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https://www.courtlistener.com/api/rest/v3/opinions/1147897/ | 228 So. 2d 723 (1969)
George E. CRAIG and James Sullivan
v.
J. K. (Woody) BURCH, d/b/a Burch Tire Company et al.
No. 7787.
Court of Appeal of Louisiana, First Circuit.
November 17, 1969.
Rehearing Denied December 22, 1969.
*725 Clifton Carl, New Orleans, for appellants.
Maurice Friedman, New Orleans, for appellees.
Before LANDRY, SARTAIN and ELLIS, JJ.
LANDRY, Judge.
Plaintiffs appeal the judgment of the trial court denying recovery of damages resulting from an automobile accident allegedly caused by a defectively recapped tire purchased from defendant, J. K. (Woody) Burch, d/b/a Burch Tire Company (Burch). The trial court found the tire was in fact defective but that the negligence of plaintiff driver, George E. Craig, was the sole proximate cause of the accident. On this basis, Craig and his guest passenger, James Sullivan, were denied recovery, hence this appeal. We disagree with the determination that plaintiff Craig's negligence was the sole proximate cause of the accident. We therefore reverse and render judgment for appellants.
Montgomery Ward, original retailer of the recapped tire, and Gates Rubber Company, tire manufacturer, were also made defendants. Plaintiffs have not prosecuted their appeals as to these defendants. Consequently, Burch is the sole appellee herein.
On January 8, 1966, Burch sold Craig three recapped tires. Burch mounted the tires on Craig's 1957 Oldsmobile, one on *726 the right front wheel, and inflated them to 32 pounds pressure. On January 16, 1966, Craig was proceeding in his vehicle from New Orleans to Angola, Louisiana, accompanied by his guests, Sullivan and one Emma Morgan. Sullivan occupied the right side of the front seat; Mrs. Morgan was sitting in the middle. The accident occurred on Highway 61, approximately 8 miles north of Baton Rouge. It is conceded the recap on the right front tire of Craig's car became separated from the tire carcass. Craig, upon hearing a bumping noise and feeling his car pull to the right, cut sharply to his left. The vehicle went out of control and overturned.
Appellants contend the accident occurred solely due to the failure of the recap. Appellee maintains the tire was properly recapped and that the accident occurred solely because of Craig's fault in (1) traveling at an excessive speed; (2) acting unreasonably by "snatching" his vehicle to the left causing him to lose control, and (3) allowing Mrs. Morgan to interfere with his driving ability by leaning on Craig while he was driving.
Craig testified he was traveling northerly on a two-lane, paved highway at a speed between 65 and 70 miles per hour under normal weather conditions. Suddenly his right front tire made several "bounces" giving forth a "Bloomp, Bloomp, Bloomp" sound and his vehicle veered sharply to the right onto the right shoulder of the road. Craig then pulled the steering wheel to his left to correct the vehicle's course. The automobile went out of control, skidded sideways down the highway, struck a culvert, overturned completely and landed upright on its wheels. It is undisputed that following the accident, the recap was found to have separated from the tire carcass. Craig denied Mrs. Morgan was asleep with her head on his shoulder at the time of the accident.
Mrs. Morgan's testimony was simply that she was asleep with her head on Sullivan's left shoulder. She awoke while the car was overturning in the air and recalled nothing further pertaining to the mishap.
Plaintiff Sullivan in essence corroborated Craig's testimony regarding the speed of the vehicle at the time of the accident. Sullivan stated further that he heard a noise made by something striking the right front fender of the car. He also testified that Craig's corrective maneuver was made after the tire made about two "bloops". He was of the opinion Craig could not help losing control of the vehicle.
James B. Howard, state trooper, arrived at the scene approximately two minutes after the accident occurred. He observed that the right front tire of plaintiff's vehicle was still inflated but that the recap tread was separated from the carcass. Trooper Howard stated the posted speed limit was 60 miles per hour. He observed skidmarks beginning in the northbound lane curving westerly into the west ditch, thence in the ditch to a culvert, across the culvert head to where the vehicle came to rest. For a distance of about thirty feet there were no skid marks because the vehicle was airborne. Trooper Howard believed the car turned completely over in the air and landed on its wheels. He found no damage to the vehicle. According to Howard, the right front wheel skidded 241 feet, the right rear 263 feet, the left front 67 feet and the left rear 56 feet. The import of the Trooper's testimony is that the vehicle skidded 49 feet on the left shoulder of the road, continued broadside 79 feet in the drainage ditch, struck the culvert, flipped over and traveled an additional 105 feet to its resting place. The Trooper found no skid marks on the right shoulder of the road.
Narration of the procedure employed in recapping tires is believed essential to a proper understanding of the question of alleged negligence and breach of warranty in selling plaintiff Craig a defectively recapped tire. It appears that tires selected for recapping should be chosen only after careful inspection for cuts, holes, breaks and other imperfections. If the carcass *727 has any significant holes or breaks, they are repaired; if unrepairable, the carcass is discarded and not used. Because extreme heat is used in the recapping, it is of the utmost importance that all tires be thoroughly dried before the process is begun. This is so because if moisture, vegetation or other foreign matter is allowed to remain in holes or cuts in the carcass, the heat applied in recapping causes steam or gas to form in the holes or cuts resulting in what is called a "mold blow", which is a separation between the tread and carcass. After the tire is inspected and dried, it is then buffed with an electrical machine to remove all excess rubber from the carcass and smooth its surface for application of the recap tread. An adhesive is then applied to affix the "camel back", a trade name for the recap rubber. The tire, with a tube inside, is then placed in a mold. The tube is inflated to maintain the tire's shape and insure a good bond between carcass and camel back. The tire is then subjected to heat of approximately 300 which binds the tread to the carcass. When this process is completed, the tire is immediately inspected, while still hot, for possible mold blow which will appear in the form of a bump or blister on either the inside or outside of the carcass. When a tire cools, blisters resulting from mold blow gradually disappear as the tread and carcass still remains. It is conceded that tires awaiting recapping tend to sweat in storage. Standard procedure dictates that tires be dried in a specially constructed drying room before being recapped.
Charles M. Strader, a recognized recapping expert, testifying in plaintiffs' behalf, stated the tire in question suffered a mold blow. He readily pointed to a cut which he found responsible for the failure. He was of the opinion proper examination while the tire was still hot should have disclosed this abnormality. Mr. Strader expressed the view that tires to be recapped should be stored in a room having proper ventilation to allow thorough drying and that proper procedure required that tires be dry or dried before recapping. He explained that recaps are designed to operate at highway speeds and that the accident in question would not produce the separation that occurred. He also stated that a separation involving 360 of tread, as in this case, would give only a split second warning and would develop in less than 100 feet of highway travel. In addition, Mr. Strader questioned the advisability of recapping this particular tire upon finding it was "pretty old". In Strader's opinion, the skidding of the vehicle and its overturning had no connection with the separation of the tread from the tire.
Everett H. Gibbs, recapping expert, called on behalf of defendant, testified the tire in question had little mileage since being recapped. He also found the tire had not run very long with the separation before the tread came off. He was of the view the cut identified by Strader was probably the origin of the tread separation. Mr. Gibbs conceded a purchaser may reasonably expect a recapped tire will perform safely at highway speeds but that normal highway speeds sustained sufficiently long could produce sufficient heat to cause a mold blow. Gibbs agreed with Strader's conclusion that the skidding and overturning of Craig's car did not cause the tire failure. Based on tire age and evidence of former repair, Gibbs considered that perhaps the carcass should have been rejected for recapping. He stated that 200 of heat are generated by a tire going 70 miles per hour but that in the recapping process heat up to 300 was used. He indicated the tire had a mold blow. Mr. Gibbs also stated a recapped tire with a mold blow would bump if placed on a car while still hot, but if allowed to cool before being used, it would ride smoothly.
Woods Burch, defendant's brother and shop foreman, testified he inspected all tires for recapping and would pass those having a small nail hole but reject those having tread cuts, breaks or cracks. He agreed that if the tire in question had a tread cut, it should have been rejected if the cut were one that could be found. He *728 could not, however, after examining the tire in court, locate the cut previously identified by Strader and Gibbs. At one point Mr. Burch indicated it was his policy to caution purchasers that recapped tires were unsafe for highway driving. He did not, however, make the sale to plaintiff and does not know whether some other employee so warned Craig. This testimony, however, is inconsistent with his admission that he believed such tires safe because he used them himself. Mr. Burch also testified his recaps are never sold hot and that sales usually take place after from two to four weeks storage. Additionally he admitted his plant had no special drying room or apparatus. He explained that tires were stored either in the boiler room or a shed attached to the establishment. Each tire was merely visually inspected and if found to be wet, was allowed to dry before processing began.
We agree in the trial court's conclusion that defendant was responsible for the tire's failure on the dual basis of negligence in performing a faulty recapping process and breach of the vendor's implied warranty of fitness of the article sold.
The vendor warrants the thing sold to be fit for its intended purpose. Dougherty v. Petrere, 240 La. 287, 123 So. 2d 60. LSA-C.C. Article 2476, provides that the warranty against hidden defects and redhibitory vices is implied in every contract of sale, unless expressly excluded. Radalec, Incorporated v. Automatic Firing Corp., 228 La. 116, 81 So. 2d 830.
The defect in the tire in question was hidden. It was one not discoverable by the purchaser upon reasonable inspection. This conclusion is warranted when it is recalled that a separation would only become manifest by bumping in the event the tire were used while still warm from the recapping process. Nor do we find warranty was expressly disclaimed.
The degree of care owed increases in relation to the danger inherent in a given situation. Culpepper v. Leonard Truck Lines, Inc., 208 La. 1084, 24 So. 2d 148; Barret et al. v. Caddo Transfer & Warehouse Co., Inc., 165 La. 1075, 116 So. 563, 58 A.L.R. 261. The danger incident to providing a motorist with an unsafe tire is obviously great. The care displayed in this instance falls short of discharging the duty owed.
We find that defendant Burch breached his warranty in negligently recapping a carcass too old for such purposes, failing to properly dry the tire in question, failing to discover a defect which should have prompted rejection of the tire sold plaintiff, and failing to have proper drying facilities in his establishment.
We come to the pivotal issue in this cause, namely, the alleged negligence of plaintiff Craig. The question of his alleged culpability for failure to anticipate failure of the recap admits of ready disposal. The record is barren of evidence that Craig either knew or was warned or informed that recapped tires were unsafe for driving at legal highway speeds. Moreover, the testimony of the experts Strader and Gibbs is to the effect recaps are safe at maximum legal speeds which we judicially note to be 70 miles per hour on some highways in this state.
However, Craig's alleged negligence in traveling at excessive speed and imprudently reacting to the emergency presented, are issues not so simply resolved. Cases are legion in our law that negligence constituting the proximate cause of an accident imposes liability on the defendant. Pelloat v. State Through Department of Highways, La.App., 198 So. 2d 674. By the same token, a plaintiff guilty of negligence proximately causing an accident (contributorily negligent) is denied recovery from a defendant who is also guilty of negligence proximately causing the accident. Hoover v. Wagner, La.App., 189 So. 2d 20. We believe cases of this nature can be more properly adjudicated when the alleged negligence of the defendant or *729 contributory negligence of plaintiff are considered in the light of four basic concepts, namely: (1) duty of care owed; (2) breach of the duty of care; (3) whether the breach of duty found is a cause in fact of the accident, and (4) proximate cause. Authorities are in unanimous agreement that the question of duty of care owed is determined in view of two elementary factors: (1) Does plaintiff have an interest which is protected at all, and (2) is plaintiff's interest protected against the type of conduct with which he can charge defendant? In determining breach of duty, the question is the reasonableness of the care taken by defendant in the light of the attending circumstances including the interest of the plaintiff and the social utility of defendant's conduct.
Cause in fact is a purely factual inquiry which poses the "but for" test, meaning but for defendant's action the accident would not have occurred. If this inquiry is answered affirmatively, the action of the defendant (or plaintiff charged with contributory negligence) is a cause in fact of the accident. Stated otherwise, a cause in fact is the sine qua non of the accident, an indispensable antecedent without which the accident would not have occurred. Arnold v. Griffith, La.App., 192 So. 761.
We note that in Dixie Drive It Yourself System New Orleans Co. v. American Beverage Company, 242 La. 471, 137 So. 2d 298, the Supreme Court has added the "substantial factor" test as a means of determining cause in fact. The rule there stated is that negligence is a cause in fact if it was a substantial factor in bringing about the injury.
Liability does not attach unless the conduct complained of is a cause in fact, i. e., it must bear a causal connection in fact to the occurrence of the accident. Arnold v. Griffith, above.
The converse is not necessarily true in that every cause in fact does not necessarily impose liability upon the perpetrator.
The cause in fact test poses the issue what would the consequences have been if defendant had not acted? To establish his cause of action, plaintiff must answer this inquiry by establishing that, more probably than not, the accident would not have occurred but for defendant's action. Stated otherwise, plaintiff must show a more than 50% chance there would have been no accident except for defendant's conduct. Perkins v. Texas & New Orleans Railroad Co., 243 La. 829, 147 So. 2d 646; Lawson v. Continental Southern Lines, Inc., La.App., 176 So. 2d 220.
Proximate cause, however, is not a factual consideration. It is a legal tool, a legislative and judicial policy. Dartez v. City of Sulphur, La.App., 179 So. 2d 482. From time immemorial courts have customarily applied two well known tests in determining proximate cause. These are: (1) Was the accident the natural and probable consequences of defendant's act, and (2) Were the results of defendant's conduct reasonably foreseeable? As thusly applied, it appears the proximate cause concept has been employed by the courts to extend or restrict liability at the court's discretion depending upon the circumstances of each case rather than on the basis that the action of the defendant was or was not a cause in fact of the accident. Such application is one of policy as evidenced in cases where the negligent defendant is not held for all losses causally related to his negligent act but only those that are the result of the force he set in motion while that force is of substantial moment. Harvey v. Great American Indemnity Co., La.App., 110 So. 2d 595; Encyclopedia of Automobile Law and Practice, Section 2532.
Proximate cause presupposes breach of a duty constituting a cause in fact of the accident. Dartez v. City of Sulphur, La.App., 179 So. 2d 482. When considering proximate cause in connection with a statutory violation, the basic inquiry is what kind of risk or risks does the statute seek to protect against? Dixie *730 Drive It Yourself System New Orleans Co. v. American Beverage Co., 242 La. 471, 137 So. 2d 298. Stated otherwise, proximate cause involves a determination of what statutory duties extend to what risks. In the absence of statutory duty, proximate cause is determined in the light of the query whether plaintiff's particular interest is protected against defendant's particular conduct. Dartez v. City of Sulphur, above. It appears, therefore, proximate cause is but a third facet of the duty formula utilized as a means of determining when liability attaches to a cause in fact or to one or more of several causes in fact. Bennett v. Sears, Roebuck & Company, La.App., 183 So. 2d 757; 65 C.J.S. Negligence § 104, page 1135.
The term proximate cause must be used with caution because it does not concern an inquiry into cause. Rather it involves an inquiry into duty, more particularly, the extent of defendant's duty with respect to plaintiff's interest to be protected.
The court below accepted the skidmarks and the damage to the culvert struck by plaintiff's automobile as evidence of excessive speed. However, skidmarks and physical damage do not, standing alone constitute proof of excessive speed under all circumstances. See Picard v. Joffrion, La.App., 202 So. 2d 372; Chiasson v. Connecticut Fire Insurance Company, La.App., 144 So. 2d 726, and Lucas v. Broussard, La. App., 197 So. 2d 696. We find defendant has failed to bear the burden of proof as regards the plea of contributory negligence.
As previously shown, breach of duty is a cause of fact if either the accident would not have occurred but for the alleged breach or if the breach were a substantial factor in causing the accident. Applying the test to the case at hand, the question is would the accident not have occurred but for Craig's breach of duty: The answer is that it would have. This conclusion is justified in view of the expert testimony that (1) the speed did not cause the tire failure; (2) the failure could just as well have happened at 60 miles per hour, and (3) that recaps are at least impliedly warranted to be safe at maximum highway speeds of up to 70 miles per hour. Since Craig's breach of duty was not a cause in fact of the accident, it could not be a proximate cause thereof. There being no causal connection between Craig's fault and the occurrence of the accident, he must be deemed free from contributory negligence. American Road Insurance Company v. Irby, La. App., 203 So. 2d 427.
Craig's alleged negligent reaction to the emergency is not supported by the testimony. A motorist faced with a sudden emergency, not of his own creation, is not required to react as a reasonably prudent driver under ordinary conditions permitting calm, unhurried decision. All that is required in such instances is a response reasonably to be expected of an ordinarily prudent motorist under similar circumstances. Wallace v. Travelers Insurance Company, La.App., 195 So. 2d 712.
Craig and Sullivan both testified that only a brief interval elapsed between the onset of the emergency and Craig's loss of control. Their evidence is confirmed by that of the expert Strader who testified a mold blow gives only a split second warning and develops in less than 100 feet of highway travel. Craig reacted to the sudden swerve of his vehicle to the right by turning the wheel sharply to the left. We believe such reaction is to be expected of a reasonably prudent driver under similar circumstances especially since the vehicle in question was in danger of leaving the highway when the corrective measure was attempted. The skidmarks at the scene represent a braking attempt on the part of the driver. The longer skidmarks made by the right front and rear tires indicate the car braked unevenly. To hold that a reasonably prudent driver could have maintained control of the vehicle under such circumstances is to engage in sheer speculation. We find no breach of Craig's duty to react as a reasonably prudent motorist under the circumstances.
*731 We find defendant's conduct was a cause in fact, an indispensable element without which the accident would not have happened. It was also the sole proximate cause of the mishap. Plaintiff had the legal right to rely upon defendant's warranty that the tire was free of defects and was safe for driving under the conditions involved in this instance. Defendant's duty was to furnish a tire free of latent defects. This obligation extended to the risk of a tire failing at the speed at which plaintiff in this case was traveling. Defendant is charged with knowledge that a mold blow in a recapped tire could be anticipated to fail and precipitate an accident under the circumstances obtaining herein.
Neither appellant produced any medical proof of injuries save and except hospital and medical reports.
Plaintiff Craig testified he sustained two fractured ribs of which one was allegedly broken, and also injury to the nerves in his neck, shoulder and right arm. Records in evidence indicate he was hospitalized for X-rays and was administered injections incurring costs of $55.00. He was transferred by ambulance to a second hospital where he remained two days and subsequently received treatment as an outpatient at a cost of $245.00. X-rays of his chest, neck and back on January 17, 1966, proved negative. It further appears he complained of neck and back pain and suffered tenderness of the ribs on January 17, 1966. Symptoms of whiplash injury were noted on January 25, 1966. On February 10, 1966, his complaints of pain were minimal. Mr. Craig testified he was a part time employee of Sullivan's Trim Shop doing piece work which netted him $45.00 to $90.00 weekly. He allegedly lost six weeks employment. In view of the nature of his injuries, we think an award to plaintiff Craig in the sum of $1,250.00 will be ample compensation for his pain and suffering.
Plaintiff must prove with legal certainty every item of damages claimed. Foggin v. General Guaranty Insurance Company, La.App., 207 So. 2d 176. Since plaintiff Craig neither repaired his vehicle nor offered competent evidence to establish the damage thereto, no recovery can be allowed for this item. LeBlanc v. Jordy, La.App., 10 So. 2d 64.
As a general rule plaintiff's detailed and uncorroborated testimony as to lost earnings may, if reasonable and accepted, support an award for such damages, but not where corroborative evidence is shown to be available and is not produced. Stevens v. Dowden, La.App., 125 So. 2d 234. We find plaintiff's testimony somewhat vague and uncertain as to alleged total earnings. No attempt at corroboration was made; neither was it shown that corroboration was unavailable. Under the circumstances we deny recovery of this item. In addition to the award for personal injuries, Craig is entitled to recover proved special damages of $300.00. A claimed ambulance expense of $15.00 is unsupported in the record and therefore denied.
Plaintiff Sullivan sustained a bruised and swollen leg and a chipped coccyx. He was X-rayed at a Baton Rouge Hospital and received treatment at New Orleans Charity Hospital, New Orleans, in the sum of $38.00. He testified his leg was painful for about two to three weeks and for about the same time his back bothered him when he sat. We find an award of $500.00 will adequately compensate him for these injuries. Sullivan testified that although he was not a union member, he worked about two or three days weekly as a longshoreman earning $3.52 hourly for at least 8 hours each day. He conceded he was employed only when there were no union members available. He offered no corroboration whatsoever as to his alleged lost earnings. We therefore deny this item.
Accordingly, it is ordered, adjudged and decreed the judgment of the trial court rejecting plaintiffs' demands be and the same is hereby reversed and set aside.
*732 It is further ordered, adjudged and decreed there be judgment herein in favor of plaintiff George E. Craig and against defendant J. K. (Woody) Burch, d/b/a Burch Tire Company, in the sum of $1,550.00, together with legal interest from date of judicial demand, until paid.
It is further ordered, adjudged and decreed that there be judgment herein in favor of plaintiff James Sullivan and against defendant J. K. (Woody) Burch, d/b/a Burch Tire Company, in the sum of $538.00, together with legal interest thereon from date of judicial demand, until paid. All costs of these proceedings to be paid by defendant J. K. (Woody) Burch, d/b/a Burch Tire Company.
Reversed and rendered. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1228785/ | 385 S.E.2d 463 (1989)
325 N.C. 484
STATE of North Carolina ex rel. UTILITIES COMMISSION; Carolina Utility Customers Association, Inc., Intervenor; Carolina Industrial Group for Fair Utility Rates (Cigfur-II), Intervenor; North Carolina Electric Membership Corporation, Intervenor; United States Secretary of the Navy, Intervenor; Elizabeth Anne Cullington, Intervenor; and North Carolina Fair Share, Intervenor, Appellees,
v.
Lacy H. THORNBURG, Attorney General, Intervenor; Carolina Power & Light Company, Applicant, and
Public StaffNorth Carolina Utilities Commission, Intervenor.
No. 89A89.
Supreme Court of North Carolina.
November 9, 1989.
James D. Little and David T. Drooz, Raleigh, for Public StaffNorth Carolina Utilities Com'n, cross-appellant.
Lacy H. Thornburg, Atty. Gen. by Jo Anne Sanford, Sp. Deputy Atty. Gen., Karen E. Long and Lemuel W. Hinton, Asst. Attys. Gen., Raleigh, for Attorney General, appellant.
Richard E. Jones, Vice President and Gen. Counsel and Robert S. Gillam, Associate *464 Gen. Counsel, Raleigh, for Carolina Power and Light Co., appellant.
FRYE, Justice.
This is a general rate case in which CP & L sought to include in the rate base the full costs of the Shearon Harris Nuclear Power Plant (Harris Plant), which became operational in May, 1987. Approximately $570,000,000 of the total costs of constructing Unit 1 was quantified as the cost of constructing common facilities to service abandoned Units 2, 3, and 4.
The essential questions presented for our review are whether the Commission erred in allowing CP & L to include in its rate base costs of $389,442,000 of the approximately $570,000,000 invested in plant facilities to service abandoned Units 2, 3, and 4 and in allowing CP & L to amortize the remaining $180,558,000 as cancellation costs. In order to answer these questions, we must examine two statutes, N.C.G.S. § 62-94, which establishes the standard of review for an appeal from a decision by the Commission, and N.C.G.S. § 62-133, which sets out the rate making process for the Commission to follow when deciding a general rate case. We hold that the orders of the Commission were affected by an error of law, N.C.G.S. § 62-94(b)(4), requiring that this case be remanded to the Commission with instructions to remove approximately $389,000,000 from the rate base and include it with the approximately $181,000,000 to be treated as cancellation costs because the former amount was not spent for property that is "used and useful" in providing electric service to the consumers as required for inclusion in the rate base under N.C.G.S. § 62-133(b)(1). Our decision further requires that the Commission on remand determine whether a new rate of return must be fixed in accordance with N.C.G.S. § 62-133(b)(4) in order that the rates fixed by the Commission shall, pursuant to N.C.G.S. § 62-133(a), be fair to CP & L and to the consumer.
I.
On 10 September 1987 CP & L filed an application with the Commission for a rate increase which would include the full construction costs of the Harris Plant. The Commission entered an order on 9 October 1987 declaring the application a general rate case. Eight parties were allowed to intervene. They were: the Public Staff, the North Carolina Department of Justice, the United States Department of Defense, Carolina Utility Customers Association, Inc., Carolina Industrial Group for Fair Utility Rates, the North Carolina Electric Membership Corporation, North Carolina Fair Share, and Elizabeth Anne Cullington. Hearings were held in Goldsboro, Wilmington, Asheville, and Raleigh during March and April of 1988. Seventy-five witnesses testified at these hearings. Further hearings were held in Raleigh from 14 April 1988 to 16 June 1988. Six of the eight intervening parties introduced testimony from twenty-one expert witnesses and six industrial consumers.
When the Harris Plant was originally designed in 1971, it included four nuclear generating units with one unit scheduled to be brought on line each year from 1977 through 1980. CP & L based its plans for this plant on projected growth rates which would require construction of all four nuclear generating units at the Harris Plant to meet the projected electric needs of its customers. However, the 1973 OPEC oil embargo changed the projected demands for electricity. New studies showed that CP & L would not need the four units originally planned for the Harris Plant. Therefore, CP & L decided to cancel the plans for Units 2, 3, and 4.
The initial cost estimate to build Harris Unit 1 was approximately $315,000,000. Harris Unit 1 actually came into commercial operation in 1987 at a cost of approximately $3,900,000,000. The original plans for the Harris Plant, adopted in 1971, called for a cluster design with the four units sharing certain common plant facilities such as the fuel handling building and waste processing building. The purpose of the cluster design was to save money overall by sharing common facilities rather than building these facilities separately for each unit. However, with the cluster design, *465 the first unit built would be more costly than follow-up units because certain structures and systems needed to operate the first unit are sized to be shared with the other units. Since construction on Unit 1 was begun before the other units were cancelled and because the original cluster design was not altered, these common facilities were built to service Unit 1 alone. Thus, the support facilities for Unit 1 were larger than necessary to serve that single unit since they were built to serve all four units.
As a result of the delays and cost overruns on Harris, the Public Staff filed a motion requesting a prudence audit of the plant's construction costs. The Commission issued an order suggesting that the Public Staff oversee such an audit. The Public Staff hired Canatom, Inc., an international engineering and consulting firm with extensive experience in nuclear power plant implementation, to investigate the reasonableness of management decisions and costs related to Unit 1. Canatom spent a year conducting this study and presented its findings in a three-volume report. This report was filed with the Commission in this rate case.
The only part of Canatom's report which is of concern on this appeal is its finding of imprudence on the part of CP & L on the "redesign" issue. Canatom's report indicates that CP & L itself conducted a study to estimate the cost impact of shared or common facilities on Harris Unit 1 due to the original four unit design. The CP & L study quantified approximately $570,000,000 as the value of the additional burden assumed by Unit 1 in anticipation of reducing the costs of the remaining three units which were later cancelled. Canatom reported that $180,558,000 of this amount could have been saved if CP & L had abandoned the cluster design in 1975 and implemented a different design. Canatom concluded that the failure to redesign in 1975 constituted imprudence on the part of CP & L.
In its Order Granting Partial Increase in Rates and Charges filed on 5 August 1988, the Commission made certain findings of fact. Among these findings were:
7. CP & L has met the prudence standard in its financing of the Shearon Harris plant. CP & L's financial management practices relating to Shearon Harris were generally reasonable and efficient.
8. Except as hereinafter found and discussed, the costs of the Shearon Harris nuclear plant are reasonable and were prudently incurred.
....
11. CP & L should be allowed to recover as an expense its abandonment loss sustained as a result of the Company's having cancelled and abandoned its Mayo Unit No. 2 in March 1987. Recovery of the investment in that unit should be accomplished over a ten-year amortization period. CP & L should be allowed to continue to recover the cancellation costs of Harris Units 2, 3, and 4. Costs of $180,558,000 ($98,340,000 on a North Carolina retail jurisdictional basis) proposed for inclusion in rate base as part of Harris Unit 1 should be reallocated and assigned as cancellation costs of Harris Units 2, 3, and 4; these costs should be excluded from rate base and should be treated in a manner consistent with the other CP & L cancellation costs discussed herein.
....
17. CP & L's reasonable original cost rate base used and useful in providing service to its North Carolina retail customers is $3,677,225,000, consisting of electric plant in service of $4,869,311,000, net nuclear fuel investment of $133,271,000, and an allowance for working capital of $114,033,000, reduced by accumulated depreciation of $949,412,000 and accumulated deferred income taxes of $489,978,000.
Commissioner Ruth Cook dissented from the part of the Commission's Order which allowed CP & L to amortize the $180,558,000 over a ten-year period. In her dissent, she concluded that this amount should be classified as "excess plant or plant held for future use" rather than cancellation costs.
*466 Both the Public Staff and the Attorney General made motions for reconsideration by the Commission, and these motions were denied in an Order Denying Motions for Reconsideration filed on 1 September 1988. In this order, the Commission again restated its position that CP & L's decision to use the cluster design, which resulted in the building of excess facilities at a cost of $570,000,000, was prudent. The Commission further explained its decision to divide this amount into $389,442,000 which would be included in the rate base and $180,558,000 which would be treated as cancellation costs. The Commission noted, "this was a ratemaking adjustment that was, in effect, adopted by the Commission on its own motion since no party to this proceeding proposed such an adjustment. We adopted this treatment for reasons of fairness and equity."
The Attorney General, the Public Staff, and CP & L all appealed from the Commission's order of 5 August 1988. Only the Attorney General and the Public Staff appealed from the order denying reconsideration. The Attorney General contends that the Commission erred in concluding that CP & L's choice of a cluster design in 1971 was prudent. We find no error in this portion of the Commission's order. The Public Staff contends that the Commission erred in quantifying the cancellation costs for common facilities built to serve Harris Units 2, 3, and 4 at $180,558,000 instead of $570,000,000. We agree. CP & L contends that the entire $570,000,000 should be included in the rate base because the Commission found that these expenses were prudently incurred. We do not agree with CP & L's position on this issue.
II.
The Utilities Commission is charged with the duty of "fixing such rates as shall be fair both to the public utility and to the consumer." N.C.G.S. § 62-133 (Cum.Supp. 1988). Section 62-133 provides a step-by-step procedure for the Commission to follow in fixing these rates. We reviewed the public utility ratemaking formula in Utilities Comm. v. Thornburg, 325 N.C. 463, 385 S.E.2d 451 (1989) (Thornburg II).
This statute requires the Commission to determine the utility's rate base (RB), its reasonable operating expenses (OE), and a fair rate of return on the company's capital investment (RR). These three components are then combined according to a formula which can be expressed as follows:
(RB × RR) + OE = REVENUE REQUIREMENTS
The rate base is the reasonable cost of the utility's property which is used and useful in providing service to the public, minus accumulated depreciation, and plus the reasonable cost of the investment in construction work in progress. See N.C.G.S. § 62-133(b)(4) (Cum.Supp. 1988 & 1982 Repl.Vol.); C.F. Phillips, Jr., The Regulation of Public Utilities 332 (1984). Operating expenses generally include costs for fuel, wages and salaries, and maintenance, as well as annual depreciation charges and taxes. C.F. Phillips, Jr., The Regulation of Public Utilities 229 (1984). The rate of return is a percentage multiplier applied to the rate base to produce the amount of money the Commission concludes should be earned by the utility, over and above its reasonable operating expenses. See N.C.G.S. § 62-133(b)(4) (Cum.Supp.1988 & 1982 Repl.Vol.).
325 N.C. 463 at 467 n. 2, 385 S.E.2d at 453 n. 2.
In this portion of the appeal, we are concerned with the procedure for determining what goes into the rate base. In determining what goes into the rate base, the statute directs the Commission to
(1) Ascertain the reasonable original cost of the public utility's property used and useful, or to be used and useful within a reasonable time after the test period, in providing the service rendered to the public within the State....
N.C.G.S. § 62-133(b)(1) (Cum.Supp.1988).
The statute sets out a two-part test for the Commission to use in deciding what goes into the rate base for all costs except costs of construction work in progress. *467 The Commission must: (1) determine the reasonable original cost of the property and (2) determine if the property is "used and useful, or to be used and useful within a reasonable time after the test period." Id. If the costs in question do not meet both parts of the test, the costs may not be included in the rate base for rate making purposes. See id.; N.C.G.S. § 62-133(b)(4) and (5).
In contending that the Commission erred in its finding, the Attorney General argues CP & L's decision to use the cluster design was not prudent and does not meet the first part of the test and, therefore, none of the $570,000,000 can be included in rate base. While we agree with the Attorney General's conclusion that the approximately $570,000,000 cannot be included in rate base, we do so, not on the basis of the reasonableness of the costs, i.e., prudence, but on the basis that the property does not meet the second part of the test, i.e., the "used and useful" test.
The standard of review by this Court of an order of the Utilities Commission is set out in N.C.G.S. § 62-94. Under this standard, the reviewing court
shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings; or it may reverse or modify the decision if the substantial rights of the appellants have been prejudiced because the Commission's findings, inferences, conclusions or decisions are:
(1) In violation of constitutional provisions, or
(2) In excess of statutory authority or jurisdiction of the Commission, or
(3) Made upon unlawful proceedings, or
(4) Affected by other errors of law, or
(5) Unsupported by competent, material and substantial evidence in view of the entire record as submitted, or
(6) Arbitrary or capricious.
(c) In making the foregoing determinations, the court shall review the whole record or such portions thereof as may be cited by any party and due account shall be taken of the rule of prejudicial error.
N.C.G.S. § 62-94(b) and (c) (1982 Repl. Vol.). As this Court has often stated, our "statutory function is to assess whether the Commission's order is affected by errors of law, and to determine whether there is substantial evidence, in view of the entire record, to support the position adopted." State ex rel. Utilities Comm. v. N.C. Natural Gas Corp., 323 N.C. 630, 639, 375 S.E.2d 147, 152 (1989); accord State ex rel. Utilities Comm. v. Public Staff, 323 N.C. 481, 489, 374 S.E.2d 361, 365-66 (1988); State ex rel. Utilities Comm. v. Carolina Utility Customers Assoc., 323 N.C. 238, 243-44, 372 S.E.2d 692, 695 (1988); State ex rel. Utilities Comm. v. Eddleman, 320 N.C. 344, at 355, 358 S.E.2d 339 at 347 (1987); State ex rel. Utilities Comm. v. Thornburg, Atty. Gen., 316 N.C. 238, 242, 342 S.E.2d 28, 31-32 (1986); State ex rel. Utilities Commission v. Carolina Utilities Customers Assoc., 314 N.C. 171, 179-80, 333 S.E.2d 259, 265 (1985). We will not disturb the findings of fact of the Commission as long as they are supported by competent, material, and substantial evidence in view of the whole record and are not arbitrary or capricious. Utilities Commission v. Thornburg, 314 N.C. 509, 511, 334 S.E.2d 772, 773 (1985) (Thornburg I).
The Attorney General contends that the Commission's finding of prudence on the part of CP & L violates subsections (4), (5), and (6) of N.C.G.S. § 62-94(b). The Attorney General claims that the Commission did not consider uncontested evidence in the whole record which indicated that CP & L's circumstances and problems in 1971 should have prevented it from selecting the cluster design because it was a high risk choice. We conclude that the Commission's finding that CP & L's costs in building the Harris Plant were prudently incurred is supported by competent, material, and substantial evidence in view of the *468 whole record and is not arbitrary or capricious. In its discussion found in the Order of 5 August 1988 under Evidence and Conclusions For Finding of Fact No. 8, the Commission discusses its finding that selection of the cluster design in 1971 was prudent. In support of this finding, the Commission states:
CP & L's choice of the cluster design was a prudent decision. CP & L considered a number of different alternative plant layouts and eventually selected the cluster design. The Company's decision to use the cluster design was based on specific and identified design criteria. The cluster design did meet the specific and identified design criteria. The cluster design did meet the specific design criteria better than the alternatives. These design criteria were consistent with the Company's long held philosophy of using common facilities at its plants in order to reduce material quantities, construction duration capital costs and total life cycle costs of its plants.
In discussing the Attorney General's contention that choice of the cluster design was not prudent, the Commission states,
the Attorney General's proposed disallowance of $560 million on this issue is premised on the assumption that the only prudent choice in 1971 was the slide-along arrangement. In cross-examination, however, Attorney General witness Marvetich refused to take a position on the prudence of selecting a twin-unit design in 1971. Evidence in this case indicates that CP & L would have selected the twin unit as its second choice, and the twin unit also would have caused the construction of common facilities for one unit.
The Commission further explains its finding that the choice of the cluster design was prudent: "The testimony of Canatom and CP & L Direct Panels, I, II, IV, CP & L Rebuttal Panel II, and CP & L Rebuttal witnesses Reinsch and Boyd are more than ample to support the finding that the choice of the cluster design was prudent." While contrary evidence was presented, the record contains sufficient evidence to support the Commission's finding that CP & L's choice of the cluster design was prudent, and this finding will not be disturbed on appeal. See Thornburg I, 314 N.C. at 511, 334 S.E.2d at 773.
III.
The Public Staff contends that the Commission erred in allowing $389,442,000 in the rate base rather than including this amount with the $180,558,000 which the Commission treated as cancellation costs. As stated earlier, to be included in the rate base, the cost must be both reasonable and incurred for property that is "used and useful" in providing service to the customers. N.C.G.S. § 62-133(b)(1). The public staff contends that the amounts in controversy cannot be included in the rate base because they were not incurred for property that is "used and useful." CP & L contends that the costs were prudently incurred for property that is "used and useful" and that the Commission, in Finding of Fact No. 17, implicitly, if not specifically, found this to be true.
A fair reading of the Commission's Finding of Fact No. 17, quoted in full earlier in this opinion, would indicate that the Commission found that $389,442,000 of the $570,000,000 construction costs was incurred for property that was "used and useful" in providing electric service to its customers as is required by N.C.G.S. § 62-133(b)(1).[1] However, in reading the Evidence and Conclusions For Finding Of Fact No. 11 and the Order Denying Motions For Reconsideration, we find that the evidence showed and the Commission actually *469 found that the $570,000,000 figure represented costs of construction of excess common facilities. In the Evidence and Conclusions For Finding Of Fact No. 11, the Commission stated:
Nevertheless, the Commission further concludes that CP & L's utilization of the cluster design, while prudent in 1971 and 1974 and thereafter, has in fact resulted in the construction of excess common facilities at the Harris Plant in the fuel handling building, the waste processing building, the water treatment building, and the diesel generator and fuel oil tank building. These buildings were designed and built to serve four nuclear units. (Emphasis added.)
In its Order Denying Motions For Reconsideration, the Commission was even clearer that the total cost for the excess common facilities was the $570,000,000 figure. In that Order, the Commission quotes from the Canatom Report:
CP & L conducted a study to estimate the cost impact of shared common facilities on Harris Unit I due to the original four unit design. Specifically, the study sought to arrive at a value for the additional burden assumed by Unit 1 (the common facilities burden) in anticipation of reducing the costs of the follow-on units. This cost has been determined to be approximately $570,000,000. (Emphasis added.)
The Commission then goes further to state:
While the Commission clearly recognized the extent of CP & L's total investment in common facilities to serve Harris Units 2, 3, and 4 as reflected in the Canatom Report and Witness Schlissel's testimony, we decided that it was appropriate to treat only a "reasonable portion" of the Company's total investment in those common facilities as cancellation costs. The intent of our decision was to arrive at an "equitable sharing" of the costs of common facilities between CP & L's shareholders and its North Carolina retail ratepayers. (Emphasis added.)
While the Commission's findings of fact are conclusive when supported by "competent, material, and substantial evidence," Utilities Commission v. Telephone Co., 281 N.C. 318, 336, 189 S.E.2d 705, 717 (1972) (General I), all the evidence in this case tends to show that the $570,000,000 was spent to build excess common facilities. If the facilities are excess, as a matter of law, they can not be considered "used and useful" as that term is used in N.C.G.S. § 62-133(b)(1). See, e.g., General I, 281 N.C. at 351, 189 S.E.2d at 729. Since the excess common facilities are not "used and useful", they cannot be included in the rate base. N.C.G.S. § 62-133(b)(1). The Commission committed an error of law in including $389,442,000 in the rate base because this amount was part of the $570,000,000 used to construct the excess common facilities to serve abandoned Harris Units 2, 3, and 4.
IV.
Since the Commission erred in placing $389,442,000 in the rate base, the next question we must answer is the proper treatment of this amount. The $389,442,000 figure is part of the $570,000,000 figure which was given as the value of the additional burden assumed by Unit 1 in anticipation of building Harris Units 2, 3, and 4. After removing the $389,442,000 from the $570,000,000, the Commission majority classified the remaining $180,558,000 as cancellation costs.
As we have already discussed, the Commission found that the entire $570,000,000 spent to build this excess facility was prudently incurred. We have also held that the excess common facilities cannot be considered "used and useful" so as to be included in rate base. The Public Staff argues that the entire $570,000,000 should be included in the cancellation costs of the abandoned Units 2, 3, and 4. We agree.
The Attorney General contends that the Commission has acted in an arbitrary and capricious manner by classifying the $180,558,000 figure as an abandonment loss subject to amortization as operating expenses. The Attorney General argues that the Commission acted in excess of its statutory authority to find that the $180,558,000 is excess common facilities and then to classify *470 it as abandonment loss. The Attorney General cites General I, 281 N.C. 318, 189 S.E.2d 705; State ex rel. Utilities Commission v. Mebane Home Telephone Company, 298 N.C. 162, 257 S.E.2d 623 (1979); and State ex rel. Commission v. General Telephone Company, 285 N.C. 671, 208 S.E.2d 681 (1974) (General II), for the proposition that excess capacity cannot statutorily be charged to ratepayers. The Attorney General reads these cases too broadly. They do not hold that costs incurred for excess capacity cannot be recovered in ratesonly that such costs may not be charged to ratepayers by including them in the rate base upon which the utility is permitted to earn a return on its investment.
These three cases cited by the Attorney General all address the issue of what should go into rate base. General I, for example, discusses among other issues the Commission's treatment of excess central office equipment which the company purchased. The Court clearly states that the money spent on these excess purchases could not be considered used and useful and, therefore, could not be placed into rate base. General I, 281 N.C. at 355, 189 S.E.2d at 728. We have already decided that the approximately $570,000,000 used to build the excess common facilities may not properly be included in rate base. The question before us is how to classify these costs since they are not properly included in the rate base. None of these cases cited by the Attorney General addresses the issue of the proper treatment of these costs if they are not to be included in the rate base.
In Thornburg II, we held that the Commission did not err in authorizing CP & L to continue to recover a portion of cancellation costs of the abandoned Harris Plant as operating expenses through amortization. Thornburg II, 325 N.C. at 472, 385 S.E.2d at 456. In that case, CP & L argued that it was proper for the Commission to authorize inclusion of the cancellation costs as an operating expense since CP & L's decision to construct the Harris Plant and the decision to cancel Units 2, 3, and 4 were approved by the Commission. We held that the recovery of these costs through the operating expense component was, like the recovery of exploration costs in Utilities Commission v. Edmisten, Attorney General, 294 N.C. 598, 242 S.E.2d 862 (1978), consistent with the purpose of the Public Utilities Act as set forth in N.C.G.S. § 62-2. Here the Commission concluded that CP & L's utilization of the cluster design resulting in excess common facilities was prudent in 1971, in 1974, and thereafter. It further found that "the additional burden assumed by Unit 1 (the common facilities burden) in anticipation of reducing the costs of the follow-on units" was "approximately $570,000,000." The Commission also "clearly recognized the extent of CP & L's total investment in common facilities to serve Harris Units 2, 3, and 4 as reflected in the Canatom report and Witness Schlissel's testimony," but decided "that it was appropriate to treat only a `reasonable portion' of the company's total investment in those common facilities as cancellation costs." A fair reading of the Commission's findings and conclusions is that the $570,000,000 represents cancellation costs attributable to abandoned Harris Units 2, 3, and 4. This is in essence the same as the cancellation costs held to be appropriately amortized as operating expenses in Thornburg II. Therefore, the Commission should have treated approximately $570,000,000[2] as cancellation costs of abandoned Harris Units 2, 3, and 4 to be recovered as operating expenses through amortization. See Thornburg II, 325 N.C. 463, 385 S.E.2d 451.
Our decision concluding that these costs are correctly treated as cancellation costs of abandoned units finds support in a 1983 U.S. Department of Energy study entitled Nuclear Plant Cancellations: Causes, Costs, and Consequences, cited by the Commission in its order in the instant case. In that publication, abandonment costs are *471 defined as "the total cost recognized by traditional utility accounting practices which would have been avoided if the project had never been undertaken." A fair reading of the findings and conclusions of the Commission in this case makes it clear that if Harris Units 2, 3, and 4 had never been undertaken, CP & L would have avoided the approximately $570,000,000 in costs for the common facilities to serve the abandoned Units 2, 3, and 4. The Commission having found that the decision permitting the incurring of these costs was prudent, it is appropriate that these costs be treated as cancellation costs of the abandoned units and recovered as operating expenses through amortization. Thornburg II, 325 N.C. 463, 385 S.E.2d 451.
In conclusion, we hold that the Commission's order of 5 August 1988 granting partial increase in rates and charges and its order of 1 September 1988 denying reconsideration are affected by an error of law, and for that reason:
1. We reverse the Commission's decision to include $389,442,000 in rate base;
2. We affirm the Commission's decision excluding from rate base $180,558,000 cancellation costs associated with abandoned Harris Units 2, 3, and 4, and treating that amount in a manner consistent with the other CP & L cancellation costs; and
3. We remand this case to the Commission with instructions to remove the approximately $389,000,000 from the rate base and include it with the approximately $181,000,000 to be treated as cancellation costs.
Since our decision results in the removal of approximately $389,000,000 from the rate base, N.C.G.S. § 62-133(b)(1), it will be necessary for the Commission, on remand, to determine whether a new rate of return must be fixed in accordance with N.C.G.S. § 62-133(b)(4) in order that the rates fixed by the Commission will be fair to CP & L and to the consumer as required by N.C. G.S. § 62-133(a).
The orders of the Commission are:
AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
MARTIN, Justice, dissenting.
At the outset, I do not find that the evidence, viewed upon the whole record test, supports the findings by the Commission that the use of the cluster design by CP & L was prudent. N.C.G.S. § 62-94(b)(5) (1982). When the contradictory evidence and the inferences therefrom are considered, the finding of prudence is just not supported by competent, material and substantial evidence. It would serve little purpose to marshall the evidence again, but any ordinary citizen, working to pay his light bill, knows that choosing a construction design which results in the building of excess facilities costing $570,000,000 is not a prudent actionespecially when your design engineers have recommended against it. CP & L compounded this error by refusing to seize the opportunity to redesign the facility in 1975.
I agree with the majority that excess facilities, as here, cannot be considered "used and useful" under the law. Again, I agree that no part of the $570,000,000 can be included in the rate base but dissent from the majority's allowing these costs to be recovered as operating expenses through amortization. See Utilities Commission v. Thornburg, 325 N.C. 463, 385 S.E.2d 451 (Martin, J., dissenting (1989)).
I find that the proper disposition of the $570,000,000 is to classify the amount as excess plant or plant held for future use rather than cancellation costs. As plant held for future use, if all or any part of the present excess facility or plant becomes "used and useful" in the future, it can be placed into the rate base at that time with the consequent benefits to CP & L and its stockholders. If past history is any prologue to the future, this method should allow CP & L to recoup these expenses in a reasonable time and do so within the existing statutory law.
MITCHELL, Justice, dissenting.
The majority recognizes that the Commission adopted its treatment of the costs associated with the Harris Plant common *472 facilities for reasons of "equity." As Justice Martin has explained in his dissenting opinion in Utilities Commission v. Thornburg, 325 N.C. 463, 385 S.E.2d 451 (1989), in which I joined, the Commission is not a court of equity and has no equitable powers. Nor do our statutes permit the Commission, or this Court for that matter, to exclude from the rate base any costs prudently incurred in constructing a used and useful electric generating plant. The result reached by the Commission, like the result reached by the majority of this Court, may be fair, equitable or simply a reasonable way to do things. However, neither the result reached by the Commission nor the result reached by the majority of this Court complies with our statutes regulating public utility ratemaking.
As I read the record on appeal, the Commission did not conclude that any of the common facilities were not used and useful in the generation of electric power at the Harris Plant. Indeed, it does not appear that any party to these proceedings contended before the Commission that the common facilities were not used and useful. Instead, the dispute before the Commission involved whether Carolina Power & Light Company (hereinafter "CP & L") had incurred costs associated with the common facilities prudently, not whether any facility of the plant was used and useful.
The Commission made findings and concluded that the costs incurred in building the Harris Plant were prudently incurred, a conclusion with which the majority of this Court agrees. Nevertheless, although no one appears to have raised the issue, the Commission further concluded that some of the common facilities were "excess common facilities." Even if it is assumederroneously in my viewthat the Commission had the authority to treat part of the prudently incurred costs for the used and useful common facilities as "excess," I do not believe that its findings and conclusions in this regard were supported by the evidence presented.
CP & L offered evidence, which appears to have been uncontroverted, that none of the fuel handling building is unused, because portions of it not presently needed for fuel handling are being used to house other plant facilities. The Technical Support Center is a computer-equipped area located in the fuel handling building that is kept available for use by engineering and technical support personnel in the event of a plant emergency. Under Nuclear Regulatory Commission (hereinafter "NRC") regulations, this center must be housed in a building with eighteen-inch-thick reinforced concrete walls. CP & L would have had to construct such a building at the Harris Plant for the Technical Support Center, had space not been available in the fuel handling building. Although other portions of the common facilities were larger than absolutely necessary, uncontroverted testimony was introduced by CP & L to the effect that the larger facilities would "be of great benefit in the event of an emergency requiring quick repairs on a large scale" at the Harris Plant, a nuclear powered electric generating plant within thirty miles of the State Capitol at Raleigh.
Further, CP & L offered uncontroverted evidence that after the decision not to complete other nuclear units at the Harris Plant had been made, it sought and obtained studies to determine whether portions of the common facilities could be eliminated. These studies revealed that while it would be physically possible to delete portions of the common facilities, they would respond differently to seismic stresses. If CP & L made such changes, it would be required to perform new seismic studies to satisfy the NRC that the modified facilities at the nuclear plant would not be damaged in the event of an earthquake. Such studies could have revealed that major modification of plant equipment and supports already in place would be necessary in order to ensure seismic stability of the modified facilities.
Based on such information, CP & L determined that it would be cheaper to build the common facilities as originally designed and use any extra space for other plant-related purposes than to delay construction yet again during times of rapidly rising construction costs while it initiated and carried out the procedures necessary to gain *473 NRC approval for smaller facilities. Given the long history of regulatory delay in the approval and construction of the various phases of the Harris Plantwell documented in the Reports of this Court over a period of almost two decadesit is to be doubted that evidence supporting any other rational decision was available. In my view of the record, none was introduced. I conclude that the evidence before the Commission would not support a determination that any of the used and useful common facilities at the Harris Plant, or any of the prudently incurred costs of such facilities, were "excess."
In my view, the Commission has no authority in law to exclude any portion of the prudently incurred construction costs of used and useful facilities from the rate base. N.C.G.S. § 62-133(b)(1) requires that the Commission determine in every general rate case "the reasonable original costs of the public utility's property used and useful..." in providing the service rendered to the public. Such costs constitute the utility's rate base. Under N.C.G.S. § 62-133(b)(4) and (5) the Commission must set rates which will allow the utility to earn a fair return on its rate base. The use of the phrase "reasonable original costs" in N.C.G.S. § 62-133(b)(1) seems to me to require that costs for the construction of the used and useful facilities of a completed nuclear power plant be included in the rate base when, as here, those costs have been determined to have been prudently incurred. Therefore, I conclude that all such costs incurred in the construction of the Harris Plant common facilities must be included in the rate base.
For the foregoing reasons, I believe that the Commission erred in excluding a portion of the costs of common facilities from the rate base and that this Court has compounded that error by excluding all such costs from the rate base and treating them as cancellation or abandonment costs. Therefore, I dissent.
NOTES
[1] Notwithstanding the contest over proper treatment of the approximately $570,000,000, neither this figure nor the $389,442,000 figure is referred to by the Commission in its twenty-eight Findings of Fact. However, when the Commission, in Finding of Fact No. 17, found that "CP & L's reasonable original cost rate base used and useful in providing service to its North Carolina retail customers is $3,677,225,000," having excluded only $180,558,000 (Finding of Fact No. 11) of the $570,000,000 (See Order Denying Motions for Reconsideration) from the rate base, it is clear that the remaining $389,442,000 of the $570,000,000 is included in the $3,677,225,000 cost rate base found by the Commission to be used and useful.
[2] This figure may be adjusted should the Commission determine that some portion of the property, as contended by CP & L, was in fact used and useful. The Public Staff, on oral argument, quantified this adjustment at $350,000. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1751153/ | 900 S.W.2d 339 (1995)
George CATHEY, M.D. and Wood County Central Hospital, Petitioners
v.
Jerry BOOTH and Glenda Booth, Respondents.
No. 95-0398.
Supreme Court of Texas.
June 22, 1995.
*340 Michael E. Starr, Douglas R. McSwane, Jr., Tyler, Monte F. James, and J. Kevin Oncken, Austin, for petitioners.
David B. Griffith and Robert D. Bennett, Gilmer, for respondents.
ON APPLICATION FOR WRIT OF ERROR TO THE COURT OF APPEALS FOR THE SIXTH DISTRICT OF TEXAS
PER CURIAM.
The Texas Tort Claims Act requires a claimant to provide a governmental unit with formal, written notice of a claim against it within six months of the incident giving rise to the claim; however, the formal notice requirements do not apply if the governmental unit has actual notice of the claim. TEX.CIV.PRAC. & REM.CODE § 101.101. In this cause, we consider whether a hospital may receive actual notice of a claim against it from its own medical records. We conclude that, for a hospital to have actual notice, it must have knowledge of (1) a death or injury; (2) its alleged fault producing or contributing to the death or injury; and (3) the identity of the parties involved. Because the records at issue in this case do not convey to the hospital its possible culpability, we reverse the judgment of the court of appeals as to any remaining claims against Wood County Central Hospital and render judgment that the Booths take nothing from the Hospital.
Glenda Booth was admitted to Wood County Central Hospital with labor pains on August 1, 1990, following a course of prenatal care by Dr. George Cathey. Glenda and Jerry Booth's child was delivered stillborn on that day.
The Booths sued Dr. Cathey and the Hospital, alleging that their negligence resulted in the stillbirth of the Booths' child and in physical pain and mental anguish to the Booths. The Booths allege that the doctor *341 and the Hospital were negligent in failing to diagnose and treat Glenda Booth's condition as a high risk pregnancy and in failing to diagnose and treat Glenda Booth for gestational diabetes.
The trial court granted summary judgment in favor of Dr. Cathey and the Hospital on all claims. The court of appeals affirmed as to the Booths' claims for the mental anguish that they suffered as a result of the negligent treatment of the fetus. Otherwise, the court of appeals reversed and remanded for a new trial. 893 S.W.2d 715, 720.
To prevail on a motion for summary judgment, a movant must establish that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Tex.R.Civ.P. 166a(c). A defendant who conclusively negates at least one of the essential elements of each of the plaintiff's causes of action or who conclusively establishes all of the elements of an affirmative defense is entitled to summary judgment. Wornick Co. v. Casas, 856 S.W.2d 732, 733 (Tex.1993); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex.1984). In reviewing a summary judgment, we must accept as true evidence in favor of the nonmovant, indulging every reasonable inference and resolving all doubts in the nonmovant's favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).
Section 101.101(c) of the Tort Claims Act provides that the formal notice requirements of section 101.101(a) "do not apply if the governmental unit has actual notice that death has occurred, that the claimant has received some injury, or that the claimant's property has been damaged." TEX.CIV.PRAC. & REM.CODE § 101.101(c). It is undisputed that the Booths failed to provide the Hospital with formal, written notice of their claims against it pursuant to section 101.101(a). The Booths assert, however, that the Hospital received actual notice of their claims. The Booths argue that section 101.101(c) requires only that a governmental unit have knowledge that a death, an injury, or property damage has occurred. We disagree.
The purpose of the notice requirement is to ensure prompt reporting of claims in order to enable governmental units to gather information necessary to guard against unfounded claims, settle claims, and prepare for trial. See City of Houston v. Torres, 621 S.W.2d 588, 591 (Tex.1981). The interpretation of section 101.101(c) urged by the Booths would eviscerate the purpose of the statute, as it would impute actual notice to a hospital from the knowledge that a patient received treatment at its facility or died after receiving treatment. For a hospital, such an interpretation would be the equivalent of having no notice requirement at all because the hospital would be required to investigate the standard of care provided to each and every patient that received treatment.
We hold that actual notice to a governmental unit requires knowledge of (1) a death, injury, or property damage; (2) the governmental unit's alleged fault producing or contributing to the death, injury, or property damage; and (3) the identity of the parties involved. Our holding preserves the purpose of the notice statute, and is consistent with the holdings of the majority of the courts of appeals. See Parrish v. Brooks, 856 S.W.2d 522, 525 (Tex.App.Texarkana 1993, writ denied); Bourne v. Nueces County Hosp. Dist., 749 S.W.2d 630, 632-33 (Tex.App.Corpus Christi 1988, writ denied); Tarrant County Hosp. Dist. v. Ray, 712 S.W.2d 271, 274 (Tex.App.Fort Worth 1986, writ ref'd n.r.e.). To the extent that Texas Dep't of Mental Health & Mental Retardation v. Petty, 817 S.W.2d 707, 717 (Tex.App.Austin 1991), aff'd on other grounds, 848 S.W.2d 680 (Tex.1992), is inconsistent with this opinion, we disapprove it.
As summary judgment proof, Wood County Central Hospital presented the affidavit of its administrator, Marion Stanberry, who stated that prior to its receipt of a letter dated July 7, 1992, the Hospital had no knowledge of any alleged injuries of Glenda or Jerry Booth or of any alleged fault of the Hospital with respect to such injuries.
The summary judgment evidence provided by the Booths does not raise a fact issue that Wood County Central Hospital had actual notice of any alleged culpability on its part producing or contributing to any injury to Glenda or Jerry Booth. The only evidence *342 presented by the Booths concerning the Hospital's knowledge of its culpability is an affidavit from Dean Cromartie, an obstetrician who reviewed Glenda Booth's medical records and determined that Dr. Cathey and the Hospital were negligent in their treatment of Glenda Booth. Dr. Cromartie explained that the Cesarean section was not performed on Glenda Booth until more than half an hour after the time that it was called for. Even if the Hospital was aware of the information in its medical records relied upon by Dr. Cromartie in forming his opinion, we hold that, as a matter of law, this information failed to adequately convey to the Hospital its possible culpability for mental and physical injuries to Glenda and Jerry Booth. Cf. Dinh v. Harris County Hosp. Dist., 896 S.W.2d 248, 252-53 (Tex.App.Houston [1st Dist.] 1995, writ dism'd w.o.j.).
Wood County Central Hospital and Dr. Cathey also argue that the judgment of the court of appeals should be reversed because the Booths failed to plead a cause of action for damages independent of the stillbirth. The Booths' pleadings contain allegations that Dr. Cathey and the Hospital were negligent in their treatment of Glenda Booth and allegations that such treatment resulted in physical and mental injuries to Glenda and Jerry Booth. A mother "may recover mental anguish damages suffered as a result of her injury which was proximately caused by [a doctor's or a hospital's negligence] and which includes the loss of her fetus." Krishnan v. Sepulveda, ___ S.W.2d ___, ___ [1995 WL 358844] (Tex.1995).[1] However, a father may not recover mental anguish damages from either the treating physician or the hospital because neither owes a duty to him. Id. at ___.
Accordingly, a majority of the Court grants the applications for writ of error, and, without hearing oral argument, affirms in part and reverses in part the judgment of the court of appeals. Tex.R.App.P. 170. The Court renders judgment that the Booths take nothing from Wood County Central Hospital and that Jerry Booth take nothing from Dr. George Cathey. With regard to the claims asserted by Glenda Booth against Dr. George Cathey, the Court affirms the judgment of the court of appeals, which remanded those claims for trial.
NOTES
[1] Neither parent, however, may recover damages for the loss of society, companionship, and affection suffered as a result of the loss of a fetus. Krishnan, ___ S.W.2d at ___. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1830915/ | 440 So. 2d 704 (1983)
Don AGUILLARD, et al.
v.
David C. TREEN, et al.
No. 83-CQ-0581.
Supreme Court of Louisiana.
October 17, 1983.
Rehearing Denied November 18, 1983.
*705 Andrew Weltchek, Bachmann, Weltchek & Powers, New Orleans, Jack D. Novik, Jay Topkis, Andre R. Jaglom, Alan Pfeffer, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, Ronald L. Wilson, New Orleans, for plaintiffs.
William J. Guste, Jr., Atty. Gen., Kendall L. Vick, Patricia Nalley Bowers, Maureen J. Feran, Cynthia D. Young, Asst. Attys. Gen., Baton Rouge, Samuel I. Rosenberg, Polack, Rosenberg, Rittenberg & Edom, New Orleans, John Di Giulio, Baton Rouge, Marion B. Farmer, Dist. Atty., Roy K. Burns, Jr., Asst. Dist. Atty., Covington, David A. Hamilton, Baton Rouge, John W. Whitehead, Wendell R. Bird, Ware, Parker, Johnson, Cook & Dunlevie, Atlanta, Ga., Sp. Asst. Attys. Gen., Thomas T. Anderson, for defendants.
CALOGERO, Justice.
The following question has been certified to this Court by the United States Fifth Circuit Court of Appeals:
"Whether Louisiana Revised Statutes Annotated Sections 17:286.1 through 17:286.7, the `Balanced Treatment for Creation-Science and Evolution-Science Act' violate Article 8 of the Louisiana Constitution?"
For the reasons which follow, we find that insofar as this statute, La.R.S. 17:286.1-286.7, represents a legislatively-mandated *706 course of study[1] it is in keeping with Article VIII, Section 1's charge to the Legislature to establish and maintain a public education system. It does not violate Article VIII, Section 3 which creates the Board of Elementary and Secondary Education (BESE) and defines that Board's powers, duties and responsibilities. And, of course, under our state constitution, unlike the federal constitution, legislation not prohibited is allowed.
Various plaintiffs[2] filed suit in federal district court against the State of Louisiana, BESE and others.[3] Plaintiffs asked that Louisiana Act 685 of 1981, the "Creation-Science" Act, be declared unconstitutional under the First and Fourteenth Amendments to the United States Constitution, and its implementation enjoined.[4]
Subsequently, BESE was realigned as a party plaintiff and moved for summary judgment, contending that La.R.S. 17:286.1 through 17:286.7 violates the 1974 Louisiana Constitution. In response to that motion, the United States District Court for the Eastern District of Louisiana decided that La. Const. art. VIII vested responsibility for educational policy in BESE rather than in the Legislature and declared that Act No. 685 of 1981 thus violated the 1974 Louisiana Constitution. After appeal, the Fifth Circuit Court of Appeals certified the question quoted above to this Court. Certification was accepted. 430 So. 2d 660 (La.1983).[5]
The issue to be decided is whether the 1974 Louisiana Constitution by vesting the responsibility exclusively in BESE prohibits the Legislature from prescribing courses of study in elementary and secondary public schools.
Whether the Legislature requires the teaching of a course, the establishment of a particular curriculum or a balanced treatment between a pair of concepts, it is essentially a question of the Legislature's plenary authority to establish and maintain education *707 within the state. Irrespective of other problems of a legal or constitutional nature that may or may not infect this Act, for our present purposes and for the limited question which we are here called upon to answer, we are focusing just on the Louisiana constitutional authority of the Louisiana Legislature to provide for educational policy to be carried out by BESE.[6]
A brief review of the history of BESE's predecessor, the Louisiana State Board of Education, is in order. The public education article, Art. 224 et seq. of the 1879 Louisiana Constitution did not include any provision for a state board. Art. 250 of the Constitutions of 1898 and of 1913 provided only for the creation of a State Board of Public Education. La. Const. art. XII § 4 (1921) created a State Board of Education, but stated in pertinent part: that "[t]he legislature shall prescribe the duties of said board and define its powers...." This single board was charged with the "supervision and control of all free public schools." [La. Const. art. XII, § 6 (1921)] and "supervision of all other higher educational institutions, subject to such laws as the Legislature may enact." [La. Const. art. XII, § 7 B (1921)]
The State Board, under the 1921 Constitution, wielded little authority. See Jackson v. Coxe, 208 La. 715, 23 So. 2d 312 (1945). Even though the Board was given the task of overseeing education at all three levels, the delegates to the 1973 Constitutional Convention believed that the State Board of Education had theretofore devoted the majority of its time to the problems of higher education. The proposed solution was the creation of an independent constitutional board with jurisdiction over public elementary and secondary schools. In introducing the educational proposals that would accomplish that end, Mr. Aertker told the 1973 convention delegates: "[T]he power that is given to this body [BESE] is budgetary power. They will go to the legislature directly with the problems of elementary and secondary education." 8 Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts 2251. (November 9, 1973). In adopting the educational article the delegates to the 1973 Constitutional Convention did not further define BESE's function, apart from the language of La. Const. art. VIII, § 3 itself.
State constitutional provisions are not grants of power but instead are limitations on the otherwise plenary power of the people of a state exercised through its legislature. Hainkel v. Henry, 313 So. 2d 577 at 579 (La.1975). As a result, the Louisiana Legislature may enact any laws that the state or federal constitutions do not prohibit. In re Oxygen Welders' Supply Profit Sharing Plan, 297 So. 2d 663 (La.1974). So, in this case, only if the 1974 Louisiana Constitution took away the Legislature's authority to prescribe courses of study in elementary and secondary public schools can this Court properly find that the Legislature was not empowered to adopt the socalled "balanced treatment laws."
Constitutional provisions are to be construed and interpreted by the same rules as are other laws. Barnett v. Develle, 289 So. 2d 129 (La.1974); Roberts v. City of Baton Rouge, 236 La. 521, 108 So. 2d 111 (1958). When a constitutional provision is plain and unambiguous, its language must be given effect.
As adopted, La. Const. art. VIII, § 1 provides: "The legislature shall provide for the education of the people of the state and shall establish and maintain a public educational system."
La. Const. art. VIII, § 3(A) provides:
The State Board of Elementary and Secondary Education is created as a body corporate. It shall supervise and control the public elementary and secondary schools, vocational-technical training and *708 special schools under its jurisdiction and shall have budgetary responsibility for all funds appropriated or allocated by the state for those schools, all as provided by law. The board shall have other powers, duties, and responsibilities as provided by this constitution or by law, but shall have no control over the business affairs of a parish or city school board or the selection or removal of its officers and employees. (Emphasis provided.)
An examination of the second sentence of La. Const. art. VIII, § 3(A) (highlighted above) shows that the language could not be more plain or unambiguous.
The phrase "all as provided by law" follows two clauses which concern supervision, control and budgetary responsibility relative to four categories of schools, clearly indicating that the phrase is intended to apply to both clauses and all of their content. Applying the modifying clause to the first part of the sentence, it states: "It shall supervise and control the public elementary and secondary schools ... as provided by law."
Justice Tate, chairman of the Committee on Style and Drafting at the 1973 Louisiana Constitutional Convention, defined the phrase "as provided by law" while writing for this Court in Board of Elementary and Secondary Education v. Nix, 347 So. 2d 147 (La.1977). Justice Tate wrote:
This section [La. Const. art. VIII, § 3(A)] provides that the board `shall supervise and control the public elementary and secondary schools, vocational-technical training and special schools under its jurisdiction and shall have budgetary responsibility for all funds appropriated or allocated by the state for those schools, all as provided by law.
When used in this context, as it was in 103 other instances in the 1974 constitution, the term "provided by law" means "provided by legislation." "Law is the solemn expression of legislative will." Louisiana Civil Code, Art. 1. (emphasis in original) 347 So.2d at 151.
Thus the Board shall supervise and control the public elementary and secondary schools as provided "by the legislature" or "by statute." 347 So.2d at 152. BESE's supervision therefore is not unfettered, but subject to laws passed by the Legislature.
Furthermore, La. Const. art. VIII, § 3(A) of the 1974 Louisiana Constitution is not a self-executing provision. To quote Professor Hargrave, Co-ordinator of legal research for the 1973 Constitutional Convention:
[I]t is accurate to say that the legislature cannot abolish the board or change its method of composition and selection, for those matters are fixed by constitutional provision. But the constitution enumerates no powers unqualified by the as-provided-by-law formula. Any constitutional powers in the board would have to be developed by some argument based on inference and structure and cannot rest on text, for the text only grants powers that are "all as provided by law." L. Hargrave, 38 La.L.Rev. 438 at 441-445 (1978). (Emphasis added.)
BESE's non-exclusive authority is made even more apparent when the BESE constitutional provision is placed side by side with the constitutional provision establishing and empowering the Board of Regents for higher education. Such comparison shows the sharp contrast between BESE's authority and that of the Board of Regents. Whereas La. Const. art. VIII § 3(A) provides that BESE "shall supervise and control the public elementary and secondary schools ... as provided by law," La. Const. art. VIII § 5(A) provides in pertinent part that the Board of Regents "shall plan, coordinate, and have budgetary responsibility for all public higher education ...," without the restrictive qualification "as provided by law."
Therefore the authority of the Board of Regents to plan, coordinate and have budgetary responsibility for public higher education, and to exercise the five specified powers, duties and responsibilities set out in La. *709 Const. art. VIII, § 5(D),[7] are constitutionally defined and "not as provided by law," whereas BESE's authority to supervise, control and have budgetary responsibility for public schools is "all as provided by law."
If the delegates had undertaken to confer upon BESE powers and responsibilities not subject to legislative control, they could have deleted the phrase "as provided by law" in the second sentence of La. Const. art. VIII § 3(A) and could have enumerated unqualified powers for BESE comparable to those in the Board of Regents provision, La. Const. art. VIII § 5. Instead La. Const. art. VIII § 3 balances the constitutional creation of an independent board for elementary and secondary education with the Legislature's ultimate responsibility for public education. It is a symbiotic relationship in which neither the Legislature nor BESE has exclusive authority over public elementary and secondary education. However, given the express language of the constitutional provision, in a contest between the two, BESE's supervision and control must yield to the legislative will as expressed by the elected representatives of the people.
We conclude therefore that BESE is given the power to supervise and control the state's public schools, which includes the determination of educational policy, but that power is subject to the direction of the legislature by virtue of the clear language of the constitutional article which creates BESE and defines the scope of its power. LSA-Const. Art. VIII, § 3(A).
The plaintiffs nonetheless suggest that language in BESE v. Nix, supra supports their position that BESE is to be given the exclusive power to prescribe courses of study for elementary and secondary education in Louisiana. We do not agree. The exclusiveness or non-exclusiveness of BESE's authority to formulate educational policy for the state through prescribing a course of study was not at issue in Nix. Nor was there at issue a weighing of the constitutional rights (or spheres), respectively, of the Legislature and BESE. Nix involved assessment of the respective powers of BESE and the State Superintendent of Education, both constitutional entities, and the Legislature's constitutional role or function in the allocation between those two entities of administrative duties with regard to budgetary responsibilities. The Court in Nix decided at 347 So. 2d 150 that
the legislature is given the power by the constitution to provide for the allocation, as between the board and the superintendent, of administrative duties with regard to budgetary responsibility for, and supervision and control of, the public schools of the state.
This power of the Legislature to prescribe duties of the Board is no foreign concept. It was the situation that prevailed in the 1921 Louisiana Constitution. In Jackson v. Coxe, 208 La. 715, 23 So. 2d 312 (1945) which admittedly preceded the 1974 Constitution, but was cited approvingly in Nix, supra, it was decided that the power of the Board to supervise and control "all free public schools" in the 1921 Constitution was "qualified by the power of the legislature to prescribe duties of the board." 347 So. 2d 152.
Although as discussed earlier in this opinion, the delegates to the 1973 Constitutional Convention were concerned with creating in BESE an independent constitutional body, *710 the language of the constitutional provision adopted by the delegates does not justify the conclusion that BESE was to have the exclusive power to prescribe courses of study for the public elementary and secondary schools of Louisiana. That portion of the opinion in Nix which represents the strongest argument on behalf of BESE's exclusive authority was only dicta and is not controlling.[8] The dispositive holding in Nix concerned only the allocation of administrative and budgetary responsibility between BESE and the State Superintendent of Public Education.
The plaintiffs suggest further that another constitutional provision, La. Const. art. VIII, § 13, grants to BESE the exclusive power to dictate, direct and ordain the content of the educational material used in our public elementary and secondary schools. The argument is not persuasive. La. Const. art. VIII, § 13(A) requires that the Legislature
appropriate funds to supply free school books and other materials of instruction prescribed by the State Board of Elementary and Secondary Education to the children of this state at the elementary and secondary levels.
Even though this provision, by implication, recognizes that school books and other materials of instruction may be prescribed by BESE, there is nothing therein nor elsewhere to suggest that BESE has the exclusive power in that regard nor that the materials prescribed by BESE cannot be in part so done at the Legislature's direction.
La. Const. art. VIII § 1 plainly and unambiguously recognizes the power of the Legislature to provide for, establish and maintain a public educational system in Louisiana. This power includes the right to select courses of study for schools in this state.[9] La. Const. art. VIII § 3(A) creates the Board of Elementary and Secondary Education but expressly qualifies the power of that board to "supervise and control the public elementary and secondary schools" with the phrase "as provided by law." Therefore La. Const. art. VIII § 3(A) does not take away from the Legislature its inherent and plenary authority to pass laws, including those prescribing courses of study in the elementary and secondary schools of this state, but affirmatively respects that authority.
For the foregoing reasons, the answer to the question certified to this Court by the United States Fifth Circuit Court of Appeals is:
No. La.R.S. 17:286.1 through 17:286.7, the "Balanced Treatment for Creation-Science and Evolution-Science Act" does not violate *711 Article VIII, of the Louisiana Constitution of 1974.
CERTIFIED QUESTION ANSWERED.
DIXON, C.J., and WATSON, J., dissent and assign reasons.
LEMMON, J., dissents.
DIXON, Chief Justice (dissenting).
I respectfully dissent.
Contrary to my earlier opinion that the certified question can be decided without resort to the ultimate question at issue in this litigation, I now believe that we should decide what "creation-science" is before we can give a valid answer.
In general, I might subscribe to the majority opinion. It holds that the 1974 Constitution, in Article 8, has not removed the power of the legislature to require a certain course of study in the primary and secondary schools. Even that question is not without doubt, because of the provisions of § 13A of Article 8, which require the legislature to supply books and materials of instruction prescribed by the State Board of Elementary and Secondary Education.
Perhaps because the litigants have not forcefully presented the issue, and have submitted to a division of the question, this court avoids the hard issue at the root of that one certified to us. It assumes that "creation-science" is a "course of study."
Since this case was decided on exceptions, there is no record. From all that I have read in the past, "creation-science" is a religious doctrine, not a course of study. R.S. 17:286.1-7 provides:
"§ 286.1. This Subpart shall be known as the `Balanced Treatment for Creation-Science and Evolution-Science Act.'
§ 286.2. This Subpart is enacted for the purposes of protecting academic freedom.
§ 286.3. As used in this Subpart, unless otherwise clearly indicated, these terms have the following meanings;
(1) `Balanced treatment' means providing whatever information and instruction in both creation and evolution models the classroom teacher determines is necessary and appropriate to provide insight into both theories in view of the textbooks and other instructional materials available for use in his classroom.
(2) `Creation-science' means the scientific evidences for creation and inferences from those scientific evidences.
(3) `Evolution-science' means the scientific evidences for evolution and inferences from those scientific evidences.
§ 286.4. A. Commencing with the 1982-1983 school year, public schools within this state shall give balanced treatment to creation-science and to evolution-science. Balanced treatment of these two models shall be given in classroom lectures taken as a whole for each course, in textbook materials taken as a whole for each course, in library materials taken as a whole for the sciences and taken as a whole for the humanities, and in other educational programs in public schools, to the extent that such lectures, textbooks, library materials, or educational programs deal in any way with the subject of the origin of man, life, the earth, or the universe. When creation or evolution is taught, each shall be taught as a theory, rather than as proven scientific fact.
B. Public schools within this state and their personnel shall not discriminate by reducing a grade of a student or by singling out and publicly criticizing any student who demonstrates a satisfactory understanding of both evolution-science or creation-science and who accepts or rejects either model in whole or part.
C. No teacher in public elementary or secondary school or instructor in any state-supported university in Louisiana, who chooses to be a creation-scientist or to teach scientific data which points to creationism shall, for that reason, be discriminated against in any way by any school board, college board, or administrator.
§ 286.5. This Subpart does not require any instruction in the subject of origins but simply permits instruction in both scientific models (of evolution-science and *712 creation-science) if public schools choose to teach either. This Subpart does not require each individual textbook or library book to give balanced treatment to the models of evolution-science and creation-science; it does not require any school books to be discarded. This Subpart does not require each individual classroom lecture in a course to give such balanced treatment but simply permits the lectures as a whole to give balanced treatment; it permits some lectures to present evolution-science and other lectures to present creation-science.
§ 286.6. Any public school that elects to present any model of origins shall use existing teacher inservice training funds to prepare teachers of public school courses presenting any model of origins to give balanced treatment to the creation-science model and the evolution-science model. Existing library acquisition funds shall be used to purchase nonreligious library books as are necessary to give balanced treatment to the creation-science model and the evolution-science model.
§ 286.7. A. Each city and parish school board shall develop and provide to each public school classroom teacher in the system a curriculum guide on presentation of creation-science.
B. The governor shall designate seven creation-scientists who shall provide resource services in the development of curriculum guides to any city or parish school board upon request. Each such creation-scientist shall be designated from among the full-time faculty members teaching in any college and university in Louisiana. These creation-scientists shall serve at the pleasure of the governor and without compensation." (Emphasis added).
Evolution, like gravity a scientific fact, must be taught as a theory. Balanced treatment must be given evolution and creation-science in lectures, textbooks, library materials and educational programs whenever the subject of the origin of man, life, earth or universe[1] is treated.
Furthermore, it does not appear that the legislature reserved to itself the power to decide this question of educational policy.
Article 8 of the 1974 Constitution was treated in Board of Elementary and Secondary Education v. Nix, 347 So. 2d 147 (La.1977), in which the constitutionality of Act 455 of 1976 was treated. Section 2 of that act was declared unconstitutional because it deprived a constitutional board (BESE) of its staff, infringing on a constitutional agency's ability to perform its constitutional function. Other sections of the act were held constitutional. In deciding these questions it was necessary to analyze Article 8. We decided "... [t]he board (BESE) is given the constitutional power to determine educational policy for the public schools of the state..." Board of Elementary and Secondary Education v. Nix, supra at 150. The legislature, we held, was "given the power" to provide for the allocation of the administrative duties "... with regard to budgetary responsibility for, and supervision and control of, the public schools of the state." 347 So.2d at 150. "The ultimate resolution of the delegates... was to recognize the board's ultimate responsibility for educational policy, free of legislative control over the composition and existence of the board ..." 347 So.2d at 151.
We continued:
"Stated another way, the most reasonable interpretation of Article 8, Section 3(A) is that the legislature shall provide by law for the supervision, control, and budgetary power of the board over elementary and secondary education. However, the constitutional provision cannot be interpreted to mean that the legislature can regulate and limit the constitutional power of the board to supervise, control, and budget elementary and secondary education." 347 So.2d at 153.
Whether Article 8 must be interpreted to prohibit any legislative requirement that a course of study or a subject matter be *713 taught may be put aside until another day, but we have already decided that educational policy is the function of BESE, under the authority of Article 8, La. Const. of 1974.
WATSON, Justice, dissenting.
The majority errs in holding that the legislature has absolute power: to order the teaching of course materials; prescribe textbooks;[1] limit library materials; and restrict educational programs in our public schools. However, this is the inevitable conclusion if all of the following aspects of this case are thoroughly considered. First, the facts:
FACTS
Various plaintiffs filed suit in federal court against the State of Louisiana, its Board of Elementary and Secondary Education (BESE), and others. Plaintiffs asked that Louisiana Act 685 of 1981, the "Creation-Science" Act, be declared unconstitutional under the First and Fourteenth Amendments to the Constitution of the United States and its implementation enjoined.
Subsequently, the Louisiana State Board of Elementary and Secondary Education was realigned as a party plaintiff. BESE moved for summary judgment, contending that the Act (LSA-R.S. 17:286.1-17:286.7) violates the Louisiana Constitution. The federal district court correctly decided that Article VIII of the state constitution vests responsibility for educational policy in BESE rather than the legislature and declared that the Act violated the Louisiana Constitution. After appeal, the Fifth Circuit Court of Appeals certified the question to the Louisiana Supreme Court. Certification was accepted. 430 So. 2d 660 (La. 1983).[2]
A similar Arkansas Act violated the First Amendment to the United States Constitution. McLean v. Arkansas Board of Education, 529 F. Supp. 1255 (1982). As the educational amici observe in their brief, "[p]olitical agitation over the teaching of evolution in the public schools ... has created a good deal of unhappy history," citing McLean, Epperson v. Arkansas, 393 U.S. 97, 89 S. Ct. 266, 21 L. Ed. 2d 228 (1968), and Scopes v. State, 154 Tenn. 105, 289 S.W. 363 (1927). For similar constitutional problems, cf. West Virginia State Board of Education v. Barnette, 319 U.S. 624, 63 S. Ct. 1178, 87 L. Ed. 1628 (1943) and People v. Sandstrom, 279 N.Y. 523, 18 N.E.2d 840 (1939).
THE ISSUE
The issue is whether the Constitution of 1974 denied the legislature authority to prescribe courses of study in elementary and secondary public schools by vesting that responsibility in BESE.
CONSTITUTIONAL BACKGROUND
To fully appreciate the problem, it is necessary to review briefly the history of state educational boards in Louisiana. The Constitution of 1921 in Article XII, provided for public education and established a state board of education, as well as the office of Superintendent of Public Education, but pointedly mandated:
"The legislature shall prescribe the duties of said board and define its powers...."[3]
The State Board, under the 1921 Constitution, wielded little authority. See Jackson v. Coxe, 208 La. 715, 23 So. 2d 312 (1945).
The framers of the Constitution of 1974 adopted a different tack; a Board of Elementary and Secondary Education was created, as were a Board of Regents for "public higher education" (Art. 8, § 5), a Board of Trustees for State Colleges and Universities (Art. 8, § 6) and Boards for L.S.U. and *714 Southern University (Art. 8, § 7). Significantly, the Constitution of 1974 omitted any proviso that the legislature was to prescribe the powers of BESE, including only the phrase "all as provided by law", which will be discussed below.
LAW
Louisiana Constitution of 1974, Article VIII, § 1 states:
"The legislature shall provide for the education of the people of the state and shall establish and maintain a public educational system."
Article VIII, § 3(A) provides:
"The State Board of Elementary and Secondary Education is created as a body corporate. It shall supervise and control the public elementary and secondary schools, vocational-technical training and special schools under its jurisdiction and shall have budgetary responsibility for all funds appropriated or allocated by the state for those schools, all as provided by law. The board shall have other powers, duties, and responsibilities as provided by this constitution or by law, but shall have no control over the business affairs of a parish or city school board or the selection or removal of its officers and employees."[4]
Article VIII, § 13(A) specifies:
"The legislature shall appropriate funds to supply free school books and other materials of instruction prescribed by the State Board of Elementary and Secondary Education to the children of this state at the elementary and secondary levels."
The heart of Act 685 is found in LSA-R.S. 17:286.4(A) as follows:
"Commencing with the 1982-1983 school year, public schools within this state shall give balanced treatment to creation-science and to evolution-science. Balanced treatment of these two models shall be given in classroom lectures taken as a whole for each course, in textbook materials taken as a whole for each course, in library materials taken as a whole for the sciences and taken as a whole for the humanities, and in other educational programs in public schools, to the extent that such lectures, textbooks, library materials, or educational programs deal in any way with the subject of the origin of man, life, the earth or the universe. When creation or evolution is taught, each shall be taught as a theory, rather than as proven scientific fact."
DEFENDANTS' ARGUMENTS
Essentially the defendants argue that (1) the phrase "as provided by law" contained in Article VIII, § 3(A) gives the legislature authority to prescribe courses of study; (2) the different scheme provided for the Board of Regents supports this theory; (3) the acts requiring the teaching of sixteen other subjects prior to the Creationism Act demonstrates the authority claimed; and (4) many other states have recognized judicially the authority of legislatures to prescribe courses of study.
This court has previously addressed the meaning of the phrase "as provided by law". Board of Elementary and Secondary Ed. v. Nix, 347 So. 2d 147 (La., 1977). Further study reinforces the conclusion stated in Nix:
"The constitutional scheme evidenced by these provisions is:
"The board is given the constitutional power to determine educational policy for the public schools of the state. In this regard, the superintendent's responsibility is to implement the policies adopted by the board. The superintendent is the administrative head of the department of education. However, for reasons to be set forth more fully below, the legislature is given the power by the constitution to provide for the allocation, as between the board and the superintendent, of administrative duties with regard to budgetary responsibility for, and supervision and control of, the public schools of the state." 347 So.2d at 150.
*715 The constitutional provisions concerning the Board of Regents fail to support defendants' argument. Although they differ slightly from the provisions for BESE, it does not follow that BESE's powers are subordinate to the legislature.
Likewise, the fact that the legislature has made other provisions for curricula in the past is not decisive as to the legislature's authority. Several of the acts were passed prior to the adoption of the 1974 Constitution; some after. For example, the Kindness to Dumb Animals Act (LSA-R.S. 17:266) and the Military Science and Tactics Act (LSA-R.S. 17:267) were passed in 1916 and 1924, respectively; the Civics Act (LSA-R.S. 17:274.1) was adopted in 1976 and the Breast Self-Examination Act (LSA-R.S. 17:275) in 1980. In the past, BESE has not challenged various legislative directives concerning subjects to be taught in the schools. This acquiescence has no legal significance. BESE is dependent on the legislature for funding and obviously must give some deference to the legislature's actions.
Defendants' brief[5] cites a multitude of jurisprudence from other jurisdictions upholding legislative authority over curricula under constitutional provisions said to be similar to Louisiana's. However, it is conceded that the Louisiana scheme is unique: a constitutional board to "supervise and control" the public schools. No contention is made by either side that there is another state with precisely the same system. The ultimate conclusion implicit in defendants' arguments and the majority's decision is that the establishment of BESE as a constitutional agency had no purpose.
THE JUNEAU AMENDMENT
The theory that the legislature retained the right to dictate courses of study is seriously impaired by a review of the proceedings of the Louisiana Constitutional Convention, and particularly the defeat of the "Juneau Amendment". On November 9, 1973, Delegate Juneau proposed an amendment as follows:
"`Section 4. Educational Boards
"`Section 4. The legislature shall establish such board or boards as may be necessary to meet the educational needs of the state. The duties and responsibilities of such board or boards shall be provided by law.'" 8 Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts 2260.
After considerable debate and many questions,[6] the amendment was defeated 23-78. The defeat of the proposal indicates clearly that the legislature was denied plenary authority over state educational boards.
What the Constitution of 1974 adopted was a system whereby the legislature was given financial responsibility for primary and secondary education and BESE, a constitutional board, was given supervision and control.
CONCLUSION
BESE has the constitutional power to supervise and control educational policy at *716 the elementary and secondary levels. LSA-Const. Art. VIII, § 3(A). Having "... the constitutional power to determine educational policy for the public schools of the state", (Board of Elementary and Secondary Education v. Nix, 347 So. 2d 147 at p. 150), the BESE Board is not required to share that authority with the legislature. The content of the schools' curricula is a matter of educational policy.
There must have been some purpose in giving BESE, an elected board, constitutional status. BESE was intended to exercise an independent function. If this function were purely ministerial, BESE's constitutional status would be meaningless. Funding and the allocation of administrative duties between BESE and the Superintendent of Education are "as provided by law". Nix, supra. The Constitution does not delineate the exact parameters of BESE's authority, but the constitutional division of powers between BESE and the legislature is implicit in Article VIII, § 13.
Article VIII, § 13, provides that "school books and other materials of instruction" are to be "prescribed" by the State Board of Elementary and Secondary Education. Thus, BESE, rather than the legislature, has the power to dictate, direct and ordain the content of the educational materials used in the elementary and secondary schools.[7]
The legislature, by prescribing the teaching of "Creation-Science" in Act 685 of 1981, attempted to dictate educational policy in violation of Article VIII of the Louisiana Constitution.
Therefore, I respectfully dissent.
NOTES
[1] Admittedly, the Balanced Treatment Act involves more than merely a course of study since it requires that a balanced treatment be given to evolution science and to creation science whenever the subject of origins arises within the established science and humanities curricula of the public schools. However, for the purposes of brevity in this opinion, we refer to this act as one which establishes a "course of study."
[2] Plaintiffs are: Don Aguillard; Reverend Phillip Allen; Dr. Paul Biesenherz; Rabbi Murray Blackman; Quentin Dastugue; Charles B. Donnellan, Individually and as father and next friend of Mary and Kathleen Donnellan; Dr. Milton Fingerman; Anthony J. and Gayle Gagliano, Individually and as parents and next friends of Lisa Gagliano; Reverend William W. Hatcher; Louisiana Federation of Teachers; Louisiana Science Teachers Association; Father George Lundy; Reverend James H. Monroe; National Association of Biology Teachers, Inc.; National Coalition for Public Education and Religious Liberty; National Science Supervisors Association; National Science Teachers Association; Rabbinical Council of New Orleans; Reverend F.T. Schumacher; Nancy Schweitzer; Bishop Kenneth Shamblin; Reverend Lonnie M. Sibley; Keith Sterzing, Individually and as Father and next friend of Lara and Peter Sterzing; Reverend James L. Stovall; University of New Orleans Federation of Teachers; Dr. Malcolm Coffin Webb, Individually and as Father and next friend of Peter and Joel Webb; Reverend Charles S. Womelsdorf; and American Association for the Advancement of Science.
[3] Other defendants are: Governor David C. Treen; Attorney General William J. Guste, Jr.; the State Department of Education; the Orleans Parish School Board (later realigned as plaintiff); the St. Tammany Parish School Board; and J. Kelly Nix, in his official capacity as State Superintendent of Education.
[4] The heart of Act 685 is found in La.R.S. 17:286.4(A) as follows:
"Commencing with the 1982-1983 school year, public schools within this state shall give balanced treatment to creation-science and to evolution-science. Balanced treatment of these two models shall be given in classroom lectures taken as a whole for each course, in textbook materials taken as a whole for each course, in library materials taken as a whole for the sciences and taken as a whole for the humanities, and in other educational programs in public schools, to the extent that such lectures, textbooks, library materials, or educational programs deal in any way with the subject of the origin of man, life, the earth or the universe. When creation or evolution is taught, each shall be taught as a theory, rather than as proven scientific fact.
[5] La.R.S. 13:72.1; Louisiana Supreme Court Rule XII.
[6] As ably stated by the state in its brief to this Court, this certification does not involve the constitutionality of Act 685 under the First Amendment to the U.S. Constitution which is an issue solely to be decided by the U.S. District Court, where plaintiff's lawsuit has been filed. Nor does this certification involve any scientific or religious question related to creation-science or evolution-science.
[7] La. Const. art. VIII, § 5(D) reads in pertinent part:
D. Powers.... The Board of Regents shall have the following powers, duties, and responsibilities relating to public institutions of higher education:
(1) To revise or eliminate an existing degree program, department of instruction, division, or similar subdivision.
(2) To approve, disapprove, or modify a proposed degree program, department of instruction, division, or similar subdivision.
(3) To study the need for and feasibility of any new institution of post secondary education....
(4) To formulate and make timely revision of a master plan for higher education....
(5) To require that every higher education board submit to it, at a time it specifies, an annual budget proposal....
[8] The Court said at 347 So. 2d 152:
In summary, therefore, as expressly recognized by Section 3(A), the legislature may determine, as between the superintendent and the board, the administrative budgetary responsibility for, and administrative supervision and control of, the public educational facilities and programs within their jurisdiction.
Then the Court continued at 347 So. 2d 153.
However, in view of the constitutional intent to confer ultimate policy-making power upon the board, the legislature may not in the guise of administrative regulation deprive the board of its constitutional policy-making duties and powers.
Stated another way, the most reasonable interpretation of Article 8, Section 3(A) is that the legislature shall provide by law for the supervision, control, and budgetary power of the board over elementary and secondary education. However, the constitutional provision cannot be interpreted to mean that the legislature can regulate and limit the constitutional power of the board to supervise, control, and budget elementary and secondary education.
[9] The only other court to consider whether La. Const. art. VIII § 1 included the right to select curriculum was the Third Circuit Court of Appeal in Faul v. Superintendent of Education, 367 So. 2d 1267 (La.App. 3rd Cir.1979). In Faul, a local school board was challenging the constitutionality of a state statute which mandated that the French language be taught in the public schools. The appellate court found at 367 So. 2d 1273:
that the general grant of power found in LSA-Const. Art. 8, § 1 encompasses the right on the part of the legislature to select the courses of study for schools in this state. Therefore, we find that there has been no usurpation of the school board's authority by LSA-R.S. 17:273.
[1] Note the confusion. Origins of life, earth and universe are theories.
[1] Shall we burn the books which do not give creationism and evolution balanced treatment "... in textbook materials taken as a whole for each course..."? LSA-R.S. 17:286.4(A) says yes, but LSA-R.S. 17:286.5 says no. See Footnote 7, infra.
[2] LSA-R.S. 13:72.1; Louisiana Supreme Court Rule XII.
[3] LSA-Const. of 1921, Art. 12, § 4 in part.
[4] Emphasis added.
[5] An able example of written appellate advocacy.
[6] During the discussion of this amendment, delegate Kelly stated in opposition:
"[W]e're not just talking about higher education. We're not even going to have a basic plan for elementary and secondary education under this particular amendment...." 8 Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts 2264.
Delegate Champagne commented:
"[E]ducation in this great state is far too expensive and too great a proposition to submit to the changing whims of the people who represent the State of Louisiana." 8 Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts 2265.
Delegate Graham added his opposition:
"I personally think that the worst thing we could do regarding the entire concept of governance of education for the children of our state, and for the people of this state would be to completely leave in the hands of the legislature all facets concerning education. I think that it is very important that we do provide some basic framework in our constitutiona framework that cannot be changed each year with each session of the legislature...." 8 Records of the Louisiana Constitutional Convention of 1973: Convention Transcripts 2266.
[7] Act 685 is ambivalent on the subject of textbooks. In § 286.4(A), it strongly implies that the schools would be required to obtain and use text books teaching "creation-science", an invasion of BESE's constitutional authority, while § 286.5 disclaims a requirement for each individual textbook to give balanced treatment or for school books to be discarded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1486561/ | 972 F. Supp. 380 (1996)
Pedro L. GOCHICOA, Petitioner,
v.
Gary L. JOHNSON, Director, Texas Department of Criminal Justice-Institutional Division, Respondent.
No. P-95-CA-036.
United States District Court, W.D. Texas, Pecos Division.
September 5, 1996.
*381 *382 Philip J. Lynch, Federal Public Defender, San Antonio, TX, for petitioner.
Charles Palmer, Assistant Attorney General, Austin, TX, for respondent.
ORDER REVERSING MAGISTRATE JUDGE'S PROPOSED FINDINGS OF FACT AND RECOMMENDATION AND GRANTING PETITIONER'S WRIT FOR HABEAS CORPUS RELIEF PURSUANT TO 28 U.S.C. § 2254
FURGESON, District Judge.
On this date, this Court considered United States Magistrate Judge Louis Guirola's Proposed Findings of Fact and Recommendations filed on November 13, 1995.
I. FACTS AND PROCEDURAL HISTORY
This case involves a state court criminal conviction of Petitioner, Pedro Gochicoa, for felony possession of heroin. The incident in question took place on August 15, 1991, in the City of Pecos, Reeves County, Texas.
On the early evening of August 15, 1991, the Pecos Police Department received a call complaining of a "suspicious person" near an apartment building in Pecos and dispatched an officer to the area. Officer Victor Prieto arrived on the scene and found Petitioner's brother, Jorge Gochicoa, sitting in a parked car. As the officer was speaking to the Jorge, Petitioner Pedro Gochicoa approached the car nervously from an alley, greeted the officer, and told his brother "let's go." Officer Prieto asked the Gochicoas several questions and then let them go.
Immediately after the Gochicoas left, Reeves County Sheriff's Deputy Andy Gomez arrived. He had been dispatched to the area based upon information received from a second call, this one from a confidential informant. The confidential informant had told the Reeves County Sheriff's dispatcher that an individual named Manuel Salcido was in the area selling heroin and that Pedro Gochicoa was in the area purchasing it. At an *383 evidentiary hearing held by this Court, Reeves County Prosecutor David Zavoda testified that the confidential informant was likely one of several individuals working with the Pecos Police Department to "keep an eye on" various suspicious people. Petitioner was one of the individuals being watched.
Deputy Gomez relayed this information to Officer Prieto and the two officers then began searching along the alley for heroin. After a few minutes, a young man, Michael Carrasco, approached the officers. Carrasco had been watching from the window of his house approximately 100 to 150 feet away when Petitioner was walking down the alley. Carrasco told the officers that when Petitioner rounded the corner of a building, he quickly reached into his pocket and made a motion as if he were throwing something to the ground. Based on this information, the police officers were able to locate a small red balloon on the ground filled with nineteen dosage units of heroin.
Petitioner was arrested on August 17, 1991, and indicted in Reeves County, Texas for felony possession of heroin. The indictment also alleged two prior felony convictions for enhancement of punishment purposes. Attorney Ted Painter was appointed to represent Petitioner. At the evidentiary hearing, Petitioner testified that Painter met with him twice, once in the county jail after his arrest and once just before trial began. Painter was not sure how many times he saw Petitioner.
At the time of Petitioner's indictment, the Reeves County District Attorney's Office had an open file policy in criminal cases. Painter testified that he had reviewed the District Attorney's file on this case. The file included Officer Prieto's report that Deputy Gomez urged a search of the alley based upon information he received from a confidential informant. Painter filed a motion for discovery and inspection of evidence on February 7, 1992. He did not file any motion to disclose the confidential informant's identity nor did he file any motions in limine to exclude information of or evidence from the confidential informant.
The file also contained a report by Pecos Police Officer Orlando Orona establishing that Petitioner had been arrested two days after the event in the alley described above. Additionally, Petitioner testified that he told Painter the date of his arrest during one of the two discussions he had with Painter about the case. Painter made no reference to this fact at trial.
Gochicoa entered a plea of "not guilty" to the indictment. The trial was held April 27, 1992, and lasted roughly half a day. The confidential informant was not identified and did not testify at the trial. Several times during the State's presentation of its case in chief, however, the prosecutor made reference to the confidential informant and the information the confidential informant provided regarding Petitioner's purchase of heroin from Manuel Salcido. In the beginning of his opening statement, the prosecutor made the following presentation to the jury:
Deputy Gomez ... pulls up and tells them (Officer Prieto) that he has gotten a tip from a confidential informant concerning the defendant, and they start searching the area where Pedro Gochicoa was coming from for contraband that has been left behind.
(5 S.R. 104.) Painter made no objection to this statement nor did he ask for any prospective relief that the prosecutor be instructed to refrain from further comment about the confidential informant.
During Officer Prieto's direct testimony, the following exchange took place:
Q: Did you say anything to him (Defendant)?
A: No, sir.
Q: Did you have any reason at this point in time to stop him, to investigate any crime that may have been committed, or do anything else concerning Pedro Gochicoa?
A: No, sir, I had no reason.
Q: Did you in fact allow them to drive away?
A: Yes, sir.
Q: At about that time as they were driving away, did a peace officer approach you position?
A: Yes, sir.
*384 Q: What officer was that?
A: It was Reeves County Sheriff's Deputy Andy Gomez.
Q: Okay. And what was Deputy Gomez's purpose in being there do you have any idea?
A: He advised me that he had some information that Peter (Pedro) was selling
...
MR. PAINTER: Your Honor, I object. That's hearsay.
MR. ZAVODA: I'll withdraw the question, Your Honor.
THE COURT: Sustained.
(5 S.R. 167-68.) Painter did not ask that the answer be stricken or that the jury be instructed to disregard the testimony.
Immediately after this objection, the prosecutor successfully elicited testimony which, in light of Officer Prieto's statement that he had no reason to detain Petitioner, indirectly apprised the jury of the out-of-court assertion by the confidential informant:
Q: Did you and Deputy Gomez have a conversation?
A: Yes, sir.
Q: Without telling me what he said, based upon that conversation did you and Deputy Gomez undertake a search?
A: Yes, sir, we did.
Q: And where were you looking at? What area were you searching?
A: We was (sic) looking on the alley mostly from where I had seen Peter (Petitioner) coming from.
Q: All right. And what were you looking for "yourself," personally?
A: Well, we were looking for any kind of drugs.
(5 S.R. 168.)
On redirect examination of Officer Prieto, the prosecutor again, this time without objection, introduced the confidential informant's telephone message into evidence:
Q: Now, you mentioned the name of Manuel Salcido when you were answering questions of Mr. Painter.
A: Yes, sir.
Q: He is the gentleman whose home is down here some place marked with an "S" is that correct?
A: That's correct.
Q: You called him the other suspect. Was he another person that was supposed to be possessing heroin or selling heroin?
A: That's Manuel?
Q: Manuel Salcido?
A: Yes, sir.
Q: Was it selling?
A: Selling, yes sir.
Q: And that's the general location that Pedro Gochicoa was coming from, is that correct?
A: That is correct.
(5 S.R. 191-92.)
When Deputy Gomez took the stand, the prosecutor acknowledged in open court that the witness could not testify to the confidential informant's statement based upon the court's prior ruling. Indeed, the prosecutor admonished Gomez shortly after his testimony began:
Q: You cannot tell me what the confidential informant told you, but based upon that information did you proceed to the 1000 block of East 10th in Pecos, Reeves County, Texas?
A: Yes, I did.
(5 S.R. 200.) Despite this admonishment, the prosecutor then proceeded to elicit testimony based upon the confidential informant's statement:
Q: Again, based upon the information you received from the confidential informant, did you and Victor Prieto Officer Prieto conduct a search of the area where Officer Prieto was at?
A: Yes, we did.
Q: What were you looking for?
A: I was looking for heroin is (sic) what I was looking for.
(5 S.R. 200.) Painter did not object to this line of questioning either.
In his closing presentation, the prosecutor used the confidential informant's assertions to conclusively link Petitioner to the heroin found in the alley:
*385 What do we know by direct evidence? ... We know that Pedro Gochicoa was out at the project on August 15th, 1991, at about five or 5:15 P.M. We know his brother Jorge was waiting for him to come back from where he was at.
We know that when he saw Victor Prieto Officer Prieto that Pedro Gochicoa got nervous. We heard that from two different witnesses, Officer Prieto and Michael Carrasco.
We know that Deputy Gomez had information from a confidential informant that Manuel Salcido was in this area in his home selling heroin and that Pedro Gochicoa was buying it at this particular time.
(7 S.R. 247-48.) Further, the prosecutor added:
What this whole thing boils down to, Ladies and Gentlemen, is that you are allowed to use your common sense as a juror in this case.
We know where Pedro was coming from. I know.
(7 S.R. 259.) Painter made no objection to either one of these statements.
The court presented the case to the jury at 4:10 p.m. The jury deliberated approximately two hours. At 6:05 p.m., they sent Judge Bob Parks a communication asking "Could we have another definition of possession? We cannot come to a decision without another definition of possession." (7 S.R. 265.) Judge Parks responded by saying that the definition of possession in his instructions to them was the only one he was permitted by law to give. The jury continued to deliberate until 6:30 p.m., at which time they sent Judge Parks a second communication: "[W]e cannot come to a unanimous decision." (7 S.R. 269.) Without objection, Judge Parks read the jury a Modified Allen Charge. At 7:55 p.m., the jury returned with a verdict of guilty. Gochicoa pled "true" to the enhancement paragraphs. The jury assessed punishment of 60 years imprisonment.
After his appointed counsel filed an Anders brief to the Court of Appeals for the Eighth Supreme Judicial District of Texas, Petitioner filed a pro se appeal. His conviction was affirmed May 5, 1993. Gochicoa v. State, No. 08-92-00116 (unpublished). Gochicoa did not petition the Court of Criminal Appeals for discretionary review. He did, however, file a state application for writ of habeas corpus pursuant to T.C.C.P. Art. 11.07. The Texas Court of Criminal Appeals denied habeas relief without a written order on April 19, 1995. Ex parte Gochicoa, No. 28-1390-01. This application for federal habeas relief followed.
In its motion for summary judgment, Respondent argued that the officers' testimony was limited to their receipt of information from an informant and their course of action based upon that information. Respondent denied that any hearsay was entered into evidence. The Magistrate Judge, similarly, concluded that the information the police received from the informant was entered into evidence to show why the officers acted as they did. It was not entered for the truth of the matter asserted and, thus, was not hearsay. The Magistrate Judge concluded that Petitioner's writ should be denied.
Petitioner requested an extension of time to file his objections to the Magistrate Judge's Findings of Fact and Recommendations which the Court granted. After reviewing Petitioner's objections, the record of the case and the relevant law, the Court appointed the federal public defender to represent Petitioner on his appeal and scheduled an evidentiary hearing on August 13, 1996.
At the evidentiary hearing, it was established that Painter had been suspended from the practice of law for six years on January 8, 1983, and then disbarred from the practice of law on August 17, 1994. The reasons for disbarment included Painter's neglect of a legal matter and his failure to keep his client apprised of her case. These incidents which lead to the disbarment occurred in 1990, before Petitioner's trial. Painter also acknowledged on cross-examination that he was aware of the rights secured by the Confrontation and Due Process Clauses.
II. STANDARD OF REVIEW
When a party objects to a Magistrate Judge's Findings of Fact and Recommendations, as has been done here, the Court is required to "make a de novo determination of *386 those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1). See also Longmire v. Guste, 921 F.2d 620, 623 (5th Cir.1991) (party is "entitled to a de novo review by an Article III judge as to those issues to which an objection is made"). Such a review means that the Court will examine the entire record and will make an independent assessment of the law. The Court need not, however, consider objections that are frivolous, conclusory or general in nature. Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir.1987).
III. PETITIONER'S OBJECTIONS
As in his original petition, Pedro Gochicoa argues in his objections that the information received by the police from the confidential informant became part of the state's case-in-chief. Since police officers in the case testified as to what the confidential informant told them, this testimony constituted hearsay. The prosecutor repeated the confidential informant's statement in his opening and closing presentations to the jury and this perpetuated the hearsay. Petitioner had no opportunity to cross-examine the informant and, thus, could not test the informant's credibility or reliability before the jury. He argues that he should have had the right to confront the confidential informant. Further, because this information suggested that Petitioner was in possession of the balloon, it was decidedly influential, especially since the jury asked for court instructions on the definition of possession.
Petitioner also restates his Due Process Clause claim, his ineffective assistance of counsel claim and his claim that Respondent should have released the confidential informant's identity. Respondent concedes that Petitioner has exhausted his state remedies as to the three claims advanced in his petition.
IV. ANALYSIS
1. Procedural Considerations
a. The Court's ability to address the merits of Petitioner's claim on federal habeas review
Petitioner did not object to the testimony discussed above. Generally, when a petitioner fails to comply with a state's contemporaneous objection rule, the federal habeas court is precluded from reviewing the claim absent a showing of cause for noncompliance with the rule and actual prejudice resulting from the alleged constitutional violation. Ortega v. McCotter, 808 F.2d 406, 408 (5th Cir.1987) (citing Wainwright v. Sykes, 433 U.S. 72, 86-88, 97 S. Ct. 2497, 2506-07, 53 L. Ed. 2d 594 (1977)).
Simply because Petitioner waived his objection at trial, however, does not deprive this Court of jurisdiction when Petitioner raises the claim on federal habeas review. Harris v. Reed, 489 U.S. 255, 263, 109 S. Ct. 1038, 1043-44, 103 L. Ed. 2d 308 (1989); Shaw v. Collins, 5 F.3d 128, 131-32 (5th Cir.1993). The last reasoned decision of the state court on this case must have "clearly and expressly" relied upon an independent state procedural ground in denying relief for federal habeas review of Petitioner's claim to be barred. Harris, 489 U.S. at 263, 109 S.Ct. at 1043-44 (quoting Caldwell v. Mississippi, 472 U.S. 320, 327, 105 S. Ct. 2633, 2638-39, 86 L. Ed. 2d 231 (1985)); see also Shaw, 5 F.3d at 131-32 (claim was not defaulted because state court did not "plainly state that [petitioner's] failure to comply with ... [contemporaneous objection] rule ... was an adequate and independent ground for rejecting [petitioner's] Sixth Amendment argument"). On appeal, the Court of Appeals for the Eighth Supreme Judicial District of Texas affirmed Petitioner's conviction. The Texas Court of Criminal Appeals subsequently denied his application for habeas relief without a written order. Thus, the Court of Appeals' affirmance was the last reasoned state court decision regarding Petitioner's claim. Ylst v. Nunnemaker, 501 U.S. 797, 805-06, 111 S. Ct. 2590, 2595-96, 115 L. Ed. 2d 706 (1991).
In an unpublished one and a half page opinion, the Court of Appeals held that Petitioner's appeal was wholly frivolous and without merit. The court added that it found "nothing in the record that might arguably support the appeal." Gochicoa v. State, No. 08-92-00116 at 2. There was no mention in the opinion that Petitioner's claim was, or *387 should be, denied based upon his counsel's failure to object at trial. The Court of Appeals did not "clearly and expressly" hold that Petitioner was procedurally barred from raising a claim of violation of his Sixth Amendment rights. Harris, 489 U.S. at 263, 109 S.Ct. at 1043-44.
In most instances, the state must also timely assert the procedural bar in federal court, otherwise the procedural default does not bar review of the claim. Engle v. Isaac, 456 U.S. 107, 124 n. 26, 102 S. Ct. 1558, 1570 n. 26, 71 L. Ed. 2d 783 (1982); see also 2 JAMES S. LIEBMAN & RANDY HERTZ, FEDERAL HABEAS CORPUS PRACTICE AND PROCEDURE § 26.2a at 814-17 (2d ed.1994). Respondent has not raised the procedural bar as preventing a ruling on the merits of Petitioner's claim. Cupit v. Whitley, 28 F.3d 532, 535 (5th Cir.1994), cert. denied, 513 U.S. 1163, 115 S. Ct. 1128, 130 L. Ed. 2d 1091 (1995) (state's failure to object to the petitioner's claim on procedural grounds waived procedural default objection). This Court, therefore, is not precluded from addressing the merits of Petitioner's claim on federal habeas review.
b. The Antiterrorism and Effective Death Penalty Act
In subsequent briefing to the Court, Respondent has suggested that recent amendments to 28 U.S.C. § 2254 made by the Antiterrorism and Effective Death Penalty Act of 1996 ("the Act") apply retroactively to this case. Certain sections of the Act contain language specifically making them retroactive. The sections of the Act containing amendments to § 2254, though, do not contain this retroactivity language.
Congress, therefore, did not intend for these amendments to apply retroactively. Boria v. Keane, 90 F.3d 36, 38 (2d. Cir. 1996); Wilkins v. Bowersox, 933 F. Supp. 1496, 1505 (W.D.Mo.1996). To conclude otherwise would render superfluous the language which designates other sections as retroactive. Mackey v. Lanier Collection Agency & Service, 486 U.S. 825, 837 n. 11, 108 S. Ct. 2182, 2189 n. 11, 100 L. Ed. 2d 836 (1988). Moreover, even if the new requirements of the Act were applicable here, Petitioner has satisfied them. The Court, therefore, may consider the merits of Petitioner's § 2254 claim.
2. Petitioner's Sixth Amendment Claim
a. Hearsay Determination
The Court's analysis begins in determining whether the presentations to the jury and the testimony discussed above resulted in the admission of hearsay evidence at Petitioner's trial, a determination which is governed by the Texas Rules of Evidence. Cupit, 28 F.3d at 536. Under Texas law, hearsay is defined as a statement, other than one made by the declarant while testifying at the trail or hearing, offered in evidence to prove the truth of the matter asserted. TEX. R. CRIM. EVID. Rule 801(d).
Respondent maintains that the evidence discussed above was not hearsay. Citing the prosecutor's testimony at the evidentiary hearing, Respondent argues that any reference to the statement of the confidential informant was made to establish the reason for the police officer's presence at the scene. If the prosecutor had intended to present the information to the jury to prove the truth of the matter asserted, he would have focused on that information much more than he actually did. Indeed, the prosecutor was careful not to elicit hearsay and prefaced his questions to Officer Gomez by instructing him not to divulge the confidential informant's statement.
The Court is unpersuaded by this argument. At the evidentiary hearing, the prosecutor claimed that he did not offer the confidential informant's statement to suggest that Petitioner possessed the heroin found in the alley. Regardless of his intent, his offer of that statement did, in fact, suggest that Petitioner possessed the heroin found in the alley. In both his opening and closing presentations to the jury, the prosecutor mentioned the existence of the confidential informant. In each instance, he referred specifically to the content of the confidential informant's call to the police. (5 S.R. 104, 7 S.R. 247-48, 259.)
The prosecutor's introduction of the confidential informant's statement was not limited *388 to opening and closing presentations. Officer Prieto initially stated on direct examination that he had no reason to stop Petitioner and had not seen him in possession of heroin. (5 S.R. 167, 176.) Despite a sustained objection to an earlier inquiry, the prosecutor introduced the content of the confidential informant's call by eventually asking Officer Prieto if the reason for his search of the alley was based upon his conversation with Deputy Gomez. (5 S.R. 168.) When Deputy Gomez took the stand, the prosecutor again presented the substance of the confidential informant's statement by questioning Deputy Gomez about the subject of the search, the same tactic he used when questioning Officer Prieto.
On the redirect of Officer Prieto, the prosecutor also elicited testimony that Manuel Salcido was selling heroin in the area where Petitioner had come from. This testimony involved an out-of-court statement based solely upon the information supplied to the police by the confidential informant. Respondent's argument to the contrary, this testimony has no relevance to the police officer's presence at the scene. The information established that Petitioner was coming from an area where the confidential informant said heroin had been sold, thereby strengthening the argument that Petitioner had possession of heroin shortly before the search of the alley took place.
Further, the prosecutor's admonishment to Deputy Gomez was ineffective in light of his prior questioning of Officer Prieto, his subsequent questions of Deputy Gomez and particularly his presentations to the jury. Although the prosecutor instructed Deputy Gomez not to tell the jury what the confidential informant had told him, he then told the jury himself. The prosecutor made the confidential informant's statement a primary focus, if not the focus, of the state's case in chief. The confidential informant's statement was offered for the truth of the matter asserted and, therefore, is hearsay under Texas law.
b. The Standard for Violations of the Confrontation Clause
The Confrontation Clause guarantees an accused the right to confront the witnesses against him. U.S. CONST. amend. VI. This guarantee involves "a personal examination and cross-examination of the witness, in which the accused has an opportunity, not only of testing the recollection and sifting the conscience of the witness, but of compelling [the witness] to stand face to face with the jury in order that they may look at him, and judge by his demeanor upon the stand and the manner in which he gives his testimony whether he is worthy of belief." Ohio v. Roberts, 448 U.S. 56, 63-64, 100 S. Ct. 2531, 2538, 65 L. Ed. 2d 597 (1980) (citing Mattox v. United States, 156 U.S. 237, 242-43, 15 S. Ct. 337, 339-40, 39 L. Ed. 409 (1895)). These protections the right to cross-examination, the right to a face-to-face confrontation and the right to have the jury view the accuser assures accuracy in the truth determining process by giving the trier of fact "a satisfactory basis for evaluating the truth of the prior statement." Dutton v. Evans, 400 U.S. 74, 89, 91 S. Ct. 210, 219-20, 27 L. Ed. 2d 213 (1970) (quoting California v. Green, 399 U.S. 149, 161, 90 S. Ct. 1930, 1936-37, 26 L. Ed. 2d 489 (1970)).
The Sixth Amendment, however, does not necessarily preclude the admission of hearsay evidence. Rather, hearsay evidence must be evaluated in the context of the trial as a whole. Cupit, 28 F.3d at 537 (citing Johnson v. Blackburn, 778 F.2d 1044, 1051 n. 9 (5th Cir.1985)). An admission of hearsay evidence violates the Confrontation Clause only if that evidence was a "crucial, critical, highly significant factor in the framework of the whole trial." Cupit, 28 F.3d at 537 (citing Johnson, 778 F.2d at 1051 n. 9).
To make that determination, the Court must consider five factors: (1) whether the hearsay evidence was crucial or devastating; (2) whether the prosecutors misused a confession or otherwise engaged in misconduct; (3) whether a joint trial or the wholesale denial of cross-examination was involved; (4) whether the most important prosecution witness, as well as other prosecution witnesses, was available for cross-examination; and (5) the degree to which the hearsay evidence is supported by indicia of reliability. Cupit, 28 F.3d at 536 (citing Johnson, 778 F.2d at 1051).
*389 (1) Was the evidence crucial or devastating?
Respondent argues that a review of the record indicates that the "small bits" of information provided by the confidential informant were not crucial or devastating. The state's main witness was Michael Carrasco who testified that he saw Petitioner make a movement as though he were throwing something to the ground. (5 S.R. 216-17.) His assistance lead the police officers to the area where the balloon of heroin was found. Further, the police officers testified that nothing else on the ground in the area. (5 S.R. 172-73.)
Respondent argues that this evidence was "no less crucial" than any references to a confidential informant. The Court does not agree. The evidence cited by Respondent does not minimize the devastating effect of the confidential informant's out-of-court statement. There was no testimony from any witness that Petitioner had purchased heroin or possessed heroin. Even the prosecutor acknowledged that he could not "give [the jury] a witness that puts that heroin in Petitioner's hand." (6 S.R. 248.) Certainly, no fact offered into evidence at trial was as convincing of guilt as the substance of the informant's statement that Petitioner was buying heroin.
(2) Did the prosecutor misuse a confession or otherwise engage in misconduct?
Respondent argues that no evidence of prosecutorial misconduct exists. That would seem likely, given the fine reputation that David Zavoda enjoys in the legal community of West Texas. The inquiry into prosecutorial misconduct, however, is not whether the prosecutor had improper motives. Rather, the court evaluates 1) whether the prosecutor's remarks were improper and 2) whether they prejudicially affected the substantive rights of the defendant. United States v. Lokey, 945 F.2d 825, 837 (5th Cir. 1991).
Given the magnitude of the prejudicial effect of the confidential informant's statement and the lack of direct evidence of Petitioner's guilt, the Court believes that the prosecutor's use of that statement constituted misconduct in this case. The prosecutor introduced facts which he knew to be inadmissible hearsay based upon the trial court's prior ruling. United States v. Flores-Chapa, 48 F.3d 156, 159 (5th Cir.1995) (overturning federal conviction on appeal where prosecutor had repeated excluded hearsay testimony at closing argument, despite two previously sustained objections to this testimony at trial) In some cases, a trial court's prompt curative instruction to a jury to disregard a prosecutor's improper comments will effectively minimize any prejudicially harmful effect upon petitioner's trial. Bagley v. Collins, 1 F.3d 378, 381 (5th Cir.1993). No cautionary instruction was given here, however, because Petitioner's attorney did not request one.
(3) Was a joint trial or wholesale denial of cross-examination involved?
Respondent contends that, under Texas law, a confidential informant has a privilege to remain anonymous. TEX. R. CRIM. EVID. Rule 508. Respondent further argues that none of the three exceptions to the rule of privilege apply to this case. The logical extension of Respondent's argument is that the confidential informant could not have been required to testify at trial and, since there has been no showing of his willingness to testify, any suggestion that he would have testified is speculative.
Respondent's reliance on the Texas Evidentiary Rule regarding the identity of confidential informants is misplaced. The third factor in this constitutional analysis considers whether Petitioner was completely denied an opportunity to cross-examine the individual whose out-of-court statement was included at trial. In this case, rather than simply assisting law enforcement in an investigation as envisioned by Rule 508, the confidential informant's hearsay statement became part of the case-in-chief. Petitioner was completely denied the opportunity to cross-examine the declarant.[1]
*390 (4) Was the most important prosecution witness, as well as other prosecution witnesses, available for cross-examination?
Respondent maintains that the most important prosecution witness in the case was Michael Carrasco, a witness whom Petitioner had the opportunity to cross-examine. Carrasco was, arguably, an important witness. He was not, however, the most important witness. Carrasco saw Petitioner's hand move towards the ground, but he could not tell if Petitioner had anything in his hand. In addition, cross-examination of Carrasco and the officers was not an adequate substitute for cross examination of informant because these witnesses had no first hand knowledge of the matters contained in the confidential informant's out-of-court assertions.
As a result, evidence that Petitioner had possessed heroin in the area where the balloon was found was introduced at trial by an unidentified person who did not appear at trial. The accuser never had to submit to a face-to-face confrontation with Petitioner and repeat the accusations under oath. Coy v. Iowa, 487 U.S. 1012, 1018-19, 108 S. Ct. 2798, 2801-02, 101 L. Ed. 2d 857 (1988). The accuser never had to submit to an examination that might have tested believability, perceptions or memory. Davis v. Alaska, 415 U.S. 308, 316, 94 S. Ct. 1105, 1110, 39 L. Ed. 2d 347 (1974). The accuser never had to submit to an examination that might have revealed possible biases or motivations. Id.; United States v. Alexius, 76 F.3d 642, 645-46 (5th Cir.1996). Petitioner was also denied his right to have the jury hear his primary accuser under oath and assess the accuser's demeanor. Maryland v. Craig, 497 U.S. 836, 845-46, 110 S. Ct. 3157, 3163-64, 111 L. Ed. 2d 666 (1990).
(5) Is the hearsay evidence supported by indicia of reliability?
Hearsay evidence has sufficient indicia of reliability if the statement was admitted under a firmly rooted exception to the hearsay rule or is supported by a showing of particularized guarantees of trustworthiness. White v. Illinois, 502 U.S. 346, 356-57, 112 S. Ct. 736, 742-43, 116 L. Ed. 2d 848 (1992). Respondent concedes that the statements at issue here do not fall within any exception to the hearsay rule. Without providing any specific facts in support, Respondent argues that the statements are trustworthy.
The Court disagrees. The informant was unidentified. His name, interest and biases were unknown. The manner in which the informant supposedly gained the knowledge to make the statements to the police was unknown. The circumstances under which the statements were made was unknown. No other witnesses had first-hand knowledge of the matters contained in the out-of-court assertions. Compare Cupit, 28 F.3d at 537 (court found the reliability of hearsay evidence was supported by defendant's own actions towards the victim both before and after his death). The record discloses nothing from which an inference of trustworthiness could be drawn.
Considering the five factors used to determine a potential Confrontation Clause violation, the hearsay evidence in this case was decidedly material in the context of the entire trial. There is no "affirmative reason" arising from the circumstances in which the confidential informant's statement was made which suggests that the statement could have been relied upon at trial. Idaho v. Wright, 497 U.S. 805, 821, 110 S. Ct. 3139, 3149-50, 111 L. Ed. 2d 638 (1990). The hearsay statements were "a crucial, critical, highly significant factor in the framework of the whole trial." Cupit, 28 F.3d at 537. Thus, the admission of the confidential informant's out-of-court statement violated Petitioner's rights under the Confrontation Clause.
c. Federal Habeas Review under Brecht and Kotteakos
Petitioner's state conviction cannot be overturned solely because the admitted hearsay evidence violated his rights under the Confrontation Clause. Unlike review on direct appeal, a court must consider "`the state's interest in the finality of convictions that have survived direct review within the *391 state system' and the concerns of `comity and federalism'" when considering a claim for federal habeas relief. 2 LIEBMAN & HERTZ, § 32.1 at 975-76 (quoting Brecht v. Abrahamson, 507 U.S. 619, 635, 113 S. Ct. 1710, 1720-21, 123 L. Ed. 2d 353 (1993)).
For these reasons, the Supreme Court in Brecht v. Abrahamson adopted a standard of review set forth in Kotteakos v. United States for determining whether a constitutional violation requires federal habeas relief. 507 U.S. at 638, 113 S.Ct. at 1722, 328 U.S. 750, 776, 66 S. Ct. 1239, 1253, 90 L. Ed. 1557 (1946). Habeas relief will not be granted unless the constitutional error had a "substantial and injurious effect or influence in determining the jury's verdict." Brecht, 507 U.S. at 637, 113 S.Ct. at 1722 (quoting Kotteakos, 328 U.S. at 776, 66 S.Ct. at 1253 (1946)); see also Cupit, 28 F.3d at 542 (citations omitted); Pemberton v. Collins, 991 F.2d 1218, 1226 (5th Cir.), cert. denied, 510 U.S. 1025, 114 S. Ct. 637, 126 L. Ed. 2d 596 (1993) (citations omitted). More specifically,
[I]f one cannot say, with fair assurance, after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error, it is impossible to concluded that substantial rights were not affected. The inquiry cannot be merely whether there was enough to support the result, apart from the phase affected by the error. It is rather, even so, whether the error itself had substantial influence. If so, or if one is left in grave doubt, the conviction cannot stand.
Kotteakos, 328 U.S. at 765, 66 S.Ct. at 1248 (citations omitted)
The Fifth Circuit's recent decision in Cupit v. Whitley appears to place the burden of proof upon Petitioner to show that the constitutional error was not harmless. 28 F.3d at 538-39 ("our task ... is to determine ... whether petitioner has successfully established in our minds grave doubt as to the question of whether the assumed wrongfully admitted hearsay influenced the conviction") (emphasis supplied). Exactly how this works when considered in the context of Brecht and other Fifth Circuit opinions is somewhat difficult to determine. The Supreme Court's decision in Brecht "apparently left intact the preexisting allocation to the state of the burden of proving harmlessness." 2 LIEBMAN & HERTZ, § 32.2b at 980. The majority opinion differentiated between the "`standard for determining whether a conviction must be set aside' and the `burden of proving that an error passes muster under this standard'" and noted that the state bears the burden for the latter. Id. (citing Brecht, 507 U.S. at 630-31, 113 S.Ct. at 1717-18). The post-Brecht Fifth Circuit decision in Lowery v. Collins arrived at this conclusion as well. 996 F.2d 770, 773 (5th Cir.1993) (state's failure to introduce any non-hearsay, direct evidence of defendant's guilt other than the hearsay evidence at issue mandated reversal).
Respondent has not cited the Court to any non-hearsay, direct evidence that Petitioner possessed the heroin found in the alley. Alternatively, if the burden rests on the Petitioner to establish grave doubt that the evidence in question influenced the conviction, Petitioner meets that burden. As noted above, there was no direct evidence in this case that Petitioner possessed heroin. No witness testified to having seen Petitioner possess or buy heroin. Carrasco testified that from a distance of 100 to 150 feet he saw Petitioner make a gesture with his hand, and the balloon was found in that vicinity. That gesture may have been consistent with tossing an object, but Carrasco did not see anything leave Petitioner's hand.[2]
Under these circumstances, the hearsay evidence admitted at Petitioner's trial had a *392 profoundly injurious effect in determining the jury's verdict. The prosecutor's statement at closing argument, alone, that a confidential informant knew Petitioner had purchased heroin and that the prosecutor knew where Petitioner was coming from based upon the information provided by the confidential informant substantially affected the jury's decision. Indeed, the manner in which the jury reached its verdict illustrates this. They deliberated two hours before asking Judge Parks for a second definition of possession. Juror confusion and dispute was, arguably, centered upon the very issue about which the confidential informant's testimony was most damaging. Less than a half hour after Judge Parks had referred them to his original instructions, the jury communicated to the Judge that it could not reach a unanimous verdict. Only after the Modified Allen Charge was read, did the jury render a verdict of guilty.
The writ of habeas corpus is "an extraordinary remedy" which should be afforded only to those persons "whom society has grievously wronged" in light of modern concepts of justice. Brecht, 507 U.S. at 633-34, 113 S.Ct. at 1719-20 (citations omitted). Accordingly, a decision to overturn a state court jury conviction on collateral review can be undertaken only after considering the significant costs to retry the petitioner, the erosion of memory and the dispersion of witnesses, and the societal interest in the prompt administration of justice. Id. at 637, 113 S.Ct. at 1721-22 (citations omitted). In this case, however, hearsay evidence violative of the Confrontation Clause was admitted at trial. That evidence was the only direct evidence that Petitioner possessed the heroin found in the alley. The introduction of the confidential informant's out-of-court statement had a "substantial and injurious effect in determining the jury's verdict." Brecht, 507 U.S. at 638, 113 S.Ct. at 1722 Petitioner's motion for federal habeas relief should be granted and he should be given a new trial.
3. Petitioner's Due Process Claim, Claim Regarding Disclosure of the Confidential Informant's Identity and Ineffective Assistance of Counsel Claim
Because the hearsay evidence admitted during Petitioner's trial violated his Sixth Amendment rights under the Confrontation Clause and had a substantial and injurious effect in determining the jury's verdict, the Court does not decide Petitioner's claim under the Due Process Clause of the Fourteenth Amendment, his claim that Respondent failed to disclose the confidential informant's identity or his claim of ineffective assistance of counsel.
V. CONCLUSION
In this case, a long line of thoughtful and conscientious judges has concluded that Petitioner's argument has no merit. These decisions are not to be taken lightly. In reaching the opposite conclusion, the Court has paused and reconsidered the matter time and again. Such reflection has also reminded the Court of its own imperfect struggles with the proper application of the Confrontation Clause. United States v. Alexius, 76 F.3d 642 (5th Cir.1996). Nevertheless, the Court's judgment remains unchanged: Petitioner's argument is meritorious. The Court, therefore, must follow the dictates of its own independent judgement, despite its great respect for the judges who have already considered this claim.
As required by 28 U.S.C. § 636(b)(1), the Court has conducted an independent review of the entire record and a de novo review of the matters raised by the objections. For the reasons set forth above, the Court concludes that Petitioner's claim and objections are meritorious. The confidential informant's out-of-court statement, as incorporated in the prosecutor's opening and closing presentations to the jury and in the examinations of Officer Prieto and Deputy Gomez, was inadmissible hearsay which was a crucial, critical, highly significant factor in the context of Petitioner's trial. A violation of his Sixth Amendment rights occurred which had a substantial and injurious effect and influence in determining the jury's verdict. Petitioner's conviction cannot stand.
Accordingly, it is ORDERED that Petitioner's writ for habeas corpus relief pursuant to 28 U.S.C. § 2254 be GRANTED.
*393 It is further ORDERED that Petitioner be released from State custody unless the State appeals this ruling or, foregoing an appeal, causes Petitioner to be retried by December 31, 1996.
NOTES
[1] Further, two exceptions to Rule 508 are pertinent to this case. Under Texas law, the privilege does not exist "if the informer appears as a witness for the public entity," or if, under certain conditions, the "informer may be able to give testimony necessary to a fair determination as to issues of guilt (or) innocence." TEX. R. CRIM. EVID. Rule § 08(c)(1)(2).
[2] "Where an accused is charged with unlawful possession of a controlled substance, the State must prove two elements: (1) that the accused exercised care, control and management over the contraband; and (2) that the accused knew it was contraband." Martin v. State, 753 S.W.2d 384, 387 (Tex.Crim.App.1988) (citation omitted). The State must establish "affirmative links'" between a defendant and a controlled substance. Humason v. State, 728 S.W.2d 363, 365-66 (Tex. Crim.App.1987) (quoting McGoldrick v. State, 682 S.W.2d 573, 578 (Tex.Crim.App.1985)). "Furtive movements or gestures alone are insufficient evidence to prove" an accused guilty of a controlled substance offense. Thomas v. State, 762 S.W.2d 721, 723 (Tex.App.1988) (citing Smith v. State, 542 S.W.2d 420, 422 (Tex.Crim. App.1976)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1110467/ | 259 So. 2d 89 (1972)
ASSOCIATED INDEMNITY CORPORATION
v.
LOUISIANA INDUSTRIES PRESTRESSED CORPORATION.
No. 4886.
Court of Appeal of Louisiana, Fourth Circuit.
March 7, 1972.
*90 Dillon & Williams (Gerard M. Dillon), New Orleans, for plaintiff-appellee.
Sessions, Fishman, Rosenson, Snellings & Boisfontaine (Cicero C. Sessions), New Orleans, for defendants-appellants.
Before REGAN, SAMUEL and LEMMON, JJ.
LEMMON, Judge.
Associated Indemnity Corporation filed a petition for declaratory judgment, naming its insured, Louisiana Industries Prestressed Corporation (LIPCO) as defendant. The suit sought a declaration of its obligation to defend LIPCO on a reconventional demand in another proceeding and to indemnify LIPCO in respect to that demand.
Associated eventually filed a motion for judgment on the pleadings, which was granted and which decreed that Associated is not obligated under the policy to defend or to indemnify LIPCO in the other proceedings. LIPCO has appealed.
Jack Sanders, d/b/a Laguna Construction Company, had undertaken construction of an overpass in the City of New Orleans pursuant to a Public Works Contract. LIPCO contracted to supply prestressed beams, but a controversy developed as to whether or not the beams met the contract specifications.
When delays occurred, LIPCO filed a lien and eventually filed a suit based on the lien. Sanders answered and filed a reconventional demand for damages. Article 39 of the answer and reconventional demand reads as follows:
"That as a direct and proximate result of the breaches of contract hereinabove *91 set forth, and in addition to the damages, hereinabove set forth, "Sanders" suffered further damages by having his ability to earn his living as a general construction contractor and/or as a bridge contractor in the foreseeable future seriously impaired due to the magnitude of the financial loss he has sustained; the loss of his bonding capacity; the loss of his ability to borrow or secure money for working capital; the loss of his reputation and earning capacity, all in the sum and amount of $500,000.00." (Emphasis supplied)
When LIPCO was served with this demand, it immediately notified Associated that the demand included damages for a species of libel and slander, for which the insurance policy provides coverage. Associated denied coverage, and LIPCO requested a reexamination of this position. Associated again denied coverage and then instituted the present suit for a declaratory judgment. The suit was transferred to the judge of the district court in whose division the lien action was pending.
LIPCO excepted, alleging that the suit was premature since no formal demand had been made on Associated. LIPCO further contended that the original suit must be tried and decided on its merits before it could be determined that the pertinent averments of the reconventional demand were within the policy coverage. The exception of prematurity was overruled.
LIPCO then filed a third party demand against Associated in the lien suit, which then put coverage under the insurance policy squarely at issue in that suit. LIPCO also filed an answer in the declaratory judgment action, which among other things alleged that the issue of coverage was now before the court in the lien suit, and Associated therefore had no cause of action or right of action for declaratory judgment.
Associated then moved for a judgment on the pleadings. LIPCO again asserted exceptions of no cause of action and no right of action and alternatively moved to stay the declaratory judgment action until the lien suit was finally determined, or to consolidate the cases for trial. The judgment on the pleadings was rendered in favor of Associated.
On appeal, LIPCO first contends that Associated is not entitled to employ a declaratory judgment action for the purpose of determining its obligation under the policy. On the other hand, Associated urges that unless this determination is made in some manner prior to the trial of the lien suit, it must either participate in a lengthy and expensive trial or expose itself to a penalty for failing to do so.
It is not necessary that the reconventional demand be tried and decided on its merits before a determination can be made of Associated's obligation to defend against the demand. That determination can be made solely from the pertinent allegations of the demand. In American Home Assurance Co. v. Czarniecki, 255 La. 251, 230 So. 2d 253 (1969) the Supreme Court stated:
"Generally the insurer's obligation to defend suits against its insured is broader than its liability for damage claims. And the insurer's duty to defend suits brought against its insured is determined by the allegations of the injured plaintiff's petition, with the insurer being obligated to furnish a defense unless the petition unambiguously excludes coverage." (Emphasis supplied)
However, LIPCO contends that Sanders is not a party to the declaratory judgment action and that a determination in this action will not necessarily terminate the dispute over coverage. LIPCO points out that a motion for summary judgment on the third party demand in the lien suit could also be used to determine Associated's obligation under the policy.
C.C.P. art. 1871 provides that the existence of another adequate remedy does not *92 preclude a judgment for declaratory relief in cases where it is appropriate. We believe that a declaratory judgment action is appropriate in this particular case to determine the rights and obligations of the parties to the contract of insurance.[1]
As to the termination of the controversy, C.C.P. art. 1876 provides:
"The court may refuse to render a declaratory judgment or decree where such judgment or decree, if rendered, would not terminate the uncertainty or controversy giving rise to the proceeding." (Emphasis supplied)
Since the article is permissive, the scope of our appellate review is a determination of whether or not the trial judge abused his discretion by not refusing to render a declaratory judgment.
We believe that there was no abuse of discretion in the present case. The lien suit is pending before the same judge who rendered the declaratory judgment. When the same issue of coverage raised by the third party demand in the lien suit is presented for adjudication, it is highly unlikely that this same judge will rule differently than he ruled in the present case. For all practical purposes, the determination of coverage already made by the trial judge in the present case has terminated the controversy in both cases.
While it may be argued in retrospect that a better procedure would have been to have the rights and obligations under the policy adjudicated in the lien suit once the third party demand was filed, this would not have prevented the multiplicity of suits. That third party demand was not made until after the present suit was underway. We believe that this declaratory judgment action was appropriate when filed and remained appropriate when the trial court rendered judgment. Certainly it would not now serve any useful purpose for us to reverse a correct determination made by the trial court in this action and force the parties to have the same determination made of the same issue by the same trial judge in the other proceeding.
We now proceed to review the correctness of the judgment itself.
The pertinent provisions of the policy of liability insurance 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 injury (herein called "personal injury") sustained by any person or organization and arising out of one or more of the following offenses committed in the conduct of the named insured's business:
* * * * * *
"Group Bthe publication or utterance of a libel or slander or of other defamatory or disparaging material, or a publication or utterance in violation of an individual's right of privacy;. . ."
The parties concede that the policy provides coverage only for damages resulting from libel and slander and that all of the other articles of the reconventional demand allege damages caused by breach of contract, for which no coverage is afforded.
We believe that while Article 39 seeks recovery for damage to Sanders' reputation, the article clearly states that the damages (including damage to reputation) were suffered "as a direct and proximate result of the breaches of contract hereinabove set forth." (Emphasis supplied)
Libel is a publication injurious to the reputation of another. But a person's reputation can be damaged in many ways, only one of which is by libel or slander. *93 The policy clearly provides coverage for damages resulting from "the publication or utterance of a libel or slander or of other defamatory or disparaging material." The policy clearly does not provide coverage for damages (to reputation or otherwise) resulting from breach of contract. Sanders does not allege in the reconventional demand any publication or utterance by LIPCO which has caused damage to his reputation.
We conclude that Associated is not obligated under its policy to defend or to indemnify LIPCO for the damages alleged by the reconventional demand.
Accordingly, the judgment of the trial court is affirmed.
Affirmed.
NOTES
[1] For a discussion of the use of a declaratory judgment action to determine disputed coverage under an insurance policy, see Borchard, Declaratory Judgments 645 (2nd ed. 1941); 1 Anderson, Actions for Declaratory Judgments, § 241 (2nd ed. 1951). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2764854/ | Order entered December 22, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00523-CR
CRISTAL PAULLETT RICHARDSON, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the Criminal District Court No. 6
Dallas County, Texas
Trial Court Cause No. F13-00479-X
ORDER
The Court ORDERS court reporter Jan Cherie Williams to file, within FIFTEEN DAYS
of the date of this order, a supplemental record containing State’s Exhibit nos. 3 and 160.
We DIRECT the Clerk to send copies of this order, by electronic transmission, to Jan
Cherie Williams, official court reporter, Criminal District Court No. 6, and to counsel for all
parties.
/s/ ADA BROWN
JUSTICE | 01-03-2023 | 12-25-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/2376846/ | 837 F. Supp. 759 (1993)
John Henry BROSSETTE
v.
CITY OF BATON ROUGE, et al.
Civ. A. No. 90-840-B.
United States District Court, M.D. Louisiana.
October 14, 1993.
*760 Benn Hamilton, Matthews & Ranel, Baton Rouge, LA, for plaintiff.
William Michael Stemmans, Baton Rouge, LA, for defendants.
RULING ON DEFENDANTS' MOTION FOR SUMMARY JUDGMENT
POLOZOLA, District Judge.
On March 31, 1989, John Henry Brossette, the owner and operator of the Old Five Crown Social Club, was served with a notice issued by the Alcoholic Beverage Control Board (ABCB) stating that Brossette had violated Baton Rouge Ordinance 8787, Section 6.A.1(10).[1] Specifically, Brossette was *761 charged with operating his establishment in a manner reasonably anticipated to have an adverse effect on the public health, safety or morals.
A hearing on the violation was set for April 6, 1989 before the ABCB. plaintiff's attorney, who was retained in the afternoon of that very same day, formally and informally requested that the hearing be continued. The requests were denied summarily by the Director of the ABCB. The board then voted to suspend plaintiff's license for one year. Brossette immediately appealed the Board's decision to the Nineteenth Judicial District Court for the Parish of East Baton Rouge. After holding a status conference with the parties on April 13, 1989, the state trial court remanded the matter back to the ABCB for a new hearing.
A second hearing was held on June 1, 1989. At the conclusion of the second hearing, the ABCB voted four to three to suspend Brossette's license for a period of six months beginning on June 2, 1989. The evidence relied upon by the ABCB in reaching its decision included complaints which various individuals had made to local law enforcement officials concerning the activities in the vicinity of the club. Brossette again appealed the ABCB's ruling to the Nineteenth Judicial District Court for East Baton Rouge Parish. The state trial court affirmed the decision of the ABCB. The trial court held that it could only review the findings of the ABCB to see if they were supported by the record. The Louisiana First Circuit Court of Appeal affirmed the decision of the trial court in an unpublished opinion.[2] A writ was then granted by the Louisiana Supreme Court.[3]
After hearing the matter, the Louisiana Supreme Court reversed the decisions of the lower courts. The Louisiana Supreme Court held that Brossette was entitled to a de novo trial before the state district court. The Supreme Court further held that the district court should have excluded the various complaints made to law enforcement officials as hearsay.[4] The court, in its conclusion, noted that:
There was one murder at the Club and one serious fight. There were numerous arrests in the vicinity, a high crime area. There was no evidence that Brossette committed, attempted, conspired, aided, abetted or encouraged anyone to commit any act adversely affecting the public health, safety or morals. On the contrary, Brossette cooperated with the police, employed police protection for his Club and suffered from its location in a high crime area. Brossette acted as a police informant and tried to protect both his premises and his customers. Crime in the area was not a sufficient basis to close the Club.[5]
On August 31, 1990, more than one year after the Board had revoked his license, Brossette filed this suit seeking damages pursuant to 42 U.S.C. § 1983 from the ABCB, the Director, and members of the ABCB, the Chief of Police for the City Police, and the City of Baton Rouge. This Court stayed the federal suit pending a decision from the Louisiana Supreme Court. On March 4, 1993, the federal suit was reinstated on the court's docket. Defendants then filed a motion for summary judgement based on two grounds: (1) they are entitled to absolute or qualified immunity and, (2) Brossette's claim under 42 U.S.C. § 1983 has prescribed. The Court finds that summary judgment should be granted on both grounds.
*762 Summary judgment is proper 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 any material fact and that the moving party is entitled to a judgment as a matter of law."[6] If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to produce evidence of the existence of a genuine issue for trial.[7] In opposing the granting of summary judgment, the non-moving party may not rest upon the mere allegations or denials of the moving party's pleadings, but by its own affidavits, depositions, answers to interrogatories, or admissions the non-moving party must set forth specific facts showing that there is a genuine issue for trial.[8] When all the evidence presented by both parties could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.[9]
Although there is no federal statute of limitations for actions brought pursuant to 42 U.S.C. § 1983, it is well established that federal courts borrow the forum state's general personal injury limitations period.[10] Consistent with the practice of borrowing state statutes of limitations for § 1983 claims, federal courts also look to state law for its tolling provisions.[11] However, federal law governs when a cause of action arises.[12] A federal cause of action arises when the plaintiff knows or has reason to know of the injury which is the basis of the action.[13]
Both parties agree on the dates material to the Court's inquiry as to whether Brossette's § 1983 claim prescribed. There is no dispute that the ABCB meeting during which the ABCB voted to suspend Brossette's license for six months took place on June 1, 1989. There is also no dispute that Brossette received notice of the suspension on June 2, 1989. The record reveals that Brossette filed his federal suit in this Court on August 31, 1990. Therefore, there are no genuine issues as to any material facts on the prescription issue.
The limitations period applicable to Brossette's § 1983 claim is the one-year prescriptive period set forth in Article 3492 of the Louisiana Civil Code.[14] Brossette's cause of action arose on June 2, 1989, the date he received notice of the suspension of his license.[15] Brossette's claim prescribed on Monday, June 4, 1990.[16]
Instead of arguing that the prescriptive period was interrupted, Brossette argues that the suspension of his license is in the nature of a continuing injury and that his claim would have prescribed on December 2, 1990 if he had not filed his complaint. This argument is without merit. In deciding whether an act constitutes a continuing injury for claims under 42 U.S.C. § 1983, the Court may look to Title VII cases as well as *763 § 1983 cases.[17] In Delaware State College v. Ricks, the United States Supreme Court instructed lower courts to distinguish between an act of discrimination and its effects when assessing whether an act amounts to a continuing violation under Title VII.[18] Judge Alvin B. Rubin gave his interpretation of Ricks in a case pending before the Fifth Circuit as follows:
If the discrimination alleged is a single act, the statute begins to run at the time of the act. If, on the other hand, the statutory violation does not occur at a single moment but in a series of separate acts and if the same alleged violation was committed at the time of each act, then the limitations period begins anew with each violation and only those violations preceding the filing of the complaint by the full limitations period are foreclosed.[19]
The suspension of Brossette's license clearly falls within the single act category delineated by Judge Rubin. The single act which is the source of the alleged violation of Brossette's civil rights was the decision by the ABCB to suspend his license on June 2, 1989. The alleged violation as the decision rendered by the Board. Each day of the suspension ordered by the Board does not constitute a "separate act." Thus, Brossette's cause of action accrued on June 2, 1989.
The prescriptive period was neither interrupted nor tolled by Brossette's appeals to the state courts for a review of the ABCB's decision. In Ubosi v. Sowela Technical Institute,[20] a student alleged that she was wrongfully dismissed from the school's nursing program. The court held that the student's resort to the statutory "grievance procedure ... did not interrupt the running of prescription of her damage suit against Sowela for wrongful termination."[21]
This Court has reached a similar conclusion in Ford v. Stone.[22] In Ford, a plaintiff brought suit pursuant to 42 U.S.C. § 1983 contending that his employer violated his civil rights in discharging him from employment. Prior to filing his suit in federal court, the Ford plaintiff had filed a suit in state court alleging that his employer had violated his civil rights protected by the Louisiana Constitution. This Court held that the filing of the state court suit did not interrupt the running of prescription on the federal court suit because, in state court, the plaintiff did not raise his "federal claims in a manner sufficient to interrupt prescription."[23] Furthermore, it is clear that the time period to file a suit which charges violations of 42 U.S.C. §§ 1981 and 1983 is not interrupted or suspended by filing a claim under Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-5.[24] Plaintiff also sued the Chief of Police for actions which allegedly occurred in 1988. This claim is clearly prescribed.
Additionally, a review of the Board's structure reveals that the Board and its individual members are entitled to absolute judicial immunity. The Board is vested with adjudicative powers to determine questions of fact pertaining to claims of violations of city ordinances. Thus, the commission is also clothed with procedural trappings typically associated with a common-law finder of fact. It may compel and hear evidence, make findings of fact, decide whether a party's license should be revoked or suspended or other sanctions should be imposed. Its decisions are appealable to the state district court on a de novo basis. In short, the Board's functions entitle it to absolute judicial immunity.[25]
The Court must now determine whether individual members of the board are *764 entitled to absolute immunity. The Fifth Circuit Court of Appeals recently set forth the factors to be considered by the court in reaching this decision in Mylett v. Mullican.
When determining whether a state governmental officer is entitled to absolute immunity we examine the character of the officer's duties and the relationship to the parties. If the officer's duties are of a judicial nature we must then weigh the costs and benefits of denying or affording absolute immunity. Our analysis is informed by reference to the following factors: (a) the need to assure that the individual defendant can perform his functions without harassment or intimidation; (b) the presence of safeguards that reduce the need for private damage as a means of controlling unconstitutional conduct; (c) insulation from political influence; (d) the importance of precedent; (e) the adversary nature of the process; (f) the correctability of error on appeal. No one factor is controlling and the list of considerations is not intended to be exclusive. After considering these factors and the Commission's role in this case, we conclude and hold that the individual Commissioners are entitled to absolute immunity for the performance of their official duties.
Considering these factors, the Court concludes that the individual members of the Board are entitled to judicial immunity.
The City of Baton Rouge is sued because of the Board's actions. This suit is also without merit.
Therefore:
IT IS ORDERED that defendants' Motion for Summary Judgment be and the same hereby is GRANTED.
IT IS FURTHER ORDERED Defendant John C. Welborn's Motion to Dismiss be and is DENIED as moot.
IT IS FURTHER ORDERED that plaintiff's suit is hereby dismissed with prejudice.
Judgment shall be entered accordingly.
NOTES
[1] This ordinance provides that an alcoholic beverage permit holder on licensed premises is not allowed to:
Commit, attempt, conspire, aid, abet or encourage any persons to commit any acts or things prohibited by this ordinance, by the East Baton Rouge Code, by the provisions of any applicable Louisiana Revised Statutes or laws, or applicable laws of the United States or any other country, pertaining to: (1) any alcoholic beverages as described in Section 1.A. herein, (2) any illegal distribution of any Controlled Dangerous Substance, (3) soliciting for prostitution, (4) pandering, (5) letting premises for prostitution, (6) gambling, (7) letting premises for gambling, (8) contributing to the delinquency of juveniles, (9) keeping a disorderly place, or (10) any act which might adversely affect the public health, safety or morals.
[2] Brossette v. Alcoholic Beverage Control Board, 601 So. 2d 37 (La.App. 1st Cir.1992).
[3] Brossette v. Alcoholic Beverage Control Board, 604 So. 2d 1298 (La.1992).
[4] Brossette v. Alcoholic Beverage Control Board, 611 So. 2d 1391 (La.1993).
[5] Brossette, 611 So.2d at 1394.
[6] Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Cormier v. Pennzoil Exploration & Production Co., 969 F.2d 1559 (5th Cir.1992); Fontenot v. Upjohn Co., 780 F.2d 1190 (5th Cir.1986).
[7] Cormier, 969 F.2d at 1560.
[8] Celotex, 477 U.S. at 324, 106 S. Ct. at 2553; Anderson, 477 U.S. at 256, 106 S. Ct. at 2514; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-7, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986); Reese v. Anderson, 926 F.2d 494, 498 (5th Cir.1991); Lavespere v. Niagara Machine & Tool Works, Inc., 910 F.2d 167, 178 (5th Cir.1990).
[9] Matsushita, 475 U.S. at 586, 106 S. Ct. at 1356; Cormier, 969 F.2d at 1560.
[10] Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir.1992).
[11] Burge v. Parish of St. Tammany, 996 F.2d 786, 788 (5th Cir.1993).
[12] Jackson, 950 F.2d at 265; Ford v. Stone, 599 F. Supp. 693, 694 (M.D.La.1984), aff'd without op., 774 F.2d 1158 (5th Cir.1985).
[13] Id.
[14] Elzy v. Roberson, 868 F.2d 793, 794-5 (5th Cir.1989); Davis v. Louisiana State University, 876 F.2d 412, 413 (5th Cir.1989).
[15] Defendants' Memo. in Support, p. 5; Complaint, ¶ XXIII.
[16] See Fed.R.Civ.P. 6.
[17] Perez v. Laredo Junior College, 706 F.2d 731, 733 (5th Cir.1983).
[18] 449 U.S. 250, 258, 101 S. Ct. 498, 504, 66 L. Ed. 2d 431 (1980).
[19] Perez, 706 F.2d at 733-4; Jackson v. Galan, 868 F.2d 165, 168 (5th Cir.1989).
[20] 584 So. 2d 340 (La.App. 3rd Cir.1991).
[21] Ubosi, 584 So.2d at 342.
[22] 599 F. Supp. 693 (M.D.La.1984).
[23] Ford, 599 F.Supp. at 696.
[24] Taylor v. Bunge Corp., 775 F.2d 617 (5th Cir. 1985).
[25] Mylett v. Mullican, 992 F.2d 1347 (5th Cir. 1993). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1116913/ | 572 So. 2d 255 (1990)
STATE of Louisiana
v.
Larry DONAHUE.
No. 90 KA 0040.
Court of Appeal of Louisiana, First Circuit.
November 14, 1990.
Rehearing Denied January 18, 1991.
*256 Clayton M. Perkins, Jr., St. Francisville, for defendant-appellant.
George H. Ware, Jr., Dist. Atty., Clinton, for plaintiff-appellee.
Before SAVOIE, CRAIN and FOIL, JJ.
CRAIN, Judge.
Larry Donahue was charged by bill of information with attempted first degree murder of West Feliciana Parish Sheriff W.M. Daniel, a violation of LSA-R.S. 14:27 and 14:30 A(2). Defendant pled not guilty, was tried by jury and found guilty as charged. Thereafter, the state filed a multiple offender bill of information charging defendant as a habitual felony offender. At the conclusion of the habitual offender enhancement hearing which followed, defendant was adjudged a Third Felony Habitual Offender; he was sentenced to imprisonment at hard labor for the remainder of his natural life, without benefit of parole, probation, or suspension of sentence. Defendant has appealed, urging three assignments of error:
1. The state failed to prove the elements of the instant charge beyond a reasonable doubt.
2. The trial court erred by denying defendant's requested jury instruction.
*257 3. Because defective evidence was admitted at the habitual offender hearing, defendant was erroneously adjudged a multiple offender.
The trial testimony of Sheriff W.M. Daniel reveals the following. On the morning of May 27, 1988, Daniel responded to a call concerning a suspicious man who was using a telephone at West Feliciana Parish High School. Upon receiving the call, Daniel immediately drove to the school in his truck.
When he arrived at the school, Daniel observed defendant exit one of the school's buildings. Directly behind defendant were Joe Wells, the school principal, and two assistant school principals, Rodney A. Lemoine, Jr., and Robert Ward.
While still inside his truck and from a distance of about one hundred feet, Daniel observed defendant raise his shirt and pull a pistol. Immediately, Daniel jammed the brakes of his truck and began exiting the truck with his shotgun. In exiting the truck, Daniel failed to put the truck's transmission in park or neutral. The truck continued to roll, struck a parked car, and then stalled. While Daniel was still exiting the truck and was in a standing position with the truck's door open and his head above the door, defendant fired the first of three shots from the pistol he had pulled. Defendant fired the first shot, while he was apparently running for cover, with the pistol pointed directly at the sheriff. At the time the first shot was fired, Daniel was about fifteen to twenty yards from defendant.
Defendant then ran around the passenger side of the sheriff's truck and got behind a car that was parked beside the truck. The sheriff remained behind his truck (apparently the driver's side). With the truck and the car between defendant and Daniel, defendant fired the second and third shots. In doing so, defendant looked through the car's window at the sheriff before rising and firing the pistol over the top of the car with the gun "angled down" in the direction of the sheriff.
After defendant fired his third shot, there was some hesitation. Daniel told defendant to drop his gun and come out. Defendant then told the sheriff to drop his gun. Daniel replied that he was the sheriff. Defendant asked to see Daniel's badge. When the sheriff displayed his badge, defendant immediately threw down his pistol, raised his hands and surrendered.
Daniel immediately went around the car where defendant was, cuffed defendant and told him he was under arrest. After further investigation, the sheriff learned that defendant was an escapee from Louisiana State Penitentiary at Angola.
During this shooting incident, the sheriff chose not to fire the pistol or the shotgun with which he was armed. The sheriff explained that to do so he would have had to shoot toward the school building, and he did not know who else might have been in the line of fire.
The sheriff testified that he was definitely in fear of being struck by a bullet. However, none of the three shots fired by defendant nor any flying glass, metal or other object actually hit the sheriff, and no one was injured during the incident.
ASSIGNMENT OF ERROR NO. ONE:
By means of this assignment, defendant submits that the state failed to prove the essential elements of attempted first degree murder beyond a reasonable doubt.
Initially, we note that the record does not reflect that defendant filed a motion for post verdict judgment of acquittal. In order to challenge a conviction on the basis of insufficiency of the evidence, defendant should have proceeded by way of a motion for post verdict judgment of acquittal. See LSA-C.Cr.P. art. 821. Nevertheless, we will consider a claim of insufficiency of the evidence which has been briefed pursuant to a formal assignment of error.
In reviewing the sufficiency of the evidence to support a conviction, an appellate court in Louisiana is controlled by the standard enunciated by the United States Supreme Court in Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979). That standard is that the appellate court must determine that the evidence, *258 viewed in the light most favorable to the prosecution, was sufficient to convince a rational trier-of-fact that all of the elements of the crime had been proved beyond a reasonable doubt. State v. Captville, 448 So. 2d 676, 678 (La.1984). The standard has been codified in LSA-C.Cr.P. art. 821.
LSA-R.S. 14:27 A provides:
Any person who, having a specific intent to commit a crime, does or omits an act for the purpose of and tending directly toward the accomplishing of his object is guilty of an attempt to commit the offense intended; and it shall be immaterial whether, under the circumstances, he would have actually accomplished his purposes.
LSA-R.S. 14:30 A(2) provides:
First degree murder is the killing of a human being:
* * * * * *
(2) When the offender has a specific intent to kill or to inflict great bodily harm upon a fireman or peace officer engaged in the performance of his lawful duties;[1]
* * * * * *
The gravamen of the crime of attempted murder, whether first or second degree, is the specific intent to kill and the commission of an overt act tending toward the accomplishment of that goal. State v. Jarman, 445 So. 2d 1184, 1189 (La.1984); State v. McCue, 484 So. 2d 889, 892 (La. App. 1st Cir.1986). Thus, in order to commit attempted first degree murder under the circumstances set forth in LSA-R.S. 14:30 A(2) and 14:27, the offender must possess the specific intent to kill a person who is a peace officer engaged in the performance of his lawful duties.
Intent, absent an admission of such by a defendant, must necessarily be proven by inferences from surrounding facts and circumstances. State v. Hicks, 554 So. 2d 1298, 1302 (La.App. 1st Cir.1989), writ denied, 559 So. 2d 1374 (La.1990). In the instant case, defendant made no such admission. Thus, it was necessary that the state prove this essential element of the crime by circumstantial evidence. The rule regarding the use of circumstantial evidence is contained in LSA-R.S. 15:438. This rule restrains the fact finder, as well as the reviewer on appeal, to accept as proven all that the evidence tends to prove, and then to convict only if every reasonable hypothesis of innocence is excluded. State v. Lilly, 468 So. 2d 1154, 1158 (La.1985); State v. Hicks, 554 So.2d at 1302.
Herein, the sheriff's testimony showed that defendant fired three shots in the direction of the sheriff. According to the sheriff, when the shots were being fired, the pistol defendant used was pointed in Daniel's direction as if defendant was trying to shoot him rather than only frighten him. In that regard, the sheriff testified that during the incident he was definitely in fear of being struck by a bullet and that he was in fear for his life.
Several eyewitnesses gave testimony at trial which corroborated Daniel's testimony that defendant's shots were directed at him. Those witnesses included Donald Ray Coates, Donald R. Milton, Rodney A. Lemoine, Jr., and Joe Wells. Although he was unsure of the number of shots fired, Coates stated that he was certain defendant was pointing the gun at the sheriff. During his testimony, Milton indicated that defendant aimed the pistol toward the sheriff's truck, moving it so as to track the truck as the sheriff arrived at the school. Lemoine testified that he saw defendant shoot twice in the direction of the sheriff and that he felt that defendant was shooting at the sheriff. Wells stated that, although he heard three shots, he saw only the first shot defendant fired. At the time of the first shot, the gun was pointed in the direction of the sheriff.
Viewing all the evidence in the light most favorable to the state, any rational trier-of-fact could have found that the state proved beyond a reasonable doubt and to the exclusion of every reasonable hypothesis of innocence that defendant had the specific *259 intent to kill a human being, who was a peace officer engaged in the performance of his lawful duties, and that defendant performed an act(s) tending directly toward accomplishing his objective. This assignment of error is without merit.
ASSIGNMENT OF ERROR NO. TWO:
By means of this assignment, defendant asserts that the trial court erred by denying his requested jury instruction.
The record reflects that, immediately after the jury retired to begin its deliberations, the trial court stated for the record that it had declined to give defense counsel's jury instruction number one; the court further stated that it was reserving defense counsel's objection to its ruling. The record reveals that defendant's written jury instruction number one was as follows:
The defense requests that since there was no touching of the victim in this case, but that the victim was in reasonable apprehension of receiving a battery, that aggravated assault should be a responsive verdict herein, 14:37. The elements of aggravated assault and assault 14:36, should be read to the jury:
LSA-C.Cr.P. art. 807 provides:
The state and the defendant shall have the right before argument to submit to the court special written charges for the jury.[2] Such charges may be received by the court in its discretion after argument has begun. The party submitting the charges shall furnish a copy of the charges to the other party when the charges are submitted to the court.
A requested special charge shall be given by the court if it does not require qualification, limitation, or explanation, and if it is wholly correct and pertinent. It need not be given if it is included in the general charge or in another special charge to be given.
(Footnote added).
In order for the state or defendant to assert the right to have a special charge given to the jury, LSA-C.Cr.P. art. 807 requires that the charge be complete, so that the trial court may use the charge without qualification, limitation or explanation. See State v. Gonzales, 258 La. 103, 245 So. 2d 372, 374 (1971).
As phrased, defendant's requested jury instruction number one was clearly incomplete and could not be given without explanation. See and compare State v. Gonzales, 245 So.2d at 374. Thus, the trial court properly denied the requested charge.
Additionally, while conceding (in brief) that a verdict of guilty of aggravated assault is not one of the responsive verdicts set forth in LSA-C.Cr.P. art. 814 A 2, defendant asserts that LSA-C.Cr.P. art. 814 A 2 unconstitutionally violates his rights to due process and equal protection under Article I, Sections 2 and 3, of the Louisiana Constitution and the Fourteenth Amendment to the United States Constitution.[3]
We find defendant's assertion that the provisions of LSA-C.Cr.P. art. 814 A 2 are unconstitutional to be meritless. Our Supreme Court has repeatedly upheld the constitutionality of Louisiana's responsive verdict system. See State v. Matthews, 380 So. 2d 43, 45 (La.1980) and the cases cited therein.[4] Similarly, we find no abridgment *260 of defendant's constitutional rights in this case.
This assignment lacks merit.
ASSIGNMENT OF ERROR NO. THREE AND PATENT SENTENCING ERROR:
By means of this assignment, defendant challenges his adjudication as a habitual felony offender. He claims that he was erroneously adjudicated to be a multiple offender because the state failed to introduce evidence proving that he had been advised of and had waived his Boykin rights when he entered a guilty plea to a predicate felony offense. However, we find defendant's adjudication as a Third Felony Habitual Offender to constitute error patent on the face of the record. LSA-C.Cr.P. art. 920(2).
A bill of information charging defendant as a Second Felony Habitual Offender was filed after the jury convicted defendant. The multiple offender bill charged that defendant was previously convicted of armed robbery on May 15, 1980,[5] in Orleans Parish and that on June 20, 1980, defendant was adjudged a Second Felony Habitual Offender and sentenced to a term of one hundred and ninety-eight years at hard labor for the armed robbery conviction.
At the hearing relative to the instant habitual offender bill of information, the state began its presentation of evidence by introducing State Exhibit S-1 into evidence. S-1 included certified copies of the bill of information charging the May 15, 1980, armed robbery conviction of Larry L. Donahue in Criminal District Court of Orleans Parish under docket number 271-682; the multiple offender bill of information upon which Larry L. Donahue's adjudication and sentence for the armed robbery conviction was based; and the minute entries of May 15, 1980, and June 20, 1980, reflecting Larry L. Donahue's conviction and sentence for the armed robbery. S-1 also included an uncertified transcript of the June 20, 1980, sentencing proceeding.
After introducing S-1 into evidence, the state presented the testimony of Mary Cockerham, an employee of the Louisiana State Penitentiary Records Office. Cockerham stated that she is custodian of the inmate records and that she brought Larry L. Donahue's prison records to court. She testified that those records contained a photograph and the fingerprints of Larry L. Donahue. The state introduced the photograph (S-2) and the fingerprints (S-3) into evidence.
The state then introduced the testimony of Joanne Robeau, a fingerprint technician with the Bureau of Identification, who qualified and was accepted by the trial court as an expert in fingerprint identification. Robeau obtained defendant's fingerprints in court; these fingerprints were introduced in evidence as S-4. Robeau compared the fingerprints of Larry L. Donahue's prison records (S-3) to those on S-4; she also compared fingerprints on the multiple offender bill of information (pertaining to Larry L. Donahue's prior habitual offender adjudication enhancing the sentence for the armed robbery in Orleans Parish) to those on S-4. Following those comparisons, Robeau concluded that the fingerprints on S-3, S-4 and the multiple offender bill previously filed in Orleans Parish were all of the same individual.
At the conclusion of the instant habitual offender hearing, the trial court adjudged defendant to be a Third Felony Habitual Offender. In doing so, it is apparent that the trial court relied upon a September 27, 1976, guilty plea to simple robbery under docket number 41563 of the Twenty-First Judicial District Court, the predicate conviction for defendant's prior second felony multiple offender adjudication in Orleans Parish. It is as to this prior guilty plea *261 that defendant now argues that the state failed to prove he was properly Boykinized.
A habitual offender bill of information does not charge a new crime but is only a method of increasing the punishment of second and subsequent felony offenses, State v. Walker, 416 So. 2d 534, 536 (La.1982). It is essential that the prior conviction(s) be formally charged in order to sentence a defendant as a multiple offender. State v. Hingle, 242 La. 844, 139 So. 2d 205, 206 (1961). The multiple offender indictment need only inform the accused of his previous felony conviction(s) within the time period set forth in LSA-R.S. 15:529.1. This satisfies the constitutional requirement that the accused shall be informed of the nature and cause of the accusation against him. State v. Bullock, 329 So. 2d 733, 737 (La.1976); State v. Rowell, 306 So. 2d 671, 675 (La.1975).
Because the instant multiple offender bill of information informed defendant only of his prior armed robbery conviction, only that prior conviction could be used for enhancement of the instant offenses. Accordingly, it was patently erroneous for the trial court to sentence defendant as a Third Felony Habitual Offender based upon another prior felony conviction (for simple robbery) as to which defendant was not specifically informed in the instant habitual offender bill of information.[6]
Consequently, we set aside defendant's adjudication as a Third Felony Habitual Offender and remand for recharging defendant as a Third Felony Habitual Offender and a new hearing thereon.
CONVICTION AFFIRMED. SENTENCE VACATED AND REMANDED FOR RECHARGE AS THIRD FELONY OFFENDER, AND REHEARING THEREON.
SAVOIE, J., dissents and assigns reasons.
SAVOIE, Judge, dissenting.
I dissent from that portion of the majority opinion which upholds the defendant's conviction for attempted first degree murder under LSA-R.S. 14:30 A(2) and 14:27. I believe that LSA-R.S. 14:30 A(2) requires that the defendant have actual or implied knowledge of the victim's identity as a police officer, and in this case the evidence, viewed under the standard set forth in Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979), does not support a finding that the defendant had the specific intent to kill or inflict great bodily harm upon a peace officer engaged in the performance of his lawful duties.
LSA-R.S. 14:30 A(2) states in pertinent part:
A. First degree murder is the killing of a human being:
* * * * * *
(2) When the offender has a specific intent to kill or to inflict great bodily harm upon a fireman or peace officer engaged in the performance of his lawful duties;
* * * * * *
The purpose of this statute is to protect police officers performing their jobs from being killed or gravely injured by felons. The statute accomplishes this purpose by deterring criminals because the penalty for the murder of a police officer can be death.[1] This purpose is accomplished only where the defendant knows that the victim is a police officer for if the defendant does not know that the victim is a police officer, how is escalation of the murder of a police officer to a capital offense supposed to deter him?
*262 Reviewing the testimony and evidence in this case, we find that while any trier-of-fact could have found that the state proved beyond a reasonable doubt and to the exclusion of every reasonable hypothesis of innocence that defendant had the specific intent to kill a human being, and that defendant performed an act(s) tending directly toward accomplishing his objective, a rational trier-of-fact would have had a reasonable doubt (under the circumstances present herein) that the state proved that defendant specifically intended to kill a peace officer engaged in the performance of his lawful duties.
We reach the foregoing conclusion for the following reasons. There was insufficient evidence introduced at trial to show that defendant had knowledge of Daniel's identity as a police officer. Daniel's testimony indicated that, although his truck had a long whip antenna, the truck had neither markings identifying it as a police vehicle nor anything else identifying him as the sheriff. The truck did have a small, red light on the dashboard, but the sheriff stated that this light was covered. The sheriff testified that he was wearing a badge at the time of the shooting but that defendant was not in a position to see the badge. While defendant's actions in drawing his weapon and firing the first shot just as the sheriff was arriving upon the scene are circumstances supportive of an inference that defendant possessed knowledge of Daniel's identity as a peace officer, the probative value of those circumstances is counterbalanced by other circumstances indicative of a lack of such knowledge. Those other circumstances were defendant's demand to the sheriff that he drop his weapon (after the sheriff requested that defendant relinquish his gun) and defendant's actions in immediately surrendering his gun when the sheriff displayed his badge to defendant. Hence, when viewed in the light most favorable to the prosecution, the evidence does not support a verdict of guilty of attempted first degree murder of a peace officer in violation of LSA-R.S. 14:30 A(2) and 14:27.
In this case, the evidence shows that the purpose of the statute was achieved: defendant surrendered his weapon once he was aware that Daniel was the sheriff.
In addition to achieving the purpose of the statute, we note that our interpretation is more consistent with the language of the statute. The majority opinion defines LSA-R.S. 14:30 A(2) as occurring where the offender possesses "the specific intent to kill a person who is a peace officer engaged in the performance of his lawful duties." Furthermore, doubt as to the scope of a criminal statute must be decided in favor of the accused and against the state. State v. Brown, 378 So. 2d 916 (La. 1979).[2]
NOTES
[1] LSA-R.S. 14:30.1(A) defines second degree murder as "the killing of a human being: (1) When the offender has a specific intent to kill or to inflict great bodily harm; ..."
[2] The record does not reflect whether defendant's requested jury instruction was timely submitted to the trial court before argument.
[3] LSA-C.Cr.P. art. 814(A)(2) provides:
(A.) The only responsive verdicts which may be rendered when the indictment charges the following offenses are:
(2.) Attempted First Degree Murder:
Guilty
Guilty of attempted second degree murder.
Guilty of attempted manslaughter.
Guilty of aggravated battery.
Not guilty.
(Emphasis ours).
[4] We note that, in State v. Marse, 365 So. 2d 1319, 1322 (La.1978), the Louisiana Supreme Court stated:
The wisdom of the Louisiana responsive verdict systemboth as to those verdicts included and those excludedhas been questioned. See, Roberts v. Louisiana, 428 U.S. 325, 96 S. Ct. 3001, 49 L. Ed. 2d 974 (1976). However, this Court has repeatedly upheld Article 814 against constitutional attacks. See, State v. Qualls, 353 So. 2d 978 (La.1977); State v. Cook, 345 So. 2d 29 (La.1977); State v. Palmer, 344 So. 2d 964 (La.1977). In cases not involving the death penalty, the element of capriciousness injected into the proceedings by the responsive verdict system does not offend the constitutional safeguards. See, State v. Palmer, supra.
....
Defendant's ultimate protection is that if the state fails to prove the elements of the offense charged or of those offenses for which responsive verdicts are prescribed by La.C.Cr.P. art. 814, he is entitled to an acquittal.
[5] We note that the bill of information states that armed robbery conviction took place on May 14, 1980. However, the correct date for the conviction is May 15, 1980.
[6] Because defendant's status as a Second Felony Habitual Offender herein is not predicated on the September 27, 1976, guilty plea to simple robbery (upon which his prior multiple offender adjudication in Orleans Parish was based), we need not and do not address the contention raised by defendant in assignment number three that the state failed to prove he was properly Boykinized when he entered the guilty plea to the simple robbery.
[1] That the victim is a police officer is the only distinction between first degree murder under LSA-R.S. 14:30 A(2), a capital offense, and second degree murder under LSA-R.S. 14:30.1 A(1), a noncapital offense.
[2] Thorough research of the jurisprudence under LSA-R.S. 14:30 A(2) reveals only one Louisiana case dealing with first degree murder or attempted first degree murder of a police officer. State v. Bessard, 461 So. 2d 1201 (La.App.3d Cir. 1984), writ denied, 466 So. 2d 467 (La.1985). In Bessard, the defendant attempted to shoot a police officer while he was being booked at the police station; thus, it was clear defendant was aware that his victim was a police officer. In an Alabama case, Ex parte Murry, 455 So. 2d 72 (Ala.1984), the Alabama Supreme Court found that murder of a police officer could be raised to a capital offense only if the defendant knew the victim was a peace officer on duty. In the Murry case, the court reviewed the "murder of a peace officer" capital offense statutes of thirty-two other states; the court listed Louisiana under "States With a Knowledge Requirement." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2522841/ | 109 F. Supp. 2d 381 (2000)
UNITED STATES of America
v.
Allen POWELL, a/k/a, Keith Bates
No. CRIM. A. 99-719.
United States District Court, E.D. Pennsylvania.
August 10, 2000.
Mitchell E. Zamoff, U.S. Attorney's Office, Philadelphia, PA, for U.S.
MEMORANDUM
EDUARDO C. ROBRENO, District Judge.
The issue before the court is whether the Supreme Court's recent decision in Apprendi v. New Jersey requires the fact of a criminal defendant's prior conviction, which increases the penalty for a crime beyond the statutory maximum, to be charged in the indictment.
On May 8, 2000, the defendant, Allen Powell ("defendant"), pled guilty to one count of possession of a firearm by a convicted felon in violation of 18 U.S.C. § 922(g). The statutory maximum term of imprisonment for a violation of § 922(g) is ten (10) years. See 18 U.S.C. § 924(a)(2). However, if the defendant's criminal history includes at least three (3) prior convictions for "a violent felony or a serious drug offense, or both," as defined by statute, the court must impose a mandatory minimum term of imprisonment of fifteen (15) years. See 18 U.S.C. § 924(e)(1); 18 U.S.C. § 924(e)(2)(A) & (B)(defining "violent felony" and "serious drug offense"). Prior to his guilty plea in this case, defendant had been convicted of at least three (3) "violent felon[ies]" or "serious drug offense[s]." Defendant's prior convictions, however, *382 were not charged in the indictment to which he pled guilty in this case.
Presently before the court is defendant's objection to the presentence investigation report ("PSI") prepared by the Probation Officer. The PSI concludes that because of defendant's three (3) prior convictions for "violent felon[ies]" or "serious drug offense[s]," he must be sentenced to a term of imprisonment of at least one hundred eighty (180) months, i.e., the fifteen (15) year mandatory minimum term of imprisonment contained in § 924(e)(1). Defendant argues that because his prior convictions were not charged in the indictment, based upon the Supreme Court's recent decision in Apprendi, he must be sentenced within the applicable guideline range determined without regard to § 924(e)(1)'s mandatory term of imprisonment.[1]
In Almendarez-Torres v. United States, 523 U.S. 224, 118 S. Ct. 1219, 140 L. Ed. 2d 350 (1998), the defendant pled guilty to an indictment charging him with violating 8 U.S.C. § 1362. Section 1362(a) forbids an alien who has been deported from returning to the United States without special permission, and authorizes a maximum term of imprisonment of two (2) years for its violation. Section 1362(b)(2) authorizes a maximum term of imprisonment of twenty (20) years if an alien who has been deported "subsequent to a conviction for commission of an aggravated felony" attempts to reenter the United States without obtaining the required permission. Almendarez-Torres, 118 S.Ct. at 1222 (quoting 8 U.S.C. § 1362(b)(2)). The defendant had been previously deported subsequent to his conviction for an "aggravated felony."
The defendant argued that because the indictment did not include a charge of his prior aggravated felony conviction, he could not be sentenced to more than two (2) years' imprisonment under § 1362(a). The Court disagreed, upholding the district court's sentence of eighty-five (85) months' imprisonment. Specifically, the Court concluded that § 1362(b)(2) "is a penalty provision, which simply authorizes a court to increase the sentence for a recidivist [and] does not define a separate crime. Consequently, neither the statute nor the Constitution require the Government to charge the factor that it mentions, an earlier conviction, in the indictment." Id. at 1223.
After Almendarez-Torres, the Court decided Apprendi. In Apprendi, the defendant pled guilty to multiple counts of possession of a firearm for an unlawful purpose in violation of a New Jersey statute. The maximum term of imprisonment authorized for the defendant's offenses was ten (10) years per offense. A separate New Jersey statute authorized a maximum term of imprisonment of twenty (20) years' imprisonment if the sentencing judge found by the preponderance of the evidence that the defendant's criminal conduct was racially motivated. The sentencing judge found that Apprendi's conduct was racially motivated, and consequently sentenced him to twelve (12) years' imprisonment. The sentence was upheld by the New Jersey Supreme Court. The Court, however, vacated the defendant's sentence, holding that "[o]ther than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury and proved beyond a reasonable doubt." Apprendi v. New Jersey, 120 S. Ct. 2348, 2362-63 (U.S.N.J.2000).[2]
*383 The question before the court is whether Apprendi, either expressly or impliedly, overruled Almendarez-Torres. If it did, since defendant's prior convictions were not charged in the indictment, defendant's sentence is capped by the statutory maximum. On the other hand, if Almendarez-Torres was not overruled, defendant may be sentenced beyond the statutory maximum based on his prior convictions.
It is true that, even before Apprendi, the Court found that Almendarez-Torres "represents at best an exceptional departure from the historical practice [of requiring the jury to determine facts which are necessary to impose a particular punishment]." Apprendi, at 2361 (referring to Court's treatment of Almendarez-Torres in Jones v. United States, 526 U.S. 227, 119 S. Ct. 1215, 143 L. Ed. 2d 311 (1999)). It is also true that according to Apprendi, "Almendarez-Torres [arguably] was incorrectly decided and ... a logical application of our reasoning [in Apprendi] should apply if the recidivist issue were contested [in this case]." Id. at 2362. Finally, it is also true that in Apprendi, the Court ultimately concluded that Almendarez-Torres was "a narrow exception to the general rule" and was based on its "unique facts." Id.
Yet, despite the Court's reservations about its continuing validity, the Court chose not to overrule Almendarez-Torres. "Needless to say, only [the Supreme Court] may overrule one of its precedents. Until that occurs [Almendarez-Torres] is the law." Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 103 S. Ct. 1343, 1344, 75 L. Ed. 2d 260 (1983)(per curiam); see also Hutto v. Davis, 454 U.S. 370, 102 S. Ct. 703, 706, 70 L. Ed. 2d 556 (1982)(per curiam)("But unless we wish anarchy to prevail within the federal judicial system, a precedent of this court must be followed by the lower federal courts no matter how misguided the judges of those courts may think it to be."). Since Almendarez-Torres was plainly addressed, but not overruled by the Supreme Court in Apprendi, the court is obligated to apply it in this case.
Defendant next points to Justice Thomas' concurrence in Apprendi, wherein he confessed error in siding with the Almendarez-Torres majority and urged the adoption of a broader rule than that adopted by the majority. Apprendi, at 2367-68, 2378-79 (Thomas, J. concurring). According to Justice Thomas, the constitution requires all facts, including the fact of prior conviction, which form the basis for imposing a particular sentence to be treated as elements of the crime, and not as "sentencing factors." Id. at 2378-79. Justice Thomas' change of heart is significant in that he supplied one of the five (5) votes in both five (5) to four (4) decisions in Almendarez-Torres and Apprendi. Relying on Justice Thomas' concurrence, defendant divines that the Court is "poised to [overrule Almendarez-Torres] in the future." Def.'s Sent. Mem. (doc. no. 26), p. 4. Although it is acknowledged that concurrences serve a valid purpose in the American legal system, including providing an additional rationale to support the holding, see Aldisert, Ruggero J., Opinion Writing 166 (1990), only majority opinions have precedential value. Id. Therefore, neither Justice Thomas' lament (regretting joining the majority in Almendarez-Torres) nor his sagacity (urging a broader rule than that adopted by the majority in Apprendi) detracts from the binding nature of Almendarez-Torres upon this court.
Finally, defendant contends that the holding in Almendarez-Torres is limited to its facts and should be applied only to cases involving aliens illegally found in the United States. This argument misconstrues the role of Supreme Court precedent in our three tier system of federal jurisprudence. Under this system, lower courts are obligated to follow both the narrow holding announced by the Supreme Court as well as the rule applied by the Court in reaching its holding. See Casey *384 v. Planned Parenthood, 14 F.3d 848, 856-57 (3d Cir.1994)(examining role of Supreme Court precedent); Loftus v. SEPTA, 843 F. Supp. 981, 984 (E.D.Pa. 1994)(same); Piazza v. Major League Baseball, 831 F. Supp. 420, 437-38 (E.D.Pa. 1993). Indeed, "[o]ur system of precedent or stare decisis is ... based on adherence to both the reasoning and result of a case, and not simply the result alone." Planned Parenthood v. Casey, 947 F.2d 682, 692 (3d Cir.1991), aff'd in part and rev'd in part on other grounds, 505 U.S. 833, 112 S. Ct. 2791, 120 L. Ed. 2d 674 (1992). If the rule were otherwise, the Supreme Court's "limited docket" would limit the Court's authority only to the "handful of cases that reached it." Id. at 691. Therefore, in this case, the court is bound to apply both the narrow holding of Almendarez-Torres, i.e., prior convictions implicating 8 U.S.C. § 1362(b)(2) are not required to be charged in the indictment, as well as the rule applied in reaching that result, i.e., prior convictions which increase a defendant's sentence beyond the statutory maximum are sentencing factors, not elements of the crime. Id.
Because the Supreme Court's recent decision in Apprendi did not, either expressly or impliedly, overrule its prior decision in Almendarez-Torres, Apprendi does not require the fact of a criminal defendant's prior conviction, which increases the penalty for a crime beyond the statutory maximum, to be charged in the indictment. Therefore, defendant's objection to the PSI is overruled.
NOTES
[1] There is a great disparity between defendant's guideline range depending upon the application of § 924(e)(1). If § 924(e)(1) applies, defendant faces a term of imprisonment of between one hundred eighty (180) and two hundred ten (210) months. If § 924(e)(1) does not apply, defendant faces a significantly lesser term of imprisonment of between seventy-seven (77) and ninety-six (96) months.
[2] In Apprendi, the Court explicitly did not address whether factors which increase a defendant's sentence beyond the statutory maximum must be charged in the indictment. Apprendi, at 2356, n. 3. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2249598/ | 133 Cal.Rptr.2d 691 (2002)
108 Cal.App.4th 197
Steven WHITE, Plaintiff and Appellant,
v.
Gray DAVIS, as Governor, etc., et al., Defendants and Respondents. Howard Jarvis Taxpayers Association et al., Plaintiffs and Respondents,
v.
Kathleen Connell, as Controller, etc., Defendant and Appellant; California State Employees Association, Local 1000, SEIU, AFL-CIO, CLC et al., Interveners and Appellants. [And three other cases.].[*]
No. B122178 & B123992.
Court of Appeal, Second District, Division Four.
May 29, 2002.
*694 Law Offices of Richard I. Fine & Associates, Richard I. Fine, Los Angeles, Jeremy Faith, Genalin Sulat, Carmela Tan, Cheri Vu; Jonathan M. Coupal, Sacramento, and Trevor A. Grimm, Los Angeles, for Plaintiff and Appellant Steven White in B122178, and for Plaintiffs and Respondents Howard Jarvis Taxpayers Association and Steven White in B123992.
Daniel E. Lungren and Bill Lockyer, Attorneys General, Linda A. Cabatic, Senior Assistant Attorney General, Paul H. Dobson, Keith Yamanaka and Jennifer K. Rockwell, Deputy Attorneys General, for Defendant and Appellant Kathleen Connell in B123992 and for Defendants and Respondents Gray Davis, Kathleen Connell and Matt Fong in B122178.
Bion M. Gregory, Richard Thomson; Eisen & Johnston Law Corporation and Marian M. Johnston, Sacramento, for Defendants and Respondents Bill Lockyer, Cruz M. Bustamante, Rob Hurtt, and Curt Pringle.
Gary P. Reynolds, Anne M. Giese, Daniel S. Connolly, Sacramento, and Michael D. Hersh, Santa Fe Springs, for Interveners and Appellants Gary Gavinski and California State Employees Association, Local 1000, SEIU, AFL-CIO, CLC.
Dennis F. Moss for Interveners and Appellants Professional Engineers in California Government and California Association of Professional Scientists.
*695 Joel H. Levinson, West Sacramento, for Intervener and Appellant California Correctional Peace Officers Association.
Carroll, Burdick & McDonough, Gary M. Messing, and Cathleen A. Williams, Sacramento, for Intervener and Appellant California Union of Safety Employees.
CURRY, J.
The two actions underlying the consolidated appeals before us arise from the state budget impasses in 1997 and 1998. In the first action, Steven White sought declaratory and injunctive relief regarding the conduct of several state officials during the budget impasse in 1997, and demurrers to the individual's first amended complaint were sustained without leave to amend. In the second action, the Howard Jarvis Taxpayers Association (Jarvis), joined by White, sought injunctive relief barring Kathleen Connell, Controller for the State of California (the Controller), from issuing warrants prior to the passage of a budget in 1998, and the trial court issued a preliminary injunction.
In view of the Legislature's enactment of budget acts for the 1997-1998 and 1998-1999 fiscal years and concessions by Jarvis and White during oral argument before us, we dismiss the appeal in the first action as moot. Although the appeal in the second action is also technically moot, we retain the case for decision due to the importance of the issues raised.
Regarding the preliminary injunction issued in the second action, we affirm in part and reverse in part. As we explain below (see Discussion, pt. II., post), the Controller may disburse funds during a budget impasse when state and federal law properly authorizes or requires their payment, despite the absence of a budget act or emergency appropriation. In some cases, state laws and provisions of the California Constitution function as appropriations outside the budget act. Furthermore, due to the supremacy clause of the United States Constitution, some federal laws require the payment of funds, notwithstanding the requirement for an appropriation in the California Constitution.
To the extent that the parties have identified particular state and federal laws, we conclude that absent a budget act or emergency appropriation, the Controller may properly disburse funds pursuant to (1) continuing appropriations found in statutes and other provisions of law, (2) article III, section 4, and article XVI, section 8.5 of the California Constitution, (3) the Federal Labor Standards Act (29 U.S.C. § 201 et seq.), and (4) federal funding mandates applicable to the Food Stamp program (7 U.S.C. § 2011 et seq.), Foster Care and Adoption programs (42 U.S.C. § 670 et seq.), Child Support program (42 U.S.C. §§ 651-669b), and Child Welfare Services program (42 U.S.C. §§ 620-628).[1]
RELEVANT FACTUAL AND PROCEDURAL HISTORY
Steven White initiated the first underlying action on July 25, 1997. On September 22, 1997, White filed his first amended complaint against the following individuals then holding elected office: Pete Wilson, *696 Governor of the State of California, Gray Davis, Lieutenant Governor of the State of California, Kathleen Connell, Controller for the State of California, and Matt Fong, Treasurer of the State of California, as well as Bill Lockyer, President Pro Tempore of the Senate of the State of California, Cruz M. Bustamante, Speaker of the Assembly of the State of California, Rob Hurtt, Senate Republican Leader, and Curt Pringle, Assembly Republican Leader.[2]
White's first amended complaint sought declaratory and injunctive relief. It alleged that the Legislature had failed to pass a budget for the 1997-1998 fiscal year by the constitutionally mandated date of June 15, 1997 (Cal. Const., art. IV, § 12), and that from June 15, 1997 to August 18,1997, when a budget was finally enacted and approved, the Controller was improperly permitted to pay funds from the state treasury to welfare recipients, state employees, members of the Legislature and other individuals without the enactment of a constitutionally mandated emergency appropriation bill (Cal. Const., art. IV, § 12; art. XVI, § 7).
Following a hearing on March 13, 1998, the trial court sustained the defendants' demurrers to White's first amended complaint without leave to amend, concluding that White's claims were moot for the 1997-1998 fiscal year, and premature for the following fiscal year. White appealed from the subsequent order of dismissal (B122178).
On June 24,1998, Jarvis and White initiated the second underlying action with a complaint for declaratory and injunctive relief, and for a writ of mandate, against the Controller in her capacity as state controller. The complaint alleged that the Legislature had not passed a budget for the 1998-1999 fiscal year by June 15, 1998, that under the state Constitution, the state government "must close" in the absence of a budget or emergency bills, and that the Controller was likely to disburse funds despite this constitutional mandate.
On July 9, 1998, the trial court issued a temporary restraining order barring the Controller from paying out funds absent a budget or an emergency appropriation, unless the payments were authorized by a continuing appropriation or by federal law. Subsequently, the trial court granted intervener status to several state employees, unions, and professional associations (the state employee interveners),[3] as well as to Jerome Feitelberg and Alameda Drug Company.[4]
On July 21, 1998, the trial court issued a preliminary injunction barring the Controller from disbursing any funds absent a budget, with the exception of funds properly appropriated prior to July 1, 1998, for expenditure in the 1998-1999 fiscal year, funds properly appropriated pursuant to emergency bills, and payments of minimum wages and overtime compensation required under the Federal Labor Standards *697 Act (FLSA) (29 U.S.C. § 201 et seq.) for work performed prior to July 21, 1998. Jarvis and White were required to post a $100,000 bond.
The Controller and the state employee interveners appealed from the order granting the preliminary injunction (B123992). In connection with this appeal, several of the state employee interveners sought to stay enforcement of the preliminary injunction by petition for writ of supersedeas in the Court of Appeal. In addition, the Controller and the state employee interveners filed petitions for writ of mandate in the Supreme Court.[5] On July 28, 1998, Division Two of this district issued a writ of supersedeas, and the petitions for writ of mandate before the Supreme Court were subsequently transferred to Division Two (B124395, B124397, B124398). The appeal in the second action and related petitions were ultimately transferred to this court, and consolidated with the appeal in the first action pending before us.
DISCUSSION
I.
The issue of mootness arises at the threshold of our discussion because the Legislature enacted (albeit belatedly) budgets for the 1997-1998 and 1998-1999 fiscal years. Furthermore, during oral argument, counsel for Jarvis and White represented that no further relief would be sought in the superior court in the underlying actions. In addition, counsel for Jarvis and White represented that White would not pursue his claims in the first action against Lockyer, Bustamante, Hurtt, Pringle, or any other legislators, that the first action had otherwise merged into the second action, and that Jarvis and White seek a decision from us only on the substantive legal issues regarding the Controller's disbursement of funds raised in the second action.
Under these circumstances, the cases before us are technically moot. However, appellate courts have the "discretion to decide otherwise moot cases presenting important issues that are capable of repetition yet tend to evade review." (Conservatorship of Wendland (2001) 26 Cal.4th 519, 524, fn. 1, 110 Cal.Rptr.2d 412, 28 P.3d 151; see County of Fresno v. Shelton (1998) 66 Cal.App.4th 996, 1006, 78 Cal. Rptr.2d 272.) Here, the issues presented are of profound public significance and arise with some frequency, but escape review with the enactment of a budget. Long before the events underlying the cases before us, our Supreme Court remarked in Jarvis v. Cory (1980) 28 Cal.3d 562, 574, footnote 6, 170 Cal.Rptr. 11, 620 P.2d 598, that budget impasses have "practically become an annual event...."
In view of the concessions by Jarvis and White, we dismiss the first action as moot, but retain the second action for decision. For this reason, we limit our inquiry to the questions presented by the preliminary injunction issued in the second action.
II.
In the appeal in the second action, the Controller and the state employee interveners contend that during a budget impasse, the Controller may disburse funds pursuant to (1) continuing appropriations, (2) provisions of the California Constitution, and (3) the FLSA and other federal law. In addition, they contend that (4) the trial court did not require Jarvis and White to post an adequate bond.
*698 A. Standard of Review
In determining whether to issue a preliminary injunction, the trial court considers two related factors: (1) the likelihood that the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. (King v. Meese (1987) 43 Cal.3d 1217, 1226, 240 Cal.Rptr. 829, 743 P.2d 889.) "The latter factor involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo." (Abrams v. St. John's Hospital & Health Center (1994) 25 Cal. App.4th 628, 636, 30 Cal.Rptr.2d 603.)
The determination whether to grant a preliminary injunction generally rests in the sound discretion of the trial court. (Abrams v. St. John's Hospital & Health Center, supra, 25 Cal.App.4th at p. 636, 30 Cal.Rptr.2d 603.) "Discretion is abused when a court exceeds the bounds of reason or contravenes uncontradicted evidence. [Citation.]" (Jessen v. Keystone Savings & Loan Assn. (1983) 142 Cal.App.3d 454, 458,191 Cal.Rptr. 104.)
"The granting of a preliminary injunction does not constitute a final adjudication of the controversy. [Citation.] Its purpose is to preserve the status quo until a final determination following a trial. [Citation.]" (Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536, 1542, 253 Cal.Rptr. 344, disapproved on another ground in Citizens for Covenant Compliance v. Anderson (1995) 12 Cal.4th 345, 359, 367, 47 Cal.Rptr.2d 898, 906 P.2d 1314.)
To the extent that the trial court's ruling rests on factual findings regarding the pertinent factors, we review the record for substantial evidence to support the findings. (American Academy of Pediatrics v. Van de Kamp (1989) 214 Cal.App.3d 831, 838-839, 263 Cal.Rptr. 46.) However, to the extent that the ruling presents an issue of pure law not presenting factual issues, we review the determination de novo. (See Efstratis v. First Northern Bank (1997) 59 Cal.App.4th 667, 671-672, 69 Cal.Rptr.2d 445.)
B. Continuing Appropriations
In issuing the preliminary injunction, the trial court concluded that funds may not be disbursed pursuant to continuing appropriations in the absence of a budget act or emergency appropriation. In our view, the trial court erred on this matter.
Before the trial court, Jarvis and White argued in general terms that continuing appropriations lack a constitutional basis. The Controller disputed this contention, and pointed to statutes and other provisions of laws that purportedly establish continuing appropriations, including general obligation bond acts approved by the voters pursuant to article XVI, section 1 of the state Constitution. The trial court concluded that Jarvis and White's general contention was correct, and it did not make individualized determinations as to whether any of the statutes or laws cited by the Controller establish a continuing appropriation.[6]
*699 Setting aside Jarvis and White's general contention that such continuing appropriations are constitutionally infirm, they do not argue on appeal that any of the cited statutes and laws are not intended to create continuing appropriations. Because the trial court did not address the existence of individual continuing appropriations and a full showing has not been made regarding them, we limit our inquiry to Jarvis and White's contention regarding the constitutional soundness of continuing appropriations.
Generally, "[i]n construing constitutional and statutory provisions, whether enacted by the Legislature or by initiative, the intent of the enacting body is the paramount consideration." (In re Lance W. (1985) 37 Cal.3d 873, 889, 210 Cal.Rptr. 631, 694 P.2d 744.) To determine this intent, we look first to the plain language of the law, read in context, and will not add to the law or rewrite it to conform to an assumed intent not apparent from the language. (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 301, 58 Cal.Rptr.2d 855, 926 P.2d 1042.) Whenever possible, we seek an interpretation that harmonizes Constitution and statute. (California Housing Finance Agency v. Elliott (1976) 17 Cal.3d 575, 594, 131 Cal. Rptr. 361, 551 P.2d 1193.)
Article IV, section 12, subdivision (c) of the California Constitution provides in pertinent part: "The Legislature shall pass the budget bill by midnight on June 15 of each year. Until the budget bill has been enacted, the Legislature shall not send to the Governor for consideration any bill appropriating funds for expenditure during the fiscal year for which the budget bill is to be enacted, except emergency bills recommended by the Governor or appropriations for the salaries and expenses of the Legislature."
Article XVI, section 7 of the California Constitution further provides that "[m]oney may be drawn from the Treasury only through an appropriation made by law and upon a Controller's duly drawn warrant." As the court explained in California Assn. for Safety Education v. Brown (1994) 30 Cal.App.4th 1264, 1282, 36 Cal.Rptr.2d 404, "[a]n appropriation is a legislative act setting aside `a certain sum of money for a specified object in such manner that the executive officers are authorized to use that money and no more for such specified purpose.' [Citation.] A continuous appropriation runs from year to year without the need for further authorization in the budget act. [Citations.]" (Fn. omitted, italics added.) Government Code sections 16304 and 13340, which fall within the statutory scheme governing appropriations, recognize and regulate continuing appropriations.[7] (30 Cal.App.4th at p. 1282, 36 Cal.Rptr.2d 404.)
*700 Generally, the Legislature "may exercise any and all legislative powers which are not expressly or by necessary implication denied to it by the Constitution." (Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 691, 97 Cal.Rptr. 1, 488 P.2d 161.) Here, nothing in article IV, section 12, expressly bars continuing appropriations. On its face, section 12 prohibits the Legislature from sending specified appropriation bills to the Governor prior to the enactment of a budget, and it provides for exceptions to this prohibition; it does not otherwise limit the Legislature's authority to enact appropriations.
Jarvis and White nonetheless contend that continuing appropriations are constitutionally unsound, arguing that (1) the structure of the budget process, as delineated in the state Constitution, bars such appropriations, and that (2) the revision of the state Constitution in 1966 that resulted in article IV, section 12, abrogated the constitutional basis for such appropriations. We disagree. As we explain below, prior to the 1966 revision, former article IV, section 34 of the Constitutionthe predecessor of article IV, section 12permitted the disbursement of funds pursuant to continuing appropriations, and nothing in the 1966 revision eliminated the constitutional basis for these appropriations.
1. Former Article IV, Section 3
Former section 34 of article IV, which was adopted in 1922, provided in pertinent part: "The Governor shall, [at] each regular session of the Legislature, submit to the Legislature, with an explanatory message, a budget containing a complete plan and itemized statement of all proposed expenditures of the State provided by existing law or recommended by him.... The budget shall be accompanied by an appropriation bill covering the proposed expenditures, to be known as the budget bill.... Until the budget bill has been finally enacted, neither house shall place upon final passage any other appropriation bill, except emergency bills recommended by the governor, or appropriations for the salaries, mileage and expenses of the senate and assembly." (Italics added.)
In Railroad Commission v. Riley (1923) 192 Cal. 54, 56-58, 218 P. 415, our Supreme Court addressed whether former article IV, section 34, impliedly repealed a statute that had created a special fund for the use of the Railroad Commission, and financed from the collection of fees. The Railroad Commission sought a writ of mandate when the state controller declined to deposit fees in the fund following the adoption of former article IV, section 34. (192 Cal. at pp. 54-55, 58, 218 P. 415.)
In granting the writ, the court in Railroad Commission concluded nothing in former article TV, section 34, barred the fund's existence, citing the principle that "[r]epeals by implication are not favored and are recognized only when there is an irreconcilable conflict between two or more *701 existing legislative enactments." (Railroad Commission v. Riley, supra, 192 Cal. at p. 57, 218 P. 415.) On this matter, the Railroad Commission court placed special emphasis on the requirement in former article IV, section 34, that the Governor should submit a budget identifying proposed expenditures "`provided by existing law.'" (192 Cal. at pp. 57-58, 218 P. 415.)
Subsequently, in Riley v. Thompson (1924) 193 Cal. 773, 776, 227 P. 772, the state controller sought a writ of mandate to transfer to the state treasury a special fund created by statute to pay the salaries and operating costs of the commission that regulated harbor pilots. The fund was financed from fees collected from harbor pilots. (Id. at p. 778, 227 P. 772.) The state controller argued that money in the fund should be absorbed into the treasury because the state budget contained a small appropriation for the commission, even though the budget allocated no funds to pay the commissioners' salaries. (Id. at pp. 776, 780, 227 P. 772.)
Our Supreme Court denied the writ, concluding that neither the state budget nor former article IV, section 34, abolished the fund. (Riley v. Thompson, supra, 193 Cal. at pp. 778-781, 227 P. 772.) Furthermore, the court in Riley held that the commissioners' salaries were properly paid from the fund, despite the absence of an allocation in the budget for this purpose. (Id. at p. 781, 227 P. 772.)
In numerous other cases prior to 1966, the Supreme Court affirmed the existence and propriety of continuing appropriations. (Gillum v. Johnson (1936) 7 Cal.2d 744, 758, 63 P.2d 810; Daugherty v. Riley (1934) 1 Cal.2d 298, 308-309, 34 P.2d 1005; Board etc. Commrs. v. Riley (1924) 194 Cal. 37, 49, 227 P. 775; Jamme v. Riley (1923) 192 Cal. 125, 126-129, 218 P. 578; Keiser v. State Board of Control (1923) 192 Cal. 129, 130-132, 218 P. 1016.)
2. 1966 Constitutional Revisions
In the early 1960's, the voters of California and the Legislature began a "vast project to modernize and update the state's antiquated constitution." (Sumner, Constitutional Revision By Commission in California (1972) 1 Western St. U. L.Rev. 48, 48 (hereafter Sumner).) "Under procedures authorized by the constitution, the Legislature, in 1961, adopted a constitutional amendment that authorized the Legislature to act, in effect, as a constitutional convention by allowing it to submit proposals for revision of the constitution to the voters. The amendment was placed on the November 1962 ballot and was approved by the voters by a margin of more than 2 to 1." (Ibid.)
The Legislature subsequently created the Constitutional Revision Commission to implement this amendment. (Sumner, supra, at p. 48.) In 1966, the commission's first set of proposals, which rewrote approximately one-third of the constitution, was adopted by the Legislature and approved by the voters. (Id. at p. 49.) "Along with the changes contained in the revision, 16,000 words were deleted from the constitution." (Ibid.)
Under the 1966 revision, former section 34 of article IV was renumbered section 12 of that article, and its language was simplified. The change most pertinent here concerns the requirement in former section 34 concerning the Governor's duty to submit a budget. Following the 1966 revisions, this requirement now states in pertinent part that "the Governor shall submit to the Legislature, with an explanatory message, a budget for the ensuing fiscal year containing itemized statements for recommended state expenditures and estimated state revenues." (Cal. Const., art. IV, § 12, subd. (a).)
*702 As part of the revision process, the Legislature also enacted former Government Code section 12016, which provided in pertinent part that "[t]he budget required by the State Constitution to be submitted by the Governor ... shall contain a complete plan and itemized statement of all proposed expenditures of the state provided by existing law or recommended by him...." (Italics added; added by Stats. 1966, ch. 161, § 9.3, p. 713; repealed by Stats.1984, ch. 1286, § 2.) This statute became effective only upon the voters' approval of the constitutional revisions at issue here. (Stats.1966, ch. 161, § 33, p. 720; Stats.1966, ch. 139, § 12, p. 969.)
3. Constitutional Soundness of Continuing Appropriations
Following the 1966 revision, the Courts of Appeal have recognized the existence of continuing appropriations (e.g., California Assn. for Safety Education v. Brown, supra, 30 Cal.App.4th at p. 1283, 36 Cal.Rptr.2d 404; Walsh v. Board of Administration (1992) 4 Cal.App.4th 682, 689-699 & fn. 5, 6 Cal.Rptr.2d 118), but no court has addressed whether the 1966 revision abrogated such appropriations.
The language of article IV, section 12, closely resembles that of former article IV, section 34, which, as we have explained (see pt. I., B.2., ante), authorized the disbursement of funds from continuing appropriations independent of a budget act. This similarity of language supports the conclusion that the two provisions carry the same meaning.
As the court explained in County of Sacramento v. Hickman (1967) 66 Cal.2d 841, 850, 59 Cal.Rptr. 609, 428 P.2d 593, "`[i]n the absence of contrary indication in a constitutional amendment, terms used therein must be construed in the light of their statutory meaning or interpretation in effect at the time of its adoption.'" (Quoting Michels v. Watson (1964) 229 Cal. App.2d 404, 408, 40 Cal.Rptr. 464.) This is because "`we cannot suppose that the framers of the new constitution were ignorant of the point decided, or that they intended the provision we adopted from the old constitution to have an operation theretofore uniformly denied to it' [citation]; and the new constitutional provision should be given the construction placed upon its predecessor even though we might not have so decided the point as a matter of first impression [citation]." (County of Sacramento v. Hickman, supra, 66 Cal.2d at p. 850, 59 Cal.Rptr. 609, 428 P.2d 593; see Professional Engineers v. Department of Transportation (1997) 15 Cal.4th 543, 564, 63 Cal.Rptr.2d 467, 936 P.2d 473.)
Jarvis and White disagree, contending that the removal of the phrase "by existing law" from the statement of the Governor's duty to propose a budget in article IV, section 12, and its concurrent placement in former Government Code section 12016 by the Legislature signaled the abrogation of continuing appropriations. They observe that the court in Railroad Commission v. Riley, supra, 192 Cal. at pages 56-58, 218 P. 415, cited the presence of this phrase in former article TV, section 34, as evidence for its conclusion that former section 34 did not repeal continuing appropriations.
We are not persuaded. The issue presented is similar to that resolved in Railroad Commission v. Riley, supra, 192 Cal. 54, 218 P. 415. Thus, following Railroad Commission, we decline to find a repeal by implication unless "there is an irreconcilable conflict between two or more existing legislative enactments." (Id. at p. 57, 218 P. 415; see Caminetti v. Pac. Mutual L. Ins. Co. (1943) 22 Cal.2d 344, 367, 139 P.2d 908.) No such conflict is present here. Rather, the language and history of article IV, section 12, and former Government *703 Code section 12016 indicate that the 1966 revision was intended to preserve continuing appropriations. The duty regarding the budget imposed on the Governor under former Government Code section 12016, on its face, is consistent with the duty stated in subdivision (a) of article IV, section 12: the phrase "recommended state expenditures" in article IV, section 12, reasonably encompasses expenditures "provided by existing law or recommended by" the Governor, as stated in former Government Code section 12016.
Moreover, as our Supreme Court remarked regarding another provision of article IV, the 1966 revision to article IV "was intended solely to shorten and simplify the Constitution, deleting unnecessary provisions; it did not enact any substantive change in the power of the Legislature and the people." (Associated Home Builders etc., Inc. v. City of Livermore (1976) 18 Cal.3d 582, 595, fn. 12, 135 Cal. Rptr. 41, 557 P.2d 473.) Nothing in the legislative history of article IV, section 12, or former Government Code section 12016 that the parties have submitted to us betrays an intent to abrogate continuing appropriations.
By contrast, Jarvis and White contend that article IV, section 12, abrogated the continuing appropriations denoted by the phrase "provided by existing law" in former Government Code section 12016, despite the intertwined history of these provisions. However, in assessing this history, the settled principles of construction direct us to accord a "strong presumption in favor of the Legislature's interpretation of a provision of the Constitution." (Methodist Hosp. of Sacramento v. Saylor, supra, 5 Cal.3d at p. 692, 97 Cal.Rptr. 1, 488 P.2d 161.) Here, the interpretation advanced by Jarvis and White renders the Legislature's placement of the phrase at issue in former Government Code section 12016 "redundant and a nullity, thereby violating one of the most elementary principles of statutory construction. [Citations.]" (Cal Pacific Collections, Inc. v. Powers (1969) 70 Cal.2d 135, 139, 74 Cal.Rptr. 289, 449 P.2d 225.)
The trial court therefore erred in determining that continuing appropriations are constitutionally infirm. Because "[a]n injunction cannot be granted `[t]o prevent officers of the law from executing a public statute for the public benefit[ ]'" (6 Witkin, Cal. Procedure (4th ed. 1997) Provisional Remedies, § 332, p. 265), the preliminary injunction must be reversed insofar as it rests on this determination.
C. Constitutionally Mandated Payments
In concluding that continuing appropriations lack a constitutional basis, the trial court impliedly rejected the Controller's contentions that certain provisions of the state Constitution mandate payments from the treasury independent of the budget act. The Controller argues that section 4 of article III, which addresses judicial salaries, and sections 8 and 8.5 of article XVI, which address school funding, constitute payment obligations that do not require an appropriation in the budget act or emergency appropriation.
Our inquiry into these contentions is guided by the principle that "in interpreting modern constitutions, their provisions will be presumed to be self-executing and to be given effect without legislation, unless a contrary intention is clearly expressed." (Flood v. Riggs (1978) 80 Cal. App.3d 138, 154, 145 Cal.Rptr. 573.) As our Supreme Court explained long ago in Denninger v. Recorder's Court (1904) 145 Cal. 629, 635, 79 P. 360, "a necessary corollary to this proposition is[ ] that a constitutional provision not strictly self-executing *704 becomes operative just as soon as it is supplemented by so much legislation as is absolutely necessary to supply its deficiencies...." (Italics added; accord, In re Redevelopment Plan for Bunker Hill (1964) 61 Cal.2d 21, 75, 37 Cal.Rptr. 74, 389 P.2d 538.)
Instructive applications of this principle and its corollary are found in San Francisco v. Dunn (1886) 69 Cal. 73, 10 P. 191, and Clausing v. San Francisco Unified School Dist. (1990) 221 Cal.App.3d 1224, 271 Cal.Rptr. 72. In San Francisco, our Supreme Court addressed former article IV, section 22 of the state Constitution. This section stated that "[n]o money shall be drawn from the Treasury but in consequence of appropriation made by law, and upon warrants duly drawn thereon by the Controller," but permitted the Legislature, "notwithstanding anything contained" in the Constitution, to grant aid to counties, cities, towns, and private entities that supported orphans, with the proviso that enumerated counties, cities and towns that supported orphans were entitled to "the same pro rata appropriations as may be granted to such institutions under church, or other control."
In San Francisco, the city and county of San Francisco sought a writ of mandate directing the state controller to disburse the pro rata allocation of aid accorded to them under former section 22 of article IV. (San Francisco v. Dunn, supra, 69 Cal. at p. 74, 10 P. 191.) Observing that the Legislature had granted aid to private institutions within San Francisco, the court in San Francisco held that the writ was properly granted, reasoning that "[s]uch appropriation having been made, the ... proviso [in former article TV, section 22] became self-executing as to counties, cities and counties, cities, and towns; and no further legislative action was required." (69 Cal. at p. 74, 10 P. 191.)
By contrast, in Clausing, a student, together with his parent and guardian, asserted a claim for damages under subdivision (c) of article I, section 28 of the state Constitution, which provides that all students attending public schools "`have the inalienable right to attend campuses which are safe, secure and peaceful.'" (Clausing v. San Francisco Unified School Dist, supra, 221 Cal.App.3d at pp. 1235-1236, 271 Cal.Rptr. 72.) Noting that a provision of the Constitution may be mandatory without being self-executing, the court in Clausing concluded that a demurrer to this claim was properly sustained, reasoning that subdivision (c) of section 28 did not provide a remedy for its violation, and no statute filled this gap. (Clausing, at pp. 1235-1238, 1241, & fn. 5, 271 Cal. Rptr. 72.) In so concluding, the Clausing court stated: "The right proclaimed in section 28, subdivision (c), although inalienable and mandatory, simply establishes the parameters of the principle enunciated; the specific means by which it is to be achieved for the people of California are left to the Legislature." (Clausing, at p. 1237, 271 Cal.Rptr. 72, fn. omitted.)
1. Article III, Section k
With qualifications not relevant here, subdivision (a) of article III, section 4, provides: "[S]alaries of elected state officers may not be reduced during their term of office. Laws that set these salaries are appropriations." (Italics added.) Observing that the salaries of state judges are set by Government Code section 68200 et seq., the Controller argues that she may disburse funds to pay these salaries independent of a budget act or emergency appropriation.
In our view, the Controller is correct. Subdivision (a) of article III, section 4, by its plain language, became self-executing with the Legislature's enactment of the *705 statutes setting judicial salaries in the Government Code. Under San Francisco, "no further legislative action [is] required" to authorize payment of these salaries. (San Francisco v. Dunn, supra, 69 Cal. at p. 74,10 P. 191.)
Our conclusion finds compelling support in Brown v. Superior Court (1982) 33 Cal.3d 242, 188 Cal.Rptr. 425, 655 P.2d 1260. In Brown, the Legislature enacted a statute that authorized several new appellate judges, but provided limited funding for the judges' staff and library. (Id. at pp. 244-246, 188 Cal.Rptr. 425, 655 P.2d 1260.) After some taxpayers challenged the statute, the superior court concluded that the limited funding rendered the statute unconstitutionally infirm, and it enjoined the implementation of the statute. (Ibid.) Shortly thereafter, the Legislature enacted a budget that cured any inadequacies in the funding. (Id. at p. 246, 188 Cal.Rptr. 425, 655 P.2d 1260.)
Recognizing that the Legislature's action had eliminated the original basis for the injunction, the court in Brown addressed other alleged infirmities in the statute. (Brown v. Superior Court, supra, 33 Cal.3d at p. 247, 188 Cal.Rptr. 425, 655 P.2d 1260.) The taxpayers contended, inter alia, that the statute was constitutionally unsound because it had not been enacted by a two-thirds majority of the Legislature, as is generally required for appropriations from the state's general fund (Cal. Const., art. IV, § 12, subd. (d)). (Brown, at p. 249, fn. 6, 188 Cal. Rptr. 425, 655 P.2d 1260.) Citing subdivision (a) of article III, section 4, the taxpayers argued that every law setting a judge's salary, including the statute in question, is an appropriation, and thus subject to the two-thirds vote requirement. (Brown, at p. 249, fn. 6, 188 Cal. Rptr. 425, 655 P.2d 1260.)
The Brown court observed that no judges had ever been appointed or drawn a salary under the statute, but nonetheless addressed the merits of this contention. (Brown v. Superior Court, supra, 33 Cal.3d at p. 249, fn. 6, 188 Cal.Rptr. 425, 655 P.2d 1260.) It stated: "The aim of the declaration in article III, section 4, subdivision (a), ... was not to require a two-thirds vote but rather to ordain that even with a mere majority vote certain salary laws are `appropriations.' The critical words were in Proposition 6 adopted by the voters at the November 1972 election. In the voters' pamphlet the Legislative Counsel explained that the words `would eliminate the existing requirement that there be a specific appropriation in the Budget Act, or otherwise, to pay salaries.' ... In other words, though a bill setting salaries of elected state officers is not an appropriation bill it nonetheless takes effect as an appropriation once it has been enacted." (Brown, at pp. 249-250, fn. 6, 188 Cal.Rptr. 425, 655 P.2d 1260.)
Although this discussion by our Supreme Court appears to be dicta, it is persuasive on the issue before us. (Grange Debris Box & Wrecking Co. v. Superior Court (1993) 16 Cal.App.4th 1349, 1358, 20 Cal.Rptr.2d 515; People v. Jackson (1979) 95 Cal.App.3d 397, 402, 157 Cal.Rptr. 154.) We therefore conclude that the Controller may properly disburse funds to pay the salaries set forth in Government Code section 68200 et seq., independently of the budget act.
2. Article XVI, Section 8
The Controller also contends that she may disburse funds independent of a budget act or emergency appropriation pursuant to article XVI, section 8 of the California Constitution.
Subdivision (a) of article XVI, section 8, provides: "From all state revenues there *706 shall first be set apart the moneys to be applied by the state for support of the public school system and public institutions of higher education." Subdivision (b) of the same section states: "Commencing with the 1990-91 fiscal year, the moneys to be applied by the state for the support of school districts and community college districts shall be not less than the greater of the following amounts[ ]...." Subdivision (b) then sets out three formulas.[8] The first of these determines an amount on the basis of the percentage of general fund revenues appropriated for public schools and community colleges in the 1986-1987 fiscal year (Cal. Const., art. XVI, § 8, subd. (b)(1)). The remaining two formulas determine amounts based on the total allocations to public schools and community colleges from defined sources in the prior fiscal year (Cal. Const., art. XVI, § 8, subds.(b)(2), (b)(3)).
These provisions of article XVI, section 8, are the result of voter initiatives. As the court explained in County of Sonoma v. Commission on State Mandates (2000) 84 Cal.App.4th 1264, 1289, 101 Cal.Rptr.2d 784, "Proposition 98, adopted by the voters in 1988, amended article XVI, section 8 of the California Constitution to provide a minimum level of funding for schools. [Citation.] The measure ... set up two tests, later expanded by the passage of Proposition 111 in 1990 to three tests, for determining the mandated minimum funding level for the coming year."
The court in County of Sonoma further observed: "Proposition 98 does not appropriate funds.... The power to appropriate funds was left in the hands of the Legislature. Proposition 98 merely provides the formulas for determining the minimum to be appropriated every budget year. The state's obligation is to ensure specific amounts of moneys are applied by the state for education." (84 Cal.App.4th at p. 1290,101 Cal.Rptr.2d 784.)
In our view, the County of Sonoma court is correct on this matter. Section 8 *707 of Article XVI, on its face, sets a minimum funding level for public schools and community colleges. Furthermore, the second and third formulas that play a role in determining this level for any given fiscal year presuppose that the Legislature has appropriated a specific amount of money for public schools and community colleges in the prior fiscal year. Accordingly, section 8 of article XVI necessarily requires the Legislature to make a determinate appropriation of funds every year that meets or exceeds the specified minimum; otherwise, the second and third formulas cannot fix a minimum level for the following year.
Thus here, as in Clausing, the provisions of article XVI, section 8, although mandatory, "simply establish[ ] the parameters of the principle enunciated" and leave "the specific means by which it is to be achieved for the people of California ... to the Legislature." (Clausing v. San Francisco Unified School Dist, supra, 221 Cal.App.3d at p. 1237, 271 Cal.Rptr. 72, fn. omitted.) We therefore conclude that they do not constitute a self-executing authorization to disburse funds.
Appellants nonetheless contend that the injunction improperly blocks funding for public education and other important governmental functions, arguing that the balance of harms do not favor Jarvis and White. We are not persuaded. We agree that barring the disbursement of such funds may cause severe distress during a budget impasse absent an emergency appropriation by the Legislature. However, in the present case, the Legislature enacted an emergency appropriation to fund vital services and pay the salaries of state employees the day after the trial court issued its injunction. (Stats.1998, ch. 213, § 1, No. 4 West's Cal. Legis. Service, p. 797.) In any event, as our Supreme Court stated in Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 447, 261 Cal.Rptr. 574, 777 P.2d 610, "if the party seeking the injunction can make a sufficiently strong showing of likelihood of success on the merits, the trial court has discretion to issue the injunction notwithstanding that party's inability to show that the balance of harms tips in his favor. [Citation.]" (Italics added.)
3. Article XVI, Section 8.5
Finally, the Controller contends that she may disburse funds independent of a budget act or emergency appropriation pursuant to article XVI, section 8.5 of the California Constitution.
Section 8.5 of article XVI establishes additional education funding subject to article XIII B, which limits government spending. As the court explained in Hayes v. Commission on State Mandates (1992) 11 Cal.App.4th 1564, 1580, footnote 7, 15 Cal.Rptr.2d 547, "[a]s it was originally enacted, article XIII B required that all governmental entities return revenues in excess of their appropriations limits to the taxpayers through tax rate or fee schedule revisions. In Proposition 98, adopted at the November 1988 General Election, article XIII B was amended to provide that half of state excess revenues would be transferred to the state school fund for the support of school districts and community college districts. [Citations.]"
Subdivision (a)(1) of article XIII B, section 2, provides: "Fifty percent of all revenues received by the state in a fiscal year and in the fiscal year immediately following it in excess of the amount which may be appropriated by the state in compliance with this article during that fiscal year and the fiscal year immediately following it shall be transferred and allocated, from a fund established for that purpose, pursuant to Section 8.5 of Article XVI."
*708 The voters also enacted article XVI, section 8.5, in adopting Proposition 98. (California Teachers Assn. v. Hayes (1992) 5 Cal.App.4th 1513, 1530, 7 Cal.Rptr.2d 699.) Subdivision (a) of article XVI, section 8.5, states that in addition to the funding required under article XVI, section 8, the controller "shall during each fiscal year transfer and allocate all revenues available" under the pertinent provisions of article XIII B "to that portion of the State School Fund restricted for elementary and high school purposes, and to that portion of the State School Fund restricted for community college purposes, respectively, in proportion to the enrollment in school districts and community college districts respectively." Subdivision (d) of article XVI, section 8.5, mandates that these funds "shall be expended solely for the purposes of instructional improvement and accountability as required by law."
Noting these provisions of article XVI, section 8.5, the court remarked in California Teachers Assn. v. Hayes, supra, 5 Cal.App.4th at page 1530, 7 Cal.Rptr.2d 699: "The measure is self-executing; it requires no legislative action.... [¶] ... Section 8.5 does not extend the Legislature's spending power to excess revenues; rather it imposes a self-executing, ministerial duty upon the Controller to transfer such excess revenues to a restricted portion of the school fund and thence to allocate such revenues to school districts and community college districts on a per-enrollment basis. Section 8.5 specifically restricts the purposes for which those funds may be expended."
We agree with the court in California Teachers Assn. Article XVI, section 8.5, and the pertinent provisions of article XIII B constitute a carefully crafted qualification of the spending limits in article XIII B, intended to enhance funding for some educational purposes while removing authority from the Legislature to redirect these funds. As such, article XVI, section 8.5, bears the earmarks of a continuing appropriation entrenched by the voters in the state Constitution. We therefore conclude that this provision contains a self-executing authorization to disburse funds.
D. Payments Pursuant to Federal Law
In issuing the preliminary injunction, the trial court concluded that the Controller was not authorized to disburse funds subject to federal law, with the exception of compensation required under FLSA for work performed prior to the date of the preliminary injunction.
The key issues here concern the extent to which the supremacy clause of the federal Constitution compels the disbursement of funds in accord with federal law during a budget impasse. "The supremacy clause declares, in pertinent part, that `Laws of the United States ... shall be the supreme Law of the Land; and the Judges of every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.' (U.S. Const., art VI, cl. 2.)[¶] Since the decision in McCulloch v. Maryland (1819) 17 U.S. (4 Wheat.) 316, 427, [4 L.Ed. 579], `it has been settled that state law that conflicts with federal law is "without effect" `(Cipollone v. Liggett Group, Inc. (1992) 505 U.S. 504, 516, [112 S.Ct. 2608, 120 L.Ed.2d 407])" (Smiley v. Citibank (1995) 11 Cal.4th 138, 147, 44 Cal.Rptr.2d 441, 900 P.2d 690.)
1. FLSA
We begin by examining whether the Controller is required to disburse funds under the FLSA during a budget impasse, absent an appropriation. As we explain below (see pt. D.1.a, D.1.b, post), state employees have a continuing employment *709 relationship with the state during a budget impasse, and thus they are entitled to receive wages and overtime compensation required under the FLSA for work performed during such a period, given the supremacy of federal law.[9] As we further explain (see pt. D.1.c, post), state employees do not have an entitlement to their full salaries (over and above the compensation required under the FLSA) pursuant to the contract clauses of the United States and California Constitutions.
The FLSA requires employers to pay minimum wages (29 U.S.C. § 206(a)) and overtime compensation (29 U.S.C. § 207(a)(1)), and provides for the recovery of unpaid minimum wages, unpaid overtime compensation, and liquidated damages (29 U.S.C. § 216(b)). Generally, "the FLSA is violated unless the minimum wage is paid on the employee's regular payday...." (Biggs v. Wilson (1993) 1 F.3d 1537, 1541.)
These provisions encompass public employers, including the states. (Biggs v. Wilson, supra, 1 F.3d at p. 1543; 29 U.S.C. § 203(d), (e)(2)(C).)[10] Thus, in Biggs v. Wilson, supra, at pages 1538-1543, the Ninth Circuit Court of Appeals concluded that California violated the FLSA in 1990 when it failed to pay the wages owed to a group of public transportation employees under the FLSA during a budget impasse until a budget was enacted.
The trial court in this case determined that under Biggs, the Controller was authorized to pay minimum wages and overtime compensation required under the FLSA for work performed prior to the date of the preliminary injunction, but state employees who continued to work after this date were "volunteers." The trial court thus apparently concluded that a budget impasse nullifies the relationship between the state and its employees, and that employees who continued to work despite notice of this nullification fall outside the protection of the FLSA.
We therefore examine three issues: (1) whether there is a continuing employment relationship between the state and its employees during a budget impasse; (2) whether this relationship, if it exists, falls within the scope of the FLSA; and (3) whether state employees are entitled to payment of their salaries during a budget impasse absent an appropriation, over and above the compensation requirements found in the FLSA.
a. Continuing Employment Relationship
Regarding the first issue, we observe that "[p]ublic employment, by and large, is not held by contract, but by statute. [Citations.]" (Hinchliffe v. City of San Diego (1985) 165 Cal.App.3d 722, 725, 211 Cal.Rptr. 560.) Nonetheless, public employment may give rise to obligations regarding compensation treated as contractual under the contract clauses of the federal and state Constitutions. (Olson v. *710 Cory (1980) 27 Cal.3d 532, 536-538, 178 Cal.Rptr. 568, 636 P.2d 532.)
As the court explained in Markman v. County of Los Angeles (1973) 35 Cal. App.3d 132, 134-135, 110 Cal.Rptr. 610: "The terms and conditions relating to employment by a public agency are strictly controlled by statute or ordinance, rather than by ordinary contractual standards; and one who accepts such employment, thereby benefiting in ways denied an employee of a private employer, must in turn relinquish certain rights which are enjoyed by private employees [citation], one such disability being that the public employee is entitled only to such compensation as is expressly provided by statute or ordinance regardless of the extent of services actually rendered. [Citations.]"
The Legislature has enacted two statutes concerning the status of public employees and the payment of their salaries during an impasse. Government Code section 1231 provides in pertinent part: "No state officer or employee shall be deemed to have a break in service or to have terminated his or her employment, for any purpose, nor to have incurred any change in his or her authority, status, or jurisdiction or in his or her salary or other conditions of employment, solely because of the failure to enact a budget act for a fiscal year prior to the beginning of that fiscal year." Furthermore, Government Code section 1231.1 provides: "Funds from each appropriation made in the budget act for any fiscal year may be expended to pay to officers and employees whatever salary that would have otherwise been received had the budget act been adopted on or prior to July 1, of that fiscal year."
In interpreting these statutes, we seek a construction that is constitutionally sound. (Kortum v. Alkire (1977) 69 Cal.App.3d 325, 333-334, 138 Cal.Rptr. 26.) "Under our Constitution the creation of an enforceable contract with the state requires compliance with the constitutional debt limitation provisions of article XVI, section 1, or a valid appropriation in support of the contract under article XVI, section 7. [Citations.] In this respect our law is consistent with federal law and the law of nearly every state in the Union. [Citations.] Persons who deal with the government are held to have notice of this limitation upon the authority to enter into contracts. [Citation.]" (Walsh v. Board of Administration, supra, 4 Cal.App.4th at p. 699, 6 Cal.Rptr.2d 118.)
Generally, "[u]nder our Constitution the state can incur valid contractual obligations in four ways: (1) by legislative authorization where the liability created will not cause aggregate state liabilities to exceed $300,000; (2) by legislative authorization in case of war to repel invasion or suppress insurrection; (3) by compliance with constitutional debt limitation requirements, which include a two-thirds vote of each house of the Legislature and approval by the majority of the voters at a general election or direct primary; or (4) by legislative authorization supported by an appropriation. ([Cal. Const., a]rt.XVI, §§ 1, 7.)" (Walsh v. Board of Administration, supra, 4 Cal.App.4th at pp. 698-699, 6 Cal.Rptr.2d 118.)
Here, nothing supports a determination that Government Code sections 1231 and 1231.1 establish an obligation to pay employee salaries in conformity with the first three of these ways, which are rooted in the debt limitation provisions of article XVI, section 1. (See Walsh v. Board of Administration, supra, 4 Cal.App.4th at pp. 698-700, 6 Cal.Rptr.2d 118.) Nor do the parties dispute that the salaries at issue here are generally paid pursuant to an appropriation on the general treasury fund, rather than pursuant to a continuing appropriation or constitutional mandate.
*711 Under these circumstances, Government Code sections 1231 and 1231.1 cannot establish an employment relationship that entitles state employees to their salaries during a budget impasse absent an appropriation, given the constitutional limitations that we have described. In our view, these statutes, if constitutionally sound, authorize a continuing employer-employee relationship during a budget impasse under which entitlement to compensation for work done during the budget impasse arises only upon the satisfaction of a condition precedent, namely, the enactment of a budget or other proper appropriation.
Under principles of contract law, an obligation to pay money may be conditioned upon the eventual accrual of funds in a specified source, or when the ability to pay arises. (1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 736, pp. 666-667.) These principles apply to the right to compensation in contracts of employment. (Ibid.; see, e.g., R.J. Kuhl Corp. v. Sullivan (1993) 13 Cal.App.4th 1589, 1599-1600, 17 Cal.Rptr.2d 425; Farnon v. Cole (1968) 259 Cal.App.2d 855, 858-859, 66 Cal.Rptr. 673; Haines v. Bechdolt (1965) 231 Cal.App.2d 659, 661-663, 42 Cal.Rptr. 53.)
Although the employer-employee relationship at issue here is ultimately governed by statute, we discern no reason rooted in the state Constitution barring the Legislature from subjecting the entitlement to wages earned during a budget impasse to an analogue of a condition precedent. Thus, the entitlement of state employees to compensation for work performed during a budget impasse does not accrue until the enactment of a budget or other proper appropriation. Furthermore, given the friction of democratic politicswhich Government Code sections 1231 and 1231.1 impliedly recognizestate employees assume the risk that satisfaction of this condition may be delayed due to the Legislature's inaction during a budget impasse. (Cf. Kline v. Johnson (1953) 263 P.2d 494, 121 Cal.App.2d Supp. 851, 852-854 [under broker's compensation agreement, broker assumed risk that employer will not ensure performance of act upon which broker's compensation is conditioned]; 1 Witkin, Summary of Cal. Law, supra, § 765, p. 692; Rest.2d Contracts, § 239(2), com. b, p. 228.)
b. Scope of the FLSA
The second issue is whether this employment relationship falls within the scope of the FLSA. Our research has located little case authority addressing the extent to which the FLSA applies to employer-employee relationships subject to such a condition precedent. Nonetheless, we discern guidance in U.S. v. Klinghoffer Bros. Realty Corp. (2d Cir.1960) 285 F.2d 487.
In Klinghoffer Bros., several security officers who worked for a corporation were asked to guard the property of a second, closely related corporation, which had filed a petition for bankruptcy. (285 F.2d at p. 489.) The security officers were told that due to the second corporation's financial embarrassment, they would not be paid for their additional overtime services until the bankruptcy proceedings ended. (Id. at pp. 489-90.) The security officers provided the additional guard services for a period, but were never compensated during this period, and they ultimately refused to extend any further services at some point before the bankruptcy proceedings terminated. (Id. at p. 490.) The court in Klinghoffer Bros. concluded that the security officers were entitled to prompt and regular payment of overtime compensation under the FLSA, even though they had worked under "a vague understanding that at some indefinite future date, related to *712 the termination of the [bankruptcy] proceedings, they would be taken care of." (Id. at pp. 490-493.)
Here, much as in Klinghoffer Bros., state employees have a continuing relationship with their employer during a budget impasse (Gov.Code, § 1231), subject to the understanding that payment of wages is dependent upon an appropriation (Gov. Code, § 1231.1). Accordingly, their relationship falls within the protection of the FLSA during such an impasse.
As the court explained in Rogers v. City of Troy (2d Cir.1998) 148 F.3d 52, 57, the FLSA requires wages to be paid in a timely fashion, where "what constitutes timely payment must be determined by objective standardsand not solely by reference to the parties' contractual arrangements." Timeliness is fixed by due reference to an employee's "work period" (ibid.), which federal regulations characterize as the employee's "established and regularly recurring period of work" (29 C.F.R. § 553.224(a); see 29 C.F.R. § 778.105). (Rogers, at pp. 57-58.) Under these principles, the FLSA requires the prompt payment of minimum wages and overtime compensation for work performed during a budget impasse, with due reference to the state employee's established work period.[11]
c. Compensation Over and Above the FLSA Requirements
Finally, we address the extent to which state employees are entitled to receive compensation during a budget impasse beyond that required under the FLSA.
The state employee interveners contend that they are entitled to full and regular payment of their salaries during a budget impasse, over and above the payments required by the FLSA, absent a budget act or other proper appropriation.[12] Citing union contracts and memoranda of understanding with the state, they argue that the injunction at issue violates the contract clauses of the United States and California Constitutions, and denies them due process of law. We are not persuaded.
Article I, section 10, clause 1 of the United States Constitution prohibits the states from passing any law impairing the obligation of contracts. Article I, section 9 of the California Constitution contains a similar clause providing that a "law impairing the obligation of contracts may not be passed." Generally, a public employee's right to compensation, once vested, "cannot be eliminated without unconstitutionally impairing the contract obligation," and that "[w]hen agreements of employment between the state and public employees have been adopted by governing *713 bodies, such agreements are binding and constitutionally protected." (Olson v. Cory, supra, 27 Cal.3d at p. 538, 178 Cal.Rptr. 568, 636 P.2d 532.)
In interpreting the state contract clause, California courts often followed federal courts that have analyzed the federal contract clause. (Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach (2001) 86 Cal.App.4th 534, 559, fn. 15, 103 Cal. Rptr.2d 447.) Nonetheless, the two clauses differ in their application in at least one respect. Whereas the federal contract clause "is directed only against impairment by legislation and not by judgments of courts" (Tidal Oil Co. v. Flanagan (1924) 263 U.S. 444, 451, 44 S.Ct. 197, 68 L.Ed. 382; see Thompson, The History of the Judicial Impairment "Doctrine" and Its Lessons for the Contract Clause (1992) 44 Stan. L.Rev. 1373, 1375 & fn. 9), the state contract clause also applies to judicial action (Bradley v. Superior Court (1957) 48 Cal.2d 509, 519, 310 P.2d 634). Because the contention in question targets an injunction, we limit our attention to the state contract clause.
Under the state contract clause, "[n]either the court nor the Legislature may impair the obligation of a valid contract...." (Bradley v. Superior Court, supra, 48 Cal.2d at p. 519, 310 P.2d 634, italics added.) However, the contract clause does not protect contracts that are prohibited by law or against public policy. (Griffith v. Connecticut (1910) 218 U.S. 563, 571, 31 S.Ct. 132, 54 L.Ed. 1151; Walsh v. Board of Administration, supra, 4 Cal.App.4th at p. 696, 6 Cal.Rptr.2d 118; People ex rel. Mosk v. Lynam (1967) 253 Cal.App.2d 959, 967, 61 Cal.Rptr. 800.)
Generally, "no contractual obligation may be enforced against a public agency unless it appears the agency was authorized by the Constitution or statute to incur the obligation; a contract entered into by a governmental entity without the requisite constitutional or statutory authority is void and unenforceable." (Air Quality Products, Inc. v. State of California (1979) 96 Cal.App.3d 340, 349, 157 Cal.Rptr. 791.) In our view, the state Constitution precludes the state from incurring an obligation to pay employee salaries during a budget impasse in the absence of a proper appropriation, and thus the failure to pay full salaries under such circumstances does not constitute an impairment of contract under the state contract clause. (Cf. California Assn. for Safety Education v. Brown, supra, 30 Cal. App.4th at pp. 1284-1285, 36 Cal.Rptr.2d 404 [statute does not create obligation protected by contract clause when it gives notice that funds must be separately appropriated by Legislature].)
It is well established that the state cannot abridge its fundamental police powers by contract. As the United States Supreme Court stated in Pennsylvania Hospital v. Philadelphia (1917) 245 U.S. 20, 23, 38 S.Ct. 35, 62 L.Ed. 124, "the States cannot by virtue of the contract clause be held to have divested themselves by contract of the right to exert their governmental authority in matters which from their very nature so concern that authority that to restrain its exercise by contract would be a renunciation of the power to legislate for the preservation of society or to secure the performance of essential governmental duties." Similarly, our Supreme Court has held that "the government may not contract away its right to exercise [its] police power in the future." (Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, 800, 132 Cal.Rptr. 386, 553 P.2d 546.)
We recognize that the obligation at issue concerns the state's taxing and spending powers, rather than its police powers, and *714 that modern contract clause jurisprudence follows the "reserved-powers doctrine," which holds that the former powers, unlike the latter powers, may be abridged by contract. (See Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach, supra, 86 Cal.App.4th at pp. 559-561, 103 Cal.Rptr.2d 447.) Under this doctrine, the state may "`bind itself in the future exercise of the taxing and spending powers.'" (Id. at p. 560, 103 Cal.Rptr.2d 447, quoting United States Trust Co. v. New Jersey (1977) 431 U.S. 1, 24, 97 S.Ct. 1505, 52 L.Ed.2d 92.)
However, the obligation here would directly undermine the appropriation requirement in article XVI, section 7 of the state Constitution. As our Supreme Court explained in Humbert v. Dunn (1890) 84 Cal. 57, 59, 24 P. 111, this requirement, which is taken from the United States Constitution, "had its origin in Parliament in the seventeenth century, when the people of Great Britain, to provide against the abuse by the king and his officers of the discretionary money power with which they were vested, demanded that the public funds should not be drawn from the treasury except in accordance with express appropriations therefor made by Parliament [citation]; and the system worked so well in correcting the abuses complained of, our forefathers adopted it, and the restraint imposed by it has become a part of the fundamental law of nearly every state in the Union." In view of the fundamental nature of this requirement, we conclude that the state cannot undertake obligations protected by the contract clause that directly contravene it. To hold otherwise would gut the requirement.
Furthermore, the injunction does not deny state employees due process, insofar as it denies them their salaries over and above the payments required under the FLSA. Under principles of contract interpretation, "`all applicable laws in existence when an agreement is made, which laws the parties are presumed to know and to have had in mind, necessarily enter into the contract and form a part of it, without any stipulation to that effect, as if they were expressly referred to and incorporated.' [Citation.]" (City of Torrance v. Workers' Comp. Appeals Bd. (1982) 32 Cal.3d 371, 378, 185 Cal.Rptr. 645, 650 P.2d 1162; see 1 Witkin, Summary of Cal. Law, supra, Contracts, § 692, p. 625.) For this reason, state employees must be deemed to have notice of the limitation on the payment of their salaries during a budget impasse. (Walsh v. Board of Administration, supra, 4 Cal. App.4th at p. 699, 6 Cal.Rptr.2d 118.)
Appellants also contend that the balance of harms arising from the failure to pay full salaries does not favor Jarvis and White, pointing to the distress to state employees caused by the denial of their full salaries (over and above the payments required under the FLSA). We recognize the severity of this distress. However, as we have explained (see pt. C.2., ante ), the Legislature enacted an emergency appropriation to pay these salaries the day after the trial court issued its injunction, and an injunction may be properly granted upon "a sufficiently strong showing of likelihood of success on the merits...." (Common Cause v. Board of Supervisors, supra, 49 Cal.3d at p. 447, 261 Cal.Rptr. 574, 777 P.2d 610.)[13]
*715 d. Conclusion
In sum, the preliminary injunction must be reversed to the extent that it denies state employees the compensation required under the FLSA during a budget impasse, absent a proper appropriation.
2. Other Federal Law
Before the trial court, the Controller also contended that other federal laws required her to disburse funds during a budget impasse. In issuing the preliminary injunction, the trial court impliedly rejected this contention.
We find guidance on this issue in Pratt v. Wilson (E.D.Cal.1991) 770 F.Supp. 539 and Dowling v. Davis (9th Cir.1994) 19 F.3d 445. In Pratt, the state controller halted payments partially funded under the now-abolished federal Aid to Families with Dependent Children (AFDC) program[14] during the 1990 budget impasse. (Pratt, at pp. 540-541.) Citing the supremacy clause, the court in Pratt concluded that the state was required to make AFDC payments during the budget impasse despite the appropriation requirements in the state Constitution. (Id. at pp. 543-544.) The Pratt court reasoned that although a state's participation in the AFDC program was voluntary, once the state had elected to participate, it was required to comply with AFDC statutes and regulations mandating timely payments. (Id. at p. 541.)
Dowling also arose out of the 1990 budget impasse. In Dowling, the state controller delayed payments under the Medi-Cal program (Welf. & Inst.Code, § 14000 et seq.), which is partially funded through the federal Medicaid law (42 U.S.C. § 1396), and the In-Home Support Service (IHSS) program (Welf. & Inst.Code, § 12300), which was partially funded by a federal block grant. (Dowling v. Davis, supra, 19 F.3d at pp. 446-148.) The state subsequently secured summary judgment in a class action arising from these delayed payments. (Id. at p. 447.)
The court in Dowling affirmed, concluding that there was no evidence that the delayed payments violated federal law. (Dowling v. Davis, supra, 19 F.3d at pp. 447-448.) In reaching this conclusion, the Dowling court reasoned that "[d]elayed payment is an inherent feature of the Medicaid statutory and regulatory framework," that the federal block grant supporting the IHSS program did not require timely payments, and the state statute governing the IHSS program predicated its continuing *716 existence on an appropriation in the state budget act. (Ibid.)
In view of Pratt and Dowling, the key issue is whether the federal laws cited by the Controller require timely payments during a budget impasse. The Controller contends that she is required to disburse funds due to the state's participation in the federal (1) Food Stamp program (7 U.S.C. § 2011 et seq.), (2) Foster Care and Adoption programs (42 U.S.C. §§ 670-679b), (3) Child Support program (42 U.S.C. §§ 651-669b), and (4) Child Welfare Services program (42 U.S.C. §§ 620-628).
Before the trial court, the Controller asserted in conclusory terms that these four federal programs carry requirements for timely payment of funds. On appeal, the Controller cites federal regulations concerning the Food Stamp program that require participating states to "act promptly on all applications" for food stamps benefits (7 C.F.R. § 273.2(a)(2)), to offer expedited services when necessary (ibid.), and to extend benefits no later than 30 days following a new application (7 C.F.R. § 274.2(b)). We therefore conclude that the Food Stamp program falls within the scope of Pratt.
In our view, Pratt also governs the Foster Care and Adoption programs and the Child Support program. The federal statutes governing the Foster Care and Adoption programs state that to receive federal funds, the state must have a plan approved by the Secretary of Health and Human Services that, inter alia, "provides that [it] shall be in effect in all political subdivisions of the [state], and, if administered by them, be mandatory upon them[.]" (42 U.S.C. § 671(a)(3), italics added.) In addition, the federal statutes require payments to enumerated persons and for enumerated purposes. (42 U.S.C. §§ 672(a), 673(a)(1)(B).) Finally, California's approved plan meets these requirements, and identifies classes of children and other persons who shall receive payments.
Furthermore, the federal regulations governing the Child Support program require an approved state plan regarding this program, and also require that the pertinent state agency must "assure that the plan is continuously in operation...." (45 C.F.R. § 302.10(c), italics added.) Moreover, these regulations set timeframes for the collection and disbursement of funds by the state agency (45 C.F.R. § 302.32(b)). California's approved plan states that it "is continuously in operation" in accordance with federal regulations. Accordingly, the Controller may properly disburse funds to make timely payments mandated under the Foster Care and Adoption programs and the Child Support program.
Finally, the Controller cites two federal statutes for the proposition that she must disburse funds in connection with the Child Welfare Services program. However, nothing in these statutes mandates timely disbursement of funds. The statutes define the term "child welfare services" to apply to services intended, inter alia, to "assur[e] adequate care of children away from their homes, in cases where the child cannot be returned home or cannot be placed for adoption" (42 U.S.C. § 625(a)(1)(F)). Moreover, they require only that the state plan for services to children under this program must provide for coordination with other services in a manner that "will best promote the welfare of such children and their families" (42 U.S.C. § 622(b)(2)).
The Controller also argues in cursory fashion that despite recent changes in federal law, the Child Welfare Services program is subject to the former AFDC requirements concerning timely payments at *717 issue in Pratt.[15] Of the statutes and regulations cited in Pratt (770 F.Supp. at pp. 541-542), only certain regulations concerning notice of changes in benefits currently apply to the Child Welfare Services program (see 45 C.F.R. § 1355.30(p)). These regulations provide that when "changes in either State or Federal law require automatic grant adjustments for classes of recipients," recipients are entitled to notice of a reduction or suspension of benefits and a hearing on the matter. (45 C.F.R. § 205.10(a)(4)(iii).) Furthermore, these regulations provide that "assistance shall not be suspended" to those recipients who request a hearing until "[a] determination is made at the hearing that the sole issue is one of State or Federal law or policy, or change in State or Federal law...." (45 C.F.R. § 205.10(a)(6)(i)(A), italics added; § 205.10(a)(6)(i)(Q.)
In view of the mandatory language of these regulations, we conclude the Child Welfare Services program falls under Pratt, rather than under Dowling, to the extent determined by the regulations in question.[16] (See Pratt v. Wilson, supra, 770 F.Supp. at p. 544, fn. 14.) Accordingly, the Controller may properly disburse only those funds necessary to comply with the notice-and-hearing requirements imposed by federal regulations on the Child Welfare Services program.
In sum, the preliminary injunction must be reversed to the extent that it bars timely payments under the federal mandates that we have identified regarding the Food Stamp program, the Foster Care and Adoption programs, the Child Support program, and the Child Welfare Services program.[17]
E. Bond
Finally, appellants contend that the trial court failed to require an adequate bond. "On granting an injunction, the court or judge must require an undertaking on the part of the applicant to the effect that the applicant will pay to the party enjoined any damages, not exceeding an amount to be specified, the party may sustain by reason of the injunction, if the court finally decides that the applicant was not entitled to the injunction." (Code Civ. Proc., *718 § 529, subd. (a).) As the court observed in ABBA Rubber Co. v. Seaquist (1991) 235 Cal.App.3d 1, 14, 286 Cal.Rptr. 518, "the trial court's function is to estimate the harmful effect which the injunction is likely to have on the restrained party and to set the undertaking at that sum."
In view of our conclusion that the preliminary injunction must be reversed in part (see pt. II., B, C.I., C.3. D.I., D.2., ante), and Jarvis and White's representation that they do not seek further relief before the trial court, we do not address appellants' contentions on this issue.
DISPOSITION
The appeal in the action initiated by White (B122178) is dismissed as moot. White and respondents in this action shall bear their own costs on appeal.
The preliminary injunction in the action initiated by Jarvis and White (B123992) is reversed to the extent that it bars the Controller from disbursing funds pursuant to (1) continuing appropriations, (2) article III, section 4, and article XVI, section 8.5, of the state Constitution, (3) the Federal Labor Standards Act (29 U.S.C. § 201 et seq.), and (4) the federal funding mandates that we have identified applicable to the Food Stamp program (7 U.S.C. § 2011 et seq.), Foster Care and Adoption programs (42 U.S.C. § 670 et seq.), Child Support program (42 U.S.C. §§ 651-669b), and Child Welfare Services program (42 U.S.C. §§ 620-628). The preliminary injunction is otherwise affirmed. In view of Jarvis and White's abandonment of further action in the trial court, we do not remand the matter for modification of the preliminary injunction. Appellants in the action initiated by Jarvis and White are awarded their costs on appeal. The writ of supersedeas will remain in effect until the issuance of our remittitur.
The petitions for writ of mandate (B124395, B124397, B124398) are dismissed as moot. Petitioners are awarded their costs regarding these petitions.
We concur: EPSTEIN, Acting P.J., and HASTINGS, J.
NOTES
[*] Connell v. Superior Court (B124395); California State Employees Assn. v. Superior Court (B124397); California Correctional Peace Officers Assn. v. Superior Court (B124398).
[1] Our conclusions here are limited to the provisions of law addressed by the parties on appeal. We do not assess whether other provisions of law may authorize or mandate the disbursement of funds during a budget impasse.
[2] On October 8, 1997, the trial court granted Gary Gavinski and California State Employees Association, Service Employees International Union, Local 1000, AFL-CIO, CLC (CSEA) leave to intervene in the action.
[3] These state employees, unions, and professional associations are as follows: Tim Behrens, David K. Okumara, Joseph W. Jimenez, CSEA, Professional Engineers in California Government, California Association of Professional Scientists, California Correctional Peace Officers Association, and California Union of Safety Employees.
[4] After Feitelberg and Alameda Drug Company filed their respondents' brief in the appeal arising from the Jarvis action, they dismissed their complaint in intervention before the trial court, and indicated that they would not participate as respondents in the appeal.
[5] Because the petitions for writ of mandate assert contentions raised in the appeal in the second action by the Controller and the state employee interveners, we do not separately address these petitions.
[6] The Controller's opening brief contends that numerous statutes and voter-approved laws establish continuing appropriations independent of the budget act, but she does not fully enumerate them. As a "small sampling," the Controller cites statutes enacted by the Legislature, including purported appropriations for disability insurance payments (Unemp.Ins.Code, § 3012), income tax refunds (Rev. & Tax.Code, § 19611), the Local Revenue Fund (Welf. & Inst.Code, § 17600), the Local Public Safety Account (Gov.Code, § 30052, subd. (a)), contributions to the Teachers' Retirement Fund (Ed.Code, § 22955), retirement and disability payments (Ed.Code, § 22307), the operations of California Housing and Infrastructure Finance Agency (Health & Saf.Code, §§ 51000, 50154), the Local Agency Investment Fund (Gov.Code, § 16429.1), and bond-related payments (Gov. Code, §§ 15814.16, 15848). The Controller also points to general obligation bond acts (e.g., Gov.Code, § 8879.10, Pub.Util.Code, § 99693.5, Pen.Code, § 7428) approved by the voters pursuant to article XVI, section 1 of the state Constitution.
For the reasons explained in the text, we do not address whether any of these laws, taken individually, establish continuing appropriations independent of the budget act.
[7] Government Code section 16304 provides: "An appropriation shall be available for encumbrance during the period specified therein, or, if not otherwise limited by law, for three years after the date upon which it first became available for encumbrance. An appropriation containing the term `without regard to fiscal years' shall be available for encumbrance from year to year until expended. [¶] An appropriation shall be deemed to be encumbered at the time and to the extent that a valid obligation against the appropriation is created."
Government Code section 16304 further provides that some appropriations are exempt from these limitations and are "available from year to year until expended," including "[continuing provisions of law appropriating for specific purposes certain classes of revenue or other receipts, upon their deposit in a particular fund in the State Treasury or upon their collection by an agency of this state." (Id., subd. (f).)
Government Code section 13340 provides that with enumerated exceptions, "no moneys in any fund that, by any statute other than a Budget Act, is continuously appropriated without regard to fiscal years, may be encumbered unless the Legislature, by statute, specifies that the moneys in the fund are appropriated for encumbrance." (Id., subd. (a).)
[8] The formulas, as set forth in subdivision (b) of article XVI, section 8 of the California Constitution, are as follows: "(1) The amount which, as a percentage of General Fund revenues which may be appropriated pursuant to Article XIII B, equals the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in fiscal year 1986-87.[¶] (2) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes shall not be less than the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in the cost of living pursuant to paragraph (1) of subdivision (e) of Section 8 of Article XIII B. This paragraph shall be operative only in a fiscal year in which the percentage growth in California per capita personal income is less than or equal to the percentage growth in per capita General Fund revenues plus one half of one percent. [¶] (3)(A) The amount required to ensure that the total allocations to school districts and community college districts from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes shall equal the total amount from these sources in the prior fiscal year, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment and adjusted for the change in per capita General Fund revenues. [¶] (B) In addition, an amount equal to one-half of one percent times the prior year total allocations to school districts and community colleges from General Fund proceeds of taxes appropriated pursuant to Article XIII B and allocated local proceeds of taxes, excluding any revenues allocated pursuant to subdivision (a) of Section 8.5, adjusted for changes in enrollment. [¶] (C) This paragraph (3) shall be operative only in a fiscal year in which the percentage growth in California per capita personal income in a fiscal year is greater than the percentage growth in per capita General Fund revenues plus one half of one percent."
[9] We do not resolve the extent to which the FLSA applies to the different categories and classes of state employees, or the extent to which the compensation required under the FLSA may fall short of any state employee's full salary. These questions have not been presented to us, and we do not address them.
[10] We recognize that individuals cannot initiate actions under the FLSA against states that have not waived their immunity under [he Eleventh Amendment to the United States Constitution (Alden v. Maine (1999) 527 U.S. 706, 754, 119 S.Ct. 2240, 144 L.Ed.2d 636), and that California has not waived this immunity (Baird v. Kessler (E.D.Cal.2001) 172 F.Supp.2d 1305, 1312). Nonetheless, the FLSA authorizes the Secretary of Labor to seek the payment of minimum wages and overtime compensation "owing to any employee or employees" under the FLSA (29 U.S.C. § 216(c)).
[11] Citing American Federation of Government Employees v. Rivlin (D.D.C. Nov. 17, 1995, No. 95-2115) 1995 WL 697236, Jarvis and White disagree, pointing out that despite the FLSA, many federal employees were laid off during the 1985 federal budget impasse pursuant to article I, section 9, clause 7 of the United States Constitution, which provides that "[n]o money shall be drawn from the Treasury but in consequence of appropriations made by law," and other federal employees were compelled to work without pay. However, American Federation of Government Employees provides little guidance here. The United States Constitution, unlike the California Constitution, is not governed by federal statutory law such as the FLSA. (Marbury v. Madison (1803) 5 U.S. (1 Cranch) 137, 176-177, 2 L.Ed. 60.)
[12] Citing Donovan v. Crisostomo (9th Cir. 1982) 689 F.2d 869, 876, the state employee interveners argue under the FLSA, employees who work overtime must receive the requisite overtime wages plus their full straight time pay. However, they do not cite any authority that the FLSA requires the full payment of straight time wages in all circumstances, and we are unaware of any such authority.
[13] On a related matter, the Controller argued before the trial court that wage payments for state employees adjusted to the federally mandated levels could not be issued by the pending pay date, and that an injunction ordering such an adjustment therefore threatened injury to state employees and the imposition of penalties on California for violations of the FLSA. Because the trial court concluded that the FLSA did not apply to state employees who continued to work after the date of the injunction, it did not resolve the factual issues raised by this contention.
We decline to resolve these factual issues for the first time on appeal. Under the FLSA, penalties may be excused when the employer engages in good faith conduct that violates the FLSA (Craig v. Far West Engineering Co. (9th Cir.1959) 265 F.2d 251, 261; Nash v. Resources, Inc. (D.Or.1997) 982 F.Supp. 1427, 1436), including conduct in compliance with a governmental directive (Reed v. Murphy (5th Cir.1956) 232 F.2d 668, 677). In view of this fact, as well as the Controller's scanty evidentiary showing, the record permits conflicting inferences regarding the likelihood of penalties and the extent of financial injury to state employees. Under these circumstances, it is inappropriate for us to resolve the pertinent factual issues. (Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 865, [270 Cal. Rptr. 699].)
[14] "[I]n August 1996, Congress enacted a new federal welfare law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (`PRWORA'), 42 U.S.C. §§ 601, et seq., . . . . The PRWORA superceded the AFDC program with a new program entitled Temporary Assistance of Need[y] Families (`TANF') that significantly increased the states' discretion to design their federally supported welfare plans...." (Roe v. Anderson (9th Cir.1998) 134 F.3d 1400, 1403, fn. 3.)
[15] We observe that the statute the Controller cites for this proposition (42 U.S.C. § 625(a)(2)) states nothing about the carryover of former AFDC payment requirements. Title 42 of the United States Code section 625(a)(2) provides only that enumerated funds disbursed under the Foster Care and Adoption programs "shall be deemed to have been expended for child welfare services." Taken by itself, this provision does not imply that the Welfare and Services program, insofar as it exists independently of the Foster Care and Adoption programs, is subject to timely payment requirements, including those applicable to the latter program.
[16] We note that these regulations also apply to the Foster Care and Adoption programs (45 C.F.R. § 1355.30(p)), and thus they constitute a mandate for disbursing funds in connection with these programs, over and above the provisions of law that are cited above in the text.
[17] Jarvis and White disagree regarding the latter three programs, citing section 901 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Pub.L. No. 104-193 (Aug. 22, 1996) 110 Stat. 2105). This provision states that TANF funds received by a state under part A of title IV of the Social Security Act (42 U.S.C. § 601 et seq.), as well as funds received under the Child Care and Development Block Act of 1990, "shall be subject to appropriation by the State legislature, consistent with the terms and conditions required under such provisions of law." However, the three programs in question are established and receive funds pursuant to other federal statutes (respectively, parts E (42 U.S.C. § 670 et seq.), D (42 U.S.C. § 651-669b), and B (42 U.S.C. § 620-628) of title IV of the Social Security Act), and nothing in the provision cited by Jarvis and White displaces the federal mandates that we have identified in the text. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246484/ | 561 N.E.2d 1147 (1990)
204 Ill. App.3d 160
149 Ill.Dec. 451
Robert DUNCAN, individually and Robert Duncan, d/b/a Chicago Do-All Custom Home Remodeling, Plaintiff and Counter-defendant-Appellee,
v.
Lauretta CANNON, Defendant and Counter-plaintiff-Appellant.
No. 1-88-3007.
Appellate Court of Illinois, First District, First Division.
September 24, 1990.
*1148 Benjamin C. Duster, Chicago, for defendant and counter-plaintiff-appellant.
Joel A. Brodsky, Chicago, for plaintiff and counter-defendant-appellee.
Justice MANNING delivered the opinion of the court:
Defendant and counterplaintiff, Lauretta Cannon, ("Defendant") appeals from the judgment of the circuit court in favor of plaintiff and counterdefendant ("Plaintiff") in the amount of $9,600 which represents the unpaid contract price of $1,900 for work performed and $7,700 for "extra" work. Defendant raises three issues on appeal: (1) whether plaintiff was entitled to additional payment for alleged extra work; (2) whether plaintiff's failure to file plans pursuant to the Chicago Building Code ("Ordinance") precludes him from recovering for extra work; and (3) whether the circuit court erred in denying defendant's request for a continuance.
The record reveals that defendant owns a three-flat apartment building in Chicago. In March 1986 defendant entered into a contract with plaintiff to modify the single *1149 boiler in the building, which heated all three apartments, by cutting it down to heat only the first floor. The original radiators were to remain on the first floor. Plaintiff was to install a new steam boiler to heat the third floor with the original radiators remaining, and a new hot water boiler to heat the second floor which would be connected to new base board radiators. Pursuant to the contract, all three boilers were to be connected to separate gas meters. The contract price was listed as $5,900 which included all labor and materials.
Shortly thereafter, the parties entered into a second contract which modified their original agreement and stated that:
"Building is a 3-flat building. Boiler is now heating the entire building. Present boiler will be cut down and only used for 1st floor and present radiators. Other 2 floors will be heated with 260,000 BTU boilers steam with lo-cut offs and automatic water feeders. Use present radiators and hook up all three boilers to separate gas meters. 3 gas meter connections. Price includes all labor and material and work to be done in a workmanlike manner."
The contract amount was listed as $7,000, "one half ½ down payment on delivery-balance to be paid on completion."
After the work was completed, plaintiff brought this cause of action. Defendant asserted a number of affirmative defenses and filed a counterclaim alleging that plaintiff had performed faulty work.
On August 29, 1988, the case was set final for trial. However, on that date defense counsel presented an oral motion for a continuance on the ground that defendant's expert witness was suddenly and unexpectedly unavailable. The trial court denied defendant's motion and proceeded with trial. Following the trial, the court entered judgment on behalf of plaintiff on counts I and II of his complaint and judgment for the defendant on her counterclaim in the amount of $450.
We first address defendant's argument that because the work in question was required by the original contract it could not be considered as extra work. In order for a contractor to recover additional payment from an owner for extra work, he must establish by clear and convincing evidence each of the essential elements in his case. He must establish that: (1) the work was outside the scope of the original contract; (2) the extra items were ordered at the direction of the owner; (3) the owner agreed either expressly or impliedly to pay extra; (4) the extra items were not voluntarily furnished by the contractor; and (5) the extra items were not rendered necessary by any fault of the contractor. (Watson Lumber Co. v. Guennewig (1967), 79 Ill.App.2d 377, 389-90, 226 N.E.2d 270.) Moreover, our courts have continually reiterated that the proof that the items are extra that the defendant ordered them as such and agreed to pay for them must be by clear and convincing evidence. R & R Constr. v. Junior College Dist. No. 529 (1977), 55 Ill.App.3d 115, 118, 12 Ill.Dec. 795, 370 N.E.2d 599, quoting Guennewig, 79 Ill.App.2d at 390, 226 N.E.2d 270; see also Athens v. Prousis (1989), 190 Ill. App.3d 349, 356, 137 Ill.Dec. 750, 546 N.E.2d 695; Cencula v. Keller (1989), 180 Ill.App.3d 645, 652, 129 Ill.Dec. 409, 536 N.E.2d 93; Ambrose v. Biggs (1987), 156 Ill.App.3d 515, 520, 108 Ill.Dec. 918, 509 N.E.2d 614; Wingler v. Niblack (1978), 58 Ill.App.3d 3d 287, 289, 15 Ill.Dec. 817, 374 N.E.2d 252.
Defendant argues that plaintiff failed to establish by clear and convincing evidence that the work in question was extra. She urges that the trial court's judgment for plaintiff was against the manifest of the evidence.
It is well established that "[c]lear and convincing evidence is considered more than a preponderance while not approaching the degree of proof necessary to convict a person of a criminal offense." (In re Estate of Ragen (1979), 79 Ill.App.3d 8, 14, 34 Ill.Dec. 523, 398 N.E.2d 198.) "The manifest weight of the evidence is that which is the clearly evident, plain and indisputable weight of the evidence.' [Citations.] In order for a finding to be contrary to the manifest weight of the evidence, *1150 an opposite conclusion must be clearly apparent. [Citation.]" In re Application of County Collector (1978), 59 Ill.App.3d 494, 499, 16 Ill.Dec. 680, 375 N.E.2d 553.
At the trial below,[1] four witnesses testified. Plaintiff testified, inter alia, that the extra work included installation of 12 new steam pipe lines, which were run from the new boilers in the basement to 12 radiators in the second and third floor apartments, and work on the walls and floors of the premises to accommodate the lines; defendant orally requested the new steam lines and promised to pay for them; the work was outside the scope of the contract since it was always his intent to use the existing pipe lines to hook-up the boilers to the radiators; he did not submit plans to the city because he did not believe the Ordinance applied to the job; and the boiler installation was subcontracted out to a third party.
Mr. Poulas, an expert witness for plaintiff, testified that he was not a licensed plumber but had been in the heating business in the Chicago area for over thirty-five years. He stated "that he did not know how many lines were run from the basement to the * * * floors" but, "individual lines were run from the basement to the radiators in the second and third floor apartments." However, Mr. Poulas offered no other testimony to establish that the work was extra, and what he did testify to was based on his visit to the second floor only.
Defendant testified on her counterclaim as to the faulty work provided by plaintiff as well as the case-in-chief. The record reflects that defendant testified that "other than the boiler change for which she agreed to pay an extra $1,000, she never requested that any extra work be done by plaintiff." She conceded that "individual lines were run from the basement to the radiators on the second floor" but denied requesting this "configuration as an extra." Defendant further stated that she considered the running of pipes from each boiler to the floor that boiler was to heat as incidental and necessary to the work required under the written contract, and that the configuration proposed by plaintiff, i.e., connecting the existing pipe lines in the basement to the new boilers and then through the original boiler which already had pipe lines extending from the basement to the individual floors would not give rise to separate heating systems and hence separate billings.
Mr. Cannon, husband of defendant, corroborated her testimony when he testified "that [although] individual lines were run from the basement to the second floor through his apartment (on the first floor), no lines were run from the basement to the third floor." When asked on cross-examination "how does heat get to the third floor apartment if there are no pipes from the basement to the third floor radiators," Mr. Cannon replied "that the new boiler for the third floor was connected to the original boiler by piping in the basement, and the heat was sent to the third floor through the original pipes in the old heating system."
As noted previously, the law in Illinois applicable to the subject of extras is specifically enunciated. (Watson Lumber Co. v. Mouser (1975), 30 Ill.App.3d 100, 109, 333 N.E.2d 19, quoting Bully & Andrews, Inc. v. Symons Corp. (1975), 25 Ill.App.3d 696, 699-700, 323 N.E.2d 806.) In the instant case, the record is devoid of evidence as to elements 4 and 5 and the evidence is disputed as to elements 2 and 3. (See Guennewig, 79 Ill.App.2d at 389, 226 N.E.2d 270.) The testimony of plaintiff urges that defendant requested and agreed to pay for the extra work. Conversely, defendant denied those allegations. Defendant insinuates that plaintiff voluntarily installed the lines as necessitated by the contractual agreement; however, she offered no evidence to substantiate the theory and neither did plaintiff offer any evidence to dispute *1151 it once placed into issue by the defendant. Although the trial court made no specific findings of fact, we can infer from its judgment for plaintiff that it agreed with plaintiff. We disagree with that conclusion, finding it to be overbroad, and general; moreover, based on our review of the record, we conclude that plaintiff failed to establish by clear and convincing evidence that he was entitled to additional payment for extra work.
Plaintiff further argues that he presented some evidence on each element; and consequently, we are to disregard the fact that defendant presented conflicting evidence on the ground that as a reviewing court we must accept the finding of the trier of fact. It is well established that where the evidence presented is conflicting, it is the duty of the trial court to listen to the testimony of the witnesses and resolve any conflicts therein on the grounds that credibility of witnesses and the weight to be given to conflicting evidence are solely matters for the trier of fact. (In re Marriage of Ligas (1982), 110 Ill.App.3d 1, 6, 65 Ill.Dec. 763, 441 N.E.2d 1277.) However, it is also well settled that a finding of the trier of fact will be reversed when against the manifest weight of the evidence (Bass v. City of Joliet (1973), 10 Ill.App.3d 860, 870, 295 N.E.2d 53), where it appears there is no evidence at all to support the finding (see Breslin v. Bates (1973), 14 Ill.App.3d 941, 303 N.E.2d 807), or where the evidence is clearly insufficient. See Hammer v. Slive (1960), 27 Ill.App.2d 196, 169 N.E.2d 400.
In the case at bar, while it is arguable that the contradictory evidence presented goes to the matter of the credibility of the witnesses; we find that the evidence presented as to the first element, whether the work was outside the scope of the original contract between the parties or necessary to the contract, is controlling. Labor and materials which are incidental and necessary to the execution of the contract generally cannot be regarded as extra work for which a contractor or builder may recover. 17A C.J.S. Contracts & 371(6), at 412 (1963). Mayer Paving & Asphalt Co. v. Carl A. Morse, Inc. (1977), 48 Ill.App.3d 73, 8 Ill.Dec. 122, 365 N.E.2d 360.
Furthermore, the only evidence before the trial court was allegations of general discussions between the parties. However, it is well settled that the burden of establishing these matters is the plaintiff's burden and evidence of general discussion will not supply all of these elements. (Guennewig, 79 Ill.2d at 390, 226 N.E.2d 270.) In the instant case, there was no expert testimony or other evidence presented as to whether new pipe lines had to be installed incidental to the contract, as advocated by the defendant, or whether existing pipe lines could be altered to run from the new boilers in the basement through the original boiler to the radiators in the apartments in order to generate separate heating bills, as advocated by the plaintiff.
Moreover, the determination of this issue was required to be resolved by more than mere assertions or denials by the parties. The trial court had an obligation to do more than weigh the testimony of the witnesses, rather the court had a duty to consider the contract itself, and the intent of the parties at the time they entered into the contract. A contract must be enforced according to its terms. (Sweeting v. Campbell (1956), 8 Ill.2d 54, 58, 132 N.E.2d 523, 525.) When construing a contract, the trial court's primary objective is to ascertain the intent of the parties at the time they entered into the contract. (Cedar Park Cemetery Assoc. v. Village of Calumet Park (1947), 398 Ill. 324, 75 N.E.2d 874.) If the terms of the contract are unambiguous, then the intent of the parties must be ascertained solely from the words used. (Schoeneweis v. Herrin (1982), 110 Ill.App.3d 800, 806, 66 Ill.Dec. 513, 443 N.E.2d 36.) A contract is ambiguous if its terms are capable of being understood in more than one sense because either an indefiniteness of expression or a double meaning is attached to them. Joseph v. Lake Michigan Mortgage Co. (1982), 106 Ill.App.3d 988, 991, 62 Ill.Dec. 637, 436 N.E.2d 663.
We have scrutinized the contract here and determine that it is ambiguous in as much as it fails to specify the number of *1152 pipe lines to be used and connections to be made to hook up the boilers to the radiators in the apartments. Nor does it state whether the "present" pipe lines are to be used or "remain" on the premises. Plaintiff asserts that the present lines were to be used but for defendant's request for new lines. He urges that the trial court agreed with him when during the hearing on the motion for reconsideration the court commented that the work was a "major modification." However, our review of the record finds nothing to base the trial court's conclusion upon.
Because the contract is ambiguous, it was incumbent upon the trial court to look to the intent of the parties at the time they entered into the contract. In this manner, the court could have properly determined whether the work was within the bounds of the contractual agreement or outside of the scope of the contract. However, the record is devoid of any indication of the trial court having made such an assessment. We have reviewed the contract and believe that the intent of the parties thereunder is clear, that intent being to produce three separate heating systems. The contract specifies that the "present boiler will be cut down" to heat the "1st floor" and that "the other 2 floors will be heated with steam boilers." It clearly states that all three boilers will be hooked up to separate gas meters and provides for "3 gas meter connections." Similarly, it states that "present radiators" will be used.
Conversely, neither the contract language, the actions of the parties, nor the testimony of plaintiff's expert witness sheds any light on the technical issue of whether new pipe lines were necessary to the contract.
"In order to recover for items as `extras,' they must be shown to be items not required to be furnished under plaintiff's original promise as stated in the contract, including the items that the plans and specifications reasonably implied even though not mentioned. A promise to do that which the promisor is already bound to do or furnish is not consideration for even an implied promise to pay additional for such performance or the furnishing of materials." Guennewig, 79 Ill.App.2d at 391, 226 N.E.2d 270.
Accordingly, we hold that on this record, it is manifestly against the weight of the evidence to find that the work was outside the scope of the original contract between the parties. As to the testimony presented by plaintiff, he offered no evidence of the specific time, place or nature of any discussions with, or conduct of, defendant involving installation of the 12 steam pipe lines. The evidence, to the contrary, discloses that plaintiff may not have used separate lines for the third floor at all. There was no expert testimony or authority presented to the court to explain how various plumbing configurations render different results. Yet, such specific evidence is required for the recovery of extras, particularly where, in addition, no bill or documentation of labor and materials provided for extra work is ever submitted.
It is the plaintiff's burden to prove each and every element by clear and convincing evidence, which he has here failed to do. Thus, we conclude that the evidence presented by plaintiff is insufficient to sustain the judgment and we reverse the trial court's judgment and remand this matter for further proceedings not inconsistent with this opinion.
Furthermore, the contract here, which was drafted by plaintiff, provides that all extra work be in writing. The contract states in pertinent part: "Any alteration or deviation from specifications below involving extra costs will be executed only upon written orders, and will become an extra charge over and above the estimate." However, there is no evidence of a written order. Plaintiff correctly asserts that oral modifications to written contracts are allowed. The rule is that a condition that all extra work be performed only upon written orders can be waived orally by the owner; but before the contractor is entitled to compensation for extras, the waiver must be proved by clear and convincing evidence. See Atlee Electric Co. v. Johnson Constr. Co. (1973), 14 Ill.App.3d 716, 303 N.E.2d 192.
*1153 In the case at bar, there is no evidence, let alone clear and convincing evidence, put forth by plaintiff that defendant waived the requirement that any modification to the contract be in writing. As discussed above in this opinion, although the trial judge commented that the installation work was a "major modification" of the parties' agreement, he made no specific finding of fact as to why such modification was not required to be in writing pursuant to the contract. Accordingly, we conclude that plaintiff failed to prove a waiver of the writing requirement by clear and convincing evidence.
Ordinarily, because of our disposition on the first issue, we would not consider the remaining issues. However, as the question regarding the applicability of the Ordinance may resurface on remand, we will briefly discuss it.
We summarily conclude that defendant's argument, which proposes that a party's failure to strictly abide by the Ordinance, assuming it is applicable to the contract,[2] operates as a bar to recovery in a cause of action for extra work, is unsupported by law. See generally Abingdon Bank & Trust Co. v. Bulkeley (1945), 390 Ill. 582, 62 N.E.2d 447.
Assuming the Ordinance was applicable to the instant matter, we find the strikingly similar case of South Center Plumbing & Heating Supply Co. v. Charles (1967), 90 Ill.App.2d 15, 234 N.E.2d 358, to be dispositive of the issue. In South Center, this court determined that the failure of a repairman, who had contracted with the building owner to remove and relocate plumbing in one apartment of the building, to obtain a permit for the work to be performed and submit plans for approval of the city as required by the ordinance, did not prohibit him from recovering on a contract or quantum meruit basis for services rendered. The court there reasoned that although the repairman violated the ordinance he was not prohibited from recovering for work performed because the ordinance did not manifest legislative intent to declare illegal contracts performed in violation of permit and filing requirements. Furthermore, as here, the record in South Center did not reflect that any harm was caused to the public welfare. 90 Ill. App.2d at 20, 234 N.E.2d 358; see also Lavine Constr. Co. v. Johnson (1981), 101 Ill.App.3d 817, 57 Ill.Dec. 389, 428 N.E.2d 1069.
In the instant case, the Ordinance merely provides inter alia that the failure of the owner or agent to file plans and specifications with the Department and to obtain a permit therefrom for "installation" of any boiler or unfired pressure vessel subjects him or her to pay a "fine of twenty-five dollars for each day on which he shall have prosecuted such installation * * * without said permit." City of Chicago Building Code & 17-2B.5 (1979).
Accordingly, we conclude that although a municipal ordinance which is applicable to the contract becomes by operation of law an implied term of the contract (Burns v. Regional Transp. Auth. (1982), 112 Ill.App.3d 464, 472, 67 Ill.Dec. 868, 445 N.E.2d 348; Lavine Constr. Co. v. Johnson (1981), 101 Ill.App.3d 817, 819, 57 Ill. Dec. 389, 428 N.E.2d 1069; Bethel Terrace, Inc. v. Village of Caseyville (1976), 43 Ill. App.3d 276, 279, 1 Ill.Dec. 936, 356 N.E.2d 1269), the Ordinance neither precludes recovery nor provides for a remedy in the form of an absolute defense in the underlying contract action between the contractor ("plaintiff") and the owner ("defendant").
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed in part; reversed in part and remanded for further proceedings consistent with the views expressed herein.
AFFIRMED IN PART; REVERSED IN PART AND REMANDED.
CAMPBELL and O'CONNOR, JJ., concur.
NOTES
[1] The record on appeal does not contain a transcription of the trial proceedings that were held on August 29, 1988, since no court reporter was present on that day. However, pursuant to Supreme Court Rule 323(c) (107 Ill.2d R. 323(c)), the trial judge certified a report of proceedings based upon the parties' proposed report of proceedings, objections, answer and amended proposal.
[2] Section 17-2B.1 of the City of Chicago Building Code provides in pertinent part that "[t]he provisions of this chapter (chapter 17) * * * shall not apply to single dwellings nor to any multiple dwelling having not more than three apartments." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1294192/ | 692 N.W.2d 708 (2005)
264 Mich. App. 668
In the Matter of Justin GAZELLA and Paige Gazella, Minors.
Family Independence Agency, Petitioner-Appellee,
v.
Lisa Marie Sayers-Gazella, Respondent-Appellant, and
Bryce Gazella, Respondent.
Docket No. 253008.
Court of Appeals of Michigan.
Submitted August 4, 2004, at Grand Rapids.
Decided January 4, 2005, at 9:00 a.m.
Released for Publication February 16, 2005.
*710 Tarrant & Tomcal, PLC (by Barbara J. Tomcal), Saginaw, for the minor children.
Kathleen M. Maine, Saginaw, for the respondent.
Before: WHITBECK, C.J., and OWENS and SCHUETTE, JJ.
OWENS, J.
Respondent Lisa Marie Sayers-Gazella (respondent) appeals as of right the trial court's order of November 29, 2003, which allowed the previously suspended order of June 5, 2003, terminating her parental rights to her two infant children pursuant to MCL 712A.19b(3)(l) and (m) to go into effect.[1] She challenges the trial court's implementation of its prior order terminating her parental rights in spite of her substantial compliance with the Adrianson[2] agreement. She also challenges the *711 trial court's initial assumption of jurisdiction over the minor children. We affirm.
The minor twin children, Justin Gazella and Paige Gazella, were born March 22, 2003. A petition seeking initial jurisdiction of the children and termination of both parents' rights was authorized for filing at a preliminary hearing held three days later. The petition alleged, in part, that respondent's parental rights to a half-sibling of the twins were terminated on May 16, 2000, in Genesee County for abandonment following a 1998 petition for child neglect, and that on October 30, 2000, respondent's parental rights to a full-sibling of the twins were terminated in Saginaw County by voluntary release following initiation of child neglect proceedings. The petition, as amended, further alleged that respondent was borderline functioning and had a history of being unable to provide a stable residence. Finally, the petition alleged that respondent did not follow through with individual and marital therapy, parent training, and parent-mentoring services. At an adjourned pretrial hearing on May 30, 2003, following a careful explanation by the trial court of respondent's rights and the potential consequences of her plea, respondent admitted the facts alleged in the amended petition. Respondent understood that her admissions would permit the court to find that the children came within the jurisdiction of the court and that statutory grounds for termination of her parental rights existed. The court then found, on the basis of the doctrine of anticipatory neglect,[3] that the children came within the jurisdiction of the court. The court further found, on the basis of respondent's admissions, that grounds existed to terminate respondent's parental rights under MCL 712A.19b(3)(l) and (m). No evidence was offered that termination would clearly not be in the children's best interests and the court made no such finding. Immediately following the plea, the court conducted the dispositional hearing.
Following the combined pretrial/adjudication/dispositional/termination hearing, the court entered two orders. The first, an order of disposition, stated that an adjudication had been held and the children came within the jurisdiction of the court. It further ordered out-of-home placement for the children.[4] The order required respondent to comply with the case service plan dated April 25, 2003, as modified at the hearing. The second order terminated the parental rights of respondent and, pursuant to the Adrianson agreement, suspended the effect of the termination order contingent on respondent's compliance with all conditions of the case service plan.
Review hearings were held on September 2, 2003, and November 20, 2003, to assess respondent's progress. At the end of the November 20, 2003, hearing, the court found that, to a substantial degree, respondent was in compliance with the case service plan. However, in spite of respondent's substantial compliance, the court found that her prognosis was poor to fair, that the children should not be returned to her, that she had not been honest with the caseworker, and that, notwithstanding substantial compliance with the case service plan, it was highly questionable whether she could care for the children unaided at any reasonable time in the foreseeable future given her lack of improvement. The court entered an order permitting the order terminating respondent's *712 parental rights to go into effect. Respondent then filed this appeal.
We review for clear error the trial court's findings on appeal of an order terminating parental rights.[5] A trial court's decision to terminate parental rights is clearly erroneous if, although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake had been made.[6] Respondent argues that the trial court erred in permitting the order terminating her parental rights to go into effect since she had completely complied with the terms of the Adrianson agreement. We disagree.
We must first examine the nature of an Adrianson agreement, or Adrianson order, and determine its current viability in light of MCL 712A.19b(5), which provides:
If the court finds that there are grounds for termination of parental rights, the court shall order termination of parental rights and order that additional efforts for reunification of the child with the parent not be made, unless the court finds that termination of parental rights to the child is clearly not in the child's best interests.[[7]]
Before the enactment of MCL 712A.19b(5), many courts hearing termination of parental rights cases utilized the technique approved by this Court in Adrianson to give parents one last chance to avoid termination of their parental rights to their children, without imposing on the petitioner (usually the state) the burden of proving its termination petition again following the additional time given to the parents for rehabilitation. In an Adrianson proceeding, the trial court would enter an order terminating the parents' rights following the necessary statutory findings. The court would then enter a further order suspending the order terminating the parents' rights on condition that the parents comply with certain requirements designed to assist their rehabilitation. If the parents were successful, the order terminating their rights would be set aside and never take effect. However, should the parents not be successful, the order terminating rights would be permitted to go into effect.
In an Adrianson proceeding, once an order terminating parental rights was entered, the petitioner need prove nothing further; the burden of proof shifted to the parents to show that they had successfully complied with the conditions under which the order terminating their parental rights was suspended.[8] However beneficial to parents Adrianson orders may have been, we hold today that their use violates both the statute and the court rule.[9] The statute and the court rule are clear: once the court finds there are statutory grounds for termination of parental rights, the court must order termination of parental rights and must further order that" additional efforts for reunification of the child with the parent not be made," unless the court finds that termination of parental rights to the child is clearly not in the child's best interests. In entering an Adrianson order, the trial court ordered that additional efforts for reunification of the child with the parent were to be made. This is clearly no longer permissible under the statute *713 and the court rule. Once the statutory grounds for termination have been proven (unless the court finds that termination of parental rights to the child is clearly not in the child's best interests), the court must terminate parental rights immediately. An Adrianson order cannot be entered.
In this case, an Adrianson order was entered by agreement of the parties. Because such an order was not lawful, and because respondent gave up her right to a contested hearing on the request to terminate her parental rights, we must consider whether she would be entitled to have the order terminating her parental rights set aside since she would likely never have agreed to it but for the Adrianson order. We hold that it need not be set aside because respondent benefited from the erroneous opportunity she was given to comply with the case service plan and establish that she could be a non-neglectful parent. This is especially true because, in this case, the grounds for terminating respondent's parental rights under MCL 712A.19b(3)(l) and (m) were a matter of court record and therefore uncontestable. In other words, she could only lose on the statutory grounds. The Adrianson order gave her a chance to avoid termination. It is true that, had no Adrianson order been entered, and had a contested hearing been held on the issue of termination, respondent could have avoided termination if the court found that termination was clearly not in the children's best interests. While that is possible in some cases, it was extremely unlikely in this case because, when the petition seeking termination of parental rights was filed, the children were only two days old and had never established a relationship or emotional bond with respondent. On the basis of the record, it does not appear that respondent could have established by clear and convincing evidence that termination of her parental rights was clearly not in the children's best interests, especially given the history of her relationship with her other children. Therefore, while we hold that the technique approved by this Court in Adrianson is no longer statutorily permissible, and that its use was therefore error, we determine that the error was clearly harmless with respect to respondent.
Given our determination that use of an Adrianson order was harmless error with respect to respondent, we next turn to whether the trial court erred in its implementation of the Adrianson order. By its terms, the Adrianson order provided that "[t]ermination is hereby suspended contingent upon mother's compliance with all conditions of the service plan." Respondent argues that she completely complied with all conditions of the service plan and, therefore, the trial court erred in finding that the order of termination should be permitted to go into effect.
We conclude that when the trial court found that respondent was in compliance with the case service plan to a substantial degree, the trial court was speaking of her physical compliance and not whether there was a significant improvement in her ability to parent. The court found that she maintained a stable residence, she was prompt for visitations with the children, and that she engaged in counseling. However, in spite of her physical compliance with the requirements of the plan, the court found that her prognosis was poor to fair.
It is true that the Adrianson order only required" mother's compliance with all conditions of the service plan." "Compliance" could be interpreted as merely going through the motions physically; showing up for and sitting through counseling sessions, for example. However, it is not enough to merely go through the motions; a parent must benefit from the services *714 offered so that he or she can improve parenting skills to the point where the children would no longer be at risk in the parent's custody. In other words, it is necessary, but not sufficient, to physically comply with the terms of a parent/agency agreement or case service plan. For example, attending parenting classes, but learning nothing from them and, therefore, not changing one's harmful parenting behaviors, is of no benefit to the parent or child.
It could be argued that a parent complied with a case service plan that merely required attending parenting classes but was silent concerning the need for the parent to benefit from them. It is our opinion that such an interpretation would violate common sense and the spirit of the juvenile code, which is to protect children and rehabilitate parents whenever possible so that the parents will be able to provide a home for their children that is free of neglect or abuse. In this case, the trial court recognized that benefiting from services, in addition to complying with the requirement to participate in those services, was necessary when, in the order implementing the order terminating respondent's parental rights, the trial court found that
[i]mplementation of the order [terminating parental rights] was suspended pending compliance with conditions and improvement in the situation.... [Emphasis supplied.]
While it would undoubtedly have been clearer if, in the order of disposition, the trial court had ordered respondent to both comply with and benefit from the services offered in the case service plan, we find that the failure to specify that she must benefit from the services was not error because benefiting from the services was an inherent and necessary part of compliance with the case service plan. Therefore, while in this case respondent substantially complied with the case service plan in that she physically did what was asked of her, she did not sufficiently benefit from the services offered to enable the court to find that she could provide a home for her children in which they would no longer be at risk of harm. Therefore, we find no error.
While not raised by respondent, we note that the trial court stated the following on the record, after finding that grounds for termination of respondent's parental rights existed pursuant to her plea:
Now obviously I have not made findings on best interest because by stipulation any order terminating her parental rights will be suspended to determine whether she is able to and does comply with conditions that may be set.
From this statement, it could be argued that the termination order was entered in error because the court had not made findings on best interests. We note, however, that a court speaks through its written orders and that, in entering the order terminating parental rights, the court necessarily found that statutory grounds for termination existed and could not have found that termination of parental rights was clearly not in the best interests of the children. Neither the statute nor the court rule requires the court to make specific findings on the question of best interests, although trial courts usually do. In fact, most trial courts go beyond the question whether termination is clearly not in a child's best interests and affirmatively find that termination is in a child's best interests. Such a finding is not required, but is permissible if the evidence justifies it. The statute and the court rule provide that, once a statutory ground for termination has been established by the requisite standard of proof, the court must enter *715 an order of termination unless the court finds that termination is clearly not in the child's best interests. If the court makes no finding regarding best interests, then the court has not found that termination would clearly not be in the child's best interests. While it would be best for trial courts to make a finding that there was insufficient evidence that termination was clearly not in a child's best interest, it is not required if no party offers such evidence, as here. For a valid termination order to be entered when no evidence is offered that termination is clearly not in the child's best interests, all that is required is that at least one statutory ground for termination be proved. If such evidence is offered by a party, the court must rule on its sufficiency. Of course, if no party presents best-interests evidence, but the court finds evidence in the record that convinces the court that termination would clearly not be in the child's best interests, the court must place that finding on the record.
Therefore, while the trial court did not make findings on best interests when the termination order was entered, this was not error since no evidence on that issue was offered. The termination order must be entered unless the court finds, by clear and convincing evidence, that termination would not be in the child's best interests, which did not happen here. The parties must be given an opportunity to present evidence on the question of best interests in a contested hearing, but, if no one does, no finding is required by the court.
In summary, while it was error for the court to utilize an Adrianson order delaying the effect of the order terminating parental rights, the respondent benefited from the court's error in that she was given an opportunity she would not otherwise have had to preserve her parental rights, especially given the clear and incontrovertible evidence that statutory grounds existed to terminate her parental rights. A litigant may not harbor error, to which he or she consented, as an appellate parachute.[10] In this case, Respondent benefited from the error; she may not now be heard to complain.
Next, respondent asserts as error the trial court's failure to state the statutory grounds under which the court took jurisdiction of the children pursuant to her plea. However, this alleged error is mentioned only in the statement of issues and is not discussed further. No authority is cited to support it. Hence, it is abandoned.[11] Nevertheless, we will consider it. The trial court did state the statutory grounds for jurisdiction. In finding that the children came within the jurisdiction of the court on the basis of anticipatory neglect, the trial court used the statutory terms "abandonment" and "neglect" and found that the children were at risk to their physical safety if they were placed in the custody of respondent. In addition, we note that whether the court stated the statutory grounds under which jurisdiction was taken is an issue concerning the court's exercise of its jurisdiction rather than an issue concerning whether the petition sufficiently alleged facts that, if true, would enable the court to find jurisdiction. Matters affecting the court's exercise of its jurisdiction may be challenged only on direct appeal of the jurisdictional decision, not by collateral attack in a subsequent appeal of an order terminating parental rights.[12] As noted earlier, the original order *716 of disposition entered June 2, 2003, and filed June 5, 2003, stated that an adjudication was held, that the children were found to come within the jurisdiction of the court, and that they were placed in out-of-home care. That is the order that was appealable as of right to challenge the adjudication. By not appealing that order, respondent lost her right to challenge the court's exercise of jurisdiction.
Finally, respondent challenges the court's assumption of original jurisdiction over her minor children on the ground that the petition was insufficient on its face and therefore the proceedings were void ab initio.
As noted earlier, a court's exercise of its jurisdiction may only be challenged on direct appeal, whereas the lack of subject-matter jurisdiction may be collaterally attacked.[13] Respondent argues that the petition was insufficient on its face because it contained no allegation that the children had been harmed. Specifically, respondent argues that "[p]ast conduct is not a statutory ground for asserting jurisdiction, there must be some current physical harm or threat of serious emotional harm." Because the petition alleged no current harm to the children, but instead anticipated future neglect of the children under the LaFlure/Dittrick doctrine of anticipatory neglect, respondent asserts that the petition was insufficient on its face and the trial court lacked jurisdiction. We disagree.
A child may come within the jurisdiction of the court solely on the basis of a parent's treatment of another child. Abuse or neglect of the second child is not a prerequisite for jurisdiction of that child and application of the doctrine of anticipatory neglect. As stated in In re Dittrick, supra at 222, 263 N.W.2d 37:
Defendants attempt to distinguish LaFlure by arguing that it only permits a finding of anticipated future neglect of a second child where a finding of past neglect of the second child has already been made. We reject that distinction because we believe that the reasoning of LaFlure is sound, even when applied to a situation where no prior determination of neglect has been made.
In In re Powers, the child was born two days before the petition for jurisdiction was filed. The petition was based solely on the treatment of another child. In answering the appellant's challenge to the probate court's jurisdiction over the child based solely on the treatment of another child, this Court held:
Consistent with Dittrick, we find that the principle of anticipatory neglect (or, in this case, anticipatory abuse) may provide an appropriate basis for invoking probate court jurisdiction. [In re Powers, supra at 589, 528 N.W.2d 799.]
Therefore, we find that the petition was not insufficient on its face and the proceedings were not void ab initio just because the petition alleged no past mistreatment of the infant children. The doctrine of anticipatory neglect alone was a sufficient basis for the court's jurisdiction over the children.
Affirmed.
NOTES
[1] Respondent-father Bryce Gazella voluntarily released his rights to the two minor children under the Michigan Adoption Code, MCL 710.21 et seq., on December 1, 2003, and is not a party to this appeal.
[2] In re Adrianson, 105 Mich.App. 300, 306 N.W.2d 487 (1981).
[3] In re Dittrick, 80 Mich.App. 219, 263 N.W.2d 37 (1977); In re LaFlure, 48 Mich.App. 377, 210 N.W.2d 482 (1973).
[4] It is this order that would have been appealable as a matter of right had respondent wished to challenge the court's finding that the children came within the jurisdiction of the court.
[5] MCR 3.977(J); In re Trejo, 462 Mich. 341, 356-357, 612 N.W.2d 407 (2000).
[6] In re Miller, 433 Mich. 331, 337, 445 N.W.2d 161 (1989).
[7] See also MCR 3.977(E)(3), (F)(1), (G)(3).
[8] In re Adrianson, supra at 319, 306 N.W.2d 487.
[9] MCL 712A.19b(5); MCR 3.977(E), (F)(1), and (G)(3).
[10] Marshall Lasser, PC v. George, 252 Mich.App. 104, 109, 651 N.W.2d 158 (2002).
[11] Yee v. Shiawassee Co. Bd. of Comm'rs, 251 Mich.App. 379, 406, 651 N.W.2d 756 (2002).
[12] In re Powers, 208 Mich.App. 582, 587-588, 528 N.W.2d 799 (1995), citing In re Hatcher, 443 Mich. 426, 505 N.W.2d 834 (1993).
[13] In re Hatcher, 443 Mich. 426, 438-439, 505 N.W.2d 834 (1993). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1621686/ | 104 F.Supp. 1010 (1952)
CUMBERLAND PORTLAND CEMENT CO. et al.
v.
UNITED STATES.
No. 48905.
United States Court of Claims.
June 3, 1952.
*1011 Cecil Sims, Nashville, Tenn., (Bass, Berry & Sims, Nashville, Tenn., were on the briefs), for plaintiff.
J. A. Rees, Washington, D. C., with whom were Theron Lamar Caudle, Asst. Atty. Gen., and Ellis N. Slack, Acting Asst. Atty. Gen. (Andrew D. Sharpe, A. F. Prescott, and H. S. Fessenden, Washington, D. C., on the briefs), for defendant.
Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and HOWELL, Judges.
HOWELL, Judge.
This action is brought to recover an overpayment in income tax, excess profits tax, and declared value excess profits tax for 1943 in the amount of $22,514.14. The question presented is whether recovery of this overassessment and overpayment is barred by the failure of the taxpayer to file a formal claim for refund within three years from the time the tax return was filed or within two years from the time the tax was paid, under 26 U.S.C. § 322(b) (1), or whether the taxpayer filed a sufficient informal claim for refund within the statutory period.
The plaintiffs are the Cumberland Portland Cement Co., hereinafter referred to as the taxpayer, and its successor corporation, Cumberland Portland Cement Company, which came into existence in December 1946, by virtue of a merger of the Cumberland Portland Cement Co. and the Tennessee Portland Cement Corporation. On January 24, 1947, the Acting Internal Revenue Agent in Charge at Nashville, Tennessee, sent the taxpayer a statutory 90-day notice containing a statement of deficiencies in tax for the years 1941 and 1942, totalling $25,629.08, and of over-assessments in tax for the years 1941 to 1944, inclusive, totalling $40,057.25 (Finding 3). This letter informed the taxpayer of its right to file a petition in the Tax Court of the United States within 90 days for a redetermination of the deficiencies, and requested that if the taxpayer did not desire to file such a petition, it execute the enclosed Form 874 entitled "Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment."[1] The letter also contained the following *1012 statement regarding the repayment of the overassessments:
"The overassessments for the taxable years 1943 and 1944 will be made the subject of certificates of overassessment which will reach you in due course through the office of the collector of internal revenue and will be applied by that official in accordance with Section 322 of the Internal Revenue Code, provided that you fully protect yourself against the running of the statute of limitations by filing with the Collector of Internal Revenue, Nashville, Tennessee, claims for refund on Form 843, copies of which are enclosed, the basis of each of which may be as set forth herein. A separate claim should be filed for each taxable year."
On March 13, 1947, the taxpayer executed the Waiver (Form 874) and returned it to the Revenue Agent in Charge at Nashville, Tennessee, with the following letter of transmittal:
"This acknowledges receipt of your letter, dated January 24, 1947, with which you enclosed statements and reports covering the determination of our income tax liability for the years 1941-42-43-44.
"We have signed and herewith return Form 874, Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment.
"In view of the fact that the stock of Cumberland Portland Cement Company was acquired by Marquette Cement Manufacturing Company, Chicago, Illinois, in January, 1947, it is very desirable that a prompt settlement be made in this matter of over-assessment, and it is further desirable that the examination of the income tax return of this corporation for the year 1945 be reported and agreed upon promptly.
"We are herewith enclosing an unsigned copy of Form 1120 return of this Company for the year 1946, as filed, with the hope that same may be forwarded to your Examiner, Mr. Eastland, Chattanooga, Tennessee, for prompt examination. From this letter, you will realize that it is desirable that prompt action be taken in the final determination of the tax adjustments for years prior to 1946 and that an early examination of the 1946 return be made.
"We appreciate the cooperation which your Department has given us in the past and we assure you that we will be glad to work with you for an early and final determination of all tax liability of the old Cumberland Portland Cement Company through December 31, 1946."
The Commissioner of Internal Revenue thereafter made assessments against the taxpayer for the deficiencies in income tax for the years 1941 and 1942, with interest thereon, and applied as a credit against these amounts the determined overassessments for 1941, 1942, and 1944, leaving a net deficiency of $22,337.62. This sum was paid by the taxpayer during July 1947, pursuant to a notice and demand for payment from the Collector of Internal Revenue. Following the payment of this net deficiency, the counsel for the taxpayer on July 26, 1947, wrote to the Commissioner requesting information as to why it had not received credit on the deficiencies in the sum of $22,514.14, representing the overassessments for 1943. The Commissioner replied on September 9, 1947, and stated that the taxpayer had been put on notice by the 90-day letter of January 24, 1947, to protect its rights against the running of the Statute of Limitations by filing claims for refund for 1943, that the Form 874 could not be construed as a claim for refund, and that since it had failed to file a claim for refund in compliance with Section 322 of the Internal Revenue Code, there was no *1013 basis upon which to predicate the allowance of the proposed overassessments.
On November 7, 1947, the taxpayer and its successor corporation attempted to perfect their claim by filing formal claims for refund on Form 843 for 1943 in the amount of $22,514.14, consisting of an overassessment in income tax of $14,882.28, an overassessment in declared value excess profits tax of $5,584.84, and an overassessment in excess profits tax of $2,047.02. These claims were disallowed in full on June 29, 1948, by the Commissioner on the ground that they had not been filed within the period of time provided by Section 322 (b) of the Internal Revenue Code.
It is plaintiff's position that the execution and filing of the Waiver on March 13, 1947, accompanied by the letter quoted in Finding 6, which was within the statutory period of limitations, constituted the filing of an informal claim for refund which was perfected after the running of the statutory period by the filing on November 7, 1947, of formal claims for refund on Form 843 on behalf of both plaintiffs. Plaintiffs insist that the Waiver (Form 874) and letter sufficed to put the Government on notice that the taxpayer claimed and expected refund of the overassessment for 1943.
Defendant contends that the Waiver cannot be construed to be an informal claim for refund and consequently, that no claim for refund, formal or informal, was filed within the period prescribed by Section 322 (b) (1) of the Internal Revenue Code, i. e., by March 15, 1947.
We fully agree with defendant's argument that Form 874, standing alone, cannot be regarded as constituting an informal claim for refund. The Form itself precludes any inference to this effect as it bore upon its face a statement, set forth in Footnote 1, that execution of the Waiver did not extend the statutory period of limitation for refunds. True Bros. Inc., v. United States, D.C., 93 F.Supp. 107, 111. Even assuming that the Waiver was sufficient to constitute an informal claim for refund, it was rejected as such by the Commissioner prior to the filing of the formal claim for refund, and consequently it could not thereafter be perfected as the Statute of Limitations had run. Newport Industries, Inc., v. United States, 60 F. Supp. 229, 104 Ct.Cl. 38, 44; Cuban-American Sugar Co., Inc., v. United States, 27 F.Supp 307, 89 Ct.Cl. 215, 224; Sugar Land Railway Co. v. United States, 48 F.2d 973, 71 Ct.Cl. 628, 635; cf. United States v. Memphis Cotton Oil Co., 288 U.S. 62, 71, 53 S.Ct. 278, 77 L.Ed. 619.
However, we are of the opinion that the March 13, 1947, letter of transmittal accompanying the executed Waiver was, when viewed in the surrounding circumstances, a sufficient informal claim for refund filed within the prescribed statutory period for presenting such claims. Section 322(b) (1) of the Internal Revenue Code provides as follows:
"Unless a claim for credit or refund is filed by the taxpayer within three years from the time the return was filed by the taxpayer or within two years from the time the tax was paid, no credit or refund shall be allowed or made after the expiration of whichever of such periods expires the later. * * *"
The purpose of the claim for refund required by Section 322 is to put the Commissioner on notice that the taxpayer believes his taxes have been erroneously assessed, and that he asked for the return or credit of the amount of overassessment. Newport Industries, Inv., v. United States, supra; Wrightsman Petroleum Co. v. United States, 35 F.Supp. 86, 92 Ct.Cl. 217, 236. In determining whether a claim for refund is sufficient to satisfy these requirements, it must be "judged by the substance as related to the facts rather than the form in which it is stated." Higginson v. United States, 81 F.Supp. 254, 268, 113 Ct.Cl. 131, 158.
In applying these guiding principles to the instant case, it becomes necessary to read the taxpayer's letter of March 13, 1947, in the light of the particular circumstances which had transpired previously, which were then well known to the Commissioner, *1014 or his authorized agent who had issued the 90-day notice, and which were referred to in the letter. The taxpayer in this letter first acknowledged receipt of the 90-day letter written on January 24, 1947, and then stated that the signed Waiver was being returned therewith. The taxpayer then proceeded to say that "* * * it is very desirable that a prompt settlement be made in this matter of overassessment * * *." This, we believe, was ample present notice to the Commissioner that the taxpayer was requesting a credit against the shown deficiencies of the amount of the overassessment. This situation is not like one where a taxpayer writes to the Commissioner notifying him for the first time of the existence of an overpayment. In such a situation the substance and basis of the claim must be clearly defined. Cf. United States v. Felt & Tarrant Co., 283 U. S. 269, 51 S.Ct. 376, 75 L.Ed. 1025; Wright & Graham Co. v. United States, 50 F.2d 274, 72 Ct.Cl. 315. Here, however, the Commissioner had notified the taxpayer of the existence of the overassessment and was thus well aware, and so were the plaintiffs, of the basis underlying it. Consequently, there was no need for the taxpayer to make any detailed or formal reference in its letter to the grounds for the refund claim. The intention of plaintiff to ask for a credit of the overassessments is, it seems to us, clear.
Furthermore, the taxpayer's execution and return of the Waiver, and the Bureau's acceptance of it, clearly show that both sides in this instance treated the statement of the deficiencies and overassessments set forth both in the 90-day notice of January 24, 1947, and in the Waiver, as constituting a final determination of these sums, although under the provisions of Section 272(f) of the Internal Revenue Code, 26 U.S.C. § 272(f),[2] the Commissioner could have thereafter assessed further deficiencies. Cf. Gilbert B. Goff, 18 B.T.A. 283, 288. The taxpayer, in waiving his right to appeal to the Tax Court and in executing Form 874 which contained as a part of its title the statement "Acceptance of Overassessment" was entitled, we believe, to regard the figures as being final for the purposes of his refund, and was justified in thereafter asserting his right to the refund or credit in an informal manner. Viewing the substance of this situation, and the surrounding facts, we believe the conclusion is inescapable that the taxpayer in its letter of transmittal made a demand for the return of or credit for the overassessment for 1943, based upon the determination of over-assessments as set forth in the 90-day notice, and upon its acceptance thereof, which demand was sufficient to put the Commissioner on notice of its claim. Thus we conclude that the taxpayer had on file an informal claim for refund or credit prior to the running of the Statute of Limitations for the taxable year 1943 on March 15, 1947.
Authority for treating the taxpayer's letter of transmittal as an informal refund claim is found in Bonwit Teller & Co. v. United States, 283 U.S. 258, 51 S.Ct. 395, 75 L.Ed. 1018, reversing, 39 F.2d 730, 69 Ct.Cl. 638, where the Supreme Court concluded that the taxpayer's waiver and the letter transmitting it, together with what went before, amounted to the filing of a claim within the meaning of the statute. The main distinction between the cases lies in the fact that in the Bonwit Teller case the Commissioner himself treated the taxpayer's letter as an informal claim. In emphasizing this fact, the Supreme Court pointed out that the question was to be distinguished from one where the Commissioner had ruled that what was done did not constitute the filing of a claim. However, *1015 in the instant case it is important to note that the Commissioner made no ruling as to the sufficiency of the letter of transmittal as an informal claim for refund.
In view of the fact that the Commissioner did not reject the informal claim for refund contained in the letter of March 13, 1947, the taxpayer could perfect the informal claim by the filing of a formal claim for refund. The Supreme Court and this court have held on numerous occasions that a claim for refund may be perfected prior to its final rejection by the Commissioner irrespective of the running of a limitation in the interval. United States v. Kales, 314 U.S. 186, 62 S.Ct. 214, 86 L.Ed. 132; United States v. Factors & Finance Co., 288 U.S. 89, 53 S.Ct. 287, 77 L.Ed. 633; United States v. Memphis Cotton Oil Co., supra; Jones v. United States, 5 F.Supp. 146, 78 Ct.Cl. 549, certiorari denied, 293 U.S. 566, 55 S.Ct. 76, 79 L.Ed. 665. In the Jones case we held, 5 F.Supp. at page 150, 78 Ct.Cl. at page 557, as follows:
"The informal claim not having been rejected by the Commissioner of Internal Revenue prior to the filing of the formal claim of March 22, 1927, was amended and perfected by that claim, notwithstanding the fact the statute of limitations had run on the filing of refund claims for the year 1917. [Cases cited.] The defects of the informal claim were cured by the amendment and the two claims became merged into a single and indivisible claim, `the new indissolubly welded into the structure of the old.' United States v. Memphis Cotton Oil Co., supra."
As this holding is equally pertinent to and controlling of the instant case, we conclude that the taxpayer properly perfected its informal claim for refund despite the running of limitations when, on November 7, 1947, it filed the formal refund claim on Form 843.
Plaintiffs have presented a number of other contentions which we need not consider in view of our conclusions set forth above. Plaintiffs are entitled to recover $22,514.14, with interest thereon according to law, except for the period from November 23, 1951, to February 4, 1952, inclusive, during which plaintiffs waived interest.
It is so ordered.
MADDEN and LITTLETON, Judges, concur.
JONES, Chief Judge and WHITAKER, Judge (concurring).
An equitable conclusion has been reached. If this is not the law, it ought to be.
NOTES
[1] The following notation appeared on the face of the Form 874:
Note. The execution and filing of this waiver at the address shown in the accompanying letter will expedite the adjustment of your tax liability as indicated above. It is not, however, a final closing agreement under section 3760 of the Internal Revenue Code, and does not, therefore, preclude the assertion of a further deficiency in the manner provided by law should it subsequently be determined that additional tax is due, nor does it extend the statutory period of limitation for refund, assessment, or collection of the tax.
[2] Section 272(f) provides in pertinent part, as follows:
"If the Commissioner has mailed to the taxpayer notice of a deficiency as provided in subsection (a) of this section, and the taxpayer files a petition with the Tax Court within the time prescribed in such subsection, the Commissioner shall have no right to determine any additional deficiency in respect of the same taxable year, except in the case of fraud, and except as provided in subsection (e) of this section, relating to assertion of greater deficiencies before the Tax Court, or in section 273(c), relating to the making of jeopardy assessments. * * *" | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1690928/ | 752 So.2d 470 (1999)
Robert M. BAILEY, Appellant,
v.
Richard WORTON d/b/a Worton Asphalt & Paving, Appellee.
No. 1998-CA-01575-COA.
Court of Appeals of Mississippi.
December 7, 1999.
Rehearing Denied February 8, 2000.
*472 James E. Woods, Attorney for Appellant.
Christian T. Goeldner, Southaven, Gregory C. Morton, Olive Branch, Attorneys for Appellee.
BEFORE SOUTHWICK, P.J., LEE, AND PAYNE, JJ.
LEE, J., for the Court:
¶ 1. The Chancery Court of DeSoto County found that a construction lien filed pursuant to Miss.Code Ann. § 85-7-131 by Richard Worton d/b/a/ Worton Asphalt & Paving, the appellee, was enforceable against Robert M. Bailey, the appellant and true owner of the subject property, having determined that there was sufficient evidence to establish that the general contractor, Ray and Associates, was an implied agent acting within the "apparent authority" granted by Bailey, in contracting with Worton. Having found no error, we affirm the judgment of the lower court.
FACTS
¶ 2. Robert M. Bailey, the appellant, and his partner were the developers of the College Hills Subdivision in Olive Branch where Worton Asphalt & Paving had installed a driveway on a lot the title of which is in the name of the appellant, Bailey. Bailey, in his effort to develop the area in the back portion of the subdivision where the subject lot is located, made an agreement with Billy and Sandra Ray d/b/a Ray & Associates, as builders and *473 realtors, granting permission to them to build a house on the lot. The Rays were free to build the house as they wished, subject to the architectural approval consistent with the covenants of the subdivision. Ray was to secure a purchaser for the house and would pay Bailey for the lot when the house sold.
¶ 3. Bailey testified that he signed a note from the Bank of Tunica and loaned Ray the money on the lot for the house. Ray began construction and advertised the house for sale. The ad represented Ray & Associates as the sellers and real estate agents. The Rays later entered into a contract for the construction and sale of the house with Joe and Wendy Hill. Ms. Hill testified that she did not know at that time that Bailey was the owner of the lot. The contract with the Hills provided that the Hills would provide the labor for a portion of the construction of the house. Construction proceeded; however, the Rays developed financial problems and did not pay Worton Asphalt & Paving for the paving of the driveway of the house.
¶ 4. Ms. Hill testified that the asphalt work for the driveway was ordered by the Rays. Hill stated that she was present when Worton Asphalt arrived at the lot to pave the driveway. However, Worton Asphalt was prepared to leave the construction site without performing the work since neither of the Rays was present to sign the contract for $2,900. Hill managed to contact Sandra Ray by phone while Worton Asphalt was still at the site, and Ray authorized Worton to do the work. Billy Ray arrived at the site of the construction shortly thereafter, and the driveway was then paved. Bailey was not aware that the drive had been paved until several days later when he was driving through the subdivision. He stated that he was no more involved in the construction or progress of this house than he was with any other house in the subdivision, and his involvement was limited to getting paid for the lot when the house was sold.
¶ 5. Worton himself did not testify but his foreman, Mr. Collins, did. No testimony was offered regarding Bailey, and there was nothing to indicate that Worton relied on the Rays as agents of Bailey or had any knowledge that they were agents of Bailey. Hill was unequivocal in her testimony that Bailey was not involved with the negotiation and execution of the Hill contract with the Rays for the purchase of the house and that she did not even know of Bailey at the time that the contract for the house was signed. Bailey stated in his testimony that he met Ms. Hill for the first time when she stopped him in the road one day as he was driving through the subdivision. Hill knew who Bailey was because Sandra Ray made frequent references to him and had spoken with him on her speaker phone from her office in Hill's presence. Hill also testified that Ray periodically notified Bailey of the progress of the construction of the house. At the time that Hill stopped Bailey as he was driving, she expressed her problems to him regarding the Rays and told Bailey that she was prepared to hire an attorney. As a result of this conversation, Bailey said that he called Sandra Ray and asked her to get in touch with the Hills to work out their problem. Bailey also testified that he did not tell Hill that he was the actual owner of the lot at that time because he did not realize that he was. He indicated that in the past such agreements for construction had been prompted by a conveyance of the lot through a second mortgage. He testified that the house was Sandra's and that he "had even forgotten about the title being in my name until they brought it up."
¶ 6. Worton Asphalt & Paving filed a construction lien pursuant to Miss.Code Ann. § 85-7-131 (1972) for $2,900 for the driveway and sought enforcement against Bailey. As to the claim of lien, Miss.Code Ann. § 85-7-135 (1972) reads as follows: "The lien declared in Section 85-7-131 shall exist only in favor of the person employed, or with whom the contract is made to perform such labor or furnish *474 such materials or render such architectural service, and his assigns, and when the contract or employment is made by the owner, or by his agent, representative, guardian or tenant authorized, either expressly or impliedly, by the owner."
¶ 7. The Chancery Court of DeSoto County, having determined that there was sufficient evidence to establish an implied agency relationship between the general contractor with whom the appellee contracted and Bailey, found the lien to be enforceable against Bailey. Bailey appeals, claiming that the Rays' agreement with Worton does not bind him.
ISSUES
I. IS RAY AN IMPLIED AGENT OF BAILEY?
¶ 8. An agent is one who stands in the shoes of his principal; he is his principal's alter ego. An agent is one who acts for or in the place of another by authority from him; one who undertakes to transact some business or manage some affairs for another by his authority. He is a substitute, a deputy, appointed by the principal, with power to do the things which the principal may or can do. 2 C.J.S. Agency § 1 c (1936). The most characteristic feature of an agent's employment is that he is employed primarily to bring about business relations between his principal and third persons, and this power is perhaps the most distinctive mark of the agent as contrasted with others, not agents, who act in representative capacities. First Jackson Securities Corp. v. B.F. Goodrich Company, 253 Miss. 519, 532-33, 176 So.2d 272, 278 (1965).
¶ 9. The applicable standard of review will not permit that the finding of the trier of fact be disturbed on appeal if there is substantial supporting evidence even if under the same proof we might have found otherwise. The finding of fact may not be set aside unless manifestly wrong. Dungan v. Dick Moore, Inc., 463 So.2d 1094, 1100 (Miss.1985); Cotton v. McConnell, 435 So.2d 683, 685 (Miss.1983). "Findings of fact made by a chancellor which are supported by credible evidence, may not be set aside on appeal." Allgood v. Allgood, 473 So.2d 416, 421 (Miss.1985).
¶ 10. In applying this definition of an agent to the facts as presented by Bailey himself describing the relationship established between him and the Rays, it is beyond dispute that the finding of the lower court that the Rays were implied agents of Bailey is supported by the credible evidence. Bailey's testimony in essence was that he gave Sandra Ray unconditional authority to build the house on the lot. He stated, "Really, I had no involvement at all. This was Sandra's house. I had even forgotten about the title being in my name until they brought it up. It was her house to sell. If she made money on it, that's fine. All I was doing was selling the lot." Bailey's objective was to sell the lot, and he had apparently arrived at the conclusion that the lot was more likely to sell with a house built on it than simply standing on its own. He therefore gave Ray the authority to build a house on his lot, which only he, as record title holder, had the authority to do. The fact that he had forgotten that the title to the lot was in his name could be construed as evidence pointing to the degree of authority with which he had endowed Sandra Ray; that is, he had delegated ultimate authority, either intentionally or through his own negligence, to her for the construction of the house, subject to the covenants and restrictions of the College Hills Subdivision. There is no question that the evidence was substantial and credible to support a finding that Ray became Bailey's agent, in accordance with the definition enunciated above.
II. DID THE RAYS HAVE THE APPARENT AUTHORITY TO BIND BAILEY ON THEIR CONTRACT WITH WORTON?
¶ 11. The chancellor, in his opinion, found that the Rays had the apparent authority from Bailey, in their dealing with *475 Worton, to bind Bailey. As his authority the chancellor cited Eaton v. Porter, 645 So.2d 1323, 1325 (Miss.1994): "This Court has defined apparent authority and found that the extent to which it binds the principal is predicated upon the perceptions of the third party in his dealings with the agent: Apparent authority exists when a reasonably prudent person, having knowledge of the nature and the usages of the business involved, would be justified in supposing, based on the character of the duties entrusted to the agent, that the agent has the power he is assumed to have."
¶ 12. Whether an agent has the apparent authority to bind the principal is a question of fact to be determined by the chancellor, or if in circuit court, by the jury. Alexander v. Tri-County Cooperative (AAL), 609 So.2d 401, 403 (Miss.1992). The fact finder must determine whether there is sufficient evidence to meet the three-pronged test for recovery under the theory of apparent authority. Andrew Jackson Life Insurance Co. v. Williams, 566 So.2d 1172, 1181 (Miss.1990). There are three essential elements to apparent authority: (1) acts or conduct of the principal indicating the agent's authority; (2) reliance thereon by a third person, and (3) a change of position by the third person to his detriment. All must concur to create such authority. Id.; Gulf Guaranty Life v. Middleton, 361 So.2d 1377, 1383 (Miss. 1978); Steen v. Andrews, 223 Miss. 694, 697-98, 78 So.2d 881, 883 (1955); Eaton, 645 So.2d at 1325. Once made, "[t]his finding will not be disturbed unless clearly contrary to the overwhelming weight of the credible evidence when viewed in the light most favorable to the verdict." Eaton at 1325-26 (quoting Christian Methodist Episcopal Church v. S & S Construction Co., Inc., 615 So.2d 568, 573-74 (Miss. 1993); Andrew Jackson, 566 So.2d at 1181.)
¶ 13. Looking, as we are required, at the evidence in a light most favorable to the chancery court's findings in favor of Worton, there is ample evidence to support its conclusion that Sandra Ray was clothed with the apparent authority to bind Bailey. Considering the first prong of the test, we look at the acts or conduct of Bailey, the principal, which indicate the agent's authority. The authority of an agent to bind his principal rests upon the powers conferred upon him by the principal. Gulfport & Mississippi Coast Traction Co. v. Faulk, 118 Miss. 894, 901, 80 So. 340, 341 (1919). Bailey's testimony itself, standing on its own, indicates the infinite authority he bestowed upon Sandra Ray. In an apparent effort to detach himself from Ray, he stated that he had no involvement in the house, that it was "Sandra's house." This was corroborated to a substantial degree by Wendy Hill's testimony that Bailey told her that the Rays were responsible for ordering all of the materials for the house as well as the testimony revealing that Bailey was not involved in any way with the Rays contract with the Hills to purchase the house. Bailey was also not involved in the contract with Worton Paving for the driveway. As stated in the discussion of the first issue, Bailey had delegated ultimate authority to Sandra Ray for the construction of the house and his lack of involvement is conduct demonstrating this.
¶ 14. The second prong of the test requires reasonable reliance upon the acts and conduct of the principal by a third person as an essential element of apparent authority. Eaton, 645 So.2d at 1325. This application to the instant case would necessitate a showing that Worton reasonably relied upon the acts or conduct of Bailey indicating to Worton that Ray had the apparent authority to act for Bailey as the owner of the property. Bailey argues that since Worton was unaware of Bailey's existence that he could not have relied on him. We disagree. Bailey's lack of presence does not absolve him of accountability but rather is indicative of his status as an undisclosed principal. Though an agent is personally answerable if at the time of *476 making the contract in his principal's behalf he failed to disclose the fact of his agency, the other party to the contract may proceed against the agent or against the principal. Estes v. Jones, 119 Miss. 142, 146-47, 80 So. 526, 528 (1919); Kelly v. Guess, 157 Miss. 157, 161-62, 127 So. 274, 276 (1929). Bailey's disappearing act is the explanation for Worton's reliance on Ray's apparent authority as the owner of the lot.
¶ 15. The test finally requires that a third person change his position to his detriment in reliance on the apparent authority of the agent. The facts indicate that Worton was prudent in his business practices. The testimony of Wendy Hill disclosed that when Worton Paving came to install the driveway that it would not proceed with its work unless authority was given by the Rays, indicating that Worton sought the party with apparent authority to bind on his contract for the driveway. Had Bailey manifested himself as the true property owner, Worton would have known that Ray was not the true owner of the lot. It is not unreasonable to conclude that Worton would have thus sought to bind Bailey as the true owner of the lot. Not being aware of this, Worton relied on Ray to his detriment.
¶ 16. Looking at the facts in a light most favorable to the decision of the court below, it is not unreasonable to conclude that Worton relied on Ray and no one else because of her apparent authority. So far as third persons are concerned, the apparent powers of an agent are his real powers. 2 C.J.S. Agency §§ 95, 96. The power of an agent to bind his principal is not limited to the authority actually conferred upon the agent, but the principal is bound if the conduct of the principal is such that persons of reasonable prudence, ordinarily familiar with business practices, dealing with the agent might rightfully believe the agent to have the power he assumes to have. The agent's authority as to those with whom he deals is what it reasonably appears to be. McPherson v. McLendon, 221 So.2d 75, 78 (Miss.1969); Steen v. Andrews, 223 Miss. 694, 697, 78 So.2d 881, 883 (1955). Where the relationship of principal and agent exists, if the principal places his agent in a position where he appears, with reasonable certainty, to be acting for the principal, and his acts are within the apparent scope of his authority, such acts bind the principal. On principles of estoppel, a principal, having clothed an agent with semblance of authority, will not be permitted, after others have been led to act in reliance on appearances thus produced, to deny, to the prejudice of such others, what he has theretofore tacitly affirmed as to the agent's powers. General Contract Corp. v. Leggett, 224 Miss. 262, 269, 79 So.2d 843, 844 (1955). Where an agent, with the knowledge and consent of his principal, holds himself out as having certain powers and transacts business with a third person, the principal is estopped from denying the authority of the agent. Germania Life Ins. Co. v. Bouldin, 100 Miss. 660, 678, 56 So. 609, 613 (1911).
CONCLUSION
¶ 17. It is our opinion that the evidence was sufficient to show that the Rays were implied agents of Bailey vested with the apparent authority to bind Bailey on the construction lien filed by Worton Asphalt & Paving pursuant to Miss.Code Ann. § 85-7-131 (1972). Under Mississippi agency law, a principal is bound by the actions of its agent within the scope of that agent's real or apparent authority. Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1180 (Miss.1990); Ford v. Lamar Life Ins. Co., 513 So.2d 880, 888 (Miss.1987). "If an agent acted within his apparent authority, the issue of actual authority need not be reached." Andrew Jackson, 566 So.2d at 1180. Finding no error, we affirm the judgment of the chancellor.
¶ 18. THE JUDGMENT OF THE DESOTO COUNTY CHANCERY COURT IS AFFIRMED. STATUTORY DAMAGES AND INTEREST ARE AWARDED *477 TO THE APPELLEE. COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
McMILLIN, C.J., KING AND SOUTHWICK, P.JJ., BRIDGES, DIAZ, PAYNE, AND THOMAS, JJ., CONCUR. IRVING, J., CONCURS IN RESULT ONLY. MOORE, J., NOT PARTICIPATING. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1919392/ | 660 So.2d 182 (1995)
Dr. Arnold KILPATRICK, Plaintiff-Appellee,
v.
Travis H. KILPATRICK, Defendant-Appellant.
No. 27,241-CA.
Court of Appeal of Louisiana, Second Circuit.
August 23, 1995.
Rehearing Denied September 21, 1995.
*183 Kneipp & Hastings by Donald L. Kneipp, Monroe, for appellant.
Bobby L. Culpepper, Jonesboro, for appellee.
Before SEXTON, NORRIS and WILLIAMS, JJ.
NORRIS, Judge.
Travis Kilpatrick appeals a trial court judgment awarding $47,667 under an oral contract to his brother, Dr. Arnold Kilpatrick. For the following reasons, we reverse and render.
*184 Facts
The oral contract at issue stemmed from litigation expenses Arnold incurred as co-executor of their brother Willard's estate after Willard's death in February 1977. Although Arnold alleged that litigation over Willard's succession was complex and expensive, the details are treated only tangentially in the instant record.[1] For purposes of this opinion, it is sufficient to say that after an adverse judgment in May 1980, which effectively denied Arnold, Travis and their niece, Lois Dennis, any share of Willard's estate, Arnold contends he phoned Travis to propose a plan to pursue the litigation. Arnold claims he told Travis, "I will finance it. If we lose I will finance our portion of it, but if we win I expect to be paid," and Travis agreed. According to Arnold, he also proposed this separately to Lois Dennis, the only other heir, and she agreed.
Arnold testified that in 1980 he borrowed a total of $170,000 from numerous banks to cover the costs of litigating the will contest. Arnold used the money to hire several attorneys for the Kilpatrick side; apparently Mrs. Willard Kilpatrick's brother, Harper Terrill, the other co-executor, hired separate counsel to protect the Terrill family's interests. Arnold testified that he formed K & K Executive Corporation solely to fund the expenses of litigation. He testified that most of the loans were made in the name of K & K Executive Corporation; however, Arnold stated he paid the principal and interest (record also shows personal checks to attorneys) from his personal checking account, and could not recall whether K & K even had a checking account.
Kilpatrick and Terrill eventually obtained a final judgment recognizing both family's inheritance rights. In August 1984, the first succession disbursement was made, and each heir, including Arnold, received $139,000. In addition, Arnold received from the estate an executor's fee of $49,000, reimbursement for expert fees of $5,000 and $3,989.70, and the principal amount of his loans, $170,000. Arnold used this money to pay off the principal and accumulated interest on the loans. Soon thereafter, Sam Donald, who had been Willard's certified public accountant and now handled matters for his estate, prepared an expense sheet for Arnold showing the total amount he borrowed and paid in connection with the litigation (including reimbursements), and the share of interest allegedly owed by each Kilpatrick heir.[2] A few months later, Arnold, accompanied by his son, presented the expense sheet to Travis and his wife at their home. Mrs. Travis Kilpatrick testified this occurred on December 4, 1984. At this time, Travis denied owing Arnold any money.
Arnold listed the claim against Travis when he was forced to file for bankruptcy in 1986. According to Arnold, by this time his niece, Lois Dennis, had already paid him her pro rata share of the interest on the loans. Another disbursement of estate funds was made in December 1989. Arnold testified that after the proposed sale of certain succession property, Travis would have received about $320,000 total. Travis admitted he had not paid Arnold for any expenses connected with the will contest.
Arnold testified that he kept Travis informed of the case status at all times. Travis conceded that he was aware of the legal *185 proceedings involving his brother's estate (he made at least one court appearance and gave one deposition), but flatly denied ever agreeing to let Arnold advance the litigation expenses and to reimburse him one-third if they ultimately won. His wife claimed at trial that she listened to every one of Travis's phone conversations because of his trouble hearing, and never heard such an agreement. Travis also testified that had Arnold consulted him, he might have agreed to pay a reasonable amount; he did not, however, consider $47,667 reasonable.
In January 1992, Arnold made formal written demand through an attorney upon Travis. Finally, in May 1993 he filed this suit to collect from Travis one-third of the interest Arnold paid on the loans. Travis denied all allegations that an oral contract existed and filed an exception of prescription with his answer.
The trial court awarded Arnold $47,667, finding sufficient proof of an oral agreement. The court believed Arnold's testimony over Travis's as to the existence of the contract. It also considered, as evidence to support Arnold's claim, a copy of the expense sheet prepared by Sam Donald itemizing Arnold's payments to various attorneys and banks, and copies of some cancelled checks to banks purportedly for repayment of principal and interest on loans. The court concluded, "The defendant has benefitted financially from the litigation far in excess of its cost and now refuses to pay his share of the costs. This Court will not allow the defendant to escape a true and just indebtedness to the plaintiff." R.pp. 39-40. The court did not mention Travis's exception of prescription, thus implicitly rejecting it.
On appeal, Travis contends the trial court erred in finding a valid oral contract existed and sufficient proof of the amount owed, in denying his exception of prescription, in admitting Arnold's expense sheet into evidence without a proper foundation, and in allowing evidence of money borrowed by and allegedly due K & K Executive Corporation, a non-party.
Discussion
The party asserting an obligation must prove it by a preponderance of the evidence. La.C.C. art. 1831. An oral contract over $500 must be proved by at least one credible witness and other corroborating circumstances. La.C.C. art. 1846. The plaintiff may be the one credible witness. Samuels v. Firestone Tire & Rubber Co., 342 So.2d 661 (La.1977); Richard v. Comeaux, 626 So.2d 507 (La.App. 3d Cir.1993), writ denied, 93-2989 (1/28/94), 630 So.2d 800. "Other corroborating circumstances" need only be general in nature; independent proof of every detail of the agreement is not required. Samuels v. Firestone Tire & Rubber Co., supra; Miller v. Harvey, 408 So.2d 946 (La.App. 2d Cir.1981). This proof may not, however, result from the plaintiff's own actions. Woodard v. Felts, 573 So.2d 1312 (La.App. 2d Cir.1991) (forester's markings on trees not corroborating evidence of an oral agreement with the landowner to market timber); Wisinger v. Casten, 550 So.2d 685 (La.App. 2d Cir.1989) (electrician's new, higher bid proposal and its approval by insurance adjuster did not modify original bid proposal agreed to by restaurant owner); Hilliard v. Yarbrough, 488 So.2d 1038 (La. App. 2d Cir.1986) (sending a copy of the wedding reception bills to defendant not a corroborating circumstance). A trial court's factual findings, including its determination as to corroboration, are entitled to great weight and will not be reversed absent manifest or clear error. Samuels v. Firestone Tire & Rubber Co., supra; Rosell v. ESCO, 549 So.2d 840 (La.1989); Lee Eyster & Asso. Inc. v. Favor, 504 So.2d 580 (La.App. 4th Cir.), writ denied, 507 So.2d 232 (1987).
Arnold's testimony sufficed as the one credible witness. The sole issue is therefore whether he supplied the requisite "corroborating circumstances" required by C.C. art. 1846.
The trial court found that Sam Donald's accounting compilation and the copies of cancelled checks to various banks showing repayment of principal and interest corroborated Arnold's claim that a contract existed. Because Arnold produced no witness to the agreement, the only evidence that can possibly *186 serve to corroborate his testimony is exhibit P-1, the expense sheet, and in globo exhibit P-2, the documents which partially supported the expense sheet. For the following reasons, however, we find the evidence insufficient to corroborate the alleged oral contract.
First, the compilation resulted solely from Arnold's own actions; he not only directed Sam Arnold to prepare the accounting summary, but he admitted that he provided much of its content from memory alone. Thus, the compilation does not suffice as corroborating circumstances. Woodard v. Felts, supra. Second, although the documentation submitted is evidence that Arnold incurred a rather large personal debt to finance the will contest, it in no way corroborates that Travis agreed to reimburse Arnold for a portion of this debt. The mere fact that Arnold had an expense sheet prepared and presented it to Travis for payment does not prove an oral agreement for partial reimbursement. Hilliard v. Yarbrough, supra. On this record we are constrained to find that Arnold has produced nothing besides his own self-serving testimony to prove the oral agreement occurred.
As noted in Hilliard, proof of an oral agreement over $500 must meet the higher standard of including corroborating circumstances in addition to the plaintiff's testimony. Thus regardless of Arnold's credibility, he has failed to show corroboration of even a general nature in the instant case. Therefore we must find that the trial court was clearly wrong to conclude that Arnold met his burden of proving the existence of an oral contract under C.C. art. 1846. Hilliard v. Yarbrough, supra.
Nevertheless, we shall examine whether Arnold may be entitled to some type of quasi contractual remedy. La.C.C. art. 2294. Actions sounding in quasi contract are subject to the 10-year liberative prescription for personal actions. La.C.C. art. 3499; Minyard v. Curtis Products Inc., 251 La. 624, 205 So.2d 422 (1967); Taylor v. Smith, 619 So.2d 881 (La.App. 3d Cir.), writ denied, 625 So.2d 1038 (1993). Arnold's cause of action did not arise until he was compelled to discharge the obligation, or repay the loans, in 1984. Minyard, supra. The instant suit, filed in 1993, is timely.
Contrary to Travis's assertion that Arnold failed to plead an alternative equitable remedy in his petition, we find the petition supports a plea for recovery under quasi-contract. Arnold's petition contains a prayer for "all necessary orders and decrees and for just and equitable relief." In any event, because the facts alleged were sufficient to give Travis fair notice of the remedy sought, no special pleading was required. Kibbe v. Lege, 604 So.2d 1366 (La.App. 3d Cir.), writs denied, 606 So.2d 540, 541 (1992); Terral v. Bearden, 338 So.2d 141 (La.App.2d Cir.1976). Additionally, La.C.C.P. art. 862 gives the court authority to allow relief to which he is entitled "even if the party has not demanded such relief in his pleadings and the latter contained no prayer for general and equitable relief." See Kibbe, supra.
Arnold urges he is entitled to recover under the doctrine of unjust enrichment. The principal behind unjust enrichment is that the plaintiff suffered an economic detriment for which he should not be responsible, while the defendant received an economic benefit for which he has not paid. La.C.C. art. 2055; Belgard v. Collins, 628 So.2d 1254 (La.App. 3d Cir.1993); Harper v. Kennedy, 561 So.2d 830 (La.App. 2d Cir. 1990). To support an action for unjust enrichment, a plaintiff must show: (1) an enrichment; (2) an impoverishment; (3) a causal connection between the enrichment and the impoverishment; (4) an absence of justification or cause for the enrichment or impoverishment; and (5) no other remedy at law. Minyard, supra; Edmonston v. A-Second Mortgage Co. of Slidell, Inc., 289 So.2d 116 (La.1974).
The first three interrelated elements are satisfied. Travis received the economic benefit of Arnold's borrowing money to litigate the succession and ultimately winning for Travis a portion of the inheritance. Travis candidly admitted he did not reimburse Arnold directly for his efforts, without which he may well have received nothing. Clearly, the enrichment and impoverishment are causally related. However, we cannot apply *187 unjust enrichment because the impoverishment was preventable, and Arnold had another remedy at law.
Absence of justification or cause, in practical terms, means that "no legal cause justifies the enrichment (in the sense that no lawful contract or provision of law was intended to permit the enrichment or to prevent the impoverishment or to bar attack on the enrichment or the impoverishment)." "No other remedy at law results when no other legal remedy is practically available to the impoverished plaintiff by which the impoverishment might be or might reasonably have been avoided." Tate, The Louisiana Action for Unjustified Enrichment, 50 Tul. L.Rev. 883 (1976) and 51 Tul.L.Rev. 446 (1977) (emphasis added). Arnold claims that Travis was unjustly enriched by receiving the full amount of his inheritance while not contributing his full share toward the legal expenses incurred. Arnold, however, testified that he voluntarily chose to seek (and did in fact obtain) reimbursement from the estate for only the principal loan amount and not the interest he paid.[3] Nevertheless, the entire sum, including the interest, was properly chargeable to Willard's succession as expenses Arnold incurred as co-executor in litigating the will, providing those expenses were reasonable. La.C.C.P. arts. 3191, 3221, 3241; See Succession of Harvey, 616 So.2d 1281 (La.App. 4th Cir.1993); Atkins v. Roberts, 561 So.2d 837 (La.App. 2d Cir.1990); Succession of Crain, 468 So.2d 778 (La.App. 1st Cir.), writ denied, 472 So.2d 30 (1985). Arnold failed to take advantage of a readily available legal remedy specifically intended to prevent heirs from assuming personal liability for such expenses. Had he done so, Arnold could have avoided the resulting enrichment and impoverishment. Having failed to avail himself of this legal remedy, Arnold cannot now resort to unjust enrichment to rectify his error. See McPhearson v. Shell Oil Co., 584 So.2d 373 (La.App. 4th Cir.1991); Newt Brown, Contractor, Inc. v. Michael Builders, Inc., 569 So.2d 288 (La. App. 2d Cir.1990), writ denied, 572 So.2d 91 (1991).
Though not addressed by either party in brief, we have also considered the doctrine of negotiorum gestio as a possible form of recovery. This quasi-contact is formed when the gestor voluntarily undertakes to manage another's affairs. La.C.C. art. 2295 (emphasis added). The gestor must act for the other's benefit, not his own. Illinois Cent. Gulf R. Co. v. Deaton, Inc., 581 So.2d 714 (La.App. 4th Cir.1991). Arnold has neither alleged nor shown on this record that he voluntarily undertook to manage Travis's affairs. Kirkpatrick v. Young, 456 So.2d 622 (La.1984). Consequently, we must assume that, as co-executor, Arnold was merely fulfilling his legal duty to defend the validity of the will. Atkins v. Roberts, supra; Succession of Kite, 366 So.2d 602 (La.App. 3d Cir. 1978), writ denied, 369 So.2d 155 (1979); Succession of Bradford, 130 So.2d 702 (La.App. 2d Cir.1961). Management of another's affairs pursuant to a legal duty does not give rise to an action under negotiorum gestio. Comment, Management of The Affairs of Another, 36 Tulane L.Rev. 108 (1961). From this record, it also appears that Arnold pursued the litigation to protect his own succession rights, while incidentally conferring a benefit upon Lois and Travis as well; Arnold did not testify to any other motive. Thus, the principles of negotiorum gestio do not apply in the instant case.
Conclusion
For the foregoing reasons, the judgment of the trial court in favor of Arnold Kilpatrick and against Travis Kilpatrick is reversed. *188 Judgment is rendered dismissing Arnold Kilpatrick's claim. Costs of trial and appeal are assessed to Arnold Kilpatrick.
REVERSED AND RENDERED.
APPLICATION FOR REHEARING
Before MARVIN, SEXTON, NORRIS and WILLIAMS, JJ., and PRICE, J. Pro Tem.
Rehearing denied.
NOTES
[1] The facts are related in Succession of Kilpatrick, 422 So.2d 464 (La.App. 2d Cir.1982), writ denied 429 So.2d 126 (1983). While on his deathbed, Willard, who had amassed a large fortune, revoked a prior will which had named First National Bank of Shreveport as co-executor of the estate and trustee of a testamentary educational foundation. Willard's new will left his entire estate to his wife, Katherine, and named as co-executors Arnold and Katherine's brother, Harper Terrill. Katherine likewise executed a new will, revoking an earlier one which had left much of her property to FNB, and instead left it one-half to her own heirs and one-half to Willard's heirs. Litigation ensued, primarily in State court, between FNB and Katherine. There was also Federal litigation. See Travelers Ins. Co. v. First Nat'l Bank of Shreveport, 675 F.2d 633 (5th Cir.1982). Katherine died in March 1979. Arnold's legal efforts were directed primarily to prove the validity of Willard's second will.
[2] Because he had recovered the principal amount paid on the loans from the estate, Arnold sought from Lois and Travis only one-third of the interest he paid. Arnold admitted that he did not attempt to recover the interest from the estate.
[3] The following colloquy occurred:
Q. Did you at any time attempt to have the succession reimburse you this interest that you're now trying to seek from Travis Kilpatrick?
A. No, I did not.
Q. Is there a reason for that?
A. I didn't feel like that was part of the estate's part. I felt like it was our part, the Kilpatrick side of the estate's expenses.
Q. All right. So, you didn't consider it expense of the estate then to include the interest that you ... that would have accrued on those loans that you borrowed? Is that correct? Is that the reason you did not seek to get reimbursement from the succession?
A. I hadn't even thought about it from that standpoint. I thought it was owed by the Kilpatrick side.
R.p. 74. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2501102/ | 61 F.Supp.2d 1372 (1999)
Dawn M. MALONE, Plaintiff,
v.
The UNITED STATES of America, Defendant.
No. CV 498-082.
United States District Court, S.D. Georgia, Savannah Division.
August 27, 1999.
*1373 *1374 R. Daniel Price, Rincon, GA, for plaintiff.
Kenneth D. Crowder, Augusta, GA, for defendant.
ORDER
NANGLE, District Judge.
Before the Court is defendant's motion to dismiss or alternatively to grant summary judgment. For the reasons that follow, defendant's motions are granted.
Background
Plaintiff, a civilian, asserts a claim in negligence under the provisions of the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671 et seq. On August 20, 1995, plaintiff was raped, sodomized and beaten by Private E-2 Roderick R. Woods while Woods was supposed to be on restricted status. Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 6-10 (Doc. 19). Six weeks prior to this rape, Private Woods had raped and sodomized another soldier at Hunter Army Airfield. Woods' commanders had placed Woods on restriction pending court martial as a result of the first rape. Def's Mem.Supp.Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 5. Plaintiff contends that her attack was the direct and proximate result of the negligence of the United States of America through the United States Department of the Army and its agents for failing to properly confine Private E-2 Roderick R. Woods after charging him with the first rape. Plaintiff states that she was injured and has suffered permanent mental distress and psychological damage as a result of being raped and sodomized by Woods. Pl.'s Compl. at 6 (Doc. 1).
The First Rape
At the time of the first rape, Woods was assigned to the 24th Ordinance Company, 260th Quartermaster Battalion, located at Hunter Army Airfield in Savannah, Georgia. Private X[1] served in this same company and was quartered in the same barracks as Woods. In the early morning of July 2, 1995, Private X went to the first floor of the barracks to visit a friend, but found that her friend was not in his room. While in the hallway, Woods spoke with Private X and invited her to come into his room to watch television. Private X agreed to come in for a few minutes. Inside his room, Woods exposed himself to Private X and locked the door. In an ensuing struggle over the doorknob, *1375 Woods grabbed Private X and began to unclothe her. She screamed for help, but no one responded, presumably because many in the unit were away for the Fourth of July weekend. Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 2-3.
Because her screams and struggles were making Woods more violent, Private X quit screaming, fearing that Woods would hurt her further. Despite Private X's continued pleas, Woods repeatedly raped her and alternately anally and orally sodomized her. During the attack, Private X continued to struggle with Woods, hitting and scratching him. Private X was finally able to convince her attacker to allow her to leave the room. She immediately ran for help and notified the military police. Woods was subsequently charged with rape, forcible sodomy, assault consummated by a battery, and housebreaking. Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 3-5.
The Order for Restricted Status
After his arrest, Woods' commanding officers, Captain Scott Bodine (Woods' Company Commander), Lt. Colonel Stephen Passero (Woods' Battalion Commander), and Colonel Joel McGrady (Woods' Brigade Commander) conferred to determine the course of action to follow with Woods pending trial. The above commanders consulted with Captain Joseph Pixley, the trial counsel at Hunter and with Colonel Waldo Brooks, the Staff Judge Advocate. Def.'s Mem.Supp.Mot. Dismissal/Summ.J. at 2-3. The group decided against confining Woods pending trial and ordered Woods to be transferred to the Headquarters & Headquarters Company, 24th Corps Support Group ("HHC"), at Fort Stewart, Georgia, located forty miles away. Woods was ordered to be on restricted status, and Captain Wilson, Woods' new company commander, was given the responsibility to determine the nature of the restrictions to be imposed. Def.'s Mem.Supp.Mot. Dismissal/Summ.J. at 3-4.
Numerous factors were considered in making the decision to transfer Woods and to not imprison him before trial. An attempt was made to balance Woods' individual liberty interests with the interest of protecting the general public. Def.'s Mem.Supp.Mot. Dismissal/Summ.J. at 4. The commanders considered the circumstances of the rape, that Private X was an acquaintance and that the rape occurred in Woods' barracks room over a holiday weekend in close proximity to other soldiers. They also considered Woods' background, including any prior "AWOLs (Absent Without Leave), any flight attempts in this incident, and any known threats." Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. B, Decl. Joel L. McGrady at 2. The commanders determined that the circumstances did not support a belief that Woods constituted a danger to the community at large or that Woods was a flight risk.
The transfer was designed to protect Private X and three other witnesses who were involved in incidents of peeping to which Woods had confessed to criminal investigators, not because of a belief that Woods was a danger to the general population at Hunter.[2] Also, the relocation was designed to have a "sobering" effect on Woods' future behavior. Defendant also explains that the confinement facility used by Ft. Stewart is the Naval Brig in Charleston, South Carolina, well over a two-hour drive from Ft. Stewart. Because Woods' defense counsel was at Hunter, confinement would have necessarily increased *1376 his difficulty in assisting with Woods' defense. Def.'s Mem.Supp.Mot. Dismissal/Summ.J. at 4-6.
Wilson initially verbally ordered Woods to be restricted. On July 26, 1995, the day the charges were filed against Woods, Wilson issued a written order restricting Woods to the brigade area of the 24th Corps Support Groups and prohibiting him from going onto the grounds of Hunter Army Airfield. Woods was also told to request permission from Wilson or a First Sergeant of HHC should he desire to leave the confinement area. Colonel McGrady approved the terms of restriction after they were specifically set out by Captain Wilson. Enforcement was Captain Wilson's responsibility. Def.'s Mem.Supp. Mot. Dismissal/Summ.J., App. O, Wilson Dep. at 32; App. U, McGrady Dep. at 16.
At the time of Woods' attachment and restriction to Fort Stewart, Captain Wilson resided in Richmond Hill, a city located in a neighboring county. Wilson was on post for approximately 12-15 hours daily. The only person to whom Wilson communicated any information about Woods was First Sergeant John Ford. Wilson admits to having no knowledge of whether Ford lived on post or anywhere near Woods' barracks at the time. No other officers or soldiers with supervisory authority were informed of Woods' restricted status. Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. O, Wilson Dep. at 42-43; 52-53. While other officers in the unit lived on post, none lived in Woods' barracks or were informed of Woods' restriction including Staff Sergeant Shields.[3] The barracks NCO, a junior enlisted soldier, lived at the barracks but had no information on the nature of the charges against Woods or the specific terms of Woods' restriction. Pl.'s Resp. Def.'s Mot. Dismissal/Summ.J. at 2-3 (Doc. 22). The defendant states that Woods never violated the terms of his restrictive orders from July 4, 1995 to August 19, 1995. Plaintiff disputes defendant's claim, stating that defendant has no factual basis to make this assertion because no system of checks was established to enforce the terms of the restriction. Plaintiff states that because Woods was not required to report his whereabouts to anyone on a periodic basis, and no one but Wilson and Ford knew of the restriction, no real restraints on his liberty existed for much of every day. Pl.'s Resp. Def.'s Mot. Dismissal/Summ.J. at 11.
The Second Rape
On August 19, 1995, the day after Woods submitted a pre-trial offer to plead guilty to the rape of Private X, Woods left Fort Stewart with a fellow soldier and traveled the 40 miles to Hunter and went to the Taro Leaf NCO Club. Def.'s Mem.Supp. Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 6. Woods met and socialized with plaintiff at the club. Plaintiff rejected Woods' overtures for sex, and later tried to avoid him. When she exited the Club later that evening, Woods followed plaintiff to her car and got in the passenger seat while plaintiff was trying to leave. Plaintiff again refused Woods' requests for sex, and Woods began exposing himself. Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 6-7. After a brief conversation and struggle, Woods dragged plaintiff out of the vehicle and behind a nearby building and forcibly raped and sodomized her. During the attack, Woods violently struck plaintiff in the face with his fist in an attempt to keep her from screaming or attracting attention. Def.'s Mem.Supp. Mot. Dismissal/Summ.J., App. J, "Stip. of Fact, United States v. Woods" at 8-10. As a result of the violent and forcible rape and sodomy, plaintiff states she has suffered extreme depression and anxiety and that her psychological well-being has been permanently damaged. Pl.'s Compl. at 6.
*1377 After complying with the administrative notice provisions of the FTCA, plaintiff timely filed a suit against the United States. In her complaint, plaintiff alleges that her injuries are the sole and proximate result of the United States Department of the Army and its officers' and agents' negligent failure to carry out the direct order of military officials to restrict Woods to the unit area of the 24th Corps Support Group and negligent failure to take specific and direct action to ensure that its orders of pre-trial confinement and/or restriction were being carried out appropriately. Pl.'s Compl. at 6. She also claims that the Army and its agents were negligent in failing to remove a known and dangerous person from the possibility of having any contact with either other military personnel or the general public. Pl.'s Compl. at 3. Defendant asserts the following affirmative defenses precluding liability: the discretionary function exception to the FTCA; the assault and battery exception, failure to state a claim on the merits under the express provisions of the FTCA as allowable under Georgia law, and the non-justiciability of internal military decisions. Def.'s Mem.Supp.Mot. Dismissal/Summ.J. at 3-4.
Analysis
I. Summary Judgment Standard
Summary judgment serves to "pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial." Fed.R.Civ.P. 56 advisory committee's note, cited inMatsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). It is appropriate only when the pleadings, depositions, and affidavits submitted by the parties indicate no genuine issue of material fact and show that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). A court must view the evidence and any inferences that may be drawn from the evidence in the light most favorable to the non-moving party. See Mercantile Bank & Trust Co. v. Fidelity & Deposit Co., 750 F.2d 838, 841 (11th Cir.1985).
The party seeking summary judgment must first identify grounds demonstrating 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). Such a showing shifts to the non-moving party the burden to go beyond the pleadings and present affirmative evidence showing that a genuine issue of material fact exists. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Thompson v. Metropolitan Multi-List, Inc., 934 F.2d 1566, 1583 n. 16 (11th Cir.1991). "Factual disputes that are irrelevant or unnecessary will not be counted," United States v. Gilbert, 920 F.2d 878, 883 (11th Cir.1991) (citations omitted), and a mere scintilla of evidence supporting the non-moving party's position will not fulfill this burden. See Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir.1990).
II. The Federal Tort Claims Act
Plaintiff asserts her claims under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), and 2671 et seq. (hereinafter "FTCA"). Under the doctrine of sovereign immunity, the United States is exempt from suit unless it consents to be sued. Dalehite v. United States, 346 U.S. 15, 30, 73 S.Ct. 956, 97 L.Ed. 1427 (1953). The jurisdiction of federal courts is limited by the terms of such consent. FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). Subject to certain exceptions, "[t]he FTCA waives the United States government's sovereign immunity from suit in federal courts for the negligent actions of its employees." Ochran v. United States, 117 F.3d 495, 499 (11th Cir.1997). In order to effectuate this waiver, the United States employee must have been "acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred." Autery v. United States, 992 F.2d 1523, 1526 (11th Cir.1993) (citing 28 U.S.C. § 1346(b)). For *1378 the following reasons, the FTCA bars the claims set forth in this case.[4]
A. The Discretionary Function Exception
The United States' waiver of immunity under the FTCA is subject to certain exceptions. 28 U.S.C. § 2680. The discretionary function exception provides that the United States shall not be liable for "[a]ny claim ... based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused." 28 U.S.C. § 2680(a). If this exception applies, "the FTCA claim must be dismissed for lack of subject matter jurisdiction." Cohen v. United States, 151 F.3d 1338, 1340 (11th Cir.1998).
In United States v. Gaubert, 499 U.S. 315, 322, 111 S.Ct. 1267, 113 L.Ed.2d 335 (1991), "[t]he Supreme Court enunciated a two-part test for determining whether the discretionary function exception bars suit against the United States in a given case." Cohen, 151 F.3d at 1341. Initially, there must be a determination that the challenged conduct "`involve[s] an element of judgment or choice.'" Gaubert, 499 U.S. at 322, 111 S.Ct. 1267 (quoting Berkovitz v. United States, 486 U.S. 531, 536, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988)). No element of judgment or choice is involved "if a `federal statute, regulation, or policy specifically prescribes a course of action for an employee to follow,' because `the employee has no rightful option but to adhere to the directive.'" Id. (citation omitted).
If the first prong is satisfied, the court must then determine "`whether that judgment is of the kind that the discretionary function exception was designed to shield.'" Id. (citation omitted). In Gaubert, the Court explained that "the purpose of the exception is to `prevent judicial `second-guessing' of legislative and administrative decisions grounded in social, economic, and political policy through the medium of an action in tort.'" Id. at 323, 111 S.Ct. 1267 (quoting United States v. S.A. Empresa de Viacao Aerea Rio Grandense (Varig Airlines), 467 U.S. 797, 814, 104 S.Ct. 2755, 81 L.Ed.2d 660 (1984)). The proper focus is "on the nature of the actions taken and on whether they are susceptible to policy analysis," Gaubert, 499 U.S. at 325, 111 S.Ct. 1267, and not on "the subjective intent of the government employee or ... whether the employee actually weighed social, economic, and political policy considerations before acting." Ochran v. United States, 117 F.3d 495, 500 (11th Cir.1997).
1. The Decision to Restrict, Rather than to Confine
With regard to the first prong, the plaintiff asserts that the decision to restrict, rather than to confine Woods did not involve an element of judgment or choice. Plaintiff argues that "[t]he `Rules for Courts-Martial' (RCM), specifically RCM 305, set the standards to be applied when a decision was made between detention or restriction pending trial." Pl.'s Resp. Def.'s Mem. at 7-8. Thus, the plaintiff states, the decision made in this case was not discretionary because it involved the "day-to-day operational" implementation of these guidelines. Additionally, the plaintiff argues that the second prong is not satisfied because the decisions to restrict or confine "do not rise to the level of analyzing social, economic or political policy, nor do they involve questions of public policy." Pl.'s Resp. Def.'s Mem. at 8.
The plaintiff's argument regarding the decision to confine fails for two reasons. First, contrary to the plaintiff's argument, *1379 the military commanders in this case were not subject to a mandatory regulation when deciding to confine or restrict. As the Eleventh Circuit explained in Autery, "[t]he relevant inquiry is whether controlling statutes, regulations and administrative policies mandated" the challenged conduct. Autery, 992 F.2d at 1528. Discretion can exist even if the officials must abide by a general rule. Cohen, 151 F.3d at 1342 ("[E]ven though a statute or regulation imposes a general duty on a government agency, the discretionary function exception may still apply if the agency retains sufficient discretion in fulfilling that duty."); see also, Ochran, 117 F.3d at 500 (same).
In Ochran, the plaintiff argued that the Attorney General Guidelines "imposed a mandatory course of action." Ochran, 117 F.3d at 500. The Eleventh Circuit rejected this argument, holding that "even though the Guidelines require the AUSA to arrange for the reasonable protection of a victim who is threatened, they did not specify how this protection is to be provided." The court further explained that "the use of the word `shall' in describing the responsibilities of the AUSA does not necessarily mean that the Guidelines left no room for the AUSA to exercise judgment or choice." Id.
In the instant case, the military commanders relied on the guidelines set forth in RCM 305(d) when determining whether to restrict or confine Woods.[5] These guidelines set forth the factors to be considered when determining "when a person may be confined." RCM 305(d) (emphasis added). No mandatory directive existed that the commanders were compelled to follow. Compare Phillips v. United States, 956 F.2d 1071, 1076 (11th Cir.1992) ("mandatory safety obligations").
The defendant has established that the commanders generally followed the 305(d) & (h) guidelines by consulting with the Staff Judge Advocate, Colonel Brooks and Captain Pixley, trial counsel at Hunter, before deciding not to confine Brooks. Further, the defendant has shown that the commanders weighed the potential threat to the public at large and the threat of flight against Woods' individual liberties before determining that restriction was a better option. Notably, there is also evidence that both McGrady and Passero had initially wanted to confine Woods and were persuaded by Captain Pixley and Colonel Brooks that there was not enough evidence to order Woods' confinement. See Def.'s Mem.Supp.Mot. Dismissal/Summ. J., App. A, Decl. Stephen P. Passero; App. B, Decl. Joel L. McGrady. Accordingly, the defendant has established that the decision not to confine Woods involved an element of judgment or choice by Woods' commanding officers.
Since the defendant has satisfied the first prong of the Gaubert test, the Court must determine whether this type of decision is one that the discretionary function exception was designed to shield. In order to make this determination, the Court must find that the decision was "susceptible to policy analysis." Gaubert, 499 U.S. at 325, 111 S.Ct. 1267. There is a presumption that "actions or decisions are `grounded in [public] policy' in cases where the statute allows government officials to exercise discretion." Cohen, 151 F.3d at 1344 (quoting Gaubert, 499 U.S. at 324, 111 S.Ct. 1267). Like classifying prisoners, *1380 deciding how to restrain a soldier is "inherently policy laden." Id. Some of the policy issues weighed here included Woods' individual rights pending trial, protection of the general public, protection of other soldiers, and the scope of military investigation. These factors are exactly the type of policy judgments that the discretionary function is designed to shield.
The plaintiff's argument regarding the decision to confine also fails because plaintiff relies on a distinction between the planning level and operational level of decisions. The plaintiff argues that implementation of the guidelines set forth in RCM 305 was simply operational, and therefore, not a discretionary function. The Supreme Court, however, has rejected the operational/planning distinction. Gaubert, 499 U.S. at 325, 111 S.Ct. 1267 ("Discretionary conduct is not confined to the policy or planning level."). Several subsequent Eleventh Circuit cases reflect this holding. Cohen, 151 F.3d at 1342 ("[T]he mere fact a government official performs an action at the `operational level' (as opposed to the `planning level') does not remove that official's action from the discretionary function exception."); Ochran, 117 F.3d at 505-06 (same); Autery, 992 F.2d at 1527 (same). Accordingly, the operational/planning distinction has no impact on the determination of discretion under the Gaubert test. Under Gaubert, the Court finds that the decision to confine was discretionary.
2. Captain Wilson's Decisions Pertaining to the Implementation of Restriction
The plaintiff argues that even if the decision to confine Woods is barred from review under the discretionary function exception, Captain Wilson's methods of implementing Woods' restriction were not discretionary and are thus reviewable under the FTCA. The plaintiff relies on the operation/planning distinction in relation to Captain Wilson's methods of implementing Woods' restriction. Since this distinction is no longer followed in this Circuit, supra, Wilson's actions must be analyzed under the usual two-prong analysis of Gaubert.
The plaintiff argues that Wilson was given a mandatory order to restrict Woods and thus, his decisions were not discretionary. There is no evidence, however, that shows that Wilson was required to follow mandatory rules in determining whether Woods was to be restricted and what type of restriction would be implemented. Wilson was informed that Woods was being transferred to his unit, and Wilson was placed in charge of Woods' restriction. However, no commanding officer gave Wilson any mandatory directive regarding how to restrict Woods. Additionally, Wilson's decisions were grounded in the same public policy considerations as the initial decision to restrict. It must be stressed that the discretionary function exception applies even if there is an abuse of discretion. Dickerson, Inc. v. United States, 875 F.2d 1577, 1581 (11th Cir.1989). Thus, even though Captain Wilson's decisions and actions may have constituted a serious blunder (especially, as we have earlier stated, in hindsight), this Court is without jurisdiction to review those choices.
B. Assault and Battery Exception
Even if the Court had found that this claim survived the discretionary function exception of the FTCA, the suit would still be barred under the FTCA's assault and battery exception. Under 28 U.S.C. § 2680(h), the FTCA does not apply to "[a]ny claim arising out of assault [and/or] battery," and, therefore, the federal district court has no jurisdiction over such a claim. In United States v. Shearer, 473 U.S. 52, 54, 105 S.Ct. 3039, 87 L.Ed.2d 38 (1985) the Supreme Court held that the "[r]espondent cannot avoid the reach of § 2680(h) by framing her complaint in terms of negligent failure to prevent the assault and battery." The plaintiff in the instant case, however, relies on the Supreme Court's further analysis in Sheridan v. United States, 487 U.S. 392, 108 *1381 S.Ct. 2449, 101 L.Ed.2d 352 (1988). In Sheridan, the Supreme Court departed a bit from its holding in Shearer, explaining that the government could be liable for the assault and battery of its employees if the government owed an independent duty to the plaintiff. The Court explained that "by voluntarily adopting regulations that prohibit the possession of firearms on the naval base and that require all personnel to report the presence of any such firearm ... the Government assumed responsibility to `perform [its] `good Samaritan' task in a careful manner.'" Id. at 401, 108 S.Ct. 2449 (citations omitted).
In the instant case, the plaintiff cannot argue that the Army owed her a duty arising out of specific military regulations since no such regulations exist in this case. Further, the plaintiff has also failed to establish a general duty to protect owed to her under Georgia law. Under the FTCA, the United States is only liable "in the same manner and to the same extent as a private individual under like circumstances ..." 28 U.S.C. § 2674. Since the claim in this case arose in Georgia, the Court must look to Georgia law to determine any duty owed to the plaintiff in this case. Tisdale v. United States, 62 F.3d 1367, 1371 (11th Cir.1995). Under Georgia law, neither private individuals nor the police have a duty to protect another individual, absent a special relationship. City of Rome v. Jordan, 263 Ga. 26, 426 S.E.2d 861, 862 (1993); Christensen v. State, 219 Ga.App. 10, 464 S.E.2d 14, 18 (1995). The plaintiff has failed to establish the existence of a special relationship between herself and the United States Army that would give rise to a duty to protect. Because the plaintiff has not established that the Army had a duty to protect in this situation, her claim is not analogous to the facts of Sheridan. Thus, the assault and battery exception to the FTCA bars this suit.
C. Quasi-Immunity Under Georgia Law
The plaintiff is also barred from suit under the doctrine of quasi-judicial immunity. Under the "like circumstances" rule set forth in the FTCA, the United States may claim any state law immunity that is enjoyed by state officials performing like duties. Tisdale v. United States, 62 F.3d 1367, 1371 (11th Cir.1995). The comparison between the circumstances of the United States officials and analogous state officials is "not overly stringent." Burgess v. United States, CV 495-108 at 7 (S.D.Ga. Order filed March 1, 1996) (citations omitted). Under Georgia law, public officials performing discretionary acts are entitled to "quasi-judicial" immunity. Christensen, 464 S.E.2d at 18. The court in Christensen defined discretionary acts as "those calling for the exercise of personal deliberation and judgment ..." Id. The court found that the parole board performed discretionary acts in deciding whether to grant parole to a convicted rapist. Like the parole board in Christensen, the military commanders in this case performed discretionary acts both in deciding whether to confine or restrict Woods and in deciding how to implement Woods' restriction. Thus, the actions of the military commanders are immune from suit under the quasi-judicial immunity theory.
III. The Mindes Four Factors
If this Court were to deny summary judgment in the instant case, it would potentially be setting new standards for the Army. In Mindes v. Seaman, 453 F.2d 197 (5th Cir.1971),[6] the Fifth Circuit warned against undue judicial interference with internal military matters. The court explained that "the greatest reluctance to accord judicial review has stemmed from the proper concern that such review might stultify the military in the performance of its vital mission." Id. at 199. Accordingly, "[a] district court faced with a sufficient *1382 allegation must examine the substance of that allegation in light of the policy reasons behind nonreview of military matters." Id. at 201.
One factor stressed by the court in Mindes was "[t]he type and degree of anticipated interference with the military function." Another factor important to the court was "[t]he extent to which the exercise of military expertise or discretion is involved." Id. If the Court were to deny summary judgment in the instant case, it would be telling the Army how to carry out confinement orders. This instruction would require military commanders to consider the possibility of future tort liability when attempting to make these decisions. Further, the decisions in this case were made by military commanders who, with the exception of Captain Wilson, all had over twenty years of military experience. Even though the Court has the deepest sympathy for the plaintiff for having to endure this heinous and terribly horrendous crime, the Court would be committing an error by reviewing these military decisions. Consequently, the Mindes factors also support the grant of summary judgment in this case.
Conclusion
For the foregoing reasons,
IT IS HEREBY ORDERED that defendant's motion to dismiss is granted. Alternatively, the defendant's motion for summary judgment is granted.
NOTES
[1] The victim's real name is withheld to protect her privacy.
[2] The Court finds it disheartening that the military commanders did not give greater weight to these peeping incidents when determining whether Woods posed an ongoing danger to women (of course, this is more clear in hindsight). See Def.'s Mem.Supp. Mot. Dismissal/Summ.J., App. A, Decl. Stephen P. Passero; App. B, Decl. Joel L. McGrady; App. C, Decl. Waldo W. Brooks; App. E, Decl. Scott Wilson; see also Def.'s Mem.Supp.Mot. Dismissal/Summ.J., App. F, Charge Sheet Ag. Woods, September 14, 1995 (Charges IV and VI).
[3] The Court finds it interesting that Wilson neglected to inform Sergeant Shields (a woman and Woods' boss in the supply room) of Woods' record of sexual misconduct for Shields' own safety. See Def.'s Mem.Supp. Mot. Dismissal/Summ.J., App. O, Wilson Dep. at 37, 53.
[4] Even if there was jurisdiction to review Captain Wilson's implementation of the restriction on Woods, the Court is not convinced that the plaintiff has established that Wilson's decisions were the proximate cause of the plaintiff's injuries. If Captain Wilson had informed Staff Sergeant Shields or the Barracks NCO, this tragic event may have occurred anyway. Woods may have escaped even if his superior officers had checked on him "on a periodic basis." Pl.'s Resp. Def.'s Mem. at 12.
[5] RCM 305(d): When a person may be confined. No person may be ordered into pretrial confinement except for probable cause. Probable cause to order pretrial confinement exists when there is a reasonable belief that:
(1) An offense triable by court-martial has been committed;
(2) The person confine committed it; and
(3) Confinement is required by the circumstances.
In explaining RCM 305(d)(3), RCM 305(h)(2) states that "(iii) confinement is necessary because it is foreseeable that:
(a) The prisoner will not appear at trial, pretrial hearing, or investigation, or
(b) The prisoner will engage in serious criminal misconduct; and
(iv) Less severe forms of restraint are inadequate."
[6] Fifth Circuit cases decided prior to October 1, 1981 are binding on the Eleventh Circuit under Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1741471/ | 506 So. 2d 146 (1987)
Harry D. HOSKINS, III
v.
Charles W. ZIEGLER, III.
No. CA-6507.
Court of Appeal of Louisiana, Fourth Circuit.
April 9, 1987.
Rehearing Denied May 20, 1987.
*147 Carter B. Wright, Ogden, Ogden & McCune, New Orleans, for defendant-appellant.
Harry D. Hoskins, III, New Orleans, for plaintiff-appellant.
Before GULOTTA, BYRNES and LOBRANO, JJ.
BYRNES, Judge.
Plaintiff, Harry Hoskins, III, and defendant, Charles Ziegler, III, both appeal the trial court's judgment awarding Hoskins $10,000 and 25% attorney fees in a suit on an open account. We affirm in part and amend in part.
The present litigation arose when Hoskins, an attorney with experience in real estate syndication, met with Ziegler, a securities broker/dealer, to discuss having Hoskins draft a private offering memorandum giving investors the opportunity to participate in the proposed syndication of a diagnostic center in Jefferson Parish. Hoskins claims that at this meeting he orally agreed to draft the documents for a flat fee of $10,000 if the syndication did not go through and $35,000 if it did. Hoskins subsequently performed the requested legal services. When the syndication failed to sell, he made demand upon Ziegler for his $10,000 fee. In response, Ziegler denied that he had agreed to pay Hoskins this amount and urged that the only fee contemplated by their oral contract was a contingency fee of $35,000 if the syndication sold. Shortly thereafter, Hoskins filed the instant suit to collect what he characterized as an overdue open account.
At trial, Hoskins testified to the terms of the oral contract and, in support of this testimony, offered the memorandum he drafted for Ziegler. Included in this document was a copy of a letter written by *148 Hoskins to the promoter of the proposed syndication in which it was stated:
"In reviewing the opinion set forth above, you should be aware that my compensation is based in part upon the sucess of the offering." (emphasis added).
Additionally, Hoskins presented a legal expert in the field of syndications who testified that it was customary to charge a flat rate or hourly fee for legal work such as Hoskins performed for Ziegler. Moreover, the expert stated that in his estimation, Hoskins' work in preparing the private offering memorandum was worth $25,000. Furthermore, the expert stated that he had never known such work to be performed on a contingency basis.
At the close of trial, the court ruled in favor of Hoskins awarding him $10,000 for legal services provided to Ziegler, granted Hoskins attorney fees in the amount of 25% of the award pursuant to the open account statute (R.S. 9:2781).
On appeal, Ziegler asserts that the trial court erred in finding that Hoskins had proved by a preponderance of the evidence that a contract providing $10,000 in attorney fees existed. On review, this court will not disturb the factual findings of the trial court in absence of manifest error when there was evidence which, upon its reasonable evaluation of credibility, furnished a reasonable factual basis for the findings. Veal v. Church's Chicken of New Orleans, 459 So. 2d 703 (La.App. 4th Cir.1984).
In the instant case, Hoskins, testified at trial that the oral agreement with Ziegler provided a miminum legal fee of $10,000 if the syndication did not sell. Hoskins also placed letters into evidence which indicated that his compensation would be based "in part" on the success of the syndication. In addition, the legal expert testified that he had never heard of syndication work being performed on a contingency fee basis. Despite the conflicting testimony of Ziegler, we find that the trial court had ample credible evidence by which to conclude that Hoskins proved he had on oral contract with Ziegler for minimum legal fees of $10,000.
Ziegler also argues that the trial court erred in awarding Hoskins $10,000 when his petition and trial testimony alleged that only $9,454.08 was due. We agree. The record shows that Ziegler paid printing costs totalling $545.92 which Hoskins had previously agreed to pay. At trial, Hoskins acknowledge that this amount was deducted from the $10,000 attorney fee he claimed due from Ziegler. We therefore amend Hoskin's award to correct this error.
By Ziegler's third assignment of error, he asserts that the trial court erred in awarding attorney fees pursuant to the open account statute. We disagree. The trial court found that Hoskins had not been paid for legal services he provided to Ziegler in accordance with an oral agreement. Under R.S. 9:2781, debts incurred for professional services constitute an open account. In the instant case, Hoskins followed the procedural requirements of R.S. 9:2781 and obtained judgment on his claim. In doing so, he became entitled to reasonable attorney fees for the prosecution and collection of this claim. R.S. 9:2781(A).
Hoskins asserts that the trial court's award of 25% attorney fees ($2,500) was unreasonably low considering the actual hours his attorney documented in litigating his claim. We do not agree.
The amount of attorney fees awarded under R.S. 9:2781(A) is left to the discretion of the trial court. Kem Search, Inc. v. Sheffield, 434 So. 2d 1067 (La.1983). Among the factors which should be considered in determining the amount of the fee are; the ultimate result obtained, the importance of the litigation, the amount involved, the number of appearances made, the intricacies of the facts and law involved, the diligence and skill of counsel, the court's own knowledge of the case, and the ability of the party liable to pay. Guillory v. Guillory, 339 So. 2d 529 (La.App. 4th Cir.1976).
In the present case, Hoskins was required to prove the existence of a delinquent open account under an oral contract. In terms of difficulty and the skill required *149 to successfully prosecute this claim, we do not find the case particularly troublesome or demanding. Moreover, while the hours logged by the attorney in representing Hoskins may have been accurate, the amount of labor performed is but one factor among many in setting reasonable attorney fees under R.S. 9:2781(A).
Our review of the record, which includes the testimony of Hoskins, the proferred evidence of hours spent in pursuing his claim and other evidence of the extent and character of the legal work performed on Hoskins' behalf convinces us that the award of $2,500.00 in attorney fees was reasonable and not an abuse of the trial court's discretion. We note, however, that while the trial judge reached the correct result, he apparently erred in suggesting that the number of attorney's hours expended on the case bore no relationship to the amount of attorney fees awarded and that the caselaw required him to grant a percentage of the claim as attorney fees. This is not the law. See Guillory, supra.
For reasons cited above, we affirm the trial court's award of attorney fees and amend the judgment to reflect an award to Hoskins of $9,454.08 on his main demand.
AFFIRMED IN PART
AMENDED IN PART. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1383352/ | 20 S.W.3d 104 (2000)
C.L. BRIDGES, Jeff Robinson, J.C. Romportl, J.E. Leach, Dillard's Department Stores, City of Houston, Officer M.L. Hogan, Officer P.A. Davis and Officer J.H. Theis, Appellants,
v.
Denise R. ROBINSON, Individually and on Behalf of the Estate of Darryl W. Robinson, Percy Robinson, and Irma Robinson, Appellees.
No. 14-99-00492-CV.
Court of Appeals of Texas, Houston (14th Dist.).
March 30, 2000.
Rehearing Overruled June 15, 2000.
*107 Brock C. Akers, Evelyn T. Ailts Derrington, Kelly Ann Dempsey, Laura Anne Coats, Robert Anthony Armbruster, Michael David Siemer, Houston, for appellants.
Roger Rider, Houston, for appellees.
Panel consists of Justices MAURICE E. AMIDEI, ANDERSON and WITTIG.
OPINION
DON WITTIG, Justice.
Darryl W. Robinson, deceased, went on a shopping spree which tragically ended at a Houston Dillard's Department Store. An altercation with the store manager turned deadly. The deceased was carted off, hogtied, ribs broken, and placed on Dillard's' curb. There he was pronounced dead.
Appellants advance this interlocutory accelerated appeal of the trial court's denial of their summary judgment motions on the affirmative defense of official immunity. Dillard's' security and law enforcement officers were called to intervene in a dispute the deceased was having with Dillard's manager Kim Wetzel. On-duty Houston Police Officers also arrived later on the scene and assisted Dillard's employees. Robinson died shortly after he and Dillard security guards struggled. The episode ended after the deceased was hogtied by Houston Police and removed to the dock. The primary issue is whether the defendants acted in good faith in subduing, restraining, and monitoring the condition of the deceased. We affirm. We also address whether the prosecution of this second interlocutory appeal was frivolous.
I. Factual Background
The facts in this case are vehemently contested. We examine the summary judgment proof to determine whether appellants' defenses are established as a matter of law. We must view the TEX.R. CIV. P. 166a summary judgment proof in the light most favorable to appellees, Denise Robinson and the deceased's estate. The record reveals often bizarre and sometimes horrendous proof.
The deceased was a longtime employee of Central Delivery Service. He was married more than sixteen years to Denise Robinson. He was also a longtime customer of Dillard's and had a Dillard's charge card. He had no police record.
*108 On June 1, 1994, the deceased was rendered brain-dead. Earlier that day, the proof shows that the deceased had been in the midst of a shopping spree. He signed a contract to purchase a car. He was to make a $2,000 cash down payment and had withdrawn $2,200 from his bank account. That day he had also purchased two cellular phones at a cost of $500 to $600. He then made several additional purchases at Dillard's department store. According to his widow, the deceased needed an additional $500 cash to meet the down payment for the car. At approximately 8:30 that evening, he went to the fourth floor of Dillard's where he spoke with Alice Lara, the store's customer service representative.
The deceased requested a withdrawal of $500 cash on his ATM card. A dispute developed between the deceased and Lara. Kim Wetzel, a Dillard's manager, intervened. An argument continued for several minutes. Wetzel, according to Marilyn Steltz, another Dillard's employee, had a confrontational nature. Steltz, also a witness, was working about twenty feet away. She could hear the argument from her station but, because of the commotion, left her station several times to visually observe the confrontation. At one point, Steltz testified[1] she heard Wetzel say to the deceased, "Don't you come over that counter." While Steltz did not observe the entire argument she indicated she did not ever see the deceased on the counter.
At about 8:45, two Dillard's salaried security officers on duty, defendants Jeff Robinson and Collier Bridges, came on the scene. Both were also regularly employed by Harris County as sheriff's deputies. The deceased complied with their request to provide identification. The deputies, accompanied by Wetzel, then escorted him to the glass-enclosed back office behind customer service. Shortly after, Steltz heard a commotion from the office and heard the deceased shout, "Are you trying to kill me? You're trying to kill me."
Wetzel then ran out of the office looking for boxing tape. When she found it, she returned to the office. Steltz asked Lara and another Dillard's employee, Shannon Brannagan, what had happened. Both replied that the deceased had wanted $500 and made no mention of the alleged counter incident. Yet another Dillard's employee, Wanda Alexander, said she had observed Wetzel riding the deceased like a "bucking bronco." Steltz then went to the office to see for herself. She saw the deceased on the floor, bound with tape, with Wetzel on top of him, wrapping more tape around his mouth and head. Again, Steltz returned to her station.
The yelling increased. Dillard's Steltz was concerned that something grave was occurring so she again returned to the office. She described the deceased as being in a "very tied down, awkward position" with his face on the floor. Steltz saw blood on the carpeting and the deceased's cheekbones were very pink and bloody and stripped of their skin from apparent carpet burns.
Steltz then observed deputy Robinson on top of the taped deceased, striking him "very, very hard" in the left rib cage. She described Robinson, as a "stockier" man than the deceased, whom she described as "willowy." Steltz shouted at the deputy, known as an acquaintance, "What are you doing?" According to the summary judgment proof, Robinson locked eyes with Steltz and glared at her. Without a word, still staring at Steltz, he struck the deceased three more times.
According to the store's own employee, Steltz, the blows to the deceased's left rib cage were so forceful "that if that man had punched my rib cage like that, this rib cage would be inside this rib cage."
Stating she was "very, very, very much at that point, for the first time in my life, terribly, terribly afraid," Steltz retreated to her station. Asked why, Steltz responded, *109 "I was afraid because I saw law enforcement inflicting the pain."
Defendant Houston Police Department Officer Romportl arrived next and proceeded to the office where the deceased was held. Momentarily, defendant HPD officers Hogan, Theis, and Davis, all of whom were on duty, arrived and went to the office. Shortly after, the deceased was wheeled out of the office, hogtied,[2] on a flatbed dolly. According to Steltz, at that time she saw only HPD officers and one of them was riding on top of the deceased. The deceased was taken to the curb outside of the Dillard's store.
Additional proof and amplification of the events were provided by Dillard's employee, James Turk. Turk stated that when he arrived at the office shortly before 9:00 p.m., he saw Dillard's guard Bridges standing with his "feet in the back of [the deceased's] neck," Dillard's guard Robinson with his knee in the deceased's back, and Wetzel on his legs. Turk noticed a hole in the wall into which it looked like "either somebody had been rammed in the wall or elbow went into the wall or something like that." A blood mark on the wall was alleged to be that of the deceased.[3] Turk noticed the deceased had a lot of "burn marks" on his face and arms from the carpet. Turk also noticed that the deceased was struggling to breathe. Wetzel directed Turk to get more tape.
When Turk returned with the tape two to three minutes later, he observed "foam and stuff" coming out of the deceased's mouth.
In the interim, the HPD officers re-hogtied the deceased. While closing the store, Dillard's assistant manager Jeffrey Munzel stated he saw the deceased on the cement with a large wound on his head. Because he was still struggling, five HPD officers were holding him face down on the cement. The officers were finally able to get the deceased in what Munzel called a "genuine hogtie."
Approximately between 9:15 and 9:30, Steltz and Turk separately went to where the deceased had been transported, the garage outside the south doors of Dillard's. Munzel also observed some of the events outside. Turk stated the deceased was laying on the concrete, face down, still hogtied, with HPD officers standing around. Turk observed something "very unusual" happen with the deceased's body. "That's the first time I ever seen [sic] a body, like, inhale then inhale. I thought that he was going to die." Turk stated that in the few minutes he was there, he did not see any of the HPD officers present check the deceased. When Turk left, he noted that the deceased was still moving.
At about the same time, Steltz was in her car some 60 feet away. For "at least" the fifteen minutes she was there she observed that the deceased's body appeared to be lifeless. During that time she said no one ever checked the man.
At approximately 9:30, the first ambulance pulled up. According to Steltz, the EMT removed a gurney, spoke to the officers for three or four minutes, replaced the gurney, and moved the ambulance out of her field of vision. She said that at no time did the EMT check the deceased. The EMT, Gaspar Guercio, testified that when he arrived, the officers told him the deceased was not breathing.
A second ambulance arrived at 9:38. The EMT, Danny Engle, attempted CPR and injected various drugs into the deceased. At 9:55, he was able to restart the deceased's heart. Munzel on the other *110 hand, stated he returned outside around 9:55, and "they pronounced him dead." The deceased was then taken to Ben Taub Hospital and was placed on life support. Two days later, he was taken off life support, and was again pronounced dead.
One of the experts designated by the Robinson appellees, Dr. Raul Lede, reviewed the medical examiner's data and findings and opined the deceased died of "positional asphyxiation." The asphyxiation was likely to have been brought on by a combination of the hogtying, the awkward positioning of his body, the weight of the officers upon him, fluid in the lungs, his heightened state of anxiety, inter alia. Appellees' experts also asserted that broken ribs reported in the autopsy may have been the result of blows sustained by the deceased in the struggle with the officers.
The statements, deposition testimony, and affidavits of the appellant officers and other employees of Dillard's yield radically differing versions of the facts than offered by appellees. Their proof shows a panting, mentally deranged Darryl Robinson came to the Dillard's customer service counter and demanded a million dollars from Lara. When she refused, he jumped on the counter, calling her "demon," badly frightening her. Wetzel then intervened but was further terrorized by the deceased. When the deputies arrived, they claim the deceased was on the counter shouting. In response to what they perceived as possible criminal activity and a potentially dangerous situation, the deputies and Wetzel escorted the deceased to the office. There, the deputies placed the deceased against the wall and attempted to handcuff him. He resisted and they all went to the floor. The deceased became extremely violent, kicking, and spitting, and exhibiting great strength. He was said to be screaming obscenities and bizarre religious and racial epithets. The deputies believed he was on drugs.[4] They eventually handcuffed him but the struggle continued. All three persons trying to subdue the deceased became physically exhausted. The two off-duty HPD officers Leach and Romportl arrived to assist. They resorted to tying, then hogtying, the deceased only because they could not otherwise stop him from fighting them. The force they used was only that which was necessary to contain this very violent actor and was not, they opined, excessive.
Likewise, the on-duty HPD officers who arrived shortly thereafter asserted the police responded only to the extent needed to subdue the deceased. When they arrived, he was still violent and screaming obscenities. They hogtied him only because he was able to break tape and plastic cuffs unsuccessfully used to restrain him earlier. They requested an ambulance as soon as they were able and monitored the deceased's breathing and physical condition the entire time he was in their custody.
II. Standard of Review
Summary judgment is proper only when the movant establishes there are no genuine issues of material fact and proves he is entitled to judgment as a matter of law. See TEX.R. CIV. P. 166a(c). To be entitled to summary judgment, a defendant must either (1) conclusively negate at least one essential element of each of the plaintiff's causes of action, or (2) conclusively establish each element of an affirmative defense to each claim. See American Tobacco Co., Inc. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997). In deciding whether there exists a disputed fact issue precluding summary judgment, we treat evidence favorable to the non-movant as true and indulge all reasonable inferences in the non-movant's favor. See id. A summary judgment may be based on uncontroverted testimonial evidence of an interested witness, or of an expert witness as to subject matter concerning which the trier of fact must be guided solely by the opinion testimony of experts, if the evidence is clear, positive and direct, otherwise credible and free *111 from contradictions and inconsistencies, and could have been readily controverted. See TEX.R. CIV. P. 166a(c).
III. Official Immunity
Appellants' motions for summary judgment were based on the affirmative defense of official immunity. Under Texas law, a defendant seeking a summary judgment on an affirmative defense of immunity must prove, without dispute and as a matter of law, that when the event in question occurred, he or she was: (1) performing a discretionary function, (2) acting in good faith, and (3) acting within the scope of their authority. See City of Lancaster v. Chambers, 883 S.W.2d 650, 653 (Tex.1994). If any element is not proved as a matter of law or is factually disputed, the summary judgment must be denied. See id. If the officer is entitled to official immunity, then the governmental entity employing him retains its sovereign immunity. See DeWitt v. Harris County, 904 S.W.2d 650, 653 (Tex.1995).
A. Discretionary Function of Deputies and Police
Appellees did not respond here or in the trial court to appellants' contentions that the individual defendants were performing a discretionary function. Hence, we do not address this prong.
B. Course and Scope
Appellants rely on Blackwell v. Harris County, 909 S.W.2d 135 (Tex.App.-Houston [14th Dist.] 1995, writ denied), for the proposition that where an officer is performing a job incident to enforcing the public laws, he is acting in the course and scope of his employment as a police officer even if the employer directed him to perform the duty. However, Blackwell also holds that:
[o]n the other hand, if he was engaged in the protection of the employer's property, ejecting trespassers or enforcing rules and regulations promulgated by the employer, it becomes a jury question as to whether he was acting as a public officer or as an agent, servant of the employer.
Id. at 139 (citing Glenmar Cinestate, Inc. v. Farrell, 223 Va. 728, 292 S.E.2d 366, 369-70 (1982)).
In our case, there is ample evidence that Deputies Robinson and Bridges, and HPD Officers Leach and Romportl, were working private, off duty, security jobs when they became involved in the altercation with the deceased. It is unclear if and when these officers assumed a role as public peace officers. What is clear is that the summary judgment proof did not establish this as a matter of law. Therefore, whether at material times these officers were acting in the course and scope of their employment remains a disputed fact issue. See Blackwell, 909 S.W.2d at 139.
Conversely, appellees do not dispute that on-duty HPD Officers Theis, Hogan, and Davis were acting in the course and scope of their public duties. That issue is therefore established as to those officers for summary judgment purposes.
C. Good Faith
Good faith is the real battleground where this legal engagement is waged. The issue depends on the assessment of a reasonably prudent officer of both the need to which an officer responds and the risk of the officer's course of action. This assessment is based on the officer's perception of the facts at the time of the event. See Wadewitz v. Montgomery, 951 S.W.2d 464, 467 (Tex.1997)(emphasis added). A court must measure good faith in official immunity cases against a standard of objective legal reasonableness, without regard to the officer's subjective state of mind. Id. at 466. The need aspect of the test refers to the urgency of the circumstances requiring police intervention. See id. Need is determined by factors such as: (1) the seriousness of the crime to which the officer responds; (2) whether the officer's immediate presence *112 is necessary to prevent injury or loss of life or to apprehend a suspect; and (3) what alternative courses of action, if any, are available to achieve a comparable result. See id. The risk aspect of good faith, on the other hand, refers to the countervailing public safety concerns: the nature and severity of harm that the officer's actions could cause, the likelihood that any harm would occur, and whether any risk of harm would be clear to a reasonably prudent officer. See id.
Good faith may be established through police expert testimony. Wadewitz makes clear that conclusory statements by expert witnesses (that a reasonable officer could have believed that some action was justified) are not enough:
An expert witness's conclusory statement that a reasonable officer could or could not have taken some action will neither establish good faith at the summary judgment stage nor raise a fact issue to defeat summary judgment. Instead, expert testimony on good faith must address what a reasonable officer could have believed under the circumstances and must be substantiated with reference to each aspect of the Chambers balancing test.
Id. at 466-67 (citations omitted).
Dillard's employees, Harris County Deputies Robinson and Bridges, offer no expert testimony establishing they acted in good faith. Nor were their actions assessed under the requisite "risk/need" balancing test. Given the alleged beating by the deputies and the myriad disputed facts, there patently remains a fact question concerning Robinson and Bridges on the material issue of good faith. Id.
To prove good faith for the HPD officers, HPD Sergeants Johnson and Stepchinski, filed expert affidavits on behalf of Officers Davis, Hogan, Theis, Romportl, and Leach. Officer Hogan also filed an expert affidavit on her own behalf as well as the other HPD officers. All the police experts assert that hogtying the deceased was appropriate given the magnitude of the deceased's violent behavior and his extremely strong ability to resist the officers and other restraints they had applied. Their proof further states all the HPD officers complied with HPD's policies and procedures on hogtying suspects. The expert officers' affidavits conclude that the HPD officers at all times acted as reasonable and prudent officers under the circumstances.
The officers' affidavits discuss at some length the need to hogtie the deceased. However, they fail to sufficiently address testimony about the manner in which the deceased was hogtied, remained hogtied, and was or was not supervised during this time. Simple subjective pronouncements of good faith by a defendant-officer, or by experts supporting the officer's assertions, are insufficient as a matter of law to meet the summary judgment movant's burden of showing good faith. Geick v. Zigler, 978 S.W.2d 261, 265 (Tex. App.-Houston [14 th Dist.] 1998, pet. denied)(citing Wadewitz, 951 S.W.2d at 467). Summary judgment proof is insufficient where the affidavit does not proffer any objective substantiation of the contention a reasonably prudent officer, under the same or similar circumstances, could have believed his actions were justified. See Geick, 978 S.W.2d at 266 (emphasis added). More specifically, Officers Johnson, Stepchinski, and Hogan do not respond to and ignore at least the following material testimony submitted by appellees in response to the motion for summary judgment:
After being hogtied, before being taken downstairs, the deceased was at times placed on his abdomen and sat upon by an HPD officer. Foam was coming from his mouth and he was having trouble breathing;
Downstairs, Turk observed a "very unusual" change in the deceased's condition which led him to believe the deceased was about to die;
*113 Steltz testified that no one checked the deceased for ten or more minutes prior to the arrival of the first ambulance. Nor did Turk see the officers check the deceased;
Despite the officers' alleged knowledge the deceased had stopped breathing sometime before the ambulance arrived, no action was taken for at least eight minutes to resuscitate him.
The implications of appellees' summary judgment proof are significant in several ways:
It created a fact issue whether the HPD officers violated the HPD policy by placing the deceased in a face down position and not closely monitoring his breathing while he was hogtied;[5]
Though Turk is not a medical expert, he nonetheless observed an alarming change in the deceased's condition indicating he may have been dead or near death. This was seemingly unheeded by the officers at a time when the officers should have been closely monitoring him;
Steltz's and Turk's testimony that the officers failed to check the deceased squarely controverted their assertion that they were continually monitoring the deceased's breathing and pulse;
EMT Guercio's statement that he was informed by the officers that the deceased was not breathing upon his arrival, combined with Steltz's statement she saw the police do nothing in the ten or more minutes before he arrived, would permit a jury to infer the officers knew the deceased had not been breathing for some ten minutes, yet took no action;
We were pointed to no place in the record establishing why the officers allowed critical minutes after Guercio's arrival to pass without taking action to save the deceased's life.
In light of the proof offered by these individual appellees, the contradictory testimony between material fact witnesses, and the inadequate expert affidavits,[6] the officers have failed to meet their burden to conclusively establish good faith. Therefore their official and derivative immunity issues are overruled. See Wadewitz, 951 S.W.2d at 466-67.
IV. Subject Matter Jurisdiction
The City of Houston argues that the acts alleged by appellees do not fall within the Tort Claims Act's limited waiver of immunity, therefore the case against it should have been dismissed for lack of subject matter jurisdiction. Specifically, *114 the City argues that (a) TEX. CIV. PRAC. & REM.CODE ANN. § 101.056 protects a governmental unit from liability for its discretionary acts; (b) TEX. CIV. PRAC. & REM.CODE ANN. § 101.055(3) protects it from suit for the method and manner in which it provides police protection; and (c) TEX. CIV. PRAC. & REM.CODE ANN. § 101.057 protects it from liability for intentional torts of its officers.
A. Discretionary Acts of the City
The discretionary function exception to the waiver of governmental immunity is designed to avoid judicial review of governmental policy decisions. See State v. Terrell, 588 S.W.2d 784, 787 (Tex. 1979). Thus, a governmental entity is immune from liability if an injury results from the formulation of policy. However, a governmental unit is not immune if an injury is caused by the negligent implementation of that policy. See Terrell, 588 S.W.2d at 787-88. This distinction is often stated in terms of actions taken at the planning or policy-making level, which are immune, and actions taken at the subordinate or operational level, which are not immune. See Tarrant County Water Control & Improvement Dist. No. 1 v. Crossland, 781 S.W.2d 427, 433 (Tex.App.-Fort Worth 1989, writ denied). In this case, appellees did not plead the City was negligent in formulation of policy. Their allegations only pertain to the individual defendants' actions taken at the applied or operational level. Thus section 101.056 is inapplicable.
B. Method and Manner of Police Protection
Again the City incorrectly points to a provision that would protect it only from its own formulation of policy, not the officers' implementation of it. Terrell, 588 S.W.2d at 788. Appellees did not plead negligence of the City in formulating policy on police protection. As held in Terrell, if the negligence causing an injury lies in the formulation of policy, i.e., the determination of the method for providing police protection, the government remains immune from liability. The "method" of performing an act refers to the governmental decision or plan for providing police or fire protection. Id. If, however, an officer or employee acts negligently in carrying out that policy, government liability may exist. Id. Section 101.055(3) is thus not applicable.
C. Intentional Acts
Finally, the City contends that under section 101.057, it is immune from liability for intentional torts of its officers. It essentially contends hogtying and restraining the deceased was an intentional tort in the category of false arrest, imprisonment, and assault, which are, as a matter of law, intentional torts and not actionable under the Tort Claims Act.
The Restatement Second of Torts defines intent to mean that "the actor desires to cause consequences of his act, or that he believes that the consequences are substantially certain to result from it." RESTATEMENT (SECOND) OF TORTS § 8A (1965). The fundamental difference between a negligence injury and an intentional injury is the specific intent to inflict injury. See Reed Tool Co. v. Copelin, 689 S.W.2d 404 (Tex.1985). In this case, appellees only pled that the HPD officers negligently employed hogtie restraints against the deceased which ultimately resulted in his death. The City offers no summary judgment proof that their own officers intended to injure or kill the deceased. The City has not established the appellees' claims as intentional torts, therefore section 101.057 is inapplicable.
This issue is overruled.
V. Sanctions for Frivolous Appeal Under TEX.R.APP. P. 45
In their brief on the merits of the underlying appeal, appellees asserted that because the existence of material facts in dispute is so obvious, appellants brought *115 this appeal in bad faith and for the explicit purpose of delaying an upcoming trial setting. Pursuant to Texas Appellate Procedure Rule 45, this court invited appellees to brief their assertions and afforded appellants an opportunity to respond.
A. Applicable Law
Rule 45 states, in pertinent part: "If the court of appeals determines that an appeal is frivolous, it mayon motion of any party or on its own initiative, after notice and a reasonable opportunity for responseaward each prevailing party just damages." TEX.R.APP. P. 45. Whether to grant sanctions is a matter of discretion, which we exercise with prudence and caution, and only after careful deliberation. See Casteel-Diebolt v. Diebolt, 912 S.W.2d 302, 306 (Tex.App.-Houston [14 th Dist.] 1995, no writ). Although imposing sanctions is within our discretion, we will do so only in circumstances that are truly egregious. See City of Houston v. Crabb, 905 S.W.2d 669, 676 (Tex.App.-Houston [14 th Dist.] 1995, no writ). Where an appellant's argument on appeal fails to convince the court, but has a reasonable basis in law and constitutes an informed, good-faith challenge to the trial court's judgment, sanctions are not appropriate. See General Elec. Credit Corp. v. Midland Cent. Appraisal Dist., 826 S.W.2d 124, 125 (Tex.1991) (interpreting former TEX.R.APP. P. 84).
In determining whether sanctions are appropriate, we carefully consider the record from the appellant's point of view at the time the appeal was filed. See City of Alamo v. Holton, 934 S.W.2d 833, 837 (Tex.App.-Corpus Christi 1996, no writ). Among the factors we consider are whether the appellant had a reasonable expectation of reversal and whether it pursued the appeal in bad faith. See Tate v. E.I. DuPont de Nemours & Co., 954 S.W.2d 872, 875 (Tex.App.-Houston [14th Dist.] 1997, no pet.); Color Tile, Inc. v. Ramsey, 905 S.W.2d 620, 624 (Tex.App.-Houston [14th Dist.] 1995, no writ).
B. Procedural Background
We outline the procedural background of this case to illustrate the context for the acts of certain appellants on this appeal. This case was originally filed in December 1995. It was removed to federal court shortly after and remanded to state court on January 23, 1997. Its initial trial setting was for December 8, 1997. On July 29, 1997, the City filed a plea to the jurisdiction based on lack of actual notice of the claim, which was denied by the trial court. The City first appealed to this court on October 3, 1997. In that earlier appeal, despite a record replete with contradictory proof and three "extensive" separate investigations by the City itself into the tragic death, the City asked us to conclude that as a matter of law, it was not on notice of appellees' claim. Specifically noting that the facts of the case were "highly disputed," another panel of our court affirmed the trial court's denial of the plea. City of Houston v. Robinson, No. 14-97-01103-CV (Tex.App.-Houston [14th Dist.] October 22, 1998, no pet.) (not designated for publication), 1998 WL 733906.
By affidavit, appellees' counsel, Roger Rider, states that when the City's earlier plea to the jurisdiction was denied by the trial court in November, 1997, the assistant City Attorney then handling this case, Judith Sanchez, "announced loudly in the courthouse hallways that the City would keep this case tied up on appeals into the millennium." Counsel further swears that the City announced to the trial court at docket call on November 6, 1998 that it would appeal the actual notice decision to the Texas Supreme Court. Accordingly, the November 9, 1998 trial date would have to be postponed. The trial court continued the setting; however, the City failed to make good its word and did not perfect that appeal.
The trial court then set a new trial date of May 17, 1999 and a February 15, 1999 deadline for summary judgment motions. Appellants filed the summary judgment *116 motions underlying this appeal between January 29, 1999 and February 1, 1999. The motions were denied on April 27, 1999. All appellants gave notice of this appeal between May 6, 1999 and the new trial date of May 17, 1999.
C. Discussion
Appellants Robinson and Bridges
We first determine whether the appeal of Deputies Robinson and Bridges was frivolous. As noted, neither one of the Dillard's deputies supplied expert testimony on good faith nor did they otherwise marshal sufficient summary judgment proof clearly required by the risk/need balancing test established under Chambers and its progeny. In her brief, counsel for these parties acknowledged the requirement of establishing good faith under this test but only endeavored to do so with argument and scant citations to the record. Further, in attempting to establish good faith, she completely ignored the damaging testimony of Steltz and other material witnesses discussed above. This is so even though, taken in the light most favorable to the non-movant, Steltz's and other proof would permit a jury to find Robinson and Bridges were unnecessarily or excessively beating the deceased, and causing or contributing to his demise.
When this court queried counsel why she did not address Steltz's testimony, she acknowledged the facts testified to by Steltz reflected badly upon her clients.[7] She argued, however, their alleged conduct was immaterial under the authority of Wadewitz and read the language from the opinion which she asserted supported her contention. Later during argument, it was pointed out that what she had cited as authority was actually language from the dissenting opinion.[8]
In considering these appellants' point of view at the time the appeal was filed, we observe that the record was well-developed with damaging proof which squarely controverted or significantly undermined their own account of what occurred that night at Dillard's. Counsel admitted she was aware of it and that it looked bad. In this light we believe there was simply no plausible basis for these appellants in good faith to ignore the testimony or to affirmatively represent in their brief that there were no material disputed facts.
We find the deputies' conduct constitutes a frivolous appeal for the following reasons: (1) failure to acknowledge and address extensive contradictory proof; (2) failure to adequately brief the issue of good faith; (3) failure to provide sufficient proof on that issue; and (4) counsel's mis-citation of a dissenting opinion as controlling authority. See, e.g., Tate, 954 S.W.2d at 875 (inadequate brief held a factor in whether to assess sanctions); Chapman v. Hootman, 999 S.W.2d 118, 124-24 (Tex. App.-Houston [14 th Dist.] 1999, no pet.)(failure to address evidence a factor); Parker v. State Farm Mut. Auto. Ins. Co., 4 S.W.3d 358, 365 (Tex.App.-Houston [1st Dist.] 1999, no pet. h.)(ignoring summary judgment evidence a factor); Triland Inv. Group v. Tiseo Paving Co., 748 S.W.2d 282, 284-85 (Tex.App.-Dallas 1988, no writ)(misconstruing nature of summary judgment evidence a factor); A.T. Lowry Toyota, Inc. v. Peters, 727 S.W.2d 307, 309 (Tex.App.-Houston [1st Dist.] 1987, no writ)(misleading the court [re the record] a factor); Bradt v. West, 892 S.W.2d 56, 79 (Tex.App.-Houston [1st Dist.] 1994, writ denied)(turning a "blind eye" to well-established law a factor).
*117 In sum, no reasonable attorney could believe this court would reverse the denial of the trial court's summary judgment as to Robinson and Bridges. We therefore hold their appeal is objectively frivolous.
Appellant Dillard's
Because Dillard's appealed on the basis of derivative immunity, its appeal is dependent on the immunity of its employees, Bridges and Robinson. Therefore, the rationale provided in the previous section equally applies here. Further, Dillard's invoked TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(5) in making its interlocutory appeal. This provision, however, is reserved for "an officer or employee of the state or a political division of the state." There is no provision allowing a private company an interlocutory appeal. Because of this, and in light of the total lack of merits of its appeal, we hold there was no good faith basis for Dillard's to file and prosecute this appeal. We therefore find Dillard's' appeal was objectively frivolous.
Appellant HPD Officers
We move to the appeal of the HPD officers, Romportl, Leach, Theis, Hogan, and Davis. Unlike the deputies, the HPD officers provided three expert affidavits employing the risk/need balancing test in attempting to establish good faith. However, like the deputies, the officers and their experts ignored significant damaging testimony about the manner of hogtying and supervision of the deceased in their analysis.
At oral argument, one of the HPD officers' lawyers asserted, in response to our query, that Steltz's testimony was all but ignored in the briefs because she was too far away from the events or was not present at all times when the HPD officers were present. This argument clearly goes to the weight of her testimony, not its competence. This is necessarily a jury argument. A jury is free to discount or even dismiss Steltz's testimony. However, as appellant is aware, an appellate court examining the propriety of a denial of summary judgment is constrained not to do so. See Friendswood Dev. Co. v. McDade + Co., 926 S.W.2d 280, 282 (Tex. 1996).
There was simply no good faith basis to feign Steltz's and Turk's testimony does not exist. Summary judgment rules require the allegations in non-movant's proof shall be taken as true with every reasonable inference to be resolved in the non-movant's favor.
We believe that no reasonable attorney could conclude this court would reverse the denial of the trial court's summary judgment filed by the HPD officers. We therefore hold their appeal is objectively frivolous. See Chapman, 999 S.W.2d at 124-25; Parker, 4 S.W.3d at 365; Tiseo Paving, 748 S.W.2d at 284-85; Bradt, 892 S.W.2d at 79.
Appellant City of Houston
The City's appeal is predicated, in part, on whether the HPD officers are entitled to immunity, discussed above. It also appealed on independent grounds asserting appellees' claims fell outside the waiver of sovereign immunity. Specifically, a governmental unit retains immunity for (1) its discretionary acts; (2) the method and manner in which it provides police protection; and (3) the intentional torts of its officers.
The City claimed that the police officers' method and manner of restraining the deceased was covered by the first two grounds. As discussed, the well-established case law very specifically holds that these provisions protect a governmental unit from formulation of policy, not the officers from their allegedly negligent implementation of it. Despite this, the City nonetheless attempted to couch appellees' claims clearly alleging negligence of the officers as falling within the provisions applying to the governmental units. Equally clear is the absence of any claims against the City that would arguably fall within *118 the cited provisions. Therefore, we believe no good faith reading of appellees' live pleadings suggest they were claims against the City for its formulation of policy regarding the method and manner of police protection or otherwise. Further, we find no good faith reading of existing case law yields the construction urged by the City. See Swate v. Crook, 991 S.W.2d 450, 455 (Tex.App.-Houston [1st Dist.] 1999, pet. denied)(conscious indifference to established law).
Yet another ground for sanctions is asserted against the City. We now turn to appellees' allegation that the City brought this appeal for purposes of delay. In examining the procedural history of this case, we are careful to distinguish engaging in bad faith delay tactics from the legitimate use of statutory and procedural avenues. Standing alone, we recognize some of the City's acts would not provide grounds for holding it delayed the prosecution of this case in bad faith. For example, there is no per se basis to sanction a party for filing for summary judgment on the last day for doing so in the court's scheduling order. We will not in this instance assess sanctions for conduct prior to or outside this appeal. We will, however, scrutinize all relevant conduct in the record in determining whether such conduct supports our finding this appeal was part of a larger pattern of the use of bad faith delay tactics.
Prior to this appeal, we note three significant occurrences in the history of this case that, along with other factors discussed, lead us to the conclusion the City filed this appeal for purposes of delay. First is the October 1997 interlocutory appeal.[9] Over a year ago, this court affirmed the trial court's denial of the City's plea to the jurisdiction on the issue of whether there existed a fact issue that the City had timely notice of appellees' claim. The City contended it did not have notice as a matter of law. After observing the facts of this case were "highly disputed," we cited voluminous evidence from numerous sources which showed clearly to the contrary.
Second is the City's announcement to the trial court at docket call that it would appeal this court's decision affirming the denial of the plea to the jurisdiction. This it did not do. However, the announcement itself served to delay that trial date.
Third is appellee's affidavit stating that, after the trial court denied the City's plea to the jurisdiction in 1997, the Assistant City Attorney, proclaimed her intent to keep this case on appeal into the millennium. We find this a very disturbing allegation that directly evidences the City's bad faith intent to delay this case from proceeding. And because of the severity of the alleged misconduct, we would hope if untrue, the allegation would be denied. It was not.
Therefore, for these additional reasons, we hold the City filed an objectively frivolous appeal, did so in bad faith and for purposes of delay. See Bradt, 892 S.W.2d at 79.
Conclusion
A party's decision to appeal should be based on professional judgment made after careful review of the record for preserved error in light of the applicable standards of review. Chapman, 999 S.W.2d at 125. In moving for summary judgment and in appealing the denial of it, appellants all but ignored a great deal of damaging material evidence that precluded reversal of the lower court's denial of summary judgment. It is fundamental that the evidence must be viewed in the light most favorable to the non-movant, yet the appellants dismissed these requirements. Instead, appellants *119 improperly presented their own version of the facts in a manner resembling jury argument. This conduct evidences a conscious indifference to long-settled principles of summary judgment law. As we stated in Chapman, "There is no room at the courthouse for frivolous litigation. When a party pursues an appeal that has no merit, it places an unnecessary burden on both the appellee and the courts. More importantly, it unfairly deprives those litigants who pursue legitimate appeals of valuable judicial resources." Id.
We therefore conclude that the filing of this appeal by the City of Houston, Dillard's Department Stores, C.L. Bridges, Jeff Robinson, J.C. Romportl, J.E. Leach, M.L. Hogan, P.A. Davis, and J.H. Theis, warrants the assessment of just damages under Rule 45. Accordingly, we sustain appellees' Motion for Damages and order appellants to pay to appellees and their attorneys $10,000, allotted as follows: City of Houston: $6,000; Dillard's Department Stores: $3,400; Jeff Robinson: $250; C.L. Bridges: $150; J.C. Romportl: $40; J.E. Leach: $40; M.L. Hogan: $40; P.A. Davis: $40; and J.H. Theis: $40. We find these amounts conservatively represent just and reasonable damages. In addition appellants shall pay appellees interest at a rate of ten percent (10%) per annum from the date of this court's mandate until paid in full.
The judgment of the trial court is affirmed.
NOTES
[1] Summary judgment proof was by deposition testimony unless otherwise indicated.
[2] According to the proof and Houston police procedures, "hogtying" consisted of securing the deceased's hands behind his back to his feet. The back is arched to the rear rendering the person virtually motionless. The person's diaphragm, particularly when positioned face down, may not properly function. This can cause positional asphyxiation, discussed in footnote 5 below.
[3] The only blood mentioned in the record was that of the deceased.
[4] The record reveals the absence of positive drug testing.
[5] Hogtying is not per se against HPD policy. However, HPD in memos and training has warned its officers of the potential dangers of hogtying a suspect, one of which is positional asphyxiation. This is the alleged cause of death in this case. Sergeant Johnson, who trains HPD officers, admitted in his deposition that if hogtying a suspect becomes necessary, in order to avoid positional asphyxiation, the officer should try not to allow the suspect to lay on his abdomen, keep him under observation, and make sure he does not stop breathing. He also issued memoranda to that effect to HPD officers. Officer Hogan also stated an HPD officer is required to "check and/or monitor" the hogtied suspect during the restraint.
In her deposition, Sergeant Stepchinski testified as an expert and fact witness. She asserted that during her Internal Affairs Division investigation she interviewed numerous people. No one told her that the deceased had been hogtied. When she was then asked in the deposition hypothetically to assume he had been hogtied, on his stomach, not breathing for ten minutes, with nobody doing anything, she was incredulous this could have happened to the deceased. "I can't imagine that an officer would stand there for ten minutes with a person that appears to be passed out and do nothing. I just can't comprehend that they would do that." When pressed, she answered, "I would have a problem with that."
[6] We note there is no reason the foregoing testimony could not have been addressed in the expert affidavits because it was of record prior to the making of the affidavits.
[7] Counsel contends that in doing so she was being "forthright" with the summary judgment record. We disagree. She in no way attempted to address Steltz's testimony in her good faith analysis in her brief, nor did she address it in oral argument, until the court pointedly asked her to.
[8] Counsel forcefully argued that a rule was binding on this court when she knew or should have known it was not. In no way did she try to make the court aware the language was from the dissenting opinion until after she was called to task.
[9] While we find nothing in the statute to disallow the City two bites at the interlocutory apple, the practice should be discouraged in the interests of judicial economy. Perhaps in light of the obvious abuse in this case, the legislature will take a harder look to the issue of multiple interlocutory appeals. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1385744/ | 6 Kan. App. 2d 885 (1981)
636 P.2d 202
CARROLL HAMILTON and EVA JEAN HAMILTON, d/b/a CARROLL HAMILTON ROOFING COMPANY, Appellants,
v.
UNITED TELEPHONE COMPANY OF KANSAS, INC., Appellee.
No. 52,981
Court of Appeals of Kansas.
Opinion filed November 19, 1981.
Petition for review denied January 15, 1982.
Patrik W. Neustrom, of Achterberg & Neustrom, of Salina, for the appellants.
Robert L. Lehr, of Overland Park, for the appellee.
Before JUSTICE HERD, presiding, SWINEHART, J., and LEWIS L. McLAUGHLIN, District Judge Retired, assigned.
McLAUGHLIN, J.:
Plaintiffs filed an action against the defendant alleging negligence or breach of contract because of problems with their business telephone service. At times during 1977 the plaintiffs discovered that customers could not reach their business by dialing the assigned telephone number. The plaintiffs alleged damages due to possible loss of profits and damage to business reputation. Defendant, a regulated public utility, answered that the Kansas Corporation Commission had exclusive jurisdiction over such an action and, as such, the action must be dismissed. The trial court dismissed the action and plaintiffs appeal.
This is a case of first impression in Kansas. In essence, the trial court ruled the KCC had primary jurisdiction over the plaintiff's action. Primary jurisdiction has been defined as a determination of whether a court or an administrative agency has the authority to make an initial rather than a final decision. Marine Terminal v. Rederi. Transatlantic, 400 U.S. 62, 68, 27 L. Ed. 2d 203, 91 S. Ct. 203 (1970); Sunflower Elec. Coop. v. Kansas Power & Light Co., 603 F.2d 791, 796 (10th Cir.1979); K. Davis, Administrative Law Text § 19.01, p. 373 (3rd ed. 1972). This determination is made by the court's evaluation of the need or lack of need for administrative judgment. Sunflower Elec. Coop. v. Kansas Power & Light *886 Co., 603 F.2d at 796; K. Davis, Administrative Law Text § 19.06, p. 381 (3rd ed. 1972).
The authority of the KCC rises from Chapter 66, Article 1 of the Kansas Statutes. K.S.A. 66-111 provides that the KCC should act when a party brings a written complaint alleging, inter alia, that the "service performed ... by such public utility ... is unreasonably inadequate, inefficient, unduly insufficient or cannot be obtained...." However, K.S.A. 66-156 states:
"The corporation commission shall have the general supervision of all public utilities and common carriers, and of all persons, companies or corporations doing business as public utilities or common carriers in this state, as defined in Laws of 1911, chapter 238 [*], and amendments thereto; and shall inquire into any neglect or violations of the laws of this state by any person, company or corporation engaged in the business of operating a public utility or common carrier therein, or by the officers, agents or employees thereof; and shall also from time to time carefully examine and inspect the condition of each public utility and common carrier, and of its equipment and the manner of its conduct and the management with reference to the public safety and convenience. Nothing in this section shall be construed as relieving any public utility or common carrier from its responsibility or liability for damage to person or property." (Emphasis supplied.)
Kansas has no case law regarding the issue on appeal but the Florida Supreme Court has dealt with a case with almost identical facts. In Southern Bell T. & T. Co. v. Mobile America Corp., Inc., 291 So. 2d 199 (Fla. 1974), plaintiff Mobile sued defendant telephone company for negligent failure to comply with statutory duty to provide service. The plaintiff sought money damages because prospective customers were unable to contact the plaintiffs due to faulty telephone service. The plaintiffs also sought damages for poor service in the past. The trial court dismissed the suit, ruling the plaintiffs must first pursue remedy from the Florida Public Service Commission (PSC) under statute. The Florida appellate court reversed, holding the PSC was not authorized to adjudicate damages for negligence, making administrative action futile and thus unnecessary. The Florida Supreme Court affirmed the appellate court decision, holding such an action is inherently judicial. The Supreme Court held a trial court might seek PSC opinions when evidence is technical, but only the court could make the actual findings.
Defendant cites numerous Kansas cases supporting the contention that this action must first be brought before the KCC. Each case offered is readily distinguishable since the factual issues presented involved sophisticated technological facts, e.g., *887 Central Kansas Power Co. v. State Corporation Commission, 206 Kan. 670, 482 P.2d 1 (1971); or involved the issuance of licenses by the KCC, e.g., Pelican Transfer & Storage v. Kansas Corporation Commission, 195 Kan. 76, 402 P.2d 762 (1965); or concerned rate orders, e.g., Southwestern Bell Tel. Co. v. State Corporation Commission, 192 Kan. 39, 386 P.2d 515 (1963). Implicit in all of these actions was the consideration of the general public welfare and the ability of the KCC to fashion some rule, rate or remedy.
The import of K.S.A. 66-101 et seq. indicates no administrative remedy exists for a party where the dispute is essentially private. Where there is no administrative remedy, the litigant may proceed directly to district court. Cf. Beaver v. Chaffee, 2 Kan. App. 2d 364, 369, 579 P.2d 1217 (1978). Further private litigants have, in the past, proceeded directly to district court in breach of contract and negligence actions against public utilities. E.g., Wille v. Southwestern Bell Tel. Co., 219 Kan. 755, 549 P.2d 903 (1976). Finally, there is no need for administrative guidance. The questions put to the district court are inherently judicial, i.e., was there breach of contract? Was there negligence? Cf. Sunflower Electric Coop. v. Kansas Power & Light Co., 603 F.2d 791 (in an anti-trust action against a public utility, the federal district court has primary jurisdiction when question involves restraint of trade and award of attorney fees); See also K. Davis, Administrative Law Text § 19.06, p. 381 (3rd ed. 1972).
The order of the district court dismissing this action is reversed and the case is remanded for trial on the merits. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1496160/ | 71 F.2d 772 (1934)
SHELL PETROLEUM CORPORATION
v.
SCULLY.
No. 7263.
Circuit Court of Appeals, Fifth Circuit.
June 30, 1934.
C. P. Berry, of St. Louis, Mo., and Nicholas Callan, of New Orleans, La., for appellant.
R. C. Milling, of New Orleans, La., for appellee.
*773 Before BRYAN, FOSTER, and HUTCHESON, Circuit Judges.
HUTCHESON, Circuit Judge.
Plaintiff is the owner of a large body of salt marsh land in the parish of La Fourche, La., to wit, 26,794.65 acres. These lands, without value for agriculture or grazing, have a surface value for trapping purposes of $5 an acre. In addition, because of the prospecting for oil which has been going on in the Louisiana Gulf Coast country for many years, they have a speculative mineral value. Beginning in 1927, defendant, an oil company engaged in prospecting for and producing oil, had been negotiating with plaintiff for a selection lease on his land. Such a lease, common in that section, gives the grantee for a small down payment the right for a limited time to explore described premises, coupled with an option to lease at a price already agreed on, such portions of the described acreage as he may select. These negotiations failed. In March, 1930, defendant's shooting crew was conducting geophysical explorations generally on lands in that parish near the vicinity of plaintiff's land. Without plaintiff's knowledge, it exercised the right of exploration of his land by exploding heavy charges of dynamite, to wit, 750 pounds, at two shot points thereon, placing its recording instruments at points on or near plaintiff's property. By this unauthorized trespass defendant acquired information as to the possibility of minerals under approximately one half of plaintiff's land, and generally in that section, presumably of value to it in the explorations it was making. Defendant, when challenged for having gone on plaintiff's land, assured plaintiff that it was by mistake, offered to pay him for the privilege it took, and also offered to agree with him for a mineral lease. In the course of these efforts defendant advising plaintiff that it had gotten a "fast" shot over his property, that is, had discovered favorable signs, gave him the benefit of the information it had. Failing to obtain a satisfactory settlement, plaintiff brought this suit for the value of the right to explore the land, which he put at $5 an acre, and also for the cost of refilling the holes made by the shots. His petition did not claim that the shooting had diminished or in any way injured the mineral value of plaintiff's land or its marketability, or that any advantage had been taken of plaintiff as the result of any information the defendant had gotten by withholding it from plaintiff. The case was pitched entirely on the theory that the defendant had taken without paying for it, a privilege for which plaintiff was entitled to be paid. The evidence of both plaintiff and defendant was definitely directed to that one point, the value of what defendant had had without paying for it, and each offered the evidence which, as he saw it, tended to establish this. Defendant insisted that what it had taken was merely a shooting privilege, and that the value of that, rather than of a selection lease which carries not only general exploratory privileges, but a selection option at a price fixed before discovery of favorable indicia was the measure of what it had taken. It made proof that $15 to $50, according to the amount of dynamite used, was customarily paid for shooting privileges, and sought to confine the recovery on this head to some such small amount. Plaintiff insisted that a truer measure of what had been taken was the price paid for selection leases. He proved this price by oral testimony and by offering in connection with it as evidence of the value of the right, selection leases made in that vicinity, and urged that what defendant had gotten was worth a considerable sum. To this proof of the value of what it had gotten defendant objected that these leases, carrying with them full exploratory privileges, and also the valuable option of selecting for leasing after exploration, at a price fixed in advance such acreage as it desired, could throw no light on the measure of what defendant had gotten. That what defendant took was only a shooting privilege of no value to it, because not coupled with an option, and especially because defendant had fully disclosed to plaintiff what it had ascertained by shooting.
The District Judge took these objections with the case, observing that he could control the matter by a later ruling, and a considerable amount of this kind of evidence was offered by both sides. The evidence all in, no motion was made by defendant to exclude the part objected to; no request was made for a charge regarding it. The whole case as testified to was sent to the jury for their verdict. They found for plaintiff for $26,795. From the judgment on that verdict this appeal is prosecuted.
The assignments are seven in number. Three of them are general complaints of the verdict as contrary to the law and the evidence, and as excessive in amount. These assignments, under settled rules, present nothing for review. Of the remaining four only the fourth presents matter requiring serious consideration. The first, to the admission over defendant's objection, of the prices *774 paid for selection mineral leases, is without substance. It is quite clear that whether the particular evidence objected to was or was not properly admitted, no reversible error in admitting it is shown, for the objection was not followed up, a vast amount of proof of the same nature came in without objection, and no motion was made at the conclusion of the evidence to exclude it, nor any to instruct the jury about it. We think we should say, however, in view of another trial, that we think the evidence was admissible, not as direct or absolute proof of the value of what defendant took, but as evidence sufficiently relevant to be considered by the jury in fixing, under the provisions of article 2315[1] and of article 1934[2] of the Louisiana Civil Code, the amount defendant should pay plaintiff for the right it took. Lebleu v. Vacuum Oil Co., 15 La. App. 689, 132 So. 233 and 776, Assignment No. 2 complains that the jury were allowed to assess as damages the cost of filling the shot holes, $750, because only an acre was destroyed, and its total value was only $5. We overrule it. We do not think this a case to which the rule plaintiff invokes, that damage to a thing cannot be more than its entire value, justly applies. It would not be reasonable to hold that plaintiff should be limited to the surface value of the amount of land blown out by the shots. Plaintiff owned the land not as isolated acreages, but as a body of land. He was entitled to have the defendant restore the land to the condition it was in before the trespass.
We overrule the third assignment complaining of the court's charge, that the damage of $26,000 claimed in paragraph 22 of the petition was included in the larger claim of paragraph 21, as presenting nothing from which defendant could have taken hurt. If the instruction had any effect upon the case, it was to limit rather than to enlarge plaintiff's rights. Besides, the defendant's objection to the charge pointed out no error in it.
The fourth assignment is challenged by appellee as insufficient in that the exception to the charge on which it rests is too general. We do not agree with appellee in this criticism. It is true that the exception is general, but it is also true that the error it attacks is of equal generality. We think the exception reached and sufficiently called the attention of the court to the error complained of, to secure its correction had the court been so minded. It plainly pointed out that the charge excepted to presented a theory of damage not in the case by the pleadings or the evidence, and without support in law. Its effect was to call sharply to the court's attention that instead of submitting to the jury the claim plaintiff sued on, the value of the exploratory right defendant had taken without permission, the charge told them that plaintiff had been deprived of "an uncertainty" as to the mineral value of his land, and directed them to find and fix as damages "the value of that uncertainty." This charge was not only improper, as not within the issues, but as submitting for the jury's finding a thing impossible, under the evidence, to be told.
We are in no doubt that there was error in the instruction. It shows the difficulty inherent in working out a rational theory of recovery on the basis of injury done to plaintiff or his land in the face of the evidence that neither the land nor its value had been damaged, but that its value had actually been increased by the discovery and disclosure to plaintiff of the indications of the presence of oil under his land.[3]
*775 We do not agree, however, with defendant that there should have been an instruction for nominal damages only, or that in the face of its admitted wrongful trespass, plaintiff must stand without remedy, because of the difficulties in the way of properly measuring his recovery.
"It is a fundamental and cardinal principle of the law of damages that the injured party shall have compensation for the injury sustained. The injured party is entitled to recover full indemnity for his loss, and to be placed as nearly as may be in the condition which he would have occupied had he not suffered the injury complained of. No measure of damages which does not afford just compensation for the loss sustained can stand the fundamental test. Upon this principle the measure of damages in any case must be based, or it neither accords with principle nor authority." West Lbr. Co. v. C. R. Cummings Export Co. (Tex. Civ. App.) 196 S.W. 546, 552; Kirby Lumber Co. v. C. R. Cummings & Co., 57 Tex. Civ. App. 291, 122 S.W. 273.
In Louisiana, by the above-quoted provisions of the Code, this principle of recovery for breaches of contract is extended to suits for offenses, quasi offenses, and quasi contracts, making more certain the recovery of compensatory damages in those cases.
We think the difficulties the charge raises are attributable to the failure to distinguish plaintiff's case, as pleaded and proven to recover the value of a privilege enjoyed by a trespasser, though no damage was done to plaintiff's land or its value, from cases like Humble Oil & Refining Co. v. Kishi (Tex. Com. App.) 276 S.W. 190; Martel v. Hall Oil Co., 36 Wyo. 166, 253 P. 862, 255 P. 3, 52 A. L. R. 91, and Thomas v. Texas Co. (Tex. Civ. App.) 12 S.W. (2d) 597, brought to recover for the destruction of values. This resulted in a disregard of the simple theory of plaintiff's case (that by an act at least quasi an offense, giving rise to an obligation in quasi contracts defendant had taken a privilege for which he ought to pay, though in the exercise of it he had not caused plaintiff any injury other than that of taking by trespass a privilege for which pay was due, Lebleu v. Vacuum Oil Co., supra), and the substitution for it of the theory advanced in cases where the trespass has caused loss or destruction of values. Though a privilege was exercised on plaintiff's land, nothing, within the meaning of those cases, was lost or destroyed by defendant's act, except the state of uncertainty plaintiff was in as to the mineral prospects of his land. In attempting to apply a measure of damage sounding in loss, the court was thus driven to submitting this impossible, and under the evidence meaningless, measure of damage.
In further evidence of the difficulties *776 inherent in submitting the measure the court chose, attention is called to the instruction that "while defendants took away the value of the uncertainty they gave it back to plaintiff in the shape of concrete facts as to what was discovered. * * * Therefore it is for you to say whether or not plaintiff has had anything taken away from him at all," and to its modification on plaintiff's objection, that it would apply only if defendant was found to be in good faith, and would not apply if he was in bad faith. Cf. Vincent v. Morgan's La. & T. R. & S. S. Co., 140 La. 1027, 74 So. 541; Lebleu v. Vacuum Oil Co., supra, holding that only compensatory damage may be in any case allowed. Had the court submitted the simple issue plaintiff tendered, the reasonable value of the privilege which defendant took by trespassing, such difficulties as would undoubtedly have still inhered in solving it would have been very different from the insurmountable ones the charge as given raised. This is not a case like Kishi's Case, supra, where one drilling a dry hole without authority, thus condemning the land as unproductive, was made to pay the lost leasing value, or like Martel's Case, supra, where he was not. It is not a case supposed by Dean Green in his excellent discussion of the Kishi Case, 4 Tex. Law Review, No. 2, page 215, and later actually brought by Thomas, in Thomas v. Texas Co. (Tex. Civ. App.) 12 S.W.(2d) 597, supra, of land condemned by geophysical operations conducted by a trespasser. It is not like any of the others supposed by Green where the dissemination of a truth learned by trespassing has caused loss of a selling value, which, but for that dissemination, the thing in question would have had with those ignorant of the truth about it. None of the difficulties raised in that article are present here. Neither are those difficulties present which arise out of the contention made in Thomas v. Texas Co., supra, in analogizing suits for damage by wrongful geophysical operations to suits for disparagement of property, such as by slander of title, Wilson v. Dubois, 35 Minn. 471, 29 N.W. 68, 59 Am. Rep. 335; Hubbard v. Scott, 85 Or. 1, 166 P. 33; Stevenson v. Love (C. C.) 106 F. 466; Thomas v. Texas Co., supra, that there must be exact proof of the loss of a sale. Nor is this a case where defendant having obtained favorable geophysical information by a trespass on plaintiff's land, uses it to his own advantage in trading with plaintiff, keeping secret from him the information thus wrongfully obtained. This is simply and only a case in which the defendant has wrongfully taken, without payment, and may be held to pay for, a privilege on plaintiff's land, which it was plaintiff's to grant or to withhold. What amount he must pay we may not undertake precisely to say. Under the applicable Code articles, it is for the jury to fix it, not by way of penalty, but compensatorily. Vincent v. Morgan's La. & T. R. & S. S. Co., and Lebleu v. Vacuum Oil Co., supra. Thus fixed, it is to be measured, not absolutely, but as near as may be under the Code, by the value of that which the defendant took. It is for the jury to fix it upon consideration of the whole evidence, under appropriate guiding instructions. In this admeasurement all the circumstances of the actual taking have their due weight. What the defendant did not take by his trespass, as well as what he did take, must, in view of the nature of some of the proof, be kept carefully in mind in determining the value of what he took. We mean by this to say that though proof of the amount paid for exploration privileges in connection with selection leases is relevant and admissible as bearing upon what defendant got, the jury should be carefully instructed in regard to this evidence; they should be told that in taking it into consideration in fixing the value of the privilege defendant took, they must bear in mind that the defendant took, it exercised none of the privileges which go with a selection lease except that of exploration. Specifically, it did not get the option which goes with such leases. They must bear in mind that there has been no actual damage to plaintiff, apart from the shot holes, except that which inheres in the defendant's taking, without pay, what plaintiff was entitled to pay for. They should consider too, and give due weight to, the fact that the defendant did not use the information to plaintiff's disadvantage, but fully advised him of it. They should, in short, consider all the circumstances of the taking and its consequences, in an endeavor to give plaintiff that compensation which the Code allows. Under appropriate instructions, it is for them to say, under all the circumstances, whether the damage awarded shall be a little more than nominal, as in Lebleu's Case, supra, or substantially more. It is for them to fix, not vindictively but compensatorily, in the light of all the disclosures, the value of the privilege defendant has assumed to take on plaintiff's land.
The judgment is reversed, and the cause is remanded for further proceedings not inconsistent herewith.
NOTES
[1] "Every act whatever of man that causes damages to another, obliges him by whose fault it happened to repair it."
[2] This Article modified the general rule by providing "There are cases in which damages may be assessed without calculating altogether on the pecuniary loss, or the privation of pecuniary gain to the party. * * * In the assessment of damages under this rule, as well as in cases of offenses, quasi offenses, and quasi contracts, much discretion must be left to the judge or jury."
[3] "It is the petitioner's theory as owner of the land, he had the absolute right to explore and develop his land for mineral purposes to the exclusion of everyone else; that this was a valuable property right, and that he was deprived of that property right by virtue of the fact that the defendant went on his land and took that value away from him. Now, that brings us to a consideration of what that value was. It is my thought that the value of that land was what it was potentially worth for mineral possibilities. The evidence in the record here shows from the very character and nature of the land that it was not fit for agricultural purposes, and there is no evidence it was fit for grazing purposes. The only evidence in the record which bears on the subject is that it was used for trapping purposes, and that it had a potential value for mineral purposes; therefore it is my thought that the value which the land had for mineral purposes was measured by an element of uncertainty and it was the value of that uncertainty of which the plaintiff was deprived when the defendant went on his property. The plaintiff had the right to explore and develop his own property to determine whether or not there were minerals underneath his land, and had the right to do so to the exclusion of all other persons, therefore when defendant took away from plaintiff that right he deprived the land of the value of that uncertainty. Now the unusual point about this case as I take it is that while the defendant admittedly did go on the plaintiff's land and did conduct certain geophysical operations covering approximately half of the acreage, the defendant did discover information that was of value to the plaintiff. They made a "fast shot" on the property and that information was in the possession of the plaintiff before this suit was filed, therefore while they took away the value of that uncertainty, they gave it back to the plaintiff in the shape of concrete facts as to what was discovered as a result of their geophysical explorations; therefore it is for you to say whether or not the plaintiff has had anything taken away from him at all or not. The operations were undoubtedly carried on, but whether those operations damaged the plaintiff to the extent claimed, is a matter that you will have to determine in the light of the evidence. Now I assume you would conclude the situation to be different if the defendant went in there and fanned this entire property and kept the information within his own bosom and did not impart it to anybody else; if plaintiff did not know what that information was I assume the measure of damage in that case would be different from the measure of damage in this case. However, you are the sole judges of the facts in this case, and not me.
"Now, in conclusion, the matter may be summarized thusly: There is no yardstick by which you can measure the damage to which this plaintiff is entitled. He has undoubtedly suffered damage. That is admitted. Now the quantum of this damage is for you to decide, in the light of the evidence and all of the surrounding circumstances that throw light on the case." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1496573/ | 181 F. Supp. 275 (1960)
Herbert ROSENGARTEN
v.
UNITED STATES.
David ROSENGARTEN
v.
UNITED STATES.
Nos. 307-56, 308-56.
United States Court of Claims.
March 2, 1960.
Bernard Weiss, New York City, for plaintiffs.
H. S. Fessenden, Washington, D. C., with whom was Charles K. Rice, Asst. Atty. Gen., James P. Garland and M. Carr Ferguson, Washington, D. C., on the brief, for defendant.
JONES, Chief Judge.
These actions for the recovery of income taxes for the year 1945, $34,837.90 plus interest as to plaintiff Herbert Rosengarten, and $16,164.38 plus interest as to plaintiff David Rosengarten, have been consolidated by stipulation because of the similarity of the questions presented.
During the years 1944 and 1945 plaintiffs were members of a family partnership, the Herbert Manufacturing Co. of New York City. Each filed a Federal income tax return for 1945 on March 13, 1946, and subsequently paid the liabilities due thereon. In 1947, the Internal Revenue Service determined that the family partnership would be disallowed. Consequently, the profits of the partnership for a period including 1944 and 1945 were redistributed among the permitted partners of the Herbert Manufacturing Co., and deficiencies for those years were asserted against plaintiffs. The 1945 deficiencies were discharged by credits and *276 cash payments during 1948, 1949, and 1951. Plaintiff Herbert Rosengarten made a final payment of $3,137.38 on July 16, 1951, and plaintiff David Rosengarten made a final payment of $2,177.86 on July 15, 1951.
On February 7, 1950, each plaintiff filed a claim in duplicate for refund for the year 1944 with the Collector (now District Director) of Internal Revenue for the Third District of New York. The claims alleged that the disallowance of the family partnership was legally erroneous in the light of certain recent decisions and rulings. On March 3, 1950, refund claims for 1944 and 1945 were filed in behalf of Walter Rosengarten, brother and co-partner of plaintiffs, who had been deceased since February 1946, alleging the same grounds as those offered in plaintiffs' 1944 claims.
In June 1953, plaintiffs' returns for 1944 and 1945 were re-examined and, based on a favorable reconsideration of the family partnership question, overassessments were recommended for 1944 and 1945. The 1944 claims were allowed and the refunds were applied in part, by consent of the plaintiffs, to deficiencies owed by members of their respective families. Refund of the overassessments for 1945 was denied on the ground that neither plaintiff had timely filed a refund claim as required by section 322(b) (1), Internal Revenue Code of 1939.[1]
On inquiry, plaintiffs were informed that the Collector for the Third District had no record of any claim for 1945 having been filed by either plaintiff. Thereafter, a claim and an amended claim for 1945 were filed on July 2, 1953, and December 27, 1954, respectively, by each plaintiff. These overassessments of $34,837.90 as to Herbert, and $16,164.38, as to David, have not been refunded by the defendant and they form the subject matter of these consolidated suits.
Plaintiffs' claims for 1944 were prepared in pencil by an employee of an accounting firm who had them typewritten in duplicate after checking the pencil copy. Claims for 1945 were prepared in duplicate at the same time based on the same theory. The original and duplicate claims for both plaintiffs for both years were hand-carried by another employee of the accounting firm to the plaintiffs' place of business where they signed the documents presented to them.
At about the same time the accounting firm prepared claims for Walter Rosengarten for 1944 and 1945 for execution by his administratrix. These claims were also prepared in pencil, then typed in duplicate. The Walter Rosengarten claims were signed at a different time and were filed with the Collector.
It has not been shown whether plaintiffs' 1944 claims which admittedly were properly filed arrived at the Collector's office in one envelope or more than one.
It is plaintiffs' contention that the evidence supports their position that the 1945 claims, as well as those for 1944, were filed within the statutory period. As an alternative theory, they assert that the claims filed in July 1953, and December 1954, were merely formalizing statements of the legally sufficient informal claims for refund for 1945 contained by implication in their own claims for 1944 and Walter's claims for 1944 and 1945.
Section 322(b) (1) of the 1939 Code, on which the Collector based his denial, states that unless a claim for refund be filed within three years of the filing of the return for that year or within two years of the payment of the tax, no refund will be made or credit allowed.[2]*277 This section would seem to prohibit the Commissioner of Internal Revenue from making a refund in the absence of compliance with its provisions. Indeed, it has been held that a Government official has no power to waive the statute of limitations in this type of situation. United States v. Garbutt Oil Co., 1938, 302 U.S. 528, 58 S. Ct. 320, 82 L. Ed. 405. If then, as defendant maintains, the first claim for the 1945 tax year was not filed by either plaintiff until July 1953, at the earliest, there was no claim filed either within three years of the returns or within two years of the payments thereon (except as to the final deficiency installment payments of July 1951).
Plaintiffs direct our attention to a line of cases, the most recent of which is the case in the Ninth Circuit, Jones v. United States, 1955, 226 F.2d 24, which are to the effect that a strong presumption of receipt arises where there is evidence of proper preparation, addressing, and mailing of a claim for refund to the proper tax official. It has also been held that this presumption may be strong enough to overcome the presumption that a Government official has acted correctly or determined properly in respect to an official act.
All of the cases cited by plaintiffs, Detroit Automotive Products Corp. v. Commissioner, 6 Cir., 1953, 203 F.2d 785; Crude Oil Corp. of America v. Commissioner, 10 Cir., 1947, 161 F.2d 809; Haag v. Commissioner, 7 Cir., 1932, 59 F.2d 516; and Hudson v. United States, D.C. 1950, 92 F. Supp. 555, have in common the fact that the trial court was offered compelling evidence of correct preparation, signing, addressing, stamping, etc., of the claim while, at the same time, the Government was able only to offer evidence of a purely negative character, i. e., that the tax collector had no record of such claim having been filed in his office. The instant case differs, however, in regard to the evidence concerning those vital facts.
We are satisfied that claims for both plaintiffs for 1944 and 1945 were prepared in duplicate by the accounting firm. As a matter of fact, those for the year 1944 were received by the Collector and were stamped, logged, numbered and attached to the returns to which they pertained. We think that the claims for both years were signed by the plaintiffs when presented to them by the employee of the accounting firm. Moreover, the evidence to that effect is uncontroverted. The evidence as to what happened thereafter is less compelling.
Mr. Rossman, from the accounting firm, testifying some eight years and nine months after the fact, indicated that he knew in general terms that he was presenting original and duplicate claims for 1944 and 1945 to each plaintiff to be signed. He testified that they were signed and notarized and that two envelopes were prepared at his direction for mailing to the Collector of Internal Revenue. His recollection as to which of the documents were placed in which envelopes, the manner of affixing the stamps and where and when he mailed the envelopes is far less categorical. He could not definitely and explicitly describe his handling of these all-important documents; indeed, this is not unusual after a lapse of so many years. Moreover, we are aware of cases holding that there was a failure of filing notwithstanding evidence of timely filing where the evidence consisted *278 of a personal recollection of events which were supposed to have transpired several years before. Worden & Co. v. United States, 1938, 22 F. Supp. 418, 86 Ct. Cl. 556. The character of this portion of the evidence, relating to the mechanics of the alleged filing by mail of the 1945 claims, is not such as would lead us to say that a presumption of due delivery and receipt by the defendant has arisen. The evidence tending to show delivery of a claim to the Commissioner or his agent must be strong enough to suggest that it is highly probable that the filing has taken place. Otherwise no presumption will be indulged.
In any event, a presumption based on such evidence would not prevail against the evidence offered by the Government as to the general and specific procedures of the local Internal Revenue office. The defendant has not merely shown that it has no record of the claims at issue; it has shown that it is extremely doubtful that the claims ever, in fact, found their way to the office. We are not prepared to say that it is impossible for the claims to have been lost or mislaid in the office of the Collector after they had been received. But we do think, based on the evidence before us, that such eventuality was most unlikely.
Defendant has introduced evidence concerning the step-by-step treatment of incoming mail, particularly as to claims, in the Office of the Collector for the Third District of New York. Throughout the handling process of such documents various indexing and registry procedures are taken. It is virtually impossible for any in-coming document to be discarded with its envelope because of the practice of viewing every opened envelope over a glass scope. It will be noted that it is possible for both of Mr. Rossman's envelopes to have reached the Collector's office containing only the plaintiffs' 1944 claims.
Applying the evidentiary facts to the law as we understand it, we must conclude that the plaintiffs' evidence is not so compelling as to excuse the proof of actual filing in compliance with the statute on a theory of presumptive filing. It is with reluctance that we hold as we must in view of the admitted right of the plaintiffs, but for the failure of filing, to the claim before this court. This is all the more so since they themselves are not responsible for the forfeiture of the refund. They merely entrusted the purely mechanical end of their fiscal affairs to their accountants which is certainly a reasonable course for busy industrialists.
The alternative argument, that the 1953 and 1954 claims served to perfect informal claims previously presented through the media of plaintiffs' 1944 claims and the 1944 and 1945 claims of Walter Rosengarten, also fails when the specific facts are tested by the law.
There are a number of reasons why it has been said that "[T]he filing of a claim or demand as a prerequisite to a suit to recover taxes paid is a familiar provision of the revenue laws, compliance with which may be insisted upon by the * * * United States." United States v. Felt & Tarrant Mfg. Co., 1931, 283 U.S. 269, 51 S. Ct. 376, 377, 75 L. Ed. 1025; Aplington v. United States, Ct.Cl., 169 F. Supp. 815.[3] Perhaps the strongest justification for this rule is to insure that the Commissioner, as representative of the Government's fiscal structure, will be put on notice of refund claims so that it can reasonably be predicted what revenues will be available to meet the estimated liabilities.
An informal claim timely filed which fairly gives notice of a taxpayer's intention to press for a refund of taxes has been held to be sufficient to satisfy the statute, even if the formalizing of that claim is not accomplished until after the statute has run. This doctrine has been applied in this court and most of the other Federal courts. United States v. Kales, 1941, 314 U.S. 186, 62 S. Ct. 214, 86 L. Ed. 132; Crenshaw v. Hrcka, 4 Cir., 1956, 237 F.2d 372; Cumberland Portland *279 Cement Co. v. United States, 1952, 104 F. Supp. 1010, 122 Ct. Cl. 580.
Those and other cases acknowledge that a specific taxpayer may claim a refund for a specific year in a formal fashion even beyond the limitation period if the claim relates back to an informal claim filed by that taxpayer for that year within the limitation period. We are aware of no case, however, where a court has held that a request for refund for a particular year constituted a claim for another year, nor any case in which a claim for refund by a specific taxpayer constituted an informal claim for that year on behalf of a different taxpayer. Yet that is what plaintiffs would have us hold in this case.
The suggested bases for the plaintiffs' alleged informal claims for 1945 are their own claims for 1944 and those of their brother for 1944 and 1945. These, they insist, formed an ample basis on which the Commissioner might have surmised that plaintiffs were also claiming for 1945 since a favorable determination of the family partnership question presented in the claims actually filed would have entitled them to a refund for 1945 as well as 1944. This, in effect, would admit of a theory of filing by inaction.
If we are to hold that a certain act constitutes an informal claim alerting the Commissioner to a potential demand for refund which will satisfy the requirements of section 322(b) of the Code, the act must be clear and explicit. An act which merely makes it possible for the Commissioner to discover the existence of a claim if he makes an independent investigation and sorts out the clues will not do. The cases supporting plaintiffs' position all reveal that the device considered an informal claim was some definite instrument, a letter of transmittal, a waiver form, a qualification attached to a check, or the like, which indicated that the taxpayer questioned a tax payment which he had made for a particular year. Each device embodied a clarity which insured that the Commissioner would not be misled.
Before we can hold that there has been an informal claim filed within the statutory period, we must be satisfied that it contains the means by which the Commissioner will be apprised that a certain tax is being contested without resort to any extraneous factors. Notwithstanding the fact that the result of our holding is to deprive plaintiffs of the major part of a refund to which, on the merits of the claim, they are apparently entitled, we hold that the record does not establish in a satisfactory manner that a claim as to the refund of 1945 income taxes was filed by either plaintiff before July 2, 1953.
Plaintiffs' final payments of $2,177.86 and $3,137.38 on the 1945 tax liabilities were made on July 15 and 16, 1951. Under section 322(b) which authorizes recovery of taxes paid within two years of the filing of a claim (not to exceed the amounts paid within the two years) plaintiffs are entitled to judgment for those sums. In its brief, the defendant, in effect, admits this but states that refunds as to those amounts were not made because of plaintiffs' refusal to agree to offset against the deficiencies of the partnership members of their respective families. We find in the statutes no legal bar to plaintiffs' recovery of the sums paid on July 15 and July 16, 1951.
For the foregoing reasons judgments will be entered for the plaintiffs in the following amounts: plaintiff Herbert Rosengarten, $3,137.38; plaintiff David Rosengarten, $2,177.86, with interest on each as provided by law.
It is so ordered.
REED, Justice (Ret.), sitting by designation, and LARAMORE, Judge, concur.
WHITAKER, Judge, took no part in the consideration and decision of these cases.
MADDEN, Judge, with whom LITTLETON, Judge (Ret.), joins, dissenting:
The court has felt obliged to decide that claims of these plaintiffs, concededly *280 otherwise valid, must be rejected because, the court concludes, the plaintiffs did not file claims for refund within the period of time set by the statute for filing such claims.
We think the evidence points more strongly to the conclusion that the plaintiffs did file timely claims for refund. The court finds:
"Plaintiffs' claims for 1944 were prepared in pencil by an employee of an accounting firm who had them typewritten in duplicate after checking the pencil copy. Claims for 1945 were prepared in duplicate at the same time based on the same theory. The original and duplicate claims for both plaintiffs for both years were hand-carried by another employee of the accounting firm to the plaintiffs' place of business where they signed the documents presented to them."
The foregoing events occurred on February 7, 1950. In June 1953 the revenue office, having concluded that the plaintiffs were entitled to refunds for both 1944 and 1945, found the claim for refund for 1944 but was unable to find any such claim for 1945.
In this state of the evidence, the court concludes that the claim for 1945, though typed for and signed by the plaintiffs, was not sent to the revenue office, though the 1944, claim, signed at the same time, was sent.
To reach this conclusion, one must suppose that the plaintiffs were so careless of their claims for some $50,000 that they allowed the papers necessary to support those claims to be lost, although at the same instant of time they carefully mailed other papers of the same import relating to the preceding year. We think the foregoing supposition is quite violent.
To reach the opposite conclusion, one has to suppose only that the revenue office is not infallible in its handling of the tens of thousands of papers which it receives; that two papers out of those tens of thousands may have been misfiled and thereby lost. This supposition seems to us to contain no element of violence. On the contrary, it is consistent with the experience of every person who has had numerous dealings with large and impersonal organizations, public and private, handling myriads of documents.
We would not reject a just claim on the sole ground that the Internal Revenue Department could not find a paper relating to it three years after, according to trustworthy evidence, it was sent to that office. We would await the further development of automation before we would conclude that the Internal Revenue Department is immune from human error.
NOTES
[1] 26 U.S.C. 322(b) (1) (1952 Ed.).
[2] The cited section of the 1939 Code provides, in pertinent part:
"§ 322. Refunds and credits.
* * * * *
"(b) Limitation on allowance(1) Period of limitation.Unless a claim for credit or refund is filed by the taxpayer within three years from the time the return was filed by the taxpayer or within two years from the time the tax was paid, no credit or refund shall be allowed or made after the expiration of whichever of such periods expires the later. If no return is filed by the taxpayer, then no credit or refund shall be allowed or made after two years from the time the tax was paid, unless before the expiration of such period a claim therefor is filed by the taxpayer.
"(2) Limit on amount of credit or refund.
"The amount of the credit or refund shall not exceed the portion of the tax paid
"(A) If a return was filed by the taxpayer, and the claim was filed within three years from the time the return was filed, during the three years immediately preceding the filing of the claim.
"(B) If a claim was filed, and (i) no return was filed, or (ii) if the claim was not filed within three years from the time the return was filed the taxpayer, during the two years immediately preceding the filing of the claim." [26 U.S.C. 322 (1952 Ed.).]
[3] Certiorari denied 1959, 361 U.S. 821, 80 S. Ct. 69, 4 L. Ed. 2d 67. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1660170/ | 881 S.W.2d 32 (1994)
Ion CASU, Appellant,
v.
CBI NA-CON, INC., Appellee.
No. B14-92-01157-CV.
Court of Appeals of Texas, Houston (14th Dist.).
May 12, 1994.
Opinion Granting Rehearing July 7, 1994.
*33 Donna Roth, José L. Garriga, Houston for appellant.
William R. Towns, Reagan Wm. Simpson, Carla J. Bishop, David R. Poage, Philip Werner and Matthew Muth, Houston, for appellee.
Before MURPHY, SEARS and DRAUGHN, JJ.
OPINION
SEARS, Justice.
This is an appeal from a summary judgment. Appellant claims that the trial court erred in holding that the statute of limitations barred his suit. We agree, and reverse and remand the cause for trial.
OVERVIEW
Ion Casu, Appellant, was injured in a chemical accident on October 30, 1987. On November 4, 1987, approximately 20 days after the accident, an attorney representing Mr. Casu sent demand letters to CBI Na-Con, Inc., (Appellee), Marathon Petroleum Company and Westheimer Heavy Hauling Company. On December 4, 1987, Mr. Casu's attorney again sent a demand letter to CBI. On April 25, 1989, within the statute of limitations, Mr. Casu filed suit against Marathon and Westheimer. CBI was not added as a defendant until November 26, 1991, over two (2) years outside the statute of limitations. CBI moved for summary judgment on the ground that the statute of limitations had run. Mr. Casu filed medical affidavits alleging his mental incompetence, and asserted that under Tex.Civ.Prac. & Rem.Code Ann. § 16.001, the limitations period had been tolled. CBI did not controvert Casu's medical affidavits. The trial court initially denied the summary judgment on the ground that a fact issue existed as to whether or not Mr. Casu's mental status tolled the limitations period.
CBI again moved for summary judgment, alleging that the failure to timely join CBI could not have been the result of Casu's unsound mind, because Casu knew that CBI was a potential defendant in November of 1987, had retained legal counsel to represent him, and had timely filed suit against two other defendants. CBI cited Johnson v. McLean, 630 S.W.2d 790, 793 (Tex.App.Houston [1st Dist.] 1982, no writ), to support its position. CBI argued that because Appellant had "access to the courts," § 16.001 did not apply. The trial court signed a "blanket order" granting the summary judgment. The court then severed Appellant's claims against CBI from his claims against Marathon & Westheimer. Appellant was subsequently adjudicated incompetent in the Marathon/Westheimer cause. Appellant appeals the summary judgment, alleging that the statute of limitations was tolled due to his incompetency and relies on the recent Supreme Court opinion of Ruiz v. Conoco Inc., 868 S.W.2d 752 (Tex.1993), to support his position.
REASONING OF RUIZ
Ruiz addressed the issue of whether limitations is "tolled on a cause of action of a person of unsound mind during the pendency of a lawsuit brought on his behalf." The Supreme Court believed that "in many respects, mentally incompetent persons present a more compelling case for legal protection" than do children. Ruiz at 755. Conoco had argued, (as Appellee does here), that the main concern of the Legislature in drafting § 16.001 and the Courts in applying § 16.001 was an incompetent person's "access to the courts." The Supreme Court disagreed and noted that "access to the courts" is not the only purpose in providing a legally incapacitated *34 person the opportunity to protect his legal rights. "The disability of a person of unsound mind is not only the lack of access to the courts, but also the inability to participate in, control, or even understand the progression and disposition of their lawsuit." Id.
The Supreme Court concluded that "the mere commencement of a lawsuit by, or on behalf of, a legally incapacitated individual is, considered alone, insufficient to deny the protection of the tolling provision." Id. It noted that this decision did not mean "that an action commenced by, or on behalf of, a legally disabled individual can never be given preclusive effect." Id. However, they did not "face such an issue" in Ruiz. We do not believe that we "face such an issue" in this appeal.
ANALYSIS TO CASE AT BAR
In order for § 16.001 to toll the running of the statute, it is not required that the plaintiff be adjudicated incompetent. To prevent summary judgment, it is only required that the plaintiff raise the issue of mental incompetency. Swink v. Dallas, 36 S.W.2d 222, 224 (Tex.Comm'n App.1931, holding approved); Felan v. Ramos, 857 S.W.2d 113 (Tex.App.Corpus Christi 1993, writ denied); Tinkle v. Henderson, 730 S.W.2d 163, 166-167 (Tex.App.Tyler 1987, writ ref'd); Smith v. Erhard, 715 S.W.2d 707, 708 (Tex.App.Austin 1986, writ ref'd, n.r.e.); Bank of Commerce v. Barton, 605 S.W.2d 638, 639 (Tex.Civ.App.Fort Worth 1980, writ dismissed); Fricke v. Wagner, 315 S.W.2d 584, 587 (Tex.Civ.App.Austin 1958, writ ref'd, n.r.e.); and Annotation, Proof of unadjudged incompetency which prevents running of statute of limitations, 9 A.L.R. 2d 964 (1950). In this case, Ion Casu did raise the issue of mental incompetency, and his affidavits and evidence were uncontroverted. The doctors' affidavits and notes indicate:
(1) Mr. Casu suffers from "acute paranoid psychosis, very serious. [It] is a complication of the exposure;"
(2) "Cognitive functioning is defective;" "Memory functioning is defective;"
(3) Results indicate "confused thinking, significant problems with sustained attention and concentration, and problems with planning, sequencing and judgment. Memory is also markedly impaired...." The psychological presentation is the most significant aspect of this patient's symptomatology. He appears to be presently acutely psychotic with significant paranoid features ... In my judgment a great deal of his psychological presentation is secondary to the chemical exposure;
(4) "At the present time Mr. Casu is of unsound mind and has been since the time of the explosion;" and
(5) "Exposure to the explosion severely impaired Mr. Casu's judgment and competency."
CBI's motion for summary judgment alleged that § 16.001 did not toll the limitations period because Casu knew that CBI was a potential defendant and had retained an attorney before the statute ran. However, knowledge of a potential defendant and retention of counsel are not sufficient to "override" § 16.001. See Ruiz (supra). Ruiz obviously had knowledge of Conoco as a potential defendant because Conoco had been added as a third-party defendant by Cameron, and Ruiz had previously filed suit against Conoco. Further, Ruiz also had legal representation. However, the holding of Ruiz requires more than knowledge of a defendant and retention of counsel to waive the protections of § 16.001. Further, the Supreme Court severely restricted the application of Johnson v. Mclean, 630 S.W.2d 790 (Tex. App.Houston [1st Dist.] 1982, no writ), the case CBI relied upon in its motion for summary judgment. Because the summary judgment proof in this case shows no more than Mr. Casu's knowledge of CBI as a potential defendant and his retention of counsel, the summary judgment should have been denied.
It should be noted that CBI argues in its brief that Casu has intentionally waived his right to sue CBI. However, CBI neither pled waiver, nor proffered proof of waiver in its summary judgment motion. We can not affirm the judgment on a ground not presented to the trial court, and the trial court could not grant judgment on a ground never *35 raised. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 675 (Tex.1979), and Marshall v. Toys-R-Us Nytex, Inc., 825 S.W.2d 193, 195 (Tex.App.Houston [14th Dist.] 1992, writ denied).
In oral submission, CBI argued that there was no evidence or allegation that the failure to name CBI as a defendant before the expiration of the statute of limitations was caused by Appellant's inability to participate in the lawsuit. The attorney for Appellant responded that she made a conscious decision not to file a controverting affidavit pointing out that her client's inability to participate in the suit was a reason CBI was not timely named as a defendant. She contends to do so would be a violation of the attorney-client privilege.
It is possible that the lack of mental capacity of a client may be used as a coverup for legal malpractice and/or an excuse to keep a lawsuit in court when it should be dismissed. It is also a possibility that the cause of action of a mentally incompetent plaintiff can be "alive" as long as the plaintiff is alive. However, the Ruiz court held that such a possibility "does not dictate a different result." Ruiz at 756. The diminished mental capacity of Casu, like Ruiz, was allegedly caused by the accident made the basis of the lawsuit. It would be unjust to deny Appellant the protection provided by § 16.001.
We hold that Appellant sufficiently raised a fact issue regarding his mental incompetency, and his mental status was not challenged. Therefore the statute of limitations is tolled under § 16.001. The judgment of the trial court is reversed, and the cause is remanded for trial as to Ion Casu.
We note that Ion Casu is the only Appellant on the appeal bond. The trial court order complained of on appeal dismisses Appellee as to the claims of plaintiff "Ion Casu, individually, and the minor plaintiffs, John A. Casu, Jr., Virginia C. Casu and Juanita Casu, appearing by and through their next friend Cecilia Casu." The Court also appointed Matthew Mutt as guardian ad litem of the children at the next friend's, Cecilia Casu's, request, due to an alleged "conflict of interest." However, neither the next friend nor the guardian ad litem perfected an appeal on behalf of the Casu children. Further, there is no point of error, argument or authority cited to this court in the Ion Casu brief as to the error in the trial court's dismissal of Appellee as a defendant in the Casu children's causes of action. Therefore, this reversal applies only to the causes of action of Ion Casu, and does not affect the trial court's dismissal of Appellee from the children's causes of action.
OPINION ON MOTION FOR REHEARING
In our original opinion we noted that Ion Casu was the only Appellant on the appeal bond. Therefore, we reversed and remanded the causes of action as to Ion Casu only, and held that the reversal did not affect the trial court's dismissal of Appellee from the children's causes of action. The minor children have now filed a motion for rehearing and a motion for leave to amend the appeal bond. They note that they were "accidently omitted" from the bond.
We grant Appellants' leave to amend the appeal bond, grant their motion for rehearing, and amend the prior opinion which reversed only as to Ion Casu. The children are also under a legal disability, and their cause of action is derivative of their father's. We hold that the appeal and points of error are now effective as to the children, and we reverse and remand the entire judgment of the trial court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2124307/ | 123 Cal. App. 3d 840 (1981)
176 Cal. Rptr. 874
VOLKSWAGENWERK AKTIENGESELLSCHAFT, Petitioner,
v.
THE SUPERIOR COURT OF ALAMEDA COUNTY, Respondent; THOMAS F. THOMSEN et al., Real Parties in Interest.
Docket No. 51972.
Court of Appeals of California, First District, Division Four.
September 23, 1981.
*845 COUNSEL
Jeffrey A. Little, Justs N. Karlsons and Carroll, Burdick & McDonough for Petitioners.
No appearance for Respondent.
Robert N. Stark, Hefner, Stark & Marois, C. Afton Moore III, Moore, Crawford & Stefanki and Leonard Sacks for Real Parties in Interest.
*846 OPINION
POCHE, J.
Volkswagenwerk Aktiengesellschaft, a German Corporation (VWAG), properly joined as a defendant in a California action for bodily injuries and loss of consortium, petitions for mandate or prohibition to vacate discovery orders issued by respondent court which would require VWAG to permit inspection of its plant and documentary records, and to give other discovery, in Wolfsburg, West Germany. The dispositive question is whether the orders should be vacated to avoid a violation of West German judicial sovereignty. (1) This unusual and difficult issue may properly be raised by writ petition. (Cf. Board of Dental Examiners v. Superior Court (1976) 55 Cal. App. 3d 811, 815 [127 Cal. Rptr. 865]; Board of Administration v. Superior Court (1975) 50 Cal. App. 3d 314, 324 [123 Cal. Rptr. 530]; Volkswagenwerk Aktiengesellschaft v. Superior Court (1973) 33 Cal. App. 3d 503, 508 [109 Cal. Rptr. 219]; O'Brien v. Superior Court (1965) 233 Cal. App. 2d 388, 391-392 [43 Cal. Rptr. 815]; cf. also Witkin, Cal. Evidence (2d ed. 1966) §§ 1050-1051, pp. 958-961; Annot. (1964) 95 A.L.R. 2d 1229, 1232-1241, as supplemented.) (2a) We conclude that in the circumstances of this action the orders should be vacated.
The action arises out of a collision which occurred on October 22, 1976, when claimant Thomas Thomsen, driving a Volkswagen microbus manufactured by VWAG, struck a stopped vehicle. The front of the microbus apparently was pushed back into the driver's compartment, severely injuring Thomsen. Ultimately one of his legs was amputated. He and his wife (claimants), real parties in interest before this court, sued several defendants. Their theory against VWAG is that the microbus design was defective in that it did not provide sufficient "crashworthiness." The microbus is also known as a "type II vehicle"; VWAG has recently replaced type II vehicles in production by a newer van design called a "Vanagon."
Claimants filed suit on June 24, 1977, and added VWAG as a defendant on September 18, 1978. There have been protracted discovery proceedings, including several bitterly contested motions for discovery orders and for sanctions. In December 1979, on claimants' motion and over VWAG's objection, a single judge was assigned to preside over further proceedings in the action. The first judge assigned was Hon. Hugh S. Koford; Judge Koford was replaced in the assignment by Hon. Robert L. Bostick in November 1980.
*847 In December 1980, claimants moved for the discovery orders here in dispute. After hearings throughout which VWAG strenuously opposed all aspects of the motion, Judge Bostick (by orders filed on Feb. 3 and Feb. 23, 1981) granted most of the relief claimants sought. In outline the orders provide:
1. Premises.
a. Access: Claimants' representatives are to have access to the VWAG facilities at Wolfsburg during normal working hours on five consecutive days to inspect and photograph the premises, inspect and copy writings, and informally interview VWAG personnel. During claimants' inspection of facilities VWAG will provide a guide. Claimants may stay after normal working hours until 10 p.m. to examine and copy writings only, and during that time VWAG may designate a monitor at claimants' expense.
b. Inspecting and photographing premises: Claimants' representatives may inspect and photograph VWAG's facilities, subject to relevancy limitations and to existing and future protective orders.
2. Writings.
a. Access to technical library and plant and records: Claimants' representatives shall have access to VWAG's technical library and plant and records "relating to the Type II vehicles and predecessor and successor vehicles within its type, including the currently produced Vanagon model," subject to relevancy, trade-secret, and personnel-record limitations.
b. Inspecting and copying writings: Claimants' representatives may inspect and copy writings "which plaintiffs shall designate as bearing upon the design, testing, modification and analysis of the crashworthiness of the front end of the Type II vehicles and predecessor and successor vehicles within its type from the outset of production through the `Vanagon' model currently produced." The order makes procedural provisions.
3. Informal interviews.
Claimants' representatives may, during normal working hours, "question any of defendant's employees, not under oath, ... to identify *848 persons who possess knowledge.... Such questioning shall not consist of detailed interrogation as to substantive knowledge, but be only that reasonably necessary for plaintiffs to select appropriate persons for depositions and to locate documents." Claimants must minimize inconvenience; VWAG shall "advise and request" cooperation. VWAG may have counsel present and may tape record.
4. Depositions.
Following the Wolfsburg visit, claimants shall provide a list of deponents within 45 days. Terms and procedures for depositions of deponents so listed are spelled out with specific reference to certain diplomatic communications known as "Notes Verbales," discussed below.
5. Ancillary provisions.
The orders also specify a date (since past) for the Wolfsburg visit to begin, require claimants to designate their representatives in advance, make all proceedings subject to an existing protective order, anticipate future consideration of depositions of experts, dispose of other pending issues, provide for administration of oaths, and state generally that: "The discovery procedures governing the conduct of counsel in this proceeding shall be those contained in plaintiffs' No. 1, the Notes Verbales commencing with the February 11, 1955 Note and, specifically, as set forth in the last exchange of the Notes of October 17, 1979 and February 1, 1980.[1]" Footnote 1 provides: "(1) This `less restrictive' procedure is authorized by Article 27(b) and (c) of the Hague Convention on Taking of Evidence Abroad in Civil or Commercial Matters, ..."
By its petition to this court VWAG attacks these orders in several ways.
California Law
(3) VWAG first contends that the discovery orders are not authorized by the local law of California. Manifestly, to be enforceable outside the state a California discovery order must in the first instance comply with the California Discovery Act. VWAG makes several specific contentions; we agree with two of them.
First, the provision (contained in par. 1(d) of the Feb. 23 order) which empowers claimants to designate which of VWAG's writings *849 are relevant to the specified subject matter is too broad. In any event it would be necessary as a practical matter for claimants to designate the documents they wished to copy, and in light of the position which VWAG has maintained throughout this action it would be inevitable that VWAG would disagree with claimants as to the relevance of many if not all of the documents so designated. If such disagreements could not be resolved by negotiation, they should be resolved by the trial court. As drafted, the order would in effect empower claimants to resolve such disputes; a party to the dispute cannot be so empowered. In our view the provision would conform to the Discovery Act were the words "plaintiffs shall designate as bearing upon" deleted and the words "are relevant to" substituted.
(4) Second, we find in the Discovery Act no authority for the requirement that VWAG give claimants access, during normal working hours, to its employees for the purpose of informal interviews. A party to litigation is entitled to unimpeded access to persons who may have relevant information, and may if necessary have court orders to forestall interference with such access. But these discovery orders go farther, requiring VWAG not only to permit claimants to interview its employees within its plant during working hours but also to "advise and request" that the employees cooperate with claimants. It is of course the policy of the Discovery Act that its provisions be liberally construed in favor of disclosure "unless clearly prohibited by statute or policy considerations." (Browne v. Superior Court (1979) 98 Cal. App. 3d 610, 614 [159 Cal. Rptr. 669]; cf. Pacific Tel. & Tel. Co. v. Superior Court (1970) 2 Cal. 3d 161, 172-173 [84 Cal. Rptr. 718, 465 P.2d 854]; Greyhound Corp. v. Superior Court (1961) 56 Cal. 2d 355, 372 [15 Cal. Rptr. 90, 364 P.2d 266].) But we conclude that the provision for informal interviews cannot be brought within the Discovery Act by simple construction no matter how liberal. To validate the provision we would be required to extend the Discovery Act beyond its statutory text, and recent cases have made clear that such an extension would be improper. (Cf. Bailey v. Superior Court (1977) 19 Cal. 3d 970, 978 [140 Cal. Rptr. 669, 568 P.2d 394] (videotaping depositions); Edmiston v. Superior Court (1978) 22 Cal. 3d 699, 703-704 [150 Cal. Rptr. 276, 586 P.2d 590] (videotaping of medical examination "not affirmatively authorized"); Browne v. Superior Court, supra, 98 Cal. App. 3d 610, 614 (physical examination by nonphysician); Bailey v. Superior Court (1978) 79 Cal. App. 3d 444, 446-448 [144 Cal. Rptr. 875] (§ 2031 "production" of a nonverbal act to be photographed).) The provision for informal interviews should be stricken from the orders in any event.
*850 We reject the rest of VWAG's contentions under the Discovery Act.
(5) VWAG argues that claimants have adequate alternative means of discovery "by established and proper procedures" and that they "have already had the benefit of pertinent discovery." Presumably this argument is addressed to the patently innovative character of the discovery orders in this action. When this question is considered without reference to whether the orders are otherwise valid the short answer appears to be that the trial court had ample cause to make the orders. It plainly appears that claimants have pursued various orthodox discovery procedures, that VWAG has consistently resisted discovery, and that the materials VWAG has produced (although apparently voluminous) have been accompanied by no assurance that they were complete or responsive. The record supports the trial court's determination that claimants needed the court's assistance and that heroic measures were called for.
VWAG also argues, more specifically, that claimants have failed to make a showing of good cause sufficient to warrant the orders for inspection of its premises and records. (6) The production and inspection procedures contemplated by Code of Civil Procedure section 2031 may be judicially enforced only upon a showing of "good cause." (Code Civ. Proc., § 2034, subd. (a).) The party required to show good cause "shall show specific facts justifying discovery and that the matter is relevant to the subject matter of the action or reasonably calculated to lead to the discovery of admissible evidence." (Code Civ. Proc., § 2036, subd. (a).) But "the moving party need only show, in addition to relevance (broadly construed), that his reasons for seeking discovery are within the declared purposes of the Discovery Act (that is, discovery will aid his case) and that discovery may be allowed without doing violence to equity, justice, or the inherent rights of the adversary." (Louisell & Wally, Modern Cal. Discovery (2d ed. 1972) § 6.05, p. 420; cf. also Beesley v. Superior Court (1962) 58 Cal. 2d 205, 209 [23 Cal. Rptr. 390, 373 P.2d 454]; Suezaki v. Superior Court (1962) 58 Cal. 2d 166, 172 [23 Cal. Rptr. 368, 373 P.2d 432, 95 A.L.R. 2d 1073]; Greyhound Corp. v. Superior Court, supra, 56 Cal. 2d 355, 388, 389; Louisell & Wally, op. cit. supra, § 6.05, pp. 424-433; Associated Brewers Distr. Co. v. Superior Court (1967) 65 Cal. 2d 583, 586-587 [55 Cal. Rptr. 772, 422 P.2d 332].) "The court's determination necessarily depends on the facts and issues of the particular case." (Associated Brewers Distr. Co. v. Superior Court, supra.) In this action the trial court had access to and carefully considered the voluminous record of all proceedings to date. Such of the trial record as is before us in this *851 writ proceeding amply supports the trial court's conclusion that there was "good cause" in the requisite sense under sections 2031 and 2034.
(7) Referring again to the provisions for inspection of premises and documents, VWAG argues that claimants have not complied with the plain requirement of section 2031 that a proponent first seek inspection by nonjudicial request. (Cf. People ex rel. Dept. of Transportation v. Superior Court (1976) 60 Cal. App. 3d 352, 358 [131 Cal. Rptr. 476].) But so literal a reading of section 2031 would defeat the purposes of the Discovery Act in this action. It is clear that claimants have repeatedly but vainly sought production of documents sufficient to persuade them, and the trial court, that complete disclosure has been made. Claimants' motion cannot be said in these circumstances to represent an "unreasonable burden" on the trial court (cf. People ex rel. Dept. of Transportation v. Superior Court, supra, 60 Cal. App. 3d 352, 357-358); and VWAG has had ample opportunity "to review such material and exercise available privileges or interpose other valid objections...."
(8) VWAG next argues in substance that the orders do not adequately describe the documents to be examined. The purpose of section 2031's requirement that documents to be inspected be adequately identified, is to protect the respondent from abuse, oppression, or other injustice. (Cf. Louisell & Wally, op. cit. supra, § 6.06, pp. 438-442; Greyhound Corp. v. Superior Court, supra, 56 Cal. 2d 355, 394-395; Pacific Auto. Ins. Co. v. Superior Court (1969) 273 Cal. App. 2d 61, 70 [77 Cal. Rptr. 836] (subpoena).) The description in these orders is undeniably broad. But we conclude that in all the circumstances reflected in the record the breadth of the description is warranted and permissible.
VWAG also argues that Judge Bostick's discovery orders "reversed, without authority," Judge Koford's prior rulings. Whether or not a prior ruling on the issues by Judge Koford would, as a matter of law, preclude the orders in dispute here, we are satisfied that the trial court's finding that Judge Koford had not ruled in respects here relevant is supported by the record.
German and International Law
(2b) VWAG next contends that the orders, even to the extent they would be valid under the California Discovery Act, encroach impermissibly upon the judicial sovereignty of West Germany.
*852 (9) The law of West Germany, and the terms of existing agreements between West Germany and this country, may be ascertained by judicial notice. (Evid. Code, §§ 452, subds. (c), (f), 454; cf. Estate of Chichernea (1967) 66 Cal. 2d 83, 86, fn. 2 [57 Cal. Rptr. 135, 424 P.2d 687].) Such notice is available in the trial court and, independently, in this court (Evid. Code, § 459) which is not bound by the trial court's determination (cf. Gallegos v. Union-Tribune Publishing Co. (1961) 195 Cal. App. 2d 791, 798 [16 Cal. Rptr. 185]; Estate of Gogabashvele (1961) 195 Cal. App. 2d 503, 508 [16 Cal. Rptr. 77].) In determining foreign law by judicial notice this court can consult or use "[a]ny source of pertinent information, including the advice of persons learned in the subject matter... whether or not furnished by a party" (Evid. Code, § 454, subd. (a)), provided that "[w]here the subject of judicial notice is the law of an organization of nations, a foreign nation, or a public entity in a foreign nation and the court resorts to the advice of persons learned in the subject matter, such advice, if not received in open court, shall be in writing." (Evid. Code, § 454, subd. (b).)
The parties have submitted substantial relevant material. From it (and from published sources which we cite below) we reach the following conclusions.
West Germany is a civil law state; apparently in common with other civil law states it takes the position that, in general, gathering of evidence within the state is exclusively the function of the state's courts and that any encroachment on this function by the courts or citizens of any foreign state may be regarded as a violation of West Germany's "judicial sovereignty." (Report of United States Delegation to Eleventh Session of Hague Conference (1969) 8 Internat. Legal Materials (U.S. Report) pp. 785, 804, 806; Edwards, Taking of Evidence Abroad in Civil or Commercial Matters (1969) 18 Int. & Comp. L.Q. (Edwards) pp. 618, 646, 647.) Until 1979, in general, West Germany recognized no international procedures for production of documents or inspection of premises within its territory, and suffered testimony to be taken within West Germany for use elsewhere, by procedures more or less comparable to common law deposition, only by application of principles of international comity to recognized categories of testimony-taking (cf. Drobnig, Bilateral Studies In Private International Law, No. 4, American-German Private International Law (1972) (Drobnig) pp. 340-341; Smit, International Co-operation in Litigation: Europe (1965) (Smit)). Depositions arranged privately, depositions on commission, and depositions on letters rogatory, all of which were tolerated subject to relatively *853 strict limitations. (Cf. also Note (1978) 29 Hastings L.J. 1237, 1238; Volkswagenwerk Aktiengesellschaft v. Superior Court, supra, 33 Cal. App. 3d 503, 506 (hereinafter VWAG 1973).)
In 1979 West Germany ratified the Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (23 U.S.T. 2555, T.I.A.S. 7444) which had been adopted by an international conference at The Hague in 1970 and thereafter had been ratified by several countries including the United States. This Hague Convention provides international access, by means consistent with local sovereignty, to evidence within West Germany. "One of the principal objects of a Convention on this subject is to bridge differences between common law and civil law systems." (Edwards, at p. 646.) To this end the conferees sought among other things to simplify and expedite use of "letters of request" which under the Hague Convention are considerably broader in function than letters rogatory. (U.S. Report, at p. 807.) By letter of request a "requesting authority" (here, for example, the California superior court) may transmit to a "Central Authority" in the country in which the evidence is to be taken a request for judicial assistance to be forwarded to and executed by a local "executing authority" (in West Germany, for example, the local court). Under the Hague Convention as adopted, the request can extend to testimony and to inspection of documents and property; procedures specified by the requesting authority will be applied to the extent feasible and consistent with local law; the executing authority shall apply those "measures of compulsion" which would be available in local actions; and the letter of request "shall be executed expeditiously."
Consistent with authority contained in the convention West Germany specified in connection with its ratification that "the taking of evidence by diplomatic officers or consular agents is not permissible in its territory if German nationals are involved" and that West Germany "will not, in its territory, execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries." West Germany also maintained strict control over the activities of commissioners and did not authorize consular personnel or commissioners to apply to local authorities for "appropriate assistance to obtain ... evidence by compulsion." West Germany specified other limitations and qualifications to the Hague Convention as well.
Neither the trial court nor claimants purport to proceed under the Hague Convention. Nor do the orders describe procedures which West *854 Germany had historically tolerated, as a matter of international comity, before 1979. Instead, claimants and the trial court rely on an exchange of diplomatic messages, called "Notes Verbales," between the United States and West Germany, citing article 27 of the Hague Convention for the proposition that "less restrictive" procedures, which claimants profess to find in the Notes Verbales, are authorized by the convention.
These Notes Verbales arose out of the postwar Allied occupation of Germany. Before World War II the evidence-taking powers of foreign consular officers within West Germany had apparently been limited to the consular compound (as distinct from "German territory" outside the consulate) and in no event extended to taking of testimony of West German nationals. In February 1955, as the Allied occupation ended, the United States High Commissioner addressed a Note Verbale to the West German Federal Ministry of Foreign Affairs asking that American consular officers in West Germany be authorized to take testimony of West German nationals; apparently the consular officers had taken voluntary depositions of all nationalities during the occupation. The upshot of a further exchange of Notes Verbales between American and West German governments, concluding on October 8, 1956, was an understanding that American consular officers could question West German and other non-American nationals, without compulsion of any kind, with an opportunity for the person questioned to be accompanied by counsel, at the consular premises or (upon the express request or express consent of the person to be questioned) at the home or place of business of the person to be questioned. Read together, these Notes Verbales represent an international understanding which will (at least as a practical matter) be honored. By a further exchange of Notes Verbales on October 17, 1979, and February 1, 1980, America and West Germany confirmed that the earlier Notes Verbales remained in effect notwithstanding ratification of the Hague Convention.
It is clear that the "questioning" contemplated by the Notes Verbales was intended to be informal and essentially investigative. Texts which refer to such questioning as "depositions" (cf., e.g., Smit, p. 202 at fn. 232; Whiteman's Digest of Internat. Law (1968) p. 223) apparently are not using the term as it would be understood under California discovery law. Because their scope is so narrow the Notes Verbales do not qualify the positions of the United States and West Germany under the Hague Convention in any relevant respect. References in the disputed discovery orders to the Notes Verbales are anomalous: In terms the Notes *855 Verbales do not apply to the discovery procedures described in the orders.
(2c) We are compelled to conclude that because they conform to no West German law, treaty, or practice of which we have been made aware the discovery orders, if executed in West Germany under the authority of the respondent court, would violate West German judicial sovereignty.
Validity of the Orders
VWAG argues that because the discovery orders would violate West German sovereignty they could not be made by a California court. VWAG relies heavily on VWAG 1973, in which it successfully litigated similar issues eight years ago. In VWAG 1973 claimants Gorden sued VWAG for injuries, alleging design and manufacturing defects in a Volkswagen automobile. Gorden obtained discovery orders (1) appointing a commissioner to take depositions of VWAG employees at Wolfsburg and (2) permitting Gorden to inspect and take pictures at the VWAG plant: Sanctions were threatened should VWAG refuse to comply. VWAG, represented by the same attorneys who represent it here, had presented to the trial court a German aide memoire, an affidavit of an expert on German law, and a letter from the United States State Department, all to the effect that the orders would violate German sovereignty and international law. The orders issued. VWAG obtained a writ of mandate from the Third District Court of Appeal, which reasoned (in relevant part): "A foreign corporation's amenability to local suit does not signal automatic subjection of its internal affairs to the courts of the forum, because the latter have no jurisdiction over persons or property outside their territory. [Citation.] ... [¶] Whatever the generous provisions of the California discovery statutes, courts ordering discovery abroad must conform to the channels and procedures established by the host nation. The limitation may rest on any one of several theories comity, curtailed discretion or implied statutory qualification. In this case the California discovery orders would impair the powers of the Federal Republic of Germany to control the property and personnel of an entity which it has created and which has never left its protection. [Citation.] Through its Embassy and through the State Department, the Federal Republic of Germany had specifically informed the superior court that letters rogatory administered by the German courts were the *856 appropriate vehicle for discovery. Whether the superior court's election to ignore these declarations represented an abuse of discretion or an excess of jurisdiction, it will be annulled by mandate." (VWAG 1973, 33 Cal. App. 3d 503, 507-508.)
Our ultimate conclusion, that the discovery orders in this action should be vacated as a matter of international comity, is analogous to that reached by the VWAG 1973 court, but we reach it by a substantially different route.
In the first place, VWAG 1973's generalization that "the courts of the forum," meaning (in context) California, "have no jurisdiction over persons or property outside their territory" is far too broad. At least since Internat. Shoe Co. v. Washington (1945) 326 U.S. 310 [90 L. Ed. 95, 66 S. Ct. 154, 161 A.L.R. 1057], it has been clear that a corporation chartered outside a state but with sufficient business activities within the state will be subject to suit in the courts of the state. (Cf. also Buckeye Boiler Co. v. Superior Court (1969) 71 Cal. 2d 893 [80 Cal. Rptr. 113, 458 P.2d 57].) VWAG is a party to this action, and does not contest its amenability to suit. (10) Once a foreign corporation is properly subject to a court's jurisdiction, it (like any other party validly joined in a local lawsuit) may with technical propriety be ordered to act or to refrain from acting, in matters relevant to the lawsuit, at places outside the state. (Cf. Rest.2d Conf. of Laws, § 53; 1 Witkin, Cal. Procedure (2d ed. 1970) Jurisdiction, §§ 142-147, pp. 669-674.) In this sense, and to this extent, at least, VWAG's internal affairs are subject to the orders of a California court in an action to which it has been made a party. In Coopman v. Superior Court (1965) 237 Cal. App. 2d 656 [47 Cal. Rptr. 131], on which VWAG 1973 relies, a party sought indirectly to search the records of a Nevada corporation which was not a party to the action; the Coopman generalizations do not apply to a corporation which is properly a party to the action in which the orders issue.
It is also the general rule that the law of the forum (again, in this case, California) will govern procedural matters, including such matters of pretrial practice as "the taking and use of depositions, discovery and penalties for refusal to comply with proper request for information." (Rest.2d Conf. of Laws, § 127, com. a., subd. 5.) Further, "[i]t ... seems that a defendant who has had sufficient contacts with the forum *857 state to give it personal jurisdiction can consistently with due process be required, on pain of default, to conform to that state's discovery procedures as essential incidents of the exercise of jurisdiction." (Note, Developments in the Law Discovery (1961) 74 Harv.L.Rev. 940, 1050.) That VWAG should have been chartered by, and should maintain its manufacturing facility in, a jurisdiction which would regard these California discovery orders as violations of its sovereignty seems happenstance so far as the California action is concerned: A strong argument can be made that as a legitimate party to a California action VWAG may be required to elect between the demands of the California court and the sensitivities of the West German government, and to risk the sanctions authorized by California law should it elect not to give the required discovery.
On the other hand, in cases such as this American courts traditionally and properly recognize the countervailing force of international comity: The concept that the courts of one sovereign state should not, as a matter of sound international relations, require acts or forebearances within the territory, and inconsistent with the internal laws, of another sovereign state unless a careful weighing of competing interests and alternative means makes clear that the order is justified. Rulings based in this concept of international comity are dictated not by technical principles of jurisdiction of the parties to or subject-matter of particular lawsuits, but rather by exercise of judicial self-restraint in furtherance of policy considerations which transcend individual lawsuits. (Cf. Rest.2d Foreign Relations Law of the United States, §§ 39-40.) Particularized to discovery matters it is (as VWAG 1973 recognized) "a policy of avoiding international discovery methods productive of friction with the procedures of host nations." (VWAG 1973, supra, 33 Cal. App. 3d 503, 508.)
(11) Federal cases which have dealt with procedures tantamount to international discovery have generally recognized that what is required is a case-by-case process of balancing the interests of the respective sovereignties to reach an appropriate "accommodation of the principles of the law of the forum with the concepts of due process and international comity." (Cf., e.g., In re Westinghouse Elec. Corp. Uranium, etc. (10th Cir.1977) 563 F.2d 992, 996-999; Arthur Andersen & Co. v. Finesilver (10th Cir.1976) 546 F.2d 338, 341-342.) The same federal cases also generally affirm in the first instance the jurisdictional power of federal courts to order a party to give discovery in another country, and generally *858 apply the "balancing approach" only when the responding party has failed to give full discovery and seeks to avoid sanctions by asserting the conflict of sovereign demands upon it. (Ibid.; cf. also Societe Internationale v. Rogers (1958) 357 U.S. 197, 211-212 [2 L. Ed. 2d 1255, 1266-1267, 78 S. Ct. 1087].)
We agree with the approach suggested in the federal cases. But we add a qualification which we deem an appropriate reconciliation of local jurisdiction and international comity: If the initial discovery order is to be validated, and if consideration of conflicts of sovereignty is to be postponed until after the responding party has failed to give the ordered discovery, then at least the initial discovery order must appear to take into account the ascertainable requirements of the foreign state and to adopt those procedures which are least likely to offend that state's sovereignty. It may be that no such accommodation is possible; if so, then arguably the order should be validated to the extent that it complies with local law, upon the assumption that the respondent party will do everything within its power to induce the foreign government to permit the discovery. But if a channel more apt to elicit the cooperation of the foreign government is plainly available but is not used, then in our view insufficient account of the requirements of international comity had been taken and the order should be set aside in the first instance.
(2d) Here the Hague Convention provides an obvious and preferable alternative means of obtaining evidence from within West Germany. Claimants argue that the convention is too restrictive to be of practical benefit. They are concerned particularly that the Convention mandates use of letters rogatory which (as visualized by claimants) would bind them to written interrogatories. We believe claimants read the Hague Convention too narrowly: The convention expressly contemplates that the German courts should seek in good faith to implement any legitimate discovery procedure the California court may request. It is true that by the terms of its ratification West Germany has indicated that it will not execute letters of request for pretrial discovery of documents, but we suggest that this limitation should be tested, in this action, by a specific request that West Germany permit inspection of documents in light of the manifest need for full disclosure of evidence in the pending California action. In our view an order drafted to employ the discovery means least likely to antagonize the foreign government may also properly require the responding party to take all possible steps to secure the permission and cooperation of the foreign government. We have no doubt that VWAG has the attention and respect of the West German *859 government and that a request from VWAG to suffer discovery to proceed in substantial conformity with California law would be favorably received.
Federal cases also suggest that concerns of international comity such as those which motivate us here should be considered only if such concerns have been brought to the court's attention, through diplomatic channels, with direct reference to the orders in question. (Cf., e.g., American Industrial Contr., Inc. v. Johns-Manville Corp. (W.D.Pa. 1971) 326 F. Supp. 879, 880-881; Arthur Andersen & Co. v. Finesilver, supra, 546 F.2d 338, 342.) In VWAG 1973, a West German aide memoire and a State Department letter were forwarded to the court; in this action, although counsel for VWAG represented at oral argument that an aide memoire had been issued, we have received no diplomatic communication. Nevertheless we are satisfied that West Germany would, were the matter brought to its attention, deem the discovery orders a violation of its judicial sovereignty. We perceive no need to wait for an aide memoire.
Once again we stress that we do not question the jurisdiction of the trial court to order VWAG, as a party to the lawsuit before it, to give discovery in West Germany. With the qualifications we have stated under California law, the orders are appropriate to the action and VWAG is legitimately subject to the orders. We conclude only that the trial court, in the exercise of judicial restraint based on international comity, should have declined to proceed other than under the Hague Convention at this stage.
We regard our conclusion as an exercise of judicial self-restraint designed to serve what we regard as important international goals. We could perhaps read the Hague Convention, broadly, as a preemptive and exclusive rule of international evidence-gathering, binding upon us as the supreme law of the land under clause 2 of article VI of the federal Constitution. But we prefer to believe that the Hague Convention establishes not a fixed rule but rather a minimum measure of international cooperation; our reading of article 27 of the convention encourages us to conclude that this is, indeed, what the ratifying states intend.
Let a writ of mandate issue directing the trial court to set aside its discovery orders of February 3 and February 23, 1981, without prejudice *860 to renewed application for discovery orders procedurally consistent with the views expressed in this opinion.
Rattigan, Acting P.J., and Christian, J., concurred.
The petition of real parties in interest for a hearing by the Supreme Court was denied January 20, 1982. Broussard, J., did not participate therein. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2035740/ | 626 N.E.2d 280 (1993)
254 Ill. App. 3d 97
193 Ill. Dec. 247
A.W. WENDELL and SONS, INC., Plaintiff-Appellee,
v.
Masood A. QAZI et al., Defendants-Appellants.
No. 2-92-1410.
Appellate Court of Illinois, Second District.
December 29, 1993.
Rehearing Denied February 3, 1994.
*283 Edward P. Freud, Todd M. Porter (argued), Ruff, Weidenaar & Reidy, Ltd., Chicago, David L. Coghlan, O'Donnell, Murtaugh & Coghlan, Lombard, for Masood A. Qazi and Yasmin Qazi.
Robert Steinbock-Sinclair, Oak Brook, Keith E. Roberts, Sr., Robert R. Verchota *284 (argued), Donovan & Roberts, P.C., Wheaton, for A.W. Wendell and Sons, Inc.
Justice McLAREN delivered the opinion of the court:
The plaintiff, A.W. Wendell & Sons, Inc., filed suit against the defendants, Masood A. Qazi, M.D., and Yazmin Qazi, for breach of contract for the nonpayment of extras on a construction contract. The Qazis responded by filing affirmative defenses alleging that Wendell failed to substantially perform under the contract by failing to construct the home in a workmanlike manner and by failing to properly supervise and direct all work on the project. After a bench trial, the trial court found the Qazis failed to sustain the burden of proving their affirmative defenses. Judgment was entered in favor of Wendell and against the Qazis for $152,185.32, which included a reduction of $1,750 that Wendell owed to the Qazis for minor repairs to the home. On appeal, the Qazis request this court to reverse the trial court's judgment and enter judgment in their favor or, alternatively, to reverse or vacate the judgment and remand for a new trial before a different judge. The Qazis assert that the trial court erred by: (1) finding that Wendell sustained its prima facie case of recovery for extras on the construction contract, including engineering fees; (2) finding that the doctrine of res judicata barred the Qazis from asserting their affirmative defenses; (3) finding that the Qazis failed to sustain their burden of proving Wendell had a duty to supervise the marble installation; (4) allowing evidence to be introduced on the issue of Wendell's contractual obligation to supervise the marble installation in light of the court's prior ruling granting partial summary judgment in favor of the Qazis on the same issue; and (5) barring the Qazis' expert witnesses as a sanction for violating Supreme Court Rule 220 (134 Ill.2d R. 220). For the following reasons, we affirm in part, reverse in part, and modify in part.
On August 5, 1987, the Qazis entered into a contract with A.W. Wendell & Sons, Inc., to design and construct a single-family residence located in an exclusive area of Oak Brook, Illinois, known as the Midwest Club. The contract price of the home was $881,967. Article 10 of the construction contract between Wendell and the Qazis provided that Wendell would act as general contractor on the project. As general contractor, Wendell agreed to "supervise and direct the work" on the home and assumed responsibility for acts and omissions of "all Subcontractors, their agents and employees and all other persons performing any of the Work under a contract with the Contractor." Article 11 defined a "Subcontractor" as "a person who has a direct contract with the Contractor to perform any of the Work at the site."
Although Wendell's role as general contractor encompassed its responsibility to hire subcontractors, article 12 of the contract reserved the Qazis' right to enter into separate contracts with subcontractors of their own choice. Subsection 12.3 of article 12 specified that "[a]ny costs caused by defective or ill-timed work shall be borne by the party responsible therefor."
Wendell's pricing sheet for the home listed Walsh Tile Company as the proposed subcontractor for marble work. However, the Qazis exercised their rights under article 12 by entering into a separate contract with a marble installer of their own choice known as Marble Supply International, Inc. Qazi forwarded a copy of the contract to Wendell. Thereafter, Wendell listed Marble Supply on its statements which indicated names of the subcontractors furnishing labor and materials on the home.
The Qazis prepared to move into the home in August 1989. When the protective coverings placed on the floors during construction were removed, the Qazis discovered that a substantial portion of the marble flooring was cracked and chipped. The existing floors needed to be replaced with new marble.
On January 18, 1990, the Qazis filed a four-count complaint in the circuit court of Cook County against Wendell and others seeking a judgment declaring that they were not obligated to make further payments on the home until the defective work was remedied (hereinafter referred to as *285 Qazi I). On March 9, 1990, Wendell recorded a lien on the property under the Mechanics Lien Act (770 ILCS 60/0.01 et seq. (West 1992)) in the circuit court of Du Page County for the nonpayment of $149,288.58 due for extras on the construction contract. On May 30,1990, Wendell filed a complaint to foreclose the mechanic's lien, for breach of contract, consumer fraud, common-law fraud, and conspiracy.
On June 1, 1990, Wendell filed a motion to dismiss the complaint in Qazi I pursuant to section 2-619(a)(3) of the Code of Civil Procedure on the ground that there was another action pending between the same parties for the same cause, namely, Wendell's Du Page County suit to foreclose the mechanic's lien, for breach of contract, and other relief. (735 ILCS 5/2-619(a)(3) (West 1992).) Alternatively, Wendell moved to transfer venue to Du Page County to consolidate Qazi I with his suit to foreclose the mechanic's lien. The motion to transfer was granted. (735 ILCS 5/2-1001 (West 1992).) Upon transfer, the circuit court of Du Page County gave Qazi I its own number and failed to consolidate it with Wendell's suit to foreclose the mechanic's lien.
Thereafter, Wendell filed a motion in the circuit court of Du Page County to dismiss the Qazis' complaint in Qazi I for failure to state a cause of action. (735 ILCS 5/2-619 (West 1992).) Wendell's motion was granted on December 7,1990, by Judge Black on the basis that Wendell could not be liable for breaching a contract to which it was not a party. The Qazis filed several motions to vacate the dismissal order and transfer the cause to the law division for consolidation with Wendell's suit to foreclose the mechanic's lien. The final motion to reconsider the dismissal order was denied in September 1991. The Qazis' appeal of that order remained pending during the trial in the instant case.
Prior to trial, the Qazis filed a motion for partial summary judgment to establish Wendell's contractual obligation to cure defects in the marble installation and chimney foundation. (735 ILCS 5/2-1005(d) (West 1992).) The trial court entered partial summary judgment against Wendell on the issue of liability for the condition of the fireplace. The court further entered partial summary judgment in favor of the Qazis concerning Wendell's contractual obligation to supervise. The trial court also granted Wendell's motion to bar the testimony of the Qazis' expert witnesses as a sanction for violating the disclosure requirements of Supreme Court Rule 220 (134 Ill.2d R. 220).
Aside from Wendell's cause of action for breach of contract, all of the various counts of Wendell's complaint against the Qazis were either voluntarily dismissed or dismissed with prejudice pursuant to motion by the Qazis prior to trial. Thus, the trial solely concerned Wendell's cause of action for breach of contract. As an affirmative defense, the Qazis asserted that Wendell was contractually obligated to perform all work on the project in a workmanlike manner and that Wendell breached the agreement by failing to properly supervise and direct the work and correct any resulting defects. Specifically, the Qazis asserted that Wendell failed to provide adequate support structures for the marble flooring; that the flooring had extensive cracks and damages; that the living room floor tilts and sways when walked upon; that Wendell failed to install working fireplaces; and numerous other unrelated allegations.
At trial, Steven Wendell testified that he is a licensed architect and builder employed by his family business, A.W. Wendell and Sons, Inc. As architect and general contractor on the Qazis' home, Wendell received a fee for "overhead and supervision" equal to 12½ of the contract amount due to each subcontractor, plus an additional 12% for extras. Mr. Wendell admittedly charged this fee for overhead and supervision on subcontracts between the owner and the contractor, including the contract between the Qazis and Marble Supply. Mr. Wendell rationalized that "[i]f the owner, for example, decided to buy his own lumber, decided to do his own concrete, if I did not have that provision [of charging a fee for overhead and supervision], he could just take my fee away to nothing." Mr. Wendell testified that he did not oversee the marble installation by Marble *286 Supply and conversed with the installers solely to furnish storage areas and heat and light for the workers.
The Qazis filed a motion to reconsider a prior ruling barring the use of expert testimony. As an offer of proof, counsel for the Qazis indicated that Howard Stearn, an architect, would offer his opinion concerning the adequacy of the flooring as installed. Keith Kissner, a general contractor who owns a marble company, would specify the costs necessary to repair and reinstall the marble flooring in the Qazis' home. The court denied the Qazis' motion to reconsider, reiterating that it barred the expert testimony as a sanction for violating the disclosure requirements of Supreme Court Rule 220 (134 Ill.2d R. 220).
Following closing arguments, the trial court found that Wendell substantially performed all of the work required under the contract in a good and workmanlike fashion. On July 7, 1992, judgment was entered in favor of Wendell and against the Qazis for $152,158.32 plus costs. The court did not state how it arrived at this figure, but it was the precise amount sought by Wendell's counsel.
Next, the court addressed the Qazis' affirmative defenses, stating as follows:
"I find that not only did the Defendants fail to establish that by a preponderance of the evidence, but that the evidence when considered as a whole clearly supports the contrary to that position and clearly supports the finding by overwhelming evidence that no such obligation was ever agreed to or reasonably contemplated between Dr. and Mrs. Qazi and the Plaintiff, A.W. Wendell and Sons, Inc.
I also find that the evidence also overwhelmingly establishes that Marble Supply was a direct contract party with the Defendants, Dr. and Mrs. Qazi, and was not in any way the subcontractor of A.W. Wendell."
The court recognized that Wendell retained 12% of the contract price for the marble floors as its fee. However, this fact did not override the language of the contract whereby Wendell assumed liability and guaranteed the workmanship of its "Subcontractors." Under the terms of the contract, Marble Supply was not a "Subcontractor" of Wendell because it did not have a direct contract with Wendell to perform work at the site. Therefore, the court ruled that Wendell owed no contractual duty to the Qazis. Concerning the Qazis' affirmative defense that the defects in the marble resulted from Wendell's negligence in failing to adequately construct the foundation for the marble, the court ruled that there was no evidence in the record to support such a finding. Alternatively, the court ruled that the Qazis' affirmative defenses
were barred by the doctrine of res judicata, since the affirmative defenses were the subject of the Qazis' cause of action in Qazi I, which was dismissed by Judge Black on the basis that Wendell was not liable for the conduct of Marble Supply and it was not a party to the contract.
Subsequent to the entry of the judgment in favor of Wendell in the instant case, this court entered its Rule 23 order in Qazi I, which affirmed Judge Black's dismissal, but not for the rationale stated by Judge Black. (Qazi v. A. W. Wendell Sons, Inc. (2d Dist. Oct. 22, 1992), No. 2-91-1077 (unpublished order under Supreme Court Rule 23) (Qazi I).) Rather, we affirmed on the basis that there was another action pending between the same parties for the same cause, namely, Wendell's instant suit against Qazi for breach of contract. The rationale cited by this court was not an adjudication on the merits. 735 ILCS 5/2-619(a)(3) (West 1992).
The Qazis filed a post-trial motion for a new trial on all the issues or for a remittitur damna to reduce the amount of the judgment to $41,888.73. The motion addressed the inconsistencies of the partial summary judgment ruling and the court's final judgment, and the finding of res judicata as to the Qazis' affirmative defenses in light of this court's Rule 23 order in Qazi I. The motion was denied after a hearing and this appeal ensued.
WENDELL'S CASE IN CHIEF FOR RECOVERY OF EXTRAS
The Qazis seek to vacate the court's order entering judgment in favor of Wendell *287 for $152,158.32 for extras on the construction contract. The ruling was based on a finding that the additions to the original construction contract were agreed upon by the parties and the resulting improvements were accepted by the Qazis. The Qazis assert that the trial court's ruling is against the manifest weight of the evidence because the record is "virtually devoid of evidence" indicating that Wendell was entitled to recover funds for "extras" on the construction contract.
To recover additional compensation from an owner for extra work on a construction contract, a contractor must prove that: (1) the work was outside the scope of the construction contract; (2) the extra items were ordered by the owner; (3) the owner agreed to pay extra, either by his words or conduct; (4) the extras were not furnished by the contractor as his voluntary act; and (5) the extra items were not rendered necessary by any fault of the contractor. (Berg & Associates, Inc. v. Nelsen Steel & Wire Co. (1991), 221 Ill. App. 3d 526, 535, 162 Ill. Dec. 779, 580 N.E.2d 1198.) A contractor must prove by "clear and convincing evidence" that the contract items were for extra work, that the owner ordered such extras, agreed to pay for them, and waived the necessity of a written stipulation. (R & R Construction Co. v. Junior College District No. 529 (1977), 55 Ill.App.3d 115, 118, 12 Ill. Dec. 795, 370 N.E.2d 599.) The contractor sustains this burden by proving that the extra work was requested by the owner, and there is no evidence indicating that the work was necessary or voluntarily performed due to fault by the contractor. Berg & Associates, 221 Ill.App.3d at 535, 162 Ill. Dec. 779, 580 N.E.2d 1198.
Section 21.1 of the construction contract requires the owner to authorize all changes to the original contract by signing a written "change order." Mr. Wendell admitted that change orders 12 through 15, which increased the contract sum by $50,174.82, were not signed or approved in writing by the Qazis. However, Mr. Wendell testified that Dr. Qazi refused to sign any change orders after discovering the marble flooring had cracked. In Mr. Wendell's opinion, the written approval was a "formality" because Dr. Qazi orally agreed to the changes before the work was performed. Dr. Qazi urges that he could not have orally agreed to the items listed in the disputed change orders because he had no further conversations with Wendell after discovering the cracked marble. Since the contract clearly and unambiguously required the Qazis to approve of any changes in writing, the Qazis assert that Wendell's testimony concerning Dr. Qazi's oral agreement was inadmissible parol evidence and should have been stricken. In the absence of Mr. Wendell's testimony, the Qazis assert that there is insufficient evidence in support of Wendell's prima facie case of recovery of contract extras.
Under the "merger doctrine" and the "parol evidence rule," preliminary negotiations to a contract are merged into the final agreement. (Howard A. Koop & Associates v. KPK Corp. (1983), 119 Ill. App. 3d 391, 75 Ill. Dec. 276, 457 N.E.2d 66.) Evidence concerning any prior written or oral agreement concerning the content of the written contract is inadmissible. (Magnus v. Lutheran General Health Care System (1992), 235 Ill.App.3d 173, 182, 176 Ill. Dec. 209, 601 N.E.2d 907.) However, under Illinois law, parties to a written contract may alter or modify its terms by a subsequent oral agreement, even though the terms of the contract preclude oral modification. (Berg & Associates, 221 Ill. App.3d at 535, 162 Ill. Dec. 779, 580 N.E.2d 1198; Falcon, Ltd. v. Corr's Natural Beverages, Inc. (1987), 165 Ill.App.3d 815, 821, 117 Ill. Dec. 480, 520 N.E.2d 831, later proceeding (1988), 173 Ill.App.3d 291, 123 Ill. Dec. 41, 527 N.E.2d 504; Estate of Kern v. Handelsman (1983), 115 Ill.App.3d 789, 71 Ill. Dec. 407, 450 N.E.2d 1286, appeal after remand sub nom. In re Estate of Kern (1986), 142 Ill.App.3d 506, 514, 96 Ill. Dec. 815, 491 N.E.2d 1275.) Contrary to the Qazis' contention, Mr. Wendell's testimony concerning Dr. Qazi's subsequent oral agreement was admissible.
*288 The issues of the existence of an oral modification, its terms and conditions, and the intent of the parties are questions of fact to be determined by the trier of fact. (South Shore Amusements, Inc. v. Supersport Auto Racing Association (1985), 136 Ill.App.3d 284, 287, 91 Ill. Dec. 55, 483 N.E.2d 337.) The findings of the trial court concerning these issues will not be disturbed on review unless they are contrary to the manifest weight of the evidence. South Shore Amusements, 136 Ill. App.3d at 287, 91 Ill. Dec. 55, 483 N.E.2d 337.
Typical items billed by the disputed change orders include carpentry, electrical work, appliances, plumbing, heating, painting and tiling. Our review of the disputed change orders reveals that a majority of the costs relate to items in excess of the allowance under the original contract or items billed based upon actual completion costs. The Qazis contend that costs assessed for excavation and haul out were not extras, but were part of the original contract price. An addendum to the original contract, admitted as part of plaintiffs' exhibit 7, lists the allowances for various contracted items. It specifically excludes haul out as part of the excavation allowance and indicates that haul out will be billed based on "time and material." While the Qazis claim no responsibility for items billed in the disputed change orders, they have no dispute over the credits for billing errors and returned appliances contained therein.
The change orders also include $11,019.57 for engineering fees. In their brief, the Qazis state that "it is abundantly clear that at least $4,000 of the $11,019.59 [sic] claimed by Wendell to be due and owing from the Qazis was not contained within any change order, and that at no time did Steven Wendell claim or testify that such engineering fees were part of the base contract." The Qazis contend that they did not agree to pay for any engineering fees and that the trial court erred in assessing these fees as a portion of the judgment entered against them.
Although the trial court, as the trier of fact, was in a superior position to determine whether Dr. Qazi agreed to all the changes, including the engineering fees, our review of the record reveals that there is insufficient evidence in support of this finding. The sole evidence that the Qazis agreed to pay engineering fees is contained in plaintiff's exhibit 18, a letter sent by Dr. Qazi to Mr. Wendell. In the letter, Dr. Qazi expresses concern about the condition of the home and its delayed delivery. In paragraph 4, Dr. Qazi proposes a series of meetings between the appropriate parties and "expert opinions" to resolve who is responsible for the damage, the costs, and any penalties. When questioned about the effect of this letter, Mr. Wendell testified that he retained the engineering firm of Raths, Raths & Johnson after Dr. Qazi's letter requested him to do so. Wendell is correct in its assertion that the engineering fees assessed predate the filing of the instant lawsuit. However, the engineering firm was first contacted after the Qazis blamed Wendell for the cracked marble. In addition, the same engineering firm was retained by Wendell as an expert witness for trial. Allowing Wendell to recover these fees would effectively charge the Qazis for the expense of Wendell's expert witness.
The trial court's judgment in favor of Wendell for $152,158.32 does not indicate how the figure was computed. Since the trial judge expressly found that all of the items in the change orders were agreed upon and accepted by the Qazis, we assume that the final judgment includes engineering fees of $11,019.57 as assessed in the change orders. Based on the evidence presented, we determine that Wendell sustained its burden of proving, by clear and convincing evidence, that the unsigned change orders, aside from the engineering fees, reflected work outside the scope of the original contract, which was ordered and agreed to by the Qazis, and was not voluntarily furnished or necessary due to Wendell's fault.
*289 THE QAZIS' AFFIRMATIVE DEFENSES
A builder is not required to build a perfect structure. (Evans & Associates, Inc. v. Dyer (1993), 246 Ill.App.3d 231, 239, 185 Ill. Dec. 900, 615 N.E.2d 770.) Rather, a builder is held only to a duty of substantial performance in a workmanlike manner. (J.R. Sinnott Carpentry, Inc. v. Phillips (1982), 110 Ill.App.3d 632, 637, 66 Ill. Dec. 671, 443 N.E.2d 597.) Substantial performance of a contract means performance of all the essential elements necessary to accomplish the purpose of the contract. W.E. Erickson Construction, Inc. v. Congress-Kenilworth Corp. (1986), 115 Ill. 2d 119, 126, 104 Ill. Dec. 676, 503 N.E.2d 233.
The Qazis asserted, as affirmative defenses, that Wendell breached its duty of substantially performing in a workmanlike manner by (1) failing to correct defective work; and (2) by failing to supervise and direct all the work on the home. A great deal of evidence was heard on these issues at trial. However, the trial court denied any recovery of the affirmative defenses based on a lack of proof. The court found that the language of the contract unambiguously imposed no duty on Wendell to supervise the installation of the marble by Marble Supply, that there was no evidence in the record to support a finding that the cracked marble resulted from Wendell's breach of a duty to construct the foundation in a workmanlike manner, and that Wendell substantially performed all the conditions required by the contract. The court did not comment on damages proximately caused by a breach of duty.
As an alternate theory to deny recovery, Judge Darrah found the Qazis' affirmative defenses were barred by the doctrine of res judicata, since Judge Black dismissed the issues raised by the affirmative defenses in Qazi I.
Under the doctrine of res judicata, or claim preclusion, a final judgment on the merits rendered by a court of competent jurisdiction absolutely bars a subsequent action involving the same claim, demand, or cause of action by the same parties or their privies. (People ex rel. Burris v. Progressive Land Developers, Inc. (1992), 151 Ill. 2d 285, 294, 176 Ill. Dec. 874, 602 N.E.2d 820; Rodgers v. St. Mary's Hospital (1992), 149 Ill. 2d 302, 311, 173 Ill. Dec. 642, 597 N.E.2d 616.) A judgment is "on the merits" in the sense that it may be pleaded to bar a subsequent action where it amounts to a decision concerning the rights and liabilities of the parties based on ultimate facts or facts disclosed by pleadings, evidence, or both, and on which the right of recovery depends irrespective of formal, technical, or dilatory objections or contentions. (Fried v. Polk Brothers, Inc. (1989), 190 Ill.App.3d 871, 878, 138 Ill. Dec. 105, 546 N.E.2d 1160). The doctrine of collateral estoppel, or issue preclusion, bars the relitigation of particular issues decided in another action between the same parties on a different cause of action. (Cirro Wrecking Co. v. Roppolo (1992), 153 Ill. 2d 6, 19-20, 178 Ill. Dec. 750, 605 N.E.2d 544.) While res judicata precludes the relitigation of single causes of action between two parties, collateral estoppel bars the relitigation of particular facts and issues common in the prior and subsequent actions which are material to both dispositions. (Cirro, 153 Ill.2d at 20, 178 Ill. Dec. 750, 605 N.E.2d 544.) Res judicata bars all matters that were actually raised or could have been raised in the prior proceeding. However, collateral estoppel will not be applied unless it appears that the party against whom the estoppel is asserted had a full and fair opportunity to litigate the issue in the prior proceeding. Fried, 190 Ill.App.3d at 878, 138 Ill. Dec. 105, 546 N.E.2d 1160.
Judge Darrah was correct in stating that an involuntary dismissal with prejudice sometimes operates as an adjudication on the merits. (See General Parking Corp. v. Kimmel (1979), 79 Ill.App.3d 883, 889, 35 Ill. Dec. 154, 398 N.E.2d 1104.) However, a dismissal for lack of jurisdiction, for want of prosecution (Fanaro v. First National Bank (1987), 160 Ill.App.3d 1030, 112 Ill. Dec. 432, 513 N.E.2d 1041), for improper venue or forum non conveniens (see Natural Gas Pipeline Co. v. Phillips Petroleum Co. (1987), 163 Ill.App.3d 136, *290 114 Ill. Dec. 372, 516 N.E.2d 527), or for the failure to join an indispensable party (Patzner v. Baise (1986), 144 Ill.App.3d 42, 98 Ill. Dec. 251, 494 N.E.2d 178) is not an adjudication on the merits. We affirmed Judge Black's dismissal of Qazi I on the basis that there was another action pending between the parties for the same cause. (735 ILCS 5/2-619(a)(3) (West 1992).) We specifically rejected Judge Black's theory that Wendell could not be liable to Qazi for the actions of Marble Supply since it was not a party to that contract. In the instant case, the issues raised by Wendell and by the Qazis in their affirmative defenses were never litigated or adjudicated on the merits for the purposes of res judicata or collateral estoppel in Qazi I. Judge Black's dismissal in Qazi I, although with prejudice, did not determine the ultimate rights and liabilities of the parties based on ultimate facts. Our affirmance of Judge Black's dismissal in Qazi I contemplated that the matters asserted therein would be adjudicated in the instant case. For these reasons, the doctrine of res judicata or collateral estoppel does not bar the Qazis from raising their affirmative defenses in the instant case. Thus, the trial court's finding in this regard was error as a matter of law.
1. DUTY
In rendering its final judgment, the trial court stated that the clear and unambiguous language of the contract imposed no duty on Wendell to supervise the conduct of Marble Supply. However, prior to trial, the court entered partial summary judgment in favor of the Qazis on this very issue, stating as follows:
"I find in favor of [the Qazis] and enter summary judgment on those two issues; that [Wendell] is liable either by virtue of his duty to supervise, under the language of the contract, or by virtue of his duty to contractto construct the subfloor in a workmanlike fashion.
But that still begs the question as to whether or not there was a causal relationship between the abrogation of either of those two duties and the cracking of the tile, and if there is a relationship, then what's the damages incurred by the owner.
And to complicate it even further, all of this should be subject to a factual determination of the impact of [the trial court's] prior ruling on what I have ruled today."
The final order on this issue read as follows:
"Summary judgment is granted on issue of liability of [Wendell] either to supervise the marble tile installation or [Wendell's] duty to construct a proper substructure to be determined at trial not inconsistent with the decision entered by [the trial court] in [Qazi I]."
Section 2-1005(d) of the Code of Civil Procedure describes the procedures to be followed in ruling on motions for a summary determination of less than all issues in a case:
"If the court determines that there is no genuine issue of material fact as to one or more of the major issues in the case, but that substantial controversy exists with respect to other major issues, or if a party moves for a summary determination of one or more, but less than all, of the major issues in the case, and the court finds that there is no genuine issue of material fact as to that issue or those issues, the court shall thereupon draw an order specifying the major issue or issues that appear without substantial controversy, and directing such further proceedings upon the remaining undetermined issues as are just. Upon the trial of the case, the facts so specified shall be deemed established, and the trial shall be conducted accordingly." (Emphasis added.) 735 ILCS 5/2-1005(d) (West 1992).
According to the express terms of section 2-1005, after the court entered partial summary judgment in favor of the Qazis on the issue of liability, the only issues remaining for trial should have concerned the causal relationship between Wendell's breach of duty, if any, and the damages incurred by the Qazis. However, Judge Darrah disregarded his prior ruling and allowed Mr. Wendell to testify about the *291 impact of a client's choice of subcontractor on his fee. Upon rendering the final judgment, Judge Darrah contradicted his prior summary judgment ruling by finding that the contract between Wendell and the Qazis did not obligate Wendell to supervise the installation of the marble by Marble Supply.
Although the court did not formally vacate its prior ruling granting partial summary judgment in favor of the Qazis in a written order, the comments by Judge Darrah during trial and in rendering judgment indicate that he clearly disavowed the order entering partial summary judgment. Wendell attempts to resolve these inconsistencies by asserting that the partial summary judgment ruling was subject to Judge Black's pronouncements in Qazi I. We note that when entering partial summary judgment in favor of the Qazis, Judge Darrah stated:
"I am going to award partial summary judgment, based on the language of the contract, that the Plaintiff owed a duty to supervise the installation of the tile and/or owed a duty to cause the subfloor upon which the tile rests to be constructed in a workmanlike fashion.
* * * * * *
The issues of the causal relationship between either of those obligations and the cracked marble, the issues of the damages that the cracked marble presents to the non-breaching party and the interrelationship of that liability to matters found by [the trial court in Qazi I] to be in conflict with what I have said, and, hence res judicata, I will reserve.
So to the extent that what I have just found is not inconsistent with what the proofs show Judge Black's ruling were [sic], they will stand."
The italicized language does indicate that Judge Darrah's ruling was conditional on the findings of Judge Black in Qazi I.
Nevertheless, if Judge Darrah did not intend to grant partial summary judgment based on the language of the contract, or intended to vacate his prior ruling based on Judge Black's pronouncements in Qazi I, he should have done so. As a result of this confusion, counsel for the Qazis conducted the trial under the mistaken premise that they had sustained their burden of proving that Wendell had a duty to supervise the marble installation and the construction of the subfloor upon which the marble rests in a workmanlike fashion. When the trial court entered its final ruling that the language of the contract clearly and unambiguously imposed no liability on Wendell for the conduct of Marble Supply, the Qazis were stunned, to say the least.
Thus, the Qazis assert that the trial court's finding that they failed to sustain their burden of proving Wendell had a duty to supervise the installation of the marble by Marble Supply is against the manifest weight of the evidence. The contractual language the trial court found to be unambiguous specifically described Wendell's obligations as follows:
"10.1 The Contractor shall supervise and direct the work, using his best skill and attention. The Contractor shall be solely responsible for all construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract.
* * * * * *
10.4 The Contractor warrants to the Owner and the Architect that all materials and equipment incorporated in the Work will be new unless otherwise specified, and that all Work will be of good quality, free from faults and defects and in conformance with the Contract Documents. All Work not so conforming to these standards may be considered defective.
* * * * * *
10.7 The Contractor shall be responsible for the acts and omissions of all his employees and all Subcontractors, their agents and employees and all other persons performing any of the Work under a contract with the Contractor.
*292 SUBCONTRACTS
11.1 A Subcontractor is a person who has a direct contract with the Contractor to perform any of the Work at the site.
11.2 Unless otherwise specified in the Contract Documents or in the Instructions to Bidders, the Contractor, as soon as practicable after the award of the Contract, shall furnish to the Architect in writing a list of the names of Subcontractors proposed for the principal portions of the Work. The Contractor shall not employ any Subcontractor to whom the Architect or the Owner may have a reasonable objection. The Contractor shall not be required to employ any Subcontractor to whom he has a reasonable objection. Contracts between the Contractor and the Subcontractor shall be in accordance with the terms of this Agreement and shall include the General Conditions of this Agreement insofar as applicable.
ARTICLE 12
SEPARATE CONTRACTS
12.1 The Owner reserves the right to award other contracts in connection with other portions of the Project or other work on the site under these or similar Conditions of the Contract.
12.2 The Contractor shall afford other contractors reasonable opportunity for the introduction and storage of their materials and equipment and the execution of their work, and shall properly connect and coordinate his Work with theirs.
12.3 Any costs caused by defective or ill-timed work shall be borne by the party responsible therefor."
Wendell admitted that he is fully responsible for the work of all "Subcontractors" he hires on the project. However, it is Wendell's position that section 11.1 of the contract specifically excludes liability for subcontractors hired by the owner under a separate contract. In rebuttal, the Qazis assert the contract is ambiguous concerning the scope of Wendell's duty because sections 10.1 and 10.4 specifically state that Wendell had a duty to supervise and warranted the workmanship of all work performed on the home.
A circuit court must determine, as a question of law, whether the language of a contract is ambiguous concerning the intent of the parties. (Quake Construction, Inc. v. American Airlines, Inc. (1990), 141 Ill. 2d 281, 288, 152 Ill. Dec. 308, 565 N.E.2d 990.) If no ambiguity exists in the language of the contract, the parties' intent must be derived by the writing itself as a matter of law. (Farm Credit Bank v. Whitlock (1991), 144 Ill. 2d 440, 447, 163 Ill. Dec. 510, 581 N.E.2d 664.) If the terms of a contract are ambiguous, or capable of more than one interpretation, their construction is a question of fact and parol evidence is admissible to ascertain the parties' intent. Farm Credit, 144 Ill.2d at 447, 163 Ill. Dec. 510, 581 N.E.2d 664; Quake, 141 Ill.2d at 288-89, 152 Ill. Dec. 308, 565 N.E.2d 990.
We find an ambiguity in the language of the contract concerning Wendell's duty to supervise the installation of the marble and guarantee the workmanship of Marble Supply. The clear language of the contract states that Wendell, as general contractor, "shall supervise and direct the work" and "shall be solely responsible for all means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract." (Emphasis added.) Wendell also warranted that "all Work will be of good quality, free from faults and defects and in conformance with the Contract Documents" and would be considered defective if not so conforming. (Emphasis added.) Even though the contract stated that Wendell assumed liability for "all" work, it specifically exculpated liability for subcontractors operating under a separate contract.
In light of the ambiguity concerning whether Wendell contractually assumed liability for the work of all subcontractors, it was within the province of the court to consider extrinsic evidence, such as Wendell's conduct with respect to Marble Supply. The fact that Wendell retained a fee for overhead and supervision on the contract *293 with Marble Supply is significant, in light of the fact that it did not retain this fee for other subcontractors operating under a separate contract. Further evidence of Wendell's assumed duty exists in its action of listing Marble Supply as a subcontractor on its statements, when Wendell did not do so for separate subcontracts for carpeting, landscaping, interior decorating, and for the construction of the driveway and wooden deck. In addition, Marble Supply was paid from a construction escrow account through statements submitted by Wendell. We also note that change order 5, admitted into evidence and executed by the Qazis and Wendell, included $38,735 for marble specifications quoted by Marble Supply. The totality of this evidence indicates that Marble Supply was not operating independently of Wendell. Wendell did more than merely provide light and heat and an area to store materials. For these reasons, we determine that the court's finding that the clear and unambiguous language of the contract imposed no duty on Wendell for the conduct of Marble Supply was against the manifest weight of the evidence. Wendell's conduct with respect to Marble Supply provided sufficient evidence to conclude Wendell had a duty to supervise the marble installation.
2. BREACH OF DUTY AND PROXIMATE CAUSE
Notwithstanding the court's error in finding the language of the contract imposed no duty, as well as its failure to recognize its prior partial summary judgment ruling, we are not convinced that any judicial error materially affected the outcome of the case. The Qazis were required to prove that Wendell breached its duties imposed by contract and that the marble flooring cracked as a proximate cause of the breach. However, there is absolutely no evidence in the record to support the Qazis' theory that Wendell breached its contractual duty to construct the subfloor in a workmanlike manner, or that Wendell's failure to supervise the marble installation directly and proximately caused the Qazis' damages. There was no expert testimony elicited at trial which established that reasonable supervision would have prevented the cracking from occurring or that the structural support for the home was inadequate.
A. RULE 220 SANCTIONS
The Qazis contend that the failure of proof resulted when the trial court barred their experts from testifying as a sanction for violating the disclosure requirements of Supreme Court Rule 220. The Qazis urge that the sanction was improper because there was no violation of Rule 220.
Supreme Court Rule 220 was designed to eliminate late or surprise disclosures of expert witnesses by establishing a uniform, but flexible, framework for revealing the identity, opinions, and qualifications of expert witnesses. (134 Ill.2d R. 220, Committee Comments, at 179-80.) Under Rule 220, the identity of an expert who is retained to render an opinion at trial must be disclosed either within 90 days of the date which the substance of the expert's opinion is first known to the party or the party's attorney, or at the first pretrial conference, whichever is later. (See 134 Ill.2d R. 220(b)(1).) The rule also requires the trial court to establish a schedule of dates for disclosure of all experts not previously disclosed. The dates chosen by the trial court must allow all discovery of experts to be completed at least 60 days prior to "the date on which the trial court reasonably anticipates the trial will commence." 134 Ill.2d R. 220(b)(1).
In this case, the trial court entered an order on November 5, 1990, scheduling the trial for June 24, 1991. A pretrial conference was set for May 23, 1991. The order directed Rule 220 discovery to be completed 60 days prior to trial and all other discovery before the pretrial conference. At the first pretrial conference, the court ordered the June 24, 1991, trial date stricken. A status hearing was held at a later date and the court reset the trial for March 16, 1992. Thereafter, the Qazis moved to continue the trial date and extend the cutoff date for the disclosure of experts on the *294 basis that Wendell's failure to answer outstanding discovery requests deprived them of the opportunity to adequately prepare their defense. The trial court set March 4, 1992, as the cutoff date for the disclosure of experts and set the trial for May 27, 1992. On March 4, 1992, the Qazis disclosed the names of Howard Stearn, Keith Kissner, and Gilbert Trujilo as proposed expert witnesses. No addresses were furnished and answers to Rule 220 interrogatories, filed over one year earlier, were not supplied. On March 27, 1992, the Qazis answered Wendell's Rule 220 interrogatories by stating that Mr. Stearn analyzed the structure of the home and would testify that "there are structural deficiencies in the steel and wood joists." Mr. Kissner was expected to estimate the cost of repairing the defective marble. The parties appeared for trial on May 27, 1992, but the case was reset for June 30, 1992.
On the first day of trial, Wendell moved to bar the Qazis' experts as a sanction for violating Rule 220. The trial court found that supplying the names of proposed experts literally complied with the order requiring the disclosure of experts by March 4, 1992. However, the court found the Qazis' answer to Wendell's Rule 220 interrogatories, served 23 days after the cutoff date for the disclosure of experts, was untimely. The Qazis' experts were barred for violating the November 5, 1990, order which required the completion of expert discovery at least 60 days before the first scheduled trial date of June 24, 1991. When the Qazis urged that continuing the trial date effectually reopened discovery, the court responded:
"[Rule 220] has been interpreted, now, to impose an obligation on the Court, even though such an order was not entered, to assure that all discovery is completed 60 days prior to the first trial date.
Customarily, in here, when the trial date is continued, the first thing lawyers say is `Should we move up expert discovery completion date?'
* * * * * *
I don't think we can infer from the fact an order entered on February 19, 1992, permitting disclosure of witnesses on the 4th of March that the parties intended or the Court intended to reopen all expert discovery.
I think that is just unfair.
* * * * * *
I think it is a quantum jump in logic that it gave you an option to reopen all discovery or him to begin 220 interrogatories anew.
* * * * * *
Now, I reasonably anticipated the trial would commence on the first time I set it for trial. I don't think that's an unfair construction of the order. I don't know of any authority that automatically slides that back any time a new trial date is given."
The court further stated that its decision to bar the Qazis' experts was based on Rule 220(c)(3), which requires a party "to reasonably supplement his answers to interrogatories propounded under this rule as additional information becomes known to the party or his counsel." (134 Ill.2d R. 220(c)(3).) In the court's opinion, the "limited discovery amendment of March 4th" did not encompass the ability to supplement interrogatories that were filed over one year earlier.
The Qazis urge that the various continuances in extending the date for the disclosure of experts to March 4, 1992, reopened discovery. In Paquet v. Steiner (1993), 239 Ill.App.3d 866, 869, 180 Ill. Dec. 546, 607 N.E.2d 615, we held that the disclosure of experts and their opinions 59 days prior to the final trial date, and 413 days after the first scheduled trial date, violated Rule 220. The court attributed no merit to the plaintiff's suggestion that the trial court could not have reasonably believed the trial would commence on the scheduled trial date due to prior continuances and other delays. However, in Vallejo v. Mercado (1991), 220 Ill.App.3d 1, 162 Ill. Dec. 692, 580 N.E.2d 655, we held that the trial court should have granted a continuance of the trial date to allow discovery of the plaintiffs *295 expert witness, even though the expert was not disclosed within Rule 220 guidelines. In Vallejo, contrary to Paquet, the plaintiff's delay was justified because new information was obtained through discovery from the defendant.
Although there is strong discord between the various districts of the appellate court on the issue of whether courts are vested with discretion in applying sanctions for Rule 220 violations, the Appellate Court, Second District, has embraced the view that a trial court may exercise discretion in applying sanctions for Rule 220 violations by considering the conduct of the parties. (See Sohaey v. Van Cura (1992), 240 Ill. App. 3d 266, 286, 180 Ill. Dec. 359, 607 N.E.2d 253; Vallejo, 220 Ill.App.3d at 8, 162 Ill. Dec. 692, 580 N.E.2d 655. Contra Phelps v. O'Malley (1987), 159 Ill.App.3d 214, 226, 110 Ill. Dec. 797, 511 N.E.2d 974.) While our supreme court has not resolved the issue of the punitive nature of Rule 220, it has indicated that the following factors should be considered in determining the severity of sanctions for discovery violations: (1) the surprise to the adverse party; (2) the prejudicial effect of the expert's testimony; (3) the nature of the expert's testimony; (4) the diligence of the adverse party; (5) whether objection to the expert's testimony was proper; and (6) the good faith of the party calling the witness. Barth v. Reagan (1990), 139 Ill. 2d 399, 417, 151 Ill. Dec. 534, 564 N.E.2d 1196.
In this case, as in Paquet, the Qazis missed the original deadline set for the disclosure of experts. However, when the trial was reset for a later date, the court extended the deadline for the disclosure of experts to March 4, 1992. In their depositions, which were made part of the record, the Qazis' experts, Howard Stearn and Keith Kissner, testified that they were retained to look into problems associated with the cracked marble in February 1992. Contrary to the situation in Vallejo, no explanation for the Qazis' extreme delay in retaining experts has been suggested. The Qazis were fully aware of the theories they intended to advance when they filed Qazi I, as their prima facie case in Qazi I is identical to their affirmative defenses in the instant case. Since no explanation for the delay was proffered, the trial court would have been justified in refusing to grant an extension. See Knight v. Haydary (1992), 223 Ill.App.3d 564, 578-79, 165 Ill. Dec. 847, 585 N.E.2d 243.
Nevertheless, the trial court's action in extending the final cutoff date for the disclosure of experts to March 4, 1992, indicates a concern that a continuance was necessary to allow for the use of expert testimony. The Qazis acted in reliance on the court's order extending the cutoff date to March 4, 1992. Timely disclosure of the names of the experts was provided by the Qazis on March 4, 1992, the date set by the trial court. Further, answers to interrogatories which disclosed the opinions of the experts were timely filed on March 27, 1992, which was at least 90 days after the experts' opinions became known (in February 1992), and not later than 60 days prior to the scheduled trial date of May 27, 1992. After considering the factors announced in Barth v. Reagan, we determine that the trial court abused its discretion in barring the testimony of the Qazis' expert witnesses as a sanction for violating Rule 220.
In this case, the prejudicial impact of barring the Qazis' witnesses was significant because expert testimony was necessary for the Qazis to establish that Wendell breached its contractual obligation to perform all work in a workmanlike manner. Although Wendell testified he did not supervise the marble installation, expert testimony was necessary to prove that a reasonable supervision would have prevented the damage. Although the trial court should have allowed the Qazis' experts to testify, we will not reverse a judgment of the trial court based on the failure to admit evidence without an indication of the substance of the excluded evidence. Healy v. Bearco Management, Inc. (1991), 216 Ill. App. 3d 945, 957, 160 Ill. Dec. 241, 576 N.E.2d 1195.
To preserve for review the erroneous exclusion of evidence, an offer of proof which specifies the proposed testimony must be made. (Mulhern v. Talk of the *296 Town, Inc. (1985), 138 Ill.App.3d 829, 834, 93 Ill. Dec. 282, 486 N.E.2d 383.) While an informal but specific offer of proof is acceptable, an offer of proof which merely summarizes the witness' proposed testimony in a conclusional manner does not preserve the error. Healy, 216 Ill.App.3d at 957, 160 Ill. Dec. 241, 576 N.E.2d 1195.
Counsel for the Qazis did not have the proposed experts testify in an offer of proof made as part of the Qazis' motion to reconsider the court's order barring expert witnesses. Rather, counsel noted that the deposition transcripts of the proposed expert witnesses, Howard Stearn and Keith Kissner, were filed and made part of the record. The Qazis' attorney stated that Mr. Stearn, an architect specializing in structural engineering, was "prepared to show the court his blueprint of the proposed solution to what he would believe was the problem with the floor," and would render his opinion on the cause of the defects of the floors and the remedial work required so that cracking would not recur. Mr. Kissner, a general contractor and owner of a marble company, would testify that he was retained to perform repairs on the marble and would estimate the costs of the repairs based on Mr. Steam's proposed plan.
In his deposition, Mr. Stearn claimed the structure was defective but failed to indicate the basis for his conclusion. He admittedly brought no instruments to the home during his inspection and made no calculations. He did not perform tests to the mortar bed upon which the marble rests, claiming that this was not within the scope of his assignment. Rather, he was told by Dr. Qazi to assume the structure was incorrect and to provide a design capable of sustaining the flooring. Mr. Stearn stated that the cracks running longitudinally suggest the truss joists provide inappropriate support for the floor. However, Mr. Stearn admittedly did not test the strength of the steel support in the Qazis' home or check for building code violations. Nevertheless, he concluded that the support beams were overstressed. While Mr. Stearn suggested a design that was different from the type provided by Wendell, his deposition failed to indicate that the structural support of the flooring was inadequate based on accepted engineering standards. Moreover, Mr. Stearn provided no evidence that the failure to supervise the work of Marble Supply was a proximate cause of the damage to the flooring. Likewise, Mr. Kissner's proposed testimony concerning the cost of replacing the marble and installing a new substructure assumes that Wendell's breach of contract was the proximate cause of the damages.
Although the record reflects that several erroneous rulings were rendered by the trial court, a reviewing court's concern is not whether an error-free trial occurred, but whether an error substantially prejudiced the appellant or unduly affected the outcome of the trial. (Cox v. Doctor's Associates, Inc. (1993), 245 Ill.App.3d 186, 207, 184 Ill. Dec. 714, 613 N.E.2d 1306.) Based on our review of the deposition transcripts of the proposed expert witnesses and the offer of proof, had the witnesses been allowed to testify as to those matters contained in their depositions and within the reasonable scope thereof (134 Ill.2d. R. 220(d)), the Qazis still would not have sustained their burden of proving (1) that Wendell breached its contractual obligation to construct the home in a workmanlike manner, or (2) that Wendell's failure to supervise the marble installation was a proximate cause of the cracked marble flooring. The proffered opinions of the proposed expert witnesses fail to directly establish a breach of duty resulting in proximately caused damages. For these reasons, the judgment of the circuit court, finding that the Qazis failed to sustain their burden of proving their affirmative defenses, was not against the manifest weight of the evidence.
As a final matter, Wendell asserts in his brief that the judgment of the circuit court must be affirmed because the Qazis failed to provide this court with a complete record since certain exhibits, which were admitted at trial, were not included as part of the record on appeal. The Qazis have supplemented the record with the exhibits Wendell *297 claims were omitted. The record presented adequately apprised this court of all matters necessary to review completely and adequately the issues raised on appeal.
To summarize our holding, we determine that Wendell sustained its burden of proving the Qazis owed additional compensation for extra work on the construction contract. However, the trial court's finding that the Qazis agreed to pay engineering fees of $11,019.57 billed in the unsigned change orders is against the manifest weight of the evidence. In accordance with our power to modify a judgment of the trial court (134 Ill.2d R. 366(a)(5)), we order a reduction in the judgment of $152,158.32 in favor of Wendell by $11,019.57, which reflects engineering fees the Qazis did not agree to pay.
Although the trial court erred by (1) failing to conduct the trial in accordance with its prior ruling granting partial summary judgment in favor of the Qazis concerning Wendell's duty to supervise the work on the project; (2) by determining Wendell owed no duty to supervise the installation of the marble; and (3) by barring the Qazis' expert witnesses as a sanction for violating Rule 220, we determine that the Qazis have failed to establish that these errors were sufficiently prejudicial such that the outcome of the trial was affected. Finally, we determine that the trial court's finding that the Qazis failed to sustain their burden of proving their affirmative defenses was not against the manifest weight of the evidence.
For the foregoing reasons, the judgment of the circuit court of Du Page County is affirmed in part, reversed in part, and modified in part.
Affirmed in part; reversed in part and modified in part.
DOYLE and QUETSCH, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246990/ | 148 Ind. App. 496 (1971)
267 N.E.2d 555
KARL BOSHONIG
v.
FRIEDA BOSHONIG.
No. 270A21.
Court of Appeals of Indiana.
Filed March 22, 1971.
Rehearing denied April 26, 1971.
Transfer denied August 3, 1971.
*497 John R. Nesbitt, Nesbitt & Fisher, of Rensselaer, for appellant.
Edwin L. Robinson, Robinson & Sammons, of Morocco, Donald E. Bowen, Bowen, Myers, Northam & Soards, of Indianapolis, for appellee.
ROBERTSON, J.
The appellant-defendant and appellee-plaintiff were divorced on the 7th of October, 1969, after forty-two (42) years of marriage. There had been an earlier trial of this cause in March of the same year. However, a motion for new trial was filed and granted.
The substance of the decree, insofar as it pertains to the award of property, gave the appellee-plaintiff Fifteen Thousand *498 Dollars ($15,000) alimony and the furniture, fixtures, and appliances located in the home. The appellant-defendant was awarded the remainder of the personal property which consisted of farm machinery, a truck, car, house trailer, various tools and machinery, a boat, motor and trailer, and all other personal property not awarded to the appellee. The ownership of real esate of the parties, consisting of a 105-acre farm, was changed to a tenancy in common, with the defendant being restrained from encumbering or disposing of his one-half until the alimony had been paid.
Other findings of significance made by the court were:
"The Court further Finds that for several years last past the plaintiff has endured extreme hardships from hunger and cold and that during said time the defendant has lived in comparable luxury and has taken six extended vacations in Europe; the Court Further Finds that the defendant willfully and without just cause abandoned and deserted the plaintiff in September, 1962, against her wishes and consent; the Court Further Finds that the defendant has been living in adultery since April, 1968;
"The Court Further Finds that the defendant has been selling and disposing of his personal property under an assumed name and that there is a bank account under such assumed name...."
The appellant filed a motion for new trial specifying as grounds therefor that the decision of the court was not sustained by sufficient evidence, was contrary to law, and the amount of alimony was too large. The assignment of error is that the court erred in overruling the motion for new trial.
Although there was conflicting evidence, a brief summary of the record viewed in the light most favorable to the appellee shows this childless couple separated in September of 1962. The parties had acquired a farm, free of any encumbrances at the time of the divorce, by buying other property, improving it, and then selling until they obtained this property. The original down payment for the initial property was provided by the appellant in 1927. There was testimony of *499 the appellee's hard work on the farm and her very poor living conditions. The appellant left the farm to work in Chicago and returned on weekends, the weather and his health permitting. His financial support for his wife consisted of Twelve Dollars ($12) per week plus utilities until he went on social security, when it changed to Twenty-two Dollars ($22) per month. There was evidence as to real and personal property values. Testimony was also given regarding the appellant living with another woman for a time after the separation. Trips to Europe, for the most part, were for the purpose of visiting appellant's aged father and were made at a cost of from Three Hundred Dollars ($300) to Five Hundred ($500) each.
We will not weigh the evidence, but will consider it in a light most favorable to the appellee. The decision of the trial court, relative to property rights, alimony, and other allowances are reviewable for a determination of an abuse of judicial discretion, and for that purpose only. The judicial discretion in a case of this nature is an exercise of official conscience, not arbitrarily, willfully, or passionately exercised, but based upon the facts and circumstances of the particular case with regard to what is right and equitable under the applicable law and to the end of a just result. The appellant's responsibility is to show a clear abuse of judicial discretion. Buckner v. Buckner (1958), 128 Ind. App. 654, 152 N.E.2d 97; Tomchany v. Tomchany (1962), 134 Ind. App. 27, 185 N.E.2d 301; Chaleff v. Chaleff (1969), 144 Ind. App. 438, 246 N.E.2d 768. The fact that circumstances would have justified a different result by another trial court than that reached by the trial court in this case does not warrant this court in substituting its judgment for that of this trial court. Buckner v. Buckner, supra.
The law is replete with cases stating the guidelines and rules to be followed by a trial court in the granting of alimony. The case of Dunbar v. Dunbar (1969), 145 Ind. App. 479, 251 N.E.2d 468, at page 472 sets forth a brief summary of the factors to be considered by the *500 trial court in determining the amount of alimony. The existing property rights of the parties, the amount of property owned and held by the husband, and the source from which it came, the financial condition and income of both the parties, the ability of the husband to earn money, whether or not the wife by her industry and economy has contributed to the accumulation of the husband's property, and the separate estate of the wife, are among the many factors that may be considered. The Dunbar case, supra, cites authorities where each of these propositions may be found. Additional rules of thumb have also been set forth in that the nature of abuse of the wife, especially as it affects her earning power or ability, may be considered in the determination of the granting of alimony and the amount thereof. Shula v. Shula (1956), 235 Ind. 210, at pp. 215, 216, 132 N.E.2d 612.
Another rule that the court might consider in granting alimony is that the innocent wife should be no worse off than if her husband had died. Bahre v. Bahre (1962), 133 Ind. App. 567, 571, 181 N.E.2d 639, 641. However, the Bahre case, supra, states that there are no binding rules, nor is there any single test which might be followed by the court in determining the sum which the husband shall pay to his wife whom he has injured by reason of the wrongs and grievances of which she has complained and which she has sustained by the evidence at the trial.
In a contested divorce action the trial court is often barraged by figures and values which are rarely in agreement. Bearing in mind that the trial court, having the parties before it in arriving at its conclusions, may have observed many things which were not and could not be made a part of the record now before us, and, therefore, cannot be apparent to us upon review. The judge's responsibility and duty in determining which values are applicable is no different than that of any trier of fact in giving the varying degrees of weight, sufficiency and credibility to any of the evidence. The trial judge fulfilled his responsibilities in this case by determining *501 from the evidence before him the amount and the method of payment of the alimony.
The appellant's position relies, insofar as it applies to excessive alimony, on the fact that the court used the wrong values in determining the amount of alimony to be paid to the appellee. In order for this court to determine that proposition to be correct, a reading of the transcript is required, then choosing one of the witnesses who testified as to values as being more or less correct than any other witness on the same point. This constitutes weighing the evidence and is completely beyond the realm of the appellate function.
In applying the previously stated guidelines and rules to the case at bar, excluding of course those inapplicable such as the size of the wife's estate, we cannot in reviewing the evidence say that the trial court has abused its discretion. We would agree with the appellant that the situation in which he is left after the judgment has been satisfied for alimony is not a comfortable one. However, as indicated by the special findings in the decree, it would appear that that was the intent of the court. The trial court had authority to do so in this case by taking into account the nature of the abuse that the appellee has suffered in this instance, and the extent of her contribution to the property of the parties during the marriage.
The appellant relies upon De Witt v. De Witt (1951), 120 Ind. App. 704, 96 N.E.2d 351, in which the trial court failed to place the value upon certain personal property of the parties. The case was reversed upon this point. The De Witt case, supra, is distinguishable from the case at bar in that there was no evidence as to the value, whereas in the instant case a reading of the record would indicate that the furniture awarded to the appellee was of little or inconsequential value. There was some evidence in this case as to value, even though the trial court did not assign a dollar amount to it.
The appellant further relies upon the case of Languell v. Languell (1968), 143 Ind. App. 24, 237 N.E.2d 587, in that *502 the award, at least from a percentage standpoint, was similar to the case at bar. The distinguishing characteristic between this case and the Languell case, supra, is the lack of gross misconduct in the Languell case. It is apparently by the findings of the trial court, especially as it related to the living conditions of the appellee and the actions of the appellant, that such misconduct existed in this case. Again referring to the guidelines and rules as previously set forth, this can be a factor in determining the amount of alimony.
Taking all these factors into consideration, we must say as a matter of law that the trial court did not abuse its discretion in the award of alimony in this case.
The test to be applied by this court upon the decision of the lower court is set forth in Pokraka v. Lummus Co. (1952), 230 Ind. 523, 104 N.E.2d 669, which states that only where the evidence is without conflict and can lead to but one conclusion, and the trial court has reached the opposite conclusion, that the decision of the trial court will be set aside on the grounds that it is contrary to law. Applying that test to a review of the evidence and the legal authorities cited by the parties hereto, we cannot say that the trial court's decision was contrary to either the law or the evidence.
The judgment of the court below is affirmed.
Sullivan, P.J., concurs; Buchanan and Lowdermilk, JJ., concur.
NOTE. Reported in 267 N.E.2d 555. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246991/ | 590 F. Supp. 1016 (1984)
SOUTHERN FARM BUREAU LIFE INSURANCE COMPANY, Plaintiff,
v.
John Fuller BURNEY, a/k/a John Bruce; Bonnie Burney; and Gerry Barr, Loyall Barr, and C.P. McCarty, Sr., Individually and as Members of the Board of Directors of Helena Rice Drier, Inc., Defendants.
No. LR-C-83-589.
United States District Court, E.D. Arkansas, W.D.
July 27, 1984.
*1017 William H. Sutton, and James M. Simpson, Friday, Eldredge & Clark, Little Rock, Ark., for plaintiff.
L. Ashley Higgins, Roscopf & Higgins, Helena, Ark., for defendant John Fuller Burney.
David Solomon, Helena, Ark., for defendant Bd. of Directors.
Sidney S. McMath, Little Rock, Ark., for defendant Bonnie Burney.
MEMORANDUM OPINION
ROY, District Judge.
This is an unusual and rather bizarre case. Plaintiff Southern Farm Bureau Life Insurance Company has instituted this action to recover from defendants John Fuller Burney, a/k/a John Bruce; Bonnie Burney (Robinson)[1]; and Gerry Barr, Loyall Barr, and C.P. McCarty, Sr., individually and as members of the Board of Directors of Helena Rice Drier, Inc., certain sums paid under policies insuring the life of John Burney.
Helena Rice Drier, Inc., was a storage facility for grain and beans, located in Helena, Arkansas. During the relevant period in this case, John Burney was president of the corporation and defendants Gerry Barr, Loyall Barr, and C.P. McCarty, Sr., were members of the Board of Directors of Helena Rice Drier, Inc. Bonnie Bumpers was legally married to John Burney during this time and they had two children.
In January 1976 John Burney was a respected member of the Helena, Arkansas, community. He had an attractive wife and two children.
Due to bad management practices for some considerable period of time, it *1018 became apparent in late April and early May that because of serious financial difficulties, Helena Rice Drier, Inc., could not meet its obligations. On May 7, 1976, John Burney arranged a meeting of the farmers who had stored crops at the Helena Rice Drier (many were his friends and neighbors) and he reported that the Helena Rice Drier had no money to pay them and no soybeans in the drier.
Most of the farmers who had lost beans in the failure were angry and at least one person threatened to take John Burney's life. Several lawsuits naming John Burney and the Board of Directors of the Rice Drier as defendants were filed because of their losses. Burney's prior arrangement to purchase farm land collapsed, and he lost the farming equipment that he had slowly accumulated during the preceding years.
By June 11, 1976, John Burney's future in Helena appeared bleak. According to his testimony, during the evening of that day, on his way home, he had to cope with a series of frustrating electric failures in his truck. He testified that while driving toward Helena over the Mississippi River bridge he saw the lights of an on-coming car appear over the crest of the bridge approaching him in his lane of traffic. He pulled the truck to the right to avoid the car and struck the bridge railing. When the truck stopped, John Burney slipped out of the cab. The other vehicle had stopped on the bridge and he could see people getting out and hear them shouting. Alarmed, John Burney slipped over the railing of the bridge, worked his way down a piling, and dropped into the river and swam downstream a short distance. After coming to the east bank of the river he walked to central Mississippi, where he caught a southbound bus. He drifted for the next few months until he settled in Key Largo, Florida.
From the night John Burney departed Helena, Arkansas, he called himself John Bruce. It is undisputed that he told no one his true identity for over six years. He did not resurface until after the Arkansas five year presumption-of-death statute had run. Ark.Stat.Ann. § 62-1601. He now lives in Key Largo, Florida, with his second wife whom he married without being divorced his first wife. They have a child.
After John Burney left Helena, Arkansas, he ignored his legal and moral obligations, including his legal duty to support his wife and family and his responsibilities concerning the Helena Rice Drier, Inc. He caused great anxiety by not notifying them or even his own parents that he was in fact alive.
For a period of over six years John Burney consistently lied about his identity and day after day misrepresented not only himself but all other facts about his background. He carried his fraud to the point of falsifying records required by governmental authorities, including falsifying Social Security information and marriage application records indicating that he had never been married before. He failed to file federal income tax returns and pay taxes to the United States Government.
At trial John Burney testified that he left every aspect of his life in Helena, leaving the impression that he was deceased. He was aware of the presumption of death law (but testified that he thought it was seven years instead of five years). He designed every relevant phase of his life to deceive everyone, including the insurance companies.
The overwhelming weight of evidence, almost undisputed, shows that John Burney, a/k/a John Bruce, was guilty of fraud. As the court said in New York Life Insurance Co. v. Nashville Trust Co., 200 Tenn. 513, 292 S.W.2d 749, 754 (1956), about an insured who stayed hidden under very similar circumstances: "We cannot imagine how acts could be more fraudulent." As long ago as 1846 the Arkansas Supreme Court said that fraud consists in the misrepresentation or concealment of a material fact calculated to deceive and mislead. Dillard's Administrator v. Moore, 7 Ark. 166 (1846).
Defendant John Burney argues that his deception had no bearing on the payment *1019 of the insurance proceeds and furthermore that he has received none of the funds paid and has not been unjustly enriched. The Court finds no merit in these contentions.
John Burney was a knowing, participating party to every insurance contract. His fraud permeated the relationships of all of the parties to the degree that any payment or agreement accepted by the parties was a result of the deliberate deception practiced by him.
Because of John Burney's fraud and deception, money was paid on the insurance policies and he is indebted to plaintiff for the sum of $90,000.00 on th policy payments made to Bonnie Burney and $380,000.00 for the payments made to the directors of Helena Rice Drier, Inc.
We now consider the case of Bonnie Burney which differs from that of John Burney.
Plaintiff contends the settlement should be set aside because of fraud, mutual mistake of fact and unjust enrichment.
John Burney resurfaced on December 1, 1982, and returned to Arkansas to visit with his father after having been injured in an industrial accident. He wanted to file suit, and his attorney told him that he would have to make complete disclosure of his past. When this information was conveyed to Bonnie Burney, she immediately, on December 2, 1982, notified Southern Farm Bureau Life Insurance Company that John Burney was not dead.
The Court finds the following evidence supports the position of Bonnie Burney that she acted in good faith, was not guilty of fraud, and that there was no mutual mistake of fact:
1. The Helena Rice Drier truck that John Burney was driving on June 11, 1976, was found wrecked on the Arkansas-Mississippi River Bridge.
2. Hand prints were found on the bridge railing near the truck.
3. The river was dragged and searched and no body was found. However, a body was sighted downriver by two fishermen about two weeks later but was not recovered.
4. Sgt. Tommy Baker of the Arkansas State Police, completing his investigation, advised Bonnie Burney that in his opinion John was dead that he either took his own life or was killed.
5. Fred Myers, a private investigator, completing his investigation on the limited funds available, reported to Bonnie Burney that it was his opinion that John was dead.
6. The family relationship between John Burney and his wife and children was a good relationship. Bonnie did not believe her husband would leave her and their children.
7. The family had a memorial service at the Methodist Church in Helena. John Burney's daughter, Paula, then seven years of age, participated in the services by reading selected passages from the Scripture.
8. Bonnie Burney is the daughter of Reverend Paul Bumpers, a distinguished Methodist minister. This family would not have conducted the service and placed a gravestone in the cemetery in memory of John Burney had they not fully believed him to be dead.
9. John Burney never communicated with his wife and children or his own parents.
Southern Farm apparently believed John Burney to be alive as indicated by the following:
1. In the complaint of Bonnie Burney on Policy No. 493376A she alleged that "on June 11, 1976, John Fuller Burney was killed ..." In response to this allegation Southern Farm answered, "... Defendant denies that the said insured is dead."
2. Bonnie Burney in her complaint on Policy No. 641625 stated that "on June 11, 1976, John Fuller Burney was killed ..." In response to this allegation Southern Farm answered, "... Defendant denies that the said insured is dead."
3. The date of issue of the "home" policy with the face value of $48,250.00 was *1020 June 13, 1973. John Burney disappeared on June 11, 1976. Southern Farm sent quarterly premium notices to Bonnie on this policy, which premiums were paid by her and were received by Southern Farm. These premiums were paid by Bonnie Burney from June 11, 1976, through December 13, 1981.
4. The date of issue of the "retirement" policy with a face value of $37,313.00 was 1975. Southern Farm sent quarterly premium notices on this policy and they were paid by Bonnie Burney and received by Southern Farm beginning after June 11, 1976, and continuing through November 19, 1981.
5. The total of premiums paid on these two policies by Bonnie Burney to Southern Farm was $14,190.00. It is to be noted that premium notices were received from Southern Farm and paid after the running of the presumption of death statute which would have been June 11, 1981.
The pertinent clause in the settlement contract reads as follows:
It is understood and agreed that this is a compromise settlement of doubtful and disputed claims, that the payment made shall not be construed as an admission of liability on the part of the parties released by whom liability is denied, that payment is made and received in full and complete satisfaction of the aforesaid action, causes of action, claims and demands, that this release contains the entire agreement between the parties, and that the terms of this release are contractual and not a mere recital." (Underscore supplied)
Southern Farm now contends it believed John Burney to be dead when the case was settled. However, Southern Farm made no payments under the provisions of the policy to Bonnie Burney although the expiration of the presumption of death statute was six months earlier. The face value of the two policies was $85,563.00 plus $14,190.00 in premiums, which totaled $99,753.00. The claim was compromised for $90,000.00, which was less than Southern Farm's exposure.
Had a jury determined at the scheduled trial that John Burney was dead and fixed the date of death as June 11, 1976, Southern Farm would have been obliged to return all premiums paid subsequent to June 11, 1976.
By entering into this agreement, Bonnie Burney gave up her right, in the event that John Burney's body was found, to seek additional payment from the insurance company for the premiums, attorney's fees, and prejudgment interest.
Southern Farm's present position that they believed Burney to be dead, hence laying a foundation for a mutual mistake of fact, is not convincing.
Southern Farm could have drafted the release contract on the assumption by both parties that John Burney was dead, or they could have gone to trial. They did neither. They calculated their alternatives and made a "business decision to settle the case."
The sequence of proceedings leading up to settlement is relevant. Bonnie Burney filed suit on her two claims on March 17, 1977.
Discovery proceedings were carried out, depositions taken, Bonnie Burney was deposed December 5, 1977.
Trial date was set for April 17, 1982. December 1, 1981, the Court issued an order directing that a settlement conference be held by the attorneys.
Settlement negotiations were conducted and a release was executed by Bonnie Burney on January 26, 1982.
Order of Dismissal because the case had been settled was entered January 26, 1982.
The settlement of cases and controversies is strongly favored by public policy since settlement of cases helps to relieve the court calendar of congestion and speeds the process of justice.
Settlements allow both sides to win something and represent final case disposition because there is no appeal.
*1021 Settlement contracts, absent fraud or a genuine mutual mistake of fact, should be upheld.
In the case of St. Paul Fire and Marine Insurance Co. v. Hundley, 354 F. Supp. 655 (E.D.Ark.1973), the release used in contracting a settlement of a personal injury claim between Dr. Hundley and St. Paul Fire and Marine Insurance Company contained a clause identical with the one used by Southern Farm herein. Dr. Hundley obtained a verdict of $1,250,000. A motion for a new trial was filed. A compromise settlement was entered into wherein Dr. Hundley was paid $500,000. At the trial Dr. Hundley had testified that he was permanently disabled from engaging in his practice as an orthopedic surgeon. Shortly after the settlement Dr. Hundley resumed his surgical practice. The insurance company sought to have the settlement canceled because of fraud. Judge Paul X Williams held the release contract was binding and constituted a contract of settlement between the parties. Judge William quoted the case of Hutcheson v. Frito-Lay, Inc., 315 F.2d 818 (8th Cir.1963). In the Frito-Lay case the insured was in an automobile accident. She filed a claim for damages to her automobile stating that she had no personal injuries and executed a release. Subsequently she found that she had a back problem and endeavored to cancel the settlement agreement. In the Frito-Lay case, the Court stated:
In the light of subsequent events it may well be that the consideration paid for the release was inadequate to compensate the plaintiffs for the personal injuries sustained by Lena Hutcheson. The release, however, must be judged by the circumstances and conditions existing at the time of the execution. The adequacy or inadequacy of the consideration may not be viewed in the light of after events. (Emphasis added)
315 F.2d at 822.
All of the information regarding the Rice Drier operations and the circumstances surrounding John Burney's departure had been discovered and were known by Southern Farm prior to the time that they decided to settle this case with Bonnie Burney.
In New York Life Insurance Co. v. Chittenden and Eastmen, 134 Iowa 613, 112 N.W. 96 (1907), the insured absented himself from the state and concealed his whereabouts from his family for a period of seven years. A claim was filed against the insurance company. To avoid a trial and the possibility of the beneficiaries obtaining a judgment, New York Life settled the case. After the settlement the insured reappeared. New York Life sought to recover the money. The Supreme Court of Iowa stated:
... this compromise and settlement of a claim based on the assertion of his (the insured) death was, we think, binding and conclusive on the company ... Therefore, we think that a settlement by which the money was paid for the purpose of avoiding a suit in which such a judgment might have been rendered is also conclusive, and that the plaintiff cannot now recover back the money thus paid. (Emphasis added)
112 N.W. at 98.
See also, Sears v. Grand Lodge AOUW of New York, 163 N.Y. 374, 57 N.E. 618 (1900).
The Court finds the settlement agreement in this case to be valid and binding.
The settlement agreement in this case was a compromise of a "disputed and controverted claim." Both sides were represented by counsel, they had basically the same facts, they considered their own best interests and entered into a binding contract.
Accordingly, plaintiff's claim against Bonnie Burney is dismissed.
Defendants Loyall Barr, Gerry Barr and Dr. C.P. McCarty, Sr., were Directors of Helena Rice Drier, Inc., along with John Burney and George Brandon, now deceased, at the time of John Burney's disappearance.
*1022 These defendants had no knowledge of the whereabouts of John Burney following his disappearance on June 11, 1976, and had no contact with him until he returned to Arkansas in December 1982. The director defendants are not guilty of conspiracy or fraud with reference to the disappearance of John Burney.
Extensive attempts were made to locate John Burney by offering rewards through newspaper advertisements, the employment of private investigators and other means and methods to determine his whereabouts. All to no avail.
Prior to the disappearance, a number of farmers had brought suit against Helena Rice Drier, Inc., and the Directors, individually, seeking recovery for soybeans and wheat stored in the Rice Drier facilities, which suits were pending in the Chancery Court of Phillips County, Arkansas, at the time of Burney's disappearance.
Helena Rice Drier, Inc., was the owner and beneficiary of three policies on the life of Burney, the face amount being, respectively, $300,000.00, $50,000.00, and $30,000.00. The latter two policies had double indemnity provisions in the event of accidental death. The Corporation borrowed money on the cash values of the policies to maintain the premiums after the disappearance of Burney, and in addition, the Directors personally paid the remaining premiums due by advancing funds to the Corporation through a period of more than five years from June 11, 1976. Loans were outstanding on the policies at the time of the settlement made in the United States District Court cases.
A portion of the chancery court suits were settled by the payment of $300,000 by the insurance carriers of C.P. McCarty, Jr., $150,000 by the insurance carriers of C.P. McCarty, Sr., the assignment of proceeds from the litigation against Merrill Lynch, Pierce, Fenner and Smith, Inc., and the transfer to the farmers of the insurance policies on the life of Burney held by Helena Rice Drier, Inc., and the agreement that any funds received therefrom would be paid to the plaintiff farmers. This was a settlement of contested litigation, and a portion of the litigation is still pending, since one farmer has refused to accept the settlement.
Helena Rice Drier, Inc., filed suits against plaintiff to recover on the three policies issued on the life of John Burney after his disappearance. These suits were settled prior to trial with payment under the Rice Drier policies of $380,000 being made, which pursuant to the settlement in the Phillips County Chancery Court was paid into the registry of the court and distributed to the numerous former plaintiffs.
The plaintiff paid a total of $380,000 under the three policies, did not deduct the amount of the loan outstanding on each of the policies, did not pay double indemnity on any policy, and did not pay prejudgment interest, penalty or attorney's fees, for which they had possible liability under the applicable Arkansas law.
These defendants executed a release prepared by plaintiff, or their attorneys, identical to the release signed by Bonnie Burney, indicating this was a compromise in settlement of a disputed claim.
As heretofore indicated, it is basic that the policy of the law is to encourage settlement of litigation and to uphold and enforce contracts of settlement if they are fairly arrived at, not in contravention of law or public policy. McCoy Farms, Inc., v. McKee, 263 Ark. 20, 563 S.W.2d 409 (1978), cert. denied, 439 U.S. 862, 99 S. Ct. 184, 58 L. Ed. 2d 171 (1978); Brewer v. Brewer, 239 Ark. 614, 390 S.W.2d 630 (1965); Squires v. Beaumont, 233 Ark. 489, 345 S.W.2d 465 (1961); Burke v. Downing Co., 198 Ark. 405, 129 S.W.2d 946 (1939). Plaintiff's attempt to set aside its compromise and payment is contrary to this principle. The settlement is binding on plaintiff as no fraud was practiced on it by these defendants. Two of the policies had double indemnity features and plaintiff knew that there was evidence that a body was seen floating in the Mississippi River at the approximate time of Burney's disappearance *1023 which might well be accepted as proof that it was his body.
The Court has given careful consideration to the excellent brief filed by plaintiff and the citations contained therein but finds the cited cases are not controlling since they are distinguishable from the case at bar. Accordingly, no grounds exist for setting the compromise settlement aside.
Judgment will be entered in accordance with this Memorandum Opinion.
NOTES
[1] Now remarried. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246993/ | 131 Ill. App. 2d 964 (1971)
267 N.E.2d 710
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
RICHARD KAYLOR, Defendant-Appellant.
No. 11298.
Illinois Appellate Court Fourth District.
March 11, 1971.
*965 Richard Hart, of Springfield, for appellant.
Richard A. Hollis, State's Attorney, of Springfield, (Arthur R. Strong, Assistant State's Attorney, of counsel,) for the People.
Judgment affirmed.
Mr. JUSTICE REARDON delivered the opinion of the court:
The defendant appealed from a finding of guilty by a jury on a charge of forgery and a subsequent sentence to the penitentiary, in which the trial court fixed the minimum and maximum periods of confinement at two years and ten years respectively.
The issues presented for review are as follows:
1. Was People's Exhibit No. 1 properly received into evidence?
2. Did the defendant at the time of the offense possess the requisite mental state to render him accountable for the offense, or was the proof of his addiction to alcohol sufficient to prevent him from forming that mental state?
3. Should the sentence be reduced pursuant to Supreme Court Rule 615, ch. 110-A, par. 615, Ill. Rev. Stat. 1969?
The record indicates that on the evening of June 29, 1969, the defendant entered a taven in Springfield, Illinois, and presented a check for payment of a beer for himself and other patrons at the bar. The check in the amount of Fifty Dollars and ninety-three cents ($50.93) bore *966 the forged signature of "John W. Kaylor". At the trial this check was identified by the bartender who recalled that when he took the check from the defendant he indicated his reluctance to cash the check, but was assured by the defendant that the owner of the bar would accept the check if he were there. The bartender testified that another patron looked at the check and verified the financial ability of its purported drawer. Thereafter, the bartender cashed the check and delivered the change to the defendant, together with the drinks he had purchased for himself and the other patrons. The defendant describes himself as one who drinks excessively, as much as two-fifths of alcoholic beverages a day.
The defendant left the tavern after cashing the check, and shortly thereafter the owner of the bar came into the tavern and picked up the check. The owner does not remember what he did with the check, other than to unsuccessfully present it for payment the next day.
The jury that heard the case was given Illinois Pattern Jury Instructions, Criminal, No. 24.02. This instruction designed for use with ch. 38, par. 6-3(a), Ill. Rev. Stat., is as follows:
"An intoxicated person is criminally responsible for his conduct unless his intoxication renders him incapable of acting knowingly."
1 The appellant's first contention is that the State failed to show a continuous chain of possession of the fraudulent check. The evidence discloses that the bartender identified the check presented to him in court as the check he had received from the defendant on the night of June 29th in payment for the drinks which the defendant purchased. The owner of the tavern also identified the check, being "People's Exhibit No. 1", as the check which had been given him by the bartender and purportedly signed by John W. Kaylor. The bartender, by identifying "People's Exhibit No. 1" as being the check given to him by the defendant in purchase of the alcoholic liquor, made unnecessary any proof of the chain of evidence about which the appellant complains. Problems of identification may arise when exhibits pass from the hands of investigative officers through the hands of expert witnesses and ultimately into the hands of the prosecution, since by reason of the treatment of those exhibits, or by reason of the nature of the exhibits themselves, they tend to lose identity. There is no such problem in this case. No serious contention is made that "People's Exhibit No. 1" was changed or altered in any way. Appellant's objection to the admission of "People's Exhibit No. 1" into evidence is not well taken. People v. Fisher, 340 Ill. 216; 172 N.E. 743 and U.S. v. S.B. Penick, 136 F.2d 413, 415.
2 We next consider whether the defendant, at the time of the offense, possessed the requisite mental state to make him accountable for the *967 offense, or was the proof of his addiction to alcohol sufficient to prevent him from forming that mental state. Historically, under Illinois law, intoxication as such, is not a defense to the commission of a crime. This principle of law was ameliorated by the recognition of the State's obligation to prove "a state of mind" as an essential element of certain offenses. There are numerous decisions in Illinois holding that where intent is a necessary element of the crime charged, the defendant cannot be convicted if it is shown that he was so intoxicated as to have been incapable of forming the requisite intent. Ch. 38, par. 6-3(a), Ill. Rev. Stat. 1967. People v. Lion, 10 Ill. 2d 208-214, 139 N.E.2d 757; People v. Hare, 25 Ill. 2d 321, 326, 185 N.E.2d 178 and People v. Minzer, 358 Ill. 345, 193 N.E. 370.
3 The crime of forgery is a specific intent crime, and the defense thereto in this case is an affirmative one. Under such circumstances, the defendant has the initial obligation of contraverting the State's case by something that is the equivalent to prima facie proof of the affirmative defense. Thereafter, the State is required to assume the burden of proving the defendant guilty by proof beyond a reasonable doubt. People v. Warren, 33 Ill. 2d 168, 210 N.E.2d 507; and People v. Honey, 69 Ill. App. 2d 429, 217 N.E.2d 371.
A review of this issue causes us again to turn to the evidence of the bartender who testified that the defendant was seated on the end stool at the bar. He remembers nothing unusual about the defendant except that he was very polite and very sensible, and that he had a portable radio under his arm which he told the bartender he had won in a raffle; and he also indicated that he had never been lucky before. The bartender said the defendant remained in the tavern about fifteen minutes. The bartender then related his conversation with the defendant concerning the check, (People's Exhibit No. 1) previously described herein. He further testified that he did not believe the defendant had been drinking. Capsulized, the defendant's testimony is that he is a chronic alcoholic and was drinking excessively for a week before June 29, 1969, the date the check was given, and that he has no recollection of being in the tavern.
4, 5 Proof that the defendant was a chronic alcoholic does not exempt him from criminal responsibility. The condition of the defendant at the bar on the night of June 29, 1969, as to drunkenness or sobriety is not established by his categorization as a chronic alcoholic. The defendant's testimony that he has no recollection of being in the bar was undoubtedly considered by the jury. However, when the jury's decision can be seen to be based on credible and substantial evidence which is sufficient to convict, that verdict is not subject to question on review, merely *968 because the jury chose to believe the evidence presented by the State. (People v. Pelegri, 39 Ill. 2d 568, 237 N.E.2d 453.) In People v. Jones, 99 Ill. App. 2d 364, 240 N.E.2d 776, at p. 779, it is stated:
"Finally, defendant contends that his felonious intent was not established beyond a reasonable doubt because the evidence proved that he was too intoxicated to entertain said intent. In order for intoxication to constitute a valid defense the defendant must show that his inebriated condition was so great as to prevent him from forming the intent essential to the crime charged. (People v. Reynolds, 27 Ill. 2d 523, 190 N.E.2d 301.) Whether the foregoing situation is indeed the case is a question of fact to be determined by the trier of fact on the basis of the evidence introduced before him. People v. Cozzie, 397 Ill. 620, 74 N.E.2d 685."
The jury was properly instructed on the issue raised by the affirmative defense of intoxication as a defense to the crime charged. Our review of the evidence persuades us to the opinion that no reasonable basis exists that would justify overturning the conclusion reached by the jury as shown by their verdict.
6 Lastly, we reach the question as to whether the sentence was excessive, and whether it should be reduced in accord with the authority contained in Supreme Court Rule 615. The trial court conducted a hearing in mitigation and aggravation and was advised that the defendant had been involved in several previous fraudulent or fictitious check charges. As a result of one of these charges, the defendant was sentenced to and served a term in the penitentiary. Review Courts in Illinois follow the advice found in the English cases to the effect that they should not "tinker" with sentences, or attempt to substitute their judgments for that of the trial courts. In this area, Appellate Courts should proceed with circumspection, recognizing that the trial judge has a superior opportunity to hear and to observe the demeanor of witnesses and obtain a "feel for the case" that is denied to the judges on review. Our statute, ch. 38, par. 1-2(c) (d), Ill. Rev. Stat. 1969, directs that penalties imposed by courts should be proportionate to the seriousness of the offense, and should recognize the philosophy of rehabilitation possibilities among individual offenders and should not be arbitrary or oppressive. The record in this case discloses that the trial judge imposed a meaningful sentence that is neither harsh nor oppressive and accommodates itself to the goal of rehabilitation.
Judgment affirmed.
CRAVEN, P.J., and TRAPP, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246998/ | 256 Ind. 97 (1971)
267 N.E.2d 165
LARRY STEVEN NACOFF
v.
STATE OF INDIANA.
No. 269S37.
Supreme Court of Indiana.
Filed March 5, 1971.
*99 Henry P. Schrenker, of Anderson, for appellant.
Theodore L. Sendak, Attorney General, Murray West, Deputy Attorney General, for appellee.
DEBRULER, J.
This is an appeal from a conviction for inflicting injury during a robbery in violation of I.C. 1971, XX-XX-X-X, being Burns § 10-1401. Trial was by jury in the Madison Circuit Court and appellant was sentenced to life imprisonment.
Appellant's first contention on appeal is that the trial court erred in admitting in evidence State's Ex. "A", a statement of appellant, because there was no showing that appellant freely and intelligently waived his constitutional right to remain silent.
Appellant was charged with robbing a gas station attendant on December 1, 1967, and while engaged in that robbery of inflicting stab wounds on the attendant. Appellant was arrested in Marion County on January 28, 1968, in the early morning hours, as a suspect in connection with a robbery that had occurred the night before. Appellant was taken to a state police post where he was read the standard state police advisement of his rights and appellant signed the waiver form. However, no statement was obtained from appellant at that time.
At 8:30 a.m. on January 28, the appellant was taken to the Madison County jail and placed in a special cell in the basement called "the boards". This cell was 6' by 3', with a commode and a wash basin with only cold water. Appellant was alone and never allowed out of this cell except to be questioned. He was fed in that cell and had no shower facilities, warm water, and no mattress for the first one and a half days. The sheriff testified that it was very unusual to permit a mattress in that cell. This was obviously a cell used for punishing disobedient prisoners or temporarily confining berserk arrestees.
*100 On January 28, at 10:00 a.m. Detective Hart of the state police questioned appellant twice after he had been placed in the Madison County jail. At this time appellant was under arrest without warrant for a robbery committed on January 27. Hart testified concerning the advisement of rights he gave appellant prior to questioning him and for purposes of this case we assume it was adequate. According to Hart he told appellant that the victim of the December 1 crime had identified him and that appellant would feel better if he cleared them both up. Hart told appellant he would pass along to the prosecuting attorney any information that appellant had cooperated with the authorities. Hart knew appellant had been an inmate at Logansport State Hospital several times and that appellant had been released from Logansport on the 27th. He told appellant he would help him get psychiatric help for appellant. Hart said he did not promise appellant any immunity. Appellant denied having anything to do with the crime and did not give Hart any statement.
The sheriff testified that he talked to appellant at least a couple of times in the next few days. At 12:30 a.m. on February 2, appellant signed the statement which was admitted at trial as State's Ex. "A". Just prior to appellant giving the statement the deputy sheriff taking the statement read to appellant a full and adequate advisement of his rights and a waiver printed at the top of the sheet on which appellant's statement was typed. Appellant then signed that statement.
Since the advisement of rights was adequate, the only issue is whether appellant intelligently and voluntarily waived his rights and made the statement. Miranda v. Arizona (1966), 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694.
A heavy burden rests on the appellee to demonstrate that the appellant intelligently and voluntarily waived his right to remain silent and to consult with appointed counsel. Miranda v. Arizona, supra. The legal standard to be applied in determining whether an accused, who has been properly advised of his rights and has signed a waiver, has voluntarily waived his rights is the same as that used in the *101 pre-Miranda coerced confession cases. The question is whether, looking at all the circumstances, the confession was free and voluntary, and not induced by any violence, threats, promises, or other improper influence. Brady v. U.S. (1970), 397 U.S. 742, 90 S. Ct. 1463, 25 L. Ed. 2d 747; Haynes v. Washington (1963), 373 U.S. 503, 83 S. Ct. 1336, 10 L. Ed. 2d 513; Rogers V. Richmond (1961), 365 U.S. 534, 81 S. Ct. 735, 5 L. Ed. 2d 760; Bram v. U.S. (1897), 168 U.S. 532, 18 S. Ct. 183, 42 L. Ed. 568; Hall v. State, 255 Ind. 606, 266 N.E.2d 16; Smith v. State (1969), 252 Ind. 425, 249 N.E.2d 493; Sparks v. State (1967), 248 Ind. 429, 229 N.E.2d 642.
We hold that the record clearly shows that the State did not carry its burden of showing that the appellant intelligently and voluntarily waived his right to remain silent and to consult with counsel. The evidence which shows this is as follows:
(1) Appellant was twenty-three years old, had never completed his second year of high school, and had been committed to a mental hospital several times. This latter fact was known to the police. Appellant was confined in a 6' by 3' cell without warm water or shower facilities for four and a half days; he left his cell only to be interrogated. Immediately upon confessing appellant was transferred to a cell block of his own choosing and allowed to shower.
(2) Shortly after being placed in the cell appellant was questioned by a state police detective who told appellant that he had been identified in the robbery on December 1, 1967; he was under arrest for a robbery on January 27, 1968; the detective would pass on any information to the prosecutor that appellant had cooperated; the detective would help him get psychiatric help. Appellant denied any knowledge of the crime.
(3) Appellant was held absolutely incommunicado for four and a half days prior to his giving the statement. Appellant was not taken promptly before a magistrate as required by law. I.C. 1971, 35-1-7-1; 35-1-8-1; 35-4-1-1; X-X-X-XXX; XX-X-XX-X; XX-X-XX-XX, being Burns §§ 9-701; 9-704; 9-704(a); 47-2307; *102 48-6112; 48-9416; Pearman v. State (1954), 233 Ind. 111, 117 N.E.2d 362.
In Miranda v. Arizona, supra, the United States Supreme Court said:
"Whatever the testimony of the authorities as to waiver of rights by an accused, the fact of lengthy interrogation or incommunicado incarceration before a statement is made is strong evidence that the accused did not validly waive his rights."
This Court has held in the past that the fact that the statement was obtained during this period of illegal detention may be considered on the issue of the admissibility of the statement. Krauss v. State (1951), 229 Ind. 625, 100 N.E.2d 824.
The purpose of this hearing before a magistrate is fourfold: (1) Advise the arrestee of the charges against him; (2) Advise the arrestee of his constitutional rights; (3) Provide arrestee with an attorney if arrestee was without funds to hire one; (4) Determine whether there is sufficient evidence that the crime charged has been committed and that the accused committed it. Fulks v. State (1970), 255 Ind. 81, 262 N.E.2d 651, (DeBruler, dissenting).
If the sheriff had complied with the law, appellant would not have been held incommunicado for four and a half days under the conditions described here. Appellant would have had counsel right away who could have explained to him at length and in detail what charges were pending against him, the penalities for those crimes, how many charges there were, etc. Counsel could have explained to appellant that the charge for the December 1 crime might be for inflicting physical injury during a robbery carrying a life sentence, rather than simple robbery carrying a sentence of ten to twenty-five years. Counsel could have explained how appellant's confession on the December 1 crime would relate to the January 27 crime and what "cleaning them up" meant. Finally, counsel could have explained to appellant just what *103 kind of psychiatric help he was going to get by confessing to inflicting injury during robbery.
This case is controlled by the recent case of Hall v. State, supra. There appellant contended his confession was not voluntary because he was intimidated into signing a confession in that the police told him his wife was a prime suspect in the burglaries along with appellant. In reversing, this Court stated:
"... there was a clear implication if he did not confess, she would be charged, which would necessitate the placing of appellant's small children in the custody of others. We do not doubt that the police officers were fully justified in believing that appellant's wife was in fact a prime suspect in the burglaries nor is there any doubt had she been charged appellant's children would by necessity have been cared for by persons other than appellant's wife. There is nothing in this record to indicate the confession made by the appellant was untrue. However, the truth of the situation is not the governing criteria in making the determination as to whether or not the appellant's confession was given freely and voluntarily after being fully apprized of all the facts and circumstances.
* * *
"Even if we assume appellant's statement is in fact true and even though appellant's wife was a suspect and might well have been charged and convicted, when the threat to so charge and attempt to convict is made by police officers to `encourage' the appellant to make a full confession, we cannot say as a matter of law that that confession is given freely and voluntarily by the appellant. The cause is, therefore, reversed with instruction to grant appellant's motion for new trial."
See also Mims v. State (1970), 255 Ind. 37, 262 N.E.2d 638.
The degree of coercion in this case is at least as great as that in the Hall case.
Judgment reversed and new trial granted.
Arterburn, C.J., concurs with separate opinion; Hunter and Prentice, JJ., concur; Givan, J., concurs in result.
*104 CONCURRING OPINION
ARTERBURN, C.J.
I reluctantly concur in the result in this opinion for the reason that I think it and Hall v. State (February 1, 1971) 255 Ind. 606, 266 N.E.2d 16, come very close to violating the general principal of appellate procedure that an appellate court should not weigh the evidence nor consider the credibility of the witnesses where there is a finding of fact supported by substantial evidence by the trial court. In other words, we should not substitute our personal views as to how we would have decided the facts in the trial court where there is conflicting evidence and the trial court heard the witnesses and considered the evidence. It is only where the evidence is without conflict that we may consider it a legal question on appeal.
This principle applies to all hearings in the trial court with reference to a determination of the facts not only the facts as to the merits of the case on trial, but also hearings as to the competency of witnesses, admissibility of evidence, or hearings on probable cause for the issuance of warrants.
"The trial court's denial of a motion to suppress evidence is presumably justified, and only the evidence tending to support the ruling will be considered, although the facts set forth in the motion must be accepted as true unless controverted; on the other hand, if evidence has been suppressed and a search warrant quashed, the presumption is, in the absence of a contrary showing by the state, that the search was illegal."
9 I.L.E., Criminal Law, Sec. 715, p. 212.
We have no reason to consider the "burden of proof" in this opinion. That matter solely concerns the trier of the facts.
I recognize that the United States Supreme Court at times has not followed this well settled principle of appellate review. The members of that Court frequently like to substitute their own personal opinions as to what the evidence proves, rather than to accept that of the trial court or lower court. I shall not knowingly violate that principle.
In these two cases I concur because I conceive the evidence as being undisputed and without conflict that the alleged confessions *105 were obtained by coercion or threats. If there was substantial evidence denying that fact, then I would have to follow the trial court's decision.
In these times, when there is a continual erosion of the public's right to protection against crime by enlarging the criminal's rights under the Constitution, rather than the law-abiding citizen's rights thereunder, I feel we should at least keep in mind the age-old principle of appellate review that we do not substitute our personal opinions on the facts for those of the trial court.
NOTE. Reported in 267 N.E.2d 165. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2246999/ | 117 Cal. Rptr. 2d 601 (2002)
96 Cal. App. 4th 540
HUGHES AIRCRAFT COMPANY, Plaintiff and Respondent,
v.
COUNTY OF ORANGE, Defendant and Appellant.
No. E029745.
Court of Appeal, Fourth District, Division Two.
February 26, 2002.
Review Denied May 15, 2002.[*]
Laurence M. Watson, County Counsel, Jim Persinger and Ward Brady, Deputy County Counsel, for Defendant and Appellant.
*602 Lloyd W. Pellman, County Counsel (Los Angeles), and Albert Ramseyer, Principal Deputy County Counsel, for County of Los Angeles as Amicus Curiae on behalf of Defendant and Appellant.
Stephen Shane Stark, County Counsel (Santa Barbara), Kevin E. Ready and Craig A. Smith, Deputy County Counsel, for Counties of Santa Barbara, Alameda, Butte, El Dorado, Fresno, Glenn, Kern and Solano, and County Assessors of the Counties of Santa Barbara, Los Angeles, San Diego and Santa Clara as Amici Curiae on behalf of Defendant and Appellant.
Bewley, Lassleben & Miller, Kevin P. Duthoy, Jeffrey S. Baird, Joseph A. Vinatieri and Jason C. Demille for Plaintiff and Respondent.
John B. Wyatt III, for Boeing Company, Northrop Grumman Corporation, Science Applications International Corporation and TRW Space and Defense Sector as Amici Curiae on behalf of Plaintiff and Respondent.
OPINION
HOLLENHORST, Acting P.J.
This case concerns the assessment of ad valorem taxes by the County of Orange (County) against the personal property, including manufacturing supplies, expensed equipment and office space partitions, used by Hughes Aircraft Company (Hughes), a defense contractor, in the performance of government contracts. We are asked to determine whether title to such property passes to the United States Government (Government) in accordance with the Federal Acquisition Regulation (FAR), 48 Code of Federal Regulations part 52.232-16 (1998), with respect to fixed-price Government contracts with progress payments, and 48 Code of Federal Regulations part 52.245-5 (1998),[1] with respect to cost-reimbursement Government contracts, such that, when in the possession of Hughes, the property is not subject to local taxation.
FACTS
Hughes is a defense contractor, which has performed multiple and various contracts for different Government agencies. In connection with its operations, Hughes operated facilities within the County for the years 1989 through 1995. During that time, Hughes maintained more than 100 separate contracts with the Government for the design and fabrication of high-tech electronic systems for the Department of Defense. Those Government contracts were subject to the FAR and the United States Cost Accounting Standards (CAS). The contracts at issue in this case were either "cost reimbursement" (§ 52.245-5(c)) or "fixed price" (§ 52.232-16(d)) contracts.
Cost-reimbursement contracts are Government contracts pursuant to which the Government reimburses Hughes for all costs necessarily and properly incurred in the performance of the contracts plus a fixed fee. (§§ 16.301-1, 16.301-2 & 16.306 (1998).) The costs include both direct costs charged to a particular contract and allocated indirect costs. Part 52.245-5(c) provides that title to any property acquired by Hughes in the performance of cost-reimbursement contracts passes to the Government at the time it is acquired. Such contracts are generally used when costs cannot be estimated with sufficient *603 accuracy to use the alternative fixed-price contract with the contractor. (§ 16.301-2.)
Fixed-price contracts are Government contracts under which the agreed consideration for contract completion is fixed. As stated, the fixed-price "qualifying" contracts involved in this case were financed by the Government under the progress payments clauses of FAR, part 52.232-16, pursuant to which the contractor issues periodic invoices based on a percentage of its projected costs incurred to date. Under the progress payments clauses, title to property acquired by the contractor for contract performance passes to the Government when the property is allocated or charged to the given contract. (§ 52.232-16(d).) Although the amounts of the progress payments are computed based upon a formula which takes into account costs incurred to date, they are not cost-reimbursement payments. Rather, the contractor assumes the risk of completion with no guarantee whatsoever that its actual costs will be recovered from the "progress payments" received. (§ 16.202-1.)
In the performance of its Government contracts, Hughes acquired certain supplies, expensed equipment and office partitions.[2] This property was purchased under indirect accounts, i.e., it was not charged to a particular Hughes contract, and consistent with the prescribed and applicable CAS and the FAR, was allocated among all of Hughes's Government contracts. Property purchased on such indirect accounts is often referred to as "overhead" property.
In the 1989-1990, 1990-1991, 1991-1992, 1992-1993, 1993-1994, and 1994-1995 tax years (1989-1995 tax years), the assessor for the County assessed all of the subject overhead property as Hughes's property, without regard to allocation between the qualifying contracts and the nonqualifying contracts. Hughes paid taxes on the overhead property and then, pursuant to Revenue and Taxation Code sections 1603 and 5097, timely filed applications for reduction of assessment and claims for refund for the 1989-1995 tax years with the County Assessment Appeals Board. Hughes contended that a portion of the taxes paid on the overhead property should be excluded from assessment because title resided with the Government. Hughes and the County have stipulated to the percentage of Hughes's costs to purchase the overhead property during the relevant years at each of its facilities, which costs were incurred in performing qualifying Government contracts. The amounts of *604 tax in dispute for each tax year are as follows:
Tax Year Tax Amount
1989-90 $241,109
1990-91 $224,737
1991-92 $205,543
1992-93 $175,199
1993-94 $157,228
1994-95 $148,830
After timely exhausting its administrative remedies in this matter, Hughes initiated this action on May 19, 1995, seeking a refund of ad valorem taxes paid to the County. Specifically, Hughes's complaint sought a recovery of $1,152,646 in taxes together with accrued interest. The matter was submitted on stipulated facts, exhibits, and the arguments of counsel. Counsel for Hughes cited to the case of Aerospace Corp. v. State Bd. of Equalization (1990) 218 Cal. App. 3d 1300, 267 Cal. Rptr. 685 (Aerospace), while counsel for the County relied on TRW Space & Defense Sector v. County of Los Angeles (1996) 50 Cal. App. 4th 1703, 58 Cal. Rptr. 2d 602 (TRW).
After considering the matter, on December 17, 1997, the trial court issued a minute order wherein it stated: "This case came to trial at a time when there was no perfect binding precedent. Then came the anticipated guidance of the appellate ruling in [TRW]. Not surprisingly, a ruling there in favor of the County of Los Angeles led the County of Orange to insist that that decision `is decisive on all issues presented by Hughes Aircraft Co. is [sic] the case before the Court.' This court has concluded otherwise, however, for two principal reasons. The first of these is item 3[3] in these parties' Stipulation of Facts relating to ownership of the subject property. That may be the most important fact in this case, and it is a notable distinction from the TRW situation. Second, the earlier opinion in [Aerospace] still seems to apply to the present situation and require judgment in favor of the plaintiff."
On February 23, 1998, judgment was entered for refund of taxes overpaid by Hughes in the sums of $241,109 for tax year 1989-1990; $224,737 for 1990-1991; $205,543 for 1991-1992; $175,199 for 1992-1993; $157,228 for 1993-1994, and $148,830 for 1994-1995, plus interest on such sums. This appeal followed.
STANDARD OF REVIEW
The evidence before the trial court came from the parties' stipulation of facts. The parties agree that the issues in this case are purely legal issues subject to de novo review. (Shuwa Investments Corp. v. County of Los Angeles (1991) 1 Cal. App. 4th 1635, 1644, 2 Cal. Rptr. 2d 783.)
DISCUSSION
Because this case involves the assessment of ad valorem taxes, resolution of the issues raised by the parties depends on the answer to the question: Do the title provisions in parts 52.245-5 and 52.232-16 vest *605 title to Hughes's overhead property in the Government? In order to answer this question, we consider the power of a state to tax a federal contractor, the facts of this case, the FAR, and applicable case law.
A. The State's Power to Tax a Federal Contractor.
Whether a state has the power to tax a federal contractor has been adequately discussed in TRW, supra, 50 Cal. App. 4th 1703, 1710-1714, 58 Cal. Rptr. 2d 602. Citing to General Dynamics Corp. v. County of LA. (1958) 51 Cal. 2d 59, 330 P.2d 794, the TRW court concluded that: "(1) [i]f the property belongs to the federal government, not to [the contractor], and the tax is construed as being an ad valorem property tax, the tax cannot be constitutionally imposed[;] (2)[i]f the property belongs to the federal government and not to [the contractor], and the tax is construed as being either a use tax or a tax on beneficial possession, the tax is constitutionally permissible but can only be imposed if state law permits the imposition of such a tax[; and] (3)[i]f the property belongs to [the contractor] and not to the federal government, an ad valorem property tax can be imposed...." (TRW, supra, 50 Cal. App. 4th 1703, 1713-1714, 58 Cal. Rptr. 2d 602.) We agree with the TRW court's conclusion and now turn to the question of who has title to Hughes's overhead property.
B. Facts.
According to the parties' stipulation, the overhead property in this case was consumed or used in the performance of qualifying Government contracts. The overhead property was described as consisting of supplies, expensed equipment and partitions. "Supplies" includes materials consumed in the production process, such as welding supplies, plating compounds, abrasives, brushes, anodes, acids, sandpaper and emery cloth, as well as artist and drafting supplies, and general office supplies. "Expensed equipment" includes durable low cost items of equipment purchased for general use with a life expectancy of less than 18 months, such as low cost laboratory and test equipment, small tools, jigs, dies, molds, patterns, taps, gauges, and similar manufacturing aids, as well as drafting equipment, lamps, calculators and blackboards. "Partitions" consists of movable office space dividers used at Hughes's various business locations to establish work areas for performance of Hughes's contracts. All of the overhead property was accounted for by Hughes as indirect cost items allocated among all of Hughes's then-pending contracts, rather than directly to particular contracts. To the extent that Hughes used the overhead property in the performance of the Government contracts, it was reimbursed by the Government. After completion of contract work, any remaining expensed equipment or partitions were sold by Hughes at bid sale, and the proceeds credited back to the Government.
The contracts at issue were either "cost reimbursement" (§ 52.245-5(c)) or "fixed price" (§ 52.232-16(d)) contracts. They specifically and expressly incorporated by reference either the cost-reimbursement contract title clauses or the progress payment title clauses, dependent upon the type of Government contract involved.[4]
*606 C. FAR.
There are 53 parts to the FAR. The first 51 parts constitute substantive regulatory law. Part 52 is an appendix with various sample clauses that may be used to implement the regulations. Only the segments of part 52 that are incorporated in the contract become the basis of the contract. Part 53 is an appendix of sample forms.
The FAR is organized into parts, subparts, sections, subsections, paragraphs and subparagraphs. The number to the left of the decimal point represents the part number, i.e., part 52.245-5(c) means part 52. Each part begins with a "000" provision, which defines the scope of that part. This is followed by a definitions section, often designated as "101," that contains important definitions to aid the reader in understanding the subsequent regulations of that part. The first number to the right of the decimal point represents the subpart, i.e., part 52.245-5(c) means subpart 2. The second and third digits to the right of the decimal identify the section, i.e., part 52.245-5(c) means section 45. The number to the right of the hyphen is the subsection, i.e., part 52.245-5(c) means subsection 5. Any notations that are in parentheses and follow the section or subsection number represent paragraph and subparagraph numbers. Again, for example, a citation to part 52.245-5(c)(3) refers to FAR part 52, subpart 2, section 45, subsection 5, paragraph c, and subparagraph 3.
According to Hughes, its contracts that included part 52.245-5 transferred title to the overhead property used in performance of those contracts to the Government.
1. Cost-reimbursement contracts (§ 52M5-5(c)).
Pursuant to part 45.106(f), part 52.245-5 must be incorporated in all cost-reimbursement contracts. Part 52.245-5(c) contains the title clause, which provides that title to property purchased by the contractor vests in the Government if its costs are reimbursable to the contractor. That part states as follows: "Title. [¶] (1) The Government shall retain title to all Government-furnished property. [¶] (2) Title to all property purchased by the Contractor for which the Contractor is entitled to be reimbursed as a direct item of cost under this contract shall pass to and vest in the Government upon the vendor's delivery of such property. [¶] (3) Title to all other property, the cost of which is reimbursable to the Contractor, shall pass to and vest in the Government upon[¶] (i) Issuance of the property for use in contract performance; [¶] (ii) Commencement of processing of the property [f]or use in contract performance; or [¶] (iii) Reimbursement of the cost of the property by the Government, whichever occurs first. [¶] (4) All Government-furnished property and all property acquired by the Contractor, title to which vests in the Government under this paragraph (collectively referred to as `Government property'), are subject to the provisions of this clause. Title to Government property shall not be affected by its incorporation into or attachment to any property not owned by the Government, nor shall Government property become a fixture or lose its identity as *607 personal property by being attached to any real property."
To summarize the above, the Government has title to three types of property pursuant to part 52.245-5(c), namely, (1) Government-furnished property; (2) property the contractor purchases for which he is entitled to be reimbursed as a direct item of cost; and (3) all other property, the cost of which is reimbursable to the contractor, such as indirect cost items. Logically, a contractor will not recover any costs for Government-furnished property for the obvious reason that the contractor did not incur any costs in obtaining the property. Equally obvious is the fact that the contractor will be reimbursed for its direct costs, i.e., that property which can be traced to having been purchased directly for use in fulfilling the Government contract. Thus, the third category of property must refer to indirect cost property (overhead property) for which the contractor is also entitled to be reimbursed. By their nature, indirect costs are incapable of being specifically identified with a particular contract.
Hughes was required to disclose to the Government all of its anticipated direct and indirect costs for each Government contract. (§ 30.2 (1998) CAS Program Requirements.) Because indirect costs, by definition, cannot be identified to each particular contract, Hughes was required to agree in advance on the percentages of its indirect costs allocable to each of its Government and private contracts. (§§ 30.2 & 31.203.) While items of overhead property are not incorporated into identifiable goods sold to the Government, they are purchased by the Government through its reimbursement of the contractor's indirect costs. Part 31.203(b) specifically provides that "[i]ndirect costs shall be accumulated by logical cost groupings with due consideration of the reasons for incurring such costs" which is further augmented by paragraph (d) which states that "[t]he contractor's method of allocating indirect costs shall be in accordance with standards promulgated by the CAS [Cost Accounting Standards] Board...."
According to the parties' stipulations, Hughes calculated the percentage of its indirect costs allocable to each of its Government contracts. Hughes was then reimbursed by the Government for those indirect costs. The "Allowable Costs and Payment" clause at part 52.216-7 establishes the methodology for the submission of the contractor's properly allocated indirect costs so as to be allowable, as well as the mechanism for reimbursement of those indirect costs by the Government. Part 16.307(a)(1) requires the insertion of the "Allowable Costs and Payment" clause in every cost-reimbursement contract. Such clause was included in Hughes's Government contracts. This clause sets up the submission mechanism procedure for the contractor to invoice its costs incurred so as to receive cost reimbursement payments for its allowable costs. The clause provides the "indirect costs linkage" to the "all other property" provision of part 52.245-5(c)(3).
Part 52.216-7, in relevant part, provides: "(b) Reimbursing costs. (1) For the purpose of reimbursing allowable costs ... the term `costs' includes only[¶] (i) Those recorded costs that, at the time of the request for reimbursement, the Contractor has paid by cash, check, or other form of actual payment for items or services purchased directly for the contract; [¶] (ii) When the Contractor is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid, for... [¶] (F) Properly allocable and allowable indirect costs, as shown in the records maintained by the Contractor for *608 purposes of obtaining reimbursement under Government contracts...." (Italics added.)
Clearly, the above paragraph evidences the Government's obligation to pay for a contractor's allocable and allowable indirect costs when submitted in accordance with the clause's procedures, i.e., the FAR and the CAS. More importantly, it shows that the Government has purchased the indirect property used by the contractor by reimbursing it for its properly allowable and allocable indirect costs. By purchasing the indirect cost property, the Government receives absolute title through the language of part 52.245-5(c)(3) which states that "[t]itle to all other property, the cost of which is reimbursable to the Contractor, shall pass to and vest in the Government ...." (Italics added.)
Part 52.216-7(h) further reinforces the Government's intent to take title under part 52.245-5(c)(3) to indirect cost property that it has purchased through reimbursement of indirect costs as follows: "Final payment. [¶] ... [¶] (2) The Contractor shall pay to the Government any refunds, rebates, credits, or other amounts (including interest, if any) accruing to or received by the Contractor or any assignee under this contract, to the extent that those amounts are properly allocable to costs for which the Contractor has been reimbursed by the Government...." Again, according to the parties' stipulation of facts, Hughes did in fact, credit to the Government the proceeds obtained from the bid sale of any remaining expensed equipment or partitions.
By reading part 52.245-5(c)(3) together with part 52.216-7(b)(1)(E) and (h)(2), it is clear that title to Hughes's overhead property passed to the Government by virtue of the Government's payment to Hughes to reimburse it for the monies spent on such property. Having paid Hughes for the overhead property, the Government bought the property and thus acquired title. Upon Hughes's sale of any unused overhead property, the Government logically expected, and was given, credit for the proceeds obtained. The easiest way for the Government to enforce that expectation is to ensure that it acquires title to the property for which it has reimbursed the contractor. It has done so by virtue of the "other property" language found in part 52.245-5(c)(3).
2. Fixed-price contracts (§ 52.232-16(d)).
Likewise, Hughes contends that title to its overhead property used in fulfilling the Government fixed-price contracts (which included § 52.232-16) was also transferred to the Government.
Part 52.232-16(d) provides that title to property described in that paragraph vests in the Government upon the date of the contract or when it is allocable or properly charged to the contract. It provides as follows: "(d) Title. [¶] (1) Title to the property described in this paragraph (d) shall vest in the Government. Vestiture shall be immediately upon the date of this contract, for property acquired or produced before that date. Otherwise, vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract. [¶] (2) Property, as used in this clause, includes all of the below-described items acquired or produced by the Contractor that are or should be allocable or properly chargeable to this contract under sound and generally accepted accounting principles and practices. [¶] (i) Parts, materials, inventories, and work in process; [¶] (ii) Special tooling and special test equipment to which the Government is to acquire title under any other clause of this contract; [¶] (iii) Nondurable (i.e., noncapital) tools, jigs, dies, fixtures, *609 molds, patterns, taps, gauges, test equipment, and other similar manufacturing aids, title to which would not be obtained as special tooling under subparagraph (ii) above; and [¶] (iv) Drawings and technical data, to the extent the Contractor or subcontractors are required to deliver them to the Government by other clauses of this contract. [¶] (3) Although title to property is in the Government under this clause, other applicable clauses of this contract, e.g., the termination or special tooling clauses, shall determine the handling and disposition of the property. [¶] (4) The Contractor may sell any scrap resulting from production under this contract without requesting the Contracting Officer's approval, but the proceeds shall be credited against the costs of performance."
Looking at the above language, Hughes's overhead property clearly falls within the categories of property contemplated. We disagree with the County's contention and the TRW court's finding that the above listing is exclusive and not illustrative. We look to the words used in the clause and note that there are no restrictive words. Had the Government intended to limit the property affected by part 52.232-16(d), it could have stated so by simply using different language. For example, in place of "`Property,' as used in this clause, includes all of the below-described items ..." it could have said, "`Property,' as used in this clause, includes only the below-described items ..." or it could have said, "`Property,' as used in this clause, includes all of the below-described items ..., except as follows ...." Having failed to provide such limiting language, we find the better interpretation of the clause is to say it is illustrative.
Nonetheless, County references part 52.245-2 (highlighted in the brief for amici curiae Counties of Santa Barbara, Alameda, Butte, El Dorado, Fresno, Glenn, Kern, and Solano and County Assessors of the Counties of Santa Barbara, Los Angeles, San Diego and Santa Clara) and argues that that part serves the same function in fixed price contracts as does 52.245-5 in cost reimbursement contracts. County argues that because 52.245-2 contains no reference to any indirect cost property, no indirect cost property passes as a result of this clause.
Part 52.245-2, in relevant part, provides: "(c) Title in Government property. [¶] (1) The Government shall retain title to all Government-furnished property. [¶] (2) All Government-furnished property and all property acquired by the Contractor, title to which vests in the Government under this paragraph ... are subject to the provisions of this clause.... [¶] (3) Title to each item of facilities and special test equipment acquired by the Contractor for the Government under this contract shall pass to and vest in the Government when its use in performing this contract commences or when the Government has paid for it, whichever is earlier, whether or not title previously vested in the Government. [¶] (4) If this contract contains a provision directing the Contractor to purchase material for which the Government will reimburse the Contractor as a direct item of cost under this contract[¶] (i) Title to material purchased from a vendor shall pass to and vest in the Government upon the vendor's delivery of such material; and [¶] (ii) Title to all other material shall pass to and vest in the Government upon[¶] (A) Issuance of the material for use in contract performance; [¶] (B) Commencement of processing of the material or its use in contract performance; or [¶] (C) Reimbursement of the cost of the material by the Government, whichever occurs first."
*610 Referring to part 52.245-2, amici argue that "[i]t is illogical that if the specific government title clause for the type of contract does not envision any transfer of indirect cost property, that another clause would do so by indirect reference (see above 52.232-16 discussion)." We disagree for two reasons. First, both parts 52.232-16 and 52.245-2 are contained in Hughes's fixed-price contracts. Thus, one must not be read to the exclusion of the other. And second, part 52.232-16(d)(2) notes that title to certain property may be acquired pursuant to other clauses of the contract (i.e., part 52.245-2). To the extent that the indirect cost property is not included in part 52.245-2, part 52.232-16 provides for its inclusion.
D. Relevant Case Law.
Having stated our interpretation of the FAR parts applicable to the case before us, we now turn to the relevant case law that has been relied upon by the parties to support their positions. Significantly, we note that the TRW case stands out as a challenge to the rationale of the cases relied upon by Hughes.
In TRW, supra, 50 Cal. App. 4th 1703, 58 Cal. Rptr. 2d 602, summary judgment was entered in favor of a Government contractor for recovery of property taxes. The trial court found that title to overhead property, i.e., consumable supplies and material, and low-value office and plant equipment, vested in the Government and was thus immune from taxation. Like this case, the TRW case involved both fixed price (§ 52.232-16(d)) and cost reimbursement (§ 52.245-5(c)) contracts. Also, the cost of the overhead property was reimbursed by the Government. On appeal, our colleagues in Division Four of the Second District reversed with directions to enter summary judgment for the County, holding that the overhead property was not property of the Government.
In reaching its decision regarding part 52.245-5 contracts, TRW relied primarily on part 45.000. Part 45.000 defines the scope of part 45 as follows: "This part prescribes policies and procedures for providing Government property[5] to contractors, contractors' use and management of Government property, and reporting, redistributing, and disposing of contractor inventory. It does not apply ... to property to which the Government has acquired a lien or title solely because of partial, advance, or progress payments; or to disposal of real property." According to TRW, "[t]his means that although the title clause found in FAR [part] 52.245-5 is the cost-reimbursement contract, the clause does not apply to certain propertythat for which the [Government has made partial, advance, or progress payments. That is, FAR [part] 52.245-5 cannot be the predicate for a claim of federal ownership of the property if the [Government was making payments to reimburse the contractor for the property." (TRW, supra, 50 Cal. App. 4th 1703, 1715, 58 Cal. Rptr. 2d 602.)
While the clear language of part 45.000 states that Part 45 does not apply to "property to which the Government has *611 acquired a lien or title solely because of partial, advance, or progress payments," the intent of that provision is to make it clear that Part 45's property maintenance and management requirements do not apply to progress payments property. However, the terms "partial or progress payments" are not synonymous with the interim billing and reimbursement of costs incurred in a cost reimbursement contract. (See 28 C.F.R. § 32.500 (1998) "This subpart prescribes policies, procedures, forms, solicitation provisions, and contract clauses for providing contract financing through progress payments based on costs. This subpart, does not apply to[¶] (a) Payments under cost-reimbursement contracts, ..." (Italics added.))
Also, as noted by an appellate court in Arizona, the TRW court's "interpretation of ... [part] 45.000 unfortunately fails to attend adequately to either the words of the regulation or those of the clause. In a cost type contract, the [Government reimburses the contractor for every item of property that the contractor procures for the job. This includes not only overhead items allocated to the contract, but also every item used specifically and exclusively for the contract. The inevitable conclusion from the TRW court's reasoning would be that all such items are outside the scope of Part 45. Part 45 would thus apply exclusively to items of property that the [Government already owns. It makes no sense to conclude that the only property to which title passes to the [Government is that which it already owns. Moreover, the provisions of Part 45 repeatedly contradict that proposition.
"The TRW court also erred in asserting that title passes to the [Government 'solely because of partial, advance, or progress payments.' [(50 Cal. App. 4th 1703, 1715, 58 Cal. Rptr. 2d 602, italics added).] The court overlooked that title also passes when the property is `issued for use in contract performance' or when the contractor starts processing the property or using it in performance of the contract. See ... § 52.245-5(c)(3)(i) & (ii). Most of the overhead items involved here were as capable of passing to the [Government under the latter circumstances as under those listed in subsection (3)(iii).[6] Indeed, as ... the language of the regulation suggests, the events detailed in subsections (3)(i) through (iii) control only the timing of the passage of title to the [Government. In short, title to property does not pass `because of the listed events; it passes `when' they occur.
"Finally, [the fact that the] overhead items cannot be specifically identified to a single [Government contract[ does not mean that] they are not [Government property and are not subject to the title-passing clause.... [Part] 52.245-5(d), provides in part: `The Government property shall be used only for performing this contract, unless otherwise provided in this contract or approved by the Contracting Officer.' (Emphasis added). [As the italicized portion of subsection (d) states, i]tems need not be identifiable to a single contract to constitute [Government property. [The language in part] 45.505-3 (1998)[is] broad enough to include overhead items. The provision states in part:
"(a) General. All Government material[7] furnished to the contractor, as well as *612 other material to which title has passed to the Government by reason of allocation from contractor-owned stores or purchase by the contractor for direct charge to a Government contract or otherwise, shall be recorded in accordance with the contractor's property control system and the requirements of this section.
"(b) Consolidated stock record. When a contractor has more than one Government contract under which Government material is provided, a consolidated record for materials may be authorized by the property administrator, provided, the total quantity of any item is allocated to each contract by contract number and each requisition of material from contractor-owned stores is charged to the contract on which material is to be used. The supporting document or issue slip shall show the contract number or equivalent code designation to which the issue is charged.
"...
"(d) Use of receipt and issue documents ... The property administrator may authorize the contractor to maintain, in lieu of stock records, a file of appropriately cross-referenced documents evidencing receipt, issue, and use of Government-provided material that is issued for immediate consumption and is not entered in the inventory record as a matter of sound business practice. This method of control may be authorized for
"(1) Material charged through overhead .... (Emphasis added). This language confirms our conclusion that the title-passing clause at ... part 52.245-5 applies to overhead property. Accord Aerospace[, supra,] 218 Cal. App. 3d 1300 [267 Cal. Rptr. 685], ..." (Motorola, Inc. v. Arizona Dept. of Revenue (App. Div. 1 1999) 196 Ariz. 137, 993 P.2d 1101, 1106-1107 (Motorola).)
In Motorola, a Government contractor appealed from the Arizona Department of Revenue's (Department) assessment for delinquent taxes against property purchased as indirect cost overhead items (overhead property) allocated to various federal and private contracts. The trial court issued summary judgment in favor of the contractor and the Department appealed. (Motorola, supra, 196 Ariz. 137, 993 P.2d 1101, 1103.) The appellate court affirmed the trial court's decision holding that title to the overhead property passed to the Government under the title-passing clauses of the cost-reimbursement type contracts (§ 52.245-5) and fixed-cost contracts (§ 52.232-16), and thus, resale exceptions to use tax were applicable. (Motorola, supra, 196 Ariz. 137, 993 P.2d 1101, 1109.)
We agree with the Motorola court's analysis and thus find the TRW court's reasoning misplaced.
In reaching its decision regarding part 52.232-16(d) contracts, the TRW court found that the listing of items of property in the four separate categories is exclusive. According to TRW "[n]othing in the introductory language suggests that the listing is illustrative. Furthermore, the four subparagraphs contain a detailed listing of various categories of property." (TRW, supra, 50 Cal. App. 4th 1703, 1718, 58 Cal. Rptr. 2d 602.) As we previously stated, we find the opposite to be the case, i.e., we find the list to be illustrative. Thus, we disagree with TRW on this point.
Next, the TRW court analyzed whether the overhead property falls within any of *613 the categories listed. In response to the contention that the property fell within the category of "`materials [and] inventories,'" the TRW court stated, "[t]aking all of the categories together, it is clear that property embraced within the meaning of this clause and therefore property belonging to the [Government is that which is used to produce the item contracted for. The listed items are used to manufacture the items, either as parts, instrumentalities or designs and technical drawings pertinent to the production and operation of the product." This is in contrast to the overhead items at issue in this case, property which includes Post Its, TRW stationery, toilet paper, and desks. None of these items is material or inventory used to produce the procured items: high-technology space and defense equipment. Instead, these items are the common staples of any ongoing business.
"The apparent purpose of [G]overnment title clauses is to protect the [Government's interest by giving it title to the asset to be acquired and the means by which the asset will be produced, operated or applied. (See FAR, § 32.503-14(a).) The [Government drafted the FAR. Presumably if it wanted to ensure that it acquired title to property such as the everyday overhead items at issue in this case, it would have included the category 'overhead' in the categories listed in FAR part 52.232-16(d). It did not do so. Instead, it set forth categories of property which have one element in common: each is necessary to the production and operation of the subject matter of the contract. We therefore do not construe the phrase 'materials [and] inventories' to include overhead property. Consequently, we conclude, as a matter of law, that the [Government does not gain title to the overhead property because of the progress payments it makes to TRW in the fixed-price contracts." (TRW, supra, 50 Cal. App. 4th 1703, 1718-1719, 58 Cal. Rptr. 2d 602, fn. omitted.)
Like the Motorola court, we are not persuaded by the TRW court's interpretation of the terms "`materials [and] inventories.'" (Motorola, supra, 196 Ariz. 137, 993 P.2d 1101, 1108.) To assume that only materials and supplies that are consumed in doing the physical work necessary to fulfill a Government contract constitute "materials" is "inherently counterintuitive and does not reflect practical reality." (Ibid., referencing fn. 9 in TRW, supra, 50 Cal. App. 4th 1703, 1719, 58 Cal. Rptr. 2d 602.) The TRW court rejected the argument that it should look to the definition of material found in part 45.301 which includes "supplies that may be consumed in normal use in performing a contract." According to TRW "reliance upon this definition is unavailing because it takes the definition out of context." (TRW, supra, 50 Cal. App. 4th 1703, 1719, fn. 9, 58 Cal. Rptr. 2d 602.) In support of its reasoning, TRW reiterated its opinion that part 45, of which 45.3 is a subpart, does not apply to property obtained via progress payments. As we previously explained, we find such opinion to be baseless, and thus choose not to follow TRW. Instead, we agree with the Motorola court's finding that "[t]he term 'materials' may include items consumed in the mental work that guides and underpins the physical work." (Motorola, supra, 196 Ariz. 137, 993 P.2d 1101, 1108.)
Relying upon Aerospace, the trial court found that title to Hughes's overhead property vested in the Government. Aerospace involved supplies and materials (overhead property) purchased by an aerospace company to help it perform its contracts with the Government for research and development of space and military systems. The Board of Equalization assessed sales and use taxes against the company on its overhead property which had been *614 purchased pursuant to resale certificates and allocated to specific contracts by multiple accounting methods. The terms of the contract included a clause specifying when title to the materials passed to the Government. The company sued for refund of sales and use taxes paid on the overhead material. The trial court found in favor of the company and the appellate court affirmed.
The Aerospace court held that the exemption from sales taxes of Revenue and Taxation Code section 6381, applied because the resale of the overhead property to the Government under the contract was included within the statute. (Aerospace, supra, 218 Cal. App. 3d 1300, 1309, 267 Cal. Rptr. 685.) The court held that no use tax applied because the company's use of the materials occurred after title passed to the Government. (Id. at pp. 1309-1310, 267 Cal. Rptr. 685.) It also held that California Code of Regulations, title 18, section 1618, under which the board reached a contrary conclusion, was arbitrary, beyond the board's rulemaking authority, and therefore invalid because it was opposed to judicial precedent that held that title in these circumstances passed according to the terms of the contract. (Aerospace, at pp. 1310-1314, 267 Cal. Rptr. 685.)
County criticizes the trial court's reliance on Aerospace, arguing that, as TRW pointed out, Aerospace involved a lawsuit for refund of sales and use taxes paid on overhead property, whereas this case involves an ad valorem tax based upon ownership. Even though different taxes are involved, we see no distinction in the title passage clauses. The primary issue in Aerospace, TRW, and this case, is ownership of the overhead property, i.e., does title to a contractor's overhead property vest in the Government pursuant to the title-passing clauses included in the Government contracts. The type of tax being assessed against the property is irrelevant to this issue.
We also reject County's argument that the title-passing clauses merely create a security interest. (Marine Midland Bank v. United States (Cl.Ct.1982) 231 Ct. Cl. 496, 687 F.2d 395; King, Federal Acquisition Law in an Era of Declining Defense Spending: Defining the Government's Interest in Defense Contractor Property (1995) 42 Naval L.Rev. 35.) As recognized by Motorola, such "position is the minority view in the federal courts. See McDonnell Douglas Corp. v. Director of Revenue, 945 S.W.2d 437, 441 (Mo.1997) (`[Security interest theory ... has yet to be adopted as a majority view by the federal courts.'). Like the court in McDonnell Douglas, we feel `no compulsion at this time to ignore the plain meaning of the title vesting provisions included in the federal contracts at issue in this case.' Id. at 441." (Motorola, supra, 196 Ariz. 137, 993 P.2d 1101, 1108; see also General Dynamics Corp. v. County of L.A., supra, 51 Cal. 2d 59, 67-71, 330 P.2d 794.)
Having found that title to Hughes's overhead property vested in the Government, we must conclude that the overhead property was not subject to County's ad valorem tax. (General Dynamics Corp. v. County of L.A., supra, 51 Cal. 2d 59, 330 P.2d 794.)
CONCLUSION
Hughes is a Government contractor doing business in County. County assessed Hughes's overhead property as Hughes's property without regard to allocation between the qualifying Government contracts and nonqualifying contracts. Hughes paid taxes on the overhead property and applied for a refund claiming that a portion of the taxes paid on the overhead property should be excluded from assessment because title resided with the Government. *615 The parties have stipulated to the percentage of Hughes's costs to purchase the overhead property, which costs were incurred in performing qualifying Government contracts.
Moreover, the parties stipulated that the overhead property in this case was consumed or used in the performance of qualifying Government contracts. All of the subject supplies, expensed equipment and partitions were accounted for by Hughes as overhead, i.e., as indirect cost items allocated among all of Hughes's then-pending contracts, rather than directly to particular contracts. Pursuant to its contracts with the Government, Hughes was reimbursed by the Government for that portion of the supplies, expensed equipment and partitions used in the performance of the Government contracts. After completion of contract work, any remaining expensed equipment or partitions were sold by Hughes at bid sale, and the proceeds credited back to the Government.
Given the parties' stipulation of facts, we were called upon to only determine whether the title provisions in parts 52.245-5 and 52.232-16 vest title to Hughes's overhead property in the Government. After consideration of Aerospace and Motorola, we conclude that they do.
DISPOSITION
The judgment is affirmed.
We concur: RICHLI and GAUT, JJ.
NOTES
[*] Kennard, J., dissented.
[1] All further section references are to 48 Code of Federal Regulations unless otherwise indicated.
[2] "Supplies" includes materials consumed in the production process, such as welding supplies, plating compounds, abrasives, brushes, anodes, acids, sandpaper and emery cloth, as well as artist and drafting supplies, and general office supplies. "Expensed equipment" includes durable low-cost items of equipment purchased for general use with a life expectancy of less than 18 months, such as low cost laboratory and test equipment, small tools, jigs, dies, molds, patterns, taps, gauges, and similar manufacturing aids, as well as drafting equipment, lamps, calculators and blackboards. "Partitions" consists of movable office space dividers used at Hughes's various business locations to establish work areas for performance of Hughes's contracts. All of the subject supplies, expensed equipment and partitions were accounted for by Hughes as overhead, i.e., as indirect cost items allocated among all of Hughes's then pending contracts, rather than directly to particular contracts. Pursuant to its contracts with the Government, Hughes was reimbursed by the Government for that portion of the supplies, expensed equipment and partitions used in the performance of the Government contracts. After completion of contract work, any remaining expensed equipment or partitions were sold by Hughes at bid sale, and the proceeds credited back to the Government.
[3] "There appears on each of the Assessed Value Summaries a column entitled `Qualifying Contract %.' HUGHES contends that these percentages truly and correctly reflect the percentage of its costs for supplies, equipment and partitions at each business location for each year, which were incurred in the performance of `qualifying contracts.' `Qualifying contracts' are contracts between HUGHES and the United States Government which contain a title clause passing title to materials, including the subject supplies, equipment and partitions, to the United States upon HUGHES' receipt thereof. Based upon the results of a previous State Board of Equalization sales tax audit which have been provided by HUGHES to the Assessor, the Assessor stipulates that the qualifying contract percentages for the years 1989-90, 1990-91, 1991-92, 1992-93, 1993-94 and 1994-95, shown on the Assessed Value Summaries, represent true and correct allocations of the subject supplies, equipment and partitions, between qualifying and non-qualifying contracts."
[4] For example, the cost-reimbursement contract provided: "This contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available.[¶] I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES ... [¶] ... [¶] 52.245-5 Government Property (Cost Reimbursement, Time and Material, or Labor Hour Contracts) (JAN 1986)...."
The fixed-price contract provided: "This contract incorporates the following clauses by reference, with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. [¶] I. FEDERAL ACQUISITION REGULATION (48 CFR CHAPTER 1) CLAUSES: ... [¶] 52.232-16 PROGRESS PAYMENTS (JUL 1991)...."
[5] "Government property is defined as `all property owned by or leased to the Government or acquired by the Government under the terms of the contract. It includes both Government-furnished property and contractor-acquired property as defined in this section.' (FAR, § 45.101(a).) Contractor-acquired property `means property acquired or otherwise provided by the contractor for performing a contract and to which the Government has title.' (Ibid.) Government-furnished property `means property in the possession of, or directly acquired by, the Government and subsequently made available to the contractor.' (Ibid.)"
[6] "For example, the items included perishable tools like hammers, drills, screwdrivers, maintenance and repair supplies; office equipment and supplies; glue, solvents, nuts, bolts and screws; laboratory equipment and materials; parts and materials like batteries, resistors, transistors, metal, and plastic that are consumed in operations; and non-capitalized plant equipment like timers, meters, and amplifiers."
[7] "`Material' is defined as: [¶] [P]roperty that may be incorporated into or attached to a deliverable end item or that may be consumed or expended in performing a contract. It includes assemblies, components, parts, raw and processed materials, and small tools and supplies that may be consumed in normal use in performing a contract. [¶] ... § 45.301 (1998) (emphasis added)." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1664348/ | 390 S.W.2d 443 (1965)
ARKANSAS STATE HIGHWAY COMMISSION, Appellant,
v.
Max LASLEY, Appellee.
No. 5-3545.
Supreme Court of Arkansas.
May 24, 1965.
Mark E. Woolsey and Don Gillespie, Little Rock, for appellant.
Howell, Price & Worsham, Little Rock, for appellee.
HOLT, Justice.
This is a condemnation proceeding by appellant to acquire land for highway purposes. The appellee sought just compensation for his leasehold interest in the land. In addition he sought to recover for the damages to his crops and the loss of cattle caused by the negligent acts of appellant's agents and employees. From the judgment on the verdict favorable to the appellee, the appellant brings this appeal. For reversal appellant relies upon two points. One of appellant's contentions is that the court erred in permitting a suit against the appellant, an agency of the state, in violation of Article 5, § 20 of the Constitution of the State of Arkansas. Appellant asserts that the appellee's damages which resulted from loss of his cattle and their trampling and eating his crops are tort claims.
Appellant's agents and employees went upon appellee's property for acquisition *444 purposes. They permitted appellee's cattle to escape resulting in the loss of fourteen head of the agreed value of $1,050.00. The damages to the crops outside the strip of right-of-way, caused by the escaped cattle, was agreed to be $3,125.30. Appellee filed his claim with the State Claims Commission for the recovery of these and other damages. The appellant filed a motion to dismiss appellee's claim on the basis that there was a suit pending in the Pulaski Circuit Court "filed for the purpose of paying all damages to which * * * [appellee is] entitled, as well as for acquisition of land title"; that appellee "has a good legal remedy open to him in the Circuit Court, which he cannot ignore and must exercise"; that an award by the State Claims Commission would result in a cost to the State which would not be shared by the Federal Government; and that "claimant is not placed in the position of suing the State of Arkansas".
Pursuant to appellant's motion to dismiss, the Claims Commission entered an order placing appellee's questioned claims upon the inactive docket stating that in its opinion "the claimant has a remedy at law" for the damages appellee suffered to his crops and his loss of cattle. Thereupon appellee filed his answer in the pending suit in circuit court. Appellant then filed a motion to require appellee to make his answer more definite and certain, to which appellee properly responded. A joint stipulation, prepared by the appellant, setting forth the proceedings before the Claims Commission and the extent of some of the damages suffered by appellee, was admitted into evidence without objection. Appellant made no motion for a directed verdict nor made any objection to the pleadings, the testimony, or the jurisdiction of the court.
In a long line of cases we have recognized that: "The State of Arkansas shall never be made defendant in any of her courts." Article 5, § 20, Arkansas Constitution. We are of the view that the loss of the cattle and resulting damages to the crops after their escape are tort claims and, therefore, are not permissible in a suit against the state. St. Francis Drainage Dist. v. Austin, 227 Ark. 167, 296 S.W.2d 668 and Wenderoth v. Baker, 238 Ark. 464, 282 S.W.2d 578. In Ark. State Highway Comm. v. McNeil, 222 Ark. 643, 262 S.W.2d 129, we recognized the well settled principles that there is no authority in the law to waive the state's immunity to a suit; that the state is not bound by the unauthorized acts of its agents and, further, the state is not estopped by an erroneous construction of the law by its representatives.
As was said in St. Francis Drainage Dist. v. Austin, supra:
"There are many laymen, lawyers and judges who believe that, in all fairness, the State, its political subdivisions and quasi public corporations such as improvement districts created by the State, should be liable for torts committed. But the law, holding otherwise, has been firmly established for many years."
The State Claims Commission was created to represent the state's conscience in such matters. The fact that the loss of the cattle and the resulting damages to appellee's crops outside the acquired right-ofway strip are tort claims does not now prejudice the right of appellee to again present his apparently just claims to the Claims Commission. Appellant urges that damages to other items belonging to appellee sound in tort. However, we refuse to interfere further since we are of the view that there was sufficient evidence the damages were necessary and incidental to the taking of the leasehold interest.
Appellant next contends for reversal that certain instructions given by the court were inherently erroneous as being confusing and conflicting. No specific objection was made to any instruction given by the court and, further, appellant offered no instruction. We find no merit in this contention, especially in view of the remittitur we now order.
*445 If the sum of $4,175.30 [$1,050.00, the agreed value of appellee's cattle and $3,125.30, the agreed damages to appellee's crops outside the right-of-way strip] is entered as a remittitur to the judgment of $20,160.00 within seventeen (17) calendar days then the judgment will be affirmed. If no remittitur is so entered, then the judgment will be reversed and the cause remanded for a new trial.
McFADDIN, J., concurs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1292142/ | 491 S.E.2d 333 (1997)
268 Ga. 536
EAST TENNESSEE MORTGAGE COMPANY, INC.
v.
UNITED STATES FIDELITY AND GUARANTY COMPANY et al.
No. S97Q1276.
Supreme Court of Georgia.
October 6, 1997.
Reconsideration Denied October 31, 1997.
*334 David J. Gellen, Michael K. Wolensky, Kutak Rock, Thomas Todd, Jr., Atlanta, for East Tennessee Mortgage Company, Inc.
Ben Kingree, Carter & Ansley, Atlanta, for United States Fidelity and Guaranty Company.
*335 CARLEY, Justice.
Blue Ridge Mountain Marina, Inc. (Blue Ridge) borrowed money from First National Bank of Chatsworth (FNB) and, as a condition of the loan, was required to obtain hazard insurance on the property securing the loan. United States Fidelity and Guaranty Company (USF&G) issued an insurance policy, which contained a "loss-payable" clause requiring that payment for any covered loss be made to FNB. A covered loss occurred on January 9, 1988. USF&G received notice of this loss from Blue Ridge and, pursuant to Blue Ridge's direction, improperly made payment for the loss to an entity other than FNB. Only after Blue Ridge's loan went into default, but before July 1991, did FNB first learn of the covered loss and the wrongful payment of the insurance proceeds by USF&G. FNB took possession of the property and called upon the guarantor of the loan to discharge Blue Ridge's debt. Subsequently, FNB assigned its interest to East Tennessee Mortgage Company (ETM), a company owned by the guarantor. On September 16, 1992, ETM brought suit against USF&G in the State Court of DeKalb County to recover for the improper payment of the insurance proceeds. Thereafter, the case was removed to the United States District Court for the Northern District of Georgia, where USF&G moved for summary judgment based upon the "no-suit" clause in the insurance policy, which provides:
No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.
The district court granted summary judgment in favor of USF&G. On appeal, the Eleventh Circuit United States Court of Appeals certified the following three questions to this Court:
(1) Is the no-suit clause of the policy described above applicable to the mortgagee without regard to its knowledge of the loss? In other words, does the no-suit clause operate broadly or is there a negative pregnant in the proof-of-loss clause such that the no-suit clause binds the mortgagee only when the mortgagee receives notice following an insured's failure to provide a proof of loss?
(2) If the no-suit clause is applicable to the mortgagee without regard to its knowledge, does the insurer's improper payment to the insured and the lack of notice to the mortgagee constitute a waiver of the no-suit clause or estop the insurer from relying on this clause?
(3) If either question (1) or question (2) is resolved in favor of the mortgagee, will the instant suit be time-barred nonetheless because suit was brought more than one year after the mortgagee and its assignee learned of the loss and improper payment?
East Tenn. Mortg. Co., Inc. v. U.S. Fidelity and Guar. Co., 111 F.3d 97, 100 (11th Cir. 1997).
The first certified question relates to whether there is any interplay between the "no-suit" clause and the "proof-of-loss" clause. In relevant part, the "proof-of-loss" clause provides that, if the insured fails to render proof of loss, then the mortgagee, upon notice, shall do so and shall be subject to the policy provision relating to the time of bringing suit. ETM contends that the mortgagee must adhere to the "no-suit" clause only where the insured fails to comply with the "proof-of-loss" clause and that, conversely, where, as here, the insured did submit a timely proof of loss, the mortgagee never becomes subject to the "no-suit" clause. "This reading of the contract, however, ignores the whole for an overly strict consideration of each part standing alone." Edwards v. Atlantic Ins. Co., 203 Ga.App. 608, 609(1), 417 S.E.2d 410 (1992) (wherein the insured argued that the "no-suit" clause was not applicable because it appeared in the fire policy, but not in the special building form policy). The "proof-of-loss" clause does not override the "no-suit" clause, but simply provides that, within 60 days after notice of the insured's failure to file a proof of loss, the mortgagee itself can file a proof of loss. If the mortgagee files proof of loss within the 60-day period, the "proof-of-loss" clause results in the continued application of the *336 terms of the contract as to time of bringing suit, just as if the insured had rendered a timely proof of loss. See World of Tires, Inc. v. American Ins. Co., 360 Pa.Super. 514, 520 A.2d 1388, 1390 (1987); Greater Providence Trust Co. v. Nationwide Mut. Fire Ins. Co., 116 R.I. 268, 355 A.2d 718, 720 (1976). Accordingly, the fact that Blue Ridge filed a timely proof of loss does not cause the "no-suit" clause to be inapplicable to the mortgagee.
By its terms, the "no-suit" clause applies to a "suit or action on this policy...." A strong line of authority supports the proposition that any form of action, growing out of an insurance contract, is governed by this limitations provision contained in the policy. 20A Appleman, Insurance Law and Practice § 11603, p. 456 (1980). In Georgia, regardless of the form of the action, "if the source of the right claimed has evolved from the written contract of insurance, the limitations contained in it supersede any other general statutory limitations. [Cits.]" Modern Carpet Indus., Inc. v. Factory Ins. Assn., 125 Ga.App. 150, 152, 186 S.E.2d 586 (1971); Reece v. Mass. Fire & Marine Ins. Co., 107 Ga.App. 581, 585, 130 S.E.2d 782 (1963). Thus, an action commenced by a mortgagee based upon the insurer's improper payment for a covered loss is an action "on the policy" for the recovery of a "claim." See Seafirst Commercial Corp. v. U.S. Fidelity & Guar. Co., 780 F.2d 1290, 1296 (5th Cir.1986).
Therefore, the "no-suit" clause required ETM or its assignor to commence an action for misdirection of the funds by USF & G within 12 months of the "inception of the loss." Several cases have held that "inception of the loss" refers to the actual loss to the insured. Herring v. Middle Georgia Mut. Ins. Co., 149 Ga.App. 585, 586, 254 S.E.2d 904 (1979); World of Tires, Inc. v. American Ins. Co., supra at 1391; Zuckerman v. Transamerica Ins. Co., 133 Ariz. 139, 650 P.2d 441, 447 (1982). However, in none of those cases was the mortgagee suing for an improper payment of a claim by the insurer. Where, as here, the policy contains the standard loss payable clause, the mortgagee's action is not based upon the contract between the insurer and the insured, but upon the separate and distinct contract between the insurer and the mortgagee. Decatur Fed. Sav. & Loan Assn. v. York Ins. Co., 147 Ga.App. 797, 798(3), 250 S.E.2d 524 (1978). There is no reason that the phrase "inception of the loss" in the "no-suit" clause must mean the date of the actual loss to the insured, when the actual loss underlying the suit is that suffered by the mortgagee at the time the insurer improperly paid the insurance proceeds in breach of the insurer's separate contract with the mortgagee.
[The "no-suit" clause here] drastically shortens the otherwise applicable six-year limitation on simple contracts, and, where its application would work a forfeiture of the policy benefit, "the court will strictly construe the provision against the insurance company...." [Cit.]
Decatur Fed. Sav. & Loan Assn. v. York Ins. Co., supra at 798(2), 250 S.E.2d 524. The "no-suit" clause, strictly construed against USF&G, permits the mortgagee or its assignee to file an action to recover for the breach of the mortgagee's separate contract at any time within 12 months of the date of the mortgagee's loss occasioned by USF&G's improper disbursement of the insurance proceeds, rather than within 12 months of the date of the loss of the property suffered by Blue Ridge.
It is undisputed that suit was not brought against USF&G by ETM or its assignor within 12 months of the date of the improper payment of the insurance proceeds. However, "[w]hile admittedly the contractual period limiting the bringing of an action is valid, it must not be held to be unconscionably inflexible." Buffalo Ins. Co. v. Steinberg, 105 Ga.App. 366, 372(1), 124 S.E.2d 681 (1962). Contractual stipulations in an insurance policy which require that suit be brought within a certain period of time "are not necessarily in every instance to be literally complied with in order to prevent a forfeiture of the policy or to allow a recovery thereon." Pilgrim Health and Life Ins. Co. v. Chism, 49 Ga.App. 121, 122, 174 S.E. 212 (1934). The circumstances may be such as to excuse a delay in compliance. Pilgrim Health and Life Ins. Co. v. Chism, supra.
*337 It was held in Pilgrim Health, etc., Ins. Co. v. Chism, [supra at 123(2), 174 S.E. 212 ], an action on a life insurance policy where the insured's death was not discovered until after the time for bringing suit had passed, that if failure to discover the death was not due to any neglect on the part of the beneficiary, the action could be maintained even though the contractual limitation had passed.
Livaditis v. American Cas. Co. of Reading, Pa., 117 Ga.App. 297, 301(2), 160 S.E.2d 449 (1968). The failure here to discover the improper payment at the time it occurred was attributable to the actions of USF&G and was not the fault of the mortgagee or ETM as assignee. Accordingly, literal compliance with the "no-suit" clause was rendered impossible and the delay in compliance was legally excused. See Pilgrim Health and Life Ins. Co. v. Chism, supra.
However, delay in compliance cannot be excused indefinitely. In order to comply with the "no-suit" clause and thereby prevent a forfeiture of the policy, the loss payee or its assignee was required to commence an action within 12 months after discovery of USF&G's misdirection of funds. Pilgrim Health and Life Ins. Co. v. Chism, supra at 123(2), 174 S.E. 212. Because it is undisputed that neither the mortgagee nor ETM commenced an action within 12 months after discovery of USF&G's improper disbursement of the insurance proceeds, we conclude that the "no-suit" clause does bar ETM's action. See Livaditis v. American Cas. Co. of Reading, Pa., supra.
Accordingly, the answer to the first and third questions is that, although the "no-suit" clause applies broadly, ETM or its assignor should have commenced an action within 12 months of discovery of the misdirection of funds. Accordingly, we need not answer the second question.
Certified questions answered.
All the Justices concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1120000/ | 611 P.2d 8 (1980)
Larry WERTZ, Appellee,
v.
STATE of Alaska, Appellant.
No. 4683.
Supreme Court of Alaska.
April 25, 1980.
*9 David Backstrom, Asst. Public Defender, Fairbanks, Brian C. Shortell, Public Defender, Anchorage, for appellant.
Harry L. Davis, Dist. Atty., Fairbanks, Avrum M. Gross, Atty. Gen., Juneau, for appellee.
Before RABINOWITZ, C.J., CONNOR, BURKE and MATTHEWS, JJ., and DIMOND, Senior Justice.
OPINION
RABINOWITZ, Chief Justice.
In a much-publicized incident in the summer of 1977, Larry Wertz attached sixty-three sticks of dynamite to the Alyeska oil pipeline near Fairbanks and exploded them.[1] The explosion did about $45,000 worth of damage to the pipeline, but did not interrupt the transmission of oil or cause an oil spill. After a jury trial, Wertz was convicted of malicious destruction of property (former AS 11.20.515) and was sentenced to ten years in prison, with three years suspended. The maximum sentence for this offense is ten years. Wertz brought this sentence appeal, alleging that the sentence is excessive. We disagree, and affirm.
Wertz was twenty-six at the time the offense was committed. His prior criminal record consisted of one misdemeanor. He had served briefly in the Army, and was given an honorable discharge by virtue of unsuitability for military service. During his Army service, he had one disciplinary infraction, for being absent without leave, when he overstayed a furlough. He had no prior history of treatment for mental illness.
During the spring and summer of 1977, Wertz was employed as a laborer on a small gold mine just north of Fairbanks. He discussed with other miners in the area his belief that there was a conspiracy among wealthy capitalists to bring down the United States and impose some form of world government. The Alyeska oil pipeline (then in the final stages of construction) was, he said, controlled by this conspiracy. Therefore, the pipeline should be blown up. He also found support in the Book of Revelation and other religious writings for his theories. At one time he said that, in a vision, God told him to blow up the pipeline. He had access to dynamite used in the mining operations, but did not have experience in using it. He persuaded a fellow worker who had explosives experience to help him.
In the early morning hours of July 20, 1977, shortly after the pipeline began operations, Wertz and his companion attached three bundles, each containing twenty-one sticks of dynamite, to the vertical supports for the elevated pipe. Shortly after 3 a.m., they detonated the dynamite using electric batteries. The explosions tore apart the insulation around the pipe, and damaged the vertical supports, but did not puncture the pipe or cause oil to leak or spill.
Wertz gave notice of an insanity defense (AS 12.45.083) and also alleged that he was mentally incompetent to stand trial. He was initially found mentally incapable of understanding the proceedings against him and assisting in his defense. After about four months of treatment in Atascadero State Hospital in California, he was found to have regained sufficient capacity to understand the proceedings.
The superior court judge in imposing sentence initially concluded that the defendant was not the "worst type of offender" in his class (State v. Wortham, 537 P.2d 1117, 1120 (Alaska 1975), and therefore not deserving of the maximum sentence. He went on to make the slightly different point that Wertz' offense was "one of the most serious property crimes." He discussed the possibilities of rehabilitation, and made a *10 "very strong recommendation" that the Division of Corrections classify Wertz to a facility at which he would receive psychiatric counseling.
We agree with the superior court that the instant offense was one of the most serious of all property crimes. It created the very real danger of a calamitous explosion and fire, and the environmental damage caused by a large-scale oil spill. It was Wertz' intention to put the pipeline out of commission, which could have had a substantial effect on the national economy.[2]
Since the superior court suspended a portion of the maximum term, this is not a maximum sentence and it need not be demonstrated that Wertz was the worst type of offender. Ferreira v. State, 602 P.2d 803, 806 (Alaska 1979); Spearman v. State, 543 P.2d 202, 205 (Alaska 1975).
Wertz' second point on appeal is that the sentence does not adequately provide for his rehabilitation. We cannot agree with this contention. The superior court in sentencing Wertz discussed at length his unquestioned need for psychiatric treatment. The court made the strongest possible recommendation that Wertz be placed in an institution where he would receive such treatment. The trial court cannot designate the specific institution where the defendant is to be confined. Ferreira v. State, 602 P.2d 803, 805 (Alaska 1979). Nor can it be expected to sentence a defendant for a crime of this seriousness to some type of rehabilitative therapy in lieu of imprisonment.
We are convinced that the record amply supports the trial court's conclusion that Wertz is a dangerous offender who requires both a lengthy term of imprisonment and intensive rehabilitative efforts. The trial court was not clearly mistaken in its sentence. McClain v. State, 519 P.2d 811 (Alaska 1974).[3]
The sentence is AFFIRMED.
BOOCHEVER, J., not participating.
NOTES
[1] The delay from the time of the offense to the time of issuance of this opinion is due largely to two factors. Wertz was initially found mentally incompetent to stand trial, as discussed in more detail, infra, and received several months of psychiatric treatment prior to trial. Also, he did not take a timely appeal. We granted permission for him to take an untimely appeal several months after the trial court had imposed sentence.
[2] We note that the legislature has drawn a similar conclusion about the seriousness of damage to oil and gas facilities. Former AS 11.20.517(a), which took effect shortly after the instant offense, makes the malicious destruction of oil and gas property a felony, carrying a ten-year maximum sentence, regardless of the amount of damage. Likewise, in the new Criminal Code, any intentional damage to an oil or gas pipeline or supporting facility constitutes criminal mischief in the first degree, a class B felony, carrying a ten-year maximum sentence. AS 11.46.480, AS 12.55.125(d). Intentional damage to other types of property is a class C felony, carrying a five-year maximum sentence, if the damage exceeds $500. AS 11.46.482, AS 12.55.125(e).
[3] The state asks that Wertz' sentence be revised upward to the maximum by requiring him to serve the three suspended years as well as the other seven. The state did not, however, file a notice of appeal in the form and at the time prescribed in Appellate Rule 21.
In light of these circumstances, we have concluded that this is not an appropriate occasion to tackle the difficult and unbriefed double jeopardy question. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1759945/ | 981 S.W.2d 260 (1998)
Don C. RESER, Appellant,
v.
STATE FARM FIRE & CASUALTY COMPANY, Appellee.
No. 04-97-00145-CV.
Court of Appeals of Texas, San Antonio.
June 24, 1998.
Rehearing Overruled July 31, 1998.
Opinion Supplementing Decision on Overruling of Rehearing August 26, 1998.
*261 Thomas B. Black, San Antonio, J. Ken Nunley, James M. Hill, Jr., Nunley & Jolley, L.L.P., Boerne, for Appellant.
Lori M. Cliffe, David V. Jones, Jones, Kurth & Andrews, P.C., San Antonio, for Appellee.
Before RICKHOFF and STONE, JJ., and DUNCAN, J., (concurring in the judgment only).
OPINION
STONE, Justice.
Appellant, Don Reser, was sued on numerous grounds by a former business client, Central Park Mall Joint Venture [CPMJV]. The suit initially included defamation allegations, which were potentially within the coverage of Reser's insurance policy with State Farm, as well as numerous other claims not within the coverage of Reser's policy. CMPJV subsequently amended its claim and eliminated the defamation allegations. State Farm withdrew its defense of Reser and refused to indemnify him once he settled with CPMJV. In this appeal we must decide whether an insurer's duty to indemnify its insured can exist, even if there is no corresponding duty to defend the insured. Under the facts of this case, we hold that the duty to indemnify does not exist in the absence of a duty to defend. Accordingly, we affirm the summary judgment granted in favor of State Farm.
FACTUAL BACKGROUND
Reser's Policy with State Farm
At all times relevant to this litigation, Reser was a named insured in a homeowner's insurance policy and a personal liability umbrella policy issued by State Farm. The umbrella policy provided coverage for personal injury, defined in part as "libel, slander, defamation of character or invasion of rights of privacy." Excluded from coverage were losses caused by "providing or failing to provide any professional service," and losses "caused by your business operations...." The parties agree that the policy provided State Farm with a discretionary right to defend rather than mandatory duty to defend.
*262 The Underlying Suit
CPMJV and State Realty Company, a real estate broker, entered into an agreement with attorneys Don Reser and John McCracken to assist in the sale of Central Park Mall. Reser and McCracken were to assist in finding a buyer for the mall and would be compensated for doing so. A dispute arose about whether Reser fulfilled his obligation under the agreement, and he subsequently sued CPMJV to recover a finder's fee. In that suit, CPMJV filed a counterclaim against Reser alleging defamation and harm to reputation, breach of contract, breach of fiduciary duty, fraud, tortious interference, legal malpractice, and violations of the Texas Deceptive Trade Practices Act.
Reser's insurer, State Farm, assumed Reser's defense of the CPMJV counterclaim under a reservation of rights. By written notice State Farm reserved its right to withdraw from the defense depending on whether the suit stemmed from Reser's business pursuits, which would not be covered under the policy. State Farm also indicated in its reservation of rights letter that "[t]here is a question as to whether or not the loss involves personal injury ... as defined by the policy."
CPMJV later filed an amended counterclaim in which it deleted all reference to the defamation and harm to reputation allegations. Approximately six months later, State Farm withdrew its defense of Reser because State Farm determined that the remaining causes of action in the counterclaim were not covered under the policy. Soon thereafter, Reser settled the lawsuit with CPMJV. The settlement agreement entitled Reser to receive $1,351,360.50 from CPMJV, offset by $475,000 in consideration of CPMJV's counterclaim.
The Instant Lawsuit
Following the settlement with CPMJV, Reser brought the suit now on appeal against State Farm alleging breach of contract and numerous extracontractual and statutory claims. The trial court severed out the breach of contract claim, which included allegations that State Farm breached its duties to defend and indemnify by withdrawing its defense of the CPMJV counterclaim. The non-contractual claims were abated and the case proceeded on the contract claim only.
State Farm's Motion for Summary Judgment
State Farm sought summary judgment on the following grounds: 1) the claims were excluded by the business pursuits and/or professional services exclusions of the policy; 2) there was no duty to defend or to provide coverage; 3) there was no duty to settle CPMJV's claims because liability was not reasonably clear; and 4) Reser did not incur a "net loss" under the policy.[1] In support of its motion, State Farm submitted as summary judgment evidence copies of the pleadings and settlement papers in the underlying Reser vs. CPMJV litigation, the deposition of Reser in which he acknowledged that the services he performed for CPMVJ were performed in his capacity as a lawyer, the insurance policies in issue, and a transcription of a telephone conversation between Reser's attorney in the CPMJV litigation and another individual. State Farm contended the conversation established that Reser did not incur a net loss when he settled the CPMJV claim.
Reser's Motion for Summary Judgment
Reser also sought summary judgment, solely on the issues of coverage and amount of loss. He claimed the policy provided coverage against CPMJV's claims, contending that CPMJV's amended counterclaim did not delete the factual and legal allegations complaining of defamation, harm to reputation, and invasion of privacy, as well as the claim for damages resulting from such alleged conduct. Reser further asserted that the "basic facts constituting CPMJV's claim for damages for harm to its business reputation were the same facts in both the original and amended counterclaims." Finally, Reser contended the business pursuits exclusion did not apply because his conduct relating to defamation and invasion of privacy allegations took place after Reser's business relationship with CPMJV concluded. Reser's *263 summary judgment evidence included affidavits from Reser and one of his attorneys, Joyce Moore, asserting that during private conversations after Reser had broken ties with CPMJV, Reser called the principals of CMPJV "crooks" and "criminals." Because these defamatory comments were made in private settings after his business relationship with CPMJV had terminated, Reser argued that the business pursuits exclusion did not apply.
Argument and Authorities
Standard of Review
Since both parties moved for summary judgment and the trial court denied one motion and granted the other, we review all the summary judgment evidence presented and resolve all the questions presented to the trial court. See Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex. 1997); Holmes v. Morales, 924 S.W.2d 920, 922 (Tex.1996); Jones v. Strauss, 745 S.W.2d 898, 900 (Tex.1988). The parties' motions raised three questions: (1) whether CPMJV's amended counterclaim stated claims within the State Farm coverage; (2) whether the business pursuits exclusion precluded coverage; and (3) whether Reser suffered a net loss, compensable under the terms of the policy. The trial court answered each of these questions in the negative. On appeal, we should render the judgment the trial court should have rendered. See Agan, 940 S.W.2d at 81; Morales, 924 S.W.2d at 922; Strauss, 745 S.W.2d at 900.
Coverage
The issue of coverage necessarily includes consideration of the duty to defend and the duty to indemnify. However, the duty to defend and the duty to indemnify are two "distinct and separate duties." Trinity Universal Ins. Co. v. Cowan, 945 S.W.2d 819, 821-22 (Tex.1997). Generally, the factual allegations in the petition and the policy language trigger the duty to defend. Id. at 821 (citing American Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 847-48 (Tex.1994)). This duty is unaffected by facts ascertained before suit, developed in trial, or by the ultimate outcome of the case. See Argonaut Southwest Ins. Co. v. Maupin, 500 S.W.2d 633, 635-36 (Tex.1973). Unlike the duty to defend, the duty to indemnify only arises after an insured has been adjudicated, whether by judgment or settlement, to be legally responsible for damages in a lawsuit. Heyden Newport Chem. Corp. v. Southern Gen. Ins. Co., 387 S.W.2d 22, 25 (Tex.1965). Even though we do not look at the specific legal theories alleged to determine the duty to indemnify, if the underlying petition does not raise factual allegations sufficient to invoke the duty to defend, then even proof of all of those allegations could not invoke the insurer's duty to indemnify. See Farmers Texas County Mutual Ins. Co. v. Griffin, 955 S.W.2d 81, 82-83 (Tex.1997); see E & L Chipping Co., Inc. v. Hanover Ins. Co., 962 S.W.2d 272, 274-75 (Tex.App.-Beaumont 1998, n.w.h.) (duty to defend is broader than duty to indemnify). Therefore, we must review the factual allegations contained in the pleadings to determine whether State Farm owed a duty to defend or a duty to indemnify.
CPMJV's counterclaim originally included Paragraph IX entitled "DEFAMATION AND HARM TO REPUTATION," which alleged that Reser defamed CPMJV orally and in writing by publishing false disparaging statements. CPMJV further alleged that the defamation exposed CPMJV to public hatred, ridicule, or financial injury and impeached its honesty, integrity, virtue, or reputation. The parties agree that this claim for defamation and damage to reputation would normally come within the policy's coverage if no exclusions applied. The parties disagree about whether the business pursuits exclusion applies.
CPMJV amended its counterclaim and omitted the Paragraph IX defamation claim. State Farm determined that the remaining causes of action were not covered by the policy and withdrew from Reser's defense. As State Farm correctly points out, we determine State Farm's duty by looking to the most recent pleading before the court. See, e.g., Garcia, 876 S.W.2d at 848. None of the legal theories alleged in the amended counterclaim triggered State Farm's duty to defend. Nevertheless, our analysis must *264 continue. We must also decide whether the factual allegations in the petition invoke the duty to indemnify.
The factual allegations in the counterclaim do not give rise to State Farm's duty to defend or the duty to indemnify. Paragraph 2.8 of the factual allegations reads in pertinent part, "At all times material to this lawsuit RESER was and is an attorney at law believed to be licensed in the State of Texas to practice law." In addition, all the factual allegations involve Reser's conduct surrounding the attempted sale of Central Park Mall. There are no specific factual allegations indicating when or to whom any defamatory comments were made. Neither the original nor the amended counterclaim ever state the substance of the defamatory remarks.[2] The amended counterclaim makes no mention of defamation and no allegation of conduct which would fall under State Farm's scope of coverage under the policy. Using the Supreme Court's test in Griffin, even if all the factual allegations of the counterclaim were proven, such proof would not invoke State Farm's duty to indemnify. Griffin, 955 S.W.2d at 82-83.
Reser contends that Griffin and other "duty to defend" cases are inapplicable because the issue in this case is the duty to indemnify, not the duty to defend. He further claims that despite the amendment of the counterclaim, the underlying facts of the case never changed, including the fact that Reser defamed the principals of CPMJV. Although Reser contends the amended counterclaim "retained the basic allegations relevant to defamation," he has not specified the basic allegations in the amended counterclaim to which he is referring. Reser's argument can be summarized as follows:
The duty to defend and the duty to indemnify are separate and distinct duties. Since case law instructs parties that insurance companies are bound by the facts, and not by the legal theories plead, State Farm is bound by the facts known to it, not by the deletion of a legal theory of recovery in the amended counterclaim. Reser claims that just as coverage cannot be created by alleging legal theories that would be within coverage, coverage cannot be defeated by eliminating causes of action that would be within coverage. Reser asserts that State Farm was aware of the underlying defamation facts; he thus concludes that the duty to indemnify still existed.
While the simplicity of Reser's argument is enticing, the argument cannot stand. As a practical matter, when a claim is asserted by a third party against an insured, the insurer will investigate and defend the claim if it determines the claim is potentially within coverage. The claim, however, must be asserted by the third party. It is not the duty of the insurer to point out to the third party that the facts discovered by the insurer during its investigation give rise to additional claims not asserted by the third party. Indeed, such a course of action would be adverse to both the insurer and its insured. In this case, the third party claim against Reser proceeded to litigation and was asserted in a counterclaim. Both Reser and State Farm were entitled to rely upon the counterclaim as a statement of the claims being asserted against Reser. See Roark v. Allen, 633 S.W.2d 804, 810 (Tex.1982) (petition intended to provide sufficient information to enable defendant to evaluate case and prepare defense). It was not State Farm's duty to inform CPMJV that the underlying and unplead facts potentially gave rise to a defamation claim, and that such a claim should be asserted in the counterclaim.[3] Thus, while State Farm had a duty to investigate the claim against Reser, the claimant CPMJVhad the burden of stating its claim. CPMJV stated its claim in its amended counterclaim, and it did not include either facts or *265 legal theories indicating that it was pursuing damages caused by defamation.
Damages Sought
Reser asserts that the defamation claim was still included in the amended counterclaim because the amount of damages sought in the original counterclaim and the amended counterclaim was the same. Reser contends that since the damages sought and the underlying facts remained the same, State Farm should have concluded that CPMJV was, in actuality, still presenting a defamation claim. The record does not support Reser's basic assumption that the amount of damages sought never changed. The original counterclaim sought damages as follows:
breach of contract$7,300,000;
breach of fiduciary duty$7,300,000;
violation of the duty of good faith and fair dealing$7,300,000;
fraud$7,300,000;
tortious interference$15,000,000;
conspiracy$7,300,000;
deceptive trade practices$7,300,000;
defamation and harm to reputation $7,300,000;
malpractice$7,300,000;
loss of interest$262,500;
harm to business reputation$15,000,000;
decline in fair market or saleable value of mall$15,000,000;
lost profits$7,300,000;
lost time and energy of principals$300,000;
exemplary damages$5,000,000 per defendant; and
attorneys feesunspecified amount.
The amended counterclaim sought identical damages, except it no longer stated a defamation claim and no longer sought the $7,300,000 previously sought in the paragraph entitled "DEFAMATION AND HARM TO REPUTATION." Thus the amended counterclaim eliminated the defamation allegations and sought to recover $7,300,000 less than was sought in the original counterclaim. The trial court correctly determined that the live pleadings in the underlying Reser vs. CPMJV litigation on their face precluded coverage or were insufficient to invoke coverage under the policy and that consequently State Farm had no duty to indemnify. See Griffin, 955 S.W.2d at 82; cf. Consolidated Underwriters v. Loyd Richardson Const. Corp., 444 S.W.2d 781, 784 (Tex. Civ.App.-Beaumont 1969, writ ref'd n.r.e.) (pleading amendment which removes allegations that establish potential coverage terminates duty to defend). Summary judgment was properly granted on this basis.
Business Pursuits Exclusions and Net Loss Requirement
State Farm sought and obtained summary judgment on the additional basis that the claims asserted against Reser by CPMJV were excluded from coverage by the professional services and business pursuits exclusions. The policy excludes coverage for any loss "caused by providing or failing to provide a professional service" or "caused by your business operations or arising out of business property...." The policy defines "business" as "a trade, profession or occupation." In light of our disposition of the case on the coverage issue, we need not address the merits of the business pursuits exclusion. Likewise, we will not address the net loss provision of the policy, nor need we address Reser's motion for summary judgment.
Conclusion
In accordance with this opinion, we overrule Reser's points of error and affirm the judgment of the trial court.
SUPPLEMENTAL OPINION ON MOTION FOR REHEARING
On July 31, 1998, appellant filed a letter brief in support of his previously-filed motion for rehearing. On the same date, but before receipt of the letter brief, this court issued its order denying appellant's motion for rehearing. In order to address the issue raised by the letter brief, the court now issues this supplemental opinion.
Appellant directs this court's attention to an order signed on September 7, 1994, in which Judge John D. Gabriel found as a matter of law that State Farm was "placed on notice of libel and slander allegations from the pleadings and letters, and that damages *266 were sought by the Jaffees." In light of this order, Reser complains of the notation in this court's original opinion that the appellate record does not clearly indicate whether State Farm was aware of the specific defamation facts before the summary judgments were filed.
Although the order signed by Judge Gabriel reveals that State Farm was aware of the Jaffees' defamation claim, State Farm's knowledge does not change the outcome of the instant case. Regardless of the extent of State Farm's knowledge of the defamation facts, the critical issue is what claims were actually asserted against State Farm's insured, Don Reser. As determined in the original opinion, Central Park Mall Joint Venture [CPMJV] had the burden of asserting its claim, and ultimately, in its amended counterclaim, CPMJV asserted neither facts nor legal theories stating a defamation claim. In the absence of a stated claim against its insured, State Farm was not obligated to defend its insured. Accordingly, appellant's motion for rehearing is overruled.
NOTES
[1] State Farm also sought summary judgment on the ground that it had the option, but not the duty, to defend Reser. This ground was denied by the trial court and it is not an issue on appeal.
[2] From the record before us, it appears that the only information regarding the specifics of the defamatory remarks is contained in the affidavits of Reser and his attorney, Jocye Moore, which were submitted in support of Reser's motion for summary judgment. The record does not indicate whether State Farm was aware of these specifics before the affidavits were filed.
[3] As previously noted, the record on appeal does not indicate that prior to the filing of Reser's motion for summary judgment State Farm knew of the defamation factsthat Reser called the CPMJV principals "crooks." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/250462/ | 276 F.2d 324
UNITED STATES of America ex rel. Charles TOWNSEND,Petitioner-Appellant,v.Frank G. SAIN, sheriff of Cook county, Illinois, and JackJohnson, warden of the Cook county jail,Respondents-Appellees.
No. 12759.
United States Court of Appeals Seventh Circuit.
April 7, 1960.
George N. Leighton, Chicago, Ill., for appellant.
Francis X. Riley, Asst. State's Atty., Chicago Ill., Benjamin S. Adamowski, State's Atty., Cook County, Ill., Chicago, Ill., for appellees.
Before HASTINGS, Chief Judge, SCHNACKENBERG, Circuit Judge, and GRUBB, District Judge.
SCHNACKENBERG, Circuit Judge.
1
On December 12, 1958, Charles Townsend filed a petition for habeas corpus in the district court, naming Frank G. Sain, sheriff of Cook county, Illinois, and Jack Johnson, warden of Cook county jail, as respondents. Petitioner was at that time awaiting execution in said jail, pursuant to a judgment of the criminal court of said county, convicting him of murder. The conviction had been affirmed by the Illinois Supreme Court, People v. Townsend, 11 Ill.2d 30, 141 N.E.2d 729.
2
Petitioner prayed for the district court to grant him a full hearing and that orders be entered setting aside his conviction and the judgment and sentence imposed upon him, ordering a new trial, and for general relief.
3
Pursuant to a rule to show cause, respondents filed an answer to the petition, incorporating the final order of the Supreme Court of Illinois in a post-conviction proceeding instituted by petitioner.
4
On a hearing, a record of the entire proceedings in the Illinois courts was produced and considered by the district court.1 No other evidence was offered or received in that court.
5
From the records of the state court proceedings, which were before the district court, appear the basic undisputed facts now related.
6
One evening during the middle of December, 1953, Vincent Campbell, who had known petitioner for several years, saw him at 35th street and Prairie avenue, in Chicago. Campbell asked 'how he was doing' and petitioner said he was 'going to make some money', and Compbell noticed that he was carrying a housebrick. Several hours later, Compbell saw petitioner in a billiard hall near 35th and Prairie, where Campbell was playing a game of billiards. Petitioner came in carrying a bag which he laid on a bench. The bag had a little tear in it and it was folded near where it was ripped. Campbell noticed that it contained a brick.
7
Jack Boone, 43 Year-old steelworker, living with his wife and two sons, left his home at 3754 South Michigan Avenue for work, December 18, 1953. He was found later in the passageway alongside the apartment house in which he lived, with blood on the back of his head behind his right ear. He was taken shortly afterward to a hospital where he died on December 21, 1953. His wallet was discovered on December 19, 1953, in a nearby apartment building.
8
Except for 8 or 9 days, petitioner had been unemployed in 1953.
January 1, 1954
9
About 1:45 a.m. on January 1, 1954, petitioner, 19 years old, was arrested by Chicago police officers, to whom he stated that he was a narcotics addict and that he had given himself heroin 1 1/2 hours earlier. He was taken to the 2d district police station, where at about 2:30 a.m. he was asked his name, address, and such information, by the lockup keeper, who made out an arrest slip. His answers were clear and coherent. He was then questioned in a room in the station for about 30 minutes by police officers Fitzgerald, Cagney and Corcoran, about various crimes, which he denied having committed. He was then placed in the women's cell alone and at about 5 a.m. was removed to the 19th district station. He was not interrogated there. He remained there until that evening, lying or reclining on his bunk.
10
Petitioner was returned to the 2d district station about 8:30 p.m. and a showup in which petitioner was viewed with others lasted about 10 minutes. During the showup plaintiff and another prisoner engaged in a fist fight. To all of the officers who saw him petitioner seemed clear, distinct and coherent in speech. Shortly before 9 p.m. petitioner was questioned by Cagney about the Boone killing and other matters for about 15 minutes. He stated he struck a man and robbed him, on the west side of Michigan Avenue, north of 38th street, about 6 p.m. on December 18.
11
While at the 2d district station, petitioner complained of stomach pains and held his abdomen. When he asked for a doctor, Cagney telephoned for one.1 -a At 9:45 p.m. Dr. Clarence E. Mansfield, a police surgeon, came. He spoke to none of the investigating officers, but was directed by the desk sergeant to petitioner. The doctor examined petitioner, tested his heart and eyes, diagnosed his symptoms as resulting from drug addiction and withdrawal, and injected into his arm a solution with a hypodermic syringe. The injection consisted of 2 cc.'s of a saline solution into which the doctor dropped 1/8 grain of sodium phenobarbital and 1/230 grain of hyoscine hydrobromide. He left four 1/4 grain phenobarbital tablets with petitioner to be taken, two aroung midnight and two in the morning. (Petitioner took two that night and the remainder the next day.) At 11:15 p.m., assistant state's attorney Janega came and questioned petitioner. The questions and his answers were recorded by a shorthand reporter.
January 2, 1954
12
Petitioner was not again interviewed until the following day, Saturday, January 2, 1954, between 11 a.m. and 1 p.m., after he had been taken to the states attorney's office. A copy of the transcribed questions and answers was handed to petitioner and Mr. Janega read the original to him. Thereupon, petitioner put his initials 'CT' on the first page of the original and he signed each page on the margin, and also at the bottom of the last page. His initials on the first page were put alongside the words 'Re: death of Jack Boone'. On this occasion petitioner did not appear sleepy or complain in any manner.
13
After signing his confession, petitioner was returned to the 2d district police station, arriving there about 3 p.m. on January 2, at which time he spoke coherently and made no complaints.
January 3, 1954
14
On Sunday evening, January 3, 1954, petitioner asked Cagney to get the doctor again because he was not feeling well. The police surgeon arrived that evening and gave petitioner some phenobarbital tablets to take orally.
January 4, 1954
15
Petitioner attended a public inquest conducted by the coroner of Cook county, Illinois on Monday morning, January 4, 1954. He was in custody of police officers. He was advised by the coroner of his right not testify, but chose to do so, was sworn and again confessed the Boone murder.
16
In accordance with Illinois practice, the state criminal court, when the case was called for trial, disposed of petitioner's motion to suppress his confession on the ground that it was involuntary. Dr. Mansfield and Dr. Harry R. Hoffman, licensed physicians, and 17 lay witnesses testified for the state, and Dr. Charles D. Proctor, who held a degree as a doctor of pharmacology, but was not a licensed physician, testified for petitioner.
17
Dr. Mansfield testified that he had examined about 20,000 narcotics addicts, about 70% Of these being addicted to heroin; that he had treated about 6,000 or 7,000 who were suffering from a withdrawal of narcotics and in about 50% Of that number had used the same injection and treatment he administered to petitioner. He found from his experience that phenobarbital reacts very well combined with hyoscine to quiet a person, to pacify, because it delays at once emotional trends that cause one to be hilarious and excitable. The addict in withdrawal is suffering from a nervous reaction. The hyoscine is to relax and the phenobarbital to seditize. Dr. Mansfield testified: 'I wanted him to rest. I did not want him to go to sleep'.
18
He also testified that he could recall no case in his experience where his use of hyoscine produced loss of memory.
19
When asked on cross-examination whether he had given petitioner 'any truth serum or anything you considered that?', he answered 'No. I never saw any in my life'.
20
Dr. Proctor testified that he had never prescribed treatment for drug addicts and had never observed the effect of hyoscine on human beings, his knowledge being gained by reading textbooks. He considered a 1/8 grain of phenobarbital given hypodermically a very low sedative dose. Hyoscine, in his opinion, exaggerates a norcotic's restlessness, prostration and excitation and deorientation would be increased, affecting consciousness and memory within a wide range. Within that range it produces amnesia and memory loss as to details and events occurring during the period of the effects of the hyoscine, which is 5 to 8 hours. The duration of amnesia would be the same for an addict as for a normal person however. In answer to a hypothetical question, he gave as his opinion, inter alia, that the assumed person suffered amnesia and had only partial consciousness.
21
The court overruled the motion to suppress the confession as evidence.
22
At the subsequent jury trial the confession was introduced into evidence, in these circumstances:
23
Petitioner, as a witness in his own behalf, denied that he robbed or assaulted Boone. He also testified that he remembered Mr. Janega coming to see him. He also remembered being in the states attorney's office and being handed some papers which he held in his hand while the state's attorney read to him.
24
Lewis Matsuoka, a court reporter, testified at the trial that he took shorthand notes of the interview of Janega with petitioner and reduced the same to typewritten form. That document as received in evidence at the trial, reads as follows:
25
'Statement of Charles Townsend taken at the 2nd District Police Station, 300 East 29th Street, Chicago, Cook County, Illinois, on Friday, January 1, 1954, at 11:15 O'clock p.m.
26
'Present:
27
'Mr. Rudolph L. Janega, Assistant State's Attorney
28
'Officer Edward Cagney, Homicide Section, D.B.
29
'Officer John Fitzgerald, 2nd District
30
'Reported by L. Matsuoka, Book No. 54-01.
31
'Mr. Janega:
32
'Q. What is your name? A. Charles Townsend.
33
'Q. Where do you live, Charles? A. 3641 Giles.
34
'Q. Where are you staying? A. 243 East 35th Street.
35
'Q. With whom do you live there? A. With Harold Hares.
36
'Q. Everything you are going to tell me about this case you are going to tell me of your own free will, is that right? A. Yes, sir.
37
'Q. There has been no threats made to you or no promises made to you, is that right? A. No, sir, no promises or no threats.
38
'Q. Calling your attention to December 18, 1953, can you recall where you were at about 6:00 p.m.? A. Yes, sir.
39
'Q. Where were you? A. 38th and Michigan.
40
'Q. What is located there? A. A big building and passageway.
41
'Q. A big building with a passageway that leads where? A. Back in the back to another building.
42
'Q. To another building? A. Yes, sir.
43
'Q. What, if anything, unusual occurred there? A. Sir?
44
'Q. What, if anything, unusual occurred there? What happened there? A. A man was going through the passageway.
45
'Q. How was he built? A. A young fellow, weighed maybe 135 pounds.
46
'Q. How was he dressed, do you know? A. No, sir.
47
'Q. What happened to that man? What did you do to him, if anything? A. Hit him in the head with a house brick and taken his money.
48
'Q. How many times did you strike him? A. Once.
49
'Q. What part of him did you strike? A. His head, the back of his head.
50
'Q. What happened after you struck him? A. He fell down.
51
'Q. That was in the passageway? A. Yes, sir.
52
'Q. What did you do after the body fell? A. Went in his pocket and taken his money.
53
'Q. What else did you take? A. His wallet.
54
'Q. His wallet? A. Yes.
55
'Q. And what else? A. That was all.
56
'Q. How much money did you take from this person? A. $4.80, I believe.
57
'Q. What did you do with the wallet? A. Threw it in the hallway near an alley on 37th Street.
58
'Q. Was it 37th Street or 37th Place? A. 37th Place.
59
'Q. You took nothing else. Did he have a wrist watch on? A. No, sir.
60
'Q. Where did you find the money? A. In his front pocket, left front pocket.
61
'Q. How? A. In his left front pocket.
62
'Q. Did he have any money in the wallet? A. No, sir.
63
'Q. Is that the last time you saw the body? A. Yes, sir.
64
'Mr. Janega: That's all.'
65
Dr. Hoffman, a licensed physician in Illinois since 1910, and a specialist in nervous and mental diseases, testified for the state at the trial on rebuttal that he had treated hundreds of narcotics addicts and had used hyoscine many hundreds of times and phenobarbital many thousands of times. He had never observed where hyoscine in normal dosage caused amnesia. In answer to a hypothetical question, based upon specific dosages to an assumed person (i.e. petitioner in this case), he stated in his opinion that the injection in question could not have caused amnesia or put the subject to sleep.
66
Both in the review of petitioner's conviction by writ of error, 11 Ill.2d 30, 141 N.E.2d 729, and in its order entered in the post-conviction proceeding, the Illinois Supreme Court considered and rejected the constitutional attacks now made by petitioner.2 He has exhausted in the state courts remedies afforded to him by Illinois.
67
As stated in petitioner's brief, his basic contentions here are that 'after he was put under influence of a police injected narcotic drug * * * to pacify and quiet him; and while he was thus under its influence, he was questioned and the confession extracted', and that it is the admission of the confession 'that gives rise to federal constitutional questions'.
68
In developing his thesis in this court, petitioner goes far beyond what appears in the records of the state courts in his case as to the effects of the injection of hyoscine and phenobarbital to relieve one who is suffering from the results of narcotics withdrawal.3 Dr. Proctor, his only witness in the criminal court, did not testify to the broad results of hyoscine and phenobarbital injection that the petition for habeas corpus asserts. Dr. Proctor's essential claim (which, we must not overlook, was disputed by Doctors Mansfield and Hoffman), was that 'severe amnesia and memory loss' could result. In his brief here, petitioner charges Dr. Mansfield with knowledge that these medicines induce admissions of guilt, and 'remove the subject * * * from the scope of reality.' There is no evidence to support this charge.
69
Even if we were to attach to Dr. Proctor's testimony the same weight as that given to that of Dr. Mansfield,4 we would be faced with a dispute in the evidence as to whether petitioner suffered a loss of memory when questioned by Mr. Janega. On habeas corpus, the district court's inquiry is limited to a study of the undisputed portions of the record. Thomas v. State of Arizona, 356 U.S. 390, 402, 78 S.Ct. 885, 892, 2 L.Ed.2d 863, where the court said:
70
'* * * '(There) has been complete agreement that any conflict in testimony as to what actually led to a contested confession is not this Court's concern. Such conflict comes here authoritatively resolved (against petitioner) by the State's adjudication.' Watts v. Indiana, 338 U.S. 49, 51-52 (69 S.Ct. 1347, 93 L.Ed. 1801) (1949). Time and again we have refused to consider disputed facts when determining the issue of coercion. See Gallegos v. Nebraska, 342 U.S. 55, 60-61 (72 S.Ct. 141, 96 L.Ed. 86) (1951); Haley v. Ohio, 332 U.S. 596, 597-598 (68 S.Ct. 302, 92 L.Ed. 224) (1948); Ward v. Texas, 316 U.S. 547, (62 S.Ct. 1139, 86 L.Ed. 1663) (1942). The rationale behind such exclusion, of course, lies in the superior opportunity of trial court and jury to observe the witnesses and weigh the fleeting intangibles which may indicate truth or falsehood. We abide by the wisdom of that reasoning.'While it is the law that a conviction cannot stand if based on a confession obtained by means violating a defendant's federal constitutional rights, Leyra v. Denno, 347 U.S. 556, 74 S.Ct. 716, 98 L.Ed. 948, petitioner has the burden of sustaining his charge that hes constitutional rights were violated in procuring his confession. Therefore, inasmuch as he contends that the medicine given him impaired his memory and thus produced an involuntary confession, we may consider evidence of other statements made by him at times when it is not claimed that any circumstances operated to affect his power of memory. In other words, when the question is whether a person's memory is wholly or partially impaired when he makes a statement, it is significant that the content of the statement is the same as that of several other statements made by him when his memory was admittedly unimpaired.
71
In its essential elements this case is unlike those in which convictions failed because of confessions obtained in violation of prisoners' constitutional rights. In this case there is evidence of the following facts:
72
(1) Petitioner asked for treatment by a doctor to relieve a condition induced by his narcotics habit;
73
(2) A physician administered the recognized treatment called for by his condition, without talking to the police officers;
74
(3) Said treatment, the injection of hyoscine and phenobarbital, relaxed petitioner but did not affect his memory, and
75
(4) A state's attorney, who did not know of the administration of the treatment, by questioning petitioner, secured his statement as to his assault on Boone.
76
The statement given was not the result of mistreatment or coercion of any kind. It was made while petitioner was in a state of relaxation induced by proper medication at his own request. In that condition he was able to remember. That he could remember, and moreover that he did remember, are confirmed by the fact that on two subsequent occasions, viz., on January 2, at the states attorney's office, when he signed the transcript of this confession, and on January 4, at the public inquest, when he admitted the assault on Boone, he reiterated the salient facts included in the confession which he now attacks. He has never contended that on either January 2 or 4 his memory was in any way impaired.5
77
Our appraisal of this record convinces us that the police and the prosecuting attorneys carefully acted in accordance with the principles governing the federal constitutional rights of petitioner and that his confession was not involuntary.
78
For the reasons herein expressed, the order of the district court is affirmed.
79
Affirmed.
1
This hearing followed a vacation of our judgment in United States ex rel. Townsend v. Sain, 7 Cir., 265 F.2d 660, and remandment to the district court by the Supreme Court of the United States, 359 U.S. 64, 79 S.Ct. 655, 3 L.Ed.2d 634, on the authority of United States ex rel. Jennings v. Ragen, 358 U.S. 276, 79 S.Ct. 321, 3 L.Ed.2d 296
1
-a. While the petition for habeas corpus recited that petitioner vomited and threw up blood in the presence of police officers, there is evidence in the record to the contrary, given by several police officers and janitors
2
In its unpublished order in the latter proceeding, the court said, inter alia:
'A study of our opinion on the writ of error discloses that all of the evidence with respect to the injection of hyoscine and phenobarbital was carefully considered by us in resolving the issue of the validity of petitioner's confession. (People v. Townsend, 11 Ill.2d 30, 35, 44 (141 N.E.2d 729)). Thus, it is clear that the issue of the effect of the drug on the confession was before us on the writ of error. The only matter which was not presented then was the fact that hyoscine and scopolamine are identical. In an attempt to escape from the doctrine of res judicata, the present petition for a writ of error contends that this fact could not have been presented to us because it was unknown to petitioner and his counsel at the time. Assuming for the moment the truth of this statement, we are of the opinion that the mere fact that the drug which was administered to petitioner is known by two different names presents no constitutional issue. At the original trial there was extensive medical testimony as to the properties and effects of hyoscine. If hyoscine and scopolamine are, in fact, identical, the medical testimony as to these properties and effects would be the same, regardless of the name of the drug. In determining the effect of the drug on the validity of petitioner's confession, the vital issue was its nature and its effect, rather than its name.'
3
He professes to be impressed with the fact that the medicine hyoscine is also known as scopolamine. Why this fact is material he has not made clear to the Illinois Supreme Court or to us. His counsel's argument is sprinkled with the repeated use of the words 'truth serum'. These glib words have no recognized medical meaning, as Dr. Mansfield's testimony shows, and are evidently borrowed by petitioner from the jargon of science fiction
4
In his brief petitioner admits that Dr. Proctor was not qualified to have his opinion taken in preference to that of Dr. Mansfield
5
That such a contention would be entirely groundless is pointed up by the fact that Dr. Proctor, defense witness, testified that the effects from hyoscine should last from 5 to 8 hours | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/2066119/ | 84 Ill. App.3d 294 (1980)
405 N.E.2d 839
GERALD NOTZKE, Plaintiff-Appellee and Cross-Appellant,
v.
THE ART GALLERY, INC., et al., Defendants-Appellants and Cross-Appellees.
No. 79-51.
Illinois Appellate Court Third District.
Opinion filed May 21, 1980.
Dean B. Rhoads, of Sutkowski & Washkuhn Associates, of Peoria, for appellants.
Robert L. Metzler, of Pekin, for appellee.
Judgment affirmed.
Mr. JUSTICE STOUDER delivered the opinion of the court:
Plaintiff Gerald Notzke commenced this action in the circuit court of Tazewell County against defendants Richard Lewis, Ronald Hild, and The Art Gallery, Inc., seeking specific performance of a restrictive *295 buy-sell agreement, damages stemming from the breach of that agreement and the breach of an employment contract, and liquidation of the corporation. The trial court considered evidence concerning the employment contract and the appropriateness of corporate liquidation at a bench trial and entered judgment for defendants on the former issue. After the expiration of a three-month period granted for the purchase of plaintiff's shares in the corporation, the court ordered its liquidation. Defendants appeal the order of liquidation and plaintiff cross-appeals the judgment concerning the employment contract.
Something of the history of the corporate venture is essential to an understanding of the various contentions at bar. In 1971, plaintiff began negotiating with Northwoods Mall, a Peoria shopping center, concerning the construction of a cocktail lounge, subsequently named The Art Gallery. Unable to procure a lease for lack of sufficient assets to obtain the necessary financing, plaintiff ultimately solicited defendants Lewis and Hild for investment in the venture. In March 1974, the defendant corporation was organized with plaintiff, Lewis, and Hild each receiving one-third of the corporation's 6,000 shares in exchange for a $15,000 contribution to capital. Each of the shareholders was elected a director of the corporation and plaintiff was selected as its president. In January 1975, the corporation borrowed $52,000 to finance construction of the lounge, and each shareholder pledged substantially all of his assets as security for this loan. As neither Lewis nor Hild had experience in the construction or operation of such a facility, plaintiff both designed the lounge and, with Hild, supervised its construction. Lewis and Hild were pleased with plaintiff's efforts and the board adopted a resolution in May 1975 that he be paid $5,000 at an undetermined time in the future. The bonus had not been paid at the time of trial.
The Art Gallery opened for business in April 1975 under the management of plaintiff and defendant Hild. Plaintiff had previously managed similar facilities and, while Hild had no such experience, he tended bar and maintained certain records. In June 1975, plaintiff and Hild began to have disputes concerning the operation of the lounge, including disagreements involving the supervision of employees. At this time, defendant Lewis was inactive in the management of the business and was informed of the escalating problems between plaintiff and Hild by corporate counsel William Morris. Later that month, Lewis delivered a set of written recommendations to plaintiff and Hild regarding corporate administration. Among Lewis' recommendations were that plaintiff terminate his employment with Caterpillar Tractor Company and assume a position as full-time manager of the lounge while Hild be relieved of managerial responsibility and further his business education to facilitate corporate expansion.
*296 After the delivery of defendant Lewis' recommendations, the board of directors held two meetings to consider the proposals. It appears that defendant Hild desired to assume full-time management of the facility, but early in July the board adopted a resolution appointing plaintiff to the position. Later that month plaintiff assumed the position of full-time manager of the business at a salary of $400 per week and left his position with Caterpillar Tractor Company. There was a conflict of testimony at trial as to whether plaintiff was assured of the managerial position as long as he was effective in that capacity. Hild was to maintain the corporate records and observe the operation of the lounge so that he might in the future manage a second facility.
In October 1975, defendants Lewis and Hild indicated they desired to sell their holdings in the corporation. Lewis thereafter wrote plaintiff indicating he had found an outside party willing to purchase his interest for $20,000. Hild had stated he desired $30,000 for his shares and in November 1975, he also indicated he had located an outside purchaser. Plaintiff offered Lewis approximately $18,370 and indicated he would be willing to buy either party out but could not purchase both of their holdings simultaneously. Plaintiff also offered to exchange a property for Lewis' interest. None of the above transfers came to pass and Lewis ultimately sold his 2,000 shares to Hild for $30,000, payable in 60 monthly payments of $622. Plaintiff was never offered an installment purchase arrangement, and the actual transfer of shares had apparently not transpired at the time of trial, although Hild was authorized to vote Lewis' shares by proxy.
On December 25, 1975, plaintiff wrote a corporate check to himself for $2,250 and on December 28, 1975, wrote himself a second check for $2,650. There was a conflict of testimony at trial regarding the authorization of these payments. Plaintiff testified he was "running a little bit scared" and Lewis had previously told him he would receive half of his $5,000 if the venture showed a certain profit. While thus explaining one check, he was unable to recall the purpose of the other. Subsequent to the writing of the two checks, payment was stopped by Hild, who had removed the corporate records from the lounge. On December 30, 1975, it was determined that plaintiff was to continue as The Art Gallery's manager but that Hild, now the controlling stockholder, would have sole power to receive and disburse funds, hire and fire employees, and generally manage the corporation.
On January 18, 1976, Gregory Brown, a corporate employee, tended bar at the club until approximately 6 p.m., when he was relieved by plaintiff. Brown, who had begun to work for the corporation a month earlier, testified that approximately $207 of business had been conducted that afternoon and the following evening he reported this figure to Hild, *297 who subsequently responded that the figure amounted to the approximate proceeds for the entire day. Hild testified that upon confronting plaintiff with this information, plaintiff stated: "Ron, didn't you ever get into the cash register when you worked?" Hild testified that he felt no obligation to keep an employee who was stealing from him and terminated plaintiff's employment with the corporation, although he conceded on cross-examination the evidence of the alleged theft was inconclusive. Plaintiff's version of his termination was considerably different. He testified that Hild told him they "just couldn't see eye-to-eye" and that "he no longer needed me." Plaintiff went on to explain that Hild stated that he now had control of the corporation and therefore he was terminating plaintiff as club manager. When plaintiff thereafter refused to leave the premises, plaintiff testified that Hild grabbed and threatened him with physical violence, and he has since been completely barred from the lounge. Plaintiff additionally denied removing any money from the cash register and likewise denied asking Hild if he had ever done so.
There is some indication that plaintiff may have closed the club shortly after Brown left that evening but Brown and Hild testified that, to their knowledge, the cocktail lounge had never closed before midnight and Hild stated plaintiff was to have kept the club open until 1 a.m. the following morning. Hild thereafter managed the club at a salary of $500 per week and plaintiff testified Hild could not otherwise have met his monthly obligation to Lewis.
Plaintiff attended a meeting of the board of directors in March 1976, but, although he received a notice, he did not attend the April 1976 meeting when new corporate directors were elected. He thus forfeited the opportunity to elect himself to the board, and Hild was subsequently elected president of the corporation. When plaintiff contacted the corporate accountants concerning his W-2 form for that year, his response was a letter from Hild stating all contact with the accountants was to be through him. Plaintiff received notice of the 1977 shareholders meeting but did not elect to attend.
At the time of trial before the circuit court, plaintiff's complaint contained three counts, and no error is assigned to the trial court's dismissal of count II, praying for damages for breach of the buy-sell agreement. As the parties stipulated that the stock in the corporation originally held by defendants Lewis and Hild would not be transferred pending the outcome of the litigation, the trial court determined not to hear evidence pertaining to count I, praying for specific performance of the buy-sell agreement. Having denied defendants' motion to dismiss count IV, praying for corporate liquidation, the bench trial proceeded on that count and count III, praying for damages for breach of the *298 employment contract. By nunc pro tunc order the court found for plaintiff on count IV and granted defendant three months to purchase plaintiff's interest in the corporation for one-third of the corporate net worth and payment of the $5,000 bonus. As defendants failed to exercise their option, the court found for defendants on count I, to which no error is assigned, and on count IV, appointing a receiver with authority to liquidate the corporation.
On appeal, defendants contend the trial court erred in denying the motion to dismiss the corporate liquidation count of the complaint and that its ultimate decision to liquidate the corporation is contrary to the manifest weight of the evidence. Plaintiff contends these rulings were correct but that the court erred in refusing to admit the buy-sell agreement and that its determination of the breach of employment contract count is contrary to the manifest weight of the evidence.
Count IV of plaintiff's second amended complaint sought liquidation of the corporation pursuant to section 86(a)(3) of the Business Corporation Act (Ill. Rev. Stat. 1977, ch. 32, par. 157.86(a)(3)), which provides:
"Circuit courts have full power to liquidate the assets and business of a corporation:
(a) In an action by a shareholder when it appears:
* * *
(3) That the acts of the directors or those in control of the corporation are illegal, oppressive or fraudulent."
As we must accept all properly pleaded facts as true and are concerned only with the question of law presented by the pleadings in determining the propriety of the ruling on the motion to dismiss (e.g., Fancil v. Q.S.E. Foods, Inc. (1975), 60 Ill.2d 552, 328 N.E.2d 538), we first consider the allegations of the relevant count.
The allegations of count IV are in large part reallegations of a conspiracy between defendants Lewis and Hild as alleged in the first counts of the second amended complaint. The complaint maintains that plaintiff was deprived of his position in the corporation, his share of corporate control, and his managerial employment as a result of this conspiratorial course of conduct. Plaintiff contends this represents oppressiveness under the statute.
In Gidwitz v. Lanzit Corrugated Box Co. (1960), 20 Ill.2d 208, 214-15, 170 N.E.2d 131, 135, the court stated:
"We have held that the word `oppressive' as used in this statute, does not carry an essential inference of imminent disaster; it can contemplate a continuing course of conduct. The word does not necessarily savor of fraud, and the absence of `mismanagement, or misapplication of assets,' does not prevent a finding that the *299 conduct of the dominant directors or officers has been oppressive. It is not synonymous with `illegal' and `fraudulent.' Central Standard Life Ins. Co. v. Davis, 10 Ill.2d 566."
The concept of oppressiveness as a ground for corporate liquidation has been available to shareholders since 1933 (see Central Standard Life Insurance Co. v. Davis (1957), 10 Ill.2d 566, 141 N.E.2d 45, 49), but neither the litigants nor our research have revealed an authoritative determination of its precise scope. In Central Standard Life Insurance Co. v. Davis, the alleged inability of preferred stockholders to reap investment gain before the expiration of a 99-year corporate charter was not deemed oppressive. In Gidwitz v. Lanzit Corrugated Box Co., an equal division of stock enabling the corporate president to control the corporation so as to deprive plaintiff's family of their rights and privileges, coupled with the lack of policy-making board meetings and other facts, was considered oppressive. In Ross v. 311 North Central Avenue Building Corp. (1970), 130 Ill. App.2d 336, 264 N.E.2d 406, a loan allegedly in consideration for a second mortgage which was never produced was considered both fraudulent and oppressive. In Compton v. Paul K. Harding Realty Co. (1972), 6 Ill. App.3d 488, 285 N.E.2d 574, 581, the court found "an arbitrary, overbearing and heavy-handed course of conduct", including the failure to call board meetings, to consult with plaintiff, maintaining an "imperious attitude when questioned about his salary," and reacting to plaintiff's requests in a dilatory fashion, justified a finding of oppression. In Gray v. Hall (1973), 10 Ill. App.3d 1030, 1034, 295 N.E.2d 506, 509, the court remanded a liquidation action for an accounting as "actions which might be oppressive under one set of circumstances would not be oppressive under others."
1 Considering the parameters of oppressiveness established in our decisional law, we feel the complaint at bar alleged a course of conduct which was "overbearing and heavy-handed." Conspiratorial action allegedly affecting an individual shareholder's control over corporate matters and the effective operation and profitability of the venture, coupled with alleged irregularity in the equity transfer, meet the threshold of objectionable oppressiveness addressed by the statute and case law thereunder. Defendants' contention that none of the alleged acts are oppressive as they are premised on plaintiff being "demoted" to a minority shareholder overlooks the characterization of this process as a conspiratorial ploy. We therefore find no error in the trial court's denial of defendant's motion to dismiss the subject count.
2 Finding the trial court correctly denied the motion to dismiss, we next consider whether its decision to liquidate the corporation is against the manifest weight of the evidence. As the judgment of that court was *300 not accompanied by any findings of fact, we must presume that all controverted facts were found in plaintiff's favor. E.g., Tolbird v. Howard (1969), 43 Ill.2d 357, 253 N.E.2d 444.
Firmly supported by the record is the fact that plaintiff and defendant Hild suffered a continuing and escalating deterioration of their business relationship beginning within two months of the Art Gallery becoming an operational reality. Given the above presumption, the predominant cause of the deteriorating relationship was Hild's desire to operate the lounge according to his personal judgment. When the corporate conflict reached the level that prompted defendant Lewis' recommendations, it is clear that Hild sought the managerial appointment awarded to plaintiff. Within three months of that appointment, Lewis and Hild both desired to sell their corporate holdings but offered their interests to plaintiff on terms which made the acquisitions impossible. Thereafter, Lewis sold his stock to Hild, accepting a five-year installment agreement as consideration. In January 1976, Hild discharged the plaintiff, accusing him of theft. Plaintiff disputed the charge of theft, both at the time of his discharge and during the trial. Not only did Hild claim the plaintiff was discharged for theft, he thereafter continued to act and believe as if the plaintiff were a thief even though no criminal charges were ever brought. Hild became the new club manager at a salary of $500 per week, enabling him to meet his newly acquired debt service. Plaintiff was physically intimidated and barred from the facility, and was not even allowed to communicate with the corporate accountant.
3 We are aware that corporate liquidation is a drastic remedy. (See, e.g., Gidwitz v. Lanzit Corrugated Box Co. (1960), 20 Ill.2d 208, 170 N.E.2d 131, 138.) Yet we are similarly aware that actions which might not be oppressive under one set of circumstances would be oppressive under others. (Gray v. Hall (1973), 10 Ill. App.3d 1030, 295 N.E.2d 506.). Where, as here, a director and officer of a corporation has accused another director of dishonesty and continues to act on the premise that the accusation is true, not only is such conduct oppressive, it also permeates all of the business relations between the parties. We do not find, under the circumstances here present, that the trial court's conclusion is manifestly erroneous.
Plaintiff contends the trial court erred in not admitting a copy of the shareholder's buy-sell agreement into evidence. As we have found the trial court's decision is not against the manifest weight of evidence, we need not reach the several contentions advanced by the parties concerning this evidentiary ruling.
The final question presented for our determination is whether the trial court's decision concerning count III of plaintiff's complaint, praying for damages for breach of the employment contract, is contrary to the *301 manifest weight of the evidence. Plaintiff argues he terminated his employment as a research director and development manager with Caterpillar Tractor Company in reliance on the terms of an oral or implied employment agreement providing that he remain as manager of The Art Gallery as long as the corporation existed and that he successfully performed his managerial function. Defendants deny the existence of any such agreement and contend alternatively that plaintiff was not successfully performing his managerial function in that he was uncooperative, dissenting, and dishonest within the scope of his employment. The weight to be given testimony is a matter to be determined by the trial court sitting without a jury, and its findings will not be disturbed unless manifestly erroneous. (E.g., People ex rel. Penrod v. Chicago & North Western Ry. Co. (1959), 17 Ill.2d 307, 161 N.E.2d 126.) Considering the conflicting evidence previously set forth, we find the trial court's decision is not against the manifest weight of the evidence.
Accordingly, the judgment of the circuit court of Tazewell County is affirmed.
Affirmed.
STENGEL and SCOTT, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2764855/ | Order entered December 22, 2014
In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-14-00056-CV
COLUMBIA NORTH HILLS HOSPITAL, SUBSIDIARY, L.P., INDIVIDUALLY AND
A/K/A AND D/B/A NORTH HILLS HOSPITAL, Appellant
V.
TONI GAIL TUCKER, Appellee
On Appeal from the 193rd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-11-15031
ORDER
We GRANT Appellant’s Unopposed Motion for Leave to File Post-Submission Letter
Brief. The letter brief received on December 11, 2014, is considered properly filed.
/s/ KERRY P. FITZGERALD
JUSTICE | 01-03-2023 | 12-25-2014 |
https://www.courtlistener.com/api/rest/v3/opinions/1887314/ | 609 F. Supp. 380 (1984)
Richard MEYER, as custodian for Pamela Meyer, Plaintiff,
v.
OPPENHEIMER MANAGEMENT CORP., Oppenheimer Asset Management Corp., Oppenheimer & Co., Oppenheimer Holdings, Inc., A.G. Edwards & Sons, Inc., Thomson McKinnon Securities, Inc., The Management Group, Inc., and Daily Cash Accumulation Fund, Inc., Defendants.
Richard MEYER, as custodian for Pamela Meyer, Plaintiff,
v.
OPPENHEIMER MANAGEMENT CORP., Oppenheimer Asset Management Corp., Oppenheimer & Co., Oppenheimer Holdings, Inc., A.G. Edwards & Sons, Inc., Thomson McKinnon Securities, Inc., J.C. Bradford & Co., Bateman Eichler, Hill Richards, Inc., Centennial Capital Corp., and Daily Cash Accumulation Fund, Inc., Defendants.
Nos. 80 Civ. 397 (ADS), 82 Civ. 2120 (ADS).
United States District Court, S.D. New York.
October 21, 1984.
Mordecai Rosenfeld, New York City, for plaintiff.
Guggenheimer & Untermeyer, New York City, for defendants Oppenheimer Management Corp., Oppenheimer Asset Management Corp., Oppenheimer & Co., Oppenheimer *381 Holdings, Inc., A.G. Edwards & Sons, Inc., Thomson McKinnon Securities, Inc., J.C. Bradford & Co., Bateman Eichler, Hill Richards, Inc., and Centennial Capital Corp.; Alfred Berman, Robert E. Smith, Alan I. Raylesberg, Jeffrey R. Zuckerman, of counsel.
Gordon, Hurwitz, Butowsky, Weitzen, Shalov & Wein, New York City, Neef, Swanson, Myer & Clark, Denver, Colo., for defendant Daily Cash Accumulation Fund, Inc.; David M. Butowsky, Clarence Otis, Jr., New York City, Rendle Myer, Robert Swanson, Denver, Colo., of counsel.
OPINION AND ORDER
SOFAER, District Judge:
Both of the cases before this court concern the legality of a decision by defendant Daily Cash Accumulation Fund, Inc. ("the Fund"), a money-market mutual fund, to adopt a Plan of Distribution pursuant to Rule 12b-1, 17 C.F.R. § 270.12b-1 (1984) ("the Plan"). The Plan allows the Fund to reimburse certain securities dealers for administrative and sales-related costs in rendering distribution assistance to the Fund. Plan ¶ 2 (1982 Fund Proxy Statement, Exh. A, at 19 (Mar. 25, 1982)). Plaintiff, a stockholder of the Fund, has challenged the legality of the Plan. For the reasons set out below, the Plan's legality is upheld.
I. Background.
Two factors render complicated this determination the relationship among the ten defendants and the prior litigation between the parties. Defendant Oppenheimer & Company owns nearly all of the stock of defendant Oppenheimer Holdings Company, which in turn owns virtually all of the stock of defendant Oppenheimer Management Corp. Oppenheimer Management Corp. owns all of the stock of defendant Oppenheimer Asset Management Corp. (collectively "the Oppenheimer defendants.") At the times relevant to these cases, Oppenheimer Asset Management Corp. owned a majority of the stock of defendant Centennial Capital Corp. ("CCC," formerly THE Management Group). CCC is the investment adviser to the Fund. The other four defendants A.G. Edwards & Sons, Inc., Thomson McKinnon Securities, Inc., Bateman Eichler, Hill Richards, Inc., and J.C. Bradford & Co. (collectively "the brokerage defendants") own the remaining stock of CCC. In addition, their clients own over ninety percent of the shares of the Fund. The brokerage defendants exercise substantial influence over their clients' decision to use the Fund as an investment vehicle.
The brokerage defendants play two roles. First, as the owners of CCC, they have an interest in maximizing CCC's profitability, since this will maximize their own income. Second, as agents for their individual clients, they have a duty to serve their clients' interests by maximizing the net return on investments in the Fund. Although an obvious potential for conflicts of interest exists in such a situation, similar relationships are prevalent throughout the money-market fund and brokerage industries.
In 1980, the plaintiff in these actions filed a stockholder derivative action against the Fund, the Oppenheimer defendants, the investment adviser (CCC was then called THE Management Group, Inc.), and two of the brokerage defendants, A.G. Edwards and Thomson McKinnon. Meyer v. Oppenheimer Management Corp. et al., No. 80 Civ. 397 (Meyer I). That suit alleged that the management fee charged by the investment adviser pursuant to its agreement with the Fund was excessive and therefore that the non-Fund defendants had violated section 36(b) of the Investment Company Act of 1940 ("ICA") as amended, 15 U.S.C. § 80a-35(b) (1982), which imposes a fiduciary duty on an investment adviser with respect to the receipt of compensation for services. At the time suit was filed, the adviser charged the Fund a constant percentage of the Fund's net assets.
At roughly the time Meyer I was filed, CCC and the Fund agreed to a new compensation scheme under which the management fee was to consist of decreasing percentages *382 of the Fund's net assets as the Fund's assets increased. Following the commencement of the action, CCC and the Fund agreed to a further reduction of the management fee. After extensive discovery, Meyer I was settled in 1981. At that time, the fee schedule was reduced even further. In the Stipulation of Settlement, the parties agreed, among other things, that CCC would "perform and offer to continue to perform all of the investment advisory services specified or required by the terms of the Advisory Agreement currently in effect between [CCC] and the Fund...." Stipulation of Settlement at 5 (June 16, 1981). The stipulation also provided that the Advisory Agreement could not be modified in any way that would "reduce the categories of service or expense guaranty undertaken by [CCC] pursuant to the terms of the current Advisory Agreement." Id. at 7.
Both sides were aware that the brokerage defendants, who owned CCC, also performed significant services for the Fund without compensation. See, e.g., Defendants' Memorandum in Support of Proposed Settlement, Meyer I, at 20 (Aug. 5, 1981) ("defendants Edwards and Thomson ... administer their own customers' accounts at a total savings to the Fund of between $2 million and $3 million per year [and] .... also save the Fund `in excess of probably $50,000 a month in postage alone' by incorporating the Fund's monthly dividend statements in [their own] account statements"); Affidavit of Mordecai Rosenfeld ¶ 13 (July 31, 1981) (affidavit in support of proposed settlement filed by plaintiff's counsel) (noting that "the very substantial costs of keeping all shareholder accounts current, ... sending monthly statements, and responding to all shareholder inquiries .... are borne, not by the Fund, but by the brokerage firms that own the Adviser"). Nevertheless, nowhere in the stipulation is there any mention of a duty on the part of the brokerage defendants to continue performing these services. The only party which was required by the settlement to perform any services was CCC.
During the year following the settlement in Meyer I, the Fund included a proposal to adopt a Rule 12b-1 distribution plan in proxy materials for its annual stockholders' meeting. All of the Fund's independent directors had voted in favor of the Plan at a Board meeting held on February 23, 1982. The Plan would authorize CCC to enter into agreements with securities dealers under which the Fund would reimburse these dealers for administrative and sales-related costs incurred in rendering distribution assistance to the Fund. The Plan placed a number of restrictions on the Fund's ability to enter into such plans and provide reimbursement of expenses. The most significant of these was a cap placed on the amount of reimbursement it was limited to the lesser of (1) the actual costs incurred by a dealer or (2) two-tenths of one percent of the average net asset value of the shares held by the broker's clients in broker-administered accounts.
The proxy statement explained that the Fund's primary motivation for adopting the Plan was to maintain its position in a competitive field. Other money-market funds had enacted Rule 12b-1 plans to reimburse securities dealers for their fund-related costs, and the directors believed that, unless the Plan were adopted, the brokerage firms that used the Fund for their administered accounts would switch these accounts to funds that provided distribution payments.
Following adoption of the Plan at the 1982 annual meeting, the plaintiff in Meyer I filed the present action, another stockholder derivative suit against the Fund, the Oppenheimer defendants, and all four of the brokerage defendants. Meyer v. Oppenheimer Management Corp. et al., No. 82 Civ. 2120 (Meyer II). This suit alleges that the Plan violates the Stipulation of Settlement in Meyer I, since the management fee agreed to as part of the settlement was meant to include all the costs incurred by the brokerage firms in administering Fund accounts. In addition, the complaint in Meyer II alleges violations of sections 36(b) and 48 of the ICA, 15 U.S.C. §§ 80a-35(b) and 80a-47(a) (1982), because *383 the management fee is excessive (and therefore a breach of the non-Fund defendants' fiduciary duty) if it covers only investment advice. Plaintiff also claims that the Fund violated section 14(a) of the Securities Exchange Act of 1934, as amended, 15 U.S.C. § 78n(a) (1982) and section 20 of the ICA, 15 U.S.C. § 80a-20 (1982), because the proxy statement fails to state that the management fee paid by the Fund to CCC was meant to include the expenses for which the Plan would reimburse brokers. Finally, the complaint alleges that defendants had violated section 15 of the ICA, 15 U.S.C. § 80a-15 (1982), in connection with the sale of two of the Oppenheimer defendants; as a result of that sale, control of CCC would change and the "undue burden" placed on the Fund by the Plan would affect the price of that sale. (That sale was in fact consummated.)
On July 30, 1982, defendants moved to dismiss the complaint in Meyer II, on the grounds both that it failed to state a legally cognizable claim and that plaintiff had failed to make a demand upon the Fund's directors pursuant to Fed.R.Civ.P. 23.1. At a hearing on October 15, 1982, the court dismissed plaintiff's section 15 claim, since the court's decision on the breach of settlement and section 36(b) claims would effectively render the section 15 claims nugatory. Transcript of October 15, 1982 hearing at 4-5, 19. The court also held that plaintiff had an obligation to present his demand to the Fund's Board, both because of Rule 23.1 and because of plaintiff's counsel's responsibilities as an officer of the court in enforcing the settlement in Meyer I. Transcript at 8-10. The court ordered that the case be put on the suspense docket pending the outcome of plaintiff's demands upon the Fund's Board. Transcript at 19. Finally, the court made clear that "the proper way to treat this case if it comes back [from the suspense docket] will be as a motion to enforce the settlement...." Id.
Plaintiff then served his demands upon the Fund's Board. Barely one month later, on December 10, 1982, plaintiff moved to restore Meyer II to the active calendar and to enforce the settlement in Meyer I. Defendants opposed restoring the case, both because the settlement had not been violated and because the Board had not yet had sufficient time to respond to plaintiff's demand letter. The court denied that motion on February 9, 1983, and ruled that the case would be restored no later than May 1, 1983, by which time the Fund's Board would have had "a reasonable opportunity to evaluate and respond to plaintiff's demands." On April 27, 1983, the Fund responded to plaintiff's letter. It informed plaintiff that "[t]he Board has unanimously concluded that your contentions are without merit and your demands must properly be rejected in the interest of the Fund and its shareholders" (Defendants' Second Motion to Dismiss, Exh. 2, at 1). In May 1983, plaintiff served a demand for production of documents on the defendants. On June 27, 1983, defendants again moved to dismiss Meyer II. It is this second motion to dismiss which is now before the court.
Meyer II raises two questions. First, did enactment of the Rule 12b-1 Distribution Plan violate the settlement agreement in Meyer I? Second, assuming that the Plan does not violate Meyer I, does the Plan violate section 36? For the reasons given below, the answer to both questions must be negative. Neither the language and spirit of Meyer I nor the legal requirements of section 36 is violated by the Fund's payment of distribution expenses.
II. The Settlement in Meyer I.
"Since a consent decree or order is to be construed for enforcement purposes basically as a contract, reliance upon certain aids to construction is proper, as with any other contract." United States v. ITT Continental Baking Co., 420 U.S. 223, 238, 95 S. Ct. 926, 935, 43 L. Ed. 2d 148 (1975); see Ashare v. Brill, 560 F. Supp. 18, 21 (S.D.N.Y.1983) (approving use of "a contract analysis" to examine settlement of shareholder derivative action against money-market fund). One of these contractual principles is that "the scope of a consent decree must be discerned within its four *384 corners, and not by reference to what might satisfy the purposes of one of the parties to it.... [T]he instrument must be construed as it is written, and not as it might have been written had the plaintiff established his factual claims and legal theories in litigation." United States v. Armour & Co., 402 U.S. 673, 682, 91 S. Ct. 1752, 1757, 29 L. Ed. 2d 256 (1971); see Hart Schaffner & Marx v. Alexander's Department Stores, Inc., 341 F.2d 101, 102 (2d Cir.1965) (per curiam) ("consent decrees `are to be read within their four corners, and especially so ... because they represent the agreement of the parties, and not the independent examination of the subject-matter by the court'"). Thus, the language of the stipulation of settlement in Meyer I must be read narrowly; only if the language is ambiguous do the broader purposes of the agreement become relevant. See United States v. Olin Ski Co., 503 F. Supp. 141, 143 (S.D.N.Y.1980).
The Meyer I stipulation provides that "all claims asserted or which might have been asserted on the basis of any and all of the matters and transactions alleged by the complaint and the amended and supplementary complaint herein be dismissed with prejudice on the merits and that judgment be entered in favor of all defendants, upon the following terms and conditions." Stipulation at 5. Two provisions of the stipulation are relevant to the question raised in Meyer II. The first condition provides that:
From and after the Effective Date of this Stipulation, as hereinafter defined, and for the period hereinafter specified, Centennial will perform and offer to continue to perform all of the investment advisory services specified or required by the terms of the Advisory Agreement currently in effect between Centennial and the Fund, for a management fee to be computed in the manner contemplated by the current Advisory Agreement as a percentage of the average daily net asset value of the Fund based on the following Schedule....
Stipulation at 5. The fourth condition provides that:
Nothing herein contained shall be deemed to provide or imply that, except in respect to the maximum scale of management fees as provided in the Revised Management Fee Rate Schedule, the terms of the Advisory Agreement presently or hereafter in effect between the Fund and Centennial may not be varied, modified or amended provided that no such variance, modification or amendment shall reduce the categories of service or expense guaranty undertaken by Centennial pursuant to the terms of the current Advisory Agreement.
Id. at 7.
Two things about the language of the stipulation, which allowed judgment to be entered in favor of all the defendants, must be noted. First, the only defendant whose duties are spelled out in the agreement is CCC. None of the services performed by either the Oppenheimer or the brokerage defendants is mentioned. Second, the stipulation refers explicitly to CCC's duties under the Investment Advisory Agreement alone.
Plaintiff argues that the management fee agreed to in the settlement "was meant to include [payment for] the very services for which the new Administration Fee [i.e., distribution payments under the Plan] has now been been imposed." Plaintiff's Answering Memorandum of Law at 4 (Aug. 1, 1983). In support of his contentions, plaintiff relies primarily upon statements made by both parties at the time the settlement agreement in Meyer I was submitted to the court for approval. In the affidavit which he submitted in favor of the settlement, plaintiff's counsel stated:
13. The management fee is, we note, not only for portfolio advice, but includes the very substantial costs of keeping all shareholder accounts current (reflecting all transactions), sending monthly statements, and responding to all shareholder inquires [sic]. It is estimated that those administrative costs actually run between *385 $2-$3 million per year (See deposition of James C. Swain, Exhibit B. at p. 85).
We should note that those costs are borne, not by the Fund, but by the brokerage firms that own the Adviser (A.G. Edwards & Sons and Thomas [sic] McKinnon originally; now includes two other firms Bateman Eichler Sutro of San Francisco and J.C. Bradford of Nashville, Tennessee). Customers of those four firms represent between 90 and 95% of the Fund's shareholders (Deposition of Swain, Exhibit B., at p. 22).
(quoted in Plaintiff's Motion To Restore Meyer II to the Active Calendar and To Enforce the Stipulation of Settlement in Meyer I, at 4 (Dec. 9, 1982)). Plaintiff argues that defendants implicitly agreed with plaintiff's characterization of the advisory fee by remaining silent in the face of this affidavit. He further argues that defendants supported this interpretation by stating both that "Centennial also provides a number of services to the Fund not normally provided by investment advisers," and that "[i]n addition, defendants Edwards and Thomson, whose customers represent approximately 80% of the Fund's beneficial shareholders, administer their own customers' accounts at a total savings to the Fund of between $2 million and $3 million per year." Defendants' Memorandum in Support of Proposed Settlement, Meyer I, at 20 (Aug. 5, 1981).
Plaintiff's contentions are unpersuasive for three reasons. First, when the terms of a written settlement agreement are clear and unambiguous, resort to statements outside the agreement is impermissible. Second, when read closely, neither statement supports plaintiff's argument that CCC was ever viewed as having borne the administrative costs of the Fund. Third, even if plaintiff is correct in claiming that CCC did bear the Fund's administrative expenses at the time of the Meyer I settlement, those expenses were not borne in connection with the Investment Advisory Agreement; the settlement agreement therefore did not require that CCC and the brokerage defendants continue to bear them.
While "[t]he Supreme Court has made clear that courts may rely on ... a review of the circumstances surrounding the formation of the consent order without violating the `four corners' rule," Olin Ski Co., 503 F.Supp. at 144, this does not mean that external documents whose language is materially different from that contained within the actual settlement agreement can be used to expand indiscriminately the scope of a consent decree. Artvale, Inc. v. Rugby Fabrics Corp., 303 F.2d 283, 284 (2d Cir.1962) (per curiam) (rejecting expansive interpretation based on other documents, in part because other documents "show ... that broader terminology was available to the parties had they chosen to use it"); see United States v. General Adjustment Bureau, Inc., 357 F. Supp. 426, 429 (S.D.N.Y. 1973) (Artvale standard is consistent with Supreme Court's decision in Armour). Moreover, the instant case is distinguishable from ITT Continental Baking Co., where the Supreme Court declined to follow the reasoning used in Artvale, 420 U.S. at 238 n. 12, 95 S. Ct. at 935 n. 12. The consent order in ITT expressly contained an explanation of the order by the parties and provided that the complaint was to be used to construe the order. Id. Here, by contrast, although the court's order mentions both plaintiff's counsel's affidavit and defendants' memorandum, no explicit or implicit resort is made to the terms of those documents for aid in construing the stipulation. Instead, the Order states that "[t]he Stipulation of Settlement ... may be consummated by the parties thereto in accordance with its terms...." Final Order and Judgment on Consent at 3 (Aug. 7, 1981) (emphasis added). The terms of the stipulation are noticably silent as to any obligation whatsoever on the part of the brokerage or Oppenheimer defendants. The parties certainly were capable of including conditions regarding their performance of particular duties. Their failure to do so cannot be brushed aside, as plaintiff seeks to do here.
*386 Moreover, the two statements to which plaintiff refers support the inference that, at the time of the Meyer I settlement, both sides understood that administrative and distribution expenses were not part of CCC's duties. Plaintiff chooses to emphasize his counsel's statement that the management fee included administrative costs, but he ignores the fact that, in the very next sentence of the affidavit, counsel explicitly noted that these costs were borne "by the brokerage firms that own the Adviser" (emphasis added). Similarly, defendants' memorandum makes the representation upon which plaintiff relies in a manner that reflects a distinction between the services performed by the brokers and those performed by CCC: "Centennial also provides a number of services.... In addition, defendants Edwards and Thomson ... administer their own customers' accounts" (emphasis added). Thus, to the extent that plaintiff looks to counsels' contemporaneous statements, the language in those statements differentiates between services provided to the Fund by CCC itself and those provided by CCC's part-owners, the brokerage firms. Such a differentiation makes good sense: at the time Meyer I was settled, over half of CCC's stock was owned by Oppenheimer Asset Management Corp. Evidently, none of the Oppenheimer defendants had individual clients who used the Fund as an investment vehicle. Thus, although the Oppenheimer defendants, through Oppenheimer Asset Management Corp.'s majority ownership in CCC, might have investment advisory duties under the settlement agreement, they could have no administrative obligations with regard to individual Fund accounts.
No doubt plaintiff now views the purpose of the settlement agreement in Meyer I as having been to fix the total amount of compensation the brokerage defendants could obtain in regard to Fund accounts, either through payments directly to them or through payments to CCC. But as the Supreme Court noted in Armour:
[T]he agreement reached [in a consent order] normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with the litigation.... [T]he resultant decree embodies as much of th[eir] opposing purposes as the respective parties have the bargaining power and skill to achieve.
402 U.S. at 681-82, 91 S. Ct. at 1757.
Moreover, plaintiff might in fact have done no better in achieving his objective after a trial. Plaintiff now seeks to pierce the corporate structure of CCC and the brokerage defendants. Had he succeeded in doing so at trial, however, he might well have failed to win any reduction in the investment advisory fee at all, since a court would probably have concluded that the fee was reasonable in light of the non-investment advisory services (i.e., administrative and distribution costs) provided without compensation by affiliated persons of the investment adviser. In Gartenberg v. Merrill Lynch Asset Management, Inc., 528 F. Supp. 1038 (S.D.N.Y.1981), aff'd, 694 F.2d 923 (2d Cir.1982), cert. denied, 461 U.S. 906, 103 S. Ct. 1877, 76 L. Ed. 2d 808 (1983), Judge Pollack dismissed the complaint for precisely this reason:
Nothing in Section 36(b) obligates this Court, in assessing the fairness of the investment advisory compensation, to restrict its vision only to those services performed directly by [the investment adviser]. Indeed, the statute recognizes that in order to properly assess the fairness of advisory compensation, the courts cannot be strictly bound by corporate structure and ignore closely related entities whose functions intimately impinge on one another. The statute itself speaks of payment for the services of the advisor "or any affiliated person of such investment adviser." 15 U.S.C.Sec. 80a-35(b) (1976). As both the Senate and House Reports stated:
[i]t is intended that the court look at all the facts in connection with the determination and receipt of such compensation, including all services rendered to the fund or its shareholders and all compensation and payments received, *387 in order to reach a decision as to whether the adviser has properly acted as fiduciary in relation to such compensation. Senate Report at 15; House Report at 37, U.S.Code Cong. & Admin.News 1970, p. 4910.
That the courts are not required blindly to adhere to corporate organization when there is no reason to do so also follows from the equitable nature of their task under Section 36(b).
528 F.Supp. at 1049 (emphasis in Gartenberg). In affirming the dismissal of plaintiff's complaint, the Second Circuit explicitly confirmed that the "theory that only the administrative costs incurred by the [investment adviser] itself may be considered" was "erroneous" and "exalt[s] form over substance...." 694 F.2d at 931.
Of course, this is not to say that in Meyer I, this court would have treated the brokerage defendants and CCC as a single entity in assessing the legality of the advisory fee. What a court would have done is irrelevant in construing a settlement agreement. Both sides willingly waived their right to a full adjudication of their claims. Plaintiff cannot now press his claims in their most expansive form when he settled for less three years ago.
By contrast, the brokerage defendants' purpose at all times may be viewed as maximizing their profits, through income derived from CCC, payments received directly from the Fund, and other sources. In fact, the Fund was led to propose the 12b-1 Plan at issue here because the brokers threatened to move their administered accounts to funds which would reimburse them for distribution expenses. If the Fund had acceded to plaintiff's demand, had declined to enact a 12b-1 Plan, and the brokerage defendants had then switched their administered accounts to another fund, plaintiff could not complain that the switch violated the settlement agreement, even though the effect that such behavior would have had on the ninety percent of the Fund's shareholders with broker-administered accounts would be identical, namely, their net yield on money-market investments would be reduced by the amount paid to brokers. That the defendants seek to maximize their profits cannot, by itself, render their behavior a violation of Meyer I.
Thus, all of plaintiff's arguments that rely on matters not explicitly contained within the Stipulation of Settlement itself must be rejected. It remains to consider what the Stipulation itself requires of defendants.
The stipulation says little about the actual duties required of CCC. To the extent that the Stipulation standing alone describes CCC's obligations, it refers to them as "investment advisory services." Stipulation at 5. The reasonable interpretation of this term is clear: the duties covered by the settlement were connected to the Fund's decisions on how to invest its assets and the execution of those decisions. Neither "investment" nor "advisory" should be taken to encompass the predominantly clerical services connected with informing shareholders about their account balances.
This conclusion is buttressed by the stipulation's repeated references to the Investment Advisory Agreement ("Agreement") then existing between THE Management Group and the Fund. (That agreement appears as an exhibit to both of defendants' motions to dismiss Meyer II as Exhibit 4 to the first motion and as Exhibit 5 to the second.) The only provision of the Agreement upon which plaintiff relies is paragraph 2, which states that "[t]he Management Company [CCC] agrees to assist in the general management and supervision of the business and affairs of the Fund." This provision is noticeably silent as to whether assistance is meant to include any financial obligation. The general tenor of the language suggests that it does not. Management and supervision of the Fund is different from administration of shareholders' accounts, the subject with which Meyer I and Meyer II are concerned.
Moreover, more detailed portions of the Agreement explicitly limit the obligations of CCC, and therefore, by plaintiff's own logic, the obligations of its owners, the *388 brokerage defendants. Paragraph 6, for example, states: "It is agreed that the services to be performed by the Management Company hereunder shall not include any specialized services not capable of rendition by the regular personnel of the Management Company." It was clear at the time of the Meyer I settlement that brokerage personnel and a separate transfer agent, SSI, were used to carry out administrative functions. Whatever the relationship of CCC and the brokerage firms, the employees performing the services at question here worked for the brokers, not CCC.
For present purposes, the most significant provision of the Agreement is paragraph 7:
The Fund will pay all expenses not specifically assumed by the Management Company hereunder, including the fees and expenses of those directors of the Fund who are not officers and directors of the Management Company, interest expenses, taxes, brokerage fees and commissions, and those fees and expenses outlined in any Distribution Agreement.
(emphasis added). This provision limits the scope of the one contractual provision upon which plaintiff relies. In addition, it shows that, at the time Meyer I was settled, the Fund possessed the power to enter into distribution agreements and that, if it did, the Fund (and not CCC or any other entity) would be responsible for any payments pursuant to such agreements. That the Fund had not exercised this power before the settlement does not render plaintiff's failure to prevent its exercise after the settlement an oversight which this court should correct under the guise of enforcing the parties' agreement.
Under the Investment Advisory Agreement, therefore, CCC had no responsibility to perform or pay for the distribution of share funds. Any obligations it might have had in connection with distribution were contained in a wholly separate agreement the General Distribution Agreement between the Fund and THE Management Group, dated December 3, 1979. (This agreement is appended to defendants' first motion to dismiss as Exhibit 6.) Like the Investment Advisory Agreement, this contract was between the Fund and the adviser alone; the brokerage firms and the Oppenheimer corporations were neither parties to the contract nor mentioned in it. CCC neither undertook to perform its current distribution obligations nor promised to perform new ones when it entered into the Meyer I settlement. The Meyer I stipulation's repeated references to one agreement and the duties of one of the defendants cannot be read to incorporate the second agreement or impose duties on the other defendants. Plaintiff therefore cannot seek to void the Fund's 12b-1 Plan on the grounds that it violates the settlement in Meyer I.
III. Legitimacy of the Fund's 12b-1 Plan.
Plaintiff also claims that, even if the settlement does not prohibit the Fund from enacting a distribution plan, the Fund's Plan violates section 36(b) of the ICA. This claim is also rejected.
The Fund's Plan was established pursuant to Rule 12b-1. 17 C.F.R. § 270.12b-1 (1984). Companies such as the Fund are prohibited from distributing securities of which they are the issuer except pursuant to a 12b-1 plan. Rule 12b-1 defines "distributing" as
engag[ing] directly or indirectly in financing any activity which is primarily intended to result in the sale of shares issued by such company, including, but not necessarily limited to, advertising, compensation of underwriters, dealers, and sales personnel, the printing and mailing of prospectuses to other than current shareholders, and the printing and mailing of sales literature.
17 C.F.R. § 270.12b-1(a)(2) (1984). The rule further provides that a company may implement or continue a distribution plan "only if the directors who vote to approve such implementation or continuation conclude, in the exercise of reasonable business *389 judgment and in light of their fiduciary duties under ... sections 36(a) and (b) [of the ICA] ... that there is a reasonable likelihood that the plan will benefit the company and its shareholders...." Id. § 270.12b-1(e).
Section 36(b) creates "a fiduciary duty with respect to the receipt of compensation for services, or of payments of a material nature, paid by [a] registered investment company or by the security holders thereof, to [an] investment adviser or any affiliated person of such investment adviser." 15 U.S.C. § 80a-35(b) (1982). This fiduciary duty is enforceable in a private action by a shareholder against both the investment adviser and any affiliated person of the investment adviser. The brokerage defendants are affiliated persons of CCC. See 15 U.S.C. § 80a-2(a)(3) (1982).
Read broadly, Plaintiff's complaint presents three theories of how the Fund's 12b-1 Plan violates section 36. (All three claims at bottom charge that the fees paid under the Plan are excessive or unnecessary.) First, he claims that the expenses involved are already covered by the management fee which the Fund pays to CCC. Second, although he does not allege any such violation in the amended complaint, he argues that the Plan violates Rule 12b-1 because it pays for costs other than distribution expenses, namely, the costs of servicing already existing accounts. Third, he claims that the payments are excessive.
Plaintiff's first claim is identical to his claim that the Plan violates the Meyer I settlement agreement. That claim has already been rejected. Nothing in any of the documents referred to by plaintiff provides support for plaintiff's claims either that the settlement agreement was intended to cover distribution expenses or that the Investment Advisory Agreement by itself was intended to pertain to such costs. See supra Section II.
Plaintiff raised his second claim a violation of Rule 12b-1 itself in his demand letter to the Fund's Board of Directors: "[A]lthough not detailed in the complaint, the Plan is defective for the additional reason that it does not comply with Rule 12b1. That Rule permits certain payments by a fund only for expenses that are `primarily' for the sale of new fund shares, whereas the stated purpose of the Fund's Plan is to maintain old, existing accounts." Letter from Mordecai Rosenfeld to Fund Board of Directors at 1 (Oct. 21, 1982) (reprinted in defendants' second motion to dismiss, Exh. 2). This claim is similarly unpersuasive. The Fund's Plan explicitly states that recipients are to be reimbursed for their "administrative and sales related costs in rendering distribution assistance." (1982 Proxy Statement, Exh. A, ¶ II.) No other expenses are mentioned anywhere in the Plan. Rule 12b-1's definition of "distribution" encompasses a wide variety of payments, including specifically compensation of dealers and sales personnel; the only restriction is that the payments must be "primarily intended to result in the sale of shares...." Plaintiff's reference to the Plan as being designed to maintain already existing accounts misinterprets this provision. Even an already existing account may purchase new shares of the Fund. Presumably, given the nature of the Fund, most of the Fund's shares are bought by current accounts. Nothing in the rule suggests that sales expenses incurred in selling shares to current Fund shareholders must be excluded from a 12b-1 plan. The Fund's Board was correct when it asserted in its reply to plaintiff's demand letter that both "facilitat[ing] and encourag[ing] the sale of Fund shares to new investors" and "facilitat[ing] the sale of more Fund shares to present shareholders" are sufficiently connected to the sale and distribution of Fund shares to make reimbursement proper under Rule 12b-1. Board Letter at 16 (Apr. 27, 1983) (reprinted in defendants' second motion to dismiss, Exh. 2). Plaintiff confuses "new shares" with "new accounts." The rule only requires a relationship between the reimbursed activity and the former. Plaintiff has failed to allege a single fact that might show that the Plan as operated violates the restrictions of Rule 12b-1.
*390 Plaintiff's final claim is that, even assuming that the expenses involved are not covered by the investment advisory agreement and are of the kind for which reimbursement under Rule 12b-1 is proper, the amounts actually reimbursed under the Fund's particular Plan are excessive and that the directors' approval of such a plan violated their duties under Rule 12b-1 and section 36(b). Burks v. Lasker, 441 U.S. 471, 484, 99 S. Ct. 1831, 1840, 60 L. Ed. 2d 404 (1979), stated in dicta that section 36(b) prevents action by a board of directors from cutting off derivative suits based on section 36 fiduciary duties. Thus, the fact that the Board approved the Fund's Plan and rejected plaintiff's demand letter cannot, by itself, render plaintiff's claims untenable. Nonetheless, section 36(b)(2) does provide that board approval and shareholder ratification "shall be given such consideration by the court as is deemed appropriate under all the circumstances." 15 U.S.C. § 80a-35(b)(2) (1982). In this case, the Board's determination, combined with plaintiff's failure to allege any facts (other than those already rejected in connection with the settlement argument) to suggest that the Board did not fulfill its responsibilities under Rule 12b-1, is sufficient for the court to conclude that plaintiff's complaint should be dismissed.
First, the board of directors which made the decision at issue in this case is unusually independent. Plaintiff himself acknowledged this during the settlement of Meyer I. See Plaintiff's Memorandum of Law in Support of the Proposed Settlement, Meyer I, at 17 (July 31, 1981). Most funds are actually created by their investment advisers and affiliate persons, and therefore are subject to manipulation by these groups. See S.Rep. 184, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Ad. News 4897, 4901. In contrast, the Fund was an existing entity which considered a number of investment advisers before deciding on THE Management Group. See Deposition of William H. Baker at 13 (May 14, 1981). In addition, the Fund's Board had negotiated a reduction of the advisory fee prior to any litigation. Finally, the way the Plan is structured evidences the directors' fulfillment of their fiduciary duties to the Fund. It limits reimbursement to actual distribution-related costs and places a cap on payments regardless of costs. Because this cap is less than the total costs of administering shareholder accounts, the brokerage defendants have continued to absorb a "substantial" part of the Fund's administrative expenses. Board Letter at 9 (Apr. 27, 1983).
Second, the Board's response to plaintiff's demand letter provides adequate evidence to show that the Board could have found a reasonable likelihood that the Plan would benefit the Fund. The Board's letter provides a detailed discussion of changes both in industry practices and in economic conditions that made a distribution plan desirable. The fact that 80 other funds had adopted 12b-1 Plans, and would therefore pay some of the brokerage defendants' expenses should they shift their administered accounts, threatened the Fund with massive redemptions. Those redemptions would have increased the effective rate of the management fee, which is higher at lower asset levels. In addition, because it would force the Fund to sell some securities before the optimal time and would prevent the Fund from investing in some desirable securities, it would also decrease the Fund's gross yield.
Of course, to the extent that individual investors would have to provide their brokers with a certain level of profit either through the Fund's Plan or another fund's distribution payments, the Fund's shareholders would not benefit directly from the Plan. But, as Table II in the 1982 proxy statement and virtually every other statement by any party in this litigation demonstrate, the Fund's investment performance was distinctly above average, and its yield was higher than the average even taking into account the distribution payments. Thus, Fund shareholders would benefit by *391 having their accounts maintained in the Fund, rather than in another money-market instrument.
The Fund's experience with the Plan in operation, as reflected in the Board's reply to plaintiff's demand letter, also supported its decision to institute a 12b-1 Plan. Plaintiff has alleged no facts to cast doubt on the Board's assessment. His only claim rests on the absolute amount of the aggregate fees paid by the Fund to CCC and the brokerage houses. See Amended Complaint ¶ 8. That shareholders might have been able to obtain a better bargain than that which they currently have is not the test under section 36(b). "Instead, plaintiffs can prevail only if this Court finds that [the investment adviser and its affiliated persons] received compensation under an agreement that was unfair to the Fund and its shareholders." Gartenberg, 528 F.Supp. at 1047 (emphasis in original). Plaintiff has utterly failed to show such unfairness. Indeed, every fact presented to the court suggests that the directors' behavior was wholly in keeping with their fiduciary duties under the ICA.
IV. Conclusion.
The Plan violates neither the settlement agreement in Meyer I nor sections 12(b) and 36(b) of the ICA. Since the distribution payments give rise to no substantive violation, the proposal to enact the plan contained in the 1982 proxy statement did not violate either section 20 of the ICA or section 14(a) of the Securities Exchange Act of 1934. Furthermore, since the payments of distribution expenses do not impose an undue burden upon the Fund, Oppenheimer's sale of its interest in CCC does not violate section 15 of the ICA. Plaintiff's motion to enforce the settlement in Meyer I, 80 Civ. 397, by voiding the Fund's 12b-1 plan is therefore denied, and defendants' motion to dismiss the complaint in Meyer II, 82 Civ. 2120, is therefore granted. This order closes these cases.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1798518/ | 619 F. Supp. 1319 (1985)
UNITED STATES of America, Plaintiff,
v.
Jack CONRAD, Defendant.
No. 84-561-Civ-J-14.
United States District Court, M.D. Florida, Jacksonville Division.
October 11, 1985.
John Lawlor, III, Jacksonville, Fla., for plaintiff.
Gordon Blalock, Jacksonville, Fla., for defendant.
OPINION
SUSAN H. BLACK, District Judge.
Introduction
Plaintiff filed this action on May 21, 1984, seeking damages for breach of contract. The Complaint alleges that the defendant was the high bidder at an auction conducted by the Small Business Administration *1320 of the assets of Mackall Printing Company and that the defendant has refused to honor his bid.
On August 2, 1984, the defendant filed an Answer which asserts the following affirmative defenses: first, that plaintiff neither owned nor had an interest in the property being auctioned; second, that defendant withdrew his offer prior to its acceptance; and third, that plaintiff misrepresented the quantity and identity of the goods being auctioned and that defendant relied upon the misrepresentation when making his bid. On August 12, 1985, defendant filed a Motion to Amend Answer which the Court granted on August 19, 1985, adding the following affirmative defenses: fourth, that plaintiff failed to comply with Section 559.27, Florida Statutes (1983), which requires that a tag reflecting the value of an item offered for auction be placed upon each item; and fifth, that the contract sued upon does not satisfy the statute of frauds, Section 672.201, Florida Statutes (1983).
This case was tried by the Court without a jury on August 19, 1985 and September 9, 1985. The Court, having considered the pretrial stipulation of the parties, the trial briefs submitted by counsel, the exhibits, the testimony at trial, and having observed the demeanor of the witnesses, makes the following findings of fact and conclusions of law.
Findings of Fact
1. On or about November 12, 1980, Edward Mackall Gobble obtained a loan from the Small Business Administration (hereinafter "SBA"), pursuant to the Handicap Assistance Loan Program, in the amount of $82,000.00 for the purpose of opening a printing business known as Mackall Printing Service. (Testimony of Scott Dailey).
2. Mr. Gobble executed and delivered to the SBA a note in the amount of the loan and gave the SBA a purchase money security interest in the assets of the business along with a mortgage on his residence. (Testimony of Scott Dailey).
3. On or about August 19, 1983, Mr. Gobble defaulted on his note and on October 5, 1983, Mr. Gobble voluntarily surrendered his business assets, which were located at premises own by Jack Conrad, to the SBA. (Testimony of Scott Dailey).
4. The SBA entered into an agreement with Jack Conrad, the defendant, to rent the premises until an auction of the assets could be held. (Plaintiff's Exhibit 6).
5. Mr. Gobble always operated with the SBA as an individual when he borrowed the funds, delivered his note and surrendered his business assets to the SBA, thereby transferring ownership of the assets to the SBA. (Testimony of Edward Gobble).
6. On November 9, 1983, the SBA held a public auction of the property surrendered by Mr. Gobble at the premises leased from Mr. Conrad. (Testimony of Scott Dailey).
7. The SBA hired Louis Boyleston Realty and Auction, Inc. for the purpose of conducting the auction. Louis Boyleston is an experienced auctioneer who has conducted numerous auctions. His clients have included the bankruptcy courts and the SBA. (Testimony of Scott Dailey).
8. Louis Boyleston, of the firm, conducted the auction in two phases, first offering the property in bulk and then in piecemeal. (Testimony of Louis Boyleston).
9. An auction conducted in bulk and then in piecemeal is a common practice in the auction industry. The auctioneer first requests bids for all of the items in bulk or in a single lot. Upon the fall of the hammer in the bulk sale, the auctioneer then requests bids on each item in piecemeal or individually. If the sum of all the piecemeal bids does not exceed the highest bulk bid, the bulk bidder takes the property. (Testimony of Louis Boyleston).
10. The terms of the auction and the items included in the auction were published in brochures sent to persons as invitations to attend the auction, were listed in notices posted throughout the premises where the auction took place, were published in brochures on a table in the premises *1321 and were announced by the auctioneer prior to beginning the auction. (Testimony of Louise Boyleston and Louis Boyleston).
11. All those who attended the auction, including Mr. Conrad, knew or should have known that certain items, including a typesetter clearly marked by a sign stating "NOT IN SALE," were not included in the auction. (Testimony of Louis Boyleston).
12. Mr. Conrad placed the highest bid of $20,000.00 in the bulk sale; the auctioneer struck down his hammer and called off the property as sold to Mr. Conrad. (Testimony of Louise Boyleston).
13. Immediately after the fall of the auctioneer's hammer, the auctioneer's clerk, Louise Boyleston, prepared and signed a memorandum of sale providing Mr. Conrad bid $20,000.00 in the bulk sale. (Testimony of Louise Boyleston, Plaintiff's Exhibit 4).
14. Several persons left the auction after the bulk sale. (Testimony of Douglas Clayton).
15. After the auctioneer had begun the piecemeal sales, Mr. Conrad approached the auctioneer and informed him that he wanted to rescind his bid. (Testimony of Louis Boyleston).
16. The auctioneer did not accept the withdrawal of the bid. (Testimony of Louis Boyleston).
17. The sum of the piecemeal sales did not exceed Mr. Conrad's bulk bid and at the end of the auction, the auctioneer announced that the winner of the bulk bid successfully purchased the property. (Testimony of Don Mullins).
18. The SBA left the property on the premises for Mr. Conrad. (Testimony of Scott Dailey).
19. Mr. Conrad has refused to pay for the property. (Testimony of Richard Young).
20. Subsequent to the auction, Mr. Conrad obtained a default judgment for back rent against Edward Gobble and levied on that judgment, resulting in a sheriff's sale of the property. (Testimony of Jack Conrad).
Conclusions of Law
1. This Court has jurisdiction over the subject matter and the parties to the action pursuant to Title 28, U.S.C. § 1345.
2. The central issue in this case is whether the high bidder in the bulk sale of an auction conducted in bulk and then in piecemeal may withdraw his bid after the fall of the hammer on his bid, but prior to the completion of the piecemeal sales. The attorneys for both parties in briefing this issue indicated that they were unable to find case or statutory law discussing this issue. However, both parties agree that the issue is controlled by the Uniform Commercial Code and the law of contract.
The Court begins with a review of the relevant code section pertaining to auctions. Section 672.328(2), Florida Statutes (1983) provides: "A sale by auction is complete when the auctioneer so announces by the fall of the hammer or in other customary manner." Furthermore, in an auction with reserve, the auctioneer may withdraw an item from the auction until the fall of the hammer indicating the completion of the sale. Similarly, a bidder may retract his bid until the fall of the hammer. Section 672.328(3), Florida Statutes (1983). It has long been settled that a bid constitutes an offer and the fall of the hammer signifies acceptance. See Blossom v. Milwaukee & Chicago R.R. Co., 70 U.S. (3 Wall.) 196, 18 L. Ed. 43 (1865); Clemens v. United States, 295 F. Supp. 1339, 1340 (D.Or.1968), aff'd 439 F.2d 705 (9th Cir.1971). Thus, the fall of the hammer creates a binding contract between the seller and the high bidder.
However, an auction conducted in bulk and then in piecemeal affects the contract because neither the bulk bidder nor the seller can perform his obligations under the contract until the piecemeal sales are complete. This is analogous to the situation described by Professor Williston: "A contract to sell goods to arrive `will impose no liability on either party unless the goods *1322 arrive,' but each is irrevocably bound by a contract from the outset." 5 S. Williston, A Treatise on the Law of Contracts § 666 (3d ed. 1961) (citation omitted). Williston classifies this as a condition precedent to the performance of the contract.
The usual and customary practice in the auction industry supports the conclusion that the fall of the hammer in the bulk sale creates a binding contract between the high bulk bidder and the seller. Once the hammer falls, the bidders know the sale is concluded and several bulk bidders leave the auction, as they did in this case. It is inconsistent to conclude that the customary practice of conducting auctions in bulk and then piecemeal changes the well established significance afforded the falling of the hammer. If the high bulk bidder were allowed to withdraw his bid until all the piecemeal sales were completed, persons who desired to bid only in bulk would have to remain throughout the longer piecemeal auctions before learning whether or not the sale was concluded. Furthermore, allowing the bulk bidder to withdraw his bid at any time up until the end of the piecemeal sales would similarly enable the auctioneer to refuse to accept the bulk bid, to exclude items from the auction, and to accept a higher bulk bid made after the fall of the hammer on the bulk sale but prior to completing all the piecemeal sales. Therefore, for the benefit of the bidders and auctioneer who need to know with certainty when a sale is closed, a binding contract must be formed between the bulk bidder and the seller upon the fall of the hammer in the bulk sale.
The requirement that the sum of all the piecemeal bids does not exceed the bulk bid for the bulk bidder to take the property constitutes a condition precedent to performance of the contract.[1] In the present case, this condition was fulfilled when the piecemeal bids did not exceed the defendant's bulk bid. The SBA has satisfied its obligations under the contract by leaving the property on the defendant's premises for him to take possession.
In conclusion, the parties entered into a binding contract upon the fall of the auctioneer's hammer. The condition precedent to performance, the failure of the piecemeal bids to exceed the bulk bid, was satisfied. Thus, the defendant is obligated to perform, namely to pay the amount of his bid.
3. The Court will address briefly two additional issues. The first is whether Section 559.27, Florida Statutes (1983), *1323 which requires the tagging of items offered at auction, provides a meritorious defense. The statute provides, in pertinent part:
(2) The provisions of this section shall not apply: (b) When a value is not expressed by the auctioneer as a guide to the bidder ....
Section 559.27(2)(b), Florida Statutes (1983). In the present case, the auctioneer never expressed an opinion as to the value of any of the items being auctioned. Thus, the provisions of the statute do not apply and there was no need to tag the items.
The second issue is whether the contract sued upon satisfies the statute of frauds, which provides, in pertinent part:
(1) [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.
Section 672.201(1), Florida Statutes (1983).
In the present case, upon the fall of the hammer, the auctioneer's clerk prepared a memorandum of sale which provided that Mr. Conrad bid $20,000 in the bulk sale. Upon the acceptance of a bid, the auctioneer or the auctioneer's clerk becomes the agent of the purchaser as well as of the seller for the purpose of drawing up and signing a memorandum of sale in compliance with the statute of frauds. See In re Community Investments Associates I, 14 B.R. 211 (Bankr.E.D.Va.1981); Romani v. Harris, 255 Md. 389, 258 A.2d 187 (1969); see also Restatement (Second) of Contracts, § 135 comment b (1979). Therefore, the writing prepared by the auctioneer's clerk satisfies the requirements of the statute of frauds.
4. For the reasons stated in this Opinion, the Clerk of the Court is directed to enter judgment for the plaintiff against the defendant in the amount of $20,000.00.
NOTES
[1] Conditions placed upon contracts derived from auction sales are not uncommon. The seller has the right to prescribe the method for conducting the auction as well as any conditions upon the awarding of property. Jones v. Tennessee Valley Authority, 334 F. Supp. 739 (M.D.Fla.1971) (auctioneer first requested bids on tracts individually then in proposed combinations and finally for all tracts together). Courts have held that bidders are bound by conditions and terms of sale as announced by the auctioneer. See United States v. Weisbrod, 202 F.2d 629 (7th Cir.1953), cert. denied, 346 U.S. 819, 74 S. Ct. 32, 98 L. Ed. 345 (1953) (condition in auction that government could withdraw from sale any property prior to its physical delivery did not render contract void for lack of mutuality of obligation and the government's acceptance of the bid contractually bound the bidder.); United States v. Blair, 193 F.2d 557 (10th Cir.1952) (bidder was bound by announced condition that if bid was not the highest one, the government could rescind the contract, revoke the property and award the property to the highest bidder.); In re Wilson Freight Co., 30 B.R. 971 (Bankr.S.D.N.Y.1983) (bidder at auction sale of tractors was bound by minimum price condition where the condition and terms of sale were announced by the auctioneer.).
At least one court has expressly recognized a contract subject to a condition precedent to performance in the auction context. In In re Community Investments Associates I, 14 B.R. 211 (Bankr.E.D.Va.1981), the court held that a bidder was not entitled to property. Even though his bid was the high bid and was accepted by the fall of the auctioneer's hammer, this created only an executory contract subject to the condition that the high bidder obtain title insurance. The bidder never obtained the insurance, thereby causing the contract to fail.
In the present case, the bidder is similarly bound by the terms and conditions announced by the auctioneer. The requirement that the piecemeal bids could not exceed the bulk bid for the bulk bidder to take the property results in a contract subject to a condition. If the piecemeal sales exceeded the bulk bid, the contract between the SBA and the defendant would fail. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2407053/ | 325 F. Supp. 2d 855 (2004)
Sidney WILLIAMS, on behalf of herself and all other similarly situated indirect purchasers in the State of Tennessee Plaintiff,
v.
DEL MONTE FRESH PRODUCE COMPANY and Del Monte Fresh Produce N.A., Inc. Defendants.
No. 3:04-0320.
United States District Court, M.D. Tennessee, Nashville Division.
July 9, 2004.
*856 Patrick M. Barrett, III, Charles F. Barrett, Barrett Law Office, Nashville, TN, for Plaintiff.
Robert Dale Grimes, Bass, Berry & Sims, Nashville, TN, for Defendants.
MEMORANDUM
WISEMAN, Senior District Judge.
I. INTRODUCTION:
Sidney Williams, on behalf of herself and all other similarly situated indirect purchasers in the State of Tennessee, ("Plaintiff"), filed a Class Action Complaint on March 5, 2004 in the Circuit Court for Davidson County. The Complaint alleged three counts of illegal conduct by Del Monte Fresh Produce Company and Del Monte Fresh Produce, N.A., Inc., ("Defendants"). Count 1 alleges a violation of the Tennessee Trade Practices Act, Tenn. Code Ann. § 47-25-101 et seq. Count 2 alleges a violation of the Tennessee Consumer Protection Act, Tenn.Code Ann. § 47-18-101 et seq. Count 3 alleges that Del Monte fraudulently concealed the existence of an antitrust violation.
Rather than answer the Complaint, Defendants filed a Notice of Removal to this Court. In the Notice of Removal, Defendants stated that this case should be removed pursuant to federal question jurisdiction and patent jurisdiction.
Plaintiff then filed a Motion to Remand, to which Defendants filed a Response, to which Plaintiff filed a Reply.
II. RELEVANT FACTS:
Plaintiff alleges the following facts in her Complaint filed in the Circuit Court for Davidson County; these facts are currently not in dispute, as Defendants have not filed an answer to Plaintiff's Complaint. Plaintiff alleges that in 1994, Defendants fraudulently obtained a patent for CO-2 Pineapples Patent # 8863. Since that time, Defendants have allegedly threatened other growers of similar pineapples with litigation if they did not cease growing the similar pineapples. In addition, Plaintiff alleges that Defendants tied *857 other products to the purchase of CO-2 Pineapples.
III. DISCUSSION:
The Well Pleaded Complaint Rule states that a plaintiff is the master of his claim, and, unless there is a federal question that appears on the face of the complaint, he may choose to have his cause heard in state court. Caterpillar, Inc. v. Williams, 482 U.S. 386, 398-99, 107 S. Ct. 2425, 96 L. Ed. 2d 318 (1987). The United States Supreme Court has held that removal from state court is only appropriate in cases where diversity jurisdiction is present or where either federal law creates the cause of action or the plaintiff's right to relief necessarily depends upon resolution of a substantial question of federal law. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808, 108 S. Ct. 2166, 100 L. Ed. 2d 811 (1988). The Supreme Court has held that to determine whether removal is proper under the Well Pleaded Complaint Rule, the Court need look no further than what appears in the plaintiff's statement of his own claim, paying no attention to possible defenses, whether anticipated or not. Franchise Tax Board of California v. Const. Laborers Vacation Trust for Southern California, 463 U.S. 1, 10, 103 S. Ct. 2841, 77 L. Ed. 2d 420 (1983).[1] Finally, the Supreme Court has clearly stated that if interpretation of federal law is not an essential element in each of the plaintiff's theories of recovery, those claims do not arise under federal law. Christianson, 486 U.S. at 810, 108 S. Ct. 2166 (emphasis added).
Based on the Well Pleaded Complaint Rule and its interpretation by the Supreme Court, this Court will look no further than Plaintiff's original complaint filed in State Court to determine whether the cause of action is created by Federal Law or a substantial federal question exists that must be adjudicated to resolve the conflict.
A. Does Federal Law Create this Cause of Action?
There is no question that the three causes of action listed in the Complaint are state law causes of action. Neither party disputes this fact in their memoranda attached to their motions. Therefore, federal law does not create this cause of action.
B. Does a Substantial Federal Question Exist that Must be Adjudicated to Resolve the Conflict?
i. Plaintiff presents at least one theory that does not require adjudication of any federal question.
The United States Supreme Court held that if interpretation of federal law is not an essential element in each of the plaintiff's theories of recovery, those claims do not arise under federal law. Christianson, 486 U.S. at 810, 108 S. Ct. 2166 (emphasis added). The Supreme Court has intimated *858 guidelines for deciding whether cases relating to patents arise under federal patent law. Id. at 808, 108 S. Ct. 2166. The Court stated:
§ 1338(a) jurisdiction likewise extends only to those cases in which a well-pleaded complaint establishes either that federal patent law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal patent law, in that patent law is a necessary element of one of the well-pleaded claims.
Id. (citing Franchise Tax Board of California, 103 S.Ct. at 2848). The Court further reasoned that it is not sufficient that a well-pleaded claim alleges a single theory under which resolution of a patent law question is essential. If there are theories completely unrelated to patent law on the face of a well pleaded complaint, then the claim does not arise under patent law. Id.
Here, Plaintiff alleges violations of the Tennessee Trade Practices Act, the Tennessee Consumer Protection Act, as well as a claim for fraudulent concealment. In addition to the patent law related allegations that Plaintiff argues prove the violations, Plaintiff also alleges that Defendants tied other products to the purchase of the pineapples in question and disparaged the goods, services or business of another. Pl. Com. at ¶¶ 39, 62. These allegations alone can sustain all three violations of Tennessee Law, with no reference to Patent Law. Thus, according to the Supreme Court's decisions in Franchise Tax Board of California and Christianson, because Plaintiff alleges a theory of recovery completely unrelated to any federal question, the case should be remanded to the Circuit Court for Davidson County.
ii. In some circumstances, state court can be a proper forum to adjudicate whether patent litigation was sham litigation.
This court agrees with the Defendants' contention that claims arising out of patent enforcement are generally so intertwined with federal law, that the federal question is substantial and needs to be adjudicated by a federal court.[2] Def. Mem. at 14. This Court, however, finds that situations exist in which the validity of patent enforcement can be adjudicated without necessitating adjudication of a federal question. These situations are analogous to those that the federal courts often apply to Sherman Act violations in relation to patent enforcement. The first such situation is when the patent was obtained fraudulently, and that fraud can be proven without addressing the merits of the patent application, but rather, by demonstrating an applicant's affirmative attempt at concealing or misstating material facts before the USPO.[3]See Cataphote Corp. v. De *859 Soto Chemical Coatings, Inc., 450 F.2d 769, 772 (9th Cir.1971). A second situation is when the patent holder is aware of the patent infirmity and, nonetheless, initiates or continues prosecution for patent infringement. See Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 n. 5, 86 S. Ct. 347, 15 L. Ed. 2d 247 (1965).[4] If the federal courts have deemed these standards appropriate for determining whether sham litigation exists in the context of federal antitrust violations, this Court sees no reason why they should not also apply in determining whether sham litigation exists in relation to patent enforcement in the context of state antitrust violations.
In this case, Plaintiff alleges that Defendants made intentional misrepresentations to the United States Patent Office ("USPO"), and that Defendants had notice and knowledge that the patent was invalid, yet continued to attempt to enforce it. Pl. Com. at ¶¶ 14-39. If Plaintiff can prove these facts, then there would not be a federal question, only a Walker Process-like fraud inquiry, where intent is paramount to a decision. State court is a competent and appropriate forum to make this inquiry. The state court could consider whether the Defendants intentionally misled the USPO an inquiry that revolves more around intent and proof of intent than around the actual facts given to the USPO. In addition, the state court could consider whether the Defendants had knowledge that its patent was invalid and continued to attempt to enforce it again, a question more of intent than patent law.
iii. Given the history of litigation surrounding Patent # 8863, a state court would not be forced to adjudicate even ancillary federal questions, as these exact questions have been subject to prior adjudication in federal courts.
First, in Del Monte Fresh Produce Company v. Dole Food Company, Inc., a Magistrate Judge for the Southern District of Florida found that Del Monte knew that it could not and did not have a patent for the MD-2 pineapple, a pineapple very similar to the CO-2 pineapple, and that the patent they had for the CO-2 pineapple did not cover the MD-2. Case No. 00-1171, Doc. # 498 at 8 (2002). The Court further found that, because of this fact, any threatening letters Del Monte sent attempting to enforce the CO-2 patent on growers of MD-2 pineapples constituted a fraudulent act. Id. Here, Plaintiff alleges that Del Monte caused competitors to refrain from growing competing pineapples, such as the MD-2, with these same fraudulent, threatening letters, thereby obtaining a monopoly. Pl. Com. at ¶ 25. Under the principle of Res Judicata, the state court could rely on the federal court's findings of fraud, in relation to these letters, thus alleviating the need to adjudicate the federal question concerning the patent enforcement.[5]
Second, Defendants filed a Motion to Dismiss with Prejudice their own claim in Maui Pineapple Co. v. Del Monte Corp., *860 Case No. 01-1449 (N.Dis.Ca.2003), stating that Patent # 8863, the CO-2 Patent, was invalid from its inception. Here, a state court could rely on this admission of invalidity of the patent, thus avoiding adjudicating that federal question. While Defendants correctly point out that an invalid patent is only one prong of proving both sham litigation and fraud before the USPO, Def. Mem. at 11-15, as explained above, these federal concerns can be alleviated if the Plaintiff can prove certain things as to Defendant's knowledge and actions. The underlying question of the validity of the patent that all of Plaintiff's claims depend upon, however, has already been adjudicated.
IV. CONCLUSION:
In summary, this Court finds that this case should be remanded to state court for the following reasons. First, Plaintiff presents at least one theory of recovery as to each violation alleged that does not require adjudication of a federal question, and per the ruling in Christianson, because there is a theory of the case that does not implicate federal law, it should be remanded to state court. See Christianson, 486 U.S. at 810, 108 S. Ct. 2166. Second, this Court finds that, contrary to a recent ruling in the Western District of Tennessee, Coker v. Purdue Pharma Co., 314 F. Supp. 2d 777, 782 (W.D.Tenn.2004), and in agreement with a ruling in the District of Kansas, Aetna U.S. Healthcare, Inc. v. Hoechst Aktiengesellschaft, 54 F. Supp. 2d 1042, 1053 (D.Kan.1999), there are situations where a state court can adjudicate whether patent litigation was sham litigation. Third, this Court finds that, given the history of litigation surrounding Patent # 8863, a state court would not be forced to adjudicate even ancillary federal questions, as these exact questions have been subject to prior adjudication in federal courts. This Court also notes that any one of the above three findings is independently enough to require a remand to state court, but because of the state of this case, and the similar cases pending before other District Courts, this Court has explained all three findings.
For the reasons set forth above, Plaintiff's Motion to Remand is GRANTED.
An appropriate ORDER will enter.
ORDER
Plaintiff Sidney Williams ("Plaintiff") has filed a Motion to Remand this action to the Circuit Court for Davidson County.
For the reasons set forth in the accompanying Memorandum, Plaintiff's Motion to Remand is GRANTED.
It is so ORDERED.
NOTES
[1] In Beneficial Nat'l Bank v. Marie Anderson, the United States Supreme Court issued an opinion which arguably changed the guidelines for removal from state court. 539 U.S. 1, 123 S. Ct. 2058, 156 L. Ed. 2d 1 (2003). The Court stated, "a state claim may be removed to federal court in only two circumstances-when Congress expressly so provides ... or when a federal statute wholly displaces the state-law cause of action through complete preemption." Id. at 8, 123 S. Ct. 2058 (emphasis added).
In the case before this Court, Plaintiff and Defendant are at odds over whether or not Beneficial Nat'l Bank changed the guidelines for when removal was appropriate. See Pl. Mem. at 4-6; Def. Mem. at 6-8. Some courts of this Circuit have adopted this change. See Bourke v. Carnahan, 2003 WL 23412975 (S.D.Ohio July 1, 2003). This Court, however, will not comment on the possible effects of Beneficial Nat'l Bank, as that determination is not necessary for the adjudication of this case given that remand should be granted on either standard.
[2] In Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 113 S. Ct. 1920, 123 L. Ed. 2d 611 (1993), the United State Supreme Court held that to prove sham litigation required a showing that the litigation was objectively baseless a federal patent law question in addition to the subjective bad faith requirement.
[3] Although Defendants will likely argue that materiality is best determined in federal court, this Court notes that in Hycor Corp. v. Schlueter Co., 740 F.2d 1529, 1539 (Fed.Cir.1984), the Federal Circuit Court stated that a finding of fraud can only be determined by a careful balancing of intent in light of materiality, as culpability is so intertwined with intent that a lessor showing of materiality is required when an intent to defraud is established. (citations omitted).
From the Complaint, this Court is convinced that Plaintiff is attempting to establish an intent to defraud, thus making materiality less of a factor. State court is a proper and competent forum to determine intent, and thus, a proper forum to adjudicate this claim. Pl. Com. at ¶¶ 14-39.
[4] This Court would like to make clear that Plaintiff must meet a very high burden to prevail on either theory. Plaintiff must present clear and convincing evidence of the accused fraud or awareness of the patent infirmity. Cataphote Corp., 450 F.2d at 772.
[5] Incidentally, the Florida Court did not find that Del Monte had fraudulently obtained the CO-2 patent, explaining that Dole had not produced clear evidence of such fraud (the standard necessary in a motion to compel attorney client communication due to the crime-fraud exception). Del Monte Fresh Produce Company v. Dole Food Company, Inc., Case No. 00-1171 (S.D.Fl.2002) at Order On Dole's Motion to Compel, Doc. # 498 at 12. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1344475/ | 675 P.2d 394 (1984)
Edward D. HANSEN, Appellant,
v.
HARRAH'S, a Nevada corporation, Claims Administration Systems, Inc., a California corporation, d/b/a CDS of Nevada, Respondents.
Paul D. LEWIS, Appellant,
v.
MGM GRAND HOTEL, RENO, INC., Respondent.
Nos. 14341, 14391.
Supreme Court of Nevada.
January 25, 1984.
*395 Raymond Badger, Carson City, for appellant Hansen.
Vargas & Bartlett, and Albert F. Pagni, Reno, for respondents Harrah's and CDS of Nevada.
Warren W. Goedert, Reno, for appellant Lewis.
McDonald, Carano, Wilson, Bergin, Bible, Frankovich & Hicks, and Valerie N. Strandell, Reno, for respondent MGM Grand Hotel.
James Crockett, Las Vegas, and Nancyann Leeder, Reno, of Amicus Curiae Committee of the Nevada Trial Lawyers Ass'n, for appellants.
OPINION
PER CURIAM:
These are consolidated appeals[1] from judgments dismissing both appellants' complaints. For the reasons set forth hereinafter, we reverse and remand both cases to the district court.
The facts of each case are as follows:
Hansen: Hansen was a pinball-video repairman for Harrah's. After he was injured at work, Hansen filed a workmen's compensation claim. CDS, the claims administrator for Harrah's, a "self-insured employer,"[2] rejected the claim. On appeal, however, a hearings officer decided Hansen was entitled to full benefits. Harrah's subsequently fired Hansen. Hansen filed a complaint alleging failure to pay benefits due[3] as well as retaliatory discharge and seeking compensatory and punitive damages. Harrah's filed a motion to dismiss based on Hansen's failure to exhaust administrative remedies under NRS 616, Nevada's Industrial Insurance Act (Act). CDS has yet to answer Hansen's complaint. The trial court dismissed Hansen's complaint with prejudice, and this appeal ensued.
Lewis: Lewis was an assistant bar manager for the Reno MGM, another "self-insured employer." Lewis suffered a hernia injury at work and made a workmen's compensation claim. MGM's claims' administrator initially denied his claim, but on appeal the hearings officer ordered that payments be made to Lewis.
MGM then fired Lewis. Lewis filed a complaint alleging retaliatory discharge and seeking compensatory and punitive damages. MGM thereafter filed a motion to dismiss, or in the alternative, motion for summary judgment. The trial court, recognizing that Nevada has not yet adopted the retaliatory discharge exception to the at-will employment rule and also believing that creation of such a cause of action is a legislative prerogative, granted MGM's motion and dismissed Lewis' complaint. This appeal ensued.[4]
*396 We first consider whether Nevada should adopt the public policy exception to the at-will employment rule recognizing as a proper cause of action retaliatory discharge for filing a workmen's compensation claim. Initially, it must be recognized that there is a significant split of authority regarding this issue. See annot., 63 A.L.R. 3d 979 (1975). We are called upon now to decide the issue for the first time.
The position asserted by Harrah's and MGM (employers) is grounded upon two principles: 1) Nevada's common law at-will employment rule which allows employers to discharge employees for any reason; and 2) the Nevada Legislature's intent, demonstrated by enactment of extensive workmen's compensation laws, to provide statutory remedies as the exclusive source of employees' relief. We are not persuaded.
We realize that certain other jurisdictions have adopted the position employers here have taken, e.g., Martin v. Tapley, 360 So. 2d 708 (Ala. 1978); Segal v. Arrow Industries Corporation, 364 So. 2d 89 (Fla. 1978); Bottijliso v. Hutchison Fruit Company, 96 N.M. 789, 635 P.2d 992 (1981), nevertheless, the at-will employment rule is subject to limited exceptions founded upon strong public policy; and the failure of the legislature to enact a statute expressly for-bidding retaliatory discharge for filing workmen's compensation claims does not preclude this Court from providing a remedy for what we conclude to be tortious behavior.
Nevada's workmen's compensation laws reflect a clear public policy favoring economic security for employees injured while in the course of their employment. It has been a long-standing policy of this Court to liberally construe such laws to protect injured workers and their families.
Unquestionably, compensation laws were enacted as a humanitarian measure. The modern trend is to construe the industrial insurance acts broadly and liberally, to protect the interest of the injured worker and his dependents. A reasonable, liberal and practical construction is preferable to a narrow one, since these acts are enacted for the purpose of giving compensation, not for the denial thereof.
Nevada Industrial Commission v. Peck, 69 Nev. 1, 10-11, 239 P.2d 244, 248 (1952). Failure to recognize the cause of action of retaliatory discharge for filing a workmen's compensation claim would only undermine Nevada's Act and the strong public policy behind its enactment. The Supreme Court of Indiana first recognized this rationale and created a cause of action in Frampton v. Central Indiana Gas Company, 260 Ind. 249, 297 N.E.2d 425, 427 (1973):
The Act creates a duty in the employer to compensate employees for work-related injuries (through insurance) and a right in the employee to receive such compensation. But in order for the goals of the Act to be realized and for public policy to be effectuated, the employee must be able to exercise his right in an unfettered fashion without being subject to reprisal. If employers are permitted to penalize employees for filing workmen's compensation claims, a most important public policy will be undermined. The fear of being discharged would have a deleterious effect on the exercise of a statutory right. Employees will not file claims for justly deserved compensation opting, instead, to continue their employment without incident. The end result, of course, is that the employer is effectively relieved of his obligation.
Many other states, as a result of similar reasoning, have also adopted or recognized a public policy exception to the at-will rule making retaliatory discharge for filing a workmen's compensation claim actionable in tort. Sventko v. Kroger Company, 69 Mich. App. 644, 245 N.W.2d 151 (1976); Kelsay v. Motorola, Inc., 74 Ill. 2d 172, 23 Ill. Dec. 559, 384 N.E.2d 353 (Ill. 1978); Brown v. Transcon Lines, 284 Or. 597, 588 P.2d 1087 (1978); Lally v. Copygraphics, 85 N.J. 668, 428 A.2d 1317 (1981); Murphy v. City of Topeka-Shawnee County Department of Labor Services, 6 Kan. App. 2d 488, 630 P.2d 186 (1981); Parnar v. *397 Americana Hotels, Inc., 652 P.2d 625 (Haw. 1982).
We know of no more effective way to nullify the basic purposes of Nevada's workmen's compensation system than to force employees to choose between a continuation of employment or the submission of an industrial claim. In the absence of an injury resulting in permanent total disability, most employees would be constrained to forego their entitlement to industrial compensation in favor of the economics necessity of retaining their jobs. Moreover, Nevada's employers have enjoyed immunity from common law tort claims by injured employees because of the state policy to compensate employees for work-related injuries regardless of fault. It would not only frustrate the statutory scheme, but also provide employers with an inequitable advantage if they were able to intimidate employees with the loss of their jobs upon the filing of claims for insurance benefits as a result of industrial injuries.
In view of the foregoing, our course is clear. We elect to support the established public policy of this state concerning injured workmen and adopt the narrow exception to the at-will employment rule recognizing that retaliatory discharge by an employer stemming from the filing of a workmen's compensation claim by an injured employee is actionable in tort. Since both the cause of action and the remedy are governed by the law of torts, there is no basis for administrative relief within the framework of the state industrial insurance system, and hence no need to exhaust purported administrative remedies as suggested by employers.
We are also asked to rule upon the availability of punitive damages in an action for unlawful discharge in retaliation for filing a workmen's compensation claim. We hold that, as with any intentional tort, punitive damages are appropriate in cases where employees can demonstrate malicious, oppressive or fraudulent conduct on the part of their employers in accordance with NRS 42.010. Indeed, the threat of punitive damages may be the most effective means of deterring conduct which would frustrate the purpose of our workmen's compensation laws.
Imposition of punitive damages in the instant cases, however, would be unfair. We have stated that the justification for punitive damages is "to punish the offender and deter others." Summa Corporation v. Greenspun, 96 Nev. 247, 257, 607 P.2d 569, 575 (1980). It would be unfair to punish employers for conduct which they could not have known beforehand was actionable in this jurisdiction. Using this same reasoning, other courts have likewise held that punitive damages should not be awarded in the case which initially adopts this new cause of action. Kelsay, 384 N.E.2d at 360; Brown, 588 P.2d at 1095; Murphy, 630 P.2d at 193. Therefore, assuming appellants are able to prove their allegations of retaliatory discharge against employers, the latters' conduct in the instant cases does not justify the imposition of punitive damages. Punitive damages may be, however, appropriately awarded for any such cause of action that arises subsequent to this opinion.
We reverse and remand both cases for action consistent with this opinion, with the proviso that, in the event either employee or both employees prevail at trial, no punitive damages be awarded.
The judgments dismissing appellants' complaints are reversed and remanded.
NOTES
[1] The Court has determined that consolidation of these appeals will assist in their disposition. NRAP 3(b).
[2] NRS 616.112 provides:
"`Self-insured employer' defined. `Self-insured employer' means any employer who possesses a certification from the commissioner of insurance that he has the capability to assume the responsibility for the payment of compensation under this chapter or chapter 617 of NRS."
[3] Hansen apparently received his benefits after filing suit.
[4] The Nevada Trial Lawyer's Association filed an amicus curiae brief on behalf of Hansen and Lewis. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1927080/ | 245 B.R. 59 (1999)
UNITED STATES of America, Appellant,
v.
GWI PCS 1, INC., et al., Appellees.
No. CIV.A. 3:98-CV-1704L.
United States District Court, N.D. Texas, Dallas Division.
September 27, 1999.
*60 Frank W. Hunger, Assistant Attorney General, Washington, DC, Paul E. Coggins, United States Attorney, Fort Worth, TX, Myrna B. Silen, Assistant United States Attorney, Northern District of Texas, Dallas, TX, J. Christopher Kohn, Sandra P. Spooner, Lloyd H. Randolph, William Alvarado Rivera, E. Kathleen Shahan, Washington, DC, Peter B. Miller, Civil Division, U.S. Department of Justice, Washington, DC, for Appellant.
Deborah L. Schrier-Rape, Dallas, TX, John A. Lee, Houston, TX, Greg Bevel, Dallas, TX, Michelle V. Larson, Andrews & Kurth L.L.P., Dallas, TX, for subsidiary debtors.
Joseph J. Wielebinski, Dallas, TX, Raymond J. Urbanik, Munsch Hardt Kopf Harr & Dinan, P.C., Dallas, TX, for GWI PCS, Inc. and General Wireless, Inc.
ORDER
LINDSAY, District Judge.
Before the court are the appeals of two rulings by the United States Bankruptcy Court, an order confirming the debtors' plan of reorganization ("Confirmation Order"), and a final judgment avoiding a portion of a claim by a creditor against the debtors ("Avoidance Judgment"). The *61 United States of America, on behalf of the Federal Communications Commission ("FCC"), appeals both of the bankruptcy court's rulings. The debtors have filed a cross-appeal of a portion of the Confirmation Order. The appeals of the two orders have been consolidated into this single case, Civil Action No. 3:98-1704-L.
I. Factual and Procedural Background
GWI PCS, Inc. (GWI PCS) made the successful bid of over one billion dollars for air spectrum wireless telecommunication frequency licenses in an auction by the FCC in May of 1996. Upon being named a winning bidder, GWI PCS was required to bring its total down payments up to 5% of its bid amount, $53 million. At GWI's request, the FCC issued the licenses in the names of the 14 subsidiary debtors. The licenses were subsequently awarded to the 14 subsidiary debtors in January of 1997. By that time, the market value, and accordingly the value of the licenses, had declined precipitously. Nevertheless, Debtors then paid the required additional 5% of the bid amount, an additional $53 million, bringing their total payment to $106 million.
The subsidiary debtors, 14 GWI PCS, Inc. subsidiaries, filed for bankruptcy in October of 1997, and challenged their obligation to pay the bid price for the licenses as fraudulent conveyances, claiming that they had received less than the reasonably equivalent value and became insolvent because of such. In January of 1998, GWI PCS, Inc. and General Wireless, Inc. likewise filed for bankruptcy and joined the subsidiary debtors in bankruptcy.
On June 4, 1998, the Bankruptcy Court entered a final judgment on the subsidiary debtors' and GWI PCS, Inc.'s avoidance claims against the FCC which reduced their obligations to the United States to $60 million. The United States appeals that judgment and unsuccessfully attempted to stay the judgment. On September 10, 1998, the Bankruptcy Court entered its order confirming the plans of reorganization for General Wireless, Inc., GWI PCS, Inc., and for the subsidiary debtors. The United States also appeals that order. The United States secured temporary stays of those decisions, expiring September 30, 1998, but were unsuccessful in securing lengthier stays. The United States appeals the Avoidance Judgment, which reduced its claim against the debtors by over $900 million, and the Confirmation Order. Debtors cross-appeal a portion of the Confirmation Order.
II. Debtors' Motion to Dismiss Appeals
On October 29, 1998, the debtors filed a motion, and brief in support thereof, to dismiss the appeal of the Confirmation Order and partially dismiss the appeal of the Avoidance Judgment. On November 12, 1998, the United States filed an opposition to the motion to dismiss. On November 30, 1998, the debtors filed their reply to the United States' opposition to the motion to dismiss. On January 22, 1999, with leave of the court, the United States filed its surreply in further support of its opposition to the motion to dismiss. The debtors seek to dismiss the appeal of the Confirmation Order and partially dismiss the appeal of the Avoidance Judgment because of equitable mootness. They argue that the failure of the United States to obtain a continuing stay has resulted in the implementation and substantial consummation of the debtors' plan. They state that numerous third parties have acted in reliance on the Avoidance Judgment and the Confirmation Order, payments have been made, settlements consummated, and obligations incurred.
Debtors also assert that dismissing the appeals as moot is in the public's interest because the public will benefit if they are allowed to reorganize and implement their business plan. Such will make low cost wireless service available to everyone in their markets, with bundles of air time minutes at prices which are not available *62 today, thus providing service to parties for whom cellular service is not currently affordable.
The United States asserts that the doctrine of equitable mootness should not apply because Debtors do not have an operating business and there exists a litigation alternative plan. It also insists that the equities do not merit dismissal and that the significant issues raised by its appeal are compelling reasons to reach the merits thereof.
In evaluating whether the appeal of a reorganization plan in a bankruptcy case is moot, the court examines whether: 1) a stay has been obtained, 2) the plan has been substantially consummated, and 3) the relief requested would affect either the rights of parties not before the court or the success of the plan. In re U.S. Brass Corp., 169 F.3d 957 (5th Cir.1999); In re Berryman Products, Inc., 159 F.3d 941, 944 (5th Cir.1998); In re Manges, 29 F.3d 1034, 1039 (5th Cir.1994), cert. denied, 513 U.S. 1152, 115 S. Ct. 1105, 130 L. Ed. 2d 1071 (1995).
The United States attempted to obtain a stay of the Avoidance Judgment and the Confirmation Order. On July 30, 1998, the United States filed a motion to stay the operation or enforcement of the Avoidance Judgment; however, on August 7, 1998, the district court denied the motion. After the Confirmation Order was entered on September 10, 1998, the United States immediately filed an emergency motion for a stay pending appeal from the bankruptcy court's orders avoiding FCC claims and confirming reorganization. A temporary stay was granted through September 30, 1998. On September 25, 1998, the United States filed a motion to extend the temporary stay. On September 30, 1998, the court denied the United States' motions for stay. The United States secured a stay from Chief Judge Politz of the Fifth Circuit Court of Appeals on September 30, 1998. On October 7, 1998, that stay was lifted by the Fifth Circuit, and the United States' emergency petition for stay pending resolution of appeals, which was treated as a writ of mandamus, was denied by the Fifth Circuit. Thus the United States vigorously sought to obtain a stay to prevent the reorganization plan from going into effect.
Vigorously, though unsuccessfully, seeking to obtain a stay of a confirmed reorganization plan is not equivalent to actually obtaining such a stay. "A stay not sought, and a stay sought and denied, lead equally to the implementation of the plan of reorganization." In re Manges, 29 F.3d at 1040, citing In re UNR Industries, 20 F.3d 766, 770 (7th Cir.), cert. denied, 513 U.S. 999, 115 S. Ct. 509, 130 L. Ed. 2d 416 (1994). The failure or inability to obtain a stay pending appeal carries the risk that review may be precluded because of mootness. Id. The United States was unable to obtain a stay, beyond the temporary stay that expired on September 30, 1998.
The next question in the mootness inquiry is whether the reorganization plan has been substantially consummated. Pursuant to 11 U.S.C. § 1101(2), "substantial consummation" means:
(A) transfer of all or substantially all of the property proposed by the plan to be transferred;
(B) assumption by the debtor or by the successor to the debtor under the plan of the business or of the management of all or substantially all of the property dealt with by the plan; and
(C) commencement of distribution under the plan.
"`Substantial consummation' is a statutory measure for determining whether a reorganization plan may be amended or modified by the bankruptcy court." In re Manges, 29 F.3d at 1040. The court "may `decline to consider the merits of confirmation when a plan has been so substantially consummated that effective judicial relief is no longer available even though the parties may have a viable dispute on appeal.'" *63 In re U.S. Brass Corp., 169 F.3d at 960, quoting In re Berryman Products, Inc., 159 F.3d at 944.
Debtors cite numerous extensive financial transactions that have been conducted based upon the reorganization plan since the Fifth Circuit denied the United States' request for a stay. These transactions include the following:
1. Equity investors have funded approximately $5.1 million into Debtors;
2. Equity investors have signed notes payable to Debtors with a face amount of approximately $5.1 million, and Debtors have drawn upon $4.4 million of those funds;
3. Lucent Technologies (Lucent) has funded $30 million into Debtors;
4. Debtors paid $28 million to Hyundai Electronics of America;
5. Debtors funded their contemplated professional fees;
6. Debtors paid $150,000 to retain Prudential Securities, Inc., as financial advisor and lead manager of their high yield debt offering;
7. Debtors paid unsecured creditors holding allowed claims their initial distribution;
8. Debtors paid the large majority of remaining administrative expenses;
9. Debtors issued $5 million in preferred stock;
10. The subsidiary debtors signed new notes and security agreements in favor of the FCC;
11. Debtors paid the FCC the first installment on the licenses, approximately $2 million;
12. Debtors have paid their regular operating expenses, including payroll, payroll taxes, property and equipment lease payments, and other normal operating expenses;
13. Debtors have paid $1.6 million to Lucent in commitment fees on the credit facilities provided by Lucent;
14. Debtors have entered binding contracts by executing purchase orders to acquire $3 million of fast start services to design and construct their wireless network;
15. With the assistance of Lucent, Debtors have begun implementation of the design plans for their network and have purchased sophisticated equipment for use therein;
16. Debtors have employed Arthur Andersen to perform audit services for 1997 and 1998, and have incurred over $40,000 for such services; and
17. Debtors have incurred other post-consummation liabilities, such as professional fees, in connection with the preparation of the offering memorandum of over $150,000.
Although the United States agrees that these transactions have taken place, it does not believe that they constitute substantial consummation. The court disagrees. Upon review of the pleadings filed and the appellate record, the court concludes that the reorganization plan has been substantially consummated because substantially all of the property proposed by the plan to be transferred has been transferred, Debtors are managing substantially all of the property dealt with by the plan, and distribution under the plan has commenced. The United States also disputes substantial consummation because the Litigation Alternative exists as a part of the confirmed reorganization plan. Again, the court disagrees. As discussed above, the court concludes that substantial consummation of the plan, by way of the Business Alternative, has already taken place irrespective of the possibility of implementation of the Litigation Alternative whereby the licenses would be returned to the FCC, and litigation for the benefit of creditors and equity would be initiated to attempt to recover the payments made by Debtors to the FCC. Accordingly, the *64 second factor also weighs in favor of dismissal of the appeal as moot.
Finally, the court must determine whether the granting of relief on appeal would affect the rights of third parties not before the court or the success of the plan. Upon review of the pleadings filed and the appellate record, the court concludes that the granting of the relief which the United States seeks on appeal would affect the rights of third parties not before the court and the success of the plan. The various investors and entities which have consummated transactions with Debtors since the entry of the Confirmation Order, and the confirmation plan itself, would be detrimentally affected if Debtors were suddenly obligated to the FCC for an additional $900 million. The third factor, therefore, weighs in favor of dismissal of the appeal as moot.
For the reasons stated above, Debtors' motion to dismiss the United States' appeal of the Confirmation Order and partially dismiss the United States' appeal of the Avoidance Judgment is granted. Accordingly, the United States' appeal of the Confirmation Order is dismissed, and the United States' appeal of the Avoidance Judgment is dismissed to the extent requested by Debtors.
With respect to the remaining issues raised by the United States' appeal of the Avoidance Judgment, the bankruptcy court's findings of fact are examined under the clearly erroneous standard, while its legal determinations are reviewed under the de novo standard. In re Sewell, 180 F.3d 707, 710 (5th Cir.1999). Based on these standards, after review of the pleadings, the appellate record, and the applicable authority, the court denies the United States' remaining claims with respect to the Avoidance Judgment. Accordingly, the bankruptcy court's Avoidance Judgment is in all things affirmed.
III. Debtors' Cross-appeal
Debtors have filed a cross-appeal of the bankruptcy court's Confirmation Order. The United States filed a motion to dismiss the cross-appeal as untimely. The United States filed its motion to dismiss Debtors' cross-appeal, alleging that the notice was untimely filed. Debtors filed a response to the motion. The United States did not file a reply to Debtors' response.
On the final due date for the filing of Debtors' notice of appeal, Debtors mistakenly submitted their notice of appeal to the clerk of the district court rather than to the clerk of the bankruptcy court. The next day, the notice of appeal was forwarded to the bankruptcy court's clerk and was stamped as filed that day, one day late.
Bankruptcy Rule 8002(a) states, in pertinent part, "If a notice of appeal is mistakenly filed with the district court or the bankruptcy appellate panel, the clerk of the district court or the clerk of the bankruptcy appellate panel shall note thereon the date on which it was received and transmit it to the clerk and it shall be deemed filed with the clerk on the date so noted." Because Debtors' notice of appeal was received by the clerk of the district court on the last day for timely filing, it is deemed timely filed with the clerk of the bankruptcy court. Accordingly, the United States' motion to dismiss is denied.[*]
Debtors' cross-appeal of the Confirmation Order complains of the bankruptcy court's modification of their plan of reorganization, requirement that Debtors reserve funds under the plan when the FCC's claim was disallowed, and determination that the FCC had an impaired claim due solely to the pendency of its appeal of the Avoidance Judgment. As stated previously, the bankruptcy court's findings of fact *65 are examined under the clearly erroneous standard, while its legal determinations are reviewed under the de novo standard. In re Sewell, supra. Based on these standards, after review of Debtors' claims, the pleadings filed, the appellate record, and the applicable authority, the court denies Debtors' claims. Accordingly, the bankruptcy court's Confirmation Order is in all things affirmed.
IV. Conclusion
As stated above, the bankruptcy court's Avoidance Judgment and Confirmation Order are hereby affirmed, and all costs of appeal are taxed against the United States. The clerk is hereby directed to "prepare, sign and enter the judgment" pursuant to Bankruptcy Rule 8016(a).
NOTES
[*] That the United States did not file a reply to Debtors' response evidences to some extent a lack of its disagreement with the merits of Debtors' response. Moreover, in light of Rule 8002(a), the court questions the seriousness of the Government's motion to dismiss the cross-appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2024049/ | 104 Ill. App. 3d 57 (1982)
432 N.E.2d 650
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
CHARLES "CHUCK" MILLER, Defendant-Appellant.
No. 16469.
Illinois Appellate Court Fourth District.
Opinion filed March 3, 1982.
Daniel D. Yuhas and Gary R. Peterson, both of State Appellate Defender's Office, of Springfield, for appellant.
Tim P. Olsen, State's Attorney, of Jacksonville (Robert J. Biderman and Garry W. Bryan, both of State's Attorneys Appellate Service Commission, of counsel), for the People.
Reversed and remanded.
JUSTICE MILLS delivered the opinion of the court:
The State's Attorney asked a single, fatal question of the defendant on cross-examination.
The query was in direct violation of the United States Supreme Court's edict in Doyle v. Ohio.
Because of it, we must reverse and remand for a new trial.
*58 FACTS
Miller, Clarence "Butch" Armstrong, and Randy Williams were charged with abducting, beating, robbing, and killing Neil Gorsuch.
Armstrong's case was tried separately. Williams pleaded guilty to kidnapping and the other charges against him were dropped when he agreed to testify against Miller and Armstrong.
Upon denial of Miller's motion for change of venue, a jury trial was held in Morgan County. The prosecution's case against Miller consisted mainly of the testimony of Randy Williams. At Miller's trial, Williams testified substantially as follows:
At 1:30 a.m. on February 9, 1980, Williams, his brother Rick, "Butch" Armstrong, and a person later identified as the victim left a tavern in Jacksonville, Illinois. The four got into a car belonging to a friend of Rick Williams. Rick drove to his house and got out. Randy began driving with the victim sitting behind him and Armstrong sitting in the back seat next to the victim. During this trip, Armstrong administered a beating to the victim.
After driving around for an undetermined length of time, the trio arrived at Williams' house. Once inside, it was discovered that the victim had become incontinent. While the victim was in the bathroom cleaning himself, Armstrong obtained from Williams a.12-gauge shotgun, shells, and a .32-caliber pistol containing one shell. When the victim exited the bathroom, Armstrong, finding feces on the floor, struck and knocked Gorsuch down. Williams attempted to clean up the feces and blood, but was not completely successful. Thereafter, the trio prepared to leave. Armstrong placed both guns in the car, shoved the victim into the rear seat, and then got in the passenger side of the car. Williams began driving and at some point, Armstrong fired the.32-caliber pistol into the back seat of the car, ostensibly to convince the victim to keep his head down. During this time, the victim's face was covered with a stocking cap.
Subsequently, with Armstrong giving directions, Williams drove to a trailer court. According to Williams, it was still dark at this time. Armstrong got out and went to a trailer, but returned shortly thereafter. Miller followed a few minutes later and got into the back seat of the car with the victim. Williams again began to drive, with Armstrong and Miller giving directions. Miller asked the victim if he had any money. According to Williams, the victim replied affirmatively, whereupon Miller hit the victim and demanded all of his money. Williams testified that he then heard Miller going through the victim's pockets.
Williams testified that he drove west out of Jacksonville through the country until he came to a bridge, where Armstrong ordered him to stop. Miller was the first to exit the car. Armstrong followed, and handed Miller the shotgun. Williams was the next to get out. Armstrong then took the *59 victim by the arm, pulled him out of the back seat of the car, and shoved him up against the rail of the bridge. Williams testified that Miller then shot the victim in the head. According to Williams, Armstrong took the shotgun, reloaded it, and also shot the victim in the head. Armstrong put a third shell in the shotgun and gave it to Williams. When Williams shot and missed, Armstrong ordered Williams to shoot again and to do it right this time or be buried there with the victim. As the shotgun was reloaded for this fourth shot, the empty shell fell through the floor of the bridge. Williams testified that he thought he hit the man with his second shot.
Armstrong then grabbed the body of the victim by the feet and flipped it over the north side of the bridge. On Armstrong's orders, Williams picked up the spent shells except the one which fell through the bridge. Armstrong, Miller, and Williams got into the front seat of the car, with Williams again driving. According to Williams, it was still dark when the trio left the bridge, heading west. A short while later, the shells, along with the victim's wallet and driver's license, were thrown out the passenger side of the car. The three returned to Williams' house, where they disposed of the shotgun. While it was still dark, Williams and Miller took Armstrong home and proceeded to a cafe. It was beginning to get light out when they arrived at the cafe. Later, Williams took Miller home.
That afternoon, Miller, Williams, and Armstrong met at another tavern in Jacksonville. All of them then went to Williams' house, where Williams cleaned up the house and the car used in the murder. The three returned to the tavern. Armstrong later left, but Williams and Miller were soon joined by Williams' brother, Rick. Williams informed his brother, Rick, that he was in trouble and needed to talk. After some more drinking, Miller, the Williams brothers, and Chris Peterson went to Williams' house. Williams testified that he and Rick went into a bedroom, where he told brother Rick that "they" had killed the person who was with them the previous evening. Thereafter according to both brothers' testimony Miller entered the bedroom and admitted the killing. Miller and Williams then left for another bacchanalian evening. They were arrested together the next morning.
Williams' testimony was challenged in several respects on cross-examination. Williams admitted to lying to the police about what he had told his brother the day after the murder and was unable to give details of the conversation between Miller, Rick, and himself when Miller allegedly admitted the murder. It was also brought out that the day after the offense, Williams told the police that Armstrong had fired the .32-caliber pistol into the rear seat while on the way to the bridge where the victim's body was found, and not before picking up defendant, as Williams had testified at trial. Additionally, Williams admitted that he had been *60 drinking since 1:30 p.m. on the date of the offense; could not recount exactly where he had driven on the night of the murder; and was unable to say how much time elapsed between the events leading up to the murder.
Finally, an expert witness for the defendant testified that in his opinion, the victim was not shot at the bridge where his body was found. On cross-examination, however, the witness stated that his opinion was based on the belief that the victim's body could not have hung over the railing of the bridge after the shooting, but that he had never examined either the bridge or the body of the deceased.
Despite these infirmities, there was some corroboration for Williams' testimony. Several persons confirmed that Armstrong and the Williams brothers left the tavern with the victim. Chris Peterson confirmed the testimony that Rick was dropped off at his house soon after leaving the tavern. Although they were unable to give exact times, several witnesses testified that in the early morning hours of February 9, 1980, Butch Armstrong came to a trailer and spoke briefly with Miller, and that Miller left with Armstrong and did not return until after daylight. In addition, Randy Williams' mother testified that Miller and her son arrived at her cafe for breakfast about 6:15 a.m. on the day in question. It was stipulated that the sun rose at 6:59 a.m. on that day. The pathologist for the State testified that after performing an autopsy on the victim, he determined that the cause of death was either of two shotgun wounds to the head. Other scientific and physical evidence tended to corroborate Williams' testimony.
Miller testified in his own behalf that it was nearly daylight when Armstrong and Williams came to the trailer to see him. He stated that the pair told him that Williams had beaten the victim with a pair of "numchucks" and that the victim had been shot to prevent him from going to the police. Miller contended that Armstrong and Williams only came to him for advice after they had committed the murder.
OPINION
The following colloquy took place at Miller's trial between Miller and the State's Attorney, Edwin Parkinson:
"Q. Mr. Miller, how old are you?
A. Twenty-three.
Q. Why didn't you tell this story to anyone when you got arrested?"
An objection to the last question was sustained and the jury was instructed to disregard, but a motion for mistrial was denied. Defendant contends that this examination violated his fifth and fourteenth amendment rights to due process of law.
*61 The clear directive issued by the Supreme Court in Doyle v. Ohio (1976), 426 U.S. 610, 49 L. Ed. 2d 91, 96 S. Ct. 2240, and United States v. Hale (1975), 422 U.S. 171, 45 L. Ed. 2d 99, 95 S. Ct. 2133, is that prosecutors may not comment upon nor question defendants regarding post-arrest silence. To do so is fundamentally unfair as silence is "insoluably ambiguous" and may constitute simply the exercise of the constitutional right to remain silent. The prosecutor's comments here clearly violate this directive, and the State does not seriously contend otherwise. Rather, the State contends that any error which did occur was harmless.
In neither Doyle nor Hale was the Supreme Court faced with the question of the applicability of the harmless-error doctrine. However, in Chapman v. California (1967), 386 U.S. 18, 17 L. Ed. 2d 705, 87 S. Ct. 824, the court held that even constitutional errors may be harmless if it is clear beyond a reasonable doubt that the error did not contribute to the defendant's conviction. Additionally, our own supreme court has applied the harmless-error doctrine in a case involving a Doyle violation. People v. Beller (1979), 74 Ill. 2d 514, 386 N.E.2d 857.
However, while the harmless-error doctrine may be applied to errors of this type, the Chapman standard was not met here. While the evidence in this case was sufficient to prove Miller's guilt beyond a reasonable doubt (see People v. Wollenberg (1967), 37 Ill. 2d 480, 229 N.E.2d 490; People v. Sheridan (1977), 51 Ill. App. 3d 963, 367 N.E.2d 422), it was not so overwhelming as to preclude all reasonable doubts about the effect of the prosecutor's comment. As previously noted, there is corroboration for the testimony of the accomplice, Randy Williams. However, nothing except Williams' testimony directly links Miller with the crimes.
We are cognizant that the jury was instructed to disregard the prosecutor's comment and that a prompt instruction will usually cure an error at trial. (People v. Carlson (1980), 79 Ill. 2d 564, 404 N.E.2d 233.) As Carlson recognized, there are exceptions to this rule. It seems that no decision of the courts in this State has dealt precisely with the issue of whether a Doyle violation may be negated by a curative instruction. Federal reviewing courts have held that instruction alone is never sufficient. See United States v. Edwards (5th Cir.1978), 576 F.2d 1152; and Morgan v. Hall (1st Cir.1978), 569 F.2d 1161.
Such a per se rule is at odds with Chapman, which requires a more individualized approach. Nevertheless, it cannot be said that beyond a reasonable doubt the instruction given in this case cured the error. The trial was essentially a credibility contest between defendant Miller and Randy Williams. The reference to post-arrest silence cast aspersions on Miller's credibility and may have irreparably prejudiced him in the eyes of the jury. Thus, reversal is required.
Defendant has alleged numerous other errors, but these have either *62 been waived for failure to raise them in his post-trial motion (People v. Pickett (1973), 54 Ill. 2d 280, 296 N.E.2d 856), or will necessarily be decided anew by the trial judge based on the factual situation presented at defendant's new trial.
Reversed and remanded for new trial.
GREEN, P.J., and TRAPP, J., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2408555/ | 412 F. Supp. 2d 439 (2006)
CELGENE CORP., et al., plaintiffs,
v.
TEVA PHARMS. USA, INC, defendant.
Civil Action No. 04-4030.
United States District Court, D. New Jersey.
February 6, 2006.
*440 Charles M. Lizza, Esq., Kevin R.J. Schroth, Esq., William C. Baton, Esq., LeBoeuf, Lamb, Greene & Macrae, LLP, Newark, NJ, for plaintiffs Celgene Corporation, Novartis Pharmaceuticals Corporation, and Novartis Pharma AG.
Brian P. Sullivan, Esq., Bradley L. Mitchell, Esq., Stevens & Lee, Princeton, NJ, for defendant Teva Pharmaceuticals USA, Inc.
OPINION
CHESLER, District Judge.
I. INTRODUCTION
In this Hatch-Waxman Act patent infringement case, defendant Teva Pharmaceuticals USA, Inc. ("Teva") moves pursuant to Federal Rule of Civil Procedure 12(c) for judgement on the pleadings with respect to plaintiff's Celgene Corporation, Novartis Pharmaceuticals Corporation, and Novartis Pharma AG's (collectively "plaintiff's") allegation of willful infringement. For the reasons that follow, Teva's motion is GRANTED.
II. BACKGROUND
A. The Hatch-Waxman Act
The Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-99, ("FDCA") provides that a company seeking to market a new brand-name drug must submit a New Drug Application ("NDA"). See id. § 355(b)(1). NDAs are generally lengthy applications that include information about the drug such as evidence of its safety and effectiveness, and information about the patents that cover or might cover it. Id. Before Congress passed the Hatch-Waxman Act, a generic drug manufacturer's use of a patented drug was considered patent infringement. This was so even if such use of the patented drug was limited to testing for Food and Drug Administration ("FDA") approval to market its generic equivalent upon expiration of the relevant patents. Accordingly, companies seeking to market generic drugs upon the expiration of patents that covered them were impeded by the cost of filing lengthy NDAs, which they could begin to prepare only upon the expiration of the brandname drug company's patents. The time it took generic companies to prepare the NDA and obtain FDA approval caused a de facto extension of the patent covering the brand-name drug.
Recognizing the benefit in reducing delays in FDA approval of generic drugs, and as a means to eliminate the de facto extension of the end of a patent term, Congress enacted the Hatch-Waxman Act amendments to the FDCA. The Hatch-Waxman *441 Act conferred two main benefits upon generic drug manufacturers. First, it allowed them to avoid the costly NDA process by filing an Abbreviated New Drug Application ("ANDA") which, in effect, "`piggyback[ed]' on the safety-and-effectiveness information that the brand-name manufacturers submitted in their NDAs." Purepac Pharm. Co. v. Thompson, 354 F.3d 877, 879 (D.C.Cir.2004) (citing 21 U.S.C. § 355(j)(2)(A) and 21 C.F.R. § 314.94(a)(3)). Thus, among other things, an ANDA must show the proposed generic drug is chemically bioequivalent to a drug that was previously approved by the FDA. 21 U.S.C. § 355(j)(4)(F).
ANDAs must also address patents that cover the drug for which approval is sought. 21 U.S.C. § 355(j)(2)(A)(vii) allows an applicant to satisfy this requirement by including in its ANDA one of several types of "certifications" explaining why the FDA should approve the application despite the patent's claim on the drug. The certification at issue here is a "Paragraph IV Certification" (named for its statutory sub-paragraph), which states "that such patent is invalid or will not be infringed by the manufacture, use, or sale of the new drug." Id. 355(j)(2)(A)(vii)(IV). Applicants use Paragraph IV Certifications to essentially challenge the validity of the brand-name drug manufacturers' patents. An applicant that includes a Paragraph IV Certification in its ANDA must inform both the patent holder and the company that submitted the NDA on which the ANDA "piggybacks." Id. § 355(j)(2)(B)(i). Once notice is served, the FDA must wait forty-five days before approving the ANDA, giving the patent holder the opportunity to file suit. Id. § 355(j)(5)(B)(iii); 21 C.F.R. § 314.107(f)(2). When a Paragraph IV Certification is filed, therefore, the brand-name drug manufacturer is forced to litigate to protect its rights.
If the patent holder sues, the FDA cannot approve the ANDA until the earlier of (A) thirty months from the notice date, (B) the applicant wins the suit, or (C) a date to which the court hearing the suit shortens the thirty month period. 21 U.S.C. § 355(j)(5)(B)(iii). If successful in its challenge, the FDA may approve the ANDA and allow the applicant to market the generic version of the brand-name drug before the expiration of patents covering it. The Act rewards the first generic drug applicant that successfully challenges the patent of an approved drug with a 180-day period in which it may exclusively market the generic version. Id. § 355(j)(5)(B)(iv).
The second benefit of the Hatch-Waxman Act to generic drug manufacturers was a limitation on the potential patent infringement liability to companies that seek FDA approval to market a generic version of the brand-name drug. See 35 U.S.C. § 271(e)(1). While the Act immunizes generic drug manufacturers from patent infringement liability for preparing an ANDA, Section 271(e)(2)(A) provides a jurisdictional basis for an infringement action against the applicant where it seeks approval to market a patented product before the expiration of the patent. The purpose of this provision is "to define a new (and somewhat artificial) act of infringement for a very limited and technical purpose that relates only to certain drug applications." Eli Lilly & Co. v. Medtronic, Inc., 496 U.S. 661, 676, 110 S. Ct. 2683, 110 L. Ed. 2d 605 (1990). Thus, if the patent holder sues the applicant within 45 days from the notice, its remedies are limited to the following:
(A) the court shall order the effective date of any approval of the drug or veterinary biological product involved in the infringement to be a date which is not earlier than the date of the expiration of the patent which has been infringed,
*442 (B) injunctive relief may be granted against an infringer to prevent the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product, and
(C) damages or other monetary relief may be awarded against an infringer only if there has been commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of an approved drug or veterinary biological product.
The remedies prescribed by subparagraphs (A), (B), and (C) are the only remedies which may be granted by a court for an act of infringement described in paragraph (2), except that a court may award attorney fees under section 285.
35 U.S.C. § 271(e)(4).
Section 285, which applies generally to patent infringement cases, provides "[t]he court in exceptional cases may award reasonable attorney fees to the prevailing party." 35 U.S.C. § 285. In determining whether or not a case is "exceptional" under Section 285, courts "look at the totality of the circumstances." Yamanouchi Pharm. Co. Ltd. v. Danbury Pharmacal, Inc., 231 F.3d 1339, 1347 (Fed.Cir. 2000). In typical patent infringement cases, the United States Court of Appeals for the Federal Circuit has found "exceptional cases" in cases of "inequitable conduct before the PTO, litigation misconduct such as vexatious or unjustified litigation or frivolous filings, and willful infringement." Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339, 1350 (Fed.Cir.2004) (citing Hoffmann-La Roche Inc. v. Invamed Inc., 213 F.3d 1359, 1365 (Fed.Cir.2000); Rosemount, Inc. v. Beckman Instruments, Inc., 727 F.2d 1540, 1548 (Fed.Cir.1984)). The Federal Circuit has not held that attorney's fees under Section 285 are recoverable based on a finding of willful infringement in a Hatch-Waxman Act case.
It is against this backdrop that the Court considers the allegations of the plaintiff's' complaint and defendant's 12(c) motion.
B. Plaintiff's' Allegations
This case presents patent infringement claims under the Hatch-Waxman Act by the plaintiff's, who hold rights in United States Patent No. 5,908,850 ("the '850 patent"), against Teva, a generic drug manufacturer. Plaintiff's market FOCALINTM, a drug that practices the '850 patent. They allege that Teva infringed the '850 patent by filing an ANDA and an amended ANDA with the FDA, which seek approval to market a generic version of FOCALINTM. (Complt. at ¶ 12-14.) The ANDA contains a Paragraph IV Certification stating that Teva believes the '850 patent to be invalid. (Id. at ¶ 15.) Plaintiff's claim the products for which Teva seeks approval are bioequivalent to the patented FOCALINTM products, have the same ingredients as the patented FOCALINTM products, have the same route of administration, dosage form and strength as the patented FOCALINTM products, and have the same, or substantially the same, proposed labeling, and the same indication and usage as the patented FOCALINTM products. (Id. at ¶ 19.) Plaintiff's allege "Teva had notice of the '850 patent beginning prior to undertaking its act of infringement. Teva's infringement has been, and continues to be, willful and deliberate." (Id. at ¶ 22.) They seek damages, including "[a]ttorney's fees in this action pursuant to 35 U.S.C. § 285." (Id., Prayer For Relief at subpara. (G), p. 6.)
C. The Instant Motion
Teva's motion for judgment on the pleadings is directed at paragraph 22 of *443 the Complaint, which alleges "Teva had notice of the '850 patent beginning prior to undertaking its act of infringement. Teva's infringement has been, and continues to be, willful and deliberate." Teva argues this allegation should be stricken because (1) a declaration of willful infringement is not within the limited remedies provided for by 35 U.S.C. § 271(e)(4) (Defendant's Moving Brief at 5-6); (2) Plaintiff's' allegations cannot support a finding of willful infringement as a matter of law under the Glaxo and Yamanouchi cases (id. at 6-9); and (3) willful infringement is part of a damages calculation under 35 U.S.C. § 284, not a remedy in Hatch-Waxman litigation (id. at 9-11). For these reasons, Teva asks that the Court strike plaintiff's' allegation of willful infringement.
In opposition, plaintiff's argue, first, that Magistrate Judge Hughes previously denied Teva's Glaxo motion and allowed discovery on the issue of willfulness. (Opposition Brief at 5-6.) Second, they argue that Glaxo does not bar a finding of willful infringement to support an award of attorneys fees in a Hatch-Waxman Act case. (Id. at 7-9.) Third, they argue the factual record reveals extreme willfulness on Teva's part. (Id. at 9-10.) Namely, plaintiff's argue Teva obtained the idea for the accused product in violation of a confidential disclosure agreement, its Paragraph IV Certification is baseless, and it had not come forward with any better prior art. (Id. at 9-10.) For these reasons, plaintiff's argue they should be permitted to develop the record on the willfulness issue. (Id. at 10.)
In its reply, Teva argues plaintiff's' argument that they should be permitted to develop the record is misplaced because this is a Rule 12(c) motion, which examines the pleadings, not the proof. (Reply at 1.) Moreover, they argue Judge Hughes' ruling allowing discovery on willfulness, which has been stayed, was not the equivalent of a ruling on the 12(c) motion. (Id. at 3.) Teva further argues that plaintiff's do not allege violations of the confidential disclosure agreement and cannot use this as a basis for a finding of willfulness. (Id. at 4.) Teva notes that this Court has held in the case of Ortho-McNeil Pharm., Inc. v. Mylan Labs., Inc., 2005 WL 1683644 (D.N.J.2005), that there can be no willful infringement based solely on an allegedly baseless Paragraph IV Certification. (Id. at 4.) Teva then recites the basis for its Paragraph IV Certification to refute plaintiff's' contention that it is baseless. (Id. at 4-14.)
III. DISCUSSION
A. Judgment on the Pleadings Standard
The standard for deciding a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is identical to that under Rule 12(b)(6). All allegations in the Complaint must be taken as true and viewed in the light most favorable to the plaintiff. Gomez v. Toledo, 446 U.S. 635, 636 n. 3, 100 S. Ct. 1920, 64 L. Ed. 2d 572 (1980); Robb v. Philadelphia, 733 F.2d 286 (3d Cir.1984). If, after viewing the allegations in the light most favorable to the plaintiff, it appears beyond doubt that no relief could be granted under any set of facts which could be proved consistent with the allegations, a court shall dismiss for failure to state a claim. Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S. Ct. 2229, 81 L. Ed. 2d 59 (1984); Zynn v. O'Donnell, 688 F.2d 940, 941 (3d Cir.1982). The narrow issue before the Court, therefore, is whether or not defendant could be found to have engaged in an act of "willful infringement" in this Hatch-Waxman Act case.
*444 B. Willful Infringement
The Court of Appeals for the Federal Circuit has held that the prevailing plaintiff in a. Hatch Waxman case may recover attorney's fees under Section 285 in "exceptional cases." In Yamanouchi Pharmaceutical Company v. Danbury Pharmacal, Inc., the owners of a patent that covered an anti-ulcer drug brought a Hatch-Waxman Act suit against a generic drug manufacturer that filed an ANDA and Paragraph IV Certification, which argued their patent was invalid for obviousness. 21 F. Supp. 2d 366 (S.D.N.Y.1998). After a bench trial, the United States District Court for the Southern District of New York held the patent was valid, id. at 374-75, and awarded plaintiff's attorney's fees, id. at 378. In awarding attorney's fees, the court found that the generic drug company's filing of a baseless Paragraph IV Certification constituted willful patent infringement. Id. at 377 n. 18. Defendants appealed to the Court of Appeals for Federal Circuit.
The appellate court did not agree with the district court that the generic company had engaged in willful infringement. 231 F.3d at 1347 (stating that the trial court "need not have elevated the ANDA certification into a finding of willful infringement"). Rather, it held that the generic drug company's numerous baseless filings in support of meritless arguments presented "exceptional circumstances" under Section 285. Id. at 1347-48. The Yamanouchi court, therefore, did not award legal fees for willful infringement.
The Federal Circuit clarified Yamanouchi with its holding in Glaxo Group Ltd. v. Apotex, Inc., 376 F.3d 1339 (Fed.Cir.2004). In Glaxo, defendant filed an ANDA for permission to market a generic version of an antibiotic drug covered by the plaintiff's' patents. Reversing the district court, the Federal Circuit held that "the mere fact that a company has filed an ANDA application or certification cannot support a finding of willful infringement for purposes of awarding attorney's fees pursuant to 35 U.S.C. § 271(e)(4)." 376 F.3d at 1350-51. The court reasoned as follows:
The Supreme Court has emphasized that 35 U.S.C. § 271(e)(2) and 35 U.S.C. § 271(e)(4) create an "artificial" act of infringement only for a "very limited and technical purpose that relates only to certain drug applications.". . . . This purpose, as the Supreme Court explains, is to permit patent holders to bring suit against generic companies despite the fact that the generic companies have not yet infringed the patents at issue. . . . In evaluating 35 U.S.C. § 271(e)(2), we have in our past decisions considered this provision to be primarily a jurisdictional-conferring statute that establishes a case or controversy in a declaratory judgment action.
Id. at 1351 (citations omitted). Thus, the Glaxo Court held that the district court "erred in hanging a finding of willfulness on such a special purpose peg." Id.
District courts that have addressed the issue have disagreed as to whether or not there can be a finding of willful infringement based upon the filing of an ANDA and Paragraph IV Certification. Compare Novartis Pharms. Corp. v. Teva Pharms. USA, Inc., Civ. A. No. 05-1887, 2005 WL 3664014 (D.N.J. Dec. 30, 2005) (holding it is possible that Novartis may be able to show activity in addition to the ANDA filing to support its claim of willfulness); Wyeth v. Teva Pharms. USA, Inc., Civ. A. No. 03-1293 (D.N.J. Aug. 5, 2004) (finding there could be activity to support willfulness on top of the filing of an ANDA and permitting discovery on the issue); Eisai Co., Ltd., v. Dr. Reddy's Labs., Ltd., Civ. A. No. 03-9053 (S.D.N.Y. Oct. 12, 2004) (denying motion to strike allegations of willfulness and holding the Federal Circuit did not "say there can be no willful infringement *445 in an ANDA case"); AstraZeneca AB. v. Andrx Pharm., LLC, Civ. A. No. 04-80 (D.Del. Aug. 11, 2004) (holding that a Paragraph IV Certification could be considered in determining willfulness) with Aventis Pharma Deutschland GMBH v. Lupin Ltd., 409 F. Supp. 2d 722, 729-30, 2006 WL 141670, at *7 (E.D.Va.2006) (holding "even a baseless ANDA filing could not constitute an act of willful infringement, though [it] could constitute an exceptional circumstance."); Aventis Pharma Deutschland GmbH v. Cobalt Pharms., Inc., 355 F. Supp. 2d 586, 593 (D.Mass.2005) (holding allegations that defendant filed a baseless ANDA and Paragraph IV Certification are "artificial act[s] of infringement" and "cannot be considered willful [infringement]"). For the reasons that follow, this Court agrees with those district courts that have held there can be no "willful infringement" where, in cases such as this, the allegedly infringing conduct is limited to the highly technical act of infringement sufficient to confer jurisdiction under the Hatch-Waxman Act.
C. Analysis
The Court finds that plaintiff could not recover under the theory that Teva willfully infringed the '805 patent. The Glaxo case makes clear that the Hatch-Waxman Act exists for the very limited purpose of creating a technical infringement so that United States district courts can decide whether or not a proposed generic drug, if manufactured, would infringe. Its purpose is to permit the matter to be decided before the drug goes to market and an actual, rather than artificial, act of infringement occurs. See Glaxo, 376 F.3d at 1351; Lupin, at 729-30, 2006 WL 141670, at *7 ("[T]he fact that the appellate court in Glaxo emphasizes that the purpose of the ANDA process is to create an `artificial' act of infringement for jurisdictional purposes strongly supports this Court's conclusion that even a baseless ANDA filing may never constitute willful infringement."). Thus, the artificial and highly technical nature of Teva's "infringement" does not rise to the level of a literal act of patent infringement that could give rise to a finding of "willful infringement," as the phrase has been applied under Section 285. While plaintiff's argue Teva's breach of the confidential disclosure agreement supports a finding of willfulness, they have not pled such conduct. Moreover, such conduct perhaps could state a claim for breach of contract but it does not further the plaintiff's' cause with regard to their claim of willful patent infringement. Accordingly, this Court will grant Teva's motion.
This holding does not prohibit plaintiff's from applying for attorney's fees under the "exceptional cases" provision of Section 285 if they prevail. Willful infringement, however, cannot be among the exceptional circumstances unless and until actual infringement occurs. See, e.g., Glaxo, 376 F.3d at 1351 (stating that the purpose of the ANDA filing "is to permit patent holders to bring suit against generic companies despite the facts that the generic companies have not yet infringed the patents at issue."); Cobalt, 355 F.Supp.2d at 593 ("[T]he prevailing party may seek to prove that this is an exceptional case, like Yamanouchi, involving serious and persistent litigation misconduct."). The Court simply holds that plaintiff's cannot prove willful infringement based upon Teva's alleged conduct to date.
IV. CONCLUSION
For all of the foregoing reasons, defendant's motion is GRANTED and paragraph 22 of the Complaint is stricken. The Court will issue an appropriate Order. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2456980/ | 985 S.W.2d 505 (1998)
Fred L. "A.L." DOMINGUES, Appellant,
v.
The CITY OF SAN ANTONIO, Appellee.
No. 04-97-00236-CV.
Court of Appeals of Texas, San Antonio.
December 16, 1998.
Rehearing Overruled January 11, 1999.
*506 Barbara Woodward, Law Office of Babrbara Woodward, Bruce J. Mery, Law Offices of Bruce J. Mery, San Antonio, for Appellant.
Bruce Robertson, Jr., Law Offices of Bruce Robertson, Jr., William W. Morris, Alberto J. Pena, Assistant City Attorney, San Antonio, for Appellee.
Before TOM RICKHOFF, Justice, SARAH B. DUNCAN, Justice (concurring in the judgment only) and KAREN ANGELINI, Justice.
KAREN ANGELINI, Justice.
The City of San Antonio appeals a judgment rendered in favor of Fred "A.L." Domingues in Domingues's suit against the City under the Texas Whistle Blower Act. The City raises five points of error, alleging that Domingues's claims are barred by collateral estoppel and his failure to exhaust administrative remedies, that the trial court erred in excluding evidence, and that the trial court erred in denying the City's motion to modify the judgment and in partially denying its motion for judgment notwithstanding the verdict. Domingues raises two cross points of error regarding the trial court's exclusion of evidence and its partial granting of the City's motion for judgment notwithstanding the verdict. We affirm, in part, and reverse, in part, the judgment of the trial court.
FACTUAL AND PROCEDURAL BACKGROUND
In November and December of 1986, Fred "A.L." Domingues, a San Antonio Police Sergeant, reported that several San Antonio Police Department officers were abusing and using excessive force against arrestees and jail inmates. Following these reports, Domingues was called before an advisory action board in the department's Internal Affairs Division. The board suspended Domingues for ten days. When Domingues returned to *507 duty, he was taken off of patrol and assigned duties at the City's detoxification center. He was also subjected to repeated accusations, complaints, and investigations.
In November of 1989, Raymond Duncan, a security guard at the detoxification center, reported to Belvin Steward, the City's liaison with the security guard company, that he had discovered Domingues engaged in what appeared to be sexual activity with a female police officer while Domingues was on duty at the detoxification facility. Domingues was indefinitely suspended in May of 1990.
Domingues appealed the suspension to the Voluntary Labor Arbitration Tribunal pursuant to the union contract between the City and the police officer's association. The arbitrator found that the report of sexual misconduct was true and that the City had just cause to discipline Domingues. Based on the facts that Domingues had been on the force for 23 years and that he was not disciplined for poor job performance, the arbitrator found that reinstatement without restoration of pay or fringe benefits was a more appropriate sanction than indefinite suspension.
Domingues did not appeal the award. Instead, he accepted his reinstatement and filed suit under the Texas Whistle Blower Act, alleging that the City had retaliated against him because he had reported the use of excessive force by San Antonio police officers. The suit was tried to a jury, which determined that Domingues had been suspended in May of 1990 because he had reported incidents of excessive force by members of the San Antonio Police Department. Accordingly, the jury returned a verdict in favor of Domingues and awarded him damages in the total amount of $168,000 for mental anguish, lost past and future wages, lost past and future employment opportunities, and arbitration costs. In addition, the jury awarded Domingues $90,000 in attorney's fees.
The City filed a motion to modify the judgment and a motion for judgment notwithstanding the verdict. The trial court denied the motion to modify, granted the motion for judgment notwithstanding the verdict as to the City's argument that Domingues was estopped from recovering damages for past lost wages and benefits, and denied the remainder of the motion for judgment notwithstanding the verdict.
ARGUMENTS ON APPEAL
A. Arbitrator's Award
In its first point of error, the City contends that the trial court erred in excluding the arbitrator's award, which was offered in support of the City's defense of collateral estoppel. The issue presented to the jury in this case was whether Domingues had been suspended for a sexual indiscretion or because he reported wrongdoing within the police department. In an effort to prove the former, the City sought to introduce the arbitrator's award after it had presented its case in chief. In doing so, the City argued that "the statement the document comes in because it's part of the operative facts of this case, and they ... the jury is entitled to know what the arbitrator considered." The arbitrator was not called as a witness and therefore could not be cross-examined. Accordingly, the trial court sustained Domingues's hearsay objection and excluded the evidence.
On appeal, the City argues that the arbitrator's statement was not offered to prove the truth of the matter asserted and was not, therefore, hearsay. See TEX.R. EVID. 801(d). We disagree. The contested issue at trial was not whether Domingues was actually involved in a sexual indiscretion on duty, but whether the allegation of such an indiscretion was the reason for his suspension. The arbitrator's award supports the contention that sexual indiscretion was the reason for Domingues' suspension. The record clearly reflects that the arbitrator's award was offered as proof that Domingues was suspended for sexual misconduct. As such, the award constitutes hearsay evidence.
Even if the arbitrator's award is not hearsay, the City contends that it was necessary to support the City's defense of collateral estoppel. Collateral estoppel is a question of law. United States v. Brackett, 113 F.3d 1396, 1398 (5th Cir.1997), cert. denied, ___ U.S. ___, 118 S. Ct. 341, 139 *508 L.Ed.2d 265 (1997); Hill v. Heritage Resources, Inc., 964 S.W.2d 89, 138 (Tex.App. El Paso 1997, writ denied). Because collateral estoppel is a question for the court, there was no harm in excluding from the jury evidence supporting the application of collateral estoppel to this case. The City's first point of error is overruled.
B. Collateral Estoppel
In its second point of error, the City contends that the trial court erred in denying its motion for judgment notwithstanding the verdict because the City's defense of collateral estoppel was established as a matter of law. The City premises its claim of collateral estoppel on the arbitrator's award which determined that Domingues was suspended for sexual indiscretion. According to the City, the arbitrator's award precludes Domingues from re-litigating the issue of whether he was suspended for "whistle blowing" or for sexual indiscretion. The issue we are faced with, then, is whether an arbitrator's award, issued after an individual submits to arbitration pursuant to a collective bargaining agreement, should be given preclusive effect in a subsequent lawsuit involving the same facts.
The case law dealing with this issue is sparse, and the majority of cases addressing the issue in other jurisdictions deal with a subsequent workers' compensation retaliation suit, not a whistle blower suit. Such was the case in Carrozza v. Texas Division-Tranter, Inc., 876 S.W.2d 173 (Tex.App. Fort Worth 1994), rev'd on other grounds, 876 S.W.2d 312 (Tex.1994), the only illustrative Texas case we located. In Carrozza, the court held that "even when an arbitration decision [under a collective bargaining agreement] is adverse to an employee, he still has the right to bring a wrongful discharge action under [the Workers' Compensation Act]." Id. at 176. Similarly, other jurisdictions have held that employees are not prevented, despite the prior submission of a related claim to arbitration under a collective bargaining agreement, from pursuing a statutory cause of action in state court. See, e.g., Blanchette v. Sch. Comm. of Westwood, 427 Mass. 176, 692 N.E.2d 21, 25-28 (Mass.1998); Genovese v. Gallo Wine Merchants, Inc., 226 Conn. 475, 483-493, 628 A.2d 946 (Conn. 1993); Andrews v. May Department Stores, 96 Or.App. 305, 773 P.2d 1324, 1326-1328 (Or.Ct.App.1989).
Although the above cited cases do not deal with the preclusive effect of arbitration on a whistle blower claim, they are instructive because the rights protected by both the workers' compensation retaliation statutes and whistle blower statutes are similar. Compare TEX. LAB.CODE ANN. § 451.001 et. seq. (Vernon 1996) (Texas Workers' Compensation Act), with TEX. GOV'T CODE ANN. § 554.001 et. seq. (Vernon Supp.1998) (Texas Whistle Blower Statute). The statutory rights embodied in these statutes are independent from any given collective bargaining agreement. If such were not the case, an individual covered by a collective bargaining agreement would be denied his right to pursue a statutory remedy simply because a collective bargaining agreement exists. Those covered by a collective bargaining agreement should have the same opportunity to litigate their claims of discrimination as those employees who are not covered by a collective bargaining agreement. Accordingly, the reasoning employed in the above cited cases applies equally to the case at bar.
Cases addressing this issue have consistently relied upon three Unites States Supreme Court cases in which the Court explicitly refused to give preclusive effect to an arbitrator's previous decision in lawsuits asserting statutory rights. See McDonald v. West Branch, 466 U.S. 284, 292, 104 S. Ct. 1799, 80 L. Ed. 2d 302 (1984) (holding that, in a federal discrimination suit, the court should not afford collateral estoppel effect to an arbitration award rendered pursuant to the terms of a collective bargaining agreement); Barrentine v. Arkansas-Best Freight System, 450 U.S. 728, 745, 101 S. Ct. 1437, 67 L. Ed. 2d 641 (1981) (stating that statutory claims are not barred by previous submission of claims to arbitrator pursuant to a collective bargaining agreement); Alexander v. Gardner-Denver Co., 415 U.S. 36, 59-60, 94 S. Ct. 1011, 39 L. Ed. 2d 147 (1974) (finding that a plaintiff may pursue a statutory cause of action in spite of previous adverse decision in an arbitration proceeding brought pursuant *509 to collective bargaining agreement). The Alexander court distinguished the rights concerning the interpretation of a collective bargaining agreement and the statutory right to be free from discrimination:
In submitting his grievance to arbitration, an employee seeks to vindicate his contractual right under a collective bargaining agreement. By contrast, in filing a lawsuit under Title VII, an employee asserts independent statutory rights afforded by Congress. The distinctly separate nature of these contractual and statutory rights is not vitiated merely because both were violated as a result of the same factual occurrence. And certainly no inconsistency results from permitting both rights to be enforced in their respectively appropriate forums.
Alexander, 415 U.S. at 49-50, 94 S. Ct. 1011. While, as the City points out, we are not dealing with a Title VII action in this case, the right of a public official to be free from retaliation for reporting illegal activity in the workplace is a right afforded by the State Legislature and is no less distinct from a contractual right than a right promulgated by Title VII. Accordingly, the distinction discussed in Alexander is applicable in this case.
The whistle blower statute in effect when Domingues filed suit requires that an "employee of a local governmental body must exhaust any applicable grievance or appeal procedures adopted by the employing local governmental body to resolve disputes concerning the suspension or termination of an employee's employment or an allegation of unlawful discrimination" before bringing a whistle blower action. See Tex. Gov't Code Ann. § 554.006(a) (Vernon 1994).[1] In enacting this section, the legislature clearly intended that employees of a local governmental body avoid litigation by initiating the proper grievance procedures when they have a potential whistle blower claim. However, there is nothing in the act which would preclude the filing of a lawsuit under this chapter if the employee is not satisfied with the result of the grievance procedure. To say that the employee was bound by the result of the grievance procedure, would render the Whistle Blower Act meaningless to employees of local governmental bodies. This result was certainly not the intent of the legislature.
In support of its position in favor of the application of collateral estoppel, the City relies on Albert v. Albert, 391 S.W.2d 186 (Tex.Civ.App.San Antonio 1965, writ ref'd n.r.e.). Albert is distinguishable on two grounds. First, the arbitration proceeding in that case was governed by a private contractual arbitration agreement, not a collective bargaining agreement. Second, the lawsuit filed following the rendition of the arbitrator's decision did not assert statutory causes of action, such as the Whistle Blower Act. Therefore, the distinction between contractual rights determined in an arbitration proceeding brought pursuant to a collective bargaining agreement and statutory rights promulgated by the Legislature was not at issue. Consequently, Albert is not controlling in this case.
The City further contends that a holding which requires parties to re-litigate questions of fact previously decided during arbitration would frustrate public policy. We disagree. First, we note that an arbitration proceeding in this context is very different from a trial court proceeding. To begin with, the parties are not the same. While the subject of the arbitration in this case was Domingues, the official party to the arbitration was the San Antonio Police Officers' Association. Accordingly, Domingues's claim might not have been supported as vigorously in arbitration as it was at trial. See McDonald, 466 U.S. at 291, 104 S. Ct. 1799. Also, the arbitrational fact-finding process is not the same as judicial fact-finding. Alexander, 415 U.S. at 57-58, 94 S. Ct. 1011. There is no discovery, no rules of evidence apply, and the rules of procedure are limited. Further, the range of remedies is much broader in a statutory whistle blower action, and arbitrators are often powerless to offer the aggrieved employee full vindication. See Barrentine, 450 *510 U.S. at 745, 101 S. Ct. 1437. Taken together, these differences demonstrate that an arbitration proceeding does not afford the employee the same opportunities to present his case as a conventional lawsuit. Moreover, if an arbitrator's award was entitled to preclusive effect, many employees would bypass the arbitration process and proceed directly to the courthouse to file suit. Such a practice would create more litigation while reducing the possibility of settlement. See Alexander, 415 U.S. at 59, 94 S. Ct. 1011.
In light of the above discussion, we find that the doctrine of collateral estoppel does not apply to Domingues in this case. Accordingly, the trial court did not err in denying the City's motion for judgment notwithstanding the verdict based upon its collateral estoppel defense. The City's second point of error is overruled.
However, we have concluded that the trial court did err in granting the City's motion for judgment notwithstanding the verdict as to the jury's award of past lost wages and benefits. It appears that the trial court, in spite of its finding that the arbitrator's award did not have preclusive effect on Domingues's whistle blower action, determined that Domingues was not entitled to the jury's $40,000 award of past lost wages and benefits because he submitted to the arbitration process, and the arbitrator recommended that Domingues be reinstated without back pay. This decision is inconsistent with the previous finding regarding the application of collateral estoppel to this case. Because we have determined that the arbitrator's award does not preclude Domingues's statutory cause of action, it, likewise, does not preclude Domingues's recovery of damages under that cause of action. Accordingly we sustain Domingues's first cross point of error.
C. Exhaustion of Remedies
In its third point of error, the City contends that the trial court erred in rendering judgment for Domingues because he failed to exhaust the applicable grievance and appeals procedure adopted by the City concerning the termination or suspension of an employee's employment. According to the City, Domingues failed to participate in the first two steps of the grievance and appeals procedure. The City contends that Domingues should have appeared before the advisory action board and had a personal appointment with the Chief of Police prior to requesting arbitration. The City also argues that Domingues was required to appeal the arbitrator's award to district court before his administrative remedies would be considered exhausted.
As noted above, the whistle blower statute provides that an "employee of a local governmental body must exhaust any applicable grievance or appeal procedures adopted by the employing local governmental body to resolve disputes concerning the suspension or termination of an employee's employment or an allegation of unlawful discrimination" before bringing whistle blower action. TEX. GOV'T CODE ANN. § 554.006(a) (Vernon 1994). However, the exhaustion requirements do not apply if a final decision is not rendered by the thirty-first day after the day the grievance procedure is initiated. TEX. GOV'T CODE ANN. § 554.006(d) (Vernon 1994); see Anders v. Weslaco Ind. School Dist., 960 S.W.2d 289, 291 (Tex.App.Corpus Christi 1997, no pet.) (noting that exhaustion is not required if employer fails to render final decision before thirty-first day after the grievance is initiated).
In this case, Domingues was suspended May 1, 1990. The fact that he timely initiated the grievance and appeals procedure appears to be undisputed. The arbitration hearings did not start until November 1990, and the final decision was not reached until January 1991. Under these facts, Domingues was not required to exhaust the grievance procedure pursuant to section 554.006 because a final decision regarding his claim was not reached within thirty days after he initiated the grievance procedure. The City's third point of error is overruled.
D. Pre-Judgment Interest
1. Mental Anguish and Loss of Employment Opportunities
In its fourth point of error, the City contends that the trial court erred in overruling its motion to modify the judgment and *511 awarding prejudgment interest on Domingues's recovery of both past and future damages. Specifically, the City complains of the trial court's award of pre-judgment interest on the following three elements of damage found by the jury: past and future mental anguish, past and future loss of employment possibilities; and arbitration costs and expenses.
In cases involving wrongful death, personal injury, or property damage, prejudgment interest is governed by statute, which does not require separation of past and future damages. TEX.REV.CIV. STAT. ANN. art. 5069 1.05, § 6 (Vernon Supp.1996); see C & H Nationwide v. Thompson, 903 S.W.2d 315 (Tex.1994). However, the computation of prejudgment interest in cases involving retaliation under the Texas Whistleblower Act is governed by Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549 (Tex.1985).[2]See COMM. ON PATTERN JURY CHARGES. STATE BAR OF TEX., TEXAS PATTERN JURY CHARGES BUSINESS, CONSUMER & EMPLOYMENT PJC110.23 (1997).
Under Cavnar, prejudgment interest cannot be awarded on future damages because a plaintiff is not entitled to recover prejudgment interest on damages until those damages have actually been sustained. Cavnar, 696 S.W.2d at 554-56. Accordingly, if the plaintiff does not segregate past losses from future losses he is not entitled to recover prejudgment interest at all on those non-segregated elements of damages. Id.
In this case, the special issues tendered to the jury did not segregate past damages from future damages for the elements of mental anguish and loss of employment opportunity. Accordingly, Domingues was awarded damages for both his past and future losses in lump sums. Under these circumstances, it is impossible to determine the amount of damages that had accrued at the time judgment was entered. Domingues argues that the City waived this argument by failing to object to the jury charge.
However, Cavnar and its progeny clearly place the burden of segregating on the party seeking damages and prejudgment interest. See, e.g., Clifton v. Southern Pac. Transp. Co., 709 S.W.2d 636, 641 (Tex.1986); Yowell v. Piper Aircraft Corp., 703 S.W.2d 630, 636 (Tex.1986); Monsanto Co. v. Johnson, 696 S.W.2d 558, 559 (Tex.1985); Gifford Hill American, Inc. v. Whittington, 899 S.W.2d 760, 766 (Tex.App.Amarillo 1995, no writ); Sisters of Charity of Incarnate Word v. Dunsmoor, 832 S.W.2d 112, 115 (Tex.App. Austin 1992, writ denied); City of San Antonio v. Hamilton, 714 S.W.2d 372, 375 (Tex. App.San Antonio 1986, writ ref'd n.r.e.). It is only logical to place the burden of submitting a proper jury charge on the party to whom the benefit of the proper charge will inure. In such cases, the defendant has no basis for objecting to an improper charge. We, therefore, conclude that the burden was on Domingues to submit a segregated jury charge. Because he failed to do so, he is not entitled to prejudgment interest on mental anguish or loss of employment opportunity. See Cavnar, 696 S.W.2d at 556.
2. Arbitration Expenses
On the same basis, the City further argues that Domingues should not recover prejudgment interest on the arbitration expenses awarded by the jury. The City contends that the jury's award of arbitration expenses included attorney's fees. Because prejudgment interest is not recoverable on awards of attorney's fees, C & H Nationwide, Inc., 903 S.W.2d at 325; Graco Robotics, Inc. v. Oaklawn Bank, 914 S.W.2d 633, 647 (Tex.App.Texarkana 1995, writ dism'd); Berry Property Management, Inc. v. Bliskey, 850 S.W.2d 644, 670 (Tex.App. Corpus Christi 1993, writ dism'd by agr.), attorney's fees should have been segregated from the remaining arbitration expenses in the jury charge if prejudgment interest was going to be awarded on arbitration expenses.[3] Because there was no such segregation, *512 the City contends that there is no way of knowing how much of the arbitration expenses finding included attorney's fees, and therefore prejudgment interest is inappropriate as to the entire finding.
However, the charge does not indicate that the arbitration expense element includes attorney's fees. In the absence of some evidence that the jury actually included attorney's fees in its award of arbitration expenses, we cannot assume that it did. This is a situation in which the burden of objecting to the form of the charge was on the City. If the City wanted to ensure that attorney's fees would not be included in the jury's computation of arbitration expenses, it should have requested a separate issue for each element or insisted that each element be mentioned in one issue. Cf. Green Intern., Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997) (requiring objection to failure to segregate attorney's fees in case containing multiple causes of action, only some of which permitted recovery of attorney's fees). Because the City failed to object, it has waived this argument on appeal. The same is true for the City's argument that there is insufficient evidence to support the jury's award of arbitration expenses. The substance of the City's argument on this point is, not that there is no evidence of arbitration costs and expenses, but that there is no evidence of Domingues's arbitration attorney's fees. In so arguing, the City is assuming the jury included attorney's fees in its computation of Domingues's arbitration expenses. The jury was asked to determine the amount of money that would fairly and adequately compensate Domingues for "[a]rbitration costs and expenses." The jury was not instructed to include attorney's fees in its determination, and the City did not object to the charge.
Domingues testified that his arbitration expenses were $36,000, including transcription and attorney's fees. However, the jury awarded only $18,000. Because attorney's fees were not represented as an element of arbitration expense and the jury did not award the full amount requested, we do not know whether the jury included attorney's fees in its award. If the City wanted to preserve its error regarding the sufficiency of the evidence to support an award of arbitration attorney's fees, it was required to object to the broad form of the jury charge. See TEX. R. CIV. P. 274; cf. Solis, 951 S.W.2d at 390 (holding failure to object to charge that does not segregate attorney's fees as to specific claims waives error). Because it did not, the City has waived this error on appeal.
Accordingly, the City's fourth point of error is sustained as to the award of prejudgment interest on future mental anguish and future loss of employment opportunities, and overruled as to the award of prejudgment interest on arbitration expenses. The City's fifth point of error regarding the sufficiency of the evidence supporting Domingues's arbitration expense is overruled.
F. Evidence of Retaliation
In his second cross point of error, Domingues contends that the trial court erred in excluding testimony regarding other instances in which the City allegedly retaliated against its employees for whistle blowing. Domingues argues that the trial court's refusal to admit such evidence prevented an award of exemplary damages.
In retaliatory discharge cases, the jury must find that the employer acted with malice before it can consider an award of punitive damages. See City of Ingleside v. Kneuper, 768 S.W.2d 451, 456-57 (Tex. App.Austin 1989, writ denied). Therefore, in this case, the jury was asked to determine whether the City's suspension of Domingues was done with malice. Then, it was instructed to answer the punitive damages question only if it had answered "yes" to the malice question. The jury determined that the City did not act with malice; therefore, it never reached the punitive damages question. Consequently, the exclusion of any evidence relevant to Domingues's punitive damages *513 claim, if error, was harmless. Domingues's second cross point of error is overruled.
The judgment of the trial court is affirmed, in part, and reversed, in part. This case is remanded to the trial court for a recomputation of damages and pre-judgment interest consistent with this opinion.
NOTES
[1] Section 554.006 was amended by the legislature in 1995. Act of June 15, 1995, 74th Leg., R.S., ch. 721, § 6, 1995 Tex. Gen. Laws 3812, 3813-14. However, the amendment to section 554.006 does not apply to the instant case. Accordingly, we apply section 554.006 as it existed prior to the 1995 amendments.
[2] We note that the different treatment of prejudgment interest depending on the type of case at issue, now applies only in cases in which the judgment was rendered on or before December 11, 1997. See Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 533 (Tex.1998).
[3] The parties do not dispute whether prejudgment interest is recoverable on arbitration expenses in general. Accordingly, there is no need for us to consider that question. Our analysis addresses only the segregation issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2238258/ | 96 Ill. 2d 385 (1983)
450 N.E.2d 322
THE PEOPLE OF THE STATE OF ILLINOIS, Appellant,
v.
CHARLES MILLER, Appellee.
No. 56561.
Supreme Court of Illinois.
Opinion filed April 13, 1983.
Rehearing denied May 27, 1983.
*386 Tyrone C. Fahner, Attorney General, of Springfield, and Tim P. Olson, State's Attorney, of Jacksonville (Michael B. Weinstein and Darrell Panethiere, Assistant Attorneys General, of Chicago, and Robert J. Biderman and Garry W. Bryan, of the State's Attorneys Appellate Service Commission, of Springfield, of counsel), for the People.
Daniel D. Yuhas, Deputy Defender, and Gary R. Peterson, Assistant Defender, of Springfield, for appellee.
Reversed and remanded.
JUSTICE MORAN delivered the opinion of the court:
Charles Miller (defendant), Clarence Armstrong and Randy Williams were charged by information with the offenses of murder, kidnaping, aggravated kidnaping and armed robbery of Neil Gorsuch in violation of sections 9-1(a)(1), 10-1(a)(2), 10-2(a)(5), and 18-2(a) of the Criminal Code of 1961 (Ill. Rev. Stat. 1979, ch. 38, pars. 9-1(a)(1), 10-1(a)(2), 10-2(a)(5), 18-2(a)). Defendant and Armstrong were tried separately. (Williams pleaded guilty to the charge of kidnaping and agreed to testify against defendant and Armstrong in return for which the State dismissed the other charges pending against him.) Following a jury trial in the circuit court of Morgan County, defendant was found guilty of all charges except armed robbery. He was, instead, found guilty of robbery. Although, in a separate sentencing proceeding, the State sought the death penalty, the jury recommended that *387 defendant be sentenced to imprisonment. The trial judge sentenced defendant to concurrent terms of 80 years' imprisonment for murder, 30 years for aggravated kidnaping, and seven years for robbery. (The judge vacated defendant's kidnaping conviction because it is a lesser included offense of aggravated kidnaping.) The appellate court reversed defendant's convictions and remanded the cause for a new trial on the ground that the prosecutor improperly cross-examined defendant regarding his post-arrest silence. (104 Ill. App. 3d 57.) We granted the State leave to appeal.
Although defendant, in his answering brief, alleges numerous errors in the trial court proceedings, we find it necessary to address only the following issues: (1) whether the prosecutor improperly cross-examined defendant as to his post-arrest silence, and (2) if so, whether the error was harmless beyond a reasonable doubt.
The record discloses that, during the evening of February 8, 1980, Randy Williams, his brother Richard, and Clarence Armstrong were drinking at the Regulator Tavern in Jacksonville. The victim, later identified as 23-year-old Neil Gorsuch, was also present at the tavern and occasionally conversed with Armstrong. Gorsuch was not previously acquainted with the Williams or Armstrong. At approximately 1:30 a.m. on February 9, 1980, all four individuals left the tavern together. Later that afternoon, the victim's body was discovered partially submerged in a creek near the Markham bridge in Morgan County.
Randy Williams, the State's chief witness, testified that Armstrong offered the victim a ride to the motel at which the victim was staying. Richard Williams was driving his girlfriend's car. Randy sat next to him in the front seat, and Armstrong and Gorsuch were in the back seat. Richard first drove himself to his home, where he and his girlfriend lived, and allowed Randy to borrow the car for the evening. He began driving, with the victim and Armstrong *388 seated in the back seat.
Randy further stated that, after driving for some time, Armstrong began hitting Gorsuch. Although his reason for administering the beating is unclear, it seems that Armstrong believed the victim was making sexual advances. Randy eventually drove to his parents' house, at which time Armstrong took Randy's stocking cap and pulled it down over the victim's face. He then ordered him to go into the bathroom and wash off the blood. Once inside, it was discovered that the victim had defecated in his pants. He cleaned himself, and subsequently threw out his underwear.
While the victim was in the bathroom, Armstrong pocketed Randy's .32-caliber revolver which was loaded with one bullet. He also obtained Randy's shotgun and some ammunition.
The trio then returned to the car, and Armstrong shoved Gorsuch into the rear seat. He then sat in the front seat with Randy, and directed him to drive to a trailer court. Sometime during the ride, Armstrong fired the revolver into the back seat. The bullet did not strike the victim. Randy parked at the designated trailer home, which Armstrong then entered. He returned a few minutes later and sat in the front seat. Shortly thereafter, defendant emerged from the trailer and sat in the back seat of the car with the victim. Randy began driving again, at Armstrong's direction. He stated that it was still dark out at this time.
During the course of the ride, Armstrong requested the victim to perform fellatio. He refused, and Armstrong asked if he wanted to "be hurt." He still resisted, and Armstrong informed him that he was a "dead man." The defendant subsequently asked the victim if he had any money. When he indicated that he did, defendant began to hit him and demanded his money. Randy stated that he "heard" defendant rustling through the victim's pockets.
*389 Armstrong directed Randy to stop the car when they reached the Markham bridge. Defendant exited the car, and Armstrong handed him the shotgun. Armstrong then pulled the victim out of the car, removed the stocking cap which was still covering his face, and pushed him against the railing of the bridge. Defendant, while standing at a distance of 10 to 12 feet from the victim, shot him in the back of the head. Armstrong reloaded the shotgun, and he also shot the victim in the head. He then placed a third shell in the gun, handed it to Randy, and ordered him to shoot the victim. Randy shot and missed, and the shell rolled through a gap in the bridge and dropped underneath. The gun was reloaded and Armstrong threatened Randy that he "better do it right, or we'll bury [you] with him." Randy fired a second shot at the victim and thought he may have hit him. Armstrong then grabbed the victim by the feet and "flipped" him over the railing of the bridge into the creek below.
At Armstrong's direction, Randy retrieved the spent shells, except the one which fell under the bridge. All three returned to the car and sat in the front seat, with Randy driving. The shells, and the victim's wallet and driver's license were thrown out the window on the passenger side of the car.
The witness further testified that he gave Armstrong a ride home, and then he and the defendant went to a cafe, owned by Mrs. Williams, for breakfast. It was beginning to get light when they arrived at the restaurant.
Later that evening, the defendant, the Williams brothers, and Richard's girlfriend went to the Williams' house. Randy stated that, while at his parents' home, he, Richard and defendant went into a bedroom to talk. At one point during the conversation, defendant admitted to participating in the killing.
During cross-examination, Randy's testimony was impeached in certain respects. Defense counsel elicited the *390 fact that, in a statement he gave the police following his arrest, he indicated that Armstrong fired the revolver into the rear seat of the car as they approached the murder site. He also, at one point, denied having any contact with the victim. In his statement, he indicated that Armstrong did not enter the trailer at which defendant was staying; he just opened the storm door and talked to somebody. Further, he named a different trailer park in his statement than the one in which defendant was staying.
As previously noted, Randy stated, on direct examination, that defendant was 10 to 12 feet away from the victim when he shot him. However, a pathologist testified that the victim died from contact or near-contact wounds. In addition, Randy did not tell the police officers about the conversation with his brother and defendant, during which defendant allegedly admitted his complicity in the murder. He only informed the officers that he told his brother "I think I might be in trouble." Randy admitted during cross-examination that he lied in his statement to the police. It was further disclosed that Randy had been drinking during most of the day on which the murder occurred and had taken a narcotic substance that evening. He was uncertain as to the routes he had driven on the evening of the murder or the amount of time which elapsed between events.
Finally, the defense called a doctor who testified that, in his opinion, the victim was not killed at the bridge because of the small amount of blood found on the bridge. However, on cross-examination, the doctor admitted that he never personally viewed the bridge or the victim's body. His opinion was based on photographs of the scene and a review of the report prepared by the pathologist who performed the autopsy. Further evidence indicated that there was a great deal of blood and brain matter located in the area around the bridge.
*391 Although impeached in certain instances, Randy's testimony was corroborated in a number of particulars. Numerous witnesses confirmed that the Williams brothers and Armstrong left the tavern with the victim at approximately 1:30 a.m. on the day of the murder. Richard Williams testified as to the seating arrangement in the car, and that he was dropped off at home after leaving the tavern. Dr. Dietrich, a pathologist who performed the autopsy, confirmed Randy's testimony that the victim received a beating while he was still alive. He also indicated that death resulted from at least two shotgun wounds to the back of the head. Although there was a severe laceration on the victim's forehead, he did not believe this wound was lethal. The doctor further stated that the victim was fully clothed at the time of the autopsy, except that he was not wearing any underwear.
A forensic scientist testified that, in his opinion, all of the discharged shotgun shells were fired from Randy's 12-gauge shotgun. The witness also stated that a projectile which was recovered from the rear seat of Richard's girlfriend's car could have been fired from Randy's revolver. Three of the shells and the victim's driver's license were recovered by police in the approximate area where Randy had indicated the items were discarded. A fourth shotgun shell was found underneath the bridge.
A number of witnesses confirmed Randy's testimony that Armstrong arrived at the trailer where defendant was staying sometime during the early morning of February 8, 1980. They stated that defendant left with Armstrong at that time and did not return until after daylight. There was testimony to the effect that it was still dark when defendant left the trailer.
Mrs. Williams testified that her son and the defendant arrived at the restaurant at approximately 6:15 a.m. on the morning of the murder. She stated that it was just beginning to get light at that hour. Both parties stipulated *392 that the sun rose at 6:59 a.m. on February 9, 1980.
Richard Williams confirmed Randy's testimony that, on the evening following the murder, the defendant and Randy spoke with him in a bedroom at his parents' house. They both admitted to participating in the murder, and defendant warned him to "be quiet about it." On cross-examination, Richard admitted to having made a statement to a police officer in which he denied knowing the victim. He also denied any conversation with his brother regarding the crime, except that Randy told him he was in trouble.
Defendant testified in his own behalf. He essentially stated that, at approximately daybreak on the morning of February 9, 1980, Armstrong came to the trailer at which he was staying and said he needed advice. He later told the defendant that he had beaten the victim, and Randy said he hit him with a pair of "numchucks." According to defendant, they had killed the victim because they were afraid he would inform the police about the beating. Thus, it was defendant's contention that the victim was already dead when Armstrong and Randy sought his advice.
He further testified that, during the evening following the murder, Randy and Richard were conversing in a bedroom at their parents' home. Defendant said he overheard Randy say to his brother: "I really ain't kiddin'. I did kill that dude." At the conclusion of his testimony, defendant stated that he had been convicted of aggravated battery in 1976.
The prosecutor commenced his cross-examination of the defendant with the following questions:
"Q. Mr. Miller, how old are you?
A. 23.
Q. Why didn't you tell this story to anybody when you got arrested?"
Defense counsel immediately objected and asked to approach the bench. A discussion was held outside the presence of the jury, during which defense counsel requested a *393 mistrial on the grounds that defendant's right to remain silent was violated. The judge denied the motion for a mistrial, but sustained the objection and informed the jury "to ignore that last question, for the time being." This line of inquiry was not further pursued, nor was defendant's silence commented upon during the State's closing argument.
It is clear that where a defendant is given the Miranda warnings at the time of his arrest and exercises his right to remain silent, the State may not comment at trial upon his post-arrest silence. (Doyle v. Ohio (1976), 426 U.S. 610, 49 L. Ed. 2d 91, 96 S. Ct. 2240.) However, in their briefs, both parties contend that the trial record does not indicate whether defendant received the Miranda warnings at the time of his arrest. They therefore characterize the issue as involving the propriety of cross-examining a defendant as to his post-arrest silence, in the absence of the Miranda-warning assurances. The State primarily cites Fletcher v. Weir (1982), 455 U.S. 603, 607, 71 L. Ed. 2d 490, 494, 102 S. Ct. 1309, 1312, for the proposition that, where a defendant does not receive Miranda warnings, it does not violate "due process of law for a State to permit cross-examination as to postarrest silence when a defendant chooses to take the stand." The defendant relies on People v. Beller (1979), 74 Ill. 2d 514, in which this court determined that the Doyle rule, prohibiting comment on a defendant's post-arrest silence, is applicable whether or not Miranda warnings have been given. Because we find that defendant did receive the Miranda warnings in the instant case, it is unnecessary to resolve the differing principles set forth in Fletcher and Beller.
We note initially that the parties' contentions assumed a different posture during oral argument. There, they each conceded that defendant did not receive the Miranda warnings at the time he was initially arrested, but that he was later informed of his rights at the police station. This point is significant under the circumstances of this case.
Testimony at a pretrial suppression hearing indicated *394 that defendant and Randy were arrested together at a gas station during the early morning of February 10, 1980. Although Miranda warnings were not administered, it is undisputed that defendant was arrested, at that time, for unlawful use of weapons. A police officer testified that, at the time of the arrest, he had no knowledge of defendant's complicity in the Gorsuch murder. Following their arrest, defendant and Randy were transported to the police station. Later that afternoon, Randy was interviewed by a police officer and gave a formal statement in which he implicated himself and defendant in the murder. A review of the common law record indicates that this interview was concluded at 2:30 p.m.
Also included in the common law record was an investigation report written by a police officer on February 11, 1980. This report indicates that, on February 10, 1980, Detectives Lieb and McKenna brought defendant into Lieutenant Turke's office for questioning concerning the murder. He was informed of his Miranda rights at 2:57 p.m. Defendant refused to talk and requested a lawyer, after which he was reincarcerated.
Under these circumstances, we conclude that defendant did receive the Miranda warnings at the time of his arrest for the instant offenses. The fact that he was not informed of these rights at the time of his initial arrest is irrelevant, since the unlawful-use-of-weapons charge was not the offense for which defendant was ultimately tried. Because defendant did receive the Miranda warnings at the relevant time, the rule enunciated in Doyle controls. Consequently, the State's inquiry during cross-examination violated defendant's right to remain silent.
The State next contends that, even if the prosecutor's inquiry concerning defendant's silence was improper, the error was harmless. Defendant asserts that the harmless-error doctrine is inapplicable because "[t]he prosecution's case was weak, premised solely on accomplice testimony." It is argued *395 that the trial was basically a credibility contest between defendant and Randy, and the reference to defendant's silence may have injured his credibility.
This court, along with a number of other courts, has determined that a Doyle violation may constitute harmless error. (See People v. Beller (1979), 74 Ill. 2d 514, 525, and cases cited therein.) As previously stated, defense counsel made a prompt objection to the prosecutor's inquiry, after which the trial judge instructed the jury to disregard the question. Normally, an instruction of this nature is sufficient to cure an error at trial. (People v. Carlson (1980), 79 Ill. 2d 564.) Defendant, however, cites three cases for the proposition that remarks concerning post-arrest silence cannot be cured by a "cautionary instruction." (See People v. Scalisi (1926), 324 Ill. 131; People v. McCray (1978), 60 Ill. App. 3d 487; People v. Kilzer (1978), 59 Ill. App. 3d 669.) These cases are inapposite.
In Scalisi, the prosecutor attempted to impeach the defendant with a statement he had previously made to him at the police station. Responding to an objection by defense counsel, the prosecutor stated, in the presence of the jury: "He is telling one story on the stand here, and at the time I talked to him right after the transaction he told an entirely different story; he was making a defense then; his counsel did not think it would get across in this case." 324 Ill. 131, 144.) This court determined that informing the jury to disregard the comment was insufficient to cure the error. However, this conclusion was based on the fact that the prosecutor, who was not sworn as a witness, stated a fact purporting to be within his personal knowledge. This misconduct is dissimilar to that involved in the instant case, and was one of many errors noted by the court in reversing the cause.
In McCray, the defendant, charged with robbery, testified on his own behalf. During cross-examination, the prosecutor inquired as to whether defendant had "[a]ny occupation *396 other than robbing people." (People v. McCray (1978), 60 Ill. App. 3d 487, 489-90.) This error, for which the cause was reversed, simply did not involve any reference to defendant's post-arrest silence. Similarly, the reversal of defendant's conviction in Kilzer was not based upon a Doyle violation. In Kilzer, the prosecutor improperly commented upon defendant's allegedly prior inconsistent statement which was not introduced into evidence. The court determined that the verdict may have been otherwise had the remarks not been made.
Here, it is our view that, beyond a reasonable doubt, the prosecutor's improper inquiry did not affect the verdict. In addition to the fact that the jury was informed to disregard the question, it was but a single, isolated reference to defendant's post-arrest silence made during the course of a lengthy trial. Further, the evidence, as previously recited, was sufficient to prove defendant's guilt beyond a reasonable doubt. We do not consider this "a case in which, absent the constitutionally forbidden [inquiry], honest, fair-minded jurors might very well have brought in [a] not-guilty [verdict]." Chapman v. California (1967), 386 U.S. 18, 25-26, 17 L. Ed. 2d 705, 711, 87 S. Ct. 824, 829.
For the above-stated reasons, the judgment of the appellate court is reversed, and the cause is remanded to the appellate court with directions to consider the other issues raised by defendant in that court but not decided.
Reversed and remanded, with directions.
JUSTICE SIMON, dissenting:
The prosecutor's improper inquiry into the defendant's post-arrest silence was not harmless error. A prosecutor's comment upon the "silence of the accused is a crooked knife and one likely to turn in the prosecutor's hand. The circumstances under which it will not occasion a reversal are few and discrete." (United States v. Edwards (5th Cir.1978), 576 F.2d 1152, 1155.) I would affirm the judgment of the *397 appellate court which reversed the defendant's convictions of murder, aggravated kidnaping and robbery, and remand the cause to the circuit court of Morgan County for a new trial.
The State's case against the defendant depended heavily upon the testimony of Randy Williams, the defendant's alleged accomplice. As the appellate court observed, "nothing except Williams' testimony directly links [the defendant] with the crimes." 104 Ill. App. 3d 57, 61.
Accomplice testimony of this kind is inherently unreliable as it often may be motivated by pressures other than the witness' desire to reveal the truth, "such as the promise of leniency or immunity and malice toward the accused." (People v. Wilson (1977), 66 Ill. 2d 346, 349.) This court has often stated that it "will not hesitate to reverse a conviction based upon the testimony of an accomplice when that testimony lacks material corroboration or is discredited by other credible evidence." E.g., People v. Hermens (1955), 5 Ill. 2d 277, 286.
In this case, the defendant vigorously disputed Williams' version of the events on the evening of the murder and the following morning. The defendant denied any involvement in the crime and implicated Williams. The jury had the sole responsibility for resolving the sharp conflict between the testimony of Williams and the testimony of the defendant. The resolution of this conflict depended totally upon the jury's assessment of the defendant's credibility, for the other evidence in the case could have fairly supported either the defendant's or Williams' story. The record clearly shows that the prosecutor, the trial court judge and the appellate court all understood that "[t]he trial was essentially a credibility contest between defendant * * * and Randy Williams." 104 Ill. App. 3d 57, 61.
Given the importance of the defendant's credibility at his trial, I cannot say beyond a reasonable doubt that the prosecutor's reference to the defendant's post-arrest silence did *398 not affect the jury's verdict. The prosecutor's statement "Why didn't you tell the story to anybody when you got arrested?" was obviously calculated to undermine the credibility of the defendant's story with the jury. I do not understand how anyone could know beyond a reasonable doubt that it did not succeed.
The majority erroneously maintains that the trial court's cautionary instructions rendered the prosecutor's improper inquiry harmless error. An improper inquiry by the prosecutor concerning the defendant's post-arrest silence is not automatically remedied by a cautionary instruction. (See e.g., United States v. Curtis (3rd Cir.1981), 644 F.2d 263, 270-71; cert. denied (1982), 459 U.S. 1018, 74 L. Ed. 2d 512, 103 S. Ct. 379; United States v. Prescott (9th Cir.1978), 581 F.2d 1343, 1352; Morgan v. Hall (1st Cir.1978), 569 F.2d 1161, 1168, cert. denied (1978), 437 U.S. 910, 57 L. Ed. 2d 1142, 98 S. Ct. 3103; see also, United States v. Hale (1975), 422 U.S. 171, 45 L. Ed. 2d 99, 95 S. Ct. 2133.) If the majority were correct, the prosecutor would have little incentive to avoid such inquiries on cross-examination of the defendant; he could safely inform the jury of the defendant's post-arrest silence, risking only an objection by the defendant's counsel and a cautionary instruction by the trial court. A cautionary instruction is at best only a partial remedy. Cf. Bruton v. United States (1968), 391 U.S. 123, 136-37, 20 L. Ed. 476, 485, 88 S. Ct. 1620, 1628.) The instruction may confuse the jury; or the jury may disregard it and use the defendant's silence against him anyway. In a close case like this one, based wholly upon accomplice testimony and circumstantial evidence, the reference to post-arrest silence can work extreme prejudice against the defendant, notwithstanding a cautionary instruction. In such cases the defendant must receive a new trial, for the Miranda warnings mean nothing unless an innocent defendant can remain silent at his arrest without prejudicing his case.
Even if a proper cautionary instruction could have cured *399 the prosecutor's improper reference to the defendant's post-arrest silence, the instruction given in this case was insufficient. The trial court only directed the jury to ignore the prosecutor's remarks "for the time being." This instruction is not a precise and unambiguous statement to the jury that it should ignore the prosecutor's remarks. Given that the trial was essentially a credibility contest between Williams and the defendant, this opaque instruction did not render the prosecutor's remarks harmless error. It did not prevent the prosecutor's highly questionable cross-examination tactic from infecting the defendant's entire testimony and lowering its value to the jury.
In my opinion, the prosecutor's improper remarks were not harmless error and the judgment of the appellate court should be affirmed and the cause remanded to the circuit court for a new trial. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2608643/ | 621 P.2d 270 (1980)
ALASKA PLASTICS, INC., an Alaska Corporation, Ralph R. Stefano, C. Harold Gillam, and Robert L. Crow, Appellants and Cross-Appellees,
v.
Patricia M. COPPOCK, Appellee and Cross-Appellant.
Nos. 4745, 4771.
Supreme Court of Alaska.
December 12, 1980.
*271 Mary A. Nordale, Fairbanks, for appellants and cross-appellees.
Olof K. Hellen, Hellen & Partnow, Anchorage, for appellee and cross-appellant.
Before RABINOWITZ, C.J., CONNOR, BURKE, and MATTHEWS, JJ., and DIMOND, Senior Justice.
OPINION
CONNOR, Justice.
The issue in this case involves the rights of a minority shareholder in a close corporation who allegedly has been deprived of benefits accorded other shareholders. The trial judge concluded that the corporation was obligated to buy the minority shareholder's stock at its fair value. We have concluded that this remedy is not available on the present record as a matter of law. *272 Accordingly, we remand to the superior court to determine whether, based upon adequate findings of fact and conclusions of law, a remedy more appropriate to the alleged facts is available.
Those facts which the parties have stipulated to or which appear to be undisputed in the record are summarized below.
In 1961 the three individual appellants, Ralph Stefano, C. Harold Gillam, and Robert Crow formed a corporation known as Alaska Plastics and began to produce foam insulation at a building they bought in Fairbanks. Each of the three incorporators held 300 shares of stock. In 1970 Crow was divorced and, as part of a property settlement, gave his former wife, Patricia Muir, 150 shares or a one-sixth interest in the corporation.[1] From the time of incorporation until this lawsuit, Stefano, Gillam and Crow have been the only directors and officers of Alaska Plastics.
Stefano conceded at trial that the corporation forgot to notify Muir of annual shareholders meetings in 1971 and 1974. It was also undisputed that Muir was not notified of a shareholders meeting in 1972. According to Muir's testimony she was told of the 1973 shareholders meeting about three hours before the meeting was held.
In 1971 and 1972, Stefano, Gillam and Crow held the shareholders meetings in Seattle. It appears from Stefano's testimony that he and Gillam also brought their wives to these meetings at company expense, but he conceded that there was no business purpose for doing so.
In 1971, Stefano, Gillam and Crow voted themselves each a $3,000 annual director's fee. Although director's fees were apparently paid from 1971 through 1974, the three directors have never authorized Alaska Plastics to pay dividends. In 1974 the three board members also authorized an annual salary of $30,000 a year for Gillam, who was then employed as general manager of Alaska Plastics. Muir testified that she has never received any money from the corporation.
At the 1974 board meeting Stefano, Gillam and Crow also decided to offer Muir $15,000 for her shares and on May 1, 1974, Stefano wrote Muir informing her of the corporation's offer. Thinking the firm's offer was too low, Muir retained a lawyer who wrote the corporation expressing her concern both regarding the offered price and regarding the corporation's failure to inform Muir of shareholders meetings. In July, 1974, Muir's lawyer made a further demand on the corporation to inspect the books and records of the corporation. Gillam apparently advised Muir where the firm kept its books and told her they could be made available. An accountant employed by Muir did investigate the company's books and estimated that the shares might have a value somewhere between $23,000 and $40,000. Muir also ordered an appraisal of Alaska Plastics' Fairbanks property.
Later that same year, at a special director's meeting in October, 1974, the three board members agreed to make a $50,000 offer for Broadwater Industries, a firm located neat Palmer that made a type of plastic foam insulation similar to that produced by Alaska Plastics at their Fairbanks plant. The purchase was apparently accomplished at some time between October and the next shareholders meeting, which was held on April 25, 1975. Muir testified that she was never consulted about the purchase and first learned about it at the 1975 meeting. At that meeting, however, she did not dissent from a shareholder vote ratifying all the acts of the directors and officers for the previous year.
Broadwater Industries was subsequently renamed Valley Plastics and is now a wholly-owned subsidiary of Alaska Plastics. The directors and officers of Valley Plastics are Stefano, Gillam and Crow.
At the 1975 shareholders meeting, Muir offered her stock to the corporation for $40,000. In June, 1975, the board raised its offer to $20,000, which Muir again rejected.
*273 Shortly after these negotiations failed, Alaska Plastics' Fairbanks plant, which was not insured, burned to the ground. The fire caused a total loss. Since the fire, Alaska Plastics has ceased production from Fairbanks and the corporation has not made an attempt to resume production in Fairbanks. All the remaining manufacturing and sales of Alaska Plastics are accomplished through its subsidiary, Valley Plastics. The fire, in effect, turned Alaska Plastics into a holding company for its affiliate.
About a year after the fire, in 1976, Stefano, acting as an individual, made a further offer of $20,000 to Muir, but the purchase never took place. Further attempts by the parties to negotiate a purchase or settlement failed and a lawsuit was filed in October 1976.
An amended complaint alleges ten separate causes of action, and prays for relief both in the name of the corporation and individually for Muir. After trial, the case was submitted to an advisory jury[2] on two issues. The first issue was whether Stefano, when he acted as an individual, breached a contract to purchase Muir's shares. The jury found no contract. The second issue was whether the corporation's offer to buy Muir's shares was "equitable." The jury found that the corporation's offer of $15,000 in 1974 was not equitable, and determined that a fair offer would have been $32,000. Following the jury's verdict, the trial judge issued a judgment which states in part:
"[T]he continued retention by Plaintiff of one-sixth of the shares in Alaska Plastics, Inc. Following the offer on April 1974 was oppressive to Plaintiff and .. . an appropriate remedy would be to direct the transfer of Plaintiff's shares to Alaska Plastics, Inc. in exchange for a fair and equitable value...."
A total judgment was entered against the three individual appellants and Alaska Plastics for $52,314, which represented $32,000 for the value of the shares, $5,200 for attorney's fees, and $15,144 in interest and costs. Muir was in turn required to convey her shares to Alaska Plastics. Both sides subsequently filed appeals.
I. SHAREHOLDER REMEDIES
In a corporation with publicly traded stock, dissatisfied shareholders can sell their stock on the market, recover their assets, and invest elsewhere. In a close corporation[3] there is not likely to be a ready market for the corporation's shares. The corporation itself, or one of the other individual shareholders of the corporation, who are likely to provide the only market, may not be interested in buying out another shareholder. If they are interested, majority shareholders who control operate policy are *274 in a unique position to "squeeze out" a minority shareholder at an unreasonably low price.[4]
From a dissatisfied shareholder's point of view, the most successful remedy is likely to be a requirement that the corporation buy his or her shares at their fair value. Ordinarily, there are four ways in which this can occur. First, there may be a provision in the articles of incorporation or by-laws that provide for the purchase of shares by the corporation, contingent upon the occurrence of some event, such as the death of a shareholder or transfer of shares. Second, the shareholder may petition the court for involuntary dissolution of the corporation. Third, upon some significant change in corporate structure, such as a merger, the shareholder may demand a statutory right of appraisal. Finally, in some circumstances, a purchase may be justified as an equitable remedy upon a finding of a breach of a fiduciary duty between directors and shareholders and the corporation or other shareholders.
It does not appear from the record that there is any provision in the articles of incorporation or by-laws which would allow Muir to force Alaska Plastics to purchase her shares. Muir has not suggested that there is such provision, and we, therefore, do not consider the availability of this first method.
As to the second method, Alaska's corporation code provides in AS 10.05.540(2) that a shareholder may bring an action to liquidate the assets of a corporation upon a showing that "the acts of the directors or those in control of the corporation are illegal, oppressive or fraudulent... ." A shareholder may also seek liquidation when "corporate assets are being misapplied or wasted." AS 10.05.540(4). Upon a liquidation of assets all creditors and the cost of liquidation must be paid and the remainder distributed among all the shareholders "according to their respective rights and interests." AS 10.05.561. There is no indication whether Muir would have received more or less than the $32,000 price for her shares ordered by the court if Alaska Plastics had been liquidated.
Liquidation is an extreme remedy. In a sense, forced dissolution allows minority shareholders to exercise retaliatory oppression against the majority. Absent compelling circumstances, courts often are reluctant to order involuntary dissolution. E.g., Capitol Toyota v. Gervin, 381 So. 2d 1038, 1039 (Miss. 1980); Baker v. Commercial Body Builders, Inc., 264 Or. 614, 507 P.2d 387, 395-97 (1973); Browning v. C&C Plywood Corp., 248 Or. 574, 434 P.2d 339, 343 (1967).[5] As a result, courts have recognized alternative remedies based upon their inherent equitable powers. Thus in Baker, interpreting a statute substantially similar to AS 10.05.540, the court authorized numerous alternative remedies for oppressive or fraudulent conduct by the majority. Among those would be:
"an order requiring the corporation or a majority of its stockholders to purchase the stock of the minority shareholders at *275 a price to be determined according to a specified formula or at a price determined by the court to be a fair and reasonable price." (footnote omitted).
Baker, 507 P.2d at 396. The same court applied that remedy in Delaney v. Georgia-Pacific Corp., 278 Or. 305, 564 P.2d 277, 288-89 (1977).
We are persuaded by Baker and conclude that Muir's request in her amended complaint for liquidation, although not actively pursued, could justify the trial court's order as an equitable remedy less drastic than liquidation. To prevail on this basis, Muir must establish on remand that the acts of Stefano, Gillam and Crow were "illegal, oppressive or fraudulent," AS 10.05.540(2), or alternatively, constituted a waste or misapplication of corporate assets. AS 10.05.540(4). Because the trial court did not reach the issue, we express no opinion here on whether Muir has satisfied the statutory standards of AS 10.05.540.
The third method of forcing a corporation to purchase a minority shareholder's shares is a statutory appraisal remedy, which may be available under the Alaska Business Corporation Act in two circumstances where there is some fundamental corporate change. The remedy is available upon the merger or consolidation with another corporation, AS 10.05.417, or upon a sale of substantially all of the corporation's assets. AS 10.05.447. There is no suggestion that either statute is applicable in this case. In some circumstances, however, courts have found that a corporate transaction so fundamentally changes the nature of the business that there is a "de facto" merger which triggers the same statutory appraisal remedy.[6]
The possibility of a de facto merger was alleged in the plaintiff's complaint and the trial court considered it before instructing the jury, but concluded that it was not applicable. Muir's principal contention was that the acquisition of Valley Plastics amounted to such a fundamental corporate change that she should have had an appraisal right.
In her cross-appeal, Muir did not assign the trial judge's dismissal of her de facto merger claim as error, nor has she argued it on appeal. Nevertheless, the remedy ordered by the trial judge is so similar to an appraisal remedy that we have examined the de facto merger doctrine more carefully because it might serve as an alternative ground for affirming the judgment of the trial court, see Carlson v. State, 598 P.2d 969, 973 (Alaska 1979); Ransom v. Haner, 362 P.2d 282, 285 (Alaska 1961).
In a frequently cited case, Farris v. Glen Alden Corp., 393 Pa. 427, 143 A.2d 25 (1958), the Pennsylvania Supreme Court concluded that, under some circumstances, a shareholder should have an appraisal right even though the strict language of a statute might confine the remedy to a shareholder in the selling corporation only. Glen Alden, a Pennsylvania coal mining company, "bought" List Industries by issuing its own stock to List. List in turn distributed the Glen Alden stock to its shareholders, who traded their List stock for Glen Alden stock. As a result of the transaction, the former shareholders of List held over three-fourths of the outstanding shares of Glen Alden and controlled eleven of the seventeen directors. The court concluded that List was in reality the purchasing corporation and that the transaction should have been done in accordance with the statutory requirements for a merger.
Although we might follow Farris in an appropriate case, we do not believe the de facto merger doctrine is applicable here. Muir never objected to the transaction, as did the plaintiffs in Farris. In fact, at the 1975 shareholders meeting Muir voted to ratify the transaction. There is no indication that her stock holdings have been diluted,[7] her proportionate interest in Valley *276 Plastics is the same as her interest in Alaska Plastics. There has been no change in the Board of Directors or corporate officers. Alaska Plastics and Valley Plastics conducted the same type of business. The conversion of Alaska Plastics into a holding company had nothing to do with the purchase of Valley Plastics, but was a result of a fire that destroyed the Alaska Plastics plant. Both corporations have retained their separate corporate status. In short, the transaction here would have been little different had Alaska Plastics purchased any other major asset. Therefore, the judgment of the trial court cannot be affirmed on this alternative ground.
We turn, then, to the fourth possibility by which a minority shareholder may force a corporation to purchase his or her shares. Two leading cases have concluded that transactions by one group of shareholders that enable it to derive some special benefit not shared in common by all shareholders should be subject to close judicial scrutiny. The Massachusetts Supreme Judicial Court concluded that shareholders in closely held corporations owe one another a fiduciary duty:
"Because of the fundamental resemblance of the close corporation to the partnership, the trust and confidence which are essential to this scale and manner of enterprise, and the inherent danger to minority interests in the close corporation, we hold that stockholders in the close corporation owe one another substantially the same fiduciary duty in the operation of the enterprise that partners owe to one another. In our previous decisions, we have defined the standard of duty owed by partners to one another as the `utmost good faith and loyalty.'" (footnotes and citations omitted).
Donahue v. Rodd Electrotype Co., 367 Mass. 578, 328 N.E.2d 505, 515 (1975). The California Supreme Court concluded that a controlling group of shareholders owes a similar duty to minority shareholders. In Jones v. H.F. Ahmanson & Co., 1 Cal. 3d 93, 81 Cal. Rptr. 592, 460 P.2d 464 (1969), the court held that a control block of stock could not be used to give the majority benefits that were not shared with the minority.
We believe that Donahue and Ahmanson correctly state the law applicable to the relationship between shareholders in closely held corporations, or between those holding a controlling block of stock, and minority shareholders. We do not believe, though, that the existence and breach of a fiduciary duty among corporate shareholders supports the appraisal remedy ordered by the trial court in this case.
The trial judge made no findings of fact or conclusions of law, but the basis for his decision is clear from extensive discussions that took place prior to instructing the jury and the form of the judge's final order. The court concluded that once the corporation made an offer to Muir it was under an obligation to purchase her stock at a "fair" price, regardless of what price the corporation had initially offered. Had Muir actually sold the stock at an unfairly low price, she might have brought an action to set the transaction aside. The existence of a fiduciary duty between shareholders would justify careful scrutiny and shifting the burden onto the defendants to show that the transaction was fair. 13 W. Jaeger, Williston on Contracts § 1626A at 806-08 (3d ed. 1970). In this case, however, Muir rejected both of the corporation's offers. We are not aware of any authority which would allow a court to order specific performance on the basis of an unaccepted offer, particularly on terms totally different from those offered. Such a rule would place a court in the impossible position of making and enforcing contracts between unwilling parties.
Donahue and Ahmanson do suggest the appropriate form of a remedy in this case, however. In Donahue, one of the controlling shareholders caused the corporation to purchase forty-five of his shares, but then refused to buy an equal number of shares held by a minority shareholder. The court first noted the benefit that a shareholder in a close corporation gained by focusing the corporation to buy his shares.
*277 "The benefits conferred by the purchase are twofold: (1) provision of a market for shares; (2) access to corporate assets for personal use. By definition, there is no ready market for shares of a close corporation. The purchase creates a market for shares which previously had been unmarketable. It transforms a previously illiquid investment into a liquid one."
328 N.E.2d at 518. The court then went on to conclude that where a controlling shareholder took advantage of such a special benefit, the fiduciary duty owed to other shareholders required that the corporation offer such a benefit equally:
"The rule of equal opportunity in stock purchases by close corporations provides equal access to these benefits for all stockholders."
Id. at 519.
In Ahmanson, the controlling group of shareholders transferred its control block of stock to a holding company which in turn offered its stock to the public. There were relatively few shares of stock in the active company in which the plaintiffs owned shares, and the price of each share was so high that they had little market appeal. The holding company, on the other hand, offered numerous shares at far lower prices. Because of the ready market for holding company shares, the controlling shareholders were able to sell part of their investment in the active company through the holding company at a huge profit. The court held that the majority shareholders had to offer this same opportunity to minority shareholders.[8]
As we read Muir's complaint, the essence of her action is that Stefano, Gillam and Crow enjoyed benefits from the corporation which should have been shared equally with her. None of the other shareholders of Alaska Plastics have sold their stock to the corporation so it would not be appropriate to order the corporation to purchase Muir's stock. Unlike Donahue, this was not one of the benefits which the majority received and which they did not share with Muir. There was evidence, however, that the corporation paid Stefano, Gillam and Crow "director's fees." Gillam received a substantial salary. The corporation apparently paid some of the personal expenses of the directors' wives. Regardless of how the corporation labels these expenditures, if they were not made for the reasonable value of services rendered to the corporation, some portion of these payments might be characterized as constructive dividends.
The analysis of such corporation payments is similar to the analysis of transactions to determine tax liability. Dividend distributions are not deductible by a corporation. Therefore, taxpayers in close corporations have made numerous attempts to structure transactions in a way which will allow a corporate deduction. Courts have not allowed the form of the transaction to prevent tax liability when the transaction is in substance a distribution of dividends. See, e.g., American Properties, Inc. v. Commissioner, 262 F.2d 150, 151 (9th Cir.1958) (payments for taxpayer's speed boat a dividend); Greenspon v. Commissioner, 229 F.2d 947 (8th Cir.1956) (payments for a "horticultural show place" not a corporate expense). We think a similar analysis should apply to payments which exclude some shareholders in a closely held corporation.[9] Such transactions should be examined to determine whether they are in fact a distribution of dividends, and if so the excluded shareholder must participate equally in the payments received by other shareholders.
We express no opinion as to whether Muir has shown that these payments were a *278 distribution of dividends, whether she was deprived of other corporate benefits which she should have shared in equally with the other three shareholders, or whether the majority shareholders violated AS 10.05.540. The case must be remanded to the trial court to make appropriate findings of fact and conclusions of law based upon the present record.
II. THE DERIVATIVE CLAIM
At the conclusion of trial, the judge dismissed Muir's derivative suit. In her brief, Muir suggests that a number of acts taken by the corporation amounted to a breach of the director's duty of care toward the corporation. For example, the directors failed to insure the Fairbanks plant, they kept large reserves of cash in noninterest-bearing checking accounts, and they loaned an employee money at a rate below prevailing rates of interest. Viewing the plaintiff's evidence alone, which amounted to little more than the fact that these acts had taken place, we conclude that the evidence was insufficient to establish a breach of duty towards the corporation.
Judges are not business experts, Dodge v. Ford Motor Co., 204 Mich. 459, 170 N.W. 668, 684 (1919), a fact which has become expressed in the so-called "business judgment rule." The essence of that doctrine is that courts are reluctant to substitute their judgment for that of the board of directors unless the board's decisions are unreasonable. No proof was presented that the alleged acts were unreasonable in the sense that they would not have been taken by "an ordinarily prudent man ... in the management of his own affairs of like magnitude and importance." Nanfito v. Tekseed Hybrid Co., 341 F. Supp. 240, 244 (D.Neb. 1972). The proof offered was therefore insufficient to present a question for the trier of fact.
In Santarelli v. Katz, 270 F.2d 762 (7th Cir.1959), the evidence showed that one of the director's wives in a closely held corporation had been receiving thousands of dollars a year to attend three or four conventions. In a stockholders derivative suit, the court noted:
"[I]f a stockholder is being unjustly deprived of dividends that should be his, a court of equity will not permit management to cloak itself in the immunity of the business judgment rule."
Id. at 768.
There is thus authority for concluding that an unfair distribution of corporate funds would be a proper subject for a derivative suit. Nevertheless, as we read the gravamen of Muir's complaint, it is that she was harmed as an individual by not receiving the same benefits as the other shareholders received, not that the corporation itself was harmed. Therefore, we believe that a derivative action would not be the appropriate form of action in this case, see Donahue v. Rodd Electrotype Co., 367 Mass. 578, 328 N.E.2d 505, 508 n. 4 (1975). Furthermore, Muir's rights are adequately protected by an individual action. The trial court thus properly dismissed this claim.
The case is REMANDED to the superior court for further proceedings in accordance with this opinion.[10]
NOTES
[1] At the time this action was filed Muir had remarried and assumed the name of Patricia Coppock. She has since that time resumed using her maiden name.
[2] Muir did not at first request a jury trial because, according to her motion in request of a jury trial, the issues appeared to be equitable in nature. After discovery, when there appeared to be legal relief available, the judge granted her request for a jury. The appellants later attempted to set aside the demand for a jury but this was refused. Although unclear from the record, it appears that this case may have begun as a conventional jury trial, but because by the close of trial it became apparent that equitable relief was appropriate, the court later considered the jury advisory in nature. In any event, the parties are in agreement that the jury was advisory only, and we will assume that this is the case.
[3] In the leading case of Donahue v. Rodd Electrotype Co., Inc., 367 Mass. 578, 328 N.E.2d 505, 511 (1975), the court suggested the following characteristics typified the close corporation:
(1) a small number of stockholders;
(2) no ready market for the corporate stock; and
(3) substantial majority stockholder participation in the management, direction and operation of the corporation.
Delaware, like several other states, makes special statutory provisions applicable to close corporations, which the law defines as those corporations with no more than thirty stockholders, some restrictions on the transfer of stock and no public offerings. See Del. Code Ann. Title 8, § 342 (1975). See generally Note, 61 Cornell L.Rev. 986, 991-96 (1976). It is clear that under any of these definitions of a close corporation, Alaska Plastics qualifies.
The assumptions underlying a discrete treatment of closely held corporations have been recently questioned. See Fessler, The Fate of Closely Held Business Associations: The Debatable Wisdom of "Incorporation", 13 U.C.Davis L.Rev. 473 (1980).
[4] For a discussion of some of the techniques that may be used to force a minority shareholder to sell out, see Donahue v. Rodd Electrotype Co., 367 Mass. 578, 328 N.E.2d 505, 513 (1975), quoting F.H. O'Neal and J. Derwin, Expulsion or Oppression of Business Associates (1961) and Note, Freezing Out Minority Shareholders, 74 Harv.L.Rev. 1630, 1630-40 (1961). For notes discussing the refusal of a controlling group to declare dividends and the payment of excessive salaries, see Note, Minority Shareholder Suits to Compel Declaration of Dividends, 64 Harv.L.Rev. 299 (1950) and Note, Executive Compensation in Close Corporations: The Need for a Modified Judicial Approach to the Reasonableness Test, 1972 Duke L.J. 1251 (1972). Where disagreement among shareholders is so great that business effectively cannot be conducted, some states provide for a "custodian" or "provisional director" remedy. See Note, Custodian Remedy For Close Corporations, 13 U.C.Davis L.Rev. 498 (1980).
[5] However, courts in other jurisdictions have ordered dissolution of profitable, closely held corporations where there has been a breakdown in the relationship of shareholders. See Application of Surchin, 55 Misc. 2d 888, 286 N.Y.S.2d 580 (N.Y. Sup. Ct. 1967); Application of Pivot Punch & Die Corp., 15 Misc. 2d 713, 182 N.Y.S.2d 459 (N.Y.Sup. 1959); Comment, Dissolution Under the California's Corporations Code: A Remedy for Minority Shareholders, 22 U.C.L.A.L.Rev. 595 (1975).
[6] For a discussion of the de facto merger doctrine, see Folk, De Facto Mergers in Delaware: Hariton v. Arco Electronics, Inc., 49 Va.L.Rev. 1261 (1963).
[7] Alaska Plastics apparently intended to offer the general manager of Valley Plastics a stock option, which might have diluted Muir's holdings, but there is no evidence in the record that the option was exercised.
[8] The court also concluded that there should have been an appraisal remedy because the transaction with the holding company amounted to a de facto merger. Jones v. Ahmanson & Co., 1 Cal. 3d 93, 81 Cal. Rptr. 592, 605-06, 460 P.2d 464, 477-78 (Cal. 1969).
[9] This type of analysis has been suggested in examining claims by minority shareholders that the majority shareholders who may be officers in the corporation are receiving excessive salaries. See Note, Executive Compensation in Close Corporations: The Need for a Modified Judicial Approach to the Reasonableness Test, 1972 Duke L.J. 1251, 1270-74 (1972).
[10] Muir has argued that the trial judge erred in not allowing her to discover certain notes prepared by an accountant. In her brief she stated that these notes were needed in order to present her derivative claim. Because we believe the trial court properly dismissed this claim, the issue is moot.
Both sides have contested the size of the award of attorney's fees. Inasmuch as the case must be remanded, it is not necessary to consider the issue. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/817130/ | UNITED STATES COURT OF APPEALS FOR VETERANS CLAIMS
NO . 03-2196
ROBERT J. INGRAM , APPELLANT ,
V.
R. JAMES NICHOLSON ,
SECRETARY OF VETERANS AFFAIRS, APPELLEE.
On Appeal from the Board of Veterans' Appeals
(Argued February 22, 2006, Decided July 12, 2006 )
Arie M. Michelsohn, of Washington, D.C., with whom Mark R. Lippman of La Jolla,
California was on the brief, for the appellant.
Jeffrey Schueller, with whom Tim S. McClain, General Counsel; R. Randall Campbell,
Assistant General Counsel; Carolyn F. Washington, Deputy Assistant General Counsel; and Lavinia
A. Derr were on the brief, all of Washington, D.C., for the appellee.
Before MOORMAN, LANCE, and SCHOELEN, Judges.
LANCE, Judge: The appellant, veteran Robert J. Ingram, appeals through counsel a
December 12, 2003, decision of the Board of Veterans' Appeals (Board) that denied entitlement to
an effective date earlier than April 15, 1992, for the grant of compensation benefits under 38 U.S.C.
§ 1151 for residuals of a pneumonectomy. Record (R.) at 1-10. The parties each filed briefs, and
the appellant filed a reply brief. Subsequently, the Court sua sponte ordered the parties to file
supplemental briefs addressing what impact, if any, the holding of the United States Court of
Appeals for the Federal Circuit (Federal Circuit) in Andrews v. Nicholson, 421 F.3d 1278 (Fed. Cir.
2005), has on this case. Thereafter, the Court heard oral arguments in the case. For the reasons that
follow, the Court will vacate the Board decision and remand the matter for further proceedings.
I. FACTS
The appellant served on active duty in the U.S. Marine Corps from September 1964 to
September 1968. R. at 14. In April 1985, he underwent a right bronchoscopy and right
pneumonectomy at a VA medical center in Salt Lake City, Utah. R. at 16-21. On May 8, 1986, the
Los Angeles, California, VA regional office (RO) received the appellant's initial formal application
for VA benefits. R. at 23-26. The appellant submitted his claim on VA Form 21-526, Veteran's
Application for Compensation or Pension. R. at 23-26. Under the section entitled "Nature and
History of Disabilities" and in response to item 24, entitled "Nature of sickness, disease or injuries
for which this claim is made and date each began," the appellant wrote: "Feb.–1985–Right lung was
removed, Salt Lake City, Utah, VA Hospital." R. at 24. He also provided responses to items 29A
through 32E, under the section entitled "if you claim to be totally disabled," as well as responses to
items 33A through 33E, and items 34A through 39B, which contained the instruction that these items
should be completed only if the applicant is applying for "non-service-connected pension." R. at 25-
26.
On August 12, 1986, the RO received the appellant's statement in support of claim wherein
he stated:
The removal of a vital organ (right lung) has greatly decreased my capacity
for air–lung capacity–by fifty percent. Also[,] I am not capable under this condition
to continue my normal life style.
I attend[ed] four years of carpenter apprenticeship course at Orange Coast
College in Coast Mesa, CA, 1972-1975, to obtain a skillful trade, but now under
these adverse medical condition[s], I am unable to continue in my skillful trade.
R. at 34. On August 14, 1986, the RO denied a claim for non-service-connected pension benefits
because he was not considered permanently unemployable. R. at 28. The appellant did not appeal
that decision.
On April 15, 1992, the appellant filed a second VA Form 21-526, Veteran's Application for
Compensation or Pension. R. at 50-53. Under the section entitled "Nature of sickness, disease or
injuries for which this claim is made and date each began,” the appellant wrote: "Right
Pneumonectomy 1985[;] Esophageal fistual 1986[;] Gastrostomy Tube 1986." R. at 51. In June
1992, the appellant submitted correspondence to the RO asserting, inter alia, that as a result of the
2
1985 surgery and VA's negligence, he developed an esophageal leak. R. at 57. In June 1995, the
RO denied his claim for benefits under 38 U.S.C. § 1151 for disability caused by VA treatment. R.
at 352-56. However, on appeal in June 1999, the Board awarded compensation benefits under
38 U.S.C. § 1151 for residuals of a pneumonectomy based on an additional disability resulting from
treatment in a VA facility. R. at 427-37. On January 20, 2000, the RO awarded a 60% disability
rating, effective from October 7, 1996. R. at 456-59. The appellant filed a Notice of Disagreement
(NOD) in May 2000, and the RO issued a Statement of the Case (SOC) in February 2002 assigning
an earlier effective date of April 15, 1992. R. at 461, 470-77. The veteran perfected his appeal to
the Board. R. at 479.
In the decision on appeal, the Board denied an effective date earlier than April 15, 1992. R.
at 1- 10. In denying the appellant's request for an earlier effective date, the Board determined, inter
alia, that neither his May 1986 application for benefits nor his August 1986 statement in support of
claim could have been construed as a claim for compensation benefits under 38 U.S.C. § 1151, and
therefore, an effective date back to 1986 was not warranted. R. at 8-9. In reaching this conclusion,
the Board stated: "There is nothing in the four corners of [the May 1986 application] that showed
an intent that the veteran was claiming compensation benefits under the provisions of 38 U.S.C.[]
§ 1151. Specifically, there was no allegation of negligence or lack of proper skill, nor did the veteran
make some other allegation of the surgery having been done improperly, as to the pneumonectomy
that was done at that time." R. at 8. The Board further concluded that there was nothing in the
appellant's August 1986 assertion that the surgery had reduced his lung capacity by 50 % "when read
alone or with the VA Form 21-526, [that] would indicate an intent to file a claim for compensation
benefits under the provisions of 38 U.S.C. § 1151. Again, the veteran was not claiming that the
surgery was done improperly or that VA had committed negligence or showed lack of proper skill
in performing the pneumonectomy." R. at 9. Based on this analysis, the Board concluded that the
preponderance of the evidence was against finding that the veteran had filed a claim under section
1151 in 1986. R. at 9.
3
II. THE PARTIES' ARGUMENTS
On appeal, the appellant asserts that the Board erred in 2003 when it determined that his May
1986 and August 1986 filings did not constitute informal claims for compensation benefits under
38 U.S.C. § 1151, which would have entitled him to the assignment of an earlier effective date.
Appellant's Brief (Br.) at 3-9; see Norris v. West, 12 Vet.App. 413 (1999) (holding that when an RO
fails to adjudicate a reasonably raised claim it remains pending). In this regard, he maintains that
VA had a duty to sympathetically read his pro se pleadings and determine all potential claims raised
by the evidence, and therefore, the Board erred when it treated his 1986 application as one
exclusively for pension benefits. Br. at 4-5. In response, the Secretary maintains that there was no
indication in either filing that demonstrated an intent by the appellant that he was claiming benefits
under 38 U.S.C. § 1151. Secretary's Br. at 4-10.
On October 4, 2005, the Court sua sponte ordered the parties to file supplemental briefs
addressing what impact, if any, the Federal Circuit's holding in Andrews has on this case.
Specifically, the Court referred to Andrews' conclusion that "when VA violates Roberson[ v.
Principi, 251 F.3d 1378 (Fed. Cir. 2001),] by failing to construe the veteran's pleadings to raise a
claim, such claim is not considered unadjudicated but the error is instead properly corrected through
a [clear and unmistakable error (]CUE[)] motion." 421 F.3d at 1284. Both parties submitted
supplemental briefs asserting that Andrews did not overrule the longstanding jurisprudence regarding
pending claims and the statutory and regulatory framework underlying it. Both parties suggested that
anything other than a narrow reading of Andrews would be unworkable because if the failure to
construe a claim needs to be raised in the context of CUE, then under the facts of this case, the Court
would have to find a finally adjudicated section 1151 claim in 1986–which is not shown in the record
on appeal. Without any RO decision, there is no indication of the evidence of record concerning the
claim, applicable law and regulation governing the claim, or any analysis applying the facts to the
legal criteria–all inherent to any CUE challenge. CUE necessarily requires a previous determination
that is final and binding. The Secretary's supplemental brief also points out that the Federal Circuit's
own interpretation of Andrews suggests a narrow reading because in Bingham v. Nicholson, 421 F.3d
1346, 1349 (Fed. Cir. 2005), the panel stated: "[A]s we recently held in Andrews, the VA's failure
4
to consider all aspects of a claim does not render its decision non-final but instead 'is properly
challenged through a CUE motion.'" (Emphasis added.)
At oral argument, the appellant maintained his prior position. However, without
acknowledging or withdrawing his supplemental brief, the Secretary argued that this case is
controlled by Andrews and that the appellant's theory cannot be considered because it can be properly
raised only through a motion asserting CUE in the 1986 RO decision, and no argument based on
CUE is before the Court. Thereafter, the appellant, pursuant to Rule 30(b) of this Court's Rules of
Practice and Procedure, filed notices of supplemental authorities.
III. ANALYSIS
A. Issue Presented
The question presented to the Court is not whether the Secretary has a duty to sympathetically
read a pro se veteran's filings to determine whether a claim has been raised. It is beyond question
that the Secretary has such a duty and that it applies not just to total disability based on individual
unemployability (TDIU) ratings, but also to any claim for benefits. See Szemraj v. Principi, 357 F.3d
1370 (Fed. Cir. 2004). The question presented to this Court is the proper procedural time and
mechanism to assert an alleged failure of the Secretary to perform this duty. We begin with the
proposition that as a Court we are reviewing specific decisions below that have been appealed to us.
See 38 U.S.C. § 7252(a) (granting the Court jurisdiction "to review decisions of the Board"). Thus,
in order for this Court to have jurisdiction to review an asserted error related to the failure to
sympathetically read a claimant's filings, the claimant on appeal here must be asserting that the error
occurred in the decision on appeal to the Court or that the error occurred in a final decision presented
in the context of a CUE motion.
In the context of this case, we must determine whether the arguments raised on appeal are
an improper attempt to use an appeal of the December 2003 Board decision [hereinafter "effective-
date decision"] as a collateral attack on the 1986 RO decision. See Cook v. Principi, 318 F.3d 1334,
1337 (Fed. Cir. 2002) (en banc). In essence, we must determine whether the 1986 RO decision
decided a section 1151 claim, which would now have to be the subject of a collateral attack, or
whether the alleged section 1151claim in 1986 was still pending at the time of the appellant's 1992
5
correspondence and, therefore, is part of the present claim stream including this direct review. If we
determine that the 1986 RO decision decided a section 1151 claim, then we do not have jurisdiction
to review the alleged error in that decision, as that decision is final and not part of the claim presently
on direct appeal. See DiCarlo v. Nicholson, 19 Vet.App. __, __, No. 03-629, slip op. at 8 (May 10,
2006) (once the Secretary has made a finding of fact, a later decision reconsidering that finding
outside of a certain circumstances (e.g., outside the context of CUE or reconsideration by the Board
Chairman) is ultra vires and must be set aside); Beverly v. Nicholson, 19 Vet.App. 394, 405 (2005)
(whether a sympathetic reading of filings raises a claim is a question of fact). If we determine that
any potential claim was still pending and part of the claim stream that resulted in the Board decision
on appeal, then we would have jurisdiction to address the substance of the appellant's argument.
B. Previously Established Law
1. Effective-Date Decisions
Section 5110(a) of title 38, U.S. Code, governs the assignment of an effective date for an
award of benefits:
[T]he effective date of an award based on an original claim, a claim reopened after
final adjudication, or a claim for increase, of compensation, dependency and
indemnity compensation, or pension, shall be fixed in accordance with the facts
found, but shall not be earlier than the date of receipt of application therefor.
38 U.S.C. § 5110(a). The implementing regulation similarly states that the effective date shall be
the date of receipt of claim or date entitlement arose, whichever is later, unless the claim is received
within one year after separation from service. See 38 C.F.R. § 3.400 (2005).
A Board determination of the proper effective date for an award of VA benefits is a finding
of fact reviewed under the "clearly erroneous" standard of review set forth in 38 U.S.C. § 7261(a)(4).
See Hanson v. Brown, 9 Vet.App. 29, 32 (1996). "A factual finding 'is "clearly erroneous" when
although there is evidence to support it, the reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.'" Hersey v. Derwinski, 2 Vet.App.
91, 94 (1992) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). The Court
may not substitute its judgment for the factual determinations of the Board on issues of material fact
merely because the Court would have decided those issues differently in the first instance. Id.
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The Board is required to consider, and discuss in its decision, all "potentially applicable"
provisions of law and regulation. Schafrath v. Derwinski, 1 Vet.App. 589, 593 (1991) (emphasis
added); see 38 U.S.C. § 7104(a); Weaver v. Principi, 14 Vet.App. 301, 302 (2001) (per curiam
order); Sanden v. Derwinski, 2 Vet.App. 97, 100 (1992). The Board is also required to provide a
written statement of the reasons or bases for its findings and conclusions on all material issues of fact
and law presented on the record; the statement must be adequate to enable a claimant to understand
the precise basis for the Board's decision, as well as to facilitate review in this Court. See 38 U.S.C.
§ 7104(d)(1); Allday v. Brown, 7 Vet.App. 517, 527 (1995); Gilbert v. Derwinski, 1 Vet.App. 49,
57 (1990).
2. Pending Unadjudicated Claims
The Secretary defines a "pending claim" as "[a]n application, formal or informal, which has
not been finally adjudicated." 38 C.F.R. § 3.160(c) (2005). This definition predates the creation of
this Court. See 38 C.F.R. § 3.160(c) (1988) (same as current version). Consistent with this
regulation, in several instances, this Court has held that a claim remains pending–even for years–if
the Secretary fails to act on a claim before him. See, e.g., Norris, 12 Vet.App. at 422 (concluding
that TDIU claim reasonably raised in 1987 and 1989 remained pending at RO). Similarly, a decision
may be rendered nonfinal when "the time for appealing either an RO or a Board decision did not run
where the [Secretary] failed to provide the veteran with information or material critical to the
appellate process." Cook, 318 F.3d at 1340 (discussing Tablazon, Hauck, Kuo, and Ashley, all infra).
In Cook, the Federal Circuit observed that this Court has tolled the period of time for a
claimant to act after an RO decision, leaving the case in a nonfinal status when the Secretary has
failed (1) to notify a claimant of the denial of a claim, see Hauck v. Brown, 6 Vet.App. 518, 519
(1994), (2) to mail a claimant a copy of the Board decision pursuant to 38 U.S.C.§ 7104(e), see
Ashley v. Derwinski, 2 Vet.App. 307, 311 (1992), (3) to provide notice to the claimant of appellate
rights, see In the Matter of the Fee Agreement of Cox, 10 Vet.App. 361, 375 (1997), vacated on
other grounds, 149 F.3d 1360 (Fed. Cir. 1998), or (4) to issue the claimant an SOC, see Tablazon
v. Brown, 8 Vet.App. 359, 361 (1995); Kuo v. Derwinski, 2 Vet.App. 662, 666 (1992). All of these
cases involved claims that had been explicitly decided by an RO in the first instance. Nonetheless,
the essence of each case is that the time limitations pertaining to a veteran's right to appeal an
7
adverse decision do not begin to run until the veteran has received proper notice that his claim was
denied.
In this line of cases, we have also held that a pending claim can be addressed when a
subsequent claim for the same disability is explicitly adjudicated. In Myers v. Principi, 16 Vet.App.
228, 229 (2002), the appellant's claim for service connection for a back condition was denied in
April 1958. Within one year of the mailing of notice of that decision, the appellant submitted a letter
to the RO that the Secretary failed to recognize was an NOD as to that decision. Id. The RO
subsequently denied three requests to "reopen" the 1958 denial and the appellant did not attempt to
appeal them. Id. Finally, in 1994 the RO rejected another attempt to "reopen" the claim and that
decision was appealed to the Board. Id. at 230. After a Board remand, the appellant was granted
benefits and he appealed the effective date assigned. Id. On review of the effective-date decision,
this Court held that the original 1958 RO decision never became final because the NOD had not been
processed, notwithstanding the intermediate denials of the three claims to "reopen." Id. at 235. As
a result, the Board's 1997 decision was a continuation of the appeal that began with the 1959 NOD
and "the veteran's original service-connection claim was part of the current claim stream." Id. at 236.
The Court remanded the matter to the Board to assign an appropriate effective date based on his
original claim. Id. Hence, under Myers, if a claim is left pending, it can be addressed when a
subsequent "claim" is processed.
3. CUE Motions
A claim of CUE is a collateral attack on a final decision by an RO or the Board. Disabled
Am. Veterans v. Gober, 234 F.3d 682, 696-98 (Fed. Cir. 2000), cert. denied, 532 U.S. 973 (2001).
Each theory of CUE is a separate claim. Andre v. Principi, 301 F.3d 1354 (Fed. Cir. 2002) ("[E]ach
'specific' assertion of CUE constitutes a claim that must be the subject of a decision by the Board
before the . . . Court [of Appeals for Veterans Claims] can exercise jurisdiction over it."); Bradley
v. Principi, 14 Vet.App. 255, 256-57 (2001) (per curiam order) (stating that "each [CUE] theory
alleged necessarily constitutes a separate claim").
The claimant must provide some degree of specificity as to what the alleged error is and,
unless it is the kind of error that, if true, would be CUE on its face, "persuasive reasons must be
given as to why the result would have been manifestly different but for the alleged error." Fugo v.
8
Derwinski, 6 Vet.App. 40, 44 (1993); see also Bustos v. West, 179 F.3d 1378, 1380-81 (Fed. Cir.
1999) (adopting this Court's interpretation of 38 C.F.R. § 3.105), cert. denied, 528 U.S. 967 (1999).
To establish CUE in a final decision of an RO or the Board, a claimant must show that (1) either the
correct facts known at the time were not before the adjudicator, or that the law then in effect was
incorrectly applied, and (2) had the error not been made, the outcome would have been manifestly
different. Grover v. West, 12 Vet.App. 109, 112 (1999). A mere disagreement with how the facts
were weighed or evaluated is not enough to substantiate a CUE claim. Damrel v. Brown, 6 Vet.App.
242, 246 (1994). Nor does CUE include the otherwise correct application of a statute or regulation
where, subsequent to the decision challenged, there has been a change in the interpretation of the
statute or regulation. Jordan (Timothy) v. Nicholson, 401 F.3d 1296, 1298-99 (Fed. Cir. 2005);
38 C.F.R. § 20.1403(e) (2005). Moreover, the failure to address a specific regulatory provision
involves harmless error unless it is shown that the outcome would have been "manifestly different."
Fugo, 6 Vet.App. at 44. "Silence in a final RO decision made before February 1990 cannot be taken
as showing a failure to consider evidence of record." Eddy v. Brown, 9 Vet.App. 52, 58 (1996).
C. Theories of the Case
1. Appellant's Theory: The effective-date decision incorrectly identified the claim that was granted.
The essence of the appellant's theory is that the Board decision presently on appeal to the
Court erred during the assignment of his effective date when the Secretary incorrectly identified
which of his submissions was the claim that led to the award of benefits. He maintains that the April
1992 document that the Secretary identifies as the relevant claim under section 5110 was not a new
claim but merely correspondence pertaining to the pending and unadjudicated May 1986 claim. This
theory draws support from 38 C.F.R. § 3.160(c), Myers, and the numerous decisions that hold when
an appellant submits a claim or takes an action on a claim that puts the ball into the Secretary's court,
it remains there–possibly for years–until the Secretary takes appropriate action to return the onus to
the claimant to act within the time periods specified by statute and regulation. See Tablazon, Hauck,
Kuo, and Ashley, all supra.
2. Secretary's Theory: The 1986 RO decision sub silentio denied the appellant's section 1151 claim.
The essence of the Secretary's theory is that even if the May 1986 application raised a claim
under section 1151, the August 14, 1986, RO decision that denied non-service-connected pension
9
benefits also denied the section 1151 claim sub silentio. Accordingly, there was no claim pending
prior to 1992 and the proper procedure for raising the issue is for the appellant to file a motion
asserting CUE in the 1986 RO decision. As no such motion has been filed or decided by the Board,
the Secretary argues that this Court lacks jurisdiction to consider the appellant's theory of error as
part of a direct review of the decision that assigned an effective date to the appellant's 1992 claim.
The Secretary draws support for this theory from the Federal Circuit's statement in Andrews: "when
the VA violates Roberson by failing to construe the veteran' s pleadings to raise a claim, such claim
is not considered unadjudicated but the error is instead properly corrected through a CUE motion."
421 F.3d at 1284. In essence, the Secretary is asserting that the appellant's attempt to raise the
alleged error in this separate proceeding is an unauthorized collateral attack outside the scope of
those permitted by Congress. See Cook, 318 F.3d at 1341 (overruling the decision in Hayre v. West,
188 F.3d 1327 (Fed. Cir. 1999), that "grave procedural error" prevents a decision of the Secretary
from becoming final).
3. The Conflict Between the Theories
The two theories outlined above cannot coexist because they are based on inconsistent factual
premises. The first theory relies on the proposition that there was no decision on the alleged 1986
section 1151 claim while the second theory relies on the 1986 RO decision as a final decision on a
section 1151 claim, which decision must be challenged for CUE. In other words, either the appellant
in this case is trying to bypass the congressionally-authorized procedures for collaterally attacking
the final 1986 RO decision or the Secretary is incorrect to assert that the appellant must attempt to
collaterally attack a decision that is irrelevant to the alleged section 1151 claim that was pending
under § 3.160(c) until 1992 and is now on direct appeal.
Accordingly, the question presented is: Assuming a claim has been reasonably raised by a
claimant, is that claim denied sub silentio by an RO decision that should have adjudicated it, or does
that claim remain pending under § 3.160(c) and Myers until it is explicitly adjudicated?
D. Resolving the Conflict
For the reasons listed below, we conclude that a reasonably raised claim remains pending
until there is an explicit adjudication of the claim or an explicit adjudication of a subsequent "claim"
for the same disability. See Myers and 38 C.F.R. § 3.160(c), both supra. If there is no explicit final
10
denial of the original claim prior to the granting of the subsequent claim, then, as part of his or her
appeal of the effective-date decision, an appellant can raise the fact that he or she filed the original
claim for the same disability at an earlier date than the claim which was subsequently granted.
We begin by looking at the crux of the problem: the apparent inconsistency between Norris
and Andrews. At oral argument, the Secretary asserted that Andrews had overruled Norris. Based
on the analysis below, the Court disagrees. While those decisions discuss related concepts, they are
factually distinguishable from each other and from the other relevant decisions in this area.
Norris is the first of the decisions at issue. In Norris, the appellant filed a claim for an
anxiety disorder. 12 Vet.App. at 414. The claim was granted and he was assigned a schedular rating
and an effective date. Id. Two later decisions of the Board (in 1980 and 1985) granted an increased
schedular rating and denied a TDIU rating. Id. Following those decisions, the appellant underwent
numerous hospitalizations, each of which resulted in an RO decision that awarded the appellant a
temporary total disability rating for the period of his hospitalization and "continued" his 70%
schedular rating thereafter. Id. at 415-16. The evidence at the time of the RO decisions from June
1987 included evidence of unemployability. Id. However, the issue of TDIU was not considered
or decided by the RO. After the RO decisions became final, the appellant filed a motion to revise
the June 1987 and February 1989 RO decisions on the basis of CUE because they failed to adjudicate
TDIU. Id. at 416.
The Court determined that where, as in Norris, the claimant has already been granted service
connection for a disability and has a schedular rating that meets the minimum criteria of 38 C.F.R.
§ 4.16(a) (i.e., he had at least a 60% rating for his psychiatric disorder) and a VA examination report
indicated unemployability due to that disability, the claimant has made an informal claim for a rating
increase, to include an evaluation as to a TDIU rating, and VA must adjudicate TDIU. Id. at 420-21.
The Court concluded that such an informal claim had been raised: "We now hold as a matter of law
that a TDIU claim was reasonably raised to the RO and was not adjudicated. Thus, there is no final
RO decision on this claim that can be subject to a CUE attack." Id. at 422. We note that Norris held
that the TDIU claims reasonably raised in 1987 and 1989 remained pending at the RO, and did not
reach the issue of the ultimate fate of the appellant's claim. The holding of Norris was "the Board
decision determining that CUE was not committed in [the] 1987 and 1989 RO decisions is
11
AFFIRMED for the reasons that are contained herein." Id. (capitalization in original). The practical
conclusion of Norris was that, following the VA medical examination that was conducted to
determine whether the veteran's condition had improved in order to determine whether the assigned
disability rating should be decreased or continued, the 1987 and 1989 RO decisions did not
adjudicate the informal claims for a TDIU rating raised by that evidence when they "continued" or
"resumed" the previously awarded 70% rating after the hospitalization. Id. at 415-16.
By comparison, in Andrews, the appellant was granted service connection and assigned a
disability rating for post-traumatic stress disorder (PTSD) in a 1983 RO decision. 421 F.3d at 1280.
Although there was evidence that the appellant was unemployable, the RO did not decide whether
the appellant was entitled to TDIU. Id. Similarly a 1985 RO decision increasing the appellant's
disability rating did not consider whether the appellant was entitled to a TDIU rating. Id. In 1995,
the appellant filed a motion asserting CUE in the 1983 and 1985 decisions for failing to apply
correctly the disability schedule. Id. "At no time [in the proceedings before the Secretary] did [the
appellant] argue that the RO in 1983 or 1985 had erred in failing to consider Andrews as having
raised a TDIU claim." Id.
The Secretary argued to the Federal Circuit "that, even if the VA had erred in failing to
construe the veteran's pleadings to raise a TDIU claim in the 1983 and 1985 proceedings, such an
error should not be considered on a CUE motion. Rather, the government urges that the TDIU claim
is still pending before the RO awaiting adjudication, and that the Veterans Court and this court are
without jurisdiction because there is no Board decision for us to review." Id. at 1281. The Federal
Circuit replied: "We disagree; the government's position is contradicted by our decision in
Roberson. . . . [W]e clearly held in Roberson that the VA's failure to consider a TDIU claim in this
manner is properly challenged through a CUE motion." Id. Nonetheless, the Federal Circuit in
Andrews concluded that the appellant had not asserted the potential TDIU claim to the Board as a
basis for finding CUE in the 1983 and 1985 RO decisions. Id. at 1284. As the only CUE theory
asserted to the Board was an error in the schedular rating assigned, the TDIU theory of CUE was not
reviewable until properly presented to and decided by the Board. Id.
Andrews relies on the Federal Circuit's decision in Roberson, which also involved a TDIU
claim. Roberson stated that Norris "is both on-point and informative." 251 F.3d at 1383. The
12
Federal Circuit further stated that "[t]he facts of Norris are similar to the present case" (both
appellants received 70% disability ratings for a mental disorder) but concluded that "the facts of
Norris are distinguishable from [the appellant's] situation" because in Norris informal claims, which
were found to raise TDIU, were made subsequent to the initial rating determination whereas in
Roberson TDIU was found to have been raised as part of the initial claim for service connection (i.e.,
assertion of unemployability made prior to the initial RO decision that granted service connection
and awarded a rating). Id. After concluding that the cases were factually distinguishable, Roberson
went on to say:
Unlike Norris, Roberson's original medical disability claim was decided by the RO and is the
claim for which Roberson seeks the highest rating possible. Ratings decisions by the DVA
are deemed "final and binding . . . as to conclusions based on the evidence on file at the time
the [DVA] issues written notification of the decision." 38 C.F.R. § 3104(a) (1994). But see
Hayre v. West, 188 F.3d 1327, 1333 (Fed. Cir. 1999) ("[a] breach of duty to assist in which
the VA failed to obtain pertinent [evidence] specifically requested by the claimant and failed
to provide the claimant with notice explaining the deficiency is a procedural error ... that
vitiates the finality of an RO decision for purposes of a direct appeal"). Roberson has not
alleged that the VA failed to obtain pertinent evidence. Thus, Roberson's claim has been
finally decided by the RO.
251 F.3d at 1383-84 (emphasis added). Accordingly, Roberson expressly considered and did not
overrule Norris. Rather, it found TDIU had been denied by the RO decision on the appellant's initial
disability rating after he had requested "the highest rating possible" disability rating. There is no
suggestion in Roberson that a decision on a wholly different claim could be regarded as a final
decision on a claim not mentioned in that decision. Rather Roberson was narrowly written to leave
the "on-point and informative" decision in Norris intact. Roberson, 251 F.3d at 1383.
The Andrews court did not disagree with Norris, and its decision stated only that a claimant
must raise the issue of an alleged failure to address TDIU through a collateral attack, such as a
motion for revision based on CUE, when evidence regarding TDIU was before the RO prior to its
decision on a claim that sought a schedular rating and that schedular rating decision was not directly
appealed. See DiCarlo, 19 Vet.App. at __, slip op at 5-7 (discussing the types of collateral attack
authorized to challenge a decision by the Secretary). None of these decisions, however, suggests that
it is possible for an RO decision on one claim to be regarded as a denial of a wholly different claim.
Hence, Andrews held, based on the facts presented, that a collateral attack must be used when, as in
13
Roberson, a TDIU rating is not addressed as part of a decision on a claim that sought a schedular
rating and that schedular rating decision is not directly appealed.
This interpretation of Norris, Roberson, and Andrews is consistent with the other decisions
of the Federal Circuit in this area. Twelve days after Andrews was decided, the Federal Circuit said
in Bingham "as we recently held in Andrews v. Nicholson, 421 F.3d 1278 (Fed. Cir. 2005), the VA's
failure to consider all aspects of a claim does not render its decision non-final but instead 'is properly
challenged through a CUE motion.'" 421 F.3d at 1349 (emphasis added). Bingham applied this
principle to hold that a decision that denied service connection for hearing loss was a final decision
as to every theory of entitlement for that benefit, including theories of presumptive service
connection. Id. at 1348-49. Specifically, the Federal Circuit in Bingham held that a 1950 Board
decision denying the appellant's claim for hearing loss was a final decision on every theory under
which that benefit could be granted. Id. Therefore, even if the Board failed to consider the
possibility of presumptive service connection when it denied direct service connection, the appellant
did not have a pending claim for service connection on a presumptive basis because that was a
different theory, not a different claim. We specifically note that Bingham did not suggest that the
Secretary's failure to decide a reasonably raised claim could not lead to a pending and unadjudicated
claim.
In addition to Bingham's interpretation of Andrews and Andrews' reliance on Roberson, we
note that the Federal Circuit has issued two other major cases discussing the Secretary's duty to
sympathetically read a veteran's pleadings in determining whether an informal claim was raised. We
find Moody v. Principi, 360 F.3d 1306 (Fed. Cir. 2004), instructive. In Moody, a 1996 RO decision
granted TDIU and assigned a 1994 effective date because, according to the RO, that was the first
time he claimed that his psychiatric disorder was secondary to his service-connected prostatitis.
360 F.3d at 1309. In 1998, he filed a CUE motion as to the 1996 effective-date decision–he argued
that it was CUE not to find an earlier informal claim for secondary service connection based on his
prior benefits claims and the evidence in the record at the time. Id. The Board rigorously applied
the 38 C.F.R. § 3.155 (2005) informal claim regulation in assessing whether there was an earlier
claim and rejected his CUE motion, and, on appeal to the Court, the appellant argued for a remand
for the Board to consider Roberson. The Federal Circuit held that "[t]he question is whether the
14
B[oard], as required by Roberson, sympathetically read Mr. Moody's filings prior to June 24, 1994,
in determining whether Mr. Moody made an informal claim for secondary service connection for his
psychiatric disorder." Moody, 360 F.3d at 1310. Based on this ruling, the Federal Circuit remanded
the matter to address, using the correct legal standard set forth in Roberson, the factual issue of
whether a claim had been raised. Id. To be clear, while Moody did involve a CUE motion, it was
a CUE motion that asserted error in the effective-date decision, not in a decision that allegedly denied
the claim sub silentio. Accordingly, Moody also supports the proposition that raising a pending
unadjudicated claim theory in connection with a challenge to the effective-date decision is
procedurally proper.
We also note the Federal Circuit's decision in Szemraj v. Principi, supra, does not favor a
particular theory or procedure for dealing with unadjudicated claims. In Szemraj, the appellant
alleged CUE in a 1989 Board decision that denied service connection for a psychosis in service. The
theory of the CUE motion was that the 1989 Board decision "failed to apply the one-year post-
service presumption of service connection provided by 38 C.F.R. §§ 3.307 and 3.309" when it denied
his psychosis claim. Szemraj, 357 F.3d at 1372. Our decision held that the Roberson duty to
sympathetically read the pleadings of a veteran did not apply to CUE motions. Szemraj, 357 F.3d
at 1373. The Federal Circuit reversed this legal conclusion and held that "VA has a duty to
sympathetically read a veteran's allegations in all benefit claims." Id. However, the Federal Circuit
went on to clarify:
[A]part from the requirement that a pro se veteran's pleadings be read
sympathetically, our decision in Roberson did not change the well-established legal
standard for determining the existence of CUE in RO and BVA decisions. See Cook,
318 F.3d at 1344. . . . In Cook we held en banc that in order to constitute CUE, the
alleged error must be both "outcome determinative" and "based upon the evidence
of record at the time of the original decision. 318 F.3d at 1344. . . . Contrary to the
appellant's argument, Roberson does not require VA to reconcile the conflicting
evidence before adjudication, nor does it require the agency to develop evidence on
the veteran's theory. To construe Roberson as requiring factual development as a
matter of course would be to effectively overrule our decision in Cook that the failure
to assist in developing the evidentiary record cannot constitute CUE. See id.
Szemraj, 357 F.3d at 1375-76 (emphasis added). The Federal Circuit then affirmed the outcome of
this Court's decision after concluding that our legal error was harmless because the appellant had not
15
actually made an allegation that the Secretary had failed to give a sympathetic reading to his
pleadings in the decision that allegedly contained CUE.
Szemraj is distinguishable from this case because the CUE motion on appeal was attacking
a prior decision that explicitly denied the claim at issue. The original decision denied a claim for
service connection for psychosis and the CUE motion asserted that the denial of service connection
for psychosis was in error because it failed to consider a specific theory of entitlement. Szemraj, 357
F.3d at 1372. Szemraj did not involve the failure to adjudicate a separate claim that had been
reasonably raised and nothing in Szemraj speaks to the appropriate theory or procedure to employ
when the Secretary fails to adjudicate an entirely separate claim. Szemraj stands only for the
proposition that the duty to sympathetically read a veteran's pleadings also applies to those pleadings
that assert CUE.
Additionally, we note that the Federal Circuit’s en banc decision in Cook endorsed our
pending claim case law. As discussed in Part III.B.2., supra, the en banc Federal Circuit in Cook
favorably reviewed our decisions in Tablazon, Hauck, Kuo, and Ashley and endorsed our holdings
that a procedural default clock does not run while the ball is in the Secretary's court. 318 F.3d at
1340. In overruling the holding in Hayre that "grave procedural error" would prevent a decision of
the Secretary from becoming final, see Hayre, 188 F.3d at 1333, the en banc Federal Circuit in Cook
concluded that our case law on pending claims was distinguishable. The en banc Federal Circuit
concluded that the appellant in Hayre–in spite of any "grave procedural error"–had received notice
of the adjudication and an opportunity to appeal. Cook, 318 F.3d at 1341. Whereas, our pending
claim case law illustrated situations where the appellant had been denied his appellate rights. Id.
If we were to accept the Secretary's invitation to read Andrews broadly as endorsing a general
doctrine of sub silentio denial, we would run afoul of this distinction recognized in Cook. It is
reasonable to say that an appellant who receives a disability rating that is less than 100% has notice
of how his condition has been rated and the opportunity to appeal the rating decision. Even if he
does not have a clear understanding of the TDIU aspect of a rating decision, he does have a clear
statement of which disability is being rated and the fact that the Secretary has declared it to be less
than 100% disabling. Hence, an appellant's ignorance of a particular legal theory for a higher rating
does not preclude him from understanding that an appealable decision has been made concerning
16
his claim. However, by urging us to adopt a doctrine of general sub silentio denials, the Secretary
is suggesting in this case that the denial of a non-service-connected pension claim in 1986 gave the
appellant in this case adequate notice and opportunity to appeal the 1986 RO decision as to a section
1151 claim. This suggestion goes too far. A section 1151 claim, which treats a disability as if it
were service-connected, is in no way an aspect of a claim for a non-service-connected pension.
Reading Andrews as broadly as the Secretary suggests would run afoul of the due process
concerns voiced by the en banc Federal Circuit in Cook and by this Court in Thurber v. Brown,
5 Vet.App. 119, 123 (1993), where we noted that "VA's nonadversarial claims system is predicated
upon a structure which provides for notice and an opportunity to be heard at virtually every step in
the process." See 38 U.S.C. §§ 5104(a) (requiring the Secretary, when making a decision affecting
the provision of benefits to a claimant, to "provide to the claimant . . . notice of such decision"),
5104(b) (requiring the Secretary, when denying a benefit sought, to provide a statement of the
reasons for the decision and a summary of the evidence considered); 38 C.F.R. § 3.103(b) (2005)
("Claimants and their representatives are entitled to notice of any decision made by VA affecting the
payment of benefits or the granting of relief."). Given that Andrews gave no consideration as to the
profound consequences of adopting a general doctrine of sub silentio denials, we do not think it
appropriate to suggest that it meant to cast doubt on the Federal Circuit's decision in Cook.
Aside from the support we find in prior case law, the pending-unadjudicated-claim theory
is clearly a preferable approach to administering the veterans benefits system. Treating the
Secretary’s failure to sympathetically read and adjudicate a reasonably raised claim as a pending
claim benefits veterans because it protects their appellate rights and works no hardship on the
Secretary in that it requires only that each claim be specifically addressed. If a veteran is aware of
a particular benefit and makes an unambiguous claim for it, the Secretary’s duty to sympathetically
read his submissions is irrelevant. That duty primarily helps those veterans who have not clearly
articulated that they are seeking a particular benefit. It is illogical to expect such veterans to
immediately recognize when the Secretary has failed to adjudicate a reasonably raised claim because
it is ignorance of the intricacies of potential claims that makes the duty necessary. Hence, if the law
equates a VA failure to adjudicate a reasonably raised claim to a sub silentio denial of the claim, then
it is unlikely that the veteran would have sufficient notice of the disposition of his claim to assert
17
error on direct appeal. Instead, any error in the adjudication of that claim would have to be raised
in a CUE motion. See 38 C.F.R. § 20.1403(c) (2005) (defining CUE as "a very specific and rare kind
of error. It is the kind of error, of fact or of law, that when called to the attention of later reviewers
compels the conclusion, to which reasonable minds could not differ, that the result would have been
manifestly different but for the error"); see also Moody, supra.
Moreover, even a savvy veteran may not be aware that there is a disagreement as to which
document raised a claim until after an effective date is assigned. Veterans benefits litigation is
frequently piecemeal. A veteran will submit a continuous stream of evidence and correspondence.
Rather than holding all the claims until every one is ready to be decided, the Secretary will develop
and decide multiple claims separately–often over a period of years. A savvy veteran could easily
submit what he believes to be a claim and receive from the Secretary an adjudication of a previously
raised claim for the same disability. The veteran could then submit more correspondence on the
claim he was trying to raise and receive a request from the Secretary for evidence or to report for an
examination. There could be years of intervening appeals, remands, and revised decisions before
the claim is actually granted and the assignment of the effective date reveals that the Secretary did
not recognize the initial submission as a claim for the benefit. In the meantime, the decision that sub
silentio denied the claim that the appellant alleges was reasonably raised has become final and can
only be challenged for CUE. Once again, the veteran would have been denied direct review of the
sub silentio denial because he had no reason to know that was an issue at the time he could have
appealed that decision. Accordingly, accepting a doctrine of sub silentio denials has grave
implications for due process and protecting the appellate rights of veterans.
Of course, not every claim for a benefit will be granted. Accordingly, if a claim is denied,
it is often irrelevant when it was first raised. There does not need to be any decision on the issue of
when the claim was first raised unless and until it actually becomes relevant to an award of benefits.
If a claim is granted, however, the date the claim was first raised is relevant to determining the
effective date. Under Myers, the appellant can argue that an earlier claim for the benefits should be
considered part of the same claim stream that eventually resulted in the award of benefits for the
purpose of establishing the effective date. If a veteran believes that he has a pending claim for a
benefit that has not received an initial decision, the veteran can unambiguously inform the Secretary
18
that a particular benefit is being sought. The Secretary must then decide entitlement to the benefit
and-if relevant-address the issue of when the claim was first raised. See DiCarlo, 19 Vet.App. at __,
slip op. at 7 (holding that the finality of a specific claim is an issue that can be raised when relevant,
but is not a procedure or claim in and of itself).
This is not to say that the question of when a claim was raised will never be relevant before
an effective date is assigned. It may be relevant, for example, to determining which version or
versions of the law are relevant to the substantive question of entitlement. See Rodriguez
v. Nicholson, 19 Vet.App. 275, 288-89 (2005) (discussing considerations relevant to determining
which version of a statute or regulation should apply when there is a change during the pendency of
a case). However, it makes little sense to adjudicate the issue of when a claim was raised unless that
issue will have some practical effect. In many cases, deciding whether or not a claim was reasonably
raised below on the possibility that it might be relevant to a future effective-date determination
amounts to nothing more than an advisory opinion. See Waterhouse v. Principi, 3 Vet.App. 473, 474
(1992) (the Court does not issue advisory opinions); cf. Mintz v. Brown, 6 Vet.App. 277, 281, 283
(1994) (Board lacked jurisdiction to entertain appellant's claim where he was seeking an advisory
opinion).
Finally, we do not hold that the Secretary’s failure to adjudicate a reasonably raised claim can
never be the basis for a CUE motion. Rather it can be the basis of a CUE motion as to a final
decision of the Secretary where the issue was relevant to a decision actually made. As discussed
above, Moody is a good example. Because the effective-date decision in that case had become final,
the appellant properly alleged CUE in the effective-date decision on the theory that it failed to
correctly identify which document was the appellant’s claim for purposes of assigning an effective
date under section 5110. The appellant's theory in this case is no different from the theory of the
appellant in Moody. The only difference is that, as a matter of procedure, the appellant here has
directly appealed his effective-date decision rather than allowing it to become final. See Beverly, 19
Vet.App. at 406 ("It would be illogical and unfair to require the appellant to wait until the Board
decision is final and then face the high burden of proving CUE when any other error can be
addressed immediately and more favorably when raised in a timely manner.")
19
Based on the above, we conclude that the Federal Circuit has neither overruled the pending-
unadjudicated-claim doctrine articulated in Norris nor created a general doctrine of sub silentio
denials. Therefore, the appellant is correct that we have jurisdiction over his appeal because it is not
a collateral attack on a prior final RO or Board decision.
E. Application of Law to Fact
Now that we are satisfied that the appellant is properly raising his assertion of error against
the effective-date decision, we must review the Board's findings and conclusions below. The Board
reviewed the 1986 filings and found that nothing in the four corners of either document could be
construed as an intent to claim section 1151 benefits R. at 8-9. The Board focused on whether the
appellant had alleged negligence or a lack of proper skill on the part of the VA physicians and
whether he had expressed an intent to apply for section 1151 benefits. R. at 8-9. Both of these forms
of analysis were legally incorrect. As the Federal Circuit explained in Hodge v. West, 155 F.3d 1356,
1362-63 (Fed. Cir. 1998), when it announced the sympathetic-reading requirement based on the
legislative history of the Veterans' Judicial Review Act and Veterans' Benefits Improvement Act of
1988, Congress intended to preserve the nonadversarial nature of the VA system wherein the
Secretary provides claimants with assistance in submitting and substantiating claims. Although there
is no statutory or regulatory definition of "sympathetic reading," it is clear from the purpose of the
doctrine that it includes a duty to apply some level of expertise in reading documents to recognize
the existence of possible claims that an unsophisticated pro se claimant would not be expected to be
able to articulate clearly. Cf. Andrews, 421 F.3d at 1283 (holding that the duty to sympathetically
read submissions does not apply to pleadings through counsel).
As to the Board's suggestion that the appellant was required to allege negligence or lack of
skill, measuring the appellant's submissions against a strict pleading requirement is fundamentally
inconsistent with the concept of a sympathetic reading and, therefore, constituted legal error by the
Board. The application of such a pleading requirement violates the duty to sympathetically read
submissions because it required the appellant to demonstrate a level of sophistication that would
render moot the duty to sympathetically read his pleadings. In other words, it is precisely because
unsophisticated claimants cannot be presumed to know the law and plead claims based on legal
elements that the Secretary must look at the conditions stated and the causes averred in a pro se
20
pleading to determine whether they reasonably suggest the possibility of a claim for a benefit under
title 38, regardless of whether the appellant demonstrates an understanding that such a benefit exists
or of the technical elements of such a claim. The Board's suggestion that the appellant was required
to articulate a specific intent to "claim . . . compensation benefits under the provisions of 38
U.S.C.A. § 1151" is similarly flawed. R. at 8, 9. The duty to sympathetically read exists because
a pro se claimant is not presumed to know the contents of title 38 or to be able to identify the specific
legal provisions that would entitle him to compensation. Again, there would be no need for the duty
to sympathetically read pleadings if pro se claimants had encyclopedic knowledge of veterans law.
Finally, we hold that it was also error for the Board to suggest that it was limiting the material
being reviewed to the "four corners" of the application and the statement in support of the claim.
Cf. EF v. Derwinski, 1 Vet.App. 324, 326 (1991) (holding that VA's duty to give a liberal reading
to an appeal of an RO decision applies to "all documents or oral testimony submitted prior to the
B[oard] decision"). While it is not clear in the record that there were any other submissions by the
appellant in connection with his 1986 application, the Board's articulation of a "four corners"
standard for reviewing the appellant's pleadings is overly formal in a system where the Secretary
must take a sympathetic view of an appellant's pleadings to determine whether a claim has been
made.
In summary, a sympathetic reading of the appellant's pleadings cannot be based on a standard
that requires legal sophistication beyond that which can be expected of a lay claimant and must
consider whether the appellant's submissions, considered in toto, have articulated a claim. In this
case, it is premature for us to determine whether the Board's finding was clearly erroneous because
its denial was based on the application of overly strict requirements that were inconsistent with the
Secretary's duty to sympathetically read pro se pleadings. Although we need not formulate a specific
standard at this time, we note that the duty to sympathetically read must be based on reasonable
expectations of a pro se claimant and the Secretary. It is the pro se claimant who knows what
symptoms he is experiencing that are causing him disability, see Cintron v. West, 13 Vet.App. 251,
259 (1999) ("[c]ertainly, the RO had no obligation to read the mind[] of the veteran"), and may assert
potential causes of the disability even if he is not competent to make a medical diagnosis, see
Espiritu v. Derwinski, 2 Vet.App. 492, 494 (1992) (holding that lay person is not competent to offer
21
evidence that requires medical knowledge). On the other hand, it is the Secretary who knows the
provisions of title 38 and can evaluate whether there is potential under the law to compensate an
averred disability based on a sympathetic reading of the material in a pro se submission.
On remand, the Secretary must consider whether the May 8, 1986, application and the
appellant's submissions in support of that application raised a claim for benefits under section 1151
based on a sympathetic reading of those documents that does not require conformance with legal
pleading requirements or intent to seek benefits under section 1151 explicitly. In addition, such
consideration must be undertaken in accordance with regulations, law, and provisions in the VA
Adjudication Procedure Manual that may be applicable to his 1986 filings, see, e.g., 38 C.F.R.
§§ 3.151 (1985 & 2005) ("claim . . . for pension may be considered to be claim for compensation");
3.155 (1985 & 2005) (discussing informal claim); VA Adjudication Procedure Manual (M21-1),
para. 21.01(a) (1983-1990) ("VA Form 21-526, Veterans Application for Compensation or Pension")
(VA to consider "VA Form 21-526 properly completed as to items 1 through 40 and signed by the
veteran in item 42" as "a claim for either disability compensation or pension, or both, depending
upon the manner of preparation and intent of the claimant, as provided below"); M21-1, Part III,
para. 2.02(a) (2005) (essentially same as above but without reference to item numbers on Form 21-
526); M21-1, para. 21.01(d) (1983-1990) ("Combined Claim for Compensation and Pension") ("If
the information specified" in both subparagraphs b (regarding claims for compensation) and c
(regarding claim for pension) above is furnished, VA is to consider it "a claim for both benefits," and
"[i]f there is any doubt as to which benefits is sought," VA is to adjudicate "both phases of the
claim"); M21-1, Part III, para. 2.02(d) (2005) (essentially same). If the Board concludes that such
a claim was raised, it must decide whether that claim was ever adjudicated or whether it was still
pending at the time of the April 15, 1992, correspondence from the veteran. Based on its factual
findings, the Board must address whether the appellant is entitled to an effective date earlier than
April 15, 1992, for the grant of benefits under section 1151.
IV. CONCLUSION
Accordingly, the December 12, 2003, Board decision is VACATED and the matter is
REMANDED for further proceedings consistent with this opinion.
22 | 01-03-2023 | 02-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1762580/ | 278 So.2d 100 (1973)
STATE of Louisiana
v.
Wilbert RIDEAU.
No. 52492.
Supreme Court of Louisiana.
May 7, 1973.
*101 James A. Leithead, Lake Charles, James A. Wood, Norco, James A. George, Baton Rouge, for defendant-appellant.
William J. Guste, Jr., Atty. Gen., Ossie Brown, Frank T. Salter, Jr., Dist. Attys., J. B. Jones, Jr., Asst. Dist. Atty., for plaintiff-appellee.
DIXON, Justice.
Defendant appeals from his conviction of murder, R.S. 14:30, and his sentence to death.
This prosecution is one that has been in the courts for many years. The original indictment arose out of the robbery of the Southgate Branch of the Gulf National Bank in Lake Charles on February 16, 1961. In the robbery, Julia Ferguson was killed.
Defendant was originally tried by a jury in the Fourteenth Judicial District Court, Parish of Calcasieu. He was found guilty and sentenced to death. On appeal to this court, the conviction and sentence were affirmed. 242 La. 431, 137 So.2d 283 (1962). In our opinion, we stated the facts surrounding the offense as follows:
"At approximately 6:55 p. m. Rideau entered the bank and at pistol point forced three employees, Julia Ferguson, Dora McCain and Jay Hickman, to fill a suitcase with money. He forced them into Julia Ferguson's automobile and directed them at pistol point to an uninhabited area northeast of Lake Charles. He then ordered them out of the car, lined them up three abreast, and fired six shots at them. Jay Hickman ran to his right and fell into a bayou. Dora McCain fell directly in front of Rideau on the west shoulder of the road. Julia Ferguson fell near Dora McCain. When Julia Ferguson attempted to rise to her knees, Rideau stabbed her to death with his hunting knife."
The United States Supreme Court reversed the conviction and sentence. Rideau *102 v. State of Louisiana, 373 U.S. 723, 83 S.Ct. 1417, 10 L.Ed.2d 663 (1963). The court held that, due to a televised interview of the defendant, he was deprived of due process of law.
Following the reversal by the United States Supreme Court, the district attorney of Calcasieu Parish moved in the trial court that the defendant show cause why a change of venue should not be ordered to a court outside the range of KPLC-TV, Lake Charles, over which the interview was televised. The defendant joined in the motion. The trial judge held that he was without authority to transfer the case to any parish other than another parish in his district or in an adjoining districtall within the range of KPLC-TVand denied the motion. On appeal, this court reversed the judgment of the trial court and granted the district attorney's motion. Because the Constitution guarantees a speedy public trial by an impartial jury to all accused persons, Art. I, § 9, Louisiana Constitution of 1921, we ordered the trial judge to grant defendant a change of venue to a parish in Louisiana outside the range of television station KPLC-TV, Lake Charles, Louisiana. State v. Rideau, 246 La. 451, 165 So.2d 282 (1964).
Venue was changed to the Nineteenth Judicial District Court in and for the Parish of East Baton Rouge. Defendant was tried in that court, was found guilty, and was sentenced to death. This court affirmed the conviction and sentence. 249 La. 1111, 193 So.2d 264 (1967). The United States Supreme Court denied certiorari. 389 U.S. 861, 88 S.Ct. 113, 19 L.Ed.2d 128 (1967).
Defendant next applied to the United States District Court for the Eastern District of Louisiana for habeas corpus which was granted and "suspended for a period of ninety (90) days, or for such additional time as may be granted the State of Louisiana by this Court within which to re-try petitioner in accordance with law, if it elects to do so...."[1]
Again defendant was retried, convicted and sentenced to death. It is from this third conviction and sentence that Rideau now appeals to this court. During the course of the proceedings, some twenty-eight bills of exceptions were reserved. Those not abandoned and those meriting discussion will be discussed.
Bill of Exceptions No. 1
Bill of Exceptions No. 1 was reserved when the trial judge permitted one of the defendant's court appointed attorneys to withdraw from the prosecution.
*103 Fred H. Sievert, Jr., a member of the law firm of Stockwell, St. Dizier, Sievert and Viccellio, alleged in a motion filed December 15, 1969 that Oliver P. Stockwell was a special assistant attorney general for the State of Louisiana and was engaged on behalf of the State in litigation. Sievert stated that under such circumstances, it appeared to him that he could not continue to represent the defendant.
James A. Leithead, another defense attorney, filed a motion, December 15, 1969, in which he alleged that his law partner was an assistant attorney general authorized to perform the duties of such office. He prayed that he be relieved of his court appointment as counsel.
The trial court denied Leithead's motion, finding that his law partner was an honorary assistant attorney general who would rarely perform services for the State.
Under Article 65 of the Code of Criminal Procedure, Seivert was allowed to withdraw as counsel. Another attorney was appointed by the trial court to assist in representing the defendant.
Article 65 of the Code of Criminal Procedure provides:
"It is unlawful for the following officers or their law partners to defend or assist in the defense of any person charged with an offense in any parish of the state:
"(1) Any district attorney or assistant district attorney; or
"(2) The attorney general or any assistant attorney general."
Defense counsel contend that this article is unconstitutional and violates the Sixth and Fourteenth Amendments to the United States Constitution because it deprives the defendant of one of his counsel who was experienced and knowledgeable concerning the facts and procedure required in this case.
An examination of the record discloses that defendant was well represented by his court-appointed counsel. (The bills of exceptions reserved indicate that counsel were alert, thorough and knowledgeable). Defendant suffered no prejudice because of his counsel. They were able and energetic.
There is no merit to counsel's contention concerning the unconstitutionality of C.Cr.P. art. 65. Bias and prejudice could result if the law did not contain the prohibitions set forth in Article 65. By its provisions, Article 65 precludes an unfair trial and lack of due process. An indigent defendant is not entitled to choose a certain lawyer.
Bill of Exceptions No. 1 is without merit.
Bill of Exceptions No. 2
Bill of Exceptions No. 2 was reserved when the trial court overruled both defense counsel's motion to quash the general venire list, grand jury venire, and indictment of the Grand Jury of Calcasieu Parish and his motion to quash the general venire list and petit jury venire of East Baton Rouge Parish.
With respect to Calcasieu Parish, defense counsel contend that the venire lists did not represent a cross-section of the community and that there was racial discrimination in their composition.
With respect to the Parish of East Baton Rouge, counsel contend that the venire lists did not represent a cross-section of the community.
The majority of the contentions raised by defense counsel in this bill of exceptions were presented on appeal and considered by us in State v. Rideau, 249 La. 1111, 193 So.2d 264, 268 (1967). In deciding adversely to defendant, we stated:
"Fairness in the formation of the jury bodies is a fundamental requirement, long recognized by this Court.... *104 Both the state and federal constitutions require that jury bodies be selected without discrimination because of race. A planned limitation of the number of negroes selected to serve on the grand jury imposed on the basis of race is prohibited....
"The question of whether racial or other discrimination has been practiced in the formation of the jury bodies is one of fact.... The burden of establishing such discrimination rests upon the defendant....
"The Jury Commission of Calcasieu Parish selected the list of Grand Jurors on January 5, 1961, before the commission of the crime charged. Clearly, therefore, no action of the jury officials could have been designed to prejudice the defendant."
Out of an abundance of caution, we have studied this bill and find that defendant has not shown that he suffered any prejudice from the venire selection in Calcasieu Parish. Likewise, he has not shown that he suffered any prejudice from the venire selection in East Baton Rouge Parish. Purposeful discrimination may not be assumed or merely asserted, it must be proved. State v. Grey, 257 La. 1070, 245 So.2d 178 (1971). A defendant who claims discrimination has the burden of establishing that such was the fact. State v. Douglas, 256 La. 186, 235 So.2d 563 (1970). The mere establishment of disparity between the number of Negroes on a venire list and the number of whites does not make a prima facie case of discrimination which must stand where not rebutted by the State. State v. Poland, 255 La. 746, 232 So.2d 499 (1970).
The testimony attached to the bill shows that the venire for East Baton Rouge Parish, at the time of this third trial and immediately prior thereto, represented a cross-section of the community.
Under the facts and circumstances, we find that the trial judge committed no error in denying these motions. Defendant did not bear his burden of proof. He has shown neither prejudice nor violation of constitutional rights.
Bill of Exceptions No. 2 is without merit.
Bills of Exceptions Nos. 3, 4, 5, 6, 7, 8 and 9
Defense counsel avers that on voir dire examination prior to empanelling the petit jury the trial court excused seven prospective jurors for cause when they testified that they would be unable to bring in the death penalty. Defense counsel contends that the action of the trial judge was prejudicial to the defendant.
These bills need not be discussed. State v. Duplessis, 260 La. 644, 257 So.2d 135 (1971) and Furman v. Georgia, 408 U.S. 238, 92 S.Ct. 2726, 33 L.Ed.2d 346 (1972) obviate the necessity. At the present time, the death sentence cannot be imposed.
Bills of Exceptions Nos. 13 and 15
Bills of Exceptions Nos. 13 and 15 were reserved when the trial court denied defense counsel's motions for a mistrial.
During the course of the trial, two witnesses were questioned by the State concerning their possession of evidence. In answering, the witnesses referred to defendant's first trial. One witness testified that he had carried shoes to court during the first trial. The second witness was asked whether money was taken out of the bank at any time. He responded that it had been taken out for the first trial.
Defense counsel contend that the witnesses' answers prejudiced the defendant and influenced the jury's verdict.
We find that no prejudice was suffered by the defendant as a result of the first question propounded because defense counsel had previously opened the door for the line of questioning.
*105 The second question might be classed as erroneous, but it did not demand a mistrial. The trial judge ably admonished the jury as follows:
". . . at this point the Court will instruct and admonish you that you are to disregard the answer to the last question that this witness gave just before you retired. You are further instructed at this time that in this case, as in any criminal case, the accused is presumed to be not guilty or he has the presumption of innocence in his favor and that this presumption of innocence abides with him until such time that you hear competent evidence from the witness stand which convinces you to the contrary and beyond a reasonable doubt. The instruction to disregard the answer to the last question means for your purposes that it is not competent evidence."
Every error in the admission of evidence does not require that a conviction be set aside. C.Cr.P. art. 921; State v. Williams, 260 La. 941, 257 So.2d 668 (1972), Harrington v. California, 395 U.S. 250, 89 S.Ct. 1726, 23 L.Ed.2d 284 (1969).
We conclude that if any error was committed in the line of questioning by the State, such error was harmless and did not require the granting of defense counsel's motions for a mistrial.
Bills of Exceptions No. 13 and 15 are without merit.
Bills of Exceptions Nos. 10, 11, 12, 14, 16, 17, 18 and 19 have not been briefed. We find that they have been abandoned and do not require discussion.
Bills of Exceptions Nos. 20, 21, 22, 23 and 24
The above bills of exceptions were reserved when the trial court refused to permit defense counsel to adduce testimony with respect to defendant's present sanity and to adduce testimony with respect to the application to defendant of the Durham rule set forth in Blake v. United States, 407 F.2d 908 (5th Cir. 1969) as follows:
"(1) A person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law.
"(2) As used in this Article, the terms `mental disease or defect' do not include an abnormality manifested only by repeated criminal or otherwise antisocial conduct."
Defendant argues that he should have been allowed to present evidence to the jury of his present mental conditionevidence the jury might use in considering whether to render a verdict which carried the death penalty. This argument is moot because we do not now have the death penalty.
Neither does the defendant argue, nor does the record reflect, that the defendant was unable to understand or assist in his defense.
The trial judge committed no error in forbidding testimony with respect to the defendant's present sanity. State v. Jenkins, 236 La. 256, 107 So.2d 632 (1959), State v. Rogers, 241 La. 841, 132 So.2d 819 (1961).
The question of insanity at the time of the commission of the crime was a matter for the jury to determine. Louisiana has not adopted the Durham rule, supra, and the trial judge correctly forbade testimony with respect thereto.
Bills of Exceptions Nos. 20, 21, 22, 23 and 24 are without merit.
Bills of Exceptions Nos. 25 and 26 are not argued in brief. We presume that they have been abandoned. They will not be discussed.
*106 Bill of Exceptions No. 27
Bill of Exceptions No. 27 was reserved when the trial court refused to give the jury special charges requested by defense counsel.
Six charges were submitted to the trial judge by defense counsel. Four of the charges related to the defendant's averred insanity at the time of the commission of the offense charged. Charge No. 5 related to a possible verdict of "Not Guilty by Reason of Insanity." Charge No. 6 related to a mitigated verdict.
We find that the trial judge committed no reversible error in refusing to give the requested special charges. His ruling properly recites:
"Request Number 1 was refused for the reason that it is covered in the general charge. Request as to charge number 2 was likewise refused, it being generally covered in the Court's charge and further paragraph 2 of this charge is not the rule applicable in this State. Defendant's request for charge number 3 is refused for the reason that it is covered in the general charge of the Court and is an incomplete statement of the proper charge. Defendant's request for charge number 4 is refused for the reason that in part it's covered by the general charge and the remaining part is not a correct statement of the law of this State. The defendant's request for charge number 5 is refused for the reason that the Court is of the opinion that the dominant theme of this request to charge is a matter that addresses itself to the Court and not to the jury. Article 654 is couched in terms that the Court shall. I do not think the request for charge is a proper matter for jury consideration. I feel that the general charge on the plea of insanity adequately and properly covers the subject matter, as our law is presently postured. See Article 805 of the Code of Criminal Procedure. The defendant's request for charge number 6 is refused for the reason that it is properly covered in the general charge."
Our review of the trial judge's general charge discloses that he adequately instructed the jury on the law applicable to this case. That portion of the requested charges which represented correct statements of the law were contained in the general charge. See, State v. McClure, 258 La. 999, 249 So.2d 109 (1971), State v. Fox, 251 La. 464, 205 So.2d 42 (1967).
Bill of Exceptions No. 27 is without merit.
Bill of Exceptions No. 28
Bill of Exceptions No. 28 was reserved when the trial court denied defense counsel's motion for a new trial.
The motion for a new trial raises matters that were discussed and determined in other bills of exceptions. Consideration of Bill of Exceptions No. 28 is unnecessary.
The mandate of the United States Supreme Court in the case of Furman v. Georgia, supra, requires the imposition of a sentence other than death. Therefore, for the reasons assigned, defendant's conviction is affirmed. The death sentence imposed upon defendant is annulled and set aside, and the case is remanded to the Nineteenth Judicial District Court with instructions that the defendant be sentenced to life imprisonment.
BARHAM, J., dissents and assigns reasons.
CALOGERO, J., concurs with reasons.
BARHAM, Justice (dissenting).
Bill of Exceptions No. 2, considered in the majority opinion, was taken to the trial court's overruling of defendant's motions to quash the general venire list, the grand jury venire, and the indictment by the *107 grand jury of Calcasieu Parish.[1] The majority found the bill to be without merit, stating that the defendant had not shown that he suffered any prejudice from the venire selections and that he failed to carry the burden of proof by establishing that discrimination existed in fact.
It is my belief that the majority applied incorrect standards in deciding the merits of this bill of exceptions. It is axiomatic that a defendant need not show that he has suffered prejudice from the venire selection where it is shown that selection processes result in a constitutionally impermissible jury venire and that these processes do not insure a fair and adequate representation of the community in the general venire. Moreover, it is equally well established that once a prima facie case of purposeful discrimination has been established, the burden of proof shifts to the State to rebut the presumption of unconstitutional selection. Alexander v. Louisiana, 405 U. S. 625, 92 S.Ct. 1221, 31 L.Ed.2d 536 (1972); Whitus v. Georgia, 385 U.S. 545, 87 S.Ct. 643, 17 L.Ed.2d 599 (1967).
First, it is necessary to examine the facts which the defendant has established to buttress his contention that purposeful discrimination was exercised in the jury selection processes. At the hearing on defendant's motions to quash the various jury venires and the indictment, defendant established through the testimony of Acton Hillebrandt, a member of the jury commission of Calcasieu Parish, that all of the jury commissioners who selected the general jury venire and the grand jury venire existing in Calcasieu Parish at the time of the return of the indictment against the defendant were white.
Although defendant failed to establish the racial composition of the general venire ultimately chosen by the jury commissioners, he did establish that the general jury venire of Calcasieu Parish was personally selected (as opposed to chosen at random) by the jury commission by use of cards which included information showing the race of each potential juror.
Defendant further established that the grand jury venire was also personally selected by the jury commission in such a way that the race of those from whom the selection was to be made was readily apparent during the choice process. The testimony of Acton Hillebrandt clearly showed "* * * all realized that both races should be represented" and that the commissioners knew that Negroes "had to be on there one way or the other". Also established at the hearing, through the introduction as exhibits of a copy of the 1960 census and an affidavit by the register of voters of Calcasieu Parish, were the facts that 25 per cent of the population of the parish 21 years of age or older were black and that approximately 162/3 per cent of the registered voters in Calcasieu Parish were black.[2] Nevertheless, only one black prospective juror was selected for the grand jury venire of 20 (5 per cent). This black served on the grand jury which indicted the defendant.
It cannot be seriously contended that this defendant failed to make out a prima facie case of purposeful racial discrimination in the selection of the grand jury venire. He has established that only 5 per cent of the grand jury venire was black, while the population of Calcasieu Parish 21 years or older was 25 per cent black. That grand *108 jury venire was selected, not at random, but with the commissioners' full knowledge of the race of each person selected. But here, as in Alexander, supra, it is not necessary that we "* * * rest our conclusion that petitioner has demonstrated a prima facie case of invidious racial discrimination on statistical improbability alone, for the selection procedures themselves were not racially neutral".
While there has been much furor about the duty of jury commissioners to be fully cognizant of the make-up of the community which they serve in order to insure fairness in jury selection processes (see Brooks v. Beto, 366 F.2d 1, 5th Cir. 1966, overruling Collins v. Walker, 335 F.2d 417, 5th Cir. 1964), it still cannot be seriously questioned that a deliberate inclusion of blacks on a jury venire may not be made so as to effect a "predetermined or fixed limitation". To put it differently, deliberate inclusion may not be employed as a means to effect exclusion.
It is therefore apparent that the defendant has established a prima facie case of purposeful discrimination, and the record does not disclose anything which may be interpreted as success by the State in effectively discharging the burden of rebutting the presumption of unconstitutional action. This being the case, I believe that we are obligated to follow the United States Supreme Court's decisions in Alexander v. Louisiana and Whitus v. Georgia.
For the reasons set forth above, I respectfully dissent from the majority's opinion.
CALOGERO, Justice (concurring):
The showing made by the defendant at the hearing on the motion to quash the general venire list, and grand jury venire for Calcasieu Parish and indictment rendered by the grand jury for the Parish of Calcasieu, and the showing made to quash the general venire list and petit jury venire for the Parish of East Baton Rouge was entirely inadequate to support his allegations of discrimination.
Since I am in accord with the majority opinion's treatment of the remaining bills of exceptions, I respectfully concur.
NOTES
[1] The judgment and order of the United States District Court of May 12, 1969 recites:
"This matter came on for hearing on petitioner's application for a writ of habeas corpus. He is presently incarcerated at Louisiana State Penitentiary awaiting the execution of the death sentence after having been convicted of murder by a state court jury. The primary ground asserted by petitioner at this hearing upon which he based his application for habeas corpus was that numerous jurors were excused by the State Court, when, upon their voir dire examination, they stated that they did not believe in capital punishment. No further inquiry was made by the court as to whether or not they could, in spite of their beliefs or feelings, vote for the infliction of such a penalty. After hearing arguments of petitioner's counsel, counsel for the state conceded that the case of Witherspoon v. State of Illinois, 391 U.S. 510, 88 S.Ct. 1770, 20 L.Ed.2d 776, was controlling here, and that, in accordance with the teaching of that case, the death sentence imposed in this case must be set aside as having, in effect, been imposed by a jury selected in violation of petitioner's constitutional rights. While the Supreme Court of the United States in Witherspoon specifically held that they were setting aside only the sentence and not the conviction in that case, nevertheless, this court concludes that since, in the present case, it was the conviction of the jury that made it mandatory on the court to impose the death sentence on petitioner, the conviction as well as the sentence in this case must be set aside, reserving, of course, to the State of Louisiana the right to re-try petitioner within a reasonable time and in accordance with law."
[1] This bill of exceptions also involves defendant's motions to quash the general venire list and the petit jury venire of East Baton Rouge Parish, where he was tried. Because of the view taken regarding defendant's attacks on the Calcasieu Parish general venire, grand jury venire, and indictment, I find it unnecessary to consider these motions.
[2] The statistics supplied by defendant in brief, and not disputed by the State, are accepted for purposes of exhibiting the racial disparity of the grand jury venire in this case. These figures were contained in defendant's exhibits filed in evidence at the hearing on the motions to quash, but these exhibits are not available for verification of the figures supplied in brief. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1023631/ | 499 F.3d 329 (2007)
Tunbosun Olawale WILLIAM, Petitioner,
v.
Alberto R. GONZALES, Attorney General, Respondent.
American Immigration Law Foundation, Amicus Supporting Petitioner.
No. 06-1284.
United States Court of Appeals, Fourth Circuit.
Argued: March 15, 2007.
Decided: September 6, 2007.
ARGUED: Craig D. Margolis, Vinson & Elkins, Washington, D.C., for Petitioner. Daniel Eric Goldman, United States Department of Justice, Office of Immigration Litigation, Washington, D.C., for Respondent. ON BRIEF: Tirzah S. Fitzkee, Amy L. Riella, Vinson & Elkins, Washington, D.C., for Petitioner. Peter D. Keisler, Assistant Attorney General, Civil Division, M. Jocelyn Lopez Wright, Assistant Director, United States Department of Justice, *330 Office of Immigration Litigation, Washington, D.C., for Respondent. Trina Realmuto, Beth Werlin, American Immigration Law Foundation, Washington, D.C., for Amicus Supporting Petitioner.
Before WILLIAMS, Chief Judge, and MICHAEL and SHEDD, Circuit Judges.
Petition for review granted; order vacated by published opinion. Judge SHEDD wrote the majority opinion, in which Judge MICHAEL joined. Chief Judge WILLIAMS wrote a dissenting opinion.
OPINION
SHEDD, Circuit Judge:
Tunbosun Olawale William petitions for review of an order of the Board of Immigration Appeals ("BIA") holding that it could not consider his motion to reopen immigration proceedings which was filed after he had been removed from the United States. In reaching this conclusion, the BIA relied on 8 C.F.R. § 1003.2(d). Because we conclude that this regulation conflicts with clear statutory language and is therefore invalid, we grant the petition for review, vacate the order of the BIA, and remand for further proceedings.
I
Since 1962, aliens involved in immigration proceedings have been able to file motions to reopen those proceedings before the BIA. Initially, motions to reopen were creatures solely of regulation. Medina-Morales v. Ashcroft, 371 F.3d 520, 528 (9th Cir.2004) ("Until . . . 1996, [t]here [was] no statutory provision for reopening of a deportation proceeding, and the authority for such motions derive[d] solely from regulations promulgated by the Attorney General.") (internal punctuation omitted) (alteration in original). As part of this regulatory scheme, 8 C.F.R. § 3.2 (predecessor to 8 C.F.R. § 1003.2(d)) provided:
[A] motion to reopen or a motion to reconsider shall not be made by or on behalf of a person who is the subject of deportation proceedings subsequent to his departure from the United States. Any departure from the United States of a person who is the subject of deportation proceedings occurring after the making of a motion to reopen or a motion to reconsider shall constitute a withdrawal of such motion.
This regulation largely paralleled a statutory provision, 8 U.S.C. § 1105a(c) (1962), which barred the federal courts from exercising jurisdiction over immigration orders when the alien had departed the country.
In 1996, Congress made major changes to immigration law through the enactment of the Illegal Immigration Reform and Immigrant Responsibility Act ("IIRIRA"), Pub.L. No. 104-208, 110 Stat. 3009. Among other things, IIRIRA (1) repealed the statutory bar to judicial review of deportation orders when the alien had departed the country and (2) codified and enacted procedures governing the filing of motions to reopen. Specifically, in codifying motions to reopen, Congress provided: "An alien may file one motion to reopen proceedings under this section. . . ." 8 U.S.C. § 1229a(c)(7)(A) (originally designated 8 U.S.C. § 1229a(c)(6)(A)). Congress then proceeded to detail the required content of a motion to reopen, the deadline for filing the motion, and exceptions from both the numerical limit of one motion and the time period for filing the motion. § 1229a(c)(7)(A)-(C).
After Congress' codification of the motion to reopen in IIRIRA, the Attorney General repromulgated, in essentially the same form, the regulation imposing the *331 bar to BIA review of motions to reopen when an alien has departed the country:
A motion to reopen or a motion to reconsider shall not be made by or on behalf of a person who is the subject of exclusion, deportation, or removal proceedings subsequent to his or her departure from the United States. Any departure from the United States, including the deportation or removal of a person who is the subject of exclusion, deportation, or removal proceedings, occurring after the filing of a motion to reopen or a motion to reconsider, shall constitute a withdrawal of such motion.
8 C.F.R. § 3.2 (later redesignated 8 C.F.R. § 1003.2(d)); see 62 Fed.Reg. 10312, 10321, 10331 (Mar. 6, 1997), 68 Fed. Reg. 9824 (Feb. 28, 2003). The validity of this regulation and its application to William are at issue in this case.
II
William is a native and citizen of Nigeria who became a permanent legal resident of the United States in 1996. In June 1997, William pled guilty to receipt of a stolen credit card in violation of Maryland law. William was sentenced to eighteen months imprisonment, with nine months suspended, and three years probation.
On November 28, 1997, the Immigration and Naturalization Service ("INS") charged William with being removable as an aggravated felon for committing an offense involving fraud or deceit in which the loss to the victim exceeds $10,000. See 8 U.S.C. §§ 1101(a)(43)(M), 1227(a)(2)(A)(iii). Subsequently, the INS also charged William with being removable as having committed a crime of moral turpitude. See 8 U.S.C. § 1227(a)(2)(A)(i). During subsequent proceedings, an immigration judge found William removable as having been convicted of a crime of moral turpitude and found him ineligible for relief. The BIA affirmed this decision, and William did not seek further review in this court. William then filed with the BIA a motion to reconsider, arguing that he had received limited post-conviction relief in the form of a reduction of sentence. The BIA denied this motion and, again, William did not pursue further review.
On July 11, 2005, William was removed from the United States. Shortly thereafter, William filed a petition for a writ of coram nobis in state court seeking to vacate his Maryland conviction. The state court granted the writ and vacated William's conviction in October 2005. On December 21, 2005, William filed a motion to reopen immigration proceedings before the BIA in which he asserted that the exceptional circumstances of his case warranted reconsideration of his removal. The BIA refused to consider William's motion to reopen thereby effectively denying it on procedural grounds reasoning that William had already been removed from the United States and, in those circumstances, 8 C.F.R. § 1003.2(d) bars the filing of a motion to reopen. This petition for review followed.
III
William argues that 8 C.F.R. § 1003.2(d), containing the post-departure bar on motions to reopen, is invalid because it conflicts with clear statutory language. Where the validity of an agency's regulation is called into question, we employ the familiar analysis prescribed by Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Accordingly, we first consider whether "Congress has directly spoken to the precise question" at issue. Id. at 842, 104 S.Ct. 2778. If Congress has so spoken, our inquiry is at an end, for we, as well as *332 the agency, "must give effect to the unambiguously expressed intent of Congress." Id. at 843, 104 S.Ct. 2778. However, if Congress has not addressed the precise question at issue, we must determine whether the agency's interpretation of the statute in question, as embodied in its regulation, is reasonable and therefore entitled to deference. Id.
The statutory provision in question is 8 U.S.C. § 1229a(c)(7)(A), which provides that "[a]n alien may file one motion to reopen proceedings under this section. . . ." William contends that this statute does not differentiate between an alien who is in the United States and one who is abroad and that it permits either to file one motion to reopen proceedings. On the other hand, the Government maintains that § 1229a(c)(7)(A) is silent with respect to post-departure motions to reopen in that it does not specifically address them. The Government therefore reads the statute as leaving a gap which it may fill with a regulation restricting the availability of motions to reopen to those aliens who remain in the United States.[1]
We find that § 1229a(c)(7)(A) unambiguously provides an alien with the right to file one motion to reopen, regardless of whether he is within or without the country. This is so because, in providing that "an alien may file," the statute does not distinguish between those aliens abroad and those within the country both fall within the class denominated by the words "an alien." Because the statute sweeps broadly in this reference to "an alien," it need be no more specific to encompass within its terms those aliens who are abroad. Thus, the Government's view that Congress was silent as to the ability of aliens outside the United States to file motions to reopen is foreclosed by the text of the statute.[2] The statutory language does speak to the filing of motions to reopen by aliens outside the country; it does so because they are a subset of the group (i.e. "alien[s]") which it vests with the right to file these motions. Accordingly, the Government's view of § 1229a(c)(7)(A) simply does not comport with its text and cannot be accommodated absent a rewriting of its terms.[3]
*333 The overall structure of § 1229a reenforces our reading of § 1229a(c)(7)(A) in two ways. First, the fact that Congress provided for specific limitations on the right to file a motion to reopen bolsters the conclusion that § 1229a(c)(7)(A) cannot be read to except from its terms those aliens who have departed the country. See United States v. Johnson, 529 U.S. 53, 58, 120 S.Ct. 1114, 146 L.Ed.2d 39 (2000) ("When Congress provides exceptions in a statute, it does not follow that courts have authority to create others. The proper inference . . . is that Congress considered the issue of exceptions and, in the end, limited the statute to the ones set forth."). Second, and more importantly, in detailing the time limit for a motion to reopen, Congress provided that the usual 90-day limit does not apply where an alien who is applying for relief from removal as a victim of domestic violence "is physically present in the United States at the time of filing the motion." 8 U.S.C. § 1229a(c)(7)(C)(iv)(IV) (emphasis added). Of course, Congress did not include this requirement of physical presence in § 1229a(c)(7)(A), which deals with motions to reopen in general and which is applicable here. This being the case, we must draw a "negative inference" from Congress' exclusion of the physical presence requirement from the statutory section under consideration, Hamdan v. Rumsfeld, ___ U.S. ___, 126 S.Ct. 2749, 2765, 165 L.Ed.2d 723 (2006), because where Congress "includes particular language in one section of a statute but omits it in another section of the same Act . . . it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion," Clay v. United States, 537 U.S. 522, 528, 123 S.Ct. 1072, 155 L.Ed.2d 88 (2003). Moreover, we can go beyond simply drawing an inference regarding Congress' intent in this case, for a finding that physical presence in the United States is required before any motion to reopen may be filed would render the physical presence requirement expressly written into subsection (c)(7)(C)(iv)(IV) mere surplusage. See, e.g., TRW, Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001) ("It is a cardinal principle of statutory construction 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.") (internal punctuation omitted). In sum, Congress knew how to include a requirement of physical presence when it wished to do so, as it did in § 1229a(c)(7)(C)(iv)(IV). That it did not do so in the general provisions of § 1229a(c)(7)(A) leads us to conclude that Congress did not make presence in the United States a prerequisite to filing a motion to reopen.
For these reasons, § 1229a(c)(7)(A) clearly and unambiguously grants an alien the right to file one motion to reopen, regardless of whether he is present in the United States when the motion is filed. Therefore, our inquiry into Congress' intent is at an end, for "[i]f the language is plain and the statutory scheme is coherent and consistent, we need not inquire further." In re Coleman, 426 F.3d 719, 725 (4th Cir.2005) (internal citation omitted). Our sole function "is to enforce [the statute] according to its terms." Id. (alteration in original).[4]
*334 Having set forth the clear meaning of § 1229a(c)(7)(A), we believe it is evident that 8 C.F.R. § 1003.2(d), containing the post-departure bar on motions to reopen, conflicts with the statute by restricting the availability of motions to reopen to those aliens who remain in the United States. Therefore, we conclude that this regulation lacks authority and is invalid. Allen v. United States, 173 F.3d 533, 536 (4th Cir. 1999) ("[W]e must overturn a regulation that clearly conflicts with the plain text of the statute."). On remand, the BIA cannot rely on 8 C.F.R. § 1003.2(d) in refusing to consider William's motion to reopen.[5]
IV
Based on the foregoing, we grant the petition for review, vacate the order of the BIA, and remand for further proceedings consistent with this opinion.
PETITION FOR REVIEW GRANTED; ORDER VACATED
WILLIAMS, Chief Judge, dissenting:
Congress has decreed that "[a]n alien may file one motion to reopen proceedings." 8 U.S.C.A. § 1229a(c)(7)(A) (West 2005 & Supp.2007). Insofar as this provision sets a numerical limit on motions to reopen, its meaning is too plain to be misunderstood. According to the majority, however, this provision does much more than set a numerical limitation on motions to reopen. It also clearly evidences Congress's intent to repeal 8 C.F.R. § 1003.2(d) (2007), the regulation barring aliens subject to removal proceedings from filing a motion to reopen after departing from the United States.
Although I appreciate the majority's reading of the statute, I am not convinced that we should halt our inquiry at step one of the two-step analysis set forth in Chevron, U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Congress's codification of a numerical limitation on motions to reopen does not speak precisely, or even generally, to the question of whether the Attorney General's departure bar on motions to reopen is a valid exercise of his rulemaking authority under the Immigration and Nationality Act (INA), as amended by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), Pub.L. No. 104-208, 110 Stat. 3009 (1996). Given that a nearly identical provision limiting aliens to one motion to reopen existed before enactment of the IIRIRA, and in the same regulation containing the departure bar now located *335 in § 1003.2(d), see 8 C.F.R. § 3.2(c)(2) (1997), I cannot join the majority's conclusion that § 1229a(c)(7)(A) by itself repeals the departure bar in 8 C.F.R. § 1003.2(d). Unlike my colleagues, I do not see how we can get a "clear sense of congressional intent," Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581, 600, 124 S.Ct. 1236, 157 L.Ed.2d 1094 (2004), to repeal the departure bar simply because the numerical limitation on motions to reopen now occupies a place in the United States Code where previously it only existed in the Federal Register. One would have expected that much more than an unremarkable numerical limitation would be needed to clearly demonstrate Congress's intent to strike down a regulation that has been in place for over forty years.
Thus, I am unable to join in the majority's Chevron analysis and therefore undertake my own inquiry under Chevron's familiar framework. This inquiry leads me to conclude that, although a close question, 8 C.F.R. § 1003.2(d) remains a valid exercise of the Attorney General's congressionally-delegated rulemaking authority under the INA.
I.
Today our court becomes the first court to invalidate 8 C.F.R. § 1003.2(d). The regulation provides the following:
A motion to reopen or a motion to reconsider shall not be made by or on behalf of a person who is the subject of exclusion, deportation, or removal proceedings subsequent to his departure from the United States. Any departure from the United States, including the deportation or removal of a person who is the subject of exclusion, deportation, or removal proceedings, occurring after the filing of a motion to reopen or a motion to reconsider, shall constitute a withdrawal of such motion.
8 C.F.R. § 1003.2(d).
When the validity of an agency's regulation is at issue, we of course apply Chevron. We must first consider whether "Congress has directly spoken to the precise question at issue," id. at 842, 104 S.Ct. 2778, in which case "the court, as well as the agency, "must give effect to the unambiguously expressed intent of Congress,"" id. at 842-43, 104 S.Ct. 2778. As part of this inquiry, we may "employ[] traditional tools of statutory construction [to] ascertain[] that Congress had an intention on the precise question at issue." I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 448, 107 S.Ct. 1207, 94 L.Ed.2d 434 (1987) (quoting Chevron, 467 U.S. at 843 n. 9, 104 S.Ct. 2778). "Even for an agency able to claim all the authority possible under Chevron, deference to its statutory interpretation is called for only when the devices of judicial construction have been tried and found to yield no clear sense of congressional intent." Gen. Dynamics Land Sys., 540 U.S. at 600, 124 S.Ct. 1236. If the statute is silent or ambiguous with respect to the specific issue, however, "the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. 2778. And where Congress has not merely failed to address a precise question but has also made an explicit delegation of rulemaking authority to the agency, "the agency's regulation is `given controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute.'" Household Credit Servs., Inc. v. Pfennig, 541 U.S. 232, 239, 124 S.Ct. 1741, 158 L.Ed.2d 450 (2004)(quoting Chevron, 467 U.S. at 844, 104 S.Ct. 2778)(alteration in original). Congress has made such a delegation to the Attorney General with respect to the INA. See 8 U.S.C.A. § 1103(g)(2) (West 2005) (providing that *336 "[t]he Attorney General shall establish such regulations, . . . delegate such authority, and perform such other acts as the Attorney General determines to be necessary for carrying out [the INA]").
According to the majority, we need not venture past Chevron's first step in this case because 8 U.S.C.A. § 1229a(c)(7)(A)'s statement that "[a]n alien may file one motion to reopen" precisely addresses the question of whether an alien may file his one motion to reopen after departing the United States. This is so, according to my good colleagues, "because, in providing that `an alien may file,' the statute does not distinguish between those aliens abroad and those within the country both fall within the class denominated by the words `an alien.'" Ante at 332.
As an initial matter, it is clear that § 1229a(c)(7)(A) does not explicitly prohibit or permit motions to reopen made after departure. The provision simply does not speak to that question. And it is hardly surprising that the provision does not distinguish between classes of aliens, for the provision's purpose is to limit the number of motions to reopen that an alien may file. Although the majority shifts the focus to Congress's use of the words "an alien," I believe the proper point of emphasis in the statute is on the number "one," for as demonstrated later, § 1229a(c)(7)(A) reflects Congress's longstanding concern with limiting the number of motions to reopen an alien may file. See Pena-Muriel v. Gonzales, 489 F.3d 438, 442 (1st Cir.2007) (noting that IIRIRA "enacted strict time limits for the filing of motions to reopen and limited aliens to a single filing").
But there are other problems with focusing in on the words "an alien" in the Chevron analysis, not the least of which is that a regulation with nearly identical language that limited aliens to one motion to reopen existed before enactment of the IIRIRA. Pre-IIRIRA, the Attorney General had already ruled that "an alien may file only one motion to reopen removal proceedings (whether before the Board or the Immigration Judge)." 8 C.F.R. § 3.2(c)(2) (1997). This numerical limitation, which was described as such in the regulation, see 8 C.F.R. § 3.2(c)(3) (providing limited exceptions to the "time and numerical limitations" set forth in § 3.2(c)(2)), existed alongside the departure bar in § 1003.2(d). The majority's conclusion that Congress's intent to repeal 8 C.F.R. § 1003.2(d) is clearly evidenced by Congress's enactment of § 1229a(c)(7)(A) alone does not sufficiently account for the realities of the pre-IIRIRA regulatory framework and imputes more meaning to the codified numerical limitation than the words of the statute can bear.
The remainder of § 1229a(c) confirms this conclusion. Section 1229(a)(c)(7) goes on to provide that, with certain exceptions, an alien must file his one motion to reopen "within 90 days of the date of entry of a final administrative order of removal." 8 U.S.C.A. § 1229a(c)(7)(C)(i). The statutory context of § 1229a(c)(7) makes clear that it is just a numerical limitation nothing more, nothing less. See United States v. Morton, 467 U.S. 822, 828, 104 S.Ct. 2769, 81 L.Ed.2d 680 (1984) ("We do not . . . construe statutory phrases in isolation; we read statutes as a whole."). In short, § 1229a(c)(7)(A) in isolation says nothing about the departure bar in 8 C.F.R. § 1003.2(d) or about whether the statute as a whole should be construed as repealing the departure bar.
It stands to reason that if Congress intended to repeal the departure bar, it would have done so by doing more than merely repeating the numerical limitation already contained in the regulations, a limitation *337 that was designed to operate alongside the departure bar to promote finality in deportation proceedings. Indeed, at oral argument, William's counsel did not go so far as to argue that § 1229a(c)(7)(A) alone rendered 8 C.F.R. § 1003.2(d) invalid; he argued instead that Congress's intent to repeal the regulation is clear when § 1229a(c)(7)(A) is considered in conjunction with other of the IIRIRA's amendments. It is this broader argument that I believe should be the focus of our attention.
Although not discussed by William or the American Immigration Law Foundation ("AILF") as amicus curiae in this case, the majority finds additional support for its reading of § 1229a(c)(7)(A) in 8 U.S.C.A. § 1229a(c)(7)(C)(iv)(IV) (West 2005 & Supp.2007), which provides that the usual 90-day filing period does not apply where an alien who is applying for relief from removal as a victim of domestic violence "is physically present in the United States at the time of filing the motion." 8 U.S.C.A. § 1229a(c)(7)(C)(iv)(IV). This provision provides little support for the majority's Chevron step-one conclusion in this case.
First, the domestic-violence exception is not relevant to the question of whether the IIRIRA repealed the regulatory departure bar, for Congress did not add the exception to § 1229a until nearly a decade after enactment of the IIRIRA. The exception was first enacted as part of the Victims of Trafficking and Violence Protection Act of 2000, Pub.L. No. 106-386, 114 Stat. 1464 (2000), an act aimed at combating the sex slave trade and preventing violence against women. See id. § 1506. The original version of the domestic-violence exception did not include current § 1229a(c)(7)(C)(iv)(IV), the "physical presence" requirement that the majority focuses on here. That provision was added later as part of the Violence Against Women and Department of Justice Reauthorization Act of 2005, Pub.L. No. 109-162, § 825, 119 Stat. 2960 (2006). See id. § 825. Thus, the IIRIRA amendments to the INA relating to motions to reopen enacted as part of a comprehensive reform to the immigration laws and the domestic-violence exception in § 1229a(c)(7)(C)(iv)(IV) enacted as part of congressional efforts to snuff out sex slave trade and domestic violence are connected neither in time nor purpose.
Second, § 1229a(c)(7)(C)(iv)(IV)'s physical-presence requirement is not coextensive with the regulatory departure bar. Whereas § 1229a(c)(7)(C)(iv)(IV) only requires that the alien be physically present in the United States "at the time of filing the motion," 8 U.S.C.A. § 1229a(c)(7)(C)(iv)(IV), the regulation provides that any departure from the United States constitutes a withdrawal of a motion to reopen that was filed while the alien was present in the United States, 8 C.F.R. § 1003.2(d). The majority understands the domestic-violence exception as proving, by negative implication, that Congress does not intend for the regulatory departure bar to apply generally to motions to reopen, but it is equally plausible to understand the domestic-violence exception as carving out a limited exception to the general working of the departure bar. This is because one can reasonably understand § 1229a(c)(7)(C)(iv)(IV) to mean that as long as the qualifying alien files a motion to reopen before departing the country, the alien's subsequent departure from the United States has no effect on the BIA's ability to hear the motion, which is a decidedly different result than would obtain under the departure bar. Given that the regulatory departure bar and the physical-presence requirement in the domestic-violence exception are not one in the same, I question the majority's conclusion *338 that the regulation renders the statutory language "mere surplusage." Ante at 333.
Having explained my disagreement with the majority's Chevron analysis, I now address William's broader challenge to the regulation, an argument that draws on other of the IIRIRA's amendments.
II.
A. Chevron Step One.
William contends that Congress has precisely spoken through the IIRIRA to the issue of § 1003.2(d)'s validity by making a number of amendments to the INA that undercut any previously existing statutory basis for the regulation. First, Congress codified the motion to reopen as a statutory form of relief, specifying both numerical limitations, see 8 U.S.C.A. § 1229a(c)(7)(A), and time limits, see id. § 1229a(c)(7)(C)(I), detailing the motion's contents, see id. § 1229a(c)(7)(B), and carving out exceptions to the time and numerical limitations, see id. § 1229a(c)(7)(C)(ii)-(iv). Congress did not, however, codify the departure bar in § 1003.2(d). Second, Congress repealed 8 U.S.C.A. § 1105a(c) (1996), repealed by Pub.L. 104-208, Div. C, Title III, § 306(b), 110 Stat. 3009-612 (1996), the provision that precluded judicial review of an order of deportation or exclusion after an alien's departure from the United States. And third, Congress restructured judicial review of final orders of removal under 8 U.S.C.A. § 1252 (West 2005) without reenacting the departure bar to judicial review. According to William, these changes to the INA clearly evidence "congressional intent to eliminate any [ ] jurisdictional bar to having a motion to reopen heard following departure, thereby rendering [§ 1003.2(d)] invalid." (Petitioner's Br. at 13.) Because this argument depends so greatly on the changes wrought by the IIRIRA to the INA, a brief review of the statutory and regulatory landscapes before and after the 1996 amendments is necessary.
1.
In 1961, Congress amended the immigration statutes and, among other things, gave the circuit courts jurisdiction to review final orders of deportation through a petition for review. See An Act to Amend the Immigration and Nationality Act, Pub L. No. 87-301, § 5(a), 75 Stat. 650, 651 (1961) (codified at 8 U.S.C.A. § 1105a(c)). This judicial review provision barred the circuit courts from reviewing an order of deportation or exclusion "if [the alien] has departed from the United States after the issuance of the order." 8 U.S.C.A. § 1105a(c). In the same year, the Department of Justice issued 8 C.F.R. § 3.2, the predecessor to § 1003.2(d). See Board of Immigration Appeals: Powers; and Reopening or Reconsideration of Cases, 27 Fed.Reg. 96, 96-97 (Jan. 5, 1962) (codified at 8 C.F.R. § 3.2). Section 3.2 provided the following:
A motion to reopen or a motion to reconsider shall not be made by or in behalf of a person who is the subject of deportation proceedings subsequent to his departure from the United States. Any departure from the United States of a person who is the subject of deportation proceedings occurring after the making of a motion to reopen or a motion to reconsider shall constitute a withdrawal of such motion.
Id. As the majority and William note, at this time there was no statutory basis for the motion to reopen. It was entirely a creature of regulation. Both the statutory departure bar to judicial review and the regulatory departure bar to BIA review remained unchanged until 1996.
*339 In 1990, however, Congress, concerned that aliens were filing frivolous motions to reopen as part of dilatory tactics to delay removal or deportation, directed the Attorney General to establish numerical and time limits on motions to reopen, where previously only the departure bar had existed. Specifically, in the Immigration Act of 1990 (the "1990 Act"), Congress directed that "the Attorney General shall issue regulations with respect to . . . the period of time in which motions to reopen and to reconsider may be offered in deportation proceedings, which regulations include a limitation on the number of such motions that may be filed and a maximum time period for the filing of such motions." Immigration Act of 1990, Pub.L. No. 101-649, § 545(b), 104 Stat. 4978 (1990). With regard to the time limitation, Congress strongly "hint[ed] that a 20-day period would be appropriate." Stone v. I.N.S., 514 U.S. 386, 400, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995).[1] It is clear, then, that as of 1990, Congress's primary concern was limiting, not expanding, the circumstances under which motions to reopen could be made.
On April 29, 1996, after a lengthy notice and comment period, the Attorney General amended 8 C.F.R. § 3.2 and established both numerical and time limits for motions to reopen and motions to reconsider. See Executive Office for Immigration Review; Motions and Appeals in Immigration Proceedings, 61 Fed.Reg. 18,900, 18,905 (Apr. 29, 1996) (codified at 8 C.F.R. § 3.2(c)(2)). The amended regulation provided that "a party may file only one motion to reopen proceedings (whether before the Board or the Immigration Judge) and that motion must be filed not later than 90 days after the date on which the final administrative decision was rendered in the proceeding sought to be reopened." Id. The Attorney General retained the departure bar language from the earlier § 3.2, but moved it to § 3.2(d). See id. § 3.2(d). The regulation also described the contents of the motion to reopen and set out very limited exceptions to the new time and numerical limitations. See id. § 3.2(c)(3). The amended 8 C.F.R. § 3.2 became effective on July 1, 1996. See 61 Fed.Reg. at 18,900.
On September 30, 1996, Congress enacted the IIRIRA. The IIRIRA contained many provisions "aimed at protecting the Executive's discretion from the courts indeed, that can fairly be said to be the theme of the legislation." Reno v. Am.-Arab Anti-Discrimination Comm., 525 U.S. 471, 486, 119 S.Ct. 936, 142 L.Ed.2d 940 (1999). These provisions included 8 U.S.C.A. § 1252(a)(2)(A), which limits judicial review of claims arising from the inspection of aliens arriving in the United States; § 1252(a)(2)(B), which bars review of denials of discretionary relief authorized by various statutory provisions; § 1252(a)(2)(C), which bars review of final orders against criminal aliens; and 8 U.S.C.A. § 1252(b)(3)(B), which repealed 8 U.S.C.A. § 1105a(a)(3), the provision entitling an alien to an automatic stay pending the completion of a judicial review of a removal order. The IIRIRA also repealed 8 U.S.C.A. § 1105a(c), which barred judicial review of deportation orders after an alien departed or was removed from the country. These and other provisions of the IIRIRA streamlined the rules and procedures in the INA so that it would be easier to remove deportable aliens from the United States.
*340 The IIRIRA also, for the first time, codified the motion to reopen, establishing time and numerical limitations on such motions, describing their contents, and carving out limited exceptions to the time and numerical limitations. See 8 U.S.C.A. § 1229a(c). These provisions virtually mimicked the pre-existing provisions in 8 C.F.R. § 3.2, except the IIRIRA did not codify the departure bar contained in § 3.2(d). The IIRIRA became effective on April 1, 1997. See IIRIRA § 309(a).
On March 6, 1997, the Attorney General promulgated regulations implementing the IIRIRA. See Inspection and Expedited Removal of Aliens; Detention and Removal of Aliens; Conduct of Removal Proceedings; Asylum Procedures, 62 Fed.Reg. 10,312 (March 6, 1997). Although the IIRIRA repealed the departure bar to judicial review, the Attorney General retained the departure bar to BIA review, only slightly modifying the provision to read as follows:
(d) Departure, deportation, or removal. A motion to reopen or a motion to reconsider shall not be made by or on behalf of a person who is the subject of exclusion, deportation, or removal proceedings, subsequent to his or her departure from the United States. Any departure from the United States, including the deportation or removal of a person who is the subject of exclusion, deportation, or removal proceedings, occurring after the filing of a motion to reopen or a motion to reconsider, shall constitute a withdrawal of such motion.
Id. at 10,331 (codified at 8 C.F.R. § 3.2(d)). The Attorney General specifically addressed the continuing validity of the departure bar to BIA review in the notice and comment process. In the commentary, the Attorney General explained:
No provision of the new section 242 of the [INA] supports reversing the long established rule that a motion to reopen or reconsider cannot be made in immigration proceedings by or on behalf of a person after that person's departure from the United States. . . . The Department [of Justice] believes that the burdens associated with the adjudication of motions to reopen and reconsider on behalf of deported or departed aliens would greatly outweigh any advantages this system might render.
Id. at 10,321. In 2003, the former § 3.2(d) was redesignated as 8 C.F.R. § 1003.2(d). See Aliens and Nationality; Homeland Security; Reorganization of Regulations, 68 Fed.Reg. 9,824, 9,830 (Feb. 28, 2003).
2.
William's argument is an argument by negative implication: Because Congress repealed the departure bar to judicial review, codified the time, numerical, and content limitations on motions to reopen, and carved out limited exceptions to the time and numerical limitations, William contends that Congress's failure to codify the departure bar clearly shows that it intended that no such bar exist. This line of argument is a familiar one, having roots in the maxim expressio unius est exclusio alterius, "the expression of one thing implies the exclusion of another." See Andrus v. Glover Constr. Co., 446 U.S. 608, 616-17, 100 S.Ct. 1905, 64 L.Ed.2d 548 (1980) ("Where Congress explicitly enumerates certain exceptions to a general prohibition, additional exceptions are not to be implied, in the absence of a contrary legislative intent.")
But for this interpretive thrust, there is a parry. See generally Karl N. Llewellyn, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to Be Construed, 3 Vand. L.Rev. 395 (1950); Landgraf v. USI Film Prods., 511 U.S. 244, 263, 114 S.Ct. 1483, *341 128 L.Ed.2d 229 (1994) ("As Professor Llewellyn famously illustrated, many of the traditional canons have equal opposites."). It is also "well established that when Congress revisits a statute giving rise to a longstanding administrative interpretation without pertinent change, the congressional failure to revise or repeal the agency's interpretation is persuasive evidence that the interpretation is the one intended by Congress." Commodity Futures Trading Comm'n v. Schor, 478 U.S. 833, 846, 106 S.Ct. 3245, 92 L.Ed.2d 675 (1986) (internal quotation marks omitted); see also Lorillard v. Pons, 434 U.S. 575, 580, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978) ("Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without [relevant] change."). These countering principles of interpretation highlight the primary defect in William's Chevron step one argument: Congress has said nothing explicitly about the propriety of a departure bar like the one in § 1003.2(d). William argues that because Congress codified every provision of the regulatory framework but the departure bar, that omission must have been intentional, but the obvious response to this argument is that Congress is presumed to have known about and approved of the departure bar when it amended the INA without explicitly repealing it. Congress often expressly repeals both statutory provisions, see, e.g., 8 U.S.C.A. § 1105a(c) (the judicial departure bar), and regulations, see, e.g., Bipartisan Campaign Reform Act of 2002, Pub.L. No. 107-155, § 214(c), 116 Stat. 81, 94 (2002) ("The regulations on coordinated communications . . . are repealed."), and it is reasonable to expect that Congress will speak with greater clarity in overruling long-held agency interpretations like the departure bar at issue here. Either way, the focus in this case inevitably shifts to what Congress did not do or say, which is a good sign that the Chevron inquiry must progress past step one.[2]
The First Circuit recently reached this same conclusion, moving past Chevron's first step in upholding the validity of 8 C.F.R. § 1003.23(b)(1) (2007), which bars immigration judges from considering motions to reopen and reconsider made after an alien's departure. See Pena-Muriel, 489 F.3d at 441-42. The departure bar in 8 C.F.R. § 1003.23(b)(1) is virtually identical to the departure bar in the regulation at issue here. Compare 8 C.F.R. § 1003.23(b)(1) with 8 C.F.R. § 1003.2(d). In Pena-Muriel, the petitioner, like William does here, argued that Congress's repeal of 8 U.S.C.A. § 1105a(c), the departure bar to judicial review, "signaled its intent that the Attorney General should no longer enforce 8 C.F.R. § 1003.23(b)(1)." Pena-Muriel, 489 F.3d at 441. The court spent little ink in concluding that deference to the Attorney General's regulation, if found to be reasonable, was warranted given that there is "no statutory language that explicitly addresses the issue." Id. Indeed, one can infer from the brevity of the Pena-Muriel court's Chevron step one analysis that the court felt little pause before proceeding to Chevron step two.
*342 Although I recognize the appeal of inferring from Congress's failure to codify the departure bar to BIA review that it meant to do away with § 1003.2(d), I cannot conclude that such an inference amounts to a clear statement of congressional intent under Chevron's first step. This is not to say that wholesale changes to a statute cannot demonstrate Congress's clear intent to repeal an agency interpretation without mentioning the interpretation by name or number, but in this case Congress's amendments to the INA did not clearly foreclose the Attorney General from exercising his discretion over the BIA's jurisdiction to hear motions to reopen made after removal. I would therefore find that, under Chevron's first step, the INA is silent as to whether the Attorney General may regulate the BIA's jurisdiction to hear motions to reopen in the way that § 1003.2(d) does.
B. Chevron Step Two.
If the statute is silent (I have concluded that it is), and if the agency is empowered by statute to issue regulations to dispel the silence (the Attorney General is), then we must uphold the agency's interpretation if it is "reasonable in light of the legislature's revealed design." NationsBank of North Carolina, N.A. v. Variable Annuity Life Ins. Co., 513 U.S. 251, 257, 115 S.Ct. 810, 130 L.Ed.2d 740 (1995). This deferential standard requires that we give the agency's interpretation "controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute." Household Credit Servs., 541 U.S. at 239, 124 S.Ct. 1741 (quoting Chevron, 467 U.S. at 843-44, 104 S.Ct. 2778); see also Zheng v. Gonzales, 422 F.3d 98, 120 (3d Cir.2005) ("Chevron, of course, stands for the proposition that administrative agencies receive broad deference in interpreting the statutes which they are charged with enforcing."). The Supreme Court has repeatedly stated that "judicial deference to the Executive Branch is especially appropriate in the immigration context where officials `exercise especially sensitive political functions that implicate questions of foreign relations.'" I.N.S. v. Aguirre-Aguirre, 526 U.S. 415, 425, 119 S.Ct. 1439, 143 L.Ed.2d 590 (1999) (quoting I.N.S. v. Abudu, 485 U.S. 94, 110, 108 S.Ct. 904, 99 L.Ed.2d 90 (1988)).
As noted above, the IIRIRA also repealed 8 U.S.C.A. § 1105a(c), which provided that "[a]n order of deportation or of exclusion shall not be reviewed by any court if the alien . . . has departed from the United States after the issuance of the order." 8 U.S.C.A. § 1105a(c) (1996). If congressional purpose is thwarted by § 1003.2(d), it must be because Congress's repeal of § 1105a(c), coupled with its failure to codify the departure bar, strongly implied its desire to generally free aliens from having to litigate removal-related matters while in the United States, including freeing them from having to litigate motions to reopen before removal. In my view, the repeal of § 1105a(c) is as important to William's argument as Congress's failure to codify § 1003.2(d), for without the statutory repeal, Congress's codification of most, but not all, of the regulatory framework regarding motions to reopen would make a less compelling argument for implied repeal of § 1003.2(d). In a sense, then, the congressional repeal of § 1105a(c) is the glue that holds together William's argument. But I do not understand Congress's repeal of the departure bar to judicial review to telegraph its intentions with respect to motions to reopen.
For one thing, judicial review is not BIA review. The repealed § 1105a(c) served as a limitation on the power of courts to review final orders of removal after the alien had departed from the country. It seems precarious to conclude that Congress's *343 statutory maneuvering with respect to the jurisdiction of the courts not only speaks, but speaks definitively, to Congress's intentions regarding the scope of the BIA's review. After all, it is the agency that is entrusted with administering the statute, not the courts.
Perhaps more importantly, judicial review of an alien's petition for review with respect to a final order of removal is not the same as BIA review of a motion to reopen. William's argument assumes that a petition for review of a final administrative order enjoys co-equal status with a motion to reopen, but the history of the motion to reopen indicates that it has been long disfavored under the immigration laws. A petition for review of a final order of removal represents an alien's first and only opportunity for judicial review of the merits of the order, whereas a motion to reopen seeks a subsequent opportunity for administrative review. It is no surprise, then, that "[m]otions for reopening of immigration proceedings are disfavored for the same reasons as are petitions for rehearing and motions for a new trial on the basis of newly discovered evidence." I.N.S. v. Doherty, 502 U.S. 314, 323, 112 S.Ct. 719, 116 L.Ed.2d 823 (1992). "There is a strong public interest in bringing litigation to a close as promptly as is consistent with the interest in giving the adversaries a fair opportunity to develop and present their respective cases." Abudu, 485 U.S. at 107, 108 S.Ct. 904. To be sure, another long-cited reason for disfavoring motions to reopen that they were often used as part of dilatory tactics and permitted "endless delay of deportation by aliens creative and fertile enough to continuously produce new and material facts sufficient to establish a prima facies case," id. at 108, 108 S.Ct. 904 (internal quotation marks omitted) is no longer in play once the alien has departed or been removed from the country, but the interest in promoting finality in immigration proceedings still remains, and is as strong as ever.
The differences between a petition for judicial review and a motion to the BIA to reopen proceedings, in my view, largely explain why Congress repealed the departure bar to judicial review and acquiesced to the continued application of the Attorney General's departure bar to BIA review. Given that the IIRIRA streamlined the rules and procedures of the INA to make it easier for the BIA to deport aliens, Congress surely must have understood that the result would be that many more aliens would be removed during the pendency of their judicial proceedings. Repealing § 1105a(c) ensured that the expedited removal of aliens would not cut off their one-and-only chance at judicial review of the merits of their removal order. But I cannot impute to Congress a similar intention to free the motion to reopen from the workings of the departure bar, given the motion's disfavored status. See Pena-Muriel, 489 F.3d at 442 (concluding that Congress's repeal of § 1105a(c) "does not remotely support an argument that Congress also intended, implicitly, to allow post-departure petitions to reopen a closed administrative proceeding").
Having established that Congress's repeal of the departure bar to judicial review of final removal orders has little or no bearing on the validity of the regulation's departure bar to BIA review of motions to reopen, I turn to the only remaining question: Does the departure bar undermine the INA's purposes as evidenced by Congress's codification of the motion to reopen? Although not without some uncertainty, I conclude that the answer is no. William's argument essentially is that we can infer from Congress's failure to codify the departure bar, in light of its codification of much of the pre-IIRIRA regulatory landscape governing motions to reopen, *344 that the regulation acts contrarily to the statute. This is a hard conclusion to accept given that the current statutory and regulatory framework, which includes the departure bar, operates nearly identically to how the regulation operated before the IIRIRA. Before the IIRIRA, an alien could only file one motion to reopen, within 90 days, and before removal from the country. Assuming the validity of the regulation, the same is true after the IIRIRA. William's argument that the regulation "cuts into" the statutory framework assumes that Congress's failure to enact the regulatory bar implies that Congress meant to do away with it, but that is the very question to be answered here and, as such, is not a convincing argument.[3]
Returning to my earlier discussion of William's "thrust" and the Government's "parry," I believe that the Government has the better of the argument. Given the INA's silence with respect to the departure bar, I understand Congress's failure to explicitly repeal 8 C.F.R. § 1003.2(d) as acquiescence to its continued operation. The regulation containing the departure bar, a provision aimed at promoting finality in removal proceedings, has been the longstanding view of the Attorney General, "a view that we [must] presume Congress understood when it amended the Act in [1996]." Stone, 514 U.S. at 398, 115 S.Ct. 1537. This presumption is especially strong here, for the Attorney General's regulation was "fresh" when Congress enacted the IIRIRA, having been promulgated only a few months before Congress passed the IIRIRA. If Congress wished to repeal, either explicitly or implicitly, a recently promulgated regulation containing a forty-year-old agency interpretation respecting the agency's own jurisdiction, it would have done much more than just transplant time, numerical, and content limitations on motions to reopen from the regulatory framework into the statutory framework without clearly saying anything, one way or the other, about the departure bar.[4] Although William and Amicus Curiae contend that Congress's omission of the departure bar from the statutory framework speaks convincingly to Congress's desire to repeal it (albeit implicitly), I understand this omission, considered in light of the changes expressly made to the INA, as acquiescence to its continued functioning.[5]
*345 III.
In sum, I conclude that Congress has not spoken precisely to the question at issue merely by using the words "an alien" in a provision setting a numerical limitation on motions to reopen. Even looking to the other changes made by the IIRIRA to the INA's framework and to post-IIRIRA amendments to the INA, I am unable to conclude that Congress has clearly signaled its intention to repeal the departure bar in 8 C.F.R. § 1003.2(d).
Turning to Chevron's second step, the Attorney General believes that the burdens associated with the adjudication of motions to reopen on behalf of departed or removed aliens would greatly outweigh any advantages such adjudication would render and would not promote the goal of finality in immigration proceedings. In light of Congress's express delegation of rulemaking power to the Attorney General and the INA's silence on the question we face here, I believe we should give the Attorney General's view controlling weight in this case, an expression of deference that is "especially appropriate" given the immigration context, Aguirre-Aguirre, 526 U.S. at 425, 119 S.Ct. 1439 (quoting Abudu, 485 U.S. at 110, 108 S.Ct. 904), and the vintage of the regulation, see Nat'l Lead Co. v. United States, 252 U.S. 140, 145-46, 40 S.Ct. 237, 64 L.Ed. 496 (1920) (stating that deference to an agency's construction of a statute is "especially [appropriate] where such construction has been long continued").[6] I would therefore uphold 8 C.F.R. § 1003.2(d) as a valid exercise of the Attorney General's congressionally-delegated rulemaking authority. Accordingly, I respectfully dissent.
NOTES
[1] The Government cites Pena-Muriel v. Gonzales, 489 F.3d 438 (1st Cir.2007), recently decided by the First Circuit, in support of its argument in this case. Pena-Muriel, however, is of limited relevance here because the First Circuit did not address the primary argument made by William: i.e. that the regulation barring post-departure motions to reopen conflicts with the clear language of § 1229a(c)(7)(A). Instead, the First Circuit, and apparently Pena-Muriel, focused on whether Congress' repeal of § 1105a(c) removed the statutory basis for the regulatory bar on post-departure motions to reopen. See Pena-Muriel, 489 F.3d at 441 ("Pena-Muriel argues that the deletion of § 1105a(c) invalidated [the regulatory bar on post-departure motions to reopen]"); id. ("The parties point to no statutory language that explicitly addresses the issue [of whether Congress intended to repeal the regulatory bar]."). We thus decide this case on an issue which is separate and distinct from that considered by the First Circuit.
[2] The clarity and breadth of the statutory language likewise overcome the Government's argument that, in enacting § 1229a(c)(7)(A), Congress codified the right to file a motion to reopen while leaving the regulatory post-departure bar in place by not expressly repealing it. Congress unambiguously addressed, and at least implicitly repealed, the regulatory post-departure bar by granting "an alien" the right to file one motion to reopen.
[3] The Government's position also lacks contextual support, for one of IIRIRA's aims is to expedite the removal of aliens from the country while permitting them to continue to seek review of their removal orders from abroad. See Ngarurih v. Ashcroft, 371 F.3d 182, 192 (4th Cir.2004) (noting that departure from the country no longer "purport[s] to cut off appellate jurisdiction"); IIRIRA § 306(b) (repealing former statutory bar to post-departure judicial review).
[4] The test for whether a word or phrase used in a statute is ambiguous is not whether we can craft a more artful or articulate statute, which we possibly could do in many cases. Instead, the test is whether the statute's text, on its face, is "reasonably susceptible to multiple meanings." Holland v. Big River Minerals Corp., 181 F.3d 597, 603 (4th Cir.1999). Here, the statute refers to "an alien," and there is simply no other statutory language or statutory context which supports reading this to mean "some aliens." The dissent fails to explain how the text itself allows for multiple meanings. Instead, it references the statute's legislative and administrative history, not to resolve an ambiguity, but to create one in the face of clear statutory language. See BedRoc Ltd., LLC v. United States, 541 U.S. 176, 187 n. 8, 124 S.Ct. 1587, 158 L.Ed.2d 338 (2004) ("[L]ongstanding precedents . . . permit resort to legislative history only when necessary to interpret ambiguous statutory text.").
[5] Of course, we express no view on the merits of William's motion to reopen. Likewise, we do not consider the Government's argument that we would have no jurisdiction to review the BIA's adjudication of the merits of William's motion because that determination is committed to the discretion of the BIA. As the BIA has not ruled on the merits of William's motion, this argument is hypothetical and not properly before us at this time. Moreover, the Government does not argue that a remand to the BIA would be futile because of a procedural or other defect in William's motion or that the BIA would necessarily refuse to exercise its discretion to reopen proceedings. In fact, at oral argument, the Government noted that none of the statutory or regulatory limitations (other than 8 C.F.R. § 1003.2(d)) is currently at issue.
[1] The 1990 Act also "cut in half the time for seeking judicial review of the final deportation order, from 180 to 90 days." Stone v. I.N.S., 514 U.S. 386, 400, 115 S.Ct. 1537, 131 L.Ed.2d 465 (1995) (citing the 1990 Act § 545(b)).
[2] Moreover, and as discussed earlier in addressing my concerns regarding the majority's Chevron analysis, it is difficult to conclude that Congress spoke to the precise question at issue here when it merely codified a number of provisions relating to motions to reopen that already existed in similar form as part of the regulatory framework, provisions that were designed to operate in conjunction with the departure bar to promote efficiency and finality in removal proceedings. The time limitation, the numerical limitation, the contents provision all of these items were part of 8 C.F.R. § 3.2(d) before enactment of the IIRIRA.
[3] The AILF as amicus curiae argues that § 1003.2(d) "puts [aliens] who fail to comply with a final order in a better situation than those who depart the United States in accordance with the order" because "[aliens] who have evaded deportation are entitled to have their motions to reopen adjudicated while [aliens] who depart voluntarily or surrender for deportation are not." (Amicus Br. at 13.) Although I am hesitant to respond to an argument that assumes a breakdown in the functioning of the INA, this argument neglects the obvious fact that, in most cases, an alien who has evaded deportation or otherwise failed to comply with a removal order will have exhausted his opportunity to file a motion to reopen within the 90-day filing period. See 8 U.S.C.A. § 1229a(c)(7)(C)(i) (West 2005 & Supp.2007) (establishing a 90-day filing period for motions to reopen). In spite of my disagreement with the Foundation's position, I wish to note my appreciation for their participation in this case.
[4] It should further be noted that, in striking down 8 C.F.R. § 1003.2(d), the majority has also opened the door to an alien filing a motion to reconsider from abroad. The regulation serves as a departure bar to both motions to reopen and motions to reconsider. See 8 C.F.R. § 1003.2(d) (2007). Like a motion to reopen, an alien may file "one motion to reconsider," 8 U.S.C.A. § 1229a(c)(6)(A) (West 2005 & Supp.2007), but the filing period is 30 days, id. § 1229a(c)(6)(B), much shorter than the 90 days for motions to reopen. As of today's majority decision, aliens also are no longer barred from prosecuting motions to reconsider after departure.
[5] To reiterate, no other court has invalidated 8 C.F.R. § 1003.2(d). Rather, courts including ours have generally assumed 8 C.F.R. § 1003.2(d) (or its post-IIRIRA predecessor, § 3.2(d)) to strip the BIA's jurisdiction over reopening motions made by departed aliens. See, e.g., Dekoladenu v. Gonzales, 459 F.3d 500, 506 (4th Cir.2006) (stating that "an alien who requests voluntary departure will forfeit his right to a decision on his motion to reopen if the IJ grants his request"); Singh v. Gonzales, 468 F.3d 135, 140 (2d Cir.2006) (noting that one consequence of an alien's compliance with a voluntary departure order is "forfeiture of the right to file a motion to reopen"); Navarro-Miranda v. Ashcroft, 330 F.3d 672, 675-76 (5th Cir.2003) (upholding BIA's application of the departure bar to find that the BIA lacked jurisdiction over the deported alien's motion to reopen). I say generally because the Ninth Circuit, despite acknowledging that the plain language of 8 C.F.R. § 1003.2(d) supports the BIA's application of an absolute departure bar, requires the BIA to consider motions to reopen made by removed aliens when the basis for removal was a criminal conviction that was later vacated. In those circumstances, the Ninth Circuit holds that the deportation based on an invalid conviction was not "`legally executed' and . . ., therefore, the defective deportation may be reopened after the petitioner has left the country." E.g., Cardoso-Tlaseca v. Gonzales, 460 F.3d 1102, 1106-08 (9th Cir.2006). Putting aside the textual and Chevron problems with the Ninth Circuit's exception to the departure bar, the Ninth Circuit continues to apply this exception and has, at least on one occasion, expressly declined to decide the validity of the regulation, see id. at 1106 n. 2 (expressly declining petitioner's invitation to invalidate 8 C.F.R. § 1003.2(d)).
[6] My conclusion is similar to the one reached by the First Circuit in Pena-Muriel v. Gonzales, 489 F.3d 438 (1st Cir.2007), in which that court upheld the departure bar in 8 C.F.R. § 1003.23(b)(1), which applies to motions to reopen made before immigration judges and is nearly identical to the departure bar in 8 C.F.R. § 1003.2(d) (2007), as a reasonable construction of the post-IIRIRA statutory landscape. See id. at 442-43. | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1023658/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-4908
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
MIGUEL MARTINEZ,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Charleston. Patrick Michael Duffy, District
Judge. (2:05-cr-01331-PMD)
Submitted: August 30, 2007 Decided: September 5, 2007
Before MICHAEL, KING, and SHEDD, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Steven Michael Hisker, Duncan, South Carolina, for Appellant.
Carlton R. Bourne, Jr., Assistant United States Attorney,
Charleston, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Miguel Martinez pled guilty to conspiracy to distribute
cocaine, in violation of 21 U.S.C. § 841(a)(1), (b)(1)(A) (2000).
He was sentenced to 262 months of imprisonment. Martinez’ attorney
on appeal has filed a brief pursuant to Anders v. California, 386
U.S. 738 (1967), concluding there are no meritorious issues for
appeal, but questioning whether the district court erred in
applying the sentencing guidelines as mandatory in violation of
United States v. Booker, 543 U.S. 220 (2005). Because the district
court in fact appropriately applied the guidelines as advisory in
sentencing Martinez post-Booker, and advised him of the advisory
nature of the guidelines at the plea hearing, we find counsel’s
claim meritless.
Martinez was advised of his right to file a pro se
supplemental brief, but has not done so. In accordance with
Anders, we have reviewed the entire record in this case and have
found no meritorious issues for appeal. We therefore affirm
Martinez’s conviction and sentence. This court requires that
counsel inform his client, in writing, of his right to petition the
Supreme Court of the United States for further review. If the
client requests that a petition be filed, but counsel believes that
such a petition would be frivolous, then counsel may move in this
court for leave to withdraw from representation. Counsel’s motion
must state that a copy thereof was served on the client. We
- 2 -
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and
argument would not aid the decisional process.
AFFIRMED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1023690/ | UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-4229
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
ISAQ RAHIM,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Columbia. Matthew J. Perry, Jr., Senior
District Judge. (3:05-cr-00496)
Submitted: September 5, 2007 Decided: September 14, 2007
Before MICHAEL, MOTZ, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Langdon D. Long, Assistant Federal Public Defender, Columbia, South
Carolina, for Appellant. Reginald I. Lloyd, United States
Attorney, Winston David Holliday, Jr., OFFICE OF THE UNITED STATES
ATTORNEY, Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Following a jury trial, Isaq Rahim was convicted of one
count of trafficking counterfeit goods, in violation of 18 U.S.C.A.
§ 2320(a) (West 2000 & Supp. 2007). The district court sentenced
Rahim to three years’ probation with six months’ home confinement
and a $100 special assessment. Rahim timely appealed.
Rahim’s attorney has filed a brief in accordance with
Anders v. California, 386 U.S. 738 (1967), asserting that there are
no meritorious issues for appeal, but questioning whether the
district court erred by denying Rahim’s motion to suppress evidence
seized after a pretextual traffic stop. Rahim did not file a pro
se supplemental brief, despite being notified of his right to do
so. The Government declined to file a responding brief. Finding
no error, we affirm.
We review the factual findings underlying the denial of
a motion to suppress for clear error and the legal conclusions de
novo. United States v. Johnson, 400 F.3d 187, 193 (4th Cir.),
cert. denied, 546 U.S. 856 (2005). The evidence is construed in
the light most favorable to the prevailing party below. United
States v. Seidman, 156 F.3d 542, 547 (4th Cir. 1998). Because
Officer Deering had probable cause to believe that a traffic
violation occurred, the decision to stop Rahim’s vehicle was
objectively reasonable under the Fourth Amendment, regardless of
the officer’s subjective motivations. See Whren v. United States,
- 2 -
517 U.S. 806, 810-13 (1996); United States v. Hassan El, 5 F.3d
726, 730 (4th Cir.), cert. denied, 511 U.S. 1006 (1994). Our
review of the record leads us to conclude that the district court
correctly denied the motion to suppress.
Pursuant to Anders, we have examined the entire record
and find no meritorious issues for appeal. Accordingly, we affirm
Rahim’s conviction and sentence. This court requires that counsel
inform Rahim, in writing, of his right to petition the Supreme
Court of the United States for further review. If Rahim requests
that such a petition be filed, but counsel believes that such a
petition would be frivolous, then counsel may move in this court
for leave to withdraw from representation. Counsel’s motion must
state that a copy thereof was served on Rahim.
We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials before
the court and argument would not aid the decisional process.
AFFIRMED
- 3 - | 01-03-2023 | 07-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1805147/ | 997 So.2d 413 (2008)
HARRIS
v.
STATE.
No. 2D08-4855.
District Court of Appeal of Florida, Second District.
December 24, 2008.
Decision without published opinion. Mand.dismissed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1491733/ | 970 S.W.2d 583 (1998)
In re the ESTATE OF Ethel Arnetta HERRING.
No. 13-96-248-CV.
Court of Appeals of Texas, Corpus Christi.
March 5, 1998.
*585 Paula Waddle, Corpus Christi, for appellant.
Eric B. Tucker, Austin, Michael D. George, Corpus Christi, for appellee.
Before SEERDEN, C.J., and FEDERICO G. HINOJOSA and CHAVEZ, JJ.
SEERDEN, Chief Justice.
Lemuel O. Herring appeals from the trial court's take-nothing summary judgment against him on his claims for conspiracy and fraudulent transfer of community property by his wife, now deceased, to Jimmy Robert Keys, her son by a prior marriage. By a single point of error challenging the summary judgment, Herring complains that the trial court erred in concluding that all of his claims were barred by the statute of limitations. We reverse and remand.
Lemuel and Ethel Herring had been married for many years when Ethel died on April 9, 1990. During the course of their marriage, Ethel Herring on several occasions transferred funds and property from the community estate to Keys, her son by a prior marriage, allegedly without Lemuel Herring's knowledge.
Just over four years after Ethel Herring's death, Lemuel Herring filed on August 12, 1994, his Plaintiff's Original Petition as a suit incident to the administration of the Estate of Ethel Arnetta Herring. Herring sued both Katina Brauchle, his daughter and the administrator of his wife's estate, and Keys. Herring alleged that his wife and Keys conspired secretly to transfer community property to Keys. Accordingly, Herring claimed that he had been defrauded of his interest in the transferred community property and that he did not discover the fraudulent transfers until after his wife died. Specifically, Herring alleged a 1984 promissory note for $15,000 to attorney Joe F. Wheat for legal services rendered to Keys in connection with criminal charges against him, $8,000 in lease payments and a $15,000 judgment on default of payment on a 1985 vehicle lease for Keys, and additional payments to Keys exceeding $8,000 from the proceeds of the sale of a community property silver coin collection and the cash surrender value of insurance policies. Herring asked for damages including the value of his interest in the wrongfully transferred community property, and for damages to his credit rating which resulted from these transfers.
Keys filed a motion for summary judgment on the ground that the applicable statutes of *586 limitations bar all of Herring's claims.[1] The motion for summary judgment was heard on February 20, 1996, and on April 30, 1996, the trial court granted a take-nothing summary judgment against Herring on all claims.[2]
A party moving for summary judgment has the burden of establishing that no genuine issue of material fact exists and that he is entitled to judgment as a matter of law. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985). In deciding whether disputed material fact issues preclude summary judgment, evidence favorable to the nonmovant is taken as true; every reasonable inference is indulged in favor of the nonmovant and any doubt is resolved in his favor. Nixon, 690 S.W.2d at 548-49. To prevail on the basis of an affirmative defense, a movant must conclusively prove all of the elements of the affirmative defense as a matter of law. Zale Corp. v. Rosenbaum, 520 S.W.2d 889, 891 (Tex.1975) (per curiam); Dallas Market Center Hotel Co. v. Beran & Shelmire, 865 S.W.2d 145, 147 (Tex.App. Corpus Christi 1993, writ denied).
Specifically, a defendant seeking summary judgment on the basis of limitations must prove when the cause of action accrued and, when applicable, must negate the discovery rule by proving as a matter of law that there is no genuine issue of fact about when the plaintiff discovered or should have discovered the nature of the injury. Burns v. Thomas, 786 S.W.2d 266, 267 (Tex.1990); Weaver v. Witt, 561 S.W.2d 792, 794 (Tex. 1977).
The two causes of action that Herring raised in his petition were civil conspiracy and fraudulent transfer of community property.
The statute of limitations for civil conspiracy is two years. Tex. Civ. Prac. & Rem.Code Ann. § 16.003(a) (Vernon Supp. 1997); Nelson v. American Nat. Bank of Gonzales, 921 S.W.2d 411, 415-416 (Tex. App.Corpus Christi 1996, no writ); Cathey v. First City Bank of Aransas Pass, 758 S.W.2d 818, 822 (Tex.App.Corpus Christi 1988, writ denied). In addition, the discovery rule applies to conspiracy to commit fraud. Cathey, 758 S.W.2d at 822 n. 3. Accordingly, the statute of limitations would bar Herring's claims for conspiracy to the extent that Keys can prove that Herring knew or should have known of such claims on August 12, 1992, two years before he filed his petition.
Herring's cause of action for fraudulent transfer is based on the fiduciary relationship that exists between a husband and a wife as to the community property controlled by each spouse. See Zieba v. Martin, 928 S.W.2d 782, 789 (Tex.App.Houston [14th Dist.] 1996, no writ); In re Moore, 890 S.W.2d 821, 827 (Tex.App.Amarillo 1994, no writ); Carnes v. Meador, 533 S.W.2d 365, 370 (Tex.Civ.App.Dallas 1975, writ ref'd n.r.e.). The breach of a legal or equitable duty which violates this fiduciary relationship existing between spouses is termed "fraud on the community," a judicially created concept based on the theory of constructive fraud.[3]Zieba, 928 S.W.2d at 789; In re Moore, 890 S.W.2d at 827; Jackson v. Smith, 703 S.W.2d 791, 795 (Tex.App.Dallas 1985, no writ).
If a spouse disposes of community property in fraud of the other spouse's *587 rights, the aggrieved spouse has a right of recourse first against the property or estate of the disposing spouse; and, if that proves to be of no avail, then the aggrieved spouse may pursue the proceeds to the extent of his community interest into the hands of the party to whom the funds have been conveyed. Carnes, 533 S.W.2d at 371.
In the present case, Herring has not only sued his late wife's estate, but also attempts to pursue the proceeds of community property transferred to Keys in breach of the fiduciary duty owed to him by his late wife and as a constructive fraud on his interest in the community estate.
Ordinarily, a claim of fraud or misrepresentation is a claim for a debt and, as such, is governed by a four-year statute of limitations. See Tex. Civ. Prac. & Rem.Code Ann. § 16.004(a)(3) (Vernon 1986); Williams v. Khalaf, 802 S.W.2d 651, 656-57 (Tex.1990). As a breach of fiduciary duty subsumes a claim of constructive fraud, it also is governed by a four-year statute of limitations. Tex. Civ. Prac. & Rem.Code Ann. § 16.051 (Vernon 1997); Perez v. Gulley, 829 S.W.2d 388, 390 (Tex.App.Corpus Christi 1992, writ denied); Spangler v. Jones, 797 S.W.2d 125, 132 (Tex.App.Dallas 1990, writ denied).
Generally, the statute of limitations does not commence to run until the fraud is discovered or until it might have been discovered by the exercise of reasonable diligence. Little v. Smith, 943 S.W.2d 414, 420 (Tex. 1997); see also Ruebeck v. Hunt, 176 S.W.2d 738, 739 (Tex.1944). Similarly, when there has been a breach of fiduciary duty, the statute of limitations does not begin to run until the claimant knew or should have known of facts that in the exercise of reasonable diligence would have led to the discovery of the wrongful act. Little, 943 S.W.2d at 420; see also Slay v. Burnett Trust, 187 S.W.2d 377, 394 (Tex.1945).
Specifically, a cause of action to set aside a transfer of community property to a third party on the ground of constructive fraud is somewhat like a cause of action to set aside a conveyance by a debtor to a third party in fraud of his creditors, which is also regulated by the four-year residual statute of limitations and does not accrue, nor does limitations begin to run, until the fraud is discovered, or could have been discovered by the exercise of reasonable diligence. See Hoerster v. Wilke, 158 S.W.2d 288, 289-90 (Tex.1942); Eckert v. Wendel, 40 S.W.2d 796, 797 (Tex.1931); Tex. Civ. Prac. & Rem.Code Ann. § 16.051 (Vernon 1997).
Accordingly, the statute of limitations would bar Herring's claims for fraudulent transfer to the extent that Keys can prove Herring knew or should have known of such claims on August 12, 1990, four years before he filed his petition.
Keys sought to prove his affirmative defense of limitations by introducing summary judgment evidence including affidavits, the prior testimony of Herring, and answers by Herring to Keys' request for admissions. Herring and Keys each submitted their own affidavits making conclusory assertions that Herring either knew, or did not know, of the fraudulent transactions in question before his wife's death. Based solely on the affidavits, a fact question clearly remains.
However, to support the summary judgment in his favor, Keys relies primarily on a set of deemed admissions that resulted from Herring's failure to sign his answers to Keys' request for admissions.
Deemed admissions are competent summary judgment evidence. Flores v. H.E. Butt Stores, Inc., 791 S.W.2d 160, 162 (Tex. App.Corpus Christi 1990, writ denied); Laycox v. Jaroma, Inc., 709 S.W.2d 2, 4 (Tex.App.Corpus Christi 1986, writ ref'd n.r.e.). Moreover, deemed admissions may not be contradicted by other summary judgment evidence. State v. Carrillo, 885 S.W.2d 212, 214 (Tex.App.San Antonio 1994, no writ); Whitworth v. Kuhn, 734 S.W.2d 108, 111 (Tex.App.Austin 1987, no writ); see also Henke Grain Co. v. Keenan, 658 S.W.2d 343, 347 (Tex.App.Corpus Christi 1983, no writ).
Texas Rule of Civil Procedure 169(1) states, in pertinent part, as follows:
The matter is admitted without necessity of a court order unless, within thirty days after service of the request, or within such *588 time as the court may allow, or as otherwise agreed by the parties, the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by his attorney, but, unless the court shortens the time, a defendant shall not be required to serve answers or objections before the expiration of fifty days after service of the citation and petition upon that defendant.
Tex.R. Civ. P. 169(1) (emphasis added).
On February 16, 1995, Keys filed and sent a set of interrogatories and requests for admissions to Herring. On March 5, 1995, a copy of Herring's answers was filed denying most of Keys' requests, but without Herring's signature or the signature of his attorney. As an exhibit to his motion for summary judgment, Keys included a copy of Herring's unsigned response to the request for admissions. Herring never sought leave of court to withdraw and correct his response by signing it.
Accordingly, Keys argues that the unsigned response has resulted in deemed admissions against Herring that bar his causes of action.
The responding party's failure to timely answer requests for admission, timely file written objections, or obtain leave of court to file the answers late, results in each request for admission being deemed admitted pursuant to Texas Rule of Civil Procedure 169. Laycox, 709 S.W.2d at 3. Moreover, such facts are considered to be established as a matter of law, and it is usually unnecessary to file a formal motion asking that the request be deemed admitted. Reyes v. International Metals Supply Co., 666 S.W.2d 622, 624 (Tex.App.Houston [1st Dist.] 1984, no writ).
In the present case, we must determine whether an unsigned response amounts to a failure to respond for purposes of deeming admissions under Rule 169.
Before its amendment in 1984 (to allow signature alone of the party or his attorney answering requests for admissions), Rule 169 required answers to be verified and requests were deemed admitted when the answers were not properly verified under the rule. Reyes, 666 S.W.2d at 624. Accordingly, under the prior Rule 169, requests were deemed admitted "when the responses were not signed and sworn." Tharp v. Blackwell, 570 S.W.2d 154, 159 (Tex.Civ.App.Texarkana 1978, no writ) (emphasis added). We recently held that, under amended Rule 169, requests may no longer be deemed admitted merely because the answers are not verified. Pinal v. Carnevale, 964 S.W.2d 311 (Tex. App.Corpus Christi 1998, n.w.h). Now, we must decide whether a request may be deemed admitted because it is not even signed.
With the amendment to require signature alone, one might be tempted to treat responses under Rule 169 in the same manner as pleadings generally. The signature on a pleading is a formal requisite and the failure to comply with the requirement is not fatal to the pleading. The trial court may not treat an unsigned pleading or motion as a nullity merely because counsel failed to sign their names to it. W.C. Turnbow Petroleum Corp. v. Fulton, 194 S.W.2d 256, 257 (Tex. 1946) (amended motion for new trial); see also Frank v. Corbett, 682 S.W.2d 587, 588 (Tex.App.Waco 1984, no writ); Home Sav. of America FSB v. Harris County Water Control and Imp. Dist. No. 70, 928 S.W.2d 217, 219 (Tex.App.Houston [14th Dist.] 1996, no writ); R.T.A. Intern., Inc. v. Cano, 915 S.W.2d 149, 151 (Tex.App.Corpus Christi 1996, writ denied) (default judgment improper based on failure of defendant to sign answer); 2 R. McDonald, Texas Civil Practice § 7:19 (1992); Loomis Land & Cattle Co. v. Wood, 699 S.W.2d 594, 596-97 (Tex.App.Texarkana 1985, writ ref'd n.r.e.) (citing McDonald).
However, while the signature on a pleading generally has been treated as a mere formality, Rule 169 and the cases interpreting it indicate that signature is a substantive requirement to a response to requests for admissions. See Reyes, 666 S.W.2d at 624; Tharp, 570 S.W.2d at 159. For, under Rule 169, the requests are deemed admitted automatically unless the responding party timely complies with the *589 specific requirements of Rule 169(1), including the signature of his answer. Rather than being a mere formality, the signature on a response to a request for admissions is some indication that the responding party has adopted and stands behind the answers he has provided in the same manner and with the same general consequences as the prior requirement for verification of the answers. Moreover, upon failure to timely and properly answer under Rule 169, it is the responding party's burden to show good cause to withdraw the deemed admissions. See Tex.R. Civ. P. 169(2); Cudd v. Hydrostatic Transmission, Inc., 867 S.W.2d 101, 104 (Tex.App.Corpus Christi 1993, no writ).
Accordingly, we conclude that Herring's unsigned response amounted to a failure to respond, and that the requested admissions were deemed against Herring under Rule 169. Those admissions included the following individual requests:
Request for Admission No. 1 Admit that [wife] did not conspire with, or otherwise secretly transfer community property owned by [wife] and you, to [Keys] at any time from the beginning of time through the date of [wife's] death.
Request for Admission No. 2 Admit that [wife] did not transfer community property owned by [wife] and you to [Keys] without your knowledge or consent, at any time from the beginning of time through the date of [wife's] death.
Request for Admission No. 11 Admit that you had knowledge of your alleged claims against [Keys], as set forth in your Plaintiff's Original Petition, when you filed your Respondent's Responses to Movant's First Set of Interrogatories in this cause in April, 1992.
Request for Admission No. 20 Admit that you had knowledge of the alleged improper and fraudulent transfers of community property owned by [wife] and you to [Keys] on or before July 31, 1992.
Request for Admission No. 21 Admit that you have not been injured in any manner as a direct result of the alleged acts of [Keys] as set forth in your Plaintiff's Original Petition.
Request for Admission No. 23 Admit that you had knowledge of your alleged claims against [Keys] as set forth in your Plaintiff's Original Petition, when your former attorney, F. Terry Callahan, sent a letter to Eric B. Tucker dated August 27, 1991, a true and correct copy of which is attached hereto as Exhibit "A." [This letter references the $15,000 payment made by wife to an attorney for Keys, and to the suit by Cenval Leasing Corporation against wife over a vehicle in Keys' possession.]
Keys generally argues that deemed admissions 2 and 21 defeat any cause of action that Herring may have. However, broad requests like 1, 2, and 21, that a plaintiff admit in effect that he has no claim against the defendant are not allowed.
"The primary purpose of Rule 169 is to simplify trials by eliminating matters about which there is no real controversy, but which may be difficult or expensive to prove. It was never intended to be used as a demand upon a plaintiff or defendant to admit that he had no cause of action or ground of defense." Stelly v. Papania, 927 S.W.2d 620, 622 (Tex.1996) (quoting Sanders v. Harder, 148 Tex. 593, 227 S.W.2d 206, 208 (1950)); see also Birdo v. Parker, 842 S.W.2d 699, 700 (Tex.App.Tyler 1992, writ denied). Accordingly, sweepingly broad requests for admission may not result in deemed admissions. Id. at 700; Powell v. City of McKinney, 711 S.W.2d 69, 71 (Tex.App.Dallas 1986, writ ref'd n.r.e.). For instance, it is improper to request that the opposing party admit or deny each and every allegation made in his or her petition, and such a request will not result in a deemed admission. Birdo, 842 S.W.2d at 700. Accordingly, we give no weight to the requested admissions that Herring's wife did not transfer community property without his consent or knowledge or that Herring has not been injured by Keys. Nor do these requested admissions relate directly to Keys' ground for summary judgment that Herring's claims are barred by limitations.
However, deemed admissions 11, 20, and 23 do specifically show that Herring had knowledge of all of his claims as alleged in *590 his petition between the dates of August 27, 1991, and July 31, 1992. These admissions barred his claims for civil conspiracy under the two-year statute of limitations, but left open his claims for fraudulent transfer under the four-year statute of limitations. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.003(a) & § 16.051. Accordingly, the trial court erred in granting summary judgment on all claims. We sustain Herring's point of error.
We REVERSE the trial court's summary judgment on Herring's claims for fraudulent transfer, but AFFIRM the summary judgment on Herring's claims for conspiracy. The case is REMANDED to the trial court for further proceedings consistent with this opinion.
NOTES
[1] Although Brauchle did not join in Keys' motion for summary judgment, Herring does not raise any argument on appeal concerning the disposition of his claims against the estate along with those against Keys. Accordingly, we do not reach the issue of whether final summary judgment should have been rendered on Herring's claims against the estate absent a proper motion for summary judgment by the estate.
[2] We note that Herring filed a Plaintiff's Amended Original Petition on March 1, 1996, ten days after the February 20, 1996, hearing on the motion for summary judgment. The trial court declined to consider the amended petition, and Herring has failed to argue on appeal that it should be considered by this Court. Because the amended petition was filed after the summary judgment hearing and without leave of court, we disregard it for purposes of the present appeal. See TEX.R.APP. P. 63; Goswami v. Metropolitan Sav. and Loan Ass'n, 751 S.W.2d 487, 490 (Tex. 1988).
[3] Constructive fraud is the breach of a legal or equitable duty which the law declares fraudulent because it violates a fiduciary relationship. Archer v. Griffith, 390 S.W.2d 735, 740 (Tex. 1964); Carnes, 533 S.W.2d at 370. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2412790/ | 36 F. Supp. 2d 915 (1998)
KINGVISION PAY PER VIEW, LTD., Plaintiff,
v.
RICHARD BOWERS AND GEORGE BOWERS, INC., d/b/a Bryce's Again, Defendants.
No. 97-2603-JWL.
United States District Court, D. Kansas.
December 18, 1998.
*916 Shirla R. McQueen, Kevin D. Weakley, Sharp, McQueen, McKinley, Dreiling, Morain & Tate, P.A., Liberal, KS, Michael L. Matula, Husch & Eppenberger, Kansas City, MO, for plaintiff.
James C. Trickey, Overland Park, KS, Wayne L. Zeigler, Zeigler Legal Services, Chtd., Olathe, KS, for defendants.
MEMORANDUM AND ORDER
LUNGSTRUM, District Judge.
This action arises from defendants' allegedly unauthorized interception and televising of the Tyson-Seldon boxing match which took place on September 7, 1996. The case is presently before the court on the summary judgment motions of plaintiff (doc. 26) and defendants (doc. 25). For the reasons set forth below, the court denies both motions.
I. Facts
Plaintiff Kingvision Pay Per View, Ltd. ("Kingvision") is a Delaware corporation that licenses various boxing matches to its customers on a pay-per-view basis. Defendants are the owners and operators of a bar called Bryce's Again, located in Shawnee, Kansas.
The uncontroverted facts reveal that on September 7, 1996, defendants broadcast the Tyson-Seldon boxing prizefight to their patrons at Bryce's Again. The uncontroverted facts further reveal that defendants subsequently purchased the rights to show the Holyfield-Moorer boxing match on November 8, 1997.
On November 25, 1997, plaintiff filed this lawsuit, alleging that the interception and subsequent broadcast of the Tyson-Seldon event was unauthorized, and thus in violation of the Cable Communications Policy Act of 1984, §§ 633 and 705, as amended, 47 U.S.C. §§ 553 and 605. Defendants, on the other hand, admit that the Tyson-Seldon match was shown, but deny that its broadcast was unauthorized.
In December, 1997, while this action was pending, defendants began sending installment payments to plaintiff for the Holyfield-Moorer fight. As of February 16, 1998, the remaining balance on that account was $900.00. On March 16, 1998, plaintiff received from defendants a check drawn in the amount of $900.00. On the underside of the check, the following language appears:
*917 For payment in full and release of all claims and services provided by payee, its assigns, and/or subsidiaries thru March 7, 1998.
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id. (citing Anderson, 477 U.S. at 248, 106 S. Ct. 2505).
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id. at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson, 477 U.S. at 256, 106 S. Ct. 2505; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson, 477 U.S. at 256, 106 S. Ct. 2505. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler, 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id.
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S. Ct. 2548(quoting Fed.R.Civ.P. 1).
III. Analysis
a. Accord and Satisfaction
Defendants move for summary judgment on the ground that the remittance to plaintiff of the March 6, 1998 check constituted an accord and satisfaction barring plaintiff's claim with respect to the Tyson-Seldon match.
In EF Hutton & Co. v. Heim, 236 Kan. 603, 604, 694 P.2d 445 (1985), the Kansas Supreme Court defined the doctrine of accord and satisfaction as follows:
To constitute an accord and satisfaction, there must be an offer in full satisfaction of an obligation, accompanied by such acts and declarations or made under such circumstances that the party to whom the offer is made is bound to understand that if he accepts the offer, it is in full satisfaction of and discharges the original obligation. An accord and satisfaction, as an adjustment of a disagreement as to what is due from one party to another through payment of an agreed amount, must be consummated by a meeting of the minds and accompanied by sufficient consideration.
Id. at 610-11, 694 P.2d 445 (citations omitted). It is thus imperative, under Kansas law, that "the creditor must, at the least, understand that the debtor's offer is intended by the debtor to fully satisfy the disputed obligation." U.S. to Use and Benefit of Joseph Stowers Painting, Inc. v. Harmon Const. Co, Inc., 1989 WL 32195 at *3 (D.Kan. 1989). Indeed, "[i]f the plaintiff did not intend *918 or understand that the claimed consideration was to operate as a release or satisfaction, there could be no contract of release or accord and satisfaction." Id. (quoting Flett Constr. Co. v. Williams, 210 Kan. 28, 29, 500 P.2d 54 (1972)).
The court agrees that the restrictive language written on the back of the March 6, 1998 check could be reasonably construed as an offer to pay $900 for the release of all claims then pending against defendants. The court is persuaded, however, that it is just as likely that plaintiff's agent truly believed the check merely represented the final payment due from defendants for the broadcast of the Holyfield-Moorer fight. The record is, therefore, controverted as to whether the check submitted by defendants constitutes an accord and satisfaction of defendants' obligation with respect to the Tyson-Seldon fight. The uncontroverted facts fail to indicate that the plaintiff was "bound to understand" that the language on the back of the check dated March 6, 1998 was intended as payment for anything other than the remaining balance owed for the Holyfield-Moorer fight. The court concludes that a reasonable fact finder could determine that no "meeting of the minds" occurred, and thus that the check did not constitute accord and satisfaction of plaintiff's claim. Accordingly, defendants' motion for summary judgment is denied.
b. Statute of Limitations Defense
With respect to defendants' contention that plaintiff's claim is time-barred, the court disagrees. First, the court notes that defendants' attempt to raise this affirmative defense in their response to plaintiff's motion for summary judgment is procedurally improper. Moreover, because defendants failed to preserve this issue in the pretrial order, the court need not consider it. See D. Kan. Rule 16.2. Even so, because the plaintiff has not objected to defendants raising the issue, the court has considered defendants' statute of limitations argument, and rejects it on the merits.
Defendants cite Joe Hand Promotions, Inc. v. Lott, 971 F. Supp. 1058 (E.D.La.1997) to support their contention that the statute of limitations has run with respect to plaintiff's 47 U.S.C. § 605 claim. Finding that no express statute of limitations provision governs actions filed pursuant to 47 U.S.C. § 605, the Lott court compared plaintiff's 47 U.S.C. § 605 claim to a state law conversion claim, and applied the state statute of limitations governing conversion actions. Id. at 1061-64. Because the relevant statute of limitations limited conversion actions to one year, the court held that plaintiff's 47 U.S.C. § 605 claim was time-barred. Id. at 1064.
While relying on the Lott decision to support their contention that a state law limitations period should apply in this case, defendant urges this court to depart from Lott's analogy of 47 U.S.C. § 605 actions to state law conversion claims, and to instead adopt K.S.A. § 60-514(c)'s one-year limitations period governing actions "upon statutory penalty or forfeiture." K.S.A. § 60-514(c).[1] Defendants thus argue that because the alleged claim arose on September 7, 1996, and plaintiffs complaint was not filed until November 25, 1997, plaintiff's action is barred by § 60-514(c).
The court finds defendants' analogy of plaintiff's 47 U.S.C. § 605 claim to an "action upon statutory penalty" misguided. The court presumes defendants so contend because the statute of limitations period governing conversion actions in Kansas is two years, and plaintiff's claim was filed within that limitations period. K.S.A. § 60-513(2). The court holds that if squarely faced with the issue, Kansas courts would follow the Lott court's rationale and hold that the statute of limitations governing conversion actions, rather than actions upon statutory penalties, would apply to plaintiff's 47 U.S.C. § 605 claim. Under the Lott rationale, then, plaintiff's claim is not time-barred.
c. Unauthorized Showing
The plaintiff moves for summary judgment on the ground that the defendants intercepted *919 and broadcast the Tyson-Seldon pay-per-view fight without plaintiff's authorization in violation of 47 U.S.C. §§ 553 and 605. In response, defendants contend that the reception and broadcast of the pay-per-view event was in fact authorized, claiming that the event could never have been received nor broadcast without plaintiff's permission.
Section 633 of the Cable Communications Policy Act of 1984, 47 U.S.C. § 553, proscribes the unauthorized reception of cable services, whereas section 705 of the same Act, 47 U.S.C. § 605, prohibits the unauthorized publication or use of intercepted communications. Thus, both section 553 and 605 serve to impose civil liability upon those who receive and broadcast communications without specific authorization from the sender thereof. Accordingly, to the extent that the parties dispute whether defendants were authorized by plaintiff to intercept and show the Tyson-Seldon fight, a material fact issue remains for trial. Accordingly, plaintiff's motion for summary judgment is denied.
IT IS THEREFORE ORDERED BY THE COURT THAT plaintiff's motion for summary judgment (doc. 26) is denied.
IT IS FURTHER ORDERED THAT defendants' motion for summary judgment (doc. 25) is denied.
NOTES
[1] Because K.S.A. § 60-518 does not pertain to actions for statutory penalties, the court assumes that defendants' reference to K.S.A. § 60-518 is in error, and that defendants instead intended to refer the court to the statute of limitations found at K.S.A. § 60-514(c). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1730749/ | 411 So. 2d 717 (1982)
Helen B. CHARPENTIER, et al., Plaintiffs-Appellants,
v.
ST. MARTIN PARISH SCHOOL BOARD, et al., Defendant-Appellee.
No. 8674.
Court of Appeal of Louisiana, Third Circuit.
March 10, 1982.
*718 Hornsby & Landry, Lucius A. Hornsby, Jr., Lafayette, for plaintiffs-appellants.
Gachassin & Capretz, Nicholas Gachassin and Carey, Tom Jones, Lafayette, for defendant-appellee.
Before FORET, CUTRER and DOUCET, JJ.
FORET, Judge.
Helen Charpentier and her daughter, Gwen Charpentier Hardy, (plaintiffs) brought this tort action to recover damages for personal injuries suffered by Gwen in two separate falls, one of which occurred at Cecilia High School, and the other on a school bus. Plaintiffs also sought to recover all medical expenses incurred by them for treatment of those injuries. The St. Martin Parish School Board (School Board), the owner and operator of the school, and Valley Alleman (Alleman), the driver of the school bus, were named defendants[1].
The School Board attempted to file a third party demand against Alleman and his liability insurer, Commercial Union Insurance Company (Commercial Union)[2], but *719 the trial court refused to grant leave for it to do so. Plaintiffs entered into a settlement and compromise with the School Board, Alleman, and Commercial Union with respect to their cause of action arising out of Gwen's fall on the school bus. The trial court, on motion of plaintiffs, and pursuant to that settlement and compromise, rendered judgment dismissing, with prejudice, plaintiffs' claims arising out of the school bus incident. Thus, the School Board was the only remaining defendant to this action at the time of trial.
Trial of plaintiffs' action resulted in a judgment in favor of defendant and against plaintiffs, dismissing their action.
Plaintiffs appeal devolutively from the trial court's judgment and raise the following issues:
(1) Whether the trial court committed manifest error in finding that plaintiffs had failed to prove that Gwen's fall at Cecilia High School was caused by a defect in the school's classroom building;
(2) Whether the trial court committed manifest error in finding that plaintiffs had failed to prove that the School Board breached any duty owed Gwen.
Defendant answered this appeal and raises the issue of whether the trial court committed manifest error in denying its motion to traverse Gwen Charpentier Hardy's right to appeal in forma pauperis. Because of our decision herein, this issue is now moot.
FACTS
This action arises out of an accident which occurred on December 20, 1977, when plaintiff, Gwen Charpentier Hardy, fell down a flight of stairs at Cecilia High School, located in St. Martin Parish. Gwen had reported to her homeroom, which was located on the third floor of the classroom building, at the commencement of classes that day. She was informed at that time that she was wanted in the principal's office, which is located on the first floor, and she immediately proceeded down one of the two stairwells in that building to the first floor.
The stairwells were designed in such a manner that the flight of stairs between each floor consisted of a stairway leading to a landing, and then another stairway heading in the opposite direction to the next floor. Gwen had reached the landing between the third and second floors, and tripped when she started down the stairway leading to the second floor. She suffered fairly severe injuries to her left knee, which eventually required surgery to correct.
Plaintiff, Helen Charpentier, instituted this action on December 1, 1978, individually, and as natural tutrix of her then minor daughter, Gwen Charpentier, alleging that Gwen's fall resulted from the School Board's: failure to properly clean steps and walkways during the day when the school building is occupied by students; failure to properly maintain steps located in the school building to insure their safety for children walking down and up said steps; failure to do what they should have done to insure the safety of the steps in a public school building; failure to see what they should have seen, or failing to do what they should have done, or having seen what they should have seen concerning the unsafe conditions of the steps in the school building; and, other acts of negligence to be listed pending discovery. Mrs. Charpentier sought to recover $180,000 in general damages for the injuries suffered by Gwen in both falls (settlement and compromise regarding the fall on the bus having been entered into subsequent to the filing of the petition), and $30,000 for past, present, and future medical expenses incurred for the treatment of those injuries.
Mrs. Charpentier filed a motion to amend her original petition on April 30, 1980, alleging that Gwen had married subsequent to the filing of the original petition, and that Gwen was now emancipated and entitled to pursue her own claim as a party plaintiff. Mrs. Charpentier further alleged that she should be allowed to remain in the action as a party plaintiff to pursue her own claim for the medical expenses she incurred, prior *720 to Gwen's marriage, for the treatment of her injuries. The trial court granted the motion.
The School Board's answer to the original petition consists of a general denial. Its answer to the amended petition also consists of a general denial, but the affirmative defense of contributory negligence is alternatively plead therein. The School Board attempted to file a third party demand against Alleman and Commercial Union shortly before the trial of this action, but long after it had answered plaintiffs' petitions. The trial court refused to grant leave to allow the School Board to file its third party demand finding that it would retard the progress of plaintiffs' main demand.
STRICT LIABILITY AND CAUSATION
Plaintiffs contend that the trial court committed manifest error in finding that they had failed to prove that any defect in the school building caused Gwen's fall down the stairs. Plaintiffs rely on LSA-C.C. Article 2322 to support their cause of action in strict liability against the School Board.
LSA-C.C. Article 2322 provides:
"Art. 2322. Damage caused by ruin of building
Art. 2322. The owner of a building is answerable for the damage occasioned by its ruin, when this is caused by neglect to repair it, or when it is the result of a vice in its original construction."
Under the provisions of LSA-C.C. Article 2322, several requirements for the imposition of liability under the article must be met:
(1) There must be a building;
(2) The defendant must be its owner, and
(3) There must be a "ruin" caused by a vice in construction or a neglect to repair, which occasions the damage sought to be recovered.
Olsen v. Shell Oil Company, 365 So. 2d 1285 (La.1979).
The trial court found that while there were defects in some of the steps of the stairways in the school building, plaintiffs failed to prove that Gwen's fall was caused by any of these defects. Our review of the record (see appendix) establishes that this finding of the trial court is not clearly wrong.
NEGLIGENCE
Plaintiffs also contend that the cause of Gwen's fall was the failure of defendant to properly clean and maintain the stairways at Cecilia High School, and that this constitutes negligent conduct on defendant's part for which it should be held liable in damages to them. Plaintiffs' claim is based on the provisions of LSA-C.C. Articles 2315 and 2316.
The first inquiry in making a determination of liability under these articles is whether any causal relationship exists between the harm suffered by Gwen and the defendant's alleged negligent conduct. Thus, if plaintiffs can show that Gwen probably would not have suffered injuries complained of but for the defendant's conduct, they have carried their burden of proof relative to cause-in-fact. Shelton v. Aetna Casualty & Surety Company, 334 So. 2d 406 (La.1976); Hill v. Lundin & Associates, Inc., 260 La. 542, 256 So. 2d 620 (1972); Vidrine v. Missouri Farm Association, 339 So. 2d 877 (La.App. 3 Cir. 1976), writ denied, 342 So. 2d 216 (La.1977); Stewart v. Gibson Products of Natchitoches Parish Louisiana, Inc., 300 So. 2d 870 (La.App. 3 Cir. 1974).
In resolving the question of whether an act or acts of a defendant were a cause-in-fact of the harm suffered by a plaintiff, we make no inquiry as to whether the act or acts were unlawful or negligent. We determine only whether they were a substantial factor without which the accident would not have occurred, i.e., whether they had some direct relationship to the accident. Laird v. Travelers Insurance Company, 267 So. 2d 714 (La.1972); Pierrotti v. Associated Indemnity Corp., 399 So. 2d 679 (La.App. 1 Cir. 1981).
The trial court made no finding regarding cause-in-fact in making its decision. Instead, *721 it assumed that there was gum on the stairs and that this caused Gwen to fall. It then went on to determine the duty owed by defendant towards students such as Gwen and found no breach of this duty. Plaintiffs contend that the trial court committed manifest error in finding no breach of duty by defendant because it used the wrong standard of care (or duty) to judge defendant's action by.
We agree with the trial court's conclusion that defendant was guilty of no negligence for which it should be held liable to plaintiffs for the injuries suffered by Gwen. However, we prefer to base our decision on a finding that plaintiffs failed to prove that any conduct of defendant was a cause-in-fact of Gwen's injuries.
Plaintiffs allege that Gwen's fall resulted from defendant's failure to clean and/or maintain the stairways at Cecilia High School. The evidence shows that the stairways were cleaned every afternoon after school was dismissed. Once classes were dismissed in the afternoon, no students were allowed back in the building until the next morning, unless they had a justifiable reason for re-entering the building.
Calais (the school principal) testified that students were forbidden to chew gum in the classrooms. There were three full-time and one part-time custodians that cleaned the school. Calais had instructed both the custodians and teachers to immediately report to him any problems they observed regarding the cleaning or maintenance of the building. There was testimony from several witnesses indicating that Calais paid particular attention to conditions affecting the cleanliness or maintenance of the school building. See Appendix.
Gwen's accident occurred approximately five minutes after classes had commenced in the morning. There were no students in the building prior to that time, and the school had been cleaned the afternoon before. In all probability, the gum that stuck to Gwen's shoe had been dropped on the stairway by a student on his way to class. In any event, plaintiffs failed to prove that defendant's allegedly negligent conduct even occurred. In fact, the evidence shows that it didn't. Again, see appendix. Having failed to prove this, plaintiffs are unable to prove that any conduct and/or omission of defendant was a cause-in-fact of Gwen's injuries. Thus, there is no need to proceed on to a determination of defendant's duty and whether that duty was breached.
For the above and foregoing reasons, the judgment of the trial court is affirmed.
All costs of this appeal are assessed against plaintiffs-appellants.
AFFIRMED.
APPENDIX
Gwen testified that as she stepped onto either the first or second step below the landing, a piece of gum stuck to her left shoe and something loose on the step. She tried raising her left shoe once, but the gum remained attached to something. She then raised her left shoe a second time and lost her balance, falling forward down the stairs. Gwen was unable to identify exactly what it was that she alleged the gum remained attached to and which was loose on the step. She "guessed" that it was a loose board.
Malcolm Calais, principal of the school at the time of the accident, testified that he checked the stairs where Gwen fell within a half-hour or so after the accident and could find no gum on the stairs. He stated that the steps were covered with rubber matting that could and did become loose at times, and which had to be nailed down. However, he was unable to recall whether the matting located on the steps where Gwen fell was loose that day. He did remember that he found nothing that caused him to be concerned enough to call the maintenance crew to repair.
Mrs. Charpentier testified that she returned to the school the afternoon after the accident and that Calais took her to the place where Gwen fell. She stated that he ran his hand under the rubber matting on the first step below the landing and showed her that the rubber matting on the second *722 step was also loose. Calais testified that he was unable to remember if he had done this.
Allen Stelly, a part-time assistant principal at the school at the time of the accident, testified that he examined the stairs where Gwen fell an hour and a-half to two hours after the accident. He stated that he saw nothing there which might have caused a person to trip and fall. However, he did acknowledge that he did not check the rubber matting covering the steps to see if any were loose.
Gwen denied ever having problems with her left knee, or that she had problems playing basketball because of it, prior to the accident. She did admit that in 1976, she had injured her left "leg" in an accident at the school, and that such injury was in the vicinity of her left knee. Velma Landry, the girls' basketball and softball coach at the school at the time of the accident, testified that plaintiff had tried out for the basketball team, prior to the accident, but was unable to make the team because of a problem with her knees.
Fletcher Sutton, M.D., was accepted by the court as an expert in the field of orthopedic surgery. Dr. Sutton testified that he first saw Gwen on February 13, 1978, approximately one and one-half months after the accident. He stated that on that occasion, "She gave a history of the knee seeming to give way, to have intermittent pain in the knee, especially when going up or down stairs". Dr. Sutton also found that Gwen had a condition which he described as "congenitally knock-kneed". He explained that this condition causes a person such as Gwen to be susceptible to having the knee cap or patella slip out of place when the knee is injured. Dr. Sutton was unable to state, with any degree of probability, whether Gwen's injury to her left knee in 1976 or the injury to that knee sustained in the fall on the stairs caused a partial dislocation of her knee cap, which he eventually repaired through surgery. However, he did believe that the dislocation of her knee cap was the result of some trauma sustained by the knee and that, based on the history Gwen had given him, it was more than likely that the knee was dislocated when she fell on the stairs.
NOTES
[1] Helen Charpentier also named the XYZ Insurance Company, a fictitious entity representing the unknown liability insurer of the St. Martin Parish School Board, and the ABC Insurance Company, a fictitious entity representing the unknown liability insurer of the school bus operated by Valley Alleman, as defendants.
[2] The School Board alleged in its third party demand that the injuries suffered by Gwen were caused solely by her fall on the school bus which resulted from Alleman's own negligence. The School Board sought indemnity from Alleman and Commercial Union for any amounts for which it might be held liable to plaintiffs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1770516/ | 549 F. Supp. 327 (1982)
James B. STANLEY, Plaintiff,
v.
UNITED STATES of America, et al., Defendants.
No. 78-8141-CIV-JAG.
United States District Court, S.D. Florida, N.D.
October 15, 1982.
Opinion Vacated November 9, 1982.
*328 John F. Romano, Cone, Wagner, Nugent, Johnson & McKeown, West Palm Beach, Fla., for plaintiff.
Alan I. Mishael, Torts Branch, Civ. Div., U.S. Dept. of Justice, Washington, D.C., for defendants.
Opinion Vacated November 9, 1982. See 552 F. Supp. 619.
ORDER
GONZALEZ, District Judge.
THIS CAUSE has come before the Court upon the Defendants' Motion to Dismiss or in the alternative Motion for Summary Judgment. The Court has considered the motion, and has heard extensive oral argument by counsel.
The case involves the secret administration of LSD to members of the U.S. Army as part of an Army experiment.
In 1958 plaintiff was a Master Sergeant in the United States Army stationed at Fort Knox, Kentucky. Plaintiff volunteered to participate in a program at the Chemical Warfare Laboratories at the Army Chemical Center, Aberdeen Proving Grounds, Edgewood Arsenal, Maryland. The purpose of the program allegedly was the development and testing of methods of defense against chemical warfare attack, including the testing of various gas masks and protective clothing.
During interviews with military and civilian personnel at Edgewood Arsenal, plaintiff was asked to drink a clear liquid which, unknown to him, contained lysergic acid diethylamide (LSD). Plaintiff unknowingly ingested this drug on four separate occasions. Plaintiff alleges that as a result he experienced severe reactions including hallucination. When he returned to active duty at Fort Knox a month later he maintains he was in an altered behavioral and emotional state.
Plaintiff was discharged from the Army in 1969 still unaware that he had ingested LSD years earlier. In December, 1975, he received a letter from the Department of the Army, Walter Reed Army Medical Center, soliciting his participation in a follow-up study of the subjects of the 1958 LSD experiments. It was then that he first became aware that he had secretly been given LSD in 1958 by Army personnel.
In his Amended Complaint, plaintiff alleges that the defendants deliberately gave him false information regarding the true nature of the program he volunteered to participate in. He further alleges that the Defendants were grossly negligent in failing to debrief and inform him of the 1958 episode upon his discharge, and in failing to continue to monitor his condition subsequent to his discharge. Plaintiff seeks damages for this allegedly negligent conduct.
The original complaint in this case was based on the same set of facts and consisted of claims brought under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) and 2671, et seq. The question of this court's jurisdiction over those claims was first raised on a motion for summary judgment. This court granted said motions on the basis of the *329 doctrine announced in Feres v. United States, 340 U.S. 135, 71 S. Ct. 153, 95 L. Ed. 152 (1950). The Feres doctrine provides that "the Government is not liable under the Federal Tort Claims Act for injuries to servicemen where the injuries arise out of or are in the course of activity incident to service." 340 U.S. at 146, 71 S.Ct. at 159.
Upon review of that ruling, the Fifth Circuit concluded that this court's application of the Feres doctrine to preclude the claims brought in the original complaint was correct, but that this court improperly granted the motion for summary judgment. Stanley v. CIA, 639 F.2d 1146 (1981). Rather, the Fifth Circuit held that the proper disposition of the case was dismissal of the complaint for lack of subject matter jurisdiction. The Fifth Circuit then remanded the case for the trial court's consideration of any amendment that the plaintiff might offer to cure the jurisdictional defect. Id. at 1159-60.
The first question now presented upon the Defendant's Motion to Dismiss the Amended Complaint is whether Plaintiff's Amended Complaint states a cause of action under the Federal Tort Claims Act (FTCA) not barred by the Feres doctrine.
The defendant argues that the Fifth Circuit, in Stanley, precluded any question of whether Stanley could allege a cause of action under the FTCA.
Although the court finds that the Fifth Circuit left the door open to Stanley to amend his complaint to allege facts sufficient to support a post-discharge tort theory, (so his claims could fall outside the Feres doctrine pursuant to Thornwell v. United States) the Court finds that the plaintiff has failed to allege a distinct tort arising entirely post-discharge. See Thornwell v. United States, 471 F. Supp. 344 (D.D. C.1979). (Feres doctrine does not bar claims arising from conduct occurring entirely post-discharge).
The court reaches this conclusion by examining the reasoning of the Fifth Circuit and its reliance on Schnurman v. United States, 490 F. Supp. 429 (E.D.Va.1980). Stanley, 639 F.2d at 1155.
In Schnurman, the plaintiff suffered injuries as a result of his exposure to toxic mustard gases during a United States Navy experiment in which he participated while an apprentice seaman. The Schnurman court granted the defendant's renewed motion to dismiss at the end of the trial finding (a) that the plaintiff's injuries were not shown to be caused in any way by the Government's failure to treat plaintiff subsequent to discharge; or (b) by the Government's failure to warn him of the true nature of the gas to which he had been exposed. There was no testimony that his injuries were in any way aggravated or multiplied by the Government's alleged post-discharge negligence, or that follow-up treatment could have avoided any long-term effects of the exposure. Schnurman, 490 F.Supp. at 437. The Schnurman court found no evidence of any causal connection between the plaintiff's injury and the Government's alleged post-discharge negligence, and held that to allow recovery for the defendants' failure to monitor and treat injuries which resulted from an in-service tort (for which there is no recovery) would leave very little of Feres immunity. Id.
Plaintiff Stanley's Amended Complaint alleges that "Upon and subsequent to Plaintiff's discharge from the army in 1969 Defendants were grossly negligent in failing to debrief and inform Plaintiff of the [LSD experiment] and in failing to continue to monitor his condition..." and that he suffers continuing and permanent psychological injuries as a result of Defendant's negligent failure to debrief him and to continue to monitor his condition. The Plaintiff does not causally connect the injuries resulting from the experiment with any conduct occurring in its entirety after Plaintiff's discharge. Although Plaintiff omits allegations of predischarge negligence in his Amended Complaint the court is not persuaded that the acts constituting the alleged negligence were separate and distinct from any acts occurring before discharge, so as to give rise to a separate actionable tort not barred by the Feres doctrine.
*330 The court, therefore, concludes that plaintiff's claims under the FTCA must be dismissed for lack of subject matter jurisdiction based upon the Fifth Circuit's opinion in Stanley, including its reliance on Schnurman v. United States.
The Amended Complaint also alleges constitutional claims based on Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971). While the court recognizes that a Bivens cause of action is available against individual officers and agents of the Government, the doctrine of sovereign immunity bars an action against the United States itself.
The question of whether a Bivens cause of action can be brought against the Government was addressed by the United States Court of Appeals for the Third Circuit in Jaffee v. United States, 592 F.2d 712 (3d Cir. 1979), cert. denied, 441 U.S. 961, 99 S. Ct. 2406, 60 L. Ed. 2d 1066 (1979). In Jaffee, plaintiff claimed damages for injuries suffered as a result of radiation exposure while serving in the United States Army when assigned to participate in nuclear testing. The court, after concluding that Jaffee's claim could not be brought under the FTCA because of the Feres doctrine, proceeded to consider whether a cause of action could be brought against the Government pursuant to Bivens.
Alternatively, Jaffee urges that this court can create an exception to the doctrine [of sovereign immunity] in order to grant relief for deliberate violation of constitutional rights. For authority supporting this argument, he turns to Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971), and to Butz v. Economou, 438 U.S. 478, 98 S. Ct. 2894, 57 L. Ed. 2d 895 (1978). In Bivens the Court recognized an implied cause of action for damages against federal officers who had violated the fourth amendment. Butz held that certain federal executive officials did not enjoy an absolute immunity for the damage suits permitted by Bivens. From these cases Jaffee tries to extract the principle that "the applicable common law doctrine of governmental immunity must yield to the paramount necessity of vindicating constitutional guarantees." But the suits in Bivens and Butz were against individual federal officers and not against the United States. Because Jaffee has sued the Government itself, Bivens and Butz do not afford him a traversable bridge across the moat of sovereign immunity.
Jaffee, 592 F.2d 712, 717 (footnotes omitted). This court finds, therefore, that the plaintiff's Bivens claims herein cannot be maintained against the Government itself.
The Defendants' Motion to Dismiss also attacks the Bivens-type claims brought against the Unknown Individual Federal Agents and Officers. Defendants first argue that fictitious individual defendants are not proper parties. This argument is without merit. See, e.g., Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388, 91 S. Ct. 1999, 29 L. Ed. 2d 619 (1971); Jaffee v. United States, 663 F.2d 1226 (3d Cir. 1981), cert. denied, ___ U.S. ___, 102 S. Ct. 2234, 72 L. Ed. 2d 845 (1982).
Defendants next argue that even if plaintiff has properly pled a Bivens cause of action against individual agents and officers, such claim is barred by the Feres doctrine.
The Feres case itself dealt exclusively with claims brought under the Federal Tort Claims Act. See Feres v. United States, 340 U.S. 135, 71 S. Ct. 153, 95 L. Ed. 152. It did not address Bivens-type actions.
At least one United States Court of Appeals has held that although a claim against the Government under the FTCA may be barred by the Feres doctrine, a Bivens claim against individuals arising from the same set of facts is not barred by Feres. See Wallace v. Chappell, 661 F.2d 729 (9th Cir. 1981). This court likewise holds that the Feres doctrine does not bar plaintiff's claims against the individual agents and officers.
*331 The defendants also attack the Amended Complaint on the ground that the claims against the individual defendants are time-barred. They contend that the applicable statute of limitations, the four-year period for actions involving negligent and intentional torts, Fla.Stat. § 95.11(3)(a) and (o), began to run in 1975 when plaintiff was first informed that he had been given LSD. Because the original complaint did not name individual defendants, defendants argue that the Amended Complaint cannot relate back to the original complaint as regards the individuals.
It is unnecessary for this Court to address the issue of relation-back. At the time plaintiff filed his original complaint the Fifth Circuit held a restrictive position as to causes of action brought pursuant to Bivens. Stanley v. CIA, 639 F.2d at 1156 n. 12; see Davis v. Passman, 571 F.2d 793 (5th Cir. 1978) (no right of action may be implied from the Due Process Clause of the fifth amendment). Thus, until the Supreme Court reversed the Fifth Circuit in Davis v. Passman, 442 U.S. 228, 99 S. Ct. 2264, 60 L. Ed. 2d 846 (1979), Stanley had no Bivens cause of action. As a result, the claims against the individuals in this case, which are based primarily on the Fifth Amendment, did not accrue until the Supreme Court's decision in 1979. It follows, therefore, that the claims against the individual officers and agents set forth in the Amended Complaint are not time-barred. See United States v. One 1961 Red Chevrolet Impala Sedan, 457 F.2d 1353 (5th Cir. 1972) (Because appellant had no reasonable probability of successfully prosecuting his claim prior to the enunciation of a new rule by the United States Supreme Court, for statute of limitations purposes the cause of action accrued on the date of the Supreme Court's decision); United States v. LePatourel, 593 F.2d 827 (8th Cir. 1979).
Finally, defendants argue that plaintiff's claim does not rise to one of constitutional magnitude, and counsels the court to exercise hesitation in recognizing a Bivens cause of action. Defendants characterize plaintiff's claim as "nothing more than a medical malpractice action based on lack of informed consent and negligent follow-up care."
The Supreme Court of the United States has recognized that there is a constitutional right to be free to decide for oneself whether to submit to drug therapy. Mills v. Rogers, ___ U.S. ___, 102 S. Ct. 2442, 73 L. Ed. 2d 16 (1982). Although it is difficult to locate the exact constitutional source of this right, courts have recognized it as a liberty or privacy interest associated with the penumbral right to privacy, bodily integrity, or personal security. See Mills v. Rogers, ___ U.S. at ___ & n. 7, 102 S.Ct. at 2447 & n. 7. This right to be free from the unwanted administration of drugs has also been associated with First Amendment rights because "the power to produce ideas is fundamental to our cherished right to communicate ..." See Mills v. Rogers, ___ U.S. at ___ n. 3, 102 S.Ct. at 2446 n. 3.
This court views the conduct alleged in the Amended Complaint as an egregious intrusion on the most precious right protected by the Constitution the right not to be deprived of life, liberty or property without due process of law. The surreptitious administration of LSD to an unwitting serviceman who believes he is involved in a project important to the development of defenses to chemical warfare constitutes a violation of the rights of privacy and bodily integrity, and of the right of an individual to control his mind, his private thoughts and his intellectual process.
It is ludicrous to suggest that such an intrusion upon a person by the federal government does not rise to a claim of constitutional magnitude, but is merely a medical malpractice claim.
In Mills v. Rogers, supra, the Supreme Court recognized that the unwanted administration of drug therapy by a state hospital to mental patients warranted constitutional scrutiny to determine whether the state's competing interests outweigh the individual's constitutionally protected interest in being free from such conduct. ___ U.S. at ___, 102 S.Ct. at 2447. The deplorable nature of such conduct is multiplied by the *332 facts in this case. The LSD was administered to the plaintiff by agents of the same government that guarantees the plaintiff his personal right to be free from such conduct, and whose constitutional duty it is to protect such personal interests. Moreover, it is the same government that lured the plaintiff into believing he was playing an important role in the defense of that government, and for which he presumably was acting out of an extreme sense of loyalty and duty. The conduct alleged in this case would shock if not outrage the conscience of any court, and is most certainly protected against by the Constitution of the United States.
Although the Court recognizes that the military relationship between Stanley and the officers and agents involved in the LSD experiments must be weighed against the individual's constitutional rights in order to determine whether a cause of action is maintainable in this case, the court cannot legally or morally find that relationship sufficient to overcome the liberty and privacy rights guaranteed by the Constitution. To do so would deprive the plaintiff and all military personnel similarly situated of any recourse against the government or its agents, and thus would deprive them of their most fundamental civil rights.
In summary, it is ORDERED AND ADJUDGED as follows:
1. That as to the claims against the Government brought under the Federal Tort Claims Act, the Motion to Dismiss be and the same is hereby GRANTED.
2. That as to the claims against the Government brought pursuant to Bivens, the Motion to Dismiss be and the same is hereby GRANTED.
3. That as to the claims against the UNKNOWN INDIVIDUAL FEDERAL AGENTS AND OFFICERS, the Motion to Dismiss be and the same is hereby DENIED.
It is FURTHER ORDERED AND ADJUDGED that, pursuant to 28 U.S.C. § 1292(b), the Court finds that this Order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation. Furthermore, should either of the parties file a Notice of Appeal of this Order, there shall be a stay of the proceedings in this cause until further Order of the Court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1396457/ | 859 F. Supp. 150 (1994)
UNITED STATES of America, Plaintiff,
v.
ONE PARCEL OF PROPERTY LOCATED AT SHELLY'S RIVERSIDE HEIGHTS LOT X, McVEYTOWN, MIFFLIN COUNTY PENNSYLVANIA, with all Appurtenances and Improvements thereon, Defendant.
Civ. A. No. 1:CV-93-598.
United States District Court, M.D. Pennsylvania.
August 5, 1994.
John J. McCann, U.S. Attys. Office, Lewisburg, PA, for plaintiff.
Spero T. Lappas, Harrisburg, PA, for defendant.
*151 Tab R. Deaner, pro se.
MEMORANDUM
CALDWELL, District Judge.
We are considering the Government's motion for reconsideration of our Memorandum and Order of May 5, 1994. We exercise jurisdiction under 28 U.S.C. § 1331.
I. Facts
We recounted the facts in some detail in our earlier Memorandum and Order. Thus, we will recount them only briefly and refer to them in greater detail as needed during our analysis. See United States v. One Parcel of Property Located at Shelly's Riverside Heights, 851 F. Supp. 633 (M.D.Pa.1994) (Caldwell, J.). This case revolves around a 10-acre tract of land in Mifflin County, Pennsylvania, on which sits a cabin. The property is owned in joint tenancy by claimant Tab Deaner and his girlfriend, Melissa Kurtz.[1] In the Winter and Spring of 1992, agents of the federal Drug Enforcement Administration began an investigation into possible marijuana cultivation at the cabin. The agents conducted surveillance, probed the property's trash, and flew over the property in an airplane equipped with a thermal-imaging device. Mr. Deaner and Ms. Kurtz were arrested in April, 1992. In August, 1992, Judge James McClure of this court accepted guilty pleas from both. Mr. Deaner plead guilty to manufacturing marijuana and was sentenced to 21 months in prison and no fine. Ms. Kurtz plead guilty to possessing marijuana and was sentenced to 12 months probation and assessed a $500 fine. In April, 1993, the Government filed a civil forfeiture action, seeking to take the entire property. Only Mr. Deaner filed a claim, but he failed to file an answer. The Government filed a motion for summary judgment and for default, which Mr. Deaner opposed. Mr. Deaner cited Austin v. United States, ___ U.S. ___, 113 S. Ct. 2801, 125 L. Ed. 2d 488 (1993), in which the Supreme Court held that civil forfeiture actions are subject to a proportionality requirement under the Eighth Amendment. We directed the Government to address the Austin issue and it did so. Subsequently, Mr. Deaner moved for leave to file an answer nunc pro tunc. On May 5, 1994, we issued a Memorandum and Order denying the Government's motions, granting Mr. Deaner's motion for leave to file an answer, and granting summary judgment in favor of the property sua sponte. The Government has filed a motion for reconsideration.
II. Law and Discussion
We will address in turn the areas in which the Government claims our Memorandum and Order of May 5, 1994, was in error.
A. Granting Summary Judgment Sua Sponte
In our order of July 8, 1994, we noted that the United States Court of Appeals for the Third Circuit had indicated in Otis Elevator Company v. George Washington Hotel Corporation, 27 F.3d 903 (3d Cir.1994), that a district court must give notice to the parties before entering summary judgment sua sponte. Rather than vacate the judgment in this case, we afforded the Government an opportunity to supplement the record and file a brief opposing the sua sponte summary judgment. In this way, we have afforded the Government the notice and opportunity referred to by the Third Circuit in Otis Elevator and cured any procedural deficiency.
The Government argues in its reconsideration motion that Mr. Deaner presented no affidavits or other record evidence. This argument is without merit. There are two ways in which a party can successfully oppose a motion for summary judgment: (1) by demonstrating that there remain material issues of fact precluding summary judgment, Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986), or (2) by agreeing that there are no material issues of fact yet showing that the application of the *152 law on those facts warrants judgment for the summary judgment opponent. In the instant case, Mr. Deaner did not dispute the facts presented by the Government; rather, he argued that the law as applied to those facts does not warrant the result sought by the Government.
B. Default
The Government argues that we improperly failed to consider the effect of Ms. Kurtz's default. As noted, we concluded that her default had no real effect because the defendant in this case is the property itself; thus, a claimant serves largely to offer arguments on behalf of the property. As Mr. Deaner had properly argued that Austin applied and that this forfeiture would be excessive, the property was adequately defended.
The Government cites United States v. Parcel of Real Property Known as 1500 Lincoln Avenue, 949 F.2d 73 (3d Cir.1991), in support of its argument. In an important way, 1500 Lincoln Avenue does not further the Government's position. In that case, a husband and wife owned a parcel of property as tenants by the entirety. The husband was engaged in illegal drug transactions and the Government sought forfeiture of the husband and wife's home. The wife asserted an "innocent owner" defense, 21 U.S.C. § 881(a)(7), and the district court agreed with the wife and dismissed the complaint. The United States Court of Appeals for the Third Circuit reversed, holding that the "innocent owner" defense of one owner does not require dismissal of the entire complaint. Rather, the court held that the Government could be entitled to a forfeiture while the wife was entitled to "full and exclusive use and possession of the property during her life [and] protection against conveyance of or execution by third parties upon her husband's former interest, [and] her survivorship right." 949 F.2d at 78.
For the purposes of the analysis of 1500 Lincoln Avenue, a tenancy by the entirety is functionally the same as a joint tenancy such as that entered into by Mr. Deaner and Ms. Kurtz. See United States v. Jacobs, 306 U.S. 363, 370, 59 S. Ct. 551, 555, 83 L. Ed. 763 (1939); Coleman v. Jackson, 286 F.2d 98, 102 (D.C.Cir.1960). Thus, if we were to follow the Government's application of 1500 Lincoln Avenue, assuming that the civil forfeiture is inappropriate as against Mr. Deaner's interest, we would still have to afford Mr. Deaner at least a life interest in the property. We do not understand the Government to seek that result.
We find a more basic flaw in the Government's invocation of 1500 Lincoln Avenue. In an "innocent owner" case, the defense arises only after the court accepts that forfeiture is appropriate. Only then will the court consider the interest of an innocent owner. Here, we have determined that the property should not be forfeited in the first place. Put differently, the "innocent owner" defense focuses on the interests of an individual owner and seeks to protect them in certain circumstances. The proportionality defense used here focuses on the property and the extent of its culpability vis-a-vis the magnitude of the crime. As such, 1500 Lincoln Avenue is distinguishable.[2]
C. Proportionality
The Government also questions our analysis of the basic issue in this case: whether the forfeiture of the property was disproportionate to the crime committed. Upon review of our Memorandum and Order of May 5, 1994, the Government's arguments in support of reconsideration, and the Government's brief in opposition to sua sponte summary judgment, we are unpersuaded that we erred. Because of that, we will not repeat here the analysis we employed; rather, we will address only those specific arguments offered by the Government.
First, the Government challenges the standard we applied. Part of our analysis relied on the three-part test enunciated in Solem v. Helm, 463 U.S. 277, 103 S. Ct. 3001, 77 L. Ed. 2d 637 (1983). The Government now asserts that "the Supreme Court has questioned *153 Solem's viability" in Harmelin v. Michigan, 501 U.S. 957, 111 S. Ct. 2680, 115 L. Ed. 2d 836 (1991). Government's Brief in Support of Motion for Reconsideration at 13, citing U.S. v. Premises Known as RR No. 1, 14 F.3d 864, 874 n. 10, 875 (3d Cir.1994). This suggestion is confusing because the Premises Known as RR No. 1 court went on to note that
Harmelin, however, is distinguishable from this case because it interprets the Cruel and Unusual Punishment Clause of the Eighth Amendment, not the Excessive Fines Clause. Justice Scalia indicated that excessive fines analysis raises different issues than that raised by cruel and unusual punishment analysis. See Harmelin, 501 U.S. at 978 n. 9, 111 S.Ct. at 2693 n. 9 ("There is good reason to be concerned that fines, uniquely of all punishments, will be imposed in a measure out of accord with the penal goals of retribution and deterrence.") Thus, a proportionality analysis under Solem may still have continuing validity on whether a fine is excessive under the Eighth Amendment.
14 F.3d at 874 n. 10 (emphasis added). Thus, our reliance on Solem and several Third Circuit cases was appropriate and we need not revisit that issue. See also, United States v. One 1988 White Jeep Cherokee, No. 1993-132, 1994 WL 228996 (D.V.I. April 25, 1994) (forfeiture of vehicle upon discovery of a single marijuana cigarette in the ashtray held to violate the Eighth Amendment).
The Government next argues that we misunderstood the extent of the criminality at play in this case. It argues that the amount of marijuana found in the cabin fairly implies a "commercial marijuana growing and distribution operation." In support of that premise, the Government offers a new affidavit from the DEA case agent. See Affidavit of Mark Andrasi at 3 ("Accordingly, the sheer volume of marijuana seized from this location strongly indicates that this marijuana was manufactured for commercial distribution rather than personal use.").
We agree that the amount of marijuana seized (20 lbs.) is a large quantity for purely personal use. However, we find a problem with this new assertion. Although Agent Andrasi believes the amount grown raises a fair presumption of distribution, the Government offered no direct evidence either in the criminal case or here. Apparently, the federal probation officer assigned to the criminal case indicated to Judge McClure that there was "no evidence that the defendant was involved in actual distribution of marijuana." Transcript of Sentencing Hearing at 33. Indeed, Assistant United States Attorney William Behe told Judge McClure at the sentencing hearing
Well, I don't think that the fact that he did not distribute or at least I couldn't prove that he distributed in any way mitigates the conduct because the crime is simply the growing, the manufacturing of it ... The crime is manufacturing and he grew it, although we did not charge him with or we are not arguing that he was distributing it ...
Id. at 34.[3] Thus, despite Agent Andrasi's affidavit, we can not conclude that the Government has shown that there was distribution in this case.
In the same area, the Government challenges our determination that the criminal conduct was essentially limited to the cabin itself. Agent Andrasi asserts that the following facts implicate the entire property in the offense: (1) the cabin was placed far from the border of the property, (2) the cabin was surrounded by a fence, and (3) there was a dog house approximately 100 yards from the cabin. Andrasi Aff. at 5-6. We can not conclude that these facts, assumed as true, taint the entire property with criminality. The fence and the dog house are as consistent with a legitimate desire for privacy as with any illegal purpose and, in any event, they were within close proximity to the cabin, which we have already recognized as involved in criminal conduct. The position of the cabin on the property is simply irrelevant. If the Government suggests that property is criminally-tainted merely because it creates a physical obstacle for DEA surveillance, we reject the argument.
*154 The Government goes on to argue that, even if total forfeiture is inappropriate, we have the discretion to mitigate the excessiveness. In its one-paragraph analysis, the Government does not explain how such a principle would apply to this case. We assume that the Government intends to suggest that, if we deny total forfeiture, we should allow something short of that. The Government cites United States v. Sarbello, 985 F.2d 716, 718 (3d Cir.1993), for the proposition that a district court may reduce a statutory penalty in order to conform to the Eighth Amendment. While this may be so, we do not see how it would apply to this case. A monetary fine may be lessened by a certain dollar increment; a forfeiture is essentially an all-or-nothing penalty. If the Government means to suggest that we should allow forfeiture of only the cabin if not the entire property, we decline to agree. It is not clear that we have authority to do so and we are not inclined to divide up the property Solomon-like leaving a cabin with no access and a parcel of property with an island in the middle.
Finally, in its brief in opposition, the Government argues that it is premature for us to rule on the excessiveness question on a pretrial motion. See United States v. $633,021.67 in U.S. Currency, 842 F. Supp. 528, 535 (N.D.Ga.1993). The court in $633,021.67 held that it could not examine the excessiveness question because it had not yet determined how much of the property was subject to forfeiture. That is not the case here. The Government has described precisely what property it seeks to take by forfeiture. If the Government cites $633,021.67 for the proposition that we must first determine that the property should be forfeited before we can reach the excessiveness issue, we reject the argument. Given that the Government seeks to take the entire property, there is no issue about the size or extent of the proposed forfeiture.[4]
III. Conclusion
The Government has challenged our Memorandum and Order of May 5, 1994, on a number of bases, both procedural and substantive. We have carefully reviewed that Memorandum and Order, the briefs, and the file and conclude that there is no reason to reconsider. We allow that the area of civil forfeiture and the Eighth Amendment is something of a legal frontier, with little appellate guidance on the difficult issue of determining excessiveness or disproportionality of forfeitures. Yet, while we in no way minimize the seriousness of the manufacture and use of illicit drugs, we believe our disposition of this matter is in harmony with the Eighth Amendment and the case law.
We will issue an appropriate order.
ORDER
AND NOW, this 5th day of August, 1994, upon consideration of the Government's motion to reconsider, it is ordered that the motion is denied.
NOTES
[1] In our earlier Memorandum and Order, we referred to a letter written by Mr. Deaner to the Court. The Government indicates that it was not served with a copy of that letter. We wish to assure the Government that we did not rely on the letter for any material information. Rather, we referred to it only in describing the history of how the cabin was built, which, of course, plays no substantive part in our resolution of this matter.
[2] Indeed, the Government argues in its brief in opposition that the "innocent owner" defense is not available in this case.
[3] Of course, Ms. Kurtz plead guilty only to possession.
[4] We recognize that a forfeiture analysis ordinarily requires that we inquire into the connection between the property and the criminal conduct. Premises Known as RR No. 1, 14 F.3d at 876; see also, Austin, ___ U.S. at ___, 113 S.Ct. at 2802, 125 L.Ed.2d at 509 (Scalia, J., concurring). In Premises Known as RR No. 1, the Third Circuit noted that the appropriate test has two parts: the first to question the nexus and the second, assuming there is one, to question excessiveness. 14 F.3d at 876. In this matter, we have essentially assumed the first and concentrated on the second. However, we have discussed in this memorandum the extent to which the property is tainted by criminality, see, ante, at 153-54, determining that the Government has not shown the criminal conduct to extend beyond the cabin itself. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1644828/ | 963 F. Supp. 1328 (1997)
ODEGARD, INC. and Stephanie Odegard, Plaintiffs,
v.
COSTIKYAN CLASSIC CARPETS, INC. and JSL Industries, Defendants.
No. 97 Civ. 1179 (JGK).
United States District Court, S.D. New York.
May 6, 1997.
*1329 Arthur R. Lehman, David Gikow, Lehman & Gikow, New York City, for Plaintiffs.
Thomas J. Hall, Alison Kronenberg Chadbourne & Parke, L.L.P., New York City, for Defendants.
OPINION AND ORDER
KOELTL, District Judge:
The plaintiffs in this action, Odegard, Inc. and Stephanie Odegard, have sued the defendants, Costikyan Classic, Carpets, Inc. ("Costikyan Carpets") and J.S.L. Industries ("JSL"), for copyright infringement, alleging that the defendants improperly copied three of their carpet designs. The defendants deny the plaintiffs' allegations and have counterclaimed, seeking a declaration that one of the plaintiffs' copyright registrations is invalid.
This Court consolidated the hearing of the plaintiffs' application for a preliminary injunction with the trial on the merits. From March 3, 1997 to March 5, 1997, the parties tried this case to the Court in a non-jury trial. Pursuant to Federal Rule of Civil Procedure *1330 52, the Court makes the following Findings of Fact and reaches the following Conclusions of Law.
FINDINGS OF FACT:
THE PARTIES
1. Odegard, Inc. is a corporation organized under the laws of the State of New York. Its principal place of business is New York City. (Joint Pre-Trial Order Undisputed Facts ("UF") at ¶ 1). Odegard, Inc. is in the business of designing, importing and selling Tibetan carpets. (Trial Transcript ("Tr.") at 67 [Odegard]).
2. Odegard is the president of Odegard, Inc. (UF at ¶ 2). She formed Odegard in 1989. (Tr. at 77-78 [Odegard]).
3. Defendant Costikyan Carpets is a corporation organized and existing under the laws of the State of New York. Its principal place of business is located in Queens County, New York. (UF at ¶ 3). Costikyan Carpets was formed in 1993 to engage in the business of manufacturing, importing and selling handmade area rugs. (Tr. at 318-19 [Costikyan]). Phillip Costikyan is the president, sole director, and sole shareholder of Costikyan Carpets. (UF at ¶ 4).
4. Defendant JSL is a corporation organized and existing under the laws of the State of New York. Its principal place of business is New York City. (UF at ¶ 5). JSL maintains a showroom at 969 Third Avenue in Manhattan. (Tr. at 211 [Braunstein]). JSL was formed in 1991 to manufacture custom carpets. (Tr. at 211-12 [Braunstein]). In 1994, JSL began manufacturing and selling Tibetan carpets. (Tr. at 214 [Braunstein]). Len Braunstein is the president, sole director and sole shareholder of JSL. (UF at ¶ 6).
5. Costikyan Carpets and JSL have formed a partnership or joint venture. This joint venture manufactures and sells hand knotted Tibetan-style carpets under the name "Kent Collection." (UF at ¶ 7).
THE COPYRIGHTS
6. The plaintiffs allege that the defendants infringed upon their copyrights to their "Asterisk," "Chaklo," and "Belak Ripyun" carpet designs.
7. Odegard, Inc. filed an application with the United States Copyright Office, dated January 23, 1997, for a Certificate of Registration for its "Asterisk" carpet design. (Plaintiffs' Exhibit ("PX") 16; Tr. at 169, 186). On March 14, 1997, after the completion of trial, the United States Copyright Office issued a Certificate of Registration for the "Asterisk" carpet design. (PX 46). That registration states that the application was received on January 31, 1997. (Id.). The parties stipulated to reopening the record to admit this Certificate of Registration into evidence. (March 21, 1997 Stipulation and Order).
8. Odegard, Inc. is the owner of a copyright to its "Chaklo" carpet design pursuant to a Certificate of Registration issued effective as of May 24, 1995 by the United States Copyright Office. (PX 9).
9. Odegard is the owner of a copyright to the "Belak Ripyun" carpet design pursuant to a Certificate of Registration, issued effective as of May 24, 1995 by the United States Copyright Office. (PX 3).
THE PLAINTIFFS' CARPETS
ASTERISK
10. The "Asterisk" carpet design was created by the plaintiffs in cooperation with Holly Hunt, Ltd. ("Holly Hunt"), a Chicagobased design studio. Holly Hunt maintains a showroom in the D & D Building, which is located at 979 Third Avenue in Manhattan. In 1994, representatives of Holly Hunt visited the plaintiffs' showroom and agreed to design a line of silk and wool Tibetan carpets in collaboration with the plaintiffs. (Tr. at 23-24 [Levine]; Tr. at 103-04 [Odegard]).
11. As part of this collaboration, Douglas Levine, at the time Holly Hunt's Director of Design, and Laura Kirar, Levine's assistant, began working on the design that would become the "Asterisk" carpet. During this design process, Levine and Kirar were primarily inspired by Japanese textiles. The two designers made a series of sketches, and began to develop a carpet design featuring an eight-pointed motif. (PX 19; Tr. at 27 [Levine]; Tr. at 49-50 [Kirar]). Levine testified at trial that the motif "wasn't really a *1331 star because it had no hard edge" but rather "free-flowing spots." (Tr. at 27 [Levine]).
12. Levine and Kirar then experimented with designs featuring different sized eight-pointed figures, which they came to refer to as asterisks. (PX 19; Tr. at 27 [Levine]; Tr. at 50 [Kirar]). The designers also experimented with the placement of the motifs on the carpet. (Tr. at 36 [Levine]).
13. The final product of this designing process was the plaintiffs' "Asterisk" carpet. This carpet features eight-point motifs. These motifs are relatively small and there is considerable space between each motif. The full size "Asterisk" carpet's border is less than an inch wide. (PX 17A, 17B).
14. The defendants assert that the "Asterisk" design is not sufficiently original to be copyrightable. The defendants point out that Levine and Kirar both testified that asterisks are common symbols that have been used for centuries. (Tr. at 34 [Levine]; Tr. at 61 [Kirar]). The defendants also entered into evidence a number of textile patterns featuring eight-pointed figures. (Defendants' Exhibit ("DX") NN, OO, PP).
15. However, the textile designs entered into evidence by the defendants all used precise and rigidly geometric eight-pointed figures. (DX NN, OO, PP). In contrast, the motifs on the plaintiffs' "Asterisk" carpet are less geometric or precise, and appear to have been drawn freehand. (PX 17A, 17B). Both Levine and Kirar testified that they consciously designed the eight-pointed figures to be less rigid than previous "star designs." (Tr. at 39 [Levine]; Tr. at 65 [Kirar]).
CHAKLO
16. The plaintiffs' "Chaklo" carpet was designed in 1994 by Odegard and Dawne Weaver, an artist employed by Odegard, Inc. The design was inspired by a customer's request for a custom carpet. The customer wanted a carpet with a design based on the shapes of wrought iron gates and railings. Weaver collected photographs of wrought iron pieces and made sketches based on those photos. These sketches became the "Chaklo" carpet design. (PX 12, 13; Tr. at 15-19 [Weaver]). During the trial, the defendants stipulated that the "Chaklo" carpet design was an original creation of the plaintiffs. (Tr. at 16).
17. The "Chaklo" carpet is a symmetrical pattern. (PX 10; Tr. at 19 [Weaver]). It features linear motifs in shapes that resemble hearts, "S's," curlicues reminiscent of snail shells, and other shapes commonly found in wrought iron grillwork. The "Chaklo" carpet has a border that contains similar motifs. (PX 10).
BELAK RIPYUN
18. The plaintiffs produced their "Belak Ripyun" carpet design by modifying their "Belak" design, which had been created in 1990. "Belak" is the Tibetan word for "frog's foot." The "Belak Ripyun" carpet was designed in response to comments by the plaintiffs' customers that the "Belak" carpet design was too linear, and therefore gave too much of a "direction" to the room. The "Belak Ripyun" uses the same frog's foot motif as the "Belak," but the design is intended to draw the eye to the center of a room rather than in one particular direction. (Tr. at 89-90 [Odegard]).
19. The "Belak Ripyun" carpet has frog's foot motifs that emanate from the center of the carpet. The motifs are triangular, with lines to represent a frog's toes. The carpet has a border with triangular patterns that resemble mountain peaks. In comparison to the "Asterisk" carpet, the motifs on the "Belak Ripyun" carpet are very close together. (PX 4).
THE DEFENDANTS' CARPETS
STAR CARPET
20. The plaintiffs allege that the defendants' "Star" carpet design infringes on their "Asterisk" carpet design. The "Star" carpet was shown by the defendants at the 1997 carpet shows in Atlanta and Las Vegas. (Tr. at 190-92 [DeMarco]). The "Star" carpet design has many similarities to the plaintiffs' "Asterisk" carpet design. Both designs have free-form, rather than rigidly geometric or precise eight-point figures. Both carpets have considerable negative space between the motifs. Both carpets also have borders, although the "Star" carpet has a larger border than the "Asterisk" carpet. Moreover, *1332 the "Star" and "Asterisk" carpets have been produced using very similar color schemes. (PX 17A, 17B, 29).
21. At trial, Braunstein asserted that he created the "Star" carpet independently, and that he had not seen the plaintiffs' "Asterisk" carpet at the time he created the "Star" carpet. Braunstein testified that in 1995 he gave a factory in Nepal instructions to create a carpet with a "star" design. (Tr. at 274 [Braunstein]). Braunstein further testified that in response to this request, he received samples from the factory in Nepal that featured various types of stars. (DX HH, II, JJ; Tr. at 261 [Braunstein]). However, the stars on these samples were different from the motifs on the final "Star" carpet. (DX HH, II, JJ; PX 29). The samples contained stars that were more geometric and precise looking than the free-form motifs that appear on the final "Star" carpet. (DX HH, II, JJ; PX 29).
22. Braunstein's assertion that the "Star" carpet was independently created is not credible. Braunstein failed to explain the process by which the Tibetan carpet factory came to translate his cursory instructions into samples, some of which feature eight-pointed figures that somewhat resemble the plaintiffs' "Asterisk" carpet. Moreover, Braunstein failed to explain how these samples came to be modified so that they more closely resembled the free-form eight-pointed motifs found on the plaintiffs' "Asterisk" carpet.
23. The defendants clearly had access to the plaintiffs' "Asterisk" carpet design. The "Asterisk" carpet has been displayed in the Holly Hunt showroom in New York since approximately March, 1996. (Tr. at 29-30 [Levine]). At trial, Braunstein testified that he had visited a designer's showroom that was located right next to the Holly Hunt showroom. (Tr. at 241 [Braunstein]). The "Asterisk" carpet was also shown at a July 1996 carpet show in Atlanta that both Costikyan and Braunstein attended. (Tr. at 107 [Odegard]; Tr. at 228 [Braunstein]; Tr. at 334 [Costikyan]).
SWIRL CARPET
24. The plaintiffs' allege that the defendants' "Swirl" carpet infringes on their "Chaklo" carpet design. The "Swirl" carpet was shown by the defendants at the 1997 carpet show in Atlanta. (Tr. at 120 [Odegard]). The "Swirl" carpet contains design elements based on shapes similar to those found the "Chaklo" carpet. Both carpets contain linear motifs in various partially circular shapes. Both carpets contain shapes that resemble hearts, "S's," and swirls reminiscent of snail shells.
25. There are also differences between the carpets. The "Chaklo" carpet is symmetrical, with the entire carpet appearing to emanate symmetrically from the center of the carpet. In contrast, the "Swirl" carpet is asymmetrical, with its motifs scattered around the carpet with no set pattern. While both carpets contain motifs that resemble hearts, "S's" and swirls reminiscent of snail shells, there are differences between the actual motifs in both size and design. Moreover, the "Swirl" carpet has a fringe but no border, the motifs run into the edge of the carpet and some of the motifs are cut off. The "Chaklo" carpet has no fringe but has a border that contains additional motifs, and all of the motifs end before the border begins. (PX 10, 28). The overall appearance of the "Chaklo" carpet is a structured symmetrical design while the "Swirl" carpet uses a more free form design.
26. Braunstein asserts that he independently created the "Swirl" carpet design. Braunstein testified at trial that the process of designing the "Swirl" carpet began in 1992 in response to a customer's request for a carpet with a free-form, non-repeat pattern. (Tr. at 297 [Braunstein]). Braunstein further testified that he worked with a mill to produce a drawing based on this customer's request. (PX 26; Tr. at 283 [Braunstein]). According to Braunstein, that original drawing, was transformed in 1996 by a designer in Bangkok into the final "Swirl" carpet design. (PX 26; Tr. at 284-86, 297 [Braunstein]).
27. However, the original drawing is very different from the final "Swirl" design drawing. The 1992 design drawing contains linear motifs in the shapes of circles and spirals, but does not contain the shapes that resemble a heart and an "S" that are present in the final design. (PX 26). Braunstein *1333 was unable to explain how the 1992 design was transformed into the final "Swirl" design, except to say that it was created by a designer in Bangkok.
28. In July, 1996, the plaintiffs' "Chaklo" carpet was pictured in an advertisement for a furniture maker. In that picture only a portion of the "Chaklo" carpet is showing. That portion of the carpet contains "heart" and "S" motifs similar to those found on the "Swirl" carpet. The "Chaklo" carpet pictured in the advertisement appears to be the same color as the "Swirl" carpet. The advertisement identified the carpet pictured as having been produced by the plaintiffs. (PX 15; Tr. at 186).
29. At a trade show held in Las Vegas in 1997, Braunstein told Thomas Demarco, the plaintiffs' general manager, that he had obtained the idea for the "Swirl" carpet from a home design magazine. (Tr. at 195 [DeMarco]). Thus, it appears that the defendants added elements to the "Swirl" carpet from the elements of the "Chaklo" carpet that were visible in the advertisement. The "Chaklo" carpet design has also been featured in other magazine advertisements. (PX 15; Tr. at 186).
ELK'S FOOT
30. The plaintiffs allege that the defendants displayed and offered for sale both an exact copy of their "Belak Ripyun" carpet, and a "Elk's Foot" carpet that was sufficiently similar to the "Belak Ripyun" carpet to infringe upon that design. The defendants deny having ever displayed or sold an exact copy of the "Belak Ripyun" carpet.
31. At trial, the plaintiffs were unable to produce a drawing, photograph or carpet sample used by the defendants to sell such an exact copy. The plaintiffs attempted to show that the defendants displayed an exact copy of the "Belak Ripyun" carpet through the testimony of Edith Ajello, a carpet sales manager. She testified that she had seen an exact copy of the plaintiffs' carpet in the defendants' booth at the Atlanta carpet show, although she could not recall if she had seen a full carpet or only a sample. (Tr. at 175-76 [Ajello]). Ajello's testimony was unconvincing that she had actually seen a "Belak Ripyun" carpet at the defendants' booth. (Tr. at 175-181 [Ajello]). There was evidence both that she may have seen the "Elk's Foot" rather than the "Belak Ripyun," and that she may have seen a "Belak Ripyun" carpet in a booth other than the defendants' booth. (Tr. at 176-78, 180-81, 202 [Ajello]). Braunstein denied that he showed a "Belak Ripyun" carpet. (Tr. at 309 [Braunstein]). Thus, the plaintiffs failed to present sufficient credible evidence at trial to demonstrate that the defendants displayed or sold an exact copy of the "Belak Ripyun" carpet.
32. It is undisputed, however, that the defendants displayed a picture of their "Elk's Foot" carpet at the 1997 carpet show in Atlanta. (PX 24; Tr. at 336 [Costikyan]). At trial, the defendants asserted that they were not soliciting orders for the carpet, but were only trying to gauge customer reaction to the design. (Tr. at 245 [Braunstein]). However, the defendants' testimony that they displayed this carpet design without any intention of selling it was not credible.
33. The "Elk's Foot" carpet design has many similarities to the "Belak Ripyun" carpet. Both have animal foot motifs. Moreover, while the motifs are slightly different, the overall look and triangular shape of the motifs is the same. In each carpet, the motifs are arranged to radiate out from the center and the arrangement of the motifs on the two carpets appears to be identical. (PX 4, 24). This was the precise arrangement of the motifs that Odegard testified was the subject of considerable creative effort on her part. (Tr. at 89-90 [Odegard]).
34. The main difference between the picture of the "Elk's Foot" design the defendants displayed at the Atlanta show and the plaintiffs' "Belak Ripyun" carpet is that the "Belak Ripyun" carpet has a border not found on the picture of the "Elk's Foot" design. However, the picture of the "Elk's Foot" was clearly cropped, because the writing on the back trails off the picture in midsentence. (PX 4, 24). The defendants had no explanation for this obvious tampering with the picture. This alteration was apparently done to eliminate a border that was depicted on this picture when it was shown in Atlanta. Given the defendants' efforts to *1334 hide the existence of this border, I can only conclude that it greatly resembled the border of the plaintiffs' "Belak Ripyun" carpet.
35. The defendants were unable to demonstrate at trial that the "Elk's Foot" design was independently created. Costikyan testified that the design was created by David Setlow, a designer who worked for Stark Carpets in New York. However, Costikyan could provide no information on how Setlow designed the "Elk's Foot." Moreover, the defendants failed to call Setlow as a witness. (Tr. at 339-40 [Costikyan]).
36. The defendants had access to the "Belak Ripyun" carpet design. Braunstein and Costikyan attended the July 1996 Atlanta carpet show at which the plaintiffs exhibited the "Belak Ripyun" carpet. (Tr. at 98 [Odegard]; Tr. at 228 [Costikyan]; Tr. at 241 [Braunstein]). The plaintiffs have also advertised the "Belak Ripyun" in magazines, including Architectural Digest. (PX 8; Tr. at 97-98 [Odegard]).
CONCLUSIONS OF LAW
1. The plaintiffs' claims arise under the Copyright Act of 1976, as amended, 17 U.S.C. § 101 et seq. This Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a).
2. "To establish copyright infringement, `two elements must be proven: (1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.'" Williams v. Crichton, 84 F.3d 581, 587 (2d Cir.1996) (citing Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340, 361, 111 S. Ct. 1282, 1295-96, 113 L. Ed. 2d 358 (1991)); see also ABKCO Music, Inc. v. Stellar Records, Inc., 96 F.3d 60, 64 (2d Cir.1996). "`A certificate of copyright registration is prima facie evidence that the copyright is valid' ... [and] `creates a rebuttable presumption that the work in question is copyrightable.'" Fonar Corp. v. Domenick, 105 F.3d 99, 104 (2d Cir.1997) (citing 17 U.S.C. § 410(c) and Whimsicality, Inc. v. Rubie's Costume Co., 891 F.2d 452, 455 (2d Cir.1989)); see also Folio Impressions, Inc. v. Byer California, 937 F.2d 759, 763 (2d Cir.1991).
VALIDITY OF THE COPYRIGHTS
3. Odegard, Inc. is the owner of a copyright to its "Chaklo" carpet design pursuant to a Certificate of Registration issued effective as of May 24, 1995 by the United States Copyright Office. (PX 9). Odegard is the owner of a copyright to the "Belak Ripyun" carpet design pursuant to Certificate of Registration issued effective as of May 24, 1995 by the United States Copyright Office. (PX 3).
4. These Certificates of Registrations provide the plaintiffs with a rebuttable presumption of ownership of valid copyrights. In regard to the plaintiffs' "Chaklo" and "Belak Ripyun" carpets, the defendants have not attempted to overcome this presumption, and have not argued that the plaintiffs do not own valid copyrights in these works. Therefore, with respect to the "Chaklo" and "Belak Ripyun" carpets, the plaintiffs have demonstrated their ownership of valid copyrights.
5. Prior to trial, Odegard, Inc. filed an application for a Certificate of Registration for its "Asterisk" carpet design with the United States Copyright Office. (PX 16; Tr. at 169, 186). On March 14, 1997, after the completion of trial, the United States Copyright Office issued a Certificate of Registration for the "Asterisk" carpet design. (PX 46). That registration states that the complete application was received on January 31, 1997. (PX 46).
6. "The effective date of a copyright registration is the day on which an application, deposit, and fee, which are later determined by the Registrar of Copyrights ... to be acceptable for registration have all been received in the Copyright Office." 17 U.S.C. § 410(d). Therefore, Odegard, Inc.'s registration became effective on January 31, 1997, which was before the filing of this action. Because Odegard, Inc.'s Certificate of Registration was effective when this action was filed, the plaintiffs are presumed to have a valid copyright in their "Asterisk" carpet design. See 2 Melville M. Nimmer & David Nimmer, Nimmer on Copyright § 7.16[D].
7. At trial, the defendants presented evidence in an attempt to rebut the presumption that the plaintiffs own a valid copyright to *1335 their "Asterisk" carpet design. "Generally speaking, the presumption of validity may be rebutted `[w]here other evidence in the record casts doubt on the question.'" Fonar, 105 F.3d at 104 (citing Durham Industries, Inc., v. Tomy Corp., 630 F.2d 905, 908 (2d Cir.1980)). This presumption can be overcome by a showing that the work was not sufficiently original to be copyrightable. See Fonar, 105 F.3d at 104.
8. At trial, the defendants argued that the plaintiffs' "Asterisk" design was not original but was copied from other designs in the public domain and therefore is not entitled to copyright protection. The defendants also argued that the plaintiffs failed to disclose that the "Asterisk" design was "derivative," and that this omission renders the plaintiffs' copyright defective.
9. "In the copyright context, originality means that the work was independently created by its author, and not copied from someone else's work. The level of originality and creativity that must be shown is minimal, only an unmistakable dash of originality need by demonstrated, high standards of uniqueness in creativity are dispensed with." Folio, 937 F.2d at 764-65 (internal citations and quotations omitted); see also Rogers v. Koons, 960 F.2d 301, 307 (2d Cir.), cert. denied, 506 U.S. 934, 113 S. Ct. 365, 121 L. Ed. 2d 278 (1992). This requirement of originality has been described as "little more than a prohibition of actual copying." Gaste v. Kaiserman, 863 F.2d 1061, 1066 (2d Cir. 1988) (citing Alfred Bell & Co. v. Catalda Fine Arts, Inc. 191 F.2d 99, 103 (2d Cir. 1951)).
10. In determining whether a fabric design is sufficiently original to be copyrightable, the Court of Appeals for the Second Circuit has stated that "a work may be copyrightable even though it is entirely a compilation of unprotectible elements." Knitwaves, Inc. v. Lollytogs Ltd., 71 F.3d 996, 1003-04 (2d Cir.1995) (citing Feist, 499 U.S. at 340, 111 S.Ct. at 1284-85). Even if the motifs themselves are not copyrightable, the designer of a fabric may copyright its selection and arrangement of motifs, or its combining of motifs. See Knitwaves, 71 F.3d at 1004; Folio, 937 F.2d at 765.
11. The "Asterisk" carpet's freeform, eight-pointed motifs are original. While the evidence at trial showed that eight-pointed figures are commonly used in fabric design, the plaintiff's less rigid and non-geometric figures are distinct from traditional eight-pointed figures. Thus, these figures have the required "unmistakable dash of creativity." Moreover, the plaintiffs' arrangement of these motifs, and their use in this particular design scheme of small motifs, arranged so as to leave considerable negative space, would be sufficiently original to be copyrightable.
12. Based on the plaintiffs' Certificate of Registration for their "Asterisk" carpet, this design is presumed to be original. The defendants have failed to present evidence sufficient to rebut this presumption. Moreover, this Court has independently determined that the plaintiffs' "Asterisk" carpet is sufficiently original to be copyrightable.
13. The defendants also attempt to rebut the presumption of validity by arguing that the plaintiffs failed to disclose that their "Asterisk" design is "derivative." "A work is not derivative unless it has substantially copied from a prior work ... [A] work will be considered a derivative work only if it would be considered an infringing work if the material that it has derived from a pre-existing work had been taken without the consent of a copyright proprietor of such pre-existing work. It is saved from being an infringing work only because the borrowed or copied material was taken with the consent of the copyright owner of the prior work or because the prior work has entered the public domain." M.H. Segan Limited Partnership v. Hasbro, Inc., 924 F. Supp. 512, 519 (S.D.N.Y. 1996) (citing 1 Nimmer on Copyright § 3.01).
14. The defendants have failed to specify a particular work that they believe the "Asterisk" carpet infringes upon. Instead, the defendants assert that the "Asterisk" carpet was copied from the public domain. However, this is merely a recasting of the argument that the "Asterisk" carpet is not original. This argument is unconvincing, as explained above, and is insufficient to rebut the presumption of validity the plaintiffs are afforded *1336 by virtue of the Certificate of Registration they received for their "Asterisk" carpet. To the extent that the defendants are arguing that the plaintiffs copied the "Asterisk" carpet design from Japanese textiles, they misunderstood the testimony of the carpet's designers. All that that testimony establishes is that the plaintiffs' designers obtained inspiration from such textiles. The "Asterisk" design was not copied from the designs in those textiles.
15. Thus, because the defendants have failed to demonstrate that the "Asterisk" carpet is not original or that it is a derivative work, the plaintiffs own a valid copyright to their "Asterisk" carpet design. Therefore, the defendants counterclaim seeking a declaration that the plaintiffs' copyright to the "Asterisk" carpet design is invalid is dismissed.
INFRINGING COPYING
16. To prove the second element of a copyright claim, infringing copying, the plaintiffs must demonstrate both that the defendants have actually copied their works, and that such copying was illegal because a "substantial similarity" exists between the defendants' carpets and the protectable elements of the plaintiffs' carpets. See Knitwaves, 71 F.3d at 1002; Fisher-Price, Inc. v. Well-Made Toy Manufacturing Corp., 25 F.3d 119, 123 (2d Cir.1994).
ACTUAL COPYING
17. A plaintiff may show "actual copying" by direct evidence. See Fisher-Price, 25 F.3d at 123. "In the absence of direct evidence, copying is proven by showing (a) that the defendant had access to the copyrighted work and (b) the substantial similarity of protectible material in the two works." Williams, 84 F.3d at 587 (internal quotations and citations omitted). The demonstration of copying by circumstantial evidence can be rebutted, and a claim of copyright infringement defeated, if the defendant can show that its work was independently created. See Folio, 937 F.2d at 765; Tienshan, Inc. v. C.C.A. International (N.J.), Inc., 895 F. Supp. 651, 657 (S.D.N.Y.1995).
18. At trial, the plaintiffs presented direct evidence that the defendants actually copied elements of the "Chaklo" carpet in designing their "Swirl" carpet. Braunstein told DeMarco that he had obtained the idea for the "Swirl" carpet from a home design magazine and the plaintiffs entered into evidence a magazine advertisement that displayed a portion of the plaintiffs' "Chaklo" carpet. (Tr. at 195 [Demarco]). As explained above, comparison of this advertisement to the defendants' "Swirl" carpet, in combination with DeMarco's testimony, provides sufficient direct evidence that the defendants actually copied elements of the plaintiffs' "Chaklo" carpet in creating their "Swirl" carpet.
19. For all three of their allegedly infringed upon carpets, the plaintiffs also sought to demonstrate "actual copying" through circumstantial evidence. The plaintiffs presented evidence to show that the defendants had access to all three of the carpet designs at issue in this case. The plaintiffs also argued that there was a substantial similarity between their carpets and the defendants' allegedly infringing carpets.
20. "Access may be inferred when the defendant had a reasonable opportunity to view the plaintiffs' work before creating its own." Judith Ripka Designs, Ltd. v. Preville, 935 F. Supp. 237, 246 (S.D.N.Y.1996) (citing Gaste, 863 F.2d at 1066-67); see also 3 Nimmer on Copyright at § 13.02[A]. Access can also be inferred when a plaintiffs' works have been widely disseminated. See ABKCO Music, Inc. v. Harrisongs Music, Ltd., 722 F.2d 988, 998 (2d Cir.1983); see also 3 Nimmer on Copyright at § 13.02[A].
21. The plaintiffs have demonstrated that the defendants had access to their "Asterisk" carpet design. The "Asterisk" carpet is displayed in the Holly Hunt showroom, which is located next door to the showroom of a designer that Braunstein visited. Moreover, the "Asterisk" carpet was displayed at a July 1996 carpet show in Atlanta that both Costikyan and Braunstein attended. Thus, the plaintiffs' have demonstrated access based both on the wide dissemination of the "Asterisk" carpet and the many opportunities the defendants had to view that carpet.
*1337 22. The plaintiffs have also demonstrated that the defendants had access to their "Chaklo" carpet. The "Chaklo" carpet design has been featured in a number of magazine advertisements. As stated above, access can be inferred when a plaintiffs' works have been widely disseminated. Moreover, Braunstein told DeMarco that he had obtained the idea for the "Swirl" carpet from a home design magazine. Thus, the plaintiffs have also demonstrated access by showing that Braunstein had examined the types of magazines in which advertisements featuring the "Chaklo" carpet design were printed.
23. The plaintiffs have also demonstrated that the defendants had access to the "Belak Ripyun" carpet design. Braunstein and Costikyan attended the July 1996 Atlanta carpet show at which the plaintiffs exhibited the "Belak Ripyun" carpet. The plaintiffs have also advertised the "Belak Ripyun" in magazines, including Architectural Digest. Thus, the plaintiffs have demonstrated access based both on the wide dissemination of the "Belak Ripyun" carpet and the many opportunities the defendants had to view that carpet.
24. In addition to showing access, to prove actual copying by circumstantial evidence, the plaintiffs must show a substantial similarity between each of their carpets and the defendants' allegedly infringing carpets. "In the context of deciding whether the defendant copied at all (as distinguished from whether it illegally copied), `similarity' relates to the entire work, not just the protectible elements." Fisher-Price, 25 F.3d at 123.
25. "Substantial similarity" for the purposes of proving "actual copying" through circumstantial evidence is different from "substantial similarity" for the purposes of showing illegal copying. See Laureyssens v. Idea Group, Inc. 964 F.2d 131, 139-40 (2d Cir.1992); Tienshan, 895 F.Supp. at 656. Thus, courts have referred to "substantial similarity," in the context of determining "actual copying" as "probative similarity" to distinguish it from the demonstration of "substantial similarity" needed to prove illegal copying. See Fisher-Price, 25 F.3d at 123; Laureyssens, 964 F.2d at 140; Tienshan, 895 F.Supp. at 656; see also 3 Nimmer on Copyright 13.03[A]. "Probative similarity" is a less demanding test than "substantial similarity," requiring only that there are similarities between the two works that would not be expected to arise if the works had been created independently. See Laureyssens, 964 F.2d at 140; Tienshan, 895 F.Supp. at 656; see also 3 Nimmer on Copyright 13.03[A].
26. Both the "Asterisk" and "Star" carpets have freeform, rather than rigidly geometric or precise eight-pointed figures. Both carpets have considerable negative space and have been produced in identical color schemes. These similarities are too great to be reasonably expected to have arisen independently in the two works. Therefore, the "Asterisk" and "Star" carpets are probatively similar. Having proven both access and probative similarity, the plaintiffs have proven, through circumstantial evidence, that the defendants actually copied their "Asterisk" carpet.
27. The "Chaklo" and "Swirl" carpets include common shapes resembling "hearts," "S's," and swirls and are rendered in the same color scheme. These similarities are too great to be reasonably expected to have arisen independently in the two works. Therefore, the "Chaklo" and "Swirl" carpets are probatively similar. The plaintiffs have proven, through circumstantial evidence, that the defendants actually copied their "Chaklo" carpet.
28. The "Belak Ripyun" and "Elk's Foot" carpets both have small triangle animal foot motifs that radiate out from the center of the carpet. The "Belak Ripyun" carpet has a border that contains triangular shapes intended to resemble mountain tops. While the picture of "Elk's Foot" presented at trial had no border, that border was apparently deliberately excised. These similarities are too great to be reasonably expected to have arisen independently in the two works. Therefore, the "Belak Ripyun" and "Elk's Foot" carpets are probatively similar. The plaintiffs have proven, through circumstantial evidence, that the defendants actually copied their "Belak Ripyun" carpet.
29. The defendants have failed to rebut the plaintiffs' showing of "actual copying" by *1338 proving that any of their carpets were independently created. For each carpet, the defendants were unable to describe credibly their design process. In regard to their "Star" and "Swirl" carpets, the defendants were also unable to explain how, without actually copying the plaintiffs' carpets, early proto-types were transformed into final products that much more closely resembled the plaintiffs' carpets.
SUBSTANTIAL SIMILARITY
30. For each of the allegedly infringed upon carpet designs, the plaintiffs have demonstrated that the defendants engaged in actual copying. However, to succeed on their claims of copyright infringement, they must also show that the copying was illegal because "[p]arrotry does not always mean piracy." Fisher-Price, 25 F.3d at 123. Copying is illegal only when there is a "substantial similarity between the defendants' work and the protectible elements of [the plaintiffs' works]." Knitwaves, 71 F.3d at 1002 (quoting Fisher-Price, 25 F.3d at 122-23).
31. In determining the protectable elements of the plaintiffs' works, "`a copyright does not protect an idea, but only the expression of an idea'" Williams, 84 F.3d at 587 (citing Kregos v. Associated Press, 3 F.3d 656, 663 (2d Cir.1993), cert. denied, 510 U.S. 1112, 114 S. Ct. 1056, 127 L. Ed. 2d 376 (1994)). "That is, the plaintiff must show that the defendant appropriated the plaintiff's particular means of expressing an idea, not merely that he expressed the same idea." Fisher-Price, 25 F.3d at 123.
32. The test for "substantial similarity" is the "ordinary observer test." See Knitwaves, 71 F.3d at 1002; Fisher-Price, 25 F.3d at 123. The ordinary observer test asks "whether the ordinary observer, unless he set out to detect the disparities [between the two works], would be disposed to overlook them, and regard their aesthetic appeal as the same." Folio, 937 F.2d at 765 (internal quotations and citation omitted); see also Knitwaves, 71 F.3d at 1002. "[D]issimilarity between some aspects of the works will not automatically relieve the infringer of liability, for `no copier may defend the act of plagiarism by pointing out how much of the copy he has not pirated.'" Williams, 84 F.3d at 588 (quoting Rogers, 960 F.2d at 308). "It is only when the similarities between the protected elements of [the plaintiffs' works] and the allegedly infringing work are of `small import quantitatively or qualitatively' that the defendant will be found innocent of infringement." Williams, 84 F.3d at 588 (quoting Rogers, 960 F.2d at 308).
33. When a work contains both protectable and unprotectable elements, the inspection must be more discerning. See Knitwaves, 71 F.3d at 1002. The court "must attempt to extract the unprotectible elements from [its] consideration and ask whether the protectible elements, standing alone, are substantially similar." Knitwaves, 71 F.3d at 1002; see also Fisher-Price, 25 F.3d at 123. This more discerning test does not change the degree of similarity required, only what elements of the works are being compared. See Knitwaves, 71 F.3d at 1002-03; see also Fisher-Price, 25 F.3d at 123 ("Where as here, we compare products that have both protectible and unprotectible elements, we must exclude comparison of the unprotectible elements from our application of the ordinary observer test").
34. The defendants' "Star" carpet is substantially similar to the protectable elements of the plaintiffs' "Asterisk" carpet. The "Asterisk" motifs, their arrangement, and the choice of color schemes are protectable elements. As explained above, the "Asterisk" and "Star" carpets have the same motifs, laid out in the same arrangement, and rendered in very similar colors.
35. In this case, the question of substantial similarity is clear. The total look of the carpets is identical, and the ordinary observer would be hard pressed to find differences between the two designs. The only difference is in the size of the borders. But, such a minor difference would not prevent the ordinary observer from regarding the aesthetic appeal as the same, given that the carpets are identical or virtually identical in every other detail. See Folio, 937 F.2d at 765; see also Knitwaves, 71 F.3d at 1002. An ordinary observer would find the carpets substantially similar. Thus, the plaintiffs *1339 have demonstrated illegal copying, and have satisfied all of the other elements of a claim for copyright infringement for the "Asterisk" design.
36. The defendants' "Elk's Foot" design is substantially similar to the protectable elements of the plaintiffs' "Belak Ripyun" carpet design. The motifs, their arrangement and their rendering in a particular color scheme are protectable elements of the "Belak Ripyun" carpet design.
37. Both carpet designs have small triangular animal foot patterns that emanate out from the center in an identical fashion and had similar borders.
38. The difference in the actual animal foot used in the motif is insufficient to defeat a finding of substantial similarity. The defendants may not avoid liability for infringing by pointing out minor differences between the designs. See Williams, 84 F.3d at 588. Even with these differences, the ordinary observer would find that the aesthetic appeal of the two carpets was substantially similar. See Folio, 937 F.2d at 765; see also Knitwaves, 71 F.3d at 1002. The most striking feature of both carpets is the small triangular motifs radiating out from the center in an identical arrangement. The arrangement of the motifs is copyrightable and has been copied to a degree that the aesthetic feel of the two designs is the same. The exact form of the motifs themselves is less important. Therefore, the plaintiffs have demonstrated illegal copying and have satisfied all of the other elements for a claim of copyright infringement.
39. Unlike the "Asterisk" and "Belak Ripyun" carpets, many of the motifs in the "Chaklo" carpet design are not protectable elements. "Heart" and "S" shaped motifs are too common to be in themselves protectable, although the individualized expression of these elements on the "Chaklo" carpet and the selection and arrangement of these elements is protectable. See Knitwaves, 71 F.3d at 1004.
40. An ordinary observer would not regard the "Swirl" carpet design as substantially similar to the "Chaklo" carpet design. The selection and arrangement of the motifs in the two carpets designs are substantially different. The overall pattern and concept of the "Chaklo" carpet is of a completely symmetrical carpet based on wrought iron grillwork. The pattern can be divided into quarters with each quarter emanating in exactly the same way from the center of the carpet. The border has its own design.
41. In contrast, the "Swirl" carpet design is not symmetrical. The pattern is dominated by several flowering shapes that resemble the swirls found on snail shells. These motifs are not placed in any symmetric way in the pattern. The motifs on the "Swirl" pattern are consistently larger than those in the "Chaklo" carpet design, and some of the motifs run off of the edge of the carpet. The "Swirl" carpet has no border, further dispelling any feeling of symmetry.
42. While both carpet designs contain motifs based on commonly used design elements, the expressions of these elements are not the same. For example, the motifs found in the "Swirl" pattern based on an "S" are not centered and are larger than any of the "S" motifs found in the "Chaklo" carpet. Moreover, the "S" motifs are arranged differently on the two carpets.
43. Based on these differences, and the overall different aesthetic appeals of the two carpets, the ordinary observer would not view the "Chaklo" and "Swirl" carpet designs as substantially similar. Therefore, while the plaintiffs have proven their claims for infringement of their "Asterisk" and "Belak Ripyun" carpet designs, that have not shown that the defendants infringed upon their "Chaklo" carpet design.
DAMAGES
44. As infringers of the plaintiffs' works, the defendants are liable for either 1) the plaintiffs' actual damages and any additional profits of the defendants attributable to the infringements; or, at the plaintiffs' election prior to judgment, 2) an award of statutory damages with respect to those works that have been registered under the Copyright Act. 17 U.S.C. § 504; see also Twin Peaks Productions, Inc. v. Publications International, Ltd., 996 F.2d 1366, 1380 (2d Cir. 1993); Rogers, 960 F.2d at 312; Itar-Tass *1340 Russian News Agency v. Russian Kurier, Inc., 1997 WL 109481 *12 (S.D.N.Y.1997). The plaintiffs seek actual damages for the infringement of their "Asterisk" carpet design, but have elected to receive statutory damages for the defendants' infringement of their "Belak Ripyun" carpet design. (Tr. at 377).
ACTUAL DAMAGES AND PROFITS
45. The plaintiffs seek damages based on the defendants' profits from selling their "Star" carpet. In determining an award of damages based on the defendants' profits, the plaintiffs bear the burden of proving the defendants' gross revenues. See 17 U.S.C. § 504(b); see also In Design v. K-Mart Apparel Corp., 13 F.3d 559, 563-64 (2d Cir. 1994); Itar-Tass, 1997 WL 109481 at *12. The defendants then have the opportunity to demonstrate deductible expenses. See 17 U.S.C. § 504(b); see also In Design, 13 F.3d at 564; Itar-Tass, 1997 WL 109481 at *12. "Any doubts resulting from an infringer's failure to present adequate proof of its costs are resolved in favor of the copyright holder." In Design, 13 F.3d at 564 (citing Gaste, 863 F.2d at 1070-71;) see also In Design v. Lauren Knitwear Corp., 782 F. Supp. 824, 832 (S.D.N.Y.1991); Itar-Tass, 1997 WL 109481 at *12.
46. The plaintiffs have submitted delivery invoices that demonstrate that the defendants received $25,853.25 in gross revenue from the sale of their "Star" carpet. (PX 35). At trial, Braunstein and Costikyan both testified that the defendants had incurred costs in developing the "Star" carpet. (Tr. at 308 [Braunstein]; Tr. at 355 [Costikyan]). According to Braunstein and Costikyan, the defendants incurred costs by traveling to Nepal, renting exhibition space at carpet shows, and marketing the carpet. (Tr. at 308-10 [Braunstein]; Tr. at 355 [Costikyan]). However, the defendants failed to submit any documentation for these expenses. Moreover, the testimony indicated that substantial portions of these expenses were incurred in connection with designing, marketing and selling a number of the defendants' carpet designs, not just the "Star" carpet. Therefore, the defendants have failed to prove deductions for their expenses.
47. The defendants did testify that there were direct manufacturing and shipping costs for the "Star" carpet in an amount of approximately seventy-five percent of the sales price. (Tr. at 311 [Braunstein]). This testimony was clear and unrefuted. It is also plain that the carpets could not have been produced without such costs. Given the plaintiffs' demonstration of the defendants' gross revenues and the defendants' proof of expenses, totalling 75% of the $25,853.25 of sales of the "Star" carpet, the plaintiffs have shown that they are entitled to an award of $6,463.31 based on the defendants' profits.
48. The plaintiffs also seek to recover damages for lost sales. The plaintiffs assert that the defendants took $400,000 worth of orders for the "Star" carpet, orders that were never filled, and that this figure represents sales of their "Asterisk" carpet they lost because of the defendants' infringement. When seeking an award of damages for lost sales, the burden is on the plaintiff to demonstrate that it would have made the sales but for the infringing activity. See Banff Ltd. v. Express, Inc. 921 F. Supp. 1065, 1068 (S.D.N.Y.1995) (citing Stevens Linen Associates, Inc. v. Mastercraft Corp., 656 F.2d 11, 15 (2d Cir.1981)); see also 3 Nimmer on Copyright at § 14.02[A].
49. The plaintiffs have failed to present any evidence, beyond their mere assertion, that they would have made the sales for which the defendants took orders. Moreover, the defendants have shown persuasively that the plaintiffs would not have made these sales. For example, all of Odegard's previous sales of "Asterisk" carpets, beginning in 1995, did not exceed $30,000. (DX SS; Tr. at 134-36 [Odegard]). Moreover, Odegard sells to both designers and wholesalers, and thus competes with the very wholesalers to whom it sells its "Asterisk" carpet. (Tr. at 190, 208 [DeMarco]). In contrast, the defendants only sold the "Star" carpet to wholesalers. (Tr. at 352 [Costikyan]). Sales to wholesalers are made at a substantially lower price than sales to designers. It is not credible that, having sold no more than $30,000 worth of "Asterisk" carpets in two years, the plaintiffs would *1341 have sold $400,000 worth of such carpets in a short period of time if only the defendants had not started selling the "Star" carpet.
50. The plaintiffs' allegations that they suffered lost sales are too speculative to warrant an additional award of actual damages. See 3 Nimmer on Copyright § 14.02[A] ("In the absence of convincing evidence as to the volume of sales that plaintiff would have obtained but for the infringement, the measure of lost profits may be rejected as too speculative"). Thus, the plaintiffs are entitled to a total award of $6,463.31 for the defendants' infringement of their "Asterisk" carpet.
STATUTORY DAMAGES
51. The plaintiffs are also entitled to an award of statutory damages for the defendants' infringement of their "Belak Ripyun" carpet. Unless the violation is willful, statutory damages are awarded in an amount of not less then $500 or more than $20,000 for infringement of a work. 17 U.S.C. § 504(c)(1); see also D.C. Comics, Inc. v. Mini Gift Shop, 912 F.2d 29, 34 (2d Cir. 1990); Itar-Tass, 1997 WL 109481 at *15. Where the infringement was willful, the award may be increased to not more than $100,000. 17 U.S.C. § 504(c)(2); see also Itar-Tass, 1997 WL 109481 at *15.
52. "Relevant factors in determining the amount of statutory damages include the expenses saved and profits reaped by the defendants in connection with the infringements, the revenues lost by the plaintiffs as a result of the defendant's conduct and the infringers' state of mind." Broadcast Music, Inc. v. R Bar of Manhattan, Inc., 919 F. Supp. 656, 659-60 (S.D.N.Y.1996); see also Fitzgerald Publishing Co., Inc. v. Baylor Publishing Co., Inc., 807 F.2d 1110, 1117 (2d Cir.1986); Itar-Tass, 1997 WL 109481 at *15. Moreover, "the potential for discouraging the defendant is factored into the determination of the award." Fitzgerald Publishing, 807 F.2d at 1117 (citing F.W. Woolworth Co. v. Contemporary Arts, Inc. 344 U.S. 228, 233, 73 S. Ct. 222, 225, 97 L. Ed. 276 (1952)); see also Itar-Tass, 1997 WL 109481 at *15.
53. "[A] defendant's knowledge that its actions constitute an infringement establishes that the defendant acted willfully within the meaning of § 504(c)(2) for purposes of enhancing statutory damages." Fitzgerald, 807 F.2d at 1115; see also N.A.S. Import, Corp. v. Chenson Enterprises, Inc., 968 F.2d 250, 252 (2d Cir.1992). Knowledge of infringement can be constructive rather than actual, and can be inferred from the infringer's conduct. See Knitwaves, 71 F.3d at 1010; N.A.S. Import, 968 F.2d at 252. Moreover, reckless disregard of the copyright holder's rights is sufficient to support an award of enhanced damages. See Knitwaves, 71 F.3d at 1010.
54. The defendants acted willfully in infringing upon the plaintiffs' "Belak Ripyun" carpet. That the defendants cut off the border on the picture of their "Elk's Foot" design demonstrates that the defendants were aware that they were infringing on the plaintiffs' designs and were willing to act dishonestly to hide their infringement from the plaintiffs and this Court. The defendants also presented testimony about the independent creation of their "Elk's Foot" carpet that was not credible and was developed to hide their infringement. The defendants knowledge that they were infringing is clear from this conduct, making an enhancement of damages appropriate.
55. The plaintiffs have not demonstrated that they lost profits or that the defendants benefited financially from their infringement of the plaintiffs, "Belak Ripyun" carpet. However, as explained above, the defendants clearly intended to infringe upon the plaintiffs' "Belak Ripyun" carpet, and went to great lengths to hide their infringement from this Court. Therefore, based on the egregiousness of the defendants' behavior, an award of $25,000 in statutory damages is appropriate in this case. Such an award also provides proper deterrence.
Other Relief
56. The plaintiffs are also entitled to a permanent injunction against the defendants enjoining them from displaying or selling carpets that could be confused with the plaintiffs' "Asterisk" or "Belak Ripyun" carpet designs. The plaintiffs should submit a proposed judgment with notice to the defendants *1342 within seven days of the date of this opinion. The defendants may submit objections to the plaintiffs' proposed judgment and counter-proposals five days thereafter.
57. The plaintiffs may submit a separate application for attorneys' fees pursuant to Federal Rule of Civil Procedure 54(d). This application should take into account that only one of the two carpet designs upon which the defendants infringed were registered at the time of the infringement. See Knitwaves, 71 F.3d at 1011, 3 Nimmer on Copyright § 14.04[D]. In ruling on such an application this Court would be guided by the factors set forth in Fogerty v. Fantasy, Inc., 510 U.S. 517, 533-34, 114 S. Ct. 1023, 1033, 127 L. Ed. 2d 455 (1994).
CONCLUSION
The defendants counterclaim that the plaintiffs' copyright registration for their "Asterisk" carpet design is invalid is dismissed. The defendants have infringed upon the plaintiffs' copyrights to its "Asterisk" and "Belak Ripyun" carpet designs. The defendants have not infringed upon the plaintiffs' "Chaklo" carpet design. The plaintiffs are entitled to an award of $6,463.31 in actual damages for the defendants' infringement of their "Asterisk" carpet design. The plaintiffs are entitled to an award of $25,000.00 in statutory damages for the defendants' infringement of their "Belak Ripyun" carpet design.
The plaintiffs are also entitled to a permanent injunction against the defendants enjoining them from displaying or selling carpets that could be confused with the plaintiffs' "Asterisk" or "Belak Ripyun" carpet designs. The plaintiffs should submit a proposed judgment with notice to the defendants within seven days of the date of this opinion. The defendants may submit objections to the plaintiffs' proposed judgment and counter-proposals 5 days thereafter. The plaintiffs may submit a separate application for attorneys' fees pursuant to Federal Rule of Civil Procedure 54(d).
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1131764/ | 262 So. 2d 377 (1972)
262 La. 80
MEDIA PRODUCTION CONSULTANTS, INC.
v.
MERCEDES-BENZ OF NORTH AMERICA, INC., et al.
No. 51475.
Supreme Court of Louisiana.
May 1, 1972.
Rehearing Denied June 5, 1972.
*378 Donald A. Meyer, New Orleans, for plaintiff-relator.
Taylor, Porter, Brooks & Phillips, John L. Glover, Baton Rouge, Monroe & Lemann, Stephen B. Lemann, New Orleans, for defendant-respondent.
SANDERS, Justice.
We granted certiorari to review a decision of the Fourth Circuit Court of Appeal denying the purchaser of an imported Mercedes-Benz automobile warranty rights against Mercedes-Benz of North America, Inc., the American distributor that supplied the automobile to the dealer.[1] We reverse.
On April 30, 1968, Media Production Consultants, Inc., a public relations firm, purchased a new 1968 Mercedes-Benz automobile from Cookie's Auto Sales, Inc., in Baton Rouge. The automobile had been manufactured in Germany by Daimler-Benz Aktiengesellschaft, a German corporation. The manufacturer transferred the automobile at the factory to Daimler-Benz of North America, the American importer, with warranty covering defects in materials and workmanship. At the American port of entry, the importer transferred the automobile to Mercedes-Benz of North America, Inc. (MBNA), the distributor. MBNA inspected the automobile and, at its vehicle distribution center, prepared *379 it for sale to a dealer. It was later sold to Cookie's Auto Sales, Inc., a dealer holding a franchise from MBNA. The Claims Policies and Procedures Manual, which MBNA furnished to Cookie's, contains the following warranty:
"Seller [MBNA] warrants (except as hereinafter provided) each part of each new Mercedes-Benz motor vehicle sold by dealer and operated in North America; i. e., the U. S. A. and Canada (including each part of any accessory or equipment thereon manufactured by Daimler-Benz A.G. or supplied by Mercedes-Benz of North America, Inc.) to be free from defects in material and workmanship under normal use and service until such motor vehicle has been operated for a distance of 24,000 miles or for a period of 24 months from the date of delivery to the original purchaser or from the date of initial operation, whichever event shall first occur.
"Seller's obligation under this warranty is limited to the replacement or repair at Seller's option, without charge for installation at Seller's place of business, of such parts as shall be returned to and acknowledged by Seller to be defective."
... (Specific exclusions omitted.)
"This warranty is expressly in lieu of all other warranties and representations, expressed or implied, and of all other obligations or liabilities on the part of the Seller, Mercedes-Benz of North America, Inc. and Daimler-Benz of North America, Inc. and Daimler-Benz A. G. Seller neither assumes nor authorizes any other person to assume for it any other liability in connection with such motor vehicle."[2]
Cookie's sold the automobile to Media. The Mercedes-Benz Owner's Service Policy delivered with the automobile contained a warranty that the vehicle was "free from defects in material and workmanship." In it the dealer agreed to replace or repair defective parts. The Service Policy also contains the following provision:
"This warranty is expressly in lieu of all other warranties and representations, expressed or implied, and of all other obligations or liabilities on the part of Dealer, Mercedes-Benz of North America, Inc., and Daimler-Benz A. G. Dealer neither assumes nor authorizes any other person to assume for it any other liability in connection with such motor vehicle."
The cover of the Mercedes-Benz Service policy bore the inscription: Mercedes-Benz of North America, Inc, Service Department, 158 Linwood Plaza, Fort Lee, New Jersey. To validate the warranty, the customer was requested to fill in and mail a card captioned "Important-Warranty" to MBNA.
The purchaser also received a manual describing the automobile and giving its specifications, bearing the inscription, Mercedes-Benz of North America, Inc.
*380 Immediately after the purchase, Media found the automobile unsuitable for use. Among the defects were a peeling off of the interior trim, interior lights that did not burn, transmission problems, stalling in traffic, a defective air conditioner, excessive brake squeal, deterioration of rear window channels, uncorrectable vibration, and paint deficiencies.
After futile efforts to obtain correction of the deficiencies, Media surrendered the car to an authorized dealer and filed this suit.
Both lower courts found the vehicle so defective as to require an avoidance of the sale. Accordingly, the sale was set aside with judgment against Cookie's, the dealer, for the purchase price. The judgment is now final but unexecuted. It is conceded that the dealer is no longer in business.
The question before us is whether or not the automobile buyer can recover from the distributor.
The Court of Appeal held that no express or implied warranty ran from MBNA to Media, the purchaser, and denied recourse against the distributor. In our opinion, this disposition is unsound.
Two warranty obligations are inherent in every sale, the warranty of merchantable title and the warranty of reasonable fitness for the product's intended use. LSA-C.C. Arts. 2475, 2476.
The jurisprudence is well settled that warranty limitation provisions in automobile manuals and similar documents delivered with the vehicle have no effect upon the statutory warranty of fitness. Radalec, Inc. v. Automatic Firing Corp., 228 La. 116, 81 So. 2d 830 (1955); Hebert v. Claude Y. Woolfolk Corporation, La. App., 176 So. 2d 814 (1965); Stevens v. Daigle and Hinson Rambler, Inc., La.App., 153 So. 2d 511 (1963); Harris v. Automatic Enterprises of Louisiana, Inc., La.App., 145 So. 2d 335 (1962); Fisher v. City Sales and Service, La.App., 128 So. 2d 790 (1961); 24 La.L.Rev. 199-200 (1964). Hence, despite the warranty limitation in the Owner's Service Policy, Media has not renounced the warranty of fitness.
More difficult is the question of whether Mercedes-Benz of North America can be held liable for a breach of the implied warranty.
MBNA asserts that it has no liability in warranty to Media, because it is neither the seller nor manufacturer of the automobile and has no contract with the purchaser.
Media asserts that MBNA occupies the position of manufacturer and, under sound legal theory, no privity of contract is required for a consumer to bring an action in warranty against a manufacturer of a defective product, relying upon Penn v. Inferno Mfg. Corp., La.App., 199 So. 2d 210, cert. denied 251 La. 27, 202 So. 2d 649 (1967); Marine Ins. Co. v. Strecker, 234 La. 522, 100 So. 2d 493 (1958); MacPherson v. Buick Motor Co., 217 N.Y. 382, 111 N.E. 1050, L.R.A.1916F, 696.
The maker of Media's vehicle is a foreign corporation, not qualified to do business in the United States. In its distribution agreement, MBNA assumes the total responsibility for marketing the cars in the United States and for selling, servicing, and establishing franchise dealerships. Its name appears upon the Dealers Claims Policies and Procedures Manual, the owner's service policy, and the owner's automobile manual.
It operates a vehicle distribution center and inspects, adjusts, and prepares the automobiles for placement in the hands of a dealer for retail sale.
Insofar as the American consumer is concerned, MBNA occupies the position of manufacturer. We hold, therefore, that the liability of MBNA to the American consumer is that of the manufacturer of a defective vehicle. See Penn v. Inferno Mfg. Corp., supra; Carney v. Sears, Roebuck & Co., 309 F.2d 300 (1962); Restatement (Second) of Torts § 400, Comment *381 (C); 65 C.J.S. Negligence § 100(3), p. 1114.
MBNA strongly relies upon the absence of privity between it and the purchaser. The equation of no privity, no liability is the traditional rule that held sway for many years. Beginning with the landmark decision of MacPherson v. Buick Motor Co., supra, in 1916, however, the privity requirement has been eliminated in product liability cases. See, e. g., Henningsen v. Bloomfield Motors, Inc., 32 N.J. 358, 161 A.2d 69 (1960); Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex. 609, 164 S.W.2d 828 (1942).
Louisiana has aligned itself with the consumer-protection rule, by allowing a consumer without privity to recover, whether the suit be strictly in tort or upon implied warranty. Marine Ins. Co. v. Strecker, supra; LeBlanc v. Louisiana Coca Cola Bottling Co., 221 La. 919, 60 So. 2d 873 (1952).[3]
We see no reason why the rule should not apply to the pecuniary loss resulting from the purchase of a new automobile that proves unfit for use because of latent defects.
The Legislature has declared that the distribution and sale of motor vehicles in Louisiana vitally affect the public interest. See LSA-R.S. 32:1251. By placing automobiles on the market, the supplier represents to the public that the vehicles are suitable for use. The intervention of a franchised dealer should not mitigate that responsibility. The dealer serves only as a conduit for marketing the automobiles.
The pecuniary loss resulting from an unusable vehicle is recoverable when there is an express warranty without privity. Beck v. Spindler, 256 Minn. 543, 99 N.W.2d 670 (1959); Inglis v. American Motors Corp., 3 Ohio St. 2d 132, 209 N.E.2d 583 (1965); Posey v. Ford Motor Co., (Fla. App.), 128 So. 2d 149 (1961); Hoskins v. Jackson Grain Co., (Fla.), 63 So. 2d 514 (1953). Although there is a split of authority on the question, we find no adequate reason for not applying the same rule and allowing recovery when there is an implied warranty without privity. See Smith v. Platt Motors, Inc., (Fla.App.), 137 So. 2d 239 (1962); Continental Copper & Steel Indus., Inc. v. E. C. "Red" Cornelius, Inc., (Fla.App.), 104 So. 2d 40 (1958); G.M.C. Truck Co v. Kelley, 105 Okl. 84, 231 P. 882 (1924); Santon v. A & M Karagheusian, Inc., 44 N.J. 52, 207 A.2d 305 (1965); Lang v. General Motors Corp., (N.D.), 136 N.W.2d 805 (1965); Manheim v. Ford Motor Co., (Fla.), 201 So. 2d 440 (1967). See also Beck v. Spindler, supra.
We hold, therefore, that Mercedes-Benz of North America, Inc., is solidarily liable with Cookie's Auto Sales, Inc. for the price of the automobile and other allowable expenses.
The Court of Appeal has never reviewed the amount of recovery, since it affirmed the trial court's dismissal of the suit. Hence, the case should be remanded to that court for fixing of the amount of the award. See Felt v. Price, 240 La. 966, 126 So. 2d 330 (1961).
For the reasons assigned, the judgment of the Court of Appeal is reversed and judgment is rendered in favor of plaintiff, Media Production Consultants, Inc., and against the defendant, Mercedes-Benz of North America, Inc., in such amount as may hereafter be fixed, said judgment to be in solido with that rendered against Cookie's Auto Sales, Inc. The case is remanded to the Court of Appeal, Fourth Circuit, for the fixing of the award. All costs are taxed against the defendant.
*382 DIXON, Justice (concurring).
I fully concur in the opinion of the majority.
An additional reason available to the plaintiff is that it was subrogated to the rights of warranty of Cookie's Auto Sales, Inc. Cookie could have waived all its rights against MBNA; the warranty of quality could have been waived but was not. The waiver must be specific. C.C. 1764; Note, 4 Tul.L.Rev. 285; see also C.C. 2503.
The limitations that MBNA attempted to place on its warranty as quoted in footnote 2 of the majority opinion did not serve as a waiver of all rights of warranty by Cookie. MBNA did not say that it sold cars to Cookie without any warranty whatsoever, express or implied. MBNA modified the "no warranty" clause to limit it to performance, characteristics, specifications and conditions, including merchantability and fitness for a particular purpose. The warranty of quality of C.C. 2520 (against redhibitory vices which might render a car absolutely useless or its use so imperfect and inconvenient that it would not have been knowingly purchased) was not mentioned.
This dealership contract was obviously prepared by MBNA. If any ambiguity exists as to the interpretation of limitations placed on the no warranty clause, it must be construed against MBNA. As this court said in Radalec, Incorporated v. Automatic Firing Corporation, 228 La. 116, 123, 81 So. 2d 830, 833:
"Under Article 2476 of the Civil Code, the warranty against hidden defects and redhibitory vices is implied in every contract of sale unless expressly excluded, see Nelson v. M.C.M. Truck Lines, 209 La. 582, 25 So. 2d 236, and Article 2474 declares that `The seller is bound to explain himself clearly respecting the extent of his obligations: any obscure or ambiguous clause is construed against him'. Accordingly, even if it be liberally conceded that the defendant actually intended to restrict its entire liability to a replacement of parts, it would still be responsible, as the alleged limitation in the contract does not plainly signify such an aim."
Under C.C. 2503, the buyer is subrogated to the seller's rights and actions in warranty. If C.C. 2503 is applicable, plaintiff Media is subrogated to Cookie's rights against MBNA. C.C. 2503 should be applicable, even though found in the section of the code dealing with warranty against eviction. This court recognized its applicability in dicta in McEachern v. Plauche Lumber & Construction Co., Inc., 220 La. 696, 57 So. 2d 405, 408. See also 14 Tul.L. Rev. 470; 23 Tul.L.Rev. 119, 140.
This principle of subrogation, long recognized as applicable to the warranty of quality, should be available to plaintiff.
NOTES
[1] La.App., 247 So. 2d 266 (1971). Writ granted 259 La. 55, 249 So. 2d 200 (1971).
[2] The four-page dealership contract executed by MBNA and Cookie's Auto Sales, Inc. contains the following italicized paragraph: "Twelfth: EXCEPT AS EXPRESSLY STATED IN SUBPARAGRAPH (N) OF PARAGRAPH 10 AND SUBPARAGRAPH (H) OF PARAGRAPH 11 of the STANDARD PROVISIONS OF THE DEALER AGREEMENT, MBNA MAKES NO WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, AS TO PERFORMANCE, CHARACTERISTICS, SPECIFICATIONS, OR CONDITION OF MERCEDES-BENZ PASSENGER CARS OR MERCEDES-BENZ PARTS TO BE SUPPLIED BY IT TO THE DEALER, INCLUDING BUT NOT LIMITED TO THE MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND ASSUMES NO LIABILITY WHATSOEVER, WHETHER FOR DIRECT, INDIRECT, OR CONSEQUENTIAL DAMAGES, OR IN ANY OTHER WAY IN CONNECTION WITH SUCH PERFORMANCE, CHARACTERISTICS, SPECIFICATIONS, OR CONDITION."
[3] Under French law, the right to sue the original vendor for breach of warranty of quality is transmitted with the object of the sale. Hue, Commentaire théorique et pratique du Code civil X (1897) No. 154, p. 209; Baudry-Lacantinerie et Saignat, Traité théorique et pratique de droit civil XVII, De la vente et de l'échange (2e éd. 1900) No. 432, pp. 368-369; 14 Tul.L.Rev. 471. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1771854/ | 737 So. 2d 706 (1999)
Ann Lang FITZGERALD
v.
Thomas C. TUCKER, et ux.
No. 98-C-2313.
Supreme Court of Louisiana.
June 29, 1999.
*709 Richard P. Ieyoub, Attorney General, John Henderson Ayres, III, Counsel for Applicant.
Carl William Robicheaux, Lafayette, Counsel for respondent.
CALOGERO, Chief Justice.[*]
We granted a writ in this case to determine whether defendant is liable to plaintiff for defamation. After a thorough review of the record, we reverse the portion of the court of appeal's judgment affirming the district court's award of damages for defamation, because we find that statements made by defendant during a television interview were not actionable as a matter of law, that plaintiff failed to prove defendant uttered allegedly defamatory statements during a meeting of the Acadiana Council on Addictions, and that plaintiff failed to allege in her petition any other defamatory statements spoken or written by defendant. In so holding, we find it unnecessary to analyze a number of issues considered by the court of appeal, such as whether plaintiff was a private figure, whether the jury was properly instructed about the degree of fault which a private plaintiff must prove to recover for publication of defamatory statements regarding matters of public concern, and whether plaintiff's award of damages for defamation should have been modified upward.
The events preceding the filing of this lawsuit arose out of Ann Lang Fitzgerald's and Thomas C. Tucker's involvement with the Louisiana State Board for the Certification of Substance Abuse Counselors, the state board authorized to test and certify substance abuse counselors. Initially, Fitzgerald worked for the Board as the administrative assistant to Donald Trahan, the former executive director. After Trahan and his secretary resigned, Fitzgerald, beginning June 1, 1992, assumed the role of the Board's administrative director. As administrative director, one of Fitzgerald's official duties was to notify certified substance abuse counselors of complaints filed against them. Fitzgerald was also responsible for having counselors' certificates of eligibility executed. In her capacity as administrative director, Fitzgerald worked alone at the Board's office for approximately five months until she resigned on November 2, 1992, the day that Tucker became the Board's chairman. Before being elected chairman, Tucker had served as one of the Board's members and chairman of the Board's ethics committee.
The significant events in this case occurred before and after November 2, 1992. Before November 2, while employed at the Board, Fitzgerald had earned her own substance abuse counseling certificate. Charged with having the certificates of eligibility duly executed, Fitzgerald took her certificate, along with sixteen others, to Charles Broussard for his signature. Broussard, a prior Board member, had not been on the Board for over four months at the time he signed the certificates. He testified that he discussed with Fitzgerald the propriety of his signing the certificates, inasmuch as he was no longer a Board member, but signed them anyway. Also, on October 30, 1992, the day before Tucker was elected chairman of the Board, *710 Fitzgerald notified Karen Tucker, who is the defendant's wife and a certified substance abuse counselor, that Stepping Stones to Recovery had filed an ethics complaint against her. At the time the complaint was filed, Fitzgerald's husband, attorney D.S. "Terry" Fitzgerald, represented Stepping Stones. In fact, Fitzgerald's husband signed the ethics complaint against Karen Tucker.
In the weeks following November 2, 1992, the day that Fitzgerald resigned and Tucker assumed office, Fitzgerald began working as a substance abuse counselor at the University Medical Center ("UMC") in Lafayette on the same floor as Karen Tucker. Thomas Tucker, on the other hand, began his work as chairman of the Board, at which time he discovered that seventeen certificates bearing Broussard's signature had been affixed by Broussard after he was no longer a Board member. Tucker discovered, in addition to the improperly executed certificates, that Board minutes were unsigned and that financial and personnel records were missing. Consequently, Tucker telephoned the Lafayette district attorney's office regarding the missing records and unsigned Board minutes. Tucker also talked with the Department of Health and Hospitals, the Office of the Legislative Auditor, and the Office of the State Inspector General. Upon instruction from the Inspector General, Tucker sent a form letter to each of the seventeen holders of the improperly executed certificates, requesting that their certificates be returned to the Board. The letter stated that the certificates were being collected so that they could be destroyed, and that replacements would be issued as soon as possible. Only after obtaining a temporary restraining order and receiving her new certificate did Fitzgerald return her invalid certificate to the Board. Despite numerous representations by Tucker to Fitzgerald that her old certificate would be destroyed, her certificate, along with the other returned certificates, was maintained at the Board's office.
Tucker's observations prompted a legislative audit. Daniel G. Kyle, who is the Legislative Auditor and a certified public accountant, conducted the audit, which covered the Board's activities for the two fiscal years ending June 30, 1992. In his final report, Kyle outlined the Board's deficient administrative and financial management activities during that period.[1] Fitzgerald served as the Board's administrative director for one month of the period covered by the audit (June 1992), and, although no individuals were mentioned in the audit, Fitzgerald's activities at the Board were called into question in the audit report. Fitzgerald never filled out any employment forms, kept her own time sheets, and signed her own paychecks. She kept pre-signed checks in her office, and from them issued checks to her husband for the rental of his office equipment to the Board. Her husband also billed the Board for legal services, including consultations with Fitzgerald. In one of those *711 invoices, Fitzgerald's husband apparently billed the Board for reviewing the ethics complaint which he filed on behalf of Stepping Stones.
Prompted by the public release of the legislative audit, Charles Huebner, a television news reporter associated with KLFY Channel 10 in Lafayette, conducted a twenty-minute, video-taped interview with Tucker at the Board's office. The interview, which Huebner later edited down to two minutes of airtime, was broadcast on June 11, 1993. During the two-minute broadcast, Huebner questioned Tucker about the various findings of the legislative audit, including the Board's inability to account for previously issued certificates and the improperly executed certificates. As the discussion regarding certificates progressed, Tucker briefly held up Fitzgerald's certificate, which displayed her name. After Tucker lowered the certificate, removing Fitzgerald's name from the camera's view, Huebner briefly gestured downward to the certificate with his hand, and asked Tucker whether "there could be people out there masquerading as substance abuse counselors." Tucker responded that "that could be happening." Huebner, again briefly gesturing with his hand to the out-of-view certificate, asked Tucker whether he had "any idea how many bogus ones are out there." Tucker responded negatively, stating "none that we are aware of at this time because we recalled the seventeen that were improperly signed." No specific statements were made during the broadcast about Fitzgerald or her certification status.
According to Fitzgerald, during the week following the broadcast, eight of her nine patients, none of whom testified at trial, left her private practice, and the ninth was referred to another counselor. Fitzgerald continued to work at UMC until November of 1993, when her one-year appointment ended. She and her husband then moved to Texas, where Fitzgerald did not practice as a substance abuse counselor. When Fitzgerald's certification came up for renewal in 1994, she mailed her certification packet to the Board. The then vice-chairman of the certification committee notified Fitzgerald by letter that her application was insufficient because Fitzgerald had only 44.5 hours of continuing education, whereas the Board rules required 48 hours. It was later revealed that that letter was drafted by Tucker, who was no longer on the Board at the time, but was serving as a consultant to the Board. Fitzgerald eventually became recertified, returned to Louisiana, and resumed her practice as a substance abuse counselor.
In June of 1993, Fitzgerald filed this lawsuit against Tucker and his wife, Karen, for defamation, tortious interference with contract, intentional infliction of emotional distress, and violations of 42 U.S.C. § 1983. After a four day trial, a twelve person jury unanimously found Tucker liable to Fitzgerald, and awarded her $50,000.00 for defamation and $56,600.00 plus legal interest for contractual interference.[2] Tucker appealed the district court judgment. In briefs to the court of appeal, Fitzgerald listed the following eighteen "retaliatory acts," quoted below, allegedly committed by Tucker which Fitzgerald contends supports the jury's verdict:
1. removed board minutes from the [Board's] offices and reported to authorities that no signed minutes were in the offices;
2. initiated a telephone call to the Lafayette Parish District Attorney's office advising criminal wrongdoing may have taken place because the board minutes were not signed;
3. initiated a meeting with the Governor's Counsel to discuss perceived wrongdoing at the [Board];
4. initiated a meeting with the Inspector General for the State of Louisiana to *712 discuss the perceived wrongdoing at the [Board];
5. initiated a meeting or discussion with the Department of Health and Hospitals and Legislative auditor to discuss perceived wrongdoing at the [Board];
6. on November 10, 1992, initiated an investigation into the prior [Board] chairman's actions;
7. on November 13, 1992, writes to the former chairman of the [Board] and advises him he has copies of all minutes of board meetings;
8. on November 13, 1992, writes to Fitzgerald seeking the recall of her certificate evidencing her certification as a substance abuse counselor;
9. on December 2, 1992, writes to Fitzgerald's attorney and advises he wants the certificates so he can destroy same due to invalid signatures;
10. on January 27, 1993, writes to Fitzgerald and seeks the allegedly invalid certificates so he may destroy same and, accusing her of unprofessional conduct, threatens disciplinary action;
11. advised that he believed Fitzgerald was trying to interfere with the necessary duties of the reorganization of the [Board];
12. received Fitzgerald's allegedly defective certificate and allowed it to remain in full view at the [Board]'s offices;
13. as per Mrs. Karen Tucker there was an indication that Fitzgerald was the subject of a criminal investigation and that she would be indicted;
14. contacted Fitzgerald's supervisor at UMC and called into question Fitzgerald's credentials to supervise substance abuse counselors;
15. stated that Fitzgerald's unit at UMC had, "operated in violation of the law" and advised Fitzgerald's supervisor that "unlawful and illegal" operations had been undertaken in her unit;
16. went to Fitzgerald's overall supervisor at UMC and told her that Fitzgerald was not qualified to work at UMC;
17. engaged in a television interview shown over South Louisiana and held up Ann Lang Fitzgerald's allegedly invalid certificate that he assured her would be destroyed and agreed that persons may be masquerading as substance abuse counselors and holding bogus certification; and
18. after he left the [Board], he received Fitzgerald's application for recertification as a substance abuse counselor and as a consultant for the [Board] drafted a letter for signature by the then Chairman of the [Board] committee for certification questioning Fitzgerald's applications and denying same for deficiencies.
The court of appeal in a three-to-two decision affirmed the district court's judgment. After noting that Fitzgerald cited eighteen "retaliatory acts" in her appellate brief, the majority reasoned that, "[i]f proven, any one defamatory act would support the jury's award of damages to Fitzgerald." The majority then reasoned that "Tucker uttered numerous untrue statements about Fitzgerald to other individuals, regarding, among other things, her credentials." The majority further reasoned that Tucker defamed Fitzgerald during the television interview.[3] Then, focusing on the interview, the majority held that Fitzgerald proved all of the elements of a defamation claim. The majority reasoned that Fitzgerald was a private individual and should only have been required to prove either defamation per se or negligence. Thus, the majority declared the jury instructions, which required the jury to find that Tucker acted with actual malice, to be harmless error, i.e., imposing the actual malice standard was a legal mistake which burdened Fitzgerald, but did not *713 cause the jury to find in her favor. The majority then overruled the portion of the judgment awarding Fitzgerald $56,600.00 for contractual interference, finding that Fitzgerald's departure from her job at UMC was voluntary. The majority, however, modified Fitzgerald's defamation award to reflect an additional $56,600.00 in damages, citing as authority its power under La.C.Civ.Pro. article 2164 to "render any judgment which is just, legal, and proper upon the record on appeal."
The two dissenting judges disagreed, finding that Fitzgerald was not a private individual, and that the speech did not involve a matter of private concern. The dissenters reasoned that the trial court properly required the jurors to find actual malice because Fitzgerald was a public official. The dissenters further reasoned that even if Fitzgerald were properly construed to be simply a private individual, the speech involved a matter of public concern, which still requires that Fitzgerald prove actual malice. The dissenters then found that the jury erred in concluding that Fitzgerald satisfied her burden of proving actual malice. The dissenters focused on the television interview, as well as the thirteenth "retaliatory act," that Tucker told his wife that Fitzgerald would be indicted. Regarding the latter allegation, the dissenters noted that both Tucker and his wife denied that such a statement was made, and that the exact nature of Tucker's comment to his wife is difficult to determine. Regarding the television interview, the dissenters reasoned that Tucker made no clear reference to Fitzgerald as the holder of a bogus certificate, and that no false statement was ever made about the recall of her certificate. The dissenters also took issue with the majority's modification of, or increase in, Fitzgerald's defamation award.
Pleading Defamation
Our code of civil procedure sets forth a system of fact pleading. Cox. v. W.M. Heroman & Co., 298 So. 2d 848, 855 (La.1974). Article 854 provides that "all allegations of fact of the petition ... shall be set forth in numbered paragraphs." The Code further provides that a petition must contain "a short, clear, and concise statement of ... the material facts of, the transaction or occurrence that is the subject matter of the litigation...." La. C.Civ.Pro. art. 891(A). To plead "material facts," the petitioner must allege more than mixed questions of law and fact, such as that the defendant breached the contract or acted unreasonably. Frank L. Maraist & Harry T. Lemmon, 1 Louisiana Civil Law Treatise Civil Procedure § 6.3, at 102 (1999). Rather, "[t]he Code requires the pleader to state what act or omission he or she will establish at trial." Id. (footnote omitted).
Fact pleading advances several goals of the petition, such as satisfying the defendant's constitutional guarantee of due process by providing the defendant with fair notice, limiting the issues before the court, and notifying the defendant of the facts upon which the plaintiff bases his claims. See Id. at 101. Thus, to plead material facts, a petitioner alleging a cause of action for defamation must set forth in the petition with reasonable specificity the defamatory statements allegedly published by the defendant. See Acme Stores v. Better Bus. Bureau of Baton Rouge, 225 La. 824, 74 So. 2d 43, 44 (1954) (It is not necessary for a plaintiff to state verbatim the words on which he bases his cause of action, but he must allege a state of facts or condition of things which would show fault under article 2315.); Juneau v. Avoyelles Par. Police Jury, 482 So. 2d 1022, 1027 (La.App. 3d Cir.1986) (Plaintiff in a defamation suit must name the individual offenders and allege separate acts of defamation as to each, including specific defamatory statements.); Robert D. Sack & Sandra S. Baron, Libel, Slander & Related Problems § 4.3.2 (2d ed. 1994 & Supp. 1998) (citing numerous cases and recognizing that "the defendant must be informed of what he or she is alleged to have said in order to be able to prepare a defense"); *714 Rodney A. Smolla, Law of Defamation § 12.05[1] (1998) ("The tradition in defamation actions is to require that the specific defamatory language be pleaded; this is a widely followed practice even when not strictly required under local pleading rules.").
As quoted above, Fitzgerald in her appellate briefs to the court of appeal and to this Court alleges eighteen "retaliatory acts" committed by Tucker which support the jury's verdict. These acts are listed in the "Statement of the Case" sections of Fitzgerald's briefs. In the argument sections of her briefs, Fitzgerald refers to many of these acts as defamatory. Specifically, Fitzgerald's brief states that "the `Statement of the Case' section reveals instances where Tucker defamed Fitzgerald." Of the eighteen acts listed, Fitzgerald's brief then highlights ten of "the most glaring examples of defamation."[4]
During oral argument before this Court, Fitzgerald's attorney, in response to the Court's questions, attempted to clarify exactly which of Tucker's statements were allegedly defamatory. Fitzgerald's attorney avowed that the eighteen acts demonstrated Tucker's fault, and that only a few of them were defamatory. Specifically, Fitzgerald's attorney represented during oral argument that Tucker defamed Fitzgerald on three occasions. First, Tucker defamed Fitzgerald during the television interview; second, Tucker defamed Fitzgerald by telling Tucker's wife that Fitzgerald may be indicted; and, third, Tucker defamed Fitzgerald by communicating to Fitzgerald's supervisor at UMC that Fitzgerald was working in violation of law and that she was "not credentialed as a substance abuse counselor."
A careful review of Fitzgerald's petition for damages, however, reveals that Fitzgerald only alleged that she was defamed twice by Tucker. The first instance, according to Fitzgerald's petition, occurred before, during, or after a meeting of the Acadiana Council on Addictions. Specifically, Fitzgerald's petition reads as follows:
10.
At some point before, during or after the meeting on March 9, 1993, of the ACADIANA COUNCIL ON ADDITIONS, [Thomas C. and Karen Tucker] both made statements to people at the meeting that petitioner was and is responsible for causing turmoil between the UMC Counselor Trainees and the [Board].[5]
The second instance of defamation allegedly occurred when Tucker held up Fitzgerald's *715 certificate and later responded to the interviewer's questions about extant unnumbered and improperly signed certificates. Specifically, Fitzgerald's petition reads as follows:
13.
During the June 11, 1993, interview, at approximately 6:00 p.m., defendant Thomas C. Tucker held up petitioner's recalled certificate....
14.
Defendant Thomas C. Tucker in the June 11, 1993, interview indicated and affirmed that petitioner's certificate was "bogus" and that petitioner is "... out there masquerading ..." as a substance abuse counselor.
In her petition, Fitzgerald never alleges that Tucker published any other defamatory statements which injured Fitzgerald.[6]
Moreover, Fitzgerald did not expand the petition by adducing at trial without objection evidence of other allegedly defamatory statements by Tucker. The general rule is that pleadings may be enlarged by evidence adduced without objection when such evidence is not pertinent to any other issue raised by the pleadings and, hence, would have been excluded if objected to timely. La.C.Civ.Pro. art. 1154; Roberson v. Provident House, 576 So. 2d 992, 994-95 (La.1991); Webster v. Rushing, 316 So. 2d 111, 114-15 & n. 10 (La.1975); Cooper v. Borden, 30,292 (La. App.2d Cir.2/25/98), 709 So. 2d 878, 881; Diesi Leasing, Inc. v. Morrow, 542 So. 2d 838, 841 (La.App. 3d Cir.), writ denied, 548 So. 2d 329 (La.1989). In the instant case, the record reflects, and Fitzgerald's attorney admits in oral argument, that evidence of the eighteen "retaliatory acts" is relevant to the issue of whether defendant acted with actual malice. We also believe that evidence of the other statements was relevant to whether Tucker intentionally interfered with Fitzgerald's employment contract with UMC.
Accordingly, this Court will only review Fitzgerald's allegations that Tucker defamed her at the March 9, 1993 Acadiana Council on Addictions meeting and during the television interview.
Proving Defamation
A cause of action for defamation arises out of a violation of Civil Code article 2315. Vicknair v. Daily States Pub. Co., 153 La. 677, 96 So. 529 (1923); Ferdinand F. Stone, 12 Louisiana Civil Law Treatise Tort Doctrine § 176(c), at 227 (1977). Defamation involves the invasion of a person's interest in his or her reputation and good name. Sassone v. Elder, 92-1856 (La.10/18/93), 626 So. 2d 345, 350 (citing W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 111 (5th ed.1984)). In order to prevail in a defamation action, a plaintiff must necessarily prove four elements: (1) a false and defamatory statement concerning another; (2) an unprivileged publication to a third party; (3) fault (negligence or greater) on the part of the publisher; and (4) resulting injury. Trentecosta v. Beck, 96-2388 (La.10/21/97), 703 So. 2d 552, 559 (citing Restatement (Second) of Torts § 558 (1977)); see Cangelosi v. Schwegmann Bros. Giant Super Markets, 390 So. 2d 196, 198 (La.1980) (considering falsity as a fifth and separate element). In other words, a plaintiff must prove "`that the defendant, *716 with actual malice or other fault, published a false statement with defamatory words which caused plaintiff damages.'" Trentecosta, 703 So.2d at 559 (quoting Sassone, 626 So.2d at 350).
We first turn to the statement allegedly uttered by Tucker at the Acadiana Council on Addictions meeting that Fitzgerald "was and is responsible for causing turmoil between the UMC Counselor Trainees and the [Board]." An exhaustive review of the record (including the 464 page trial transcript and the parties' pre-trial memoranda and stipulations), the parties' appellate briefs, and the oral arguments before this Court reveals not one iota of discussion about this meeting, let alone statements made at the meeting by Tucker that Fitzgerald caused turmoil between UMC counselor trainees and the Board. Accordingly, we find that Fitzgerald failed to meet her burden of proving the second element of a defamation claim, that Tucker published this statement.
We next consider the second instance of alleged defamation, Tucker's statements during the interview with Huebner. As noted above, for a statement to be actionable, it must be false, defamatory, and concern another. Generally, a communication is defamatory if it tends to harm the reputation of another so as to lower the person in the estimation of the community, to deter others from associating or dealing with the person, or otherwise exposes a person to contempt or ridicule. Trentecosta, 703 So.2d at 559 (citing Restatement (Second) of Torts § 559 cmt.(e) (1977)); Freeman v. Cooper, 414 So. 2d 355 (La.1982). Thus, a communication which contains an element of personal disgrace, dishonesty, or disrepute undoubtedly satisfies the definition of defamatory. Trentecosta, 703 So.2d at 559; Bussie v. Lowenthal, 535 So. 2d 378 (La.1988). Nonetheless, not all defamatory statements are actionable. Rather, many statements are protected by the First Amendment's guarantee of freedom of speech. For example, "`a statement of opinion relating to matters of public concern which does not contain a provably false factual connotation will receive full constitutional protection.'" Romero v. Thomson, 94-1105 (La.1/17/95), 648 So. 2d 866, 870 (quoting Milkovich v. Lorain Journal Co., 497 U.S. 1, 20, 110 S. Ct. 2695, 111 L. Ed. 2d 1 (1990)). Also, "[s]peech on matters of public concern enjoys enhanced constitutional protection." Romero, 648 So.2d at 869.
Ultimately, the court must decide whether a communication is capable of a particular meaning and whether that meaning is defamatory.[7]Sassone, 626 So.2d at 353 & n. 9; Bussie, 535 So.2d at 382.
[A]s a general rule, a Louisiana appellate court should not disturb the reasonable findings and inferences of fact of a trial judge or jury, even though the appellate court may feel that its own evaluations and inferences are as reasonable. But when interpretation of a communication in light of the constitutional requirements is involved, our scope of review is to examine in depth the "statements in issue" and the "circumstances under which they were made," and to "re-examine the evidentiary basis" of the lower court decision in the light of the Constitution.
Mashburn v. Collin, 355 So. 2d 879, 886-87 (La.1977).
In Mashburn v. Collin, this Court declared "that the First Amendment freedoms ... afford, at the very least, a defense against defamation actions for expressions of opinion...." Id. at 885. We expounded on this rule in Bussie v. Lowenthal, stating that:
a pure statement of opinion, which is based totally on the speaker's subjective view and which does not expressly state or imply the existence of underlying facts, usually will not be actionable in *717 defamation. That is because falsity is an indispensable element of any defamation claim, and a purely subjective statement can be neither true nor false.
Id. at 381 (citation omitted). However, in Bussie we also noted that statements of opinion usually refer to express or implied statements of fact. Id. Of course, if a statement of opinion is accompanied by an express statement of fact, that express statement of fact may be actionable if it is defamatory, false, and concerns another. Moreover, if a statement of opinion implies that certain facts exist, then such a statement, even though couched in terms of an opinion, could certainly give rise to a defamation action if the implied factual assertions are defamatory and false. Id. (citing Freeman, 414 So.2d at 355). "[E]ven if an opinion gives rise to false factual inferences, the defendant will be liable only if the statement was made with `knowing or reckless falsity.'" Id. & n. 6 (footnote omitted) (quoting Mashburn, 355 So.2d at 885). Moreover, "the factual inference created by the statement [of opinion] must be ascertainable by a reasonable person with some degree of certainty." Id. at 378. "Otherwise, juries would be asked to engage in guessing-games about possible uncomplimentary inferences that can be drawn from statements of opinion, and the First Amendment protections afforded in this area would become worthless." Id. (footnote omitted); see Restatement (Second) of Torts § 566 cmt.(c)(4). In sum, an expression of opinion is actionable only if it implies the existence of underlying facts ascertainable by a reasonable person with some degree of certainty, and the implied factual assertions are false, defamatory, made with actual malice, and concern another.
In addition to false, defamatory statements of fact, and statements of opinion made with actual malice which imply false, defamatory facts, yet another type of statement is actionable under Louisiana's law of defamation. A plaintiff may recover for defamation by innuendo or implication, which occurs when one publishes truthful statements of fact, and those truthful facts carry a false, defamatory implication about another. Schaefer v. Lynch, 406 So. 2d 185, 188 (La.1981); see Sassone, 626 So.2d at 353-54; Sack & Baron, supra, § 3.6; Smolla, supra, § 4.05[1]. In other words, defamatory meaning can be insinuated from an otherwise true communication. Schaefer, 406 So.2d at 188. The rationale behind this rule is that, when truthful statements carry a defamatory innuendo, the factual implication should also be true to justify the implication. Id. Nonetheless, the publication of true statements is generally encouraged even if published "`for no good reason or for the worst possible motives....'" Id. (quoting Prosser, Law of Torts, 4th ed., West, p. 197). Moreover, truthful facts which carry a defamatory implication can only be actionable if the statements regard a private individual and private affairs. Schaefer, 406 So.2d at 188. "Where public officers and public affairs are concerned, there can be no libel by innuendo."[8]Id.
The determination of whether a statement is an assertion of fact or a mere expression of opinion should be made according to the facts of each particular case. Bussie, 535 So.2d at 381. "In Mashburn, *718 we noted that `the crucial difference between statement of fact and opinion depends upon whether ordinary persons hearing or reading the matter complained of would be likely to understand it as an expression of the speaker's or writer's opinion, or as a statement of existing fact.'" Id. (quoting Mashburn, 355 So.2d at 885).
The opinion may be ostensibly in the form of a factual statement if it is clear from the context that the maker did not intend to assert another objective fact but only his personal comment on the facts which he had stated. An expression of opinion occurs when the maker of the comment states the facts on which his opinion of the plaintiff is based and then expresses a comment as to the plaintiff's conduct, qualifications or character or when both parties to the communication know the facts or assume their existence and the comment is clearly based on the known or assumed facts in order to justify the comment.
Mashburn, 355 So.2d at 885. The question of whether a statement is one of fact or opinion depends upon the circumstances in which the statement was made, and the reasonable inferences which may be drawn from a statement of opinion will vary depending upon the circumstances of the case.
We turn now to determining whether Tucker published actionable statements during the interview with Huebner. So that we can better analyze the nature of the statements in the context of the interview, we transcribe below the relevant portions of the interview. Tucker's and Huebner's corresponding actions are bracketed and italicized, and the statements alleged to be defamatory are printed in bold type. Before Huebner asks Tucker any questions, a voice quotes several deficiencies noted in the Legislative Auditor's report, as each quote is displayed across the television screen. The transcription begins with the last quote read and displayed.
Voiceover: "And failed to issue certificates to substance abuse counselors in consecutive order ..." [Quote is displayed on the screen. Neither Tucker nor Huebner is shown].[9]
Huebner: So there is no way to account for how many have been issued, which is of considerable concern to Tucker and others. [While Tucker is holding Fitzgerald's improperly signed certificate, the camera zooms in, displaying the certificate, including her name.]
Tucker: We would encourage any person who has a question about a certificate to call the Board. We can verify who has authentic certificates today. [Before Tucker responds, he lowers his arms, thereby removing Fitzgerald's name from the camera's view. It is apparent that Tucker is still holding the certificate, though.]
Huebner: So there could be people out there masquerading as substance abuse counselors? [Huebner gestures toward Fitzgerald's certificate, which is still in Tucker's hands. Fitzgerald's name is not visible.]
Tucker: That could be happening.
Huebner: Do you have any idea how many bogus ones are out there? [Huebner gestures toward Fitzgerald's certificate, which is still in Tucker's hands. Fitzgerald's name is not visible.]
Tucker: No sir. None that we are aware of at this time because we recalled the seventeen that were improperly signed.
Huebner: The seventeen that you know of?
Tucker: The seventeen that we know of.
*719 We find that the first statement "That could be happening"was a statement of opinion. Given the circumstances surrounding the statement, we believe ordinary persons hearing this statement would be likely to understand it as an expression of Tucker's opinion. He was responding to a question about the mere possibility of people "masquerading" as substance abuse counselors, due to the Board's inability to account for certificates. Moreover, the term "masquerading" is subjective in nature, and Tucker never stated that anybody, let alone Fitzgerald, was in fact practicing as a substance abuse counselor without a valid certificate.
In order for an expression of opinion, which is highly protected by the First Amendment, to be actionable, it must imply the existence of underlying facts ascertainable by a reasonable person with some degree of certainty, and the implied factual assertion must be false, defamatory, made with actual malice, and concern another. In this case, Tucker never spoke Fitzgerald's name. Also, Tucker did not display Fitzgerald's name when he responded to Huebner's question. Although it is within the realm of possibility that someone may have believed that Fitzgerald, herself, was masquerading as a substance abuse counselor with a bogus certificate in violation of Board rules, it is not an inference which a reasonable person would readily ascertain with some degree of certainty. In fact, a reasonable person might conclude just the opposite, that Fitzgerald is not masquerading as a counselor with a bogus certificate, because Tucker, the chairman of the Board, was holding that certificate during the interview. Moreover, one of Tucker's responses actually affirms that nobody has an improper certificate anymore because each has been collected. How then could Fitzgerald be masquerading with a bogus certificate? It is telling that at trial not one individual testified that, as a result of viewing the newscast, he believed Fitzgerald was uncertified or counseling in violation of Board rules.[10]
Furthermore, a reasonable person might readily ascertain with some degree of certainty from Tucker's statements that there is a possibility that somebody, other than Fitzgerald (whose certificate was in the hands of Tucker) may have an unnumbered certificate. This is substantially true. Moreover, another inferencethat at one point Fitzgerald in fact had an improperly signed, unnumbered certificate is substantially true. See Romero, 648 So.2d at 871; Otero v. Ewing, 165 La. 398, 115 So. 633 (1927). Yet another possible factual inference exists, viz., that Fitzgerald was somehow involved in the improper execution of the certificates. Again, such an inference is substantially true, as Fitzgerald was charged with the responsibility of having the certificates duly executed, but instead brought them to a non-Board member for his signature. Furthermore, a viewer of the newscast could have readily ascertained whether Fitzgerald's certificate was currently valid by calling the Board, as Tucker encouraged during the interview. Accordingly, we find that Tucker's statement that "[t]hat could be happening" is not actionable as matter of law.
We next turn to the second allegedly defamatory statement published by Tucker"No sir. None that we are aware of at this time because we recalled the seventeen that were improperly signed." Given the circumstances surrounding this statement, we believe ordinary persons hearing this statement would likely understand it as an expression of fact. The statement is not capable of subjective interpretation, but rather states the precise number of improperly signed certificates that had been recalled at that time. Moreover, Tucker is speaking in his capacity as chairman of the Board. By using the pronoun "we" in the context of this specific *720 interview, it is quite clear that Tucker intends the statement not to be construed as his personal opinion, but rather as a statement of fact by the Board.
Significantly, there is nothing provably false about Tucker's statement. Tucker tactfully avoids incorporating Huebner's reference to the certificates as "bogus," instead referring to them as improperly signed. It is substantially true that the certificates were improperly signed certificates, and that seventeen had been recalled by the Board, at the Inspector General's direction. See Romero, 648 So.2d at 871; Otero, 115 So. at 633. Accordingly, we find that Tucker's response concerning improperly signed certificates is not an actionable, false statement of fact.
We now consider whether Tucker's statements constituted defamation by innuendo, i.e., did Tucker publish truthful statements of fact which carry a false, defamatory implication. Essentially, we must determine whether Tucker implied false, defamatory innuendo about Fitzgerald by displaying Fitzgerald's improperly signed certificate[11] and later truthfully replying to Huebner's question. We have earlier noted that a plaintiff may claim defamation by innuendo only if the statements regard a private individual and private affairs. Schaefer, 406 So.2d at 188 (emphasis added). "Where public officers and public affairs are concerned, there can be no libel by innuendo." Id. Unquestionably, the issuance of unnumbered and improperly executed Board certificates is a matter of public concern. Not only is their existence disconcerting to the public, but so is the Board mismanagement resulting in their issuance. Clearly, the Legislative Auditor found the matter troubling, Huebner thought the matter was newsworthy, and various certified substance abuse counselors testified at trial that they thought the matter was a matter of public concern. Accordingly, we find that Tucker's statement of fact did not constitute defamation by innuendo.
For the foregoing reasons, we find that Tucker's statements during the interview are not actionable, defamatory statements. Because the record does not establish that Tucker's alleged statement during the Acadiana Council on Addictions meeting ever took place, and because Fitzgerald failed to allege in her petition that Tucker published any other actionable statements, we reverse the portion of the court of appeal's judgment affirming and modifying upward the award of damages for defamation, and hereby render judgment in favor of Tucker.
DECREE
JUDGMENT OF COURT OF APPEAL AWARDING PLAINTIFF DAMAGES IS REVERSED; JUDGMENT RENDERED IN FAVOR OF DEFENDANT THOMAS C. TUCKER; SUIT DISMISSED WITH PREJUDICE.
NOTES
[*] Marcus, J., not on panel. See Rule IV, Part 2, § 3.
[1] Among other deficiencies, Kyle reported that the Board did not maintain administrative and financial records, a violation of LSA-RS 44:36(A); that the Board's minutes lacked the signature of the chairman or executive director of the Board in violation of L.A.C. Title 46, Part LXXX, Ch. 5, § 503 F; that all certificates could not be accounted for because they were not consecutively numbered or pre-numbered; that the Board did not file the required Internal Revenue Service and other payroll tax forms; that the Board's personnel files for its three employees did not contain the hourly rate of pay, employment contracts, W-4s, L-4s, or any payroll forms authorizing payroll deductions; that the Board failed to adopt, amend, or report an annual budget for either year in violation of LSA-R.S. 39:1331 et seq.; that the Board bought a copy machine and entered into a lease-purchase agreement for office equipment in violation of state purchasing regulations; that the Board had pre-signed checks in the checkbook; that the Board's receipts only reflected deposits; that the Board had 13 pre-approved, blank time sheets, that the Board did not maintain invoices or time and attendance sheets to support payments; and that of 40 payments amounting to $11,020.00, 31 payments amounting to $9,472.00 were not properly supported.
[2] Tucker's wife was dismissed from the suit, the emotional distress claim was abandoned, and, on Tucker's motion for directed verdict, the civil rights claim was dismissed.
[3] The majority opinion did not identify specifically any particular statement of Tucker's as being defamatory.
[4] According to Fitzgerald's brief, the most glaring examples of defamation occurred when Tucker (1) called Fitzgerald's supervisor and indicated that Fitzgerald did not have adequate credentials as a substance abuse counselor; (2) advised Fitzgerald's supervisor that Fitzgerald was not qualified to work at UMC; (3) initiated a telephone call to the Lafayette Parish District Attorney's office advising them that criminal wrongdoing may have taken place because the board minutes, which Fitzgerald allegedly supervised, were not signed; (4-7) initiated meetings with the Governor's special counsel; State of Louisiana Inspector General; Legislative auditor; and, State of Louisiana Department of Health and Hospitals, all in an attempt to investigate the [Board's] office practices in which Fitzgerald performed day-to-day secretarial duties for a brief period of time; (8) further engaged in a television interview where he held up Fitzgerald's certificate and agreed there may be people with bogus certificates masquerading as substance abuse counselors, implying Fitzgerald had a bogus certificate and was masquerading as a substance abuse counselor; (9) indicated to various individuals, including Fitzgerald's husband, that during Fitzgerald's tenure as Administrative Director of the Board she was engaged in "cover ups"; (10) communicated to his wife, Karen, that Fitzgerald may be indicted. This last instance, according to Fitzgerald, "was the most clandestine, and perhaps the most damaging defamatory action."
[5] We find it unnecessary to determine whether the petition alleges with reasonable specificity that Tucker defamed Fitzgerald at the meeting of the Acadiana Council on Addictions, because we find, infra, that Fitzgerald did not present at trial any evidence whatsoever that Tucker ever uttered such a statement.
[6] In her petition, Fitzgerald never alleges that Tucker defamed Fitzgerald by telling Karen Tucker that Fitzgerald may be indicted. Rather, Fitzgerald alleges that "[d]efendant KAREN TUCKER told petitioner's supervisor that petitioner was going to be subject to an indictment for criminal conduct...," and that "KAREN TUCKER made these statements in a smug manner, knowingly, and with such reckless disregard for the truth that her statements were malicious and defamatory towards [Fitzgerald]." Karen Tucker has been dismissed from this suit. Moreover, Fitzgerald's petition does not allege that Tucker defamed Fitzgerald by communicating to Fitzgerald's supervisor at UMC that Fitzgerald was "working in violation of law" and that she was "not credentialed as a substance abuse counselor."
[7] The jury must decide whether a communication capable of a defamatory meaning was so understood by the recipient. Sassone, 626 So.2d at 352 n. 9.
[8] In Sassone, 626 So.2d at 354, the Court pretermitted the specific question of whether a private plaintiff may bring an action for defamation by innuendo against a media defendant. The Court found that, "when the court looks not at what was said, but at what impression was created, a media publication can give rise to an infinite number of impressions." Id. The Court then noted that, assuming a private plaintiff could bring an action for defamation by innuendo against a media defendant, adequate protection of freedom of the press at least requires that the a private plaintiff prove that the alleged implication is the principal inference a reasonable reader or viewer will draw from the publication as having been intended by the publisher. The Court then found that the principal inference of the statement at issue was not defamatory. Id.
[9] We are mindful that the twenty-minute video tape of the interview, which was not introduced into evidence, was substantially edited down to a two-minute newscast. Tucker had no control over the editing process, and was unaware of exactly which camera angles and views accompanied his statements.
[10] Fitzgerald testified that eight out of nine of her private counseling patients left her service after the newscast. However, none of them testified as to why they left her service.
[11] "[P]hotographs and similar visual communications rarely themselves make an express assertion beyond the fact that what is portrayed is real. Thus, defamation by picture is usually established through implication, given the context in which the photograph appears." Sack & Baron, supra, § 2.4.9. The depiction of Fitzgerald's certificate contained no distortions rendering it a falsehood, and the certificate displayed was in fact Fitzgerald's improperly executed certificate. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1784034/ | 165 So. 2d 282 (1964)
246 La. 451
STATE of Louisiana
v.
Wilbert RIDEAU.
No. 47130.
Supreme Court of Louisiana.
June 8, 1964.
Rehearing Denied July 1, 1964.
*283 Jack P. F. Gremillion, Atty. Gen., M. E. Culligan, Asst. Atty. Gen., Frank T. Salter, Jr., Dist. Atty., Jack C. Watson, Asst. Dist. Atty., for appellant.
James A. Leithead, Fred H. Sievert, Jr., Lake Charles, for appellee.
FOURNET, Chief Justice.
Wilbert Rideau's conviction and sentence to die for the murder of Julia Ferguson, affirmed by this court,[1] having been reversed by the United States Supreme Court[2] because the jury trying him had been drawn from a community exposed repeatedly and in depth through the medium of television to the "spectacle" of Rideau being interviewed in jail the day following the murderwhile flanked by the Sheriff of Calcasieu Parish and two state troopers during which interview he confessed not only the murder of Julia Ferguson but other crimes as well,[3] and holding "that due process of law in this case required a trial before a jury drawn from a community of people who had not seen and heard" this televised interview, the district attorney, in an effort to comply with this judgment, moved in the trial court that the defendant be directed to show cause why a change of venue to a court outside the range of KPLC-TV, Lake Charles, over which this interview was televised, should not be ordered. In answer to the rule, the defendant, admitting in essence the allegations of the state's motion that he could not get a fair trial in any of the parishes within the range of KPLC-TV, joined in the prayer that a change of venue "to some community outside of the broadcast range" of this television station be granted.
The trial judge, pointing out that under Louisiana law[4] he was without authority to transfer the case to any parish other than another parish in his district or in an adjoining district,[5] and, according to the decision *284 of the United States Supreme Court, every citizen living within these parishes, which are all within range of station KPLC-TV, was automatically ineligible to sit as jurors at the trial of Rideau, a judicial impasse had been reached and Rideau, in effect, was placed beyond the authority of the Louisiana courts by the decision handed down by our land's highest court. He, accordingly, denied the motion for the change of venue. From this ruling the state has appealed.
In so ruling, we think our learned brother below overlooked the fact that a change of venue is, primarily, to insure the rights of an accused to a speedy trial by an impartial jury, as guaranteed under the Bill of Rights to the United States Constitution and Section 9 of Article I of the Louisiana Constitution, and when procedural legislation setting out the rules governing such change conflict with these basic constitutional rights, to the extent the legislative enactments deprive an accused of due process of law, then they must yield. See, State v. Morgan, 142 La. 755, 77 So. 588; State ex rel. Gannon v. Porter Circuit Court, 239 Ind. 637, 159 N.E.2d 713; Irvin v. Dowd, 366 U.S. 717, 81 S. Ct. 1639, 6 L. Ed. 2d 751, and Turner v. State, 87 Fla. 155, 99 So. 334.
In the Morgan casewhere former statutes similar to those in effect now, and quoted in full in Footnote No. 4, were involved, although the question posed was whether there could be more than one change of venuethis court very aptly observed: "These statutes were adopted in furtherance of the well-known principle, first recognized in Magna Charta and now forming part of the Bill of Rights of all constitutional governments, whereby every person charged with crime is entitled to be tried by an impartial jury of his peers. * * * When, therefore, the lawmaking power vests in the courts the power to change the venue and transfer a criminal trial from one parish to another parish, that power is to be exercised with the view of carrying out and putting into effect this constitutional guarantee," and, in reversing the ruling of the trial judge refusing to permit the defendant in that case to introduce evidence to show he could not secure an impartial trial in the parish to which the district attorney proposed the case be changed, this court pointed out, further, that in a "proceeding under these statutes, the judge is vested with the same judicial discretion which he may lawfully exercise in the performance of any other judicial function. * * * He should be guided with the view of affording the accused the opportunity to be tried by an impartial jury, as well as with the view of protecting the good order of society by a strict and impartial enforcement of the criminal statutes." (The emphasis has been supplied.)
The Gannon case, supra, involved an Indiana law similar to ours with respect to a second change of venue that was not authorized by the statute or the state's constitution, except in so far as the latter guaranteed to the accused "a public trial, by an impartial jury, in the county in which the offense shall have been committed," although both the state and the defendant there, as in the instant case, stipulated, in effect, facts that would require another change. The Supreme Court of Indiana held that "when under such circumstances a verdict of guilty, if returned, could not be sustained on appeal because of the admission of error on the part of the state, it would be nonsensical for the law to say to the parties and the court, nevertheless you cannot transfer the trial to another county to avoid such error. Faced by such a predicament it becomes the duty of the judiciary to provide to every accused a public trial by an impartial jury, even though to do so the court must grant a second change of venue and thus contravene the general legislative policy of granting only one change of venue from the county." (The emphasis has been supplied.)
In view of the conditions in existence at the time the original statutes of Louisiana were enacted many years ago, we think particularly appropriate the statement by the *285 Supreme Court of Florida in Turner v. State, supra, to the effect that although "both sections 6099 and 6100, Revised General Statutes, providing for change of venue, require that such changes be to some other county within the same circuit as the county from which the cause is transferred, * * * these statutes were enacted in 1845 and 1895 respectively, when every circuit contained half dozen or more counties, while at the present Polk alone composes the Tenth judicial circuit. * * * In instances like this we think the letter of the law must keep pace with the spirit and purpose of the law * * *." (The emphasis has been supplied.)
In referring with approval to the Gannon decision, supra, in another case involving the change of venue statutes of Indiana, the United States Supreme Court pointed out that "England, from whom the Western World has largely taken its concepts of individual liberty and of the dignity and worth of every man, has bequeathed to us safeguards for their preservation, the most priceless of which is that of trial by jury. This right has become as much American as it was once the most English. * * * In essence, the right to jury trial guarantees to the criminally accused a fair trial by a panel of impartial, `indifferent' jurors," and inasmuch as "A fair trial in a fair tribunal is a basic requirement of due process," the "failure to accord an accused a fair hearing violates even the minimal standards of due process." Irvin v. Dowd, supra.
Impartiality, as used in connection with the constitutional guarantee that an accused shall have a speedy and public trial by an impartial jury, is not "a technical conception" but "a state of mind," and "For the ascertainment of this mental attitude of appropriate indifference, the Constitution lays down no particular tests and procedure is not chained to any ancient and artificial formula" (United States v. Wood, 299 U.S. 123, 57 S. Ct. 177, 81 L. Ed. 78), the necessity for transfer to guarantee this impartiality depending "upon the totality of the surrounding facts." Irvin v. Dowd, supra. (The emphasis has been supplied.)
We therefore conclude that whatever provisions exist in our statutes with respect to the change of venue in criminal cases, they cannot supersede our constitutional guarantee of "a speedy public trial by an impartial injury" to all accused persons (Section 9 of Article I of the Louisiana Constitution), or impede the mandate of the United States Supreme Court that a trial of the defendant in the instant case in any parish within reach of the televised programs of KPLC-TV denies him due process of law. (The emphasis has been supplied.)
For the reasons assigned, the ruling of the trial judge denying the state's motion for a change of venue in this case is reversed, the motion is granted, and, accordingly, the trial judge is ordered to grant a change of venue in this case for the trial of the defendant, Wilbert Rideau, to a parish in this state outside the range of those reached by televised broadcasts beamed by KPLC-TV, Lake Charles, Louisiana.
NOTES
[1] State v. Rideau, 242 La. 431, 137 So. 2d 283.
[2] Rideau v. State of Louisiana, 373 U.S. 723, 83A S.Ct. 1417, 10 L. Ed. 2d 663.
[3] As stated in our decision when this case was originally before us, the facts disclosed that "At approximately 6:55 p.m. Rideau entered the bank and at pistol point forced three employees, Julia Ferguson, Dora McCain and Jay Hickman, to fill a suitcase with money. He forced them into Julia Ferguson's automobile and directed them at pistol point to an uninhabited area northeast of Lake Charles. He then ordered them out of the car, lined them up three abreast, and fired six shots at them. Jay Hickman ran to his right and fell into a bayou. Dora McCain fell directly in front of Rideau on the west shoulder of the road. Julia Ferguson fell near Dora McCain. When Julia Ferguson attempted to rise to her knees, Rideau stabbed her to death with his hunting Knife."
[4] Article 293 of the Louisiana Code of Criminal Procedure (now R.S. 15:293) provides: "If, on the trial of any application for a change of venue, it shall be established, by legal and sufficient evidence, that a fair and impartial trial can not be had in the parish in which the felony shall be charged to have been committed and in which the case is pending, the judge shall order a change of venue to an adjoining parish of the same judicial district, or to a parish of an adjoining district, and, by preference, to that parish in which a district court shall next be held." Article 294 of this same code (now R.S. 15:294) provides: "After a cause shall have been removed as above provided for, it shall not be a second time removed under any pretense whatsoever." (The emphasis has been supplied.)
[5] The parishes within the trial judge's immediate district are Cameron and Calcasieu. Those of the adjoining districts within the range of KPLC-TV are Jefferson Davis, Vermilion, Acadia, Lafayette, St. Landry, Evangeline, Allen Beauregard, Rapides, and Vernon. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1835742/ | 108 B.R. 684 (1988)
In re METRO, LTD., a Ohio Limited partnership, Debtor.
Bankruptcy No. 3-88-427.
United States Bankruptcy Court, D. Minnesota, Third Division.
June 7, 1988.
*685 ORDER
DENNIS D. O'BRIEN, Bankruptcy Judge.
The matter before the Court is creditor Travelers Insurance Company's (Travelers) motion to dismiss or convert this Chapter 11 bankruptcy case. A hearing was held on April 8, 1988. Gregory Gustafson and Joseph Deuhs represented the Debtor. Tony Beitz represented Travelers. Based on the arguments and memoranda of counsel, the record and files herein, and being fully advised in the matter, the Court makes this Order pursuant to the Federal and Local Rules of Bankruptcy Procedure.
I.
Debtor is an Ohio limited partnership which was organized in 1976 primarily to own real property for investment purposes. It owns a single asset, a commercial building, situated on a 245,490 square foot parcel of real estate located at 7400 Metro Boulevard, Edina, Minnesota (7400 Building). Debtor does not manage the building, but has hired a management company, CIDCO Management Company, Inc., (CIDCO) to perform this function.
On May 29, 1985, Metro borrowed from Travelers 4.5 million dollars at 12.5 percent interest, to refinance a pre-existing debt on the 7400 Building. The loan is evidenced by a promissory note providing that Metro would make interest payments of $46,875.00 for 48 months and a balloon payment of 4.5 million dollars on May 31, 1989. The note is secured by a first mortgage on Debtor's property; an assignment of rents, issues and profits; and a collateral assignment of leases.
Metro defaulted on mortgage payments due in October, November and December 1987, and January and February 1988. It failed to pay taxes and special assessments due October 15, 1987. On January 7, 1988, Travelers accelerated and demanded the immediate payment of the entire principal balance and accrued interest owing. It scheduled a hearing to appoint a temporary receiver for Tuesday, February 16, 1988. Metro filed for bankruptcy under Chapter 11 on February 12, 1988. At that time, it owed Travelers a principal balance of 4.5 million dollars, and interest in the approximate amount of $175,000.00. It owed the Minnesota Department of Revenue approximately $237,000.00 in accrued and unpaid real estate taxes.
Prior to 1987, Debtor made a substantial profit. From 1981 to 1986, tenants occupied at least 93 percent of the 7400 Building's available space and in 1986 tenants occupied 97 percent of its space. Each of Debtor's partners has received cash distributions totalling $65,653.00 on investments of $16,500.00.
In 1987, Debtor encountered several major problems which adversely affected its financial condition. Most significantly from Debtor's standpoint, it discovered that the 7400 Building was insulated with asbestos containing material (ACM). Debtor obtained preliminary assessments of the extent of this problem and has begun to investigate cost-effective environmentally safe responses to it. It estimates that it needs three to four months to determine the full impact that the problem will have on the operation of the building and the cost involved. Based on some bids received to remove the ACM from certain areas of the building, however, Debtor projects that the cost involved will not be in excess of $1,000,000.00.[1]
Debtor also lost two major tenants in 1987, apparently for reasons unrelated to the management of the building.[2] Occupancy of the building is presently at about 70 percent and Debtor concedes that the *686 real estate market in the Minneapolis/St. Paul area currently is "soft".[3]
Finally, Debtor discovered that a 5,000 gallon underground fuel tank on the property was leaking fuel oil. Removal of the tank appears necessary, and Debtor estimates that removal and replacement will cost approximately $10,000.00.
Debtor currently is not generating a sufficient cash flow to service its debt to Travelers.[4] The parties dispute whether Debtor has equity in the property. Travelers asserts that the property has, at most, a value of 4.5 million dollars and that it is depreciating. Debtor claims the property is worth 7.1 to 8.3 million dollars and that it is appreciating in value.
Travelers argues that Debtor cannot generate the cash flow or obtain financing necessary to: pay the cost of remedying the physical problems of the building, market its vacant space, pay back taxes, and service the debt to Travelers. It contends Debtor will not succeed in obtaining new tenants in light of the asbestos problem and soft real estate market and, that even if it could obtain the tenants, the terms of their leases would have to be such that they would not be income producing to Debtor for two to three years. It asserts that no lending institution will accept as collateral for a loan, a building with the loan-to-value ratio and physical problems of the 7400 Building.
Travelers requests that this case be dismissed, claiming: (1) Debtor is not eligible to file under Chapter 11 as it is merely a passive investor, not a business; (2) Debtor filed its petition solely to delay foreclosure and therefore in bad faith; (3) Debtor will not be able to confirm a plan of reorganization; and (4) the building is depreciating and Debtor has no reasonable likelihood of rehabilitation.
Debtor argues that it is eligible for protection under Chapter 11 of the Bankruptcy Code and that there is insufficient cause at this stage of the bankruptcy to convert or dismiss this case.
II.
A.
Chapter 11 may be used only by persons engaged in a business. Wamsganz vs. Boatmen's Bank of DeSoto, 804 F.2d 503 (8th Cir.1986). The Debtor in this case is engaged in a business.
Limited partnerships are used by persons for investment purposes; however, this use does not transform what is unquestionably a legitimate form of business organization, into merely an investment vehicle. A limited partnership in Minnesota, by definition, is an association of persons to carry on a business.[5]
The fact that the limited partnership in this case has only one asset does not alter the conclusion that it is engaged in a business. For the limited partnership to succeed, marketing decisions must be made, tenants sought, leases approved, financing obtained, and building improvements constructed periodically. If successful, the limited partnership generates a profit for the benefit of its partners. Ownership and operation of the 7400 Building clearly is a business.
The fact that the limited partnership hires an outside management company to manage the building also does not alter the conclusion that it is carrying on a business. In a limited partnership, the general partner has ultimate control over, and responsibility *687 for, the affairs of the business.[6] Here, this is manifested through the general partners' selection, hiring, and supervision of the property manager;[7] its power to fire the manager if it is not in agreement with the decisions made; and its unlimited liability.
It appears that Congress contemplated the use of Chapter 11 by single asset real estate limited partnerships. Single asset real estate cases were permitted under the reorganization provision of the Bankruptcy Act and Congress did not prohibit them under Chapter 11 of the Bankruptcy Code. In fact, it appears that enactment of § 1111(b) was, in part, a response to a decision in a single asset real estate limited partnership case, In re Pine Gate Assoc., Ltd., 6 B.C.D. 301 (Bankr.N.D.Ga.1977). See Norton Bankr.L. & Prac.Bankr.Code § 1111, Editor's Comment (1987-1988 ed.).
This Court recently determined that two individual farmer debtors who filed under Chapter 11 were not eligible for protection under that Chapter, where their sole "business activity" was the leasing of their real estate to a farming partnership which actually farmed it. In re Fosness, BKY X-XX-XXXX (D.Minn. Dec. 29, 1987). Travelers argues that Fosness controls here. But the facts of this case are not like those in Fosness.
The Fosnesses leased their farmland to a family partnership, which was not a debtor in the bankruptcy. The partnership actually was the business that conducted the farming operation and generated the profits. The Fosnesses did not fully control the partnership; one debtor was not a partner, and the other had only a one-half interest in it. The Fosnesses, in effect, filed for bankruptcy simply to restructure the indebtedness on their farmland.
In this case, the Debtor to be reorganized owns the property securing the indebtedness and controls the business of operating that property.
B.
11 U.S.C. § 1112(b) provides in relevant part:
(b) Except as provided in subsection (c) of this section, on request of a party in interest or the United States trustee, and after notice and a hearing, the court may convert a case under this chapter to a case under Chapter 7 of this title or may dismiss a case under this chapter, whichever is in the best interest of creditors and the estate, for cause, including
(1) continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation;
(2) inability to effectuate a plan;
. . . . .
In addition to the causes enumerated under § 1112(b) for conversion or dismissal, cause exists to dismiss a Chapter 11 petition if it was not filed in good faith. Stage I Land Co. v. U.S. Dept. of HUD, 71 B.R. 225 (Bankr.D.Minn.1986). The Court concludes there is insufficient cause to convert or dismiss this case at this point in the bankruptcy.
Initially, the Court finds that the Debtor filed for bankruptcy under Chapter 11 for the purpose of reorganizing and in good faith. Debtor is attempting to work out a solution to the asbestos problem, seek new tenants, solicit equity contributions, seek lenders willing to loan against a building containing asbestos, and refinance or restructure its indebtedness to Travelers. As discussed below, Debtor has a reasonable likelihood of reorganizing and the potential to confirm a plan of reorganization. This Debtor did not file for bankruptcy simply to delay Traveler's foreclosure of the 7400 Building.
The ramifications of Debtor's asbestos problem are still unknown, and Debtor has not yet obtained the financing needed to address its problems or service its debt. *688 Nonetheless, Debtor presented evidence sufficient to demonstrate a reasonable likelihood that it can reorganize.
First, the Court notes that prior to 1987, Debtor operated very successfully.
Second, Debtor has embarked on a serious effort to deal with the asbestos problem: it obtained preliminary reports evaluating the extent to which ACM is present in the building; initiated a program to contain and remove the ACM; and has taken steps to insure that the building's occupants are not exposed to adverse levels of the ACM. It obtained opinions that the ACM may not have to be removed at least from some areas of the building; that containment may be all that is needed to adequately address the problem.
Third, Debtor presented an appraisal and several affidavits in proof of its contention that the 7400 Building has equity in it. It has discussed financing with lenders and concluded that loans will be made against a building containing ACM, where the problem is being properly and thoroughly managed through some type of program.[8] Debtor is convinced that its limited partners will make equity contributions to this reorganization, rather than lose the building in a foreclosure.[9] Finally, it asserts that it has various other means through its association with real estate partnerships to raise equity capital.
Lastly, Debtor provided evidence that it can generate a positive cash flow. It hired a real estate firm to market the vacant space in the 7400 Building. A leasing agent of the firm stated by affidavit that the public interest in leasing space in the 7400 Building has increased markedly since Debtor made improvements in the building in 1987; that currently, several businesses are considering leasing space in the building; and, that the building can be fully leased by the end of 1988.
Travelers asserts that Debtor's evidence of an ability to reorganize is inaccurate and misleading. Its major objection is that the Debtor's appraisal of the building and claimed ability to cash flow a plan are overstated in light of the fact that even if Debtor could obtain new tenants, tenant improvements and concessions made to obtain them would render their tenancies non-income producing for at least two years. Balancing this against the totality of Debtor's evidence, the Court believes a reasonable likelihood of reorganization exists.
Further, Debtor has potential to meet other requirements specifically addressed by Travelers, needed to confirm a plan of reorganization. In addition to making its feasibility argument, Travelers stated that a plan could not be confirmed as it was the only listed creditor at the time it filed its motion, its claim would necessarily be impaired, and it would not consent to a plan of reorganization. Debtor owes money to the Minnesota Department of Revenue and has since filed completed schedules showing numerous unsecured creditors; thus, at this point in the bankruptcy, it is not certain that Travelers acceptance of a plan is necessary. Moreover, it is not altogether clear at this point that Debtor will be unable to refinance Traveler's debt. Travelers also indicated that a plan cannot be confirmed as Travelers will not receive under Chapter 11 what it would receive if Debtor were liquidated. At this time, in light of Debtor's evidence, the Court cannot conclude that this is true.
Finally, from Debtor's evidence demonstrating that it has implemented steps to remedy the physical problems of the building and improve its marketability, it appears that Travelers' collateral will not significantly decrease in value if Debtor is allowed to proceed to confirmation. Based on all of the above,
IT IS HEREBY ORDERED: The motions of Travelers Insurance Company are denied.
NOTES
[1] Debtor stated in a January 11, 1988, letter by one of its general partners to Travelers' manager of investments, that the cost might be as high as $2,000,000.00. This statement has no apparent foundation, and was made in the context of a letter depicting Debtor in an unfavorable light, in an effort to obtain a cash flow mortgage from Travelers. Debtor's attorneys stated at the hearing that the general partner who authored this letter has been removed from the partnership.
[2] One tenant reduced its operations in the Minneapolis/St. Paul area; the second tenant terminated its tenancy as a result of its filing for bankruptcy.
[3] The January 11, 1988, letter also stated that the 7400 Building needed substantial improvements to enhance its marketability. Debtor stated in its responsive memorandum that this statement was incorrect.
[4] Its schedule of current income and current expenditures shows that it has a monthly income of approximately $74,000.00 and expenses, including mortgage payments due Travelers, of $92,224.50.
[5] A partnership is defined as "an association of two or more persons to carry on, as co-owners, a business for profit." MINN.STAT. § 323.02, subd. 8 (emphasis added). A limited partnership is "a partnership formed by two or more persons under the laws of this state and having one or more general partners and one or more limited partners." MINN.STAT. § 322A.01, subd. 7.
[6] The limited partners are passive; their sole function is to serve as a source of capital and generally their only interest is to make a profit. By law, they cannot control the business.
[7] At the hearing, Debtor's attorneys claimed that Debtor's general partner, Meta Operating Limited Partnership, through its officers, supervises the day-to-day activities of CIDCO; the officers meet with CIDCO once every six weeks, receive reports from CIDCO, approve leases, and are currently involved in resolving the asbestos problem.
[8] Debtor submitted a letter to the Court by one lender who was aware of the asbestos problem, and interested in discussing Debtor's refinancing needs.
[9] Tax considerations appear to be the motivating factor; Debtor's limited partners will incur tax obligations of approximately $20,000.00 in a foreclosure. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1682068/ | 266 F. Supp. 937 (1967)
William O. HUDSPETH, Plaintiff,
v.
ATLANTIC & GULF STEVEDORES, INC., Defendant.
Civ. A. No. 66-819.
United States District Court E. D. Louisiana, New Orleans Division.
April 17, 1967.
*938 Wilson M. Montero, Jr., New Orleans, La., for plaintiff.
Cornelius G. Van Dalen, New Orleans, La., for defendant.
RUBIN, District Judge:
This motion for summary judgment puts the question: Is a seaman who usually provides his own meals even while working aboard his ship and who usually returns to his home ashore at night entitled to be paid maintenance during a period of disability resulting from an injury received in the service of his vessel? The answer is neither self-evident nor is it provided clearly by the school of decisions concerning seamen's rights. Yet on principle it appears to this court that the seaman in such a case is worthy of his maintenance.
William O. Hudspeth was employed by Atlantic & Gulf as a deckhand aboard a tug, The M/V McGRATH No. 2. The McGRATH is a push boat, and most of the time it works in the New Orleans Harbor. The regular crew consisted only of the Captain and Hudspeth. Hudspeth did not have seaman's papers. He was paid $2.27 per hour, with time and one-half for hours in excess of forty in one week. His duties were varied. He was both engineer and deckhand. Occasionally, he relieved the Captain at the wheel. He usually received no meals aboard ship. When possible, he ate his lunch ashore. If his work duties did not permit him to go ashore at meal time, he heated coffee, or made a sandwich, or warmed a can of food aboard ship. He lived in Metairie with his wife and six children, and usually spent each night at home. However, whenever required to do so by irregular work calls, he remained aboard the tug at night. On these occasions, he provided his own sheets and pillows.
The tug had a galley of sorts, with a butane stove, but meals were not usually prepared aboard. Occasionally, the tug pushed barges or derricks a relatively short distance up the Mississippi River, to Taft. In the seven months before the accident, Hudspeth took three such voyages, one for three days in January, 1966; one for a single day in August, 1966; and the last one for two days on August 7 and 8, 1966. When such trips were made, Hudspeth's employer gave the master of the tug $10 to buy food for himself and Hudspeth. At such times, Hudspeth prepared the food aboard ship.
On August 31, 1966, at about 5:30 P.M., Hudspeth left the tug and went ashore at the Alcoa Wharf in New Orleans to get a meal for himself and the master. He went to a hamburger shop where he ate his own meal while waiting for the master's order to be fixed. He then returned to the wharf and gave the master his lunch, his change, and his drink. He started to go back to the tug, but the master suggested that Hudspeth telephone the superintendent for orders concerning the night's work. Hudspeth went into a shed on the wharf to make the call, but was unable to reach the superintendent. When *939 he returned, the captain invited him to sit down. He sat down on or rested against a pallet board which was leaning against a wall. The pallet board slipped and struck Hudspeth, injuring his back.
Although it denied liability to Hudspeth, Atlantic & Gulf paid him maintenance in the total sum of $504, at the rate of $6.00 per day, and he received free medical care at the United States Public Health Hospital as well as from defendant's own physician. When Hudspeth's lawyer sought an increase to $8.00 per day, Atlantic & Gulf's lawyer decided that Hudspeth was entitled to nothing for maintenance because he did not receive lodging or meals aboard the vessel, and the payment of maintenance was discontinued.
Hudspeth then sued seeking the payment of maintenance at the rate of $6.00 a day and damages and attorney's fees for the refusal to pay maintenance alleging this to be arbitrary, unreasonable, and without justification or cause.
The defendant contends that this matter is not ripe for summary judgment. Apparently it believes that shoals of factual disputes lie hidden in this suit and that, despite the affidavits and depositions that have been filed in support of the motion, the channel is not yet well marked enough for decision of this case. But there does not appear to be any genuine dispute about any question of fact that is material to the issues now posed. While the waters are somewhat murky, the difficulty of seeing is caused by uncertainty of legal principles, not by factual differences.
The ancient sea codes recognized the right of seamen to maintenance and cure when they became ill or were injured in the service of their ships. The obligation of the shipowner to pay maintenance and cure to ill or injured seamen was first recognized in this country in the case of Harden v. Gordon, Fed. Cas. 6047 (CC Me.1823). There Judge Story, in a passage that has become a navigation chart for admiralty lawyers, based the allowance on reasons that were profoundly humanitarian, buttressed by an argument of dubious economic and psychological logic,[1] and a generalization about seamen's character that would be at least questionable today.[2] Today the right is recognized in general maritime law as a part of the seaman's contract of employment,[3] incident to his status in the employment of his ship.
At first, the seaman's right to maintenance and cure lasted only for the remainder of the voyage for which he had signed, and consisted of payment by the shipowner of his wages, cure (in the sense of medical and nursing care), and subsistence.[4] The exact amount to which a seaman is entitled, however, is not clearly set forth in the American cases.
The sea codes of the Middle Ages attempted to define with precision the extent of the seaman's right to maintenance. Excerpts from some of these are set forth in Norris, The Law of Seamen, § 538. Thus, The Laws of Oleron (dating from the 12th Century) provided:
"Art. VII. If it happens that sickness seizes on any one of the mariners, while in the service of the ship, the master ought * * * likewise to afford him such diet as is usual in the ship; that is to say, so much as he had on shipboard in his health, and nothing more, unless it please the master to allow it him; and if he will have better diet, the master shall not be found to provide it for him, unless *940 it be at the mariner's own cost and charges * * *."
Similarly, The Laws of Wisbury (13th Century) stated:
"Art. XIX. If a seaman falls ill of any disease, and it is convenient to put him ashore, he shall be fed as he was aboard. * * *"
And The Laws of the Hanse Towns, which were used in the 17th Century, contained similar language:
"Art. XLV. If any mariner falls sick of any disease, he shall be put ashore and maintained in like manner as if he was on shipboard * * *."
The American maritime cases contain generalizations similar to, but less explicit, than the rules of the sea codes. In The Bouker No. 2, 241 F. 831 (2d Cir. 1917), cert. den. 245 U.S. 647, 38 S. Ct. 9, 62 L. Ed. 529, when the principle was established that the right to maintenance and cure extends a reasonable time beyond the duration of the voyage, the right was defined as follows:
"By the custom of the sea the hiring of sailors has for centuries included food and lodging at the expense of the ship. This is their maintenance, and the origin of the word indicates the kind and to a certain extent the quantum of assistance due the sailor from his ship."
In Calmar S. S. Corp. v. Taylor, 1938, 303 U.S. 525, 58 S. Ct. 651, 82 L. Ed. 993, the Supreme Court decided that the duty of a shipowner to provide maintenance and cure to a seaman who became ill of an incurable disease while in its employ did not extend to the payment of a lump sum sufficient to defray the cost of maintenance and cure for the remainder of his life. Discussing the basic nature of the right, the Court said:
"The maintenance exacted is comparable to that to which the seaman is entitled while at sea, The Henry B. Fiske, 141 F. 188, 192 (D.C.); The Mars, 145 F. 446, 447 (D.C.), affirmed 149 F. 729 (C.C.A.); The Bouker No. 2, supra, 836, and `cure' is care, including nursing and medical attention during such period as the duty continues. Whitney v. Olsen, 108 F. 292, 297 (C.C.A.) and cases cited; Dougherty v. Thompson-Lockhart Co., 211 F. 224, 227 (D.C.)."
Similar generalizations can be found in other American cases.[5] In none of these cases, however, does it appear that the court was confronted with the necessity of tacking its sails to the wind that blows here, for the courts apparently proceeded on the hypothesis that the disabled seaman was a typical blue water tar.
But it is now certain that the seaman's right to maintenance and cure is a basic term of his employment contract, and it should not be treated like the "landman's remedy so often a promise to the ear to be broken to the hope."[6]
"It has been the merit of the seaman's right to maintenance and cure that it is so inclusive as to be relatively simple, *941 and can be understood and administered without technical considerations."[7]
Admiralty courts have been liberal in interpreting the duty to pay maintenance "for the benefit and protection of the seamen who are its wards."[8] "Certainly the nature and foundations of the liability require that it be not narrowly confined or whittled down by restrictive and artificial distinctions defeating its broad and beneficial purposes."[9] For the shipowner's liability for maintenance and cure is among "the most pervasive" of all. When there are ambiguities or doubts, they are resolved in favor of the seaman.[10]
The "ancient solicitude of courts of admiralty for those who labor at sea"[11] continues unchanged despite the progress from canvas sails to diesel engines. For the injured seaman is entitled to be certain of "receiving compensation intended to be sufficient to pay for his care."[12]
When faced head-on with a situation in which a seaman provided his own meals and did not live aboard his ship but went home after each day's work, most courts have allowed an injured seaman maintenance sufficient to cover the cost of meals and lodging (albeit sometimes without discussion of the fact that this might exceed what he received aboard ship). This was done in Weiss v. Central Railroad Co. of New Jersey, 2d Cir. 1956, 235 F.2d 309, in which the plaintiff was employed both to do duties ashore and as a deckhand on a ferry. He worked as an extra, that is, he was called in to replace other employees temporarily absent from their regular duties. During his employment, which lasted only thirteen days, the plaintiff was employed ashore six days, and he worked on the ferry boat a total of seven days. He slept at home and ate his meals there, except for lunch. He became sick as a result of reactivation of a latent condition of pulmonary tuberculosis.
It was urged that the plaintiff was not entitled to an allowance for maintenance. Chief Judge Clark's opinion dealt at length with the question whether the plaintiff was a seaman within the meaning of the Jones Act, 46 U.S.C. § 688. He concluded that "If an employee is a a `seaman' for those purposes [that is for purposes of the Jones Act], he is by the same token a `master or member of a crew of any vessel' within the meaning of the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901, 903(a) (1), and is excluded from the coverage of that Act." Once it was established that the plaintiff was a seaman, he was entitled to the same rights as every other seaman, regardless of the fact that his working conditions were different from those of the typical seafarer. In this connection the court observed:
"We know of no authority, however, for holding that a seaman is not entitled to the traditional privileges of his status merely because his voyages are short, because he sleeps ashore, or for other reasons his lot is more pleasant than that of most of his brethren. Further, so to hold would be to create a genre of `seamen' ineligible for the benefits of maintenance and cure, yet equally barred from recovery under the Longshoremen's Act, 33 *942 U.S.C. § 903(a) (1). This surely was not the intention of Congress."
In his dissent, Judge Lumbard agreed with the other members of the court that every person who is a "master or member of a crew" within the meaning of the Longshoremen's Act and who is therefore excluded from its remedies is also a "seaman" entitled to maintenance and cure. But he differed with the conclusion that Weiss was a seaman entitled to maintenance and cure. He urged that the term has a different meaning in determining who may sue for unseaworthiness and who is entitled to maintenance and cure. The considerations leading to recognition of the right were not applicable, he felt, to cases like the one before the court. The plaintiff should not have been awarded maintenance because he was not the kind of seaman entitled to that remedy. He worked ashore a good part of the time; he had no permanent connection with a ship; and he worked aboard various ferries irregularly. But it is implicit in the rationale of the dissent that, if Judge Lumbard had been convinced that the plaintiff was a seaman, he would have joined the majority in allowing maintenance.
The present case is therefore stronger than the Weiss case. For the defendant admits, as indeed it must under the facts, that it "employed plaintiff * * * as a seaman and member of the crew of said vessel in the capacity of deckhand." It is true that Hudspeth's working conditions were more like those of a landlubber than those of the blue water sailor with respect to his hours of work, manner of lodging and method of compensation. In these regards, Hudspeth was not, like Jack in the folk song, every inch a sailor. But he was undoubtedly a member of the crew of his vessel, and he was subject to many of the hazards of the sea. By the rationale of the Weiss case, he is entitled to all of the rights of a seaman.
Similar results have been reached in other cases. In The City of Avalon, 9th Cir. 1946, 156 F.2d 500, a fisherman was to be paid a share of the catch. While on the vessel, he paid for his own food. He was disabled on a voyage and sought maintenance. The district court denied him recovery for food and allowed only the seaman's cost of lodging. The Court of Appeals increased the maintenance allowance to cover the cost of food notwithstanding the fact that the vessel upon which libelant was injured did not provide him with meals. The appellee attempted to justify the lower court's decision by the statement in Calmar Steamship Co. v. Taylor, 1938, 303 U.S. 525, 528, 58 S. Ct. 651, 653, 82 L. Ed. 993, 997, quoted above, that "[t]he maintenance exacted is comparable to that to which the seaman is entitled while at sea." The appellate court said: "We do not agree. This statement means no more than that an injured man during his disability is to be maintained in no better or worse condition than at sea. The purpose of the historic implied contract to maintain an injured seaman arises from his helplessness during his injury, a right `every court should watch with jealousy' to maintain."
A similar issue was silently dealt with in Creppel v. J. W. Banta Towing Inc., E.D.La.1962, 202 F. Supp. 508. That case involved the master of a tug which worked around docks in the Mississippi River at Baton Rouge, Louisiana. He lived ashore and came aboard to work his watch. He was paid $20 a day for days actually worked. The court awarded him maintenance, fixing it at $8.00 which the parties had stipulated was the proper rate "during the period of disability for which maintenance may be recoverable."
In Ledet v. U. S. Oil of Louisiana, Inc., E.D.La.1964, 237 F. Supp. 183, a roughneck was injured while working offshore. He was held entitled to receive maintenance and cure for the entire period of time from the date of his injury until the day of trial, except for the time when he was in a hospital and was being furnished with meals and lodging, even though this obviously included periods in which the seaman would have been *943 ashore providing his own meals and lodging had he not been injured.
The libelant in Rowald v. Cargo Carriers, Inc., E.D.Mo.1965, 243 F. Supp. 629, worked aboard a motor vessel thirty days and was ashore thirty days. He was paid at all times, whether aboard ship or on shore. He became ill during a period of shore duty. The court awarded him maintenance and cure at the rate of $6.00 per day during the period of his illness even though he apparently would have furnished his own meals and lodging during his usual periods ashore.
The only case that is in any part contrary appears to be Alexandervich v. Gallagher Bros., 2d Cir. 1961, 298 F.2d 918. There libelant was a cook aboard a tug, and worked two out of every three weeks. During each two week tour, he lived aboard the tug and his meals and lodging were provided. He was injured while working aboard the tug. He sued for damages for his injury, loss of earnings (including his "found," or meals and lodging, as part of his earnings), and maintenance and cure up until the time he reached maximum cure. The lower court awarded "found" at the rate of $8.00 per day for the period following his discharge from the Public Health Hospital until the date of his trial. This figure was reduced by one-third to reflect the fact that his meals and lodging were furnished only two-thirds of the time. On appeal, the court held that plaintiff was not entitled to "found" as part of his damages in tort because he maintained a home for his family and was therefore not out of pocket with respect to the lodging element of "found." His award for "found" was therefore reduced to the extent that it included an allowance for lodging, but the court held that, for the period between his discharge from the hospital and the time he reached the point of maximum cure, he was entitled to maintenance. The fact that the injured seaman maintained a home for his family where he lived during his recuperation did not reduce the daily rate to be paid him for maintenance. The Court of Appeals therefore approved the payment of maintenance at the rate of $8.00 per day, but allowed this amount of maintenance only for those days during the period that plaintiff would have worked aboard the boat and received lodging and subsistence. There was no discussion of the reason for the reduction during the usual shore period.
To deny one who is clearly a seaman the right to maintenance merely because he does not receive lodging and meals aboard ship raises problems that would distort the simple lines of the maintenance remedy. The logical extension of such a rule would be to hold that, if such a seaman is hospitalized, he must provide his own meals; his employer need provide only the cure. If a seaman were at sea five days a week, but was normally ashore and provided his own lodging and food two days a week, the same reasoning would indicate that he should be paid maintenance only for 5/7 of the period during which he is disabled. In the present case the plaintiff received an allowance for meals for six days in the seven months preceding the injury; is he to be given a maintenance allowance of 6/7 of a day per month? Indeed, the rationale that maintenance is allowable only when meals would have been served aboard challenges the now well settled doctrine that the disabled seaman is entitled to be paid maintenance beyond the end of his voyage,[13] for were maintenance to be allowed only for those days during which the ship would have served him meals, it would end when the voyage was over.
Having come this far, we find the remaining issues to be considered before determining the right to summary judgment relatively easy. While such matters as status of a seaman and the proper amount for maintenance and cure are usually factual issues, they may be *944 determined on motion for summary judgment where the "extraneous materials" in support of the motion "establish with certainty that there is no triable issue of fact, and in that event summary judgment should be rendered for the party entitled thereto as a matter of law."[14]
The defendant contends that the plaintiff's injury was not caused by or contributed to by any fault, neglect, or want of care on the defendant's part or by the unseaworthiness of the defendant's tug, but was caused solely by the plaintiff's own negligence. This, however, is no defense to the present claim because neither the negligence of the owner or of the crew of the vessel, nor the unseaworthiness of the vessel enter into consideration with respect to recovery for maintenance. There is no setoff or defense for contributory negligence nor any fellow servant rule or doctrine of assumption of risk. Aguilar v. Standard Oil Company, 1943, 318 U.S. 724, 63 S. Ct. 930, 87 L. Ed. 1107. Only some willful misbehavior or deliberate act of indiscretion suffices to deprive the seaman of his protection, Ibid., 318 U.S. at 731, 63 S. Ct. 930.
Hudspeth was a seaman. He was injured in the service of his vessel. During the period for which he seeks maintenance, he has been disabled on account of his injury, he has been under medical treatment as an outpatient, and he has not yet been found fit for duty. He has reasonable prospect for improvement or eventual recovery. He has supported himself. There remains only the question of the proper amount due him.
The amount of maintenance to which an injured seaman is entitled is a factual question.[15] Some courts have measured it by the amount necessary to provide meals and lodging ashore of the same character that were furnished aboard ship;[16] but other authorities say the amount is to be based on proof of the seaman's out-of-pocket expenses.[17] Maritime union contracts frequently fix the daily maintenance rate and this rate is usually applied to seamen covered by the contract.[18] At last one text writer says that "even if there is no union rate applicable to a particular case, a court may take judicial notice of the amount fixed by union agreements in the area."[19] Courts have sometimes considered the union contract rate as persuasive of the reasonableness of the sum fixed even when it is not directly applicable,[20] or as admissible evidence in the absence of other proof,[21] or as at least one factor tending to show the reasonable value of maintenance.[22]
The Court of Appeals for the Fifth Circuit has said that "the seaman's recovery must be measured by the reasonable cost of that maintenance and cure to which [the plaintiff] is entitled at the time of the trial." United States v. Robinson, 5th Cir. 1948, 170 F.2d 578. This means the reasonable cost of meals and lodging ashore of a type that the injured seaman would normally require. The union contracts introduced by affidavit in this case provide some evidence of the proper rate. The fact that the defendant paid Hudspeth maintenance at the rate of $6.00 per day *945 until payments were discontinued tends to show what rate the defendant itself considered reasonable. The cash allowance given the members of the crew of the McGRATH for meals when they were sent out of the New Orleans Harbor area was approximately $2.50 per day. Taking all of these factors into account, I conclude that all of the material facts necessary to determine the proper amount of maintenance are in evidence and that a daily rate of $6.00 is reasonable.[23]
But this does not mean that the plaintiff is also entitled to attorney's fees or to separate and additional damages. In Vaughn v. Atkinson, 1962, 369 U.S. 527, 82 S. Ct. 997, 8 L. Ed. 2d 88, attorney's fees incurred by the plaintiff were allowed as damages because the shipowner was callous in its attitude, made no investigation of the seaman's claim, and its default was found to be "willful and persistent." The Second Circuit Court of Appeals reads this opinion "to allow recovery of counsel fees only where the employer is shown to have been `callous' or `recalcitrant' in" his refusal. Roberts v. SS Argentina, 2d Cir. 1966, 359 F.2d 430; see in accord Diaz v. Gulf Oil Corp., S.D.N.Y.1965, 237 F. Supp. 261; Pyles v. American Trading and Production Corp., S.D.Tex.1965, 244 F. Supp. 685. In the cases in this district in which attorney's fees or other damages have been allowed, the court found that the shipowner was "lax in investigating a claim which they would have found to have merit" and "was arbitrary and unreasonable" in its refusal to pay, Stewart v. S. S. Richmond, E.D.La.1963, 214 F. Supp. 135, or that the owner had "no reasonable excuse" for its refusal, Sims v. Marine Catering Service, E.D.La.1963, 217 F. Supp. 511. It is true that one court has observed that the award of attorney's fees "is discretionary with the court," but it cited as its sole authority the Supreme Court's decision in the Vaughn case, which clearly does not support such a conclusion. Rowald v. Cargo Carriers, Inc., E.D.Mo.1965, 243 F. Supp. 629.
Here the question of Hudspeth's right to maintenance was seriously mooted, and the defendant contested its liability in good faith. Notwithstanding the hardship which the plaintiff has suffered as a result of the failure to pay him maintenance, there is no sound authority upon which this court can base an award to him for either damages or attorney's fees.
The Clerk is therefore directed to enter judgment for maintenance at the rate of $6.00 per day, from December 9, 1966, to date, exclusive of any period of hospitalization during that period, without prejudice to plaintiff's right to such future maintenance as he may be entitled to recover, with interest at the rate of 5% per annum on each week's maintenance included in that period from its due date until paid, but denying the plaintiff's other demands. This opinion will serve instead of findings of fact and conclusions of law.
NOTES
[1] "It [the right of a sick or injured seaman to receive maintenance and cure] encourages seamen to engage in perilous voyages with more promptitude, and at lower wages."
[2] "They are generally poor and friendless, and acquire habits of gross indulgence, carelessness, and improvidence."
[3] Norris, The Law of Seamen, § 545; O'Donnell v. Great Lakes Dredge and Dock Company, 1943, 318 U.S. 36, 63 S. Ct. 488, 87 L. Ed. 596; Aguilar v. Standard Oil Company, 1943, 318 U.S. 724, 63 S. Ct. 930, 87 L. Ed. 1107.
[4] The Osceola, 1903, 189 U.S. 158, 23 S. Ct. 483, 47 L. Ed. 760.
[5] Thus, in Muise v. Abbott, 1st Cir. 1947, 160 F.2d 590, the Court said that "* * * the right, at least as to maintenance and care, i. e., maintenance ashore of a quality comparable to that to which the seaman is entitled while at sea, and the fair value of the nursing and medical care required, * * * arises even though the seaman's injury was not received on shipboard * * *" and in McCarthy v. American Eastern Corp., 3rd Cir. 1949, 175 F.2d 727, the Court observed that "* * * the maintenance to which [an injured seaman] is entitled after leaving the ship during the time needed for treatment and cure is under the maritime law the equivalent of that ordinarily furnished a seaman at sea." Many like observations are found in Norris, The Law of Seamen. Thus in § 540, at page 586, this author states that, "While being cured his maintenance takes the place of the seaman's sustenance, of the standard and quality to which he is entitled while aboard ship." See also Ibid., at § 543, page 593; § 546, page 598; § 570, page 646; and § 605, page 696.
[6] Farrell v. United States, 1949, 336 U.S. 511, 69 S. Ct. 707, 93 L. Ed. 850.
[7] Farrell v. United States, 1949, 336 U.S. 511, 516, 69 S. Ct. 707, 709, 93 L. Ed. 850, 854; Couts v. Erickson, 5th Cir. 1957, 241 F.2d 499.
[8] Calmar Steamship Corp. v. Taylor, 1938, 303 U.S. 525, 58 S. Ct. 651, 82 L. Ed. 993. See also Vaughn v. Atkinson, 1962, 369 U.S. 527, 82 S. Ct. 997, 8 L. Ed. 2d 88, and cases cited therein.
[9] Aguilar v. Standard Oil Company, 1943, 318 U.S. 724, 735, 63 S. Ct. 930, 936, 87 L. Ed. 1107, 1116. See also Warren v. United States, 1951, 340 U.S. 523, 71 S. Ct. 432, 95 L. Ed. 503.
[10] Aguilar v. Standard Oil Company, 1943, 318 U.S. 724, 63 S. Ct. 930, 87 L. Ed. 1107. See also Warren v. United States, 1951, 340 U.S. 523, 71 S. Ct. 432, 95 L. Ed. 503.
[11] Weiss v. Central Railroad Co. of New Jersey, 2d Cir. 1956, 235 F.2d 309, 311.
[12] Norris, The Law of Seamen, 1962, § 536, page 577.
[13] The Bouker No. 2, 2d Cir. 1917, 241 F. 831; Farrell v. United States, 1949, 336 U.S. 511, 69 S. Ct. 707, 93 L. Ed. 850.
[14] Moore, Federal Practice, ¶ 56.17(35).
[15] Norris, The Law of Seamen, § 605, page 696.
[16] Calmar Steamship Corp. v. Taylor, 1938, 303 U.S. 525, 58 S. Ct. 651, 82 L. Ed. 993.
[17] Stankiewicz v. United Fruit Steamship Corp., 2d Cir. 1956, 229 F.2d 580; Field v. Waterman Steamship Corp., 5th Cir. 1939, 104 F.2d 849.
[18] Reardon v. California Tanker Co., 2d Cir. 1958, 260 F.2d 369, cert. den. 1959, 359 U.S. 926, 79 S. Ct. 609, 3 L. Ed. 2d 628; Bartholomew v. Universe Tankships Inc., 2d Cir. 1960, 279 F.2d 911.
[19] Edelman, Maritime Injury and Death, p. 13.
[20] Keefe v. America Pacific S/S Co., S.D. Cal.1953, 110 F. Supp. 853.
[21] Curd v. United States, E.D.La.1954, 118 F. Supp. 921.
[22] Yates v. Dann, Del.1954, 124 F. Supp. 125.
[23] See, for example, the following cases in which the rate was fixed by agreement of the parties: Creppel v. J. W. Banta Towing, Inc., D.C.La.1962, 202 F. Supp. 508, $8.00; Theriot v. Aetna Casualty & Surety Co., D.C.La.1963, 215 F. Supp. 36, $8.00; and the following cases in which the rate was fixed by the court: Gros v. Galloway, D.C.La.1965, 1065 A.M.C. 1876, $8.00; Richards v. Crescent Towing and Salvage Co., Inc., D.C.La. 1958, 161 F. Supp. 820, $6.00; and Rose v. Bloomfield Steamship Co., D.C.La. 1958, 162 F. Supp. 576, $8.00. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2469818/ | 103 F.Supp.2d 875 (2000)
UNITED STATES of America, Plaintiff,
v.
PHOTOGRAMMETRIC DATA SERVICES, INC., and David G. Webb, Defendants.
No. CRIM. 99-471-A.
United States District Court, E.D. Virginia, Alexandria Division.
June 21, 2000.
*876 Jack Hanly, Assistant United States Attorney, United States Attorneys Office, Alexandria, VA, for Plaintiff.
David F. Geneson, Hunton & Williams, Laura A. Miller, Nixon Peabody LLP, Washington, DC, for Defendants.
MEMORANDUM OPINION
BRINKEMA, District Judge.
Before the Court is the defendants' Joint Motion to Set Aside the Verdict and Enter an Order for Judgment of Acquittal or for a New Trial, and defendant Photogrammetric Data Services, Inc.'s Motion to Set Aside the Verdict on the Basis of Bruton v. United States, and Enter an Order for Judgment of Acquittal or a New Trial. For the reasons stated below, both motions will be denied.
I. Procedural History
Photogrammetric Data Services, Inc. ("PDS") is a Sterling, Virginia corporation in the business of preparing topographic maps from aerial photography and ground surveys for construction projects for various customers, including the Virginia Department of Transportation ("VDOT"). David G. Webb ("Webb") was the supervisor of the photogram department at PDS. On December 22, 1999, the United States filed an eight-count indictment against PDS and Webb, charging the defendants with Highway Project Fraud in violation of 18 U.S.C. § 1020, and Mail Fraud in violation of 18 U.S.C. § 1341. The indictment alleged in Counts 1-4 that PDS and Webb had knowingly made false statements, representations, and claims with respect to the quantity and costs of work performed in connection with the construction of a highway project by submitting false invoices for payments covering labor for which the defendants knew they were not entitled because the hours had been artificially inflated. Counts 5-8 alleged that the defendants had knowingly devised a scheme and artifice to defraud VDOT and *877 the Federal Highway Administration ("FHWA") and that the defendants had used the United States Postal Service and other interstate commercial carriers to further this scheme and artifice to defraud.
A four-day jury trial was held beginning on March 27, 2000. At the close of the government's case, the Court granted the defendants' Fed.R.Crim.P. 29(a) motion for judgment of acquittal as to Counts 2 and 6. The remaining Counts were submitted to the jury for deliberation, and the jury returned a verdict of guilty as to both defendants on Counts 1,3,5,7, and 8, and a verdict of not guilty as to both defendants on Count 4. The defendants then timely filed the post-trial motions which are now before us.
II. Standard of Review
A jury verdict must be sustained if there is substantial evidence, when viewed in a light most favorable to the government, to support the verdict. See United States v. Cummings, 937 F.2d 941 (4th Cir.1991)(citing Glasser v. United States, 315 U.S. 60, 62 S.Ct. 457, 86 L.Ed. 680 (1942)). Thus, so long as a reasonable trier of fact could find that the evidence establishes the guilt of the defendants beyond a reasonable doubt, the verdict cannot be set aside. See United States v. Rasco, 123 F.3d 222, 228 (5th Cir.1997).
III. Joint Motion to Set Aside Jury Verdict
The defendants have raised a number of arguments which they contend support their position that the verdict should be set aside. They argue that the government: (1) failed to allege and prove that the defendants made false statements in connection with a project approved by the Secretary of Transportation or an appropriately authorized delegee; (2) failed to prove that false statements were made in connection with a highway construction project, as required under 18 U.S.C. § 1020;[1] (3) failed to allege or establish a sufficient federal nexus to prosecute under § 1020; (4) failed to prove that the defendants acted with the specific intent to defraud, or with the requisite knowledge of the elements of the offense; (5) failed to demonstrate that the strictly interstate use of a private interstate carrier constitutes mail fraud; and (6) failed to prove that PDS invoices were delivered via United States mail or that Webb used the mail or caused the mails to be used. Additionally, the defendants have raised numerous arguments with respect to the jury instructions, suppression issues, and various other pre-trial rulings of the Court.
A. Approval By the Secretary of Transportation
Defendants argue that the jury verdicts as to Counts 1 and 3 should be set aside because the government neither alleged nor proved that the alleged false statements were made in connection with the construction of a project approved by the Secretary of Transportation. Specifically, they contend that the government submitted no proof that the Secretary of Transportation personally approved any of the highway projects that are the basis for the § 1020 violations alleged in Counts 1 and 3.
*878 Although the defendants concede that the Secretary also has the power to delegate his authority,[2] they assert that the testimony of John Grounds, FHWA Financial Manager, was insufficient to establish that such a delegation had in fact been made, and no other testimony regarding this fact was elicited. The defendants point to Grounds' testimony that "we", i.e. FHWA, had been an authorized delegee of the Secretary of Transportation shows there was no legal delegation because § 322(b) allows only for delegation to an officer or employee, but not an agency. See, Melrose Assoc. v. United States, 43 Fed. Cl. 124 (Fed.Cl.1999).
We find this argument unsupported by the record. Grounds testified that he had been an FHWA employee for 27 years, and had been Financial Manager for the last 10 years. Tr. 484-85. He indicated that when his office receives funding requests from VDOT, the requests are first screened by engineers before he signs off on them, thereby committing federal funds to the project. Id. at 486. He testified that he is authorized to do so by the Secretary of Transportation. Id. Although the defendants make much of the fact that Grounds could not identify the precise regulation under which his authority is granted, his testimony that he does, in fact, have this authority was otherwise uncontroverted. We are therefore satisfied that his testimony was sufficient to establish that the highway projects at issue in Counts 1 and 3 had the approval of the Secretary of Transportation.
B. Connection To A Highway Construction Project
Defendants assert that they should have been acquitted because the government did not prove that the alleged false statements were made "in connection with the construction of any highway or related project", as required under § 1020. They argue that the government did not charge the defendants under the first paragraph of § 1020 which pertain to the creation or "the submission of plans, maps, [and] specifications" for highway or related projects. Conversely, the defendants contend that the second paragraph, under which the defendants were charged, relates to false statements made in actual highway construction projects. Thus, because defendants' photogrammetric work fell squarely under the rubric of Preliminary Engineering work for projects which necessarily had not begun, defendants argue that no false statement was made in an actual highway or related project.
The Government correctly responds that defendants' reading of § 1020 is strained. Upon close inspection, it becomes obvious that the first paragraph of § 1020 enumerates submissions such as plans, maps, contracts, etc. because that paragraph prohibits the making of false statements in submissions made "for approval by the Secretary of Transportation." If the project has yet to be approved, such preliminary work as plans, maps, and contracts are the only things in which a false statement could be made. Conversely, the second paragraph prohibits the making of false statements in submissions for projects "approved by the Secretary". Obviously, this paragraph encompasses all submission related to the project once it has been approved.
The assertion that the second paragraph is inapplicable to these defendants because the false statements were related to projects on which construction was never begun is unsupported. There is no requirement under § 1020 that the project, once approved, must move forward. The second paragraph of § 1020 is both retrospective and prospective in its sweep, prohibiting *879 false statements concerning work "performed or to be performed, or materials furnished or to be furnished." Thus, paragraph two of the statute includes all false statements made after approval by the Secretary of Transportation; there is no requirement, as defendants would have us read into the statute, that the false statement be made in connection with an "actual" highway or related project. We find that the defendants were properly charged and convicted under the second paragraph of 18 U.S.C. § 1020 because the projects for which they made false statements had been approved by the Secretary of Transportation.
C. Lack of a Federal Nexus
Defendants next assert that the trial evidence does not establish a sufficient federal nexus to support a conviction under § 1020. In particular, they assert that no federal nexus exists because the government did not prove either the physical transport of an item in interstate commerce or that the challenged conduct had a substantial effect on interstate commerce, as required under United States v. Lopez, 514 U.S. 549, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995). Furthermore, the defendants contend that their actions had no impact on any federal interest because under the Federal-Aid Highway Act, federal government contributions meant to defray state costs of highway construction are awarded in fixed sums, and therefore operate as strict ceilings which completely insulate the United States from any overcharges. See United States v. Azzarelli Constr. Co., 647 F.2d 757 (7th Cir.1981).
The government responds that both these arguments are without merit because the statute at issue in Lopez was struck down because it neither regulated an interstate commercial activity nor contained a requirement that the gun possession be connected in any way to interstate commerce. As the Court has recently clarified:
[T]he statute [in Lopez was defective because it] contained `no express jurisdictional element which might limit its reach to a discrete set of firearm possessions that additionally have an explicit connection with or effect on interstate commerce.' Such a jurisdictional element may establish that the enactment is in pursuance of Congress' regulation of interstate commerce.
United States v. Morrison, ___ U.S. ___, ___ - ___, 120 S.Ct. 1740, 1750-51, 146 L.Ed.2d 658 (2000)(quoting Lopez, 514 U.S. at 562, 115 S.Ct. 1624). Because § 1020 contains, in the words of Lopez, a "jurisdictional element which would ensure, through case-by-case inquiry, that the [highway fraud] in question affects interstate commerce", then it does not run afoul of the Commerce Clause. Lopez, 514 U.S. at 561, 115 S.Ct. 1624.
We agree with the government's position that approval by the Secretary of Transportation is the jurisdictional element sufficient to create a federal nexus under 18 U.S.C. § 1020. Cf., e.g., United States v. Lindsay, 184 F.3d 1138 (10th Cir.1999)(reversing federal bank fraud conviction because government failed to prove that bank was FDIC insured, an essential jurisdictional element); United States v. Schultz, 17 F.3d 723 (5th Cir. 1994)(same).
Second, we find no merit in the claim that no federal nexus exists because the party which sustained the injury as a result of defendants' false statements was VDOT. Defendants assert that "[n]othing in the Constitution gives Congress the power to turn a possible crime strictly against Virginia into a federal felony." Br. at 11. This disingenuous argument fails to recognize that the federal government has a patently obvious interest in insuring that federal funds, once distributed, are properly administered. Thus, a false statement made in relation to a highway or related project, may fall within the ambit of § 1020:
*880 even when it is not submitted to a federal agency directly and the federal agency's role is limited to financial support of a program it does not itself directly administer ... the necessary link between deception of the non-federal agency and effect on the federal agency is provided by the federal agency's retention of the ultimate authority to see that the federal funds are properly spent.
United States v. Petullo, 709 F.2d 1178, 1180 (7th Cir.1983) (citations omitted); see also, United States v. Shafer, 199 F.3d 826, 828-29 (6th Cir.1999); United States v. Gibson, 881 F.2d 318 (6th Cir.1989).[3]
Moreover, defendants' reliance on United States v. Azzarelli Construction Co., 647 F.2d 757 (7th Cir.1981), is unavailing, because that case dealt with a different statute, under the False Claims Act, 31 U.S.C. § 231, in a purely civil context. In Azzarelli, the Seventh Circuit found that the United States could not recover civil damages because it had suffered no actual injury in light of the fact that the Federal-Aid Highway Act awards a fixed amount to each state. See id. at 760-61. Our case is distinguishable from Azzarelli because the statute at issue, 18 U.S.C. § 1020, unlike the False Claims Act (which provides only a civil remedy), extends beyond claims for monetary remuneration by the United States to criminalize false representations made with respect to such things as the character, quantity, or quality of work done or materials used in a project receiving federal highway funds. Thus, Congress clearly intended to create a criminal cause of action not based solely upon fiscal loss. Perhaps more importantly, Congress has reacted negatively to the holding in Azzarelli:
[T]he Senate Judiciary Committee made clear that it intended the concept of loss to the United States to be considered broadly. As the Committee noted, the Seventh Circuit had held in [Azzarelli] that there was no loss to the United States, and hence no viable False Claims Act suit, where the federal government had contributed a fixed sum to Illinois for highway projects and thus would have paid out the same amount regardless whether contractors submitted false claims to the State. The Committee made clear it disapproved of this result, and expressly `intended the new subsection ... to overrule Azzarelli and similar cases which have limited the ability of the United States to use the act to reach fraud perpetrated on federal grantees, contractors or other recipients of Federal funds.'
U.S. ex rel. Yesudian v. Howard University, 153 F.3d 731, 739 (D.C.Cir.1998)(quoting S.Rep. No. 99-345, at 22 (1986)); see also U.S. ex rel. Koch v. Koch Industries, Inc., 57 F.Supp.2d 1122, 1128 (N.D.Okla. 1999). Accordingly, we find that there was a sufficient federal nexus to charge and convict these defendants under 18 U.S.C. § 1020.
D. Specific Intent
The defendants assert that the verdicts should be set aside as to Counts 1 and 3 because the government did not prove that they acted willfully or with a specific intent to defraud the United States, relying on 23 C.F.R. § 633, subpt. C, App. A ¶ 5 (1999).[4] This issue was raised pre-trial when counsel for Webb renewed a motion to dismiss Counts 1-4 because the indictment failed to charge wilfulness, as defendant alleged was required *881 under United States v. Molin 244 F.Supp. 1015 (D.Mass.1965). Tr. at 86-90. We took the issue under advisement. At the close of the government's case, Webb's counsel asked the Court to take judicial notice of the regulation, but we declined to do so because defendants were being prosecuted for violating § 1020, which only requires that a defendant act "knowingly". The C.F.R. standard was found inapplicable:
I've looked at this regulation and there is no question it's a C.F.R. regulation. And the Court would normally take judicial notice of that, except, I don't think it's relevant to this case. And the reason I don't think it is, is that the statute under which the defendants are being prosecuted in Counts 1 through 4 only contains the adverb "knowingly" ... And the one Massachusetts case notwithstanding, I think given what I would expect the Fourth Circuit's approach to be on that, I don't think wilfulness plays a role in those first four counts. And so, I think this would be completely irrelevant and could, in fact, be misleading. Because the C.F.R. is using a word which is not in the statute. And they're not being prosecuted for a violation of the regulation. They're being prosecuted for a violation of 1020 ... I realize this is a statute that's almost never used [but] I think it's extremely safe to construe a statute with the specific words that Congress used and they've only used the word `knowingly' here.
Tr. at 862-63, 865. Defendants have raised no new arguments in their brief which cause us to question the correctness of our ruling during the trial. Accordingly, we find that the government was not required to prove willfulness or specific intent to defraud in order to properly sustain convictions of these defendants under 18 U.S.C. § 1020.
E. Knowledge of the Elements of the Offense
Knowledge must generally be proven with respect to each element of the offense charged. See, e.g., United States v. Ellen, 961 F.2d 462, 466-467 n. 2 (4th Cir.1992). Defendants contend that Counts 1 and 3 should be set aside because the government failed to prove that the defendants knew that the work PDS invoiced was related to the construction of a highway or related project approved by the Secretary of Transportation or his delegee. The government counters that proof of such knowledge was not required in this instance because approval by the Secretary of Transportation or his delegee is merely a jurisdictional element, for which knowledge need not be proved. See United States v. Feola, 420 U.S. 671, 675, 95 S.Ct. 1255, 43 L.Ed.2d 541 (1975); United States v. Daughtry, 48 F.3d 829, 832 (4th Cir.1995).
We are persuaded, consistent with the Supreme Court's discussion in Feola, that the requirement under § 1020 that the prohibited fraudulent statement must either be submitted to or approved by the Secretary of Transportation is only jurisdictional, and nothing more.[5]See also United States v. Yermian, 468 U.S. 63, 104 S.Ct. 2936, 82 L.Ed.2d 53 (1984)(holding that proof of actual knowledge of federal agency jurisdiction is not required under 18 U.S.C. § 1001).
*882 F. Mail Fraud Counts
In 1994, the mail fraud statute was amended to also prohibit the use of private or commercial carriers, in addition to the U.S. mails, in attempting to carry out a scheme or artifice to defraud. Defendants contend that the jury verdict should be set aside on all mail fraud counts because the government did not prove that the U.S. mails were used, nor did it prove that the private or commercial carriers that were used had delivered or transported mail in interstate commerce. Specifically, defendants assert that § 1341 is ambiguous, but that the legislative record clearly demonstrates an intent to amend the statute to address fraudulent interstate mailings effected by the use of private or commercial carriers. Defendants therefore ask us to read the statute as proscribing only the interstate use of private or commercial carriers, and to set aside the verdicts under the rule of lenity.
The canons of statutory construction require us to begin by analyzing the text of the statute, which is the "authoritative source" for gleaning legislative intent. See Holder v. Hall, 512 U.S. 874, 933, 114 S.Ct. 2581, 129 L.Ed.2d 687 (1994)(Thomas, J., concurring). In so doing, we should not construe the statute "so as to render any provision of [it] meaningless or superfluous." Beck v. Prupis, ___ U.S. ___, ___, 120 S.Ct. 1608, 1616, 146 L.Ed.2d 561 (2000). "If the language is plain and `the statutory scheme is coherent and consistent'", we may stop our inquiry there. Holland v. Big River Minerals Corp., 181 F.3d 597, 603 (4th Cir.1999)(quoting United States v. Ron Pair Enters., Inc., 489 U.S. 235, 240-41, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989)). Given these guiding principles, we are confident that Congress intended the amendments to 18 U.S.C. § 1341 to extend to purely intrastate delivery of mails by private or commercial carriers as long as those carriers engage in interstate deliveries. A reading of § 1341 which would require that the interstate carrier actually deliver the matter interstate would produce an absurd result.
We note, as defendants have recognized, the case law is clear that a violation of § 1341 occurs when a thing is mailed intrastate via the U.S. mail because federal jurisdiction exists under the Postal Power, and not the Commerce Clause. See United States v. Elliott, 89 F.3d 1360 (8th Cir.1996)(citing cases). While jurisdiction lies only under the Commerce Clause for the use of private or commercial carriers, Congress may still regulate their intrastate activities because they are instrumentalities of interstate commerce. See United States v. Lopez, 514 U.S. 549, 558, 115 S.Ct. 1624, 131 L.Ed.2d 626 (1995). Thus, it is not surprising that courts have upheld other statutes under an analogous theory, despite the fact that the specific acts at issue occurred only intrastate. See, e.g., United States v. Marek, 198 F.3d 532 (5th Cir.1999)(finding that Western Union is a facility in interstate commerce and therefore affirming conviction under the federal murder-for-hire statute); United States v. Weathers, 169 F.3d 336, 341 (6th Cir.1999)(finding that intrastate use of a cellular phone constituted use of a facility in interstate commerce under the Travel Act).
The 1994 amendment to § 1341 added a prohibition against sending an item through a private or commercial carrier in furtherance of the fraud. But it also criminalizes knowingly causing an item to be delivered by such a carrier "according to the direction thereon, or at the place at which it is directed to be delivered" in furtherance of the fraud.[6] Thus, by the *883 express terms of the statute, for example, an entity in Virginia could properly be charged with mail fraud under § 1341 if it knowingly caused the item to be delivered in furtherance of the fraud, even if the delivery address is also in Virginia. If indeed Congress had intended to limit the reach of the 1994 amendment to interstate delivery only, then it would have been of paramount importance to amend or otherwise qualify that portion of the statute creating an offense based upon the place of delivery to reflect that such delivery occur across state lines. We can infer from Congress' failure to do so, given the totality of the evidence of what ill Congress was seeking to remedy, that it intended the statute to apply to both intrastate and interstate mailings. See Burns v. United States, 501 U.S. 129, 136, 111 S.Ct. 2182, 115 L.Ed.2d 123 (1991)("In some cases, Congress intends silence to rule out a particular statutory application, while in others Congress' silence signifies merely an expectation that nothing more need be said in order to effectuate the relevant legislative objective"); Quest Medical, Inc. v. Apprill, 90 F.3d 1080, 1091 (5th Cir.1996)("Legislative intent can be inferred from the absence or presence of a particular provision in a statute."). Accordingly, we find that 18 U.S.C. § 1341 facially applies to the intrastate use of private or commercial carriers who engage in interstate commerce.
Likewise, we reject defendants' argument that the verdict should be set aside on Counts 5, 7, and 8 because the government failed to introduce sufficient evidence that the allegedly fraudulent invoices were mailed or that Webb caused the mails to be used. Denise Lade, PDS' officer manager who was responsible for mailing PDS' invoices, testified that after she got the VDOT time sheets for all photogrammetry work out of Webb's office, she would prepare the invoices which were mailed, either by U.S. mail or by UPS Ground, depending on the number to be sent and the type of project. Tr. at 668-70. The time sheets and invoices were maintained, and the mailings effected, all in the ordinary course of business. Id. at 666, 670-72. At trial she could not tell how a particular invoice may have been sent merely from looking at the invoice itself, but she was certain that it would have gone out either by U.S. mail or UPS. Id. at 680-81. In light of Webb's position within PDS and his experience in the company, we find inherently incredible defendants' argument that he was ignorant of how PDS processed invoices for payment or that the invoices were being mailed. Moreover, in light of Lade's testimony, there was ample evidence upon which the jury could convict the defendants of Counts 5, 7, and 8. See United States v. United Medical & Surgical Supply Corp., 989 F.2d 1390, 1404 (4th Cir.1993)(holding that a mailing by defendant's agent satisfied mailing element of statute); United States v. Norton, 780 F.2d 21 (8th Cir.1985)(holding that the knowledge requirement is satisfied if defendant knew or could reasonably foresee that mailing would take place).
G. Notice and Discovery Deficiencies
The defendants argue that the verdict should be set aside on all counts because the notice provided in the indictment and the post-indictment discovery provided to the defendants were insufficient to apprise the defendants of the charges they faced. In particular, defendants contend that the indictment was insufficient because, among other things, it did not specify or allege what services or materials were invoiced, it did not provide the amounts of the false invoices, it did not allege how many time sheets were altered, and it did not allege who among the defendants made the false statements. Moreover, they assert that the Bill of Particulars failed to cure these deficiencies because it did not identify how *884 much time was moved, where it was moved from, and how much of a total loss was sustained.
We find these claims to be without merit, as they were substantially addressed by the Court in the March 24, 2000 pretrial hearing. During argument for defendants' motion in limine, counsel for the government indicated that the reason he planned on introducing a multitude of time sheets was to rebut any argument on behalf of the defendants that any changes were either mistakes or inadvertent:
Now on the alterations, 34 we've identified as supporting the counts, and I want the freedom to put in some more that the employees have clearly said are false. And sometimes it's, `I changed them.' Sometimes it's, `David Webb told me to change them.' Sometimes it's, `This has been changed after I turned it in.' I want the jury to see the different types of things ... I identified as much as I could in the grand jury. I did it in the bill of particulars. I responded with each one and what entries on here were false on each of those 34[and] I told them, look and this column, and if there were particular dates, I identified the columns on each time sheet.
March 24, 2000 Tr. at 22-23. After considering the defendant's arguments, the Court determined that, in general, the indictment and the bill of particulars was sufficient to apprise the defendants of the charges against them:
The government is not required in either the grand jury indictment or in the bill of particulars to lay out all the evidence that supports a particular charge. They're required to give defense counsel enough clear notice as to what it is the client is being charged with so they can defend and also plead jeopardy if they're convicted. And with a bill of particulars, again, it's not meant to lay out the government's entire case. It's meant to give the defense a fair shot at defending the case. And I think there is enough detail [here].
Id. at 38. Nevertheless, to insure that the defendants were not crippled by a lack of notice and opportunity to prepare a defense, the Court struck a balance and allowed the government to introduce and use in its case-in-chief only those documents "that have been clearly identified for the defense along the parameters" defense counsel had set. See id. at 32. In light of this ruling, we find that the defendants were sufficiently apprised of the specific charges they faced and the evidence against them.
H. Remaining Issues
The defendants also raise numerous additional issues which they contend support setting aside the jury verdict, among them: the Court erred in its jury instructions on mail fraud and aiding and abetting; the government failed to prevent the completion of the crimes alleged in Counts 7 and 8; the Court erred by admitting into evidence documents and testimony relating to non-charged items and to Counts 2 and 6, for which defendants were acquitted; and the Court erred by failing to suppress evidence illegally obtained by Bradley Broussard, and the tainted fruit of Broussard's allegedly unlawful search and seizure, i.e. the statements taken from Webb and the search of PDS, both occurring on January 20, 1999. We have carefully considered each of these arguments, and find them to have no merit.
IV. PDS's Motion to Set Aside the Verdict on the Basis of Bruton v. United States.
Defendant PDS asserts that, in light of defendant Webb's decision not to testify, the introduction into evidence of taped conversations in which Webb implicated wrongdoing by PDS violated its Sixth Amendment confrontation rights, relying on Bruton v. United States, 391 U.S. 123, 88 S.Ct. 1620, 20 L.Ed.2d 476 (1968). Moreover, defendants contend that the Supreme *885 Court has recently emphasized in Lilly v. Virginia, 527 U.S. 116, 119 S.Ct. 1887, 144 L.Ed.2d 117 (1999), that the mere fact that a statement qualifies as an exception to the hearsay rule does not justify its use in evidence against another defendant when constitutional concerns exist. Thus, PDS concludes that the jury verdict should be set aside as to it because the Court, despite Bruton, allowed into evidence the tapes recordings under Fed. R.Evid. 801(d)(2)(D).
We are satisfied that our decision allowing into evidence the tape recordings of Webb, as well as the statements he made to the officers at his home on January 29, 2000, was not erroneous. We reach this conclusion without finding it necessary to decide, as the parties dispute, whether the evidence adduced at trial sufficiently established a conspiracy so as to alternatively allow this evidence in under Rule 801(d)(2)(E). Under Rule 801(d)(2)(D), a statement by a party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship, is not considered hearsay and is therefore admissible. The statements made by Webb clearly satisfy this exception: he was questioned primarily about billing practices and procedures at PDS, while he was currently employed as manager of the photogram department.
In so finding, we are unpersuaded by PDS's argument that allowing the evidentiary exception embodied in Fed. R.Evid. 801(d)(2)(D) to trump Bruton effectively eviscerates that case, making a corporation's confrontational rights meaningless. First, Bruton and Lilly were not cases in which an agency relationship existed between the co-defendants. Thus, because a statement of an agent or servant concerning a matter within the scope of his employment made during the existence of the relationship is an admission of his employer, see 31 Michael H. Graham, 9 Federal Practice & Procedure § 6723 (1997), the facts of this case are decidedly different from those in Bruton and Lilly. Moreover, as the Lilly decision recognized, firmly rooted hearsay exceptions are admissible over Sixth Amendment Confrontation Clause objections because the authors of that amendment "obviously intended to respect certain unquestionable rules of evidence" in drafting the Confrontation Clause. Lilly, 119 S.Ct. at 1894 (citing Mattox v. United States, 156 U.S. 237, 15 S.Ct. 337, 39 L.Ed. 409 (1895)). We agree with the Fifth Circuit, the only court to decide the issue by published opinion, that hearsay exceptions under Rule 801(d)(2)(D) are firmly rooted. See United States v. Walker, 148 F.3d 518 (5th Cir.1998); United States v. Saks, 964 F.2d 1514 (5th Cir.1992). Accordingly, we find that our decision to allow into evidence Webb's various statements was not erroneous.
V. Conclusion
For the foregoing reasons, all defendants' motions are denied. An appropriate Order will follow.
The Clerk is directed to forward copies of this Memorandum Opinion to counsel of record.
ORDER
For the reasons stated in the accompanying Memorandum Opinion, it is hereby
ORDERED that defendants' Joint Motion to Set Aside the Verdict and Enter an Order for Judgment of Acquittal or for a New Trial be and is DENIED; and it is further
ORDERED that defendant Photogrammetric Data Services, Inc.'s Motion to Set Aside the Verdict on the Basis of Bruton v. United States, and Enter an Order for Judgment of Acquittal or a New Trial be and is DENIED.
The Clerk is directed to forward copies of this Order to counsel of record.
NOTES
[1] 18 U.S.C. § 1020 reads, in pertinent part:
"Whoever ... knowingly makes any false statement, false representation or false report as to the character, quality, quantity, or cost of the material used or to be used, or the quantity or quality of work to be performed, or the costs thereof in connection with the submission of plans, maps, specifications, contracts, or costs of construction of any highway or related project submitted for approval to the Secretary of Transportation; or
Whoever knowingly makes any false statement, false representation, false report, or false claim with respect to the character, quality, quantity, or costs of any work performed or to be performed, or materials furnished or to be furnished, in connection with the construction of any highway or related project approved by the Secretary of Transportation" is guilty of a felony.
[2] The Secretary of Transportation "may delegate, and authorize successive delegations of, duties and powers of the Secretary to an officer or employee of the Department. An officer of the Department may delegate, and authorize successive delegations of, duties and powers of the officer to another officer or employee" of the Department. 49 U.S.C. § 332(b).
[3] Petullo, Schafer, and Gibson are cases involving 18 U.S.C. § 1001. We are aware that jurisdiction is expressly conferred under § 1001 to include "the jurisdiction of the executive, legislative, or judicial branch of the government." Although § 1020 is not as explicit, it nevertheless implicates the authority delegated to the Federal Highway Administrator, who is expressly charged with administering the Federal-Aid Highway Act. See 49 C.F.R. § 1.48(c); 23 U.S.C. § 101, et seq.
[4] The preamble to the Regulations' discussion of § 1020 states that "[w]illful falsification, distortion, or misrepresentation with respect to any facts related to the project is a violation of federal law."
[5] "Labeling a requirement `jurisdictional' does not necessarily mean, of course, that the requirement is not an element of the offense Congress intended to describe and to punish. Indeed, a requirement is sufficient to confer jurisdiction on the federal courts for what otherwise are state crimes precisely because it implicates factors that are an appropriate subject for federal concern ... The significance of labeling a statutory requirement as `jurisdictional' is not that the requirement is viewed as outside the scope of the evil Congress intended to forestall, but merely that the existence of the fact that confers federal jurisdiction need not be one in the mind of the actor at the time he perpetrates the act made criminal by the federal statute. The question, then, is not whether the requirement is jurisdictional, but whether it is jurisdictional only." 420 U.S. at 677 n. 9, 95 S.Ct. 1255.
[6] "Whoever ... for the purpose of executing [a] scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or things whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be [fined or imprisoned]." 18 U.S.C. § 1341 (West 2000)(emphasis on 1994 amendments). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1250143/ | 130 Wis.2d 200 (1986)
386 N.W.2d 510
PULASKI CHASE CO-OPERATIVE, Plaintiff-Appellant,
v.
KELLOGG-CITIZENS NATIONAL BANK, Defendant-Respondent.
No. 85-0386.
Court of Appeals of Wisconsin.
Submitted on briefs January 21, 1986.
Decided March 11, 1986.
*201 For the appellant there were briefs by Mary A. Klass and Lubinski, Rottier & Lubinski of Seymour.
For the respondent there was a brief by John A. Muraski and Nelson & Schmeling of Green Bay.
Before Cane, P.J., Dean and LaRocque, JJ.
LAROCQUE, J.
Pulaski Chase Co-operative appeals a summary judgment granted to Kellogg-Citizens National Bank. Pulaski seeks to recover $6,139.13 representing the face amount of Kellogg's cashier's check issued to Pulaski. The issue is whether Kellogg may *202 stop payment on its cashier's check for failure of consideration. We conclude that because Kellogg dealt directly with Pulaski, it was entitled to raise its defense of failure of consideration regardless whether Pulaski was a holder in due course. We therefore affirm the judgment.
The material facts are undisputed. Pulaski sold farm supplies on credit to Robert Borlee in return for a $6,139.13 personal check drawn on Kellogg. The check was postdated to November 15, 1983. In mid-November, Borlee advised Pulaski that he lacked sufficient funds to cover the check but agreed to replace it with two new checks, one for $3,000 to be cashed immediately and a second for $3,139.13 to be cashed later. Borlee, without Pulaski's knowledge, then placed a stop order on the original $6,139.13 check.
While awaiting delivery of the two new checks, Pulaski queried Kellogg as to funds in Borlees' account and was advised that the account held at least $6,139.13. Thus, rather than obtaining the new checks, Pulaski presented Kellogg the original $6,139.13 check. A Kellogg teller failed to discover a stop order and issued Pulaski a cashier's check in exchange for the Borlees' check.
Kellogg, upon realizing its error, stopped payment on the cashier's check, and Pulaski now seeks the check's face amount. Both parties moved for summary judgment, and the trial court granted Kellogg's motion.[1]
*203 A cashier's check is a draft drawn by a bank upon itself. See J. White and R. Summers, Handbook of the Law Under the Uniform Commercial Code § 17-5 at 681 (2d ed. 1980). Authorities conflict on the question whether a bank can dishonor its cashier's check. Some jurisdictions apply a flat prohibition against dishonoring a cashier's check by the issuing bank.[2] Other jurisdictions disdain a per se rule and allow a bank to dishonor its cashier's check where the check holder has dealt directly with the bank or is not a holder in due course, and where there is a failure of consideration or a fraud perpetrated on the bank.[3]
*204 We conclude that an issuing bank may raise appropriate defenses and refuse to honor its cashier's check held by a party to the instrument with whom the bank has dealt. The proposition upon which an issuing bank is denied the right to stop payment in those jurisdictions so holding is that, unlike an ordinary check, a cashier's check is accepted when it is issued. See secs. 404.403 and 404.303, Stats. We reject that approach because it ignores fundamental principles of equity. As an example, a bank from which a cashier's check has been procured by fraud should be able to defeat liability as long as the check remains in the hands of the remitter who perpetrated the fraud. See Wertz v. Richardson Heights Bank and Trust, 495 S.W.2d 572, 575 (Tex. 1973) (Walker, J., dissenting). The Uniform Commercial Code recognizes general principles of law and equity unless displaced by particular provisions of the code. Section 401.103, Stats. Where the rights of innocent third persons are not involved, there is no overpowering reason to compel a bank to pay its cashier's check without regard to defenses. "[T]he strong considerations of public policy favoring negotiability and reliability of cashier's checks are not germane." TPO, Inc. v. FDIC, 487 F.2d 131, 135 (3d Cir. 1973). Moreover, because the bank, and not its customer, stops payment on the cashier's check, the bank's reputation and credit are not at stake. See Travi Construction Corp. v. First Bristol County National Bank, 405 N.E.2d 666, 668 (Mass App. Ct. 1980). If an innocent third party takes the instrument for value, the result would obviously be different.
*205 Kellogg has established its right to refuse payment. Failure of consideration is a proper defense against any person not having the rights of a holder in due course. Sections 403.408 and 403.306(2), Stats. There was a failure of consideration here because Kellogg received Borlee's stop payment order before it issued the cashier's check and thus had no right to charge the Borlees' account. See Wilmington Trust Co. v. Delaware Auto Sales, 271 A.2d 41, 42 (Del. 1970). Consequently, Kellogg received nothing for the cashier's check.
Pulaski argues that it was a holder in due course and, as such, is immune to a failure of consideration defense. We need not decide that issue because even if Pulaski had been a holder in due course, it would still take the cashier's check subject to the defenses of any party to the check with whom it had dealt. Section 403.305(2), Stats. Failure of consideration is one such defense. Travi Construction, 405 N.E.2d at 669. Kellogg may assert its own defenses as a basis for dishonor although it may not rely on the defenses of any third party. See Louis Falcigno Enterprises v. Massachusetts Bank and Trust Co., 436 N.E.2d 993, 994 (Mass. App. Ct. 1982).
Pulaski's remedy is against the Borlees, both on their underlying obligation and on their contract as drawer. Section 403.413(2), Stats.
By the Court.Judgment affirmed.
NOTES
[1] In summary judgment cases, we follow the same analysis as the trial court. That procedure, discussed in Preloznik v. City of Madison, 113 Wis. 2d 112, 115-16, 334 N.W.2d 580, 582-83 (Ct. App. 1983), need not be repeated here. Pulaski's claim and Kellogg's defense
[2] See Swiss Credit Bank v. Virginia Nat'l Bank-Fairfax, 538 F.2d 587 (4th Cir. 1976); Munson v. American Nat'l Bank and Trust Co. 484 F.2d 620 (7th Cir. 1973); Kaufman v. Chase Manhattan Bank, 370 F.Supp. 276 (S.D.N.Y. 1973); Able & Assocs., Inc. v. Orchard Hill Farms, 395 N.E.2d 1138 (Ill. App. Ct. 1979), overruling Bank of Niles v. American State Bank, 303 N.E.3d 186 (Ill. App. Ct. 1973); National Newark & Essex Bank v. Giordano, 268 A.2d 327 (N.J. Super. Ct. 1970); Moon Over The Mountain, Ltd. v. Marine Midland Bank, 87 Misc. 2d 918, 386 N.Y.S.2d 974 (N.Y. Civ. Ct. 1976); Wertz v. Richardson Heights Bank and Trust, 495 S.W.2d 572 (Tex. 1973).
[3] See TPO, Inc. v. FDIC, 487 F.2d 131 (3d Cir. 1973); National Bank v. Miner, 140 P. 27 (Cal. 1914); Wilmington Trust Co. v. Delaware Auto Sales, 271 A.2d 41 (Del. 1970); Tropicana Pools, Inc. v. First Nat'l Bank, 206 So. 2d 48 (Fla. Dist. Ct. App. 1968); Wright v. Trust Co., 134 S.E.2d 457 (Ga. Ct. App. 1963); State Bank v. American Nat'l Bank, 266 N.W.2d 496 (Minn. 1978); Dakota Transfer & Storage Co. v. Merchants Nat'l Bank & Trust Co., 86 N.W.2d 639 (N.D. 1957). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580134/ | 390 F.Supp.2d 1084 (2005)
Mario VALDES, etc., Plaintiff,
v.
James V. CROSBY, Jr., etc., et al., Defendants.
No. 301CV799J32HTS.
United States District Court, M.D. Florida, Jacksonville Division.
March 31, 2005.
*1085 *1086 Ellis Stuart Rubin, Stuart M. Address, Guy Bennett Rubin, Stuart, FL, Stuart Edward Goldenberg, North Palm Beach, FL, for Plaintiff.
Kevin Anthony Blazs, Ronald S. Wasilenko, Robert H. Ellis, Robert E. Blanchfield, John F. Dickinson, Sarah B. Mabery, Jacksonville, FL, Kimberly L. King, Leslei G. Street, Kelly Overstreet Johnson, Laureen E. Galeoto, Tallahassee, FL, D. Andrew Vloedman, Gainesville, FL, for Defendants.
Susan A. Maher, Tallahassee, FL, for Movant.
ORDER ON MOTIONS FOR SUMMARY JUDGMENT
CORRIGAN, District Judge.
I. Introduction
This case is before the Court on motions for summary judgment filed by defendants Timothy Giebeig (Doc. 278), James V. Crosby, Jr. (Doc. 280), Denise McEachern (Doc. 287), Jimmie Burger (Doc. 288) and *1087 Betty Koon, as personal representative for the estate of A.D. Thornton (hereinafter, "A.D.Thornton") (Doc. 396). These parties have filed supporting memoranda of law (Docs.279, 281, 289, 291, 397) and other evidentiary materials (Docs.282, 283, 284, 285, 286, 299). Plaintiff filed briefs in opposition (Docs.334, 336, 401) with attachments and other supporting materials (Doc. 341, 388, 392). The Court held oral argument on the motions on October 20, 2004.[1]
On July 17, 1999, inmate Joy Frances ("Frank") Valdes died after having been beaten at Florida State Prison ("FSP"). The State of Florida charged nine prison employees with crimes related to Valdes' death ranging from second degree murder to official misconduct. After four prison guards were acquitted at trial, charges against the remaining defendants were dropped. The father of Frank Valdes, plaintiff Mario Valdes, has now brought a civil suit in his own name and on behalf of his son's estate against the corrections officers who allegedly participated in or failed to stop the beatings, medical personnel who allegedly failed to provide Frank Valdes with medical treatment or to protect him from further abuse, and certain supervisory personnel. In his second amended complaint, plaintiff alleges that the actions and inactions of these defendants violated Frank Valdes' constitutional rights in violation of 42 U.S.C. § 1983 and resulted in his wrongful death in violation of Fla. Stat. § 768.20.
Defendants James V. Crosby, Jr. (who, though on vacation July 17, 1999, was the FSP warden at the time of Frank Valdes' death), Timothy Giebeig (who was the prison inspector), A.D. Thornton (who was the acting FSP warden on July 17, 1999, the day Valdes died),[2] Denise McEachern and Jimmie Burger (who were both nurses at FSP) now move for summary judgment claiming that plaintiff has failed to marshal sufficient evidentiary support for his claims and that, even if he has, qualified immunity protects these defendants from this suit.[3] The Court concludes there are no triable issues which would allow plaintiff's case against Giebeig, A.D. Thornton, McEachern and Burger to go forward, but that material issues of fact preclude granting Crosby's motion for summary judgment. The Court emphasizes that it is not finding Crosby liable, only that plaintiff has produced sufficient evidence to permit a jury to decide the case against Crosby at trial.
II. Standard of Review
When ruling on motions for summary judgment, the Court "must view all evidence and all factual inferences therefrom in the light most favorable to the non-moving party." Miller v. King, 384 F.3d 1248, 1258-59 (11th Cir.2004) (citations omitted). "Issues of credibility and the weight to be afforded to certain evidence are determinations appropriately made by a finder of fact and not a court deciding summary judgment." Id. at 1259 (citations and quotations omitted). Summary judgment should only be granted "when the pleadings, depositions, answers to interrogatories, and admissions on file, together *1088 with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Id. (citations and quotations omitted). In other words, "if the record taken as a whole could not lead a rational trier of fact to find for the non-moving party" then "[t]here is no genuine issue for trial" and summary judgment is due to be granted. Id. (citations and quotations omitted).
III. Facts Taken in the Light Most Favorable to Plaintiff[4]
A. Background
The Florida State Prison compound includes a maximum security facility which houses the most difficult and dangerous inmates within the Florida prison system. At FSP, Frank Valdes was a death row inmate housed on X-wing where he was transferred after killing a guard at another Florida correctional institution. X-wing is used to house capital offenders and the inmates at FSP who present the most serious disciplinary problems.
Prison officials at FSP and other facilities sometimes must use physical force against inmates to compel their compliance with directions and each such use of force is to be documented by prison officials. Copies of the use of force forms are forwarded to the warden. When an inmate is to be removed from his cell and refuses to submit to being restrained by handcuffs and leg irons, officials may perform a "cell extraction," wherein four or five officers use physical force to restrain and remove the inmate from his cell. Following a use of force, including cell extractions, the inmate and officials involved are seen by medical personnel who document and treat the injuries, if any, sustained by both officials and the inmate during the use of force.
Prison guards at FSP are sometimes accused by inmates of having committed an abuse of force. When such an accusation is reported on a grievance form, the inspector at the prison initially receives these charges and electronically forwards the information to the Inspector General's central office. In addition to allegations about staff abuse, hundreds of other less serious grievances (involving matters such as exercise privileges and meals) are received *1089 every week by the prison inspector and electronically forwarded on a daily basis to the Inspector General's central office. The central office reviews these inmate grievances and responds to the prison inspector regarding what further action, if any, is to be undertaken by the inspector. Copies of the inspector's report to the central office and of the central office's response are sent to the warden. The central office also receives inquiries about prison conditions from persons outside the prison, such as an inmate's family or government officials whom an inmate or his family may have contacted. Copies of the documentation of such inquiries and directions about what action will be taken are forwarded to the warden.
Although the warden is not permitted to interfere with an investigation,[5] he is in charge of the institution[6] and has the authority to transfer an inmate to another prison or to another location within the prison and to reassign a guard from one area of the prison to another. The warden also has the authority to take measures to attempt to reduce instances of prisoner mistreatment such as increasing training of prison officials, videotaping cell extractions, and rotating officers. Crosby stated that the potential for prisoner abuse by guards at any prison is always present due to the degree of authority the guards must exercise over other human beings. Crosby testified that he would move a guard to a different area if he thought there was a pattern of complaints about that guard's behavior. Crosby further testified that he did everything he could within the limits of his authority to minimize the risk of inmate abuse and to try to create an atmosphere at FSP where abuse would not occur. Crosby Oct. 29, 2003 depo in Mathews (Doc. 341, Ex. 12) at Tr. 243-44.[7]
*1090 Prior wardens at FSP had required officials to videotape cell extractions. Warden Ron McAndrew, the warden before Crosby, testified that FSP had a "notorious reputation" as an institution where guards beat the inmates (McAndrew depo in Mathews (Doc. 341, Ex. 17) at Tr. 33) and he felt staff were more likely to act professionally and inmates were less likely to resist the commands of the guards when they knew they were being videotaped during cell extractions. McAndrew testified that his predecessor at FSP suggested videotaping cell extractions as a method to cut down on problems during uses of force. McAndrew depo in Mathews (Doc. 341, Ex. 17) at Tr. 184. When Crosby became warden, he discontinued the practice of videotaping cell extractions because it was not required and he did not find it helpful.
McAndrew testified that when Crosby succeeded him as FSP warden, the two had several conversations in which McAndrew warned Crosby about certain renegade guards who McAndrew believed were abusive toward inmates and needed to be kept out of high profile areas because "[t]hey were out of hand and [McAndrew] was afraid they would kill an inmate." McAndrew depo in Mathews (Doc. 341, Ex. 17) at Tr. 20. One of the guards McAndrew testified he warned Crosby about in writing was Timothy Thornton, one of the defendants in this case. At the time McAndrew left FSP in February 1998, Thornton (along with Jason P. Griffis, another defendant guard in this case) had recently been present during an X-wing cell extraction following which the inmate was "airlifted by helicopter to a hospital, where he remained for nine days and was treated for extensive injuries and spent several months recuperating." Skrtich v. Thornton, 280 F.3d 1295, 1300 (11th Cir.2002). The inmate's injuries from that incident included "chest trauma with multiple fractures of his ribs and hemopneumothorax, a scalp laceration, injuries to his back, shoulder and knee and abdominal trauma." Id. The inmate's chest "revealed the presence of an extensive amount of injuries with multiple abrasions and contusions and several markings of shoes on his back and left chest" which markings a doctor found "were probably made from a stomping motion as opposed to merely holding [the inmate] down," "consistent with physical abuse." Id. (citations omitted).[8] McAndrew testified that he had moved Timothy Thornton away from areas where he thought Thornton would have opportunities to cause problems. A.D. Thornton, who was an assistant warden under both McAndrew and Crosby, testified that both he and McAndrew had concern about Timothy Thornton. A.D. Thornton depo in Mathews (Doc. 341, Ex. 19) at Tr. 21, 34-35.[9] After Crosby became the FSP warden, Timothy Thornton was promoted to Captain, was permitted to work on X-wing, and was personally selected by Crosby to receive *1091 preferential staff housing. Id. at Tr. 26-27, 39-40.
A.D. Thornton also testified that Crosby was instrumental in bringing Montrez Lucas to FSP; Lucas was transferred to FSP from another correctional institution where he had worked with Crosby. Id. at Tr. 37-38. Lucas, who is named as a defendant in this suit for allegedly participating in the beating death of Frank Valdes, was investigated shortly after Valdes' death for teaching correctional officer trainees improper practices in June 1999 which the Department of Corrections investigation report states included the following: falsifying use of force report forms, having officers corroborate each other's "stories" to "justify" uses of force, taking "free shots" at inmates while they were handcuffed, using chemical agents on inmates without the required notice and even after inmates became compliant, reviewing medical reports before completing use of force forms to ensure conformity between the two, instructing trainees about which areas of the human body could be kicked without leaving bootprints, bringing inmates to the medical ward for treatment of minor injuries and then beating the inmates severely after they had been returned to their cells. Lucas also bragged about how he had been suspended for excessive force but had not been terminated for it. Doc. 341, Ex. 1 (May 25, 2004 deposition of Chase Riveland), at Ex. 6 (DOC Office of Inspector General Investigation # 99-22822, of Official Misconduct involving Montrez Lucas).
Reverend Andrew MacRae, who was an FSP prison chaplain from 1994 until August of 1999 testified about the marked difference in the culture at FSP after Crosby became the warden. MacRae testified that although he never witnessed an inmate being physically abused during any warden's administration, Crosby had a more "hands-off" approach than did prior wardens, thus permitting the "good old boys" network of guards to mistreat inmates. MacRae testified that after Crosby became warden, there were occasions when MacRae was prevented from seeing inmates following uses of force which previously had been a time that he would often offer counsel to those inmates. MacRae was also familiar with the practice of "touching up" an inmate, wherein an inmate would be subjected to minor injuries during an apparently justifiable use of force and then, following corroboration of the injuries by the medical facility, the inmate would be returned to X-wing and beaten. MacRae testified that he believed these instances increased during Crosby's tenure because of Crosby's hands-off approach.
Plaintiff submitted documentation about numerous inquiries regarding alleged inmate abuse by FSP corrections officers which were forwarded to Crosby at FSP by the central office between December 1998 and July 1999. Those letters include reference to an inmate's complaint that he was "being maliciously harassed and threatened by staff" who "threatened to kill" the inmate and that his efforts to remedy the issue at the institutional level had been "to no avail"; an inmate's complaint that officers were falsifying disciplinary reports against him as a means to keep him in close management confinement; a complaint from an inmate's spouse stating that FSP staff had locked her husband in a stripped cell, were depriving him of food and were "threatening to physically abuse" him; an inmate's letter "concerning drug dealing and physical abuse by staff" which also notes that the Department of Corrections agreed to take steps to ensure that the inmate's safety would not be jeopardized because of his testimony as a witness; an inquiry on behalf of an inmate's family members who were "concerned about the inmate's safety since they allege he was beaten by [a *1092 sergeant and] was taken to the hospital for sustained injuries" and had not had contact with him since; an inmate who wrote "alleging fear for [his] life and wishing to file a complaint against four officers" he stated were "trying to kill [him]"; a letter from another inmate who complained of being "harassed and threatened by both staff and other inmates" as a result of his status "as a witness for the State Attorney's Office"; an inquiry on behalf of an inmate who feared for his safety at FSP because he had murdered a corrections officer at another Florida correctional institute more than 15 years earlier; a letter from a death row inmate to the Florida Department of Law Enforcement ("F.D.L.E."), asking it to investigate his claims that supervisory staff at FSP failed to investigate allegations that prison officials assigned to death row permitted a violent inmate to be out of his cell without restraints so that he could threaten and intimidate other inmates; letters from several different inmates claiming that corrections officers had threatened to kill them; and a letter on behalf of an inmate discussing allegedly criminal acts committed by various guards, and questioning the need for officers to continue to use force against an inmate once he has already been restrained by handcuffs and shackles. See Crosby Oct. 29, 2003 depo in Mathews (Doc. 341, Ex. 12) at Ex. 1.
In a March 25, 1999 meeting of FSP supervisory personnel attended by both Giebeig and Crosby,[10] there was a discussion about the frequency with which certain officers were being accused of abusing inmates and what steps might be taken to remedy the situation. See Giebeig depo in Mathews (Doc. 341, Ex. 14) at Ex. 7.
Plaintiff also references an inmate request form received by Crosby's office on June 16, 1999 a month prior to Valdes' death, which reads, in relevant part:
TO: Superintendent
FROM: Inmate Name: Seburt Connor
Inportant [sic] message to Mr. Warren [sic] James Crosby. The Superintendent. Please remove Mr. Frank Valdez [sic] from X Wing! His life can be in danger! I was told by one of the guards! That he is going to die! But please dont [sic] call my name! Cause my life can be in danger too!! I have already seen an attemp [sic] on his life! I repeat dont [sic] say where you get this information! They might try to kill me too! Please note, these are the mens [sic] that I [have] seen tortureing [sic] Mr. Frank Valdez [sic][as] follows?
Connor's letter then lists the names of four officers (none of whom are defendants here) who allegedly kicked Valdes while he was face down with his arms handcuffed behind his back and a chain around his waist, while they held a wet towel over his mouth and nose and restrained his feet. See Doc. 338, Exhibit 1 [marked Plaintiff's Exhibit D (BATES # 000162)].[11]
A few days before Valdes died, Giebeig and Crosby received notice of potential inmate abuse involving another X-wing inmate, Willie Mathews. Mathews had arrived at FSP on July 4, 1999 along with four other inmates from Hamilton Correctional Institution following a riot at Hamilton *1093 in which several guards (including one who was pregnant) were seriously injured. At FSP, Mathews was placed in isolation on X-wing. On or before July 13, 1999, both Crosby and Giebeig were called by Mathews' mother who reported that she had received a letter from an officer working at the prison who wrote that her son, Willie Mathews, was in danger and was being abused by prison guards. In response, on July 13, Giebeig saw Mathews who complained he had been assaulted and his jaw was injured. Giebeig also spoke to the inmate in the next cell "who stated that he did not hear or see anything concerning inmate Mathews and did not want to get involved." See Giebeig depo in Mathews (Doc. 341, Ex. 14) at Ex. 2. Giebeig testified that he "had conversations with [Crosby] every day on everything going on at FSP" and that therefore Giebeig was "almost positive" that by July 13, 1999, Crosby was aware of Mathews' allegations that he was being attacked on X-wing (Giebeig depo in Mathews (Doc. 341, Ex. 14) at Tr. 115). Giebeig later testified that he was "sure somewhere between the 13th and the ... 16th" of July 1999, he "spoke with him [meaning Crosby] ... concerning the Mathews allegations" (Giebeig depo in Valdes (Doc. 283) at Tr. 28-29). Giebeig further testified that he had no actual recollection of telling Crosby that Mathews' jaw was broken. Id. at Tr. 36-48.
On July 15, 1999, two days before Valdes died, Mathews filed an emergency grievance stating that he was in fear for his life and was suffering from an untreated broken jaw following repeated brutal assaults by prison guards on X-wing. Mathews urged authorities to send someone to come get him and the other inmates who had come from Hamilton "before we are killed." See Mathews' grievance, attached as Exhibit 1 to Doc. 158 (Plaintiff's Second Amended Complaint).[12] Mathews was seen by a prison dentist who originally failed to diagnose that Mathews' jaw was broken, but by July 16, 1999, Giebeig was advised by dental staff that Mathews did in fact have a fractured jaw and Giebeig apparently reported this information to the acting warden, A.D. Thornton.[13] No use of force form was ever filed which might have explained such an injury.
Both Crosby and Giebeig testified that most prisoner complaints are unsubstantiated and Giebeig testified that upon investigation (which can involve review of medical records, interviewing inmates, officials and other witnesses), he has never found an allegation of excessive force to be substantiated. Crosby testified that he sometimes delegated the responsibility for reviewing and acting on inmate complaints to his secretary and indeed, nearly all of the above noted correspondence regarding alleged inmate abuse by guards contain notations of an "r" next to Crosby's initials, which Crosby testified indicated that his secretary (R honda Horler) may have handled the matter without him becoming involved or having specific knowledge of the complaints or her response. See Crosby Oct. 23, 2003 depo in Mathews (Doc. 341, Ex. 12) at Tr. 260-63.
These facts, viewed in the light most favorable to plaintiff for summary judgment purposes, provide the backdrop *1094 against which the events of July 17, 1999 unfold.
B. Events of July 17, 1999
Raymon Hanson was an FSP corrections officer working on E-wing on July 17, 1999. In a sworn statement given on January 22, 2000 and by later deposition, Hanson testified that on the morning of July 17, 1999, his E-wing assignment was changed when Sergeant J.P. Griffis instructed Hanson that he was needed to assist in an X-wing cell extraction. Hanson changed into protective gear, including a helmet, protective vest, elbow pads, knee pads, gloves, a pair of boots and an electronic shield and proceeded to X-wing where he was told that inmate Frank Valdes had threatened Sergeant Lucas and may have a chemical grenade in his cell. Hanson knew that Valdes was on death row for killing a guard at another facility during an escape attempt and he was familiar with Valdes' reputation of being a dangerous inmate who had been known to have weapons in his cell in the past.
Hanson testified that while he and other officers were preparing for the extraction, Sergeant Griffis told Captain Timothy Thornton that "Valdes has had this coming to him." See Doc. 334, Exhibit 3 (Hanson statement) at Tr. 13. Based on his past experience participating in cell extractions, Hanson took this statement to mean that the officers "were going to go down there and teach [Valdes] that he can't be threatening officers and he has to comply with the rules, that being on disciplinary confinement wasn't enough, that some physical punishment was going to have to be inflicted on him." Id. at Tr. 13-14.
Accompanied by Sergeants Griffis, Saul and Brown, Hanson, who is 6' 4" tall and at the time weighed approximately 310 pounds, was to be the first officer into the cell. Officers Lewis, Beck and Stanford, Sergeant Lucas and Captain Thornton were all present but were not part of the extraction team. On X-wing, Hanson smelled the strong odor of gas which he assumed had been used on Valdes in failed attempts to peaceably extract him from his cell. When Valdes' cell door was opened, Hanson attempted to back away because of irritation to his eyes, skin and nose caused by the severe gas fumes emanating from Valdes' cell. At the time, Valdes, who was wearing only boxer shorts, was standing in the center of the cell holding a towel to his face. One of the sergeants held Hanson in place and, while Captain Thornton stood in the doorway, Hanson then proceeded to enter Valdes' cell where Valdes was now curled up on the floor in a fetal position, with his hands covering his face and head. Valdes was not resisting or acting aggressively and no weapons were visible in his cell. Hanson had intended to pin Valdes to the ground and to discharge his electronic shield on Valdes but the shield had become caught on the doorway and accidentally discharged on another officer. Hanson testified that while he then moved out of the way to put the shield on the cell bunk, the other officers began punching, striking and kicking Valdes, who remained on the ground, not showing any signs of resisting. Valdes was turned onto his stomach and Hanson then came over and stood on Valdes' legs to prevent Valdes from kicking anyone while the other officers continued punching him. Hanson stated that he then kicked Valdes in the buttocks out of frustration and then left the cell because he was having difficulty breathing due to the gas fumes.
After getting a towel to wipe his face, Hanson returned to the cell where he saw Sergeant Brown violently kicking Valdes in the midsection, while saying to Valdes, "Who you gonna kill now, [expletive]?" Hanson then left the cell to tell Officer Beck to get a pair of leg irons. When Hanson returned, Valdes was in the doorway *1095 of the cell, and Sergeant Brown's boot was in Valdes' face. Captain Thornton then directed Valdes to stand up and when he did not, Hanson testified that Captain Thornton put a hand-held electronic restraint device to Valdes' forehead and released the trigger, shocking Valdes with an electric charge. Valdes, who was handcuffed by this point, was then dragged out of the cell and placed on the ground. When he refused to stand, Captain Thornton slapped him across the face.
Officers then put Valdes on a cart and wheeled him to the medical clinic (about 1/4 mile away from X-wing) where one of the officers helped Valdes walk into the emergency room where he then laid down on an examining table. Hanson testified that Nurse Denise McEachern saw Valdes first and that she told the officers that she wanted a male nurse to handle Valdes. McEachern told investigators that she observed Valdes slumped forward with blood on his face. She knew Valdes had a reputation for being dangerous around females and for her own safety she decided to have Jimmie Burger, an available male nurse, examine Valdes. Hanson testified that after McEachern left, Sergeant Griffis punched Valdes in the mid-section and Valdes then sat up on the examining table. McEachern stated that she may have seen Captain Thornton slap Valdes at some point as she passed the room.
Nurse Jimmie Burger came to the room to examine Valdes. Sergeant Brown and Captain Thornton remained with Valdes while the other officers were examined in another room by Nurse McEachern and Nurse Robin Rash, who was called to assist so that the officers, who reeked of the chemicals used in Valdes' cell, could leave more quickly. Nurse Burger testified that during the approximately 25 minutes he spent examining Valdes, he observed him to be alert, oriented and responsive and suffering from only minor injuries typical of those sustained during a cell extraction, including an abrasion on his lip, a recent bloody nose, some discoloration to his right shoulder and three circular red marks down his left side which Burger believed were marks indicating use of an electronic shield. Burger testified that Valdes' vital signs were normal. Nurse Rash briefly saw Burger with Valdes while Rash was in the clinic preparing to assist Nurse McEachern with her examination of the officers. Nurse Rash's observations of Valdes' condition are consistent with the report from Burger.
During his exam of Valdes, Burger believed that one of the officers intentionally harassed Valdes by shining a surgical light into his face, although this did not interfere with Burger's ability to complete the exam and did not result in injuries to Valdes. Also, when Burger momentarily left the room, he said he heard a loud noise that sounded perhaps like a slap but he was not sure the sound came from the room where Valdes was. Citing several examples of inmates who had been seriously injured in the past, Burger stated that he knew that officers sometimes subjected an inmate to minor injuries during a use of force and later, after a medical exam confirmed the minor injuries, the officers would take an inmate back to his cell "and beat him half to death." See F.D.L.E. Investigative Report # 514, transcript of November 22, 1999 undercover meeting at Tr. 49. Burger stated that he had a "negative feeling" about the manner in which officers were treating Valdes. However, Burger determined that there was not a basis to call a doctor[14] or to keep Valdes in *1096 the medical department for observation and he therefore authorized his release.[15]
Once Valdes was released from medical, Hanson accompanied officers who pushed Valdes in a wheelchair back to an empty cell on X-wing. Hanson testified that shortly thereafter, the officers involved in the cell extraction gathered in a room to complete their use of force forms, using the medical reports and falsified information to justify their actions and Valdes' injuries. Hanson testified that the injuries he observed on Valdes included a small amount of blood coming out of his mouth or nose and some abrasions to his chest or shoulder area. Hanson further testified that Officer Sauls reported that Valdes had a boot print on his neck which Sauls said he had inflicted while restraining Valdes. Hanson stated that Valdes was not having difficulty breathing and Hanson did not think Valdes' injuries were very significant. Hanson depo at Tr. 123, 185. When Hanson later viewed photographs of Valdes taken at the time of his death, he thought that Valdes' condition in those photographs was significantly different than his condition following the cell extraction. Once the use of force forms were completed, Hanson returned to his other assignments and did not see Valdes again before his shift ended that afternoon.
Nurse McEachern testified that at about 2:00 p.m. that day she was called by Captain Thornton who reported that an inmate (later identified as Valdes) on X-wing had sustained a facial laceration during an intentional fall from his bunk but that the inmate stated that he was all right. Thornton reported that McEachern told Thornton that "she would pass it on to the next shift." See Doc. 254, Ex. D (Department of Corrections FSP July 17, 1999 6:58 p.m. incident report from T.A. Thornton, Capt.). McEachern states that Thornton advised her that the inmate's injuries were not serious and he agreed that she could examine the inmate when *1097 she made her scheduled rounds around 3:00 p.m. Officer Beck reported that he began checking on Valdes every 15 minutes after he observed him intentionally fall from his bunk. See Doc. 254, Ex. D (Department of Corrections FSP July 17, 1999 6:58 p.m. incident report from Dewey Beck). Beck reported that when he observed Valdes at 3:00 p.m., Valdes again intentionally fell to the ground but again reported that he was fine. Beck reported that upon observation at 3:15 p.m., Valdes was "lying on the floor looking like he wasn't breathing." Id. Beck then called medics. Id.[16]
As she prepared to make her 3:00 p.m. rounds, McEachern received the call that emergency medical assistance was needed on X-wing. Nurse Helen Roberts, who was present at the time, testified that McEachern told Roberts that it was inmate Valdes "just acting up again" and they would see him during their rounds. See Doc. 334 at Exhibit A (partial transcript of Roberts' testimony from state criminal proceeding).[17] Another call came moments thereafter insisting that medical attention be sent to X-wing immediately. Roberts testified that even then McEachern reported that she had seen Valdes earlier in the day, that he was okay and that he would be fine. Id. The nurses then made their way to X-wing where they learned that Valdes was in cardiac arrest. McEachern assisted two officers who were performing CPR on him. The officers reported that when they began CPR on Valdes he did not have a pulse and was not breathing. Officers reported to McEachern that Valdes had apparently injured himself by repeatedly throwing himself off his bunk onto the concrete floor. They put Valdes onto a stretcher and brought him back to the medical unit where McEachern began an IV while officers continued CPR. Rescue units arrived shortly thereafter and took Valdes to a hospital where he was pronounced dead at 4:18 p.m. on July 17, 1999. The medical examiner's autopsy of the following day revealed
[m]ultiple blunt traumatic injuries including contusions, abrasions and lacerations of face and scalp, fracture of mandible; patterned and unpatterned abrasions and contusions on anterior and posterior trunk, multiple serial rib fractures of right and left halves of ribcage, fracture of sternum, right and left hemothoraces, and subcutaneous emphysema extending from lower face to scrotum; lacerations and hemorrhage of gut mesenteries and liver capsule; hemorrhage within and around right adrenal gland; abrasions of right and left legs from knee to ankle level and linear abrasions on right and left wrists.
See Doc. 299, Exhibit 8. The medical examiner found these injuries to be fresh, having occurred within five to ten minutes of *1098 Valdes' death. Id. The probable cause of death was listed as "beating." Id.[18]
The State of Florida brought criminal charges of murder, conspiracy, battery and official misconduct against several of the guards who were allegedly involved in the death of Frank Valdes. After four of those officers were tried and acquitted, charges were dropped against the others. The Department of Justice has confirmed that it is investigating this case; thus federal criminal charges arising out of Valdes' death are still possible.[19] Because of this possibility, the defendant guards (with the exception of Raymon Hanson, whose testimony is described above) have refused to testify in this case, claiming Fifth Amendment privilege. The guards have not sought summary judgment; thus, regardless of the outcome of the motions filed by Crosby, Giebeig, A.D. Thornton, McEachern, and Burger, the case will proceed to trial against the guards.[20]
IV. Relevant Legal Principles
A. Eighth Amendment Jurisprudence
Plaintiff has sued defendants for compensatory and punitive damages claiming that they violated Frank Valdes' Eighth Amendment right to be free from cruel and unusual punishment. "The Constitution does not mandate comfortable prisons, but neither does it permit inhumane ones, and it is now settled that `the treatment a prisoner receives in prison and the conditions under which he is confined are subject to scrutiny under the Eighth Amendment.'" Farmer v. Brennan, 511 U.S. 825, 832, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994) (citations and quotations omitted). "In its prohibition of `cruel and unusual punishments,' the Eighth Amendment places restraints on prison officials, who may not, for example, use excessive physical force against prisoners." Id. "Being violently assaulted in prison is simply not part of the penalty that criminal offenders pay for their offenses against society." Id. at 833, 114 S.Ct. 1970 (citations and quotations omitted). However, "[i]f prison conditions are merely restrictive and even harsh, they are part of the penalty that criminal offenders pay for their offenses against society." Miller, 384 F.3d at 1260. "Prison conditions rise to the level of an Eighth Amendment violation only when they involve the wanton and unnecessary infliction of pain." Id. Here, if it can be shown that prison guards unnecessarily beat Valdes, causing his *1099 death, his Eighth Amendment rights would be violated by those who participated in the beatings.[21]
1. Supervisory Liability
In his claims against the three supervisory officials, Crosby, Giebeig, and A.D. Thornton, additional legal principles apply because "supervisory officials are not liable under § 1983 for the unconstitutional acts of their subordinates on the basis of respondeat superior or vicarious liability." Miller, 384 F.3d at 1261 (citations and quotations omitted). Rather, "[s]upervisory liability under § 1983 occurs only when the supervisor personally participates in the alleged unconstitutional conduct or when there is a causal connection between the actions of a supervising official and the alleged constitutional deprivation." Id. (citations and quotations omitted).
A causal connection may be demonstrated when "a history of widespread abuse puts the responsible supervisor on notice of the need to correct the alleged deprivation, and he or she fails to do so," or when "a supervisor's custom or policy results in deliberate indifference to constitutional rights," or when the "facts support an inference that the supervisor directed the subordinates to act unlawfully or knew that subordinates would act unlawfully and failed to stop them from doing so." Id. (citations and quotations omitted). "The deprivations that constitute widespread abuse sufficient to notify the supervising official must be obvious, flagrant, rampant, and of continued duration, rather than isolated occurrences." Brown v. Crawford, 906 F.2d 667, 671 (11th Cir.1990). "The standard by which a [prison] supervisor is held liable in his individual capacity for the actions of a subordinate is extremely rigorous." Cottone v. Jenne, 326 F.3d 1352, 1360 (11th Cir.2003).
2. Deliberate Indifference to an Inmate's Medical Needs
Plaintiff alleges that Nurses Denise McEachern and Jimmie Burger violated Frank Valdes' Eighth Amendment right to be free from cruel and unusual punishment by failing to attend to his serious medical needs. A prison official's "deliberate indifference to the serious medical needs of prisoners constitutes the unnecessary and wanton infliction of pain ... proscribed by the Eighth Amendment." Estelle v. Gamble, 429 U.S. 97, 104, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976) (citations and quotations omitted). While "[t]he standard of care applicable to nurses is universal, and does not diminish when the setting is a jail rather than a hospital." McDowell v. Brown, 392 F.3d 1283, 1296 (11th Cir.2004), "not every claim by a prisoner that he has not received adequate medical treatment states a violation of the Eighth Amendment." Farrow v. West, 320 F.3d 1235, 1243 (11th Cir.2003) (citations and quotations omitted). "The inadvertent or negligent failure to provide adequate medical care cannot be said to constitute an unnecessary and wanton infliction of pain." Id. (citations and quotations omitted).
"To show that a prison official acted with deliberate indifference to serious medical needs," a plaintiff must first "set forth evidence of an objectively serious medical need," which, in this Circuit, "is considered one that has been diagnosed by a physician as mandating treatment or one *1100 that is so obvious that even a lay person would easily recognize the necessity for a doctor's attention," such that "if left unattended, [would] pose[ ] a substantial risk of serious harm"; and second, the plaintiff must show that the official responded to this serious medical need with "deliberate indifference." Id. A plaintiff may establish a constitutional deprivation by demonstrating that his serious medical needs were met with "treatment so cursory as to amount to no treatment at all" or "delay of treatment for obviously serious conditions where it is apparent that delay would detrimentally exacerbate the medical problem, the delay does seriously exacerbate the medical problem, and the delay is medically unjustified." Taylor v. Adams, 221 F.3d 1254, 1259-60 (11th Cir.2000) (quotations and citations omitted). See also, Brown v. Johnson, 387 F.3d 1344, 1351 (11th Cir.2004) (reaffirming above statement of the current law).
C. Qualified Immunity
The five defendants before the Court on these motions each claim that even if plaintiff has created a triable issue concerning whether any of them committed a constitutional violation, qualified immunity protects them from liability in this suit. "Qualified immunity protects government officials acting within their discretionary functions from liability for civil damages as long as their conduct does not violate clearly established statutory or constitutional rights that a reasonable person would have known." Skrtich v. Thornton, 280 F.3d 1295, 1302 (11th Cir.2002) (citations omitted). The relevant inquiry is "whether it would be clear to a reasonable [official] that his conduct was unlawful in the situation he confronted." Id. (citations and quotations omitted).
Thus, assuming the officials have acted within their discretionary functions (and there is no suggestion here that they did not), at the summary judgment stage, the qualified immunity analysis involves a two-step process first, has plaintiff put forth sufficient evidence to show that a jury could reasonably find that one or more of these defendants violated Valdes' constitutional rights and second, was it clearly established under the law at the time that their conduct would violate those rights.[22]
D. State Law Claim
Defendants further argue that because plaintiff has failed to demonstrate that his federal § 1983 claims are sustainable, his state law claim for wrongful death is due to be dismissed because the basis for the Court's supplemental jurisdiction over this claim (which indisputably arises out of the same nucleus of operative facts as plaintiff's federal claims) will be extinguished. The defendant nurses further claim that they are immune from suit for plaintiff's state law claims under the Sovereign Immunity Act, Fla. Stat. § 768.28. Defendants Crosby and Giebeig additionally argue that plaintiff has failed to offer sufficient evidence to support a wrongful death action.
V. The Court's Decision
A. Plaintiff's § 1983 Claims
1. Defendant James V. Crosby, Jr.
As stated above, supervisory liability can only be established in one of two ways either by showing personal participation by a supervisor in a constitutional violation or by demonstrating "a causal connection between the actions of a supervising official and the alleged constitutional deprivation." Miller, 384 F.3d at *1101 1261. Plaintiff contends that the facts support his claims against Crosby in both these ways. However, there is no evidence that Crosby personally participated in the beating of Valdes or that any guards were following specific direction from Crosby in using excessive force against Valdes. Thus, the acts and omissions alleged by plaintiff are not of a type which could support a claim of "personal participation" by Crosby. Cf., H.C. by Hewett v. Jarrard, 786 F.2d 1080, 1087 (11th Cir.1986) (finding superintendent's actions of throwing detainee against wall and then denying him medical treatment implicated him personally). See also, Brown v. Crawford, 906 F.2d 667, 671 (11th Cir.1990) (examining only whether causal connection could be established based on widespread history of objectionable conditions without regard to personal participation analysis because jail director had no direct involvement in creating those conditions); Goodson v. City of Atlanta, 763 F.2d 1381, 1388 (11th Cir.1985) (describing how jail director's failure to properly train or supervise his employees, coupled with his knowledge of resulting constitutionally deficient conditions of incarceration, sufficiently supported liability of director in his role as supervisor, even though director had no personal participation or involvement in constitutional deprivation); Adams v. Franklin, 111 F.Supp.2d 1255, 1265 (M.D.Ala.2000) (noting that sheriff and jailer were not even present at jail on night plaintiff was allegedly denied necessary medical treatment and plaintiff properly did not allege any personal participation by those supervisors).
The Court therefore turns to plaintiff's claim that he can establish liability through a causal connection between Crosby's actions and the alleged constitutional deprivation committed by Crosby's subordinates. Generally in such inquiry, the Court first addresses the involvement of the supervised employee(s) who have allegedly committed the Eighth Amendment violation. See e.g., Cottone, 326 F.3d at 1358-59, 1361 (establishing first that plaintiff sufficiently stated claim that guards had committed constitutional violation of prisoner's rights by failing to monitor inmates and then addressing whether any causal connection existed between actions or omissions of supervisory officials and guards' actions). At this juncture, however, the supervised employees (the guards) have not moved for summary judgment and Crosby, Giebeig, and A.D. Thornton, the supervisory officials, have not attempted to refute the evidence that Valdes died because of a beating administered in violation of the Eighth Amendment. Indeed, the Court need look no further than the medical examiner's autopsy report described above to find that plaintiff has created a triable Eighth Amendment issue. See Doc. 229, Exhibit 8 (medical examiner's report detailing the "multiple blunt traumatic" and "fresh" injuries covering Valdes's body from his face to his ankles, including multiple broken bones and internal hemorrhaging, all of which led the medical examiner to determine that the probable cause of death was "beating"); see also, Skrtich, 280 F.3d at 1302 (holding that "[t]he undisputed evidence in [the] record reflected that Skrtich had been electrically shocked to render him unable to resist, and then kicked, punched and beaten," and noting that "[i]n the absence of any evidence that any force, much less the force alleged here, was necessary to maintain order or restore discipline, it is clear that Skrtich's Eighth Amendment rights were violated").
Having sufficiently established for the purposes of these motions that a constitutional violation occurred, plaintiff must further show the existence of "a causal connection between the actions of a supervising official and the alleged constitutional deprivation" which can be established *1102 when "a history of widespread abuse puts the responsible supervisor on notice of the need to correct the alleged deprivation, and he or she fails to do so," or when "a supervisor's custom or policy results in deliberate indifference to constitutional rights," or when "facts support an inference that the supervisor directed the subordinates to act unlawfully or knew that subordinates would act unlawfully and failed to stop them from doing so." Miller, 384 F.3d at 1261 (citations and quotations omitted).
Plaintiff has produced evidence from which a jury could find that Crosby received copies of all the complaints referenced above (and many more not specifically cited) concerning the abuse of inmates by guards at FSP, including allegations of abuse against Valdes; Crosby had been specifically warned by his predecessor about certain renegade guards whose abuse of inmates was so severe that the prior warden felt one of them might kill an inmate if not stopped; and that Crosby's own staff held a meeting in which they raised concern about the frequency with which certain guards were being accused of abusing inmates.
Plaintiff has also presented evidence that Crosby, who was in charge of FSP, had a reputation for being a "hands-off" warden; regularly delegated responsibility for his office's grievance response management to his secretary, admitting that she often exercised full authority over the handling of grievance management without any input from Crosby; elected to end videotaping of cell extractions because it was not required even though other wardens felt it led to staff acting more professionally; promoted and gave preferential treatment to Timothy Thornton, the guard who former warden McAndrew had warned Crosby might "kill an inmate"[23] and who had recently been involved in a cell extraction where the inmate's resulting injuries were so severe that he was life-flighted to a hospital for treatment; failed to keep guards with known records of alleged abuse away from assignments near at-risk inmates such as those on X-wing; and failed to properly investigate the complaints of Mathews, an incident in which an X-wing inmate in isolation sustained a broken jaw and no use of force form was on record to explain the injury, and Connor, the inmate who warned Crosby that guards were planning to kill Valdes.
This evidence, taken together, is sufficient to entitle plaintiff to attempt to prove at trial that inmate abuse at the hands of guards was not an isolated occurrence but rather occurred with sufficient regularity as to demonstrate a history of widespread abuse at FSP. Whether Crosby actually drew the inference of widespread abuse and was therefore "on notice of the need to correct or to stop" abuse by officers[24] then becomes a factual question for the jury. Cottone, 326 F.3d at 1362; Smith v. Brenoettsy, 158 F.3d 908, 913 (5th Cir.1998) (holding that where plaintiff pointed to record facts to suggest that warden had requisite knowledge that guard posed substantial risk of serious harm, question of whether warden "actually drew the inference" was question of fact for jury).
All of this evidence, again taken together, is also sufficient to allow a jury to consider whether Crosby had established customs and policies that resulted in deliberate indifference to constitutional violations and whether Crosby failed to take *1103 reasonable measures to correct the alleged deprivations. Cottone, 326 F.3d at 1360. See also, Miller, 384 F.3d at 1263 (finding that plaintiff had created a triable issue as to whether warden was liable either personally or in his supervisory capacity based on warden's knowledge of inmate's conditions and his failure to exercise authority as warden to ensure that guards corrected the conditions); Smith, 158 F.3d at 912-13 (dismissing warden's appeal of denial of summary judgment in light of factual disputes as to warden's knowledge of substantial risk and reasonableness of warden's response where plaintiff, who was stabbed by a prison guard, sent letters to warden complaining of verbal abuse and threats by guard and warden responded that sheer volume of unsubstantiated complaints made investigation of every complaint unreasonable).
Thus, given the facts as described above (which the Court reiterates are presented in the light most favorable to plaintiff[25]), plaintiff has produced sufficient evidence to create a triable issue as to whether a causal connection can be established between Crosby's actions and the alleged constitutional deprivation.[26]
Crosby, however, claims that even if plaintiff has established a constitutional violation, Crosby is protected by qualified immunity. Although it was clearly established that Valdes' constitutional rights would be violated if he were beaten to death by guards using excessive force[27] (for purposes of these motions, the Court must assume that is what occurred here), it is not the liability of the guards that is at issue in this motion but, rather, that of the warden. Thus, the question is whether it was clearly established at the time of Valdes' death that a warden could face liability under § 1983 predicated on his failure to take reasonable steps in the face of a history of widespread abuse which created a known substantial risk of serious harm to inmates or his adoption of custom or policies which result in deliberate indifference to the constitutional rights of prison inmates. The answer is "yes"; in 1999 (when Valdes died) it was clearly established that a warden, the person charged with directing the governance, discipline, and policy of the prison and enforcing its orders, rules, and regulations (see Fla. St. § 944.14), would bear such liability. See, e.g., LaMarca v. Turner, 995 F.2d 1526, 1539 (11th Cir.1993) (holding that prison warden could face liability when his failure to take appropriate measures to improve prisoner safety created a climate which *1104 preordained the violence which ensued);[28]Fundiller v. City of Cooper City, 777 F.2d 1436, 1443 (11th Cir.1985) (holding safety director whose responsibility included disciplining police officers and setting police department policy could be liable for failing to take corrective steps in the face of pattern of excessive force engaged in by officers).
The Court will deny Crosby's motion for summary judgment as to Count I. As required in summary judgment practice, this ruling is based on facts cast in the light most favorable to plaintiff and construing all reasonable inferences in plaintiff's favor. It is clear from the depositions that much of the evidence upon which plaintiff relies will be strongly disputed, no doubt causing a jury to wrestle with difficult credibility choices. Nonetheless, based on the evidence presented and the controlling Eleventh Circuit precedent, plaintiff must be permitted to proceed to trial against Crosby. Miller, 384 F.3d at 1262 (noting that, while defendants "hotly dispute" plaintiff's assertions, plaintiff's "evidence creates genuine issue of material fact" regarding Eighth Amendment violation).[29]
2. Defendant Timothy Giebeig
The analysis of the potential liability of Giebeig, the FSP inspector, falls along the same lines as that described for Crosby. First, there is no evidence that Giebeig personally participated in the alleged beating of Valdes or directed others to participate. Second, like Crosby, Giebeig received copies of the extensive documentation related to alleged inmate abuse by guards. He also attended the meeting in which concerns were raised about this issue. A reasonable jury could infer that Giebeig was also on notice of a widespread history of abuse of inmates.[30]
*1105 However, whether Giebeig failed to take steps to abate that risk is a closer question. Unlike the presentation of evidence against the warden, Crosby, plaintiff has not shown measures that Giebeig was tasked with handling but failed to take; rather plaintiff takes issue with the thoroughness of the steps Giebeig did take.
The uncontroverted evidence reveals that Giebeig's role was to gather the initial information about certain incidents including reports of abuse and forward his findings to the Inspector General's Office which determined what further action, if any, would be undertaken by Giebeig as the inspector at the prison. See generally, Giebeig depo in Mathews (Doc. 341, Ex. 14) at Tr. 21-24, 27-28; Giebeig depo in Valdes (Doc. 283) at Tr. 50-51. Once a matter was referred back to Giebeig for further investigation from the Inspector General (which Giebeig testified did not generally occur until a day or more after the reported incident),[31] Giebeig's role expanded to collecting additional information by interviewing inmates, staff, medical personnel, or other witnesses; reviewing reports and other documentation such as log books; taking photographs and visually inspecting scenes and other such measures to make an assessment of whether the allegations could be substantiated. See Giebeig depo in Mathews (Doc. 341, Ex. 14) at Tr. 28-48. Once Giebeig's report was complete, he forwarded it to the Inspector General (with a copy to the warden). In the event the Inspector General had only called for an internal investigation, any additional information was gathered at the direction of the warden who was given a copy of any resulting report, as was the Inspector General's office. Giebeig depo in Valdes (Doc. 341, Ex. 13) at Tr. 50-51.
While the documentation of Giebeig's investigations into complaints such as that of Mathews may leave open the question as to whether more could have been done (such as, for example, probing further to determine what exactly it was that the inmate next to Mathews did not want to get involved with when he was questioned about Mathews), and although Giebeig's failure to substantiate a single instance of inmate abuse is questionable, this alone is insufficient to create liability. The evidence established that Giebeig was responsible for investigating incidents and reporting his findings to others (see Giebeig depo in Valdes (Doc. 283) at Tr. 45-47 (testifying that inspector's obligation is to report activity and role of warden is to act on it)); no evidence suggested that Giebeig was responsible for or had the authority to prevent or correct problems relating to abusive guards. Thus, the Court finds plaintiff has failed to create a triable issue as to whether Giebeig violated plaintiff's constitutional rights because plaintiff has not demonstrated a causal connection between Giebeig's actions (or inactions) and the alleged constitutional deprivation.[32] Giebeig's summary judgment motion is therefore due to be granted as to Count I.[33]
*1106 3. Defendant A.D. Thornton
Plaintiff's claim against A.D. Thornton as a supervisory official can only be established by showing personal participation in a constitutional violation or by demonstrating a causal connection between the supervisor's actions and the deprivation. Although A.D. Thornton was at FSP on July 17, 1999, plaintiff has pointed to no evidence that A.D. Thornton participated in or was aware of the circumstances surrounding Valdes' death.[34] Thus, the Court considers only whether plaintiff has demonstrated any causal connection between A.D. Thornton's actions and the constitutional deprivation allegedly committed by the guards. Though plaintiff's second amended complaint alleges that A.D. Thornton was involved in supervisory decisions, plaintiff has failed to support these allegations with any evidence to show that A.D. Thornton, or assistant wardens generally, had any policy-making role at FSP, or that A.D. Thornton was aware of any "culture" of widespread abuse at FSP. A.D. Thornton testified that while he and the prior warden McAndrew often discussed problem guards, he did not recall ever having such conversations with Crosby. Although A.D. Thornton was the acting warden on July 17, 1999, the day Valdes died (and perhaps the day before as well), this alone is insufficient to hold him liable for Valdes' death under § 1983. Plaintiff having offered no evidence to support a finding that any action by A.D. Thornton had any causal connection to the alleged actions of the guards, A.D. Thornton's motion is due to be granted as to Count I.[35]
4. Defendant Jimmie Burger
As set forth above, to establish a prison official's deliberate indifference to a serious medical need, plaintiff must first set forth evidence of an objectively serious medical need that if left unattended would pose a substantial risk of serious harm. *1107 Farrow, 320 F.3d at 1243. The Court finds that Valdes did not have an objectively serious medical need when seen by Nurse Burger in the medical clinic following the morning cell extraction. Although the abuse Valdes sustained in his cell (as described by Hanson) certainly had the potential to create serious injuries requiring further attention, the unrebutted medical evidence is that Burger's exam revealed that Valdes suffered minor injuries consistent with those seen by medical personnel in prisons following cell extractions and there was no basis for Nurse Burger to order further treatment. Thus, plaintiff has failed to support his claim that Jimmie Burger violated Valdes' Eighth Amendment rights based on deliberate indifference to a serious medical need[36] and Burger's motion for summary judgment is therefore due to be granted as to Count II.[37]
5. Defendant Denise McEachern
Because the Court finds plaintiff has failed to demonstrate that Valdes had an objectively serious medical need when he came to the clinic following the morning cell extraction, McEachern likewise has no liability based on such a claim. However, plaintiff also claims that McEachern was deliberately indifferent to Valdes' medical needs when she was called to respond to his emergency in the afternoon. Based on the information known to McEachern at the time, plaintiff has failed to demonstrate that a jury could reasonably find that McEachern would have known Valdes had a serious medical need. During the first call (around 2:00 p.m.) the undisputed evidence is that guards told McEachern that Valdes said he was fine and even if after receiving the later calls (around 3:00 p.m.) McEachern appeared to Nurse Roberts to have a laissez-faire attitude and did not immediately respond, McEachern still arrived on X-wing within minutes of receiving the call and guards were attending to Valdes' medical needs by administering CPR. Thus, even if there was a delay, there is no evidence that it created or exacerbated Valdes' injuries. See McDowell, 392 F.3d at 1299-1300, 1302 (noting that plaintiff offered no reliable evidence that earlier medical intervention would have prevented or diminished injury beyond well known theory that "the sooner" medical treatment is afforded, "the better," which "has nothing to do with causation"). Thus, plaintiff has failed to support a claim that Denise McEachern violated Valdes' Eighth Amendment rights based on deliberate indifference to a serious medical need[38] and McEachern is therefore due to be granted summary judgment as to Count II.
B. Plaintiff's State Law Claim
Although the focus of the parties' arguments centered on the § 1983 claims, these defendants also moved for summary judgment on plaintiff's state law wrongful death claim, Count III. Having found that plaintiff has failed to create a triable issue as to the liability of defendants Giebeig, A.D. Thornton, Burger or McEachern under *1108 42 U.S.C. § 1983, the Court could simply dismiss plaintiff's wrongful death action against these four defendants, permitting plaintiff to bring his state law claim in state court. See 28 U.S.C. § 1367(c)(3) and (d). However, in determining whether to retain jurisdiction over state law claims once federal claims have been dismissed, the Court is to "consider concerns of comity, judicial economy, convenience, fairness and the like." Lewis v. City of St. Petersburg, 260 F.3d 1260, 1267 (11th Cir.2001) (quotations and citations omitted).
These defendants have each pled[39] that they are entitled to sovereign immunity pursuant to Florida's Sovereign Immunity Act, which grants immunity to state employees for tort actions unless the employee "acted in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety or property." Fl. Stat. § 768.28(9)(a). Plaintiff concedes that the standard to overcome this immunity is at least as high as the standard needed to prove his § 1983 claims against these defendants. See, e.g., Williams v. City of Minneola, 619 So.2d 983, 986 (Fla. 5th DCA 1993) (necessary showing of wanton and willful disregard sufficient to overcome § 768.28(9)(a) immunity is equivalent to showing of recklessness); Farmer, 511 U.S. at 836, 114 S.Ct. 1970 (showing of deliberate indifference is equivalent to showing of recklessness).
Thus, for the same reasons the Court finds plaintiff has failed to create a triable issue of fact as to whether Giebeig, A.D. Thornton, McEachern, and Burger are liable under § 1983, the Court also finds plaintiff has failed to marshal sufficient evidence to overcome the protection afforded these four defendants under Florida's Sovereign Immunity Act. The Court therefore declines to exercise its discretion to simply dismiss plaintiff's state law claims against these defendants pursuant to 28 U.S.C. § 1367(c)(3) and instead finds that considerations of judicial economy, convenience and fairness dictate that McEachern's, A.D. Thornton's, Burger's and Giebeig's summary judgment motions be granted as to Count III, plaintiff's wrongful death claim.[40]
As to defendant Crosby, other than arguing that the Court's supplemental jurisdiction over the state law claim should be extinguished if the § 1983 claim is dismissed (an event that is not occurring at this time), Crosby raises one additional argument contained in a single sentence which states, "there is no record evidence to suggest that Crosby had any direct involvement in the death of Valdes." Doc. 281 at 19. Plaintiff did not respond to this point. However, "direct involvement" may not be required to state a wrongful death claim under Florida law.[41] Although plaintiff's *1109 second amended complaint sufficiently pleads the elements necessary to support a claim for wrongful death, neither party has directed the Court to any specific record evidence which supports or refutes this claim and the Court therefore declines to grant summary judgment based on this undeveloped argument. However, this denial will be without prejudice to Crosby re-filing a motion for summary judgment as to Count III only at a later date.
VI. Conclusion
Accordingly, it is hereby
ORDERED:
1. The Summary Judgment Motions filed by Defendants Timothy Giebeig (Doc. 278), Betty Koon, as personal representative for the estate of A.D. Thornton (Doc. 396), Denise McEachern (Doc. 287) and Jimmie Burger (Doc. 288) are GRANTED.
2. There being no just reason for delay, the Clerk shall enter a separate final judgment against plaintiff and in favor of defendants Timothy Giebeig, Betty Koon, as personal representative for the estate of A.D. Thornton, Denise McEachern and Jimmie Burger pursuant to Fed.R.Civ.P. 54(b).
3. Defendant James V. Crosby, Jr.'s Motion for Summary Judgment (Doc. 280) is DENIED.
4. Although the Court has granted summary judgment in favor of defendants Giebeig, McEachern, and Burger, the Court does not find that plaintiff's claims against these defendants were so lacking in evidentiary support that Rule 11 sanctions are warranted.[42] Therefore, Defendant Jimmie Burger's Motion for Sanctions (Doc. 304), Defendant Denise McEachern's Motion for Sanctions (Doc. 305), and Defendant Giebeig's Motion for Sanctions (Doc. 350) are DENIED. For obvious reasons, Defendant Crosby's Motion for Sanctions (Doc. 349) is DENIED.
5. The Court's decision on these motions did not require it to decide any of the Daubert motions (Docs.274, 276, 292) and they will therefore remain pending at this time. However, it appears the relief sought by Defendant Crosby's and Giebeig's Motion to Strike Supplemental Opinions of Plaintiff's Expert Chase Riveland (Doc. 272) has now been granted, at least in part, so the Court will DENY that motion at this time without prejudice to renewal when the Court takes up the Daubert motions.
6. Defendants Denise McEachern and Jimmie Burger's Motion to Strike Portions of Plaintiff's Memorandum in Response to Defendant McEachern and Burger's Motions for Summary Judgment (Doc. 358) is DENIED.
7. Plaintiff's Partially Unopposed Motion to Take Deposition of Expert (Dr. Slepin) Beyond Discovery Deadline (Doc. 381) is MOOT, the Court now having granted summary judgment in favor of the parties who intended to offer Dr. Slepin as an expert witness in the trial of this case.
8. Defendant Crosby's Motion to Supplement Defendant Crosby's Memorandum of Law in Support of Motion for Summary Judgment (Doc. 394) is GRANTED. The Court has considered the additional points raised in the motion to supplement.
*1110 9. Plaintiff's Cross-Motion to Strike Memorandum in Support of Motion (Doc. 395) is DENIED.
10. In addition to the Daubert motions noted above, the pending motions still remaining are the Motions to Dismiss and for Fees related to defendants Rash and Hudnall (Docs.241, 324). The Court will address these motions by separate Orders.
11. Because the record utilized by the parties is somewhat scattered and many matters upon which the parties relied came from the Mathews file, for convenience of appellate review, plaintiff is directed to assemble one complete appendix of all record materials cited in this opinion (this includes complete copies of all depositions which must also include a complete set of deposition exhibits). The appendix should include an index which cross-references the citations used by the Court in this opinion. Plaintiff shall deliver the appendix to chambers of the undersigned no later than April 29, 2005, with service copies to defendants. Following review, the Court will file the appendix and it will become part of the record of this case.
12. By separate Order, the Court will re-set this case for a settlement conference before the Honorable Harvey E. Schlesinger, United States District Judge.[43]
13. The undersigned will await results of the settlement conference before determining what further action should be taken, including setting this case for trial.
DONE AND ORDERED.
NOTES
[1] A.D. Thornton's motion was not filed until after the October 20, 2004 argument but A.D. Thornton is represented by the same counsel as Crosby and Giebeig and all three motions raise similar arguments. No party requested argument on A.D. Thornton's motion and the Court does not find argument necessary to decide it.
[2] A.D. Thornton is not related to Timothy Thornton, a corrections officer also named in this suit.
[3] The remaining defendant guards (including the guards who allegedly beat Valdes) did not move for summary judgment and therefore are awaiting trial.
[4] These facts are drawn from the depositions, affidavits, other testimony of record and documents filed in this case and, as adopted by plaintiff (see, e.g., Doc. 341), from the file of Mathews v. Crosby, 3:99- cv-1117-J-32MMH. Although the Court declined to consolidate the Valdes and Mathews cases for purposes of discovery, there have been no objections to the use of discovery elicited in Mathews (the moving parties' counsel were present throughout discovery in both cases). Additionally, some depositions were cross-noticed for both cases and some witnesses who were deposed in Valdes were essentially permitted to stand on their earlier deposition testimony from Mathews. See, e.g., Giebeig depo in Valdes (Doc. 341, Ex. 13) at Tr. 4-5 (inquiring whether Giebeig wished to change any of his earlier deposition testimony offered in Mathews case).
Specific attributions to the sources are only noted where deemed particularly relevant or when directly quoting a source (and citations to material originally filed in Mathews are to the Valdes docket location where such material has been incorporated, usually Doc. 341). Testimony revealed that some of the policies or procedures described herein (such as, for example, the alphabetical codes used for wing designations) have since changed.
Some of the defendants raised hearsay objections to the Court's consideration of certain evidence offered by plaintiff. Where such evidence is included in this recitation of facts without further explanation, those objections have been overruled on the grounds that I find the evidence is sufficiently trustworthy to be admitted under Fed.R.Evid. Rule 807 for purposes of deciding these motions. However, the Court is not foreclosing the possibility that these rulings could be reconsidered at trial, depending on the development of the evidence.
[5] Crosby testified that a directive to that effect was issued in March 1999 and remained in effect through at least the time of Valdes' death. Whether that policy remains in effect at this time is unknown.
[6] In Florida, wardens are charged with the duty to supervise the government, discipline, and policy of the state correctional institutions, and to enforce all orders, rules and regulations. Fla. Stat. § 944.14. The parties failed to fully develop the record regarding the extent of the warden's authority in implementing these duties and there is some ambiguity in the evidence as to whether a warden has the authority to terminate a corrections officer. See, e.g., Crosby Oct. 15, 2003 depo in Mathews (Doc. 341, Ex. 12) at Tr. 61-62 (stating that certain disciplinary actions are processed through the warden and the legal department); McAndrew depo in Mathews depo (Doc. 341, Ex. 17) at Tr. 29 (saying he would "fire an officer in a heart beat [and] send him to prison" if the officer were caught abusing inmates); McAndrew depo in Mathews (Doc. 341.Ex. 17) at Tr. 130-31 (stating that Bureau of Legal Services must be consulted for an opinion before a warden can terminate an officer).
[7] Warden Patricia McCusker, who served as an assistant warden under Crosby at FSP, testified to similar effect, stating that Crosby had a proactive management style and that he kept lists of guards who had used force in the past. See Doc. 297 at Tr. 26-27. A.D. Thornton, who served as an assistant warden under both former warden McAndrew and Crosby at FSP, testified that while McAndrew often had concerns about specific guards including Timothy Thornton, who McAndrew moved to a position where he would be less likely to get in trouble, A.D. Thornton did not recall having conversations with Crosby about potential staff abuse of inmates. A.D. Thornton depo in Mathews (Doc. 341, Ex. 19) at Tr. 36. A.D. Thornton also testified that as "the man in charge of the institution," the warden would be the person to whom staff abuse allegations were brought by the inspector and that if the warden had concerns about such allegations, he would assign someone such as A.D. Thornton or "the colonel" "to look into it." Id. at 75-76. While A.D. Thornton further testified as to what steps he would take if asked to "look into" allegations of staff abuse, he was not questioned as to whether Crosby had in fact ever asked him to look into allegations of staff abuse.
[8] Thornton and Griffis moved for a stay of the Skrtich civil case on the basis that the alleged facts and circumstances of that incident were so similar to the facts and circumstances of the Valdes incident that any statements they made regarding Skrtich could potentially be used against them in the State of Florida's then upcoming criminal prosecution of Thornton and Griffis for their alleged actions in the Valdes matter. See Doc. 25 in Skrtich v. Thornton, 3:99-cv-742-J-25HTS (M.D.Fla. February 29, 2000).
[9] McAndrew also testified that shortly after he became warden he wanted to terminate Timothy Thornton. McAndrew reprimanded Thornton instead based in part on the advice of A.D. Thornton and another assistant, who advised McAndrew that Crosby (who at the time was the DOC director of Security and Institutional Management), had called them on Timothy Thornton's behalf to ask that Timothy Thornton be given every possible consideration. Tr. 126-30.
[10] Although Crosby's name is not listed among those present at the meeting, certain statements in the meeting minutes are attributed to him and, even if he was not present when this discussion took place, the minutes show that a copy was sent to him. The minutes also show that A.D. Thornton (an assistant warden) was absent from the meeting but that he too received a copy of the meeting minutes.
[11] In the copy provided to the Court, the text of this letter appears to end mid-sentence and it is not clear whether the original text carried over to another page.
[12] Mathews did not send his grievance through the ordinary channels (it was filed as an emergency appeal) and it may be that neither Crosby nor Giebeig had seen his grievance by the time Valdes was killed.
[13] An acting warden serves in the capacity of warden in his absence. Crosby was on vacation on July 17, 1999 when Valdes died and he believed his vacation may have begun the previous day, which would explain why Giebeig's notes reflect that he was reporting to A.D. Thornton, not Crosby.
[14] In fact, the doctor on call that day happened to call the clinic while Burger was seeing Valdes and Burger told McEachern to tell the doctor that Valdes had no injuries needing further treatment by a doctor (such as sutures for example).
[15] Plaintiff attempts to create a triable issue of fact regarding Valdes' condition while in the medical facility that morning based in part on a statement by Burger to McEachern during an undercover meeting on November 22, 1999 to the effect that, contrary to Burger's other statements, when Burger saw Valdes following the extraction, his "ribs kicked in, his lungs weren't that clear." However, this line of the actual transcript shows an "inaudible" at the beginning of Burger's sentence just prior to this phrase and, given the conversation just before and after this line about how the nurses could not have missed observing Valdes' injuries if he was in such bad condition, it is unreasonable to take this phrase as a statement of Burger's belief about Valdes' condition at the time Burger treated him. See Doc. 341, Ex. 4 (F.D.L.E.I.R.# 514) at Tr. 4. Plaintiff also points to other statements from Burger and McEachern regarding the amount of blood on Valdes' face and a statement from McEachern about Valdes moaning, as well as a seemingly contradictory statement by McEachern given to investigators in which she stated that when Valdes arrived in the medical unit following the cell extraction, she told Burger that it appeared that officers had "beaten the s ___ out of him." See McEachern depo (Doc. 298) at Tr. 97. When questioned about this statement, McEachern was not sure why she had said that but thought that it looked like Valdes had "had a good tussle with the officers." Id. at Tr. 99. Inmates are often injured during legitimate uses of force, especially during cell extractions which, by their very nature, involve officers forcibly extracting a recalcitrant prisoner from his cell. Thus, it is not unusual, as Burger and others testified, to see injuries to inmates following extractions. See, e.g., Doc. 299, Exhibit 5 (excerpt of June 16, 2004 deposition testimony of plaintiff's prison expert, Chase Riveland at Tr. 69-71); Doc. 299, Exhibit 7 (affidavit of Victor Selyutin, M.D.) at ¶¶ 9-14; Doc. 299, Exhibit 9 (affidavit of Thomas S. Edwards, M.D.) at ¶¶ 8-11, 17-21. The evidence marshaled by plaintiff is not necessarily contradictory to a finding that Valdes' injuries at this point appeared minimal and it is certainly not sufficiently colorable to create a triable issue of fact as to this point.
[16] The truthfulness of Beck's reports about his observations of Valdes are disputed by plaintiff; but there is no dispute that the nurses' knowledge about Valdes' condition at the time was based, at least in part, on the reports the nurses received from the guards. Thus, the content of those reports, even if their truthfulness is in dispute, is relevant in determining whether the nurses have any liability for their actions and is therefore included in this recitation.
[17] McEachern has raised a hearsay objection to the testimony of Helen Roberts which was given in the state criminal case against the guards. Generally, inadmissible hearsay cannot be considered when ruling on summary judgment. Club Car, Inc. v. Club Car (Quebec) Import, Inc., 362 F.3d 775, 783 (11th Cir.2004). However, where the testimony would be admissible non-hearsay evidence at trial (which the Court assumes it would be here because Roberts' recitation of McEachern's statements would be those of a party-opponent), the Court may consider it. See Macuba v. Deboer, 193 F.3d 1316, 1322-25 (11th Cir.1999).
[18] Some of the defendant guards intend to offer expert testimony that Valdes' death may have been caused or contributed to by his voluntary ingestion of acetaminophen. That testimony is the subject of a Daubert motion not addressed in this opinion.
[19] The federal investigation is now over three years old and federal authorities are unable to say when it will conclude. Thus, the Court is proceeding with this civil case.
[20] This recitation of facts stated in the light most favorable to plaintiff does not rely on testimony from either Robert Krebs, an inmate who was at FSP and knew Valdes, or Chase Riveland, plaintiff's prison expert (with a minor exception, see footnote 15, supra). The hearsay issues with Krebs' testimony likely render much of it inadmissible but because decision on these motions is not dependent on his testimony, the Court is not making any final decision on those objections at this time. As for Riveland, the Court expects that his testimony about the general field of corrections, prison supervision and management and the like, will assist the jury and will likely be admissible at trial for that purpose. However, the Court has concerns about Riveland's opinions concerning the factual events of this case because, for the most part, the evidence on which he bases those opinions does not appear to be complex or in need of interpretation by an expert. There has been no need to rely on his opinions about those matters to decide these motions and the Court will therefore reserve final rulings on the Daubert motions related to Riveland's expert testimony until closer to trial.
[21] Thus, this case is different from many Eighth Amendment cases where it is not alleged that prison officials actually participated in the beating of an inmate, but that prison officials allowed inmates to attack each other and were deliberately indifferent to the situation. See e.g., Purcell ex rel. Estate of Morgan v. Toombs County, GA, 400 F.3d 1313, 1319 (11th Cir.2005).
[22] A recent Supreme Court decision has suggested that the sequential order of these steps may be reconsidered in a future case. See Brosseau v. Haugen, 125 S.Ct. 596, 598 n. 3, 160 L.Ed.2d 583, and concurring opinion at 600-01 (2004).
[23] See McAndrew depo in Mathews (Doc. 341, Ex. 17) at Tr. 81.
[24] The law does not require a party to show that a supervisor "knew precisely who would attack whom." Hale v. Tallapoosa, 50 F.3d 1579, 1583 (11th Cir.1995).
[25] Indeed, the current record reveals material factual disputes regarding much of this evidence. Compare, for example, the depositions of Crosby and McCusker with those of McAndrew, McRae, Giebeig and A.D. Thornton, in which the deponents offer conflicting testimony as to whether Crosby gave preferential treatment to guards such as Timothy Thornton who had reputations as being "enforcers" who abused inmates or whether Crosby took adequate measures to monitor and curb staff-on-inmate violence; whether Crosby ended videotaping practices or whether they were not in existence in the first place; and whether Crosby was a "hands-off" or "hands-on" warden. These evidentiary disputes cannot be resolved on summary judgment.
[26] Plaintiff has not presented evidence from which to draw an inference that Crosby "directed [his] subordinates to act unlawfully or knew that subordinates would act unlawfully." Miller, 384 F.3d at 1261.
[27] See, e.g., Skrtich, 280 F.3d at 1302 (stating that by 1998, Eleventh Circuit "precedent clearly established that government officials may not use gratuitous force against a prisoner who has been already subdued or, as in this case, incapacitated"); Bruce v. Wade, 537 F.2d 850, 853 (5th Cir.1976) (a violation of § 1983 is clearly stated by the unjustified beating of an inmate at the hands of prison officials).
[28] At the trial in LaMarca (which also addressed claims for injunctive relief), the defendant warden argued that he had done all he could with the budget he had and the court heard extensive testimony about how prison funds were spent by the defendant warden as compared to his successors and predecessors. See LaMarca, 995 F.2d at 1537-38. Although the evidence presented on these motions is nowhere near as extensive, Crosby did present some evidence about steps he took to improve conditions. See, e.g., McCusker depo, Doc. 297, at Tr. 26 (testifying about Crosby's efforts to curb abuse). However, as stated above, plaintiff's evidence (such as that Crosby abandoned measures adopted by his predecessor like videotaping cell extractions and moving renegade guards like Thornton away from problem inmates), is sufficient to create a triable issue as to whether the steps Crosby did take were reasonable.
[29] The Court is aware that, at first blush, its decision on the motion filed by Crosby in this case may appear to be inconsistent with the Court's decision to grant his summary judgment motion in the Mathews case, where much of the same evidence was considered. See Case No. 3:99-cv-1117-J-32MMH, Doc. 379. However, as promised, the Court has taken a fresh look at the evidence and has also considered the further development of the record in this case. Also, the Mathews incident itself plays a role in this case because, by July 17, 1999 when Valdes died, Crosby was (or should have been) aware of the relevant facts of the Mathews incident: that inmate Willie Mathews, who Crosby knew had just arrived at FSP following an alleged assault on a corrections officer at another facility, had suffered a broken jaw allegedly at the hands of guards on X-wing and no use of force report had even been filed regarding the incident. Given the accumulation of the other evidence already at his disposal, this additional information helps to create a triable issue as to whether Crosby was aware that certain FSP guards were acting in a manner which presented a substantial risk of serious harm to inmates, whether Crosby's customs and policies fostered this environment, and whether Crosby reasonably responded to this risk.
[30] Giebeig also agreed that as the institutional inspector, he was responsible for "keeping [his] eyes and ears open and alert to staff abuse of prisoners." Giebeig depo in Mathews (Doc. 341, Ex. 14) at Tr. 131-32.
[31] An exception to this routine occurred whenever Giebeig telephoned his supervisor in the Inspector General's office to report an incident that required more immediate attention. Giebeig offered examples of an employee arrest, a fire or a serious stabbing as incidents fitting this category. Giebeig depo in Mathews (Doc. 341, Ex. 14) at Tr. 83. Giebeig testified that he immediately called his supervisor upon learning from Dr. Poston that Mathews' jaw was broken. Id. at Tr. 109-10.
[32] The Court therefore need not consider whether Giebeig is entitled to qualified immunity.
[33] Although a ruling in favor of Giebeig, whose responsibility included determining whether allegations of abuse were meritorious, may seem inconsistent with a ruling against Crosby, who relied on the results of Giebeig's investigations, plaintiff has mounted sufficient other evidence to compel the denial of Crosby's motion, such as evidence that Crosby was or should have been aware of the sheer volume of staff abuse allegations based on his receipt of all inmate complaints (whether deemed meritorious by Giebeig or not), that Crosby was or should have been aware of the recent Skrtich incident, that Crosby met with his staff and was advised of alleged abuse by staff, and that he was aware or should have been of the plea from Seburt Connor asking Crosby to intervene to save Valdes' life. Most significantly, it was the warden, Crosby, not Giebeig, who was specifically charged with the governance of FSP and who had the authority to take any necessary steps to reduce the risk of inmate abuse by guards.
[34] In his response to A.D. Thornton's motion for summary judgment, plaintiff states that, according to the trial testimony of inmate Robert Krebs, A.D. Thornton told Valdes that when Crosby went on vacation, Valdes would be killed. As noted above, see footnote 19, supra, the Court has not relied on Krebs' testimony due to hearsay issues; however, Krebs' trial testimony does not identify the speaker of these specific threats, although he does mention conversations between Valdes and Sergeant Montrez Lucas in which the two exchanged death threats.
[35] Although plaintiff deposed A.D. Thornton as a witness in the Mathews action, A.D. Thornton was not deposed in this case at any time prior to his death in April 2004. (A.D. Thornton was not a party in Mathews. At the time his deposition was taken, A.D. Thornton had been named in this suit and his counsel was present at the deposition).
As with plaintiff's § 1983 claim against Giebeig, plaintiff's § 1983 claim against A.D. Thornton suffers from a failure of proof, especially regarding A.D. Thornton's state of knowledge and job responsibility. Thus, the Court is not saying that § 1983 claims could never be brought against prison supervisory officials such as inspectors or assistant wardens in similar circumstances, only that plaintiff has failed to provide sufficient evidentiary support for these claims against these two defendants. On the other hand, plaintiff mounted sufficient evidence to create a triable issue as to the warden Crosby's state of knowledge and his responsibility.
[36] Thus, the Court need not reach the issue of whether Burger is entitled to qualified immunity.
[37] To the extent plaintiff has attempted to state a claim based on Burger's failure to prevent officers from further abusing Valdes, plaintiff has not presented evidence that Burger had more than a suspicion that further abuse might occur (thus obviating the possibility that Burger acted with deliberate indifference in the face of such a risk). Due to this failure of proof, the Court need not reach the further question of whether clearly established law would require a prison nurse to act in such circumstances.
[38] The Court therefore does not consider whether McEachern is entitled to qualified immunity.
[39] See Answers and Affirmative Defenses, Docs. 165 & 169.
[40] These findings are based on the parties having intensely litigated this case in this forum for a period of more than three years.
[41] A wrongful death claim against a supervisory official or entity is a legally available cause of action. See, e.g., Stoker v. Smith, 1999 WL 224579, *5, 12 Fla. L. Weekly Fed. D 306 (M.D.Fla. Mar.11, 1999) (denying motion to dismiss wrongful death claim against sheriff for shooting death of unarmed suspect by police where plaintiff alleged duty, breach, causation and damages); Gutierrez v. City of Hialeah, 729 F.Supp. 1329, 1332 (S.D.Fla.1990) (holding that doctrine of respondeat superior could support wrongful death claim against police chief for shooting death but that claim should be dismissed nonetheless due to potential for jury confusion with § 1983 claim); Saunders v. Rhode Island, 731 F.2d 81, 82 (1st Cir.1984) (describing special interrogatories posed to jury which determined that although warden was aware that guards permitted inmates out of cells, warden's failure to stop practice was not failure of exercise of reasonable care to protect inmate from attack and thus, warden's actions were not proximate cause of inmate's death). See also, Matallana v. School Board of Miami-Dade County, 838 So.2d 1191, 1192 (Fla. 3rd DCA 2003) (affirming summary judgment for defendant for wrongful death of student in fight with classmate because School Board's duty to student ended when students left school grounds).
[42] Fed.R.Civ.P. Rule 11; see also, Byrne v. Nezhat, 261 F.3d 1075, 1105-06 (11th Cir.2001) (describing standard for award of Rule 11 sanctions).
[43] To afford the parties a fair opportunity to engage in settlement discussions, the Court would favorably entertain a motion for extension of time to file a notice of appeal under Federal Rules of Appellate Procedure Rule 5. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2580138/ | 390 F.Supp.2d 1341 (2005)
Linda DENT, Plaintiff,
v.
AMERICAN INTERNATIONAL LIFE ASSURANCE CO. OF NEW YORK, Defendant.
No. 5:03CV175 (DF).
United States District Court, M.D. Georgia, Macon Division.
May 16, 2005.
*1342 Manley F. Brown, Jarome E. Gautreaux, Warren C. Grice, Gerald Spencer Mullis, Macon, GA, for Plaintiff.
John C. Daniel, III, John C. Edwards, Macon, GA, William B. Wahlheim, Jr., John David Collins, Birmingham, AL, for Defendant.
ORDER
FITZPATRICK, District Judge.
Plaintiff initiated this action to recover life insurance benefits she asserts she is due as the beneficiary of her son's life insurance policy. Currently before the Court are Plaintiff's Motion for Summary Judgment (tab 26) and Defendant's Motion for Summary Judgment (tab 29).
I. STANDARD OF REVIEW
The Supreme Court has observed, "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and we think it should be interpreted in a way that allows it to accomplish this purpose." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Under Rule 56, summary judgment must be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548. In reviewing a motion for summary judgment, the court must view the evidence and all justifiable inferences in the light most favorable to the non-moving party, but the court may not make credibility determinations or weigh the evidence. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
II. FACTUAL BACKGROUND
Plaintiff's son, the decedent, Derek Morgan, was an employee of Wal-Mart Stores, Inc. ("Wal-Mart"). As a part of his employment, Mr. Morgan was eligible to participate in the Associates Health and Welfare Plan ("the Plan"). One component of the Plan was Group Term Life Insurance Policy, number GL-10722-01, ("the Policy") that was funded and administered by Defendant. Two types of coverage were provided for under the Policy: basic life insurance and optional life insurance. Basic life insurance has a benefit amount of one times the annual earnings up to a maximum of $50,000.00. Tab 33, Ex. 3 to Compl., Pg. 9. There is a guaranteed issue amount of $50,000.00 for basic life insurance. Guaranteed Issue Amount, for both types of insurance, is defined as:
the amount of insurance that will be issued to an insured person without Evidence of Insurability. The Guaranteed Issue Amount for an insured person's life insurance is shown in the schedule. For amounts in excess of the Guaranteed Issue Amount, Evidence of Insurability satisfactory to the company must be provided at the insured's expense.
Tab 33, Ex. 3 to Compl., Pg. 9. The second type of insurance offered was optional life insurance whereby employees could elect additional coverage and have the premium amount deducted from their paycheck. Mr. Morgan exercised the option for additional *1343 life insurance; he selected option two that had a benefit amount of $25,000.00. The optional life insurance had a Guaranteed Issue Amount of $25,000.00.
The Policy also provided for a thirty-one day conversion period during which time employees, who were no longer a member of the eligible class, could elect to convert coverage under the Policy to individual coverage. Tab 33, Ex. 3 to Compl., Pg. 21. The coverage that an employee could convert is "not [] more than the amount of Life insurance that is lost under this Policy." Tab 33, Ex. 3 to Compl., Pg. 20. In addition, the Policy provides that should the insured die during the conversion period a death benefit "equal to the maximum amount the Insured could have otherwise converted" will be paid. Tab 33, Ex. 3 to Compl., Pg. 21.
Mr. Morgan left his employment with Wal-Mart on July 20, 2000, and died from smoke inhalation in a house fire on August 20, 2000. Mr. Morgan had not exercised his conversion privilege, but died on the thirty-first day of the conversion period. Plaintiff has received a total of $37,000.00 from Defendant, which represents basic life insurance coverage equal to Mr. Morgan's $12,000.00 annual salary and the $25,000.00 optional life insurance Mr. Morgan carried. Asserting that she is due the Guaranteed Issue Amount of $50,000.00 plus interest, Plaintiff filed this action in the Superior Court of Bibb County, Georgia. Defendant removed the action, which is governed by the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C.A. § 1001, to this Court.
III. LEGAL ANALYSIS
By their motions for summary judgment the parties seek to have the Court review Defendant's decision to pay Plaintiff life insurance benefits totaling $37,000.00.
A. Standard for Reviewing Decision
Even though "ERISA provides no standard for reviewing decisions of plan administrators or fiduciaries," the Supreme Court has done so. Williams v. BellSouth Telecomm. Inc., 373 F.3d 1132, 1134 (11th Cir.2004). In Firestone, the Supreme Court established three distinct standards of review applicable to the plan administrators' decisions: "(1) de novo where the plan does not grant the administrator discretion[;] (2) arbitrary and capricious [where] the plan grants the administrator discretion; and (3) heightened arbitrary and capricious where there is a conflict of interest." HCA Health Servs. of Ga., Inc. v. Employers Health Ins. Co., 240 F.3d 982, 993 (11th Cir.2001) (quoting Buckley v. Metro. Life, 115 F.3d 936, 939 (11th Cir.1997)). To determine the applicable standard of review in this case, the Court "is required to examine `all of the plan documents.'" Shaw v. Conn. Gen. Life Ins. Co., 353 F.3d 1276, 1282 (11th Cir.2003) (quoting Cagle v. Bruner, 112 F.3d 1510, 1517 (11th Cir.1997)). If after examining all the plan documents the Court finds "that the documents grant the claims administrator discretion, then at a minimum, the court applies arbitrary and capricious review and possibly heightened arbitrary and capricious review." HCA, 240 F.3d at 993.
In considering the parties earlier discovery motions, which included similar arguments to those made by Plaintiff in her summary judgment brief, the Court previously applied the above reasoning to determine the standard of review. The Court held that "the ... applicable standard of review for this Court to employ is heightened arbitrary and capricious." Order dated Oct. 7, 2004, Tab 19 Pg. 4. Consequently, the law of the case doctrines dictates that this Court will continue to follow its earlier holding and apply the heightened *1344 arbitrary and capricious standard of review. See Toole v. Baxter Healthcare Corp., 235 F.3d 1307, 1313 (11th Cir.2000) ("Under the law-of-the-case doctrine, an issue decided at one stage of a case is binding at later stages of the same case.").
B. Review of Benefit Decision
The Eleventh Circuit has clearly articulated the steps this Court is to follow in reviewing a claims administrator's benefit decision.
(1) Apply the de novo standard of determine whether the claims benefits-denial decision is wrong (i.e., the court disagrees with the administrator's position); if it is not, then end the inquiry and affirm the decision.
(2) If the administrator's decision in fact is "de novo wrong," then determine whether he was vested with discretion in reviewing claims; if not, end judicial inquiry and reverse the decision.
(3) If the administrator's decision is de novo wrong and he was vested with discretion in reviewing claims, then determine whether reasonable grounds supported it (hence, review his decision under the more deferential arbitrary and capricious standard).
(4) If no reasonable grounds exist, then end the inquiry and reverse the administrator's decision; if reasonable grounds do exist, then determine if he operated under a conflict of interest.
(5) If there is no conflict, then end the inquiry and affirm the decision.
(6) If there is a conflict of interest, then apply heightened arbitrary and capricious review to the decision to affirm or deny it.
Williams, 373 F.3d at 1138 (internal citations omitted). This directive gives the Court a clear path to follow in deciding the parties' cross motions for summary judgment. Furthermore, having previously determined the heightened arbitrary and capricious standard of review is applicable, the Court has already decided that the administrator was vested with discretion (step two) and that there is a conflict of interest (step four). The Court now turns to review the benefit decision at issue.
1. De Novo Wrong
Plaintiff has received a $37,000.00 benefit. This amount represents the decedent's $12,000.00 annual salary and the $25,000.00 optional life insurance policy the decedent carried. However, Plaintiff contends that Defendant's interpretation of Guaranteed Issue Amount is wrong and asserts that she should have recovered an additional $50,000.00, the amount listed as the Guaranteed Issue Amount, for a total of $87,000.00, plus interest.
The Guaranteed Issue Amount is defined as "the amount of insurance to be issued without Evidence of Insurability" and the amount of insurance an employee is eligible to be issued is specified in the Schedule of benefits. Tab 33, Ex. 3 to Compl., Pg. 9. Unambiguous terms of an insurance contract are to be understood in their `plain, ordinary, and popular sense.' Elan Pharmaceutical Research Corp. v. Employers Ins. of Wausau, 144 F.3d 1372, 1376-77 (11th Cir.1998) (quoting Horace Mann Ins. Co. v. Drury, 213 Ga.App. 321, 445 S.E.2d 272, 274 (1994)). A plain and ordinary reading of the definition for Guaranteed Issue Amount in Defendant's Policy would render an understanding that Guaranteed Issue Amount is the amount of insurance an employee may be eligible to be issued without presenting any medical evidence.
The insurance industry considers guaranteed issue amount a function of group underwriting. Group underwriting enables every employee to be issued coverage regardless of medical history. See 263 PLI/Tax 195, Practicing Law Institute *1345 (Sept. 22, 1987). The Eleventh Circuit has not defined nor interpreted Guaranteed Issue Amount. But, other courts have treated the phrase as an industry term that is understood as the amount of insurance able to be issued without any evidence of health. See Jackson v. Travelers Ins. Co., No. 94 Civ. 5895, 1996 WL 350677 (S.D.N.Y. June 26, 1996) (stating that Guaranteed Issue Amount is the amount that could be obtained regardless of medical history); see also Blum v. Spectrum Restaurant Group, Inc., 261 F.Supp.2d 697 (E.D.Tex.2003) (stating that Guaranteed Issue Amount was the amount of insurance that does not require proof of good health). In neither of these instances did the court treat the guaranteed issue amount as a payable benefit, rather it was a phrase that clarified the amount of insurance that an insured could apply for without providing evidence of health.
Given this understanding of Guaranteed Issue Amount, for basic benefit life insurance, the maximum amount of insurance an employee may be issued under the Policy without Evidence of Insurability is $50,000.00. However, the maximum amount of insurance able to be issued without Evidence of Insurability and the amount an individual employee is actually eligible to be issued are not necessarily the same amount. Specifically, the Guaranteed Issue Amount affords the possibility of being issued $50,000.00 worth of basic benefit life insurance without having to submit any Evidence of Insurability. But, the only way that the decedent, or any Wal-Mart employee, would be eligible to be issued $50,000.00 worth of basic benefit life insurance is if his beneficiary would be eligible, under the terms set out in the Schedule, to receive a $50,000.00 benefit. The Schedule sets forth that the benefit to be paid is one times the decedent's annual salary, up to a maximum of $50,000.00. The benefit amount corresponds to annual salary. Had the decedent earned a salary of $50,000.00 then his benefit amount would have matched the amount of insurance he was eligible to be issued without Evidence of Insurability, that is the Guaranteed Issue Amount. But, in this case, the benefit amount the decedent was eligible to be issued was $12,000.00, so the Guaranteed Issue Amount did not dictate the amount of insurance the decedent was eligible to be issued or the benefit Plaintiff was to receive.
The phrase Guaranteed Issue Amount itself implies the Court's interpretation the guarantee that Defendant made was to issue $50,000.00 worth of insurance without evidence of insurability to eligible employees, it did not guarantee to pay a $50,000.00 insurance benefit to all beneficiaries. To follow Plaintiff's argument that she is due the full amount of the Guaranteed Issue Amount as the basic life insurance benefit would require that every beneficiary be paid $50,000.00 regardless of the insured's annual salary. This interpretation cannot be followed. The value of a life, according to Defendant, is the life's annual salary, which in this case was $12,000.00, and not a pre-set amount, such as $50,000.00. See Tab 33, Ex. 3 to Compl., Pg. 5, 39 (providing in the Schedule of benefits, the basic benefit is "one times annual earnings up to a maximum of $50,000"); see also Couch on Insurance § 1:39 (3rd ed.1995) (stating that value of insured life does not specifically match value of policy but is offset by premium charged and premium corresponds with likelihood of paying benefit).
Plaintiff attaches much weight to the deposition testimony of Susan Martin. See tab 27, Pl.'s Br. Pg. 11. However, after reading the pages preceding the text Plaintiff quotes, the Court does not find the quotation in Plaintiff's brief instructive. Ms. Martin was asked the value of the Guaranteed Issue Amount and she responded *1346 that $50,000.00 was the maximum, that $50,000.00 was the amount, that no more and no less would be issued. See Tab 33, Ex. C, Martin Depo. Pg. 16-17. Plaintiff attempts to use this testimony as evidence that $50,000.00 was the amount of the benefit. However, that was not the question Ms. Martin answered she was asked how much insurance would be issued per the Guaranteed Issue Amount, to which she replied $50,000.00. That testimony does not state, infer, or suggest that $50,000.00 is the guaranteed benefit amount, it merely states that without evidence of insurability a flat $50,000.00 of basic benefit life insurance would be issued to qualifying employees.
The use and treatment of the phrase Guaranteed Issue Amount in the optional life insurance is further proof of the validity of the Court's interpretation. The Guaranteed Issue Amount for optional life insurance is $25,000.00, which was also the benefit amount the decedent elected. Thus, because of the definition of Guaranteed Issue Amount, Plaintiff was able to receive the full amount of her son's optional policy even though he had not submitted Evidence of Insurability. There is nothing inconsistent about how the phrase is used in the Schedule of benefits for basic life insurance and for optional life insurance.
Furthermore, Plaintiff would not able to recover more than $50,000.00 in total. The Guaranteed Issue Amount for basic benefit life insurance is $50,000.00. Evidence of Insurability, which "means a statement or medical evidence of health that determines if a person qualifies for coverage under this Policy," is required before any amount over $50,000.00 will be issued or paid. Tab 33, Ex. 3 to Compl., Pg. 9. It is undisputed that Mr. Morgan did not submit any Evidence of Insurability. See Tab 33, Ex. B Mason Depo., Ex. B, Pg. 2 ¶ 3. Therefore, even if Plaintiff's interpretation of Guaranteed Issue Amount were correct, the most Plaintiff would have been able to receive is $50,000.00, not the $62,000.00 she asserts would be due her as the benefit of her son's basic life insurance.
Consequently, Defendant's decision to pay Plaintiff $37,000.00 based on its interpretation of Guaranteed Issue Amount was not de novo wrong. Therefore, the decision will not be overturned.
2. Reasonable Grounds for Decision
Had the Court found that Defendant's decision was wrong, the next step would have been to determine if Plaintiff's interpretation of the Policy was correct or at least reasonable. See HCA Health Services of Ga., Inc. v. Employers Health Ins. Co., 240 F.3d 982, 994 (11th Cir.2001) ("If the court determines that the claims administrator's interpretation is `wrong,' the court then proceeds to decide whether the claimant has proposed a `reasonable' interpretation of the plan.") (quoting Lee v. Blue Cross/Blue Shield, 10 F.3d 1547, 1550 (11th Cir.1994)). Plaintiff argues that Guaranteed Issue Amount is an ambiguous term open to multiple interpretations. Because "contra proferentem applies to ERISA plans," after finding Defendant's decision wrong or the phrase Guaranteed Issue Amount ambiguous, the Court would be required to construe "the ambiguities ... against the drafter of a document;" and, "as such, [Plaintiff's] interpretation [would be] viewed as correct." HCA, 240 F.3d at 994 n. 24. Even though the Court would have to accept Plaintiff's definition of Guaranteed Issue Amount as correct, Plaintiff would "not necessarily prevail." Id. Plaintiff would only succeed if the Court were to determine that Defendant's wrong interpretation was also unreasonable. Id. Because the Court agrees with Defendant's interpretation of Guaranteed Issue Amount, the Court cannot find Defendant's interpretation unreasonable. *1347 Consequently, a second and separate reason for affirming Defendant's decision is that even if both Defendant and the Court are wrong, the decision is reasonable because Guaranteed Issue Amount is a term commonly associated with underwriting, and not with payable benefits. See 11/15/04 NATUNDLH 18 (stating that guaranteed issue policy is one without medical underwriting, also known as simplified issue).
IV. CONCLUSION
According to the foregoing reasoning, Defendant's interpretation of Guarantee Issue Amount is affirmed and its decision to pay Plaintiff a $37,000.00 total life insurance benefit was correct. Therefore, Plaintiff's Motion for Summary Judgment is DENIED and Defendant's Motion for Summary Judgment is GRANTED.
SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2569002/ | 78 F.Supp.2d 543 (1999)
State of LOUISIANA, et al.
v.
BRASELMAN CORPORATION, et al.
No. Civ.A.96-0862 CW.
United States District Court, E.D. Louisiana.
February 10, 1999.
*544 Richard Gladstein, Aimee Jimenez, Michael Donnellan, Environmental Enforcement Section, U.S. Dept. of Justice, Washington, DC, James L. Turner, U.S. Environmental Protection Agency, Dallas, TX, for plaintiff U.S.
Louis E. Buatt, Louisiana Department of Environmental Quality, Office of Legal Affairs & Enforcement, Baton Rouge, LA, for plaintiff.
John Y. Pearce, Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Braselman Corporation, Shirley B Braselman, defendants.
Manning Gasch, Jr., Hunton & Williams, Richmond, VA, Benjamin Richard Slater, Jr., Anne Elise Brown, Slater Law Firm, New Orleans, LA, Joseph M. Spivey, III, Lisa S. Spickler, Christopher R. Graham, Hunton & Williams, Richmond, VA, James L. Bradford, III, Seale, Daigle & Ross, Covington, LA, for Alabama Great Southern Railroad Company, defendant.
American Creosote Works, Inc. by J. Douglas Nesom, Pensacola, FL, for defendant American Creosote Works, Inc.
Michael A. Chernekoff, Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, LA, William L. Schuette, Jr., Jones, Walker, Waechter, Poitevent, *545 Carrere & Denegre, LLP, Baton Rouge, LA, Charles H. Tisdale, King & Spalding, Atlanta, GA, for Union Camp Corporation, third-party plaintiff.
Robert Allan Vosbein, Glen Marion Pilie, Deborah Bila Rouen, Adams & Reese, New Orleans, LA, for Kerr-McGee Chemical Corporation, third-party defendant.
ORDER AND REASONS
LEMMON, District Judge.
IT IS HEREBY ORDERED that Alabama Great Southern Railroad Company's motion for summary judgment on grounds that the action is time-barred is DENIED (Document # 89). The cross-motion for summary judgment of the United States of America and the State of Louisiana is GRANTED. Document # 116.
IT IS FURTHER ORDERED that the motion for summary judgment of the United States of America and the State of Louisiana (Document # 83) is GRANTED IN PART AND DENIED IN PART: the summary judgment motion is GRANTED on the issue of the Alabama Great Southern Railroad Company's liability for response costs as a responsible person, and that portion of the motion for summary judgment seeking joint and several liability is DENIED. Alabama Great Southern Railroad Company's cross-motion for summary judgment on the issue of liability is DENIED. (Document # 92.)
BACKGROUND
The United States of America and the State of Louisiana[1] (collectively, the Government) filed companion suits, Civil Actions 96-872 and 96-862, against defendants Fleming American Investment Trust PLC, Alabama Great Southern Railroad Company (Alabama), Braselman Corporation (Braselman), Shirley Braselman, American Creosote Works, Inc. (American Creosote), Union Camp Corporation, and Kerr-McGee Chemical Corporation pursuant to the provisions of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 42 U.S.C. §§ 9607 to 9675, to recover the costs of remediating environmental pollution of Bayou Bonfouca. The Government alleges that all of the named defendants and/or their predecessors in interest are owners, operators, former owners, and/or former operators of a facility that used creosote to treat wood, and that during the years the facility was operated by the defendants, creosote was released into Bayou Bonfouca.
The Bayou Bonfouca Superfund Site (Site) is an area comprising approximately 55 acres, which contained an abandoned creosoting works that began operations in 1882, and sections of the adjacent Bayou Bonfouca in Slidell, Louisiana. Braselman, the current owner, purchased the Site on August 15, 1975.
Creosote and other hazardous substances have been released into the environment at and from the Site. The substances, generally known as polyaromatic nuclear hydrocarbons (PAHs), include naphthalene, acenaphthylene, acenaphthene, fluorene, phenanthrene, anthracene, fluoranthene, pyrene, benzo (a) anthracene, chrysene, benzo (b) fluranthene, benzo (k) fluoranthene, benzo (a) pyrene, indeno (1,2,3-cd) pyrene, dibenzo (a, h) anthracene and benzo (g, h, i) perylene. The contamination resulted from drippage from treated wood along rail tracks and in storage locations; discharge of condensate from live steaming and the barometric condenser; discharge of oil-water mixtures from sumps that contained residual solutions from the cylinders; discharge from leaky pipes, pumps, valves, broken pipes, etc.; discharge from sludge that was removed from the work tanks and cylinders and spread on the yard; spills and drippage *546 of creosote from the loading and unloading of barges and rail cars; and runoff of rain water from the contaminated soil in the yard.
In 1976, the United States Coast Guard conducted an investigation of the Bayou Bonfouca waterway and found creosote in the sediments. The divers conducting the investigation received second degree burns from contact with the sediment.
The Environmental Protection Agency (EPA) placed the Site on the National Priorities List[2] on September 8, 1983. An EPA Remedial Investigation[3] from 1983 to 1986 confirmed the presence of hazardous substance contamination. The EPA selected a remedial alternative in a Record of Decision issued on March 31, 1987, including excavation and incineration of surfacial creosote accumulations and contaminated sediment dredged from the bayou, creek, and drainage channel; the placement of a cap over the residues from the incineration and the surface soils; and treatment of contaminated groundwater. An Explanation of Significant Difference issued on February 5, 1990, because there were indications that the extent of the bayou and groundwater contamination was greater than the original estimate. The Explanation of Significant Difference reaffirmed the remedial action selected in the Record of Decision and increased the estimate of expected remedial construction costs due to the increased contamination found at the Site. The incineration of the contaminants was completed in 1995; however, the groundwater treatment is ongoing. The Government has incurred astronomical response costs at the Site. The cost to the United States has been at least $140,000,000, $13,000,000 of which the State has reimbursed under its 10% statutory share of costs obligation, and the EPA expects to incur additional costs before the project is completed.
DISCUSSION
Alabama has filed a motion for summary judgment asserting that the Government is barred by the statute of limitations from recovering response costs expended at the Bayou Bonfouca Superfund Site. Alabama argues that the filing of the action was time-barred because the physical on-site construction commenced in October 1989 or earlier, outside the six-year limitations period applicable to the suit filed on March 11, 1996, following an agreement on December 8, 1995, that if the statute of limitations had not run by that date, the limitation period would be tolled. The Government has filed a cross-motion for summary judgment on the statute-of-limitations issue and the issue of liability for response costs under CERCLA. Alabama has filed a cross-motion for summary judgment asserting that it was neither an owner nor an operator as defined by CERCLA and, alternatively, that it is not jointly and severally liable.
Summary judgment is proper when, viewing the evidence in the light most favorable to the non-movant, "there is no genuine issue as to any material fact and ... the moving party is entitled to judgment as a matter of law." Amburgey v. Corhart Refractories Corp., 936 F.2d 805, 809 (5th Cir.1991); Fed.R.Civ.P. 56(c). If the moving party meets the initial burden of establishing that there is no genuine issue, the burden shifts to the non-moving party to produce evidence of the existence of a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 321, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmovant cannot satisfy his summary judgment burden with conclusory allegations, unsubstantiated assertions, or only a scintilla of *547 evidence. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc).
The material facts are not in dispute. The questions before the court concern the interpretation of CERCLA and the application of the law to the facts.
I. The statute of limitations
Congress implemented the statute of limitations to express a determination that cost recovery actions must commence in a timely fashion in order to achieve timely cleanup of affected sites and to replenish the fund. See United States v. Navistar International Transportation Corp., 152 F.3d 702, 706 (7th Cir.1998). "`Statutes of limitation sought to be applied to bar rights of the Government, must receive a strict construction in favor of the Government.'" Badaracco v. Comm'r, 464 U.S. 386, 391, 104 S.Ct. 756, 78 L.Ed.2d 549 (1984) (quoting E.I. Dupont De Nemours & Co. v. Davis, 264 U.S. 456, 462, 44 S.Ct. 364, 68 L.Ed. 788 (1924)). CERCLA'S statute of limitations provides in relevant part:
An initial action for the recovery of the costs referred to in section 9607 of this title must be commenced
(A) for a removal action, within 3 years after the completion of the removal action
....
(B) for a remedial action, within 6 years after the initiation of physical on-site construction of the remedial action, except that, if the remedial action is initiated within 3 years after the completion of the removal action, costs incurred in the removal action may be recovered in the cost recovery action brought under this subparagraph.
42 U.S.C. § 9613(g)(2) (emphasis added). The term "removal" is defined as:
the cleanup or removal of released hazardous substances from the environment, such actions as may be necessary taken in the event of the threat of release of hazardous substances into the environment, such actions as may be necessary to monitor, assess, and evaluate the release or threat of release of hazardous substances, the disposal of removed material, or the taking of such other actions, as may be necessary to prevent, minimize, or mitigate damage to the public health or welfare or to the environment, which may otherwise result from a release or threat of release.
42 U.S.C. § 9601(23). "Remedial" is defined as follows:
The terms "remedy" or "remedial action" mean those actions consistent with permanent remedy taken instead of or in addition to re removal actions in the event of a release of threatened release of a hazardous substance into the environment, to prevent or minimize the release of hazardous substances so that they do not migrate to cause substantial danger to present or future public health or welfare or the environment. The term includes, but is not limited to, such actions at the location of the release as storage, confinement, perimeter protection using dikes, trenches, or ditches, clay cover, neutralization, cleanup of released hazardous substances and associated contaminated materials, recycling or reuse, diversion, destruction, segregation of reactive wastes, dredging or excavations, repair or replacement of leaking containers, collection of leachate and runoff, onsite treatment or incineration, provision of alternative water supplies, and any monitoring reasonably required to assure that such actions protect the public health and welfare and the environment ... [T]he term includes offsite storage, treatment, destruction, or secure disposition of hazardous substances and associated contaminated materials.
42 U.S.C. § 9601(24). "Problems of interpretation have arisen from the Act's use of inadequately defined terms, a difficulty particularly apparent in the response cost area." Artesian Water Co. v. Government *548 of New Castle County, 851 F.2d 643, 648 (3rd Cir.1988). "[R]emedial actions are generally response actions conducted in accordance with a [Record of Decision] over an extended period of time in amounts exceeding 1 million dollars." United States v. Akzo Nobel Coatings, Inc., 990 F.Supp. 897, 904 (E.D.Mich.1998).
The statute of limitations is triggered for a remedial action when there is an "initiation of physical on-site construction of the remedial action." 42 U.S.C. § 9613(g)(2)(B).
Congress did not establish a bright line rule to establish "the actions that would trigger the limitations period." See Navistar, 152 F.3d at 712. Congress specifically stated that "the initiation of physical on-site construction of the remedial action" is the triggering event. Id. at 712-13 (placement of clay on the site was a physical action that initiated the construction of a permanent clay cap). A four-part test to determine when "physical on-site construction" occurs was enunciated in State of California v. Hyampom Lumber Co., 903 F.Supp. 1389, 1391-92 (N.D.Cal.1995):
First, it must be "physical." Second, it must have occurred "on-site." Third, the activity must be part of the "construction of the remedial action." Fourth and finally, in addition to possessing the above characteristics, the activity must constitute the "initiation" of the remedial action.
....
The question of whether a given activity is "construction of the remedial action" calls for a two-part inquiry. First, the activity must be "remedial." Under CERCLA, response actions are characterized as either "removal" or "remedial." ... [I]t is generally held that "removal actions" are short-term, temporary responses to an immediate threat as well as actions taken to assess, monitor and evaluate a given site, while "remedial actions" are those measures taken to achieve a permanent solution. ... Second, in addition to being "remedial," the activity must be part of the "construction of the remedial action." "Construction" is not defined in CERCLA and seems a poor word choice to define the types of physical activities that would go on during a remedial action, inasmuch as the term ordinarily connotes the creation of something that did not exist before, rather than the repair or cleansing of something that already exists.... The term still serves the purpose of excluding those preliminary and tentative "physical on-site" activities that while related to the remedial action, are not part of its "construction."
Alabama contends that more than six years prior to entering a tolling agreement on December 8, 1995, the EPA and its contractors undertook activities that qualify as the initiation of physical on-site construction of the remedial action: the installation of monitoring wells and the installation of a groundwater extraction and treatment system. Alabama argues that the construction of the monitoring wells triggered the running of the statute of limitations because the wells were part of the long-term cleanup plan determined by the Record of Decision. As to the installation of the groundwater extraction and treatment system, Alabama argues that the pilot system was initiation of remedial action because it was designed to operate in a similar fashion as the full-scale groundwater remediation system. Alabama asserts that the only difference was that the recovered creosote would be stored during the pilot operations and that it would be incinerated during the full-scale operations. Alabama concedes that the details of the recovery system final design and operation were expected to be developed during the pilot study. As further evidence that construction began in October 1989 or earlier, Alabama relies on two published EPA "Bayou Bonfouca Site Updates" dated June 1990 and December 1, 1990, which stated that "[c]onstruction on the first [operable unit], dealing with *549 treatment of ground water contamination, began in October 1989 and is still underway."
Alabama has not established that "physical on-site construction of the remedial action" was initiated before December 8, 1989 (six years before the tolling agreement). The EPA performed a Remedial Investigation and Feasibility Study between 1983 and 1986. On March 31, 1987, the EPA issued a Record of Decision, which set forth the selected remedy for cleaning up the Site. The EPA performed Remedial Design Investigations in two phases from June 1987 through June 1990 to study inter alia the extent of the groundwater contamination at the Site and the sediment contamination in the Bayou. The Remedial Design Investigation included drilling and installing more wells.
Newly constructed and pre-existing monitoring wells were used during the investigation and design phases of the project. However, there is no support for Alabama's proposition that the continued use of these wells during the remedial action phase caused the date of the onset of the remedial action for statute-of-limitations purposes to relate back to the installation of the monitoring wells. Nor does the fact that the monitoring wells were used for a long term trigger the initiation of the remedial action and the running of the limitations period. The distinction between temporary and permanent wells is not relevant to the determination of when the remedial action began.
From February 8, 1989, until March 10, 1989, a Phase II pilot study was conducted. The pilot study did not trigger the initiation of the remedial action. The pilot study was a preliminary activity that was part of the design investigation, not a permanent remedy. The EPA performed a study of two extraction systems and rejected one of them. "Construction" excludes preliminary and tentative activities that are related to the remedial action. See Akzo Nobel Coatings, Inc., 990 F.Supp. at 906. Accordingly, neither the monitoring of the wells or the pilot study were part of the "construction."
On October 16, 1989, the EPA awarded a contract to conduct the groundwater remediation to Chemical Waste Management, Inc. Chemical Waste Management was required to prepare several written plans for approval before starting on-site construction. A "notice to proceed" with the work was issued on December 12, 1989. Alabama does not identify any physical, on-site action taken by Chemical Waste Management from the October 1989 award of the contract until the December 12, 1989, notice to proceed. The earliest date which "construction" could have begun is the date of the notice to proceed.[4]
The EPA's declarations that "construction" had begun in October 1989 referred to awarding the contract to Chemical Waste Management; however, the mere use of the word "construction" in the updates is not evidence that physical, on-site, remedial action had begun on that date for purposes of the statute of limitations. The action is not time barred because fewer than six years after the notice to proceed, on December 8, 1995, the parties entered the tolling agreement. On March 11, 1996, the Government filed suit against Alabama and others to recover costs to date. As a matter of law, the action is not barred by the six-year statute of limitations.
II. Liability of Alabama Great Southern Railroad under CERCLA
The Government's motion and Alabama's cross-motion for summary judgment address the question whether Alabama was an "owner" or "operator" of a facility, as defined by CERCLA, during the Creosote Works' earliest period of operation from 1882-1886 and from 1902-1972 when Alabama maintained a system of industrial tracks at the Creosote Works.
*550 "CERCLA, as amended by the Super-fund Amendments and Reauthorization Act of 1986, facilitates prompt clean up of hazardous sites by establishing a response and financing mechanism to control problems endemic to hazardous waste disposal sites." United States v. Chromalloy American Corp., 158 F.3d 345, 348 (5th Cir.1998). "The statute operates through a bifurcated scheme to promote the cleanup of hazardous substances that have been released into the environment." Uniroyal Chemical Co., Inc. v. Deltech Corp., 160 F.3d 238, 242 (5th Cir.1998), modified on reh'g in other part, 1999 WL 7912 (5th Cir.1999). The Hazardous Substance Response Trust Fund, or Superfund, 42 U.S.C. § 9631, provides money for waste site cleanup, 42 U.S.C. § 9604, or for compensating parties who have incurred response costs. Also, CERCLA gives private parties the right to bring a cost-recovery action against "responsible persons" for costs associated with responding to an environmental threat. 42 U.S.C. § 9607(a).
To establish a prima facie case for a private cost-recovery action, a plaintiff must prove: (1) that the site in question is a `facility' under § 9601(9), see 42 U.S.C. § 9607(a); (2) that the defendant is a `responsible person' under § 9607(a), see 42 U.S.C. 9607(a); (3) that a release or threatened release of a hazardous substance occurred, see 42 U.S.C. § 9607(a)(4); and (4) that the release or threatened release caused the plaintiff to incur response costs, see 42 U.S.C. § 9607(a)(4).
Uniroyal, 160 F.3d at 242.[5]
Section 9607(a) lists four classes of "responsible persons" that are liable for response costs:
(1) the [present] owner and operator of ... a facility,
(2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of,
(3) any person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person ..., at any facility ..., and
(4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities ... or sites selected by such person.
Id. at 243; 42 U.S.C. § 9607(a). CERCLA is a strict liability statute, and plaintiffs are not required to prove causation. Id. If the plaintiff establishes the elements for a prima facie case, the defendant must prove one of the following defenses listed in § 9607(b): that the release or threat of a release of the hazardous substance that resulted in the damages "were caused solely by (1) an act of God; (2) an act of war; [or] (3) an act or omission of a third party. ..." Id. & n. 8.
A. Was Alabama an "owner" or "operator" of a facility in the early years
On July 16, 1881, the Alabama, New Orleans, Texas & Pacific Junctions Railways Co. Ltd. (ANOT & P) obtained a controlling interest in the New Orleans Northeastern Rail Road Company (NONER) and agreed to construct a railway line between New Orleans to Meridian, Mississippi. NONER built and leased the Creosote Works from ANOT & P to treat wood with creosote for railroad ties, pilings, and telephone poles. Alabama is the successor to NONER.
The Government contends that NONER, and thereafter Alabama, was an "owner" of the Creosote Works and the system of industrial tracks that played an integral role at the plant within the meaning of § 107(a)(2) of CERCLA. The Government contends that the Site and the system *551 of industrial tracks and railroad cars are facilities where releases or threatened releases of hazardous substances into the environment as defined in § 9601(9) have occurred.
The Government also argues that NONER should be deemed an owner of the Creosote Works from 1882 through 1884 because, as a lessee, it exercised the requisite control over and responsibility for the use of the property. The Government asserts that, in addition to paying rent, NONER exercised its right of possession with respect to third parties that it authorized to use the premises. The November 1, 1981, contract between NONER and Fletcher, Wesenberg & Company (Fletcher) to complete the trestle work across Lake Pontchartrain states that the creosote works contemplated in the contract was moved to Bayou Bonfouca. NONER was obligated to erect creosoting works and grant the use of the works to Fletcher free of charge. Contracts for the construction of the Creosote Works were executed by NONER. Fletcher agreed to return the works to NONER in a complete state of repair at the termination of the contract.
Alabama argues that liability cannot be imputed to NONER because NONER was not an owner. Alabama contends that no lease agreement exists and that a bare reference to the payment of rent is insufficient to impute owner liability. Alabama explains that ANOT & P, as the owner of Creosote Works, charged NONER for the "use of creosote works" only because NONER had a contractual obligation to supply the use of a creosote works to Fletcher, the contractor chosen to construct the trestle.
In Fletcher v. New Orleans N.E.R. Co., 20 F. 345, 346 (E.D.La.1884), Fletcher sued NONER, asserting that NONER improperly exercised its right under the contract to void the contract and take possession of all materials because the work was not completed according to the contract. In that action, Fletcher "conceded that the creosote works and the land upon which they are located belong to the railroad company." Id. Although the court stated that NONER could not enforce the forfeiture of Fletcher's property in a suit in equity, the court granted "an injunction to prevent defendant from selling, disposing of, or incumbering property, or removing it from the jurisdiction of this court, until the right to maintain the forfeiture is determined in a suit at law." Id.
Alabama argues that the dispute that arose with Fletcher does not impute ownership to NONER. Alabama contends that the reference to ownership by the "railroad company" in the court's opinion in Fletcher is inconsequential because it is doubtful that any of the parties would have known which "railroad company" actually owned the Creosote Works.
The court concludes that NONER, the predecessor of Alabama, was an "owner" within the meaning of CERCLA during the pre-1900 period. Even though NONER did not have title to the property, NONER was a lessee who asserted control over the property and, as such, was an "owner" for purposes of § 9607(a)(1). See Burlington Northern v. Woods Indus., 815 F.Supp. 1384, 1391 (E.D.Wash.1993).[6] Alabama, as a successor of NONER is liable under CERCLA from 1882-1886.
B. Was Alabama an "owner" of the system of tracks which was a "facility" from 1902 through 1972?[7]
The Government argues that Alabama was an owner from 1902 through 1972 *552 because NONER owned the steel rail and associated hardware on spur tracks that serviced the Creosote Works from 1903 until the closure of the facility in 1972, and engaged in the pickup and delivery of freight using the spur tracks. The Government argues that the tracks and adjacent area comprised approximately 20% of the Site, and that the Indentures and Agreements granted NONER possession, control, and responsibility for the system. Further, in 1979, seven years after the plant ceased operations and closed, Alabama entered the property and removed the tracks from the Site. The Government argues that the tracks constitute a structure or installation within the meaning of the term "facility" under § 9607(9).
Alabama contends that the five successive trackage indentures or agreements interpreted under Louisiana law do not indicate ownership because they are similar to easements or rights of way under common law. The defendant cites Long Beach Unified School Dist. v. Dorothy B. Godwin California Living Trust, 32 F.3d 1364 (9th Cir.1994) for the proposition that the holder of an easement was not liable under CERCLA as an owner.
Alabama asserts that no civil law court has interpreted such agreements as constituting ownership under CERCLA. Alabama contends that only certain sections of the actual steel rails and hardware associated with those rails were owned by NONER.
The term "facility" means (A) any building, structure, installation, equipment, pipe, or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel.
United States v. Bestfoods, 524 U.S. 51, 118 S.Ct. 1876, 1881 n. 2, 141 L.Ed.2d 43 (1998).
Alabama does not dispute that NONER was the owner of the tracks from during the post 1900 period and that it entered into agreements and indentures giving it the right to place the tracks on the property. NONER was vested with title to various industrial tracks at the Creosote Works under a 1902 conveyance; 1903, 1907, 1910 indentures, a 1925 agreement; and a 1962 agreement. In the 1903 indenture, NONER was responsible for construction, operation, and maintenance of three spur tracks leading from its railway line. In the 1907 indenture, NONER was responsible for construction, operation, and maintenance of five spur tracks. In the 1910 indenture, NONER was responsible for operation and maintenance of the spur tracks leading from the railway line to the Site. In the three indentures, NONER held "the proper use and exclusive possession" of the spur tracks as long as it used the tracks to service the Creosote works. In 1979, seven years after the plan ceased operations, Alabama entered the Site and removed the tracks.
The question whether the agreements were an indicia of ownership of the land is not relevant to the inquiry because the railroad tracks themselves constitute a "facility" within the statutory meaning.
The railroad tracks meet the definition of facility because the railroad tracks were an "installation" that played an integral part in the transport and disposal of the hazardous substances. The wood was carried by rail at every stage of the treatment process: from its initial delivery to *553 the Creosote Works through its shipment out of the area as a finished product. The court concludes that Alabama is a responsible person under CERCLA as the owner of a "facility" for the period from 1902 to 1972.[8]
C. Joint and Several or Divisible Liability
The Government argues that Alabama, as the successor to NONER, should be held jointly and severally liable for the release of hazardous substances at the Site. The Government contends that the harm is indivisible because creosote, consisting of more than 200 individual compounds, was commingled at the Site for nearly a century.
Alabama contends that even if it were liable, joint and several liability is inappropriate because it is prepared to offer evidence to demonstrate that the harm is divisible chronologically, by quantum of production, and by actual response costs related to activities conducted at the site during different periods in history. Alabama contends that all of this evidence is factual and that it is inappropriate for the Government to suggest that undisputed material facts compel a conclusion of joint and several liability.
"[J]oint and several liability is not mandated under CERCLA" and applies only in appropriate cases. Bell Petroleum Services Inc. v. Sequa Corp., 3 F.3d 889, 897, 901 (5th Cir.1993). The Fifth Circuit has adopted the approach that relies almost exclusively on the principles of the Restatement (Second) of Torts. Id. at 900. "Under that approach, a defendant who seeks to avoid the imposition of joint and several liability is required to prove the amount of harm it caused." Id. An early resolution with respect to the timing of the "divisibility" is preferable; however, the matter is left to the sound discretion of the district court. Id. at 901. Equitable factors are not addressed initially; they are considered in actions for contributions among jointly and severally liable parties. Id. "Whether there is a reasonable basis for apportionment depends on whether there is sufficient evidence from which the court can determine the amount of harm caused by each defendant." Id. at 903. "[A]pportionment is appropriate even though the evidence does not establish with certainty the specific amount of harm caused by each defendant[]." Id.
The opinions offered by Alabama's experts indicate that the releases during the early wood preserving operations, as opposed to subsequent wood preserving operations, can be estimated.
The expert report of Dr. Warren S. Thompson states that the level of contamination during the 1882-1884 operation was very low and that sludge and wastewater volumes represent a small portion of the total production of waste at the Site. The creosote entrained in the wastewater discharge from 1882-1884 was 1,747 pounds compared to approximately 644,910 pounds from 1902-1971. Moreover, loss of creosote was less because the equipment was new and the high cost of creosote was an incentive to minimize losses.
The opinion of Dr. Jurgen H. Exner estimates the composition of creosote oil from London, England during the pre-1990 period; the amount of creosote oil used to treat wood during that period; the amount of creosote oil that was lost to drippage, sludges, spills, and waste; and the decrease in PAH that occurred during the eighteen year period from 1884 until 1903 when the wood-treatment operation was closed.
The report of Ray K. Forrester emphasizes that early wood preserving operations are responsible for a negligible portion of the contamination and remediation. The opinion states that most of the remediation *554 expenditures are attributable to the operations in the most recent decades of wood preserving operations at the Site when production and waste generation was higher, the equipment was older, and the cost of creosote was reduced. Further, the report attributes a significant portion of the costs to the catastrophic release of creosote during a fire in 1972.
Thus, Alabama has presented evidence to establish that there are disputed material facts which must be resolved prior to the determination whether there is a reasonable basis for apportioning liability, and summary judgment on this issue is not appropriate.
Conclusion
Accordingly, the Government's motion for summary judgment for the recovery of response costs is GRANTED IN PART on the issue of liability as a matter of law. The action is not barred by CERCLA's statute of limitations, and Alabama is responsible for response costs as an owner of a facility where there was a release of a hazardous substance. Alabama's motions for summary judgment on these issues are DENIED. Alabama has demonstrated that there is a genuine issue of material fact on the question of joint and several liability; therefore, the Government's motion for summary judgment is DENIED IN PART on the issue of joint and several liability.
NOTES
[1] This order does not address the issue of whether the statute of limitations has run as to the State of Louisiana's claims against Alabama under Louisiana law because the motion for summary judgment on the issue whether the State's claims have prescribed was filed after the hearing on these motions.
[2] The National Priorities List, 40 C.F.R. Pt. 300, App. B, identifies facilities nationwide which threaten the public health, welfare, or the environment through the release of hazardous substances.
[3] A remedial investigation is a study used to characterize the nature and extent of contamination at a site and to determine remedial alternatives for cleanup.
[4] The first physical, on-site activity by Chemical Waste Management that is in evidence is the erection of a fence around the Site on April 2, 1990.
[5] The third and fourth elements of the cost-recovery action are not in dispute. Moreover, it is not disputed that the Creosote Works is a "facility." The question is whether Alabama was an owner or operator of a facility during the relevant time periods.
[6] Because NONER was an owner, it is not necessary to determine whether it was also an "operator."
[7] There is no merit to Alabama's contention that the question of liability as an owner or operator of the spur tracks from 1902 until 1972 concerns facts that are beyond the scope of the Government's complaint. The Government placed the defendant on notice of its claims in its complaint and, almost two years ago, in a letter to Carol Browner, the Administrator of the EPA, the defendant's Chief Executive Officer admitted knowledge of the claims regarding the trackage agreements. Further, the defendant provided information regarding the trackage agreements without objection in discovery and in related insurance litigation, in which the defendant conceded knowledge of the Government's theories from 1902 to 1972.
[8] Because Alabama was an owner of a facility where the release of a hazardous substance occurred, the Court does not address the question whether Alabama was also an operator. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2314366/ | 311 F. Supp. 2d 1147 (2004)
DIRECTV, INC., Plaintiff,
v.
Perry LOCKWOOD, et al., Defendants.
No. 03-2279-GTV.
United States District Court, D. Kansas.
March 18, 2004.
*1148 Robert P. Numrich, Todd M. Johnson, Baty, John J. Gates, Baty, Holm & Numrich, PC, Kansas City, MO, for Plaintiff.
Kurt S. Brack, Holbrook & Osborn, PA, Merriam, KS, for Defendant.
MEMORANDUM AND ORDER
VanBEBBER, Senior District Judge.
Plaintiff DIRECTV alleges that Defendants surreptitiously intercepted and decrypted DIRECTV's satellite signals using devices intended for that purpose, ultimately to gain free viewing of satellite television programming. The case arises out of Plaintiff's acquisition of shipping records of distributors of devices intended for satellite television signal interception and decryption. Plaintiff brings five Counts against each Defendant in its Complaint. Counts One and Four of Plaintiff's Complaint concern violations of the Cable Communications Policy Act. Count Two alleges interception and disclosure of DIRECTV's electronic communications in violation of 18 U.S.C. § 2511. Count Three alleges possession, manufacture, and/or assembly of devices used for surreptitious interception of electronic communications in violation of 18 U.S.C. § 2512, and Count Five alleges civil conversion.
The case is before the court on Defendants Michael Mielke's and Richard Prentiss's motions to dismiss (Docs. 27 and 29). Both Defendants ask the court to dismiss Counts Three and Five of Plaintiff's Complaint. For the following reasons, the court grants Defendants' motions.
I. Standard of Review
Defendants move to dismiss certain Counts of Plaintiff's complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted.
A Rule 12(b)(6) motion to dismiss will be granted only if it appears beyond a doubt that the plaintiff is unable to prove any set of facts entitling him to relief under his theory of recovery. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). "All well-pleaded facts, as distinguished from conclusory allegations, must be taken as true." Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). The court must view all reasonable inferences in favor of the plaintiff, and the pleadings must be liberally construed. Id.; Fed.R.Civ.P. 8(f). The issue in reviewing the sufficiency of a complaint is not whether the plaintiff will prevail, but whether the plaintiff is *1149 entitled to offer evidence to support his claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974), overruled on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982).
II. Factual Background
Plaintiff has filed numerous cases in this court and around the nation, alleging similar facts against each defendant in each case. The specific facts of this case are not important to the resolution of the motions before the court, but the court will recount the general background of Plaintiff's claims against the defendants in this case and in other cases. The facts as relayed here should not be relied upon for any particular case; they are only intended as general background information.
Plaintiff is in the business of distributing satellite television broadcasts to customers throughout the United States who have paid a subscription fee. Subscribers use a satellite dish to receive Plaintiff's satellite signals and an access card to unscramble the signals. The access cards are electronically programmed by Plaintiff to block or unblock television channels and specific programs depending on the customers' subscription level and individual pay-per-view programming choices. While Plaintiff's scrambled satellite signals can be received by any satellite dish, Plaintiff controls the use of these signals through the access cards.
On various dates, Plaintiff obtained the shipping records, email communications, credit card receipts, and other records of several distributors of devices used to receive and decode satellite signals. Plaintiff then filed suit against the persons identified by the distributors' records, alleging that the only use of the devices is to illicitly decrypt satellite programming, and that the defendants used these devices to display Plaintiff's programming without authorization from Plaintiff.
III. Discussion
A. Count Three 18 U.S.C. § 2512
Defendants first argue that, as a matter of law, no civil cause of action exists for violations of 18 U.S.C. § 2512. This court has already addressed the issue in DIRECTV, Inc. v. Hosey, 289 F. Supp. 2d 1259 (D.Kan.2003). For the reasons fully discussed in Hosey, the court grants Defendants' motions with respect to Count Three.
B. Count Five Conversion
Defendants next request that the court dismiss Count Five against them because Plaintiff has not alleged that Defendants used the property at issue to the exclusion of Plaintiff's rights, as required by Kansas law. The court will dismiss Count Five on such basis.
Under Kansas law, conversion is the "unauthorized assumption or exercise of the right of ownership over goods or personal chattels belonging to another to the exclusion of the other's rights." Gillespie v. Seymour, 14 Kan. App. 2d 563, 796 P.2d 1060, 1066 (1990) (citing Moore v. State Bank of Burden, 240 Kan. 382, 729 P.2d 1205, 1210 (1986)). To state a claim for conversion under Kansas law, a plaintiff must allege that he has been deprived of the use of his property. See United Phosphorus Ltd. v. Midland Fumigant, Inc., No. 91-2133-EEO, 1995 WL 646818, at *2 (D.Kan. Oct.13, 1995); Indep. Drug Wholesalers Group, Inc. v. Denton, 833 F. Supp. 1507, 1522 (D.Kan.1993).
The key issue before the court is whether Plaintiff's satellite signals can be converted when any unauthorized use is not to the exclusion of Plaintiff. Judge Vratil of this District recently discussed a parallel *1150 issue whether a patent could be converted under Kansas law. She distinguished an intangible patent from a security interest, which may be converted under Kansas law, and stated:
Defendant next argues that plaintiff's patent is distinguishable from a security interest and that [Kansas law] does not dictate that a patent is property which can be converted. Kansas law requires that for a conversion claim, defendant must use the property to the exclusion of plaintiff's rights. A patent, on the other hand, is not subject to the same risk of loss. As shown by this case, even if defendant infringes upon plaintiff's patent, plaintiff's patent is still valid plaintiff retains the right to rely on the patent and seek enforcement of it and plaintiff also retains the right to make his patented product. Because plaintiff's design idea is intangible, it is possible for both plaintiff and defendant to use it. While defendant's use might be improper, defendant has not taken plaintiff's property to the exclusion of plaintiff. Plaintiff has a right to his intangible property, but it is not a right that allows him to bring a conversion claim in Kansas under the present facts. As another court has noted, "it is not uncommon for a person to have an intangible property right without a cause of action in conversion to protect that right." Miles, Inc. v. Scripps Clinic & Research Found., 810 F. Supp. 1091, 1096 (S.D.Cal.1993). Plaintiff's present conversion claim presents just such a right and must be dismissed.
Malik v. Lynk, Inc., No. 99-2015-KHV, 1999 WL 760217, at *2 (D.Kan. Aug.18, 1999) (citations omitted). Judge Vratil also noted that she was not "suggest[ing] that a patent right could never be a proper basis for a conversion claim." Id. at *2 n. 1. She stated that she could "envision scenarios where defendant uses plaintiff's patent and also prevents plaintiff from using the patent." Id.
The court finds Judge Vratil's reasoning persuasive. Plaintiff does not allege that Defendants used its property to Plaintiff's exclusion. Plaintiff fails to allege, and rationally is incapable of alleging in good faith, that Plaintiff is deprived of its signal any time there is unauthorized use of its signal. Because Plaintiff's signal is intangible, it is possible for Plaintiff, its customers, and unauthorized users to use the signal simultaneously. Because Plaintiff is unable to allege that Defendants used its intangible property to Plaintiff's exclusion, Plaintiff alleges in a conclusory manner that Defendants unlawfully converted its property for their own commercial use and benefit. Such an allegation is insufficient to survive a motion to dismiss.
The court recognizes that several cases have defined conversion under Kansas law without mentioning the word "exclusion." See, e.g., Rajala v. Allied Corp., 919 F.2d 610, 633 (10th Cir.1990) (requiring some "actual interference with" the owner's possession of the property for a conversion claim) (citation omitted); Indep. Drug Wholesalers Group, Inc., 833 F.Supp. at 1522 (defining conversion as the "unauthorized assumption and exercise of a right of ownership over goods or personal chattels belonging to another, to the alteration of their condition or the exclusion of the owner's rights") (emphasis added) (citations omitted); Temmen v. Kent-Brown Chevrolet, 227 Kan. 45, 605 P.2d 95, 99 (1980) (defining conversion as the unauthorized exercise of the right of ownership over property by another). The court has reviewed those cases, and concludes that whether the property was taken to the exclusion of the plaintiff in those cases was not at issue. The cases are not instructive on the issue at hand.
*1151 The court is also reluctant to recognize a cause of action for conversion in the instant case because the property at issue is intangible. Plaintiff has cited several district court cases holding that an action for conversion may lie when the subject is intangible personal property. See, e.g., DIRECTV, Inc. v. DiSalvatore, No. 02-00706, 2003 U.S. Dist. LEXIS 23822, at *18 (N.D.Ohio May 21, 2003); Don King Prods./Kingvision v. Lovato, 911 F. Supp. 419, 423 (N.D.Cal.1995); Quincy Cablesystems, Inc. v. Sully's Bar, Inc., 650 F. Supp. 838, 848 (D.Mass.1986). The court does not dispute that in some instances, intangible property may be converted, see, e.g., Resolution Trust Corp. v. Heights of Tex., FSB, No. 89-2099-O, 1991 WL 205040, at *4 (D.Kan. Sept. 17, 1991), 1991 U.S. Dist. LEXIS 14255, at *12-13, but none of the cases Plaintiff cites provide the support Plaintiff needs to save its claim.
The DiSalvatore district court held that while "[i]t is not immediately obvious that the common law conversion claim for taking of personal property has been expanded to the point of allowing a claim for the taking of an interest that is neither tangible nor exclusive," finding the defendants liable for conversion under the unique circumstances of the case was appropriate. 2003 U.S. Dist. LEXIS 23822, at *18. In DiSalvatore, the summary judgment motions were unopposed. Id. at *2.
In Don King, the court held that broadcast television signals were intangible property that were nevertheless capable of being converted. 911 F. Supp. at 423. The court made the determination under California law, which does not require unauthorized use of property to the exclusion of the owner's rights. Id. ("In California, conversion has three elements: (1) ownership or right to possession of property, (2) wrongful disposition of the property right of another, and (3) damages.") (citations omitted). The Quincy Cablesystems court made a similar determination, based on Massachusetts law that does not require that the owner be excluded from using the property. 650 F. Supp. at 848. Both cases are distinguishable for this reason.
As a final note, Plaintiff alternatively asks the court to grant Plaintiff leave to amend to properly plead Counts Three and Five if the court determines that they do not state a cause of action. Such relief is denied, as the court fails to see how good faith amendment of either of the claims could rectify the deficiencies identified in this Memorandum and Order.
IT IS, THEREFORE, BY THE COURT ORDERED that Defendants Michael Mielke's and Richard Prentiss's motions to dismiss (Docs. 27 and 29) are granted. The court dismisses Counts Three and Five of Plaintiff's Complaint against these Defendants.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2314368/ | 311 F. Supp. 2d 203 (2004)
RATIONAL SOFTWARE CORP., Plaintiff,
v.
STERLING CORP., Defendant.
No. CIV.A. 02-10002-JLT.
United States District Court, D. Massachusetts.
March 31, 2004.
*204 *205 Lawrence F. Boyle, Richard M. Dohoney, Morrison, Mahoney, & Miller LLP, Boston, MA, for Sterling Corporation, Defendant.
Jonathan Hurwitz, Miles A. Jellinek, Cozen & O'Connor, Philadelphia, PA, Patrick J. Loftus, III, Law Offices of Patrick Loftus, Boston, MA, for Rational Software Corporation, Plaintiff.
Michael E. Okolita, Donald E. Feener & Associates, Worcester, MA, for Sterling Corporation, Defendant.
MEMORANDUM
TAURO, District Judge.
Rational Software Corporation ("Plaintiff") brought this action against Sterling Corporation ("Defendant"), a commercial moving company, after employees of Defendant dropped a computer disk array[1] that was owned by Plaintiff off of the back of one of Defendant's trucks. The disk array was irreparably damaged. The Parties agree that the damage was caused solely by the negligence of Defendant's employees.[2] Plaintiff seeks to recover $250,000. The Parties agree that $250,000 is the total amount of damages that Plaintiff sustained due to Defendant's negligence.[3] Defendant, however, asserts that its liability for the damaged disk array is limited to a value of sixty cents per pound.[4] Defendant, therefore, asks this court to limit Plaintiff's recovery to $924, as the disk array weighed 1,540 pounds.[5]
This court held a two-day bench trial to determine the amount of damages that Plaintiff is entitled to receive.
Findings of Fact
From 1997 to 2001, Plaintiff employed Defendant to move items to and from its various facilities within the Commonwealth of Massachusetts.[6] During that period, Plaintiff "did a tremendous amount of moving between" its facilities.[7] In fact, from 1997 to 2001, Defendant moved items for Plaintiff on over 200 occasions.[8] And, *206 "the structure and the terms [were] pretty much the same for all of the[] moves that [Defendant] did for" Plaintiff.[9]
In connection with each of the moves, Defendant issued a standard bill of lading to Plaintiff.[10] Defendant, thus, issued over 200 bills of lading to Plaintiff from 1997 to 2001.[11] At the bottom of each bill of lading, in bold red print, there was a "Delivery Acknowledgment" section that included a space for the shipper to sign to confirm that "The Above Services Were Rendered and The Goods Have Been Received In Good Condition Except As Noted."[12] An employee of Plaintiff signed every one of the over 200 bills of lading in the "Delivery Acknowledgment" section.[13]
Also at the bottom of each bill of lading, directly above the "Delivery Acknowledgment" section, and also in bold red print, there was a provision that purported to limit Defendant's liability. It provided: "Unless A Different Value Is Declared, The Shipper Hereby Releases The Property To A Value Of $.60 Per Pound Per Article."[14] Immediately after that liability-limiting provision, a space was provided for the shipper to declare a higher value.[15]
Michael W. Horn ("Horn"), the employee of Plaintiff who "[o]versaw the shipping and receiving" for the facilities that are relevant to this action,[16] initialed the liability-limiting provision on three of the abovementioned bills of lading.[17] On the other bills of lading, the liability-limiting provision was not initialed.[18] Over the course of its dealings with Defendant, Plaintiff did not once declare a value higher than sixty cents per pound.[19]
Defendant had a "policy [of] advis[ing][its] clients of the sixty cent per pound liability limitation,"[20] which was a "term[ ] and condition [ ]" of every move that it performed.[21] And, Defendant's customers were told that if they wanted coverage that exceeded sixty cents per pound per item, they could purchase additional coverage either from Defendant or from an independent insurance carrier.[22] Defendant's sixty cent per pound liability limitation is, moreover, standard throughout the commercial moving industry.[23]
Terrence J. Deignan ("Deignan"), the individual who "overs[aw] any work that" Defendant did for Plaintiff,[24] has stated that Plaintiff was informed, both orally and in writing, of the sixty cent per pound liability limitation prior to February 1, 2001, the day on which the damage in issue occurred.[25] What is more, Plaintiff has *207 acknowledged that, prior to that date, it knew of Defendant's sixty cent per pound liability limitation.[26] Plaintiff has also conceded that it "knew that if [it] wanted more [insurance], [it] could either buy it through [its] own insurance company or though [Defendant's] insurance company."[27]
In addition, prior to February 1, 2001, Defendant "had filed a Commodity Rate Tariff ... with the Massachusetts Department of Telecommunications and Energy ...."[28] The Tariff expressly mentions Defendant's standard sixty cent per pound per item liability limitation.[29] It also states that, if a shipper wants to declare a different value, it must enter that "value ... on [the] Bill of Lading ...."[30] The Tariff was "referenced on every bill of lading [that Defendant] issued to [P]laintiff."[31]
On February 1, 2001, Horn contacted Deignan and arranged for Defendant to move a computer disk array from one of Plaintiff's Massachusetts facilities ("Facility One") to another one of its Massachusetts facilities ("Facility Two").[32] Horn did not know the value of the disk array.[33]
When Defendant's employees arrived at Facility One to pick up the disk array, they did not provide Plaintiff with a bill of lading.[34] Upon its arrival at Facility Two, the disk array was dropped by employees of Defendant.[35] After the disk array was dropped, Horn, who was present at Facility Two, was given a bill of lading that was identical to the more than 200 bills of lading that Defendant had previously given to Plaintiff in connection with prior moves.[36] Deignan, who was also present at Facility Two, had written the following comments on the bill of lading: "Main Frame was dropped off of tailgate [and] fell to the ground the extent of the damage at this time is not known. The outside has been damaged do not know about the inside."[37] Horn signed the bill of lading in the "Delivery Acknowledgment" section.[38] He did not declare a value higher than sixty cents per pound in the section of the bill of lading that contained the liability-limiting provision, but he did not separately sign or initial that section either.[39]
Horn has since testified that, at the time he signed the bill of lading, he thought that Defendant would be "responsible" for any damages caused by its own employees' negligence, despite the bill of lading's sixty cent per pound liability-limiting provision.[40] He has also since testified that he thought that Defendant used its bills of *208 lading only as a means to record time for billing purposes.[41]
Conclusions of Law
Defendant argues that its liability for the damaged disk array is limited to a value of sixty cents per pound. To support its argument, Defendant points out that the bill of lading for the February 1, 2001 move contained a provision that limited its liability to a value of sixty cents per pound per item "Unless A Different Value Is Declared"[42] and that Plaintiff, an experienced shipper, signed the bill of lading without declaring a "Different Value." Defendant also cites Plaintiff's familiarity with its standard bill of lading form and its practice of limiting its liability to a value of sixty cents per pound per item to further support its argument. Additionally, Defendant contends that this court should enforce its sixty cent per pound liability limitation because it maintained a Tariff on file with the Massachusetts Department of Telecommunications and Energy that both referenced its sixty cent per pound liability limitation and afforded Plaintiff an opportunity to declare that the disk array had a value higher than sixty cents per pound.[43]
Plaintiff, however, asserts that it should not be bound by the sixty cent per pound liability limitation. It claims that, although Defendant had in place, on February 1, 2001, all of the mechanisms that it needed to effectively limit its liability to sixty cents per pound, it failed to properly implement those mechanisms. First, Plaintiff notes that it was not given, and did not sign, the bill of lading until after the disk array had been moved and damaged. Second, it emphasizes that its representative signed the bill of lading only in the "Delivery Acknowledgment" section, and not in the section that informed it of its opportunity to declare that the disk array had a value higher than sixty cents per pound. And, third, it insists that because "Defendant failed to follow the terms of its ... Tariff,"[44] it should not now be allowed to rely on that Tariff. Plaintiff, moreover, maintains that it should not be bound by the bill of lading's liability-limiting provision because, despite the existence of that provision and its knowledge of Defendant's practice of limiting its liability, it thought that Defendant would be "responsible" for any damages caused by its own employees' negligence and that the bill of lading served only to record time for billing purposes.[45]
Because the computer disk array was transported entirely in intrastate commerce, the laws of the Commonwealth of Massachusetts govern this action.[46] According to Mass. Gen. Laws ch. 106, § 7-309(2), a carrier may contractually limit its liability, so long as it follows the requirements set forth in the statute:
Damages may be limited by a provision that the carrier's liability shall not exceed a value stated in the document if the carrier's rates are dependent upon value and the consignor by the carrier's tariff is afforded an opportunity to declare a higher value or a value as lawfully provided in the tariff, or where no *209 tariff is filed he is otherwise advised of such opportunity ....[47]
A "document" is defined as a "document of title."[48] And, a "`[d]ocument of title' includes [a] bill of lading ...."[49]
In accordance with § 7-309(2), the bill of lading that Plaintiff received in connection with the move in issue contains "a provision that [Defendant's] liability [for damages] shall not exceed a value" of sixty cents per pound per item.[50] There can be no question that the bill of lading constitutes a "document" under the statute.[51] It is also clear that Defendant's "rates are dependant upon value" within the meaning of that statute.[52] And, there is no dispute that, prior to the move in issue, Defendant "had filed a ... Tariff ... with the Massachusetts Department of Telecommunications and Energy ...."[53] This court must, therefore, decide whether Plaintiff, "by [Defendant's] tariff[, wa]s afforded an opportunity to declare" that the disk array had a value higher than sixty cents per pound, or if Defendant is not permitted to rely on its Tariff, whether Plaintiff was "advised of" that opportunity.[54]
This court believes that Plaintiff was both "afforded an opportunity to declare" that the disk array had a higher value and "advised of" that opportunity.[55] It is clear that Plaintiff, "by [Defendant's] tariff [, was] afforded an opportunity to declare" that the disk array had a value higher than sixty cents per pound. The Tariff provides that any "declared value must be entered on [the] Bill of Lading ...."[56] And, the bill of lading that Plaintiff signed upon delivery of the damaged disk array stated, in bold red print, that *210 "Unless A Different Value Is Declared, The Shipper Hereby Releases The Property To A Value Of $.60 Per Pound Per Article."[57] Immediately after that statement, there was a space where Plaintiff could have declared a higher value.[58]
Plaintiff was also "advised of" its opportunity to declare that the disk array had a value higher than sixty cents per pound. Plaintiff has acknowledged that, prior to the move in issue, it was informed of Defendant's standard sixty cent per pound liability limitation.[59] It has also admitted that it was told "that if [it] wanted more [insurance], [it] could either buy it through [its] own insurance company or through [Defendant's] insurance company."[60] Plaintiff, moreover, was a long-term client of Defendant, and Plaintiff's representatives had signed over 200 bills of lading during the course of the Parties' business relationship.[61] Every one of those bills of lading contained the same provision: "Unless A Different Value Is Declared, The Shipper Hereby Releases The Property To A Value Of $.60 Per Pound Per Article."[62] In view of the above, Plaintiff cannot now claim that it was not "advised of" its opportunity to declare a higher value.
Defendant has, thus, complied with the requirements of § 7-309(2).[63] And, although Plaintiff has articulated a number of arguments as to why it should not be bound by the sixty cent per pound liability limitation, none of those arguments is sufficient to relieve it of that limitation.
First, Plaintiff contends that, because the bill of lading was signed only in the "Delivery Acknowledgment" section, and not in the section that informed it of its opportunity to declare that the disk array had a value higher than sixty cents per pound, the bill of lading's liability-limiting provision should not operate to limit its recovery. But, even though Plaintiff did not separately sign the section of the bill of lading that informed it of its opportunity to declare a higher value, that does not relieve it of the liability limitation. Plaintiff was a sophisticated shipper. And, it may be presumed that when it left blank the space on the bill of lading provided for declaring the released value of the disk array, it did so deliberately and with full knowledge of the consequences of its action.[64]
Second, Plaintiff asserts that, because it was not given a bill of lading when the disk array was picked up from Facility One, it was not "afforded an opportunity to declare" that the disk array had a value higher than sixty cents per pound. Although it is true that Plaintiff was not given the bill of lading until after the disk array had been dropped at Facility Two, it *211 does not follow that Plaintiff was not "afforded an opportunity to declare" a higher value. At the time Horn signed the bill of lading, he knew that the disk array had been damaged, and there was nothing to prevent him from declaring that the disk array had a value greater than sixty cents per pound.[65] Yet, he did not declare a higher value, and despite its arguments to the contrary, Plaintiff is now bound by that decision.[66]
And, third, Plaintiff argues that this court should give no legal effect to the bill of lading's liability-limiting provision because, when it signed the bill of lading, it thought that Defendant would be "responsible" for any damages caused by its own employees' negligence[67] and that the bill of lading served only to record time for billing purposes. Those alleged misunderstandings are, however, irrelevant. Plaintiff, an experienced shipper, chose to ship according to the terms of the bill of lading, and it acknowledged its acceptance of those terms, including the liability limitation, when it signed that document. Plaintiff is, therefore, bound by those terms.[68] In addition, over the course of the Parties' professional relationship, Plaintiff had received over 200 bills of lading from Defendant that were identical to the bill of lading in issue, and as a result, it should have been extremely familiar with the terms of that document when it signed it. Plaintiff cannot now claim that it did not understand those terms.
As a final matter, this court notes that it would be inequitable, at this point, to permit Plaintiff to avoid the liability limitation. "To allow [Plaintiff] not to declare the proper value of its shipment, avoid paying a higher rate, but then recover the true value of its goods would allow [Plaintiff] to have it both ways."[69]
Conclusion
For the foregoing reasons, Defendant's liability for the damaged disk array is limited to a value of sixty cents per pound or $924.
AN ORDER WILL ISSUE.
NOTES
[1] The disk array is a computer mainframe. See Def.'s Ex. E.
[2] Pl.'s Ex. 1.
[3] Id.
[4] See Def.'s Conclusions of Law ¶¶ 1-11.
[5] See Def.'s Proposed Findings of Fact ¶ 25.
[6] Tr. Sept. 29, 2003 ("Tr.1") at 28:18-25, 30:5-18.
[7] Id. at 30:5-7.
[8] Id. at 30:21-33:6; see Def.'s Ex. B. During that period, Defendant performed "two distinct types of moves" for Plaintiff: infrequent "major moves" and frequent "day-to-day stuff." Tr. Sept. 30, 2003 ("Tr.2") at 27:16-19. Plaintiff's disk array was damaged during one of the frequent "day-to-day" moves. Id. at 30:7-9.
[9] Tr. 1 at 40:4-11.
[10] See Def.'s Exs. B, G.
[11] See id.
[12] Id.
[13] See Def.'s Ex. B.
[14] Def.'s Exs. B, G.
[15] See id.
[16] Tr. 1 at 28:12-25.
[17] See Def.'s Exs. D-1, D-2, D-3.
[18] See Def.'s Ex. B.
[19] Tr. 1 at 55:17-56:4.
[20] Tr. 2 at 75:6-21.
[21] Id. at 5:2-5; see id. at 75:23-25.
[22] See id. at 17:20-18:9.
[23] Id. at 76:2-11.
[24] Id. at 5:18-20.
[25] See, e.g., id. at 10:5-11:16, 75:6-22. In connection with one of the "major moves" that Defendant performed for Plaintiff, Defendant provided Plaintiff with a written proposal that stated that Defendant's liability was limited to a value of sixty cents per pound per item. See Tr. 1 at 40:19-46:22; Def.'s Exs. C, C-1, C-2. Although the move in issue was not a "major move," Plaintiff was informed of Defendant's liability-limiting policy on other occasions as well. See, e.g., Tr. 2 at 10:5-11:16, 75:6-22.
[26] See, e.g., Tr. 1 at 48:16-20, 59:12-15.
[27] Id. at 50:7-10.
[28] Def.'s Proposed Findings of Fact ¶ 23; see Def.'s Ex. A. A tariff is "a publication stating the rates and charges between designated points or fixed distances of a common carrier and all rules in connection therewith." 220 C.M.R. 260.02.
[29] See Def.'s Ex. A at 3.
[30] Id.
[31] Def.'s Proposed Findings of Fact ¶ 23; see Def.'s Ex. B.
[32] Tr. 1 at 56:7-22.
[33] Id. at 59:2-5.
[34] See Tr. 2 at 46:19-47:11.
[35] See Tr. 1 at 62:4-6.
[36] Id. at 64:18-65:23; see Def.'s Exs. B, E. It is significant to note that Horn signed a fair number of the more than 200 bills of lading in the "Delivery Acknowledgment" section. See Def.'s Ex. B.
[37] Def.'s Ex. E.
[38] Tr. 1 at 66:23-25; see Def.'s Ex. E.
[39] See Def.'s Ex. E.
[40] Tr. 1 at 74:11-20.
[41] See id. at 31:15-32:12. Deignan, at his deposition, stated that the "signature on the bill of lading" served "[j]ust to verify that there was some work done on that particular day." Tr. 2 at 51:1-8. At trial, however, Deignan testified that "one of the purposes [of the bill of lading] is to show that work was done." Id. at 53:9-17 (emphasis added).
[42] Def.'s Ex. B.
[43] See Def.'s Conclusions of Law ¶ 11.
[44] Pl.'s Proposed Findings of Fact ¶ 30.
[45] See Tr. 1 at 31:15-32:12, 74:11-20; Pl.'s Proposed Findings of Fact ¶¶ 17, 22.
[46] See 49 U.S.C. § 14501(c)(3)(A).
[47] Section 7-309(2) represents the codification of the long-standing principle in Massachusetts law that a carrier's liability for damages to a shipper's property may be limited by the terms of an agreement between the parties. See, e.g., Boynton v. Am. Express Co., 221 Mass. 237, 108 N.E. 942, 943 (1915).
[48] Mass. Gen. Laws ch. 106, § 7-102(e).
[49] Mass. Gen. Laws ch. 106, § 1-201(15).
[50] § 7-309(2); see Def.'s Ex. B.
[51] § 7-309(2); see §§ 7-102(e), 1-201(15).
[52] § 7-309(2). In New York, which has adopted a statute identical to § 7-309(2), it is well established that common carriers "may ... limit liability based on their own negligence to declared value, if the shipper is given a choice of rates depending on the [shipper's] valuation of the goods." ABN Amro Verzekeringen BV v. Geologistics Americas, Inc., 253 F. Supp. 2d 757, 765 (S.D.N.Y.2003) (emphasis added); see also Nat'l Blouse Corp. v. Felson, 274 A.D. 164, 79 N.Y.S.2d 765, 767-68 (1st Dep't 1948) ("The established rule is that a common carrier cannot make a valid contract exempting itself from damages for negligence, and that such is the effect of a clause in a bill of lading fixing a maximum liability for loss in transit, unless the shipper is given a choice of rates depending on his valuation of the goods.") (emphasis added). In this case, Defendant charged Plaintiff the rate that it charged because Plaintiff did not declare that the disk array had a value greater than sixty cents per pound. If Plaintiff had declared that the disk array had a value greater than sixty cents per pound, it would have been charged a higher rate. The rate that Defendant charged Plaintiff was, therefore, dependent upon Plaintiff's valuation of the disk array.
[53] Def.'s Proposed Findings of Fact ¶ 23; see Def.'s Ex. A.
[54] § 7-309(2).
[55] To be sure, there is a dispute over whether this court should allow Defendant to rely on its Tariff. Plaintiff insists that because "Defendant failed to follow the terms of its ... Tariff," it should not now be permitted to rely on it. See Pl.'s Proposed Findings of Fact ¶¶ 30-31. But, because Plaintiff was both "afforded an opportunity to declare" that the disk array had a higher value and "advised of" that opportunity, the dispute concerning Defendant's Tariff is immaterial.
[56] Def.'s Ex. A at 3.
[57] Def.'s Ex. E (emphasis added).
[58] See id.
[59] See Tr. 1 at 48:16-20, 59:12-15.
[60] Id. at 50:7-10.
[61] See Def.'s Ex. B.
[62] See id. (emphasis added). On a few prior occasions, Horn initialed the provision that appears in the text. See Def.'s Exs. D-1, D-2, D-3.
[63] See supra note 55.
[64] See Mech. Tech. Inc. v. Ryder Truck Lines, Inc., 776 F.2d 1085, 1089 (2d Cir.1985) ("When a sophisticated shipper ... leaves blank the space provided for declaring the released value of the goods, we will presume that he did so deliberately with full knowledge of the consequences under the applicable tariff."); Hollingsworth & Vose Co. v. A-P-A Transp. Corp., 158 F.3d 617, 620 (1st Cir.1998) (holding that the shipper, "in leaving the declaration space blank in the bill of lading, agreed-by virtue of the tariff's `unless [a different value is declared'] clause-to" the limitation of liability that was stated in the carrier's tariff).
[65] In actuality, Plaintiff had a greater opportunity to declare a higher value than most shippers, as the damages it suffered were not speculative at the time it was "afforded an opportunity to declare" a higher value. Before Horn was given the bill of lading to sign, the following comments had been written on it: "Main Frame was dropped off of tailgate [and] fell to the ground the extent of the damage at this time is not known. The outside has been damaged do not know about the inside." Def.'s Ex. E.
[66] See Hollingsworth & Vose Co., 158 F.3d at 620 ("[T]he ordinary law of contracts ... makes a party pretty much responsible for whatever he or she signs ...."); Lee v. Allied Sports Assocs., Inc., 349 Mass. 544, 209 N.E.2d 329, 333 (1965) ("It is the rule in this Commonwealth that the failure to read or to understand the contents of a release, in the absence of fraud or duress, does not avoid its effects.").
[67] But see Nat'l Blouse Corp. v. Felson, 274 A.D. 164, 79 N.Y.S.2d 765, 767-68 (1st Dep't 1948) ("The established rule is that a common carrier cannot make a valid contract exempting itself from damages for negligence, and that such is the effect of a clause in a bill of lading fixing a maximum liability for loss in transit, unless the shipper is given a choice of rates depending on his valuation of the goods.") (emphasis added).
[68] See Hollingsworth & Vose Co., 158 F.3d at 620; Lee, 209 N.E.2d at 333.
[69] ABN Amro Verzekeringen BV v. Geologistics Americas, Inc., 253 F. Supp. 2d 757, 768 (S.D.N.Y.2003). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3101891/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-12-00342-CR
Craig Anthony Franklin § From the 396th District Court
§ of Tarrant County (1264222D)
v. § June 13, 2013
§ Opinion by Justice Gabriel
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
there was no error in the trial court’s judgment. It is ordered that the judgment of
the trial court is affirmed.
SECOND DISTRICT COURT OF APPEALS
By _________________________________
Justice Lee Gabriel | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1570853/ | 277 S.W.2d 733 (1955)
TENNESSEE GAS TRANSMISSION COMPANY, Appellant,
v.
Varnum Kenyon HALL et al., Appellees.
No. 12766.
Court of Civil Appeals of Texas, San Antonio.
March 23, 1955.
*734 Kelley, Looney, McLean & Littleton, Willard E. Dollahon, Edinburg, Baker, Botts, Andrews & Shepherd, Houston, for appellant.
Strickland, Wilkins, Hall, & Mills, Mission, for appellees.
W. O. MURRAY, Chief Justice.
This is a condemnation proceeding heard in the County Court at Law of Hidalgo County, Texas, wherein Tennessee Gas Transmission Company was condemnor and Varnum Kenyon Hall and wife, Betty Lou Hall, were condemnees. Condemnor was seeking an easement from 50 to 200 feet wide, comprising approximately 1.199 acres of land, across a sixteen-acre tract of land owned by the Halls, for the purpose of constructing and maintaining a high pressure feeder pipe line for its natural gas transmission system.
The trial was to a jury and, based upon the jury's answers to the issues propounded, judgment was rendered in condemnees' favor in the total sum of $20,691.79, and Tennessee Gas Transmission Company has prosecuted this appeal.
Appellant's first point of error is as follows:
"The trial court erred in overruling Plaintiff's motion for a new trial in connection with Plaintiff's allegations of jury misconduct in receiving new evidence in the jury room, because the verdict was fundamentally defective due to the fact that while the jury was deliberating upon its verdict, and before a verdict had been reached, one or more of the jurors testified that Plaintiff condemnor could have gone around the boundary of Defendants' 16 acre tract, rather than diagonally across same; and that, in deciding to cut across such land with their pipeline, said company had acted arbitrarily, prompted by the desire to save a few lengths of pipe and a few dollars of expense without regard to Mr. and Mrs. Hall's right, and irrespective of how much the land owners might be damaged by such a course which testimony, clearly revealing bias and prejudice toward the pipeline company, although not properly before the jury from any source and not being knowledge common to the public in general, was discussed and considered by the jury; and such jury, or some of them, were influenced by such discussion, and were caused to render a verdict in favor of Defendants for a larger sum than they would have rendered had such new and inflammatory testimony not been introduced, which testimony and discussion constituted material misconduct calculated to and probably *735 did result in an improper verdict in this cause."
The first question is, Did the jury receive new evidence in the jury room? All the testimony heard on the motion for a new trial is to the effect that the jury did discuss the fact that the damage would have been less if the pipe line had gone around appellees' sixteen-acre tract rather than diagonally across the property. However, the conversation did not necessarily occur in the manner set out in appellant's first point. The trial judge having overruled motion for a new trial, it is our duty to construe the testimony given at the hearing on the motion for a new trial in a light most favorable to appellees, the evidence being conflicting and the burden of proof being upon appellant. Barrington v. Duncan, 140 Tex. 510, 169 S.W.2d 462.
The foreman of the jury, E. D. Forbes, is the one who is alleged to have given the testimony during the deliberations of the jury with reference to the pipe line going diagonally across the land rather than around the boundaries. There is a conflict in the evidence as to just what Forbes said: One of the jurors, Carl Hugo, while being questioned by counsel for appellant, was asked, "Do you recall what Mr. Forbes said?" Hugo gave the following answer: "I think he said that he even thought that the gas company would have damaged the land a whole lot less if they had gone around the boundary line instead of cutting diagonally through it; it would have done a lot less damage to Mr. and Mrs. Hall." If this is what was said, and under the above stated rule we must presume that it is, because this is the least harmful statement testified to, then the statement was not new evidence, because there was evidence in the record to support this statement, and it was in no way improper.
Furthermore, the record shows that one of appellees' counsel made an argument to the jury, without objection, along the same line as was made by the juror Forbes. The making of this argument by counsel to the jury is not here assigned as error in any way. Under such circumstances, appellant will not be heard to complain that one of the jurors repeated the same argument during the deliberations of the jury, which he heard made during the argument of counsel. Smallwood v. Edmiston, Tex.Civ. App., 246 S.W.2d 220. If the argument had already been made to the jury, its reiteration to the jury by Forbes could hardly have caused the jury to return an improper verdict. Rules 327 and 434, Texas Rules of Civil Procedure.
Appellant's second point of error is as follows:
"The trial court erred in overruling Plaintiff's motion for a new trial in connection with Plaintiff's allegations of jury misconduct in receiving new evidence in the jury room, because the verdict was fundamentally defective due to the fact that while the jury was deliberating upon its verdict, and before a verdict had been reached, one or more of the jurors testified that should Defendant landowner, Varnum K. Hall, ever use a `chisel' or `subsoiler' plow upon his land, the tip thereof could strike Plantiff's buried high-pressure gas pipeline and either break same immediately or at least scratch some of the outside asphalt or tar wrapping off of the pipe, thereby enabling water in the soil, over a period of time, to rust and weaken said pipe at that particular place; that if such pipe should ever be so broken by a `chisel' or `sub-soiler', either directly or indirectly, there was great danger that the gas (escaping at high pressure) would ignite and burn Defendants' home now on the 16 acre tract in question, or some other house or houses that might, hereafter, be built on said Hall tract; that such danger existed, the possibility thereof would be apparent to any prospective purchaser of any of such land, and therefore would have a depressing or reducing effect upon the value of Defendants' land; that such new testimony about a `chisel' or `sub-soiler', so introduced to the jury in flagrant disregard of the charge of the Court, *736 was not properly before the jury from any source, and was not knowledge common to the public in general, yet was discussed and considered by the jury; and such jury, or some of them, were influenced by such discussion, and were caused to render a verdict in favor of Defendants for a larger sum than they would have rendered had such new and original testimony not been introduced, which testimony and discussion constituted material misconduct calculated to and probably did result in an improper verdict in this cause."
We overrule this point. The record shows without contradiction that the process of chiseling or sub-soiling land is a matter of common knowledge in and around Hidalgo County. Two of the jurors so testified and there was no evidence to the contrary. We must again presume that the trial judge, in overruling appellant's motion for a new trial, impliedly found that such process was a matter of common knowledge in the jurisdiction of the trial court. Jurors have a right to consider things which they know as a matter of common knowledge, along with the facts proven upon the trial. Head v. Hargrave, 105 U.S. 45, 26 L. Ed. 1028; 20 Am.Jur. 55, § 28.
A jury in arriving at a verdict may take into consideration matters of common knowledge though such facts have not been proven during the trial. Maryland Casualty Co. v. Hearks, 144 Tex. 317, 190 S.W.2d 62; Lewis v. Halbert, Tex.Civ.App., 67 S.W.2d 430; Blue Diamond Motor Bus Co. v. Hale, Tex.Civ.App., 69 S.W.2d 228; Akers v. Epperson, 141 Tex. 189, 171 S.W.2d 483, 156 A.L.R. 1028; 41 Tex.Jur. 852.
It was established by the testimony of the jurors Fred Buehler, Jr., and Carl Hugo, that in the jurisdiction of the trial court sub-soiling or chiseling operations, as discussed by the jury, were matters of common knowledge. Therefore, the trial court in determining whether the jury was guilty of misconduct had a right to take such common knowledge into consideration. Arcola Sugar Mills Co. v. Rodriquez, Tex. Civ.App., 18 S.W.2d 844. We must presume that the trial court found that the jury in discussing the chiseling or subsoiling process were discussing matters within their common knowledge, and not things of which they simply had a personal knowledge.
We think the record fails to show that appellant was prejudiced by the alleged misconduct of the jury. The main issue contested between the parties was as to whether appellees' land had a special value for subdivision purposes before the laying of the gas pipe line. Before the jury engaged in the alleged misconduct, they had answered the first issue to the effect that the 1.199 acres of land in the right-of-way across the sixteen-acre tract, had a reasonable market value of $1,737.50 per acre before the gas pipe line was laid across the property. This indicates that the jury had accepted the testimony offered by appellees that the property had extra value as subdivision property before the laying of the gas pipe line and had repudiated the testimony offered by appellant to the contrary.
The jury found that the 1.199 acres taken for the right-of-way had a value after the pipe was laid of $250 per acre. It was in connection with this issue that the alleged jury misconduct occurred. Only one witness was questioned as to this value, and his answer was $250 per acre. Thus the jury was following the undisputed evidence in answering question No. 2, as to the value per acre of the 1.199 acres taken for the right-of-way. The above alleged misconduct took place while the jury was deliberating upon their answer to issue No. 2, and, as pointed out above, they answered this issue in keeping with the uncontradicted evidence. If the jury had answered this issue in the most favorable manner possible to appellant it would have made only a slight difference in the total amount of the judgment.
The jury answered issue No. 3, in effect, that the remaining 14.801 acres of the sixteen-acre tract was worth $1,737.50 per acre before the laying of the gas pipe line. *737 If they had answered otherwise, they would have been giving an answer inconsistent with their answer to issue No. 1. Having accepted the theory of appellees, that the sixteen acres were subdivision property, in answering issue No. 1, they could not have then accepted appellant's theory and decided that the sixteen acres had no extra value as subdivision property and have placed the value at $600 or $700 per acre at most, as testified to by appellant's witnesses.
When the entire record, both on the main trial and on the hearing of the motion for a new trial, is considered, we are unable to say that appellant was prejudiced by the alleged misconduct. Trousdale v. Texas & N. O. R. Co., Tex.Civ.App., 264 S.W.2d 489, affirmed by the Supreme Court 276 S.W.2d 242; Rules 327 and 434, T.R.C.P.; Ford v. Carpenter, 147 Tex. 447, 216 S.W.2d 558; Southwestern Bell Telephone Co. v. Ferris, Tex.Civ.App., 89 S.W.2d 229; Smallwood v. Edmiston, Tex.Civ.App., 246 S.W.2d 220; McCall v. Alpine Telephone Corporation, Tex.Civ.App., 183 S.W.2d 205.
The jury had ample evidence before them to support a belief on their part that the sixteen-acre tract had subdivision value before the laying of the pipe line but not afterwards, and this would support a finding by the jury that the damage was uniform throughout the entire tract. The evidence would further support a finding that the appellees had intended from the time they purchased the property, to subdivide and sell it for homesites.
The verdict of the jury was amply supported by the evidence and was not excessive in amount. The judgment is affirmed.
NORVELL, Justice (dissenting).
The court below rendered judgment in this case for the total sum of $20,691.79, as and for the taking of a portion and damage to the remainder of a sixteen-acre tract of land located on Farm Road No. 495, some three-quarters of a mile in a northeasterly direction from the city limits of McAllen, Texas. Of the sixteen acres, 1.199 acres were condemned as a right of way for the purpose of laying a pipe line which was to serve as a part of appellant's gas gathering system. Although the provisions of the easement contract provided that the pipe should be buried twenty-four inches below the surface of the ground, and appellee Varnum Hall testified that he estimated the pipe was actually laid three to four feet below the surface, the jury allowed a recovery of $1,487.50 for the taking of the 1.199 acres. The jury found that the 14.801 acre balance had been damaged to the extent of $1,277.50 per acre.
This award of damages obviously cannot be supported upon the hypothesis of a diminution of the value of the land for farming and agricultural purposes. It appears that a residence had been built upon the premises, but no question of damage to this structure was submitted to the jury or even suggested by the pleadings. Although the evidence shows that at the time of the laying of the pipe line and at the time of the trial, the appellees were farming their sixteen-acre tract by raising cotton and tomatoes thereon, and had never actually subdivided the tract for rural homesites or any other purpose, the award is sought to be sustained upon the premise that the property was suitable for subdivision and that its value for such purpose was destroyed by the laying of the pipe line. To say the least, the award is extremely high and, in the opinion of this writer, the estimate of value for subdivision purposes was correctly described by one of appellees' witnesses as a "speculative value."
This Court recently had occasion to examine in detail, the rules relating to the granting of new trials for misconduct on the part of a jury. Trousdale v. Texas & N. O. R. Co., Tex.Civ.App., 264 S.W.2d 489, affirmed Tex., 276 S.W.2d 242. It is not my purpose to reiterate what was said in that opinion, other than to point out that in arriving at the probability of injury we must consider all of the pertinent record and that the amount of the award or judgment is necessarily an item of prime consideration. A deviation from a prescribed standard of conduct, which when coupled with a modest or reasonable award might *738 be considered harmless, assumes a different aspect when the judgment approaches the exorbitant.
Four special issues were submitted to the jury. Nos. 1 and 2 relate to the difference in value of the 1.199 easement strip before and after the laying of the pipe line thereon. Issues Nos. 3 and 4 relate to the damages sustained to the remainder of the tract (14.801 acres). Two former jurymen testified upon the hearing of the motion for new trial, and it appears that either while the jury was deliberating upon the answer to Special Issue No. 2, or shortly thereafter, some of the members of the jury discussed the probability of a deep plow or ground chisel striking the gas pipe, tearing off its protective covering and thus allowing it to corrode and become weakened. This discussion was carried to the point of arguing that the pipe might explode and cause appellees' house to burn. One of the juror witnesses testified that this discussion took place for a short period which he estimated at five minutes. This conversation took place before the jury answered Issues Nos. 3 and 4, relating to damages to the 14.801 acres remaining outside the easement area.
The fact that it may be common knowledge among farmers in Hidalgo County that a type of plow or chisel in general use in that county will disturb the soil to a depth of two feet, does not to my mind remove the prejudicial effect of the statement and ensuing discussion. The vice of such discussion lies in the fact that it introduced a new element into the case which was not pleaded, suggested, nor argued in open court. Issues Nos. 3 and 4 do not mention the subdivision value hypothesis, but that theory is urged here as supporting the verdict and was no doubt argued in the trial court. Yet the supposition of possible damage and deterioration of the pipe, consequent explosion and fire, was urged within the secrecy of the jury room to support a large award of damages.
There is testimony in the record that gas carrying pipes are carefully constructed, prepared and wrapped with a protective coating. It is shown by the evidence that in the absence of negligence in manufacture, preparation and placing, such pipes are not dangerous instrumentalities. The probability of a plow or chisel striking and injuring a pipe necessarily has reference to the depth at which the pipe is laid. It is not suggested that appellant was a party to this localized common knowledge relating to plow or chisel depth, and it may be supposed that had the pipe line company been informed in regard thereto by pleadings or otherwise, it would have agreed to lower its pipe rather than pay some fifteen to sixteen thousand dollars in advance for damages in case of a possible explosion.
Ordinarily the importation of some extraneous matter into a jury's deliberation as a basis upon which to rear some rather fantastic argument would not constitute reversible error because of a lack of probable prejudice, but a $1,200 an acre verdict for damages to cotton and truck farming land (insofar as the actual use to which it is now being put is concerned), should give occasion for pause. While appellees rely upon a "subdivision value" to support their judgment, it appears that the jury, or at least a portion of them, may have relied upon deep plowing, broken pipes and burning houses to support an extremely high and (to me) speculative recovery. I am of the opinion that probable prejudice was shown and that the judgment should be reversed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2463975/ | 995 S.W.2d 661 (1999)
HYUNDAI MOTOR COMPANY, Hyundai Motor America, Inc., and Port City Pontiac-GMC Trucks, Inc. d/b/a Harbor Hyundai, Petitioners,
v.
Rowena RODRIGUEZ, by and through her next friend, Andrea RODRIGUEZ, Respondent.
No. 97-0648.
Supreme Court of Texas.
Argued November 18, 1998.
Decided June 10, 1999.
*662 Ray A. Weed, Ruth G. Malinas, San Antonio, Jose E. Garcia, McAllen, William Powers, Jr., Austin, Thad D. Spalding, David M. Prichard, San Antonio, for petitioners.
David O. Gonzalez, Alice, Ramon Garcia, Edinburg, Baldemar Gutierrez, Alice, Maria Teresa Coronado, Edinburg, for respondent.
Justice HECHT delivered the opinion of the Court.
The sole question here before us is this: when claims for breach of an implied warranty and strict liability are both predicated on the dangerousness of a product's design, must the trial court ask the jury to make essentially the same factual determination separately for each legal theory? A divided court of appeals answered in the affirmative.[1] We disagree.
I
Rowena Rodriguez, then twenty-seven years old, suffered severe injuries when the 1988 Hyundai Excel-GL in which she was riding went out of control and rolled over. Rodriguez sued the vehicle manufacturers, Hyundai Motor Company and Hyundai Motor America, Inc., and the seller, Port City Pontiac-GMC Trucks, Inc., d/b/a Harbor Hyundai (collectively, "Hyundai"), alleging that the vehicle was not crashworthy because its roof structure and padding and its passenger restraint system were defectively designed so that she was thrown into the roof in the accident and injured more seriously than she would have been otherwise. Rodriguez claimed $20 million actual damages based on three legal theories: negligence; strict products liability, including design and marketing defects; and breach of implied warranty. All three theories were predicated on the same complaints, both in the pleadings and the evidence at trial: that defects in the roof and in the restraint system made the vehicle unreasonably dangerous. Hyundai contended at trial that Rodriguez's injuries were caused not by her impact against the roof of the vehicle but by her ejection from the vehicle due to her failure to wear her seat belt, or else by the negligence of the driver, Cruz.
The district court's charge to the jury contained only two questions concerning liability. One inquired whether any negligence of Hyundai, Rodriguez, or Cruz, was a proximate cause of Rodriguez's injuries. The jury found that only Rodriguez and Cruz negligently caused the accident, apparently crediting Hyundai's evidence that Rodriguez was injured when she was thrown outside the vehicle because she was not wearing her seat belt. (Rodriguez did not object at trial or on appeal to the *663 admission of evidence that she was not wearing a seatbelt at the time of the accident. The issue is not before us on appeal, and we therefore express no opinion on it.) The other liability question and instruction inquired about a design defect, as follows:
Was there a design defect in the 1988 Hyundai Excel at the time it left the possession of Hyundai Motor Company that was a producing cause of the injury in question?
A "design defect" is a condition of the product that renders it unreasonably dangerous as designed, taking into consideration the utility of the product and the risk involved in its use.
The jury answered "no". The district court refused to include in the charge questions concerning a marketing defect or a breach of implied warranty. Specifically, as pertaining to the issue now before us, the district court refused to submit the following question and instruction concerning breach of implied warranty requested by Rodriguez:
Was the automobile supplied by [Hyundai] unfit for the ordinary purposes for which such automobiles are used because of a defect, and, if so, was such unfit condition a proximate cause of the injury in question?
A defect means a condition of the goods that renders it unfit for the ordinary purposes for which it is used because of a lack of something necessary for adequacy.
The jury having failed to find Hyundai liable, the district court rendered judgment that Rodriguez take nothing.
Rodriguez appealed on several grounds, among them that the district court erred in refusing to include a jury question and instruction on her breach-of-warranty claim. Rejecting all Rodriguez's other arguments, the court of appeals accepted this one, reasoning that because "defect" is defined differently for products-liability and breach-of-implied-warranty causes of action, the district court was required to submit both matters to the jury and was not permitted "to combine independent grounds of recovery into a single question."[2] Consequently, the court reversed the judgment for Hyundai and remanded the case for trial on Rodriguez's breach-of-implied-warranty claim. Chief Justice Seerden dissented, concluding that "the jury's rejection of a strict liability design defect theory conclusively negated the elements necessary for Rodriguez to recover under her alternate theory of implied warranty of merchantability."[3] The dissent argued that if the only defect alleged under either theory involves the dangerousness of the product, as in a crashworthiness case, the determination of "defect" for strict liability purposes also resolves the issue of "defect" for implied warranty purposes.[4] Noting that liability for breach of implied warranty requires a finding of proximate cause ("but for" causation and foreseeability) while liability for a design defect requires a finding of producing cause ("but for" causation only), the dissent reasoned that if the jury failed to find that any defect in the vehicle was a producing cause of Rodriguez's injuries, it could not have found that the same alleged defect proximately caused her injuries.[5]
Only Hyundai appealed to this Court. We granted Hyundai's application for writ of error to consider whether the district court erred in refusing to include Rodriguez's breach-of-implied-warranty question and instruction in the jury charge.[6]
II
A trial court must submit in its charge to the jury all questions, instructions, and definitions raised by the pleadings and evidence.[7] When feasible, jury *664 questions should be in broad form, accompanied by appropriate instructions and definitions.[8] A single question may relate to multiple legal theories. For example, in Texas Department of Human Services v. E.B., we held that a finding of grounds for termination of parental rights could be used to support one of two legal bases for termination.[9] And in American National Petroleum Co. v. Transcontinental Gas Pipe Line Corp., we held that a damages finding on a contract claim would support recovery on a tort claim where the measure of damages was the same for either claim.[10] Indeed, submission of a single question relating to multiple theories may be necessary to avoid the risk that the jury will become confused and answer questions inconsistently.[11] The goal of the charge is to submit to the jury the issues for decision logically, simply, clearly, fairly, correctly, and completely. Toward that end, the trial judge is accorded broad discretion so long as the charge is legally correct.[12]
Liability for personal injuries caused by a product's defective design can be imposed under several legal theories, among them negligence, breach of warranty, and strict products liability.[13] The requisite proof for recovery on a design defect claim was prescribed by statute in 1993 and made the same for any legal theory asserted.[14] But before enactment of that statute, when the case before us was tried, *665 "design defect" was defined differently for different legal theories. In Plas-Tex, Inc. v. U.S. Steel Corp.,[15] we explained the difference in the meaning of "defect" in a strict-liability action and an action under Texas Business & Commerce Code § 2.314(b)(3)[16] for breach of implied warranty of merchantability.[17] For strict liability, "defect" means "a condition of the product that renders it unreasonably dangerous."[18] For breach of implied warranty, a product is defective if it is "unfit for the ordinary purposes for which [it is] used because of a lack of something necessary for adequacy."[19]
The difference in the two concepts of "defect" is critical in circumstances like those presented in Plas-Tex. There the plaintiff alleged that polyester resins purchased for use in manufacturing fiberglass swimming pools caused the pools to delaminate. Asserting a breach of the implied warranty of merchantability, plaintiff sought to prove only that the resins were not fit for the ordinary purposes for which they were used; plaintiff did not contendand could not successfully do so that the resins or the resulting delamination made the swimming pools unreasonably dangerous. In Plas-Tex, plaintiff could recover on a breach-of-warranty claim but not on a strict-liability claim.
But in a crashworthiness case involving a claim for personal injuries, like the one now before us, strict-liability's and breach-of-warranty's concepts of "defect" are functionally identical. The claim in a crashworthiness case is that a defect in the vehicle caused an occupant to sustain injuries in an accident that he or she would not otherwise have suffered. A defect in a vehicle that makes it uncrashworthy and thus causes occupants to be exposed to an unreasonable risk of harm in the event of an accident is both "unfit for the ordinary purposes for which [it is] used because of a lack of something necessary for adequacy" and unreasonably dangerous. An uncrashworthy vehicle cannot be unfit for ordinary use but not unreasonably dangerous, nor can it be unreasonably dangerous but fit for ordinary use; it must be both or neither.
The congruence in crashworthiness cases of the two concepts of defect for strict-liability and breach-of-implied-warranty claims is illustrated in the case before us. Rodriguez's strict-liability and implied-warranty actions (as well as her negligence claim, although it does not concern us) stem from a single complaint that the 1988 Hyundai Excel GT did not adequately protect her in a rollover because of design defects in the roof and restraint system. Neither in her pleadings, nor in the evidence at trial, did Rodriguez claim that some defects related only to her strict-liability claim and some only to her breach-of-implied-warranty claim. In this Court, Rodriguez has identified no evidence offered to prove a breach of implied warranty that did not also support her claim of strict liability.
Because the controlling issues regarding the existence of a defect for strict liability and breach of implied warranty were functionally identical in this case, we hold that the district court was not required to submit Rodriguez's requested question and instruction. Rather, to avoid confusing the jury and the possibility of inconsistent findings, the district court properly refused the requested question and instruction. This is true even though the language of the refused question and instruction was different than that of the question and instruction submitted. While trial courts should obtain fact findings on all theories pleaded and supported by evidence, a trial court is not required to, and *666 should not, confuse the jury by submitting differently worded questions that call for the same factual finding.
Other courts in similar cases have likewise concluded that whether a defect exists for breach of an implied warranty of merchantability and for strict liability involves an identical factual determination.[20] A number of jurisdictions have encountered the irreconcilable verdicts that often arise from this type of dual submission.[21] A number of jurisdictions, anticipating such a problem, have approved a trial court's refusal to submit a warranty question in similar circumstances.[22] The Restatement (Third) of Torts: Products Liability *667 also supports a single submission to the jury in such cases:
[T]wo or more factually identical defective design claims ... should not be submitted to the trier of fact in the same case under different doctrinal labels. Regardless of the doctrinal label attached to a particular claim, design ... claims rest on a risk-utility assessment. To allow two or more factually identical risk-utility claims to go to a jury under different labels, whether "strict liability," "negligence," or "implied warranty of merchantability," would generate confusion and may well result in inconsistent verdicts.
* * *
The same analysis applies to claims against a nonmanufacturing supplier.... The plaintiff in the nonmanufacturing supplier case should, once again, not be free to submit a case to a jury based on both the implied warranty of merchantability and strict liability theories since they are based on the same factual basethe sale by the supplier of a defective product regardless of fault. The theories are thus duplicative and do not constitute valid separate claims that may be given to the trier of fact in the same case.[23]
As we have noted, for cases tried since the 1993 effective date of chapter 82 of the Civil Practice and Remedies Code, the findings required to establish a design defect claim are identical, regardless of the legal theory asserted.[24]
III
While the concepts of defect are functionally indistinguishable for strict liability and breach of implied warranty in a case like the one before us, other elements of the two causes of action are different. For example, for strict liability a product defect must be shown to have been only a producing causethat is, a "but for" causeof injury, while liability for breach of warranty requires a showing of proximate causethat is, "but for" causation and foreseeability.[25] In the case before us, the district court inquired of the jury about producing cause only. Although Hyundai would have been entitled to a finding of proximate cause as a predicate for Rodriguez's recovery for breach of warranty, Hyundai did not object to the charge for this omission. Had Hyundai done so, the court would have been required to ask the jury for separate findings concerning producing cause and proximate cause. Rodriguez's requested question and instruction correctly incorporated the element of proximate cause, but the court's refusal to submit the question to the jury did not harm Rodriguez because the charge as submitted would have allowed her the full recovery she sought on the lesser finding of producing cause.
We recognize, too, that the consequences of liability determinations under strict liability and breach of warranty theories are different.[26] Liability for breach of an implied warranty of merchantability is restricted to merchants;[27] strict liability *668 is not so limited.[28] A breach of warranty may be a basis for recovery under the Deceptive Trade PracticesConsumer Protection Act; strict liability is not.[29] For breach of an implied warranty a plaintiff may recover only actual damages,[30] but recovery under the DTPA may include statutory damages and attorney fees;[31] in an action for strict liability a plaintiff may recover actual and punitive damages, but not attorney fees.[32] The statute of limitations is four years on a breach of warranty claim[33] but only two years on a strict liability claim.[34] These are but some of the differences (none of which were involved in this case).
Plaintiffs are generally entitled to obtain findings that will support alternative theories of recovery, even if those theories address but a single injury. In such cases, the trial court should structure the jury charge to obtain findings that will allow the plaintiff to elect a basis of recovery, and the defendant to assert defenses that may not be available to all theories. Our holding today does not hamper the trial court from submitting a charge on multiple theories. We hold only that the jury should not be asked to consider the identical defect finding in response to questions relating to strict-liability and breach-of-implied-warranty claims.
* * * * *
For the reasons we have explained, the court of appeals erred in reversing the judgment of the district court. Accordingly, we reverse the judgment of the court of appeals and render judgment that Rodriguez take nothing.
NOTES
[1] 944 S.W.2d 757.
[2] 944 S.W.2d at 771.
[3] 944 S.W.2d at 774 (Seerden, C.J., dissenting).
[4] Id at 775.
[5] Id.
[6] TEX. SUP.CT. J. 500 (Mar. 13, 1998).
[7] TEX.R. CIV. P. 278 ("The court shall submit the questions, instructions and definitions in the form provided by Rule 277, which are raised by the written pleadings and the evidence."); Triplex Communications, Inc. v. Riley, 900 S.W.2d 716, 718 (Tex.1995) ("If an issue is properly pleaded and is supported by some evidence, a litigant is entitled to have controlling questions submitted to the jury."); Elbaor v. Smith, 845 S.W.2d 240, 243 (Tex. 1992) ("[Rule 278] provides a substantive, non-discretionary directive to trial courts requiring them to submit requested questions to the jury if the pleadings and any evidence support them."); see Exxon Corp. v. Perez, 842 S.W.2d 629, 631 (Tex.1992) (per curiam).
[8] TEX.R. CIV. P. 277 ("In all jury cases the court shall, whenever feasible, submit the cause upon broad-form questions. The court shall submit such instructions and definitions as shall be proper to enable the jury to render a verdict."); Westgate, Ltd. v. State, 843 S.W.2d 448, 455 n. 6 (Tex.1992) ("Although we adhere to the principles of broad-form submission, [Rule] 277 is not absolute; it mandates broad-form submission `whenever feasible.' Submitting alternative liability standards when the governing law is unsettled might very well be a situation where broad-form submission is not feasible.") (citation omitted).
[9] 802 S.W.2d 647, 649 (Tex.1990).
[10] 798 S.W.2d 274, 278 (Tex.1990).
[11] See Holmes v. J.C. Penney Co., 382 S.W.2d 472, 473 (Tex.1964) ("[T]he submission of duplicitous issues raising the same fact question, whether identical in language or merely in similar form, is erroneous."); Mobil Chem. Co. v. Bell, 517 S.W.2d 245, 255 (Tex.1974) (criticizing the trial court's submission of both a general negligence issue based on res ipsa proof and a second negligence question based on proof of specific negligent acts, stating, "[w]e disapprove the practice of submitting the same issue in two different ways").
[12] See E.B., 802 S.W.2d at 649.
[13] Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 423 (Tex.1984); see WILLIAM POWERS, Jr., TEXAS PRODUCTS LIABILITY LAW § 1.02, at 1-1 to 1-2 (2d ed.1994).
[14] Section 82.005 of the Texas Civil Practice and Remedies Code sets out the proof necessary for recovery in all "products liability action[s] in which a claimant alleges a design defect". Section 82.001(2) defines a "[p]roducts liability action" as
any action against a manufacturer or seller for recovery of damages arising out of personal injury, death, or property damage allegedly caused by a defective product whether the action is based in strict tort liability, strict products liability, negligence, misrepresentation, breach of express or implied warranty, or any other theory or combination of theories.
TEX. CIV. PRAC. & REM.CODE §§ 82.001(2). See also TEXAS PATTERN JURY CHARGESMALPRACTICE, PREMISES & PRODUCTS PJC 71.4B (1997); RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 2 cmt. n, at 40 (Proposed Final Draft, 1997) ("This Restatement contemplates that a well-coordinated body of law governing liability for harm to persons or property arising out of the sale of defective products requires a consistent definition of defect, and that the definition properly should come from tort law, whether the claim carries a tort label or one of implied warranty of merchantability.").
[15] 772 S.W.2d 442(Tex.1989).
[16] TEX. BUS. & COM.CODE ANN. § 2.314(b)(3) (providing that, to be merchantable, goods must be "fit for the ordinary purposes for which such goods are used").
[17] Plas-Tex, 772 S.W.2d at 444.
[18] Id.
[19] Id.
[20] See, e.g., Foster v. Ford Motor Co., 621 F.2d 715, 719 (5th Cir.1980) (applying Texas law) ("The negative implication of the warranty requirement that goods be `fit for the ordinary purposes for which such goods are used' is that the goods not be unreasonably dangerous."); Chestnut v. Ford Motor Co., 445 F.2d 967, 969 (4th Cir.1971) (applying Va. law) (holding that the safety standard is the same under negligence, breach of warranty, and strict liability theories); Basko v. Sterling Drug, Inc., 416 F.2d 417, 427 (2d Cir.1969) (applying Conn. law) ("[T]he `defect' necessary for the imposition of strict liability is the equivalent of an implied warranty of merchantability."); Wood v. General Motors Corp., 673 F. Supp. 1108, 1119 (D.Mass.1987) ("A claim for the breach of implied warranty of merchantability focuses on whether the defect renders the product unreasonably dangerous and therefore unfit for its ordinary use or purpose."); cf. City of Greenville v. W.R. Grace & Co., 827 F.2d 975, 978 (4th Cir.1987) (applying S.C. law) ("I]n order to prevail on a negligence or breach of warranty theory, a plaintiff must prove that `the product, as designed, was in a defective condition unreasonably dangerous to the user....'"); Morgen Indus., Inc. v. Vaughan, 252 Va. 60, 471 S.E.2d 489, 492 (1996) ("In order to recover under either a negligence or a breach of implied warranty theory [in a products liability case] ... a plaintiff must show ... that the goods were unreasonably dangerous"). But see Brewer v. Jeep Corp., 724 F.2d 653, 656 (8th Cir.1983) (applying Ark. law) ("Arkansas requires an additional element, over and above the defect necessary for a warranty action, to be demonstrated ... in strict liability [: unreasonable dangerousness.]"); Zacher v. Budd Co., 396 N.W.2d 122, 140 (S.D.1986) ("`[F]itness for ordinary purposes,' appears to set a lower liability threshold that is more beneficial to a plaintiff. It also appears easier for a jury to understand and apply.").
[21] See, e.g., Costilla v. Aluminum Co. of Am., 835 F.2d 578, 579 (5th Cir.1988) (applying Texas law) (holding that "a double submission was unwarranted" when the jury found a twist-off bottle cap was not unreasonably dangerous, because "the determination of defect for purposes of dangerousness for § 402A liability often resolves the issue of defect for unmerchantability liability"); Gumbs v. International Harvester, Inc., 718 F.2d 88, 95 (3rd Cir.1983) (applying Virgin Islands law) (concluding that the jury's findings were irreconcilably inconsistent, because the requisites for strict liability and breach of implied warranty of merchantability were, under the facts of that case, coextensive); Bowler v. Stewart-Warner Corp., 563 A.2d 344, 347 (D.C.App. 1989) (reasoning that, because strict liability and implied warranty "represent but one tort" under D.C. law, it was error to give instruction as to both, for the dual submission gave rise to inconsistent findings that the product was unfit for their ordinary purpose but not unreasonably dangerous).
[22] See, e.g., Foster, 621 F.2d at 719 (holding that, under Texas law, plaintiffs were not entitled to separate instructions on breach of warranty, because the proof required under both theories was substantially similar and the jury's finding of no defect precluded recovery under both strict liability and warranty); Basko, 416 F.2d at 427 (holding that, under Connecticut law, it was not error to refuse an instruction on breach of implied warranty, because defect under strict liability is equivalent to breach of an implied warranty of merchantability); see also Brewer, 724 F.2d at 656 (8th Cir.1983) (applying Ark. law) (holding that, under Arkansas law, it was not reversible error to refuse a warranty question because, under the facts and circumstances, the alleged defect in warranty was the same defect that rendered the product unreasonably dangerous); cf. Chestnut, 445 F.2d at 968-969 (holding that, under Virginia law, it was not error to charge the jury on warranty and refuse strict liability and negligence submissions, on the grounds that the safety standard is the same under all three theories). See generally Allan E. Korpela, Annotation, Necessity and Propriety of Instructing on Alternative Theories of Negligence or Breach of Warranty, Where Instruction on Strict Liability in Tort is Given in Products Liability Cases, 52 A.L.R. 3d 101, 103 (1973) (noting the "reluctance on the part of courts to give [both] instructions where the particular facts ... do not require them, for fear of creating ... confusion").
[23] RESTATEMENT (THIRD) OF TORTS: PRODUCTS LIABILITY § 2 cmt. n, at 41-42 (Proposed Final Draft, 1997).
[24] TEX. CIV. PRAC. & REM.CODE §§ 82.001(2), 82.005.
[25] See Union Pump Co. v. Allbritton, 898 S.W.2d 773, 775 (Tex.1995) ("[P]roducing cause is the test in strict liability. Proximate and producing cause differ in that foreseeability is an element of proximate cause, but not of producing cause." (citation omitted)); Signal Oil & Gas Co. v. Universal Oil Prods., 572 S.W.2d 320, 328 (Tex.1978) (stating that breach of warranty claims require proof that the breach proximately caused the plaintiff's injury).
[26] See Garcia v. Texas Instruments, Inc., 610 S.W.2d 456, 462 (Tex.1980) ("[T]he Code [i.e., implied warranty] establishes an alternative remedy to strict liability in tort with respect to injuries suffered from a defective product."); see also Mid Continent Aircraft Corp. v. Curry County Spraying Serv., Inc., 572 S.W.2d 308, 311 (Tex.1978) (characterizing strict liability in tort and warranty liability in contract as having an "entangled relationship in the area of products liability").
[27] TEX. BUS. & COM.CODE § 2.314(a).
[28] RESTATEMENT (SECOND) OF TORTS § 402A cmt. f(1965).
[29] TEX. BUS. & COM.CODE § 17.50(a).
[30] Id. §§ 2.714(b)-(c), 2.715.
[31] Id. § 17.50(b), (d).
[32] See TEX. CIV. PRAC. & REM.CODE § 41.003(a); Travelers Indem. Co. v. Mayfield, 923 S.W.2d 590, 593 (Tex.1996) ("In Texas, attorney's fees may not be recovered from an opposing party unless such recovery is provided for by statute or by contract between the parties.").
[33] TEX. BUS. & COM.CODE § 2.725(b).
[34] TEX. CIV. PRAC. & REM.CODE § 16.003. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2488608/ | 71 So. 3d 311 (2011)
STATE of Louisiana
v.
Jerrold J. FRANCIS.
State of Louisiana
v.
Jerrold Francis.
No. 2011-K-0571.
Supreme Court of Louisiana.
October 7, 2011.
Denied. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2503050/ | 70 F. Supp. 2d 717 (1999)
Barbara STRAWN
v.
AFC ENTERPRISES, INC. d/b/a Church's Chicken.
No. Civ.A.G-99241.
United States District Court, S.D. Texas, Galveston Division.
November 4, 1999.
*718 *719 Ted C Litton, Royston Rayzor Vickery and Williams, Houston, TX, for Ted C Litton, mediator.
Alton C Todd, Attorney at Law, Alvin, TX, for Barbara Strawn, plaintiff.
Gary Duane Sarles, Sarles and Ouimet, Dallas, TX, for AFC Enterprises Inc, dba Churchs Chicken, defendant.
ORDER DENYING DEFENDANT'S MOTION TO STAY OR DISMISS AND TO COMPEL ARBITRATION
KENT, District Judge.
On January 7, 1998, Plaintiff Barbara Strawn was allegedly injured in a slip and fall accident within the course and scope of her employment at Defendant's Church's Chicken restaurant in Alvin, Texas. She brought this suit as an original action in this Court, with jurisdiction founded on diversity of citizenship. Now before the Court is Defendant's Motion to Stay or Dismiss and to Compel Arbitration, brought pursuant to the Federal Arbitration Act ("FAA"), 9 U.S.C. §§ 1-16. For the reasons set forth below, Defendant's Motion is DENIED.
I. FACTUAL SUMMARY
Defendant AFC Enterprises, d/b/a Church's Chicken, is a non-subscriber to the Texas Workers' Compensation Act. Rather than provide workers' compensation insurance coverage, AFC established the America's Favorite Chicken Company Texas Employee Injury Benefit Plan (the "AFC Plan"). Under the AFC Plan, employees injured or killed in the course and scope of their employment are entitled to limited medical, wage-replacement and death benefits. Acting pursuant to the terms of the AFC Plan, Defendant has paid Plaintiff about $22,500 in wage-replacement benefits, and about $24,000 in medical benefits.
Defendant seeks to steer any and all disputes that may arise between an employee and AFC into binding arbitration. Defendant accomplishes this goal by requiring all prospective employees to sign the Value Deal Agreement as a condition of their employment. The Value Deal Agreement provides that "all claims and disputes Employee may presently have or may in the future have" against Defendant, expressly including "claims for bodily injury or physical, mental or psychological injury" must be submitted to binding arbitration. The parties do not dispute that Barbara Strawn signed the Value Deal Agreement on August 14, 1997.
The AFC Plan and the Value Deal Agreement work in tandem, each referencing the other. In particular, the AFC Plan is designed to provide a heightened level of benefits to employees who sign the Value Deal Agreement and agree to submit claims to an arbitral forum.
Of great significance to the following analysis, the AFC Plan provides minimal benefits, as compared to those available under the Texas Workers' Compensation Act. The differences between the benefits provided under the AFC Plan and the Workers' Compensation Act are striking. Under the Act, an employee is entitled to lifetime medical benefits, without limitation on amount. Under the AFC Plan, the employee is entitled to only 26 weeks of benefits, or 104 weeks of benefits if he has signed a Value Deal Agreement. Employees under the Act can recover a percentage of their wages based on their degree of medical impairment; no such benefits for impairment are provided under the AFC Plan. Under the Act, an employee could receive as much as 80% of his average wage for up to 401 weeks as long term wage replacement benefits; the AFC Plan has no such provision. For severe injuries, the Act provides for up to 75% of the pre-injury wage amount for life; the AFC Plan provides no such benefits. For workers killed in the course of their employment, the Act provides benefits at the same rate as lifetime benefits. The AFC Plan provides no death benefits at all unless the employee has signed a Value Deal *720 Agreement, and then benefits are limited to twice the employee's pre-injury annual pay, up to an absolute maximum of $75,000.
Defendant does not really dispute that the AFC Plan provides minimal benefits as compared to those available under the Texas Workers' Compensation Act. Indeed, Defendant boldly asserts that a nonsubscribing employer is "not required to offer any benefits for on the job injuries" (emphasis added). According to Defendant, the sparse level of benefits under the AFC Plan is "consistent with Texas public policy, because AFC pays at least limited benefits without regard to fault." Defendant further argues that the combination of the limited benefits under the AFC Plan, coupled with the mandatory arbitration requirement of the Value Deal, is not contrary to public policy. In fact, Defendant goes so far as to claim that "AFC could have unilaterally imposed the Value Deal Agreement on its employees as a condition of employment without offering any benefits whatsoever."
II. The Analytical Standard
When adjudicating a motion to compel arbitration under the Federal Arbitration Act, the Court conducts a two step analysis. The first step has two sub-parts: the Court is to determine a) whether the parties agreed to arbitrate the dispute in question, and b) whether the dispute in question falls within the scope of the agreement to arbitrate. See Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th Cir.1996). The second step of the Webb analysis involves deciding "whether legal constraints external to the parties agreement foreclosed the arbitration of those claims." Id. (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628, 105 S. Ct. 3346, 3355, 87 L. Ed. 2d 444 (1985).
Because federal policy favors arbitration, when analyzing step 1(b), ambiguities as to the scope of the arbitration clause are to be resolved in favor of arbitration. See Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468, 475-76, 109 S. Ct. 1248, 1253, 103 L.Ed.2d 488(1989); Webb, 89 F.3d at 258. And because federal policy favors arbitration, parties can agree to arbitrate a wide variety of disputes. Consequently, an analysis of step 1(a) is likewise biased towards finding in favor of arbitrability. The Supreme Court has held that even disputes involving statutory rights can be arbitrable. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 26, 111 S. Ct. 1647, 1652, 114 L. Ed. 2d 26 (1991). This conclusion is based on the principle that "by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum." Mitsubishi Motors, 473 U.S. at 628, 105 S. Ct. at 3354.
In keeping with the strong federal policy in favor of arbitration, many disputes about the enforceability of an arbitration clause are themselves to be resolved in an arbitral forum. Thus the fact that a party makes a credible showing of duress or fraud, or argues that an arbitration clause is unconscionable, may not be enough to prevent a Court from finding in favor of arbitration under step 1(a). See Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 402-04, 87 S. Ct. 1801, 1805-06, 18 L. Ed. 2d 1270 (1967). Under the Prima Paint rule, if the complaint is directed against the contract as a whole, the enforceability of the arbitration provisions contained within the contract are to be decided by the arbitrator. See id. Thus under step 1(a), for a court to find an arbitration clause unenforceable, the dissatisfied party must confine his attack to the arbitration clause itself. See id. For example, if a party claims that the signature on an employment contract was obtained by fraud, the enforceability of an arbitration clause found within that employment contract is to be decided by the arbitrator, because the attack goes to *721 the contract as a whole. But if the complaint is that the arbitration clause itself was obtained by fraud, then it is for a court, and not an arbitrator, to decide on the enforceability of the arbitration provision. See id.
While there is a strong federal policy in favor of arbitration, there are limits to this policy. The FAA by its own terms allows some arbitration agreements to be rendered unenforceable by neutral principles applicable to contracts generally. The FAA makes most arbitration agreements "valid, irrevocable, and enforceable save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (emphasis added). It is the second step of the Webb analytical framework which addresses this possibility. Notwithstanding the fact that an arbitration agreement is otherwise valid (Webb step 1(a)) and that the dispute is within the scope of the agreement (Webb step 1(b)), an arbitration agreement can still be invalidated under the second step of the Webb analytical framework due to "legal constraints external to the parties' agreement." See Webb, 89 F.3d at 257-58.
Thus there are two independent ways to attack the enforceability of an arbitration agreement which appears to cover the underlying dispute between the parties. A party can attack the arbitration clause under step 1(a), and if the complaint is directed at the arbitration clause in isolation, the court will decide if it is enforceable; whereas if the complaint is directed at the entire contract, an arbitrator will decide if it is enforceable. See Prima Paint, 388 U.S. at 402-04, 87 S. Ct. at 1805-06. Alternatively, a party can mount a more global challenge to the arbitration agreement under step 2, arguing, for example, that the agreement is void as against public policy. "Thus, generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening [the FAA]." Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687, 116 S. Ct. 1652, 1656, 134 L. Ed. 2d 902 (1996).
III. Analysis
1) The Position of the Parties
The Defendant contends that the Value Deal arbitration agreement is absolutely valid and enforceable. As authority for this proposition, Defendant calls the Court's attention to a variety of cases, including Cupit v. Walts, 90 F.3d 107, 109 (5th Cir.1996) (upholding a collective bargaining agreement between a union and a non-subscribing employer in which the employees agreed to waive their right to pursue common law negligence actions in exchange for employer provided benefits comparable to those available under the Texas Workers' Compensation Act); Duran v. Intex Aviation Services, Inc., No. 95-CV-0403-R (N.D.Tex. Nov. 8, 1995) (unpublished opinion), aff'd without published opinion, 1996 WL 556967, 98 F.3d 1339 (5th Cir.1996) (upholding summary judgment against an employee who claimed she did not understand the legal effect of a waiver of the right to sue, or in the alternative, that the waiver was obtained under duress); Gutierrez v. Academy Corp., 967 F. Supp. 945 (S.D.Tex.1997) (Kent, J.) (granting motion to compel arbitration in a Title VII discrimination case); Brito v. Intex Aviation Services, Inc., 879 F. Supp. 650 (N.D.Tex.1995) (upholding validity of a purely voluntary employee occupational insurance plan which, if accepted, became the exclusive remedy for job related injuries); Kinnebrew v. Gulf Ins. Co., No. 94-CV-1517-R, 1994 WL 803508 (N.D.Tex. Nov.28, 1994) (compelling arbitration of employee's sex discrimination claim); Martinez v. IBP, Inc., 961 S.W.2d 678 (Tex.App. Amarillo 1998, writ denied) (upholding an employee's waiver of common law causes of action made in settlement of claims after the injury had occurred).
Defendant's principal argument begins with the observation that these cases upheld *722 the validity of an employee's out and out waiver of his statutory or common law right to sue. Because Defendant has not required Church's Chicken employees to waive any right to sue, employees are still free to supplement the meager benefits available under the AFC Plan by pursuing tort claims against Defendant, albeit in an arbitral, not a judicial forum. Defendant concludes that if an out and out waiver of the right to sue can be valid, requiring an employee to consent to a "mere" agreement to arbitrate his tort claims must be valid as well.
In the alternative, Defendant argues that if the Value Deal agreement is found to be voidable, then the Plaintiff has ratified the agreement by accepting nearly $47,000 of benefits under the AFC Plan. Finally, relying on Prima Paint, Defendant further argues that any doubts as to the enforceability of the arbitration agreement should be resolved by an arbitrator, not this Court.
The Court understands the Plaintiff to be arguing that the combination of a unilaterally imposed arbitration agreement with a benefit plan significantly inferior to that available under the Workers' Compensation Act is void as against Texas public policy. Plaintiff's position is that it is permissible for an employer to offer a benefit plan comparable to that under the Workers' Compensation Act while also requiring employees to waive statutory or common law causes of action. An employee under such a scheme is no worse off than his counterpart under a workers' compensation plan. And it may be permissible for a non-subscribing employer to offer a miserly benefit plan provided no further restrictions are imposed, because this leaves an injured employee free to supplement his ultimate recovery by pursuing tort claims in a judicial forum. But Plaintiff contends that it is not permissible to offer benefits significantly inferior to those available under the workers' compensation system, and simultaneously force an injured employee seeking to supplement his recovery into an arbitral forum.
In support of this position, Plaintiff relies primarily on two cases: Reyes v. Storage & Processors, Inc., 995 S.W.2d 722 (Tex.App. San Antonio 1999, pet. for rev. filed) and Cupit, 90 F.3d at 109. The Reyes court held that a waiver of an employee's common law causes of action was void as against public policy where the employees were given benefits substantially less generous than those available under the Workers' Compensation Act. See Reyes, 995 S.W.2d at 727-28. The Cupit court held that an "agreement between a non-subscribing employer and its employees whereby the non-subscribing employer contractually obligates itself to provide benefits to its employees equal to or greater than those provided under the Texas Workers' Compensation Act is a valid and enforceable contract." Cupit, 90 F.3d at 109 (emphasis added). Thus by negative implication, Cupit supports the conclusion that a non-subscribing employer's benefit plan which is substantially less generous than what is available under the Texas Workers' Compensation Act may not be valid.
2) The Public Policy Underlying the Workers' Compensation Act
The Court finds Plaintiff's argument to be persuasive. For purposes of this analysis, the Court assumes that the arbitration agreement is otherwise valid (Webb step 1(a)), and also assumes that the broad language in the Value Deal agreement covers the tort claims here in dispute (Webb step 1(b)). See Webb, 89 F.3d at 257-58. But the Court is convinced that the arbitration agreement fails to pass muster under the second step of the Webb analytical test because the agreement is void as contrary to Texas public policy with respect to the workers' compensation system.
At common law, an injured employee could pursue a tort claim against his employer, and stood to recover if he demonstrated *723 that his injuries were proximately caused by the employer's negligence. See Texas Workers' Compensation Commission v. Garcia, 893 S.W.2d 504, 521 (Tex. 1995); Reyes, 995 S.W.2d at 726. However, the employer could defend using the fellow servant, contributory negligence, and assumption of the risk doctrines. In practice, these proved formidable defenses, often defeating recovery.
Reacting to the perceived inequities of this system, the Texas Legislature enacted the Texas Workers' Compensation Act. Tex.Lab.Code Ann. § 401.001 et seq. If an employer elects to subscribe to the workers' compensation system, its employees are permitted to waive their common law and statutory causes of action, in exchange for which they become entitled to limited but certain benefits under the Act, and without any requirement of proving the employer's negligence. See Garcia, 893 S.W.2d at 521; Reyes, 995 S.W.2d at 726. The Texas Legislature thus offered an employer the ability to avoid potentially significant common law and statutory liability in exchange for providing his employees with fixed and relatively modest benefits without regard to fault.
In Texas, an employer is not required to subscribe to the workers' compensation system, but there are penalties associated with not subscribing. Opting out of the system is discouraged by eliminating all the common law defenses previously available to the employer, thus exposing the employer to a heightened probability of tort liability. See Garcia, 893 S.W.2d at 521; Reyes, 995 S.W.2d at 726.
The Texas Legislature clearly intended a balanced exchange between the employee and the employer. But there is always the potential for abuse, and courts must be vigilant in policing such abuses. "The Texas Workers' Compensation Act was enacted primarily for the benefit and protection of employees." See Hazelwood v. Mandrell Industries Co., 596 S.W.2d 204, 206 (Tex.App. Houston [1st Dist.] 1980, writ ref'd n.r.e.) For example, a non-subscribing employer cannot contract to provide only the limited workers' compensation benefits without also agreeing to waive its common law defenses should the employee decide not to enroll in the plan, thereby retaining his common law and statutory causes of action. See id. Likewise, "public policy does not permit an employer to reap the principal benefit of providing workers' compensation coverage the waiver of an injured employee's common law and statutory claims without also bestowing on the injured employee the principal benefit for which that waiver is the `quid pro quo' the limited but certain benefits guaranteed by workers' compensation insurance coverage." Reyes, 995 S.W.2d at 727-28. The Reyes court rejected, as against public policy, the waiver of an employee's common law and statutory claims obtained by offering benefits substantially less generous than those provided by the workers' compensation scheme. Significantly, the benefits rejected as inadequate in Reyes were actually more generous than those offered by Defendant AFC.
In attempting to distinguish Reyes, Hazelwood and other cases, Defendant makes much of the distinction between, on the one hand, a waiver of an employee's right to pursue common law and statutory claims, and, on the other hand, an agreement to arbitrate claims in a non-judicial forum. The Court is unpersuaded that this distinction is as significant as Defendant claims.
According to Defendant, "AFC could have unilaterally imposed the Value Deal Agreement on its employees as a condition of employment without offering any benefits whatsoever." This argument surely proves too much. Defendant could not have unilaterally imposed a requirement that prospective employees waive all common law and statutory causes of action in exchange for no benefits whatsoever. See Reyes, 995 S.W.2d at 727-28; Hazelwood, 596 S.W.2d at 206; see also Cupit, 90 F.3d at 109. Such a one-sided arrangement *724 would be contrary to Texas public policy with regard to worker's compensation coverage, because it undermines the proper "quid pro quo" exchange envisioned by the legislature. If the "balance is tipped so that the employee's benefits under the statute are substantially reduced, the clear intent of the legislature is thwarted." Hazelwood, 596 S.W.2d at 206. Likewise, allowing an employer to unilaterally impose an arbitration agreement in exchange for miserly benefits can only be consistent with public policy if the arbitral forum is enough like the judicial forum that the "quid pro quo" exchange desired by the Texas Legislature is not significantly undermined. Otherwise, a non-subscribing employer could, as Defendant claims, offer an employee "no benefits whatsoever", unilaterally impose an arbitration agreement as a condition of employment, and thereby force the employee to seek his only supplemental remedies in a perhaps vastly different arbitral forum. The Legislature thought that stripping a non-subscribing employer of his common law defenses and allowing an injured employee to sue in a judicial forum was a disincentive adequate to prevent an excessive number of employers from opting out of the workers' compensation system. Thus whether a non-subscribing employer can unilaterally consign an injured employee to an arbitral forum without thwarting the intent of the Legislature depends on how similar an arbitral forum is to a judicial one.
Without intending in any way to impugn the integrity or competence of arbitrators, the Court finds that an arbitral forum is not sufficiently similar to a judicial forum to prevent thwarting the clear intent of the Texas Legislature in enacting the Workers' Compensation Act. Most obviously, an arbitral forum does not permit an employee to have his claim heard by a jury. Forcing a non-subscribing employer, deliberately shorn of common-law defenses, to defend himself before a jury is the sort of disincentive the legislature presumably had in mind when they designed a scheme to minimize the number of employers electing to opt out of the workers' compensation system.[1] Contrary to Defendant's claims, the fact that Plaintiff Barbara Strawn, for whatever reason, chose to waive her right to a jury trial in this particular case is irrelevant to the Court's public policy analysis. "In considering whether a contract is contrary to public policy, the test is whether the tendency of the agreement is injurious to the public good, not whether its application in a particular case results in actual injury." Hazelwood, 596 S.W.2d at 206.
Another significant difference between a judicial and an arbitral forum is that the rules of evidence are significantly relaxed in an arbitral forum. "As a speedy and informal alternative to litigation, arbitration resolves disputes without confinement to many of the procedural and evidentiary strictures that protect the integrity of formal trials." Forsythe Int'l, S.A. v. Gibbs Oil Co. of Texas, 915 F.2d 1017, 1022 (5th Cir.1990). Likewise, and again without intending to cast doubt on the competence of arbitrators generally, the level of legal expertise required to become an arbitrator is significantly different from that required to become a Texas state or federal judge. Clearly, stripping a defendant of common law defenses is not much of a disincentive in practice if the rules of evidence employed in the forum fail to properly protect an injured employee's chances for recovery, or if the legal expertise of those conducting the proceedings are not adequate to allow the employee to vindicate the technical legal advantages the Texas Legislature saw fit to bestow on the employees of a non-subscribing employer. As is *725 widely recognized, parties in an arbitration proceeding may find that "the results of arbitration by private and untrained `judges' are distantly remote from the fair process procedurally followed and application of principled law found in the judicial process." Stroh Container Co. v. Delphi Indus., Inc., 783 F.2d 743, 751 (8th Cir. 1986). Although parties are free to accept this different brand of justice in many situations, a non-subscribing employer cannot simultaneously offer minimal benefits and also unilaterally impose such a distinct forum on an its injured employees without subverting the properly balanced "quid pro quo" exchange desired by the Texas Legislature.
Another striking difference is the limited level of judicial review available in an arbitral forum. Under the FAA, a court reviews arbitral decisions under an extremely deferential standard, one that has been called "among the narrowest known to the law." Litvak Packing Co. v. United Food & Commercial Workers, Local Union No. 7, 886 F.2d 275, 276 (10th Cir.1989). Errors in the interpretation or the application of the law are not a sufficient basis to vacate an arbitration award. See United Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 38, 108 S. Ct. 364, 370-71, 98 L. Ed. 2d 286 (1987). The grounds for vacatur under § 10 of the FAA are quite limited.[2] Recognizing the limited extent of judicial review of arbitration awards, some Circuits have created nonstatutory grounds for reviewing awards, and will vacate awards if they exhibit "manifest disregard" for the law, or are "arbitrary and capricious." See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Bobker, 808 F.2d 930, 936 (2nd Cir.1986) (applying "manifest disregard" standard). However, the Fifth Circuit has refused to develop nonstatutory grounds for review, so within this Circuit, the potential for review is extraordinarily limited. See R.M. Perez & Associates v. Welch, 960 F.2d 534, 539-40 (5th Cir.1992) (rejecting the "manifest disregard" standard). The significance of limited judicial review, of course, is that when the Legislature was contemplating the proper level of disincentives required to minimize the number of employers who elect to opt out of the workers' compensation system, the Legislature presumably would have assumed the existence of the ordinary level of appellate scrutiny. Employers would recognize they could not escape liability if an injured employee was prejudiced by obvious errors of law in the trial court. The employer would calculate that, given effective judicial review of lower court decisions, any such victory would be short-lived. Thus once again it is hard to see how a non-subscribing employer can unilaterally consign an employee to an arbitral forum, with little possibility of effective judicial review, without subverting the system of incentives and the properly balanced "quid pro quo" intended by the Legislature in enacting the workers' compensation system.
It is true that an arbitral forum is at least formally adequate for vindicating even statutory rights. See Gilmer, 500 U.S. at 26, 111 S. Ct. at 1652. But the formal adequacy of the arbitral forum in general is not at issue in this particular case. The Court instead finds that, where employers offer minimal benefits and unilaterally impose an arbitral forum on their injured employees, such a forum is sufficiently dissimilar to a judicial forum as to undermine Texas public policy with respect *726 to the workers' compensation system. Consequently, the Court finds that the Value Deal Agreement, which relegates to an arbitral forum all Church's Chicken employees seeking to supplement their meager benefits, is void as against public policy.
3) Defendant's Arguments and Authorities
The Court is not persuaded by the arguments Defendant has offered in opposition to this conclusion. There appears to be no Fifth Circuit authority which stands squarely in the way of the Court's conclusion. Contrary to Defendant's suggestion, Cupit offers more support to Plaintiff's position than to Defendant's. Although the Cupit court rejected plaintiff's public policy challenge to an agreement in which employees waived their common law causes of action, the court limited its holding to plans "whereby the non-subscribing employer contractually obligates itself to provide benefits to its employees equal to or greater than those provided under the Texas Workers' Compensation Act." Cupit, 90 F.3d at 109. The implication is that requiring a waiver in exchange for benefits substantially less generous than those available under the workers' compensation system might not withstand a public policy challenge. This conclusion is further strengthened by the fact that the Cupit court felt the necessity to limit its holding despite the fact that Cupit involved a collective bargaining agreement worked out between a union and the non-subscribing employer. See id. at 108. If the Cupit court felt the necessity to limit its holding even in a case where there was much greater equality of bargaining power between the unionized employees and the employer, then there is all the more reason to conclude that the Value Deal agreement unilaterally imposed by Defendant on individual, non-unionized employees raises serious public policy concerns.
Defendant submitted for the Court's review a copy of the Fifth Circuit's unpublished Duran opinion which was associated with the table affirmance of the trial court's decision. See Duran, 98 F.3d 1339 (table affirmance). However, the Duran opinion provides little support for Defendant's position. The Fifth Circuit expressly declined to rule on plaintiff's argument that a waiver might be void as against public policy, because the plaintiff failed to raise this argument in the trial court.
This Court's Gutierrez opinion is distinguishable. The plaintiff in Gutierrez unsuccessfully sought to avoid an arbitral forum for her Title VII employment discrimination claim. See Gutierrez, 967 F.Supp. at 946. Because the plaintiff in Gutierrez suffered no personal injuries, the level of benefits available to an injured worker were not relevant, and therefore there was no need to analyze the public policy concerns underlying the Texas Workers' Compensation Act.
However persuasive and well-reasoned cases such as Kinnebrew and Brito may be, they are not binding as precedent on this Court. In any event, the Kinnebrew case is inapposite, for the same reason Gutierrez is: the plaintiff in Kinnebrew was pursuing a sex discrimination claim, not a personal injury claim. See Kinnebrew, 1994 WL 803508 at *1. The Brito case is also inapposite, because the plan upheld there was entirely voluntary, and there were no allegations that the benefits available under the plan were significantly less than those offered under a workers' compensation plan. See Brito, 879 F.Supp. at 654, n. 4. Judge McBryde went out of his way to note that "[a]n employee ... has a choice about whether to enroll in the plan. His employment status is unaffected by the choice he makes.... Accordingly, the main purpose of the Act, to protect and benefit the employee, is not contravened by the existence of the plan and its concomitant waiver." Id.
The Martinez case is likewise inapposite. The Martinez court upheld a waiver agreement entered into after the employee was injured. See Martinez, 961 S.W.2d at *727 684. An agreement made after an employee is injured is more like an attempt to settle or compromise a lawsuit, because the extent of the employee's injury and the nature of his claims are known by both parties. Such an agreement is quite different from the arbitration agreement Defendant AFC unilaterally imposes before an employee is even injured.
Defendant argues that even if the Value Deal Agreement is considered voidable, Plaintiff has ratified it by accepting $47,000 of benefits under the AFC Plan. This argument fails, because the Court has found the Value Deal Agreement void, not merely voidable. See Oubre v. Entergy Operations, Inc., 522 U.S. 422, 118 S. Ct. 838, 843-44, 139 L. Ed. 2d 849 (distinguishing between a voidable contract, which may be ratified, and a contract void as against public policy, which cannot be ratified).
Defendant also attempts to invoke the Prima Paint rule by drawing on the distinction between an attack focused on an arbitration clause in isolation, and a general attack on a contract which happens to contain an arbitration clause. According to Defendant, because Plaintiff has failed to attack the Value Deal arbitration agreement in isolation, the validity of the Value Deal agreement is itself a question that should properly be decided by an arbitrator, not this Court. The Court disagrees. In the first place, the Prima Paint rule is applicable to step 1(a) of the Webb analysis, not the second step. See R.M. Perez & Assocs., 960 F.2d at 537 (5th Cir.1992) (applying the Prima Paint analysis to step 1(a) of the Webb analysis). Since the Court's analysis turns on the second step of the Webb analysis, the Prima Paint rule is not implicated. But even if the Prima Paint rule applies when a party attacks the validity of the arbitration agreement under the second step of the Webb analysis, the Court construes Plaintiff to be attacking the Value Deal agreement in isolation. The Value Deal is an entirely separate document, not a clause contained within a larger employment contract addressing many other issues. The Value Deal agreement is concerned almost exclusively with establishing arbitration as the means for resolving disputes between the parties. Plaintiff's public policy argument is that requiring an employee to sign the Value Deal agreement under the circumstances of this case thwarts the will of the Texas Legislature. Because Defendant would be free to offer the modest benefits under the AFC Plan in the absence of the Value Deal agreement, Plaintiff's complaint is directed to the Value Deal agreement in isolation. Consequently, under the Prima Paint rule, it is for the Court, not an arbitrator, to assess whether the Value Deal agreement contravenes the public policy of Texas.
Finally, although Defendant does not quite make this argument, it is worth addressing anyway. It is true that the FAA preempts any state law which has the effect of putting an agreement to arbitrate on a "lesser footing" than an ordinary contract. "What states may not do is decide that a contract is fair enough to enforce all its basic terms (price, service, credit), but not fair enough to enforce its arbitration clause. The Act makes any such state policy unlawful, for that kind of policy would place arbitration clauses on an unequal `footing,' directly contrary to the Act's language and Congress' intent." Allied-Bruce Terminix Companies v. Dobson, 513 U.S. 265, 281, 115 S. Ct. 834, 843, 130 L. Ed. 2d 753. Consequently, the Fifth Circuit has held that the FAA preempts the requirement of Section 171.002 of the Tex.Civ.Prac. & Rem.Code, which makes arbitration agreements covering personal injury actions enforceable only if signed by counsel for each party. See Miller v. Public Storage Mgmt., Inc., 121 F.3d 215, 219 (5th Cir.1997). Section 171.002 is clearly preempted because "Congress precluded states from singling out arbitration provisions for suspect status." Doctor's Associates, 517 U.S. at 687, 116 S. Ct. at 1656.
*728 But preemption is not at issue in this case. The Court's holding does not put an arbitration agreement on an unequal footing with respect to ordinary contracts. Instead, the Court has found that an arbitration agreement, in these circumstances, violates the public policy underlying the Texas Workers' Compensation Act. As Hazelwood and Reyes illustrate, an ordinary employment contract can be invalidated on precisely the same basis. Consequently, the Court's holding treats an arbitration agreement no better, and no worse, than an ordinary contract which impermissibly thwarts the legislative intent behind the Workers' Compensation Act.
IV. CONCLUSION
For the reasons set forth above, Defendant's Motion to Stay or Dismiss and to Compel Arbitration is DENIED. The Parties are ORDERED to file no further pleadings on this issue, including motions to reconsider and the like. The parties are ORDERED to bear their own taxable costs and expenses incurred herein to date. IT IS SO ORDERED.
NOTES
[1] Obviously, this analysis does not hinge on concerns about a plaintiff's right to a jury trial under the Seventh Amendment. Instead, the possibility that a jury might sit as the factfinder in a judicial forum is relevant only insofar as it may have influenced the Texas legislature's calculation of the proper level of disincentives necessary to prevent an excessive number of employers from opting out of the workers' compensation system.
[2] The grounds include 1) where the award was procured by corruption, fraud, or undue means; 2) where there was evident partiality or corruption in the arbitrators; 3) where the arbitrators were guilty of misconduct in refusing to postpone the hearing, upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the controversy; or of any other misbehavior by which the rights of any party have been prejudiced; 4) where the arbitrators exceeded their powers, or so imperfectly executed them that a mutual, final, and definite award upon the subject matter submitted was not made. See 9 U.S.C. § 10. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2519146/ | 33 F. Supp. 2d 820 (1998)
K.C. 1986 LIMITED PARTNERSHIP, Plaintiff,
v.
READE MANUFACTURING, et al., Defendants,
v.
Habco, Inc., et al., Third-Party Defendants.
No. 93-1062-CV-W-5.
United States District Court, W.D. Missouri, Western Division.
September 16, 1998.
*821 *822 *823 Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for K.C. 1986 Limited Partnership.
Carl H. Helmstetter, Elaine D. Koch, Spencer Fane Britt & Browne, LLP, Kansas City, MO, John Bradley Leitch, Sonnenschein, Nath & Rosenthal, Kansas City, MO, Barry S. Sandals, Morrison & Foerster, San Francisco, CA, for Reade Manufacturing.
Thompson Coburn, St. Louis, MO, Ian P. Cooper, Peper, Martin, Jensen, Maichel & Hetlage, St. Louis, MO, Michele B. Corash, Barry S. Sandals, Morrison & Foerster, San Francisco, CA, Sean J. Mahoney, Morrison & Foerster, San Francisco, CA, Joseph R. Colantuono, Wehrman & Colantuono, L.L.C., Leawood, KS, for U.S. Borax, Inc.
Carl H. Helmstetter, Elaine D. Koch, Spencer Fane Britt & Browne, LLP, Kansas City, MO, for Remacor.
David E. Shay, Shughart, Thomson & Kilroy, P.C., Kansas City, MO, Joel P. Brous, Shughart, Thomson & Kilroy, P.C., Kansas City, MO, for Nancy Reade Forster.
Joe B. Whisler, Susan Elizabeth McKeon, Cooling & Herbers, P.C., Kansas City, MO, Edward L. Smith, Theresa Shean Hall, Knipmeyer, McCann, Smith, Manz, & Gotfredson, Kansas City, MO, Donald G. Scott, Edward R. Spalty, Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, Joanne M. Barbera, Cooling & Herbers, Kansas City, MO, for Habco, Inc.
Edward L. Smith, Theresa Shean Hall, Knipmeyer, McCann, Smith, Manz, & Gotfredson, Kansas City, MO, Donald G. Scott, Edward R. Spalty, Charles F. Speer, Armstrong, Teasdale, Schlafly & Davis, Kansas City, MO, for Donald E. Horne.
ORDER
LAUGHREY, District Judge.
Pending before the Court is Hardee's Food Systems, Inc.'s ("Hardee's") Motion for Summary Judgment on the claims asserted against it in this action, which include claims asserted by U.S. Borax ("Borax") in its Amended Cross-Claim under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), (Count I and II), the Resource Conservation and Recovery Act ("RCRA") (Count III), declaratory judgment (Count IV), negligence (Count V), contribution (Count VI), indemnity (Count VII) and unjust enrichment (Count VIII) and claims asserted by K.C.1986 Limited Partnership ("K.C.1986") in its Second Amended Complaint for negligence (Count III), strict liability for ultra-hazardous activities (Count IV), nuisance (Count V), contribution (Count VII), indemnity (Count VIII), unjust enrichment (Count IX) and contractual indemnity (Count X). Also pending is Borax's Cross-Motion for Summary Judgment on its CERCLA claims against Hardee's. *824 Although this case is currently stayed pending approval by the United States Environmental Protection Agency ("EPA") of a remedial plan to clear up the site at issue, the Court is resolving certain pending motions at the request of the parties in an effort to expedite the dispute.
I. Background
K.C.1986 has owned property located at 2251 Armour Road in North Kansas City, Missouri (the "Site") since December 1986. From 1963 to 1968, Borax leased the Site from a previous owner, Reade Manufacturing ("Reade"). Both Borax and Reade used the Site to store and blend chemicals used in herbicides. The Site was also used by Habco, Inc. ("Habco") and its predecessors to manufacture herbicides. In 1988, Hardee's began investigating the possibility of purchasing the Site from K.C.1986 for use as a restaurant. In 1988-1989, it was common in Kansas City for potential purchasers or lessees of commercial real estate to undertake some type of pre-acquisition environmental investigation. The scope and extent of work performed in these investigations varied considerably. Hardee's contacted and eventually retained Terracon Environmental, Inc. ("Terracon") to conduct a pre-acquisition environmental investigation.
The contract entered between Hardee's and Terracon provides that Terracon "shall furnish all labor, supervision, machinery, equipment, materials and supplies necessary" and "shall be solely responsible for all materials, equipment, tools and work until the project is completed." The contract further provides that Terracon "shall conduct all operations in [Terracon's] own name and as an independent contractor, and not in the name of, or as an agent for Hardee's."
Before the parties agreed to the scope and cost of the work to be done by Terracon, Terracon submitted several written proposals to Hardee's, the first of which is dated October 7, 1988. Terracon's initial proposal contemplated (1) a records review of state and federal environmental regulatory agencies to detect any history of environmental problems at the Site, (2) a title search to identify previous owners and historical land usage, (3) visual observation for signs of contamination, (4) tank, vat and floor sampling, (5) drilling and sampling, (6) well construction, (7) chemical analysis, (8) data evaluation, and (9) a final report. In the October 7, 1988 letter from Terracon to Hardee's outlining Terracon's initial proposal, Terracon noted that "[t]his property has a history of commercial development involving companies which regularly handled chemical commodities." In a revised proposal for environmental investigation set forth in a letter dated December 21, 1988 from Terracon to Hardee's, Terracon stated, "the work scope has been developed to sample for contamination in an area where it may likely be present, based upon Terracon's knowledge of the site." In an undated letter by Hardee's concerning the scope of Terracon's investigation, Hardee's wrote, "As previously discussed, we are not prepared to spend this much money given the fact that a preliminary on site inspection revealed high evidence of contamination. We are, however, going to have Terracon analyze a grab sample to substantiate their suspicions." In connection with its investigation, Terracon was present on the Site during all or part of approximately seven to 10 days between October 1988 and September 1989. The amount of time Hardee's representatives were also present at the Site is disputed.
On April 5, 1989, Hardee's made a Freedom of Information Act ("FOIA") request to the EPA requesting information "pertaining to chemical, asbestos, petroleum, or other contamination you have investigated or know of at the [Site]." Thereafter, on June 15, 1989, Hardee's and K.C.1986 entered into a "Ground Lease" for the Site. The Ground Lease states that "Subject to the satisfaction of the conditions set forth herein, Landlord agrees to lease to Hardee's, and Hardee's agrees to lease from Landlord, [the Site] ..." (Ground Lease, ¶ 1.1). Under the heading "Conditions Precedent," the Ground Lease further provides in part:
4.1 Hardee's agreement to lease the Premises is subject to all of the following conditions precedent being satisfied on or before the One Hundred Eightieth (180th) day after the last execution hereof ...
. . . . .
*825 (C) Hardee's obtaining, at its sole cost, satisfactory soil tests and determining that the soil or ground is free from contamination and is otherwise suitable for constructing the improvements contemplated by Hardee's herein.
Under a separate section of the Ground Lease with the heading "Soil Testing," Hardee's obligation to conduct soil testing is set forth in more detail:
2A.1 (A) ... Hardee's shall order soil tests, including but not limited to geotechnical and contamination studies of the Premises....
(B) Within thirty (30) days of the written soil test results, Hardee's shall determine whether to: a) terminate the Lease on account of unacceptable soil conditions; b) perform further tests; or c) proceed with clearing the other conditions precedent contained herein.
. . . . .
(D) In the event that Tenant elects to proceed with clearing the other conditions precedent, Hardee's shall deliver to Landlord a copy of the soil report which will set forth the remedial actions which must be taken to make the soil suitable for Hardee's purposes and meet the soil and ground water requirements as established by the Missouri EPA.
The Ground Lease between Hardee's and K.C.1986 was fully executed on June 15, 1989. (See Ground Lease, ¶ 29). Pursuant to the terms of the Ground Lease,
Hardee's, its representatives, agents, and contractors, [were granted] the right to enter upon the Premises to make soil tests, provided that Hardee's hereby agrees to reasonably restore any damage caused by the soil tests. Landlord agrees that Hardee's shall not bear any liability arising through the discovery of hazardous waste conditions and its compliance with all laws relating to the disclosure of any adverse findings. Hardee's agrees to reasonably restore any such damage caused by such soil tests and will defend and hold Landlord harmless from claims, liens and expenses or damages arising out of the acts of Hardee's, its representatives, agents, and contractors in performing the soil tests.
(Ground Lease, ¶ 2.1(B)). While the right to enter the Site consistent with the above provision commenced upon the execution of the Ground Lease, Hardee's asserts that the lease itself never materialized because Hardee's terminated the Ground Lease, pursuant to ¶ 2A.1, prior to the date of commencement of the lease term. The Ground Lease provides that "The `Commencement Date' of the Term shall be the date which Hardee's takes possession of the Premises for the purpose of constructing the improvements contemplated herein." (Ground Lease, ¶ 6.1). In addition to granting Hardee's the right to terminate the lease under certain conditions, the lease provides, "If Hardee's effectively terminates this Lease, then Hardee's shall pay to Landlord the sum of $100,000 as liquidated damages." (Ground Lease, ¶ 2A.1(H)).
On September 5, 1989, Terracon issued its preliminary environmental assessment of the Site, stating that "... [e]levated levels of several contaminants have been detected in the soil and groundwater samples collected at the site, which we feel will require further exploratory efforts and, most likely, remedial actions...." Hardee's forwarded the preliminary environmental assessment to K.C.1986 under cover of letter dated September 8, 1989. Terracon issued its final report outlining its environmental assessment of the Site on September 22, 1989. That same day, Hardee's notified K.C.1986 by certified mail of its election to terminate the Ground Lease as a result of the contamination uncovered incident to Terracon's investigation. Terracon's final report was provided to K.C.1986 on October 9, 1989. The report advised K.C. 1986 that the owner of the Site was required to notify the Missouri Department of Natural Resources ("Mo DNR") of Terracon's finding of contamination, and that if it failed to do so, Terracon would be required to report its findings to the Mo DNR.
As part of its investigation, Terracon installed monitoring wells at the Site in 1989. Hardee's employees did not instruct Terracon regarding the manner of installing the monitoring wells. There is a dispute as to whether those monitoring wells contributed *826 to the contamination of the regional alluvial aquifer beneath the Site. Contaminants, such as arsenic which was found in levels at the Site requiring remedial action, naturally migrate downward through soil. The rate of migration is affected by the amount of precipitation and the porosity and permeability of the soil. In contrast to natural migration of substances through soil, Borax asserts that because Terracon screened monitoring wells 1, 2 and 5 through the near-surface groundwater zone, high concentrations of arsenic were released directly to the top of the regional aquifer, and the arsenic loading to the regional aquifer beneath the Site was increased by 17 percent. Borax also argues that the conduits created by Terracon's monitoring wells have allowed concentrations of arsenic and other contaminants to migrate from the more highly contaminated clay into the less contaminated underlying sand aquifer. According to Terracon, its monitoring wells "did not cause a substantial increase in arsenic contamination" at the Site. Terracon asserts that its wells "were constructed in accordance with the standard of care in the community in the Greater Kansas City area that existed in 1989" and that they are "similar in design to monitoring wells installed and paid for by Borax and K.C.1986."
Terracon's final report recommended "that the five monitor wells be properly abandoned at the site, including removing the PVC casing and filling the boreholes with appropriate material." After the Ground Lease was terminated, Hardee's sent K.C.1986 a letter dated November 21, 1989, in which it offered to cap or in some form remove the monitoring wells installed on the property by Terracon. According to Hardee's, K.C.1986 did not respond. Terracon again informed K.C.1986 that it considered itself under an obligation to inform the Mo DNR of the contamination at the Site if K.C.1986 did not do so. Accordingly, by letter dated December 20, 1989, Terracon notified the Mo DNR of its findings of contamination at the Site. In 1990, K.C. 1986's real estate agent replaced the locks on the monitoring wells at the request of K.C. 1986. In September 1993, the Mo DNR and K.C.1986 entered a Consent Agreement requiring K.C.1986 to prepare and implement a remedial action plan for the Site. K.C.1986 did not properly abandon the monitoring wells installed by Terracon until September 1995.
II. Summary Judgment Standard
The standard for granting summary judgment is well established. Rule 56 of the Federal Rules of Civil Procedure provides that a moving party is entitled to summary judgment "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." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Reliance Ins. Co. v. Shenandoah South, Inc., 81 F.3d 789, 791 (8th Cir.1996). The moving party carries the initial burden of informing the district court of the basis for the motion and identifying the portions of the record which demonstrate a lack of a genuine issue for trial. Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.1992); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). "When the moving party has carried its burden under Rule 56(c), [the] opponent [of the Motion] must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The opposing party is required to designate specific facts from which a reasonable juror could return a verdict in its favor. Anderson, 477 U.S. at 248, 106 S. Ct. 2505.
When considering a motion for summary judgment, a court must scrutinize the evidence in the light most favorable to the nonmoving party, and the nonmoving party "must be given the benefit of all reasonable inferences." Mirax Chem. Prods. Corp. v. First Interstate Commercial Corp., 950 F.2d 566, 569 (8th Cir.1991) (citation omitted).
III. Discussion
A. Claims Premising Hardee's Liability on the Doctrine of Respondeat Superior
Borax and K.C.1986 premise Hardee's liability for many of their claims on the *827 doctrine of respondeat superior,[1] under which a principal is vicariously liable for the acts of its agent. In its motion for summary judgment, Hardee's argues that Terracon was an independent contractor, not an agent of Hardee's, precluding application of the doctrine of respondeat superior and absolving Hardee's of vicarious liability for Terracon's acts. Borax counters with the argument that the acts allegedly giving rise to liability in the instant case constitute non-delegable duties for which Hardee's is liable regardless of Terracon's status as an independent contractor. Further, K.C.1986 argues that Hardee's is contractually obligated to indemnify it against any claim, harm or liability arising from the acts of Terracon.
1. Independent Contractor
Under the doctrine of respondeat superior, Missouri law generally holds a principal liable to third parties for the acts or omissions of its agents. Bass v. Kansas City Journal Post Co., 347 Mo. 681, 148 S.W.2d 548, 551 (1941). Missouri law distinguishes, however, between an agent and an independent contractor. Greco v. ABC Transnational Corp., 623 F. Supp. 104, 105 (E.D.Mo.1985). Someone who hires an independent contractor generally is not held liable for the acts or omissions of the independent contractor. See Greco, 623 F.Supp. at 105.
Borax and K.C.1986 contend that Terracon acted as Hardee's agent, while Hardee's argues that it hired Terracon as an independent contractor. An independent contractor is one "who contracts with another to do something for him, but who is not controlled by the other with respect to his physical conduct in the performance of the undertaking." Corder v. Morgan Roofing Co., 350 Mo. 382, 166 S.W.2d 455, 457 (1942) (citing Restatement of Agency § 239). The essential difference is that "one who has work performed by an agent or servant is in a position to exercise more or less detailed control over the manner in which the work is done. The employer of an independent contractor, on the other hand, controls only the final result and not the manner by which it is accomplished." Bass, 148 S.W.2d at 552. To distinguish between an agent and an independent contractor, Missouri courts consider the following factors:
(a) The extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (g) the method of payment, whether by the time or by the job; (h) whether or not the work is a part of the regular business of the employer; and (i) whether or not the parties believe they are creating the relationship of master and servant.
Mattan v. Hoover Co., 350 Mo. 506, 166 S.W.2d 557, 564 (1942) (quoting Restatement of Agency § 220). No single factor is dispositive of the outcome, and each must be given weight in accordance with the circumstances of the particular situation. Bass v. Kansas City Journal Post Co., 347 Mo. 681, 148 S.W.2d 548, 552 (1941). The ultimate issue to be considered, however, is whether the employer has the right to control the details of the other's work. Merick Trucking, Inc. v. Missouri Div. of Employment Sec., Labor and Indus. Relations Comm'n of Mo., 902 *828 S.W.2d 871, 873 (Mo.App.1995); Gardner v. Simmons, 370 S.W.2d 359, 362 (Mo.1963).
Hardee's and Terracon entered into a contract which specifically provides that:
Contractor shall perform all work diligently, carefully and in a good and workmanlike manner; shall furnish all labor, supervision, machinery, equipment, materials and supplies necessary therefor ... Contractor shall conduct all operations in Contractor's own name and as an independent contractor, and not in the name of, or as an agent for Hardee's.
(Contract, ¶ 10). While Terracon and Hardee's characterization of their relationship as an employer/independent contractor is not dispositive of the issue before the Court, it is probative of the intended nature of the relationship. See Farm Bureau Co-op. Mill & Supply, Inc. v. Blue Star Foods, 137 F. Supp. 486, 492 (W.D.Mo.1956), aff'd, 238 F.2d 326 (8th Cir.1956); Empson v. Missouri Highway & Transp. Comm'n, 649 S.W.2d 517, 521 (Mo.App.1983) (citing Northern v. McGraw-Edison Co., 542 F.2d 1336, 1343 (8th Cir.1976), cert. denied sub nom. McGraw Edison v. Soper, 429 U.S. 1097, 97 S. Ct. 1115, 51 L. Ed. 2d 544, reh'g denied, 430 U.S. 960, 97 S. Ct. 1612, 51 L. Ed. 2d 812 (1977)). According to the provisions of the contract, Terracon was to "furnish all labor [and] supervision" to carry out the environmental assessment, indicating that Hardee's had little control over the details of Terracon's work once the scope of it was agreed to between the parties. This same provision indicates that Terracon supplied its own "machinery, equipment, materials and supplies" and that Terracon and Hardee's intended Terracon to act as an independent contractor.
Other factors relevant to Terracon's status also weigh in favor of finding that Terracon acted as an independent contractor in preparing its environmental assessment of the Site. For instance, environmental consulting is a distinct business which requires special training and education. Compensation for the job was negotiated before the project began, and Terracon was paid based on the job performed rather than by the hour. There has been no evidence proffered that Terracon remained employed by Hardee's in any capacity after its obligations under the contract at issue in this case were fulfilled. Nor has any evidence been proffered suggesting that conducting environmental assessments is part of Hardee's regular business. To the contrary, the evidence currently before the Court suggests that Hardee's retained Terracon because Hardee's lacked the requisite skills to conduct an adequate environmental assessment of the Site.
It is the burden of K.C.1986 and Borax to establish that a principal/agent relationship existed between Hardee's and Terracon. See Empson, 649 S.W.2d at 521 ("the burden of establishing [an existing agency] is on the party alleging the existence of the agency"). Because the Court finds that an analysis of the undisputed facts leads only to the conclusion that Terracon performed the environmental assessment of the Site as an independent contractor of Hardee's, summary judgment consistent with that finding is appropriate. See Smoot v. Marks, 564 S.W.2d 231, 236 (Mo.App.1978); Greco, 623 F.Supp. at 106. The finding that Terracon acted as an independent contractor of Hardee's, however, does not mandate a finding that summary judgment is appropriate in favor of Hardee's on all claims asserted by Borax and K.C.1986 which premise Hardee's liability on the doctrine of respondeat superior. See Bass, 148 S.W.2d at 552 (when certain special circumstances exist, "one who has employed an independent contractor may become liable for the latter's tort").
2. Non-Delegable Duty Doctrine
The established rule for determining landowner liability for acts done by an independent contractor is that:
a landowner has no vicarious liability for the torts of an independent contractor. This general rule recognizes that the landowner has no right of control over the manner in which the work is to be done, and for that reason the work "is to be regarded as the [independent] contractor's own enterprise and he, rather than the [landowner], is the proper party to be charged with the responsibility for preventing *829 the risk and administering and distributing it."
Zueck v. Oppenheimer Gateway Properties, 809 S.W.2d 384, 386 (Mo.1991) (quoting W. Prosser & W. Keaton, The Law of Torts, 509 (5th ed.1984)). An exception to the general rule exists where the work performed by the independent contractor constitutes an inherently dangerous activity. Mallory v. Louisiana Pure Ice & Supply Co., 320 Mo. 95, 6 S.W.2d 617, 624 (Mo.1928); Zueck, 809 S.W.2d at 386. The purpose of the non-delegable duty exception "is to prevent the landowner, for whose benefit the work is being done, from avoiding liability and defeating the recovery of an injured, innocent third party, by hiring a contractor who is not fiscally responsible to do the dangerous work." Zueck, 809 S.W.2d at 386.
To establish the applicability of the non-delegable duty exception, the plaintiff must show that "(1) performance of the contract necessarily involves some inherently dangerous activity; [and] (2) the activity which caused the damage was reasonably necessary to the performance of the contract and was inherently dangerous ..." Smith v. Inter-County Tel. Co., 559 S.W.2d 518, 523 (Mo.1977).[2] The Missouri Supreme Court explained how to determine whether an activity is inherently dangerous:
"The distinction seems to be that if the doing of the work necessarily causes danger which must be guarded against, then the employer must see to it that such dangers are guarded against and cannot relieve himself by casting this duty on an independent contractor. If, however, the work is dangerous only by reason of negligence in doing it, then the liability falls only on the independent contractor. In the one case the doing of the work creates danger and requires active care to counteract the danger. In the other there is no danger unless created by negligence. The one starts with danger and requires preventive care to make safety, while the other starts with safety and requires negligence to make danger."
Mallory, 6 S.W.2d at 624 (quoting Carson v. Blodgett Constr. Co., 189 Mo.App. 120, 174 S.W. 447, 448 (1915)). The Court further explained:
"The injury need not be a necessary result of the work, but it is sufficient that it will be a probable result of the work if proper precautions to guard against injury are not taken. However, the work must be such as will probably, and not which merely may, cause injury if proper precautions are not taken. If the work is of such a nature that it could be done without probable injury to any one except in the event of negligence in the manner of doing it, no liability attaches to the employer."
Mallory, 6 S.W.2d at 624 (quoting 39 C.J. 1331).
Applying the definition of inherent danger first requires identifying "the work" and "the danger" which must be guarded against. The work is typically defined as the specific act engaged in by the independent contractor rather than the general nature of the work. For example, in Mallory, an employee of an excavating company was injured when a wall fell on him. Mallory, 6 S.W.2d at 619. The landowner argued that it was not liable for plaintiff's injury because the general contractor was an independent contractor responsible for any harm which occurred. Mallory, 6 S.W.2d at 623. In turn, the general contractor argued that the excavation company was an independent contractor responsible for the harm. Mallory, 6 S.W.2d at 621. The work was defined by the court as "excavating land underneath the wall which ultimately collapsed in accordance with the method prescribed by the general contractor and assented to by the landowner." Mallory, 6 S.W.2d at 622. Notably, the court did not define the work in terms of general excavation. See also, Smith, 559 S.W.2d at 523 (work described as: "insertion *830 of the pipe under the road at a substantial depth; that the walls of the trench in which plaintiff was injured were vertical, not sloped; that the ditch at that point was between 6 and 12 feet deep; and that there was no shoring or bracing of any kind"); Loth v. Columbia Theater Co., 197 Mo. 328, 94 S.W. 847, 848 (1906) (work was to lower a sign in order to change its lettering). In the case at hand, Borax characterizes the work as installing monitoring wells, whereas Hardee's characterizes the work as general environmental inspection. Based on the relevant case law, it is the opinion of this Court that "the work" which Borax argues was inherently dangerous was installing monitoring wells into an area with known soil contamination and suspected ground water contamination.
Borax asserts that the work performed by Terracon is inherently dangerous. Borax argues that Shockley v. Hoechst Celanese Corp., 793 F. Supp. 670, 675 n. 4 (D.S.C.1992), modified on other grounds, 996 F.2d 1212 (Table), 1993 WL 241179 (4th Cir.), Dickerson, Inc. v. Holloway, 685 F. Supp. 1555, 1566 (M.D.Fla.1987), aff'd sub nom. Dickerson v. United States, 875 F.2d 1577 (11th Cir.1989) and Graham v. Canadian Nat'l Ry. Co., 749 F. Supp. 1300, 1320 (D.Vt.1990) stand for the proposition that "in the context of hazardous waste, courts in other jurisdictions have had no difficulty imposing liability on the contracting party" by applying the non-delegable duty doctrine. (Opp. at 3). While this statement may be literally accurate, the Court will not overlook the distinction drawn by Hardee's, that "[e]ach of these cases cited by Borax involved situations in which an employer knowingly contracted with an independent contractor for the intentional disposal or discharge of hazardous substances." In the case at hand, Hardee's did not contract for intentional disposal, removal, transportation or other activity associated with hazardous waste that necessarily would have required extensive precautions. Rather, Hardee's contracted for sampling and testing to determine the extent of contamination. While this activity necessarily carries with it the potential to contact and disturb hazardous waste, it is not a foregone conclusion that such will be the case, as it is in the case examples cited by Borax. This distinction is sufficient to preclude a finding that the aforementioned cases support a finding at the summary judgment stage that Hardee's was involved in an inherently dangerous activity.
Based on the agreement between Hardee's and Terracon, installing monitoring wells was reasonably necessary to Terracon fulfilling its duties. Whether installing monitoring wells through soil known to be contaminated to some degree in order to test ground water is an inherently dangerous activity poses a genuine issue of material fact more appropriately resolved at trial. See Nance v. Leritz, 785 S.W.2d 790, 792 (Mo.App.1990) (citing Floyd v. Benson, 753 S.W.2d 945 (Mo.App. 1988)). Accordingly, summary judgment in favor of Hardee's dismissing all claims in which Hardee's liability is premised on the doctrine of respondeat superior must be denied.
3. Contractual Indemnity to K.C.1986
K.C.1986 argues in its Opposition that if the Court grants Hardee's motion for summary judgment, Hardee's nonetheless must remain a defendant in the case because Hardee's did not move for summary judgment on Count X of K.C.1986's Second Amended Complaint asserting a claim for contractual indemnity. The Court disagrees that Hardee's did not move for summary judgment on K.C.1986's claim for contractual indemnity. Hardee's Motion for Summary Judgment (Doc. # 450) explicitly states that Hardee's seeks "summary judgment in its favor on all claims asserted against it in this action," which would include Count X of K.C.1986's Second Amended Complaint asserting a claim for contractual indemnity.
K.C.1986 bases its claim for contractual indemnity on ¶ 2.1B of the Ground Lease, which grants:
Hardee's, its representatives, agents, and contractors the right to enter upon the Premises to make soil tests, provided that Hardee's hereby agrees to reasonably restore any damage caused by the soil tests. Landlord agrees that Hardee's shall not bear any liability arising through the discovery of hazardous waste conditions and its compliance with all laws relating to the *831 disclosure of any such damage caused by such soil tests and will defend and hold Landlord harmless from claims, liens and expenses or damages arising out of the acts of Hardee's, its representatives, agents, and contractors in performing the soil tests.
(emphasis added). Hardee's argues that the contractual indemnity provision applies only to "acts ... in performing the soil tests," and does not apply to the installation of groundwater monitoring wells. While it is undisputed that the contract does not specifically provide for testing groundwater, the Court notes that the Ground Lease does provide that "Hardee's shall deliver to Landlord a copy of the soil report which will set forth the remedial actions which must be taken to make the soil suitable for Hardee's purposes and meet the soil and ground water requirements as established by the Missouri EPA." (Ground Lease, ¶ 2A.1(D) (emphasis added)).
To find a contractual obligation to indemnify another party, the contract language setting forth the agreement to indemnify must be "clear and unequivocal." Coello v. Tug Mfg. Corp., 756 F. Supp. 1258, 1263 (W.D.Mo.1991); Parks v. Union Carbide Corp., 602 S.W.2d 188, 188-89 (Mo.1980); Linsin v. Citizens Elec. Co., 622 S.W.2d 277, 281 (Mo.App.1981). Based on the contract language, plausible arguments exist to support either the finding that Hardee's agreed to "defend and hold Landlord harmless from claims, liens and expenses or damages" resulting from acts related only to soil testing or the finding that Hardee's agreed to "defend and hold Landlord harmless from claims, liens and expenses or damages" resulting from any acts related to the environmental assessment of the Site. Because the provisions of the contract do not clearly and unambiguously set forth the boundaries of Hardee's agreement to "defend and hold harmless" K.C.1986, summary judgment on this issue is inappropriate.
Hardee's also argues that any contractual indemnity obligation it may have had was discharged in 1990 when K.C.1986 instructed its real estate agent to remove Terracon's locks on the monitoring wells and replace them with its own locks. Under Missouri law, "any act[s] on the part of any indemnitee which materially increases the risk, or prejudices the rights, of the indemnitor, will discharge the indemnitor under the contract of indemnity." Holiday Inns, Inc. v. Thirteen-Fifty Inv. Co., 714 S.W.2d 597, 603 (Mo.App.1986) (quoting Hiern v. St. Paul-Mercury Indem. Co., 262 F.2d 526, 529 (5th Cir.1959) (citations omitted)). The act (installing monitoring wells) which allegedly caused increased contamination was committed prior to the locks being changed in 1990. While changing the locks may arguably have prevented Hardee's or Terracon from mitigating any damage caused by installing the monitoring wells in the first place, it did not increase the risk of initial spread of contamination or the hazards associated therewith. Because Hardee's has not established that changing the locks in 1990 increased its risk or prejudiced its rights, that act did not dissolve any contractual indemnity obligation incurred by Hardee's under the Ground Lease.
B. CERCLA Liability
CERCLA imposes liability for response costs incurred in remedying environmental hazards posed by hazardous waste sites, 42 U.S.C. § 9607, and allows liable parties to seek contribution from other liable parties. 42 U.S.C. § 9613. The primary purpose of CERCLA is "to encourage quick response and to place the cost of that response on those responsible for the hazardous conditions." Control Data Corp. v. S.C.S.C. Corp., 53 F.3d 930, 936 (8th Cir. 1995). Accordingly, CERCLA § 107(a)(2) provides that "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, ... shall be liable." 42 U.S.C. § 9607(a)(2). Hardee's seeks summary judgment that it is not liable under CERCLA for response costs incurred in cleaning up hazardous substances at the Site. In its cross-motion, Borax seeks summary judgment that Hardee's is liable for such response costs.[3]
*832 To establish liability under CERCLA, "a plaintiff must show that a defendant is within one of the four classes of covered persons enumerated in [42 U.S.C. § 9607(a)]." Control Data, 53 F.3d at 934. Borax contends that Hardee's falls within the second class of covered persons enumerated in 42 U.S.C. § 9607(a)(2): "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of." In response, Hardee's argues that it is not a "covered person" because it has never owned or operated the Site, and if the Court finds that Hardee's has owned or operated the Site, no hazardous substance was disposed of during its ownership or operation of the Site.
1. Disposal
For CERCLA liability to attach to Hardee's, it must have "disposed" of hazardous waste. CERCLA incorporates the definition of "disposal" provided in the RCRA:
The term "disposal" means the discharge, deposit, injection, dumping, spillage, leaking, or placing of any solid waste as hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any water, including ground waters.
42 U.S.C. § 6903(3). Whether disposal of hazardous waste occurred during the time Hardee's is alleged to have owned or operated the Site is disputed by the parties. Hardee's hired Terracon to conduct a pre-acquisition soil investigation. Borax argues that Terracon disposed of hazardous waste when it constructed monitoring wells as part of its pre-acquisition investigation, making both Terracon and Hardee's strictly liable. According to Borax, the wells increased the natural rate of contaminant migration, causing groundwater contamination and increasing the pre-existing soil contamination.[4]
The definition of disposal does not quantify the amount of hazardous substance involved in the act. See CDMG, 96 F.3d at 719 ("There is no exception for de minimus disturbances. [citations omitted] The fact that a defendant's disposal of contaminants is trivial may provide a ground to allocate loss liability to that defendant, but it is not a defense to liability"); see also Stewman, 993 F.2d at 649 ("there is no minimum quantitative requirement to establish a release or threat of release of a hazardous substance under CERCLA") (citing Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 668-69 (5th Cir. 1989)). Neither is it material for purposes of CERCLA liability that the act complained of is the only or the initial introduction of hazardous material to the Site. See Kaiser Aluminum & Chem. Corp. v. Catellus Dev. Corp., 976 F.2d 1338, 1342-43 (9th Cir.1992) ("CERCLA's definition of `disposal' expressly encompasses the `placing of any ... hazardous waste ... on any land.' 42 U.S.C. § 6903(3). Congress did not limit the term to the initial introduction of hazardous material onto property"); Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573 (5th Cir.1988) ("[T]his definition of disposal does not limit disposal to a one-time occurrencethere may be other disposals when hazardous substances are moved, dispersed, or released during landfill excavations and fillings"); Acme Printing Co., 870 F.Supp. at 1480 (Defendant liable for release of hazardous substance where excavation of site caused barrels of waste to be unearthed and ruptured).
Whether Terracon's construction of monitoring wells increased the rate of contaminant migration is a question of fact which will require credibility determinations of the parties' expert witnesses at trial. The Court finds that based on the evidence before it, a genuine issue of material fact exists as to whether a disposal of hazardous substances *833 occurred during the period of time Hardee's is alleged to have owned or operated the Site. Accordingly, summary judgment on this point must be denied.
2. Owner
Hardee's asserts it never owned the Site, while Borax asserts that Hardee's was deemed an owner for purposes of CERCLA because of its leasehold interest. Lessees are considered owners for purposes of determining CERCLA liability. See, e.g., U.S. v. Mexico Feed and Seed Co., Inc., 980 F.2d 478, 484(8th Cir.1992); (lessee was owner and operator of land); United States v. South Carolina Recycling and Disposal, Inc., 653 F. Supp. 984, 1003, n. 2 (D.S.C.1984), modified on other grounds sub nom. United States v. Monsanto Co., 858 F.2d 160 (4th Cir.1988).
The parties dispute whether Hardee's ever acquired a leasehold interest in the Site. Hardee's argues that the Ground Lease it entered was merely an agreement to lease upon the occurrence of certain conditions precedent, which never occurred. Borax, on the other hand, argues that the Ground Lease Hardee's entered was an actual lease with the option to terminate upon the failure of certain conditions subsequent. Although the Ground Lease specifically refers to "conditions precedent," it also refers to termination of the agreement and contains other provisions indicating Hardee's is bound by the Ground Lease. Even though the Ground Lease provided that the lease term did not commence until the occurrence of certain conditions precedent, Hardee's did have the right to enter the Site and perform whatever environmental investigation it chose as soon as the Ground Lease was executed. There is no evidence that K.C.1986 dictated the terms or was involved in negotiating the scope of work to be performed by Terracon. Further, although Hardee's had the right to terminate the Ground Lease, Hardee's was required to pay liquidated damages in the event it chose to exercise that right. Having reviewed the terms of the Ground Lease, the Court finds that it is ambiguous as to whether Hardee's was a lessee of the Site at the time Terracon performed its environmental assessment. Summary judgment therefore cannot be granted for or against any party based on Hardee's holding an actual leasehold interest in the property.
Borax further argues that even if Hardee's was not a lessee at the time of Terracon's activities, it did have an equitable interest in the Site, which is sufficient for Hardee's to be deemed an "owner" for purposes of CERCLA. Hardee's did not respond to this argument. Under Missouri law, "an equitable title is the right in the party to whom such title belongs to have the legal title transferred to him upon the performance of a specified condition." Reinhold v. Fee Fee Trunk Sewer, Inc., 664 S.W.2d 599, 603 (Mo.App.1984) (citing State ex rel. City of St. Louis v. Baumann, 348 Mo. 164, 153 S.W.2d 31 (1941)). By citing case law regarding equitable title, Borax is effectively arguing that Hardee's held an equitable lease at the time of Terracon's acts by virtue of the terms of the Ground Lease. Equitable title passes to the prospective purchaser once the right to redeem title is vested in the prospective purchaser. Baumann, 153 S.W.2d at 35 ("The right to call in the legal title ordinarily presupposes an equitable title in the person who may exercise the right"). Entering a contract itself does not transfer equitable title where another party can effectively terminate the contract by performing an act solely with its control. Baumann, 153 S.W.2d at 34. In such a case, the prospective purchaser has an inchoate title to the land. Baumann, 153 S.W.2d at 34. For example, in Baumann, the City acquired a certificate of purchase of certain real estate through a tax sale. Baumann, 153 S.W.2d at 33. Pursuant to Missouri statute, the party delinquent in taxes had two years to redeem the land by paying the back taxes. Baumann, 153 S.W.2d at 33. If no one redeemed the land during the two-year period, the holder of the certificate of sale became entitled to a deed to the property upon presentation of the certificate to the collector. Baumann, 153 S.W.2d at 34. During the redemption period, the City had only an inchoate title to the land. Baumann, 153 S.W.2d at 34. Once the redemption period expired, it acquired equitable title to the land because it needed only to present its certificate *834 of purchase to acquire legal title. Baumann, 153 S.W.2d at 34. Where the law of the state in which the property is located recognizes the doctrine of equitable title, it has been applied to find "ownership" under CERCLA. See, e.g., United States v. Wedzeb Enters., Inc., 809 F. Supp. 646, 652 (S.D.Ind.1992).
Hardee's and K.C.1986 entered into the Ground Lease, which provides that the lease agreement is "[s]ubject to the satisfaction of the conditions set forth herein ..." (Ground Lease, ¶ 1.1). In addition to conditions set forth throughout the Ground Lease, ¶ 4 enumerates certain "conditions precedent" to which Hardee's agreement to lease the Site is subject. Because the failure of one of the conditions set forth in ¶ 4 precipitated Hardee's notice of termination of the Ground Lease, the parties focus on the conditions outlined in ¶ 4 in their arguments regarding the status of Hardee's interest in the Site. While Hardee's has the obligation to perform the "conditions precedent" set forth in ¶ 4, other conditions contained in the Ground Lease require K.C.1986 to act. (See, e.g., ¶ 4A.1). Once the Ground Lease was entered, Hardee's acquired an inchoate interest in the leasehold. That inchoate interest would turn into an equitable interest upon K.C.1986 satisfying all of the conditions in the Ground Lease requiring it to act. At that time, Hardee's "would have the right to have the legal title transferred to [it] upon the performance of specified conditions." Baumann, 153 S.W.2d at 35. The parties have not provided the Court information sufficient to determine whether Hardee's ever gained an equitable interest in the Site and, if it did, whether that interest was gained prior to Terracon installing the monitoring wells. Whether Hardee's was an owner of the Site at the time of disposal, either by holding a leasehold interest or an equitable leasehold interest in the Site, presents a genuine issue of material fact.
3. Operator
Even if Hardee's is found not to have been an owner of the Site at the time of Terracon's activities, it may nonetheless be liable under CERCLA if it was an operator. The Eighth Circuit has held that
an individual may not be held liable as an `operator' under § 9607(a)(2) unless he or she (1) had authority to determine whether hazardous wastes would be disposed of and to determine the method of disposal and (2) actually exercised that authority, either by personally performing the tasks necessary to dispose of the hazardous wastes or by directing others to perform those tasks.
United States v. Gurley, 43 F.3d 1188, 1193 (8th Cir.1994), cert. denied, 516 U.S. 817, 116 S. Ct. 73, 133 L. Ed. 2d 33 (1995) (individual employee of waste reclamation company, who was not an officer, director or shareholder of the company, was found liable as an operator under CERCLA).[5] Whether Hardee's was an operator of the Site requires an analysis of the totality of the circumstances surrounding its involvement at the Site. Gurley, 43 F.3d at 1195 ("An individual defendant's responsibility for the disposal of hazardous waste should be judged on a case-by-case bases"). Although Hardee's did not control the manner in which Terracon carried out its environmental investigation, it did control the nature and scope of the work to be done. Hardee's had apparently unlimited access to the Site after it entered the Ground Lease and was expressly granted the authority to design and carry out an environmental assessment of the Site. Hardee's negotiated the contract with Terracon and approved of Terracon installing monitoring wells. While Hardee's did not actually perform the environmental investigation, it did direct Terracon to perform it and, by negotiating the scope of work to be performed, it arguably directed Terracon to install the monitoring wells. Based on these facts, the Court finds that a genuine issue of material fact exists as to whether Hardee's was an operator of the Site at the time Terracon installed the monitoring *835 wells. Summary judgment declaring Hardee's never operated the Site is, therefore, improper. Because Borax bears the burden of proof on this issue, summary judgment declaring Terracon liable as an operator is also inappropriate.
C. RCRA Claim
In its suggestions in support of summary judgment, Hardee's states that it joins in Terracon's suggestions regarding the RCRA without repeating the same. No party offers additional argument or factual basis for altering the Court's opinion set forth in the Order regarding Terracon's Motion for Summary Judgment. The Court notes that neither party asserts that Hardee's was ever given an RCRA notice. Accordingly, the Court finds that Hardee's is entitled to summary judgment on Borax's RCRA claim (Count III).
D. K.C.1986's Nuisance Claim
Hardee's also states in its suggestions in support of its summary judgment that it adopts Terracon's suggestions regarding K.C.1986's nuisance claim. Neither party has offered argument or factual basis suggesting the Court should alter its opinion as set forth in its Order regarding Terracon's motion for summary judgment. Accordingly, the Court finds that Hardee's is entitled to summary judgment on K.C.1986's public nuisance claim (Count V).
For the foregoing reasons, it is hereby
ORDERED that Hardee's Motion for Summary Judgment (Doc. # 450) is
DENIED as to Counts I and II of Borax's Amended Cross-Claim (Doc. # 251) alleging CERCLA liability;
GRANTED as to Count III of Borax's Amended Cross-Claim (Doc. # 251) alleging a cause of action under the RCRA;
DENIED as to Counts IV, V, VI, VII and VIII of Borax's Amended Cross-Claim (Doc. # 251) alleging declaratory judgment, negligence, contribution, indemnity and unjust enrichment;
DENIED as to Counts III, IV, VII, VIII, IX and X of K.C.1986's Second Amended Complaint (Doc. # 142) alleging negligence, strict liability for ultra-hazardous activities, contribution, indemnity, unjust enrichment and contractual indemnity; and
GRANTED as to Count V of K.C.1986's Second Amended Complaint alleging nuisance. It is further
ORDERED that U.S. Borax's Cross-Motion for Partial Summary Judgment against Hardee's (Doc. # 484) is DENIED.
NOTES
[1] While Borax and K.C.1986 do not expressly identify which claims are premised on the doctrine of respondeat superior, it appears they are asserting that all counts other than Counts I, II, III, IV, and X are premised on the doctrine of respondeat superior. For example, Borax premises Hardee's liability under Count VI (contribution), Count VII (indemnity) and Count VIII (unjust enrichment) on the assertion that Hardee's "is liable because they are past owners/operators of the Site and they caused the disposal of some or all of the hazardous substances alleged to be present at the Site." (Amended Cross-claim, ¶ 66, 71, and 78). It is clear from the factual background contained in the Amended Cross-claim that Hardee's liability is based on contamination from the monitoring wells installed by Terracon. (Amended Cross-claim, ¶ 20). Accordingly, Borax's theory of liability against Hardee's under Counts VI, VII and VIII of its Amended Cross-claim appears to be premised on a finding that Hardee's is vicariously liable for Terracon's acts.
[2] Smith also required the plaintiff to establish that "(3) the one contracting with the independent contractor negligently failed to insure that adequate precautions were taken to avoid damage by reason of the inherently dangerous activity; and (4) plaintiff's damage was a direct result of such negligence." Smith, 559 S.W.2d at 523. That portion of Smith has since been overruled, and such a showing is no longer required. See Ballinger v. Gascosage Elec. Co-op., 788 S.W.2d 506, 509 (Mo.1990); Zueck, 809 S.W.2d at 387, 391.
[3] In its Second Amended Complaint, K.C.1986 does not assert a cause of action against Hardee's under CERCLA.
[4] Hardee's argues that CERCLA's innocent owner defense mandates that it not be held liable under CERCLA "unless the dispersal of contaminants is coupled with negligent conduct during the assessment." (Sugg. in Supp. at 15 (citing United States v. CDMG Realty Co., 96 F.3d 706 (3rd Cir.1996))). As set forth in detail in this Court's Order disposing of Terracon's Motion for Summary Judgment, the Court declines to follow the holding in CDMG.
[5] In United States v. TIC Investment Corp., 68 F.3d 1082 (8th Cir.1995), the Eighth Circuit indicated that a different test to determine operator liability than that articulated in Gurley may apply to various types of actions not relevant here. TIC, 68 F.3d at 1089, n. 5, cert. denied sub nom. Georgoulis v. United States, ___ U.S. ___, 117 S. Ct. 50, 136 L. Ed. 2d 14 (1996). Absent further direction from the Eighth Circuit, the Court deems itself bound by the Gurley decision. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2522683/ | 82 F. Supp. 2d 689 (2000)
Marie J. LOWERY, Plaintiff,
v.
UNIVERSITY OF HOUSTON CLEAR LAKE, Defendant.
No. CIV. A. G-99-064.
United States District Court, S.D. Texas, Galveston Division.
February 8, 2000.
*690 *691 Sheila Beth Owsley, Houston, TX, for Marie J Lowery, PhD., plaintiff.
Jacqueline Murry Molden, Assistant Atty General, Austin, TX, for the University of Houston at Clear Lake, defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
KENT, District Judge.
Plaintiff Lowery brings this claim against Defendant University of Houston Clear Lake alleging age and gender discrimination in violation of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq., and the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. Now before the Court is Defendant's Motion for Summary Judgment, filed December 10, 1999. For the reasons stated below, Defendant's Motion for Summary Judgment is GRANTED.
I. FACTUAL SUMMARY
In September 1974, Defendant hired Plaintiff Marie J. Lowery, a white female, as an Associate Professor in Elementary Education and Language/Learning Disabilities. Two years later, Plaintiff applied for tenure and a promotion to the rank of Full Professor. She received tenure but was denied the promotion. Plaintiff applied unsuccessfully for a promotion to Full Professor again in 1977, 1978, and 1979. Although she had been repeatedly denied a promotion, Plaintiff continued her teaching responsibilities as an Associate Professor until July 20, 1998, when she tendered her resignation, effective August 20, 1998.
On July 27, 1998, Plaintiff filed a complaint with the Equal Employment Opportunity Commission ("EEOC"), alleging discrimination. She received a right-to-sue letter from the agency on November 3, 1998. Plaintiff then filed suit on February 1, 1999, alleging salary and promotion discrimination on the basis of gender and age, *692 in violation of both Title VII and the ADEA.
II. ANALYSIS
A. Summary Judgment Standard
Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986). When a motion for summary judgment is made, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 2510, 91 L. Ed. 2d 202 (1986). Issues of material fact are "genuine" only if they require resolution by a trier of fact. See id. at 248, 106 S. Ct. at 2510. The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Only disputes over facts that might affect the outcome of the lawsuit under governing law will preclude the entry of summary judgment. See id. at 247-48, 106 S. Ct. at 2510. If the evidence is such that a reasonable fact-finder could find in favor of the nonmoving party, summary judgment should not be granted. See id.; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986); Dixon v. State Farm Fire & Cas. Co., 799 F. Supp. 691, 693 (S.D.Tex.1992) (noting that summary judgment is inappropriate if the evidence could lead to different factual findings and conclusions). Determining credibility, weighing evidence, and drawing reasonable inferences are left to the trier of fact. See Anderson, 477 U.S. at 255, 106 S. Ct. at 2513.
Procedurally, the party moving for summary judgment bears the initial burden of "informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrates the absence of a genuine issue of material fact." Celotex Corp., 477 U.S. at 323, 106 S. Ct. at 2553; see also FED. R. CIV. P. 56(c). The burden then shifts to the nonmoving party to establish the existence of a genuine issue for trial. See Matsushita, 475 U.S. at 585-87, 106 S. Ct. at 1355-56; Wise v. E.I. DuPont de Nemours & Co., 58 F.3d 193, 195 (5th Cir.1995). The Court must accept the evidence of the nonmoving party and draw all justifiable inferences in favor of that party. See Matsushita, 475 U.S. at 585-87, 106 S. Ct. at 1355-56. However, to meet its burden, the nonmovant "must do more than simply show that there is some metaphysical doubt as to the material facts," but instead, must "come forward with `specific facts showing that there is a genuine issue for trial.'" Id. at 586-87, 106 S. Ct. at 1355-56 (quoting FED. R. CIV. P. 56(e)).
B. ADEA Claims
Although the parties did not address the issue of Eleventh Amendment immunity, the Court raises it sua sponte, pursuant to its authority under Rule 12(h)(3) of the Federal Rules of Civil Procedure. See Ysleta del Sur Pueblo v. Texas, 36 F.3d 1325, 1335 (5th Cir.1994) (noting that because the Eleventh Amendment operates as a jurisdictional bar, the issue may be raised by a court sua sponte); McDonald v. Board of Miss. Levee Comm'rs, 832 F.2d 901, 906 (5th Cir.1987) ("[E]leventh amendment immunity is a jurisdictional issue that `cannot be ignored, for a meritorious claim to that immunity deprives the court of subject matter jurisdiction of the action.'" (quoting Crane v. Texas, 759 F.2d 412, 415 (5th Cir.1985))). The Eleventh Amendment prohibits actions against a state entity in federal court, unless either the state has waived its sovereign immunity or Congress, pursuant to another provision in the Constitution, has expressly abrogated the state's immunity. See Atascadero State Hosp. v. Scanlon, 473 U.S. 234, 237-40, 105 S. Ct. 3142, 3144-46, 87 L. Ed. 2d 171 (1985). A state's intention to waive sovereign immunity must be "unequivocally expressed." Stem v. Ahearn, 908 F.2d 1, 4 (5th Cir.1990). Because *693 the University of Houston Clear Lake is an instrumentality of the State of Texas, the Court must inquire whether Plaintiff's ADEA claim is barred on the ground that Defendant enjoys Eleventh Amendment immunity. See TEX. EDUC. CODE ANN. § 111.73 (Vernon 1996) (signifying that the University of Houston Clear Lake was created by the laws of the State of Texas). In this case, there is nothing to indicate that the State of Texas consented to Plaintiff's suit. More importantly, the United States Supreme Court has recently held that because the ADEA exceeds the scope of congressional authority, it is therefore invalid as an abrogation of state sovereignty. See Kimel v. Florida Bd. of Regents, ___ U.S. ___, 120 S. Ct. 631, 648, 145 L. Ed. 2d 522 (2000). Accordingly, Plaintiff's ADEA claims are DISMISSED for lack of subject matter jurisdiction.
C. Title VII Claims
1. Plaintiff Properly Filed Her Suit Within Ninety Days of Receiving Her Right-to-Sue Notice
Defendant first seeks summary judgment on Plaintiff's Title VII claims on the basis that Plaintiff did not file her lawsuit within the statutorily prescribed time period. Defendant's assertion, however, is incorrect.
Title VII provides that if the EEOC dismisses a charge brought by a person aggrieved due to unlawful employment practices or does not file a civil action within one hundred eighty days from the filing of the charge, the EEOC shall "notify the person aggrieved and within ninety days after the giving of such notice a civil action may be brought against the respondent named in the charge." 42 U.S.C. § 2000e-5(f)(1) (1994). The Fifth Circuit has interpreted this ninety-day limitations requirement as akin to a statute of limitations rather than as a jurisdictional prerequisite. See Espinoza v. Missouri Pac. R. Co., 754 F.2d 1247, 1248 n. 1 (5th Cir.1985). It is well understood that the ninety-day limitations period begins to run "on the date the EEOC right-to-sue letter is delivered to the offices of formally designated counsel or to the claimant." Ringgold v. National Maintenance Corp., 796 F.2d 769, 770 (5th Cir.1986); accord Plant v. GMRI, Inc, 10 F. Supp. 2d 753, 755 (S.D.Tex.1998).
In this case, the EEOC issued a determination regarding Plaintiff's allegations on October 30, 1998. The central question, however, does not revolve around the date of issuance; instead, it turns on the date Plaintiff received the notice. Although Plaintiff first indicated in her interrogatory responses that she received the right-to-sue letter on October 30, 1998, Plaintiff now has provided evidence affirmatively showing that the notice was not received until November 3, 1998. See Pl.'s Resp. to Def.'s Mot. for Summ. J Ex. 2. Given that suit was filed on February 1, 1998 (precisely ninety days following Plaintiff's receipt of the right-to-sue letter), Plaintiff complied with the ninety-day requirement, and therefore her claims are timely. Accordingly, Defendant's Motion for Summary Judgment as to the ninety-day limitations period is DENIED.
2. Plaintiff's Failure to Promote Claim Is Time-Barred
Defendant next argues that Plaintiff may not rely upon any allegation of discriminatory conduct occurring prior to September 30, 1997, because Plaintiff failed to file a charge of discrimination within three hundred days of the allegedly offensive conduct. Under Title VII, a civil action based upon employment discrimination cannot be commenced unless the plaintiff has filed a charge within three hundred days of the challenged conduct. See 42 U.S.C. § 2000e-5(e)(1). Generally, the limitations period begins on the date that the discriminatory act occurred, and a plaintiff cannot sustain her claims based on incidents occurring before the three hundred-day period. See Waltman v. International Paper Co., 875 F.2d 468, 474 (5th Cir.1989).
*694 In the instant case, Plaintiff filed her initial charge of discrimination with the EEOC on July 27, 1998. Hence, according to Defendant, only events occurring on or after September 30, 1997 are actionable under the statutory three hundred-day period. The Court, however, finds Plaintiff's failure to promote claim to be the only charge that is time-barred.
The Fifth Circuit recognizes an equitable exception to the three hundred-day statutory period that allows the Court to consider all relevant incidents, including those that would otherwise be time-barred, where such incidents constitute a continuing violation. See id. In order to sustain a claim under the continuing violation theory, the plaintiff must show that at least one incident of discrimination occurred within the three hundred-day period. See id. But the plaintiff must demonstrate more than a mere fact that at least one act of discrimination took place during the statutory filing period; instead, the plaintiff must also "prove a series of continuous violations constituting an organized scheme leading to a present violation." Berry v. Board of Supervisors, 715 F.2d 971, 981 (5th Cir.1983). To accomplish this, the plaintiff must establish that: (i) the one timely act involved the same type of discrimination; (ii) the acts and events sought to be linked in a continuing violation theory were regular or recurring; and (iii) the events had a degree or permanence that would alert a reasonably prudent person similarly situated that her rights had been violated. See Waltman, 875 F.2d at 475. The core idea, then, is to "`focus [] on what event, in fairness and logic, should have alerted the average lay person to act to protect [her] rights.'" Glass v. Petro-Tex Chem. Corp., 757 F.2d 1554, 1560-61 (5th Cir.1985) (quoting Dumas v. Town of Mount Vernon, 612 F.2d 974, 977 (5th Cir.1980)); see Snooks v. University of Houston, Clear Lake, 996 F. Supp. 686, 688-89 (S.D.Tex.1998) (declaring that "the 300-day limitations period may be equitably tolled until the time the facts supporting a cause of action are or should be apparent to the employee" (citations omitted)). In this case, Plaintiff complains of undercompensation and failure to promote. The Court will evaluate each claim in turn.
Plaintiff first alleges that she was continually undercompensated for the ten years preceding her retirement at the University. Her claim of discriminatory undercompensation therefore extends until August 30, 1998, the date of Plaintiff's resignation. This certainly represents a time period falling well within the statutory three hundred-day period. Clearly, as to the undercompensation claim, Plaintiff meets the first two prongs of the Waltman test. Plaintiff further asserts that she meets the third requirement under Waltman because she did not realize the unlawful disparity in salaries between herself and other male colleagues until after she resigned. See Lowery Aff. ¶ 35. The Court finds Plaintiff's arguments sufficient for the continuing violation theory to attach. Hence, the undercompensation claims withstand Defendant's argument for dismissal.
Plaintiff's allegations regarding the failure to promote do not, however, meet the Waltman requirements, because they necessarily involve only those time periods in which Plaintiff applied for a Full Professor position. Plaintiff acknowledges that the last time she attempted to obtain Full Professor status was 1979. See Lowery Aff. ¶ 18. It follows then that Plaintiff did not seek promotion at any time during the three hundred days preceding her filing of a charge of discrimination with the EEOC. Consequently, Plaintiff cannot show that an incident involving a failure to promote occurred within the requisite three hundred day time period Plaintiff's failure to promote claims fails the first prong under Waltman. And unlike her claims regarding undercompensation, Plaintiff was aware for more than nineteen years that she had not received a promotion. Moreover, as an active faculty member, she knew which professors had been promoted during this time period. After evaluating *695 this evidence, the Court finds that a reasonably prudent person would or should have been on notice that discrimination had occurred. See Stewart v. Houston Lighting & Power Co., 998 F. Supp. 746, 749 ("A reasonable person who is rejected for a promotion for which he or she is otherwise qualified, and who also has experienced discrimination such as the Plaintiff alleges, should be put on notice of the discrimination."). Plaintiff has even cited one case that supports the Court's conclusion. See Huckabay v. Moore, 142 F.3d 233, 240 (5th Cir.1998) (dismissing a plaintiff's failure to promote claim as untimely because it represented "an isolated occurrence[] that should have put [the plaintiff] on notice that a claim had accrued"). To assert otherwise is absolutely preposterous, for Plaintiff brings forth not a single shred of evidence indicating that, for whatever reason, she had no knowledge of the unequal treatment regarding promotions and only learned of it within the three hundred days prior to filing her EEOC claim.[1] Thus, to the extent the alleged failure to promote claims occurred before September 30, 1997, they are time-barred. Accordingly, Defendant's Motion for Summary Judgment as to Plaintiff's claim of failure to promote is GRANTED.
3. Plaintiff's Undercompensation Claims Fail on the Merits
Having disposed of all but one of Plaintiff's claims, the Court now addresses on the merits the charge of compensation discrimination. Plaintiff alleges she was discriminated against because of her sex. Section 703(a)(1) of Title VII provides in relevant part: "It shall be an unlawful employment practice for an employer to ... discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(1); see Plemer v. Parsons-Gilbane, 713 F.2d 1127, 1131-32 (5th Cir.1983) (noting that Title VII prohibits employers from paying women less than the worth of their jobs merely because they are women).
Here, Plaintiff's Title VII claim requires a showing of intentional discrimination. See Peters v. City of Shreveport, 818 F.2d 1148, 1153 (5th Cir.1987). To determine whether intentional discrimination exists, the Fifth Circuit applies the burden-shifting analytical framework first established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See, e.g., Johnson v. Chapel Hill Indep. Sch. Dist., 853 F.2d 375, 381 (5th Cir.1988) (applying McDonnell Douglas to a differential treatment case brought pursuant to Title VII).[2]
Under this framework, the Court employs a three-part test designed to determine a defendant's motivation in taking the challenged action. See McDonnell Douglas, 411 U.S. at 803-04, 93 S. Ct. at 1824-25; Burdine, 450 U.S. at 252-54, 101 S. Ct. at 1093-94. First, the plaintiff must establish a prima facie case by proving the elements of the discrimination claim. If the plaintiff proves her prima facie case, a presumption of discrimination arises. See Bodenheimer v. PPG Indus., Inc., 5 F.3d 955, 957 (5th Cir.1993). The burden of production then shifts to the defendant to rebut this presumption by articulating a legitimate, nondiscriminatory reason for the alleged discriminatory action. See Olitsky v. Spencer Gifts, Inc., 964 F.2d 1471, *696 1478 n. 19 (5th Cir.1992). A defendant meets this burden by proffering admissible evidence of an explanation that would be legally sufficient to justify a judgment for the defendant. See Guthrie v. Tifco Indus., 941 F.2d 374, 376 (5th Cir.1991). This does not require that the defendant persuade the trier of fact that there was no intentional discrimination; the defendant need only produce evidence on that point. See Hicks, 509 U.S. at 507-08, 113 S. Ct. at 2747-48. Finally, once the defendant satisfies this burden, the presumption of discrimination established by the plaintiff's prima facie case dissolves. See Burdine, 450 U.S. at 255 n. 10, 101 S. Ct. at 1095 n. 10. The plaintiff's burden of persuasion then arises, and she must produce evidence that the defendant's proffered reasons are mere pretexts, the real reason for the action having been based on an impermissible animus. See id. at 256, 101 S. Ct. at 1095; Bodenheimer, 5 F.3d at 959. The plaintiff may succeed at this juncture, either by persuading the Court that a discriminatory reason more likely motivated the defendant, or by showing that the defendant's proffered explanation is not entitled to credence. See Burdine, 450 U.S. at 256, 101 S. Ct. at 1095. The ultimate burden of proving intentional discrimination rests at all times with the plaintiff. See Hicks, 509 U.S. at 507, 113 S. Ct. at 2749.
Summary judgment is particularly appropriate when the Court is evaluating evidence at the "pretext" stage of the McDonnell Douglas analysis. As the Fifth Circuit has noted:
"[I]t is relatively easy both for a plaintiff to establish a prima facie case and for a defendant to articulate a legitimate, nondiscriminatory reason for his decision." ... In the context of summary judgment ..., the question is not whether the plaintiff proves pretext, but rather whether the plaintiff raises a genuine issue of fact regarding pretext.
Britt v. Grocers Supply Co., 978 F.2d 1441, 1450 (5th Cir.1992) (quoting Amburgey v. Corhart Refractories Corp., 936 F.2d 805, 811 (5th Cir.1991)). Speculation and belief are insufficient to create a fact issue as to pretext, and pretext cannot be established by mere conclusory statements of a plaintiff who feels that she has been discriminated against. See E.E.O.C v. Exxon Shipping Co., 745 F.2d 967, 976 (5th Cir. 1984); Britt, 978 F.2d at 1451.
a. Plaintiff Fails to Present a Prima Facie Case of Discriminatory Compensation
In this case, Plaintiff alleges that because of her sex she was compensated differently than her male counterparts at the University. To establish a prima facie case of compensation discrimination under Title VII, a plaintiff must demonstrate that (1) she is a member of a protected class, and (2) she was paid less than a nonmember for work requiring substantially the same responsibility. See Uviedo v. Steves Sash & Door Co., 738 F.2d 1425, 1431 (5th Cir.1984); see Pittman v. Hattiesburg Mun. Separate Sch. Dist., 644 F.2d 1071 (5th Cir.1981). Defendant does not deny that Plaintiff is a member of a protected class; instead, Defendant contends that it paid her more than at least one of the men to whom she compares herself. Defendant also argues that comparing Plaintiff's salary to the other male faculty member listed in Plaintiff's complaint is inappropriate because he is a Full Professor, while Plaintiff was at all times an Associate Professor.
For the purposes of her pay discrimination claims, Plaintiff compares herself to Randy Seevers, an Associate Professor, and John Carter, a Full Professor. See Pl.'s Compl. ¶ 10-11. At the outset, the Court notes that Plaintiff cannot use Carter as a proper basis for comparison because as a Full Professor Carter does not share comparable duties and responsibilities with Associate Professors. Moreover, because of seniority and status, Full Professors are compensated at an entirely different rate than are Associate Professors such as Plaintiff. Simply put, evaluating the salary package received by a Full *697 Professor vis-a-vis an Associate Professor reveals nothing that the Court could possibly find relevant in so far as it applies to the undercompensation claims posed by Plaintiff. Therefore, the Court will focus on Plaintiff's comparison to Seevers.
In the brief, overlapping period in which they both worked at the University, Plaintiff never received a lower salary than Seevers. In fact, Dr. Dennis Spuck, Dean of the Education Department (the individual responsible for determining salary decisions) has provided a sworn statement explaining that Dr. Seevers began teaching at the University of Houston Clear Lake campus as a professor in the fall semester of 1998 at an annual starting salary of $38,001.00. See Spuck Aff. ¶ 13. When Plaintiff retired in August 1998, she received a salary of $43,409.00. As to Seevers, Plaintiff has therefore failed to prove she "was paid less than a nonmember for work requiring substantially the same responsibility."
b. Defendant Offers Legitimate Nondiscriminatory Reasons for the Alleged Discriminatory Actions
Assuming arguendo that Plaintiff could meet the two-pronged Uviedo test, the Court now considers Defendant's proffered reasons for its actions. In determining merit pay increases, Defendant has instituted a clearly defined procedure. All full-time continuing faculty members undergo an annual review, which involves a multi-step process. Faculty members first complete an annual review form in which they self-report their activities, accomplishments, and rate their overall performance in the areas of teaching, scholarship, and service. Once the self-report forms are completed, the Associate Dean at the School of Education then independently rates each faculty member's performance in the areas of teaching, service, and research, and provides written comments explaining the basis for the ratings.[3] The forms are then returned to each faculty member for signature, whereupon the ratings are forwarded to the Dean of the School of Education for final approval.[4] The ratings approved by the Dean form the basis for determining merit salary increases. Using these ratings, faculty members are divided into four levels of merit, with each level being assigned a specific monetary amount drawn from the fiscal year's budget. The levels form a sliding scale: faculty members assigned to the fourth level receive the most merit money, while those placed in the first level receives the least. See Spuck Aff. ¶¶ 5-7.
Plaintiff does not dispute that her ratings over the past decade have consistently been less than stellar. In January 1988, Dr. Spuck, then Associate Dean, rated Dr. Lowery as "Very Good" in teaching, "Poor" in research, and "Fair" in service all of which served to rank her in the first (lowest) level of merit. See Def.'s Mot. for Summ. J. Ex. 5 Attach. 6. The next year, Associate Dean Spuck rated Dr. Lowery as "Very Good" in teaching, "Poor" in research, and "Very Good" in service all of which served to rank her this time in the second level of merit. See id. Ex. 5 Attach. 7. In January 1990, Associate Dean Spuck ranked Dr. Lowery as "Outstanding" in teaching, "Very Good" in service, but Dr. Lowery did not receive a rating for research because she allegedly failed to demonstrate research activities (which include *698 publications, research grants or awards, or presentations) all of which caused her once again to rank in the second level of merit. See id. Ex. 5 Attach. 8; Spuck Aff. ¶ 9. Dr. Spuck attributes Plaintiff's low ranking on the merit scale to her "poor" research scores. And although Plaintiff had the right to challenge these ratings and have them reconsidered, Plaintiff did not chose not to pursue such action, and instead signed each evaluation sheet for submission to the Dean. See Spuck Aff. ¶ 5.
Plaintiff's deficiencies in scholarship and research were also noted by the other Associate Deans who evaluated her performance. In 1991, Associate Dean Thomas C. Gee awarded Plaintiff an "Outstanding" rating in teaching, a "Fair" rating in research, and a "Very Good" rating in service which resulted in Plaintiff ranking in the third level of merit. See Def.'s Mot. for Summ. J. Ex. 5 Attach. 9. The next year and in 1996, Plaintiff failed to submit an Annual Review report to the Associate Dean responsible for her evaluations; accordingly, she was not awarded a merit increase during those years. See Doris Pather Aff. ¶ 8; Hans Olsen Aff. ¶ 7; Def.'s Mot. for Summ. J. Ex. 6 Attach. 4 (informing Plaintiff that Dr. Doris Pather (female) had not received her Annual Review and warning that Plaintiff would be assigned the lowest level of merit for the year if the Annual Review was not submitted); id. Ex. 7 Attach. 1 (informing Plaintiff that because Plaintiff had not submitted her Annual Review form, Dr. Olsen could not offer a merit recommendation "except as to no credit and no merit"). In the remaining years, from 1992 until 1997 Plaintiff continued to typically receive a "Poor" ranking in the area of research, and a "Fair" rating in the area of service thus, she ranked in the first (lowest) level of merit every year other than 1994, when she ranked in the second level. See Def.'s Mot. for Summ. J. Ex. 6 Attach. 1-3; id. Ex. 7 Attach. 2-3.
Plaintiff's poor ranking in research each of the past ten years explains why she, as a university academician, did not receive higher overall scores in the merit salary rankings. The salary disparity complained of by Plaintiff can therefore easily be explained by factors other than gender. See Travis v. Board of Regents, 122 F.3d 259 (5th Cir.1997), cert. denied, 522 U.S. 1148, 118 S. Ct. 1166, 140 L. Ed. 2d 176 (1998). Ultimately, Defendant's explanation for its salary decisions qualifies as a legitimate, nondiscriminatory reason for Plaintiff's allegedly low compensation. Thus, the Court finds, as a matter of law, that Defendant's evidence that Plaintiff's evaluations and publication rate constitute legitimate, nondiscriminatory reasons for any possible disparity in pay between Plaintiff's original salary as Associate Professor in 1974 and Dr. Seevers's initial salary as Associate Professor in 1998. Having found these legitimate, nondiscriminatory reasons, the burden-shifting structure of McDonnell Douglas becomes irrelevant to Plaintiff's claims, and the inference of unlawful discrimination had it been created by Plaintiff's prima facie evidence disappears. See Burdine, 450 U.S. at 255 n. 10, 101 S. Ct. at 1095.
c. Plaintiff Fails to Show Evidence of Pretext Necessary to Overcome Defendant's Nondiscriminatory Justifications
Finding that Defendant has indeed offered a legitimate nondiscriminatory explanation for Plaintiff's compensation, the Court now turns to the issue of pretext.[5] A plaintiff alleging employment discrimination need not come forward with direct evidence of discriminatory intent in order to avoid summary judgment. See La Pierre, 86 F.3d at 449; Rhodes v. Guiberson *699 Oil Tools, 75 F.3d 989, 994 (5th Cir. 1996) (en banc). Such direct evidence of an employer's discriminatory intent is rare; therefore, Title VII plaintiffs ordinarily must prove their claims through circumstantial evidence. A plaintiff establishes this circumstantial evidence of intentional discrimination by demonstrating that Defendant's articulated nondiscriminatory rationale is pretextual. See McDonnell Douglas, 411 U.S. at 804, 93 S. Ct. at 1825; Burdine, 450 U.S. at 253, 101 S. Ct. at 1093. Indeed, "[t]he factfinder's disbelief of the reasons put forward by the defendant (particularly if disbelief is accompanied by a suspicion of mendacity) may, together with the elements of the prima facie case, suffice to show intentional discrimination." Hicks, 509 U.S. at 511, 113 S. Ct. at 2749.
Although the burden here rests with Plaintiff, she fails to persuade the Court that a rational jury could find a discriminatory reason motivated Defendant or that Defendant's proffered reasons are unworthy of credence. See Burdine, 450 U.S. at 256, 101 S. Ct. at 1095. Plaintiff offers the following evidence of discrimination: (1) the affidavits of Dr. Henry Williams, Dr. John Carter, and Dr. Betty Criscoe, (2) a battery of graphs allegedly charting salary comparisons in the University's Education Department, and (3) her own affidavit.
Neither Dr. Williams's nor Dr. Carter's affidavits support a reasonable inference of gender-based salary discrimination directed toward Plaintiff.[6] At most, the affidavits merely establish that Dr. Spuck closely managed faculty committee assignments, and that based on unconfirmed figures, a younger faculty member, Dr. Rakow, received higher merit increases than Plaintiff a fact that both Drs. Williams and Carter attribute to Dr. Spuck's supposed favoritism of Dr. Rakow over Plaintiff.[7] These assertions simply do not prove an animus based on gender. For her part, Dr. Criscoe's affidavit discusses the reason she left the University in 1994 and opines that Dr. Spuck intentionally set out to ensure that she received a lower salary. This affidavit, however, does not discuss the Plaintiff's situation and offers no verifiable proof that Defendant intentionally discriminated against Plaintiff by improperly undercompensating her particularly given the low scores Plaintiff consistently received in her annual reviews.
Next, Plaintiff has provided the Court with twenty-eight home-spun graphs allegedly depicting (1) a long-standing salary disparity that has existed between men and women in the Education Department at the University, and (2) the specific salary differentials between each male professor in the Department and Plaintiff. Although Plaintiff claims that these graphs "verify the extreme discrepancy between Dr. Lowery and her peers," they, in their current form, prove nothing of the sort. Pl.'s Resp. to Def.'s Mot. for Summ. J. at *700 13. None of the graphs have been authenticated, and therefore they are not verifiable. These exhibits do not indicate who researched, complied, or computerized the graphs, nor do they reveal the basis for the calculations. See id. Ex. 28-36.[8] The Court cannot even adduce from many of the graphs which professors are male and which are female. The composition of these exhibits makes them virtually undecipherable. Because the Court has no way to corroborate the underlying data upon which the graphs are based, it is inadmissible in its present form.[9]
The only other evidence produced is Plaintiff's own affidavit stating, among other things, that "Dean Spuck ... ignored the policies and procedures of both the University and the School of Education," that the Associate Deans "conveniently lost" two of Plaintiff's annual reviews, that Dean Spuck manipulated faculty committee assignments so as to reduce Plaintiff's participation in service activities, and that Dean Spuck arbitrarily canceled one of her teaching programs. See Lowery Aff. ¶¶ 18-21.[10] The Court initially notes that Plaintiff adduces no proof whatever of her qualifications to receive greater merit pay increases than she actually received. Defendant has stressed that Plaintiff's poor showing in academic scholarship goes a long way toward explaining her low merit salary increases. And, even Plaintiff acknowledges that she did not devote as much effort to her research endeavors as her colleagues. See Lowery Aff. ¶ 30 (noting that Plaintiff voluntarily chose to focus on service rather than research and agreeing that "[o]ur goal should be to acquire, disseminate and preserve knowledge, rather than teach, research and service.").[11] Such an admission supports Defendant's position that sex has nothing to do with this employment dispute. Plaintiff's lower pay is explained by poor performance, particularly in the area of scholarship. *701 See EEOC v. Louisiana Office of Community Servs., 47 F.3d 1438, 1447 (5th Cir.1995) (noting that "unless disparities in curricula vitae are so apparent as virtually to jump off the page and slap us in the face, we judges would be reluctant to substitute our views for those of the individuals charged with the evaluation by virtue of their own years of experience and expertise in the field in question").
Thus, other than her personal beliefs, Plaintiff has no admissible evidence to support her assertions that she was treated unfairly due to her sex.[12] As the Court has stated previously, "[s]peculation and belief are insufficient to create a fact issue as to pretext." McKey v. Occidental Chem. Corp., 956 F. Supp. 1313, 1319 (S.D.Tex.1997). Moreover, conclusory allegations of intentional discrimination simply do not suffice. See Douglass v. United Services Auto. Ass'n, 79 F.3d 1415, 1430 (5th Cir.1996) (en banc) ("In short, conclusory allegations, speculation, and unsubstantiated assertions are inadequate to satisfy the nonmovant's burden.... It is more than well-settled that an employee's subjective belief that he suffered an adverse employment action as a result of discrimination, without more, is not enough to survive a summary judgment motion, in the face of proof showing an adequate nondiscriminatory reason."); see also Nichols v. Loral Vought Sys. Corp., 81 F.3d 38, 42 (5th Cir.1996) (noting that plaintiffs generalized statements regarding relative qualifications or the treatment of similarly situated employees is insufficient to support an inference of discrimination); Ray v. Tandem Computers, Inc., 63 F.3d 429, 434 (5th Cir.1995) (stating that "bald assertions of age discrimination are inadequate to permit a finding that proscribed discrimination motivated [the defendant's] actions against [the plaintiff]"). In the end, Plaintiff has not succeeded in persuading the Court that a rational jury could be persuaded that a discriminatory reason more likely motivated Defendant, nor has she shown that Defendant's proffered explanation is not entitled to credence. See Burdine, 450 U.S. at 256, 101 S. Ct. at 1095. Consequently, Defendant's Motion for Summary Judgment on Plaintiff's discrimination claims regarding undercompensation is GRANTED, and those claims are hereby DISMISSED WITH PREJUDICE.
III. CONCLUSION
After an exhaustive review of this case, Plaintiff's ADEA claim is DISMISSED WITH PREJUDICE, pursuant to the Supreme Court's recent holding in Kimel v. Florida Board of Regents. Moreover, Plaintiff's Title VII claim surrounding the failure to promote is DISMISSED WITH PREJUDICE due to limitations problems. Finally, because Plaintiff has failed either to prove a prima facie case of discrimination or to adequately rebut Defendant's evidence that she had not met the criteria for merit pay increases, Plaintiffs Title *702 VII claim involving undercompensation is also DISMISSED WITH PREJUDICE.
The parties are ORDERED to file no further pleadings on these issues in this Court, including motions to reconsider and the like, unless justified by a compelling showing of new evidence not available at the time of the instant submissions. Instead, the parties are instructed to seek any further relief to which they feel themselves entitled in the United States Court of Appeals for the Fifth Circuit, as may be appropriate in due course.
IT IS SO ORDERED.
FINAL JUDGMENT
For the reasons set forth in the Order issued this date, each of Plaintiffs' claims is DISMISSED WITH PREJUDICE. All parties are ORDERED to bear their own costs and attorney's fees incurred herein to date.
THIS IS A FINAL JUDGMENT.
IT IS SO ORDERED.
NOTES
[1] The Court's finding is bolstered by Plaintiff's brief, which acknowledges that her complaint primarily focuses on alleged discriminatory acts taken against her during her latter years at the University. See Pl.'s Resp. to Def.'s Mot. for Summ. J. at 21 ("Dr. Lowery's complaint centers on the treatment she received during the period 1990 until her retirement.").
[2] McDonnell Douglas was refined in Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981), and was further clarified in St. Mary's Honor Center v. Hicks, 509 U.S. 502, 113 S. Ct. 2742, 125 L. Ed. 2d 407 (1993).
[3] For each area reviewed, the Associate Dean assigns a rank of "Outstanding," "Very Good," "Good," "Fair," or "Poor." If a faculty member fails to submit the annual review evaluation, the Associate Dean may also list "No Teaching," "No Service," or "No research."
[4] Upon receiving the evaluation completed by the Associate Dean, a faculty member may submit a written request for reconsideration of the ratings. The Associate Dean is then required to notify the faculty member in writing of the results of the reconsideration. See Spuck Aff. ¶ 5. Dean Spuck's affidavit states that during the time in which he served as Associate Dean, Plaintiff "never appealed any of the review ratings I rendered." Id. What is more, when Dr. Spuck became dean, he "never changed any of the ratings and/or rankings the Associate Deans awarded to Dr. Lowery." Id. ¶ 6.
[5] As noted previously, it is because the Court wishes to proceed with extreme caution in this case that it continues this exercise, despite the fact that the Court has already found that Plaintiff has failed to present a prima facie case of discriminatory undercompensation.
[6] The fact of the matter is that the highest paid Associate Professor and Full Professor in the Department of Education are both women. See Spuck Aff. ¶ 12.
[7] Plaintiff has presented absolutely nothing to support this unsubstantiated claim. In fact, the evidence indicates otherwise. Since 1994, Dr. Rakow has consistently received high ratings in his annual reviews and therefore has ranked in the fourth (highest) level for merit increases. See Def.'s Mot. for Summ. J. Ex. 8 Attach. 4-9. Interestingly, in 1994 Dr. Rakow applied for Full Professor status, but was denied. In his evaluation, Dr. Rakow received a "satisfactory" rating in research because, according to Dr. Edward J. Hayes, Senior Vice President for Academic Affairs and Provost, his "research [showed] relatively small growth since 1990 when [he] became associate professor." See id. Attach. 1. Dr. Rakow "made a concentrated effort to improve [his] performance in the area of research," see Rakow Aff. ¶ 4; Def.'s Mot. for Summ. J. Ex. 8 Attach. 2, and subsequently improved his ratings in that category. Comparing the progress Dr. Rakow made in his research endeavors to that undertaken by Plaintiff during the same time period reveals a stark discrepancy. For Drs. Williams and Carter to suggest that Dr. Rakow's record does not support the merit increases he received overlooks Dr. Rakow's demonstrated efforts to improve upon his research skills and publication rate.
[8] In fact, Plaintiff's Exhibits 29 and 30 do not even include a label along the X-axis indicating the years covered by the graphs. In any event, none of the graphs have accompanying spreadsheets detailing either the actual data figures that were plotted onto each graph or where these figures come from.
[9] Assuming, however, that the graphs accurately reflect the salary figures earned in the University's Department of Education, they, by themselves, still do not prove that Plaintiff's alleged undercompensation was motivated by unlawful sexual discrimination. Instead, if accurate, the graphs regarding salary differences would reflect that Plaintiff's annual review scores have been lower than those earned by her academic peers. Compare, e.g., Def.'s Mot. for Summ. J. Ex. 10 (revealing the ratings that Associate Professors Drs. Robert M. Jones, Fred D. Kierstead, Steven Rakow, and Paul A. Wagner received in their annual reviews), with Def.'s Mot. for Summ. J. Ex. 5 (revealing relatively lower ratings in Plaintiff's annual reviews). Accordingly, even with these crude graphs, Plaintiff cannot create an inference that any pay disparity was the result of intentional discrimination based on gender.
[10] In her affidavit, Plaintiff also recounts a single gender-based comment made during her employment at the University. She states that Dr. Spuck told another faculty member "We don't have to worry about that old white-haired lady." Lowery Aff. ¶ 25. A single comment told by a supervisor does not support a claim of discrimination by itself, nor does it reveal Defendant's reasons for not increasing Plaintiff's merit pay. Cf., e.g., Boyd v. State Farm Ins. Companies, 158 F.3d 326, 329 (5th Cir.1998) (noting that absent a causal link between the remark and the employment decision, a supervisor's single racial comment is only a "stray remark from which no reasonable fact-finder could infer race discrimination. The mere utterance of a racial epithet is not indicia of discrimination under Title VII."), cert. denied, ___ U.S. ___, 119 S. Ct. 1357, 143 L. Ed. 2d 518 (1999).
[11] Plaintiff also raises questions regarding how the University incorporated her "research" into her annual evaluations. Plaintiff alleges that time and again her work was "totally ignored and [was] never counted toward my evaluation." See Lowery Aff. ¶ 32. Plaintiff, however, provides no proof either that she had in fact included these "uncounted" research activities in her evaluation, or that the administration omitted them from consideration during the evaluation process. More importantly, despite the fact that all professors are given the opportunity to challenge, in writing, evaluations with both the Associate Dean and the Dean, Plaintiff has offered no evidence that she ever did so.
[12] Plaintiff clings to the idea that Defendant's evaluation system memorialized in its annual review process is subjective and a pretext for discriminatory merit pay increases. In short, Plaintiff believes that her consistently low rankings reveal Defendant's discriminatory motive. The Court, however, fails to see how written evaluations completed by three different individuals (one of whom was a female) evidences a discriminatory motive particularly when Plaintiff had the opportunity to formally challenge any determinations made by these officials, but chose not to do so. Plaintiff has supplied the Court with no evidence showing that she asked for reconsideration of her evaluations or of the methodologies employed to reach her individual rankings. Hence, Plaintiff does not provide sufficient evidence to support her allegation that the evaluation system was subjective and sexually discriminatory.
In the end, Plaintiff's seeks for this Court to revise the University's system for evaluating its professors, because Plaintiff is upset that the Dean and Associate Deans retained the exclusive authority to determine merit pay increases according to a ranking system that measures scholarship, service, and teaching. The Court declines to undertake the responsibility of second-guessing Defendant's business decisions, which necessarily include methods for evaluating employee performance. See, e.g., Walton v. Bisco Indus., Inc., 119 F.3d 368, 372 (5th Cir.1997). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2576129/ | 116 F. Supp. 2d 745 (2000)
EVERGREEN PRESBYTERIAN MINISTRIES, INC., et al.,
v.
Mr. David W. HOOD, Secretary of Louisiana Department of Health and Hospitals.
Civil Action Nos. 00-306, 00-461, 00-515 and 00-547.
United States District Court, W.D. Louisiana, Lafayette-Opelousas Division.
June 14, 2000.
*746 *747 Nicholas Gachassin, Jr., Richard A. MacMillan, Gachassin & Hunter, Michael M. Meunier, Christopher C. Johnston, Michael R. Schulze, Stephen M. Sullivan, Sullivan Stolier & Resor, New Orleans, LA, Normand Francis Pizza, Robert L. Cabes, Peter M. Meisner, Alanna S. Arnold, Milling Benson Woodward Hillyer Pierson & Miller, New Orleans, LA, Gary J. Ortego, Office of Gary J. Ortego, Ville Platte, LA, Jonathan C. Vidrine, West & Vidrine, Ville Platte, LA, Angela W. Adolph, Baton, Rouge, LA, for Plaintiffs.
Francisco H. Perez, Stephen R. Russo, Richard L. Henley, Louisiana Dept. of Health & Hospitals, Baton Rouge, LA, Charles Miller, Anna Engh, Covington & Burling, Washington, DC, for Defendant.
REASONS FOR JUDGMENT
HAIK, District Judge.
On February 18, 2000, Evergreen Presbyterian Ministries filed a Complaint for Preliminary Injunction, Permanent Injunction, and Declaratory Relief, followed by an Application for Temporary Restraining Order filed on March 1, 2000. Consolidated with this matter were the following: Louisiana Nursing Home Association, filed on March 8, 2000; Calcaseiu Association of Retarded Citizens, Inc., et al, filed on March 15, 2000; and Doctors Hospital of Opelousa et al on March 20, 2000 all filed against the original defendant, David W. Hood. Numerous Temporary Restraining Orders were issued in the referenced matters. They are as follows: Evergreen Presbyterian Ministries March 2, 2000; Louisiana Nursing Home Association March 16, 2000; Doctors Hospital of Opelousas March 23, 2000. A hearing was held on May 4, 2000 at which time plaintiffs' request for a preliminary injunction was granted.
A. Facts
The Medicaid program was established pursuant to Title XIX of the Social Security Act (42 USC § 1396, et seq.). The Louisiana program is jointly financed with the state providing approximately thirty percent (30%) and the federal government financing approximately seventy percent (70%) of the expenditures. A budgetary shortfall in the Medicaid program was predicted for the 1999-2000 fiscal year which caused the Department of Health and Hospitals to initiate reductions in the Medicaid program.
David W. Hood is the Secretary of the Louisiana Department of Health and Hospitals, an agency within the executive branch of the state government. The LDHH projected the shortfall in the budget to be approximately $126,000,000. Additionally, Governor Foster, by executive order, required LDHH to reduced expenditures by $22,500,000 in state general *748 funds, with approximately $16,000,000 of this figure to be cut from Medicaid. When combined with the federal funds, the cuts amounted to approximately $52,500,00. The total amount of the proposed cuts was approximately $180,000,000, representing approximately 5% of the State Medicaid Budget. LDHH devised a spending reduction plan and emergency rules were invented. The methods undertaken and the question of compliance with federal regulations lead to the case at hand.
B. Plaintiffs' Contentions
Plaintiffs contend that, although participation in the Medicaid program is voluntary, a state electing to do so must comply with federal regulations, namely 42 USC 1396, et seq. Plaintiffs propose that the projected shortfall was reported to the Joint Legislative Committee on the Budget on December 3, 1999 and a Memorandum from defendant dated January 24, 2000 advised the Committee of the spending reduction program.
Plaintiffs claim that defendant started publishing a series of notices beginning January 25, 2000 which invited comment on the proposed emergency rules which were to take effect beginning on March 1, 2000 enacting numerous reductions, including a seven percent (7%) across the board cut in some Medicaid programs. Plaintiffs claim the publication did not include the methodology upon which the reductions were chosen, the new rates, or the justification for such as intended by section 4711 of the Balanced Budget Act of 1997. Additionally, plaintiffs claim the public process engaged in by defendant is deficient because meaningful comment from those parties affected was not permitted, noting that defendant advised in correspondence to the Joint Legislative Committee on the Budget that no other alternatives should be considered.
Plaintiffs further allege that the result of a state Public Records Act request submitted to defendant requesting all documents, studies, reports and finding regarding the sufficiency of the rates for efficiently and economically run non-state hospitals, nursing facilities, and Intermediate Care Facilities for mentally retarded individuals (ICFMRs) concluded that there were no such documents in existence which justified the proposed reductions for non-state hospitals or ICFMRs. Plaintiffs claim the analysis for reductions in rates for nursing facilities was "legally deficient".
Plaintiffs specifically alleged violations of 42 USC § 1396a(a)(30)(A), the "equal access" provision of the Social Security Act, 42 USC § 1396a(a)(13)(A), the "public process" provision (applying to only institutional providers), 42 USC § 1396a(a)(19), and 42 USC § 1396a(a)(33), Constitutional violations, as well as state law violations. Plaintiffs claim they are entitled to redress under 42 USC § 1983 for threatened violation of their civil rights under 42 USC § 1396. It should be noted that plaintiffs set forth various claims which were not the focus of these injunctive proceedings.
C. Defendant's Contentions
Defendant contends that plaintiffs do not have a right to bring any claims pursuant to 42 USC § 1983 or 28 USC § 2201. Defendant claims that the repeal of the Boren amendment clearly showed Congress' intent to foreclose all section 1983 actions pursuant to any alleged violation of 42 USC § 1396a. Additionally, defendant argues that there is no private right of action under section 1983 for violations of section 1396a since the repeal of the Boren amendment. The Boren Amendment was replaced with 42 USC § 1396a(a)(13)(A), the "public process" requirement. Based upon this, defendant argues that the plaintiffs can not show a likelihood of success on the merits.
Additionally, the defendant argues that section 1396 may not even apply to the situation at hand as the rates in question are interim rates which are effective for only 120 days. These rates published by emergency rule do not fall under section 1396's requirements, according to the defendant. He argues that the uncertainty *749 in the statute's language makes it unclear if the statute deals only with rates prior to final rates created in regular rulemaking. Defendant argues that enforcement of section 1396a is left to DHHS and HCFA and is not a right belonging to plaintiffs under section 1983.
In addition to claiming plaintiffs have no right of action, the defendant argues that any rights under section 1396a(a)(13)(A) do not pass the analysis set forth in Blessing v. Freestone, 520 U.S. 329, 117 S. Ct. 1353, 137 L. Ed. 2d 569 (1997) when determining if a right exists under section 1983, as the language of the statute is too "vague and amorphous" for the second prong to be satisfied. Alternatively and additionally, defendant argues that he has complied with the "public process" requirement set forth in the statute. Defendant argues that LDHH used a modified emergency rulemaking process which called for at least a thirty day comment period followed by regular rulemaking procedures under the APA. Defendant claims the publications included notice that the rate would be reduced seven percent (7%) or the rate itself, reference as to where the methodology could be found, and the justification for the change. Additionally, defendant claims there was ample time for comment. Defendant also believes that the twelve rules which are believed to be subject to the requirement of public process were published in a manner which complied with the statute.
Defendant argues that noting the percentage of reduction rather than the actual numbers was more informing to the public. Also, defendant notes that a reference as to where the methodology and justification could be found was included. Post-Boren amendment arguments similar to those referenced above were set forth to support the contention that plaintiffs have no redressable right under section 1983 for violations of section 1396a(a)(30)(A), (a)(19), or (a)(33) either and that said sections were not violated. Defendant claims that, through the repeal of the Boren amendment, Congress sought to make rate setting a state function, removing federal courts from the process. Further, defendant denies that the reductions will have any great effect on the facilities themselves and the care they are able to provide.
Additionally, defendant denies any Constitutional violations and argue that this Court lacks subject matter jurisdiction over the entire matter. Defendant claims that there is no federal question based upon the above arguments and, therefore, only state law claims remain.
ANALYSIS
42 USC § 1983 does not provide substantive rights, but does give an avenue by which rights arising from other sources may be pursued. According to 42 USC § 1983,
"Every person who, under color of any statute, ordinance, regulation, custom, or usage, or any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress."
The United States Supreme Court in, Blessing v. Freestone, 520 U.S. 329, 117 S. Ct. 1353, 137 L. Ed. 2d 569 (1997), set forth a three prong analysis to be used when determining whether a right exists under section 1983. First, Congress must have intended that the provision in question benefit the plaintiffs. Second, the plaintiff must demonstrate that the right which is asserted to be protected by the statute is not so "vague and amorphous" that its enforcement would strain judicial competence. Third, the statute must unambiguously impose a binding obligation on the states. In order to seek redress under section 1983, a plaintiff must assert a violation of a federal right, not merely a federal law.
*750 The provisions of the Medicaid statute which have been focused upon, namely the "public process" provision (Section 4711 of the Balanced Budget Act of 1997) and the "equal access provision" (42 USC § 1396a(a)(30)(A)) are in place to benefit the plaintiffs. When a state chooses to participate in a Medicaid program and receive funds from the federal government, the state must administer that program in compliance with the laws governing such. The plaintiffs are entitled to rely upon the state of Louisiana to do so and are entitled to protect any rights given to them by such statute.
When a state changes its rates of payment to providers, Section 1396a applies. The statute clearly states that a state plan for medical assistance must
"provide for a public process for determination of rates of payment under the plan for hospital services, nursing facility services, and services of intermediate care facilities for the mentally retarded under which (i) proposed rates, the methodologies underlying the establishment of such rates, and justification for the proposed rates are published; (ii) providers, beneficiaries, and their representatives, and other concerned State residents are given a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications; (3) final rates, the methodologies underlying the establishment of such rates, and justifications for such final rates are published, and (iv) in the case of hospitals, such rates take into account the situation of hospitals which serve a disproportionate number of low income patients with special needs."
Providers have a right to a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications for rate changes. Had the statute meant to distinguish between the types of rates to which these requirements would apply, it would have done so. As it did not, the requirements set forth in 1396a apply to all rates of payment, whether intermediary or otherwise. This section clearly benefits the plaintiffs in this action, satisfying the first prong of the Blessing analysis.
Additionally, the "equal access" provision requires that the state must
"provide such methods and procedures relating to the utilization of, and payment for, care and services available under the plan ... as may be necessary to safeguard against unnecessary utilization of such care and services and to assure that payments are consistent with efficiency, economy, and quality of care and are sufficient to enlist enough providers so that care and services are available under that plan at least to the extent that such care and services are available to the general population in the geographic area".
This provision protects beneficiaries and their access to medicaid care. As this Court agrees with those decisions which have found providers to be "beneficiaries" under the equal access portion of the statute, it finds that this section is intended to benefit various parties, including providers such as the plaintiffs in this case. Further, this Court agrees with the Seventh Circuit's Methodist Hospitals, Inc. v. Sullivan, 91 F.3d 1026 ruling wherein that Court followed the Eighth Circuit's Arkansas Medical Soc. v. Reynolds, 6 F.3d 519 (8th Cir.1993) determination that providers have a private right of action, derived through section 1983, to enforce the equal access provision of the Medicaid statute.
The second prong of the Blessing analysis has also been satisfied in that the public process and equal access rights are not so vague and amorphous that judicial competence would be strained in the enforcement of such. Plaintiffs set forth a detailed and specific claim that their federal rights under both the equal access and public process sections of the Medicaid statute were violated through the defendants promulgation of the proposed rates in an emergency rule without adequately assuring the rates would not affect access to medical care and without providing for a public process which allowed plaintiffs a *751 reasonable opportunity to review the changes and participate. Plaintiffs have cited various failures on the defendant's part to comply with express requirements of the Medicaid statute. Judicial competence would in no way be strained through the enforcement of plaintiffs' statutory rights.
Finally, the third prong of the Blessing analysis calls for the statute to "unambiguously impose a binding obligation on the States". The language of the Medicaid statute itself satisfies this final requirement in that it begins with the language, "A state plan for medical assistance must ..." The Act, through 42 USC 1396a(a)(13)(A), requires a public process which includes the publishing of proposed rates, methodologies, and justifications. In addition, this section mandates that parties such as the plaintiffs in this case are given a "reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications", as well as considering the situation of hospitals which "serve a disproportionate number of low income patients with special needs". 42 USC § 1396a(a)(30)(A) also imposes an obligation on the state to ensure equal access to medical care under Medicaid. The obligations imposed in the Medicaid statute are unambiguous and mandatory. Therefore, with all elements of the analysis met, it is concluded that plaintiffs have a right of action under section 1983 for violations of section 1396a.
Based upon the above analysis and conclusion, it is determined that this Court has subject matter jurisdiction over this matter as this case involves a question of both federal and Constitutional law. There have been various claims asserted by plaintiffs which appear to have merit and the issues therein reach beyond state law and into the federal venue.
The Fifth Circuit has concluded that, in order to secure preliminary injunctive relief, a party must prove certain factors. They are as follows: a substantial likelihood of success on the merits; a substantial threat of irreparable injury unless the injunction issues; the threatened injury to movant outweighs any damage the proposed injunction may cause the opposing party; the injunction will not disserve the public interest.
Plaintiffs have set forth case law and evidence which support a substantial likelihood of a violation of section 1396a(a)(30)(A). Plaintiffs rely heavily on the Eighth Circuit Arkansas Medical Society v. Reynolds decision, which struck down proposed rates in a similar situation, finding a violation of the equal access requirements of section 30(A) due to the reductions being based mainly on budgetary concerns. The Medicaid Act mandates consideration of the equal access factors of efficiency, economy, quality of care, and access to services in the process of setting or changing rates of payment. There is no set method or procedure for making the evaluations, but all of the statutory factors must be considered when changing rates.
Through their deposition testimony, numerous individuals involved in the process of reducing the Medicaid rates in the instant case noted that the primary, and possibly sole, reason for the reduction was the budgetary shortfall. For example, in his deposition, Thomas Collins, former State Medicaid Director, stated the following:
"Q: Well, since the cost has to be the rate has to be consistent with the cost of economically and efficiently operated providers, how did you determine that a 7% reduction would be consistent with that cost?
A: We did not." (Depo., Thomas Collins, 3/14/00, p. 15)
He further answered, in response to a question of what impact the new rates would have and whether the rate would be consistent with economically and efficiently operated providers, "No we did not, we were simply trying to follow the provisions of the Appropriations Act and had no reason to know precisely whether those rate reductions would result in a violation." *752 (Depo, Thomas Collins, 3/14/00, p. 17). Mr. Collins was then asked, "Was there any other reason for the reduction other than the deficit?" He answered, "No".
Sandra Victor, chief of policy development and implementation in the Bureau of Health Services financing, whose section is responsible for promulgation of the rules governing Medicaid, testified as follows with regard to the notices:
"Q: Did they explain why the agency was changing?
A: Yes, it did.
Q: Why was that?
A: To avoid a budget deficit." (Depo. Sandra Victor, 3/13/00, p. 14)
Additionally, Jerry Barnard, Rate Determination Specialist 2, observed as follows with regard to the seven percent (7%) reduction:
"Q: Can you tell us if the 7 percent cut that's been implemented fits into that methodology at all?
A: No. It doesn't.
Q: It does not?
A: It's not in the approved methodology in the state plan."
Further questioning revealed the following:
"Q: It's just an across the board cut?
A: Right.
Q: Independent of the methodology completely, is that right?
A: That's the way I look at it." (Depo., Jerry Barnard, 3/14/00, p. 22, 23)
John Marchand, section chief for institutional reimbursements/director of institutional reimbursements, added the following:
"Q: So, how do you base what do you base your assurance on now that the rate for ICF/MRs is consistent with economically and efficiently operated providers?
A: I didn't make an assurance.
Q: Well, other testimony has indicated that your office is required to keep all the documentation necessary to give that assurance. What documentation do you have, or do you have any basis to indicate that a 7 percent reduction is consistent with economically and efficiently operated providers?
A: I do not." (Depo., John Marchand, 3/15/00, p. 64)
Mr. Marchand later admitted to having no data whatsoever to support an assurance that the rates for long-term care hospitals would be consistent with an efficiently and economically operated provider and that the services would be as equally available to Medicaid beneficiaries as to the general population. (Depo., p. 67-68).
Clearly, from the testimony, it can be concluded that no studies were contemplated, much less completed, to determine if the reductions would violate section 1396a(a)(30)(A). There was no evidence of a determination of the impact the seven percent (7%) reduction would have on providers. The individuals deposed virtually unanimously noted that the reductions were enacted for budgetary reasons. The published notice cited budgetary concerns as the reason for the change. Numerous courts, including the Seventh Circuit, Eighth Circuit, and Middle District of Alabama have concluded that parties have a federal right under section 30(A) which is enforceable through section 1983. As the United States Supreme Court stated in Wilder v. Virginia Hosp. Ass'n, 496 U.S. 498, 110 S. Ct. 2510, 110 L. Ed. 2d 455 (1990), it is the state's burden to show "by express provision or other specific evidence from the statute itself that Congress intended to foreclose such private enforcement." Based upon the evidence presented, this Court can not conclude at this time that Congress intended to preclude a private right of action for violations of section 1396a(a)(30)(A) through the repeal of the Boren Amendment. It is therefore determined that plaintiffs have proven a substantial likelihood of success on this issue, supporting their request for injunctive relief.
Turning to plaintiffs' claim that the defendant violated section 1396a(a)(13)(A), again this Court can not, in good conscience, *753 conclude that the repeal of the Boren Amendment precludes a private right of action under section 1983. As previously discussed, the "new" section 1396a(a)(13)(A) sets forth very specific requirements which are, by the language of the statute, mandatory when determining rates of payment. This section of the Medicaid Act appears to have retained procedural rights, even if the substantive rights were eliminated by the repeal of the Boren Amendment.
Section 13 requires the proposed and final rates, along with the methodologies underlying such and the justification for such to be published. The notices in question did not provide the required information. Sandra Victor answered as follows in her deposition:
"D: Did the notices that you prepared include the proposed new rates for ICF/ MRs, the proposed new rates for hospitals, the proposed new rates for nursing facilities?
A: That information was not in my notice. I believe it was submitted to the hospitals and efficient providers under separate cover.
Q: Was it sent to the patients, beneficiaries?
A: Recipients?
Q: Yes.
A: No, I don't think it was." (Depo., Sandra Victor, 3/13/00, p. 19)
Section 1396a(a)(13)(A) mandates that "providers, beneficiaries and their representatives, and other concerned state residents are given a reasonable opportunity for review and comment on the proposed rates, methodologies, and justifications." As the notices in question did not provide the required information, and it is unclear from the deposition testimony presented whether that information was available at all, it is virtually impossible to conclude at this time that a reasonable opportunity for review or comment on the new rates was given to the interested parties. Further depositions reveal that the situation of hospitals which serve a disproportionate number low income patients with special needs were not considered, although the statute required them to be.
Thomas Collins testified as follows:
"Q: Is it your understanding that the state health plan and the revised (a)(13)(A) requirements require the department to consider the needs of hospitals that receive DSH payments?
A: I don't recall specifically. I think that's correct.
Q: Was a conscious decision made not to pay attention despite the mandatory requirement?
A: I'm not sure we took that into consideration at all. We were simply looking at the overall picture and trying to comply with the Appropriations Act.
Q: So, you would admit that you disregarded the requirement in the Social Security Act?
A: Yes, I would have to say that we did because I don't recall considering that." (Depo., Thomas Collins, 3/14/00, p. 49-50)
Additionally, this Court considered the fact that perhaps "emergency rules" would not have been necessary had the issue of the predicted budget shortfall been addressed earlier. It was revealed through various depositions that the budgetary shortfall was known at least as early as November and likely even earlier. Charles Castille, undersecretary of the Louisiana Department of Health and Hospitals, notes in his deposition that as early as July and August 1999 correspondence was passed ordering spending freezes in the department, suggesting a budgetary problem. He further commented, "We knew before the Governor had issued the executive order that we had a projected shortfall of approximately $153 million at that time in the part of the Medicaid budget that deals specifically with payment to private providers." (Depo., Charles Castille, 3/22/00, p. 38). He further states that the department had "hard and substantial knowledge" of the shortfall in early November 1999. Previous reviews, he further *754 noted, had revealed the problem before that time, although further research was suggested. (Depo., p. 15) Had the projected shortfall been addressed at an earlier time, perhaps beneficiaries and providers would have had a satisfactory opportunity for meaningful review and comment of the proposed changes.
Plaintiffs have also proven a substantial likelihood of success on the merits with regard to the issue of public process as required by the statute. As such, it is logical to conclude that, should plaintiffs prove successful their claims of section 30 and 13 violations, then the state plan is not being administered in a way which is in the best interest of recipients, which would be a violation of sections 19 and 33. Tied in with the foregoing are the alleged violations of state law as well as plaintiffs Constitutional rights. Should plaintiffs be successful in their above mentioned claims, it is likely that some Constitutional and state law violations were also committed, as the issues are so intertwined. As plaintiffs have proven a substantial likelihood of success on the merits of their section 1396a claims, it follows that the same is true for various alleged Constitutional and state law violations which are closely related.
Further, this Court concludes that there is a real and substantial threat of irreparable injury without the issuance of the requested injunction. Plaintiffs contend that, should their rates of payment be reduces as proposed, it is possible, and even likely, that many providers will be unable to continue providing necessary services. This may result not only in the discharge of patients named in this lawsuit, as well as other disabled patients, but in the possible bankruptcy of some facilities. Plaintiffs views were supported by various affidavits which were submitted with their memorandum(s) in support of the Application for Temporary Restraining Order. Should these providers not receive the funds necessary to provide their services, they may be forced to turn away new and release current patients, which would be detrimental to society as a whole.
Further evidence in support of the threat of irreparable harm was provided through the deposition of Jerry Barnard. The testimony revealed the following regarding durable medical equipment which is a targeted reduction in addition to the seven percent (7%):
"Q: So if DME is eliminated, how will an efficiently and economically provider such as Evergreen provide DME for its patients?
A: I don't know.
Q: Would there be a risk that they would be providing their services then at below their cost if they provided DME that is no longer covered?
16.
A: Actually, no, I don't think so because I don't think they would keep the client.
Q: What do you mean by "they wouldn't keep the client"?
A: I think they would discharge the client or not admit him.
Q: Would that create an access problem for those kinds of patients?
A: I think so.
Q: have you expressed these concerns in any way within the department?
A: Yes." (Depo., Jerry Barnard, 3/14/00, p. 13-14)
Further deposition testimony from Jerry Barnard disclosed the following:
"Q: Would a reduced rate be more consistent with the cost of an EEOP such as Evergreen or less consistent with the real cost of an EEOP?
A: I think it would be less because I don't think we've given them 7 percent inflation since we set the from the '95 cost reports." (Depo., p. 28)
Should the injunctive relief not be provided and the cuts effected, the potential damage to providers and patients would be irreversible even if plaintiffs are ultimately successful in their claims. The damage to those patients refused services, discharged, or unable to receive the necessary *755 care would be potentially devastating and certainly presents a substantial threat of irreparable injury.
Related to this finding is the realization that the "threatened injury to movant outweighs any damage to the opponent". Should the defendant be unable to effect certain reductions in the Medicaid budget at this time, little or no permanent damage will be done. Should the defendant ultimately prove successful, the Department of Health and Hospitals can implement the cuts at that time. Additionally, as noted by this Court during its May 4, 2000 hearing, the state budget provides for numerous unnecessary expenses, money which could potentially solve the Medicaid deficit. Also, there have been various proposals suggested, such as intergovernmental transfers for correcting the Medicaid deficit. The Court notes such in an effort to demonstrate that the Department of Health and Hospitals can not only recoup any rightful funds they may be entitled to at a later date, but can actively consider solutions and perhaps discover an ultimate resolution of the deficit problem while this case is pending. Plaintiffs would have no redress for the problems they potentially face should the injunction not issue. Defendants threat of injury is far outweighed by the threat of injury to patients and providers.
Finally, we, as a society, have an obligation to our low income elderly and handicapped members. As this Court noted in its March 3, 2000 ruling, "This Court certainly feels that the public has a serious interest in providing medical care and services to low income persons who are over the age of sixty-five (65), who are blind, disabled, and/or mentally unable to care for themselves". The public interest is served by caring for those who, through no fault of their own, are unable to care for themselves. It is the duty of a responsible society and its official bodies to ensure that those individuals are provided with adequate care. Should these officials fail in this duty by, for example, not following the laws governing various programs, it is the responsibility of the Courts called upon to protect the individual's rights. To do so certainly serves the public interest.
CONCLUSION
For the reasons set forth above, plaintiffs' request for a preliminary injunction is granted. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1436763/ | 670 A.2d 831 (1995)
In Re Tonya SELIVONIK.
No. 94-170.
Supreme Court of Vermont.
November 17, 1995.
*832 Robert Appel, Defender General, Anna Saxman, Appellate Defender, and Karen Barney, Legal Intern, Montpelier, for appellant.
Jeffrey L. Amestoy, Attorney General, Montpelier, and Michael O. Duane and Alexandra N. Thayer, Assistant Attorneys General, Waterbury, for appellee Department of Social and Rehabilitation Services.
Before ALLEN, C.J., and GIBSON, DOOLEY and JOHNSON, JJ.
JOHNSON, Justice.
Petitioner sought to expunge her name from a state registry of sex abusers and appeals from an order of the Human Services Board denying her petition. We affirm.
*833 I.
Petitioner was 15 years old in October 1988, when the Department of Social and Rehabilitation Services (SRS) initiated delinquency proceedings against her as a result of a violation of 13 V.S.A. § 3252(3), which allegedly occurred in May 1988. The petition charged that she had engaged in inappropriate sexual conduct by fondling and kissing a child's penis while babysitting the child. The court dismissed the delinquency petition in December 1988, and the State did not appeal. The juvenile record in that matter was then sealed.
The complaint was investigated by an SRS worker[1] and a state trooper, and in June 1988, SRS independently determined the complaint was substantiated and entered petitioner's name in its state registry for sex abusers.[2] Petitioner was not notified of SRS's determination that the report was substantiated and was not told her name was entered on the state registry.
In the fall of 1992 petitioner was employed at a day care center, and some time after she began work, the program's director was told by a parent that allegations of sexual assault had previously been made against petitioner. The director confirmed the report with SRS, which warned that the program would be in violation of its license if it continued to employ petitioner. Petitioner was discharged from her employment.
In January 1993 petitioner applied to the Human Services Board for an order expunging her name from the state's registry. After an administrative hearing, the hearing officer recommended that petitioner's record be expunged from the state's registry, based on his interpretation of the registry statute and without reaching a decision on the merits. The Board rejected the hearing officer's interpretation and remanded for a decision on the merits. The hearing officer made further findings of fact and recommended that the petition be denied. The recommendation was accepted by the Board. The present appeal followed.
II.
Petitioner argues first that since she was a child at the time her name was entered into the state child abuse registry, she has the right to expungement under 33 V.S.A. § 4916(g), which provides:
(g) A person may, at any time, apply to the human services board for relief if he or she has reasonable cause to believe that contents of the registry are being misused. All registry records relating to an individual child shall be destroyed when the child reaches the age of majority. All registry records relating to a family or siblings within a family shall be destroyed when the youngest sibling reaches the age of majority. All registry records shall be maintained according to the name of the child who has been abused or neglected, and the name of the person about whom the report was made.
(Emphasis added.)
Petitioner contends that the Board ignored the plain meaning of the statute in ruling that the word "child" in § 4916(g) applied only to the victim and not to the person about whom the report was made, since the statute provides, "All registry records relating to an individual child shall be destroyed when the child reaches the age of majority." We do not agree.
As originally drafted, § 4916(g) concluded with the clause, "All registry records shall be maintained according to the name of the child who has been abused or neglected." 1981, No. 207 (Adj.Sess.), § 1. There was no provision for maintenance of records in the name of the perpetrator. Thus, the original references to "child" had only one meaning the child who was the victim of abuse. As petitioner concedes, the name of the abused child and the perpetrator were expunged *834 when the child reached the age of majority. The statute's concluding phrase, "and the name of the person about whom the report was made," was added by the Legislature in 1990. 1989, No. 295 (Adj.Sess.), § 5. The obvious purpose was to prevent loss of the perpetrator's name when the abused child's name was expunged from the registry.
Petitioner argues that once "the person about whom the report was made" was included in the section, the Legislature also intended a change in the previous meaning of "child" to cover a child who was also a "person about whom the report was made." Petitioner argues that testimony by a witness before the House Health and Welfare Committee in 1990 supports her argument that the Legislature intended to allow expungement of child perpetrators when they became adults. Although a legislative witness did advocate this position to the committee, and suggested language be added to the bill to effectuate this result, the Legislature did not do so. In the context of a statute whose main purpose is the prevention of child abuse, the more persuasive interpretation is that the names of perpetrators were to be maintained regardless of age.
Petitioner persuasively argues that our interpretation of the statute is inconsistent with the more general public policy of the state relating to juvenile offenders, which is to "remove from children committing delinquent acts the taint of criminality and the consequences of criminal behavior." 33 V.S.A. § 5501(a)(2). It is somewhat ironic that if petitioner had been convicted of child sexual abuse in juvenile proceedings, her record would have been sealed to protect her from the stigma of her misconduct in adulthood. See In re R.D., 154 Vt. 173, 176, 574 A.2d 160, 161 (1990). Moreover, her conviction in the juvenile court would not have permitted the imposition of any civil disabilities resulting from the conviction or operated to disqualify her from any civil service application or appointment. 33 V.S.A. § 5535(a). Instead, petitioner is permanently stigmatized by a Human Services Board finding, based on a preponderance of the evidence, that she committed one instance of sexual abuse.[3] Although an expungement remedy is available in theory, the Legislature left no discretion in the Human Services Board to expunge an act for reasons other than that the allegation is untrue.
Nevertheless, that the sexual abuse registry statute is seemingly contradictory to other public policies of the state is not sufficient to overcome the Legislature's intent to treat child sexual abuse as a special area of concern warranting different treatment. The solution to petitioner's problem, if there is to be one, lies with the Legislature.
III.
Petitioner next argues that her inclusion on the state registry violates her Fourteenth Amendment due process rights. She contends that the standard of proof required both for substantiation of an abuse complaint and at the hearing on expungement falls below the due process standard of a preponderance of the evidence articulated by the court in Valmonte v. Bane, 18 F.3d 992, 1004 (2d Cir.1994) ("some credible evidence" standard did not allow for balancing of evidence from both sides, as allowed by "fair preponderance" standard, which is constitutionally appropriate).
SRS does not dispute petitioner's claim that inclusion on the state registry implicates protected liberty and property interests of petitioner. See Valmonte, 18 F.3d at 1002 (holding that statutory impediment to employment caused by inclusion on state child abuse registry implicates liberty interest). SRS also does not challenge petitioner's argument that the Human Services Board must apply a preponderance of the evidence standard in its hearing on petitioner's request for expungement. See LaFaso v. Patrissi, 161 Vt. 46, 54, 633 A.2d 695, 700 (1993) (noting that, "as a general rule," preponderance standard applies in administrative adjudications in Vermont). The focus of the parties' *835 dispute on this issue is whether the Board actually applied the preponderance standard.
Petitioner's claim that the Board did not apply the preponderance standard fails because she does not distinguish between the low standard of proof required for substantiation of an abuse complaint, and the higher standard that is applied at an expungement hearing. An abuse complaint is substantiated, and entered into the state registry, if SRS determines "after investigation that a report is based upon accurate and reliable information that would lead a reasonable person to believe that the child has been abused or neglected." 33 V.S.A. § 4912(10). Thus, prior to the Board's de novo hearing, agencies investigating reports of suspected child abuse need not apply a preponderance of evidence standard to their determinations.
The court in Valmonte appears to suggest that a preponderance standard is required at the time of initial determination, as well as at the hearing. Valmonte, 18 F.3d at 1004. We do not agree that the initial investigation of a report must be conducted under the higher standard. We note, however, that the New York Central Registry at issue in Valmonte had a number of differences from the Vermont registry. Most importantly, in New York a person included in the registry was not entitled to a hearing conducted under a preponderance standard unless the person had lost a job or been fired because of inclusion in the registry. Id. at 997. In Vermont, a person included in the registry has the right at any time to petition for expungement, 33 V.S.A. § 4916(h), and is entitled to a fair hearing conducted under the preponderance standard. A higher standard at the investigatory stage is not necessary to meet due process concerns because of the availability of such a hearing at any time after inclusion in the registry.
At a hearing by the Board on a petition for expungement, the burden is on SRS to establish that a record should not be expunged. 33 V.S.A. § 4916(h). The Board requires SRS to meet this burden by demonstrating by a preponderance of the evidence that the report is based upon accurate and reliable information and that the information would lead a reasonable person to believe that a child has been abused or neglected.
This higher standard was applied by the Board in reaching its decision in this case. The Board concluded:
[O]ther than the petitioner's denial of the allegations and unsupported, if plausible, conjecture as to some alternative explanation, there is no evidence that would call into question either the veracity of the children and their ability to have accurately reported what allegedly occurred or their (or their mother's) motives in bringing these allegations to the attention of the police and SRS.
In light of the above, despite the striking of the children's testimony, it is concluded that SRS's "substantiation" of the report of child sexual abuse in question is supported by a preponderance of the evidence.
(Emphasis added.)
Petitioner further contends, however, that the preponderance standard applied by the Board requires a lesser showing than the "fair preponderance" standard articulated in Valmonte, 18 F.3d at 1004. Specifically, petitioner argues that the Board's standard does not require the finder of fact to be "convinced by a preponderance of evidence that the abuse occurred, but only that some reasonable person could believe that the abuse occurred." We recognize that the Board's modified phrasing of the preponderance standard could lead to some confusion as to the standard of proof required.
Even if petitioner were correct in her assertion that the Board applied a lower standard of proof than preponderance of the evidence, the evidence in this case was sufficient to show by a preponderance of the evidence that the incident of abuse occurred. The Board relied primarily on the hearsay testimony and written notes of the SRS investigator and the police officer who interviewed the child. The Board found that the police officer and investigator were "experienced" and "unbiased," that their oral testimony and written notes showed that the child's allegations were "specific and left little room for mistake or misinterpretation," that their written reports were prepared *836 soon after the interview took place, and that their written reports were consistent.
Although the Board's decision is supported only by hearsay evidence, that evidence has sufficient indicia of reliability to support a finding by a preponderance of the evidence that the alleged abuse occurred. See Watker v. Vermont Parole Bd., 157 Vt. 72, 76-77, 596 A.2d 1277, 1280 (1991) (hearsay may be sole evidence in revocation proceeding if determined inherently reliable). In Watker we stated that we must "evaluate the weight each item of hearsay should receive according to the item's truthfulness, reasonableness, and credibility." Id. at 77, 596 A.2d at 1280. Here, the sources of the hearsay evidence were disinterested persons, the hearsay was specific and detailed, and the two hearsay accounts were consistent. The hearsay evidence had sufficient indicia of reliability to support the Board's decision.
IV.
Finally, petitioner asserts that SRS lacked jurisdiction to substantiate the report of sexual abuse following dismissal of the juvenile proceedings against her, based on 33 V.S.A. § 5503(a), which provides:
(a) The juvenile court shall have exclusive jurisdiction over all proceedings concerning any child who is or who is alleged to be a delinquent child or a child in need of care or supervision brought under the authority of this chapter, except as otherwise provided in this chapter.
(b) The orders of the juvenile court under the authority of this chapter shall take precedence over any order of any other court of this state, except an order establishing child support, to the extent inconsistent therewith.
(Emphasis added.) As 33 V.S.A. chapter 49 has legislative goals, functions, and procedures completely different from those under 33 V.S.A. chapter 55, an SRS determination under chapter 49 that a sex abuse report has been substantiated, or a de novo affirmance of that determination by the Board, cannot be "inconsistent" with the judgment of a family court (sitting as a juvenile court). Chapter 55 is concerned with the issue of delinquency; the issue in chapter 49 proceedings is substantiation of an abuse complaint. The most salient demonstration of the two-track nature of the respective abuse-reporting and correction proceedings under chapters 49 and 55 is the lack of any reference in chapter 49 to the judgments or records in any other proceedings. Moreover, the broad, remedial purposes of the Child Abuse and Neglect Reporting Act would not be served by tying its very carefully crafted criteria for substantiating a report of abuse to the outcome of adult criminal or juvenile proceedings relating to the conduct of the person about whom the report was made.
Affirmed.
NOTES
[1] The SRS investigation was undertaken pursuant to 33 V.S.A. § 4915.
[2] The sexual abuse registry is created by statute, 33 V.S.A. § 4916, and contains records by name of offenders and victims of child sexual abuse. An owner or operator of a day care facility licensed or registered by SRS may request from SRS a record of substantiated reports of child abuse for a current or prospective employee. SRS will inform the requesting owner or operator if such a record exists. 33 V.S.A. § 309.
[3] The committee hearings on the amendments indicate that the Legislature's concern was with repeat offenders who, if not listed as perpetrators, could escape notice when the child victims reached the age of majority. No witness before the committee raised the problem of stigma that might occur from a single offense committed by a minor. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2180173/ | 199 Cal.App.3d 171 (1988)
244 Cal. Rptr. 567
LUMBERMENS MUTUAL CASUALTY COMPANY, Plaintiff and Appellant,
v.
HEATHER LEIGH VAUGHN, a Minor, etc., et al., Defendants and Respondents.
Docket No. H001674.
Court of Appeals of California, Sixth District.
March 2, 1988.
*173 COUNSEL
Rankin, Oneal, Center, Luckhardt & Lund and Mark G. Hyde for Plaintiff and Appellant.
Craig G. McIntosh, Low, Ball & Lynch, David B. Lynch and John P. Walovich for Defendants and Respondents.
OPINION
BRAUER, J.
Lumbermens Mutual Casualty Company (hereinafter designated the Carrier) brought an action for declaratory relief against its insured and other named defendants. In the action Carrier claimed that a homeowner's policy it had issued provided no coverage for an accident in which the insured's wife was killed. The court below rendered judgment on the pleadings in favor of the defendants and against the Carrier. We reverse with directions.
I. BACKGROUND
A. The Accident
In August of 1983 defendant Jeffrey Leep rented a garden tractor from defendant A-1 Rental Center (hereinafter designated Rental). Sandra Leep, *174 Jeffrey's wife, was operating the tractor on the Leep premises on August 7, 1983. While she was thus engaged the tractor overturned and killed her.
B. The Rental Agreement
The reverse side of the rental agreement contained printed provisions designed to protect Rental from liability for accidents. For example, paragraph 5 read in pertinent part: "CUSTOMER shall immediately report any accident involving the rental equipment to COMPANY and deliver to COMPANY every process, pleading, notice, or paper of any kind whatsoever received by CUSTOMER relating to any claim, suit, or proceeding connected with any accident or event involving the equipment. CUSTOMER shall not aid or abet the assertion of any such claim, suit, or proceeding, and shall cooperate fully with COMPANY in investigating and defending same."
Paragraph 7 read thus: "COMPANY shall not be liable for loss, damage, or injury to property or the person of CUSTOMER or any other person arising out of the use or operation of the equipment rented. CUSTOMER shall assume all risk of such loss or damage, waive all claims therefore against COMPANY, and defend, indemnify, and hold COMPANY harmless from all claims arising out of such loss or damage."
Paragraph 8 provided: "CUSTOMER shall defend, indemnify, and hold COMPANY harmless from and against any and all losses, liabilities, damages, injuries, claims, demands, costs, and expenses arising out of, or connected with, the possession or use of the equipment during the rental term, including but not limited to, any and all claims of, or liabilities to, third parties, arising out of the operation, use, abandonment, conversion, secretion, concealment, or unauthorized sale of the equipment, or the confiscation of the equipment by any governmental authority for unlawful improper use of said equipment."
C. The Carrier's Policy
At the time of the accident Jeffrey Leep and his wife were the named insureds in a homeowner's insurance policy issued by Carrier. Like most such policies, it purported to provide broad coverage but contained a great number of exclusions.
As to personal liability coverage, the policy in pertinent part read thus: "If a claim is made or a suit is brought against any insured for damages *175 because of bodily injury or property damage caused by an occurence to which this coverage applies, we will: [¶] 1. pay up to our limit of liability for the damages for which the insured is legally liable; and [¶] 2. provide a defense at our expense by counsel of our choice, even if the allegations are groundless, false or fraudulent."
The policy specifically excluded from personal liability coverage any bodily injury or property damage arising out of the "ownership, maintenance, use, loading or unloading of motor vehicles or all other motorized land conveyances, including any trailers, owned or operated by or rented or loaned to any insured," or out of "entrustment by the insured of a motor vehicle or any other motorized land conveyance to any person." (Italics added.) But this "motorized land conveyance" exclusion had its limits, because the policy further provided that the exclusion did not apply to "a motorized land conveyance designed ... for the maintenance of an insured location which is: [¶] (a) not designed for travel on public roads; and [¶] (b) not subject to motor vehicle registration." The garden tractor involved in this case fit the last-quoted description.
The policy also excluded from personal liability coverage "bodily injury to you and any insured within the meaning of part a. or b. of Definition 3, `insured.'" According to definition 3, "`insured' means you and the following residents of your household: [¶] a. your relatives; [¶] b. any other person under the age of 21 who is in the care of any person named above." For the sake of simplicity we shall hereinafter designate this exclusion as the "family exclusion."
D. Leep's Action
In his capacities as an individual, as guardian ad litem for his minor daughter Heather Leigh Vaughn, and as administrator of his wife's estate, Leep sued for damages for the wrongful death of his wife (Santa Clara County Super. Ct. action No. 539948). Among the named defendants were the manufacturer of the tractor, the distributor of the tractor, and Rental. Rental filed a cross-complaint against Leep for indemnity, based upon the express indemnity provisions contained in the rental agreement. Leep tendered his defense on the cross-complaint to Carrier. Carrier agreed to provide a defense, but reserved its right to seek an independent determination of its obligation to defend and indemnify Leep. Carrier than instituted the present action for declaratory relief (Santa Clara County Super. Ct. action No. 559348).
*176 E. Carrier's Action
Carrier's complaint named as defendants all of the parties to Leep's action, including Leep himself. But in pertinent part the complaint alleged an actual controversy only between Carrier and Leep. Specifically, the complaint alleged that Carrier "contends it has no obligation to insure defendant against damages caused by bodily injury to residents of defendant's household, nor against liability on the rental contract. Defendant JEFFREY B. LEEP disputes these contentions and contends that plaintiff is obligated to indemnify defendant for damages caused by bodily injury arising out of the subject incident." The complaint sought a judicial declaration "as to whether [Carrier] is obligated to indemnify defendant JEFFREY B. LEEP for damages caused by bodily injury to its insureds and for liability under the rental contract." To this complaint all of the named defendants filed general denials.
Carrier took discovery, and then moved for summary judgment. The basic thrust of the motion was simple: As a matter of law, the "family exclusion" in Carrier's policy forbade liability coverage, and therefore Carrier was not obligated to defend or indemnify Leep. This pristine thrust was muddied when Carrier admitted, in its moving papers, "that to a limited extent coverage is determined by the reasonable expectations of the insured." In response Leep and Rental focused on the gunk, and argued that Leep had reasonably expected to be defended and indemnified. In this posture the matter was submitted for decision to Judge A of the Santa Clara County Superior Court. In a minute order Judge A ruled: "Motion for Summary Judgment on behalf of plaintiff denied. Facts 10 and 11 are in dispute." Facts 10 and 11 both dealt with Leep's alleged expectations of his insurance coverage, and neither concerned any issue of ambiguity in the provisions of Carrier's policy.
On October 28, 1985 (the date apparently set for trial), the lawyers representing Carrier, Leep, and Rental all presented trial briefs to Judge B of the Santa Clara County Superior Court. The briefs were filed in open court, and Carrier's counsel revealed that two of the named defendants the manufacturer and the distributor of the tractor had been dismissed from the action with Carrier's consent. Thus the personae of this action dwindled to Carrier as plaintiff, Leep and Rental as defendants. Court and counsel engaged in colloquy, in the course of which defense counsel somehow persuaded Judge B that Judge A's earlier ruling necessarily meant that Carrier's policy was ambiguous in its terms, and therefore afforded coverage for the accident. Judge B's comments indicate his thinking: "Since Judge *177 [A] could have decided in this case that the contract is clear and unambiguous, and that there is no coverage, but he did not, and he did specify as material disputes between the parties, the reasonable expectations, it follows that he decided that the contract is ambiguous. [¶] Quite frankly, even had he not decided that and that question were presented to me as a matter of law, ... I would have decided it the same way, so I find that the only issue left before me is the issue of reasonable expectation." Further: "I find that the question of ambiguity is not before me. That that was necessarily decided by Judge [A] in his ruling on the motion for summary judgment. [¶] Therefore, the issue before me is whether or not coverage in this case was provided to the insured based upon the reasonable expectation of the insured." (1) But an order denying summary judgment is not a final judgment and is not res judicata. (De La Pena v. Wolfe (1986) 177 Cal. App.3d 481, 485 [223 Cal. Rptr. 325].) It is therefore not binding on the judge conducting the trial.
Then Leep's counsel moved for judgment on the pleadings, and Rental's counsel joined in the motion. After further discussion the matter was continued to the following day, October 29. On that date the court learned that Leep and Rental had entered into a stipulated judgment in the earlier lawsuit, i.e., action No. 539948. Carrier's counsel described the stipulation as follows: "The settlement yesterday is a good example of a collusive act, in my opinion. The cross-complaint for express indemnity, there's an only that, not on the comparative indennity, and express indemnity apparently is stipulated judgment which I heard on the record yesterday but there's no transcript of yet wherein A-1 [Rental] receives a stipulated judgment against the insured [Leep] for a hundred and twenty-five thousand dollars with a covenant not to execute thus protecting the insured."
Despite the foregoing representation, Judge B granted judgment on the pleadings in favor of Leep and Rental. He ultimately signed a judgment which denied Carrier relief and specified that Carrier "is obligated to defend and indemnify defendant JEFFREY LEEP on the aformentioned Cross-complaint...." Implied in the judgment, although not expressly stated, were the notions (1) that the "family exclusion" in the policy was ambiguous, and therefore (2) that Carrier's policy afforded coverage for the accident in question. From that judgment Carrier appeals.
II. CONTENTIONS ON APPEAL
The arguments advanced by the parties on appeal are varied and intricate. Paraphrased, they run thus: Appellant Carrier contends that the "family *178 exclusion" contained in its policy is clear, unambiguous, and enforceable, and therefore the policy does not afford liability coverage for the death of Leep's wife. In support of that proposition Carrier cites cases involving automobile insurance. Carrier further contends that the trial court erred in granting judgment on the pleadings without first considering extrinsic evidence of Leep's reasonable expectations of coverage.
Respondents Leep and Rental contend (1) that automobile insurance cases furnish no applicable precedent for this case, which involves a homeowner's policy; (2) that the "family exclusion" clause is ambiguous when read with other provisions of the policy; and (3) the trial court committed no error in granting judgment on the pleadings without first indulging in an evidentiary hearing.
III. SCOPE OF REVIEW
(2) "When a motion for judgment on the pleadings has the purpose and effect of a general demurrer, the facts alleged in the pleading attacked must be accepted as true, and the [trial] court may also consider matters subject to judicial notice." (Kachig v. Boothe (1971) 22 Cal. App.3d 626, 630 [99 Cal. Rptr. 393].) Ordinarily such a motion is confined to the face of the challenged pleading; but when a written instrument is attached to the pleading and properly incorporated therein by reference, the court may examine the exhibit and treat the pleader's allegations of its legal effect as surplusage. (Cohen v. Ratinoff (1983) 147 Cal. App.3d 321, 327 [195 Cal. Rptr. 84].)
(3) In this case Carrier did not attach a copy of its policy to the complaint for declaratory relief. The complaint merely alleged the legal effect of the policy. But Carrier attached a certified copy of the policy, marked Exhibit A, to its trial brief. Rental, in its trial brief, quoted verbatim from portions of the policy. The policy itself was thus before the trial court when the motion for judgment on the pleadings was first raised, and Judge B specifically stated on the record without objection and, indeed, with the evident approval of both sides, that he had received and considered Carrier's and Rental's trial briefs. Consequently our review includes an examination of the policy's provisions.
(4) On appeal from a judgment on the pleadings, the case is reviewed in the same way as a judgment of dismissal entered following the sustaining of a general demurrer. (Gill v. Curtis Publishing Co. (1952) 38 Cal.2d 273, 275 [239 P.2d 630]; Peters v. State of California (1987) 188 Cal. App.3d 1421, 1424 [234 Cal. Rptr. 117].) "While it is the duty of a reviewing court, in *179 most cases, to indulge in every reasonable presumption in favor of sustaining the trial court, substantially the reverse is true when [the] plaintiff appeals from a judgment on the pleadings." (Crain v. Electronic Memories & Magnetics Corp. (1975) 50 Cal. App.3d 509, 512 [123 Cal. Rptr. 419].)
IV. DISCUSSION
(5) It is settled in this state that "the doctrine of reasonable expectation of coverage comes into play only where there is an ambiguity in the policy." (Wolf Machinery Co. v. Insurance Co. of North America (1982) 133 Cal. App.3d 324, 328 [183 Cal. Rptr. 695], italics added; accord, Morris v. Atlas Assurance Co. (1984) 158 Cal. App.3d 8, 17 [204 Cal. Rptr. 95].) (6a) Consequently before reaching the question of reasonable expectation, we must first determine whether the "family exclusion" provision in Carrier's policy is ambiguous. (7) Where, as here, no evidence was presented in aid of the policy's language, the construction of that language is purely a matter of law. (Employers Cas. Ins. Co. v. Foust (1972) 29 Cal. App.3d 382, 385 [105 Cal. Rptr. 505].) We are not bound by the trial court's interpretation of the policy. (Russell v. Bankers Life Co. (1975) 46 Cal. App.3d 405, 413 [120 Cal. Rptr. 627].)
(6b) We have quoted Carrier's "family exclusion" in part I of this opinion. That exclusion is pellucid and unequivocal: it expressly provides that Carrier shall afford no liability coverage for injuries suffered by the insured (Leep) or his relatives. Carrier correctly points out that in the area of automobile insurance, similar "family exclusion" clauses have repeatedly been upheld by this state's Supreme Court and its Courts of Appeal. (See, e.g., Farmers Ins. Exchange v. Cocking (1981) 29 Cal.3d 383, 387 [173 Cal. Rptr. 846, 628 P.2d 1], and cases there cited.) "`[T]he concept of a household exclusion is a common one which has long enjoyed judicial support. Its purpose is to prevent suspect inter-family legal actions which may not be truly adversary and over which the insurer has little or no control. Such an exclusion is the natural target for the insurer's protection from collusive assertions of liability....' (United Farm Bur. Mut. Ins. Co. v. Hanley (1977) 172 Ind. App. [329] [360 N.E.2d 247, 252], fns. omitted ...," cited and quoted with approval in Farmers Ins. Exchange v. Cocking, supra, 29 Cal.3d at p. 389.)
Leep and Rental begin by noting that "family exclusion" clauses are statutorily authorized in Insurance Code section 11580.1, subdivision (c)(5), which deals specifically with automobile insurance policies. They further note that the Insurance Code contains no equivalent provision relating to *180 homeowner's policies. Therefore, they argue, automobile insurance cases furnish no applicable precedents for the case before us, and "this court should not make new law by holding that Insurance Code section 11580.1(c)(5) applies to homeowners insurance."
We are not persuaded. This state's Supreme Court has held that Insurance Code section 11580.1, subdivision (c)(5) "permits, but does not require, automobile insurers to continue to exclude coverage for bodily injury liability to insureds (usually, family household members)." (Farmers Ins. Exchange v. Cocking, supra, 29 Cal.3d at p. 389, italics in original.) "[¶] The decision of a carrier whether to offer, or of a prospective insured to accept, the various kinds of liability insurance is one which the Legislature reasonably might well leave to the insurer and insured, respectively. To hold otherwise and, in effect, to require family member liability coverage against the better judgment of the contracting parties would constitute an unprecedented judicial interference into private contractual and economic arrangements...." (Id., at pp. 390-391.)
If this principle applies to automobile insurance, we can see no reason why it should not equally apply to homeowner's insurance. Therefore the fact that the Insurance Code makes no mention of "family exclusions" in homeowner's policies does not preclude a carrier from insisting upon, or an insured from accepting, such an exclusion. The Fourth Appellate District, confronted with a "family exclusion" in a homeowner's policy, wrote this: "We can find no authority either in court decision or legislative enactment to suggest this exclusion in a homeowner's policy is against public policy and, indeed, we do not believe it is." (State Farm Fire & Cas. Co. v. Alstadt (1980) 113 Cal. App.3d 33, 40 [169 Cal. Rptr. 593]; accord, State Farm Fire & Cas. Co. v. Clendening (1983) 150 Cal. App.3d 40, 43 [197 Cal. Rptr. 377].) We agree.
Leep and Rental next contend that the "family exclusion" in Carrier's policy is ambiguous because it conflicts with the "motorized land conveyance" provisions in the same policy. We have quoted the "motorized land conveyance" provisions in part I of this opinion. The argument seems to run thus: The policy provides liability coverage for injury or death sustained when a "motorized land conveyance" is (a) not designed for travel on public roads, (b) not subject to motor vehicle registration, and (c) used for the maintenance of an insured location. The garden tractor which killed Leep's wife fit that description. The "motorized land conveyance" provisions create no coverage exception for the insured or members of his family. Therefore the "motorized land conveyance" provisions conflict with the *181 "family exclusion" in the policy, and that conflict should be resolved against the carrier and in favor of coverage.
This argument ignores the essential difference between the "motorized land conveyance" provisions and the "family exclusion." They do not address the same topic. Under the "motorized land conveyance" provisions, coverage is afforded when an injury is caused by a specified type of instrumentality used in a specified way. The "family exclusion," on the other hand, concerns the persons to whom coverage is provided. Carrier's insurance policy plainly excludes liability coverage for any injury to any insured person. Consequently we find no inconsistency where the policy in effect says (a) there is liability coverage for personal injury caused by a garden tractor, (b) unless the injury is to a resident member of the insured's family. "The insurance carrier need not insure risks arising from intrafamily torts unless it chooses to do so." (State Farm Fire & Cas. Co. v. Clendening, supra, 150 Cal. App.3d at p. 43.)
But Leep and Rental both contend that the instant action does not involve a true intrafamily tort. They claim that Carrier's exposure arises from the indemnification provisions in the rental agreement, rather than from a suit for damages instituted by one family member against another. In our view this is a distinction without a difference.
A "family exclusion" in an insurance policy is designed to protect the insurance carrier from collusion both by and between family members. Whether a family member colludes with another family member, or with an adversary who is not a family member, the result is the same: the insurance carrier becomes the victim. Therefore where, as here, the "family exclusion" is plain and unambiguous, it should not be disregarded merely because a family member sides with a party who is not.
We cannot say, and we do not hold, that actual collusion occurred between Leep and Rental. But certainly the circumstances surrounding this case provided Leep with every incentive for collusion. In his underlying action (No. 539948) Leep was both plaintiff and cross-defendant. Leep stipulated that Rental would recover $125,000 on its cross-complaint against him. If he planned to pay those damages out of Carrier's pocket, he would have a direct financial stake in the defeat of Carrier's declaratory relief action (No. 559348) against Rental. Furthermore, Carrier would be deprived of Leep's assistance and cooperation, to which Carrier was entitled by express provisions of the policy.
*182 In view of the foregoing we need not reach the question of expectation of coverage.
V. DISPOSITION
The judgment is reversed. The trial court is directed to enter a new and different judgment in favor of plaintiff Lumbermens Mutual Casualty Company, and against all remaining defendants in action No. 559348. Lumbermens shall recover its costs on appeal.
Agliano, P.J., and Capaccioli, J., concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/250534/ | 276 F.2d 656
Application of Jan ROSICKY.
Patent Appeal No. 6513.
United States Court of Customs and Patent Appeals.
March 30, 1960.
Harry C. Bierman, New York City (Hugo E. Weisberger, Washington, D. C., of counsel), for appellant.
Clarence W. Moore, Arthur H. Behrens, Washington, D. C. (Joseph Schimmel, Washington, D. C., of counsel), for the Commissioner of Patents.
Before WORLEY, Chief Judge, and RICH, MARTIN, and SMITH, Associate Judges, and Judge C. WILLIAM KRAFT.1
MARTIN, Judge.
1
This appeal is from a decision of the Patent Office Board of Appeals affirming the final rejection of claims 1, 5, 11 to 15, 17, 18 and 28 to 36 in application Serial No. 402,590 filed January 6, 1954, entitled "Xanthene Derivatives and Process of Making Same." Several claims directed to more limited processes have been allowed.
2
The following claims are considered to be representative:
3
"1. In a process of producing xanthene derivatives having a basic side chain in 9-position, the steps comprising contacting xanthene in a non-polar organic solvent with a sodium-transferring agent in statu nascendi and adding to the resulting xanthene sodium a halogen substituted organic base.
4
"28. A xanthene compound having a basic side chain in 9-position, said compound being selected from the group consisting of a xanthene compound of the formula
5
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
6
wherein Z is a heterocyclic ring selected from the group consisting of the piperidine ring and the pyrrolidine ring, said heterocyclic ring being connected to the CH2-group by its nitrogen atom, its acid addition salts, and its quaternary ammonium compounds with lower alkyl halides and lower alkyl sulfates.
7
"31. A spasmolytic and antihistaminic composition comprising, as essential spasmolytic and antihistaminic ingredient, not less than 0.1% of a xanthene compound having a basic side chain in 9-position, said compound being selected from the group consisting of a xanthene compound of the formula
8
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
9
wherein Z is a heterocyclic ring selected from the group consisting of the piperidine ring and the pyrrolidine ring, said heterocyclic ring being connected to the CH2-group by its nitrogen atom, its acid addition salts, and its quaternary ammonium compounds with lower alkyl halides and lower alkyl sulfates, and a significant amount of a pharmaceutical carrier."
10
The process of making the claimed substituted 9-xanthenes includes producing the intermediate sodium xanthene. The examples require as a first step the thorough mixture of finely divided sodium in an inert nonpolar solvent such as anisole. To the resulting suspension xanthene is added, after which chloro-, iodo-, or bromobenzene is introduced slowly, while stirring constantly. Thereafter a basic alkyl halogenide, such as B-pyrrolidino ethyl chloride, is added with stirring. Upon crystallization and separation the corresponding substituted 9-xanthenes are obtained. By familiar processes, the substituted 9-xanthenes may be quaternized or treated to form the corresponding acid addition salts.
11
The claimed compounds and compositions are sufficiently exemplified by claims 28 and 31. They are said to combine a highly desirable combination of spasmolytic (prevents or retards spasms) and antihistaminic (alleviates allergic symptoms) properties.
12
The only reference in the record is Cusic et al., U. S. Patent No. 2,676,971, issued April 27, 1954, filed April 21, 1951. The Cusic et al. specification includes the following:
13
"The compounds which constitute our invention are represented by the structural formula
14
NOTE: OPINION CONTAINING TABLE OR OTHER DATA THAT IS NOT VIEWABLE
15
wherein X represents oxygen or sulfur, alk is a lower bivalent saturated aliphatic hydrocarbon radical, R, R' and R" are members of the class consisting of alkyl, aralkyl, alkenyl and hydroxyalkyl radicals and Z is one equivalent of an anion. The radical alk represents a bivalent saturated hydrocarbon radical of from two to eight carbon atoms. The radicals are derived from straight-chain or branched-chain aliphatic hydrocarbons and include such radicals as ethylene, propylene, butylene, amylene, hexylene, and polymethylenes from trimethylene to octamethylene. Among the radicals which R, R', and R" represent are such lower alkyl groups as methyl, ethyl, propyl, butyl, amyl and hexyl, hydroxyethyl, hydroxypropyl, hydroxybutyl, hydroxyamyl, hydroxythexyl, wherein the propyl, butyl, amyl, and hexyl groups may be either of the straight-chain or branched-chain type. Further, these radicals may be of unsaturated type as in the case of allyl, crotyl, methallyl, other butenyls, pentenyls and the like.
16
"The radical NRR' may also be a nitrogen-containing hetermono-cyclic radical such as piperidine, lupetidine, pyrrolidine, morpholine, thiamorpholine, piperazine, N'-alkylpiperazine and the like. The radical Z represents one equivalent of an anion such as fluoride, bromide, chloride, iodide, sulfate, phosphate, citrate, oxalate, benzenesulfonate, ascorbate and sulfamate." (Emphasis ours.)
17
With respect to the therapeutic properties of the compounds, the patent states that the quaternary salts are active cardio-vascular agents and that they "are active in preventing the transmission of sympathetic and parasympathetic autonomic nerve impulses through the ganglia" (at least one of the effects of spasmolytic agents).
18
To make the Cusic et al. compounds, the 9 position of xanthene is activated. The patent teaches for this purpose the use of an ether solution of n-butyl lithium, or a toluene solution of lithium amide or sodamide. Those solutions with xanthene and chloro-dialkylamines present form 9-(dialkylamino alkyl) xanthenes.
19
The board held process claims 1, 5 and 11 to 15 to be unpatentable over Cusic et al. It was not felt that "sodium-transferring agent" excluded sodamide (sodium amide) even when considered in conjunction with "in statu nascendi," which phrase was said by the board to be "indefinite and meaningless." Nothing was found in the specification which limited the transferring agent to chloro-, bromo- or iodobenzene.
20
Appellant asserts that the phrase "in statu nascendi" requires the sodium to be present in its nascent or transitory highly active state, rather than as a preformed compound such as sodamide. In such a condition, it is said, the sodium reacts with xanthene to form xanthene sodium much more rapidly than does sodamide. It is this which appellant relies upon to distinguish his process from that taught by Cusic et al., none of the other features being argued to be patentably different from the cited art.
21
Claim 1, the broadest process claim, will be considered first. The portion of the claim which is in controversy reads:
22
"* * * the steps comprising contacting xanthene in a non-polar organic solvent with a sodium-transferring agent in statu nascendi * * *" (Emphasis ours.)
23
Hachk's Chemical Dictionary, 3rd Ed., 1950, states the following:
24
"Status Nascendi. The nascent (q.v.) state, or the condition of a molecule at its formation during a chemical reaction. Many elements are more active when newly-formed (as hydrogen), and it is assumed that in this state there exist free atoms, H, that have not combined into the molecule, H2.
25
"Nascent. Describing a chemical substance at the moment of its formation; especially a gas at the moment it is generated in which condition it is more chemically-active, presumably on account of free single atoms being present, instead of the less active gas molecules. n. state. The condition of a substance during its formation, or liberation from its compounds (see status nascendi)."
26
Those definitions make it clear to us that the phrase has a definite meaning, that it connotes to chemists a highly active state in which an element can exist. While we recognize that the term "nascent state" is more commonly applied to substances such as oxygen, hydrogen, chlorine and nitrogen, there is nothing which has been brought to our attention which would indicate that it is inapplicable to elemental sodium.
27
It now becomes necessary to consider the manner in which the phrase "in statu nascendi" modifies "sodium-transferring agent" to see if it excludes substances such as sodamide, a preformed sodium transferring carrier.
28
It is clear from appellant's specification that the term "sodium-transferring agent" requires the presence of both sodium and the transferring means. In view of the meaning of "in statu nascendi" we feel that it, in conjunction with "sodium-transferring agent," limits the transferring agent to one which is capable of providing highly active sodium, and requires the presence of nascent or transitory sodium. Appellant has given three examples of such carriers, chloro-, bromo- and iodo-benzene, which function in that manner, and it is to these compounds that appellant refers as being suitable media for producing nascent sodium.
29
All of the Cusic et al. sodium transferring agents, such as sodamide, are preformed, and do not, so far as the record shows, produce nascent sodium which appellant alleges tends to react with xanthene much more rapidly than the preformed compounds. The basis of the board's rejection of claim 1 was that it was directly anticipated by Cusic et al., and that it lacked the essential element of novelty. Since we find that the process is novel over the cited prior art, we are left with the question of obviousness.
30
There is nothing of record either by way of references or statements of the Board of Appeals or examiner which assists us in ascertaining whether the use of a transferring agent capable of producing nascent sodium in a process for making xanthene sodium would have been obvious to one of ordinary skill in the art at the time this application was filed. We have no authority to presume that it would have been obvious and we will not do so; consequently we must hold it to be unobvious. The board's rejection of claim 1, as well as claims 5 and 11 to 15 which are all of narrower scope, over the art of record is reversed.
31
It is not necessary to consider all of the board's reasons for rejecting compound claims 17, 18, 28, 29 and 30 since we find one of their reasons to be correct. The board stated that "Since the particular groups [piperidine and pyrrolidine] are disclosed in the [Cusic et al.] reference as the equivalent of other amino radicals and are so considered generally in the medicinal art, as well as in their preparation, and would be so recognized by one skilled in the art, there is no need for a specific exemplification thereof to be anticipatory."
32
Appellant relies upon two basic arguments,1 the first of which is that Cusic et al. does not specifically name the claimed compounds nor teach how or that they may be made.
33
It is true that all of the products specifically named by Cusic et al. are dialkylamines and that those claimed by appellant are not named. It is clear beyond doubt, however, that the compounds claimed are within the scope of the generic disclosure of the reference. The specification of the patent describes not only the compounds specifically named therein, but also those in which either a piperidine or a pyrrolidine heterocyclic ring is utilized in lieu of a dialkylamine. Therefore the fact that appellant's specific compounds are not named is of no moment. Further there is no reason of record to believe that they could not be made in the same manner as the dialkylamines exemplified. It is unnecessary for us to pass upon the question of whether the two groups are generally known as equivalents in the medicinal arts. However, the recent decision of this court, In re Grimme, 274 F.2d 949, 47 CCPA ___, is interesting to note in that regard. Claims 17, 18, 28, 29 and 30 are unpatentable, and the board's rejection of those claims is affirmed.
34
In our consideration of the patentability of the compound claims in this case, we have not been persuaded by appellant's second contention that his compounds embody an eminently advantageous combination of spasmolytic and antihistaminic activities. First of all, Cusic et al. points out that the genus therein disclosed has antispasmodic properties. While no suggestion is made of potential antihistaminic value, it is clear that such properties are inherent in at least some of the compounds specifically named by Cusic et al.2 Where, as here, appellant is merely claiming the compounds themselves and at least one of the properties upon which he relies to predicate patentability is disclosed as possessed by the prior art, we find no good reason to remove from the realm of that which is anticipated, those compounds which have some additional property not so disclosed.
35
The board was of the opinion that the recitation of a pharmaceutical carrier, in combination with the compounds discussed above, did not render claims 31 to 36 patentable over the Cusic et al. patent. Appellant, to overcome this ground of rejection, relies primarily upon a number of prior art patents which include claims to compounds in the environment of carriers of various types, presumably to establish that the utilization of a carrier in admixture with a compound can make an old compound patentable. We know of no authority which compels such a conclusion. Accordingly we will confine our attention to the record.
36
Although the Cusic et al. patent does not refer to carriers, the specification does state that the compounds are useful pharmacological and therapeutic agents. It is well known, and it needs no citation of authority, that drugs and pharmaceuticals are usually dispensed and utilized in either liquid or solid media. One skilled in the arts concerned with agents of the type disclosed by Cusic et al. would be cognizant of the fact that the therapeutics of the reference would have to be diluted or suspended in some manner to make them pharmaceutically useful. Consequently, it would be obvious to one skilled in the art to utilize a carrier with the disclosed compounds of Cusic et al., and appellant having done no more than the obvious in this respect cannot rely upon such a feature for patentability.
37
Appellant has further pointed out that several of his claims require certain quantities of the pharmaceutical agents to be in the carriers, for example, between about 25 and 125 mg. (claim 36). Appellant has not established by any sort of clinical data that such a quantity would be a safe or useful dosage for the treatment of any particular malady, or useful for the alleviation of specific symptoms. The board's rejection of composition claims 31 to 36 is affirmed.
38
The rejection of claims 17, 18 and 28 to 36 inclusive is affirmed; the rejection of claims 1, 5 and 11 to 15 is reversed.
39
Modified.
Notes:
1
United States District Judge for the Eastern District of Pennsylvania, designated to participatein place of Judge O'Connell, pursuant to provisions of Section 292(d), Title 28, United States Code.
1
In addition, appellant asks us to make a distinction between
(1) a disclosure made in knowledge of published prior art which an inventor presumably should know and can know, and
(2) a disclosure made whereby the inventor was unable to know the prior art because it was not published at the time his application was filed but was merely and in secret disclosed to the Patent Office in a pending application.
Since 35 U.S.C. § 102(e) states that a United States patent is effective as a reference as of its filing date, appellant's contention is devoid of persuasive force.
2
Interestingly enough, appellant's disclosure attributes this allegedly surprising combination of properties not only to the piperidine and pyrrolidine substituted 9-xanthenes but also to at least one of the dialkylamino substituted 9-xanthenes specifically named by Cusic et al | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1720683/ | 121 So. 2d 344 (1960)
Reola KNIGHTEN et al.
v.
AMERICAN AUTOMOBILE INSURANCE COMPANY et al.
No. 5020.
Court of Appeal of Louisiana, First Circuit.
May 31, 1960.
Rehearing Denied June 29, 1960.
*345 Jos. A. Gladney, Baton Rouge, for appellants.
Seale, Hayes, Smith & Keogh, Baton Rouge, for appellees.
Before ELLIS, LOTTINGER, LANDRY, and PUGH, JJ.
PUGH, Judge ad hoc.
This is a damage suit which arose out of a collision between a one-half ton pick-up truck owned and operated by James R. Wilson (in which plaintiff, Reola Knighten, was riding as guest passenger) and an automobile which was operated by defendant Clarence V. Johnson (in which J. C. Thompson and J. B. Thompson were riding as passengers). Reola Knighten's husband, Granger Knighten, was joined as plaintiff, and the American Automobile Insurance Company, the liability insurer on the Johnson vehicle, was joined as defendant.
Pursuant to the prayer in the petition, plaintiffs were awarded a jury trial. During the course of the trial, and for reasons not here pertinent, the suit as to Granger Knighten was dismissed by order of the District Judge. It does not appear that an appeal was taken on behalf of Granger Knighten from the order of dismissal, and the correctness of the District Court's ruling as to this matter is not before us on this appeal. The jury returned a verdict in favor of defendants (11 to 1), the trial judge denied plaintiff Reola Knighten's application for a new trial, and judgment was entered dismissing her suit. Plaintiff Reola Knighten took this appeal.
The collision in question occurred November 28, 1955, at about 1:00 p.m. on Plank Road which, where the collision occurred, is a two-lane, hard-surfaced State highway running generally north-south. The Wilson truck, followed by the Johnson automobile, was proceeding north on Plank Road when, several miles north of the Baton Rouge city limits, the collision occurred, as Johnson attempted to overtake and pass the Wilson truck and as Wilson attempted to execute a left turn into a gravelled private road to the west. The left rear portion of the Wilson truck was struck by the right front portion of the Johnson vehicle. The impact occurred in the left or passing lane, a short distance to the west of the center line.
The first question, of course, concerns whether Johnson was negligent. In this connection, plaintiff Reola Knighten relies heavily upon another case which grew out of the same collision, Johnson v. Wilson, which was considered first by this Court (1957, 97 So. 2d 674), and later was reversed in part by the Supreme Court (La. *346 1960, 118 So. 2d 450). In the earlier case, suit had been instituted by Johnson to recover damages to his car caused by the alleged negligence of Wilson. The defendant Wilson had denied that he was negligent and reconvened to recover $235,965.37 for personal injuries he allegedly sustained as a result of the accident. The case was tried before a jury, which rejected plaintiff Johnson's claim and awarded defendant Wilson a verdict in the sum of $8,507.37. In our opinion in that case we observed that the evidence was "sharply contradictory," and went on to state:
"We see no need to detail the discrepancies. In reaching a verdict for appellee Wilson, the jury must necessarily have accepted Wilson's version of the accident. The factual determinations of the trier of fact, particularly when based upon an evaluation of the credibility of opposing witnesses, should not be disturbed on appeal unless manifestly erroneous. Jones v. Jones, 232 La. 102, 93 So. 2d 917; Fouquier v. Fouquier, 231 La. 430, 91 So. 2d 591; Guidry v. Crowther, La.App. 1 Cir., 96 So. 2d 71. Furthermore, the District Court, who saw and heard the witnesses, refused to grant a new trial upon the appellants' application for same." 97 So.2d at page 676.
This Court concluded that it was not manifestly erroneous for the jury to have accepted Wilson's version of the accident, and it was in the light of the Wilson version, thus accepted for purposes of appellate review, that we stated that Johnson was guilty of gross negligence. In its review of our decision in that case, the Supreme Court expressed no disagreement with our position in this regard, and we feel that the statements in the opinion by the Supreme Court relative to negligence on the part of Johnson is to be interpreted to mean that if the version of the collision by Wilson in that case be accepted, and it was not manifestly erroneous for the jury to so accept it, Johnson was guilty of negligence. The Supreme Court's reversal in part of our decision was on another point, i. e., whether in the light of uncontroverted facts defendant Wilson was guilty of contributory negligence.
In her reliance upon the pronouncements of this Court and the Supreme Court in the prior litigation of Johnson v. Wilson, plaintiff Reola Knighten contends that it "has been settled as a matter of law" that Johnson was guilty of negligence, and that this decision "is binding on the defendants herein as a matter of law." The theory which underlies this contention is not altogether clear. In support thereof she relies upon a number of cases, none of which, in our opinion, are controlling here. Several of these cases (Alba v. Holstead, 1946, 210 La. 357, 27 So. 2d 130; Lewis v. Baker, 1911, 128 La. 92, 54 So. 482; Davis v. Lewis & Lewis, La.App.1954, 72 So. 2d 612; Noe v. Maestri, La.App.1939, 190 So. 590) concern the binding effect of prior rulings in the same case between the same parties. (See, generally, the discussion in Moore's Federal Practice §§ 0.401 and 0.404 (2d ed. 1959) and "Developments in the Law of Res Judicata," 65 Harv.L.Rev. 818, at 822 (1952)). These cases have no application whatsoever to a situation where, as here, it is a different case, the parties are different and the cause of action is different. Another case relied upon by plaintiff (Coyle v. Horton, La.App.1937, 174 So. 277) concerns the situation where cases involving identical issues were, for all purposes, consolidated for trial. One of the cases so tried was appealed to the Supreme Court, which recited the facts in all of the cases, discussed the issues and the law applicable thereto, and affirmed the judgment of the trial court. The Court of Appeal in its consideration of those of the consolidated cases which were appealed to it concluded that it was controlled by the prior decision of the Supreme Court on the same record. In the instant case there was no consolidation for trial, the cases were tried at different times before different juries, and of course there is a different record. (Only a minute portion of the record in the prior case, page 84 *347 thereof, was offered in evidence in the instant case.) The last of the Louisiana state court cases relied upon by plaintiff in this connection (Heymann v. Mathes, 1931, 18 La.App. 403, 137 So. 871) concerned a question of law (whether attorney fees may be collected by a money lender operating under the Small Loan Law, LSA-R.S. 6:571 et seq.). The same Court of Appeal which decided the Heymann case had previously decided the same question in the affirmative in a different case between different parties, and the Supreme Court in denying an application for review had declared that the decision by the Court of Appeal was correct. The Court of Appeal in the Heymann case felt that it was bound by the pronouncement of the Supreme Court in the prior proceeding. We are not here concerned with what rule of law should be applied to uncontroverted facts, but rather with the facts themselves. In the prior case between different litigants arising out of the same occurrence, the trier of fact resolved sharply conflicting testimony against Johnson, and on appeal it was found that their determination was not manifestly erroneous. Here a different factual determination was made between different parties in a different trial in the light of evidence then adduced. The problem now appears to be whether this determination was manifestly erroneous.
The federal cases relied upon by plaintiff in support of her position (Campbell v. United States, D.C.E.D.La.1948, 75 F. Supp. 181, reversed 5 Cir., 1949, 172 F.2d 500, certiorari denied 1949, 337 U.S. 957, 69 S. Ct. 1532, 93 L. Ed. 1757; Westmoreland et al. v. Mississippi Power & Light Co., 5 Cir., 1949, 172 F.2d 643; Zimmerman v. Mathews Trucking Corp., 8 Cir., 1953, 203 F.2d 864, rehearing denied, modified 8 Cir., 1953, 205 F.2d 837; West v. American Telephone & Telegraph Co., 1940, 311 U.S. 223, at pages 236-237, 61 S. Ct. 179, at page 183, 85 L. Ed. 139; Yoder v. Nu-Enamel Corp., 8 Cir., 1941, 117 F.2d 488) are also not persuasive as to this issue. It is true that both the Zimmerman and Westmoreland cases concerned problems arising from several suits growing out of the same occurrence, but both of these cases make it clear that a factual finding in one case is not conclusive in another. In the Westmoreland case, the Court made it clear that the prior judgment would not ground a plea of res judicata and that the appellant was not "bound by the facts as presented to the state court." And in the Zimmerman case the court was concerned with whether if a state court jury verdict in favor of plaintiff in a state court action was upheld on review by the state's Supreme Court it would be improper for a federal court in a case arising out of the same occurrence to set aside a federal jury verdict which was also in favor of plaintiff. That the state court action did not cause negligence of defendant to be established as a matter of law in the Zimmerman case, is clear from the fact that on rehearing the court ordered a new trial, that the case be again submitted to the jury for determination of the facts and the application of the proper law. In this connection, see also Roucher v. Traders & General Insurance Co., 5 Cir., 1956, 235 F.2d 423, 424, wherein it was stated:
"The district court granted summary judgment for the defendant, appellee, in an automobile negligence action, apparently upon the ground that there was no genuine issue as to the nonnegligence of the defendant's insured, Joseph H. Hicks. That conclusion the district court reached solely as a result of evidence taken upon a trial involving the same accident, and held by a Louisiana state court not to show negligence on the part of the said insured. Hicks v. Tilquit, La.App., 82 So. 2d 100. The plaintiff was not a party to such former action and strenuously objected to the admissibility in this case of the evidence therein taken or of the result of such trial.
* * * * * *
"The question of defendant's liability cannot be lawfully withdrawn from the *348 jury and determined by the court unless the facts are not only undisputed but are also such that all reasonable men, in the exercise of a fair and impartial judgment, must draw the inference and conclusion therefrom of nonnegligence."
Plaintiff concedes, as indeed she must, that the statements in the case of Johnson v. Wilson are not binding upon the defendant Johnson as a matter of res judicata. Article 2286 of the LSA-Civil Code provides:
"The authority of the thing adjudged takes place only with respect to what was the object of the judgment. The thing demanded must be the same; the demand must be founded on the same cause of action; the demand must be between the same parties, and formed by them against each other in the same quality."
It is clear that here the demand is different, is based upon a different cause of action, and is between different parties. Since Reola Knighten was not a party litigant to the prior proceeding, any finding in that proceeding that Johnson was not negligent would certainly not have been binding upon her. To hold otherwise would be to deny to her her day in court. Since Johnson could not have taken advantage of a finding of non-negligence, he should not be bound in this case by a prior finding of negligence. Phrased differently, if there were a bus accident in which fifteen passengers were injured and one, because of ineptness or otherwise, is unsuccessful in his suit against the bus company, surely it would be improper to hold that all of the other victims had thereby lost their right to a day in court. Similarly, if the second person won in his action against the bus company, this would not mean that the thirteen remaining victims would automatically be entitled to recover. It is clear on reason and authority that the case of Johnson v. Wilson is not determinative of the negligence issue in this case. See Gaines v. Hennen, 1860, 24 How. 553, 65 U.S. 553, 571-580, 16 L. Ed. 770, a case arising under Louisiana law; Lefebvre, Syndic v. De Montilly, 1846, 1 La.Ann. 42; Mastier v. New Orleans, Opelousas & Great Western Railroad Co., 1861, 16 La.Ann. 354, 356; Rauschkolb v. Di Matteo, 1938, 190 La. 7, 181 So. 555; Aucoin v. Aucoin, La.App.1948, 34 So. 2d 819; Roucher v. Traders & General Insurance Co., 5 Cir., 1956, 235 F.2d 423, a case arising under Louisiana law; Shields v. American Motorists Insurance Co., D.C.E.D.La.1957, 157 F. Supp. 520, a case arising under Louisiana law. The cases of McKnight v. State, La.App.1953, 68 So. 2d 652 and Muntz v. Algiers & G. St. Ry. Co., 1908, 116 La. 236, 40 So. 688, are clearly distinguishable. They both concern a different problem, that raised when, in a suit by one party against another party, liability is deemed derivative (predicated upon the negligence of a third party), and in a prior suit by the first party against the third party the latter has been held not to be liable. See American Law Institute Restatement of the Law of Judgments (1942) and compare Sections 96 and 99 and accompanying comments, with Section 93 and accompanying comments, especially illustrations 8 and 9; and see also Freeman on Judgments §§ 469, 428-429 (1925); Annotation, 133 A.L.R. 181; and Note, 14 Louisiana Law Review 901 (1953).)
Although Louisiana's doctrine of res judicata is more limited than at common law (see Woodcock v. Baldwin, 1902, 110 La. 270, 275, 34 So. 440, 441 and Comment, 2 Louisiana Law Review 347 (1940) ), it would appear, however, that the same result reached here would also generally be reached at common law. See, for example, Elder v. New York & Pennsylvania Motor Express, Inc., 1940, 284 N.Y. 350, 31 N.E.2d 188, 133 A.L.R. 176; Montgomery v. Taylor-Green Gas Co., 1947, 306 Ky. 256, 206 S.W.2d 919; Triplett v. Lowell, 1936, 297 U.S. 638, 642, 56 S. Ct. 645, 647, 80 L. Ed. 949, 952; Park-In Theatres v. Waters, 5 Cir., 1950, 185 F.2d 193, 195;
*349 Taormina Corporation v. Escobedo, 5 Cir., 1958, 254 F.2d 171, 174. See American Law Institute Restatement of the Law of Judgments (1942) § 93, particularly illustrations 8 and 9, wherein it is stated:
"8. A, a woman, brings an action against B for physical injury. Judgment is given for B on the ground that B was not negligent. C, the husband of A, who did not control the action although he testified for his wife, brings an action against B for loss of services of A. He is not concluded by the judgment in the first action. (As to the effect of control, see § 84.)
"9. Same facts as in Illustration 8, except that judgment was given for A in the first action on the ground that B was negligent. In the action brought by C, the judgment in favor of A does not conclude B as to this matter."
and Section 84, especially illustration 18, wherein it is stated:
"18. Six persons are hurt by an explosion upon A's premises. One of them, B, brings suit alleging A's negligence. The other five contribute to the compensation of B's attorney, are active in supplying evidence and testify for B. They do not, however, control the proceedings. Judgment is given for A on the merits. In subsequent proceedings brought by others, the judgment is not res judicata as to A's negligence."
See also Annotation: Judgment in action growing out of accident as res judicata, as to negligence or contributory negligence, in later action growing out of same accident by or against one not a party to earlier action, 133 A.L.R. 181; Freeman on Judgments §§ 428-429 (1925); and Moore's Federal Practice § 23.11[3] (1948).
That different triers of fact might validly reach different conclusions concerning the same set of facts is clearly made possible by the doctrine of manifest error, which has been so repeatedly recognized in the jurisprudence of this state. See Kendrick v. Kendrick, 1958, 236 La. 34, 38, 106 So. 2d 707, 708; Orlando v. Polito, 1955, 228 La. 846, 849, 84 So. 2d 433, 434; Wier v. Grubb, 1955, 228 La. 254, 271, 82 So. 2d 1, 7; Olivier v. Abunza, 1954, 226 La. 456, 461, 76 So. 2d 528, 530; Barlotta v. Walker, 1953, 223 La. 157, 160, 65 So. 2d 122, 123; Plunkett v. United Electric Service, 1948, 214 La. 145, 160, 36 So. 2d 704, 709, 3 A.L.R. 2d 1437; Barnes v. Le Blanc, 1945, 207 La. 989, 991, 22 So. 2d 404, 405; Thomas v. Mobley, La.App.1960, 118 So. 2d 476, 481; Roux v. Attardo, La.App. 1957, 93 So. 2d 332, 335; Hayes v. Illinois Central Railroad, La.App.1955, 83 So. 2d 160, 162; Futrell v. Pacific Indemnity Company, La.App.1955, 79 So. 2d 903, 909. Where the facts are in dispute, as hereespecially so, as in the instant case, where the resolution of conflicting factual accounts depends upon an evaluation of the credibility of witnessesit is very appropriate to give great weight to the findings of fact reached by the trial judge or jury. As Justice Stone observed in Worcester County Trust Company v. Riley, 1937, 302 U.S. 292, 299, 58 S. Ct. 185, 188, 82 L. Ed. 268, 275, "conflicting decisions upon the same issue of fact do not necessarily connote erroneous judicial action. Differences in proof and the latitude necessarily allowed to the trier of fact in each case to weigh and draw inferences from evidence and to pass upon the credibility of witnesses, might lead an appellate court to conclude that in none is the judgment erroneous."
It must be remembered that plaintiff in this case had the burden of proof. This burden certainly could not be carried, and plaintiff did not attempt to carry it, by merely relying upon the case of Johnson v. Wilson, which she maintains established as a matter of law that Johnson was negligent. Under the law she was required to adduce evidence to establish her claim, and this she attempted to do. The jury apparently was unimpressed by the testimony given by plaintiff Reola Knighten and by *350 Wilson, the driver of the vehicle in which the plaintiff was riding. Both Reola Knighten and Mr. Wilson testified that when they were about 400 feet from the driveway to the west, Mr. Wilson signalled for a left turn by extending his arm. Mr. Wilson testified that about 100 feet from the driveway he started to pull over to the left to make a gradual left turn, and that about 65 feet from the driveway his vehicle began to enter the left traffic lane. Reola Knighten testified that Mr. Wilson started pulling over for a left turn about 300 feet from the driveway. The impact occurred about 35 feet from the driveway, a short distance to the west of the center line, and if the above testimony be accepted as true, then it is clear that defendant Johnson was negligent in not heeding the signal and in attempting to pass the Wilson truck under the circumstances. It seems clear that the jury did not accept plaintiff's version as to what happened, and this is not surprising. Plaintiff Reola Knighten's testimony was greatly shaken by vigorous and effective cross-examination. Instead of the above, the jury apparently accepted the testimony of the other three eye witnesses to the collision, that of Clarence Johnson, and the two passengers in the Johnson vehicle, J. C. Thompson and J. B. Thompson. J. C. Thompson, plaintiff's witness, testified that although he was sitting in the front and looking out of the windshield he saw no hand signal from the Wilson truck; that the Johnson vehicle had started to pull over to the left to pass the Wilson truck when the truck was still "a good little piece" ahead of the car; that the Johnson vehicle was right by the side of the Wilson truck when the truck "cut over" into the left lane; and that Johnson had blown his horn and applied his brakes. J. B. Thompson, a defense witness, testified to substantially the same facts. Defendant Johnson testified that he was going roughly about 60 miles an hour; that when he was about 25 yards behind the Wilson truck he pulled into the left lane to pass it; and that when he was about 20 yards behind the truck he blew his horn; that he saw no hand signal; that when he was about 10 yards behind the truck it first started entering the left hand lane; and that after the accident, he ran to help Mr. Wilson get out of the truck, which was lying on its right side; that he could not open the door, and had to wait for Mr. Wilson to run down the glass before the door could be opened (thus further negativing the testimony by Wilson and Reola Knighten relative to the hand signal). If the testimony by the latter three witnesses be accepted, then it is clear that the jury was correct in its conclusion that Johnson was not negligent. From a close study of the record, we are inclined to accept this version as to what happened, but whether this be correct or not, it was certainly not manifestly erroneous for the jury to reach the conclusion it did.
For the reasons assigned, the judgment of the lower court is affirmed, appellant to pay the costs of this appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3022198/ | United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 98-3411
___________
Kenyatta Williams, *
*
Appellant, *
*
v. *
*
Dora Schriro, Dir. of Dept. of Corr.; *
Michael Bowersox, Superintendent; * Appeal from the United States
Linda Wilkson, Functional Unit * District Court for the
Manager; James M. Ruman, Regional * Eastern District of Missouri.
Administrator; Steve Long, Dir., Div. *
Adult Institutions; Paul Delo, Former * [UNPUBLISHED]
Superintendent; Allen Luebbers, *
Former Asst. Superintendent; Deanna *
L. Hutchinson, Director of Nurses; *
Pedro Cayabyab, Doctor, *
*
Appellees. *
___________
Submitted: February 5, 1999
Filed: February 11, 1999
___________
Before FAGG, HANSEN, and MORRIS SHEPPARD ARNOLD, Circuit Judges.
___________
PER CURIAM.
Kenyatta Williams appeals the district court’s1 order granting summary
judgment to defendants in his 42 U.S.C. § 1983 action, in which he claimed that
defendants were deliberately indifferent to his medical needs in violation of the Eighth
Amendment, and that he was subjected to a sexual assault while being examined.
Upon a thorough review of the record and the parties’ briefs, we conclude summary
judgment was proper and reject Mr. Williams’s additional arguments on appeal.
Accordingly, the judgment is affirmed. See 8th Cir. R. 47B. We also deny Mr.
Williams’s motions on appeal for appointment of counsel and an injunction.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
1
The Honorable Terry I. Adelman, United States Magistrate Judge for the
Eastern District of Missouri, to whom the case was referred for final disposition by
consent of the parties pursuant to 28 U.S.C. § 636(c).
-2- | 01-03-2023 | 10-13-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2349816/ | 4 F. Supp. 2d 669 (1998)
Charise SORENSEN, Plaintiff,
v.
Gerald ASHMORE and Horizon/CMS Healthcare Corp. d/b/a Baptist Physical Rehabilitation Center, Defendants.
No. 1:97-CV-0730.
United States District Court, E.D. Texas, Beaumont Division.
April 13, 1998.
*670 Jill Swearinger Chatelain, Provost & Umphrey, Beaumont, TX, for Plaintiff.
L. Traywick Duffie, W. Christopher Arbery, Hunton & Williams, Atlanta, GA, Lewis B. Gardner, Houston, TX, for Defendant.
ORDER and MEMORANDUM OPINION
COBB, District Judge.
On this day came for consideration Plaintiff's Motion for Remand, filed by Charise Sorensen.
Plaintiff filed a complaint in the 172nd District Court of the State of Texas, alleging one count of sexual harassment, one count of battery, and one count of false imprisonment. Plaintiff prayed for actual damages; "damages for the extreme emotional distress"; punitive damages; "costs, including reasonable attorney's fees"; and "all other relief which the Court deems just and proper." The complaint, however, did not specify a specific dollar amount of recovery being sought. On December 31, 1997, Defendants removed the case to this court on the ground of diversity jurisdiction. Plaintiff now seeks to have the case remanded because she is not seeking more than the jurisdictional amount of $75,000. Plaintiff's counsel filed an affidavit to that effect on January 29, 1998.
"In removal practice, when a complaint does not allege a specific amount of damages, the party invoking federal jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds the jurisdiction amount." St. Paul Reinsurance Co., Ltd. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir.1998). "The district court must first determine whether it is `facially apparent' that the claims exceed the jurisdictional amount." Id. The jurisdictional facts must be judged as of the time the complaint is filed; subsequent events cannot serve to deprive the court of jurisdiction once it has attached. Id. at 1253-54. "[T]hough the plaintiff after removal, by stipulation, by affidavit, or by amendment of his pleadings, reduces the claim below the requisite amount, this does not deprive the district court of jurisdiction." St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 292, 58 S. Ct. 586, 82 L. Ed. 845 (1938).
Defendants, in opposition to remand, have asserted that the total value of the potential claim against them, i.e. the attorney's fees for trying the case, plus actual damages, damages for "extreme emotional distress," and "punitive damages in an amount deemed sufficient to prevent these Defendants from repeating this discriminatory conduct and harassment," will exceed $75,000. Plaintiff's counsel's attempt to limit the claim to less than the jurisdictional limit is ineffective to support remand. This court must judge whether it is apparent, to a legal certainty, from the face of the complaint, that plaintiff is not entitled to recover the jurisdictional amount. Id. at 289, 58 S. Ct. 586. The affidavit cannot be considered. This court agrees with Defendants that it is facially apparent from the prayer for relief in the original complaint that the amount in controversy exceeds $75,000.
IT IS ORDERED, ADJUDGED, AND DECREED, therefore, that Plaintiff's Motion for Remand is DENIED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3105513/ | The State of TexasAppellee
Fourth Court of Appeals
San Antonio, Texas
April 9, 2014
No. 04-12-00739-CR
Jose Guadalupe MARTINEZ,
Appellant
v.
The STATE of Texas,
Appellee
From the 38th Judicial District Court, Real County, Texas
Trial Court No. 2010-1132-DR
The Honorable Camile G. Dubose, Judge Presiding
ORDER
Sitting: Catherine Stone, Chief Justice
Karen Angelini, Justice
Luz Elena D. Chapa, Justice
The trial court has signed written findings of fact and conclusions of law, which have
been filed in a supplemental clerk’s record. We reinstate the appeal on the docket of this court.
We order appellant may file a supplemental brief addressing his third issue (whether the trial
court erred in denying his motion to suppress evidence of his oral and written statements) in light
of the trial court’s findings and conclusions. The supplemental brief must be filed by April 29,
2014 and may not exceed 5,000 words. The State may file a responsive brief, not to exceed
5,000 words, within twenty days after appellant’s supplemental brief is filed.
_________________________________
Luz Elena D. Chapa, Justice
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of the said
court on this 9th day of April, 2014.
___________________________________
Keith E. Hottle
Clerk of Court | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/2332415/ | 50 F. Supp. 2d 1288 (1999)
TIME WARNER ENTERTAINMENT/ADVANCE-NEWHOUSE PARTNERSHIP d/b/a Time Warner Cable, Plaintiff,
v.
WORLDWIDE ELECTRONICS, L.C. d/b/a Worldwide Electronics, Nationwide Electronics, Inc. d/b/a Nationwide Electronics, Alan Marks, Lewis Schneiderman, Susan Marks a/k/a Susan Mann, Audrey Schneiderman, John Does 1-10, Jane Does 3-10, Unidentified Corporations 1-10 and Unidentified Business Entities 1-10, Defendants.
No. 98-6118-CIV.
United States District Court, S.D. Florida.
January 26, 1999.
*1289 Ronald E. D'Anna, Mattlin & McClosky, Boca Raton, FL, Daniel J. Lefkowitz, Patrick Sullivan, Jericho, NY, for Plaintiff.
Frederick A. Cary, The Cary Law Firm, Rancho Santa Fe, CA, for Defendants.
ORDER GRANTING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT
RYSKAMP, District Judge.
THIS CAUSE came before the Court upon the plaintiff, Time Warner Entertainment/Advance Newhouse Partnership d/b/a Time Warner Cable's ("TWEAN" or "plaintiff") motion for summary judgment on its claims against some of the defendants under the Cable Communications Policy Act of 1984, as amended (47 U.S.C. § 553). The defendants Worldwide Electronics, L.C. ("Worldwide"), Nationwide Electronics, Inc. ("Nationwide"), Alan Marks ("Marks") and Lewis Schneiderman ("Schneiderman"), against whom the motion was directed, responded and TWEAN thereafter replied. The parties subsequently waived oral argument and the Court considers the motion ripe for adjudication.
As set forth below, the Court grants summary judgment to TWEAN with respect *1290 to its claims under 47 U.S.C. § 553(a)(1) against Worldwide, Nationwide, and Marks,[1] and grants recovery to TWEAN and against the defendants, jointly and severally, of its actual damages and defendants' profits pursuant to 47 U.S.C. § 553(c)(3)(A)(1), the additional sum of $50,000.00 in enhanced damages under 47 U.S.C. § 553(c)(3)(B), a permanent injunction pursuant to 47 U.S.C. § 553(c)(2)(A) against these defendants, and an award of attorneys' fees and costs in this action pursuant to 47 U.S.C. § 553(c)(2)(C). The Court will subsequently schedule a conference to address the parties' submissions with respect to determination of the precise amount of actual damages suffered by TWEAN, the defendants' profits, and the attorneys' fees and costs to be awarded.
I. BACKGROUND
The largely undisputed facts most relevant to TWEAN's claims for relief under 47 U.S.C. § 553[2] are as follows:
A. The Plaintiff and its Business
TWEAN operates cable television systems throughout the United States pursuant to franchises awarded to it by various governmental entities and has an approximate total of 7.5 million subscribers. TWEAN offers cable television programming to subscribers who request and pay for the same. See Mahoney Aff. ¶ 3. TWEAN's Albany, New York system has been primarily responsible for bringing and prosecuting this action.
TWEAN's programming is offered to its subscribers in "packages" of programming services, such as Basic and Standard, which a subscriber may select and receive at a monthly rate. Subscribers may also elect to purchase one or more "premium" programming services, such as Cinemax, Home Box Office and Showtime, for an additional monthly charge per service. Id. ¶ 4. TWEAN also offers Pay Per View programming, a service enabling subscribers to purchase individual movies, sporting events, or other entertainment for a per event fee over and above the subscriber's regular monthly subscription fee. Id. ¶ 5. Each subscriber is entitled to receive only that level of programming and services that he or she selects and purchases. Id. ¶ 6.
TWEAN encodes or "scrambles" the signals for specific programming services, and provides its subscribers who purchase such programming with converter-decoder devices. These devices decode the scrambled signals so that the programming selected and purchased by a particular subscriber can be viewed clearly on the subscriber's television set. Programming services not purchased remain *1291 scrambled and therefore cannot be viewed on the subscriber's television set. Id. ¶ 9. It is possible, however, for a dishonest individual to install an unauthorized or "pirate" decoder/converter unit or "descrambler" (one programmed to descramble all programming services) onto plaintiff's cable system in order to receive all of TWEAN's scrambled premium and Pay Per View programming services, without authorization and without making payment therefor. Id. ¶ 11.
TWEAN's system is "addressable," which means that the converter-decoder TWEAN provides to a subscriber is programmed by a central computer to authorize viewing of only those programming services purchased by that subscriber. Each subscriber who purchases services that are scrambled will have his or her decoder programmed by the TWEAN central computer to receive only those services selected and purchased. Id. ¶ 12.
B. The Defendants and their Business
Defendants Worldwide, Nationwide, Marks and Schneiderman, who conducted business at 4400 West Hillsboro Blvd., Suite # 3, Coconut Creek, Florida, were engaged in the business of selling cable television decoders or descramblers for profit. See Marks Tr. at 13, 19-23. Marks testified that he and Schneiderman were the owners of Nationwide and Worldwide. Id. at 4, 8-9.
Defendants advertised and marketed their products to the plaintiff's cable television subscribers, including but not limited to those serviced by its Albany system, via newspapers, magazines with nationwide circulation, and the Internet, and sold their converter-decoders to persons who called their "800" number and indicated that they were purchasing the devices for use on the plaintiff's cable television system. See generally Allen Aff.
C. The Plaintiff's Investigation of Defendants
In or around November of 1997, the defendants' pirate decoder sales operation came to the attention of TWEAN. Mahoney Aff. ¶ 13. TWEAN's Albany, New York division retained A.C.I. Investigations, Inc. ("ACI") to investigate the defendants and their business. Id.; Allen Aff. ¶ 3.
In brief, ACI's investigation consisted of several telephone calls to the defendants, the purchase of three pirate decoders (which the investigator specified would be used in TWEAN's Albany, New York system), and surveillance at the defendants' business location. See generally Allen Aff. During the surveillance at the defendants' place of business, ACI observed numerous daily pickups and deliveries by both Federal Express and United Parcel Service of packages which appeared to contain pirate decoding devices. The decoders purchased by TWEAN's investigators were subsequently tested and found to be capable of descrambling and permitting viewing of all of TWEAN's scrambled programming services, including premium and Pay Per View services. Mahoney Aff. ¶ 14-16.
D. The Present Action
TWEAN's Albany, New York system thereafter took the lead in bringing this action on behalf of TWEAN against the defendants for injunctive relief and monetary damages on account of their manufacture and/or sale and distribution of pirate decoders. At the outset of this action, TWEAN sought on an ex parte basis and this Court granted, a temporary restraining order (the "TRO") which, inter alia, directed the U.S. Marshal Service to seize the defendants' business records and stock of pirate decoding devices from their business location. The TRO also provided for a restraint on assets pending decision in this action, as well as a prohibition against defendants' future sales of pirate decoding devices. This relief was thereafter confirmed after a hearing in the Court's preliminary injunction dated February 26, 1998.
*1292 E. The Defendants' Position Regarding TWEAN's Summary Judgment Motion
The defendants concede that they sold non-addressable, fully descrambling cable television decoding devices for use on cable systems. Marks Tr. at 20-21. Their position, generally, is that they lacked the intent to assist in the interception of cable television programming services. This position is supported primarily by their use of disclaimers, which advised decoder purchasers that the devices were not to be used illegally. See Def.s' Reply to Pl.s' Mot. for Summ. J. at 3-4; Hr'g Tr. at 2-3; 19-20.[3]
II. LEGAL STANDARD
Federal Rule of Civil Procedure 56(c) sets forth the standard governing summary judgment. In its most basic form, summary judgment is appropriate where there is no genuine issue of material fact in dispute and the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986) ("the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.") (emphasis in original). An issue of fact is material if it might affect the outcome of the suit under the governing law. Id. at 248, 106 S. Ct. 2505. An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id.
The party seeking summary judgment bears the initial burden of demonstrating the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 26 L. Ed. 2d 142 (1970). Once the moving party has met its burden, the party opposing summary judgment may not simply rely on the pleadings or mere denials of the allegations. Rather, the opposing party must adduce some evidence showing that material facts are in issue. Anderson, 477 U.S. at 256, 106 S. Ct. 2505. "Rule 56(c) therefore requires a non-moving party to go beyond the pleadings and by [its] own affidavits or by the depositions, answers to interrogatories, and admissions on file designate specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).
The Eleventh Circuit has restated the method for allocating burdens in a summary judgment motion. Specifically, in accordance with U.S. Supreme Court precedent,
The moving party 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. Only when that burden has been met does the burden shift to the non-moving party to demonstrate that there is indeed a material issue of fact that precludes summary judgment.
Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991).
III. DISCUSSION
A. 47 U.S.C. § 553
Section 553(a)(1) of the Communications Act, enacted in 1984, provides as follows:
*1293 No person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.
Id. Put simply, Section 553(a)(1) prohibits the interception and assisting in the interception of any communications service offered over a cable system. See U.S. v. Coyle, 943 F.2d 424, 427 (4th Cir.1991) ("[It] was enacted to protect the revenue of television cable companies from unauthorized reception of their transmissions[.]"). Subsection 553(a)(2) defines the prohibition against "assisting" in this activity to include the illegal manufacture and sale of "pirate" descrambling devices:
For the purpose of this section, the term "assist in intercepting or receiving" shall include the manufacture or distribution of equipment intended by the manufacturer or distributor of equipment (as the case may be) for unauthorized reception of any communications service offered over a cable system in violation of subparagraph (1).
47 U.S.C. § 553(a)(2). Section 553, on its face, applies to the sale of cable television decoders. Indeed, as stated by the House Committee on Energy and Commerce, it is the express focus of this section:
[P]aragraph (a)(2) is primarily aimed at preventing the manufacture and distribution of so-called "black boxes" and other unauthorized converters which permit reception of cable service without paying for the service. H.R. No. 98-934, 98th Cong.2d Sess. 84 (1984), reprinted in 1984 U.S.Code Cong. & Admin. News 4655, 4721.
Cited in Storer Communications, Inc. v. Mogel, 625 F. Supp. 1194, 1198 (S.D.Fla. 1985); Continental Cablevision, Inc. v. Poll, 124 F.3d 1044, 1046, fn. 2 (9th Cir. 1997). See also TKR Cable Co. v. Cable City Corp., No. 96-2877, 1996 WL 465508 at *5 (D.N.J. July 29, 1996) (Brown, J.).
Since the time of its enactment, Section 553 has been interpreted to prohibit sales of decoder devices identical to those sold by the defendants when the seller possesses specific knowledge or intent that the device will be used for unauthorized reception of cable television programming services. See e.g., Time Warner Cable of New York City v. Freedom Electronics, Inc., 897 F.Supp. at 1459 (S.D.Fla.1995); Storer Communications, 625 F.Supp. at 1198; Poll, 124 F.3d at 1047; United States v. Norris, 88 F.3d at 466; Int'l Cablevision, Inc. v. Sykes, 997 F.2d 998, 1003-05 (2d Cir.1993) ("Sykes I"); Coyle, 943 F.2d at 427; United States v. Gardner, 860 F.2d 1391, 1398-99 (7th Cir.1988), cert. denied 490 U.S. 1023, 109 S. Ct. 1751, 104 L. Ed. 2d 187 (1989); Intermedia Partners Southeast v. QB Distributors, L.L.C., 999 F. Supp. 1274, 1281 (D.Minn.1998); Time Warner Cable of New York City v. Cable Box Wholesalers, Inc., 920 F. Supp. 1048 (D.Ariz.1996).
Liability under Section 553(a) for selling pirate decoders, requires primarily that the defendants be engaged in the "distribution of equipment intended by the ... distributor ... for unauthorized reception." 47 U.S.C. § 553(a)(2). As discussed below, the business of the defendants at issue in this action is essentially the same as that of most of the defendant pirate decoder sellers which are the subjects of the reported decisions arising under either Section 553 or Section 605, i.e., the sole purpose in defendants' selling descramblers, and in their customers' purchasing them, is to permit or enable these customers to steal cable television programming services from their cable television providers.
B. Evidence of the Defendants' Intent
Preliminarily, it should be noted that there is no dispute that the defendants *1294 sold non-addressable fully descrambling cable television decoders. See Allen Aff. ¶¶ 7, 12 & 17; Marks Tr. at 20-21. In addition, the defendants' business records recovered during the seizure do not suggest that either Nationwide or Worldwide was engaged in any other legitimate business. More specifically, there is no dispute that the defendants sold into TWEAN's Albany, New York franchise areas decoding devices which were compatible with TWEAN's scrambling technology and which, when attached to TWEAN's system, allowed a user to view all of TWEAN's scrambled premium and Pay Per View programming services. See Mahoney Aff. ¶¶ 14-16; Allen Aff. ¶¶ 7-20. In their submissions in this action, the defendants did not dispute that the devices sold by them were not addressable by cable operators and that they were capable of descrambling all of a cable operator's scrambled premium and Pay Per View programming services. Indeed, defendant Marks acknowledged that the devices had this capability. See Marks Tr. at 20-21.
Having established that the defendants sold pirate decoding devices into TWEAN's franchise area, the Court turns to the issue of intent, the only disputed matter herein regarding liability, and identifies the following indicia of the defendants' intent to assist in intercepting cable service.
1. The defendants' decoding devices are non-addressable and fully descrambling
Numerous reported decisions indicate that the best evidence of the defendants' intent is the nature of the non-addressable, fully descrambling decoding devices they sold. As the Court noted in TKR Cable:
As set forth at length herein, this Court finds that the sale of non-addressable decoders with bullet busters, with with (sic) the seller provides hookup instructions and which the seller represents can "get" all the premium and Pay Per View channels. of a cable television service provider call have only one purpose to enable the purchaser to receive and unscramble programming services offered by a cable company without notifying the cable company and without paying for the services.
Id. at *7. The Court in Subscription Television of Greater Washington v. Kaufmann, 606 F. Supp. 1540 (D.D.C.1985) made a similar observation:
There is only one purpose to be achieved by modifying a decoder device so as to eliminate its addressability function: to enable a user to receive and unscramble an STV signal without notifying the signal provider. Thus, the defendant is selling a decoder that is no longer compatible with plaintiffs' computer and may not be terminated by its computer. The defendant's "instruction" accompanying the decoder [advising the purchaser] to communicate with the signal provider is therefore worthless.
Id. at 1543 (bracketed material added). In Poll, the Ninth Circuit affirmed a lower court's finding of Section 553 liability and reaffirmed the holdings in earlier decisions that non-addressable and fully descrambling devices furnish considerable evidence of a pirate decoder seller's intent to assist in the interception of cable services:
By removing addressability from its converter-decoder devices and modifying them to descramble constant pay-perview programming, Poll effectively defeated all of Continental's security measures, thereby allowing the user to receive unlimited premium and pay-perview programming free of charge.
Id. at 1047.[4]See also General Instrument Corp. of Del. v. Nu-Tek Electronics & *1295 Mfg., Inc., 3 F. Supp. 2d 602 (E.D.Pa. 1998) (Gawthrop, J.) at *1 (finding that defendant had converted devices originally manufactured for sale to cable operators for the "unlawful purpose" of descrambling cable signals without a cable operator's knowledge or authorization).[5]
2. The defendants' decoding devices have "bullet-busting" capabilities
A handwritten document recovered during the February 9, 1998 seizure at the defendants' business location indicated that the defendants sold devices which had so-called "bullet busting" capabilities. The document, states, in pertinent part: "All boxes have built in surge protectors a.k.a. bullet (sic)." Mahoney Aff. at Ex. C. (emphasis in original). Similarly, defendants' Nationwide Electronics catalog describes one of the features of the Jerrold Compatible Super J.A. Impulse Descrambler as follows: "State-of-the-art electronics `ignores' camouflage signals sent by the cable company, so you get perfectly tuned cable stations every time." Id. at Ex. D. In his affidavit, Mr. Mahoney, who is in charge of security for TWEAN's Albany system, states that:
[M]any pirate decoder sellers market their products as being "bullet proof," and market products called "bullet busters." By these terms, pirate decoder sellers indicate to prospective customers that they sell products that will not be detected by a cable company using bullets [software-driven electronic security signals used to combat cable piracy]. Sometimes the decoders by themselves are represented to be "bullet proof." Other times, the decoder purchaser is advised of the possibility of purchasing a "bullet buster," which is a separate filter which can purportedly filter the bullets prior to their reaching the pirate decoder device.
Mahoney Aff ¶ 3. Numerous decisions discuss the effects of the use of "bullet busters," a term of art in the pirate decoder industry, and confirm that this feature allegedly protects illicit decoders from the electronic bullet software countermeasures used by numerous cable television companies to disable pirate decoders. See Poll, 124 F.3d at 1047; TKR Cable Co., 1996 WL 465508 at *2; Cable Box Wholesalers, 920 F.Supp. at 1050; Freedom Electronics, 897 F.Supp. at 1457; Coyle, 943 F.2d. at 425 (similar device, referred to as a "Cable TV Data Blocker," hinders cable companies from discovering the unauthorized use of a descrambler). Significantly, the *1296 courts in Poll and TKR Cable found that bullet busters or bullet protectors offered by pirate decoder sellers which defeat security measures of the cable companies clearly show intent to assist in the theft of cable television services. Poll, 124 F.3d at 1047; TKR Cable Co., 1996 WL 465508 at *7.
3. The defendants' money back guarantee
The defendants' money back guarantee provides further evidence of their intent. See, e.g. Allen Aff.Ex. C, D & E (30 day money back guarantee) For example, a December 30, 1997 letter, sent by electronic mail, from decoder purchaser Roland Mink to the defendants states, "As per your instructions I am returning this box for "no charge" replacement. As we discussed on the phone it would not pick up the premium channel's (sic). You instructed me to return it and you would send a Zenith box just like the one I have." Id. at Ex. E. There is a handwritten notation on the letter reading "Paragon Zen/Rem in 1/7/98," suggesting that Mr. Mink would be (or was) sent a replacement on or after January 7, 1998. Id. Similarly, the Return Sheet sent by Rodney Diehl on January 23, 1998 states, "The following stations are missing: 68 (Spanish TV), 69 (Showtime), 72 (Pay Per View), 73 (Pay Per View) and 76 (Pay Per View)." Id. A handwritten notation on this letter states "Tocom/rem in 2/2/98," suggesting that Mr. Diehl would be (or was) sent a replacement on or after February 2, 1998. Id.
The Court in TKR Cable, presented with evidence of a similar return policy, stated that "defendants' return policy provides additional evidence of their intent to enable theft of programming services." Id. at *7. See also QB Distributors, 999 F.Supp. at 1280-81.
C. The Defendants' Arguments
The defendants raise several arguments in support of the contention that there exists a genuine issue of material fact regarding whether the defendants had the requisite intent to assist in the unlawful interception of cable television programming. The Court will consider each argument in turn.
1. The defendants' use of disclaimers
The defendants included "disclaimer" provisions and statements with their decoder sales. See Allen Aff.Ex. B, C & D. The defendants rely upon the disclaimers to shield them from liability, and attempt to shift culpability to their customers. See Hr'g Tr. at 2-3. These disclaimers indicate that the purchaser represents to the defendants that he or she will not use the purchased device illegally and without authorization from his or her cable company.
However, every reported decision regarding this "disclaimer" defense to claims under either Section 553 or 605 has held that such disclaimers in no way shield descrambler sales operations from liability. See, e.g., QB Distributors, 999 F.Supp. at 1282; TKR Cable, 1996 WL 465508 at *7; Gardner, 860 F.2d at 1395; ON/TV of Chicago v. Julien, 763 F.2d 839, 844 (7th Cir.1985); Cable Box Wholesalers, 920 F.Supp. at 1053; Freedom Electronics, 897 F.Supp. at 1459; Oceanic Cablevision, Inc. v. M.D. Electronics, 771 F. Supp. 1019, 1025 (D.Neb.1991); Kaufmann, 606 F.Supp. at 1542-3.[6] Indeed, courts have found that a pirate decoder seller's use of *1297 such disclaimers reflects their awareness of the illegality of their business. See, e.g., Columbia Cable TV Co., 954 F.Supp. at 127 ("This court does not find that the disclaimer negates any intent to assist others in the unauthorized access of cable programming. In fact, the court finds that the disclaimer demonstrates knowledge of the most probable if not only use of the devices.").[7]
2. The defendants' decoders have lawful uses
The defendants assert that there are other reasons for purchasing pirate decoders aside from use in stealing cable television services. For example, their advertisements state "Why Rent?" This purported legitimate reason for purchasing a decoder is simply not credible or compelling. The descramblers sold by the defendants cost as much as $399.00. The F.C.C. regulated monthly equipment rental fee charged by TWEAN is $3.17 (these fees are assessed oil an actual cost basis). See Mahoney Aff. ¶ 4. In order to recoup his or her investment in a pirate descrambler for the purpose of avoiding such rental charges, a purchaser would need to use the pirate decoder purchased from the defendants for more than 10 years (putting aside matters of interest and the present value of money, as well as the reality that even a legitimate decoder has a useful life of approximately 7-10 years before malfunctioning or being made obsolete by evolving, incompatible technology).
The Cable Box Wholesalers Court, presented with similar arguments, rejected them as follows:
Because the two decoders sold by defendants to Time Warner's investigator cost $728.00, the rental fees charged by Time Warner for a decoder is $2.90 per month, and decoders have a useful life of 7-10 years, defendants' argument that customers purchased Cable Box decoders to avoid rental fees is unpersuasive.
Id. at 1053.[8]
Also unpersuasive are defendants' arguments that customers purchase their decoders to avoid potential liability to the cable company for lost, stolen or damaged equipment to restore such TV functions as remote volume control, picture-in-picture, or parental lockout.
Id. at 1053 fn. 7.[9]See also Poll, 124 F.3d at 1048 ("the fact that Poll's boxes had legal uses does not insulate it from civil liability *1298 where the evidence establishes that Poll knew and intended the "black boxes" to be used for the unauthorized interception of cable television programming").
3. The plaintiff's have not established that the defendants' decoders were actually used for illegal purposes
The defendants also argue that they cannot be held liable under Section 553 absent proof that purchasers other than TWEAN's investigators used the pirate decoders sold by defendants to intercept cable television services. This argument has been repeatedly rejected, as Section 553 only requires intent to assist in the unauthorized interception of communications offered over a cable system (by selling pirate decoders) and proof of actual interception by purchasers is not required. See Gardner, 860 F.2d at 1397 ("On its face, the statute does not require actual use by the distributor or purchaser"); QB Distributors, 999 F.Supp. at 1281 ("defendants cannot avoid a finding of specific knowledge and intent simply because Intermedia cannot prove particular subscribers actually used the devices illegally."). In response to a similar argument, the court in General Instrument Corp. v. Nu-Tek Electronics & Mfg., Inc., 3 F. Supp. 2d 602, stated the following:
Nu-Tek also argues that GI failed to present evidence that the cable subscribers using Nu-Tek boxes were unauthorized to receive cable services, and that, to prevail, GI must prove such unauthorized reception. But the issue is not whether service was illegally received. Proof that a cable subscriber used a non-addressable cable device without authorization is unnecessary to establish a violation of § 553(a). As to manufacturers and distributors of cable boxes, the plaintiff must only show facts sufficient to prove an intent to assist customers in unauthorized reception.
Id. at 609 (citations omitted). See also U.S. v. Beale, 681 F. Supp. 74, 75 (D.Me. 1988) ("The language of section 553, its legislative history, the limited case law interpreting section 553, and similar precursor statutes, all lead to the conclusion that proof of actual interception or reception is unnecessary, provided there has been proof of willful manufacture or distribution of equipment intended for unauthorized use in the interception or reception of a cable communications service."); Storer Communications, Inc. v. Mogel, 625 F.Supp. at 1200 ("The Court further concludes that defendants' defense that only the use of such equipment is illegal, rather than its sale or distribution, is totally without merit.").
The Court also takes note that, in response to TWEAN's summary judgment motion, the defendants failed to produce any objective evidence of the legality of their business, as opposed to their stated intent and belief.[10] This conspicuous absence of evidence to support defendants' self-serving assertions regarding the supposed *1299 legality of their business is similar to that noted by the Court in Cablevision Systems Corp. v. Muneyyirci, 876 F. Supp. 415, 419 (E.D.N.Y.1994). In Muneyyirci, the Court, in granting summary judgment under 47 U.S.C. § 605 for 390 sales of pirate decoders, expressly relied upon the failure of the defendants therein to make any showing of the legality of their business:
Most telling is the defendants' failure to challenge plaintiff by introducing any evidence suggesting that certain sales were legal not one invoice, not one purchaser, not one affidavit, not one record of any kind establishing legitimate sales to an authorized distributor, or anyone.
* * * * * *
The defendants have simply not produced any evidence of legitimate sales of decoders or combination units. Their failure to present any evidence of legitimacy, in the face of Cablevision's convincing presentation, including evidence that there is no legitimate retail market for the decoders and combination units, leads the Court to conclude that there is no genuine issue of fact with respect to the legitimacy of sales of single decoders or combination units to individuals.
Id. at 419 (emphasis in original). The defendants also did not produce evidence that they had the required FCC approval to manufacture, distribute or market converter-decoders for a cable system, furnishing additional evidence of their intent or knowledge that their devices would be used to receive unauthorized programming. See Poll, 124 F.3d at 1046, 1047.
In sum, in light of the overwhelming indicia of the defendants' intent to intercept the cable services offered by the plaintiff, including the defendants' acknowledgment that they (I) knew the decoders they sold would descramble TWEAN's scrambled programming services, (ii) sold devices to customers who stated their intention to use such devices on TWEAN's system[11] and advised such customers about circumventing TWEAN's and other cable operators' anti-piracy bullets, (iii) sold devices with "bullet busting" capabilities; and (iv) had a policy of replacing devices which were unable to fully descramble a cable company's signals, the conclusion that defendants' pirate decoder sales were intended by both defendants and their customers to be used for unauthorized interception of cable services is inescapable, Accordingly, there are no genuine issues of material fact with respect to the defendants' liability to TWEAN under 47 U.S.C. § 553, and summary judgment in favor of the plaintiff will be granted.
IV. RELIEF TO BE GRANTED TO PLAINTIFF
A. Recovery of Actual Damages and All of Defendants' Profits from their Pirate Decoder Sales Business
TWEAN asks the Court to award it the actual damages its suffered as a result of the defendants' cable piracy business, together with all of the defendants' profits, pursuant to 47 U.S.C. § 553(c)(3)(A)(i), which provides:
the party aggrieved may recover the actual damages suffered by him as a result of the violation and any profits of the violator that are attributable to the *1300 violation which are not taken into account in computing the actual damages; in determining the violator's profits, the party aggrieved shall be required to prove only the violator's gross revenue, and the violator shall be required to prove his deductible expenses and the elements of profit not attributable to factors other than the violation.[12]
The legislative history of Section 553, the import of which was not disputed by the defendants, confirms that the actual damages and profits provision was meant to provide an incentive to an aggrieved cable operator who commenced a civil action against a person or entity involved in cable piracy:
Under subparagraph (3)(A) the court is granted authority to award damages based on either of two methods of computation. The aggrieved party, pursuant to (3)(A)(i), may recover actual damages and all profits of the violator attributable to the violation, including those profits attributable to the violation where it also occurred outside of the local area of the individual cable system, that are not taken into account in calculating actual damages. In determining the violator's profits, the party aggrieved shall have the burden of establishing the violator's gross revenues by the best means available, while the violator shall have the burden of any expenses he incurred which are normally deductible in determining profit, as well as any profit or revenues which are attributable to factors other than the violation.
H.R. No. 98-934, 98th Cong.2d Sess. 85 (1984), reprinted in 1984 U.S.Code Cong. & Admin. News 4655, 4722 (emphasis added). In an unreported decision in Time Warner Cable of New York City v. Cable Box Wholesalers, No. 95-703-TUC-JMR (D.Ariz. Dec.7, 1995), the Court stated the following:
[P]laintiff may recover defendants' profits attributable to violations of § 553, including violations not involving plaintiff's areas of cable service. 47 U.S.C. § 553(c)(3)(A)(i); H.R.Rep. No. 934, 98th Cong., 2d Sess. 85 (1984), reprinted in 1984 U.S.C.C.A.N. 4655, 4722.
Clearly, Congress intended that a cable pirate's profits were to serve as an incentive to an aggrieved cable operator who acted in the interests of all cable operators by civil prosecution of such decoder seller.
In its motion, TWEAN indicated that it presently seeks only (I) this Court's determination of defendants' liability under 47 U.S.C. § 553 for their pirate decoder sales, and (ii) the Court's award to it of its actual damages and defendant' profits pursuant to Section 553(c)(3)(A)(i), in an amount to be determined subsequently. This Court determines that TWEAN shall be entitled to recover from the defendants, jointly and severally,[13] the actual damages reasonably incurred as a result of the 39 *1301 identified sales into its Albany, New York system and all of defendants' profits from their pirate decoder sales business which TWEAN can prove.
B. Enhanced Damages
In addition to its request for actual damages and all of defendants' profits in an amount to be subsequently determined, TWEAN presently requests an award of $50,000 in enhanced damages under Section 553. Section 553(c)(3)(B), which states that "the court in its discretion may increase the award of damages, whether actual or statutory under subparagraph (A), by an amount of not more than $50,000,." clearly contemplates that such enhanced damages be awarded regardless of whether an aggrieved cable operator seeks statutory or actual damages. This enhanced damages award can be assessed in the Court's discretion against a defendant, such as the defendants herein, who committed violations of Section 553 willfully and for purposes of commercial advantage or private financial gain. Freedom Electronics, 897 F.Supp. at 1460; Poll, 124 F.3d at 1049. As the Supreme Court noted in Trans World Airlines v. Thurston, 469 U.S. 111, 127, 105 S. Ct. 613, 83 L. Ed. 2d 523 (1985), the standard for will-fulness in a civil case is lower, requiring proof only of "a disregard for the governing statute and an indifference to its requirements." The standard of willfulness set forth in Thurston has been adopted in this Circuit in actions under the Communications Act. See Cable/Home Communication Corp. v. Network Productions, Inc., 902 F.2d 829, 851 (11th Cir.1990).
In this case, the evidence, including the defendants' deposition testimony, demonstrates that they conducted their pirate decoder sales business willfully and with full knowledge of the damages caused to cable operators such as TWEAN as a result thereof. As a result of the action previously brought against them by Staten Island Cable, the defendants herein were fully aware of the existence of the specific federal statutes which forbade their conduct, and they were well acquainted with the precise nature of the harm, including monetary damages, which their pirate decoders caused to cable systems such as those operated by TWEAN. Indeed, they intended that such harm, in the form of lost revenues, take place and their business depended upon their customers being able to access TWEAN's premium and Pay Per View services without payment to it.
In General Instrument Corp. v. Nu-Tek Electronics & Mfg., Inc., No. 93-3854, 1997 WL 325804 (E.D.Pa. June 4, 1997) *1302 (Gawthrop, J.), the Court awarded the full measure of discretionary damages under similar circumstances and stated the following:
As for the punitive damages here, anything less than $50,000 would be uncalled for. The defendant, speaking through its president and CEO, Mr. David J. Abboud, made huge sums of money, well knowing that it was and he was repeatedly and brazenly flouting the law in so doing. Mr. Abboud's testimony at trial, in which he sanctimoniously sought to profess ignorance of that reality, was an exercise in rank perjury. At $50,000, he gets off cheap.
Id. at * 3.
In assessing the full measure of enhanced damages against the defendants herein under Section 553(c)(3)(B), the Court has considered the legislative intent embodied by this provision that commercial enterprises conducted, as here, for private financial gain should be assessed substantial liability, if not punitive-type damages. Based on the concerted effort of the defendants directed against the plaintiff and other cable operators, the maximum assessment of $50,000.00 in enhanced damages against each of the defendants, jointly and severally, is appropriate.
C. Award of Plaintiff's Attorneys' Fees and Investigative Costs
Under Section 553(c)(2)(C), a court may award recovery of full costs, including reasonable attorneys' fees, to a prevailing aggrieved party. See Poll, 124 F.3d at 1046 (noting district court's award of attorneys' fees); Sykes I, 997 F.2d at 1009; Nu-Tek, 1997 WL 325804 at *3; American Cablevision of Queens v. McGinn, 817 F. Supp. 317, 320 (E.D.N.Y.1993). See also Time Warner Cable of New York City v. U.S. Cable T.V., Inc., 920 F. Supp. 321, 329 (E.D.N.Y.1996); Muneyyirci, 876 F.Supp. at 422. Full costs may include, recovery of investigative costs. See, e.g., In re Cohen, 121 B.R. 267, 269 (Bankr.E.D.N.Y.1990) (noting district court award of investigative fees pursuant to Section 553 as part of overall damage assessment against similar pirate decoder distributor). In light of the clear need to put an end to the defendants' illegal conduct, the Court awards the plaintiff recovery of its reasonable attorneys' fees and investigative costs in an amount to be determined after submission of documentation of fees and expenses.
D. Permanent Injunctive Relief
Section 553 authorizes a court to "grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain violations ...." Section 553(c)(2)(A). When express authority for issuance of "statutory" injunctions is provided by legislative enactment, an injunction may issue without resort to the traditional "equitable" prerequisites of such relief. See TKR Cable Co., 1996 WL 465508 at *10; Freedom Electronics, 897 F.Supp. at 1460 (citing Burlington N.R.R. Co. v. Dep't of Revenue, 934 F.2d 1064, 1074-75 (9th Cir.1991)); Duke v. Uniroyal, Inc., 777 F. Supp. 428, 432-33 (E.D.N.C. 1991) (court found that it could issue an injunction without evaluating traditional factors); Securities Industry Ass'n v. Board of Governors of Federal Reserve System, 628 F. Supp. 1438 (D.D.C.1986).[14]
In this case, the entry of a permanent injunction pursuant to Section 553 is *1303 more than justified. The defendants' entire business was based upon undermining the industry's integrity while providing tools for dishonest persons to steal cable operators' products. Moreover, there is a clear risk that defendants will continue such criminal conduct in the future. The defendants' recidivist conduct and denial of any wrongdoing in the face of overwhelming proof amply demonstrates that they are likely to commence such an illegal operation again. Accordingly, the defendants will be enjoined from entering this illegal market in any capacity in the future. See e.g., Columbia Cable TV, 954 F.Supp. at 128 (permanent injunction issued under § 553); Poll, 124 F.3d at 1046 (referencing district court's entry of permanent injunction under § 553). Any lesser measure would require each of the thousands of cable operators in the United States to commence separate actions against the defendants in order to protect their respective interests, a wholly unnecessary result given the manifestly illegal nature of their business and the injunctive power provided for by Section 553.
V. CONCLUSION
The Court has considered the parties' submissions with respect to the Motion and the pertinent portions of the record and being otherwise fully advised in the premises, it is
ORDERED AND ADJUDGED that the plaintiff's motion for summary judgment [DE 57] be, and the same hereby is GRANTED, and the Court
(i) finds that the defendants are liable to plaintiff for the 39 violations of 47 U.S.C. § 553 identified in the motion;
(ii) finds additionally that the defendants' violations were committed willfully and for purposes of the defendants' commercial advantage or private financial gain;
(iii) awards to the plaintiff pursuant to 47 U.S.C. § 553(c)(2)(C) the actual damages reasonably shown to result to it from the defendants' 39 violations of Section 553, and all of defendants' profits from their pirate decoder sales operation, with the amount of such damages and profits award to be determined after plaintiff's submissions in support of the specific amounts requested, and with judgment for such amount to be a final judgment pursuant to Fed.R.Civ.P. 54(b);
(iv) awards to plaintiff $50,000 in enhanced damages pursuant to 47 U.S.C. § 553(c)(3)(B), with judgment for such amount to be a final judgment pursuant to Fed.R.Civ.P. 54(b);
(v) pursuant to 47 U.S.C. § 553(c)(2)(A), modifies the preliminary injunction and merges it into this Order, and enjoins the defendants from further possession, use, manufacture, modification, sale or distribution of pirate cable television decoding devices, as that term is defined in the preliminary injunction; and
(vi) pursuant to 47 U.S.C. § 553(c)(2)(C), awards to TWEAN its costs, including reasonable attorneys' fees *1304 and investigative costs, incurred in asserting its claims against the defendants, with the amount of such award to be determined after the plaintiff's submissions in support of the specific amounts requested, and with judgment for such amount to be a final judgment pursuant to Fed.R.Civ.P. 54(b).
DONE AND ORDERED.
NOTES
[1] In a "Suggestion of Death" served on September 30, 1998, it was represented to the Court that Schneiderman died on August 19, 1998. TWEAN has declined to substitute a party pursuant to Fed.R.Civ.P. 25. Consequently, the claims against Schneiderman are extinguished.
[2] In its complaint, TWEAN asserted claims under 47 U.S.C. §§ 553 and 605 with respect to the defendants' pirate decoder sales business. Although there is a split of authority regarding the applicability of Section 605 to cable piracy, compare International Cablevision, Inc. v. Sykes, 75 F.3d 123 (2d Cir.1996), cert. denied, 519 U.S. 929, 117 S. Ct. 298, 136 L. Ed. 2d 217 (1996) ("Sykes II") and United States v. Norris, 88 F.3d 462 (7th Cir.1996), the two reported decisions on this issue in federal courts in Florida, Time Warner Cable of New York City v. Freedom Electronics, Inc., 897 F. Supp. 1454 (S.D.Fla.1995) and American Television and Communications Corp. v. Floken, Ltd., 629 F. Supp. 1462 (M.D.Fla. 1986), have held that Section 605 is applicable to theft of cable services. In this action, TWEAN, stating its intention to avoid protracted litigation of this issue herein, in light of the dearth of defendants' purported identified assets, consented to the dismissal of its Section 605 claim. However, as the cases decided under the two similar statutes involve identical issues such as intent, this decision cites and discusses case law under both statutes.
[3] The only other "proof" offered to support their opposition to TWEAN's summary judgment motion are their self-serving statements that they did not believe that their pirate decoder sales were illegal. See e.g., Id. at 3 ("Also, a review of the complete deposition of Alan Marks ... shows that the defendant did not once indicate that he felt he was violating any laws in selling converters"). See also Marks Decl. ¶ 7-11.
[4] Defendants' provision of instructions explaining how to install the device and access premium and pay per view services, Allen Aff. ¶ 9d, 14d & 19d, & Ex. "B," "C," & "D," is additional evidence of their intent that their devices would facilitate the theft of services. See Storer Communications, 625 F.Supp. at 1200 (noting defendant's provision of installation instructions is conduct which assists in receiving or intercepting cable transmissions); Sykes I, 997 F.2d at 1003-4 (same); Columbia Cable TV Co., Inc. v. McCary, 954 F. Supp. 124, 128 (D.S.C.1996) ("The instructions distributed by defendant further demonstrate that he sold his devices with the intent of assisting others in receiving cable television services without authorization"); TKR Cable Co., 1996 WL 465508 at *7 (defendants' provision of "hookup instructions" along with device formed part of basis for finding of intent).
[5] In defendants' Local Rule 7.5 statement, Marks asserted that to his knowledge, there was no such thing as a pirate decoder. Id. ¶ 14(a). However, his extended tenure in the decoder marketplace and the numerous reported decisions (including one from this Court) using this term completely undermine the credibility of his claim. See Freedom Electronics, 897 F.Supp. at 1457 ("There is a nationwide, `black market' industry of various manufacturers, vendors and distributors of "pirate" converter-decoders or descramblers, who market devices and equipment to subscribers of plaintiff's cable television programming services seeking to avoid the payment of subscription fees to view premium and Pay Per View programming services"); Poll, 124 F.3d at 1046 (same). See also Sykes II, 75 F.3d at 126 (use of terms "pirate decoder"); Kaufmann, 606 F.Supp. at 1545 (use of term "pirate decoder"); TKR Cable Co., 1996 WL 465508 at *2 (discussion of pirate decoder).
[6] In Cable Box Wholesalers, the Court noted the following regarding the defendants' disclaimer defense:
Defendants' catalog included a disclaimer warning the purchaser that it is unlawful to intercept cable signals. The disclaimer informs the customer that the local cable company should be contacted for authorization prior to installing the decoder. At the preliminary injunction hearing, Time Warner's Director of Signal Security testified that in the 5½ years he had been involved in cable security, he has never received a call from a customer informing Time Warner that a customer purchased a decoder and wanted authorization for its use.
Id. at 1050. Similarly, in Kaufmann, 606 F.Supp. at 1543, the plaintiff cable company therein noted that no pirate decoder purchasers had ever contacted it as directed by the defendant's disclaimers ("The defendant Kaufmann has asserted that he was selling from 30 to 40 decoders per week in the Washington metropolitan area. To date, the plaintiffs have never been contacted by any of these purchasers to arrange for payment of the monthly fee."). Moreover, in Kaufmann, the Court noted that, as a non-addressable decoder was not detectable on a cable system, the defendant's "instruction" accompanying the decoder [advising the purchaser] to communicate with the signal provider was "therefore worthless." Id.
[7] See also United States v. Gardner, 860 F.2d 1391, 1396 (7th Cir.1988) ("Whatever the attempted legal effect of the defendant's disclaimer, the ultimate trier of fact could easily find that it was a transparent attempt to deny the patent illegality of the defendant's acts ..." (citing ON/TV of Chicago v. Julien, 763 F.2d 839, 844 (7th Cir.1985)) (emphasis added)).
[8] See also QB Distributors, 999 F.Supp. at 1281-82 (citing Cable Box Wholesalers discussion with approval).
[9] The defendants also make the arguments rejected in Cable Box Wholesalers. See Marks Decl. at ¶ 14 f. ("I disagree with paragraphs 23-25 [of TWEAN's Local Rule 7.5 statement] in that it misstates the reasoning under which most people purchase their own converters; that is, better reception, more features, better remote controls, better integration with home theater systems.")
[10] The defendants argue that a cable company can prevent theft of its services by placing a trap on a pirate decoder purchaser's line to prevent pay per view signals from being received. See Marks Decl. at 12. Aside from the fact that pirate decoder purchasers do not tell their cable providers about their use of the device, the argument that cable operators must use other means of protecting their signals in addition to the millions of dollars invested in their scrambling technology was expressly rejected in TKR Cable Co.:
Defendants also argue that the plaintiff has other means of protecting the services offered by it from theft besides scrambling those programming services for which a subscriber has not paid. However this Court rejects defendants' very cynical position that plaintiff cannot rely upon one reasonably effective method of protecting the services offered by it, and must instead use every available means, no matter how expensive, impractical or redundant, to secure its signals, in order to have standing to recover for theft of its services. Id., 1996 WL 465508 at *8.
[11] TWEAN clearly is an "aggrieved person" within the meaning of Section 553(c)(1). It is a cable operator whose communications are being intercepted and is suffering the loss of cable customers, income and theft of services. Freedom Electronics, 897 F.Supp. at 1459; Storer Communications, 625 F.Supp. at 1199; TKR Cable Co., 1996 WL 465508 at *10-*11. TWEAN's subscribers were among those targeted by the defendants, who advertised in publications with nationwide circulation, local publications, including some in upstate New York in the vicinity of TWEAN's Albany, New York franchise area which has spearheaded this action, and on the Internet.
[12] See also analogous § 605(e)(3)(C)(I)(I).
[13] TWEAN pleaded, and this Court finds, that the respondent defendants were engaged in a scheme to manufacture, modify and sell pirate decoders). Second Amended Complaint ¶ 19, which is sufficient to impose joint and several liability on each of them. In Sackman v. Liggett Group, Inc., 965 F. Supp. 391, 394 (E.D.N.Y.1997), the Eastern District of New York noted that civil conspiracy is not an independent tort or basis for liability, but merely provides for the extension of liability to one that participates in tortious conduct, supervises it, or profits from it, and stated, "A claim for civil conspiracy is merely the string whereby the plaintiff seeks to tie together those who, acting in concert, may be held responsible in damages for any overt act or acts. Accordingly, allegations of conspiracy are only appropriate for the purpose of establishing joint liability by co-participants in a particular tortious conduct." Id. at 395 (citations omitted). The extension of liability to all culpable persons under a civil conspiracy theory is well-established. See e.g. Kashi v. Gratsos, 790 F.2d 1050, 1054-55 (2d Cir. 1986); Innovative Networks, Inc. v. Satellite Airlines Ticketing Centers, Inc., 871 F. Supp. 709, 731 (S.D.N.Y.1995) (civil conspiracy allegations "merely serve the proper purpose of allowing the acts of each of the defendants to be attributed to the others").
Similarly, the defendants can be held jointly and severally liable under an aiding and abetting liability theory. See Electronic Laboratory Supply Co., Inc. v. Cullen, 977 F.2d 798 (3d Cir.1992) (aiding and abetting liability should attach in civil actions if (as in the present case), they are based on federal criminal statutes); K & S Partnership v. Continental Bank, N.A., 952 F.2d 971, 980 (8th Cir.1991) (analogizing civil conspiracy, which is not a separate cause of action but extends the scope of liability once an underlying tort claim has been established, to aiding and abetting liability). See also Hafner v. Brown, 983 F.2d 570, 576, fn. 6 (4th Cir.1992).
Finally, the evidence clearly demonstrates that defendant Marks personally participated in Nationwide's and Worldwide's illegal business. See, e.g., Allen Aff. ¶ 7 (investigator spoke to "Allan," who sold decoders to him on two separate occasions); Mahoney Aff.Ex. F. ("Al" responds to "Tim's" Internet inquiry by providing "legal opinion" that the sale and use of pirate decoders is legal). Accordingly, Marks may be held individually liable without recourse to piercing the corporate veil. See, e.g., New Jersey Dept. of Environmental Protection v. Gloucester Environmental Mgt. Servs., Inc., 800 F. Supp. 1210, 1219 n. 9 (D.N.J. 1992) ("Generally corporate shareholders or officers may be held personally liable for the corporation's violations of the law where the officer has participated in the wrongful acts of the corporation ...").
[14] Apart from the proven violations of Section 553 committed by defendants, the injunction sought is clearly in the public interest, as defendants' conduct is unquestionably criminal in nature, and the public's interest in preventing such conduct is evident. See Securities Indus. Ass'n, 628 F.Supp. at 1443 (in cases where injunctive relief is sought to prevent continuing violations of federal statutes, "the equities to be balanced are not simply those of the private litigants, but also the interests of the public as defined by Congress"). See also Cox Cable Cleveland Area v. King, 582 F. Supp. 376, 381 (N.D.Ohio 1983) ("Congress and the Courts have recognized and protected Cox's interest in cable television communications").
Numerous other courts have also noted that the entry of an injunction against defendants' continued sale and distribution of unauthorized cable television decoding devices does not harm and, in fact, will promote the public interest. TKR Cable Co., 1996 WL 465508 at * 11 (noting that cable piracy undermines intellectual property rights of creators and owners of stolen programming); Freedom Electronics, 897 F.Supp. at 1460 (noting that cable piracy may result in FCC-prohibited "signal leakage" and creates an unfair subsidy to "freeloaders"). See also Storer Communications, 625 F.Supp. at 1203 (noting loss of franchise fees to municipalities from cable piracy); Kaufmann, 606 F.Supp. at 1546; Cox Cable, 582 F.Supp. at 381 (noting that lost cash flow to cable operators adversely affects their ability to purchase and maintain a higher quality of programming services for their subscribers). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1114700/ | 651 So. 2d 395 (1995)
SENTILLES OPTICAL SERVICES, a DIVISION OF SENASCO, INC., Plaintiff-Appellant,
v.
Ronald Cole PHILLIPS, et al., Defendants-Appellees.
No. 26594-CA.
Court of Appeal of Louisiana, Second Circuit.
March 1, 1995.
*397 Theus, Grisham, Davis & Leigh by Robert J. Bozeman, Monroe, for appellant.
Hudson, Potts & Bernstein by Stephen A. North, and William T. McNew, Monroe, for appellees.
Before MARVIN, C.J., LINDSAY, J., and PRICE, J. Pro Tem.
MARVIN, Chief Judge.
In this action to enforce a covenant not to compete in an employment contract, Sentilles Optical Services, a North Carolina employer, appeals a partial summary judgment in favor of its former employee, John Adams, and other defendants who later hired Adams. The threshold issue is the law to be applied, North Carolina, as the contract provided, or Louisiana, where the action was brought and where Adams and the other defendants reside.
Making the analysis required by LCC Arts. 3537 and 3515, we find the non-competition provision unenforceable under either law and affirm the judgment.
FACTS
The employment contract, signed in North Carolina while Adams resided and worked there, contains this provision:
[Paragraph 7] NON-COMPETITION BY EMPLOYEE:
Commencing with the terms of this agreement and ending two years after termination hereof, Employee shall not, directly or indirectly, either as an agent, principal, partner, stockholder or in any other representative capacity, engage or participate in any business that is in competition in any manner whatsoever with the business of Company.
Adams left his job with Sentilles September 1, 1992, giving no written notice. Sentilles later learned Adams had moved to Monroe where he began working for defendant Ronald Cole Phillips in the optical business. Sentilles brought suit to enforce the contract, including the non-competition clause, against Adams and also alleged contract interference by Phillips and the companies he owns. Adams, Phillips, and the other defendants moved for partial summary judgment on the validity and enforceability of the non-competition clause, claiming that Louisiana law should be applied to find the clause unenforceable. The trial court granted the partial summary judgment without giving reasons.
DISCUSSION
Summary judgment shall be granted to the moving party if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact, and that mover is entitled to judgment as a matter of law. CCP Art. 966 B.
Sentilles alleged that Adams worked for Sentilles in research and development of new ideas and concepts, and was privy to information about customers and prices. One new concept involved a special type of lamp or light bulb. Adams and another Sentilles employee worked together on research to provide specifications so a manufacturer could produce a prototype of the lamp and then manufacture the lamp exclusively for Sentilles to sell.
Adams left the Sentilles offices September 1, 1992, and telephoned to say he would not be returning to work. In October Sentilles learned that Adams had moved to Monroe and was working for another optical business.
In November, Sentilles learned that Adams was soliciting the business of Sentilles' clients. Sentilles discovered in December that Adams had contacted the bulb manufacturer in an attempt to buy the bulb. Sentilles suggests that Adams used the information gained in his employment to get another manufacturer to produce the same type of bulb.
Sentilles also asserts that Adams continued to solicit Sentilles' customers in places like Silver Springs, Maryland; Greensboro, North Carolina; Del Ran, New Jersey; and Memphis, Tennessee. These allegations, if true, make it clear that Adams is not in Louisiana passively engaging in the same type of trade as Sentilles, but is competing *398 for Sentilles' customers in the states mentioned.
CHOICE OF LAW
Sentilles argues that this court should apply North Carolina law, which would require enforcement of the non-competition agreement. By filing suit here, Sentilles has subjected itself to Louisiana law, including the laws that apply to choice of law questions.
Under Louisiana law it is acceptable for contracting parties to make a choice of state law which will govern the agreement between them. That choice will be given effect, except to the extent that law contravenes the public policy of the state whose law would otherwise be applicable under Article 3537. LCC Art. 3540.
Enforcement of a conventional obligation is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to that issue. LCC Art. 3537. Article 3537 lists factors for determining the state whose law should be applied, incorporating the factors also listed in the more general LCC Art. 3515. The two articles are intended to be read together. See LCC Art. 3537, Comment (c). The objective of the articles is to "identify the state whose policies would most seriously be impaired if its laws were not applied to [the] issue [to be resolved]." LCC Arts. 3515 and 3537. This objective is achieved through an issue-specific analysis of the policies of each of the two states, the first step in which process is to identify the relevant policies of the laws in two states.
North Carolina Policies Implicated in this Conflict
The single and very narrow issue initially before us questions only the validity of the covenant not to compete. North Carolina disfavors such covenants not to compete. "Every contract ... in restraint of trade ... in the State of North Carolina is hereby declared illegal." General Statutes of North Carolina, § 75-1.
Although disfavored, a covenant not to compete in an employment contract is enforceable in North Carolina in equity if it is (1) in writing, (2) entered into at the time of and as a part of the employment contract, (3) based on valuable considerations, (4) reasonable both as to time and territory, (5) fair to the parties, and (6) not against public policy. Orkin Exterminating Co. of Raleigh v. Griffin, 258 N.C. 179, 128 S.E.2d 139 (1962); Safety Equipment Sales & Service, Inc. v. Williams, 22 N.C.App. 410, 206 S.E.2d 745 (1974).
An individual's voluntary contractual restraint on his right to carry on his trade or calling is prima facie illegal and must be shown to be reasonable by the party seeking to enforce it. Rose v. Vulcan Materials Co., 282 N.C. 643, 194 S.E.2d 521 (1973).
The restraint is unreasonable and void if it is greater than is required for the protection of the promisee or if it imposes an undue hardship upon the person who is restricted. Owing to the possibility that a person may be deprived of his livelihood, the North Carolina courts are less disposed to uphold restraints in contracts of employment than to uphold them in contracts of sale. Masterclean of North Carolina, Inc. v. Guy, 82 N.C.App. 45, 345 S.E.2d 692 (1986), citing Wilmar, Inc. v. Liles, 13 N.C.App. 71, 185 S.E.2d 278 (1971), cert. denied.
A covenant not to compete which does not meet the six essential elements is invalid as a matter of law. See Hartman v. W.H. Odell and Associates, Inc., 117 N.C.App. 307, 450 S.E.2d 912 (unreasonable in time and territory); Masterclean of North Carolina, supra (unreasonable as to territory); Nalle Clinic Co. v. Parker, 101 N.C.App. 341, 399 S.E.2d 363 (1991), review denied, and Iredell Digestive Disease Clinic v. Petrozza, 92 N.C.App. 21, 373 S.E.2d 449 (1988), aff'd, 324 N.C. 327, 377 S.E.2d 750 (1989) (contrary to public policy).
Thus the concept seems firmly rooted in North Carolina jurisprudence that a covenant not to compete contained in an employment contract is contrary to the law against restraint of trade if the covenant is found unreasonable as to territory. We thus conclude North Carolina courts will not enforce *399 such a covenant unless it satisfies that criterion.
Louisiana Policies Implicated in this Conflict
Although based on the common law, the North Carolina policy concerning these covenants is similar to Louisiana's policy expressed in the civil code and statutes. A covenant not to compete contained in an employment agreement is disfavored in Louisiana because it may function to deprive a person of his livelihood. Such a covenant will be enforced here only if it meets narrowly drawn criteria. Otherwise the covenant will be held invalid as a matter of law.
Our statute provides that "[e]very contract or agreement, or provision thereof, by which anyone is restrained from exercising a lawful profession, trade, or business of any kind, except as provided in this Section, shall be null and void." LRS 23:921 A. The clear import of this language is that only those restraints which fit within the narrowly tailored exceptions will be enforced.
In Louisiana an employee and his employer may agree that the employee will refrain from engaging in a business similar to that of the employer but such an agreement must be limited in duration (not to exceed two years after employment ends) and location. The covenant will not be enforceable unless it specifies the parish or parishes, or the municipality or municipalities, in which the employee may not compete, and in which the employer must be conducting a "like" business. LRS 23:921 C.
Comparison of North Carolina and Louisiana Policies
In comparing the North Carolina policy with Louisiana policy, we find that the North Carolina policy is, in a broad sense, stricter. A covenant not to compete which meets our requirements of geographic and temporal limits may still be unenforceable under North Carolina law because it fails to satisfy one or more of the other five North Carolina requirements. Those requirements are based upon the common law concepts embodied in the statute of frauds, and the doctrines of mutuality, consideration, and unconscionability. The North Carolina analysis is based on reasonableness, while our codal approach requires mechanical adherence to the requirements listed in the law (especially the geographical and time limitations).
A covenant which violates our statute because it restrains the employee for more than two years, may perhaps be reasonable in North Carolina. Our law would also hold unenforceable a covenant which prohibited the employee from competing with the employer in a municipality or parish (or county) where the employer did not "carr[y] on a like business." The North Carolina analysis would focus on reasonableness, requiring the employer to show where its customers are located and that the geographic scope of the covenant is necessary to maintain those customer relationships. Hartman, supra.
However, the law in each state obviously is based on and facilitates application of the same concept, protection of the significant interests of each party. To be enforceable, a covenant not to compete must protect some substantial interest of the employer. Wilmar, Inc. v. Liles, supra. The restraint is unreasonable and void if it is greater than is required for the protection of the promisee or if it imposes an undue hardship upon the person who is restricted. Masterclean of North Carolina, supra. Although contracts restraining employment are not viewed favorably in modern law, the North Carolina courts continue to consider it as much a matter of public concern to see that valid engagements are observed as it is to frustrate oppressive ones. Safety Equipment, supra, at 414-415, 206 S.E.2d at 748-749.
APPLICATION OF LAWS
In assessing the enforceability of the non-competition clause before us, we note that it is in writing, it is a part of and entered into at the time of the employment contract, and it recites consideration. However, it is the absence of the geographic limitation which proves fatal. The time limit of two years is valid under Louisiana law, and would probably be found reasonable, and therefore valid, under North Carolina law.
*400 In Louisiana, the absence of the geographic limitation in the challenged clause renders the clause invalid. We also conclude the clause is unenforceable in North Carolina because it contains no geographic limitation.
If the territory is too broad, "the entire covenant fails since equity will neither enforce nor reform an overreaching and unreasonable covenant." Hartman, supra, quoting Beasley v. Banks, 90 N.C.App. 458, 460, 368 S.E.2d 885, 886 (1988).
Notwithstanding that the pleadings refer to Sentilles customers in Maryland, New Jersey, Tennessee, and North Carolina, the covenant in question contains no territorial limitation as required in North Carolina. Louisiana has an obvious interest in protecting its citizens, employers and employees, against territorially unlimited covenants not to compete, essentially because of the same policies we discern that apply in North Carolina. While we consider the covenant unenforceable under either law, we shall mechanically apply the Louisiana statutory requirement and affirm the judgment holding the covenant unenforceable.
DECREE
At appellant's cost, the judgment is AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1656060/ | 443 S.W.2d 253 (1969)
CITY OF BEAUMONT et al., Petitioners,
v.
A. B. MARKS, Respondent.
No. B-931.
Supreme Court of Texas.
February 5, 1969.
Rehearing Denied April 30, 1969.
*254 Anthony G. Brocato, Orgain, Bell & Tucker, John G. Tucker, Beaumont, for petitioners.
Weller, Wheelus & Green, Edward H. Green, Beaumont, for respondent.
SMITH, Justice.
The respondent, A. B. Marks, brought this suit in the District Court of Jefferson County, Texas, against the City of Beaumont, Texas, Southern Pacific Company, Missouri Pacific Lines and Kansas City Southern Railway Company, seeking compensation under Article I, § 17, of the Constitution of Texas, Vernon's Ann.St.,[1] for diminution in value to his leasehold interest in real estate. The landowner and a sub-lessee were not made parties. The respondent alleged that such diminution was due to impairment of reasonable access resulting from construction of a railroad grade separation project, which was begun December 31, 1963, and completed in the latter part of June, 1965. Trial was to a jury, which found the value of plaintiff's leasehold before and after construction. These findings resulted in a finding of damages in favor of the respondent against the petitioners for $46,000.00, the difference between such values. The trial court entered judgment accordingly. The Court of Civil Appeals affirmed. 427 S.W.2d 111.
For convenience, the petitioners, the Southern Pacific Company, Missouri Pacific Lines and the Kansas City Southern Railway Company, shall hereafter be referred to as the Railroads, and the petitioner, the City of Beaumont, shall be designated as the City. The respondent, A.B. Marks, shall be referred to as the Plaintiff. The Railroads and the City have filed separate applications for writ of error. Both applications present the primary question of whether or not the Plaintiff's access rights have been impaired to such an extent as to constitute damage to his property for public use under Article I, § 17, of the Texas Constitution. We have concluded that the courts below have correctly held that Plaintiff's access rights have been impaired to an extent which constitutes a damage to his property for public use under the Constitution; but for reasons hereinafter discussed, we find that errors were committed which require that the judgments below be reversed and the cause be remanded to the trial court for a new trial.
*255 The construction of a railroad grade separation project by the Railroads under an agreement with the City set in motion the resulting deprivation of a reasonable access to Plaintiff's property. The term of Plaintiff's leasehold estate, including building and improvements does not expire until April 22, 2021 A.D. The leased property is situated on Lots 153 and 154 in Block 36 of the City of Beaimont, with a frontage of 120 feet on both Orleans and Gilbert Streets. Block 36 is bordered by Orleans Street on the west, Gilbert Street on the north, Pearl Street on the east and Milam Street on the south. The situation of Plaintiff's property before and after construction of the project is shown by Appendix "A" and Appendix "B", respectively, attached hereto. The lots involved are located in the northwest corner of Block 36. Before the project was begun this property fronted on Orleans Street, a one-way street running north, and Gilbert Street, a two-way street running east and west. A single railroad track ran along the middle of Gilbert Street. Both Orleans and Gilbert Streets were sixty (60) feet in width. At the time of the construction of the project, the Wholesale Automotive Supply Company was the sublessee of the Plaintiff's leased lots and occupied the building situated thereon. It is stated as a fact that this company moved from the premises in the latter part of 1964, but continued the payment of rent for the remaining fourteen (14) months of its lease contract. Since the completion of the project, there has been no tenant occupying or using Plaintiff's lots, except that in February, 1967, the sublessee (Wholesale Automotive Supply Company) was granted permission to use the property as a temporary warehouse facility without charge other than caring for the building situated thereon.
After completion of the project, which had as its main purpose the elimination of crossings of streets by railroad tracks at grade, many changes are noticeable. For example, two tracks are now located on Gilbert Street with a consequent higher grade, protected by a curb, so that Orleans Street traffic cannot cross Gilbert Street. Also, only a ten-foot wide traffic lane remains on Gilbert Street, between the new esplanade and the Plaintiff's property. Almost all north bound Orleans Street traffic now angles off to the left after crossing Milam Street, and proceeds under the underpass. In fact, the underpass is now considered part of Orleans Street. The "Old" Orleans Street remains just as it was except for three material changes: (1) the entrance to the street just north of Milam is now only fourteen (14) feet wide instead of sixty (60) feet wide; (2) northbound traffic is now blocked by the new esplanade and must turn right onto Gilbert Street; and (3) there is evidence that the space left for making the right turn from Orleans Street onto Gilbert Street is so limited that large trucks cannot negotiate the turn.
It is well settled that abutting property owners, under proof such as presented here, have certain property rights in existing streets and highways in addition to their right in common with the general public to use them. Generally, the most important of these private rights is the access to and from the highway or street. State v. Meyer, 403 S.W.2d 366 (Tex.Sup.1966); DuPuy v. City of Waco, 396 S.W.2d 103 (Tex.Sup.1965) (viaduct); City of San Antonio v. Pigeonhole Parking of Texas, 158 Tex. 318, 311 S.W.2d 219, 73 A.L.R. 2d 640 (1958) (street); Powell v. Houston & T.C.R. Co., 104 Tex. 219, 135 S.W. 1153, 46 L.R.A.N.S., 1615 (1911) (street); Adams v. Grapotte, 69 S.W.2d 460 (Tex.Civ.App.1934), aff'd 130 Tex. 587, 111 S.W.2d 690 (1938) (sidewalk); Pennysavers Oil Co. v. State, 334 S.W.2d 546 (Tex.Civ.App.1960, writ ref'd) (limited-access highway). This right of access has been described as an easement appurtenant to the abutting land, which includes not merely the ability of the abutting landowner to enter and leave his premises by way of the street or highway, *256 but also the right to have the premises accessible to patrons, clients and customers. See 10 McQuillin, Municipal Corporations, 671 (3d ed. 1950); Clark, The Limited-Access Highway, 27 Wash.L.Rev. 111 (1952); Note 3, Standford L.Rev. 298 (1951).
In DuPuy, supra, although the facts[2] were somewhat different from those presented here, this Court held that:
"It is the settled rule in this state that an abutting property owner possesses an easement of access which is a property right; that this enactment is not limited to a right of access to the system of public roads; and that diminishment in the value of property resulting from a loss of access constitutes damage."
Also, in DuPuy, we said:
"To the same effect is Fort Worth Improvement District No. 1 v. City of Fort Worth, 106 Tex. 148, 158 S.W. 164, 48 L.R.A., N.S., 994 (1913), in which this Court held that if a public work is constructed which inflicts an injury peculiar to certain property not suffered in common with other property in the community or section, such property is damaged within the meaning of the Constitution, and the law will not permit the infliction of such injury without the allowance of just compensation."
We think that the facts here establish a diminishment in the value of the property resulting from a loss of reasonable access. As the above testimony indicates, there have been three changes wrought by the construction of the project which, considered together, have effected this loss of reasonable access: (1) The space in which to make the turn from "Old" Orleans Street onto Gilbert Street is so narrow that large trucks, presumably of clients, cannot negotiate the turn; (2) the remaining ten (10) foot lane (Gilbert Street) is so narrow that (a) a vehicle could not travel down the street if another vehicle chose to park there, and (b) a vehicle could not safely travel down the street if a train were on the south track; and (3) since "Old" Orleans remains one way north, the driver of a vehicle, too large to make an exist on Gilbert Street, would not be able to turn such vehicle and legally exist south on "Old" Orleans.
We turn now to a consideration of the points of error which afford the basis for our judgment reversing the judgments of the courts below. The Railroads and the City contend that it was harmful error to allow the jury, over objection, to determine the amount of damages it assessed based partly upon evidence of the diversion of traffic under the underpass, as depicted on Plat "B", attached hereto. The witnesses who gave their opinion as to market value of Plaintiff's property after the construction of the project considered the construction of the "New" Orleans Street and the diversion of traffic to the new street as well as "circuity of travel" to reach Plaintiff's property in arriving at their opinion as to market value after construction. In this connection, the only special issues submitted simply inquired of the jury the value of the Plaintiff's property before and after construction. Generally, the matter of what may be considered by the jury and what may not be considered will be best determined by the trial court in the admission and exclusion of testimony rather than by instruction to the jury. DuPuy, supra; State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194, 200 (1936). However, we think a special instruction would have been more appropriate in this instance. It was not error to admit the evidence depicting the changes in the streets brought about by the construction and the circuitous routes necessary *257 to travel in reaching the Plaintiff's property; however, it was harmful error to fail to instruct the jury that the diversion of traffic from the old to the new and the "circuity of travel" cannot constitute a deprivation of reasonable access. Diversion of traffic resulting in the necessity of using circuitous routes is not compensable. State Highway Commission v. Humphreys, 58 S.W.2d 144 (Tex.Civ.App.1933, writ ref'd); Pennysavers Oil Co. v. State, 334 S.W.2d 546 (Tex.Civ.App.1960, writ ref'd). A special instruction would have adequately informed the jury that it could not consider such evidence in determining the market value of Plaintiff's property.
The Railroads and the City next contend that it was harmful error for the trial court to permit the introduction of an instrument, designated as the "Primary Agreement", between the four railroads (one, the Sante Fenot a party to this suit) and the City. The contention is made that the error was compounded when the court permitted the attorney for Plaintiff to argue to the jury the contents of the agreement. The Railroads and the City objected to the introduction of the "Primary Agreement" and the argument to the jury on the grounds that the agreement was immaterial to any jury issue which would be submitted for determination. The agreement contained the statement that the total estimated cost of the project was $10,928,374; a provision relating to the contributions of the Railroads in the sum of $2,440,000; and a provision showing the estimated cost of rights of way and property damage to be $880,200. The objection pointed out that the introduction of the agreement injected into the case for consideration by the jury prejudicial matters, such as insurance, allocation of funds, the availability of funds, the source of funds to be used in payment of claims, and the contribution of the parties. Upon another trial, the "Primary Agreement" should not be admitted in evidence before the jury.
We point out that the method of proof in the former trial of the market value of the Plaintiff's leasehold interest followed very closely the rule announced in Urban Renewal Agency of the City of Lubbock v. Trammell, 407 S.W.2d 773 (Tex.Sup.1966). On the question of the market value of the Plaintiff's leasehold interest, before and after the project, the Railroads' expert witness testified that the value before construction was $35,500, and the value after construction was $9,000; the Plaintiff's expert witness testified that the value before the construction was $55,302, and after, $6,892. The jury found that the market value before the project was $55,000; after the project, $9,000. The Plaintiff's expert arrived at the figure $55,302 by appraising the property, by use of the income approach, at $74,400. He felt that this figure more nearly represented the market value of the property than did the figures he got by using the cost approach ($80,000) or the market or comparable approach ($75,000). Next he determined the market value of the interest of the landowner ($14,585) and of the sublessee ($4,513), and subtracted the total of the latter two ($19,098) from $74,400 to arrive at the market value of the Plaintiff's interest, $55,302. The Railroads' expert witness also felt that the income approach reflected the market value better than the cost or market approach. Using the income approach, he found the market value of the property to be $48,000, and the market value of the leasehold, Plaintiff's interest, $35,500. This method of proof followed very closely the rule announced in Trammell, supra.
Finally, the Railroads' point that the Court of Civil Appeals erred in affirming the judgment of the trial court in its holding that the Railroads were jointly and severally liable with the City of Plaintiff for the damages occasioned by the construction of the project is overruled.
The judgments of the trial court and the Court of Civil Appeals are both reversed *258 and judgment is here rendered that the cause be remanded to the trial court for a new trial not inconsistent with this opinion. All costs are adjudged against the Respondent, A. B. Marks.
McGEE, J., not sitting.
*259
ON MOTION FOR REHEARING
The Petitioners and the Respondent have filed motions for rehearing. We overrule all motions. We adhere to the judgment heretofore rendered. However, we find it necessary to take note of Respondent's motion to the extent of retracting the holding that a special instruction would have been appropriate and that it was harmful error to fail to instruct the jury that the construction of a new street and diversion of traffic from the old to the new and the circuity of travel cannot constitute a deprivation of reasonable access. Failure to instruct the jury in regard to these matters was not before the Court. The Court was never called upon to so instruct the jury. The only ruling of the Court with which we are concerned is the action of the Court in overruling Petitioners' objections to evidence of diversion of traffic and circuity of travel to be used and taken into consideration by the witnesses in arriving *260 at their opinion as to market value of Plaintiff's property after the construction of the project. The only special issues submitted to the jury for determination simply inquired as to the value of the Plaintiff's property before and after construction. It was harmful error to allow the introduction of the objectionable evidence for the jury's consideration in determining its answers to the special issues submitted. Diversion of traffic resulting in the necessity of using circuitous routes is not compensable. See authorities cited in our original opinion.
The motions for rehearing are overruled. No further motions for rehearing will be entertained.
NOTES
[1] "No person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made * * *."
[2] In DuPuy, the property owner abutted on a paved alley to the east and a two-way street to the south. After construction of a viaduct over and along the two-way street, 17th Street, a concrete barrier was erected on the old, lower 17th Street, leaving DuPuy fronting on a cul de sac. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1550503/ | 5 F.2d 58 (1925)
DROWNE
v.
GREAT LAKES TRANSIT CORPORATION.
No. 175.
Circuit Court of Appeals, Second Circuit.
February 2, 1925.
Brown, Ely & Richards, of Buffalo, N. Y. (Fred W. Ely, of Buffalo, N. Y., of counsel), for appellant.
Sullivan, Bagley & Wechter, of Buffalo, N. Y. (Joseph A. Wechter, of Buffalo, N. Y., of counsel), for appellee.
Before ROGERS, MANTON and HAND, Circuit Judges.
MANTON, Circuit Judge.
The appellant, owner of the Munsey, was engaged in overhauling *59 and putting her in condition for navigation for the season of 1923 while she lay moored in her winter quarters in the port of Buffalo on February 21, 1923. There were about 40 workmen, consisting of carpenters, electricians, and pipe fitters, engaged in making these repairs. They were in various parts of the vessel in charge of several foremen. The appellant's shipkeeper was on board. In addition to the work being done by such employees of the owner, there were employees of the Buffalo Marine Construction Company, of whom the deceased was one, who were repairing plates on the starboard side of the hull in holds Nos. 1 and 2. This work was being carried on pursuant to a contract between it and the owner. The hull was divided into five holds. Access to No. 1 hold was through a manhole aft of No. 1 hatch. A fixed iron ladder leads to the bottom. The manhole is about 30 inches in diameter and covered with a steel cover which, when in place, was flush with the deck. The iron ladder is permanent and the manhole and ladder furnish a means of ingress and exit to and from the hold. It is located 6 or 7 feet aft No. 1 hatch and a little to the port of amidships. This between-decks is a large room, and each of the five holds has two hatches. No. 1 is in the forward end of the vessel, about 17 or 18 feet across and about 7 or 8 feet fore and aft and was covered with planks in sections. The planks were 10 to 12 inches wide and about 7½ feet long. There were about eighteen to each hatch. Each plank was handled with hatch hooks which were hooked into gauges through which a bolt passed in each end of the plank. It required two men to remove the planks on each hatch and in so doing to use a hatch hook. In 1914, the owners were directed by the federal steamboat inspector to provide movable guards made of pipe with which to guard the manholes when the cover was removed. The guard, as made, consisted of four upright legs about 3 feet high, around which two other pipes were fastened horizontally so that when in use it would be a safeguard against falling into the manhole. Such guards were used upon the Munsey when in service, but they were not there on the occasion herein referred to.
The deceased was a member of a riveting gang and operated a riveting machine. The rivets were heated in the forge and were passed from the forge to the place of use. This gang had been engaged in work on the vessel for about three days. On the morning of February 21, 1923, the covers were taken off the manhole near hatch No. 1 so that the rigger gang could get into the No. 1 hold for the purpose of rigging up a staging for the riveters. The riveting gang was working at that time in No. 2 hold, and No. 1 was closed. When they finished with No. 2 hold, they shifted their tools to No. 1 hold by taking the tools up onto the betweendecks and letting them down into No. 1 hold through the manhole aft No. 1 hatch. The forge for heating the rivets was already in No. 1 hold. The deceased was one of the men who assisted in doing this work. There was no guard around the manhole, and although the shipkeeper was asked for a guard, none was furnished, and a search of the vessel for such guard produced none, and it was admitted at the trial that there was no manhole guard aboard the vessel at the time of the accident. It became necessary to remove the covers of No. 1 hatch to let in air and let out the smoke and gas for the forging machine below. The foreman directed that some of the covers of No. 1 hatch be removed. The deceased was engaged in removing these covers with another workman, both of whom used the only two hatch hooks available. These were found on the vessel. They succeeded in removing one plank, and as they were lifting the second plank, it slipped from the hooks and fell into the hold. They tried unsuccessfully to lift the third one, and then a fourth, and when they lifted this three or four inches, the hook of the deceased's fellow workman slipped off the plank, and as the plank dropped, it slipped from the hook held by the deceased, and the sudden releasing of the entire weight of the plank caused the deceased to take involuntary steps backward in an effort to recover his equilibrium, and before he succeeded he fell into the open and unguarded manhole, doubled up, and went through and met his death. The hook which his fellow workman had used was taken, and both were produced at the trial by the appellee. They were sufficiently identified to justify the learned trial judge to accept the claim that they were the hooks used at the time of the accident. It was not proven that there were other hooks available, nor is it established that there was any negligence on the part of the deceased or his fellow workman in the choice of the hooks.
The vessel was obligated to provide reasonably safe equipment for the deceased, and we think it was a breach of that duty to him to fail to keep this manhole reasonably safe for him and his fellow employees, although they were working for a construction *60 company, by placing a guard about it. The Spokane (C. C. A.) 294 F. 242, certiorari denied, The Spokane v. Steiner, 264 U.S. 583, 44 S. Ct. 332, 68 L. Ed. 861; The Omsk (C. C. A.) 266 F. 200. Movable guards for the purpose of guarding open manholes were recognized as a necessary safeguard, for the vessel used them after it was ordered so to do by the federal inspector. The deceased's fellow workman asked for such a guard to use it as a protection, and this was denied him because there were none on board. With the large number of mechanics at work on the vessel, reasonable care should have dictated to the vessel owner the need of keeping open the manholes in going to and from the decks, and this one in particular, while the riveting gang was working there. It was the duty of the vessel to furnish proper guards under such circumstances. Because there is testimony that the hooks used were the only available ones, no contributory fault can be chargeable to the deceased in using them on the occasion in question. When either through the fault of the hook or otherwise, the deceased lost his balance and involuntarily stepped back in the direction of and into the manhole, he would have been uninjured except for the negligence in failing to properly guard the manhole. There was no reason to suspect danger in the work the deceased undertook to do, and it was the natural and the probable consequence of the negligence or wrongful act of maintaining an unguarded manhole that ought to have been foreseen in the light of the attending circumstances that was the proximate cause of the loss of this life. Salsedo v. Palmer (C. C. A.) 278 F. 92, 23 A. L. R. 1262; Wilmington Star Company v. Fulton, 205 U.S. 60, 27 S. Ct. 412, 51 L. Ed. 708; D. L. & W. Co. v. Petrowsky, 250 F. 564, 162 Cow. C. A. 570; Milwaukee & St. Paul Ry. Co. v. Kellogg, 94 U.S. 475, 24 L. Ed. 256; Fitzwater v. Warren, 206 N.Y. 355, 99 N.E. 1042, 42 L. R. A. (N. S.) 1229; Rooney v. Brogan Constr. Co., 194 N.Y. 32, 86 N.E. 814.
The deceased, 40 years of age, was earning $1,800 a year and at the time of his death had an expectancy, according to the American Tables of Mortality, of 25 years. He left a widow. The learned District Judge awarded $13,500 as compensatory damages. While the steamship company takes this appeal, it is a trial de novo in this court. The John Twohy, 255 U.S. 77, 41 S. Ct. 251, 65 L. Ed. 511; Reid v. Fargo, 241 U.S. 544, 36 S. Ct. 712, 60 L. Ed. 1156; The Kalfarli (C. C. A.) 277 F. 391. We are not concluded as to the amount awarded by the District Judge, since the whole case is open here, and we are not unmindful of the cases which assert that the decision of the trial court in admiralty upon the questions of fact, based upon conflicting testimony or the credibility of witnesses examined before the judge, is entitled to great respect and will not be lightly reversed or modified unless there is a decided preponderance of evidence against it or a mistake is clearly shown. The Ludvig Holberg, 157 U.S. 60, 15 S. Ct. 477, 39 L. Ed. 620. But this appellate court is not concluded by the amount awarded, even though the witnesses were seen and heard by the District Judge. The Spokane, supra; Pentz v. The Ariadne, 13 Wall. 475, 20 L. Ed. 542; The Kalfarli, supra. These are many elements that enter into the assessment of damages for the wrong resulting in loss of life. The deceased's age, his earning capacity, his dependents and their ages, his condition of health, his prospect of advancement in position and employment, are all elements to be considered. His contribution to his family is an important factor. The deceased was married for 15 years and was in very good health. He was in no way disabled from carrying on his occupation. He worked steadily and contributed from $35 to $50 a week to his wife. If he lived the full expectancy of life, he had an earning capacity of $45,000, and according to his custom, his wife would have received for her living, comfort, and their mutual savings, nearly all of it. Of course, his life might not have been spared during this full life's expectancy. He might have become sick or infirm. But with good health and a useful life in prospect, we think the award below was insufficient. We must take note of juries' award of compensation as some guide to control us in the decision of this question of fact. We note that with the increase in the cost of living, awards have been larger. The widow who must live without the aid of her husband is necessarily confronted with the increase in the cost of living and of her clothing. In the administration of justice, it is the purpose of the law to compensate the dependents as fully as money can for the loss sustained. Its demands, we think, require us to increase the award here and to allow the administratrix $15,000, the full amount prayed for in the libel.
The decree is modified, with directions to the District Court to enter a decree in conformity with this opinion. Decree modified, with costs. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1161086/ | 961 P.2d 1279 (1998)
Michael DOMINGUES, Appellant,
v.
The STATE of Nevada, Respondent.
No. 29896.
Supreme Court of Nevada.
July 31, 1998.
Morgan D. Harris, Public Defender, and Robert L. Miller and Phillip J. Kohn, Deputy Public Defenders, Clark County, for Appellant.
Frankie Sue Del Papa, Attorney General, Carson City; Stewart L. Bell, District Attorney and James Tufteland, Chief Deputy District Attorney and Christopher J. Laurent, Deputy District Attorney, Clark County, for Respondent.
OPINION
YOUNG, Justice.
This case raises the single issue of whether NRS 176.025 is superseded by an international treaty ratified by the United States, which prohibits the execution of individuals who committed capital offenses while under the age of eighteen. NRS 176.025 allows imposition of the death penalty on a defendant who was sixteen years old or older at the time that the capital offense was committed.
FACTS
On October 22, 1993, sixteen-year-old Michael Domingues murdered a woman and her four-year-old son in the victims' home. In August 1994, a jury found Domingues guilty of one count of burglary, one count of robbery with the use of a deadly weapon, one count of first degree murder, and one count of first degree murder with the use of a deadly weapon. At seventeen years of age, Domingues was sentenced to death for each of the two murder convictions. On May 30, 1996, this court upheld Domingues' convictions and sentence. Domingues v. State, 112 Nev. 683, 917 P.2d 1364 (1996), cert. denied, ___ U.S. ___, 117 S. Ct. 396, 136 L. Ed. 2d 311 (1996).[1]
On November 7, 1996, Domingues filed a motion for correction of illegal sentence, arguing that "execution of a juvenile offender violates an international treaty ratified by the United States and violates customary international law." Article 6, paragraph 5 of the International Covenant on Civil and Political Rights (ICCPR) provides that: "Sentence *1280 of death shall not be imposed for crimes committed by persons below eighteen years of age and shall not be carried out on pregnant women." ICCPR, Dec. 19, 1966, art. 6, S. Treaty Doc. No. 95-2, 999 U.N.T.S. 171, 175.
In 1992, the United States Senate ratified the ICCPR, with the following pertinent reservation and declaration:
That the United States reserves the right, subject to its Constitutional constraints, to impose capital punishment on any person (other than a pregnant woman) duly convicted under existing or future laws permitting the imposition of capital punishment, including such punishment for crimes committed by persons below eighteen years of age.
....
That the United States declares that the provisions of Articles 1 through 27 of the [ICCPR] are not self-executing.
138 Cong.Rec. S4781-01, S4783-84 (daily ed. April 2, 1992) (emphasis added).
At a hearing on Domingues' motion to correct the illegal sentence, the district court concluded that the sentence was not facially illegal and, thus, it lacked jurisdiction to correct the sentence; on March 7, 1997, the district court issued an order denying Domingues' motion. Domingues appeals from this order.
DISCUSSION
Domingues contends that pursuant to the ICCPR, imposition of the death sentence on one who committed a capital offense while under the age of eighteen is illegal. ICCPR, 999 U.N.T.S. at 175. Although the United States Senate ratified the ICCPR with a reservation allowing juvenile offenders to be sentenced to death, Domingues asserts that this reservation was invalid and thus this capital sentencing prohibition set forth in the treaty is the supreme law of the land. See 138 Cong.Rec. S4781-01, S4783-84 (daily ed. April 2, 1992). Domingues contends that his death sentence, imposed for crimes he committed when he was sixteen years old, is thereby facially illegal. See Edwards v. State, 112 Nev. 704, 708, 918 P.2d 321, 324 (1996) (recognizing the inherent power of the district court to correct a facially illegal sentence); Anderson v. State, 90 Nev. 385, 528 P.2d 1023 (1974). We disagree.
We conclude that the Senate's express reservation of the United States' right to impose a penalty of death on juvenile offenders negates Domingues' claim that he was illegally sentenced. Many of our sister jurisdictions have laws authorizing the death penalty for criminal offenders under the age of eighteen, and such laws have withstood Constitutional scrutiny. See Stanford v. Kentucky, 492 U.S. 361, 109 S. Ct. 2969, 106 L. Ed. 2d 306 (1989); Ved P. Nanda, The United States Reservation to the Ban on the Death Penalty for Juvenile Offenders: An Appraisal Under the International Covenant on Civil and Political Rights, 42 DePaul L.Rev. 1311, 1312-13 (1995).
NRS 176.025 provides that the death penalty shall not be imposed upon individuals who were under sixteen years of age at the time that the offense was committed. Because Domingues was sixteen at the time he committed a capital offense, we conclude that the death penalty was legally imposed upon him. Accordingly, we affirm the decision of the district court denying Domingues' motion to correct the sentence.
SHEARING, J., and BLAKE, District Judge,[2] concur.
SPRINGER, Chief Justice, dissenting:
The International Covenant on Civil and Political Rights, to which the United States is a "party," forbids imposing the death penalty on children under the age of eighteen. International treaties of this kind ordinarily become the "supreme law of the land." Under the majority's interpretation of the treaty, the United States, at least with regard to executing children, is a "party" to the treaty, while at the same time rejecting one of its most vital terms. Under Nevada's interpretation *1281 of the treaty, the United States will be joining hands with such countries as Iran, Iraq, Bangladesh, Nigeria and Pakistan in approving death sentences for children. I withhold my approval of the court's judgment in this regard.
ROSE, Justice, dissenting:
Following a brief hearing, the district court summarily concluded that the death sentence was facially valid in spite of an international treaty signed by the United States which prohibits the execution of individuals who were under eighteen years of age when the crime was committed. I believe this complicated issue deserved a full hearing, evidentiary if necessary, on the effect of our nation's ratification of the ICCPR and the reservation by the United States Senate to that treaty's provision prohibiting the execution of anyone who committed a capital crime while under eighteen years of age.
The penultimate issue that the district court should have considered is whether the Senate's reservation was valid. Article 4(2) of the treaty states that there shall be no derogation from Article 6 which includes the prohibition on the execution of juvenile offenders. ICCPR, 999 U.N.T.S. at 174. Furthermore, there is authority to support the proposition that the Senate's reservation was invalid. See, e.g., Restatement (Third) of the Foreign Relations Law of the United States § 313 (1987); Ved P. Nanda, The United States Reservation to the Ban on the Death Penalty for Juvenile Offenders: An Appraisal Under the International Covenant on Civil and Political Rights, 42 DePaul L.Rev. 1311, 1331-32 (1993).
If the reservation was not valid, then the district court should determine whether the United States is still a party to the treaty. If the reservation was a "sine qua non" of the acceptance of the whole treaty by the United States, then the United State's ratification of the treaty could be considered a nullity. See William A. Schabas, Invalid Reservations to the International Covenant on Civil and Political Rights: Is the United States Still a Party?, 21 Brook.J.Int'l.L. 277, 318-19 (1995). But, if the United States has shown an intent to accept the treaty as a whole, the result could be that the United States is bound by all of the provisions of the treaty, notwithstanding the reservation. Id.
These are not easy questions and testimony about the international conduct of the United States concerning the subjects contained in the treaty, in addition to expert testimony on the effect of the Senate's reservation may be necessary. A federal court that deals with federal law on a daily basis might be better equipped to address these issues; however, the motion is before the state court and it should do its best to resolve the matter. Accordingly, I would reverse the district court's denial of Domingues' motion and remand the case for a full hearing on the effect of the ICCPR on Domingues' sentence.
NOTES
[1] According to the State, Domingues' petition for writ of certiorari to the United States Supreme Court raised the issues of whether this court's statutory review of his sentence violated due process and whether this court's review of his sentence violated the Eighth Amendment.
[2] The Governor appointed the Honorable Archie E. Blake, Judge of the Third Judicial District Court, to sit in place of the Honorable A. William Maupin, Justice, who recused himself. Nev. Const. art. 6, § 4. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1607740/ | 366 So. 2d 1299 (1978)
FIRST GUARANTY BANK
v.
C. D. ALFORD et al.
No. 62508.
Supreme Court of Louisiana.
December 15, 1978.
Rehearing Denied January 26, 1979.[*]
*1300 Ben R. Miller, Jr., Leonard L. Kilgore, III, Sanders, Downing, Kean & Cazedessus, for defendant-respondent.
Tom H. Matheny, Pittman & Matheny, Hammond, for plaintiff-applicant.
CALOGERO, Justice.
On April 30, 1973 Dr. C. D. Alford borrowed $155,000.00 from First Guaranty *1301 Bank and as evidence of the debt signed a promissory note payable one year thereafter. Among other security for the debt Dr. Alford had his wife encumber real estate which was her separate property. This was done by execution of a collateral mortgage note (a $155,000.00 demand promissory note payable to order of "ourselves" and duly endorsed in blank), a collateral mortgage and an act of pledge. Each of these latter three instruments was signed by both Dr. and Mrs. Alford. The collateral mortgage note and the collateral mortgage each contained a provision as follows:
DUE ON DEMAND. This is a collateral note secured by a collateral mortgage and may be placed as collateral security for any hand note or notes which shall govern the terms, time of payment, interest rate and all other conditions set forth therein. This note may be issued and re-issued without being extinguished by confusion, and its validity will not be affected by the fact that the original indebtedness for which it was issued is paid.
The act of pledge acknowledged a loan "represented by one certain promissory note of even date herewith in the amount of $155,000.00" and recited that Dr. and Mrs. Alford "do by these presents pledge as security for said note the following collateral, to wit:
"(1) One certain collateral note secured by a collateral mortgage in the amount of $155,000.00, dated April 30, 1973; . . ."
The collateral mortgage was duly recorded and both the collateral mortgage note (sometimes hereinafter referred to as the "ne varietur" note) and Dr. Alford's promissory note (sometimes hereinafter referred to as the "hand note") were given to the bank. The ne varietur note has thereafter remained in the possession of the bank. The hand note was cancelled and returned to Dr. Alford on May 28, 1974, his debt having been renewed upon execution of a promissory note for $195,000.00 on May 24, 1974.
There were executed after April 30, 1973 the following instruments, each of them signed by Dr. Alford only:
(1) A $195,000.00 promissory note dated May 21, 1974 payable June 21, 1974 signed by Dr. Alford, the note indicating that it was secured by "Collateral Pledge Agreement # 149."
(2) Collateral Pledge Agreement # 149 dated May 21, 1974 signed by Dr. Alford, by which he pledged and hypothecated unto the First Guaranty Bank of Tangipahoa Parish, among other securities,
"Act of Pledge dated April 30, 1973 $155,000.00 collateral mortgage dated 4-30-73 . . ."
(3) A $275,764.67 promissory note dated June 28, 1974 payable in one year signed by Dr. Alford, the note indicating that it was secured by "Collateral Pledge Agreement # 244."
(4) Collateral Pledge Agreement # 244 dated June 28, 1974 signed by Dr. Alford, by which he pledged and hypothecated unto the First Guaranty Bank of Tangipahoa Parish among other securities
"Act of Pledge dated April 30, 1974 $155,000.00 collateral mortgage dated 4-30-74 . . ."
(5) A $28,000.00 promissory note dated June 30, 1975 payable August 7, 1975 signed by Dr. Alford, indicated that it was secured by the "C.P.A. # 244."
When Dr. Alford defaulted on payment of his obligations the bank filed a petition against him and his wife, Mrs. Alford, in solido for the sums of $275,764.67 and $28,000.00 under respective promissory notes referred to hereinabove, together with the interest due thereon, attorney's fees and costs. In that petition the bank also contended that it was the holder of a collateral mortgage note dated April 30, 1973 executed by both defendants.
Mrs. Alford filed a motion for summary judgment seeking dismissal of the bank's claim against her on the two notes, and a petition for a writ of mandamus seeking to have the collateral mortgage cancelled. The trial judge rendered separate judgments granting relief as to both matters.
*1302 He dismissed the bank's claims against Mrs. Alford and issued the writ of mandamus directing the clerk of court to cancel the collateral mortgage. Both rulings were affirmed by the Court of Appeal. 359 So. 2d 700 (La.App. 1st Cir. 1978). This Court granted writs. 360 So. 2d 1349 (La.1978).
The bank in its assignment of errors complains that since genuine issues of material fact existed, the Court of Appeal erred in affirming summary judgment. It urges that Mrs. Alford was indeed personally liable on the obligation sued on, and contends that the Court of Appeal should not have affirmed the trial court's ordering the clerk of court to cancel the Alford collateral mortgage from the court records.
The latter contention, which attracts our chief interest in this opinion, was the claim which prompted our granting writs in this case.
In addressing the issue presented, a brief review of the character of collateral mortgages will be helpful. A mortgage is an accessory right which is granted to the creditor over the property of another as security for the debt. La.Civ.Code arts. 3278, 3284. Mortgages are of three types: conventional, legal and judicial. La.Civ. Code art. 3286. Within the area of conventional mortgages, three different forms of mortgages are recognized by the Louisiana statutes and jurisprudence: an "ordinary mortgage" (La.Civ.Code arts. 3278, 3290); a mortgage to secure future advances (La. Civ.Code arts. 3292, 3293); and a collateral mortgage. See Thrift Funds Canal, Inc. v. Foy, 261 La. 573, 260 So. 2d 628 (1972). Unlike the other two forms of conventional mortgages, a collateral mortgage is not a "pure" mortgage; rather, it is the result of judicial recognition that one can pledge a note secured by a mortgage and use this pledge to secure yet another debt.
A collateral mortgage indirectly secures a debt via a pledge. A collateral mortgage consists of at least three documents, and takes several steps to complete. First, there is a promissory note, usually called a collateral mortgage note or a "ne varietur" note. The collateral mortgage note is secured by a mortgage, the so-called collateral mortgage. The mortgage provides the creditor with security in the enforcement of the collateral mortgage note.
Up to this point, a collateral mortgage appears to be identical to both a mortgage to secure future advances and an ordinary mortgage. But a distinction arises in the collateral mortgage situation because money is not directly advanced on the note that is paraphed for identification with the act of mortgage. Rather, the collateral mortgage note and the mortgage which secures it are pledged to secure a debt.
Clearly, the mortgage at issue in this matter is a collateral mortgage. On the face of both the collateral mortgage note and collateral mortgage is typed the following language:
"This is a collateral note secured by a collateral mortgage and may be placed as collateral security for any hand note or notes . . ."
A collateral mortgage note may be pledged to secure future obligations. In that event full payment of a given obligation will not extinguish the collateral mortgage note and accompanying mortgage. (And in such cases the collateral mortgage will have a ranking from the initial pledge. La.Civil Code, art. 3158.)
The question in this case is whether Mrs. Alford did in fact pledge her collateral mortgage note to secure any debt other than the $155,000.00 hand note executed by Dr. Alford on April 30, 1973. It is apparent to us that she did not.
The collateral mortgage note and collateral mortgage admittedly contained the identical provision quoted hereinabove by which Mrs. Alford acknowledged that the note may be placed as collateral security for any hand note or notes and that the note may be issued and reissued without being extinguished (and that its validity will not be affected by the fact that the original indebtedness for which it was issued is paid.)
That the note may be reissued does not require the conclusion that it was.
*1303 In fact the collateral note was not reissued (i. e. there was no second or subsequent pledge by Mrs. Alford of the note[1]) and it was not placed as collateral by Mrs. Alford for any hand note or notes other than the one specifically named in the only pledge agreement she signed, the $155,000.00 hand note executed by Dr. Alford on April 30, 1973.
That the collateral note was in effect a negotiable bearer instrument, a matter which we initially found troubling, is of no moment. It was not a debt instrument but a security device, a pledge instrument. And it was not properly pledged to secure either of the two obligations upon which the bank bases its suit.
The fact that the collateral mortgage note was bearer paper does not alter or affect Mrs. Alford's position in this case because Dr. Alford was never a holder of the collateral mortgage note (thus, neither by virtue of ownership nor possessory interest could he have pledged it, at least not after the April 30, 1973 Act of Pledge signed by his wife and himself) and the bank had full knowledge of the true ownership of the instrument, insofar as it represented Mrs. Alford's obligation, through the specially written pledge agreement. The bank came into possession of the collateral mortgage note by virtue of the Act of Pledge dated April 30, 1973, which clearly limited the pledge of the collateral mortgage note by Mrs. Alford to secure the specific obligation of Dr. Alford evidenced by the $155,000.00 hand note. When the obligation on the $155,000.00 hand note was extinguished, as it clearly was, the Bank continued to possess the collateral mortgage note as a mere depositary, fully cognizant of how and under what conditions and limitations it possessed the collateral mortgage note. Dr. Alford had no authority to repledge Mrs. Alford's collateral mortgage note for any other personal or community obligations, and the Bank as a party to the April 30, 1973 pledge agreement should have been fully aware that he had no such authority.
Mrs. Alford did not give the collateral mortgage note to Dr. Alford for his use in providing security for his obligations. To the contrary Mrs. Alford personally pledged the collateral mortgage note, her separate and paraphernal property, as security for a certain limited obligation. Without destroying the nature of the instrument as a collateral mortgage note Mrs. Alford could have done little more to limit the pledge than to recite in writing that the bank should accept the collateral mortgage note in pledge under the terms and conditions that the pledge secure the obligation on a certain debt note executed by Dr. Alford.[2]
The bank's retention of the collateral mortgage note after extinguishment of the ancillary debt note (or hand note), without either an outset pledge to secure future obligations or a subsequent pledge by the obligor on the collateral note (Ms. Alford, that is) gives the bank no security interest in the collateral mortgage note. If this were not the case any party, even with the bank's full knowledge of the circumstances and acquiescence therein, could pledge, without any interest therein, the collateral mortgage of another to secure his own obligation without the consent of the obligor on the collateral mortgage note, simply because the obligee-bank has possession of and has not returned a collateral mortgage note pledged on an earlier extinguished obligation. It goes without saying that this cannot be.
*1304 An analogous case is Durham v. First Guaranty Bank, La.App., 331 So. 2d 563. There Mr. Durham executed a $20,000.00 collateral mortgage note which was pledged to secure a hand note of $3,500.00. The latter was later paid. The First Guaranty Bank retained, possession of the collateral mortgage note. The Bank contended that the collateral mortgage note also secured a $17,000.00 note of a partnership of which Mr. Durham was a member, but it was unable to point to an Act of Pledge of the collateral mortgage note to secure the latter debt. The court stated:
"However the $17,000 note sued upon in the instant case does not contain any such reference to the collateral mortgage and note. There is absolutely no connexity between it and the mortgage security."
* * * * * *
"The pledge of a collateral mortgage note to secure any indebtedness is a contract, LSA-C.C. Art. 3133. The pledge secures only that debt or debts contemplated in the contract between the pledgor and the pledgee, (citations omitted) (emphasis added).
* * * * * *
"Because of their very nature and function, security devices should be strictly construed . . . Yet even a liberal interpretation of the instant collateral mortgage and accompanying note would not convince this court that the note sued upon was connected to and secured by said collateral mortgage."
Nor are the provisions of Civil Code Article 3158[3] concerning retention and reissuance of the pledge instrument any comfort to the bank or any support for its position that retention alone of the item pledged here effects the continued viability of the pledge to secure any future obligations that might be contracted.[4] The pertinent part of Article 3158 applies only to obligations or liabilities of the pledgor to the pledgee. See underscoring in footnote 3. In the instant case the pledgor Mrs. Alford was not the obligor on the notes which the bank contends are secured by the pledged instrument.
Since Mrs. Alford's pledge of the collateral mortgage note recited that it was to secure only the $155,000.00 hand note of April 30, 1973 and no other past or future obligations of Dr. Alford, the bank cannot assert a security interest in the collateral mortgage note with respect to Dr. Alford's two obligations (promissory notes of $275,764.67 and $28,000.00) incurred on June 28, 1974 and June 30, 1975, respectively. For these reasons it was legally correct for the trial court to issue the writ of mandamus ordering cancellation of the collateral mortgage.
*1305 With respect to the propriety of the trial court's granting Mrs. Alford's motion for summary judgment, the rulings of the trial court and the Court of Appeal are also correct. Mrs. Alford has no personal liability on the two notes sued upon. She did not sign either of them. As the Court of Appeal observed, Mrs. Alford's only actions were the execution of (1) the collateral mortgage on her separate property, (2) the $155,000.00 collateral mortgage note (a conditional rather than primary obligation) and (3) the Act of Pledge of April 30, 1973. Inasmuch as Dr. Alford's $155,000.00 hand note (to secure which Mrs. Alford executed the three instruments comprising the collateral security) has been extinguished, there is no obligation on the part of Mrs. Alford in connection with the collateral mortgage note. And inasmuch as she is not a debtor on either of the two notes sued upon she may not be held personally liable thereon.
Decree
For the above and foregoing reasons the judgments appealed are affirmed at relator's cost.
AFFIRMED.
DIXON, J., dissents.
NOTES
[*] Dixon, J., would grant a rehearing.
[1] For a discussion of issuance and reissuance, see Nathan and Marshall, The Collateral Mortgage, 33 La.L.Rev. 497, 504-06 (1973).
[2] It has been suggested that Mrs. Alford, by delivering her collateral mortgage note (a bearer instrument) to the bank, was placing it as security for Dr. Alford's $155,000.00 hand note and future advances by the bank to Dr. Alford. The argument is that the language in the pledge instrument, that she placed it as security for the $155,000.00 hand note, was somehow unintended surplus languagebecause the $155,000.00 note was simply the hand note of coincident date. This cannot be so because the Civil Code denominates a pledge a contract (Article 3133) and this contract, reduced to writing, unambiguously providing the pledge to be security only for "said note", clearly manifests the intent that only the $155,000.00 hand note be secured. La.Civil Code art. 1945(3).
[3] The text of article 3158 provides in pertinent part:
"[I]t is further provided that whenever a pledge of any instrument or item of the kind listed in this article is made to secure a particular loan or debt, or to secure advances to be made up to a certain amount, and, if so desired or provided, to secure any other obligations or liabilities of the pledger to the pledgee, then existing or thereafter arising up to the limit of the pledge, and the pledged instrument or item remains and has remained in the hands of the pledgee, the instrument or item may remain in pledge to the pledgee or, without withdrawal from the hands of the pledgee, be repledged to the pledgee to secure at any time any renewal or renewals of the original loan or any part thereof or any new or additional loans, even though the original loan has been reduced or paid, up to the total limit which it was agreed should be secured by the pledge, and, if so desired or provided, to secure any other obligations or liabilities of the pledger to the pledgee, then existing or thereafter arising, up to the limit of the pledge, without any added notification or other formality, and the pledge shall be valid as well against third persons as against the pledger thereof, if made in good faith; and such renewals, additional loans and advances or other obligations or liabilities shall be secured by the collateral to the same extent as if they came into existence when the instrument or item was originally pledged and the pledge was made to secure them." (Emphasis provided)
[4] Mere retention of the thing pledged, i. e. the collateral mortgage note, does not determine the continued existence of the pledge. See Durham v. First Guaranty Bank, supra; cf. Scott v. Corkern, 231 La. 368, 91 So. 2d 569 (1956). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2092608/ | 927 F. Supp. 190 (1996)
RESURE, INC.
v.
CHEMICAL DISTRIBUTORS, INC.; Safeway Transportation, Inc.; Edward Buggage; Scott F. McCants and Saul Kimble.
Civil Action No. 95-274-B.
United States District Court, M.D. Louisiana.
May 31, 1996.
*191 Ralph Shelton Hubbard, III, Loree Peacock LeBoeuf, Lugenbuhl, Burke, Wheaton, Peck, Rankin & Hubbard, New Orleans, Louisiana, for Plaintiff.
Andre' Collins Gaudin, Abbott, Best & Marks, New Orleans, Louisiana, Laurence E. Best, Best, Koeppel & Klotz, New Orleans, Louisiana, for Defendant Chemical Distributors, Inc.
Ward F. LaFleur, Preis & Kraft, Lafayette, Louisiana, for Safeway Transportation, Inc.
Charles R. Moore, Moore, Walters, Shoenfelt & Thompson, Baton Rouge, Louisiana, for Edward Buggage and Scott F. McCants.
Walton J. Barnes, II, Baton Rouge, Louisiana, for Saul Kimble.
RULING ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
JOHN V. PARKER, Chief Judge.
This matter is before the Court on a motion for summary judgment filed by the plaintiff, Resure, Inc. ("Resure"). For the reasons which follow, the motion is granted.
FACTS AND PROCEDURAL HISTORY
On July 16, 1993, a parked tanker truck exploded in Port Allen, Louisiana, destroying several nearby vehicles and releasing a plume of contaminants into the surrounding atmosphere. A chemical reaction inside the tank caused the explosion. The truck was owned by TMI Enterprise, Inc., and was, at the time of the explosion, leased to defendant Safeway Transportation, Inc. ("Safeway"). The truck had been previously leased to defendant Chemical Distributors, Inc. ("CDI"). The explosion was allegedly caused in part by CDI's failure to thoroughly clean the inside of the tank at the end of CDI's lease term.
As a result of the explosion, suits were filed in both state and federal court. At least two state court suits are pending in the Eighteenth Judicial District Court for the Parish of West Baton Rouge, Louisiana. Both of those suits seek damages for personal injuries suffered after being exposed to the released contaminants. Two federal court suits are pending in the Middle District of Louisiana. One of those suits seeks contribution for response costs incurred cleaning up the explosion site. The other suit is the one presently before the Court. In this suit, Resure, CDI's commercial general liability insurer, seeks a declaratory judgment that the facts of this case come within the policy's pollution exclusion clause, and that Resure is therefore not liable on the policy. Jurisdiction is invoked under 28 U.S.C. § 1332. Named as defendants are CDI, Safeway, Edward Buggage, Scott McCants, and Saul Kimble. Buggage, McCants, and Kimble are plaintiffs in the state court suits and have all named CDI as a defendant in those suits. Safeway has filed a third party-complaint against CDI in the other federal court suit. It appears from the record that Resure has *192 not been named as a defendant in any of these other lawsuits.
On October 31, 1995, Resure filed the motion for summary judgment now before the Court. CDI filed its opposition two days after the deadline for opposing the motion had passed, despite this Court having previously granted the defendants an extension of time in which to file oppositions. The other defendants filed oppositions adopting the arguments advanced by CDI. The Court will consider CDI's arguments despite CDI's failure to timely file its opposition.
SUMMARY JUDGMENT
Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is proper 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 any material fact and that the moving party is entitled to a judgment as a matter of law."[1]
ANALYSIS
The parties generally agree as to the facts and circumstances surrounding the explosion. What is disputed is whether Louisiana or New Mexico law governs, and whether the pollution exclusion clause is so unambiguous as to make this case appropriate for summary judgment.
A. Choice of Law
Resure argues that New Mexico law should govern this dispute. In support, Resure points out that CDI is a New Mexico corporation, and that the insurance policy was negotiated and delivered in New Mexico. Resure then argues that "if the law of the place of `accident' is applied to a multi-state trucking company [like CDI], neither it nor its insurer have any means of negotiating required coverage for the insured with any degree of certainty."[2] Resure also makes the related argument that application of the law of the place of the accident could result in inconsistent results from state to state. The defendants do not argue that Louisiana law should govern this dispute, but instead argue that regardless of whose law applies, summary judgment is inappropriate.
Klaxon Co. v. Stentor Electric Manufacturing Co.[3] requires the Court to apply Louisiana's choice-of-laws provisions. Applying Louisiana Civil Code articles 3515 and 3537, the Court finds that New Mexico law must govern this dispute. When confronted with similar cases, Louisiana courts consistently apply the law of the state in which the insurance policy was executed.[4]
B. The Pollution Exclusion Clause
The Resure policy insures against claims for "bodily injury" and "property damage." "Bodily injury" is defined as "bodily injury, sickness or disease sustained by any person." "Property damage" is defined as "physical injury to or destruction of tangible property ... including the loss of use thereof ... or loss of use of tangible property which has not been physically injured or destroyed."
The disputed clause in the insurance policy reads as follows:
This insurance does not apply ... to "bodily injury" or "property damage" (including the loss of the use thereof) caused by, contributed to or arising out of the actual or threatened discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants into or upon the land the atmosphere or any course or body of water, whether above or below ground.
*193 It is understood and agreed that the intent and effect of this exclusion is to delete from any and all coverage afforded by this policy and [sic] claim, action, judgment, liability, settlement, defense or expense (including any loss, cost or expense arising out of any governmental direction or request that the "insured" test for, monitor, clean-up, remove, contain, treat, detoxify or neutralize pollutants) in any way arising out of such actual or threatened discharge, dispersal, release or escape, whether such results from the "insured" activities or the activities of others and weather [sic] or not such is sudden or gradual and whether or not such is accidental, intended, foreseeable, expected, fortuitous or inevitable and wherever such occurs.
Resure argues that the clause is unambiguous and that its application to the facts is clear. The defendants do not argue that the language of the clause is ambiguous, nor do they argue that a literal reading of the clause renders the policy inapplicable to the facts of this case. They instead argue that based on the history of pollution exclusion clauses, it is unclear whether this clause applies to these facts. The defendants contend that pollution exclusion clauses are generally directed at the insured's own polluting activities. They point out that the July 16 explosion did not result from CDI's own polluting activities, and thus conclude that it is unclear whether the clause applies in this case.
This argument is without merit. The second paragraph of the clause expressly states that this particular exclusion applies regardless of whether the discharge results from the insured's activities or from the activities of others.[5] Turning to the individual claims levied against CDI, Buggage and McCants allege that "as a result of the explosion, [they] breathed in air contaminated with the chemicals in the trailer and sustained personal injury."[6] Similarly, Kimble alleges that he suffered respiratory ailments as a result of "the release of gases, fumes and chemicals which invaded his body."[7] These allegations clearly come within the policy exclusion for bodily injury caused by or arising out of the discharge, dispersal, release or escape of toxic chemicals into the atmosphere. Kimble also alleges he "further suffered damages to his motor vehicle,"[8] though it is unclear whether the damage was caused by the explosion itself or by the released pollutants. In either event, this claim clearly comes within the exclusion for property damage caused by or arising out of the discharge, dispersal, release or escape of toxic chemicals into the atmosphere.
In order to evaluate Safeway's third-party complaint filed against CDI in the other federal court lawsuit, it is necessary to consider the numerous theories of recovery asserted by Uniroyal against Safeway.[9] Without going into detail, the Court is satisfied *194 that these various theories of recovery all come within the Resure policy pollution exclusion clause. The Court also notes that to the extent CDI is found liable for response costs incurred cleaning up the explosion site, those costs are likely not "bodily injury" or "property damage" within the meaning of the policy.[10]
The defendants next argue that summary judgment is inappropriate because Resure has failed to address the potential impact of New Mexico's doctrine of reasonable expectations. That doctrine holds that "if the language of the [insurance] policy is such that a layman could not understand its full impact, the policy expectations of the insured."[11] The rationale for the doctrine is that "the insured most often is a layman, the average man or woman on the street, who is not a college graduate or a student of insurance law.... They cannot, ordinarily, read and understand the complex, complicated and intricate provisions of an insurance policy...."[12]
The Court finds that the doctrine of reasonable expectations plays no part in interpreting the pollution exclusion clause at issue. The doctrine is intended to protect unsophisticated laymen, and hence it probably has little application in the business insurance context. Even if it is appropriate to apply the doctrine in certain business settings, it should not be applied here, since Jerry Wood, President and Chief Executive Office of CDI since 1986, personally participated in procuring the policy issued by Resure to CDI. Finally, the doctrine should not be invoked to create an ambiguity in an otherwise unambiguous policy provision.[13]
The Court therefore finds that the facts of this case fall within the policy's pollution exclusion clause, and that Resure is entitled to summary judgment as a matter of fact and law.
C. Reimbursement of Defense Costs
After being informed of the first lawsuit filed against CDI, Resure retained an attorney to defend CDI's interests. However, Resure had serious doubts whether CDI was entitled to coverage under the policy. Accordingly, in a letter dated September 9, 1994, Resure reserved all its rights under the policy, including its right to reimbursement of any costs of defense. Pursuant to that reservation, Resure now seeks reimbursement for its costs of defense, including all attorney fees paid by it. The defendants have not addressed this issue in their opposition memorandums.
Resure timely reserved its rights under the policy. That reservation specifically referred to the possibility that Resure might seek reimbursement for any and all costs of defense. There is nothing in the record to suggest CDI objected to the reservation. Accordingly, Resure is entitled to reimbursement for all costs of defense.
Therefore:
IT IS ORDERED that the plaintiffs motion for summary judgment be and it is hereby GRANTED.
Judgment shall be entered dismissing this suit with prejudice.
NOTES
[1] See also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552, 91 L. Ed. 2d 265 (1986); Cormier v. Pennzoil Exploration & Prod. Co., 969 F.2d 1559, 1560 (5th Cir.1992).
[2] Pl.'s Mem. In Supp. of Mot. for Summ.J. at 7.
[3] 313 U.S. 487, 496, 61 S. Ct. 1020, 1021-22, 85 L. Ed. 1477 (1941).
[4] See Partin v. Dolby, 652 So. 2d 670, 674 (La. App. 1st Cir.1995); Holcomb v. Universal Ins. Co., 640 So. 2d 718, 722 (La.App. 3d Cir.), writ denied, 644 So. 2d 643 (1994); Levy v. Jackson, 612 So. 2d 894, 897 (La.App. 4th Cir.1993).
[5] Also, as previously noted, related litigation is pending before this Court. The Court in that case has already found a similar pollution exclusion clause to be unambiguous and applicable regardless of the manner in which the accident arose. Uniroyal Chem. Co. v. Deltech Corp., No. 93-998 (M.D.La. Dec. 27, 1995) (granting the defendant insurer's motion for summary judgment). See also Bituminous Casualty Corp. v. Kenworthy Oil Co., 912 F. Supp. 238, 240-41 (W.D.Tex.1996).
[6] Pet. For Damages at 3, Buggage v. TMI Enters., Inc., No. 26066 (La. 18th J.D.C.).
[7] Pet. at 3, Kimble v. Safeway Transp., Inc., No. 26065 (La. 18th J.D.C.).
[8] Pet. at 3, Kimble v. Safeway Transp., Inc., No. 26065 (La. 18th J.D.C.).
[9] Uniroyal seeks compensatory damages from Safeway under the following theories of recovery: The Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.A. § 9601-9675 (West 1995); The Louisiana Hazardous Materials Transportation and Motor Carrier Safety Law, La.R.S. 32:1501- :1521 (West 1989 & Supp.1996); negotiorum gestio; unjust enrichment; general tort law; and general agency law. Uniroyal also seeks punitive damages under Louisiana Civil Code article 2315.3, although the policy contains a punitive damages exclusion clause that would likely absolve Resure of any liability for punitive damages, regardless of the effect of the pollution exclusion clause.
[10] Also in the other federal court lawsuit, Union America has intervened as the insurer of Enercon Trucking, Inc. ("Enercon"), which owned seven trailer units that were destroyed by the explosion. Union America paid Enercon's claim, then intervened as plaintiff and named CDI as a defendant. Although Union America is not a party to the case presently before the Court, the Court notes that Union America's claims would certainly come within the Resure policy exclusion for property damage caused by or arising out of the discharge, dispersal, release or escape of toxic chemicals into the atmosphere.
[11] Davison v. Business Men's Assurance Co. of Am., 85 N.M. 796, 518 P.2d 776, 778 (1974). See also Pribble v. Aetna Life Ins. Co., 84 N.M. 211, 501 P.2d 255, 260 (1972).
[12] Read v. Western Farm Bureau Mut. Ins. Co., 90 N.M. 369, 563 P.2d 1162, 1166 (Ct.App.1977).
[13] See Davison, 518 P.2d at 778-79. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2428673/ | 108 F. Supp. 2d 681 (2000)
Sissy LITTLEFIELD, David Littlefield, Joel Odom, Susan Becmer, Nicholas Becmer, Jonathan Becmer, Stan Bland, Glenda Bland, Jennifer Bland, Jeffery Bland, Steve Calvery, Greta Calvery, Ashley Calvery, Scott Ryan Calvery, Lenny McKinney, Opal McKinney, Beverly McKinney, Rebecca McKinney, Virginia McLaren, Natalie Johnson, Tom Napper, Brandi Napper, Kevin Napper, Chelsea Napper, Mary Penn, Haley Penn, Lynzi Anderson, Drew Anderson, Michael Karadimas, Karen Stacey-Karadimas, Sunni Stacey, William Tapley, Norma Tapley, Kaytie Elizabeth Tapley, Cecilia Williams, Rachel Diane Williams, Cindy Woods, Dustin Woods, Benjamin Woods, Chad Woods, Aaron Woods, Danny Duckworth, Belinda Duckworth, Jeremiah Duckworth, Clayton Duckworth, Tammy Winner, Mark Winner, Ryan Winner, Daniel Ingram, Cliff Clipp, Kim Clipp, Michael Lambeth, Cash Cliff Clipp, Joe Don Law, Brad Law, David Lowery, Vanita Lowery, Madeline Lowery, Keith McCullam, Margaret McCullam, and Brandi McCullam, Plaintiffs,
v.
FORNEY INDEPENDENT SCHOOL DISTRICT, Keith Bell, Kenneth Cleaver, Clarence Doggan, Jay Calvin, Jim Jacobs, Rick Townsend, David Walker, and Chester J. St. Clair, Defendants.
No. 3:00-0575-T.
United States District Court, N.D. Texas, Dallas Division.
August 3, 2000.
*682 *683 *684 *685 Lawrence S Fischman, Glast Phillips & Murray, Dallas, TX, for plaintiffs.
Trey Langston Dolezal, Henslee Fowler Hepworth & Schwartz, Austin, TX, Hermon L Veness, Jr, Andrew A Chance, Henslee Fowler Hepworth & Schwartz, Dallas, TX, for defendants.
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT AND DENYING AS MOOT MOTIONS TO DISMISS
MALONEY, District Judge.
Before the Court are two Motions to Dismiss Pursuant to Rule 12(b)(6), filed on May 31, 2000, and Defendants' Motion for Summary Judgment, filed on June 5, 2000, by Defendants Forney Independent School District, Keith Bell, Kenneth Cleaver, Clarence Doggan, Jay Calvin, Jim Jacobs, Rick Townsend, David Walker, and Chester J. St. Clair (collectively, "the School Board"). After consideration, the Court concludes that the motion for summary judgment should be granted and Plaintiffs' complaint should be dismissed. Accordingly, Defendants' outstanding motions to dismiss pursuant to FED. R. CIV. P. 12(b)(6) are deemed moot.
INTRODUCTION
In April 1999, the Forney Independent School District, through the auspices of the School Board, inaugurated a mandatory school uniform policy applicable to each of the nearly 2,500 students in the four schools which comprise the district. The uniform policy was implemented at the beginning of the 1999-2000 school year. Objecting to the uniform policy on philosophical and religious bases, Plaintiffs, who are students enrolled in the Forney I.S.D. and their parents, filed this action under the provisions of 42 U.S.C. § 1983 against the school district, its trustees and its superintendent, alleging that the mandatory policy violated their individual constitutional rights.
FACTS AND PROCEDURAL HISTORY
In 1995, the Texas Legislature enacted TEX. EDUC. CODE ANN. § 11.162, which authorizes local school districts to adopt mandatory student uniform policies. Section 11.162 provides, inter alia:
(a) The board of trustees of an independent school district may adopt rules that require students at a school in the district to wear school uniforms if the board determines that the requirement would improve the learning environment at the school.
....
(c) A parent or guardian of a student assigned to attend a school at which students are required to wear school uniforms may choose for the student to *686 be exempted from the requirement or to transfer to a school at which students are not required to wear uniforms and at which space is available if the parent or guardian provides a written statement that, as determined by the board of trustees, states a bona fide religious or philosophical objection to the requirement.
Acting pursuant to the authority of the state enabling statute, Defendant St. Clair, the Forney school superintendent, explored the possibility of implementing such a policy at the Forney schools.[1] St. Clair reviewed the uniform policies employed by other school districts, along with studies on the efficacy of school uniforms and anecdotal evidence. St. Clair came to the conclusion that the implementation of a school uniform program would, according to his research, have the following beneficial effects on the students and the system as a whole: improve student performance, instill self-confidence, foster self-esteem, increase attendance, decrease disciplinary referrals, and lower drop-out rates.
In March 1999, students were sent home with a survey designed to get parental feedback to the school uniform proposal.[2] Thirty-four percent of the parents responded and, of those, approximately sixty percent were in favor of school uniforms. Additionally, "town meetings" were held at the schools, where copies of the proposed uniform code were distributed to members of the public, and parents were provided the opportunity to discuss the proposal with school administrators. The matter was then submitted to the School Board for consideration. The School Board made factual findings that school uniforms would improve the learning environment at the schools and that the proposed policy would further that goal. On April 19, 1999[3], the board approved the uniform policy, which was scheduled to take effect at the beginning of the 1999-2000 school year.
While for several years the students at Forney I.S.D. were subject to a school dress code, the new uniform policy requires the students to wear a limited choice of apparel during school hours. For example, boys are required to wear khaki or navy blue pants or shorts, and a choice of a white, red, yellow, or blue collar shirt, either short or long sleeve. Girls are afforded similar color choices, and they may wear skirts or "jumpers" of a prescribed length. Denim, leather, suede, or similar material is not permitted to be worn, except as an outer-garment such as a jacket or coat. Students are not permitted to wear any clothing in a manner suggesting gang affiliation and manufacturer logos are limited in size. The principal of each school may, at his discretion and from time to time, designate a "non-uniform" day.
The policy includes an "opt-out" provision whereby students, through their parents, can apply for an exemption from the policy based upon philosophical or religious objections, or upon medical necessity. Parents who object to the policy are asked to complete a questionnaire concerning the basis of their protestations. The questionnaire is designed to elicit information as to the sincerity of the beliefs of those parents who assert objections. Further, as a component of the uniform policy, the School Board established a three-step grievance procedure whereby opt-out requests are initially considered by the principal of the respective school. If the request is denied, the parent may seek a review of their request by the school superintendent. *687 A denial by the superintendent may then be reviewed by the School Board at its regular meeting. If the opt-out request is not granted by the School Board, the parent may appeal the decision to the Texas Education Agency. Finally, if the parent is not granted an exemption from the uniform policy through administrative review, he or she may seek redress in state court.[4] While pursuing their exemption request through the grievance process and on appeal, the students are not required to wear the prescribed uniform.
Through the use of the questionnaire and the grievance procedure, the School Board seeks to ascertain bona fide philosophical or religious objections to the uniform policy. However, many Plaintiffs refused to complete the questionnaire or failed to advance their claim through the grievance procedure. The parents of seventy-two children sought exemptions from compliance with the uniform policy, of which twelve were granted, including Plaintiffs Jonathan Becmer, Jeremiah Duckworth, Clayton Duckworth, and Madeline Lowery. The applications of the students who were denied exemptions based on philosophical objections, were denied because they indicated that those students had worn some type of uniform in the past, for example, as a member of the football or softball team, girl scouts, school mascot costume, or a uniform required by virtue of their employment.
Finding no relief from the uniform policy through administrative channels, Plaintiffs filed this § 1983 action, seeking to enjoin the School Board from applying the uniform policy to them, and requesting from the Court a declaration that the Forney school uniform policy is unconstitutional. Plaintiffs also seek damages and attorney's fees.
In response, Defendants filed two motions to dismiss pursuant to FED. R. CIV. P. 12(b)(6), contending that Plaintiffs have failed to state a claim upon which relief can be granted. Defendants also moved for summary judgment in accordance with FED. R. CIV. P. 56. In each of the motions, the individual Defendant school officials assert the defense of qualified immunity and seek dismissal on that basis as well. Inasmuch as the parties have submitted documentary evidence in connection with all of the pending motions combined, the Court will treat Defendants' Rule 12(b) motions to dismiss as motions for summary judgment, in accordance with that rule.
STANDING
As a threshold issue, the Court must address Defendants' contention that Plaintiffs lack standing to assert their claims. Defendants suggest that Plaintiffs have not presented a justiciable "case or controversy" for consideration by the Court and that it is not within the power of this Court under Article III of the United States Constitution to adjudicate this dispute. Specifically, Defendants submit that Plaintiffs have failed to show that they have suffered any injury as a result of the implementation of the school uniform policy. None of the Plaintiff students have been suspended or expelled from school for failing to abide by the uniform policy. Therefore, there is no cognizable injury.
Article III, section 2, of the Constitution limits the adjudicative power of federal courts to "Cases" or "Controversies." Persons who do not present such a case or controversy lack standing to litigate their dispute in federal court. Arizonans for Official English v. Arizona, 520 U.S. 43, 64, 117 S. Ct. 1055, 137 L. Ed. 2d 170 (1997). Thus, in order to establish standing, a party must show "`an invasion of a legally protected interest' that is `concrete and particularized' and `actual or imminent.'" *688 Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 119 L. Ed. 2d 351 (1992)). Citing Nevares v. San Marcos Consolidated I.S.D., 111 F.3d 25 (5th Cir.1997), Defendants argue that Plaintiffs do not have a constitutional right to attend a particular school. Therefore, Plaintiffs cannot complain that they will suffer injury if they refuse to abide by the uniform policy, since they do not have a right to attend a particular school in the first instance.
The Nevares decision is inapposite. While the United States Court of Appeals for the Fifth Circuit there held that students do not have a protected interest in attending a particular school, it did not hold that students do not have a right to attend school. Indeed, the Nevares court cited Goss v. Lopez, 419 U.S. 565, 574, 95 S. Ct. 729, 42 L. Ed. 2d 725 (1975), wherein the Supreme Court earlier held that protected property interests are not normally created under the federal Constitution; rather, they are created by state law and protected by the federal due process clause. The Goss Court determined that, where the state has statutorily created a right to a free public education, the state is "constrained to recognize a student's legitimate entitlement to a public education as a property interest which is protected by the Due Process Clause ...." Id. Likewise, in the instant case, Texas has established an entitlement to free public education. See TEX. EDUC. CODE ANN. § 25.001. Indeed, unless otherwise exempt, children are required by state law to attend school. TEX. EDUC. CODE ANN. § 25.085. Therefore, under Goss, Plaintiff students have a right to attend a Forney school appropriate for their grade level.
Plaintiffs have alleged that the uniform policy implemented at the Forney I.S.D., at which attendance is compulsory, violates their asserted rights under the Constitution. Moreover, the Forney I.S.D. Student Uniform Policy specifically provides that if a student persists in his refusal to comply with the uniform policy, his ultimate sanction is the alternative education program or expulsion. Thus, it is apparent that the penalty of expulsion from school may be imposed on those students who, for whatever reason, refuse to wear the prescribed uniform. Moreover, Plaintiffs seek remedies, including damages, for injuries which have already occurred. Accordingly, the Court concludes that Plaintiffs have established a particularized, imminent or actual injury, for purposes of Article III. Therefore, they have the requisite standing to assert their claims.
SUMMARY JUDGMENT STANDARD
Summary judgment is proper when the pleadings and evidence on file show that no genuine issue exists as to any material fact and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The movant bears the burden of establishing the propriety of summary judgment, and all pleadings and evidence are viewed in the light most favorable to the nonmovant. Melton v. Teachers Ins. & Annuity Ass'n of America, 114 F.3d 557, 559 (5th Cir.1997). As such, the movant must inform the court of the basis of its motion and identify the portions of the record which reveal there are no genuine material fact issues. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The function of the court, therefore, is to make the threshold inquiry of determining whether there is a need for a trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).[5]
Once the movant makes this showing, the nonmovant must demonstrate that there is evidence in the record establishing *689 that there is a genuine issue of material fact for trial. Id. at 323-24, 106 S. Ct. 2548. To carry this burden, the opponent must do more than simply show some metaphysical doubt as to the material facts. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348,89 L.Ed.2d 538 (1986). A dispute as to a material fact is "genuine" under Rule 56(c) only if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson, 477 U.S. at 251-52, 106 S. Ct. 2505. The mere existence of a scintilla of evidence in support of the nonmovant's position is insufficient to preclude a grant of summary judgment. Stewart v. Murphy, 174 F.3d 530, 533 (5th Cir.1999). The opponent must present evidence sufficient to support a resolution of the factual issue in his favor. Anderson, 477 U.S. at 249, 106 S. Ct. 2505. The court may properly enter summary judgment against a party if that party fails to establish the existence of an element essential to the case and as to which it will bear the burden of proof at trial. Celotex, 477 U.S. at 324-26, 106 S. Ct. 2548. Summary judgment is also appropriate when the only issues to be decided in the case are issues of law, as in the instant case, or when the non-moving party's claims are legally deficient. Neff v. American Dairy Queen Corp., 58 F.3d 1063, 1065 (5th Cir.1995); Hang On, Inc. v. City of Arlington, 65 F.3d 1248, 1257 (5th Cir.1995).
PLAINTIFFS' CONSTITUTIONAL CLAIMS
Plaintiff students contend that the Forney school uniform policy violates their constitutional right of free speech by suppressing their expressions of individuality and uniqueness, while requiring them to display a contrary message, namely, conformity, through the visual medium of the uniforms themselves. Additionally, the students complain that the policy impedes their liberty interest in wearing the clothing of their choice while at school. Similarly, Plaintiff parents allege that the policy, which, by definition, limits their ability to select the clothing worn by their children while at school, impermissibly encroaches on their constitutional right to direct the upbringing and education of their children. Plaintiffs also assert that the mandatory uniform policy prohibits the free exercise of their religion, inasmuch as the policy is in conflict with the students' preferred manner of dress, which is directed by their respective religious beliefs. Finally, Plaintiffs argue that the questionnaire employed by the School Board to obtain information concerning Plaintiffs' objections to the policy constitutes an impermissible inquiry into Plaintiffs' philosophical and religious beliefs.
Plaintiffs suggest that the source of the foregoing rights emanate from the First, Ninth, and Fourteenth Amendments to the Constitution. Thus, Plaintiffs' array of challenges to the Forney school uniform policy implicates several constitutional provisions, which, accordingly, necessitates an examination of the contours of each asserted right.
FREE SPEECH
The First Amendment prohibits Congress from abridging the freedom of speech. That prohibition is extended to the states by virtue of the Fourteenth Amendment. Zinermon v. Burch, 494 U.S. 113, 125, 110 S. Ct. 975, 108 L. Ed. 2d 100 (1990). While it literally forbids the abridgement of "speech," the protections of the First Amendment extend to expressive conduct as well. United States v. O'Brien, 391 U.S. 367, 88 S. Ct. 1673, 20 L. Ed. 2d 672 (1968). However, with respect to conduct, the Supreme Court has cautioned: "We cannot accept the view that an apparently limitless variety of conduct can be labeled `speech' whenever the person engaging in the conduct intends thereby to express an idea." Id. at 376, 88 S. Ct. 1673. Accordingly, "[t]he government generally has a freer hand in restricting expressive conduct than it has in restricting the written or spoken word." *690 Texas v. Johnson, 491 U.S. 397, 406, 109 S. Ct. 2533, 105 L. Ed. 2d 342 (1989).
Thus, the initial inquiry is whether the conduct in question can be characterized as "speech" for purposes of First Amendment analysis. To that end, the Court must consider whether the activity is "sufficiently imbued with elements of communication," so as to fall within the protective scope of the First Amendment. Spence v. State of Washington, 418 U.S. 405, 409, 94 S. Ct. 2727, 41 L. Ed. 2d 842 (1974). To help identify expressive conduct, the Supreme Court has fashioned a two-part test, which requires courts to determine: (1) whether an intent to convey a particularized message was present, and (2) whether the likelihood was great that the message would be understood by those who viewed it. Id. at 410-411, 94 S. Ct. 2727; Johnson, 491 U.S. at 404, 109 S. Ct. 2533. It is critically important to examine the nature of the activity, combined with the factual context in which it was undertaken. Spence, 418 U.S. at 409-410, 94 S. Ct. 2727; Cabrol v. Town of Youngsville, 106 F.3d 101, 109 (5th Cir.1997).
In the context of public education, First Amendment rights are applied in light of the special characteristics of the school environment. Tinker v. Des Moines Ind. Comm. School Dist., 393 U.S. 503, 506, 89 S. Ct. 733, 21 L. Ed. 2d 731 (1969). Thus, while it is true that students do not "shed their constitutional rights to freedom of speech or expression at the schoolhouse gate," id., it is equally true "that the constitutional rights of students in public school are not automatically coextensive with the rights of adults in other settings." Bethel School Dist. No. 403 v. Fraser, 478 U.S. 675, 682, 106 S. Ct. 3159, 92 L. Ed. 2d 549 (1986). Stated otherwise, "a school need not tolerate student speech that is inconsistent with its `basic educational mission' [citation omitted], even though the government could not censor similar speech outside the school." Hazelwood School Dist. v. Kuhlmeier, 484 U.S. 260, 266, 108 S. Ct. 562, 98 L. Ed. 2d 592 (1988) (citing Fraser, 478 U.S. at 685, 106 S. Ct. 3159). This is so, as the Supreme Court has observed, because the quintessential objective of public education is the "inculcation of fundamental values necessary to the maintenance of a democratic political system." Fraser, 478 U.S. at 681, 106 S. Ct. 3159 (quoting Ambach v. Norwick, 441 U.S. 68, 76-77, 99 S. Ct. 1589, 60 L. Ed. 2d 49 (1979)). Therefore, "[t]he determination of what manner of speech in the classroom or in school assembly is inappropriate properly rests with the school board." Fraser, 478 U.S. at 683, 106 S. Ct. 3159; Kuhlmeier, 484 U.S. at 267, 108 S. Ct. 562.
Likewise, expressive conduct in the school environment may be constitutionally circumscribed where it is inconsistent with the mission of primary and secondary school education. Karr v. Schmidt, 460 F.2d 609, 613-614 (5th Cir. 1972); Lansdale v. Tyler Junior College, 470 F.2d 659, 663 (5th Cir.1972); Ferrell v. Dallas Ind. School Dist., 392 F.2d 697, 702-703; Domico v. Rapides Parish School Bd., 675 F.2d 100 (5th Cir.1982) (holding that school employee hairstyle regulations contained in dress code were constitutionally permissible). The Fifth Circuit has described the governing authority's interest in maintaining an effective and efficient school system as "compelling" and "of paramount importance." Ferrell, 392 F.2d at 703. In upholding a school hair length regulation, the Ferrell court further observed:
That which so interferes or hinders the state in providing the best education possible for its people, must be eliminated or circumscribed as needed. This is true even when that which is condemned is the exercise of a constitutionally protected right.
Id.
In Karr, the Fifth Circuit sitting en banc, upheld another school regulation pertaining to hair and grooming. There, the plaintiff was prohibited from enrolling *691 in school because his hair length was in excess of the maximum length prescribed by the grooming regulation. In response, he sued the principal and the school board, contending that his hair style was symbolic speech by which he expressed his individuality, and that the school regulation unconstitutionally suppressed that message. Id. at 613. The Karr court stated the issue presented as follows: "Is there a constitutionally protected right to wear one's hair in a public high school in the length and style that suits the wearer?" Id. The court held that "no such right is to be found within the plain meaning of the Constitution." Id. In beginning its analysis, the Karr court reaffirmed its earlier determination in Ferrell that the interest of the state in maintaining an effective and efficient school system is "compelling." Id. at 612. Ultimately, the court concluded that the plaintiff's conduct (wearing long hair) was not imbued with sufficient communicative content to fall within the protection of the First Amendment.
Given the compelling state interest in promoting educational goals, compared with the minimal intrusion on the plaintiff's rights, the Karr court announced a per se rule that such regulations are constitutional. Id. at 617-618. Appreciating the myriad of school regulations pertaining to student appearance which were subject to attack, the court recognized that federal courts have more urgent tasks to perform than to supervise the affairs of local school boards. Thus, the court decreed:
Henceforth, district courts need not hold an evidentiary hearing in cases of this nature. Where a complaint merely alleges the constitutional invalidity of a high school hair and grooming regulation, the district courts are directed to grant an immediate motion to dismiss for failure to state a claim for which relief can be granted.
Id.
However, in Tinker, the Supreme Court invalidated a school policy which forbade students from wearing black armbands at school. Tinker, 393 U.S. at 514, 89 S. Ct. 733. There, the Court specifically noted that the armbands were worn by the students to criticize the Vietnam war. Id. at 504, 89 S. Ct. 733. Under those circumstances, wearing the armbands was a symbolic act of political protest and, thus, it was similar to "pure speech," which is entitled to "comprehensive protection under the First Amendment." Id. at 505-506, 89 S. Ct. 733.
At the heart of the Tinker decision is the Supreme Court's analysis of the context in which the conduct occurred, along with the circumstances surrounding the adoption of the "antiarmband" policy by the school authorities. The students made known their intention to wear the armbands to school to protest the war. The school authorities became aware that the students would be wearing the armbands and hastily adopted the armband regulation only two days before the planned protest. Id. at 504, 89 S. Ct. 733. Moreover, the Court found it relevant to its analysis that the school authorities did not ban the wearing of other political symbols, such as campaign buttons and the Iron Cross, which is associated with NAZI party affiliation; rather, the only banned symbols were the black armbands. Id. at 510-511, 89 S. Ct. 733. Furthermore, the Court observed that the peaceful demonstration by the students did not portend violence, such that school officials had no cause to believe that wearing the armband would cause a disruption. Clearly then, the Court placed a premium on (1) the intent of the students to display a symbol of political protest, and (2) the disingenuous adoption of the regulation by school officials to prohibit only that symbolic act. It is clear that the school officials in Tinker sought to control the content of the students' speech, notwithstanding their contentions otherwise.
Further narrowing the scope of its holding, the Tinker Court stated, "The problem posed by the present case does not relate to regulation of the length of skirts or the type of clothing, to hair style, or *692 deportment.... Our problem involves direct, primary First Amendment rights akin to `pure speech.'" Id. at 507-508, 89 S. Ct. 733. Thus, the Court's invalidation of the school armband regulation was premised on the notion that political speech, which is intended and understood by others as such, is deserving of the highest protection afforded by the First Amendment. However, the Court reiterated its recognition that school authorities generally exercise great latitude in regulating student conduct: "On the other hand, the Court has repeatedly emphasized the need for affirming the comprehensive authority of the States and of local school officials, consistent with fundamental constitutional safeguards, to prescribe and control conduct in the schools." Id. at 507, 89 S. Ct. 733.
With the foregoing principles in mind, the Court turns to the facts of the instant case. Plaintiff students simply contend that they have a First Amendment right to express their individuality by wearing the clothing of their choice to school. To determine the existence vel non of such a right, the first inquiry, as earlier noted, is whether the mere wearing of particular clothing is sufficiently imbued with elements of communication to bring that conduct within the ambit of the First Amendment.
Employing the Spence test, ante, the Court looks to whether Plaintiff students intended to convey a particularized message by wearing their chosen mode of dress, and, if so, whether the likelihood was great that the message would be understood by those who viewed it. Id. at 410-411, 94 S. Ct. 2727. The students claim that they intended to convey their individuality by virtue of their particular clothing. Further, they state that the wearing of their preferred clothing is an expression of their opposition to the uniform policy. The Court need not determine whether the students subjectively intended to express their individuality. Thus, for purposes of analysis, the Court will assume their intent, which satisfies the first part of the Spence test.
However, the Court reaches a different conclusion with respect to the likelihood that others would understand the students' message of individuality. While it may be generally true that every facet of life has symbolic meaning, it certainly does not follow that the clothing which one wears is a readily identifiable proclamation to the world of one's individuality. Indeed, it is axiomatic that everyone is different. But the mere fact of existence does not imbue one with First Amendment speech rights. The Supreme Court has observed, "It is possible to find some kernel of expression in almost every activity a person undertakes for example, walking down the street or meeting one's friends at a shopping mall but such a kernel is not sufficient to bring the activity within the protection of the First Amendment." City of Dallas v. Stanglin, 490 U.S. 19, 25, 109 S. Ct. 1591, 104 L. Ed. 2d 18 (1989). Here, by merely wearing the clothes of their choice, it cannot be said that Plaintiff students were communicating a particularized message which would have a great likelihood of being understood by others. See Cabrol, 106 F.3d at 109 (finding no expressive conduct in the plaintiff's daily activity of maintaining chickens in his yard after being prohibited from doing so by local ordinance); Bivens v. Albuquerque Public Schools, 899 F. Supp. 556, 560-561 (D.N.M.1995) (concluding that student's wearing of sagging pants did not amount to constitutionally protected speech); Olesen v. Bd. of Ed. of School Dist. No. 228, 676 F. Supp. 820, 822 (N.D.Ill.1987) (determining that wearing of earring by a male student to express his "individuality" was not a "message" within the protective scope of the First Amendment).
The Supreme Court's rejection of the notion that an apparently limitless variety of conduct can be labeled "speech," applies with even greater force in the public school environment, where the state's interest in promoting education is undeniably compelling. *693 The instant case is closely analogous to Karr. It is insufficient and myopic to distinguish Karr on the basis that its holding related to grooming regulations, whereas here the offending policy relates to dress. It is apparent that hair length restrictions and clothing requirements originate from the governing authority's ability to regulate a student's appearance while at school, provided that the policy is facially neutral and generally applicable. Further, the hair length restriction which was upheld in Karr is a greater, but acceptable intrusion on the students' rights, although it is more permanent. See Bivens, 899 F.Supp. at 560 n. 7 ("[I]t should be noted that hair length, in contrast to sagging pants, is a relatively permanent condition that stays with a student after he or she exits the schoolhouse gates.").
Unlike the facts presented in Tinker, the conduct of Plaintiff students in the instant case does not contain the requisite elements of communication to cloak it with the protection afforded by the First Amendment. In Tinker, the black armbands were overtly symbolic of the students' protest of the Vietnam War. That message was received loudly and clearly by others, including school administrators, who sought to suppress that message. Here, however, any message conveyed by the Plaintiff students was not such that reasonable persons would have understood its meaning. To an onlooker, a student wearing blue jeans and a t-shirt may be perceived as conveying "I'm confident" or "My other clothes are dirty," or any other conceivable message other than "I'm an individual." In addition, the uniform policy was facially-neutral and generally applicable to all students. Plaintiffs do not contend that the policy was enacted for an improper purpose. The policy was adopted to improve student performance and to ultimately further the educational goals of the school district.
Plaintiffs also assert that, by being required to wear the uniform, they are being compelled to communicate a message that they deem repugnant conformity. However, Plaintiffs' contention in this regard is merely the same argument advanced earlier from a different perspective. That is to say, once the Court has determined that there is no communicative element to the students' clothing, the same result obtains with respect to school uniform clothing. Thus, the clothing authorized by the uniform policy is no more expressive than the clothing selected by the students. Furthermore, the school uniforms do not become imbued with elements of communication simply because of the School Board's stated reasons for adopting the policy improving student performance and the like. The potential benefits of the policy cannot be construed as an intent to express those benefits. Even so, there is not a great likelihood that others will perceive a message of "conformity" emanating from the students who wear the uniform. Simply stated, Plaintiff students do not communicate a constitutionally prohibitive (or protected) message merely by wearing clothing authorized by the school uniform policy.
Finally, Plaintiff students complain that the questionnaire used to determine the basis for their objections to the uniform policy was unconstitutionally intrusive. Plaintiffs claim that the School Board does not have a right to gather information concerning Plaintiffs' beliefs, whether philosophical or religious, to determine whether Plaintiffs are eligible for an exemption from the policy. By doing so, they contend, the School Board is conditioning the students' free speech rights on the "arbitrary determination" that the student is sincere in his beliefs. Plaintiffs' complaint alleges that the Texas Education Code does not require or authorize the use of the questionnaire, or any other inquiry into Plaintiffs' beliefs, as a condition of allowing them to opt-out of the uniform policy. They contend that the questionnaire is "but a sham" to evade the exemption requirements of the state statute.
*694 The Court concludes that this free speech claim fails as a matter of law. Initially, the Court notes that Plaintiffs expressly state that they are not attacking the procedural aspects of the opt-out process, which presumably would include all facets of the procedure, including the questionnaire.[6] Accordingly, Plaintiffs cannot protest the alleged "arbitrary decisions" by the School Board. Further, Plaintiffs do not point to any applicable authority to suggest that they may refuse to comply with opt-out procedures, then complain that their opt-out request was denied. It is ludicrous to suggest that the questionnaire or the grievance procedure, whereby Plaintiffs are afforded the opportunity to voice their objections to the uniform policy, is somehow restrictive of speech. To the contrary, Plaintiffs are encouraged to fully inform the School Board of the basis of their objections. The questionnaire, then, is fully consistent with the free speech clause. That Plaintiffs are given the opportunity to explain their objections, but refuse to do so, cannot be laid at the feet of the School Board. Moreover, the state enabling statute, which Plaintiffs do not attack, authorizes exemptions for bona fide philosophical or religious beliefs. It is obvious, therefore, that the School Board must have some basis for determining a claim for exemption, just as a student must present a note from his parent for being absent from class.
In their final free speech argument, Plaintiffs contend that the uniform policy was an improper "prior restraint" on their speech. The speech to which Plaintiffs refer is the wearing of clothes of their choice, as discussed above. However, because the Court has concluded that Plaintiff students' conduct was not speech under the First Amendment, it necessarily follows that any action taken by the School Board with respect to the students' non-speech conduct was not a "prior restraint" of speech, and therefore not violative of the free speech clause.
Having concluded that the school uniform policy does not implicate Plaintiffs' free speech rights, it is clear that Karr mandates dismissal of those claims. However, notwithstanding the clear directive to dismiss, the Court in any case concludes that the uniform policy meets the rational basis test set forth in Karr. See id. at 616 (stating that the standard of review is whether the regulation is reasonably intended to accomplish a constitutionally permissible objective). While the burden is on Plaintiffs to establish that the policy is "wholly arbitrary," id. at 617, the School Board has clearly established that the policy was adopted to further the legitimate, indeed compelling, goal of improving the learning climate at the Forney schools.
Moreover, whether the decision to implement school uniforms is the best or worst method of achieving that goal is not subject to review by the Court. See Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 464, 101 S. Ct. 715, 66 L. Ed. 2d 659 (1981) (holding that "States are not required to convince the courts of the correctness of their legislative judgments."); Qutb v. Strauss, 11 F.3d 488, 493 n. 7 (5th Cir.1993) ("Federal courts have always been reluctant to question the potential effectiveness of legislative remedies designed to address societal problems."); Schleifer v. City of Charlottesville, 159 F.3d 843, 849 (4th Cir.1998) (The "uncertain nature of remedial legislation is no reason for courts to fashion their own cures .... Whether we as judges subscribe to these theories is beside the point. Those elected officials with their finger on the pulse of their home community clearly did.").
*695 Accordingly, the Court concludes that the Forney school uniform policy does not violate Plaintiffs' free speech rights under the First Amendment. There being no genuine issue of material fact as to those claims, Defendants are entitled to judgment as a matter of law.
DUE PROCESS
The due process clause of § 1 of the Fourteenth Amendment to the United States Constitution provides, inter alia: "No State shall ... deprive any person of life, liberty, or property, without due process of law." That provision has been interpreted to afford not only procedural guarantees against the deprivation of "liberty," but also a substantive aura of protection against constitutionally impermissible restrictions by the state or its subdivisions. Board of Regents v. Roth, 408 U.S. 564, 572, 92 S. Ct. 2701, 33 L. Ed. 2d 548 (1972). The Supreme Court has recognized that some personal liberties are of such constitutional significance that they are deemed "fundamental," including the right to marry, Loving v. Virginia, 388 U.S. 1, 87 S. Ct. 1817, 18 L. Ed. 2d 1010 (1967); to bear children, Skinner v. Oklahoma ex rel. Williamson, 316 U.S. 535, 62 S. Ct. 1110, 86 L. Ed. 1655 (1942); of marital privacy, Griswold v. Connecticut, 381 U.S. 479, 85 S. Ct. 1678, 14 L. Ed. 2d 510 (1965); to use contraception, Eisenstadt v. Baird, 405 U.S. 438, 92 S. Ct. 1029, 31 L. Ed. 2d 349 (1972); and to abortion, Roe v. Wade, 410 U.S. 113, 93 S. Ct. 705, 35 L. Ed. 2d 147 (1973).
Some rights protected by the due process clause have also been characterized as "privacy interests" emanating from the "penumbra" of other textual sources of the constitution most notably, the First and Ninth Amendments. See Griswold, 381 U.S. at 484, 85 S. Ct. 1678; id. at 486-499, 85 S. Ct. 1678 (Goldberg, J., concurring). However, the Supreme Court has stated that there is no meaningful or substantive distinction between the various constitutional sources of such rights. See Runyon v. McCrary, 427 U.S. 160, 179 n. 15, 96 S. Ct. 2586, 49 L. Ed. 2d 415 (1976) (noting that parental rights and privacy rights "may be no more than verbal variations of a single constitutional right."). The analyses of such rights are the same, whether arising from the due process clause or the other cited sources. Indeed, the jurisprudence cited in this Court's discussion of Plaintiffs' rights, below, invariably attributes the source of such rights to the due process clause of the Fourteenth Amendment. As such, the Court will analyze Plaintiffs' privacy right claims in light of the prevailing due process jurisprudence. Thus, the Court must determine whether Plaintiffs have presented liberty interests cognizable under the due process clause.[7]
Plaintiffs' due process claims consist of two collateral components: Plaintiff students' asserted right to wear the clothing of their choice while at school, and Plaintiff parents' right to direct the upbringing and education of their children. The Court will examine each component separately.
Students' Liberty Interest
The Fifth Circuit has recognized that there is a general liberty interest in choosing how to wear one's hair; however, that right does not rise to the level of fundamental significance. Lansdale, 470 F.2d at 663; Domico, 675 F.2d at 101. Furthermore, the Fifth Circuit has expressly declined to recognize as fundamental, the right of public school students to wear their hair as they please. Karr, supra, 460 F.2d at 615. "It is our firm belief that this asserted freedom does not rise to the level of fundamental significance which would warrant our recognition of such a substantive constitutional right." Id. In so concluding, the Karr court succinctly explained the relative nature of individual liberties:
We think it plain that individual liberties may be ranked in a spectrum of importance. At one end of the spectrum *696 are the great liberties such as speech, religion, and association specifically guaranteed in the Bill of Rights. Of equal importance are liberties such as the right of marital privacy that are so fundamental that, even in the absence of a positive command from the Constitution, they may be restricted only for compelling state interests. At the other end of the spectrum are the lesser liberties that may be invaded by the state subject only to the same minimum test of rationality that applies to all state action.
Karr, 460 F.2d at 615.
Balancing the interests of the student and the school authorities, the Karr court determined that the intrusion on the students' liberty interest was "temporary and relatively inconsequential," while the school's interest in maintaining decorum and deportment was substantial: "We feel compelled to recognize and give weight to the very strong policy considerations in favor of giving local school boards the widest possible latitude in the management of school affairs." Id. at 615. Having concluded that the right of a student to wear his hair as he pleases does not merit heightened scrutiny as a fundamental right, the Karr court applied the rational basis test to the hair length regulation and determined that it was "reasonably intended" to accomplish a legitimate state objective. Id. at 616.
As earlier noted, the reasoning of Karr can be easily applied to the instant case. The school uniform policy is similar to the hair length restrictions in Karr. Each causes minimal intrusion on the students' liberty interests, while serving a legitimate educational objective. This Court has earlier observed that hair length restrictions, unlike school uniforms which may be taken off at the end of the school day, are more intrusive, yet they have been upheld by the Fifth Circuit. Thus, a fortiori, the Forney school uniform policy does not unconstitutionally encroach on Plaintiff students' due process rights.
Finally, Plaintiffs, both students and parents, allege the deprivation of their liberty interest in preventing the disclosure of private information concerning their respective philosophical beliefs. They contend that the questionnaire and the grievance procedure, whereby they are allowed to explain their objections to the uniform policy, unconstitutionally intrude into their private affairs. In support of their argument, Plaintiffs cite Fadjo v. Coon, 633 F.2d 1172 (5th Cir.1981), where the Fifth Circuit observed that the liberty interest in privacy is composed of two notions: the freedom from being required to disclose personal matters to the government and the freedom to make certain types of decisions without government interference. Fadjo, 633 F.2d at 1175. Here, Plaintiffs simply do not want to explain their beliefs to the School Board for purposes of applying for an opt-out. In such cases, Fadjo mandates that the courts "must balance the invasion of privacy alleged by [the plaintiff] against any legitimate interests proven by the state." Id. at 1176. The Fadjo court further stated that, because a constitutional right was presented, "more than mere rationality must be demonstrated" by the state. Id. (quoting Plante v. Gonzalez, 575 F.2d 1119, 1134 (1978)).
In American Civil Liberties Union of Miss. v. State of Miss., 911 F.2d 1066 (5th Cir.1990), the Fifth Circuit considered the privacy right of citizens to prevent disclosure of intimate information about them surreptitiously gathered during the 1950s and 1960s, by a state commission devoted to perpetuating segregation. Id. at 1067-1068. Much of the information was disparaging and highly personal, and included allegations of homosexuality, child molestation, illegitimate births, sexual promiscuity, drug abuse, and extreme political and religious views. Id. at 1070. There, the court relied on Fadjo, but employed the rational basis test in allowing limited disclosure. ACLU v. Miss., 911 F.2d at 1070 ("An intrusion into the interest in avoiding disclosure of personal information will thus *697 only be upheld when the government demonstrates a legitimate state interest which is found to outweigh the threat to the plaintiff's privacy interest."). Id. (quoting Fadjo, 633 F.2d at 1176).
The Supreme Court has held that state laws which require physicians to provide information concerning their patients' controlled substance prescriptions do not implicate a privacy right recognized by the due process clause. Whalen v. Roe, 429 U.S. 589, 603-604, 97 S. Ct. 869, 51 L. Ed. 2d 64 (1977). The plaintiffs in Whalen, doctors and patients, argued that the state reporting requirement interfered with their privacy right to make decisions concerning their health. Id. at 599-600, 97 S. Ct. 869. Nevertheless, without utilizing heightened scrutiny, the Whalen court upheld the reporting requirement as a reasonable exercise of the state's police power. Id. at 598, 97 S. Ct. 869.
In this case, it is clear that neither the questionnaire nor the grievance procedure compel a constitutionally prohibitive disclosure of personal information. First, Plaintiffs who refused to respond to the questionnaire and did not seek an opt-out through the grievance procedure, did not reveal any information and, thus, their claims have no legal merit. The School Board's request for information, which was ultimately refused by Plaintiffs, does not present a constitutional violation. Second, as to those who acceded to the School Board's request and supplied information, the Court concludes that the information provided did not invade their right of privacy. The questionnaire was simply used to elicit minimal information concerning the basis of Plaintiffs' objections to the uniform policy, and it was used only for the purpose of determining whether an exemption was warranted. As earlier noted, the School Board's interest in maintaining an effective and efficient school system is not only legitimate, but "compelling" and "of paramount importance." Ferrell, 392 F.2d at 703. Balancing the minimal intrusion on Plaintiffs' privacy interests with the significant interest of the School Board in achieving its educational goals, the Court concludes that Plaintiffs' due process claims arising out of disclosure of personal information must likewise fail.
Parental Rights
Plaintiff parents' due process claims are premised on the concept that parents have a recognized constitutional right to direct the upbringing and education of their children. Meyer v. Nebraska, 262 U.S. 390, 43 S. Ct. 625, 67 L. Ed. 1042 (1923); Pierce v. Society of Sisters, 268 U.S. 510, 45 S. Ct. 571, 69 L. Ed. 1070 (1925); Wisconsin v. Yoder, 406 U.S. 205, 92 S. Ct. 1526, 32 L. Ed. 2d 15 (1972). However, while Plaintiffs' asserted rights may be generally characterized as "parental rights," it is important to note that their claims more particularly arise within the context of public education. The Supreme Court has indicated that the "`[s]ubstantive due process' analysis must begin with a careful description of the asserted right, for `[t]he doctrine of judicial self-restraint requires us to exercise the utmost care whenever we are asked to break new ground in this field.'" Reno v. Flores, 507 U.S. 292, 302, 113 S. Ct. 1439, 123 L. Ed. 2d 1 (1993) (quoting Collins v. City of Harker Heights, Texas, 503 U.S. 115, 125, 112 S. Ct. 1061, 117 L. Ed. 2d 261 (1992)); see also Washington v. Glucksberg, 521 U.S. 702, 721, 117 S. Ct. 2258, 138 L. Ed. 2d 772 (1997); Bowers v. Hardwick, 478 U.S. 186, 191, 106 S. Ct. 2841, 92 L. Ed. 2d 140 (1986). "It is important, therefore, to focus on the allegations in the complaint to determine how [the plaintiff] describes the constitutional right at stake ...." Collins, 503 U.S. at 125, 112 S. Ct. 1061. Thus, the Court must examine the particular right advanced by Plaintiffs, namely, the right to send their children to school in the clothes of their choice.
The Meyer/Pierce/Yoder trilogy is the touchstone for the Court's analysis of Plaintiffs' claims. The Meyer decision laid *698 the foundation for the Supreme Court's later explications of the right of parents to direct the upbringing and education of their children. There, a parochial school instructor was convicted of teaching German under a Nebraska statute which made it a misdemeanor to teach a student any language other than English. In examining the parameters of the due process clause, the Court stated, "Without doubt, [the Fourteenth Amendment] denotes not merely freedom from bodily restraint but also the right of the individual ... to marry, establish a home and bring up children ... and generally enjoy those privileges long recognized at common law as essential to the orderly pursuit of happiness by free men." Meyer, 262 U.S. at 399, 43 S. Ct. 625. Thus, the state may not interfere with those individual liberties "under the guise of protecting the public interest, by legislative action which is arbitrary or without reasonable relation to some purpose within the competency of the state to effect." Id. at 399, 43 S. Ct. 625.
Two years after Meyer, the Supreme Court in Pierce considered whether a state may prohibit parents from sending their children to a private school. The offending statute in question required all parents having custody of school-age children to send them to a public school. Pierce, 268 U.S. at 530, 45 S. Ct. 571. Relying on its decision in Meyer, the Court held that the statute "unreasonably interferes with the liberty of parents and guardians to direct the upbringing and education of children under their control." Pierce, 268 U.S. at 534-535, 45 S. Ct. 571. The Pierce Court further affirmed that such rights may not be abridged by state legislation "which has no reasonable relation to some purpose within the competency of the state." Id. Finally, the Court also recognized for the first time the important state interest in providing public education: "No question is raised concerning the power of the state to reasonably regulate all schools, to inspect, supervise and examine them ...." Id. at 534, 45 S. Ct. 571.
Nearly fifty years after Pierce, the Supreme Court decided Yoder its most revealing examination of the confluence of parental rights and the substantial state interest in public education. The Yoder Court invalidated a Wisconsin statute that required children to attend a public or private school until the age of sixteen. Plaintiffs were members of the Amish faith, whose religious beliefs prohibited them from allowing their children to attend school beyond the eighth grade. The parents insulate their children from formal education and other worldly influences after they acquire fundamental reading and math skills, in order to inculcate Amish attitudes and beliefs through home-based vocational training, the object of which is to prepare them for the role of farmer or housewife. Yoder, 406 U.S. at 211, 92 S. Ct. 1526. This value-shaping, informal educational experience is a necessary rite of passage for Amish youth. The training of their children is a central tenet of the Amish faith, which has been practiced by the Amish in a substantially unchanged fashion for three hundred years. Id. at 219, 92 S. Ct. 1526.
While Yoder was decided on the free exercise of religion clause of the First Amendment, the Supreme Court clearly premised its holding in part on the "interests of parenthood." Id. at 233, 92 S. Ct. 1526. The Court also acknowledged the substantial state interest in providing and regulating a public educational system: "There is no doubt as to the power of a State, having a high responsibility for education of its citizens, to impose reasonable regulations for the control and duration of basic education. [Citation omitted.] Providing public schools ranks at the very apex of the function of a State." Id. at 213, 92 S. Ct. 1526. However, the Court also noted that the parents' right to guide their children's religious upbringing and education has "a high place in our society." Id. at 213-214, 92 S. Ct. 1526. Citing Meyer and Pierce, the Court concluded that *699 the Wisconsin compulsory education law was unconstitutional as it applied to the Amish children.
Understanding the full import of Yoder, which refined the parental rights announced in Meyer and Pierce, is critical to properly analyze the claims presented in the present case. In Yoder, the Supreme Court, while reaffirming the general notion that parental rights are a protected liberty interest under the due process clause, recognized the "high responsibility" and regulatory power of the state in matters of public education. Furthermore, while fundamental religious practices may excuse parents from complying with educational policies, secular objections to such policies are insufficient to avoid compliance. The Court was very specific in framing its holding:
We come then to the quality of the claims of the respondents .... In evaluating those claims we must be careful to determine whether the Amish religious faith and their mode of life are, as they claim, inseparable and interdependent. A way of life, however virtuous and admirable, may not be interposed as a barrier to reasonable state regulation of education if it is based on purely secular considerations .... [T]he very concept of ordered liberty precludes allowing every person to make his own standards on matters of conduct in which society as a whole has important interests.
Yoder, 406 U.S. at 215-216, 92 S. Ct. 1526 (emphasis added).
Thus, while the Court stated in general terms that "only those interests of the highest order and those not otherwise served can overbalance legitimate claims to the free exercise of religion," id. at 215, 92 S. Ct. 1526, considering the quality of the claims before it, the Court concluded: "[W]hen the interests of parenthood are combined with a free exercise claim of the nature revealed by this record, more than a `reasonable relation to some purpose within the competency of the State' is required to sustain the validity of the State's requirement under the First Amendment." Id. at 233, 92 S. Ct. 1526 (emphasis added) (quoting Pierce, 268 U.S. at 535, 45 S. Ct. 571). While the Court employed more than a rational basis standard with reference to the First Amendment free exercise clause, it is clear that the due process interest of parents to direct the upbringing and education of their children, standing alone, warranted no more than rational basis review. The standard was elevated only because of the free exercise aspect of the parents' claims because, as earlier noted, the secular aspect of their claim (implicating due process) will not overcome a reasonable educational regulation. Thus, Yoder dictates that this Court apply a rational basis standard of scrutiny to the uniform policy in the instant case. See Herndon v. Chapel Hill-Carrboro City Bd. of Ed., 89 F.3d 174, 178-179 (4th Cir.1996) (tracing the lineage of Yoder and concluding that due process claims involving parental rights in the school context warrant only rational basis scrutiny); Immediato v. Rye Neck School Dist., 73 F.3d 454, 461-462 (2d Cir.1996) (holding that rational basis scrutiny applied to parents' due process objection to a mandatory, community service curriculum requirement adopted by the school board).
While Yoder directs a rational basis review of the Forney school uniform policy, the recent case of Troxel v. Granville, ___ U.S. ___, 120 S. Ct. 2054, 147 L. Ed. 2d 49 (2000), may be seen to offer an alternative view. There, in the context of child visitation rights, the Supreme Court observed that "the right of parents to make decisions concerning the care, custody, and control of their children" is a fundamental right protected by the due process clause. Troxel, 120 S.Ct. at 2060. The Troxel Court struck down a Washington statute that allowed "any person" to file a petition to seek visitation rights with a child, and such visitation may be awarded if it is in the best interest of the child. Id. at 2061. The plaintiffs in that case, who are the paternal grandparents of two illegitimate *700 children of their late son, sought visitation rights with the children. Nevertheless, the Court found the statute offensive to the parental rights of the mother, whose parental fitness was not at issue. Id. at 2061. The Court held that the visitation statute, which sweepingly allowed "any person" to seek visitation with a child, unconstitutionally interfered with the mother's right to make decisions concerning the care, custody, and control of her own children. Id. at 2065.
The broad declaration by the four-member Troxel plurality, that parental rights are "fundamental" liberty interests, caused other members of the Court to express concern. Justice Souter noted that the Court had "long recognized that a parent's interests in the nurture, upbringing, companionship, care, and custody of children are generally protected by the Due Process clause ...." Troxel, 120 S.Ct. at 2066 (Souter, J., concurring) (emphasis added). Citing Meyer, Justice Souter acknowledged that the right of parents to raise their children and control their education is "protected by the Constitution." Id. However, he then observed that the contours of parental rights have not been fully delineated by the Court: "Our cases, it is true, have not set out exact metes and bounds to the protected interest of a parent in the relationship with his child ...." Id. at 2066.
In his dissent, Justice Stevens remarked that the Court's decisions indicate that parents' fundamental liberty interest in caring for and guiding their children may be encroached by state action in "exceptional circumstances." Id. at 2071 (Stevens, J., dissenting). Furthermore, "despite this Court's repeated recognition of these significant parental liberty interests, these interests have never been seen to be without limits." Id.
Criticizing the plurality's expansion of the narrowly-crafted category of fundamental rights to include parental rights, Justice Scalia observed:
Only three holdings of this Court rest in whole or in part upon a substantive constitutional right of parents to direct the upbringing of their children [citing Meyer, Pierce, and Yoder]. The sheer diversity of today's opinions persuades me that the theory of unenumerated parental rights underlying these three cases has small claim to stare decisis protection.... While I would not now overrule those earlier cases (that has not been urged), neither would I extend the theory upon which they rested to this new context.
Troxel, 120 S.Ct. at 2074 (Scalia, J., dissenting). Justice Scalia further forewarned that if the courts "embrace this unenumerated [parental] right ... we will be ushering in a new regime of judicially prescribed, and federally prescribed, family law. I have no reason to believe that federal judges will be better at this than state legislatures ...." Id. at 2074-2075.
Echoing the concerns of his dissenting colleagues, Justice Kennedy urged caution in expanding the category of fundamental rights. Pointing to the cases cited by the plurality in elevating to fundamental right status the right of parents to direct the care, custody, and control of their children, Justice Kennedy stated: "The principle exists, then, in broad formulation; yet courts must use considerable restraint, including careful adherence to the incremental instruction given by the precise facts of particular cases, as they seek to give further and more precise definition to the right." Id. at 2076 (Kennedy, J., dissenting).
Close analysis of the Troxel plurality opinion reveals that, although the Supreme Court designated the parental rights at issue as fundamental, the Court conspicuously failed to articulate a standard of judicial scrutiny to be applied to laws which impinge on such rights. Indeed, the absence of a standard spurred Justice Thomas to note in his concurrence, "The opinions of the plurality, Justice Kennedy, and Justice Souter recognize such a [parental] right, but curiously none of them *701 articulates the appropriate standard of review." Troxel, 120 S.Ct. at 2068 (Thomas, J., concurring).
In Troxel, the plurality cited several cases concerning parental rights in arriving at the general conclusion that parental rights are fundamental. The Troxel plurality points to the following cases in support of its conclusion: Meyer, 262 U.S. at 399, 43 S. Ct. 625 (involving the right to be taught a foreign language); Pierce, 268 U.S. at 534-535, 45 S. Ct. 571 (concerning the right of parents to send their children to a private school); Prince v. Massachusetts, 321 U.S. 158, 64 S. Ct. 438, 88 L. Ed. 645 (1944) (upholding a state child labor law which prohibited children from selling magazines in the street or other public place); Stanley v. Illinois, 405 U.S. 645, 92 S. Ct. 1208, 31 L. Ed. 2d 551 (1972) (invalidating a state statute which automatically allowed the state to assume custody of a child whose mother died, without allowing the unwed father to assert parental rights); Yoder, 406 U.S. at 232, 92 S. Ct. 1526 (striking down a compulsory education law which required all children to attend school until age sixteen); Quilloin v. Walcott, 434 U.S. 246, 98 S. Ct. 549, 54 L. Ed. 2d 511 (1978) (holding that the "best interest of the child" evidentiary standard is all that is required in a child adoption proceeding); Parham v. J.R., 442 U.S. 584, 99 S. Ct. 2493, 61 L. Ed. 2d 101 (1979) (upholding a state statute authorizing parents to commit their children to mental institutions without the child's consent); Santosky v. Kramer, 455 U.S. 745, 102 S. Ct. 1388, 71 L. Ed. 2d 599 (1982) (holding that due process requires that proceedings to terminate parental rights must utilize the "clear and convincing" evidentiary standard of proof); Glucksberg, 521 U.S. at 720, 117 S. Ct. 2258 (holding that terminally ill patients do not have a fundamental liberty interest in committing suicide).
Clearly, only three of the foregoing cases cited by the Troxel plurality implicate parental rights in the context of public education: the Meyer, Pierce, and Yoder trilogy. The Supreme Court did not apply heightened scrutiny to the challenged governmental interference in either Meyer or Pierce. Further, with respect to the parental rights claim alone (without the benefit of a free exercise claim), the Yoder Court indicated that rational basis scrutiny was appropriate. See Meyer, 262 U.S. at 399-400, 43 S. Ct. 625 (the state interference must not be "arbitrary or without reasonable relation to some purpose within the competency of the state to effect."); Pierce, 268 U.S. at 534-535, 45 S. Ct. 571 (same); and Yoder, 406 U.S. at 215, 92 S. Ct. 1526 ("A way of life ... may not be interposed as a barrier to reasonable state regulation of education if it is based on purely secular considerations."). Thus, for that line of Supreme Court jurisprudence concerning parental rights and their relationship with public educational interests, the Supreme Court has directed a rational basis review.
This Court recognizes, however, that both Meyer and Pierce were decided before the Supreme Court articulated its three-tier scrutiny method of analysis. See San Antonio Ind. School Dist. v. Rodriguez, 411 U.S. 1, 40, 93 S. Ct. 1278, 36 L. Ed. 2d 16 (1973) (noting that earlier cases employed the "traditional" standard of scrutiny). The application of strict judicial scrutiny to state action was first mentioned in Justice Harlan's dissent in Poe v. Ullman, 367 U.S. 497, 548, 81 S. Ct. 1752, 6 L. Ed. 2d 989 (1961) (Harlan, J., dissenting). Furthermore, it was not explicitly adopted by the Court until 1971. See Graham v. Richardson, 403 U.S. 365, 375, 91 S. Ct. 1848, 29 L. Ed. 2d 534 (1971); see also Herndon, 89 F.3d at 177-179 (discussing the evolution of the three-level scrutiny model in the context of parental rights).
Notwithstanding that Meyer and Pierce were decided before the inauguration of the present hierarchical scrutiny scheme, Yoder was handed down after the Supreme Court adopted the strict scrutiny analysis normally applied to fundamental rights but, notably, the Yoder Court did *702 not call for strict scrutiny of reasonable educational regulations to which parents assert secular claims of parental rights. Yoder, 406 U.S. at 215, 92 S. Ct. 1526. It is clear, therefore, that rational basis scrutiny applies in parental rights cases where the interests of the state in promoting education are also present.
The Supreme Court has stated that the due process clause "forbids the government to infringe certain `fundamental' liberty interests at all ... unless the infringement is narrowly tailored to serve a compelling state interest." Flores, 507 U.S. at 301-302, 113 S. Ct. 1439 (emphasis added) (citing Collins v. Harker Heights, 503 U.S. 115, 125, 112 S. Ct. 1061, 117 L. Ed. 2d 261 (1992)); see also Glucksberg, 521 U.S. at 720, 117 S. Ct. 2258 (stating that the due process clause "provides heightened protection against government interference with certain fundamental rights and liberty interests.") (emphasis added). Thus, it is clear that government interference with certain fundamental liberty interests warrants a heightened level of judicial scrutiny. Furthermore, Yoder is authority for the proposition that some fundamental rights, depending on their character and the context in which they are asserted, may warrant either rational basis scrutiny or something more than that.
This Court, then, is left with the Meyer/Pierce/Yoder line of Supreme Court precedent on the one hand, and the recent Troxel decision on the other. Clearly, Yoder and its antecedents are more relevant than Troxel and the line of unrelated parental rights cases it relied upon to elevate such rights to fundamental status. The fundamental right of filiation and companionship with one's children, which the Supreme Court examined in Troxel, is an entirely different balance of interests from the right of parents to send their children to a public school in clothes of their own choosing. The Supreme Court has characterized the interest of the state and local authorities in providing its citizens with public education as the "very apex of the function of a State." Yoder, 406 U.S. at 213, 92 S. Ct. 1526. Therefore, in the context of public educational interests, the parental right to control the upbringing and education of one's children is more properly decided under Yoder, rather than Troxel.
Thus, while there appears to be some inconsistency between Troxel and Yoder, the Supreme Court's decision in Agostini v. Felton, 521 U.S. 203, 117 S. Ct. 1997, 138 L. Ed. 2d 391 (1997), resolves any perceived tension. There, the Court acknowledged that its earlier First Amendment establishment clause law had been modified by later rulings. Id. at 237, 117 S. Ct. 1997. However, the Court warned that earlier decisions by the Court remain viable until such time as they are expressly abrogated by the Court:
We do not acknowledge, and we do not hold, that other courts should conclude our more recent cases have, by implication, overruled an earlier precedent. We reaffirm that "[i]f a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions."
Id. (citing Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989)). Thus, because Yoder has direct application to this case, this Court must employ the reasoning of that decision to decide the instant case, notwithstanding the more general pronouncements of Troxel.
Contrary to Plaintiffs' suggestion, it would be disingenuous and utter folly for this Court to simply group together all liberty interests involving parents and their children, despite the context in which they are invoked, place them under the rubric of "fundamental rights," and ipso facto apply strict scrutiny to the particular *703 governmental intrusion. Parental rights do not exist in a vacuum; rather, their exercise depends on the circumstances out of which they arise. Hence, the competing interests are balanced. The Supreme Court has clearly stated that lower courts must give a "careful description of the asserted fundamental liberty interest," Glucksberg, 521 U.S. at 720, 117 S. Ct. 2258, because "neither the rights of religion nor rights of parenthood are beyond limitation." Prince, 321 U.S. at 166, 64 S. Ct. 438. The Prince Court further observed that "the state has a wide range of power for limiting parental freedom and authority in things affecting the child's welfare; and ... this includes, to some extent, matters of conscience and religious conviction." Id. at 167, 64 S. Ct. 438; see also Runyon, 427 U.S. at 178, 96 S. Ct. 2586 (stressing that parents "have no constitutional right to provide their children with private [or public] school education unfettered by reasonable government regulation.").
Accordingly, this Court applies the principles of Yoder to the instant case. Plaintiff parents' due process claim, therefore, is subject only to rational basis scrutiny. See Herndon, 89 F.3d at 179; Immediato, 73 F.3d at 462. As such, the school uniform policy passes constitutional muster. The Court has previously concluded that the School Board's interest in furthering education is not only compelling, but paramount. See Ferrell, 392 F.2d at 703. The uniform policy is a measure directed toward that end. Clearly then, the policy easily meets the rational basis test. Therefore, it does not unconstitutionally inhibit Plaintiff parents' due process right to direct the upbringing and education of their children. The School Board is entitled to judgment as a matter of law as to those claims.
RELIGION RIGHTS
The First Amendment religion clauses provide in pertinent part: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof ...." These commandments are applicable to the states through the Fourteenth Amendment. Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S. Ct. 900, 84 L. Ed. 1213 (1940). Plaintiffs contend that the school uniform policy unconstitutionally inhibits their right to freely exercise their religious beliefs, namely, the right to determine the clothing worn by their children at school, in accordance with their respective religious beliefs.[8] They also allege that the questionnaire and grievance procedure establishes a preference for a particular religion, in violation of the establishment clause.
Free Exercise Clause
The free exercise of religion clause of the First Amendment affords absolute protection to religious beliefs. Employment Div., Dept. of Human Resources of Oregon v. Smith, 494 U.S. 872, 877, 110 S. Ct. 1595, 108 L. Ed. 2d 876 (1990). The clause also extends, to a limited extent, to conduct based upon religious beliefs. Id. at 877-878, 110 S. Ct. 1595. The Supreme Court observed, "Our cases have long recognized a distinction between the freedom of individual belief, which is absolute, and the freedom of individual conduct, which is not absolute." Bowen v. Roy, 476 U.S. 693, 699, 106 S. Ct. 2147, 90 L. Ed. 2d 735 (1986). In defining the limits of protection afforded by that constitutional provision, the Supreme Court explained that the free exercise clause "holds an important place in our scheme of ordered *704 liberty, but the Court has steadfastly maintained that claims of religious conviction do not automatically entitle a person to fix unilaterally the conditions and terms of dealings with the Government. Not all burdens on religion are unconstitutional." Id. at 702, 106 S. Ct. 2147.
In Smith, the Supreme Court held that facially neutral, generally applicable laws which incidentally burden religiously motivated conduct are not subject to strict scrutiny analysis. Smith, 494 U.S. at 885, 110 S. Ct. 1595. In doing so, the Court abrogated its earlier decision in Sherbert v. Verner, 374 U.S. 398, 83 S. Ct. 1790, 10 L. Ed. 2d 965 (1963), and its progeny, which applied strict scrutiny to governmental action which imposed a burden on religious conduct. Therefore, a neutral, generally applicable governmental regulation will withstand a free exercise challenge when it is reasonably related to a legitimate state interest. See Diaz v. Collins, 114 F.3d 69, 71 (5th Cir.1997) (noting that Smith lowered the level of scrutiny to rational basis); Munn v. Algee, 924 F.2d 568, 574 (5th Cir.1991) (applying Smith in a civil case).
In the instant case, there is no evidence to suggest that the Forney school uniform policy is not facially neutral or generally applicable. The evidence clearly reveals that the policy was not enacted for the purpose of inhibiting any religious belief or practice. The only reference in the policy to religion is the opt-out provision, which obviously is an attempt to accommodate, not hinder, the religious beliefs of the students and their parents. Clearly then, the policy was not adopted "because of" Plaintiffs' beliefs, but "in spite of" them. See Personnel Administrator of Mass. v. Feeney, 442 U.S. 256, 279 n. 24, 99 S. Ct. 2282, 60 L. Ed. 2d 870 (1979); Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520, 540, 113 S. Ct. 2217, 124 L. Ed. 2d 472 (1993). Accordingly, Smith points to the validity of the uniform policy.
Plaintiffs argue, however, that Smith left open the door to strict scrutiny analysis in cases where the rights asserted derive not only from the free exercise clause, but also from due process clause protection of parental rights, discussed above. Plaintiff's argument springs from language in Smith which indicated that a more demanding level of judicial scrutiny would apply in circumstances where the a free exercise claim is combined with a parental rights claim. Smith, 494 U.S. at 881, 110 S. Ct. 1595. The Court referred to such a situation as a "hybrid." Id. at 882, 110 S. Ct. 1595. Plaintiffs suggest that in situations where hybrid rights are presented, strict scrutiny is demanded. However, Plaintiffs' argument is a product of a misreading of Smith.
The unambiguous holding in Smith is that strict scrutiny analysis is inapplicable to neutral, generally applicable governmental regulations which place an incidental burden on religious practices. Smith, 494 U.S. at 885, 110 S. Ct. 1595. Nevertheless, in order to distinguish Yoder, rather than overrule it, the Smith Court observed that it was not presented with a hybrid situation such as that found in Yoder, which involved free exercise rights and parental rights. Smith, 494 U.S. at 881-882, 110 S. Ct. 1595. Thus, in reducing the scrutiny level from strict to rational basis, the Smith decision left Yoder's standard of review intact. Contrary to Plaintiffs' assertion, Smith does not articulate any standard of scrutiny in the hybrid situation or otherwise. The perplexing notion of hybrid rights was discussed in Justice Souter's concurrence in Lukumi, 508 U.S. at 567, 113 S. Ct. 2217 (Souter, J., concurring):
[T]he distinction Smith draws strikes me as ultimately untenable. If a hybrid claim is simply one in which another constitutional right is implicated, then the hybrid exception would be so vast as to swallow the Smith rule, and, indeed, the hybrid exception would cover the situation exemplified by Smith, since free speech and associational rights are certainly implicated in the peyote ritual. But if a hybrid claim is one in which a *705 litigant would actually obtain an exemption from a formally neutral, generally applicable law under another constitutional provision, then there would have been no reason for the Court in what Smith calls the hybrid cases to have mentioned the Free Exercise Clause at all.
While there is no Fifth Circuit jurisprudence on the subject of hybrid rights,[9] other courts have required more than the mere allegation of a hybrid rights violation. In Swanson v. Guthrie Ind. School Dist., 135 F.3d 694, 700 (10th Cir.1998), the court concluded that the plaintiffs could not avail themselves of the hybrid right exception because they had not established a colorable claim of infringement of a parental right. There, a parent home-schooled her child for religious reasons. When the parent attempted to enroll her child part-time in a public school, she was denied. The parent claimed violations of her free exercise rights and her parental rights. In concluding that the parent had not shown a colorable parental right claim, the court stated:
At a minimum ... it cannot be true that a plaintiff can simply invoke the parental rights doctrine, combine it with a claimed free-exercise right, and thereby force the government to demonstrate the presence of a compelling state interest. Whatever the Smith hybrid-rights theory may ultimately mean, we believe that it at least requires a colorable showing of infringement of recognized and specific constitutional rights, rather than the mere invocation of a general right such as the right to control the education of one's child.
Swanson, 135 F.3d at 700. The Ninth Circuit has also adopted the "colorable claim" view of hybrid rights. Miller v. Reed, 176 F.3d 1202, 1208 (9th Cir.1999) (holding that a plaintiff does not allege a hybrid rights claim, and thus he is not entitled to strict scrutiny of the offending regulation, merely by combining a meritless claim of the violation of another alleged fundamental right or a claim of an alleged non-fundamental right).
Likewise, the First Circuit Court of Appeals has also required that the nature and quality of the hybrid claims must implicate the threshold set by Yoder. Brown v. Hot, Sexy and Safer Productions, Inc., 68 F.3d 525 (1st Cir.1995), cert. denied, 516 U.S. 1159, 116 S. Ct. 1044, 134 L. Ed. 2d 191 (1996). The court explained:
We find that the plaintiffs' allegations do not bring them within the sweep of Yoder for two distinct reasons. First, as we explained, the plaintiffs' allegations of interference with family relations and parental prerogatives do not state a privacy or substantive due process claim. Their free exercise challenge is thus not conjoined with an independently protected constitutional protection. Second, their free exercise claim is qualitatively distinguishable from that alleged in Yoder.
Brown, 68 F.3d at 539.
The Sixth Circuit, however, has taken a different approach to the hybrid rights theory it has refused to apply it. In Kissinger v. Bd. of Trustees of Ohio State University, 5 F.3d 177 (1993), the court bluntly stated the paradox presented by the hybrid rights principle:
We do not see how a state regulation would violate the Free Exercise Clause if it implicates other constitutional rights but would not violate the Free Exercise Clause if it did not implicate other constitutional rights.... [T]he Smith Court did not explain how the standards under the Free Exercise Clause would change depending on whether other constitutional rights are implicated. *706 Kissinger, 5 F.3d at 180. Moreover, the court stated that it would be "completely illogical" to hold that the legal standard under the free exercise clause should be dependent on whether a free exercise claim is coupled with another constitutional claim:
[T]herefore, at least until the Supreme Court holds that legal standards under the Free Exercise Clause vary depending on whether other constitutional rights are implicated, we will not use a stricter legal standard than that used in Smith to evaluate generally applicable, exceptionless state regulations under the Free Exercise Clause.
Id.
Plaintiffs rely instead on Hicks v. Halifax Co. Bd. of Ed., 93 F. Supp. 2d 649 (E.D.N.C.1999), in support of their assertion that the hybrid rights analysis applies to the instant case. There, the school board adopted a school uniform policy, to which the plaintiff objected on religious grounds. The policy did not contain an opt-out provision for religious objectors, unlike the present case. The plaintiff filed suit, claiming an infringement of her free exercise rights and parental rights. The Hicks court examined the Smith decision in some detail and concluded that the mere allegation of a free exercise claim and a parental rights claim is sufficient to state a hybrid rights claim and thereby invoke strict scrutiny analysis. Hicks, 93 F.Supp.2d at 662. However, the court then stated that "the presence of the interest, as a genuine claim, supported by evidence in the record" triggered heightened scrutiny. Id.
This Court adopts the reasoning of the First, Sixth, Ninth, and Tenth Circuits. In keeping with the purpose and scope of Smith, it is clear that Plaintiffs cannot merely allege the violation of several constitutional rights, link them to a free exercise claim, and thereby invoke the demanding strict scrutiny standard. Whether they attach to their free exercise claim a parental rights claim or a free speech claim, the result is the same.[10] Such bootstrapping cannot be inferred from Smith. Indeed the Smith Court looked with disfavor on the application of heightened scrutiny to free exercise claims. "[W]e cannot afford the luxury of deeming presumptively invalid, as applied to the religious objector, every regulation of conduct that does not protect an interest of the highest order." Smith, 494 U.S. at 888, 110 S. Ct. 1595. It must be kept in mind that Smith is the general rule, and exceptions will not be easily found. The Smith Court noted that the application of strict scrutiny to all regulations which touch upon religion will undermine its efficacy in other areas:
If the "compelling interest" test is to be applied at all, then, it must be applied across the board, to all actions thought to be religiously commanded. Moreover, if "compelling interest" really means what it says (and watering it down here would subvert its rigor in the other fields where it is applied), many laws will not meet the test. Any society adopting such a system would be courting anarchy ....
Smith, 494 U.S. at 888, 110 S. Ct. 1595.
In the present case, the Forney school uniform policy requirements are qualitatively and, indeed, substantially different from the claims considered in Yoder. There, the Supreme Court went to great lengths to examine the "quality of the claims" presented. Yoder, 406 U.S. at 215, 92 S. Ct. 1526. The Court explained that the compulsory school attendance law at issue there would "substantially" interfere with the "fundamental" tenets of the Amish, which have been practiced by the sect unchanged for three hundred years. Id. at 217-219, 92 S. Ct. 1526. The law carried *707 the threat of "undermining the Amish community." The Court further observed that there was "strong evidence" in the record of a "sustained faith pervading and regulating respondents' entire mode of life." Id. at 219, 92 S. Ct. 1526. In the Yoder Court's mind, the Amish parents had made a "convincing showing, one that probably few other religious groups or sects could make ...." Id. at 235-236, 92 S. Ct. 1526. Based on the substantial showing that the compulsory attendance law would entirely undermine the very core of the Amish faith, the Court observed that "when the interests of parenthood are combined with a free exercise claim of the nature revealed by this record, more than merely a `reasonable relation to some purpose within the competency of the State' is required to sustain the validity of the State's requirement ...." Id. at 233, 92 S. Ct. 1526.
The quality of Plaintiffs' free exercise claims do not present the type of claims that would implicate a "more than" rational basis level of scrutiny, such as that utilized in Yoder. Whatever the basis of their religious objection, those Plaintiffs who object to the school uniform policy for that reason have not demonstrated that the policy will impact their religious practices in any appreciable manner, and certainly not to the degree of interference in Yoder. Plaintiffs simply contend that the uniform policy is contrary to their religious faith, but do not indicate how the wearing of a school uniform, as contrasted with other clothing, would affect their faith or their practices. As the Supreme Court clearly stated, "We have never held that an individual's religious beliefs excuse him from compliance with an otherwise valid law prohibiting conduct that the State is free to regulate." Smith, 494 U.S. at 878-879, 110 S. Ct. 1595.
However characterized whether by falling within the general scope of Smith as a neutral, generally applicable regulation, or by failing to meet the requirements of Yoder the Forney school uniform policy meets rational basis scrutiny and, indeed, the School Board has demonstrated that the policy is "more than merely a reasonable relation" to a legitimate interest in education. As earlier noted, it is a reasonable means to effect the compelling interest in furthering important educational goals.
Plaintiffs next argue that the questionnaire and the grievance procedure denied their rights of free exercise of religion. Essentially, Plaintiffs complain that during the grievance procedure in which their exemption requests were denied, the School Board impermissibly passed judgment on Plaintiffs' religious beliefs. Plaintiffs' claims are meritless. Initially, the Court notes again that Plaintiffs do not contest the procedures employed by the School Board in the grievance process. Furthermore, it is clear that the School Board can inquire into the sincerity of Plaintiffs' beliefs. Hernandez v. Comm'r of Internal Revenue, 490 U.S. 680, 693, 109 S. Ct. 2136, 104 L. Ed. 2d 766 (1989) (stating that, "under the First Amendment, the IRS can reject otherwise valid claims of religious benefit only on the ground that a taxpayers' [sic] alleged beliefs are not sincerely held."). Under TEX. EDUC. CODE ANN. § 11.162, which Plaintiffs do not contest, the School Board is required to exempt only those persons with bona fide objections. There is no other method by which to determine whether Plaintiffs' objections are sincere, except through inquiry by persons charged with effectuating the policy. Moreover, there is no evidence to establish that the School Board or its designees specifically considered the veracity of Plaintiffs' beliefs or, if known, that it influenced their denial of Plaintiffs' exemption request. Drawing all inferences in Plaintiffs' favor, it is clear that the religious exemption requests were denied, not on the basis of a particular stated faith, but on the fact that the students had worn other types of uniforms in the past and did not indicate why they objected to the *708 school uniform clothing, or their parents did not bother to explain their objection.
Accordingly, there is no genuine issue of material fact as to whether the Forney school uniform policy violated their rights of free exercise of religion, and the School Board is entitled to judgment as a matter of law.
Establishment Clause
The establishment clause of the First Amendment prohibits the government from promoting or affiliating itself with any religious doctrine or organization, discriminating against persons on the basis of their religious beliefs or practices, delegating a governmental power to a religious institution, or entangling itself in a religious institution's affairs. County of Allegheny v. ACLU, 492 U.S. 573, 590-591, 109 S. Ct. 3086, 106 L. Ed. 2d 472 (1989). The Supreme Court has fashioned a three-part inquiry to determine whether a particular governmental action does not offend the establishment clause: first, the statute or regulation must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion; third, the statute or regulation must not foster an excessive entanglement with religion. Wallace v. Jaffree, 472 U.S. 38, 55-56, 105 S. Ct. 2479, 86 L. Ed. 2d 29 (1985). Thus, "[e]ach value judgment under the Religion Clauses must therefore turn on whether [the] particular acts in question are intended to establish or interfere with religious beliefs and practices or have the effect of doing so." Walz v. Tax Comm'n of City of New York, 397 U.S. 664, 669, 90 S. Ct. 1409, 25 L. Ed. 2d 697 (1970).
The gravamen of Plaintiffs' establishment clause claim is that the School Board arbitrarily granted opt-out requests for those students whose religious beliefs the School Board agreed with. However, Plaintiffs candidly admit that they have no knowledge concerning the School Board's consideration and disposition of the exemption requests of others and, again, they do not contest the grievance procedures. Nevertheless, the Court concludes that neither the uniform policy nor the opt-out procedure violates the establishment clause.
The fundamental consideration is whether the School Board discriminated against or preferred a particular religious group or philosophy. Here, the uniform policy unquestionably has a secular purpose. Next, the principal effect neither advances nor inhibits religion. Its purpose is to enhance the learning environment in the Forney schools, irrespective of the religious faith of a particular student. Finally, the policy does not unnecessarily entangle the School Board with religion. The uniform policy references religion only in the context of exemptions. There is no evidence to suggest that as a result of the uniform policy, the School Board must routinely or even occasionally become involved in religious matters. Less than one hundred exemption requests, out of nearly 2,500 students, were considered by the School Board, and the vast majority concerned secular opt-out requests. Therefore, there is an absence of material fact as to Plaintiffs' establishment clause claims. The School Board is accordingly entitled to judgment as a matter of law.
EQUAL PROTECTION
The equal protection clause of the Fourteenth Amendment provides that no state shall "deny to any person within its jurisdiction the equal protection of the laws." Simply stated, that provision commands that all persons similarly situated should be treated alike. City of Cleburne, Texas v. Cleburne Living Center, 473 U.S. 432, 439, 105 S. Ct. 3249, 87 L. Ed. 2d 313 (1985). Generally, a statute is presumed to be valid and will be upheld if the classification established by the statute is rationally related to a legitimate state interest. Id. at 440, 105 S. Ct. 3249. When social or economic legislation is at issue, the equal protection clause allows states wide discretion, for the Constitution presumes *709 that improvident legislation will be ultimately cured through the political process. Id. However, where classifications are based on race, alienage or national origin, or where the legislation impinges on fundamental rights, such legislation is subject to heightened scrutiny. Id.
With the exception of the allegation in their complaint, Plaintiffs have not suggested, much less argued a colorable equal protection claim. The complaint merely alleges that the School Board has created an arbitrary class: students and parents residing in the Forney I.S.D. The Court notes that the School Boards' authority extends only to the boundaries of the Forney I.S.D., wherein Plaintiffs reside. Clearly, if all students and parents within the Forney I.S.D. are the same persons singled out for similar disparate treatment, then by definition there can be no inequality in treatment.
This Court may enter summary judgment on its own motion if the parties are on notice to come forward with all of their evidence. Celotex, 477 U.S. at 326, 106 S. Ct. 2548. The Court may also dismiss claims on its own motion under FED. R. CIV. P. 12(b)(6) for failure to state a claim upon which relief can be granted, "as long as the procedure employed is fair." Bazrowx v. Scott, 136 F.3d 1053, 1054 (5th Cir.1998). In the instant case, Plaintiffs' equal protection claim obviously lacks merit and they have had ample opportunity to address that claim. Thus, under these circumstances it would not be unfair to dismiss it. Therefore, the Court will dismiss the equal protection claim.
QUALIFIED IMMUNITY
When the defense of qualified immunity is asserted against a claim under 42 U.S.C. § 1983, the initial inquiry is whether a constitutional violation has occurred. Siegert v. Gilley, 500 U.S. 226, 111 S. Ct. 1789, 114 L. Ed. 2d 277 (1991). However, since the Court has concluded that no constitutional violations occurred in this case, the issue of qualified immunity is moot. Saenz v. Heldenfels Bros., Inc., 183 F.3d 389, 392 (5th Cir.1999).
It is therefore ORDERED that Defendants' Motion for Summary Judgment, filed on June 5, 2000, by Defendants Forney Independent School District, Keith Bell, Kenneth Cleaver, Clarence Doggan, Jay Calvin, Jim Jacobs, Rick Townsend, David Walker, and Chester J. St. Clair, is granted.
It is FURTHER ORDERED that the two Motions to Dismiss Pursuant to Rule 12(b)(6), filed on May 31, 2000, by Defendants Forney Independent School District, Keith Bell, Kenneth Cleaver, Clarence Doggan, Jay Calvin, Jim Jacobs, Rick Townsend, David Walker, and Chester J. St. Clair, are both denied as moot.
NOTES
[1] Plaintiffs expressly do not challenge the constitutionality of § 11.162.
[2] Because of time constraints related to the need to receive survey responses before the end of the 1999 school year, students at the Forney High School were not given the surveys. However, parents of Forney High School students were given the opportunity to participate in "town meeting" discussions concerning the uniform policy.
[3] The minutes of the School Board meeting on that date reflect that the uniform policy was adopted by the trustees on the second reading.
[4] Plaintiffs do not contest the validity of the grievance procedures employed by the School Board.
[5] See also Crawford-El v. Britton, 523 U.S. 574, 600, 118 S. Ct. 1584, 140 L. Ed. 2d 759 (1998) ("Summary judgment serves as the ultimate screen to weed out truly insubstantial lawsuits prior to trial.").
[6] In Plaintiffs' response to Defendants' motion for summary judgment, they state: "However unfair this [grievance] procedure may have been, Plaintiffs are not before this Court on a procedural due process claim. The controlling issue in this case is whether Defendants may force a student to wear a uniform against the wishes of the student and his/her parents."
[7] Plaintiffs expressly do not assert procedural due process claims.
[8] Only twelve of the named Plaintiffs allege that the Forney uniform policy violates their free exercise rights: Virginia McLaren and her daughter Natalie Johnson; Mary Penn and her children, Haley Penn, Lynzi Anderson, and Drew Anderson; William Tapley and Norma Tapley, and their daughter Kaytie Tapley; and, David Lowery and Vinita Lowery, and their daughter Madeline Lowery. However, the Lowerys were granted an exemption from the uniform policy and McLaren removed her daughter, Natalie, from the Forney I.S.D.
[9] In Society of Separationists, Inc. v. Herman, 939 F.2d 1207, 1216 (5th Cir.1991), the Fifth Circuit touched on "religion-plus-speech;" however, that opinion was withdrawn on rehearing en banc, 959 F.2d 1283 (5th Cir.1992) (holding that the plaintiffs lacked standing without reaching the underlying merits).
[10] Plaintiff students' free speech claim was found to be lacking the primary element of communication and, thus, unprotected by the First Amendment. Therefore, Plaintiff students' free exercise claim cannot be subject to heightened scrutiny on the basis of their free speech claim, which does not meet the constitutional definition of "speech." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2322364/ | 968 A.2d 865 (2009)
William FELKNER
v.
CHARIHO REGIONAL SCHOOL COMMITTEE.
No. 2009-23-M.P.
Supreme Court of Rhode Island.
April 7, 2009.
*867 Nicholas Gorham, Esq., North Scituate, Christopher Anderson, Esq., for Plaintiff.
Jon M. Anderson, Esq., Providence, for Defendant.
Present: GOLDBERG, Acting C.J., SUTTELL, ROBINSON, JJ., and WILLIAMS, C.J. (ret.).
OPINION
Acting Chief Justice GOLDBERG, for the Court.
This is a petition in equity in the nature of quo warranto. William Felkner (Felkner or petitioner) brings this action in quo warranto, seeking a determination by the Supreme Court that he rightfully has retained the title of school committee member of the Chariho Regional School Committee despite also having taken the oath of office as councilman for the Town of Hopkinton. This case came before the Supreme Court for oral argument on March 9, 2009; Felkner advanced the argument that he lawfully can hold both positions simultaneously. After considering Felkner's contentions, we conclude that upon assuming the position of town councilman for the Town of Hopkinton, Felkner, in effect, resigned his seat on the Chariho Regional School Committee. We reach this conclusion because multiple officeholding specifically is prohibited by the Hopkinton Town Charter. As well, we *868 decide that the simultaneous holding of these two positions violates the long-recognized common-law doctrine of incompatibility.
I
Facts and Travel
The facts giving rise to the instant dispute are simple and undisputed. On November 7, 2006, Felkner was elected to the Chariho Regional School Committee for a four-year term. On November 18, 2006, Felkner took the oath of office and swore to "discharge the duties of said office and to exercise all the powers thereto belonging to law." Two years later, Felkner was elected and took the oath of office for a two-year term on the Hopkinton Town Council. When the Chariho Regional School Committee met on November 18, 2008, Felkner took his seat as a committee member. During the meeting, the committee sought to address Felkner's status, and committee member George Abbott moved to table, until December 9, 2008, the issue of whether Felkner retained his office on the Chariho Regional School Committee by virtue of his new position on the Hopkinton Town Council. Despite being asked to sit with the public and to abstain from participating in the executive session of the school committee meeting, Felkner refused. Because of Felkner's continued presence during the executive session, the meeting was opened to the public. Eventually the school committee successfully voted to have Felkner escorted out of the building.
At the meeting on December 9, 2008, Felkner and his attorney appeared in order to argue that Felkner remained a member of the Chariho Regional School Committee notwithstanding his election to and engagement of the office of town councilman. Counsel for the school committee explained that the Rhode Island Supreme Court was vested with exclusive jurisdiction to hear Felkner's complaint. Unpersuaded, Felkner filed a complaint in the Superior Court, seeking an order declaring that the Chariho Regional School Committee lacked the authority to determine that he was not a member of that body.[1] In response, the Chariho Regional School Committee filed a motion to dismiss for lack of subject-matter jurisdiction and for failure to state a claim upon which relief can be granted.
Meanwhile, on January 13, 2009, the Chariho Regional School Committee decided, in a seven-to-two vote, to accept Felkner's resignation from the committee by virtue of his membership on the Hopkinton Town Council. Three days later, the Superior Court ruled that it lacked subject-matter jurisdiction to entertain Felkner's request for declaratory relief to return him to his seat on the school committee.[2] Felkner then filed the instant petition in equity in the nature of quo warranto with this Court.
II
Analysis
Before this Court, Felkner argues that he has set forth a legally cognizable cause of action in quo warranto. Felkner contends that the Chariho Regional School Committee wrongfully excluded him from *869 membership on the school committee. The committee maintains that when Felkner assumed his office on the Hopkinton Town Council, he resigned his seat on the school committee by operation of law, in accordance with the plain language of the Hopkinton Town Charter, as well as the common-law doctrine of incompatibility.
We recognize that "an action to test one's title to office is an action in quo warranto," whereby one may bring a petition in equity in the nature of quo warranto, asserting his or her right to the office at issue. McKenna v. Williams, 874 A.2d 217, 228, 229 (R.I.2005). See also Fargnoli v. Cianci, 121 R.I. 153, 161, 397 A.2d 68, 72 (1979) ("A quo warranto writ, or an information in the nature of quo warranto, is a common law remedy or proceeding whereby the state directs an individual to show by what warrant he holds public office and to oust him from its enjoyment if the claim is not well founded."). "A successful petitioner obtains a decree which not only ousts the respondent from office but also declares that the petitioner is the rightful holder of the office in dispute." Fargnoli, 121 R.I. at 162, 397 A.2d at 73. To prevail, the petitioning party must rely on the strength of his or her own title and "bears the burden of establishing that he or she was illegally removed." Seemann v. Kinch, 606 A.2d 1308, 1310 (R.I.1992).
Jurisdiction over an equitable quo warranto claim, when brought by a private citizen rather than the Attorney General on behalf of the state, is vested exclusively in the Supreme Court. McKenna, 874 A.2d at 229. See also G.L. 1956 § 10-14-1 ("The title to any office, to determine which the writ of quo warranto lies at the common law, may be brought in question by petition to the [S]upreme [C]ourt."). Because Felkner claims right and title to the office of member of the Chariho Regional School Committee, pursuant to § 10-14-1 the action properly is before us, and this Court has original jurisdiction over the petition.[3]
With this in mind, we turn to the particular assertion of the Chariho Regional School Committee, that Felkner, by taking the oath of town councilman for the Town of Hopkinton, vacated his office on the Chariho Regional School Committee as a matter of law.
A
Hopkinton Town Charter
The Chariho Regional School Committee is the operating authority for the Chariho Regional School District, which encompasses the Towns of Charlestown, Richmond, and Hopkinton. The Chariho Regional School Committee is composed of eleven members, with representation from each of the three towns in proportion to their respective populations. The jurisdiction of the Chariho Regional School Committee is governed by the Chariho Act.[4]
The Hopkinton Town Charter, first adopted in 2002, is the governing law of the Town of Hopkinton. Because the Hopkinton Town Charter contains a specific provision about multiple officeholding, we first shall examine the charter to resolve whether Felkner's simultaneous membership on both the Chariho Regional School Committee and the Hopkinton Town Council is permissible. Section 1240 of the Home Rule Charter of the Hopkinton Town Charter states, with respect to multiple officeholding, that:
"No elected member of the Town government shall hold more than one (1) *870 elective or [sic] position in the Town Government at the same time."
Section 1240 also contains the following additional language:
"Membership on boards or commissions that act as representation of the Town of Hopkinton in regards to the School District shall not disallow that elector from serving on another board, committee or commission in Town government."
The term "elected official" is defined later in the charter, and includes school committee members. Specifically, section 2130 of the Home Rule Charter of the Hopkinton Town Charter provides:
"Town Council members, School Committee members, Town Clerk, Moderator, Town Sergeant, Director of Public Welfare, District Moderators and District Clerks will be elected." (Emphasis added.)
This Court long has abided by the principle that, "[w]hen * * * called upon to construe the provisions of a municipal charter, the usual rules of statutory construction are employed." Town of Johnston v. Santilli, 892 A.2d 123, 127 (R.I.2006) (quoting Coventry School Committee v. Richtarik, 122 R.I. 707, 713, 411 A.2d 912, 915 (1980)); Stewart v. Sheppard, 885 A.2d 715, 720 (R.I.2005); see also Mongony v. Bevilacqua, 432 A.2d 661, 663 (R.I.1981) (holding that the rules of statutory construction apply to municipal ordinances). We have recognized that "[i]t is the accepted rule that the provisions of city charters should be construed so as to give, so far as possible, reasonable meaning and effect to all parts of the section in question." Stewart, 885 A.2d at 720 (quoting Carter v. City of Pawtucket, 115 R.I. 134, 138, 341 A.2d 53, 56 (1975)). "However, `when the language of the statute is clear and unambiguous, the court must interpret it literally, giving the words of the statute their plain and ordinary meanings.'" Id. (quoting Labor Ready Northeast, Inc. v. McConaghy, 849 A.2d 340, 345 (R.I.2004)). Thus, when faced with an unambiguous enactment, this Court will not engage in statutory construction but will apply the language as written. State v. Greenberg, 951 A.2d 481, 489 (R.I.2008).
Before proceeding with our examination of the charter, we must set out one additional canon of construction. When confronted with competing statutory provisions that cannot be harmonized, we adhere to the principle that "the specific governs the general * * *." Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992); Morton v. Mancari, 417 U.S. 535, 550-51, 94 S. Ct. 2474, 41 L. Ed. 2d 290 (1974); see also G.L.1956 § 43-3-26; Casey v. Sundlun, 615 A.2d 481, 483 (R.I. 1992). Because in this instance the specific terms are controlling, this Court will defer to the more precise language governing a particular subject.
At the outset, we observe that, by the plain language of the Hopkinton Town Charter, a member of the school committee is considered an elected official. This definition is explicit and requires no analysis on our part. It follows, with absolute certainty, that a school committee member likewise is an "elected member of the [t]own government" who, under section 1240 of the charter, expressly is prohibited from holding more than one elected position in town government at the same time.
Next, in light of the charter provision that permits serving on multiple boards, we must determine whether a member of the school committee reasonably can be considered a member of a "board, committee[,] or commission." To reach this determination, we must look at the charter in its entirety to discern the scheme set forth therein. When referring *871 to the Chariho Regional School Committee, the Hopkinton Town Charter makes its reference apparent by naming the "School Committee" by specific language.[5] Although the town charter also makes a general reference to boards, committees, and commissions, it reserves a more specific reference to the "School Committee" when the provision applies to that particular body alone. In other words, where in the charter the drafters intended to refer to the Chariho Regional School Committee, they did it explicitly by using the term "School Committee."
However, when referring more generally to another board, committee, or commission, the drafters have used this more general language. Because of this distinction in terms, we are satisfied that if the drafters of the Hopkinton Town Charter had intended to exclude the Chariho Regional School Committee from the prohibition against dual officeholding, they would have done so with the same specificity and clarity that is present in other provisions of the charter that apply to the Chariho Regional School Committee. As such, we conclude that the language in the charter is clear; it unambiguously prohibits dual officeholding by two elected officials, including, inter alia, a member of the Chariho Regional School Committee and the Hopkinton Town Council.
Despite this difference, Felkner nevertheless asserts that the following provision, as set forth in section 1240 "Membership on boards or commissions that act as representation of the Town of Hopkinton in regards to the School District shall not disallow that elector from serving on another board, committee or commission in Town government"is an exception to the general prohibition against dual officeholding in town government. However, when the Hopkinton Town Charter was adopted in 2002, and the same holds true today, the Chariho Act provided for a building committee and a finance committee for the regional school district, which are separate and distinct appointments from the elected members of the Chariho Regional School Committee. The exception under which Felkner seeks relief was not enacted so that an elected school committee member could serve simultaneously on the Chariho Regional School Committee and the Hopkinton Town Council. Rather, this provision exists so that appointed members of the building and finance committees can serve the Town of Hopkinton in some other, nonelected manner such as a member of some other "board, committee[,] or commission."
Because this is an action in quo warranto, it was Felkner's burden to establish his entitlement to the office. He has not done so. Having accorded the words of the Hopkinton Town Charter their plain and ordinary meaning, we conclude that the charter clearly prohibits dual officeholding by elected officials such as members of the Chariho Regional School Committee. Therefore, we hold that Felkner's position on the Chariho Regional School Committee terminated by operation of law when he undertook the oath of office as a member of the Hopkinton Town Council.
B
Doctrine of Incompatibility
Although this decision rests on the explicit prohibition against dual officeholding *872 in the Hopkinton Town Charter, we are well aware that "[t]he simultaneous holding of more than one public office has been a traditional subject of public concern." Cummings v. Godin, 119 R.I. 325, 332, 377 A.2d 1071, 1074 (1977). Accordingly, we shall address the impact of the doctrine of incompatibility in this case. This Court previously has recognized the doctrine of incompatibility as the principal common-law concept dealing with officials who hold dual public offices with potentially overlapping duties.[6]See State v. Brown, 5 R.I. 1, 9-11 (1857).
The doctrine of incompatibility, still widely accepted today as a viable basis under which an individual may be divested of his or her public office, expressly forbids the holding of incompatible offices. Advisory Opinion to the Governor, 121 R.I. 64, 66-67, 394 A.2d 1355, 1356-57 (1978); Cummings, 119 R.I. at 333, 377 A.2d at 1074; McCabe v. Kane, 101 R.I. 119, 122, 221 A.2d 103, 105 (1966); In re Opinion of the Governor, 67 R.I. 197, 201, 21 A.2d 267, 270 (1941); State ex rel. Metcalf v. Goff, 15 R.I. 505, 506, 9 A. 226, 226 (1887). See also 3 McQuillin, Municipal Corporations § 12.67 at 367 (3d ed. 2001); 5 Stevenson, Antineau on Local Government § 76.05[9] (2d ed. 2007).
The primary inquiry in this analysis, whether the positions indeed are incompatible, depends in large part on the particular facts of each case, especially with respect to the functions and duties of the pertinent offices. The doctrine was set out by this Court in Goff more than a century ago, and is two-fold. First, "incompatibility does not depend upon the incidents of the offices, as upon physical inability to be engaged in the duties of both at the same time." Goff, 15 R.I. at 506, 9 A. at 226. Secondly, two offices are incompatible if "one is subordinate to the other, and subject in some degree to its revisory power; or where the functions of the two offices are inherently inconsistent and repugnant." Id. at 507, 9 A. at 227. See also State v. Lee, 78 N.D. 489, 50 N.W.2d 124, 126 (1951) ("Incompatibility of offices exists where there is a conflict in the duties of the offices, so that the performance of the duties of the one interferes with the performance of the duties of the other."). Accordingly, "the question of incompatibility is to be determined from the nature of the duties of the two offices, and not from a possibility, or even a probability, that the defendant might duly perform the duties of both." Goff, 15 R.I. at 508, 9 A. at 228 (quoting Brown, 5 R.I. at 11).
In its original pronouncement of the rule, this Court explained that the holding of two incompatible offices results in a resignation of the first-acquired office because no person simultaneously can serve the public trust impartially when inconsistent duties and liabilities are involved. Brown, 5 R.I. at 9-10. See also Goff, 15 R.I. at 506, 9 A. at 226 ("It is well settled that, when a person accepts an office incompatible with one which he then holds, he thereby impliedly resigns or vacates his former office."); 3 McQuillin, § 12.67 at 367 ("[T]he mere acceptance of the second incompatible office per se terminates the first office as effectively as a resignation."). In explaining the premise upon which the rule of implied resignation is based, we stated that the resignation
"can be thought of as one of election, though not properly one of individual *873 choice. There is no room for an actual election, unless it exists simply in choosing to accept a second, incompatible office. Once that act is done, the law implies an immediate resignation of the prior office, accompanied by a surrender of all claim and title to that office." Advisory Opinion to the Governor, 121 R.I. at 67, 394 at 1357.
This rule "is designed to serve firm public policy objectives, not the least of which is to ensure continuing certainty with regard to who holds public office." Id. Because of the unambiguous nature of this forfeiture, the public never is left wondering which office has been vacated. Id.
Whether two public offices are incompatible is a question of law to be determined by this Court upon examining the nature of the offices and their relationship to one another. See Advisory Opinion to the Governor, 121 R.I. at 69-70, 394 A.2d at 1358 (holding as incompatible the positions of Superior Court justice and District Court judge because a Superior Court justice has the power of review over a District Court judge); Opinion of the Governor, 67 R.I. at 205, 21 A.2d at 271 (holding as incompatible the offices of member of the General Assembly and member of the Board of Elections); Goff, 15 R.I. at 508-09, 9 A. at 227-228 (holding as incompatible the offices of deputy sheriff and judge of the District Court because of the supervisory role a judge of the District Court has over a deputy sheriff); Brown, 5 R.I. at 11 (holding as incompatible the offices of colonel of the line and major general of the division). Cf. McCabe, 101 R.I. at 123-26, 221 A.2d at 106-07 (declining to hold as incompatible the offices of the Supreme Court clerk and state senator, although noting that the simultaneous holding of the two positions may give rise to a potential conflict of interest).
Although our previous cases provide useful guidance, to proceed with our analysis we must conduct a careful examination of the character and functions of the offices of school committee member and town councilman, as well as their relationship with each other. The relationship between a town and a school district is defined by a number of potential contracts between these entities. Indeed, the Town of Hopkinton and the Chariho Regional School Committee enter into lease agreements; they contract with one another for water usage and distribution; the Hopkinton Town Council fills vacancies on the Chariho Regional School Committee;[7] and the Town of Hopkinton is the appropriating and taxing authority for the town's share of the Chariho Regional School District budget.
The Town of Hopkinton holds title to and operates the realty upon which the Ashaway and Hope Valley Schools (two schools in the Chariho Regional School District) are located. Although the Town of Hopkinton owns the real property upon which the schools physically are situated, the Chariho Regional School District is responsible for "all maintenance obligations and the payment of all expenses associated with the [property]." Because of their joint responsibilities with respect to these properties, the Hopkinton Town Council and the Chariho Regional School Committee may disagree over issues arising *874 with respect to the maintenance, upkeep, and operation of the buildings. For instance, in a February 2009 Chariho Regional School Committee meeting, the minutes indicate an extended dialogue concerning the lease for the Ashaway School and specifically the gas line on the premises. Although that particular issue apparently has been resolved, not every dispute necessarily will end as amicably.
Clearly, if permitted to hold both positions, Felkner may be faced with a potential clash of duties concerning a particular school building. He would have a vote as a member of the Hopkinton Town Council, which operates as landlord to the Chariho Regional School District; he also would have a vote as a member of the Chariho Regional School Committee, which stands as tenant to the Town of Hopkinton. If a dispute were to arise concerning improvements or alterations to either the Ashaway or Hope Valley Schools, the closing of one or both of the existing schools, or the building of a new school, it is unclear which role Felkner would play when casting his vote-school committee member or town councilman.
Moreover, and perhaps even more fundamentally, Felkner, as a school committee member, is obliged to make his "first and greatest concern" the "educational welfare of the students attending the public schools." G.L. 1956 § 16-2-9.1(a)(11). Yet, as a sitting town councilman, Felkner is charged with the competing duty of representing, first and foremost, the interests of the people of the Town of Hopkinton. The discord presented by these conflicting responsibilities is patent; Felkner cannot, as a member of the Chariho Regional School Committee, act principally for the children of all three towns (Charlestown, Richmond, and Hopkinton) when he has a concurrent duty to further the interests of the citizens of the Town of Hopkinton.
Because of the myriad of responsibilities and conflicting duties stemming from Felkner's dual positions, there is a great likelihood of a potential clash of duties that would result in a gross incompatibility of offices. Public policy demands that one who holds a public office discharge his or her duties with undivided loyalty; and a public officer, in holding a position of public trust, stands in a fiduciary relationship to the citizens that he or she has been elected to serve. See Trist v. Child, 88 U.S. (21 Wall.) 441, 450, 22 L. Ed. 623 (1874). We are of the opinion that an individual cannot properly act contemporaneously as a school committee member and as a member of the town council without encountering some significant discordant interests and issues during such simultaneous tenure. In the case before us, school committee member Felkner's duties to the entire Chariho Regional School District can readily run counter to town councilman Felkner's loyalty to the citizens of the Town of Hopkinton.
We have no doubt that Felkner was selected by his constituents to two elected positions because he offered ideas and plans that were favorable to the respective public constituencies. However, by serving on these two distinct bodies, he will be confronted with issues in which both the Chariho Regional School Committee and the Hopkinton Town Council have separate interests. Such a conflict inevitably would result in the silencing, to at least one of these constituencies, of Felkner's voice as their elected official. Because of this very real possibility, the common-law doctrine of incompatibility serves to force the officeholder to abandon one of the positions.
Accordingly, we conclude that the doctrine of incompatibility serves as an impervious *875 and insurmountable bar to dual officeholding in this case. By accepting a seat on the Hopkinton Town Council, and taking the oath of office, Felkner has vacated his seat on the Chariho Regional School Committee. We need not decide whether the Chariho Regional School Committee had the authority to determine whether Felkner resigned from the committeean issue of concern nonetheless because, before reaching that question, it was incumbent upon Felkner to satisfy his right to title to the office and not merely attack the Chariho Regional School Committee's procedure in ousting him. See Seemann, 606 A.2d at 1310. Because Felkner cannot prove his own title for the reasons set forth in this opinion, we need go no further.
Conclusion
For the reasons stated herein, we conclude that the offices of member of the Chariho Regional School Committee and member of the Hopkinton Town Council cannot be held at the same time by the same person. The petitioner is unable to fully and faithfully perform the duties of both offices in every instance. By accepting the office of member of the town council, the petitioner ipso facto resigned his office as member of the Chariho Regional School Committee. Let a judgment of ouster from the office of school committee in the Chariho Regional School District be entered against Felkner.
Justice FLAHERTY did not participate.
NOTES
[1] William Felkner also alleged in his complaint a violation by the Chariho Regional School Committee of the Open Meetings Act, G.L. 1956 chapter 46 of title 42.
[2] The Superior Court ruled that although it dismissed Felkner's declaratory-judgment action for lack of subject-matter jurisdiction, it nevertheless retained jurisdiction to hear Felkner's allegation under the Open Meetings Act.
[3] We note that the Attorney General did not participate in this case.
[4] See P.L. 1958, ch. 55, as amended by P.L. 1986, ch. 286.
[5] For example, section 1250 of the Home Rule Charter of the Hopkinton Town Charter, discussing conflicts of interest, begins with the following language: "No member of the Town Council, School Committee, nor the Town Manager nor any officer or employee of the Town * * *." (Emphasis added.)
[6] Although in some jurisdictions the incompatibility analysis is guided not by the common-law doctrine of incompatibility, but instead by a statute prohibiting the holding of two offices by the same person, we have in Rhode Island no such statute, and therefore look to the well-settled tenets of the doctrine of incompatibility.
[7] See Section 10 of the Chariho Act, which provides, in relevant part:
"In the event of any vacancy by death, resignation or incapacity to serve of any term of any member of said regional school district committee, the town council of the member town in which such vacancy occurs shall fill such vacancy by election by a majority vote of the town council of said town for the unexpired term of the member whose office is thus vacated." P.L. 1986, ch. 286, § 10. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2456566/ | 403 S.W.2d 366 (1966)
The STATE of Texas, Petitioner,
v.
Frank K. MEYER et ux., Respondents.
No. A-10937.
Supreme Court of Texas.
May 18, 1966.
Rehearing Denied June 22, 1966.
*367 Waggoner Carr, Atty. Gen., Austin, Carroll R. Graham and Aden L. Vickers, Asst. Attys. Gen., for petitioner.
Vinson, Elkins, Weems & Searls, F. Russell Kendall, M. C. Chiles and Jarrel D. McDaniel, Houston, for respondents.
SMITH, Justice.
This is a condemnation proceeding brought by the State of Texas to acquire fee simple title to a 14.9456-acre strip of land out of a 103-acre tract belonging to respondents, Frank K. Meyer and wife, Lucille R. Meyer. The award of the special commissioners in this cause was $208,192.00, from which award the respondents appealed to the county court for a jury trial. After a trial in which the respondents waived any severance damages to the remainder, the jury found the market value of the strip taken to be $1,074,199.50. Judgment was entered in favor of respondents for this amount, granting to the State the fee simple title to the land condemned exclusive of any oil, gas or sulphur thereunder. The State appealed to the Court of Civil Appeals and that Court has affirmed the judgment of the county court. 391 S.W.2d 471. We affirm the judgments of the Court of Civil Appeals and the trial court.
*368 The 14.9456-acre strip condemned by petitioner in this proceeding is a part of a 103-acre tract owned by respondents in the southwestern part of the City of Houston, Harris County, Texas. The larger tract is bounded on the north by Beechnut Street, on the west by Post Oak Road, on the south by Brays Bayou and on the east by the City of Houston Sewage Treatment Plant. The tract condemned is the portion of the larger tract which fronts on the east side of Post Oak Road for a distance of 2,618.93 feet, and is 240 feet in depth and contains 651,030 square feet. The portion taken by the State is bounded on the east by respondents' 88-acre remainder of the original 103-acre tract. At the time of the condemnation, respondents' land abutted on Post Oak Road, which road was at that time a conventional highway with traffic proceeding in both directions past the property. It cannot be disputed that this property has a high commercial value, being on a main traffic artery of a large and growing city, and this is substantiated to a degree by the fact that it lies across the highway from the successfully developed Meyerland Shopping Center.
In the State's petition for condemnation it is pointed out that this property is required in the construction of a controlled access highway as a part of the National System of Interstate and Defense Highways in the State of Texas; that for such purpose it is necessary to acquire the fee simple title to the land taken; and that roads are to be built as a part of said controlled access highway whereby the right of ingress and egress to or from the remaining property of respondents abutting on the new highway is not to be denied. It then excluded from the taking all oil, gas and sulphur which could be removed from beneath the condemned land without going on the surface of the land to extract such minerals. The parties agree that this reserved mineral interest has no value and no effect on the market value of the land taken. In the prayer the State asked that fee title to the land be vested in it, with the sole exclusion of the reserved mineral interest.
Thereafter, before the case was called for trial in the county court, respondents admitted the power of petitioner to condemn their land and waived any claim for severance damages to their remainder. They then presented a motion in limine to the court requesting that:
"* * * the Court instruct counsel for the Plaintiff that these Defendants have waived all right to seek damages to the remainder of Defendants' land and that the sole issue involved in this cause is the market value of the 14.9456 acres of land being condemned herein and therefore counsel should be instructed to make no reference in their voir dire examination of the jury panel, in their argument or in their questions to the witnesses as to the fact that Defendants own any land adjacent and contiguous to the land being condemned, and that their sole interrogation be in regard to the market value of said 14.9456 acres being condemned and that in view of these Defendants' waiver of any right to compensation or claim for damages to the remainder of their contiguous property that Plaintiff be restricted in its interrogations, arguments, evidence, and exhibits from showing or referring to the remainder of Defendants' lands or from attempting to introduce any evidence which will have the effect of attempting to show the jury that the size of Defendants' land is just merely being reduced by the taking of said 14.9456 acres. In truth and in fact, these Defendants have waived all right to compensation with the exception that they demand and will ever pray for the market value of the said 14.9456 acres of land which are herein being condemned and which in fact has already been appropriated by Plaintiff in this cause. Such being the case, the fact that Defendants own additional land adjoining the lands being taken has no bearing, as a matter *369 of law, upon the sole issues being tried in this cause, and the sole reason for the introduction of evidence, or reference by opposing counsel, concerning such ownership would be to prejudice the rights of Defendants to recover the market value of their land being condemned * * *."
The court in its order granting the motion in limine, after taking note of the fact that the State was not condemning the right of ingress to or egress from the property remaining and abutting on the improvements to be constructed, directed the State to refrain from revealing to the jury that the 14.9456-acre strip was only a part of a larger tract owned by respondents. The granting of this motion and the subsequent exclusion of evidence in compliance therewith are the subjects of points of error before this Court. The only information the jury received as to the use to which the condemned property was going to be put was that it was to be used for "general highway purposes." Furthermore, the trial court would not allow the State to show that the right of ingress and egress, hereinafter referred to as right of access, was not being condemned. Apparently the trial court was of the opinion that to have permitted this fact to be presented to the jury would necessarily have revealed, although perhaps indirectly, that the respondents retained land contiguous to the strip condemned, and respondents contend that such knowledge on the part of the jury would have defeated the purpose of the motion in limine and the order granting it. In making a disposition of this cause, we necessarily must determine whether the order granting the motion in limine and the rulings during the course of the trial excluding evidence in compliance with that order resulted in depriving the State of presenting a valid theory of valuation to the jury. It is our decision that under the facts of this case the order granting the motion in limine and the consequent evidentiary rulings by the trial court were proper and necessary in order to insure to the landowners the fair market value of the land taken.
Petitioner's first five points of error are closely related and are briefed and argued together. These points complain of the error of the Court of Civil Appeals in affirming the trial court's action in (1) granting the motion in limine; (2, 3) excluding the opinion testimony of two of the State's expert witnesses, Legge and Dailey, as to the value of the strip taken because of factors considered and the method by which they arrived at their opinions; (4) excluding the testimony of the State's witness, Stork, the Supervising and Designing Engineer for the Texas Highway Department, as to the improvements to be constructed on the land taken; and (5) excluding the State's Exhibits Nos. 5 and 6 which were highway plans showing the nature and location of the improvements to be built on the condemned property and to the north and south along Post Oak Road. In essence it is the State's contention that since respondents, after the taking of the condemned land, still have remaining land from which they have access to the land taken, upon which has been or will be constructed a frontage or service road, there has not been a whole taking in fee simple but that instead the State has acquired a fee title burdened with an easement for which it should be entitled to pay less than for a fee simple absolute.
On voir dire examination, out of the presence of the jury, two of the State's three expert witnesses as to value, Legge and Dailey, stated unequivocally that in arriving at their opinions of the value of respondents' 14.9456 acres they considered the part taken as a part of the larger 103-acre tract and took into consideration the fact that the right of access was not being acquired by the State. Furthermore, in arriving at a per acre value for the strip taken, they averaged the values of various portions of the whole tract even though the portion of the whole nearer the highway was worth more than other parts further removed insofar as highest and best *370 use development is concerned. Each witness readily admitted that had he appraised the 14.9456 acres as a single tract of land, disregarding the remainder and the access rights, his appraisal would have been higher. After exclusion by the trial court of these witnesses' opinions as to value based on the above method of appraisal, the State did not choose to bring in their value testimony based on an appraisal of the condemned land as a whole taking. Also on voir dire, the State's third value witness, Edmonds, appraised the strip taken in conformity with the trial court's ruling that the remainder and retained access was not to be considered; his opinion of the value of the property taken was $227,860.50. Edmond's testimony was later given in evidence before the jury.
The witness Stork testified out of the presence of the jury as to his position with the Highway Department and then explained that Exhibit No. 5 was a set of the contract drawings for the construction of a portion of the West Loop Freeway and the South Loop Freeway. These plans were prepared under Stork's supervision and reflected the improvements to be erected upon the condemned strip. As to Exhibit No. 6, Stork testified that it was a map showing the freeway as it would be constructed through the subject property. All of Stork's testimony was excluded by the trial court as being immaterial to a jury finding of the market value of the land taken. We agree that such evidence was immaterial, and the trial court was correct in excluding it.
It is apparent that the ultimate result here to be obtained is to be governed by a determination of the nature of the right of access and its effect upon or incidence in determining market value and damages in condemnation suits. That is to say, in a situation like we now have before us, is the right of access a burden upon the land taken which is to be considered as reducing the fair market value to be paid for land condemned, or is it a property right appurtenant to the remainder which is material only to a determination of damages or benefits, if any, to such remainder?
At least one case has recognized quite frankly that "[t]he precise origin of [the concept of access rights] is somewhat obscure but it may be said generally to have arisen by court decisions declaring that such right existed and recognizing it." Bacich v. Board of Control, 23 Cal. 2d 343, 144 P.2d 818, 823 (1943). It is a safe assumption, supported by virtually all of the authorities, that the view of access as a property right was originally "deduced by way of consequence from the purposes of a public highway." 3 Tiffany, Real Property 927 (3d ed. 1939); and see also the dissenting opinion in Muhlker v. New York & H. R. R. Co., 197 U.S. 544, 572, 25 S. Ct. 522, 49 L. Ed. 872 (1905). Early road construction was by local citizens as well as for local use, and almost all highways or roads were for the purpose of "land service." Moreover, the abutters often donated the land, labor, and materials necessary to the road construction and maintenance, and in view of this, it seldom occurred to anyone to attempt to deny their right to use the road for ingress and egress. Whatever its origin, the right is now clearly established as a concomitant of ownership of land abutting on a highway. See Covey, Control of Highway Access, 38 Neb.L.R. 407 (1959); Duhaime, Limiting Access to Highways, 33 Ore.L.R. 16 (1953); 25 Am. Jur., Highways § 154.
The Texas courts have recognized that abutting property owners have certain private rights in existing streets and highways in addition to their right in common with the general public to use them. Generally, the most important of these private rights is the right of access to and from the highway. DuPuy v. City of Waco, 396 S.W.2d 103 (Tex.Sup.1965) (viaduct); City of San Antonio v. Pigeonhole Parking of Texas, 158 Tex. 318, 311 S.W.2d 218, 73 A.L.R. 2d 640 (1958) (street); Powell v. Houston & T. C. R. Co., 104 Tex. *371 219, 135 S.W. 1153, 46 L.R.A.,N.S., 1615 (1911) (street); Adams v. Grapotte, 69 S.W.2d 460 (Tex.Civ.App.1934), aff'd, 130 Tex. 587, 111 S.W.2d 690 (1938) (sidewalk); Pennysavers Oil Co. v. State, 334 S.W.2d 546 (Tex.Civ.App.1960, err. ref.) (limited-access highway). This right of access has been described as an easement appurtenant to the abutting land, which includes not merely the ability of the abutting landowner to enter and leave his premises by way of the highway, but also the right to have the premises accessible to patrons, clients and customers. See 10 McQuillin, Municipal Corporations 671 (3d ed. 1950); 28 C.J.S. Easements §§ 1-4; 39 C.J.S. Highways § 141; Rest. Servitudes §§ 450 (a), 453, 507; Clark, The Limited-Access Highway, 27 Wash.L.R. 111 (1952); Note, 3 Stanford L.R. 298 (1951). That this right of access is a property right which is encompassed by Article 1, Section 17 of the Constitution of Texas, Vernon's Ann.St., is so well settled as to require no citation of authority.
This Court announced in State v. Carpenter, 126 Tex. 604, 89 S.W.2d 194, 979 (1936), that the issues to be determined in a condemnation suit where a strip of land has been taken for highway purposes are (1) the fair market value of the strip actually taken, regardless of any benefits derived from the improvements contemplated by the condemnor, and (2) damages for any diminution in value of the landowner's remaining property by virtue of the severance or the use to which the strip taken is to be put. Such diminution may be offset by increased value of the remaining land by reason of the improvement to be constructed on the land taken. Judgment will, in all events, be in favor of the landowner for the value found in response to the first issue regardless of benefits to the remainder. Carpenter, supra, 89 S.W.2d at 202.
The Carpenter case was written, of course, in the context of a highway or road to which previously abutting landowners and newly abutting landowners, without distinction, have access as a matter of right, but the language therein establishes beyond dispute that the use to which the land taken is to be put is material only to a determination of damages or benefits to the remainder, when damages to the remainder are sought by the condemnee. This Court stated, at 197:
"* * * [I]t has become recognized as necessary in practically all cases, in arriving at the just compensation to which an owner is entitled in condemnation cases, where a part only of a tract is taken, to take into consideration the two elements, to wit, the fair market value of the part taken, or its intrinsic value in case there is no market value, and the damages occasioned to the remainder of the tract by reason of the taking and the construction of the improvement for which it is appropriated. In all cases where the element of offset on account of benefits is involved, it is necessary to ascertain the value of the portion actually taken so that compensation may be paid therefor in money. * * *"
Further, at 198, the Court, quoting from an earlier Court of Civil Appeals opinion, said:
"`* * * The cost of additional fencing, establishing watering places, and other items of like nature necessitated by the laying of the road do not constitute a measure of damage and are not recoverable as distinct items of damage, but evidence of this nature is admissible, and is entitled to be accorded its proper probative force in determining whether the tract of land as a whole has been damaged. These are matters which may and should be considered by the jury or court trying the case. In like manner increased and better road facilities may be taken into consideration as offsetting such damage. * * *'" [Emphasis added.]
Therefore, as a general rule, when the taking of land for highway purposes *372 results in a new or increased access to the remaining and abutting property, this benefit may be considered by the jury as offsetting any damages due to the severance of the land taken and, conversely, if the taking should result in a deprivation of reasonable access which the remaining land previously enjoyed, the loss occasioned by this denial may be considered as an element of damage to the remainder. Here the record conclusively shows that the State is not guaranteeing direct access to the expressway portion of the highway to respondents' remaining property but only access to the frontage road; it is reasonable to assume that, if the State had sought to deny access from the remainder to the frontage road, respondents would not have waived damages to the remainder. As pointed out above, the State contends that retention of access is a circumstance which should be considered by the jury in arriving at the fair market value of the land taken even where no damages to the remainder are sought by the landowner.
In an article entitled Condemnation of Land for Highway or Expressway, by Dan Moody, Jr., 33 T.L.R. 357 (1955), the author considers the value of access rights[1]*373 to be an element of severance damages, and his conclusion that the nature and extent of the use to which the severed strip is to be put by the State is material only to a determination of damages or benefits to the remainder is in harmony with the basic holding in State v. Carpenter, supra. It necessarily follows that if the landowner waives all claim to damages to the remainder, then damages because of denial of access, or benefits because of access being permitted, becomes immaterial to a determination of the fair market value of the land taken.
In 1957, the Legislature enacted Article 6674w, Vernon's Annotated Texas Statutes, authorizing the State Highway Commission to construct and modernize controlled access highways. Article 6674w-1[2] deals with the rights of abutting landowners to access to such new highways whether *374 constructed over previous highway rights of way or over new ones. We have found no cases interpreting this statute in the context of the exact question we have before us, nor is it necessary to undertake an extensive or far-reaching interpretation of its total effect. It is apparent, from a study of the statute to the extent required for a determination of the issues presented in this case, that the statute recognizes preexisting access as a compensable item of damages and authorizes the Highway Commission, within its discretion, to grant access to abutting lands which theretofore had no access to such controlled access highway. Furthermore, there is nothing in the statute inconsistent with the conclusion we have reached as to the nature and incidence of the right of access, and its place in condemnation suits. In the instant case, respondents had access to the highway at the time of the condemnation which was an incident of and appurtenant to their whole property. A portion of their property has been condemned, but the access appurtenant to their remaining land is still attached thereto and is immaterial to a determination of the fair market value of the part taken.
Access to a highway or road from lands abutting thereon may be likened to an easement appurtenant to such abutting lands. An easement "passes with the dominant estate as inseparably connected with it, the person who alone has at any particular time any right to the easement being the person who is at that time the owner of the dominant estate. It does not exist as a personal right, and cannot be enjoyed apart from the dominant estate." 2 Walsh, Law of Real Property, § 230, p. 553 (1947). "An appurtenant easement is an incorporeal right, which is attached to and belongs with some greater or superior right. * * * It is said to be appurtenant when it inheres in the land, concerns the premises, and is necessary to the enjoyment thereof, and is in the nature of a covenant running with the land, attached to the lands to which it is appurtenant, and * * * [i]t cannot exist unconnected with the land, to the enjoyment and occupation of which it is incident." 2 Thompson on Real Property, § 321, p. 64 (1961). "Where the owner imposes upon one part of his estate an apparent and obvious servitude in favor of another [part], and, at the time of the severance of ownership, such servitude is in use, and is reasonably necessary for the fair enjoyment of the other, then, whether the severance is by voluntary alienation or by judicial proceedings, the use is continued by operation of law. * * * A right-of-way appurtenant to land is appurtenant to every part of it." Thompson, supra, § 322, p. 75.
For the reasons above stated, we hold that when the landowner seeks damages to his remainder by reason of the severance of the land condemned, denial of access is to be considered in arriving at such damages and retention of access is to be considered in offsetting such damages. Respondents had the right to waive damages to the remainder. Having done so, the issue of access rights became irrelevant to a determination of the issue of the fair market value of the fee title to the tract of land actually condemned. Therefore, the circumstance of retained access cannot be considered in reaching an opinion as to the value of the land taken. To allow such testimony before the jury would be to permit, in effect, the consideration of an element of enhancement to the remainder in determining the taking issue. The trial court was correct in excluding the testimony of the State's witnesses, Legge and Dailey.
Another question involved in petitioner's second and third points of error is whether the trial court erred in refusing to allow the State's witnesses, Legge and Dailey, to average the lower priced acreage on the remainder of respondents' property with the higher priced frontage acreage being condemned, thereby resulting in a uniform per acre value throughout the entire 103-acre tract which then determined the *375 value of the 14.9456 acres being condemned. Again the witnesses recognized that this computation would result in a different and lower figure than an appraisal based on an assumed whole taking, but the State here contends that this is a proper method of valuation, and, as support for its contention, cites the following cases: McFaddin v. State, 373 S.W.2d 259 (Tex.Civ.App. 1963, n. r. e.); Harris County Flood Control District v. Hill, 348 S.W.2d 806 (Tex. Civ.App.1961, n. w. h.); Coastal Transmission Corporation v. Lennox, 331 S.W.2d 778 (Tex.Civ.App.1960, n. w. h.); Central Power and Light Company v. Graddy, 318 S.W.2d 943 (Tex.Civ.App.1958, n. w. h.); Floyd County v. Clements, 150 S.W.2d 447 (Tex.Civ.App.1941, writ dism.); State v. Davis, 140 S.W.2d 861 (Tex.Civ.App.1940, n. w. h.); Pillot v. City of Houston, 51 S.W.2d 794 (Tex.Civ.App.1932, n. w. h.); and State v. Carpenter, supra. We have examined these authorities, and, insofar as there is language therein inconsistent with the rule of valuation announced in this opinion, it is now disapproved. The State also cites several decisions from other jurisdictions concerning the method of valuation in situations identical with or similar to the situation here before us which supports its contention that a pro rata method of appraisal is proper. City of Los Angeles v. Allen, 1 Cal. 2d 572, 36 P.2d 611 (1934); City of Grand Rapids v. Barth, 248 Mich. 13, 226 N.W. 690, 64 A.L.R. 1507 (1929); and in re Fourth Avenue, Borough of Manhattan, City of New York, 221 A.D. 458, 223 N.Y.S. 525 (1927).[3] These cases are also inconsistent with our view. Therefore, we decline to follow any holding of this or any other jurisdiction which leads to the adoption of a method of valuation which would result in depriving the condemnee of his property without the full compensation to which he is entitled. There is no valid reason for valuing the strip of land taken under a different theory of appraisal solely because no damages to the remainder are claimed by the landowner. See the case of Territory of Hawaii, by Sharpless v. Adelmeyer, 45 Haw. 144, 363 P.2d 979, 984-85 (1961) where it is recognized that there are many pitfalls inherent in the approach contended for by the State; see also 4 Nichols on Eminent Domain § 14.31 [1] at p. 728 and § 14.231 at p. 545.
In the present case, it is beyond dispute that the land being condemned had, at the time of the taking, a significantly higher per acre market value than the land not being condemned which lay further from the highway. The State's theory is that since the frontage of the highway has merely moved over to the remaining land of respondents, thereby increasing the value of the newly abutting land, in effect, the State has only condemned a composite 14.9456 acres of the whole tract. We cannot agree with this theory. Such post-condemnation increase in value of the respondents' remaining land may occur, but the conclusion is inescapable that such appraisal would result in offsetting the estimated enhanced value of the remainder after the condemnation against the market value of the part taken at the time of the condemnation. It is well settled that "the value of the part taken should be ascertained by considering such portion alone, and not as a part of the larger tract * * *" and "enhancement in market value of the residue of the land by reason of `special benefits' is a legitimate offset to damages thereto, but not to the value of the part actually taken." State v. Carpenter, supra, 89 S. W.2d at 197 and 201. As was said in 3 Nichols on Eminent Domain § 8.6206 [1] at pp. 97-98:
"* * * [T]here can be no doubt that the tendency in recent years has been away from that principle [the before and after rule] and toward the adoption of the rule that the land taken, at least, must be paid for in money without consideration *376 of benefits to the remaining land. The development of the later rule is undoubtedly explained by the fact that the propensity of many American communities to be over-sanguine in regard to the beneficial results of projected public improbements had resulted in the taking of much valuable private property for which the owners never received any compensation other than anticipated benefits which never accrued. It was a reaction to this injustice that led to the ready adoption of a rule which, while in theory unsound, would as a matter of practice bring about a more equitable result, and in the cases in which injustice resulted, would distribute the effects of it upon the public at large."
Since the Carpenter case, Texas has consistently followed this rule as opposed to the before and after rule, and we are still convinced that this approach will more often achieve justice for all parties. Any language in Carpenter to the contrary is dictum and not in harmony with the tenor of the opinion generally, especially the statement "unless, of course the issue of damages to the remainder of the tract is not involved." The trial court was correct in restricting the witnesses to an appraisal of the property condemned without regard to the remainder. Therefore, for the reasons above stated, petitioner's first five points of error are overruled.
Petitioner's sixth point of error complains of the affirmance by the Court of Civil Appeals of the trial court's action in permitting respondents' value witnesses to testify as to twelve comparable sales. Petitioner argues that these sales were not comparable in that they were in fee simple and included all rights in the land and were not burdened with an easement of access. This was petitioner's only complaint going to show that the sales were not comparable, and in view of our decision that access rights are only material to an issue of damages to the remainder, if such are sought by the condemnee, the admission of testimony as to such comparable sales was proper. Petitioner's sixth point of error is overruled.
Therefore, for the reasons above stated, the judgments of the trial court and the Court of Civil Appeals are affirmed.
GRIFFIN and HAMILTON, JJ., dissenting.
NOTES
[1] "* * * The right [of access] apparently originated in connection with the basic purpose for which nearly all highways and streets, until very recently, were constructed. These roads were designed largely to afford ready access to the lands over and beside which they ran. It is obvious that this purpose could hardly be accomplished unless the abutting landowners had a right of ingress and egress. It is not hard to see the reasoning behind the right of access concept in connection with such roads and highways. However, with the development of highways designed primarily as arteries for the expeditious flow of traffic between more or less distant centers of population, this reasoning can no longer be said to apply to all roads and highways. Most of the cases mentioning the right of access have involved public ways admittedly designed primarily to serve the abutting property, and many of them involved an interference, often by an individual, with a more or less conceded right of access. As a consequence, the cases are full of broad statements regarding this right which are not supported by reasoning which takes into consideration the problem of expressways.
* * * * *
"If land is condemned for the purpose of constructing an old-fashioned highway intended to serve in a substantial manner the area through which it passes, the weight of authority seems to be that the owner of the remaining portions of the tract from which the condemned strip is taken has a right of access to the highway, unless, of course, the judgment of condemnation indicates in some way that that right is being taken. The right of access seems to be implicit in one of the purposes of the highway. However, there is at least one case possibly contrary to that proposition.
"There is a significant difference in the case of condemnation for the purpose of constructing an expressway. In that case, the intention to serve the area through which the highway passes is likely to be decidedly secondary and perhaps nonexistent. It seems clear that if the plans manifest in the condemnation proceeding call for a highway which will deny access over long stretches, an abutting landowner will not be held to have any right of access, for in that case it would be clear that the condemning authority intended to take his right of access. There is more difficulty where the plans as manifest at the time of condemnation call for some sort of limited access, as by way of a service road, at virtually any point along the highway. It might be argued that the very existence of such limited access is a recognition of the right of access. On the other hand, experience has taught that increasing traffic may require substantial curtailment of access to the highway and even its elimination for long stretches, in the interest of safety. Consequently, it may be argued that the complete taking of this right is foreseeable in the case of any expressway.
"Since direct authority is completely lacking, a statement of what the law is in this latter case could be no more than an educated guess. However, it can be said that the only safe course is to insist on consideration of this point in the condemnation proceeding; if the condemning authority refuses to agree that a right of access is being retained, it must be assumed that it is being taken, and the landowner will be entitled to damages on that basis." [Emphasis added.]
[2] Article 6674w-1 provides: (subsection 2 only)
"Control of Access. The State Highway Commission, by proper order entered in its minutes, is hereby authorized and empowered:
"(a). To designate any existing or proposed State Highway, of the Designated State Highway System, or any part thereof, as a Controlled Access Highway;
"(b). To deny access to or from any State Highway, presently or hereafter designated as such, whether existing, presently being constructed, or hereafter constructed, which may be hereafter duly designated as a Controlled Access Highway, from or to any lands, public, or private, adjacent thereto, and from or to any streets, roads, alleys, highways or any other public or private ways intersecting any such Controlled Access Highway, except at specific points designated by the State Highway Commission; and to close any such public or private way at or near its point of intersection with any such Controlled Access Highway;
"(c). To designate points upon any designated Controlled Access Highway, or any part of any such highway, at which access to or from such Controlled Access Highway shall be permitted, whether such Controlled Access Highway includes any existing State Highway or one hereafter constructed and so designated;
"(d). To control, restrict, and determine the type and extent of access to be permitted at any such designated point of access;
"(e). To erect appropriate protective devices to preserve the utility, integrity, and use of such designated Controlled Access Highway; and,
"(f). To modify or repeal any order entered pursuant to the powers herein granted.
"Provided, however, that nothing in the foregoing subparagraphs (a) through (f), inclusive, shall be construed to alter the existing rights of any person to compensation for damages suffered as a result of the exercise of such powers by the State Highway Commission under the Constitution and laws of the State of Texas.
"Subject to the foregoing limitations any order issued by the State Highway Commission pursuant to such powers shall supersede and be superior to any rule, regulation or ordinance of any department, agency or subdivision of the State or any county, incorporated city, town or village, including Home Rule Cities, in conflict therewith.
"No injunction shall be granted to stay or prevent the denial of previously existing access to any State Highway upon the order of the Commission except at the suit of the owner or lessee of real property actually physically abutting on that part of such State Highway to which such access is to be denied pursuant to the Commission's order, and then only in the event that said abutting owner or lessee shall not have released his claim for damages resulting from such denial of access or a condemnation suit shall not have been commenced to ascertain such damages, if any.
"Along new Controlled Access State Highway locations, abutting property owners shall not be entitled to access to such new Controlled Access State Highway locations as a matter of right, and any denial of such access shall not be deemed as grounds for special or exemplary damages, except where access to such new Controlled Access State Highway shall have been specifically authorized by the State Highway Commission to or from particular lands abutting upon such new Controlled Access State Highway in connection with the purchase or condemnation of lands or property rights from such abutting owners to be used in such new Controlled Access State Highway location, and the State Highway Commission thereafter denies access to or from such particular abutting lands to such State Highway at the point where such lands actually abut upon such State Highway."
[3] See the dissent by McAvoy, J., for a concise statement of what we consider to be the better view. 223 N.Y.S. 529. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2460242/ | 957 S.W.2d 625 (1997)
TRAIL ENTERPRISES, INC. d/b/a Wilson Oil Company, Appellant,
v.
CITY OF HOUSTON, Appellee.
No. 14-96-00689-CV.
Court of Appeals of Texas, Houston (14th Dist.).
November 20, 1997.
*628 Bruce Manuel Partain, Jim Mitchell Smith, Beaumont, Howard W. Edmunds, Houston, for appellant.
Judy K. Hatfield, Houston, for appellee.
Before YATES, HUDSON and FOWLER, JJ.
OPINION
YATES, Justice.
This appeal is from a summary judgment granted in favor of appellee, the City of Houston (the City), on the ground that limitations barred appellant's claim of inverse condemnation of its mineral rights in property located under Lake Houston. Appellant, Trail Enterprises, Inc. d/b/a Wilson Oil Company, raises ten points of error contending the trial court erred in granting the City's motion for summary judgment and in denying its cross-motion for partial summary judgment. We affirm.
BACKGROUND
Wilson Oil Company (Wilson) is the lessee under two oil and gas leases covering land out of a 985-acre tract adjacent to and beneath Lake Houston, which is either within the City limits or within the City's extraterritorial jurisdiction (ETJ).[1] The City acquired the surface estate of 45.9 acres of the 985-acre tract in 1948 for the purpose of constructing Lake Houston. The deed to the City was made subject to the mineral leases to Wilson and others, and reserved the grantor's right to drill and operate wells on the property, so long as the drilling, exploration and production did not endanger, damage or pollute the reservoir.
On March 27, 1954, the City and Wilson entered a contract whereby the City agreed to pay Wilson to elevate twelve wells that would be inundated with the flooding for the lake. In the contract, Wilson agreed that any drilling, exploration or production would not endanger, damage or pollute the reservoir.
On May 19, 1965, the City passed Ordinance 65-912 to control the pollution of Lake Houston. On December 20, 1967, the City passed Ordinance No. 67-2544, currently section 23-102 of the City's Code (the Ordinance), which amended Ordinance No. 65-912. The amendment prohibits the drilling of wells within the "control area" of Lake Houston nearer than 1000 feet from Lake Houston or any of its drains, streams, or tributaries, or at an elevation of less than 48 feet above mean sea level. In the current codification of the Ordinance, "control area" is defined as "[t]hat land contained in the extraterritorial jurisdiction of the city, which contains waters that flow into or adjacent to the watershed of Lake Houston."[2] There is no provision for a hearing to request a variance or exception to the drilling prohibition.
*629 Forest Cove Development Company (Forest Cove) obtained the mineral leasehold interests at issue on April 1, 1972. Forest Cove assigned the leases to appellant, its wholly-owned subsidiary, Trail Enterprises, Inc. (Trail), on May 29, 1986. Trail Enterprises operates under the assumed name of Wilson Oil Company.
On December 9, 1994, appellant requested a variance hearing to acquire an exemption from the Ordinance so that it could obtain a permit to drill on its leases. The City did not respond. On June 28, 1995, appellant filed suit against the City requesting a declaratory judgment that the Ordinance is unconstitutional and void. Appellant claimed the Ordinance resulted in a taking of its property rights without just compensation and sought damages for inverse condemnation.
Appellant filed a motion for partial summary judgment, reserving the litigation of its damages for trial. Appellant raised the following grounds: (1) the City deprived it of its property without due process; (2) it was denied equal protection; (3) the City impaired its contract rights; (4) the Ordinance is a retroactive law; and (5) the Ordinance resulted in a taking without compensation. In addition, appellants alleged the City's defenses to its claims were barred by estoppel. The City responded, alleging that: (1) the Ordinance is a constitutionally valid use of its police power; (2) the Ordinance is not arbitrary or capricious; (3) appellant failed to establish a taking occurred; (4) if a taking occurred, it happened on December 20, 1967, and is barred by limitations; and (5) the variance request did not revive the barred causes of action. The City then filed its motion for "final" summary judgment on the ground that all of appellant's claims are barred by limitations because they are related to the purported taking, accrued in 1967, and were barred as a matter of law ten years later, at the latest. The trial court granted the City's motion and, by separate order, denied appellant's motion. This appeal resulted.
STANDARD OF REVIEW
First, we must resolve a conflict concerning our ability to review the denial of appellant's motion for partial summary judgment. Generally, an order denying a summary judgment is not appealable because it is an interlocutory order. Novak v. Stevens, 596 S.W.2d 848, 849 (Tex.1980). However, an exception exists when both parties move for summary judgment on the entire case, and the court grants one of the motions and overrules the other. See Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex.1984); Tobin v. Garcia, 159 Tex. 58, 316 S.W.2d 396, 400 (1958). Some courts hold that we may review the denial of a "cross-motion" only when the motion entitles the court to finally resolve the entire case, including rendition of the appropriate judgment. Jensen Constr. Co. v. Dallas County, 920 S.W.2d 761, 767-68 (Tex.App.Dallas 1996, writ denied). Under this reasoning, we may not review the denial of a partial summary judgment which is not otherwise subject to appellate review. See Rice v. English, 742 S.W.2d 439, 446 (Tex.App.Tyler 1987, writ denied) (op. on reh'g) (holding that denial of a motion for partial summary judgment is an interlocutory order not subject to appellate review).
Recently, the Texas Supreme Court held that we "should review all summary judgment grounds the trial court rules on and the movant preserves for appellate review that are necessary for final disposition of the appeal...." Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996). Here, the trial court expressly granted the City's motion for summary judgment and denied appellant's motion for partial summary judgment by separate orders. Appellant raises separate points of error complaining of the denial of its motion. Therefore, because the grounds raised in appellant's motion for partial summary judgment are necessary to the disposition of the appeal, are preserved, and were ruled upon by the trial court, we should address all of these grounds on appeal.
When both parties file motions for summary judgment, we must determine on appeal all questions presented, including the propriety of the order overruling the losing party's motion. Jones v. Strauss, 745 S.W.2d *630 898, 900 (Tex.1988). The court may consider all evidence in deciding whether to grant either motion. Dallas County Appraisal Dist. v. Institute for Aerobics Research, 766 S.W.2d 318, 319 (Tex.App.Dallas 1989, writ denied). Additionally, the court may rely on one party's evidence to supply missing proof in the other party's motion. DeBord v. Muller, 446 S.W.2d 299, 301 (Tex.1969).
A summary judgment is proper only when a movant establishes that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c). To prevail, a defendant must establish 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). 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 theories pleaded. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex.1983). Summary judgment is also proper for a defendant if it conclusively establishes all elements of its affirmative defense as a matter of law. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979).
STATUTE OF LIMITATIONS
In appellant's first point of error, it complains generally that the trial court erred in granting the City's motion for summary judgment. In points two and three, it argues its claims are not barred by the two-year or ten-year statutes of limitations.
Appellant has alleged a claim for taking without just compensation. The Fifth Amendment to the United States Constitution provides that private property shall not be taken for public use without just compensation. U.S. CONST. amend. V. The provision is applicable to the states under the due process clause of the Fourteenth Amendment. The Texas Constitution also contains a "takings clause," which provides in part that "[n]o person's property shall be taken, damaged or destroyed for or applied to public use without adequate compensation being made, unless by consent of such persons...." TEX. CONST. art. 1, § 17.
If the government appropriates property without paying adequate compensation, the owner may recover the resulting damages in an "inverse condemnation" suit. See, e.g., City of Austin v. Teague, 570 S.W.2d 389 (Tex.1978); City of Abilene v. Burk Royalty Co., 470 S.W.2d 643 (Tex. 1971). An inverse condemnation may occur when the government physically appropriates or invades the property, or when it unreasonably interferes with the landowner's right to use and enjoy the property, such as by restricting access or denying a permit for development. Taub v. City of Deer Park, 882 S.W.2d 824, 826 (Tex.1994), cert. denied, 513 U.S. 1112, 115 S. Ct. 904, 130 L. Ed. 2d 787 (1995); Westgate, Ltd. v. State, 843 S.W.2d 448, 452 (Tex.1992). Governmental restrictions on the use of property can be so burdensome that they result in a compensable taking. San Antonio River Auth. v. Garrett Bros., 528 S.W.2d 266, 273 (Tex.Civ.App. San Antonio 1975, writ ref'd n.r.e.).
All property, however, is held subject to the valid exercise of the police power, and a municipality is not required to compensate a landowner for losses resulting therefrom. See City of College Station v. Turtle Rock Corp., 680 S.W.2d 802, 804 (Tex.1984); Woodson Lumber Co. v. City of College Station, 752 S.W.2d 744, 746 (Tex.App.Houston [1st Dist.] 1988, no writ). A city may enact reasonable regulations to promote the health, safety, and general welfare of its people. Turtle Rock Corp., 680 S.W.2d at 805.
The United States Supreme Court has stated, "government regulationby definitioninvolves the adjustment of rights for the public good. Often this adjustment curtails some potential for the use or economic exploitation of private property. To require compensation in all such circumstances would effectively compel the government to regulate by purchase." Andrus v. Allard, 444 U.S. 51, 64, 100 S. Ct. 318, 326, 62 L. Ed. 2d 210 (1979). As Justice Holmes stated in the landmark decision of Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413, 43 S. Ct. 158, 159, 67 L. Ed. 322 (1922), "[g]overnment *631 hardly could go on if to some extent values incident to property could not be diminished without paying for every such change in the general law. As long recognized some values are enjoyed under an implied limitation and must yield to the police power." When a government regulates a right, prohibits some noxious use, or if the public need outweighs the private loss, compensation should not be allowed. Teague, 570 S.W.2d at 393.
There is no statutory provision specifically providing a limitations period for inverse condemnation actions. The courts in Texas agree, however, that a plaintiff's cause of action for inverse condemnation is barred after the expiration of the ten-year period of limitations to acquire land by adverse possession, which is found in TEX. CIV. PRAC. & REM.CODE ANN. § 16.026 (Vernon 1986).[3]See Brazos River Auth. v. City of Graham, 163 Tex. 167, 354 S.W.2d 99, 110 (1961) (holding that ten-year limitations period applied while rejecting claim that two-year limitations barred action for taking that occurred when operation of dam and formation of lake caused flooding of sewage disposal plant); Waddy v. City of Houston, 834 S.W.2d 97, 102 (Tex.App.Houston [1st Dist.] 1992, writ denied) (affirming summary judgment where city established that sewer pipe's installation seventy years before suit was filed was significantly more than ten-year limitations period for inverse condemnation); Hudson v. Arkansas Louisiana Gas Co., 626 S.W.2d 561, 563 (Tex.App.Texarkana 1981, writ ref'd n.r.e.) (reversing a summary judgment where the trial court failed to apply ten-year limitations period to inverse condemnation claim); Hubler v. City of Corpus Christi, 564 S.W.2d 816, 823 (Tex.Civ.App.Corpus Christi 1978, writ ref'd n.r.e.) (distinguishing ten-year limitations period for "taking" from two-year period for "damaging" of property). The two-year limitations period for actions for trespass or damage to land is not applicable here. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.003 (Vernon 1976 & Supp.1997).
While the City does not agree that a taking has occurred, it asserts that if the Ordinance does constitute a regulatory taking, appellant's claim accrued in 1967 when the Ordinance was passed. Consequently, the City asserts appellant's claim is barred by the ten-year limitations period found in TEX. CIV. PRAC. & REM.CODE ANN. § 16.026 (Vernon 1986).
Appellant contends there are several reasons why its claims are not barred. First, it argues that its request for a variance in 1994 somehow revived its claim. It contends that by ignoring appellant's request for a variance, the City performed a second act of taking. We find no support for this position. For cases of adverse possession, a cause of action accrues and limitations begins to run when entry on land is made. Waddy, 834 S.W.2d at 103. When, as here, there has been no "entry" on land, but rather an interference with the right to use the property, limitations must begin when that interference first occurs. A cause of action accrues for limitations purposes when facts come into existence authorizing a claimant to seek a judicial remedy. Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990). Any "taking" in this case occurred when the Ordinance prohibiting drilling was enacted, not when appellant was later denied a hearing on its request for a variance.
Appellant contends that the Texas Supreme Court's language in Brazos River Authority supports its argument that no limitations period applies. Appellant focuses on the Court's statement that "[i]n case of a `taking' of property, the city's right thereto would not be barred if ever until the expiration of the ten year period necessary to acquire lands by adverse possession...." 354 S.W.2d at 110 (emphasis added). Appellant argues that the Supreme Court used the *632 term "if ever" to indicate a claim for "taking" is never barred. We determine, however, that the Brazos Court's inclusion of "if ever" referred to its previous discussion recognizing that former article 5517 provided that statutes of limitations did not apply to cities.[4]See id. at 109. The Court also stated that "the great weight of American authority supports the position that, absent a particular statute covering the situation, the land limitation rather than the general limitation statutes apply to such inverse condemnation proceedings." Id. Appellant also argues the Court cited Ackerman v. Port of Seattle for the proposition that "an action for constitutional taking is not barred by any statute of limitations...." 55 Wash.2d 400, 405, 348 P.2d 664, 667 (1960). The Ackerman court actually stated that while an action for constitutional taking is not barred by limitations, it "may be brought at any time before title to the property taken is acquired by prescription. The prescriptive period in this state has been held to be ten years." Id. Thus, while the terminology may be different, the Ackerman case clearly found that a claim for "taking" or inverse condemnation must be brought within ten years. Consequently, both Brazos and Ackerman support the applicability of the ten-year limitations period to this case.
Nor do we accept appellant's argument that the City cannot prevail on its limitations claim because it failed to prove the elements of adverse possession. We do not read the cases applying the ten-year limitations period to inverse condemnation claims as requiring the defendant to establish the elements of adverse possession. Therefore, the City is not required to prove it made an "actual and visible appropriation of the land." In Waddy, the City was required to establish only the date the cause of action accrued, not the elements of adverse possession, to be entitled to summary judgment on limitations on plaintiff's inverse condemnation suit. 834 S.W.2d at 103. Moreover, the City's possession in Waddy was not "visible" because the plaintiff claimed he was unaware of the sewer pipe crossing his property when he bought it. Id. at 100. Appellant makes a contradictory argument that the City cannot prove the elements of adverse possession because no taking has occurred and the cause of action has not yet accrued. The City correctly responds that appellant cannot have it both ways: it cannot sue for a taking and deny that the cause of action has accrued. Because proof of the elements of adverse possession are not required when asserting the ten-year limitations period for an inverse condemnation suit, we conclude that the ten-year period applies to a regulatory taking, as well as when there has been an actual physical invasion or appropriation of property.
To prove its limitations defense, the City was required to establish when the cause of action accrued. Waddy, 834 S.W.2d at 103. The City asserted that any taking occurred when the Ordinance prohibiting drilling was passed. Appellant pleaded "Ordinance 67-2544 violated the Fifth Amendment to the United States Constitution [and Article I, section 17 of the Texas Constitution] because it was a taking of Plaintiff's property for public use without the payment of just compensation and without Plaintiff's consent. It was an act of inverse condemnation." Appellant's pleadings admit that the Ordinance was passed on December 20, 1967. Appellant also pleaded that the Ordinance did not permit exceptions. Because it provided no procedure for a variance or appeal, the Ordinance was final when implemented and any further action was futile. See Town of Sunnyvale v. Mayhew, 905 S.W.2d 234, 246 (Tex.App.Dallas 1994, writ granted).
A party may plead itself out of court by pleading facts that affirmatively negate its cause of action. Texas Dep't of Corrections v. Herring, 513 S.W.2d 6, 9 (Tex. 1974). A summary judgment may not be based upon a weakness in the nonmovant's pleading or proof unless it establishes the absence of a right of action or an insurmountable bar to recovery. State v. Durham, 860 S.W.2d 63, 68 (Tex.1993). Where the plaintiff's pleadings establish that the statute of limitations has run, pleadings alone *633 can justify summary judgment. Washington v. City of Houston, 874 S.W.2d 791, 794 (Tex.App.Texarkana 1994, no writ). Appellant did not plead or prove that it did not discover its cause of action until a later date; thus the City had no burden to negate the discovery rule. Therefore, the City established its limitations defense as a matter of law.
ESTOPPEL
In point of error four, appellant argues that the City is estopped from asserting its affirmative defense of limitations. Appellant argues that the City cannot disavow its obligations contained both in its contract with Wilson and in the reservation of mineral rights contained in the City's deed. It claims that these agreements are covenants running with the land. Appellant contends the City is estopped from "testifying or offering evidence in derogation of Wilson Oil's title because of the common law doctrines of estoppel by deed, by contract, and by record; the sanctity of mineral reservations in a deed; the sanctity of covenants that run with the land."[5]
If in response to a motion for summary judgment on limitations, a nonmovant asserts an affirmative defense such as estoppel, it has the burden of raising a fact issue with respect to its affirmative defense. Zale Corporation v. Rosenbaum, 520 S.W.2d 889, 891 (Tex.1975); Nichols v. Smith, 507 S.W.2d 518, 521 (Tex.1974). It must come forward with summary judgment evidence sufficient to raise an issue of fact on each element of the defense to avoid summary judgment. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex.1984); "Moore" Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934, 936-37 (Tex. 1972).
These same claims are raised in appellant's point of error complaining of the denial of its motion for partial summary judgment. In point of error eight, appellant contends the Ordinance impaired its contractual rights in violation of both the federal and Texas constitutions. As the movant for summary judgment, appellant was required to establish his contract claim as a matter of law. See Tex.R. Civ. P. 166a(c).
As a general rule the doctrine of estoppel does not apply against a governmental unit exercising governmental functions. Bowman v. Lumberton I.S.D., 801 S.W.2d 883, 888 (Tex.1990); Dallas Cent. Appraisal Dist. v. G.T.E. Directories Corp., 905 S.W.2d 318, 322 (Tex.App.Dallas 1995, writ denied); Farmer's Marine Copper Works, Inc. v. City of Galveston, 757 S.W.2d 148, 152 (Tex.App.Houston [1st Dist.]1988, no writ). Appellant concedes that the Texas Constitution permits laws impairing contracts when the public safety and welfare must be protected. The provision in the Texas constitution prohibiting laws which impair the obligations in contracts is not absolute and must be balanced against a state's interest in exercising its police power. Texas State Teachers Ass'n v. State, 711 S.W.2d 421, 424-25 (Tex.App.Austin 1986, writ ref'd n.r.e.). As more fully discussed herein, the City's prohibition on drilling is a valid exercise of its police power.
In addition, the City has not acted in derogation of its contract with Wilson or the mineral reservation in its deed. Both permitted drilling only if there was no pollution of the Lake. The record indicates that the Ordinance was passed after a "great number of complaints" about drilling in the control area of Lake Houston. In October 1967, the Director of the Department of Public Works wrote the mayor that "[t]he wells that have been drilled have caused a degree of pollution to the Lake waters by the drilling of oil wells, thereby allowing pollutants to seep or flow into ditches, reservoirs, and gullies that ultimately drain or wash into the lake." We determine that appellant's estoppel *634 and contract claims do not preclude the City from asserting its limitations defense as a matter of law.
In conclusion, appellant's cause of action for inverse condemnation is barred by limitations and the City is entitled to summary judgment as a matter of law. We overrule appellant's points of error one through four and eight.
CONSTITUTIONAL ARGUMENTS
In point of error five, appellant asserts generally that the trial court erred in denying its motion for partial summary judgment. In points six and ten, appellant contends the City, through its Ordinance, deprived it of its property without due process in violation of article I, section 19 of the Texas Constitution and the Fifth and Fourteenth Amendments to the U.S. Constitution.
Appellant first argues it was deprived of procedural due process because it was denied notice and an opportunity for hearing before loss of its property interest. It complains that the Ordinance was passed on an "emergency" basis after its first reading. In addition, it contends the city council's agenda was not specific and did not constitute sufficient notice to alert property or mineral owners that a drilling prohibition would be considered.[6]
Appellant did not own the mineral interests when the Ordinance was passed in 1967. Therefore, the facts surrounding the passage of the Ordinance are immaterial. When Forest Cove, the parent company of Trail, which does business as Wilson and is domiciled in Houston, acquired the leases in 1972, it was charged with notice of the Ordinance. See City of Dallas v. Coffin, 254 S.W.2d 203, 206-07 (Tex.Civ.App.Austin 1953, writ ref'd n.r.e.). One is charged with constructive notice of the actual knowledge that could have been acquired by examining public records. Mooney v. Harlin, 622 S.W.2d 83, 85 (Tex. 1981). Those residing in or having business dealings with a city are presumed to know its ordinances. Board of Adjustment of the City of San Antonio v. Nelson, 577 S.W.2d 783, 786 (Tex.App.San Antonio), aff'd, 584 S.W.2d 701 (Tex.1979). We hold appellant was charged with constructive notice of the Ordinance and its procedural due process challenge must fail as a matter of law.
Appellant also contends it was deprived of substantive due process because the Ordinance mandated a complete ban on drilling. In addition, appellant raises an equal protection challenge in its point of error seven. Appellant contends the Ordinance requires a small group of mineral interest owners with interests in the control area, which is in the City's ETJ, to pay the cost of protecting the City's water supply. Appellant argues: "mineral owners within the city limits are free to drill within 1000 feet of the lake and its drains (including man-made), streams, or tributaries regardless of the proximity of the wells to Lake Houston." The City responds that the Ordinance applies equally to all mineral interest owners whose interests are within the City's ETJ in the Lake Houston control area. In addition, the summary judgment record does not contain evidence of other drilling in the area of Lake Houston.[7]
The standard of review for a substantive due process challenge is whether the statute has a reasonable relation to a proper legislative purpose, and whether it is arbitrary or discriminatory. Cannon v. Lemon, 843 S.W.2d 178, 183 (Tex.App.Houston [14th Dist.] 1992, writ denied). Similarly, to pass equal protection scrutiny under a rational basis review, an ordinance's classification must be rationally related to a legitimate state interest. City of Austin v. Quick, 930 S.W.2d 678, 692 (Tex.App.Austin 1996, writ granted).
When a city government passes an ordinance that is final and conclusive, it cannot be revised by the courts unless the passing of the ordinance was arbitrary, unreasonable, and a clear abuse of power. Safe Water Foundation of Texas v. City of Houston, *635 661 S.W.2d 190, 192 (Tex.App.Houston [1st Dist.] 1983, writ ref'd n.r.e.). There is a presumption in favor of the validity of the ordinance and appellant faces an "extraordinary burden" when asserting an ordinance is unconstitutional. Turtle Rock Corp., 680 S.W.2d at 805.
The City asserts that this regulation is a legitimate exercise of its police power. It contends it is reasonable to prohibit drilling in the area of its watershed to protect the City's water supply. The right of an entity to conduct oil and gas activities in this state is not an absolute right, but a qualified right subject to reasonable restriction by the state. See Elliff v. Texon Drilling Co., 146 Tex. 575, 210 S.W.2d 558, 561 (Tex.1948); see also R.D. Oil Co. v. Railroad Comm'n of Texas, 849 S.W.2d 871, 875 (Tex. App.Austin 1993, no writ) (holding that commission order directing that wells be plugged after a finding of potential pollution did not constitute a taking without due process). Reasonable regulations to promote the health, safety, and the general welfare of its people is a valid exercise of a city's police power. Turtle Rock Corp., 680 S.W.2d at 805. We hold that the Ordinance is a valid exercise of the City's police power as a matter of law.
Because the Ordinance is reasonably related to a legitimate state interest, protection of the City's water supply, it does not violate appellant's constitutional rights. This is true even though the Ordinance may have a greater effect on appellant as a member of a group of oil and gas lease holders with interests in the control area than it may have on other mineral owners. In Helton v. City of Burkburnett, a factually similar case, the Fort Worth Court of Appeals rejected an equal protection challenge to an ordinance regulating drilling and stated:
The equal protection clause of the Fourteenth Amendment does not prohibit a municipality with properly delegated powers from enacting ordinances based on reasonable classification of the objects of the legislation or of the persons whom it affects. Ordinances will not be regarded as special and class legislative merely because they affect one class and not another, provided they affect all members of the same class alike; if a classification in municipal ordinances is reasonable, including all that may be said to be similarly situated and affecting alike all of those, there is no forbidden discrimination. Thus, specific municipal regulations for one kind of business, which may be necessary for the protection of the public, can never be the just ground of complaint because like restrictions are not imposed upon other businesses of a different kind....
619 S.W.2d 23, 24-25 (Tex.App.Fort Worth 1981, writ ref'd n.r.e.).
The summary judgment evidence shows that the purpose of the Ordinance was to protect the City's main source of water supply from contamination caused by drilling of oil or gas wells within the prohibited control area. Measures to prevent contamination of Lake Houston caused by drilling for oil and gas in the area of its watershed are rationally related to the legitimate goal of protecting the City's water supply from pollution. Thus, there is a rational relationship between the purpose of the statute and its means, and appellant's substantive due process and equal protection rights have not been violated.
In point nine, appellant contends the Ordinance is a retroactive law in violation of the Texas constitution. See Tex. Const. art. I, § 16. The constitution's prohibition against retroactive laws must be balanced against the state's interest in exercising its police power. Texas State Teachers Assn, 711 S.W.2d at 424-25. For the reasons previously discussed, any retroactive effect of the Ordinance is outweighed by the City's imperative need to protect its water supply from pollution. We overrule points of error five, six, seven, nine and ten.
CONCLUSION
In conclusion, we affirm both the order granting the City's motion for summary judgment and the order denying appellant's motion for partial summary judgment.
NOTES
[1] Appellant's leasehold estate is part of a 985-acre lease granted by H.C. House to Producers Oil Company on March 1, 1912. On June 5, 1934, Producers' successor assigned a lease covering 885 acres of the tract to the original Wilson Oil Company. Appellant does business under the assumed name of Wilson Oil Company, but the record does not indicate that appellant is affiliated with the former company.
[2] The city's extraterritorial jurisdiction extends five miles outside the city limits.
[3] Section 16.026 provides in relevant part:
A person must bring suit not later than 10 years after the day the cause of action accrues to recover real property held in peaceable and adverse possession by another who cultivates, uses or enjoys the property.
TEX. CIV. PRAC. & REM.CODE ANN. § 16.026(a) (Vernon 1986).
"Adverse possession" means an actual and visible appropriation of real property, commenced and continued under a claim of right that is inconsistent with and is hostile to the claim of another person.
TEX. CIV. PRAC. & REM.CODE ANN. § 16.021(1) (Vernon 1986).
[4] Under current law, a city's right of action is also not barred by section 16.026, among other limitations statutes. See TEX. CIV. PRAC. & REM.CODE ANN. § 16.061(a) (Vernon 1997).
[5] The City is not, as appellant argues, attempting to negate appellant's title to the mineral interests by virtue of its leases and the reservation in the City's deed. Appellant still possesses its leasehold interest in the minerals, but its ability to produce them has been restricted. If appellant had defeated the City's claim of a valid use of its police powers and established that the Ordinance constituted a taking, i.e., that it could not obtain access to the minerals through directional drilling or any other means, then it would have been entitled to compensation had it brought its claim within the limitations period.
[6] The Agenda simply stated: "Amend Sec. I of Ord. No. 65-912 passed May 19, 1965, regulating controlling & prohibiting pollution of Lake Houston."
[7] The location of wells shown on an unauthenticated Railroad Commission gas production ledger cannot be determined. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1127391/ | 377 So.2d 859 (1979)
Bob R. RICHARDS
v.
FARMERS EXPORT COMPANY et al.
No. 10306.
Court of Appeal of Louisiana, Fourth Circuit.
October 10, 1979.
On Rehearing November 12, 1979.
John Swanner, Seale, Smith & Phelps, Baton Rouge, for defendants-appellees Troutman, Ryckegham, Smith and Champagne.
George M. Papale, Knight, D'Angelo & Knight, Gretna, for plaintiff-appellant.
*860 Gary T. Breedlove, Francipane, Regan & St. Pee', Metairie, for third-party defendant-appellee Employers Mut. Liability Ins. Co. of Wisconsin.
Before STOULIG, SCHOTT and BEER, JJ.
SCHOTT, Judge.
Plaintiff has appealed from a judgment dismissing his suit against supervisory personnel for damages arising out of an injury sustained on the job. The judgment was based upon a jury verdict returned on special interrogatories finding that the four defendants were negligent but that plaintiff was contributorily negligent. The principal issue raised by plaintiff is that the facts and law do not support the defense of contributory negligence.
Plaintiff was employed as a general laborer by Farmers Export Company. The four defendants were Howard Troutman, the general manager of the company, William Van Ryckegham, the plant superintendent, Nathan Smith, plaintiff's foreman, and Leon Champagne, a co-worker. The company was engaged in the operation of a grain elevator with all of the usual related activities, including loading and unloading railroad cars. In this connection, the company maintained its own railroad tracks inside the premises and a "dinky" or small locomotive. On the day of the accident plaintiff's foreman, Smith, ordered Champagne, plaintiff and four other men to repair a gap in the rails on the property. Champagne was not plaintiff's superior but had done railroad work, including rail repair work, for 21 years before coming to work for Farmers Export Company and was regarded as the principal rail repair man for the seven years he worked for Farmers Export. Thus, he was put in charge of this work even though he was not technically the supervisor or foreman of plaintiff and the other men in the strict sense.
Champagne sized up the problem and decided on the proper solution. He would hook onto the dinky a 20-foot spare rail which was in a stack near the main building and drag it out to the point on the rails where the gap was located. There were two sets of tracks leading from the main building and circling the property and the gap was in one of the inside tracks. The dinky took the outside tracks, and Champagne's plan was to have the men move the spare rail from the outside tracks over to the two inside tracks and there use the spare rail as a battering ram to push the defective rail into place. When he set out on the project the usual operator of the dinky was off and plaintiff, next in line, operated the dinky for the group. When they arrived at the location of the job they released the spare rail from behind the dinky, and while all of the men were in the process of lifting the spare rail plaintiff's back was injured.
Plaintiff's general theory of recovery is based on the failure of defendants to supply him with a safe place to work. More specifically, he charged them with negligence in failing to provide him with proper equipment so as to avoid the hazard of manual lifting which caused his injury; to conduct adequate safety instructions which would include the proper method of group lifting heavy objects; and to properly train plaintiff in railroad maintenance work. Plaintiff offered evidence that the use of rail tongs might have prevented his injury and that this is standard equipment in the railroad industry for handling rails.
As with any jury verdict, we can only speculate as to what led them to their conclusions. However, the evidence was overwhelming that Champagne was a qualified railroad repair man and that all of his superiors were justified in delegating responsibility to him to perform what seemed to be a rather minor repair job. That being so, the jury may have concluded that the negligence common to all of the defendants was in their failure to have the railroad tongs available for this work or, perhaps, their failure to teach plaintiff how to lift heavy objects. But they must have concluded that plaintiff did not act as a reasonably prudent person since he was an experienced laborer, had undoubtedly lifted heavy objects *861 during all of his working life and either stretched his own capacity or put himself in the wrong position, thereby committing contributory negligence and barring his own recovery.
Plaintiff contends the defense of contributory negligence was not available to defendants as a matter of law and, even if it were, the facts do not support the defense in this case. He relies primarily on Hall v. Hartford Accident & Indemnity Co., 278 So.2d 795 (La.App. 4th Cir. 1973), writ refused, 281 So.2d 753, and Chaney v. Brupbacher, 242 So.2d 627 (La.App. 4th Cir. 1970).
The Hall case can be initially distinguished from the instant case in that it was an affirmance of the judgment of the trial court in favor of plaintiff pursuant to the jury verdict. The burden in that case on appeal rested on the defendants, whereas in the instant case the burden is squarely on the plaintiff to demonstrate the trier of fact was clearly wrong in their factual findings. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978). In addition, the court in Hall was confronted with a charge of contributory negligence on the part of plaintiff stemming from his misuse of a wheel assembly device by over inflating a tire. The court concluded that the supervisory personnel were clearly in a position where they knew or should have known of the dangers involved in this procedure and relieved plaintiff of contributory negligence on the theory that plaintiff had no such knowledge or control over that situation. In describing plaintiff's use of the equipment the court noted that his function was to depress a button in order to inflate the tire and his continuing to do so after the desired pressure was obtained did not necessarily constitute contributory negligence under the circumstances where there was no instrument on the equipment showing the tire pressure. To reach the opposite conclusion the court would have been required to substitute itself for the jury as the fact finder on this narrow point.
In Chaney, the court was impressed with the overall hazardous circumstances of the job where plaintiff was working and found that the employer could not escape liability for sending the workmen into this environment with the argument that plaintiff was contributorily negligent for following these instructions. Under those circumstances the court concluded that the workman's only alternatives were to try to tell his superior how to run the job or to quit. The instant case is clearly distinguishable.
Plaintiff was injured because he either lifted something too heavy or he lifted it from the wrong position. Heavy lifting for a general laborer who does heavy work on a day to day basis is about as routine as walking. This accident did not happen because plaintiff was in a dangerous environment as in Chaney, or because of a momentary misuse of a technical device as in Hall. No safety programs are necessary to teach experienced laborers that they might injure their backs if they undertake to pick up too heavy a load or if they bend their backs over completely in order to pick up a heavy load rather than to use their legs in the process of lifting. Such a safety program would be about as necessary as teaching them to watch where they are walking. What is more important, however, is the fact that plaintiff was not in a position where he reasonably could feel that he had to pick up this load or quit. Champagne was not plaintiff's superior and by his own testimony he did not tell these men how to move the rail because he felt that laborers could figure this out for themselves. All Champagne told them was to move the rail from one point to another, a distance of about ten feet. They could have easily walked the rail that distance by moving one end with the other end on the ground and then by moving the other end until the destination was reached. Had they followed this procedure the weight being lifted by plaintiff would have been well within accepted limits for safe lifting. Plaintiff testified that all five men stretched themselves out along this rail and were trying to walk the whole thing over, which the jury undoubtedly thought was unreasonable and constituted contributory negligence. There was no compulsion or even pressure on *862 plaintiff to perform in this unreasonable manner.
In Galloway v. Employers Mutual of Wausau, 286 So.2d 676 (La.App. 4th Cir. 1973), writ refused, 290 So.2d 333, another case relied on by plaintiff, the court was satisfied that plaintiff was not guilty of contributory negligence because a safe alternative was not as readily available or as obvious to him as the danger of not choosing it. The court reasoned that it was unreasonable to expect him to inform his superior that he should use an overhead crane to remove objects crowding him at his work place and locate those items elsewhere before requiring him to run a lathe. The difference is that plaintiff in the instant case had a reasonable and readily available alternative and the jury undoubtedly held him accountable for his failure to use that alternative. Two other differences are noted between this case and Galloway, namely, in Galloway the court affirmed a jury verdict so that the case was in a different posture on appeal, and Galloway was again an overall dangerous environment situated like Chaney, whereas that element is not present in the instant case. The danger here, if any, was in the manner plaintiff chose to perform a narrow specific task.
Plaintiff contends that the trial judge erred in his instructions to the jury. Defendants had submitted a request for instructions on assumption of risk as well as contributory negligence, and at the charge conference the trial judge informed defendants that he would not give the assumption of risk instruction because the evidence did not warrant such. However, he informed defendants in the presence of plaintiff's counsel that he would not give the requested contributory negligence charge for the reason that it was included in his general charge. Plaintiff's counsel did not object at that time, nor did he object to the general charge. Yet plaintiff now complains that as a matter of law the trial judge erred in giving the contributory negligence charge because if assumption of risk was not applicable then necessarily contributory negligence would not be applicable. Furthermore, he now contends that the wording of the general charge on contributory negligence was erroneous. By failing to object plaintiff waived his right to assign error in this court on the charge, LSA-C.C.P. Art. 1793.
However, even if timely objections had been made the arguments have no merit. First, we see no error in the trial court's wording of the charge on contributory negligence which he defined as the failure to use ordinary and reasonable care under the circumstances. Second, assumption of risk and contributory negligence are not necessarily the same defenses in a suit such as plaintiff's. In a situation like Chaney or Galloway, where the employee is faced with either working in a dangerous environment or quitting, perhaps there is no difference, but where plaintiff is free to perform a routine task according to various alternatives which are readily available to him, and where the employer has given him no specific instructions as to how to do it and has subjected him to no pressure in the method of performance, his performance of that task in an unreasonable manner is nothing more than simple contributory negligence barring his recovery.
We cannot say that the judgment appealed from is clearly wrong and, therefore, it is affirmed.
AFFIRMED.
ON REHEARING
SCHOTT, Judge.
We have granted a rehearing on the limited application of defendants Troutman, Van Ryckegham, Smith and Champagne because we neglected to address in our original opinion the appeal which they have taken from the judgment of the trial court dismissing their third-party demand against Employers Mutual Liability Insurance Company of Wisconsin.
The third-party demand was for attorneys' fees and costs incurred by defendants in a stipulated amount in defending themselves against the main demand based upon the allegation that they were covered under *863 the liability policy issued by Employers. The policy of insurance contains an endorsement which provides that "persons insured" include the following:
"(c) if the named insured is designated in the declarations as other than an individual, partnership or joint venture, the organization so designated and
(i) any director or stockholder thereof while acting within the scope of his duties as such; and
(ii) any executive officer of the named insured while acting within the scope of his employment for the named insured.
The term `executive officer' means any person holding any of the officer positions created by the charter or bylaws of the named insured."
The record supports the conclusion that third-party plaintiffs do not qualify as executive officers under the quoted definition. They admitted that they were not officers, and copies of the charter and bylaws of the corporation show the various positions held by them were not officer positions created by these documents.
However, third-party plaintiffs rely on LSA-R.S. 22:628 as interpreted in Spain v. Travelers Insurance Company, 332 So.2d 827 (La.1976), for their position that the failure of Employers to attach copies of the charter and bylaws to its policy prevents it from relying on those documents to contest coverage.
Prior to its amendment by Act 150 of 1976 (the accident sued on occurred on January 7, 1975) R.S. 22:628 was as follows:
"No agreement in conflict with, modifying, or extending the coverage of any contract of insurance shall be valid unless in writing and made a part of the policy. This section shall not apply to the contracts as provided in Part XV of this Chapter."
In the Spain case the court found that the statute was applicable to an exclusion claimed by an excess insurer on the basis of policy provisions which sought to incorporate the primary policy's provisions by reference without actually attaching to the excess policy a copy of the primary policy. But the instant case is clearly distinguishable.
The charter and bylaws of Farmers Export Company do not constitute an "agreement in conflict with, modifying, or extending the coverage." They are purely definitional in identifying who is an executive officer under the policy and were not required by R.S. 22:628 to be attached to the policy for this purpose.
Third-party plaintiffs also contend that they were due a defense by Employers even if there is no coverage pursuant to American Home Assurance Company v. Czarniecki, 255 La. 251, 230 So.2d 253 (La. 1969). But this case, too, is distinguishable. There was a policy insuring Czarniecki and the allegation was made that this policy covered the accident sued on. The court held that the duty to defend is governed by the allegations and is broader than coverage under the policy. However, in the instant case there is an allegation of insurance coverage on third-party plaintiffs not under a policy issued to them but to Farmers Export Company. They are strangers to this policy. Surely the Czarniecki doctrine cannot be extended to any case where an insurance company, which is a total stranger to the defendant, is simply alleged to provide coverage. Carried to its logical conclusion, this argument would enable a plaintiff to pick out of the air any insurance company, allege coverage and require the company to defend.
Accordingly, the judgment dismissing the third-party demand against Employers is affirmed.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1598480/ | 995 F.Supp. 451 (1998)
In re SUMITOMO COPPER LITIGATION.
No. 96 Civ. 4584(MP).
United States District Court, S.D. New York.
March 11, 1998.
*452 *453 OPINION AND DECISION
POLLACK, Senior District Judge.
Global Minerals and Metals Corp. ("Global") and R. David Campbell ("Campbell"), (collectively referred to as the "Global Defendants") move pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure to dismiss the Second Claim of the Second Consolidated Class Action Complaint (the "Complaint"), brought under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), U.S.C. § 1961, et seq. (the "Second Claim").
Background
Plaintiffs allege that Sumitomo Corporation ("Sumitomo"), through its head copper trader Yasuo Hamanaka ("Hamanaka"), and other parties, including the Global Defendants, manipulated the price of copper on the London Metal Exchange (the "LME"), and thereby by implication on the COMEX division of the New York Mercantile Exchange ("Comex"), for approximately seven years, from 1989 to 1996.
Specifically, between February, 1995 and June, 1996, defendants allegedly manipulated prices of copper futures contracts by purchasing and holding "unneeded" copper exchange contract long positions, thereby restricting available supply. Allegedly, as a result of the manipulation, copper prices reached an artificially high level. The purported scheme collapsed under regulatory scrutiny, at which time Sumitomo fired Hamanaka and liquidated its positions at a loss.
Plaintiffs allege that during 1995-96, after regulators became suspicious, Sumitomo and Global Defendants opened brokerage accounts together in Sumitomo's name, but as to which Global Defendants held a power of attorney and managed the trading. Plaintiffs claim this was done to exert maximum effect upon prices and to deflect the regulators attention away from Sumitomo. Plaintiffs further allege that Global Defendants and Sumitomo regularly discussed and coordinated their price manipulation and that they acted in concert in making false statements to the market place and regulators. This concerted action in manipulating the copper market forms the factual basis for the RICO claims at issue in this motion.
The Global Defendants assert that the Second Claim consists of no more than news articles, rumors and generalized allegations which defendants "will at the appropriate time prove to be baseless." They argue that the Second Claim is deficient in the following respects: 1) the Global Defendants are not alleged to have participated in the operation or management of a "RICO enterprise"; 2) the alleged predicate acts of mail fraud and wire fraud are not sufficiently particularized; and 3) Plaintiffs have not pled reliance on any acts of mail or wire fraud.
For the purposes of this motion, the factual allegations of the Second Consolidated Class Action Complaint are accepted as true, and all inferences are drawn in favor of the pleader. Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir.1993).
Discussion
A. Sufficiency of RICO Enterprise Allegations
To state a RICO claim, a plaintiff must allege that defendants "conduct[ed] or participat[ed] ... in the conduct of [an] enterprise's affairs through a pattern of racketeering activity." 18 U.S.C. § 1962(c). RICO defines "enterprise" as "any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity." 18 U.S.C. § 1961(4). The enterprise may be "proved by evidence of an ongoing organization, formal or informal, and *454 by evidence that the various associates function as a continuing unit." United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981). This Circuit construes the enterprise element of RICO liberally: "[T]he language and the history [of RICO] suggest that Congress sought to define the term as broadly as possible...." United States v. Indelicato, 865 F.2d 1370, 1382 (2d Cir.), cert. denied, 493 U.S. 811, 110 S.Ct. 56, 107 L.Ed.2d 24 (1989) (en banc).
Here, the alleged structure of the enterprise is clear from the Complaint. Although Sumitomo and Global were distinct legal entities, they opened joint accounts with Merrill Lynch, Morgan Stanley and Rudolf Wolff in Sumitomo's name, but as to which Global and Campbell had a power of attorney and played some role in the management of trading. In the Merrill Lynch account, the Global Defendants are alleged to have used Sumitomo's credit to make purchases. Through these joint accounts, as well as through their individual accounts, Sumitomo and Global are alleged to have coordinated their copper trading in an effort to manipulate prices. This is a sufficient allegation of a RICO enterprise.
Additionally, to be subject to RICO liability, a defendant must have participated, directly or indirectly, in the operation or management of the enterprise. Reves v. Ernst & Young, 507 U.S. 170, 183, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993). Liability is not limited to those primarily responsible for an enterprise's affairs, in upper management, or who occupy a formal position in the enterprise, but may attach even to "lower-rung participants in the enterprise who are under the direction of upper management."[1]Id. at 183-84. However, "some part in directing the enterprise's affairs is required." Id. at 184.
Although Global Defendants contend that they merely acted at Sumitomo's behest, the Complaint alleges, at a minimum, "substantial assistance" on the part of the Global Defendants in the overall manipulation scheme. See Napoli v. United States, 45 F.3d 680, 683 (2d Cir.), cert. denied, 514 U.S. 1084, 115 S.Ct. 1796, 131 L.Ed.2d 724 and 514 U.S. 1134, 115 S.Ct. 2015, 131 L.Ed.2d 1014 (1995). Global Defendants are alleged to have coordinated their trading activities and public statements with Sumitomo and, at least, of acting under the direction of Sumitomo by purchasing copper exchange contracts through the joint accounts. At this early stage, these allegations are sufficient to satisfy Reves.
Contrary to the Global Defendants suggestion, allegations of the existence of a RICO enterprise must meet only the "notice pleading" requirements of Fed R.Civ.Pro. 8. Trustees of Plumbers Nat'l Pension Fund v. Transworld Mech., Inc., 886 F.Supp. 1134, 1144-45 (S.D.N.Y.1995); Azurite Corp. v. Amster & Co., 730 F.Supp. 571 (S.D.N.Y. 1990). At this time, nothing more is required of Plaintiffs.
B. Sufficiency of Mail and Wire Fraud Allegations
Under RICO, a "pattern of racketeering activity" consists of "at least two acts of racketeering activity" within a ten year period. See 18 U.S.C. § 1961(5); Sedima, S.P.R.L v. Imrex Co., 473 U.S. 479, 496 n. 14, 105 S.Ct. 3275, 87 L.Ed.2d 346 (1985); McLaughlin v. Anderson, 962 F.2d 187, 190 (2d Cir.1992). Among the predicate acts enumerated in § 1961(1) are any acts of mail fraud indictable under the federal mail fraud statute, 18 U.S.C. § 1341, and any acts of wire fraud indictable under the federal wire fraud statute, 18 U.S.C. § 1343.[2]
*455 Plaintiffs allege that the Global Defendants have committed the predicate acts of mail fraud and wire fraud in carrying out a "master plan" to manipulate and artificially inflate the prices of copper and its derivatives. The elements of a claim of mail or wire fraud are: (1) the existence of a scheme to defraud involving money or property; and (2) the use of the mails or wires in furtherance of the scheme. See United States v. Trapilo, 130 F.3d 547, 551-52 (2d Cir.1997); McLaughlin, 962 F.2d at 191 (citing Schmuck v. United States, 489 U.S. 705, 712, 109 S.Ct. 1443, 103 L.Ed.2d 734 (1989)).
Contrary to the Global Defendants assertion that each of the elements of common law fraud must be pled to satisfy the first prong of the mail and wire fraud statutes, "[t]he term `scheme to defraud' is measured by a `"nontechnical standard. It is a reflection of moral uprightness, of fundamental honesty, fair play and right dealing in the general [and] business life of members of society."'" Trapilo, 130 F.3d at 550 n. 3 (citing United States v. Von Barta, 635 F.2d 999, 1005 n. 12 (2d Cir.1980), cert. denied, 450 U.S. 998, 101 S.Ct. 1703, 68 L.Ed.2d 199 (1981) (quoting Gregory v. United States, 253 F.2d 104, 109 (5th Cir.1958).)) In Trapilo, the Second Circuit noted that smuggling, an act unlikely to constitute an act of common law fraud, was "an act within the meaning of a `scheme to defraud'" because it "violate[d] fundamental notions of honesty, fair play and right dealing." Id. See also, Ray Larsen Associates, Inc. v. Nikko America, Inc., 89 CIV 2809, 1996 WL 442799 *5 (S.D.N.Y. August 5, 1996) (noting that "because [the mail and wire fraud statutes] are broader than common law fraud, it is possible for a plaintiff sufficiently to plead mail or wire fraud while nevertheless failing to plead common law fraud.")
To satisfy the second prong of the mail and wire fraud statutes, a plaintiff must show 1) that the defendants "caused" the mailing or use of the wires, "namely that they must have acted `with knowledge that the use of the mails [or wires] will follow in the ordinary course of business, or where such use can reasonably be foreseen, even though not actually intended,'" and 2) that the mailing or use of the wires "was for the purpose of executing the scheme or, in other words, `incidental to an essential part of the scheme.'" United States v, Bortnovsky, 879 F.2d 30, 36 (2d Cir.1989) (quoting Pereira v. United States, 347 U.S. 1, 8-9, 74 S.Ct. 358, 98 L.Ed. 435 (1954)).[3]
In pleading a violation of the mail and wire fraud statutes, Rule 9(b) of the Federal Rules of Civil Procedure must be satisfied. Mills, 12 F.3d at 1176; German de La Roche v. Calcagnini, No. 95 CIV. 6322, 1997 WL 292108, at *7 (June 3, 1997, S.D.N.Y.). Rule 9(b) reads: "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge and other condition of mind of a person may be averred generally." Fed.R.Civ.P. 9(b).
Rule 9(b) has great "urgency" in civil RICO actions. Schmidt v. Fleet Bank, No. 96 CIV. 5030, 1998 WL 47827, *5 (Feb. 4, 1998, S.D.N.Y..) (quoting Morin v. Trupin, 778 F.Supp. 711, 716 (S.D.N.Y.1991)). The rationale underlying a strict application of the pleading requirements in civil RICO actions is that merely initiating a RICO action against a defendant can "unfairly stigmatize him as a `racketeer.'" Plount v. American Home Assurance Co., 668 F.Supp. 204, 205 (S.D.N.Y.1987). Also, "the civil RICO has resulted in a flood of what are and should be state court cases that are being reframed and brought in federal court as RICO actions because of the carrot of treble recovery and the availability of a federal forum." Id. Indeed, the "overwhelming trend" amongst the lower courts is to apply Rule 9(b) strictly in order to effect dismissal of civil RICO suits. See 16 RICO L.Rep. 1, 79-93 (1992) (index showing disproportionate number of dismissals in civil RICO suits under Rule 9(b)); see also Michael Goldsmith, Judicial Immunity For White Collar Crime: The Ironic Demise of Civil RICO, 30 Harv.J. on Legis. 1 (1993) (demonstrating, allegedly, that judicial reform *456 of the RICO statute by the lower courts has resulted in the demise of civil RICO actions).
However, while Rule 9(b) may be construed strictly in the context of civil RICO actions, it should not be applied in a manner which would, in effect, obstruct all plaintiffs, including those with valid claims, from initiating civil RICO actions. RICO clearly provides for civil remedies to benefit victims of racketeering, and in the absence of congressional action, these provisions should not be ignored. See 18 U.S.C. § 1964(c); see also H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249, 109 S.Ct. 2893, 106 L.Ed.2d 195 (1989) ("RICO may be a poorly drafted statute; but rewriting it is a job for Congress...."). Moreover, even if applied strictly, Rule 9(b) must still be read together with Rule 8(a), which requires a plaintiff to plead only a short, plain statement upon which he is entitled to relief. See Connolly v. Havens, 763 F.Supp. 6, 12 (S.D.N.Y.1991).
In cases in which a plaintiff claims that specific statements or mailings were themselves fraudulent, i.e., themselves contained false or misleading information, the complaint should specify the fraud involved, identify the parties responsible for the fraud, and where and when the fraud occurred. See Mills, 12 F.3d at 1175 (citing Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir.1989)); McLaughlin, 962 F.2d at 191 (2d Cir.1992); Luce v. Edelstein, 802 F.2d 49, 55 (2d Cir. 1986).
In cases in which the plaintiff claims that the mails or wires were simply used in furtherance of a master plan to defraud, the communications need not have contained false or misleading information themselves, See Schmuck, 489 U.S. at 715. In such cases, a detailed description of the underlying scheme and the connection therewith of the mail and/or wire communications, is sufficient to satisfy Rule 9(b). Spira v. Nick, 876 F.Supp. 553, 559 (S.D.N.Y.1995); Center Cadillac v. Bank Leumi Trust Co., 808 F.Supp. 213, 229 (S.D.N.Y.1992), aff'd, 99 F.3d 401 (2d Cir.1995). When read appropriately, Spira does not fall outside the established rules in this Circuit, as appears from the following extract:
For one thing, we do not regard mailings in furtherance of the scheme, but which are not themselves false or misleading, as "averments of fraud" within the language of Rule 9(b). For another, it is difficult to see any useful purpose in requiring that a RICO complaint specifically allege each mailing in furtherance of a complex commercial scheme, at least where, as here, the complaint alleges that numerous mailings of particular kinds were made in furtherance of the scheme. Once the plaintiff alleges with particularity the circumstances constituting the fraudulent scheme, neither the reputational interests nor the notice function served by Rule 9(b) would be advanced in any material way by insisting that a complaint contain a list of letters or telephone calls.
Id. In complex civil RICO actions involving multiple defendants, therefore, Rule 9(b) does not require that the temporal or geographic particulars of each mailing or wire transmission made in furtherance of the fraudulent scheme be stated with particularity. Spira, 876 F.Supp. at 559.[4] In such cases, Rule 9(b) requires only that the plaintiff delineate, with adequate particularity in the body of the complaint, the specific circumstances constituting the overall fraudulent scheme. Madanes v. Madanes, 981 F.Supp. 241, 254 (S.D.N.Y.1997); Center Cadillac, 808 F.Supp. at 229; Beth Israel Med. Ctr. v. Smith, 576 F.Supp. 1061, 1070-71 (S.D.N.Y.1983).
Here, the Complaint asserts a detailed fraudulent master plan involving coordinated efforts by Global Defendants and Sumitomo to manipulate copper prices. In alleging the predicate acts of mail and wire fraud for the purposes of the RICO claim, *457 the Complaint refers back to its previous factual allegations, and therefore must be read in conjunction with them. Plaintiffs allege, with the requisite specificity, a scheme whereby Sumitomo and Global Defendants purchased and held unneeded copper exchange contacts long positions in excess of 1,000,000 tons of copper, thereby injecting artificial demand and buying pressure into the supply/demand equation for copper exchange contracts. Global Defendants and Sumitomo are then alleged to have cornered substantially all of the copper available for delivery in copper exchange warehouses and kept the copper off the market, artificially restricting available supply. Among the relevant allegations regarding use of the mails and wires, the Complaint states:
56 (b) Campbell ... spoke periodically from Global's office in New York with Sumitomo, per Imamura, by telephone. Global, per Campbell had, during 1995-96, virtually daily contact by interstate wires (telephone and telefax) with Sumitomo, per Hamanaka or Masahiro Mogari, who was a trader on Sumitomo's Copper Team.
...
278. Campbell. During the Class Period [February 6, 1995 through June 15, 1996], Campbell also used the interstate wires and mails virtually on a daily basis throughout the Class Period to implement the manipulation alleged in paragraphs 41 to 269 hereof, without limitation:
(a) by making phone calls from this District to Hamanaka [in Japan]; and
(b) by making phone calls from this District to Merrill Lynch personnel, including Wolfgang Becker, Jane Walsh and others [in London, England].
279. Global. Global used the interstate wires and mails throughout the Class Period, including without limitation:
(a) by sending faxes and making phone calls to Hamanaka;
(b) by sending faxes and making phone calls to Merrill Lynch personnel, including Wolfgang Becker, Jane Walsh and other [in London, England].
These generalized allegations, when properly read in the context of the specific allegations made previously in the Complaint, are sufficient to plead mail and wire fraud. "[T]he failure to describe particular letters or telephone calls is not fatal to the complaint.... In light of the complaint's allegations, it is certainly reasonable to infer that mail and/or telephone communications were used in furtherance of the defendants' scheme." Beth Israel, 576 F.Supp. at 1071. Moreover "a plaintiff does not have the burden of perfection, and thus a complaint may survive despite its blemishes." Madanes, 981 F.Supp. at 253.
Additionally, the somewhat more specific allegations made against Hamanaka may be attributed to the Global Defendants for the purposes of the mail and/or wire fraud statutes. "The defendant need not personally initiate or receive the mailing to be liable for mail fraud, so long as the use of the mails by others was reasonably foreseeable. Any mailing incidental to an essential part of the scheme will be regarded as reasonably foreseeable." Tribune Co. v. Purcigliotti, 869 F.Supp. 1076, 1088 (S.D.N.Y. 1994), aff'd sub. nom. Tribune Co. v. Abiola, 66 F.3d 12 (2d Cir.1995) (citations omitted). The Complaint contains the following allegation:
277. During the Class Period Hamanaka continued to use the wires and the mails on a daily basis to implement the manipulation as alleged in paragraphs 41 to 269 hereof, including without limitation:
(a) by sending faxes and making phone calls to Campbell in this District;
(b) by sending faxes and making phone calls to Morgan Stanley, per Cross in this District;
(c) by sending faxes or making phone calls to Merrill Lynch, per Tony Ellis and others, in this District; and
(d) by making false statements in phone calls to this District on or about October 15, 1995 and November 6, 1995.
Again, these generalized allegations, when combined with the specific allegations made previously in the Complaint, adequately meet the requirements of Rule 9(b).
C. Sufficiency of Allegations of Reliance
In civil RICO claims, this Circuit has required a "causal connection between *458 the prohibited conduct and plaintiffs injury." Norman v. Niagara Mohawk Power Corp., 873 F.2d 634, 636 (2d Cir.1989). When the predicate acts or mail and/or fraud are alleged, "to establish the required causal connection, the plaintiff [is] required to demonstrate that the defendant's misrepresentations were relied on." Metromedia Co. v. Fugazy, 983 F.2d 350, 368 (2d Cir. 1992), cert. denied, 508 U.S. 952, 113 S.Ct. 2445, 124 L.Ed.2d 662 (1993) (citing County of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1311 (2d Cir.1990)); see also THC Holdings Corp., v. Tishman, No. 93 CIV. 5393, 1996 WL 291881, at *4 (May 31, 1996 S.D.N.Y.) (noting that "[a]lthough detrimental reliance is not an element of mail or wire fraud claims generally, a plaintiff seeking to base RICO liability on these predicate acts must prove that its injuries are the result of reliance on the fraud.").
Here, Plaintiffs allege that Global Defendants made misrepresentations to exchange regulators which allowed Global to continue its manipulative trading, thereby proximately causing Plaintiffs' injury. Additionally, Plaintiffs allege that Global and Sumitomo's coordinated price manipulation constituted a fraud on the market.
In Basic v. Levinson, 485 U.S. 224, 108 S.Ct. 978, 99 L.Ed.2d 194 (1988), the Supreme Court endorsed the fraud on the market theory for the imposition of liability under SEC Rule 10b-5, allowing a presumption of reliance to satisfy Rule 10b-5 where misleading statements were made to the market, though they were not directly relied upon by the plaintiffs. Id. at 242-47. The court noted that the presumption is supported by "common sense and probability," i.e. market prices of stock traded on well developed markets reflect all publicly available information. Id. at 246. The Supreme Court quoted Congress:
No investor, no speculator, can safely buy and sell securities upon the exchanges without having an intelligent basis for forming his judgment as to the value of the securities he buys or sells. The idea of a free and open public market is built upon a theory that competing judgment of buyers and sellers as to the fair price of a security brings about a situation where the market price reflects as nearly as possible a just price. Just as artificial manipulation tends to upset the true function of an open market, so the hiding and secreting of important information obstructs the operation of the markets as indices of real value.
Id.; H.R.Rep. No. 1383, 73d Cong., 2d Sess. 11 (1934) (emphasis added).
Aside from the numerous cases in which the fraud on the market theory of reliance has been used by the courts in actions brought under Rule 10b-5, it has been employed by this Circuit in cases involving common law fraud in both securities and commodities cases. See In re Blech Securities Litig., 961 F.Supp. 569, 587 (S.D.N.Y.1997) (noting that "[i]n the context of market manipulation, New York law requires only that a plaintiff allege reliance on the integrity of the market to satisfy the reliance element of a common law fraud case"); Minpeco, S.A. v. Hunt, 718 F.Supp. 168, 176 (S.D.N.Y.1989) (upholding a fraud on the market theory of common law fraud under New York law in a case involving the trading of commodity futures contracts). Here, there is no reason to abandon the presumption of reliance in a case involving allegations of market price manipulation simply because the presumption is being invoked in the context of the RICO predicate acts of mail and wire fraud in a commodities case. The commodities markets too are well developed. See Basic, 485 U.S. at 246.
CONCLUSION
The Complaint sufficiently states a claim under RICO and satisfies the requirements of Rule 9(b) Federal Rules of Civil Procedure. The motion to dismiss the Second Claim of the Complaint is denied.
SO ORDERED.
NOTES
[1] The Supreme Court has declined to decide "how far § 1962(c) extends down the ladder of operation...." Reves v. Ernst & Young, 507 U.S. 170, 184 n. 9, 113 S.Ct. 1163, 122 L.Ed.2d 525 (1993).
[2] The wire fraud statute, 18 U.S.C. § 1343, provides in relevant part: "Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, transmits or causes to be transmitted by means of wire, radio, or television communication in interstate or foreign commerce, any writings, signs, signals, pictures, or sounds for the purpose of executing such scheme or artifice, shall be fined under this title or imprisoned not more than five years, or both...." The mail fraud statute, 18 U.S.C. § 1341, is similar to the wire fraud statute in all respects material to the present discussion.
[3] Since the requisite elements of a "scheme to defraud" under the mail and wire fraud statutes are identical, cases construing mail fraud apply to the wire fraud statute as well. United States v. Slevin, 106 F.3d 1086, 1088 (2d Cir.1996); United States v. Lemire, 720 F.2d 1327, 1334-35 n. 6 (2d Cir.1983), cert. denied, 467 U.S. 1226, 104 S.Ct. 2678, 81 L.Ed.2d 874 (1984).
[4] The holding in Spira has been construed by the Global Defendants to be at odds with other of our district court cases. See German de La Roche v. Calcagnini, No. 95 CIV. 6322, 1997 WL 292108 (June 3, 1997, S.D.N.Y.); Old Republic Ins. Co. v. Hansa World Cargo Serv., 170 F.R.D. 361 (S.D.N.Y.1997); Levy v. Aaron Faber, Inc., 148 F.R.D. 114 (S.D.N.Y.1993); Azurite v. Amster & Co., 730 F.Supp. 571 (S.D.N.Y.1990). However, in those cases, either the fraud was in the content of the mails and/or wires themselves, or the link between the communications and the overall fraudulent scheme was insufficiently spelled out. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1983020/ | 309 Md. 147 (1987)
522 A.2d 961
HILLIARD & BARTKO JOINT VENTURE
v.
FEDCO SYSTEMS, INC. AND GARDINER & GARDINER, INC.
No. 72, September Term, 1986.
Court of Appeals of Maryland.
March 27, 1987.
Stephan J. Boardman (James H. Hulme, Nancy S. Heermans and Arent, Fox, Kintner, Plotkin & Kahn, on brief) Washington, D.C. and Patricia C. Hilliard, Gen. Counsel, on brief), Forestville, for appellant.
Gail A. Nettleton, Washington, D.C. (Sadur & Pelland, Washington, D.C., on brief) for appellee Gardiner & Gardiner, Inc.
Steven M. Levine, Washington, D.C. (Paul T. Cuzmanes and Wilson, Elser, Moskowitz, Edelman & Dicker, Washington, D.C., on brief) for appellee, Fedco Systems, Inc.
Argued before MURPHY, C.J., ELDRIDGE, COLE, RODOWSKY, COUCH and McAULIFFE, JJ. and MARVIN H. SMITH, Associate Judge of the Court of Appeals of Maryland (retired), Specially Assigned.
RODOWSKY, Judge.
At issue here is when limitations began to run in this building construction case on claims asserted in arbitration by the owners against the architect and builder. In Frederick Contractors, Inc. v. Bel Pre Medical Center, Inc., 274 Md. 307, 314, 334 A.2d 526, 530 (1975), we held that "it is for the courts and not the arbitrators to determine the timeliness of a demand for arbitration...." Here the legal position of those defending the claims is that limitations began to run when the owners discovered that they might have one or more causes of action. The owners, although not disputing when "discovery" occurred, nevertheless assert that they have claims against the builder and against the architect which did not accrue until after "discovery."
Appellants, Don Hilliard and John H. Bartko, as joint venturers (H & B), own an 80,000 s.f. building, constructed from preengineered, metal sections and containing both warehouse and office space, which is leased to the appellants' incorporated moving and storage business. Appellees are the architect, Fedco Systems, Inc. (Fedco), and the general contractor, Gardiner & Gardiner, Inc. (Gardiner). Fedco and Gardiner each contracted separately with H & B.[1] Fedco agreed to design and to supervise construction of the building, and Gardiner agreed to construct it. Each contract contained an arbitration clause. The party demanding arbitration was required to do so no later than the date by which the applicable statute of limitations would bar institution of legal or equitable proceedings based on the claim.[2]
The building was plagued by leaks that were observed before construction was completed. Eventually, H & B sued both Fedco and Gardiner in the Circuit Court for Prince George's County. That complaint alleged that the leaks were caused by negligence of Gardiner during construction, and by negligence of Fedco in designing the building and in supervising construction. H & B also alleged that Gardiner had breached its contract by failing to provide a watertight building. Fedco and Gardiner sought to compel arbitration of the claims against them, and the court ordered arbitration. Four months later H & B filed demands for arbitration. Fedco and Gardiner then filed the subject actions seeking permanently to enjoin the arbitrations because H & B's demands were barred by limitations. Judgment was for Fedco and Gardiner. The trial court found that H & B knew that the building leaked more than three years before the demands for arbitration were filed.[3] H & B appealed to the Court of Special Appeals, which affirmed in an unreported opinion. We granted H & B's petition for certiorari which accepts fact-findings of the trial court and raises only questions of law.
The following chronology is relevant.
November 6, 1980 Punch list inspection of building by representatives of
contractor and of architect and by a partner of H & B.
November 7, 1980 Letter from Fedco to Gardiner itemizing "items ...
noted as being defective or needing further
attention[,]" including: "Repair multiple roof leaks
in the warehouse area and single roof leak in the
office area of the building."
December 3, 1980 Inspection of building made by representatives of H &
B, Fedco, and Gardiner. Resulting punch list includes
two items relating to leaks in the building.
Same Date found by trial court as the date by which building
was substantially complete and ready for occupancy.
December 19, 1980 H & B is occupying office portion of building, storing
some materials in warehouse portion, and paying
electric bill.
Same Latest date, as found by trial court, by which
substantial completion, substantial payment by H & B,
and partial occupancy had all occurred.
Same Date argued by Gardiner and Fedco to be the latest date
by which limitations began to run.
January 12, 1981 Representative of Gardiner makes affidavit on
requisition for final payment reflecting a balance of
$163,978 on contract sum of $1,519,634.
February 4, 1981 Fedco approves final payment to contractor.[4]
February 18, 1981 Letter from Gardiner to Fedco confirming that all punch
list items were completed.
February 20, 1981 Letter of February 18 transmitted by architect to H &
B.
February 23, 1981 Letter from H & B to Fedco, with copy to Gardiner,
stating that building continues to leak "from numerous
points in the roof and around many of the skylights[,]"
and through the walls. H & B states that Gardiner's
work cannot be considered "final."
February 27, 1981 Letter from Gardiner to H & B acknowledging
responsibility for leaks that appear within one year,
promising future corrective efforts, and requesting
release of final payment.
March 1981 During this month Gardiner receives final payment from
H & B.
January 8, 1982 Fedco issues certificate of substantial completion as
of December 1, 1980. Certificate was backdated after
architect determined from review of files that
substantial completion had been achieved on or about
December 1, 1980.
February 16, 1982 Letter from Fedco to H & B reflecting that H & B had
not paid balance of fee for architectural services.
March 23, 1983 H & B sues Fedco and Gardiner in the Circuit Court for
Prince George's County.
August 26, 1983 Circuit Court orders arbitration.
December 28, 1983 H & B files with the American Arbitration Association
(AAA) demands for arbitration against Fedco and
Gardiner.
The parties have assumed that the "applicable statute of limitations," as the quoted words are used in the arbitration clauses, is Md.Code (1974, 1984 Repl.Vol.), § 5-101 of the Courts and Judicial Proceedings Article (CJ). It reads:
A civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.
With December 28, 1983, as the agreed date of commencement of the arbitrations, the issue is whether H & B's claims "accrued" before December 27, 1980. Conceptually those claims may sound in both contract and tort against Fedco and Gardiner respectively, unless, as Fedco argues, H & B has limited the claims it may assert in arbitration by the allegations of the circuit court complaint previously filed by it.
I
In this part we shall consider whether limitations bar a claim by H & B in contract against Fedco. But, first, we consider a procedural point raised by the architect.
A
Fedco points out that H & B's circuit court complaint filed on March 23, 1983, claimed against the architect in tort alone, and Fedco argues that no contract claim against it is involved in the arbitration. In its demand for arbitration, however, H & B described the nature of the dispute with Fedco as follows:
Alleged breach of contract and negligence in the design and construction of warehouse leased to District Moving and Storage Company, Inc. as claimed in Law Number 83-1287, Circuit Court for Prince George's County, Maryland with respect to which respondent has enjoined prosecution in Equity Number 83-0899, Circuit Court for Prince George's County, Maryland.
The H & B-Fedco contract submits to arbitration "[a]ll claims, disputes and other matters in question between the parties to this Agreement, arising out of, or relating to this Agreement or the breach thereof...." The arbitration clause incorporates the Construction Industry Arbitration Rules of the American Arbitration Association. Rule 7 (Jan. 1, 1981, ed.), "Initiation under an Arbitration Provision in a Contract," provides that the notice of arbitration "shall contain a statement setting forth the nature of the dispute...." Id. at 6. Rule 8, "Change of Claim or Counterclaim," provides:
After filing of the claim or counterclaim, if either party desires to make any new or different claim or counterclaim, same shall be made in writing and filed with the AAA.... However, after the arbitrator is appointed no new or different claim or counterclaim may be submitted without the arbitrator's consent. [Id. at 6-7.]
Although H & B's demand for arbitration describes the dispute as including an alleged breach of contract, the complaint in the civil action to which that demand also refers does not plead a contract claim against Fedco. The issue of whether a demand in this form limits the scope of an arbitration is an issue within the very broad submission of the arbitration clause and is for the arbitrator to decide. See generally Gold Coast Mall, Inc. v. Larmar Corp., 298 Md. 96, 468 A.2d 91 (1983). Further, even if the demand for arbitration were interpreted to exclude breach of contract, the AAA Construction Industry Rules make certain provisions for amendment. Application of those rules is for the arbitrator.
Consequently, our only concern under Bel Pre, supra, is whether any H & B claim, including breach of contract, can survive the bar of limitations when H & B admittedly knew of leaks in the building more than three years before demanding arbitration.
B
The contract between Fedco and H & B divides the basic services to be rendered by the architect into five phases: schematic design, design development, construction documents, bidding or negotiation, and construction phase-administration of the construction contract. Fedco's duties in the construction phase included endeavoring "to guard the Owner against defects and deficiencies in the Work of the Contractor" ( ¶ 1.1.14), and exercising authority "to reject Work which does not conform to the Contract Documents" ( ¶ 1.1.17). Paragraph 1.1.20 of the contract further provides:
The Architect shall conduct inspections to determine the Dates of Substantial Completion and final completion, shall receive and review written guarantees and related documents assembled by the Contractor, and shall issue a final Certificate for Payment.
The inspection to determine final completion and the issuance of the final certificate of payment did not take place until after December 27, 1980.
H & B submits that limitations did not begin to run on any of its claims against the architect until Fedco had completed rendering all of the services which it had promised. Our cases have called this approach to a limitations issue the "continuation of events" theory. See Booth Glass Co. v. Huntingfield Corp., 304 Md. 615, 500 A.2d 641 (1985) (continuation of events theory does not defer running of limitations on owner's claim asserting negligence in original glass installation against subcontractor which thereafter had been endeavoring to correct the defective work); Waldman v. Rohrbaugh, 241 Md. 137, 215 A.2d 825 (1966) (medical malpractice; continuation of events discussed; discovery rule applied).
H & B rests its argument on the two Maryland decisions which may have applied the continuation of events theory, Vincent v. Palmer, 179 Md. 365, 19 A.2d 183 (1941) and W.B. & A. Electric R.R. v. Moss, 130 Md. 198, 100 A. 86 (1917). Vincent involved a Great Depression era contract under which a mechanical engineer obtained first call on the plaintiff's services by promising the plaintiff ten percent of profits. The engineer did not specify when the plaintiff's share of the profits would be paid. Suit was brought after the arrangement had continued for almost seven years. We held that limitations did not run "until an accounting is made or [plaintiff's] services are ended." 179 Md. at 375, 19 A.2d at 189. In Moss the contract, which was between principal and agent for the latter to obtain a lease for the former on certain premises, also failed to specify date of payment. The agent initially obtained the lease in his own name and a month later assigned it to the principal. The critical date three years prior to suit fell after the lease was obtained by the agent but before the assignment. Because there were conflicting inferences from the evidence, limitations in that case was a question of fact and the action was remanded.
H & B emphasizes the following statement from Moss:
The general rule seems also settled that in the computation of the statutory period, in cases where there is an undertaking which requires a continuation of services, or the party's right depends upon the happening of an event in the future, the statute begins to run only from the time the services can be completed or from the time the event happens. Angell on Limitations, sec. 120; Wood on Limitations, 325-330. [130 Md. at 204-05, 100 A. at 89.]
We have a number of reservations about the applicability of the holdings in Vincent and in Moss to H & B's claim here. Because the contracts for the rendering of services in those two cases were not specific as to when payment for services was due to be made, the opinions can be read to stand for no more than that limitations did not begin to run until payment was due. See, e.g., 1 H. Wood, A Treatise on the Limitation of Actions at Law & in Equity § 120, at 673 (D. Moore 4th ed. 1916) ("Under an ordinary contract for services for a stated period, whether long or short, no time for payment being agreed upon, the right of action accrues immediately upon the completion of the term of service."). Nor is it at all clear that the continuation of events theory postpones the running of limitations against the party for whom the services were rendered on that party's claim that the services as rendered did not conform to the contract. On the other hand, a trial court in New York has held that an owner's malpractice action against an architect was not barred by limitations where the architect, after final payment had been made to the contractor, participated in efforts attempting to correct a leaking roof. The court analogized to New York's "continuous treatment" exception to time of accrual which had been applied in medical malpractice actions. See County of Broome v. Vincent J. Smith, Inc., 78 Misc.2d 889, 358 N.Y.S.2d 998 (1974).
We need not resolve these questions in this case, however, because CJ § 5-108(b)-(e), the special statute of repose for claims against architects, professional engineers, and contractors, does not permit use of the continuation of events theory as H & B would have it applied here. For example, in its civil action H & B alleged malpractice by Fedco in the design of the building. Prior to December 27, 1980, H & B was on notice that a design defect might be causing the leaks. Absent the operation of the discovery rule or of a continuation of events theory, an owner's cause of action for improper design by architects accrues when the plans are finally approved. See Comptroller of Virginia ex rel. Virginia Military Institute v. King, 217 Va. 751, 759, 232 S.E.2d 895, 900 (1977). In this case the discovery rule likely postponed the start of limitations beyond the date of plan approval, but, under the trial court's findings, not to as late as December 27, 1980. By that date at the latest limitations had begun to run against H & B's accrued claims against Fedco by virtue of § 5-108.
In relevant part § 5-108 reads:
(b) A cause of action for damages does not accrue and a person may not seek contribution or indemnity from any architect, professional engineer, or contractor for damages incurred when ... injury to real ... property, resulting from the defective . .. condition of an improvement to real property, occurs more than 10 years after the date the entire improvement first became available for its intended use.
(c) Upon accrual of a cause of action referred to in subsection[] ... (b), an action shall be filed within 3 years.
(d) This section does not apply if the defendant was in actual possession and control of the property as owner, tenant, or otherwise when the injury occurred.
(e) A cause of action for an injury described in this section accrues when the injury or damage occurs.
The history of this provision elucidates its application.
The predecessor to present § 5-108 was enacted by Ch. 666 of the Acts of 1970.[5] In the year preceding this enactment Steelworkers Holding Co. v. Menefee, 255 Md. 440, 258 A.2d 177 (1969) had applied the discovery rule to determine accrual of a cause of action for general statute of limitations purposes in a malpractice action against an architect. That same year Mattingly v. Hopkins, 254 Md. 88, 253 A.2d 904 (1969) had held the discovery rule governed accrual of a malpractice action against a professional engineer. The discovery rule had earlier been applied in Callahan v. Clemens, 184 Md. 520, 41 A.2d 473 (1945) to the accrual of a cause of action by an adjoining property owner against a contractor who had allegedly negligently erected a wall. It was clear that one purpose of Ch. 666 was to set a time limit after which the discovery rule could not operate.
Chapter 666 was modified as part of the Code revision project when the Courts and Judicial Proceedings Article was enacted, effective January 1, 1974. From a prohibition, "[n]o action ... shall be brought," the language was changed to read in relevant part:
Except as provided by this section, no cause of action for damages accrues ... when ... injury to real ... property resulting from the defective .. . condition of an improvement to real property occurs more than 20 years after the date the entire improvement first becomes available for its intended use. [Md.Code (1974), CJ § 5-108(a) (emphasis added).]
Present § 5-108(d) was subsection (b) in the 1974 enactment. The 1974 changes also added as subsection (c) the language now found in (e) ("A cause of action for an injury described in this section accrues when the injury or damage occurs.").
The Revisor's Note explains the 1974 changes.
This section is new language derived from Article 57, § 20. It is believed that this is an attempt to relieve builders, contractors, landlords, and realtors of the risk of latent defects in design, construction, or maintenance of an improvement to realty manifesting themselves more than 20 years after the improvement is put in use. The section is drafted in the form of a statute of limitation, but, in reality, it grants immunity from suit in certain instances. Literally construed, it would compel a plaintiff injured on the 364th day of the 19th year after completion to file his suit within one day after the injury occurred, a perverse result to say the least, which possibly violates equal protection. Alternatively, the section might allow wrongful death suits to be commenced 18 years after they would be barred by the regular statute of limitations.
The section if conceived of as a grant of immunity, avoids these anomalies. The normal statute of limitations will apply if an actionable injury occurs.
Subsection (c) is drafted so as to avoid affecting the period within which a wrongful death action may be brought. [Md.Code (1974), CJ at 182.]
The Revisor's Note makes plain that § 5-108 was not intended to abrogate the discovery rule as it then applied to actions against architects, engineers, and contractors. Inasmuch as the twenty year cutoff was intended to address the problem of latent defects, the statute anticipated that suits could be brought more than three years after legally recognized injury, which was unknown to the plaintiff, had occurred. Prior to immunity arising after the twenty year period, "[t]he normal statute of limitations will apply if an actionable injury occurs." Thus, the language of present subsection (e), equating accrual with "when the injury or damage occurs," means when the injury or damage is discovered.
Present subsections (b) and (c) were added by Ch. 698 of the Acts of 1979. Subsection (b) reduced the period before immunity to ten years for architects and professional engineers and Ch. 605 of the Acts of 1980 added contractors to that class. See Whiting-Turner Contracting Co. v. Coupard, 304 Md. 340, 499 A.2d 178 (1985).
The provisions of § 5-108 which are significant to H & B's claim are subsections (e) and (c). A cause of action by H & B for a defective condition of the building "accrue[d] when the injury or damage occur[red]," which means when the injury or damage was discovered. Upon accrual of that cause of action, suit "shall be filed within 3 years." § 5-108(c). The language of subsections (c) and (e) does not accommodate further postponing of the time for accrual of an H & B cause of action beyond the time of discovery and does not accommodate enlarging the three year limitations period following that accrual. Consequently, the continuation of events theory cannot apply to the claim against the architect.
It follows that the sole H & B cause of action against Fedco for breach of contract which remains viable in the face of the limitations defense is one accruing on or after December 27, 1980. The record indicates that Fedco's final inspection occurred after that date. H & B's circuit court complaint included an allegation of negligent inspection. If the arbitrator concludes that a contract claim against Fedco is procedurally permissible and finds that the final inspection did not conform to the contract, H & B would be entitled to proven damages for that breach.
II
For the same reasons given in Part I B above, a cause of action in tort by H & B against Fedco would lie for any harm suffered by H & B that was proximately caused by Fedco's breach of a legally imposed duty occurring on or after December 27, 1980.
III
Analysis of H & B's claims against Gardiner for breach of contract has been greatly simplified by Antigua Condominium Association v. Melba Investors Atlantic, Inc., 307 Md. 700, 517 A.2d 75 (1986), which was decided after all but appellant's reply brief in the case now before us had been filed. At oral argument counsel for H & B submitted that Antigua resolved most of the issues in this case, and we agree.
The Antigua litigation included claims by the purchasers of units in a residential condominium against the developer, as seller. The developer raised a limitations defense to the claims of those purchasers who had taken deeds more than three years before the institution of suit seeking damages for defects, including water leaking into the building. The standard contract of sale utilized by the developer contained the developer's promise to make necessary repairs provided notice of the defect was given to the developer within one year following settlement under the contract. We held that an action for breach of that provision (the Repair Clause) accrued within the three year limitation period, saying:
We do not interpret the Repair Clause as simply a warranty of the condition of a unit or of the common elements as of the time of closing with a Unit Owner. Had Melba simply guaranteed the condition of the property as of the date of closing with a Unit Owner, any breach of that guarantee would necessarily occur at closing and, absent a special statute, the cause of action would accrue for limitations purposes when the breach was discovered. See Poffenberger v. Risser, 290 Md. 631, 431 A.2d 677 (1981). Here, however, Melba additionally promised to repair if notified timely. The breach of that covenant to repair does not occur at closing or necessarily when notice is given. Conceptually, the ways in which one who has contracted to repair could breach that contract include repudiating the obligation before any notice is given, or, after being on notice of the defect, failing to undertake the repairs within a reasonable time, expressly refusing to repair, or, after undertaking to repair, abandoning the work before completion. [307 Md. at 715, 517 A.2d at 82-83.]
General Condition 13.2.2 of the H & B-Gardiner contract in relevant part reads:
If, within one year after the Date of Substantial Completion of the Work ... any of the Work is found to be defective or not in accordance with the Contract Documents, the Contractor shall correct it promptly after receipt of a written notice from the Owner to do so unless the Owner has previously given the Contractor a written acceptance of such condition. This obligation shall survive termination of the Contract. The Owner shall give such notice promptly after discovery of the condition.
Fedco, albeit retroactively, certified December 1, 1980, as the date of Substantial Completion. By letter dated February 23, 1981, H & B gave written notice to Gardiner of the leaking condition of the building. Under Antigua, H & B's claim for breach of Gardiner's promise to correct the work pursuant to ¶ 13.2.2 of the General Conditions is not barred by limitations. Indeed, Gardiner's obligation to perform was subject to the condition precedent of notice and would not even arise until notice had been given. There is evidence that Gardiner acknowledged its obligation under this covenant. H & B's contract claim for breach of General Condition 13.2.2 is not barred by limitations.[6]
IV
All claims of H & B against Gardiner based on breach by Gardiner of a legally imposed duty which proximately caused harm to H & B as manifested by leaks in the building prior to December 27, 1980, are barred by limitations in view of H & B's knowledge of the leaks acquired more than three years before the demand for arbitration. H & B's dispute with Gardiner must, however, be arbitrated as to ¶ 13.2.2. If H & B is able to prove at that arbitration that Gardiner, on or after December 27, 1980, breached a legally imposed duty which proximately caused harm to H & B and if H & B can further prove that that harm is greater in degree than, or different from, harm which H & B otherwise would have suffered because of the breach by Gardiner, if any, of a legally imposed duty occurring prior to December 27, 1980, then H & B's claim against Gardiner in tort would not, to that extent, be barred by limitations.
JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED IN PART AND REVERSED IN PART. CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO AFFIRM IN PART AND REVERSE IN PART THE JUDGMENT OF THE CIRCUIT COURT FOR PRINCE GEORGE'S COUNTY AND FURTHER TO REMAND THIS CASE TO THE CIRCUIT COURT FOR PRINCE GEORGE'S COUNTY FOR THE ENTRY OF A JUDGMENT CONSISTENT WITH THIS OPINION. COSTS TO BE PAID TWENTY-FIVE PERCENT BY HILLIARD & BARTKO JOINT VENTURE, TWENTY-FIVE PERCENT BY FEDCO SYSTEMS, INC., AND FIFTY PERCENT BY GARDINER & GARDINER, INC.
NOTES
[1] The parties utilized standard forms of agreements suggested by the American Institute of Architects. Specifically, they are AIA document B-141 (January 1974 ed.) as to Fedco and, as to Gardiner, A-101 (11th ed. June 1977) and A-201, General Conditions of the Contract for Construction (13th ed. August 1976).
[2] Article 11 of the H & B-Fedco contract provides in relevant part:
11.1 All claims, disputes and other matters in question between the parties to this Agreement, arising out of, or relating to this Agreement or the breach thereof, shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise.
11.2 Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. The demand shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.
The general conditions of the H & B-Gardiner contract which are relevant to the issues presented here provide:
7.9 ARBITRATION
7.9.1 All claims, disputes and other matters in question between the Contractor and the Owner arising out of, or relating to, the Contract Documents or the breach thereof, ... shall be decided by arbitration in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise.
7.9.2 Notice of the demand for arbitration shall be filed in writing with the other party to the Owner-Contractor Agreement and with the American Arbitration Association, and a copy shall be filed with the Architect. The demand for arbitration shall be made ... within a reasonable time after the claim, dispute or other matter in question has arisen, and in no event shall it be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.
[3] The arguments of all of the parties treat H & B's demands for arbitration as the events which stop the running of the statute of limitations as it is incorporated into the arbitration provisions. Consequently, we express no opinion concerning the effect, if any, on limitations of the earlier filing by H & B of a circuit court action against the contractor and architect.
[4] The president of Fedco testified that the final inspection, which he did not make personally, was made in the "February-March time frame."
[5] As it appeared in Md.Code (1957, 1972 Repl.Vol.), Art. 57, § 20, § 1 of the enactment read:
No action to recover damages for injury to property real or personal, or for bodily injury or wrongful death, arising out of the defective and unsafe condition of an improvement to real property, nor any action for contribution or indemnity for damages incurred as a result of said injury or death, shall be brought more than twenty years after the said improvement was substantially completed. This limitation shall not apply to any action brought against the person who, at the time the injury was sustained, was in actual possession and control as owner, tenant, or otherwise of the said improvement. For purposes of this section, "substantially completed" shall mean when the entire improvement is first available for its intended use.
[6] H & B makes an alternative argument on which we need not opine in view of our holding concerning General Condition 13.2.2. The argument relies on an analysis applied in President & Directors of Georgetown College v. Madden, 505 F. Supp. 557 (D.Md. 1980), aff'd in part and appeal dismissed in part, 660 F.2d 91 (4th Cir.1981) in a section of the District Court opinion other than that on which we relied in Antigua. Georgetown College is not a discovery rule case. H & B argues that its contract with Gardiner was entire and indivisible in that Gardiner's promised performance was to deliver a completed structure, and that, under Georgetown College, limitations first begin to run on final acceptance by the owner and not when undiscovered defective work was done.
In its brief H & B describes its contract claim against Gardiner as one seeking damages because the building leaks. That is the basis of the damages claimed under ¶ 13.2.2 of the General Conditions. H & B has not argued that there is any difference in the relief allowable for a breach by Gardiner of ¶ 13.2.2 and that allowable for a breach by Gardiner of its promise to perform the work in the first instance. | 01-03-2023 | 10-30-2013 |
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