congress has chosen to secure that purpose through the use of potentially punitive sanctions designed to deter negligent or arbitrary delays in payment." Griffin, 458 U.S. at 572,102 S. Ct. 3245, 3250.
Analogies to court decisions implementing the punitive intent of congressional legislation where the language is plain, no matter how severe, are not entirely apropos the bankruptcy setting, in which "courts of bankruptcy are essentially courts of equity, and their proceedings inherently proceedings in equity." Local Loan Co. v. Hunt, 292 U.S. 234, 240, 54 S. Ct. 695, 697, 78 L. Ed. 1230 (1934). This Court is mindful that the Bankruptcy Code controls the Court's equitable discretion and that it must not "use equity to contradict statutory or common law in order to reach what the court feels is a fairer result." In re Offshore Diving & Salvaging, Inc., 1999 WL 961763, *2 (E.D.La. Oct.20, 1999); see also In re Oxford Management, Inc., 4 F.3d 1329, 1334 (5th Cir.1993) (equitable powers under § 105(a) must be "exercised in a manner that is consistent with the Bankruptcy Code"). That said, the Court recognizes that the Bankruptcy Code "is designed to achieve two equally important objectives. The first is to provide honest debtors who have fallen on hard times the opportunity for a fresh start in life .... [and][t]he second ... is to protect creditors in general." H.R.Rep. No. 103-835, 103d Cong., 2d Session (1994), reprinted in 1994 U.S. CODE CONG. & ADMIN. NEWS (U.S.C.C.A.N.) 3340, 3341. This Court can not, without further consideration, just shrug its shoulders at a putative *838 statutory result that it would find abhorrent in equity, just because that result is merely to the debtor's detriment. Consequently, this Court will not be satisfied with a plain-meaning-of-the-language construction that yields an inequitable result, until it is convinced no equitable construction of that same language is possible.
In charting a course through the language of § 726(a), this Court takes to heart the Supreme Court's instruction that "interpretations of a statute which would produce absurd results are to be avoided if alternative interpretations consistent with the legislative purpose are available." Crooks v. Harrelson, 282 U.S. 55, 60, 51 S. Ct. 49, 50, 75 L. Ed. 156 (1930). Further, this Court is also mindful of the canon of statutory construction that makes it the court's duty "to give effect, if possible, to every clause and word of a statute." Duncan v. Walker, 533 U.S. 167, 174, 121 S. Ct. 2120, 2125, 150 L. Ed. 2d 251 (2001); see also Williams v. Taylor, 529 U.S. 362, 404,120 S.Ct. 1495, 146 L. Ed. 2d 389 (2000) (describing this canon as a "cardinal principle of statutory construction"); Market Co. v. Hoffman, 101 U.S. 112, 115, 25 L. Ed. 782 (1879) ("As early as in Bacon's Abridgment, sect. 2, it was said that `a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant'"). This Court, accordingly, will be "reluctan[t] to treat statutory terms as surplusage in any setting." Duncan, 533 U.S. at 174, 121 S.Ct. at 2125 (internal quotations omitted).
The course that navigates an alternative interpretation consistent with the legislative purpose while avoiding an inequitable consequence to the debtor has been outlined by the bankruptcy court in its opinion below. See In re Reed, 293 B.R. 698 (Bankr.N.D.Tex.2003). To that court's credit, its analysis of the statutory thread spun by § 726(a) gives effect, as it should, to a clause that is simply not discussed by either the Vogt or Smith courts. As the bankruptcy court below notes, under § 726(a)(5) interest is to be paid from the date of filing on any claim paid under paragraphs (1) through (4) of § 726(a), and "[p]aragraph (a)(1) refers to payment of section 507 claims, `proof of which is timely filed under section 501.'" Id. at 699 (italics in original). Although that court recognizes that § 507, dealing with priority of claims, draws within its compass both those claims for administrative expenses allowed under § 503(b),[6] and also the claims of unsecured creditors,[7] the court does not prematurely halt its analysis there.[8] The bankruptcy court concludes *839 that the general, inclusive reference to § 507 is limited by the clause referring to § 501, and in doing so, it refuses to treat that clause as surplusage.[9]Id. at 701.
Adding § 501 to the statutory thread to be followed and including it in the bankruptcy court's analysis (the lacuna evident in the Vogt and Smith opinions) reveals that § 501 addresses the filing of proofs of claims by creditors and proofs of interests by equity security holders. § 501(a). Applying the Code's definition in § 101(10) of a "creditor" as an "entity that has a claim against the debtor that arose at the time of or before the order for relief concerning the debtor," the bankruptcy court below concluded that the trustee and other professionals employed by the trustee do not constitute claim-filing creditors since their claims for administrative fees and expenses necessarily did not arise at the time of or before the order for relief concerning the debtor. Id. Although § 726(a)(1) at first seems to include them by its reference to claims of the kind specified in § 507, they are winnowed out by the reference to § 501, because they are not of the kind proof of which is timely filed under § 501 for pre-petition claims by creditors. No reference is made to claims which are filed under § 503, which would draw in other claims specified in § 507 for postpetition administrative expenses. Therefore, the trustee and the other professionals he hired were not holders of claims of the kind intended to be paid under § 726(a)(1), and as a result, their claims could not be claims on which interest is paid under § 726(a)(5). Id. The holding of the bankruptcy court below that payments of interest on the trustee's administrative fees and expenses are not allowed under § 726(a)(5) is affirmed.
While this Court realizes that the implication of this reading of the statutory language is that no administrative fees or expenses are eligible for interest under § 726(a)(5), it does not find this result any more troubling than a reading which allows for interest to accrue on services before they are rendered or expenses before they are incurred. Although this holding is based on a construction of the plain meaning of the statute's language, and not on any surmise regarding congressional intent, this Court can think of no compelling reason to suppose that the intent of Congress was otherwise. As the bankruptcy court below notes, adequate provision is made within the rest of the Code for payment of the trustee's administrative fees and expenses: regular payments of the trustee's and other administrative fees and expenses are approved and regulated by § 330 and capped by § 326 of the Code; their priority is established by § 507; and their payment is authorized by § 503(a). Id. These sections seem to completely address all pertinent aspects of the trustee's claims for administrative expenses, and all these provisions for procedures and priority are established completely independent of the final distribution. There is no reason to suspect that a further rule concerning these disbursements of administrative expenses would be buried within a section concerned with the procedures and priorities for the final distribution of the property of the estate to unsecured creditors.[10] As the Fifth Circuit has noted, these kinds of "disbursements of estate funds to pay administrative *840 expenses incurred by the trustee in the process of converting estate assets to cash" are "markedly different" from "distribution, as [that term] is used in the context of ... bankruptcy law." Van Gerpen, 267 F.3d at 456. Their priority is already clearly established ahead of those claims by unsecured creditors, for the simple reason that "creditors must pay for those expenses necessary to produce the distribution to which they are entitled." In re H.L.S. Energy Co., Inc., 151 F.3d 434, 437 (5th Cir.1998). There is ample reason for this Court to determine, if it needed to, that Congress neither needed nor intended to include any provisions for the trustee's expenses, or for interest on those expenses, within the provisions of § 726(a).[11]
Further, § 331 allows the trustee to apply to the court at least every 120 days for allowance and disbursement of interim compensation, and sooner with the court's permission. 11 U.S.C. § 331. The trustee does not have to wait until the final distribution to receive payment for these administrative fees and expenses.[12] The fact that he is allowed to do so under a reasonable schedule does not suggest to this Court that Congress either felt compelled to or intended to provide for interest for those claims, especially within the section dealing with final distributions to unsecured creditors.
V.
CONCLUSION
For the foregoing reasons, the holding of the bankruptcy court below that payments of interest on the trustee's administrative fees and expenses are not allowed under § 726(a)(5) is affirmed.
NOTES
[1] Specifically, the Final Report claimed interest in the amount of $295.55 on Trustee's fees; $20.01 on Trustee's expenses; $92.59 on Trustee's attorney's fees; $3.74 on Trustee's attorney's expenses; $51.47 on Trustee's accountant's fees, for a total of $463.36 in interest.
[2] The Odyssey, Book XII.
[3] Judge Phillips, the author of the Vogt opinion, is an experienced bankruptcy judge, as the Fifth Circuit has noted in In re Van Gerpen, 267 F.3d 453, 456 (5th Cir.2001). This Court is reluctant to suggest that anything could be lacking in Judge Phillips' lengthy consideration of § 726(a), but this Court is compelled by the canons of statutory construction to give significance to every clause, and thus must address the implications of the reference to § 501 within the statutory thread.
[4] The goddess Circe instructed Odysseus, "Ah, shun the horrid gulf! by Scylla fly. 'Tis better six to lose, than all to die," referring to the cliff-dwelling, six-headed monster who could snatch a sailor in each of her mouths.
[5] The Vogt court justifies the remaining possible inequities of accruing interest from the date of filing of the petition on post-petition trustee fees, as is necessary under its "wider reading," by reasoning that the trustee's postpetition claims are unique in view of the "role of the trustee and the trustee's responsibility to the estate" from the very moment of its creation. Id. at 284. Such a result leads to "no illogic, absurdity, [or] capriciousness . . . in providing for interest from the petition date upon a compensation claim that in fact ... exists from the petition date because it is grounded in and limited by the estate ... itself." Id. at 285 (emphasis in original). And, in fact, this Court would find justification in that reasoning, were not a still "wider reading" of the plain language possible that removes all inequities, as set forth by the bankruptcy court below.
[6] See paragraph (a)(1) of § 507.
[7] See paragraphs (a)(2)-(8) of § 507.
[8] Likewise, it does not veer off onto the course taken by the court in In re Motley, under which interest is applicable only to claims under § 507(a)(2)-(8), and not to administrative expenses under § 507(a)(1). The statutory analysis offered by Motley determined that (a), because § 726(a)(5) allows payment of interest on any claim paid under § 726(a)(1), and (b), because § 726(a)(1) allows distribution of property to pay claims of the kind specified in § 507, but makes no mention of payment of expenses of the kind specified in § 507, therefore (c), those administrative expenses provided for under § 507(a)(1) are not authorized for distribution of property of the estate for the payment of administrative expenses, much less for the payment of interest on those expenses. See In re Motley, 150 B.R. 16, 20 (Bankr.E.D.Va. 1992). As the Vogt court, which severely criticizes this approach, see Vogt, 250 B.R. at 268-70, so this Court does not find this argument persuasive. The question for this Court is not whether administrative expenses fit the definition of "claims"surely they are "claims" as that term is defined by the Code itself at § 101(5)(a)but whether they are within that narrower sub-group of claims specifically described and intended by § 726(a)(1), subject to its references to §§ 507 and 501.
[9] This clause was added in the 1994 Amendments to the Bankruptcy Code. This Court can find nothing in the legislative history indicating why it was added.
[10] The Senate Report on the Bankruptcy Reform Act of 1978, commenting on § 726, notes that "Paragraph [a](5) provides that postpetition interest on prepetition claims is also to be paid to the creditor in a subordinated position. Like prepetition penalties, such interest will be paid from the estate only if and to the extent that a surplus of assets would otherwise remain for return to the debtor at the close of the case." S. Rep. 95-989, 95th Cong., 2d Session (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5883. The clearly stated intent is to provide for interest on prepetition claims of creditors in a subordinated position, with no mention whatsoever of postpetition claims or non-creditor claims, which those of the trustee must necessarily be.
[11] As the Court has previously noted, part of the confusion derives from the reference in § 726(a)(1) to claims of the kind specified in § 507, without paying proper attention to its further reference to proof of those claims under § 501. Section 507 establishes the priority of various claims, among which are administrative claims, which have a priority over claims of unsecured creditors. The reference to § 507 in § 726(a)(1) does not, by itself, bring within the ambit of the final distribution those claims for administrative fees and expenses, especially in light of the circumscription of that reference by the further reference to § 501, which has nothing to do with administrative fees and expenses.
[12] Even Judge Phillips recognizes that "while payments made on account of compensation and administrative expense applications must be accounted for, it is not necessary that they be claims paid within the final distribution." Vogt, 250 B.R. at 282. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1442297/ | 155 N.J. Super. 78 (1977)
382 A.2d 393
EUGENE GARROW, M.D., PLAINTIFF-APPELLANT,
v.
ELIZABETH GENERAL HOSPITAL AND DISPENSARY, DEFENDANT-RESPONDENT.
Superior Court of New Jersey, Appellate Division.
Argued September 26, 1977.
Decided December 27, 1977.
*82 Before Judges CONFORD, MICHELS and PRESSLER.
Mr. Harold J. Ruvoldt, Jr. argued the cause for appellant (Messrs. Ruvoldt & Ruvoldt, attorneys).
Mr. Peter A. Somers argued the cause for respondent (Messrs. Lindabury, McCormick & Estabrook, a professional corporation).
The opinion of the court was delivered by PRESSLER, J.A.D.
We are here asked to reconsider our holding in Sussman v. Overlook Hospital Assn., 95 N.J. Super. 418 (App. Div. 1967), regarding the procedural scope of the fair hearing which a private hospital is required to afford a physician before it may refuse him a staff appointment. More specifically, we are asked to reconsider the conclusion we there reached that the physician is not entitled to representation by counsel at any stage of presentation of his case to the hospital authorities. We are also here asked to define the extent to which, if at all, the physician is entitled to prehearing discovery. We are satisfied that our reappraisal of our earlier holding is required by the development of the law in the decade since Sussman was decided both in respect of the status of private hospitals and in respect of the expansion of the right to counsel in a variety of noncriminal matters.
The questions here presented arise in an undisputed factual context. Plaintiff Eugene Garrow is a licensed physician of both this State and New York. A Diplomate of the American Board of Surgery, his subspecialty in the surgical area is pediatric surgery. In November 1974 he applied for appointment to the staff of defendant Elizabeth General Hospital (hospital) as a pediatric surgeon. The hospital characterizes itself as an "open" hospital. That is *83 to say, it holds itself ready to accord staff privileges to any competent and qualified applicant. Compare this status with that of hospitals, typified by defendant hospital in Guerrero v. Burlington Cty. Memorial Hosp., 70 N.J. 344 (1976), which limit their staffs by reason of their judgment as to the requirements of the public interest.
Plaintiff's application indicates his prima facie impressive credentials. His training included a tour as chief resident in surgery both at Montefiore Hospital in New York City and at Children's Hospital in Detroit, Michigan. He was a Fellow of the American Academy of Pediatrics, Surgical Section, of the American Pediatric Surgical Association of the American College of Surgeons and of the New York Society for Pediatric Surgery. He was then serving as Director of Pediatric Surgery at Jersey City Medical Center and its affiliate, Margaret Hague Hospital, and attended at Christ Hospital in Jersey City and Clara Maas Hospital in Belleville. Since 1965 he had served as an Associate Clinical Professor at the New Jersey College of Medicine and had also published several articles in leading medical journals on his sub-specialty.
Initial consideration of plaintiff's application was delayed for several months because of his own request that it be held in abeyance. It thereafter proceeded in a relatively unexceptional manner through the various hospital committees and departments in accordance with the bylaws of the medical staff of the Hospital. By November 1975 the Medical Staff Executive Committee had approved the favorable recommendation of the Credentials and Eligibility Committee despite the absence of a recommendation from the Department of Surgery.[1] Before, however, final action was *84 taken on those favorable recommendations, the application was referred back to these Committees for reconsideration because of the hospital's receipt of additional information concerning plaintiff. That reconsideration resulted in a recommendation that the application be disapproved, and that recommendation was next considered by the Medical Organization Committee, whose responsibility it was to make the final recommendation to the Board of Trustees. The Medical Organization Committee's private deliberation resulted in a recommendation of disapproval, and the specific and detailed reasons therefor were memorialized in its meeting minutes,[2] ultimately furnished to plaintiff. Notice to plaintiff of the adverse recommendation by the Medical Organization Committee was accompanied by its advisory that he had the right to a hearing before the Board of Trustees pursuant to the bylaws and the further advisory as to the date by which he would be required to request such a hearing. The hearing was scheduled for May 21, 1976, but has not to this date taken place by reason of the intervention of this action, which was brought by plaintiff for the purpose of securing the procedural rights in respect of the hearing to which he regards himself entitled.
The complaint here filed and its accompanying order to show cause sought relief only from the hospital's refusal to accord plaintiff a pre-hearing opportunity "to examine all of the documents in [its] possession which are material to his application for membership." The hospital responded by a cross-motion seeking dismissal of the complaint on a variety of procedural grounds, including failure to exhaust administrative remedies, violation of the entire controversy doctrine and prematurity. By the time the parties' applications *85 were heard, however, two additional issues had been added to the controversy by consent: first, the hospital's right to exclude counsel from the scheduled hearing, and second, the right of the hospital's Board of Trustees to delegate the hearing function to a committee of its members for report and recommendation. The merits of these issues were not, however, reached below, the trial judge having concluded, and in our view erroneously so, that plaintiff's action was premature.
In our judgment the action was maintainable. There is no longer any question in this jurisdiction that a private hospital must accord a physician a hearing before it can reject his application for admission. The judicial function is, moreover, limited to a determination, based on a review of the record of that hearing, as to whether the hospital's decision "is supported by substantial credible evidence and is neither arbitrary nor capricious." Guerrero v. Burlington Cty. Memorial Hosp., supra, 70 N.J. at 356, 359 (1976). Thus the hearing is a critical event in the physician's ultimate challenge to the hospital's adverse action. Its virtually dispositive procedural consequences and its potentially dispositive substantive consequences demand that it be conducted with scrupulous fairness. Predetermined rules governing the conduct of the hearing which apparently have the capacity of substantially impinging upon the required minimum parameters of procedural fairness should clearly be subject to challenge without first requiring the physician to submit himself to a process whose procedural defects may be so grave as to affect his substantial rights. The offer by a hospital of an inadequate hearing is, in our view, no less actionable than its refusal to offer a hearing at all. We do not mean to suggest that every procedural disagreement between physician and hospital regarding the conduct of a scheduled hearing merits pre-hearing judicial intervention. We are, however, satisfied that such disagreements which directly implicate traditional concepts of fundamental procedural due process do warrant such intervention. And we *86 are further persuaded that the questions here raised regarding the right to counsel and the right to pre-hearing discovery are of that magnitude. We, therefore, address the merits of this dispute.[3]
With respect to the right to counsel issue, we believe that the time has come for us to depart from our holding in Sussman v. Overlook Hospital Assn., supra. We there said that "it is not essential that plaintiffs be afforded the right to confront and cross-examine witnesses or to be represented by counsel in the presentation of their case. It is within the discretion of the Board of Trustees as to whether counsel may attend the hearing and participate in the proceedings." Our reasons for then so concluding were based on our appreciation of the fact that hospital boards of trustees, being neither courts nor duly constituted administrative agencies would lack the capacity, the experience, the procedural mechanisms and the resources of time, expertise and money necessary to act as a quasi-judicial body. It seemed then, ten years ago, that the burden the hospital would face in conducting that kind of hearing was disproportionate to any increased benefit the physician would thereby obtain. His interests, it then seemed, could be adequately protected by the rather vaguely defined "fair hearing" we then envisioned, where a physician could present his own witnesses but not confront adverse witnesses, and where the hospital's attorney might be present to advise and assist but not the physician's. Sussman, however, must be placed in historical context. It was decided only several years after the landmark opinion in Greisman v. Newcomb Hosp., 40 N.J. 389 (1963), which first subjected the admissions decisions of private hospitals in this State to judicial review at all and was indeed one of the first decisions rendered in this *87 country reaching that conclusion.[4] Accordingly, we initially proceeded cautiously in further defining the scope of the physicians' admissions rights, both substantively and procedurally, and in implementing the relationship between the hospital's discretionary actions and the corrective power of the court in respect thereof. We must, however, continue to respond to the demands of current realities dominating the delivery of health care services.
At the outset, we repeat the predicates upon which the holding in Greisman was based. As Justice Jacobs there concluded, "hospitals are operated not for private ends but for the benefit of the public, and * * * their existence is for the purpose of faithfully furnishing facilities to the members of the medical profession in aid of their service to the public." 40 N.J. at 397-398. This proposition proceeded, of course, from the recognition that doctors need hospitals in which to practice and, accordingly, that the "privilege" of hospital admission is ordinarily a necessary adjunct of the right to practice at all; that patients requiring hospital care ought to be reasonably accommodated in having doctors of their choice attend them, and that hospitals, although privately organized, are nevertheless public agencies in significant particulars, namely in their function, in their financing and in their virtually monopolistic character. Thus, while hospitals were accorded and continue to be accorded substantial discretion in making their admission decisions, nevertheless that discretion, because it is "deeply imbedded *88 in public aspects," must be "exercised reasonably and for the public good." 40 N.J. at 402. That qualification on the discretionary power must, of course, be understood to mean that rejection of an admission application must be based on reasons legitimately related to the hospital's capacity to properly serve the health needs of the community and not motivated either by considerations of the self-interest of the doctors already admitted or by any other arbitrary or discriminatory consideration. A corollary of this limitation of discretion is the obligation of the hospital to give and the right of the physician to receive a specific statement of reasons for a proposed rejection and the opportunity of the physician to be heard if he chooses to challenge that statement. So we held in Sussman, concluding, however, that the opportunity to be heard could be adequately met by a hearing held without legal representation.
The significance of the hearing, both procedurally and substantially, was thereafter accorded new dimension by our Supreme Court in Guerrero v. Burlington Cty. Memorial Hosp., supra. Guerrero not only reaffirmed the principle that "the power to exclude must be reasonably and lawfully exercised in furtherance of the interests of both the public and the medical profession." 70 N.J. at 358. It also demanded, as we have heretofore indicated, that the decision to exclude be based upon substantial credible evidence supporting a legally cognizable reason for exclusion, it being the express intention of the court to apply to the determination of the private hospital precisely the same standard of review applicable to governmental administrative agencies. 70 N.J. at 356. That standard of review affords the hospital a great measure of insulation from successful attack. But it concomitantly imposes upon the hospital a significantly greater burden in respect of the nature of the hearing it is required to afford. In our judgment, the review standard of "substantial credible evidence" cannot but imply that there will first have been a full opportunity for the adducing of favorable evidence, the challenge to adverse evidence and the testing *89 of the credibility, relevance and probative value of evidence. This is not a standard of review which is susceptible of application to decisions reached by means of informal discussions, private interviews, reliance on undisclosed sources, unilateral investigations and the like. And if what is accordingly being reviewed is a record of the marshalling, presentation and testing of facts, then we are speaking in terms of the special and unique skills and training of the lawyer, the benefit of which neither the physician, the hospital nor the reviewing court should be required to forego. The point is that if the repository for the basic factfinding function is to be the hospital itself rather than the court,[5] then it is at the hospital hearing level that counsel must be initially permitted. In our view, it makes no difference whether the physician's right to a hearing derives from the Greisman concept of the public trust and fiduciary obligation imposed on a private hospital or from the consequences of state action deemed to be implicated in respect of hospitals publically funded or receiving financial assistance under the Hill-Burton Act, 42 U.S.C.A. § 291 et seq.[6] See, e.g., Sosa v. Val Verde Memorial Hosp. Bd. of Mgrs., 437 F.2d 173, 174 (5 Cir.1971); Sams v. Ohio Valley Gen. Hosp. Ass'n, 413 F.2d 826, 828 (4 Cir.1969). And see Walsky v. Pascack Valley Hosp., 145 N.J. Super. 393, 407-408 (Ch. Div. 1976). In either event, procedural due process in the conduct of the hearing is required, and we regard the impact of the substantial credible evidence rule of review on the notion of a fair hearing to leave little doubt as to the right to counsel at the mandated hospital hearings.
*90 We are further persuaded that the right to counsel at the hearing is compelled by reason of the nature of the physician's interest in hospital admission. Traditional distinctions between rights and privileges are not here useful and were effectively abandoned in Greisman, supra. As Guerrero also points out:
It is readily apparent that staff privileges for a member of the medical profession are essential to a viable medical practice. This is especially true as to surgeons. Unlike other types of physicians, surgeons must have access to a hospital operating room or they are precluded from practicing the specialty for which they have been trained. [70 N.J. at 355]
State control over the licensing, operation, construction and expansion of hospital facilities imposed by the Health Care Facilities Planning Act of 1971, N.J.S.A. 26:2H-1 et seq. has, at least at present, intensified the staff admission problem. Cf. Walsky v. Pascack Valley Hosp., supra. We appreciate that expulsion by a hospital of a physician already admitted, or the hospital's failure to renew an appointment theretofore made, may have an appreciably greater adverse impact on his professional future than a refusal to admit him in the first instance. But that greater impact should not detract either from the significant interest the physician has in gaining admittance or from the significant adverse impact denial has, both in terms of his present ability to practice medicine and the effect which a denial will have on future applications for admission. The difference in impact, in our view, does not justify a lesser requirement for procedural due process in the admission hearing. We furthermore perceive an anomaly in, for example, affording counsel when a temporary suspension of driving privileges is at stake, Rodriguez v. Rosenblatt, 58 N.J. 281 (1971); cf. In re Arndt, 67 N.J. 432 (1975), and of affording a quasi-judicial hearing participated in by counsel when continued school attendance is at stake, Tibbs v. Franklin Tp. Bd. of Ed., 114 N.J. Super. 287 (App. Div. 1971), aff'd 59 N.J. 506 (1971), but leaving a physician *91 on his own at a factfinding hearing the outcome of which will seriously affect his ability to practice his profession.
We are also satisfied that we will not be imposing an undue practical burden on the hospital by permitting the physician to be represented by counsel should he so desire. As a simple empirical proposition we note first that many hospitals apparently routinely do permit representation by counsel at hearings involving both admission and termination decisions. See Walsky v. Pascack Valley Hosp., supra. And see Duffield v. Memorial Hosp. Ass'n of Charleston, 361 F. Supp. 398 (S.D.W. Va. 1973); Schooler v. Navarro Cty. Memorial Hosp., 375 F. Supp. 841 (N.D. Tex. 1973); Hoberman v. Lock Haven Hosp., 377 F. Supp. 1178 (M.D. Pa 1974); Citta v. Delaware Valley Hosp., 313 F. Supp. 301 (E.D. Pa. 1970); Campbell v. St. Mary's Hosp., 252 N.W.2d 581 (Minn. Sup. Ct. 1977); Application of Shiffman, 35 A.D. 709, 314 N.Y.S.2d 823 (App. Div. 1970); Theissen v. Watonga Municipal Hosp. Bd., 550 P.2d 938 (Okl. Sup. Ct. 1976).[7] We may also assume, in light of the constantly increasing medical-legal complexities, that hospitals are themselves continuously advised by counsel in all areas of hospital administration having legal implications, including the critical processing stages of admission applications. Certainly counsel will be available to hospital hearing committees to assist in the proper implementation of their hearing responsibilities. If lay boards of adjustment, planning boards and local boards of education can operate in this manner, we are satisfied that hospital boards can too.
As to the two remaining claims of plaintiff, the right to pre-hearing discovery and the right to a hearing before the *92 full Board of Trustees, we find considerable merit in the first and none in the second. The discovery problem is simplified by the hospital's concession at oral argument that it intends at the hearing to rely only on such information as it is willing to fully disclose to plaintiff and only upon such witnesses as will appear before the Committee. The hospital's argument is only that it should not be required to disclose those portions of its files in advance of the hearing, undertaking to grant a continuance of the hearing if that course of action should then seem warranted. Any inconvenience, however, which the hospital may suffer by reason of a pre-hearing disclosure is clearly outweighed both by the procedural importance to plaintiff of being able to prepare his response in advance of the hearing and by the extent to which pre-hearing disclosure may expedite the proceedings themselves. See, e.g., Duffield v. Memorial Hosp. Ass'n of Charleston, supra; Christhilf v. Annapolis Emergency Hosp. Ass'n Inc., 496 F.2d 174 (4 Cir.1974); Suckle v. Madison General Hosp., 362 F. Supp. 1196 (W.D. Wis. 1973), aff'd 499 F.2d 1364 (7 Cir.1974). The hospital should now make at least an initial decision as to the information on which it will rely and make such of that information as it has in its possession available to plaintiff forthwith.
As to plaintiff's argument that he is entitled to a hearing by the full Board of Trustees, we need merely point out that delegation of the hearing and recommendation function is a routine and unexceptionable technique employed by administrative agencies and was, in fact, the procedure followed in Guerrero. As long as the Board of Trustees retains the final power of decision we see no impediment to its delegation of the hearing to a committee of its members.
We reverse and remand for entry of judgment consistent herewith.
NOTES
[1] The Department of Surgery had apparently recommended denial of the application on the ground that the community served by the hospital already had adequate coverage for pediatric surgery. That recommendation was given no weight by the Medical Organization Committee, which reviewed the ultimate Medical Staff Committee recommendation, on the ground of its irrelevance "since the staff is `open' and the bylaws of the medical staff currently make no provision for closing any department or division."
[2] The reasons essentially were based on apparent misrepresentations made by plaintiff in his application regarding other of his hospital affiliations and questions raised by doctors at other hospitals regarding plaintiff's "clinical judgment."
[3] Neither party confined himself on this appeal to the procedural question deemed dispositive below but rather briefed and argued the merits of the substantive questions, which both agree require no further factual presentation.
[4] Only a small minority of sister jurisdictions are in accord with the Greisman holding. See Willis v. Santa Ana Community Hosp. Ass'n, 58 Cal.2d 806, 26 Cal. Rptr. 640, 376 P.2d 568 (Sup. Ct. 1962); Bricker v. Sceva Speare Memorial Hosp., 111 N.H. 276, 281 A.2d 589 (Sup. Ct. 1971); Davidson v. Youngstown Hosp. Ass'n, 19 Ohio App.2d 246, 250 N.E.2d 892 (App. Ct. 1969); Woodard v. Porter Hosp., Inc., 125 Vt. 419, 217 A.2d 37 (Sup. Ct. 1966); Silver v. Castle Memorial Hosp., 53 Haw. 475, 497 P.2d 564 (Sup. Ct. 1972); Peterson v. Tucson General Hosp., Inc., 114 Ariz. 66, 559 P.2d 186 (Ct. App. 1976).
[5] Compare, for example, the judicial factfinding as to the reasonableness of a hospital decision to close admissions undertaken in Davis v. Morristown Memorial Hosp., 106 N.J. Super. 33 (Ch. Div. 1969), with the rationale of Guerrero.
[6] There is nothing in the record indicating whether defendant hospital has received Hill-Burton funds.
[7] We are aware of, but for the reasons we have herein set forth disagree with, decisions of sister states finding no right to counsel. See, e.g., Silver v. Castle Memorial Hosp., 53 Haw. 475, 497 P.2d 564 (Sup. Ct. 1972); Anton v. San Antonio Community Hosp., 55 Cal. App.3d 212, 127 Cal. Rptr. 394 (D. App. Ct. 1976). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4222011/ | Case: 16-17014 Date Filed: 11/20/2017 Page: 1 of 2
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-17014
Non-Argument Calendar
________________________
D.C. Docket No. 3:15-cr-00005-CAR-CHW-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARCUS PORTER,
a.k.a. Dirt,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
________________________
(November 20, 2017)
Before MARTIN, JULIE CARNES and JILL PRYOR Circuit Judges.
PER CURIAM:
The Government’s motion to dismiss this appeal pursuant to the appeal
waiver in Appellant’s plea agreement is GRANTED. See United States v. Bushert,
997 F.2d 1343, 1350-51 (11th Cir. 1993) (sentence appeal waiver will be enforced
Case: 16-17014 Date Filed: 11/20/2017 Page: 2 of 2
if it was made knowingly and voluntarily); United States v. Grinard-Henry, 399
F.3d 1294, 1296 (11th Cir. 2005) (waiver of the right to appeal includes waiver of
the right to appeal difficult or debatable legal issues).
2 | 01-03-2023 | 11-20-2017 |
https://www.courtlistener.com/api/rest/v3/opinions/1805516/ | 202 Mich. App. 335 (1993)
508 N.W.2d 175
PEOPLE
v.
TIMS
Docket No. 133334.
Michigan Court of Appeals.
Submitted February 2, 1993, at Lansing.
Decided November 1, 1993, at 9:55 A.M.
Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, Robert E. Weiss, Prosecuting Attorney, Donald A. Kuebler, Chief, Appellate Division, and Edwin R. Brown, Assistant Prosecuting Attorney, for the people.
Jerome F. O'Rourke (Robert D. Goldstein, of Counsel), for the defendant.
*336 Before: FITZGERALD, P.J., and WEAVER and MARILYN KELLY, JJ.
MARILYN KELLY, J.
Following a jury trial, defendant was convicted of negligent homicide. MCL 750.324; MSA 28.556. On appeal, he argues that the trial court erred in instructing the jury that defendant's conduct had to be only "a substantial" cause of the accident rather than "the substantial" cause. We reverse.
The fatal accident in this case occurred while defendant and Bobby Osborn were drag racing. Eyewitnesses estimated their vehicles to be traveling at between 70 and 90 miles per hour. Defendant's vehicle struck and killed the victim approximately three quarters of a mile beyond the start of the race. The victim was hit while running across the street to retrieve a ball. Defendant claimed the race had ended by the time the collision occurred. An accident reconstruction expert estimated that, at the point of impact, defendant was traveling at between 22 and 49 miles per hour. Defendant claimed that the victim ran out in front of his car, his senses impaired from drinking alcohol.
I
The crime of negligent homicide is the killing of a person through an act of ordinary negligence, which only becomes criminal when the victim dies. People v Clark, 171 Mich App 656, 659; 431 NW2d 88 (1988). A decedent's contributory negligence is not a defense to a charge of negligent homicide. People v Clark, 295 Mich 704, 708; 295 NW 370 (1940); People v Richardson, 170 Mich App 470, 472; 428 NW2d 698 (1988). However, the jury may consider the victim's negligence to the extent that it bears on the question of proximate cause or on *337 defendant's negligence. Clark, 295 Mich 708; Richardson, supra.
In this case, the trial court instructed the jury that it could consider the victim's conduct in determining whether defendant's driving was "a substantial" cause of the accident. Defendant argues that the jury instruction should have required a finding that his act was "the substantial" cause of the accident.
There is currently a split of authority in this Court relating to the causal connection necessary to prove vehicular homicide. Some panels have held that a defendant's conduct must be "the proximate" cause of the accident. People v Scott, 29 Mich App 549; 185 NW2d 576 (1971). Others have held that it need be only "a proximate" cause. People v Dolen, 89 Mich App 277; 279 NW2d 539 (1977). The current jury instruction states:
If you find that [named deceased] was negligent, you may only consider that negligence in deciding whether the defendant's conduct was [the/a substantial] cause of the accident. [CJI2d 16.20.]
The commentary notes to CJI2d 16.20 indicate that the trial court must decide whether to follow Scott or Dolen. The phrase "a substantial cause" was taken from Brisboy v Fibreboard Corp, 429 Mich 540, 547; 418 NW2d 650 (1988). There, the Michigan Supreme Court indicated that, when numerous factors produced an injury, one actor's negligence was not a proximate cause unless it was "a substantial factor" producing the injury.
II
Scott relied on the rationale in Commonwealth v *338 Root, 403 Pa 571; 170 A2d 310 (1961). In Root, the Pennsylvania Supreme Court ruled that the tort liability concept of proximate cause has no proper place in prosecutions for vehicular homicide. Id. Scott accepted this holding. Neither Root nor Scott addressed whether the contributory negligence of the decedent could be a defense to vehicular homicide.
Michigan courts have consistently maintained that contributory negligence is not a defense to a charge of negligent homicide. In Dolen, we indicated that the fatal flaw in Scott was the failure to recognize this principle. Dolen, 281. If the existence of another proximate cause of a fatal accident prevents a verdict of guilt against a defendant, contributory negligence is a good defense. Id. The Dolen court found no support for earlier cases holding that a defendant's negligent driving must be "the sole and only proximate cause" of the fatal accident. Id., 280.
III
Other jurisdictions follow the Dolen rationale. See Fioretti v Delaware, 245 A2d 170 (Del, 1968); Connecticut v Alterio, 154 Conn 23; 220 A2d 451 (1966). In Alterio, the Supreme Court of Connecticut recognized that contributory negligence is not a defense to a violation of a motor vehicle criminal homicide statute. The state has the burden to prove that "a proximate cause" of the death was the unlawful acts of the defendant. The state fails to meet its burden only if the conduct of the victim was an independent and efficient cause of his death. See Alterio, 29-30.
In Fioretti, the Delaware Supreme Court recognized that defendant's negligence need not be the *339 sole proximate cause of the fatal accident. Fioretti, 171. It is sufficient if the negligence was "one" of the proximate causes. Id.
IV
We agree with the rationale advanced in Dolen, Fioretti, and Alterio. We believe that a defendant's conduct need not be the proximate or "the substantial" cause of an accident. Instead, it is enough that his conduct be a proximate or "a substantial" cause.
Instructing a jury that the defendant's conduct was "a substantial" cause of the accident prevents the jury from excusing the defendant's negligence if the victim is contributorily negligent. Such an instruction also allows the jury to look at the victim's conduct to determine if the defendant's conduct was "a substantial" cause of the fatal accident. For example, a jury could conclude that the defendant's conduct was not "a substantial" cause of the accident if: (1) the victim's conduct was an intervening and superseding cause of the accident which the defendant could not foresee, or (2) the victim's conduct was the sole and only proximate cause of the injury. See Clark, 171 Mich App 659; Scott, 555.[1]
V
Although we recognize that this Court has created a conflict on this issue, we are precluded from *340 resolving it. No conflict exists on the issue within the Michigan Supreme Court. According to our Supreme Court, in order for a defendant to be convicted of vehicular homicide, his conduct must be "the proximate cause" of the death. People v Layman, 299 Mich 141, 145; 299 NW 840 (1941); People v Townsend, 214 Mich 267, 275; 183 NW 177 (1921); People v Barnes, 182 Mich 179, 199; 148 NW 400 (1914). We are bound by the doctrine of stare decisis and are powerless to overturn a decision of the Michigan Supreme Court. Schwartz v Flint (After Remand), 120 Mich App 449, 462; 329 NW2d 26 (1982), rev'd on other grounds 426 Mich 295; 395 NW2d 678 (1986).
Reluctantly, we must reverse and remand. On remand, we instruct the trial court that the jury instructions should read "the substantial" not "a substantial" cause. However, we urge our Supreme Court to take up this issue and clarify CJI2d 16.20, because we believe the better reasoned approach is found in Dolen, Fioretti and Alterio.
Reversed.
WEAVER, J. (concurring).
I join in the result only of the lead opinion and agree with it in urging the Supreme Court to resolve this issue. The confusion created by the recent Court of Appeals cases[1] conflicting with the older Supreme Court cases[2] is reflected in the jury instruction, which states:
If you find that [named deceased] was negligent, you may only consider that negligence in deciding whether the defendant's conduct was [the/a substantial] cause of the accident. [CJI2d 16.20.]
*341 FITZGERALD, P.J. (concurring).
I agree with Judge MARILYN KELLY's ultimate resolution of this case. I write separately, however, because I do not agree with the conclusion that in order for a defendant to be convicted of vehicular homicide, his conduct must be "a" proximate cause of the death. People v Dolen, 89 Mich App 277; 279 NW2d 539 (1977). I believe that the defendant's conduct must be "the" proximate cause of the death. People v Layman, 299 Mich 141, 145; 299 NW 840 (1941). Thus, I would follow People v Scott, 29 Mich App 549; 185 NW2d 576 (1971).
NOTES
[1] In Clark, a panel of this Court indicated that, to exonerate a defendant on a negligent homicide charge, the victim's contributory negligence must be "a substantial" factor causing the injury. Clark, 659-660. We disagree with this ruling. Allowing the defendant to be exonerated if the victim's negligence was "a substantial" factor would mean that contributory negligence is a good defense to negligent homicide. See Dolen, supra.
[1] People v Dolen, 89 Mich App 277; 279 NW2d 539 (1977), and People v Abramczyk, 163 Mich App 473; 415 NW2d 249 (1987).
[2] People v Barnes, 182 Mich 179; 148 NW 400 (1914), People v Townsend, 214 Mich 267; 183 NW 177 (1921), and People v Layman 299 Mich 141; 299 NW 840 (1941). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1805517/ | 59 B.R. 276 (1986)
In re Clinton RHYNE and Anna Rhyne, Debtors.
Clinton RHYNE and Anna Rhyne, Plaintiffs,
v.
Mamie CUNNINGHAM, Individually and as Administratrix of the Estate of Jeffrey Cunningham, Deceased, and James R. Moyles, Esquire, and Feinberg & Silva, Defendants.
Bankruptcy No. 84-01956G, Adv. No. 85-0413G.
United States Bankruptcy Court, E.D. Pennsylvania.
April 8, 1986.
*277 Eric L. Frank, Community Legal Services, Inc., Philadelphia, Pa., for debtors/plaintiffs, Clinton Rhyne and Anna Rhyne.
James R. Moyles, Philadelphia, Pa., for James R. Moyles, defendant.
Felix P. Gonzalez, Feinberg & Silva, Philadelphia, Pa., for defendants, Mamie Cunningham, Individually and as Administratrix of the Estate of Jeffrey Cunningham, Deceased, and Feinberg & Silva.
Samuel M. Brodsky, Philadelphia, Pa., trustee.
OPINION
EMIL F. GOLDHABER, Chief Judge:
The issue under scrutiny is whether a creditor who violates the permanent injunction of 11 U.S.C. § 524(a) of the Bankruptcy Code ("the Code") barring the collection of a discharged debt, may be held in civil contempt for that conduct and be surcharged attorneys' fees. We hold that a violation of § 524(a) may be redressed through contempt and the exaction of attorneys' fees.
We summarize the facts of this case as follows:[1] Several years ago Mamie Cunningham ("Cunningham") commenced in state court, through her counsel, James R. Moyles ("Moyles"), of the firm of Feinberg & Silva ("Feinberg"), a wrongful death action against the debtors and Anthony Rhyne. The debtors then filed for relief under chapter 7 of the Code. During the pendency of the state court action the debtors' counsel informed Moyles and the state court that the chapter 7 petition had been filed. Several months later we granted the debtors a discharge of their debts. Notwithstanding the entry of said discharge, Moyles thereafter proceeded to trial in state court and obtained judgment against the debtors.
The debtors filed the instant complaint requesting that the judgment be stricken, that the defendants be held in contempt and that in the contempt action the defendants *278 be held liable to the debtors for attorneys' fees. The complaint was served on Cunningham and Feinberg & Silva, but not on Moyles. After the date for answering the complaint had passed without an answer being filed by the defendants, the debtors filed a praecipe for the entry of default. Several days later the defendants answered the complaint and filed an "answer to plaintiffs' motion for the entry of judgment by default" although no motion for such relief had previously been filed. At that time the defendants also filed a praecipe in state court to mark satisfied the judgment against the debtors. The judgment against Anthony Rhyne apparently remains outstanding. The debtors then filed a motion requesting default judgment, or in the alternative, summary judgment in the instant matter.
On the filing of a petition for relief under the Code, a stay automatically arises to bar certain debt collection efforts against the debtor, his property and property of the bankruptcy estate. 11 U.S.C. § 362(a). The later entry of an order of discharge operates as a permanent injunction against the collection of discharged debts. 11 U.S.C. § 524(a).[2] The continuation of a law suit to reduce a claim to judgment violates both the automatic stay of § 362(a)(1) and the permanent injunction of § 524(a)(2).
Actions taken in violation of the automatic stay are generally void. Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (1940); Borg-Warner Acceptance Corp. v. Hall, 685 F.2d 1306, 1308 (11th Cir.1982); Emerson Quiet Kool Corp. v. Marta Group, Inc. (In re Marta Group, Inc.), 33 B.R. 634, 639 (Bankr.E.D. Pa.1983). Violation of the automatic stay may be redressed through an action for civil contempt. Fidelity Mortgage Investors v. Camelia Builders, Inc., 550 F.2d 47, (2d Cir.1976), cert. den., 429 U.S. 1093, 97 S.Ct. 1107, 51 L.Ed.2d 540 (1977). Since the proscription of § 524(a) is, like § 362(a), an injunction, we hold that transgressions against § 524(a) may also be vindicated in a proceeding for civil contempt. Jones v. Jones (In Re Jones), 38 B.R. 690 (Bankr. N.D. Ohio 1983); Whitaker v. Lockert (In Re Whitaker), 16 B.R. 917, 923 (Bankr.M.D. Tenn.1982); In Re Holland, 21 B.R. 681 (Bankr.N.D.Ind.1982); In Re Batla, 12 B.R. 397 (Bankr.N.D.Ga.1981); 3 Collier on Bankruptcy § 524.01, p. 524-9 (15th ed.1985).
The violation of an injunction will not support a finding of contempt in all cases. Porter v. Goodyear Employees Credit Union (In Re Porter), 25 B.R. 425, 427 (Bankr.D.Vt.1982); Springfield Bank v. Caserta (In Re Caserta), 10 B.R. 57 (Bankr.S.D.Ohio 1981). Also, "a person cannot be held in contempt of an order about which the person had no knowledge." Camelia, 550 F.2d at 51. In order to prevail on an action for contempt the moving party must prove his case by clear and convincing evidence rather than by the usual standard of a preponderance of the evidence. Schauffler v. Local 1291, International Longshoremen's Ass'n, 292 F.2d *279 182 (3d Cir.1961); Quniter v. Volkswagen of America, 676 F.2d 969, 974 (3d Cir.1982). As the United States Court of Appeals for the Third Circuit stated:
The plaintiff has a heavy burden to show a defendant guilty of civil contempt. It must be done by clear and convincing evidence, and where there is ground to doubt the wrongfulness of the conduct of the defendant, he should not be adjudged in contempt.
Quinter, 676 F.2d at 974 (quoting Fox v. Capital Co., 96 F.2d 684, 686 (3d Cir.1938). "Each violation of the stay must be considered in its entirety, with due consideration given to the underlying facts, prior to a finding of contempt." Ramage v. Ramage (In Re Ramage), 39 B.R. 37, 39 (Bankr. E.D.Pa.1984). "The power of contempt should generally be reserved for action evincing a contumacious frame of mind." Id.; Revere Copper Products, Inc. v. Hudson River Sloop Clearwater, Inc. (In Re Revere Copper and Brass, Inc.), 29 B.R. 584, 589 (Bankr.S.D.N.Y.1983); Mack v. Com. of Pennsylvania Dept. of Public Welfare (In Re Mack), 46 B.R. 652, 657 (Bankr.E.D.Pa.1985); In Re Ram Mfg. Inc., 45 B.R. 663, 667-68 (Bankr.E.D.Pa.1985).
Applying these authorities to the instant case, we conclude that Moyles, a person learned in the law, violated § 524(a) by continuing with the state court suit, knowing that the debtors had filed their chapter 7 petition. Although no judgment can be entered against Moyles since he was not served with the complaint, his actions are attributable to his firm and it can be held liable.
As to Moyles' client, Cunningham, there is no evidence of record indicating that she directed Moyles to take his contemptuous course or that she even knew of it. Thus, as to Cunningham, the motion for summary judgment must be denied. Although Cunningham did not timely answer the debtors' complaint, we will also deny the debtors' motion for default judgment against her since the United States Court of Appeals for the Third Circuit has voiced its reluctance to the entry of that form of relief. Hritz v. Woma Corp., 732 F.2d 1178 (3d Cir.1984).[3]
We have rejected Feinberg's argument against the imposition of liability on its proffered basis that neither the defendants nor the state court had "proof" of the filing of the debtors' petition. By proof, Feinberg apparently means a certified copy of the bankruptcy petition or the discharge order. Feinberg has attempted to brace his position with the assertion that the state court would have dismissed the action against the debtors if the requisite "proof" had been presented. We conclude that Feinberg's stance is meritless since actual knowledge of the filing of the petition and concomitant knowledge of the stay are sufficient bases from which to conclude that a party knowingly violated the stay. Receipt of formal, certified documents evincing the filing of the petition is not necessary.
We will, accordingly, enter an order granting the motion for summary judgment against Feinberg but deny such relief against Cunningham. With this entry of judgment against Feinberg for civil contempt, we will also hold the partnership *280 liable to the debtors for attorneys' fees and in our order we will schedule a hearing to determine the amount of the award. Since the debtors admit that Moyles was never served with the complaint, we will sua sponte dismiss the complaint against him.
NOTES
[1] Under Fed.R.Civ.P. 56, which is applicable through Bankruptcy Rule 7056, summary judgment can be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The U.S. Court of Appeals for the Third Circuit has characterized summary judgment as "a drastic remedy," and has stated "that courts are to resolve any doubts as to the existence of genuine issues of fact against the moving parties." Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981). "Inferences to be drawn from the underlying facts contained in the evidential sources submitted to the trial court must be viewed in the light most favorable to the party opposing the motion." Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir.1976), cert. den., 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). Nonetheless, in opposing a motion for summary judgment "an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing there is a geniune issue for trial." Fed.R.Civ.P. 56(e).
[2] § 524. Effect of discharge
(a) A discharge in a case under this title
(1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, or 1328 of this title, whether or not discharge of such debt is waived.
(2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived; and
(3) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect or recover from, or offset against property of the debtor of the kind specified in section 541(a)(2) of this title that is acquired after the commencement of the case, on account of any allowable community claim, except a community claim that is excepted from discharge under section 523 or 1328(c)(1) of this title, or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of this title, in a case concerning the debtor's spouse commenced on the date of the filing of the petition in the case concerning the debtor, whether or not discharge of the debt based on such community claim is waived.
11 U.S.C. § 524(a).
[3] It is well settled in this Circuit that the entry of a default judgment is left primarily to the discretion of the district court. As Justice Harlan explained in the parallel context of sanctions for failure to prosecute a claim, a trial court's discretion to dismiss a complaint is a power of "ancient origin" that has generally been considered an "inherent power," governed not by rule or statute but by the control necessarily vested in courts to manage their own affairs so as to achieve the orderly and expeditious disposition of cases. Link v. Wabash Railroad Co., 370 U.S. 626, 629-31, 82 S.Ct. 1386, 1388-89, 8 L.Ed.2d 734 (1962). This discretion is not without limits, however, and we have repeatedly stated our preference that cases be disposed of on the merits whenever practicable.
Between the extremes of repeated contumacious conduct and innocent procedural error are the manifold instances of neglect and inadvertence that require trial courts to weigh the equities of the situation and the need for the efficacious resolution of controversies. The exercise of such judgment does not lend itself to a rigid formula or to a per se rule.
Hritz v. Woma Corp., 732 F.2d at 1180-81 (some cites omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1872961/ | 116 So.2d 269 (1959)
238 La. 614
Ella Townsen CLEMENT
v.
SNEED BROTHERS et al.
No. 44222.
Supreme Court of Louisiana.
December 14, 1959.
*270 McClendon & Benton, Minden, Hargrove, Guyton & Van Hook, Shreveport, for defendants-appellants.
Roy M. Fish, Springhill, for plaintiffs-appellees-respondents.
McCALEB, Justice.
The original plaintiff, Ella Townsen Clement, sued defendants for cancellation of an oil and gas lease covering her property *271 and for the damages she sustained by reason of their failure to drill a well. After a trial on the merits, but before judgment, Mrs. Clement died and the administrator of her succession was substituted as party plaintiff. Judgment was subsequently rendered cancelling the lease and awarding the administrator $60,000 damages, from which judgment defendants prosecuted this appeal.
On June 29, 1959 the four heirs of Mrs. Clement were sent into possession of her estate. Shortly thereafter, two of these heirs transferred their interest in the pending litigation to one James B. Branch, Jr. and notified defendants by letter of this transfer, stating that the consideration therefor was $5,062.50.
By order of this Court dated July 13, 1959, the four heirs of Mrs. Clement were substituted as plaintiffs-appellees and, on the same date, another order was issued substituting Branch as party plaintiff for the two heirs whose interest he had purchased.
On September 14, 1959 defendants filed a motion to remand the cause to the district court so that they could institute proceedings for the purpose of paying Mr. Branch for the litigious rights acquired by him and obtain from him the release provided for in Article 2652 of the Civil Code, which reads as follows:
"He against whom a litigious right has been transferred, may get himself released by paying to the transferree the real price of the transfer, together with the interest from its date".
The two plaintiffs who have not assigned their interest, joined by Branch, made written reply to the motion urging certain objections thereto and further declared that a remand of the case would be inequitable with respect to the plaintiffs who have not sold their interest, as the appeal would lose its preference position on the docket of this Court and its disposal would thereby be unseasonably delayed.
Defendants' right to a remand of the cause for the purposes set forth in their motion is well settled in our jurisprudence, the cases holding that the privilege conferred by Article 2652 of the Civil Code to a party against whom a litigious right has been transferred may be exerted pendente lite, either in the lower court or on appeal, provided it will end the litigation. Smith v. Cook, 189 La. 632, 180 So. 469 and authorities there cited. Of course, a remand in this case will not end the litigation completely, since the rights of plaintiffs who have not transferred their interest to Branch remain unaffected. However, it suffices that the right which may be availed of by defendants will end the suit insofar as Branch is concerned, it having been held in Smith v. Cook that a defendant may invoke the provisions of Article 2652 when some, but not all, of the plaintiffs have sold their interest in the litigation.
On the other hand, it is equally well established that the party seeking to redeem the litigious right must be reasonably prompt in making known his intention and that, if after learning of the transfer he continues to contest the suit and protracts the litigation, he will not be permitted to redeem because he has, by his conduct, defeated one of the objects of Article 2652, which is the prevention of unnecessary litigation. Leftwich v. Brown, 4 La.Ann. 104; Pearson v. Grice, 6 La.Ann. 232; Rhodes v. Hooper, 6 La.Ann. 355; Salbadore v. Crescent Mut. Ins. Co., 22 La.Ann. 338; Evans v. DeL'isle, 24 La.Ann. 248 and Crain v. Waldron, 210 La. 561, 27 So. 2d 333.
Plaintiffs contend that defendants have not acted timely since they received notice of the transfer on July 9, 1959 and did not take action until September 14, 1959, when they filed the motion now under consideration.
There may be instances in which a delay of two months before taking action would be considered as untimely. But this is not true under the facts of this case. Defendants have not taken affirmative action inconsistent with the right they invoke. Nor *272 can the fact that they permitted a two-month period to elapse from the date they were informed of the transfer to the date of the filing of their motion preclude them from asserting their right under Article 2652 of the Code. So long as the delay does not serve to prolong the litigation, it is improper to say that the party has perferred to continue the lawsuit rather than to take advantage of his right under the codal article.
Plaintiffs also assert that the two heirs who transferred their interests to Branch were compelled to do so because defendants had refused to compromise separately with them and that, under these circumstances, defendants are not entitled to a remand of the case.
We see no merit in the point. The object of Article 2652 of the Code, as stated in Smith v. Cook, supra [189 La. 632, 180 So. 473], "* * * was primarily `to prevent the purchasing of claims from avarice or to injure the debtor * * *'" and also "* * * to favor the party against whom the matter in litigation is transferred over one who speculates in law suits". Hence, it matters not that defendants refused to compromise separately with Branch's transferrors as this affords no ground for denying defendants their legal rights.
Plaintiffs declare that defendants' motion should be denied since they have not alleged a tender of the price Branch paid for the litigious rights and also because they have not unequivocally pleaded that they will pay him the real price of the transfer, together with interest.
These contentions have no substance. Defendants cannot be required to redeem the litigious right until they are able to ascertain "the real price of the transfer" as provided by Article 2652. The situation here is unlike that obtaining in Winchester v. Cain, 1 Rob. 421; Pearson v. Grice, supra; Rhodes v. Hooper, supra; Crain v. Waldron, supra and other matters in which the transfer of the litigious right was made while the case was pending before the district court. In such cases, evidence may be immediately received to establish "the real price" of the litigious right. Then a tender can be made at that time as is required (see Crain v. Waldron, supra) and the proper litigants released by the Court.
Conversely, if the litigious right is transferred after judgment of the district court, as in this case, the party seeking the benefit of the codal article has no way of being legally certain of the real price of the transfer unless the case is remanded and evidence of such price is adduced, since he cannot be sure that the price stated by his adversary was the price actually paid.
Finally, the two plaintiffs who have not transferred their interest assert that, if we grant the motion to remand, they will be denied the right of having this litigation concluded in its ordinary course for the reason that the remand will occasion a delay in the hearing of the appeal.
This plea is impressive and we think it our duty to obviate any undue delay in the hearing of the appeal which may be sustained as a result of the remand. While we cannot deny defendants' legal right to a remand or hear the case in this Court until defendants are able to determine whether they will redeem the litigious right purchased by Branch, we believe that the remand of the case for the limited purpose of hearing the evidence respecting the real price of the transfer and the exercise by defendants of their rights can be completed and the record returned to this Court within sixty days from the finality of our order. To facilitate compliance, the trial judge is instructed to hear the evidence as soon as possible, when the record is returned for the restricted purpose hereinabove stated. Meanwhile, the appeal will remain in its present position on the preference docket of this Court.
It is therefore ordered that this case be remanded to the lower court so that evidence may be adduced respecting the real price of the transfer to James B. Branch, *273 Jr. so that defendants may elect, if they desire, to release themselves from any liability to said Branch in accordance with the provisions of Article 2652 of the Civil Code, provided that the record is returned to this Court not later than sixty days from the finality of this decree. Taxation of costs of this remand is to be delayed until final disposition of the case insofar as the interest of Branch is affected. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3090527/ | NUMBER 13-12-00762-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI - EDINBURG
IN RE CLAUDIA MARTINEZ AND JUAN MARTINEZ
On Petition for Writ of Mandamus.
MEMORANDUM OPINION
Before Chief Justice Valdez and Justices Rodriguez and Longoria1
Per Curiam Memorandum Opinion
Relators, Claudia Martinez and Juan Martinez, filed a petition for writ of
mandamus and motion for immediate temporary relief in the above cause on December
18, 2012. The Court granted the motion for immediate temporary relief, and requested
and received a response to the petition for writ of mandamus from the real party in
interest, Lone Star National Bank.
The Court, having examined and fully considered the petition for writ of
mandamus and the response thereto, is of the opinion that the petition for writ of
1
The Honorable Rose Vela, former Justice of this Court, did not participate in this opinion
because her term of office expired on December 31, 2012. In accordance with the appellate rules, she
was replaced on panel by Justice Nora Longoria. See TEX. R. APP. P. 41.1(a).
mandamus should be denied. Accordingly, the stay previously imposed by this Court is
LIFTED and the petition for writ of mandamus is DENIED. See TEX. R. APP. P. 52.4,
52.8, 52.10(b).
PER CURIAM
Delivered and filed the 3rd
day of January, 2013.
2 | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1150264/ | 531 So. 2d 982 (1988)
FORD MOTOR CREDIT COMPANY, Appellant,
v.
ALACHUA TRADING COMPANY, INC., & Raymond G. Ross, Appellees.
No. 87-1987.
District Court of Appeal of Florida, First District.
August 22, 1988.
Rehearing Denied October 24, 1988.
*983 Harry B. Mahon, of Mahon, Farley & McCaulie, Jacksonville, for appellant.
No appearance for appellees.
WENTWORTH, Judge.
Appellant seeks review of a declaratory judgment determining that appellees retain title to an automobile and appellant may not declare its financing contract breached. Appellant contends that its security interest has been impaired so as to constitute a breach of the agreement under section 672.609, Florida Statutes. We find that appellant has not complied with the statutory procedure to obtain assurance of performance, and we therefore affirm the order appealed.
Appellant holds an installment financing contract for a motor vehicle purchased by appellees. This vehicle was seized by the United States Drug Enforcement Agency and returned to appellant with instructions that it would again be confiscated and not returned should appellant release the vehicle to appellees. The vehicle was seized in connection with an alleged illegal drug transaction after it was loaned to a third party by appellees, and at the time of seizure all payments due under the financing contract were current. Appellant sought a declaratory judgment as to whether it may declare the contract breached, asserting that its security has been impaired by the potential for reseizure of the vehicle. Appellees requested that the vehicle be returned to them, asserting that the government has effectively abandoned its claim to the vehicle. The lower court agreed, and declared that appellant may not deem the contract breached.
In ruling that the government has abandoned its claim the court relied upon State v. Motlow, 76 S.W.2d 417 (Mo. 1934), affirmed 295 U.S. 97, 55 S. Ct. 661, 79 L. Ed. 1327 (1935). Motlow addressed the ownership and taxation of property which had been seized by the government and subsequently released upon substitution of a cash bond in lieu of forfeiture. These circumstances are not involved in the present case, and the decision in Motlow does not foreclose the government from asserting a claim of forfeiture in this instance.
While Motlow is not controlling, the government's power to assert a claim of forfeiture may be subject to time limitations. See Western Pacific Fisheries Inc. v. S.S. President Grant, 730 F.2d 1280 (9th Cir.1984); see also United States v. One 1973 Buick Riviera Automobile, 560 F.2d 897 *984 (8th Cir.1977). But even were the government precluded from pursuing forfeiture for the prior drug transaction, the government could still pursue forfeiture in the future for any subsequent drug transaction. In that event an innocent lien holder with a perfected security interest could seek a return of the property through remission or mitigation of forfeiture. See United States v. One 1980 Chevrolet Corvette, 564 F. Supp. 347 (D.N.J. 1983). But a party seeking remission or mitigation must show that it had no knowledge or reason to believe that the property would be used in violation of the law. 28 C.F.R. section 9.5(c). And a forfeiture might be successfully challenged by an appropriate party who did all that it reasonably could to avoid having the property put to an unlawful use. See generally, United States v. One 1976 Lincoln Mark IV, 462 F. Supp. 1383 (D.C.W.D.Pa. 1979); accord, Astol Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 94 S. Ct. 2080, 40 L. Ed. 2d 452 (1974). However, such a claim has been denied where a vehicle was seized in connection with narcotics violations by a permissive user known to the owner to have a record of such violations. See e.g., United States v. One 1976 Buick Skylark, 453 F. Supp. 639 (D.Col. 1978).
The potential for a forfeiture claim as to the vehicle, and appellant's knowledge that the vehicle was used in connection with a drug transaction, prompts appellant's concern for its security interest. Section 672.609, Florida Statutes, authorizes a demand for assurance of performance when grounds for insecurity arise. If a demand is made and adequate assurance is not forthcoming the aggrieved party may then treat the contract as breached by repudiation. See Central Oil Co. v. M/V Lamma-Forest, 821 F.2d 48 (1st Cir.1987); section 672.609(4), Florida Statutes. But appellant seeks to deem the contract breached under the statute without having sought any assurance of performance in accordance with the statutory procedure. We do not address the question of what assurance might be sufficient in these circumstances, but we conclude that appellant may not ignore the statutory procedure. Appellant's failure to comply with section 672.609 precludes a declaration of breach.
Although we reject the lower court's finding that State v. Motlow, supra, is controlling, we agree that appellant may not treat the contract as breached. We therefore affirm the order appealed.
ERVIN and BOOTH, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1743139/ | 511 So. 2d 939 (1987)
Elizabeth F. UPTON, Administratrix of Estate of Jeffery Leonard Faggard, Deceased,
v.
MAGNOLIA ELECTRIC POWER ASSOCIATION.
No. 57054.
Supreme Court of Mississippi.
August 19, 1987.
*940 Garland D. Upton, Columbia, for appellant.
J.W. Land, Bryan, Nelson, Allen Schroeder & Randolph, Hattiesburg, for appellee.
Before ROY NOBLE LEE, P.J., and PRATHER and ROBERTSON, JJ.
ROBERTSON, Justice, for the Court:
I.
This wrongful death action arises out of a fatal electrocution accident as a young high school graduate encountered a power line on his grandmother's property. Though the dead boy's mother has sued the power company, the evidence wholly failed to show that the lines or the electricity were owned by the power company or that it negligently did or failed to do anything that caused the fatal accident.
The trial court granted the power company's motion for a directed verdict. We affirm.
II.
Jeffery Leonard Faggard was born September 29, 1963. On Friday, May 29, 1981, he graduated from Tylertown High School. Five days later he was dead.
Jeff was living with his grandmother, Mrs. J.L. Bullock, in rural Walthall County, Mississippi. On Wednesday afternoon, June 3, 1981, Jeffery decided that he would electrify the fencing around the pen he had built for his deer dogs. He was working alone. At approximately 4:20 p.m. Jeff was found lying on the tin roof of a shed, adjacent to the dog pen, in the backyard. He was bare chested, with his body from the waist up hanging down between two wires that came to the front of the building. Jeff had been electrocuted.
Magnolia Electric Power Association (MEPA) supplied electricity to the Bullock home. The wiring bringing electrical current to the Bullock home is set forth in a configuration or schematic drawing attached hereto as Appendix A. In 1955 the wiring had been originally set up so that electricity was fed from MEPA's nearby transformer ("A") through a pole meter on a pole ("B") in the Bullock's back yard. From this pole meter, electricity was then fed to the Bullock home ("C"), a smoke-house in the back yard (Shed No. 1) and a brooder house (Shed No. 2) in the back yard, upon which Jeff was found dead.
Sometime between the initial installation of the pole meter and Jeff's accident, the meter had been removed and placed on the Bullock home. MEPA had not made this change. When the meter was moved, the wiring at the pole meter, which apparently had theretofore run through breakers in the meter base, was re-routed so that it did not pass through any breakers. This wiring had made it impossible to turn the electricity off going to the buildings in the back yard without turning the transformer off. The wires between which Jeff was found ran from a pole in the back of the smoke-house ("D"), which was fed by wiring from the pole ("B") upon which the meter had been originally installed. And, the rear of the building upon which Jeff was found was used as a support for chicken wire on the side of the dog pen next to the building. The chicken wire extended from the ground to just under and in contact with the flat tin roof of the building, making a ground. This means that the metal roof of the building would complete the grounding circuit if a "hot" wire came in contact with it, creating a very dangerous situation.
The transformer ("A") wire extending to the original meter pole ("B") belonged to MEPA. All of the remaining wiring, including *941 the wiring Jeff fatally encountered, belonged to the Bullocks and had been installed by the Bullocks.
In any event, on April 20, 1984, Jeff's mother, Elizabeth F. Upton, acting as administratrix of his estate, filed a wrongful death claim against MEPA in the Circuit Court of Marion County, Mississippi, alleging that MEPA had been negligent and seeking $5,000,000.00 in damages. Upton charged that Jeff's electrocution was the direct result of improper installation and connection of electric wires by MEPA which were connected directly to the wiring which Jeff came into contact with and caused his death.
In due course the case was transferred to the Circuit Court of Pike County, Mississippi, where trial was held on October 10, 1985.
At trial, Upton first called Hubert Wood, a service man for MEPA, who described the scene of the accident upon his arrival June 3, 1981. When Wood arrived that day, he found that the pole meter had long ago been disconnected and installed on the house, but the meter had been pulled off the house and placed on the ground. He described where the pole meter and meter base had once been located, and how the wiring had been changed so that the electricity to the buildings in the back yard could not be cut off with the breaker located in the meter base. Wood testified that MEPA had not moved the pole meter. Wood explained that the power company owned all the wiring up to the pole meter and that the power company owned the electricity until it passed through the customer's meter. He conceded that MEPA's meter reader reasonably should have noticed the (unauthorized) removal of the pole meter.
Elizabeth Upton then testified about an incident occurring February 11, 1976, which she later argues is indicative of MEPA's negligence. Specifically, she testified that her father and Jeff were pruning fruit trees and she was carrying the cut limbs to a pile to burn. She walked under the power lines that went to the building upon which Jeff was killed, and some of the limbs touched the wires and fire shot everywhere. The lights in their house went out, and they were unable to turn the electricity on by throwing the switches, so they called the power company. Two men from the power company came out, walked around and looked at all the wires and flipped something on the transformer located on a nearby pole and the lights came back on. She testified that was all the employees of the power company did. She later argues that the power company was negligent, via these employees, because they should have recognized a dangerous condition and remedied such condition at that point in time. Elizabeth also testified about Jeff's reason for being in the backyard that afternoon, and that he had no knowledge of electricity other than knowing how to trip the multi-breaker.
O.D. Martin, a neighbor of Mrs. J.L. Bullock, testified that on the afternoon of June 3, 1981, he went to the Bullock home pursuant to a call from Mrs. Bullock to come quickly. Upon his arrival, Martin saw Jeff lying on the tin roof looking as if he were already dead. Martin testified that in an attempt to cut the power off, he pulled the meter off the house power box and placed it on the ground. By this time, another neighbor, Buford Pigott, had arrived and together they cut the wires going to the building upon which Jeff was lying. Pigott also testified, substantiating Martin's testimony.
Upton's last witness was Robert E. Briggs, a consultant electrical engineer, was offered as an expert in electrical engineering. Upton's counsel posed Briggs a hypothetical question regarding whether the hookup to the Bullock home, with the pole meter removed and installed on the house, and with the wiring at the pole meter site route as it was the day of the accident, was a proper service connection. Briggs testified that in his opinion it was not. However, Briggs testified on cross-examination that, if the meter was on the pole and the wiring ran through the breakers in the meter base and the weatherhead[1]*942 atop the meter pole was the only hookup, then the service connection would be normal and proper.
Significantly, Briggs substantiated Wood's previous testimony pertaining to ownership and control of the wiring and electricity. Briggs testified that, typically, the power company owns wiring up to the weatherhead at the service point or, in other words, at the point of delivery, and that the power company owned the electricity until it passed through the customer's meter. Briggs also described safety requirements of the National Electrical Safety Code.
The Defendant's case-in-chief consisted of one witness, Evonne Martin, wife of O.D. Martin, who testified on behalf of Upton. Evonne testified that she followed her husband to the Bullock home on the evening of June 3, 1981, and upon arrival saw Jeff lying between two wires on the tin roof of the building in the back yard.
At the close of all the evidence, MEPA renewed its motion for a directed verdict. See Rule 50, Miss.R.Civ.P. The court asked Upton's attorney what specific act of negligence by the Defendant caused the death of the deceased. Upton's counsel responded that MEPA permitted electricity to flow through lines to the Bullock home, and the power company should have recognized a dangerous condition existed when it visited the Bullock home back in 1976. The Circuit Court sustained MEPA's motion for directed verdict, holding:
[T]he Plaintiff has to prove not only that the Defendant was negligent in some way, but that that negligence, if any, proximately caused or contributed to the injury producing the death of this young man. The evidence indicates that there was by somebody I don't know who, but by somebody there was apparently an intentional shorting of the meter base by connecting the wires to the source lugs and that there was no meter in that meter base out at the pole. And then the power ran to the meter box at the house, where there was a meter. Now, the evidence if that was negligence there has not been one iota of evidence introduced to show that that negligence, if any, caused or contributed to in any way the untimely death of Jeffrey Leonard Faggard. It's true that it was apparently electricity that caused his death, and it's true that electricity was supplied to the home by the Magnolia Electric Power Association, but their responsibility ends somewhere, and by law it ends once that power goes through the meter. It becomes the customer's electricity, and there is no way that I know of that any electric power association can prevent the users of their electricity from doing certain things that are extremely hazardous to their own health, such as, trying to rig up an electric fence while lying on a metal building. So I just don't feel that there has been sufficient evidence introduced upon which a judgment could be based by a reasonable jury and so, therefore, I'm going to sustain the motion of the Defendant, and will have to dismiss the case... .
On October 12, 1985, the Circuit Court entered final judgment dismissing Upton's complaint with prejudice. Upton now brings this appeal.
III.
A.
Upton's sole assignment of error challenges the correctness of the Circuit Court's granting of MEPA's motion for a directed verdict. Upton urges that the evidence was sufficient that a jury issue was created with respect to her charge that MEPA had been negligent and that such negligence had proximately caused her son's death. She argues, accordingly, that the Circuit Court should have overruled the motion for directed verdict and submitted the case to the jury.
When considering such an issue on appeal, we must keep in mind the standards the Circuit Court must employ. When the defendant moves for a directed verdict at the close of the plaintiff's case-in-chief, the circuit court must consider the evidence *943 before it at that time in the light most favorable to the plaintiff, giving the plaintiff the benefit of all favorable inferences that may reasonably be drawn from that evidence. See Dale v. Bridges, 507 So. 2d 375, 377 (Miss. 1987); Jones v. Hatchett, 504 So. 2d 198, 205 (Miss. 1987); Collins v. Ringwald & Godard, 502 So. 2d 677, 678 n. 1-79 (Miss. 1987); Baker Service Tools, Inc. v. Buckley, 500 So. 2d 970, 971-72 (Miss. 1986); Rucker, Stubbs Trucking v. Hopkins, 499 So. 2d 766, 770 (Miss. 1986); Roosevelt Smith v. Estate of Louis Gilbert, 498 So. 2d 823, 825 (Miss. 1986); White v. Hancock Bank, 477 So. 2d 265, 268-69 (Miss. 1985); Paymaster Oil Co. v. Mitchell, 319 So. 2d 652, 657 (Miss. 1975).
The same standard applies to motions for directed verdict or, as they were formerly called, requests for peremptory instructions, made at the close of all the evidence and to motions for judgments notwithstanding the verdict, except with these motions more evidence is before the jury at the time they are registered. Paymaster, 319 So.2d at 656; compare Goodwin v. Gulf Transport Co., 453 So. 2d 1035, 1037 (Miss. 1984) (same standard applies to motion for directed verdict at close of plaintiff's case except the court only has evidence of plaintiff before it to consider at time motion is made). Indeed, as the Comment to Rule 50(a), Miss.R.Civ.P., explains, "[a] motion for directed verdict, pursuant to M.R.C.P. 50(a), supersedes both the former peremptory instruction practice and the demurrer to the evidence." Comments, Rule 50(a), Miss.R.Civ.P. Accordingly, when the defendant moves for a directed verdict at the close of all the evidence, the court must consider the plaintiff's evidence along with any uncontradicted evidence put on by the defendant, all in the light most favorable to the plaintiff. Baker Service Tools, Inc., 500 So.2d at 972; Paymaster Oil, 319 So.2d at 656; Comments, Rule 50(a), Miss.R.Civ.P. If the plaintiff's evidence and the uncontradicted evidence of the defendant, all considered in the light most favorable to the plaintiff, are such that reasonable jurors could differ as to the verdict, then a peremptory instruction (directed verdict) must be refused and a motion for j.n.o.v. denied. Baker Service Tools, Inc., 500 So.2d at 972.
B.
Electricity is a highly dangerous agency; therefore, the power company which dispenses and sells electricity is under a duty to use the highest degree of care for the protection of the public and individuals. Garcia v. Coast Electric Power Association, 493 So. 2d 380, 382 (Miss. 1986) (cases collected therein). However,
As a general rule, there is no duty to inspect poles, wires or appliances before supplying electrical power where such poles, wires or appliances are controlled by the customer.
City of Starkville v. Harrison, 418 So. 2d 51, 53 (Miss. 1982). Put another way,
[U]nless the current is supplied with actual knowledge of such conditions, the responsibility of the company supplying electricity ends when connection is properly made under proper conditions and it delivers the current in a manner that will protect both life and property.
City of Starkville, 418 So.2d at 52-53 (quoting 26 Am.Jur.2d, Electricity, Gas and Steam § 105 (1966)).
MEPA owed no duty to Jeffery Faggard with respect to electric lines not under its control. To be sure, Upton frames the issue as one of who had control over the electricity running through the wires as opposed to actual ownership of the wires. This is not the proper focus, as demonstrated by the duty set forth by this Court in City of Starkville, supra.
The only two witnesses (Wood and Briggs) qualified to testify about facts necessary to establish duty testified that MEPA owned all of the wiring up to the pole meter. The pole meter had been moved by someone other than MEPA between the time of its original installation and Jeff's accident. All wiring beyond the pole meter was under the control of the property owner, Bullock; therefore, MEPA's responsibility to inspect wiring stopped at the original pole meter connection. *944 See City of Starkville, 418 So.2d at 53. Further, electricity became that of the customers upon passing through the meter. As such, MEPA neither owned nor controlled the wiring between which Jeff was found lying or the electricity passing through such wiring.
Upton argues that MEPA owed Faggard an active duty to maintain its electrical wires, and "not merely a passive obligation to act only when some third person has gone to the trouble to volunteer information to the company of a particular danger at a particular place." Mississippi Power Co. v. Harrison, 247 Miss. 400, 152 So. 2d 892 (1963). As such, Upton argues that when MEPA's employees came to the Bullock residence in February, 1976, a dangerous condition existed which MEPA's employees should have recognized and removed. The problem is that she never comes close to explaining how the problem that should have been apparent in 1976 would, if corrected, have eliminated the future cause of Jeff's death.
In the end, all of the talk about the meter amounts to so much rhetoric, for the fact that the meter was moved had nothing to do with the accident. The meter has no capacity to break the current going to the smokehouse or dog shed. Assuming, arguendo, that MEPA had knowledge that the meter had been moved to the house, and had an obligation to do something about it, Upton profits nothing, for had MEPA taken some action to get the meter placed back on the pole where it should have been, that, without more, would not have prevented the accident.[2] The danger, if any, as a result of the rewiring we repeat, rewiring done by someone unrelated to MEPA and without its authorization or knowledge was that there was no circuit breaker between the transformer and the wiring going to the smoke house and the dog shed. There is no testimony that the presence of the circuit breaker that originally was in place at the time the wiring was installed in 1955 would have prevented the accident.
We need to be real clear about this. Upton was charged in law with a duty to provide credible evidence that MEPA did something which we may label negligence and that such negligence proximately caused Jeff's death. Only two witnesses testified who could provide this sort of information, MEPA's serviceman, Herbert Wood, and electrical engineer, Robert Briggs. The most Wood would say was that the Bullock wiring done by Bullock on the Bullock property was unorthodox. He offered nothing helpful to Upton on causation. The most Briggs would say was that there was "an improper connection," that the wiring in question was "just not the proper way to run a service." He said further that the unorthodox wiring left at the old meter pole created "an unnecessary exposure." But one may search Briggs' testimony in vain for any suggestion that, had the wiring been done as he would have had it done, the accident could have been avoided.
Put otherwise, we find no occasion on which Briggs gives expert opinion testimony that any act or omission of MEPA proximately caused or contributed to the death of Jeffery Faggard. Indeed, the testimony of both Wood and Briggs appears to be that, had the breaker been in place and had the wiring carrying the current from the transformer to the dog shed gone through the breaker, Jeffery Faggard would still have been shocked when he encountered the wires while on the metal roof of the dog shed and nothing in that encounter would have tripped the breaker in time to save his life.
Considering all of the evidence under the legal principles set forth above, we find no error in the Circuit Court's order granting MEPA's motion for directed verdict.
AFFIRMED.
*945 WALKER, C.J., ROY NOBLE LEE and HAWKINS, P.JJ., and DAN M. LEE, PRATHER, ANDERSON and GRIFFIN, JJ., concur.
SULLIVAN, J., not participating.
NOTES
[1] The weatherhead is a protective device located at the top of the meter pole.
[2] Inferentially, it appears that the power going to the pump house, the smokehouse and the dog shed, by reason of the removal of the meter to the side of the house, was not metered electricity. To the extent that Bullock used electricity at these three places, she received it free. Whether she or her late husband knowingly "stole" electricity from MEPA is a matter upon which we need not speculate. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1540418/ | 213 B.R. 415 (1997)
In re John A. SCHEUER, Denise A. Scheuer, Debtors.
John A. SCHEUER, Denise A. Scheuer, Plaintiffs,
v.
MARINE MIDLAND BANK, N.A., Defendant.
Bankruptcy No. 96-60435, Adversary No. 96-70241.
United States Bankruptcy Court, N.D. New York.
February 11, 1997.
*416 Harter, Secrest & Emery, Syracuse, NY (Debra Su Dock, of counsel), for Marine Midland Bank, N.A.
Wayne R. Bodow, Syracuse, NY, for Debtors.
MEMORANDUM-DECISION, FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
STEPHEN D. GERLING, Chief Judge.
Presently before the Court is a motion for summary judgment filed by Marine Midland Bank ("Marine") on November 27, 1996, in the adversary proceeding commenced by John A. and Denise A. Scheuer ("Debtors") by the filing of a complaint ("Complaint") on September 9, 1996. Debtors' counsel filed an affidavit on December 11, 1996, opposing the motion and requesting summary judgment in favor of the Debtors, which the Court will treat as a cross-motion for purposes of this Decision.
The Court heard oral argument at its regular motion term in Utica, New York, on December 17, 1996 ("Hearing"). Since both parties had filed memoranda of law in support of their respective positions prior to the oral argument, the Court indicated that it would not require any further briefs, and the matter was submitted for decision on that date.
JURISDICTIONAL STATEMENT
The Court has jurisdiction over the parties and subject matter of this adversary proceeding pursuant to 28 U.S.C. §§ 1334(b), 157(a), (b)(1), (b)(2)(K) and (O).
FACTS
Debtors filed a voluntary petition ("Petition") pursuant to Chapter 13 of the Bankruptcy Code (11 U.S.C. §§ 101-1330) ("Code") on February 5, 1996. On their Petition Debtors listed their address as 102 Baum Avenue, North Syracuse, New York ("Residence"). Marine is listed in the Debtors' Schedules as holding a second mortgage on the Residence which secures a home equity line of credit in the amount of $18,275. Debtors listed the value of their Residence as $70,500 and the value of the real property subject to Marine's mortgage lien is listed as "0.00". See Schedule D of Debtors' Schedules.[1] According to its proof of claim, filed April 24, 1996, Marine asserts that it holds a secured claim in the amount of $18,156.08 with interest at 12.40% per year from January 20, 1995. Norwest Mortgage, Inc. ("Norwest") is listed as holding a first mortgage on the Debtors' Residence in the amount of $70,647. The Order of Confirmation, signed September 6, 1996, provides that Norwest is to receive $2,768.40 on its arrearages through the Plan and $71,653.10 is to be paid by the Debtors outside the Plan. There is no provision in the Plan for the treatment of Marine's claim.[2]
Marine contends that it did not object to the Debtors' Plan as it assumed that it would be treated as a long term debt and paid outside the Plan. Indeed, counsel for the Debtors indicated at oral argument that the purpose of the adversary proceeding is to modify the Plan pursuant to Code § 1329 and to change the treatment of Marine's claim by seeking to discharge the mortgage and obtain a release of Marine's lien on the Residence. Debtors seek an Order of the Court fixing Marine's secured claim at "0.00" and also requests that the Bank's mortgage lien be "discharged." Marine makes the argument that irrespective of the value of the Residence, the Debtors may not modify its claim since it is the holder of a claim secured by a security interest in real property that is the Debtors' principal residence.[3]
*417 Counsel for Debtors contends that if, as Marine asserts, there are no material issues of fact, then Marine has admitted the factual allegations set forth in Debtors' Complaint, namely that there was no equity securing the second mortgage held by Marine at the time the loan was taken out and Debtors are entitled to summary judgment as a matter of law. However, it is Marine's position that it has not admitted certain allegations enumerated in the Complaint and, in fact, expressly denied a number of Debtors' allegations concerning the market value of the Residence and the extent of the Debtors' equity in its Answer, filed October 9, 1996.
DISCUSSION
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." K. Bell & Assoc., Inc. v. Lloyd's Underwriters, 97 F.3d 632, 636 (2d Cir.1996) (quoting Rule 56(c) of the Federal Rules of Civil Procedure ("Fed.R.Civ.P.")). In this case, Marine contends that there is no genuine issue of material fact that would prevent the Court from holding, pursuant to Code § 1322(b)(2), that as a matter of law, the Debtors are not entitled to modify Marine's rights as a holder of a claim secured only by a security interest in the Debtors' Residence.
Code § 1322(b)(2) provides that a Chapter 13 plan "may modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's residence, or of holders of unsecured claims . . ." Code § 101(5)(A) defines "claim" as a "right to payment," whether secured or unsecured. Whether or not ones claim enjoys "secured" status is determined in accordance with Code § 506(a), which provides that
[a]n allowed claim of a creditor secured by a lien on property in which the estate has an interest . . . is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property . . . and is an unsecured claim to the extent that the value of such creditor's interest . . . is less than the amount of such allowed claim.
In the adversary proceeding sub judice if the Court were to determine that the Residence is entirely encumbered by Norwest's first mortgage, then Marine's claim in the estate's interest could be no greater than "0". By statute Marine's claim would be completely unsecured. However, Marine argues that it is unnecessary for there to be any valuation of the Debtors' Residence to determine the extent of its security interest since the rights protected by Code § 1322(b)(2) are based on its status as a mortgagee. Marine's position, however, is not supported by the majority of bankruptcy courts that have addressed the issue. See In re Sanders, 202 B.R. 986 (Bankr.D.Neb. 1996); In re Geyer, 203 B.R. 726 (Bankr. S.D.Cal.1996); In re Lee, 177 B.R. 715 (Bankr.N.D.Ala.1995); In re Thomas, 177 B.R. 750 (Bankr.S.D.Ga.1995); In re Castellanos, 178 B.R. 393 (Bankr.M.D.Pa.1994); In re Mitchell, 177 B.R. 900 (Bankr.E.D.Mo. 1994); In re Woodhouse, 172 B.R. 1 (Bankr. D.R.I.1994); In re Sette, 164 B.R. 453 (Bankr.E.D.N.Y.1994); In re Moncrief, 163 B.R. 492 (Bankr.E.D.Ky.1993); In re Williams, 161 B.R. 27 (Bankr.E.D.Ky.1993); In re Kidd, 161 B.R. 769 (Bankr.E.D.N.C. 1993); In re Lee, 161 B.R. 271 (Bankr. W.D.Okla.1993); In re Hornes, 160 B.R. 709 (Bankr.D.Conn.1993); In re Plouffe, 157 B.R. 198 (Bankr.D.Conn.1993); but see In re Jones, 201 B.R. 371 (Bankr.D.N.J.1996); In re Barnes, 199 B.R. 256 (Bankr.W.D.N.Y. 1996); In re Neverla, 194 B.R. 547 (Bankr. W.D.N.Y.1996).
The fact that a majority of courts have taken a particular position on an issue certainly does not prevent this Court from aligning itself with the minority if an independent analysis so warrants. In this instance, however, the Court agrees with the majority that if a creditor's claim, secured only by a security *418 interest in real property that is the debtor's principal residence, is determined to be totally unsecured, the creditor is not entitled to the protection of Code § 1322(b)(2).
The Court's analysis of necessity begins with consideration of the U.S. Supreme Court's decision in Nobelman v. American Sav. Bank, 508 U.S. 324, 113 S.Ct. 2106, 124 L.Ed.2d 228 (1993). In that case, the Supreme Court concluded that the rights bargained for by the mortgagor and the mortgagee are protected from modification by Code § 1322(b)(2), even though the mortgagee's claim was undersecured. See id., 508 U.S. at 329, 113 S.Ct. at 2110. The majority of courts interpreting the Nobelman decision have determined that in order for a mortgagee to claim the protection of Code § 1322(b)(2), it must qualify under Code § 506(a) as a holder of a secured claim to some extent. See Plouffe, 157 B.R. at 200 (emphasis added). The courts that take issue with this interpretation of Nobelman argue that the Nobelman court "looked solely to the existence of the mortgage to determine whether the creditor fell under the anti-modification provision." Jones, 201 B.R. at 374; Neverla, 194 B.R. at 551 (stating that "the most reasonable construction of Section 1322(b)(2) is the literal and functional interpretation which results in it protecting from modification in Chapter 13 cases all properly perfected Homestead Mortgages irrespective of the value of the debtor's residence").
Bankruptcy Judge Stephen A. Stripp in Jones points out that the Supreme Court in Nobelman "stated that the determination that a portion of the bank's claim included an unsecured component under § 506(a) `does not necessarily mean that the `rights' the bank enjoys as a mortgagee, which are protected by § 1322(b)(2), are limited by the valuation of its secured claim.'" Jones, 201 B.R. at 374, (quoting Nobelman, 508 U.S. at 329, 113 S.Ct. at 2110). Judge Stripp suggests that the majority of courts to address the issue failed to consider that it is the "rights" of a mortgagee that Code § 1322(b)(2) protects. See id. Indeed, the Nobelman court makes the statement that "the bank's contractual rights are contained in a unitary note that applies at once to the bank's overall claim, including both the secured and unsecured components." Nobelman, 508 U.S. at 331, 113 S.Ct. at 2111. In Nobelman the Supreme Court emphasized the fact that the bank was a "holder" of a "secured claim" because the house retained a certain amount of value. See Nobelman, 508 U.S. at 329, 113 S.Ct. at 2110. The court expressed concerns that in the situation in which there exists a secured component to a creditor's claim that the debtor not be permitted to modify the terms of the unsecured portion as it would, of necessity, effect the terms of the secured portion as well. See id., 508 U.S. at 331, 113 S.Ct. at 2111.
There is a distinction to be drawn between the facts confronting the Nobelman court and those addressed by the bankruptcy courts in the cases cited above. The latter cases concerned claims of mortgagees that were determined to be totally unsecured; whereas in Nobelman the mortgagee's claim was secured in part. Indeed, the statement from Nobelman relied on by Judge Stripp reads in its entirety as follows:
The portion of the bank's claim that exceeds $23,500 is an `unsecured claim componen[t]' under § 506(a) (citation omitted); however, that determination does not necessarily mean that the `rights' the bank enjoys as a mortgagee, which are protected by § 1 322(b)(2), are limited by the valuation of its secured claim.
Nobelman, 508 U.S. at 329, 113 S.Ct. at 2110.
The minority, it appears, would have this Court ignore Code § 506(a) in applying Code § 1322(b)(2). Yet, the entire discussion of the Nobelman court focused on the interrelationship of the two sections. The court talks of giving "effect to § 506(a)'s valuation and bifurcation of secured claims through a Chapter 13 plan." Id. There would be no need for a judicial valuation of the collateral if a creditor had only to rely on "a piece of paper purporting to give a creditor rights in specified collateral." Hornes, 160 B.R. at 715. Instead, there must be a preliminary determination of valuation under Code § 506(a). See Sette, 164 B.R. at 455. Code § 1322(b)(2) requires such an analysis; otherwise, Code § 1322(b)(2) should have been written to provide that a Chapter 13 plan *419 may "modify the rights of holders of secured or unsecured claims, other than a claim secured only by a security interest in real property that is the debtor's principal residence . . ." See generally Hornes, 160 B.R. at 719 (stating that had Congress intended to make the "anti-modification clause" an exception to the general rule that unsecured claims are subject to modification, "it would have placed that clause after both the secured claims clause and the unsecured claims clause."). Instead, the placement of the "anti-modification clause" after reference to the "rights of holders of secured claims" supports the conclusion that there must first be a determination under Code § 506(a) that a creditor is at least partially secured in order to take advantage of the protections afforded by Code § 1322(b)(2). See Thomas, 177 B.R. at 753. It is only if it is determined that the creditor has a secured claim that the rights protected under Code § 1322(b)(2) then extend to any unsecured portion of its claim as well.
In the view of this Court, there must first be a valuation of the Residence to determine whether Marine has a secured claim. As pointed out in Castellanos, "[E]ven though a mortgage contract makes a creditor a holder of a claim `secured by a lien', that creditor is a `holder of a secured claim' only because the residence retained some value as collateral." Castellanos, 178 B.R. at 395. The Court acknowledges that such a conclusion places a creditor in a somewhat tenuous position, subject to "insignificant fluctuations of estimated value" which may result in a debtor being able to modify the creditor's claim. See Barnes, 199 B.R. at 257. On the other hand, if Marine is determined to be secured to the extent of only one dollar, then the Debtors would not be permitted to modify its claim. In other words, a single dollar of value would allow Marine full recovery on its claim. However ludicrous this result may appear, it is not for this Court to remedy the situation; rather, it is the province of Congress to amend the Code if it deems it appropriate.
Based on the above analysis, the Court must deny Marine's motion for summary judgment since there exists an issue of the value of the Residence. Counsel for Debtors has suggested that summary judgment be granted in favor of the Debtors based on Marine's assertion that there are no issues of material fact concerning the extent of Debtors' equity in the Residence securing the second mortgage at the time the loan was made to the Debtors.
In seeking summary judgment, Marine has taken the position that the value of the Residence and the existence, or lack thereof, of equity was not a material fact and, therefore, need not be considered by the Court in connection with Code § 1322(b)(2). Marine was not conceding that there was no issue concerning the valuation of the Residence. Indeed, in its Answer it clearly denies the Debtors' allegations in this regard. Furthermore, whether or not there was any equity in the Residence at the time the loan was made is irrelevant to the Court's determination of value as of the commencement of the case for purposes of determining whether Marine holds a secured claim pursuant to Code § 506(a). Accordingly, there is likewise no basis for granting the summary judgment to the Debtors.
Based on the foregoing, it is hereby
ORDERED that Marine's motion requesting summary judgment is denied;
ORDERED that Debtors' cross-motion seeking summary judgment is denied; and it is further
ORDERED that the trial of the adversary proceeding, which was originally scheduled for January 15, 1997, and adjourned, is rescheduled for March 24, 1997, at 2:00 p.m. at U.S. Bankruptcy Court, Room 236, U.S. Courthouse, 10 Broad Street, Utica, New York 13501.
NOTES
[1] In Schedule A, attached to their Petition, Debtors have indicated that the Residence had a value of $71,000.
[2] According to the Chapter 13 Trustee's Findings and Summary of the § 341 Meeting held on April 1, 1996, Marine was to be paid "as totally unsecured."
[3] Marine, in its Reply filed December 13, 1996, also makes the argument that even if the Court were to cancel its consensual mortgage lien on the Debtors' Residence, under Code § 1322(b)(5) and § 1328(c)(1), its claim would still be excepted from the Debtors' discharge upon completion of the Chapter 13 plan. That argument, however, is not before the Court in the context of the motion and "cross-motion" for summary judgment and will not be addressed herein. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2256461/ | 179 Cal.App.4th 603 (2009)
THE PEOPLE, Plaintiff and Respondent,
v.
STEVEN ARTHUR REYNOLDS, Defendant and Appellant.
No. E047192.
Court of Appeals of California, Fourth District, Division Two.
November 20, 2009.
*606 Rudy Kraft, under appointment by the Court of Appeal, for Defendant and Appellant.
Edmund G. Brown, Jr., Attorney General, Dane R. Gillette, Chief Assistant Attorney General, Gary W. Schons, Assistant Attorney General, Rhonda Cartwright-Ladendorf and Kristen Kinnaird Chenelia, Deputy Attorneys General, for Plaintiff and Respondent.
OPINION
RAMIREZ, P. J.
Defendant, Steven Arthur Reynolds, a sexually violent predator (SVP) (Welf. & Inst. Code,[1] § 6600 et seq.), filed a petition for unconditional release (§ 6608), pro se, after he had been recommitted as an SVP, and while that recommitment was on appeal. The petition alleged only that (a) it has been nearly four years since his original commitment, and (b) prior to his recent recommitment proceeding, he was ready to go to trial with an expert available to testify on his behalf. Counsel was appointed. The People made a motion to dismiss the petition, and, at the hearing on the petition, defense counsel acknowledged there were no changed circumstances. The court dismissed defendant's petition without prejudice to refile when defendant's circumstances change.
*607 On appeal, defendant argues (1) the trial court abused its discretion by failing to review defendant's petition prior to dismissing it; (2) the petition was not frivolous; and (3) defendant's counsel provided ineffective assistance by "abandoning" defendant in conceding the petition lacked merit. We affirm.
BACKGROUND
At defendant's request, we have taken judicial notice of defendant's prior appeal, E044582. Defendant was first deemed an SVP in 2001, and was found to meet the criteria for commitment in subsequent evaluations. In March 2006, another recommitment petition was filed based on two evaluations which concluded defendant still met the criteria for commitment as an SVP.
On June 11, 2007, the People made a motion to retroactively apply an indeterminate term to defendant's initial commitment, which was granted on October 12, 2007. Defendant appealed that decision, and we reversed on June 4, 2009. (People v. Taylor (2009) 174 Cal.App.4th 920 [94 Cal.Rptr.3d 756].)
While that appeal was pending, on April 23, 2008, defendant filed a petition for unconditional release, pro se, pursuant to section 6608. The petition alleged that (1) it had been nearly four years since his initial commitment making it less likely he would reoffend, and (2) prior to the retroactive conversion of his original commitment to an indeterminate term, he had been ready to go to trial and had an expert witness available to testify on his behalf. On June 20, 2008, the People filed a petition for subsequent recommitment. Attached to the recommitment petition were the evaluations of two psychologists, conducted in April 2008, who concluded that defendant still met the criteria for commitment as an SVP. On June 25, 2008, the court appointed two experts to conduct current evaluations.
On October 23, 2008, the People responded to defendant's petition for unconditional release, requesting that the petition be denied as frivolous. On October 30, 2008, the court granted the People's motion to dismiss defendant's petition for unconditional release. On November 19, 2008, defendant appealed the dismissal of his petition.
DISCUSSION
1. The Trial Court Did Not Abuse Its Discretion in Dismissing Defendant's Petition Where Defendant Did Not Oppose the Dismissal Motion and Conceded There Were No Changed Circumstances at the Hearing.
Defendant argues that the dismissal of his petition for unconditional release must be reversed because the trial court did not review the petition, and it *608 improperly considered two recent evaluations by the State Department of Mental Health (DMH) concluding defendant was still an SVP. Because defendant waived any opposition to the People's motion to dismiss the petition and conceded there were no changed circumstances, there was no error.[2]
(1) A person committed as an SVP may petition for conditional release or an unconditional discharge, notwithstanding the lack of recommendation or concurrence by the Director of Mental Health.[3] (§ 6608, subd. (a).) Upon receipt of a such a petition without the concurrence of the director, the court "shall endeavor whenever possible to review the petition and determine if it is based upon frivolous grounds and, if so, shall deny the petition without a hearing." (Ibid.) If the petition is not found to be frivolous, the court shall hold a hearing to determine whether the person committed would be a danger to the health and safety of others in that it is likely that he or she will engage in sexually violent criminal behavior due to his or her diagnosed mental disorder. (§ 6608, subd. (d).) At the hearing, the person petitioning for release has the burden of proof by a preponderance of the evidence. (§ 6608, subd. (i); People v. Rasmuson (2006) 145 Cal.App.4th 1487, 1503 [52 Cal.Rptr.3d 598] (Rasmuson).) The court is only required to hold a hearing if the petition is not based on frivolous grounds. (Rasmuson, at p. 1503.)
(2) Where a hearing is ordered on the petition for unconditional release, the standard of review is the substantial evidence standard. (Rasmuson, supra, 145 Cal.App.4th at pp. 1503-1504.) We have found no cases discussing the standard of review applicable where the court dismisses the petition without a hearing. However, in any type of proceeding, the movant (or petitioner) bears the burden of alleging and showing entitlement to the relief sought. (People v. Lopez (1997) 52 Cal.App.4th 233, 251 [60 Cal.Rptr.2d 511]; see also Conservatorship of Hume (2006) 140 Cal.App.4th 1385, 1388-1389 [44 Cal.Rptr.3d 906] [a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting].) In habeas corpus proceedings, analogous in nature to a petition for release from involuntary treatment, a discretionary writ will be summarily denied without a hearing unless the petitioner meets his burden of alleging *609 and proving the facts supporting his claim for relief. (In re Miranda (2008) 43 Cal.4th 541, 575 [76 Cal.Rptr.3d 172, 182 P.3d 513].)
(3) We therefore interpret section 6608 to require defendant to allege facts in his petition that will show he is not likely to engage in sexually violent criminal behavior due to his diagnosed mental disorder, without supervision and treatment in the community, since that is the relief defendant requested. On appeal from a dismissal without a hearing, we will therefore review the facial adequacy of the petition to state a basis for relief. (See FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381 [282 Cal.Rptr. 508] [function of pleadings in summary judgment proceedings].)
(4) Defendant assumes that we review the trial court's ruling for abuse of discretion. We agree. SVP proceedings are special proceedings of a civil nature. (People v. Yartz (2005) 37 Cal.4th 529, 535 [36 Cal.Rptr.3d 328, 123 P.3d 604].) As such, the provisions of the Code of Civil Procedure relative to mandatory dismissals have been held inapplicable. (See People v. Evans (2005) 132 Cal.App.4th 950, 955-956 [34 Cal.Rptr.3d 35].) However, the trial court has inherent authority under section 187 of the Code of Civil Procedure to ensure the orderly administration of justice, including the authority to dismiss an SVP petition for unreasonable prosecutorial delay. (Evans, at p. 957.) We interpret this to mean that a trial court may exercise its inherent authority to dismiss a defendant's petition for unconditional release.
We therefore apply the abuse of discretion standard and review the record to determine if, considering all the circumstances before it, the trial court exceeded the bounds of reason. Where there is a basis for the trial court's ruling and it is supported by the evidence, we will not substitute our opinion for that of the trial court. (People v. Superior Court (Cheek) (2001) 94 Cal.App.4th 980, 987 [114 Cal.Rptr.2d 760].)
In the present case, after defendant filed his pro se petition for unconditional release, he was represented by counsel. At the hearing, defendant's appointed counsel agreed defendant's circumstances had not changed in a way that would justify going forward on the petition. The record supports this conclusion. The two most recent annual evaluations, conducted in the same month as defendant's petition was filed, unanimously concluded defendant was yet an SVP who presented a danger to the health and safety of others. The petition did not allege any facts to the contrary.
It was forthright of the court to admit it had only glanced at the pleadings before dismissing the petition, but defendant did not object to the dismissal. *610 To the contrary, he expressly agreed to a dismissal without prejudice to permit defendant to refile at a later date, once his circumstances change. A party forfeits his or her right to attack error by implicitly agreeing or acquiescing at trial to the procedure objected to on appeal. (Mesecher v. County of San Diego (1992) 9 Cal.App.4th 1677, 1685-1686 [12 Cal.Rptr.2d 279].) A party who requests the court to act as it did has invited error. (See People v. Williams (2008) 43 Cal.4th 584, 629 [75 Cal.Rptr.3d 691, 181 P.3d 1035].)
(5) Under these circumstances, it was not an abuse of discretion for the trial court to dismiss the petition after merely glancing at it, where no one requested that the court read it carefully and defendant conceded there was no change in defendant's circumstances such that the court might conclude defendant was no longer a danger to others.
2. Trial Counsel Provided Effective Assistance of Counsel in Not Opposing the Motion to Dismiss Where There Were No Circumstances to Support a Conclusion Defendant's Condition Had So Changed He Would Not Be a Danger to Others.
Possibly anticipating our resolution of the first issue, defendant argues that he was deprived of effective assistance of counsel by his attorney's agreement that the petition for unconditional release, which defendant describes as an "abandonment," should be dismissed. We disagree. To resolve this question, we must determine whether defendant's petition was nonfrivolous and entitled to a hearing, such that counsel's concession precluded a more favorable result.
(6) It is well established that to demonstrate that his right to effective assistance of counsel was violated, defendant must satisfy a two-pronged test: He must show (1) performance below an objective standard of reasonableness by his attorney, and (2) prejudice sufficient to establish a reasonable probability he would have obtained a more favorable result in the absence of counsel's error. (Strickland v. Washington (1984) 466 U.S. 668, 687-688, 693-694 [80 L.Ed.2d 674, 104 S.Ct. 2052] (Strickland).)
Defendant's trial counsel conceded that there were no changed circumstances that would justify going forward with defendant's petition for unconditional release. The record supports his concession: The same month in which defendant filed his petition, two psychologists employed by the DMH submitted reports in connection with the People's petition for recommitment. Both reports concluded that defendant continued to meet the criteria for an *611 SVP, that he continued to be a danger to the public, and that he was a high risk to reoffend. Since the court would have been obligated to obtain a written recommendation from the director of the treatment facility prior to conducting a hearing on defendant's petition for unconditional release, the existence of two recent, negative reports from that very facility was fatal to any chance defendant might have of being released.
On appeal, defendant does not claim otherwise, except to point to the fact (1) it has been four years since his initial commitment and that reoffense rates drop as offenders age; and (2) a year before he filed his petition, there was one expert who would have testified on his behalf at the 2007 hearing. Additionally, defendant argues he should not have to provide evidence of his current SVP status in his petition beyond his bare assertions, apparently unaware that the court was required to obtain the written recommendation of the DMH prior to taking any action on defendant's petition.[4] (§ 6608, subd. (j).) We read this to mean that the decision to order a hearing is to be made after the court has obtained input from the DMH.
Defendant's strongest contention was that four years had passed since his initial commitment. However, instead of attaching the opinion of an evaluator indicating that the passage of time had reduced his potential risk, or citing treatises or journals to support his position that recent research points to the positive effects of aging in reducing risk of reoffending, defendant merely refers to recent transcripts of SVP proceedings which are not before us. He also argues that the Static-99[5] overstates the risk of reoffending, but cites no authority to support this proposition. Defendant's petition was similarly devoid of support for these propositions.
(7) Defendant also argues that the court should have disregarded the two recent evaluations attached to the People's opposition to the petition for unconditional release. His assertion appears to be that the court's review of the petition for unconditional release was limited to a reading of the petition alone, without reference to any supporting evidence. We disagree. As in other areas of law, a pleading may be accompanied by exhibits, or may incorporate factual support by reference. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 427, p. 562.) The SVP statute is unclear on this point, but we *612 cannot agree with defendant's position, considering it was he who bore the burden of proof in the trial court that he should be unconditionally released. At a minimum, he was required to allege facts from which the court could conclude he is no longer an SVP, if he was to be afforded an evidentiary hearing. He did not do so. The passage of time and the previous availability of a single favorable witness in 2007 do not establish even a prima facie basis for relief, such as would entitle him to a hearing.
In this regard, it is significant that defendant acknowledges that the issue is whether defendant is or is not an SVP. Yet his petition neither alleged this fact, nor did it otherwise demonstrate that he is no longer an SVP. Thus, even if we could agree that the passage of time reduced the risk of reoffense, or that on some past occasion a witness would have testified favorably for him, defendant did not allege he was no longer an SVP, which, by his own argument, was the main issue.
(8) In short, the petition was frivolous. The SVP act does not define the term "frivolous," but reviewing courts have applied the definition found in Code of Civil Procedure section 128.5, subdivision (b)(2). That section defines "frivolous" to mean "totally and completely without merit" or "for the sole purpose of harassing an opposing party." (Ibid.; see People v. Collins (2003) 110 Cal.App.4th 340, 349-350 [1 Cal.Rptr.3d 641].) A court is not compelled to grant a hearing where there is only slight evidence to support the defendant's petition; if the defendant's position is completely without merit, a hearing should be denied regardless of whether admissible evidence supports the position. (Id. at p. 350.)
Even if counsel had argued in favor of the petition, no other result was possible, much less likely. Defendant cited no authority to support his assertion that the passage of four years from his initial commitment would justify an unconditional release. Nor did defendant provide any information about the expert who would have testified in his defense a year earlier. Nor did defendant explain whether this expert's opinion would still be favorable in light of the information presented in the two more recent evaluations of his condition.
We conclude that defendant's attorney made a wise tactical decision by not opposing the dismissal of the petition in the face of two recent evaluations demonstrating defendant is still an SVP at risk of reoffending. There was no reasonable probability he would have obtained a more favorable result in the absence of counsel's alleged error. (Strickland, supra, 466 U.S. at pp. 687-688, 693-694.)
*613 DISPOSITION
The judgment is affirmed.
McKinster, J., and Richli, J., concurred.
NOTES
[1] All further statutory references are to the Welfare and Institutions Code, unless otherwise stated.
[2] We will address defendant's claim of ineffective assistance of counsel in the next separate section.
[3] Section 6608 actually refers to petitions for "conditional release" or an "unconditional discharge." (§ 6608, subd. (a).) Defendant's petition was styled as a petition for "uncondition[al] release pursuant to Welfare and Institution Code, section 6608." Because there do not appear to be any differences in the manner in which the petitions are treated, we simply use the nomenclature used by defendant.
[4] The statutory scheme allows a committed defendant to file his own petition, and provides for appointment of counsel, who can assist a defendant in marshalling sufficient evidence to meet the burden of proof at the hearing. (§ 6608, subd. (a).)
[5] The Static-99 is a 10-item actuarial assessment instrument created for use with adult male sexual offenders, which is designed to estimate the probability of sexual and violent recidivism. (See People v. Allen (2008) 44 Cal.4th 843, 853 [80 Cal.Rptr.3d 183, 187 P.3d 1018].) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1764868/ | 261 So.2d 311 (1972)
MOLBERT BROTHERS POULTRY & EGG COMPANY, Inc., et al., Plaintiffs-Appellants-Appellees,
v.
Edgar W. MONTGOMERY, Defendant-Appellee-Appellant.
No. 3788.
Court of Appeal of Louisiana. Third Circuit.
April 19, 1972.
Rehearings Denied May 16, 1972.
Writ Refused June 20, 1972.
*312 McHale & Bufkin by Louis D. Bufkin, James L. Babin, Lake Charles, for plaintiffs-appellants.
Cormie & Morgan by Robert E. Morgan, Lake Charles, for defendant-appellee.
Before SAVOY, MILLER and DOMENGEAUX, JJ.
MILLER, Judge.
Plaintiffs Molbert Brothers Poultry & Egg Company, Inc., and Jasper Feed Company, Inc. appeal the finding that Molbert Brothers had no cause of action against defendant Edgar W. Montgomery and that Jasper Feed's claim was one in redhibition and had prescribed. Defendant answered the appeal contending that damages should be awarded to Montgomery for the loss occasioned by Jasper Feed's refusal to purchase baby chicks which it had contracted to purchase.
Each party to this litigation had more than twenty years experience in the business of commercially raising or handling chickens. On March 2, 1966 Montgomery (as seller) contracted for the "sale of baby chicks" to Molbert Brothers (as buyer). Under the contract Montgomery was required to purchase 10,000 pullet chicks and 1,400 male chicks for the purpose of producing eggs from which "healthy and marketable baby chicks" can be hatched and sold to Molbert Brothers. Montgomery was obligated to sell all baby chicks hatched from eggs produced by the 10,000 hens and Molbert Brothers was obligated to purchase said chicks at a price of 8 cents each. Montgomery was obligated to deliver the chicks to Molbert Brothers in Jasper, Texas. The agreement provided that it "shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns." To establish the flock, Montgomery borrowed $25,000 under an interest free loan from Molbert Brothers. The loan was subsequently paid in full.
*313 On March 10, 1966 Molbert Brothers assigned the contract to its sister corporation Jasper Feed Company, Inc. Montgomery knew of and approved the transfer. As required by the contract, Montgomery purchased the pullets and male chicks. His flock matured and was inspected for pullorum by Louisiana authorities in September, 1966. The flock was approved as breeders.
Delivery of baby chicks started on October 28 and terminated on December 27, 1966 after some 233,000 chicks had been delivered and paid for.
Jasper Feed had some 35 to 50 separate "farmer" operators feeding out baby chicks for an eight to ten week period. At that time the chicks were expected to weigh more than three and one-half pounds and Jasper Feed would sell the chickens to Molbert Brothers in Lake Charles for slaughter.
Jasper Feed purchased chicks from three producers, one of which was Montgomery. Some of Jasper Feed's farmers raised only Montgomery chicks and some raised chicks from more than one producer. Only 40,000 chicks were delivered by Montgomery before November 15, 1966. Some 73,000 were delivered during the remainder of November. Sixty thousand were delivered before December 16 and 60,000 thereafter. More than the normal amount of Montgomery chicks began to die immediately after delivery. It became apparent that the Montgomery chicks were not developing properly and on December 9, 1966, some of the Montgomery chickens were sent to the Texas Agriculture Experiment Station Poultry Disease Investigations at Center, Texas. On December 15, 1966 a diagnosis was mailed to Jasper Feed stating that cultures from those chickens "were positive for pullorum disease."
Montgomery was contacted and the parties discussed the problem. On December 16, it was orally agreed that delivery would continue but that the price would be reduced to 7.6 cents per chick. Jasper Feed was to spend $.00.4 per chick for medication. As noted above, some 60,000 chicks were delivered between December 16 and December 27, all at a price of 7.6 cents each. Shortly after December 27, Jasper Feed was notified by Texas authorities that all their flocks would be quarantined if they purchased another chick from Montgomery without obtaining a current certificate from Louisiana authorities stating that Montgomery's flock was free from pullorum. Montgomery did not seek the certificate but sold his breeder flock for slaughter. We note defendant's argument that this sale was caused by Jasper Feed's refusal to take chicks and not to avoid testing the flock. There is no manifest error in the trial court's rejection of Montgomery's contention. The finding that Montgomery's chicks had pullorum when they were delivered is supported by the record. The finding that Montgomery did not know of this condition until December 16, 1966 is also supported by the record.
The trial court correctly found that Molbert Brothers had no cause of action against Montgomery. Under LSA-C.C. Art. 2642, the transfer of the contract rights from Molbert Brothers to Jasper Feed without reservation of rights, effectively terminated Montgomery's obligation to Molbert Brothers. Alternatively Molbert Brothers contends that the March 2, 1966 contract contained a stipulation pur autre vie in favor of Molbert Brothers, and that the concluding provision that the contract "shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns" gives rights to Molbert Brothers which exist after Molbert Brothers assigned the contract to Jasper Feed. The quoted provision of the contract does not provide additional rights to a third party and we distinguish the cases cited by Molbert Brothers on that ground. Molbert Brothers must look to its sister corporation Jasper Feed to recover its loss occasioned by its purchase of diseased chickens from Jasper Feed.
*314 The trial court correctly concluded that Jasper Feed's action is founded in redhibition. The contract was a contract for sale and was so nominated by the parties. Jasper Feed contends that Montgomery's chicks were infested with a disease called pullorum. It is contended that this disease rendered some of Montgomery's chickens unfit and worth less money and that many Montgomery chickens died. This is the classic redhibitory action. LSA-C.C. Arts. 2520, 2532. Sidney D. Fazio, "A Comparsion of Redhibition in Louisiana and the Uniform Commercial Code." 19 La.L.Rev. 165 at 166.
Actions based on a breach of warranty against defects are to be brought in redhibition instead of as a breach of contract. Unlike damages for other contractual breaches, damages caused by a breach of the warranty in a contract of sale are regarded as founded upon redhibition and subject instead to the prescription applicable to redhibitory actions. Crowley Grain Drier, Inc. v. Fontenot, 132 So.2d 573 at 577 (La.App. 3 Cir. 1961); Rapides Grocery Co. v. Clopton, 171 La. 632, 131 So. 734 (1930); Walton v. Katz & Besthoff, Inc., 77 So.2d 563 (La.App.Orls. 1955); Yeargain v. Blum, 144 So.2d 756 (La.App. 4 Cir. 1962); Minyard v. Curtis Products, Inc., 192 So.2d 208 (La.App. 4 Cir. 1966).
Jasper Feed argues that this is not a claim in redhibition because to be successful in a redhibitory action, one must tender the object of the sale to the seller. Womack v. Lafayette Furniture Co., 50 So.2d 843 (La.App. 1 Cir. 1951). This argument has been rejected where the article purchased is consumed by use and obviously cannot be returned. Walton v. Katz & Besthoff, Inc., 77 So.2d 563 (La. App.Orls.1955); Henderson v. Leona Rice Milling Company, 160 La. 597, 107 So. 259 (1926); and Rapides Grocery Company, Inc. v. Clopton, 171 La. 632, 131 So. 734 (1930). Under LSA-C.C. Art. 2532, it is not necessary to tender the chicks where they have "* * * perished through the badness of * * * quality * * *." See also LSA-C.C. Art. 2536. A return of the surviving diseased chickens was contraindicated by the nature of the transaction. It was established that seller could not have accepted return of the chicks. The rationale of the above cited cases is here applicable.
Jasper Feed next argues that the word animals as used in LSA-C.C. Art. 2535 does not include chickens and bases the argument on the definitions found in Webster's dictionary. We are more impressed with LSA-C.C. Art. 3419 wherein "chickens" are referred to as a species of animal.
"Art. 3419. Chickens, turkeys, geese, ducks and other domestic animals, shall not be considered wild animals, though there are species of these animals which exist in a state of natural liberty. * *" (Emphasis added.)
Jasper Feed knew that Montgomery's chicks had pullorum on December 16, 1966. The last purchase was made on December 27, 1966. Suit was not filed until May 15, 1967. Jasper Feed's claim for losses suffered by the chicks purchased from Montgomery had prescribed. LSA-C.C. Art. 2535.
Jasper Feed claims that part of its loss resulted from the spread of pullorum from Montgomery's chicks to chicks purchased from two other producers. Had plaintiff been able to show bad faith on the part of the seller, LSA-C.C. Art. 2545 would apply to this claim and 2546 would apply to its principal claim. However, plaintiff did not show bad faith on the part of defendant-seller. Seller's first knowledge of the pullorum infection in his flock came when plaintiff informed him on December 16, 1966. Prior to this time, defendant had reasonably relied upon his compliance with inspection requirements which had shown a negative reaction to pullorum in his flock. As to deliveries after *315 December 16, plaintiff, being well aware of the defect in defendant's chicks, cannot be allowed to recover in redhibition on either his principal or secondary demand.
Montgomery's reconventional demand was properly rejected. Jasper Feed was obligated to refuse delivery of chicks after December 27 when the Texas authorities gave notice that Jasper Feed's extensive operation would be quarantined if another Montgomery chick was delivered without a current certificate that Montgomery's flock was free of pullorum. Montgomery's failure to obtain the certificate terminated Jasper Feed's obligation under the contract.
The judgment of the trial court is affirmed. Costs of this appeal are assessed one-half to plaintiffs and one-half to defendant.
Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2371958/ | 902 S.W.2d 51 (1995)
Daniel FREE & Wife, Karen Free, Appellants,
v.
AMERICAN HOME ASSURANCE CO. & American International Group, Inc., Appellees.
No. 01-94-00035-CV.
Court of Appeals of Texas, Houston (1st Dist.).
June 1, 1995.
*52 Albert S. Low, Jr., Houston, for appellants.
Andrew F. Spalding, Phillip D. Sharp, Houston, for appellees.
Before OLIVER-PARROTT, C.J., and MIRABAL and O'CONNOR, JJ.
*53 OPINION
OLIVER-PARROTT, Chief Justice.
Appellants, Daniel and Karen Free, appeal from a take-nothing summary judgment in their suit for defamation and intentional infliction of emotional distress. We affirm in part and reverse and remand in part.
Background facts and procedural history
Daniel Free was employed as an auditor by appellees, American Home Assurance Co. and American International Group (collectively, "AIG"). In April of 1991, Free got into a squabble with his immediate supervisor, Darrell Boyd. On April 19, 1991, Free was asked to resign, and on April 22, he tendered his letter of resignation. This letter, which was part of AIG's motion for summary judgment, details the events leading to Free's resignation. In the letter, Free attributed his termination to a misunderstanding between Boyd and himself. After resigning, Free sued AIG for slander, intentional infliction of emotional distress, and negligence, based on three separate conversations:
(1) a telephone conversation between Boyd and Craig Peterson, an employment "headhunter;"
(2) a conversation between Boyd and Loren McGlade, Boyd's supervisor; and
(3) a conversation between Boyd and Elaine Predmore, a fellow AIG auditor.
The content of these conversations is undisputed: The Peterson conversation was surreptitiously tape recorded by Peterson, and the substance of the McGlade and Predmore conversations was not contested by AIG. The transcript of the Peterson conversation indicates that Boyd referred to Free as a "lightweight" who "lacked a comprehensive grasp of what was necessary to handle large accounts," failed to produce, failed to follow through, and who "would vacillate, procrastinate and allow things to languish entirely too long."
AIG conceded, for the purposes of summary judgment, Free's allegation that Boyd told Elaine Predmore, another auditor, that Free was fired "because he had lied about where he was, had falsified his itinerary, and persisted in lying about where he was when confronted about his work schedule." AIG also conceded that the Boyd/McGlade conversation occurred exactly as Free alleged.
AIG moved for summary judgment on several grounds, attacking elements of Free's causes of action as well as setting up affirmative defenses. The trial court rendered summary judgment in favor of AIG, and Free appeals.
Standard of Review
Under Tex.R.Civ.P. 166a(c), a summary judgment is proper for a defendant if its summary judgment proof establishes, as a matter of law, that there is no genuine issue of material fact concerning one or more of the essential elements of the plaintiff's cause of action. Goldberg v. United States Shoe Corp., 775 S.W.2d 751, 752 (Tex.App.Houston [1st Dist.] 1989, writ denied). A summary judgment for the defendant disposing of the entire case is proper only if, as a matter of law, the plaintiff could not succeed upon any of the theories in its petition. Havens v. Tomball Community Hosp., 793 S.W.2d 690, 691 (Tex.App.Houston [1st Dist.] 1990, writ denied).
In reviewing the granting of a motion for summary judgment, this Court will take all evidence favorable to the non-movant as true. MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986); Goldberg, 775 S.W.2d at 752. Every reasonable inference will be indulged in favor of the non-movant, as will any reasonable doubt. Id.
When, as in this case, the defendant moves for summary judgment on its own affirmative defenses, the defendant has the burden of proving each element of its defense as a matter of law. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). In this case, the trial court rendered a general summary judgment. Therefore, we must consider whether any of the theories asserted by AIG are meritorious. State Farm Fire & Cas. Co. v. S.S., 858 S.W.2d 374, 380 (Tex.1993); Hardy Road 13.4 Joint Venture v. Med. Center Bank, 867 S.W.2d 889, 892 *54 (Tex.App.Houston [1st Dist.] 1993, writ denied).
Slander
AIG attacks Free's claim of slander on three grounds. First, AIG contends that Boyd's statements to Peterson were not defamatory as a matter of law; second, that the Peterson conversation was invited by Free; and third, that all three conversations were protected by a qualified privilege.
1. Defamation as a matter of law
The trial court was provided with a tape recording of the Peterson conversation. AIG contends that the tape (and the transcript of the tape) eliminate any material issue of fact regarding whether Boyd said anything defamatory. The transcript of the conversation indicates that Boyd referred to Free as a "lightweight" who "lacked a comprehensive grasp of what was necessary to handle large accounts," failed to produce, failed to follow through, and who "would vacillate, procrastinate and allow things to languish entirely too long."
AIG does not argue that Boyd's statement to Peterson was true, or even that it was protected opinion. See, e.g., Yiamouyiannis v. Thompson, 764 S.W.2d 338, 340 (Tex. App.San Antonio 1988, writ denied). Instead, AIG argues that Boyd's statement was simply not capable of a defamatory meaning.
A statement may be false, abusive, and unpleasant without being defamatory. Schauer v. Memorial Care Sys., 856 S.W.2d 437, 446 (Tex.App.Houston [1st Dist.] 1993, no writ). Whether words are reasonably capable of a defamatory meaning is a question of law for the court. Carr v. Brasher, 776 S.W.2d 567, 570 (Tex.1989). Only if the court determines that the language is ambiguous should the jury be permitted to determine the statement's meaning and the effect the statement has on the ordinary listener. Musser v. Smith Protective Servs., Inc., 723 S.W.2d 653, 655 (Tex.1987).
A statement is defamatory if the words tend to injure a person's reputation, exposing the person to public hatred, contempt, ridicule, or financial injury. Einhorn v. LaChance, 823 S.W.2d 405, 411 (Tex. App.Houston [1st Dist.] 1992, writ dism'd w.o.j.). In addition, however, words which are otherwise not actionable can become so if they affect a person injuriously in his or her office, profession, or occupation. Gulf Constr. Co. v. Mott, 442 S.W.2d 778, 783 (Tex.Civ.App.Houston [14th Dist.] 1969, no writ). In this case, Free's summary judgment evidence included the deposition of Craig Peterson, the professional recruiter hired by Free. Peterson stated that Boyd's statement to him was "a very skillful blackball" and that "someone with that kind of a stigma attached to his background is probably not going to find gainful employment at any significant level." Boyd essentially branded Free an incompetent. Free established a fact issue as to whether Boyd's statement to Peterson was capable of a defamatory meaning. Summary judgment was therefore improper to the extent that it was based on AIG's contention that even assuming the statements were false, nothing defamatory was ever said to Peterson.
2. Affirmative defense of invitation
AIG argues that even if Boyd made defamatory statements about Free, summary judgment was still proper, because as a matter of law Boyd's statements were protected by the affirmative defense of invitation. A plaintiff may not recover for a publication to which he has consented, or which he has authorized, procured, or invited. Ramos v. Henry C. Beck Co., 711 S.W.2d 331, 336 (Tex.App.Dallas 1986, no writ). This privilege has been applied where the plaintiff has given references to a prospective employer, and the former employer makes defamatory statements. See, e.g., Smith v. Holley, 827 S.W.2d 433, 437 (Tex.App.San Antonio 1992, writ denied). The privilege bars recovery even if the speaker acted with malice. Id. at 438.
Relying on Frank B. Hall & Co. v. Buck, 678 S.W.2d 612, 618 (Tex.App.Houston [14th Dist.] 1984, writ ref'd n.r.e.), cert. denied, 472 U.S. 1009, 105 S. Ct. 2704, 86 L. Ed. 2d 720 (1985), Free argues that the fact that Free told Peterson that Boyd was his former supervisor does not bar his claim for *55 defamation because he did not know what Boyd would say. The court in Buck allowed recovery despite the invitation defense, because there was no evidence that the plaintiff knew in advance what the defendant might say about the plaintiff. Id. at 619. Here, the parties dispute the extent and nature of the prior knowledge that Free had.
AIG contends that Free's letter of resignation eliminates any genuine issue of material fact about whether Free knew that Boyd would defame him. This argument is unpersuasive. Free's letter of resignation stated that he had been asked to resign because "Boyd believed I had intentionally misinformed him as to my location the morning of April 18, 1991." Free's letter went on to recount the circumstances leading to his resignation:
Mr. Boyd started asking me about the status of the various audits I was working on. These files were not in one central location so I began to move about my office to retrieve these files while attempting to continue my conversation with Mr. Boyd. When he came to an audit file by the name of Ivex Packaging, Mr. Boyd claims that instead of requesting the status of the file he asked if I had been out to the insureds the morning of the 18th. I understood him to be asking the same as he had been on all the other files and proceeded to give him the status of the audit to date. When Mr. Boyd got what he thought was an affirmative answer to his question concerning my location the morning of the 18th he called Mr. Denis Sucec at Ivex to confirm. Mr. Sucec told him I had not been there the morning of the 18th.
Free concluded the letter by stating that he was protesting his resignation because "it may create the appearance that I agree with the erroneous allegation, which I do not."
AIG argues that the letter effectively accuses Boyd of making "erroneous allegations." Nowhere in the letter, however, does Free accuse Boyd of knowingly or purposely manufacturing allegations against him. Rather, the above-quoted language suggests that the incident was caused as much by simple miscommunication as anything else. While the letter constitutes some evidence that Free had reason to believe that Boyd might not speak favorably about him, it certainly does not establish the fact as a matter of law.
We hold that AIG failed to establish, as a matter of law, its affirmative defense of invitation.
3. Qualified privilege
AIG also contends that all three conversations were protected by a qualified privilege. The parties agree that under the facts of this case, whether a qualified privilege exists is a question of law. Schauer, 856 S.W.2d at 449; Houston v. Grocers Supply Co., 625 S.W.2d 798, 800 (Tex.App.Houston [14th Dist.] 1981, no writ). A qualified privilege protects communications made in good faith on a subject in which the author has an interest or a duty to another person having a corresponding interest or duty. Martin v. Southwestern Elec. Power Co., 860 S.W.2d 197, 199 (Tex.App.Texarkana 1993, no writ).
AIG had the burden of proving good faith, an interest to be upheld, a statement limiting its scope to this purpose, a proper occasion, and publication in a proper manner and to proper parties only. Martin, 860 S.W.2d at 199. The law presumes good faith and want of malice where the statement is qualifiedly privileged. Marathon Oil Co. v. Salazar, 682 S.W.2d 624, 630 (Tex.App. Houston [1st Dist.] 1984, writ ref'd n.r.e.). The privilege is lost, however, if the statement was in any degree actuated by malice. Id. at 631. The general rule is that when publication of an allegedly defamatory statement is made under circumstances creating a qualified privilege, the plaintiff has the burden to prove malice. Where the defendant moves for summary judgment, however, the defendant assumes the burden of proving the absence of malice. Martin, 860 S.W.2d at 199.
Free apparently concedes that AIG established the applicability of the privilege. Indeed, it is clear that Boyd's statements to Peterson were made under circumstances creating the qualified privilege. The privilege *56 applies to statements made by a former employer to a prospective employer or to a headhunter such as Peterson. Pioneer Concrete v. Allen, 858 S.W.2d 47, 50 (Tex.App. Houston [14th Dist.] 1993, writ denied). Likewise, there is no dispute that Boyd's statements to McGlade and Predmore concerned Free's performance of his duties at AIG and his compliance with AIG policies.
Free argues, however, that AIG failed to prove that Boyd acted without malice. We agree. In its motion for summary judgment, AIG presented the trial court with the affidavits of Predmore and McGlade. Both affiants stated that they did not feel that Boyd's statements to them were malicious. The issue, however, was Boyd's state of mind. AIG was required to disprove, as a matter of law, that Boyd either knew his statements were false or was reckless concerning their falsity. Carr, 776 S.W.2d at 571. In Casso v. Brand, 776 S.W.2d 551, 559 (Tex.1989), the Texas Supreme Court held that the defendant's own affidavit attesting to the absence of malice can be sufficient to require the plaintiff to establish malice by independent evidence. Here, however, AIG never introduced any evidence concerning Boyd's subjective state of mind. Thus, AIG failed to establish, as a matter of law, that Boyd's statements were privileged.
Emotional distress
To prevail in a suit for intentional infliction of emotional distress, the plaintiff must show: (1) intentional or reckless conduct; (2) that is extreme or outrageous; (3) that caused emotional distress; (4) that was severe in nature. Twyman v. Twyman, 855 S.W.2d 619, 621 (Tex.1993). In its motion for summary judgment, AIG argued (1) that nothing Boyd did or said was "extreme and outrageous;" and (2) that Boyd was not acting within the course and scope of his employment with AIG and thus did not render AIG liable under respondeat superior.
Nothing Boyd said to Peterson was "extreme and outrageous." Although we have held that there was a fact issue whether Boyd's statements to Peterson were defamatory, calling Free a "lightweight" who "allowed things to languish" simply cannot be considered so utterly intolerable or atrocious as to sustain a claim of intentional infliction of emotional distress. Randalls Food Market, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995).
Negligence
Free's petition alleged that AIG's negligent supervision of Boyd resulted in Boyd's slander and intentional infliction of emotional distress on Free. On appeal, AIG argues that because both the slander and the emotional distress claims fail, the negligence claim must also fail. Because we have reversed the judgment of the trial court as to the slander claim, however, this argument is inapplicable. Thus, there are no grounds to support the summary judgment as to Free's claim of negligence.
We sustain points of error one, three, and four. We overrule point of error two.
Motion for new trial
Free's fifth point of error is that the trial court erred in overruling Free's motion for new trial. Nothing in Free's brief mentions or addresses this alleged error. Free has abandoned this point on appeal. Raitano v. Texas Dept. of Public Safety, 860 S.W.2d 549, 554 ((Tex.App.Houston [1st Dist.] 1993, writ denied) (a point of error unsupported by the citation of authority presents nothing for review). We overrule point of error five.
Conclusion
We affirm the trial court's judgment as to intentional infliction of emotional distress, and reverse and remand as to slander and negligence. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1516339/ | 420 S.W.2d 165 (1967)
Carolyn Vee BOHN, Appellant,
v.
Wilford J. BOHN, Appellee.
No. 15168.
Court of Civil Appeals of Texas, Houston (1st Dist.).
September 14, 1967.
Rehearings Denied October 12, 1967.
*167 Andrews, Kurth, Campbell & Jones, Homer Mabry, Houston, Adams, Granberry & Hines, F. P. Granberry, Crockett, for appellant.
Carey Williams, Houston, for appellee.
COLEMAN, Justice.
This appeal arises out of a suit for divorce. Appellant's primary complaint concerns the disposition made of the property of the parties.
This suit was filed by appellee. A judgment of divorce was entered on the cross-action of appellant, who was granted custody of the children. Appellee was required to make payments for the support of the children and was granted visitation privileges. Appellant complains of the judgment in respect to the provisions for support and visitation as well as the provisions regarding the division of the property owned by the parties. There is no appeal from that part of the judgment decreeing a divorce.
The parties were married June 2, 1957. At that time appellee was about thirty-five years of age. He had degrees in Business Administration and Law. He had served in the armed forces of this country for four years in World War II and one year during the Korean War, entering the service as a private and leaving as a 1st Lieutenant. He had practiced law for two years as an employee of different oil companies.
At the time of the marriage appellant was twenty-three years of age. She was a graduate of Southern Methodist University and had taught school in Dallas for one year. There is testimony that she suffered from an inferiority complex. She owned an automobile, some furniture, a relatively small amount of cash, and stock in the Southland Life Insurance Company worth about $70,000.00.
Appellee had little separate property other than an automobile. He had lost his job, and had determined to enter the private practice of law in Tyler. After the wedding appellant's parents gave the couple $2,000.00 as a wedding present. They gave appellee some office furniture. In November, 1957, appellant's parents gave them 60 shares of stock of Citizens First National Bank of Tyler, and also provided them funds with which to acquire a membership in a country club in Tyler, Texas. During the marriage appellant's parents made other gifts to the couple, including some stock in the Southland Life Insurance Company. They also permitted their daughter to draw checks on their bank account and she drew checks in the approximate amount of $33,000.00. There was testimony that this amount was considered an advancement against her share of the estate of her parents.
In November, 1957, appellant had a miscarriage. During this month at appellee's suggestion she agreed to give him one-half of her Southland Life stock and had it transferred into his name. Appellant testified that appellee told her that for estate tax purposes it would be wise if all of the stock was not in her name and that it would be much better if he had half of it because there wouldn't be as much estate *168 tax to pay in the event of her death. She also testified that appellee asked her to transfer the stock over to him to show and prove how much she loved him. She testified that she had faith and confidence in him and expected the marriage to last for the balance of her life. She testified that she understood from her conversation with appellee that if their marriage terminated prior to the death of one of them, she would get the stock back. She also testified that he asked her not to mention the transfer of stock to her parents.
While appellee stated that "perhaps" the discussion of the inheritance and estate tax was a secondary aspect to the gift itself, he admitted that the matter of benefits to the estate resulting from a gift to him of half of appellant's stock was discussed. He did not deny or contradict any of appellant's testimony concerning the circumstances leading to the gift. A written instrument executed by appellant and appellee conveying the stock to a third person in trust for the purpose of transferring it to appellee as a gift was introduced together with the written transfer from the trustee to appellee.
At the time of the trial the Southland stock transferred to appellee, the ownership of which he had retained, had increased in value to a sum of approximately $140,000.00. Appellant remained owner of stock of a greater value. Both parties had sold some of the stock in their respective names to purchase and improve their Houston residence, and appellee had sold some of the stock in his name to make certain payments on a 216 acre farm in Houston County, and appellant had sold some stock to secure cash for her living expenses.
In his judgment the trial court found that the shares of stock of the Southland Life Insurance Company carried on the books of the company in the name of Wilford J. Bohn were his separate property and set these shares of stock apart to him free from any claim of appellant.
The court made the same finding and decree in regard to the shares of stock in that company standing in the name of appellant.
The court further found that a 216 acre tract of land purchased by appellee during the marriage was the separate property of appellee and set over to him this tract of land, together with all improvements thereon and the farm equipment.
It is undisputed in the record that a down-payment of $6,400.00 was made on the purchase price of this land, $3,200.00 of which appellee secured from a sale of Southland Life Insurance Company stock. The balance of the down-payment was paid with the proceeds of a bank loan. The note given for the balance of the purchase price in the sum of $22,680.00 was executed by appellee alone, and was secured by the vendor's lien and a deed of trust. Neither this note, nor the note given the bank for $3,200.00 to complete the down-payment, contained any recitations limiting the liability of the community estate or providing that it should be paid from appellee's separate estate. The deed, however, recited that the downpayment was made by appellee out of his separate property, and purported to convey the land to appellee as his separate property.
The decree recited that all other property in the possession of the parties, except for specified properties held for the benefit of their minor children, "is community property of the parties hereto" and proceeded to divide it. Appellant was given the community homestead together with all household furniture, furnishings, appliances, silver, china, glassware, her personal clothing, jewelry, her automobile, one-half of the balance in certain bank accounts, and other items. She was required to assume the indebtedness on the homestead. Appellee was given his automobile, certain firearms, his personal effects, office furniture, law books, accounts *169 receivable, his business bank account, and other items.
Appellant's principal points of error concern the action of the trial court in failing to set aside the gift of stock made by her to appellee, and in finding the Houston County farm to be appellee's separate property.
The trial court erred in his conclusion that the Houston County farm constituted the separate property of appellee. In the absence of evidence to support a finding that the vendor's lien note executed during the marriage by appellee would be paid out of the separate property of appellee, it necessarily follows that a portion of the purchase price was paid by the community, since by presumption and legal effect the note is a community obligation. That portion of the down-payment paid with the funds acquired by a bank loan must be deemed paid with community funds. The community furnished $25,880.00 of the total consideration of $28,080.00, and thereby acquired a pro tanto ownership in the property. Broussard v. Tian, 156 Tex. 371, 295 S.W.2d 405 (1956).
The trial court is authorized by Article 4638, Vernon's Ann.Civ.St., to divide the property of the parties as he shall deem just and right, "having due regard to the rights of each party and their children, if any," but the trial court may not divest either party of title to real estate owned in his or her separate right. Hailey v. Hailey, 160 Tex. 372, 331 S.W.2d 299, 1960; Reardon v. Reardon, 163 Tex. 605, 359 S.W.2d 329, 1962; Hedtke v. Hedtke, 112 Tex. 404, 248 S.W. 21, 1923.
The statute has been construed to mean that the separate property should be restored to its owners, respectively, and that such division of the community be made as may seem just and right. Fitts v. Fitts, 14 Tex. 443; Puckett v. Puckett, 205 S.W.2d 124, Tex.Civ.App., Texarkana, 1947.
It is well settled, however, that when circumstances require it, the trial court may divide the separate personal property of the parties in such manner as may seem just and right. Ex Parte Scott, 133 Tex. 1, 123 S.W.2d 306, 1939; Fuhrman v. Fuhrman, 302 S.W.2d 205, Tex.Civ.App., El Paso, 1957; Grant v. Grant, 351 S.W.2d 897, Tex.Civ.App., Waco, 1961, error dism., woj.
In spite of the broad discretion vested in the trial court in making a division of the property of the parties, the error of the court in determining the status of the Houston County land as being a part of the separate estate of appellee constitutes harmful error, and requires that the case be reversed for a new trial. Since the trial court was of the opinion that this property was not a part of the community estate, it follows that he was of the opinion that it could not be divided between the parties for such action would result in divesting appellee of title to separate real estate. His discretion, therefore, could not have been properly exercised in decreeing the division of the property of the parties.
The trial court refused to set aside appellant's gift of the Southland Life Insurance Company stock to appellee. In so doing he impliedly found that the gift was not a result of undue influence, duress, or any species of fraud practiced on appellant by appellee. He also impliedly found that appellee did not promise to reconvey the stock to appellant in the event of their being divorced. The trial court erred in making these findings since they are not supported by the evidence.
In Mills v. Gray, 147 Tex. 33, 210 S.W.2d 985, 1948, Mrs. Gray conveyed some property to one of her sons. Later the property was sold with her knowledge and consent, and other property purchased with *170 the proceeds. Mrs. Gray sued her son, alleging that the property was conveyed to him with an understanding that he would reconvey it to her after she was divorced, or, if the property was sold, that he would divide the proceeds with her and his brothers and sisters. The trial court refused to admit evidence of the parol trust. The Supreme Court held that the testimony was erroneously excluded and affirmed the judgment of the Court of Civil Appeals reversing the trial court.
The Supreme Court held that where at the time of a transfer of property the transferee was in a confidential relation to the transferor, and the transferor relied upon his oral promise to reconvey the property, he is chargeable as a constructive trustee of the property for the transferor. In so holding the Court quoted with approval from Restatement of The Law, Vol. 1, Sec. 44, p. 135; 54 Am.Jur. 178, Sec. 233; and Scott on Trusts, Vol. 1, 253, Sec. 44.2.
The relationship of husband and wife ordinarily is a fiduciary relationship. In Thigpen v. Locke, 363 S.W.2d 247, Tex. Sup.1962, the court quotes from the Restatement of Restitution, § 182, Comment on Clause (b), p. 735, as follows (a confidential relationship exists) "* * * where, because of family relationship or otherwise, the transferor is in fact accustomed to be guided by the judgment or advice of the transferee or is justified in placing confidence in the belief that the transferee will act in the interest of the transferor."
In Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 1951, the court quotes with approval the following passage from Sec. 227, 54 Am.Jur., "Trusts," pp. 174-175:
"An unfair transaction between a confider and a confidant or fiduciary, at least where the confidence is induced by a fiduciary relationship between the parties, gives rise to a constructive trust in respect of any unjust enrichment of the confidant or fiduciary. Where such a transaction is attacked, the burden of proof is on the confidant or fiduciary to establish the fairness of the transaction, and to this end he must fully disclose the facts and circumstances, and affirmatively show his good faith and the absence of pressure or influence on his part in the matter."
In Archer v. Griffith, 390 S.W.2d 735, Tex.Sup.1965, the court said: "The relation between an attorney and his client is highly fiduciary in nature, and their dealings with each other are subject to the same scrutiny, intendments and imputations as a transaction between an ordinary trustee and his cestui que trust. `The burden of establishing its perfect fairness, adequacy, and equity, is thrown upon the attorney, upon the general rule, that he who bargains in a matter of advantage with a person, placing a confidence in him, is bound to show that a reasonable use has been made of that confidence; a rule applying equally to all persons standing in confidential relations with each other.' Story, Equity Jurisprudence, 7th ed. 1857, § 311. This principle has always been recognized by the Texas courts. Cooper v. Lee, 75 Tex. 114, 12 S.W. 483; Holland v. Brown, Tex.Civ.App., 66 S.W.2d 1065 (writ ref.); Bell v. Ramirez, Tex.Civ.App., 299 S.W. 655 (writ ref.)."
In Riley v. Wilson, 86 Tex. 240, 24 S.W. 394 (1893), the court held that a wife could make a valid gift of her separate property to her husband, and in the opinion quoted from Story, Equity Jurisprudence, 1395, as follows:
"Upon this subject the doctrine is now firmly established in equity that she may bestow her separate property, by appointment or otherwise, upon her husband, as well as upon a stranger; but at the same time courts of equity examine every such transaction between husband and wife with an anxious watchfulness and caution, and dread of undue influence."
*171 Since the fairness and validity of the transaction has been brought into question by the testimony of appellant, appellee had the burden of showing the fairness of the transaction and he has failed to meet this burden.
Appellee has urged that appellant's cause of action to set aside the gift of stock is barred by the applicable statute of limitations. Since appellee was married at the time the property was transferred and has been married until this action was brought, her action is not barred. Article 5535, V.A. C.S.; Deaton v. Rush, 113 Tex. 176, 252 S.W. 1025 (1923); Carl v. Settegast, 237 S.W. 238 (Tex.Com.App.1922); Bartholomew v. Bartholomew, 264 S.W. 721 (Tex. Civ.App., 1924); Moore v. Moore, 225 S.W. 78 (Tex.Civ.App., San Antonio 1920).
While there is no direct testimony that appellee told appellant that he wanted to hypnotize her and that she agreed to cooperate to that end, this is a reasonable conclusion to be drawn from the testimony. It appears that the trial court refused to admit testimony of the conclusion that he did hypnotize her, but admitted testimony as to what was said on these occasions. In this the trial court did not err.
The trial court erred in refusing to permit an attorney to testify, in answer to a hypothetical question fairly summarizing the evidence as to the work performed by appellant's attorney, what sum of money would constitute a reasonable attorney's fee.
Points of error were directed at that portion of the judgment permitting appellee to have the children visit with him for two weeks during the summer. The order is sufficiently certain and was not an abuse of discretion.
Other points of error are presented and have been carefully considered. None of them constitute error requiring a reversal of this case.
The judgment of the Trial Court awarding a divorce to appellant and awarding her custody of the children is not disturbed. Otherwise the judgment, including the provisions awarding visitation rights, determining the amount of support to be paid by appellee, and dividing the property of the parties, is severed and is reversed and remanded for a new trial.
Reversed and remanded.
On Motions for Rehearing
Appellee complains that this Court erred in considering points of error concerning the action of the trial court in finding that the shares of stock acquired by appellee from his wife constituted his separate property because the trial court lacked jurisdiction to set aside the gifts made by the wife through the instrumentality of a trustee. This argument is based on the limited jurisdiction of the Court of Domestic Relations.
By Article 2338-11a the Harris County Court of Domestic Relations No. 4 is given jurisdiction concurrent with the District Courts of all divorce cases, including the adjudication of property rights and all other matters involving justiciable controversies between spouses. It was not given jurisdiction to adjudicate disputes as to property rights between husband and wife and third parties. Rose v. Hatten, 417 S.W.2d 456 (Tex.Civ.App., Houston 1966).
Appellee seeks to bring this case under Rose v. Hatten by pointing out that appellant sued to set aside the instrument by which she, joined by her husband, conveyed the stock to Dee Brown Walker, Trustee, "in trust, for the sole and only purpose of conveying the same to Wilford J. Bohn." Thereafter the trustee transferred the stock by instrument in writing to Bohn and caused the stock to be issued to him. Other shares of stock were transferred by Mrs. Bohn to her husband using the same device. The instruments contained warranties. It is appellee's position that these instruments *172 cannot be set aside unless the trustees were made parties, and that if they were made parties the Court of Domestic Relations would not have jurisdiction since there would be a controversy involving title to property between a husband and wife and third parties.
It is well settled that one who desires to create an express, private trust must give his trustee affirmative powers and duties. In the absence of such powers and duties the trust is passive or dry, and legal title, not merely an equitable interest, passes to the cestui que trust. There is respectable authority that the duty of executing a deed to a named cestui que trust is not such a duty as will prevent title from vesting immediately. Bogert, Trusts and Trustees, 2d Ed., § 206. See Moore v. City of Waco, 85 Tex. 206, 20 S.W. 61 (1892); Brown v. Harris, 7 Tex. Civ. App. 664, 27 S.W. 45 (1894); Clark v. Wisdom, 403 S.W.2d 877 (Tex.Civ.App., Corpus Christi 1966).
In any event the trustee had transferred the stock in accordance with the trust instrument when this suit was instituted and the trust had terminated. The trustee never had any equitable interest in the stock. There could be no liability under the trustee's warranty since the trust was executed and there was no monetary consideration. Ragsdale v. Ragsdale, 172 S.W.2d 381 (Tex.Civ.App., Galveston 1943), aff'd 142 Tex. 476, 179 S.W.2d 291.
It is our opinion that Dee Brown Walker was not a necessary party to this suit to set aside the instruments in question. The fact that the trustee was not made a party apparently did not bother the court in Ragsdale v. Ragsdale, 142 Tex. 476, 179 S.W.2d 291 (Tex.Com.App.1944, opinion adopted), a suit to set aside a trust agreement, nor the court in Caffey's Ex'rs et al. v. Caffey, 12 Tex. Civ. App. 616, 35 S.W. 738 (1896). See also Golob v. Stone, 262 S.W.2d 536 (Tex.Civ.App., Texarkana 1953).
The motions for rehearing are overruled. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1653241/ | 576 So. 2d 490 (1991)
Alvin WILSON
v.
STATE of Louisiana, Through the DEPARTMENT OF PUBLIC SAFETY AND CORRECTIONS.
consolidated with
Ed HILLIARD, Jr.
v.
STATE of Louisiana, Through the DEPARTMENT OF PUBLIC SAFETY AND CORRECTIONS.
No. 90-C-1679.
Supreme Court of Louisiana.
March 11, 1991.
*492 Charles E. Griffin, II, St. Francisville, Albert F. Richard, Plaquemine, for Alvin and Ed Hilliard plaintiffs-applicants.
William J. Guste, Jr., New Orleans, Houston T. Penn, Asst. Atty. Gen., Joseph E. Kopsa, Baton Rouge, for State of La. Dept. of Public Safety defendant-respondent.
COLE, Justice.
We determine whether the State of Louisiana, through the Department of Public Safety and Corrections, as a custodian of prisoners, is liable for criminal acts perpetrated on the plaintiffs by an escaped convict where the incidents in question took place thirteen days after the convict left the grounds of the prison. The trial court, having conducted a bench trial, held the State liable to the victims. The Court of Appeal, First Circuit, reversed the trial court's holding of liability. We conclude the court of appeal correctly set forth the applicable law but erroneously applied the law to the facts of the case. Hence, we reverse the holding of the court of appeal on the issue of the State's liability. The court of appeal did not address the issue of damages. However, we find no abuse of discretion in the awards and, in the interest of judicial economy, we reinstate the judgments of the trial court as regards both liability and quantum.
I.
Plaintiffs Alvin Wilson and Ed Hilliard, Jr. brought this negligence action against the State of Louisiana through the Department of Public Safety and Corrections seeking compensation for both personal injuries and theft of their property. Plaintiffs were the victims of a robbery committed by an escaped convict, Robert Downs, who had been confined to the Louisiana State Penitentiary, Angola, Louisiana, for a term of 198 years for armed robbery.
Downs and two other convicts escaped from Angola on the evening of August 23, 1986. They had removed a cinder block from a wall constructed underneath an elevated gym, made their way to the perimeter fence, and cut through the fence directly below an unmanned guard tower. Their escape was detected within the hour, and prison officials immediately initiated a search. The search team used dogs, placed guards at key locations, and patrolled the area. Subsequently, the search personnel were deployed to different locations in Mississippi as the officials began receiving leads on the whereabouts of the escaped convicts. The search, although lessened in intensity, was not formally called off until the occurrence of the incidents involved in this action.
On the evening of September 5, 1986, plaintiffs were confronted by Downs as they returned home to a trailer located several miles from the prison grounds. While holding plaintiffs at gunpoint, Downs ordered them to give him the keys to Wilson's truck, led them inside the trailer, and tied them up with wire hangers. He stole clothing, money, food, weapons, and the truck. After the plaintiffs were discovered by a neighbor, they identified Downs at the local sheriff's office as the one who had assaulted and robbed them.
Contending the state was negligent in allowing Downs to escape from its custody, plaintiffs filed suit seeking damages for both the personal injuries they had suffered and the theft of their property. The trial court found the State at fault, awarding damages of $17,500 to Wilson and $15,000 to Hilliard. The court found the criminal acts were perpetrated during the course of an ongoing escape and were committed to obtain money and transportation to effectuate the escape.
The court of appeal reversed and rendered judgment for the defendant. Wilson v. Dept. of Public Safety & Corr., 563 So. 2d 1251 (La.App. 1st Cir.1990). It held the trial court erred in finding the injuries sustained by the plaintiffs were within the scope of the duty owed by the state. Specifically, it held the district court erred in finding the criminal acts committed by Downs, thirteen days after his escape, *493 were "an integral part of the process of escaping." Id. at 1253. Further, the court concluded:
As a matter of policy, the state's liability should not extend to acts of violence committed by escaped convicts thirteen days after the escape from confinement. Consequently, we hold that, in this case, the risk that an escaped convict would harm these plaintiffs thirteen days after the escape is simply too remote to fall within the scope of the custodian's duty to prevent inmates from escaping.
Wilson, supra, at 1254 (citation omitted).
II.
We have not previously set forth the test to be applied when the victim of a crime committed by an escapee sues prison authorities for the damage inflicted. As a general proposition,
[t]he determination of liability in a negligence case usually requires proof of five separate elements: (1) proof that the defendant had a duty to conform his conduct to a specific standard (the duty element); (2) proof that the defendant's conduct failed to conform to the appropriate standard (the breach element); (3) proof that the defendant's substandard conduct was a cause-in-fact of the plaintiff's injuries (the cause-in-fact element); (4) proof that the defendant's substandard conduct was a legal cause of the plaintiff's injuries (the scope of liability or scope of protection element); and (5) proof of actual damages (the damages element). The first element is usually a judge question, and the other four are usually jury questions unless reasonable minds could not differ.
Fowler v. Roberts, 556 So. 2d 1, 4-5 (La. 1989) (citation omitted). More specifically, the courts of appeal in this state have fashioned a test from principles implicit in our opinion in Frank v. Pitre, 353 So. 2d 1293 (La.1978). The test, reiterated by the court of appeal in this case, is one we believe enables courts to arrive at practical, common-sense results while balancing the interests of the State, as custodian, and innocent plaintiffs injured as a result of the State's negligent conduct.
Custodians of prisoners have a duty to manage the affairs of the prison so as not to create an unreasonable risk of harm to the public. This duty does not encompass all harm inflicted by escapees. Although prison authorities have a duty to prevent inmates from escaping, that duty is intended to protect persons from being harmed by escaping inmates while they are in the process of escaping. The duty is not intended to protect persons from harm inflicted by inmates who have already escaped and who subsequently commit tortious acts in the furtherance of their own pursuits. The state is not the insurer of the safety of its citizens. To recover against a custodian, a plaintiff must prove that the custodian was negligent in the management of the prison, that this negligence facilitated the escape, that the actions of the escapee caused the harm complained of, and that the risk of harm encountered by the particular plaintiff falls within the scope of the duty owed by the custodian. Wilson, 563 So.2d at 1253 (citing Sanchez v. State, Department of Health & Human Resources, 506 So. 2d 777 (La.App. 1st Cir.1987)); LeBlanc v. State, Through Dept. of Corrections, 393 So. 2d 125 (La.App. 1st Cir.), writ denied, 394 So. 2d 1235 (La.1980); and, Reid v. State, Department of Corrections, 376 So. 2d 977 (La.App. 1st Cir.1979), writ denied, 380 So. 2d 71 (La.1980). See also, Edwards v. State, 556 So. 2d 644, 649 (La. App. 2d Cir.1990).
In resolving the scope of the duty issue, improper emphasis has occasionally been placed on foreseeability or on the proximity of time and distance between the escape and the escapee's offense that caused the injury to his victim. The proper question is whether the offense occurred during, or as an integral part of, the process of escaping. Edwards, supra, at 649; LeBlanc, supra, at 128.[1]
*494 The court of appeal, while acknowledging the proper legal precepts, held, nonetheless, that the trial court erred in finding the criminal acts committed by Downs thirteen days after his escape were an integral part of the process of escaping. It determined that "[a]s a matter of policy, the state's liability should not extend to acts of violence committed by escaped convicts thirteen days after the escape from confinement." Wilson, 563 So.2d at 1254 (citation omitted). The court concluded the risk that an escaped convict would harm Wilson and Hilliard thirteen days after the escape is "simply too remote to fall within the scope of the custodian's duty to prevent inmates from escaping." Id.
We disagree with the conclusion reached by the court of appeal. The record fully supports the trial court's finding that Downs was dangerous and would be seeking food, clothing, weapons, and transportation to make his way out of Louisiana. Although there is some dispute as to whether it is eight or fifteen miles from the penitentiary, Hilliard's residence is within the normal area of containment set up by prison personnel in the event of a prison break (i.e., the search perimeter). At the time of the incident, the search for Downs and the other two inmates had not been formally abandoned, tending to indicate the defendant's suspicion Downs remained within the search perimeter. Under these circumstances, we have no difficulty concluding the theft of Wilson's truck was a necessary and integral component of the escape process. The truck enabled Downs to pass the search zone established by the authorities and greatly facilitated his successful flight from the state. The stolen food, clothing and money further aided in the process of the escape.
We emphasize the primary focus of the inquiry is on the question of whether the acts giving rise to the suit occurred during, or as an integral part of, the process of escaping. The operative word is "process," since there is no bright-line point of delineation which will satisfactorily assist a court in making the appropriate duty-risk analysis.[2] To focus exclusively on the time expiring after the inmate's exit from the prison grounds to the point where he victimizes a plaintiff leads to arbitrary cut-off points which serve neither the interests of plaintiffs nor those of the State. The same may be said of the distance involved. If an act committed one hour and one mile from the point of departure is compensable and one committed one month and one hundred miles from the same point is not, we are left without means to draw the line except in some arbitrary fashion unsatisfactory to all concerned. This is not to say considering these factors is impermissible. Rather, they are but two factors among many, which will vary with the circumstances of each case, that should be considered in determining whether the acts for which the plaintiff seeks compensation were committed during, or as an integral part of, the process of escaping.
III.
Because the court of appeal found no liability on the part of the State, it did not address the issue of damages raised by both plaintiffs and defendant. Similarly, the court of appeal did not address the issue of whether plaintiffs proved the prison custodian was negligent because it found the trial court erred in finding the injuries were within the scope of the duty owed by the State. Wilson, 563 So.2d at 1253. The court explicitly recognized that *495 the defendant has a duty to manage the affairs of the prison so as not to create an unreasonable risk of harm to the public. Id. The court implicitly recognized the duty was breached by the State in allowing the three convicts to escape. In any event, the court did not disturb the trial court's finding that the duty was breached. Although the issue was not fully briefed or argued before us, we find no manifest error, see Rosell v. Esco, 549 So. 2d 840, 844 (La.1989), in the trial court's conclusion that allowing inmates at a maximum security institution to remain unsupervised for a time sufficient to remove a cinder block from a wall, to crawl through the hole thus made, to cut through the wire fence at the perimeter of the same facility beneath an unmanned guard tower, and to remain at large without warning to those in plaintiffs' position, all constitute a breach of the State's duty. We will therefore not disturb the trial court's finding of negligence. And, as previously noted, we find no abuse of discretion in the monetary awards made to the respective plaintiffs.
Accordingly, we reverse the judgment of the court of appeal as to the State's liability and reinstate the judgments of the trial court as regards both liability and quantum.
REVERSED: TRIAL COURT JUDGMENTS REINSTATED.
LEMMON, J., concurs.
MARCUS, J., dissents and assigns reasons.
MARCUS, Justice (dissenting).
Assuming that the state was negligent, I do not believe that the injuries sustained by the plaintiffs were within the scope of the duty owed by the state. The risk that an escaped convict would harm these plaintiffs thirteen days after the escape and eight or fifteen miles from the penitentiary is too remote to fall within the scope of the custodian's duty to prevent inmates from escaping. Accordingly, I respectfully dissent.
NOTES
[1] Stated another way, the proper inquiry is how easily the risk of injury is associated with the duty that is sought to be enforced. Edwards, supra, at 649.
[2] We reject categorically the State's contention that the concept of escape in negligence actions should be linked to the definition of simple escape found in La.Rev.Stat. § 14:110(A)(1) (West 1986). That statute provides
[s]imple escape shall mean ... [t]he intentional departure ... of a person imprisoned, committed, or detained from a place where such person is legally confined, from a designated area of a place where such person is legally confined, or from the lawful custody of any law enforcement officer or officer of the Department of Public Safety and Corrections.
This restrictive definition of the process of escape, i.e., the escape is complete as soon as the escapee leaves the grounds of the prison, is not feasible. It would limit compensation to those injured by the inmate while he remained on the prison grounds, presumably guards and other inmates. No court has hinted the class of persons who may recover is to be so limited. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1676721/ | 432 So. 2d 1082 (1983)
AETNA INSURANCE COMPANY, Plaintiff-Appellee,
v.
GRADY WHITE BOATS, INC., et al., Defendant-Appellant.
No. 82-685.
Court of Appeal of Louisiana, Third Circuit.
May 25, 1983.
*1083 Haik, Haik & Minvielle, Edwin S. Patout, New Iberia, for plaintiff-appellant.
Voorhies & Labbe, Amos H. Davis, Allen, Gooch & Bourgeois, Arthur I. Robison, Hiatt, Fazzio & Kuehne, Anthony Fazzio, Lafayette, Gibbens & Blackwell, John Blackwell, New Iberia, Camp, Carmouche, Barsh, Hunter, Gray & Hoffman, Randy J. Fuerst, Lake Charles, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, for defendant-appellee.
Before DOMENGEAUX, FORET and CUTRER, JJ.
FORET, Judge.
Aetna Insurance Company (plaintiff) brought this action to recover the sum of $9,000, which it paid to two of its insureds for the loss of a boat owned by them. One of the named defendants is Himel Marine, Inc. (Himel). Himel brought a third party demand against its comprehensive general liability insurer, United States Fidelity & Guaranty Company (USF & G). In response, USF & G filed a motion for summary judgment.
The trial court, after hearing USF & G's motion, rendered judgment in its favor, dismissing Himel's third party demand with prejudice.
Himel appeals and raises the following issues:
(1) Whether the trial court erred in finding no genuine issue of material fact with respect to the insurance coverage afforded Himel by USF & G; and,
(2) Whether the trial court erred in finding no genuine issue of material fact with respect to USF & G's duty to defend Himel.
FACTS
In its petition, plaintiff alleged that two of its insureds (Alvin J. Toups, Jr. and Steven Wright) were the owners of a vessel which sank in the Gulf of Mexico after striking an oil rig. On the day of the accident, plaintiff had in full force and effect a policy of insurance on the vessel. Pursuant to the terms of that policy, plaintiff paid its insureds $9,000. It then instituted *1084 this action alleging that it was legally and/or contractually subrogated to the rights of its insureds. Plaintiff's insureds had purchased the vessel from Himel, and it alleged that Himel had committed certain acts of negligence which were a cause-in-fact of the accident. Plaintiff also sought to assert a cause of action against Himel on the basis of strict liability.
Himel, after answering plaintiff's petition, filed a third party demand against USF & G in which it alleged that USF & G had issued it a contract of insurance providing coverage for completed operations hazard and product hazards. In addition, Himel alleged that the contract of insurance provides that USF & G shall have the right and duty to defend any suit brought against it, and that USF & G had refused to defend it against plaintiff's suit. USF & G then filed its motion for summary judgment alleging that no genuine issue of material fact existed and that it was entitled to judgment as a matter of law.
MOTION FOR SUMMARY JUDGMENT
Himel contends that the trial court erred in granting USF & G's motion for summary judgment because there exists a genuine issue as to certain material facts, i.e., the coverage afforded by USF & G to it under the terms of the policy.
"COVERAGE B-PROPERTY DAMAGE LIABILITY" found in the comprehensive general liability insurance provisions of the policy reads as follows:
"The Company will pay on behalf of the Insured all sums which the Insured shall become legally obligated to pay as damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence, and the Company shall have the right and duty to defend any suit against the Insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation or settlement of any claim or suit as it deems expedient, but the Company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the Company's liability has been exhausted by payment of judgments or settlements."
(Underscoring indicates policy language emphasis by darker print.)
Completed operations hazard is defined as follows:
"`completed operations hazard' includes bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the Named Insured. `Operations' include materials, parts or equipment furnished in connection therewith. Operations shall be deemed completed at the earliest of the following times:
(1) when all operations to be performed by or on behalf of the Named Insured under the contract have been completed,
(2) when all operations to be performed by or on behalf of the Named Insured at the site of the operations have been completed, or
(3) when the portion of the work out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
Operations which may require further service or maintenance work, or correction, repair or replacement because of any defect or deficiency, but which are otherwise complete, shall be deemed completed.
The completed operations hazard does not include bodily injury or property damage arising out of:
*1085 (a) operations in connection with the transportation of property, unless the bodily injury or property damage arises out of a condition in or on a vehicle created by the loading or unloading thereof,
(b) the existence of tools, uninstalled equipment or abandoned or unused materials, or
(c) operations for which the classification stated in the policy or in the Company's manual specifies `including completed operations';"
Products hazard is defined as follows:
"`products hazard' includes bodily injury and property damage arising out of the Named Insured's products or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs away from premises owned by or rented to the Named Insured and after physical possession of such products has been relinquished to others;"
Exclusions (n) and (o) found in the comprehensive general liability insurance provisions read as follows:
"This insurance does not apply:
. . . . .
(n) to property damage to the Named Insured's products arising out of such products or any part of such products;
(o) to property damage to work performed by or on behalf of the Named Insured arising out of the work or any portion thereof, or out of materials, parts or equipment furnished in connection therewith ....".
(Underscoring indicates policy language emphasis by darker print.)
Finally, "Named Insured's products" is defined as follows:
"`Named Insured's products' means goods or products manufactured, sold, handled or distributed by the Named Insured or by others trading under his name, including any container thereof (other than a vehicle), but `Named Insured's products` shall not include a vending machine or any property other than such container, rented to or located for use of others but not sold;"
In its brief filed in this Court, USF & G states that it has never denied that the policy it issued Himel provides coverage for completed operations hazard and products hazard. However, it argues that there is a significant difference between the extension of coverage for damages arising out of operations or the named insured's products, as opposed to the exclusion of coverage for damage to the named insured's products.
In its oral reasons for judgment, the trial court noted this distinction and stated that:
"A reading of the exclusionary language in this liability policy makes it clear to me that damage to the product itself is excluded from coverage, the purpose of the policy being a multi-peril liability type policy, and not a collision type or property damage in itself type policy."
Our jurisprudence is settled to the effect that liability policies containing exclusions similar to those reproduced above provide no coverage to the insured for repair or replacement of his own defective work or defective product. See Vobill Homes, Inc. v. Hartford Accident & Indemnity Company, 179 So. 2d 496 (La.App. 3 Cir.1965), writ denied, 181 So. 2d 398 (La.1966); Vitenas v. Centanni, 381 So. 2d 531 (La.App. 4 Cir. 1980); Peltier v. Seabird Industries, Inc., 304 So. 2d 695 (La.App. 3 Cir.1974), writ denied, 309 So. 2d 343 (La.1975); Breaux v. St. Paul Fire & Marine Insurance Co., 345 So. 2d 204 (La.App. 3 Cir.1977); Superior Steel, Inc. v. Bituminous Casualty Corporation, 415 So. 2d 354 (La.App. 1 Cir.1982).
We agree with the trial court's finding that no coverage is provided by USF & G for damage to the named insured's (Himel's) products.
However, Himel argues that the endorsements for coverage for completed operations hazard and products hazard supersede the exclusions found in the policy. In the alternative, Himel argues that said endorsements conflict with the exclusions and give rise to ambiguity in the policy. We find no merit to either of Himel's arguments.
*1086 We agree with the lower court's finding that the policy provisions are unambiguous and adopt its following reasoning:
"Now, the only other question is, does the definitions portion in defining, quote, completed operations hazard, close quote, and, quote, products hazard, close quote, do those provisions either make an exception to the exclusion, or, does it create vagueness or possible room for dual interpretation of the policy so that the presumption under the law which would which would favor the insured as opposed to the insurer, since the insurer drafted the language, would apply. I think not. I don't see a contradiction in language. The completed operations hazard definition seeks to include protection against bodily injury and property damage liability arising out of operations. And that word operations is the key word, and it's further defined to include materials, parts, or equipment, and we can assume that boat is equipment. Okay? [sic] again going back to the beginning language, the completed operations hazard includes bodily injury and property damage arising out of operations, not to the equipment. I think that language is clear enough. The rest of the language underneath there, to me, does not bear upon this issue. The same thing is true under the products hazard definition, which includes bodily injury and property damage arising out of the named insured's products. Not to the products, but arising out of them."
Finally, Himel argues that coverage is provided by the USF & G policy because plaintiff's action sounds in tort, rather than redhibition. We find no merit to this argument.
Absent conflict with statute or public policy, insurers may, by unambiguous and clearly noticeable provisions, limit liability and impose such reasonable conditions as they wish upon the obligations they assume by contract. Jones v. MFA Mutual Insurance Company, 410 So. 2d 1190 (La. App. 3 Cir.1982); Livingston Parish School Board v. Fireman's Fund American Insurance Company, 282 So. 2d 478 (La.1973); Oceanonics, Inc. v. Petroleum Distributing Company, 292 So. 2d 190 (La.1974); Breaux v. St. Paul Fire & Marine Insurance Company, 326 So. 2d 891 (La.App. 3 Cir.1976). In these circumstances, unambiguous provisions limiting liability must be given effect. Jones v. MFA Mutual Insurance Company, supra; Breaux v. St. Paul Fire & Marine Insurance Company, 326 So. 2d 891 (La.App. 3 Cir.1976); Snell v. Stein, 259 So. 2d 876 (La.1972); Niles v. American Bankers Insurance Company, 258 So. 2d 705 (La.App. 3 Cir.1972).
DUTY TO DEFEND
Having found no coverage afforded to Himel by USF & G for the loss of plaintiff's insureds' vessel, we must now determine whether USF & G has a duty to defend Himel against plaintiff's claim.
An insurer's obligation to defend suits brought against its insured is determined by the allegations of the plaintiff's petition. The insurer is obligated to provide a defense unless the petition unambiguously excludes coverage. McKinney v. Greene, 379 So. 2d 69 (La.App. 3 Cir.1980), writs denied, 381 So. 2d 1233, 1235 (La.1980); American Home Assurance Company v. Czarniecki, 230 So. 2d 253 (La.1969); Jackson v. Lajaunie, 270 So. 2d 859 (La.1972).
The allegations of plaintiff's petition unambiguously exclude coverage as it states that the vessel (one of the "Named Insured's products") was a total loss as a result of which plaintiff paid the sum of $9,000. It is obvious that plaintiff is seeking to recover for property damage to the vessel itself. Thus, there is no merit to Himel's argument that USF & G has a duty to defend it against plaintiff's claim.
DECREE
For the above and foregoing reasons, the judgment of the trial court is affirmed.
All costs of this appeal are assessed against third party plaintiff-appellant (Himel).
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1752660/ | 521 So. 2d 818 (1988)
James B. GARDNER, et ux., Plaintiffs/Appellants,
v.
Paul LAKVOLD d/b/a Wash on Wheels, et al., Defendants/Appellees.
No. 19,396-CA.
Court of Appeal of Louisiana, Second Circuit.
February 24, 1988.
Lunn, Irion, Johnson, Salley & Carlisle by Gerald M. Johnson, Jr., Shreveport, for plaintiffs/appellants.
Blanchard, Walker, O'Quin & Roberts by Roy S. Payne, Julie M. Lafargue, Bodenheimer, Jones, Klotz & Simmons by Frank H. Thaxton, III, Shreveport, for defendants/appellees.
Before HALL, C.J., and FRED W. JONES, Jr., and SEXTON, JJ.
HALL, Chief Judge.
This is a property damage action involving the removal of paint from the outside of a house, owned by the plaintiffs James B. Gardner and Sally I. Gardner. The defendants are Paul Lakvold d/b/a Wash on Wheels, the contractor of the paint removal job; American Insurance Company, Mr. Lakvold's liability insurer; and Diedrich Chemicals-Restoration Technologies, Inc., the manufacturer of the caustic substance used by Mr. Lakvold to remove the paint from the plaintiffs' house.
The issue is the applicability of two exclusionary clauses contained in a comprehensive general liability policy issued by American to Mr. Lakvold. Plaintiffs appeal *819 the trial court's granting of a motion for summary judgment in favor of American denying insurance coverage on the basis of these exclusions. We reverse and remand.
In March, 1985 the plaintiffs conferred with Paul Lakvold d/b/a Wash On Wheels and Robert H. Nance regarding whether the paint on their home could be removed and the house repainted. Mr. Lakvold told the plaintiffs that he could remove the paint, with the exception of the edges around the doors and windows, and that the house could be repainted. The plaintiffs subsequently contracted with Mr. Lakvold for the removal of the paint from their house and with Mr. Nance for the repainting of the house.
Mr. Lakvold used caustic chemicals manufactured by Diedrich Chemicals-Restoration Technologies, Inc. and high pressure water hoses to remove the paint from the Gardner's home. During this process, water leaked through the windows and doors damaging the interior of the home. The work continued, however, and in late March or early April, 1985, Mr. Lakvold told plaintiffs that he had removed all the paint he could from the house and that he had asked Mr. Nance to inspect the house to see if he could accept it. Mr. Nance reported to the plaintiffs that a considerable amount of paint remained on the house and that he could not paint it in that condition. He also told the plaintiffs that the wood siding had been damaged by the high pressure water hoses and that the house would have to be sanded before it could be repainted. Mr. Lakvold offered to redo the paint removal process but plaintiffs' refused, choosing instead to have Mr. Nance remove the remaining paint with an alternative process. After removing the rest of the paint, Mr. Nance applied the new paint, finishing in June, 1985. By late August or early September the new paint had begun deteriorating.
Mr. Nance opined that when Mr. Lakvold attempted to remove the old paint he had apparently failed to neutralize and/or thoroughly wash the caustic chemicals from the surface of the house and the remaining chemicals were dissolving the new paint. Mr. Nance advised the plaintiffs that they should wait at least a year for the chemical seepage to subside and then strip the affected area down to the bare wood with a neutralizer before repainting. Mr. Nance estimated that this process would cost $5,000.00. He also estimated that an additional $2,500.00 might be needed for work on any areas that might continue to dissolve.
At the time of the incidents complained of, there was in full force and effect a policy of comprehensive general liability insurance issued by the American Insurance Company to Mr. Lakvold which provided property damage coverage. American conceded that the policy provided coverage for the damage to the interior of the house caused by Mr. Lakvold's negligence in allowing water to leak into the house but denied coverage for any repair or restoration work to the exterior of the home. American contends that the damage to the exterior of the home arose out of the allegedly poor workmanship of Mr. Lakvold and the defective materials he used and that the liability policy which it issued to Mr. Lakvold specifically excluded coverage for property damage claimed for repair or replacement of work performed by Mr. Lakvold. The exclusions contained in the "Broad Form Property Damage Liability Coverage (Including Completed Operations)" relied on by American provide as follows:
"This insurance does not apply:
(2) ...
(d) to that particular part of any property, not on premises owned by or rented to the insured ...
(iii) the restoration, repair or replacement of which has been made or is necessary by reason of faulty workmanship thereon by or on behalf of the insured;
(3) with respect to the completed operations hazard ... to property damage to work performed by the named insured arising out of such work or any portion thereof, or out of such materials, parts or equipment furnished in connection therewith."
At the outset we note that the plaintiffs are not seeking to recover the cost of hiring someone to complete the paint removal *820 work undertaken by Mr. Lakvold. They concede that the cited exclusions would preclude coverage for that item of damages. They do, however, claim that there is coverage for the destruction of the new paint job, the cost of stripping the new paint job and the cost of painting the house a second time.
Exclusion (2)(d)(iii) is not applicable in that it excludes coverage for restoration, repair or replacement of property necessitated by "faulty workmanship thereon". The property of the plaintiffs that was damaged was the new paint job. Mr. Lakvold did not work on the new paint job at all, therefore the damages to it could not have been necessitated by his "faulty workmanship thereon". Rather, the damage to the new paint job was caused by Mr. Lakvold's faulty workmanship on the old paint and consequently damages to the new paint job are not excluded from coverage.
Exclusion (3) is generally referred to as a "work product" exclusion. American contends that a liability insurer who includes such an exclusion in its policy is not liable for damages to the "work product" of the insured due to negligent, faulty or defective construction and workmanship, citing Magill v. Owen Construction Co., Inc., 434 So. 2d 520 (La.App. 2d Cir.1983); Aetna Insurance Co. v. Grady White Boats, Inc., 432 So. 2d 1082, (La.App. 3d Cir.1983); Old River Terminal Co-Op v. Davco Corp., 431 So. 2d 1068 (La.App. 1st Cir.1983); and Fredeman Shipyard v. Weldon Miller Contractors, Inc., 497 So. 2d 370 (La.App. 3d Cir.1986). The cases cited by American are distinguishable from the present case in that they concern damages to the actual item constructed or worked on by the contractor rather than damages to other property belonging to the plaintiffs.
A case involving facts analogous to the present case is Hendrix Electric Co., Inc. v. Casualty Reciprocal Exchange, 297 So. 2d 470 (La.App. 2d Cir.1974). There an electrical contractor who had been hired to install exterior garage lighting and convenience outlets for garage units at Barksdale Air Force Base damaged an existing power panel. The court interpreted an exclusion similar in wording to exclusion (3) and held that the damage was not to any "work performed by or on behalf of the named insured" but rather to existing property of the Government and therefore the exclusion did not apply.
Similarly, exclusion (3) does not apply to the facts of the present case. The damage was not to any "work performed by the named insured." The damage was to other property of the plaintiffs, that is, the new coats of paint applied by Mr. Nance. The American policy provides coverage for these damages just as it provides coverage for the damage to the interior of the house. In both cases the damage was caused by the negligence or faulty workmanship of Mr. Lakvold or faulty materials used by him but was not caused by faulty workmanship on the interior of the home or on the new paint job. Nor was the interior of the home or the new paint job the object of the work contracted to be performed by Mr. Lakvold.
For the reasons assigned, the judgment of the district court is reversed, the motion for summary judgment is overruled, and the case is remanded to the district court for further proceedings. The costs of appeal are assessed to appellee, The American Insurance Company.
Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1175636/ | 551 P.2d 710 (1976)
The PEOPLE of the State of Colorado, Plaintiff-Appellee,
v.
James Edward HANSEN, Defendant-Appellant.
No. 26358.
Supreme Court of Colorado, En Banc.
June 21, 1976.
Rehearing Denied July 19, 1976.
*711 John D. MacFarlane, Atty. Gen., Jean E. Dubofsky, Deputy Atty. Gen., E. Ronald Beeks, Asst. Atty. Gen., Denver, for plaintiff-appellee.
Rollie R. Rogers, Colorado State Public Defender, James F. Dumas, Jr., Chief Deputy State Public Defender, Mary G. Allen, Deputy State Public Defender, Denver, for defendant-appellant.
ERICKSON, Justice.
James Edward Hansen was convicted of rape, 1971 Perm.Supp., C.R.S.1963, 40-3-401(1)(a).[1]*712 He seeks reversal and a new trial on the grounds that the jury was not properly instructed on a lesser-included offense and on evidentiary issues relating to the identification of the defendant. We affirm.
On December 27, 1972, the prosecutrix was forced to have sexual intercourse at a laundromat on South Logan Street in Denver. The testimony at trial established that the prosecutrix was alone in the laundromat when a man entered, grabbed her from behind, placed a sharp object at her throat, and stated, "Do as I say and I won't hurt you." When the prosecutrix was forced into a bathroom, she noticed that her assailant had a pocket knife which he closed and put in his pocket. After locking the bathroom door, the assailant forced the prosecutrix to submit to intercourse and then left the laundromat.
Shortly thereafter, the victim ran out into the street where she saw her alleged attacker sitting in a parked vehicle. Crying, she ran up to some people on the street and asked for help. She pointed to the vehicle. As the vehicle drove away, both the prosecutrix and another person were able to view a portion of the vehicle's license plate as well as the make and approximate year of the vehicle. A car of a similar description was seen driving by a police station one day, and the ownership of the vehicle was traced to the defendant. The prosecutrix identified the defendant in court as the individual who had attacked her and as the man who was sitting in the car outside the laundromat. The defendant elected not to testify.
Identification of the Defendant
The prosecutrix testified that she was attacked by a clean-shaven man. The defendant, in his case in chief, produced witnesses who testified that the defendant was wearing a beard sometime around the date of the criminal episode. Thereafter, the prosecutor produced rebuttal testimony to show that the defendant did not have a beard prior to the date of the offense. The defendant now claims that the trial court erred in refusing to permit him to introduce surrebuttal evidence to establish that he had a beard several months prior to the date of the offense.
We stated in People v. Martinez, 181 Colo. 27, 506 P.2d 744 (1973), the general rule that:
"[D]efendants should always be permitted to introduce as surrebuttal, evidence which tends to meet new matter introduced by the prosecution on rebuttal. Otherwise, it is within the discretion of the trial court to allow or deny surrebuttal."
The evidence which the defendant sought to introduce on surrebuttal was not in response to new evidence, and the trial court did not abuse its discretion in denying the defendant's request.
Newly Discovered Evidence
Subsequent to the trial, defense counsel filed a motion for new trial on the grounds of newly discovered evidence, alleging that two acquaintances of the defendant had been discovered who would testify that the defendant was wearing a beard on December 29, 1972, and January 2, 1973. The trial court refused to grant the defendant's motion.
Motions for new trial based upon newly discovered evidence are not favored and are only granted to prevent manifest injustice. People v. Scheidt, 187 Colo. 20, 528 P.2d 232 (1974); Edwards v. People, 151 Colo. 262, 377 P.2d 399 (1962). A denial of such a motion will not be overturned unless the trial court has clearly abused its discretion. People v. Scheidt, supra; Edwards v. People, supra. A cardinal prerequisite to the granting of the motion is a showing by the defense that a diligent search and inquiry has been made *713 "to discover all possible evidence favorable to the defendant prior to and during the trial. . . ." People v. Scheidt, supra; Pieramico v. People, 173 Colo. 276, 478 P.2d 304 (1970); Isbell v. People, 158 Colo. 126, 405 P.2d 744 (1965). Since the defense did not make a showing of a diligent search to discover the additional testimony, the ruling of the trial judge will not be disturbed.
Lesser-Included Offense Instruction
At the conclusion of the defendant's case, defense counsel tendered an instruction to the court which would have permitted the jury to find the defendant guilty of a violation of 1971 Perm.Supp., C.R.S.1963, 40-3-402,[2] the gross sexual imposition statute. That statute reads, in pertinent part:
"Gross Sexual Imposition. (1) Any male who has sexual intercourse with a female person not his spouse, commits gross sexual imposition if:
"(a) He compels her to submit by any threat less than those set forth in section 40-3-401(1)(a), but of sufficient consequence reasonably calculated to overcome resistance. . . ." [Emphasis added.]
The jury was instructed upon, and the defendant was convicted of, a violation of 1971 Perm.Supp., C.R.S.1963, 40-3-401(1) (a), which reads, in part, as follows:
"Rape. (1) Any male who has sexual intercourse with a female person not his spouse commits rape, if:
"(a) He compels her to submit by force or by threat of imminent death, serious bodily harm, extreme pain, or kidnapping, to be inflicted on anyone.. . ."
The defendant's contention that gross sexual imposition is a lesser-included offense of rape is correct. A comparison of the two relevant statutes indicates that the greater offense cannot be committed without having committed the lesser offense, thus satisfying the test set forth in People v. Rivera, 186 Colo. 24, 525 P.2d 431 (1974), for identifying lesser-included offenses. Any doubt in this regard is overcome by our recent decision in People v. Beaver, Colo., 549 P.2d 1315 (Supreme Court, announced May 17, 1976).
In People v. Beaver, supra, the defendant was charged with deviate sexual intercourse by force or its equivalent 1971 Perm.Supp., C.R.S.1963, 40-3-403(1)(a).[3] The jury was instructed on that offense, as well as deviate sexual intercourse by imposition, 1971 Perm.Supp., C.R.S.1963, 40-3-404(1) (a).[4] We held that deviate sexual intercourse by imposition was a lesser-included offense of deviate sexual intercourse by force or its equivalent. Comparing the two statutes, we concluded that the elements of both were the same, "except that the degree of harm threatened is less serious under section 40-3-404(1)(a)." People v. Beaver, supra.
Additionally, 1971 Perm.Supp., C.R.S. 1963, 40-1-508(5)(c),[5] provides as follows:
"A defendant may be convicted of an offense included in an offense charged in the indictment or the information. An offense is so included when:
. . . . . .
"(c) It differs from the offense charged only in the respect that a less serious injury or risk of injury to the same person, property, or public interest or a lesser kind of culpability suffices to establish its commission."
The two statutes here in issue are identical except that the degree of harm threatened in the gross sexual imposition statute is less serious than that involved in the rape statute. Therefore, gross sexual imposition is a lesser-included offense of rape. Accord, People v. Barger, Colo., 550 P.2d 1281 (Supreme Court, announced June 14, 1976).
The defendant, however, was not entitled to an instruction on the lesser-included *714 offense inasmuch as no evidence appears in the record which would support the giving of such an instruction. Before the court is required to charge the jury with respect to a lesser-included offense, a rational basis must exist "for a verdict acquitting the defendant of the offense charged and convicting him of the included offense." 1971 Perm.Supp., C.R.S.1963, 40-1-508(6);[6]People v. Thompson, 187 Colo. 252, 529 P.2d 1314 (1975). As heretofore noted, the defendant did not testify in his own behalf. The only evidence as to the manner in which the alleged rape occurred was presented by the prosecutrix. This evidence, which the jury determined to believe, amply supported the verdict of rape.
Accordingly, the trial court properly refused to give the tendered instruction.
The remaining contentions of the defendant are without merit, and the conviction of the defendant is affirmed.
NOTES
[1] Now section 18-3-401(1)(a), C.R.S.1973. Part 4 of article 3 of title 18 has been repealed and reenacted in Colo.Sess.Laws 1975, ch. 171 at 627, et seq.
[2] Now section 18-3-402(1)(a), C.R.S.1973.
[3] Now section 18-3-403(1)(a), C.R.S.1973.
[4] Now section 18-3-404(1)(a), C.R.S.1973.
[5] Now section 18-1-408(5)(c), C.R.S.1973.
[6] Now section 18-1-408(6), C.R.S.1973. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1199188/ | 64 Wash. App. 916 (1992)
827 P.2d 321
AETNA CASUALTY AND SURETY COMPANY, Respondent,
v.
M & S INDUSTRIES, INC., ET AL, Appellants.
No. 13944-8-II.
The Court of Appeals of Washington, Division Two.
April 8, 1992.
As amended by order July 27, 1992.
William H. Dunn, Jr., H. Peter Sorg, Jr., and Lane Powell Spears Lubersky; Dexter A. Washburn and Mikkelborg, Broz, Wells & Fryer, for appellants.
Jan K. Kitchel and John A. McHugh, for respondent.
*918 [As amended by order of the Court of Appeals July 27, 1992.]
ALEXANDER, J.
This is an appeal from a determination that Aetna Casualty and Surety Company did not insure against claims brought by Four Seasons, Inc., and Form-Tec, Inc., against M&S Industries, Inc., Aetna's insured. Four Seasons, a Canadian manufacturer of concrete form systems used in heavy construction, and Form-Tec, its United States product distributor, sued M&S for supplying allegedly defective plywood panels used in the manufacturing process. Initially uncertain whether its policy provided coverage, Aetna ultimately took the position that it did not, and filed this declaratory judgment action seeking an adjudication of the question. The Superior Court agreed with Aetna and granted summary judgment in Aetna's favor. We reverse.
M&S Industries, located in Vancouver, Washington, is a supplier of plastic-coated plywood panels. M&S advertised the superiority of its products, and Four Seasons was sufficiently impressed by the promotional literature to purchase a large quantity of 2 by 8 and 4 by 8 plywood panels from M&S in 1986. Four Seasons manufactures "engineered concrete form systems". In the manufacturing process, Four Seasons cuts plywood panels into widths ranging from 4 to 24 inches, drills and notches them, attaches rows of metal support bars, affixes latches, and applies a moisture sealer to the edges. When the form system is complete, a contractor responsible for pouring the foundation at a construction site can stand the forms on edge, connect them together in a line using the latches, adjust the thickness of the foundation by using spacers to connect the inside and outside form walls, and pour concrete into the form thus created. After the concrete dries, the forms can be stripped away and reused for another pour. A well-made form system can be used hundreds of times. The underlying problem in this case is that, despite the claims made by M&S in its promotional campaigns, the plywood panels it supplied to Four Seasons were of poor quality.
*919 Four Seasons sold form systems made with M&S panels, through Form-Tec, to a number of contractors. Within weeks, the contractors began complaining to Four Seasons about peeling or "delamination" of the plastic facing on the forms, separation of the plywood lamination itself, warpage, and insufficient strength to contain a concrete pour. Four Seasons recalled the defective forms from the market and offered to replace them with forms made of plywood obtained from another supplier.
Four Seasons and Form-Tec demanded compensation for their damages in a letter sent to M&S in December 1986. They itemized damages of $274,000 incurred by Four Seasons and $95,000 incurred by Form-Tec, consisting of the costs of replacing the defective forms, lost profits on the sale of those forms, and lost profits on other sales not made because of the need to divert production to replacement forms. M&S referred the demand letter to Aetna, its liability insurance carrier. A claims representative in Aetna's Portland, Oregon, office responded that Aetna would provide a complete defense, subject to a reservation of rights concerning any alleged damage to M&S's own product, "which is ordinarily not covered."
Four Seasons and Form-Tec ultimately sued M&S and its owners, Gene Weber and Roland Mill, in federal court in the Western District of Washington. The plaintiffs alleged, inter alia, breach of contract, breach of warranty, negligence, and violations of the Washington Consumer Protection Act. M&S referred the complaint to Aetna. The claims department in Aetna's Seattle office, which had taken over the file, reserved the right to reject coverage on the ground that most, if not all, of the claimed damages fell within the policy's exclusion for damage to the insured's own product.[1] Aetna continually expressed doubts about coverage and *920 rejected a proposal by the plaintiffs wherein Aetna would pay $370,000 to settle the lawsuit. Aetna refused, during further negotiations, to contribute significantly to any settlement between the parties.
In light of Aetna's refusal, the parties entered into a settlement of their federal court lawsuit.[2] Consequently, Four Seasons and Form-Tec took an essentially unopposed judgment in federal court against these defendants in the amount of $564,972. Aetna filed the instant declaratory judgment action in Clark County Superior Court to obtain a determination of coverage.
The Superior Court ruled that Aetna's liability policy did not cover the damages claimed against M&S. It decided that the plywood panels "did not perform as anticipated as [they] proceeded to separate, warp, or become unusable after short usage. Aetna did not become a guarantor of the product, [but provided insurance] only if the product caused loss to others or their property." The Superior Court entered summary judgment in Aetna's favor, and this appeal followed.
[1] The facts are not in dispute. On review of a summary judgment construing an insurance policy, we stand in the shoes of the trial court and decide whether the prevailing party, here Aetna, is entitled to judgment as a matter of law. Guelich v. American Protec. Ins. Co., 54 Wash. App. 117, 118, 772 P.2d 536 (1989). The applicable general principles of construction are these:
An insurance policy is a contract, and the rules regarding its construction are basically the same as those covering other contracts. Stanton v. Public Employees Mut. Ins. Co., 39 Wn. *921 App. 904, 907, 697 P.2d 259, review denied, 103 Wash. 2d 1039 (1985). A court must look first to the contract to determine the parties' intent. Greer v. Northwestern Nat'l Ins. Co., 109 Wash. 2d 191, 197, 743 P.2d 1244 (1987). Clear language must be given effect according to its plain meaning, and a court may not construe such language. Felice v. St. Paul Fire & Marine Ins. Co., 42 Wash. App. 352, 356, 711 P.2d 1066 (1985), review denied, 105 Wash. 2d 1014 (1986). In interpreting a policy, the language must be given a fair, reasonable, and sensible construction. E-Z Loader Boat Trailers, Inc. v. Travelers Indem. Co., 106 Wash. 2d 901, 907, 726 P.2d 439 (1986). It should be interpreted as it would be understood by the average purchaser of such a policy. See Ames v. Baker, 68 Wash. 2d 713, 716, 415 P.2d 74 (1966)....
Boggs v. Whitaker, Lipp & Helea, Inc., 56 Wash. App. 583, 585, 784 P.2d 1273, review denied, 114 Wash. 2d 1018 (1990).
POLICY COVERAGE
M&S purchased a comprehensive general liability policy from Aetna. The policy insures against property damage caused by an occurrence for which the insured is found legally obligated to pay damages. The policy defines "property damage" as (1) physical injury to or destruction of tangible property, or (2) loss of use of tangible property caused by an occurrence. "Occurrence", in turn, is defined to mean an accident that results in unexpected or unintended bodily injury or property damage.
[2, 3] When an insurer issues a general liability policy, it is not issuing a performance bond, product liability insurance, or malpractice insurance. Westman Indus. Co. v. Hartford Ins. Group, 51 Wash. App. 72, 80, 751 P.2d 1242, review denied, 110 Wash. 2d 1036 (1988). Consequently, the type of policy at issue here insures against damage to tangible property of another, not the insured's product. Guelich v. American Protec. Ins. Co., supra; Marley Orchard Corp. v. Travelers Indem. Co., 50 Wash. App. 801, 750 P.2d 1294, review denied, 110 Wash. 2d 1037 (1988); General Ins. Co. of Am. v. International Sales Corp., 18 Wash. App. 180, 184, 566 P.2d 966 (1977), review denied, 90 Wash. 2d 1010 (1978).
Thus, the difficulty in deciding the coverage issue lies in determining whether the deterioration of the plywood panels *922 supplied by M&S caused damage to the tangible property of anyone else. The cases addressing this issue have established that if the property damage is confined to the insured's defective product itself, a comprehensive general liability policy provides no coverage. Yakima Cement Prods. Co. v. Great Am. Ins. Co., 93 Wash. 2d 210, 608 P.2d 254 (1980) (defective concrete panels made by insured caused no damage to owner's roof); Federated Serv. Ins. Co. v. R.E.W., Inc., 53 Wash. App. 730, 770 P.2d 654 (1989) (defective "Isoboard" incorporated by insured into construction of fruit storage structure; insurer conceded coverage for damage to stored apples, but coverage excluded for costs of replacing insured's own "Isoboard"); General Ins. Co. of Am. v. International Sales Corp., supra (defective epoxy coating provided by insured caused no damage to metal pipe when it peeled off after application). Cf. Hauenstein v. St. Paul-Mercury Indem. Co., 242 Minn. 354, 65 N.W.2d 122 (1954) (defective plaster applied to building walls by contractor; coverage excluded for damage to plaster itself, but not excluded for diminution in market value of building or cost of removing defective plaster and restoring building). On the other hand, coverage is present where the defective product causes damage to another person's tangible property, Marley Orchard Corp. v. Travelers Indem. Co., supra; Federated Serv. Ins. Co. v. R.E.W., Inc., supra, and the coverage also extends to consequential damages resulting directly from such injury. Yakima Cement Prods. Co., 93 Wn.2d at 219; Marley Orchard Corp., 50 Wn. App. at 807.
Aetna argues that the only property damage caused by the failure of the plywood panels was to the panels themselves its insured's product and that nobody else suffered any property damage. We read the record differently.
[4] M&S supplied basic, plastic-coated sheets of plywood to Four Seasons. Four Seasons converted the plywood panels into an entirely different product designed to contain poured concrete in a variety of heights, lengths, and thicknesses. Four Seasons cut the panels into different sizes, cut notches and holes into them so spacers could be attached, *923 added metal support bars and latches, and applied a sealer. The plywood was only one component of the finished product, just as sheet metal is but one component of the bed on a pickup truck. The finished form sold by Four Seasons to contractors was much more than a sheet of plywood; it was a manufactured product with a particular function. Consequently, the defects in the plywood panels affected the entire form system. The forms came apart, they warped, they lost strength, and they could not be reused with anything like their promised frequency or the industry standard. Clearly, M&S's panels caused damage to the tangible property of another, Four Seasons. Thus, we can easily distinguish those cases in which the defects in the insured's product caused damage to that product itself, e.g., Yakima Cement Prods. Co. v. Great Am. Ins. Co., supra; Federated Serv. Ins. Co. v. R.E.W., Inc., supra. The defective plywood panels provided by M&S caused damage to the concrete form systems manufactured by Four Seasons, so absent an exclusion from coverage, Aetna's policy applies.
EXCLUSIONS
[5, 6] Aetna invokes several policy exclusions in an effort to avoid coverage. Exclusion clauses subtract from coverage, and each exclusion is to be read with the insuring contract, independently of any other exclusions. Harrison Plumbing & Heating, Inc. v. New Hampshire Ins. Group, 37 Wash. App. 621, 627, 681 P.2d 875 (1984). Exclusionary clauses are to be "most strictly" construed against the insurer in view of the fact that the purpose of insurance is to insure, and the contract should be construed so as to make it operative rather than inoperative. Phil Schroeder, Inc. v. Royal Globe Ins. Co., 99 Wash. 2d 65, 68, 659 P.2d 509 (1983), modified on reconsideration, 101 Wash. 2d 830, 683 P.2d 186 (1984).
[7] Exclusion (p) of the policy, known as a "sistership" exclusion,[3] provides that the policy does not apply:
*924 (p) to damages claimed for the withdrawal, inspection, repair, replacement, or loss of use of the named insured's products or work completed by or for the named insured or of any property of which such products or work form a part, if such products, work or property are withdrawn from the market or from use because of any known or suspected defect or deficiency therein; ....
As stated in Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash. 2d 37, 43, 811 P.2d 673 (1991), the intent of this exclusion is as follows:
while the insurance covers damages for bodily injuries and property damage caused by the product that was defective or failed, it was never intended that the insurer would be saddled with the cost of preventing such defects or failures any more than it was intended that the insurer would pay the cost of avoiding the defect in the first place or preventing the first failure if the product had been discovered to be in a defective or dangerous condition before the occurrence.
(quoting 2 R. Long, Liability Insurance § 11.09[3], at 11-99 (1990)). The insurer is not liable, therefore, for the cost of preventative or curative action taken by its insured. Olympic Steamship, 117 Wn.2d at 43 (citing Yakima Cement Prods. Co. v. Great Am. Ins. Co., 22 Wash. App. 536, 542, 590 P.2d 371 (1979), rev'd on other grounds, 93 Wash. 2d 210, 608 P.2d 254 (1980)).
[8] This exclusion does not negate coverage, however, when a third party, rather than the insured, removes the insured's product from the market. In that event, coverage is still present because the interests of the parties are fairly balanced: The insurer does not bear the cost of an insured's curative or preventative measures, but the insured retains protection against a foreseeable element of claims that commonly arise when the insured's product must be withdrawn from the market. Olympic Steamship, 117 Wn.2d at 48.
*925 The sistership exclusion does not apply in this case for two reasons. First, no defective "sister" panels were withdrawn from the market because of anyone's fears that they, too, would prove defective after the defects first came to light. Panels were withdrawn and replaced only after customers complained of defects in the panels delivered to them. Second, it was third parties Four Seasons and Form-Tec who withdrew the products, not the insured party, M&S.
Aetna's brief also mentions exclusion (n), a "work product" exclusion. That exclusion applies "to property damage to the named insured's products arising out of such products or any part of such products; ...". This language comports with the case law, discussed above, holding that a policy of this kind does not cover damage to the insured's own products that prove defective. As we have said, this case involves damage to other tangible property as well. Thus, this exclusion obviously does not negate coverage. See also Firemen's Ins. Co. v. Bauer Dental Studio, Inc., 805 F.2d 324 (8th Cir.1986) (insured made and sold dental crowns to dentist who ground and polished them to fit individual patients. Patients complained of cracked crowns. Exclusion did not negate coverage because the completed crowns were a composite product that was not solely the insured's work); Imperial Cas. & Indem. Co. v. High Concrete Structures, Inc., 858 F.2d 128 (3d Cir.1988) (insured supplied steel strips to manufacturer of washers, who stamped washers out of the steel and forwarded them for heat treatment for ultimate use in automotive industry. Insured's steel was defective, so that heat treatments resulted in defects in washers. Exclusion did not negate coverage because the washers were a new product with greater value than the steel itself); Pittsburgh Plate Glass Co. v. Fidelity & Cas. Co., 281 F.2d 538 (3d Cir.1960) (insured supplied paint to manufacturer of venetian blinds, who baked paint onto the blinds. Damages caused when paint peeled off the blinds were not excluded from coverage because once the paint was baked onto the *926 steel blinds and became part of the finished product, it was no longer the insured's product).
Finally, Aetna's policy contains an exclusion for "loss of use" damages, which states that insurance is not provided for:
(m) ... loss of use of tangible property which has not been physically injured or destroyed resulting from
(1) a delay in or lack of performance by or on behalf of the named insured of any contract or agreement, or
(2) the failure of the named insured's product or work performed by or on behalf of the named insured to meet the level of performance, quality, fitness or durability warranted or represented by the named insured;
but this exclusion does not apply to loss of use of other tangible property resulting from the sudden and accidental physical injury to or destruction of the named insured's products or work performed by or on behalf of the named insured after such products or work have been put to use by any person or organization other than an insured; ....
This exclusion is difficult to parse, but we interpret it to exclude coverage when either: (1) the named insured delays or fails to perform the contract or (2) the insured's products or work fails to meet the standards warranted by the contract, resulting in the loss of use of another's tangible property that has not been physically injured or destroyed. However, coverage still exists ("this exclusion does not apply") if someone else has put the insured's products or work to use and, thereafter, a loss of use of other tangible property results from "sudden and accidental physical injury to or destruction of" the insured's products or work.
[9] This exclusion clearly does not apply either. It applies only to "loss of use of tangible property which has not been physically injured or destroyed." The property of Four Seasons the concrete forms was physically injured by the defects in M&S's product. This result is consistent with the purpose of a comprehensive general liability policy: to insure against liability damage to another's property. Marley Orchard Corp., 50 Wn. App. at 806. The policy provides that such damage includes the loss of use of the tangible property. See Guelich v. American Protec. Ins. Co., supra.
*927 Aetna argues, in addition, that it is not liable for the advertising injuries suffered by Four Seasons and Form-Tec and for which they claim coverage under a policy endorsement. The advertising injury endorsement states that Aetna will pay for "advertising injury" arising out of the conduct of the insured's business. An umbrella extension of the policy limits refers to "advertising offense", defined as injury arising out of the named insured's advertising activities "if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition ...". Washington's Consumer Protection Act, in RCW 19.86.020, declares unlawful all "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce". Four Seasons claimed and recovered damages in federal court for "unfair competition" in the form of M&S's misleading and deceptive advertising and violations of the Consumer Protection Act.
[10] The policy language does not cover these damages. Four Seasons and Form-Tec recovered for violations of the CPA and for misleading and deceptive advertising. The policy definition of "advertising offense" includes "unfair competition", but the unfair competition condemned by the CPA consists only of acts directed at competitors. Boggs, 56 Wn. App. at 586. M&S was a supplier to Four Seasons and Form-Tec, not their competitor. Unfair and deceptive practices that are harmful to consumers can also constitute unfair competition under the CPA, but this type of general liability policy does not cover such practices unless competitors are harmed. Boggs v. Whitaker, Lipp & Helea, Inc., 56 Wash. App. 583, 586-88, 784 P.2d 1273, review denied, 114 Wash. 2d 1018 (1990).
DUTY TO DEFEND
[11] An insurer is obliged to defend any complaint alleging facts that, if proved, would render the insurer liable. State Farm Gen. Ins. Co. v. Emerson, 102 Wash. 2d 477, 486, 687 P.2d 1139 (1984). The duty does not hinge on the insured's potential liability to the claimant, but on whether *928 the complaint alleges any facts rendering the insurer liable to the insured under the policy language. Claims that are clearly not covered by the policy relieve the insurer of its right and duty to defend. Emerson, 102 Wn.2d at 486. The pleadings must be liberally construed, and if they are subject to an interpretation that creates a duty to defend, the insurer must comply with that duty. R.A. Hanson Co. v. Aetna Ins. Co., 26 Wash. App. 290, 294, 612 P.2d 456 (1980).
The amended complaint filed by Four Seasons and Form-Tec clearly gave rise to a duty to defend when M&S tendered the complaint to Aetna. The complaint states that M&S's plywood panels "exhibited high incidence of defects, excessive warpage and delamination", resulting in complaints, nonpayment, and cancellation of orders by customers of Four Seasons and Form-Tec. Because the policy covers claims for damage to the tangible property of Four Seasons and Form-Tec, plus consequential damages causally related to the property damage, Marley Orchard Corp., 50 Wn. App. at 807, Aetna had a duty to defend.
Aetna's duty to defend extended, thus, to Four Seasons and Form-Tec's claims against M&S for direct and consequential damages resulting from the defective plywood panels delivered by M&S. It did not extend to advertising injuries or to the claimed violations of the Consumer Protection Act, for reasons explained above, and it did not extend to claims made individually against Roland Mill and Gene Weber for allegedly engaging in a fraudulent transfer of M&S assets. We have not been directed to any policy language covering the latter claim.
[12] Aetna breached its duty to defend the claim for damages resulting from the defective panels by persistently denying coverage. Because the policy provides coverage and the exclusions do not apply, Aetna must pay all damages, direct and incidental, stemming from the claims for those damages.[4]Bosko v. Pitts & Still, Inc., 75 Wash. 2d 856, 454 *929 P.2d 229 (1969). Unfortunately, the plaintiffs' judgment in federal court did not segregate damages to particular theories of recovery. We cannot determine how much of the total judgment pertains to the claims covered by the policy and how much is not covered according to our analysis. The trial court will have to resolve that question.
The appellants, relying on Olympic Steamship, 117 Wn.2d at 52-54, request an award of attorney's fees on appeal. We deny the request except insofar as it relates to fees incurred by M&S. Although Olympic Steamship holds that an insurer who refuses to defend or pay a justified claim must reimburse fees incurred by its insured to defend the claim, the case does not hold that the insurer must pay the fees incurred by a judgment creditor of the insured. Here, we have held that Aetna had a duty to defend certain claims against its insured, M&S, but did not have to defend the uncovered claims brought against Mill and Weber, individually. The other appellants, Four Seasons and Form-Tec, are simply not Aetna's insureds. They contend that they stepped into the shoes of the insured, M&S, "to compel the insurer's payment obligation" and are thereby entitled to their fees on appeal. We disagree. The agreement settling the federal court lawsuit expressly placed the burden on M&S to pursue Aetna for payment of the judgment, and it placed a cap on M&S's liability. Therefore, even if Four Seasons and Form-Tec have really been the ones to shoulder the burden of establishing coverage in this appeal, their efforts have obviously been at least as much for their own benefit as for M&S's. The judgment creditors have not truly stepped into the shoes of the insured and cannot claim the benefit of Olympic Steamship for purposes of obtaining attorney's fees on appeal.
The summary judgment in Aetna's favor is reversed, and the cause is remanded to superior court with instructions to determine the dollar amount of Aetna's obligation under the *930 policy, plus a reasonable attorney's fee and costs of defense related to the covered claims, including a reasonable fee to M&S for legal services on appeal.
PETRICH, C.J., and SEINFELD, J., concur.
NOTES
[1] Aetna retained a Seattle law firm to defend M&S pending a fuller evaluation of the coverage issue, although it apparently never offered more than $25,000 in settlement because of its doubts about coverage and its belief that the plaintiffs had not documented their consequential damages, i.e., lost profits and business opportunities.
[2] The basic terms of the settlement were as follows: (1) Four Seasons and Form-Tec agreed to accept $60,000 from M&S; (2) M&S agreed not to oppose the plaintiffs' proof of liability and damages in federal court; (3) in the event of judgment against M&S and the individual defendants, M&S promised to "pursue all of their rights against Aetna to obtain payment of the judgment and all costs incurred by Defendants by reason of Aetna's refusal to defend or settle Plaintiffs' claims"; (4) the plaintiffs would not execute upon any judgment entered in federal court against the defendants, but if defendants succeeded in recovering from Aetna less than $370,000, they would pay plaintiffs the difference between the amount recovered and the smaller of $370,000 or the amount of plaintiffs' federal court judgment, to a cap of $150,000.
[3] This exclusion is called the "sistership" exclusion because it applies where products are recalled from the market because of known defects in their sister products. Imperial Cas. & Indem. Co. v. High Concrete Structures, Inc., 858 F.2d 128, 136 (3d Cir.1988). The exclusion is derived from the practice observed in the airline industry of grounding all "sister" aircraft of a particular type when a defect in one of them is suspected of causing an accident. In that situation, the potential damages arising from loss of use of the sisterships are enormous, and the exclusion confines coverage to damages arising from the defect in the aircraft that crashed. Olympic S.S. Co. v. Centennial Ins. Co., 117 Wash. 2d 37, 43, 811 P.2d 673 (1991).
[4] By virtue of their settlement, the federal court plaintiffs, Four Seasons and Form-Tec, stand to benefit from the policy's coverage of some of their claims. We assume that the insured remains principally interested in Aetna's duty to defend because of the expenses it incurred separately in defending the plaintiffs' claims. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2902443/ | COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
-
JAN COOPER AND SAM ORTEGA,
Appellants,
v.
FIESTA INDUSTRIES OF EL PASO,
INC., D/B/A PRINCE MACHIAVELLI,
AND JAMES A. HERNANDEZ,
Appellees.
§
§
§
§
§
No. 08-05-00389-CV
Appeal from the
120th District Court
of El Paso County, Texas
(TC# 2003-5560)
MEMORANDUM OPINION
This is an attempted appeal from a summary judgment granted in favor of Appellees,
Fiesta Industries of El Paso, Inc., d/b/a Prince Machiavelli, and James A. Hernandez. The
issue before this Court is whether Appellants, Jan Cooper and Sam Ortega timely filed their
notice of appeal. We conclude that they did not and dismiss the attempted appeal for want
of jurisdiction.
The record reflects that the trial court entered its judgment on September 2, 2005. A
motion for new trial was not filed in this case. Appellants filed their notice of appeal on
November 23, 2005.
A civil appeal is perfected when the notice of appeal is filed. Tex. R. App. P. 26.1;
see Restrepo v. First Nat’l Bank of Dona Ana County, N.M., 892 S.W.2d 237, 238 (Tex.
App.--El Paso 1995, no writ) (applying former Tex. R. App. P. 40(a)(1)). If the appellant
does not file a motion for new trial, a motion to modify, a motion to reinstate under Rule
165a, or a request for findings of fact or conclusions of law, the notice of appeal must be
filed within thirty days after the judgment or other appealable order is signed. Tex. R. App.
P. 26.1; Restrepo, 892 S.W.2d at 238. The time for filing a notice of appeal is extended if
the appellant files both a notice of appeal and a motion for extension of time within fifteen
days after the deadline for filing the notice of appeal. Tex. R. App. P. 26.3.
The last date allowed for timely filing the notice of appeal was October 2, 2005, thirty
days after the day the trial court entered its judgment. See Tex. R. App. P. 26.1. Appellants
did not file their notice of appeal until November 23, 2005 and did not timely file a motion
for extension of time. Therefore, Appellants failed to perfect this appeal. Accordingly, we
dismiss the appeal for want of jurisdiction.
RICHARD BARAJAS, Chief Justice
January 12, 2006
Before Barajas, C.J., McClure, and Chew, JJ. | 01-03-2023 | 09-09-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/3098885/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00056-CR
Charles Delona Bellamy, II § From the 213th District Court
§ of Tarrant County (1233958D)
v. § September 19, 2013
§ Per Curiam
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
SECOND DISTRICT COURT OF APPEALS
PER CURIAM | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1768119/ | 925 S.W.2d 656 (1996)
Michael MANTAS, M.D., a/k/a Michael Mantas, Mike Mantas, Dr. Michael Mantas d/b/a the Furniture Store and the Cowboy Furniture Store, Relators,
v.
THE FIFTH COURT OF APPEALS, Respondent.
No. 96-0198.
Supreme Court of Texas.
July 12, 1996.
*657 Ronald D. Wren, Bedford, for Relators.
Kendall Wayne Hill, Fort Worth, Lewis Benjam Barnett, Jr., Lewisville, J. Benjamin Barlow, Fort Worth, for Respondent.
PER CURIAM.
In this original mandamus proceeding, we must determine whether the court of appeals abused its discretion by refusing to summarily enforce a settlement agreement reached while the underlying case was on appeal. We hold that, because the appellee disputed the validity of the settlement agreement, the appellant was required to seek enforcement of the agreement in a separate action, subject to the normal rules of pleading and proof. The court of appeals thus did not abuse its discretion in this regard. We further conclude, however, that the court of appeals did abuse its discretion by refusing to abate the appeal while appellant sought enforcement of the settlement agreement, and that appellant lacks an adequate remedy by appeal. We conditionally grant mandamus relief on the abatement issue only.
Lewis Barnett obtained a judgment against Michael Mantas for $209,423 in July 1995, in a suit arising from a commercial dispute. Mantas timely perfected an appeal and posted a supersedeas bond for the amount of the judgment and interest. The court of appeals ordered the parties to mediation, where they reached and signed a settlement *658 agreement. On December 8, 1995, pursuant to the settlement agreement, Mantas issued a check to Barnett and his attorneys for $160,000 in full satisfaction of the judgment, and Barnett signed a release of judgment, a joint motion to dismiss the appeal, and an agreed order dismissing the appeal.
Later that same day, before any documents were filed with the court of appeals, Barnett withdrew his consent to the settlement, revoking Mantas' authority to file the settlement documents on Barnett's behalf. While there is no dispute that the $160,000 settlement check was negotiated, Barnett contends that his attorneys, who no longer represented him, cashed the check without his authorization, collected their fee from the proceeds, and remitted the balance to the State Comptroller to pay back taxes allegedly owed by Barnett. The $160,000 has never been returned to Mantas.
Mantas moved in the court of appeals to enforce the settlement agreement. He asked the court to 1) declare the settlement agreement and release of judgment to be valid and enforceable, 2) dismiss the appeal with prejudice, and 3) release Mantas' supersedeas bond. Mantas alternatively asked the court to order Barnett to return the $160,000. The court of appeals denied Mantas' motion to enforce the settlement agreement, relying on Cadle Co. v. Castle, 913 S.W.2d 627 (Tex. App.Dallas 1995, writ denied). That case held that enforcement of a disputed settlement agreement, even if reached at court-ordered mediation, must be determined in a breach-of-contract cause of action under normal rules of pleading and evidence.
Mantas consequently filed a separate suit, which is still pending, in district court to enforce the settlement agreement. Mantas then asked the court of appeals to abate the appeal pending resolution of the enforcement suit, but the court of appeals denied this request.[1]
Mantas seeks mandamus relief compelling the court of appeals to enforce the settlement agreement, or alternatively to abate the appeal pending resolution of the enforcement suit. We granted temporary relief staying the proceedings in the court of appeals pending our consideration of the merits.
Mantas argues that, because he has paid $160,000 in settlement which has not been returned, the settlement agreement must be enforced. He contends that it is fundamentally unfair to require him to continue prosecuting the appeal after he paid this amount to his opponent. Even if he prevails in the appeal, Mantas claims, he will probably not recover the payment from Barnett, whom he characterizes as judgment proof. Mantas thus concludes that he will be effectively denied his appellate rights.
Barnett responds that the settlement check was cashed without his authorization and that he personally received none of the money. Further, he seeks to assert affirmative defenses to the contractual settlement agreement, including fraud in the inducement, which he contends must be resolved in a separate enforcement suit. Barnett agrees, however, that the underlying appeal should be abated pending resolution of the enforcement suit.
We recently reaffirmed that a written settlement agreement may be enforced though one party withdraws consent before judgment is rendered on the agreement. See Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex.1995). Where consent is lacking, however, a court may not render an agreed judgment on the settlement agreement, but rather may enforce it only as a written contract. Id. at 462. Thus, the party seeking enforcement must pursue a separate breach-of-contract claim, which is subject to the normal rules of pleading and proof. Id. Where the settlement dispute arises while the trial court has jurisdiction over the underlying action, a claim to enforce the settlement agreement should, if possible, be asserted in that court under the original cause number. However, where the dispute arises while the underlying action is on appeal, as in this case, the party seeking enforcement *659 must file a separate breach of contract action.
Because Barnett revoked his consent to the settlement before the court of appeals dismissed the appeal in accordance with the agreement, the court correctly determined that Mantas was required to seek enforcement in a separate suit. Mantas' settlement payment does not alter the procedural requirements set forth in Padilla. Consequently, the court of appeals did not abuse its discretion in refusing to summarily enforce the settlement agreement.[2]
Similarly, the court of appeals did not abuse its discretion by refusing to order Barnett to return the $160,000. Whether Barnett should return the money, and the resulting effect if he is unable to do so, are issues intimately related to Mantas' enforcement suit.
We conclude, however, that the court of appeals did abuse its discretion by refusing to abate the appeal pending resolution of the enforcement suit. It makes no sense for the court of appeals to expend its resources, and require the parties to expend theirs, on an appeal which may be moot. Certainly, a ruling on the merits of the appeal before judgment is rendered in the enforcement suit would inject needless uncertainty and confusion into the issues surrounding the settlement.
Mantas also lacks an adequate remedy by appeal regarding the abatement issue. If the agreement is ultimately upheld, Mantas will have lost much of the settlement's benefit if he has been required to expend time and resources in prosecuting the appeal. Under these unusual circumstances, the appellate remedy is inadequate. Cf. Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272-73 (Tex.1992) (party has no adequate appellate remedy from trial court's erroneous refusal to compel arbitration).
For the foregoing reasons, the Court conditionally grants mandamus relief on the abatement issue. The court of appeals is directed to abate the underlying appeal pending final resolution (including all appeals) of Mantas' suit to enforce the settlement agreement. The Court denies Mantas' remaining requests for mandamus relief.
NOTES
[1] Mantas asked the district court which rendered the original judgment to release the supersedeas bond due to the settlement. While refusing to completely release the bond, the court did reduce it to $72,366.
[2] Section 154.071 of the Texas Civil Practice and Remedies Code, which applies specifically to court-ordered alternative dispute resolution, provides as follows:
(a) If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract.
(b) The court in its discretion may incorporate the terms of the agreement in the court's final decree disposing of the case.
(c) A settlement agreement does not affect an outstanding court order unless the terms of the agreement are incorporated into a subsequent decree.
This section, however, does not create a separate standard for enforcing disputed settlement agreements that bypasses the common law pleading and proof requirements. See Cadle Co. v. Castle, 913 S.W.2d 627 (Tex.App.Dallas 1995, writ denied). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1798912/ | 977 S.W.2d 616 (1998)
Ex parte Roberto Moreno RAMOS.
No. 35938-01.
Court of Criminal Appeals of Texas, En Banc.
July 15, 1998.
Before the court en banc.
ORDER
WOMACK, Judge, delivered the order of the Court, which McCORMICK, Presiding Judge and MANSFIELD, PRICE and HOLLAND, Judges, joined.
The applicant seeks post-conviction habeas corpus relief from a judgment imposing a sentence of death. The statute which was enacted in 1995 to regulate the procedure for these cases requires the application to be filed within 180 days. See Code of Criminal Procedure article 11.071, § 4(a). The convicting court may find good cause to file the petition as late as 90 days thereafter, but "an applicant cannot establish good cause for untimely filing of an application filed after the 91st day after the applicable filing date." Id., § 4(f).
In this case the convicting court found good cause to allow late filing. It entered an order on May 22, 1997 "grant[ing] an extension of 90 days to file an application for writ of habeas corpus, until August 22, 1997." Record at 231. The order was internally inconsistent, because a period of 90 days would have ended on August 20, while a period which ended on August 22 would have been 92 days long. The applicant filed his application on August 22. The convicting court has found that the applicant acted in good-faith reliance on the order of May 22. Record at 273. The State recommended that, based on the equities, the convicting court address the merits of the application. See Record at 1096. The convicting court entered findings of fact and conclusions of law on the merits of the application.
Literally applied, Article 11.071, Section 4(f) would make it impossible for the applicant to establish good cause for his untimely filing. In these circumstances, in which the *617 applicant relied in good faith on a mistaken calculation which was entered by the convicting court without objection, we believe that such a literal application would deny the applicant the due course of the law of the land. See Texas Constitution, article I, § 19.[1]
Two separate opinions say there is no difference between this case and Ex parte Smith, 977 S.W.2d 610 (Tex.Cr.App.1998). See post at 618 (Baird, J., concurring) ("the identical situation ... presenting the identical issue"); post at 618-619 (Overstreet, J., dissenting) (finding a "common thread" in the cases and "inconsistency" in their dispositions). They ignore the crucial fact which distinguishes the cases: Ramos met an incorrectly-calculated deadline that the court had entered and on which he relied in good faith; Smith did not. See Ex parte Smith, supra, 977 S.W.2d at 610 ("There is no claim that the applicant [Smith] relied in good faith on an improper order of the trial court. Cf. Ex parte Ramos").
A concurring opinion says that in Ex parte Smith, supra, we held that "a habeas court... lost jurisdiction when the application was untimely," and therefore we cannot have jurisdiction in this case. See post at 618 (Baird, J., concurring) (citing Ex parte Smith, supra). The dismissal of the application in Ex parte Smith was not on account of a want of jurisdiction. This Court has jurisdiction of Smith's and Ramos's applications. We held in Ex parte Smith that the statute which regulates the exercise of our jurisdiction requires the dismissal of the late-filed application. In the case now before us, we hold that, on these specific facts, the regulatory statute cannot be constitutionally applied to require the dismissal of the application. Therefore we shall address the merits of the application.
Five claims involving jury selection and a claim involving the court's charge to the jury at the guilt stage of the trial have already been raised and rejected on the direct appeal from this conviction. See Ramos v. State, 934 S.W.2d 358 (Tex.Cr.App.1996). They will not be addressed on habeas corpus.
Two claims concern the court's charge to the jury at the punishment stage of the trial. These claims should have been, but were not, raised on the appeal. Habeas corpus will not lie as a substitute for appeal. See Ex parte Gardner, 959 S.W.2d 189, 198-200 (Tex.Cr.App.1998). The claims will not be addressed.
The application is denied.
BAIRD, J., filed a concurring opinion.
OVERSTREET, J., filed a dissenting opinion.
KELLER, J., filed a dissenting opinion.
MEYERS, J., dissented without opinion.
BAIRD, Judge, concurring.
The order of the Court correctly sets forth the series of events resulting in the untimely filing of the instant application. I concur with the decision to deny relief but write separately to demonstrate the obvious inconsistency between Ex parte Smith, 977 S.W.2d 610 (Tex.Cr.App.), and the instant case.
The Smith Court refused to reach the merits of the untimely filed habeas application. The unmistakable mandate from Smith was "an applicant cannot establish good cause for untimely filing of an application filed after the 91st day after the applicable filing date." Ibid., (citing Tex.Code Crim. Proc. Ann. art. 11.071 § 4(f)). I dissented, believing the Court should have exercised its original jurisdiction to reach the merits of the habeas application.[1]
*618 Now, the present majority resolves the identical situation in an entirely different way. They acknowledge that when Tex.Code Crim. Proc. Ann. art. 11.071 is "literally applied," there can be no good cause for the reason the application was untimely filed. However, such a "literal application, would deny applicant the due course of law of the land." Therefore, the majority purports to address the merits of applicant's claims and denies relief. The majority's advancement of the due course of law theory is devoid of any citations or legal analysis.
What is the law in one case is entirely different in another case presenting the identical issue. How can a habeas court which lost jurisdiction when the application was untimely, see Smith, retain jurisdiction when the statutory period has elapsed? It simply cannot. To hold as the present majority does would permit the parties to confer jurisdiction by agreementa proposition that has been settled contrary to the present majority for decades.[2]
The only jurisdiction under which we may consider the merits of the instant application is our original jurisdiction. Tex. Const. Art. V, Sec. 5. Despite their sleight of hand antics, the majority correctly determines the merits of applicant's claims do not entitle him to relief. To that decision, I concur, but their delivering two totally conflicting opinions on the same day is shameful and will only lead to confusion in the future.
OVERSTREET, Judge, dissenting.
Today the majority gives a new meaning to the lady with a blindfold holding the scales of justice, as it dispatches three indigent death row inmates toward the execution chamber without meaningful review of their habeas claims. Ex parte Laroyce Lathair Smith, No. 36,512-01 (Tex.Cr.App. delivered July 15, 1998), Ex parte Robert Moreno Ramos, No. 35,938-01 (Tex.Cr.App. delivered July 15, 1998), and Ex parte Paul Richard Colella, No. 37,418-01 (Tex.Cr.App. delivered July 15, 1998), Smith by written opinion, Ramos and Colella by written orders. My previous dissent in Smith is withdrawn and replaced with this dissenting opinion.
To dismiss Smith and Colella as abuse of writ because their lawyers untimely filed writ applications borders on barbarism because such action punishes the applicant for his lawyers's tardiness. It would be fair to punish the attorney by not providing payment. It would be fair to punish the attorney by not providing payment. It would also be fair to the applicant, and serve the concept of justice better, to appoint a new lawyer and reinitiate the timetable. Must the indigent Texas Death Row inmate suffer the ultimate punishment of death without benefit of State habeas review because of his lawyer's tardiness? A majority of this Court says "yes," but I say "no," even if I stand alone. I shall address all three of these cases together.
One common thread in all three cases is that applicants are indigent death row inmates who requested the appointment of a lawyer, this Court appointed lawyers to represent them, and all three lawyers filed applications after the 90th day, which is clearly outside of the time limit set out in the statute, Article 11.071, V.A.C.C.P. Smith is dismissed as not timely filed because of a 9-day delay. Colella is dismissed as not timely filed because of a 37-day delay. Ramos is denied on the merits even though there is a 2-day delay in filing, with such delay being excused on Texas Constitutional grounds of due course of law because the lawyer relied on incorrect instructions from the trial court *619 instead of reading and understanding the law himself. Apparently in some situations, death row inmates are due a little more due course of law than in others.
In Smith, Judge Womack is critical of me because I speak and write of being fair. He also pays lip service to "[o]ur oaths are to uphold the constitutions and laws.... The law is clear: this court shall dismiss this application because it was filed late." Smith, supra, at 611, slip op. at 4. My question of Judge Womack can be answered "yes" or "no" Was the application in Ramos filed late? The answer leaps out as "yes." The Judge who said the law is clear now deviates. At least Judge Keller, even though I disagree with her position, has the courage to interpret the law the same way each time. The Court seems unwilling to effectuate the entire will of the Legislature when it enacted Article 11.071. It goes without saying that the Legislature wanted to speed up the process and add finality to the disposition of death penalty cases. However, I do not believe that the Legislature intended to throw the Constitution on its head and fairness out the door. The majority also seems unwilling to take into consideration how its disposition of these applications affects the ability of the death row inmates to seek federal review. Apparently, pursuant to federal law, including The Anti-Terrorism and Effective Death Penalty Act, 28 U.S.C. § 2261 et seq., death penalty applicants who seek federal habeas review are subject to procedural default holdings if they do not properly pursue their claims to a resolution before this Court. Harris v. Reed, 489 U.S. 255, 109 S. Ct. 1038, 103 L. Ed. 2d 308 (1989); Murray v. Carrier, 477 U.S. 478, 106 S. Ct. 2639, 91 L. Ed. 2d 397 (1986).
If a lawyer's actions deny an indigent death row applicant meaningful review of his claims, then I question whether the inmate standing in line to be executed has received effective assistance of counsel. Commonsense tells me that if you do not have effective assistance of counsel, with all due respect, I consider that worse than having no lawyer at all because having an ineffective lawyer gives a sense of legitimacy to the proceeding, yet the degree of assistance may be equivalent to not having a lawyer at all.
The only thing consistent about the majority's disposition of these cases is its inconsistency, the apparent need to justify its disposition in the cases without regard to the legislative intent of the statute and/or fairness, and a reckless disregard of the law based on its own stare decisis. Without a doubt, Smith and Colella are being treated differently than Ramos. Therein lies the criticism of death penalty litigation. Some are being treated differently than others, and today the Court clearly throws gasoline on the fire.
For these reasons, I dissent to the disparate treatment of the indigent death row inmates of Texas and specifically to the disposition of Smith and Colella. I concur only in the decision to deny relief in Ramos.
KELLER, Judge, dissenting.
For one primary reason, and two secondary reasons, this application should be dismissed. I therefore dissent to the majority opinion, which addresses the merits of the claim.
This writ application was filed too late to comply with the requirements of Tex.Code Crim. Proc. Ann. art. 11.071. And, as the majority acknowledges, "Literally applied, Article 11.071, Section 4(f) would make it impossible for the applicant to establish good cause for his untimely filing." (op. at 616). Our only course under the statute is to treat the application as an untimely or subsequent application under Section 5. In this case applicant does not meet the requirements of Section 5 for consideration of the merits of such an application. As such, the statute tells us that we "shall issue an order dismissing the application as an abuse of the writ." The first and best reason we should dismiss the application is that the statute does not allow us to do anything else.
The majority finds a constitutional impediment to following the literal language of the statute. It determines that, because applicant relied in good faith on a mistaken calculation of the trial court, our failure to allow a good faith exception would deny applicant *620 due course of law under the Texas Constitution. Article I, Section 19 of our Constitution provides that, "No citizen of this State shall be deprived of life, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due course of the law of the land." It seems to me that the law of the land here relevant is art. 11.071 and the Constitution itself.
Article 5, Section 5, of the Texas Constitution provides, in relevant part:
"Subject to such regulations as may be prescribed by law, the Court of Criminal Appeals and the Judges thereof shall have the power to issue the writ of habeas corpus,..." (Emphasis supplied).
In Ex parte Davis, 947 S.W.2d 216, 223 (Tex.Crim.App.1996) (McCormick, P.J., concurring), a majority of this Court determined that article 11.071 is the exclusive means by which this Court may exercise its original habeas corpus jurisdiction in death penalty cases. Since Article 5, Section 5, of the Constitution and Article 11.071 are the relevant law, and both are complied with only by dismissing the application, I do not see how applicant would be deprived of due course of law by the Court doing so.
A second reason to dismiss the application concerns the majority's belief that good cause exists in this case. The majority concludes that there is good cause because applicant filed the application late in reliance on an erroneous time calculation by the trial court. The record shows that applicant asked the trial court to extend the time for filing until August 22. The miscalculation was applicant'snot the court's. Faulting the trial court under these circumstances is inappropriate and allows applicant to benefit from tardiness that is of his own creation.
A third reason to dismiss the application concerns the notion that it "violates the spirit of article 11.071"[1] or that it "borders on barbarism"[2] for us to refuse to consider the merits of a capital murder writ application simply because of a missed deadline. An unfortunate practice has arisen regarding "extensions" of time to file. The statute does not allow a court to grant an extension of time to file. The statute requires that the application be filed within 180 days from the appointment of counsel. If the application is filed after 180 days, the application is presumed untimely unless the applicant establishes good cause (defined as "particularized justifying circumstances") for the late filing. If good cause is established, the trial court is then to proceed as if the application had been timely filed. Thus, the statute does not contemplate extensions of time. Instead, it allows an applicant to establish after a late application is filed that there was good cause to file late. And it provides what seems to me to be a generous buffer zone ninety daysfor late filing.
Here, counsel was appointed on November 22, 1996, so applicant was required to file the application by May 21, 1997. On May 22, 1997, applicant requested the unauthorized extension. Applicant could have filed an untimely application as late as August 19, 1997, if the trial court had found good cause for the late filing. He filed it on August 22, 1997, ninety-three days after it was due.
The legislature clearly was aware of the dangers of imposing a strict timetable, and crafted the statute to avoid any possible unfairness that might have resulted from imposing absolute time limits. Not only does the statute allow a 90-day grace period for non-compliance with the time limits, it requires the trial court to hold a good cause hearing within ten days of the 180-day due date if the application is not timely filed. The legislature took into account the contingencies of good cause, miscalculation of time limits, and missed deadlines. But it also imposed an absolute prohibition against exceeding the 90-day grace period. Our lawmakers intended to create an absolute deadline, they were entitled to do so, and it was not unfair for them to do so. And it is in no way unfair for our Court to abide by the guidelines the legislature has imposed.
*621 I would dismiss this application as an abuse of the writ. I respectfully dissent from the decision to do otherwise.
NOTES
[1] "No citizen of this State shall be deprived of life, liberty, property, privileges or immunities, or in any manner disfranchised, except by the due course of the law of the land." TEX. CONST. art. I, § 19.
[1] In Smith, supra, Judge Womack intimated the dissenters betrayed our oaths of office because we believed the application should be considered. Judge Womack stated:
... Our oaths are to uphold the constitutions and laws of this country and state; they are not a commission to do what a majority of us think is fair. The law was passed by the legislature and approved by the governor, in accordance with our constitutional form of government. The law is clear: this court shall dismiss this application because it was filed late. If the law is barbarous, the legislature should repeal it or the governor should commute or pardon those who are subjected to it. In the meantime, we must follow it.
Smith, at 611. (emphasis supplied). The majority opinion here makes no meaningful distinction between the instant case and Smith.
[2] In State v. Roberts, 940 S.W.2d 655, 657 (Tex. Cr.App.1996) this Court held, "... subject matter jurisdiction cannot be conferred by agreement of the parties; jurisdiction must be vested in a court by constitution or statute. "(citing Garcia v. Dial, 596 S.W.2d 524, 527 (Tex.Cr.App.1980)); and, Ex parte Caldwell, 383 S.W.2d 587, 589 (Tex.Cr. App.1964) If the parties cannot agree to confer jurisdiction they should not be able to confer jurisdiction by mistake as the majority now permits. Ante, at 617, slip op. pg. 3.
[1] Ex parte Smith, 977 S.W.2d 610 (Tex.Crim.App. 1998) (Baird, J., dissenting)
[2] Ex parte Smith, 977 S.W.2d 610 (Tex.Crim.App. 1998) (Overstreet, J., dissenting) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472233/ | 29 F. Supp. 2d 592 (1998)
UNITED STATES of America, Plaintiff,
v.
Donald G. STEVENS, Defendant.
No. A97-0121 CR (JKS).
United States District Court, D. Alaska.
December 8, 1998.
*593 Steven E. Skrocki, Assistant United States Attorney, and Robert C. Bundy, United States Attorney, Anchorage, Alaska, for the United States of America.
William P. Bryson, Anchorage, Alaska, for defendant Donald G. Stevens.
ORDER GRANTING DEPARTURE
SINGLETON, District Judge.
INTRODUCTION
Donald G. Stevens ("Stevens") was charged in an indictment with one count of possession of child pornography in violation of 18 U.S.C. § 2252A(a)(5)(B), a class D felony.[1] Stevens entered a plea of guilty without *594 a plea agreement and proceeded to sentencing. The maximum penalty is five years imprisonment and a $250,000 fine. Stevens received a sentence of twelve months and one day incarceration, a $10,000 fine and three years of supervised release. This sentence resulted in part from this Court's granting one downward departure and denying two others. See U.S.S.G. § 5K2.0. Because the parties agreed on the offense level and criminal history calculations made by the presentence officer, the only issues argued at the sentencing hearings concerned these possible downward departures. The Court set out its reasoning on the record and elaborates upon that reasoning in this written decision.
THE OFFENSE
On September 26, 1997, Stevens took his laptop computer to John Martinson who operates a computer repair business. Stevens had been having difficulty with his computer's "mouse pad," which Martinson repaired. Martinson apparently performs an additional service for his customers, whether requested or not, whereby he searches the computers left in his care for computer viruses. The test Martinson performs requires him to review files kept on the computer's hard drive. During his inspection, Martinson found what he suspected were image files containing child pornography. Martinson was concerned that there were over four-hundred such images. Martinson initially copied these files to his hard disk but on advice of the police, he transferred the files to a zip disk and destroyed the images on his own hard drive. In the meantime, Martinson sabotaged Stevens' computer to prevent him from erasing the images. Martinson initially contacted the Anchorage Police Department and the case was eventually assigned to the Federal Bureau of Investigation.
The FBI obtained a search warrant for Stevens' computer and was able to access the files previously discovered by Martinson. Many of the files depict pre-teenage children. Most would qualify as obscene under the more stringent standards differentiating obscenity from child pornography. There are images of very young children engaging in bestiality and various sadomasochistic activities in apparent distress.[2] The conduct depicted could cause severe physical pain to the youthful participants. Experience teaches that the risk of psychological and emotional injury is even greater. The FBI found no additional evidence of child pornography in Stevens' residence except the computer images on his hard drive.
All of the images were obtained through "chat rooms" on America Online ("AOL"), to which Stevens subscribed. Stevens apparently became interested in the scope of material available through the chat rooms and took the time to learn the necessary codes and passwords to access those chat rooms specializing in child pornography. Stevens' modus operandi was to enter the chat room and transmit the single message "list me" in answer to code messages posted in the chat rooms. Other participants having pornography to distribute would read this message and in response, Stevens' "screen name" would be added to a mailing list and he would receive bulk e-mails of images, many of which would qualify as child pornography from other participants in the chat rooms.[3]*595 It does not appear that Stevens ever actively participated in the activities of the chat room by soliciting particular images or discussing his collection with other participants.
Martinson feared that certain of the images might have been recently scanned locally and that Stevens might have appeared in some of the pictures, suggesting that Stevens was currently abusing children. No such evidence has been produced. The Court finds credible the testimony of Supervisory Special Agent Kenneth V. Lanning of the FBI that it is difficult to date any particular image without a context. Lanning estimated that the bulk of the images currently in circulation were produced and placed in circulation in the late 1960s and early 1970s, continuing into the 1980s and even the 1990s.
Pornographic images, including images involving children, have been in existence since the invention of the camera in the 19th century. This is clear from the reports of the two Commissions which have addressed obscenity and pornography. See THE REPORT OF THE COMMISSION ON OBSCENITY AND PORNOGRAPHY 136-43 (Bantam Books 1970) (reflecting the conclusions of the Commission established by President Johnson in 1967) (hereafter "Commission-70"); FINAL REPORT OF THE ATTORNEY GENERAL'S COMMISSION ON PORNOGRAPHY 130-81, 341-84 (Rutledge Hill Press 1986) (reflecting the conclusions of the Commission appointed by President Reagan's Attorney General in 1985) (hereafter "Commission-86"). Anthony Comstock, the 19th century crusader against obscenity, bragged that he had personally destroyed over three-million pornographic pictures. See LAURENCE H. TRIBE, AMERICAN CONSTITUTIONAL LAW § 12-16 at 918 (2d ed.1988). The 1970 Commission on Obscenity and Pornography was unable to verify how many obscene pictures were in circulation, but estimated that there must be millions. See Commission-70 at 141. While both Comstock and the Commission on Obscenity and Pornography did not differentiate between child and adult pornographic pictures, or between drawings and photographs, there is no reason to believe that the volume of such pictures was significantly different based upon the age of the persons depicted. Bearing in mind that Matthew Brady was only one among many successful commercial photographers at the time of the American Civil War, it is reasonable to assume that millions of photographs depicting children in sexually charged situations were produced domestically or imported from abroad and were in circulation prior to 1977.[4]
*596 There was no evidence beyond Lanning's testimony regarding the origin of the specific images in question, and the Government made no effort to show that any of the images Stevens possessed were recently produced.[5] A preponderance of the evidence would therefore indicate that each of the images collected by Stevens originated and was probably produced prior to 1977, over eighteen years before Stevens first downloaded pornography in 1995.[6] Thus there is *597 no evidence that any of the images depict individuals who were under the age of eighteen at the time Stevens downloaded their image.
It is clear, however, that a substantial number of the images collected by Stevens portray children substantially under the age of eighteen at the time the images were produced. There is no evidence that Stevens participated personally in any of the activities depicted. There is no evidence that Stevens attempted to contact any person depicted in any of the images, or ever learned or attempted to learn the identity of any such person. Furthermore, there is no evidence that Stevens corresponded with anyone representing that he or she was currently producing child pornography or currently abusing children.
THE OFFENDER
Stevens was born in West Stewartstown, New Hampshire, on February 25, 1951. He was forty-seven years old at the time of sentencing. He has no criminal record. Stevens has never been married and has no children. He is currently living with Suzanne Eusden, whom he met at a mountaineering club meeting in New Hampshire twenty-seven years ago. They have lived together for eight years. At sentencing it was mentioned that Stevens had previous short term relationships lasting up to a year with other women, but the details are sketchy. It does not appear that Stevens ever sought out women with children for relationships. In fact, Stevens indicates that he does not wish to be married and have children because it would interfere with his freedom.
Stevens graduated from high school and attended college for two years earning an Associate of Science degree in Forestry. Most recently, Stevens has worked steadily as a longshoreman in Whittier, Alaska. He also has a part time business caring for privately owned boats in Whittier. Stevens has invested successfully in the stock market and has a net worth of over $350,000. He purchased his computer in 1995 in part to monitor his stock holdings. It does not appear that Stevens owned a computer prior to 1995.
THE SENTENCE
The Court held two sentencing hearings in this case. The first hearing was held on July 31, 1998. At that hearing, Dr. James F. Harper testified on behalf of Stevens, but the hearing ended before he could be cross-examined. The Court also heard from Ms. Eusden and from George Kapolchok, a friend of Stevens.
At the second hearing, held on September 29, 1998, Dr. Harper completed his testimony. The Government then presented its witnesses. Doctor Irvin A. Rothrock testified in person, and the Court heard telephonic testimony from Dr. Andres E. Hernandez, Director of the Sex Offender Treatment Program at the Federal Correctional facility in Buckner, North Carolina, and national coordinator of sex offender treatment for the Federal Bureau of Prisons. The Court also heard from Kenneth V. Lanning of the FBI, who has served for over eighteen years as an investigator and consultant on issues of child sexual exploitation. The Court additionally heard allocution from Stevens and argument from counsel for both parties.
The Court adopted the factual findings and Sentencing Guideline application in the presentence report, supplemented by certain factual findings made during the evidentiary hearings. Stevens had a Total Offense Level of 16, and a Criminal History Category of I.[7]*598 Stevens was therefore subject to a sentencing range of twenty-one to twenty-seven months and two to three years of supervised release, a fine of from $5,000 to $50,000, and a special assessment of $100. Ultimately, this Court determined to depart downward three offense levels to a Total Offense Level of 13 in reliance on U.S.S.G. § 5K2.0, placing Stevens in a sentencing range of twelve to eighteen months.
The Court sentenced Stevens to twelve months plus one day to assure him credit for good time served, three years of supervised release, a fine of $10,000 and a special assessment of $100. See Docket No. 44 (Judgment). These remarks will expand slightly on this Court's oral discussion of the factors that influenced its decision and hopefully put this case in context. The issues are sufficiently complicated that a more detailed written decision should provide illumination.
WORST, TYPICAL AND LEAST OFFENDERS
There was no plea agreement in this case. The parties accepted the conclusions of the presentence report regarding the applicable Sentencing Guideline range. The Government did not suggest any aggravating factors beyond the number of pornographic images and their content. Stevens, however, asked for a downward departure.
The United States Supreme Court has provided guidance to the district courts regarding their discretion to grant departures. See Koon v. United States, 518 U.S. 81, 116 S. Ct. 2035, 135 L. Ed. 2d 392 (1996). See also United States v. Sanchez-Rodriguez, 161 F.3d 556 (9th Cir.1998) (en banc). Essentially, sentencing courts should proceed in stages. The first stage involves identifying the "heartland" of the applicable Sentencing Guideline. See Koon, 518 U.S. at 95, 116 S. Ct. 2035 (citing United States v. Rivera, 994 F.2d 942, 949 (1st Cir.1993)). While the Supreme Court uses slightly different terminology, it looks for the same factors that have historically guided sentencing. The trial judge must imagine the universe of those convicted of a given offense and then divide that universe into three subsets: worst offenders, typical offenders, and least offenders. Presumably the worst offenders will receive a sentence near the top of the range of available sentences, a typical offender one occupying the heartland will receive a sentence in the middle, and a least offender will receive a sentence near the bottom of the available sentences. The worst and least offenders are defined by reference to the typical offender who with his typical offense occupies the heartland.[8]
A district court considering a departure must before considering the specific arguments advanced by the parties, define the heartland of the Sentencing Guideline which accounts for the typical case, and thenafter a careful consideration of the applicable Guidelines identify and examine factors which serve to distinguish the defendant being sentenced from the typical defendant in the typical case. Once these factors have been segregated, the court can then determine whether any of the factors alone or in combination serve to remove the case sub judice from the heartland and warrant a *599 departure either upward or downward. To make this decision, the court must determine whether the factor(s) that are relied upon to take a case out of the heartland are encouraged, discouraged or neutral in the treatment given to the offense by the United States Sentencing Commission. This case is complicated by the fact that the heartland of the offense and of the offenders who commit it has not been well defined.[9]
The offense at issue in this case constitutes one of a number of offenses that might best be characterized as child sexual exploitation. See 18 U.S.C. §§ 2251-60. There is some similarity between these offenses and the sexual abuse of children. See 18 U.S.C. §§ 2241-48. While serving first as an Alaska Superior Court Judge, and later as a judge of the Alaska Court of Appeals, an appellate court whose jurisdiction was limited to criminal cases and related matters including sentence appeals, the undersigned gained extensive exposure to the prosecution of those who abuse children sexually and the sentences they receive. See AS 22.07.010-.100 (establishing Alaska Court of Appeals and defining its jurisdiction, composition and parameters).
Alaska followed England in providing by statute for appellate review of sentences in 1969. See AS 12.55.120 (1969); State v. Chaney, 477 P.2d 441 (Alaska 1970).[10] The Alaska Court of Appeals inherited that jurisdiction when it was established in 1980. The general criteria for sentence review was prescribed in Chaney. A sentence should serve the overlapping goals of rehabilitating the offender into a non-criminal member of society, isolating the offender from society to prevent criminal behavior during the period of rehabilitation, deterring the offender himself after his release from confinement or other penalogical treatment, as well as deterring other members of the community who might possess similar tendencies toward criminal conduct, and community condemnation of the individual offender, or in other words, reaffirming societal norms for the purpose of maintaining respect for the norms themselves. See Chaney, 477 P.2d at 444 (citing Appellate Review of Primary Sentencing Decisions: A Connecticut Case Study, 69 YALE L.J. 1454 (1960)). With the addition of retribution, which appears in the Yale Law Review article but not in the Chaney list, these factors are virtually identical to the factors described in 18 U.S.C. §§ 3582 and 3553(a).[11]
*600 Alaskan judges were sentencing with regard to these factors and subject to appellate review over fifteen years before sentencing appeals were authorized in the federal system. In presumptive sentencing, Alaska judges had a preview of what federal judges would encounter in the Sentencing Guidelines.
Prosecution of sexual abusers significantly increased in Alaska in the 1970s and a significant percentage of the sentence appeals before the Alaska Court of Appeals involved sexual abuse of minors. See AS 11.41.434.470 (sexual abuse of minors in various degrees). In part this was traceable to the fact that Alaska adopted a revised criminal code based on the Model Penal Code and a new presumptive sentencing system based on proposals by the Twentieth Century Fund Task Force on Criminal Sentencing. See REPORT OF THE TWENTIETH CENTURY FUND TASK FORCE ON CRIMINAL SENTENCING, FAIR AND CERTAIN PUNISHMENT (1976); Braaten v. State, 705 P.2d 1311, 1323-28 (Alaska App. 1985) (Singleton, J., concurring). Many of the sexual abuse cases the undersigned considered while sitting on the Alaska Court of Appeals involved child pornography. See, e.g., Lawrence v. State, 764 P.2d 318 (Alaska App.1988); Rodriquez v. State, 741 P.2d 1200 (Alaska App.1987); Dymenstein v. State, 720 P.2d 42 (Alaska App.1986); Qualle v. State, 652 P.2d 481 (Alaska App.1982). The only case that involved only child pornography without accompanying sexual abuse appears to have been Harris v. State, 790 P.2d 1379 (Alaska App.1990), where a stepfather photographed his stepdaughter for his own arousal with no evidence of distribution.
Nevertheless, the weight of the evidence presented at the sentencing hearing in this case suggests that persons convicted of the offenses for which Stevens was convicted should not, in the absence of more evidence, be automatically confused with men and women convicted of sexually abusing children. While some child molesters view pornography and some do not, and some who view pornography molest children but most do not, there seems to be no significant correlation between the two groups. Dr. Hernandez, Director of the Sex Offender Treatment Program, presented testimony to this Court in which he essentially treated the two groups as fungible. However, Dr. Hernandez's opinion was formed based upon his dealing primarily with the class of child molesters. The Court concludes that this limited experience may have distorted Dr. Hernandez's views.[12]
The weight of the evidence suggests that men and women who have more than a passing interest in child pornography, certainly those who would collect large volumes of it, fall into a deviant subclass of the community (i.e., most men and women do not do this or have any interest in doing it). Men and women in deviant groups typically come to the attention of social scientists in one of two ways. Either their deviancy constitutes a crime and brings them to the attention of the police, or their deviancy conflicts with other aspects of their lives (e.g., difficulty earning a living) and leads the person to seek mental health counseling.[13] Where a deviant has adjusted to his deviancy, he will not wish to change it, and will therefore not seek mental health treatment, and if the deviancy does not involve living victims who are capable of making a complaint, the deviancy is unlikely to come to the attention of the authorities. In such cases, neither the law enforcement community nor the mental health community *601 will generate informed statistics regarding the composition of the deviant community which might allow for meaningful study of the community's characteristics.
It seems, therefore, that where a person must be sentenced for an offense that is not frequently prosecuted and where there is no opportunity to rely on social science literature to characterize the heartland of offenders, a court must approach the issue indirectly for purposes of distinguishing between heartland, or typical offenders, on the one hand, and worst or least offenders on the other. The terms "worst offender" and "least offender" could refer to the nature of the offender or the nature of the offense, or a combination of both. See Harris, 790 P.2d at 1382-84. Thus, a worst offender could be either a multiple offender with a history of convictions who has not learned from past periods of incarceration, or a man or woman who commits a single particularly egregious offense, for example, a person who pleads to a lesser offense while having committed a greater offense. Under the Sentencing Guidelines, a person's criminal history addresses his past behavior. Thus the primary focus in this decision will be on the gravity of Stevens' offense. In this Court's view, it has always seemed most reasonable to view worst offenders as people whose relevant conduct encompasses a more serious offense than the one to which the offenders plead as basically the beneficiaries of charge bargaining. See Braaten, 705 P.2d at 1323-28 (Singleton, J., concurring) (discussing worst and least offenders). In contrast, a least offender would be one who minimally qualified as an offender under the relevant statute. See id. at 1325.
This approach seems particularly appropriate taking into consideration the fact that nearly ninety percent of criminal prosecutions result in a plea, generally pursuant to a plea agreement. See U.S.S.G. Ch. 1, Pt. A, Intro. 4(c) (1997). Plea agreements fall into roughly two categories, sentencing bargains where the parties bargain for a particular sentence or range of sentences, and charge bargains where the parties agree on the charge that will be sustained by the plea and further agree that other charges that could have been brought will not be brought and additional charges that were brought will be dismissed. The Sentencing Guidelines have significantly restricted sentence bargaining. Thus, the bulk of the plea agreements seen in this Court have been charge bargains where people arguably guilty of greater offenses or multiple offenses save the Government the time and trouble of going to trial in return for permission to plead to one or more "lesser" offenses.
It is possible that Stevens was only guilty of and therefore plead to the lowest possible charge, eliminating any room for a charge bargain. Nevertheless, failure to recognize the significance of charge bargaining in creating the class of offenders convicted of any specific offense distorts any effort to visualize the heartland for any Guideline relevant to that offense. This is because the typical person being sentenced for an offense will probably have entered into a charge bargain and his or her relevant conduct will typically show guilt of more serious conduct than a limited examination of the elements of the offense named in the charge bargain would disclose. See, e.g., United States v. Romualdi, 101 F.3d 971 (3rd Cir.1996) (defendant guilty of receiving plead to possession); United States v. Wind, 128 F.3d 1276 (8th Cir.1997) (defendant guilty of transmitting computer images of child pornography to an undercover agent of the police plead to simple possession).[14]
*602 With this in mind, in the absence of any significant experience with a particular offense and class of offenders, the best approach is to look at the evils which the statute is intended to prevent and see how a particular offender's conduct compares to the evils Congress sought to prevent. Viewed in this light, someone whose conduct seriously contributed to the harm identified by Congress particularly where his relevant conduct included commission of a greater offense would be a worst offender, who in an appropriate case could receive an upward departure, someone who significantly contributed to the harm but less seriously would occupy the heartland, and someone who was properly convicted because his conduct satisfied each of the elements of the offense but whose conduct minimally contributed to the harm envisioned by Congress would be a least offender eligible for a downward departure.
Fortunately, in three separate decisions, the Supreme Court has provided significant guidance on what harms follow from the possession of child pornography. See Osborne v. Ohio, 495 U.S. 103, 110 S. Ct. 1691, 109 L. Ed. 2d 98 (1990); New York v. Ferber, 458 U.S. 747, 102 S. Ct. 3348, 73 L. Ed. 2d 1113 (1982); Stanley v.. Georgia, 394 U.S. 557, 89 S. Ct. 1243, 22 L. Ed. 2d 542 (1969). None of these cases specifically address the federal statutes being considered in this case, but subsequent cases which do address those statutes and the legislative history surrounding enactment of the federal statutes make it clear that Congress was concerned about the same harms and the same victims. See United States v. Boos, 127 F.3d 1207, 1211-13 (9th Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 734, 139 L. Ed. 2d 672 (1998).
In Stanley, the Supreme Court held that the First Amendment protected the private possession of obscene material whose production could be prohibited under the test that was established in Roth v. United States, 354 U.S. 476, 77 S. Ct. 1304, 1 L. Ed. 2d 1498 (1957), and subsequent to Stanley, modified in Miller v. California, 413 U.S. 15, 93 S. Ct. 2607, 37 L. Ed. 2d 419 (1973). In Ferber, the Supreme Court held that the Miller test did not limit a state's authority to bar sexually provocative depictions of children even if those depictions were not strictly speaking obscene. Finally, in Osborne, the Supreme Court declined to apply Stanley to child pornography, concluding that the state's interest underlying prohibition of child pornography far exceeded its interest in prohibiting adult pornography and justified penalizing private possession in the home. See 495 U.S. at 108-09, 110 S. Ct. 1691.
Ferber made a sharp break with Stanley in terms of its analysis of the social harms traceable to pornography. Stanley represented the historic view toward laws prohibiting the possession of pornography which rested on the assumption that the only social harms flowing from the production and distribution of pornography were to the consumer who would be corrupted by viewing the images. This was also the thrust of the analysis provided by the 1970 Commission on Obscenity and Pornography. While the Commission on Obscenity and Pornography did discuss harms to children, those harms emanated from possessing or receiving pornography, not from participating in its production. See Commission-70 at 62-67, 412-13. Ferber looked not to the harm which consumers suffered, but to the harm participants suffered in producing the pornography. Osborne followed Ferber in this regard. The danger that the minds of those possessing the material would be "poisoned" was insufficient to permit regulation of private possession in the home under Stanley, but the real danger in the form of harm to the physiological, emotional and mental health of the exploited and potentially exploited children portrayed in the pornography provided sufficient justification in the view of the Osborne majority for the prohibition on private consumption of child pornography by consenting *603 adults. See Osborne, 495 U.S. at 109, 110 S. Ct. 1691. But see id. at 139-45, 110 S. Ct. 1691 (Brennan, J., dissenting).
Osborne pointed to three essential harms to children addressed by the laws prohibiting private possession of child pornography: (1) reception and possession of child pornography encouraged its production; (2) child pornography could be used by pedophiles to seduce their victims; and (3) pornographic materials constituted a permanent record of a child's abuse which could haunt the child in years to come. See id. at 108-11, 110 S. Ct. 1691. Prohibiting possession encourages possessors to destroy their inventory, thus providing some solace to past victims. See id. at 111, 110 S. Ct. 1691. See also United States v. Arvin, 900 F.2d 1385, 1387 (9th Cir.1990), cert. denied., 498 U.S. 1024, 111 S. Ct. 672, 112 L. Ed. 2d 664 (1991). Thus, the gravamen of the offense is the harm to the real children exploited in the pornographic depictions. See Boos, 127 F.3d at 1209-13.[15] Knowledge of the harms to be prevented and the victims to be protected helps a trial court identify the heartland of the offense and divide offenders into the three classes of offenders based upon the extent to which each offender's conduct contributes to the harm and injures the victims identified by Congress.
First we must ask if Stevens is among the class of worst offenders. Clearly, if Stevens' conduct warranted an upward departure on the basis that he was a worst offender, it would be difficult to conclude that he was also entitled to a downward departure on the ground that he was a least offender. A worst offender would generally be an offender whose relevant conduct constituted a greater offense or whose conduct substantially contributed to the harms identified by Congress in enacting the statutes in question.
There is no evidence that Stevens ever abused a specific child, or that he singled children out for specific attention whether permissible or impermissible. Stevens has spent most of his life in small towns, including Whittier, his current home. It is unlikely that any significant interest in children would have been overlooked by Stevens' neighbors, and yet neither his supporters nor his detractors have noted any interest Stevens had in a particular child or group of children. It does not appear that Stevens has ever served as a church or community youth leader or taken a special interest in any of his friends' children. In fact, based on the evidence in this case, Stevens appears indifferent to the children he might actually encounter and views any children that he might become responsible for as a threat to his independence.
Nor is there any evidence that Stevens ever transmitted or sent pornographic images to anyone or traded in such images. It is possible that Stevens' conduct might satisfy the elements of receiving as well as possessing child pornography. See United States v. Norris, 159 F.3d 926, 930 n. 4 (5th Cir.1998) ("Arguably, there is no meaningful distinction between the offenses of receiving and possessing child pornography"). Stevens certainly downloaded the images from AOL utilizing the phone lines. Given the circumstances surrounding his obtaining the images, the Government might have felt that Stevens was not aware of the exact nature of any particular images that the cryptic phrase "list me" would bring until he viewed them on downloading, and therefore he lacked scienter as to any specific visual image until that time. It appears that some of Stevens' *604 postings may have resulted in his receiving adult pornography and simulated child pornography.[16] It would not be unreasonable to distinguish the two offenses on this basis. Stevens never engaged in any conduct similar to ordering a specific image based upon a description of that image in a catalogue or even in an e-mail communication. Consequently, this Court concludes that Stevens is not clearly guilty of a more serious offense. In order to determine whether he is a heartland offender, it is necessary to compare his conduct to the harms identified by Congress.
Stevens is not one of the offenders for whom collection of child pornography is a supplement to the molestation of real children. For this reason, Stevens is simply not involved in one of the fundamental harms identified by the Supreme Court, namely, use of pornography to seduce child victims. See, e.g., Rodriquez, 741 P.2d at 1202 (illustrating how child molesters utilize pornography to seduce vulnerable children). By the same token, there is no evidence that Stevens ever produced any child pornography or distributed it to anyone else. As previously discussed, evidence presented at the hearing suggested that large-scale commercial production of child pornography has been virtually eliminated and current production appears to be a cottage industry. See Osborne, 495 U.S. at 143-45, 110 S. Ct. 1691 nn. 17 & 18 (Brennan, J., dissenting). There is no evidence that Stevens directly encouraged anyone connected with that cottage industry.
Testimony at the hearing also suggests that many if not all of the images possessed by Stevens were probably produced in the 1960s and 1970s, and many may have been produced much earlier and simply circulated in the deviant community ever since. While the Court recognizes that individuals are producing child pornography and distributing it on the internet even as it writes, current production would appear to be only a small percentage of the vast inventory already in existence. If Comstock could destroy over three-million obscene pictures in the final years of the 19th century, then the total volume of such pictures that have accumulated in the interim must be truly overwhelming. It should be recognized that with the internet both the market and the sources of supply are truly world wide. Testimony at the hearing and in the materials submitted by the parties established that many pedophiles and other collectors of child pornography keep vast collections. This is a recurrent theme in affidavits submitted in support of search warrants.
It is not unreasonable to infer that such collections have been horded down through the years and passed around among the deviant population. The 1970 Commission on Obscenity and Pornography found that advances in photographic technology in the 1950s, probably referring in part to the Polaroid camera and photo duplication equipment, made circulation of existing stocks so cheap and easy that commercial production was not economic. Now duplication and transmission are even easier. Every picture in every collection throughout the entire world is now available for cheap computer duplication and transmission over the internet.
In the absence of evidence to the contrary, the Court has inferred as a matter of fact, that it is more probable than not that any specific image possessed by Stevens originated prior to 1977, the date when Congress first began regulating child pornography. It is instructive that many of the states emboldened by Ferber were enacting comparable statutes at the same time. Congress initially focused its efforts on production, imposing severe penalties on those producing child pornography, and later distribution. Unless we assume that Congress's efforts were unavailing, it is reasonable to infer that recruitment of new "victims" has lessened and fewer new images are being produced at the same time that circulation of existing images has greatly increased.[17]
*605 The question before this Court is not whether some harm has been done to the interests and victims that Congress wished to protect. For purposes of this decision, the Court must assume that harm has been done. Thus in defining the elements of the offense, Congress has looked to the age of the person depicted at the time the depiction took place. See 18 U.S.C. § 2256(9)(A)(i)(I). Stevens has plead guilty and been convicted. The Court's job at sentencing is to quantify the harm in order to divide offenders into appropriate categories based upon their culpability.
Stevens is one of a population of consumers of pornography whose collective efforts must be considered. Congress was clearly concerned about the total impact on the market of all possessors and did not limit its concerns to the incremental harm caused by a single possessor. The class of which Stevens is a member contributes to the harm in two ways: (1) encouraging, by their consumption, continued production of child pornography, and (2) encouraging, by their consumption, further distribution of the pornographic images once they are produced. While the Ninth Circuit in Boos minimized the importance of future victims, it did not eliminate that concern entirely, and given the legislative history of the statutes at issue, it would be difficult to do so. See 127 F.3d at 1209-13. In order to evaluate Stevens' culpability, it is necessary to examine how his conduct contributes to these additional harms.[18]
Unlike many, Stevens did not pay for the images either in cash or in kind through barter. Unlike many, Stevens did not carry on correspondences with producers and purveyors of the pornography. Stevens' encouragement was passive, apparently consisting of no more than using the code phrase "list me" in certain chat rooms operated by AOL where pornography was commonly distributed. It is not suggested that Stevens took an active part in the management of the chat rooms. By the same token, Stevens did not share his collection with others, or even disclose to others, as far as we know, that he had the collection. While Stevens' conduct certainly satisfied all the elements of the offense to which he plead, if we examine his proven conduct against the harms that Congress sought to prevent, it appears that Stevens' contribution to those harms was de minimis. No victim past, present or future is likely to be harmed solely or even significantly because of anything Stevens did or failed to do.
Certainly a primary harm identified by the Supreme Court and later by Congress was the fact that pornographic photographs and particularly photographs scanned into computers, duplicated and distributed worldwide create a permanent record of past abuse. So long as the images are in existence, the victims are being harmed. The offense is clearly a continuing offense. Nevertheless, this harm requires evaluation like any other harm.
A victim would be harmed in two ways. First, there exists the generic concern that pictures were taken and will always be in existence. The pictures Stevens received are *606 mass produced. He received them as part of mass mailings through the chat rooms. The incremental harm he has caused any specific person pictured is de minimis. Even if Stevens had destroyed his collection, the same images would be continuously available. Therefore the harm caused by Stevens' possession only minimally contributed to creating a record of past abuse.
The second kind of harm and the most significant in the testimony of witnesses who have actually raised the issue in court before me is the risk that victims will encounter people who can identify them from pictures.[19] This is a source of great fear and embarrassment to affected individuals. The older the picture and the more the victim has changed in appearance during the interim, the less likely that the victim could be currently recognized or would believe that he or she could be currently recognized from the photographs in question. It appears likely that most of the pictures in Stevens' possession are more than twenty years old. It is unlikely that any persons pictured in those images would fear that they could be recognized from them today. The fact that none of the pictures involve people that Stevens knew or that knew him is significant. Thus, unlike many cases with which this Court has dealt, there is no context connecting Stevens to a specific victim to aid third parties specifically close friends or associates of the victim who might come into possession of Stevens' collection to recognize that victim.
How do we define the heartland of the offense? Congress's purpose in banning private possession of child pornography was primarily to protect current children from present exploitation. The victim of an offense like Stevens' is not society as a whole or even children who will be exploited in the future, but the actual children portrayed in the images. See Boos, 127 F.3d at 1213; United States v. Hibbler, 159 F.3d 233 (6th Cir.1998); United States v. Rugh, 968 F.2d 750 (8th Cir.1992).[20]But see United States v. Toler, 901 F.2d 399 (4th Cir.1990). If the purpose of the legislation is the protection of present children and the specific children to be protected are the children pictured in the images, and by reasonable extension those who will be harmed by anyone influenced by the willingness of the possessor to possess, then at the heartland of the Sentencing Guideline are those offenders who exploit victims who are currently children by in effect encouraging child pornography's production so that they can receive and possess it. See, e.g., United States v. Tagore, 158 F.3d 1124 (10th Cir.1998).
In Tagore, the defendant joined a chat room, helped develop its charter and while never producing child pornography himself, actively conversed with those that did and traded the resulting images. While the defendant in Tagore was convicted of more serious offenses than Stevens, the discussion of chat room operation in Tagore helps to define the heartland for possession offenses. Clearly the kind of conduct described by chat room participants where there were actual *607 on-line conversations regarding the exploitation of specific children serves to bring the possession guideline into synchronization with the harms which Congress has identified. In contrast, Stevens did not converse with anyone about the images to be delivered to him, and it is more probable than not that as a result he received images that are at least twenty years old.
It seems that Congress clearly intended to stamp out child pornography if possible and believed that attacking the market for such materials was necessary to achieve that goal. It is also clear that Congress set its net very wide for that purpose to assure that those primarily responsible for the production and distribution of child pornography could not escape through evidentiary loop holes. While it might be possible to differentiate between images produced in 1890 and those in 1990, it would probably be much more difficult to differentiate images produced in 1977 from those produced in 1995. Thus the statute clearly prohibits possession of child pornography from 1900 to assure conviction of those possessing child pornography produced in 1998 if identified and apprehended.
Congress has, however, provided a relatively short maximum sentence for those first offenders convicted of possessing child pornography five years. Consequently, worst offenders, heartland offenders and least offenders will all receive a sentence of five years or less. Since most pornography would appear to be transmitted via computer, most individuals caught will probably have more than ten images in their collection, and most will probably have some pre-school children depicted in that collection. The practical range of sentences will therefore be triggered by an Offense Level of 21 (15+2+2+2), less three for acceptance of responsibility in the event of a plea for an Offense Level of 18, which for a Criminal History Category of I yields a range of twenty-seven to thirty-three months. The effective minimum sentence without departure for a first offender convicted of a heartland offense will therefore be forty-five percent of the maximum sentence.
It is clear that Congress wanted possessors of child pornography to be identified, prosecuted, convicted and sentenced to prison for a reasonable time. It is less clear that Congress intended that the least offender within the class of possessors should receive a sentence almost half as large as the most serious offender. Viewed in this way, it seems clear that the Sentencing Commission has addressed distinctions between producers, transmitters and possessors, but has not adequately addressed differences within the residual or default class of mere possessors. An examination of the reported cases, considered against the background of the testimony in this case and the various commission reports dealing with pornography and the legislative history of the statutes, leads this Court to conclude that there are significant differences between the conduct of the various individuals who are guilty of mere possession and that the Sentencing Guidelines do not adequately address those differences.
The Court is therefore prepared to find that while Stevens is clearly a member of the class of offenders, he is a least offender. Stevens is outside the heartland of offenders who, by virtue of their conduct, must have contributed to a greater extent to the harms Congress sought to prevent. This determination justifies a downward departure. See Sanchez-Rodriguez, 161 F.3d 556. Recognizing that where a given defendant's actual offense is de minimis when compared to other offenders, and the trial court concludes on that basis that his actions are of a kind or of a degree that renders them outside the norm of other offenders committing other offenses, it is proper to depart. This is so even if the offender unquestionably committed the offense and his conduct satisfies all of the offense's elements and in addition the Sentencing Guidelines linguistically apply to his situation.
Here, the Guidelines do address distinctions between producing, distributing and possessing child pornography. The Guidelines do not take the further step and differentiate within the class of mere possessors based upon the likely harm they will do to the class of victims Congress wishes to protect. Examining the conduct of the various defendants discussed in the reported cases, it is clear that virtually all have made greater *608 efforts to involve themselves with producers and distributors of child pornography (or undercover operators posing as producers and distributors) than Stevens did. If any of the chat rooms frequented by Stevens had stressed the availability of recently created child pornography, then perhaps the result would be different.
ADDITIONAL BASES FOR DEPARTURE
Stevens asks this Court to find two additional or substitute bases for downward departure, both of which demand this Court's attention. See United States v. Ramos-Oseguera, 120 F.3d 1028, 1029 (9th Cir.1997) (holding each proposed basis for a downward departure must be separately addressed and considered).
1. Aberrant Behavior
First, Stevens contends that his actions in collecting over three-hundred separate images of child pornography over an eighteen month period constitute aberrant behavior under standards adopted by the Ninth Circuit. See U.S.S.G. Ch. 1, Pt. A, Intro. 4(d) ("The Commission, of course, has not dealt with the single acts of aberrant behavior that may still justify probation at higher offense levels through departures."). Stevens relies upon, among other sources of authority, United States v. Fairless, 975 F.2d 664 (9th Cir.1992) and United States v. Takai, 941 F.2d 738 (9th Cir.1991). Recent cases, however, have explained the holding of Takai. See United States v. Colace, 126 F.3d 1229, 1231-32 (9th Cir.1997); United States v. Pierson, 121 F.3d 560, 563-64 (9th Cir. 1997). In Colace, the Ninth Circuit set out a number of factors which a sentencing court faced with a claim of aberrant behavior must address. See 126 F.3d at 1231 n. 2. Applying those factors to this case, it appears that most either militate against an aberrant behavior departure, or cannot be determined on the existing record.
While Stevens is a first offender, he did not commit a single criminal act. Each time he downloaded an image of a different child he committed a separate crime and arguably injured a separate victim. See Boos, 127 F.3d at 1210. The offenses were not spontaneous or unplanned, but continued over a significant period of time. Stevens' motivations for committing the crime are unclear. Stevens was interviewed by a psychiatrist and a psychologist and neither believed his explanation for committing the crime. This Court is equally in doubt. While it is possible that Stevens is suffering from a psychological disorder related to collecting child pornography, and that such disorder subjected him to substantial pressure, the Court is unable to draw this conclusion. Finally, the Court did receive letters from Stevens' friends and family expressing shock at his behavior, but that would virtually always be the case with the collection of child pornography because it is a deviant behavior and most deviant people keep such behavior secret. True, Stevens has been an exemplary hard working citizen throughout his life and prior to the institution of the Sentencing Guidelines would probably have received probation on that basis, but the Guidelines specifically preclude such socio-economic considerations from influencing a sentence. See U.S.S.G. §§ 5H1.5, 5H1.6 and 5H .10. See also United States v. Duerson, 25 F.3d 376 (6th Cir.1994).
Finally, and most important given the testimony in this case and particularly that of Special Agent Lanning, the positive aspects of Stevens' life and relationships are really not inconsistent with being a collector of pornography.[21]
2. Significantly Reduced Mental Capacity
Mental and emotional conditions are ordinarily not relevant in determining whether a sentence should be outside the applicable Sentencing Guideline range. See *609 U.S.S.G. § 5H1.3. An exception permits a downward departure if a defendant suffers from significantly reduced mental capacity that contributed to the commission of his or her offense. See id. § 5K2.13.[22] Stevens asks for a departure on this basis, relying primarily upon a report from Dr. Harper.
Dr. Harper initially credited Stevens' explanation that he was not erotically affected by the pornography he collected, but simply was engaged in a quest to explore AOL to find the bizarre and the unusual. At the final sentencing hearing, however, Dr. Harper was more guarded in this regard. Dr. Harper interviewed both Stevens and Ms. Eusden and accepted their statements that they had a full and typical sex life and looked to one another to fulfill sexual needs. Based on these conclusions, Dr. Harper found that Stevens was compulsive in his on-line forays and that this compulsive aspect of his personality explained why he would spend more than a full year haunting chat rooms to collect pornography.
Dr. Harper made it clear that he did not mean to indicate that Stevens suffers from any mental illness including Obsessive-Compulsive Disorder or a lesser degree of Obsessive-Compulsive Personality Disorder not amounting to a full personality disorder. Compare DIAGNOSTIC AND STATISTICAL MANUAL OF MENTAL DISORDERS-IV ("DSM-IV") § 300.3 at 417-23 (4th ed.1994), with DSM-IV § 301.4 at 669-72. In context, Dr. Harper was clearly speaking of compulsions, not obsessions. DSM-IV § 301.4 appears more likely than DSM-IV § 300.3 because its diagnostic features seem to best describe Stevens as seen by Dr. Harper. For example, it does not appear that Stevens' collection of pornography caused him any "marked distress," or that the collection efforts interfered with Stevens' normal routine, occupational functioning, or usual social activities or relationships with others, though clearly it was time consuming. Nor does it appear that Stevens' ability to engage in cognitive tasks was compromised. See id. § 300.3 at 419. On the other hand, as described by Dr. Harper, Stevens does meet some of the criteria of DSM-IV § 301.4. However, even here Stevens has more characteristics that do not conform to the diagnosis than those which do. For example, Stevens appears to have a very full leisure life apart from his work he sails, skis and enjoys the outdoors. It also appears that collecting pornography would be inconsistent with the scrupulous morality typically exhibited by people with this disorder. See id. § 301.4 at 670.[23]
*610 In presenting his significantly reduced mental capacity argument, Stevens principally relies upon United States v. McBroom, 124 F.3d 533 (3rd Cir.1997), and also finds some support in United States v. Cantu, 12 F.3d 1506 (9th Cir.1993). McBroom establishes that collection of child pornography is a "non-violent" crime for purposes of this Guideline because its elements do not contain a requirement that the offender used, attempted to use, or threatened to use force. Cantu would be in accord though it is not a child pornography case. This Court agrees. Even if this Court were to apply the more case-specific criteria for finding a non-violent offense, see McBroom, 124 F.3d at 542-44, it would find Stevens' offense nonviolent because he never had any contact with any of the victims of his offense and played no part in the production or distribution of child pornography. Under Ninth Circuit precedents, "significantly reduced mental capacity" does not require a major mental illness or a defect in rationality. See Cantu, 12 F.3d at 1512-13. Any cognitive or volitional impairment will do. See McBroom, 124 F.3d at 548-49. In determining whether the mental impairment contributed to the offense and, if so, how great a departure is warranted, the court should not look for "but for" causation, but should be prepared to depart if the mental impairment contributed in any manner to the offense, and in making this determination, the sentencing court should be lenient.
Nevertheless, this Court is not able to grant a departure on the basis of significantly reduced mental capacity. First, Dr. Harper's testimony does not establish or even suggest either a cognitive or volitional impairment. There is no evidence that Stevens is unable to absorb information in the ordinary way or that he is in any way "impaired" in conforming his behavior to the law.[24] Part of this lack of evidence is traceable to the fact that Stevens was not forthcoming with either mental health practitioner. This Court agrees with Dr. Rothrock that Stevens' explanation for his actions is not credible. Clearly, Stevens need not show a mental illness or a condition recognized in DSM-IV to earn a departure. He must, however, show that his mental condition significantly reduced his capacity and contributed in some way to his offense. Stevens has not made that showing.[25]
SCOPE OF DEPARTURE
At one time the Ninth Circuit took the view that a trial judge contemplating a departure must adjust the extent or magnitude of the departure to some analogous Guideline. The circuit court now recognizes that such a categorical rule is inappropriate. See United States v. Green, 152 F.3d 1202, 1209 (9th Cir.1998); United States v. Sablan, 114 F.3d 913, 919 (9th Cir.1997) (en banc), cert. denied, ___ U.S. ___, 118 S. Ct. 851, 139 L. Ed. 2d 752 (1998). Instead, the trial court is directed to act reasonably and explain its actions. The best framework for such action and explanation is found in 18 U.S.C. § 3553(a).
Rehabilitation and reformation are important criteria but difficult to apply in this case. *611 On the one hand, Stevens has never been convicted of a crime, has been employed throughout his adult life, and apparently has a solid relationship with his significant other. On the other hand, all of these factors were in place during the approximately eighteen months Stevens was building his collection of child pornography. While there is no evidence that Stevens ever collected or sought out pornography prior to 1995, there is no compelling explanation in the record for why he did so beginning in 1995. The Court has carefully considered the testimony of both Dr. Harper and Dr. Rothrock and believes they are as uncertain as this Court. A significant part of that uncertainty stems from the fact that Stevens has not given a credible explanation of his conduct.
Deterrence of self and others are also important criteria. Congress clearly saw prosecutions for mere possession of child pornography as part of a strategy aimed at preventing child sexual abuse. We do not fully understand the population of non-pedophiles who possess child pornography, if in fact there is such an identifiable population, and to that extent have difficulty determining what would deter them. The 1970 Commission on Obscenity and Pornography attempted to study the subject population, or at least that part of it that consumed adult pornography, and concluded that those involved appeared very ashamed of their actions and acted furtively as a consequence when researchers attempted to contact them. See Commission-70 at 157. Given the community outrage at such conduct, and the hatred for anyone whose sexual interests differ from the norm, it would appear that mere exposure and prosecution would be sufficient to deter both Stevens and those similarly situated from further activity.[26]
Isolation and incapacitation do not appear to be particularly important factors in this case. Without his computer, it does not appear that Stevens would offend again. He does not seem a present danger to potential victims of the sexual abuse recorded in child pornography.
Retribution and affirmation of community norms are very important criteria. Clearly Congress wanted to stamp out child pornography and cast its net very wide to assure maximum impact. It is instructive that affirmation of community norms, the so called expressive or educative function of punishment, see Joel Feinberg, The Expressive Function of Punishment, in A READER ON PUNISHMENT 71 (Anthony Duff & David Garland eds., Oxford Univ. Press 1994), is included in 18 U.S.C. § 3553(a)(2)(A). It is clear that Congress wished to condemn the possession and collection of child pornography without regard to the actual instrumental or utilitarian effect that condemnation had on actual collectors. Congress was not indifferent to deterrence but it was not willing to limit itself to deterrence. Thus Congress recognized the point Special Agent Lanning made in his testimony, that the greatest evil accompanying the circulation of child pornography was the validation which acceptance, discussion and trading in such materials gave to the conduct of those who produced it. Community condemnation and the reaffirmation of community norms through imposition of serious penalties was Congress's way of undermining that validation and assuring that the community at large would understand that it is not acceptable to take pleasure in images depicting crimes committed against helpless children. See TRIBE, AMERICAN CONSTITUTIONAL LAW § 12-16 at 915 n. 71.
In discussing related offenses, Judge Noonan stated the issue forcefully, "when a child is made the target of the pornographer-photographer, the statute will not suffer the insult to the human spirit, that the child should be treated as a thing." See United *612 States v. Wiegand, 812 F.2d 1239, 1245 (9th Cir.1987). Judge Noonan did not mention Immanuel Kant, but he echoes an important variation on Kant's categorical imperative, that we must view all of the men and women with whom we come in contact as ends, never as means to our ends. See BRENDAN E.A. LIDDELL, KANT ON THE FOUNDATION OF MORALITY A MODERN VERSION OF THE GRUNDLEGUNG 152-57 (Indiana Univ. Press 1970). The most disturbing aspect of this case remarked upon by both Dr. Harper and Dr. Rothrock, is Stevens' emotional distance from the children some of them literally being tortured that are depicted in the image files kept on his hard drive. Clearly, any sentence imposed in this case must "invalidate" such behavior and reaffirm the community norm that all children are worthy of respect and entitled to be considered as "ends" and not merely as a means to the ends of others.
Stevens has asked for a probationary sentence. Probation is inappropriate for a number of reasons. First, the sheer mass of Stevens' collection over three-hundred separate images counsels caution. Second, Stevens' conduct occupies the borderland between receipt and possession. See United States v. Romualdi, 101 F.3d 971 (3rd Cir. 1996). He clearly received as well as possessed images downloaded from AOL. While scienter is a problem and Stevens may have been in doubt regarding the result of sending the message "list me" when he first began, it is difficult to argue that eighteen months and some three-hundred plus images later he was still in doubt. More troublesome, many of the images Stevens collected involved depictions of sadism and cruelty. Congress considers such pictures particularly offensive. This was also the conclusion of the Attorney General's Commission on Pornography in 1986. Finally, the record does not leave the Court with a clear understanding of the part child pornography plays in Stevens' overall mental and emotional makeup, thus complicating any prediction regarding the likelihood of recidivism.
This is a difficult case. Congress has cautioned this Court to impose a penalty sufficient but no greater than is necessary to comply with the purposes discussed above. See 18 U.S.C. § 3553(a). This Court concludes that a three-level downward departure pursuant to U.S.S.G. § 5K2.0 and 18 U.S.C. § 3553(b) is appropriate under the facts of this case. See U.S.S.G. Ch. 1, Pt. A, Intro. 4(b). This departure results in a sentencing range of twelve to eighteen months. A sentence at the low end will be sufficient, but no greater than what is necessary to serve the goals identified in 18 U.S.C. § 3553(b).
IT IS THEREFORE ORDERED:
The Court will grant a three-level downward departure pursuant to U.S.S.G. § 5K2.0 and 18 U.S.C. § 3553(b). See U.S.S.G. Ch. 1, Pt. A, Intro. 4(b).
NOTES
[1] 18 U.S.C. § 2252A provides in relevant part:
(a) Any person who
(5) either
(B) knowingly possesses any ... computer disk, or any other material that contains 3 or more images of child pornography that has been mailed, or shipped or transported in interstate or foreign commerce by any means, including by computer, or that was produced using materials that have been mailed, or shipped or transported in interstate or foreign commerce by any means, including by computer, shall be punished as provided in subsection (b).
18 U.S.C. § 2252A(b) provides in part:
(2) Whoever violates, or attempts or conspires to violate, subsection (a)(5) shall be fined under this title or imprisoned not more than 5 years, or both, [with enhanced penalties for subsequent convictions].
[2] As troublesome as these images are, it should be said in fairness to Stevens that the sadomasochistic images account for about ten percent of the three-hundred and fifty plus images he retained. The images of bestiality would increase that percentage slightly. The majority of the pictures depict nude or partially nude children emphasizing their genitals. There are numerous images of adults engaging in sexual activity with very young children. There are also images of teenagers and possibly of youthful appearing adults.
[3] "A screen name is an alias used by subscribers to computer services. The use of a screen name is commonplace, and is not limited to those engaged in illicit activities." United States v. Lamb, 945 F. Supp. 441, 446 n. 1 (N.D.N.Y.1996) (citations omitted). The operation of AOL is discussed in detail in United States v. Maxwell, 45 M.J. 406 (U.S. Armed Forces 1996). A detailed explanation of how AOL chat rooms operate and how bulk e-mail lists for child pornography are established is given in United States v. Charbonneau, 979 F. Supp. 1177, 1179 (S.D.Ohio 1997).
[4] Three somewhat overlapping trends might explain an increase in the number of images distributed between 1965 and 1975. First, the children's rights movement coming at the same time as the sexual revolution, and increased community acceptance of the youth culture, including youth drug use, tended to eliminate traditional restrictions on the freedom of young people and substantially increased the number of runaways (while at the same time the beginnings of the human potential movement and the urge to "do your own thing" cut down on parental responsibilities resulting in many "throw away kids") who lived on the street or with those who would take them in. Such children were therefore susceptible to all forms of exploitation including youth prostitution and the production of pornography. The undersigned was an Alaska Superior Court Judge with responsibility for the Family Court during a significant part of the period from 1970 to 1980. Matters within the jurisdiction of the Family Court included both domestic relations and children's proceedings. See, e.g., L.A.M. v. State, 547 P.2d 827 (Alaska 1976) (discussing the community response to a typical runaway during that period). See also Rodriquez v. State, 741 P.2d 1200, 1204-06 (Alaska App.1987) (testimony dealing with the same general time period and outlining how children on the street are recruited and exploited by child sexual abusers).
The second trend was a general slackening of community opposition to "hard core pornography," culminating in the Supreme Court's decision in Stanley v. Georgia, 394 U.S. 557, 89 S. Ct. 1243, 22 L. Ed. 2d 542 (1969), which held that people had a First Amendment right to possess pornography in their homes. Many critics believed that this decision foretold future decisions which would by analogy to the Supreme Court's birth control jurisprudence, legitimate the delivery and transmission of pornography as well. See, e.g., Griswold v. Connecticut, 381 U.S. 479, 85 S. Ct. 1678, 14 L. Ed. 2d 510 (1965); Poe v. Ullman, 367 U.S. 497, 81 S. Ct. 1752, 6 L. Ed. 2d 989 (1961). Thus it was widely believed that prosecution of those who distributed pornography to consenting adults would not be punished. See CHARLES REMBAR, THE END OF OBSCENITY passim (1968). The recommendations of the 1970 Commission on Obscenity and Pornography focus on 1969 as the culmination of an increasing tolerance of what had been considered hard core pornography. See Commission-70 at 136-37. See also Commission-86 at 14, 341-84 (adopting essentially the same historical overview). This belief was relatively short-lived. The United States Supreme Court decided three cases in the early 1970s which upheld laws restricting the sale, importation and transportation of obscene materials to consenting adults. See United States v. 12 200-Foot Reels, 413 U.S. 123, 93 S. Ct. 2665, 37 L. Ed. 2d 500 (1973); United States v. Orito, 413 U.S. 139, 93 S. Ct. 2674, 37 L. Ed. 2d 513 (1973); United States v. Reidel, 402 U.S. 351, 91 S. Ct. 1410, 28 L. Ed. 2d 813 (1971). Shortly thereafter, Congress enacted the Protection of Children Against Sexual Exploitation Act of 1977, 18 U.S.C. § 2251 et seq. The history of this Act and its various amendments are discussed in United States v. X-Citement Video, Inc., 513 U.S. 64, 115 S. Ct. 464, 130 L. Ed. 2d 372 (1994). Writing in 1990, both the majority opinion written by Justice White and the dissent by Justice Brennan assumed that the enactment by Congress of the 1977 Act and comparable acts in the states had effectively driven the child pornography market underground and by inference returned it to the cottage industry status it had before 1969. See Osborne v. Ohio, 495 U.S. 103, 110-11, 110 S. Ct. 1691, 109 L. Ed. 2d 98 (1990) (majority opinion). Accord id. at 143-45 nn. 17 & 18, 110 S. Ct. 1691 (Brennan, J. dissenting).
The final consideration is the advances in photographic technology in the late 1950s, which simplified the reproduction of pornographic images and increased their distribution. It is interesting that the 1970 Commission on Obscenity and Pornography found that these technological advances had significantly reduced the commercial traffic in pornographic pictures because of "the ease and inexpensiveness with which photographs can be duplicated or produced by self-developing cameras." See Commission-70 at 141. It is reasonable to assume that the utilization of computers which increases the ease and decreases the cost of duplication has enhanced this trend to increase distribution at the same time that commercial distribution is further curtailed. See Lamb, 945 F.Supp. at 450 (explaining how pornographic photographs are "scanned" and thereby transferred to a computer where they can be copied as often as the pornographer wishes).
In summary, this Court concludes that given the substantial number of images of child pornography in existence in the early 1970s, the significant effect of laws punishing the production, distribution and reception of child pornography beginning in 1977, and the relative ease with which existing images can be duplicated and transmitted, it is reasonable to infer that any given image downloaded from a computer and possessed in 1995 originated prior to 1977 in the absence of some indication that a particular image is of more recent vintage.
[5] Lanning testified that it was virtually impossible to tell the age or origin of any specific image except by reference to circumstantial evidence (i.e., hairstyles, furniture, etc.). He did note that over the years law enforcement has prosecuted many producers of child pornography, and that law enforcement agencies provide a clearing-house regarding such prosecutions. Frequently, law enforcement officers can recognize specific images as originating with specific producers tracing the images in that way and providing a rough date. Also, various state and federal law enforcement agencies are constantly monitoring computer chat rooms and "billboards." When a producer is caught in a "sting" it is sometimes possible to trace certain contemporaneous pictures to the producer's computer-correspondents. That was not done in this case. A major investigation of AOL users entitled "innocent images" is detailed by the district court in Lamb, 945 F.Supp. at 445-46. It is also clear from a review of the cases that many chat room conversations involve images that are being represented as recently produced and purport to represent current children. The chat rooms that Stevens frequented were monitored by federal law enforcement agents and his screen name was noted. The Government has submitted logs of what are apparently intended to serve as representative samples of such conversations. There is no evidence that Stevens responded to a discussion indicating that photographs of children currently being abused were available.
[6] This is not to say that new images have not been added to the total number of pictures in circulation since 1977. Clearly they have been. See, e.g., Qualle v. State, 652 P.2d 481 (Alaska App.1982) (Qualle was photographing pre-school children in sexual poses and sending the photographs to Scandinavian pornographic magazines in 1979. His crimes were discovered when German custom agents confiscated the film). Many of the federal cases involve people who are currently abusing children and photographically recording that abuse. The point is that current production is part of a cottage industry in which abusers photograph the abuse and in some cases distribute the resulting images. See Commission-86 at 130-38. When we remember that much of this current activity involves photographing for private consumption as a souvenir of abuse and not distribution, it becomes clear that as a percentage of the total images in circulation, any images added since 1977 would constitute a small proportion of the overall circulation. It is certainly possible that some of the images possessed by Stevens might have been produced more recently, but Stevens' burden to prove facts in support of a downward departure does not require him to prove a fact beyond reasonable doubt much less beyond all possible doubt. His burden is to prove a fact by a preponderance of the evidence. See United States v. Lipman, 133 F.3d 726, 729 (9th Cir.1998). In the absence of evidence to the contrary regarding a specific child pornographic image, it is more probable than not that the image was produced prior to 1977.
[7] The applicable Sentencing Guideline is U.S.S.G. § 2G2.4. The Base Offense Level is 15, see U.S.S.G. § 2G2.4(a), two levels were added because some of the computer images depicted pre-teens, see id. § 2G2.4(b)(1), and two levels were added because Stevens obtained the images over the internet with his computer, see id. § 2G2.1(b)(3). Therefore, Stevens' Adjusted Offense Level was 19. This was reduced by three levels to reflect acceptance of responsibility, see id. § 3E1.1(b), leaving a Total Offense Level of 16.
[8] Koon constituted a sharp break with the approach previously taken in the Ninth Circuit regarding departures. In prior case law, the Ninth Circuit viewed trial court discretion regarding departures as limited to suggesting proposed bright line rules to the circuit court which if adopted became standards for future operation. The circuit thus took a categorical approach to departures. Some trial court suggestions were adopted either on the nomination of the trial court or by the panel on appeal and these became in effect judicial amendments to the Sentencing Guidelines. Other proposals were categorically rejected. Koon precludes categorical rejection of a proposed departure unless the Sentencing Guidelines themselves specifically preclude it and teaches that each case must be decided on its individual merits without the need to develop any bright line rules beyond those specific factors which the Guidelines themselves reject as appropriate sentencing considerations. See United States v. Sanchez-Rodriguez, No. 97-10238, 1998 WL 801855 (9th Cir. Nov.20, 1998) (en banc).
[9] The offense is defined by its elements. Anyone whose conduct provides an evidentiary basis for conviction and either pleads guilty or is convicted at trial is properly placed in the population or set of offenders. The Government seems to argue that this population is co-extensive with the heartland, but the Government's argument is clearly not plausible. The three groups, worst offenders, heartland (i.e., typical) offenders, and least offenders, all encompass individuals who have committed the crime and satisfied its elements. Anyone who did not satisfy the elements would be entitled to a judgment of acquittal and would not be in the total population awaiting sentencing. Thus, the difficulty does not lie in determining whether a given defendant is guilty, for that information is supplied by the defendant's plea or a jury verdict. Rather, the difficulty lies in determining what type of an offender the guilty person is in the perception of Congress and the Sentencing Commission.
[10] In Chaney, the Alaska Supreme Court discussed at length the 1968 approved draft of the ABA Project on Minimum Standards for Criminal Justice, Standards Relating to Appellate Review of Sentences. See 477 P.2d at 443-47. That draft notes the English practice of permitting appellate review of sentences, a practice not common in the United States at that time. The English practice is more thoroughly discussed in Sir Rupert Cross's The English Sentencing System (London: Butterworths 1975).
[11] Section 3553(a) adopts a principal of "leniency" whereby a sentence should be sufficient but not greater than necessary to comply with the purposes set forth in paragraph 2 of the same subsection. Those purposes are (1) just punishment or retribution and promotion of respect for the law, which the Chaney court called community condemnation or reaffirmation of community norms; (2) adequate deterrence from criminal conduct, presumably both special deterrence aimed at the sentenced prisoner himself and general deterrence aimed at those in the class of potential violators of the same statute; (3) protection of the public, which could be redundant of deterrence but in context probably means by isolation, which in other discussions is called incapacitation; and (4) rehabilitation. See 18 U.S.C. § 3553(a)(2). Like the Chaney court, the federal statute suggests that application of the factors should take into account "the nature and circumstances of the offense and the history and characteristics of the defendant." See id. § 3553(a)(1). These sentencing factors can be traced back at least to Plato's laws. See, e.g., PLATO, THE LAWS 256 (Thomas L. Pangle trans., Basic Books, Inc.1980); MARY MARGARET MACKENZIE, PLATO ON PUNISHMENT (1981). Since Plato, each of the factors has received much attention in the literature. See, e.g., PHILOSOPHICAL PERSPECTIVES ON PUNISHMENT (Gertrude Ezorsky ed., State Univ. of New York Press 1972); A READER ON PUNISHMENT (Antony Duff & David Garland eds., Oxford Univ. Press 1994).
[12] It is unfortunate for purposes of defining a heartland of offenders in this case that the two groups are not fungible because most judges, at least those with state court experience, have had extensive experience with child molesters in the criminal justice system at least since the late 1970s. Understandably, most courts do not have much experience to rely upon in defining a class of offenders who possess pornography but do not also sexually molest children.
[13] The number of men and women from deviant communities who publish their memoirs, while increasing in recent years, hardly provides a sufficient sample to permit meaningful statistical analysis.
[14] This is not to say that Stevens' plea to the charged offense did not result in some benefits to him. He received credit for acceptance of responsibility despite his limited acknowledgment of responsibility. In addition, the Government did not argue and the pre-sentence officer did not recommend that Stevens be assessed a two level increase in his offense level for ten or more visual depictions. See U.S.S.G. § 2G2.4(b)(2). Each computer file constitutes a separate visual depiction and Stevens had more than three-hundred images suggesting substantially more than ten files. See United States v. Fellows, 157 F.3d 1197, 1200-02 (9th Cir.1998). Finally, it is possible that a jury would have convicted Stevens of "receiving" the images via his computer and not merely possessing them. If so, he would have been vulnerable to an initial two offense level increase pursuant to U.S.S.G. § 2G2.2, and a four level upward adjustment because a number of the images he collected depicted sadistic or masochistic conduct. See U.S.S.G. § 2G2.2(b)(3). Had he been charged with receiving and not merely possessing, he could have been charged separately for each "file" and the offenses would not have been grouped which would have resulted in a potentially much higher sentence. See, e.g., U.S.S .G. §§ 3D1.4-.5 (suggesting that someone possessing over three-hundred and fifty images could have his offense level increased as much a five levels). See also United States v. Boos, 127 F.3d 1207, 1213 (9th Cir. 1997), cert. denied, ___ U.S. ___, 118 S. Ct. 734, 139 L. Ed. 2d 672 (1998).
[15] In United States v. Hilton, 999 F. Supp. 131 (D.Me.1998), the district court considered the effect of the amendments contained in the Child Pornography Prevention Act of 1996 to statutes penalizing simulated child pornography. See 18 U.S.C. § 2252A. The district court reasoned contrary to the Ninth Circuit in Boos that the aim of the amended statutes was to protect future victims of child pornography and not merely the actual persons depicted in the images and that prohibiting circulation of images depicting youthful appearing adults served that end. See Hilton, 999 F.Supp. at 134. But see 18 U.S.C. § 2252A(c) (affirmative defense that person depicted is adult). In this Court's view, Hilton is not persuasive because it raises all of the problems which the Supreme Court sought to avoid in United States v. X-Citement Video, Inc., 513 U.S. 64, 115 S. Ct. 464, 130 L. Ed. 2d 372 (1994), where it specifically held that the individual depicted must be a minor and the offender must know that the person is a minor before the offense is established. Hilton ultimately held that the amendments to the statutes rendered them overbroad and vague and therefore unconstitutional. See 999 F.Supp. at 135-37.
[16] The phrase "simulated child pornography" is used to refer to images that depict a youthful appearing adult. Many of the images possessed by Stevens would be prohibitable obscenity even if they depicted adults. It is not clear that receiving adult obscenity is a more serious offense than the one to which Stevens plead.
[17] If there were three-million images available for distribution in the late 19th century and the typical collector today has less than one-thousand images in his collection, then it would appear that the historical inventory would be sufficient to stock each person's collection. If this is true, then definition of the heartland should discriminate between those people who are in search of depictions of current children and those who are not. It appears from the literature that there are numerous men who are interested in images of real children with a real identity whom the offender might actually meet. Stevens is not in this category. The issue is not whether Stevens is a pedophile, but whether he has expressed an interest in current children and thus contributed however incrementally to the current abuse of children.
[18] Special Agent Lanning testified to a related harm which he termed "validation." In his view, each chat room constitutes a support group of like minded individuals. Each additional person who is willing to accept an e-mail transmission of child pornography serves to assure the sender that his actions are "ok" and that trafficking in child pornography is normal and not deviant behavior. From the standpoint of individual victims it might not matter that a given e-mail depicting her reached one-hundred rather than ten individuals, but from the standpoint of validation it would certainly encourage a given transmitter to know that one-hundred people and not only ten were interested in his transmissions. It is this consideration that will ultimately play a significant part in determining how great a departure is warranted by the facts of this case.
[19] In the 1970s when I handled a great number of divorces it was not uncommon for a witness to testify that during the course of marriage the witness had consented to having his or her spouse videotape the two in sexual activity presumably for their private enjoyment and not to be shared with others. When the marriage was breaking up it was not uncommon for one spouse to threaten to circulate such tapes among the parties' friends, acquaintances and co-workers in order to injure the other spouse. It was clear from the demeanor of the testifying witnesses that they viewed such actions with horror. The witness's horror was in significant part attributable to the fear that viewers of the tape would recognize the participants and think less of them.
[20] It appears that these cases are correct in so analyzing Congressional intent. If there is a defect in the reasoning of these cases it is in the implicit assumption that the people depicted in the pictures are children at the time the possessor receives them. In other words, that production, distribution, reception and possession of these images are relatively contemporaneous acts. In fact, as previously discussed, most of the pictures presently being distributed were probably produced prior to 1977. The cause of an effect must precede it. It is difficult to see how anything Stevens did in 1995 "caused" any actions in 1977 or any actions before that time. In a sense, Stevens contributed to causing the specific distributions of the images in which he participated by signaling that his name should be added to an e-mail list in the period from 1995 to 1997, but the incremental harm his actions caused to children victimized in 1977 is de minimis.
[21] Dr. Harper did testify that Stevens' eight year relationship with Ms. Eusden and the testimony of both that theirs was a mutually rewarding sexual relationship was inconsistent with typical collectors of pornography. But see Commission-70 at 157-66 (where the majority of the pornography collectors who would submit to interviews gave the same report). This Court is not convinced that these reports are true and therefore tends to discount but not reject expert opinion based upon their truth.
[22] The "Diminished Capacity" Guideline is of no bearing if the decrease in mental capacity is caused in whole or in part by alcohol or drug abuse, if the crime is one of violence, or if the offender's criminal history requires his incarceration to protect the public. See U.S.S.G. § 5K2.13. There is no evidence of excessive use of alcohol or drugs or that either played any part in "causing" Stevens to collect pornography. Stevens has no prior criminal history. Whether collecting child pornography is a "crime of violence" will be addressed in the text of this order as will the need to incapacitate Stevens by incarcerating him to protect the public.
[23] The Court has not addressed "paraphilias" in the text of this decision because no one suggests that Stevens is suffering from a paraphilia. See DSM-IV § 302.70 at 522-25. Both Dr. Harper and Dr. Rothrock ruled out one form of paraphilia, pedophilia. They did not specifically address another paraphilia wherein the person affected would forego or significantly limit an adult sexual relationship with a partner and turn exclusively or primarily to pornography for arousal and masturbation for release. This would seem to describe the defendant in United States v. McBroom, 124 F.3d 533 (3rd Cir.1997). Long before he began collecting child pornography through the internet, McBroom wasted hours hanging out in peep shows and adult book stores. His actions clearly affected his marriage. Such a person might truly be a compulsive collector of pornography. There is no evidence that Stevens had any interest in child pornography prior to 1995.
The testimony of Stevens and Ms. Eusden is inconsistent with a diagnosis of paraphilia. There is some circumstantial evidence that would support a finding of such a paraphilia the number of images downloaded, the period of time during which the downloading took place and most important, a fact noted by both mental health practitioners, that Stevens was not emotionally or morally repelled by images of children being tortured and subjected to various extreme indignities such as bestiality. If Stevens did not view the children pictured in the images as "real" and the experiences depicted as "real," but simply used the images as an aid to fantasy and a stimulus to masturbation as a substitute for interpersonal sexual relations, that would explain his relative indifference to the horror portrayed in a number of the images that he not only downloaded but retained. Fixation on pornography rather than "real" children would also explain why Stevens has never shown much interest in real children or their activities. Such a paraphilia might qualify for a downward departure under U.S.S.G. § 5K2.13, but there are insufficient facts to support such a finding. Stevens denies any sexual stimulation from the images and, with Ms. Eusden, reports a mutually satisfactory adult interpersonal sexual relationship. No mental health professional diagnosed Stevens as having a paraphilia related to pornography.
[24] Dr. Harper did not testify that Stevens had a compulsion or obsession about child pornography. Dr. Harper testified that in general Stevens manifested compulsive personality traits that served to explain his general adjustment. Once Stevens started doing something he would tend to continue until he finished. Dr. Harper was not able to relate these personality characteristics in any meaningful way to explain why Stevens downloaded pornography as opposed to some other interesting items he encountered on AOL, or why Stevens forwent adult pornography in favor of child pornography.
[25] A person's mental capacity must be significantly reduced. In relation to what? The offenders functioning at other times? In other contexts? In relation to heartland offenders? The Guideline does seem to suggest that mental capacity must be "significantly reduced" in relation to other offenders similarly situated, but that decision is not controlling here because Stevens really produced no evidence that his mental capacity was significantly reduced in other respects.
[26] A review of the community responses from Whittier presented by both sides bears this out. A significant number of Stevens' neighbors view him with loathing and disgust despite knowing him personally and never having had bad relations with him in the past. On the other hand, the offense is one committed in the privacy of the home, and the supervised release condition authorizing spot searches which would extend to any computer on the premises would probably also serve to deter further illegal actions. It does not appear that Stevens ever collected pornography before he bought his computer. Confiscation of the computer would appear an effective deterrent. See United States v. Ownby, 926 F. Supp. 558 (W.D.Va.1996) (discussing 18 U.S.C. § 2253 and forfeiture in child pornography cases). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1495497/ | 127 F.2d 233 (1942)
UNITED STATES ex rel. MARCUS et al.
v.
HESS et al.
No. 7841.
Circuit Court of Appeals, Third Circuit.
Argued March 2, 1942.
Decided March 23, 1942.
As Amended March 26, 1942.
William H. Eckert and Eugene B. Strassburger, both of Pittsburgh, Pa. (J. Vincent Burke, Jr., Joseph A. Beck, Ben Paul Brasley, Peter Cooper, John J. Dougherty, A. S. Fingold, Zeno Fritz, Elder W. Marshall, James P. McArdle, Thomas D. McCloskey, John B. Nicklas, Jr., Carl D. Smith, W. W. Stoner, Ferdinand T. Weil, Gifford K. Wright, Emory R. Kyle and Smith, Buchanan & Ingersoll, all of Pittsburgh, Pa., on the brief), for appellants.
Thurman Arnold, of Washington, D. C., for the United States.
Charles J. Margiotti, Pittsburgh, Pa. (Margiotti, Pugliese & Casey, Joseph H. Reich, Joseph A. Rossi, on the brief), for appellees.
Before CLARK, JONES, and GOODRICH, Circuit Judges.
*234 CLARK, Circuit Judge.
We share appellees' righteous indignation at the conduct of the appellants. In fact their own counsel made no attempt in his argument to us to justify that conduct. We cannot, however, share appellees' views of the applicable statute. The facts are not in dispute and may be simply stated. Federal funds were granted under the Public Works Administration to local municipalities and school districts in Allegheny County, Pennsylvania to be expended in public-works projects. The appellants, the officers and members of the Electrical Contractors Association of Pittsburgh, conspired to rig the bidding on these projects. The pattern of the collusion was the informal and private averaging of the prospective bid which might have been submitted by each appellant. An appellant chosen by the others would then submit a bid for the averaged amount and the others all submitted higher estimates. The government was thereby defrauded in that it was compelled to contribute more for the electric work on the projects than it would have been required to pay had there been free competition in the open market. A verdict against the appellants was had in the sum of $315,100.91, which consisted of $203,100.91 damages (being double the actual damages found by the jury) and $112,000 penalties ($2,000 penalty for each violation of the statute). The defendants' motions for a new trial and judgment non obstante veredicto were refused. These motions were on various grounds. The learned District Judge discussed principally two: the scope of the pertinent statute and the question of double jeopardy. As we think he erred as to the first, it is unnecessary to pass on the others. We may say that we have already given some consideration to the question of civil sanctions and double jeopardy.[1]
The plaintiff-appellee is an informer. In other words he is the "any person" referred to in the statute.[2] The fact that he is manifestly any person does not completely solve his difficulty. He must also establish the relevancy of the statute. In terms it reads: "Every person who makes or causes to be made, or presents or causes to be presented, for payment or approval, to or by any person or officer in the civil, military, or naval service of the United States, any claim upon or against the Government of the United States, or any department or officer thereof, knowing such claim to be false, fictitious, or fraudulent, or who, for the purpose of obtaining or aiding to obtain the payment or approval of such claim, makes, uses, or causes to be made or used, any false bill, receipt, voucher, roll, account, claim, certificate, affidavit, or deposition, knowing the same to contain any fraudulent or fictitious statement or entry, or who enters into any agreement, combination, or conspiracy to defraud the Government of the United States, or any department or officer thereof, by obtaining or aiding to obtain the payment or allowance of any false or fraudulent claim." Revised Statutes, § 5438. (Italics ours.)
In the companion section of the Revised Statutes already alluded to,[3] some of the present functions of the Department of Justice were delegated to the people at large. Private persons were empowered to prosecute frauds against the United States through informer actions.[4] Thus any person may sue another who commits "any of the acts prohibited by any of the provisions of section fifty-four hundred and thirty-eight."[5] Section 5438 was repealed in 1909.[6] Since the amendments to its successor[7] were not incorporated into the provision creating liability in informer actions, *235 these amendments may not be invoked in qui tam suits.[8]
Qui tam actions have always been regarded with disfavor:
"It is wrong for a free country to allow an informer to seek redress for his own pecuniary advantage in respect of a public wrong in which he has no direct personal interest or concern. A wrong to the State should surely be atoned for by a penalty payable to the State alone. * * * The origin of the practice whereby private persons can exploit the wrongs of others goes back into English history. Penal actions of this sort arose generally because men doubted whether the eyes of the primitive State were sufficiently watchful and its arm sufficiently long to discover and punish offenders. In a few cases of later date the legislature may have distrusted the zeal of the executive. * * *
"The golden age of the informer was the Tudor period. In Sir William Holdsworth's History of English Law[9] reference is made to the long line of sixteenth-century statutes in which the common informer was given the penalties recovered by his energy, and collusive proceedings by friends of culprits were treated as `covinous' and therefore no bar against a genuine informer's suit. The system gradually provoked resentment among the many who were `unjustlie vexed and disquieted by common informers' and this class found a powerful champion in the great Sir Edward Coke. In his Third Institute of the Laws of England he describes informers as `turbidum hominum genus', and as ranking among the `viperous vermin who endeavored to have eaten out the sides of the church and common-wealth'. By their diligence in setting penal actions on foot they impoverish `chiefly the poorer sort for malice and private ends'. Coke's influence caused a marked decline in the statutory recognition and encouragement of common informers. Probably the Crown recognized that it paid better to take the penalty for itself. Coke expressed this view in more dignified words: `The King cannot commit the sword of his justice or the oil of his mercy concerning any penal statute to any subject.'" Hurst, The Common Informer, 147 Contemporary Review 189, 190.
That dislike has been implemented in court decisions for informer statutes have been construed with utmost strictness. Informers wishing to recover under them must adhere to the exact language of the statute.[10]
The statutory language here important authorizes recovery only where the defendants presented a "claim upon or against the Government of the United States, or any department or officer thereof."[11] Plaintiff would have us believe that the statutory words "presents * * * any claim upon or against" are synonymous with "commits a fraud upon". This argument is refuted both by legislative history and by grammar. The Senator in charge of the bill said in introducing it: "This bill has been prepared at the urgent solicitation of the officers who are connected with the administration of the War Department and the Treasury Department. The country, as we know has been full of complaints respecting the frauds and corruptions practiced in obtaining pay from the Government during the present war; and it is said, and earnestly urged upon our attention, that further legislation is pressingly necessary to prevent this great evil. * * *" The Congressional Globe, 37th Cong., 3d Sess., Dec. 1, 1862 March 9, 1863, at p. 952.
That the Honorable Senator from Michigan was guilty of no overstatement is apparent from the histories of the times: "The government was cheated without conscience in its purchases of military supplies. A committee of the War Department in 1862 exposed frauds of $17,000,000 in contracts amounting to $50,000,000.[12] The Michigan legislature formally charged *236 that `traitors in the disguise of patriots have plundered our treasury', and James Russell Lowell, agreeing, asserted, `Men have striven to make the blood of our martyrs the seed of wealth.' The term, `shoddy aristocracy', came to signify those who reaped fortunes out of government contracts, particularly from supplying the soldiers with inferior clothing." Hockett, Political and Social Growth of the American People 1492-1865, 759.[13]
"Necessity, haste and carelessness can explain the acceptance of a great many of these contracts and a very great deal of inferior goods. But a large amount of blame must go to a horde of government-paid officials who, either through criminal negligence or criminal collusion, permitted or encouraged this robbing of the government treasury and cruelty to the American soldier * * *. Accused inspectors passed the blame on to those letting the contracts, the latter blamed the contractors, and the contractors in turn contended that they furnished goods according to specification. * * * Such wide publicity was gained by this complicity of public officials in the early contracting business that one of the very first acts of the extra session of Congress in 1861 was to institute an investigation of the existing practices and conditions. * * * The committee discovered an astounding amount of illegal and fraudulent activities, in some instances calling into question the honor or good judgment of men high in political and military councils of the country." 1 Shannon, Organization and Administration of the Union Army, 56-58.[14]
To the word "claim" has been attributed several legal meanings. It is used as an equivalent for "cause of action",[15] "debt",[16] "demand",[17] "existing right"[18] and "unadjudicated obligation".[19] Through them all however runs the sense of something owing from one party to another. The statement of the facts upon which that obligation is asserted to depend may of course be false, but if true would spell out something like an action of assumpsit or debt. It is something quite different to rely on facts which never could give rise to a promise, express or implied, to pay however amply they demonstrate a cheat. The authorities cited by the plaintiff were all cases decided under statutes which used such phrases as "for the purpose of defrauding the United States"[20] and "to defraud the United States".[21]
*237 The plaintiff seeks to come within the statutory words by stressing the fact that the periodical estimates for partial and final payment were presented to an officer of the PWA. This fact does not surmount the requirement that the claim must be one "against the United States Government or a department or officer thereof." The question is not merely to whom is something presented, it is also what is presented. A claim against the United States means "a right to demand money from the United States."[22] The defendants at no time had such a right. The defendants' contracts were exclusively with the local municipalities. Neither the United States of America nor any of its departments, officers or agencies was a party to said contracts. No promise was made by the United States Government nor any department or officer thereof to pay the defendants for their work. Nor was any specific fund prescribed by the defendants' contracts for their payment. Since the local municipalities were the only parties who promised to pay the defendants, the defendants could look solely to this source for payment. Where the local municipalities obtained the funds to pay the contractors was immaterial as between the local municipalities and the defendants. The claims of the defendants then were simply against the local municipalities. Since the defendants had no claim upon or against the United States, this action was not authorized by the informer statutes.
We wish to make it quite plain that our decision herein has no bearing whatever on ultimate restitution. In so far as the United States or the municipalities concerned have been defrauded, suit can be brought and the injured made completely whole. Furthermore, any defendants who are guilty can be punished by more than financial penalty they can be sent to jail.
So much for the appellants the United States as amicus curiae contends that the plaintiff was without statutory authority to prosecute this action. The government argues that the right of an informer to sue under Section 3491 of the Revised Statutes has been repealed by subsequent congressional enactment. The repeal is alleged to have impliedly occurred as a result of the Reorganization Act of 1933.[23] This Act declares its purpose to be the reduction of governmental expenditures and the increase of governmental efficiency. It of course makes no reference to informer actions. By its provisions the President is empowered to regroup and transfer the functions of any executive agency. Pursuant to his authority the President promulgated an order which reads in part: "The functions of prosecuting in the courts of the United States claims and demands by, and offenses against, the Government of the United States, and of defending claims and demands against the Government, and of supervising the work of the United States attorneys, marshals, and clerks in connection therewith, now exercised by any agency or officer, are transferred to the Department of Justice." Executive Order No. 6166, Section 5, June 10, 1933, 5 U.S.C.A. §§ 124-132 note. (Italics ours.)
The government contends that the foregoing order confers upon the Department of Justice the duty of prosecuting all claims on behalf of the United States. If this interpretation is accepted, the executive order conflicts with Section 3491 of the Revised Statutes under which the present action was instituted. Since Section 3491 was enacted seventy years prior to the order, it is contended that the earlier statute has been impliedly repealed. A declaration of implied repeal, however, is not a matter which a court will undertake lightly. Courts have never looked upon implied repeals with favor.[24] The presumption is always *238 against the intention of the legislature to repeal by implication.[25] An English authority has summarized the rule thusly: "Repeal by implication is never to be favoured; and when the repeal is not express, the burden is on those who assert that there is an implied repeal to show that the two statutes cannot stand together." Beal, Cardinal Rules of Legal Interpretation 525.
And our American writers say: "Repeals by implication are not favored. This means that it is the duty of the court to so construe the acts, if possible, that both shall be operative. * * * One statute is not repugnant to another unless they relate to the same subject and are enacted for the same purpose. * * * When there is a difference in the whole purview of two statutes apparently relating to the same subject, the former is not repealed." Sutherland, Statutes & Statutory Construction § 247.
"The inconsistency or repugnancy between two statutes necessary to supplant or repeal the earlier one must be more than a mere difference in their terms and provisions. There must be what is often called `such a positive repugnancy between the provisions of the old and the new statutes that they cannot be reconciled and made stand together.' In other words they must be absolutely repugnant, or irreconcilable." Crawford, Statutory Construction, § 311.[26]
Applying this test we find that the executive order is not at all repugnant to or irreconcilable with Revised Statute Section 3491. The subject matter of the presidential decree is the transfer of functions within the executive agencies of the government. It does not by its terms encompass any claims which may be asserted by individuals for the government, as is done in informer actions brought under Revised Statute Section 3491. The words we italicized in the order quoted above make this clear. The order expressly provides that its application is limited to claims prosecuted by some governmental "agency or officer". "Agency or officer" as used in the order is obviously a shortened reference to and is synonymous with the words "executive agency or officer" in the authorizing statute. Plaintiff does not come within the statutory definition of an "executive agency" since it cannot be classified as a "commission, independent establishment, board, bureau, division service or office in the executive branch of the Government." Since the order neither relates to the same subject matter nor was enacted for the same purpose as Revised Statute Section 3491 the Government's thesis of implied repeal is without foundation. Nor is the government's argument bolstered by a reference to the Act of February 10, 1939 which provides: "No suit for the recovery of taxes, or of any fine, penalty, or forfeiture, shall be commenced unless the Commissioner authorizes or sanctions the proceedings and the Attorney General directs that the suit be commenced." 26 U.S.C.A. Int.Rev.Code, § 3740.
This provision is a part of the Internal Revenue Code and relates only to those qui tam actions brought under the revenue laws.[27] It was derived from Revised Statute Section 3214[28] which existed side by side with the statute under which this action was begun.[29] The two sections of the Revised Statutes are consistent since one refers to informer actions under the revenue laws only and the other to all remaining informer actions. Each therefore is operative.
The judgment of the District Court is reversed and the cause remanded for further proceeding in accordance with this opinion.
NOTES
[1] Mauch v. Com'r, 3 Cir., 113 F.2d 555.
[2] "* * * Such suit may be brought and carried on by any person, as well for himself as for the United States; the same shall be at the sole cost and charge of such person, and shall be in the name of the United States, but shall not be withdrawn or discontinued without the consent, in writing, of the judge of the court and the district attorney, first filed in the case, setting forth their reasons for such consent." R.S. § 3491, 31 U.S.C.A. § 232.
[3] R.S. § 3491, 31 U.S.C.A. § 232, footnote 2, supra.
[4] These provisions were derived from the Act of March 2, 1863, 12 Stat. 696, Chapter 67, repealed by R.S. § 5596. For general discussions on these actions see 23 Am.Juris., Forfeitures and Penalties, § 61; 25 C.J., Fines, Forfeitures and Penalties, § 84.
[5] R.S. § 3490, 31 U.S.C.A. § 231.
[6] Section 341 of the Act of March 4, 1909, c. 321, known as the Criminal Code of 1909, 35 Stat. 1095, 1153, 1159. An amendment to R.S. § 5438 by the Act of May 30, 1908, c. 235, 35 Stat. 555, is not material to this case.
[7] Section 35 of the Criminal Code of 1909, as amended by Act of October 23, 1918, c. 194, 40 Stat. 1015, constitutes 18 U.S.C.A. §§ 80 and 83. Further amendments made by Act of June 18, 1934, c. 587, 48 Stat. 996 and Act of April 4, 1938, c. 69, 52 Stat. 197.
[8] Olson v. Mellon, D.C., 4 F. Supp. 947, affirmed sub nomine U. S. ex rel. Knight v. Mellon, 3 Cir., 71 F.2d 1021; United States ex rel. Kessler v. Mercur Corp., D.C., 13 F. Supp. 742, 743, affirmed, 2 Cir., 83 F.2d 178.
[9] Volume IV, p. 355 et seq.
[10] Ferrett v. Atwill, 8 Fed.Cas. page 1161, No. 4,747. Cf. United States v. Kansas Pac. Ry. Co., 26 Fed.Cas. page 680, No. 15,506; United States v. Shapleigh, 8 Cir., 54 F. 126.
[11] R.S. § 5438, 18 U.S.C.A. § 80.
[12] The report of this committee says: "He cannot be looked upon as a good citizen, entitled to favorable consideration of his claim, who seeks to augment the vast burdens, daily increasing, that are to weigh on the future industry of the country, by demands upon the treasury for which nothing has been rendered. * * * Worse than traitors in arms are the men who pretend loyalty to the flag, feast and fatten on the misfortunes of the nation, while patriot blood is crimsoning the plains of the South and bodies of their countrymen are moldering in the dust." Report of the House Committee on Government Contracts, March 3, 1863.
[13] For an account of the frauds in "bounty-jumping" and "pension-grabbing" see Hockett, supra at page 733 and Schlesinger, Political and Social Growth of the American People 1865-1940, p. 111.
[14] One enterpriser bought defective rifles from the government for $17,486 and immediately resold them to a different quartermaster for $109,912. See Josephson, The Robber Barons, 61.
[15] Foust v. Munson S. S. Lines, 299 U.S. 77, 57 S. Ct. 90, 81 L. Ed. 49.
[16] Holden v. Stratton, 191 U.S. 115, 24 S. Ct. 45, 48 L. Ed. 116; Coats v. Arthur, 5 S.D. 274, 58 N.W. 675.
[17] United States v. Rhodes, C.C., 30 F. 431; In re Heim's Estate, 166 Misc. 931, 3 N.Y.S.2d 134.
[18] Supera v. Moreland Sales Corp., 28 Cal. App. 2d 517, 82 P.2d 963.
[19] In re Frank's Estate, 154 Misc. 472, 277 N.Y.S. 573.
[20] Criminal Code § 28, 18 U.S.C.A. § 72 (Madden v. United States, 1 Cir., 80 F.2d 672); Criminal Code § 35, 18 U.S. C.A. §§ 80-86 (United States v. Kapp, 302 U.S. 214, 58 S. Ct. 182, 82 L. Ed. 205).
[21] Criminal Code § 37, 18 U.S.C.A. § 88 (United States v. Carlin, D.C., 259 F. 904; Belvin v. United States, 4 Cir., 260 F. 455; Langer v. United States, 8 Cir., 76 F.2d 817; United States v. Harding, 65 App.D.C. 161, 81 F.2d 563). United States v. Bowman, 260 U.S. 94, 43 S. Ct. 39, 67 L. Ed. 149; United States v. Mellon, 2 Cir., 96 F.2d 462; United States v. J. Greenbaum & Sons, 2 Cir., 123 F.2d 770 and United States v. Schor, D.C., 13 F. Supp. 399 were brought under a portion of Section 35 of the Criminal Code which provides: "Make * * * any fraudulent or fictitious statement or entry in any matter within the jurisdiction of any department or agency of the United States." Kay v. United States, 303 U.S. 1, 58 S. Ct. 468, 82 L. Ed. 607 concerned a prosecution under 12 U.S.C. A. § 1467 which provides: "Whoever makes any statement, knowing it to be false, or whoever willfully overvalues any security, for the purpose of influencing in any way the action of the Home Owners' Loan Corporation or the Board."
[22] Hobbs v. McLean, 117 U.S. 567, 575, 6 S. Ct. 870, 873, 29 L. Ed. 940; 7 Words and Phrases, Perm.Ed., 392. See also, United States ex rel. Kessler v. Mercur Corp., D.C., 13 F. Supp. 742, 743, affirmed, 2 Cir., 83 F.2d 178, 181, certiorari denied 299 U.S. 576, 57 S. Ct. 40, 81 L. Ed. 424; United States ex rel. Salzman v. Salant & Salant, D.C., 41 F. Supp. 196; United States ex rel. Gilchrist v. American Cotton Co-operative Ass'n et al. (L. 58-272 S.D.N.Y.) (no opinion for publication). Cf. United States v. Cohn, 270 U.S. 339, 345, 346, 46 S. Ct. 251, 70 L. Ed. 616; Mookini v. United States, 9 Cir., 95 F.2d 960, 961.
[23] Act of March 3, 1933, c. 212, Section 16, 47 Stat. 1517.
[24] United States v. Noce, 268 U.S. 613, 45 S. Ct. 610, 69 L. Ed. 1116; United States v. Greathouse, 166 U.S. 601, 17 S. Ct. 701, 41 L. Ed. 1130; In re Martin, 7 Cir., 75 F.2d 618.
[25] Bookbinder v. United States, 3 Cir., 287 F. 790.
[26] See also 59 C.J. Statutes § 508; 25 R.C.L. Statutes §§ 168-171; Repeal or Amendment Implied From Later Inconsistent Enactment, 37 Columbia Law Review 292.
[27] See 26 U.S.C.A.Int.Rev.Code, § 3745.
[28] Section 3213 of the Revised Statutes is the provision authorizing qui tam actions in enforcing revenue laws. By its context then section 3214 referred only to revenue enforcement actions.
[29] See Olson v. Mellon, D.C., 4 F. Supp. 947. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1517684/ | 328 A.2d 449 (1974)
Gerald C. ROCK and Janet M. Rock, his wife, Plaintiffs,
v.
DELAWARE ELECTRIC COOPERATIVE, INC., a Delaware Corporation, Defendant,
v.
The STATE of Delaware, Defendant and Third Party Plaintiff,
v.
W. B. MITTEN & SONS, INC., a Delaware Corporation, Third Party Defendant.
Leon G. POWELL, Plaintiff,
v.
INTERSTATE VENDAWAY, INC., a Delaware Corporation, Defendant and Third Party Plaintiff,
v.
CHRYSLER CORPORATION, a Delaware Corporation, Third Party Defendant.
James B. HARVEY, Plaintiff,
v.
The CITY OF WILMINGTON et al., Defendants.
The CITY OF WILMINGTON, a Municipal Corporation of the State of Delaware, Defendant and Third Party Plaintiff,
v.
FACCIOLO PAVING AND CONSTRUCTION COMPANY, a Delaware Corporation, Third Party Defendant.
Superior Court of Delaware, Kent and New Castle.
October 31, 1974.
*450 Julius Komissaroff, Howard M. Berg, Berg, Komissaroff & Sawyer, Wilmington, for third party defendants.
William Prickett, Myron T. Steele, Prickett, Ward, Burt & Sanders, Dover, for defendant and third party plaintiff, the State of Delaware.
Alfred M. Isaacs, Flanzer & Isaacs, Wilmington, for defendants and third party plaintiffs, Interstate Vendaway, Inc. and the City of Wilmington.
OPINION
O'HARA, Judge.
The Court has four motions under consideration. Two third party defendants have filed motions to dismiss third party *451 complaints for failure to state claims upon which relief can be granted. One third party defendant has moved for summary judgment. One third party plaintiff has filed a cross motion for summary judgment in its favor with regard to its third party complaint. In their complaints, the third party plaintiffs seek indemnity of any amount recovered against them in actions brought by injured employees of the third party defendants. The third party plaintiffs base their claims for indemnification on an express or implied obligation arising out of contractual relations with the respective third party defendant. Each third party defendant was required to pay its employee compensation benefits.
The third party actions arise from the following factual situations:
Leon G. Powell, plaintiff, an employee of Chrysler Corporation ("Chrysler"), was injured while working for Chrysler when a truck operated on Chrysler's property by an employee of Interstate Vendaway, Inc. ("Vendaway") struck a stack of cartons pinning plaintiff between other cartons and a work table. Powell sued Vendaway for damages resulting from the injury, claiming negligence on the part of Vendaway's employee in the operation of the truck. Vendaway filed a third party complaint against Chrysler claiming breach of an implied covenant to provide a safe working place for Vendaway and an implied promise of indemnification for breach of the covenant. Chrysler answered the third party complaint asserting that an express indemnification provision in a contract precludes an implied right of indemnification.
This is Chrysler's third motion for summary judgment. The background and ruling on Chrysler's first motion appeared in Powell v. Interstate Vendaway, Inc., Del. Super., 300 A.2d 241 (1972). In that action, Vendaway's third party complaint alleged that the duty which Chrysler violated was to provide a safe working place for Chrysler's employee. The Court held that the allegation was not supportable since the duty alleged was a common law duty of an employer to its employee to provide a safe working place. Vendaway had cited Diamond State Tel. Co. v. University of Delaware, Del.Supr., 269 A.2d 52 (1970) as authority. In distinguishing Diamond, the Court made the following observations:
"It [third party complaint] rested on the implied contractual obligation of the contractor to perform its contracted work in a workmanlike manner. By contrast Chrysler has no contractual work; its only express contractual duty was to provide certain space, utilities and facilities. Chrysler's activities are not contractually related to Vendaway. It is not asserted that plaintiff was performing services related in any way to the express contractual obligation of either Vendaway or Chrysler. * * * * If Chrysler is liable to indemnify Vendaway, it must rest upon an implied obligation which Chrysler (owner) owed to Vendaway (contractor)...."
Following the decision against it, Vendaway filed an amended complaint. Chrysler based its second motion for summary judgment upon the proposition that the instant case did not fall within the holding in Diamond. This Court, by opinion dated June 27, 1973, denied Chrysler's motion stating that even though the damages for which Vendaway seeks indemnification reflect a tort recovery by Chrysler's employee, the third party complaint states a valid cause of action springing from a separate contractual relationship. Chrysler filed a third motion for summary judgment and it is this motion which is presently before the Court.
Gerald C. Rock, plaintiff, an employee of W. B. Mitten & Sons, Inc. ("Mitten"), was injured while working for Mitten when the cable of a crane owned by Mitten came into contact with an uninsulated high-tension electric wire of Delaware Electric Cooperative, Inc. during the course of Mitten's rehabilitation of the *452 Mill Creek Bridge under contract with the State of Delaware ("State"). Rock sued State and Delaware Electric Cooperative for damages resulting from the injury alleging that State was negligent in drafting blueprints which failed to show that certain electric lines were uninsulated and to show their proper location, and in failing to halt construction when it knew or should have known of the dangerous condition created by a live high voltage wire within the proximity of the construction. State filed a third party complaint against Mitten claiming that express provisions protect State from any liability to third parties which is incurred under the construction contract. State also claims breach of an implied agreement to perform workmanlike service and an implied contractual promise of indemnification. Mitten answered the third party complaint asserting that express indemnification provisions do not entitle State to indemnity for a claim based upon its own negligence.
James B. Harvey, plaintiff, an employee of Facciolo Paving and Construction Company ("Facciolo"), was injured while working for Facciolo when he cut into an underground power line owned by the Delmarva Power & Light Company during the course of repairs to a sewer main of the City of Wilmington ("City"). Harvey sued City and Delmarva Power & Light Company. The plaintiff's complaint against City alleges liability on the part of City by reason of its negligence in failing to provide plaintiff with a safe place to work, failing to de-energize the high voltage electric line, and failing to mark the location of said electric line. City filed a third party complaint against Facciolo for indemnification on the express provisions in City's contract with Facciolo. Facciolo answered the third party complaint contending that the express indemnification provisions of the written contract between City and Facciolo do not indemnify City for the consequences of its own negligence. City filed a cross motion for summary judgment in its favor with regard to the third party complaint.
The questions to be decided by the Court are 1) whether the principals are entitled to indemnification either under the express indemnification provisions in the contracts or under separate implied obligations of indemnity from implied covenants by the contractors to perform their work in a workmanlike manner and, 2) whether a contractor is entitled to indemnification under an implied covenant by the owner to provide a safe working place for the contractor when there is an express indemnification provision in the contract.
There is no statutory basis for permitting recovery of damages from the employer of an injured employee by a third person tortfeasor. The Workmen's Compensation Act makes the liability of an employer to his employee absolute but limits it in amount. The employee is prohibited from suing his employer for injuries resulting from negligence of the employer or his employees. 19 Del.C. § 2304. However, § 2363 of the Act permits common law actions in tort against a third person whose negligence injures the employee. Pursuant to this authority the plaintiffs have brought actions against the defendants third party plaintiffs in the instant case. In 2 Larson, Workmen's Compensation Law 76.21 (1970) at 238, the author states:
"The claim of an employee against the employer is solely for statutory benefits; his claim against the third person is for damages. The two are different in kind and cannot result in a common liability."
Thus, common law indemnity cannot be used to impose liability on an employer since it arises where two people commit a tort or wrong which hurts the same person. Citing Delaware's decisional law, if an employer is to be held liable to indemnify a third party plaintiff, "it must be upon some theory other than tortious conduct on *453 its part". Diamond State Tel. Co. v. University of Delaware, supra.
The doctrine of an implied right of indemnity was first announced in admiralty law in Ryan Stevedor. Co. v. Pan-Atlantic Steam. Corp., 350 U.S. 124, 76 S. Ct. 232, 100 L. Ed. 133 (1956) and is precedent within the federal orbit. As observed by the Court in Diamond State Tel. Co. v. University of Delaware, supra, the growth of the doctrine in the Federal Courts may have arisen from the application of admiralty's more equitable approach toward joint defendants and their respective obligations in contra-distinction to the common law. More recently the Delaware Supreme Court in Howard, Needles, Tammen & B. v. Steers, Perini & P., Del.Supr., 312 A.2d 621 (1973) observed that the principle of an implied promise of indemnity is generally restricted to maritime law. The specific language of the Court should be recognized:
"... most decisions subsequent to Ryan have noted that the principle enunciated by that case is peculiar to maritime law, and few courts have extended it to other areas of the law."
The Delaware Supreme Court examined the question of indemnification by an employer to a third party in Diamond State Tel. Co. v. University of Delaware, supra. The Court gave thought to the trial court's decision that when two individuals are jointly negligent and the concurrent negligences contribute to the injury of another, one may be the primary wrongdoer and the other the secondary wrongdoer. Such a concept would hold the two parties as joint tortfeasors with the right of contribution running between them. The trial court also stated that even if a contract is not proven there may still be an equitable obligation on Diamond to indemnify University. The Supreme Court rejected these concepts as insufficient basis for indemnification by an employer of a third party. The Court held that imposing liability on a primary-secondary basis or on an equitable basis may not be done under our law. It is for this reason that the Court held that the only basis for liability of an employer to indemnify a third party is the breach of a promise, either express or implied.
When parties to a contract have entered into a written agreement expressly setting forth one party's indemnifying liability, there is no room for any enlargement of that obligation by implication. Howard, Needles, Tammen & B. v. Steers, Perini & P., supra. This doctrine was also enunciated in Waller v. J. E. Brenneman Company, Del.Super., 307 A.2d 550 (1973). In the case of Waller, a general contractor, Brenneman, on a repair project involving the St. George's Bridge in Delaware, entered into a subcontract with G & H Steel Service, Inc. Waller, an employee of G & H, was injured at the job site when he was struck by a concrete conveyor operated by Brenneman's employee. Brenneman claimed that a dangerous condition existed on the bridge which caused the injuries and damages to the plaintiff of which G & H was aware but in spite of its knowledge permitted Waller to work there. The contract between Brenneman and G & H contained two pertinent provisions, 1) an indemnification clause running in favor of the contractor and limited to the subcontractor's negligent acts or omissions and 2) an express covenant by the subcontractor to perform its work in a workmanlike manner. Brenneman had argued that an implied agreement to indemnify arose from an alleged breach of the express covenant by G & H to perform its work in a workmanlike manner. The Court held:
"Where a written contract exists which includes a specific indemnification provision setting forth the rights and duties of the parties, the specific provision should govern and the courts should not enlarge the right to indemnification by implication."
Where a third party plaintiff is to be indemnified from the consequences of his own negligence, this intention must *454 clearly appear from the language of the agreement. See Howard, Needles, Tammen & B. v. Steers, Perini & P., supra; Marshall et al. v. Maryland, D. & V. Ry. Co., Del.Super., 1 W.W.Harr. 170, 112 A. 526 (1921); 175 A.L.R. 8 (1948). This rule was stated recently by the Delaware Supreme Court in State v. Interstate Amiesite Corporation, Del.Supr., 297 A.2d 41 (1972):
"... such a contract provision must be crystal clear and unequivocal in requiring the contractor to assume all liability for damage claims, whichever party may have been guilty of the negligence which actually caused the injury."
However, after examining the indemnification provisions in the contract between State and Amiesite, the Court concluded that the language of the agreement was not crystal clear and sufficiently unequivocal to require Amiesite to indemnify the State for damages collected for State's own negligence. See also Hollingsworth v. Chrysler Corporation, Del.Super., 208 A.2d 61 (1965).
In other cases, the courts have held that the terms of the agreement protected the indemnitee against the consequences of his own negligence. In the case of Bar Steel Construction Corp. v. Read, Del.Supr., 277 A.2d 678 (1971), the Court held that where an employee of the contractor was killed while climbing a steel structure erected by the subcontractor, the indemnification agreement between the contractor and the subcontractor rendered the subcontractor answerable in damages. The terms of the contract had left no doubt that the subcontractor agreed to assume all damage claims arising out of the work required by the contract. The principle that a party may by contract protect itself from the results of its own negligence is also illustrated in a United States Circuit Court decision by Judge Collins J. Seitz. Jamison v. Ellwood Consolidated Water Company, U.S.Ct. 3rd Cir., 420 F.2d 787 (1970). In the Jamison case, a painting contractor entered into a written contract with a water company to paint its water tower. The contract contained a provision in which the contractor agreed to assume all damage claims "whether or not due in whole or in part to any act, omission, or negligence of the Water Company". An employee of the contractor was killed in a fall from the water tower because of the water company's failure to comply with certain Pennsylvania Department of Labor regulations. The contractor was unsuccessful in challenging the provision of the contract as against public policy by insulating the water company from the consequences of its failure to comply with an express statutory enactment. According to the Court the parties by contract had immunized the indemnitee from the results of his own negligence.
All the parties in the cases before the Court entered into written contracts with express indemnification provisions. Third party plaintiffs, State and City, have express indemnification provisions running in their favor. The express indemnification provision in the contract between Vendaway and Chrysler does not run in favor of Vendaway, the third party plaintiff, seeking indemnification. Vendaway asserts that the absence of an express indemnification provision in its favor permits an implied right of indemnification based on an implied covenant on the part of Chrysler to provide Vendaway with a safe place to work. Vendaway's position is that it is not attempting to enlarge on the express provisions in favor of Chrysler and, therefore, a separate implied right of indemnification may exist in its favor.
Applying the rule in the Waller case, if an implied agreement to indemnify cannot arise from breach of an independent express covenant by the indemnitor to perform its work for the indemnitee in a workmanlike manner, no greater right can arise from breach of a separate implied covenant by an indemnitor to provide a safe working place for the indemnitee.
*455 In its third party complaint, State contends that Mitten owed State an independent duty to perform its work in a careful, prudent, and workmanlike manner and that Mitten's breach of this implied contract gives rise to an implied agreement to indemnify State. The law will not imply a right of indemnity where the parties have entered into a written contract with express indemnification provisions. Accordingly, the express provisions in the contracts under consideration shall govern and there shall be no presumption of additional implied obligations.
Before examining the express indemnification provisions in the principals' contracts, the Court observes that any indemnification rights due the indemnitees would arise only if they are, in fact, negligent. To require indemnification of the indemnitees for their own negligence, the language of their agreements must show this intent in clear and unequivocal terms. While the intention to indemnify against the results of the indemnitees' negligence must be clear, it need not be expressed in so many words. Where the language clearly indicates the intention of the parties that the agreement shall include negligence, the Court will give effect to such intention despite its inclination to construe the agreement strictly against the indemnitee. See Powell v. Interstate Vendaway, Inc., supra. It has also been said that in cases where it is not improbable that a party would undertake to indemnify the indemnitee against his own negligence, the Court need not follow the general rule of strict construction. 41 Am.Jur.2d, Indemnity, § 15 (1968).
The contract between State and Mitten contains the following indemnification provisions:
"The contractor shall indemnify and save harmless the department, its officers and employees from all suits, actions, or claims of any character brought because of any injuries or damage received or sustained by any person, persons, or property on account of the operations of the said contractor; or on account of or in consequences of any neglect in safeguarding the work; or through use of unacceptable materials in constructing the work; or because of any act or omission, neglect, or misconduct of said contractor; or because of any claims or amounts recovered from any infringement of patent, trademark, or copyright; or from any claims or amounts arising or recovered under the `Workmen's Compensation Act', or any other law, ordinance, order, or decree..."
State asserts that the provision above requires the contractor to assume responsibility for damage claims "on account of or in consequence of any neglect in safeguarding the work" and to indemnify State "from any claims or amounts arising or recovered under ... any law, ordinance, order or decree". A condition precedent to the plaintiff's recovery is a finding of negligence on the part of State. State's right to indemnification would not be "on account of the operations" of Mitten. The provision applies only to claims based on the negligence of Mitten. The provisions in the above contract contain the exact language examined in Amiesite, in which State sought indemnification from Amiesite. After reviewing this provision, the Supreme Court found the terms insufficiently clear to require the contractor to indemnify State for damages collected for State's own negligence. This decision is controlling. The provision relied on by State does not indemnify State against its own negligent acts.
The contract between City and Facciolo contains the following provisions:
"The Contractor shall pay, indemnify and save harmless the City, its agents and employees from all suits, actions, claims, demands, damages, losses, expenses and/or costs of every kind and description to which the City may be subjected or put by reason of injury (including death) to persons or property resulting *456 from the manner or method employed by the Contractor, his agents and employees, or sub-contractors, in the performance of this contract, or any part thereof, or from, by or on account of any act or omission of the Contractor, his agents, and employees, or sub-contractors, and whether such suits, actions, claims, demands, damages, losses, expenses and/or costs be against, suffered or sustained by other corporations and persons to whom the City, its agents and employees, may become liable therefor..."
In addition to the provision above, the contract also provided as follows:
"(a) 2. Special Provisions
2:1. The Contractor shall be responsible to notify all utilities before commencing with the work, namely:
(1) Delmarva Power & Light Company (Gas)
(2) Diamond State Telephone Company
(3) Delmarva Power & Light Company (Power)
(4) Wilmington Water Department."
City directs specific attention to the following phrases in the above contract: "... to whom the City, its agents and employees, may become liable therefore ..." which City contends obligates Facciolo to indemnify City if City should become liable because of "... such suits, actions, claims, demands, damages ...". City further contends as follows: Facciolo agreed to notify the utilities before commencing work and it failed to do so. If it is determined that Facciolo failed to notify the utilities and that plaintiff's injuries resulted from that failure, this omission on Facciolo's part would require Facciolo to indemnify City with respect to the instant action. City will be liable to the plaintiff only if City is found to have been negligent. None of the provisions relied upon by City specifically provide a basis for relief for a claim predicated on City's negligence. Even though it is not improbable that Facciolo would undertake to indemnify City against its own negligence, the terms of the agreement are insufficiently clear and unequivocal to permit this construction.
The third party plaintiffs are not entitled to indemnification under either express indemnification provisions or implied obligations. Mitten's and Facciolo's motions to dismiss and Chrysler's motion for summary judgment are granted. City's cross-motion for summary judgment is denied.
It is so ordered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/811380/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-7149
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
CORY NEWMAN,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Greenville. G. Ross Anderson, Jr., Senior
District Judge. (6:04-cr-01127-GRA-8; 6:12-cv-01431-GRA)
Submitted: November 2, 2012 Decided: November 6, 2012
Before WILKINSON, KEENAN, and THACKER, Circuit Judges.
Dismissed by unpublished per curiam opinion.
Cory Newman, Appellant Pro Se. Carrie Fisher Sherard, Assistant
United States Attorney, Greenville, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Cory Newman seeks to appeal the district court’s order
denying his motion to amend his previously denied 28 U.S.C.A.
§ 2255 (West Supp. 2012) motion and its subsequent order denying
his Fed. R. Civ. P. 60(b) motion for reconsideration. The
orders are not appealable unless a circuit justice or judge
issues a certificate of appealability. 28 U.S.C.
§ 2253(c)(1)(B) (2006). A certificate of appealability will not
issue absent “a substantial showing of the denial of a
constitutional right.” 28 U.S.C. § 2253(c)(2) (2006). When the
district court denies relief on the merits, a prisoner satisfies
this standard by demonstrating that reasonable jurists would
find that the district court’s assessment of the constitutional
claims is debatable or wrong. Slack v. McDaniel, 529 U.S. 473,
484 (2000); see Miller-El v. Cockrell, 537 U.S. 322, 336-38
(2003). When the district court denies relief on procedural
grounds, the prisoner must demonstrate both that the dispositive
procedural ruling is debatable, and that the motion states a
debatable claim of the denial of a constitutional right. Slack,
529 U.S. at 484-85.
We have independently reviewed the record and conclude
that Newman has not made the requisite showing. Accordingly, we
deny a certificate of appealability and dismiss the appeal. We
dispense with oral argument because the facts and legal
2
contentions are adequately presented in the materials before the
court and argument would not aid the decisional process.
DISMISSED
3 | 01-03-2023 | 11-06-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/811863/ | In the
United States Court of Appeals
For the Seventh Circuit
No. 12-1302
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
C HRISTOPHER L. L ARANETA,
Defendant-Appellant.
A MY and V ICKY,
Intervenors.
Appeal from the United States District Court
for the Northern District of Indiana, Hammond Division.
No. 2:10-cr-00013-RL-PRC-1—Rudy Lozano, Judge.
A RGUED O CTOBER 1, 2012—D ECIDED N OVEMBER 14, 2012
Before P OSNER, W ILLIAMS, and SYKES, Circuit Judges.
P OSNER, Circuit Judge. The defendant pleaded guilty to
seven counts of violation of federal child pornography
laws, 18 U.S.C. §§ 2251(d)(1), 2252(a)(1), (a)(2), (a)(4),
and was sentenced to 30 years’ imprisonment, to be
followed by supervised release for the rest of his life,
and also to pay restitution to two women, referred to
2 No. 12-1302
pseudonymously as Amy and Vicky, in the amount of
$3,367,854.00 and $965,827.64; pornographic images of
them, as girls, were found in the defendant’s possession.
The amount awarded Amy is identical to the amount
she has requested, and usually been awarded, in literally
hundreds of other criminal cases involving pornographic
images of her. But the amount the judge ordered the
defendant to pay Vicky subtracts the restitution that she
has collected from other defendants. The appeal chal-
lenges the length of the defendant’s sentence and the
amount of restitution that the judge ordered him to pay.
The government defends the sentence but not the restitu-
tion award, and also challenges our allowing Amy and
Vicky to intervene in this appellate proceeding; and let’s
start there.
There is no counterpart in the federal rules of criminal
procedure to Rule 24 of the civil rules, which explicitly
authorizes, and regulates, intervention. But the civil
rules do not exhaust the procedural authority of federal
judges. Chambers v. NASCO, Inc., 501 U.S. 32, 43-46 (1991),
lists a variety of inherent powers of a federal court, in-
cluding power to “impose silence, respect, and decorum,”
“control admission to its bar,” “discipline attorneys,”
“punish for contempts,” “vacate its own judgment
upon proof that a fraud has been perpetrated upon
the court,” “conduct an independent investigation in
order to determine whether it has been the victim of
fraud,” “bar from the courtroom a criminal defendant
who disrupts a trial,” “dismiss an action on grounds of
forum non conveniens,” and “act sua sponte to dismiss a
suit for failure to prosecute.” In United States v. Rollins,
607 F.3d 500, 502 (7th Cir. 2010), we added that
No. 12-1302 3
“motions to reconsider (in district courts) and petitions
for rehearing (in courts of appeals) are ordinary elements
of federal practice that exist in criminal prosecutions
despite their omission from the Rules of Criminal Pro-
cedure.”
Although in International Union, United Automobile,
Aerospace & Agricultural Implement Workers of America, AFL-
CIO, Local 283 v. Scofield, 382 U.S. 205, 217 n. 10 (1965),
the Supreme Court left open the question whether there
is inherent power to allow intervention at the appellate
level, we answered the question in the affirmative long
ago, see Hurd v. Illinois Bell Tel. Co., 234 F.2d 942, 944
(7th Cir. 1956), and other courts have joined us. See
In re Grand Jury Investigation Into Possible Violations of
Title 18, U.S. Code, Sections 201, 371, 1962, 1952, 1951, 1503,
1343 & 1341, 587 F.2d 598, 601 (3d Cir. 1978); United
States v. Bursey, 515 F.2d 1228, 1238 n. 24 (5th Cir. 1975).
Intervention has even been permitted in district court
cases in which the conditions for intervention in Rule 24
were not satisfied. Missouri-Kansas Pipe Line Co. v. United
States, 312 U.S. 502, 505-06 (1941); Textile Workers Union
of America, CIO v. Allendale Co., 226 F.2d 765, 767-68
(D.C. Cir. 1955) (en banc).
We therefore consider the question whether to allow
victims of crime to intervene in criminal proceedings
(rather than merely to be heard, a right granted them
by the Criminal Victims’ Rights Act, 18 U.S.C. § 3771(a)(4))
to be one of expedience rather than of power. Yet even
if a right to intervene in criminal cases were limited
to victims who like Amy and Vicky have a financial
4 No. 12-1302
stake because they have a colorable claim to restitution,
it would be a mistake to allow intervention at the
district court level. That would be a recipe for chaos.
Imagine plea bargaining in which intervening crime
victims argue for a different bargain from that struck
between the government and the defendant, or trials at
which victims’ lawyers present witnesses and cross-
examine the defendant’s witnesses or participate
in the sentencing hearing in order to persuade the
judge to impose a harsher sentence than suggested by
the prosecutor.
The complications of intervention are many fewer at
the appellate stage, where participation is limited to
filing briefs and, at the appellate court’s discretion, par-
ticipating in oral argument, which we permitted in
this case. The Criminal Victims’ Rights Act allows a
crime victim whose claim of restitution is denied to
seek mandamus in the court of appeals, 18 U.S.C.
§ 3771(d)(3), but makes no provision for participation by
a victim who has been successful in the district court.
Suppose the government declines to defend the restitu-
tion award when the award is challenged by the
defendant in his appeal from his sentence. The case for
intervention is most compelling when a person has a
direct financial stake in a case and cannot be certain that
any party has an interest in defending that stake. The
government has no financial stake in restitution to victims
of crime. And judicial power to allow intervention at
the appellate level can be exercised in a case such as
this without causing the problems that intervention in
No. 12-1302 5
the district court would cause—indeed without causing
any problems at all that we can see.
The statutory provision entitling a victim of crime to
seek mandamus if restitution is denied strengthens our
conclusion. If we reversed the award to Amy and Vicky
and directed the district court to vacate it, they could
then seek mandamus, and if we denied it they could
ask the Supreme Court to review the denial. Allowing
them to participate at this stage of the appellate
process avoids a second trip to the appellate courts, and
also ensures that they’ll be “able to present their argu-
ments on the issues to a reviewing court which has not
crystallized its views.” International Union, United Automo-
bile, Aerospace & Agricultural Implement Workers of America,
AFL-CIO, Local 283 v. Scofield, supra, 382 U.S. at 213. Par-
ticipation as amici curiae would not be an adequate
substitute, for as nonparties they could not seek
rehearing or rehearing en banc or review by the Supreme
Court, should our decision go against them.
We are mindful of the Eleventh Circuit’s holding in
United States v. Alcatel-Lucent France, SA, 688 F.3d 1301,
1306 (11th Cir. 2012) (per curiam), that a crime victim
cannot appeal from a denial of restitution in a criminal
case because the victim is not a party, and the district
court cannot make the victim a party, thus enabling him
or her to appeal, by allowing the victim to intervene.
We have no quarrel with that result, because, as we
have just said, we do not think a crime victim should
be permitted to intervene in the district court. Our case
is different. The crime victims, having prevailed in the
6 No. 12-1302
district court, are not trying to appeal. They are seeking
only to intervene in this court and only to defend the
award they received in the district court. Whether inter-
vention at the appellate level only is permissible was
not an issue in the Eleventh Circuit’s case.
We begin our discussion of the merits of the de-
fendant’s appeal with his challenge to the length of the
prison sentence. The maximum prison sentence for any
of the first six offenses (offenses of receiving, distributing,
and transporting child pornography) to which he pleaded
guilty was 20 years. The judge ordered the sentences for
these six offenses to run concurrently. It was only by
making the sentence for the seventh offense—possession of
child pornography, an offense for which the maximum sen-
tence is 10 years, 18 U.S.C. § 2252(b)(2)—consecutive to
the other sentences that the judge jacked up the defen-
dant’s prison term to 30 years. This was nevertheless
a below-guidelines sentence. The guidelines sentence
would have been life imprisonment (though it could not
have been imposed, because it would have exceeded
the statutory maximum), in part because of the “pattern
of activity” guideline, U.S.S.G. § 2G2.2(b)(5), which in-
creases the base offense level by five points if the defen-
dant “engaged in a pattern of activity involving the sexual
abuse or exploitation of a minor.” Application Note 1
amplifies the definition to cover “any combination of
two or more separate instances of the sexual abuse or
sexual exploitation of a minor by the defendant, whether
or not the abuse or exploitation (A) occurred during the
course of the offense; (B) involved the same minor; or
(C) resulted in a conviction for such conduct.” The
district judge ruled that the government had proved that
No. 12-1302 7
the defendant had engaged in a pattern of such activity,
and that ruling was not clearly erroneous.
But the defendant complains that the pattern of activity
guideline allowed, or more precisely encouraged, the
judge to make the length of imprisonment as long as
possible by invoking criminal conduct for which the
defendant had never been convicted. That is true, but
merely illustrates the unexceptionable general proposition
that conduct relevant to the crime of conviction can be
considered in calculating a sentence even if that conduct
did not result in a conviction. See, e.g., United States v.
Watts, 519 U.S. 148, 156-57 (1997) (per curiam). All that
the sentencing guidelines do is create suggested (no
longer mandatory) sentencing ranges inside the statu-
tory ranges, and it is proper to vary the interior ranges
in light of other criminal conduct by the defendant that
is related to the conduct for which he’s been convicted,
even if that other conduct, because it did not result in a
conviction, is not counted as criminal history in the
criminal-history tables that also influence guidelines
ranges. Other acts of sexual predation by a defendant
convicted of sexual predation have predictive sig-
nificance with regard to the likelihood of recidivism,
and likelihood of recidivism is an uncontroversially
relevant consideration in deciding how long a defendant
should be incapacitated (by being imprisoned) from
committing further crimes, provided of course that the
sentence does not exceed the statutory maximum.
Relevant conduct also bears on the length of sentence
that is necessary to deter others (more realistically,
8 No. 12-1302
some others; if deterrence were fully effective, there
would be no crime) from committing the same crime as
the defendant. Suppose a defendant committed twenty
serious sex crimes but has been convicted only of the
one for which he’s being sentenced. A long sentence
is appropriate to remind him and others that even if
sexual predators get away with their crimes most of
the time, if they’re caught their other crimes (if discov-
ered) will figure in their sentences and so will be at least
indirectly punished—and indirect punishment is better
than no punishment.
The defendant further complains that the judge should
not have given him a consecutive sentence for the
offense of possession. Consecutive sentencing for inde-
pendent crimes (as distinct from consecutive sentences
for “a single crime, procedurally proliferated”—that is,
where “morally the transaction was a single wrong, to
be expiated by a single punishment,” United States ex rel.
Mignozzi v. Day, 51 F.2d 1019, 1021 (2d Cir. 1931) (L.
Hand, J.)) is proper because the effect of a concurrent
sentence is to reduce or wipe out a sentence for a crime
of which the defendant has been convicted. Had the
judge made the defendant’s 10-year sentence concurrent
with his 20-year sentences, the 10-year sentence would
have been nullified. “Would it not be absurd, to make
one imprisonment a punishment for two offences?”
Russell v. Commonwealth, 7 Serg. & Rawle 489, 1882 WL
13700, at *2 (Pa. 1882). Absurd or not, it is not required.
The defendant’s remaining challenges to the prison
component of his sentence are well-nigh frivolous. They
No. 12-1302 9
are that his sentence punishes him more harshly than
similar offenders and even than criminals who commit
more serious, because violent, offenses, and that viewing
child pornography does not prove that the viewer has a
sexual interest in children. The district court addressed
and rejected both challenges, the first because the dis-
parities were, as he was entitled to rule, “overridden by
the seriousness of the offense.” And remember that the
defendant’s sentence, though long, is a below-guidelines
sentence.
The second challenge we barely understand. We can
imagine a person who chanced on a pornographic
image of a child looking at it out of curiosity; and of
course police officers, lawyers, and judges, in a prosecu-
tion involving child pornography, will view child pornog-
raphy without being expected to find it sexually arous-
ing. But the defendant doesn’t fall into any of these classes
of innocent viewers; anyway he had revealed in chat
logs introduced in evidence his interest in engaging in
sexual acts with children. And the district court’s
finding that the defendant’s involvement with child
pornography was part of a pattern of sexual abuse
was based on evidence of his having sexually abused
children physically, rather than just by possessing
or distributing images of them.
The restitution component of the defendant’s sentence,
to which we now turn, presents more difficult issues
than the prison component. 18 U.S.C. § 2259(a) provides
that “the court shall order restitution for any offense
under” chapter 110, the chapter in Title 18 in which
10 No. 12-1302
one finds the federal criminal laws against sexual ex-
ploitation and abuse of children, and the order “shall
direct the defendant to pay the victim (through the ap-
propriate court mechanism) the full amount of the
victim’s losses as determined by the court.” 18 U.S.C.
§ 2259(b)(1).
Amy was 8 years old when she was repeatedly raped
by her uncle, who photographed the rapes, and other
forced sexual acts that he committed against her, in order
to create child pornography, which was widely dissemi-
nated online. Vicky was 10 when she was first raped, and
images of rapes of her that were committed over a two-
year period were also widely disseminated online. Alto-
gether tens of thousands of pornographic images of
Amy and Vicky have circulated on the Internet. The
losses for which the two women (for they are now adults)
sought and received restitution in the district court in-
cluded incurred and expected costs of therapy, lost (and
expected to be lost) income because of psychological
damage that impairs their ability to work, and other
items, all within the specific statutory definitions (of
which more shortly) of victims’ compensable losses.
Amy traces all her losses to psychological damage
caused by her learning that pornographic images of her
had been widely disseminated. She says that she had re-
covered from the psychological damage imposed by the
rapes themselves but relapsed when she learned about
the dissemination. Vicky attributes her lost income to
“hypervigilance” triggered by the dissemination of porno-
graphic images of her, and her psychologist has opined
No. 12-1302 11
that her continuing need for counseling is attributable
to the rapes as well.
The judge assessed Vicky’s loss as $1,224,697.04, but
because she had already recovered $258,869.40 from
other defendants, he ordered the defendant to pay only
the unpaid balance of $965,827.64. Yet as we noted
he awarded the entirety of Amy’s losses, calculated at
$3,367,854, even though her lawyer acknowledges that
she has already recovered about half those losses. The
lawyer should have specified the entire amount re-
covered and the district court should then have sub-
tracted that amount, as he did with Vicky.
The defendant does not question the judge’s calcula-
tion of Amy’s and Vicky’s losses. But he denies that he’s
responsible for those losses, or at least for all of them
that remain unpaid. Images of Amy and Vicky were
found on his computer, true, but he was only one of
an unknown number of viewers. Although he was
found guilty of distributing child pornography, there is
no evidence referred to in the presentence report—and
the judge made no finding—that he distributed any of the
images involving Amy or Vicky. The government in a post-
argument submission, however, argues that there is evi-
dence in the record that some of the images uploaded
by the defendant may have been of the two girls.
Amy and Vicky argue that it doesn’t matter because the
statute, as we noted earlier, makes the defendant liable for
the “full amount of the victim’s losses,” and it is that full
amount that the judge computed; for he made no effort
to estimate the loss attributable to the defendant’s
12 No. 12-1302
viewing of pornographic images of the two girls. They
acknowledge that the defendant is liable only for losses
traceable to his crime, cf. 18 U.S.C. § 2259(c), but
they deny that the defendant’s crime has to have been
a “proximate cause” of those losses.
The statute defines “full amount of the victim’s losses”
as the costs incurred by the victim for—
(A) medical services relating to physical, psychiatric,
or psychological care;
(B) physical and occupational therapy or rehabilita-
tion;
(C) necessary transportation, temporary housing,
and child care expenses;
(D) lost income;
(E) attorneys’ fees, as well as other costs incurred; and
(F) any other losses suffered by the victim as a proxi-
mate result of the offense.
18 U.S.C. § 2259(b)(3) (emphasis added). Amy and Vicky
argue that only the losses specified in the last subsec-
tion—“any other losses”—are subject to a “proximate
cause” limitation. They rely in part on the “canon of
construction” (rule of interpretation) known as the “last-
antecedent” canon, which says that a qualification in
the last term of a series should be confined to that
term. Barnhart v. Thomas, 540 U.S. 20, 26 (2003). Another
canon, however, the “series-qualifier” canon, contradicts
the “last-antecedent” canon; it provides that a modifier
at the beginning or end of a series of terms modifies all
No. 12-1302 13
the terms. Porto Rico Railway, Light & Power Co. v. Mor, 253
U.S. 345, 348 (1920).
The modifier “proximate cause” appears at the end of
the series in subsection (b)(3), so either canon could
apply to it; we don’t know how to choose between them.
Fortunately we don’t need to choose; for however “proxi-
mate cause” might be thought to qualify a defendant’s
liability for “any other losses,” there would be no
rational basis for omitting that qualification from the
specified losses (medical services, therapy, lost income,
etc.). All that the inclusion in section 2259(b)(3) of “any
other losses” does is close loopholes that might open up
because of the detailed specification of losses in the
preceding subsections; there is no reason that any limita-
tion on liability imposed in the name of “proximate cause”
should not apply equally to the specified and the unspeci-
fied losses. Illustrative of “any other losses” are the “costs
related to schooling (school supplies, travel allowances,
uniforms, the costs of food and snacks)” for a “program for
alternative learning that would allow the child victims to
receive some type of education” because they had previ-
ously “stopped attending school altogether after their
ordeal,” involved in United States v. Doe, 488 F.3d 1154,
1159, 1161-62 (9th Cir. 2007), and the costs incurred by
guardians who took custody of the child victims of
making necessary renovations to house them, and of
transporting them to and from school, involved in United
States v. Searle, 65 Fed. Appx. 343, 346 (2d Cir. 2003). We
can think of no reason why those costs would be subject
to a proximate-cause limitation but not the very similar
costs specified in the preceding subsections of the statute.
14 No. 12-1302
A more difficult question is what “proximate cause”
actually means. The term seems to have been around
forever. See, e.g., Peters v. Warren Ins. Co., 39 U.S. 99, 108
(1840). Cardozo in Palsgraf v. Long Island R.R., 162 N.E.
99, 100-01 (N.Y. 1928), defined it as the foreseeability of
the act alleged to have inflicted compensable harm.
That definition failed to catch on, although foreseeability
is acknowledged to be a relevant consideration, as we’ll
see shortly. The conventional definition of proximate
cause was and remains “that which, in a natural and
continuous sequence, unbroken by any efficient inter-
vening cause, produces the injury and without which
the result would not have occurred.” Spicer v. Osunkoya,
32 A.3d 347, 351 (Del. 2011); see also State v. Jackson, 697
S.E.2d 757, 759 (Ga. 2010); Ashley County v. Pfizer, Inc., 552
F.3d 659, 666 (8th Cir. 2009); Pickett v. RTS Helicopter, 128
F.3d 925, 929 (5th Cir. 1997). What “natural” and “continu-
ous” and “unbroken” and “efficient” and “intervening”
mean in the context of determining legal responsibility
for a harm remains, after centuries, unclear.
The current edition of Black’s Law Dictionary (9th ed.
2009) attempts an updating: it defines proximate cause
as “1. A cause that is legally sufficient to result in
liability; an act or omission that is considered in law to
result in a consequence, so that liability can be imposed
on the actor,” or “2. A cause that directly produces an
event and without which the event would not have oc-
curred.” Id. at 250. The first definition begs the question
(“legally sufficient to result in liability”) and the sec-
ond founders on the uncertain meaning of “directly.”
No. 12-1302 15
All that “proximate cause” does as a practical matter
is require a court to have a reason for picking out one
causal relation among the many that may have con-
tributed to an untoward event, a reason such that
making that relation a basis of legal liability would have
a socially desirable effect, such as deterrence. Holmes
v. Securities Investor Protection Corp., 503 U.S. 258, 269-70
(1992). In BCS Services, Inc. v. Heartwood 88, LLC, 637 F.3d
750, 756 (7th Cir. 2011), we examined the various kinds
of “work” done by “proximate cause” (the flip side—
“remote causation”—the set of causes that shouldn’t give
rise to legal liability—might be a clearer name for a doc-
trine that places limits on the scope of liability). We said
that it “protects the ability of primary victims of wrongful
conduct to obtain compensation; simplifies litigation;
recognizes the limitations of deterrence (unforeseeable
consequences of a person’s acts will not influence his
decision on how scrupulously to comply with the law);
and eliminates some actual or possible but probably
minor causes as grounds of legal liability.” Suppose the
defendant didn’t upload the images he possessed of
Amy and Vicky to the Internet, and someone stole them
by hacking into his computer and the hacker uploaded
them—that would be an unforeseeable consequence of
the defendant’s crime for which presumably he would
not be liable because imposing liability for unforeseeable
consequences of one’s criminal acts is unlikely to deter
those acts. And likewise if Amy or Vicky had lost
income because her psychological trauma had caused
her to have to reschedule a job interview, and in the
interim the job was filled. Cf. Guth v. Tazewell County,
No. 11-3452, 2012 WL 4901159, at *5 (7th Cir. Oct. 17, 2012);
16 No. 12-1302
Movitz v. First National Bank, 148 F.3d 760, 763-64 (7th
Cir. 1998).
But we don’t have to get deeper into the proximate-
cause briar patch. Before a judge gets to the issue of
proximate cause, he has to determine what the de-
fendant caused. Amy’s and Vicky’s brief misses this
point in stating (a proposition not wholly true, but we’ll
ignore that qualification) that “a tortfeasor cannot say
he should escape liability for sinking a barge because
someone else’s acts would have sunk the barge regard-
less.” The statement is an allusion to a discussion in W.
Page Keeton et al., Prosser and Keeton on the Law of Torts
§ 52, p. 347 (5th ed. 1984), of a class of tort cases best
illustrated by cases concerning not barges but “multiple
fires of negligent origin. If each fire would have
destroyed the plaintiff’s property, so that all the fires
were sufficient conditions of the harm but none was a
necessary condition, nevertheless the firemakers would
be jointly liable whether or not they were acting in con-
cert.” Greene v. Doruff, 660 F.3d 975, 979 (7th Cir. 2011).
Otherwise there would be two wrongdoers, a harm
from the wrongdoing—yet no liability.
Is this such a case? Amy’s and Vicky’s brief states that
“apportioning [their] harm among the numerous past,
present, and future defendants is all but impossible. But
all of them have contributed to Amy and Vicky’s images
going ‘viral’ on the internet.” It’s an open question
whether the defendant in the present case uploaded any
of Amy’s and Vicky’s images to the Internet—if he
didn’t, then he didn’t contribute to those images “going
No. 12-1302 17
viral.” If we consider only his having seen those images,
and imagine his being the only person to have seen
them, Amy’s and Vicky’s losses would not have been
as great as they were. Think of Vicky’s stalker, whose
stalking of her, inspired by seeing her pornographic
images, caused significant psychological harm that
could not be attributed to the defendant in this case to
the slightest degree if he never uploaded any of
her images.
But we learn from the government’s post-argument
submission that the defendant may have uploaded
the images of Amy and Vicky after all, and thus have
contributed to the victims’ hurt—but how much he
might have contributed to it in this way, who could
say? All that’s clear is that without a finding that he was
a distributor, it is beyond implausible that the victims
would have suffered the harm they did had he been
the only person in the world to view pornographic
images of them. The case must therefore be remanded
for a redetermination not of the victims’ total damages,
which are conceded, but of the portion allocable to
the defendant. This is the approach taken by all but one
of the courts of appeals to have addressed the issue.
United States v. Burgess, 684 F.3d 445, 460 (4th Cir. 2012);
United States v. Kearney, 672 F.3d 81, 99-100 (1st Cir. 2012);
United States v. Aumais, 656 F.3d 147, 154-55 (2d Cir.
2011); United States v. Kennedy, 643 F.3d 1251, 1264-65 (9th
Cir. 2011); United States v. Monzel, 641 F.3d 528, 539-40
(D.C. Cir. 2011); United States v. McDaniel, 631 F.3d 1204,
1209 (11th Cir. 2011). (The outlier is In re Unknown, No. 09-
41238, 2012 WL 4477444, at *21 (5th Cir. Oct. 1, 2012) (en
banc).)
18 No. 12-1302
But suppose that on remand the judge finds that the
defendant was a distributor after all. The apportion-
ment problem would then be acute, maybe insoluble.
When two or more tortfeasors, though not acting in
concert, inflict a single loss as a result of their separate
acts, they can be sued as joint tortfeasors and each
made liable for the full amount of the plaintiff’s
loss—that’s the two-fires case we mentioned earlier. (There
really are such cases—e.g., Anderson v. Minneapolis, St. Paul
& Sault Ste. Marie Ry. Co., 179 N.W. 45, 49 (Minn. 1920).)
The approach may be applicable to distributors of pornog-
raphy (and if so, though it is a tort doctrine it could be
adopted for criminal restitution) because it may be im-
possible as a practical matter to apportion liability
among distributors. The number of pornographic
images of a child that are propagated across the
Internet may be independent of the number of distributors.
A recipient of the image may upload it to the Internet;
dozens or hundreds of consumers of child pornography
on the Internet may download the uploaded image
and many of them may then upload it to their favorite
child-pornography web sites; and the chain of down-
loading and uploading and thus distributing might
continue indefinitely. That would be like the joint-fire case.
But if the defendant in this case is not responsible for
the viewing of the images of Amy and Vicky by even
one person besides himself, joint liability would be inap-
propriate. Amy and Vicky argue that psychological
harm is always “indivisible.” But it isn’t. If separate
fires join and burn down the house, the harm is
indivisible: the house is gone, and all the firemakers
No. 12-1302 19
are liable even though any one of the fires would have
destroyed the house. And in our distribution example,
the distributors may be jointly liable though again the
entire harm might have occurred had there been only
a single distributor. But often psychological harm can
be greater or less, and it would have been less in this
case if instead of tens of thousands of images of Amy’s
and Vicky’s rapes being viewed on the Internet one
image of each had been viewed by one person, the defen-
dant.
The victims argue finally that imposing joint liability
on the defendant is not a big hardship for him because
he can seek contribution from the other viewers of the
pornographic images. The judge made the defendant’s
liability “joint and several,” which would indeed
permit the defendant to seek contribution from the other
contributors to Amy’s and Vicky’s losses. It is doubtful
that the judge had the authority to do this. Contribution
in a federal case normally and we assume in a criminal
restitution case requires statutory authorization. See
Northwest Airlines, Inc. v. Transport Workers Union of Amer-
ica, AFL-CIO, 451 U.S. 77, 95-99 (1981). The Criminal
Victims’ Rights Act states (in 18 U.S.C. § 2259(b)(2)) that
an order of restitution under the Act shall be “enforced
in accordance with section 3664,” which is the general
criminal restitution statute. That section authorizes
the sentencing court to make liability for restitution
joint and several “if the court finds that more than
1 defendant has contributed to the loss of a victim,”
18 U.S.C. § 3664(h), and there is only one defendant in
this case. So there is no statutory authorization for what
the district judge did here.
20 No. 12-1302
We add that contribution in a case such as this would
be extraordinarily clumsy, when one considers that in all
likelihood all the defendants from whom restitution
is being sought by Amy and Vicky are in prison and
most of them have negligible assets to contribute to
our defendant. On the basis both of practical consider-
ations and the absence of statutory authorization, the
Second Circuit in another case involving Amy held that
contribution is not permissible unless the defendants
from whom contribution is sought are defendants in the
same case as the defendant seeking contribution. United
States v. Aumais, supra, 656 F.3d at 155-56.
The district judge ordered the defendant to pay restitu-
tion from his prison wage at a rate of $100 a year. (We
have said that the schedule of restitution payable before
the defendant is released from prison should be left to
the Bureau of Prisons to determine, United States v. Sawyer,
521 F.3d 792, 796 (7th Cir. 2008)—an issue on which the
courts are divided, see, e.g., United States v. Lemoine, 546
F.3d 1042, 1048 and n. 4 (9th Cir. 2008)—but the govern-
ment has not cross-appealed from the sentence.) It
would make little sense to permit the defendant to sue
other defendants for tiny shares of the amount of money
that he is paying. True, there’s always a chance of his
winning a lottery or otherwise coming into money, all
of which would be subject to being restitutioned away
from him. But the chance is not large enough to justify
the bother of awarding contribution rights to hundreds
of prison inmates. We have enough inmate suits as it is.
To summarize: The defendant’s prison sentence is
affirmed. The calculation of the crime victims’ losses is
No. 12-1302 21
affirmed too, except that the judge must determine how
much to subtract from Amy’s losses to reflect payments
of restitution that she has received in other cases. The
order of restitution is vacated and the case remanded
for a redetermination of the amount of restitution owed
by the defendant; that will require, besides the subtrac-
tion we just mentioned, a determination whether the
defendant uploaded any of Amy’s or Vicky’s images.
The defendant will not be permitted to seek contribution
from other defendants convicted of crimes involving
pornographic images of the two girls. And Amy and Vicky
will not be permitted to intervene in the district court.
A FFIRMED IN P ART, V ACATED IN P ART,
AND R EMANDED WITH INSTRUCTIONS.
11-14-12 | 01-03-2023 | 11-14-2012 |
https://www.courtlistener.com/api/rest/v3/opinions/2185870/ | 782 F. Supp. 28 (1992)
In the Matter of ARBITRATION BETWEEN KEYSTONE SHIPPING CO., and Chas. Kurz & Co., Inc., Petitioners,
and
TEXPORT OIL COMPANY, Respondent.
No. 91 Civ. 5794 (DNE).
United States District Court, S.D. New York.
January 27, 1992.
*29 Peter A. Junge, Lilly Sullivan Purcell Barkan & Junge, New York City, for petitioner.
John R. Foster, Waesche, Sheinbaum & O'Regan, New York City, for respondent.
OPINION & ORDER
EDELSTEIN, District Judge:
BACKGROUND
Petitioner Chas. Kurz & Co., Inc. ("Kurz") owns the United States flag tanker Valley Forge (the "vessel"), which it operates through an affiliated company, petitioner Keystone Shipping Corporation ("Keystone"). In April 1991, respondent Texport Oil Company ("Texport") chartered the vessel to carry gasoline blending stocks from a United States Gulf port to an east coast port. The contract, which was signed by Kurz and Texport, but not by Keystone, provided that "any and all disputes and differences of whatever nature arising out of this Charter shall be put to arbitration" in New York. The parties agree that at all times Keystone acted as agent for its disclosed principal Kurz.
After delivery of the cargo, a dispute arose among petitioners, respondent and GATX Terminals Corporation, which stored the cargo, concerning the cargo's condition. Texport sued the vessel in rem, GATX, Kurz and Keystone in Texas state court. With the consent of the parties, the case was removed to the Southern District of *30 Texas. The case was then transferred to the District of New Jersey.
On July 2, 1991, Kurz and Keystone served a demand for arbitration on Texport. While Texport agreed to arbitrate its dispute with Kurz, it refused to arbitrate its conflict with Keystone. Texport reasoned that because Keystone did not sign the contract that contains the arbitration clause, Keystone had no right to compel arbitration. Keystone and Kurz have petitioned this Court for an order directing Texport to arbitrate its action with Keystone. Keystone also seeks a stay of its litigation with Texport pending arbitration.
DISCUSSION
Section 4 of the Federal Arbitration Act (the "Act") provides that:
A party aggrieved by the alleged failure, neglect or refusal of another to arbitrate under a written agreement may petition any United States District Court ... for an order directing that such arbitration proceed in the manner provided for in such agreement.
9 U.S.C. § 4. To compel arbitration under section 4, a party must establish that "(1) an arbitration agreement exists; (2) the dispute falls within the scope of the arbitration agreement ...; and (3) the dispute does not involve the making of the agreement or the failure to comply therewith." Prudential Lines, Inc. v. Exxon Corp., 704 F.2d 59, 63 (2d Cir.1983); see Associated Mason Contractors, Inc. v. Harrington, 820 F.2d 31, 35 (2d Cir.1987). The parties agree that this dispute falls within the scope of a valid agreement. Texport asserts, however, that Keystone has no power to compel arbitration because it did not sign the contract containing the arbitration clause. The issue before this Court, then, is under what circumstances a party that did non sign a contract containing an arbitration clause (a "non-signatory") may still compel arbitration.
"There is a strong and liberal federal policy favoring arbitration agreements." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625, 105 S. Ct. 3346, 3353, 87 L. Ed. 2d 444 (1985) (quoting Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S. Ct. 927, 941, 74 L. Ed. 2d 765 (1983)). The Act was intended to avoid "the costliness and delays of litigation" and to place arbitration agreements "upon the same footing as other contracts...." H.R.Rep. No. 96, 68th Cong., 1st Sess., 1, 2 (1924). Nevertheless, "`arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not so agreed to submit.'" McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 522 (2d Cir.1980) (quoting United Steelworkers of Am. v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582, 80 S. Ct. 1347, 1353, 4 L. Ed. 2d 1409 (1960)).
There are four circumstances in which courts apply arbitration clauses to non-signatories. First, the Second Circuit has held that "[i]n an appropriate situation, the corporate veil may be pierced and a party may be held bound to arbitrate as the signatory's alter ego." Interocean Ship Co. v. National Shipping and Trading Corp., 523 F.2d 527, 537 (2d Cir.1975), cert. denied, 423 U.S. 1054, 96 S. Ct. 785, 46 L. Ed. 2d 643 (1976); see McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519 (2d Cir.1980) (non-signatory bound to arbitration agreement because contract expressly provided that companies affiliated with signatory are contractually bound); Wren Distrib., Inc. v. Phone-Mate, Inc., 600 F. Supp. 1576, 1579 (E.D.N.Y.1985). Nevertheless, "corporate relationship alone does not provide a basis for allowing" a non-signatory to enforce the arbitration clause. Fried, Krupp, GmbH v. Solidarity Carriers, Inc., 674 F. Supp. 1022, 1027 (S.D.N.Y.), aff'd without opinion, 838 F.2d 1202 (2d Cir.1987). The corporate bond necessary is one where "the parent corporation so dominates and controls the affairs of its subsidiary that the subsidiary cannot be said to have any independent existence or will of its own." Coastal States Trading, Inc. v. Zenith Navigation, S.A., 446 F. Supp. 330, 336-37 (S.D.N.Y.1977). Moreover, "absent findings of fraud or bad faith, a corporation ... is entitled to a presumption of separateness from a sister corporation ... *31 even if both are controlled by the same individuals." American Renaissance Lines, Inc. v. Saxis S.S. Co., 502 F.2d 674, 677 (2d Cir.1974). Keystone has not alleged that it enjoys the type of relationship with Kurz that justifies piercing the corporate veil. Keystone alleges only that the companies are affiliated. A lone allegation of mere affiliation, however, does not suggest, let alone prove, that Kurz controls Keystone or that they are essentially one entity. Accordingly, this Court cannot pierce the corporate veil and permit Keystone, a non-signatory, to enforce the arbitration agreement between Kurz and Texport.
Second, a non-signatory may enforce an arbitration agreement if it and a signatory to the agreement are both parties to a common bill of lading that expressly incorporates another contract's arbitration clause. See Import Export Steel Corp. v. Mississippi Valley Barge Line Co., 351 F.2d 503, 506 (2d Cir.1965); Fisser v. International Bank, 282 F.2d 231, 233 (2d Cir.1960); Golden Eagle Canada v. S.S. Marilia, No. 80 Civ. 1673, 1984 WL 815 (S.D.N.Y. Aug. 24, 1984). In support of its motion, petitioners cite cases that allow non-signatories to enforce arbitration clauses in other contracts if they hold bills of lading that incorporate these arbitration clauses by reference. See, e.g., Bunge Corp. v. M/T Stolt Hippo, 1980 A.M.C. 2611 (S.D.N.Y.1979); Lowry & Co. v. S.S. Le Moyne D'Iberville, 253 F. Supp. 396 (S.D.N.Y.1966), appeal dismissed, 372 F.2d 123 (2d Cir.1967). These cases do not support petitioners' argument, however, because Texport and Keystone do not enjoy any contractual relationship. No bill of lading or other agreement binds these parties. Accordingly, Keystone cannot compel Texport to arbitrate this dispute under a bill of lading theory.[1]
Third, the Second Circuit has held that "although a party is bound by an arbitral award only where it has agreed to arbitrate, an agreement may be implied from the party's conduct." Gvozdenovic v. United Air Lines, Inc., 933 F.2d 1100, 1105 (2d Cir.), cert. denied, ___ U.S. ___, 112 S. Ct. 305, ___ L.Ed.2d ___ (1991). While the court based this rule on an arbitration clause in a labor contract and not a commercial agreement, at least one court has found that the rationale extends to commercial contracts. See In re Transrol Navegacao S.A., 782 F. Supp. 848 (S.D.N.Y. 1991). Under United Air, then, "when an agreement to arbitrate may be implied from conduct of a non-signator, that non-signator may not later assert the invalidity of the arbitral award based on its non-signatory status." Id. For instance, in Transrol, Judge Wood found that respondent had agreed to arbitrate despite never having signed the contract containing the arbitration clause because it previously had agreed to arbitrate in France and only later refused to arbitrate in New York. See id. Texport, however, never indicated an intention to arbitrate. In fact, Texport has consistently refused to arbitrate its dispute with Keystone. Keystone may not, therefore, compel arbitration under an implied conduct theory.
Fourth, under certain circumstances, a non-signatory may enforce an arbitration agreement contained in a contract *32 that it signed on behalf of its principal. See Barrowclough v. Kidder Peabody & Co., 752 F.2d 923, 938-39 (3d Cir. 1985); Fisser v. International Bank, 282 F.2d 231, 234-35 (2d Cir.1960); Continental U.K. Ltd. v. Anagel Confidence Compania Naviera, S.A., 658 F. Supp. 809, 813 (S.D.N.Y.1987). Courts apply "common law principles of agency ... to maritime contracts and obligations arising under the [Act]." Getty Oil Co. v. Norse Management Co. (PTE) Ltd., 711 F. Supp. 175, 176 (S.D.N.Y.1989); McAllister Bros., Inc. v. A & S Transp. Co., 621 F.2d 519, 524 (2d Cir.1980).[2] Signing an arbitration agreement as an agent for a disclosed principal is not sufficient to render the agent a party to the arbitration clause. See Flink v. Carlson, 856 F.2d 44, 46 (8th Cir.1988); Interocean Shipping, 523 F.2d at 538; Overseas Oil Transp. Corp. of Panama v. Phibro Energy, A.G., No. 88 Civ. 1302, 1990 WL 130773, LEXIS 11763 (S.D.N.Y. Sep. 7, 1990); Restatement (Second) of Agency § 320 (1958). Because Keystone signed the agreement for its disclosed principal, Kurz, Keystone is not a party to the agreement and has no authority to enforce the arbitration clause.
CONCLUSION
For the foregoing reasons, Keystone's and Kurz's petition to compel arbitration is denied.
SO ORDERED
NOTES
[1] Petitioners apparently cite these cases for the proposition that a broad arbitration clause automatically binds non-signatories if the dispute falls within the scope of the clause. In their memorandum of law, petitioners state that "[b]road-based Charter Party agreements to arbitrate `all disputes ... arising out of this charter binds not only the signatories, but all those who subsequently consent to be bound by its terms.'" Petitioners' Memorandum of Law, at 6 (quoting Lowry & Co. v. S.S. Le Moyne D'Iberville, 253 F. Supp. 396 (S.D.N.Y.1966)). Petitioners fail to recognize that these decisions involve situations where the non-signatory and signatory had a separate contractual relationship that incorporated another contract's arbitration clause by reference. No such relationship exists here. Moreover, it is clear that "a non-party to an arbitration agreement cannot `make an arbitrable claim out of a non-arbitrable one by assigning it to a person having a broad any dispute arbitration contract with the party against whom the claim lies.'" Fried, Krupp, GmbH v. Solidarity Carriers, Inc., 674 F. Supp. 1022, 1027 (S.D.N.Y.1987) (quoting Caribbean S.S. Co., S.A. v. Sonmez Denizcilik ve Ticaret A.S., 598 F.2d 1264, 1266-67 (2d Cir.1979)).
[2] Two cases have held that traditional agency principles do not govern an arbitration analysis involving entities that enjoy a parent-subsidiary relationship. See Itel Containers Int'l Corp. v. Atlanttrafik Express Serv. Ltd., 725 F. Supp. 1303, 1310 (S.D.N.Y.1989), aff'd in part and vacated in part on other grounds, 909 F.2d 698 (2d Cir.1990); Kashfi v. Phibro-Salomon, Inc., 628 F. Supp. 727, 735 (S.D.N.Y.1986). These courts use the alter ego doctrine to determine when a non-signatory may enforce an arbitration agreement. Because Keystone and Kurz do not enjoy a parent-subsidiary bond, however, traditional agency law controls the arbitration analysis. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1572895/ | 971 S.W.2d 611 (1998)
Joan Lindsey COLEMAN, Individually and as Personal Representative of the Estate of Bradley Vale Lindsey, et al., Appellants,
v.
EQUITABLE REAL ESTATE INVESTMENT MANAGEMENT, INC., et al., Appellees.
No. 05-96-00667-CV.
Court of Appeals of Texas, Dallas.
March 31, 1998.
*613 R. Windle Turley, Tahira Khan Merritt, Law Offices of Windle Turley, P.C., Dallas, Alfred W. Ellis, Dallas, for Appellants.
Frank Finn, Rachelle Hoffman Glazer, Lisa A. Schumacher, Scott Patrick Stolley, Thompson & Knight, P.C., Dallas, for Appellees.
Before LAGARDE, WHITTINGTON and ROACH, JJ.
OPINION
ROACH, Justice.
In this premises liability case, appellants Joan Lindsey Coleman and Gerald and Nanci Armstrong appeal the trial court's summary judgment in favor of appellees Equitable Real Estate Investment Management Inc. and United Commercial Management, Inc. In two points of error on appeal, appellants complain the trial court erred in concluding, as a matter of law, that (i) appellees owed no duty in this case and (ii) appellees' conduct was not a proximate cause of the injuries suffered. For the reasons set forth below, we overrule both points of error and affirm the trial court's judgment.
Factual Background
On Sunday, April 4, 1994, Brad Vale Lindsey and James Armstrong were working at Blockbuster Video in Casa Linda Shopping Center. Armstrong was the store's assistant manager; Lindsey was a customer service representative. The store, which had been open about one week, closed at midnight. When Lindsey failed to return home after work, his mother went to the store to check on him. The store's lights were on, but the entrance door was locked. Hours later, the police gained entry into the store and found both employees fatally shot. The police impounded a videotape from the store's surveillance cameras that depicted what occurred that night. The videotape had no audio.[1]
The videotape showed that Armstrong, as required by Blockbuster policy, locked the store's doors at midnight. About five minutes later, he checked out the last two customers. After completing the transaction, Armstrong unlocked the exit door, let the customers out, and relocked the exit door. No customers remained in the store. Armstrong then walked around the counter to the door of the entrance vestibule. The door did not have an inside handle, and Armstrong pried it open and unlocked the exterior entrance door. In violation of Blockbuster policy, Armstrong then let in an unidentified man and relocked the door. Armstrong, who "appeared comfortable" with the man, walked with him to the cash register. Both men appeared to take something from the cash register. Lindsey, who had been working *614 in another area of the store when Armstrong let the man in, walked up to the counter where Armstrong and the man were standing. Armstrong and the man stepped out of the diamond-shaped counter into the exit corridor. Lindsey "raise[d] his hands" and then removed something from his pocket and handed it to the assailant. The object appeared to be an envelope.
After that, the man placed Armstrong and Lindsey in front of him and followed them to the back office, where the tape showed the man with a gun for the first time. Armstrong went to the safe, rattled the handle, and shrugged his shoulders, as if he were unable to open the safe. At that point, the tape showed the gunman shoot Armstrong. The tape does not show Lindsey being shot.
The gunman left the office and attempted to leave the store through the entry vestibule. He noticed the door had no handle, circled the diamond-shaped counter, and left the store through the exit door. The gunman was "moving at a very calm, normal pace as if you just paid for a video and walked out of the store." It was determined that about $300 was missing. Some Blockbuster employees speculated that Armstrong knew the assailant.
An earlier portion of the videotape showed that the gunman had been in the store about thirty minutes before closing that night. Armstrong had an armful of tapes and was putting them back on the shelves. The assailant selected a tape and approached Lindsey, who was behind the counter. After an interaction with Lindsey, the assailant put the tape on the counter.
At the time of the incident, Blockbuster did not have in-store security officers and appellees Equitable and United (the shopping center's asset and property managers) provided no security officers in the common areas on Sunday nights. Appellees' security contract provided for one uniformed, unarmed guard to patrol on foot from noon to 7 a.m. Monday through Saturday and from noon to 6 p.m. on Sunday. The guard was to report daily to the shopping center manager, assist customers with problems such as a stalled car, assist tenants and employees to and from their cars if requested, and watch for any type of safety hazards, mischief, or other activity in the common areas.
The parents of the employees (appellants) sued appellees for negligence, alleging they failed to provide adequate security when they knew or should have known of several prior incidents of criminal activity in the area.[2] Thereafter, appellees moved for summary judgment on the grounds that (i) they owed no duty to the Blockbuster employees because they had no right of control over Blockbuster's operation, i.e, the security of the leased premises and (ii) no acts or omissions by them proximately caused the deaths of the Blockbuster employees. The trial court granted summary judgment in appellees' favor without specifying the basis for its ruling. This appeal ensued.
Standard of Review
Summary judgment for a defendant is proper only when the defendant negates at least one element of each of the plaintiff's theories of recovery or pleads and conclusively establishes each element of an affirmative defense. Science Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). Once the defendant produces evidence entitling it to summary judgment, the burden shifts to the plaintiff to present evidence creating a fact issue. Walker v. Harris, 924 S.W.2d 375, 377 (Tex.1996).
In reviewing the granting of a summary judgment, we take as true all evidence favorable to the nonmovant and indulge every reasonable inference in the nonmovant's favor. Science Spectrum, Inc., 941 S.W.2d at 911. When the trial court does not specify the grounds upon which it granted summary judgment, we affirm if any of the movant's grounds support the summary judgment. Carr v. Brasher, 776 S.W.2d 567, 569 (Tex. *615 1989); Texas Stadium Corp. v. Savings of Am., 933 S.W.2d 616, 618 (Tex.App.Dallas 1996, writ denied). If a movant does not show it is entitled to judgment as a matter of law, we must remand the case for a trial on the merits. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); Texas Stadium Corp., 933 S.W.2d at 618.
Duty
In the first point of error, appellants complain the trial court erred in granting summary judgment on the basis that appellees owed no duty to provide security to the Blockbuster employees killed inside the store. In particular, appellants argue summary judgment was improper because the summary judgment evidence showed that appellees knew or should have known of prior criminal activity, including violent crime, in the shopping center area. Appellants argue that appellees nevertheless failed to provide any security in the common areas on the night of the murder and thus breached their duty.
Appellees counter they had no duty to protect Blockbuster's employees from criminal acts occurring inside the Blockbuster store. They urge any duty they may have had was dependent on control of security of the premises where the crime was committed. Specifically, they contend any duty they may have had to provide security extended only to the common areas of the shopping center. Because they had no control over the security of the Blockbuster premises, they argue they had no duty to prevent the murders in this case. We agree.
The threshold inquiry in a negligence case is whether the defendant owes a legal duty to the plaintiff. Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995). The plaintiff must establish both the existence and the violation of a duty owed to the plaintiff by the defendant to establish liability in tort. Id. The existence of a duty is a question of law for the court to decide from the facts surrounding the occurrence in question. Id.
As a general rule, a person has no legal duty to protect another from the criminal acts of third parties or to control the conduct of another. Walker, 924 S.W.2d at 377; Centeq, 899 S.W.2d at 197. Similarly, a lessor generally has no duty to tenants or their invitees for dangerous conditions on the leased premises. Johnson County Sheriff's Posse, Inc. v. Endsley, 926 S.W.2d 284, 285 (Tex.1996); Holt v. Reproductive Servs., Inc., 946 S.W.2d 602, 606 (Tex.App.Corpus Christi 1997, writ denied). This general rule stems from the notion that a lessor relinquishes possession or occupancy of the premises to the lessee. Endsley, 926 S.W.2d at 285; Holt, 946 S.W.2d at 606.
This general rule, however, is not absolute. One who controls the premises does have a duty to use ordinary care to protect invitees from criminal acts of third parties if he knows or has reason to know of an unreasonable and foreseeable risk of harm to the invitee. Lefmark Management Co. v. Old, 946 S.W.2d 52, 53 (Tex.1997); Centeq, 899 S.W.2d at 197; Exxon Corp. v. Tidwell, 867 S.W.2d 19, 21 (Tex.1993). But, as the Texas Supreme Court has emphasized, this duty is commensurate with the right of control over the property. Lefmark, 946 S.W.2d at 54; Exxon, 867 S.W.2d at 21. Thus, a lessor who retains control over premises used in common by different occupants of his property has a duty to keep those common areas reasonably safe for the tenants and their guests. Endsley, 926 S.W.2d at 285; Holt, 946 S.W.2d at 606. Likewise, a tenant is responsible for so much of the property as he controls pursuant to his lease. See Holt, 946 S.W.2d at 606.
As the cases cited above indicate, control is the dispositive factor in determining whether a legal duty should be imposed on appellees in this case. Specifically, we focus on "who had specific control over the safety and security of the premises, rather than on the more general right of control over operations." Centeq, 899 S.W.2d at 199; Exxon, 867 S.W.2d at 23. Before we will impose a duty against appellees to protect against the criminal acts of third parties, we must find appellees had specific control over the security of the premises where the criminal act took place. See Centeq, 899 S.W.2d at 199; Exxon, 867 S.W.2d at 23.
*616 Included in appellees' summary judgment evidence was the shopping center lease.[3] Although the lease does not specifically address "security," it does set forth the rights and obligations of each party with respect to the demised premises and common areas. Under the lease, the Casa Linda owners relinquished possession of and control over the Blockbuster premises to Blockbuster for the purpose of selling and renting prerecorded audio and/or video products. With respect to those leased premises, appellees, as property managers, had only a limited right of access. Specifically, article 21 of the lease provided:
Upon reasonable prior notice, but in no event less than twenty-four hours (24) (except in the case of an emergency), Landlord may enter the Demised Premises during Tenant's business hours for purposes of inspection, to show the Demised Premises to prospective purchasers and lenders, or to perform maintenance and repair obligations imposed upon the Landlord by this Lease....
In contrast, appellees retained control over the common areas and were obligated to maintain those areas "in good order and repair." LaRee Stein, director of property management for United, testified that tenants were responsible for the security of their own premises and she stressed that appellees did not maintain keys to its tenants' premises, including Blockbuster.
We conclude this evidence established that appellees had no control over security decisions of the leased premises where the murders occurred. The burden, therefore, shifted to appellants to present some evidence raising a fact issue. Although appellants presented hundreds of pages of deposition testimony and affidavits as summary judgment proof, none of this evidence even remotely suggests that appellees retained any control over the security of the leased Blockbuster store. Instead, appellants rely on appellees' control over the common areas to establish a duty to protect the Blockbuster employees inside the store. We cannot agree. If appellees did not have any right to control the security of the Blockbuster premises, they cannot have any duty to provide the same. Exxon, 867 S.W.2d at 23 ("If Exxon did not have any right to control the security of the station, it cannot have any duty to provide the same."); cf. Spohn Health Sys. Corp. v. Silva, 960 S.W.2d 654, 654, 41 Tex. Sup.Ct. J. 149, 149 (Dec. 4, 1997) (per curiam) (disapproving language in court of appeals's decision to extent it implied person has control of non-owned premises merely because that person owns adjacent property).
The murders in this case did not occur on the portion of the premises over which appellees retained control of security decisions, i.e., the common areas. Rather, the criminal conduct occurred inside the locked Blockbuster store, an area over which Blockbuster had specific control of security. Under such circumstances, we cannot conclude appellees had a duty to protect Blockbuster employees from criminal acts occurring inside the store once it was closed and locked. Accordingly, we overrule the first point of error.
Proximate Cause
Even assuming appellees owed a duty to appellants and breached that duty, we would nevertheless conclude summary judgment was proper because there was no proximate cause in this case. In Texas, proximate cause involves two distinct elements: cause-in-fact and foreseeability. See Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 549 (Tex.1985); Benser v. Johnson, 763 S.W.2d 793, 795 (Tex.App.Dallas 1988, writ denied). The term "cause-in-fact" contemplates that the defendant's negligent act or omission was a substantial factor in bringing about the plaintiff's injury and without it no harm would have occurred. See Travis v. City of Mesquite, 830 S.W.2d 94, 98 (Tex.1992) (op. on reh'g); Nixon, 690 S.W.2d at 549. Foreseeability means that the actor, as a person of ordinary intelligence, should have anticipated the dangers his negligent *617 act created for others. Nixon, 690 S.W.2d at 549-50; Berly v. D & L Sec. Servs., & Investigations, Inc., 876 S.W.2d 179, 182-83 (Tex. App.Dallas 1994, writ denied). Foreseeability does not require the actor to anticipate the precise manner in which an injury will occur; it only requires that (i) the injury be of such a general character as might reasonably have been anticipated, and (ii) the injured party be so situated with relation to the wrongful act that injury to him or to one similarly situated might reasonably have been foreseen. Berly, 876 S.W.2d at 183.
There can be more than one proximate cause of an injury, and all persons whose negligent conduct contributed to the injury are responsible for it. See Travis, 830 S.W.2d at 98; El Chico Corp. v. Poole, 732 S.W.2d 306, 313 (Tex.1987); see also Bel-Ton Elec. Serv., Inc. v. Pickle, 877 S.W.2d 789, 795 (Tex.App.Dallas 1994) (recognizing there can be concurrent proximate causes of accident), rev'd on other grounds, 915 S.W.2d 480 (Tex.1996); Berly, 876 S.W.2d at 182. Although proximate cause is typically a question of fact, the lack of it may be established as a matter of law where the circumstances are such that reasonable minds cannot arrive at a different conclusion. Lear Siegler, Inc. v. Perez, 819 S.W.2d 470, 471-72 (Tex.1991); Bel-Ton, 877 S.W.2d at 795.
In their summary judgment motion, appellees argued Armstrong's security breach was an unforeseeable act that destroyed any causal connection between their negligence and the employees' deaths. We agree.
Texas courts distinguish between a new and independent cause, which destroys the causal connection between the original negligent act or omission and the complained-of injury, and a "concurrent act," which cooperates with the still-persisting original act in proximately causing the injury and is itself a proximate cause of the injury. See Boorhem-Fields, Inc. v. Burlington Northern R.R. Co., 884 S.W.2d 530, 536 (Tex. App.Texarkana 1994, no writ) (citing Bell v. Campbell, 434 S.W.2d 117, 122 (Tex.1968)). In determining whether the later negligent act is, in fact, a new and independent cause, Texas courts focus on the foreseeability of the intervening party's actions. See Aerospatiale Helicopter Corp. v. Universal Health Servs., Inc., 778 S.W.2d 492, 497 (Tex.App. Dallas 1989, writ denied), cert. denied, 498 U.S. 854, 111 S.Ct. 149, 112 L.Ed.2d 115 (1990). If the cause could have been foreseen, it does not "break" the chain of causation and relieve the original tortfeasor of liability. See Northwest Mall, Inc. v. Lubri-Lon Int'l, Inc., 681 S.W.2d 797, 803-04 (Tex. App.Houston [14th Dist.] 1984, writ ref'd n.r.e.). As stated in Aerospatiale:
In applying the test of foreseeability to situations where a negligently created pre-existing condition combines with a later act of negligence causing an injury, there is a distinction between a situation in which one has created a dangerous condition and a later actor observes, or by the circumstances should have observed, the existence of the dangerous condition and a situation in which the dangerous condition is not apparent and cannot be observed by the actor. In regard to the first situation, the intervening act interrupts the natural sequence of the events and cuts off the legal effect of the negligence of the initial actor. This is based upon the premise that it is not reasonable to foresee or expect that one who actually becomes cognizant of a dangerous condition in ample time to avert the injury will fail to do so.
Aerospatiale, 778 S.W.2d at 497 (quoting Wolf v. Friedman Steel Sales, Inc., 717 S.W.2d 669, 673 (Tex.App.Texarkana 1986, writ ref'd n.r.e.)).
In Aerospatiale, this Court considered the issue of proximate cause in the crash of a twin-engine helicopter. After take-off, the helicopter's engine cowling (or cover) separated from the aircraft and snagged a coiled steel cable, essentially leaving the aircraft operating with one engine. The pilot, however, ignored procedures in the operator's flight manual and bypassed an additional safety feature, which resulted in the helicopter crashing. We concluded the pilot's actions in this regard were unforeseeable by the helicopter's manufacturer and concluded that the separation of the cowling was not, as a matter of law, a proximate cause of the crash.
Likewise, we conclude Armstrong's act was an unforeseeable event that was of such *618 a nature as to break the natural sequence of events and create a new and independent cause in this case. According to James McCoy, the Blockbuster store manager at the time of the murders, the Blockbuster entrance and exit doors were to be locked at midnight. If there were customers remaining in the store, McCoy testified that an employee would check them out, unlock the door so the customers could leave, and then relock the door. Additionally, Blockbuster policy prohibited allowing anyone to be let into the store once the doors were locked. Armstrong had been trained with respect to this policy. Further, according to McCoy, he and Armstrong had discussed that very policy earlier on the day of the murder, and McCoy reiterated that no one was allowed in the store after midnight.
In this case, the evidence shows that Armstrong followed policy and locked the Blockbuster doors at midnight. After that, however, Armstrong went around the vestibule, pried open the interior entrance door, unlocked the exterior entrance door, and opened it to allow an unidentified man to enter the store. This deliberate violation of safety policy is simply extraordinary in light of the fact that Armstrong had been told that same day not to open the doors after midnight. In essence, Armstrong opened the doors to a locked store late at night, after hours, knowing that an undetermined amount of cash was on hand. In so doing, he defeated the very purpose of the policy put in place for his and other employees' safety. If Armstrong had followed prescribed safety policy, the assailant would not have been able to gain access to the store and the murders inside the store would not have occurred. Under these circumstances, we conclude Armstrong's actions were not foreseeable to appellees and were of such a character as to break the natural sequence of events, thereby creating a new and independent cause. We conclude the trial court properly granted summary judgment to appellees.
We affirm the trial court's judgment.
NOTES
[1] Although the summary judgment evidence in the trial court included the videotape, the videotape was not included in the appellate record. Nevertheless, the appellate record contains the affidavits and depositions of various witnesses detailing what was contained on the videotape.
[2] Appellants also sued Blockbuster Entertainment Corporation, Blockbuster Videos, Inc., and Firstwatch Corporation. Firstwatch was the security company for the shopping center at the time of the incident. Appellants settled their claims against the Blockbuster defendants and nonsuited their claims against Firstwatch. This appeal involves only the claims against Equitable and United.
[3] The lease was between Equitable Life Assurance Society of the United States, Mutual of America Life Insurance Company, CLDT Corporation, and Equitable Variable Life Insurance Company, as tenants in common, and Blockbuster Videos, Inc., as tenant. Appellees acted as the owners' delegates to manage the property. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1666464/ | 728 So.2d 1273 (1999)
Lawrence and Marie TRAHAN
v.
Robert L. McMANUS, M.D. et al.
No. 97-C-1224.
Supreme Court of Louisiana.
March 2, 1999.
Rehearing Denied April 1, 1999.
*1274 Joel E. Gooch, Lafayette, for Applicant.
J. Minos Simon, Lafayette, for Respondent.
Robert L. Roland, Chris LeBlanc, Baton Rouge, for Amicus Curiae Louisiana Hosp. Ass'n.
Larry M. Roedel, David A. Woolridge, Jr., Baton Rouge, for Amicus Curiae Louisiana Dental Ass'n.
Amy W. Phillips, Baton Rouge, for Amicus Curiae Louisiana State Medical Society.
Marc W. Judice, Lafayette, for Amicus Curiae Medical Protective Company.
*1275 LEMMON, Justice.[*]
The parents of Terry Trahan filed this action to recover damages under La. Civ. Code art. 2315.6 for their mental anguish and emotional distress resulting from their sons injury and death. The principal issues are (1) whether this action falls within the limitations of the Medical Malpractice Act, and (2) whether "bystander damages" are recoverable when the "event" observed by the plaintiffs that allegedly caused their mental anguish was the negligent omission of the doctor who failed to treat their son in the hospital emergency room for serious injuries sustained in an automobile accident.
Facts
Plaintiff Marie Trahan received a telephone message that her thirty-six year-old son, who was living with his parents at the time, had been injured in a one-vehicle accident. She went to the hospital emergency room, where her son appeared to be in pain. However, the doctor relieved Mrs. Trahan's anxiety by assuring her that her son was not seriously injured and simply needed bed rest. The doctor discharged the son about two and one-half hours after he had entered the hospital.
Unfortunately, the doctor had read the wrong chart, and Terry Trahan, as suggested by the vital signs on his chart, was suffering from shock and internal bleeding. At home, Terry Trahan complained of severe pain to both of his parents, and his condition continued to worsen. He died in the presence of his parents about seven hours after his discharge from the hospital.
Two separate actions arose from the alleged malpractice. Terry Trahan's widow, from whom he was separated at the time of his death, filed a survival and wrongful death action under La. Civ.Code arts. 2315.1 and 2315.2 against the doctor and the hospital on behalf of herself and their children. The doctor and his insurer settled the claim for his maximum exposure of $100,000 under the Medical Malpractice Act, and the widow and children reserved their rights against the Patient's Compensation Fund as to their claim for additional damages.[1]
Terry Trahan's parents separately filed the present action under La. Civ.Code art. 2315.6 against the doctor and his insurer.[2] Defendants responded with (1) an exception of no right of action, contending that plaintiffs were not within the category of persons entitled to emotional distress damages under Article 2315.6, since Terry Trahan was survived by a spouse and children; and (2) an exception of no cause of action, contending that the law did not authorize recovery of bystander damages under Article 2315.6 under the facts of this case, since plaintiffs did not witness the event that caused the injury to their son. The trial court maintained the exceptions, but the court of appeal reversed and remanded the case for trial on the merits. 94-167 (La.App. 3d Cir.3/22/95); 653 So.2d 89, cert. denied, 95-1018 (La.6/2/95); 654 So.2d 1112.
After trial, the jury, although finding the doctor was negligent, returned a verdict in favor of defendants, based on the additional finding that Terry Trahan did not suffer, as a result of the doctors negligence, "any injury that would not otherwise have been incurred." The jury thus apparently accepted defendants' argument that Terry Trahan would have died from the automobile accident injuries, even if he had been treated at the hospital.
The court of appeal reversed, with one judge dissenting. 96-669 (La.App. 3d Cir.2/19/97); 689 So.2d 696. First reiterating its earlier decision that plaintiffs had a cause of action for Article 2315.6 damages,[3]*1276 the court noted that the injury-causing event was the doctor's negligent discharge of the patient, which was viewed by the mother and which caused her severe and debilitating anguish. As to the father, the court stated that "the continuing event was visited almost instantaneously" on the father who was compelled to witness the distressing events of the final seven hours of his sons life. Id. at 5-7; 689 So.2d at 701.
The intermediate court further held that the trial judge erred in instructing the jury on the law and burdens of proof in a medical malpractice case, because this case did not fall under the Medical Malpractice Act. The court concluded that the Act only applies to a claim by the patient against a qualified health care provider.
The court then reviewed the record de novo, concluding that the doctor's negligence was a cause-in-fact of Terry Trahans death.[4] The court determined from the record that plaintiffs had proved Terry Trahan would have survived if the doctor had rendered proper care timely. Further determining that plaintiffs had proved their emotional distress was serious, severe and debilitating, the court awarded damages of $100,000 to each plaintiff.
On defendant's application, this court granted certiorari. 97-1224 (La.6/30/97); 696 So.2d 996.
Action for Article 2315.6 Damages under Medical Malpractice Act
The outset complaint to this court by defendants and amici relates to the holding by the court of appeal that this is not a medical malpractice action. The intermediate court made that ruling in the context of its determination that the trial judge erred when he instructed the jury on La.Rev.Stat. 9:2794 pertaining to the required elements of proof and the burden of proof in a medical malpractice action. Reasoning that plaintiffs were not patients of the defendant doctor and were not parties to a health care contract, the court held that the Medical Malpractice Act does not apply to an action by a third party for the mental anguish damages resulting from a patient's injury or death caused by the negligence of the patient's heath care provider. We disagree.
The cause of action for damages resulting from an injury to or death of a patient caused by a doctor is provided by Civil Code Articles 2315, 2315.1 and 2315.2. The Medical Malpractice Act simply provides procedures for and limitations on such causes of action when the doctor is a qualified health care provider. Similarly, Article 2315.6 provides a cause of action to specified persons for mental anguish damages resulting from an injury to or death of a patient caused by a doctor, subject to the procedures and limitations of the Medical Malpractice Act, when the specified relatives of the patient incur the mental anguish within the circumstances outlined in Article 2315.6.
The Act defines "malpractice" as follows:
"Malpractice" means any unintentional tort or any breach of contract based on health care or professional services rendered, or which should have been rendered, by a health care provider, to a patient, including failure to render services timely and the handling of a patient, including loading and unloading of a patient, and also includes all legal responsibility of a health care provider arising from defects in blood, tissue, transplants, drugs and medicines, or from defects in or failures of prosthetic devices, implanted in or used on or in the person of a patient.
*1277 La.Rev.Stat. 40:1299.41 A(8) (emphasis added).
The conduct complained of in the present case was an unintentional tort arising out of a qualified health care provider's failure to render professional services which should have been rendered to a patient. Each of the patient's parents was a "person having a claim under this Part for bodily injuries to or death of a patient on account of malpractice...." La.Rev.Stat. 40:1299.41 E(1).
In Hutchinson v. Patel, 637 So.2d 415, 428 (La.1994), a case in which a health care provider committed a tort against a person who was not his patient, this court noted that while the Medical Malpractice Act applies exclusively to claims arising from injury to or death of a patient, the claimant need not be a patient, and non-patient claimants may include representatives of a patient acting on the patient's behalf and "other persons with claims arising from injuries to or death of a patient." That language applies to the facts of the present case.
In summary, nothing in the Medical Malpractice Act distinguishes between damage claims by the patient under Article 2315, damage claims by statutory survivors of the patient under Articles 2315.1 and 2315.2, and damage claims by statutorily-limited relatives of the patient under Article 2315.6. The fact that the damages recoverable under Article 2315.6 are limited to mental anguish damages and to specifically required facts and circumstances does not serve to remove Article 2315.6 claims from the applicability of the Medical Malpractice Act, as long as the mental anguish arises from the injury to or death of a patient caused by the negligence of a qualified health care provider.
Recovery of Damages under Article 2315.6
For many years, Louisiana and other jurisdictions declined to recognize a cause of action for recovery of mental anguish damages based on negligent infliction of emotional distress when the claimant's mental anguish resulted from a tort-caused physical injury to another. See, e.g., Black v. Carrollton RR Co., 10 La. Ann. 33 (1855). Recovery in early cases was allowed only for mental anguish that was "parasitic" to a physical injury, when the claimant could show some sort of "impact," however slight, upon his person. See W. Page Keeton et al., Prosser & Keeton on Torts, 363 (5th ed.1984). Later cases allowed recovery for mental anguish when there was physical injury to a person other than the plaintiff, if the plaintiff was in the "zone of danger" of the harm that befell the other person. Id. at 365. The common rationale for limiting recovery to these situations was that, absent impact or a near miss, the defendant could not reasonably have anticipated any harm to the plaintiff and therefore should not be held liable for such harm. Id.
Probably the first reported modern case to allow a claim for bystander damages beyond the limits of the impact or zone of danger rules was Dillon v. Legg, 68 Cal.2d 728, 69 Cal.Rptr. 72, 441 P.2d 912 (1968). In Dillon, the California Supreme Court allowed a claim for emotional distress damages by a mother who saw her young daughter run over and killed by an automobile. The court stated that the mothers "shock resulted from a direct emotional impact upon plaintiff from the sensory and contemporaneous observance of the accident." Id. at 920 (emphasis added).
Prior to 1990, Louisiana followed the preDillon common law jurisprudence, even though mental anguish damages resulting from injury to another person literally fell within the scope of La. Civ.Code art. 2315. This court reconsidered that position in Lejeune v. Rayne Branch Hosp., 556 So.2d 559 (La.1990), in which the plaintiff's husband was hospitalized in a comatose condition. The plaintiff entered the hospital room and observed her husband shortly after a nurse had cleaned some of the blood from wounds caused by rats chewing on her husband's face, neck and legs. Although the plaintiff was neither physically injured nor exposed to the physical injury that befell her husband, this court, applying the duty-risk analysis, held that the risk to a person of mental anguish damages occasioned by the negligent infliction of injury to a third person may, under certain circumstances, fall within the scope of the hospital's duty under Article 2315. The decision outlined four circumstances under which mental anguish damages *1278 may be recovered, the one pertinent to the present case being:
A claimant need not be physically injured, nor suffer physical impact in the same accident in order to be awarded mental pain and anguish damages arising out of injury to another. Nor need he be in the zone of danger to which the directly injured party is exposed. He must, however, either view the accident or injury-causing event or come upon the accident scene soon thereafter and before substantial change has occurred in the victim's condition.[5]
Id. at 569-70 (emphasis added).
The following year, the Legislature codified the Lejeune decision by enacting La. Civ.Code art. 2315.6, which allows certain "persons who view an event causing injury to another person, or who come upon the scene of the event soon thereafter [to] recover damages for mental anguish or emotional distress that they suffer as a result of the other person's injury...."[6] La. Civ.Code art. 2315.6 A.
If recovery of mental anguish damages resulting from negligently caused physical injury to another person had been allowed prior to the Lejeune decision, a tortfeasor, under the literal terms of Article 2315, might have been held liable to repair any damages remotely caused by his or her fault. However, liability for fault does not extend to all damages that result from that fault. Hill v. Lundin & Assoc., 260 La. 542, 256 So.2d 620 (1972). As a matter of policy, the courts, under the scope of duty element of the duty-risk analysis, have established limitations on the extent of damages for which a tortfeasor is liable. See, e.g., PPG Industries v. Bean Dredging, Inc., 447 So.2d 1058 (La.1984), in which this court held that the liability of a dredging contractor who negligently damaged a natural gas pipeline does not extend to the economic losses incurred by the pipeline owner's contract customer who was required to obtain gas at a higher price from another source during the period of repair of the damaged pipeline. This court noted that the list of possible victims and the extent of economic damages might be extended indefinitely unless the court made a policy decision placing some limitation on the recovery of damages.
The Lejeune decision, while recognizing for the first time a claimant's right to recover mental anguish damages resulting from negligently caused physical injury to another, carefully delineated limitations on bystander recovery. But for this limitation, liability might have been extended, under the literal terms of Article 2315, to allow recovery of mental anguish damages by an acquaintance of the tort victim who learned of the injury by telephone call several days after the injury-causing event. The Legislature, in codifying the Lejeune decision, placed further limitations by specifying the category of persons who may recover. More significantly, the Legislature prohibited any recovery of mental anguish damages resulting from the negligent infliction of injury to another, except under the circumstances outlined in Article 2315.6.[7] Accordingly, this right of recovery has been recognized jurisprudentially and legislatively to exist only under very limited circumstances.
*1279 Article 2315.6 Damages in the Present Case
In the Dillon and Lejeune cases, the plaintiffs suffered mental distress contemporaneously with observing the event that immediately caused observable injury to another person. Emotional distress usually occurs contemporaneously with the observance of the event when the event is a negligent act by the tortfeasor. However, when the event is a negligent omission by the tortfeasor, such as frequently occurs in medical malpractice cases, the applicability of Article 2315.6 becomes more problematic for recovery of damages for mental distress resulting from observing an injury-causing event or arriving on the scene of the injury soon after the event while the victim is still in the condition, caused by the event, that creates emotional distress in the observer.
A historical review of cases allowing recovery of bystander damages shows that bystander damages are intended to provide a remedy when severe mental distress arises directly and immediately from the claimant's observing a traumatic injury-causing event to the direct victim. In order to recover, the claimant who observes the injury-causing event (or soon thereafter comes upon the scene of the injury) must be contemporaneously aware that the event has caused harm to the direct victim. The requirement of temporal proximity has always been at the root of allowing recovery for emotional distress caused by an injury to another, see Prosser & Keeton at 366, whether recovery is limited to one who actually witnessed a traumatic injury (as in Dillon), or whether recovery is extended to one coming soon upon the traumatic injury, as under the Louisiana rule. Recovery of damages for mental anguish has almost never been extended to one who observed the victim's suffering at a place other than where the injury-causing event occurred or at a time not closely connected to the event.
The requirements of Article 2315.6, when read together, suggest a need for temporal proximity between the tortious event, the victim's observable harm, and the plaintiff's mental distress arising from an awareness of the harm caused by the event.[8] The Legislature apparently intended to allow recovery of bystander damages to compensate for the immediate shock of witnessing a traumatic event which caused the direct victim immediate harm that is severe and apparent,[9] but not to compensate for the anguish and distress that normally accompany an injury to a loved one under all circumstances.[10]
*1280 The present case is complicated by the fact that the event which caused the injury and death was the automobile accident. The doctor's negligence was failing to read the correct chart and to provide treatment to the patient based on the data on the chart, which arguably caused the patient to lose his chance of surviving the automobile accident injuries. This negligence of omission, while a concurrent cause of the death (if plaintiffs proved cause-in-fact, an issue we do not reach), was not an injury-causing event in which the claimant was contemporaneously aware that the event had caused harm to the direct victim, as required for recovery of Article 2315.6 damages.
Even under the view of the court of appeal that the injury-causing event was the doctor's negligent discharge of the patient, that event was not a traumatic event likely to cause severe contemporaneous mental anguish to an observer, even though the ultimate consequences were tragic indeed. There was no observable harm to the direct victim that arose at the time of the negligent failure to treat, and no contemporaneous awareness of harm caused by the negligence. The doctor's negligent discharge of the patient, accompanied by mistaken assurances that the patient would soon recover, was not itself an emotionally shocking event. Similarly, the father's witnessing his son's arrival home from the hospital was not the witnessing of an injury-causing event, or the coming soon after upon the scene of an injury-causing event, for which bystander damages may be awarded under the strict limitations of Article 2315.6.
Furthermore, the observance of the injury-causing event in the present case can hardly be compared to witnessing the car crash that caused the decedent's injuries in the first place. Nor can it even compare to the situation in Wartelle v. Women's and Children's Hosp., 97-0744 (La.12/2/97); 704 So.2d 778, where the medical malpractice, the awareness of harm, and the ensuing mental anguish were all very close in time.[11]
We are aware of the decisions in Ochoa v. Superior Court (Santa Clara County), 39 Cal.3d 159, 216 Cal.Rptr.661, 703 P.2d 1 (1985)[12] and Love v. Cramer, 414 Pa.Super. 231, 606 A.2d 1175 (1992),[13] which arguably are favorable to the initial decision by the court of appeal in the present case that overruled the exception of no cause of action. First, even if Ochoa and Love expanded the circumstances under which bystander damages may be recovered in accordance with Dillon v. Legg, those were jurisprudential expansions of prior case law. The courts in Ochoa and Love were not limited, as Louisiana courts are, by a legislative edict that allows recovery only under specified circumstances *1281 and prohibits recovery under any other circumstances.
Second, it is doubtful that plaintiffs in the present case could recover even if this court adopted the jurisprudence expansion of bystander damages expressed in Ochoa. The court in Ochoa recognized that while the doctor's negligent failure to render treatment was not itself traumatic, bystander damages were recoverable because the plaintiff observed the doctor's conduct and was contemporaneously aware that the conduct was causing harm to the patient. Contemporaneous awareness of harm caused by the event has been a critical factor for recovery in almost all bystander damages cases, and there was no such contemporaneous awareness in the present case.
We accordingly conclude that the severe mental anguish undoubtedly experienced by plaintiffs in this case did not occur within the limited circumstances prescribed by Article 2315.6 as the sole basis for awarding damages for mental anguish caused by negligent injury inflicted upon another person.
Decree
The judgment of the court of appeal is reversed, and plaintiffs action is dismissed.
JOHNSON, J., concurs in part and dissents in part and assigns reasons.
JOHNSON, J., Concurring in part, Dissenting in part.
I join with the majority in holding clearly for the first time that a claimant may recover bystander damages under the Louisiana Medical Malpractice Act ("the Act"), La.Rev. Stat. Ann. § 40:1299.41 et seq. Prior jurisprudence limited recovery to claims by the patient or statutory survivors for bodily injuries to or death of the patient on account of malpractice by a covered health care provider. Today, the majority recognizes that bystander damages are recoverable under the Medical Malpractice Act and that claimants may recover for their own mental anguish damages caused by negligence in the treatment of a patient.
Having determined that the Medical Malpractice Act covers the damages recognized in Lejeune v. Rayne Branch Hospital, 556 So.2d 559 (La.1990), the majority concludes that these plaintiffs are not entitled to recovery because the event which caused Terry Trahan's injury and death was the automobile accident. In my view, Dr. McManus' negligence in reading the wrong chart, and his discharge of the patient without correct diagnosis and treatment was the event which caused the patient to lose his chance of survival. This was the injury-causing event which resulted in claimants being entitled to recovery under La. Civ.Code art. 2315.6.
Dr. McManus testified that American Legion Hospital had diagnostic tools available which could detect internal bleeding and that he would have performed some of these procedures had he not read the wrong chart. His testimony was as follows:
Q. So, with modern medicine, and all the technology we have today, that type of condition [internal bleeding], if properly cared for, you'd reasonably expect that this guy's life could be saved. There would be a good chance to be saved, is that right?
A. I think there's a chance. I don't think that I could basically say that his life would be saved, but there was a chance.
Q. But as a reasonable medical probability, if you had applied yourself, and applied all the diagnostic tools to locate this and control this, as a reasonable medical probability, you would say this man's life could have been saved?
A. Yes, sir. (emphasis added).
Q. Now, as far as you're concerned, Doctor, this person, Mr. Trahan, as you stated earlier, was an otherwise healthy person. So, the cause of his death was a loss of blood that resulted from the lack of attention, is that correct?
A. Yes, sir. This is what was stated yesterday by the pathologist.
In light of the evidence adduced at trial, the Third Circuit was correct in reversing the jury's verdict and awarding damages to the plaintiffs. The testimony of Dr. McManus clearly demonstrates that but for the negligent discharge, Terry Trahan would *1282 have had an excellent chance of survival. The assertion by the majority that the event which caused Terry's injury and death was the automobile accident is untenable.
Finally, turning to the question of whether these plaintiffs have satisfied all the prerequisites for receiving bystander damages. Lejeune effectively established the criteria for recovery of mental pain and anguish damages arising out of injury to third persons. Before damages are awarded, the following must be proven:
1. A claimant must show that he either viewed the accident or injury causing event or arrived upon the accident scene soon thereafter and before the victim's condition substantially changed.
2. The direct victim of the traumatic injury must suffer such harm that it can reasonably be expected that one in claimant's position would suffer serious mental anguish from the experience.
3. The emotional distress sustained by claimant was serious and reasonably foreseeable, and compensation should only be allowed where the emotional injury is both severe and debilitating.
4. A close relationship existed between the direct victim and the claimant.[1]
The parties have stipulated that a close relationship existed between Terry and the plaintiffs. As such, the question is whether the remaining criteria are present. The facts in this case show that Mrs. Trahan picked her son up from the hospital, signed for his discharge and was personally instructed by McManus to put Terry to bed and watch over him. She then assisted Terry in getting into their vehicle. During their drive home, he kept falling on her. When they arrived at home, both Mr. and Mrs. Trahan walked Terry into the house. Once inside, Mrs. Trahan maintained a watchful eye over her son. Terry complained of back pain and discomfort. In an attempt to relieve the pain, Mrs. Trahan helped to turn him on his side. When it became apparent that Terry's condition was deteriorating, Mrs. Trahan called for an ambulance and accompanied her son back to the hospital. She further testified that because of Terry's death, she cannot sleep at night and constantly thinks about him. Despite getting very emotional, she and her husband visit Terry's grave almost daily. His death has left her in a state of constant grief for which she sought the professional help of Dr. Lyle LaCorgne, a licensed clinical psychologist.
Mr. Trahan was equally traumatized by his son's death. After assisting his son into the house and putting him in the bed, Mr. Trahan performed some outdoor chores and periodically checked on his son. Each time Mr. Trahan checked on Terry, he watched his son's face reflect a person experiencing severe pain. After hearing, "help me daddy my back is killing me", he turned Terry on his side and noticed that Terry's abdominal area had begun to swell. When he noticed that Terry was no longer breathing, Mr. Trahan desperately tried to provide Terry with what turned out to be his last few breaths by performing CPR.
The majority takes the position that there was no observable harm to Terry at the time of the negligent discharge, no contemporaneous awareness of harm caused by this negligence, and that the negligent discharge was not an emotionally shocking event. However, the record in this case shows that both plaintiffs viewed the graphic effects of the negligent discharge of their son. In essence, Terry died right before plaintiffs' eyes, as they desperately tried to relieve the agony he suffered during his last hours. Without question, the emotional distress they incurred as a result of his death was serious and it is reasonably foreseeable that parents would suffer emotional distress from witnessing the death of their son. The expert testimony proves that the plaintiffs experienced and continue to experience severe and debilitating emotional distress from Terry's death. The appellate court was correct in concluding that the injury-causing event was the negligent discharge of the patient and that Mr. *1283 and Mrs. Trahan suffered from emotional distress that was severe, debilitating, and foreseeable. The Court of Appeal's award to each plaintiff for mental anguish resulting from Terry's negligent discharge and death was correct.
For the aforementioned reasons, I concur in the portion of the judgment recognizing the right to recover 2315.6 bystander damages under the Medical Malpractice Act and respectfully dissent from the majority's holding that the plaintiffs have not met the prerequisites for recovery under La. Civ.Code art. 2315.6.
NOTES
[*] Marcus, J., not on panel. Rule IV, Part 2, § 3.
[1] The two actions were consolidated at one time, but later were severed. The attorneys at oral argument in the present case informed the court that the claims against the Fund for additional survival and wrongful death damages had been compromised.
[2] Plaintiffs had no right of action under Articles 2315.1 and 2315.2 because their son was survived by a spouse and children.
[3] Plaintiffs clearly had a right of action under Article 2315.6, which lists the tort victim's parents among the persons entitled to recover emotional distress damages. Unlike Articles 2315.1 and 2315.2, Article 2315.6 does not exclude parents from recovery when the tort victim is survived by a spouse or child.
[4] The court of appeal incorrectly applied the "law of the case" doctrine as an alternative basis for reversing the jury's factual determination regarding cause-in-fact. The earlier pronouncement by the court of appeal that the doctor's malpractice was a cause-in-fact of Terry Trahans death did not result from reviewing the evidence produced at a trial on the merits, but rather involved a review of a judgment on an exception of no cause of action for which the allegations of the petition were accepted as true only for the purpose of the exception. The jury's subsequent determination regarding cause-in-fact was based on evidence presented at trial, and the intermediate court's earlier pre-trial decision with respect to cause-in-fact did not constitute "the law of the case" in the review of the subsequent judgment on the merits.
[5] The other three circumstances listed by the court were:
The direct victim of the traumatic injury must suffer such harm that it can reasonably be expected that one in the plaintiff's position would suffer serious mental anguish from the experience.
The emotional distress sustained must be both serious and reasonably foreseeable to allow recovery.
There must be a close relationship between the claimant and the direct victim.
Id. at 569-70.
[6] Other requirements for recovery under Article 2315.6 are that the harm to the injured person must be severe enough that one could reasonably expect the observer to suffer serious mental distress; the plaintiff must suffer emotional distress that is "severe, debilitating, and foreseeable"; and the plaintiff must have a specifically enumerated relationship with the injured person. The Legislature thus defined the "close relationship" that had been left as an open question in Lejeune.
[7] Article 2315.6B provides in part that "[d]amages suffered as a result of mental anguish or emotional distress for injury to another shall be recovered only in accordance with this Article." (emphasis added).
[8] This approach is consistent with the duty-risk considerations articulated in Lejeune, where this court recognized the need to proceed somewhat conservatively in what is still a relatively new area of tort law. Lejeune, 556 So.2d at 568-69. In Lejeune, this court stated that "the essence of the tort is the shock caused by the perception of the especially horrendous event.... The emotional injury must be directly attributable to the emotional impact of the plaintiffs observation or contemporaneous sensory perception of the accident and immediate viewing of the accident victim." 556 So.2d at 570, n. 11 (internal quotations and citations omitted). For the same reasons, recovery is not permitted when the plaintiff has merely been informed of the accident. See, e.g., Chamberlain v. State, Through D.O.T.D., 624 So.2d 874 (La.1993) (no recovery when victim's parents learned of accident from others). A non-contemporaneous onset of mental distress is not within the scope of the tortfeasor's liability, as limited by this court in Lejeune and by the Legislature in Article 2315.6, particularly when the tortious event was not itself shocking when it happened.
[9] This was the view taken by the dissenting judge in the first appeal in the present case. 653 So.2d at 94. See also Simmons v. Hartford Ins. Co., 786 F.Supp. 574 (E.D.La.1992), in which the court, applying Louisiana law as it stood after the Lejeune decision but before the enactment of Article 2315.6, stated:
For purposes of this action, the Court need not address whether [the victim's father] experienced such distress from the entire experience surrounding his daughter's death. Instead, our focus is on whether he experienced severe and debilitating distress specifically from "the shock caused by the perception of the especially horrendous event." That is, did [the father] suffer severe and debilitating distress solely as a result of his initial perception of the aftermath of the accident?
It follows that "the claimant must realize, at the time he witnesses the event, that the injuries are serious." Otherwise, the distress would not arise from the perception of the event, but rather from being told of the seriousness of the event at some future time.
Id. at 578 (emphasis added).
[10] The damages awarded to plaintiffs in this case were really more like the damages commonly awarded in a wrongful death action. But wrongful death damages cannot be awarded under the guise of bystander damages when the claimant did not experience shock or other emotional distress contemporaneously with viewing a traumatic injury to the victim. Cf. Lloyd v. State, 395 So.2d 1385 (La.App. 1st Cir.1981) (plaintiffs were allowed mental distress damages for their mother's wrongful death, but were not allowed bystander damages for finding her mutilated body).
[11] Today's decision should not be read as necessarily precluding recovery of bystander damages in all medical malpractice contexts. In Wartelle v. Women's and Children's Hosp., 97-0744 (La.12/2/97); 704 So.2d 778, the court did not reach the issue raised in the present case, recovery of bystander damages having been denied based on the "non-person" status of the stillborn child. 704 So.2d at 784-85. However, the plaintiffs in that case not only witnessed the defendants negligent act and the stillbirth that immediately resulted, but they also suffered mental anguish from contemporaneous awareness of the harm to the direct victim.
[12] In Ochoa, the plaintiffs witnessed their thirteen-year-old son's dying of pneumonia in juvenile custody because the authorities refused to provide adequate care or to let the parents take their son to a private doctor.
[13] In Love, the plaintiff witnessed the misdiagnosis of her mother's heart disease, and her mother died of congestive heart failure seven weeks later. Focusing on negligence by omission, the court allowed recovery of bystander damages because plaintiff witnessed both the negligent omission and the injurious consequences which eventually occurred, reasoning that "[i]t is enough if the negligence constituted the proximate cause of the injury, and of the resulting emotional trauma." Id. at 1177.
[1] Under La. Civ.Code art. 2315.6, this class is restricted to close relatives such as the spouse, children, parents, grandparents and siblings. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1747434/ | 953 F.Supp. 84 (1997)
UNITED STATES of America, Plaintiff,
v.
Rita GLUZMAN, Defendant.
No. 96 Cr. 323 (BDP).
United States District Court, S.D. New York.
January 17, 1997.
*85 *86 Cathy Seibel, Diedre M. Daly, Asst. U.S. Attys., White Plains, NY, for U.S.
Lawrence Hochheiser, Michael Rosen, Diarmund White, New York City, for Defendant.
PARKER, District Judge.
On April 25, 1996, defendant Rita Gluzman ("Gluzman") was indicted for conspiring to commit interstate domestic violence and for committing interstate domestic violence in violation of 18 U.S.C. § 2261 (1996).[1] Gluzman moves to dismiss the indictment on the ground that Congress, when it enacted section 2261, exceeded its authority under the Commerce Clause. See U.S. Const., Art. I, § 8, cl. 3. For the reasons stated below, I find the challenged provision to be a constitutional exercise of Congress' power to regulate interstate commerce. Accordingly, the motion to dismiss is denied.
BACKGROUND
The facts as alleged by the government are as follows.[2] In the late morning of April 7, 1996, Police Officer Richard Freeman happened upon Vladimir Zelenin dumping the body parts of Yakov Gluzman, Rita Gluzman's husband, into the Passaic River in New York near ECI Technology, Inc. ("ECI"), a company co-owned by Rita and Yakov Gluzman. Upon this inadvertent discovery, Zelenin, after being advised of his constitutional rights under Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), confessed that he, with the help of his cousin Rita Gluzman, had murdered Yakov Gluzman.
According to Zelenin, an employee of ECI, Gluzman approached him approximately one month earlier to enlist him in the murder of her estranged husband. Apparently, Gluzman told Zelenin that she and her husband were undergoing divorce proceedings as a result of which ECI would shut down and Zelenin would lose his job. Zelenin agreed to assist Gluzman in the murder.
On April 5, 1996, Gluzman allegedly told Zelenin that she wanted to kill her husband the next day, before her husband came to her house to collect some of his belongings. Zelenin stated that on the appointed day, April 6, 1996, he met Gluzman in New Jersey and drove with her to Pearl River, New York, to commit the murder, armed with an ax and a knife. Once in Pearl River, they entered Yakov Gluzman's apartment and awaited his return. When he arrived, Gluzman and Zelenin killed him together. Zelenin then dismembered the body while Gluzman cleaned the apartment of traces of the crime.
Zelenin admits to placing Yakov Gluzman's body parts into plastic bags, which were then loaded into the trunks of a Ford Taurus registered to ECI and Yakov Gluzman's Nissan Maxima. Gluzman and Zelenin drove the two cars to the ECI parking lot, after which Zelenin drove Gluzman to her home in Upper Saddle River, New Jersey. They allegedly agreed that Zelenin would return to ECI and dump the bags filled with Yakov Gluzman's body parts into the nearby Passaic River and then meet later that day at ECI. The discovery of Zelenin by Freeman and Zelenin's subsequent arrest prevented this later rendezvous.
Gluzman disappeared after the murder. On April 12, 1996, personnel at the Cold Spring Harbor Laboratory ("the Laboratory") in Long Island, New York, discovered a *87 trespasser in a cottage on the premises. When Arthur Brings, director of facilities at the Laboratory, approached the trespasser, he recognized her as Rita Gluzman, who he knew from past work-related visits that she and her husband had made to the Laboratory. Later that day, Gluzman was arrested by the Nassau County authorities and charged with burglary of the Laboratory cabin. On April 18, 1996, Gluzman was arrested by federal agents and charged in a federal complaint with conspiracy to violate and a substantive violation of 18 U.S.C. § 2261.
On April 25, 1996, a grand jury returned a two count indictment against Gluzman, charging her with conspiracy to commit interstate domestic violence and the commission of interstate domestic violence. Specifically, the indictment charges that Gluzman both conspired to, and actually did, travel from New Jersey to New York with the intent to murder her estranged husband, and that, once in New York, she murdered him, in violation of 18 U.S.C. § 2261.
Gluzman subsequently brought this motion to dismiss her indictment arguing that section 2261 neither regulates a commercial activity nor contains a requirement that the activity in question be connected to interstate commerce, and therefore its enactment exceeded the authority of Congress to legislate under the Commerce Clause. Gluzman argues that the legislative history of 18 U.S.C. § 2261 does not support Congress' authority to enact the section under the Commerce Clause. She further argues that Congress is limited, under its Commerce powers, to regulating only those activities that have an economic component or that implicate some other attribute of commerce. Consequently, according to Gluzman, the interstate conduct prohibited by section 2261 falls beyond Congress' authority.
DISCUSSION
Since one of Gluzman's principle arguments is that section 2261 is unsupported by its legislative history, we begin with an examination of the pertinent Congressional findings. In September 1994, Congress passed the Violence Against Women Act of 1993 ("VAWA") as part of the larger Violent Crime Control and Law Enforcement Act of 1994, P.L. 103-322; see S.Rep. No. 103-138, at 38 (1993). Section 221, Title II of the VAWA (codified as 18 U.S.C. § 2261) contains the challenged provision, which makes it a crime for a person to travel across a state line "with the intent to injure, harass, or intimidate that person's spouse or intimate partner," and "in the course of or as a result of such travel [to] intentionally commit[] a crime of violence caus[ing] bodily injury to such spouse or intimate partner." 18 U.S.C. § 2261(a)(1).
The legislative history of the VAWA contains little express consideration of section 2261 and the impact on interstate commerce of traveling across state lines to commit domestic violence. In its discussion of the VAWA generally, however, Congress noted that "[o]ur society pays a heavy price for [domestic] violence: 1 million women a year seek medical attention for injuries caused by violence at the hands of a male partner, children in homes with family violence are 15 times more likely to be abused or neglected than children in peaceful homes; and finally, estimates suggest that we spend $5 to $10 billion a year on health care, criminal justice, and other social costs of domestic violence." S.Rep. No. 103-138, at 41.
In describing the purpose of section 2261, Congress did note that it served to fill the "[g]aps in the legal protection offered to victims of domestic violence ... [where] States and localities have not addressed the issue sufficiently." S.Rep. No. 103-138, at 43. The Committee on the Judiciary further stated that it believed that the provisions in section 2261 "constitute an appropriate response to the problem[s] of domestic violence which, because of their interstate nature, transcend the abilities of State law enforcement agencies. The committee's legislation does not constitute an `overfederalization' of crimes. Under title 18 of the United States Code, there are provisions that make it a crime to cross a State line with falsely made dentures or with a cow." S.Rep. No. 103-138, at 62.
Gluzman argues, nonetheless, that the legislative history of 18 U.S.C. § 2261 fails to indicate that the statute as finally enacted was based on any findings in that history *88 that the interstate travel in furtherance of spousal abuse was activity that affected interstate commerce. She further contends that section 2261 neither regulates a commercial activity nor contains a requirement that the activity in question be connected to interstate commerce, and therefore its enactment exceeded the authority of Congress to legislate under the Commerce Clause.
The challenged statutory provision arose in an area which Congressional power is exceedingly broad. Indeed, the power is "complete in itself, may be exercised to its utmost extent, and acknowledges no limitations, other than are prescribed in the constitution." Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 196, 6 L.Ed. 23 (1824). Thus, "the task of a court that is asked to determine whether a particular exercise of congressional power is valid under the Commerce Clause is relatively narrow." Hodel v. Virginia Surface Mining & Reclamation Ass'n, Inc., 452 U.S. 264, 276, 101 S.Ct. 2352, 2360, 69 L.Ed.2d 1 (1981).
While a court's inquiry when examining the constitutionality of a congressional enactment is an independent one, the court will consider congressional findings, including congressional committee findings. United States v. Lopez, 514 U.S. 549, ___, 115 S.Ct. 1624, 1631, 131 L.Ed.2d 626 (1995). Where the court determines that the legislators, "in light of facts and testimony before them, have a rational basis for finding a chosen regulatory scheme necessary to the protection of commerce," the court's investigation is completed. Katzenbach v. McClung, 379 U.S. 294, 303-04, 85 S.Ct. 377, 383, 13 L.Ed.2d 290 (1964); see also Hodel, 452 U.S. at 276, 101 S.Ct. at 2360.
Review of the legislative history of the section, though sparse, indicates that Congress had a rational basis for concluding that the regulation of interstate domestic violence was "reasonably adapted to [an] end permitted by the Constitution." Hodel, 452 U.S. at 276, 101 S.Ct. at 2360. Congress, in enacting section 2261, alluded to the substantial toll of domestic violence on the physical and economic welfare of individuals directly affected by such violence as well as public generally. See S.Rep. No. 103-138 at 41. Although gender-based violence, particularly when it is targeted against women, was clearly of primary concern to Congress, it was not the exclusive motive for the VAWA in its entirety. As previously noted, when addressing section 2261, the Committee considered, in nongender specific terms, "the health care, criminal justice, and other social costs of domestic violence," S.Rep. No. 103-138, at 41, and crafted what it believed to be an "appropriate response to the problem[s] of domestic violence which, because of their interstate nature, transcend the abilities of State law enforcement agencies." S.Rep. No. 103-138, at 62.
Having determined that a rational basis exists, "the only remaining question for judicial inquiry is whether the `means chosen by [Congress] [are] reasonably adapted to the end permitted by the Constitution.'" Hodel, 452 U.S. at 276, 101 S.Ct. at 2360 (quoting Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 262, 85 S.Ct. 348, 360, 13 L.Ed.2d 258 (1964)). Gluzman suggests that the Supreme Court's recent decision in United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, compels the conclusion that they are not.
In Lopez, the Supreme Court invalidated the Gun-Free School Zones Act, 18 U.S.C. § 922(q), which prohibited possession of a firearm in a school zone, as beyond the scope of the Commerce Clause. In defining the contours of the Commerce Clause, the Lopez Court identified three broad categories of activity that Congress may regulate under its commerce power: (1) the use of the channels of interstate commerce; (2) the instrumentalities of interstate commerce or persons or things in interstate commerce, even though the threat comes only from intrastate activity; and (3) intrastate activities that have a substantial relation to interstate commerce. Lopez, 514 U.S. at ___ _ ___, 115 S.Ct. at 1629-30.
Lopez held that Congress, in enacting 18 U.S.C. § 922(q), exceeded its authority under the Commerce Clause by failing to incorporate a jurisdictional element requiring a commerce nexus and by attempting to regulate local, non-economic activity. Id. at ___ _ *89 ___, 115 S.Ct. at 1630-31. Lopez, however, was concerned only with the third category of activity, and did not purport to affect Congress' exercise of its commerce power with regard to the regulation of the use of the channels or instrumentalities of commerce.
Unlike the statute at issue in Lopez, section 2261 does not regulate purely local activity, but, instead, is an exercise of Congress' power under the first category of cases articulated by the Lopez Court the authority to regulate the use of channels of commerce.[3] Furthermore, the section clearly requires an identifiable interstate nexus, namely, the crossing of a state line with the criminal intent to commit domestic violence against one's spouse and the actual commission of such violence. See 18 U.S.C. § 2261(a). Section 2261 therefore avoids the constitutional deficiencies identified in Lopez where the interstate nexus was non-existent and the activity to be regulated was purely local. Thus, whatever limitation Lopez may have recognized with respect to congressional power over intrastate activities that may affect commerce, the decision did not speak to the broad power of Congress to regulate the channels of interstate commerce, an area occupied by section 2261 as well as numerous other criminal statutes. See, e.g., 18 U.S.C. § 1073 (criminalizing travel in interstate commerce to avoid prosecution); 18 U.S.C. § 1201 (criminalizing kidnaping if the victim is transported in interstate commerce); 18 U.S.C. § 1952 (prohibiting travel in interstate commerce to carry on certain specified unlawful activities including, inter alia, extortion, bribery or arson); 18 U.S.C. § 2314 (prohibiting the transportation or transfer in interstate commerce of stolen property).
Congress' authority "to keep the channels of interstate commerce free from immoral or injurious uses has been frequently sustained, and is no longer open to question." Heart of Atlanta Motel, 379 U.S. at 256, 85 S.Ct. at 357 (quoting Caminetti v. United States, 242 U.S. 470, 491, 37 S.Ct. 192, 196-97, 61 L.Ed. 442 (1917)). Thus, courts consistently have upheld federal criminal statutes that regulate the crossing of state lines by persons or things in a manner incident to some criminal activity. See, e.g., Scarborough v. United States, 431 U.S. 563, 97 S.Ct. 1963, 52 L.Ed.2d 582 (1977) (holding that under 18 U.S.C. § 1202(a), a statute criminalizing possession "in interstate commerce or affecting commerce" of a firearm by a convicted felon, proof that the possessed firearm previously traveled in interstate commerce was sufficient to satisfy the required nexus between possession and commerce); United States v. Hernandez, 85 F.3d 1023, 1031 (2d Cir.1996) (upholding Comprehensive Drug Abuse Prevention and Control Act of 1970, 18 U.S.C. § 922(g)(1) and 922(k), which criminalize possession of firearms by felons where the weapon at issue was shipped or transported in interstate or foreign commerce); United States v. Sirois, 87 F.3d 34 (2d Cir.), cert. denied, ___ U.S. ___, 117 S.Ct. 328, 136 L.Ed.2d 241 (1996) (upholding statute, 18 U.S.C. § 2251(a), penalizing a pornographer if "such person knows or has reason to know that such visual depiction will be transported in interstate or foreign commerce").
Gluzman contends, nonetheless, that Congress exceeded the scope of its authority under the Commerce Clause by attempting to regulate an activity that was not commercial. According to the defendant, for statutory enactments under Lopez categories one and two to pass constitutional muster, such regulations must involve "economic activity" or must expressly require movement "in interstate commerce" as grounds for jurisdiction. *90 In other words, in order to affect the channels of interstate commerce as a basis for regulation, the conduct sought to be criminalized must involve the transportation of something e.g. pornography or goods from state to state or at a minimum some other commercial activity that has a clearly identifiable connection with commerce.
While these contentions might carry some weight if the analysis concerns whether local activities substantially affect interstate commerce, they are wide of the mark where, as here, the statute regulates conduct in interstate commerce. Five days after Lopez was decided, in United States v. Robertson, 514 U.S. 669, 115 S.Ct. 1732, 131 L.Ed.2d 714 (1995) (per curiam), the Supreme Court reaffirmed the distinction between activities in interstate commerce and local activities that substantially affect interstate commerce. There, the Court concluded that it was not necessary to prove that an Alaskan gold mine "affect[ed]" interstate commerce to bring it under the Racketeer Influenced and Corrupt Organizations Act (RICO); it was sufficient merely to prove that the gold mine was an "enterprise ... engaged in ... interstate or foreign commerce." Id. at ___, 115 S.Ct. at 1733. The Court made clear that "[t]he `affecting commerce' test was developed [] to define the extent of Congress' power over purely intra state commercial activities that nonetheless have substantial inter state effect." Id. The Court upheld the RICO conviction based on "the inter state activities of Robertson's mine," without considering its local activities. Id.
As the Ninth Circuit recently stated, the Supreme Court in Robertson "explained that the[] three bases of congressional authority [identified in Lopez] are analytically distinct." United States v. Pappadopoulos, 64 F.3d 522, 526 (9th Cir.1995). Thus, to the extent that Congress seeks to regulate persons or things in interstate commerce as opposed to local activities that affect interstate commerce its power to do so was not changed by Lopez.
It has long been established that Congress can not only regulate activities that involve interstate or international transportation of goods and people, but it can do so "regardless of whether the transportation is motivated by a `commercial purpose.'" Sirois, 87 F.3d at 40 (citing United States v. 12,200-Ft. Reels of Super 8MM Film, 413 U.S. 123, 125, 93 S.Ct. 2665, 2667, 37 L.Ed.2d 500 (1973)). Indeed, the regulated activity need not even be commercial in character. Heart of Atlanta Motel, 379 U.S. at 256, 85 S.Ct. at 356-57; Hoke v. United States, 227 U.S. 308, 320, 33 S.Ct. 281, 283, 57 L.Ed. 523 (1913). "Transactions [may] be commerce though non-commercial; they may be commerce though illegal and sporadic, and though they do not utilize common carriers or concern the flow of anything more tangible than electron and information." United States v. South-Eastern Underwriters Ass'n, 322 U.S. 533, 549-50, 64 S.Ct. 1162, 1172, 88 L.Ed. 1440 (1944). Congress has long exercised the authority to keep the channels of interstate commerce free from injurious non-commercial uses, including, among others, the transportation of firearms for private use, Scarborough, 431 U.S. 563, 97 S.Ct. 1963, pornography for private use, Sirois, 87 F.3d 34, liquor for private use, United States v. Hill, 248 U.S. 420, 39 S.Ct. 143, 63 L.Ed. 337 (1919), and obscene materials for private use. United States v. Orito, 413 U.S. 139, 93 S.Ct. 2674, 37 L.Ed.2d 513 (1973). Thus, the Supreme Court has held that the Commerce Clause empowers Congress to prohibit the importation of obscene material from abroad, even if it is imported for personal use rather than commercial distribution. See 12200-Ft. Reels of Super 8 MM Film, 413 U.S. 123, 93 S.Ct. 2665. The Court has also upheld the Mann Act's application to interstate transportation of persons for an immoral purpose polygamy on the ground that the statute, "while primarily aimed at the use of interstate commerce for the purposes of commercialized sex, is not restricted to that end." Cleveland v. U.S., 329 U.S. 14, 67 S.Ct. 13, 91 L.Ed. 12 (1946).
Moreover, this Court cannot glean, as Gluzman urges, any principled distinction between Congress' power to prohibit one from transporting an article or another person and its power to prohibit the use of commerce by the illegal actor herself. Indeed, statutes regulating persons who cross state lines harboring *91 the intent to commit an unlawful activity have consistently been upheld as within Congress' authority under the commerce clause.
For example, the Travel Act, 18 U.S.C. § 1952, which makes it a crime to use an interstate facility with the intent to "promote, manage, establish, carry on, or facilitate the promotion, management, establishment, or carrying on of any unlawful activity," has long been upheld as well within Congress' authority to legislate under the Commerce Clause. See, e.g., United States v. Herrera, 584 F.2d 1137, 1147 (2d Cir.1978) (noting that the constitutionality of section 1952 has been repeatedly and unsuccessfully challenged); United States v. Barrow, 363 F.2d 62 (3d Cir. 1966), cert. denied, 385 U.S. 1001, 87 S.Ct. 703, 17 L.Ed.2d 541 (1967); United States v. Zizzo, 338 F.2d 577 (7th Cir.1964), cert. denied, 381 U.S. 915, 85 S.Ct. 1530, 14 L.Ed.2d 435 (1965); United States v. Goldberg, 928 F.Supp. 89, 94-98 (D.Mass. 1996); see also Hemans v. United States, 163 F.2d 228 (6th Cir.), cert. denied, 332 U.S. 801, 68 S.Ct. 100, 92 L.Ed. 380 (1947) (upholding the Fugitive Felon Act, which made unlawful the travel in interstate commerce with the intent to avoid prosecution); United States v. Boone, 904 F.Supp. 866 (N.D.Ind.1995) (upholding 18 U.S.C. § 924(m), which prohibits an individual from "travel[ing] from any State or foreign country into any other State" in an attempt to illegally deal in firearms, as a valid exercise of congressional authority under the Commerce Clause). Considering the plenary power afforded to Congress to regulate the channels of interstate commerce, section 2261 certainly falls within the categories of activity that Congress may properly regulate.
Section 2261 has the requisite relation to interstate commerce as defined under controlling law since it is triggered only if an individual crosses a state line with the intent to injure, harass, or intimidate his or her spouse or intimate partner, and that travel actually results in the intentional commission of a crime of violence that causes bodily injury to such spouse or intimate partner. See 18 U.S.C. § 2261. As was previously noted, it is a "well settled principle that Congress may impose relevant conditions and requirements on those who use the channels of interstate commerce in order that those channels will not become the means of promoting or spreading evil, whether physical, moral, or economic in nature." North Am. Co. v. SEC, 327 U.S. 686, 705, 66 S.Ct. 785, 796, 90 L.Ed. 945 (1946).[4]
Gluzman's final argument attacks section 2261 as overbroad, pointing to the legislative history's myriad references to violence against women and the absence of any such references to problems associated with violence against men. She argues that to the extent that gender-based violence does have a genuine effect on interstate commerce, those findings are relevant only to 42 U.S.C. § 13981, which establishes a civil rights remedy for gender-based violence. Thus, according to the defendant, 18 U.S.C. § 2261, insofar as it applies to protect "spouses" and is gender neutral, reaches beyond the scope of congressional findings with regard to the *92 effect of gender-based violence on interstate commerce.
Gluzman fails to recognize, however, that in order to succeed in a facial challenge to section 2261, she "must show that `no set of circumstances exists under which the [section] would be valid.'" United States v. Sage, 92 F.3d 101, 106 (2d Cir.1996) (quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 2100, 95 L.Ed.2d 697 (1987); see Giusto v. I.N.S., 9 F.3d 8, 10 (2d Cir.1993). Thus, even if this Court were to find that section 2261 is unconstitutional as so far as it fails to regulate nongender motivated activity, it would be "insufficient to render the [section] wholly invalid, since the [Supreme] Court has not recognized an `over-breadth' doctrine outside the limited context of the First Amendment." Sage, 92 F.3d at 106 (citing General Electric v. New York State Dep't of Labor, 936 F.2d 1448, 1456 (2d Cir.1991)).
CONCLUSION
Based on the above reasons, this Court finds that 18 U.S.C. § 2261 is a constitutional exercise of Congress' power to regulate commerce. Accordingly, the motion to dismiss the indictment is denied.
SO ORDERED.
NOTES
[1] Additional charges were brought against Gluzman in superseding indictments dated October 31, 1996, November 14, 1996, and December 12, 1996. Those indictments added charges of illegal interception of oral communications in violation of 18 U.S.C. §§ 2511(1)(a), 2511(4)(a); use of a device to intercept oral communication in violation of 18 U.S.C. §§ 2511(1)(b), 2511(4)(a), and travel in furtherance of extortion in violation of 18 U.S.C. § 1952.
[2] This factual background is gleaned from the complaint filed against Gluzman on April 18, 1886, the affidavits submitted in support of the search warrants of Gluzman's residence and ECI Technology, Inc., a company owned by Gluzman, and the April 25, 1996 indictment.
[3] Only two other courts have considered the constitutionality of provisions of the VAWA. One challenge was successful, the other was not. See Brzonkala v. Virginia Polytechnic and State University, 935 F.Supp. 779 (W.D.Va.1996) (holding that Title III of the VAWA, 42 U.S.C. § 13981, is an unconstitutional exercise of Congress' power under the Commerce Clause and the Enforcement Clause of the Fourteenth Amendment); Doe v. Doe, 929 F.Supp. 608 (D.Conn.1996) (upholding the constitutionality of 42 U.S.C. § 13981). Both cases, however, deal exclusively with Title III of the VAWA, 42 U.S.C. § 13981, which creates a civil rights remedy for gender-based violence. Section 13981, as both the Brzonkala and Doe courts recognize, regulates purely intrastate activity and therefore differs analytically from 18 U.S.C. § 2261, which regulates an interstate activity, namely the travel across state lines to commit domestic violence. See 18 U.S.C. § 2261.
[4] Gluzman further argues that, in the event that violence against women were determined to provide Commerce Clause jurisdiction, section 2261 could not apply to acts of violence against a husband, and the indictment, in this case, would thus have to be dismissed. In determining the scope of a statute, a court must "look first to [the statute's] language. If the statutory language is unambiguous, in the absence of a `clearly expressed legislative intent to the contrary, that language must ordinarily be regarded as conclusive.'" Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 299, 78 L.Ed.2d 17 (1983) (quoting United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981)). Gluzman's argument ignores the plain language of section 2261 which criminalizes interstate travel with the intent to injure a "spouse" or "intimate partner." The statute is decidedly gender neutral. Only a "`clearly expressed legislative intention' contrary to the ... [statutory] language, ... would require [the court] to question the strong presumption that Congress expresses its intent through the language it uses." INS v. Cardoza-Fonseca, 480 U.S. 421, 433, n. 12, 107 S.Ct. 1207, 1214, n. 12, 94 L.Ed.2d 434 (1987). No such contrary language is present in this case. The legislative history recognizes that women are the "most likely target" of gender-based violence, S.Rep. 103-138 at 54, but does not exclude men as potential victims. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1841458/ | 189 B.R. 619 (1995)
In re Herman Andrew MARTIN, Debtor.
Bankruptcy No. 95-32026-S.
United States Bankruptcy Court, E.D. Virginia, Richmond Division.
November 7, 1995.
*620 Charles C. Cowsert, III, Fredericksburg, VA, for Debtor.
Gerald F. Daltan, Scott, Daltan & Van Lear, Fredericksburg, VA, for Unsecured Creditor.
MEMORANDUM OPINION
BLACKWELL N. SHELLEY, Bankruptcy Judge.
This matter comes before the Court upon the objection of John E. Mitchell, Jr. ("Mitchell"), to confirmation of the Chapter 13 reorganization plan submitted by Herman Andrew Martin ("Martin" or the "Debtor"), filed in this Court on June 2, 1995. Mitchell objects to the Debtor's plan on several grounds, alleging primarily that the Debtor did not submit his plan in good faith as required by 11 U.S.C. § 1325(a)(3). Mitchell also asserts that the Debtor's plan does not provide for all of the Debtor's net disposable income as required by 11 U.S.C. § 1325(b)(1), and that the Debtor's plan reflects unfair discriminatory treatment of certain unsecured debts. The Court conducted a hearing on this matter on August 9, 1995, at which time counsel for the Debtor and Mitchell presented evidence and argument. At the conclusion of the hearing, the Court ordered both parties to submit a list of supporting citations.
This is a core proceeding, over which this Court has jurisdiction under 28 U.S.C. §§ 157(b)(2)(L) and 1334. Upon consideration of the pleadings, the record, the evidence, and the argument of counsel, the Court makes the following findings of fact and conclusions of law.
FINDINGS OF FACT
On the 20th of October, 1992, Martin pled guilty to a charge of misdemeanor assault and battery in a Spotsylvania County General District Court. The genesis of Martin's guilty plea was an incident in August of 1992 during which Martin apparently struck Mitchell in the head, resulting in considerable physical damage to Mitchell. Nearly a year and a half laterin February of 1994 a Spotsylvania County Circuit Court entered judgment against Martin and in favor of Mitchell in a civil suit stemming from the August 1992 assault and battery. After a jury trial, the Spotsylvania County Court awarded Mitchell a judgment of $100,000 in compensatory damages plus costssignificantly less than the $500,000 in compensatory and punitive damages originally sought by Mitchell.
Over the course of the next several months, Mitchell and Martin, through counsel, conducted lengthy negotiations in an attempt to arrive at a mutually agreeable payment schedule for the judgment award. Unfortunately, those negotiations were not successful, and although Martin made two voluntary payments of $300, Mitchell initiated garnishment *621 proceedings against Martin in July of 1994.
On May 18, 1995, Martin filed a voluntary petition in bankruptcy, seeking the protection of this Court under Chapter 13 of the Bankruptcy Code. On June 2, 1995, Martin filed his Chapter 13 plan. Martin's plan proposed that he pay all of his disposable income some $375 per month into the plan for thirty-six months. Martin's plan listed a total of one secured and six unsecured creditors, the debt to Mitchell being the largest.
Martin is currently married, and his wife's marital duties include organizing and maintaining the couple's finances. Martin's plan states that his wife earns a monthly income nearly equal to his own, and that she is responsible for half of the couple's monthly housing costs. But his wife did not enter into bankruptcy in a joint case or otherwise.
While Martin currently has a steady job, he did voluntarily change his place of employment in early 1994. For a period of 11 years, ending in January or February of 1994, Martin worked as a truck driver for the Martin Brower Corporation, and earned a reported compensation of $44,000 in 1993. Martin was a truck driver, and spent an average of two nights a week away from home. But in early 1994, Martin voluntarily left Martin Brower and became unemployed. Martin's testimony was unclear as to the exact date of his resignation, but based upon correspondence from his counsel, he was definitely no longer employed at Martin Brower as of mid-February, 1994.
Martin testified at length regarding his motivation for leaving Martin Brower and becoming unemployed. Martin Brower had apparently changed ownership sometime prior to Martin's resignation, and Martin's job description had changed accordingly. Martin testified that after his employer's ownership change, he was required to unload his truck onto hand-trucks and carry the load into stores and up stairways always under demanding time constraints. Previously, his work consisted only of driving his truck to store locations, and using a conveyor belt system to push his load off of his truck to a receiving area. His new job requirements represented a significant increase in physical labor.
In March of 1994, Martin began working for his current employer, CVS. Evidence revealed that Martin received compensation from CVS totaling $26,224.09 in 1994, and $20,610.84 through August 5th of 1995 substantially less than Martin's earnings at Martin Brower. Further testimony and evidence established that Martin's compensation from CVS was based upon an hourly wage of $14.80, plus mileage pay at a rate of $.3639 per mile. But since Martin's work and mileage compensation vary from week-to-week based upon a seniority system for available work, this Court is convinced that an accurate determination of Martin's compensation cannot be arrived at by a simple hourly wage rate calculation.[1] Instead, Martin's monthly wages can only be estimated by extrapolating from year-to-date earnings and adjusting that figure based upon known variations. As explained more fully below, this Court declines to make a finding of fact as to Martin's actual monthly or annual wage.
CONCLUSIONS OF LAW
This Court must answer three separate questions in order to reach a decision in this matter. First, after considering the facts and circumstances as outlined above, does the Debtor's Chapter 13 plan meet the "good faith" standard mandated by 11 U.S.C. § 1325(a)(3)? Second, does the Debtor's plan reflect unfair discriminatory treatment of a selected class of unsecured debts which is impermissible under 11 U.S.C. § 1322(b)(1)? And lastly, does the Debtor's Plan require the Debtor to pay all of his *622 projected disposable income into the plan as required by 11 U.S.C. § 1325(b)(1)(B)?
Chapter 13 requires that all confirmable plans be proposed in "good faith," and "not by any means forbidden by law." 11 U.S.C. § 1325(a)(3) (West 1995). Unfortunately, the Bankruptcy Code fails to define the phrase "good faith" either directly by way of a code provision, or indirectly in the form of legislative history. As a result, the "good faith" requirement has evolved into an elastic concept, dependent for the most part on the facts and circumstances of the particular case and the discretion of the court. In a 1987 decision, one court correctly noted that "[m]ore than 300 reported `good faith' decisions form a maze of rules and exceptions swallowing rules. Nearly identical fact patterns have produced inconsistent results within judicial districts and across the circuits." Nelson v. Easley (In re Easley), 72 B.R. 948, 950 (Bankr.M.D.Tenn.1987). The truth of that statement has not changed significantly in the intervening years.
This Court last discussed the Chapter 13 good faith issue two years ago in In re Thorsted, 157 B.R. 5 (Bankr.E.D.Va.1993). Thorsted involved a debtor who had filed his Chapter 13 proceeding immediately after receiving a discharge under Chapter 7. In Thorsted, this Court relied heavily upon two Fourth Circuit decisions Deans v. O'Donnell, 692 F.2d 968 (4th Cir.1982), and Neufeld v. Freeman, 794 F.2d 149 (4th Cir.1986) and constructed a framework within which to conduct a § 1325(a)(3) good faith inquiry.
A finding that a plan was not filed in good faith requires an "inquiry . . . to determine whether or not, considering `all militating factors,' there has been `an abuse of the provisions, purpose or spirit' of Chapter 13." The debtor's prepetition conduct "is a relevant factor to be considered in the § 1325(a)(3) good faith inquiry." "[A] Chapter 13 plan may be confirmed despite even the most egregious pre-filing conduct where other factors suggest that the plan nevertheless represents a good faith effort by the debtor to satisfy his creditors' claims."
Thorsted, 157 B.R. at 9-10 (internal citations omitted).
In Deans, the Fourth Circuit Court of Appeals considered a Chapter 13 plan and denied confirmation because the plan failed to make substantial and meaningful payments to unsecured creditors. Deans, 692 F.2d at 969. The Deans Court rejected any per se test, and held that courts making a "good faith determination" must consider "the totality of circumstance . . . on a case by case basis in order fairly to apply [§ 1325(a)(3)]." Id. at 972. The Deans Court went on to enumerate a non-exhaustive "check-list" of factors to be considered in making the "good faith" determination.[2]Id.
In its later decision, Neufeld v. Freeman, the Fourth Circuit Court of Appeals considered a debtor's Chapter 13 Plan wherein a significant portion of the unsecured debt was incurred as a result of the debtor's intentional fraudulent activity. 794 F.2d at 150. The Neufeld Court expanded upon its earlier holding in Deans, stating that "although the discharge of an obligation which would be nondischargeable in Chapter 7 is not, standing alone, a sufficient basis on which to find bad faith or deny confirmation, it is a relevant factor to be considered in the § 1325(a)(3) good faith inquiry." Id. at 152.
Applying the framework of analysis outlined above to the facts, this Court concludes that the Debtor has adequately met his burden of establishing that his plan was filed in good faith. After becoming liable to Mitchell for the $100,000 judgment a debt admittedly the fault of Martin although perhaps not foreseeable Martin also entered into negotiations to satisfy the judgment and made two voluntary payments towards that end before becoming subject to salary garnishment. Taken in context, the facts and circumstances *623 of this case describe a debtor who was subject to salary garnishment for a period of ten months and who then sought bankruptcy protection within the spirit and the purpose of Chapter 13. Martin stated repeatedly in his testimony that he simply could not continue any longer without protection from his creditors. This Court finds his testimony credible, and declines to make a finding that Martin's sole motivation in filing his Chapter 13 petition was to evade an otherwise nondischargeable debt.
Mitchell urges that this Court deny confirmation on good faith grounds based upon the synergy of a number of factors. Specifically, Mitchell points to the origin of the underlying debt, the percentage of payment to unsecured creditors in the plan, the length of the plan, the pre-petition conduct by Martin to include quitting one job and then accepting lower paying employment and an alleged dishonesty in reporting income to the trustee. Mitchell has provided this Court with an abundance of case citations wherein courts faced with somewhat similar fact patterns have denied plan confirmation on good faith grounds or outlined relevant Chapter 13 good faith standards.[3] However, analysis of debtor good faith must proceed on a case by case basis. Deans, 692 F.2d at 972. And after mature consideration of each of the factors cited by Mitchell within the context of the totality of the circumstances of this case this Court declines to accept Mitchell's analysis.
At the same time, this Court cannot deny the compelling nature of Mitchell's allegations. Accordingly, the Court chooses to address Mitchell's principal allegations, and provide insight into the Court's rationale.
To begin, Mitchell first points out that the overwhelming majority of Martin's debt nearly 55% of his total debt and 94.8% of his unsecured debt would arguably be determined non-dischargeable if Martin had sought bankruptcy protection under Chapter 7.[4] But that fact, in and of itself, in not *624 dispositive. See, e.g., Neufeld, 794 F.2d at 152.
The statutory provisions of Chapter 13 permit the discharge of a number of debts that would be nondischargeable under other chapters of the Bankruptcy Code. This Court is aware that some Courts have looked to the nature of the underlying debt as a primary factor in denying Chapter 13 plan confirmation particularly in the case of larceny and fraud or debts resulting from particularly egregious behavior with foreseeable consequences. See, e.g., In re Sitarz, 150 B.R. 710 (Bankr.D.Minn.1993) (denying confirmation of debtor's Chapter 13 plan based inter alia on good faith grounds because debtor intentionally financially defrauded creditor); Handeen v. LeMaire (In re LeMaire), 883 F.2d 1373 (8th Cir.1989) (panel decision), vacated, 891 F.2d 650 (8th Cir. 1989), on rehrg., 898 F.2d 1346 (8th Cir.1990) (en banc) (denying confirmation of debtor's Chapter 13 plan on good faith grounds after the debtor, who had attempted to murder the objecting creditor, stipulated to damages in a civil suit, and then filed his Chapter 13 plan in a clear and obvious attempt to avoid paying the stipulated damages); In re Chase, 43 B.R. 739 (D.C.1984) (denying plan confirmation for lack of good faith when debtor entered into consent agreement in exchange for creditor's promise not to testify at criminal sentencing and to drop civil suit and immediately filed Chapter 13 petition). But the underlying debt is not the only factor to be considered.
This Court believes that Martin's pre-petition behavior, while reprehensible, does not rise to the level of that described in Sitarz and LeMaire, and is factually distinguishable from Chase. Taken as a whole, the facts and circumstances do not outline a debtor who is manipulating the system to take advantage of ill-gotten gains, or to escape his responsibility for egregious behavior. To be sure, this Court does not condone Martin's behavior, and feels a great deal of empathy toward Mitchell. But the totality of circumstances presented by the Debtor demonstrates that Martin did file his petition in good faith, notwithstanding the underlying nature of his largest debt.
Mitchell also points to the small percentage of payment to unsecured creditors within Martin's plan as well as the length of the plan as indicators of a lack of good faith. It is well settled that there exists no minimum percentage payment requirement in Chapter 13 proceedings. See In re Liggins, 145 B.R. 227, 230 (Bankr.E.D.Va.1992). Chapter 13 requires that creditors receive at least as much under any plan as they would receive in a Chapter 7 liquidation. See 11 U.S.C. § 1325(a)(4) (West 1995). And once objected to, a confirmable Chapter 13 plan must commit all of a debtor's disposable income for a minimum 36 month period. 11 U.S.C. § 1325(b)(1)(B) (West 1995). So long as these requirements are met, a small percentage payment to unsecured creditors, taken by itself, does not result in automatic rejection of a plan for lack of good faith. Martin has not made the claim that he will receive less under this plan than he would in a Chapter 7 liquidation, but only that the small percentage payment and the plan's minimum 36 month duration represent bad faith on their face.
While a payment percentage as low as 6% demands increased scrutiny, this Court declines to make a finding that the percentage payment in Martin's plan amounts to a lack of good faith. Martin's plan proposes to commit all of his disposable income for the minimum 36-month period made mandatory by Mitchell's objection. Absent additional considerations, this Court is unwilling to impose *625 requirements onto debtors and their plans which are not mandated by relevant statutes.
With respect to the length of Martin's Chapter 13 plan, as previously stated, the Bankruptcy Code mandates a minimum of 36 months duration for any plan objected to unless that plan pays 100% of allowed unsecured claims. 11 U.S.C. § 1325(b)(1)(B) (West 1995). But the Code also sets a maximum duration of 60 months for Chapter 13 plans, and requires the debtor to show cause for extending any plan beyond 36 months. "The [Chapter 13] plan may not provide for payments over a period that is longer than three years, unless the court, for cause, approves a longer period, but the court may not approve a period that is longer than five years." 11 U.S.C. 1322(d) (West 1995).
Generally, the opportunity to extend a plan beyond 36 months duration while at the same time limiting that extension to 60 months total plan length exists as a means of permitting debtors to fashion workable Chapter 13 plans without becoming indentured servants. By permitting some flexibility, § 1322(d) permits debtors with a small disposable income to extend their plan long enough to overcome the inability to cure defaults under § 1322(b)(5), or pay priority or secured claims in a shorter period of time. See 5 Collier on Bankruptcy ¶ 1322.15 (15th ed.). "Although cause [as used in § 1322(d)] is not defined in the Code, bankruptcy courts have extended Chapter 13 plans to five years where a large portion of the debtor's obligations consist of nondischargeable debt, such as guaranteed student loans." Washington Student Loan Guaranty Assoc. v. Porter (In re Porter), 102 B.R. 773, 777 (9th Cir. BAP 1989).
The time limit provisions of § 1322(d) and the ability to extend a Chapter 13 plan beyond 36 months are provisions enacted for the debtor's benefit. To require the Chapter 13 debtor to extend his plan beyond the three year minimum period in order to create a cache of payments much larger than the debtor's current liquidated asset value ostensibly for the creditors' sole benefit would thwart the statutory requirements and intent of Chapter 13; however, to permit the debtor to extend beyond the three-year period to provide for payments of at least the liquidated value of the estate may be sufficient cause for the Court to approve such a request. This viewpoint is generally supported by case law. See, e.g., In re Pierce, 82 B.R. 874 (Bankr.S.D.Ohio 1987) (holding that debtor may voluntarily extend plan longer than 36 months to increase dividend to unsecured creditors, but may not be forced to do so); In re Greer, 60 B.R. 547 (Bankr. C.D.Cal.1986) (holding that lack of any payment to unsecured creditors in three year plan period was not sufficient cause to extend plan); Porter, 102 B.R. at 777 (holding that absent some compelling reason, debtor's should not be forced to pay into a plan for longer than three years); In re Vensel, 39 B.R. 866 (Bankr.E.D.Va.1984) (holding that debtor is under no obligation to propose a five-year plan as opposed to a three-year plan); cf. Arnold v. Weast (In re Arnold,), 869 F.2d 240 (4th Cir.1989) (holding that substantial and unforseen increase in debtor income not discovered until 30 months into the plan was sufficient cause to require debtor to increase plan length from 36 to 60 months).
Had Congress intended otherwise, § 1322(d) could have been fashioned in a manner that required a longer plan length based upon the plan's percentage payment. Congress apparently desired to grant debtors a degree of flexibility within the provided limits, and absent some additional showing of bad faith, this Court will not second guess that scheme. This Court therefore rejects Mitchell's assertion that the length of Martin's plan combined with the small percentage payment to unsecured creditors represents less than a good faith filing.
Mitchell's final good faith allegations center on Martin's employment situation and honesty in reporting income. This Court finds Martin's testimony with respect to his employment entirely credible. Martin stated that he left his employer of eleven years only after an ownership change introduced far more rigorous physical requirements into his job, dramatically increasing both the difficulty and duration of his work day. Martin also cited his desire to reduce his average workday *626 from its fifteen to eighteen hour length to something more reasonable, and to discontinue "long haul travel" which required his absence from home an average of two nights per week.
Martin's testimony portrayed a picture of a man who needed to change his employment, and who was willing to take a pay cut to do so. This Court would be more inclined to give some consideration to Martin's employment change as an indication of bad faith had the change occurred on the eve of bankruptcy. But Martin changed jobs more than a year before his bankruptcy filing. Although Martin's disposable income is smaller today than it would have been in 1993 and the resulting payment to creditors out of that disposable income is smaller accordingly and while Martin's change of jobs and lower income may have ultimately caused his entry into bankruptcy due to a lack of sufficient funds after garnishment,[5] this Court accepts Martin's explanation for his employment decision as being predicated on factors other than his bankruptcy proceeding or denying creditors satisfaction on their claims.
With respect to Martin's good faith in portraying his wages, this Court made a finding of fact that Martin's monthly wages, by their very nature, are difficult to estimate. Martin testified that his wife takes care of all of the financial matters in his family, and that he arrived at his plan wage figures using what he perceived as his average monthly take home pay testimony that this Court finds credible. While Martin's portrayal of his wages may not have been entirely accurate, this Court can point to no evidence that Martin intentionally submitted incorrect wage information in his Chapter 13 filing.
At their very essence, Mitchell's good faith allegations appear to focus primarily upon the nature of Martin's primary unsecured debt a judgment for an intentional tort and an attempt to demonstrate the unseemliness of discharging 94% of that debt. But this Court must simply construe the law, not construct it. It is up to Congress to write the law. And if denying debtors an opportunity to discharge in a Chapter 13 proceeding those debts derived from committing intentional torts has sufficient moral, social or economic value, then it is up to Congress to take appropriate action. Until that time, this Court is constrained by the law as written. And based upon the totality of the circumstances of this case, this Court concludes that Martin successfully demonstrated that he proposed his Chapter 13 plan in good faith.
Moving on, Mitchell also objects to the Debtor's plan on a second basis, pointing out that the plan classifies unsecured debts, and pays selected unsecured debts in full. Mitchell claims that this classification and payment scheme has the effect of unfairly discriminating against his unsecured claim.
While not stated in Mitchell's Objection, this allegation apparently arises under § 1322(b)(1) which states that
the [Chapter 13] plan may (1) designate a class or classes of unsecured claims, as provided in section 1122 of this title, but *627 may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims.
11 U.S.C. § 1322(b)(1) (West 1995) (emphasis added).
Courts have uniformly adopted a four factor test with which to analyze and detect the unfair discrimination prohibited by the first portion of § 1322(b)(1).[6] But courts have not reached the same unanimity with respect to their interpretation of the second portion of § 1322(b)(1).
Some courts have interpreted the awkward language of § 1322(b)(1) as creating a "carve out" or exception to the otherwise applicable unfair discrimination test when co-signed debts are separately classified. See In re Dornon, 103 B.R. 61, 64 (Bankr.N.D.N.Y. 1989); In re Lawson, 93 B.R. 979 (Bankr. N.D.Ill.1988); In re Chapman, 146 B.R. 411, 416 (Bankr.N.D.Ill.1992). The Dornon court presented with a debt co-signed by the debtor's mother relied upon Congressional intent,[7] and a plain reading of the statute before approving a plan which proposed to pay 100% of a separately classified co-signed debt, but which only proposed to pay 10% of other unsecured debts. Dornon, 103 B.R. at 62. Dornon, and its progeny, interpreted the "however" in § 1325(b)(1) to permit otherwise discriminatory treatment of co-signed unsecured debts within Chapter 13 plans. Presumably, this discriminatory treatment was necessary to ensure that the debtor had a fair opportunity to complete the plan provisions and receive a "fresh start" without overwhelming pressure to make additional payments outside of his plan.
Other courts have interpreted § 1322(b)(1) to permit different treatment of co-signed debts, but not a different treatment that would permit unfair discrimination. See, e.g., In re Cheak, 171 B.R. 55 (Bankr.S.D.Ill. 1994); In re Battista, 180 B.R. 355 (Bankr. D.N.H.1995); Spokane Credit Union v. Gonzales (In re Gonzales), 172 B.R. 320 (E.D.Wash.1994); and Nelson v. Easley (In re Easley), 72 B.R. 948 (Bankr.M.D.Tenn. 1987). "[A]ll `different' treatments are not necessarily fair discrimination." Easley, 72 B.R. at 956.
In Battista, the court pointed out that the term "differently" in § 1325(b)(1) has "content separate from the proscription against unfair discrimination." Battista 180 B.R. at 357, quoting Easley, 72 B.R. at 956. The Battista court went on to find that a Chapter 13 plan which proposed to pay two unsecured co-signed creditors in full while paying other unsecured creditors a 6% dividend represented unfair discrimination. Id. at 357-58. Accordingly, the Battista court denied plan confirmation. Id.
In Cheak, the court applied the four-factor test for discrimination and determined that a debtor's Chapter 13 plan that proposed to pay unsecured debts co-signed by the debtor's spouse in full represented unfair discrimination. Cheak 171 B.R. at 57-58. The *628 Cheak court went on to voice concerns regarding the potential for abuse if debtors were arbitrarily permitted to shield their spouse's income by paying co-signed debts in full. Id. at 58. Since the debtor and his wife presumably pool their income for purposes of household expenses, "[t]he identity of interests between the debtor and his wife as co-signor distinguishes this case from one involving a co-signor who is a relative or close friend with a separate income." Id.
This Court agrees that the rationale and analysis of Cheak and Battista comports most closely with the intent of Congress and the underlying principles of Chapter 13 and the Bankruptcy Code. Permitting a debtor to arbitrarily differentiate between creditors based upon the co-signed status of a debt without any further justification is an invitation to abuse. Particularly in the circumstances of this case where the debtor is co-signed with his spouse and that spouse has a significant income permitting a different treatment of co-signed debts which may represent unfair discrimination appears to be antithetical to the intent, spirit and purpose of Chapter 13.
For illustration, consider the example where a Chapter 13 debtor pays 10% to general unsecured creditors, but 100% to unsecured creditors who have received the co-signature of a spouse. The spouse's income is effectively shielded with respect to the co-signed debts. In one scenario, the spouse may have no disposable income all of her income being used to pay for living expenses or legitimate personal debts. At the other extreme, the spouse may have an abundance of disposable income, may be paying for high value luxury items, or may be protecting extensive property holdings. It would be difficult for this Court to look with favor on a debtor's plan which proposes to pay 10% to general unsecured creditors and 100% to co-signed unsecured creditors while the debtor's spouse makes payments on a Lambourghini. Additionally, absent some requirement for a demonstration of fair discrimination, a debtor could voluntarily co-sign any and all of the spouse's obligations immediately prior to bankruptcy, and apply a greater percentage of his disposable income to paying those co-signed debts. The debtor's actions would unfairly reduce the percentage and total payment that the debtor's original creditors should receive.
This Court therefore adopts the analysis of Cheak and Battista which requires a debtor to demonstrate "fair" discrimination. Applying this analysis to Martin's plan, this Court must conclude that Martin has not successfully met his burden of demonstrating fair discrimination.
After deducting trustee's fees, Martin's proposed plan would pay two co-signed debtors 100% while paying approximately 6.5% to Mitchell and the other unsecured creditors. On the other hand, if all unsecured debts were treated equally, Mitchell's payment would increase to approximately 10.2%. Martin testified that separate classification of debts was necessary because his wife had separate, independent debts. Martin's plan reflects that his wife is responsible for half of the couple's monthly housing costs, and he testified that his wife paid for her own car. But Martin's plan also shows that his wife has an income nearly equal to his own, with no explanation as to the eventual use of the remainder of that income or why discriminatory classification to the extent noted in the plan is actually necessary and fair.
Based upon the current state of the record, this Court cannot confirm Martin's plan which proposes to pay 100% of those debts co-signed by his wife. Should Martin wish to separately classify his co-signed debts, then he must establish that such a classification does not represent unfair discrimination. Thus, absent further documentation or amendment, this Court must deny confirmation to Martin's plan on those grounds.
Mitchell's final objection to the Debtor's plan states that Martin has failed to provide for all of the debtor's net disposable income to be paid into the plan. Section 1325(b)(1) prohibits this Court from approving any plan once objected to unless inter alia that plan "provides that all of the debtor's projected disposable income to be received in the three-year period beginning on the date that the first payment is due under the plan will be applied to make payments under the plan." 11 U.S.C. § 1325(b)(1)(B) *629 (West 1995). Mitchell asserts that Martin's plan fails to account for all of his disposable income, and thus, must be denied confirmation.
The Code defines "disposable income" as income that is received by the debtor which is not reasonably necessary "for the maintenance or support of the debtor or a dependent of the debtor." 11 U.S.C. § 1325(b)(2) (West 1995). And if the debtor is engaged in business, disposable income includes that income not required for expenditures "necessary for the continuation, preservation, and operation of such business." Id.
After mature consideration of the testimony offered before this Court, and other evidence in the record, this Court concludes that Mitchell's objection on this ground must be sustained. Martin admitted that he was mistaken as to his hourly wage rate believing that it was $14.50 per hour rather than the actual $14.80 and that he failed to specifically account for his mileage reimbursements. As stated earlier, Martin's income is not easily discernable, and although this Court declines to find a lack of good faith in Martin's submission, the presence of error is nonetheless evident. To be fair, this Court points out that evidence also demonstrated the existence of additional bills which were not originally included in Martin's plan. Thus, Martin's modified plan, while probably displaying an increase in total monthly income, will likely not demonstrate a significant increase in disposable income. But since Martin's current plan must be modified or further substantiated on other grounds, it is appropriate that the new plan should better reflect Martin's actual expected monthly income and expenses.
In conclusion, this Court finds that Martin's Chapter 13 plan was proposed in good faith. At the same time, this Court also finds that absent additional proof and justification, Martin's plan unfairly discriminates against unsecured creditors by paying 100% of the debts co-signed by Martin's spouse, while paying roughly 6% of other unsecured debts. This Court's ruling does not necessarily deny Martin the ability to so classify these debts, but simply requires a sufficient justification for doing so. Lastly, this Court finds that Martin's proposed plan does not accurately enough reflect the debtor's actual expected monthly income. For these reasons, Martin's plan should be denied confirmation.
An Order conforming with this Memorandum Opinion will be entered by the Court.
NOTES
[1] For example, a pay statement entered into evidence shows that Martin earned $470.64 in hourly wages and $118.27 in mileage pay during the week ending August 5, 1995 pay period # 32. If pay period # 32 were representative, Martin's year to date earnings should equal approximately $18,845.12. However, a CVS representative testified that Martin's year to date earnings through pay period # 32 actually totaled $20,610.84 a difference of 9%. The variations in number of hours worked and miles traveled in any given week make the estimation of Martin's disposable income a difficult and imprecise exercise.
[2] Specifically, the Deans Court stated that courts should consider:
the percentage of proposed repayment, . . . the debtor's financial situation, the period of time payment will be made, the debtor's employment history and prospects, the nature and amount of unsecured claims, the debtor's past bankruptcy filings, the debtor's honesty in representing facts, and any unusual or exceptional problems facing the particular debtor.
Deans at 972.
[3] See United States v. Estus (In re Estus), 695 F.2d 311 (8th Cir.1982) (rejected debtor's fifteen month Chapter 13 plan as not filed in good faith); In re Liggins, 145 B.R. 227 (Bankr. E.D.Va.1992) (stating that a minimal percentage payment to general unsecured creditors warranted a close examination of Chapter 13 good faith filing factors); Grundy Nat'l Bank v. Johnson, 106 B.R. 95 (W.D.Va.1989) (vacating debtor's Chapter 13 plan on other grounds and outlining good faith analysis standards); In re Kazzaz, 62 B.R. 308 (Bankr.E.D.Va.1986) (permitting a debtor's Chapter 13 Plan which provided for a 16% payment to unsecured creditors); In re Baber, 57 B.R. 597 (Bankr.W.D.Va.1986) (denying debtor's conversion of Chapter 7 proceeding to one under Chapter 13 as motivated solely by desire to gain discharge of otherwise nondischargeable debt); In re Dant, 9 B.R. 117 (Bankr. E.D.Va.1981) (denying confirmation of debtor's Chapter 13 plan as representing a de minimis repayment plan and thus not filed in good faith); In re Heyer, 13 B.R. 610 (Bankr.E.D.Va.1981) (finding lack of good faith in debtor's Chapter 13 Plan which pays only small percentage of unsecured debts when debtor has the ability to pay more).
[4] The Bankruptcy Code exempts from discharge under Chapter 7 any debts which are the result of willful and malicious injury by the debtor to another entity or the property of another entity. See 11 U.S.C. 523(a)(6) (West 1995). Courts have used this provision to exempt from Chapter 7 discharge those debts arising from intentional torts or criminal actions such as assault and battery. See, e.g., Davis v. Williams, (In re Williams), 173 B.R. 912, 914 (Bankr.W.D.Ark. 1994) (finding that conviction for assault and battery within the context of Arkansas criminal statutes constituted sufficient evidence to satisfy the willful and malice prongs of 11 U.S.C. § 523(a)(6)). Moreover, debtors may be collaterally estopped from denying or relitigating a prior state court determination of willful and malicious behavior which would satisfy a § 523(a)(6) inquiry. See Hagan v. McNallen (In re McNallen) 62 F.3d 619, 624 (4th Cir.1995). In this case, Debtor's counsel argues that since Martin pled guilty to misdemeanor assault and battery, and the civil jury refused to award punitive damages, the willful and malicious elements of § 523(a)(6) have not yet been demonstrated. Martin may be correct. Conviction of misdemeanor assault and battery in Virginia does not necessarily require the presence of malice as an element in the subject action. See Va.Code Ann. § 18.2-57 (Michie 1988); Barrett v. Commonwealth of Va., 231 Va. 102, 341 S.E.2d 190, 192-94 (1986) (stating that "malice excludes passion and passion presupposes the absence of malice," and that the trial court erred by providing a jury instruction on malicious wounding while refusing to provide an instruction on the lesser included offense of unlawful wounding which does not require the presence of malice [and to which assault and battery is an even lesser included offense]); and see, e.g., 1 Model Jury Instructions Committee, Virginia Model Jury Instructions, Instruction No. 38.100 (Michie 1994 Suppl.) (stating that assault and battery is a lesser included offense of malicious wounding which is properly found when malice has not been established, but instead that the act was done in an angry, rude or vengeful manner). And based upon the submitted record to include the relevant civil proceeding Motion for Judgment and Judgment Order this Court cannot conclude that Martin's civil proceeding jury found that Martin had committed his intentional tort with willful intent and malice. Lastly, since the existence of the equivalent of malice is one element of a punitive damages award, see Hamilton Dev. Co. v. Broad Rock Club, Inc., 248 Va. 40, 445 S.E.2d 140, 143 (1994), the fact that Martin's civil proceeding jury refused to award punitive damages may indicate that malice was not demonstrated. But this Court is not required to make any finding with respect to Martin's Chapter 7 dischargeability under § 523(a)(6), and accordingly, declines to do so.
[5] Under relevant Virginia statutes, a garnishing creditor may subject up to 25% of a debtor's weekly disposable earnings to garnishment. See Va.Code Ann. § 34-29 (Michie 1995 Suppl.). The term "disposable earnings" is defined as "that part of the earnings of an individual remaining after the deduction from those earnings of any amounts required by law to be withheld." Id. at § 34-29(d)(2). With some exceptions, the Virginia statute preserves a minimum weekly salary for the debtor equal to thirty times the federal minimum hourly wage. Id. at § 34-29(a)(2). But, unlike a Chapter 13 plan which permits the debtor to fashion a plan and safeguard sufficient funds to provide for his living expenses a garnishment may deduct more funds from a debtor's paycheck than that debtor can afford. Thus, in garnishment unlike a Chapter 13 plan a reduction in weekly pay not only reduces the amount paid to the garnishing creditor, but may also reduce the funds available to the debtor to pay for his particular minimum living requirements. While it is easy to understand why a Chapter 13 debtor would accept an easier but lower-paying job thereby reducing the disposable income available to creditors while maintaining the same income available to himself to provide for living expenses a debtor under garnishment would place himself in a very precarious position by reducing his weekly wages since he may not be able to adequately protect his minimum living expenses. This Court can easily envision a scenario wherein a person under garnishment whose take-home pay is reduced may be forced to resort to bankruptcy proceedings in order to maintain a minimum standard of living for himself and his family.
[6] The four factors include:
(1) whether the discrimination has a reasonable basis;
(2) whether the debtor can carry out a plan without such discrimination;
(3) whether such discrimination is proposed in good faith; and
(4) the treatment of the class discriminated against.
In re Bradley, 109 B.R. 182, 183 (Bankr.E.D.Va. 1990); In re Cheak, 171 B.R. 55, 58 (Bankr. S.D.Ill.1994); In re Perkins, 55 B.R. 422, 425-26 (Bankr.Okla.1985).
[7] Specifically, Dornon quoted the legislative record surrounding the Congressional adoption of the relevant amendment to § 1322(b)(1):
Although there may be no theoretical differences between co-debtor claims and others there are important practical differences that must be recognized. Because codebtors are often relatives or friends, the debtor may feel a great need to pay the debt in full, even if that is not permitted within the Chapter 13 plan. If the debtor can be required to devote all disposable income to the plan, the conflicting desire to voluntarily make payments outside the plan on a co-signed debt may spell failure for the plan by leaving insufficient income to keep up plan payments. If, as a practical matter, the debtor is going to pay the codebtor claim, he should be permitted to separately classify it in Chapter 13.
Dornon at 64, quoting 5 Collier on Bankruptcy, ¶ 1322.05 at 1322-9 to 1322-10 (15th ed. 1989) (citing to S.REP. NO. 65, 98th Cong., 1st Sess., 17-18 (1983) [S. 445] ("Senate Report")) (internal quotations omitted). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1868242/ | 103 B.R. 61 (1989)
In re Elizabeth K. DORNON, Debtor.
Bankruptcy No. 88-01432.
United States Bankruptcy Court, N.D. New York.
May 26, 1989.
*62 James F. Selbach, P.C., Syracuse, N.Y., for debtor.
Warren V. Blasland, Syracuse, N.Y., trustee.
MEMORANDUM-DECISION, FINDINGS OF FACT, CONCLUSIONS OF LAW AND ORDER
STEPHEN D. GERLING, Bankruptcy Judge.
Elizabeth K. Dornon ("Debtor") filed her petition seeking relief under Chapter 13 of the Bankruptcy Code, 11 U.S.C.A. §§ 101-1330 (West 1979 & Supp.1989) ("Code"), on September 20, 1988 and submitted her plan the same day. She listed two unsecured debts in her petition: a student loan in the amount of $4,985.51 owed to "NYSHESC," presumably the New York State Higher Education Services Corporation, and a loan for $2,104.92 from Key Bank. Against this debt of $7,090.43, the Debtor indicated assets of $1,125.00, consisting entirely of her state exemptions.
The Debtor takes home $920.00 each month as an assembler for the Welch Allyn, Inc., where she has been employed for three years. A resident of Weedsport, New York, she has two children, who are her dependents. In her schedule of current income and current expenditures, she added $110.00 each month, representing one-twelfth of her income tax refund, to generate a monthly income of $1,130.00 against current monthly expenditures of $970.00.
The Debtor proposes to pay the Trustee $60.00 per month for a period of sixty months. Her plan also seeks to pay in full Key Bank's claim, which is co-signed by her mother, under Code § 1322(b)(1) and further contemplates a ten percent distribution to the remaining creditor, NYSHESC.
The first meeting of creditors pursuant to Code § 341 was conducted on November 16, 1988 and at the November 18, 1988 hearing on plan confirmation, the Trustee objected to confirmation on the basis that the plan was not filed in good faith.
Decision was reserved and upon the parties' filing of memoranda of law, the matter was submitted on February 14, 1989.
JURISDICTION
The Court has jurisdiction over this core proceeding by virtue of 28 U.S.C.A. §§ 1334 and 157(a), (b)(1), (2)(L) (West Supp.1989). The following findings of fact and conclusions of law are issued in accordance with Bankruptcy Rules ("Bankr.R.") 2002(b), 3020(a), 7052, 9014.
ARGUMENTS
The Trustee takes the position that the Debtor's treatment of the Key Bank debt, which her mother had co-signed, as a special class with a one hundred percent distribution and a ten percent payout on her NYSHESC student loan, which would be nondischargeable in a Chapter 13 [sic], demonstrates that the plan was not filed in good faith. See Letter from Warren V. Blasland, Esq. to the Honorable Stephen D. Gerling (Dec. 5, 1988). Noting that she switched from studying data processing to nursing during two years of community college, he states that "no evidence was shown to indicate any reasons why the debtors future income would not increase over the next five year period." Id.
*63 Relying upon this Court's decision in In re Makarchuk, 76 B.R. 919 (Bankr.N.D.N. Y.1987), the Trustee asserts that confirmation should be denied because the primary and principal purpose of the Debtor's plan was to discharge an otherwise nondischargeable student loan debt. He claims that the student loan debt was the only claim the plan actually deals with since the Key Bank claim is to be fully paid. See id.
The Debtor responds that she is a single, unmarried parent supporting her two children with no assistance from their father. She states that she incurred the student loan while attending a local community college and living on public assistance, but was forced to take on the factory job because of insufficient income, whereupon her welfare payments terminated. She ultimately was forced to quit school because it became impossible to do that and support her family.
The Debtor distinguishes her situation from that of the debtor in In re Makarchuk by pointing out that in that case 1) the only claims were education loans, 2) the debtor converted to Chapter 13 from a Chapter 7 after unsuccessfully trying to discharge those loans under Code § 523(a)(8)(B) in a Chapter 7 context, 3) her creditors had filed written objections, and 4) she proposed a thirty-six month plan. See Debtor's Memorandum Of Law In Response To The Trustee's Objection To Confirmation Of Plan (Feb. 3, 1989). Furthermore, she is attempting to repay one debt and simultaneously protect her mother who co-signed the other obligation, a fact she attested to at her § 341 meeting, unlike Laura Makarchuk whose primary purpose was to discharge her otherwise nondischargeable student loans.
The Debtor argues that there is nothing in the record to indicate she is acting contrary to the "honesty of intention" standard for good faith set forth by the Second Circuit in Johnson v. Vanguard Holding Corp. (In re Johnson), 708 F.2d 865 (2d Cir.1983) and expanded by this Court in In re Sutliff, 79 B.R. 151 (Bankr.N.D.N.Y. 1987). She maintains that, consistent with the spirit and purposes of Chapter 13, her plan is an honest, good faith attempt to repay her creditors within her means and she is entitled to the more generous discharge available to her than what would be in Chapter 7. See id.
DISCUSSION
While articulated as a good faith objection to plan confirmation presumably made pursuant to Code § 1325(a)(3), the Trustee's objection also invokes Code § 1325(a)(1) and, hence, Code § 1322, in challenging the Debtor's classification of claims. Such judicial scrutiny is in accord with Code § 1325(a), mandating as it does, six prerequisites to confirmation, notwithstanding the absence of specific written objections. See In re Johnson, supra, 708 F.2d at 867.
The Court hereby makes a finding that the Debtor's plan complies with Code § 1325(a)(2), (4), (5) and (6).
First, the Court assumes there are no unpaid fees, charges or amounts due under 28 U.S.C.A. § 1930 (West Supp.1989) or under the plan since the record is silent on such matters. Code § 1325(a)(2).
Second, it is clear that the only property the plan will distribute to the two unsecured creditors is the Debtor's future disposable income since her personal property schedule indicates an estate consisting of personal belongings, some cash and an automobile. The creditors' zero dividend in a Chapter 7, without even considering the hypothetical liquidation expenses, is obviously less than their Chapter 13 plan distribution, more than satisfying the "best interests of creditor's test" of Code § 1325(a)(4). See, e.g., In re Hieb, 88 B.R. 1019, 1021-23 (Bankr.D.S.D.1988); In re Barth, 83 B.R. 204 (Bankr.D.Conn.1988).
Third, as there are no secured claims, Code § 1325(a)(5) is inapplicable.
Fourth, while the Court acknowledges that the Debtor's budget is tight, it is based upon realistic expenses and steady and regular income. The record's silence on any default and the Court's reluctance to impose upon the Debtor its own conception of what sacrifices she should make, *64 lead it to give her the opportunity to implement her proposed plan. See In re Compton, 88 B.R. 166, 167 (Bankr.S.D.Ohio 1988); 5 L.King COLLIER ON BANKRUPTCY ¶ 1325.07 (15th ed. 1989). The Court thus concludes that the Debtor has demonstrated feasibility under Code § 1325(a)(6).
With regard to the classification challenge triggering Code § 1322(b)(1), the Court finds itself bound by the plain statutory language of the amendment enacted by the Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub.L. No. 98-353, 98 Stat. 333 (1984) ("BAFJA"). See, e.g., In re Hobaica, 65 B.R. 693, 695 (Bankr.N.D.N.Y.1986). Said amendment automatically sanctions different and favored treatment for a debtor's consumer debts which are co-signed by another individual and constitutes a "carve out" to the "unfair discrimination" standard; see, e.g., In re Lawson, 93 B.R. 979 (Bankr.N.D.Ill. 1988) (discussing "four factor" test developed by the courts but choosing to limit the inquiry to one of reasonableness), imposed upon a debtor's exercise of the option to designate unsecured debt into more than one class. See In re Diaz, 97 B.R. 903 (Bankr.S.D.Ohio 1989); In re Storberg, 94 B.R. 144, 146 & n. 3 (Bankr.D.Minn.1988); In re Dondero, 58 B.R. 847 (Bankr.D.Or. 1986). Accord Public Finance Corp. v. Freeman, 712 F.2d 219 (5th Cir.1983). Contra Nelson v. Easley (In re Easley), 72 B.R. 948, 955-56 (Bankr.M.D.Tenn.1987). However, this different treatment, designed to encourage the utilization of Chapter 13 rather than Chapter 7, must still satisfy Code § 1325(a). See, e.g., In re Birriel Gonzalez, 73 B.R. 259 (Bankr.D. Puerto Rico 1987).
Assuming arguendo that the amendment is "awkwardly worded," In re Easley, supra, 72 B.R. at 956, Congressional intent can be gleaned from BAFJA's quasi-legislative history given the lack of official legislative history on Code § 1322(b)(1):
"Although there may be no theoretical differences between co-debtor claims and others, there are important practical differences" that must be recognized. Because codebtors are often relatives or friends, the debtor may feel a great need to pay the debt in full, even if that is not permitted within the chapter 13 plan. If the debtor can be required to devote all disposable income to the plan, the conflicting desire to voluntarily make payments outside the plan on a co-signed debt may spell failure for the plan by leaving insufficient income to keep up plan payments. "If, as a practical matter, the debtor is going to pay the codebtor claim, he should be permitted to separately classify it in chapter 13."
5 COLLIER ON BANKRUPTCY, supra, ¶ 1322.05 at 1322-9 to 1322-10 (footnotes omitted) (citing to S.REP. NO. 65, 98th Cong., 1st Sess., 17-18 (1983) [S. 445] ("Senate Report"), quoted in In re Dondero, supra, 58 B.R. at 848).[1]
The Senate Report also focused on the amendment's ability to thwart a "ripple effect" where the debtor's inability to pay the co-signed debt could create pressure threatening his "fresh start" by, for instance, brewing trouble on the work or home front or triggering the co-debtor's financial difficulties or even a bankruptcy filing. See 5 COLLIER ON BANKRUPTCY, supra, ¶ 1325.05[1] at n. 12 (quoting to Senate Report at 17). Accord In re Todd, 65 B.R. 249, 253 (Bankr.N.D.Ill.1986); In re Perkins, 55 B.R. 422, 426 (Bankr.N.D. Okla.1985).
*65 There has been no indication that the Debtor is anything but a consumer debtor or that she did not use the funds from the Key Bank loan primarily for personal, family or household purposes. See Code § 101(7). Thus, the Court finds her debt to Key Bank, co-signed by her mother, to be a consumer debt falling within the exception of Code § 1322(b)(1). Accordingly, her plan's different treatment of her two unsecured claims is permissible and satisfies Code § 1325(a)(1).
Turning to the good faith objection, the Court must agree with the Debtor on every account. Her case is indeed distinguishable from the debtor's situation in In re Makarchuk, supra, and, as such, is not applicable herein. The Debtor is honestly and sincerely striving to propose a plan two years beyond the statutory prescription with every last bit of her disposable income while supporting her two children. See In re Doersam, 849 F.2d 237, 239 (6th Cir.1988) (listing factors). She is fueled by not one but two objectives to protect her mother by paying out the Key Bank loan and to satisfy, to the best of her ability, her student loan, the fruits of which do not appear to be contributing to her income. Moreover, "a good faith proposal of a Chapter 13 plan does not require the substantial repayment of unsecured creditors," In re Sutliff, supra, 79 B.R. at 154, or prohibit the equal treatment of claims that would not be dischargeable in Chapter 7 with other unsecured claims. See In re Lawson, supra, 93 B.R. at 988.
A debtor cannot be penalized by exercising her statutory right to the fresh start of a Chapter 13 "super discharge," extending to all but alimony, support and maintenance and long term debt, for Congress has deemed it a fair exchange for a three to five year voluntary re-commitment to debt obligation under court supervision. See Code § 1328(a). See generally In re Lambert, 10 B.R. 223 (Bankr.E.D.N.Y. 1981); see also In re Owens, 82 B.R. 960, 966 (Bankr.N.D.Ill.1988) (citing In re Rimgale, 669 F.2d 426, 428 (7th Cir.1982)); In re Makarchuk, supra, 76 B.R. at 923.
Furthermore, her budget is skeletal, with no frills or cushion, and the record reveals neither serious misconduct nor abuse nor anything less than full disclosure to justify a finding that her plan was proposed in bad faith. See In re Smith, 848 F.2d 813, 819 (7th Cir.1988); In re Sutliff, supra, 79 B.R. at 155 (quoting 5 COLLIER ON BANKRUPTCY, supra, ¶ 1325.04 at 1325-17). Under the facts of this case, the totality of circumstances establishes plan compliance with Code § 1325(a)(3), in the context of both good faith and "not by any means forbidden by law." See Hardin v. Caldwell (In re Caldwell), 851 F.2d 852, 860 (6th Cir.1988); In re Smith, supra, 848 F.2d at 813; In re Chaffin, 816 F.2d 1070, 1073 (5th Cir.1987).
By reason of the foregoing, it is hereby ORDERED:
1. That the Trustee's good faith objection to the confirmation of the plan, pursuant to Code § 1325(a)(3), is denied, and
2. That the Debtor's Chapter 13 plan is confirmed, having complied with the remaining five requirements of Code § 1325(a).
NOTES
[1] Another commentator, commenting on BAFJA's sparse legislative history, has noted that the
Senate reports on two earlier versions of the law S. 2000 and S. 445 ... provide valuable insight into the purpose and interpretation of many provisions which survive in the current version of the law. These reports explain in great detail the arguments in favor of changing the Code and furnish an opportunity for an informed evaluation of the empirical basis and policy judgments that underlie these changes.
Breitowitz, New Developments in Consumer Bankruptcies: Chapter 7 Dismissal on the Basis of "Substantial Abuse", Part 1, 59 AM.BANKR. L.J. 327, 336 (1985) (footnotes omitted), quoted in In re Dondero, supra, at 58 B.R. at 848-49. Accordingly, the usefulness of this quasi-legislative history cannot be underscored enough. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2021499/ | 172 B.R. 320 (1994)
In re Donald L. GONZALES, Debtor.
SPOKANE RAILWAY CREDIT UNION, Appellant,
v.
Donald L. GONZALES, Appellee.
Bankruptcy No. 93-02711-K13. No. CS-94-166-JLQ.
United States District Court, E.D. Washington.
September 21, 1994.
*321 *322 Gregory R. Heline, Spokane, WA, for debtor/appellee.
J.T. Janecek, Spokane, WA, for appellant.
MEMORANDUM OPINION AFFIRMING IN PART, REVERSING IN PART, AND REMANDING BANKRUPTCY COURT ORDER
QUACKENBUSH, Chief Judge.
THIS MATTER comes before this court on appeal from a decision rendered by the *323 Bankruptcy Court for the Eastern District of Washington. A hearing on this appeal was heard with oral argument on September 9, 1994. Appellant was represented by J.T. Janecek; Debtor-Appellee was represented by Gregory Heline.
Appellant, Spokane Railway Credit Union (SRCU), objected to the proposed Chapter 13 plan of Debtor Donald Gonzales. Overruling the objection, the Bankruptcy Court confirmed the plan. SRCU appeals the confirmation, raising two general issues on appeal: (1) Whether Debtor acted in good faith in proposing his Chapter 13 plan; and (2) whether the unsecured creditors were "fairly" segregated into two different classes. For the following reasons, this court remands on the first issue, and affirms in part and reverses in part on the second issue. Specifically, this court affirms, inter alia, the Bankruptcy Court's decision regarding separate classification of the child support obligation.
I. BACKGROUND
In October 1993, Debtor, Donald Gonzales, lost his job with H & N Electric. He claims he was terminated because his creditors had been contacting H & N Electric about his past due debts.[1] On October 12, 1993, Debtor filed for bankruptcy under Chapter 13 of the Bankruptcy Code.
The Debtor owed Spokane Railway Credit Union approximately $16,230 on a 1992 Pontiac Firebird. The Chapter 13 plan submitted by Debtor proposed to pay SRCU $9,650, as a secured creditor on the 1992 Pontiac Firebird that SRCU financed for Gonzales in 1992. The remaining portion of the unpaid car loan, approximately $6,500, was to be treated as unsecured debt, and SRCU would receive nothing against the $6,500 under the plan.
The plan also provided that certain favored unsecured creditors would be paid in full, while other unsecured creditors, such as SRCU for the excess part of its car loan, would not be paid at all. For example, child support obligations owing by Debtor since 1980 in the amount of $18,000 would be paid in full under the plan; a co-signed debt owing to Washington Trust Bank on a credit card would be paid in full; a co-signed debt owing to Washington Trust Bank for a car loan for the benefit of another person would be paid in full; and a co-signed debt owing to Associated Credit for dental work performed on Debtor's ex-wife and live-in girlfriend, "Sam" Wolferman, would be paid in full. Unsecured creditors going unpaid would be U.S. Bank Credit Line, U.S. Bankcard Division, Household Finance for the unsecured portion on a computer loan, and SRCU for its excess unsecured portion on the 1992 Pontiac Firebird loan.
SRCU objected to this plan in the Bankruptcy Court. In addition to objections to the separate classifications for the unsecured debt, SRCU complained that Debtor acted in bad faith by fraudulently transferring $25,000 to $50,000 in business equipment to his ex-wife and live-in girlfriend, "Sam" Wolferman, 6 months before declaring bankruptcy.
Gonzales and Wolferman divorced in 1984. Nonetheless, it appears the two have lived together since the divorce. In 1988 or 1989, Gonzales loaned Wolferman $10,000 toward her part-time advertising business, which she ran out of their home. The Debtor evidently acquired an interest in the business.
According to the affidavit of Wolferman, that business, begun in October 1987, consisted of three desks, a Sharp copier, and a few clients. Wolferman was unable to earn enough money to repay the loan to Gonzales. Therefore, according to Wolferman, she transferred a half-interest in her home to Gonzales. However, Wolferman also states in her affidavit that Gonzales forgave the loan and relinquished any interest he had in the business to Wolferman when her corporation dissolved in September 1993.
These two allegations appear inconsistent. Assuming September 1993 is the date Gonzales forgave the loan, he could not have received a half-interest in Wolferman's home in exchange therefor, since he already had been deeded a half-interest in the home in August 1992, a year prior. It is unclear *324 whether Gonzales received any consideration for relinquishing whatever interest he had in Wolferman's business as a result of the $10,000 loan.
At the meeting of creditors on November 18, 1993, Gonzales testified that the value of the interest in the advertising business he transferred back to Wolferman was approximately $50,000. Wolferman maintained in her affidavit that Gonzales must have been mistaken as to this value because her business was not worth $50,000. She claims the equipment was worth no more than $2,000 and her client base was essentially valueless because her clients were not bound to her contractually.
SRCU contends that Gonzales failed to propose his plan in good faith in as much as he neglected to list the transfer of his property interest in the advertising business back to Wolferman; he allegedly mischaracterized several debts as co-debts, including debts of Sam Wolferman on which Debtor was merely the accommodation maker; his future income will rise since he was re-hired by his former employer, H & N Electric, after the bankruptcy petition was filed; unsecured creditors have been unfairly divided into two classes, with the preferred class receiving 100% repayment, while the unpreferred class will receive 0% repayment; the car loan from SRCU has been modified downward from about $16,000 to a secured value of only $9,650; and Debtor is $18,000 in arrears on child support since 1980, even though his 1992 earnings totalled $40,000, and he purchased a $70,000 motor home in 1991.
Debtor counters that he exaggerated the amount transferred to Wolferman since, according to her affidavit, the value of the business consisted of only $2,000 in equipment; he had no interest in the advertising business to transfer anyway; debts listed as co-debts are truly co-debts; and child support is non-dischargeable. Debtor maintains that under the totality of the circumstances, he acted in good faith.
The Bankruptcy Court overruled the objections of SRCU to the Chapter 13 plan. The plan to repay creditors was orally confirmed by the Bankruptcy Court on March 31, 1994. On April 1, 1994, a written Order confirming the plan was filed. No findings of fact or conclusions of law were entered.
SRCU appeals the Order confirming the Chapter 13 plan. SRCU contends that the Bankruptcy Court erred in failing to find that, because Debtor transferred his interest in Wolferman's advertising business back to Wolferman 6 months before filing for bankruptcy, the Debtor lacked "good faith" in proposing his plan, and the assets should be recovered under Chapter 7 as a "preference." SRCU also contends that the Bankruptcy Court erred by allowing favored status for certain unsecured creditors. SRCU maintains that the "best interests" of the creditors would be better served if this case was converted to a Chapter 7 bankruptcy.
II. DISCUSSION
This court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a) (district courts shall have jurisdiction to hear appeals from final judgments, orders, and decrees of bankruptcy judges).
Findings of fact by the Bankruptcy Court are reviewed for clear error; conclusions of law are reviewed de novo. Wien Air Alaska, Inc. v. Bachner, 865 F.2d 1106, 1108 (9th Cir.1989); In re Deer Park, 136 B.R. 815, 817 (9th Cir. BAP 1992); Fed.R.Civ.P. 52; B.R. 8013. Mixed questions of law and fact are reviewed de novo. In re Safeguard Self-Storage Trust, 2 F.3d 967, 970 (9th Cir. 1993); In re Woodson Co., 813 F.2d 266, 270 (9th Cir.1987); Multnomah County v. Rudolph (In re Rudolph), 166 B.R. 440, 441 (D.Or.1994).
"A bankruptcy judge's finding that a debtor's plan is proposed in good faith is a finding of fact reviewed under the clearly erroneous standard." In re Metz, 820 F.2d 1495, 1497 (9th Cir.1987); accord In re Slade, 15 B.R. 910, 911 (9th Cir. BAP 1981). Whether a plan unfairly discriminates between classes of unsecured creditors is a question of law reviewed de novo. Groves v. LaBarge, 160 B.R. 121, 122 (E.D.Mo.1993).
*325 A. "Good Faith" of Debtor
A Chapter 13 plan shall be confirmed if, among other factors, the plan has been proposed in good faith and not by any means forbidden by law. 11 U.S.C. § 1325(a)(3). Good faith is mandatory for confirmation of a Chapter 13 plan. In re Chinichian, 784 F.2d 1440, 1442-44 (9th Cir. 1986); see also In re Barnes, 32 F.3d 405, 407 (9th Cir.1994) (making 11 U.S.C. § 1325(a)(5)(B)(ii) mandatory as well). However, under 11 U.S.C. § 1325(a)(3), good faith "is neither defined by statute, nor explained in legislative history." In re Warren, 89 B.R. 87, 90 (9th Cir. BAP 1988). In ascertaining good faith, a court must look at the totality of the circumstances to determine whether the plan constitutes an abuse of the provisions, purpose or spirit of Chapter 13. In re Huerta, 137 B.R. 356, 366 (Bankr. C.D.Cal.1992). "In the foregoing context, the debtor has the burden to establish good faith. . . ." In re Warren, 89 B.R. at 93.
Several factors may be considered under the totality of the circumstances, including: (1) The amount of the proposed payments and the amount of the debtor's surplus; (2) the debtor's employment history, ability to earn and likelihood of future increases in income; (3) the probable or expected duration of the plan; (4) the accuracy of the plan's statements of the debts, expenses and percentage repayment of unsecured debt and whether any inaccuracies are an attempt to mislead the court; (5) the extent of preferential treatment between classes of creditors; (6) the extent to which secured claims are modified; (7) the type of debt sought to be discharged and whether any such debt is non-dischargeable in Chapter 7; (8) the existence of special circumstances such as inordinate medical expenses; (9) the frequency with which the debtor has sought relief under the Bankruptcy Code; (10) the motivation and sincerity of the debtor in seeking Chapter 13 relief; and (11) the burden that the plan's administration would place upon the trustee. In re Huerta, 137 B.R. at 366-67; See also In re Warren, 89 B.R. at 93 (listing the same 11 factors).
By pre-printed order filed April 1, 1994, the Bankruptcy Court confirmed Debtor's Chapter 13 plan. In so doing, the court implicitly overruled SRCU's objection to the plan, and found good faith on the part of Debtor in proposing the plan. However, the Bankruptcy Court provided no findings of fact, conclusions of law, or analysis in reaching its decision. This court does not know whether the Bankruptcy Court applied the 11 factors mentioned above in finding good faith.
In his response brief, Debtor admits no findings of fact were made. (See Ct. Rec. 6, p. 13.) Nonetheless, Debtor suggests this court may infer the Bankruptcy Court's findings. Debtor argues strenuously that the Bankruptcy Court's implied findings support Debtor's good faith. However, it is difficult for this court to see how it can review implied findings for clear error.
In In re Tucker, 989 F.2d 328 (9th Cir. 1993), the Ninth Circuit Court of Appeals faced the exact problem before this court. A creditor objected to debtors' good faith because the debtors allegedly concealed funds and prevented a deputy sheriff from seizing those funds shortly before the bankruptcy was filed. Id. at 329-30. Despite the objection, "[t]he bankruptcy court confirmed the plan using a pre-printed form." Id. at 330.
No findings of fact were given supporting the bankruptcy court's confirmation of the plan. "Nothing said, written or signed by the bankruptcy court provide[d] any basis for overruling the [creditor's] good faith objection." Id. The bankruptcy court failed to make findings addressing the bad-faith objection by the creditor, and, therefore, the Ninth Circuit remanded for sufficient findings on whether the debtors acted in good faith. Id.; accord Connecticut Gen. Life Ins. Co. v. Hotel Assocs. (In re Hotel Assocs.), 165 B.R. 470, 475 (9th Cir. BAP 1994) (remanding to bankruptcy court for findings on whether plan proposed in good faith).
Here, no written or oral findings exist for this court to review. The Bankruptcy Court provided no specific reasons for overruling the objections of SRCU. This court has no basis upon which to review for clear error *326 the Bankruptcy Court's presumed finding of good-faith. Accordingly, this court must remand this issue to the Bankruptcy Court for further factual findings as to the basis for overruling the objection of SRCU concerning Debtor's alleged good faith.[2]
B. Classes of Unsecured Creditors
SRCU also contends that the Bankruptcy Court erred in confirming the plan because the plan discriminates between classes of unsecured creditors. SRCU will receive nothing on its unsecured portion of the 1992 Pontiac Firebird car loan, while other unsecured creditors, such as the Washington Department of Social and Health Services (DSHS), Washington Trust Bank, and Associated Credit, will receive 100% payment on their unsecured debts. SRCU claims that such discrimination is "unfair" and, therefore, violative of 11 U.S.C. § 1322(b).
1. Child Support
A plan may designate different classes of unsecured claims, but it may not discriminate unfairly against any class so designated. 11 U.S.C. § 1322(b)(1). The debtor bears the burden of proof that a plan does not unfairly discriminate. In re Warner, 115 B.R. 233, 236-37 (Bankr.C.D.Cal. 1989). Unfortunately, the Code provides no definition of "unfair." Id. at 237. Moreover, "[t]he legislative history to § 1322(b) does not specify the grounds upon which a court should determine whether a proposed classification is unfair." In re Smalberger, 157 B.R. 472, 475 (Bankr.D.Or.1993). As a result, courts have developed a generally applicable test to determine whether a classification is "fair."
A court should determine: (1) Whether the discrimination has a reasonable basis; (2) whether the debtor can carry out a plan without the discrimination; (3) whether the discrimination is proposed in good faith; and (4) whether the degree of discrimination is directly related to the basis or rationale for the discrimination. In re Wolff, 22 B.R. 510, 512 (9th Cir. BAP 1982). In other words, a court should determine whether the discriminatory treatment rationally furthers an articulated, legitimate interest of a debtor. In re Lawson, 93 B.R. 979, 984 (Bankr.N.D.Ill. 1988). SRCU contends that the plan fails this test because it proposes to repay unsecured child support arrearage in full, while SRCU is to be paid nothing on its unsecured claim.
In deciding whether a separate classification for child support is fair, courts are divided. Some courts prohibit the inclusion of past-due child support obligations in a Chapter 13 plan. See Caswell v. Lang, 757 F.2d 608, 610 (4th Cir.1985) ("Past due child support obligations may not be included in a Chapter 13 plan under the bankruptcy code"); In re Pacana, 125 B.R. 19, 25 (9th Cir. BAP 1991) (support obligations insulated from mandatory inclusion in Chapter 13 plan by virtue of express provisions of bankruptcy code); In re Warner, 115 B.R. at 241 (child support should generally not be included in Chapter 13 plan); In re McCray, 62 B.R. 11, 12 (Bankr.D.Colo.1986) (debt for past-due child support may not be included in Chapter 13 plan). These courts reason that federal bankruptcy courts should not interfere with matters of such particular state concern, and that child support issues are best handled by state courts. Plans that include repayment of child support divest state courts of their ability to enforce payment of arrearage. Furthermore, payment of support might be delayed pending confirmation of the plan. Therefore, according to the above federal courts, Chapter 13 plans should not include child support.
Other courts adopt a different approach. These courts have upheld as fair a distinction in a Chapter 13 plan between unsecured child support and other unsecured debts. See In re Leser, 939 F.2d 669, 672 (8th Cir.1991) (no unfair discrimination where counties' claims for child support arrearage *327 placed in separate class from other unsecured creditors); In re Benner, 146 B.R. 265 (Bankr.D.Mont.1992) (upholding plan that provided for 100% repayment of nondischargeable maintenance obligation, while paying nothing to other unsecured claims); In re Whittaker, 113 B.R. 531 (Bankr. D.Minn.1990) (no unfair discrimination where child support arrearage paid in full, while general unsecured creditors paid minimal amount); In re Storberg, 94 B.R. 144 (Bankr. D.Minn.1988) (upholding plan providing for 100% payment for past due child support and 18% payment to a fifth class of unsecured creditors); In re Davidson, 72 B.R. 384, 387 (Bankr.D.Colo.1987) (permitting inclusion of past-due child support in plan upon express consent of child support creditor);[3]In re Haag, 3 B.R. 649 (Bankr.D.Or.1980) (plan providing for 100% payment for past-due child support and 25% payment to other unsecured creditors did not unfairly discriminate); In re Curtis, 2 B.R. 43 (Bankr. W.D.Mo.1979) (plan providing for 100% payment of past-due child support and 10% payment to other unsecured creditors did not unfairly discriminate). In upholding the plans, these courts required 100% repayment of any child support arrearage, particularly since child support is nondischargeable. See 11 U.S.C. § 523(a)(5).
Courts that authorize discrimination in favor of child support claims and against general unsecured creditors have offered two reasons to justify the discrimination. First, they assert that allowing such chapter 13 plans helps assure payment of the child support claims. Strong public policy favors the repayment of child support obligations. Second, these courts recognize that unsecured creditors, generally, receive nothing in a Chapter 7 liquidation anyway. Because child support is non-dischargeable, it must be paid regardless of which bankruptcy chapter is used. In addition, failure to pay child support may result in contempt proceedings, or criminal penalties. Therefore, because the debtor must repay the arrearage, it is better to get something under Chapter 13 than potentially nothing under Chapter 7.[4]
No previously-mentioned case discussing the inclusion of child support in a Chapter 13 plan directly binds this court. Under the facts of this case, this court finds the position and reasoning of those courts that permit the inclusion and separate classification of child support arrearage in a Chapter 13 plan to be more persuasive. Separate classification for child support is not unfair in light of the non-dischargeability of child support, society's strong interest in having child support paid in full, and a debtor's need to start fresh upon completion of the plan. See In re Bugna, 33 F.3d 1054, 1059 (9th Cir.1994) ("The Code is designed to afford debtors a fresh start, and we interpret liberally its provisions favoring debtors.")
"While bankruptcy courts must be very sensitive to the needs of this vulnerable class of creditors, payment of prepetition support of alimony [or child support] arrearage through a chapter 13 plan may be completely appropriate in some cases where the debtor is not using the bankruptcy case as a device for evading familial responsibilities." 5 Collier on Bankruptcy ¶ 1322.14[1] (15th ed. 1994). Given that Debtor is in arrears some $18,000 since 1980, this court does not believe that Debtor is now using bankruptcy as a means to evade his familial responsibilities, although he may previously have ignored those responsibilities. Besides, Debtor proposes to repay all of the arrearage.
If one is truly concerned about the welfare of a debtor's children, one should foster the ability of a debtor to repay his or her child support arrearage. The end result is what counts. Evidently, outside the strictures of a Chapter 13 plan, Debtor does not have the ability and/or willingness to repay his child support debt. Including 100% repayment of outstanding child support in the Chapter 13 *328 plan will help assure that Debtor finally meets this obligation.
Although child support is typically a matter of state concern, this court sees no harm in facilitating payment of the arrearage at this late date. It would seem that any attempt by the state to require repayment has failed in light of Debtor's $18,000 arrearage dating back to 1980. Also, given the length of Debtor's default, there is little to fear from a temporary delay pending the confirmation of Debtor's plan. The facts of this particular case warrant intervention to compel repayment through the Chapter 13 plan. Accordingly, the Bankruptcy Court did not err by confirming a plan which placed child support arrearage into a separate class of unsecured debt within the Chapter 13 plan.
2. Co-Signed Debt
SRCU also complains that certain allegedly co-signed debt has been classified differently from the general unsecured debt. In addition to DSHS, Washington Trust Bank will be paid in full on a car loan that benefitted Wolferman, and a credit card that benefitted Debtor, and Associated Credit will be paid in full for a debt incurred by Wolferman.[5] Meanwhile, SRCU will be paid nothing on its unsecured debt incurred by Gonzales.
A Chapter 13 plan "may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims. . . ." 11 U.S.C. § 1322(b)(1). While awkwardly worded, this provision has been interpreted as sanctioning preferential treatment for claims on which a co-signer is liable with the debtor. See In re Dornon, 103 B.R. 61, 64 (Bankr.N.D.N.Y.1989). Typically, co-debt is with family or friends. "Without such classification the desire to satisfy, outside the plan, co-signed obligations held by relatives and friends would hamper a debtor's chances of successfully completing his or her plan." In re Davis, 101 B.R. 505, 507 (Bankr.S.D.Ohio 1989); see also In re Cheak, 171 B.R. 55, 58 (Bankr.S.D.Ill.1994) ("A debtor's desire to protect a co-signer with whom he has close personal ties might normally justify discriminatory treatment to prevent the debtor from jeopardizing his successful reorganization by attempting repayment outside the plan"). Therefore, debts that are both co-signed and incurred for consumer needs may be classified separately from other unsecured debt. See In re Riggel, 142 B.R. 199, 204 (Bankr.S.D.Ohio 1992).
Relying on the special treatment accorded co-debtor claims in § 1322(b)(1), courts have approved plans paying 100% of unsecured, co-signed claims, while paying only 10% to other unsecured claims. See In re Dornon, 103 B.R. at 65; In re Chapman, 146 B.R. 411, 416 (Bankr.N.D.Ill.1992). Some courts except co-signed claims from the "unfair discrimination" test altogether, see In re Riggel, 142 B.R. at 204, while other courts apply the four-factor test of In re Wolff to determine whether the discrimination is fair. See generally In re Easley, 72 B.R. 948, 955 (Bankr. M.D.Tenn.1987).
Here, the Chapter 13 plan confirmed by the Bankruptcy Court classified co-debt between Debtor and his ex-wife and live-in girlfriend, Wolferman, and co-debt between Debtor and his employer, H & N Electric, separately from other unsecured debt. Because the debt is apparently co-signed, separate classification seems proper. However, "the debtor who seeks to discriminate in favor of a co-signed claim has the burden of showing that such discrimination is fair, and this determination must be made on a case by case basis." In re Cheak, 171 B.R. at 58.
SRCU argues that the debt is not actually "co-debt" and, therefore, should not *329 receive preferential treatment.[6] The court finds that the debt is co-debt, but, nonetheless, concludes that separate classification for some of the debt is unfair and in violation of § 1322(b)(1).
First, SRCU contends that the car loan from Washington Trust Bank is not co-debt because the car loan benefitted Wolferman, not Debtor. By analogy to stay protection under Chapter 13, SRCU maintains that co-debt only exists when another extends his or her credit to help the debtor receive the benefit of the extension of credit. Because Wolferman drives the car that was the subject of the Washington Trust Bank car loan, and, therefore, receives the benefit, SRCU charges that the loan is not "co-debt."
The loan was co-signed by Wolferman and H & N Electric, and Debtor used the funds from Washington Trust Bank primarily for personal, family, or household purposes, namely the purchase of an automobile. That makes the debt "co-debt" for purposes of § 1322(b)(1). See In re Dornon, 103 B.R. at 65. However, the debt benefitted Wolferman, not Gonzales. In his response brief, Gonzales admits H & N Electric, the other co-signer, co-signed the car loan to help Gonzales "provide Ms. Wolferman with a car." (See Ct. Rec. 6, p. 18.) Should Gonzales be permitted to treat this co-debt separately from other unsecured debt where the co-debt benefitted the co-signer, not the debtor?
The legislative history to § 1322(b)(1) notes:
Although there may be no theoretical differences between codebtor claims and others, there are important practical differences that must be recognized. Because codebtors are often relatives or friends, the debtor may feel a great need to pay the debt in full, even if that is not permitted within the chapter 13 plan. If the debtor can be required to devote all disposable income to the plan, the conflicting desire to voluntarily make payments outside the plan on a cosigned debt may spell failure for the plan by leaving insufficient income to keep up plan payments. If as a practical matter, the debtor is going to pay the codebtor claim, he should be permitted to separately classify it in chapter 13.
5 Collier on Bankruptcy ¶ 1322.05[1] (15th ed. 1994) (citing to S.Rep. No. 65, 98th Cong. 1st Sess. 17-18 (1983)) (internal quotations and footnotes omitted). Underlying the assumption that a debtor will feel a great need to pay in full a co-signed debt between the debtor and a friend or relative is the additional assumption that the co-debt benefitted the debtor, not the friend or relative. The obligation to repay arises because the friend or relative extended his or her credit to help the debtor acquire credit. In return for the help, a debtor will feel a moral obligation to repay the loan in full to protect the co-signer.
However, the same is not true where the debtor extends his or her credit to help the co-signer. No moral obligation exists to repay the loan since no help was given to the debtor. On the contrary, it was the debtor that helped the co-signer. Without the moral obligation to repay the loan in full, irrespective of the plan, there is little chance this type of co-debt will impede completion of the plan. Therefore, no reason justifies the classification of unsecured co-signed debt, acquired for the benefit of the co-signer, separately from other general unsecured debt. To do so would be unfair to the general unsecured creditors. Accordingly, this court *330 finds that § 1322(b)(1) is limited to co-signed debt acquired for the benefit of the debtor, not the co-signer. See generally In re Dornon, 103 B.R. at 65 (permitting separate classification of bank loan co-signed by mother, but belonging to debtor); In re Perkins, 55 B.R. 422, 426 (Bankr.N.D.Okla.1985) (upholding plan that discriminated in favor of loan benefitting debtors, but secured by household goods of son).
If only Wolferman had co-signed the Washington Trust Bank car loan, it would have been unfair to the general unsecured creditors to classify this debt separately in Debtor's Chapter 13 plan. The loan was acquired for the benefit of Wolferman; she drove the car. No moral obligation would exist for Gonzales to repay the loan.
However, H & N Electric, Debtor's employer, also co-signed the loan. Debtor has strong reason to repay the loan in full, regardless of the provisions of the Chapter 13 plan. Debtor may be fired, again, if H & N Electric has to repay the loan on behalf of Debtor. As a practical matter, Debtor is going to repay the loan to keep his job. Therefore, separate classification of this debt is justified. The Bankruptcy Court did not err by permitting separate classification of the Washington Trust Bank car loan co-debt.
Second, SRCU argues that the Washington Trust Bank credit card cannot be co-debt because Wolferman's limited income of $400 per month could not have played a part in receipt of the credit card. Again, since Wolferman, H & N Electric, and Gonzales co-signed for the credit extension, and since the credit card was primarily used for personal, family or household purposes, the Washington Trust Bank credit card is "co-debt" for purposes of § 1322(b)(1).
Additionally, separate classification of the credit card debt fairly discriminates against other unsecured creditors. See In re Cheak, 171 B.R. at 57-58. SRCU admits in its opening brief that "only the debtor used the credit card." (See Ct. Rec. 4, p. 6.) By co-signing the credit card application, Wolferman accommodated Gonzales. She helped Gonzales. In addition, H & N Electric helped Gonzales by co-signing for the credit extension. Therefore, the rationale for permitting separate classification of co-signed unsecured debt under § 1322(b)(1) applies. The fact that Wolferman may have earned only $400 per month at the time the credit card was granted is of limited import. Her credit and income played some part in the issuance of the credit card, which ultimately benefitted Gonzales. The Bankruptcy Court properly permitted separate classification of this debt as well.
Third, SRCU contends that the co-debt owing Associated Credit for dental work performed on Wolferman is the debt of Wolferman.[7] Because Wolferman received the benefit of the extension of credit, SRCU maintains that Gonzales cannot be a co-debtor with Wolferman. Although, technically, the debt was not "co-signed," because Gonzales orally guaranteed the debt, for all intents and purposes the debt was "co-signed" since both Wolferman and Gonzales were liable on it. The credit extended for the dental services was primarily used for personal, family or household purposes. Therefore, the debt owing to Associated Credit is "co-debt" for purposes of § 1322(b)(1).
Nonetheless, separate classification of this unsecured debt would be unfair to the other unsecured creditors. Clearly, Wolferman alone benefitted from this debt. No *331 moral obligation exists for Gonzales to repay the debt since he was not the primary recipient of the credit. He only extended his credit to accommodate Wolferman. Therefore, no reason exists to treat this debt separately. The Bankruptcy Court erred by permitting separate classification of the debt owing to Associated Credit.
In sum, the Bankruptcy Court acted properly in overruling any objection to the Chapter 13 plan because the plan classified the car loan debt owing to Washington Trust Bank and the credit card debt owing to Washington Trust Bank separately from other unsecured debt. However, the Bankruptcy Court erred by failing to sustain the objections to the preferential classification accorded the Associated Credit dental-work debt. Accordingly,
IT IS HEREBY ORDERED:
1. The Order Confirming Chapter 13 Plan and Attorney's Fees to be Paid Through Plan, filed April 1, 1994 by the Bankruptcy Court is AFFIRMED IN PART, REVERSED IN PART, and REMANDED.
The issue of whether Debtor acted in good faith in proposing his Chapter 13 plan is REMANDED to the Bankruptcy Court for further factual findings as to the basis for overruling the objection of SRCU to Debtor's alleged good faith.
As to the issue of whether the unsecured creditors were "fairly" segregated into two different classes, the Bankruptcy Court is AFFIRMED in its decision regarding the child support obligation, the Washington Trust Bank car loan debt and the Washington Trust Bank credit card debt, and is REVERSED in its decision regarding the Associated Credit dental work debt.
IT IS SO ORDERED. The Clerk is hereby directed to enter this Order; furnish copies to counsel; remand to the Bankruptcy Court; and close the file.
NOTES
[1] H & N Electric re-hired Gonzales in March 1994, after this bankruptcy was filed.
[2] The Bankruptcy Court also is requested to make express findings as to whether the value of property to be distributed under the Chapter 13 plan is not less than the amount that would be paid if the estate of the debtor were liquidated under Chapter 7. See 11 U.S.C. § 1325(a)(4). In addition, the Bankruptcy Court should make findings as to SRCU's claim of fraudulent transfer under 11 U.S.C. § 548.
[3] SRCU focuses on this case as requiring express consent by a child support creditor before child support arrearage can be included within a plan. No other case imposes this requirement. Even so, DSHS filed a claim in this case and chose not to object to the plan. Presumably, the child support creditor in this case agreed with repayment through the plan.
[4] Since SRCU will receive nothing on the unsecured portion of its loan, this second rationale is inapplicable to the case at hand.
[5] SRCU also has concern with repayment to Household Finance for a computer loan made to Debtor. That computer was subsequently gifted to Wolferman. In Schedule D, the computer loan is listed as a debt secured by the value of the computer $365. On the remaining portion of the $1,250 loan, Household Finance apparently will receive nothing. See Debtor's Chapter 13 Plan (indicating that only DSHS, Washington Trust Bank, and Associated Credit will be repaid at 100%; remaining unsecured creditors will be paid at 0%). Therefore, the court need not address the propriety of the alleged 100% repayment to Household Finance since it appears that Household Finance will not be paid 100%.
[6] SRCU argues throughout that the claimed co-debt should not be classified separately because Debtor has failed to show a business purpose for the classification. (Citing In re Wolff, 22 B.R. at 511-12). In re Wolff does not require a "business purpose" for separate classification. Business purpose just happened to be the reason put forth by the debtor in that case to justify the discrimination. Moreover, In re Wolff did not discuss co-debt as a basis for separate classifications of unsecured debt, especially since the case was decided 2 years before the amendment allowing separate treatment for co-debt. See In re Cheak, 171 B.R. 55, 57 (Bankr.S.D.Ill.1994) ("Section 1322(b)(1) was amended in 1984 to add the provision regarding codebtor claims").
Cases discussing co-debt do not require a business purpose for a separate classification. See In re Dornon, 103 B.R. at 61. Case law is replete with instances where a court classified co-signed debt separately from general unsecured debt regardless of a business reason for doing so. See In re Todd, 65 B.R. 249 (Bankr.N.D.Ill.1986) (need to maintain confidence and harmony with police partner justified discrimination favoring co-debt with that partner).
[7] Interestingly, SRCU failed to raise a Statute of Frauds argument in the Bankruptcy Court regarding this debt. Apparently, at the time of the dental work, Gonzales personally told the dentist that Gonzales would be responsible for the bill. In other words, Gonzales orally guaranteed payment of the dental bill. Usually, a guarantee must be in writing. See Kirkland v. Dressel, 104 Wash. 668, 177 P. 643 (1919) (oral contract assuming and agreeing to pay debt of another is unenforceable by statute of frauds). Nevertheless, even if SRCU now wished to raise a Statute of Frauds argument to exclude the co-debt dental bill from the Chapter 13 plan, SRCU could not. A Statute of Frauds argument must be raised in the bankruptcy court to preserve such an argument for appeal. See In re Fairchild Aircraft Corp., 6 F.3d 1119, 1128 (5th Cir.1993) (affirming waiver of argument under Statute of Frauds for failure to raise in bankruptcy court); See also In re Gilchrist, 891 F.2d 559, 561 (5th Cir.1990) (noting well-established doctrine that reviewing courts do not consider arguments or claims not presented to the bankruptcy court). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2244577/ | 769 N.E.2d 207 (2002)
Gregory FINGER, Appellant-Defendant,
v.
STATE of Indiana, Appellee-Plaintiff.
No. 49A02-0106-CR-389.
Court of Appeals of Indiana.
June 4, 2002.
*208 Kathleen M. Sweeney, Indianapolis, IN, Attorney for Appellant.
Steve Carter, Attorney General of Indiana, Scott A. Kreider, Deputy Attorney *209 General, Indianapolis, IN, Attorneys for Appellee.
OPINION
BROOK, Chief Judge.
Case Summary
Appellant-defendant Gregory Finger ("Finger") appeals the trial court's order denying his motion to suppress evidence. We reverse.
Issue
Finger raises one issue for review, which we restate as whether the trial court erred in denying Finger's motion to suppress evidence.
Facts and Procedural History
On September 18, 2000, at around 10:30 p.m., Finger was sitting in the driver's seat of a car parked on the south curb of 56th Street near the intersection Meridian Street intersection in Indianapolis. Finger's companion, Michael Crosby ("Crosby"), was sitting in the passenger seat. Officer Richard Young ("Young") of the Butler Police Department received a dispatch stating that a concerned citizen had reported a suspicious vehicle located near the intersection of 56th and Meridian Streets.
Young drove to the intersection, parked his police cruiser behind Finger's car, and activated his emergency lights.[1] Young, who was in uniform, approached the car and asked Finger what was happening. Finger told Young that the car had run out of gas and that a passerby would soon be returning with more gas. Young made a quick glance at the gas gauge.[2] After obtaining identification from Finger and Crosby, Young returned to his police cruiser and ran a license check and warrant check, both of which came back negative. Instead of returning the identifications to Finger and Crosby, Young retained them.
After Young had been at the scene for five to ten minutes, two more Butler police officers arrived in one vehicle. Young told these officers that Finger and Crosby claimed to be out of gas.[3] One officer stood on the passenger side of the car, and at least two officers shone their flashlights into the car. The officers noticed a knife on the back seat and some ammunition on the front seat. Young asked about the knife and ammunition; Finger and Crosby replied that they did not know what the knife and ammunition were doing in the car or to whom the objects belonged. At the suppression hearing, Young testified that although this explanation made him suspicious, he had no indication that any crime had been or was being committed. Tr. at 25.
At this point the officers had Young and Crosby step out of the car. The officers then removed the knife and ammunition for their safety.[4] Young noticed a slight odor of alcohol about Finger. After the two Butler officers arrived, Young noticed that Finger and Crosby became nervous. At one point, Crosby apparently stated a *210 different reason as to why he and Finger had parked there.[5]
Fifteen to twenty minutes after Young first arrived on the scene, and about ten minutes after his fellow Butler officers arrived, the officers overheard a call on an Indianapolis Police Department North District Channel that a robbery had just taken place. The robbery occurred at a liquor store at the southeast corner of North Illinois and 56th Streets, about one block away from where Finger and Crosby were parked. Based on the robbery call and the inconsistent explanations, the officers decided to detain Finger and Crosby and Mirandized them. At this point, about twenty minutes had elapsed since Young had arrived.
Young turned the investigation over to the Indianapolis Police Department ("IPD"). IPD officers brought the robbery victims to the scene. The victims identified Crosby, but not Finger, as having been involved in the robbery. The IPD officers found the identification card of a victim of a previous robbery inside the car. In addition, the perpetrators of both the previous robbery and this night's robbery had attempted to tie up the victims with shoelaces, and Finger was wearing tennis shoes with no shoelaces.
IPD Detective Delbert Shelton ("Shelton") transported Finger to police headquarters. Five hours after arriving at police headquarters, Finger gave a taped statement to Shelton.[6] Shelton detected an odor of alcohol on Finger's breath and some degree of physical impairment in Finger's walking. Finger told Shelton that he had been drinking, and Shelton believed that Finger was somewhat impaired at the time that he gave the taped statement.
On September 22, 2000, the State charged Finger with Class B felony conspiracy to commit robbery, two counts of Class B felony robbery, and two counts of Class B felony criminal confinement. On April 26, 2001, Finger filed a motion to suppress all evidence obtained through what he alleged was an illegal investigatory stop and detention due to a lack of "reasonable suspicion of criminal activity afoot." Appellant's App. at 54. He also moved to suppress his taped statement because his level of intoxication rendered it involuntary and unknowing. The trial court held a hearing on Finger's motion on May 4, 2001. Following the hearing, Finger moved to supplement the suppression record with the probable cause affidavit and police report, which motion was granted by the trial court.
On May 10, 2001, the trial court denied Finger's motion to suppress. In its ruling, the trial court found that Young's initial approach of Finger's car was not an investigatory stop, but rather an attempt to assist a motorist who may have been having car trouble.[7] The trial court further found that Young had "specific and articulable facts sufficient to give rise to a reasonable suspicion that a person had committed or was committing a crime." Id. at 96. The trial court's order reads in relevant part as follows:
47. The Court specifically finds that once Officer Young made the decision to detain the defendant, he considered the following which rises to the level of reasonable suspicion:
a. The defendant smelled of an odor of an alcoholic beverage;
*211 b. That Officer Young heard a radio run that a robbery had been committed at the liquor store at 56th & Illinois by two black males;
c. That the defendant's car was located less than one block from the liquor store; and
d. That the information provided to Officer Young by the defendant and his passenger as to what they were doing in the area was inconsistent.
Id.
The trial court further found that the officers properly seized the knife and ammunition lying in plain view in the back seat of the car out of concern for their safety. The trial court also found that under the totality of the circumstances, Finger's taped statement was given voluntarily and intelligently. The trial court certified its order for interlocutory appeal,[8] and this court accepted jurisdiction.
Discussion and Decision
Finger argues that the trial court erred in finding that Young approached Finger to assist him, and that Young did not make an investigatory stop. Finger claims that there were insufficient facts to support the requisite reasonable suspicion for an investigatory stop. Finger bases his claims on both Article I, Section 11 of the Indiana Constitution and the Fourth Amendment of the United States Constitution.[9]
The State argues that the trial court properly denied Finger's motion to suppress because Young did not stop the car but was responding to a call about a suspicious vehicle that was supposedly out of gas.[10] The State claims that "during the investigation reasonable suspicion developed," Appellee's Br. at 4, and that therefore the trial court did not abuse its discretion in denying Finger's motion to suppress.
A. Standard of Review
We review the denial of a motion to suppress in a manner similar to other sufficiency matters. We do not reweigh the evidence, and we consider conflicting evidence most favorable to the trial court's ruling. However, unlike the typical sufficiency of the evidence case where only the evidence favorable to the judgment is considered, we must also consider the uncontested evidence favorable to the defendant.
Overstreet v. State, 724 N.E.2d 661, 663 (Ind.Ct.App.2000) (citations omitted).
B. Fruit of the Poisonous Tree
"Evidence seized illegally or obtained as a result of an illegal seizure by a government agent is not directly admissible in a criminal or quasi-criminal proceeding against a person whose expectation of privacy was violated by the illegal seizure." C.D.T. v. State, 653 N.E.2d 1041, 1044-45 (Ind.Ct.App.1995).
*212 The "fruit of the poisonous tree" doctrine is one facet of the exclusionary rule of evidence which bars the admissibility in a criminal proceeding of evidence obtained in the course of unlawful searches and seizures. When applied, the doctrine operates to bar not only evidence directly obtained, but also evidence derivatively gained as a result of information learned or leads obtained during an unlawful search or seizure. To invoke the doctrine, a defendant must show that challenged evidence was obtained by the State in violation of the defendant's Fourth Amendment rights. Stated differently, the defendant must show that the search or seizure was illegal in the first instance. Where there is no illegal search or seizure, there can be no "fruit of the poisonous tree."
Hanna v. State, 726 N.E.2d 384, 389 (Ind. Ct.App.2000).
C. Three Levels of Police Investigation
There are three levels of police investigation. Overstreet, 724 N.E.2d at 663. Two of these, an investigatory stop and an arrest or detention, implicate the Fourth Amendment's prohibition against unreasonable searches and seizures. See id. The third, a consensual encounter, does not. Id.
First, the Fourth Amendment requires that an arrest or detention for more than a short period be justified by probable cause. Probable cause to arrest exists where the facts and circumstances within the knowledge of the officers are sufficient to warrant a belief by a person of reasonable caution that an offense has been committed and that the person to be arrested has committed it. Second, it is well-settled Fourth Amendment jurisprudence that police may, without a warrant or probable cause, briefly detain an individual for investigatory purposes if, based on specific and articulable facts, the officer has a reasonable suspicion that criminal activity "may be afoot." Accordingly, limited investigatory stops and seizures on the street involving a brief question or two and a possible frisk for weapons can be justified by mere reasonable suspicion. Finally, the third level of investigation occurs when a law enforcement officer makes a casual and brief inquiry of a citizen which involves neither an arrest nor a stop. In this type of "consensual encounter" no Fourth Amendment interest is implicated.
Id. (citations omitted).
What begins as a consensual encounter may evolve into an investigatory stop. See Bovie v. State, 760 N.E.2d 1195, 1198 (Ind.Ct.App.2002). "In a consensual encounter, the individual remains free to disregard the police officer and to walk away. Only when an individual no longer remains free to leave does an investigatory stop begin." Id. See also Terry v. Ohio, 392 U.S. 1, 19 n. 16, 88 S.Ct. 1868, 20 L.Ed.2d 889 (1968) ("Only when the officer, by means of physical force or show of authority, has in some way restrained the liberty of a citizen may we conclude that a `seizure' has occurred.").
The United States Supreme Court has held that "in order to determine whether a particular encounter constitutes a seizure, a court must consider all the circumstances surrounding the encounter to determine whether the police conduct would have communicated to a reasonable person that the person was not free to decline the officers' requests or otherwise terminate the encounter." Florida v. Bostick, 501 U.S. 429, 439, 111 S.Ct. 2382, 115 L.Ed.2d 389 (1991). This is an objective test: the proper inquiry is "not whether the citizen perceived that he was being *213 ordered to restrict his movement, but whether the officer's words and actions would have conveyed that to a reasonable person." California v. Hodari D., 499 U.S. 621, 628, 111 S.Ct. 1547, 113 L.Ed.2d 690 (1991); see also Knowles v. State, 571 N.E.2d 1308, 1311 (Ind.Ct.App.1991).
Examples of circumstances under which a reasonable person would have believed he was not free to leave include the threatening presence of several officers, the display of a weapon by an officer, some physical touching of the person of the citizen, or the use of language or tone of voice indicating that compliance with the officer's request might be compelled.
Overstreet, 724 N.E.2d at 664.
D. Retention of Finger's Identification
Early in the course of the encounter, Young requested Finger's identification. Young then returned to his cruiser and ran a license and warrant check. After learning that Finger's license was valid and that he had no outstanding warrants, Young returned to the parked car and continued questioning Finger and Crosby. Instead of returning the identification to Finger, however, Young retained it. The inquiry here is whether, in light of all of the circumstances (including Finger's explanation that the car was out of gas), a reasonable person would feel free to leave when a police officer retains his or her license.
While we have found no Indiana cases dealing specifically with a police officer's retention of a driver's license in the consensual encounter context, other jurisdictions have concluded that a reasonable person would not feel free to leave when a police officer retains his or her identification. In Florida v. Royer, 460 U.S. 491, 103 S.Ct. 1319, 75 L.Ed.2d 229 (1983), the Supreme Court stated that a defendant in an airport could not, as a practical matter, leave the airport because the defendant's ticket and identification had been seized and retained by the police, and the police had taken the defendant's luggage. Id. at 504 n. 9, 103 S.Ct. 1319. The Royer court distinguished the case from United States v. Mendenhall, 446 U.S. 544, 100 S.Ct. 1870, 64 L.Ed.2d 497 (1980), in which the court determined that a law enforcement agent's questioning of the defendant in an airport was a consensual encounter:
Here, Royer's ticket and identification remained in the possession of the officers throughout the encounter; the officers also seized and had possession of his luggage. As a practical matter, Royer could not leave the airport without them. In Mendenhall, no luggage was involved, the ticket and identification were immediately returned, and the officers were careful to advise that the suspect could decline to be searched. Here, the officers had seized Royer's luggage and made no effort to advise him that he need not consent to the search.
Id.
The Seventh Circuit Court of Appeals considered three airport drug courier cases in the wake of the Supreme Court's Royer decision. In United States v. Cordell, 723 F.2d 1283 (7th Cir.1983), cert. denied (1984), the court stated:
When officers O'Connor and Abreu identified themselves as police officers, asked Cordell if he would speak to them, and requested his identification and airline ticket, they were doing nothing that could be construed as a Fourth Amendment seizure unless one views all encounters between the police and citizens as seizures requiring justification, and we do not.
However, when O'Connor handed Cordell's driver's license and airline ticket *214 to Abreu, and told Cordell they were conducting a narcotics investigation, the encounter had become a detention.
Id. at 1285. Two years later, in United States v. Borys, 766 F.2d 304 (7th Cir. 1985), cert. denied (1986), the court stated, "Officers' retaining airline tickets and driver's licenses has been a crucial factor in finding that a seizure has occurred. Suspects deprived of their ticket and identification are effectively deprived of the practical ability to terminate the questioning and leave." Id. at 310. Finally, in United States v. Soto-Lopez, 995 F.2d 694 (7th Cir.1993), the court held that the circumstances "did not rise above the level of a consensual encounter" when one police officer took notes as another police officer read the information from the driver's license. Id. at 699. "When an officer merely glances at a ticket, it does not amount to a seizure." Id. (emphasis in original).
The Eleventh Circuit Court of Appeals analogized airplane tickets and driver's licenses in the Fourth Amendment context. In United States v. Thompson, 712 F.2d 1356 (11th Cir.1983), a police officer approached a car parked in long-term parking at the Jacksonville Airport in Florida. See id. at 1358. As he approached, the officer noticed that the driver had an object held to his nose. Id. The driver moved the object quickly to his side when he noticed the officer. Id. The officer asked the driver for identification. Id. The driver produced his driver's license. Id. The officer retained the license while he continued to question the driver. Id. The court stated,
The cases holding that a Terry-type stop occurs where law enforcement officers retain a person's airline ticket are controlling. In a purely physical sense, the retention of a person's airline ticket does not prevent him from leaving the company of law enforcement agents. He may, if he has sufficient funds, attempt to purchase another ticket and depart to his chosen destination. Or he may simply try to walk away, abandoning his plans to travel by air. But the cases ... hold that despite physical possibility of departure, a reasonable person whose airline ticket has been retained would not believe that the officers would permit him to depart.
As in the airline ticket cases, the person whose driver's license has been retained can, in a physical sense, attempt to leave the scene. He can abandon his vehicle and walk away, or attempt to drive away. As the airline ticket cases hold, however, the legal issue is whether a reasonable person would believe that law enforcement officers would permit him to leave. Contrasted with a person whose airline ticket has been retained, a person in a car whose license has been retained has less reason to expect that he will be permitted to leave. While a person may theoretically purchase another airline ticket and proceed on his way, a driver whose license has been retained may drive away only at the risk of arrest. Thus, the airline ticket cases reinforce, if not compel, our conclusion that a driver whose license has been retained would not reasonably believe himself free to leave.
Id. at 1360-61.
Finally, in United States v. Jordan, 958 F.2d 1085 (D.C.Cir.1992), where police officers stopped Jordan as he prepared to climb into his car and asked to see his identification, the court held that "what began as a consensual encounter between [the police officer] and Jordan graduated into a seizure when the officer asked Jordan's consent to a search of his bag, after he had taken and still retained Jordan's driver's license." Id. at 1088.
*215 These cited authorities establish that a consensual encounter becomes an investigatory stop under the Fourth Amendment when a law enforcement agent retains an individual's driver's license or other identification. Under the facts of the instant case, we need not determine the precise moment at which Young's retention of Finger's identification transformed the consensual encounter into an illegal investigatory stop because Young retained Finger's identification long before the reasonable suspicion required to conduct a legal investigatory stop developed. We therefore reverse the trial court's order denying Finger's motion to suppress the evidence obtained from the illegal stop and Finger's subsequent statement to police.
Reversed.
RILEY, J., and MATHIAS, J., concur.
NOTES
[1] At the suppression hearing, Young testified, "I activated my emergency equipment being that this is at an intersection and approached the vehicle to ascertain if I could offer any assistance." Tr. at 6.
[2] Young testified that he later looked at the gas gauge "more closely to confirm that[he] had seenthe gas needle was not on empty." Tr. at 14. According to Young, the gas gauge registered approximately one-eighth (1/8) of a tank of gas. Id. at 15.
[3] On cross-examination, Young acknowledged that he probably told the officers that he had run a license and warrant check. Tr. at 23.
[4] Young testified that they might have searched the car for a handgun matching the ammunition. Tr. at 27.
[5] This reason is not specified in the record.
[6] The contents of Finger's statement are not included in the record or appendix.
[7] Young testified that he had been dispatched to investigate "a suspicious vehicle with two subjects sitting inside the vehicle[.]" Tr. at 6.
[8] In his appellate brief, Finger mistakenly asserts that this court has "jurisdiction of this [interlocutory appeal] pursuant to Ind. Appellate Rule 4(B)(6)." Appellant's Br. at 1. Under the current rules of appellate procedure, effective January 1, 2001, this court has "jurisdiction over appeals of interlocutory orders under [Appellate] Rule 14." Ind. Appellate Rule 5(B).
[9] We do not reach Finger's Indiana constitutional claim because we find Fourth Amendment jurisprudence dispositive of the issue.
[10] To the extent that the State implies that Young knew that the car was out of gas when he responded to the call, this interpretation of the facts is somewhat skewed. The record does not indicate that the concerned citizen reported the car as anything more than suspicious, and certainly not that the car was out of gas. Rather, the record clearly indicates that Young did not learn that the car was supposedly out of gas until he began questioning Finger. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1722735/ | 849 S.W.2d 373 (1993)
Pat GOGGINS, Appellant,
v.
Darlene LEO, Appellee.
No. B14-92-00269-CV.
Court of Appeals of Texas, Houston (14th Dist.).
February 4, 1993.
*374 Stephen N. Riner, Houston, for appellant.
Jeffery R. Singer, Houston, for appellee.
Before MURPHY, CANNON and MORSE (Sitting by Designation), JJ.
*375 OPINION
CANNON, Justice.
This is a forcible detainer case. Darlene Leo ("Leo") successfully sued Pat Goggins ("Goggins") in justice court for possession of Leo's condominium. Goggins lost on her appeal to the county court and now appeals to us. We affirm.
For approximately four years, Goggins had leased a condominium from Exocet, Inc. ("Exocet"), not a party to this suit. In May 1988 Ponderosa Forest Utility District and other taxing entities (collectively "Ponderosa") obtained a judgment against Exocet in the 11th District Court for unpaid taxes. In September 1988 the Harris County Precinct No. 4 constable conducted a tax foreclosure sale, but there were no bidders, and the property was struck off to Ponderosa. The record does not contain the deed, but we assume that Ponderosa acquired title to the condo by tax sale deed. In July 1991 for reasons unclear from the record, a second tax foreclosure sale was held where Ponderosa obtained another tax sale deed. That same month, Leo purchased the property from Ponderosa by tax resale deed. She immediately requested in writing that Goggins vacate the property. In August 1991 after Goggins refused to leave, Leo filed a forcible detainer action in the Justice Court, Precinct No. 4, Harris County, and the court awarded Leo possession. In November 1991 Goggins appealed to the County Civil Court at Law No. 2, Harris County (the "trial court"). After a trial de novo bench trial, the county court again awarded Leo possession. Goggins appeals.
A summary of relevant dates and transactions follows:
(1) May 25, 1988Judgment, by the 11th District Court foreclosing on the condo in favor of Ponderosa and ordering a tax sale.
(2) June 20, 1988First Order of Sale.
(3) September 6, 1988First Tax Foreclosure Sale, but no bidders and condo struck off to Ponderosa.
(4) Date Unknown (not in record)First Tax Sale Deed, conveyance to Ponderosa.
(5) May 22, 1991Second Order of Sale.
(6) July 18, 1991Tax Resale Deed, tax resale to Leo.
(7) July 29, 1991Second Tax Foreclosure Sale, condo bought by Ponderosa.
(8) July 29, 1991Second Tax Sale Deed, conveyance to Ponderosa.
In point of error eight, Goggins complains that the trial court erred in failing to grant her motion for directed verdict because there was no evidence or insufficient evidence that the condo was located within the jurisdiction of Justice Court, Precinct No. 4, Harris County.
The justice court in the precinct in which the real property is located has jurisdiction in forcible detainer actions. Tex. Prop. Code Ann. § 24.004 (Vernon Supp. 1993). The appellate jurisdiction of the county court is confined to the jurisdictional limits of the justice court. Standard Inv. Co. v. Dowdy, 122 S.W.2d 1107, 1109 (Tex.Civ.AppDallas 1938, writ dism'd). The county court has no jurisdiction on appeal unless the justice court had jurisdiction. Lewis v. Terrell, 154 S.W.2d 151, 153 (Tex.Civ.App.Austin 1941, writ refd w.o.m.); 6 Tex. JUR.3d Appellate Review § 946 (1980).
A no evidence challenge requires this court to review only the evidence and reasonable inferences from the evidence that tend to support the finding, disregarding all evidence and inferences to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522 (Tex. 1988). We uphold the finding if there is any evidence of probative force in the record to support it. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).
Goggins requested that the trial court take judicial notice of the complaint for forcible detainer filed by Leo in the justice court. That sworn complaint reads in part, "... the premises situated at 2103 Place Rebecca D7 [,] Houston, Texas 77090 together with the dwelling and outhouses situated in the Justice of the Peace Precinct No. 4...." We find that this is *376 some evidence in support of the implied finding that the condo was located in Precinct No. 4, and we overrule Goggins' no evidence challenge.
To review a complaint of factual insufficiency, we weigh all the evidence in support of and contrary to the challenged finding. We uphold the finding unless we conclude that the evidence is so weak or so against the great weight and preponderance of the evidence that the finding was manifestly erroneous or unjust. Id. In a bench trial, the trial court is the finder of fact and may take into consideration all the facts and surrounding circumstances in connection with the testimony of each witness and accept or reject all or any part of that testimony. Southwestern Bell Media, Inc. v. Lyles, 825 S.W.2d 488, 493 (Tex. App.Houston [1st Dist.] 1992, writ denied).
Leo's sworn complaint avers that the condo was situated in Precinct No. 4. As there was no controverting evidence, we find that the sworn complaint was sufficient to establish the location of the condo and that the trial court's implied finding to that effect was not manifestly erroneous or unjust. We overrule Goggins' insufficient evidence challenge and point eight.
In point seven Goggins argues that the trial court erred in denying her plea in abatement because the dominant jurisdiction over all aspects of the case was vested in the 11th District Court by virtue of the 1988 foreclosure suit.
Goggins contends that the trial court should have dismissed Leo's suit due to the "pendency of Cause No. 86-00465" in the 11th District Court. We disagree that the cause was "pending." The 11th District Court rendered a final judgment on May 25, 1988. However, the record does reflect that Leo filed an application for writ of possession on November 15, 1991, to enforce that judgment. Nevertheless, that enforcement action would not preclude Leo from pursuing a parallel forcible detainer in justice court. Forcible detainer is cumulative, not exclusive, of other remedies. Anarkali Enters, v. Riverside Drive Enters., 802 S.W.2d 25, 26 (Tex.App.Fort Worth 1990, no writ). Justice and district court remedies may be employed concurrently. Hartzog v. Seeger Coal Co., 163 S.W. 1055, 1060 (Tex.Civ.App.Dallas 1914, no writ). We overrule point seven.
In point four, Goggins complains that the trial court erred in awarding title to the condo to Leo because there was no evidence or insufficient evidence of Leo's chain of title.
The trial court's judgment stated, "... [T]he property the subject of this lawsuit... is hereby awarded to Plaintiff Darlene Leo." (emphasis ours). The writ of possession which followed stated, "... Plaintiff(s)... recovered judgment against defendants), Pat Goggins, for possession of the premises____" (emphasis ours). We find that the trial court awarded possession, not title, to Leo, and we overrule point four.
In point five, Goggins contends that the trial court erred in awarding title to Leo because there were no pleadings asserting a claim of title. As in point four, we find that the trial court did not award title to Leo, and we overrule point five.
In point six, Goggins asserts that the trial court erred in awarding title to Leo because the trial court did not have subject matter jurisdiction over suits to determine title to land or recovery of land. As in points four and five, we find that the trial court did not award title to Leo. Moreover, we refer Goggins to Tex. Gov't Code Ann. § 25.1032(c)(1) & (6) (Vernon Supp.1993) where the Harris County courts at law are given jurisdiction to decide the issue of title and hear suits for recovery of real property. We overrule point six.
In point two, we reach the heart of Goggins' appeal. Goggins complains that there was no evidence or insufficient evidence to support the implied finding that she committed a forcible detainer. Goggins argues that the only evidence of ownership is Leo's own testimony and her 1991 tax resale deed, and that such evidence is deficient.
The action of forcible detainer was created by the legislature to provide a speedy *377 and inexpensive remedy for determination of who is entitled to possession of property. Johnson v. Fellowship Baptist Church, 627 S.W.2d 203, 204 (Tex.App.Corpus Christi 1981, no writ). Tex.Prop.Code Ann. § 24.002 (Vernon Supp.1993) states in pertinent part:
(a) A person who refuses to surrender possession of real property on demand commits a forcible detainer if the person: (1) is a tenant or a subtenant wilfully and without force holding over after the termination of the tenant's right of possession; (2) is a tenant at will or by sufferance, including an occupant at the time of foreclosure of a lien superior to the tenant's lease; or (3) is a tenant of a person who acquired possession by forcible entry, (emphasis added).
A no evidence challenge requires this court to review only the evidence and reasonable inferences from the evidence that tend to support the finding, disregarding all evidence and inferences to the contrary. Davis, supra. We uphold the finding if there is any evidence of probative force in the record to support it. In re King's Estate, supra.
The undisputed facts are that Goggins had lived in the condominium from approximately November 1987 and paid rent monthly to Exocet, the prior owner. The testimony conflicted on whether Goggins and Exocet had a one-year lease or whether Goggins was merely a month-to-month tenant. No lease was introduced into evidence. There was no lease or other agreement between Goggins and Leo. Goggins did not claim to be the owner of the property. Leo purchased the condo from Ponderosa by the 1991 tax resale as evidenced by her 1991 tax resale deed and her own testimony. Leo gave timely written demand for possession. Goggins refused to leave or pay rent to Leo.
There was no landlord-tenant relationship between Leo and Goggins nor any forcible entry. Therefore, Leo's only theory of recovery was that Goggins was a tenant by sufferance, i.e., an occupant at the time of foreclosure of a lien superior to the tenant's lease. A tenant at sufferance does not have privity with the landlord but is merely an occupant in naked possession after his right to possession has ceased. See Black's Law Dictionary 1314 (5th ed. 1979).
Leo was required to prove the following elements under this theory of recovery: (1) Leo was the owner, (2) Goggins was an occupant at the time of foreclosure, (3) the foreclosure was of a lien superior to Goggins' lease, (4) Leo made demand for possession, and (5) Goggins refused to leave. See § 24.002, supra.
There was evidence of Leo's ownership. Leo's tax resale deed was evidence of ownership as was her uncontroverted testimony. Goggins complains that Leo did not comply with Tex.R.Civ.P. 798 regarding proof of title to a common source. But Rule 798 applies only to trespass to try title suits. She also contends that Leo is required to prove chain of title when seeking to prove title under an execution sale, including but not limited to the execution deed, order of sale, and officer's return. But the authority she relies on, Sledge v. Craven, 254 S.W.2d 888, 890 (Tex.Civ.App.Galveston 1953, no writ) and 34 tex.JuR.3d Enforcement of Judgments § 132 (1984) relate to trespass to try title and enforcement of judgment situations respectively, not to forcible detainer. Leo need not prove up title, but need only show sufficient evidence of ownership to demonstrate a superior right to immediate possession. In fact, Tex.R.Civ.P. 746 specifically prohibits the adjudication of the merits of title in a forcible detainer action.
There was evidence that Goggins was an occupant of the condo at the time of foreclosure. It was undisputed that Goggins was living in the condo at the time of the 1991 tax sale and resale. There was evidence that the foreclosure was of a lien superior to Goggins' lease. Ponderosa's tax lien arose from the 1988 judgment. If the lease was renewed annually as Goggins testified, then the latest one-year lease must have been renewed after the tax lien and would be inferior to it. See 50 TexJur. Liens § 12 (1986) (first in time, first in *378 right). There was evidence that Leo made demand for possession. It was undisputed that Leo gave Goggins 30-days written notice before bringing her forcible detainer action. Finally, there was undisputed evidence that Goggins refused to surrender possession. We find that there was some evidence supporting the trial court's implied conclusion that Goggins committed a forcible detainer, and we overrule her no evidence challenge.
An insufficient evidence challenge requires us to consider the evidence both in support of and contrary to the challenged findings. We set aside the finding only if the evidence is so weak or the finding so against the great weight and preponderance of the evidence as to be clearly wrong or unjust. In re King's Estate, supra. In a bench trial, the trial court is the finder of fact and may take into consideration all the facts and surrounding circumstances in connection with the testimony of each witness and accept or reject all or any part of that testimony. Southwestern Bell Media, Inc., supra.
Goggins did not controvert the above facts establishing forcible detainer. Rather, she attempted unsuccessfully to introduce evidence relating to the 1991 tax sale to Ponderosa in order to show that Leo's title was burdened by Exocet's right of redemption. As we explain under the next point, we find that evidence to be relevant to the issue of possession but not helpful to Goggins' position. We therefore find the evidence sufficient to support the trial court's conclusion that Goggins committed a forcible detainer and overrule point two.
In point three, Goggins complains that the trial court improperly excluded evidence relevant to Leo's right to possession, i.e., the testimony of Mark Brooks, attorney for Ponderosa; the 1991 order of sale; and the 1991 Ponderosa deed. The trial court sustained Leo's relevancy objection.
The substance of Brooks' excluded testimony was that a tax sale was held in July of 1991 and that Ponderosa acquired title via tax sale deed. The testimony, order of sale, and deed were preserved by bill of exception.
Goggins argues that the excluded evidence was offered to prove that Leo's right of possession had not yet commenced. The tax code provides for a two-year period of redemption within which the former owner can repurchase the foreclosed property. That period begins to run when the tax sale deed is recorded. Tex.Tax Code Ann. § 34.-21(a) (Vernon 1992). The 1988 judgment authorizing the tax sale states in part:
AND IT IS FURTHER ORDERED, AJUDGED AND DECREED by the Court that the Clerk of this Court withhold the issuance of a writ of possession to the land above described and ordered sold, or any part thereof which is sold, until the expiration of the period of redemption fixed by law, and if, before the expiration of said period of redemption, no person who is entitled to redeem the said property have exercised the right of redemption, then at that time a writ of possession shall immediately be issued.... (emphasis added).
Goggins argues that this judgment and restriction on possession is binding on Ponderosa as purchaser at the tax sale. She maintains that the 1991 Ponderosa deed has not yet been filed of record, so the period of redemption has not even begun. She reasons that Ponderosa has no right to immediate possession and that Leo acquires no greater right than Ponderosa under her quitclaim tax resale deed.
Leo replies that the 1991 tax sale evidence is not relevant because, under Tex. R.Civ.P. 746, the only issue in forcible detainer is the right to possession and the merits of title shall not be adjudicated.
Rule 746 notwithstanding, evidence of title may be received in forcible detainer actions, not for the purpose of determining title, but in connection with or incident to the right of possession. Haith v. Drake, 596 S.W.2d 194, 197 (Tex.App.Houston [1st Dist.] 1980, writ ref'd n.r.e.); 41 Tex. JuR.3d Forcible Entry and Detainer § 12 (1985). Goggins' excluded evidence cannot be deemed irrelevant merely because the evidence relates to title.
*379 We find that the 1991 tax sale evidence was relevant to the issue of possession and that the trial court erred in excluding it. However, we also find that the error was harmless.
Under prior law, in effect at the time of the 1988 judgment, a purchaser at a tax sale could take possession of the property only after the former owner's period of redemption had run. See, e.g., State v. Moak, 146 Tex. 322, 207 S.W.2d 894, 896 (1948). In 1989, however, the tax code was changed to permit a purchaser at a tax sale to take possession during the former owner's redemption period. The 1989 amendment to § 34.21 added a subsection (c):
The right of redemption does not grant or reserve in the former owner of the real property the right to the use or possession of the property, or to receive rents, income, or other benefits from the property while the right of redemption exists.
Tex.Tax Code Ann. § 34.21(c) (Vernon 1992). Section 49(e) of the 1989 amendatory act provides:
The change in law ... applies only to a tax sale held on or after [June 15, 1989]. The interest of the owner of real property sold at a tax sale before the effective date ... is covered by the law in effect when the tax sale was held, and the former law is continued in effect for that purpose.
Acts 1989, 71st Leg., ch. 796, § 33, eff. July 15, 1989 (emphasis added). Section 49(e) makes clear that the 1991 tax sale was governed by the new § 34.21(c).
If Leo's chain of title runs from the 1991 tax sale and Ponderosa deed, then the 1989 amendment to the tax code permits Ponderosa and Leo to take possession despite the former owner's redemption period. We find that the evidence relating to the 1991 tax sale is relevant because the evidence tended to make more probable a fact of consequence to the determination of the action, i.e., that Leo's right of possession had commenced. Tex.R.Civ.P. 401.
However, that evidence could only harm Goggins' position. Therefore, while we find that Goggins' proffered evidence on the 1991 tax sale was relevant to the issue of possession, we also find that excluding that evidence did not harm Goggins. The error was not calculated to cause nor did cause the rendition of an improper judgment. Tex.R.App.P. 81(b)(1). We overrule point two.
In point one, Goggins complains that the trial court abused its discretion by failing to file findings of fact and conclusions of law. She contends that she is unable to discern the facts and grounds of recovery on which the trial court based its judgment.
Goggins' original and follow-up requests for findings of fact and conclusions of law were timely. Failure of a court to file findings and conclusions is presumed harmful unless the record affirmatively shows that appellant suffered no harm. Cherne Industs. v. Magallanes, 763 S.W.2d 768, 772 (Tex.1989); see Vickery v. Texas Carpet Co., 792 S.W.2d 759, 763 (Tex.AppHouston [14th Dist.] 1990, writ denied) (no harm when appellant failed to appear, offered no defense, and appellee's evidence was simple and sufficient). The test for harm is whether the circumstances of the particular case would require an appellant to guess at the reasons for the trial court's decision. Sheldon Pollack Corp. v. Pioneer Concrete of Texas, Inc., 765 S.W.2d 843, 845 (Tex.App.Dallas 1989, writ denied). In other words, the issue is whether the appellant was prevented from making a proper presentation of his case on appeal. Eye Site, Inc. v. Blackburn, 750 S.W.2d 274, 277 (Tex.App. Houston [14th Dist.] 1988), rev'd on other grounds, 796 S.W.2d 160 (Tex.1990).
We find that there was only one possible theory of recovery for Leo and that the implied findings necessary for that recovery were supported by the evidence. Leo never alleged forced entry and so Tex.Prop. Code Ann. § 24.001, the forcible entry and detainer statute, was inapplicable. The facts were undisputed that no landlord-tenant relationship existed between Goggins *380 and Leo, and so the only recovery under Tex.Prop.Code Ann. § 24.002, the forcible detainer statute, was under subsection (a)(2). Under that provision, Leo could recover possession by showing that she was the current owner, that Goggins was an occupant at the time of the foreclosure of a lien superior to her former lease, and that Goggins refused to vacate after Leo's demand for possession. We find that the record affirmatively reflects that Goggins was not impaired in bringing her appeal because of confusion over Leo's theory of recovery or the necessary evidentiary support. It is clear from her brief that Goggins correctly discerned Leo's only possible theory of recovery. We overrule point one.
There being no reversible error, we affirm the judgment below. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2576726/ | 8 F. Supp. 2d 908 (1998)
Denise René DUPRÉ, Plaintiff,
v.
HARRIS COUNTY HOSPITAL DISTRICT d/b/a Ben Taub General Hospital, Defendant.
No. Civ.A. H-96-3280.
United States District Court, S.D. Texas.
June 12, 1998.
*909 *910 *911 Richard S. London, London Schaeffer and Patterson, Houston, TX, for plaintiff.
Mary E. Baker, Office of Harris County Attorney, Houston, TX, Bruce Stephen Powers, Office of Harris Cty. Attorney, Houston, TX, for defendant.
MEMORANDUM AND ORDER
CRONE, United States Magistrate Judge.
Pending before the court is Defendant Harris County Hospital District's ("Harris County") Motion for Summary Judgment (# 22). Harris County seeks summary judgment on Plaintiff Denise René Dupré's ("Dupré") claims of discrimination and retaliation in violation of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq., and intentional infliction of emotional distress.
Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, this court is of the opinion that Harris County's motion should be granted.
*912 I. Background
On September 6, 1992, Dupré was hired by the Assistant Vice President of Perinatal Nursing Leela Thomas ("Thomas") to serve as a nurse in the neonatal intensive care unit at Ben Taub Hospital ("Ben Taub"). Shortly thereafter, Dupré requested "a compressed weekend schedule which meant working eight hours or more on consecutive days...." Her request was granted, resulting in Dupré's shifts regularly lasting about sixteen hours. Dupré generally worked at the hospital only on Fridays, Saturdays, and Sundays, although she would occasionally work other days. While employed at Ben Taub, Dupré was supervised by Head Nurse Pippa Andrews ("Andrews"), and subsequently by Head Nurse Felicia King ("King"). During this period, Leela Thomas ("Thomas") was the Director of Nursing.
In December 1994, Dupré took time off from work to seek treatment for depression. She was treated by Louis A. Fallace, M.D. ("Fallace"), who prescribed the medications Klonopin, Paxil, and lithium and advised her to rest. It was at this time she was diagnosed as suffering from bipolar disorder.[1] Dupré provided Harris County with a Return to Work form signed by Fallace, dated December 15, 1994, which states:
This is to certify that Denise Dupré has been treated by the undersigned for an illness, from 12-8-94 to Present.
It is my impression that this patient has recovered sufficiently to return to work on or about 12-16-94.
The letter does not state the nature of the illness for which Dupré was treated, although it does identify Fallace as a physician specializing in psychiatry.
According to Dupré she informed King and Thomas of her bipolar disorder and depression around this time.[2] Dupré also alleged that all of her co-workers were aware of her disability, while Thomas stated at her deposition that she was only aware that Dupré "had an attendance problem." Dupré contends that she specifically informed King that her disability restricted the amount of stress that she could endure on the job. Further, she purportedly told King that the physical fatigue associated with her condition and her medication also limited her ability to work a 16-hour shift. Dupré alleges that she requested accommodation of her condition in the form of a transfer to a low-risk nursery or a shorter shift. Dupré maintains that King refused her request and told her that no other positions were available.
Dupré contends that she also informed Thomas of these difficulties and confided that she suffered additional stress because a man who had raped her as a child Dupré's former brother-in-law worked in an adjacent unit. Dupré asserts that she requested a transfer to a less-stressful position in a regular nursery or a low-risk nursery, or that she be given a part-time position. Thomas allegedly refused to transfer Dupré or to place her in a part-time position, stating that there were no other nursery positions available and that the hospital did not have any part-time positions. Dupré contends that "Febe Aldana and Guadalupe Manito ... were transferred to positions which were less stressful than mine around the same time that I requested such a transfer." The affidavit of Tena Gardner ("Gardner") Director of Human Resources for Harris County states that the hospital's records confirm that Phebe Aldana ("Aldana") transferred from *913 the neonatal intensive care unit to the newborn nursery, but not until April 17, 1995, several months after Dupré was terminated. As to Guadalupe Manito ("Manito"), the hospital's records indicate that she worked in the neonatal intensive care unit until her resignation on October 21, 1995, nine months after Dupré's termination, and, following her resignation, she was listed on the nursing registry. It is undisputed, however, that two "potentially less stressful" positions that became available on December 26, 1994, and January 2, 1995, during Dupré's tenure at Ben Taub, were posted in the emergency room. Felecia Peterson Former Nurse Manager of the Neonatal Intensive Care Unit at Ben Taub states in her affidavit that job listings for nurse "positions at Ben Taub were posted on the first floor of the hospital and were readily available for Ms. Dupré's review." In fact, Dupré acknowledges in her affidavit that positions in the regular and low-risk nurseries were posted in the emergency room. There is no evidence, however, that Dupré ever applied for either of these positions or for any position posted at Ben Taub.
Throughout Dupré's employment at the hospital, nurses in the neonatal intensive care unit were responsible for the care of two or three infants. On January 13, 1995, King filed an Employee Report concerning an allegation that Dupré was negligent and conducted unsafe nursing practices with respect to one of the infants under her care. Specifically, the report alleges that on January 8, 1995, Dupré "incorrectly transcribe [sic] PBS (phenobarbital) for baby Boyd. 5 mg daily was ordered but 20 mg daily was transcribed to the Kardex. The order was signed by Ms. Dupré." King filed another Employee Report on January 13, 1995, alleging that on January 8, 1995, Dupré was negligent and unsafe in her nursing practices insofar as she incorrectly hung the intravenous fluids for baby Boyd ("Boyd"). Specifically, she transposed the UVC and UAC lines.[3] Dupré, however, avers that the fluid lines were correctly positioned, and that the actual problem resulted from a malfunction in the line pumps. Nevertheless, Dupré was placed on probation for ninety days, purportedly based on these two incidents. According to Dupré, the stated reasons are a mere pretext, and her disability and absences from work mused by her illness were the actual motivating factors for her being placed on probation. She contends that Harris County's refusal to investigate the true cause of the fluid lines incident is based on her disability. Dupré argues that "a nurse who was not disabled would not have been placed on probation, would have been given a real investigation of the incident...." Dupré further alleges that King "constantly harassed and questioned" her about her medical condition and informed her that she could not miss any more work during the probationary period.[4] In addition, Dupré perceived King as being "more distant," "very hurried," uncomfortable around her, and not as friendly as she had been.
Dupré's probationary period was scheduled to run from January 24, 1995, to April 23, 1995. Dupré confirmed at deposition that she was notified that any incidents of negligence or unsafe practices during this period would result in further disciplinary action, including termination. On January 25, 1995, King filed another Employee Report, in which she alleged that on January 22, 1995, Dupré and another nurse, Adrian DeJohnnette ("DeJohnnette"), "did not do the change-of-shift chart check" and that Dupré did not do the 24-hour chart check. Specifically, Boyd was to be fed 6.7 cc every three hours, but a mistranscription by DeJohnnette recorded the order as 6.7 cc every hour.[5]*914 Dupré contends, however, that she checked the chart, but failed to notice that the dosage was to be administered every three hours rather than every hour. As a result of Dupré's oversight, DeJohnnette's mistranscriptions remained undetected, and "Boyd received the incorrect rate of gastric feed flow for another eight hours." Consequently, Boyd required additional corrective care, including a chest x-ray, the administration of oxygen, and the administration of Lasix.
After the Employee Report was filed, Dupré attended a meeting with King and Thomas during which they discussed the incident. Prior to the meeting, King informed Thomas that Dupré complained of being depressed. Harris County terminated Dupré on January 30, 1995, purportedly for failing to discover DeJohnnette's error. It also subjected her to peer review and reported her alleged misconduct to the Texas Board of Nurse Examiners. DeJohnnette received a less-severe discipline suspension for three days and ninety-days probation purportedly because she was not already on probation. Dupré asserts that, were it not for her disability, she "would have not been terminated when another nurse had mistranscribed feeding orders."
After her termination, Dupré filed a grievance with Harris County. A grievance hearing was held on February 21, 1995. On February 24, 1995, Thomas sent a letter to Richard London Dupré's attorney stating:
I have considered all of the information presented at Ms. Dupré's grievance hearing on February 21, 1995. Because of the significance of the multiple errors from a medical point of view, I have decided to uphold the termination.
The termination also was upheld at the next step of the grievance procedure. On April 4, 1995, Harris County informed Dupré that because she had filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"), it was terminating the grievance procedure as directed by its internal policies. Specifically, the Harris County Hospital District Employee Handbook states in part: "In the event that external proceedings are invoked prior to or during a grievance procedure, the grievance or potential grievance will be considered resolved through any agreements resulting from the external process."
Dupré has held five different nursing positions following her termination from Ben Taub. Between April and June 1995, she was employed as a traveling nurse for Medical Express, which primarily entailed caring for newborns. She testified that she left this job because of exhaustion created by her depression. After an eight-month period of unemployment, she served as a "school nurse fillin" for the Lamar School District. She worked as a temporary nurse in late 1995, 1996, and 1997, dealing with infants, intensive care nursery, and postpartum mothers. Among the places she worked were Women's Hospital, HS Doctor's Hospital in Coral Gables, Florida, Mercy Hospital in Laredo, Texas, Texas Children's Hospital in Houston, and Conroe Regional Medical Center. From June 1997 to the present, Dupré has worked as a nurse at the Conroe Regional Medical Center in the neonatal intensive care unit. She reports that none of these employers has complained about her performance. Dupré also testified that in 1995, she applied for permanent nursing positions at St. Joseph's Hospital, Hermann Hospital, Visiting Nurses, Methodist Hospital, Southwest Memorial, Richmond State School, a hospital formerly known as Pasadena General, and at Polly Ryon in Rosenberg, Texas.
Dupré filed a charge of discrimination with the EEOC on March 20, 1995, alleging discrimination on the basis of a disability as well as retaliation. Subsequently, on May 26, 1995, she filed another charge of discrimination alleging retaliation due to Harris County's decision to end the internal review of her termination.[6] On October 2, 1996, Dupré instituted this action, seeking recovery for discrimination and retaliation under the ADA as well as intentional infliction of emotional distress under Texas law.
*915 II. Analysis
A. Summary Judgment Standard
Rule 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED.R.CIV.P. 56(c). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Marshall v. East Carroll Parish Hosp. Serv. Dist., 134 F.3d 319, 321 (5th Cir.1998); Wenner v. Texas Lottery Comm'n, 123 F.3d 321, 324 (5th Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 1514, 140 L. Ed. 2d 667 (1998). The moving party, however, need not negate the elements of the nonmovant's case. See Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994)).
Once a proper motion has been made, the nonmoving party may not rest upon mere allegations or denials in the pleadings, but must present affirmative evidence, setting forth specific facts, to show the existence of a genuine issue for trial. See Celotex Corp., 477 U.S. at 322-23, 106 S. Ct. 2548; Anderson, 477 U.S. at 257, 106 S. Ct. 2505; Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Marshall, 134 F.3d at 321-22; Wallace, 80 F.3d at 1047; Little, 37 F.3d at 1075. All the evidence must be construed "in the light most favorable to the non-moving party without weighing the evidence, assessing its probative value, or resolving any factual disputes." Williams v. Time Warner Operation, Inc., 98 F.3d 179, 181 (5th Cir.1996) (citing Lindsey v. Prive Corp., 987 F.2d 324, 327 n. 14 (5th Cir.1993)); see Marshall, 134 F.3d at 321; Messer v. Meno, 130 F.3d 130, 134 (5th Cir. 1997); Hart v. O'Brien, 127 F.3d 424, 435 (5th Cir.1997). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49 n. 5, 111 S. Ct. 401, 112 L. Ed. 2d 349 (1990) (quoting Anderson, 477 U.S. at 255, 106 S. Ct. 2505); see Marshall, 134 F.3d at 321.
Nevertheless, the nonmovant's burden is not satisfied by "some metaphysical doubt as to material facts," conclusory allegations, unsubstantiated assertions, speculation, or "only a `scintilla' of evidence." Little, 37 F.3d at 1075; see Hart, 127 F.3d at 435; Wallace, 80 F.3d at 1047; Douglass v. United Serv. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir.1996) (citing Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871, 115 S. Ct. 195, 130 L. Ed. 2d 127 (1994)). Summary judgment is mandated if the non-movant fails to make a showing sufficient to establish the existence of an element essential to her case on which she bears the burden of proof at trial. See Celotex Corp., 477 U.S. at 322, 106 S. Ct. 2548; Wenner, 123 F.3d at 324. "In such a situation, there can be `no genuine issue as to any material fact' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 322-23.
B. Americans with Disabilities Act
The ADA is a federal antidiscrimination statute designed to prevent otherwise qualified individuals from being discriminated against in employment based on a disability. See 29 C.F.R. § 1630, App.; Taylor, 93 F.3d at 160-61. To achieve this goal, the ADA provides that "[n]o covered entity shall discriminate against a qualified individual with a disability because of the disability of such individual in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment." 42 U.S.C. § 12112(a); see also Taylor, 93 F.3d at 162; Daigle v. Liberty Life Ins. Co., 70 F.3d 394, 396 (5th Cir.1995); Daugherty v. City of El Paso, 56 F.3d 695, 696 (5th Cir.1995), cert. denied, 516 U.S. 1172, 116 S. Ct. 1263, 134 *916 L.Ed.2d 211 (1996); Dutcher v. Ingalls Shipbuilding, 53 F.3d 723, 725 (5th Cir.1995). The ADA defines a "qualified individual with a disability" as "an individual with a disability who, with or without a reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires." 42 U.S.C. § 12111(8).
1. Prima Facie Case and Burden of Proof
To recover under the ADA, the plaintiff must prove that she was discriminated against on the basis of her disability. See Daigle, 70 F.3d at 396; Jacques v. Clean-Up Group, Inc., 96 F.3d 506, 510-11 (1st Cir. 1996); Allison v. Department of Corrections, 94 F.3d 494, 497 (8th Cir.1996). The plaintiff may present either direct evidence of disability discrimination or may employ the indirect method of proof utilized in other types of discrimination cases. See Taylor, 93 F.3d at 162; Rizzo v. Children's World Learning Ctrs., Inc., 84 F.3d 758, 762 (5th Cir.1996); see also McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). In the absence of direct evidence of discrimination, the plaintiff can establish a prima facie case under the ADA by showing that:
(1) she has a "disability;"
(2) she is qualified for the job;
(3) she was subject to an adverse employment action; and
(4) she was replaced by a non-disabled person or was treated less favorably than non-disabled employees.[7]
See Burch v. Coca-Cola Co., 119 F.3d 305, 320 (5th Cir.1997) (citing Daigle, 70 F.3d at 396), cert. denied, ___ U.S. ___, 118 S. Ct. 871, 139 L. Ed. 2d 768 (1998); see also Turco v. Hoechst Celanese Corp., 101 F.3d 1090, 1092 (5th Cir.1996) (citing Rizzo, 84 F.3d at 763).
If the plaintiff succeeds in making this prima facie showing, a rebuttable presumption of discrimination arises, and the burden of production shifts to the employer to articulate a legitimate, nondiscriminatory reason for its actions. See Daigle, 70 F.3d at 396 (citing Burdine, 450 U.S. at 254, 101 S. Ct. 1089); Olitsky v. Spencer Gifts, Inc., 964 F.2d 1471, 1478 n. 19 (5th Cir.1992), cert. denied, 507 U.S. 909, 113 S. Ct. 1253, 122 L. Ed. 2d 652 (1993); EEOC v. Texas Bus Lines, 923 F. Supp. 965, 969-70 (S.D.Tex. 1996). While the employer need not prove that its actions were motivated by the legitimate reason, it must produce some evidence in support of its proffered reason. See Daigle, 70 F.3d at 396 (citing St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 507-10, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993)); Texas Bus Lines, 923 F.Supp. at 970. "The defendant's burden is merely one of production and not of persuasion". See Burdine, 450 U.S. at 257-58, 101 S. Ct. 1089. "If the employer produces any evidence `which, taken as true, would permit the conclusion that there was a nondiscriminatory reason for the adverse action,' then the employer has satisfied its burden of production." Daigle, 70 F.3d at 396 (quoting St. Mary's Honor Ctr., 509 U.S. at 507, 113 S. Ct. 2742); see also Texas Bus Lines, 923 F.Supp. at 970.
If the employer meets its burden of production, the presumption is dissolved, and the burden shifts back to the plaintiff to demonstrate that the proffered reason is a pretext for discrimination the defendant's alleged nondiscriminatory reason is false and the real reason for the adverse action is disability discrimination. See Armendariz v. Pinkerton Tobacco Co., 58 F.3d 144, 148 (5th Cir.1995) (citing St. Mary's Honor Ctr., 509 U.S. at 510-11, 113 S. Ct. 2742), cert. denied, 516 U.S. 1047, 116 S. Ct. 709, 133 L. Ed. 2d 664 (1996); Daigle, 70 F.3d at 396. As with discrimination cases generally, the plaintiff at all times bears the ultimate burden of persuading the trier of fact that she has been the victim of illegal discrimination based on her disability. See id. (citing St. Mary's Honor Ctr., 509 U.S. at 511, 113 S. Ct. 2742). *917 To prevail on an ADA claim, the plaintiff must prove that an adverse employment decision was made solely because of her disability. See Turco, 101 F.3d at 1092; Rizzo, 84 F.3d at 763.
a. ADA-Qualified Disability
Harris County contends that Dupré has not satisfied her burden with respect to showing that she suffered from an ADA-qualified disability.
The ADA defines a disability as:
(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual;
(B) a record of such impairment; or
(C) being regarded as having such impairment.
42 U.S.C. § 12102(2); see also Pryor v. Trane Co., 138 F.3d 1024, 1026 (5th Cir. 1998); Hamilton v. Southwestern Bell Tel. Co., 136 F.3d 1047, 1050 (5th Cir.1998); Still v. Freeport-McMoran, Inc., 120 F.3d 50, 52 (5th Cir.1997); Robinson v. Global Marine Drilling Co., 101 F.3d 35, 36 (5th Cir.1996), cert. denied, ___ U.S. ___, 117 S. Ct. 1820, 137 L. Ed. 2d 1028 (1997). The ADA further restricts the meaning of physical and mental impairment to:
(1) Any physiological disorder, or condition, cosmetic disfigurement, or anatomical loss affecting one or more of the following body systems: neurological, musculoskeletal, special sense organs, respiratory (including speech organs), cardiovascular, reproductive, digestive, genito-urinary, hemic and lymphatic, skin, and endocrine; or
(2) Any mental or psychological disorder, such as mental retardation, organic brain syndrome, emotional or mental illness, and specific learning disabilities.
Dutcher, 53 F.3d at 726 n. 5 (quoting 29 C.F.R. § 1630.2(h)(1), (2)). "A physical impairment, standing alone, is not necessarily a disability as contemplated by the ADA. The statute requires an impairment that substantially limits one or more of the major life activities." Id. at 726. The ADA defines neither "substantially limits" nor "major life activities," but the EEOC regulations under the ADA, which adopt the same definition of major life activities as used in the Rehabilitation Act, provide significant guidance. Id.; see also Hamilton, 136 F.3d at 1050; Bolton, 36 F.3d at 942; Chandler, 2 F.3d at 1391. "Major life activities means functions such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, and working." Hamilton, 136 F.3d at 1050 (quoting 29 C.F.R. § 1630.2(i)); Dutcher, 53 F.3d at 726; Bolton, 36 F.3d at 942; Chandler, 2 F.3d at 1390. The factors that should be considered in determining whether an impairment substantially limits a major activity include:
(1) the nature and severity of the impairment;
(2) its duration or expected duration; and
(3) its permanent or expected permanent or long-term impact.
See Hamilton, 136 F.3d at 1050 (citing 29 C.F.R. § 1630, App., § 1630.2(j)); Oswalt v. Sara Lee Corp., 74 F.3d 91, 92 (5th Cir.1996); Dutcher, 53 F.3d at 726; Bolton, 36 F.3d at 943. Substantially limited means:
(i) Unable to perform a major life activity that the average person in the general population can perform; or
(ii) Significantly restricted as to the condition, manner or duration under which an individual can perform a particular major life activity as compared to the condition, manner, or duration under which the average person in the general population can perform the same major life activity.
Pryor, 138 F.3d at 1026 n. 12 (quoting 29 C.F.R. § 1630.2(j)(i), (ii)); accord Hamilton, 136 F.3d at 1050 n. 5; Sherrod v. American Airlines, Inc., 132 F.3d 1112, 1119 (5th Cir. 1998); Dutcher, 53 F.3d at 726 n. 8.
While "working" is listed as one of the major life activities, "`working' does not mean working at a particular job of [one's] choice." Turco v. Hoechst Celanese Chem. Group, Inc., 906 F. Supp. 1120, 1127 (S.D.Tex. 1995) (citing Wooten v. Farmland Foods, 58 F.3d 382, 385-86 (8th Cir.1995)), aff'd, 101 F.3d 1090 (5th Cir.1996); see also Dutcher, 53 F.3d at 727. "`[S]ubstantially limits means significantly restricted in the ability to perform either a class of jobs or a broad range of jobs in various classes as compared to the average person having comparable training, skills and abilities. The inability to perform a single, particular job does not *918 constitute a substantial limitation in the major life activity of working.'" Pryor, 138 F.3d at 1027 (quoting 29 C.F.R. § 1630.2(j)(3)(i)); see Hamilton, 136 F.3d at 1051; Sherrod, 132 F.3d at 1120; Still, 120 F.3d at 52. "An employee's inability to perform one aspect of his job while retaining the ability to perform the work in general does not amount to a substantial limitation of the activity of working." Dutcher, 53 F.3d at 727 (citing Chandler, 2 F.3d at 1392) (citing with approval Elstner v. Southwestern Bell Tel. Co., 659 F. Supp. 1328, 1343 (S.D.Tex.1987), aff'd, 863 F.2d 881 (5th Cir.1988)).
In the case at bar, Dupré's bipolar disorder and the medication prescribed to treat it reportedly left her fatigued, incapable of working a 16-hour shift, and unable to deal with stressful situations. These impairments, however, do not affect the major life functions set forth in the EEOC's regulations. See Palmer v. Circuit Court of Cook County, 117 F.3d 351, 352 (7th Cir .1997) (depression and anxiety caused by conflict with supervisor or coworker did not constitute a disability), cert. denied, ___ U.S. ___, 118 S. Ct. 893, 139 L. Ed. 2d 879 (1998); Weiler v. Household Fin. Corp., 101 F.3d 519, 524 (7th Cir.1996) (heightened anxiety and stress, migraines and depression triggered by an unpleasant supervisor were not substantial limitations on a major life activity). Dupré does not contend that her disability prevents her from caring for herself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, or working generally. Similarly, Dupré has not provided any medical records, reports, opinions, or documents that even suggest that her ability to work or function in any capacity was substantially limited by her disability or the medication she was taking. See Adams v. Rochester Gen. Hosp., 977 F. Supp. 226, 232 (W.D.N.Y.1997). Indeed, one month prior to her termination, Fallace stated "this patient has recovered sufficiently to return to work on or about 12-16-94." Thus, Dupré's own psychiatrist believed that she was capable of performing the functions of her job. In addition, Dupré alleges that, prior to her termination she sought a transfer to a less-stressful nursing position, which confirms that even Dupré believed her impairment not to be so disabling as to completely foreclose her from working as a nurse.
The evidence fails to demonstrate that Dupré's bipolar disorder prevented her from performing an entire class of jobs, or even a broad range of jobs. A court must reject "plaintiff's argument that she was substantially limited in the activity of working where her condition only restricted her performance of one job ...." Paleologos v. Rehab Consultants, Inc. 990 F. Supp. 1460, 1465 (N.D.Ga.1998) (holding that plaintiff was not substantially limited in her performance of a major life activity where she experienced stress at the thought of going to work and dealing with management). Rather, Dupré conceded in her deposition that following her termination she has held several nursing jobs similar to the one she held with Harris County. In fact, within months of her termination, she was caring for newborns, and she has held various positions dealing with infants, some in an intensive care nursery, over the past several years. Currently, she is employed as a nurse in the neonatal intensive care unit at Conroe Regional Medical Center, a job she has held for the past year. According to Dupré, none of these employers expressed dissatisfaction with her performance. Thus, it is apparent that her disability does not preclude her from working or from continuing to work in her chosen profession of nursing.
Dupré manifestly "retains the ability to compete successfully with similarly skilled individuals and no facts indicate that [s]he is unable to perform a class of jobs nor a broad range of jobs." See Hamilton, 136 F.3d at 1051; Gaul v. Lucent Tech. Inc., 134 F.3d 576, 580 n. 3 (3d Cir.1998) ("we strongly suspect that a plaintiff who is unable to work with individuals who cause him `prolonged and inordinate stress' cannot be said to be incapable of performing a `class of jobs or a broad range of jobs in various classes'"). While Dupré's illness may have caused her some difficulty, she has not shown that she has an impairment that substantially limits a major life activity. See Forrisi v. Bowen, 794 F.2d 931, 934-35 (4th Cir.1986) (plaintiff with fear of heights is not disabled because his condition did not substantially limit plaintiff's *919 work, only his ability to perform particular job); Howard v. Navistar Int'l Transp. Co., 904 F. Supp. 922, 929 (W.D.Wis.1995) (employee did not suffer impairment that substantially limited major life activity, and thus was not disabled, where his only limitation was that he could not operate particular machine), aff'd, 107 F.3d 13, 1997 WL 53044 (7th Cir.1997). Having no disability cognizable under the ADA, Dupré has failed to adduce summary judgment evidence that she has a record of having an impairment that substantially limits a major life activity.
Similarly, Dupré has not shown that she is regarded by others as having such an impairment nor has she demonstrated she was treated as having such an impairment. Harris County continued to employ Dupré after she allegedly reported her illness to King and Thomas. She continued to hold all of her previous responsibilities and duties following her diagnosis. Other than a statement of her own subjective beliefs, Dupré has offered no evidence indicating that Harris County or its agents regarded Dupré as being limited by her disorder. An employee's own subjective belief of discrimination, however, no matter how genuine, cannot serve as the basis for judicial relief. See, e.g., Price v. Marathon Cheese Corp., 119 F.3d 330, 337 (5th Cir.1997); Nichols v. Loral Vought Sys. Corp., 81 F.3d 38, 42 (5th Cir.1996); Douglass, 79 F.3d at 1430; Ray v. Tandem Computers, Inc., 63 F.3d 429, 434 (5th Cir.1995); Armendariz, 58 F.3d at 153; EEOC v. Louisiana Office of Community Servs., 47 F.3d 1438, 1448 (5th Cir.1995). While Dupré contends that King stated, "I just don't understand you folks, I have not had any experience with mental illness or manic-depressive people personally," this statement, standing alone, does not indicate that King treated Dupré differently because of her bipolar disorder. Therefore, as Dupré has not shown that she suffered from a disability, was limited as to a major life activity as a result of the attitudes of others, or was treated as having a substantially limiting impairment, she has failed to establish the first element of a prima facie case of discrimination under the ADA.
b. Adverse Employment Action
Dupré complains that, in addition to being placed on probation and ultimately terminated, Harris County's discriminatory treatment took various forms, including King's purported questioning about her disorder and King's alleged failure to treat Dupré with the same friendliness that she did prior to learning about her illness.
Under the ADA, as in the Title VII context, adverse employment actions include discharges, demotions, refusals to hire, refusals to promote, and reprimands. See Kocsis v. Multi-Care Management, Inc., 97 F.3d 876, 885 (6th Cir.1996) (reassignment to different division not adverse employment action); Yates v. Avco Corp. 819 F.2d 630, 638 (6th Cir.1987); Lulac Councils 4433 & 4436 v. City of Galveston, 979 F. Supp. 514, 518 (S.D.Tex.1997). With respect to the definition of an "adverse employment action," the Seventh Circuit has explained:
A materially adverse change in the terms and conditions of employment must be more disruptive than a mere inconvenience or an alteration of job responsibilities. A materially adverse change might be indicated by a termination of employment, a demotion evidenced by a decrease in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished material responsibilities, or other indices that might be unique to a particular situation.
Crady v. Liberty Nat'l Bank & Trust Co., 993 F.2d 132, 136 (7th Cir.1993) (no adverse action where job transfer merely caused personal inconvenience or altered job responsibilities); see Harlston v. McDonnell Douglas Corp., 37 F.3d 379, 382 (8th Cir.1994) (reassignment to a different position without any reduction in title, salary, or benefits was not adverse employment action although new position involved different duties and was more stressful); Flaherty v. Gas Research Inst., 31 F.3d 451, 457 (7th Cir.1994) (semantic change in title and "bruised ego" did not constitute adverse employment action where pay, benefits, and level of responsibility remained the same); Spring v. Sheboygan Area Sch. Dist., 865 F.2d 883, 885 (7th Cir.1989) (transfer to a dual principalship over two schools with higher *920 pay was not an adverse employment action); Page v. Bolger, 645 F.2d 227, 233 (4th Cir.), cert. denied, 454 U.S. 892, 102 S. Ct. 388, 70 L. Ed. 2d 206 (1981) (process used in selecting board members that evaluated plaintiff's qualifications for promotion did not involve an adverse employment action).
Here, although Dupré challenges her probation and termination, she does not complain that she was demoted, not promoted, or reprimanded while employed at Ben Taub. Dupré's allegations concerning King's questions about her disability and King's unfriendly demeanor are minor inconveniences that do not rise to the level of actionable conduct. Moreover, while these allegations are found in her complaint, at deposition, Dupré testified that King never asked her questions about her disability. Thus, the only competent evidence that exists on this point refutes Dupré's allegations, as an unverified complaint does not constitute proper summary judgment evidence. See King v. Dogan, 31 F.3d 344, 346 (5th Cir.1994); see also Behrens v. Pelletier, 516 U.S. 299, 309, 116 S. Ct. 834, 133 L. Ed. 2d 773 (1996); Wallace, 80 F.3d at 1047. Consequently, Dupré has failed to satisfy her burden of showing an adverse employment action as to any claims aside from her probation and termination.
c. Replaced by Non-disabled Person or Treated Adversely
Harris County also contends that Dupré has failed to establish that she was replaced by a non-disabled person or that she was treated less favorably than similarly situated individuals without a disability.
There is no evidence before the court indicating that Dupré was replaced by a non-disabled individual. She has proffered no evidence regarding the identity of the nurse who replaced her, much less whether her replacement was disabled. In fact, the record is devoid of any information concerning whether her former position in the neonatal intensive care unit was filled after her termination. Dupré also has presented no evidence that she suffered disparate treatment when she was placed on probation after two reported incidents of negligence and unsafe practices. She does not contest the mistranscription of Boyd's phenobarbital dosage, which occurred on January 8, 1995, nor does she state that this error was an insufficient cause for being placed on probation. Although she avers that she did not transpose the fluid lines, Dupré has not shown that other similarly situated, non-disabled employees, who were charged with comparable infractions, were not placed on probation.
Although she asserts that Harris County failed properly to investigate the alleged transposition of the fluid lines because of discriminatory animus, Dupré has presented no evidence in support of this claim. She has not shown that other individuals, whether disabled or not, were afforded an expanded review process when accused of wrongdoing. Furthermore, she does not allege that she actively sought further review beyond requesting that King and Thomas investigate the alleged incident. She makes no allegation that she attempted to seek redress from hospital officials or that they refused to conduct an inquiry. There also is no indication that she utilized the internal grievance procedure to correct any perceived impropriety with regard to her being placed on probation.
With respect to Dupré's failure to notice DeJohnnette's transcription error while performing the change-of-shift chart check and the 24-hour chart check, Dupré does not deny that she was negligent in falling to notice the mistake. Moreover, she does not contend that she should not have be disciplined for her negligence, but only complains that she was disciplined more severely than DeJohnnette. Dupré does not dispute, however, that she was on probation at the time of this incident, while DeJohnnette was not. Nor does Dupré dispute that the Employee Report for the fluid lines incident, which she signed, specifically warned her that "[i]f any other incident of negligence/unsafe practices is reported during this period, further disciplinary action (including termination) will be taken." Rather, she admitted that she was warned that any future incidents could result in her termination. Thus, although Dupré's termination constituted a greater punishment than DeJohnnette's three-day suspension and ninety-day probation, Dupré's situation differed substantially from that of DeJohnnette, as Dupré was already on probation and had been warned that another infraction could result in her *921 termination. It is notable, however, that DeJohnnette was both suspended and placed on probation for this one error, whereas Dupré was not suspended for her previous infractions and was not placed on probation until after the second incident was reviewed. This suggests that Dupré received more favorable, rather than less favorable, treatment compared to a similarly situated employee.
As to Dupré's claim that Harris County refused to transfer her or reduce the length of her shift, Dupré, likewise, has failed to show that she was treated less favorably than other employees. Although she makes conclusory allegations that both Aldana and Manito were transferred to less-stressful positions, she has not sustained her summary judgment burden with respect to these allegations. Dupré has not demonstrated that she formally applied for any less-stressful positions. Instead, the uncontroverted evidence reflects that she did not apply for the two posted positions that became available in late December 1994 and early January 1995 or for any position posted at Ben Taub. Gardner states that in her affidavit that the procedures for intra-departmental transfers "generally required a written request." A plaintiff alleging discrimination who fails to apply for a desired position may still establish a prima facie case if she shows that filing a formal application would have been a futile gesture. See International Bhd. of Teamsters v. United States, 431 U.S. 324, 365, 97 S. Ct. 1843, 52 L. Ed. 2d 396 (1977); Chambers v. Wynne Sch. Dist., 909 F.2d 1214, 1217 (8th Cir.1990). Similarly, a plaintiff's failure to apply may be excused by "overwhelming evidence of pervasive discrimination in all aspects of [the employer's] internal employment practices." Kreuzer v. Brown, 128 F.3d 359, 363 n. 2 (6th Cir.1997) (quoting Harless v. Duck, 619 F.2d 611, 617-18 (6th Cir.), cert. denied, 449 U.S. 872, 101 S. Ct. 212, 66 L. Ed. 2d 92 (1980)), cert. denied, ___ U.S. ___, 118 S. Ct. 1802, 140 L. Ed. 2d 941 (1998); see Monfort, Inc. v. NLRB, 965 F.2d 1538, 1546 (10th Cir.1992). Dupré, however, has made neither showing.
Moreover, the unrefuted evidence indicates that the transfers about which Dupré complains took place well after her departure. In her affidavit, Dupré vaguely asserts that Aldana and Manito's alleged transfers occurred "around the same time that I requested such a transfer." Gardner's affidavit, however, establishes that Aldana's transfer occurred approximately four months after Dupré's alleged request for transfer, and about three months after her termination. Similarly, Gardner's affidavit reveals that Manito's departure from the neonatal intensive care unit occurred nine months subsequent to Dupré's termination, after which Manito received assignments only from the nursing registry. Thus, other than Dupré's own subjective belief, there is no evidence that Manito was ever transferred. Furthermore, there is no indication that either of these alleged positions was available at the time Dupré purportedly was seeking a transfer. Additionally, no evidence has been presented concerning the reasons for the alleged transfers, whether the alleged transferees formally applied for the positions, or whether Ben Taub initiated the alleged transfers. Likewise, Dupré does not contend that she was more qualified than Aldana and Manito or that she had equal qualifications for the positions. Furthermore, there is no evidence that Aldana and Manito were not disabled.
Finally, with respect to her request for a shorter shift, Dupré has not shown that any of her co-workers was granted a reduction in shift duration. Further, as Dupré had requested a compressed work week, requiring her to work only on weekends, any significant reduction in her shift would have resulted in her working less than a forty-hour week. It is uncontroverted, however, that Ben Taub did not have any part-time positions available. Where an employer has no part-time positions, a request for such a position is unreasonable and not required by the ADA. See Terrell v. USAir, 132 F.3d 621, 626 (11th Cir.1998). Similarly, an employer has no obligation to create a new "light duty" position for an employee. See Steffes v. Stepan Co., 144 F.3d 1070, 1073 (7th Cir.1998); Still, 120 F.3d at 53; Foreman v. Babcock & Wilcox Co., 117 F.3d 800, 809 (5th Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 1050, 140 L. Ed. 2d 113 (1998); Monette v. Electronic Data Systems Corp., 90 F.3d 1173, 1186 (6th Cir.1996) ("employers are not required to create new positions for *922 disabled employees in order to reasonably accommodate the disabled individual"). Nor is an employer required to implement "an accommodation that would result in other employees having to work harder or longer." Turco, 101 F.3d at 1094; see Kralik v. Durbin, 130 F.3d 76, 79 (3d Cir.1997); Daugherty, 56 F.3d at 700; Milton v. Scrivner, Inc., 53 F.3d 1118, 1124-25 (10th Cir.1995).
Thus, Dupré has not shown that she was replaced by a non-disabled person nor has she identified a similarly situated, non-disabled employee who was treated better than she. Accordingly, Dupré has failed to establish the fourth element of a prima facie case of discrimination under the ADA.
2. Legitimate, Nondiscriminatory Reason
Even if Dupré had established a prima facie case of disability discrimination, Harris County has set forth an adequate, nondiscriminatory reason for its actions.
Once a plaintiff establishes a prima facie case of discrimination, the burden of production shifts to the defendant to articulate a legitimate, nondiscriminatory reason for the adverse employment action. See St. Mary's Honor Ctr., 509 U.S. at 506-07, 113 S. Ct. 2742; Sherrod, 132 F.3d at 1122; Messer, 130 F.3d at 137; Faruki v. Parsons S.I.P., Inc., 123 F.3d 315, 320 (5th Cir.1997); Walton v. Bisco Indus., Inc., 119 F.3d 368, 370 (5th Cir.1997). The purpose of this step is "`to force the defendant to give an explanation for its conduct, in order to prevent employers from simply remaining silent while the plaintiff founders on the difficulty of proving discriminatory intent.'" Stratton v. Department of the Aging, 132 F.3d 869, 879 (2d Cir.1997) (quoting Fisher v. Vassar College, 114 F.3d 1332, 1335 (2d Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 851, 139 L. Ed. 2d 752 (1998)). "The employer need not persuade the court that it was motivated by the reason it provides; rather, it must simply articulate an explanation that, if true, would connote lawful behavior." Greenway v. Buffalo Hilton Hotel, 143 F.3d 47, 51 (2d Cir.1998); accord Williams, 98 F.3d at 181; Acevedo-Diaz v. Aponte, 1 F.3d 62, 67 (1st Cir.1993); Fields v. Clark Univ., 966 F.2d 49, 51 (1st Cir.1992), cert. denied, 506 U.S. 1052, 113 S. Ct. 976, 122 L. Ed. 2d 130 (1993). Hence, the defendant's burden is relatively light. See Greenway, 143 F.3d at 51.
"If the employer produces any evidence `which taken as true, would permit the conclusion that there was a nondiscriminatory reason for the adverse action,' then the employer has satisfied its burden of production." Daigle, 70 F.3d at 396 (quoting St. Mary's Honor Ctr., 509 U.S. at 507, 113 S. Ct. 2742); Texas Bus Lines, 923 F.Supp. at 970. "The employer's stated legitimate reason must be reasonably articulated and nondiscriminatory, but does not have to be a reason that the judge or jurors would act on or approve." Loeb v. Textron, Inc., 600 F.2d 1003, 1012 n. 6 (1st Cir.1979); see Nix v. WLCY Radio/Rahall Communications, 738 F.2d 1181, 1187 (11th Cir.1984). Indeed, even an employer's incorrect belief that "`an employee's performance is inadequate constitutes a legitimate, nondiscriminatory reason.'" Mayberry v. Vought Aircraft Co., 55 F.3d 1086, 1091 (5th Cir.1995) (quoting Little v. Republic Refining Co., Ltd., 924 F.2d 93, 97 (5th Cir.1991)). The articulated reason, however, must be "clear and specific." Gallo v. Prudential Residential Servs. Ltd. Partnership, 22 F.3d 1219, 1226 (2d Cir.1994). Furthermore, it "must be legally sufficient to justify a judgment for the [employer.]" Hodgens v. General Dynamics Corp., 144 F.3d 151, 160 (1st Cir.1998) (quoting Burdine, 450 U.S. at 255, 101 S. Ct. 1089); see Nichols, 81 F.3d at 41; Rhodes v. Guiberson Oil Tools, 75 F.3d 989, 992 (5th Cir.1996). If the defendant sustains it burden of production, "the presumption raised by the plaintiff's prima facie case essentially disappears, and the plaintiff is left with the ultimate burden." Tanik v. Southern Methodist Univ., 116 F.3d 775, 776 (5th Cir.), cert. denied, ___ U.S. ___, 118 S. Ct. 600, 139 L. Ed. 2d 488 (1997); accord Messer, 130 F.3d at 137; Grimes v. Texas Dep't of Mental Health & Mental Retardation, 102 F.3d 137, 140 (5th Cir.1996).
Here, Harris County has set forth a legitimate, non-discriminatory reason for Dupré's termination. Thomas explained in her affidavit, "I terminated Ms. Dupré's employment because of the seriousness of this third act of negligence, which occurred during her probation *923 period." In another affidavit, Thomas related that Dupré's disability played no role in her decision to terminate Dupré. Hence, Harris County has articulated a specific reason for Dupré's termination, which permits the conclusion that it was not based on a discriminatory animus, thus satisfying the burden of production.
3. Pretext for Discrimination
Because Harris County has carried its burden of articulating a legitimate, nondiscriminatory reason for terminating Dupré, to prevail, she must prove by a preponderance of the evidence that Harris County's proffered reason is a pretext for discrimination. See Travis v. Board of Regents, 122 F.3d 259, 263 (5th Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 1166, 140 L. Ed. 2d 176 (1998); Price, 119 F.3d at 337. To demonstrate a "pretext for discrimination," the plaintiff must show both that the employer's stated reason for its actions is false and that prohibited discrimination was the real reason for the employer's decision. See St. Mary's Honor Ctr., 509 U.S. at 515, 113 S. Ct. 2742; Travis, 122 F.3d at 263; Swanson v. General Servs. Admin., 110 F.3d 1180, 1185 (5th Cir.), cert. denied, ___ U.S. ___, 118 S. Ct. 366, 139 L. Ed. 2d 284 (1997); Louisiana Office of Community Servs., 47 F.3d at 1443. The evidence of pretext must be more substantial than pure speculation; a plaintiff must provide sufficiently specific reasons for her allegations of pretext. See Nichols, 81 F.3d at 42. "The employer, of course, will be entitled to summary judgment if the evidence taken as a whole would not allow a jury to infer that the actual reason for the discharge was discriminatory." Rhodes, 75 F.3d at 994; see Price, 119 F.3d at 337.
Here, Dupré has made no showing that Harris County's articulated reasons for its actions are false or that discrimination was actually the motivating factor. The unrefuted evidence reflects that on January 13, 1995, Dupré was placed on probation as a result of two reported incidents of negligence and unsafe nursing practices. Dupré signed the Employee Reports detailing the infractions and acknowledged that additional errors would result in further disciplinary action, including termination. Despite this warning, Dupré was involved in another incident, the merits of which she does not contest. Her negligence in failing to perform the requisite chart checks resulted in the infant, Boyd, displaying an increased heart rate and desaturation. This incident necessitated remedial measures for Boyd, including a chest x-ray, the administration of oxygen, and medication. After an investigation, Dupré was terminated.
Moreover, there is no evidence tying her difficulties on the job to her alleged disability. She has made no showing that Harris County's conduct toward her was directly or indirectly related to her purported disability. At most, Dupré may have presented some evidence suggesting that she was placed on probation for an infraction she did not commit. Yet, "`[w]hile an employer's judgment or course of action may seem poor or erroneous to outsiders, the relevant question is simply whether the given reason was a pretext for illegal discrimination.'" Nix, 738 F.2d at 1187 (quoting Loeb, 600 F.2d at 1012 n. 6). In this situation, Dupré has produced no evidence, either direct or circumstantial, to support a finding of illegal disability discrimination. Therefore, she has not shown that Harris County's articulated reasons for its actions were a pretext for unlawful discrimination. Under these circumstances, it is apparent that Dupré's purported disability was neither the sole cause nor even a motivating factor in her discharge. See Turco, 101 F.3d at 1092; Rizzo, 84 F.3d at 763. Therefore, Dupré has failed to establish a cognizable claim of discrimination under the ADA.
C. Retaliation under the ADA
Dupré further asserts that Harris County retaliated against her for filing a charge of discrimination with the EEOC.
The ADA prohibits discrimination against an employee who has engaged in activity protected by the Act:
No person shall discriminate against any individual because such individual has opposed any act or practice made unlawful by this chapter or because such individual made a charge, testified, assisted, or participated *924 in any manner in an investigation, proceeding, or heating under this chapter.
42 U.S.C. § 12203(a). "Retaliation claims are treated the same whether brought under the ADA or Title VII." Penny v. United Parcel Serv., 128 F.3d 408, 417 (6th Cir. 1997); see Davidson v. Midelfort Clinic, Ltd., 133 F.3d 499, 511 (7th Cir.1998); Krouse v. American Sterilizer Co., 126 F.3d 494, 500 (3d Cir.1997); Stewart v. Happy Herman's Cheshire Bridge, Inc., 117 F.3d 1278, 1287 (11th Cir.1997); Soileau v. Guilford of Maine, Inc., 105 F.3d 12, 16 (1st Cir.1997). A plaintiff may establish a claim of retaliation under the ADA by adducing direct evidence or by using the burden-shifting framework of McDonnell Douglas Corp. See Daigle, 70 F.3d at 396.
To establish a prima facie case of retaliation, a plaintiff must show:
(1) she engaged in statutorily protected activity;
(2) she suffered an adverse employment action; and
(3) a causal connection existed between the protected activity and the adverse action.
See Kiel v. Select Artificials, Inc., 142 F.3d 1077, 1079 (8th Cir.1998); Champagne v. Servistar Corp., 138 F.3d 7, 12 n. 5 (1st Cir. 1998); Sherrod, 132 F.3d at 1122 n. 8; Penny, 128 F.3d at 417; Krouse, 126 F.3d at 500.
The plaintiff bears the initial burden of establishing a prima facie case of retaliation. See Davidson, 133 F.3d at 511. If an employee establishes a prima facie case of retaliation under the ADA, the burden shifts to the employer to advance a legitimate, nonretaliatory reason for its adverse employment action. See Krouse, 126 F.3d at 500. Of course, the plaintiff bears the ultimate burden of proving that the proffered reason for the action was merely a pretext for discrimination and that a discriminatory motive was the determining factor behind the defendant's actions. See Talanda v. KFC Nat'l Management Co., 140 F.3d 1090, 1998 WL 159353, at *4 (7th Cir. Apr.7, 1998); Penny, 128 F.3d at 417. "The ultimate issue of retaliation requires the employee to prove that the adverse employment action would not have occurred `but for' the protected activity." Sherrod, 132 F.3d at 1122.
In the instant case, Dupré has not shown by direct evidence that she suffered actionable retaliation, nor has she established a prima facie case of retaliation. The only act of retaliation alleged by Dupré Harris County's decision to discontinue the grievance process regarding Dupré's challenge to her termination is not the type of adverse action covered under ADA's anti-retaliation provision. The anti-retaliation provision was "designed to address ultimate employment decisions, not to address every decision made by employers that arguably might have some tangential effect upon those ultimate decisions." Dollis v. Rubin, 77 F.3d 777, 781 (5th Cir.1995); see Page, 645 F.2d at 233; Creswell v. Deere & Co., No. 96-CV-1392-P, 1997 WL 667928, at *9 (N.D.Tex. Oct.21, 1997). Ultimate employment decisions include hiring, discharging, promoting, compensating, or granting leave. See Webb v. Cardiothoracic Surgery Assocs., 139 F.3d 532, 539 (5th Cir.1998); Messer, 130 F.3d at 135; Mattern v. Eastman Kodak Co., 104 F.3d 702, 707 (5th Cir.), cert. denied, ___ U.S. ___, 118 S. Ct. 336, 139 L. Ed. 2d 260 (1997). An ultimate employment decision, in itself or through its direct consequences, must effect a material change in the terms or conditions of employment. See Ledergerber v. Stangler, 122 F.3d 1142, 1144 (8th Cir.1997). "Although actions short of termination may constitute an adverse employment action within the meaning of the statute, `not everything that makes an employee unhappy is an actionable adverse action.'" Manning v. Metropolitan Life Ins. Co., Inc., 127 F.3d 686, 692 (8th Cir.1997) (quoting Montandon v. Farmland Indus., Inc., 116 F.3d 355, 359 (8th Cir.1997) (quoting Smart v. Ball State Univ., 89 F.3d 437, 441 (7th Cir.1996))). Interlocutory or mediate decisions, even those that can lead to an ultimate employment decision, are not adverse employment actions for purposes of the employment discrimination statutes. See Mattern, 104 F.3d at 708.
In this case, Harris County's failure to proceed with Dupré's grievance did not effect a material change in the terms of Dupré's conditions of employment, as she had already been terminated. The discontinuance of the grievance process pursuant to Harris County's *925 internal policy did not have a direct impact on hiring, discharging, promoting, compensating, or granting leave. At best, it had a tangential effect on whether Dupré would be reinstated in the event she prevailed. Thus, Harris County's termination of the grievance process in deference to the EEOC's investigation did not rise to the level of an adverse employment action for purposes of the anti-retaliation provision of the ADA. Therefore, Dupré has failed to establish a prima facie case of retaliation under the ADA. In fact, Dupré abandoned this claim when she failed to adduce evidence on this issue in response to Harris County's motion for summary judgment.
D. Intentional Infliction of Emotional Distress
1. Elements of Claim
Dupré also asserts a claim for intentional infliction of emotional distress against Harris County. To prevail on this claim, Dupré must establish:
(1) the defendant acted intentionally or recklessly;
(2) the defendant's conduct was extreme and outrageous;
(3) the defendant's actions caused her emotional distress; and
(4) the emotional distress suffered by her was severe.
See Hart, 127 F.3d at 452; Ward v. Bechtel Corp., 102 F.3d 199, 203 n. 2 (5th Cir.1997); Burden v. General Dynamics Corp., 60 F.3d 213, 218 (5th Cir.1995); MacArthur v. University of Tex. Health Ctr., 45 F.3d 890, 898 (5th Cir.1995); Mattix-Hill v. Reck, 923 S.W.2d 596, 597 (Tex.1996); Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995) (citing Twyman v. Twyman, 855 S.W.2d 619, 621-22 (Tex.1993)).
While "extreme and outrageous," as used in the second element of this standard, is an amorphous phrase that escapes precise definition, there appears to be a consensus that conduct is "outrageous" if it is "atrocious" and surpasses "all possible bounds of decency," such that it is "utterly intolerable in a civilized community." See McConathy v. Dr. Pepper/Seven Up Corp., 131 F.3d 558, 563 (5th Cir.1998); MacArthur, 45 F.3d at 898; Ugalde v. W.A. McKenzie Asphalt Co., 990 F.2d 239, 243 (5th Cir.1993); Johnson v. Merrell Dow Pharm., Inc., 965 F.2d 31, 33 (5th Cir.1992); Dean v. Ford Motor Credit Co., 885 F.2d 300, 306 (5th Cir.1989); Randall's Food Markets, Inc., 891 S.W.2d at 644. In Dean, the Fifth Circuit (citing RESTATEMENT (SECOND) OF TORTS § 46 cmt. d (1965)) explained:
Liability [for outrageous conduct] has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.... Generally, the case is one in which a recitation of the facts to an average member of the community would lead him to exclaim, "Outrageous."
885 F.2d at 306. Liability does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. See Ugalde, 990 F.2d at 243; Johnson, 965 F.2d at 33; Wilson v. Monarch Paper Co., 939 F.2d 1138, 1143 (5th Cir.1991). There is no occasion for the law to intervene in every case where someone's feelings are hurt. See id.
Specifically, in the employment context, the Fifth Circuit, applying Texas law, has repeatedly stated that a claim for intentional infliction of emotional distress will not lie for "mere employment disputes." See, e.g., MacArthur, 45 F.3d at 898; Johnson, 965 F.2d at 33. The courts recognize that in order to manage its business properly, an employer must be able to supervise, review, criticize, demote, transfer, and discipline employees. See id. at 34; Wilson, 939 F.2d at 1143. Even actions that may be unlawful in an employment setting may not be the sort of behavior that constitutes "extreme and outrageous" conduct. See Prunty v. Arkansas Freightways, Inc., 16 F.3d 649, 654 (5th Cir. 1994); Ugalde, 990 F.2d at 243; Honea v. SGS Control Servs., Inc., 859 F. Supp. 1025, 1031 (E.D.Tex.1994); Sebesta v. Kent Elecs. Corp., 886 S.W.2d 459, 462-63 (Tex.App. Houston [1st Dist.] 1994, writ denied). "It is not enough that the defendant has acted with an intent that is tortious or even criminal." Washington v. Knight, 887 S.W.2d 211, 216 (Tex.App. Texarkana 1994, writ denied).
*926 "[T]he fact of discharge itself as a matter of law cannot constitute outrageous behavior." Wornick Co. v. Casas, 856 S.W.2d 732, 735 (Tex.1993) (citing Reid v. Sears, Roebuck & Co., 790 F.2d 453, 462 (6th Cir.1986) (no liability for intentional infliction of emotional distress where an actor does no more than insist on its legal rights)). "An employer will not be held liable for exercising its legal right to terminate an employee, `even though he is well aware that such [action] is certain to cause emotional distress.'" Johnson, 965 F.2d at 34 (quoting Diamond Shamrock Ref. & Mktg. Co. v. Mendez, 809 S.W.2d 514, 522 (Tex.App. San Antonio 1991), aff'd in part and rev'd in part on other grounds, 844 S.W.2d 198 (Tex. 1992)). To hold otherwise would "wholly undermine the employment at will doctrine by subjecting employers to `a potential jury trial in connection with virtually every discharge.'" McKethan v. Texas Farm Bureau, 996 F.2d 734, 742 (5th Cir.1993) (quoting Wornick Co., 856 S.W.2d at 736), cert. denied, 510 U.S. 1046 114 S. Ct. 694, 126 L. Ed. 2d 661 (1994).
Here, Dupré has not described any conduct that even approaches extreme or outrageous behavior. Not only does she fail to articulate the incidents she believes to be atrocious or outrageous, but a brief perusal of the affidavits and deposition transcript submitted in support of this claim shows that Dupré was not subjected to any actions by Harris County that could be viewed as surpassing "all possible bounds of decency." Dupré's claim is nothing more than a typical employment dispute, which, under these circumstances, does not entail the egregious behavior indispensable to an actionable claim for intentional infliction of emotional distress. No doubt, being terminated can be a traumatic experience for any employee. See Johnson, 965 F.2d at 34. In this instance, however, there is no indication that Harris County engaged in offensive or hostile behavior or that it denigrated, belittled, or degraded Dupré. Instead, the evidence reflects that Harris County treated Dupré in a polite and professional manner. In short, none of the conduct that Dupré describes is so vile or reprehensible as to be "utterly intolerable in a civilized community."
Moreover, Dupré has not shown that any emotional distress she may have suffered as a result of Harris County's actions was severe. For a claim of intentional infliction of emotional distress to be cognizable under Texas law, there must be "sufficient proof of severe emotional distress, wholly apart from any outrageous conduct on the defendant's part." Tidelands Auto. Club v. Walters, 699 S.W.2d 939, 944 (Tex.App. Beaumont 1985, writ ref'd n.r.e.); see Badgett v. Northwestern Resources Co., 818 F. Supp. 998, 1003 (W.D.Tex.1993). "Severity of distress is an element of the cause of action, not simply a matter of damages." Benavides v. Moore, 848 S.W.2d 190, 195 (Tex.App. Corpus Christi 1992, writ denied); see K.B. v. N.B., 811 S.W.2d 634, 640 (Tex.App. San Antonio 1991, writ denied), cert. denied, 504 U.S. 918, 112 S. Ct. 1963, 118 L. Ed. 2d 564 (1992).
"Emotional distress" means any highly unpleasant mental reaction such as extreme grief, shame, humiliation, embarrassment, anger, disappointment, worry, and nausea. See Behringer v. Behringer, 884 S.W.2d 839, 844 (Tex.App. Fort Worth 1994, writ denied); see also Washington, 887 S.W.2d at 216; Badgett, 818 F.Supp. at 1003; Tidelands Auto. Club, 699 S.W.2d at 945. In order to recover damages, however, the plaintiff must prove more than mere worry, anxiety, vexation, embarrassment, or anger. See McCray v. DPC Indus., Inc., 875 F. Supp. 384, 392 (E.D.Tex.1995) (citing Regan v. Lee, 879 S.W.2d 133, 136 (Tex.App. Houston [14th Dist.] 1994, no writ)); Haryanto v. Saeed, 860 S.W.2d 913, 923 (Tex.App. Houston [14th Dist.] 1993, writ denied). "The law intervenes only where the distress is so severe that no reasonable person should be expected to endure it." Behringer, 884 S.W.2d at 844 (citing RESTATEMENT (SECOND) OF TORTS § 46 cmt. j (1965)).
In this situation, Dupré does not claim to have experienced any psychiatric problems as a result of Harris County's conduct. Dupré was already experiencing depression and had been diagnosed with bipolar disorder before she was placed on probation and subsequently terminated by Harris County. While the cause of her mental problems is *927 unclear, Dupré contends that, when she was a child, she was raped by her former brother-in-law, who was a co-worker at Ben Taub. In any event, the record reflects that her disorder was effectively controlled by medication. Consequently, Dupré's claimed emotional distress cannot be said to be "so severe that no reasonable person could be expected to endure it." Benavides, 848 S.W.2d at 195.
Therefore, Dupré has failed to proffer sufficient evidence to support two of the required elements of an intentional infliction of emotional distress claim under Texas law extreme conduct and severe distress. Indeed, Dupré abandoned this claim when she did not respond to Harris County's motion for summary judgment on this issue.
2. Sovereign Immunity
Harris County asserts that even if Dupré had established the elements of a claim of intentional infliction of emotional distress, her claim would be barred by the doctrine of sovereign immunity.
In Texas, under the doctrine of sovereign immunity, a governmental entity cannot be held liable for the actions of its employees unless there is a constitutional or statutory provision waiving such immunity. See Dallas County Mental Health & Mental Retardation v. Bossley, 968 S.W.2d 339, 340 (Tex.1998); Harris County v. Dillard, 883 S.W.2d 166, 168 (Tex.1994); University of Tex. Med. Branch v. York, 871 S.W.2d 175, 177 (Tex.1994); Lowe v. Texas Tech Univ., 540 S.W.2d 297, 298 (Tex.1976); Harrison v. Texas Bd. of Pardons & Paroles, 895 S.W.2d 807, 809 (Tex.App. Texarkana 1995, writ denied); Bookman v. Bolt, 881 S.W.2d 771, 774 (Tex.App. Dallas 1994, writ denied). Sovereign immunity can be waived only through the use of clear and unambiguous language. See York, 871 S.W.2d at 177; Duhart v. State, 610 S.W.2d 740, 742 (Tex.1980). In the absence of a waiver, Harris County is entitled to sovereign immunity with respect to Dupré's claims. See York, 871 S.W.2d at 177; City of El Paso v. W.E.B. Inv., 950 S.W.2d 166, 169 (Tex.App. El Paso 1997, writ denied); Allen v. City of Midlothian, 927 S.W.2d 316, 322 (Tex.App. Waco 1996, no writ).
The Texas Legislature enacted the Texas Tort Claims Act ("TTCA") to waive sovereign immunity in certain limited circumstances. See Kerrville State Hosp. v. Clark, 923 S.W.2d 582, 586 (Tex.1996); York, 871 S.W.2d at 177; Harrison, 895 S.W.2d at 809. The TTCA provides:
A governmental unit in the state is liable for:
(1) property damage, personal injury, and death proximately caused by the wrongful act or omission or the negligence of an employee acting within his scope of employment if:
(A) the property damage, personal injury, or death arises from the operation or use of a motor-driven vehicle or motor-driven equipment; and
(B) the employee would be personally liable to the claimant according to Texas law; and
(2) personal injury and death so caused by the condition or use of tangible personal or real property if the governmental unit would, were it a private person, be liable to the claimant according to Texas law.
TEX.CIV.PRAC. & REM.CODE ANN. § 101.021. Counties, as political subdivisions of the State of Texas, fall within the parameters of the Act. See TEX.CIV. PRAC. & REM.CODE ANN. § 101.001(2)(B); see also McCord v. Memorial Med. Ctr. Hosp., 750 S.W.2d 362, 363 (Tex.App. Corpus Christi 1988, no writ).
For a governmental entity to be held liable for the acts of its employee under the TTCA: (1) the claim must arise under one of three specific areas of liability; and (2) the claim must not fall within an exception to the waiver of sovereign immunity. See Alvarado v. City of Brownsville, 865 S.W.2d 148, 155 (Tex.App. Corpus Christi 1993), rev'd on other grounds, 897 S.W.2d 750 (Tex.1995); accord City of Hempstead v. Kmiec, 902 S.W.2d 118, 122 (Tex.App. Houston [1st Dist.] 1995, no writ); McKinney v. City of Gainesville, 814 S.W.2d 862, 865 (Tex.App. Fort Worth 1991, no writ); see also City of Denton v. Page, 701 S.W.2d 831, 834 (Tex. 1986); Salcedo v. El Paso Hosp. Dist., 659 S.W.2d 30, 31 (Tex.1983). "The determination of a governmental entity's negligence will be made only after a claimant has *928 cleared these two statutory hurdles." Alvarado, 865 S.W.2d at 155. In order to hold Harris County liable under the TTCA, the plaintiff's injuries must have been proximately caused by the operation or use of a motor-driven vehicle or motor-driven equipment or by a condition or use of tangible real or personal property. See Bossley, 968 S.W.2d at 342; Salcedo, 659 S.W.2d at 33; Vincent v. West Tex. State Univ., 895 S.W.2d 469, 472 (Tex.App. Amarillo 1995, no writ); TEX.CIV. PRAC. & REM.CODE ANN. § 101.021. Dupré's claims do not fall under any of these categories.
Moreover, the TTCA does not waive immunity for intentional torts. See Taylor v. Gregg, 36 F.3d 453, 457 (5th Cir.1994); Riggs v. City of Pearland, 177 F.R.D. 395, 405 (S.D.Tex.1997); Huong v. City of Port Arthur, 961 F. Supp. 1003, 1008-09 (E.D.Tex. 1997); Delaney v. University of Houston, 835 S.W.2d 56, 58 (Tex.1992); Kmiec, 902 S.W.2d at 122; City of San Antonio v. Dunn, 796 S.W.2d 258, 261 (Tex.App. San Antonio 1990, writ denied). In fact, intentional torts are specifically exempted from the coverage of the TTCA. The statute provides:
This chapter does not apply to a claim:
(1) based on an injury or death connected with any act or omission arising out of civil disobedience, riot, insurrection, or rebellion; or
(2) arising out of assault, battery, false imprisonment, or any other intentional tort, including a tort involving disciplinary action by school authorities.
TEX.CIV.PRAC. & REM.CODE ANN. § 101.057. "This limitation provides that claims `arising out of assault, battery, false imprisonment, or any other intentional tort' are not actionable" under the TTCA. McCord, 750 S.W.2d at 363; see Riggs, 177 F.R.D. at 405; Callis v. Sellars, 953 F. Supp. 793, 801 (S.D.Tex.1996); Dunn, 796 S.W.2d at 261. Thus, Harris County is immune from liability for Dupré's claim of intentional infliction of emotional distress.
III. Conclusion
In summary, Dupré has not adduced sufficient evidence to defeat Harris County's motion for summary judgment. There are no outstanding issues of material fact with regard to her claim of disability discrimination, as she has failed to show that she has a disability cognizable under the ADA or that she was treated adversely compared to non-disabled employees. Dupré also has made no showing that her disability was the cause of her termination. She, likewise, has not shown that she suffered an adverse ultimate employment decision in retaliation for engaging in activity protected under the ADA. Additionally, Dupré has failed to establish a prima facie case of intentional infliction of emotion distress under Texas law and, in any event, her claim is barred by the doctrine of sovereign immunity.
Therefore. Dupré has failed to present a claim that would entitle her to relief, and Harris County is entitled to judgment as a matter of law. Accordingly, Harris County's motion for summary judgment is GRANTED.
IT IS SO ORDERED.
NOTES
[1] The Fifth Circuit has described the attributes of bipolar disorder, previously know as manic-depression:
Bipolar disorder is a psychosis involving a mood disorder characterized by swings from mania to depression. Mania is characterized by elevated mood and associated behavioral responses. Characteristics of mania are hyperactivity, optimism, flamboyance, loud, pressured speech, garrulousness, distractibility, delusions of grandeur, disorganized behavior pattern, and poor judgment. Depression is characterized by lowered mood state and related behavior. Characteristics of depression are sadness, hopelessness, feelings of guilt and worthlessness, social withdrawal, psychomotor retardation and vegetative somatic symptoms including anorexia, weight loss, and insomnia. The disability experienced from bipolar disorder ranges from mild to severe.
Taylor v. Principal Fin. Group, Inc., 93 F.3d 155, 160 n. 2 (5th Cir.) (citing ALAN BALSAM, M.D. & ALBERT P. ZABIN, DISABILITY HANDBOOK 628-29 (1990)), cert. denied, ___ U.S. ___, 117 S. Ct. 586, 136 L. Ed. 2d 515 (1996).
[2] Dupré testified at deposition that she did not remember whether she informed King of her illness before or after she took time off from work.
[3] Although the parties have not explained the problem with transposition, Thomas related in her deposition: "[D]ifferent kinds of fluids are given to neonates through the UAC and UVC lines; and some fluids that are supposed to be going into the vein, if they are given into the artery, that can cause big problems."
[4] In her complaint, Dupré alleges that both King and Andrews "constantly harassed and questioned her about her medical conditions." In her deposition, however, Dupré stated that Andrews left the hospital before she was diagnosed with bipolar disorder and that she was never questioned or harassed by Andrews. Similarly, at deposition Dupré was asked: "Did Felicia King ever come to you and ask you questions about your disability or your diagnosis of bipolar disorder?" She replied, "no."
[5] Dupré refers to this form of feeding as "the milk drip."
[6] Despite Dupré's assertion that she filed the second charge on May 26, 1995, it is dated and was notarized on June 1, 1995.
[7] "The elements of a plaintiff's prima facie case necessarily vary according to the facts of the case and the nature of the claim." LaPierre v. Benson Nissan, Inc., 86 F.3d 444, 448 (5th Cir.1996). Thus, the fourth element merely sets forth two nonexclusive ways in which a plaintiff can demonstrate that an adverse employment decision was made "under circumstances which give rise to an inference of unlawful discrimination." Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 254, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981); see also EEOC v. J.M. Huber Corp., 927 F.2d 1322, 1328, n. 24 (5th Cir.1991). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2987818/ | January 29, 2013
JUDGMENT
The Fourteenth Court of Appeals
JOHN WAYNE BATES, Appellant
NO. 14-13-00016-CR V.
THE STATE OF TEXAS, Appellee
________________________________
This cause was heard on the motion of the appellant to withdraw notice of
appeal. Having considered the motion the Court orders the appeal DISMISSED.
We further order appellant pay all costs expended in the appeal.
We further order the mandate be issued immediately.
We further order this decision certified below for observance. | 01-03-2023 | 09-23-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2237189/ | 592 N.E.2d 491 (1992)
228 Ill. App. 3d 526
170 Ill. Dec. 55
The PEOPLE of the State of Illinois, Plaintiff-Appellee,
v.
Kenneth CARTER, Defendant-Appellant.
No. 1-89-1015.
Appellate Court of Illinois, First District, Second Division.
March 31, 1992.
*493 Jack O'Malley, State's Atty., County of Cook, Chicago (Renee Goldfarb, Howard D. Weisman and Christine Cook, of counsel), for plaintiff-appellee.
Randolph N. Stone, Public Defender of Cook County, Chicago (Donald S. Honchell, of counsel), for defendant-appellant.
Justice DiVITO delivered the opinion of the court:
Defendant Kenneth Carter, charged with aggravated battery and armed robbery, was convicted by a jury of aggravated battery and robbery and was sentenced to concurrent terms of 5 and 20 years, respectively. In this appeal, defendant contends that (1) the verdict for aggravated battery, premised upon use of a deadly weapon, was inconsistent with the jury's implicit rejection of the use of a dangerous weapon in the commission of the robbery, as evidenced by the verdict on the armed robbery charge; (2) the statute that permits the sentencing court to impose a more severe sentence upon a defendant who commits an offense in a place of worship violates the Establishment Clause of the first amendment to the United States Constitution; (3) the State failed to prove beyond a reasonable doubt that defendant was subject to Class X sentencing; and (4) the court erred in permitting the State to present certain rebuttal evidence. We affirm.
At defendant's jury trial, the State presented the following evidence. Just after 7 a.m. on March 15, 1988, Donald Valentini was walking west on Schiller at Leland, saying his rosary while en route to early morning mass at Immaculate Conception Church in the 1400 block of North Northpark on Chicago's North Side. At that time, defendant passed Valentini on the left. Valentini turned north on Leland, heading for the church, and defendant continued west on Schiller. Just as Valentini reached the mouth of an alley, defendant jumped out, holding a beer bottle over his head. Valentini looked at him while the two men had a short conversation, and he then started walking toward the church. Defendant walked with him on the left. The two men talked as they continued walking toward the church, and defendant lowered the bottle.
When Valentini opened the rear door to the church and entered the vestibule, defendant broke the bottle over his head. Valentini cried out for help, knowing that a priest would be in the church six steps below. Defendant continued to hit him about the head, but he paused when the priest appeared at the bottom of the stairs nearby. Valentini fell to the floor; defendant continued hitting him and yelled, "I'm going to kill you, you motherfucker." Although the priest could see what was occurring, he did not get a good look at Valentini's assailant, who then took Valentini's wallet from his pants pocket and ran off. The priest helped Valentini to his feet and walked him to the rectory, where the police were called. Valentini was taken by police to Lutheran General Hospital; he was treated and released. Approximately one month later, Valentini went to the police station to view mug books, from which he identified defendant as the man who had accosted him. Two months later, Valentini *494 attended a lineup, at which he identified defendant.
At the close of the State's case, defendant moved for a directed verdict, which the court denied. Defendant presented as his only witness Dorothy Jackson, the mother of his girl friend. According to Ms. Jackson, defendant lived with her and her family at 6844 South Oakley, on Chicago's South Side, from December 1987 until "the present time when he left." On the morning of the attack, she testified, defendant was with her in the living room, drinking coffee and watching video tapes.
Over defense objection and after much dispute about proper impeachment and rebuttal, the circuit court permitted the State to present, in its rebuttal case, testimony that when defendant was arrested in June 1988 for this incident, he gave as his address 1408 North Northpark, which is in the block where the offenses occurred. In addition, although defendant had supplied the Northpark address in May 1987 when arrested for a misdemeanor, he had given 6001 South Oakley as his address when arrested on an unrelated charge in March 1988, a few days after the instant offenses. Defendant had been in jail continuously from the day of his March 1988 arrest to and after his June 1988 arrest.
The circuit court gave jury instructions and verdict forms for robbery and battery as well as for the charged offenses of armed robbery and aggravated battery. As previously indicated, the jury returned guilty verdicts for robbery and aggravated battery.
At defendant's sentencing hearing, his counsel agreed with the prosecutor that defendant was Class X eligible, and the State recounted defendant's prior convictions. The court then commented separately on the applicability of each of the mitigation and aggravation factors listed in sections 5-5-3.1 and 5-5-3.2, respectively, of the Unified Code of Corrections (Ill.Rev. Stat.1989, ch. 38, pars. 1005-5-3.1, 1005-5-3.2). After doing so, the court expressly rejected an extended term sentence because, it acknowledged, defendant had to be sentenced as a Class X offender under section 5-5-3(c)(8) of the Unified Code of Corrections (Ill.Rev.Stat.1989, ch. 38, par. 1005-5-3(c)(8)). The court then sentenced defendant to 20 years for the robbery and 5 years for the aggravated battery, to run concurrently with each other and with another sentence of 7½ years imposed for an unrelated October 1988 conviction for residential burglary.
I.
Defendant first contends that the aggravated battery verdict, i.e., guilty of battery with a deadly weapon, must be set aside because it is legally inconsistent with the jury's implicit verdict on the armed robbery charge, i.e., not guilty of robbery with a dangerous weapon. Both crimes have as an essential element the existence of a weapon, he argues, and a weapon logically cannot have been both there and not there. To cure the inconsistency, he urges this court to exercise its discretion by reducing the aggravated battery verdict to a conviction for simple battery, pursuant to Illinois Supreme Court Rule 615(b)(3) (134 Ill.2d R. 615(b)(3)), and then to remand for resentencing on the battery.
The State counters that defendant waived consideration of this issue by not objecting to the verdict at trial or in his post-trial motion. Even if this court disagrees as to waiver, the State contends, the inconsistency is not plain error, so revising the verdict is inappropriate. In addition, the State argues that although the bottle/weapon existed during the battery, it no longer existed when defendant took Valentini's wallet, having shattered on impact. Even if the verdicts were inconsistent, the State offers alternatively, such inconsistency is permissible. Defendant replies that because the issue is one of insufficient proof of guilt of aggravated battery, he was under no obligation to raise it at the trial level in order to retain the right to appeal the issue. Even if he should have raised it below, he adds, the court may consider it now under the plain error doctrine.
As a preliminary matter, we must reject the State's assertion that defendant's *495 failure to raise this issue at trial or in his post-trial motion necessarily results in loss of the right to appeal the issue. To be sure, this is the general rule, but an exception exists for a defendant's challenge to the sufficiency of evidence. People v. Kennard (1990), 204 Ill.App.3d 641, 657, 149 Ill. Dec. 492, 503, 561 N.E.2d 1188, 1197.
Legal inconsistency occurs "when a verdict of guilty is premised on the existence of an element of the offense and a verdict of not guilty [for a simultaneous act] is premised on the non-existence of that same element." (People v. Scherzer (1989), 179 Ill.App.3d 624, 648, 128 Ill. Dec. 598, 615, 534 N.E.2d 1043, 1060.) Although certain inconsistencies between verdicts are permissible (People v. Solis (1991), 216 Ill. App. 3d 11, 20, 159 Ill. Dec. 451, 456, 576 N.E.2d 120, 125), legal inconsistency will render a criminal verdict invalid, warranting reversal. People v. Frias (1983), 99 Ill. 2d 193, 197-204, 75 Ill. Dec. 674, 676-79, 457 N.E.2d 1233, 1235-38.
The crimes at issue here are robbery, armed robbery, battery, and aggravated battery. The latter, as alleged in this case, is defined as intentionally or knowingly causing bodily harm, without legal justification, while using a deadly weapon. (Ill. Rev.Stat.1987, ch. 38, par. 12-4(b)(1).) Armed robbery, similarly, is the taking of another's property from his person or presence while carrying or otherwise armed with a dangerous weapon; without the weapon, the crime is robbery. (Ill.Rev. Stat.1989, ch. 38, pars. 18-2, 18-1.) Defendant's apparent belief that the jury had no choice but to consider the two charged crimes here as a single event is the keystone of his theory: if the weapon was found not to exist during the robbery, it could not exist during the battery.
Defendant's premise is faulty, so his logic fails. Although the jury could have viewed this related series of acts to be an armed robbery despite the timing of the shattering of the bottle (People v. Blake (1991), 144 Ill. 2d 314, 322, 162 Ill. Dec. 47, 51, 579 N.E.2d 861, 865), it was not obliged to do so. On the contrary, the jury could have decided that the State had not demonstrated the "necessary concurrence of events" to justify an armed robbery conviction (Blake, 144 Ill.2d at 322, 162 Ill. Dec. at 51, 579 N.E.2d at 865); it could have decided, for example, that defendant's decision to relieve Valentini of his wallet was merely an afterthought. Alternatively, the disparity in the verdicts could reflect jury leniency. (People v. Hyman (1972), 8 Ill. App. 3d 382, 385, 290 N.E.2d 627, 629.) Under either scenario, the verdicts would not be inconsistent because they would not be premised on both the existence and the non-existence of the bottle. Accordingly, we need not alter the jury's decision here.
II.
Defendant next contends that subsection 5-5-3.2(a)(10) of the Unified Code of Corrections (Ill.Rev.Stat.1989, ch. 38, par. 1005-5-3.2(a)(10),[1] relied upon by the circuit court in imposing sentence, violates the Establishment Clause of the first amendment to the United States Constitution. He claims that the statute has no arguable secular purpose, has as its primary effect the advancement of religion, and creates excessive government entanglements. Because the existence of even one of these defects will render a statute unconstitutional, he argues, his sentence is invalid.
The State presents a dual challenge to defendant's standing to contest the statute's constitutionality. It posits first that defendant was sentenced under the Class X statute, not this one, and the court did not ultimately impose a more severe sentence than the 30 year maximum for Class X offenders. Moreover, having waited to raise this issue until appeal, defendant should be deemed to have waived it. Even if we reach the merits, the State asserts, the statute has none of the defects defendant ascribes to it. Defendant replies that the record unambiguously reveals that the judge employed the statute while sentencing *496 him, giving him standing to challenge the statute's constitutionality. Furthermore, a criminal defendant need not attack a statute's unconstitutionality at trial in order to preserve the issue for review, the State's citation to a contrary appellate court decision notwithstanding.
Section 5-5-3.2(a) of the Unified Code of Corrections states that
"The following factors shall be accorded weight in favor of imposing a term of imprisonment or may be considered by the court as reasons to impose a more severe sentence [for a felony]:
* * * * * *
(10) the offense took place in a place of worship or on the grounds of a place of worship, immediately prior to, during or immediately following worship services. For purposes of this subparagraph, "place of worship" shall mean any church, synagogue or other building, structure or place used primarily for religious worship." Ill.Rev.Stat.1989, ch. 38, par. 1005-5-3.2(a)(10).
As a preliminary matter, we reject the State's standing argument: at the sentencing hearing, the court stated outright that "I certainly think [the aggravating factor at issue] applies." (People v. P.H. (1991), 145 Ill. 2d 209, 220, 164 Ill. Dec. 137, 141, 582 N.E.2d 700, 704 (one may question a statute's constitutionality after sustaining some direct injury due to enforcement thereof).) Also, despite the admittedly muddled history of the relationship between waiver and constitutional challenges in Illinois (People v. Ward (1990), 194 Ill.App.3d 229, 232 n. 1, 141 Ill. Dec. 162, 164 n. 1, 550 N.E.2d 1208, 1210 n. 1; O'Neill, Waiver of Constitutional Issues in Criminal Cases: Confusion in the Illinois Supreme Court, 11 N.Ill. U.L.Rev. 55 (1990)), at the present time there is no doubt that the waiver rule is inapplicable when the issue raised on appeal is that of a statute's unconstitutionality. (People v. Bryant (1989), 128 Ill. 2d 448, 454, 132 Ill. Dec. 415, 418, 539 N.E.2d 1221, 1224.) We further note that, although it is our duty to strike down unconstitutional statutes, we must presume that a statute is valid and must construe it as such if reasonable to do so, resolving doubts in favor of constitutionality. (P.H., 145 Ill.2d at 220-21, 164 Ill. Dec. at 142, 582 N.E.2d at 705; People v. Williams (1991), 143 Ill. 2d 477, 481, 160 Ill. Dec. 437, 438, 577 N.E.2d 762, 763.) In particular, sentencing statutes are presumed constitutional. People v. Clark (1981), 102 Ill.App.3d 414, 423, 57 Ill. Dec. 892, 898, 429 N.E.2d 1255, 1261.
The Establishment Clause of the first amendment to the United States Constitution states that "Congress shall make no law respecting an establishment of religion * * *." Under the incorporation doctrine of the fourteenth amendment, the Establishment Clause applies to the States as well as to the Federal government. (Cantwell v. Connecticut (1940), 310 U.S. 296, 60 S. Ct. 900, 84 L. Ed. 1213.) In Lemon v. Kurtzman (1971), 403 U.S. 602, 91 S. Ct. 2105, 29 L. Ed. 2d 745, the Supreme Court held that the Establishment Clause was intended to protect against "three main evils[:] * * * `sponsorship, financial support, and active involvement of the sovereign in religious activity.'" (403 U.S. at 612, 91 S. Ct. at 2111, 29 L.Ed.2d at 755, quoting Walz v. Tax Commissioner of New York (1970), 397 U.S. 664, 668, 90 S. Ct. 1409, 1411, 25 L.Ed.2d. 697, 701.) Under Lemon, to pass constitutional muster, a statute's legislative purpose must be secular; its principal or primary effect cannot advance or inhibit religion; and it may not "foster `an excessive government entanglement with religion.'" (403 U.S. at 612-13, 91 S.Ct. at 2111, 29 L. Ed. 2d at 755, quoting Walz, 397 U.S. at 674, 90 S. Ct. at 1414, 25 L.Ed.2d at 704.) Despite the Supreme Court's professed "unwillingness to be confined to any single test or criterion in this sensitive area" (Lynch v. Donnelly (1984), 465 U.S. 668, 679, 104 S. Ct. 1355, 1362, 79 L. Ed. 2d 604, 613), it nevertheless applies Lemon with regularity. (County of Allegheny v. ACLU (1989), 492 U.S. 573, 592 n. 44, 109 S. Ct. 3086, 3100 n. 44, 106 L.Ed.2d *497 472, 493 n. 44.) We do so here as well.[2]
Defendant contends that the statute's unacceptable nonsecular purpose is to "singl[e] out for harsher penalty those crimes committed in sectarian locations," thereby conveying the impermissible message that those who attend religious services are "more deserving of government protection." Defendant offers no citation to legislative history or other factual support for his position, however; instead, he merely speculates as to the General Assembly's intent. The State counters that the statute's purpose is to protect worshipers from criminals who would interfere with their constitutional right to free exercise of religious belief. The only legislative history cited by the State is an introduction by Representative Howard B. Brookins, the sponsor of the bill. Speaking of an earlier version of the bill, which would have elevated a simple battery to an aggravated battery if committed on the property of a house of worship, Representative Brookins stated, "[T]his bill [will] give the clergy and parishioners the same protection which our police officers, teachers and nurses have." 83d Ill.Gen.Assembly, House Proceedings, March 24, 1983, at 44.
To warrant a finding that a statute is unconstitutional for lack of secular purpose, a challenger must demonstrate conclusively that the statute "was motivated wholly by religious considerations." (Emphasis added.) (Lynch, 465 U.S. at 680, 104 S. Ct. at 1362, 79 L.Ed.2d at 614.) Moreover, "[e]ven if some legislators were motivated by a conviction that [clergy and worshipers] in particular w[ere] valuable and worthy of protection, that alone would not invalidate [a statute] because the relevant inquiry is the legislative purpose of the statute, not the possibly religious motives of the legislators." (Emphasis in original.) (Board of Education v. Mergens (1990), 496 U.S. 226, 249, 110 S. Ct. 2356, 2371, 110 L. Ed. 2d 191, 215 (opinion of O'Connor, J., joined by Rehnquist, C.J., and White and Blackmun, JJ.).) Defendant has presented no evidence whatsoever from which we can glean an impermissible purpose.
In addition, we observe that courts usually will defer to a legislature's articulated secular purpose. (Edwards v. Aguillard (1987), 482 U.S. 578, 586, 107 S. Ct. 2573, 2579, 96 L. Ed. 2d 510, 521.) Here, the sole purpose articulated (to protect places of worship, and those who use them, to the same extent as certain other classes of victims) provides the requisite secular basis, particularly when coupled with the implicit purpose of every aggravation factor, which is to permit more severe punishment for those who commit crimes that the sovereign finds more offensive. Places of worship reach out and extend an invitation to the public; doors are unlocked; security is relaxed. The provision here merely reflects the legislature's determination that crimes committed in such places, like crimes committed against the aged, are more repugnant to the community than, for example, crimes committed against convenience stores and those who use them. As such, it acknowledges our country's long tradition of respect for the exercise of religion, as evidenced by the first amendment's Free Exercise Clause.[3] Indeed, *498 were we to extend defendant's reasoning to its logical conclusion, we would have to hold that the Free Exercise Clause itself, if enacted by the General Assembly, would violate the Establishment Clause. We decline to follow this path.
Defendant next claims, again without evidentiary support, that the statute's primary effect is to advance religion because it confers the benefit of special government protection exclusively, not just incidentally, on clergy and worshipers. The State counters, also without support, that the statute's effect is to deter and reduce crime in general. Neither addresses the issue squarely.
The primary effect of this sentencing provision, like any other, falls on criminals rather than on their victims. We agree with defendant that if the statute may be said to confer a benefit on anyone, the benefit falls primarily on those who own houses of worship and those who attend religious services therein, but this benefit is too indirect to violate the Establishment Clause. (Walz, 397 U.S. 664, 675-76, 90 S. Ct. 1409, 1415, 25 L. Ed. 2d 697, 705.) Moreover, to "advance" religion is to "endorse," "favor," or "promote" it, that is, "at the very least, [to] appear[] to take a position on questions of religious beliefs or [to] `mak[e] adherence to a religion relevant in any way to a person's standing in the political community.'" (County of Allegheny v. ACLU (1989), 492 U.S. 573, 594, 109 S. Ct. 3086, 3101, 106 L. Ed. 2d 472, 494-95.) We view the sentencing statute at issue as similar to a New Mexico statute that made criminal the defacing of a church. When this statute was challenged on first amendment grounds, the Court of Appeals of New Mexico held that the statute did not "advance" religion but merely provided a penalty for damaging property. (State v. Vogenthaler (App.1976), 89 N.M. 150, 152, 548 P.2d 112, 114.) We cannot say that the primary effect of the statute at issue is not similarly benign.
Lastly, defendant asserts that the court's use of this statute to impose a heavier sentence constitutes "excessive entanglement" with religion by the State. He is mistaken. The analysis for excessive entanglement includes examination of "the character and purposes of the institutions that are benefitted, the nature of the aid the State provides, and the resulting relationship between the government and the religious authority" (Lemon, 403 U.S. at 615, 91 S. Ct. at 2112, 29 L.Ed.2d at 757), an analysis that defendant's bald assertion of entanglement omits. Defendant has not demonstrated how the statute at issue here either "benefits" religious institutions other than indirectly, as previously indicated, or how it provides government "aid" within the meaning of Lemon, or how it establishes the continuing relationship between religious institutions and the government, such as a government's "day to day surveillance or administration of religious activities," that is the hallmark of "excessive entanglement." (Board of Education v. Mergens (1990), 496 U.S. 226, 252-53, 110 S. Ct. 2356, 2373, 110 L. Ed. 2d 191, 217, (opinion of O'Connor, J., joined by Rehnquist, C.J., and White and Blackmun, JJ.).) Accordingly, defendant has failed to prove any entanglement, and therefore we hold that he has not met the standard of the third prong of the Lemon test.
III.
Next, defendant asks this court to vacate his sentence and remand for resentencing because the State did not meet the statutory criteria for sentencing him as a Class X offender. Defendant's specific argument is that the State failed to offer proof beyond a reasonable doubt of the dates of his prior crimes and convictions. Moreover, he asserts, having failed to proffer such evidence at his original sentencing hearing, the State is barred by the Double Jeopardy Clause of the fifth amendment to the United States Constitution from resentencing him as a Class X offender.
The State responds that the case law on the quantum of proof required for sentencing under this statute is unsettled, urging us to await the Illinois Supreme Court's pronouncement on the question in People v. Williams (No. 70253, oral argument heard June 24, 1991). Even if its burden were *499 proof beyond a reasonable doubt, the State argues, circumstantial evidence may be used to prove prior convictions (People v. Harris (1987), 157 Ill.App.3d 70, 74, 109 Ill. Dec. 486, 490, 510 N.E.2d 107, 111, appeal denied 116 Ill. 2d 567, 113 Ill. Dec. 309, 515 N.E.2d 118), and here defendant's arrest records and presentence investigation report suffice. Furthermore, the State contends, defendant waived this issue because his counsel replied, "That's correct, Judge" when the assistant State's Attorney commented at the outset of the sentencing hearing that "defendant is now Class X eligible," and his counsel did not object when the circuit court later stated that "all parties would agree [the Class X sentencing statute] is applicable." As for defendant's double jeopardy argument, of the appellate courts that have considered the issue, only the Second District supports defendant. People v. Shelton (4th Dist. 1991), 208 Ill.App.3d 1094, 153 Ill. Dec. 722, 567 N.E.2d 680 (double jeopardy no bar); People v. Brooks (1st Dist., 1st Div., 1990), 202 Ill.App.3d 164, 147 Ill. Dec. 519, 559 N.E.2d 859 (same); People v. Chandler (1st Dist., 5th Div., 1991), 218 Ill.App.3d 97, 161 Ill. Dec. 28, 578 N.E.2d 155 (same); contra People v. Hamilton (2d Dist.1990), 198 Ill.App.3d 108, 144 Ill. Dec. 426, 555 N.E.2d 785, appeal granted 133 Ill. 2d 564, 149 Ill. Dec. 329, 561 N.E.2d 699 (consolidated with Williams).
Defendant replies that his counsel conceded only that he was eligible for Class X sentencing, not that he waived the State's obligation to prove beyond a reasonable doubt that the statute applied here. He further notes that, because the sentencing error is so grave, it amounts to plain error, allowing this court to review it even though his counsel failed to object. Lastly, he argues that what the State calls circumstantial evidence of his prior crimes is nothing but assumptions, an improper basis for sentencing.
Section 5-5-3(c)(8) of the Unified Code of Corrections states,
"When a defendant, over the age of 21 years, is convicted of a Class 1 or Class 2 felony, after having twice been convicted of any Class 2 or greater Class felonies in Illinois, and such charges are separately brought and tried and arise out of different series of acts, such defendant shall be sentenced as a Class X offender. This paragraph shall not apply unless (1) the first felony was committed after [February 1, 1978]; and (2) the second felony was committed after conviction on the first; and (3) the third felony was committed after conviction on the second." Ill.Rev.Stat.1989, ch. 38, par. 1005-5-3(c)(8).
As noted above in Part I, the waiver rule is inapplicable when a defendant challenges the sufficiency of the evidence. (People v. Kennard (1990), 204 Ill. App. 3d 641, 657, 149 Ill. Dec. 492, 501, 561 N.E.2d 1188, 1197.) We assume, for this analysis, that the State must prove beyond a reasonable doubt the chronological order of offense and conviction dates for Class X sentencing (Kennard, 204 Ill.App.3d at 660, 149 Ill. Dec. at 503, 561 N.E.2d at 1199; People v. Harris (1987), 157 Ill.App.3d 70, 74, 109 Ill. Dec. 486, 490, 510 N.E.2d 107, 111, appeal denied 116 Ill. 2d 567, 113 Ill. Dec. 309, 515 N.E.2d 118), a burden that the State may satisfy with circumstantial evidence (People v. Stewart (1989), 186 Ill. App. 3d 833, 838, 134 Ill. Dec. 569, 573, 542 N.E.2d 915, 919, appeal denied 128 Ill. 2d 670, 139 Ill. Dec. 520, 548 N.E.2d 1076). We conclude that the State met its burden here.
At the sentencing hearing, the court and both counsel could see from the defendant's presentence investigation report that he had three prior convictions as an adult, two of which met the statutory timing criteria.[4] According to the report and defendant's arrest record, he was arrested in June 1983 and subsequently pleaded guilty to robbery and aggravated battery in January 1984. Defendant's next applicable offense and conviction occurred in 1985. The crime at issue here was committed in *500 March 1988, with conviction in March 1989. Therefore, the only fact needed to satisfy the statute, but not directly presented in the report or the arrest record, was the date on which defendant committed the crimes for which he was arrested in 1983.
As the State suggests, it needed to prove beyond a reasonable doubt only that these crimes occurred after February 1, 1978, the effective date of the statute. Because the limitations period for the 1983 crimes was three years (Ill.Rev.Stat.1983, ch. 38, par. 3-5), the 1983 arrest date indicates that he committed the crimes no earlier than 1980. Consequently, the court could infer from the 1983 arrest date that the crimes occurred after the 1978 effective date of the statute. (Kennard, 204 Ill.App.3d at 660-61, 149 Ill. Dec. at 504, 561 N.E.2d at 1200 (court may infer dates despite lack of direct evidence); see also People v. Kinzer (1991), 214 Ill.App.3d 790, 158 Ill. Dec. 361, 574 N.E.2d 155; but see Shelton; Brooks; Washington; People v. Pietruszynski (1989), 189 Ill.App.3d 1071, 137 Ill. Dec. 181, 545 N.E.2d 942, appeal denied (1990), 129 Ill. 2d 570, 140 Ill. Dec. 678, 550 N.E.2d 563; People v. Parks (1988), 168 Ill.App.3d 978, 119 Ill. Dec. 662, 523 N.E.2d 130 (State did not meet burden when it failed to present evidence of dates offenses were committed).) The lack of direct evidence on this point does not lead inexorably to a reasonable doubt that defendant did not qualify for Class X sentencing. Accordingly, we hold that Class X sentencing was proper. In light of our ruling, we need not address defendant's double jeopardy claim.
IV.
Defendant's final contention on appeal is that the circuit court erred in allowing the State to present, in its rebuttal case, Detective Jon Cole's testimony that at defendant's arrest three months after the incident, defendant gave as his address a street number on the same block as the church. He argues that this evidence was neither proper impeachment of a defense witness nor rebuttal on a material issue. Admission of this evidence constitutes reversible error, he contends, warranting a new trial. The State counters that the testimony was admissible for two reasons: it contradicted defense evidence on a material matter (Ms. Jackson's testimony, which gave the impression that defendant had no connection to the crime scene), and its materiality is such that it could have been used in the State's case in chief.
Courts define rebuttal evidence as "that which [the State presents] to explain, repel, contradict, or disprove evidence presented by the accused." (People v. Rios (1986), 145 Ill.App.3d 571, 584, 99 Ill. Dec. 368, 378, 495 N.E.2d 1103, 1113.) Such evidence is generally inadmissible if it contradicts previously admitted evidence on a merely collateral matter, however, unless a defendant has raised the collateral issue in his own case. (People v. Dale (1989), 189 Ill.App.3d 704, 726, 136 Ill. Dec. 997, 1011-12, 545 N.E.2d 521, 535-36, appeal denied (1990), 129 Ill. 2d 567, 140 Ill. Dec. 675, 550 N.E.2d 560.) The circuit court's decision to admit such evidence is reversible only upon a showing of abuse of discretion. Dale, 189 Ill.App.3d at 726, 136 Ill. Dec. at 1012, 545 N.E.2d at 536.
We conclude that the testimony at issue had a tendency to "explain, repel, contradict, or disprove" Ms. Jackson's testimony, so the court did not err in admitting it. In fact, the evidence at issue is, as the trial court described it, "very serious, damaging evidence against the defendant" in that the arresting officer's testimony was the only direct evidence linking defendant to the neighborhood of the crime in this "single-finger I.D." case. In a close credibility contest like this one, such evidence cannot be deemed merely collateral. Accordingly, we hold that the testimony was proper rebuttal and thus its admission constituted no abuse of discretion.
Judgment affirmed.
SCARIANO and McCORMICK, JJ., concur.
NOTES
[1] P.A. 86-1418 amended the statute, adding another factor and renumbering the paragraph at issue as 1005-3-3.2(a)(11), effective January 1, 1991.
[2] We are aware that, as Justice Easterbrook cautions, Lemon may have lost its tang. (Harris v. City of Zion (7th Cir.1991), 927 F.2d 1401, 1424 (Easterbrook, J., dissenting), petition for cert. filed August 19, 1991.) Indeed, in Lee v. Weisman, No. 90-1014, the United States Supreme Court has been asked to reconsider Lemon and to replace the relatively strict, separationist Lemon test with a more lenient one that turns on coercion of belief. (60 U.S.L.W. 3351-53 (Nov. 12, 1991).) On November 6, 1991, the Court heard oral argument in Lee, in which the question is whether saying prayers at a graduation ceremony for a public junior high school violates the Establishment Clause. Because Lee concerns school children, a specially protected group in first amendment jurisprudence, and because the new standard, if adopted, would be less favorable to defendant than Lemon, we see no reason to await the Court's decision before ruling on the challenge here.
[3] We note that the State's suggested statutory purpose (prohibiting interference with the free exercise of religion) was mentioned during the legislative discussions as well. We do not find this argument persuasive, however, because it fails to recognize that the first amendment prohibits such interference only by the sovereign, not by criminals.
[4] The last of these was ineligible for consideration because the subsequent arrest and conviction occurred after the commission of the crime here but before the conviction at issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3358499/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.]MEMORANDUM OF DECISION
In this action, commenced by writ, summons and complaint, dated January 20, 1993, the plaintiff seeks to recover funds advanced to the defendant for the purpose of financing insurance premiums. CT Page 6903
The defendant has answered and has filed special defenses alleging a lack of agency relationship.
After a full trial, all parties present or represented by counsel, the court, based on a preponderance of the credible, relevant and legally admissible evidence, finds, determines and rules as follows:
The plaintiff, AFCO Credit Corporation (AFCO), is a New York Corporation with its principal place of business in Parsippany, New Jersey. AFCO is licensed with the insurance commissioner as an insurance premium finance company authorized to do business in Connecticut.
At all times relevant hereto, the defendant, Go Fly a Kite, Inc. (GFK) was a remains a corporation organized under the laws of the state of Connecticut with its principal place of business at 385 Town Street, East Haddam, Conn.
At all times relevant hereto, McCutcheon Burr, Inc. (MB) was a corporation organized under the laws of the state of Connecticut with its principal place of business at 300 Plaza Middlesex, Middletown, Conn. MB is a licensed agent and broker for property and casualty insurance.
On or before April 30, 1990, MB procured an insurance policy, allegedly on behalf of GFK, from General Star Indemnity Company (General). The total amount of the premium due under the policy was $37,500.00
On or about April 30, 1990, MB arranged a financing agreement, allegedly on behalf of GFK, with AFCO, and pursuant thereto, issued a draft to itself, as authorized by its relationship with AFCO, for the full premium of $37,500.00.
The financing agreement was signed by an employee of MB.
GFK, indicating that the annual premium of $37,500.00 was too expensive, selected an alternate insurance policy affording less coverage but with a premium of $13,000.00. The policy was issued and the $13,000.00 premium covering the alternate policy was financed and paid in full.
Prior to the financing agreement subject to this suit, GFK had entered into a financing agreement with AFCO, but in that CT Page 6904 instance, a principal of GFK had signed the agreement, not an employee of MB.
AFCO claims that MB's employee signed as the agent of GFK and thereby bound GFK as principal.
The $37,500.00 remains unpaid to date.
Agency may arise because of an apparent relationship or by implication or may be expressly entered into.
Apparent agency exists where a principal, through his own acts, causes or allows a person to believe his agent possesses the right to act on his behalf. It is to be determined by acts of the principal rather than by acts of the agent. LouisBeckenstein, et al v. Porter Carrier, Inc., et al, 191 Conn. 120,464 A.2d 6 (1983): Lewis v. Michigan Millers Mutual Ins.,Co., 154 Conn. 660, 228 A.2d 803 (1967).
The only prior act of GFK in its relationship with AFCO is when the parties entered into a financing agreement wherein a principal of GFK, not an employee of MB, signed the agreement.
The court expressly finds that there was no apparent agency authorizing MB to enter into a financing agreement on behalf of GFK.
Also, there was no evidence offered that would support an express agency relationship authorizing MB to sign a binding financing agreement between AFCO GFK.
An express agency is authority delegated by the principal to this agent by words that expressly authorize him to do a delegable act. It must be expressed distinctly either written or orally. Black Law Dictionary, Revised Fourth Edition.
No such evidence was presented in this case. The court finds no express agency existed.
An implied agency is a fact to be proven by deductions or inferences from the manifestations of consent of the principal and is that which the principal intends his agent to possess.Fireman's Fund Indemnity Co. v. Longshore Beach and Country Club,Inc., 127 Conn. 493, 18 A.2d 347, 350 (1941). CT Page 6905
There was no evidence of any nature offered from which the court might find implied agency.
In sum under the facts and circumstances of this case, no express implied or apparent agency ever existed between GFK and BM which authorized BM to enter into a premium financing agreement with AFCO.
Accordingly, judgment may enter for the defendant, Go Fly a Kite, Inc., on the complaint, against the plaintiff AFCO Credit Corporation, together with costs.
SPALLONE STATE TRIAL REFEREE
Judgment enters in accordance with the foregoing Memorandum of Decision
Jonathan W. Field, Deputy Chief Clerk | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2011776/ | 232 N.W.2d 525 (1975)
STATE of Iowa, Appellant,
v.
Virgil MONTGOMERY, Appellee.
No. 57226.
Supreme Court of Iowa.
August 29, 1975.
Richard C. Turner, Atty. Gen., and Lyle A. Rodenburg, County Atty., for appellant.
Roderic A. Pearson, of Peters, Campbell & Pearson, Council Bluffs, for appellee.
*526 Heard before MOORE, C. J., and REES, UHLENHOPP, REYNOLDSON and HARRIS, JJ.
HARRIS, Justice.
Virgil Montgomery (defendant) was arrested November 3, 1973 and charged with assault with intent to commit murder in violation of § 690.6, The Code. On defendant's motion the case was dismissed. On the State's appeal we reverse the trial court and remand.
Following his arrest defendant was incarcerated for two days before he appeared before an associate district court judge and entered a plea of not guilty. He requested appointment of counsel at public expense. The matter was set for the next day, November 6, 1973 at 10:00 a. m. On the following day an attorney was appointed to represent defendant. Defendant appeared with counsel as scheduled. Defendant's appearance bond was set at $2500 and a preliminary examination was set for November 28, 1973. Defendant was unable to make bail.
On November 28, 1973 preliminary examination was continued until December 12, 1973, the order stating it was done "by agreement of the parties."
On December 10, 1973 a county attorney's information was filed charging defendant with assault with intent to commit murder. The last entry on the calendar of the associate district court judge was dated December 12, 1973 and ordered dismissal of the preliminary examination at the request of the county attorney for the reason a "true information has been filed."
Defendant appeared with his court appointed counsel in district court on December 28, 1973. The calendar entry showed defendant received a copy of the information, waived time for speedy trial, and entered a plea of not guilty. The court released defendant on his own recognizance and set trial for the week of February 12, 1974. On January 28, 1974 defendant's counsel wrote the district court judge advising he would be unable to try the case the week of February 12 because of a conflict. Unsatisfied with the efforts of his counsel defendant requested a new attorney on February 26, 1974. The trial court granted his application and appointed defendant's present counsel, also at public expense.
Defendant filed a motion to dismiss on March 5, 1974 on three grounds. (1) No preliminary examination was held in accordance with § 761.1, The Code; (2) an indictment was not found against him within 30 days as required by § 795.1, The Code; and (3) defendant was not brought to trial within 60 days after filing of the information as required by § 795.2, The Code. The trial court sustained the motion on the first two grounds and did not rule on the third.
I. The State is right in its first challenge to the trial court ruling. An accused may be convicted on a county attorney's information even though a preliminary examination is not held. State v. Franklin, 163 N.W.2d 437, 440 (Iowa 1968); State v. Watson, 193 N.W.2d 96, 97 (Iowa 1971); Furgison v. State, 217 N.W.2d 613, 616 (Iowa 1974). Recently we reaffirmed the rule in a case where preliminary hearing had been set at the time the county attorney's information was filed. State v. Lass, 228 N.W.2d 758, 762-763 (Iowa 1975). It was error for the trial court to sustain the motion to dismiss on the first ground.
II. The trial court also sustained the motion to dismiss for violation of § 795.1, The Code. That section provides: "When a person is held to answer for a public offense, if an indictment be not found against him within thirty days, the court must order the prosecution to be dismissed, unless good cause to the contrary is shown. * * *."
The trial court was of the opinion defendant was "held to answer" within the meaning of this section. In a number of cases we have held the term "held to answer", within the meaning of § 795.1, means "held to answer by a magistrate after a preliminary *527 examination or waiver of [the] same." State v. Mays, 204 N.W.2d 862 (Iowa 1973); State v. Morningstar, 207 N.W.2d 772 (Iowa 1973); State v. Sowle, 218 N.W.2d 573, 574 (Iowa 1974); State v. Lee, 222 N.W.2d 471 (Iowa 1974); State v. Thomas, 222 N.W.2d 488 (Iowa 1974); State v. Lyles, 225 N.W.2d 124 (Iowa 1975); State v. Emery, 230 N.W.2d 521 (Iowa 1975). Under this definition defendant was never held to answer within the meaning of § 795.1. The court was in error in holding there was violation of this section.
III. The third ground raised in the motion was a claimed violation of § 795.2, The Code. That section provides in part: "If a defendant indicted for public offense, whose trial has not been postponed upon his application, be not brought to trial within sixty days after the indictment is found, the court must order it to be dismissed, unless good cause to the contrary is shown. * * *." We recently reviewed our interpretation of this section in Boyle v. Critelli, 230 N.W.2d 495 (Iowa 1975). Under our interpretation of the statute since State v. Gorham, 206 N.W.2d 908, 913 (Iowa 1973) we have not adhered to the demand-waiver rule. The controlling principles for the question now presented were explained in State v. Albertsen, 228 N.W.2d 94, 96 (Iowa 1975). The State, not the defendant, has the obligation to bring a defendant to trial. However delay attributable to the defendant may constitute good cause preventing the State from carrying out its obligation. See also State v. King, 225 N.W.2d 337, 340 (Iowa 1975) and citations; State v. Lyles, 225 N.W.2d 124, 126 (Iowa 1975) and citations.
In the instant case the State insists it was prepared to go to trial within 60 days of December 10, 1973, the date the true information was filed. The State urges failure to bring defendant to trial within this time was due to delays on the part of defendant's counsel. Defendant was dissatisfied with his first counsel and seeks to disclaim any delays attributable to him. But no protest of the situation was made until February 26, 1974 when defendant requested new counsel be appointed. We cannot subscribe to a rule whereunder an accused could have counsel cause delay and then, after the running of the 60 day period, renounce counsel and claim a dismissal under this section. Such a rule would make it possible for an accused to invite and cause the delay and then take advantage of it.
Although the trial court did not rule on the third ground it would have been error to sustain the motion on the basis of § 795.2, The Code.
IV. The final question has to do with disposition of the case. We have found the trial court was in error in sustaining the motion. The question is whether the dismissal is nevertheless final or whether the case should be remanded for trial. The question is controlled by our opinion in State v. Buckley, 232 N.W.2d 266 (Iowa 1975). Under the rule announced in that case the cause should be remanded for trial.
Reversed and remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1419530/ | 197 F. Supp. 777 (1961)
IRVING TRUST COMPANY, Libelant,
v.
THE Steamscrew GOLDEN SAIL (ex Wang Archer), her engines, etc., and Marine Bulk Carriers, Inc., Respondents,
And Companion and Consolidated Libels, Intervenors.
No. 60-14.
United States District Court D. Oregon.
July 28, 1961.
Erskine B. Wood, Portland, Or., for libelant.
Alfred A. Hampson, Portland, Or., for intervening Overseas Mercantile Corp.
Donald S. Richardson and James B. Griswold, Portland, Or., for intervenors.
EAST, District Judge.
The libelant herein (Trust) seeks to foreclose a first ship's mortgage held by it.
The respondents consist of second ship's mortgage holder and various claimants in rem against the S. S. Golden Sail.
This matter comes forward to the Court upon the segregated issue of the standing or priority of the three claims:
(1) Vacation, welfare and pension contributions allegedly to be paid by the Golden Sail and her claimants to some nine intervening trustees, acting under and pursuant to the union contract negotiated by and between the union as bargaining agent for its members with the *778 owners of the Golden Sail and standing in priority to Trust's first ship's mortgage, as being preferred maritime liens for "wages of the crew of the vessel * *" intervening members of the crew claiming
(2) Unpaid wages after the arrest of the vessel Golden Sail, and
(3) Transportation and linen allowances after said arrest.
The matter of this segregated issue having been presented to the Court on written briefs and the Court now being advised, enters its opinion.
(1) Vacation, Welfare and Pension.
All of the unlicensed members of the Golden Sail were represented by the Seafarer's International Union, Atlantic and Gulf District, AFL-CIO. Their wages, hours and working conditions were set forth in collective bargaining agreement known as the Freightship Agreement, which provided, inter alia, for certain payments to be made to the various trust funds for vacation pay, welfare and pension benefits and education under the "Plan of the Atlantic" fund. Pursuant to these agreements, the owners and operators of the Golden Sail obligated themselves to pay to the various trustees a particular sum per day for each crew member serving aboard the Golden Sail. The funds were to be used by the trustees in accordance with the terms of the trust agreements to pay vacations to the crew members and provide health, welfare and pension benefits.
The trustees assert herein that the unpaid contributions under the above agreement constitute a preferred maritime lien; in particular, that they are a part of the "wages of the crew of the vessel." 46 U.S.C.A. § 953, inter alia, defines a preferred mortgage lien as follows:
"(a) When used hereafter in this chapter the term preferred maritime lien means * * *, for wages of the crew of the vessel, * * *"
This statute does not define the phrase "wages of the crew of the vessel," and this question in these proceedings was of first impression, and the Court was about to conclude the issue adverse to the intervening trustees, upon an analogy drawn from the following legal premise that "wages * * * due to workmen" so as to be entitled to priority under Sec. 64, sub. a(2) of the Bankruptcy Act, 11 U.S.C.A. § 104, sub. a(2), under the decision of the United States Supreme Court in United States v. Embassy Restaurant, Inc., 1956, 359 U.S. 29, 79 S. Ct. 554, 555, 3 L. Ed. 2d 601, wherein the Court held that the contributions owed to the welfare fund were not "wages * * * due to workmen." The Court examined the nature of the contributions and stated:
"Let us examine the nature of these contributions. They are flat sums of $8 per month for each workman. The amount is without relation to his hours, wages or productivity. It is due the trustees, not the workman, and the latter has no legal interest in it whatsoever. A workman cannot even compel payment by a defaulting employer. Moreover it does not appear that the parties to the collective agreement considered these welfare payments as wages. The contract here refers to them as `contributions.' Finally, Embassy's obligation is to contribute sums to the trustees, not to its workmen; it is enforceable only by the trustees who enjoy not only the sole title, but the exclusive management of the funds." 359 U.S. 29, at page 32, 79 S.Ct. at page 556.
However, this Court was advised of the report of Commissioner James E. Ross for the United States District Court for the Southern District of Texas in the matter of Meridian Trading Corp. v. S. S. Denton, etc., being a preferred ship's mortgage foreclosure proceedings substantially upon the questions presented in these proceedings, which report is now published in 1960 A.M.C. 2264 (Vol. 38, Part II). The Commissioner holds that contributions made by the shipowners to the trustees under the union bargaining agreement for vacation pay, welfare and pension payments to the members of the *779 union are not wages within the meaning of 46 U.S.C.A. § 953, providing that "wages of the crew of the vessel" are preferred maritime liens. The Commissioner talks about some conditions which are not common with the agreements and plans in the instant case, but these words of the Commissioner are conclusive on the issue, in my opinion:
"There are several other common provisions in each of these six plans, however, which show plainly that employer contributions to the plans are not wages of the crew. Each plan under consideration provides that the employer contributions shall be used for the purpose of paying the administrative costs of the operations of the plan, the expenses of the trustees, attorney's fees in case the trustees employ attorneys for purposes authorized by the plan, the costs of fidelity bonds required by the trustees, and even the expense of defense of suits brought against the trustees in their official capacity as trustees. These matters are far too far removed from the payment of wages to mariners engaged in the navigation of a vessel (and in her services) to be classified as wages of the crew of the vessel. The contracting parties (union trustees and owners of the vessel) negotiated and contracted for the liability of the owners in personam for contribution to these plans, but none of the parties intended for any of these obligations to attach to vessels in rem." Pp. 2277-2278. (Parenthetical material added.)
The following editor's note appears at p. 2264:
"Exceptions to the Commissioner's report filed for Russell H. Brandon by trustees of International Organization M. M. & P. Plan, Maritime Engineers Beneficial Ass'n, and Augusta Oil Burning S. P. A., were denied by the court (Ben C. Connolly, D. J.) on November 23, 1960, an appropriate order to be submitted by counsel within 10 days. Ed."
Since the above proceedings, Mr. Jack Brookshire, a Commissioner for the United States District Court for the Eastern District of Texas, at Beaumont, filed his report on or about April 7, 1961, in re the matter of the S. S. Ozark. So far as I am advised, this report has not been published, but, with thanks to proctors for the trustees, the Court has been supplied with a purported copy thereof.
It appears therefrom that Commissioner Brookshire's report to the Court as to contributions for vacation pay is directly contra to Commissioner Ross' report in that Commissioner Brookshire feels and is "constrained to hold" and recommends to his Court that "contributions payable to the trustees of the union for vacation plans due in admiralty law amount to, constitute and are equivalent to, wages, therefore are entitled to the priority and ranking, and status of seamen's lien wage claims." As to claims for payments due the trustees for welfare and pension plans, Commissioner Brookshire appears to agree with Commissioner Ross. I feel that Commissioner Brookshire fails to perceive the essential difference between union bargaining agreements of workers ashore and the signing of ship's articles between the seamen and the master of the vessel for the voyage, which is governed by "shipment of the crew." 46 U.S. C.A. §§ 561-591. It is legend that the unpaid "wages of the crew" is a libel against the vessel in rem. The trustees' claim under the union bargaining agreement is an action in personam against the signatory owners thereof. I think Commissioner Ross' conclusion is sounder and I shall follow the course charted by him. Therefore, the trustees' claim for preferred maritime lien on account of vacation pay should be denied.
(2) Unpaid Wages after the Arrest of the Vessel Golden Sail
It appears from the evidence that all of the crew members had been paid in full their accrued wages for the entire voyage, from the signing of the articles at Vancouver, Washington, until its conclusion at Vancouver, Washington, to *780 and including January 15, 1960, on which date the vessel was arrested and taken into custody by the Marshal of the United States District Court for the District of Oregon pursuant to the libel initially entered herein (order of Court, July 1, 1960, aggregating $50,939.79).
The crew members now ask for additional wages for the period January 16, 1960, through January 27, 1960, during which time the vessel was in custodia legis of the Marshal and during which time the crew members remained aboard. However, there is no showing in the evidence that the crew members remained aboard at the request of the owners or that they performed any ship's services at the request of or for the benefit of the Marshal. The voyage was completed and the crew members who remained aboard did so of their own free will. I conclude that upon this claim the seamen cannot prevail.
"It is well settled that no maritime lien can be allowed to seamen for wages accruing subsequent to the time the ship is taken into custodia legis, and particularly is this true where, as here, the libel is filed by the crew of the vessel. The theory here is that the act of seizing a ship, pursuant to legal process, effectively terminates the voyage, and thereby discharges the crew with no further claim for wages. Thus, seamen's wage claims are only effective for those services performed prior to libel." Citing Putnam v. Lower, 9 Cir., 1956, 236 F.2d 561, 570.
(3) Transportation and Linen Allowance after Arrest
As stated above, the subject voyage was completed at Vancouver, Washington, on January 15, 1960, and the obligation of the master and his ship and the rights of the trustees under the signed articles had been faithfully performed. The crew was at liberty to leave the vessel, but voluntarily elected to remain aboard at the sufferance of the United States Marshal. I conclude that the claims of the crew members for transportation and payment for linen allowance should be denied.
Proctors for all parties are advised that the segregated issues of the claims for stevedoring charges by Brady-Hamilton Stevedoring Company and J. L. Stulb, dba Texla Stevedoring Company, are set for call on August 7, 1961.
Proctors for libelant and second preferred ship's mortgage are requested to submit appropriate findings of fact and conclusions of law and decree upon this segregated issue in accordance with the above. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1427864/ | 278 S.W.3d 501 (2009)
ROUGH CREEK LODGE OPERATING, L.P. d/b/a Rough Creek Lodge, and Rough Creek Investors GP, LLC, Appellants,
v.
DOUBLE K HOMES, INC., Appellee.
No. 11-07-00152-CV.
Court of Appeals of Texas, Eastland.
February 5, 2009.
*503 Kenneth B. Chaiken, Chaiken & Chaiken, P.C., Dallas, Steven D. Goldston, Goldston Law Firm, Denton, for appellants.
Edwin J. Seilheimer, Seilheimer Reid, PC, Granbury, for appellee.
OPINION
RICK STRANGE, Justice.
This suit arises out of a contractual dispute involving remodeling projects at a resort owned and operated by Rough Creek Lodge Operating, L.P. d/b/a Rough Creek Lodge, and Rough Creek Investors GP, LLC. The jury found in favor of the contractor, Double K Homes, Inc., and awarded actual damages of $26,245.14. We affirm.
I. Background Facts
Rough Creek is a luxury resort covering 11,000 acres. Double K is a home builder and general contractor. Rough Creek's resident manager, Frank Alvarez, approached Double K's owner, Bill Cathey Jr., to discuss a remodeling project at the resort. They reached an oral agreement, and Double K began remodeling Rough Creek's Spa. Alvarez later asked Cathey to do some additional remodeling, and Cathey agreed to do so for costs plus 10%. Double K did several remodeling projects for Rough Creek. In late February 2005, Double K was nearing completion of its work, and Cathey submitted a draw request for $37,175. Rough Creek paid $22,000 initially and subsequently $4,000 more.
Whether because of Cathey's draw request or otherwise, the parties had several disagreements in March about their respective responsibilities, and Rough Creek retained another contractor to finish the outstanding projects. Double K sent a demand for payment. When it was not paid, Double K filed a mechanic's lien and then filed suit seeking contractual damages, attorney's fees, and foreclosure of its lien. Rough Creek counterclaimed, contending that Double K did not perform timely and in a workmanlike manner.
II. Issues
Rough Creek challenges the judgment with four issues. Rough Creek contends that the evidence is legally and factually insufficient, that the trial court erroneously utilized a broad-form liability question, and that the trial court erred when it denied Rough Creek leave to file a trial amendment adding the defense of excessive demand.
III. Analysis
A. Sufficiency of the Evidence.
Rough Creek argues that the jury charge required Double K to prove that it completely performed all required work and that, because there was evidence that *504 some of the remodeling projects were uncompleted, the evidence is legally or factually insufficient to support the jury's verdict.
1. Standard of Review.
When conducting a legal sufficiency review, we consider all of the evidence in the light most favorable to the verdict, crediting any favorable evidence if a reasonable factfinder could and disregarding any contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 821-22 (Tex.2005). When conducting a factual sufficiency review, we consider all of the evidence and uphold the jury's finding unless the evidence is too weak to support it or the finding is so against the overwhelming weight of the evidence as to be manifestly unjust. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex.1986).
2. The Charge.
The first question asked: "Do you find that Double K Homes, Inc. completely performed all of the work required under its construction agreements with Rough Creek Lodge?" The jury was instructed in the charge that a contractor could suspend its work or be excused from further performance in certain circumstances[1] and that completion of a contract means "the actual completion of the work, other than replacement or repair of the work performed under the contract."
3. The Evidence.
There were no written agreements between Rough Creek and Double K. Under the charge, the jury was required to first determine what work the oral construction agreements required and, then, whether Double K completed them or was excused from complete performance. The parties disputed each of these issues.
Cathey testified that, prior to his February draw request, there had been no complaints about Double K's work. Alvarez described the situation differently. He criticized Double K's installation of a waterfall in the Spa and its construction of a horse-washing station. He complained that the Spa Addition still needed ceiling, painting, and electrical work and that the Wildlife House needed hot water and painting work. Cathey responded that Rough Creek altered projects after they were started and, in one instance, after it was completed and that Rough Creek was complaining about some items that he had not heard of before. He also testified that Double K's work was done correctly.
The parties disputed whether Double K's work was performed timely. Alvarez contended that Cathey promised to finish the Wildlife House by Super Bowl Sunday. Cathey denied ever agreeing to do so. He testified that he had promised to do his best to complete the work by then but that their work was slowed down by the discovery of a den of rattlesnakes under the house, by Rough Creek's decision to special order shutters, and by weather. By e-mail *505 dated March 2, Alvarez advised Cathey that his boss had given Alvarez a drop dead date of March 11 to complete the remaining remodeling work. Alvarez acknowledged that this was a unilaterally selected date. Cathey testified that the March 11 date was impossible to meet because of factors beyond his control. He also testified that Double K had been very busy with other projects in March and that it was April 7 before he was able to see the light of day.
When Cathey submitted his February draw request, he had $21,475.11 in outstanding bills. He went over the draw request with Alvarez and expected to be paid. Alvarez testified that Rough Creek was shocked by Double K's request and denied agreeing to pay it. Rough Creek had been paying "like clockwork" but, because Double K was nearing the end of the projects, Alvarez decided to slow the payments down until everything was completed. Consequently, Rough Creek paid only $22,000.
On March 7, Cathey and Alvarez met at Home Depot and purchased materials for the Cabin project. According to Cathey, Alvarez asked him to pay for the materials and said that he was holding a check and he would release it as soon as the punch list items were completed. On March 18, Alvarez sent Cathey an e-mail. Alvarez indicated that he had deposited $4,000 in the bank for Double K, that he had $6,000 in additional checks, and that he could get the balance when the jobs were completed and the accounts reconciled. He asked Cathey to send him spreadsheets and invoices. He also set out several punch list items.
Cathey testified that Alvarez told him the invoices were being requested to verify that sales tax had been paid. Cathey assured Alvarez that all sales taxes had been paid. He also told Alvarez that, if Rough Creek would send him $400 to cover his time and expenses for copying the invoices, he would provide copies within seven business days. Alvarez refused to pay Double K any more money until the work was completed. He testified that everyone always understood that the parties would settle up at the end and that Double K would have to "true up" its charges. He also testified that Cathey had previously agreed to provide the invoices.
Because of the payment dispute, Cathey decided to "draw a line in the sand." On April 7, he sent Alvarez an e-mail and advised him that he was at a stopping point until he received another draw. He asked Alvarez to deposit the $6,000 he was holding into Double K's account. Alternatively, he asked Alvarez to pay an outstanding $2,000 supplier bill. Despite his threat, Cathey sent out a worker to address the punch list items. Alvarez responded the same day and again refused to pay any more money until the work was complete. For the first time, he referenced retaining 10% of the contract. Even though retained funds secure payment of vendors and subcontractors,[2] when Rough Creek received a bill and demand letter from a supplier for materials used on the remodeling projects, it refused to pay it. Alvarez testified that Rough Creek intended instead to keep the 10% until reaching an agreement with Cathey.
Unbeknownst to Alvarez, his boss Cary Platt sent Double K a certified letter dated April 6. Platt essentially accused Cathey of abandoning the job site. Platt contended that there had been no one on the job site for thirty days (Alvarez agreed that this was untrue), and he gave Cathey five days to respond. Cathey responded with his *506 own certified letter. He took issue with many of Platt's factual contentions, and he denied any wrongdoing. Cathey demanded payment of $15,968.11 for unpaid bills and $18,085.41 for unpaid contractor fees. He included copies of unpaid bills. Alternatively, he gave Platt the opportunity to pay the outstanding bills directly. Finally, he stated that, if not paid in five days, he would file a lien.
Alvarez retained another contractor to finish the remodeling projects and to repair problems he attributed to Double K's work. Rough Creek received Double K's invoices through discovery. Alvarez reviewed these and contended that they did not match up with Double K's prior charges. He noticed that some items had been returned but that Rough Creek's bill was not credited. He also contended that there were missing invoices for $7,409.86. But, he agreed that, following his audit, Rough Creek still owed Double K $15,384.11.
4. Is the Evidence Sufficient?
Cathey and Alvarez disputed whether Double K performed all required work, performed it timely, and performed it in a good and workmanlike manner. Because a juror could find Cathey's testimony credible, we must defer to the jury's credibility determination. Cathey's testimony is factually and legally sufficient to establish that Double K performed its work timely and in a good and workmanlike manner. The question is whether the evidence is sufficient to establish that Double K performed all required work or that it had an excuse not to.
Rough Creek contends that the charge required Double K to completely rather than substantially perform all required work, and its brief contains an exhaustive list of unfinished items. Many of these are matters that Double K denied responsibility for, and we must defer to the jury's determination of them. Others could be characterized as replacement or repair work. Because the charge excepted this from its definition of actual completion, we must defer to the jury's verdict on these as well. Our deference, however, does not resolve this dispute because, on April 7, Cathey sent Alvarez an e-mail in which he said that Double K had completed 95% of the Cabin project but that it was suspending any further work until it received another draw. Because Double K's e-mail acknowledged that work remained on at least one project, it cannot claim that it completed all required work but must show that it was excused from doing so.
The jury charge instructed the jury that complete performance was not required in two instances. The first required proof that Double K submitted a written request for payment of an allowed amount for properly performed work, that Rough Creek did not pay within thirty-five days of receiving that request, and that Double K then provided written notice of its intent to suspend work within ten days if payment was not received.[3] The only written notice of Double K's intent to suspend work was Cathey's April 7 e-mail. In that e-mail, Cathey did not threaten to suspend work if Double K was not paid in ten days but announced that Double K was at a stopping point now. Furthermore, Cathey admitted at trial that his draw request contained an error and that he had demanded $2,000 more than he was entitled to receive. Double K, therefore, was not excused from further performance under this instruction.
*507 In the charge, the jury was also instructed that further performance was not required following a material breach of the agreement by Rough Creek that justified refusing further performance or that prevented further performance. Rough Creek contends that this instruction is immaterial given the plain language of question one. We disagree. The instruction and issue must be read together. In this instance, the jury was required to determine if Double K completely performed its work until Rough Creek's conduct excused further performance.
Even though Cathey's April 7 e-mail indicated that Double K would perform no further work until paid, he sent workers to address punch list items. Rough Creek did not allow him to do any work because it had already hired another company. The jury could, therefore, determine that, as of April 7, Double K was prevented from further performance.
The jury could also find that Rough Creek materially breached the agreement and that this excused further performance. The parties' disagreements surfaced after Cathey's February draw request. Previously, Rough Creek had paid draw requests without dispute. But it paid only a portion of the February request and continually conditioned further payment of even undisputed amounts upon completion of its punch listwhich because of the parties' dispute was not an agreed list. It unilaterally imposed a deadline for the completion of all work. Each of these actions could be considered a material breach.
Because this dispute concerns a series of oral contracts and because the parties disputed their contractual obligations, credibility was an issue. The jury had cause to discredit Alvarez's testimony. He justified not paying Double K because Rough Creek was retaining 10% of the contract as required by law,[4] but he refused to use the retainage to pay a supplier for materials used at the resort. He also justified not paying Double K because Cathey did not provide Rough Creek with a copy of his invoices, but a juror could question this. Cathey sent an accounting and a copy of his unpaid bills to Platt by letter dated April 12. Even though Alvarez was Rough Creek's corporate representative and the one responsible for reconciling the books, he was unaware of the letter until trial because Platt did not forward it or keep a copy of the invoices. Finally, even after Alvarez received Double K's invoices through discovery and he determined that Rough Creek owed an additional $15,384.11, Rough Creek still did not pay. Alvarez admitted that Rough Creek intended to withhold payment until it reached an agreement with Double K "on everything." The jury could reasonably find that this was the sole reason for not paying and that it was done to force Double K into a more favorable agreement.
The evidence is legally and factually sufficient to support the jury's answer to question one. Rough Creek's first and second issues are overruled.
B. Did the Trial Court Err by Utilizing a Broad-Form Liability Question?
Rough Creek next argues that the trial court improperly utilized a broad-form liability question because it commingled valid and invalid liability grounds. Rough Creek reasons that it is impossible to know if the jury found that Double K completely performed all required work, or that it was entitled to suspend further work, or that it was excused from further performance.
*508 Double K answers that Rough Creek has waived this issue because it was not properly briefed. Tex.R.App.P. 38.1(h) provides that an appellant's brief "must contain a clear and concise argument for the contentions made, with appropriate citations to authorities and to the record." This requires a specific argument and analysis showing that the record and the law support the contention. Deutsch v. Hoover, Bax & Slovacek, L.L.P., 97 S.W.3d 179, 198-99 (Tex.App.Houston [14th Dist.] 2002, no pet.). We must interpret this requirement reasonably and liberally. Republic Underwriters Ins. Co. v. Mex-Tex, Inc., 150 S.W.3d 423, 427 (Tex.2004). Rough Creek's brief satisfies this standard.
The trial court's submission of jury questions and instructions is reviewed under an abuse of discretion standard, recognizing that broad-form submission of questions is favored in Texas. Fin. Ins. Co. v. Ragsdale, 166 S.W.3d 922, 926 (Tex.App.El Paso 2005, no pet.). A trial court abuses its discretion if it acts in an arbitrary or unreasonable manner without reference to any guiding rules or principles. Walker v. Gutierrez, 111 S.W.3d 56, 62 (Tex.2003). In reviewing jury charges, we consider the pleadings, the evidence presented at trial, and the charge in its entirety. De Leon v. Furr's Supermarkets, Inc., 31 S.W.3d 297, 300 (Tex.App.El Paso 2000, no pet.). Even if the trial court abuses its discretion, we may not reverse unless the error, when viewed in light of the totality of the circumstances, the error amounted to such a denial of the rights of the complaining party as was reasonably calculated to and probably did cause rendition of an improper judgment. Id. Whether the charge submits the proper controlling issues in the case, in terms of theories of recovery or defense, is a question of law, that we review de novo. Fin. Ins. Co., 166 S.W.3d at 926.
Trial courts are required, whenever feasible, to utilize broad-form questions in their jury charge. See Tex.R. Civ. P. 277. But the Texas Supreme Court has recognized that in some instances this broad-form preference must defer to a granulated submission. In Crown Life Ins. Co. v. Casteel, 22 S.W.3d 378, 390 (Tex.2000), the court held that it was error to utilize a single broad-form liability question combining five distinct DTPA-based theories of liability with eight other theories because the plaintiff lacked standing to assert four of the five DTPA theories. The court found that this error was harmful because a reviewing court could not determine whether the jury based its verdict on a valid or invalid theory of liability. In Harris County v. Smith, 96 S.W.3d 230, 231 (Tex.2002), the trial court asked the jury to determine a lump sum damage award for each plaintiff, and it listed the elements that the jury could consider. Unfortunately, there was no evidence for some of the listed elements. The court held that the rationale in Casteel applied and that instructing the jury to consider elements for which there was no evidence was harmful. Id. at 236. Similarly, in Romero v. KPH Consolidation, Inc., 166 S.W.3d 212 (Tex.2005), the court held that there was no evidence to support the submission of a malicious credentialing claim and that it was harmful error to utilize a broad-form apportioning issue because it allowed the jury to consider both the invalid credentialing claim and a separate, valid negligence claim. Id. at 215.
Not all charge errors, however, are harmful. In Bed, Bath & Beyond v. Urista, 211 S.W.3d 753 (Tex.2006), the trial court erroneously submitted an unavoidable accident instruction. The court found that harm could not be presumed and that, when it reviewed the entire record, it could *509 not conclude that the instruction caused the case to be decided differently than it would have been otherwise. Id. at 758. The court distinguished Casteel and Harris County by noting that they dealt with multiple theories of liability and multiple damage elements but that this case concerned a single liability theory. Id. at 756-57; see also Columbia Med. Ctr. of Las Colinas v. Bush ex rel. Bush, 122 S.W.3d 835 (Tex.App.Fort Worth 2003, pet. denied) (allegations of multiple acts of negligence are not separate theories of liability and do not make a broad-form submission improper).
This case is much closer to Urista than Casteel or Harris County. Unlike Casteel, Double K asserted a single cause of action: breach of contract. Merely because this required the resolution of multiple fact questions does not convert it into multiple theories of liability. Unlike Harris County, the jury was not instructed to consider an element of damage for which there was no evidence. While we do not know the jury's exact thought process, we do know that there is sufficient evidence to support its determination that Rough Creek breached its agreement with Double K. The liability question could have been rephrased although we note that Rough Creek did not object to the form of that question, and the jury should not have been asked if Double K completed its work or instructed that it could suspend its work, but to accept Rough Creek's argument that this was harmful would require either that we disregard Urista and presume harm, or that we disregard Rule 277 and encourage granulated charges. Because we can do neither, the third issue is overruled.
C. Did the Trial Court Err by Denying Rough Creek's Motion to Add the Defense of Excessive Demand by Trial Amendment?
After both sides rested, Rough Creek orally requested leave to amend its answer to include the defense of excessive demand, contending that this issue had been tried by consent. Double K objected. The trial court denied Rough Creek's request, stating that the matters giving rise to this defense were clearly known by both sides well before trial started and that it could have been easily included in a pleading. The court also expressed some doubt that the issue had been tried by consent because the evidence went to other issues in the case.
We review a trial court's order granting or denying a request for a trial amendment under an abuse of discretion standard. Chase Manhattan Mort. Corp. v. Cook, 141 S.W.3d 709, 716 (Tex.App.Eastland 2004, no pet.). A trial court has no discretion to refuse an amendment unless (1) the opposing party presents evidence of surprise or prejudice or (2) the amendment contains the assertion of a new cause of action or defense and, thus, is prejudicial on its face and the opposing party objects to the amendment. Menix v. Allstate Indem. Co., 83 S.W.3d 877, 881 (Tex.App.Eastland 2002, pet. denied). The burden of showing prejudice or surprise rests on the party resisting the amendment. Id. Surprise may be shown on the face of the amendment when it would reshape the cause of action to the prejudice of the other party. Trailways, Inc. v. Clark, 794 S.W.2d 479, 492 (Tex.App.Corpus Christi 1990, writ denied). When the record shows a lack of diligence in bringing the amendment and when the matter appears to have been known by the party seeking to amend and is not based on any newly discovered facts, the court does not abuse its discretion in refusing to allow the amendment. Chase Manhattan, 141 S.W.3d at 716. When an amended pleading is prejudicial on its face *510 and the trial court denies leave to file the amended pleading, the burden shifts to the party who offered the amended pleading to clearly demonstrate on appeal that the trial court abused its discretion. Hardin v. Hardin, 597 S.W.2d 347, 349 (Tex.1980).
Rough Creek's trial amendment was prejudicial on its face because it added a new defense. Rough Creek did not assert that this defense was based upon any newly discovered facts but instead reiterated a position taken well before suit was filed: that Cathey's pre-suit demand was for more than Double K was entitled to receive. The trial court did not abuse its discretion by denying Rough Creek's trial amendment, and the fourth issue is overruled.
IV. Holding
The judgment of the trial court is affirmed.
NOTES
[1] The charge instructed the jury:
(a) A contractor is authorized by law to suspend further work on the 10th day after the occurrence of both of the following circumstances: (1) within 35 days of receiving a written request for payment for an amount that is allowed to the contractor under the contract for properly performed work, the owner fails to pay the undisputed amounts; and (2) thereafter, the contractor gives the owner written notice that the payment has not been received and stating the intent of the contractor to suspend work for nonpayment.
(b) Further performance under the agreement is not required if the owner's conduct (1) amounted to a material breach of the agreement that justified the contractor refusing further performance or (2) that prevented the contractor's further performance.
[2] See Tex. Prop.Code Ann. § 53.102 (Vernon 2007).
[3] The parties advise us that this instruction was based upon TEX. PROP.CODE ANN. § 28.009(a) (Vernon 2000). Because there are some distinctions between the court's instruction and this statute, we have limited our consideration to the instruction.
[4] See TEX. PROP.CODE ANN. § 53.101 (Vernon 2007). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2240284/ | 148 Ill. App. 3d 311 (1986)
499 N.E.2d 155
In re GABRIEL PRONGER, a Minor (The People of the State of Illinois, Petitioner-Appellee,
v.
Elizabeth M. Green, Respondent-Appellant).
No. 4-85-0645.
Illinois Appellate Court Fourth District.
Opinion filed October 14, 1986.
Rehearing denied November 17, 1986.
Thomas A. Bruno, of Urbana, for appellant.
Thomas J. Difanis, State's Attorney, of Urbana (Kenneth R. Boyle, Robert J. Biderman, and Michael Blazicek, all of State's Attorneys Appellate Prosecutor's Office, of counsel), for the People.
Reversed and remanded.
PRESIDING JUSTICE McCULLOUGH delivered the opinion of the court:
Respondent appeals an order of the circuit court of Champaign County finding her an unfit parent (Ill. Rev. Stat. 1985, ch. 40, pars. 1501(D)(m), (D)(p)) and terminating her parental rights (Ill. Rev. Stat. 1985, ch. 37, par. 705-9(2)). Respondent argues, first, that the trial court's orders were void because it lacked personal jurisdiction over the minor at all periods during the cause of action and, second, that the trial court's findings were against the manifest weight of the evidence.
Only a short review of some of the proceedings in this cause is necessary for our disposition. The first petition with respect to the child was filed on April 21, 1983. Between that time and May 21, 1985, there were some 15 different hearings with respect to the minor child and his best interests and welfare. A supplemental petition alleging that the mother and father of the minor child were unfit was filed on May 21, 1985. That petition alleged that on December 1, 1983, the circuit *312 court of Champaign County entered an order finding the minor to be dependent and neglected and on February 23, 1984, entered a dispositional order naming the guardianship administrator of the Department of Children and Family Services as permanent guardian. The balance of the May 21, 1985, supplemental petition contains counts alleging unfitness on the part of the mother and father of the child. The child was properly served with summons as to the supplemental petition, and the mother and father were properly before the court. An order terminating parental rights and continuing the guardianship in the Department of Children and Family Services was entered on September 9, 1985. Respondent mother's appeal is from that order.
The respondent mother's first argument, asserting that the trial court's orders were void because it lacked personal jurisdiction over the minor at all periods during the cause of action, disposes of this case. The trial court did properly have jurisdiction of the minor child with respect to the supplemental petition filed May 21, 1985. However, the allegations of that petition were that the child had been previously declared a ward of the court by the court's order of December 1, 1983, and the dispositional order of February 23, 1984. The common law record in this case, consisting of almost 900 pages, has been searched with respect to service of summons on the child with respect to any matter which occurred prior to the May 21, 1985, supplemental petition being filed. The record does not show that the child was served with any summons with respect to the original petition filed April 21, 1983, or any of the subsequent petitions filed from that date to May 21, 1985. Specifically, the child had not been served with any summons with respect to the December 1, 1983, hearing, nor the February 23, 1984, dispositional hearing. This court, in In re Crouch (1985), 131 Ill. App. 3d 694, 476 N.E.2d 69, has stated that without service of summons upon the child any orders by the trial court are void.
Any petition to terminate parental rights as in this case requires that the child be adjudged a ward of the court either at that hearing or a prior hearing. This was not done, and the argument of the respondent mother is well taken. Because of the failure of service of summons as to the child with respect to the petition for adjudication and disposition, this cause should be reversed and remanded to the trial court.
For the above reasons, we reverse the trial court.
Reversed and remanded.
MORTHLAND and SPITZ, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1762208/ | 117 So. 2d 897 (1960)
239 La. 23
William Brown TINSLEY
v.
SEISMIC EXPLORATIONS, INC., of Delaware and W. A. McNeil.
No. 44728.
Supreme Court of Louisiana.
February 15, 1960.
Oliver, Digby & Fudickar, Monroe, Ellis, Lancaster & King, Frank B. Ellis, William McM. King, New Orleans, for applicants.
Robinson & Atkins, Homer, for plaintiff-respondent.
SIMON, Justice.
Plaintiff, a mineral lessee, seeks the recovery of damages resulting from an alleged geophysical trespass committed by the defendants, Seismic Explorations, Inc., a corporation engaged in conducting seismic tests, and W. A. McNeil, one of its crew chiefs. Plaintiff alleged that, at the time of the alleged trespass, he was the owner of an *898 oil, gas and mineral lease for a valuable consideration, by which the lessor (landmineral owner) granted him the exclusive right to investigate, explore, prospect, drill and mine for the production of oil, gas and other minerals in and under a certain 280-acre tract of land in Claiborne Parish, Louisiana. Plaintiff alleged that the defendants entered upon the land covered by and burdened with plaintiff's lease and conducted seismograph explorations without his consent and approval. Plaintiff further alleged that his damages are the depreciation in the value of his leasehold rights and the monetary loss occasioned by the refusal of a prospective purchaser of the lease to accept its assignment and transfer. Plaintiff later abandoned these claims and confined his demand for damages under LSA-C.C. Article 2315 solely on the ground that the information obtained by defendant in conducting geophysical operations constituted a trespass on plaintiff's leasehold rights. The landowner-lessor was not joined in the suit.
In their answer the defendants admitted that, in the process of conducting seismic tests for information leading toward mineral development over a 40,000-acre area, they secured the permission of the owners of the 280-acre tract of land heretofore referred to, and which at the time was subject to an oil, gas and mineral lease in favor of plaintiff; that no consideration was demanded or paid for this permission, nor for permission to conduct such tests on any of the other tracts within the 40,000-acre area. They further allege that at the time the permit was obtained and the tests conducted plaintiff had not commenced any mineral operations on the leased premises, and that there is no factual or legal basis whatsoever for an award of compensable damages.
After a hearing on the merits, the trial judge rendered judgment in favor of plaintiff and awarded damages in the amount of $840, which was held to represent plaintiff's total leasehold investment, i.e., the original consideration of $1 per acre for the first year of the lease, and the payment of a like amount for two annual renewals, with legal interest from date of judicial demand until paid.
The Court of Appeal [111 So. 2d 837], though recognizing "the validity and persuasiveness of defendant's contention that no actual damage has been proved," affirmed the judgment below, holding that by virtue of the mineral lease plaintiff became the exclusive owner of the right to conduct seismic tests; that by virtue of Act 205 of 1938, as amended by Act 6 of the Second Extra Session of the Legislature of 1950, incorporated in LSA-R.S. 9:1105, this right was transformed or converted into a real property right which gave the mineral lessee the right of bringing an action in tort for trespass and to recover damages.[1] On defendant's application we granted writs of review.
On February 19, 1955, F. B. Crow granted a mineral lease to plaintiff covering 280 acres, more or less, in Claiborne Parish, for a consideration of $280 cash and certain royalties to be paid by lessee on any production which might be obtained from any mineral explorations. Under its provisions the lessor-land and mineral-owner granted to plaintiff-lessee the exclusive exploratory rights, common to all mineral leases, and as heretofore stated. It is shown that the lease was renewed for the second and third successive years on payment of the stipulated price; that during the period of time the agents of companies, other than defendants, approached plaintiff for his permission to conduct seismograph tests, all of these proposals were unacceptable. It is further shown that defendants, after obtaining the permission of the lessor-land and mineral-owner, without notice to or consent of plaintiff, conducted the seismic tests, resulting in this tort action.
*899 The question presented is whether, under the provisions of LSA-C.C. Article 2315,[2] a mineral lessee can maintain an action for damages resulting from a geophysical trespass committed by a third party who has the consent of the lessor-land and mineral-owner to conduct these mineral tests.
We necessarily concede and have recognized the well-known and accepted fact that:
"* * * the right to geophysically explore land for oil, gas or other minerals is a valuable right. Large sums of money are annually paid landowners for the mere right to go upon their land and make geophysical and seismograph tests. The information obtained as the result of such tests is highly valuable to the person or corporation by whom they are made. If the information thus obtained be favorable, it can be used and is used in dealing with the landowner for his valuable mineral rights. If the information be unfavorable, the fact quickly becomes publicly known and thus impairs the power of the landowner to deal advantageously with his valuable mineral rights. The average landowner is without means or funds to secure geophysical or seismograph information. Where that information, which is exclusively his by virtue of his ownership of the land, is unlawfully obtained by others, the landowner is clearly entitled to recover compensatory damages for the disregard of his property rights." Layne Louisiana Co. v. Superior Oil Co., 209 La. 1014, 26 So. 2d 20, 22.
Also see Angelloz v. Humble Oil & Refining Co., 196 La. 604, 199 So. 656; Holcombe v. Superior Oil Co., 213 La. 684, 35 So. 2d 457; Franklin v. Arkansas Fuel Oil Co., 218 La. 987, 51 So. 2d 600.
In all of the foregoing cited cases in which compensatory damages were allowed as a result of a geophysical trespass, the claimant seeking reparation was either the landowner or the owner of a mineral servitude. In an exhaustive research we profess our inability to find any cases in which we recognized and determined the right of a mineral lessee to recover civil damages against a third party charged with a geophysical trespass.
Prior to the passage of Act No. 205 of 1938, as originally enacted,[3] the owner or possessor of mineral leases had no standing to prosecute a possessory or petitory action for the protection of his leasehold rights independently of the owner of the fee. Up to that time it was generally recognized that the sale of minerals was, in effect, the creation of a real right, being in its legal sense that of a servitude (Frost-Johnson Lumber Co. v. Salling's Heirs, 150 La. 756, 91 So. 207). Under the prevailing uncertainty as to the true and definite nature of a mineral lease, in 1936 we finally removed all doubt when in the case of Gulf Refining Co. of Louisiana v. Glassell, 186 La. 190, 171 So. 846, we held that a lessee had no standing to defend or prosecute his rights as such, independently of his lessor, and that if the latter failed to become party to a suit in which the lessee sought relief, the lessee was without recourse, his contract having produced merely personal, and not real, rights *900 and obligations between him and his lessor, and that his only recourse was an action in warranty against his lessor, thus prohibiting him from maintaining a petitory or possessory action against a third party title claimant.
This pronouncement having been met with consternation by the oil industry, to cure this deficiency or defect[4] Act 205 of 1938 was enacted, supra, wherein the Legislature classified oil, gas and other mineral leases, or the right to reduce oil, gas, or other minerals to possession, together with the rights, privileges and obligations resulting therefrom, as real rights and incorporeal immovable property, the latter phrase being merely a synonym for a real servitude imposed upon the land leased in favor of the lessee. Tyson v. Surf Oil Co., 195 La. 248, 196 So. 336. The statute further declared that as such the same may be "asserted, protected and defended in the same manner as may be the ownership or possession of other immovable property by the holder of such rights" by any procedure available to the owner of land, and without the latter's concurrence or joinder.
Notwithstanding this Act, in Tyson v. Surf Oil Co., supra, we announced that our codal articles dealing with ordinary leases still apply to oil, gas, and mineral leases, in proper cases; that the Legislature intended to grant to mineral lessees, in the protection of their interests, the advantage of maintaining real actions; and, finally, that it was not designated to modify, change, or alter the substantive nature of leases as codally prescribed.
Again in Amerada Petroleum Corporation v. Reese, 195 La. 359, 196 So. 558, 564, plaintiff, a mineral lessee, sued to set aside a judgment of partition had between the co-owners of the land, and thus to revive and preserve its mineral lease. It was therein urged that the statute having transformed and created a mineral lessee as the holder of a real right, i.e., the same right of ownership as that of a lessor (one of the co-owners), the failure to make the mineral lessee a party to the suit rendered the judgment of partition an absolute nullity. We held that Act 205 of 1938 did not give the owner or possessor of a mineral interest (lessee) the right to bring an action for partition as could his lessor; that the mineral lessee was not a necessary party to nor could he prevent the action of partition by licitation between owners of the fee, even though the act classified his status as of the owner of a real right, and even where such rights were acquired from some but not all of the co-owners.
In Colgin v. Harris, D.C.W.D.La., 27 F. Supp. 798, Judge Poterie, as District Judge, said:
"The argument of petitioner that Act No. 205 of 1938 has rendered the above articles of the Code (Liberative Prescription of 10 years) inapplicable to mineral leases, and has changed the prescriptive period, well settled by jurisprudence, cannot be sustained. This recent act of the Legislature of Louisiana merely provides a remedy to a lessee in that it declares him to have a real right, assertible in the courts. It is procedural in character and does not change nor affect the substantive law."
Therein was quoted an excerpt from a review entitled "The Louisiana Legislation of 1938," one of its two authors being Dean Paul M. Hebert of the Louisiana State University Law School, who, when treating of Act 205 of 1938, concluded that by defining a mineral lease as a "real right," the Act brings the right of the lessee within operation of our Codal articles permitting petitory actions.
An examination of our jurisprudence following the Glassell decision, supra, in construing Act 205 of 1938, manifestly shows that a mineral lease creates *901 merely a personal right, with the imposition of personal obligations one owes to another, and which may be solely declared against the obligor, a contract which is similar to any other predial lease. In fact, we have consistently announced that the statute, including its amendment in 1950, as hereinafter dealt with, does not create or impart a "real right" in its true sense.
In Arnold v. Sun Oil Co., 218 La. 50, 48 So. 2d 369, 390, wherein was involved the effect of our laws of registry, it was contended that under these laws a mineral lessee had, by virtue of Act 205 of 1938, acquired a greater right than an ordinary lessee. We held that the statute made no further extension than a grant to mineral lessees of the right to avail themselves of any procedural remedy that may be available to the owner of the realty in the protection and defense of such rights as the lessor legally conveyed; that the laws of registry are not applicable to a contract of letting and hiring within the codal articles.[5] In rejecting this contention we said that the statute is "remedial and procedural in character, and that it has not affected or changed any of the substantive rights flowing from the execution of mineral leases." Wier v. Grubb, 215 La. 967, 41 So. 2d 846.
At the next Legislative session following the Arnold decision, Act 205 of 1938 was amended by Act 6 of the Second Extra Session of 1950, and is incorporated in the Revised Statutes as R.S. 9:1105. The amendatory act retained the provisions of the 1938 Act and added a sentence thereto reading:
"This Section shall be considered as substantive as well as procedural so that the owners of oil, gas and other mineral leases and contracts within the purpose of this Section shall have the benefit of all laws relating to the owners of real rights in immovable property or real estate."
Our expressed views that the amendatory statute does not create substantive real rights is clearly pronounced in these recent cases, namely Dixon v. American Liberty Oil Company, 226 La. 911, 77 So. 2d 533; Perkins v. Long-Bell Petroleum Company, 227 La. 1044, 81 So. 2d 389, and Reagan v. Murphy, 235 La. 529, 105 So. 2d 210.
In the Dixon case we held that a mineral lease is distinguished from a mineral servitude in that a lease "does not produce the same legal effect for, though it is characterized as a real right in LSA-R.S. 9:1105, it is merely a contract which permits the lessee to explore for minerals on the land of the lessor in consideration of the payment of a rental and/or bonuses. It places no charge whatever on the land and cannot be put in the same classification as a mineral servitude, which is an incorporeal immovable that attaches to the land itself. See Arnold v. Sun Oil Co., 218 La. 50, 48 So. 2d 369 and cases there cited." (Italics ours.) [226 La. 911, 77 So. 2d 537]
In the Perkins case, we said [227 La. 1044, 81 So. 2d 393]:
"A mineral lease, though characterized as a real right under LSA-R.S. 9:1105, is, as stated in the last cited case (Dixon v. American Liberty Oil Company), `merely a contract which permits the lessee to explore for minerals on the land of the lessor in consideration of the payment of a rental and/or bonuses.' To this, we may add that the lessee is not only accorded the right to explore but is obliged to do so in most cases or pay a delay rental if he does not explore within the primary term of the lease. In a mineral *902 lease, the lessor, being entitled to royalties in the event of production, is interested in requiring his lessee to explore. Not so with a landowner whose property is subjected to a mineral servitude. Being without interest in the minerals, he is without right, during the existence of the servitude, to insist upon development, and the only duty required of him is to permit the servitude owner to explore as long as the servitude remains in esse. The grant of the servitude `* * * does not oblige the owner of the estate subject to it to do anything * * * `. Article 655 of the LSA-Civil Code."
In the Reagan case, which unequivocally resolves the issue here presented, we concluded that the statute, as amended, did not in its true sense create a real right, saying [235 La. 529, 105 So. 2d 213]:
"Indeed, it is perfectly evident from even a casual reading of the amendment that the Legislature did not intend to change the essence of the contractual rights and obligations between mineral lessees and lessors but only that it sought to place mineral lessees on the same level as landowners by conferring on them `benefits' of the laws relating to owners of immovable property. This, the Act spells out in no uncertain terms for, after classifying a mineral lease as a real right, it is declared that the law shall be considered as substantive as well as procedural for a special purpose, i.e., `* * * so that the owners of * * mineral leases * * * shall have the benefit of all laws relating to the owners of real rights * * *'."
Again we further said:
"Accordingly, it is clear that the term `real right' under the civil law is synonymous with proprietary interest, both of which refer to a species of ownership. Ownership defines the relation of man to things and may, therefore, be declared against the world. A personal right, on the other hand, defines man's relationship to man and refers merely to an obligation one owes to another which may be declared only against the obligor.
"Viewed in this light and applied to mineral leases, it is seen that to say that the Legislature intended to change the true essence of a mineral lease from a personal contract into a real right would necessarily require the conclusion that the mineral lessee owns the right to explore for the minerals. The correlative of this proposition is that a mineral lessor divests himself of all proprietary interest in the minerals and has only a personal right to enforce the terms of the lease. This, for the reason that the same thing may not be owned by two persons at the same time. Civil Code, Article 494."
Accordingly, we refused to inject uncertainty and artificiality into our law of oil and gas, opening the door to technical concepts which would run afoul of our traditional rules governing the framework of the law of lease, thereby making uncertain many contractual rights and obligations, not only retroactively but prospectively as well.
It is well settled that a lease is not in essence a real right. In re Morgan R. & S. S. Co., 32 La.Ann. 371, we said:
"The rights of use, enjoyment, and disposal are said to be the three elements of property in things. They constitute the jura in re. The right of a lessee is not a real right, i. e., a jus in re. In other words, the lessee does not hold one of the elements of property in the thing. His right is a jus ad rem, a right upon the thing * * *."
LSA-C.C. Article 2703 clearly fixes the rights of a lessee whose possession has been disturbed, as follows:
*903 "The lessor is not bound to guarantee the lessee against disturbances caused by persons not claiming any right to the premises; but in that case the lessee has a right of action for damages sustained against the person occasioning such disturbance."
From the foregoing observations it necessarily follows that for the mineral lessee to recover the damages sought in this case, it must appear (1) that he became vested with the exclusive right to conduct geophysical surveys on the subject property under the contract of lease, (2) that under the provisions of LSA-R.S. 9:1105 such right is protected against invasion by the timely recordation of the lease, and (3) the damages claimed to have been sustained are established by the evidence.
Conceding, without deciding, that the plaintiff-lessee in this instance was granted the exclusive right to conduct geophysical surveys, under his contract of lease, and that the recordation of the contract of lease protects his rights provided for in the Statute, it is manifest that plaintiff, under the facts and circumstances here presented, has utterly failed to prove any measure of actual damages suffered by him and of such a certainty as to be recoverable under our law.
The Court of Appeal erroneously based its decision on the idea that "* * * the defendants took something of value to themselves through the commission of a quasi offense, although a dollar value could not be definitely established by the plaintiff." But the predicate for recovery under Article 2315 of the LSA-Civil Code is an act "* * * that causes damage to another, * * *" which obliges the wrongdoer to repair the damage. If there has been no actual damage, there can be no recovery. See Layne Louisiana Co. v. Superior Oil Co., supra; Holcombe v. Superior Oil Co., supra; and Franklin v. Arkansas Fuel Oil Co., supra. In essence, the award of the district court, which was affirmed by the Court of Appeal, amounts to the infliction of punitive or exemplary damages which are not recoverable under our law, nor can we countenance an award based on arbitrary measures.
The judgment appealed from is reversed and set aside and plaintiff's suit is dismissed at his cost.
HAMITER, J., concurs in the decree.
NOTES
[1] Tinsley v. Seismic Explorations, Inc. of Delaware, La.App.1959, 111 So. 2d 834, 836.
[2] "Every act whatever of man that causes damage to another, obliges him by whose fault it happened to repair it; * * *."
[3] "Oil, gas and other mineral leases, and contracts applying to and affecting such leases or the right to reduce oil, gas or other minerals to possession, together with the rights, privileges and obligations resulting or flowing therefrom, are hereby defined and classified as real rights and incorporeal immovable property, and may be asserted, protected and defended in the same manner as may be the ownership or possession of other immovable property by the holder of such rights, without the concurrence, joinder or consent of the landowner, and without impairment of rights of warranty, in any action or by any procedure available to the owner of immovable property or land."
[4] Allison v. Maroun, 193 La. 286, 190 So. 408.
[5] However, in respect to the protection accorded third persons who rely on the public records, Act 7 of the Second Extraordinary Session of 1950 (LSA-R.S. 9:2721-2724), redefines "third persons" to include the lessee in a mineral lease, thus in effect overruling the Arnold case, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1784269/ | 737 So. 2d 1257 (1999)
Mattie Connell CASKEY, et al.
v.
KELLY OIL COMPANY, et al.
No. 98-C-1193.
Supreme Court of Louisiana.
June 29, 1999.
*1259 Scott C. Sinclair, Shreveport, Thomas A. Harrell, Baton Rouge, Counsel for Applicant.
James M. Johnson, Donald Frank Bright, Counsel for Respondent.
LEMMON, Justice.[*]
This is an action by the mineral lessors of a 140-acre tract against one of their colessees to enjoin the co-lessee's use of a road on the leased premises and to recover various damages. The issue before this court is whether the co-lessee, under the "adjacent lands" clause in the mineral lease, may improve and use an existing road on the leased premises to conduct mineral operations on adjacent land not owned by the lessors, without having to prove that the lessors will receive some benefit from the co-lessee's use of the road and subject only to the requirement of La.Rev.Stat. 31:11 that the co-lessee exercise its rights with "reasonable regard" for the rights of the lessors.
Facts
In 1972, the three plaintiffs and their predecessors in title granted an oil, gas and mineral lease covering 140 acres in Webster Parish known as the Connell tract. The granting clause of the Connell lease provided, in pertinent part:
Lessor ... hereby grants, leases and lets exclusively unto Lessee for the purposes of investigating, exploring, prospecting, drilling and mining for and producing oil, gas and all other minerals, laying pipe lines, building tanks, power stations, telephone lines, and other structures thereon to produce, save, take care of, treat, transport and own said products and for dredging and maintaining canals, constructing roads and bridges, and building houses for its employees, and, in general, for all appliances, structures, equipment, servitudes and privileges which may be necessary, useful or convenient to or in connection with any operations conducted by Lessee thereon, or on any adjacent lands, the following described land in Webster Parish....
The original lessee assigned a substantial interest in the lease to a company that successfully completed a well on the leased premises. Thereafter, there were further assignments, and at the time of trial all of the lessee's interest was owned by Sonat Exploration and by defendant Kelley Oil Corporation,[1] a co-lessee who owned a 25.66% interest in the lease.
Since the inception of the lease, the colessees and their predecessor lessees, through various operators, have obtained production from wells on the Connell tract. By agreement of the co-lessees, Sonat has acted as operator of the wells on the Connell tract, but Kelley, although a co-lessee, has never acted as operator.
In the 1980s, Kelley's predecessors completed a well on the Seamster tract, which is south of and immediately adjacent to the Connell tract. To gain ingress and egress to drill and to operate the Seamster well, Kelley's predecessors used an existing unimproved north-south road on the Connell tract that had been used by previous operators of the Connell wells.
Kelley became the operator of the Seamster well about 1988. Kelley's personnel began entering the Connell tract through a locked gate on the Connell tract's north boundary and using the same road used by its predecessors to gain ingress and egress to the Seamster well on the adjacent land south of the Connell *1260 tract. Although Kelley's personnel allegedly often neglected to secure the gate, plaintiffs never objected to use of the road by Kelley and its agents to obtain access to the Seamster well.
In the summer of 1996, Kelley, through a contract operator, undertook to drill a well on the Crichton tract, which also is located south of and immediately adjacent to the Connell tract. After investigating and rejecting other potential routes to the well site, Kelley directed its operator for the Crichton well to improve the road on the Connell tract. Thereafter, the operator, without seeking the permission of the lessors, temporarily removed the locked gate, improved the ditches and removed small timber alongside the road, and laid a shale surface over the roadway. As a result of the improvements, a high quality oilfield road now traverses the entire Connell tract in a north-south direction and permits direct access to the Crichton tract.
Plaintiffs filed this action to enjoin Kelley and its contract operator from using the surface of the Connell tract for access to its operations on the Crichton tract and to recover damages. After a hearing, the trial court denied a preliminary injunction, reasoning that Kelley had the right, under the clear and unambiguous "adjacent lands" clause in the Connell lease, to construct roads to further its mineral operations on any adjacent lands. The court further held that Kelley's conduct, although "brash and uncivil," was not unreasonable under Article 11 of the Mineral Code.[2]
Thereafter, the parties submitted the permanent injunction on the record, and the trial court rendered judgment denying the permanent injunction and awarding plaintiffs the stipulated sum of $3,199.25 for the timber damages and damage to the land. The court ruled in favor of defendants on all other claims, including plaintiffs' claim for damages for trespass.
The court of appeal reversed and rendered judgment permanently enjoining defendants and their agents from committing any further acts of trespass on the Connell tract. 30,278 (La.App.2d Cir.2/25/98), 706 So. 2d 1102. The court reasoned that Article 122 of the Mineral Code[3] imposes an obligation upon the mineral lessee to operate the leased property for the mutual benefit of the parties to the lease, and while that obligation can be contractually defined, the public policy underlying the obligation cannot be abrogated. 30,278 at p. 5, 706 So.2d at 1105. The court concluded that Kelley failed to prove a benefit accruing to the lessors from Kelley's use of the surface of the leased premises to conduct operations on adjacent lands.
As to reasonableness, the court opined that use of the road by Sonat and its predecessors "set the standard for reasonableness" and that Kelley's conduct, by contrast, was "much more invasive, damaged the premises, and diminished the desirability of the tract for the Connells' future retirement homes." 30,278 at p. 6, 706 So.2d at 1105. Thus the court concluded that while the Connell lease permits a lessee to use the surface of the leased tract for road construction, such use cannot increase the burden on the property unless the conduct is in good faith and for the mutual benefit of the parties. Id. Said the court, "The only `benefit' shown is a high-quality oilfield road where a `pig trail' used to lie; however, this road is unwanted, heavily traveled, and clearly not consistent *1261 with the mineral development of the Connell tract." 30,278 at pp. 6-7, 706 So.2d at 1105-06.
We granted defendants' application for certiorari to consider the correctness of the decision of the court of appeal. 98-1193 (La.6/26/98), 719 So. 2d 485.
Applicability of Article 122
Disagreeing with the court of appeal that a mineral lessee's use of the surface of the leased premises for operations on adjacent lands always requires a mutual benefit for the lessor, we hold that the "mutual benefit" principle codified in Article 122 has no application to the "adjacent lands" clause, which represents a contractual bargained-for exchange between the parties.
An oil, gas and mineral lease is a contract by which the lessee is granted the right to explore for and produce minerals. La.Rev.Stat. 31:114. We thus look to the Mineral Code, along with the contract of lease between the parties, to define the parties' respective rights and obligations.
A mineral lessor is bound to deliver the leased premises, to refrain from disturbing the lessee's possession, and to perform the contract in good faith. See La.Rev.Stat. 31:119. On the other hand, the courts early recognized that a mineral lessee is "obliged to operate the leased premises in the best interests of both lessor and lessee." John M. McCollam, A Primer for the Practice of Mineral Law Under the New Louisiana Mineral Code, 50 Tul. L.Rev. 729, 804 (1976). This "mutual benefit" principle is now embodied in Article 122 of the Mineral Code.
Article 122 sets forth some of the obligations imposed on mineral lessees under pre-Code jurisprudence. In Frey v. Amoco Production Co., 603 So. 2d 166, 174 (La. 1992), we considered the source of the obligations imposed by Article 122, stating:
In Louisiana, the implied covenants originate not in the general principle of cooperation found in the law of contracts... but rather as particularized expressions of Civil Code Article 2710's mandate that the lessee enjoy the thing leased as a "good administrator." ... The duty to act as a "reasonably prudent operator," imposed on the mineral lessee by Article 122 of the Mineral Code, is thus an adaptation of the obligation of other lessees to act as "good administrators."
By its express terms, Article 122 imposes on the mineral lessee the obligations (1) to perform the contract in good faith and (2) to develop and operate the leased property as a reasonably prudent operator for the mutual benefit of both lessor and lessee. The mutual benefit requirement pertains to the manner in which the lessee must develop and operate the leased premises.
The pre-Mineral Code jurisprudence in Louisiana recognized the lessee's duty as encompassing five distinct categories of obligations: (1) the obligation to develop reservoirs discovered; (2) the obligation to explore and test all portions of the leased premises after discovery of minerals in paying quantities; (3) the obligation to protect the leased property against drainage from wells on adjacent lands; (4) the obligation to diligently market the minerals discovered and capable of production in paying quantities; and (5) the obligation to restore the surface as near as practical on completion of operations. La.Rev.Stat. 31:122, Comment. The lessee's conduct in fulfilling these implied obligations is governed by the standard of the conduct expected of persons of ordinary prudence under similar circumstances and conditions, with due regard for the parties' respective interests. Frey, 603 So.2d at 175.
Scholarly treatises have recognized the implied obligations of a mineral lessee in other jurisdictions to include obligations to drill an initial exploratory well; to protect the leasehold from drainage; to reasonably develop the premises; to explore further and market the product; and to conduct with reasonable care and due diligence all operations on the leasehold that affect the lessor's royalty interest (including drilling, *1262 producing and marketing operations). See, e.g., 5 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law § 804 (1998). Other scholarly writings suggest that the implied obligations extend to the duty to represent the lessor fairly in regulatory proceedings. McCollam, supra at 810; Luther L. McDougal, Louisiana Oil and Gas Law § 4.7 at 234 (1991). However, we find no authority to extend the scope of the mutual benefit requirement of Article 122 to encompass the lessee's contractual right to reasonable use of the surface of the leased premises for operations on adjacent lands, and we conclude that the Legislature never intended for Article 122 to have such a broad sweep.
Our holding does not conflict with Frey, supra. There, we relied on Article 122, inter alia, to conclude that the lessor was entitled to royalties on take-or-pay payments made to the lessee by the gas purchaser. We observed that an economic benefit accruing from the leased land which is generated solely by virtue of the lease, and not expressly negated, is to be shared between the lessor and lessee in the fractional division contemplated by the lease royalty clause. Frey, supra at 174. In stark contrast to Frey, the matter before us does not involve an economic benefit flowing from the leased land or implicate the royalty clause in any manner.
Nor does our holding conflict with or negate the lessee's obligation under Article 122 to reasonably develop the leased premises. "The law of this state is well settled that the main consideration of a mineral lease is the development of the leased premises for minerals, and that the lessee must develop with reasonable diligence or give up the contract." Carter v. Arkansas Louisiana Gas Co., 213 La. 1028, 1034, 36 So. 2d 26, 28 (1948). The jurisprudence interpreting the implied obligation of reasonable development holds that once production in paying quantities has been obtained from a mineral formation, the lessee is bound to develop the producing formation in the manner of a reasonable prudent operator, taking into consideration both his own interests and the lessor's interests. La.Rev.Stat. 31:122, Comment.
Here, it is undisputed that the co-lessees of the Connell tract fulfilled their contractual obligation to develop and operate the leased property in the manner of a reasonable mineral lessee. Moreover, there was no evidence of a violation of any other recognized obligation of a mineral lessee under Article 122.
Because we have concluded that the "mutual benefit" obligation of Article 122 does not preclude the mineral lessee's exercise of any contractual rights to reasonable use of the surface of the leased premises for operations on adjacent lands without any benefit accruing to the lessor because of that use, Article 122 does not apply in this case. We therefore proceed to examine the purpose of the "adjacent lands" clause and to review the factual determination of whether the co-lessee used the surface of the leased premises with reasonable regard to the rights of the lessors.
The "Adjacent Lands" Clause In General
In the absence of a violation of law or public policy, the mineral lease constitutes the law between the parties and regulates their respective rights and obligations. Frey v. Amoco Production Co., 603 So. 2d 166, 172 (La.1992). See also La.Rev.Stat. 31:3. Mineral leases are construed as leases generally, and the provisions of the Civil Code applicable to ordinary leases, when pertinent, are applied to mineral leases. Frey, 603 So.2d at 171. Therefore, when the words of a mineral lease are clear and explicit and do not lead to absurd consequences, a court may not make further interpretation in search of the parties' intent. See La. Civ.Code art. 2046.
Although the granting of a mineral lease does not convey any title to the surface of the land, it is common for a mineral lease to expressly grant the lessee the right to undertake certain activities on the surface. *1263 Luther L. McDougal, Louisiana Oil and Gas Law § 3.4 at 119 (1991). "Even in the absence of a clause setting forth the types of surface activities the lessee may engage in on the leased premises, the lessee has an implied right to use the surface to the extent `reasonably necessary' to explore for and drill oil and gas wells." Id. at 119a (footnote omitted). See also La.Rev.Stat. 31:119 (mineral lessor is bound to refrain from disturbing the lessee's possession); Broussard v. Northcott Exploration Co., Inc., 481 So. 2d 125 (La.1986) (mineral lessee must reasonably exercise its rights under mineral lease); Rohner v. Austral Oil Exploration Co., 104 So. 2d 253 (La. App. 1st Cir.1958) (recognizing mineral lessee's implied right to use an area of the surface which is reasonably necessary to undertake certain works, including building roads for ingress and egress); Leger v. Petroleum Engineers, Inc., 499 So. 2d 953 (La.App. 3d Cir.1986) (mineral lease impliedly authorized lessee to undertake subsurface injection of waste salt water attributable to production from other wells on leased premises).
An "adjacent lands" clause in a mineral lease goes a step further by providing expressly that the lessee may use the surface of the leased premises to conduct operations on adjacent land which is not owned by the lessee. Numerous commentators have recognized the validity of a contractual clause granting easements or surface rights in the leased property in connection with operations on other premises. See, e.g., Douglas Gross, "What Constitutes Reasonably Necessary Use of the Surface of the Leasehold By A Mineral Owner, Lessee, or Driller Under an Oil and Gas Lease or Drilling Contract," 53 A.L.R. 3d 16 §§ 8(a) & 8(b) (1974); 1 Eugene Kuntz, Law of Oil and Gas § 3.2 (1987 & Supp.1999); 1 Patrick H. Martin & Bruce M. Kramer, Williams & Meyers Oil and Gas Law § 218.4 (1998); Hamilton E. McRae, "Granting Clauses in Oil and Gas Leases: Including Mother Hubbard Clauses," 2 Inst. On Oil & Gas L. & Tax'n 43 (1951).
An "adjacent lands" clause, although constituting a significant burden on the leased premises, promotes the efficient development of oil and gas fields and the state's public policy of developing mineral resources. The clause was intended to permit a lessee to develop an oil and gas field without regard to property lines and without the necessity of constructing duplicative roads, pipelines, tank farms and other facilities. However, the clause is limited to the term of the lease which continues in effect, after the delay rental period, only as long as there is production in paying quantities on the leased premises. Thus a mineral lessee cannot use the "adjacent lands" clause for access to operations on other premises unless the basic lease is being maintained by payment of delay rentals or by production.[4]
As one early commentator observed, "[T]he use of the leased premises in connection with other operations in the same area can in many instances accomplish more efficient and economical operation." McRae, supra at 57. Moreover, the "adjacent lands" clause, widely used in mineral leases for many years, resolves the impracticality for a mineral lessee to determine in advance which tracts of land will share in the production from a specific well, or whether a specific well will be productive, or whether the leased premises subject to the "adjacent lands" clause subsequently will be pooled or unitized with producing wells on the adjacent lands. When there are "adjacent lands" clauses in the leases of several tracts in a field, there is a potential benefit to all lessors, and the fact that one or more particular lessors ultimately do not receive any specific benefits *1264 from the lessee's use of the surface of the leased premises to conduct operations on adjacent lands does not affect the validity of the contractual provision.
The "Adjacent Lands" Clause In the Connell Lease
The granting clause of a mineral lease describes the purpose of the lease and specifies the uses of the land authorized for the lessee to accomplish the overall purpose. Leger v. Petroleum Engineers, Inc., 499 So. 2d 953, 955 (La.App. 3d Cir.1986). In the present case, the granting clause authorized the lessee both (1) to conduct mineral operations on the leased premises for the production of oil and gas, and (2) to use the leased premises in connection with mineral operations conducted both on the leased premises and on adjacent lands.[5] These grants were supported by various considerations, including the mineral development of the lessors' property.
Plaintiffs first contend that the quoted language refers only to adjacent lands also owned by the same lessor. Plaintiffs would thus have us interpret the "adjacent lands" clause as a cover-all or "Mother Hubbard" clause, the purpose of which is "to protect the lessee in the event that the description fails to include adjacent lands owned by the lessor." McDougal, supra, at § 3.4 at 117.
The Connell lease in fact contains a "Mother Hubbard" clause,[6] which is distinct from the "adjacent lands" clause contained in the quoted paragraph. The "Mother Hubbard" clause in the Connell lease provides in pertinent part that the "lease also covers and includes battures, accretions and all other land owned by Lessor adjacent to the land particularly described above." (emphasis added). In contrast, the "adjacent lands" clause refers to operations conducted on the leased land or "on any adjacent lands," regardless of whether the adjacent land is owned by the lessor.
Plaintiffs further argue that even if the "adjacent lands" clause is construed to permit a mineral lessee to use the surface of the leased premises to obtain access for the lessee's operations on adjoining lands not owned by the lessors, the clause should only apply to a lessee who is also the lease operator. Plaintiffs contend that allowing a non-operator co-lessee (such as Kelley) to use the surface was not intended by the parties to the lease contract and is not a reasonable interpretation of the provision.
Under plaintiffs' interpretation, the "adjacent lands" clause apparently would only apply when a lessee is the operator of record on both tracts. Such a constrained interpretation would render the "adjacent lands" clause virtually without effect. See La. Civ.Code art. 2049. Moreover, under the Connell lease, the operations by Sonat, as operator, or Kelley, as co-lessee, are indistinguishable from one another as to their lessors. See La.Rev.Stat. 31:130 (a partial assignment or partial sublease does not divide a mineral lease); La.Rev.Stat. 31:168 (mineral rights are susceptible of ownership in indivision); La.Rev.Stat. 31:174 (a use or possession of a mineral right inures to the benefit of all co-owners of the right); La.Rev.Stat. 31:177 (prohibiting operation without consent of all coowners to a mineral lease except in limited circumstances). See also La.Rev.Stat. 31:131, Comment (rule that mineral lessor must accept performance by assignee or sublessee "stems from the belief that the lessor's basic concern is that the obligations of the lease be properly performed" and that "as long as performance *1265 is being rendered, [lessor] has no major interest in who is rendering it.") Thus all co-lessees must consent to mineral operations on the leased property, and while one co-lessor frequently is deemed to be the operator, all co-lessees generally share in the benefits and the costs of the operation.
Accordingly, we conclude that the fact that Kelley is a co-lessee is more appropriate for consideration as a factor in weighing whether Kelley's use of the surface of the leased premises for conducting operations on adjacent lands is reasonable within the contemplation of the requirement in Article 11 that the lessee exercise its rights with "reasonable regard" for the rights of the lessor.
Reasonable Use of the Leased Premises
Having determined that the surface rights granted under the Connell lease clearly include uses necessary for operations on adjacent lands, we must now determine if Kelley's use of the surface of the leased premises was reasonable. See Hamilton E. McRae, "Granting Clauses in Oil and Gas Leases: Including Mother Hubbard Clauses," 2 Inst. On Oil & Gas L. & Tax'n 43, 58 (1951) (because courts have limited lessee's incidental rights, including surface use, to those necessary to the exercise of the purpose of the lease, "the right of surface use by the lessee gives rise to the corollary that lessee's use must not be negligent or unreasonable.") (footnote omitted).
The mineral lessee has the right to use the surface of the leased premises to the extent reasonably necessary for its operations thereon and on adjacent lands. This right is not unfettered, however. See, e.g., East v. Pan American Petroleum Corp., 168 So. 2d 426 (La.App. 3d Cir.1964) (lessee acted unreasonably in excavating 14,000 cubic yards of dirt from leased premises to use in building board road to well on adjacent tract).
The Connell lease and the Mineral Code imposed upon the mineral lessee the standard of reasonableness with regard to the exercise of surface rights under the lease. Paragraph 18 of the Connell lease provided that "Lessee shall compensate Lessor for all damages to the timber, growing crops, fences and improvements on the premises occasioned as a result of the Lessee's operations hereunder." Additionally, paragraph 19 provided in pertinent part that the lessee, at the expiration of the lease, "shall ... restore the surface of the premises to as nearly as reasonably possible the condition in which it was at the commencement of the lease."
Significantly, La.Rev.Stat. 31:11 requires that the landowner and the mineral owner each exercise its respective rights "with reasonable regard for those of the other." The standard of reasonableness is "flexible" and "require[s] judicial interpretation to determine its impact on a given set of circumstances." McCollam, A Primer for the Practice of Mineral Law Under the New Louisiana Mineral Code, 50 Tul.L.Rev. 729, 811 (1976). See also La.Rev.Stat. 31:11, Comment. Although the standard of reasonableness in Article 11 "constitutes legislative form without specific content ... the thrust of the rule is to permit concurrent use of the land by the surface owner and the mineral owner with neither owner deemed to have a paramount right of use." McCollam, supra at 760. Finally, the reasonableness standard in Article 11 is not necessarily measured against a negligence standard. La.Rev. Stat. 31:11, Comment.
Accordingly, the circumstances which constitute an unreasonable exercise of contractual rights must be determined on a case-by-case basis. See Broussard v. Northcott Exploration Co., Inc., 481 So. 2d 125, 129 (La.1986). The issue thus presents a question of fact which is subject to the manifest error standard of review. Canter v. Koehring Co., 283 So. 2d 716 (La.1973).
In the present case, the trial judge, who personally visited the site, concluded in denying plaintiffs' petition for preliminary injunction that "Kelley's use of the road was not contrary to the reasonableness standard and was consistent with rights *1266 granted under the Connell lease." The court of appeal erred in reversing the trial court without a finding of manifest error.
Of great importance is the fact that the road had been in existence since 1981 or earlier, and Sonat, Kelley and their predecessors used the road to drill and operate wells on the Connell tract and the Seamster tract. These operations involved daily use of the road by a pumper to each well and occasional use by an eighteen-wheel truck to haul salt water and condensate from the wells.
The evidence established that the road was inadequate for Kelley's purposes in connection with the drilling and completion of the Crichton well. According to a petroleum engineer for Kelley's contract operator, access twenty-four hours per day under all weather conditions is critical for ongoing mineral operations, as well as for safety, especially during the drilling stage of limited duration. He explained that although the existing road was "not ... in terrible shape," it was old and narrow and "needed some improvement"; the trucks, in attempting to navigate the road, became stuck and sometimes overturned, causing the filling in of ditches alongside the road; inadequate drainage allowed water to stand on the road, causing dirt to come onto the road; and timber growth also caused "somewhat blind curves." The engineer testified that he recommended adding a layer on top of the existing road and cutting smaller brush and timber alongside the road in order to improve the drainage. He explained that the additional layer improved the road from the north gate to the new well and would last for several years with low maintenance.
A Sonat employee also testified that the road was not an all-weather road and needed improvement. He had driven over the unimproved road for two years to service Sonat's two wells, and he described the unimproved road as "pretty sticky," explaining that he experienced difficulty in using the road in rainy weather because it was "real slick." Although he never found it impossible to service the wells because of the condition of the road, he occasionally observed that saltwater trucks could not make it up the road on rainy days. He further testified that the improvement of the road enhanced Sonat's operations on the Connell tract because "it's not near as much trouble getting [operations] out" and "not near as much wear and tear on [the] truck."
Although the traffic on the road increased during the two-to-three months of drilling and completion phases of Kelley's operation on the adjacent land,[7] this factor does not by itself establish that use of the road by Kelley and its contract operator was unreasonable. While traffic increased temporarily during the relatively brief drilling and completion operations, the traffic thereafter returned to the normal pattern of use that had been employed on the same location of the road for many years by Sonat and Kelley and their predecessors.[8]
Other evidence supported the trial court's finding of reasonableness. Sonat is also using the road for access to the Connell wells, and a Sonat employee testified that the road "has improved [Sonat's operations on the Connell tract] quite a bit." Moreover, while Kelley's contractor removed *1267 the north locked gate during the drilling and completion of the Crichton well, the contractor after completion restored the gate to its original position, and Kelley posted a security guard at the location while the gate was not in place.
In summary, Kelley's actions in improving the road, expressly authorized by the "adjacent lands" clause of the Connell lease, were reasonable. The unimproved road could not be used safely by the equipment needed to drill and complete the Crichton well. Moreover, the temporarily increased traffic, while heavy, was customary for such oil and gas operations.
The trial court properly found that Kelley and its contract operator used the road under the express authority of the lease to conduct mineral operations on adjacent lands and that their use was reasonable under the circumstances. There was no evidence that defendants ever used the road for any purpose inconsistent with the rights granted under the lease.[9]
We emphasize that the decision on the "reasonable regard" requirement of Article 11 might be different if a party bought a one percent interest in a mineral lease that had been held by production for twenty years and immediately proceeded to construct a new road, along with housing for its employees, on the leased premises in order to conduct operations on adjacent lands. However, on the facts and circumstances in the record in the present case, we cannot say that the trial court erred in finding that Kelley used the surface of the leased premises with reasonable regard for the rights of the lessors.
Decree
For these reasons, the judgment of the court of appeal is reversed, and the judgment of the trial court is reinstated.
NOTES
[*] Victory, J., not on panel. Rule IV, Part 2, § 3.
[1] The petition incorrectly refers to "Kelly Oil Company."
[2] La.Rev.Stat. 31:11 provides:
The owner of land burdened by a mineral right or rights and the owner of a mineral right must exercise their respective rights with reasonable regard for those of the other. Similarly the owners of separate mineral rights in the same land must exercise their respective rights with reasonable regard for the rights of other owners.
[3] La.Rev.Stat. 31:122 provides:
A mineral lessee is not under a fiduciary obligation to his lessor, but he is bound to perform the contract in good faith and to develop and operate the property leased as a reasonably prudent operator for the mutual benefit of himself and his lessor. Parties may stipulate what shall constitute reasonably prudent conduct on the part of the lessee.
[4] A simple hypothetical illustrates this point. Lessee secures two separate mineral leases, with "adjacent lands" clauses, covering adjoining properties owned by two unrelated entities. Lessee uses the surface of tract A to obtain access to tract B, ultimately obtaining production on tract B. If tract A is not included in a unit, once the delay rental period has passed (or in the absence of a delay rental clause), the lessee must obtain production on tract A or the lease on tract A will terminate by its own terms.
[5] The emphasized language in the paragraph quoted earlier in the opinion expressly authorizes the lessee to construct and use roads across the Connell tract necessary for operations on adjacent lands.
[6] The "Mother Hubbard" clause in the Connell lease provides:
This lease also covers and includes battures, accretions and all other land owned by Lessor adjacent to the land particularly described above. For the purpose of calculating the rental payments hereunder provided for, said land is estimated to comprise 140 acres, whether it actually comprises more or less. (emphasis added).
[7] During the first phase of the project, eighteen-wheelers with 80,000 pounds capacity made about fifty trips to haul the drilling rig and associated equipment down the improved road to the Crichton well over about a two-day period. At drilling completion, the same number and type of rigs hauled the equipment out over the improved road in a similar time period, and additional rigs used the improved road in connection with a three-stage fracture job during the completion phase.
[8] Since the completion of the Crichton well, one pumper makes one trip each day to both the Crichton well and the Seamster well using a three-quarter ton pickup truck. An eighteen-wheeler hauls saltwater from the Crichton well once a week and from the Seamster well once every two weeks. An eighteenwheeler collects condensate from the Crichton well twice a month and from the Seamster well once a month. Additionally, a threeton truck must visit the site twice a month while the well is new.
[9] Moreover, defendants have fully compensated plaintiffs for any damages to the land and timber. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2286983/ | 764 F. Supp. 1146 (1990)
PENROD DRILLING CORPORATION, Plaintiff,
v.
GRANITE STATE INSURANCE CO., et al., Defendants.
Civ. A. No. L-89-70.
United States District Court, S.D. Texas, Laredo Division.
October 17, 1990.
George H. Kolb, William G. Whitehill, Joe B. Harrison, Gardere & Wynne, Dallas, Tex., James K. Jones Jr., Laredo, Tex., for Penrod Drilling Corp.
Jerry Kacal, Dunn, Kacal, Adams, Pappas & Law, Houston, Tex., Robert Keith Drummond, Strasburger & Price, Michael Wayne Johnston, Dallas, Tex., Frank J. Saldana Jr., Laredo, Tex., for Granite State Ins. Co. and American Intern. Underwrite.
MEMORANDUM AND ORDER
KAZEN, District Judge.
Pending are Plaintiff Penrod Drilling Corporation's (Penrod) Application for Attorney's Fees and Defendants' opposition to the motion. Defendants raise two questions: 1) was the award of attorney's fees proper under 28 U.S.C. § 1447(c); and 2) if proper, did Penrod sufficiently document its fee application?
Award of Attorney's Fees. In assessing the propriety of the award of attorney's fees, the Court looks first to the language of the statute:
An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.
*1147 28 U.S.C. § 1447(c). As the parties have rightly noted, wide discretion is given to the trial court in assessing these expenses on the removing party after remand. Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 720 (5th Cir.1974). Defendants contend that this discretion is constrained as to the award of attorney's fees and cite cases stating that such fee awards are allowed only where the party "acted in bad faith, vexatiously, wantonly, or for oppressive reasons." Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 257-59, 95 S. Ct. 1612, 1621-23, 44 L. Ed. 2d 141 (1975) (quoted in A.N. MacDiarmid v. Lawbar Petroleum, 456 F. Supp. 503, 505 (W.D. Tex.1978)). In Alyeska Pipeline, the Supreme Court was stating the so-called "American rule" that in the absence of a statute or contract to the contrary attorney's fees should not be awarded unless there is demonstrable "bad faith," etc. Prior to 1988, Defendants' contentions and authorities would have been more compelling. Prior to 1988, § 1447(c) did not specifically include attorneys fees. Defendants rely on several cases that note the absence of provision for attorney's fees in the statute and conclude that while bad faith is not required to award "costs", bad faith must be shown to award attorney's fees. MacDiarmid, supra; Armstrong v. Goldblatt Tool Co., 609 F. Supp. 736, 739 (D.Kan.1985) (costs awarded under § 1447(c), but not attorney's fees for lack of showing of bad faith, vexatious or wanton conduct); Medical Legal Consulting Serv. v. Covarrubias, 648 F. Supp. 153, 158-60 (D.Md.1986) (costs, but not attorney's fees, awarded no bad faith; citing Alyeska Pipeline and noting that "an amendment to the statute probably is necessary to provide the courts with authority to [award fees]"); News-Texan, Inc. v. City of Garland, Tex., 814 F.2d 216, 220 (5th Cir.1987) ("section 1447(c) does not require bad faith as a precondition to an award of costs"). However, in November of 1988, Congress amended § 1447(c) to allow the award of attorney's fees in addition to the award of costs. Judicial Improvements and Access to Justice Act of 1988, Pub.L. 100-702, 102 Stat. 4642, § 1016(c)(1). Clearly, this amended language brings the award of attorney's fees under the same analysis as "just costs," removing the need to show bad faith or vexatious, wanton, or oppressive conduct to receive attorney's fees under § 1447(c). This interpretation of § 1447(c), as amended, was endorsed in a recent district court opinion:
[Nonmovant] argues the statutory change does not alter the established standard for awarding attorney's fees on remand only when the removal has been in "bad faith, vexatious...." This argument entirely misapprehends the "American rule" on the award of attorney's fees. The award of attorney's fees is but one exception to the "American rule" and is vested in the "inherent power" of the courts. [citing Alyeska Pipeline] This exception in no way impacts upon Congress' power "to pick and choose among its statutes and to allow attorney's fees under some, but not others." [citation omitted] By virtue of the amendment to § 1447(c), attorney's fees are now treated in the same fashion as costs, with both matters being left to the court's discretion.
Elkhart Co-op Equity Exchange v. Day, 716 F. Supp. 1384, 1388 (D.Kan.1989). The Court finds this reading of the amended statute persuasive. To the extent that the case of Beightol v. Capitol Bankers Life Ins. Co., 730 F. Supp. 190, 196 (E.D.Wis. 1990) still requires a finding of "good faith," this Court declines to follow it. The existence of "good faith" was not required for an award of "just costs" before 1988, News-Texan, supra, and there is no reason why it should be required now that the definition of "costs" has been expanded to include attorneys fees.
Therefore, this Court finds no reason to disturb its earlier decision to award attorney's fees. Defendants' Motion to Reconsider is DENIED.
Application for Attorney's Fees. Defendants' contend that the Plaintiff's application for attorney's fees lacks sufficient specificity or clarity to allow this Court to make a fair award. Defendants acknowledge *1148 that Penrod's attorneys have submitted detailed time records but protest that some of the time entries are "mixed," involving activities not strictly limited to the remand issue.
The Court accepts the amended affidavit and records submitted by William G. Whitehill, who avers that he has personal knowledge of any "mixed" billings and claims to have made appropriate reductions. Defendants, though vigorously opposed to Plaintiff's Application, have failed to challenge the reasonableness of the time spent or fees charged.
Calculation of Award. Following the method delineated in Johnson, supra, the Court has reviewed the Plaintiff's Application and makes the following findings.
(1) This suit originated in state court and came to this Court on a removal petition filed by the Defendants. Plaintiff shortly thereafter moved for remand and filed supporting briefs. The Magistrate recommended that Plaintiff's motion to remand be granted. Defendants' filed objections with this Court to the Magistrate's recommendation, and the Plaintiff responded. This Court agreed with the Magistrate, found the case improvidently removed and ordered it remanded, taxing costs, including reasonable attorney's fees, to the Defendants.
Plaintiff retained the services of the law firm of Gardere & Wynne of Dallas, Texas in this case. Attorneys Joe B. Harrison, Stacy Obenhaus, William G. Whitehill, and Carol L. Wolfram of Gardere & Wynne performed work for Plaintiff in pursuing the remand of this case. Mr. Harrison performed supervisory functions [1.3 hours]. Mr. Obenhaus did a portion of the research and drafting of the motion and supporting briefing [16.6 hours]. Mr. Whitehill was responsible for a major part of the research and drafting [49.5 hours]. Ms. Wolfram did some limited research work. [4.6 hours].
The Court accepts as reasonable the documentation of counsel as to time required on the removal and remand questions by each attorney involved, and finds no reason to adjust these amounts up or down.
(2) The Court concludes that, although this matter did turn on some unusual points of law requiring substantial effort on the part of counsel, the analytical effort did not rise to the level of exceptionally novel or difficult.
(3) Plaintiff's counsel capably presented and pursued their motion. The Court found the matter ably briefed.
(4) Plaintiff's counsel specifically admits that work on this case did not preclude other employment.
(5) Plaintiff's counsel claims different hourly rates for each of the four attorneys involved. The rates vary due to the level of experience. The Court finds these rates to be within the expected range for attorneys of these experience levels in the Dallas legal community, and, in the absence of any contrary evidence, concludes that Plaintiff's hourly rates are reasonable.
(6) The fee here was apparently fixed. The Court finds no basis in this factor to adjust the award upward or downward.
(7) Plaintiff's counsel specifically admits that time limitations imposed by this case were not unusual or extraordinary.
(8) The amount involved is substantial in that Plaintiff asserts that the Defendants negligently interposed themselves and settled claims against the Plaintiff-insured for $2,178,000, which will impact Plaintiff through the Defendants-insurers' retrospective premium setting. Plaintiff's counsel correctly notes that they successfully defended their client's ability to pursue its claim in its preferred forum. The Court does not find these facts sufficient to alter the award in either direction.
(9) The Court is aware that Gardere & Wynne is a sizable and respected firm; however, the Court is not personally familiar with the reputation of any of the individual attorneys.
(10) Plaintiff's counsel did not mention any element of undesirability attaching to this case.
(11) Plaintiff has retained the services of Gardere & Wynne for in excess of three *1149 years. This factor does not suggest adjustment of the fee upward or downward.
(12) Neither party has put forward evidence of other awards in cases similar to this one. The Court's experience and research indicate that the award amount put forward by Plaintiff's counsel would be consistent with similar awards made by this Court and others in the area.
In summary, the Court finds that the reasonable amount of time spent and fees charged by each attorney of counsel to Plaintiff in this matter, based on their respective levels of experience and ability, are as follows:
Attorney Hour Rate Expense
Joe B. Harrison 1.3 $245.00 $ 318.50
Stacy Obenhaus 16.6 135.00 2,241.00
William G. Whitehill 49.5 160.00 7,920.00
Carol L. Wolfram 4.6 145.00 667.00
_________
$11,146.50
Paying close attention to factors (1), (5), (8), and (9), the Court concludes that the above fees are customary and reasonable for this matter. Copper Liquor, Inc. v. Adolph Coors Co., [II], 624 F.2d 575, 583 (5th Cir.1980). Moreover, the Court finds nothing in its review of the other Johnson factors to recommend adjusting these findings. It is therefore ORDERED that Plaintiff Penrod is awarded the sum of $11,146.50 as reasonable attorney's fees under 28 U.S.C. § 1447(c).
DONE. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1136688/ | 692 So.2d 1038 (1997)
SAFETY NET FOR ABUSED PERSONS
v.
Honorable Robert SEGURA and Honorable Kathryn Boudreaux.
No. 96-CA-1978.
Supreme Court of Louisiana.
April 8, 1997.
*1039 Dennis Ray Stevens, Gibbens, Blackwell & Stevens, New Iberia, for Applicant.
Victoria Reed, Baton Rouge, Rebecca Mims Kirk, Abbeville, for Respondent.
MARCUS, Justice.[*]
Safety Net for Abused Persons, Inc. ("SNAP"), filed a petition for a writ of mandamus in the district court directing Judge Robert L. Segura, City Court Judge for the City Court of New Iberia, and Kathryn D. Boudreaux, Clerk of Court for the City Court of New Iberia, to enforce the provisions of La. R.S. 13:1906. La. R.S. 13:1906 directs the clerk of the city courts of New Iberia and Jeanerette, and the municipal courts of Delcambre and Loreauville, to collect an additional fee in civil and criminal cases to support a program to aid victims of domestic violence. Specifically, the statute directs that the money collected be deposited in a special fund to benefit SNAP, a domestic violence program and shelter serving Iberia Parish. Judge Segura had refused to collect the fee mandated by La. R.S. 13:1906 since the effective date of the statute. The trial judge issued a writ of mandamus directing the defendants to comply with the provisions of La. R.S. 13:1906, rejecting the defendants' constitutional challenge to the statute. The defendants perfected a suspensive appeal from the trial court's judgment. The court of appeal ruled that La. R.S. 13:1906 violated La. Const. art. VII, § 14 and constituted an infringement on the powers of the judiciary under the constitutional separation of powers doctrine. The court of appeal thus vacated and set aside the writ of mandamus directing the defendants to comply with the requirements of La. R.S. 13:1906.[1] We *1040 granted SNAP's application and docketed the case as an appeal.[2] La. Const. art. V, § 5(D)(1).
The issue presented for our consideration is whether La. R.S. 13:1906 violates La. Const. art. VII, § 14 or the separation of powers doctrine found in La. Const. art. II, § 2.
The Louisiana Legislature enacted La. R.S. 13:1906 in 1992. It provides:
A. In addition to all other fees and costs now or hereafter provided by law, the clerk of the city courts of New Iberia and Jeanerette, and the municipal courts of Delcambre and Loreauville, except as otherwise provided by law and subject to the provisions of Code of Civil Procedure Article 5181 et seq., shall collect from every person filing any type of civil suit or proceeding a fee of three dollars per filing. In respect to the municipal courts, the fee shall be in addition to the maximum court costs provided for in R.S. 33:441(a).
B. In each criminal proceeding in which a fine is imposed or court costs are ordered to be paid, an additional fee of three dollars shall be collected by the clerk of the city or municipal court, which shall be in addition to all other fines, costs, or forfeitures lawfully imposed.
C. The clerk shall remit all funds collected pursuant to this Section for deposit in a special fund, which is hereby designated as "SNAP Shelter Fund for Iberia Parish". The expenditure of the funds shall be at the discretion of the board of directors of the local family violence program, Safety Net for Abused Persons, Inc. All funds shall be subject to and included in the program's annual audit. A copy of the audit shall be filed with the legislative auditor who shall make it available for public inspection.
The court of appeal found that La. R.S. 13:1906 violates La. Const. art. VII, § 14, which provides, in pertinent part:
(A) Prohibited Uses. Except as otherwise provided by this constitution, the funds, credit, property, or things of value of the state or of any political subdivision shall not be loaned, pledged, or donated to or for any person, association, or corporation, public or private. Neither the state nor a political subdivision shall subscribe to or purchase the stock of a corporation or association or for any private enterprise.
(B) Authorized Uses. Nothing in this Section shall prevent (1) the use of public funds for programs of social welfare for the aid and support of the needy....
(C) Cooperative Endeavors. For a public purpose, the state and its political subdivisions or political corporations may engage in cooperative endeavors with each other, with the United States or its agencies, or with any public or private association, corporation, or individual.
Specifically, the court of appeal concluded that La. R.S. 13:1906 violates Section 14(A) because that section prohibits a political subdivision from donating funds to nonprofit corporations. However, this conclusion disregards Sections 14(B) and 14(C), which clearly authorize the legislature to use public funds for social programs supporting the needy and to engage in cooperative endeavors with private entities in furtherance of a public purpose.
The state has entered into a contract with SNAP, a private non-profit corporation, to provide counseling and shelter for domestic abuse victims, a 24-hour crisis hotline, domestic abuse prevention programs, and rape crises intervention, among other services. SNAP thus provides valuable services for the social welfare of those in need, victims of domestic abuse. Under Section 14(B), the Legislature is free to use public funds for such social programs.[3] Therefore, La. R.S. 13:1906 does not violate La. Const. art. VII, § 14(A) because the services provided by SNAP fall under the exceptions established in Sections 14(B) and 14(C).
*1041 The court of appeal also found that La. R.S. 13:1906 violates the Louisiana Constitution because the law imposes legislative functions on the judicial branch of government. The court of appeal concluded that "[t]he judicial function does not include the collection of fines and costs for the purpose of facilitating the objectives of these [social service] organizations, no matter how noble their purpose."
The separation of powers doctrine is found in Article II of the Louisiana Constitution. La. Const. art. II, § 2 prohibits any one of the three branches of government from exercising power belonging to another branch. La. Const. art. II, §§ 1 and 2 establish the basis for the recognition of inherent powers in the judicial branch which the legislative and the executive branches cannot abridge. Konrad v. Jefferson Parish Council, 520 So.2d 393, 397 (La.1988); Singer Hutner Levine Seeman & Stuart v. Louisiana State Bar Association, 378 So.2d 423, 426 (La.1979). Under the doctrine of inherent powers, courts have the power (other than those powers expressly enumerated in the constitution and the statutes) to do all things reasonably necessary for the exercise of their functions as courts. The inherent powers of the judicial branch necessarily encompass the authority to administer the business of the courts. Konrad, 520 So.2d at 397.
We recognize that crystal clear distinctions among the branches of government are not always possible or desirable. The practical aspects of governing require flexibility and make some overlapping inevitable. Consequently, this court will cooperate with the legislative and executive branches of government unless it interferes with the effective administration of justice. With respect to legislation that has an impact on the judicial system, this court will uphold legislative acts passed in aid of the judiciary's inherent power, but will strike down statutes which tend to impede or frustrate its authority. Singer, 378 So.2d at 426; Louisiana State Bar Association v. Connolly, 201 La. 342, 355, 9 So.2d 582, 586 (1942).
With these precepts in mind, we turn to an examination of the statute at issue. La. R.S. 13:1906 directs the clerk of the city courts of New Iberia and Jeanerette, and the municipal courts of Delcambre and Loreauville to collect an additional fee of three dollars per filing for every type of civil suit filed and in every criminal case where costs, fines, or forfeitures are imposed. The clerk is then obligated to remit the funds to SNAP. It is important to determine at the outset whether the three dollar "fee" imposed by the statute in question is in reality a tax. The nature of a charge is determined not by its title, but by its incidents, attributes and operational effect. Thus, the nature of a charge must be determined by its substance and realities, not its form. Gallaspy v. Washington Parish Police Jury, 94-1434, p. 3 (La.11/30/94); 645 So.2d 1139, 1141; Reed v. City of New Orleans, 593 So.2d 368, 371 (La.1992).
Although the statute refers to the charge as a "fee," we find that it is in reality a tax. A charge that has as its primary purpose the raising of revenue, as opposed to the regulation of public order, is a tax. Moreover, a tax is a charge that is unrelated to or materially exceeds the special benefits conferred upon those assessed. Audubon Insurance Co. v. Bernard, 434 So.2d 1072, 1074 (La.1983); 4 Cooley, The Law of Taxation, Ch. 29, § 1784 (4th ed.1924). The money collected pursuant to La. R.S. 13:1906 goes, not to court services nor to any other entity associated with the judicial system, but to a private, nonprofit corporation to be used at its discretion for domestic violence programs. The charge is thus not a fee assessed to defray the expenses of litigation or to support the court system. Rather, it is a revenue raising measure designed to fund a particular social program. Therefore, the question before us is whether the legislature may impose a tax on litigants that is collected by the judiciary to go directly to a private non-profit corporation to fund a social welfare program for victims of domestic abuse.
There are no Louisiana cases dealing with the constitutionality of such litigation tax statutes; however, a few other states have addressed statutes analogous to the one at *1042 issue in this case. See Farabee v. Board of Trustees, Lee County Law Library, 254 So.2d 1 (Fla.1971) (fee for law library); Crocker v. Finley, 99 Ill.2d 444, 77 Ill.Dec. 97, 459 N.E.2d 1346 (1984) (fee to support domestic violence program); Ali v. Danaher, 47 Ill.2d 231, 265 N.E.2d 103 (1970) (fee for law library); Wenger v. Finley, 185 Ill. App.3d 907, 133 Ill.Dec. 782, 541 N.E.2d 1220 (1st Dist.), appeal denied, 127 Ill.2d 644, 136 Ill.Dec. 610, 545 N.E.2d 134 (1989) (fee to support an alternative dispute resolution center); LeCroy v. Hanlon, 713 S.W.2d 335 (Tex.1986) (fee for state's general revenue fund). These courts have all followed the same analysis: to pass constitutional muster, court filing fees must be related to the costs of the administration of justice.
Courts have analyzed statutes imposing additional filing fees on litigants to fund extra-judicial or quasi-judicial programs under the constitutional provision guaranteeing access to courts and to a lesser extent under the constitutional separation of powers provision. After an extensive discussion of the purpose and history of the Texas state constitution's access to courts provision, the Texas Supreme Court held:
[F]iling fees that go to state general revenuesin other words taxes on the right to litigate that pay for other programs besides the judiciaryare unreasonable impositions on the state constitutional right of access to the courts. Regardless of its size, such a filing fee is unconstitutional for filing fees cannot go for non court-related purposes. LeCroy, 713 S.W.2d at 342.
Likewise, the Illinois Supreme Court concluded that "[i]f the right to obtain justice freely is to be a meaningful guarantee, it must preclude the legislature from raising general revenue through charges assessed to those who would utilize our courts." Crocker, 77 Ill.Dec. at 102, 459 N.E.2d at 1351.
Louisiana's access to the courts provision is comparable to other states' open courts provisions. It provides:
All courts shall be open, and every person shall have an adequate remedy by due process of law and justice, administered without denial, partiality, or unreasonable delay, for injury to him in his person, property, reputation, or other rights. La. Const. art. I, § 22.
This provision, like the Fourteenth Amendment to the United States Constitution, protects an individual's access to the judicial process. Where access to the judicial process is not essential to the exercise of a fundamental right, the legislature is free to restrict access to the judicial machinery if there is a rational basis for that restriction. Bazley v. Tortorich, 397 So.2d 475, 485 (La. 1981); Everett v. Goldman, 359 So.2d 1256, 1268 (La.1978).
Courts have also confronted challenges to certain filing fee statutes based on the separation of powers doctrine. Like the access to the courts provision, the separation of powers doctrine mandates a reasonable relationship between the fee imposed and the costs of the administration of justice. A fee that is unrelated to the administration of justice necessarily impinges on the efficient administration of justice. See Ali, 265 N.E.2d at 105-06 (upholding a statute imposing a filing fee for a law library in the face of a separation of powers challenge because the fee contributes "to a proper and even improved administration of justice"); Wenger, 133 Ill. Dec. at 788-90, 541 N.E.2d at 1226-28 (finding that a filing fee to support a non-profit dispute resolution center does not violate separation of powers because the centers "will be used to improve the efficient administration of the courts").
Following the trend restricting the imposition of court fees to instances where they fund functions of the judicial system, we hold that court filing fees may be imposed only for purposes relating to the administration of justice. This requirement is inherent in our constitutional right of access to the courts and the constitutional separation of powers doctrine. Moreover, our clerks of court should not be made tax collectors for our state, nor should the threshold to our justice system be used as a toll booth to collect money for random programs created by the legislature.
In light of our holding, we must next determine whether the fee imposed by La. R.S. 13:1906 is sufficiently related to the *1043 administration of justice to pass constitutional muster. Applying the constitutional standards derived from the access to courts and separation of powers provisions, other state courts have rejected as unconstitutional several taxes disguised as filing fees, finding that they were unrelated to the administration of justice. In a case similar to the instant case, the Illinois Supreme Court found that a statute imposing an additional five dollar filing fee to fund shelters and other services for victims of domestic violence was unconstitutional as an unreasonable interference with the petitioners' access to the courts, even where the fee was imposed only on petitioners for dissolution of marriage.[4]Crocker, 77 Ill.Dec. at 101, 459 N.E.2d at 1351. The court enunciated the general rule that "court filing fees and taxes may be imposed only for purposes relating to the operation and maintenance of the courts." The court concluded that "[d]issolution-of-marriage petitioners should not be required, as a condition of their filing, to support a general welfare program that relates neither to their litigation nor to the court system." The court acknowledged that the counseling and support services the funds provided for domestic abuse victims might enable the victims to seek redress through the court system, but found that connection to be too remote to save the statute from its constitutional infirmities. Id. See also LeCroy, 713 S.W.2d at 342 (holding that a statute imposing a $40 filing fee to go to state general revenues was an unconstitutional tax on the right to litigate because the funds paid for programs beside the judiciary).
By contrast, several courts have upheld statutes imposing filing fees devoted to defraying the costs of the administration of justice. In Farabee v. Board of Trustees, Lee County Law Library, the Florida Supreme Court found that a statute imposing an additional three dollar filing fee for the provision and maintenance of a law library for the use of the courts and the public was constitutional. 254 So.2d at 3. In upholding the law library fee, the court reasoned that an adequate law library for use by the courts, lawyers and litigants "is essential to the administration of justice today, and it is appropriate that its cost be assessed against those who make use of the court systems...." Id. at 5. See also Ali, 265 N.E.2d at 106 (also upholding the constitutionality of a law library fee as a reasonable expense related to litigation); Wenger, 133 Ill.Dec. at 787, 541 N.E.2d at 1225 (finding that a one dollar additional filing fee to fund a non-profit dispute resolution center is constitutional because it is related to the "operation and maintenance of the courts").
It should be emphasized that under our holding court fees are usually constitutional. Litigation may not be without reasonable expense. However, where there is a statute, such as the one at issue here, imposing a tax on all civil filings to fund a program far removed from the judicial process, it must fall. We find that La. R.S. 13:1906 imposes an unconstitutional filing fee in violation of the right of access to the courts and of the separation of powers doctrine because its purposeto fund domestic abuse services is unrelated to the administration of justice. While domestic abuse programs are indisputably worthy and necessary in society today, they are essentially social welfare programs that cannot be funded with filing fees that are imposed on all civil suits and collected by the judiciary as mandated by La. R.S. 13:1906.[5]
SNAP provides a myriad of laudable services for victims of domestic abuse, the primary ones being shelter, counseling and information for abuse victims. However, these *1044 services have no logical connection to the judicial system. SNAP is not a part of the judicial branch, it serves no judicial or even quasi-judicial function, it is not a program administered by the judiciary, and it is not a link in the chain of the justice system. Furthermore, La. R.S. 13:1906 imposes a fee on all civil suits filed; thus, the purpose of the fee bears no relationship to the nature of the filing against which it is assessed. Also, there is no chance that any of the revenue raised by the statute will ultimately be used to fund the judicial system. Under the scheme imposed by La. R.S. 13:1906, the fees collected go directly to SNAP, where they remain to be used at SNAP's discretion. Moreover, the possibility that some persons who seek SNAP's assistance may eventually seek redress through the court system, and that the services SNAP provides may enable some of these persons to gain access to the judicial process, is too remote and speculative to save the statute from its constitutional infirmities.
La. R.S. 13:1906 also imposes an additional fee of three dollars in every criminal proceeding in which a fine or forfeiture is imposed or court costs are ordered. Although the imposition of a fee in a criminal context in addition to a fine or court costs presents a slightly different issue than a charge imposed as a filing fee necessary to gain entry to the judicial process, our analysis and conclusion are substantially the same. "[A]s long as the statutory criminal assessments are reasonably related to the costs of administering the criminal justice system, its imposition will not render the courts `tax gatherers' in violation of the separation of powers doctrine." State v. Claborn, 870 P.2d 169, 171 (Okl.Cr.1994) (finding that a fingerprinting fee, a victims compensation assessment, and a drug assessment imposed on a criminal defendant convicted of drug charges did not violate the separation of powers doctrine because they are "reasonably related to the costs of administering the criminal justice system and are not simply an executive branch tax"). See also Broyles v. State, 285 Ark. 457, 688 S.W.2d 290, 292 (1985) (holding that a charge on a criminal defendant convicted of driving while intoxicated to support the Highway Safety Program and other programs relating to drunken driving, detoxification services and alcohol and drug abuse rehabilitation is constitutional since funds go to agencies society has had to create to keep the highways safe from drunk drivers); State v. Young, 238 So.2d 589 (Fla.1970) (holding that a statute imposing a one dollar charge for law enforcement on every person convicted of a crime is not a violation of the separation of powers doctrine because it is reasonable that one who is convicted of a crime "should be made to share in the improvement of agencies that society has had to employ in defense against the very acts for which he has been convicted"); State v. Johnson, 478 S.E.2d 16, 24 (N.C.App.1996) (finding that a $100 fee imposed on a criminal convicted of a drug charge to recompense the state for costs of drug analysis was not a violation of the separation of powers doctrine because the charge is reasonably related to the costs of administering the criminal justice system).
For the same reasons that La. R.S. 13:1906 is unconstitutional in the civil context, it is also unconstitutional in the criminal context as a violation of the separation of powers doctrine. The additional fee imposed by the statute on all criminal defendants to benefit SNAP is not sufficiently related to the administration of the criminal justice system to warrant its collection in the manner prescribed by La. R.S. 13:1906. The charge is not related in any material way to the criminal justice system. It does not support any of the traditional institutions that constitute the criminal justice system. It is not a charge intended to defray the costs of the prosecution of the particular defendant against whom the fee is assessed. Neither does the fee bear a relationship to a social problem caused by a specific crime to which the fee is attached. Rather, the three dollar fee is charged against all persons against whom a fine or costs are assessed, regardless of the crime or the particular costs of the prosecution.
In sum, we find that La. R.S. 13:1906 does not violate La. Const. art. VII, § 14. Instead, we find that the statute's imposition of a filing fee in all civil suits violates the right of access to the courts (La. Const. art. I, § 22) and the separation of powers doctrine *1045 (La. Const. art. II, § 2). Moreover, we also find that the statute's imposition of a fee in each criminal proceeding in which a fine, court costs, or a forfeiture is ordered violates the separation of powers doctrine (La. Const. art. II, § 2).
DECREE
For the reasons assigned, the judgment of the court of appeal declaring La. R.S. 13:1906 unconstitutional and vacating the writ of mandamus issued by the trial court is affirmed.
KIMBALL, J., dissents in part and assigns reasons.
JOHNSON, J., dissents.
KIMBALL, Justice, concurring in part and dissenting in part.
I concur with the majority's conclusion that La. R.S. 13:1906 is unconstitutional in the civil context. However, because the additional fee imposed by La. R.S. 13:1906 on all criminal defendants is intricately related to the administration of the criminal justice system, I am compelled to dissent from the majority's contrary holding.
According to the majority, the charge imposed by La. R.S. 13:1906 is not related in any way to the criminal justice system. In my view, this statement represents a fundamental misunderstanding of the relationship between domestic violence and the criminal justice system. U.S. Department of Justice statistics reveal that from 1987-1992, intimates (spouse, ex-spouse, boyfriend, girlfriend) committed an annual average of 621,015 rapes, robberies, or assaults, representing more than 13% of all these violent victimizations. Bureau of Justice Statistics, U.S. Dep't of Justice, Leaflet No. NCJ-149259, Violence Between Intimates 1 (1994). According to the Federal Bureau of Investigation, of the 22,540 murders committed nationwide in 1992, 15% of these murders involved a victim described in police records as an intimate of the killer. Id. The 1984 report of the U.S. Attorney General's Task Force on Family Violence recommended that family violence be recognized and responded to as a criminal activity and that law enforcement officials, prosecutors, and judges develop a coordinated response to family violence. U.S. DEP'T OF JUSTICE, ATTORNEY GENERAL'S TASK FORCE ON DOMESTIC VIOLENCE, FINAL REPORT (1994).
Safety Net for Abused Persons, Inc. (SNAP) is a program designed to assist through education and counseling both the victims and the perpetrators of domestic violence. SNAP provides victims of domestic violence with assistance in obtaining access to civil and criminal courts. Through programs implemented by SNAP, victims of domestic violence learn how to utilize the court system in order to protect themselves and their children.
The above quoted statistics compiled by the U.S. Department of Justice and the Federal Bureau of Investigation show the criminal justice system is inundated with cases involving domestic violence. Thus, I fail to understand how the majority could conclude that the fee imposed by La. R.S. 13:1906 is not sufficiently related to the administration of the criminal justice system.
For these reasons, I respectfully dissent from the portion of the majority's opinion which holds that the fee imposed by La. R.S. 13:1906 in criminal cases violates La. Const. Art. II, § 2.
NOTES
[*] Lemmon, J. not on panel. Rule IV, Part 2, § 3.
[1] Safety Net for Abused Persons v. Segura, 94-1471 (La.App. 3d Cir. 6/26/96); 677 So.2d 152.
[2] Safety Net for Abused Persons v. Segura, 96-1978 (La.11/8/96); 683 So.2d 253.
[3] The defendants argue that the definition of "needy" in the context of La. Const. art. VII, § 14(B) should be restricted to include only the "indigent." The defendants cite no authority in support of this contention. This argument lacks merit.
[4] Compare Crocker with Villars v. Provo, 440 N.W.2d 160 (Minn.App.1989) and Browning v. Corbett, 153 Ariz. 74, 734 P.2d 1030 (App.1986), two court of appeal cases which found a rational relationship between fees on dissolution of marriage petitioners and domestic violence shelters. These courts reasoned that "[s]ince victims of domestic violence and child abuse frequently come from broken homes, it is rational to raise funds for programs to assist such victims by requiring parties to a marriage dissolution action to pay an additional fee at the time of filing." Browning, 734 P.2d at 1032.
[5] We note that the statute may violate the constitutional guarantees of equal protection and due process as well. However, neither the parties nor the court of appeal raised this issue. Thus, this issue is not properly before us and we do not address it. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1149234/ | 708 So.2d 77 (1998)
Carolyn McGEHEE
v.
Robert DEPOYSTER, Individually, and In His Official Capacity As Superintendent of Richton School District.
Nos. 96-CA-01153-SCT, 96-IA-01049-SCT.
Supreme Court of Mississippi.
March 12, 1998.
*78 Albert D. Malone, Ridgeland, for Appellant.
J.B. Van Slyke, Jr., Hattiesburg, for Appellee.
Before PITTMAN, P.J., and McRAE and JAMES L. ROBERTS, Jr., JJ.
McRAE, Justice, for the Court:
¶ 1. This appeal arises from a series of orders entered by the Circuit Court of Perry County in September, 1996 in a defamation action brought by the Principal of the Richton Elementary School against the Superintendent of the Richton School District, both individually and in his official capacity. In both her interlocutory appeal and her direct appeal, McGehee raises the issues of whether, pursuant to Miss. Code Ann. § 11-46-11(1), she was required to provide DePoyster with notice of the state law claims against him in his individual capacity as well as of charges she brought pursuant to 42 U.S.C. § 1983. In her direct appeal, McGehee further asserts that the circuit court erred in granting DePoyster's motion to dismiss on the basis of her failure to provide him with statutory notice. Finding that the notice provisions of Miss. Code Ann. § 11-46-1(1) are not applicable to a government employee sued in his individual capacity for actions not within his scope of employment or to actions brought pursuant to 42 U.S.C. § 1983, we reverse the circuit court's order of dismissal and remand for further proceedings.
I.
¶ 2. Front page headlines in the Hattiesburg American proclaimed that sparks were flying in the small town of Richton, Mississippi when Richton School District Superindent, Dr. Robert DePoyster, raised allegations that Richton Elementary School Principal, Carolyn McGehee, used "questionable disciplinary techniques" with the youngsters. DePoyster allegedly told television station WDAM that McGehee had violated school policy and made a mistake in judgment in allegedly locking Deborah Lott's five-year old son in a storage shed for detention. It further was alleged in the press that McGehee had washed another child's mouth out with soap after he swore and suspended an eleven-year-old child for fighting, after which she took him home, where he had stayed alone on the porch for four hours until his parents returned. The incidents apparently were investigated by the Department of Human Services.
¶ 3. McGehee filed a complaint in the Circuit Court of Perry County on March 31, 1995 against DePoyster, individually and in his official capacity as Superintendent of the Richton School District, as well as against Deborah Lott and Charles "Eddie-Boy" Woodward. She alleged that the three published false statements, defaming her and injuring her reputation, via the Hattiesburg American and WDAM television station, as well as to other third parties. She also raised allegations of civil conspiracy to defame, libel and slander, false light invasion of privacy and intentional infliction of emotional distress. Further, McGehee charged DePoyster, individually and in his official capacity, with violating 42 U.S.C. § 1983 in ordering her not to speak to or associate with members of the Richton School Board and by constructively denying her the right to a hearing.
¶ 4. DePoyster, Lott and Woodward denied the allegations raised in the complaint. DePoyster counterclaimed for damages for tortious interference with his contract and intentional infliction of emotional distress, asserting *79 that through McGehee's acts of insubordination, the Richton School Board launched an investigation into unspecified allegations against him, resulting in his resignation under duress. McGehee sought dismissal of the counter-claim in her answer. DePoyster filed an amended answer on December 18, 1995, asserting that the action against him was barred by sovereign immunity and that he was immune in both his individual and official capacities, requiring the suit to be dismissed pursuant to Miss. Code Ann. § 11-46-9(1)(d).
¶ 5. On August 28, 1996, DePoyster filed a motion to dismiss, charging that the original complaint was filed without giving proper statutory notice. He further raised the 1993 revision of Miss. Code Ann. § 11-46-11 as a defense and asserted that the complaint should be dismissed because it was not filed within the statutory time period. Finding that McGehee failed to comply with statutory notice provisions, the circuit court dismissed her claims against DePoyster, both individually and in his official capacity, in a judgment filed September 4, 1996. An order dismissing DePoyster's counterclaim on the same grounds also was filed at that time.
¶ 6. McGehee filed a motion to reconsider, to correct judgment or to grant interlocutory appeal on September 5, 1996. She sought review of the dismissal of the § 1983 action against DePoyster, as well as the state court claims brought against him in his individual capacity. The circuit court overruled the motion to reconsider or correct the judgment as to DePoyster and certified the interlocutory appeal, granting the remaining parties, Lott and Woodward, a continuance pending proceedings before this Court.
II.
¶ 7. In both her direct appeal and her interlocutory appeal, the crux of McGehee's argument is whether Dr. DePoyster, individually, was entitled to statutory notice of the claims against him. She concedes that any action brought against him in his official capacity as Superintendent of the Richton School District required ninety days notice pursuant to Miss. Code Ann. § 11-46-11(1). McGehee contends, however, that the acts complained of did not fall within the scope and course of DePoyster's employment. Therefore, she asserts, suit brought against him in his individual capacity is not subject to the Sovereign Immunity Act's notice provisions. DePoyster, without citing any authority, argues that the notice of claim requirement also applies to suits brought individually against a government employee. He contends that he was acting in his official capacity and within the scope of his employment when the alleged actions occurred. Thus, he concludes that because there was no notice provided pursuant to § 11-46-11(1), subsequent questions of law cannot be entertained.
¶ 8. Miss. Code Ann. § 11-46-11(1) provides as follows for notice of tort claims against a governmental entity and its employees:
After all procedures within a governmental entity have been exhausted, any person having a claim for injury arising under the provisions of this chapter against a governmental entity or its employee shall proceed as he might in any action at law or in equity; provided, however, that ninety (90) days prior to maintaining an action thereon, such person shall file a notice of claim with the chief executive officer of the governmental entity, and, if the governmental entity is participating in a plan administered by the board pursuant to Section 11-46-7(3), such chief executive officer shall notify the board of any claims filed within five (5) days after the receipt thereof.
Miss. Code Ann. § 11-46-11(1)(Supp. 1997). McGehee acknowledges that the notice requirement applies to suit brought against an employee, acting in his official capacity. The issue, therefore, is whether it is applicable to actions brought individually against a government employee.[1]
¶ 9. Notice of claim statutes "`are enacted primarily for the benefit of governmental *80 defendants,'" but serve "the additional purpose of notifying the proper public officials of dangerous physical conditions or inappropriate and unlawful governmental conduct, which allows for prompt corrective measures." Felder v. Casey, 487 U.S. 131, 142-143, 108 S.Ct. 2302, 2309, 101 L.Ed.2d 123, 140-141 (1988)(citing Civil Actions Against State Government, Its Divisions, Agencies, and Officers, 564 (W.Winborne, ed. 1982)).[2] Most jurisdictions have some sort of statutory notice provisions, with the majority of states requiring only substantial compliance with notice requirements. In those jurisdictions where the statutes have not specified their applicability or inapplicability to individual actions, courts have held that statutory notice of claim requirements do not apply to a government employee sued in his individual capacity. See, e.g., Kalpin v. Cunningham, 60 A.D.2d 997, 401 N.Y.S.2d 659, 660 (1978); Vermeer v. Sneller, 190 N.W.2d 389, 392 (Iowa 1971).
¶ 10. DePoyster asserts that regardless of whether he is sued in his official or in his individual capacity, the notice requirement must be met because he was acting within the scope and course of his employment. Indeed, an action against a government employee in his individual capacity may be subject to notice of claim requirements if the act complained of occurred within the scope and course of his employment:
Nevertheless, implicit in the supreme court's ruling is the notion that governmental employment, standing alone, does not trigger the notice provision of the Act. Van Valkenburg [v. Warner, 602 N.E.2d 1046, 1049 (Ind. Ct. App. 1992)]. Where the plaintiff elects to sue the governmental employee in her individual capacity, notice is required only if the act or omission causing the plaintiff's loss is within the scope of the defendant's employment. Id.
Bienz v. Bloom, 674 N.E.2d 998, 1004 (Ind. Ct. App. 1996). DePoyster stepped outside of the scope and course of his employment when he talked to the media rather than resolving the situation internally. Moreover, the acts complained of in the case sub judice, including libel, slander and defamation, are considered to be outside the scope and course of employment pursuant to the sovereign immunity statute.[3] Miss. Code Ann. § 11-46-5(2) provides that:
For the purposes of this chapter an employee shall not be considered as acting within the course and scope of his employment and a governmental entity shall not be liable or be considered to have waived immunity for any conduct of its employee if the employee's conduct constituted fraud, malice, libel, slander, defamation or any criminal offense other than traffic violations.
Miss. Code Ann. § 11-46-5(2)(Supp. 1997). DePoyster points to § 11-46-7(2) for the proposition that a government employee cannot be sued individually for actions occurring within the course and scope of his employment, but neglects to cite the qualifying language analogous to that found in § 11-46-5(2), supra.
An employee may be joined in an action against a governmental entity in a representative capacity if the act or omission complained of is one for which the governmental entity may be liable, but no employee shall be held personally liable for acts or omissions occurring within the course and scope of the employee's duties. For the purposes of this chapter an employee shall not be considered as acting within the course and scope of his employment and a governmental entity shall not *81 be liable or be considered to have waived immunity for any conduct of its employee if the employee's conduct constituted fraud, malice, libel, slander, defamation or any criminal offense.
Miss. Code Ann. § 11-46-7(2)(Supp. 1997)(emphasis added).
¶ 11. Sections 11-46-5(2) and 11-46-7(2) expressly provide that an employee shall not be considered as acting within the scope and course of his employment for conduct amounting to defamation, libel and slander, the very charges brought by McGehee against DePoyster. We therefore do not construe § 11-46-11(1) as requiring notice to DePoyster or other government authorities of suit brought against him individually for acts outside of the scope of his employment.
III.
¶ 12. McGehee next contends that the lower court erred in dismissing her 42 U.S.C. § 1983 claim against DePoyster on the basis of failure to provide proper notice pursuant to § 11-46-11(1). The United States Supreme Court addressed this issue in Felder v. Casey, 487 U.S. 131, 140-141, 108 S.Ct. 2302, 2307-08, 101 L.Ed.2d 123, 139-140 (1988), holding that state notice of claims statutes are not applicable to § 1983 actions brought in state courts. Wisconsin's notice of claim statute required a written notice of claim within 120 days of the alleged injury or a showing that the government subdivision, agency, or employee had actual notice of the claim and would not be prejudiced by the absence of written notice. Felder, 487 U.S. at 136, 108 S.Ct. at 2305, 101 L.Ed.2d at 136. The Supreme Court found that the statute was preempted when § 1983 actions were brought in state court because it conflicted with the purpose of 42 U.S.C. § 1983 and its enforcement would "frequently and predictably produce different outcomes in § 1983 litigation based solely on whether the claim is asserted in state or federal court." 487 U.S. at 138, 108 S.Ct. at 2307, 101 L.Ed.2d at 138. In so holding, the Supreme Court first looked with approval at the reasoning employed by the federal courts to find that notice of claim statutes were not applicable to § 1983 cases there.
These courts have reasoned that, unlike the lack of statutes of limitations in the federal civil rights laws, the absence of any notice-of-claim provision is not a deficiency requiring the importation of such statutes into the federal civil rights scheme. Because statutes of limitation are among the universally familiar aspects of litigation considered indispensable to any scheme of justice, it is entirely reasonable to assume that Congress did not intend to create a right enforceable in perpetuity. Notice-of-claim provisions, by contrast, are neither universally familiar nor in any sense indispensable prerequisites to litigation, and there is thus no reason to suppose that Congress intended federal courts to apply such rules, which "significantly inhibit the ability to bring federal actions."
Felder, 487 U.S. at 140, 108 S.Ct. at 2308, 101 L.Ed.2d at 139 (quoting Brown v. United States, 742 F.2d 1498, 1507 (D.C.App. 1984)). The Court found the federal court precedent instructive because:
[f]irst, it demonstrates that the application of the notice requirement burdens the exercise of the federal right by forcing civil rights victims who seek redress in state courts to comply with a requirement that is entirely absent from civil rights litigation in federal courts. This burden, as we explain below, is inconsistent in both design and effect with the compensatory aims of the federal civil rights laws. Second, it reveals that the enforcement of such statutes in § 1983 actions brought in state court will frequently and predictably produce different outcomes in federal civil rights litigation based solely on whether that litigation takes place in state or federal court. States may not apply such an outcome-determinative law when entertaining substantive federal rights in their courts.
487 U.S. at 141, 108 S.Ct. at 2308, 101 L.Ed.2d at 139-140.
¶ 13. The Felder Court found that the Wisconsin statute operated as a condition precedent to actions brought in state court against governmental entities or their employees and provided them an affirmative defense not available to them in federal court. Id., 487 *82 U.S. at 144, 108 S.Ct. at 2309, 101 L.Ed.2d at 141. The Court reiterated that "`Congress ... surely did not intend to assign to state courts and legislatures a conclusive role in the formative function of defining and characterizing the essential elements of a federal cause of action.'" Id. (quoting Wilson v. Garcia, 471 U.S. 261, 269, 105 S.Ct. 1938, 1943, 85 L.Ed.2d 254 (1985)). Emphasizing that it was the decision of Congress, and not the state legislatures, to subject states and their employees to liability for violation of civil rights, the Court continued, stating that
States, however, may no more condition the federal right to recover for violations of civil rights than bar that right altogether, particularly where those conditions grow out of a waiver of immunity which, however necessary to the assertion of state-created rights against local governments, is entirely irrelevant insofar as the assertion of the federal right is concerned, and where the purpose and effect of those conditions, when applied in § 1983 actions, is to control the expense associated with the very litigation Congress has authorized.
This burdening of a federal right, moreover, is not the natural or permissible consequence of an otherwise neutral, uniformly applicable state rule. Although it is true that the notice-of-claim statute does not discriminate between state and federal causes of action against local governments, the fact remains that the law's protection extends only to governmental defendants and thus conditions the right to bring suit against the very persons and entities Congress intended to subject to liability.
487 U.S. at 144-145, 108 S.Ct. at 2309-2310, 101 L.Ed.2d at 141-142.
¶ 14. We further note, Felder notwithstanding, that nothing in § 11-46-1 purports to insulate the State, its political subdivisions or any of its employees from liability for constitutional violations. To the contrary, § 11-46-17, which provides for the creation of the Tort Claims Fund and liability insurance, authorizes plans of self-insurance established by political subdivisions to "provide coverage for liabilities outside the provisions of this chapter, including but not limited to liabilities arising from Sections 1983 through 1987 of Title 42 of the United States Code ..." Miss. Code Ann. § 11-46-17(2)(Supp. 1997)(emphasis added). The statute, therefore, expressly places § 1983 actions beyond its purview.
¶ 15. The United States Supreme Court's decision in Felder clearly holds that statutory notice of claim provisions are inapplicable to § 1983 actions brought against governmental entities or employees in state court. Moreover, Miss. Code Ann. § 11-46-17 places § 1983 actions outside the purview of the Tort Claims Act. Therefore, Miss. Code Ann. § 11-46-11(1) cannot be used to bar McGehee's § 1983 claims against DePoyster merely because they were brought in state court rather in federal court.
IV.
¶ 16. In her direct appeal, McGehee contends that the circuit court erred in granting DePoyster's motion to dismiss the state and federal court claims brought against him individually. She concedes that the circuit court correctly dismissed her common law claims against DePoyster in his official capacity because of failure to comply with the notice provisions of Miss. Code Ann. § 11-46-11(1). "When considering a motion to dismiss, the allegations in the complaint must be taken as true and the motion should not be granted unless it appears beyond doubt that the plaintiff will be unable to prove any set of facts in support of his claim." T.M. v. Noblitt, 650 So.2d 1340, 1342 (Miss. 1995); Overstreet v. Merlos, 570 So.2d 1196, 1198 (Miss. 1990). While DePoyster's motion to dismiss was not filed under any specific rule, we construe it as a motion for relief pursuant to either Miss. R.Civ. P. Rule 12(b)(2) or 12(c), because it challenges the legal sufficiency of the complaint; to wit, whether the jurisdictional prerequisites of filing suit against a governmental employee were met. The circuit court's dismissal of McGehee's § 1983 claims against DePoyster on grounds of the notice-of-claim statute is completely contrary to the United States Supreme Court's decision in Felder, supra. Further, Miss. Code Ann. §§ 11-46-5(2) and 11-46-7(2) expressly state that an employee *83 shall not be considered as acting within the scope and course of his employment for conduct amounting to defamation, libel and slander, the charges raised against DePoyster by McGehee. The notice provisions of § 11-46-11(1) therefore were not applicable to the cause of action against DePoyster in his individual capacity. The circuit court erred in dismissing her claims on basis of the statutory notice basis. Finally, based on the early stage of the pleadings in which the motion to dismiss was filed and granted, we cannot say that "`it appears beyond a doubt that plaintiff can prove no set of facts in support of her claim which would entitle her to relief,'" and the case should be remanded for further proceedings on the state law claims against DePoyster, in his individual capacity, as well as on the § 1983 action.
V.
¶ 17. The notice of claim provisions of Miss. Code Ann. § 11-46-1(1) are not applicable to actions brought individually against government employees acting outside of the scope of their employment. Further, pursuant to Felder v. Casey, the United States Supreme Court expressly held that state notice of claim statutes cannot be applied to § 1983 actions brought in state court against a government employee in his individual or official capacity. Accordingly, the circuit court erred in dismissing the § 1983 action against DePoyster as well as the common law actions against him in his individual capacity on the basis of failure to provide notice pursuant to § 11-46-1(1). We reverse the order of the circuit court's order of dismissal and remand the case for further proceedings consistent with this opinion.
¶ 18. REVERSED AND REMANDED.
PRATHER, C.J., PITTMAN, P.J., and BANKS, JAMES L. ROBERTS, Jr., SMITH, MILLS and WALLER, JJ., concur.
SULLIVAN, P.J., not participating.
NOTES
[1] Whether injuries arising from acts of libel and slander are injuries as defined by Miss. Code Ann. § 11-46-1(h) is not at issue and we do not address whether they are encompassed by the Tort Claims Act.
[2] Our Mississippi cases indicate only that "[t]here are a number of valid reasons why the Legislature would require that the Chief Executive Officer of a governmental entity be given advance notice of planned litigation against it, and the Legislature saw fit to implement specific and detailed requirements for the granting of this notice." City of Jackson v. Lumpkin, 697 So.2d 1179, 1181 (Miss. 1997). The opinion does not further elaborate.
[3] A January 5, 1994 Mississippi Attorney General's Opinion notes that while members of the Foster Care Review Board enjoy public official immunity for acts arising from their duties on the Board, "[w]hat clearly is not protected are actions that do not fall within the scope of their duties on the Board or conduct that constitutes fraud, malice, libel, slander, defamation or criminal offense." A.G. Op. # 93-0972 (1994 WL 32528). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1457017/ | 265 F.Supp. 723 (1967)
LONG ISLAND TANKERS CORPORATION, a corporation, Libelant, and
John A. Cross et al., Libelants in Intervention,
v.
S. S. KAIMANA, her engines, etc., et al., Respondents.
Nos. 28019, 28026, 28094, 28107, 28223, Admiralty No. 28019.
United States District Court N. D. California.
February 9, 1967.
*724 John Hays and George L. Waddell of Dorr, Cooper & Hays, San Francisco, Cal., for libelant in No. 28019 and for respondent in Nos. 28094, 28107 and 28026.
John Paul Jennings of Jennings, Gartland & Tilly and Richard Ernst, San Francisco, Cal., and Marvin C. Taylor, Washington, D. C., for libelants in intervention in Nos. 28019 and 28026 and for libelants in Nos. 28094, 28107 and 28223.
Harold L. Witsman and John F. Meadows, U. S. Admiralty and Shipping Section (West Coast Office) and Cecil F. Poole, U. S. Atty., San Francisco, Cal., for respondent in No. 28223.
MEMORANDUM OF DECISION
SWEIGERT, District Judge.
This is a consolidation of five separate libels in rem involving claims by the trustees of certain so-called vacation, pension and welfare trusts against each of five vesselsSS Lanikai, SS Alaska Bear (now owned by Pacific Far East Line, Inc.), SS Kaimana, SS Lanakila (upon which Pacific Far East Line, Inc., is holder of preferred ship mortgages) and SS Coast Progress (upon which the United States is holder of a preferred ship mortgage).
The Court has jurisdiction of the parties and subject matter under U.S.Const. art. III, § 2; 28 U.S.C. § 1331(a); and 46 U.S.C. §§ 951, 953.
The cases are presently before the Court for decision after trial upon a "Stipulation as to Certain Facts and Other Matters" and certain testimony and exhibits introduced at trial. The evidence introduced at trial was largely explanatory of the provisions of the collective bargaining agreements governing the trusts.
Under the provisions of these collective bargaining agreements between Pacific Maritime Association, representing steamship companies and various maritime unions, representing sea-going personnel, certain vacation, pension and welfare trusts were established and placed under the administration of trustees equally divided between persons designated by Pacific Maritime Association and persons designated by the unions.
The collective bargaining agreements provide for the payment of vacation pay, pensions and welfare benefits by the trustees to designated beneficiaries. These beneficiaries include not only the *725 various sea-going personnel but also shore-based union officials, instructors at schools for seamen, shore-based workmen repairing and maintaining cargo vans and personnel administering the trusts herein.
The collective bargaining agreements also provide the method of financing such benefits. Under the agreements the steamship companies are obligated to make contributions to the trustees of the various trusts through the Pacific Maritime Association. These contributions are based upon the number of days of work performed for each steamship company by covered employees and the job classification of the particular employee.
The libels in rem here involved are based upon claims by the trustees against Coastwise Line and Dorama, Inc., both steamship companies bound by the collective bargaining agreement, for contributions due and owing to the trustees as a result of the operation by Coastwise Line of each of the five vessels herein and the operation by Dorama, Inc., of three of them. During these operations work was performed for these steamship companies by sea-going personnel covered by the collective bargaining agreement.
Coastwise, however, failed to pay its contributions for voyages which terminated during the period of February 1959 through February 23, 1960, and is now insolvent.
Dorama failed to pay its contributions for voyages terminating during the period of June 23, 1959, through February 25, 1960, and is now insolvent.
The basic issue involved in all five proceedings is whether the trustee's claims for the contributions which became due and owing from Coastwise Line and from Dorama, Inc., can be asserted as maritime liens and, if so, whether they are entitled to "preferred" maritime lien priority against said vessels as "wages of the crew of the vessel" within the meaning of 46 U.S.C. § 953.
Section 953 of Title 46 is part of Chapter 25 of Title 46 dealing with ship mortgages and known as the Ship Mortgage Act, 41 Stat. 1000-1006 (1920), 46 U.S. C. §§ 911-984 (1964).
Prior to 1920 ship mortgages were not entitled to enforcement by maritime liens and were subordinate to all of the many maritime liens a ship might incur. See Bogart v. The John Jay, 17 How. 399, 58 U.S. 399, 15 L.Ed. 95 (1854). For this reason they came to be "practically worthless" as security instruments. See Detroit Trust Co. v. The Barlum, 293 U.S. 21, 39, 55 S.Ct. 31, 79 L.Ed. 176 (1934). The Congress, in order to provide for the promotion and maintenance of the American merchant marine, enacted this Ship Mortgage Act to make private investment and credit in the shipping industry more attractive and also to protect the United States as one of the principal sources of credit for ship financing. See Gilmore and Black, The Law of Admiralty 571 (1957). This was accomplished by placing ship mortgages upon a stronger security basis.
The Ship Mortgage Act provides that mortgages which comply with the conditions enumerated in 46 U.S.C. § 922 shall be called "preferred mortgages" and as such entitled to the preferred status given by 46 U.S.C. § 953. See 46 U.S.C. § 922(a), (b).
Section 953 of the Act provides that in any foreclosure and sale of a ship in admiralty, all preexisting lien claims in the vessel shall be held terminated and shall thereafter attach to the proceeds of the sale except that a "preferred mortgage lien" shall have priority over all such claims except "preferred maritime liens" and expenses, fees and costs allowed by the Court.
Section 953(a) provides that the term "preferred maritime lien," as used in the chapter, means (1) a lien arising prior in time to the recording of a preferred mortgage or (2) a lien for damages arising out of tort, for wages of a stevedore when employed directly by the owner, operator, master, ship's husband or agent of the vessel, "for wages of the crew of the vessel" for general average and for salvage. The Ship Mortgage *726 Act does not further define the term "wages of the crew of the vessel."
A threshold question is whether Congress intended by the phrase "wages of the crew of the vessel" as used in Section 953, to include all seamen's lien claims for compensation for maritime service or intended only a more limited kind of seamen's maritime lien claim. The trustees contend that Congress intended to protect the traditional seaman's wage lien claims and did so by providing that "wages of the crew of the vessel" have priority over preferred ship mortgages.
Admiralty courts have not limited the seaman's lien claim to those for ordinary wages. On the contrary, the Courts have recognized the seaman's lien claim for compensation for maritime services regardless of the form of the compensation provided only that the claim is reducible to money. See Harden v. Gordon, 11 Fed.Cas. p. 480, No. 6,047 (C.C.Me.1823). From the earliest period of maritime commerce the test in admiralty courts for determining whether there is a seaman's wage lien has been: Has a maritime service been performed? If such service has been performed, then whatever constitutes the compensation for the service, if reducible to money, may be enforced by a maritime lien against the vessel upon which those services were performed.
In Gayner v. The New Orleans, 54 F. Supp. 25 (N.D.Cal.1944) the Court (Goodman, J.) allowed seamen's wage liens for dismissal cash benefits due ferry-boat employees under their collective bargaining agreements as a result of the abandonment of ferry-boat service in San Francisco Bay. The Court rejected the contention of the respondent that the ferry-boat company and not the vessel was responsible for the payment of such benefits under the collective bargaining contract and that the benefits were not in their nature such wages or compensation as entitled a seaman to a maritime lien, stating at 27: "* * * that the fullest protection to seamen for all maritime services has always been the policy of the Admiralty."
In The Great Canton, 299 F. 953 (E.D. N.Y.1924) the Court rejected a contention that the seaman's entitlement to one month's wages for improper discharge under 46 U.S.C. § 594 and for two days' pay for each and every day wages are withheld after a specified period under 46 U.S.C. § 596 is against the master or owner and not a lien against the vessel. Going back to the early case of Sheppard v. Taylor, 5 Pet. 674, 709-710, 8 L.Ed. 269 (1831), wherein Justice Story wrote of the remedies of seamen against the vessel, the Court upheld the seamen's maritime lien for this statutory compensation. See also The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760 (1903) (seaman's wage lien upheld for maintenance and cure resulting from a seaman falling sick in the service of the ship) and Lakos v. Saliaris (The Leonidas), 116 F.2d 440 (4th Cir. 1940) (seaman's wage lien upheld for extra compensation for hazardous maritime service in a war zone).
For purposes of decision in this case, but without deciding the question, the Court will assume that the phrase "wages of the crew of the vessel", as used in § 953, was intended to include the traditionally broad seaman's lien claim and to give all such lien claims priority over ship mortgages.
The remaining and basic question is whether the claim for the contributions here involved constitutes seamen's claims for compensation for maritime services in the broad traditional sense.
In each of the cases above mentioned, the compensation in question had become due to the seamen and the only question was whether the form of the compensation was such as to bring the claim within the protection of the seaman's maritime lien.
In the pending case the contributions in question are due and payable, not to the seamen, but to the trustees. The collective bargaining agreement expressly states that the contributions from the steamship companies are payable *727 only to the trustees, not the employees, and that covered employees have no right, title, interest or claim in or to their employer's or any other employer's contributions to the trust funds.
The contributions in question are not for pension, vacation or welfare benefits due to any particular seaman because such benefits are necessarily computed on a different basis than the contributions from the steamship companies.
Under the collective bargaining agreement benefits to a particular seaman are computed according to the number of days of his covered employment over a specified period provided a minimum number of days are worked by the particular employee during the period. In the computation all days worked by the seaman for any of the steamship companies covered by the agreements are included and totaled.
The amount of the benefit, thus computed, to which a particular covered employee may become entitled bears no direct relationship to the amount of contributions to the trustees from any particular steamship company.
On the other hand, the contributions of the steamship companies, including, of course, Coastwise Line and Dorama, Inc., are computed according to the number of days of covered employment worked by covered employees for the particular steamship company and the job classification of those employees.
Further, although contributions for union officials are made by the unions and contributions for trust personnel by the trust, itself, steamship company contributions are made for work performed, not by seamen, but by seamen school instructors and shore based workmen maintaining cargo vans.
Further, the agreements provide for annual review of the operations of the trust fund plans and for an increase in the rate of steamship company contributions whenever necessary to assure that the trusts will be sufficient to meet all benefits to which covered employees may be entitled. These trust funds are also financed in part by income on investment of trust funds.
In the pending case the claims of the trustees are not for any pension, vacation or welfare benefits due to any particular seaman. No seaman claims nonpayment of any such benefit. It appears from the Stipulation of Facts that all seamen who performed maritime service for Coastwise and Dorama have received and will continue to receive from the trustees all such benefits to which they were or may become entitled notwithstanding the failure of Coastwise and Dorama to make the contributions based upon the maritime services of those seamen.
On the other hand, no benefits are paid to seamen who do not work the required minimum number of days during the specified period even though the steamship employer makes its contributions for the days worked by them.
It appears, therefore, that the claims of the trustees are solely for contributions due from Coastwise and Dorama to the trusts. Those contributions are a means of financing the trust funds but they do not constitute the compensation to which any particular seaman is or may become entitled.
In our opinion, therefore, the claims of the trustees for the contributions in question do not constitute claims enforceable as seamen's maritime liens in the statutory or traditional maritime sense.
This conclusion does not foreclose the right of seamen to enforce their claims for pension, vacation or welfare benefits by maritime lien. We are not called upon to determine in this case whether sea-going personnel, entitled to vacation, pension or welfare benefits under the collective bargaining agreement, have a right to enforce such claim in the event of non-payment from the trust by means of a maritime lien, either in the traditional sense or in some narrower statutory sense, upon the ship or ships of any particular steamship company for whom they rendered maritime services or upon *728 the ships of all steamship companies' parties to the agreement.
Such claims of seamen for unpaid pension, vacation or welfare benefits stand on an altogether different footing than the contributions from the steamship companies.
The seamen's claims for unpaid benefits are clearly for the protection of the seaman but claims of the trustees for contributions from certain steamship companies are more for the protection of the other steamship companies against increase of their rate of compensation by reason of default of one or some of them.
As far as the seamen are concerned, even the default of all the steamship companies would not deprive the seamen of their claims of lien against the ships for benefits which might possibly become due to them but remain unpaid. Such claims would still be enforcible by the seaman's maritime lien unless (as might be contended in the light of the peculiar provisions of the collective bargaining agreement) such claims, even when made for benefits by or for the seamen themselves, be deemed incapable of allocation to any particular ship upon which the seaman in question performed maritime servicea question we are not called upon to decide.
Libellant trustees argue that their claim for the contributions are solely for the benefit of the seamen and that, therefore, the trustees must be considered as standing in the shoes of the seamenin effectassignees or trustees of their claims.
It is well established that an assignee (and, we assume, a trustee) of a seaman may enforce the wage lien of the assignor or beneficiary. See The President Arthur, 25 F.2d 999 (S.D.N.Y. 1928). See also United States v. Embassy, 359 U.S. 29, 34, 79 S.Ct. 554, 3 L.Ed.2d 601 (1959).
However, in the pending case, as in Embassy, the contributions (as distinguished from the benefits themselves) are owed only to the trusteesnot to the seamen.
The question presented in this case has previously been before the Courts. In Brandon v. SS Denton, 302 F.2d 404, 415-416 (5th Cir. 1962) the Court had before it a situation identical with that now before this Court. Various seafaring unions and others contended that contributions owed by steamship companies under pension, welfare and vacation plan funds (substantially similar to those here involved) were the equivalent of "wages of the crew of the vessel" within the meaning of § 953 and, therefore, secured by a preferred maritime lien and entitled to priority over preferred ship mortgages. The Court, affirming the District Court, The Denton, 1960 A.M.C. 2264 (S.D.Texas 1960)[1] and the report of Commissioner Ross therein, held to the contrary.
Shortly after the District Court's 1960 decision in The Denton, supra, the District Court for the Eastern District of Texas, affirming a report of Commissioner Brookshire, (in an unreported decision), held that claims for contributions due the trustees for such welfare and pension plans did not come within the ambit of "wages of the crew of the vessel" but that contributions payable to the trustees for vacation plans were entitled to the priority, ranking and status of seaman's lien for wages. Upon appeal the United States Court of Appeals, following its decision in Brandon affirmed the District Court's ruling with respect to claims due the welfare and pension plans, but reversed the lower court's ruling as to claims due the vacation plans. Barnouw v. SS Ozark, 304 F.2d 717 (5th Cir. 1962).
Subsequent to the District Court decisions in The Denton and The Ozark, the District Court for the District of Oregon reached the same conclusion as the Court in The Denton, supra, finding that the reasoning of Commissioner Ross *729 in that case was sounder than Commissioner Brookshire's in The Ozark. Irving Trust Co. v. The Golden Sail, 197 F.Supp. 777 (D.Or.1961).
In United States v. Embassy Restaurant, Inc., 359 U.S. 29, 79 S.Ct. 554 (1959), the trustees of welfare funds (substantially similar to those in our case) contended that contributions due the trust funds from a bankrupt employer were entitled to priority in payment under § 64(a) (2) of the Bankruptcy Act, as amended, 11 U.S.C. § 104(a) (2), as "wages * * * due to workmen." The Court held, however, that these contributions were not "wages * * * due to workmen" and denied them priority.
Libellant trustees greatly rely on United States for Benefit and on Behalf of Sherman v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957) in which the Court held that trustees of welfare trusts similar to those involved herein could recover against the surety for unpaid contributions due the trust funds from the contractor under the contractor's payment bond given pursuant to the Miller Act, 49 Stat. 793, 40 U.S.C. §§ 270a-270d (1964).
However, the Court in Embassy has clearly distinguished Carter stating in 359 U.S. at 34-35, 79 S.Ct. at 557:
"Nor does the Carter case, supra, support the granting of a priority to these contributions. There we dealt with the Miller Act, which granted to every person furnishing labor or material the right to sue on the contractor's payment bond `for the sum or sums justly due him.' The contractor defaulted and the trustees of a welfare fund similar to that involved here sued on the bond for recovery of contributions `justly due.' Our opinion did not hold that contributions were part of `wages * * * due to workmen.' In fact we pointed out that the trust agreement provided that the contributions `shall not constitute or be deemed to be wages,' id., 353 U.S. at 217, 77 S.Ct. at 797. The Act having the broad protective purposes of securing all claims that are `justly due,' we held that the trustees might recover. In short, though the contributions were not wages, they were `justly due' as a claim within `the purposes of the Miller Act.' Under the Bankruptcy Act, however, not all claims `justly due' have priority. They must be within a class, such as `wages * * * due to workmen.' The claims here are not. If this class is to be so enlarged, it must be done by the Congress."
As the Carter and Embassy cases read together make clear, the test is not whether the claims for the contributions are made on behalf of the employees, but whether the claims are of such a nature as to come within the protection of the "seaman's maritime claim" considered either in the traditional or statutory sense.
For the foregoing reasons this Court holds that the trustees' claims for the contributions are not entitled to the seaman's maritime lien or to preference as "wages of the crew of the vessel" within the meaning of 46 U.S.C. § 953.
This memorandum of decision shall constitute the Findings of Fact and Conclusions of Law as required by F.R.Civ.P. 52. Proctors representing the vessel interests shall prepare, serve on opposing counsel for approval as to form and lodge with the Court a final judgment for each of the five cases herein.
NOTES
[1] See also The Kingston, 1961 A.M.C. 1321 (S.D.Tex.1961) reaching the same conclusion by the same Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1994942/ | 299 B.R. 369 (2003)
In re Kathleen K. BELLWOAR, Debtor.
No. 03-15455 SR.
United States Bankruptcy Court, E.D. Pennsylvania.
October 1, 2003.
*370 Jeffrey Kurtzman, Klehr, Harrison & Harvey, Branzburg & Ellers LLP, Philadelphia, PA, Counsel for the Debtor.
Daniel Luke McAuliffe, DrinkerBiddle & Reath LLP, Philadelphia, PA, Counsel for Citibank.
Gary Seitz, Esqurie, The Bayard Firm, Wilmington, DE, George Conway, Esquire, Office of the U.S. Trustee, Philadelphia, PA, Chapter 7 Trustee.
OPINION
STEPHEN RASLAVICH, Bankruptcy Judge.
Introduction.
Before the Court are objections to certain exemptions claimed by the above Chapter 7 Debtor, Kathleen K. Bellwoar. The objections are interposed by Citibank, N.A., a creditor which the Debtor has scheduled as having a general unsecured claim against her in the disputed amount of $162,298.62.
As originally filed, Citibank's objections ran to a number of the Debtor's exemption claims. In a supplemental filing, however, Citibank retreated from all but the two which will be discussed herein. The Chapter 7 Trustee has filed a response in which he adopts Citibank's position vis a vis its two remaining objections and asks that his original report of "no assets" be withdrawn. The Debtor filed a written response in defense of her exemption claims and an evidentiary hearing was held on September 24, 2003. For the reasons which follow, the objections will be sustained in part and denied in part.
Background.
The Debtor is a former partner in the accounting firm of Arthur Anderson & Company. As is widely known, the once prominent Anderson firm closed its doors after it was indicted for its role in the failure of Enron Corporation. Citibank is a creditor of Anderson and is asserting liability on the part of Anderson's former partners for Anderson's debt to it. Such a claim against the Debtor was apparently the impetus for her filing this case. Although married, the Debtor filed this Chapter 7 case individually.
*371 The Debtor's exemption claims are set forth on Bankruptcy Schedule C. As permitted, the Debtor declined the federal exemptions available to her under 11 U.S.C. § 522(d) and instead elected the state exemptions described in 11 U.S.C. § 522(b)(2). With one exception, the Debtor's exemption claims are based on her ownership of the property in question as a tenant by the entireties with her spouse, H.Jay Bellwoar. The lone exception pertains to funds in a 401(k) retirement account which are owned by the Debtor individually, but which are claimed by her as exempt pursuant to 42 Pa.C.S.A. § 8124.
The two objections still at issue go to a small portion of the funds in the aforesaid retirement account and to the entirety of a $373,692.00 fund on deposit in an account with a securities brokerage firm. The essence of Citibank's objections is that the state laws which the Debtor invokes in support of her exemption claims do not entitle her to such exemptions. The Court will analyze each objection in turn.
Discussion.
A. 401(k) Account
This objection can be dealt with quickly. The Debtor lists the value of the retirement account as $160,681 and claims the entirety thereof as exempt. At the hearing in this matter, Citibank reversed its position and agreed that the bulk of this fund is exempt for present purposes by virtue of 42 Pa.C.S.A. § 8124(b)(IX). However, Citibank argues that under 42 Pa.C.S.A. § 8124(b)(IX)(A), any funds contributed to the account in the one year preceding the Debtor's bankruptcy filing do not qualify for the exemption. Citibank presses its objection to that portion of the fund that does not qualify by virtue of this caveat to the statute in question. The Debtor concedes Citibank's legal theory, and acknowledges as well that approximately $12,000 was contributed to the retirement account within one year of her bankruptcy filing. The Debtor is agreeable to turnover of the non-exempt portion of the fund to the Chapter 7 Trustee, but the parties remain divided over whether the entire non-qualified amount must be turned over to the Trustee, or only that portion thereof which is available to the Debtor after deduction for deferred income taxes and/or the tax penalty which will be assessed against the Debtor by virtue of her early withdrawal of the funds. Because the amount in controversy is relatively small, the parties indicated to the Court that this aspect of their dispute may be considered resolved, subject to their requesting that the Court revisit the matter if it should become necessary for the Court to liquidate the precise amount to be turned over to the Trustee.
B. Securities Brokerage Account.
The Debtor's exemption claim with respect to the funds on deposit with UBS PW Securities is premised on her ownership of the funds as a tenant by the entirety with her spouse. Other things being equal, there is little question that entireties property cannot be reached by creditors of only one spouse and the Debtor would therefore be entitled to the claimed exemption. See generally, Napotnik v. Equibank and Parkvale Savings Association, 679 F.2d 316 (3d Cir.1982).
The rub here arises because Citibank maintains that the subject account is not in fact owned by the Bellwoars by the entireties. Citibank, as the objecting creditor, bears the burden of proving this contention. B.R. 4003(c); Kaplan v. First Options of Chicago, Inc. 189 B.R. 882, 888 (E.D.Pa.1995).
In support of its position, Citibank relies exclusively on the new account application *372 completed by the Bellwoars in 1992 with the predecessor of UBS PW, i.e., Kidder Peabody and Company. The application form (Exhibit D-1) has on its first page a box containing various abbreviations for the type of account being opened, with smaller boxes next to each abbreviation for a check mark. The abbreviation box checked on the Bellwoar application is "JT Ten." Next to this is an abbreviation box designated "Ten Ent." This box is not checked. Above this section of the form is another box entitled "Account Classification" and in this box are printed the words "JT Ten." On the strength of this, Citibank maintains that the Bellwoars have evinced an intent to hold the funds in this account as other than tenants by the entireties and thus the state law exemption for entireties property does not extend to the account. The Court disagrees.
Under Pennsylvania law, there is a strong presumption that property owned jointly by a husband and wife is held by them as tenants by the entireties. See e.g., DeCoatsworth v. Jones, 414 Pa.Super. 589, 595, 607 A.2d 1094, 1097 (1992), aff'd in part and rev'd in part 536 Pa. 414, 639 A.2d 792 (1994). Indeed, the presumption has been specifically applied to funds on deposit:
Where property or an account is placed in the names of a husband and wife, a gift and the creation of an estate by the entireties is presumed even though the funds used to acquire the property or to establish the account were exclusively those of the husband. [citation omitted]. The placing of the property in both names, without more, creates an estate by the entireties. [citations omitted]. It is their actual marital status and not necessarily the words stated or omitted in the instrument that determines their right to take as tenants by the entirety. [citations omitted]. In order to overcome the presumption that an estate by the entireties exists and that a complete gift ensued therefrom, there must be clear and convincing evidence to the contrary. [citations omitted]. Even where a husband places the property in both names without his wife's knowledge or consent, a valid gift occurs. [citation omitted]. Likewise, if a husband acquires property with his own funds, and places it in the names of himself and wife, this constitutes a gift and an estate by the entireties, even though he exclusively receives the income therefrom during his lifetime. [citation omitted]. The same principles apply whether real estate, personal property or stocks and securities are involved.
In re Estate of Holmes, 414 Pa. 403, 406-07, 200 A.2d 745, 747 (1964); accord Constitution Bank v. Olson, 423 Pa.Super. 134, 142, 620 A.2d 1146, 1150-51 (1993).[1]
Citibank has failed to rebut the above-described presumption. As noted, the sole evidence offered in support of the proposition that the Bellwoars intended to hold the securities account other then by the entireties is the account application form. Each of the Bellwoars, however, testified that they hold, and have always intended to hold, all of their assets as marital property.[2] They further *373 testified that they did not notice, let alone understand, the significance, if any, of the box which was checked on the new account application form, which form, although signed by the Bellwoars, was completed by a brokerage account representative. The Court credits the testimony of the Bellwoars in all respects. Moreover, the brokerage account representative responsible for the Bellwoar account also appeared at the hearing and testified credibly that it was his firm's standard operating procedure to automatically check the joint tenancy box for all new married couple accounts, without consultation with the applicant, and that this was what was done in the case of the Bellwoars. One plausible reason for this procedure may be that on page 2 of the pre-printed account application form, where the signature lines appear, there is no reference to a tenancy by the entireties account. Rather, there are signature blocks only for accounts opened as joint tenancies with the right of survivorship, or tenancies in common.
On the totality of this record, the Court is unpersuaded that Citibank has carried its burden of proof by a preponderance of the evidence, let alone by the higher standard of clear and convincing evidence, which present controlling authority mandates.[3] The Bank's objection to the exemption claim with respect to the securities brokerage account shall therefore be denied.
An appropriate Order follows.
ORDER
AND NOW, upon consideration of the Objection of Citibank, N.A. to the Debtor's claim of exemptions, all responses thereto, and after hearing held September 24, 2003, it is hereby:
ORDERED, that the Objections be and hereby are sustained in part and denied in part, as follows:
The Objection to the exemptibility of funds deposited into the Debtor's 401K retirement account within the one year preceding the filing of her bankruptcy case is sustained. The Debtor shall turnover to the Trustee such funds as the parties mutually agree are subject to this ruling, without prejudice to the parties' right to request re-listing of this aspect of this dispute should they be unable to agree on the precise amount. The objection to the Debtor's claim of exemption to the UBS PW securities brokerage account is Denied for the reasons set forth in the within Opinion.
NOTES
[1] The court notes that the Pennsylvania Supreme Court has intimated in dicta that the presumption may perhaps in some cases be rebutted by a preponderance of the evidence. Sutliff v. Sutliff, 518 Pa. 378, 386-87, 543 A.2d 534, 538-539 (1988).
[2] It is undisputed that they do hold all other property in this fashion, with the exception of Mrs. Bellwoar's retirement account and one vehicle which is owned by Mr. Bellwoar alone and 2 vehicles which are leased by Mr. Bellwoar individually. The Court considers these deviations to be of scant probative weight with respect to the question of ownership of the securities account.
[3] "The clear and convincing standard requires evidence that is `so clear, direct, weighty, and convincing as to enable the jury to come to a clear conviction, without hesitancy, of the trust of the precise facts of the issue.'" Calle v. York Hospital, 232 F.Supp.2d 353, 360-61 (M.D.Pa.2002)(quoting Rohm and Haas Co. v. Continental Cas. Co., 566 Pa. 464, 781 A.2d 1172, 1179 (2001)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2003461/ | 122 B.R. 582 (1990)
In re Thomas Raymond WHITELOCK and Peggy Whitelock, Debtors.
Bankruptcy No. 90B-00844.
United States Bankruptcy Court, D. Utah, C.D.
December 26, 1990.
*583 *584 Ronald G. Schiess, Salt Lake City, Utah, for Thomas Raymond Whitelock and Peggy Whitelock, debtors.
Barbara W. Richman, Salt Lake City, Utah, Standing Chapter 13 Trustee, pro se.
MEMORANDUM DECISION AND ORDER
JUDITH A. BOULDEN, Bankruptcy Judge.
Thomas and Peggy Whitelock (Whitelocks), the debtors in this chapter 13 case, sought confirmation of a plan providing full payment plus interest of a specially classified cosigned unsecured claim. Noncosigned unsecured claimants were to receive a thirty percent dividend on their claims. Barbara W. Richman (Richman), the Standing Chapter 13 Trustee, objected to confirmation asserting the separate classification and disparate treatment were impermissively discriminatory. This court concurs with Richman and, based upon the unfair discrimination against unsecured creditors contained in the plan and other factors, denies confirmation of the Whitelocks' plan.
JURISDICTION
The court has jurisdiction over the parties to and the subject matter of this contested matter pursuant to 28 U.S.C. §§ 157(b) and 1334(b). Venue in this division is proper. This is a core proceeding within the meaning of 28 U.S.C. § 157(b)(2)(L).
FACTS
On February 7, 1990, the Whitelocks filed a petition for relief under chapter 13 of the Bankruptcy Code.[1] The facts which, in part, necessitated the filing are as follows. In 1985, Thomas Whitelock incurred a substantial debt to the Internal Revenue Service (IRS). The evidence presented was inconclusive regarding whether the tax liability was consumer or business related. On October 11, 1985, Thomas Whitelock borrowed $15,898.38 at 15.66% interest from First Security Financial (FSF) to satisfy the IRS obligation. The payment schedule on the note required forty-seven monthly payments of $220 with a balloon payment of $14,842.78 on the October 26, 1989, due date. Though no separate evidence was presented to the court, the note evidencing the debt to FSF indicated that the loan was secured by real property, a single family residence, located at 255 Browning Avenue, Salt Lake City, Utah. The note allocated the distribution of the $15,432.38 loan proceeds to "makers and I.R.S."
On November 6, 1989, shortly after the balloon payment was due and a little over ninety days prior to filing this petition, Thomas Whitelock along with his mother, Erma S. Whitelock, executed a second note in favor of First Security Bank of Utah. N.A. (FSB) that was used to pay off the *585 prior FSF note. The second loan was secured by a deed of trust on Erma Whitelock's home, also indicated as being located at 255 Browning Avenue, Salt Lake City, Utah. Thomas Whitelock possessed no legal interest in the real property, but Erma Whitelock executed the deed of trust to assist him in acquiring the loan. The second note, in the amount of $18,186.30 with a fixed 13.46% a.p.r., required 108 monthly payments of $286.52 but contained no balloon payment. According to the Whitelocks' chapter 13 statement, only $573 had been paid on the FSB note as of the date of filing.
Thomas Whitelock alleges he was not contemplating filing bankruptcy at the time the second loan was obtained three months before this filing. Even if the court were inclined to accept this statement as true, it is evident that the Whitelocks were in serious financial circumstances at the time. On their original chapter 13 statement, the Whitelocks listed their total debts as $89,698, of which $35,993 comprised unsecured claims.[2] Assets were valued at $51,076. The dates upon which the unsecured debts were incurred were omitted from the chapter 13 statement. An amendment ordered by the court revealed that these unsecured claims were incurred within approximately two years of the filing of the petition, and all were in existence at or prior to the November 6, 1989, transaction with FSB. With exception of the FSB cosigned claim of $17,500, nine of the Whitelocks'[3] remaining ten unsecured obligations were credit card debts, each having a substantial balance.
Thomas Whitelock testified that the expenses in November 1989 for his family of three[4] were approximately the same as the expenses set forth in the monthly budget filed with the February 1990 petition. The Whitelocks amended their budget on August 7, 1990, however, to increase their total monthly expenses from $1,139 to $1,406. The amendment increased the expenses for utilities from $164 to $231, home maintenance from $25 to $50,[5] automobile insurance from $50 to $72, transportation from $100 to $150, food from $250 to $300, medical from $25 to $55, laundry from $20 to $25, periodicals from $10 to $16, recreation from $40 to $50, and haircare from $20 to $27. Only one item, the expense for clothing, was decreased from $50 to $45.
Peggy Whitelock was unemployed at the time of the FSB transaction. Previously, she had been employed at Wescom Marketing for part of 1989. Thomas Whitelock testified Peggy Whitelock was looking for work at the time of the FSB transaction, and he anticipated her income to satisfy the obligation. A response filed to the trustee's objection to confirmation and signed by the Whitelock's counsel indicated Peggy Whitelock had elected to remain at home with her minor child. Peggy Whitelock filed a petition for relief under chapter 7 of the Bankruptcy Code on September 15, 1989, and received a discharge of her debts on January 2, 1990, one month before this filing.
*586 At the time, three months prior to filing, that he signed the second note to FSB, Thomas Whitelock was employed as a salesperson for Marshall Industries, where he had worked since January of 1988. He earned $2,200 as a monthly gross base salary plus an average of $600 to $700 in incentives. He testified his income fluctuated monthly in the range of $100 to $1,000 in excess of his regular salary depending upon the incentive program. Thomas Whitelock testified that he received an increase of approximately $150 a month in his salary shortly before this filing. However, he indicated the increase in sales income that he anticipated when he signed the second note to FSB was not forthcoming. The amended chapter 13 budget reflected only $2,079 net income. The court cannot reconcile the income figures in the sworn statements with Thomas Whitelock's testimony.
The amended plan dated July 19, 1990, proposed to submit payments of $673 per month (the Whitelocks' entire projected disposable monthly income) for sixty months, plus a contribution of the funds paid into the plan prior to confirmation. The plan classified into one class all unsecured claims except the FSB cosigned claim that was separately classified. Unsecured claimants except FSB would be paid thirty percent of their claims, but the plan proposed full payment of the FSB claim plus a thirteen percent discount factor. This treatment would result in the accelerated payment of FSB's claim in 60 months, instead of the 108 months provided by the terms of the note.
The Whitelocks are poised to benefit from the proposed plan through the elimination of several monthly obligations. They are surrendering a 1988 Pontiac Grand Am, a snowmobile, and a rental residence, none of which have any marketable equity. The file reflects the monthly payment on the automobile as $348.54, on the snowmobile as $90.38, and on the real property as $380.93. Collectively, the Whitelocks are saving payments of $819.85 per month by this filing and the surrender of the collateral.[6] Their payment into the plan for distribution to all remaining debt, however, is only $673. While the Bankruptcy Code permits and encourages such consolidation, it is some indication of the Whitelocks' ability to service debt prepetition and concurrently the inaccuracy of their amended budget.
Thomas Whitelock stated his reason for filing the chapter 13 petition was to forestall FSB from foreclosing on Erma Whitelock's home. He testified that he felt payments toward his mother's obligation took precedence over payments to other creditors. No evidence suggests that FSB has either approached Erma Whitelock for payments, attempted to foreclose, or filed a proof of claim in this case. Nor is there any indication FSB has required that the note be paid on an accelerated basis. No notice of the bankruptcy petition had been given to Erma Whitelock, and her son testified she had no knowledge of this proceeding, even though she is a co-obligor and as such is a contingent claimant of this estate.
LEGAL ANALYSIS
The Whitelocks argue that they may properly categorize the cosigned claim and accord it special treatment pursuant to section 1322(b)(1). Further, they assert that their proposed separate classification does not discriminate unfairly and that the different treatment is allowed because the debt is a consumer debt upon which Erma Whitelock is jointly liable.
A. CONSUMER DEBT
The threshold issue is whether the debt owed to FSB is a consumer debt. Section 101(7) defines a consumer debt as "debt incurred by an individual primarily *587 for a personal, family, or household purpose." The legislative history of the section points out that the definition was adapted from the "definition used in various consumer protection laws." H.R.Rep. No. 595, 95th Cong., 1st Sess. 309 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 22 (1978); 124 Cong.Rep. H11,090; S17,406; 1978 U.S.Code Cong. & Admin.News 5787, 5808, 6266. The Tenth Circuit Court of Appeals has adhered to the intent of Congress and the rationale of consumer laws, stating that the "courts have turned to the test articulated in cases decided under those [consumer protection] laws to determine when a debt falls within the above description." Citizens Nat'l Bank v. Burns (In re Burns), 894 F.2d 361, 363 (10th Cir.1990).
Although the Whitelocks possess no legal interest in the real property owned by Erma Whitelock, the property secures the note in favor of FSB. This security interest is relevant in that the legislative history of section 101(7) provides the following limitation: "A consumer debt does not include a debt to any extent the debt is secured by real property." 124 Cong.Rec. H11,090 (daily ed. Sept. 28, 1978) (statement of Rep. Edwards); 124 Cong.Rec. S17,406 (daily ed. Oct. 6, 1978) (statement of Sen. DeConcini). There exists a split of authority relating to whether obligations secured by real property constitute consumer debts.[7]
The court must look to the purpose of the debt to determine its inclusion within the consumer debt definition. Thomas Whitelock testified that the purpose of the original loan with FSF was to pay off a debt to the IRS, and that the purpose of the renegotiated loan with FSB was to pay off the FSF note.[8] The FSB loan is an expenditure that serves a family or household purpose. The converse of a business debt in a chapter 13 context is presumptively a consumer debt. There is no substantial indication that the repayment of the FSF debt was in any manner business related.
Notwithstanding the fact the underlying debt in this case is secured by real property, this court finds that the debt is a consumer debt. The court agrees with the Ninth Circuit statement in Kelly that the statutory scheme so "clearly contemplates *588 that consumer debt include debt secured by real property that there is no room left for any other conclusion." Kelly, 841 F.2d at 912.[9] Furthermore, reliance on conflicting legislative history rather than on the language of the statute "stands the process of statutory interpretation on its head." 841 F.2d at 912.[10] Nevertheless, the evidence regarding the nature of the tax claim is so inconclusive that the court will consider it a consumer debt.
B. CLASSIFICATION OF UNSECURED CLAIMS AND UNFAIR DISCRIMINATION
The Whitelocks' plan separately classifies the cosigned unsecured claim of FSB from other unsecured claims. Richman argues that this categorization is an improper classification. Section 1322(b)(1) provides that a plan may
designate a class or classes of unsecured claims, as provided in section 1122 of this title, but may not discriminate unfairly against any class so designated; however, such plan may treat claims for a consumer debt of the debtor if an individual is liable on such consumer debt with the debtor differently than other unsecured claims.
Subsection 1322(b)(1) was specifically amended by the Bankruptcy Amendments and Federal Judgeship Act of 1984 (BAFJA) to allow cosigned consumer debts to be treated differently than other unsecured claims.[11] There being no official legislative history on the 1984 amendment to section 1322(b)(1), this court finds instructive the BAFJA quasi-legislative history:
"Although there may be no theoretical differences between co-debtor claims and others, there are important practical differences" that must be recognized. Because codebtors are often relatives or friends, the debtor may feel a great need to pay the debt in full, even if that is not permitted within the chapter 13 plan. If the debtor can be required to devote all disposable income to the plan, the conflicting desire to voluntarily make payments outside the plan on a cosigned debt may spell failure for the plan by leaving insufficient income to keep up plan payments. "If, as a practical matter, the debtor is going to pay the codebtor claim, he should be permitted to separately classify it in chapter 13."
5 Collier on Bankruptcy ¶ 1322.05[1] at 1322-10 (15th ed. 1989) citing S.Rep. No. 65, 98th Cong., 1st Sess. 17-18 (1983). One stated reason for the amendment and debtors' increased flexibility to classify claims was to encourage individuals to file their petitions under chapter 13 instead of chapter 7. See In re Perkins, 55 B.R. 422, 425. (Bankr.N.D.Okla.1985). The limitations imposed in sections 1322(a)(3) and (b)(1) pose no prohibition against the Whitelocks' proposed classification.
The court need not find if the different treatment of FSB's claim discriminates against a certain class, it need only determine if the discrimination is unfair. The decision is to be made on a flexible, case-by-case approach, taking into account the particular facts and circumstances of each case. The debtors have the burden of establishing the rationale and fairness of a discriminatory treatment of unsecured claims. In re Furlow, 70 B.R. 973, 977 (Bankr.E.D.Pa.1987); In re Cook, 26 B.R. 187, 190 (Bankr.N.M.1982).
*589 The Ninth Circuit Bankruptcy Appellate Panel in Amfac Distrib. Corp. v. Wolff (In re Wolff), 22 B.R. 510 (Bankr. 9th Cir.1982) (per curiam) delineated a four-factor test to determine fairness. Wolff held that different treatment and classification do not unfairly discriminate if the following factors are fulfilled:
1. The discrimination has a reasonable basis,
2. The debtor cannot carry out a plan without such discrimination,
3. The discrimination is proposed in good faith, and
4. The degree of discrimination is directly related to the basis or rationale for the discrimination.
Id. at 512. The panel recognized the above factors enunciated in In re Kovich, 4 B.R. 403 (Bankr.W.D.Mich.1980) and In re Dziedzic, 9 B.R. 424 (Bankr.S.D.Tex.1981) and followed by most courts that have dealt with this issue. This court will utilize the Wolff test as one of several possible elements in determining fairness. The third factor of the test has become convoluted as a result of the plethora of cases that have attempted to define good faith. Therefore, the third factor is modified so as to inquire whether the discrimination manipulates the bankruptcy system and thereby abuses the provisions, purpose, or spirit of chapter 13.
The Whitelocks present the analysis of two cases to support their contention: In re Lawson, 93 B.R. 979 (Bankr.N.D.Ill. 1988) and In re Hamilton, 102 B.R. 498 (Bankr.W.D.Va.1989). The Whitelocks and the court in Lawson prefer replacing the long established four-part test for determining unfairness with the following test: "[A] discrimination is `fair,' and therefore permissible, to the extent, and only to the extent, that it rationally furthers an articulated, legitimate interest of the debtor." 102 B.R. at 502.[12] In Lawson, however, the court specifically interpreted section 1322(b)(1) to disallow a chapter 13 debtor from "advanc[ing] any personal interest by discriminating in the treatment of unsecured creditors." 93 B.R. at 984. Lawson reasoned that this type of discrimination "could lead to approval of discrimination on purely personal grounds, like family relationships and friendship" a situation analogous to that of the Whitelocks. 93 B.R. at 984. In Hamilton, a chapter 13 plan that classified cosigned debts on student loans incurred by and solely for the benefit of the debtors' children separately from the other unsecured debts and paid approximately fourteen percent and five percent of the claims in each class, respectively, was held to unfairly discriminate. The court held that "the desire of parents to protect their children from the claims of creditors" did not "constitute a legitimate interest of the debtor." 102 B.R. at 502.
1. Reasonable Basis for Discrimination
The court in In re Green, 70 B.R. 164, 166-67 (Bankr.W.D.Ark.1986),[13] established that the determinative factors in the fairness of a proposed discrimination are whether the discrimination is supported by a reasonable basis and whether there is significant justification for dissimilar treatment. Certain justifications have been found not to provide a reasonable basis: the imposition of a criminal jail sentence upon nonpayment of restitution, In re Bowles, 48 B.R. 502, 508 (Bankr.E.D.Va. 1985); the existence of cosigned student *590 loans, Hamilton, 102 B.R. at 501; the contingent nature of a claim, In re Diaz, 97 B.R. 903, 905 (Bankr.S.D. Ohio 1989); personal animus toward the creditor, In re Storberg, 94 B.R. 144, 146 (Bankr.D.Minn. 1988). Discrimination on the basis that past due nondischargeable alimony or child support obligations are involved is reasonable.[14] Where the debtor found it imperative to maintain confidence and harmony with his police street partner, discrimination was rationally based. In re Todd, 65 B.R. 249, 253 (Bankr.N.D.Ill.1986). Another acceptable rationale is the facilitation or improvement of a debtor's rehabilitation.[15]
The mere fact that real property owned by Erma Whitelock secures FSB's claim is not valid justification for paying FSB excessively more than other unsecured claimants on an accelerated basis. This is the type of discrimination based upon purely personal grounds that Lawson cautioned against. Fair discrimination requires more justification than simply the personal preference of a debtor; accordingly, dissimilar treatment must be justified as fair and reasonable. In re Hosler, 12 B.R. 395, 396 (Bankr.S.D. Ohio 1981). The Whitelocks have not indicated that Erma Whitelock cannot make the payments on the obligation that she cosigned or that FSB intends to foreclose if it is not treated as set forth in the plan. Indeed, it would be extremely unusual for a banking institution to require acceleration of a note in this manner. Thomas Whitelock asserts that he feels a strong moral obligation to repay the debt in full, as he rightfully should. That feeling alone, however, is insufficient to indicate that the discrimination against other unsecured creditors is fair.
2. Ability to Carry Out a Plan Without Such Discrimination
The Whitelocks have put forth no evidence that their plan could not be carried out without the proposed discrimination. Determination of the ability to effectuate a plan without disparate treatment of a disfavored class generally necessitates an examination of whether the treatment protects a relationship with a specific creditor that the debtors need to reorganize successfully. See generally In re Perskin, 9 B.R. 626, 632 (Bankr.N.D.Tex.1981) (debtor's occupation as traveling salesperson required favored treatment of two credit card claimants). The section 1301(a) stay protection for codebtors insulates the Whitelocks from indirect creditor pressure that might be exerted against cosigners or guarantors. FSB's possible action against Erma Whitelock, to the extent permitted by section 1301(a), poses minimal threat to the viability of an amended nondiscriminatory plan.[16] Furthermore, there is no evidence that either Erma Whitelock or FSB assert an overbearing control over the Whitelocks' employment or financial affairs.
3. Discrimination is Not Manipulative of the Bankruptcy System
Despite the inclusion of a good *591 faith factor[17] within the long-established Wolff four-prong test, a more limited focus on whether the proposed discrimination manipulated the bankruptcy system and abused the provisions, purpose, or spirit of chapter 13 would be helpful. Therefore, a court should preliminarily investigate the intent or motive of the debtor in proposing the discrimination in question.[18] The Whitelocks testified that full payment to FSB was a primary feature of the plan to avoid any consequence resulting from action taken by FSB to collect on or foreclose the interest in Erma Whitelock's home.
The court, recognizing that a plan may appropriately be proposed for various reasons, has considered the Whitelocks' single-minded purpose. However, although there exists a "certain latitude in discriminating between some claims[,] that latitude is circumscribed still by the measurements of equity and fairness." In re Young, 102 B.R. 1022, 1023 (Bankr.W.D.Mo.1989). An inquiry into fairness involves more than ascertaining the rationality of the debtors' proposed discrimination.
The Whitelocks' attempt to convert an obligation that would be paid over 108 months by its contractual terms and now accelerate the payment over only 60 months, to the considerable disadvantage of their unsecured creditors, is indicative of abuse of the chapter 13 system. Payments on the FSB obligations would have amortized at $286.52 per month. Now the obligation will be paid at almost twice that rate, with little left for other creditors. Thomas Whitelock's cavalier attitude toward paying unsecured claims other than FSB's claim is additional indication of the unfairness in the disparate treatment. Consequently, the intent of the Whitelocks and their concomitant attempt to shorten the time within which the FSB debt is repaid at the expense of other unsecured creditors evidences a manipulation of the chapter 13 system.
4. Degree of Discrimination Relates to the Basis for Discrimination
There is a distinction between treating a claim differently and discriminating against it unfairly.[19] Considering the circumstances presented here, a seventy percent differential in the amounts paid on cosigned versus non-cosigned debts is unfair. See Hosler, 12 B.R. at 396 (a twenty percent versus one hundred percent return difference was determined significant). Furthermore, the degree of differential treatment does not directly relate to the discrimination's basis. See Freshley, 69 B.R. at 97. The court finds useful an examination of the amounts proposed "for repayment to each class of unsecured claims in light of the rationale for separate classification." In re Johnson, 69 B.R. 726, 729 (Bankr.W.D.N.Y.1987) (an eighty-five percent differential in the amount paid each class was unfair). No bright-line test on the percentage difference between the classes is available, any more than a certain percentage return constitutes good faith. However, a grossly disproportionate percentage repayment, an unjustifiable order of payment, a discount factor with no reasonable basis or, as in this case, an accelerated payment beyond a legal obligation at the expense of other creditors, are all indicia of unfairness.
*592 C. CONFIRMATION OF THE PLAN UNDER SECTION 1325
1. Good Faith
Section 1325(a)(3) mandates that the court "confirm a plan if . . . the plan has been proposed in good faith and not by any means forbidden by law." The Tenth Circuit has interpreted section 1325(a)(3) to require "an inquiry, on a case-by-case basis, into whether the plan abuses the provisions, purpose or spirit of Chapter 13." Flygare v. Boulden, 709 F.2d 1344, 1347 (10th Cir.1983) citing United States v. Estus (In re Estus), 695 F.2d 311, 315 (8th Cir.1982). The more recent opinion of Pioneer Bank v. Rasmussen (In re Rasmussen), 888 F.2d 703, 704 (10th Cir.1989) has reinforced the continuing tenacity of Flygare as good law by favorably reiterating the eleven-factor guideline adopted in Flygare.[20] Of the eleven elements set forth in Flygare, at least five of the elements suggesting bad faith are present in this case. The Whitelocks' schedules are incomplete and their budget at variance with Thomas Whitelock's testimony. The seventy percent differential proposed by the plan, demonstrates extreme preferential treatment between classes of creditors.
No extraordinary reasons or unforeseen circumstances triggered the filing of the petition. To the contrary, it is apparent the debt existed at the time the obligation with FSB was incurred. Peggy Whitelock received a discharge of her debts immediately prior to this filing. According to the Tenth Circuit, both "pre-petition conduct and prior bankruptcy filings by the debtor may be relevant to the good faith inquiry under § 1325(a)(3)." Rasmussen, 888 F.2d at 704, citing Neufeld v. Freeman, 794 F.2d 149, 150 (4th Cir.1986). The court remains unconvinced as to the Whitelocks' desire to repay creditors other than FSB, given Thomas Whitelock's adamant testimony regarding his moral obligation to repay this debt at the expense of others. The amendment to the budget increasing virtually all expenses and reflecting income at variance with Thomas Whitelock's testimony is also indicative of the Whitelocks' motivation and lack of sincerity. The court finds it telling that the current filing was initiated only one month following Peggy Whitelock's discharge in the chapter 7 case and slightly more than ninety days after the FSB note was renegotiated.
A determination of good faith under the Flygare totality of the circumstances approach dictates against confirmation of the Whitelocks' plan. Approving confirmation would have the effect of unfairly manipulating the chapter 13 bankruptcy system, an action prohibited by Rasmussen. Thomas Whitelock's statement that he had no intention to file this petition at the time he incurred the FSB obligation is not credible. Little change of circumstances occurred in the ninety-day interval except that Peggy Whitelock received her chapter 7 discharge. The totality of the foregoing facts and circumstances, inclusive of the inordinately unfair discrimination against unsecured claimants other than FSB, evidences a less than good faith proposal of the plan.
2. Projected Disposable Income
Section 1325(b) provides that if the trustee objects to confirmation, the court may not approve a plan unless unsecured claims are to be paid in full or the plan commits the debtors' projected disposable income for three years. Disposable income is defined in section 1325(b)(2)(A) as income not reasonably necessary for the maintenance *593 or support of the debtors or their dependents. The 1984 amendment adding the disposable income test did not obviate all the circumstances utilized to determine good faith previous to 1984.[21]
This court has reviewed countless chapter 13 budgets and has an understanding of the amounts customarily listed as necessary expenses for a family of three in this area. While the amended budget of the Whitelocks is not extravagant, neither is it spartan. The upward adjustment of almost all categories, and the inclusion of cumulatively generous amounts for recreation, home maintenance, clothing, and personal grooming, demonstrate the Whitelocks' unwillingness to modify their lifestyle to satisfy their obligations. The cumulative evidence indicates that the inflated amended budget contains expenses not reasonably necessary for the Whitelocks' support or maintenance.
CONCLUSION
This court holds that the debt involved in this case is a consumer debt within the meaning of section 101(7), notwithstanding the accompanying conflicting legislative history. Although the claim fits within the exception in section 1322(b)(1) for consumer debts, the Whitelocks' plan unfairly discriminates against unsecured creditors holding non-cosigned debts, and consequently violates section 1322(b)(1) and therefore also section 1325(a)(1). Even under the Lawson test cited by the Whitelocks, the accelerated payment of FSB's claim fails to rationally further an articulated, legitimate interest of the debtors. Independent of the Whitelocks' failure to prove the fairness of the proposed discrimination, the plan would not be confirmable for other reasons. As presently drafted, the plan violates section 1325(a)(3), which requires that the plan be proposed in good faith, and violates section 1325(b), which requires that the plan commit the debtors' projected disposable income for payments under the plan. Therefore, it is hereby
ORDERED, that confirmation of the plan proposed by the Whitelocks is denied.
NOTES
[1] All statutory references throughout are to Title 11 of the U.S.Code, unless otherwise specified.
[2] If this case were liquidated under chapter 7, the pro rata return to unsecured creditors would be zero. If the plan in its present state were to be confirmed, FSB would be paid in full and other unsecured claimants would receive more than they would have received in a chapter 7 liquidation.
[3] The Whitelocks' attorney represented that the majority of the listed debt was incurred by Thomas Whitelock, Peggy Whitelock having received a chapter 7 discharge only one month prior to this filing. Despite the requirement in Official Form Number 10 that such information be provided in the chapter 13 statement, none of the documentation signed under oath specifically set forth whether the debt was jointly owed or that of Thomas Whitelock only.
[4] Thomas Whitelock testified as to the existence of Peggy Whitelock's daughter, a dependent undisclosed on the chapter 13 statement. Whitelock's attorney later represented to the court that the family included two children, not one. The chapter 13 statement is to be amended to accurately reflect the size of this family.
[5] The Whitelocks' chapter 13 statement does not list any real property other than a rental property that is to be surrendered to the secured creditor. Therefore, the $50 for home maintenance must either be in error or for the upkeep of an apartment.
[6] Included as collateral for secured claims not surrendered through the plan were a barbecue with a listed fair market value of $482 and wedding rings listed at $1,691. The plan provided for payment of a debt as a secured claim for federal income taxes owed for 1986 and 1988 in the amount of $2,747 with an eleven percent discount rate. The court lifted the automatic stay to allow an offset of a tax refund, so the remaining $2,775.59 claim of the IRS is now filed as an unsecured priority claim.
[7] The following cases hold that debts secured by realty are not consumer debts: In re Circle Five, Inc., 75 B.R. 686 (Bankr.D. Idaho 1987) (the court held that a consumer debt is not one secured by real estate and that for definitional purposes, the term "family" does not include adult children or relatives who are not part of the debtor's household); In re Green, 70 B.R. 164, 166 (Bankr.W.D.Ark.1986) (a debt secured by real property owned by the debtor's mother was considered a "nonconsumer" debt); In re Walton, 69 B.R. 150, 17 Collier Bankr.Cas.2d (MB) 124, 130 (E.D.Mo.1986) (the secured portion of a mortgage debt owed to HUD was not a consumer debt).
Other courts adopt the differing holding: McDaniel v. Nationwide, 85 B.R. 69, 70 (Bankr. N.D.Ill.1988) (a consumer debt, within the meaning of exception to avoidability for certain preferential transfers made by debtors with primarily consumer debts, can include debts secured by realty); Zolg v. Kelly (In re Kelly), 841 F.2d 908 (9th Cir.1988), aff'g 57 B.R. 536 (Bankr.D.Ariz.1986) (the court held that consumer debt may include debt secured by real property; however, "the exclusion of debts secured by real property is logical and consistent with the purpose behind section 707(b)"). The courts in McDaniel and Kelly construed section 101(7)'s definition of consumer debt in the context of the section 547(c)(7) exception to avoidability. The cases gave rise to a reference to the Code provision that states approval of a reaffirmation agreement is not required "to the extent that such debt is a consumer debt secured by real property." 11 U.S.C. § 524(c)(6)(B). Both courts reasoned that if a debt secured by realty could never be a consumer debt, then 11 U.S.C. § 524(c)(6)(B) would make no sense.
[8] The evidence establishing the nature of the tax liability Thomas Whitelock owed so as to require incurring the original obligation is inconclusive, though the amount of the debt, and the subsequent obligations incurred in 1986 may indicate involvement in a business enterprise rather than wage earner income taxes. The court in Harrison v. IRS (In re Harrison), 82 B.R. 557, 558 (Bankr.D.Colo.1987), held that "a tax liability is in no way a consumer debt because it originates from the earning of income not in the course of a consumption activity. "However, the Harrison decision may properly be narrowed to 11 U.S.C. § 1301(a) injunctions against collection of a consumer debt against a codebtor. See also Pressimone v. IRS (In re Pressimone), 39 B.R. 240, 245 (N.D.N.Y.1984) (not a consumer debt within meaning of 11 U.S.C. § 1301(a)).
[9] This rationale may be limited to purposes of determining substantial abuse under 11 U.S.C. § 707(b) and for consumer debts under 11 U.S.C. §§ 521(2), 524(c)(6)(B) and 524(d)(2).
[10] The Ninth Circuit stated that explanatory floor statements of legislators should not be used to expand the plain language of the congressional statement. The official committee reports provide the authoritative guide to deciphering legislative intent. Garcia v. United States, 469 U.S. 70, 105 S.Ct. 479, 83 L.Ed.2d 472 (1984). However, it is appropriate to go beyond a statute and review the legislative history only when the statute is ambiguous. United States v. Locke, 471 U.S. 84, 95, 105 S.Ct. 1785, 1792-93, 85 L.Ed.2d 64 (1985).
[11] Pub.L. No. 98-353, 98 Stat. 333. The 1984 amendment in effect overruled those aspects of In re lacovoni, 2 B.R. 256 (Bankr.D. Utah 1980) that declared the impropriety of separately classifying cosigned unsecured claims from other unsecured claims based solely on the existence of a co-obligor.
[12] The language relating to "an articulated, legitimate interest" is borrowed from the landmark constitutional rights case of San Antonio Indep. School Dist. v. Rodriguez, 411 U.S. 1, 17, 93 S.Ct. 1278, 1288, 36 L.Ed.2d 16 (1973). In Rodriguez, the U.S. Supreme Court examined whether a Texas system of school financing violated the equal protection clause of the Constitution by determining the extent to which the financing "rationally further[ed] some legitimate, articulated state purpose." 411 U.S. at 17, 93 S.Ct. at 1288. This court is reluctant to bring forward and adopt the panoply of constitutional and judicial scrutiny analysis entailed in Rodriguez and its progeny construing the legitimate interest articulation.
[13] Green contains facts most analogous to the case at hand. The debtors in Green proposed full payment on an unsecured claim in which the real property was owned by one debtor's mother. The remaining unsecured claimants were to be paid approximately twenty-five percent on their claims. The court found that debtors failed to prove significant justification for the dissimilar treatment and denied confirmation.
[14] In re Whittaker, 113 B.R. 531, 534 (Bankr.D. Minn.1990); In re Storberg, 94 B.R. 144, 146-48 (Bankr.D.Minn.1988); In re Davidson, 72 B.R. 384, 387 (Bankr.D.Colo.1987).
[15] In re Terry, 78 B.R. 171 at 173 (Bankr.E.D. Tenn.1987) ("A debtor's rehabilitation may be improved as the result of higher payments to doctors, hospitals, merchants, or schools with whom the debtor may deal in the future."); In re Freshley, 69 B.R. 96, 98 (Bankr.N.D.Ga.1986) (a plan that proposed repayment of the debtor's student loan so that he could return to school and earn a degree was found necessary for the debtor's rehabilitation.)
[16] It is not unforeseeably improbable that if debtors are required to amend their plan to pay cosigned claims less than full payment, that they may nevertheless surreptitiously cause additional payments to be made so that cosigned claimants are paid in full. However, the Whitelocks in this case possess the capability to pay more to the disfavored unsecured class as a result of their surrender of certain collateral that previously required substantial monthly expenditures. The court is not necessarily enjoining the Whitelocks or other chapter 13 debtors from paying one hundred percent to cosigned claimants where the circumstances properly allow full payment. Certainly, it is not the practice of this court to presume chapter 13 debtors will violate the statute by impermissibly paying creditors directly in violation of the terms of their plans.
[17] Some courts have adopted the rationale of Green, 70 B.R. at 166: "The factor of whether the discrimination is proposed in good faith is subsumed in the concept of good faith of the plan in general." See also Furlow, 70 B.R. at 977 (critical of third Wolff factor). While that rationale is valid, the determination that a proposed discrimination is unfair must usually be made before ever reaching the good faith merits of the plan.
[18] "The principal unfair discrimination issue raised by a selective plan is a debtor's motive for singling out the nonpriority claims included in the plan." Dole, Selective Chapter 13 Plans: A Permissible Use or a Prohibited Abuse of the Bankruptcy Code Following the 1984 Amendments? 3 Bankr.Dev.J. 511, 524 (1986).
[19] "[A] debtor's power to treat co-signed consumer debts `differently' has content separate from the proscription against unfair discrimination. The awkward language is resolved by holding that all different treatments are not necessarily fair discriminations." In re Easley, 72 B.R. 948, 956 (Bankr.M.D.Tenn.1987).
[20] 11 U.S.C. § 1325 was also amended in 1984 subsequent to the Flygare decision. Although the addition of 11 U.S.C. § 1325(b) encompasses many of the Flygare factors, the factors remain relevant to the good faith analysis in the Tenth Circuit. Contra In re Thompson, 116 B.R. 794 (D.Colo.1990). In dicta, Rasmussen noted the Eighth Circuit's narrowing of the 11 U.S.C. § 1325(a)(3) good faith analysis after the 1984 amendments to include only "whether the debtor has stated his debts and expenses accurately; whether he has made any fraudulent misrepresentation to mislead the bankruptcy court; or whether he has unfairly manipulated the Bankruptcy Code." Rasmussen, 888 F.2d at 704 n. 3, citing Education Assistance Corp. v. Zellner, 827 F.2d 1222 (8th Cir.1987) (the court preserved the totality of the circumstances approach to measure good faith). See also Handeen v. LeMaire (In re LeMaire), 898 F.2d 1346 (8th Cir. 1990) (modifying, yet reinforcing, the Estus totality of the circumstances approach).
[21] A Senate committee report suggests that fulfillment of the disposable income requirement allows confirmation where the debtors make substantial efforts to pay their debts, even though the payments themselves are not substantial. S.Rep. No. 65, 98th Cong., 1st Sess. 22 (1983). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2220361/ | 105 Ill.2d 414 (1985)
475 N.E.2d 840
THE PEOPLE OF THE STATE OF ILLINOIS, Appellee,
v.
GEORGE W. DEL VECCHIO, Appellant.
No. 52800.
Supreme Court of Illinois.
Opinion filed February 22, 1985.
Rehearing denied March 29, 1985.
*415 *416 *417 *418 *419 *420 *421 Daniel D. Yuhas, Deputy Defender, and David P. Bergschneider, Assistant Defender, of the Office of the State Appellate Defender, of Springfield, for appellant.
Neil F. Hartigan, Attorney General, of Springfield, and Richard M. Daley, State's Attorney, of Chicago (Mark Rotert, Assistant Attorney General, of Chicago, and Michael E. Shabat and Sara Dillery Hynes, Assistant State's Attorneys, of counsel), for the People.
Judgment affirmed.
*422 JUSTICE GOLDENHERSH delivered the opinion of the court:
In an indictment returned in the circuit court of Cook County, defendant, George W. Del Vecchio, was charged with murder (Ill. Rev. Stat. 1975, ch. 38, par. 9-1(a)(2)), rape (Ill. Rev. Stat. 1975, ch. 38, par. 11-1), deviate sexual assault (Ill. Rev. Stat. 1975, ch. 38, par. 11-3), and burglary (Ill. Rev. Stat. 1975, ch. 38, par. 19-1). Following a jury trial, defendant was found guilty of each of the charged offenses. In a hearing requested by the People, the jury found that there existed one or more of the factors set forth in section 9-1(b) of the Criminal Code of 1961 (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(b)) and that there were no mitigating factors sufficient to preclude a sentence of death. Defendant was sentenced to death, and the sentence was stayed (87 Ill.2d R. 609(a)) pending appeal to this court (Ill. Const. 1970, art. VI, sec. 4(b); 87 Ill.2d R. 603). The defendant was also sentenced to 15 years for rape, 6 years for deviate sexual assault, and 7 years for burglary.
At trial, Karen Canzoneri testified that she and her six-year-old son, Tony, occupied the first-floor and attic levels in a two-flat building in Chicago. On the evening of December 22, 1977, Mrs. Canzoneri, Tony, and Santo Falcone had driven to Lombard, where Mrs. Canzoneri purchased a stereo receiver. When they returned to Chicago they stopped at a tavern, and while there they saw defendant and his wife, Rose, both of whom they knew. When they left the tavern approximately a half hour later, Rose Del Vecchio came with them. After assembling the stereo which Mrs. Canzoneri had purchased, Falcone put Tony to bed downstairs. When Falcone returned upstairs, defendant was with him. Defendant brought with him a briefcase containing marijuana which he, Falcone, and Rose Del Vecchio smoked. After approximately *423 an hour, Mrs. Canzoneri asked them to leave.
At about dawn, Mrs. Canzoneri was awakened when she heard footsteps. When she asked who was there, defendant identified himself, stating he "wanted to talk." Mrs. Canzoneri attempted to shoot defendant with a pistol which Falcone had given her, but defendant slapped it out of her hand. Defendant would not permit her to check on Tony, responding that Tony was sleeping peacefully. When she attempted to leave the room to check on her son, defendant pushed her back on the bed, kissed her face, breasts, vagina, and legs, and despite her request to stop, had intercourse with her. During the intercourse, she heard a telephone ring. She asked defendant to let her answer it because it was probably her mother, who lived across the street. She told him that unless she answered the telephone, her mother would come over. Defendant did not respond. Mrs. Canzoneri could not determine which of the three telephones in the apartment was ringing. The ringing stopped. The telephone rang again and defendant went downstairs. Mrs. Canzoneri looked for the telephone but could find only the cord. The telephone, severed from the cord, was found later when the police searched the premises. She ran downstairs and across the street to her mother's house. Mrs. Canzoneri told her mother she had been raped and called the police.
Chicago police officer William Sacco testified that five police officers responded to the call of a rape in progress. Mrs. Canzoneri told the officers that there was a man with a gun in her house, that she knew the man and that it was defendant. After searching the first floor, the officers went up to the attic bedroom. Alerted by the sound of snow crunching outside the window, Officer Sacco saw defendant crawling on the roof and ordered him inside. Defendant responded by blurting, "I *424 didn't kill nobody." Defendant was arrested, given Miranda warnings, and handcuffed. Officer Richard Elmer testified that, after searching various areas of the building and interviewing a neighbor, he and other officers discovered a crawl space located under the stairs. They opened the door and found the body of Tony Canzoneri. Later examination showed that the boy's trachea, carotid artery, jugular vein and vagus nerve were completely severed, and the third and fourth cervical vertebrae were fractured.
It appears from the testimony that when she entered her home earlier that evening Mrs. Canzoneri left her purse on the kitchen table. Her purse, among other things, contained her keys, and a credit card. When defendant was taken into custody, the credit card was in his possession.
Defendant contends first that he did not receive effective assistance of counsel. The record shows that prior to trial defense counsel had indicated that the defense would be insanity. Counsel attempted to determine whether the circuit court would permit the People to rebut the insanity defense with evidence of defendant's 1965 convictions for murder, robbery and attempted robbery. The circuit court stated that until the evidence of insanity was presented it could not determine whether evidence of the prior convictions was relevant. Defendant contends that defense counsel should have made an offer of proof concerning the evidence which would be presented and that the failure to do so constituted ineffective assistance of counsel. Defendant argues that because of the failure to make an offer of proof counsel did not learn whether the circuit court would exclude evidence of the prior convictions and therefore were unable to make an informed tactical decision concerning the defense to be presented. Defendant contends that, as a result, counsel withdrew a meritorious insanity defense *425 and instead relied on an intoxication defense for which the evidence did not present a prima facie case.
The People contend that defendant received excellent representation. They state that defense counsel interviewed 30 to 40 witnesses, filed numerous pretrial motions, obtained court-ordered psychiatric examinations of defendant, vigorously cross-examined the People's witnesses, and called 24 witnesses to testify on behalf of defendant. The People further note that prior to the People's cross-examination of Dr. Stipes, who had testified concerning the effect of the ingestion of PCP, defense counsel, in limine, indicated they would tender an insanity instruction. The court offered defense counsel a choice of an insanity instruction, in which event the People would be permitted to rebut the defense with evidence of defendant's prior convictions, or forgoing an insanity instruction, thereby precluding introduction of evidence of the prior convictions. It was at this point, and for this reason, that defense counsel elected to withdraw the insanity defense and proceed on an intoxication theory.
In People v. Albanese (1984), 104 Ill.2d 504, after reviewing the Supreme Court's recent opinion in Strickland v. Washington (1984), 466 U.S. ___, 80 L.Ed.2d 674, 104 S.Ct. 2052, and this court's opinion in People v. Greer (1980), 79 Ill.2d 103, the court said:
"Although we do not foresee that application of the Strickland rule will produce results that vary significantly from those reached under Greer, we hereby adopt the Supreme Court rule for challenges to effectiveness of both retained and appointed counsel (see People v. Royse (1983), 99 Ill.2d 163, 170) and reject the single-component test of Twomey.
To assist lower courts, the Supreme Court also offered the following guidelines for applying its two-component standard: `[A] court need not determine whether counsel's performance was deficient before examining the prejudice *426 suffered by the defendant as a result of the alleged deficiencies. * * * If it is easier to dispose of an ineffectiveness claim on the ground of lack of sufficient prejudice, which we expect will often be so, that course should be followed.' 466 U.S. ___, ___, 80 L.Ed.2d 674, 699, 104 S.Ct. 2052, 2069-70." 104 Ill.2d 504, 526-27.
On this record, we are unable to say that defendant was prejudiced by counsel's alleged ineffectiveness. Clearly, defendant's contention that the evidence presented with respect to the intoxication defense failed to establish a prima facie case is without merit because an instruction was given on the intoxication defense and the jury chose to reject it. Obviously the jury also rejected the evidence of defendant's insanity adduced at the sentencing hearing because it failed to find the existence of the mitigating factor that "defendant was under the influence of extreme mental or emotional disturbance" (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(c)(2)). Thus, we are unable to say that counsel's performance caused substantial prejudice to the defendant without which the result of the trial would probably have been different.
Defendant contends next that he was denied a fair trial because of the assistant State's Attorneys' personal attacks on defense counsel and their improper argument that the defense was a fraud. In the cross-examination of a police officer, defense counsel attempted to show that the officer had refused to discuss the case with one of defendant's attorneys. On redirect examination the assistant State's Attorney asked the officer if it was "his practice to talk to defense attorneys, people who represent murderers?" In closing argument the assistant State's Attorney asserted that the jury had heard "many different defenses," with the defenses shifting first to one and then back to the other. Comment was made to the effect that the insanity defense had been withdrawn "because it wasn't working." In several instances objections *427 were sustained, and in one instance a motion for mistrial was denied.
It would have been better if the comments of which defendant complains had not been made, but on this record we conclude that the comments did not result in prejudice which requires reversal. Defendant has not denied that he committed the homicide, and the context in which the improper argument was made is unlikely to have influenced the jury in deciding the crucial question whether defendant's intoxication from the ingestion of PCP rendered him unable to form the intent necessary to commit the offense.
As the court said in People v. Smothers (1973), 55 Ill.2d 172:
"The character and scope of argument to the jury is left very largely to the trial court, and every reasonable presumption must be indulged in that the trial judge has performed his duty and properly exercised the discretion vested in him. (North Chicago Street Ry. Co. v. Cotton, 140 Ill. 486.) The general atmosphere of the trial is observed by the trial court, and 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." (55 Ill.2d 172, 176.)
We find no such abuse of discretion here.
Defendant contends next that the circuit court committed reversible error in permitting the People to introduce irrelevant testimony that defendant had committed adultery and to argue, without any basis in the evidence, that defendant and his wife engaged in deviate sexual activity. The testimony to which this contention refers was elicited during the cross-examination of defendant's wife, Rose Del Vecchio, who stated that Mary Blackstone had lived in their home and that during that period she had slept with defendant. The reference to improper prosecutorial *428 comment concerns a remark to the effect that defendant, his wife, and another woman were in bed together. This comment was in turn based on an attempt to elicit from Mrs. Del Vecchio the admission that there had been a lesbian relationship between the witness and Ms. Blackstone.
In the context of the entire record it is difficult to see that the relationship of either defendant or his wife with Ms. Blackstone was material to the issues in the case, but an argument can be made that in view of the wide-ranging direct testimony of Mrs. Del Vecchio the cross-examination concerning defendant's adultery with Ms. Blackstone may have been proper. In our opinion, however, neither question warrants lengthy analysis or discussion. Defendant's evidence shows that he was an admitted narcotics dealer, a regular user of PCP, and on the night of the occurrence in question, he asserts that he was so completely intoxicated by reason of the ingestion of PCP that he has no recollection of what occurred. In view of those circumstances we conclude that evidence of his adultery with Ms. Blackstone or the possibility that the jury may have concluded there was a lesbian relationship between defendant's wife and Ms. Blackstone would have had no prejudicial effect on the jury. This was not a situation where defendant denied the commission of the offenses; the only issue involving defendant's credibility was whether he was intoxicated at the time of the homicide. Under the circumstances we hold that if any error was committed, it was, beyond a reasonable doubt, harmless.
Defendant contends next that the circuit court erred in refusing to grant a mistrial or to excuse veniremen who overheard a juror state her personal opinion of the accused. Defendant contends that the circuit court should have interrogated the remaining veniremen concerning the effect of the remark. Upon commencement *429 of voir dire, the court instructed the prospective jurors that defendant was presumed innocent, that this presumption would be overcome only by proof of guilt beyond a reasonable doubt, and that they were to base their decision solely on the evidence presented at trial. The court then posed several questions to the prospective jurors collectively, regarding whether any had discussed the case. The court instructed them to answer by standing. If a prospective juror stood he would then be examined individually by the court. Following that questioning period, jurors were called to the jury box 12 at a time and examined individually in panels of four. One of the prospective jurors said she had read about and discussed the case. When asked whether she had reached an opinion of defendant's guilt, she responded, "I think the guy shouldn't be out walking the streets." The court then excused all five prospective jurors who had previously responded that they had knowledge of the case through pretrial publicity.
While our system of jurisprudence requires the participation of fair and impartial jurors, it is not necessary that they be totally ignorant of the facts of the case before they assume their roles as jurors. (Irvin v. Dowd (1961), 366 U.S. 717, 722, 6 L.Ed.2d 751, 756, 81 S.Ct. 1639, 1642.) The court excused those who had responded that they had previous knowledge of the case. The remaining veniremen who heard the comment had not otherwise heard about the case. We are unable to say that because of this single, isolated comment the jurors were unable to reach a verdict based solely on the evidence.
Defendant has also argued that the systematic exclusion of veniremen opposed to the death penalty denied him his right to a jury drawn from a fair cross-section of the community and resulted in a jury biased toward the prosecution. We have considered and rejected this latter *430 contention that qualifying a jury according to the principles of Witherspoon v. Illinois (1968), 391 U.S. 510, 20 L.Ed.2d 776, 88 S.Ct. 1770, results in a jury biased in favor of conviction (People v. Lewis (1981), 88 Ill.2d 129, 147, cert. denied (1982), 456 U.S. 1011, 73 L.Ed.2d 1308, 102 S.Ct. 2307) and decline to reconsider it here. Implicit in that holding was our conclusion that a jury chosen in accordance with the principles of Witherspoon does not deny defendant a jury drawn from a fair cross-section of the community.
We consider next defendant's contention that his sentence must be vacated because it was imposed by a jury which was selected in violation of the principles established in Witherspoon v. Illinois (1968), 391 U.S. 510, 20 L.Ed.2d 776, 88 S.Ct. 1770. In Witherspoon, the Supreme Court held that a sentence of death cannot be carried out if the jury that imposed or recommended it was chosen by excluding veniremen for cause simply because they voiced general objections to the death penalty or expressed conscientious or religious scruples against its infliction. The court said:
"Unless a venireman states unambiguously that he would automatically vote against the imposition of capital punishment no matter what the trial might reveal, it simply cannot be assumed that that is his position." (391 U.S. 510, 516 n. 9, 20 L.Ed.2d 776, 781-82 n. 9, 88 S.Ct. 1770, 1774 n. 9.)
Defendant contends that one juror was improperly excused during voir dire in violation of the standard set forth in Witherspoon. The following colloquy, in pertinent part, occurred:
"THE COURT: * * * Now, with respect to I asked some questions with respect to the juror's views on the death penalty.
Is there anyone here who feels that who feels that after you if you sat on a jury that found a defendant *431 guilty of murder, is there anyone here who feels that he or she would automatically set the penalty at death after a after a finding of guilty of murder?
(No responses.)
THE COURT: Okay, yes, sir.
PROSPECTIVE JUROR RADEK: Russell Radek, 397. You know, I thought about it last night, you know, about the statement, and the death penalty, and I just don't think I that I could do that.
* * *
THE COURT: Is your feeling such that no matter what the circumstances, no matter what the background of the defendant is, is your feeling such that you consider a set of facts under which you would consider signing consider signing a verdict affixing the punishment of death?
PROSPECTIVE JUROR RADEK: I don't think I have that right to do that."
Defendant argues that "at no time did Mr. Radek make it unmistakably clear that he would vote against the death penalty regardless of the evidence." The circuit court is in a superior position to ascertain the meaning a venireman intends to convey. In our opinion the standards of Witherspoon were met and the prospective juror's inclusion of "I think" did not render his answers ambiguous. We are persuaded that regardless of what the evidence showed, he would have voted against the imposition of the death penalty, and we conclude that the circuit court did not err in excusing him.
Defendant contends next that the circuit court erred in holding a single hearing at which the jury heard evidence of statutory aggravating factors along with evidence of mitigation and nonstatutory aggravating factors. Defendant contends that this resulted in prejudice requiring reversal. He points out that with reference to the statutory aggravating factors the People's burden of proof is beyond a reasonable doubt, and the rules of evidence *432 apply; whereas on the question whether the mitigating factors are sufficient to preclude a death sentence, information is admissible without regard to the rules of evidence, and the statute specifies no burden of proof. Defendant argues that evidence of defendant's prior convictions for armed robbery and attempted armed robbery, which were introduced as evidence of nonstatutory aggravating factors, were irrelevant to the question of the statutory aggravating factors.
While we do not exclude the possibility that a factual situation might arise which would require a hearing bifurcated in the manner for which defendant contends, we are of the opinion that no such bifurcation was required here, and that defendant was not prejudiced. The two statutory aggravating factors alleged were that the defendant had been convicted of two intentional or premeditated murders, and that the murder of Tony Canzoneri occurred in the course of the commission of another felony. We fail to perceive in what manner the evidence of nonstatutory aggravating matters could have affected the verdict of the jury on these two questions. The testimony shows that, in the 1965 murder of which defendant was convicted, he fired several shots at the deceased while he lay helpless on the sidewalk. With respect to the other aggravating factor, the evidence is overwhelming of defendant's guilt of rape and deviate sexual assault. On the record before us we conclude that defendant's contentions are without merit.
Defendant contends next that the circuit court erred in admitting evidence at the sentencing hearing of his allegedly involuntary confession and subsequent guilty plea to the 1965 murder of Fred Christiansen without first conducting a hearing on his motion to suppress the confession on voluntariness grounds. While defendant contests the voluntariness of his inculpatory statement, he does not contend that the guilty plea was involuntarily *433 entered. This court has held that "a constitutional right, like any other right of an accused, may be waived, and a voluntary plea of guilty waives all errors or irregularities that are not jurisdictional." (People v. Brown (1969), 41 Ill.2d 503, 505.) Thus, the issue was waived by the voluntary plea of guilty.
Defendant next contends that the circuit court improperly sustained the People's objections to evidence which would have shown the manner in which defendant had helped other persons. Defendant argues that the evidence was relevant to mitigation and to show his potential for rehabilitation. The first ruling of which defendant complains occurred during the following exchange between defense counsel and defendant's half-sister, Laura Rosiles:
"MR. QUEENEY [defense counsel]: In what ways would he help those men in jail?
LAURA ROSILES [half-sister]: Well, I talked to Howie. From what I understand he was suffering
MR. THEOBALD [assistant State's Attorney]: Objection.
THE COURT: Sustained."
The defense also presented testimony of Marilyn Berg that defendant had helped her oldest son in his problems with the police, and had talked to her about her husband's problems. The second allegedly erroneous ruling occurred during the following colloquy:
"MR. QUEENEY [defense counsel]: Did George ever talk to you about your husband?
A: Yes, he did.
Q: What kind of problems does your husband have?
MR. OBBISH [prosecuting attorney]: Objection, Judge.
THE COURT: Objection sustained."
As the People point out, defense counsel was at no time precluded from eliciting testimony regarding the help defendant offered to these men. In the first instance, the *434 circuit court properly sustained an objection to the witness' nonresponsive answer. In the second instance, it correctly sustained the objection to defense counsel's irrelevant questions regarding the nature of Mrs. Berg's husband's problems. There was no offer of proof concerning the evidence sought to be introduced, and absent such offer we are unable to review the matter.
Defendant contends next that the People improperly introduced irrelevant and prejudicial evidence that Fred Christiansen, the 1965 murder victim, was survived by a spouse and a child. At the death penalty hearing, during the assistant State's Attorney's interrogation of a Chicago police officer, the following ensued:
"Q: And while you were at the Belmont Hospital, did you have occasion to see Helen and Geraldine Christiansen?
A: Yes, I did.
Q: And did they make an identification of their husband and their father at the Belmont Hospital?
A: Yes, they did."
The People respond that this testimony was relevant for the purpose of showing the victim's identity. Defendant contends that it cannot be argued that this testimony was offered for the purpose of identification because the victim had already been identified by Officer Cavanaugh, who had appeared at the scene and who testified that he knew Christiansen. There was no further interrogation on the matter, and we conclude that the error, if any, was harmless.
The next reference to the victim's family to which defendant objects occurred during closing argument, when the assistant State's Attorney commented:
"Mrs. Christiansen in 1965 lost her husband, and for that life she got the short end of the stick. Mrs. Christiansen got shortchanged by the criminal justice system in Illinois, because for that life, for that precious life, eight *435 years was the penalty that he paid for that, and not only did Mrs. Christiansen suffer from that, but now the Canzoneri family has had to suffer from that."
Citing People v. Bernette (1964), 30 Ill.2d 359, defendant argues that, despite the fact that defense counsel did not object, the reference to the victims is prejudicial error requiring reversal. In Bernette the court held that the evidence relating to the victim's family had no relevance to guilt or innocence. What occurred here, both in the testimony and in argument, is clearly distinguishable from Bernette. In Bernette the People elicited detailed testimony concerning the deceased's surviving family and commented on it in argument. Moreover, although remarks regarding a deceased's family are generally improper, we have held that where, as here, the comments occurred during the sentencing hearing, the ordinary rules controlling the admissibility of evidence do not apply. (People v. Davis (1983), 95 Ill.2d 1, 37.) In Davis, the defendant's death sentence was upheld despite similar comments. (See also People v. Free (1983), 94 Ill.2d 378, cert. denied (1983), 464 U.S. 865, 78 L.Ed.2d 175, 104 S.Ct. 200.) Furthermore, the jury was fully aware of the prior murder and the circumstances surrounding it, and we doubt that its verdict was influenced by the argument.
We consider next defendant's argument that certain comments made by the People during both opening and closing arguments improperly referred to the possibility of defendant's parole in the event the jury chose not to impose the death sentence. During opening argument, the assistant State's Attorney argued:
"The so-called experts who are in charge of the criminal justice system decided that Mr. Christiansen's life was worth fourteen to twenty years. That's the sentence that George Del Vecchio received for the murder of Mr. Christiansen. Well, you can see that if George Del Vecchio *436 from 1965 had served even the minimum of that sentence, fourteen years, Tony Canzoneri would be alive today and looking forward to Thanksgiving tomorrow. The so-called experts have said, let George Del Vecchio out after serving eight years in custody, various juvenile facilities and then the Illinois State Penitentiary. They decided George Del Vecchio had been rehabilitated. Those decisions from those so-called experts cost Tony Canzoneri his life."
During closing arguments, he argued:
"You have a right, ladies and gentlemen, to protect yourself from people like George Del Vecchio. You should demand that you be protected from people like George Del Vecchio.
You must, you can't leave it up to the experts. You can't trust the experts. People like George Del Vecchio
MR. QUEENEY: Objection.
THE COURT: He may argue.
MR. OBBISH: can fool the experts. He's a manipulator, he's a malingerer, he fools other people, he uses other people.
Don't put the decision on somebody else, because you can't count on them, because you can bet a few years from now there will be another expert who will be willing to come along and say he's fine."
Citing People v. Walker (1982), 91 Ill.2d 502, defendant contends that because these comments were made during the sentencing hearing he is entitled to a new sentencing hearing. In Walker the court noted that the possibility of parole was a factor in at least one juror's mind because the circuit judge had received a note from the jury asking for clarification of the possibility of parole. We find Walker distinguishable in that there is no evidence that the possibility of parole was a factor considered in the jury's deliberations. Further, the assistant State's Attorney accurately described the jury's sentencing choices. As the Supreme Court said, "[s]urely the [defendant] cannot argue that the [United States] Constitution *437 prohibits the State from accurately characterizing its sentencing choices." (California v. Ramos (1983), 463 U.S. 992, 1005 n. 19, 77 L.Ed.2d 1171, 1183 n. 19, 103 S.Ct. 3446, 3455 n. 19.) The assistant State's Attorney was attempting to "inform the jury of the nature of the sentence of imprisonment that may be imposed, including its implication with respect to possible release upon parole, if the jury verdict is against sentence of death." (463 U.S. 992, 1009 n. 23, 77 L.Ed.2d 1171, 1186 n. 23, 103 S.Ct. 3446, 3457 n. 23.) We cannot say, in the circumstances shown here, defendant was denied a fair trial. People v. Williams (1983), 97 Ill.2d 252, 305-06.
Defendant contends next that psychiatrists, called by the People at the sentencing hearing, were improperly allowed to testify as to the opinions of nontestifying experts. Dr. Richard Rogers, a clinical psychologist, and Dr. James Cavanaugh, a psychiatrist called by the People in rebuttal, testified that, in their opinions, defendant was sane at the time of the offenses, was a sociopath and malingerer who at the time of the offense was not suffering from extreme mental or emotional distress. The testimony of which defendant complains consists of statements that other psychiatrists who had examined defendant reached conclusions consistent with those of Drs. Rogers and Cavanaugh. Citing People v. Ward (1975), 61 Ill.2d 559, and Wilson v. Clark (1981), 84 Ill.2d 186, defendant argues that in permitting these experts to testify concerning the opinions of nontestifying witnesses, the circuit court, in violation of defendant's sixth amendment right of confrontation, erroneously permitted the jury to consider the opinions of the nontestifying psychiatrists. He argues that although under Ward and Wilson an expert may state an opinion based on the report of another witness it was error to permit him to state the opinion of the other witness. The evidence was admitted at the sentencing hearing pursuant *438 to section 9-1(e) (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(e)), which provided:
"During the proceeding any information relevant to any of the factors set forth in Subsection (b) may be presented by either the State or the defendant under the rules governing the admission of evidence at criminal trials. Any information relevant to any additional aggravating factors or any mitigating factors indicated in Subsection (c) may be presented by the State or defendant regardless of its admissibility under the rules governing the admission of evidence at criminal trials. The State and the defendant shall be given fair opportunity to rebut any information received at the hearing."
This court has held that this section suspends the rules of evidence so that the jury may have all relevant information before it. (People v. Free (1983), 94 Ill.2d 378, 422, cert. denied (1983), 464 U.S. 865, 78 L.Ed.2d 175, 104 S.Ct. 200.) Moreover, we are not persuaded that the brief reference to the fact that the opinions of other nontestifying experts were consistent with those experts who testified was prejudicial.
Defendant's next contention also concerns the testimony of Dr. James Cavanaugh. Dr. Cavanaugh testified that defendant was sane at the time of the offense, not under "extreme emotional distress," and diagnosed defendant as possessing an antisocial personality disorder and being a malingerer. It is defendant's contention that he is entitled to a new sentencing hearing because the circuit court denied him the opportunity to make an offer of proof that Dr. Cavanaugh relied on the report of an unqualified, unlicensed psychologist in forming his own opinion on defendant's mental condition at the time of the offenses. The record shows that defense counsel sought to examine Dr. Cavanaugh outside the presence of the jury to determine the extent of his reliance on the report. The circuit court denied defense counsel's request *439 and concluded from a review of the doctor's report and Dr. Cavanaugh's direct testimony that the report of the psychologist did not materially affect Dr. Cavanaugh's opinion. The People argue that the issue has been resolved because this court in People v. Free (1983), 94 Ill.2d 378, cert. denied (1983), 464 U.S. 865, 78 L.Ed.2d 175, 104 S.Ct. 200, found that Dr. Ronald K. Siegel, the psychologist involved, is qualified. (94 Ill.2d 378, 411.) The circuit court concluded that Dr. Cavanaugh's opinion was not materially affected by Dr. Siegel's allegedly unreliable report. On this record we are unable to say that the circuit court erred in its conclusion.
Defendant contends next that he must be granted a new sentencing hearing because the circuit court, in violation of the statute and defendant's fifth amendment rights, improperly admitted the testimony of psychiatrists who had made a court-ordered examination of defendant. Defendant argues that under the provisions of section 115-6 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1977, ch. 38, par. 115-6) the testimony was inadmissible unless he sought to raise the defense of insanity and points out that the defense of insanity was withdrawn during the guilt phase of the trial.
In the sentencing hearing defendant called Dr. Edward Senay, who testified that in his opinion defendant was under extreme emotional distress, was unable to conform his conduct to the requirements of the law at the time of the offense, and was suffering from "toxic psychosis." It is the position of the People that the testimony of Drs. Cavanaugh and Rogers, who had examined defendant, was admissible, and as previously noted, they testified in rebuttal that defendant was not suffering from extreme emotional disturbance, was able to conform his conduct to the requirements of the law, was possessed of an antisocial personality disorder, and was *440 a malingerer. We find no violation of defendant's constitutional rights and conclude that under the authority of People v. Silagy (1984), 101 Ill.2d 147, 174-75, the testimony of Drs. Cavanaugh and Rogers was properly admitted to rebut the testimony of Dr. Senay.
Citing Bruton v. United States (1968), 391 U.S. 123, 20 L.Ed.2d 476, 88 S.Ct. 1620, defendant contends next that at the sentencing hearing he was denied the right to confront witnesses when the circuit court erroneously permitted a police officer to testify concerning the statements of defendant's accomplices who had implicated defendant in the 1965 robbery and murder of Fred Christiansen. Bruton held that admission at a joint trial of a defendant's extrajudicial confession implicating a codefendant violated the codefendant's right of cross-examination guaranteed by the confrontation clause of the sixth amendment. This court has interpreted Bruton and its progeny not to require "`reversal of a defendant's conviction when the defendant himself has confessed and his confession "interlocks" with and supports the confession of his codefendant.'" (People v. Davis (1983), 97 Ill.2d 1, 21.) Defendant's confession is not only consistent with, but is more detailed than, the statements attributed to his codefendants. In these circumstances, the admission into evidence of the accomplices' statements concerning the 1965 murder did not constitute reversible error.
Defendant contends next that he must be granted a new sentencing hearing because the jury was not instructed that in order to support the finding that there existed the aggravating factor set forth in section 9-1(b)(3) (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(b)(3)), multiple murders occurring as a result of unrelated acts must be premeditated. Alternatively, he contends that he is entitled to a new sentencing hearing because the verdict form finding the existence of that aggravating factor did *441 not state that the murders for which defendant had been convicted were intentional. Defendant's first argument was considered by this court in People v. Davis (1983), 95 Ill.2d 1, which held that section 9-1(b)(3) does not require premeditated acts, but merely "two or more murders resulting from intentional or knowing acts." (95 Ill.2d 1, 36.) Notwithstanding, the error, if any, was cured by the jury instruction which provided:
"Before the defendant who has attained the age of eighteen years can be eligible for the death penalty, either or both of the following statutory aggravating factors must be proven beyond a reasonable doubt.
One: * * *.
Two: The defendant George Del Vecchio has been convicted of intentionally murdering Anthony Canzoneri and intentionally murdering one Fred Christiansen."
Defendant's alternative argument that the verdict form omitted the word "intentionally" was waived by his failure to object to the form when tendered or to submit an alternative form.
Defendant contends next that the death penalty statute is unconstitutional because it permits the consideration of undefined nonstatutory aggravating factors and thus violates the eighth amendment ban on arbitrary and capricious imposition of the death penalty. In support of his argument defendant cites Henry v. Wainwright (5th Cir.1981), 661 F.2d 56, vacated and remanded (1982), 457 U.S. 1114, 73 L.Ed.2d 1326, 102 S.Ct. 2922, aff'd on remand (5th Cir.1982), 686 F.2d 311, vacated and remanded (1983), 463 U.S. 1223, 77 L.Ed.2d 1407, 103 S.Ct. 3566, affirmed in part and reversed in part on remand (5th Cir.1983), 721 F.2d 990, cert. denied (1984), 466 U.S. ___, 80 L.Ed.2d 846, 104 S.Ct. 2374. In People v. Free (1983), 94 Ill.2d 378, 427, cert. denied (1983), 464 U.S. 865, 78 L.Ed.2d 175, 104 S.Ct. 200, we distinguished the Florida statute considered in Henry *442 and need not discuss it again.
Defendant next contends that he was denied a fair sentencing hearing where the assistant State's Attorney made insinuations concerning defendant's misconduct and engaged in prejudicial argument not supported by the evidence. In support of his argument he cites People v. Nuccio (1969), 43 Ill.2d 375, in which the judgment was reversed and the cause remanded because the State's Attorney repeatedly insinuated that defendant had previously threatened decedent and some of the prosecution's witnesses, but failed to call those witnesses, some of whom were in the courtroom. We find it unnecessary to enumerate the instances where the assistant State's Attorney in the instant case made these alleged insinuations. The court in Nuccio limited its holding to "[w]here, as here, the guilt of the accused is not manifest, but is dependent upon the degree of credibility accorded by the trier of fact to his testimony and that of the witnesses who testify on his behalf * * *." (43 Ill.2d 375, 396.) Given the overwhelming evidence of guilt, we find Nuccio inapposite.
Defendant contends next that the assistant State's Attorney improperly argued that the jury was to decide whether to impose the death penalty by determining whether the mitigating or aggravating evidence was greater. He argues that the admonition is contrary to the statute and misinformed the jury of its function. We find it unnecessary to set forth the specific remarks which defendant enumerates because we have determined that the effect of the improper argument, if any, was cured when the circuit court sustained defendant's objections and admonished the jurors that they would be correctly instructed on the law. Prior to retiring for deliberations, the jurors were correctly instructed by the court regarding the law to be applied in the second phase of deliberations. We conclude that the circuit court *443 took proper steps to insure that the jury properly applied the law to the facts of this case.
We next consider defendant's contention that the People's being given the opportunity to both open and close the final arguments at the sentencing hearing denied him due process. In People v. Williams (1983), 97 Ill.2d 252, 302-03, we considered and rejected this contention, and we decline to reconsider it here.
Defendant next argues that the death penalty is excessive and requests this court to reduce the sentence to a term of imprisonment. Citing People v. Carlson (1980), 79 Ill.2d 564, and People v. Gleckler (1980), 82 Ill.2d 145, defendant argues that this court is obliged to reduce his sentence because his crimes were caused by mental or emotional disturbance. However, both cases are inapposite. Gleckler vacated the death sentence which had been imposed on the defendant, one of three persons indicted for the murder, because "Gleckler, with no criminal history, * * * was not the ringleader in this sordid affair; nor [were] his rehabilitative prospects demonstrably poorer than those who received imprisonment terms." (82 Ill.2d 145, 171.) Likewise, in Carlson, the court considered as a mitigating factor, inter alia, the fact that defendant had no prior criminal background. Given defendant's prior serious criminal history (including murder and robbery) and his sole responsibility for the crime, we do not agree that imposition of the death penalty upon defendant was excessive.
Defendant raises a number of constitutional issues, all of which have been determined adversely to defendant's contentions. Defendant argues that the constitutional requirement of adequate appellate review mandates written, factual findings by the jury. This precise issue was considered in People v. Gaines (1981), 88 Ill.2d 342, 384, cert. denied (1982), 456 U.S. 959, 72 L.Ed.2d 482, 102 S.Ct. 2034, and relying on People v. Brownell *444 (1980), 79 Ill.2d 508, the court held such findings were not required. Defendant also contends that article I, section 11, of the Illinois Constitution requires that the jury be instructed to consider whether he possessed any rehabilitative potential and because his attorney failed to tender such an instruction, his death sentence should be vacated. In People v. Gaines (1981), 88 Ill.2d 342, 380-83, cert. denied (1982), 456 U.S. 959, 72 L.Ed.2d 482, 102 S.Ct. 2034, this issue was decided adversely to defendant. We have also considered and rejected the argument that the statutory mitigating factor of "extreme mental or emotional disturbance" (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(c)(2)) is both unconstitutionally vague and impermissibly limiting. (People v. Silagy (1984), 101 Ill.2d 147, 163-65.) Defendant has also argued that because the death penalty statute provides no data-gathering procedures for compilation of all capital felony cases, this court is unable to prevent its arbitrary imposition. We have previously considered and rejected this contention. (People v. Brownell (1980), 79 Ill.2d 508, 541-44.) In Pulley v. Harris (1984), 465 U.S. 37, 79 L.Ed.2d 29, 104 S.Ct. 871, the Supreme Court imposed no requirement not met by our present method of review. Defendant contends that the failure of the death penalty statute to require the People to prove beyond a reasonable doubt the absence of mitigating factors sufficient to preclude the death penalty violates due process of law and the eighth amendment. In People v. Free (1983), 94 Ill.2d 378, cert. denied (1983), 464 U.S. 865, 78 L.Ed.2d 175, 104 S.Ct. 200, we reaffirmed our holding in People v. Brownell (1980), 79 Ill.2d 508, that a unanimous jury, or the court, must weigh the mitigating factors against the aggravating factors and conclude that there are no mitigating factors sufficient to preclude the imposition of the death sentence. We decline the invitation to reconsider the propriety of those holdings.
*445 Defendant, in his supplemental brief, argues that, in violation of the eighth and fourteenth amendments, the circuit court improperly instructed the jury that "[n]either sympathy nor prejudice should influence you." The court gave instructions in the form of Illinois Pattern Jury Instructions (IPI) Criminal, No. 1.01 (2d ed. 1981) (general instructions regarding the functions of the court and the jury), omitting paragraph 4 as recommended by the Illinois Supreme Court Committee for capital cases. Defendant cites People v. Easley (1983), 34 Cal.3d 858, 671 P.2d 813, 196 Cal. Rptr. 309, which held that, although appeals to the sympathy or passions of the jury are inappropriate at the guilt phase, it is necessary that the jury consider the sympathetic elements of defendant's background during the death penalty phase. (34 Cal.3d 858, 880, 671 P.2d 813, 827, 196 Cal. Rptr. 309, 323.) We are not persuaded that the instruction given was inappropriate and note further that no instruction consistent with defendant's contentions was tendered.
Defendant contends next that the death penalty was imposed in violation of the eighth and fourteenth amendments to the Constitution of the United States. He argues that "the essence of the death penalty decisions of the Supreme Court has been that a constitutionally imposed death sentence requires an individualized sentencing process in which the sentencer will decide whether `death is the appropriate punishment in a specific case.'" He argues, too, that the jurors, despite finding that mitigation did not outweigh aggravation, may have considered capital punishment inappropriate, but may have felt that they were without discretion to return a verdict other than one imposing the death penalty. He contends that for those reasons the jury, in addition to the finding that mitigation did not outweigh aggravation, should have been required to find that death was the appropriate punishment. He contends, too, that the jury *446 may have assumed that it was defendant's burden to disprove the suitability of the death sentence. We do not agree. Implicit in the statutory scheme is that the jury should carefully weigh the factors "in order to reach a fair and just result, one that is based on the particular circumstances of the offense and the defendant." (People v. Brownell (1980), 79 Ill.2d 508, 538.) The holding in Brownell resolves any question of "appropriateness."
Defendant contends next that after being found eligible for the death sentence, in violation of the eighth and fourteenth amendments he bore the burden of proving that the death penalty was inappropriate. In People v. Williams (1983), 97 Ill.2d 252, 302, we held that at the aggravation and mitigation hearing there is no burden of proof, but, rather, the People have the burden of going forward with the evidence, and we decline to reconsider that holding here.
Finally, defendant asserts that four of the members of this court have previously expressed the opinion that the statute is unconstitutional because it bestows upon the People the sole discretion to determine whether to seek the death penalty, and that this may result in arbitrary application of the statute. (See People ex rel. Carey v. Cousins (1979), 77 Ill.2d 531, 544 (Ryan, J., Goldenhersh, C.J., and Clark, J., dissenting); People v. Lewis (1981), 88 Ill.2d 129, 179 (Simon, J., dissenting), cert. denied (1982), 456 U.S. 1011, 73 L.Ed.2d 1308, 102 S.Ct. 2307.) Defendant notes that three of the judges filed concurring opinions, relying on stare decisis, upholding the constitutionality of the death penalty statute (see People v. Lewis (1981), 88 Ill.2d 129, 165 (Goldenhersh, C.J., concurring), 166 (Ryan, J., concurring), 167 (Clark, J., concurring), cert. denied (1982), 456 U.S. 1011, 73 L.Ed.2d 1308, 102 S.Ct. 2307), and that these opinions were predicated on the assumption that the Supreme Court would review the validity of the statute. The argument *447 continues that because the Supreme Court has denied certiorari, this court is, in effect, the "final tribunal" to determine the statute's validity. Defendant argues that the Supreme Court's denial of certiorari in, inter alia, People v. Lewis (1981), 88 Ill.2d 129, cert. denied (1982), 456 U.S. 1011, 73 L.Ed.2d 1308, 102 S.Ct. 2307, requires this court to reconsider the constitutionality of the statute. We do not agree. However, we note parenthetically that there are decisions of this court on which petitions for writs of certiorari await consideration. (See People v. Gacy (1984), 103 Ill.2d 1; People v. Holman (1984), 103 Ill.2d 133; People v. Albanese (1984), 104 Ill.2d 504.) As the People note, previous denials of certiorari by the Supreme Court do not preclude it from later granting certiorari. (Chessman v. Teets (1957), 354 U.S. 156, 175-77, 1 L.Ed.2d 1253, 1265-67, 77 S.Ct. 1127, 1137-38.) In People ex rel. Carey v. Cousins (1979), 77 Ill.2d 531, cert. denied (1979), 445 U.S. 953, 63 L.Ed.2d 788, 100 S.Ct. 1603, the majority traced the history of the broad discretion enjoyed by the State's Attorney in both the initiation and the management of criminal litigation and determined that such discretion was not unconstitutional. Cousins has subsequently been reaffirmed (see, e.g., People v. Lewis (1981), 88 Ill.2d 129, cert. denied (1982), 456 U.S. 1011, 73 L.Ed.2d 1308, 102 S.Ct. 2307), and we decline to reconsider it here.
For the reasons stated, we affirm the judgment of the circuit court of Cook County. The clerk of this court is directed to enter an order fixing Tuesday, September 17, 1985, as the date on which the sentence of death entered by the circuit court is to be executed. The defendant shall be executed by lethal injection in the manner provided by section 119-5 of the Code of Criminal Procedure of 1963 (Ill. Rev. Stat. 1983, ch. 38, par. 119-5). A certified copy of this order shall be furnished by the *448 clerk of this court to the Director of Corrections, to the warden of Stateville Correction Center, and to the warden of the institution wherein the defendant is confined.
Judgment affirmed.
JUSTICE SIMON, concurring in part and dissenting in part:
I concur in the majority's judgment that the defendant's conviction for murder should be affirmed, but I dissent from the decision to impose the death penalty. For the reasons set forth in my separate opinions in People v. Lewis (1981), 88 Ill.2d 129, 179 (Simon, J., dissenting), in People v. Silagy (1984), 101 Ill.2d 147, 184 (Simon, J., concurring in part and dissenting in part), and in People v. Albanese (1984), 104 Ill.2d 504, 549 (Simon, J., concurring in part and dissenting in part), I have concluded that the Illinois death penalty statute violates the United States and Illinois constitutions.
Moreover, the comments made by the assistant State's Attorney during the sentencing hearing regarding the possibility of parole for the defendant if the jury chose not to impose the death penalty require that the death sentence be reversed. In People v. Walker (1982), 91 Ill.2d 502, 515, this court held:
"Our statute requires that the court or jury, as the case may be, consider aggravating and mitigating factors, which are relevant to the imposition of the death penalty. (Ill. Rev. Stat. 1977, ch. 38, par. 9-1(c).) Whether or not the defendant may, at some future time, be paroled is not a proper aggravating factor to consider in determining whether the death penalty should be imposed."
The majority's attempt to distinguish Walker from this case is unpersuasive. Here, as in Walker, the prosecution argued that the defendant might be paroled if he received a prison term. Here, as in Walker, the trial court overruled objections to this improper argument. *449 Here, as in Walker, the jury may have considered the possibility of parole in determining whether the defendant should be executed, a factor that is not permitted by the Illinois death penalty statute.
As this court said in Walker, "[in] a death penalty case, a high standard of procedural accuracy is required in determining whether or not that penalty will be imposed. The procedural errors in this case do not conform to the high standard which must be followed to insure that proper matters are considered in aggravation and that the penalty is applied in as uniform a manner as possible within the framework of an adversary proceeding." 91 Ill.2d 502, 517.
California v. Ramos (1983), 463 U.S. 992, 1005 n. 19, 77 L.Ed.2d 1171, 1183 n. 19, 103 S.Ct. 3446, 3454-55 n. 19, is not in point. The defendant has not argued here that the United States Constitution prohibits the State from accurately characterizing its sentencing choices. Rather, he has argued that our death penalty statute prohibits the State from raising improper issues in the determination of aggravating factors. Our opinion in People v. Walker supports that contention. I would therefore vacate the sentence of death and remand to the trial court for resentencing. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2362997/ | 805 S.W.2d 387 (1991)
James C. CATHEY and Bette Cathey, Petitioners,
v.
METROPOLITAN LIFE INSURANCE CO., Dow Chemical Co. and Michael H. Maddolin, Respondents.
No. C-8323.
Supreme Court of Texas.
January 30, 1991.
*388 Joe K. Longley, Mark L. Kincaid, Austin, James W. Patterson, Houston, for petitioners.
Katherine D. Hunt, Judson R. Wood, A.J. Harper, II, Fulbright & Jaworski, Houston, Ace Pickens, Austin, William Toppeta, J.M. Lenaghan, D.J. Harman, New York City, for respondents.
OPINION
GONZALEZ, Justice.
This is an appeal in a case involving "ERISA," the Employee Retirement Income Security Act of 1974. 29 U.S.C. §§ 1001-1461 (1988). An employee and his wife brought state law claims against his employer and its insured for alleged wrongful denial of a claim for in-home nursing care. The trial court granted a summary judgment to the defendants. The court of appeals affirmed the judgment of the trial court. 764 S.W.2d 286. We are called upon to decide whether causes of action stated under: 1) article 21.21, section 16 of the Texas Insurance Code; 2) section 17.50(a)(4) of the Texas Deceptive Trade Practices Act; and 3) article 3.62 of the Texas Insurance Code are superseded by the provisions of ERISA. We hold that ERISA preempts these causes of action in this case. We therefore affirm the judgment of the court of appeals.
FACTS
Because this is a summary judgment case, the facts shown by the Catheys are taken as true. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex. 1985). James Cathey was employed as a purchasing agent for Dow Chemical Company ("Dow") from 1973 to 1983. During his tenure at Dow, Cathey was told by Dow representatives that he and his wife, Bette Cathey, were covered by a group insurance plan (the Dow plan). In the mid-1970's Bette Cathey was diagnosed with multiple sclerosis, and her condition worsened so that eventually she could no longer walk without assistance. In 1982, Bette Cathey's physicians ordered home nursing care for her. These expenses were paid for under the group insurance plan covering Dow employees. In 1985, Metropolitan Life Insurance Company ("Met"), acting as the claims administrator for the Dow plan, refused to continue paying for the nursing care. Cathey contacted Michael Maddolin, group claim consultant with Met, who told him that there was no medical necessity for nursing care for Bette Cathey.
The Catheys filed suit against Dow, Met, and Michael Maddolin alleging common law and statutory causes of action; no ERISA causes of action were stated. The trial court found each cause of action to be preempted by ERISA and, following the Catheys' refusal to amend their petition to state an ERISA cause of action,[1] rendered summary judgment in favor of Dow, Met, and Maddolin. The court of appeals affirmed that judgment.
ERISA
The Employee Retirement Income Security Act of 1974 subjects employee benefit plans to federal regulation. The act regulates both pension plans and welfare plans that provide benefits for contingencies such as illness, accident, disability, death, or unemployment. While it provides standards and rules governing reporting, disclosure, and fiduciary responsibility for pension and welfare plans, ERISA does not mandate any particular benefits. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90-91, 103 S. Ct. 2890, 2896-97, 77 L. Ed. 2d 490 (1983).
Section 514(a) of ERISA provides:
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of this chapter shall supersede any and all state laws *389 insofar as they may now or hereafter relate to any employee benefit plan described in section 1003(a) of this title.
This section is informally known as the "preemption" provision of ERISA. It is narrowed in scope by subsection 514(b)(2)(A), commonly known as the "saving" clause:
Except as provided in subparagraph (B), nothing in this subchapter shall be construed to exempt or relieve any person from any law of any state which regulates insurance, banking, or securities.
Subparagraph 514(b)(2)(B), the "deemer" clause, modifies the saving clause by providing that no employee benefit plan:
shall be deemed to be an insurance company or other insurer ... for purposes of any law of any state purporting to regulate insurance companies.
The operation of these provisions has been succinctly explained by the United States Supreme Court:
To summarize the pure mechanics of the provisions quoted above: If a state law "relate[s] to ... employee benefit plan[s]," it is preempted. The saving clause excepts from the pre-emption clause laws that "regulat[e] insurance." The deemer clause makes clear that a state law that "purports] to regulate insurance" cannot deem an employee benefit plan to be an insurance company, (citations omitted).
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S. Ct. 1549, 1552, 95 L. Ed. 2d 39 (1987).
Section 1001(b) of Title 29 declares that it is the policy of ERISA to protect:
the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.
29 U.S.C. § 1001(b) (1988). In Pilot Life, the Supreme Court explained that the preemption provision of ERISA was intended to have the effect of "reserving] to Federal authority the sole power to regulate the field of employee benefit plans." 481 U.S. at 46, 107 S.Ct. at 1552 (quoting Representative Dent, 120 Cong.Rec. 29197 (1974)).
THE DISPUTE
The Catheys contend that misrepresentations made by representatives of both Dow and Met are actionable under the Texas Insurance Code and Deceptive Trade Practices Act ("DTPA"). They argue that their claims do not "relate to" an employee benefit plan and thus are not preempted. In the alternative, the Catheys assert that even if their claims do relate to an employee benefit plan within the meaning of the preemption provision, they are preserved by the saving clause as laws regulating insurance.
Dow, Met, and Maddolin assert that section 16 of article 21.21 and article 3.62 of the Texas Insurance Code, and section 17.-50(a)(4) of the DTPA are state laws that "relate to" an ERISA plan and are therefore preempted. They further contend that the causes of action alleged by the Catheys are not saved from preemption by the saving clause because they conflict with the civil enforcement scheme provided in ERISA and are therefore displaced. Both Dow and Met pleaded ERISA preemption in their answers; Maddolin did not.
"RELATE TO"
A state law, defined in section 1144(c)(1) to include all laws, decisions, rules, regulations, or other action having the effect of law, is preempted by ERISA only if it "relates to" a plan. 29 U.S.C. § 1144(a) (1988). We must therefore begin with the fundamental inquiry: When does a state law relate to an employee benefit plan?
The United States Supreme Court has loosely defined the parameters of the "relate to" requirement. "A law `relates to' an employee benefit plan, in the normal sense of the phrase, if it has a connection or reference to such a plan." Shaw, 463 U.S. at 96-97, 103 S. Ct. at 2899-2900. Also *390 the Court declared that "[t]he phrase `relate to' was given its broad common-sense meaning." Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 739, 105 S. Ct. 2380, 2389, 85 L. Ed. 2d 728 (1985). The Court has repeatedly stated that the words "relate to" should be construed expansively. See Shaw, 463 U.S. at 96-97, 103 S. Ct. at 2899-2900; Pilot Life, 481 U.S. at 46-48, 107 S. Ct. at 1552-53; Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 8, 107 S. Ct. 2211, 2215-16, 96 L. Ed. 2d 1 (1987). ERISA preemption applies not only to state laws but to all forms of state action dealing with the subject matters covered by this federal statute. 29 U.S.C. § 1144(c)(1) (1988); see also Shaw, 463 U.S. at 98, 103 S. Ct. at 2900. In keeping with this broad interpretation, the Court held that a cause of action for wrongful termination related to an ERISA plan where it was based on the allegation that the employer fired the employee to avoid paying benefits under a pension plan. Ingersoll-Rand Co. v. McClendon, ___ U.S. ____, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990).[2]
Given these declarations by the Supreme Court, courts have not hesitated to find that state laws having an effect on employee benefit plans relate to such plans and are therefore preempted by ERISA. See, e.g., Ramirez v. Inter-Continental Hotels, 890 F.2d 760 (5th Cir.1989); Boren v. N.L. Indus., 889 F.2d 1463 (5th Cir.1989), cert. denied, ___ U.S. ____, 110 S. Ct. 3283, 111 L. Ed. 2d 792 (1990); Sommes Drug Stores Co. Employee Profit Sharing Trust v. Corrigan Enters., 793 F.2d 1456 (5th Cir. 1986), cert, denied, 479 U.S. 1034, 107 S. Ct. 884, 93 L. Ed. 2d 837 (1987); Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, cert, denied 492 U.S. 906, 109 S. Ct. 3216, 106 L. Ed. 2d 566 (1989); Misic v. Building Serv. Employees Health & Welfare Trust, 789 F.2d 1374 (9th Cir.1986); Juckett v. Beecham Home Improvement Prods., Inc., 684 F. Supp. 448 (N.D.Tex. 1988); Systems, Inc. v. Taylor, 744 S.W.2d 956 (Tex.App.Dallas 1988, writ denied); Giles v. Texas Instruments Employees Pension Plan, 715 S.W.2d 58 (Tex.App.Dallas 1986, writ ref'd n.r.e.); Felts v. Graphic Arts Employee Benefits Trust, 680 S.W.2d 891 (Tex.App.Houston [1st Dist] 1984, no writ). "Because of the breadth of the preemption clause and the broad remedial purpose of ERISA, `state laws found to be beyond the scope of [the preemption provision] are few.'" Cefalu v. B.F. Goodrich Co., 871 F.2d 1290, 1294 (5th Cir.1989).
The common law claim in Pilot Life was not alleged against the employee benefit plan, but against the insurance company that administered the plan. Nevertheless, the Court noted that the cause of action clearly related to a plan and was thus preempted. 481 U.S. at 47-48, 107 S.Ct. at 1553; see also Ramirez, 890 F.2d at 760, 762-63 (suit brought against former employer and its insurance carrier held to be preempted); Cefalu, 871 F.2d at 1292-93 (suit related to an ERISA plan even though it was alleged against the former employer and not the plan). The Catheys' claim for nursing care was made and denied pursuant to the Dow plan's terms, and they appealed this denial under the internal review provisions of the plan. We hold that the Catheys' claims against Dow and Met relate to an employee benefit plan; the claims are thus preempted unless a contrary result is mandated by the saving clause.
ERISA'S EXCLUSIVE REMEDY SCHEME v. THE SAVING CLAUSE
The Catheys assert that even if their claims relate to an employee benefit plan, they are saved from preemption by section 1144(b)(2)(A), the saving clause. The saving clause saves from preemption state laws which regulate insurance. Metropolitan Life, 471 U.S. at 737,105 S.Ct. at 2388; Pilot Life, 481 U.S. at 47, 107 S. Ct. at 1553. However, even the saving clause *391 cannot save from preemption a state law that provides remedies not provided by ERISA. In Pilot Life, the Supreme Court announced that ERISA's civil enforcement remedies were intended to be exclusive. 481 U.S. at 54, 107 S.Ct. at 1556. Pilot Life involved allegations of improper processing of a claim for benefits. In holding that the plaintiff's claim for breach of the Mississippi common-law duty of good faith and fair dealing was preempted by ERISA, the Court stated, "[t]he policy choices reflected in the inclusion of certain remedies and the exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA." Id.; see also McClendon, 111 S.Ct. at 484-85; Mutual Life Ins. Co. v. Yampol, 840 F.2d 421, 425 (7th Cir.1988).
Even if these insurance code provisions and the DTPA provisions were subject to the saving clause, the Court's opinions in Pilot Life and McClendon held that Congress intended all suits alleging improper claims processing be governed only by ERISA. McClendon, 111 S.Ct. at 485; Pilot Life, 481 U.S. at 52-54, 107 S. Ct. at 1555-56. Section 16 of article 21.21 and article 3.62 of the Insurance Code and section 17.50(a)(4) of the DTPA provide recovery that was not included under ERISA. The Court has decided that ERISA's civil enforcement scheme could not be supplemented by state law remedies. Therefore, a statutory remedy for improper claims processing is not available against an ERISA plan or its administrator.
CONCLUSION
The Catheys seek to recover remedies not available under ERISA's civil enforcement provisions. Therefore, even if the provisions in question could be said to regulate the business of insurance for purposes of ERISA preemption analysis, they would still be preempted as laws that provide remedies that are inconsistent with the civil enforcement provisions provided in ERISA. See Pilot Life, 481 U.S. at 51-57, 107 S. Ct. at 1555-58; Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S. Ct. 3085, 3092, 87 L. Ed. 2d 96 (1985); Ramirez, 890 F.2d at 764; Kelley v. Sears, Roebuck & Co., 882 F.2d 453, 456 n. 2 (10th Cir.1989); Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 493-94 (9th Cir.1988), cert, denied, 492 U.S. 906, 109 S. Ct. 3216, 106 L. Ed. 2d 566 (1989); In re Life Ins. Co. of N. Am., 857 F.2d 1190, 1194 (8th Cir.1988); Anschultz v. Connecticut Gen. Life Ins. Co., 850 F.2d 1467, 1469 (11th Cir.1988); Juckett v. Beecham Home Improvement Prods., 684 F. Supp. 448 (N.D.Tex.1988); McManus v. Travelers Health Network, 742 F. Supp. 377 (W.D. Tex. 1990); Commercial Life Ins. Co. v. Superior Court, 47 Cal. 3d 473, 253 Cal. Rptr. 682, 764 P.2d 1059 (1988), cert, denied sub nom. Juliano v. Commercial Life Ins. Co., 490 U.S. 1075, 109 S. Ct. 2087, 104 L. Ed. 2d 651 (1989). Accordingly, we hold that Texas Insurance Code section 16 of article 21.21 and article 3.62 as well as DTPA section 17.50(a)(4) are preempted by the provisions of ERISA in the context of the facts of this case. Dow and Met properly pleaded ERISA preemption in their answers; Maddolin did not. We agree with the court of appeals, however, that the preemption of the Catheys' claims against Dow and Met extends to Maddolin because he acted as Met's employee in the course of its business. We therefore affirm the judgment of the court of appeals.
Concurring opinion by DOGGETT, J., joined by MAUZY and GAMMAGE, JJ.
DOGGETT, Justice, concurring.
In one brief writing the court today is forced to eliminate the rights of hundreds of thousands of Texas families to protect themselves from false, misleading, and deceptive practices in the handling of health and disability insurance claims. These are rights that had been secured by consumer protection statutes properly enacted by the Texas Legislature and that remain in effect today for those Texans who obtain their coverage directly from insurers rather than through their employers. Unfortunately, there is little that I or any other member of this court can do about this deplorable demise *392 of state-given rights other than to lament their passage.
Recognizing that Ingersoll-Rand v. McClendon, ___ U.S. ____, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990), and Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 107 S. Ct. 1549, 95 L. Ed. 2d 39 (1987), control this case, I must concur with the court's opinion. By its reading of ERISA's preemption clause, the United States Supreme Court has restricted the very rights of employeesto avoid the delay or denial of benefitsthat Congress sought to protect. Through peculiar federal judicial interpretation, a statutory addition to workers' rights has been converted into a statutory removal of those rights. The law has been reshaped into a form that achieves the converse of its original purpose. Identical claims are now treated differently depending on whether the claimant is insured individually or through an employer. Those insured through their employers are denied by ERISA preemption the safeguards afforded by Texas to their fellow citizens. I join with the growing number of courts and commentators who express the concern that through continued misconstruction, ERISA has become "quicksand" that "will continue to expand and to preempt everything in its meandering path." Jordan v. Reliable Ins. Co., 694 F. Supp. 822, 835 (N.D.Ala.1988). For the over 56 million Americans who are enrolled in group health insurance plans like the one in which James Cathey was a member,[1] ERISA has become more than mere quicksand; it has become a black hole.
Through ERISA, Congress sought "to assure that individuals who have spent their careers in useful and socially productive work will have adequate incomes to meet their needs when they retire." H.Rep. No. 807, 93d Cong., 2d Sess. 3, reprinted in 1974 U.S.Code Cong. & Admin.News 4639, 4670. The measure responded to increasing abuses against workers caused by irresponsible management of pension and welfare benefit funds. In its "declaration of policy," Congress noted:
that despite the enormous growth in such plans many employees with long years of employment are losing anticipated retirement benefits owing to the lack of vesting provisions in such plans; that owing to the inadequacy of current minimum standards, the soundness and stability of plans with respect to adequate funds to pay promised benefits may be endangered; that owing to the termination of plans before requisite funds have been accumulated, employees and their beneficiaries have been deprived of anticipated benefits.
29 U.S.C. § 1001(a) (1974). The primary objective of the legislation was "to increase the rights of employees by imposing strict fiduciary duties on employers and benefit plan administrators and by providing the employees with the civil remedies in section 502(a)." Note, Punitive Damages and ERISA: An Anomalous Effect of ERISA's Preemption of Common Law Actions, 65 Wash.U.L.Q. 589, 609 (1987).
In view of this laudable goal, several commentators have expressed dismay at the paradox that has arisen since Pilot Life: the workers ERISA was intended to protect lack a remedy for wrongs unaddressed by the statute, while the companies targeted by Congress employ ERISA as an effective shield against responsibility for wrongful processing of claims. The first manifestation of this incongruous result is that workers covered by group benefit plans have been denied state causes of action that had been available prior to the Act's passage. Id. See also, Note, Blind Faith Conquers Bad Faith: Only Congress Can Save Us After Pilot Life Insurance Co. v. Dedeaux, 21 Loy.L.A.L.Rev. 1343, 1381 n. 303 (1988) (hereinafter Note, Blind Faith) (observing the lack of Congressional intent to preempt state causes of action for breach of a covenant of good faith and fair dealing). Second, persons covered by group benefit plans are limited to ERISA's remedies, while individual insurance policyholders retain the full range *393 of state remedies. Id. at 1347.[2] The harm is exacerbated by the reality that employees seldom have a voice in selecting their company's group insurer. Whether taken separately or together, these developments evince a disturbing disregard for Congress' overriding intent to protect the participants and beneficiaries of group benefit and pension plans. Their aim is best served by reading ERISA's remedies as a floor rather than a ceiling, and by respecting the traditional deference given to state insurance regulations as mandated by the McCarran-Ferguson Act, 15 U.S.C. § 1011. Under ERISA, insurers who provide group benefit plans have little incentive to deal promptly and fairly with employee participants.[3] Indeed, for ERISA to preempt all state law that may be loosely defined as "relating to" employee benefit plans is "counterproductive to ERISA's objective of furthering, rather than debilitating, progressive employment law." Gregory, The Scope of ERISA Preemption of State Law: A Study in Effective Federalism, 48 U.Pitt. L.Rev. 427, 457 (1987).
Moreover, expansive preemption of state common law and statutes regulating the insurance industry upsets the equilibrium between the federal government and the states that Congress intended to preserve by enacting the saving clause, 29 U.S.C. § 1144(b)(2)(A), thereby eviscerating this once-important provision. In Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S. Ct. 2380, 85 L. Ed. 2d 728 (1985), the clause was initially given vitality by acknowledgment of the well-established rule that "[t]he presumption is against preemployee plan.' There would then have been no need for the `saving clause' to emption, and we are not inclined to read limitations into federal statutes in order to enlarge their pre-emptive scope." Id. at 741, 105 S. Ct. at 2390. The presumption against preemption is particularly strong with respect to those areas, such as insurance, "traditionally regarded as properly within the scope of state superintendence." Florida Lime and Avocado Growers v. Paul, 373 U.S. 132, 144, 83 S. Ct. 1210, 1218, 10 L. Ed. 2d 248 (1963); Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S. Ct. 1305, 1309, 51 L. Ed. 2d 604 (1977).
In Metropolitan Life, while state-mandated policy inclusion of mental health coverage was related to the business of insurance and therefore within the scope of preemption, the saving clause directed that the law not be preempted. 471 U.S. at 739, 746-47, 105 S. Ct. at 2389, 2392-93. In so holding, the Court analyzed the legislative history of ERISA, and noted that the final version of the law included a preemption clause more broadly worded than those in the original versions submitted to the Conference Committee by the two houses of Congress. Rather than halting its analysis at that point, as it did in Pilot Life, 481 U.S. at 46, 107 S. Ct. at 1552, the Court proceeded to conclude that this expansion of the preemption clause "gave the insurance clause a much more significant role, as a provision that saved an entire body of law from the sweeping general preemption clause." Metropolitan Life, 471 U.S. at 746 n. 23, 105 S. Ct. at 2392 n. 23 (emphasis added). The Court's holding thus refused to "impose any limitation on *394 the saving clause beyond those Congress imposed in the clause itself." Id. at 746, 105 S. Ct. at 2392.
In contrast to the Metropolitan Life Court's careful deference to Congress' intent to balance the preemption and saving clauses, the Pilot Life opinion added a consideration that tips the balance of federalism inexorably away from the states by reducing the saving clause analysis to an empty exercise. The Court interpreted ERISA's legislative history to support the notion that Congress had intended that the statute's remedies be exclusive. This holding was drawn from the statements of several members of Congress to the effect that ERISA was meant to "preempt the field." 481 U.S. at 46, 107 S. Ct. at 1552. Congress' intent that ERISA provide exclusive remedies, however, was subordinate to its effort to provide greater protections to workers covered by pension and welfare benefit plans. When viewed in this light, the preemption clause should be given no more than equal consideration with the saving clause, which remains to preserve state regulation of insurance that is equally meant to safeguard the interests of workers.[4] Instead, as one commentator asserts, "the Pilot Life Court gutted the saving clause of meaning." Note, Blind Faith, supra, at 1382.
Refusing an interpretation of Pilot Life that would require the preemption of a California statute regulating the bad faith conduct of insurers, one court appropriately concluded that to do so "would rewrite the saving clause to read: `Nothing in this subchapter except section 1132 shall be construed to exempt or relieve any person from any law of any State which regulates insurance....' The Supreme Court strongly indicated in Metropolitan Life that this is not the law." Graves v. Blue Cross, 688 F. Supp. 1405, 1412 (N.D.Cal.1988) (emphasis in original). Unfortunately, this interpretation has now been rejected by McClendon. Pilot Life and McClendon thus seize from the states the ability to "deter[ ] insurance companies from exploiting insureds when they are most financially vulnerable." Note, Blind Faith, supra, at 1397.
By affirming Pilot Life's, unfortunate mischaracterization of Congressional intent, the Supreme Court in McClendon takes another step away from the goals of federalism. States are no longer the laboratories of democracy[5] when it comes to protecting their consumers. States have been thwarted in their efforts to fill the federal void left in the regulation of insurance companies that provide benefit plans under ERISA. Gregory, supra, at 457. Ironically, this gap was initially created by the Congress in the McCarran-Ferguson Act, 15 U.S.C. § 1011, which entrusts to the States the regulation of "the business of insurance."
This federal court deprivation of state law protections stands in notable juxtaposition with the professed goal of some in Washington to return power to the states. The Texas courts and the Texas legislature are powerless to preserve the rights of workers covered by group benefit plans. Texans have little recourse but to petition their federal legislators to correct what has been an errant jurisprudential path. The time is long past for Congress to reconsider the expanse of ERISA and to resurrect the authority of the states to provide additional protections to their citizens.
MAUZY and GAMMAGE, JJ., join in this concurring opinion.
NOTES
[1] The Catheys filed a separate ERISA suit against the Dow Chemical Company Medical Care Program during the pendency of this action. We note that the Fifth Circuit handed down its decision in that case on August 3, 1990, holding that the Catheys were entitled to partial recovery on their ERISA claim. Cathey v. Dow Chemical Co. Medical Care Program, 907 F.2d 554 (5th Cir. 1990).
[2] Also, we note that the Supreme Court handed down FMC Corporation v. Holliday contemporaneously with McClendon. ___ U.S. ____, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990). However, that opinion does not impact our decision in this case. In Holliday, the Court considered whether a state law prohibiting subrogation claims fell within ERISA's insurance saving clause. The state law did not conflict with ERISA's exclusive remedy scheme.
[1] U.S. Census Bureau, 1990 Statistical Abstract 413 (1990).
[2] The Supreme Court reinforced a third curious distinctionthat between self-insured plans and those that obtain insurance from regulated insurance companiesin FMC Corp. v. Holliday, ___ U.S. ____, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990), discussed in the majority opinion, supra, at 388 n. 1. This distinction was introduced by the Court in Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 747, 105 S. Ct. 2380, 2393, 85 L. Ed. 2d 728 (1985). In his dissent to Holliday, Justice Stevens describes the distinction as "broad and illogical," and adds:
Had Congress intended this result, it could have stated simply that `all State laws are pre-empted insofar as they relate to any selfinsured exempt state insurance laws from the preemption clause, or the `deemer clause,' which the Court today reads as merely reinjecting into the scope of ERISA's pre-emption clause those same exempted state laws insofar as they relate to self-insured plans.
Holliday, ___ U.S. at ____, 111 S.Ct. at 411 (Stevens, J., dissenting).
[3] Under 29 U.S.C. § 1132, ERISA plan participants or beneficiaries harmed by a lengthy delay in, or unreasonable denial of, benefits may bring a time-consuming and expensive action in court to recover no more than the benefits due under the plan. § 1132(a)(1)(B). The award of attorney's fees is possible, but solely within the discretion of the court. § 1132(g)(1).
[4] The Court correctly observed in Metropolitan Life: "While Congress occasionally decides to return to the States what it has previously taken away, it does not normally do both at the same time." 471 U.S. at 740, 105 S.Ct. at 2389. It seems that where ERISA is concerned, the Court has created an exception to this principle.
[5] See New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S. Ct. 371, 386-87, 76 L. Ed. 747 (1932) (Brandeis, J., dissenting). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1498803/ | 112 F.2d 54 (1940)
COMMERCIAL CREDIT CO., Inc.,
v.
DAVIDSON. In re CHANCELLOR.
No. 9429.
Circuit Court of Appeals, Fifth Circuit.
May 22, 1940.
*55 E. L. Trenholm, of Jackson, Miss., for appellant.
Thomas Y. Minniece, of Meridian, Miss., for appellee.
Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.
HOLMES, Circuit Judge.
The question in this case is: In what way, if any, is the Mississippi purchase-money lien affected by the bankruptcy act? This is a federal question, but it is one which in this case depends partly upon property rights given by state statutes in the construction of which we follow state decisions.
We are controlled by federal law in determining what liens are preserved in bankruptcy; what character of title to the debtor's property is vested in the trustee in bankruptcy; and, as to such property, what rights, remedies, and powers are deemed vested in the trustee. We look to state law to ascertain what property the debtor owned immediately preceding the time of bankruptcy; what liens thereon, if any, then existed; the character thereof; and the order of priority among the respective creditors holding such liens. More specifically in this case, we determine under state law whether the purchase-money lien creditor would have had priority over a creditor then holding a lien thereon by legal or equitable proceedings.
The facts are undisputed: In April, 1938, the bankrupt purchased in Mississippi an automobile truck, executing in favor of the vendor an installment note for part of the purchase price, payable in monthly installments, and a conditional sales contract, which was not recorded, in which the title to said truck was retained in the vendor until the note should be fully paid. Before the first installment was due, the note and contract were assigned for value to appellant, which held the same at the time of bankruptcy (November 19, 1938), when there was a balance due thereon of $360, which includes interest and other charges, some of which may be distinct from the purchase price. The bankrupt operated a grocery store and traded in cattle under his own name, using the truck mainly in the latter business. The truck was turned over to the trustee in bankruptcy, who sold it and holds the proceeds in lieu thereof.
Appellant filed its claim in bankruptcy, asserting a statutory purchase-money lien on said truck, and praying that the proceeds of the sale thereof be applied to the balance due it on the purchase price. It is contended that the Mississippi sign statute defeats the claim of appellant; that, if the sign statute is inapplicable, the lien of the trustee is superior to the lien of appellant; and that, if the lien of the trustee is not superior to the lien of the vendor where notice is given to the trustee, the notice in this case is insufficient.
This is not a claim for reclamation of the property. Although the seller and its assignee took and retained until the time of bankruptcy a conditional sales contract, the appellant in this proceeding does not stand upon this contract, but concedes that the debtor was a trader using the truck in its business, that the contract was not recorded, and that the sign statute cuts off a secret claim of ownership of this character.[1]*56 The appellant here claims a lien for the purchase money solely under the Mississippi statute, and it is not prevented from so doing, since the highest court of that state, in Superior Laundry & Cleaners v. American Laundry Mach. Co., 170 Miss. 450, 155 So. 186, decided that the holder of a purchase-money lien and a title-retention contract may elect between a suit to enforce the lien and an action to replevy the property. It also held that the sign statute did not cut off the purchase-money lien.[2]
We come then to the question first stated, whether or not the purchase-money lien is affected by the bankruptcy act. So far as this is a federal question, it cannot rest upon any such shifting basis as whether the trustee had notice of the lien. The rights of the trustee were fixed by federal statutes as of a date prior to his appointment, and before any one could know with certainty who would be appointed. The title of the bankrupt to the truck was vested in the trustee by operation of federal law. He is not such a purchaser[3] as is referred to in the state statute giving a lien for purchase money. The common use and acceptation of the term is against such construction, and the state is without power to legislate effectively so as to include trustees in bankruptcy as purchasers with or without notice of an existing lien. Valid liens may be created by state legislation, but the state may not limit the duration of such liens by the time of bankruptcy, or extend their duration beyond that time, upon the theory of notice to the trustee, or upon any conceivable theory. This is true, in addition to the reasons stated, because the federal act preserves in bankruptcy statutory liens of this class, and the effect of an adjudication in bankruptcy upon liens existing at the time of bankruptcy is a federal question.[4]
Without reference to any special lien or class of liens, the general rule is that a trustee in bankruptcy is not an innocent purchaser, but takes the property of the bankrupt subject to all valid liens, claims, and equities existing against it in the hands of the bankrupt at the time the petition is filed, except in cases where there has been a conveyance or incumbrance of the property which is void as against the trustee by some positive provision of the act, and except as affected by section 70, sub. c of the Chandler Act.[5] The amendment of 1910, as rewritten in said section 70, sub. c, provides that the trustee, as to all property in the possession or under the control of the bankrupt at the date of bankruptcy or otherwise coming into the possession of the bankruptcy court, shall be deemed vested as of the date of bankruptcy with all the rights, remedies, and powers of a creditor then holding a lien thereon by legal or equitable proceedings, whether or not such a creditor actually exists; and, as to all other property, the trustee shall be deemed vested as of the date of bankruptcy with all the rights, remedies, and powers of a judgment creditor then holding an execution duly returned unsatisfied, whether or not such a creditor actually exists.
The Mississippi statute gives the vendor of personal property a lien thereon for the purchase money while it remains in the hands of the first purchaser or of one deriving title or possession through him with notice that the purchase money was unpaid.[6]*57 The decisive point on this appeal is whether such prior purchase-money lien on personal property is superior in right to the lien of a subsequently enrolled judgment (which seems to be the most favored lien created by legal proceedings) where the property remains in the hands of the debtor. Since the trustee can prevail here only upon his rights as a lien creditor under local law, and since the appellant relies solely upon a local statute creating a lien for purchase money, it is apparent that our decision is controlled by the law of Mississippi. Let us see what are the rights of a judgment creditor in that state.
The judgment creditor succeeds only to such rights in the judgment debtor's property as the judgment debtor had. He takes the place of the judgment debtor and is barred by all the equities which bar the judgment debtor. He can assert no demand that the judgment debtor is precluded from asserting.[7] The lien of a duly enrolled judgment binds the property of the debtor in the hands of a subsequent vendee or more remote purchaser from the debtor. It becomes a lien on after-acquired property from the date of its acquisition.[8]
Two later Mississippi decisions are cited,[9] but if we look to what the court did in those cases, rather than to what it said, we shall find that, in the first, the purchase-money creditor prevailed outright in a suit against the trustee in bankruptcy; that, in the second, the court awarded the custody of the fund to the trustee, and remitted the purchase-money creditor to the bankruptcy court to assert its rights as a creditor therein, leaving the determination of its rights to the bankruptcy court. In both cases, the court was dealing with federal questions as well as questions involving the construction of state statutes, and we are unable to determine to what extent its ruling in either case was affected by its view of the federal questions, as to which we are not bound, rather than by its construction of state statutes, as to which we are bound so absolutely that it is necessary to conform our decision to any ruling the state court may make which is not violative of the federal constitution.[10]
In the Pearson case, supra [146 Miss. 225, 110 So. 710], the court seemed to be of the opinion that "a contract lien secured from the purchaser of the goods within four months preceding the bankruptcy" should be set aside under the bankruptcy act (which is a federal question), and the creditor required to "take its place in line with the other creditors of the bankrupt." The lien relied on here is not contractual, nor is it one created by legal proceedings; it arose solely by virtue of the Mississippi statute.
The decision to restore custody of the property to the trustee in bankruptcy turned upon whether or not the trustee took title to the property with notice that the purchase money was unpaid. This also was a federal question, because the title of the trustee to the property of the bankrupt vests by virtue of the federal statute, and, prior to the amendment of 1910, the trustee was vested with no better right or title than belonged to the bankrupt at the time the petition in bankruptcy was filed.[11]
The final and vital question presented on this appeal was not decided in the Pearson case. The court referred to an enrolled judgment creditor as "a lien-holder who prevails over creditors who have not secured judgment," and indicated that the lien of an enrolled judgment is stronger and more far-reaching than that of an execution *58 judgment, or of one who has obtained a lien by execution; but nowhere in the Pearson opinion did the court consider the relative rights, under state law, of a creditor having a lien for purchase money and a creditor holding a lien by legal or equitable proceedings. The court contented itself by awarding the custody of the property to the trustee in bankruptcy and remitting the purchase-money creditor, who was the plaintiff in that case, to the bankruptcy court to assert its rights as a creditor therein.
In Norris v. Trenholm,[12] this court had before it the identical statute now under review, and upheld the validity of the purchase-money lien in bankruptcy. It was decided after the amendment of 1910. The decision was questioned in one case and approved in another by the Supreme Court of Mississippi. In commenting on it in the first case,[13] the court said it was inconceivable, if the sign statute had been invoked in that case, that this court would have decided it without making any reference to the statute. It is now conceded that the sign statute has no application to creditors of a common debtor asserting a statutory lien which is not required to be recorded. This principle was recognized in the second case,[14] decided eight years later, wherein the first question was whether the seller of personal property to a merchant for the purpose of resale waived his lien for the purchase money. In holding that the statute was not subject to such a narrow construction, the court said this was the view taken in the case of Norris v. Trenholm, supra, "the opinion in which case is well reasoned, and in our judgment sound." [131 Miss. 671, 95 So. 643.] No such question was raised, or could have been decided, in Norris v. Trenholm, because the property involved (being show cases for a drug store) was not sold or held for resale by the merchant, not being a part of the stock of goods, but being fixtures. Nevertheless, the decision in Norris v. Trenholm is sound upon the federal questions therein decided; and, upon the Mississippi purchase-money statute, it is in harmony with the decisions of that state.
Our conclusion in the instant case is that the trustee merely stands in the shoes of the bankrupt, and can assert no better title to the truck than the bankrupt had. The purchase-money creditor, being first in time, is first in right; and the trustee in bankruptcy cannot defeat its claim by asserting rights of a creditor holding, under state law, a lien by legal or equitable proceedings. We decide nothing with reference to paragraph c of Section 67 of the Bankruptcy Act of 1938,[15] since no question with respect to costs of administration or wages having priority over liens such as the lien here involved was raised or decided below, and since there is nothing in the record or in the agreed statement of facts before us to present to the court an issue under said paragraph.
The judgment appealed from is reversed, and the cause remanded to the district court for further proceedings not inconsistent with this opinion.
NOTES
[1] Gillaspy v. Harvester Co., 109 Miss. 136, 67 So. 904; Payne Hardware Co. v. Harvester Co., 110 Miss. 783, 70 So. 892; Durant Motor Co. v. Simpson, 160 Miss. 313, 133 So. 672; Louisiana Oil Corp. v. Robbins, 169 Miss. 39, 152 So. 846.
[2] Campbell Paint & Varnish Co. v. Hall, Trustee, 131 Miss. 671, 95 So. 641.
[3] In re Goodwin Gas Stove, 166 Pa. 296, 31 A. 91; Kinne v. Kinne, 45 How. Prac. 61; Hall v. Hall, 81 N.Y. 130; Stamm v. Bostwick, 40 Hun 35, affirmed in 122 N.Y. 48, 25 N.E. 233, 9 L.R.A. 597; 32 Cyc. 1267 et seq.; 2 Blackstone 241, 285, 485.
[4] 11 U.S.C.A. § 107, sub. b.
[5] 11 U.S.C.A. § 110, sub. c; Collier on Bankruptcy, 13th Ed. Vol. 2, p. 1643; Thompson v. Fairbanks, 196 U.S. 516, 25 S. Ct. 306, 49 L. Ed. 577, 13 A.B.R. 437, 445; First National Bank v. Staake, 202 U.S. 141, 149, 26 S. Ct. 580, 50 L. Ed. 967, 15 A.B.R. 639; Zartman v. First National Bank, 216 U.S. 134, 30 S. Ct. 368, 54 L. Ed. 418, 23 A.B.R. 635; In re Georgia Handle Co., 5 Cir., 109 F. 632, 48 C.C.A. 571, 6 A.B.R. 472; Martin v. Orgain, 5 Cir., 174 F. 772, 98 C. C.A. 246, 23 A.B.R. 454; Norris v. Trenholm, 5 Cir., 209 F. 827, 126 C.C. A. 551, 31 A.B.R. 353; Pugh v. Loisel, 5 Cir., 219 F. 417, 33 A.B.R. 580; Border National Bank v. Coupland, 5 Cir., 240 F. 355, 39 A.B.R. 165; Lontos v. Coppard, 5 Cir., 246 F. 803, 40 A.B.R. 575; Merchants' & Mechanics' Bank v. Sewell, 5 Cir., 61 F.2d 814.
[6] Sec. 2239, Miss.Code 1930. In Norris v. Trenholm, supra, referring to this lien, the court said, 209 F. at p. 830: "It is only a security for the payment of the price, and the benefit conferred by it should follow the debt when it is assigned. Foundry Co. v. Pascagoula Ice Co., 72 Miss. 608, 615, 18 So. 364; Powell v. Smith, 74 Miss. 142, 151, 20 So. 872."
[7] Walton v. Hargroves, 42 Miss. 18, 97 Am.Dec. 429; Foute v. Fairman, 48 Miss. 536; Mississippi Val. v. Chicago, etc., R. Co., 58 Miss. 846; Harris v. Hazlehurst Oil Mill, 78 Miss. 603, 30 So. 273; Candler v. Cromwell, 101 Miss. 161, 170, 57 So. 554.
[8] Jenkins v. Gowen. 37 Miss. 444, explaining Moody v. Harper, 25 Miss. 484; Mitchell v. Wood, 47 Miss. 231.
[9] Campbell Paint & Varnish Co. v. Hall, 131 Miss. 671, 95 So. 641; Pearson v. Wm. R. Moore Dry Goods Co., 146 Miss. 225, 110 So. 709.
[10] Green v. Neal, 6 Pet. 291, 31 U.S. 291, 8 L. Ed. 402; Bauserman v. Blunt, 147 U.S. 647, 13 S. Ct. 466, 37 L. Ed. 316; Edward Hines Yellow Pine Trustees v. Martin, 268 U.S. 458, 45 S. Ct. 543, 69 L. Ed. 1050; Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188, 114 A.L.R. 1487.
[11] York Mfg. Co. v. Cassell, 201 U.S. 344, 352, 26 S. Ct. 481, 484, 50 L. Ed. 782; Southern Dairies v. Banks, 4 Cir., 92 F.2d 282.
[12] 5 Cir., 209 F. 827, 126 C.C.A. 551, 31 A.B.R. 353.
[13] Gillaspy v. Harvester Co., 109 Miss. 136, 67 So. 904.
[14] Campbell Paint & Varnish Co. v. Hall, 131 Miss. 671, 95 So. 641.
[15] 52 Stat. 877, 11 U.S.C.A. § 107, sub. c. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1516878/ | 292 Md. 683 (1982)
441 A.2d 708
LAWRENCE WILBUR HALL
v.
STATE OF MARYLAND
[No. 24, September Term, 1981.]
Court of Appeals of Maryland.
Decided February 24, 1982.
*684 The cause was argued before MURPHY, C.J., and SMITH,[*] DIGGES, ELDRIDGE, COLE, DAVIDSON and RODOWSKY, JJ.
George E. Burns, Jr., Assistant Public Defender, with whom was Alan H. Murrell, Public Defender, on the brief, for appellant.
Patricia E. McDonald, Assistant Attorney General, with whom was Stephen H. Sachs, Attorney General, on the brief, for appellee.
COLE, J., delivered the opinion of the Court.
In this case the issue we shall decide is whether a statement made by the accused to a probation officer conducting a presentence investigation at the direction of the trial court is admissible in a subsequent trial for purposes of impeachment.
The parties agreed upon the pertinent facts. On March 6, 1979, Willard and Lorraine Sheppard, along with their son, Stanley, were present in their Bethesda jewelry store, when, at about 11:15 a.m., a well-dressed man came to the door. The door, which was equipped with a lock operated by means of a buzzer, was opened by Stanley Sheppard and the man entered the store. Once inside, the man produced a pistol and announced, "This is a holdup." Moments later, a second man, identified at trial as the appellant, walked up to the door and stood there, looking in. The man inside the store, while pointing his weapon at the Sheppards, backed towards the door and attempted unsuccessfully to open it. He then demanded that the Sheppards press the buzzer to release the lock and admit the second man; the Sheppards refused. Apparently while the gunman was distracted by his attempt to open the door, Stanley Sheppard escaped to the basement beneath the store. Willard Sheppard then seized a pistol which was hidden in a cabinet and fled towards the basement. *685 As he did so, the man inside the store fired his pistol, wounding Mr. Sheppard in the back. Mrs. Sheppard then pressed the buzzer, releasing the lock and the gunman went out the front door. Mrs. Sheppard testified that the gunman, after stepping outside, paused for a moment with the second man who had remained standing at the door throughout the incident. The two then turned and walked in opposite directions.
Willard and Stanley Sheppard emerged from the basement and went in search of the robbers. Approximately a block away, they observed Lawrence Wilbur Hall standing near a bus stop. Stanley Sheppard flagged down a policeman and directed his attention to Hall, who was at that time attempting to enter a taxicab. The policeman approached Hall, ordered him to put his hands on top of the cab, and frisked him. Hall was carrying an empty briefcase and had a fully loaded revolver in the pocket of his coat. His alleged accomplice in the robbery, the man who entered the store and shot Mr. Sheppard, was neither apprehended nor identified.
Lawrence Wilbur Hall was tried by a jury in the Circuit Court for Montgomery County for assault with intent to rob, use of a handgun in the commission of a felony, carrying a handgun, and related offenses. The jury found Hall guilty of the crime of carrying the handgun. However, the jury was unable to reach a verdict as to the remaining charges and as to these charges a new trial was scheduled.
After Hall's conviction on the handgun charge and prior to the second trial, the court ordered a presentence investigation report. Pursuant to this order Hall was interviewed by Louis S. Monk, Jr., a probation officer. The presentence report was filed and Hall was sentenced.
At the second trial Hall took the witness stand and testified that at the time of the offense he was employed by Adreana's Pizzeria as a night delivery man and had been robbed before. He further testified that at the suggestion of his boss he carried the handgun to protect himself while working, that he had been working the night before his *686 arrest, and that he had forgotten to take the handgun out of his coat pocket before leaving the house on the day he was arrested.
The prosecutor, on cross examination, asked Hall questions regarding his employment at Adreana's. Hall continued to maintain that he was employed the night before and that this was the reason the gun was in his coat pocket. Thereafter, the prosecutor called Monk as a rebuttal witness to testify on the limited question of Hall's employment. Defense counsel objected. In a hearing outside the presence of the jury, the trial court ruled Monk's testimony admissible for purposes of impeachment. Monk testified before the jury that during the presentence interview Hall said that he was unemployed from January through March 6, 1979. Defense counsel did not request an instruction that Monk's testimony be admitted solely for purposes of impeaching Hall's credibility nor did the trial court offer such instruction on its own motion. Hall was convicted.
The Court of Special Appeals affirmed the judgment of the trial court in Hall v. State, 47 Md. App. 590, 425 A.2d 227 (1981). The intermediate appellate court rested its decision on the premise that there was no violation of Hall's Fifth Amendment protection against self-incrimination, as his statement was not compelled, and that there was no violation of his Sixth Amendment right to counsel because there had been no deliberate elicitation of incriminating statements by the State. We agree with the judgment reached by the Court of Special Appeals but rest our decision upon a different basis.[1]
Before us, Hall contends that the Court of Special Appeals erred in its consideration of his Fifth and Sixth Amendment rights, citing Estelle v. Smith, 451 U.S. 454, 101 S. Ct. 1866, *687 68 L. Ed. 2d 359 (1981), and Edwards v. Arizona, 451 U.S. 477, 101 S. Ct. 1880, 68 L. Ed. 2d 378 (1980), as dispositive. Hall also maintains that because the trial judge did not give a limiting instruction regarding Monk's testimony, the evidence was substantive and not restricted to its impeachment effect. Hall further argues that eliciting testimony on the presentence report in open court violated Maryland Code (1971, 1981 Cum. Supp.), Art. 41, § 124(b), providing for the confidentiality of presentence investigation reports.
As we noted, the Court of Special Appeals found that there had been no violations of Hall's Fifth and Sixth Amendment rights. However, assuming, arguendo, that Miranda warnings were constitutionally required and the statement given to Monk was not preceded by Miranda warnings,[2] and that the defendant's counsel was not present at the interview, the statement would still be admissible for purposes of impeachment.
In Franklin v. State, 281 Md. 51, 375 A.2d 116 (1977), cert. denied, 434 U.S. 1018, 98 S. Ct. 739, 54 L. Ed. 2d 764 (1978), we addressed the propriety of the admission of an extrajudicial statement where we assumed the statement was obtained without complying with the mandates of Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966). We held that
a statement may be received in evidence at the criminal trial of the declarer for the purpose of impeaching his credibility, not generally, but specifically with regard to a contradiction, reasonably inferred, between issues initiated by him on direct examination and the impeaching statement, provided the trustworthiness of the evidence satisfies legal standards. This is so even though the statement was obtained during a custodial interrogation *688 without the warnings by Miranda being given, or defectively given, or, if properly given, not effectively waived. [281 Md. at 58.]
Franklin followed the Supreme Court cases of Harris v. New York, 401 U.S. 222, 91 S. Ct. 643, 28 L. Ed. 2d 1 (1971) and Oregon v. Hass, 420 U.S. 714, 95 S. Ct. 1215, 43 L. Ed. 2d 570 (1975). In Harris an extrajudicial statement made by the accused was admitted into evidence to impeach testimony given by the accused on direct examination. The evidence was not admissible substantively because the accused had not been properly advised of his rights in the manner prescribed by Miranda and at the trial the court instructed the jury that the evidence regarding the out-of-court statements was to be considered only for its impeachment value. The Supreme Court ruled that even though the technical requirements of Miranda and the Fifth Amendment had not been met when the statement was obtained, the evidence was properly admitted. The reasoning was that "[t]he impeachment process here undoubtedly provided valuable aid to the jury in assessing petitioner's credibility, and the benefits of this process should not be lost, in our view, because of the speculative possibility that impermissible police conduct will be encouraged thereby." 401 U.S. at 225.
This precept was reiterated in Oregon v. Hass, supra. In Hass statements obtained after the defendant had asked for a lawyer were used to impeach testimony elicited on direct examination. The jury was instructed that the evidence was to be considered only for whatever impact it had on the defendant's credibility. The Supreme Court found Harris to be controlling and added that "the shield provided by Miranda is not to be perverted to a license to testify inconsistently, or even perjuriously, free from the risk of confrontation with prior inconsistent utterances." 420 U.S. at 722.
Examining the circumstances in the instant case under the rules established by this Court in Franklin and the Supreme Court in Harris and Hass it is obvious that Hall cannot prevail on his contention that the statement he made *689 to Monk, the probation officer, was inadmissible because it was obtained without Miranda warnings. The prior inconsistent statement was admitted to impeach Hall's credibility. It related specifically to the statement made by Hall on direct examination that he was employed at the time he was arrested and directly contradicted that assertion. Hall does not claim that the evidence was coerced nor does the record reflect such foul play. Under these circumstances it is apparent that the trial court properly admitted the testimony of the probation officer.
Nor do we find any violation of Hall's Sixth Amendment right to counsel. The record is clear that Hall and his counsel were aware that the trial court ordered a presentence report. As a matter of fact, the record suggests that defense counsel escorted him to the Department of Parole and Probation for the interview and left him there. We agree with the Court of Special Appeals that there "is no evidence which suggests that the state contrived to separate the appellant and his counsel or to conduct the interview at a time when appellant's counsel was not present." 47 Md. App. at 596. We find no Sixth Amendment violation.
There is, however, a factual wrinkle present in this case that was not present in Harris or Hass. The admissibility of the extrajudicial comment is predicated on its use for impeachment purposes only. In both Harris and Hass the trial judge gave limiting instructions to the jury, saying that the testimony was to be assessed for its impact on the defendant's credibility and not as substantive evidence of guilt. No such limiting instruction was given in the instant case. Hall contends that this allowed the jury to consider the evidence substantively, thereby obviating the applicability of the Harris-Hass exception.
We find this contention unpersuasive for two reasons. First, Hall's defense attorney did not request a limiting instruction nor did he object when such an instruction was not given. Second, even without a limiting instruction the testimony by its nature was not substantive evidence of guilt. Hall argues that the absence of an objection or a request when the impeaching testimony was heard does not *690 preclude him from prevailing on this point on appeal. Hall cites People v. Green, 27 Cal. 3d 1, 164 Cal. Rptr. 1, 609 P.2d 468 (1980), and Jones v. State, 243 Ga. 820, 256 S.E.2d 907, cert. denied, 444 U.S. 957, 100 S. Ct. 437, 62 L. Ed. 2d 329 (1979) for the proposition that giving a limiting instruction is a prerequisite to admitting impeachment evidence and that the burden is on the trial court to give the instruction.
We initially point out that, while these cases may have stood for the propositions Hall suggests, both cases found the absence of instruction to be harmless error. More important, however, is the fact that the law in this State is controlled by a Maryland Rule that has been well articulated by case law. Maryland Rule 756 (g) provides that:
Upon appeal a party assigning error in the instructions may not assign as of right an error unless (1) the particular portion of the instructions given or the particular omission therefrom or the particular failure to instruct was distinctly objected to before the jury retired to consider its verdict and (2) the grounds of objection were stated at that time. Ordinarily no other error will be considered by the Court of Appeals or the Court of Special Appeals, but the appellate court, either of its own motion or upon the suggestions of a party may take cognizance of and correct any plain error in the instructions, material to the rights of the accused even though such error was not objected to as provided by section f of this Rule.
Thus, unless we can find "plain error" in the instructions, material to the rights of the accused, Hall is precluded from complaining about the trial court's failure to give an instruction on appeal.
The doctrine of plain error was recently the subject of extensive scrutiny by this Court. In State v. Hutchinson, 287 Md. 198, 411 A.2d 1035 (1980), we reversed a conviction for second degree rape where the trial judge failed to instruct the jury that, aside from various guilty verdicts it could find, *691 it could also find the defendant not guilty. We expressed our disinclination to prescribe a fixed formula for plain error but went on to say that
we do expect that the appellate court would review the materiality of the error in the context in which it arose, giving due regard to whether the error was purely technical, the product of conscious design or trial tactics or the result of bald inattention.... In our cases we have characterized instances when an appellate court should take cognizance of unobjected to error as compelling, extraordinary, exceptional or fundamental to assure the defendant a fair trial. 287 Md. at 202-03.
Applying the principles of Hutchinson to the case at bar we are led to the conclusion that there was no plain error. The testimony introduced by the State was narrowly focused on the question of the truth of Hall's assertion that he was employed at the time of his arrest. We cannot characterize the situation as compelling, extraordinary, or exceptional nor does it appear that the failure to instruct was an error that was so fundamental that Hall was deprived of a fair trial.[3]
That the failure to give a limiting instruction was not plain error is further supported by examining the nature of the evidence admitted. Monk testified only that Hall had told him that at the time of the offense he was unemployed. This was not an occasion where there was a conflict with an alibi defense or some other offer of proof of criminal agency. Rather, Monk's testimony concerned only a prior inconsistent statement and did not in any way offer substantive *692 evidence of Hall's guilt or innocence. As such the evidence could only have been interpreted as reflecting on credibility. On the basis of the foregoing rationale, we conclude that Hall's failure to object to the lack of instruction or failure to request a limiting instruction precludes him from using this as a leg upon which to support the alleged constitutional violations that he contends occurred.
Hall's last contention is that admitting Monk's testimony was a violation of Maryland Code (1971, 1981 Cum. Supp.), Art. 41, § 124 (b) and Maryland Rule 771 (b). In pertinent part, section 124 (b) provides that "presentence reports shall be confidential and not available for public inspection except upon court order or for use by any correctional institution." Maryland Rule 771 (b) tracks section 124 (b) and provides that a presentence report "is not a public record and shall be kept confidential as provided in Article 41, § 124 (b) of the Maryland Code."
The short answer to this contention is that the report was not introduced nor was the substance of the report made public. The information provided the probation agent is the kind (such as name, age, home address) routinely and preliminarily ascertained in any interview and is not gathered for the purpose of incriminating the defendant. In our view this type of information was not intended by the Legislature to be protected by § 124 (b) and thus we find no violation of either the spirit or the letter of § 124 (b) or Rule 771 (b).
We hold, therefore, that Monk's testimony based on the presentence interview was admissible to impeach Hall's statement made on direct examination and, as limited, this testimony did not violate the confidentiality requirements of Article 41, § 124 (b) or Rule 771 (b).
Judgment of the Court of Special Appeals affirmed.
Appellant to pay the costs.
NOTES
[*] Reporter's Note: Digges, J., now retired, participated in the hearing and conference of this case while an active member of this Court; after being recalled pursuant to the Constitution, Article IV, Section 3A, he also participated in the decision and adoption of this opinion.
[1] In its decision of this case, the Court of Special Appeals recognized the impact of Oregon v. Hass, 420 U.S. 714, 95 S. Ct. 1215, 43 L. Ed. 2d 570 (1975), and Harris v. New York, 401 U.S. 222, 91 S. Ct. 643, 28 L. Ed. 2d 1 (1971), on the admissibility of testimony offered for impeachment where it might otherwise be inadmissible. Hall v. State, 47 Md. App. 590, 597-98, 425 A.2d 227 (1981). It is our opinion that these cases are the crux of the holding in this case and obviate the necessity of a protracted Fifth and Sixth Amendment analysis.
[2] In Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966), the Supreme Court held that prior to any custodial interrogation by law enforcement officers the accused must be warned that he has a right to remain silent; that any statement he makes can be used against him; that he has the right to the presence of an attorney; and if he cannot afford an attorney one will be appointed for him.
[3] Maryland cases abound with instances where the plain error doctrine was advanced for a failure to instruct and where this Court subsequently denied review. See, e.g., Dimery v. State, 274 Md. 661, 338 A.2d 56 (1975), cert. denied 423 U.S. 1074, 96 S. Ct. 857, 47 L. Ed. 2d 84 (1976), (failure to tell jury in rape case they could specify a penalty less than life not plain error); Giles v. State, 229 Md. 370, 183 A.2d 359 (1962) (failure to instruct not reviewed because Court refused to engage in appellate alleviation of trial tactics); Madison v. State, 200 Md. 1, 87 A.2d 593 (1952) (Court refused to pass on a non-existent jury instruction). | 01-03-2023 | 10-30-2013 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.