url stringlengths 54 59 | text stringlengths 0 3.41M | downloaded_timestamp stringclasses 1 value | created_timestamp stringlengths 10 10 |
|---|---|---|---|
https://www.courtlistener.com/api/rest/v3/opinions/1279081/ | 279 N.W.2d 130 (1979)
203 Neb. 459
Irene PALMA, Appellant,
v.
Shirley Ann BARTA and Joseph Frank Barta, Jr., Appellees.
No. 42058.
Supreme Court of Nebraska.
May 22, 1979.
*132 Daniel G. Dolan, of Dolan, Dinsmore & Davis, Omaha, for appellant.
J. Thomas Rowen, of Miller & Rowen, Omaha, for appellees.
Heard before KRIVOSHA, C. J., McCOWN, BRODKEY and HASTINGS, JJ., and WHITEHEAD, District Judge.
BRODKEY, Justice.
Plaintiff below, Irene Palma, appeals to this court the verdict of the jury and judgment rendered thereon awarding her the sum of $4,000 as damages for injuries she received on October 28, 1976, in an intersection collision between an automobile driven by her husband, Victor Palma, and an automobile driven by the defendant, Shirley Ann Barta, owned and maintained by her husband, Joseph Frank Barta, Jr. We affirm.
At the conclusion of the evidence, the trial court sustained a motion by plaintiff's counsel for a directed verdict on the issue of defendants' negligence; and submitted to the jury only the issue of the amount of damages. The court instructed the jury that the burden was upon the plaintiff to prove by a preponderance of the evidence: "1. That the plaintiff sustained personal injuries and other damages resulting from said personal injuries. 2. That the accident was the proximate cause, or a proximately contributing cause of such injuries and damages. 3. The nature, extent and amount of the damages thus sustained by the plaintiff." As previously stated, the jury returned a verdict for the plaintiff in the sum of $4,000.
In her brief, on appeal, plaintiff alleges as grounds for a new trial: (1) That the court erred in failing to grant plaintiff's motion for mistrial based upon the fact that during the selection of the jury one of the jurors, Stanley Blakito, failed to admit on voir dire that a claim had been made against him in a personal injury action; (2) that the court erred in overruling an objection by plaintiff's counsel, and in denying plaintiff's motion for mistrial made subsequent thereto, on the basis of evidence elicited by defendants' counsel concerning plaintiff's gross-net income differences; (3) that the court erred in overruling an objection by plaintiff's counsel, and in denying the motion for mistrial made subsequent thereto, on the basis of introduction into evidence of plaintiff's income tax records, which reflected her gross earnings including sick pay benefits, in violation of the "collateral source" rule; (4) that the court erred in failing to convey to the jury supplemental instruction No. 1 in which the court informed the jury that it had stricken from the record and withdrawn from evidence the aforementioned income records, and directed the jury that they need not concern themselves with those exhibits nor with the reasons for their withdrawal from evidence; (5) that the court erred in failing to grant plaintiff's motion for mistrial at the conclusion of final argument because of improper and prejudicial remarks made by defendants' counsel; and (6) that the court failed to grant a new trial on its own motion because of the numerous errors in the record. It should be noted that the plaintiff *133 has not specifically assigned as error that the amount of damages awarded her by the jury was inadequate; although she argues that issue at great length in her brief, pointing out that the award of the jury was less than one-half of the amount of the special damages she allegedly proved at the trial.
We discuss first plaintiff's contention that the court should have excused the juror, Stanley Blakito, who subsequently became foreman of the jury, because of his failure to correctly answer the inquiry put to him during voir dire with reference to any claims which may have been made against him in a personal injury action. It appears that the accident which the juror neglected to discuss had occurred some 20 years prior to the accident involved in the instant case, and that the juror had voluntarily advised the court of that fact before the commencement of the trial, when he recollected the incident. The court voluntarily informed counsel for both parties of that fact, stating: "Let the record show that prior to the beginning of the trial this morning I have advised counsel here in chambers that a juror, Stanley Blakito, approached me outside of the courtroom and advised me that as he was driving home last night he remembered an accident that he had in the 1950's that he had not brought up in response to voir dire examination yesterday; that he was driving an automobile for his employer, and that after the accident he learned that a lady in the other car was making a claim for personal injuries against both himself and his employer. He does not know whether the claim ripened into a law suit or not. He says that that is the last he has heard of it. He told me, in response to my asking him, that he could set the matter aside and pay no attention to it, as far as his ability to decide the issues of this case." At that time, the trial court offered to allow counsel for both sides to examine the juror further as to the matter in question, but that offer was refused by both counsel. In response to a question of the defendant as to whether the juror was actually a defendant in the previous court action, the court stated that Blakito told him he was involved in an accident and learned through his employer that a lady had made a claim for injuries, but he didn't know whether or not it had ripened into a lawsuit and that was the last he heard about it. Plaintiff argues, however, that to remove the juror in question would have required her to use one of her peremptory challenges. She did not do so. Under the facts revealed in the record, and particularly in view of the statement of the juror that he could render a fair and impartial judgment in the matter, and also because of the fact that the incident in question occurred at a point in time remote from the accident in the instant case, we conclude that no prejudice resulted to the plaintiff which would warrant the sustaining of a motion for mistrial.
Plaintiff's second and third assignments of error will be discussed together, as they both involve the admission of evidence during the trial, over objection of plaintiff's counsel, where the trial judge subsequently changed his mind, ordered the evidence stricken from the record, and instructed the jury to disregard it. Plaintiff testified on direct examination with reference to loss of wages or income from Western Electric, her employer, which she claims resulted from the injuries she sustained in the accident. She testified that prior to the accident in question she was receiving $4.80 per hour plus "incentive payments" in a fluctuating amount. On cross-examination, counsel for the defendants inquired with reference to her general take-home pay during that period. Plaintiff's counsel interposed an objection based upon immateriality, irrelevancy, and incompetency, which objection was overruled; and the plaintiff was allowed to testify as to the amount of her gross and net pay. The court subsequently recognized its error and vacated its previous ruling regarding the admission of the testimony, and admonished the jury as follows: "Let me state for the record, ladies and gentlemen of the jury, that with regard to previous evidence concerning the plaintiff's wages and evidence that was admitted concerning the amount of her net earnings, or *134 take home pay, so to speak, I previously overruled an objection made by the plaintiff to that evidence. I have reconsidered that ruling, and I am vacating that ruling, and I am sustaining the objection made; and therefore, must now strike from the record all such evidence that was offered and received on that point. So that evidence is stricken from the record and, as I will later instruct you in writing, you must disregard that evidence that has been stricken." Furthermore, in its instructions to the jury, the court stated: "In determining any questions of fact presented in this case, you should be governed solely by the evidence introduced before you. You should not indulge in speculation, conjectures, or inferences not supported by the evidence. You should not consider any evidence which has been stricken from the record; you should not be influenced by statements of counsel not supported by evidence." (Emphasis supplied.) In Danner v. Walters, 154 Neb. 506, 48 N.W.2d 635 (1951). We stated: "Where evidence improperly received is afterwards stricken out and expressly withdrawn from the consideration of the jury, the error involved in its reception is ordinarily cured." We conclude that plaintiff's claim of reversible error by the action of the court in the above matter is without merit.
Plaintiff's third assignment of error involves the admission by the court into evidence of exhibits 21, 22, and 23, which were the Federal and State of Nebraska income tax returns of the plaintiff covering the years 1977, 1976, and 1975, respectively. Plaintiff contends that since those returns include, in the total of the income received by her during the years in question, sick pay benefits paid to her by her employer, the introduction of those records violated the "collateral source rule" and resulted in prejudicial error to her. Plaintiff's counsel objected to the introduction of those exhibits on the general ground that they were immaterial, but subsequently changed the basis of the objection to include the collateral source rule. There is no clear evidence in the record that the exhibits were ever seen or inspected by the jury. The question of the admissibility of the income tax statements was argued at length by both counsel, following which the trial court vacated its previous ruling and sustained the motion of the plaintiff to withdraw the exhibits from evidence, stating: "I agree with you, I sustained your motion, I'm going to have to give them a supplemental instruction. Mr. Rowen: You are going to give them another instruction in that regard? The Court: Just that I am withdrawing these three exhibits, just so they won't be wondering where they are at. Mr. Dolan: Are you going to instruct them to disregard those exhibits? The Court: I will dictate it right now. Supplemental Instruction No. 1: The Court has withdrawn from evidence Exhibits 21, 22 and 23; therefore, you need not concern yourselves with those exhibits, nor should you concern yourselves with the reasons for their withdrawal from evidence.
"Would you gentlemen be interested in waiving the reading of that supplemental instruction in open court? Mr. Dolan: Yes. Mr. Rowen: Yes, I am agreeable to that." The court's trial docket entry for Wednesday, February 8, 1978, also contains the following notation: "Before Exhibits # 21, 22, and 23 are given to jury, supplemental Instruction No. 1 is submitted to jury; parties having waived reading of instruction to jury in open court." Also in the court's written order following argument of plaintiff's motion for a new trial, he states as follows: "In addition, however, the income tax returns referred to were never shown to the jury, the court having decided that the returns should not be admitted into evidence, and thereupon by supplemental instruction No. 1 given to the jury, withdrew those exhibits from their consideration. Again, the jury was instructed in written instruction No. 1 not to be influenced by statements of counsel not supported by evidence." The court, in its order, also found: "The withdrawal of the exhibits and the supplemental instruction to the jury adequately corrected any error in their admission."
In her fourth assignment of error, however, plaintiff contends that the court *135 erred in failing to convey to the jury supplemental instruction No. 1, above referred to, which informed the jury that the court was withdrawing the income tax records from evidence and instructing the jury to disregard them. Plaintiff argues in her brief that it is very questionable whether the jury did receive supplemental instruction No. 1, and also that the jury probably did review the income tax returns. A subsequent hearing was held by the court to determine from the testimony of those involved whether supplemental instruction No. 1 was, in fact, ever actually delivered to the jury. A review of the testimony given at that hearing convinces us that the instruction in question was undoubtedly given them. The court administrator for the Fourth Judicial District testified that on the day in question he recalled a meeting in chambers between the judge and counsel with regard to exhibits 21, 22, and 23, the tax records, and that at that time the judge prepared a supplemental instruction, which was given to him by the court reporter. He took the instruction to the clerk's office, filed it, returned it for checking, and then gave it to the temporary bailiff, Kathy Severson; and that he watched the bailiff take it into the jury room pursuant to his instructions. He did not, however, see her physically hand it to the jury, but saw her go to the jury room and come back without it. The temporary bailiff, Kathy Severson, also testified that she received the supplemental instruction with directions to transmit it to the jury. She was asked: "Do you remember who you handed it to?" and she replied: "I went in and I just laid it on the table in there. I didn't hand it to anybody specifically, you know. I knocked on the door and I went in and I set it on the table, you know. I didn't hand it to anyone." She was then asked if she said anything when she did that, and replied: "I believe I said that this instruction would explain the exhibits they did not have, or something that they were questioning. I don't recall my exact words. Something to that effect." Stanley Blakito, the foreman of the jury, was also called as a witness and testified as follows with reference to what transpired at that time: "Q. I want to ask you this: Do you recall, though, calling out and asking for the income tax returns, sending a note out? A. Calling out? Q. Sending a note out by way of the bailiff saying, `Where are the income tax returns?' Do you recall that happening? A. Yes, I think, ya, come to think of that I think we asked for the latest ones. There was some old ones from way back, and we asked for the new ones, the latest ones, and there wasn't. Q. Do you recall then after sending that note out that the bailiff then brought you back an instruction instructing you to disregard that? A. That's right. And then we referred * * * back to, the other stuff. We came out once into the courtroom and we were having instructions, and we went back in there, and as we sat in there we were going through the whole case, and then we came up, one thing, so we wrote a note and had it come out to see if we could get some clarification on that matter. Then we didn't get nothing back. We got a note back just to review the evidence that we had on our table. Q. What I'm talking about, initially, after you retired, right after the instructions were read to you, do you remember sending the note out asking for the tax returns, right after you retired? A. Well, to answer your question, I believe the note that went out was asking, like I stated, was for the latest years, which would have been probably '77 or '76. Q. Then do you remember after you sent that note out that the bailiff brought you back an instruction or a piece of paper or note or something telling you to disregard the tax returns? A. Yes. We were told just to go back and refer to our list of stuff that we had from the Judge on our sheets. Q. You do recall that occurring? A. Yes." It seems clear from Mr. Blakito's testimony that during the deliberations of the jury, supplemental instruction No. 1, directing the jury to disregard the tax returns, was delivered to them. Plaintiff's fourth assignment of error is without merit.
Plaintiff's fifth assignment of error is that the court should have granted plaintiff's motion for mistrial at the conclusion *136 of the final arguments because of improper and prejudicial remarks made by defendants' counsel. Plaintiff argues that defendants' counsel stated to the jury that the reason we are here is because we couldn't get the case "settled." Recollection of the incident by defendants' counsel was that his comments were "[W]e had a dispute which we cannot resolve," and he did not recall using the word "settle." The trial court stated his recollection of the incident as follows: "On the motion for mistrial, my recollection is that Mr. Rowen did state to the jury, `We try to settle these cases,' or might have said, `We tried to settle this case.' He did use the [word] `settle' in my recollection. Objection was made promptly by plaintiff, and I stated to the jury, to the best of my recollection, that efforts to resolve issuesI deliberately avoided the use of the word `settle,' I always do, as a matter of fact, telling the jury the case is `settled.' `Attempts to resolve issues are irrelevant to this trial and the objection is sustained,' I believe those are almost identically my words.
"The objection was timely made, the jury was told the objection was sustained, and I don't believe I told them to disregard the comment, but I don't believe with that objection made and the sustaining of the objection that there was any prejudicial error at that point. The motion is overruled." In view of the court's action in sustaining the objection at that time, we do not believe prejudicial error resulted.
Finally, plaintiff argues that although the individual errors allegedly committed by the trial court may not, standing alone, be sufficient to warrant a new trial, yet a collection of individual errors can accumulate to result in prejudice to the complaining party such that a new trial is proper. She cites in support of this proposition Faught v. Washam, 329 S.W.2d 588 (Mo., 1959). While it is possible that some jurisdictions have adopted the rule advanced by plaintiff, we do not find that the State of Nebraska has ever done so, nor has our attention been directed to any Nebraska cases so holding. While it is possible that the proposed rule may, under certain circumstances, have a salutary effect, yet we do not see that the facts of the present case present such a situation. Although the plaintiff has alleged numerous assignments of error, we do not believe that the number of assignments alleged is controlling. We have not found merit in any of the assignments of error alleged to the extent, even considered collectively, they would warrant a new trial. We believe the record in this case amply sustains the conclusion that no prejudicial error resulted to the plaintiff.
Although not specifically assigned as error, we discuss one further matter, as it appears that in reality the substance of all of plaintiff's contentions and claims of error is in fact based upon her contention that the verdict of the jury in this case was inadequate. She points out that the damages awarded her in the amount of $4,000 is less than one-half of the amount of her claimed special damages; and therefore argues that she is entitled to a new trial because of that fact. She contends that her evidence established lost wages in the amount of $7,600 and medical expense of $1,506 or total special items of damage amounting to over $9,000. The record does not contain an itemized explanation by plaintiff as to how she computed her lost wages in the amount of $7,600, but her counsel did admit he argued to the jury that plaintiff sustained lost wages in that amount as the result of the accident. In this connection, plaintiff contends defendants' counsel, in his final argument to the jury, made reference to the income tax records of the plaintiff and instructed the jury to " * * * look in there to see if you can find a loss of $7,600." However, since the tax records referred to were withdrawn from evidence by the court and the jury was instructed to disregard them, we conclude the error, if any, was not prejudicial.
Notwithstanding the above, we believe it is clear there is ample evidence in the record to justify the verdict of the jury in the amount of $4,000. The record is replete with evidence, including hospital records and medical records of plaintiff's *137 employer, showing that plaintiff had experienced the same or similar medical problems for several years prior to the accident in question, and had an extensive history of prior medical problems, including chronic backaches, and pain in the upper neck and right arm. We, of course, do not know what motivated the jury to bring back a verdict in the amount they did, as their discussions and reasons inhere in the verdict itself and may not be inquired into. We note, however, the court did instruct the jury that one of the elements they must find, before the jury could assess damages in favor of the plaintiff, was that the defendant's negligence was the proximate cause of the damages to plaintiff. It is altogether possible, in view of the plaintiff's past history of medical problems, the jury concluded that not all of her personal injuries and medical expenses were the proximate result of the accident in question, and may have reduced the size of their verdict as the result thereof. Evidence of doctors in the record indicates the injury suffered by plaintiff, described as a cervical sprain, was a soft tissue injury, not unlike a sprained ankle; and there was no permanent disability involved. X-ray and myelogram films showed no evidence of any abnormality. The jury could have concluded that even if plaintiff did incur the medical expense and was absent from work for the length of time claimed, the loss was not reasonably necessary as the result of the injury sustained. The rule is well-established that triers of fact are not required to accept as absolute verity every statement of witnesses not contradicted by direct evidence, and the persuasiveness of evidence may be destroyed even though not contradicted by direct evidence. Magdaleno v. Nebraska Panhandle Community Action Agency, 195 Neb. 783, 241 N.W.2d 114 (1976); K & R, Inc. v. Crete Storage Corp., 194 Neb. 138, 231 N.W.2d 110 (1975). The rule is likewise well-established that a verdict will not be set aside as inadequate unless it is clearly against the weight and reasonableness of the evidence and is so disproportionate to the injury proved as to indicate that it was the result of passion, prejudice, mistake, or some other means not apparent in the record, or that the jury disregarded the evidence or rules of law. Cover v. Platte Valley Public Power and Irr. Dist., 173 Neb. 751, 115 N.W.2d 133 (1962); Schweitz v. Robatham, 194 Neb. 668, 234 N.W.2d 834 (1975). This court cannot say that the verdict was clearly against the weight of the evidence presented to it, nor that it indicated that the verdict resulted from passion, prejudice, or mistake.
Finding no reversible error in the record, the verdict of the jury and the judgment of the trial court must be affirmed.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/102513/ | 296 U.S. 268 (1935)
MILWAUKEE COUNTY
v.
M.E. WHITE CO.
No. 32.
Supreme Court of United States.
Argued November 12, 13, 1935.
Decided December 9, 1935.
CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.
*269 Mr. Herbert H. Naujoks, Assistant Attorney General of Wisconsin, and Mr. Clark J.A. Hazelwood, with whom Mr. James E. Finnegan, Attorney General, and Mr. O.L. O'Boyle were on the brief, for Milwaukee County.
Mr. Irving Herriott, with whom Mr. W. Ward Smith was on the brief, for M.E. White Co.
MR. JUSTICE STONE delivered the opinion of the Court.
This case comes here under § 239 of the Judicial Code, 28 U.S.C. 346, on certificate of the Court of Appeals for the Seventh Circuit, which presents a question of law concerning which the instructions of this Court are desired for the proper decision of the case.
The relevant facts, as stated by the certificate, are that the appellant, Milwaukee County, a county and citizen of Wisconsin, brought suit in the District Court for Northern Illinois against M.E. White Company, appellee, *270 a corporation and citizen of Illinois, to recover on a judgment for $52,165.84, which appellant had duly recovered and entered against the appellee in the Circuit Court of Milwaukee County, Wisconsin, a court of general jurisdiction. The judgment is said to be for taxes duly assessed against appellee, under Wisconsin statutes, upon income received from its business transacted within the state under state license. The district court dismissed the cause on the ground that, as the suit was in substance brought to enforce the revenue laws of Wisconsin, it could not be maintained in the district court in Illinois.
The question certified is as follows:
"Should a United States District Court in and for the State of Illinois, having jurisdiction of the parties, entertain jurisdiction of an action therein brought, based upon a valid judgment for over $3,000 rendered by a court of competent jurisdiction in the State of Wisconsin against the same defendant, which judgment was predicated upon an income tax due from the defendant to the State of Wisconsin?"
Appellee insists that the question should be answered in the negative (1) because such a suit is not within the judicial power conferred upon district courts by the Constitution and laws of the United States, and (2) because a judgment for taxes constitutes an exception to the requirement of the Constitution and statutes of the United States that full faith and credit be given in each state to the public acts and judicial proceedings of every state.
1. By § 24 of the Judicial Code, 28 U.S.C., § 31, district courts are given original jurisdiction "of all suits of a civil nature at common law or in equity," where there is the requisite diversity of citizenship and the amount in controversy exceeds $3,000. In this grant of jurisdiction of causes arising under state as well as federal law the phrase "suits of a civil nature" is used in contradistinction to "crimes and offenses," as to which the jurisdiction *271 of the district courts is restricted by § 24 (2) to offenses against the United States. Thus suits of a civil nature within the meaning of the section are those which do not involve criminal prosecution or punishment, and which are of a character traditionally cognizable by courts of common law or of equity. Such are suits upon a judgment, foreign or domestic, for a civil liability, of a court having jurisdiction of the cause and of the parties, which were maintainable at common law upon writ of debt, or of indebitatus assumpsit.[1]
Even if the judgment is deemed to be colored by the nature of the obligation whose validity it establishes and we are free to reexamine it and, if we find it to be based on an obligation penal in character, to refuse to enforce it outside the state where rendered, see Wisconsin v. Pelican Insurance Co., 127 U.S. 265, 292, et seq.; compare Fauntleroy v. Lum, 210 U.S. 230, still the obligation to pay taxes is not penal. It is a statutory liability, quasi contractual in nature, enforciable, if there is no exclusive statutory remedy, in the civil courts by the common law action of debt or indebitatus assumpsits. United States v. Chamberlin, 219 U.S. 250; Price v. United States, 269 U.S. 492; Dollar Savings Bank v. United States, 19 Wall. 227; and see Stockwell v. United States, 13 Wall. 531, 542; Meredith v. United States, 13 Pet. 486, 493. This was the rule established in the English courts before the Declaration of Independence. Attorney General v. Weeks, Bunbury's Exch. Rep. 223; Attorney General v. Jewers and Batty, id., 225; Attorney General v. Hatton, *272 id., 262; Attorney General v. , 2 Ans. Rep. 558; See Comyn's Digest (Title "Dett," A, 9); 1 Chitty on Pleading, 123; cf. Attorney General v. Sewell, 4 M. & W. 77.
The objection that the courts in one state will not entertain a suit to recover taxes due to another or upon a judgment for such taxes, is not rightly addressed to any want of judicial power in courts which are authorized to entertain civil suits at law. It goes not to the jurisdiction but to the merits, and raises a question which district courts are competent to decide. See Illinois Central R. Co. v. Adams, 180 U.S. 28; General Investment Co. v. New York Central R. Co., 271 U.S. 228, 230; Becker Steel Co. v. Cummings, ante, p. 74.
That defense is without merit if full faith and credit must be given the judgment. But even if full faith and credit is not commanded there is nothing in the Constitution and laws of the United States which requires a court of a state to deny relief upon a judgment because it is for taxes. A state court, in conformity to state policy, may, by comity, give a remedy which the full faith and credit clause does not compel. Young v. Masci, 289 U.S. 253; Bond v. Hume, 243 U.S. 15; cf. Tennessee Coal, Iron & R. Co. v. George, 233 U.S. 354; Clark Plastering Co. v. Seaboard Surety Co., 259 N.Y. 424; 182 N.E. 71; Herrick v. Minneapolis & St. Louis Ry. Co., 31 Minn. 11; 16 N.W. 413; Healy v. Root, 11 Pick. (Mass.) 389; Schuler v. Schuler, 209 Ill. 522; 71 N.E. 16. A suit to recover taxes due under the statutes of another state has been allowed without regard to the compulsion of the full faith and credit clause. Holshouser v. Copper Co., 138 N.C. 248; 50 S.E. 650. The privilege may be extended by statute. See N.Y. Laws, 1932, c. 333. Where suits to enforce the laws of one state are entertained in the courts of another on the principle of comity, the federal district courts sitting in that state may entertain them and should if they do not infringe federal law *273 or policy. Union Trust Co. v. Grossman, 245 U.S. 412, 418; Bond v. Hume, supra; Northern Pacific R. Co. v. Babcock, 154 U.S. 190, 197, 198; Dennick v. Railroad Co., 103 U.S. 11; see Bradford Electric Light Co. v. Clapper, 286 U.S. 145, 161.
2. The faith and credit required to be given to judgments does not depend on the Constitution alone. Article IV, § 1, not only commands that "full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state" but it adds "Congress may, by general laws, prescribe the manner in which such acts, records and proceedings shall be proved and the effect thereof." And Congress has exercised this power, by Act of May 26, 1790, c. 11, 28 U.S.C. 687, which provides the manner of proof of judgments of one state in the courts of another, and specifically directs that judgments "shall have such faith and credit given to them in every court within the United States as they have by law or usage in the courts of the State from which they are taken."
Such exception as there may be to this all-inclusive command is one which is implied from the nature of our dual system of government, and recognizes that consistently with the full faith and credit clause there may be limits to the extent to which the policy of one state, in many respects sovereign, may be subordinated to the policy of another. That there are exceptions has often been pointed out, Broderick v. Rosner, 294 U.S. 629, 642; Alaska Packers Assn. v. Industrial Accident Comm'n, 294 U.S. 532, 546; Bradford Electric Light Co. v. Clapper, supra, 160; Huntington v. Attrill, 146 U.S. 657, 663; Wisconsin v. Pelican Insurance Co., 127 U.S. 265, 293; and in some instances decided. See Haddock v. Haddock, 201 U.S. 562; Maynard v. Hill, 125 U.S. 190; Hood v. McGehee, 237 U.S. 611; Olmsted v. Olmsted, 216 U.S. 386; Fall v. Eastin, 215 U.S. 1. Without attempting to *274 say what their limits may be, we assume for present purposes that the command of the Constitution and of the statute is not all-embracing and direct our inquiry to the question whether a state to which a judgment for taxes is taken may have a policy against its enforcement meriting recognition as a permissible limitation upon the full faith and credit clause. Of that question this Court is the final arbiter. See Alaska Packers Assn. v. Industrial Accident Comm'n, supra, 547; Bradford Electric Light Co. v. Clapper, supra, 157-162.
It is said that in answering it the court should examine the record which supports the judgment and refuse to give credit to the judgment, if the cause of action upon which it is founded is one which it would not enforce, and appellee urges that a suit for taxes imposed by state statute will not be entertained outside the taxing state. It has often been said,[2] and in a few cases held,[3] that statutes imposing taxes are not entitled to full faith and credit. Other obligations to pay money arising under the statutes of one state must be given recognition in courts of another. Converse v. Hamilton, 224 U.S. 243; Broderick v. Rosner, supra; Bradford Electric Light Co. v. Clapper, supra. But it is insisted that to this rule taxing statutes constitute an exception, analogous to that relating *275 to penal laws, because the courts of one state should not be called upon to scrutinize the relations of a foreign state with its own citizens, such as are involved in its revenue laws, and thus commit the state of the forum to positions which might be seriously embarrassing to itself or its neighbors. See Moore v. Mitchell, 30 F. (2d) 600, 602, 604; Beale, Conflict of Laws, § 610.1.
Whether one state must enforce the revenue laws of another remains an open question in this Court. See Moore v. Mitchell, 281 U.S. 18, 24. But we do not stop to inquire whether the considerations which have been thought to preclude the enforcement of the penal laws of one state in the courts of another are applicable to taxing statutes; or whether the mere possibility of embarrassment in their enforcement should stay the hand of the court of another state in cases where in fact such embarrassment will not occur. For present purposes we will assume that the courts of one state are not required to entertain a suit to recover taxes levied under the statutes of another and confine our inquiry to the single question whether they must nevertheless give full faith and credit to judgments for such taxes.
A cause of action on a judgment is different from that upon which the judgment was entered. In a suit upon a money judgment for a civil cause of action the validity of the claim upon which it was founded is not open to inquiry, whatever its genesis. Regardless of the nature of the right which gave rise to it, the judgment is an obligation to pay money in the nature of a debt upon a specialty. Recovery upon it can be resisted only on the grounds that the court which rendered it was without jurisdiction, Pennoyer v. Neff, 95 U.S. 714; D'Arcy v. Ketchum, 11 How. 165; Tilt v. Kelsey, 207 U.S. 43; or that it has ceased to be obligatory because of payment or other discharge; Anderson v. Clark, 70 Ga. 362; Haggerty v. Amory, 7 Allen (Mass.) 458; First Nat. Bank v. *276 Hahn, 197 Mo. App. 593; 198 S.W. 489; Revere Copper Co. v. Dimock, 90 N.Y. 33; or that it is a cause of action for which the state of the forum has not provided a court, Anglo-American Provision Co. v. Davis Provision Co., (No. 1), 191 U.S. 373; compare Kenney v. Supreme Lodge, 252 U.S. 411, unless it is compelled to do so by the privileges and immunities clause; compare Douglas v. N.Y., N.H. & H.R. Co., 279 U.S. 377; McKnett v. St. Louis & S.F. Ry Co., 292 U.S. 230, and Broderick v. Rosner, supra; or possibly because procured by fraud, compare Christmas v. Russell, 5 Wall. 290; Maxwell v. Stewart, 22 Wall. 77; Hanley v. Donoghue, 116 U.S. 1; Simmons v. Saul, 138 U.S. 439, with Webster v. Reid, 11 How. 437; McNitt v. Turner, 16 Wall. 352; Cole v. Cunningham, 133 U.S. 107, 112.
Trial of these issues, even though the judgment be for taxes incurred under the laws of another state, requires no scrutiny of its revenue laws or of relations established by those laws with its citizens, and calls for no pronouncement upon the policy of a sister state. It involves no more embarrassment than the interstate rendition of fugitives from justice, the constitutional command for which is no more specific than that requiring full faith and credit. Foreign judgments are not liens and are not entitled to execution in the state to which they are brought. See McEmploy v. Cohen, 13 Pet. 312; Cole v. Cunningham, supra, 112; cf. Gasquet v. Fenner, 247 U.S. 16; Sistare v. Sistare, 218 U.S. 1, 26. They can no more demand priority over domestic claims for taxes than a judgment upon a simple contract debt, which is equally a binding obligation of the judgment debtor where rendered, and to which full faith and credit must be accorded.
We can perceive no greater possibility of embarrassment in litigating the validity of a judgment for taxes and enforcing it than any other for the payment of money. The very purpose of the full faith and credit *277 clause was to alter the statutes of the several states as independent foreign sovereignties, each free to ignore obligations created under the laws or by the judicial proceedings of the others, and to make them integral parts of a single nation throughout which a remedy upon a just obligation might be demanded as of right, irrespective of the state of its origin. That purpose ought not lightly to be set aside out of deference to a local policy which, if it exists, would seem to be too trivial to merit serious consideration when weighed against the policy of the constitutional provision and the interest of the state whose judgment is challenged. In the circumstances here disclosed no state can be said to have a legitimate policy against payment of its neighbor's taxes, the obligation of which has been judicially established by courts to whose judgments in practically every other instance it must give full faith and credit. Compare Fauntleroy v. Lum, supra.
In numerous cases this Court has held that credit must be given to the judgment of another state although the forum would not be required to entertain the suit on which the judgment was founded; that considerations of policy of the forum which would defeat a suit upon the original cause of action are not involved in a suit upon the judgment and are insufficient to defeat it. Full faith and credit is required to be given to the judgment of another state although the original suit on which it was based arose in the state of the forum and was barred there by the Statute of Limitations when the judgment was rendered; Christmas v. Russell, 5 Wall. 290; Roche v. McDonald, 275 U.S. 449; and where the original suit was upon a gambling contract invalid by the law of the forum where it was made; Fauntleroy v. Lum, supra. It was required where the judgment was for wrongful death, although it was thought that the statute giving the recovery was not entitled to full faith and credit. Kenney *278 v. Supreme Lodge, supra; compare Converse v. Hamilton, supra; Broderick v. Rosner, supra; see also American Express Co. v. Mullins, 212 U.S. 311.
Appellee especially relies upon the statement in the opinion of this Court in Wisconsin v. Pelican Insurance Co., supra, that (292, 293):
"The essential nature and real foundation of a cause of action are not changed by recovering judgment upon it; and the technical rules, which regard the original claim as merged in the judgment, and the judgment as implying a promise by the defendant to pay it, do not preclude a court, to which a judgment is presented for affirmative action, (while it cannot go behind the judgment for the purpose of examining into the validity of the claim,) from ascertaining whether the claim is really one of such a nature that the court is authorized to enforce it."
In that case it was held that this Court was without original jurisdiction of a suit brought by Wisconsin to recover upon a judgment obtained in its own courts for a penalty imposed by its statutes for the failure of an insurance company to file an annual report. So far as the opinion can be taken to suggest that full faith and credit is not required with respect to a judgment unless the original cause of action would have been entitled to like credit, it is inconsistent with decisions of this Court already noted and was discredited in Fauntleroy v. Lum, supra, 36, 37, and Kenney v. Supreme Lodge, supra, 414.
The precise question now presented appears to have been decided in only a single case, New York v. Coe Manufacturing Co., 112 N.J.L. 536; 172 A. 198. In holding in that case that a New York judgment for taxes was entitled to full faith and credit, the New Jersey Court of Errors and Appeals pointed out that questions of the construction and application of the New York tax laws were not the subject of litigation in New Jersey, since *279 they had been conclusively determined by the New York judgment, which established liability for the tax.[4]
We conclude that a judgment is not to be denied full faith and credit in state and federal courts merely because it is for taxes.
We intimate no opinion whether a suit upon a judgment for an obligation created by a penal law, in the international sense, see Huntington v. Attrill, supra, 677, is within the jurisdiction of the federal district courts, or whether full faith and credit must be given to such a judgment even though a suit for the penalty before reduced to judgment could not be maintained outside of the state where imposed. See Wisconsin v. Pelican Insurance Co., supra.
The findings of the Wisconsin court, upon which the judgment in the present case was predicated, are appended as an exhibit to the certificate. They indicate that the judgment included interest and a "penalty" of *280 2% for delinquency in payment, but the record does not disclose that the nominal penalty arose under a penal law or is of such a nature as to preclude suit to recover it outside the state of Wisconsin. See Huntington v. Attrill, 146 U.S. 657, 667, et seq. The certificate and question are framed on the assumption that it is not. The judgment is stated to be for taxes.
The question is answered "yes."
MR. JUSTICE McREYNOLDS and MR. JUSTICE BUTLER think that the question should be answered "no."
NOTES
[1] Horsy v. Daniel, 2 Lev. 161; 1 Marsh. 284; Prince v. Nicholson, 5 Taunt. 665; Hall v. Odber, 11 East. 118; Lyman v. Brown, 2 Curtis 559, 561; Taylor v. Bryden, 8 Johns. 173; Russell v. Smyth, 9 M. & W. 810; Andrews v. Montgomery, 19 Johns. 162; Boston India Rubber Co. v. Hoit, 14 Vt. 92; Carter v. Crews, 2 Port. (Ala.) 81; Belford v. Woodward, 158 Ill. 122; Cole v. Driskell, 1 Blackf. (Ind.) 16; see 1 Chitty on Pleading, 115; 2 Freeman on Judgments, § 1515.
[2] Henry v. Sargeant, 13 N.H. 321; Gulledge Bros. Lumber Co. v. Wenatchee Land Co., 122 Minn. 266; 142 N.W. 305; Colorado v. Harbeck, 232 N.Y. 71; 133 N.E. 357; James & Co. v. Second Russian Insurance Co., 239 N.Y. 248, 257; 146 N.E. 369; Matter of Martin, 255 N.Y. 359, 362; 174 N.E. 753; Beadall v. Moore, 199 A.D. 531; 191 N.Y.S. 826; cf. Municipal Council of Sydney v. Bull [1909], 1 K.B. 7; Queen of Holland v. Drukker [1928], Ch. 877; Attorney General of Canada v. Schulze & Co., 9 Sc. L.T. Rep. 4.
[3] Moore v. Mitchell, 30 F. (2d) 600 (C.C.A.2d); affirmed on another ground, 281 U.S. 18; Matter of Bliss, 121 Misc. 773; 202 N.Y.S. 185; Matter of Martin, 136 Misc. 51; 240 N.Y.S. 393; Maryland v. Turner, 75 Misc. 9; 132 N.Y.S. 173. Contra, Holshouser v. Copper Co., 138 N.C. 248; 50 S.E. 650.
[4] The Restatement of Conflict of Laws of the American Law Institute, 1934, declares:
§ 610. "No action can be maintained on a right created by the law of a foreign state as a method of furthering its own governmental interests."
This is stated by Comment (c) to refer to claims for taxes. It also declares:
§ 443. "A valid foreign judgment for the payment of money which has been obtained in favor of a state, a state agency, or a private person, on a cause of action created by the law of the foreign state as a method of furthering its own governmental interests will not be enforced."
Comment (b) states that the enforcement of such a judgment is not required by the full faith and credit clause. But illustration 4 states that a state judgment against a foreign corporation for a stipulated fee for the privilege of doing business within the state is entitled to full faith and credit.
These conclusions should be compared with New York v. Coe Manufacturing Co., supra. See Beale, Conflict of Laws, §§ 443.1, 610.2. | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/2397209/ | 402 S.W.2d 743 (1966)
Donald Wayne CATHY, Appellant,
v.
The STATE of Texas, Appellee.
No. 38951.
Court of Criminal Appeals of Texas.
April 13, 1966.
Rehearing Denied May 25, 1966.
*744 Victor R. Blaine, Houston, for appellant.
Frank Briscoe, Dist. Atty., Carl E. F. Dally, James C. Brough and Robert J. Musslewhite, Asst. Dist. Attys., Houston, and Leon B. Douglas, State's Atty., Austin, for the State.
McDONALD, Presiding Judge.
The offense is driving while license suspended; the punishment, enhanced by proof of a prior conviction, is 30 days confinement in jail and a fine of $300.00.
Officer Joe Dvorsky of the Texas Department of Public Safety testified that he had custody of appellant's driver's record, and that this record revealed that appellant had been issued a commercial operator's license which bore an expiration date of September 23, 1960.
The record further reflects that his license was suspended effective November 17, 1959, after a corporation court of Dallas, Texas, held a hearing at which appellant was found to be an habitual violator of the traffic laws as defined in Section 22, Article 6687b, Vernon's Ann.Tex.Civ.St.
On August 30, 1960, a Dallas corporation court found that appellant had committed an offense for which his license could be automatically suspended, and the Department of Public Safety entered an order suspending appellant's license for an additional twelve-month period from November 17, 1960, until November 17, 1961.
Three subsequent automatic suspensions resulted from convictions for driving while license was suspended, as provided for by Section 24, Article 6687b, with the effect that appellant's license was purportedly under suspension until November 17, 1964, at the time he was arrested for the present offense.
Appellant stipulated that he had driven a motor vehicle upon a public street in Harris County, Texas, on October 4, 1964, and further stipulated that he had been previously convicted of driving while his license was suspended on May 22, 1963.
Appellant's one contention on appeal is that the evidence is insufficient to support his conviction. More specifically, the first two suspensions described above were ordered by the Department as a result of hearings held before the corporation court, and it is appellant's position that he had no notice that either hearing was to be held, and further that he was not notified of the results of either hearing or of the action taken by the Department. He argues that the Department, in ordering the suspension of his license without notice of the hearings or orders, exceeded the authority granted by Section 22 of Article 6687b, and these suspensions are therefore void. Consequently his commercial operator's license was not under suspension on September 23, 1960, when it expired. Appellant contends he has had no license since that date *745 and that his conviction here, for driving while his license was suspended, is necessarily void, because one of the elements of proofthat the accused possess a license which was suspendedwas not proven.
The facts necessary for determination of this issue are found in appellant's driver's record, which shows that notice of the first hearing held on November 17, 1959, was mailed to appellant by certified mail on November 3, 1959, and that this notice was returned to the Department undelivered and not receipted for. Following the hearing, the Department entered its order suspending appellant's license for one year effective November 17, 1959, and notice of the action taken by the Department was sent by certified mail to appellant at the address stated on his license. This notice was also returned to the Department undelivered and not receipted for. It is undisputed that appellant was told by a Dallas police officer in July, 1960, that his license was suspended and advised that another hearing would be held concerning his driving status, but the record does not reflect that appellant had notice, actual or constructive, as to when the hearing would be held. Notice was mailed by certified mail that a hearing would be held August 30, 1960, but this notice was not received by appellant, according to his driver's record, which also fails to show that notice of the suspension order was sent to appellant after this hearing.
From these facts, it is clear that service, as required by Section 22, Article 6687b, was not had upon appellant. Podany v. State, 172 Tex. Crim. 451, 358 S.W.2d 118. Article 6687b does not authorize suspension of a license without notice and hearing except as provided by Section 24, not applicable here. Texas Department of Public Safety v. Hamilton, 157 Tex. 616, 306 S.W.2d 712. The suspensions effective November 17, 1959, and November 17, 1960, are therefore void. As appellant's license was not under suspension on its date of expiration, it expired on September 23, 1960. The record shows that there was no renewal of appellant's privilege to operate a motor vehicle, and there is no evidence that he was issued a new license. The state has failed to show that appellant had a license which was suspended on the date of the offense alleged, and the conviction cannot stand. Bryant v. State, 163 Tex. Cr.R. 544, 294 S.W.2d 819.
The state contends that appellant's stipulation at his trial that on May 22, 1963, he was duly and legally convicted of driving while license was suspended was an admission that he had a license at that time and that the license was suspended, and that having admitted this, appellant is precluded from asserting that the 1959 and 1960 suspensions are void, because these suspensions were necessary to obtain the 1963 conviction.
Even if we assume that in successive criminal actions the judgment of the former action operates as an estoppel in the latter as to every point and question which was actually litigated and determined in the first action, there is no indication that the validity of the 1959 and 1960 suspensions has ever been challenged, and the 1963 conviction for driving while license was suspended cannot be considered conclusive on this issue. It is incumbent upon the state in every cause of action to prove the elements of the offense charged. One of the elements of the offense of driving while license is suspended is that the accused's privilege to drive a motor vehicle must be suspended at the time of the alleged offense. Under this court's interpretation of Article 6687b, this means that the state is required to prove that the accused had a license which was suspended at the time of the alleged offense, or that the accused's privilege to drive was suspended at the time his license expired by its own terms, and that because of an unbroken chain of successive suspensions, that privilege remained suspended from the expiration date to the time of the alleged offense. Preble v. State, Tex.Cr. App., 402 S.W.2d 902, opinion delivered *746 February 9, 1966. The state has failed to prove this element of the offense. We overrule the state's contention that appellant's stipulation as to his prior conviction estopped him from asserting his defense that he had no license which could be under suspension at the time of the alleged offense. See Lee v. State, 86 Tex. Crim. 146, 215 S.W. 326.
The judgment is reversed and the cause remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2027421/ | 15 B.R. 650 (1981)
RSB MANUFACTURING CORPORATION, Plaintiff-Appellant,
v.
BANK OF BARODA, Defendant-Appellee.
81 Civ. 2086 (LBS).
United States District Court, S.D. New York.
October 29, 1981.
*651 Michael Berman, New York City, for plaintiff-appellant.
Mudge, Rose, Guthrie & Alexander, Thomas W. Evans, Robert A. Jaffe, Marguerite R. Kahn, New York City, for defendant-appellee.
OPINION
SAND, District Judge.
This case comes before this Court on appeal from a decision in Bankruptcy Court, 9 B.R. 414 (Bkrtcy.1981) [hereinafter "Opinion"], granting the motion of the defendant-appellee, Bank of Baroda, to dismiss the complaint of the plaintiff-appellant, RSB Manufacturing Corporation ("RSB"). The appellant, beneficiary of two letters of credit, issued by the Bombay branch of the Bank of Baroda and advised by Chemical Bank in New York and the New York branch of Baroda, seeks to collect the full amount of the credits.
Judge John J. Galgay determined that Baroda was not liable. The appellant contends that the court only considered the liability of the New York branch of Baroda as advising bank, failing to reach the question of Baroda's liability as issuer, a question properly before the court because Baroda is subject to jurisdiction in New York for all purposes. This Court finds the appeal without merit for reasons discussed herein and affirms the decision of the Bankruptcy Court.
BACKGROUND
Judge Galgay's decision did not involve any finding of facts.[1] The facts are not disputed by the parties on this motion to dismiss and thus a short summary of the facts stated by the Bankruptcy Court suffices for purposes of this appeal.
Facts
RSB is a supplier of machinery to jewelry manufacturing companies. It entered into *652 a contract for the sale of goods with Elegant Industries Pvt. Ltd. of Bombay ("Elegant"). In order to assure the payment of the contract price of $54,900, RSB required Elegant to apply for an irrevocable letter of credit. The Bombay branch of the Bank of Baroda issued a letter of credit on September 21, 1979 to cover the contract price. This letter of credit was amended on February 22, 1980 to increase the amount of credit to $63,500 and to extend the expiration date. To facilitate payment in New York, Baroda authorized Chemical Bank to serve as the advising and paying bank. Chemical Bank, through its International Operations Division in New York, notified RSB on October 11, 1979 that the credit had been established for the benefit of RSB, specifying that its communication was "solely in advice of our correspondent's credit and conveys no engagement by us." Opinion at 415.
On February 22, 1980, Elegant obtained a second letter of credit, in the amount of $8,853.50, from the Bombay branch of the Bank of Baroda for the benefit of P. Romanoff International Ltd. ("Romanoff"). For this letter of credit Baroda authorized its own New York branch to serve as the advising and paying bank. The New York branch notified Romanoff of the letter of credit on March 12, 1980, stating "that the communication is `solely an advice of a Letter of Credit issued by the below mentioned correspondent and conveys no engagement by us.'" Opinion at 415. This letter of credit is also a subject of this litigation since Romanoff has assigned its claim to RSB.
Subsequently, Elegant, alleging fraud in the underlying sales contracts, sued RSB, Romanoff, and Baroda in the High Court of Judicature in Bombay, and obtained a temporary injunction on April 10, 1980, restraining Baroda from "encashing and/or paying the two letter[s] of credit of U.S. $63,500 dated 21-9-79 and U.S. $8,853.50 dated 22.2.80 in any manner whatsoever. . . ." Exhibit A, Brief for the Appellee. Informed of the injunction, the two New York advising and paying banks dishonored drafts submitted by the beneficiaries of the letters of credit. Chemical dishonored RSB's draft for $63,500 on April 17, 1980 and Baroda dishonored Romanoff's draft on May 5, 1980. Opinion at 415.
In the interim between the issuance of the injunction and the dishonoring of the drafts, both RSB and Romanoff shipped goods to Elegant; RSB on April 13 and Romanoff on April 25.[2] Opinion at 415.
RSB filed a petition under Chapter 11 of the Bankruptcy Code, on May 12, 1980, at which time Bankruptcy Judge Edward J. Ryan ordered Elegant to refrain from prosecuting its suit in India. Opinion at 415.
In the related case which led to this appeal, RSB sought payment on letters of credit from Baroda and Elegant and damages arising from Chemical's delay in notifying RSB of the Indian Court's injunction from Chemical. Baroda presently appeals from Judge Galgay's decision dismissing RSB's claim against Baroda.
The Opinion
Judge Galgay characterized the question of the place of performance of the letters of credit as determinative. Opinion at 416. Under New York Banking Law, Sec. 204-a (3)(a) (McKinney), a foreign banking corporation, such as Baroda, can be liable "for contracts to be performed at its office or offices in any foreign country . . . to no greater extent than a bank . . . organized and existing under the laws of such foreign country would be liable under its laws." Quoted in Opinion at 416-417. Thus, if the letters of credit were only to be performed in India, rather than in New York, Judge Galgay reasoned, the existence of the Indian Court's injunction, extinguishing the present obligation of Baroda, would preclude Baroda's liability in New York as well. Opinion at 416-417.
Judge Galgay found that the letters of credit were to be performed only in India, because the New York branch of Baroda *653 and Chemical had expressly limited their roles to that of advising and paying banks. Opinion at 416-417. Judge Galgay discussed the obligations of the several parties to the letters under the provisions of the Uniform Customs and Practice for Documentary Credits (1974 Revision) (UCP), applicable in this case. The two New York branches, here, effectively limited their roles, as UCP Article 3(b) permits, and thus remained neutral parties in the arrangement, authorized to advise the beneficiaries of the issuance of the credit and to accept documents and negotiate drafts on behalf of the issuing bank. Opinion at 416. Had these banks "confirmed" the letters of credit, they would have assumed liability to pay. Opinion at 417, citing UCP Art. 3(b). Only the Bombay branch of Baroda, the issuing bank, extended its credit to Elegant and assumed a commitment to pay the beneficiary. Opinion at 416. The advising and paying banks incurred no obligation to pay. Since only the Bombay branch of Baroda was obligated to pay, the Judge concluded, the performance of this obligation must take place in Bombay. Opinion at 417.
Applying N.Y. Banking Law Sec. 204-a(3)(a) (McKinney), the Judge found any liability the New York branch might otherwise have had extinguished by the Indian injunction. Opinion at 417.
The Appeal
In its appeal, RSB concedes at the outset the correctness of the Bankruptcy Court's finding that the New York branches were merely advising and paying banks, undertaking no obligation of their own. Appellant's Brief at 4. Instead it argues that the court raised the issue of jurisdiction "sua sponte," without the benefit of a record, found that the two branches of Baroda were separate corporate entities, and went on to discuss only the liability of the New York branch as advising bank. Appellant's Brief at 3. It argues that Baroda is subject to personal jurisdiction in New York and thus the court should have reached the question of Baroda's liability as issuing bank. Appellant's Brief at 3. RSB further contends that the letters of credit were to be performed in New York, because the New York branches were authorized to make payments in New York. Appellant's Brief at 2.
Baroda concedes that it was subject to the Bankruptcy Court's jurisdiction for causes of action arising anywhere because it does business in New York. Appellee's Brief at 4. It contends that the court's decision did not depend on a finding of corporate separateness and that it is not liable as issuing bank. Baroda argues that the efficacy of the injunction depends on the place of performance of the obligation and that since the New York branch was only the advising and paying branch without an independent obligation, the performance was to have taken place in India and the Indian court's injunction barred that performance. Baroda bolsters its argument with invocations of the sovereign compulsion and act of state doctrines. Appellee's Brief at 5-9.
DISCUSSION
On a motion to dismiss, it would indeed have been inappropriate to determine the factual question of whether Baroda's New York branch was a separate entity. The Bankruptcy Court did not, however, make such a finding. It is true the court repeatedly referred to the New York branch as "Baroda N.Y." but this term was merely shorthand that the court designated for "the New York branch of Baroda." See Opinion at 415. The discussion of the place of performance of the obligation and the different roles of the branches made such a designation convenient. The court addressed the question of where, if the transaction were carried out as planned, the payment would have taken place, not the question of where the Bank of Baroda could be sued for breach of that obligation. It is undisputed that Baroda does business in New York, and thus is subject to jurisdiction in New York for actions arising anywhere. See N.Y.Civ.Prac.Law and Rules Sec. 301 (McKinney); Appellee's Brief at 4. But the fact that Baroda can be sued in New York for breach of contract does not *654 change the parties' substantive agreement regarding the place of performance. While it would be necessary to find the New York branch a separate corporate entity in order to shield it from lawsuits to enforce obligations performable at other branches, such a finding is not necessary to limit the place of performance to a single branch. The designation of a place of performance is a substantive matter within the control of the parties. Here, the Bombay branch of Baroda entered into a contractual obligation to pay when it assumed the role of issuing bank. See H. Harfield, Letters of Credit, at 27 (1979). Baroda's use of its own New York branch did not extend its undertaking, because that branch was only to serve the limited, neutral role of advising and paying bank. Without question, the advising and paying bank does not assume any liability to the beneficiary (other than liability for the accuracy of the advising communication). See id. at 10-11; UCP Art. 3. Since the New York branch did not confirm the credit, the original contractual obligation was not enlarged, and the situs of the obligation remained Bombay. Thus, the decision of the Bankruptcy Court that the New York branch did not incur liability as advising and paying bank did not depend on a finding of corporate separateness.
Because Baroda was before the court for all purposes, the Bankruptcy Court should also have reached the question of the liability of the Bombay branch as issuer, as the appellant correctly urges and the appellee concedes. The court's opinion does appear to deal exclusively with the New York branch's liability as advising and paying bank, however some of the court's language indicates that it assumed Baroda could not be liable as issuer. Indeed, that conclusion is so clear, the court may have assumed the appellant did not even contend otherwise. The court states, "As under the laws of India neither Baroda nor Baroda N.Y. can honor the letters of credit issued for the benefit of RSB, without violating the injunction, Section 204-a(3)(a) of the New York Banking Law applies and suspends any liability Baroda N.Y. would otherwise have under New York law." Opinion at 417. It appears from this statement that the court considered the Indian court's injunction a bar to Baroda's performance of its obligation in India.
This Court agrees that the injunction precludes Baroda's liability. As the Bankruptcy Court pointed out, RSB does not "raise any interest of this state which would cause this Court to find that comity should not be observed." Opinion at 417. RSB, in fact, does not in any way challenge the efficacy of this injunction. It does not, for example, argue that the Indian Court's decree somehow violates the principles of international law. See Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S. Ct. 923, 11 L. Ed. 2d 804 (1964). For this reason, the appellant's invocation of the act of state doctrine is superfluous. RSB's claim against Baroda is essentially for breach of contract. The letter of credit, once communicated to the beneficiary, becomes an irrevocable offer which the beneficiary accepts by presenting the paying bank with the required documents. See H. Harfield, Letters of Credit at 27-28 (1979). At the point when RSB (or Romanoff, on the second letter of credit) presented the documents, Baroda as issuing bank would be obligated to pay as it had promised, unless its performance had been excused. Here, as the appellee properly argues, the Indian court's injunction excuses Baroda's performance. This excuse is best analyzed as impossibility by legal prohibition. See 6 A. Corbin, Corbin on Contracts Sec. 1343 (2d ed. 1962). The defense of impossibility extends to prohibition by judicial action as long as the party seeking to be excused has not caused or failed to prevent the judicial action. Id. at Sec. 1346; see Kama Rippa Music, Inc. v. Schekeryk, 510 F.2d 837, 842 (2d Cir. 1975). Here, Elegant, not Baroda, procured the injunction, and the appellant does not allege that Baroda could have prevented the court's action. That the injunction issued from a foreign court does not render the excuse unavailable. While it is true that a foreign court's decree restraining a party to a contract cannot excuse a performance to take place in the United *655 States, it will excuse a performance to take place within that court's jurisdiction. 6 A. Corbin, Corbin on Contracts at Sec. 1351. In this case, as discussed above, p. 654, supra, India was the place of performance. Clearly, then, Baroda cannot be held liable for its failure to perform.
Finally, any argument attempting to show that the extinguishment of Baroda's duty to perform in India creates an obligation to pay in the New York branch must fail according to New York Banking Law Sec. 204-a(3)(a). As the Bankruptcy Court correctly stated, Sec. 204-a(3)(a) absolves the New York branch of any contractual liability beyond that imposed in the foreign country where the contract was to be performed.
This Court therefore affirms the decision of the Bankruptcy Court dismissing RSB's amended complaint against the Bank of Baroda.
SO ORDERED.
NOTES
[1] The appellant contends that the court necessarily determined that the New York branch of Baroda was a separate corporate entity. Appellant's Brief at 3-4. Such a finding would have been inappropriate on a motion to dismiss, and, in fact, was not made. See, pp. 653-654, infra.
[2] It should be noted that RSB does not at this time pursue its assigned claim against Chemical. Opinion at 416. Relevant to that claim is the fact that the New York branch of Baroda received notice of the injunction on April 12, 1980 but failed to notify Romanoff until April 25, 1981. Opinion at 415. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2451249/ | 464 S.W.2d 91 (1971)
Jesus R. HERNANDEZ, Petitioner,
v.
GREAT AMERICAN INSURANCE COMPANY OF NEW YORK et al., Respondents.
No. B-2343.
Supreme Court of Texas.
February 24, 1971.
*92 McCullough, Murray & McCullough, Carter, Stiernberg, Skaggs & Koppel, Jack Skaggs, Adams, Graham, Lewis, Jenkins and Briscoe, Gordon L. Briscoe, Harlingen, for petitioner.
Cox, Wilson, Duncan & Black, Bascom Cox and John William Black, Brownsville, for respondents.
REAVLEY, Justice.
The question here is the time of the accrual of a Stowers type cause of action. We recognize that the Texas law to date has required the insured to pay some portion of the judgment against him before bringing suit for reimbursement from the insurer. Our reconsideration brings us to eliminate the requirement of prepayment and to allow the suit from the time liability is fixed by final judgment.
In 1958 one A. T. Baucum was injured in an automobile accident. He sued Jesus R. Hernandez, the employer of the driver of the other vehicle, for damages alleged to total $155,000. Hernandez was insured and defended in that suit by Great American Insurance Company of New York, Great American Indemnity Company, and Massachusetts Fire and Marine Insurance Company, under one policy (and we will refer to the insurer as Great American). Baucum won a judgment against Hernandez in the amount of $81,686 in 1961, 344 S.W.2d 498.
Great American paid the full amount of its policy limit, $25,000, which left Hernandez owing $56,636 on the Baucum judgment. Nothing further was paid until 1967, when Baucum obtained a writ of execution, and land belonging to Hernandez was sold thereunder for $10,500.
This suit was filed by Hernandez against Great American in 1968. He alleged that Great American, in defending him in the former suit, had negligently rejected several reasonable settlement offers which were within its policy limits. He alleged an actionable tort under the authority of Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 545 (Tex.Comm.App.1929). Hernandez sought relief in two respects. First, he sued to recover the $10,500 which he was forced to pay upon the judgment in 1967. Secondly, Hernandez sought a declaratory judgment declaring that all future payments on the judgment shall be immediately reimbursable by Great American upon being presented with a duly executed receipt from Baucum.
The trial court sustained Great American's plea of limitations and dismissed Hernandez' suit. The court of civil appeals affirmed, holding that any cause of action had accrued at the time of the former judgment in 1961 and had therefore been barred by the two year statute of limitations prior to the filing of this suit in 1968. 456 S.W.2d 729.
THE SUIT TO RECOVER $10,500
The lower courts are in error in holding that Hernandez could have sued Great American for the $56,636 at any time after the date of the judgment in 1961. Under the law as declared by this court in Universal Automobile Ins. Co. v. Culberson, 126 Tex. 282, 86 S.W.2d 727 (1935), no cause of action arose until 1967 when the first payment was made by Hernandez. The insurer's contention then that Culberson could not maintain a suit against it, until and unless he paid the judgment rendered against him in favor of the holder of the first judgment, was overruled by the court of civil appeals (54 S.W.2d 1061) *93 but sustained by this court. In the opinion cited and on rehearing (87 S.W.2d 475) it was made very clear that the insured could not assert a Stowers type cause of action against the insurer until the insured had paid some sum on the former judgment "and then only to the extent of his payment." (86 S.W.2d 731).
In 1953 this court had before it the case of Linkenhoger v. American Fidelity and Casualty Co., 152 Tex. 534, 260 S.W.2d 884. The question there was whether the two year statute of limitations began to run on the date of the negligence of the insurer or at a time as late as the final judgment in the first suit. Linkenhoger paid the judgment and brought his suit against the insurer within two years after the final judgment but more than two years after the negligent failure to settle. The court of civil appeals rendered judgment for the insurer on the ground that the suit was barred by limitations (257 S.W.2d 718) but this court held that Linkenhoger was entitled to his judgment because limitations had not begun to run "in any event" until the judgment in the first case became final. The Culberson case was cited as authority for the proposition that the insured "could maintain no action against the insurer until he had paid some portion thereof" without a word of criticism or limitation of that holding.
The Court of Appeals for the Fifth Circuit has discussed the Texas law on this point at some length, and it correctly concluded that as of the time of the writings Texas was firmly in the prepayment camp. Seguros Tepeyac, S.A., Compania Mexicana de Seguros Generales v. Jernigan, 410 F.2d 718 (1969); Seguros Tepeyac, S.A., Compania Mexicana de Sequros Generales v. Bostrom, 347 F.2d 168, 176 (5th Cir. 1965).
Since no suit could have been brought by Hernandez prior to the payment on the judgment in 1967, the statute of limitations could not now be held to have started to run until that date, and the present suit was not barred at the time it was filed.
THE SUIT AS TO THE UNPAID PORTION OF THE FORMER JUDGMENT
Since the case is being remanded to the trial court and the plaintiff Hernandez is seeking a declaratory judgment with respect to the liability of Great American on that portion of the judgment against Hernandez which has not been paid, we think it proper to consider whether the prepayment rule prohibits that relief. Since we consider the tort complete when liability is fixed and find no justification for continuing the loss indemnity limitation on suits under Stowers, the holding of Universal Automobile Ins. Co. v. Culberson, supra, is overruled. We need make no decision as to whether a declaratory judgment would be available to Hernandez if other relief were unavailable.
The particular terms of the insurance policy which Universal Automobile Ins. Co. issued to Culberson were held by the court to create an indemnity rather than a liability contract. 86 S.W.2d 730. It followed that as to the amount of the Witt judgment within the policy limits, the insured Culberson could not sue Universal on the policy without first paying the Witt judgment. This may bear on the explanation of why the court applied the same prepayment rule when it came to the tort liability of Universal to Culberson.
The traditional rule of strict indemnity requires the indemnitor to reimburse only actual loss and not to discharge the liability of the indemnitee. 41 Am. Jur.2d Indemnity §§ 28 et seq. Chief Justice Hemphill criticized this rule in 1857 in Pope v. Hays, 19 Tex. 375, but it is a firmly established part of the law of indemnity contracts. It is consistent with the favoritism of the law for guarantors and indemnitors. McKnight v. Virginia Mirror Co., 463 S.W.2d 428 (Tex.1971). It has been said to follow the maxim: "As a man binds himself, so shall he be bound;" and thus one who agrees to indemnify against loss should not be required to pay more *94 than what is actually lost. Russell v. Lemons, 205 S.W.2d 629, 631 (Tex.Civ.App. 1947, writ ref'd, n.r.e.).
This strict indemnity limitation is inconsistent with the law of tort liability where the injured party is entitled to recover, as nearly as possible, compensation for the damages he suffers. This includes his expenses, past and future, paid or unpaid, to which he has been or will be put as a consequence of the tort. He need not prove payment of his medical bills, for example, to include them within his damages for which the tortfeasor is liable.
A tortfeasor is given more relief against his joint tortfeasor than the damaged insured is given against his tortfeasor under the Culberson rule. One tortfeasor may sue the other for indemnity or contribution so as to obtain a determination of liability and a judgment over against the other for all or a portion of what the first one is forced to pay. Renfro Drug Co. v. Lewis, 149 Tex. 507, 235 S.W.2d 609 (1951); Union Bus Lines v. Byrd, 142 Tex. 257, 177 S.W.2d 774 (1944); Dallas Ry. & Terminal Co. v. Harmon, 200 S.W.2d 854 (Tex.Civ.App.1947, writ ref'd); Lottman v. Cuilla, 288 S.W. 123 (Tex. Com.App.1926); Barton v. Farmers' State Bank, 276 S.W. 177 (Tex.Com.App.1925).
In the case of Atkins v. Crosland, 417 S.W.2d 150 (Tex.1967), the plaintiff sued an accountant alleging negligence in the preparation of plaintiff's income tax returns which resulted in a larger tax liability. The trial court granted a summary judgment for the defendant accountant on the ground that the acts of negligence occurred more than two years prior to commencement of the suit. In this court the plaintiff contended that limitations did not begin to run until he paid the excess taxes; in the alternative he argued that limitations began at the time the excess tax was assessed against plaintiff by the Commissioner of Internal Revenue. This court agreed with the plaintiff that the tort was completed, the cause of action accrued, and limitations began to run when the tax deficiency was assessed. The payment of the taxes was not discussed.
There should be no difference between the rule as to recoverable damages for Atkins and for Hernandez. They both alleged tort actions grounded on negligence. In the present suit, the insurance policy is relevant only in that it is the source of Great American's duty to use care in the defense of Hernandez against any judgment for any amount. As to Baucum, Hernandez was a tortfeasor. In the present suit Hernandez is not a tortfeasor; he contends that he has suffered a judgment in the amount of $56,636 because of the negligence of Great American. The judgment injures Hernandez while it remains unpaid. His credit is affected. A lien attaches to his land. His non-exempt property is constantly subject to sudden execution and forced sale. He is entitled to relief from the harm if it is the fault of the tortfeasor.
It is suggested that we should avoid a rule that permits the insured to collect his judgment against the insurer without then paying the injured person. We assume that the holder of the former judgment would ordinarily be a party in the second suit or move to protect his interests prior to payment of the second judgment to the insured. If the judgment rule permits the possibility of the injured person not receiving full payment of the first judgment, so does the prepayment rule. The possibility of windfall to the insured under the judgment rule should be weighed alongside the windfall to the insurer under the prepayment rule. If the insured is too poor to pay the first judgment, it is the insurer responsible for the judgment who escapes with what he should pay. Furthermore, the Stowers action lies to repair the harm to the insured. The tort of the insurer in mismanaging the defense of the insured in the first case is harmful to the insured alone. The holder of the former judgment benefitted from the tort to the extent of the harm to the insured.
*95 When we decide the time the cause of action accrues, we also decide the period of limitations. Assuming no concealment of the act of negligence and no tolling of the statute, limitations will bar the suit two years after the excess judgment becomes final. The insured who knows of the rejected offer, for example, but who relies on the attorney retained by the insurer, may let two years go by before he hears of what we call the Stowers rule. This is a possibility, although the word ordinarily reaches the insured from the holder of the excess judgment. In any event, it is preferable to put a limit on the time within which an action for tort may be commenced. Under the prepayment rule, so long as the insured avoids execution on the former judgment, he controls the time of his Stowers suit. If it serves him to await the absence of a particular witness, he simply delays making a payment until he has his advantage. Again, we think the consequences of the judgment rule to be preferable.
Virtually everything that has been written on this subject in the past fifteen years has favored the judgment rule over the prepayment rule. E.g., Ammerman v. Farmer's Insurance Exchange, 22 Utah 2d 187, 450 P.2d 460 (1969); Henegan v. Merchants Mutual Insurance Co., 31 A.D.2d 12, 294 N.Y.S.2d 547 (1968); Gray v. Nationwide Mutual Ins. Co., 422 Pa. 500, 223 A.2d 8 (1966); Southern Farm Bureau Casualty Insurance Company v. Mitchell, 312 F.2d 485 (8th Cir. 1963); Sweeten v. National Mutual Insurance Company of D.C., 233 Md. 52, 194 A.2d 817 (1963); Alabama Farm Bureau Mutual Casualty Insurance Company v. Dalrymple, 270 Ala. 119, 116 So. 2d 924 (1959); Comment, Prepayment and Assignment Under the Texas Stowers Doctrine, 2 Texas Tech.L.Rev. 69 (1970); Howell, Stowers Doctrine in Texas, 32 Tex.B.J. 376 (1969).
We hold that Hernandez is entitled to sue for relief as to the unpaid portion of the former judgment as well as for the $10,500 which has been paid. It also follows that the right of action for the unpaid judgment debt of one in the position of Hernandez now exists, and limitations commences to run on the date of the delivery of this opinion. Any cause of action by one so situated arising in the future will have limitations commence with the date of the final judgment against the insured.
The judgment of the lower courts is reversed and the case is remanded to the trial court. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2158195/ | 612 N.E.2d 157 (1993)
Ranaye (Morgan) RICHARDSON, Appellant-Petitioner,
v.
Daniel G. MORGAN, Appellee-Respondent.
No. 48A05-9204-CV-126.
Court of Appeals of Indiana, Fifth District.
April 12, 1993.
*158 David W. Stone IV, Stone Law Office & Legal Research, Anderson, for appellant-petitioner.
Steven C. Smith, Patrick R. Ragains, Anderson, for appellee-respondent.
BARTEAU, Judge.
Ranaye Richardson and Daniel Morgan were divorced in 1988. At that time, the two agreed that they would have joint custody of their twin sons (now age 11), with Ranaye having primary physical custody. This agreement, as well as a very complicated visitation schedule, was made a part of the divorce decree. On March 20, 1991, Daniel sought modification of the original custody order, alleging "a substantial and continuing change of circumstance to warrant a modification of the Court's previous custody order." (R. 25). After hearing evidence and interviewing the twins in camera, the trial court granted Daniel's petition to change the children's primary residence, leaving the joint custody order intact. On appeal from this order, Ranaye argues that the evidence does not support a finding of changed circumstances to support the modification. She also argues that she was denied due process. We agree with Ranaye that the evidence does not support the trial court's decision and reverse. Because we reverse, we will not address Ranaye's due process argument.
FACTS
Ranaye is a special education teacher at a local school. She is married to a police officer with the Madison County Sheriff's Department. Ranaye, her second husband, her husband's nine year-old son from a previous marriage, and the twins live in the same home in which Ranaye and Daniel lived during their marriage a three bedroom home on a two-acre lot off of Highway 9 in Anderson. Ranaye's work schedule is such that she arrives home when the boys do. Although she leaves before they do in the morning, her husband is at the house with the children. Her husband's schedule varies depending on the type of work he is doing at the time. In addition to his job with the sheriff's department, Ranaye's husband also does odd jobs. The boys attend church with their mother and step-father. Several witnesses testified that Ranaye was a fit mother and that her home was suitable for the children.
Daniel works at Inland Fisher Guide and his second wife is a legal secretary. They live in a two bedroom duplex in a rural area. By all accounts, this home is nice and adequate for the children. Daniel is very involved in the boys' upbringing and has coached the boys' sports teams.
The boys, Jarrell and Joseph, are both bright children who are described as mature for their age. Both parents describe the twins as being happy and seemingly well adjusted when they are with that particular parent. The boys do well academically and are very involved in sports. There is evidence that Daniel and Ranaye disagree on how to raise the children. Considerable testimony was elicited at trial regarding one incident in particular. Ranaye became upset when she saw Daniel, who was coaching the boys' basketball team, spank one of the boys in front of the team *159 members during practice. In response, Ranaye would not permit the twins to play on a basketball team which Daniel coached. Eventually, however, Ranaye agreed to their playing basketball on the week nights and weekends when they were with their father. (Under the original order, Daniel had custody of the boys two nights during the week in addition to every other weekend).
Dr. Kenneth Dimick acted as a moderator to help Ranaye and Daniel work out problems in the joint custody arrangement. He had agreed with Ranaye and Daniel that he would not testify in court as to which party he felt should have custody. He did, however, testify that he did not think it would be harmful for the children if Daniel were to have primary physical custody of the boys. He also testified that both boys had a strong desire to live with Daniel. Dr. Dimick testified that the boys' Intelligence Quotient test scores had dropped since the original custody order; however, there was no indication as to why this drop occurred. Further, Dr. Dimick testified that test scores will vary from one test to the next. There is no evidence that the boys had any discipline or behavior problems.
After hearing testimony from several witnesses and interviewing both boys in camera, the trial court entered the following order:
ORDER
The Court having taken under advisement the Petition to Modify filed by Husband on March 20, 1991 and having heard evidence on said petition on July 18, 1991, October 30, 1991 and November 6, 1991 and having interviewed the minor children in chambers now finds that the Agreement entered by the parties and filed with the Court on April 7, 1988 should be modified to read as follows:
CUSTODY AND VISITATION[1]
5. The children shall reside primarily with father.
6. Mother shall have all reasonable access to the children, which shall include no less than the following:
a) Alternate weekends from Friday at 3:30 p.m. until 8:00 p.m. on Sunday. However, mother shall transport the children on said weekends to any activities in which the children have been previously enrolled.
b) One week-day evening from the close of school until 8:30 p.m. when the children are not scheduled to participate in school related or athletic activities. Father shall advise mother no less than two weeks in advance of said activities so the week-day evening visitation can be scheduled.
8. In addition, during the period of time when the children are with father, he shall extend the mother the right to baby sit for the children when a sitter is required, taking into account the children's wishes and reasonable opportunities for relatives to have the children and spend time with them.
9. Father shall have the children for a period of four weeks immediately after the school year ends. The children shall then be with mother for four weeks. Father shall then have the children with him for the balance of the school summer vacation.
13. The prior Order that father pay support is hereby vacated. The Court was not provided with information concerning the current incomes of each party and will hold a hearing on this issue upon the filing of a praecipe by either party. Alternatively, the Court will consider the filing of stipulations by the parties concerning either their agreement concerning the amount of child support or stipulations of the respective incomes of the parties and a child support guideline calculation sheet from which the Court will rule without a hearing.
*160 All remaining provisions of the Agreement entered by the parties on April 7, 1988 remain in full force and effect.
(R. 42-3).
DECISION
As in any other custody modification case, a parent seeking to change the primary residence of a child where a joint custody order is in place must show a change in circumstances so substantial and continuing as to make the original residential arrangement unreasonable. Ind. Code 31-1-11.5-22; Lamb v. Wenning (1992), Ind., 600 N.E.2d 96. As stated by our supreme court:
We conclude that the more stringent modification of custody standard should apply. The same concerns about stability and continuity present in sole custody modifications are present in the joint custody situation. One of the most significant elements of stability in the child's life is the child's primary caretaker the person who cooks his meals, puts him to bed, and cares for him on a daily basis. It is certainly likely in joint custody arrangements that both parents are more involved in rearing a child. Still, when a child lives primarily with one parent under joint custody, a modification which sends a child to live with the other parent may have the same effect, as far as the child is concerned, as a traditional change in custody. Therefore, we hold that where there is joint legal custody with one parent providing the child's primary residence, a court may modify that residence only upon a showing of changed circumstances so substantial and continuing as to make the original residential arrangement unreasonable.
Id. at 98. It is not sufficient that a change in the custodial home has taken place: the petitioner must show that the change is of a decisive, substantial and continuing nature. Simons v. Simons (1991), Ind. App., 566 N.E.2d 551. Further, to prevail on a petition to modify custody, the non-custodial parent bears a heavy burden of overcoming the custodial parent's right to continued custody. Id.; Elbert v. Elbert (1991), Ind. App., 579 N.E.2d 102, 106.
Our review of the trial court's decision to modify custody is limited to determining whether the trial court abused its discretion in applying the applicable statutory guidelines. Id.; Schenk v. Schenk (1991), Ind. App., 564 N.E.2d 973, 977, reh'g denied. We will not reweigh the evidence nor judge the credibility of witnesses and we may only consider that evidence which supports the trial court's determination. Id. We will reverse a modification decision if there has been a manifest abuse of the trial court's discretion. Simons, 566 N.E.2d at 554. An abuse of discretion occurs if the petitioner fails to allege and prove a decisive change in conditions and there are no findings by the trial court of such changes. Id.
Such an abuse of discretion occurred here. Although Daniel alleged in his modification petition that there had been a substantial change in circumstances, he made no allegations as to what those changes were. Further, he failed to prove at trial that there have been such changes. The only real change found in Ranaye's life is that she has remarried and there is another boy living in the house. This, standing alone, is not sufficient to show a decisive change in circumstances.
Daniel argues in his brief that Ranaye has "created an atmosphere in the boys home where their contact with father, one of the things they most desire is minimized and thwarted at every turn." Appellee's Br. 10. This allegation is not supported by the evidence. Admittedly, Ranaye did not want the boys to play on the basketball team that Daniel coached. She testified that she was opposed to Daniel coaching the boys after she saw Daniel spank one of the boys at practice. Whatever her reasons, she did propose a compromise which was accepted by Daniel. There is no evidence that Ranaye interfered with any of Daniel's scheduled visits. Further, there is no evidence that Ranaye tried to undermine Daniel in front of the boys.
Daniel also places much stock in the boys' expressed desire to live with him. However, absent evidence that the existing *161 custody order is unreasonable, a child's wishes will not support a modification of custody. Id.
In summary, we find that the trial court abused its discretion by modifying the 1988 child custody order and reverse.[2] Because we reverse the modification, we need not address Ranaye's argument that she was denied procedural due process.
REVERSED.
RUCKER, J., concurs.
HOFFMAN, J., dissents with opinion.
HOFFMAN, Judge, dissenting.
I respectfully dissent. The majority opinion correctly applies the law as it was interpreted in Lamb v. Wenning (1992), Ind., 600 N.E.2d 96, Debruler, J., dissenting (majority determined that modification of joint custody obtained through "substantial and continuing change" standard). However, an issue which has not been addressed by the legislature or our Supreme Court is whether joint custody can remain viable once contested modifications arise after the initial determination that joint custody is in the best interests of the children.
In the present case, the parties initially agreed to joint custody with primary physical custody residing with Richardson. The dissolution court awarded joint custody as requested by the parties. The preciseness with which the custody and visitation schedules were set out appears telling with regard to the parties' ability to cooperate in matters concerning the children. Even after the January 15, 1992 order modifying custody, the parties continued to file petitions based upon differing interpretations of the visitation order and an unwillingness on the part of the father to comply with the order.
One of the statutory factors to be considered prior to an award of joint legal custody is: "whether the persons awarded joint custody are willing and able to communicate and cooperate in advancing the child's welfare." IND. CODE § 31-1-11.5-21(g) (1984 Supp.). Although this requirement is not explicitly elevated to paramount stature within Indiana's joint custody provisions, some jurisdictions have so provided.
See e.g. Petrashek v. Petrashek (1989), 232 Neb. 212, 440 N.W.2d 220 (joint custody not favored, only awarded in rare circumstance where parents possess great ability to cooperate);
Dunham v. Dunham (1989), Okla. App., 777 P.2d 403 (cardinal criterion is agreement by parties along with ability to cooperate to reach shared decisions; thus, parties' opposition to joint custody is antithesis of joint custody concept);
Trolf v. Trolf (1987), 126 App.Div.2d 544, 510 N.Y.S.2d 666, app. diss. 69 N.Y.2d 1038 (joint custody not favored and such order must be reversed where record demonstrates animosity and inability to cooperate).
Here, the parties did not object to joint custody. However, the highly contested nature of the modification proceedings and the parties' continued inability to amicably abide by a detailed visitation schedule portends future behavior inconsistent with joint custody. The mere necessity for such a detailed visitation schedule reflects a low level of concerted effort between the parties.
I continue to believe that the divisive nature of dissolution and custody proceedings requires the utmost caution prior to an award of joint custody. The statutory considerations *162 attempt to insure that joint custody will not be awarded unless some spirit of cooperation between the parties concerning the children is readily apparent. Once joint custody has been awarded, the parties must be able to maintain that spirit of cooperation.
Filing contested modification proceedings should dissolve a joint custody award and return the parties and the custody matters to status quo ante, requiring a custody determination under the best interests standard. There is no such thing as unilateral cooperation. When at least one party does not wish to proceed with the joint custody arrangement and has been unable or unwilling to amicably alter the arrangement, the spirit of cooperation necessary for the children to thrive in a joint custody arrangement has been destroyed. To allow such an award to stand does not serve the interests of the children but merely placates the desire of both parties to have custody. Thus, the filing of a contested modification proceeding should require a hearing to determine the best interests of the children as in any initial custody proceeding.
To the extent that Lamb, supra, 600 N.E.2d at 98, could be read as a barrier to an assessment of custody based upon the best interests of the child after a joint custody award is dissolved, I would urge the Supreme Court to revisit this aspect of the custody formula. As noted by the majority in Lamb, "[o]ne of the most significant elements of stability in a child's life is the child's primary caretaker... ." Id. The substantial and continuing change standard is primarily suited to curb the role of the judiciary and limit the court's discretion to alter custody once established. It does not, however, comport with the reality of the destabilizing qualities inherent in joint custody.
The terms "joint" or "shared" custody are legal fictions in that the parties' dissolution effectively prohibits them from simultaneously sharing custody. For those parties who wish to split physical custody, the children are bounced to and fro without stability. When physical custody lies with one party, the everyday decisions are, for the sake of stability and practicality, left to that party. Any major decisions which the parties should share are exactly of the type which cause turmoil straining familial relationships in the most congenial families. Such decisions would appear to be beyond the scope of the relationship of parties who chose to resolve their differences through divorce.
Therefore, I would vote to remand the cause for a hearing to determine the best interests of the children and for an award of sole custody based upon such evidence.
NOTES
[1] The numbering on this order is intended to correspond with numbered paragraphs in the divorce decree. The fact that the numbers are not consecutive should not be taken to mean that the order is in some way incomplete.
[2] We recognize in Lamb v. Wenning (1992), Ind., 600 N.E.2d 96, an opinion handed down after the trial court's order in this case, the supreme court remanded the custody modification to the trial court "for evaluation of the evidence according to the change in custody standard... ." Id. at 99. In Lamb, the trial court judge stated at the hearing that he was going to modify custody because it would be in the best interest of the children. In the written order, however, he stated that there had been a change of circumstances to warrant the modification, but did not state what those circumstances were. The petitioner had not alleged changed circumstances in his petition. Unsure which standard the trial court employed, the supreme court remanded for clarification.
Here, however, Daniel did allege a change in circumstances. Further, there is no indication that the court used the "best interest" standard, as was the case in Lamb. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2504626/ | 717 S.E.2d 230 (2011)
STATE of North Carolina
v.
Kenny BOWDEN.
No. COA11-305.
Court of Appeals of North Carolina.
October 4, 2011.
*231 Attorney General Roy Cooper, by Assistant Attorney General Kathleen N. Bolton, for the State.
Appellate Defender Staples Hughes, by Assistant Appellate Defender Katherine Jane Allen, for Defendant.
STEPHENS, Judge.
Evidence and Procedural Background
This case arises from a residential break-in and larceny in Charlotte on 17 September 2008. The evidence at trial tended to show the following: On that date, Mariela and Thomas Hernandez lived in a single-family home at 6641 Hampton Way Drive, across the street from Andrew Garvin. That morning, Ms. Hernandez locked the doors when she left for work. Later that morning, Mr. Garvin looked out his front window and observed a man wearing a black hoodie walk from the Hernandez's backyard to their front door. Knowing that Mr. and Ms. Hernandez were usually at work during the day, Mr. Garvin called 911.
Officer John Plyler of the Charlotte Mecklenburg Police Department arrived at the Hernandez home within five minutes of Mr. Garvin's call. Mr. Garvin continued to observe the scene from across the street. Officer Plyler parked his marked patrol car down the street from the Hernandez home, but did not see anyone on the street or in the Hernandez yard. As he walked toward the house, Officer Plyler noticed that the front door was standing open. Officer Plyler radioed Officer Christopher Chipman, who was en route as backup and then "stood by" at the right front corner of the Hernandez house where he could observe the front yard, the right side yard, and part of the back yard.
At this point, the man in the hoodie came from the back of the Hernandez home toward the front yard again, wearing what appeared to be a white glove[1] and carrying various items, which were later determined to have come from inside the Hernandez home. Suddenly, possibly because he realized that law enforcement had arrived, the man dropped everything in the side yard and began walking away from the home. At this moment, Officer Chipman pulled up to the Hernandez house and the man in the hoodie took off running with Officer Chipman in pursuit.
A second man, later identified as Defendant Kenny Bowden, then emerged from behind the Hernandez home and walked toward the front yard. Officer Daniel C. Jones, who had also arrived at the scene, saw Defendant and called out to alert Officer Plyler to Defendant's presence. Defendant also took off running, and Officers Plyler and Jones gave chase. During the pursuit, Officer Plyler, who was in uniform, repeatedly identified himself as a police officer and ordered Defendant to stop and lie down on the ground. Defendant continued his flight. The officers eventually lost sight of Defendant and radioed for assistance. Defendant was discovered hiding in thick underbrush by a K-9 officer shortly thereafter. The man in the black hoodie was never apprehended.
At trial, Ms. Hernandez testified that her home had been left in disarray and identified *232 jewelry, credit cards and other items from the home which had been found scattered in the yard. Officers Plyler and Jones identified Defendant as the second man who had run from the front yard of the Hernandez residence, although Mr. Garvin was not able to identify Defendant.
On 6 October 2008, the Mecklenburg County Grand Jury indicted Defendant for felonious breaking and entering and larceny after breaking and entering. On 14 January 2009, Defendant was indicted for having attained the status of habitual felon. Defendant was also charged with two counts of resisting a public officer. The cases were joined for trial at the 27 September 2010 criminal session of Mecklenburg County Superior Court. At the close of the State's evidence, Defendant moved to dismiss all charges. The trial court dismissed one count of resisting a public officer and denied Defendant's motion as to the remaining count of that offense. The court deferred ruling on the motion as to the other charges.[2] On 29 September 2010, the jury found Defendant guilty of felonious breaking and entering, larceny after breaking and entering, and the remaining count of resisting a public officer. Defendant then admitted his status as an habitual felon. The trial court deferred sentencing until arguments could be heard on Defendant's motion to dismiss the charges of felonious breaking and entering and larceny after breaking and entering.
On 1 October 2010, Defendant again moved to dismiss these charges. On 4 October 2010, the trial court entered judgments notwithstanding the verdicts on the felonious breaking and entering and larceny after breaking and entering charges, and dismissed the habitual felon charge. The court sentenced Defendant to 60 days imprisonment for the resisting a public officer conviction. The State appeals pursuant to N.C. Gen.Stat. § 15A-1445(a)(1) (2009).
Standard of Review
The standard of review on appeal from a trial court's ruling on a motion to dismiss is the same whether the defendant or the State prevailed below and regardless of whether the motion is granted at the close of the State's evidence, at the close of all evidence, or after return of a verdict. State v. Scott, 356 N.C. 591, 595, 573 S.E.2d 866, 868 (2002).
Upon [a] defendant's motion for dismissal, the question for the Court is whether there is substantial evidence (1) of each essential element of the offense charged, or of a lesser offense included therein, and (2) of [the] defendant's being the perpetrator of such offense. If so, the motion is properly denied.
If the evidence is sufficient only to raise a suspicion or conjecture as to either the commission of the offense or the identity of the defendant as the perpetrator of it, the motion should be allowed.
In reviewing challenges to the sufficiency of evidence, we must view the evidence in the light most favorable to the State, giving the State the benefit of all reasonable inferences. Contradictions and discrepancies do not warrant dismissal of the case but are for the jury to resolve. The test for sufficiency of the evidence is the same whether the evidence is direct or circumstantial or both. Circumstantial evidence may withstand a motion to dismiss and support a conviction even when the evidence does not rule out every hypothesis of innocence.
State v. Fritsch, 351 N.C. 373, 378-79, 526 S.E.2d 451, 455 (internal citations and quotation marks omitted), cert. denied, 531 U.S. 890, 121 S.Ct. 213, 148 L.Ed.2d 150 (2000).
Discussion
The State argues that the trial court erred in dismissing the felonious breaking and entering and larceny after breaking and entering charges against Defendant for insufficiency of the evidence. We disagree.
"The essential elements of felonious breaking or entering are (1) the breaking or entering (2) of any building (3) with the intent to commit any felony or larceny therein." *233 State v. Williams, 330 N.C. 579, 585, 411 S.E.2d 814, 818 (1992) (citing N.C. Gen. Stat. § 14-54(a) (1986)). "The criminal intent of the defendant at the time of breaking or entering may be inferred from the acts he committed subsequent to his breaking or entering the building." Id.
"The essential elements of larceny are that [the] defendant (1) took the property of another; (2) carried it away; (3) without the owner's consent; and (4) with the intent to permanently deprive the owner of the property." State v. Coats, 74 N.C.App. 110, 112, 327 S.E.2d 298, 300, cert. denied, 314 N.C. 118, 332 S.E.2d 492 (1985). Further, larceny committed after a breaking or entering is a felony, regardless of the value of the property taken. State v. Perkins, 181 N.C.App. 209, 219, 638 S.E.2d 591, 597-98 (2007).
Here, Defendant was tried on a theory of acting in concert. "`Under the doctrine of acting in concert, if two or more persons act together in pursuit of a common plan or purpose, each of them, if actually or constructively present, is guilty of any crime committed by any of the others in pursuit of the common plan.'" State v. McCullers, 341 N.C. 19, 29-30, 460 S.E.2d 163, 169 (1995) (quoting State v. Abraham, 338 N.C. 315, 328-29, 451 S.E.2d 131, 137 (1994)). "This is true even where the other person does all the acts necessary to commit the crime." Abraham, 338 N.C. at 329, 451 S.E.2d at 137 (internal citation and quotation marks omitted). In contrast, a defendant's presence at the scene of a crime is not evidence of his guilt, even if the defendant is in sympathy with the criminal actor and makes no attempt to prevent the crime. State v. Capps, 77 N.C. App. 400, 402-03, 335 S.E.2d 189, 190 (1985).
Here, the State presented evidence that an unknown man, who appeared to be concealing his identity with a hoodie, was seen walking around the Hernandez yard and carrying property later determined to have been taken from the Hernandez home. This unknown man fled when he saw police officers and was never apprehended or identified. Defendant was also seen in the Hernandez yard, but was never seen entering or leaving the home or carrying any property belonging to Mr. or Ms. Hernandez. Defendant also fled from law enforcement officers. However, no evidence linked Defendant to the unknown man. In sum, the only evidence that could link Defendant to the break-in was (1) his presence in the back yard of the home just after the unknown man was seen carrying stolen property in the area, and (2) his flight from the crime scene when he saw the police officers.
As noted above, "[a] defendant's mere presence at the scene of the crime does not make him guilty of felonious larceny even if he sympathizes with the criminal act and does nothing to prevent it." Id. Thus, Defendant's presence in the Hernandez yard, standing alone, is not evidence of acting in concert. Further, while "[i]ntent to aid [another in commission of a larceny] may be inferred from [a] defendant's actions or from his relation to the perpetrator[,]" Id. at 403, 335 S.E.2d at 191, here, Defendant took no action to aid the unknown man and there is no known relationship between them. Finally,
[w]hile the flight of an accused person may be admitted as a circumstance tending to show guilt, (i)t does not create a presumption of guilt, nor is it sufficient standing alone, but it may be considered in connection with other facts in determining whether the combined circumstances amount to an admission.
State v. Gaines, 260 N.C. 228, 231, 132 S.E.2d 485, 487 (1963) (internal quotation marks and citations omitted).
We agree with the State that Gaines is distinguishable from the facts before us. Unfortunately for the State, we conclude that the evidence in Gaines, while insufficient to support a larceny charge, was still stronger than the evidence presented in Defendant's case. In Gaines, the defendant (and another young man, Andrews) were charged with larceny in connection with a jewelry store robbery:
There was evidence Gaines and Andrews walked into the store with Billy Hill; that they were in the store when Billy Hill stole the box of diamonds; that they, along with *234 Billy Hill, ran from the store when Davis was directed to call the Chief of Police; and that they left Cherryville in a Chevrolet car operated by Billy Hill and owned by Billy Hill's father.
There is no evidence Gaines or Andrews at any time had possession of any part of the diamonds or that they, by word or deed, aided and abetted Billy Hill in the theft of the box of diamonds. In short, the evidence tends to show that Gaines and Andrews were present when Billy Hill stole the box of diamonds and that they accompanied him in his flight from the scene of the crime.
The State offered in evidence the statements made by Billy Hill, Gaines and Andrews to the effect that Gaines and Andrews had nothing to do with the theft and had no knowledge that Billy Hill entered the store with intent to steal.
Id. at 231, 132 S.E.2d at 487. Our Supreme Court held that "[w]hile the[se] circumstances may raise a suspicion or conjecture of the guilt of Gaines and Andrews, this is insufficient to withstand their motions for judgments as of nonsuit." Id. at 232, 132 S.E.2d at 487.
Here, we recognize that, in contrast to the defendant in Gaines, Defendant was not merely present in a public place such as a jewelry store, but was instead on private property without the express permission of the owners. However, Defendant was not facing a charge of trespassing. In addition, nothing in the evidence at trial tended to show the nature of the Hernandez backyard or the neighborhood as a whole with regard to foot traffic, walking paths, or informal "cut-throughs."
Unlike in Gaines, Defendant and the unknown man were never seen together at the Hernandez home and did not flee together. They were never seen to have any interaction and there is no known connection between them, unlike the men in Gaines who entered and left the scene of the larceny together and were admitted acquaintances. Overall, the evidence of acting in concert here is weaker than that presented in Gaines, which our Supreme Court held was insufficient. Thus, the trial court here properly granted Defendant's motion to dismiss and we affirm, having found
NO ERROR.
Judges ERVIN and BEASLEY concur.
NOTES
[1] Testimony at trial established that it was actually a white sock worn over the man's hand.
[2] We note that, although N.C. Gen. Stat. § 15A-1227(c) (2009) requires "[t]he judge [to] rule on a motion to dismiss for insufficiency of the evidence before the trial may proceed[,]" neither party has raised an issue regarding the trial court's deferral on appeal. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3101731/ | COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00260-CR
Ian Manning § From the 367th District Court
§ of Denton County (F-2013-0202-E)
v. § June 27, 2013
§ Per Curiam
The State of Texas § (nfp)
JUDGMENT
This court has considered the record on appeal in this case and holds that
the appeal should be dismissed. It is ordered that the appeal is dismissed.
SECOND DISTRICT COURT OF APPEALS
PER CURIAM | 01-03-2023 | 10-16-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1538082/ | 6 B.R. 456 (1980)
In re GARLAND CORPORATION, Bristol Knitting Mills, Inc., D.S.B., Inc. and Garland Knitting Mills of Georgia, Inc., Debtors.
Creditors' Committee, Appellant.
Bankruptcy No. 80-9001.
United States Bankruptcy Court, Bankruptcy Appellate Panel, D. Massachusetts.
October 17, 1980.
*457 *458 Kaye, Fialkow, Richmond & Rothstein by Richard Kaye, Boston, Mass., Jonathan Helfat and Albert Reisman, New York City, for appellant, Creditors' Committee.
Ropes & Gray by Charles Normandin, Boston, Mass., for appellees, Garland Corp., Bristol Knitting Mills, Inc., D.S.B., Inc. and Garland Knitting Mills of Georgia, Inc.
Christopher Parker, Boston, Mass., for appellee, United States, trustee.
Goodwin, Procter & Hoar by Jon D. Schneider and Evan Jones, Boston, Mass., for appellees, New England Merchants Bank and Prudential Ins. Co. of America.
Widett, Slater & Goldman, P.C. by Robert Robinson, Guy B. Moss and Daniel J. Carragher, Boston, Mass., for appellee, Sydney Parlow, trustee.
Before CYR, C.J., and VOTOLATO and JOHNSON, JJ.
CYR, Chief Judge.
An emergency appeal has been taken from various orders of the bankruptcy judge entered during the early stages of these chapter 11 reorganization proceedings.[1] The Garland Corporation and its subsidiaries [debtor] manufacture and sell clothing, principally knitted goods and sportswear for women. From its earliest beginnings, the debtor achieved financial success as a sweater manufacturer. Severe financial difficulties later developed in the wake of its operation of thirty six retail stores and a factory producing clothing principally for Levi Strauss, and its entry into the field of sportswear design and manufacture.
Upon the commencement of its reorganization proceedings, the debtor sought authorization to borrow operating funds from New England Merchants Bank [Bank] and Prudential Insurance Company [Prudential]. Following an ex parte hearing the same day,[2] the bankruptcy judge authorized an immediate borrowing from the Bank and Prudential,[3] fixing May 7, 1980, after the formation of the Creditors' Committee, for further hearing on the application. At the conclusion of the May 7 hearing, the Creditors' Committee having appeared without interposing objection, the bankruptcy judge authorized the debtor to borrow an additional $700,000 and to enter into a line-of-credit agreement with the Bank and Prudential for up to $1.4 million in postpetition borrowings.[4] These postpetition loans were *459 later deemed priority costs of administration under Bankruptcy Code § 507(b)[5] and a first encumbrance on all assets of the debtor.[6]
On May 16, the Creditors' Committee appeared in opposition to the request of the debtor to borrow an additional $500,000, and filed a motion to convert the proceedings to chapter 7. After hearing, the bankruptcy judge approved the $500,000 borrowing, increased the line of credit to $1.7 million, declined to convert the proceedings to chapter 7, and granted a motion by the U.S. trustee to appoint a trustee.[7] The Creditors' Committee appeals.
The Appellate Panel authorized an expedited appeal, while denying a stay pending appeal.[8] Immediately following oral argument, the Appellate Panel affirmed the orders of the bankruptcy judge declining to convert the proceedings to chapter 7 and appointing a reorganization trustee. The Panel deferred its decision on the remaining issue in response to Bankruptcy Code § 364(e).[9]
The appellant challenges the May 16 order authorizing a third borrowing in the amount of $500,000 on grounds that the evidence did not demonstrate a reasonable likelihood that the debtor could be successfully rehabilitated, and because the borrowing of operating funds secured by theretofore unencumbered assets requires adequate *460 protection of the interests of unsecured creditors, within the meaning of Bankruptcy Code § 361, in the absence of which the borrowing constituted a taking of property without just compensation, contrary to the fifth amendment to the Constitution of the United States. The decision of the bankruptcy judge permitting the continued operation of the debtor under the direction of a trustee was challenged on the same grounds.
The refusal to convert the case to chapter 7 and the approval of the motion to appoint a trustee to operate the business were based on findings, adequately supported by the record, that the future financial condition and business prospects of the debtor would be significantly enhanced were it to dispose of its retail stores and the Georgia plant, terminate all but its sweater manufacturing operation, reduce its top-heavy payroll, and bring in new management. The appellant did not deny that significant reductions in employee and executive payrolls and the sale of the retail outlets would produce beneficial results. The likelihood that substantial benefits would result from an aggressive implementation of these initiatives was substantiated by the appellant's own witness. There was uncontroverted evidence that current management had erred seriously in the past, particularly in its cash flow projections and unprofitable business undertakings. The appellant mounts no serious challenge to these findings, but believes it would be better for the estate and creditors were the debtor liquidated under chapter 7.
The only basis for converting an embryonic reorganization proceeding under section 1112(b)(1) is a sufficient showing that the debtor would continue to sustain losses or diminish the estate if the reorganization effort is permitted to proceed and that there exists no reasonable likelihood of rehabilitation. Bankruptcy Code § 1112(b)(1). While the debtor's own projections clearly evidenced the near certainty of short-term operating losses, the bankruptcy judge concluded, appropriately in our view, that there existed a reasonable likelihood that the debtor could be rehabilitated.[10] See 5 Collier on Bankruptcy, ¶ 1112.03[c][i] (15th Ed. 1980) at 1112-14. Where there is a reasonable prospect of a successful rehabilitation a motion to convert under section 1112(b)(1) must be denied. Id.
The appropriateness of the decision to appoint a reorganization trustee under Bankruptcy Code §§ 1104 & 151104 turns upon whether there was a sufficient showing of cause, including incompetence or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or, in the alternative, a showing that the appointment would be in the best interests of the creditors and the estate. See, e.g., In re Hotel Associates, Inc., 3 B.R. 343, 1 CBC 2d 733, 6 BCD 160 (E.D.Penn.1980). There is a presumption in a chapter 11 case that the debtor is to continue in control and possession of its business. LaSherene, Inc. d/b/a The Sunshine Corporation, 3 B.R. 169, 174, 1 CBC 2d 685, 692, 6 BCD 153, 156 (N.D.Georgia 1980).
The Appellate Panel must accept the findings of the bankruptcy judge unless clearly erroneous. First Circuit Rules Governing *461 Appeals From Bankruptcy Judges to District Courts, Appellate Panels and Court of Appeals, Rule 16. In re Multiponics, Inc., 622 F.2d 709, 713 (5th Cir. 1980); Boston and Maine Corp. v. First National Bank of Boston, 618 F.2d 137, 141 (1st Cir. 1980). The findings of fact are amply supported by the record, and the conclusions of law, freely reviewable on appeal, In re Multiponics, Inc., supra, comport with the legislative prescriptions of sections 1104(a) [151104(a)] and 1112(b)(1).
Appellant next challenges the authorization under section 364(c)(2) to borrow operating funds secured by unencumbered assets.[11] The appellant insists that it was an abuse of discretion to permit the May 16 loan to be secured by unencumbered assets of the debtor, without first determining that the debtor was unable to obtain unsecured credit, as required by Bankruptcy Code § 364(c).[12]
The May 16 borrowing was another in a series arranged pursuant to a line-of-credit agreement among the debtor, the Bank and Prudential, approved by the bankruptcy judge on May 1, 1980. The May 1 order contains an express finding that unsecured financing was not available to the debtor.[13] A review of the sufficiency of the evidence supporting this finding is severely hampered by the failure of the appellant to include the April 30 hearing transcript in the record on appeal. Without such a transcript we decline to review. In re Colonial Realty Investment, 516 F.2d 154, 160 (1st Cir. 1975). The May 1 order was not appealed and is not, therefore, before us. Neither is there any evidence before us that the ability to obtain unsecured financing improved between May 1 and May 16.
Appellant is the official Creditors' Committee representing the holders of unsecured claims against the debtor. The Creditors' Committee is concerned that the satisfaction of unsecured claims may be delayed, diminished or rendered impossible as a result of the authorization to encumber "free" assets as security for postpetition operating loans. Its position appears to be that holders of unsecured claims whose recoveries may be thus materially impaired are entitled, by statute as well as by constitutional guarantee, to adequate protection in advance of the fixing of liens on unencumbered assets as a means of obtaining postpetition operating loans to finance the future operations of the reorganization debtor.
The May 16 borrowing was authorized under Bankruptcy Code § 364(c)(2), after notice and a hearing, upon a sufficient showing that the debtor was unable to obtain unsecured credit. The debtor was in urgent need of operating funds with which *462 to meet its payroll. Its 1,300 employees had been instructed not to report for work without calling in advance to learn if the plant would open. The appellant's own witnesses and committee members confirmed that essential raw materials were available only on a cash-on-delivery basis and that other trade creditors would not produce the needed yarns without assurances of payment. The record substantiates the finding that the urgently needed operating monies were otherwise unavailable.
There is no express statutory requirement that holders of unsecured claims be provided "adequate protection." Adequate protection within the meaning of Bankruptcy Code § 361 need be provided only as expressly required under section 362, section 363, or section 364.[14] There is no requirement of adequate protection in respect to credit obtained under Bankruptcy Code § 364(c)(2).[15]
The authorization to use previously unencumbered assets as collateral for postpetition operating loans is further challenged as an unconstitutional deprivation of the fifth amendment rights of unsecured creditors.
The bankruptcy power conferred by the Constitution upon the Congress is subject to fifth amendment guarantees against the taking of private property without just compensation.[16]Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 589, 55 S. Ct. 854, 863, 79 L. Ed. 1593 (1935). The fifth amendment guarantees protection against any taking of private property, even for a purpose wholly public in nature, without just compensation. 295 U.S. at 602, 55 S.Ct. at 869. Therefore, no taking of private property, in reorganization proceedings or otherwise, can be countenanced by the court in contravention of the "just compensation" clause.
Although our attention has not been invited to any authority for the proposition that holders of unsecured claims possess constitutionally protected substantive rights in property of the estate of a reorganization debtor,[17] it is at least arguable that the fixing of a lien on property of the estate under the bankruptcy laws in certain circumstances may constitute a taking within the meaning of the "just compensation" clause. It is in the area of collateral impairment, however, that such constitutional concerns more frequently arise in a reorganization context. It seems generally agreed in broad outline at least that Congress in the exercise of its bankruptcy power cannot deprive a creditor of substantial preexisting property rights in specific collateral, without just compensation. Armstrong v. U.S., 364 U.S. 40, 44, 48-49, 80 S. Ct. 1563, 1566, 1568, 1569, 4 L. Ed. 2d 1554 (1960); 295 U.S. at 602, 55 S.Ct. at 869. Nevertheless, there are no constitutional constraints inhibiting Congress in the exercise of its bankruptcy power from extinguishing the recovery rights of holders of *463 unsecured claims, because an unsecured claim confers no right in specific property of the obligor. 295 U.S. at 588, 55 S.Ct. at 863. Congress may rearrange the order of distribution of the property of a bankrupt estate without infringing the constitutional rights of the holders of claims thereby deprived of recoveries otherwise available under the preexisting scheme of priority. See, e.g., New York Credit Men's Adjustment Bureau, Inc. v. Jesse Goldstein & Co., 276 F.2d 886, 888 (2d Cir. 1960); City of Chelsea v. Dolan, 24 F.2d 522, 523 (1st Cir. 1928).
Appellant represents the interests of holders of unsecured claims against the debtor. Their constitutional rights do not rise to the level accorded lien creditors, id. at 523, and their claims are subject to discharge under federal bankruptcy laws, inasmuch as the constitutional proscription against impairing the obligation of contracts applies to the states alone. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 589, 55 S. Ct. 854, 863, 79 L. Ed. 1593 (1935).
Any impairment of the recoupment anticipated by holders of unsecured claims from unencumbered assets of the estate is dependent for its redress upon congressional rather than constitutional prescription. See New York Credit Men's Adjustment Bureau v. Jessie Goldstein & Co., 276 F.2d 886, 888 (2d Cir. 1960); City of Chelsea v. Dolan, 24 F.2d 522, 523 (1st Cir. 1928). Congress has chosen to exercise its substantive bankruptcy power so as not to require "adequate protection" of the interests of the holders of unsecured claims under the Bankruptcy Code in circumstances where the debtor obtains postpetition credit on the strength of a lien on previously unencumbered property of the estate theretofore available in whatever measure for the satisfaction of unsecured claims. See Bankruptcy Code §§ 361 & 364(c)(2). The only criteria mandated by Congress for the fixing of a lien on free assets pursuant to section 364(c)(2) are that such action be authorized by the court, after notice and a hearing, upon a showing that unsecured credit cannot be obtained. Since there are no other constitutional or legislative requirements, the court may permit the use of unencumbered assets as collateral to secure postpetition indebtedness upon compliance with section 364(c)(2).
Affirmed.
NOTES
[1] The Garland Corporation and its three subsidiaries: Bristol Knitting Mills, Inc.; D.S.B., Inc.; and Garland Knitting Mills of Georgia, Inc. filed voluntary chapter 11 petitions on April 29, 1980. The cases are consolidated.
[2] The record reveals that only the debtor, the Bank and Prudential received notice of the application. However, it was suggested during oral argument that the U.S. trustee was informed. While the April 30, 1980 order has not been appealed, it was to have been entered only "after notice and a hearing." Bankruptcy Code § 364(c)(1) & (2). The flexible notice formula prescribed by Bankruptcy Code § 102(1)(A) is not so relaxed as to permit ex parte relief in the absence of specific findings substantiating its appropriateness in the circumstances. See, e.g., In re Sullivan Ford Sales, Inc., 2 B.R. 350, 1 CBC 2d 400, 5 BCD 1288 (D.Me.1980). The exigent nature of the circumstances may have warranted ex parte relief, but not without reasonable efforts to provide advance notice to parties in interest. 2 B.R. at 356. The nonexistence of an official Creditors' Committee does not excuse the failure to attempt notification of the twenty largest unsecured creditors. See Interim Local Bankruptcy Rule 1007(a), District of Massachusetts. The Panel opines that there has been no sufficient showing of reasonable efforts to notify other parties in interest. The right to be heard "has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest." Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed. 865 (1950).
[3] The order of May 12, 1980 states that $362,000 was borrowed during the week of May 2, 1980 pursuant to the April 30 order.
[4] The Bank and Prudential claim prepetition indebtedness of $5.9 million and $3 million, respectively secured by accounts receivable, equipment, and real estate.
Postpetition credit was to be made available to the debtor under a formula based on 80% of prepetition and postpetition accounts receivable outstanding less than 90 days, 10% of the book value of inventory (not in excess of $1,000,000) and $2,200,000 of fixed assets, less prepetition indebtedness.
[5] Bankruptcy Code § 507(b) provides:
(b) If the trustee, under section 362, 363, or 364 of this title, provides adequate protection of the interest of a holder of a claim secured by a lien on property of the debtor and if, notwithstanding such protection, such creditor has a claim allowable under subsection (a)(1) of this section arising from the stay of action against such property under section 362 of this title, from the use, sale, or lease of such property under section 363 of this title, or from the granting of a lien under section 364(d) of this title, then such creditor's claim under such subsection shall have priority over every other claim under such subsection.
[6] The order signed by the bankruptcy judge on May 12, 1980 provides as follows:
Any loans made pursuant to such line of credit and pursuant to the order of May 1, 1980 will be secured by a lien on all the assets of the debtors, including, without limitation, a first lien on postpetition receivables, inventory and leasehold rights in a lien junior to the Bank's and Prudential's security interest in prepetition receivables, machinery and equipment, and such loans shall constitute a cost of administration pursuant to § 507(b). . . .
The May 12 order was not appealed.
[7] Bankruptcy Code § 151104(a) provides:
At any time after the commencement of the case but before confirmation of a plan, on request of a party in interest or the United States trustee, and after notice and a hearing, the court shall order the appointment of a trustee
(1) for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or similar cause . . . or
(2) if such appointment is in the interests of creditors, any equity security holders, and other interests of the estate. . . .
(Emphasis added.)
The order appealed from contains no finding substantiating compliance with the notice requirements of section 151104 in respect to the motion to appoint a trustee offered by the U.S. trustee during the course of the May 16 hearing. See the discussion at note 2 supra. Moreover, the motion to convert to chapter 7 itself appears to have been made during the May 16 hearing. There can be no question but that the debtor, and perhaps equity security holders as well, were entitled to reasonable advance notice of these motions.
[8] By order entered June 6, 1980, the Court of Appeals for the First Circuit dismissed an appeal from the order denying stay. 627 F.2d 1088.
[9] Bankruptcy Code § 364(e) reads as follows:
The reversal or modification on appeal of an authorization under this section to obtain credit or incur debt, or of a grant under this section of a priority or a lien, does not affect the validity of any debt so incurred, or any priority or lien so granted, to an entity that extended such credit in good faith, whether or not such entity knew of the pendency of the appeal, unless such authorization and the incurring of such debt, or the granting of such priority or lien, were stayed pending appeal.
[10] Furthermore, the notice requirements of section 1112(b) are not shown to have been satisfied. Although the debtor was informed several days earlier that a motion to convert might develop, there was in fact no notice of the motion until May 16, 1980, the day of the hearing. The hearing commenced over the objection of the debtor whose counsel had not yet even seen the motion. The requirement of notice and hearing mandates notice appropriate in the circumstances. 11 U.S.C. § 102(1)(A). See In re Sullivan Ford Sales, 2 B.R. 350 (Me. 1980). There is no evidence that notice was ever given to equity security holders. The record is silent as to why the motion was not filed earlier and interested parties notified in advance of the hearing. "The notice must be of such nature as reasonably to convey the required information, Grannis v. Ordean [234 U.S. 385, 34 S. Ct. 779, 58 L. Ed. 1363], supra, and it must afford a reasonable time for those interested to make their appearance. . . ." (Emphasis added.) Mullane v. Central Hanover Bank and Trust Co., 339 U.S. 306, 314, 70 S. Ct. 652, 657, 94 L. Ed. 314 (1950).
[11] Bankruptcy Code § 34(c) provides in relevant part:
If the trustee is unable to obtain unsecured credit allowable under section 503(b)(1) of this title as an administrative expense, the court, after notice and a hearing, may authorize the obtaining of credit or the incurring of debt
(1) with priority over any or all administrative expenses of the kind specified in section 503(b) or 507(b) of this title;
(2) secured by a lien on property of the estate that is not otherwise subject to a lien; or
(3) secured by a junior lien on property of the estate that is subject to a lien.
[12] Appellees urge that this issue is mooted by section 364(e). See note 9 supra.
Its legislative history indicates that the purpose of section 364(e) is to immunize credit extensions not stayed pending appeal, see H.R.Rep. No. 95 595, 95th Cong. 1st Sess. (1977) 347; S.Rep. No. 95 989, 95th Cong., 2d Sess. (1978) 58, U.S.Code Cong. & Admin.News 1978 pp. 5787, 5844, which is not to suggest that section 364 orders not stayed are not appealable. Upon reversal or modification of an order under section 364(c), the appellate tribunal may fashion relief conformably with section 364(e) as is appropriate in the circumstances. Moreover, a constitutional challenge cannot be barred by statute even if the interpretation here urged by appellees were correct.
[13] The order of May 1 states:
Based on the testimony of James Lynch, Vice President and Treasurer of the debtors, representations of counsel and the record in this matter, I make the following findings of fact:
. . . . .
7. No other financing is available to the debtor . . . The debtor is unable to obtain credit as an unsecured administrative expense.
[14] Bankruptcy Code § 361, 11 U.S.C.A. § 361.
[15] See note 11 supra.
[16] U.S.Const. amend. V. There seems to be some confusion in the case law as to whether constitutional guarantees for the protection of substantive property rights in bankruptcy proceedings derive from the "just compensation" clause or from the "due process" clause of the fifth amendment to the United States Constitution. Compare Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 601-02, 55 S. Ct. 854, 868 69, 79 L. Ed. 1593 (1935) with Wright v. Vinton Branch Bank, 300 U.S. 440, 470, 57 S. Ct. 556, 565, 81 L. Ed. 736 (1937). See generally, Murphy, Restraint and Reimbursement: The Secured Creditor in Reorganization and Arrangement Proceedings, 30 Bus.Lawyer 15, 26 (1974).
[17] The right of the appellant to procedural due process rests on an entirely different footing.
Many controversies have raged about the cryptic and abstract words of the Due Process Clause but there can be no doubt that at a minimum they require that deprivation of life, liberty or property by adjudication be preceded by notice and opportunity for hearing appropriate to the nature of the case. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313, 70 S. Ct. 652, 656, 94 L. Ed. 865 (1950).
Mullane held that the principal and income beneficiaries under a common trust fund, whose interests were "presumably subject to diminution in the proceeding by allowance of fees and expenses. . . ." were entitled to notice and hearing measuring up to the standards of due process. Id. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1634257/ | 5 So. 3d 313 (2009)
LEONARD
v.
BOARD OF SUP'RS OF LOUISIANA STATE UNIVERSITY.
No. 2008 CA 1692.
Court of Appeal of Louisiana, First Circuit.
February 13, 2009.
WHIPPLE, J.
Decision without published opinion Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2206387/ | 870 N.E.2d 1048 (2007)
In the Matter of Steven K. RAQUET, Respondent.
No. 34S00-0603-DI-99.
Supreme Court of Indiana.
August 1, 2007.
ORDER FINDING MISCONDUCT AND IMPOSING DISCIPLINE
Upon review of the report of the hearing officer appointed by this Court to hear evidence on the Indiana Supreme Court Disciplinary Commission's "Verified Complaint for Disciplinary Action," and the briefs of the parties, the Court finds that the Respondent engaged in professional misconduct and imposes discipline on Respondent.
Facts: The underlying facts are undisputed. For a period of about three months in 2001, Respondent viewed child pornography on the internet, printed some of the photographs, and paid some unknown on-line provider for the material. There is no evidence that he downloaded any photos. Respondent stopped viewing child pornography, and in December 2002, he began receiving counseling, which continues today.
At some point, electronic evidence of Respondent's conduct came to the attention of federal authorities. Respondent retained counsel and cooperated with federal authorities in their investigation. On March 23, 2004, Respondent was charged in state court with possession of child pornography, a Class A Misdemeanor. On May 21, 2004, Respondent entered into a pretrial diversion agreement. On June 13, 2005, Respondent successfully completed the diversion program and the case was dismissed.
On March 17, 2006, the Commission filed a verified complaint against Respondent based on his conduct involving child pornography. After a hearing, the hearing officer appointed in this case concluded that Respondent was remorseful, that he cooperated with all the authorities investigating the matter, and that aside from this incident six years ago, Respondent has provided exemplary public service as a lawyer. The hearing officer recommended Respondent be given a private reprimand. The Commission argues that a period of suspension is warranted.
Violations: The Court finds, and Respondent admits, that Respondent violated Professional Conduct Rule 8.4(b): Commission of a criminal act that reflects adversely on a lawyer's honesty, trustworthiness or fitness as a lawyer.
Discipline: Respondent's conduct furthers the sexual exploitation of children. Such serious professional misconduct calls for sterner discipline than a reprimand. Cf. In re Conn, 715 N.E.2d 379 (Ind.1999) (agreed two-year suspension for receiving and transmitting child pornography over the internet and for failing to disclose on bar application federal investigation of this conduct.)
The Court notes, however, substantial mitigating factors in this case. Respondent's encounter with child pornography was brief and it occurred six years ago. Respondent has taken responsibility for his actions by seeking professional help, cooperating with all investigations of his actions, and admitting his misconduct. He is remorseful and this misconduct is the only blot on his legal career since he was admitted to practice in 1983.
In light of these circumstances, the Court suspends Respondent from the practice of law for a period of thirty (30) days, beginning August 31, 2007. Respondent shall not undertake any new legal matters between service of this order and the effective date of the suspension, and Respondent shall fulfill all the duties of a suspended attorney under Admission and Discipline Rule 23(26). At the conclusion *1049 of the period of suspension, provided there are no other suspensions then in effect, Respondent shall be automatically reinstated to the practice of law, subject to the conditions of Admission and Discipline Rule 23(4)(c). The costs of this proceeding are assessed against Respondent.
The hearing officer appointed in this case is discharged.
The Clerk of this Court is directed to give notice of this order to the hearing officer, to the parties, and to all other entities entitled to notice under Admission and Discipline Rule 23(3)(d).
All Justices concur, except SULLIVAN and BOEHM, JJ., who dissent and would impose a public reprimand. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1101748/ | 237 Miss. 355 (1959)
114 So.2d 854
WILLIAMS, et al.
v.
HOOD.
No. 41220.
Supreme Court of Mississippi.
October 19, 1959.
Cunningham & Cunningham, Booneville; Brown & Elledge, Fulton, for appellant.
*357 W.P. Mitchell, Tupelo, for appellee.
GILLESPIE, J.
Appellants, plaintiffs below, the surviving widow and son of Wilson Williams, deceased, sued Junior Hood, appellee, defendant below, for the alleged wrongful death of the said Wilson Williams, deceased. Hood was charged with negligent operation of his Mercury automobile which was being driven north on Highway 45 when it ran into the rear of a pickup truck operated by Wilson Williams, deceased, at a point 75 feet north of the intersection of Highway 45 and the Osburn-Wheeler Road. The jury returned a verdict for the defendant and plaintiffs appealed.
*358 Highway 45 runs north and south and the Osburn-Wheeler Road runs east and west. Williams approached the intersection from the east, and the jury was justified in finding that he did not stop before entering the intersection, but the evidence overwhelmingly shows that Williams was driving slowly with his lights on when he entered the intersection and turned north and entered the east or northbound lane of Highway 45. After Williams had thus entered the highway and had travelled a distance of 75 feet, Hood's automobile struck the right rear of Williams' truck. The truck was knocked a distance of 44 feet where it wrapped around a tree and was destroyed. Williams was killed. Starting south of the intersection, the Hood automobile skidded with all four wheels locked a distance of 201 feet to the point of impact, and skidded an additional 213 feet after the impact. The damaged right front wheel of Hood's automobile was dragging the pavement the distance of 213 feet Hood's automobile skidded north of the impact. There was a standard intersection sign on the east side of Highway 45 located 500 feet south of the intersection. Highway 45 is on a fifteen or twenty percent incline going north, so that Hood's automobile was skidding up hill on a dry pavement. From the said intersection, one can see south on Highway 45 a distance of about one-half mile.
Hood and his passenger testified that Hood was driving about 50 to 60 miles per hour when he approached the intersection; that Williams' truck ran out of the Osburn-Wheeler Road 20 or 30 feet ahead of Hood; that Hood applied his brakes as quickly and as hard as he could; that he could not turn to the left because a vehicle was coming south, and he could not turn right because of a deep fill on that side. Hood stated that he estimated he was 20 feet from Williams' truck when he applied his brakes.
*359 (Hn 1) The question raised by this appeal is whether the verdict and judgment for defendant Hood is contrary to the overwhelming weight of the evidence.
A jury trial affords the best means of settling disputed questions of fact in cases of this kind, and the power of a court to set aside the verdict of the jury and grant a new trial on the ground that the verdict of the jury is contrary to the weight of the evidence should be exercised by the court with the utmost care. But the power and duty of the court to review the evidence and set aside the verdict of the jury on the ground that the verdict is against the overwhelming weight of the evidence is a necessary incident to the right of trial by jury. Beard v. Williams, 172 Miss. 880, 161 So. 750; Belk v. Rosamond, 213 Miss. 633, 57 So.2d 461.
Hood cites Stewart v. Madden, (Miss.) 101 So.2d 353, and Meo v. Miller, 227 Miss. 11, 85 So.2d 568, but those cases do not control. A comparison of the facts in those cases with the facts in the present case is sufficient to distinguish the cited cases.
Without regard to whether Williams was negligent in entering the intersection, we are of the opinion that the physical facts overwhelmingly show that Hood was operating his automobile at a high, dangerous, and negligent rate of speed and did not have it under reasonable control, and that such negligence was a proximate cause of the fatal collision. These facts show that the Hood vehicle skidded a total distance of 414 feet upgrade on a dry pavement in addition to the slowing effect of the impact with the truck. Williams had entered the intersection, made the turn into the northbound lane of Highway 45, and travelled 75 feet before he was struck in the rear. The force of the impact was undoubtedly great, as evidence by the fact that the truck was knocked forward and to the right a distance of 44 feet and "wrapped around a tree" east of the highway. The version told by Hood and his passenger witness *360 is wholly inconsistent with the physical facts. (Hn 2) The right to trial by jury includes the right of both parties to a trial by a jury that will respond to reason. (Hn 3) We are firmly of the opinion that the jury in this case did not respond to reason, and that the verdict exonerating Hood was the result of bias, passion, or prejudice.
Accordingly the case is reversed for a new trial.
Reversed and remanded.
McGehee, C.J., and Lee, Kyle and Arrington, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1557619/ | 493 F.Supp. 544 (1980)
LITTLE, BROWN AND COMPANY, (INC.), Plaintiff,
v.
Peter G. BOURNE, Defendant.
Civ. A. No. 79-2597-G.
United States District Court, D. Massachusetts.
July 23, 1980.
*545 John Taylor Williams, Barbara B. Williams, Haussermann, Davison & Shattuck, Boston, Mass., for plaintiff.
David J. Hatem, Parker, Coulter, Daley & White, Boston, Mass., Edward Ashworth, Charles Morgan Jr. & Assoc., Washington, D.C., for defendant.
MEMORANDUM AND ORDER
GARRITY, District Judge.
Plaintiff, Little, Brown and Company, a Massachusetts based publishing company, maintains this action to recover $18,500 advanced to the defendant, Peter G. Bourne, on a contract to write a book about Jimmy Carter's 1976 presidential campaign. Dr. Bourne, a resident of the District of Columbia, moved to dismiss for lack of personal jurisdiction or, if unsuccessful on that motion, to transfer the action to the District Court for the District of Columbia pursuant to 28 U.S.C. § 1404(a). We received supporting and opposing memoranda on these issues and heard oral argument. For reasons hereinafter stated both motions are denied.
Jurisdiction over the Person
Plaintiff's asserted basis for jurisdiction is the Massachusetts long arm statute, Mass. G.L. c. 223A, § 3, and specifically sections 3(a) and 3(b) of the statute. They read as follows:
A court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a cause of action in law or equity arising from the person's (a) transacting any business in this commonwealth; (b) contracting to supply services or things in this commonwealth; . . .
The plaintiff has the burden of proving the court's jurisdiction. Lizotte v. Canadian Johns Manville Co., 1 Cir. 1970, 387 F.2d 607, 608. Here, the question of personal jurisdiction turns on the nature and the extent of defendant's contacts with the Commonwealth during the course of his relationship with the plaintiff publisher. The following facts appear in affidavits filed by the parties.
In March, 1976, the defendant met in Boston with a Little, Brown editor to discuss the prospects for a book about Dr. Bourne's experiences on the Carter presidential campaign. Carter's political fortunes were at that point still unknown and the Bourne book had not advanced much beyond the planning stages. No contract resulted from this first meeting in Boston.
Later in the spring of 1976, the defendant retained the Sterling Lord Agency of New York to act as literary agent on the book. Thereafter, a proposal and outline were put out generally for bids, and in July, 1976, plaintiff received the five page proposal from the New York agent's office. Plaintiff bid on the book, the bid was accepted by the defendant, and on July 27, 1976 a contract was sent by plaintiff in Boston to the New York offices of Sterling Lord. Sterling Lord passed the contract on to the defendant in Washington who signed the contract and returned it to Boston through his agent. The contract called for an advance of $18,500 on signing, which amount plaintiff mailed to Sterling Lord on August 17, 1976.
There then followed an exchange of letters, outlines, and further proposals between the defendant in Washington, D.C., and Roger Donald, a Boston based editor at Little, Brown. In order to meet a spring 1977 deadline for listing the book as a new *546 release, the parties began an accelerated process of editing by which defendant was to submit each chapter for editing as it was completed. The defendant mailed each installment directly to Little, Brown in Boston. Copies of the manuscript were there circulated to an editor, copy editor, and legal advisor; an initial edit followed, and the edited chapter was then returned to Dr. Bourne for review. As part of this process, plaintiff's editors spoke regularly by phone and corresponded with the defendant to discuss editorial changes, the progress of pending chapters, and the mechanics of delivering the manuscripts by the fastest method possible. At one point the defendant used plaintiff's courier service in Washington, D.C., to avoid the delay of regular mail service. By January or February of 1977, plaintiff had received six chapters of the book (roughly one-half of the total manuscript), and of these had edited five and typeset three in galley form.
With the spring deadline approaching and the book only half complete, the editor in charge, Mr. Donald, flew to Washington in late February to discuss the book with the defendant. On March 2, 1977 the book was dropped from the plaintiff publisher's spring list and the parties set about negotiating a revised schedule. Because the book had originally been framed as a campaign memoir, the delay in completing the book required also that the topic be restructured, perhaps to include the first year of the Carter presidency. Defendant submitted a proposal to that effect on March 29, 1977, which plaintiff's editors rejected. Thereafter, relations between the parties deteriorated. After a lapse of nearly a year Dr. Bourne submitted a new topic proposal but Little, Brown did not act on it. In the spring and summer of 1979, plaintiff sought to cancel the contract and asked the defendant to return the monies advanced.[1] Plaintiff commenced this action on December 31, 1979.
Under section 3(a) of the Massachusetts long arm statute, the court looks to the defendant's contacts with the forum state. Dr. Bourne was physically present in Massachusetts only once in connection with this book. In March of 1976 he visited Little, Brown offices in Boston with little more than an idea for a book. At most it can be said he was testing the waters, looking for encouragement to continue his efforts. No contract resulted from this meeting. Defendant followed quite a different course in his second effort to find a publisher. In July, 1976, with a more concrete proposal in hand, he put his book out for bids, presumably contacting a number of publishing houses around the country. In offering his book for bids, defendant's contacts with Massachusetts amounted only to mailing a proposal to Little, Brown through his New York agent. Plaintiff happened to be the high bidder (its bid submitted through Sterling Lord in New York) and a contract was successfully negotiated. Under the circumstances we view the one trip to Boston in March as distinct from and unrelated to the events surrounding the contract negotiations in July. Accordingly, for purposes of the long arm statute, this cause of action, which relates to the July contract, cannot be said to arise out of the defendant's transacting any business in Massachusetts when he came here in March.
From July 1976, when defendant's agent put his book out for bids, during the contract negotiations and until the alleged breach, defendant did not physically enter the Commonwealth. All contacts with the forum were through the mails and by telephone both parties sharing in initiating or receiving the letters or phone calls. The publishing process requires frequent communications between author and editors. In this case drafts were received in Boston and circulated among the editors there, the manuscript was marked up for galleys in-house, and letters and outlines were exchanged between Boston and Washington *547 as a part of the development of the theme and content of the book. Thus, by looking at the whole of defendant's relationship with the plaintiff publisher, and for purposes of literal fidelity to Section 3(a) of the long arm statute, we may conclude that even though defendant was physically absent, he can be held to have transacted business in Massachusetts. Our analysis depends, however, on the important constitutional limitations on our power to exercise jurisdiction over this case. See, Good Hope Industries, Inc. v. Ryder Scott, 1979 Adv.Sh. 1155, 1161-62, ___ Mass. ___, 389 N.E.2d 76. Were defendant's contacts with the forum such "that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice,'" International Shoe Co. v. Washington, 1945, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95, and has defendant "purposely avail[ed] [him]self of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws?" Hanson v. Denckla, 1958, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283.
Had Dr. Bourne only mailed a proposal to Massachusetts and received back a contract which he signed and returned to Massachusetts, there would have been no basis for asserting personal jurisdiction in Massachusetts. See "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 1972, 361 Mass. 441, 280 N.E.2d 423, where the defendant's only contacts with the forum were to mail a purchase order and partial payment to plaintiff's division in Worcester. See also, Droukas v. Divers Training Academy, Inc., 178 Mass.Adv.Sh. 1175, 375 Mass. 149, 376 N.E.2d 548. But where by the nature of the performance called for under the contract the defendant becomes actively involved in plaintiff's business in Massachusetts, for example by monitoring the plaintiff's performance and supervising compliance with specifications and procedures, defendant's contacts are more than that of a passive purchaser and its involvement with the forum is enough to support jurisdiction. See Whittaker Corp. v. United Aircraft Corp., 1 Cir. 1973, 482 F.2d 1079, 1084-85; Marketing & Distribution Resources v. Paccar, Inc., D.Mass. 1978, 460 F.Supp. 990, 994.
The instant case falls somewhere in the middle of these two extremes. Much depends on how we characterize the performance called for under the contract between the parties. In a contract to manufacture goods, for example, a defendant buyer knows that by placing his order he sets off a chain of activity by the plaintiff manufacturer in the forum. However, as a general rule, the plaintiff's activities and conduct in the forum cannot serve as the basis for jurisdiction; and in the case of a passive purchaser the letters and phone calls into the forum which may accompany an order are viewed as ancillary activity without substantial commercial consequence in the forum. Cf. Good Hope Industries, supra at 1166, ___ Mass. at ___, 389 N.E.2d at 82; Whittaker, supra at 1084. Such a rule with respect to manufacturing contracts encourages foreign purchasers to deal with resident sellers without fear of being drawn into litigation in a distant court. Whittaker, supra, at 1085.
The contract between the parties in this case, however, bears little, if any, resemblance to a contract to purchase manufactured goods. Full performance by the defendant did not extend simply to writing a book and mailing it to plaintiff's office. The contract called for a manuscript "in content and form satisfactory to the Publisher, . . . in proper shape for the press." Any experienced author understands this to mean that from the bare outline which was the only basis for the publisher's bid, both author and publisher would work together to create a publishable and commercially marketable book. A publishing contract, unlike the basic bilateral contract to purchase a manufactured product, cannot be executed through independent acts of performance. Scores of interdependent acts go into the process: chapters and sections are submitted piecemeal, revisions for style are made in the editors' offices, content is reviewed for legal problems, drafts are circulated and recirculated between author and editor, and eventually printers and proof readers join with the *548 author and the publisher to make a mutual decision on visual format and style.[2] Whether or not defendant was free to do his writing outside of Massachusetts, he knew that as a consequence of entering into the contract with the plaintiff and mailing each of six chapters to Boston, he set in motion a complicated series of editing and printing steps, in every case unique to the particular author and book.
The pattern and frequency of interaction between plaintiff and defendant resembles that described in Good Hope Industries, supra. In that case the defendant, Ryder, provided appraisals and studies of natural gas reserves for its client energy companies. Under Ryder's contract it received raw data from the plaintiff, Good Hope, which it periodically analyzed and reported on. Ryder sent its reports from Texas to plaintiff's offices in Massachusetts. Each report was the occasion for numerous follow-up phone calls between the parties, and plaintiffs relied on the information in these reports in formulating financing and development plans. In concluding that defendant had contacts with Massachusetts sufficient to establish jurisdiction under section 3(a), the court noted:
We think that by sending appraisal reports and by initiating numerous telephone calls to the plaintiffs at their headquarters in Massachusetts, the defendant undertook purposeful activity in the forum. It reasonably could have foreseen that significant managerial decisions, based on the information it had provided, would be made in Massachusetts. Had the defendant not desired to expose itself to a claim of Massachusetts jurisdiction, it was within its power to refuse to deal with the plaintiffs here.
Id. ___ Mass. at ___, 389 N.E.2d at 82. We view Dr. Bourne's contract with Little, Brown as an undertaking of similar dimension and duration; it is neither so unfair nor so unreasonable as to amount to denial of due process to require him to defend this action in this forum.[3] Defendant's motion to dismiss is therefore denied.
Motion to Transfer Venue
Defendant has moved in the alternative to have this action transferred to the District Court for the District of Columbia. In deciding the question of forum non conveniens, the court considers the convenience of the parties and witnesses, and the interests of justice. 28 U.S.C. § 1404(a). Plaintiff's witnesses, six in number, are all from Massachusetts with the exception of Roger Donald, the editor assigned to the Bourne project, who at present is working out of plaintiff's New York office. Besides the defendant himself (who is frequently overseas) the principal defense witness is Sterling Lord, the New York agent. The only other defense witness will be called as an expert on the interpretation of literary contracts. He lives in the District of Columbia and works for the federal government. Considering the predominance of witnesses from Massachusetts and New York, the choice between Massachusetts or the District of Columbia (New York is almost equidistant from either city by plane) probably tends toward Massachusetts as the most convenient forum. In any event, few complicated *549 issues are presented and the trial is not likely to be lengthy. Overall, the inconvenience to the defendant of litigating in Massachusetts is slight it simply does not rise to the level of hardship that warrants denying plaintiff its primary right to choose a forum. See, A. Olinick & Sons v. Dempster Bros., Inc., 2 Cir. 1966, 365 F.2d 439.
Accordingly defendant's alternative motion to transfer is also denied.
NOTES
[1] In September, 1977, the editor on the project, Roger Donald, was transferred to Little, Brown's New York office. After that date most, but not all, of the correspondence between the parties was between New York and Washington, D.C.
[2] A different case might be presented where a manuscript was already written and edited and its author sought only a publisher who would set it into type and market it without changing its contents. The sale of paperback rights to an established hardcover bestseller is such an example. In this case, however, Little, Brown had bid only on a five-page proposal submitted by Dr. Bourne. It must necessarily have been contemplated that together they would create a final, much expanded product, satisfactory to both.
[3] Section 3(b) of the Massachusetts long arm statute suggests an additional basis for jurisdiction over the defendant. The cause of action arises out of defendant's contracting to supply services (his authorship and cooperation with editing) or things (the manuscript) in the Commonwealth. But we cannot rely on the contract alone, "isolated in nature and void of any other significant contacts with the Commonwealth," Droukas, supra, at ___, 376 N.E.2d 554, as the sole source of jurisdiction without giving due consideration to the same constitutional limitations we have here discussed with respect to defendant's transacting business in the Commonwealth. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1599853/ | 788 F.Supp. 1002 (1992)
PARKSIDE LUTHERAN HOSPITAL, Plaintiff,
v.
R.J. ZELTNER & ASSOCIATES, INC. ERISA PLAN and Blue Cross & Blue Shield of Ohio, Defendants.
No. 91 C 3070.
United States District Court, N.D. Illinois, E.D.
March 24, 1992.
*1003 Norman E. Goldman, Leonard D. Saphire-Bernstein, Albert Speisman, Denise M. Sircher, Nicola J. Bowkett, Albert Speisman & Associates, Highland Park, Ill., for Parkside Lutheran Hosp.
Joseph Michael Gagliardo, Neil P. Stern, James J. Convery, Laner, Muchin, Dombrow, Becker, Levin & Tominberg, Ltd., Chicago, Ill., for Blue Cross and Blue Shield of Illinois, Blue Cross & Blue Shield of Ohio and R.J. Zeltner & Associates, Inc. ERISA Plan.
MEMORANDUM OPINION AND ORDER
PLUNKETT, District Judge.
Plaintiff, PARKSIDE LUTHERAN HOSPITAL ("PARKSIDE"), filed suit to recover unpaid medical bills that it incurred for the treatment of one of the Defendants' insureds. Defendant, BLUE CROSS & BLUE SHIELD OF OHIO ("BLUE CROSS"), has moved to dismiss all three counts of Plaintiff's Amended Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1). For the reasons that follow, we dismiss Count I of Plaintiff's Amended Complaint with prejudice and dismiss Counts II and III with leave to amend.
BACKGROUND[1]
Sometime during the fall and winter of 1987, Linda Zeltner was admitted to Parkside Lutheran Hospital for medical care. While at the hospital Linda Zeltner incurred hospital and medical charges of at least $23,372.68. (Pl.'s Am.Comp. Count I ¶ 8.)
During her hospital stay Linda Zeltner had health insurance coverage through an ERISA plan as a dependent of a covered employee. (Id. ¶ 6.) BLUE CROSS was a fiduciary under this ERISA plan. (Id. ¶ 7.)
On October 28, 1987, a PARKSIDE employee contacted the ERISA plan and confirmed that Linda Zeltner had health benefit coverage under that plan. (Id. Count II ¶ 12.) When she was admitted to PARKSIDE, Linda Zeltner and her husband Robert Zeltner executed an assignment of benefits to PARKSIDE. (Id. Count I ¶ 9.) This assignment was intended to transfer their rights under their ERISA plan to PARKSIDE for reimbursement for Linda Zeltner's hospital and medical expenses. (Id.)
Pursuant to the apparent assignment of benefits, PARKSIDE sent the bill for Linda Zeltner's hospital and medical expenses, which totalled $23,372.68, to the address specified by the ERISA plan and BLUE CROSS. (Id. ¶ 10.) The Defendants paid $11,146.68, but have refused to pay the balance of the bill ($12,226.00). (Id. ¶ 11.) PARKSIDE filed suit in state court to recover this amount. BLUE CROSS removed the claim to federal court on the grounds that the claim necessarily rests on the Employee Retirement Income Security Act (ERISA).
In Count I of Plaintiff's Amended Complaint, PARKSIDE asserts its rights as assignee of the ERISA plan to the contractual benefits of that plan. Count II contains a claim for equitable estoppel; Count III, for negligent misrepresentation.
*1004 ANALYSIS
In their Motion to Dismiss,[2] the Defendant BLUE CROSS contends that the Court lacks subject matter jurisdiction over this case because Linda Zeltner's health benefit plan clearly states that beneficiaries may not assign their benefits to others, and therefore, PARKSIDE cannot properly maintain a suit based on the plan against BLUE CROSS. (Def.'s Mot.Dis. at 2.) BLUE CROSS also argues that the claims of equitable estoppel and negligent misrepresentation (Counts II and III) are pre-empted by ERISA and, therefore, are unmaintainable. (Id.) We address the Defendant's challenge to the assignment first.
A. Assignment Under the Plan
The Seventh Circuit has recently stated that subject matter jurisdiction is present where a health care provider that is an assignee of an ERISA plan participant has a colorable claim to benefits. Kennedy v. Connecticut Gen. Life Ins. Co., 924 F.2d 698, 700 (7th Cir.1991). The question before us is whether PARKSIDE has a colorable claim to benefits of Linda Zeltner's plan.
The plan at issue states:
Payment of Benefits
You authorize us to make payments directly to Providers who have performed Covered Services for you. We also reserve the right to make payment directly to you; you cannot assign your right to receive payment to anyone else. The choice of a Provider is solely yours. Once a Provider performs a Covered Service, we will not honor your request for us to withhold payment of claims submitted.
(Def.'s Mot.Dis. Exhibit B (Subscriber Certificate for the Policy of R.J. Zeltner & Assoc., Inc.) at 25 (emphasis added)). The Seventh Circuit stated in Kennedy, "Because ERISA instructs courts to enforce strictly the terms of plans, an assignee cannot collect unless he establishes that the assignment comports with the plan....
Only if the language of the plan is so clear that any claim as an assignee must be frivolous is jurisdiction lacking." Kennedy, 924 F.2d at 700 (emphasis in the original) (citations omitted). We find that the language of Linda Zeltner's plan clearly prohibited any assignment, hence PARKSIDE has no colorable claim to benefits under the plan.
PARKSIDE would have us believe that this non-assignment language in the plan cannot be enforced against health care providers and that, in the alternative, the intent of the parties regarding assignment of benefits is unclear. (Pl.'s Response at 2-3).
Two decisions rendered after the briefing of this motion, however, make clear that non-assignment language in ERISA plans can be enforced against health care providers. Davidowitz v. Delta Dental Plan of Cal., 946 F.2d 1476 (9th Cir.1991) ("The court concludes that ERISA welfare plan payments are not assignable in the face of an express non-assignment clause in the plan."); Washington Hosp. Ctr. Corp. v. Group Hospitalization and Medical Services, 758 F.Supp. 750, 755 (D.D.C.1991) ("ERISA does not on its face appear to embody any policy in favor of attorney's fees for assignees so strong as to invalidate the anti-assignment clause.") Indeed, the Eighth Circuit recently held that a state statute prohibiting non-assignment clauses was pre-empted by ERISA. Arkansas Blue Cross & Blue Shield v. St. Mary's Hosp., 947 F.2d 1341 (8th Cir.1991). In reaching this conclusion, the court found it important that the plan administrator be permitted to control who should receive plan benefits: "By negating a non-assignment clause, the assignment statute takes from the claims administrator who is a plan fiduciary, and gives to the beneficiaries control over who should receive payment of ERISA-plan welfare benefits." Id. at 1346 (citations omitted).
Moreover, we do not agree that the plan language is unclear respecting the parties' intent concerning the assignment of benefits *1005 to health care providers. The plan unequivocally states, "you cannot assign your right to receive payment to anyone else." (emphasis added). As the Ninth Circuit recently stated in a similar case, "[a]s a general rule of law, where the parties' intent is clear, courts will enforce non-assignment provisions." Davidowitz, 946 F.2d at 1478 (citations omitted).
Because we find that Linda Zeltner's plan precluded her from assigning her benefits to PARKSIDE, we conclude that PARKSIDE has no colorable claim to benefits as required under Kennedy and consequently this court lacks subject matter jurisdiction over Count I of this claim. Hence, we dismiss Count I of Plaintiff's Amended Complaint.
B. State Law Claims
BLUE CROSS contends that PARKSIDE's claims based on equitable estoppel and negligent misrepresentation are preempted by ERISA. (Def's Mot.Dis. at 2.) PARKSIDE's Amended Complaint does not state whether its claims for equitable estoppel and negligent misrepresentation are based on state law or federal common law. However, we assume based upon the representations Plaintiff has made in subsequent filings that these claims are predicated solely on state law.[3]
Quoting the text of § 514(a) of ERISA, the Supreme Court has stated,
If a state law "relate[s] to ... employee benefit plan[s]," it is preempted. The savings clause excepts from the preemption clause laws that "regulate insurance."
Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 45, 107 S.Ct. 1549, 1552, 95 L.Ed.2d 39 (1987). The issue that confronts us here is whether state law claims by health care providers not asserted pursuant to an assignment of rights "relate to" an ERISA plan and, as a consequence, are preempted.
In Pilot Life, the Court held that ERISA preempts all state common law causes of action based on the alleged improper processing of a claim for benefits. As this Circuit has subsequently noted, "ERISA's preemptive power remains virtually undefeated." Maciosek v. Blue Cross & Blue Shield, 930 F.2d 536, 539 (7th Cir.1991). However, courts have recognized that where the plaintiff is a third-party health care provider there are certain situations in which preemption will not occur.
In Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236 (5th Cir.1990), the Fifth Circuit found that a hospital's claim against the employer of one of its patients and that employer's group health insurer for negligent misrepresentation was not pre-empted by ERISA. The court stated:
We cannot believe that Congress intended the preemptive scope of ERISA to shield welfare plan fiduciaries from the consequences of their acts toward non-ERISA health care providers when a cause of action based on such conduct would not relate to the terms or conditions of a welfare plan, nor affect or affect only tangentially the ongoing administration of the plan.
Id. at 250. The court noted that ERISA pre-emption is generally found in actions which have one of two characteristics, "(1) the state law claims address areas of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and (2) the claims directly affect the relationship among the traditional ERISA entities the employer, the plan *1006 and its fiduciaries, and the participants and beneficiaries." Id. at 245. It held that neither of these characteristics was present when a health care provider brought an action based on its status as an independent third-party provider. The court found that a claim of misrepresentation concerning the existence of coverage was "independent of the plan's actual obligations under the terms of the insurance policy and in no way seeks to modify those obligations." Id. at 250.
The Tenth Circuit recently followed this reasoning in Hospice of Metro Denver v. Group Health Ins., 944 F.2d 752 (10th Cir. 1991). In that case the plaintiff did not claim any breach of the plan contract but only asserted a promissory estoppel claim. Finding that the state law claim did not affect the relations among the parties to the plan, it noted "[a]n action brought by a health care provider to recover promised payment from an insurance carrier is distinct from an action brought by a plan participant against the insurer seeking recovery of benefits due under the terms of the plan." Id. at 756. It held, "[d]enying a third-party provider a state law action based upon misrepresentation by the plan's insurer in no way furthers the purpose of ERISA." Id.
Instead of this line of authority, Defendants would have us rely on a recent Sixth Circuit Court of Appeals decision, Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (6th Cir.1991).[4]Cromwell involved an action brought by a health care provider alleging, among other things, claims of promissory estoppel, negligence, and breach of good faith. Apparently the health care provider in Cromwell, like PARKSIDE in the instant case, contacted the insurer to verify coverage and, once such verification was obtained, provided services for which it was never paid. In Cromwell the insurer refused to pay because it had discovered that the patient in question was no longer covered under the plan. The Sixth Circuit found that the plaintiff's allegations were asserted "as grounds for the recovery of benefits from the ... plan for health care services...." Id. at 1276. Because it found that these claims were asserted to recover under the plan itself, the court held that "appellants' state law claims are at the very heart of issues within the scope of ERISA's exclusive regulation and, if allowed, would affect the relationship between plan principals by extending coverage beyond the terms of the plan." Id.
We are unpersuaded, however, by Cromwell that state common law claims of the sort at issue here are asserted in order to recover benefits from an ERISA plan itself. Instead, we agree with the dissenting Judge Jones that where the grounds for the state law claims are representations made by the insurer to the health care provider directly, these representations may create duties quite apart from those under the plan. Id. at 1285 (Jones, J. dissenting). Thus, we find that where alleged representations create duties that exist outside of those encompassed in an ERISA plan and that do not interfere with duties contained in that plan, ERISA preemption will not occur.
However, where the representations made by an insurer to a third-party provider would act to modify the terms of a group insurance plan e.g., to allow receipt of benefits that were no longer available under the explicit terms of the plan the third-party's claim does "relate to" the plan and hence is preempted by ERISA. Coonce v. Aetna Life Ins. Co., 777 F.Supp. 759 (W.D.Mo.1991). In Coonce the court stated,
This is not a case where the health care provider simply called the plan administer to verify that a prospective patient had coverage, as was the case in Memorial Hospital. Rather, this case involves a series of discussions that took place for the express purpose of determining whether [the insured] would continue to receive benefits.... Taken in their entirety, the representations defendants are alleged to have made would have *1007 modified the plan by allowing [the insured] to receive benefits which were no longer available to plan participants....
Id. at 768. Because the conversations at issue in Coonce had the effect of orally modifying the express terms of the ERISA plan, they related to the plan and, as a consequence, were preempted by ERISA.
These cases suggest that in an action for misrepresentation, the claim's relation to the plan depends on the nature of the representation: if it was merely involving a verification of coverage and, quite apart from the policy itself, created a duty between insurer and provider, the plan is not involved and the action does not "relate to" the plan; however, if the conversations concerned the nature of the coverage under the plan e.g., whether an illness was a pre-existing condition or whether a given procedure was covered under the policy they do "relate to" the plan for ERISA preemption purposes.
With this in mind we turn to the Amended Complaint. In that complaint, Plaintiff states:
12. On October 28, 1987, an employee of the Plaintiff contacted the ERISA plan and confirmed health insurance benefits for Mrs. Zeltner.
13. In confirming health insurance benefits for Mrs. Zeltner, the ERISA plan represented to Parkside that Mrs. Zeltner's hospital expenses would be covered by the ERISA plan, subject only to facts it neither knew nor should have known through reasonable inquiry.
(Pl.'s Am.Comp. ¶¶ 12-13.) We find these paragraphs unclear as to the nature of the alleged representations. Paragraph 13 does not make clear whether the ERISA plan in fact made an express representation to PARKSIDE that the expenses were covered under the plan or merely confirmed coverage, which PARKSIDE took to mean that the particular hospital expenses it was contemplating incurring were covered. Because the preemption issue turns on whether the representations modified the terms of the plan and because the language as drafted is unclear on this point, we dismiss Counts II and III of Plaintiff's Complaint and give them leave to amend. We note, however, that if Plaintiff fashions a claim that is not preempted by ERISA, this Court will be forced to remand the remaining state law claim to state court since we lack jurisdiction to entertain such a claim.[5]
CONCLUSION
We hereby dismiss Count I of Plaintiff's Amended Complaint with prejudice and dismiss Counts II and III with leave to amend.
NOTES
[1] On a motion to dismiss, the court views the allegations of the complaint as true, along with reasonable inferences therefrom, and views these in the light most favorable to the plaintiff. Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir.1981).
[2] The instant motion to dismiss is the second motion to dismiss that has been filed by BLUE CROSS in this action. The first, which challenged in personam jurisdiction and venue, has apparently been abandoned. (Pl.'s Response to Def.'s [Second] Mot.Dis. the Am.Comp. at 1.)
[3] The Amended Complaint does not state whether Counts II and III arise under state law or federal common law. Defendant BLUE CROSS pointed out this lack of clarity in its motion to dismiss. (Def.'s Mot.Dis. at 2) ("Counts II ... and III ... fail to state any jurisdictional basis for their inclusion in the Amended Complaint. However, because this suit seeks to enforce rights under an ERISA plan, it is well established that they are pre-empted by ERISA, regardless of whether they are predicated upon state or federal law." (citation omitted).) In its response to Defendant's motion, the Plaintiff failed to clarify the basis for its claim, or to assert the basis for this Court's jurisdiction over these counts. Instead, Plaintiff's response relies on caselaw concerning state law claims; hence, we find that Plaintiff has waived any federal common law claims and seeks to assert only state law claims of equitable estoppel and negligent misrepresentation.
[4] The Defendant BLUE CROSS brought this case to our attention in a supplemental brief filed only a few days before we were scheduled to rule on its motion to dismiss.
[5] As Defendant points out, see supra note 3, Plaintiff has neglected to specify in Counts II and III the basis for our jurisdiction. However, given the nature of Count I, we assumed for the purposes of this motion, that jurisdiction was predicated upon the pendency of the state claim. Now that we have dismissed Count I, this court lacks jurisdiction to determine non-preempted state law claims given that no basis for diversity has been asserted and the jurisdictional amount has not been reached. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1671659/ | 686 So.2d 1053 (1996)
STATE of Louisiana
v.
Randy BISHOP.
No. 96-KA-694.
Court of Appeal of Louisiana, Fifth Circuit.
December 30, 1996.
*1054 Frank Desalvo, Laura K. Gasiorowski, New Orleans, for Defendant/Appellant.
Jack M. Capella, District Attorney, Alison Wallis, Assistant District Attorney, 24th Judicial District, Parish of Jefferson, Gretna, for Plaintiff/Appellee.
Before GAUDIN, GOTHARD and DALEY, JJ.
DALEY, Judge.
Defendant, Randy Bishop, appeals his sentence following his guilty plea on charges of attempted forcible rape, a violation of LSA-R.S. 14:27:42.1. Defendant alleges that the sentence is an ex post facto application of the notification provisions of the Sexual Offender Law under LSA-R.S. 15:542 and thus violative of the United States and Louisiana Constitutions. For the reasons that follow, we vacate defendant's sentence and remand for resentencing.
Defendant pled guilty to attempted forcible rape that occurred on September 11, 1994. The victim was twenty-two years old at the time of the offense. In a companion case, defendant was charged with committing the crimes of sexual battery and oral sexual battery. On April 9, 1996, defendant appeared for sentencing and was sentenced to five years at hard labor, the sentence was suspended and defendant was placed on two years active probation. The trial court judge also stated that "... also, compliance is imposed in conformity with article 15:542, the sexual offender notification law...." Compliance with the Sexual Offender notification law was suspended for ninety days pending appellate review. The trial court then ordered a stay on the imposition of the sexual offender notification requirements pending this appeal. However, the sentencing transcript reveals the trial judge did not mention the offense of sexual battery in his acceptance of the guilty plea or in sentencing the defendant. This constitutes an error patent.
A review of the record reveals that the defendant's guilty plea was not entered in compliance with the terms of the plea agreement. In the waiver of rights form, the defendant stated that he was pleading guilty to the offenses of attempted forcible rape, oral sexual battery and sexual battery; however, during the plea colloquy, the trial court questioned the defendant as follows:
And you're pleading guilty today to attempt[ed] forcible rape in matter number 94-5519, and oral sexual battery, case *1055 number 94-5997 which occurred on the 11th day of September, 1994.
Under substantive criminal law, there are only two alternative remedies available for a breach of a plea bargain: (1) specific performance of the agreement, or (2) nullification or withdrawal of the plea. Lewis v. State Through Dept. of Public Safety and Corrections, 602 So.2d 68 (La.App. 1st Cir. 1992), writ denied, 604 So.2d 1312 (La.1992). Because a guilty plea will not be considered valid unless the plea is a free and voluntary choice on the part of the defendant, see State v. Nuccio, 454 So.2d 93 (La.1984), the defendant should be afforded the option of entering a plea of guilty to the all three offenses and being sentenced within the limits of the plea agreement, or of withdrawing his guilty plea and proceeding to trial on the charges. Therefore, defendant's plea to the offenses is hereby vacated and the case is remanded for further proceedings.
Additionally, it is noted that the trial court only imposed a single sentence despite the fact that the defendant pled guilty to multiple offenses. The trial court must impose a separate sentence for each offense for which the defendant was convicted. State v. Parker, 593 So.2d 414 (La.App. 1st Cir.1991). Therefore, patent sentencing error occurs when a trial court, in sentencing for multiple offenses, does not impose a separate sentence for each offense. State v. Soco, 94-1099 (La.App. 1st Cir. 6/23/95), 657 So.2d 603.
Concerning the merits of defendant's appeal, we note the trial court erred in requiring defendant to register as a sex offender under the provisions of LSA-R.S. 15: 542 that were not in effect at the time the offense was committed. This violates the constitutional prohibition on ex post facto application of laws. See State v. Calhoun, 669 So.2d 1359 (La.App. 1st Cir.1996); State v. Linson, 654 So.2d 440 (La.App. 1st. Cir.1996); State v. Payne, 633 So.2d 701 (La.App. 1 Cir.1993).
Accordingly, for the foregoing reasons, we vacate defendant's sentence and remand for resentencing.
SENTENCE VACATED, CASE REMANDED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1652153/ | 722 So.2d 490 (1998)
Joe W. SMITH, Jr., Joe W. Smith, and Clovis Smith
v.
Natalie Cash MALOUF, Alex J. Malouf, Jr., and Patricia Malouf.
No. 92-CA-01177-SCT.
Supreme Court of Mississippi.
September 24, 1998.
*491 J. Brad Pigott, Mary Marvel Fyke, Jackson, Attorneys for Appellants.
James W. Burgoon, Jr., James E. Upshaw, F. Ewin Henson, III, Greenwood, Attorneys for Appellees.
En Banc.
BANKS, Justice, for the Court:
¶ 1. Here we are confronted with a challenge to the propriety of the lower court's dismissal of a suit, which alleged intentional infliction of emotional distress, conspiring to prevent the appellant-father from exercising *492 his parental rights and conspiring to effect an illegal adoption of a child born out of wedlock. Because they have no standing, we affirm the dismissal of the appellant-grandparents' claim. The appellant-father, on the other hand, should have been afforded his day in court on his claims of intentional infliction of emotional distress and conspiracy to deprive him of his parental rights. Accordingly, we reverse and remand this matter to the trial court for further proceedings.
I.
¶ 2. In May 1989, teenagers Joey Smith and Natalie Malouf began dating, and in August 1991, Natalie discovered that she was pregnant. She told Joey about the pregnancy on August 16. The following day Joey asked Natalie to marry him, and they discussed their options regarding the baby although no decision was made at that time. Joey and Natalie told her parents (hereinafter "the Maloufs") about the pregnancy. The Maloufs told Joey the child would be put up for adoption and the pregnancy would be kept private until then.
¶ 3. The next day, August 18, Joey returned to the Maloufs' home in an attempt to change their minds about the adoption. Their minds were set. On August 19 Joey confided in his pastor about the pregnancy. Together, they told his parents (hereinafter "the Smiths") that Joey would soon be a father. After finding out about the baby, the Smiths went to the Maloufs and told them that they did not want the child to be placed for adoption and that they were willing to take full responsibility for the child. The Maloufs remained firm in their decision regarding the child's adoption.
¶ 4. The record is not clear, but it would appear that Natalie and Joey's romance went sour soon after she discovered she was pregnant. When he called her on September 7, Natalie asked him not to call again. At some point in that month, Joey consulted an attorney about the situation, but he did not take any formal action at that time. A few months later in December, the Smiths visited Natalie at school in Indiana. According to the Maloufs, the Smiths kidnapped and badgered Natalie regarding the child's adoption.
¶ 5. In January 1992, Joey went to the Maloufs' home and was told that Natalie was gone and that she would not be back until the child was born. On January 14, 1992, Joey initiated legal proceedings against Natalie in the Leflore County Chancery Court, seeking a declaration of paternity, order for custody of the child and injunctive relief to stop adoption proceedings within and outside Mississippi. Because Natalie could not be reached for service of process, she was served by publication on three separate dates February 21 and 28 and March 6. On March 9, one of Natalie and Joey's mutual friends called Joey and asked him to drop the suit against Natalie, informing him Natalie said she would not put the child up for adoption if he dropped the suit.
¶ 6. Joey applied for a temporary restraining order enjoining the commencement of adoption proceedings on March 12. The TRO was served on Natalie via her father. On March 27, the chancellor issued a permanent injunction in the form of a final judgment, enjoining Natalie and "all who might assist her" from proceeding with an adoption. Joey and his parents mailed the chancellor's order to all Vital Statistics offices in the State of Mississippi. He also hired investigators to trace Natalie's whereabouts. On April 18, Natalie called Joey and told him the birth of their child was imminent and that she was healthy. She asked him to sign the adoption papers, and she also mentioned private adoption.
¶ 7. The baby was born on April 21, 1992 in Marietta, Georgia. After discovering her whereabouts, Joey went to Georgia and retained an attorney to assist in getting custody of the child. However, his attempts were too late. Natalie and her parents traveled to California where the baby was adopted to Canadian parents.
¶ 8. Joey and his parents sued Natalie and her parents in circuit court, alleging civil conspiracy and intentional infliction of emotional distress. In September 1992, Natalie and her parents filed motions to dismiss the complaint. The chancellor stayed all proceedings in chancery court and suspended all prior orders except the declaration of Joey's *493 paternity. On October 2, 1992, Joey's California attorney learned that the child had been adopted by parents in Alberta, Canada. The Canadian adoption was put on hold pending the resolution of the Mississippi action. On October 22, the circuit court granted the 12(b)(6) motions to dismiss filed by the Maloufs and Natalie. Joey filed notice of appeal from that order on November 13, 1992.
¶ 9. Joey and the Smiths assign as error the following:
ISSUE I
THE COURT ERRED IN RULING THAT BECAUSE JOEY SMITH IS AN UNWED FATHER (RATHER THAN AN UNWED MOTHER), HE HAS NO PARENTAL RIGHTS TO RECEIVE NOTICE OF ANY ADOPTION OF, OR TO OBJECT TO ANY ADOPTION OF, OR TO SEEK LEGAL CUSTODY UPON THE BIRTH OF, HIS BIOLOGICAL CHILD.
ISSUE II
THE CIRCUIT COURT'S RULING THAT MR. AND MRS. JOE SMITH LACKED STANDING TO CLAIM DAMAGE, FLOWING EITHER FROM THE DEFENDANTS' UNLAWFUL CONSPIRACY OR FROM THE DEFENDANTS' INFLICTION OF EMOTIONAL DISTRESS UPON THEM, WAS ERRONEOUS.
ISSUE III
PLAINTIFFS ESTABLISHED ALL ELEMENTS OF THEIR CLAIMS FOR PURPOSES OF RULE 12.
ISSUE IV
THE CHANCERY ORDER ENTERED IN A SEPARATE JUDICIAL PROCEEDING, THAT DEFENDANTS SEEK TO INSERT INTO THE RECORD IN THE INSTANT CAUSE, IN NO WAY ADVERSELY AFFECTS PLAINTIFFS' CLAIMS FOR RULE 12 PURPOSES.
ISSUE V
THE DISTRICT COURT ERRED IN HOLDING THAT JOEY SMITH WAS LIMITED TO SEEKING REDRESS FOR THE TORTIOUS ACTIONS OF THE MALOUFS BY RESORT TO CONTEMPT PROCEEDINGS IN THE CHANCERY COURT.
ISSUE VI
THE DISTRICT COURT ERRED IN HOLDING THAT BECAUSE THE DEFENDANTS WERE EXERCISING UNSPECIFIED "RIGHTS TO TRAVEL FREELY THROUGHOUT THE UNITED STATES AND TO BE LEFT ALONE," THEY WERE SHIELDED FROM LIABILITY FOR DAMAGES CAUSED BY THEIR INTENTIONAL TORTS.
II.
a.
¶ 10. This Court, in adjudicating Rule 12(b)(6) motions, has held that upon a motion for dismissal pursuant to M.R.C.P. 12(b)(6) for failure to state a claim upon which relief can be granted, the pleaded allegations of the complaint must be taken as true, and a dismissal should not be granted unless it appears beyond a reasonable doubt that the plaintiff can prove no set of facts in support of his claim which entitles him to relief. Overstreet v. Merlos, 570 So.2d 1196, 1197 (Miss.1990).
¶ 11. "A motion to dismiss under MRCP 12(b)(6) tests the legal sufficiency of the complaint.... [T]o grant this motion there must appear to a certainty that the plaintiff is entitled to no relief under any set of facts that could be proved in support of the claim." Busching v. Griffin, 465 So.2d 1037, 1039 (Miss.1985). In Carpenter v. Haggard, 538 So.2d 776, 777 (Miss.1989), this Court further explained that "[u]nder the MRCP it is only necessary for the complaint to show that the plaintiff is entitled to some relief in court in order to survive a Rule 12(b)(6) motion." The dismissal of a complaint on a 12(b)(6) motion is reviewed de *494 novo. Tucker v. Hinds County, 558 So.2d 869, 872 (Miss.1990); UHS-Qualicare, Inc. v. Gulf Coast Community Hosp., Inc., 525 So.2d 746, 754 (Miss.1987).
b.
¶ 12. We first examine whether Joey had a right to notice of the adoption of his child or a right to object to that adoption under state or federal law. If under current law Joey was so entitled but was prevented from achieving such by and through the actions of Natalie and her parents, the Maloufs, then he is indeed entitled to a trial on his conspiracy and tort claims. With that issue in mind, we begin by looking at the pertinent Mississippi statutes and case law governing this issue.
¶ 13. Miss.Code Ann. § 93-17-5 (1994) provides in relevant part:
In the case of a child born out of wedlock, the father shall not be deemed to be a parent for the purpose of this chapter, and no reference shall be made to the illegitimacy of such child [during the adoption process].
The effect of this provision is that the putative father of a child does not have to be notified of an adoption proceeding because he is not considered a parent under the statute and parents are the only parties statutorily required to be made parties to the adoption proceeding. Thus, § 93-17-5 expressly indicates that Joey was not entitled to notice of the adoption of his child nor was his consent to the adoption necessary.[1] Thus under the statutory law of this state, Joey has no right to complain about the adoption of the child. See Humphrey v. Pannell, 710 So.2d 392, 395 (Miss.1998).
¶ 14. Despite the conclusiveness of § 93-17-5, several United States Supreme Court decisions demonstrate the unconstitutionality of our statute. In fact, the constitutionally suspect nature of § 93-17-5 was recognized recently by this Court in Humphrey v. Pannell. There we stated that:
Although Miss.Code Ann. § 93-17-5 and applicable decisions of this Court do not require notification of the natural unwed father of an illegitimate child, applicable United States Supreme Court decisions nevertheless make it clear that this Mississippi statute [§ 93-17-5] would be unconstitutional in its application in certain cases, particularly in cases in which the natural unwed father has attempted to establish a substantial relationship with the child.
Id. at 396 (citing N. Shelton Hand, Mississippi Divorce, Alimony, and Child Custody, § 21-5 (3rd. ed.1992)).
¶ 15. Beginning with Stanley v. Illinois, 405 U.S. 645, 651-63, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972), the United States Supreme Court for the first time stated that under certain circumstances the Constitution protected the parental rights of an unwed father. These circumstances included instances in which the putative father had participated in the "companionship, care, custody, and management" of his child. Under those circumstances, his custodial rights to the child could not be revoked without a hearing to determine his parental fitness.
¶ 16. Since this seminal case, the Supreme Court has clarified and in many ways expanded the rights of unwed fathers. Six years after Stanley, the Supreme Court in Quilloin v. Walcott, 434 U.S. 246, 98 S.Ct. 549, 54 L.Ed.2d 511 (1978) rejected a putative father's quest to veto the adoption of his eleven-year-old child. The Court found that the father wholly failed to have or seek custody of the child nor had he ever shouldered any significant responsibility with respect to the daily supervision, education, protection and care of the child. Thus, that case established the requirement of a meaningful relationship with the child and not simply proof of biology.
*495 ¶ 17. Then there was Caban v. Mohammed, 441 U.S. 380, 99 S.Ct. 1760, 60 L.Ed.2d 297 (1979) where the unwed father had custody of his children for several years. Under the applicable New York law, the putative father was merely entitled to notice of the proposed adoption of his children following the mother's death and an opportunity to present evidence on the children's best interest. A sharply divided Supreme Court struck down the New York statute on equal protection grounds, concluding that the undifferentiated distinction between unwed mothers and unwed fathers did not bear a substantial relationship to the State's asserted interests. The Court further found that the father and children had lived together for many years, thereby having established and maintained a significant, supportive relationship. The Court therefore concluded the father should have the privilege of vetoing the adoption of his children. Once again, the Supreme Court was greatly influenced by the fact that the putative father had initiated and carried out a substantial relationship with the children.
¶ 18. Lehr v. Robertson, 463 U.S. 248, 261-62, 103 S.Ct. 2985, 77 L.Ed.2d 614 (1983) dealt with an unwed father's attempt to block the adoption of his child by the stepfather. The Supreme Court noted that putative father had never lived with the child or mom, nor had he provided any type of financial support. In short, the father had never "grasped the opportunity to form a relationship" with his child even though the pertinent statute provided him ample procedural protection to do so. As such, the Supreme Court rejected his equal protection claims, likening the father to Quilloin, who also had never even attempted to establish a substantial relationship with the child.
¶ 19. While the preceding cases provided much needed protection to the rights of those unwed fathers who had "grasped the opportunity" to establish a relationship with their children, they failed to address the issue before us what, if any, constitutional protections should be given to a putative father whose child was adopted immediately after birth, thereby prohibiting him from establishing any type of substantial relationship with the child. This very situation has been addressed by the New York County Surrogate Court in In re Adoption of Baby Girl S, 141 Misc.2d 905, 535 N.Y.S.2d 676 (1988).
¶ 20. There, the child was born on April 24, 1988. Id. at 677. The adoption proceedings commenced on May 4. On March 2 fiftythree days before the child was born the unwed father filed a petition to establish his paternity and obtain custody of the unborn child. Id. After several failed attempts, the mother was served with an order on May 6 to show cause that restrained her "from removing or causing the removal" of the child from the county.
¶ 21. On May 13, counsel for the mother and father appeared in Family Court. The mother's attorney failed to inform the court that she had given birth on April 24 and that the child had been placed for adoption in New York County. The restraining order was continued and the matter was adjourned until June 9. In the interim, the mother appeared in the Surrogate Court to place her consent to the adoption on the record. On June 9, the mother told the trial judge and the putative father that she had given birth. The judge ordered the mother to appear in court with the baby on June 14. On that date, she came to court and informed the judge that she had surrendered the baby for adoption. That same day, the father filed with the Putative Father Registry. The next day his attorney informed the Surrogate Court about the paternity and custody proceedings initiated by the father.
¶ 22. The Surrogate Court appointed a guardian ad litem for the child, and a trial on the issue of paternity was scheduled for July 18. On the morning of trial, the mother admitted she lied about her husband being the father of the child and that the attorney for the adoptive parents had advised her to give the "mistaken" responses. The putative father was determined to be the father of the child, and a hearing was scheduled to determine his rights in the adoption proceeding.
¶ 23. At this hearing, the mother announced that she wished to revoke her consent to the adoption and to either take custody of the child or give her to the father. The mother also corroborated the father's testimony *496 from the paternity hearing. Specifically, she confirmed that he told her upon finding out that she missed her menstrual period, "I love you and want to marry you." The mother further admitted that at one point she told the father she was not pregnant and then terminated their relationship. Also she disclosed that the attorney advised her to say she found out about the adoptive parents via an advertisement in the paper because the attorney was not supposed to be the gobetween for an adoption. Id. at 678. When the father learned (from a friend) about the pregnancy, he asked the mother to give the child to him. At one point, he even went to see her and offered her $8,000 to help pay for her expenses. The mother continued to tell him the baby was not his. The mother's testimony established that she and the adoptive parents worked in concert to "mastermind something" to deal with "the latest Gus [the putative father] issue," knowing that the mother's estranged husband whose consent to the adoption they submitted was not in fact the child's father.
¶ 24. The Surrogate Court found that the adoptive parents (both attorneys) and their counsel orchestrated the whole proceeding so that the court would not discover the omission of Gustavo from the adoption petition. The petition was, in the Surrogate Court's words, "a blatant attempt to make an end run around the Family Court proceedings." Id. at 680. The Court further concluded that when the mother consented to the adoption in Surrogate Court she violated the lower court's restraining order. In short, the Court determined that the adoption proceeding was "permeated with fraud and misrepresentation" and dismissed it accordingly. Id.
¶ 25. Despite this ruling, the Court went on to state that Gustavo had "grasped the opportunity" to develop a relationship with his daughter and accepted responsibility for her future. Furthermore, the Court noted to hold that no unwed father has a right to prevent an unwed mother from placing their child for adoption immediately at birth would create an invidious gender-based distinction between the rights of unwed fathers and unwed mothers. Id. at 684.
¶ 26. Baby Girl S was affirmed by the New York Court of Appeals in the consolidated case of In re Raquel Marie X., 76 N.Y.2d 387, 559 N.Y.S.2d 855, 559 N.E.2d 418 (N.Y.1990). Addressing whether "the full measure of constitutional protection the right to a continued parental relationship absent a finding of unfitness [is] ever required where a child is placed for adoption before any real relationship can exist, and if so, what actions on the unwed father's part would demonstrate his willingness to take parental responsibility sufficient to give rise such rights," that court of appeals concluded that such an interest must be recognized in appropriate circumstances as a matter of federal constitutional law. Id. at 861, 559 N.E.2d at 424. In order to fall within this constitutional protection, however, the unwed father must come forward to immediately assume parental responsibilities and he must do so in a prompt and substantial manner, including public acknowledgment of paternity, payment of pregnancy and birth expenses, steps taken to establish legal responsibility for the child, and other factors evincing a commitment to the child. Id. at 865, 559 N.E.2d at 428. Any unfitness, waiver or abandonment on the part of the father works to his detriment. Id. All of these requirements had been met by the father in Baby Girl S, where the evidence indicated the father had sought full custodial responsibility virtually from the time he learned of the mother's pregnancy and that he had done everything possible to manifest and establish his parental responsibility. Id.
¶ 27. The instant matter is very analogous to Baby Girl S. Taking the allegations in the complaint as true, from the moment he learned of her pregnancy Joey asked Natalie to marry him. Upon being rejected, he told her that he wanted to keep the child and that he would provide her with financial and any other type of support necessary. When it was disclosed that Natalie and the Maloufs did not want the child, Joey and the Smiths appealed to them to give the child to Joey on more than one occasion. Their pleas were disregarded. Joey sought legal advice, but did not institute legal proceedings until Natalie and her parents orchestrated a scheme whereby Natalie and her mother traveled *497 across the United States and the continent to avoid Joey until the child was born and adopted.
¶ 28. While they were moving from state to state and country to country, Joey like the father in Baby Girl S was "grasping every opportunity" to manifest and establish a relationship with his child. He filed a declaration of paternity, obtained a permanent injunction against Natalie and all others working with her to prohibit an adoption of the child, hired private investigators to locate Natalie and mailed the permanent injunction to every Vital Statistics office in Mississippi as well as other states. In sum, he did all he could have done under the circumstances. Unfortunately as the Court realized in Baby Girl S, the unwed father who attempts to establish a parental relationship can be thwarted by the unwed mother's interference. Such was the case here.
¶ 29. Though our state's common law and statutory law did not vest Joey with any protections regarding his right to receive notice of the adoption of his child or to object or veto said adoption, he was entitled to greater constitutional protections under the federal constitution and the dismissal of his suit was therefore improper. As noted in Humphrey v. Pannell, here we are presented with a situation in which the natural unwed father attempted in every way possible to establish a substantial relationship with the child. He was unable to do so because of the mother and her parents.
¶ 30. As the United States Supreme Court has established, Joey had a constitutional right to be notified of or to withhold his consent to the adoption of his child in light of his substantial and prompt attempts to establish a relationship with his child. Section 93-17-5, as a bar to the instant action, then cannot stand up to constitutional scrutiny. See also Nale v. Robertson, 871 S.W.2d 674 (Tenn.1994) (ruling that a Tennessee statute, which allowed adoption to occur before an unwed father's parental rights had been determined, was unconstitutional).
c.
¶ 31. Joey faced with the certainty of never gaining custody of his son has sued Natalie and her parents for intentional infliction of emotional distress and conspiracy. This state recognizes recovery for both negligently and intentionally inflicted emotional distress:
Where there is something about the defendant's conduct which evokes outrage or revulsion, done intentionally or even unintentionally yet the results being reasonably foreseeable Courts can in certain circumstances comfortably assess damages for mental and emotional stress, even though there has been no physical injury. In such instances, it is the nature of the act itself as opposed to the seriousness of the consequences which gives impetus to legal redress.
Leaf River Forest Prods., Inc. v. Ferguson, 662 So.2d 648, 658 (Miss.1995) (quoting Sears Roebuck & Co. v. Devers, 405 So.2d 898, 900 (Miss.1981)).
¶ 32. We have, on a number of occasions, considered the tort of intentional infliction of emotional distress. See Fuselier, Ott & McKee, P.A. v. Moeller, 507 So.2d 63 (Miss.1987) (firing of attorney, including changing of door locks to office not sufficient conduct); T.G. Blackwell Chevrolet Co. v. Eshee, 261 So.2d 481 (Miss.1972) (forging of car buyer's name on finance contract, sufficient conduct); Lyons v. Zale Jewelry Co., 246 Miss. 139, 150 So.2d 154 (1963) (abusive bill collection tactics amounted to sufficient conduct). The standard is whether the defendant's behavior is malicious, intentional, willful, wanton, grossly careless, indifferent or reckless. Leaf River Forest Prods., Inc. v. Ferguson, 662 So.2d 648, 659 (Miss.1995).
¶ 33. If there is outrageous conduct, no injury is required for recovery for intentional infliction of emotional distress or mental anguish. Id. at 658. One who claims emotional distress need only show that the emotional trauma claimed was a reasonably foreseeable consequence of the negligent or intentional act of another. First National Bank v. Langley, 314 So.2d 324 (Miss.1975) If the conduct is not malicious, intentional or *498 outrageous, there must be some sort of demonstrative harm, and said harm must have been reasonably foreseeable by the defendant. Strickland v. Rossini, 589 So.2d 1268, 1275 (Miss.1991).
¶ 34. The first aspect we must consider is what type of conduct occurred between Joey and Natalie and the Maloufs. Natalie argues she was entitled to put the child up for adoption, just like she would have been entitled to have an abortion had she been so inclined. Thus it is her position that she cannot be held liable for infringing upon Joey's rights when in fact she was only exercising her own right to place the child for adoption.
¶ 35. Natalie is correct insofar as she acknowledges that this Court is faced with two individuals' diametrically opposed legal rights her right to place the child for adoption and Joey's constitutional right to establish and maintain a relationship with his child. However her reliance on her constitutionally protected right to an abortion is of no moment since she was not hiding in order to effectuate an abortion. In other words, had Natalie been seeking an abortion there would have been little Joey could have done to prohibit her or to assert an interest that would have outweighed her right to abort the child. See Doe v. Smith, 486 U.S. 1308, 108 S.Ct. 2136, 100 L.Ed.2d 909 (1988) (denying an application for an injunction, seeking to enjoin a mother from aborting the child on grounds that the mother's interests in aborting the child outweighed the father's interests notwithstanding Planned Parenthood of Central Missouri v. Danforth, 428 U.S. 52, 96 S.Ct. 2831, 49 L.Ed.2d 788 (1976)). This is not an abortion case however. Once Natalie decided to carry the child full-term and place the child for adoption, Joey's constitutionally protected rights became viable.
¶ 36. Hence, the pivotal question here is whether Natalie and her parents owe damages to Joey for interfering with his right to attempt to gain custody of the child by exercising her own right to terminate her relationship with the child. Stated otherwise, the issue is whether Joey has a viable claim for intentional infliction of emotional distress, thereby rendering the circuit court judge's dismissal of his claim improper. Taking the well-pled allegations in the complaint as true, we conclude that he does.
¶ 37. It is irrefutable that appellees' behavior was intentional and that the foreseeable result of their actions was that the child would be adopted by strangers, thereby depriving Joey of an opportunity to veto the adoption and vie for custody. It is also axiomatic that any father especially a father who has gone that "extra mile" to gain custody of his child would suffer severe emotional distress due to the child he wanted being secretly placed for adoption. Thus, this Court concludes that Joey has presented a viable claim for intentional infliction of emotional distress. See Kessel v. Leavitt, 1998 WL 407096, ___ S.E.2d ___ (W.Va.1998) (affirming a verdict for damages in similar circumstances).
III.
¶ 38. Joey also sued Natalie and the Maloufs for effectuating a conspiracy to prevent him from establishing a relationship with his child. A conspiracy is "a combination of persons for the purpose of accomplishing an unlawful purpose or a lawful purpose unlawfully." Shaw v. Burchfield, 481 So.2d 247, 255 (Miss.1985). Civil conspiracy, which results in damage, may give rise to a right of recovery. Id. (citing Bailey v. Richards, 236 Miss. 523, 537-38, 111 So.2d 402, 407-08 (1959)).
¶ 39. The instant claim is that the defendants conspired to unlawfully violate the outstanding injunction and to deprive Joey of his lawful rights as natural parent of the child. These allegations are sufficient to pass Rule 12(b)(6) muster, and Joey should have been afforded the opportunity to present the merits of this claim.
IV.
¶ 40. We turn now to the propriety of the suit initiated by the Smiths, Joey's parents, against Natalie and her parents, the Maloufs. In the circuit court proceedings, Natalie and the Maloufs argued that as grandparents the Smiths had no legal standing to assert rights involving a grandchild. *499 The circuit court agreed with this contention and therefore ruled that the Smiths could not maintain an action for unlawful conspiracy to violate the chancery court injunction, prohibiting Natalie and anyone else working with her in going forward with the adoption.
¶ 41. The Smiths presently argue that they did, in fact have standing to assert a claim against Natalie and the Maloufs. In particular, they assert even though they were not parties to the chancery injunction and their own parental rights were not violated they have standing because they were damaged by the Maloufs' unlawful conspiracy which deprived their son of his parental rights and which resulted in the illegal adoption of their only grandchild. They further posit that they suffered "mental and emotional distress" and that they have "expended a great deal of resources" because of Natalie and her parents' conduct. In short, they contend these damages provided them with a colorable interest in the subject matter of this litigation and the circuit court's finding of no standing was clearly erroneous.
¶ 42. The Maloufs respond that the Smiths are not parents, nor were they parties to the chancery court injunction. The Smiths therefore cannot complain that the injunction was violated. Natalie likewise counters that only she and Joey were parties to the injunction, thereby making it impossible for the Smiths to sue her or her parents (who were not parties to the injunction).
¶ 43. We conclude that in order to prevail on these claims it must be established that the plaintiffs had some legal interest at stake. We find no such legal interest on the part of the Smiths. We therefore affirm so much of the judgment as dismisses their claim for failure to state a cause of action upon which relief could be granted.
V.
¶ 44. Finally, it is asserted that Joey's only remedy is to institute contempt proceedings in the chancery court. We reject that contention. Conduct may be at once tortious and violative of a court order. The victim is not thereby deprived of a tort remedy simply because the conduct complained of also violated a court order. See Mitchell v. Stevenson, 677 N.E.2d 551, 563 (Ind.Ct.App.1997) (holding that defendant's actions constituted contempt and evidence supported finding of intentional infliction of emotional distress). It is also asserted that to hold Natalie liable violates her constitutional right to travel. We also reject that claim. Parties may exercise constitutional rights in a manner which unlawfully damages others. When they do so, they can be held accountable. See Kathleen K. v. Robert B., 150 Cal.App.3d 992, 198 Cal.Rptr. 273 (Cal. Ct.App.1984) (constitutional right to privacy did not protect respondent from a suit for damages based upon severe injury to the appellant's body resulting from the contraction of genital herpes after respondent misrepresented that he was disease-free); see also Doe v. Roe, 218 Cal.App.3d 1538, 267 Cal.Rptr. 564 (Cal.Ct.App.1990) (holding same).
¶ 45. For the foregoing reasons, the judgment of the circuit court is hereby reversed, except as herein provided, and this matter is remanded to that court for further proceedings.
¶ 46. REVERSED AND REMANDED.
PRATHER, C.J., SULLIVAN, P.J., and McRAE and JAMES L. ROBERTS, Jr., JJ., concur.
PITTMAN, P.J., concurs with separate written opinion joined by McRAE and JAMES L. ROBERTS, Jr., JJ.
SMITH, J., concurs in part and dissents in part with separate written opinion joined by MILLS, J.
MILLS, J., concurs in part and dissents in part with separate written opinion joined by SMITH, J.
WALLER, J., not participating.
PITTMAN, Presiding Justice, specially concurring:
¶ 47. I write separately to emphasize that this is a suit for the tort claims of intentional infliction of emotional distress and conspiracy to deprive Mr. Smith of his parental rights against Ms. Malouf and her parents. This is *500 not an abortion case. I concur with Justice Banks' assessment that under precedents of the United States Supreme Court, Mississippi Code Ann. § 93-17-5 does not meet the test of the United States Constitution. Stanley v. Illinois, 405 U.S. 645, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972), Lehr v. Robertson, 463 U.S. 248, 103 S.Ct. 2985, 77 L.Ed.2d 614 (1983), Caban v. Mohammed, 441 U.S. 380, 99 S.Ct. 1760, 60 L.Ed.2d 297 (1979), Quilloin v. Walcott, 434 U.S. 246, 98 S.Ct. 549, 54 L.Ed.2d 511 (1978).
¶ 48. The legislature might consider revisiting this unconstitutional statute and allowing the biological father's rights (in regard to a child born out of wedlock) to be born at the precise moment of the birth of the child. The father would have no say during the pregnancy but his interest can be born literally out of the child's birth.
¶ 49. The interest of the biological father must be demonstrated and he would be subject to all the requirements of establishing that he can be a good father, but he should not be prohibited by state statutes from having a voice in the child's well-being and indeed cannot be denied his interest without notice according to rulings of the United States Supreme Court before cited.
¶ 50. If parties conspire to deny the Father his constitutionally protected interest in fatherhood, after he has made known his desire of custody or his desire to be considered, such act or acts rise to the level of tort. To hold otherwise in this case leaves Smith with constitutional rights that were wronged, but no remedy. The remedy we impose pales when compared with Smith's loss, but it is the only remedy available to Smith or this Court.
¶ 51. To deny Smith the opportunity of fatherhood after birth because it may cause a wrongful abortion is to do wrong to prohibit wrong.
¶ 52. The United States Supreme Court in Stanley v. Illinois, 405 U.S. 645, 649, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972) determined that a biological father, under the due process clause of the United States Constitution, was:
entitled to a hearing on his fitness as a parent before his children were taken from him and that, by denying him a hearing and extending it to all other parents whose custody of their children is challenged, the State denied Stanley [unwed biological father] the equal protection of the laws guaranteed by the Fourteenth Amendment.
The United States Supreme Court found it repugnant that under the Illinois law, "Stanley [unwed biological father] [was] treated not as a parent but as a stranger to his children...." Id. at 648, 92 S.Ct. 1208.
¶ 53. Similarly, under Mississippi's statute regarding parental consent to adoption, Miss. Code Ann. § 93-17-5 (1994) states in relevant part:
In the case of a child born out of wedlock, the father shall not be deemed to be a parent for the purpose of this chapter, and no reference shall be made to the illegitimacy of such child.
Under Mississippi's statute, the unwed biological father is treated as a legal stranger to his child. That, under Stanley v. Illinois, is unconstitutional.
¶ 54. In Lehr v. Robertson, 463 U.S. 248, 262, 103 S.Ct. 2985, 77 L.Ed.2d 614 (1983), the United States Supreme Court, while finding in favor of granting the adoption to the husband of the biological mother over the objection of the biological father, did recognize the significance of the biological connection between the child and the biological father.
The significance of the biological connection is that it offers the natural father an opportunity that no other male possesses to develop a relationship with his offspring. If he grasps that opportunity and accepts some measure of responsibility for the child's future, he may enjoy the blessings of the parent-child relationship and make uniquely valuable contributions to the child's development. If he fails to do so, the Federal Constitution will not automatically compel a State to listen to his opinion of where the child's best interests lie.
Id. at 262, 103 S.Ct. 2985.
¶ 55. In the present case, Joey [biological father] made every effort to be a part of the child's life, to the extent of repeatedly offering to adopt and raise the child himself. All *501 of his efforts were rebuffed by Natalie [biological mother] and her parents who insisted on forever severing Joey's child from him. This, under Lehr v. Robertson, is unconstitutional.
¶ 56. The United States Supreme Court in Quilloin v. Walcott, 434 U.S. 246, 255, 98 S.Ct. 549, 54 L.Ed.2d 511 (1978) again recognized "the relationship between parent and child is constitutionally protected." The State was required in that case to find nothing more "than that the adoption, and denial of legitimation, were in the `best interests of the child.'" Id. In the present case, Natalie is not trying to prevent Joey from establishing his parental rights because she wants custody of the child herself. Rather, Natalie wanted a family from Canada to adopt the child. It is a very difficult argument for Natalie and the Maloufs to make that removing the child to Canada, to be adopted by a family which is of no relation to the child, would be in the child's best interest, when the child's biological father (who has not been proven unfit) desperately desires to raise and nurture his child. For Natalie and her parents to succeed without notice to the biological father was unconstitutional under Quilloin v. Walcott.
¶ 57. Finally, in Caban v. Mohammed, 441 U.S. 380, 382, 99 S.Ct. 1760, 60 L.Ed.2d 297 (1979), the United States Supreme Court held a New York statute unconstitutional which allowed a man's children to be adopted by their biological mother and her husband without the biological father's consent on equal protection grounds. The Court reasoned that "[g]ender-based distinctions `must serve important governmental objectives and must be substantially related to achievement of those objectives' in order to withstand judicial scrutiny under the Equal Protection Clause." Id. at 388, 99 S.Ct. 1760 (citation omitted).
¶ 58. The Mississippi statute in the present case allows the biological mother to put a child up for adoption without obtaining the biological father's consent and in this instance without notice to the father. Where, as here, the biological father has made every effort to establish both a relationship with the child and his rights in relation to the child, to allow the mother to circumvent all of his efforts and agree to the adoption over his vehement objections is unconstitutional under the reasoning of the United States Supreme Court in Caban v. Mohammed.
¶ 59. The majority holding of this present case will bring Mississippi into the ranks of a growing number of jurisdictions which have, pursuant to the above mentioned United States Supreme Court decisions, recognized the importance of the natural father's relationship with his offspring. See In re Adoption of B.G.S, 556 So.2d 545, 558-59 (La. 1990); Appeal of H.R., 581 A.2d 1141, 1162-63(D.C.1990)(separate opinion of Ferren, Assoc. J.); In re Petition of Kirchner, 164 Ill.2d 468, 208 Ill.Dec. 268, 649 N.E.2d 324 (Ill.1995).
¶ 60. It is surprising that some, who for fear of increasing the likelihood of abortions in the state, would trample the rights of biological fathers who are trying to love, care for, and provide for their children; and do so in the name of family values. No one wishes to see abortions increase, but cutting off rights of fathers to be fathers to their children is certainly not the proper means to that end. I concur with the majority opinion.
McRAE and JAMES L. ROBERTS, Jr., JJ., join this opinion.
SMITH, Justice, concurring in part and dissenting in part:
¶ 61. I agree with the majority that Joe W. Smith and Clovis Smith have no legal standing to assert rights regarding this child. Their intentions and actions were indications of care and love towards their son and his child. Unfortunately, the law affords them no remedy.
¶ 62. However, the majority's far reaching decision allowing Joe Jr. to proceed in his tort claims of intentional infliction of emotional distress and conspiracy to deprive him of his parental rights against Natalie Malouf and her parents, Alex J. Malouf, Jr. and Patricia Malouf will have an extremely significant impact upon a woman's decision whether to place a child for adoption.
*502 ¶ 63. The majority by recognizing such a tenuous tort of emotional distress and conspiracy in these type situations, indirectly encourages women to flock to abortion clinics and terminate their pregnancies in order to escape civil penalties possibly attached to making a decision to carry the child to full term.
¶ 64. It is hard to fathom that a woman wanting to exercise her right to terminate her pregnancy could travel to an abortion clinic unfettered by the State, her lover or for that matter even her husband, but once she decides to continue the pregnancy, she is no longer free to travel and go on about her business. It is because of this ironical injustice, that I respectfully dissent.
¶ 65. The United States Supreme Court for decades through the Due Process Clause of the Fourteenth Amendment has recognized the right of individuals to be free from State interference in private decision making involving the family, such as marriage, procreation, contraception, family relationships, child rearing, and education. Loving v. Virginia, 388 U.S. 1, 87 S.Ct. 1817, 18 L.Ed.2d 1010 (1967) (interracial marriages); Skinner v. Oklahoma ex rel. Williamson, 316 U.S. 535, 62 S.Ct. 1110, 86 L.Ed. 1655 (1942) (procreation); Pierce v. Society of Sisters, 268 U.S. 510, 45 S.Ct. 571, 69 L.Ed. 1070 (1925) (the right to educate one's child as one chooses); Meyer v. Nebraska, 262 U.S. 390, 43 S.Ct. 625, 67 L.Ed. 1042 (1923) (the right of private schools to teach as they see fit); Griswold v. Connecticut, 381 U.S. 479, 85 S.Ct. 1678, 14 L.Ed.2d 510 (1965) (use of contraception between married couples); Eisenstadt v. Baird, 405 U.S. 438, 92 S.Ct. 1029, 31 L.Ed.2d 349 (1972) (use of contraception between unmarried couples). This very general liberty was later extended to encompass the right of a woman to control her own destiny according the dictates of her conscience in regard to child bearing. Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973) (right to terminate a pregnancy); Planned Parenthood of Southeastern Pennsylvania v. Casey, 505 U.S. 833, 112 S.Ct. 2791, 120 L.Ed.2d 674 (1992) (modified the right to terminate a pregnancy).
¶ 66. In Roe v. Wade, 410 U.S. 113, 93 S.Ct. 705, 35 L.Ed.2d 147 (1973), the United States Supreme Court held that a woman's decision to abort a fetus is a "fundamental right." Implicit in such a holding is the converse i.e., that if a woman made a decision not to abort a fetus, such decision deserves equal treatment under the law, as an equally fundamental right. In Planned Parenthood of Southeastern Pennsylvania v. Casey, the Court modified its holding in Roe and concluded that reproductive rights were not "fundamental," and that the State had an interest in the life of the fetus and that a State may regulate abortion procedures in ways rationally related to that legitimate state interest, so long as the State regulation did not pose an "undue burden." Nonetheless, Casey still "retained" and "reaffirmed" the "essential holding" of Roe. Casey, 505 U.S. at 846, 112 S.Ct. 2791.
¶ 67. Because a woman has a "liberty" interest in making reproductive decisions, a substantive component of that liberty is to allow the woman to make these decisions without State interference or State enforcement of family and friend interference. See Bray v. Alexandria Women's Health Clinic, 506 U.S. 263, 113 S.Ct. 753, 122 L.Ed.2d 34 (1993) (reproductive decisions not only warrant State non-interference, but also protection from interference by protestors).
¶ 68. "It is a promise of the Constitution that there is a realm of personal liberty which the government may not enter. We have vindicated this principle before." Casey 505 U.S. at 847, 112 S.Ct. 2791. "Neither the Bill of Rights nor the specific practices of States at the time of the adoption of the Fourteenth Amendment marks the out limits of the substantive sphere of liberty which the Fourteenth Amendment protects." Casey 505 U.S. at 848, 112 S.Ct. 2791. Our cases recognize "the right of the individual, married or single, to be free from unwarranted governmental intrusion into matters so fundamentally affecting a person as the decision whether to bear or beget a child." Eisenstadt, 405 U.S. at 453, 92 S.Ct. 1029. "These matters, involving the most intimate and personal choices a person may make in a lifetime, choices central to personal dignity and *503 autonomy, are central to the liberty protected by the Fourteenth Amendment. At the heart of liberty is the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life. Beliefs about these matters could not define attributes of personhood were they formed under compulsion of the State." Casey, 505 U.S. at 851, 112 S.Ct. 2791.
¶ 69. The Casey Court recognized that there were two ways to perceive Roe. One was as an exemplar of Griswold type liberty. The other was a rule of personal autonomy and bodily integrity. The present case involves both of these aspects in that Joey has attempted to use the law to hold Natalie hostage to Greenwood, Mississippi, and he has also sought to use the law to divest Natalie of the exercise of her full reproductive rights. Because the Constitution recognizes and promotes a woman's decision to carry her child to full term, this right would indeed be a hollow right if she were not also allowed to decide the fate of her child once she gave birth.
¶ 70. Having given a general overview of reproductive rights, this case also deals with the question of whether a nonmarital biological father (a putative father) has any rights when he has sired a child out of wedlock. A simple answer to this question would be yes, as it has been addressed by the United States Supreme Court in many different contexts. However, the primary question in the case sub judice is whether those rights of a putative father would override the rights of a woman to control her reproductive rights. Having already discussed the concept of reproductive rights, we now look at what the United States Supreme Court has said in regards to the rights of nonmarital biological fathers, in order to weigh and balance the two interests.
¶ 71. In Stanley v. Illinois, 405 U.S. 645, 655, 92 S.Ct. 1208, 31 L.Ed.2d 551 (1972), the United States Supreme Court held unconstitutional an Illinois statute which conclusively presumed every father of a child born out of wedlock to be an unfit person to have custody of his children. Stanley had lived with the children all their lives and had lived with their mother for 18 years. There was nothing in the record to indicate that Stanley was a neglectful father. The Court held that the Due Process Clause was violated by the automatic destruction of the custodial relationship without giving the father any opportunity to present evidence regarding his fitness as a parent.
¶ 72. In Quilloin v. Walcott, 434 U.S. 246, 98 S.Ct. 549, 54 L.Ed.2d 511 (1978), the United States Supreme Court upheld the constitutionality of a Georgia statute requiring putative fathers to legitimate the child in order to be able to exercise veto power over the child's adoption. There, the natural father, Quilloin, never legitimated the child, and sought visitation rights and filed a petition for legitimation only after the mother had remarried and her new husband had filed an adoption petition.
¶ 73. In Caban v. Mohammed, 441 U.S. 380, 99 S.Ct. 1760, 60 L.Ed.2d 297 (1979), the United States Supreme Court considered a New York statute which gave an unwed mother the authority to block an adoption simply by withholding her consent, but which only gave an unwed father the right to block the adoption by showing that the best interests of the child would "not permit the child's adoption." Caban involved the claims of two natural parents who had maintained joint custody of their children from the time of their birth until they were respectively two and four years old. Relying on both the Equal Protection Clause and the Due Process Clause, the father challenged the validity of an order authorizing the mother's new husband to adopt the children. Applying intermediate scrutiny, the United States Supreme Court found that where the putative father had established a "substantial relationship" with the child, the Equal Protection Clause would prohibit the double standard. While the Court did not really address the Due Process claim, it did comment that where an unwed father demonstrates a full commitment to the responsibilities of parenthood by "com[ing] forward to participate in the rearing of his child," his interest in personal contact with the child acquires substantial protection. Caban, 441 U.S. at 392, 99 S.Ct. 1760.
*504 ¶ 74. More interesting is the dissent in Caban, for it addresses some of the issues present in the case sub judice. But before we display Justice Stevens' remarks, it must be borne in mind that the mother in Caban was not asserting her reproductive rights as the children involved were two and four years old and had already established a relationship with their natural father.
[Caban] concerns the validity of rules affecting the status of the thousands of children who are born out of wedlock every day. All of these children have an interest in acquiring the status of legitimacy; a great many of them have an interest in being adopted by parents who can give them opportunities that would otherwise be denied; for some [of] the basic necessities of life are at stake....
Nevertheless, it is also true that [the statute] gives rights to natural mothers that it withholds from natural fathers. Because it draws this gender-based distinction between two classes of citizens who have an equal right to fair and impartial treatment by their government, it is necessary to determine whether there are differences between the members of the two classes that provide a justification for treating them differently.... But it also requires analysis that goes beyond a merely reflexive rejection of gender-based distinctions.
Men and women are different, and the difference is relevant to the question whether the mother may be given the exclusive right to consent to the adoption of a child born out of wedlock. Because most adoptions involve newborn infants or very young children, it is appropriate at the outset to focus on the significance of the difference in such cases.
Both parents are equally responsible for the conception of the child out of wedlock. But from that point on through pregnancy and infancy, the differences between the male and the female have an important impact on the child's destiny. Only the mother carries the child; it is she who has the constitutional right to decide whether to bear it or not. In many cases, only the mother knows who sired the child, and it will often be within her power to withhold that fact, and even the fact of her pregnancy, from that person. If during pregnancy the mother should marry a different partner, the child will be legitimate when born, and the natural father may never even know that his "rights" have been affected. On the other hand, only if the natural mother agrees to marry the natural father during that period can the latter's actions have a positive impact on the status of the child; if he instead should marry a different partner during that time, the only effect on the child is negative, for the likelihood of legitimacy will be lessened.
These differences continue at birth and immediately thereafter. During that period, the mother and child are together; the mother's identity is known with certainty. The father, on the other hand, may or may not be present; his identity may be unknown to the world and may even be uncertain to the mother. These natural differences between unmarried fathers and mothers make it probable that the mother, and not the father or both parents, will have custody of the newborn infant.
In short, it is virtually inevitable that from conception through infancy the mother will constantly be faced with decisions about how best to care for the child, whereas it is much less certain that the father will be confronted with comparable problems. There no doubt are cases in which the relationship of the parties at birth makes it appropriate for the State to give the father a voice of some sort in the adoption decision. But as a matter of equal protection analysis, it is perfectly obvious that at the time and immediately after a child is born out of wedlock, differences between men and women justify some differential treatment of the mother and father in the adoption process.
Most particularly, these differences justify a rule that gives the mother of the newborn infant the exclusive right to consent to its adoption. Such a rule gives the mother, in whose sole charge the infant is often placed anyway, the maximum flexibility in deciding how best to care for the child.... Finally, it facilitates the interests of the adoptive parents, the child, and *505 the public at large by streamlining the often traumatic adoption process and allowing the prompt, complete, reliable integration of the child into a satisfactory new home at as young an age as is feasible. Put most simply, it permits the maximum participation of interested natural parents without so burdening the adoption process that its attractiveness to potential adoptive parents is destroyed.
This conclusion is borne out by considering the alternative rule proposed by appellant. If the State were to require the consent of both parents, or some kind of hearing to explain why either's consent is unnecessary or unobtainable, it would unquestionably complicate and delay the adoption process. Most importantly, such a rule would remove the mother's freedom of choice in her own and the child's behalf without also relieving her of the unshakable responsibility for the care of the child. Furthermore, questions relating to the adequacy of notice to absent fathers could invade the mother's privacy, cause the adopting parents to doubt the reliability of the new relationship, and add to the expense and time required to conclude what is now usually a simple and certain process. While it might not be irrational for a State to conclude that these costs should be incurred to protect the interest of natural fathers, it is nevertheless plain that those costs, which are largely the result of differences between the mother and the father, establish an imposing justification for some differential treatment of the two sexes in this type of situation.
With this much the Court does not disagree; it confines its holding to cases such as the one at hand involving the adoption of an older child against the wishes of a natural father who previously has participated in the rearing of the child and who admits paternity. Ante, at 392-393, 99 S.Ct. 1760. The Court does conclude, however, that the gender basis for the classification drawn by [the statute] makes differential treatment so suspect that the State has the burden of showing not only that the rule is generally justified but also that the justification holds equally true for all persons disadvantaged by the rule. In its view, since the justification is not as strong for some indeterminately small part of the disadvantaged class as it is for the class as a whole, see ante, at 393, 99 S.Ct. 1760, the rule is invalid under the Equal Protection Clause insofar as it applies to that sub-class. With this conclusion I disagree.
. . . . .
The mere fact that an otherwise valid general classification appears arbitrary in an isolated case is not a sufficient reason for invalidating the entire rule. Nor, indeed, is it a sufficient reason for concluding that the application of a valid rule in a hard case constitutes a violation of equal protection principles.
Caban, at 441 U.S. at 402 412, 99 S.Ct. 1760 (Stevens, J., dissenting) (footnotes omitted) (emphasis added). This passage is long, and it speaks volumes as to what the majority actually decided. The only reason that Caban was resolved in the manner in which it was, was due to the fact that there were older children involved, and children who arguably had some relationship with their father. Caban did not involve a newborn. Moreover, the dissent makes clear that this case could have turned out very differently had the mother been asserting her "freedom of choice" or her "privacy" rights. While Justice Stevens' view of the matter was not endorsed or adopted by the majority at that time, neither was it rejected; the majority just chose to answer the question at hand. Subsequently, three years later, the Supreme Court did adopt Justice Stevens' view. While Justice Stevens could have limited his opinion to the fact that he was unwilling to trash a statute because it may have been unconstitutional only as applied to a small subset, he took license to make some extremely important observations. In his dissent, Justice Stevens predicted that there would be clash between a woman asserting her reproductive rights in regard to a newborn and a putative father asserting his rights, and since that was not the question in Caban, the majority did not touch upon it. That very question is now haunting this Court, which it should answer with the greatest *506 of delicacy. Unfortunately, that has not occurred.
¶ 75. Shortly after Caban, in Lehr v. Robertson, 463 U.S. 248, 103 S.Ct. 2985, 77 L.Ed.2d 614 (1983), the United States Supreme Court upheld the adoption of a child where the putative father had not been notified since the State of New York had a registry in which putative fathers could enroll so as to guarantee notification to them should their illegitimate child be placed on the adoption block. Lehr attempted to block his child's adoption by the unwed mother's new husband. The child's mother married the new husband eight months after her birth, and the new husband sought to adopt the child when she was two years old. Lehr had neither offered to marry the mother, nor had he supported the child custodially, personally, or financially. The Court found that if the natural father fails to grasp the opportunity to develop a relationship with his child, the Constitution will not automatically compel a State to listen to his opinion of where the child's best interests lie. Lehr, 463 U.S. at 256-263, 103 S.Ct. 2985.
¶ 76. Finally, in Michael H. v. Gerald D., 491 U.S. 110, 109 S.Ct. 2333, 105 L.Ed.2d 91 (1989), the Court tackled a California statute which provided the child of a married woman cohabitating with her husband is presumed to be a child of the marriage, as long as the husband is not impotent or sterile. The statute provided that the presumption could not be rebutted by a putative father, but only by the husband or wife, and only within the first two years of the child's birth. Five justices found that the putative father, Michael H., was not deprived of any protected liberty interest, holding that a statute giving categorical preference to a husband over an adulterous lover is not unconstitutional.
¶ 77. From a general overview, a distinction can be drawn between "developed parentchild relationship" that was implicated in Stanley and Caban, and the "potential relationship" involved in Quilloin and Lehr. Lehr, 463 U.S. at 261, 103 S.Ct. 2985. At first, the most simplistic assessment of these cases would be "if and when one [a father] develops [a] relationship [with] his natural child, [then only] is [he] entitled to protection against arbitrary state action as a matter of due process." Lehr, 463 U.S. at 260, 103 S.Ct. 2985 (quoting Caban, 441 U.S. at 414, 99 S.Ct. 1760). However, factoring in Michael H., that understanding of the putative father's rights is debatable, as Michael H. did not receive any favored status even after maintaining a substantial relationship with his child, since the Court found his rights must succumb to the rights of the marital family.
¶ 78. In view of the United States Supreme Court cases of Stanley, Quilloin, Caban, Lehr, and Michael H., it would be uncertain whether Joey has any rights as a putative father, as the case at bar has a very different fact pattern in comparison to the putative fathers cases. First, not one of those cases dealt with the issue sub judice, where the natural mother is asserting her reproductive rights against the rights of the putative father. Second, Stanley and Caban, which in my view were correct, involved a situation where the father had already established a relationship. Here, since Joey cannot claim to have had a "substantial relationship" with his child, the holdings in those two cases are not applicable. Third, even though Lehr and Quilloin might appear applicable, as those appellants, like Joey, argued that they had the "potential" to hold a relationship with their child, Joey's claim is different in that he "intended" to have a substantial relationship with the child and desired to raise the child, and only missed out on his "opportunity" because of Natalie's actions, and not his own inactions. In that sense, the outcome of all of these putative fathers cases may be inapplicable to Joey's situation. However, Natalie refused to marry Joey and in spite of all his claims of good intention, there is not proof that Joey provided any support whatsoever which was one of the Lehr court's main concerns.
¶ 79. Nonetheless, it is indeed helpful to look for certain truths that run in those cases, which would be applicable in the present context, regardless of the fact differences. As a base concept, it can be said that "the mere existence of a biological link does not merit equivalent constitutional protection." Lehr, 463 U.S. at 261, 103 S.Ct. 2985.
*507 In fact, at the onset, the Court noted that it "disagree[d]" with appellant Lehr's assertion that Stanley and Caban "g[a]ve him an absolute right to notice and an opportunity to be heard before the child may be adopted." Lehr, 463 U.S. at 250, 103 S.Ct. 2985. Lehr made clear that there are no absolute rights for putative fathers, when it cited with approval Justice Stevens' dissent in Caban, which observed:
"Even if it be assumed that each married parent after divorce has some substantive due process right to maintain his or her parental relationship, ... it by no means follows that each unwed parent has any such right. Parental rights do not spring full-blown from the biological connection between parent and child. They require relationships more enduring." 441 U.S., at 397, 99 S.Ct. 1760....
Lehr, 463 U.S. at 260, 103 S.Ct. 2985. The Court touted the same mentality when Michael H. argued that Stanley and progeny established that "a liberty interest [wa]s created by biological fatherhood plus an established parental relationship." Michael H., 491 U.S. at 123, 109 S.Ct. 2333. The Court found that line of reasoning "distort[ed] the rationale of those cases." Michael H. at 123, 109 S.Ct. 2333. The Court concluded that the putative fathers cases all recognized a "historic respect indeed, sanctity would not be too strong a term traditionally accorded to the relationships that develop within the unitary family." Michael H., 491 U.S. at 123, 109 S.Ct. 2333. The court also concluded "that the Constitution protects the sanctity of the family precisely because the institution of the family is deeply rooted in this Nation's history and tradition." Michael H., 491 U.S. at 124, 109 S.Ct. 2333. Because Michael H. and his daughter Victoria D.'s quasi-family relationship was not one which had been treated as a "protected family unit" under our society's "historic practices" or on any "special protection" basis, it was constitutional to have a statute which gave a categorical preference to the marital family. Michael H., 491 U.S. at 124, 129, 109 S.Ct. 2333. Thus, the essence of Justice Scalia's opinion in Michael H. was that persons in the position of Michael H. have never been accorded historical protections, but since traditional family units have, the family's rights to maintain its integrity and to be free from assault would supersede the rights of a putative father claiming his interests. When "the child is born into an extant marital family, the natural father's unique opportunity conflicts with the similarly unique opportunity of the husband of the marriage; and it is not unconstitutional for the State to give categorical preference to the latter." Michael H., 491 U.S. at 129, 109 S.Ct. 2333.
¶ 80. At first glance, one might wonder if Michael H. applies sub judice, as Natalie was unmarried at the time of the child's birth, thus, not really having a "family unit" which could claim these protections afforded by our traditions and history. The concern of Michael H. that the family unit can be assailed by outsiders really is not present in this case. However, just the fact that there were competing interests in Michael H. proves it to be the most instructive for deliberations in this case.
¶ 81. In Michael H. v. Gerald D., the competing interests between a natural putative father and a marital father was the crux of the issue. The plurality observed that "to provide protection to an adulterous natural father is to deny protection to a marital father, and vice versa.... One of them will pay a price...." Michael H., 491 U.S. at 130, 109 S.Ct. 2333 (emphasis in original). Likewise, assuming arguendo that Joey had any liberty interests in this situation, then his interests are in competition with that of Natalie's interests to make her reproductive choices unhampered. To provide protection to Joey's alleged interests would be to deny Natalie the free exercise of her constitutionally protected options. In my view, under our state laws and the federal laws, it is Joey who must "pay the price" here, for we find that his interests in putative fatherhood are neither sufficiently realized nor protected, while it is well established that her liberty interests in reproductive choice are both recognized and vigilantly guarded.
¶ 82. Joey maintains that he should not be faulted for not being able to come within the purview of the cases that do give putative fathers certain rights if they had established *508 a substantial relationship with the child. Stanley, Caban, supra. Joey asserts that but for the fact that Natalie chose to have this baby out-of-state, and then chose to place the child for adoption in a foreign country, he was denied the opportunity to follow through on his intention to raise and support this child. Therefore, I pose the question whether Joey has gained an interest based on his mere "intentions" to raise his child, after all, his intentions may alter significantly in the future! First, the fact that a putative father maintained a substantial relationship with the child is of little consequence, as indicated by the Supreme Court's last pronouncement in Michael H. Second, in thoroughly reviewing the case law on putative fathers, not one of them stands for the proposition that a putative father has rights based on his "potential" or his "intentions" to rear the child. Stanley, Quilloin, Caban, Lehr, Michael H., supra. Lastly, as previously stated, the ultimate question before this Court is whether Joey's alleged rights would supersede Natalie's reproductive rights.
¶ 83. In exercise of her rights, the first question Natalie must answer for herself is whether or not to have the child. Under the current interpretation of the Constitution, either choice is protected. Roe, Casey, supra. Once that decision has been made, she must make other decisions which are the necessary corollary to her first decision. It is well established that "[w]ithout ... peripheral rights the specific rights would be less secure." Griswold, 381 U.S. at 482-83, 85 S.Ct. 1678.
¶ 84. For example, had Natalie decided to have an abortion, she would then have the right to decide which abortion doctor to visit, which women's clinic to use, and where and how to conduct herself both before and after the exercise of this choice. Roe, Casey, Bray, supra. Similarly, since Natalie decided not to have an abortion, she then had to decide from which obstetrician to seek medical care, in which hospital she wanted to deliver her child, and where and how she wanted to keep herself both pre- and postdelivery.[2]Roe, Casey, Bray, supra.
¶ 85. "[W]hile [these rights are] not expressly included in [the respective Amendment, their] existence is necessary in making the express guarantees fully meaningful." Griswold, 381 U.S. at 483, 85 S.Ct. 1678. There are "specific guarantees in the Bill of Rights [which] have penumbras, formed by emanations from those guarantees that help give them life and substance." Griswold, 381 U.S. at 484, 85 S.Ct. 1678.
¶ 86. Because the Constitution recognizes and promotes a woman's decision to carry her child to full term, this right would indeed be a hollow right if she were not also allowed to decide the fate of her child once she gave birth. "Her suffering is too intimate and personal for the State to insist, without more, upon its own vision of the woman's role, however dominant that vision has been in the course of our history and our culture." Casey at 852, 112 S.Ct. 2791.
¶ 87. Here, the record establishes that Natalie chose to carry the child to full term not only because of religious conviction, but because she wished for her child to be reared in a two parent home, far and away from her own backyard, and to avoid any confusion that a child might experience living in the same small community as the mother who chose to give the child away. "At the heart of liberty is the right to define one's own concept of existence....." Casey 505 U.S. at 851, 112 S.Ct. 2791. It is clear that the reproductive choice she made was due in part to her belief that she could put the child up for adoption to a stable two-parent family, out of sight out of mind from her own domain, and no longer be subject to any financial *509 responsibilities or ties with her child.[3] Because Natalie wished for this outcome for her baby and herself, she "chose" to carry it to full term. "The destiny of the woman must be shaped to a large extent on her own conception of her spiritual imperative and her place in society." Casey 505 U.S. at 852, 112 S.Ct. 2791. Therefore, any limitations on the legal choices she makes for herself or her child, in-utero or post-delivery, is a limitation on her initial reproductive right of choice. There are "specific guarantees in the Bill of Rights [which] have penumbras, formed by emanations from those guarantees that help give them life and substance." Griswold, 381 U.S. at 484, 85 S.Ct. 1678. Thus, Natalie not only has a Fourteenth Amendment Due Process liberty interest in carrying her child to full term, she has a correlating penumbralike liberty interest in seeking to insure the destiny of her child, once born, as it relates to her, even to the detriment of that child's natural (putative) father.
¶ 88. What would the freedom of speech mean if persons were told that they could print anything they wanted, but the government would be responsible for the delivery, dissemination, and placing of the products. What would the freedom of association mean if persons were told that they could congregate with whomever they wanted, but once they left the congregation, they must associate with others they did not want to? Similarly, what would Natalie's reproductive rights mean if she were allowed all the freedom she wanted during pregnancy, but the moment her child was brought into this world, she would either have to turn it over to Joey or have to face the prospect of associating with it? Natalie's right to place her unborn child for adoption, to the exclusion of the child's natural father, is but a natural extension of her reproductive rights. That right has always been there, this dissenting opinion merely fleshes it out.
¶ 89. All this to say, that men who are as haphazard and careless as this, do not have substantive due process rights in regard to offspring of their seed. These type of "putative fathers" rights claims are reeking havoc for adoptions. While one might sympathize with the father and his current desire to help raise this child, it must be remembered that there are no guarantees that his interest in the child will continue. Months or even years from now, if the father's conduct does not measure up, it will be the mother who will be left holding the baby and picking up the pieces. Today, many men are reaping a supposed benefit of premarital and extramarital sex, without any of the consequences. Men are not only creating these illegitimate children, but are then demanding notice about said child's adoption in the process of making less than half-hearted attempts to support their issue, and essentially holding the lives of child's mother in abeyance for months and sometimes years to come, all under the pretense of procedural and substantive due process. Consistent with Stanley and Caban, this Court should hold that when men who father children out of wedlock incur substantive legal obligations, either voluntarily or through court order, then and only then, do certain rights attach. "[T]he Constitution protects the sanctity of the family precisely because the institution of the family is deeply rooted in this Nation's history and tradition." Michael H., 491 U.S. at 124, 109 S.Ct. 2333. While our society has reached the point where we can no longer look to the law to engender responsible behavior, we can interpret the law to preserve the remaining vestiges of a concept called "family."
¶ 90. A sub-issue has arisen by our consideration of this issue, and should be answered in order not to appear inconsistent to our citizenry. The question is why should the mother of the child have such greater rights than the father. In other words, why does she get to pick and choose whether or not she wants to hold the putative father responsible, but the putative father on the other hand has no such correlating right? While this question looks as if it might pose some *510 sort of impermissible gender distinction, in actuality, it does not. Again, some one will have to "pay a price." As has already been thoroughly discussed in this opinion, by insisting on the putative father's rights to be equal to that of the mother, we cast a dark shadow on her ability to make an unfettered reproductive choice. However, by giving the initial right of self-determination for the baby to the mother, there is no similar weight placed on the father. If the mother of the child holds the putative father legally responsible for his offspring, then he is only paying the just consequences of his conduct. However, if the mother of the child places the child for adoption, then the putative father will either feel that he lucked out or feel a sense of loss, depending on his mind set.
¶ 91. When the outcome is like the one at bar, the putative father seems to emotionally tug at this Court's heart by asking us to sympathize with his sense of loss with his feelings of knowing that he has a child out there somewhere that he can't even know. Again, the putative father will have two sets of emotions depending on the reproductive choice the mother of the child has made. Either he can feel sadness at the prospect of his lover's decision to abort the child, or he can unfortunately feel joy and relief knowing that he has narrowly managed to escape his responsibilities. Either he can feel sadness over the mother's decision to have the child and place it for adoption, or joy over her decision to place the child for adoption and again allow him the privilege of foregoing his legal responsibilities. Whatever choice she makes, the putative father will be affected with some sort of emotion; either he will know he has a dead baby or he will know he has a live baby. The law does not require this Court to curb the rights of women just because the man may experience one of these emotions in regard to the life status of the baby. Casey, 505 U.S. at 898, 112 S.Ct. 2791. (holding that husband's notification or consent not required for an abortion).
¶ 92. Against this backdrop, we must now address the propriety of the lower court's decision to grant a Rule 12(b)(6) motion on both the conspiracy claim and the intentional infliction of emotional distress claim. The court found that Joey had no legally cognizable right under Mississippi law to notice of his child's adoption, so in essence, he had no paternal rights that were capable of violation, and further found that Mr. and Mrs. Smith lacked standing to assert a conspiracy claim against the Maloufs. The court also found that the Maloufs had merely been enjoying their constitutionally protected rights to travel freely throughout the United States and the world and to be left alone, therefore, the defendants could not have entered a conspiracy by exercising that which they had a legal right to do. The emotional distress claim was also dismissed on the ground that it was not wrong to exercise a constitutionally protected right, regardless of the consequence to others.
¶ 93. The facts are undisputed. Natalie became pregnant by Joey. Natalie chose to have the baby and desired to give it up for adoption as a result of that choice. The Smiths brought an injunction against her in the Chancery Court of LeFlore County to stop her from putting the baby up for adoption to anyone but Joey. She left LeFlore County and traveled to various parts of the United States and Europe. The Maloufs assisted her in her travels. The Smiths expended great effort to locate her. She had the baby in Georgia and placed the child for adoption in California to a Canadian couple. Hence, this action was brought for emotional distress and conspiracy in the Circuit Court of LeFlore County.
¶ 94. A civil conspiracy is a combination of two or more persons to accomplish an unlawful purpose or to accomplish a lawful purpose by unlawful means. Shaw v. Burchfield, 481 So.2d 247, 255 (Miss.1985). In this case, adoption of an illegitimate child is a lawful end. Traveling in the United States is a lawful purpose. Traveling in Europe is lawful also. The Maloufs (who were not even a part of the injunction) giving money to their own daughter Natalie in order to help support and maintain her is likewise as lawful as any other parent giving money to a child to vacation and travel. Surely the plaintiffs are not asserting that just because of Natalie's reproductive state, she must forego her constitutional rights and no longer receive travel *511 allowances from her parents; after all, if one were free to vacation in Europe when one was not carrying a child, should that freedom be dissolved because one was pregnant? California Fed. Sav. & Loan Ass'n v. Guerra, 479 U.S. 272, 280, 284, 107 S.Ct. 683, 93 L.Ed.2d 613 (1987) (it is wrong to discriminate against women on the basis of pregnancy). Thus, not only was the end not an unlawful purpose, neither was the method for achieving it.
¶ 95. Now, it is obvious that Natalie's travel was in an effort to maintain privacy avoiding Joey and to have the baby placed for adoption with a family. Again, even that is not an unlawful purpose in that she was exercising her own privacy rights, reproductive rights, right to associate (or not associate), and right to travel. The record does not establish that Natalie's actions were all a part of a grand scheme to hurt Joey. She simply did what she needed to do for her own life, and in her opinion, the baby's best interest. Desiring a certain outcome and tranquility for one's life is not an unlawful end, and traveling long distances so as to avoid others and have that peace is not an unlawful means. If anything, Natalie could just as easily counterclaimed on a conspiracy against Joey and the Smith's for doggedly pursuing, harassing, and infringing upon her privacy rights. She did not do so. Why? Possibly, pursuit of money was not her concern, but rather, only her own peace of mind, desire to be left alone, and to provide a proper two parent loving home for her child somewhere well away from Greenwood, Mississippi. In this regard, the Smiths claim for conspiracy is deficient, as a matter of law.
¶ 96. I respectfully dissent.
MILLS, J., joins this opinion.
MILLS, Justice, concurring in part and dissenting in part:
¶ 97. I join with Justice Smith in his concurrence in part and dissent in part and write separately only to express my views in this matter.
¶ 98. Few cases before this Court have engendered such strong feelings as the matters presently before us. While none of the parties to this proceeding are blameless, each should also be commended to a degree. First, the daughter, Natalie Malouf, and her parents, should be commended for opting to birth the child and placing it for adoption. Ironically, the majority opinion will encourage women to seek abortions rather than birth in order to avoid a potential hassle with putative fathers.
¶ 99. The efforts of Joe Jr. to have a voice in the rearing of the child are also commendable. However, the briar thicket he is in was created by his own actions. I find it hard to countenance his claims of intentional infliction of emotional distress when he was an acting participant in the questionable behavior precipitating the pregnancy and resulting litigation. I would not allow these tort claims to continue. The broad language in the majority opinion expanding claims for intentional infliction of emotional distress absent other damages is unnecessary to the development of tort law in this state.
¶ 100. Finally, the true heartbreak and distress suffered by Joe W. Smith and Clovis Smith are apparent. It is tragic that this undoubtedly caring and loving family must live with the cold impact of the law in this case. Though their intentions are undoubtedly without fault, they simply have no rights under the law to pursue this matter. The law is incapable of fashioning a remedy for every perceived wrong in society.
¶ 101. I join the majority opinion only to the extent that it holds that Joe W. Smith and Clovis Smith have no legal standing to assert any rights in this cause. I would affirm the lower court on all other matters.
SMITH, J., joins this opinion.
NOTES
[1] The Mississippi Legislature amended § 93-17-5 during the 1998 legislative session. Subsection (3) was rewritten to allow the father to have a right to object to an adoption if he has demonstrated a full commitment to the responsibilities of parenthood within 30 days after the birth of the child. The amendment was effective beginning July 1, 1998 and is effective until July 1999. From and after July 1999, subsection 3 of 93-17-5 reverts to the language existing before the amendment.
[2] "The right of freedom of speech and press includes not only the right to utter or to print, but the right to distribute, the right to receive, the right to read, ... and freedom of inquiry, freedom of thought, and freedom to teach ... indeed the freedom of the entire university community." Griswold, 381 U.S. at 482, 85 S.Ct. 1678 (citations omitted). Similarly, freedom of association is more than just the right to peacefully attend a meeting; a penumbra of this right would entail the right of a group not to disclose one's membership list. Griswold, 381 U.S. at 483, 85 S.Ct. 1678. "Without those peripheral rights the specific rights would be less secure." Griswold, 381 U.S. at 482-83, 85 S.Ct. 1678.
[3] The Smiths never offered to adopt the child, which would have left Natalie without any legal responsibilities or ties. They only offered to help support Joey's decision and aid financially whenever possible. Obviously, Joey cannot adopt his own child, thus, if he raised the child, he would have had legal recourse to force financial support from Natalie, and have had the capacity to forever embroil her in a situation from which she wanted to separate herself. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1669453/ | 323 So.2d 547 (1975)
Joe H. TALLY, Superintendent of Education of Smith County
v.
BOARD OF SUPERVISORS OF SMITH COUNTY.
No. 48232.
Supreme Court of Mississippi.
November 10, 1975.
Rehearing Denied December 8, 1975.
*548 Larry E. Clark, Taylorsville, for appellant.
L.D. Pittman, Raleigh, for appellee.
Before RODGERS, SMITH and WALKER, JJ.
WALKER, Justice.
This is an appeal from the Circuit Court of Smith County, Mississippi, which consolidated for hearing two cases appealed from the Board of Supervisors involving the leasing of sixteenth section lands.
The circuit court affirmed the action of the Board of Supervisors in granting a 25-year lease of 96 acres of sixteenth section lands to one Joe D. Stringer, and from this judgment of the circuit court, Joe H. Tally has appealed.
In the second case, the circuit court affirmed the action of the Board of Supervisors in granting a 25-year lease of 15 acres of sixteenth section lands to Eula Mae Brown.
From this judgment, Joe Tally has appealed that part of the order affirming the granting of the lease to Eula Mae Brown; and, the Board of Supervisors has cross-appealed from a part of the order requiring it to give notice to specified officials ten days prior to the execution of any renewal leases on sixteenth section lands in Smith County, which will be discussed in a separate part of this opinion.
ON DIRECT APPEAL
I.
The first question presented on direct appeal in both cases is whether the appellant, Joe Tally, as an individual and taxpayer of Smith County was entitled to notice that the two leases were to be renewed. We hold that he was not. Mississippi Code Annotated section 19-3-11 (1972) prescribes the time and place for meetings of the Boards of Supervisors (in counties comprising one judicial district, such as Smith County), that being on the first Monday of each month. The statute furnishes constructive notice to the general public as to all regular meetings of Boards of Supervisors and no other notice is required, except where specifically required by statute or in unusual circumstances, in order for the Boards to conduct their business. Byrd v. Byrd, 193 Miss. 249, 8 So.2d 510 (1942).
This statutory notice of the regularly scheduled meetings satisfies the constitutional guarantees of due process. See North Larmie Land Co. v. Hoffman, 268 U.S. 276, 283, 45 S.Ct. 491, 494, 69 L.Ed. 953, 957 (1925), where it is said:
All persons are charged with knowledge of the provisions of statutes and must take note of the procedure adopted by them and when that procedure is not unreasonable or arbitrary there are no constitutional limitations relieving them from conforming to it.
*549 The cases of Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972); First Jackson Securities Corp. v. B.F. Goodrich Co., 253 Miss. 519, 176 So.2d 272 (1965); and Rice v. McMullen, 207 Miss. 706, 43 So.2d 195 (1949), requiring personal notice and cited by appellant Tally, are clearly distinguishable from the facts of the instant case. In each of those cases the aggrieved party had a personal interest in the object of the litigation, not shared by the general public, as distinguished from the appellant here whose interest is no different than that of every other citizen and taxpayer of Smith County.
II.
The appellant's next contention that he was denied the right to present evidence as to the fair market value of the subject leases is also without merit. His request to be heard with reference to the Stringer lease was not transmitted to the Board of Supervisors until after adjournment of the term at which the lease had been granted and approved by the Board. His request, even if it had been sufficient in law, was not timely made; therefore, he cannot now be heard to complain. Keenan v. Harkins, 82 Miss. 709, 35 So. 177 (1903).
In the matter of the Eula Mae Brown lease, the appellant's petition for a hearing and the affidavit in support of it with reference to the fair market value of the lease was couched in general terms and conclusions and wholly failed to recite facts which he intended to prove. If the appellant had proved that the fair rental value of the lands in question was greater than that called for in the lease, then he should have stated in his petition for a hearing that he intended to prove by certain evidence (detailing it) that the rental value of the lease was a particular amount. This Court could then determine whether such evidence would be material to the issues involved. Under the present state of this record, we are left to conjecture and surmise as to what appellant might have proven, and consequently are unable to say that he was prejudiced.
We do not reach the question of whether Tally had a right to present evidence before the Board if his requests had been timely and properly made.
III.
The appellant's next contention that the circuit court erred in refusing to allow appellant to present his evidence before the circuit court is also without merit. We have repeatedly held that an appeal from a Board of Supervisors or a City by a bill of exceptions, provided by Mississippi Code 1942 Annotated section 1195 (Supp. 1972) [now Mississippi Code Annotated section 11-51-75 (1972)] is an appeal to an appellate court, and that the circuit court is bound by the record made before the Board. See Thornton v. Wayne County Election Commission, 272 So.2d 298 (Miss. 1973) and Stewart v. City of Pascagoula, 206 So.2d 325 (Miss. 1968). Testimony is not admissible in the circuit court on such appeals unless the Board itself is charged with fraud, Thornton v. Wayne County Election Commission, supra; and, there is no intimation here that the Board of Supervisors acted fraudulently.
IV.
The appellant next contends that the Board of Supervisors breached its duty as trustee of the sixteenth section lands by leasing these lands for the yearly sum of forty cents per acre which appellee contends is only a nominal charge; and, that the leases should be declared void for that reason. This contention has caused us great concern as it has much merit.
Sixteenth section lands are trust properties. In Jefferson Davis County v. James-Sumrall Lumber Co., 94 Miss. 530, 49 So. 611 (1909), this Court said:
The title to sixteenth section land is in the state; but it holds same in trust for *550 the support of the public schools of the township wherein the same is situated ... confers upon the several counties, through their respective boards of supervisors ... jurisdiction and control of sixteenth section land, to be exercised, of course, within the terms of the original trust... . A county is a political subdivision of the state, created for the purpose of acting for the state in local matters, whose powers are exercised by a board of supervisors. The state, in thus dealing with sixteenth section land, acts through one of its own, and most appropriate, governmental agencies. For such purposes, and within the power conferred upon it, the county is the state. (94 Miss. at 535-36, 49 So. at 612).
See also Holmes et al. v. Jones et al., Miss., 318 So.2d 865 (1975); Keys et al. v. Carter et al., Miss., 318 So.2d 862 (1975); Tally, Superintendent of Education of Smith County, et al. v. Carter et al., Miss., 318 So.2d 835 (1975); Daniels v. Sones, 245 Miss. 461, 147 So.2d 626 (1962); Lambert v. State, 211 Miss. 129, 51 So.2d 201 (1951); Washington County v. Riverside Drainage District, 159 Miss. 102, 131 So. 644 (1931).
This Court is committed to the proposition that these lands constitute property held in trust for the public schools and must be dealt with by boards of supervisors as such, and thus the rules applicable to trusts and trust property generally are to be applied. Keys et al. v. Carter et al., supra.
Boards of Supervisors, as trustees, are under a duty to lease sixteenth section lands for a reasonable rental and not a nominal one. 54 Am.Jur. Trusts section 471 (1945) states:
The implication and exercise of the power of a trustee to lease must be reasonable with regard to the rights of beneficiaries, the nature of the property, the uses to which it advantageously may be put, and the usual and customary methods of dealing with such property in the locality where it is situated. This rule is applicable to the determination of the rent, the period of the lease, and rights granted under the lease. (54 Am.Jur. at 374).
90 C.J.S. Trusts § 319 (1955) states:
Where trustees possess power to lease trust property they may lease it on such terms, conditions, and rentals as are reasonable and customary for that class of property in the particular vicinity. (90 C.J.S. at 497).
......
A trustee is required to charge a reasonable rental for property of the trust which has been leased, and a lease of trust property will be set aside where it is for a nominal rental. In determining whether or not a rent is reasonable, regard is to be had to the character of the property, values assigned to rental space, the purpose of the trust, the local custom with respect to similar property, and all the conditions attending the execution of the lease. (90 C.J.S. at 499).
Moreover, the Mississippi Constitution, Article 4, Section 95 (1890) provides that: "Lands belonging to, or under the control of the state, shall never be donated directly or indirectly, to private corporations or individuals ..."; and, where the consideration paid for a lease is so small as to amount to a donation of the property, the lease is void. Keys et al. v. Carter et al., supra.
The appellant contends that a yearly rental of forty cents per acre on the subject lands is grossly unreasonable. This argument is most persuasive and it is only by the exercise of a great deal of judicial restraint that we do not so hold. An annual rental of forty cents per acre on the leased lands would reflect a value of only *551 $8.00 per acre, if a return of five percent per annum were considered reasonable.[1] We can take judicial notice that little, if any, land in the State of Mississippi could have been purchased on the open market for its reasonable value at such a low price in 1973. However, in view of the vast disparity in the types, location, topography, demand for rental property and other facts too numerous to mention, we hesitate to hold as a matter of law that the rental was so grossly unreasonable as to amount to a donation of the leased lands.
However, appellant is not without a remedy. He may pursue the procedures outlined in Mississippi Road Supply v. Hester, 185 Miss. 839, 188 So. 281 (1939), and seek the relief alluded to by Justice Smith in the case of Keys, et al. v. Carter et al., supra, where he said:
The facts alleged in the bill, if supported by proof accepted by the chancellor as the trier of facts, would be capable of supporting a finding that the lease of this 320 acre tract for an annual rental of $170, although the fair value of the lease was $4,000 per year, amounted to an unconstitutional donation... . In that event, the lease was and is void and may be attacked in this suit. See Saxon v. Harvey, 190 So.2d 901 (Miss. 1966) and Coleman v. Shipp, 223 Miss. 516, 78 So.2d 778 (1955).
However, the remedy is the voiding of the lease rather than its continuation for the remainder of the 25 year period with damages prospectively figured for each year of its future existence. In the event that the unequivocal allegations of the bill should be sustained by the chancellor upon trial of the case, an immediate cancellation of the lease would ensue and a judgment against defendants for such damages as might be proved and be found actually to have resulted from the inception of the lease to the date of its cancellation as an unconstitutional donation would be justified. See Koonce v. Board of Supervisors of Grenada County, 202 Miss. 473, 32 So.2d 264 (1947).
A determination of whether the annual rental of forty cents per acre is so unreasonable as to amount to a donation of the property should only be made after a full evidentiary hearing at which all parties have had an opportunity to participate.
V.
Tally's primary complaint leading to this appeal was that the sixteenth section lands were leased for sums less than their fair market value. In that regard, we would point out that the Legislature has enacted Mississippi Code Annotated section 29-3-1 (Supp. 1974), which became effective March 14, 1974, and provides, inter alia, that no action of any Board of Supervisors with regard to the leasing of sixteenth section lands, or lands in lieu thereof, shall be valid unless approved by a majority of the membership of the Board of Trustees of the School District or Districts in which the section or portion thereof proposed to be leased is located. Such vote shall be taken at a regular or duly called special meeting of the Board of Trustees and shall be entered on the minutes thereof; and that in the event the Board of Trustees of the School District or Districts in which the land is located declines to approve the rental value of the land set by the Board of Supervisors, the Board of Supervisors shall appoint one appraiser, the Board of Trustees shall appoint one appraiser and the two appraisers so appointed shall appoint a third appraiser whose duty shall be to appraise the land, exclusive of buildings, structures and fences and to file a written report with each Board setting forth a recommendation for the rental value of the land. That section also provides that in the event any party is aggrieved by the decision of the appraisers setting forth the appraised rental value, the party so aggrieved *552 shall be entitled to an appeal to the chancery court in which the land is located. Fair and reasonable rental of sixteenth section lands should be assured under this procedure.
ON CROSS-APPEAL
The Board of Supervisors has appealed from that part of the circuit court's order with reference to the Eula Mae Brown lease which provides:
IT IS FURTHER ORDERED AND ADJUDGED that, in the interest of justice and in order to attempt to establish harmony and tranquility between elected officials and agents charged with their respective duties, ten days prior to the execution of any renewal lease on Sixteenth Section land, notice be given to the County Superintendent of Education and to the Mississippi State Forestry Commission, affording them the right to submit documentary proof as to their recommendations of the classification of the land as timber land or not, or their opinion of the projected reasonable value of the land, under the existing laws of the State of Mississippi.
The cross-appellant contends that the procedure for granting sixteenth section leases is prescribed by statute and that the circuit court was without authority to set additional procedures for the Board of Supervisors of Smith County to follow in the future when leasing these lands. We agree with cross-appellant's contention. The procedure prescribed for the leasing of sixteenth section lands is set forth by statute and is applicable to the Boards of Supervisors generally, and the circuit court was without authority to order additional procedures to be imposed upon the Board of Supervisors of Smith County.
The judgment of the circuit court affirming the action of the Board of Supervisors with reference to the Stringer lease is affirmed.
The judgment of the circuit court in affirming the order of the Board of Supervisors in granting the lease to Eula Mae Brown is affirmed, but is reversed as to the provision of the judgment imposing additional procedures upon the Board of Supervisors to be followed in the granting of future sixteenth section land leases.
Affirmed in part and reversed in part.
GILLESPIE, C.J., and PATTERSON, INZER, ROBERTSON, SUGG and BROOM, JJ., concur.
NOTES
[1] Five percent is used for the purpose of example only. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1874904/ | 253 F. Supp. 951 (1966)
In the Matter of Petition for Naturalization of Thomas Henry EDGAR.
No. 286634.
United States District Court E. D. Michigan, S. D.
May 5, 1966.
*952 Cornelius J. Finnen, Detroit, Mich., for petitioner.
Jack C. Stewart, Asst. Director for Citizenship, John C. Midanek, Naturalization Examiner, for Immigration Service.
TALBOT SMITH, District Judge.
The question before us may be very simply stated: Has the petitioner, Thomas Henry Edgar, the "good moral character" required by law for naturalization?[1] He is married, he has a daughter, he is gainfully employed and he is supporting his family. The question arises because, we find, agreeing with the Examiner, that he has committed adultery, as defined under the laws of the State of Michigan.[2] It came about in this way: After his wife came to this country, she became unhappy. She didn't like it here. Petitioner, however, felt that this was where he could make a better living. In addition there was a problem between them about raising a family, there being no children of the marriage. The record disclosures on the marital controversies are meager, but it is clear that there was friction and discord. One day the wife moved out, without further discussion, and went East. She has since remarried. After the lapse of some two years, petitioner began keeping company with a single girl, a fellow employee. Sporadic acts of intercourse occurred, and pregnancy resulted. At this juncture, petitioner filed for divorce, which was granted, following which marriage between the parental parties took place. The child was born in October of 1964 and all are now living together as a family.
There is no doubt, as related above, that the petitioner had sexual relations with a woman other than his wife during the statutory period, and, furthermore, that under Michigan law such relations were adulterous. But these findings are not dispositive of the issue presented for it is well established under the Federal cases that adultery and exclusion are not synonymous. The difficulty here is that the word adultery is a word of infinite gradations of meaning. We have civil adultery and we have criminal adultery. Some states require that each of the partners be married to another, whereas in others it is sufficient *953 if one of them is married to another. Some require continuing acts while in others a single transgression will suffice. We need not exhaust the catalog. It is clear that we are not looking to see whether a petitioner is technically guilty of adultery under local law. We are considering a federal statute. Article I, Section 8 of the United States Constitution empowers the Congress "[t]o establish an uniform Rule of Naturalization", and we must interpret the relevant Congressional acts in the light of the Constitutional provision. (Emphasis ours.) We conclude, on this phase of the case, with Judge Marovitz (In Re Briedis, 238 F. Supp. 149, D.C., Ill.1965) that in reaching decision upon the meaning of the federal act we are not remitted to a patchwork of state laws but that "the better view is to develop a uniform federal standard when interpreting a statute relating to the federal right to citizenship."
Thus we squarely face what is in our judgment the crucial issue in the case, namely, the interrelation of the commission of adultery, however defined, with the possession of the statutorily required good moral character. We are now in an area of the utmost doubt and indecision. Rulings will vary, even within circuits, as various of the factors making up the sum total of one's moral character are stressed. It was Learned Hand who pointed out, in Schmidt v. United States, 177 F.2d 450, 2 Cir. 1949 (a case involving sexual intercourse between an unmarried alien and a single woman) that the statutory phrase "good moral character" defies explicit definition, that it demands an estimate by the court, "necessarily based on conjecture, as to what people generally feel." Is the situation, then, viewed in the light of community sentiment, so reprehensible as to demand exclusion, lest the purity of our stock be contaminated by the influx of degraded strains of character? The cases are all at sixes and sevens. The determinations made vary from case to case, from decade to decade, and, indeed, from judge to judge, as the scales upon which the facts are weighed vary in delicacy, as we of the courts "resort to our own conjecture, fallible as we recognize it to be."[3]
But from all the confusion of facts, and cases, and community standards, one factor emerges with the utmost clarity: the vast majority of cases have undertaken an inquiry into palliative facts as the sins are weighed upon the scales. A doctrine of extenuation has emerged, arguably with Congressional sanction.[4] To put it more bluntly, there is no automatic equating of adultery with bad moral character.
Basically, the prohibitions against adultery, however defined, are designed to safeguard and protect the marriage relationship, to "guard the sanctity of marriage." People v. Lipski, 328 Mich. 194, 48 N.W.2d 325 (1950). Or, as put by the Ninth Circuit in Wadman v. Immigration and Naturalization Service, 329 F.2d 812 (1964): "[Congress] has found offensive that extramarital intercourse which tends to destroy an existing marriage; which evidences disregard of marital vows and responsibilities." The Wadman court, in fact, concluded (although relying in part upon the California adultery statute) in words peculiarly appropriate to the facts before us:
* * * "In our judgment isolated acts of intercourse by a married person, not amounting to cohabitation, occurring after that person's spouse has, without justification, willfully and permanently abandoned the marital relationship, do not constitute adultery as that term is used in § 101(f) (2) and may not be held as matter of law to constitute bad moral character under § 244." * * *
*954 These and other courts have found, and we agree, that there are circumstances which may justify, indeed, in our judgment, require, a finding that petitioner does have the good character prerequisite to citizenship, despite the commission of adultery. We find the petition of Mr. Edgar to be such a case. Here the petitioner was not a party to a viable marriage at the time he began dating Miss Parenti. His wife had left him voluntarily some two years before, to go to New York and live with some girls. While legally still in effect, the relationship of the parties in the marriage had been, for all practical purposes, severed. Petitioner's relationship with Miss Parenti did not begin until long after his wife had left him. He testified that he saw her exclusively, and that after a few isolated acts of intercourse a child was conceived. At this point, petitioner took immediate steps to sever the existing legal ties of marriage and was granted judgment of divorce by default. He married Miss Parenti as soon as possible thereafter and he, his wife, and child now live together as a family. We believe that there is little question that such conduct, while not to be condoned, should not be viewed as so morally reprehensible, or of such evil and meretricious character as to compel this court to declare that Mr. Edgar, is, by reason thereof, a man of bad character. With Judge Hand, we do not believe "that the present sentiment of the community views as morally reprehensible such faithful and long continued relationship(s) under the circumstances here disclosed." Ibid.
In view of the foregoing, this court makes the following Conclusions of Law:
CONCLUSIONS OF LAW
1. This Court has jurisdiction of the parties and of the subject matter in this proceeding.
2. Petitioner has established that he is and has been a person of good moral character for the period of five years immediately preceding the date of his filing of his petition for naturalization.
3. Accordingly, the recommendation of the United States Naturalization Examiner that the petition be denied on the ground that the petitioner has failed to establish good moral character during the period required by law is overruled, and the petition is approved.
An appropriate order may be presented.
NOTES
[1] Sections 316(a) and 101(f) of the Immigration and Nationality Act, 8 U.S.C.A. § 1427(a) and 1101(f). The latter reference provides:
"No person shall be regarded as, or found to be, a person of good moral character who, during the period for which good moral character is required to be established, is, or was(2) one who during such period had committed adultery;"
[2] M.S.A. § 28.218, Comp.Laws 1948, § 750.29.
[3] 177 F.2d p. 451.
[4] See the comprehensive legislative history found in Dickhoff v. Shaughnessy, 142 F. Supp. 535 (1956). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1863448/ | 318 So.2d 865 (1975)
A.B. HOLMES, Individually and as next friend of Alvin Holmes et al.
v.
C.W. JONES et al.
No. 48222.
Supreme Court of Mississippi.
September 29, 1975.
*866 Charles H. Ramberg, Brandon, Barry H. Powell, John L. Maxey, II, Jackson, for appellants.
W.E. McIntyre, Jr., McLaurin & Nicols, George T. Kelly, Brandon, Chill, Chill & Dove, Jackson, for appellees.
Before GILLESPIE, SMITH and ROBERTSON, JJ.
ROBERTSON, Justice.
A.B. Holmes and Bobbie D. Mangum, individually and as next friends and fathers respectively of Alvin Holmes and Bobbie Jean Mangum, minors, brought suit in the Chancery Court of Rankin County, Mississippi, against Milton Singletary, Hilton Richardson, R.L. Cross, Tom Rives and Steen Patrick, Supervisors of Rankin County, Mississippi, and the United States Fidelity and Guaranty Company, the surety on their official bonds, and C.W. Jones, for the illegal and unconstitutional leasing of 16th Section school lands to C.W. Jones for a grossly inadequate rental.
The complainants averred in their bill of complaint:
"Minor complainants are educable children residing in Township 3 North, Range 4 East, Rankin County, Mississippi, and are attending public school in the County-Wide School District of Rankin County, the public school district in which said township is located. Adult complainants are inhabitants of said township and are the parents of educable children residing in said township.
......
"The State of Mississippi holds title to Section 16, Township 3 North, Range 4 East, Rankin County, Mississippi, as trustee for the benefit of the inhabitants and educable children of said township for the support of the public schools therein. Pursuant to state law, the Board of Supervisors of Rankin County acts as agent for the state as trustee of said section in the leasing of said section for the benefit of said educable children and inhabitants."
The complainants attached to their bill of complaint as exhibits:
1. A copy of an Order of the Board of Supervisors duly and unanimously adopted on January 26, 1970, and recorded on the Board's official Minutes, authorizing and ordering a 25-year lease of 150 acres of 16th Section land to C.W. Jones for an annual rental of $37.50, being approximately $.25 per acre per year.
2. Copy of the lease, executed on January 26, 1970, by "THE BOARD OF SUPERVISORS OF RANKIN COUNTY, MISSISSIPPI BY (Signed) C.W. Jones, County Superintendent of Education of Rankin County, Mississippi" to himself, C.W. Jones.
*867 The order of the Board of Supervisors, Exhibit "F" to the bill of complaint, recites among other things:
"C.W. Jones having heretofore made application to this Board for a twenty-five year lease of the Sixteenth Section property now owned by said applicant, situated in Section 16, Township 3, Range 4, in Rankin County, Mississippi, ... and the Board finds that said property [150 acres] should be leased for a term of twenty-five years from this date, for a ground rental payable annually, in advance, and the County Superintendent of Education of Rankin County, Mississippi concurs therein.
"It is therefore ordered by the Board of Supervisors of Rankin County, Mississippi, that the hereinabove described property be and the same is hereby leased to the said C.W. Jones for a term of twenty-five (25) years from this date at and for a ground rental, payable annually, in advance, the sum of $37.50 per annum and upon the payment of such first annual rental into the County Depository of said County to the credit of the Interest Fund of Township 3, Range 4, and the execution and delivery by the lessee to the County Superintendent of Education of said County of their notes for the rent thereof for the remaining years of the term of such lease, the County Superintendent of Education of Rankin County is hereby authorized and directed to execute unto the said C.W. Jones, a lease, which shall be substantially in the form as adopted by this Board at its April 7, 1969 meeting, as shown by the minutes of this Board of said meeting." (Emphasis added).
The lease from C.W. Jones, County Superintendent of Education of Rankin County, to C.W. Jones, individually, recites:
"By virtue of the authority conferred on me by the order of the Board of Supervisors of Rankin County, Mississippi, and in consideration of the sum of $37.50 paid unto the County Depository of said County to the credit of the Township Fund, being the annual rental due on said property for one year from this date, and a like annual payment to be made by the lessee on the 26th day of January of each year hereafter during the term of this lease, as evidenced by notes therefor this day executed by said lessee and delivered to the County Superintendent of Education of said County, said Board of Supervisors, acting by and through the County Superintendent of Education of said County, hereby lease and lets unto the said C.W. Jones, his heirs, executors, administrators, and assigns, for a term of twenty-five (25) years, ....
......
"If default is made in the payment of any annual rental herein required to be paid, this lease may be terminated by and for the county by the County Superintendent of Education of said county executing and filing in the office of the Chancery Clerk of said county a statement certifying that default had been made in the payment of such rental." (Emphasis added).
Exhibit "H" to the bill of complaint is a Lease Contract from C.W. Jones as lessor to David Patrick as lessee, of the same 150 acres of 16th section land [less 10 acres, and plus 7 acres in Section 15], for a three-year term for an annual rental of $900. The lease recites:
"The Lessee is to pay as rent therefor as follows:
$900.00 on or before March 15, 1970, and on or before the same date in each succeeding year for the term of this lease.
......
"This lease is effective from the date stated above and will expire on December 31, 1973, unless renewed by mutual *868 consent of the parties." (Emphasis added).
The complainants specifically prayed for a judgment against the defendants, jointly and severally, for $18,695.14, (which complainants averred was the value of the 25-year lease at a fair rental of $1,462.50 per year, discounted at 6% per annum), and also for general relief.
The chancellor sustained general demurrers, one filed by the Supervisors and one filed by C.W. Jones, on March 1, 1974, to the bill of complaint.
Complainants contend on this appeal that the Chancery Court erred in sustaining general demurrers to their bill of complaint. We agree.
As correctly stated in the bill of complaint, Sixteenth Section school lands are trust lands to be administered for the benefit of the inhabitants and educable children of the township for the support of the public schools therein.
Mississippi Code Annotated section 29-3-1 (1972) provides:
"The county boards of supervisors of the several counties wherein there are situated any sixteenth section school lands or lands in lieu thereof, under the general supervision of the state land commissioner, shall have control and jurisdiction of said school lands and of all funds arising from any disposition thereof heretofore or hereafter made. All such funds shall be paid into the proper depository, and all notes, bonds, and other securities for the same, evidencing loans or other investments thereof, shall be turned over to the county depository and duly collected as provided by law." (Emphasis added).
The Legislature in 1974 amended Section 29-3-1, inserting this proviso:
"[P]rovided, that no action of any board of supervisors with regard to the leasing of sixteenth section lands, or lands in lieu thereof, shall be valid unless approved by a majority of the membership of the board of trustees of the school district or districts in which the section or portion thereof proposed to be leased is located."
This amendment did not take effect until March 14, 1974, which, of course, was four years after the acts complained of in the case at bar.
Mississippi Code Annotated section 29-3-57 (1972) provides:
"The county superintendent of education shall keep a current docket as to the expiration date of all leases on sixteenth section lands; likewise, he shall keep a correct current docket upon the existing leases or any extensions thereof as to the amounts and time of payment of rentals provided for by such lease. It shall be the duty of the county superintendent of education to collect promptly all rentals due and all principal and interest due upon loans and investments of sixteenth section funds, . .. . It shall be the duty of the county superintendent of education to supervise generally the administration of all sixteenth section lands within his jurisdiction." (Emphasis added).
In State ex rel. v. Dear et al., 209 Miss. 268, 46 So.2d 100 (1950), we said:
"This Court held in the case of Rice et al. v. McMullen, [207 Miss. 706,] 43 So.2d 195, 202, not yet reported in State Reports, as follows: `It is well established that the rights of a beneficiary of a trust estate who finds the trust property has been wrongfully transferred to a third party with notice of the trust are clearly defined in law, and are without dispute so far as we know. Such a beneficiary has the right to follow the trust property and to recover the res if he can identify it in the hands of the third party, or he can have judgment against the third party for the value of the trust property. Scott on Trusts, Sections 291.2, 291.7; *869 [4] Bogert on Trusts, and Trustees, § 867.'" 209 Miss. at 277, 46 So.2d at 103.
The complainants, representing the beneficiaries of this trust estate, were proper parties to bring this suit.
The bill of complaint on its face shows that C.W. Jones, County Superintendent of Education of Rankin County, Mississippi, acting in a fiduciary capacity, violated a solemn trust and executed a 25-year lease of the trust property to himself for a grossly inadequate consideration of $37.50 a year for 150 acres of trust lands.
A fiduciary cannot take advantage of his position of trust in administering the estate entrusted to him. The intent of the Legislature is unmistakeably clear in the general law on this subject.
Mississippi Code Annotated, sections 91-7-253 and 91-7-255 (1972) provide:
"No executor, administrator, guardian, receiver, or other fiduciary appointed by or acting pursuant to the authority of any chancery court may borrow or use for his own benefit, directly or indirectly, any of the funds or property of the estate committed or intrusted to him by such court, nor purchase or acquire, directly or indirectly, any interest therein adverse to any creditor or beneficiary of such estate. Nor may he loan the same, or any part thereof, to any parent, brother, sister, son, daughter of, or one in loco parentis to the ward or himself, nor to any attorney or agent representing him or such estate, nor to the wife or any child of such attorney or agent. Nor may any court or chancellor authorize or ratify any such prohibited use, acquisition, or loan." (Emphasis added).
"No executor, administrator, guardian, receiver, or other fiduciary appointed by or acting pursuant to the authority of any chancery court may sell, assign, or transfer any note, bill of exchange, bond, stock certificate, or other negotiable paper belonging to the estate committed or intrusted to him by such court, unless he shall be authorized so to do by an order of the court or chancellor, or by the last will and testament of the decedent. Every such prohibited sale, assignment, or transfer shall be void, whether the vendee, assignee, or transferee shall have had notice or knowledge of the want or lack of authority of such fiduciary to sell, assign, or transfer the same or not." (Emphasis added).
The averments of the bill of complaint and the exhibits thereto clearly show a good cause of action against each member of the Board of Supervisors, the surety on their bonds, and C.W. Jones. The lease of January 26, 1970, from C.W. Jones, County Superintendent of Education of Rankin County, to C.W. Jones individually was void on its face. The lease contract from C.W. Jones to David Patrick, providing for the payment of an annual rental of $900, beginning March 15, 1970, (less than two months after the execution on January 26, 1970, of a lease of substantially the same sixteenth section school land by C.W. Jones, County Superintendent of Education, to C.W. Jones, individually, for $37.50 annual rental) shows on its face that the lease to Jones was for a grossly inadequate consideration amounting to a donation of public property to a private individual, in clear violation of Section 95 of the Constitution of the State of Mississippi, which provides in part:
"Lands belonging to, or under the control of the state, shall never be donated directly or indirectly, to private corporations or individuals, or to railroad companies." (Mississippi Constitution Article 4, § 95).
The bill of complaint also states a prima facie case against all the defendants for the recovery of the difference between the $900 annual rental and the $37.50 annual rental for each of the three years of the lease from Jones to Patrick, plus legal interest.
*870 The decrees of the chancery court sustaining the general demurrers to the bill of complaint are reversed and this cause remanded for a trial on the merits.
Reversed and remanded.
RODGERS, P.J., and PATTERSON, INZER, SUGG, WALKER and BROOM, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1836986/ | 80 So.2d 845 (1955)
227 La. 866
Clifford E. FONTENOT
v.
MAGNOLIA PETROLEUM CO. et al.
Marvin YOUNG, Sr.
v.
MAGNOLIA PETROLEUM CO. et al.
No. 41552.
Supreme Court of Louisiana.
April 25, 1955.
Rehearing Denied May 23, 1955.
*846 Isom J. Guillory, Jr., Isom J. Guillory, Eunice, for plaintiffs-appellants.
Liskow & Lewis, Lake Charles, Brewer, Matthews, Nowlin & Macfarlane, San Antonio, Tex., for defendants-appellees.
SIMON, Justice.
Two separate suits were filed against the defendants, Magnolia Petroleum Co. and Petty Geographical Engineering Co., by plaintiffs, Clifford E. Fontenot and Marvin Young, Sr., to recover compensation for damages to their respective residences alleged to have resulted from the negligence of defendants in the use of explosives while conducting geophysical observations in the vicinity of plaintiffs' homes. In the alternative, plaintiffs allege liability of the defendants irrespective of the lack of fault or negligence in the use of these explosives.
Both suits were consolidated for purposes of trial and by agreement of counsel were submitted for decision on the merits at the same time and on the same evidence.
The trial court rendered separate judgments in favor of the defendants, dismissing plaintiffs' respective demands; and the consolidated cases are now before us on appeal. These consolidated cases are filed under one docket number of this Court, and we shall perforce dispose of the issues presented in one opinion but with separate applicable decrees.
The respective residences of plaintiffs are situated in a rural section near Eunice, St. Landry Parish. The home of plaintiff Fontenot was built in the early months of 1946, and that of plaintiff Young in 1947. For all practical purposes both homes were relatively new, of substantial construction, and of modern design and conveniences.
It is alleged that vibrations and concussions radiating in the soil from the point of the explosions conducted by defendants on July 27, 1948, resulted in the detailed damages complained of. The damages alleged by both plaintiffs bear similar characteristics, consisting mainly of cracks in the walls, ceilings and areas connected with windows and doors, and broken concrete foundations and porch floors. Plaintiff Fontenot claims property damages in the sum of $2,045, $505 for disturbances and the invasion of the privacy of his home, and $500 for future damages as a result of the inconvenience and displacement anticipated when and if his home is repaired, aggregating the sum of $3,050. Plaintiff Young claims property damage in the sum of $3,500, $650 for disturbances and the invasion of the privacy of his home, and $500 for future damages as a result of the inconvenience and displacement anticipated when and if his home is repaired, aggregating the sum of $4,650.
The defendants admit that on July 27, 1948, the Petty Geographical Engineering Co., acting under contract with its codefendant, Magnolia Petroleum Co., conducted geophysical operations in exploring for oil and gas within the vicinity of the homes of plaintiffs; that while engaged in this operation they exploded 10-pound charges of Nitramon "S" at surface depths *847 of 66 feet to 70 feet and at distances of 860 feet to 1,000 feet from plaintiffs' residences. It appears that plaintiff Fontenot had denied the defendants the privilege of entering upon his residence property to conduct these geophysical operations, and that the explosions in relation to his home were conducted on adjoining property; whereas, plaintiff Young orally agreed to allow defendants the right of entry upon his property.
The truth and accuracy of the property damages claimed by plaintiffs to their respective residences are not challenged by defendants, and no attempt was made to disprove these facts. However, defendants strenuously assert that the defective and damaged condition of plaintiffs' homes was not caused through the geophysical operations as conducted by them but resulted from a natural settlement of the earth and poor or defective construction workmanship.
In support of their respective claims, plaintiffs and their wives testified that immediately prior to these operations the defects herein complained of were nonexistent. Plaintiff Young testified that on the day of the explosions he was at his home and observed the preparatory mechanics conducted by the defendants; that when the shots were fired he experienced a feeling as if "a wave was going under me" and which he compared to "standing on a roller of some kind". He did not inspect his home on that day, having no plausible reason for so doing, and it was only on the following day that his wife called his attention to ants having invaded the kitchen. On the second day following the explosions, while spraying ant poison around his premises, he thereupon discovered the damages complained of.
Mrs. Young testified that on the day in question several explosions were fired in the vicinity of their home, with resulting vibrations, and that shortly after the noon hour a louder blast was of such severity as to cause violent tremors in the floors and windows. These consecutive events, causing apprehension of impending danger, prompted her to leave her home in search of neighborly comfort in the home of Mrs. Fontenot.
Plaintiff Fontenot was absent from his home on the day in question but learned of these activities upon his return that evening. Upon being informed two days later of the complaints of plaintiff Young, Fontenot inspected his own premises and discovered the then existing damages which he testified did not exist prior to these explosions.
Mrs. Fontenot testified that on the day in question, the nearby explosions caused much rattling of the window blinds; that she found cracks and other detailed defects as she house-cleaned on days subsequent, and which were non-existent prior to the date of the explosions.
One Herbert M. Guillory, a lumber contractor and the Vice-President and Executive Manager of the G. J. Deville Lumber Co., Inc., Eunice Branch, estimated the damages complained of and testified from his personal observation of the nature of the damages. He concluded that they were the result of either a large area of soil having been "washed out" beneath the foundations or the foundations themselves having been subjected to some violent shock or concussion.
One Clayton Joseph D'Avy, Jr., an architect, examined these homes and testified that from his scientific knowledge the general cracking complained of by plaintiffs and the actual physical displacement of substantial "masses" of concrete in the foundation, floors and porches could not have been caused by natural settlement but were clearly, in his opinion, the result of sharp and otherwise rapid vibrations of the soil.
Other witnesses testified on behalf of plaintiffs to the effect that these homes were of sound construction, of good and substantial workmanship and of materials of unquestioned worthiness, particularly the concrete poured for their foundations and porches, and which were generally accepted as more than adequate for many *848 future years of security and comfortable occupancy.
Defendants presented evidence to show that their use of explosives in these geophysical operations was reasonable and in accord with the usual, customary and approved methods of conducting such explorations, and that therefore they cannot be held guilty of any fault or negligent act giving rise to a cause of action in favor of plaintiffs. Their explosive experts testified that, considering the distances separating the points of the explosions from the homes of plaintiffs, it would have been scientifically impossible for the blast of a 10-pound explosive used to have produced vibrations or concussions sufficient to cause the damages complained of. These experts support their conclusions with a detailed and scientific discussion of theories and of experiments made by them during the month of September, 1948, particularly in connection with the use of the "Falling Pin Seismometer", on which was recorded the effect of experimental explosions allegedly fired under the same conditions as existed in relation to the ones complained of by plaintiffs. They all agree that the cause of the defective condition of plaintiffs' homes can be attributed to no cause other than that of natural earth settlement or the use of inferior material and poor workmanship in their construction.
In disposing of questions of this character, we are mindful of two important considerations: First, to give the owner of property the largest liberty possible, in the use, occupation and improvement of his own property, consistent with the right to employ modern methods and machinery in accomplishing the improvements desired; and second, that one may not use his own property to the injury of any legal right of another. This maxim of the common law, "Sic utere tuo ut alienum non laedas",[1] is so well established and so universally recognized that it needs neither argument nor citation of authority in its support.[2]
Impressed as we are with the unchallenged and unrebutted proof by plaintiffs, we necessarily conclude that the evidence clearly establishes the claim of plaintiffs in that the general and extensive damages to their homes were non-existent prior to, and were the causal result of, the geophysical operations conducted by defendants. The fact that plaintiffs did not discover these substantial injuries until two days after defendants' operations, or that the homes were of frail or cheap construction (with no substantive proof to support this conclusion) does not in any wise relieve defendants of liability.
Counsel for defendants rely upon the principles of law as expressed in the cases of McIlhenny v. Roxana Petroleum Corp., 10 La.App. 692, 122 So. 165, and Le Bleu v. Shell Petroleum Corp., La.App., 161 So. 214, and from these holdings contend that neither in common law jurisdictions nor under Louisiana law can there be any recovery in the absence of actionable negligence or fault sustained by reason of the operation of a lawful business conducted with due care and according to usual, customary and approved modern methods.
In the case of Devoke v. Yazoo & M. V. R. Co., 211 La. 729, 30 So.2d 816, 820, we reviewed the jurisprudence under our law and that of the common law states pertinent to various obligations which are imposed upon proprietors towards one another in the use and enjoyment of their property rights. Therein we quoted from the Revised Civil Code, which provides:
"* * * `Although a proprietor may do with his estate whatever he pleases, still he can not make any work on it, which may deprive his neighbor of the liberty of enjoying his own, or which may be the cause of any damage to him'" LSA-C.C. Article 667, "* * * although it should occasion some inconvenience to his neighbor * * * but not a real damage." LSA-C.C. Article 668.
*849 It has been universally recognized that when, as here, the defendant, though without fault, is engaged in a lawful business, conducted according to modern and approved methods and with reasonable care, by such activities causes risk or peril to others, the doctrine of absolute liability is clearly applicable. There can be no legal justification for relieving it of liability and thereby deny compensatory damages to one having no relation to the conducting of such business and thus compel him to bear the unwarranted loss.
In the Devoke case, supra, we also quoted as follows:
"It is the universally accepted rule of law that `The owner of property has a right to conduct thereon any lawful business not per se a nuisance, as long as the business is so conducted that it will not unreasonably inconvenience a neighbor in the reasonable enjoyment of his property. But every business, however lawful, must be conducted with due regard to the rights of others, and no one has a right to erect and maintain a nuisance to the injury of his neighbor even in the pursuit of a lawful trade, or to conduct a business on his own land in such a way as will be injurious or offensive to those residing in the vicinity' (39 Am.Jur. 324, Section 43), and liability in such cases does not depend upon the question of negligence. Sections 4 and 24, pages 282 and 304. See, also, Winfield's Textbook of the Law of Tort, 2d Ed., Sections 133 and 138, pages 481 and 516; Harper on Torts, Sections 180, 181, and 182; 20 R.C.L. 381, Sections 3 and 5; 46 C.J. 663, Section 28; Camfield v. United States, 167 U.S. 518, 17 S.Ct. 864, 42 L.Ed. 260; Dixie Ice Cream Co. v. Blackwell, 217 Ala. 330, 116 So. 348, 58 A.L.R. 1223; Herman v. City of Buffalo, 214 N.Y. 316, 108 N.E. 451; Pearson v. Kansas City, 331 Mo. 885, 55 S.W.2d 485; Toft v. City of Lincoln, 125 Neb. 498, 250 N.W. 748; and other cases referred to in 28 Words and Phrases, Nuisance, pages 930-942." (Italics ours.)
In the case of Tucker v. Vicksburg, S. & P. R. Co., 125 La. 689, 51 So. 689, we said that the grant and exercise of privileges to one confers no right of the use thereof in disregard of private rights of others. There is a recognized presumptive rule that every man is bound to use his own property or exercise his rights in relation to privileges granted so that he does not injure his neighbor.[3]
We are unwilling to follow any rule which rejects the doctrine of absolute liability in cases of this nature and prefer to base our holding on the doctrine that negligence or fault, in these instances, is not a requisite to liability, irrespective of the fact that the activities resulting in damages are conducted with assumed reasonable care and in accordance with modern and accepted methods.
It follows that clearly the plaintiffs in this instance do not bring an action in tort but one that springs from an obligation imposed upon property owners by the operation of law thereby granting to other property owners the maximum enjoyment in the liberty and use of their property. To hold otherwise would grant the right to conduct operations of a nature as is here involved, and upon its being shown that such activities are conducted in full accord with accepted modern methods, no liability may attach therefor in favor of persons injured.
Defendants contend that plaintiff Young having granted to them the privilege of entering upon his property for the purpose of conducting these geophysical operations absolves them from liability. We find no merit in this contention. True, plaintiff Young orally agreed to permit entrance upon his property for these purposes, but it cannot be said that he expressly or impliedly granted legal immunity to the *850 defendants from liability for any damages suffered by him as a result of these operations.
Defendant does not dispute the correctness of the itemized estimates of cost of repair as contained in the record. It is shown that the cost of repairs in regard to the home of plaintiff Young amounts to the sum of $2,722 (Ex. P-18), and that the cost of repairs to the Fontenot home is the sum of $2,045 (Ex. P-19).
We also conclude that plaintiffs are entitled to recover damages as a result of the invasion of the privacy of their respective homes, the inconvenience occasioned them and the mental anguish suffered by each as a result of these property damages. Actual damages resulting from a wrongful act are not limited to the pecuniary loss sustained thereby. They extend also to the mental and physical suffering which are considered a distinct element of damages and as such are actual and compensatory. Byrne & Co. v. Gardner & Co., 33 La.Ann. 6; Bourg v. Brownell-Drews Lumber Co., 120 La. 1009, 45 So. 972; Jiles v. Venus Community Center, etc., Ass'n, 191 La. 803, 186 So. 342; Dodd v. Glen Rose Gasoline Co., 194 La. 1, 193 So. 349, 353; Humphreys v. Bennett Oil Corporation, 195 La. 531, 197 So. 222; McGee v. Yazoo & M. V. R. Co., 206 La. 121, 19 So.2d 21. We feel that an award of $250 in that respect to each of these plaintiffs is commensurate.
Plaintiffs' claims for damages as a result of anticipated future inconvenience, if and when their respective homes are repaired, are not supported by any proof whatsoever and are, therefore, accordingly denied.
For the reasons assigned, it is therefore ordered, adjudged and decreed that the judgments of the lower court are reversed, set aside and annulled.
It is further ordered, adjudged and decreed that there be judgment in favor of Marvin Young, Sr., and against the Magnolia Petroleum Co. and the Petty Geographical Engineering Co., in solido, in the sum of $2,972, with legal interest thereon from date of judicial demand until paid.
It is further ordered, adjudged and decreed that there be judgment in favor of Clifford E. Fontenot and against the Magnolia Petroleum Co. and the Petty Geographical Engineering Co., in solido, in the sum of $2,295, with legal interest thereon from date of judicial demand until paid.
All costs of these suits are to be borne by the defendants.
NOTES
[1] "So use your own that you do not injure that of another."
[2] 20 A.L.R.2d 1384.
[3] Winfield's Textbook of the Law of Tort. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1936999/ | 252 Miss. 27 (1965)
172 So.2d 425
THORNTON BROTHERS, INC.
v.
GORE
No. 43358.
Supreme Court of Mississippi.
March 1, 1965.
*28 J.E. Skinner, Jackson, for appellant.
W.E. Gore, Jr., Jackson, for appellee.
*29 LEE, C.J.
The original bill of complaint in this case charged the following facts: The Thorntons entered into a contract with John E. Gore, Jr., to lease a brick building, just out of the corporate limits of the City of Jackson, on Highway 80 between Jackson and Clinton for a drug store at a rental of $125 per month. The lease began February 1, 1955, and ran to January 31, 1960. The new lease, or renewal, was entered into for the period from February 1, 1960 to January 31, 1965 for a monthly rental of $150. In March 1962, Gore complained that White's Auto Store, a business in the same shopping center, was selling products in competition with his business, that he asked the Thorntons for an exclusive right to sell drugs and sundry articles; and that they signed the same, as shown in an exhibit thereto.
They further charged that, during April 1963, Gore advised them that he was erecting a building and intended to move his drug store to that location, and that he did so move the same in September 1963 to that location, between one-quarter and one-half of a mile away. They charged that Gore was claiming that the supplemental lease was valid and subsisting. On the contrary, they alleged that it was void and cast a cloud on their title, and they wished this cloud to be cancelled. They also alleged that the agreement was without consideration; that it was contrary to public policy; and *30 that Gore had abandoned their property. The prayer of the bill sought a cancellation of the supplemental lease and an injunction to restrain Gore from interfering with their right to utilize such property as they desired.
The answer and cross bill by defendant and cross-complainant Gore admitted a number of the allegations of the bill of complaint, and stated that White's Auto Store had violated his right in the sale of drug products and accessories to a drug store. He charged that this business was also sold by the then operators of that store to one of the Thorntons. He charged that he and the Thorntons originally entered into a contract and orally agreed that no one else would be permitted to compete with him; that after an incident in March 1962, he requested the Thorntons to reduce to writing the agreement under which they had been operating throughout the period of his occupancy; that the complainants executed the supplemental agreement set out in their exhibit in paragraph 10 of the bill; and that the agreement was a mere continuation of their oral agreement of January 24, 1955. He denied that he was opening a new drug store one-quarter of a mile away, but said that he was still operating at his old location. He denied that he had closed that business but still had approximately $6,000 worth of stock in the building; and that he had paid promptly all rent as it came due. He further alleged that the supplemental lease was valid, subsisting and binding. The instrument contained an exclusive right against the sale of drugs, sundries, and all other merchandise normally sold in a drug store, and was dated January 24, 1955.
By way of cross bill, Gore reiterated the history of the mutual transactions between himself and the Thorntons, who, at the time of the original transaction, were brothers and business partners; and that, although several years after the original transaction in 1955, the *31 brothers formed a corporation, composed of themselves and their respective wives, and they were the principal officers of the corporation and continued to own the property. He reiterated the details, constituting a violation of the agreement, which assured him freedom from competition in this area. He also charged that the Thorntons promised to stop the competition, but did not do so; and that, in an effort to prevent the misunderstanding and carry out their real understanding, the Thorntons agreed to and did execute the supplemental lease. But he charged that they have been negotiating to lease his rented store to another one Leo Moore. Consequently, the prayer of his cross bill was that the court enjoin the Thorntons from leasing the building which he was still occupying and on which he was paying rent.
It was admitted that Gore had paid promptly the rental of $150 per month. The parties stipulated that the supplemental lease was dated and signed January 24, 1955. C.D. Thornton said that he and his brother signed the instrument "to keep harmony"; and that they "wanted all satisfied". He admitted that he did promise to see the offending party, and did so, but said that this man showed him that he was selling only six small items, like shaving lotion, shaving cream, etc. On the question as to what had been the agreement between the parties, his evidence was as follows:
Q... . After you made your talk down there with Mr. Pickler, (operating White's Auto Store) it was then a couple of weeks later that you signed that agreement?
A. Something like that. Yeah, I thought it was all settled, everybody satisfied.
Q. Well, in other words, it was agreeable with you, I take it, for Mr. Gore to have exclusive rights to sell drug store products there?
*32 A. Because I thought everything was satisfied, and he give no reason for leaving, I thought he would be there.
Q. I understand that, but it was agreeable with you for him to have exclusive rights to sell drug store products.
A. As long as long as he had a store there.
Q. And that was true from the time he first opened up, wasn't it?
A. That's right.
Q. That's right, in other words, when he first came in there, it was under the agreement that he had
A. No, there was no agreement at all.
Q. No agreement, but an understanding that he was going to sell drug store
A. Drug store items, that's right.
Q. items, and he would be protected
A. Yeah.
Q. and that was from February, 1955 until the day he moved out?
A. That's right."
Gore's evidence, in detail, related the history of the business association between the parties and substantiated the denials of his answer and the allegations of his cross bill.
In his opinion, the learned chancellor, among other things, held as follows:
"Now, it's true that this supplemental agreement does not recite a consideration, and it is not a new agreement but merely reduced a verbal agreement which was not void but voidable to writing, covering the terms of the lease of '55 and the lease of '60, and the consideration which moved the parties to enter into the lease contract is the consideration for the oral agreement which was later reduced to writing, and I am going to hold as a matter of law that the agreement of 1962 was a valid agreement and enforceable, but I also hold *33 as a matter of law that that agreement dies with the lease on I believe it was January the 31st, 1965."
The decree dismissed the original bill of complaint and granted the relief prayed for in the cross bill. It is from that action that the Thorntons appealed.
Appellee's position is that the agreement, while reduced to writing in 1962, actually represented an agreement that was made in 1955. Here was the situation: Gore was in the drug business. The Thorntons were eager to get lessees for the building through which they expected to develop a shopping center. To accomplish this purpose, it was important to have a drug store therein actually a necessity. Naturally Gore would not, and did not, expect his landlord to afford a competitor for him in that area. There had been no competition from any other lessee since the commencement of operation. When such developed in 1962, he immediately sought to get it remedied. The Thorntons were anxious to keep their tenant. They promised him that they would stop that competition. They at least led Gore to believe that they had done so. "To keep harmony" they executed the supplemental lease, reciting that it was effective as of 1955, and C.D. Thornton testified that such understanding and agreement existed from the beginning. That question was an issue in the pleadings. The chancellor found that the understanding did exist from the outset.
37 C.J.S. Frauds, Statute of section 171(a), pp. 647-8 (1943), is in part as follows: "The memorandum of the contract required by the statute of frauds may be made subsequently to the making of the contract itself, and at any time before an action is brought on the contract. This is especially true where the writing is dated as of the time of the contract, although a writing otherwise sufficient to comply with the statute is none the less valid for want of a date.
*34 "It is held that the memorandum may be made at any period of the performance of the contract, ...
"In general, the memorandum must be in existence at the time when action is brought. . ." (Emphasis supplied).
(Hn 1) The above rule has been adopted by this Court in Ludke Electric Co. v. Vicksburg Towing Co., 240 Miss. 495, 127 So.2d 851 (1961), where, at page 502 thereof, the opinion used the following statement: "The requirement of the Statute of Frauds is met, when a written memorandum has been made by the party to be charged at any time before the action is brought." In 17 C.J.S. Contracts section 61, p. 731 (1963), it is said: "So, as between the parties, it is usually immaterial that the contract is not executed on the day of its date; and it is competent for the parties to agree that the contract shall take effect as of a date earlier than that on which it is executed." See also 49 Am. Jur., Statute of Frauds sections 316-7, pp. 630-2 (1943).
Appellants say that there was no consideration for the supplemental lease.
On that question, 17 C.J.S., Contracts section 71, pp. 753-4 (1963), states: "No special consideration need be singled out or apportioned for each separate provision in a contract and a number of agreements covering more than one subject may be founded on one consideration. In other words, a single consideration may support several counter-promises made by the other party to the transaction. While the consideration for one contract will not support a distinct and independent contract, where two instruments are executed as part of the same transaction, the benefit accruing to one of the parties in one instrument may be the consideration for the promise of such party in the other, as discussed infra § 78." (Emphasis supplied). The same principle is announced in Section 78 Ibid., pp. 766-7, adding only: "When so intended, an agreement with one person may *35 constitute consideration for an agreement with another." (Emphasis supplied).
This Court in Ogle v. Durley, 223 Miss. 32, 77 So.2d 688 (1955), at page 43, made this statement: "The lease was for a valuable and substantial consideration. The law will not weigh the quantum of the consideration in a contract, and so long as it is something of real value in the eyes of the law it is sufficient." Citing 17 C.J.S. Contracts section 127 (1963).
The Court holds that there were good and sufficient considerations to the parties for the execution of the supplemental contract.
(Hn 3) The appellants urge that parol evidence cannot be permitted to alter a written instrument. Of course, this may be done to show the effective date of the instrument. See 20 Am. Jur. Evidence section 1118, p. 977-8 (1939). But for such rule, appellants could not even deny that January 24, 1955 was the date of the supplemental lease. See Southern Pipe & Supply Co. v. Joseph, 234 Miss. 80, 105 So.2d 485 (1958); Webb v. Mobile & Ohio R. Co., 105 Miss. 175, 62 So. 168 (1913). Consequently, this contention is untenable.
(Hn 4) The appellants contend that the covenant in the supplemental lease constituted an unlawful restraint of trade.
Actually the case of Parker v. The Lewis Grocer Co., 246 Miss. 873, 153 So.2d 261 (1963), has foreclosed that question. There the inquiry was whether a restrictive covenant, in that instance a shopping center, was antagonistic to the public interest. It was shown that the covenants were reasonable and in the fourth syllabus, which correctly deduced the meaning of the decision, it is said: "Restrictive covenants with respect to shopping centers are not antagonistic to public interest, but are consistent therewith." Consequently, this contention by the appellants must be rejected.
*36 In addition to what has already been said, it must be remembered that there was no provision in the lease, under which appellants were authorized to declare, in this instance, a forfeiture. There is no dispute that all rent had been promptly paid.
The Court is of the opinion that the learned chancellor was correct in his finding and that the decree should be affirmed.
Affirmed.
Ethridge, Rodgers, Jones and Patterson, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2902741/ | COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
WALTER CRAWFORD,
Appellant,
v.
THE STATE OF TEXAS,
Appellee.
§
§
§
§
§
§
No. 08-05-00200-CR
Appeal from the
243rd Judicial District Court
of El Paso County, Texas
(TC# 20040D02322)
O P I N I O N
Appellant Walter Crawford appeals his conviction for burglary of a habitation. Following
a negotiated plea bargain agreement, the trial court deferred adjudicating Appellant’s guilt and
placed him on 6 years’ community supervision. Subsequently, the State filed a motion to
adjudicate guilt. At the revocation hearing, the State abandoned its allegation that Appellant
violated condition “a” and presented evidence on its second and third allegations, which the trial
court found to be true. The trial court adjudicated Appellant’s guilt and assessed punishment at
12 years’ imprisonment. Because the trial court’s written judgment adjudicating guilt states that
it found the allegations that Appellant violated conditions “(a),” “(b),” and “(k)” of his probation
to be true, in Appellant’s sole issue, he argues that the written judgment should be reformed to
delete the findings regarding allegation “3(a)” or “(a).” We affirm the trial court’s judgment as
modified.
On May 4, 2004, Appellant was indicted for the offense of burglary of a habitation. On
June 14, 2004, Appellant pled guilty to the offense and was placed on deferred adjudication for
six years. On February 10, 2005, the State filed a motion to adjudicate guilt, alleging that
Appellant violated the terms and conditions of his probation. The State filed its first amended
motion to adjudicate guilt on March 3. At the revocation hearing, the State abandoned condition
“(a),” the allegation contained in its motion pertaining to new offenses, specifically the alleged
offense of assault/family violence and sexual assault, under “3(a).” Appellant stipulated to his
identity and to the conditions of probation. Through the testimony of Appellant’s probation
officer and El Paso police officers, the State presented evidence that Appellant violated condition
“(b)” by consuming an alcoholic beverage and violated condition “(k)” by failing to participate in
250 hours of community service. After the State rested, the trial court found the State’s
allegations in paragraph 3(b) and 3(k) to be true. At the conclusion of the punishment hearing,
the trial court revoked probation, entered an adjudication of guilt, and sentenced Appellant to
twelve years’ imprisonment in the Institutional Division of the Texas Department of Criminal
Justice.
REFORM WRITTEN JUDGMENT
In his sole issue, Appellant contends the trial court erred by finding that Appellant
violated condition “(a)” of the terms and conditions of his probation where the State abandoned
that ground at the hearing on its motion to adjudicate guilt. In effect, Appellant’s complaint is
that the trial court’s written judgment does not correctly reflect which terms and conditions of his
probation the trial court found he had violated. Appellant is not challenging the trial court’s
determination to proceed to an adjudication of guilt. See Olowosuko v. State, 826 S.W.2d 940,
942 (Tex.Crim.App. 1992)(no appeal from determination to proceed to adjudication of guilt).
Instead, Appellant requests that this Court modify the judgment to delete the trial court’s finding
that he violated condition “a,” under the State’s allegation “3(a)” in the trial court’s judgment
adjudicating guilt. The State agrees that the written judgment contains this error and suggests we
reform the judgment.
If there is a variation between the oral pronouncement and written memorialization of the
sentence, the oral pronouncement controls. See Coffey v. State, 979 S.W.2d 326, 328
(Tex.Crim.App. 1998). Here the record shows that the State abandoned its allegation that
Appellant violated condition “(a)” of the terms and conditions of his probation and proceeded to
introduce evidence in support of its remaining allegations. The trial court orally found those
remaining allegations concerning conditions “(b)” and “(k)” to be true. The trial court’s written
judgment, however, reflects that Appellant violated conditions “(a),” “(b),” and “(k).” This
Court has the power to modify incorrect judgments when we have the necessary data and
information to do so. See Tex.R.App.P. 43.2(b); Bigley v. State, 865 S.W.2d 26, 27-8
(Tex.Crim.App. 1993); Asberry v. State, 813 S.W.2d 526, 529-30 (Tex.App.--Dallas 1991, pet.
ref’d). Accordingly, we sustain Appellant’s sole issue for review and modify the trial court’s
judgment to delete its notation that Appellant violated condition “(a)” as alleged in the State’s
motion.
As modified, we affirm the trial court’s judgment.
February 15, 2007
DAVID WELLINGTON CHEW, Chief Justice
Before Chew, C.J., McClure, and Carr, JJ.
(Do Not Publish) | 01-03-2023 | 09-09-2015 |
https://www.courtlistener.com/api/rest/v3/opinions/1667790/ | 321 So. 2d 301 (1975)
Tommy EDWARDS et al.
v.
Mrs. Ina McIntyre HARPER et al.
No. 47959.
Supreme Court of Mississippi.
November 3, 1975.
*302 Johnston & Adams, Brandon, for appellants.
McLaurin & Nicols, Brandon, for appellees.
Before RODGERS, SMITH and SUGG, JJ.
SUGG, Justice:
Complainants filed a bill to confirm title to seventy-five acres of 16th Section land located in Rankin County, within the corporate limits of the City of Brandon, under the provisions of Mississippi Code Annotated section 29-3-103 (1972).
Exhibit "A" annexed to the bill of complaint is the application of F.L. Harper for a ninety-nine year extension of existing 16th Section leases on property described in paragraph three of the bill of complaint. The application of Harper alleged that he held the land under two leases for a period of twenty-five years each, one from October 10, 1932, the other from December 8, 1936. Neither of the leases had expired when the application for extension was filed.
F.L. Harper died testate and devised his leasehold interest in the seventy five acres to Mrs. Ina McIntyre Harper who later conveyed an undivided one-half interest to Maxine Harper Carr, Orville Earl Harper and Dale Lamar Harper. Mrs. Harper and her grantees, as complainants, named the President of the Board of Supervisors of Rankin County as defendant. The record does not show when the bill of complaint was filed, but it was sworn to on October 15, 1973. On October 20, 1973, the chancellor issued a fiat setting the cause for hearing at 9:00 a.m. on November 2, 1973.
On October 23, 1973, Tommy Edwards, one of the appellants, filed a petition to intervene in the case. Edwards alleged that the 1946 lease granted F.L. Harper was void for failure to comply with statutory requirements and that the property was worth in excess of $75,000 at the present market value. On November 3, 1973, James O. Ryals, Jr. and Joseph S. Donnell filed a petition to join in the petition to intervene previously filed by Tommy Edwards. On the same date complainants demurred to the petition to intervene and the chancellor entered an order denying intervention by Tommy Edwards. By separate order, the petition of Ryals and Donnell to join in the petition to intervene filed by Tommy Edwards was denied. We affirm the chancellor's ruling for the reason that the petition to intervene filed by Tommy Edwards did not state a cause of action.
On November 2, 1973, Tommy Edwards, James O. Ryals, Jr. and Joseph S. Donnell filed, in the same cause, a petition to set aside the lease. The petition was filed on behalf of the public and all other taxpayers of Rankin County were invited to join. They alleged that the petition was filed because of the failure of the public officials of Rankin County, Mississippi, specifically the President of the Board of Supervisors, to file an answer to the original bill of complaint of Mrs. Harper, et al.
*303 On November 2, 1973, complainants demurred to the petition of Edwards, et al, and assigned the following grounds: (1) There is no equity on the face of the petition, (2) the petitioners are not parties in the original bill to confirm title and cannot inject themselves into the case, (3) the petition fails to state a cause of action, and (4) other causes to be shown at the hearing.
The first and third grounds of the demurrer raised questions which are properly the subject of a general demurrer, while the second ground assigned is the subject of a special demurrer. In Griffith's Mississippi Chancery Practice § 294 at 278-79 (2nd ed. 1950), the author states:
The general demurrer being, then, one which comprehensively goes to the whole bill, and which of necessity therefore must be treated throughout as an entirety, so that if the bill be good or maintainable in any part or in any respect such a demurrer must be entirely overruled, it follows as a logical consequence that grounds of demurrer which go to form only, or only to a part of a bill, or only to some particular phase of it, or which raise some secondary or affirmative defense, that is to say, grounds which belongs to a special and not to a general demurrer, should not be inserted in a general demurrer, and if so done, such latter grounds must necessarily be disregarded, and that is exactly what our cases hold, that is to say, where there are several grounds of demurrer and one of them goes to the whole bill in its primary aspects and is determinative of the whole case, the court will consider only that one ground and will pass or disregard all the others, and if the single ground going to the whole primary case be not good, the whole demurrer will be overruled, regardless of the fact that if some of the other grounds had been set up in a separate special demurrer they might have been sustained. Matters therefore which constitute the subject of a special demurrer must not be set up in a general demurrer. If both kinds of grounds are desired to be urged at the same time two demurrers may be filed, one a general demurrer and the other a special demurrer, but they cannot ordinarily go in the same pleading.
The demurrer should have been overruled because the petition to set aside the lease stated a cause of action sufficient to withstand a general demurrer. Appellants alleged that, at the time of the execution of the lease to Harper in 1946, the land had a fair market value of $22,500, and the ground rental for the ninety nine year period of $400 was so grossly inadequate as to render the lease a donation in violation of Article IV, Section 95 of the Mississippi Constitution of 1890. We have held in two recent cases that 16th Section lands are held in trust and are the proper subject of taxpayer suits. Keys v. Carter, Miss., 318 So. 2d 862 (decided September 29, 1975); Holmes v. Jones, Miss., 318 So. 2d 865 (decided September 29, 1975).
The court did not give a reason for sustaining the demurrer; therefore, we can only surmise that the chancellor sustained the demurrer because of the third ground assigned. Parties may not intervene in cases except on formal order of the court unless they are recognized as parties by the others. However, if a special demurrer had been filed on the ground that appellants had not been admitted by an order of the court, and such demurrer sustained, appellants could then have filed a proper application for an order admitting them as parties.
The rule governing applications to intervene is succinctly stated in Griffith's Mississippi Chancery Practice § 411 at 402 (2nd ed. 1950), as follows:
Applications to intervene must be made with due diligence, all the circumstances considered; and an intervention should not be allowed if it would operate necessarily *304 to seriously retard the principal suit, more especially if the interests of the applicant may be protected by the final decree in the cause as it stands, from which it follows that the petition is not to be allowed at all in any case when the decrees, orders or process in the original suit will not cause the proposed intervenor either to gain or to lose by their direct legal operation and effect. The petition must show, by positive and concise averment, the material facts whereby the rights of the applicant are involved, what those rights are, and the relief to which he deems himself entitled. .. .
Measured by the above rule, appellants, as taxpayers, should be admitted as parties. The original suit was a bill to confirm title to a 16th Section lease; appellants were not dilatory in filing their petition to set aside the lease, and the interest of the appellants and other taxpayers could not be protected by a final decree confirming title in complainants to the leasehold interest in the lands involved. Appellants were not injecting new issues into the case, but were contending that the consideration paid for the lease was so inadequate that it amounted to a donation. On remand, the trial court should admit appellants as parties by formal order.
The fourth ground of the demurrer should not have been reached by the court because it does not state a ground for demurrer. In Griffith's Mississippi Chancery Practice § 302 at 289 (2d ed. 1950), we find the following:
[I]t is therefore a useless and futile thing to add to a demurrer, as is so often seen, the ground or statement "for other causes to be shown on the hearing." Not only so, because our court has in effect so held, but because moreover the statute already cited requires the demurrer to be certified by the solicitor who prefers it. A certificate of an unassigned ground would be anomalous, if not an absurdity.
This case is therefore reversed and remanded for further proceedings not inconsistent with this opinion.
Reversed and remanded.
GILLESPIE, C.J., and PATTERSON, INZER, ROBERTSON, WALKER and BROOM, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1721362/ | 554 So. 2d 1361 (1989)
Tony TRIPLETTE
v.
EXXON CORPORATION d/b/a Exxon Company, USA.
No. 88 CA 1705.
Court of Appeal of Louisiana, First Circuit.
December 19, 1989.
Jeffrey M. Bassett, Opelousas, for plaintiff-appellant Tony Triplette.
Daniel Atkinson, Leonard Cardenas, III, Baton Rouge, for defendant-appellee Midwest Cooling Tower Services, Inc. U.S. Fidelity & Guar. Co.
E. Burt Harris, New Orleans, for defendant-appellee Exxon Corp.
David Johnson, Baton Rouge, for intervenor-appellee Aetna Cas. and Sur. Co.
Before CARTER, SAVOIE and ALFORD, JJ.
CARTER, Judge.
This is an appeal from a trial court judgment granting a motion for summary judgment.
FACTS
On or about June 4, 1985, plaintiff, Tony Triplette, was employed as a laborer by Midwest Cooling Tower Services, Inc. (Midwest). Midwest had a contract with Exxon Corporation (Exxon) to repair its cooling towers at the Exxon Refinery in Baton Rouge. On that date, plaintiff, while working in a six-by-six foot bay within the cooling tower, was walking along a board or pipe located between two vertical posts, removing drift eliminators which lay upon a 2 × 4 board. Suddenly, the board or pipe upon which plaintiff was walking broke, and plaintiff fell some fifty feet, injuring his shoulder.
*1362 On June 3, 1986, plaintiff filed suit for damages against Exxon and Midwest. In his petition, plaintiff alleged that Exxon was negligent for failing to provide plaintiff a proper platform, failing to warn that the supports were rotten, failing to provide safety equipment, and failing to supervise the work. Plaintiff also alleged that Exxon was strictly liable for plaintiff's damages. Plaintiff further alleged that Midwest was liable to plaintiff for Exxon's negligence pursuant to an indemnity agreement.[1]
On October 23, 1987, Aetna Casualty and Surety Company (Aetna), Midwest's worker's compensation insurer, filed a petition for intervention, seeking reimbursement for worker's compensation and medical benefits paid to or on behalf of plaintiff.
Thereafter, Exxon filed a motion for summary judgment, contending that Exxon was not liable to plaintiff as a matter of law. After a hearing, the trial court granted Exxon's motion for summary judgment and dismissed plaintiff's demands. From this adverse judgment, plaintiff appeals, assigning the following errors:
1. The trial court erred in finding there was no material issue of fact as to whether Exxon's negligence caused or contributed to plaintiff's injury.
2. The trial court erred in finding there was no issue of material fact as to whether Exxon was liable to plaintiff under a theory of strict liability.
3. The trial court erred in finding that there was no material issue of fact as to whether plaintiff was engaged in an ultra hazardous activity at the time of his injury.
NEGLIGENT LIABILITY UNDER LSA-C.C. ART. 2315
Under Louisiana law, a principal generally is not liable for the offenses an independent contractor commits in the course of performing its contractual duties. Ainsworth v. Shell Offshore, Inc., 829 F.2d 548 (5th Cir.1987), cert. denied, 485 U.S. 1034, 108 S. Ct. 1593, 99 L. Ed. 2d 908 (1988); Smith v. Zellerbach, 486 So. 2d 798 (La. App. 1st Cir.1986), writ denied, 489 So. 2d 246 (La.1986); Ricky Wayne Massey, et al. v. Century Ready Mix Corporation, 552 So. 2d 565 (La.App. 2nd Cir.1989), decided on November 1, 1989, under docket no. 20,879-CA consolidated with 21,248-CA. This rule, however, is subject to two well-delineated exceptions. Under the first exception, a principal may not avoid liability for injuries resulting from an ultrahazardous activity by hiring out the work to an independent contractor. Ainsworth v. Shell Offshore, Inc., supra; Smith v. Zellerbach, supra; Ewell v. Petro Processors of Louisiana, Inc., 364 So. 2d 604 (La. App. 1st Cir.1978), writ denied, 366 So. 2d 575 (La.1979).
Whether an activity qualifies as ultrahazardous in Louisiana is a question of law to be determined after a balancing of claims and interests, a weighing of the risk and the gravity of harm, and the consideration of the individual and societal rights and obligations. Langlois v. Allied Chemical Corporation, 258 La. 1067, 249 So. 2d 133 (1971); Chandler v. Bunge Corporation, 489 So. 2d 275 (La.App. 4th Cir.1986), writ denied, 492 So. 2d 1219 (La.1986). See Ainsworth v. Shell Offshore, Inc., supra; Hawkins v. Evans Cooperage Co., Inc., 766 F.2d 904 (5th Cir.1985); Perkins v. F.I.E. Corporation, 762 F.2d 1250 (5th Cir. 1985).
The court in Perkins discussed the Louisiana doctrine of ultrahazardous activity in detail, finding the doctrine to be defined by three boundaries: (1) the activity must relate to land or some other immovable; (2) the activity itself must cause the injury, and the defendant must be engaged directly in the injury-producing activity; and (3) the activity must not require substandard conduct to cause injury. This third element requires that the activity "can cause injury to others, even when conducted with the greatest prudence and care." Kent v. Gulf States Utilities Company, 418 So.2d *1363 493, 498 (La.1982). The "ultrahazardous" label is thus limited to those activities which present "a risk of harm that cannot be eliminated through the exercise of due care." O'Neal v. International Paper Co., 715 F.2d 199, 202 (5th Cir.1983).
In the instant case, the activity conducted by plaintiff was repairing cooling towers. While this work is routinely performed at great heights (in this case fifty feet) with the proper safety equipment and due care, this activity is one which can be performed safely without great risk of injury. The activity does not rise to the level of those activities enumerated in Kent, in which, with the exercise of care and prudence, still encompass great risk of injury or harm.
As pointed out in the deposition testimony and/or affidavit of Daniel A. Wiltz, president and owner of Midwest, plaintiff was improperly using his safety belt at the time of the accident. Rather than hooking the safety belt lanyard to the lanyard after looping the lanyard around the vertical post, plaintiff hooked both ends back to his safety belt. As a result, plaintiff could not reach the center of the bay without unhooking his belt. Had the proper method been employed, the safety lanyard would have been of sufficient length to permit plaintiff to reach beyond the center of the six-by-six foot bay in which he was working without unhooking his safety lanyard. However, because plaintiff improperly used the safety belt, he unhooked the belt to reach the center of the bay to complete his task of removing the drift eliminators. Had the safety belt been used properly by plaintiff or had Midwest used life lines, this accident would not have occurred. Clearly, the activity did not constitute an "ultrahazardous activity" so as to impose liability on Exxon.
The second exception imposes liability upon a principal for the negligent acts of an independent contractor when the principal reserves the right to supervise or control the work. Hawkins v. Evans Cooperage Co., Inc., supra; Smith v. Zellerbach, supra. It is not the supervision and control which is actually exercised that is significant, but it is the right to exercise it which is of primary concern in determining whether a principal may be held liable for the torts of an independent contractor. Hickman v. Southern Pacific Transport Company, 262 La. 102, 262 So. 2d 385 (1972); Smith v. Zellerbach, supra. The fact that the owner periodically inspected the job site to be sure that work was being performed in accordance with the specifications does not constitute the exercise of operational control. Williams v. Gervais F. Favrot Company, 499 So. 2d 623 (La. App. 4th Cir.1986), writ denied, 503 So. 2d 19 (La.1987).
Further, the court in Hemphill v. State Farm Ins. Company, 472 So. 2d 320, 322 (La.App. 3rd Cir.1985), stated that the "control" determination "depends in great measure upon whether and to what degree the right to control the work has been contractually reserved by the principal. The supervision and control which is actually exercised by the principal is less significant."
In the case sub judice, the contract provided that Midwest would furnish all supervision, labor, and equipment. Exxon did not retain the right to control or supervise the work performed by Midwest. Plaintiff received his instructions from Midwest and was supervised by Midwest personnel. Although Exxon reserved the right to terminate the contract with Midwest at will, Exxon was still obligated to pay for the work done on or before the date of termination and for reimbursement of all expenses. Further, even though the contract required that Midwest comply with Exxon safety standards, this requirement does not signify the requisite right of operational control sufficient to vitiate the independent contractor relationship. The test for determining owner-independent contractor status is direct supervision over the step-by-step process of accomplishing the work.
After reviewing the depositions, answers to interrogatories, etc., we find that the trial court did not err in finding, as a matter of law, that the relationship between Exxon and Midwest was that of *1364 owner and independent contractor and that Exxon did not retain the right to control or supervise the work by Midwest. The summary judgment evidence does not support the imposition of liability against Exxon for the negligence of an independent contractor.
STRICT LIABILITY UNDER LSA-C.C. ART. 2322
LSA-C.C. art. 2322 provides:
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.
The owner's fault is founded upon the breach of his obligation to maintain or repair his building so as to avoid the creation of undue risk of injury to others. The owner is absolved from his strict liability neither by his ignorance of the condition of the building, nor by circumstances that the defect could not easily be detected. He is absolved from such liability only if the thing owned by him falls, not because of its defect, but rather because of the fault of some third person or of the person injured thereby or because the fault is caused by an irresistible cause or force not usually foreseeable. Olsen v. Shell Oil Company, 365 So. 2d 1285 (La.1978).
LSA-C.C. art. 2322 imposes liability upon the owner of a building for injury resulting from the building's ruin, when this is caused by neglect to repair it, or when it is the result of a vice in its original construction. To prevail on this strict liability claim, the plaintiff must prove that (1) there was a building; (2) the defendant was its owner; and (3) injury was caused by a "ruin," resulting from a vice in original construction or neglect to repair. Ainsworth v. Shell Offshore, Inc., supra; Olsen v. Shell Oil Company, supra. See also Mason v. Liberty Mutual Insurance Company, 423 So. 2d 736 (La.App. 4th Cir. 1982), writ denied, 425 So. 2d 773 (La.1983).
In Stine v. Creel, 417 So. 2d 1243 (La. App. 1st Cir.1982), writ denied, 422 So. 2d 163 (La.1982), this circuit, when faced with a similar factual case, stated:
In this instance, Stine was going about a repair job to keep the building from falling to ruin. Crown Zellerbach was repairing and protecting its property. One of the obvious effects of this job would be to avoid the very liability imposed by RCC 2322. Olsen v. Shell Oil Co., [La.] 365 So. 2d 1285, will not impose liability in this instance. It was not the ruin of the roof that caused the fall and resulting injuries to Stine. It was the unsafe manner by which Stine sought to remove the roof section that caused his fall. To follow the rationale of Stine would be to place strict liability upon any owner who went about repairing a building. To the contrary, the law should and does encourage owners to repair. If they elect not to repair, then the owner is strictly liable for damages resulting from the ruin or collapse of his building.
Further, RCC 2317 gives Stine no relief. Clearly Crown Zellerbach had custody of the warehouse. But the roof of the building, under the facts of this case, does not constitute a defective thing that caused injury to Stine. Again, it was not the roof that caused the injuryit was the manner about which Stine sought to remove it that caused the injury. (emphasis added) 417 So.2d at 1246.
In the instant case, prior to commencing the repairs, Midwest evaluated the Exxon cooling tower and determined that its employees could safely perform the repair work. Midwest and its employees, including plaintiff, were fully aware that the cooling tower contained boards which were rotten, which was the reason for the repairs. Plaintiff and his co-workers were experienced at this type of work and were in the process of removing the very boards which broke, resulting in plaintiff's fall.
Further, the contract between Exxon and Midwest provided that Midwest would provide all necessary equipment to perform the job. In his deposition, plaintiff stated that the safety harness he was using at the time of the accident would not reach the full distance between the posts to which he would attach his safety belt. Plaintiff, therefore, unhooked the safety belt at certain *1365 times to perform the repair work. As pointed out earlier, had plaintiff properly utilized the safety belt lanyard, the belt was sufficient in length to safely reach the full distance of the six-by-six foot bay, without having to unhook the safety line.
Clearly, plaintiff's injury was not caused by the ruin of the building, but was caused by the manner in which plaintiff improperly used the safety belt as he sought to remove boards within the cooling tower. Having so determined, the trial court found that Exxon was entitled to judgment as a matter of law. We have reviewed the record and cannot say that the trial judge was manifestly erroneous in so finding.
CONCLUSION
For the above reasons, the trial court judgment, granting Exxon's motion for summary judgment, is affirmed. Plaintiff is cast for all costs.
AFFIRMED.
SAVOIE, J., agrees with the result.
NOTES
[1] Exxon also filed a cross-claim against Midwest for indemnification pursuant to their indemnity agreement. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1149006/ | 708 So. 2d 362 (1998)
June REED
v.
WAL-MART STORES, INC. and ABC Insurance Company.
No. 97-C-1174.
Supreme Court of Louisiana.
March 4, 1998.
*363 James D. Kirk, Alexandria, John G. Swift, Lafayette, for Applicant.
Brian M. Caubarreaux, Marksville, Anthony F. Salario, Baton Rouge, for Respondent.
TRAYLOR, Justice.[*]
We granted writs in this case to resolve a disparity among the Courts of Appeal regarding the standard for reviewing findings of an unreasonable risk of harm and to correct a decision which conflicts with this Court's recent decision in Boyle v. Board of Supervisors, Louisiana State Univ., 96-1158 (La.1/14/97); 685 So. 2d 1080.
Because we find that the proper standard of appellate review is the manifest error standard and because we further find that no reasonable finder of fact could conclude that the defect at issue presented an unreasonable risk of harm and because the lower courts' finding of such conflicted with Boyle, we find that the lower courts were manifestly erroneous and reverse.
FACTS AND PROCEDURAL HISTORY
On February 3, 1995, June Reed fell in a Wal-Mart parking lot, breaking her arm. The parking lot is constructed of fifteen-foot concrete squares. She alleges that she tripped on an uneven expansion joint between two of the squares.
At trial, Reed asserted that the expansion joint was defective and that it presented an unreasonable risk of harm. The plaintiff's safety expert testified that there were vertical height differences of ¼ to ½ inch along the joint at issue. The expert testified that, while a ¼ inch variance is acceptable, a ½ inch variance is unreasonably dangerous. The trial court, applying La. R.S. 9:2800.6, agreed with the plaintiff's expert and awarded plaintiff $50,000.
Finding that the trial court was not manifestly erroneous, the court of appeal affirmed.
DISCUSSION
The trial court held defendant Wal-Mart liable under La. R.S. 9:2800.6. The court found, along with the other required elements of La. R.S. 9:2800.6, that the "condition presented an unreasonable risk of harm."
It is common for the surfaces of streets, sidewalks, and parking lots to be irregular. It is not the duty of the party having garde of the same to eliminate all variations in elevations existing along the countless cracks, seams, joints, and curbs. These surfaces are not required to be smooth and lacking in deviations, and indeed, such a requirement would be impossible to meet. Rather, a party may only be held liable for those defects which present an unreasonable risk of harm. The issue in this case is the proper standard of reviewing, and what is encompassed within, a finding that a defect presents an unreasonable risk of harm.
Boyle v. Board of Supervisors, LSU
Because of its extreme similarity, we are initially guided by this Court's recent decision in Boyle, 685 So.2d at 1080, and a brief discussion of that case is warranted.
In Boyle, the lower courts had found that a ½ to 1 inch height variance in a sidewalk joint on the LSU campus was an unreasonably dangerous defect. The lower courts, *364 however, failed to apply a risk-utility analysis in arriving at that conclusion. Pretermitting the issue of the proper standard of review, this Court, after applying a risk-utility analysis, found manifest error and reversed. In doing so, the Court weighed the risk of the "relatively small depression" in the sidewalk joint against the sidewalk's social utility, including the cost of repair. Along with the size of the defect, the Court also considered as a factor the accident history of the alleged defect. The depression was located in a high traffic area and the plaintiff's fall was the first reported. After pointing out the clear usefulness of sidewalks, the Court then found that it would be unreasonable to expect the defendant to maintain all of its sidewalks (more than 22 miles) in such a perfect condition as to avoid the complained-of defect. After weighing the substantial utility, including cost of repair, against the minimal risk of the relatively small depression, the Court held that it was not an unreasonably dangerous defect and that it was manifest error to so find.
Standard of Review
As the Boyle decision did not reach the issue of standard of review and because of the conflict among the circuits, we first turn to the proper standard of review to be applied in cases involving findings of unreasonable risks of harm or unreasonably dangerous defects.
As stated, the Courts of Appeal have employed different standards of review in this context. The First Circuit, along with the Fourth, has applied the manifest error standard to the factual findings but not to the ultimate conclusion, E.g., Green v. City of Thibodaux, 94-1000 (La.App. 1st Cir. 10/6/96); 671 So. 2d 399, writ denied 95-2706 (La.2/28/96); 668 So. 2d 366 Doane v. Wal-Mart Discount Stores, Inc., 96-2716 (La.App. 4th Cir. 6/25/97); 697 So. 2d 309, writ denied 97-1852 (La.10/17/97); 701 So. 2d 1328, while the Third Circuit has generally applied a pure manifest error standard. E.g., Nichols v. Wal-Mart Stores, Inc., 97-625 (La.App. 3d Cir. 7/2/97); 698 So. 2d 53, writ denied 97-2067 (La.11/14/97); 703 So. 2d 628 (expressly rejecting the reasoning of Green).[1] However, it should be noted that the Third Circuit has occasionally applied the latter standard. Migues v. City of Lake Charles, 96-626 (La. App. 3 rd Cir. 11/06/96); 682 So. 2d 946 (following Green).
We now reject Green, 671 So. 2d 399, and find that the manifest error standard of review is the proper standard.
This is not a res nova. Though we have not specifically stated that the proper standard for reviewing a determination that a condition presented an unreasonable risk of harm, we have addressed the issue on several occasions. E.g., Tillman v. Johnson, 612 So. 2d 70 (La.1993) (per curiam); Oster v. Dep't of Transp. and Dev., 582 So. 2d 1285 (La.1991); Landry v. State, 495 So. 2d 1284 (La.1986); Entrevia v. Hood, 427 So. 2d 1146, 1149 (La.1983). In Tillman, we stated that whether a defect presents an unreasonable risk of harm "is a disputed issue of mixed fact and law or policy that is peculiarly a question for the jury or trier of the facts." Tillman, 612 So.2d at 70 (citing to Entrevia, 427 So. 2d 1146; Landry, 495 So. 2d 1284; and Oster, 582 So. 2d 1285). "The unreasonable risk of harm criterion entails a myriad of considerations and cannot be applied mechanically." Oster, 582 So.2d at 1288 (citing to Landry, 495 So.2d at 1287). The concept, which requires a balancing of the risk and utility of the condition, is not a simple rule of law which can be applied mechanically to the facts of the case. Id. Because of the plethora of factual questions and other considerations involved, the issue necessarily must be resolved on a case-by-case basis. Additionally, an appellate court, reviewing a cold record, is not in the best position to weigh and evaluate the evidence presented and make this determination. Rather, the original fact finder, viewing live testimony and evidence, is best positioned to make a determination so heavily laden with factual issues.
Because a determination that a defect presents an unreasonable risk of harm predominantly encompasses an abundance of factual findings, which differ greatly from case to case, followed by an application of those facts to a less-than-scientific standard, *365 a reviewing court is in no better position to make the determination than the jury or trial court. Consequently, the findings of the jury or trial court should be afforded deference and we therefore hold that the ultimate determination of unreasonable risk of harm is subject to review under the manifest error standard. A reviewing court may only disturb the lower court's holding upon a finding that the trier of fact was clearly wrong or manifestly erroneous. Stobart v. State, 617 So. 2d 880 (La.1993).
In determining whether a defect presents an unreasonable risk of harm, the trier of fact must balance the gravity and risk of harm against the individual and societal rights and obligations, the social utility, and the cost and feasibility of repair. Boyle, 685 So.2d at 1083; Entrevia v. Hood, 427 So. 2d 1146, 1149 (La.1983); Langlois v. Allied Chemical Corp., 258 La. 1067, 249 So. 2d 133 (1971). Simply put: The trier of fact must decide whether the social value and utility of the hazard outweigh, and thus justify, its potential harm to others? W. PAGE KEETON ET AL., PROSSER AND KEETON ON THE LAW OF TORTS § 31 (5 th ed. 1984). The reviewing court must then evaluate the fact finder's determination under the manifest error standard of review.
The Parking Lot Expansion Joint
In the instant case, the trial court,[2] along with the appellate court, failed to consider the risk-utility balance, but rather merely found that the joint was a defect which caused the fall. Therefore, we must consider the risk-utility balance concurrently with our analysis of whether the fact finder was clearly wrong in reaching its conclusion.
The plaintiff tripped and fell on the crack between two of the several concrete blocks which make up the Wal-Mart parking lot. The height variance between the blocks was from ¼ to ½ inch. Notably, the blocks which comprise this parking lot and the expansion joint between them are similar in construction to the sidewalk blocks and joint present in Boyle, 685 So.2d at 1080. Also, both the retail parking lot here and the sidewalk in Boyle were subject to heavy pedestrian traffic.
Here, as in Boyle, we are dealing with a relatively small variance, indeed smaller than that in Boyle. The instant variance of ¼ to ½ inch is only half that of the ½ to 1 inch variance in Boyle. Thus, as we characterized the variance in Boyle as a "relatively small depression," the defect here is minimal indeed. As previously discussed, one cannot expect paved surfaces of streets, sidewalks, and parking lots to be free of all deviations and defects.
Our analysis, however, does not end there. We must also consider the accident history of the defect. Boyle, 685 So.2d at 1083. The instant defect was in a high traffic area with estimates of up to a potential six million pedestrians crossing the defect and, like Boyle, this was the first reported accident. Thus, the risk presented by this joint is in all aspects less hazardous than that addressed in Boyle.
Plaintiff asserts that this defect was more hazardous because it was located directly in front of the store where everyone has to pass and where the vehicular traffic is the heaviest. Indeed, plaintiff conceded at oral argument that not every ½ inch crack in the parking lot would be an unreasonable risk of harm, but contended that this one was because of its location "right in front of the store." We are unimpressed by this contention primarily because it is based on a false premise. The record, including testimony of the plaintiff's own expert and photographic evidence, reveals that the defect at issue was not located directly in front, but rather 40 yards away down one of the several traffic aisles in the parking lot. The location cannot be accurately characterized as "right in front," nor can it be distinguished from the adjacent traffic aisle. Furthermore, our analysis would not be different if the defect had in fact been located in the traffic lane immediately in front of the store. Each patron, save those dropped at the door, must traverse at least one traffic aisle before reaching the area of the parking lot adjacent to the entrance. Given the high overall volume *366 of pedestrian traffic in the lot, we would not find one defect adjacent to the entrance an unreasonable risk of harm, yet find the same defect reasonable simply because it is subject to only a third or fourth the total traffic.
As to weighing the social utility and cost of repair, the utility of paved parking lots is clearly apparent as unpaved parking lots would present far more hazards: potholes, wheel ruts, erosion damage, and infinite variations in elevation. As to the specific utility of expansion joints, they are necessary for safety and for maintenance of larger paved surfaces. The expansion joints allow for the concrete to expand and contract as it heats and cools due to weather. Absent the joints, the concrete blocks would contract and subsequently crack and split in the cold. Subjected to heat, the concrete would press against each other, cracking, shifting and buckling, which would produce far more hazardous deviations than the minor ¼ to ½ inch variation at issue here. Additionally, the cost of maintaining such an area would be prohibitive as it would necessitate frequent replacement of the fragmented concrete blocks. The utility of the expansion joint is clear.
The cost of repairing the defect is our final consideration. Contrary to the plaintiff's contention that "the defect could have easily been remedied for a minimal amount,"[3] the cost to eliminate all such minor defects is staggering. Plaintiff's argument incorrectly assumes that the defendant need only have smoothed the joint at issue. Such a contention simplistically overlooks the reality of the situation. A defendant would have to be able to accurately foresee which crack an individual would trip over. Even an elimination of all such elevation deviations in this entire parking lot would fall short of repairing the defect. To avoid liability, this defendant would have to either eliminate all such "defects" in all of its parking lots and sidewalks or cease doing business. Beyond that, parties having garde of the countless concrete parking lots, driveways, sidewalks, and streets throughout the state would likewise have to smooth such surfaces eliminating all elevation deviations of more than ¼ inch to avoid potential liability. Furthermore, such an enormous expense would not rest with the parties owning the paved surfaces, but rather the cost would be shifted either to the public through taxing in the case of government-owned surfaces or, in the case of privately owned concrete surfaces, to consumers via higher prices in retail or increased fees for contract parking. Beyond the cost of the initial smoothing, maintaining such surfaces free from defects is likely impossible, and is certainly cost-prohibitive.
Therefore, given the negligible size of the defect, being even less than that which we considered in Boyle, along with the absence of previous accidents, and because the utility of parking lot expansion joints far outweighs the minimal hazard, and because the cost of repair and maintenance is prohibitive, we find that the instant defect could not present an unreasonable risk of harm and that such a finding was therefore clearly wrong. Conversely, we find that such a "defect" is entirely reasonable.
DECREE
For the foregoing reasons, we find that the lower courts were clearly wrong in holding that the expansion joint at issue presented an unreasonable risk of harm. Therefore, the judgments of the lower courts are reversed.
REVERSED.
KIMBALL, J., concurs and assigns reasons.
CALOGERO, J., concurs for reasons assigned by KIMBALL, J.
LEMMON, J., concurs and will assign reasons.
KIMBALL, Justice, concurring.
I concur with the holding that the proper standard for reviewing a finding of an unreasonable risk of harm is the manifest error standard. Furthermore, I concur in the result *367 agreeing that the uneven expansion joint in this case did not present an unreasonable risk of harm. However, I disagree with the conclusion the lower courts failed to consider the risk-utility balance in its determination of whether the variance in question presented an unreasonable risk of harm.
In his three page "Reasons for Ruling," the trial judge specifically stated the condition could have been corrected with a minor repair and concluded, "The magnitude and risk of harm posed by this defect in the walkway certainly outweighs the feasibility and cost utility of minor repair as stated by the expert." The majority opinion, at footnote 3, recognized the trial judge made this statement, but noted that he did not address or consider any of the other aspects of the risk-utility balance. The majority opinion then concluded that this statement indicated he only considered one factor in the risk-utility balance. I disagree with this conclusion. The trial judge in this case very well may have considered the other aspects of the risk-utility balance in his determination of the unreasonable risk of harm, but only mentioned the cost of repair vis-a-vis the magnitude of the risk because that was the only aspect of the balancing test in question. This is especially true in this case where there was undisputed evidence concerning the size and location of the variance, the history of the defect and parking lot in general, and the obvious social utility of paved walkways and parking facilities. I feel that if we were to require the trial court to provide a "mantra" of the steps in reaching their conclusions we would certainly be engaged in micro-management of the lower courts, a truly undesirable result.
While I disagree with the opinion's conclusion the trial judge did not properly apply the risk-utility test, I agree with its ultimate conclusion, the expansion joint did not present an unreasonable risk of harm. As noted, the trial judge stated the cost of repairing this expansion joint was minimal. Based on the testimony of the plaintiff's expert and the evidence presented, the trial judge's conclusion was manifestly erroneous.
During his presentation, plaintiff's counsel called Mr. Gene Moody who was accepted by the trial judge as an expert in civil and safety engineering. Mr. Moody testified the expansion joint in question could be repaired two ways: by filling the uneven expansion joints with "some asphalted concrete" or by overlaying the entire parking lot with an inch of asphalt. Mr. Moody also testified that in between the time of the accident and his inspection of the lot, "there had been some patching ... [which] would have made the area safer." Furthermore, the patching which had been done was "very similar" to the first solution he proposed. However, Mr. Moody conceded, and the photographs of the scene he took on April 15, 1996, reveal, the patching done by the defendant did not repair the problem. Mr. Moody stated when he went to the parking lot to make his inspection, there was, despite the patching, a ¼ to ½ inch difference in elevation at the expansion joint. In his opinion, it would have been "wise" to overlay the entire lot and while overlaying the lot was expensive, it was a long term solution to the problem.
Mr. John Robert Reed, the plaintiff's son, also testified on Ms. Reed's behalf. Mr. Reed stated that in May of 1995, he and his mother returned to the scene and took a Polaroid photograph of the area where Ms. Reed fell. This photograph was admitted into evidence as plaintiff's exhibit-3. The Polaroid taken by Mr. Reed in May of 1995, is dissimilar from the photographs taken by Mr. Moody, eleven months later, in that the earlier photograph reveals the expansion joints without any patching. Whereas, the later photographs reveal the same area, eleven months later, patched, the curative recommendation made by Mr. Moody at trial was ineffective. Significantly, a cursory comparison of the two photographs in conjunction with a review of Mr. Moody's testimony reveal that one of Mr. Moody's solutions to the problem at issue, patching, was no solution at all. In the eleven months between the taking of the two sets of photographs, the expansion joint in question had been "repaired" and reverted to its original state. The minimal cost of repair, as opined by the trial judge, was no repair at all. Mr. Moody stated that in making the repair, there were two possible choices: patching, which was *368 "cheap" in terms of cost, but would present only a short term solution, or overlaying the entire parking surface with ½ inch of asphalt, which was more expensive, but a long term solution. Patching, as a method of "repair" proved to be a short term solution indeed.
Therefore, it is my opinion that the trial judge properly addressed all of the factors to be considered in the risk-utility balance, yet did so in a manifestly erroneous manner. The evidence presented and the testimony reveal the cost of repair was not minimal. Therefore, I concur in the result that the expansion joint at issue did not present an unreasonable risk of harm.
NOTES
[*] Victory, J., not on panel. Rule IV, Part 2, § 3.
[1] In the instant case the Third Circuit also applied the manifest error standard of review.
[2] This case was tried without jury.
[3] In his Reasons for Ruling, the trial court likewise characterized the repairs as minimal and although that does show that the trial court considered cost of repair, one factor of the risk-utility balancing, the court did not address nor consider any other aspect of the balancing test. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1210800/ | 967 P.2d 1200 (1998)
1998 OK 88
James E. SHAMBLIN, Plaintiff/Defendant on Counterclaim-Appellee,
v.
Allen BEASLEY and Helen J. Beasley, husband and wife, Port Duncan Realty Company, Port Duncan Owners' Association, and Estey Cabinet Door, Defendants/Counterclaimants-Appellants.
No. 88965.
Supreme Court of Oklahoma.
September 15, 1998.
As Corrected January 28, 1999.
Tommy R. Dyer, Jr., Davis & Thompson, Jay, Oklahoma, for Appellants.
Richard D. James, W. Neil Wilson, Wallace, Owens, Landers, Gee, Morrow, Wilson, Watson & James, Miami, Oklahoma, for Appellee.
*1203 OPALA, Justice.
¶ 1 The three dispositive issues presented on certiorari are: (1) Does the evidentiary material in the record provide undisputed proof that the service of statutory pre-sale notice on the wife-owner by delivery to her husband satisfies the fundamental law's due process standards? (2) Do the alleged irregularities in the publication notice invalidate the tax resale? and (3) Does the evidentiary material tendered by the lender at nisi prius raise a fact issue on the merits of the controversy which was not fit for disposition by summary process? We answer the first and the third questions in the affirmative and the second in the negative.
I
THE ANATOMY OF LITIGATION
¶ 2 The spousal possessors, Allen and Helen Beasley [counterclaimants, former or spousal owners, or husband and wife], had failed to pay ad valorem taxes on their homestead, *1204 which was sold to the county at a delinquent tax sale.[1] Unredeemed from the lien of ad valorem tax for more than two years, these premises were acquired at a tax resale by the plaintiff below, James Shamblin [Shamblin, plaintiff or purchaser].[2] Two months after the resale tax deed was executed, the purchaser brought a claim to quiet his title in the premises against the delinquent spousal owners still in possession and the mortgage lender, Port Duncan Realty Co., and for ejectment of the spousal defendants from the land.[3] By their separate counterclaims both the possessors and the mortgage company (the latter acting through its owner, Roger Laubach [lender]) mount an attack on the plaintiff's muniment of title the resale tax deed to bring about its judicial cancellation. The challenge rests on the county's failure to comply with the statutory pre-sale notice requirements.[4] The trial court gave summary judgment to the purchaser and denied the three defendants' joint quest for like relief. According to the trial court's ruling (a) the pre-sale notice to each of the defendants is sufficient as a matter of law, (b) the county treasurer was required to do no more than give notice by publication and by certified mail, (c) even though the treasurer had in fact requested both, there is no statutory requirement either for a return receipt or for restricted delivery, (d) although *1205 the defendants maintained in their affidavits that they did not receive actual notice, the treasurer complied with all statutory requirements and (e) none of the defendants' due process rights was violated. The Court of Civil Appeals affirmed.
A.
Tax Resale Purchaser's Plea For Summary Judgment
¶ 3 The purchaser's suit is based on his claim to a superior title acquired by resale tax deed, which operates in law to extinguish the spousal owners' and the lender's statutory opportunity for redeeming the land from ad valorem lien. There is no dispute that the husband signed both the receipt for the notice-bearing certified mail directed to his wife as well as for that which was addressed to him.[5] Nor is it challenged that the lender's grandson executed the receipt for the notice-bearing certified mail sent to the mortgage company.[6] Purchaser maintains that the proceedings leading toward the county treasurer's execution of the resale tax deed substantially comply with the statutory prerequisites and provide prima facie evidence of the transaction's validity. The only issue, he urges, is whether the service effected (on the wife and on the lender) in the framework of the procedure employed complies with the notice requirements of due process. It is the purchaser's position that the tax resale notice that was to be effected by certified mail directed to each of the spousal owners and to the lender, which called for restricted delivery and return receipt, passes muster under the constitutional mandate for "reasonable probability" that the defendant will receive actual notice.[7]
B.
Former Owners' Counterclaim and Their Summary Judgment Quest
¶ 4 The spousal defendants argue several affirmative defenses to defeat the purchaser's suit. According to their joint answer, the wife's due process rights were violated because (a) she failed to receive "actual notice" of the resale and (b) her notice of resale, given by certified mail, went to the husband, who neither delivered the critical letter to her nor informed her of the impending sale.[8]Both spouses claim the sale is fatally tainted by irregularities because the published notice (a) fails to inform them of the location of the sale, (b) states that the property was being sold under certain cited statutory provisions which had been renumbered in a subsequent official compilation and were no longer in force, (c) fails to include the date the property was sold to the county for delinquent taxes[9] and (d) improperly refers to the 1991, 1992 and 1993 tax rolls, rather than to the "last tax rolls in the treasurer's office".[10] Spousal defendants, who aver in their counterclaim that the resale tax deed is void for all the reasons stated in their answer, seek to have their own title quieted.
¶ 5 In support of their quest for relief by summary process, husband and wife submitted separate affidavits. According to that of the wife (a) her husband failed to deliver to her the notice of sale that was mailed by the county treasurer in an envelope addressed to her, (b) she did not receive "actual notice" that her home was to be sold for delinquent taxes on 10 June 1996, (c) her husband was not an authorized agent to sign the receipt for certified mail directed to her or to acknowledge her receipt of the notice from the county treasurer and (d) her husband did not *1206 tell her about the sale of her home for delinquent tax liability until after the sale had been completed. The husband's affidavit states that (a) the certified letter addressed to him and that directed to his wife were both delivered to him at his jobsite (rather than at his residence),[11] (b) he was not aware of any attempt to serve the certified letter upon his wife, (c) he still has possession of the unopened notice-bearing envelope addressed to his wife, (d) his wife had neither appointed him as her agent nor authorized him to accept certified mail on her behalf, and (e) he and his wife do not file joint income tax returns; each of them bears individual responsibility for a self-assessment to be declared.
C.
Lender's Counterclaim and Quest For Summary Judgment
¶ 6 The lender's affirmative defenses are nearly identical to those of the spousal defendants. He alleges that notice of the tax resale, delivered by certified mail, restricted delivery, and signed for by his grandson, Mike Laubach, does not satisfy the fundamental requirements of due process. Lender's counterclaim similarly argues that the resale tax deed is void and that, subject to lender's mortgage, the spousal defendants' title should be quieted.
¶ 7 According to the lender's summary judgment affidavit, his grandson (a) picked up the notice-bearing envelope from the mortgage company's post office box but failed to deliver it to the addressee-lender, (b) is not an officer or employee of the mortgage company and was not expressly authorized to receive mail on the lender's behalf, (c) is an employee of a building supply company that shares a post office box with the mortgage company and (d) was not authorized to sign the receipt for the notice of sale addressed to the lender which had called for restricted delivery to the addressee.
D.
The Efficacy Of Facially Valid Service That Is Assailed As Fraught With A Hidden Infirmity Ordinarily Presents A Question Of Fact
¶ 8 The validity of service on the wife and on the lender presents here both a matter of defense against the purchaser's quiet title suit as well as a critical "issue on the merits"[12] in the respective parties' counterclaims.[13] What is on or dehors the merits depends on whether the issue at hand affects one or more elements of the claim for relief or any elements of the defense that stands interposed against the claim.[14] If a case tenders a fact issue on the merits of the controversy it is unfit for disposition by summary process.[15] The issue must be resolved by submission to the trier.[16] A resale tax deed, facially meeting the basic statutory *1207 prerequisites, cuts off the redemption opportunity for those affected parties who are not then under some legal disability.[17] Service that is facially valid, but latently ineffective, is not impervious to attack for an infirmity that lies beneath the record's surface.[18] A challenge launched under the provisions of 12 O.S.1991 § 1031[19] to the validity of service that is facially regular, though alleged to be fraught with a hidden defect, presents an issue of fact that must be resolved upon consideration of proof extraneous to the face of the record. The attack is timely if brought within three years.[20] The defendants' challenge to the validity of service was hence timely pressed.
II
STANDARD OF REVIEW FOR SUMMARY JUDGMENT
¶ 9 The focus in summary process is not on facts a plaintiff might be able to prove at trial (i.e., the legal sufficiency of evidence that could be adduced), but rather on whether the tendered evidentiary material, viewed as a whole, (a) shows undisputed facts on some or all material issues, which facts (b) support but a single inference that favors the movant's quest for relief.[21] Summary process a special procedural track to be conducted with the aid of acceptable probative substitutes[22] is a search for undisputed material facts that would support but a single inference which favors the movant. It is a method for identifying and isolating non-triable fact issues, not a device for defeating the opponent's right to trial. Only that evidentiary material which entirely eliminates from testing by trial some or all material fact issues will provide legitimate support for nisi prius use of summary relief in whole or in part. All inferences to be drawn from the evidentiary material must be viewed in the light most favorable to the nonmoving party.[23] The function of summary process is not to set the stage for trial by affidavit, but to afford a method of summarily terminating a case (or eliminating from trial some of its issues) when only questions of law remain.[24]*1208 Summary process applies in a like manner to issues that are tendered in legal as well as in equitable claims (or counterclaims).[25]
III
THE WIFE CANNOT SUCCEED IN SECURING A SENTENCE OF NULLITY FOR THE SERVICE EFFECTED BY THE HUSBAND'S ACCEPTANCE OF THE NOTICE-BEARING ENVELOPE ADDRESSED TO HER AS ONE OF THE DEFENDANTS IN THE CASE
¶ 10 Both spousal owners seek to reinstate the legal redemption period by setting aside the tax resale. One of the wife's affirmative defenses (and her counterclaim) must stand or fall on the adequacy of personal notice to her by service of process effected on the husband. The remainder of spousal defenses, which are joint, rests on the validity of the published notice, whose content is alleged not to comport with the statutory requirements.
A.
The Principles Of Agency Law Do Not Govern The Constitutional Quality of Notice Served Through Another
¶ 11 The binding effect that acceptance of service by one person for another may have on the latter, although often characterized in terms of agency,[26] is not truly governed by the principles of agency law,[27] but rather by constitutional norms that shape the quality of notice that is one's due. A person statutorily appointed to receive service for another is not a true agent within the meaning of agency law.[28] For the rules of agency to come into play, the "representation" of one person by another must be intended to affect the principal's legal position.[29]The wife's challenge to service in this case does not call for a test based on agency rules; rather, it raises the constitutional question of whether, in the context of this litigation, one spouse's receipt of notice directed to another may be binding on the other spouse as the latter's "actual notice".
*1209 B.
Notice Must Pass Muster Under The Criteria of Due Process
¶ 12 Service is not subject to invalidation for any departure from the mode prescribed by statute. When it is alleged that there was want of strict compliance with statutory requirements for service, the court must in every case determine whether the found departure offends the standards of due process and thus may be deemed to have deprived a party of its fundamental right to notice.[30] Notice is a jurisdictional requirement and a sine qua non element of due process.[31] The latter notion requires notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and to afford them an opportunity to present their objections.[32] As the Constitution inexorably commands, no one's rights may be adversely affected in the absence of due and timely notice that affords a full and fair opportunity to defend.[33] The right to be heard is of little value unless a party is fairly and timely apprised of what interests are sought to be affected by process that is triggered.[34]
C.
The Reasonable Probability That The Person Who Was Not Individually Served Will Receive Actual Notice By One Who Accepted Service For Another
¶ 13 Failure to open delivered certified mail containing vital notice is not by itself a vitiating infirmity in the course of imparting knowledge that is the addressee's due. So long as the notice-giving process does not fall below the standard of that which is due, it is not subject to invalidation.[35] When it is tested by the gauge of due process, judicial approval (or condemnation) of the husband's receipt of notice directed to his wife must depend on whether in the context of the case there is a reasonable probability that the person who was not individually served will receive actual notice from one by whom service was accepted.[36] A finding *1210 of agency is neither critical nor indispensable to the constitutional standard for measuring the reasonable probability of actual notice reaching the intended party. It is the totality of circumstances not the particular norms of statutory requirements that dictates the quality of service necessary to safeguard an individual's property interest at stake.[37]
D.
Service Effected On A Member Of One's Household Is Recognized As Valid
¶ 14 Legislation in force since statehood recognizes as effective that service which was made on a member of one's household by leaving a copy of the process with any person (15 years or older) who is then residing at the "dwelling house" or "usual place of abode" of the person to whom process is directed. See the provisions of 12 O.S.Supp.1996 § 2004(C)(1)(c)(1)[38] The statute also provides that an appointment may be made by the addressee or "by law" for acceptance of service for another. This provision represents our legal system's long-standing confirmation that effective service need not be made exclusively on one to whom process is addressed.[39] The conceptual underpinning for the provisions of § 2004(C)(1)(c)(1) is not in a notion of agency or of kinship (by consanguinity or affinity), but rather in the law's perceived bond by cohabitation in a common dwelling.[40] The test we apply today has the very same underpinning. The constitutional norms of quality are not dependent on where service was effected on another. The fundamental-law test is based on the reasonable probability[41] that *1211 the person to whom service is directed will receive actual notice from one who accepted service for another as the latter's lawful designee. The service in this case is to be treated as within the guidelines prescribed by § 2004(C)(1)(c)(1) and of the general policy expressed in it.
E.
The Combined Components Of Notice-Giving Process In Contest Militate In Favor Of Concluding That Service Of Wife's Notice On The Husband Does Not Offend The Minimum Standards Of Due Process
¶ 15 The commonality of the affected owners' interests both in the conjugal as well as in the property ownership regime sense is critical in ascertaining whether, consistently with the "reasonable probability" test, service on the husband will in this case be deemed binding on his wife. Among the circumstances to be considered here are the following combined components: (a) the existence of spousal status (the owners' matrimonial bond), (b) their joint ownership of the property in question, (c) the fact that by the legal impact of proceedings for tax resale their respective interests were affected alike, (d) the notice was critical and beneficial to the preservation of both spousal owners' interests, (e) the fact of their cohabitation, at the critical time in question, by maintaining a joint residence in a common dwelling, and (f) the property's homestead status. Another important factor to be weighed here is the absence of allegation in any of the spouses' affidavits that at the time material to the notice the spousal owners were either estranged or living separately from one another, or that they otherwise stood, with respect to the property interest in litigation, in a position antagonistic to one another.
¶ 16 We hence apply the totality-of-circumstances test to conclude that there was here a reasonable probability that if the service of process directed to the wife was accepted and signed by the husband on her behalf, the nonreceiving spouse will be afforded actual notice of the pendency of the tax resale. The notice served on the husband was beneficial to the preservation of both spousal parties' interests in the then commonly owned and possessed property, and the impact of the then-impending tax resale upon their individual interest was identical.[42] In sum, the service on the wife through her husband does not fall here below the minimum standards of process that was her due.
¶ 17 The wife having tendered no fact issue in this case which would overcome the presumption of regularity in the service of process made through the husband is not entitled to a judicial declaration that would relieve her of the legal consequences flowing from the husband's acceptance of service for her. It follows that the critical resale tax deed did extinguish both spousal owners' equity of redemption. Today's holding is not to be enlarged by reading into it the principle that the wife would be bound by service delivered to the husband in a context other than the circumstances presented by this case.
IV
ALLEGED IRREGULARITIES IN THE PUBLICATION NOTICE ARE INSUFFICIENT TO INVALIDATE THE TAX RESALE
¶ 18 The counterclaimants argue that because the tax resale is fatally tainted by irregularities in the text of the published statutory notice of tax resale, it should be invalidated and the deed canceled under the doctrine of strictissimi juris.[43] According to their argument, the published notice (a) *1212 failed to identify the location of the resale, (b) states that the property was being sold under certain statutory provisions which had been renumbered in the official compilation and were no longer in force, (c) failed to include the date the property was sold to the county for delinquent taxes[44] and (d) improperly refers to the 1991, 1992 and 1993 tax rolls, rather than to the date of the last tax rolls in the treasurer's office.
¶ 19 The attack on the notice wrongly presupposes that any deviation from the statutory requirements renders the tax resale fatally defective.[45] The essence of notice in this case lies in its effective warning (to the affected parties) of the impending tax resale and in affording them a timely opportunity to redeem the property from the tax lien.[46]
¶ 20 The opportunity to redeem is unrelated to the geographical location of a sale; it hinges on the well-known public fact that the county treasurer's office is situated at the courthouse, where redemption rights may be exercised up until their extinction is brought about by the resale tax deed. This case is distinguishable from Cate v. Archon,[47] where personal notice of the execution sale's location was held to be essential. There, lack of that information deprived the judgment debtor of an opportunity to appear and to take appropriate steps (by bidding in) before the affected property was irretrievably lost.[48] Moreover, it seems clear that the county treasurer's published notice which states that a resale will be held "at the office of the County, State of Oklahoma" has reference to the county offices whence the notice came.[49]
¶ 21 We conclude that none of the alleged irregularities is critical to the constitutional efficacy of the published notice.
V
LENDER'S AFFIDAVIT IN SUPPORT OF SUMMARY PROCESS RAISES A HOST OF FACT ISSUES FOR DETERMINATION AT TRIAL
¶ 22 Lender argues that his grandson was not authorized to receive process on behalf of the mortgage company and hence the service received by him fails to meet the minimum due process standards.[50] In essence, what the lender tenders is a question of fact concerning facially valid service alleged to be fraught with a hidden infirmity that vitiates the process.
¶ 23 Generally, a letter placed in the mail is presumed to have been received.[51]*1213 To overcome the presumption here, the lender must show that the person who received the letter gained access to the box by intrusion rather than by means provided by the lender himself.[52] The original document returned by the post office is not in the record. Sans any paper trail documenting how the delivery was receipted, we can assume no more than that the letter was mailed to a correct address. But absent any proof in the record and any returned post office paperwork, we cannot likewise assume that it was mailed to the same address as that shown by the pertinent recorded instruments in the register of deeds' office.
¶ 24 By affidavit stating that an intruder retrieved the certified letter addressed to the mortgage company, lender overcame the law's presumption that the critical notice-bearing letter mailed by the county treasurer was received by the addressee-defendant. Moreover, the lender's position is aided by the principle that his knowledge that the ad valorem taxes were then delinquent did not equate with notice that a tax resale proceeding had been instituted and the redemption opportunity would stand subject to extinguishment.[53]
¶ 25 In the light of pertinent constitutional jurisprudence, among the material issues of fact tendered by lender's affidavit, which must be resolved by trial, are: (a) Was the mail in question directed to the lender's address shown on some recorded instrument or to any other place? (b) In whose name (or names) was the post office box registered? (c) Was the post office box rented by the entity to whom the letter was addressed or intended for delivery? (d) What was the lender's relationship to the person who retrieved the letter of notice from the post office box? (e) What means, if any, did the retriever use to secure the content of the lender's post office box? and (f) How did the letter's retriever obtain access to the box? Upon these material issues of fact the lender was entitled to an adversary hearing, and the county treasurer to an opportunity to refute the lender's denial-of-actual-notice scenario. This may be done by showing, among others, that the retriever's access to the box was gained either with lender-provided means or with his prior knowledge (or acquiescence). Although this contest over the quality of notice is litigated here within the framework of a purchaser's quiet title suit, the governing principles are the same as those which would apply in a suit for cancellation of the resale tax deed or in a contest over the efficacy of a judgment secured upon constitutionally infirm service.[54]
VI
SUMMARY
¶ 26 Based on the commonality of interests, both in the conjugal and in the property *1214 ownership regime sense, the minimum due process standard for effective notice to the wife has been met. Service on her through the husband was not so wanting in the quality of process that was her due as to warrant the deed's cancellation. No facts tendered by the spousal owners' affidavits raise issues calling for a trial. Absent from the wife's affidavit are any allegations that, at the critical contest stage, either party-spouse stood in a posture adverse to the other with respect to the property interest at stake. The wife, having tendered no fact issue, may not secure a judicial declaration that would relieve her of the legal consequences attendant upon the service accepted for her by the husband.
¶ 27 The text of the published notice is free from any vitiating constitutional deficiency.
¶ 28 The lender's evidentiary material has raised a host of fact issues on the merits of the controversy, which must be resolved by trial. The dispute tendered is critical to resolving the question of whether the service on the lender meets the minimum standards of due process. By today's pronouncement we are not declaring that service on the lender is legally infirm. What we hold is that summary process is unfit for disposition of the lender's attack on the service made on him. Whether the letter addressed to the lender fell into the hands of an intruder or was retrieved by one to whom the addressee-lender had afforded the means of access to the box which was his chosen method for receiving mail presents a question for the trier.
¶ 29 On certiorari granted upon the counterclaimants' (spousal owners and mortgage lender) petition, the Court of Civil Appeals' opinion is vacated; the trial court's summary judgment is affirmed only (a) insofar as it adversely affects the title of spousal defendants and (b) reversed insofar as it adversely affects the interest of the lender; and cause is remanded for disposition of lender's defense and counterclaim in a manner not inconsistent with today's pronouncement.
¶ 30 KAUGER, C.J., SUMMERS, V.C.J., and HODGES, LAVENDER, HARGRAVE, OPALA, ALMA WILSON and WATT, JJ., concur.
¶ 31 SIMMS, J., concurs in judgment.
NOTES
[1] For the statutory regime governing tax sales, see 68 O.S.1991 §§ 3101 et seq. Unpaid ad valorem taxes become a lien against the entire fee of the delinquent owner. 68 O.S.1991 § 3101. The lien attaches when the tax is due, and unless redeemed, the property is subject to sale in satisfaction of the tax liability. 68 O.S.1991 §§ 3105, 3106. When no bids are received at the original tax sale, the property stands sold to the county by operation of law. 68 O.S.1991 § 3108. Dearing v. State ex rel. Com'rs of Land Office, 1982 OK 5, 642 P.2d 226, 228-229. For recent appellate discussion of the interests that would be entitled to notice in tax resale proceedings, see Stottlemyre v. Haworth, 1998 OK CIV APP 31, 957 P.2d 131; Kester v. Ives, 1998 OK CIV APP 109, 960 P.2d 865. For the provisions that govern service before a tax deed is issued, see Berkeley Federal Bank & Trust v. Selby, 1998 OK CIV APP 102, 969 P.2d 369.
[2] The terms of 68 O.S.1991 § 3125 are:
"If any real estate purchased by the county at delinquent tax sale shall remain unredeemed for a period of two (2) years from date of sale, and no person shall offer to purchase the same for the taxes, penalty and costs due thereon, the county treasurer shall proceed to sell such real estate at resale, which shall be held on the second Monday of June each year in each county." (Emphasis supplied.)
See, e.g., Federal Land Bank of Wichita v. American Bank & Trust Co., 1991 OK 91, 823 P.2d 359, 360.
[3] The quiet title suit also names two other parties as defendants in the case, Port Duncan Owners' Association and Estey Cabinet Door, who are not appellants herein (the purchaser's summary judgment brief informs the court that these defendants are either in default or have filed their disclaimers in the case).
[4] The pertinent terms of 68 O.S.1991 § 3127 are:
"The county treasurer shall give notice of the resale of such real estate by publication .... Such notice shall contain a description of the real estate to be sold, the name of the owner of said real estate as shown by the last tax rolls in the office of the county treasurer, the time and place of sale, a statement of the date on which said real estate was sold to the county for delinquent taxes, the year or years for which taxes have been assessed but remain unpaid and a statement that the same has not been redeemed for the period of two (2) years from the date of sale, the total amount of all delinquent taxes, costs, penalties and interest accrued, due and unpaid on the same, and a statement that such real estate will be sold to the highest bidder for cash. It shall not be necessary to set forth the amount of taxes, penalties, interest and costs accrued each year separately, but it shall be sufficient to publish the total amount of all due and unpaid taxes, penalties, interest and costs. The county treasurer shall, at least thirty (30) days prior to such resale of real estate, give notice by certified mail, by mailing to the owner of said real estate, as shown by the last tax rolls in his office, and to all mortgagees of record of said real estate a notice stating the time and place of said resale and showing the legal description of the real property to be sold. If the county treasurer does not know and cannot, by the exercise of reasonable diligence, ascertain the address of any mortgagee of record, then the county treasurer shall cause an affidavit to be filed with the county clerk, on a form approved by the State Auditor and Inspector, stating such fact, which affidavit shall suffice, along with publication as provided for by this section, to give any mortgagee of record notice of such resale. Neither failure to send notice to any mortgagee of record of said real estate nor failure to receive notice as provided for by this section shall invalidate the resale, but the resale tax deed shall be ineffective to extinguish any mortgage on said real estate of a mortgagee to whom no notice was sent...." (Emphasis supplied).
[5] The purchaser plaintiff below does not dispute that the husband had accepted service for the wife. There is no returned post office paperwork in the record.
[6] Neither does the record include the returned post office paperwork for the notice mailed to the lender.
[7] For this constitutional norm the purchaser directs us to Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798, 103 S. Ct. 2706, 2711, 77 L. Ed. 2d 180 (1983).
[8] The record contains no original post office returns.
[9] See the pertinent terms of 68 O.S.1991 § 3127, supra note 4.
[10] See the pertinent terms of 68 O.S.1991 § 3127, supra note 4.
[11] According to the purchaser's brief on motion for summary judgment, the notices were delivered to the husband at the family home. Other evidentiary material tendered (a copy of the unopened envelope addressed to the wife but delivered to the husband) shows that the address on the wife's certified letter is a post office box number.
[12] The word "merits" has a well-defined meaning in law. See, e.g., Pryse Monument Company v. District Court of Kay County, 1979 OK 71, 595 P.2d 435, 437-38 (when a case is terminated as time-barred, the disposition is "on the merits" because in that context the statute of limitations presents an affirmative defense against the claim).
[13] Issues of fact or law on the merits are typically raised by the pleadings. The terms of 12 O.S.1991 § 552 provide:
Issues arise on the pleadings, where a fact or conclusion of law is maintained by one party, and controverted by the other. There are two kinds. First, of law. Second, of fact.
[14] See, e.g., Pryse, supra note 12.
[15] The terms of 12 O.S.1991 § 557 provide:
All other issues of fact shall be tried by the court, subject to its power to order any issue or issues to be tried by jury, or referred as provided in this Code.
[16] Trial is a judicial determination of issues on the merits. Practice, procedure and evidence are not embraced within the latter term, but are deemed matters "dehors the merits." Roark v. Shelter Mut. Ins. Co., 1986 OK 82, 731 P.2d 389, 390 n. 2 (Opala, J. concurring); Flick v. Crouch, 1967 OK 131, 434 P.2d 256, 261.
[17] Sherrill v. Deisenroth, 1975 OK 136, 541 P.2d 862, 866-867; Price v. Mahoney, 175 Okl. 355, 53 P.2d 257, 258-259 (1935).
[18] Facially valid service that is in fact ineffective may extend the redemption period as well as save one who is adversely affected from the legal consequences of a resale tax deed. See Scoufos v. Fuller, 1954 OK 363, 280 P.2d 720, 723; Hough v. Hough, 1989 OK 65, 772 P.2d 920, 921.
[19] The pertinent terms of 12 O.S.1991 § 1031 are:
"The district court shall have power to vacate or modify its own judgments or orders within the times prescribed hereafter:
* * *
Third. For mistake, neglect or omission of the clerk or irregularity in obtaining a judgment or order. * * *" (Emphasis supplied.)
[20] The pertinent terms of 12 O.S.Supp.1993 § 1038 are:
"* * * Proceedings to vacate or modify a judgment, decree or order, . . . for the causes mentioned in paragraphs 3 and 6 of Section 1031 of this title, shall be within three (3) years . . . . A void judgment, decree or order may be vacated at any time, on motion of a party, or any person affected thereby." (Emphasis supplied.)
See also Scoufos, supra note 18 at 723.
[21] Hulsey v. Mid-America Preferred Ins. Co., 1989 OK 107, 777 P.2d 932, 936 n. 15. An order that grants summary relief disposes solely of law questions. It is hence reviewable de novo. An appellate court claims for itself plenary, independent and nondeferential authority to re-examine a trial court's legal rulings. Kluver v. Weatherford Hosp. Auth., 1993 OK 85, 859 P.2d 1081, 1084. Oklahoma's summary process is similar, but not identical, to that followed in the federal judicial system. See Salve Regina College v. Russell, 499 U.S. 225, 231, 111 S. Ct. 1217, 1221, 113 L. Ed. 2d 190 (1991).
[22] "`Acceptable probative substitutes' are those which may be used as `evidentiary materials' in the summary process of adjudication." Jackson v. Oklahoma Memorial Hosp., 1995 OK 112, 909 P.2d 765, 773 n. 35; Gray v. Holman, 1995 OK 118, 909 P.2d 776, 781 n. 16 (quoting from Seitsinger v. Dockum Pontiac Inc., 1995 OK 29, 894 P.2d 1077, 1080-81); Davis v. Leitner, 1989 OK 146, 782 P.2d 924, 926-27.
[23] Carmichael v. Beller, 1996 OK 48, 914 P.2d 1051, 1053.
[24] Russell v. Board of County Com'rs, Carter County, 1997 OK 80, 952 P.2d 492, 503; Bowers v. Wimberly, 1997 OK 24, 933 P.2d 312, 316; Stuckey v. Young Explor. Co., 1978 OK 128, 586 P.2d 726, 730.
[25] For application of summary relief, Rule 13, Rules for District Courts of Oklahoma, 12 O.S.Supp.1993, Ch. 2, App., whose terms govern summary process, makes no distinction between legal and equitable actions. Other jurisdictions, much like Oklahoma, do not differentiate for summary judgment purposes between equity suits and actions at law. See City of Savage v. Varey, 358 N.W.2d 102, 105 (Minn.App.1984)(citing Forsblad v. Jepson, 292 Minn. 458, 195 N.W.2d 429, 430 (1972)); Cloverlanes Bowl, Inc. v. Gordon, 46 Mich.App. 518, 208 N.W.2d 598, 602 (1973); Spencer v. Leone, 420 S.W.2d 685, 687 (Ky.1967); Fisher v. Hargrave, 318 Ill.App. 510, 48 N.E.2d 966, 970 (1943).
[26] The notions of agency were inadvertently injected into the field of service of process through language used in legislation such as that found in statutes pertaining to notice of service on nonresident motorists. Nonresident motorist legislation named certain persons (or officials) as agents to accept service for others. See, e.g., Wuchter v. Pizzutti, 276 U.S. 13, 19, 48 S. Ct. 259, 260-61, 72 L. Ed. 446, 57 A.L.R. 1230 (1928); Hess v. Pawloski, 274 U.S. 352, 356, 47 S. Ct. 632, 633, 71 L. Ed. 1091 (1927); Stoner v. Higginson, 316 Pa. 481, 175 A. 527, 531-535 (1934).
[27] The RESTATEMENT (SECOND) OF AGENCY § 1 defines agency as "... the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Gray v. Holman, 1995 OK 118, 909 P.2d 776, 779. For a history of English agency law, see B.S. Markesinis and R.J.C. Munday, AN OUTLINE OF THE LAW OF AGENCY 12 (Butterworths 3d ed.1992).
[28] See RESTATEMENT (SECOND) OF AGENCY § 1, comment f, which states that "[w]hether the word 'agent' as used in a statute corresponds to the meaning here given depends, with other factors, upon the purpose of the statute. Thus, the purpose of statutes providing for substituted service of process on a public official is to satisfy the due process requirement of the United States Constitution. Although such a statute may label the public official an `agent' for receiving service of process, he is not an agent in the sense used herein [the law of agency]. He is not in fact designated by the one on whose account he `accepts service', nor does he respond to that person's directions...." (Emphasis supplied.)
[29] Markesinis, supra note 27 at 12. Agency, which generally deals with one person representing another in a transaction, is a "contract by which one person, with greater or less discretionary powers, undertakes to represent another in certain business relations." F. Wharton, AGENCY AND AGENTS (1876).
[30] Luster v. Bank of Chelsea, 1986 OK 74, 730 P.2d 506, 510.
[31] Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 313-15, 70 S. Ct. 652, 656-57, 94 L. Ed. 865 (1950). See also Bailey v. Campbell, 1991 OK 67, 862 P.2d 461, 469; Norman v. Trison Development Corp., 1992 OK 67, 832 P.2d 6, 9-10; Cate v. Archon Oil Co., 1985 OK 15, 695 P.2d 1352, 1356; Jackson v. Ind. School Dist. No. 16 of Payne Co., 1982 OK 74, 648 P.2d 26, 30; Bomford v. Socony Mobil Oil Co., 1968 OK 43, 440 P.2d 713, 718.
[32] Mullane, supra note 31, 339 U.S. at 314, 70 S.Ct. at 657. Due process is violated by the mere act of exercising judicial power upon process not reasonably calculated to apprise interested parties of the pendency of an action. Boddie v. Connecticut, 401 U.S. 371, 378, 91 S. Ct. 780, 786, 28 L. Ed. 2d 113 (1971); Armstrong v. Manzo, 380 U.S. 545, 85 S. Ct. 1187, 14 L. Ed. 2d 62 (1965); Schroeder v. New York, 371 U.S. 208, 211, 83 S. Ct. 279, 281, 9 L. Ed. 2d 255, 89 A.L.R. 2d 1398 (1962); Riverside & Dan River Cotton Mills v. Menefee, 237 U.S. 189, 35 S. Ct. 579, 59 L. Ed. 910 (1915); Grannis v. Ordean, 234 U.S. 385, 394, 34 S. Ct. 779, 783, 58 L. Ed. 1363, 1369 (1914); Cate, supra note 31 at 1356; Bomford, supra note 31 at 719. Due process requires adequate notice, a realistic opportunity to appear and the right to participate in a meaningful manner. Lack of notice constitutes a jurisdictional infirmity Mullane, supra note 31, 339 U.S. at 313-15, 70 S.Ct. at 656-57; Bailey, supra note 31 at 469; Cate, supra note 31 at 1356; Bomford, supra note 31 at 718; Pointer v. Hill, 1975 OK 73, 536 P.2d 358, 361.
[33] Federal constitutional jurisprudence teaches that an opportunity to be heard is an essential element of due process. Mennonite, supra note 7, 462 U.S. at 798, 103 S.Ct. at 2711 (the Court held that "[s]ince a mortgagee clearly has a legally protected property interest, [it] is entitled to notice reasonably calculated to apprise" it of the action); Mullane, supra note 31, 339 U.S. at 314, 70 S.Ct. at 657. Notice must be reasonably calculated to inform interested parties of the pending action and of every critical stage so as to afford them an opportunity to defend or to meet the issues at a meaningful time and in a meaningful manner. Manzo, supra note 32, 380 U.S. at 550, 85 S.Ct. at 1190.
[34] At a bare minimum, legal notice must inform one of the antagonist's pressed demands and apprise one of the result consequent on default. Mullane, supra note 31, 339 U.S. at 314, 70 S.Ct. at 657; Matter of Estate of Pope, 1990 OK 125, 808 P.2d 640, 642; Bomford, supra note 31 at 718.
[35] Wuchter, supra note 26, 276 U.S. at 24, 48 S.Ct. at 262.
[36] See Wuchter, supra note 26, 276 U.S. at 24, 48 S.Ct. at 262, for the "reasonable probability" standard of notice. There, the Court held that the statute which provided for substituted service upon the secretary of state for nonresident or departed resident motorists, without more, violated federal due process standards. The Court reasoned that the statute's omission of a provision making it reasonably probable that a defendant would receive actual notice invalidated the notice-shaping law. Under the Wuchter rule, "if the statutory provisions in themselves indicate that there is reasonable probability that if the statutes are complied with, the defendant will receive actual notice," the service of process will be sustained. Id., 276 U.S. at 24, 48 S.Ct. at 262.
[37] The quality of notice is gauged by constitutional norms, not by legislative language. Mennonite, supra note 7, 462 U.S. at 795, 103 S.Ct. at 2711; Mullane, supra note 31, 339 U.S. at 314, 70 S.Ct. at 657; see also Federal Land Bank, supra note at 361; Luster, supra note 30 at 510.
[38] The pertinent provisions of 12 O.S.Supp.1996 § 2004(C)(1)(c)(1) are:
"* * * C. BY WHOM SERVED: PERSON TO BE SERVED.
1. SERVICE BY PERSONAL DELIVERY * * *
c. Service shall be made as follows:
(1) Upon an individual other than an infant who is less than fifteen (15) years of age or an incompetent person, by delivering a copy of the summons and of the petition personally or by leaving copies thereof at the person's dwelling house or usual place of abode with some person then residing therein who is fifteen (15) years of age or older or by delivering a copy of the summons and of the petition to an agent authorized by appointment or by law to receive service of process; * * *"
[39] The legislative predecessor of § 2004(C)(1)(c)(1) came with territorial legislation. It became state law in 1907. The terms of that statute, § 3938, St. 1893, provided that "the service shall be by delivering a copy of the summons to the defendant personally, or by leaving one at his usual place of residence, at any time before the return day." See Theison v. Brown, 11 Okl. 118, 65 P. 925, 926 (1901). The statute was amended in 1910 to provide (§ 4711, R.L.1910) that "[t]he service shall be made by delivering a copy of the summons to the defendant personally or by leaving one at his usual place of residence with some member of his family over fifteen years of age, at any time before the return day." See Jackson v. Smith, 83 Okl. 64, 200 P. 542, 543 (1921) (in an action to set aside a sheriff's deed and to redeem certain lands, the court held that service was validly effected by leaving a copy of the summons at the defendant's usual place of residence with his daughter-in-law, then over the age of 15 years and permanently residing in the home).
[40] There is no notion of agency in Oklahoma's statutory service scheme that antedates the 1984 Pleading Code. The acceptance of service for another, when effective, is treated as a juristic act one that bears legal consequences for another, rather than the other's delegated act. A juristic act is designed to have a present legal effect. It is an act by a private individual directed to the origin, surrender or alteration of a right. See Gates v. P.F. Collier, Inc., 378 F.2d 888, 896 (9th Cir.1967); Evans v. Wilson, 776 S.W.2d 939, 940 (Tenn.1989).
[41] See Wuchter, supra note 26, 276 U.S. at 24, 48 S.Ct. at 262, for the "reasonable probability" standard of notice.
[42] Where, on the other hand, no notice is ever sent, the reasonable probability is that the defendants may not be informed of the action until a judgment is obtained and then attempted to be enforced. Schroeder, supra note 32, 371 U.S. at 212-213, 83 S.Ct. at 282-283 (the Court concluded that publication in a newspaper and by posting notices was inadequate to apprise a property owner of condemnation proceedings' institution, when the condemnee's name (and address) was readily ascertainable from both the local deed records and the tax rolls).
[43] For the strictissimi juris doctrine, counterclaimants cite Sherrill, supra note 17 at 867.
[44] See the pertinent terms of 68 O.S.1991 § 3127, supra note 4.
[45] Luster, supra note 30 at 509 (the court noted that the focus of its inquiry into the adequacy of notice of a tax resale "is not whether the notice substantially complied with state statutory procedures; but rather, whether the notice satisfied the elementary and fundamental requirement of due process").
[46] Manzo, supra note 32, 380 U.S. at 550, 85 S.Ct. at 1190; Federal Land Bank, supra note 2 at 362.
[47] Cate, supra note 31.
[48] After Cate's promulgation in 1985, supra note 31, the legislature amended the pertinent statutes to make them conform to due process. 12 O.S.Supp.1986 § 764 (1986 Okl.Sess.L. 227 § 3, eff. Nov. 1, 1986). Here, the published notice of the 10 June 1996 resale faithfully tracks the due process requirements that are set out in the statute governing the quality of notice required to be given before an execution sale.
[49] The published notice identifies the county treasurer as the official who prepared, signed and submitted the tax resale notice for publication.
[50] The terms of Art. 2, § 7, Okl. Const. are:
No person shall be deprived of life, liberty, or property, without due process of law.
State fundamental law requires that persons to be affected be given notice and an opportunity to be heard before any of their substantial rights may be altered or affected. Crussel v. Kirk, 1995 OK 41, 894 P.2d 1116, 1121; Pope, supra note 34 at 642-43; Cate, supra note 31 at 1355; York v. Halley, 1975 OK 51, 534 P.2d 363, 364; Bomford, supra note 31 at 719; Shaw v. Swank, 1966 OK 114, 416 P.2d 928, 931; Kiespert v. Jenkins, 1958 OK 92, 324 P.2d 283, 284; Greco v. Foster, 1954 OK 42, 268 P.2d 215, 219.
[51] Generally, a letter placed in the mail is presumed to have been received. When a letter is sent by post, properly addressed, a prima facie presumption of its delivery to the party to whom it is addressed, which arises from it, may be overcome by contradictory evidence. Oaks v. Motors Ins. Corp., 1979 OK 77, 595 P.2d 789, 792 n. 10; Liberty Plan Co. v. Francis T. Smith Lumber Co., 1961 OK 30, 360 P.2d 500, 504; Hagner v. United States, 285 U.S. 427, 430, 52 S. Ct. 417, 418, 76 L. Ed. 861 (1932)(there is a rebuttable presumption that any letter mailed in the ordinary course will reach its destination); C. McCormick, McCORMICK'S HANDBOOK OF THE LAW OF EVIDENCE § 343 (1972)(a "letter properly addressed, stamped and mailed is presumed to have been duly delivered to the addressee"). Absent a contrary state of the record, we must assume that the returned post office paperwork, which was not included in the record (supra note 6), was regular on its face.
[52] A finding that the retriever of the letter in question (the lender's grandson) is an agent for the lender is neither critical nor indispensable to the constitutional test for measuring the reasonable probability of actual notice reaching the intended party. See supra ¶ 11 of this text and the accompanying footnotes. It is the totality of circumstances that dictates the quality of notice constitutionally required to safeguard the lender's property interest. See supra ¶ 13 of this text and the accompanying footnotes.
[53] Mennonite, supra note 7, 462 U.S. at 800, 103 S.Ct. at 2712 (the Court held that "a mortgagee's knowledge of delinquency in the payment of taxes is not equivalent to notice that a tax sale is pending"); Pope, supra note 34 at 643. According to the purchaser's brief and affidavit in support of summary process, the county treasurer's file includes a note allegedly from the lender dated 10 July 1993, which states: "Thank you for your Notice of Delinquent Taxes on Lot 4, Block 5, Phase 1, Port Duncan. Please be advised that Port Duncan Realty Company declines to make payment of the delinquent taxes."
[54] See, e.g., Wells Fargo v. Ziegler, 1989 OK 113, 780 P.2d 703 (lender's foreclosure action against mortgagor and tax resale purchasers, consolidated with tax resale purchasers' quiet title suit); Phillips v. Thompson, 1964 OK 18, 389 P.2d 473 (landowner's suit to cancel a resale tax deed and to quiet his title in the property). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2399016/ | 394 S.W.2d 810 (1965)
Rudolph GIL alias Rudy Gil, Appellant,
v.
The STATE of Texas, Appellee.
No. 38410.
Court of Criminal Appeals of Texas.
October 27, 1965.
M. N. Garcia, Austin, for appellant.
Thomas D. Blackwell, Dist. Atty., Philip A. Nelson, Jr., Asst. Dist. Atty., and Leon B. Douglas, State's Atty., Austin, for the State.
McDONALD, Presiding Judge.
The offense is possession of narcotic paraphernalia with two prior non-capital felony convictions alleged for enhancement; the punishment, life.
At about 9 p.m. on July 27, 1964, three officers of the Austin Police Department entered cabin number 2 at the Jackson Courts in East Austin. They had been informed by the motel owner that appellant and a companion, Jesse Capuchino, had checked into cabin number 1, and the owner had granted the officers permission to occupy cabin number 2 for the purpose of surveillance of activities in the adjoining cabin. Capuchino had a record of prior convictions for narcotics violations, and Lt. *811 Gann, one of the officers in cabin number 2, testified that he was familiar with Capuchino's reputation and "had people who were keeping me up-to-date with his activities."
In order to see into cabin number 1, Lt. Gann stood on a graveled walkway alongside that cabin and looked through a window the venetian blinds of which were partially opened and in need of repair. Appellant and his companion showered and left the motel, returning at about 11:30 p. m. From his vantage point at the window, Lt. Gann observed Capuchino open a package containing narcotic paraphernalia which he took into the bathroom out of the sight of the officer. Appellant meanwhile opened the closet door, removed his shirt and reached up inside the door frame. When Capuchino emerged from the bathroom, placing the paraphernalia on the dresser, appellant picked up an eye dropper and hypodermic needle and went into the bathroom.
At this juncture, Lt. Gann and his fellow officers prepared to enter the cabin and, in doing so, alerted Capuchino, who resisted the officer's efforts to come through the door. After forcing their way into the room, the officers arrested the pair, but Capuchino momentarily freed himself, went into the bathroom, and flushed the commode. The officers found the hypodermic needle in the commode, a bottle cap containing heroin on the dresser, and gelatin capsules and sugar above the door in the closet; the eye dropper syringe was not found. Lt. Gann testified that appellant was languid and lethargic, the pupils of his eyes were pin-pointed, his arms bore fresh needle marks. In the officer's opinion, both appellant and his companion were under the influence of narcotics.
Appellant contends that the arrest and search were illegal, and the evidence obtained as a result of the search is therefore inadmissible, as is the testimony of Lt. Gann as to appellant's physical characteristics and demeanor at the time of the arrest. He argues that the officers were within the curtilage of appellant's premises when they first observed the criminal activity inside the cabin, and that looking into appellant's window was a violation of his right to be left alone guaranteed by the Fourth Amendment of the U. S. Constitution.
As to whether or not the walkway from which Lt. Gann observed appellant's activities was within the curtilage of appellant's premises, this Court was confronted with that precise issue in the appeal from the conviction of appellant's companion on a similar charge in Capuchino v. State, Tex. Cr.App., 389 S.W.2d 296, where it was stated:
"When Gann received information from the owner of the motel that appellant had secured a cabin there, he obtained her permission to use an adjoining cabin. This necessarily carried with it permission to use all the public areas of the motel such as the graveled walkway where he stood while observing these two men inside the cabin. The pictures in evidence clearly show that the walkway was a part of the grounds of the motel and not a part of the cabin." 389 S.W.2d 296, 298.
Nor can we agree that appellant's constitutional rights were violated when police officers peered into his room through the window described above. A similar contention was considered by this court in Giacona v. State, Tex.Cr.App., 372 S.W.2d 328, cert. denied by U. S. Supreme Court, 375 U.S. 843, 84 S. Ct. 92, 11 L. Ed. 2d 70; Crowell v. State, 147 Tex. Crim. 299, 180 S.W.2d 343; Eversole v. State, 106 Tex. Crim. 567, 294 S.W.2d 210, and the rule is that where one is so foolish as to leave his windows unsecured he may not complain if another observes an illegal act being committed therein.
The officers had no search warrant or warrant for arrest, nor do the facts indicate that there were sufficient grounds to obtain a warrant of any kind prior to observing appellant and his companion in possession *812 of narcotic paraphernalia. The officers were at the motel for the sole purpose of seeing if appellant and his companion were violating laws which Capuchino was known to have violated in the past, and these officers did not have the requisite probable cause necessary to obtain a warrant until they observed these laws being violated, at which time they entered the cabin and arrested appellant.
Article 212, Vernon's Ann.C.C.P. provides:
"A peace officer or any other person, may, without warrant, arrest an offender when the offense is committed in his presence or within his view, if the offense is one classed as felony, or is an `offense against the public peace.'"
In Giacona v. State, Tex.Cr.App., 372 S.W.2d 328, officers looked through the window of Giacona's apartment and observed what they viewed as a narcotics violation after their attention had been attracted to the apartment by loud talking and cursing, and the smell of marijuana burning. They entered the apartment, made an arrest and seized the marijuana. In overruling Giacona's contention that the evidence was inadmissible because the arresting officers were illegally on appellant's premises, this Court said on motion for rehearing:
"We are here dealing with an arrest made without a warrant by officers who saw a felony being committed in their view and a subsequent legal seizure, or taking, of the contraband in the officers' view and in appellant's possession, as an incident to a lawful arrest. We are not here dealing with a factual situation primarily involving search. Appellant has apparently overlooked this distinction." 372 S.W.2d 328, 332.
Here, as in Giacona, the evidence which supports appellant's conviction was not obtained as the result of an illegal search, but was obtained in conjunction with the lawful arrest of appellant, who committed a felony in the presence of the arresting officers.
Finding no error, the judgment is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2600873/ | 239 P.3d 621 (2010)
2010 WY 128
James L. BALL, Appellant (Respondent),
v.
STATE of Wyoming, ex rel., WYOMING WORKERS' SAFETY AND COMPENSATION DIVISION, Appellee (Petitioner).
No. S-09-165.
Supreme Court of Wyoming.
September 22, 2010.
*622 Representing Appellant: George Santini of Ross, Ross & Santini, LLC, Cheyenne, Wyoming.
Representing Appellee: Bruce A. Salzburg, Wyoming Attorney General; John W. Renneisen, Deputy Attorney General; James M. Causey, Senior Assistant Attorney General; Cara Boyle Chambers, Assistant Attorney General. Argument by Ms. Chambers.
Before KITE, C.J., and GOLDEN, HILL, VOIGT[*], BURKE, JJ.
*623 GOLDEN, Justice.
[¶ 1] James L. Ball (Ball) appeals the district court decision reversing an Office of Administrative Hearings order awarding benefits for medical treatments Ball received for a hernia. Ball suffered the hernia when a spinal cord stimulator, implanted to treat chronic back pain from an earlier compensable work-related injury, malfunctioned and shocked him, causing him to stand rapidly and then fall. The question we must answer is whether the hernia occurred "in the course of the employment" as that term appears in Wyo. Stat. Ann. § 27-14-603(c)(iii) (Lexis-Nexis 2009). We hold that Ball's hernia occurred "in the course of the employment" and reverse the district court's decision.
ISSUES
[¶ 2] Ball presents these issues:
1. Was the decision of the Hearing Officer that James Ball's hernia was compensable under the "second injury doctrine" correct?
2. Did the District Court err by concluding as a matter of law that James Ball's hernia did not occur within the "course of employment" as required under § 27-14-603(c)(iii) (LexisNexis 2009)?
3. Should Wyoming recognize that injuries occurring from complications of medical treatment of work-related injuries are themselves compensable?
The Wyoming Workers' Safety and Compensation Division (Division) states a single issue:
Did the Hearing Examiner commit an error of law by analyzing Appellant's injury under the second compensatory injury doctrine and by failing to properly apply the requirements of Wyo. Stat. Ann. § 27-14-603(c)?
FACTS
[¶ 3] In June 1993, while at work, Ball slipped on a drain cover as he was walking into a walk-in refrigerator to get some milk, and injured his shoulder, neck, back, and right leg. He was awarded permanent total disability benefits and has received ongoing benefits for treatment of chronic pain, including narcotic pain medications and implantation of a spinal cord stimulator.
[¶ 4] Ball originally had a spinal cord stimulator implanted for treatment of his chronic pain in 2000. By May of 2006, the original stimulator was no longer operable and a new stimulator was implanted. Unfortunately, with the new stimulator, Ball developed painful side effects that he described as "good jolts" or "a shocking sensation," and which occurred without warning while he was lying down or moved in a certain way. At the time of the hearing in this matter, Ball was working with his physicians to resolve these problems.
[¶ 5] In mid-July of 2007, Ball was at home lying in bed when he experienced a shocking sensation that caused him to attempt to stand up "real fast." Ball described it as having his right leg feel as though it was all muscle cramps or a big "charley horse." As Ball stood, he fell. He did not know whether he passed out or not, but when he attempted to get up, he experienced a pain in his left groin that he had never experienced before. Ball attempted to call his physician as he feared he had broken a wire on the stimulator. He initially thought that he had perhaps pulled a muscle, but the pain in his left groin worsened over time to the point that he sought medical attention.
[¶ 6] A few days after falling, Ball saw Dr. Deborah Young, M.D., a board certified psychologist and neurologist who had treated Ball for some time for his chronic pain. Dr. Young, who had seen Ball on June 28, 2007, and recertified his total disability, met with Ball on July 26, 2007. Dr. Young stated the following concerning that visit:
In the interval since our last appointment, somewhere around 7/15/07, Mr. Ball experienced severe shock-like pains on his right flank and right leg, which he attributed to his spinal stimulator. The pain was so intense that he jumped out of bed and either secondary to the pain or the postural hypotension I mentioned in my last letter, or a combination of both, he fell to the floor. Since that time he has had severe left groin pain, which Dr. Wailes' office has plans to evaluate. At our appointment, it *624 was clear that Mr. Ball was in more pain; it was difficult for him to handle sitting in the chair and he asked to stand for part of the meeting.
[¶ 7] On August 1, 2007, Ball was examined by Dr. James Shaw, M.D., an associate of Dr. Wailes with Pacific Pain Medicine Consultants. At that time, Dr. Shaw noted:
The patient presents for an early follow up after a fall from bed. He ha[d] an electrical sensation discharge from what he believes was the SCS and a "charlie's horse" and passed out. He immediately felt a pull and burn in his groin on the left that has been present ever since. When he lays down he is fine, but when he gets up and walks around he feels the pain and it bulges. Valsalva increases the pain. It does not radiate to the testes or down the thigh. There is no history of previous herniorrhaphy. He still has stimulation in the low back but more stimulation in the legs but to the point of discomfort. No obvious significant movement of the leads on his last xray last week. The location of the pain is in the lower back neck and thoracic spine, but now has severe groin pain. The pain radiates down bilateral lower extremities and down bilateral upper extremities. The pain is described as sharp, burning, aching and stabbing. The severity of the pain is usually severe. The timing of the pain is constant. Associated symptoms are numbness and weakness on the right side. Pain clinic treatments have included medication management and spinal cord stimulation. Overall the patient is frustrated with ongoing pain and anxious to pursue other options. As part of this patient's exam, I have reviewed the notes of Dr. Young. The worst area of pain is located in the groin.
In that same report, Dr. Shaw noted the following in his treatment plan:
He is complaining of classic hernia complaints after this fall from his electrical feeling in his legs. I would consider this a work related problem based off the origin of the fall. I will order an ultrasound to r/o hernia as based on his complaints. In the meantime, no heavy lifting or repetitive bending in the meantime. Pain is so significant he couldn't tolerate the SCS adjustment we had scheduled for him so he has rescheduled.
[¶ 8] Following an abdominal CT scan, which revealed an inguinal hernia containing a large bowel, Ball underwent surgery on August 16, 2007. At the time of the operation, the surgeon noted that "[t]here was a lot of scarring either this hernia had been quite chronic or it may be related to previous surgery. I think the patient may have had a vasectomy on that side." Ball had in fact had a vasectomy more than twenty years earlier.
[¶ 9] Ball saw Dr. Young again on December 6, 2007, after having undergone hernia surgery. In a letter concerning that visit, Dr. Young summarized the history Ball had previously provided concerning his hernia, that he had jumped out of bed and fallen to the floor after experiencing an electrical sensation in his right leg. Dr. Young concluded, "[I]t would appear that the hernia developed as a consequence of the neurological sequelae of Mr. Ball's work-related injury."
[¶ 10] The Division issued a final determination denying payment for treatment of Ball's hernia on the basis that it was not related to Ball's original 1993 injury to his back. Ball objected to the Division's determination, and the matter was referred for a contested case hearing. During the contested case hearing, Ball contended that he was entitled to benefits to cover the costs related to his hernia because the development of his hernia was causally related to his original work-related injury. Specifically, Ball claimed that his fall was caused by a malfunction in his electrical stimulator, which was prescribed and implanted to treat his chronic low back pain. Ball contended that the hernia statute, Wyo. Stat. Ann. § 27-14-603(c), should not apply, but if it were applicable, he had proven the statute's elements.
[¶ 11] The Division contended at the contested case hearing that Ball had not filed an injury report for his hernia and thus neither the Division nor the hearing examiner had jurisdiction to award benefits. The Division further contended that § 27-14-603(c) was controlling and that Ball could not meet his *625 burden of proof under that statute, because "how, why, when, or where the Claimant's hernia occurred is a matter of significant speculation or conjecture." The Division also contended that one of the facilities that had provided care for Ball's hernia had failed to file timely reports of certain treatments or procedures and such applications for payment were thus barred.
[¶ 12] At the contested case hearing, the only witness to testify was Ball. No deposition testimony was presented, and the Division did not present an independent medical evaluation. Following the contested case hearing, the hearing examiner entered his findings, conclusions and order on February 7, 2008. The hearing examiner concluded the employee was not required to submit a new injury report because his hernia was a compensable second injury. The hearing examiner agreed with the Division, however, that certain of the costs for Ball's treatment were not reimbursable because the facility that had provided the treatment had not timely submitted the reports of its treatment.
[¶ 13] The hearing examiner also agreed with the Division that the hernia statute, § 27-14-603(c), was applicable. The hearing examiner found, however, that Ball had proved all of the statutorily required elements and Ball's hernia was therefore a compensable injury. Specifically, the hearing examiner made the following relevant findings of fact:
(i) Was the Hernia of Recent Origin?
51. This Office finds and concludes that Ball clearly proved his July 2007 hernia was of recent origin. Ball testified his left groin pain started after his fall and was a new pain. Ball also indicated he has never before had a hernia or groin pain, although he did have a vasectomy five years ago. In addition, there is no indication of any groin pain or hernia in the medical records, which were submitted in this case, prior to July 2007. Although Dr. Deemer's operative report suggests that Ball's hernia could have been chronic, Ball's symptoms, related to his hernia, did not arise until his fall which was caused by a shock from the spinal stimulator.... Furthermore, this Office gave little weight to Dr. Deemer's unsolicited comment in his operative report because the statement was speculative as to the reason for the scar tissue.
(ii) Was the Hernia's Appearance Accompanied by Pain?
52. This Office finds and concludes that Ball clearly proved his July 2007 hernia was accompanied by pain. Ball testified he immediately experienced left groin pain after his fall in July 2007. Ball's testimony is further supported by Dr. Young's July 26, 2007, letter to Ball's claim's analyst which indicated Ball had severe left groin pain after his fall, and Ball was in pain at his appointment with Dr. Young. Furthermore, the medical records from each of the physicians indicated that Ball consistently reported how and when his left groin pain started.
(iii) Was the Hernia immediately preceded by some accidental strain suffered in the Course of Ball's Employment?
53. The appearance of Ball's hernia or hernia related symptoms was immediately preceded by an accidental strain. Ball testified, and repeatedly and consistently reported to his medical providers, that he fell when his leg gave out after a shock from his spinal stimulator caused him to have a "charley horse."
54. In addition, this Office finds and concludes that Ball's accidental strainthe "charley horse" and subsequent fallwas suffered in the course of his employment because the spinal stimulator was the initial cause of the unbroken chain of events leading to Ball's accidental strain. The spinal stimulator adequately connected or related Ball's fall/accidental strain to his work because the spinal stimulator was implanted into Ball to treat his low back and leg pain which directly resulted from his work related injury in 1993. Moreover, the medical records from Pacific unequivocally established that Ball's spinal stimulator provided significant relief of Ball's work related pain. In other words, as required by the quote cited above from In re Hardison, Ball clearly proved his July 2007 hernia was related to his employment through the implanted spinal stimulator.
*626 (iv) Did Ball's Hernia Exist Prior to the Date of His Fall?
55. This Office finds and concludes that Ball clearly proved his hernia did not exist prior to his fall in July 2007. Other than Dr. Deemer's statement in his operative report, "either this hernia had been quite chronic or it may be related to previous surgery," there is no evidence which suggested Ball had the hernia before his fall in July 2007. The medical records from Dr. Shaw and Dr. Young do not mention a hernia or groin pain prior to July 2007 and Dr. Shaw's August 1, 2007, medical notes expressly stated Ball has no history of a hernia.
56. Accordingly, Ball has met his burden under Wyo. Stat. Ann. § 27-14-603(c) (LEXIS 2007). Prior to the July 2007 work related fall, there is no evidence Ball ever had a hernia or suffered symptoms related to a hernia. The work related fall resulted in a strain accompanied by immediate pain and the appearance of an inguinal hernia on Ball. Ball is therefore awarded medical benefits for his hernia.
[¶ 14] The Division appealed the hearing examiner's order to the district court. On appeal to the district court, the Division submitted only one issue, whether the hearing examiner had misapplied the elements of the hernia statute to the evidence in the case. In arguing its position, the Division contended a hernia is not compensable as a second injury unless the original injury was itself a hernia.
[¶ 15] On July 27, 2009, the district court entered its Order Reversing and Remanding Award of Benefits. In so ordering, the district court expressly deferred to the hearing examiner's findings of fact and found those were supported by substantial evidence. The district court concluded, however, that under the hernia statute, a hernia is a compensable injury only when it is the original injury. That is, the district court rejected even the Division's proposed compromise interpretation and concluded, as a matter of law, a hernia can never be compensable as a second injury.
[¶ 16] Ball timely filed his notice of appeal. On appeal, Ball again contends the hernia statute does not apply, but also argues alternatively that if the Court were to find the statute does apply, his hernia injury meets the statute's requirements for compensability. The Division has again limited its statement of the issue on appeal and has adopted the district court's reasoning. It agrees there is no evidentiary dispute for this Court to address and instead contends, as a matter of law, a hernia is never compensable as a second compensable injury.
DISCUSSION
Standard of Review
[¶ 17] We review administrative decisions based on the factors set forth in the Wyoming Administrative Procedure Act, which provides:
(c) To the extent necessary to make a decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. In making the following determinations, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error. The reviewing court shall:
(i) Compel agency action unlawfully withheld or unreasonably delayed; and
(ii) Hold unlawful and set aside agency action, findings and conclusions found to be:
(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;
(B) Contrary to constitutional right, power, privilege or immunity;
(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;
(D) Without observance of procedure required by law; or
(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.
Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2009).
*627 [¶ 18] In regard to the interpretation and application of law, we have further stated:
The interpretation and correct application of the provisions of the Wyoming Worker's Compensation Act are questions of law over which our review authority is plenary. Conclusions of law made by an administrative agency are affirmed only if they are in accord with the law. We do not afford any deference to the agency's determination, and we will correct any error made by the agency in either interpreting or applying the law.
Wyoming Workers' Safety & Comp. Div. v. Faulkner, 2007 WY 31, ¶ 10, 152 P.3d 394, 396 (Wyo.2007) (quoting Bailey v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2002 WY 145, ¶ 9, 55 P.3d 23, 26 (Wyo.2002) (citations omitted)).
[¶ 19] In an appeal from a district court's appellate review of an administrative decision, we review the case as if it came directly from the hearing examiner, affording no deference to the district court's decision. State ex rel. Wyoming Workers' Safety & Comp. Div. v. Kaczmarek, 2009 WY 110, ¶ 7, 215 P.3d 277, 280 (Wyo.2009).[1]
[¶ 20] Because Ball and the Division agree that Ball suffered a hernia injury, the sufficiency of the evidence substantiating that injury is not at issue. Likewise, the Division does not in this appeal challenge the hearing examiner's findings regarding three of the four required elements of the hernia statute, namely, the hernia was of recent origin, the appearance of the hernia was accompanied by pain, and the hernia did not exist before the date of the injury. See § 27-14-603(c)(i), (ii), and (iv). Where the parties diverge is on the third requirement of the hernia statute, § 27-14-603(c)(iii), that the hernia was sustained "in the course of the employment." There is again no factual dispute as to the circumstances of Ball's hernia injury. Instead, the parties dispute questions of law, specifically the meaning of the phrase "in the course of the employment" in the hernia statute, and the applicability of the second compensable injury rule to a hernia injury.
Second Compensable Injury Rule
[¶ 21] At the outset of our discussion, we believe it is a useful starting point to address what the second compensable injury rule is and what it is not. In its brief, the Division has pointed out that where a common law remedy conflicts with a statutory remedy, the statutory remedy is controlling, citing Schlattman v. Stone, 511 P.2d 959, 961-62 (Wyo.1973). Applying this principle, the Division contends the second compensable injury rule is a common law remedy that conflicts with the hernia statute and thus cannot be applied to a hernia injury. We do not take issue with the Division's statement of the relationship between statutory and common law remedies, but we do disagree with the Division's contention that the second compensable injury rule is a "common law remedy."
[¶ 22] The Workers' Compensation Act defines the term "injury" for purposes of compensability under the Act. "Injury" means
any harmful change in the human organism other than normal aging and includes damage to or loss of any artificial replacement and death, arising out of and in the course of employment while at work in or about the premises occupied, used or controlled by the employer and incurred while at work in places where the employer's business requires an employee's presence and which subjects the employee to extrahazardous duties incident to the business.
Wyo. Stat. Ann. § 27-14-102(a)(xi) (Lexis-Nexis 2009).
[¶ 23] We have discussed the causal nexus this provision requires between an injury and the injured employee's work:
The provision acknowledges that injuries may occur on or off the premises of the employer. In either case, the injury is compensable if it arises out of and in the *628 course of employment. This requirement emphasizes the need for a causal connection between the injury and the employment. Such a causal connection is supplied when there is a nexus between the injury and some condition, activity, environment or requirement of the employment. It is this requirement, and only this requirement, which is envisioned by the language contained in § [XX-XX-XXX(a)(xi)].
Corean v. State ex rel. Workers' Comp. Div., 723 P.2d 58, 60 (Wyo.1986); see also Haagensen v. State ex rel. Wyoming Workers' Comp. Div., 949 P.2d 865, 867-68 (Wyo.1997). We have also stated that an "injury is not compensable if it cannot fairly be traced to the employment as a contributing cause and if it comes from a hazard that the employee would have been equally exposed to outside of the employment." Finley v. State ex rel. Wyoming Workers' Safety & Comp. Div., 2006 WY 46, ¶ 8, 132 P.3d 185, 188 (Wyo. 2006) (quoting State ex rel. Wyoming Workers' Safety & Comp. Div. v. Bruhn, 951 P.2d 373, 377 (Wyo.1997)).
[¶ 24] The above-quoted passages are this Court's interpretations of the statutorily required causal link between an injury and the injured employee's work. The same is true of the second compensable injury rule. When a condition or injury is found compensable under the second compensable injury rule, it merely means that an initial compensable injury has resulted in an injury or condition that requires additional medical intervention. That is, under the second compensable injury rule, a subsequent injury or condition is compensable if it is causally linked to the initial compensable work injury. Alvarez v. State ex rel. Wyoming Workers' Safety & Comp. Div., 2007 WY 126, ¶ 18, 164 P.3d 548, 552 (Wyo.2007); Yenne-Tully v. Workers' Safety & Comp. Div., 12 P.3d 170, 172 (Wyo.2000). We recently explained the second compensable injury rule and its required causation:
We have used a number of terms to describe the required causal connection between the first and second injuries including: "direct cause" (Pino v. State ex rel. Wyo. Workers' Safety & Comp. Div., 996 P.2d 679, 684 (Wyo.2000); Taylor v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2003 WY 83, ¶ 12, 72 P.3d 799, 803 (Wyo.2003)); "caused by" (Casper Oil Co. v. Evenson, 888 P.2d 221, 226 (Wyo.1995)); "causally related to" (Chavez v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2009 WY 46, ¶¶ 26-27, 204 P.3d 967, 973-74 (Wyo.2009); Walsh v. Holly Sugar Corp., 931 P.2d 241, 243 (Wyo.1997)); "direct causal connection" (Alvarez v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2007 WY 126, ¶ 17, 164 P.3d 548, 552 (Wyo. 2007)); "direct and natural result" (Stewart v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2007 WY 58, ¶ 12, 155 P.3d 198, 203 (Wyo.2007) (quoting 1 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 10.10, at 10-2 (2006))); "significant causal connection" and "predominant cause" (Yenne-Tully v. State ex rel. Wyo. Workers' Safety & Comp. Div., 2002 WY 90, ¶ 11, 48 P.3d 1057, 1062 (Wyo.2002)); "fairly be traced to" and "a contributing cause" (State ex rel. Wyo. Workers' Safety & Comp. Div. v. Bruhn, 951 P.2d 373, 377 (Wyo.1997)). Regardless of the terminology used to describe the causal connection, the burden remains the same: the claimant must show, by a preponderance of the evidence, that it is more probable than not that the second injury was caused by the first.
Kaczmarek, ¶ 11 n. 3, 215 P.3d at 282 n. 3.
[¶ 25] That the second compensable rule is a causation analysis, and not a court-created benefit or remedy, is clear from the manner in which this Court has applied the rule. See, e.g., Chavez v. State ex rel. Wyoming Workers' Safety & Comp. Div., 2009 WY 46, ¶¶ 26-27, 204 P.3d 967, 973-74 (Wyo.2009) (recognizing rule that subsequent injury is compensable if it is causally related to initial compensable work injury and upholding Medical Commission's factual finding that the required causal link did not exist between original work-related injury and subsequent back surgery); Nagle v. State ex rel. Wyoming Workers' Safety & Comp. Div., 2008 WY 99, ¶ 38, 190 P.3d 159, 173 (Wyo.2008) (applying second compensable injury rule to find causal link between original work injury to foot and wrist and hip injuries sustained *629 fourteen years later in fall caused by disabled foot); Alvarez, ¶ 26, 164 P.3d at 555 (applying second compensable injury rule in upholding Medical Commission finding that re-tear of rotator cuff and resulting surgery were related to original work-related rotator cuff tear); Carabajal v. State ex rel. Wyoming Workers' Safety & Comp. Div., 2005 WY 119, ¶ 17, 119 P.3d 947, 953 (Wyo.2005) (reversing OAH denial of benefits and remanding for application of second compensable injury rule in consideration of causal relationship between surgery to treat herniated disc and work injury over twenty years earlier); Casper Oil Co. v. Evenson, 888 P.2d 221, 225 (Wyo.1995) (upholding benefits under second compensable injury rule where injured employee received immediate medical attention for work-related back injury and proved a causal link to his subsequently developed need for surgery); Baldwin v. Scullion, 50 Wyo. 508, 62 P.2d 531, 539 (1936) (upholding award of benefits where employee showed subsequent condition was gradually and ultimately produced by original work injury).
[¶ 26] This Court's analysis in other cases involving the application of the second compensable injury rule proceeds in much this same vein. It is thus clear that the second compensable injury rule is not a common law remedy. It is simply an expression of this Court's interpretation of the causal link required between an employee's work and original work injury and any related and subsequently developed injury or condition.
[¶ 27] We therefore reject the Division's argument that the rule cannot be applied where there is a statute governing a particular injury or condition. We now turn to the Division's remaining argument that the language of the hernia statute limits compensability of a hernia injury to those instances where the hernia is the original injury and the hernia occurred in the work place.
Hernia Statute
[¶ 28] The Division and Ball disagree whether the hernia statute applies and, if it does apply, how it should be interpreted. The hernia statute provides as follows:
If an employee suffers a hernia, he is entitled to compensation if he clearly proves that:
(i) The hernia is of recent origin;
(ii) Its appearance was accompanied by pain;
(iii) It was immediately preceded by some accidental strain suffered in the course of the employment; and
(iv) It did not exist prior to the date of the alleged injury.
Wyo. Stat. Ann. § 27-14-603(c) (LexisNexis 2009).
[¶ 29] In interpreting the hernia statute, to determine both its applicability and its meaning, we apply our usual rules of statutory interpretation.
In interpreting statutes, our primary consideration is to determine the legislature's intent. All statutes must be construed in pari materia and, in ascertaining the meaning of a given law, all statutes relating to the same subject or having the same general purpose must be considered and construed in harmony. Statutory construction is a question of law, so our standard of review is de novo. We endeavor to interpret statutes in accordance with the legislature's intent. We begin by making an inquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection. We construe the statute as a whole, giving effect to every word, clause, and sentence, and we construe all parts of the statute in pari materia. When a statute is sufficiently clear and unambiguous, we give effect to the plain and ordinary meaning of the words and do not resort to the rules of statutory construction. Wyoming Board of Outfitters and Professional Guides v. Clark, 2001 WY 78, ¶ 12, 30 P.3d 36, ¶ 12 (Wyo.2001); Murphy v. State Canvassing Board, 12 P.3d 677, 679 (Wyo. 2000). Moreover, we must not give a statute a meaning that will nullify its operation if it is susceptible of another interpretation. Billis v. State, 800 P.2d 401, 413 (Wyo.1990) (citing McGuire v. McGuire, 608 P.2d 1278, 1283 (Wyo.1980)).
Moreover, we will not enlarge, stretch, expand, or extend a statute to matters *630 that do not fall within its express provisions. Gray v. Stratton Real Estate, 2001 WY 125, ¶ 5, 36 P.3d 1127, ¶ 5 (Wyo.2001); Bowen v. State, Wyoming Real Estate Commission, 900 P.2d 1140, 1143 (Wyo.1995).
Loberg v. Wyo. Workers' Safety & Comp. Div., 2004 WY 48, ¶ 5, 88 P.3d 1045, ¶ 5 (Wyo.2004) (quoting Board of County Comm'rs of Teton County v. Crow, 2003 WY 40, ¶¶ 40-41, 65 P.3d 720, ¶¶ 40-41 (Wyo.2003)). Only if we determine the language of a statute is ambiguous will we proceed to the next step, which involves applying general principles of statutory construction to the language of the statute in order to construe any ambiguous language to accurately reflect the intent of the legislature. If this Court determines that the language of the statute is not ambiguous, there is no room for further construction. We will apply the language of the statute using its ordinary and obvious meaning.
State v. Hanover Compression, LP, 2008 WY 138, ¶ 8, 196 P.3d 781, 784 (Wyo.2008) (quoting BP Am. Prod. Co. v. Wyo. Dep't of Revenue, 2005 WY 60, ¶ 15, 112 P.3d 596, 604 (Wyo.2005)).
[¶ 30] The Division contends that the hernia statute applies anytime the injury at issue is a hernia. Ball on the other hand contends that the statute applies only where the hernia at issue is the original work injury. We agree with the Division and conclude, as the hearing examiner did, that the hernia statute unambiguously requires an employee's injury to satisfy all criteria in the statute to be compensable. The statute does not create any exceptions to its application, and we would have to read terms into the statute to create an exception for hernias that are second compensable injuries, something we will not do. See Parker v. Artery, 889 P.2d 520, 528 (Wyo.1995) (legislature's omission of language from statute construed as intentional).
[¶ 31] Having determined the statute is applicable, we turn then to the parties' contentions concerning its meaning. The present dispute is centered on the meaning of the phrase "in the course of the employment," as it is used in the third element of the hernia statute. See § 27-14-603(c)(iii). Ball contends that "in the course of employment" means a hernia is compensable if it is found to be causally related to the employee's original work injury, assuming all of the other elements of the statute are met. The Division on the other hand contends that the phrase means the hernia must have been the original injury and must have occurred in the workplace to be compensable. We find Ball's position to be the more persuasive as it is in keeping with the plain language and context of the hernia statute, as well as the legislative intent.
[¶ 32] It is clear at the outset that the legislature did not expressly state, as it certainly could have, that a hernia must be suffered in the workplace, and be the original work injury, to be compensable. We note with interest that in the same statute addressing a hernia, the legislature also addresses employment-related coronary conditions and has written "[t]he causative exertion occurs during the actual period of employment stress[.]" Wyo. Stat. Ann. § 27-14-603(b)(ii) (LexisNexis 2009) (emphasis added). In the hernia section of this same statute, § 27-14-603(c)(iii), instead of writing that the hernia "was immediately preceded by some accidental strain in the course of the employment," the legislature easily could have written that the hernia "was immediately preceded by some accidental strain suffered during the actual period of employment stress," or that the hernia "was immediately preceded by some accidental strain suffered at the workplace" or "at work," but it did not.
[¶ 33] Plainly, if the legislature had meant to say "at the workplace" or "at work" in the hernia statute, it would have done so. The language is not only shorter, but quite specific. We think such language would have come naturally to any draftsman, unless that draftsman really intended to say something different from "at the workplace" or "at work." In keeping with our rules of statutory interpretation, we will not supply those terms or read them into the statute. It follows then that the only way we may accept the Division's proposed interpretation of *631 § 27-14-603(c)(iii) is to find those limitations on compensability within the plain meaning of the phrase "in the course of the employment."
[¶ 34] The "in the course of employment" language is used elsewhere in the Act, and because our rules of interpretation mandate that we construe statutes in pari materia and must consider and construe in harmony all statutes relating to the same subject or having the same general purpose in ascertaining the meaning of a given law, the legislature's use of the language elsewhere in the Act will be our starting point for determining the meaning of the phrase as it is used in the hernia statute. In particular, the Act defines an injury as one "arising out of and in the course of employment." § 27-14-102(a)(xi) (emphasis added).
[¶ 35] As noted in our earlier discussion, this Court has addressed on numerous occasions the type of causal requirement that is created by the Act's use of the phrase "arising out of and in the course of employment." With respect to the separate components of the phrase, we have held that there is no distinction to be drawn between "arising out of employment" and "in the course of employment." Corean, 723 P.2d at 60. In Corean, we stated:
Unlike the state courts discussed above, we have consistently refused to create a two-part analysis for the phrase "arising out of and in the course of employment." Instead, we have construed "arising out of" employment to mean the same thing as "in the course of employment."
Id. (emphasis added).[2]
[¶ 36] In Corean, this Court not only adhered to its prior refusal to recognize a distinction between the phrases "arising out of employment" and "in the course of employment," it also rejected the suggestion that the place where an employee's injury occurred is a definitive factor in determining whether that injury arose out of or in the course of employment. Our words bear repeating:
The provision acknowledges that injuries may occur on or off the premises of the employer. In either case, the injury is compensable if it arises out of and in the course of employment. This requirement emphasizes the need for a causal connection between the injury and the employment. Such a causal connection is supplied when there is a nexus between the injury and some condition, activity, environment or requirement of the employment. It is this requirement, and only this requirement, which is envisioned by the language[.]
Id.
[¶ 37] We see no reason to depart from our holding in Corean. The phrases "arising out of" and "in the course of" employment, together or separately, mean the same thing. Thus, the phrase "in the course of the employment" as used in the hernia statute means the same thing it means elsewhere in the Act. A hernia, like any other injury, is compensable if there exists "a nexus between the injury and some condition, activity, environment or requirement of the employment." See Corean, 723 P.2d at 60. And, a hernia, like any other injury, is compensable whether it occurs on or off the premises of the employer, as long as the required nexus exists between the employee's work and the hernia. Id.; see also Alvarez, ¶ 27, 164 P.3d at 555 ("[w]hat matters is not where the employee was or the nature of the triggering event, but whether the initial compensable injury ripened into a condition requiring additional medical intervention and whether the subsequent injury was causally related to the initial compensable injury").
*632 [¶ 38] The upshot of the legislature's use of the phrase "in the course of the employment" in the hernia statute is that a hernia is compensable for the same reason any other work injury is compensable there exists a causal relationship between the work and the injury. It follows then that the second compensable injury rule applies in the same manner to a hernia as it would to any other work injury. If a causal link exists between an employee's original work injury and his development of a hernia, the hernia arose "in the course of the employment" and is compensable as a second or subsequent compensable injury.
[¶ 39] This interpretation does not undermine the purpose to be achieved by the restrictions on the compensability of hernia injuries. This Court has previously discussed the legislative purpose behind the statute limiting the compensability of hernia injuries:
We have already quoted from Smith v. Cabarrus Creamery Company [217 N.C. 468, 8 S.E.2d 231 (1940)], a Tennessee case, a state which has a statute on hernia almost like ours, and have seen that the court in that case did not believe that within the contemplation of the statute, liberally construed, industry should be relieved from most cases of hernia, most of which, as stated by the court, "are produced (protrude) by the strain of lifting." The South Carolina Court, under a statute on hernia also very similar to ours, expressed the opinion in Rudd v. Fairforest Finishing Co., 189 S.C. 188, 200 S.E. 727, 729 [ (1939) ], that "in our opinion, the legislative purpose evident in our Act is to restrict compensation for hernia to those cases where there is a relative and reasonably close coincidence between the accidental injury and the hernia, and where it is clear that no other agency intervened, as to time, place, or action, to cause the injury." In Arduini v. General Ice Cream Company, 123 Conn. 43, 46, 192 A. 314, 316, 114 A.L.R. 1333 [ (1937) ], the court stated that "the underlying reason for such special provisions [as to hernia] in this and other states is that owing to the nature of hernia and its onset, a lifting or straining, perhaps months before, may be assigned as the producing cause and the basis of a claim for compensation the merits of which, due to lapse of time and lack of notice to the employer, are extremely difficult of just determination, and the purpose is to restrict compensation to those cases where there is relative coincidence of accident and some significant manifestation of a hernia resulting therefrom, and thereby measurably alleviate that difficulty." ... With the light which we have on the question before us, imperfect, perhaps, as that still is, we are unable to see how we can sustain the contention of appellant above discussed. It may not be amiss, in this connection, to quote from Dr. Kessler, from whom we have already quoted, and who wrote on page 418 as follows: "The specter of an army of fraudulent claims for hernia is not as menacing to these employers who have been progressive enough to institute physical examination of their employees, both at the time of hiring and at periodical intervals. The record of a preexisting hernia bars a claimant from compensation unless the existing hernia becomes strangulated. With a record of no hernia at the time of hiring and the occurrence of a hernia during the course of employment, the task of deciding the compensability becomes easier. The fact that no hernia existed prior to the alleged accident and there was a corroborated history of some strain or unusual effort are in my mind the two most important criteria of the responsibility for a hernia and payment of compensation by the employer."
Colorado Fuel & Iron Corp. v. Frihauf, 58 Wyo. 479, 494-96, 135 P.2d 427, 432-433 (1943).
[¶ 40] The primary goal of the hernia provision, as recognized by this Court in Frihauf, is to restrict compensation for hernia injuries to those hernias that are work related and are reported in a sufficiently timely manner that the Division and the employer have an adequate opportunity to evaluate the causal link between the hernia and the employee's work. Given the meaning we have always given the phrase "in the course of employment," the Division is left in a position in which it may make the required *633 determinations of whether the reported hernia injury was of recent origin, accompanied by pain, work related, and not preexisting. The required determinations may be made without reading into the statute a bright line rule requiring that the hernia both occurred in the workplace and that it was the original injury.
[¶ 41] As further evidence that our interpretation does not offend the legislative intent in using the phrase "in the course of employment," we note that this Court has for years interpreted the phrase in the manner discussed above. During that time, the legislature has not changed the definition or enhanced the hernia statute to limit compensability to injuries that occur in the workplace. We thus conclude that the legislature has acquiesced in the interpretation we have given the phrase "in the course of employment," as that phrase is used throughout the Act, including in the hernia statute. See In the Interest of ANO, 2006 WY 74, ¶ 14, 136 P.3d 797, 801 (Wyo.2006).
[¶ 42] We find that if there is any disservice to the legislative intent, it is in the statutory interpretation urged by the Division. The Division, in its brief on appeal and again during oral argument, agreed that there is no factual dispute concerning the events that led to Ball's hernia. The Division further stated it does not take issue with the hearing examiner's finding that Ball's hernia was caused by Ball's original work injury. Instead, the Division contends the hernia statute makes this a unique case where that causal relationship is immaterial because the statute bars benefits for any hernia injury unless the injury is the original injury and occurred in the workplace. The Division went so far as to argue that if the injury Ball suffered when his spinal stimulator malfunctioned had been something other than a hernia, a broken limb, for example, the injury would have been compensable.
[¶ 43] The Division's interpretation produces an absurd result, and we have repeatedly held that we will reject statutory interpretations that lead to absurd results. See Stutzman v. Office of Wyoming State Engineer, 2006 WY 30, ¶ 16, 130 P.3d 470, 475 (Wyo.2006); Allied-Signal, Inc. v. Wyoming State Bd. of Equalization, 813 P.2d 214, 226 (Wyo.1991). That the legislature did not intend such a result is further evidenced by the legislature's express statement that at least part of its intention in enacting the Act was to ensure benefit claims would be decided on their merits. See Wyo. Stat. Ann. § 27-14-101(b) (LexisNexis 2009) ("[i]t is the specific intent of the legislature that benefit claims cases be decided on their merits"). The Division's proposed bright line rule, that a hernia must occur in the workplace and be the original work injury, disregards the merits of an actual causal relationship between a hernia injury and the employee's work and thus achieves a result opposite of that intended by the legislature.
Quasi-Employment Doctrine
[¶ 44] As a final matter, we address the Division's contention that the hearing examiner's finding of compensability was an improper application of the "quasi-employment doctrine" that this Court rejected in Bruhn. Again, we disagree. In Bruhn, this Court rejected the "quasi-employment doctrine" because it was viewed as a doctrine that would allow compensation for an injury that could not be fairly traced to the employee's work and that the employee would have been equally exposed to outside of the employment. Bruhn, 951 P.2d at 377. This is not a concern in the present case.
[¶ 45] The hearing examiner applied the clear and convincing burden of proof required by the hernia statute and found Ball had met this elevated burden. He found Ball had presented clear and convincing proof of the causal link between the malfunction of his spinal stimulator, which was implanted to treat the original work injury, and his subsequent fall and hernia. Because the Division does not contest this finding, it cannot suggest that the concern we expressed in Bruhn is at play in this case. The harm to which Ball was exposed was one that occurred only because of the medical treatment he received for a work injury. The medical treatment Ball received for his work injury caused his hernia, and the hernia was therefore a compensable second injury. See Rodgers v. State ex rel. Wyoming Workers' Safety & Comp. *634 Div., 2006 WY 65, ¶ 53, 135 P.3d 568, 585 (Wyo.2006) (holding compensable subsequent gastrointestinal problems caused by pain medication taken for work-related back injury).
[¶ 46] The hearing examiner did not rely on the quasi-employment doctrine in finding a causal connection between Ball's original work injury and his hernia. There was, therefore, no error related to that doctrine.
CONCLUSION
[¶ 47] The hearing examiner's finding that the authorized medical treatment for Ball's original work injury caused his subsequent hernia is uncontested, and the district court erred in holding that benefits were barred on the ground that the second compensable injury rule could not be applied. We reverse and remand to the district court for a remand to the Office of Administrative Hearings for reinstatement of the hearing examiner's original order awarding benefits.
NOTES
[*] Chief Justice at time of oral argument.
[1] The district court's decision in such cases is, however, always of help as an aid to our analysis and may reveal some factor not apparent to the parties but a subject of judicial discernment. Bd. of Cty. Comm'rs of Teton Cty. v. Teton Cty. Youth Servs., Inc., 652 P.2d 400, 421 (Wyo. 1982) (Raper, J., dissenting).
[2] We acknowledge the Division relied on our analysis in Corean to support its opposite suggestion that this Court has drawn a critical distinction between the phrases "arising out of" and "in the course" of employment and has held that the latter means during working hours and in the place of employment. The Division's recounting of our holding in Corean was flawed because it relied on our recitation of the rulings in certain other states, without then considering the paragraph immediately following that recitation, quoted above in the text, wherein we expressly rejected that approach. Thus, contrary to the Division's assertion, we have not interpreted the phrases "arising out of" and "in the course of" employment as having separate and distinct meanings, but have in fact reached the opposite conclusion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1123326/ | 192 Or. 368 (1951)
233 P.2d 774
233 P.2d 777
TYLER
v.
KELLEY TIMBER PRODUCTS CO., INC., and TOMPKINS and EISSLER JAMES
v.
KELLEY TIMBER PRODUCTS CO., INC., and TOMPKINS and EISSLER
Supreme Court of Oregon.
Argued May 22, 1951.
Affirmed July 6, 1951.
Petition for rehearing denied September 5, 1951.
*369 Edward E. Sox, of Albany, argued the cause and filed a brief for appellants.
Mark Weatherford argued the cause for respondent. With him on the brief were Morley & Thomas, of Lebanon, and Weatherford & Thompson, of Albany.
Before BRAND, Chief Justice, and HAY, LATOURETTE and WARNER, Justices.
AFFIRMED.
LATOURETTE, J.
This is an action brought by plaintiff-respondent in replevin to recover 245 logs from the Kelley Timber Products Co., Inc., (hereinafter referred to as the "Kelley Company"), Wendell H. Tompkins, assignee of a mortgage given by the above company, and one Eissler, receiver appointed in the mortgage foreclosure proceedings.
The case was tried to the court without a jury; findings, conclusions and judgment were given in behalf of plaintiff, and Tompkins and Eissler appealed, a default and judgment having theretofore been entered against the said Kelley Company. The point involved on the appeal is whether or not there was substantial evidence to sustain the findings of the court that title to the logs did not pass to the Kelley Company from *370 plaintiff at the time plaintiff delivered the logs to the said Kelley Company.
Plaintiff, together with his father, felled and bucked some timber belonging to plaintiff's father near Lebanon. Over a course of months plaintiff delivered logs to the Kelley Company, which had erected a sawmill some miles from the farm on which the timber was felled and bucked.
A partnership composed of H. Friedlander and L. Laster, of New York, doing business as the Woodex Lumber Company, originally advanced some $6,000.00 to Phillip Kelley and Kenneth B. Kelley, father and son, who were operating a sawmill as a partnership, in return for which the Kelleys turned over to them the output of the mill. Subsequent thereto, at the instance of Friedlander and Laster, the Kelley partnership was incorporated as Kelley Timber Products Co., Inc., and all of its corporate stock was transferred to the Woodex Company which placed a man by the name of McNeil in charge of the said Kelley Company under the title of "comptroller." Thereafter all the funds, management and transactions of said company were controlled by the Woodex Company, Kelley and his son being made employees of said company.
The Woodex Company then caused the new Kelley Company to issue a mortgage to it covering the mill and all lumber and logs which belonged to said company, and which should thereafter be acquired by it, said mortgage to be security for advances theretofore made and to be made by the Woodex Company.
Loggers in the Lebanon vicinity, including plaintiff, who were dealing with the Kelley Company, believed they were dealing with the Kelley partnership, and did *371 not know that the Woodex firm had the affairs of the Kelley Company sewed up lock, stock and barrel.
Plaintiffs and others began delivering logs to the Kelley Company and for a time were paid for the logs so delivered by them. Thereafter the Woodex Company assigned the aforesaid mortgage to defendant Tompkins, who brought foreclosure proceedings and procured the appointment of Eissler as receiver under the mortgage. The record shows that at that time there were a number of creditors of the Kelley Company who were in the same business as plaintiff, whose unpaid claims aggregated some $30,000.00.
During the course of the proceedings the receiver sold the logs in question and holds the money derived therefrom, awaiting orders of the court.
The situation which prompted the present law suit was the failure of the Kelley Company to honor a check issued by it to plaintiff for the purchase of the logs aforesaid. The question before us is whether or not the transaction between plaintiff and the Kelley Company was a cash or a credit transaction. If a cash transaction, title to said logs, under the law, would not pass and would remain in plaintiff, and he would be entitled to prevail in the present case. If for credit, his action would not lie. Johnson v. Iankovetz, 57 Or. 24, 102 P. 799, 110 P. 398; Weyerhaeuser Co. v. First National Bank, 150 Or. 172, 38 P. (2d) 48, 43 P. (2d) 1078.
There was no written contract between the parties, nor was any evidence adduced as to the nature of the full transaction between him and the Kelleys. The only evidence given is that the price for the logs was "$29.00 and $27.00 per thousand," and that payments were to be made every two weeks, the agreement being evidenced *372 by the following brought forth on cross examination:
"Q Mr. Tyler, you first delivered logs in April under a contract to pay you $29.00 a thousand, is that right?
"A Yes, sir.
* * *
"Q And you were working on an arrangement where you would pick up your check every two weeks, is that right?
"A Yes."
After the check in payment of the logs involved in the present case was dishonored, plaintiff and his father went to the mill yard of the Kelley Company and identified the logs which they had delivered, the same being piled on a side road where they had been theretofore unloaded by plaintiff. While they were there, Mr. Eissler, the receiver, arrived. The son testified that the receiver wanted to know what they were doing, whereupon the son replied, "* * * I told him that we was scaling our logs, it was our property, and we was looking out for it." As to the receiver's response thereto, plaintiff testified, "Well, he didn't say too much. He just walked off, didn't say much of anything."
It is the contention of the appealing defendants that the logs were not to be paid for until two weeks after delivery; therefore, this, in itself, makes the transaction one for credit rather than for cash, especially since there was no evidence in the case that the transaction was a cash deal. Section 71-142, O.C.L.A., (Uniform Sales Act) reads as follows:
"Unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions; that is to say, the seller must be ready and willing *373 to give possession of the goods to the buyer in exchange for the price and the buyer must be ready and willing to pay the price in exchange for possession of the goods."
In 46 Am. Jur., Sales, 645, § 478, we read:
"The fact that the check received for goods was not delivered simultaneously with the delivery of the goods to the buyer, but a short time thereafter, does not show that the sale was upon credit; it does not conclusively prove a total abandonment of title and right of possession by the seller, unless, under all the circumstances of the case, it appears that such result was intended."
In the Weyerhaeuser case, supra, we said:
"* * * Defendant company was entitled to a sufficient time to assemble the documents, examine the invoice to see if it conformed to their order, examine the mate's receipt to see that it covered the lumber, and the certificate of inspection, or P.L.I.B., to ascertain if it was in proper condition.
"Where the seller gives the purchaser a short time for such purpose, it is not an extension of credit; it is a courtesy and not a right under the contract."
Cited in the Weyerhaeuser case is Dows v. Dennistoun, 28 Barbour's (N.Y.) 393, a case wherein cash was to be paid within ten days after delivery. The court there held that there was a qualified delivery, and that there was no absolute transfer of the title to the property where the purchase price was not paid.
1. Since there was no direct evidence as to whether the sale of the logs was for cash or for credit, in addition to the statutory presumption of a cash agreement, we must look to the circumstances of the case to determine what result was intended. Quoting from the Weyerhaeuser case, we find at p. 211, "`If the agreement *374 does not provide in express terms that payment shall be made on delivery and no provision is made for credit, the intention of the parties must control.'"
A transaction involving the sale and periodic delivery of logs is vastly different from a sale over the counter of stock in trade. As said in the Weyerhaeuser case at p. 194, "In the sale of cumbersome articles like lumber, it can not be delivered and collection made therefor in the same manner as goods are sold over the counter."
2. Plaintiff and others were making intermittent delivery of logs to the Kelley Company's premises. It could not be expected, nor was it contemplated, that on the delivery of each batch of logs the parties would run to the comptroller to collect their money. The evidence discloses that the comptroller was the only one with authority to pay out funds and then only with the consent of the mortgagees, Friedlander and Laster (who were in New York). There was scaling to be done, bookkeeping to be accomplished, and other matters involved in present-day logging and sawmill operations, which all consumed time, and the fact that plaintiff was to pick up his check every two weeks did not conclusively establish a credit transaction.
We find no merit in the other assignments of error presented by defendants.
3. This case presented a question of fact for the trial court to determine under all the circumstances in the case. Since the lower court found that the transaction was a cash and not a credit transaction, and there being evidence in support thereof, we are not at liberty to disturb such finding. Affirmed.
*375 Edward E. Sox, of Albany, argued the cause and filed a brief for appellants.
Mark Weatherford argued the cause for respondent. With him on the brief were Morley & Thomas, of Lebanon, and Weatherford & Thompson, of Albany.
Before BRAND, Chief Justice, and HAY, LATOURETTE and WARNER, Justices.
AFFIRMED.
LATOURETTE, J.
We have this day rendered an opinion in Tyler v. Kelley Timber Products Co., Inc., et al. That case and the present case were consolidated and argued together before the court. The facts are practically the same, and the legal question involved raises the same point of whether the James deal was one for cash or for credit.
The opinion in the Tyler case is controlling in the case at bar. Affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1279085/ | 90 Wis. 2d 158 (1979)
279 N.W.2d 437
HARENG, and husband, Appellants,
v.
BLANKE, and others, Respondents.
No. 76-263.
Supreme Court of Wisconsin.
Argued May 1, 1979.
Decided June 12, 1979.
*160 For the appellants there were briefs by Max Raskin and Philip Padden of Milwaukee, and Alan M. Clack of Racine, and oral argument by Mr. Clack.
For Dr. James K. Blanke and Continental Insurance Company there was a brief by Foley & Capwell, S.C., and oral argument by Rex Capwell of Racine.
For E. Michael Kourakis there was a brief by Otjen, Philipp & Van Ert, S.C., and oral argument by Ernest J. Philipp of Milwaukee.
HEFFERNAN, J.
This is an appeal from judgments dismissing malpractice causes of action against Dr. James K. Blanke, Dr. E. Michael Kourakis, and their insurer, Continental Insurance Company.
The jury returned a verdict which failed to find either physician negligent. The basic question is whether the jury's verdict was supported by credible evidence. We conclude that there was credible evidence to sustain the verdict and, accordingly, we affirm.
*161 This action was brought by a young married woman and her husband. The claim is made that surgery was unnecessarily and negligently performed and that complications were not recognized and treated promptly and properly.
It is undisputed that, following surgery, Anne Marie Hareng was severely ill and, because of an abdominal infection incurred during the course of her illness, her fallopian tubes have become blocked and she is unable to have children.
The record shows that Anne Marie Hareng noticed pain in the lower right side in the fall of 1971. There is some evidence that would indicate that this pain had persisted for several years. She consulted a Racine physician in May of 1972 and then saw Dr. Lee J. Bowden, an osteopathic physician, late in the same month.
After several office visits, she was admitted to Northwest General Hospital for tests in July of 1972. After tests and further examination, Anne Hareng underwent a laparotomy, an exploratory operation of the abdominal region, and an appendectomy. The surgery was performed by Dr. James K. Blanke, an osteopathic surgeon, on July 13, 1972.
Anne Hareng appeared to make a rapid and uneventful recovery and was released on July 16, 1972. She was readmitted, however, on July 19, 1972, complaining of abdominal pain, fever, diarrhea, nausea, and vomiting. Her condition became steadily worse, and by July 25, 1972, she was near death. On August 3, 1972, she underwent surgery to alleviate peritonitis, which by that time had been diagnosed. It was determined, at the time of the August 3 surgery, that the peritonitis originated where the appendix had been. Apparently the tie-off of the stump had "blown out" and fecal material leaked into the abdominal cavity. Drainage for the abdomen was provided.
*162 On August 8, 1972, however, the drain tube became dislodged and further leakage of fecal matter occurred. Additional corrective surgery was required on the same day.
Following that surgery she was transferred to another hospital, where specialized treatment could be given. There she again underwent surgery for the treatment of abdominal abcesses. She was released from the hospital on September 2, 1972, but was unable to walk until the end of October of 1972.
A year later, October 1973, a diaphragmatic hernia was diagnosed and further surgery was required. There was evidence to show that this hernia had its origin in the earlier surgery. In May of 1974 it was determined that Anne Hareng was sterile. There was evidence to show that this was the result of a fallopian-tube blockage occasioned by a pelvic infection.
Originally the action for malpractice was brought against Dr. Bowden, the Northwest General Hospital, Dr. Blanke, and Dr. Kourakis. A settlement, prior to trial, was achieved with the first two defendants.
[1-3]
In response to questions posed in a special verdict, the jury determined that there was no negligence on the part of Dr. Blanke or Dr. Kourakis. In response to post-verdict motions, the trial court upheld the verdict as supported by credible evidence, in particular the testimony of Dr. Blanke himself. The standard of review of a jury verdict is that it will not be upset if there is any credible evidence which supports it. The evidence will be viewed in the light most favorable to the verdict. May v. Skelley Oil Co., 83 Wis. 2d 30, 35, 264 N.W.2d 574 (1978); Nelson v. Travelers Insurance Co., 80 Wis. 2d 272, 282-83, 259 N.W.2d 48 (1977). This is especially true on review in this court where the verdict has the approval of the trial court. Toulon v. Nagle, 67 Wis.2d *163 233, 242, 226 N.W.2d 480 (1975). The credibility of witnesses and the weight given to their testimony are left to the jury's judgment, and where more than one inference can be drawn from the evidence, this court must accept the inference drawn by the jury. Roach v. Keane, 73 Wis. 2d 524, 536, 243 N.W.2d 508 (1976).
In this case, nine physicians testified concerning the medical procedures employed in the care of Anne Hareng. In addition, there was testimony from the patient herself, her husband, a neighbor, and parents of Anne and Thomas Hareng. The plaintiffs attempted to show that there was negligence at a number of points in the treatment of Anne Hareng in the decision to operate, in the performance of the surgery, in the failure to diagnose peritonitis on July 21, 1972, in the failure to diagnose peritonitis on July 25, 1972, and in the delay of surgery to treat peritonitis until August 3, 1972. All of these attempts to prove negligence were countered by some credible evidence to the contrary.
Clearly, Anne Hareng, for a period of well over a year, was subjected to medical and surgical procedures which resulted in severe pain and mental anguish. Moreover, after the termination of the treatment, she was left with severe and disabling residuals.
The question whether this was the result of malpractice or physicians' negligence was one for the jury. Under the standards set forth above, the record demonstrates that the jury's finding that neither Dr. Blanke nor Dr. Kourakis was negligent must be sustained.
While there was evidence submitted by Anne Hareng that neither Dr. Bowden or Dr. Blanke had informed her of the risk of the proposed surgery, Dr. Blanke testified to the contrary, and the record contains a consent form which acknowledged that the procedures had been explained to her.
Anne Hareng testified that, upon her return to the hospital, she was neglected and was not seen by either *164 Dr. Blanke or Dr. Bowden from July 19 to July 25, 1972. She acknowledged, however, that she did not remember what was going on during part of this period. Dr. Bowden testified that he did see Anne Hareng on the 20th and 21st and continued to see her regularly thereafter during her stay in the hospital. Medical records were introduced which showed that Anne Hareng was seen on the days in respect to which she had no memory.
There was evidence which would tend to show that the surgery of July 13, 1972, should not have been undertaken without additional tests. Dr. Norbert Enzer stated that, in his opinion, there should have been prior consultation with an orthopedist, a gynecologist, and a psychiatrist. Dr. Charles Morrison Schroeder and Dr. Loren J. Yount also stated that the surgery was undertaken without sufficient testing and consultation. There was, however, credible testimony to the contrary. Dr. Pete R. Lombardo testified that the surgery undertaken was in conformance with accepted medical practice. Dr. William Merkow acknowledged that, while additional tests could have been performed prior to surgery, on the basis of the tests the surgery performed conformed to good medical practice.
Dr. Bowden testified that additional tests would not have been helpful and that surgery was warranted because of the chronic pain. Dr. Blanke also testified that no conditions were encountered at the initial surgery which indicated that special tests would have been helpful.
Anne Hareng testified that she was released on July 19, 1972, although she continued to be in pain. Dr. Blanke denied that she made a complaint of pain and stated that he would not have discharged her if she had complained about pain on that date.
There was evidence to show that faulty surgical techniques were used in tying off the stump of the appendix. *165 Dr. Enzer, Dr. Schroeder, and Dr. Yount said that improper procedures were used in this respect. Yet, Dr. Lombardo stated that the technique used was acceptable. Dr. Merkow stated that medical literature is divided in respect to whether the technique espoused by plaintiffs' witnesses was the better one or whether the technique actually used was better.
There was also conflicting evidence in respect to when peritonitis should have been diagnosed and when corrective surgery optimally would have been performed.
Dr. Blanke testified that Anne Hareng's original condition was enteritis, and that the peritonitis did not commence until July 24 or 25. On the 25th, he called in Dr. Kourakis, who testified that on that date the condition was peritonitis. The witnesses for plaintiffs and defendant disagreed in respect to whether surgery for the peritoneal situation should have been undertaken immediately. Some of the plaintiffs' experts testified that surgery should have been undertaken at the earliest possible moment. Dr. Kourakis testified that, because of Anne Hareng's condition, surgery could not be considered on the date that peritonitis was diagnosed and that Anne Hareng would have to be "built up" before surgery. Drs. Enzer, Schroeder, and Yount were critical of the failure to make the diagnosis and to perform surgery earlier. The testimony of Drs. Blanke, Bowden, and Lombardo stated, to the contrary, that the conduct conformed to acceptable medical practice.
[4]
It is clear from the record that the jury was confronted by sharply conflicting testimony in respect to the necessity for the initial surgery, the techniques employed, the diagnosis of peritonitis, and its subsequent treatment. There was credible evidence which if believed by the jury would have supported a verdict that the physicians were negligent. The jury, however, did not make that finding. Instead, it chose to believe the testimony *166 that the defendants were not negligent. As the recital above demonstrates, a verdict of no negligence a verdict approved by the trial judge was supported by credible evidence and must be approved on appeal. We affirm the judgments based on the jury's verdict.
It is also claimed that the trial court erred in its re-instruction of the jury. The record shows that, in the course of their deliberations, the jurors returned and one of them stated, "We are still wondering about the meaning of negligence." The court then re-read a portion of the instructions previously given dealing with what is negligence. After re-reading portions of the instruction, the court asked the jury if the re-instruction was helpful. The court received an affirmative response. The court then asked for comment from counsel concerning the re-instruction as given. The senior counsel for the plaintiffs said, "I think the Court read it correctly."
It is now claimed that the entire instruction, including the portion relating to the disclosure of possible risks and care in diagnosis, should have been re-read.
The statute governing re-instructions is sec. 805.13(5), Stats.:
"Reinstruction. After the jury retires, the court may reinstruct the jury as to all or any part of the instructions previously given, or may give supplementary instructions as it deems appropriate."
[5]
It is apparent that this is a restatement of a discretionary test previously set forth in decisional law. The necessity for, the extent of, and the form of re-instruction rests in the sound discretion of the court. Seitz v. Seitz, 35 Wis. 2d 282, 300, 151 N.W.2d 86 (1967); Olson v. Siordia, 25 Wis. 2d 274, 279, 130 N.W.2d 827 (1964).
[6]
The trial judge read a portion of the instruction previously read to the jury. A juror acknowledged that *167 the re-reading was helpful. As an aid to the exercise of discretion, the court asked for assistance of counsel. Counsel for the plaintiffs acquiesced in the instruction and suggested no changes. No error in the instructions offered originally or as re-read has been pointed out. Nor is there any evidence to show that the partial re-reading was misleading or confusing. We conclude that the court did not abuse its discretion in re-reading only a portion of the instructions. It was sufficient to satisfy the question posed by the jury when it re-read the portion offered. The conduct of the trial court in this regard was appropriate.
While it can reasonably be argued that plaintiffs' counsel's express acquiescence constituted waiver, we need not resort to waiver in the present case, for we see no error in the re-instruction given.
Additionally, it is claimed that the trial was infected with error because the jury was permitted to know that Dr. Bowden and the Northwest General Hospital were released by settlement prior to the start of trial.
During trial, Dr. Blanke's attorney asked Anne Hareng why Dr. Bowden was no longer a party. Plaintiffs' counsel immediately objected. In a recess, however, plaintiffs' counsel acknowledged that the jury was entitled to know who was sued. The court ruled that defense counsel could elicit information "that by agreement of the parties, Dr. Bowden and the hospital are no longer parties to the action." No objection was made to this ruling. On return to the courtroom, defense counsel asked, "In effect, a mutual agreement between you and Dr. Bowden was negotiated, is that correct?" The response of Anne Hareng was, "Yes, sir." No objection was made to the question or to the answer.
[7-9]
It would appear that there was a clear waiver of the objection when plaintiffs' counsel acquiesced in the *168 court's ruling and also acquiesced in the question and answer in the courtroom. Moreover, we conclude that the testimony was admissible. While public policy provides a limited privilege against disclosure of settlements and offers to settle, the privilege and the exclusion is not absolute. Sec. 904.08, Stats., "does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness. . . ."[1]See also, McCormick, Evidence (2d ed.), sec. 274, p. 664.
It is argued by defendants that the evidence of a prior settlement between Dr. Bowden and the Harengs was admissible to show prejudice on the part of Anne Hareng as a witness because she had a financial interest in playing down the negligence of Dr. Bowden and emphasizing that of Dr. Blanke and Dr. Kourakis. We agree, and we conclude that evidence of a settlement can be used, as in this case, to show possible bias of a witness, although it cannot be used to prove liability or invalidity of a claim at issue.
Also, it is claimed that the plaintiffs were prejudiced by a statement of defense counsel in the final argument. The trouble with this contention is that the statement, "I suggest to you he was the least responsible of any one of the three doctors, he was negotiated out," is not *169 presented in the context of the record. We cannot from the record determine what was being considered by the jury when the statement was made. Moreover, the plaintiffs claim that the transcript is in error that, in fact, defense counsel really stated, "He was the most responsible. . . ."
We cannot explore the merits of the plaintiffs' argument when the statement in the record is in itself impeached by the party who now raises the objection and when we are unable to determine the context in which the statement appears.
Because no negligence was found in respect to the conduct of either Dr. Blanke or Dr. Kourakis, the question of Dr. Bowden's negligence is of no significance in the disposition of this case. We therefore do not explore the plaintiffs' contention that the court erroneously imposed upon the plaintiffs the burden of proving the negligence of the party who had been released prior to trial. The question in the posture of the case before us is moot and, in view of our disposition of the other issues, irrelevant.
The fact that the jury found no damages were to be awarded to Thomas Hareng, husband of Anne, and no loss of wages was found for Anne Hareng does not demonstrate that the jury was perverse in its verdict.
[10]
The record showed that Anne Hareng was not working at the time of the surgery and had not worked for a year prior to that time. She testified that she felt well enough to go to work in 1974 but she did not commence work until 1976, two years later. There thus was credible evidence to show that Anne Hareng was out of work not because of her disability, but because she preferred not to work. While a jury could have awarded damages for a loss of earning capacity, under the evidence it was not obliged to do so. We cannot conclude that the jury's verdict was per se erroneous.
*170 [11, 12]
The finding that Thomas Hareng suffered no damages is not perverse. True, there is evidence which by implication would indicate that he was deprived of his wife's society for the summer and fall of 1972 and a portion of 1973, but no systematic effort to prove loss of society, comfort, or companionship was emphasized by the plaintiffs. Moreover, in this case, under well established rules, the denial of damages in respect to Thomas Hareng's loss of society and Anne Hareng's loss of earnings is not prejudicial. We have said:
"`The rule is that where a jury has answered other questions so as to determine that there is no liability on the part of the defendant, which finding is supported by credible evidence, the denial of damages or granting of inadequate damages to the plaintiff does not necessarily show prejudice or render the verdict perverse. . . .'" Dahl v. K-Mart, 46 Wis. 2d 605, 613, 176 N.W.2d 342 (1970), quoting Sell v. Milwaukee Automobile Ins. Co., 17 Wis. 2d 510, 519, 117 N.W.2d 719 (1962).
We conclude that there is evidence to support the jury's verdict finding no negligence by the defendants. The judgments which followed are based upon that verdict.
By the Court. Judgments affirmed.
NOTES
[1] Sec. 904.08, Stats., reads as follows:
"Compromise and offers to compromise. Evidence of (1) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. This section does not require exclusion when the evidence is offered for another purpose, such as proving bias or prejudice of a witness, negativing a contention of undue delay, proving accord and satisfaction, novation or release, or proving an effort to compromise or obstruct a criminal investigation or prosecution." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1607857/ | 773 F. Supp. 270 (1991)
UNITED STATES of America, Plaintiff,
v.
Ray A. GRESSETT, James E. Savage and R.J. Fellows, Defendants.
No. 91-40001-04 to 91-40001-06.
United States District Court, D. Kansas.
August 8, 1991.
*271 *272 *273 Lee Thompson, U.S. Atty., Wichita, Kan., Richard L. Hathaway, Asst. U.S. Atty., Topeka, Kan., for U.S.
Warren Lyon (for Rule 5 only), Jim Burnham, Dallas, Tex., Stephen W. Cavanaugh, Fisher, Cavanaugh & Smith, P.A., Topeka, Kan., for Ray A. Gressett.
Thomas D. Haney, Topeka, Kan., Robert C. Bennett, Houston, Tex., for James E. Savage.
Marilyn M. Trubey, Asst. Federal Public Defender, Topeka, Kan., for R.J. Fellows.
MEMORANDUM AND ORDER
ROGERS, District Judge.
On July 26, 1991, the court held a hearing on a number of pretrial motions filed by the defendants. The purpose of this memorandum and order is to memorialize the rulings made by the court at the hearing and to address the unresolved motions. In resolving these motions, the court recognizes, pursuant to the order of the magistrate judge, that each defendant is deemed to have joined in all motions not "opted out" of within three days after filing. The court notes that none of the defendants has opted out from the motions filed by co-defendants. Accordingly, the rulings on all of the motions shall apply to all of the defendants.
The remaining defendants, Ray A. Gressett, James E. Savage and R.J. Fellows, are charged in a thirteen-count indictment. All of the counts concern the defendants' involvement with transactions with Peoples Heritage Federal Savings and Loan Association (Peoples). In count 1, the defendants are charged with conspiracy to defraud the United States and to commit crimes against the United States in violation of 18 U.S.C. § 371. In counts 2 to 10, the defendants are charged with bank fraud in violation of 18 U.S.C. § 1344(2). In counts 11 to 13, the defendants are charged with making a false statement to the United States in violation of 18 U.S.C. § 1001.
GRESSETT'S MOTIONS
Motion to Dismiss Indictment or, in the Alternative, to Strike the Surplusage (Doc. # 131)
Defendant Gressett moves to dismiss the superseding indictment because it charges the defendants with violations of unspecified civil banking regulations and internal banking policies and is therefore inadequate to sustain criminal liability. He *274 further asserts that the indictment is unconstitutionally vague in charging the unspecified violations of regulations and policies. Alternatively, defendant asks that all references to alleged violation of regulations and internal banking policies be stricken as surplusage, specifically paragraphs 3, 5, 6, 8, 9, 10 and 11.
The government contends that the defendants are not charged with violating a criminal law on the basis of civil regulatory violations. The government asserts that the defendants are charged with committing fraud by conspiring to conceal material information from Peoples, an intentional and knowing action designed to deprive Peoples of the ability to make loan decisions on the basis of complete and relevant information.
The charges are not subject to dismissal. First, the government has adequately charged the defendants with conspiring to intentionally conceal affiliate interests in loans made by Peoples. United States v. Frost, 914 F.2d 756 (6th Cir.1990); United States v. Walker, 871 F.2d 1298 (6th Cir. 1989). Second, the government has adequately charged the defendants with bank fraud and false statements to a federal agency. In sum, the superseding indictment adequately sets forth the elements of the offenses charged and apprises the defendants of the nature of the crimes charged.
In the alternative, the defendant has asked that all references to alleged violations of regulations and internal banking policies be stricken as surplusage. The court may strike surplusage in an indictment. Fed.R.Crim.P. 7(d). A motion to strike surplusage is addressed to the sound discretion of the court. United States v. Collins, 920 F.2d 619, 631 (10th Cir.1990). A motion to strike surplusage should be granted only if the disputed allegations are clearly not relevant to the charge and are inflammatory and prejudicial. Id.
The government contends that the reference to violations of federal regulations and internal policies and procedures is relevant to the defendants' intent and motive in structuring the transactions as they did. We agree. Accordingly, this alternative motion shall be denied.
Second Motion to Dismiss Indictment or, in the Alternative, to Strike the Surplusage (Doc. # 132)
Defendant moves to dismiss the superseding indictment because it charges the defendants with violating their "fundamental duties" to Peoples, none of which can result in criminal liability. He further asserts that the indictment is unconstitutionally vague in charging unspecified violations of the defendants' fundamental duties. Alternatively, defendant asks that all references to defendants' "fundamental duty" to Peoples be stricken as surplusage.
The government makes the same arguments as it made in the preceding motion. The government asserts that the defendants are not charged with a mere breach of fiduciary duties, but rather with committing fraud by conspiring to conceal material information from Peoples.
Again, we believe that the indictment is sufficient. A fair reading of the indictment, as a whole, reveals that the charges in the indictment are not founded upon defendants' fiduciary breaches, but rather are founded upon defendants' actions in conspiring to conceal affiliate interests in various loans.
Defendant's alternative motion to strike surplusage shall also be denied. The references to defendants' violations of fundamental fiduciary duties are relevant to the defendants' intent and motive in structuring the transactions in the way they did.
Third Motion to Strike Surplusage (Doc. # 133)
Defendant seeks to strike the following statement from paragraph 57 of the superseding indictment as surplusage: "proceeds of this $4,520,000 loan would be diverted through a sham sale of property." Defendant contends that these words are not essential to the offense charged and are prejudicial.
*275 This description is relevant to the government's case. See United States v. Sciandra, 529 F. Supp. 320, 322 (S.D.N.Y.1982). Accordingly, the motion shall be denied.
Fourth Motion to Strike Surplusage (Doc. # 134)
Defendant seeks to strike the following statement from paragraph 18A of the superseding indictment as surplusage: "by obstructing and defeating by deceitful and dishonest means." Defendant contends that these words are not essential to the offense charged and are prejudicial.
Deceit and dishonesty are the essence of the government's charges. Accordingly, the use of these words is relevant to the government's case. See United States v. Walker, 871 F.2d 1298, 1307 (6th Cir.1989). This motion shall be denied.
Fifth Motion to Strike Surplusage (Doc. # 135)
Defendant seeks to strike the words "nominee borrower" from paragraphs 29, 42, 48, 69 and 79 as surplusage. Again, defendant contends that these words are not essential to the offenses charged and are prejudicial.
The government asserts that they will demonstrate at trial that the defendants accomplished their fraud through transactions involving nominee borrowers. Accordingly, this language is relevant to the government's case, and the motion shall be denied.
Sixth Motion to Strike Surplusage (Doc. # 136)
Defendant seeks to strike the words "concealment," "concealed," and "concealing" from paragraphs 16, 22, 26, 29, 30, 32, 33, 36, 42, 48, 50, 53, 56, 61, 67, 72, 74, 77, 79 and 85 of the superseding indictment as surplusage. Again, defendant asserts that these words are not essential to the offenses charged and are prejudicial.
Again, the government contends that they will demonstrate at trial that the defendants accomplished their fraud through concealment of their transactions. Accordingly, this language is proper and should not be stricken.
Motion to Dismiss Counts 1, 2 and 10 (Doc. # 152)
Defendant seeks dismissal of counts 1, 2 and 10 because Peoples Financial Mortgage Company is not a federally chartered or federally insured financial institution. The defendant argues that Peoples Financial is a holding company or a subsidiary, and 18 U.S.C. § 1344 was not extended to cover holding companies and subsidiaries of federally insured financial institutions until August 9, 1989.
The government asserts that Peoples Financial was a subsidiary of Peoples and was its alter ego. The government argues that 18 U.S.C. § 1344 covers the charges contained in counts 1, 2 and 10 because all the misrepresentations contained in these counts were ultimately made to Peoples, a federally insured financial institution. We agree. Defendant's motion to dismiss counts 1, 2 and 10 shall be denied.
Motion to Dismiss Indictment for Failure of the Government to Comply with the Pretrial Order of May 15, 1991 (Doc. # 161)
Defendant seeks dismissal of the indictment because the government has failed to comply with a portion of the pretrial order of May 15, 1991. Defendant contends that the government has not produced a complete set of documents concerning the following matters which were ordered to be produced: (1) Jenkens & Gilchrist files relating to transactions contained in the Indictment; (2) reports of examinations conducted by OTS, FHLBB of Topeka and Dallas, RTC, FDIC, or FSLIC; (3) loan committee minutes of Peoples, minutes of all meetings of Peoples Financial Mortgage Corp., minutes and director's packets for board of directors of Peoples Heritage Federal Savings & Loan.
The government responded at the hearing that it has supplied all of the materials ordered by the magistrate judge and this court. The government points out that the defendants are unable to show that any documents or information have been with-held.
*276 Having heard the arguments of counsel and listened to some evidence, we are unable to conclude that the government has not complied with the court's order of May 15, 1991. The government has represented that it has provided all of the ordered material, and the court has not been shown any contrary evidence. Accordingly, this motion shall be denied.
Motion to Dismiss for Grand Jury and Prosecutorial Abuse (Doc. # 127)
Defendant seeks to dismiss the indictment because of grand jury abuse and misconduct by the government before the grand jury. Defendant argues that the government failed to introduce the testimony of his attorney, Jim Porter, who would have provided substantial exculpatory evidence. The defendant points out that the grand jury subpoenaed Porter, Porter moved to quash the subpoena, Judge Saffels denied the motion to quash, and the grand jury never called Porter.
The government has responded to the defendant's contention as follows: (1) the testimony of James Porter is not exculpatory; (2) even if it were considered exculpatory, it is not substantially exculpatory; and (3) even if the government failed to present substantially exculpatory evidence, dismissal of the indictment is not required because the defendant was not prejudiced.
Prosecutorial misconduct will merit dismissal of an indictment only when it substantially influenced the grand jury's decision to indict or raises grave doubt that the decision to indict was substantially influenced. Bank of Nova Scotia v. United States, 487 U.S. 250, 256, 108 S. Ct. 2369, 2374, 101 L. Ed. 2d 228 (1988). The Tenth Circuit requires a prosecutor to reveal known, substantially exculpatory evidence to the grand jury. United States v. Page, 808 F.2d 723, 728 (10th Cir.1987), cert. denied, 482 U.S. 918, 107 S. Ct. 3195, 96 L. Ed. 2d 683 (1987). "Substantial exculpatory evidence" is evidence that clearly negates guilt and that would change a grand jury's decision to charge a defendant with a crime. United States v. Reid, 911 F.2d 1456, 1460 (10th Cir.1990), cert. denied, ___ U.S. ___, 111 S. Ct. 990, 112 L. Ed. 2d 1074 (1991).
The court has carefully examined the defendant's argument. We do not find that the defendant has met his burden of showing that the government's failure to produce Porter for the grand jury had any effect on the grand jury's decision to indict. The defendant has not convinced the court that the testimony of Porter constituted substantial exculpatory evidence. Accordingly, this motion shall be denied.
Motion to Dismiss Count One of the Indictment for Failure to Allege an Offense (Doc. # 128)
Defendant contends that Count One should be dismissed because it alleges a conspiracy to violate a statute, 18 U.S.C. § 1344, not in existence at the time the conspiracy allegedly began. The indictment charges that the conspiracy commenced "as early as 1984, the exact date unknown to the grand jury, and continuing until the return of this indictment." The bank fraud statute, 18 U.S.C. § 1344, was not enacted until October 12, 1984. In the alternative, defendant asks that the court issue an order prohibiting the government or its witnesses from referring to any act or conduct by the defendant occurring before October 12, 1984.
The government has responded that two other district courts have considered the argument made by the defendant and rejected it. This court has carefully examined the cases relied upon by the government, United States v. Robichaux, 698 F. Supp. 107 (E.D.La.1988) and United States v. Whitty, 688 F. Supp. 48 (D.Maine 1988), and we agree with their reasoning and conclusion. Accordingly, this motion shall be denied.
Motion to Transfer Cause for Trial (Doc. # 129)
Defendant seeks a transfer of the trial of this case to another district because trial within this district will severely prejudice him and will deny him a fair trial by an impartial jury. Defendant bases this argument on the "extensive, repeated and in-depth unfavorable and highly prejudicial *277 publicity" which has taken place in Kansas concerning the failure of Peoples. Defendant has attached a number of newspaper articles reporting the indictment in this case and some of the surrounding circumstances as support for this motion.
The government contends that the defendant has not met his burden of proving that the pretrial publicity is so severe and prejudicial as to deprive him of sixth amendment rights.
A court may transfer a case when "there exists in the district where the prosecution is pending so great a prejudice against the defendant that the defendant cannot obtain a fair and impartial trial at any place fixed by law for holding court in that district." Fed.R.Crim.P. 21(a). This rule is intended for cases in which prejudice in the community will make it difficult or impossible to select a fair and impartial jury. 2 Wright, Federal Practice and Procedure: Criminal 2d § 342 (1982). The court has considerable discretion in deciding motions under Rule 21(a). United States v. Neal, 718 F.2d 1505, 1510 (10th Cir.1983), cert. denied, 469 U.S. 818, 105 S. Ct. 87, 83 L. Ed. 2d 34 (1984). In determining whether a motion for change of venue should be granted under this rule on the basis of prejudicial pretrial publicity, the court should take into account who is responsible for generating the publicity, the extent to which the publicity is focused on the crime or the individual, and any other factors relative to the publicity's effect on the ability of potential jurors to hear the evidence impartially. United States v. Maldonado-Rivera, 922 F.2d 934, 967 (2d Cir.1990).
The defendant's presentation on this issue is inadequate. The defendant has not sufficiently demonstrated that the pretrial publicity has been so prejudicial as to prevent the defendant from obtaining a fair and impartial trial. The defendants may renew this motion at trial if they find it necessary. The courts, including the Tenth Circuit, have recognized that the existence of prejudice can better be determined by voir dire examination of potential jurors than by affidavits and speculation about the effect of publicity. See, e.g., United States v. Lamb, 575 F.2d 1310, 1315 (10th Cir.1978), cert. denied, 439 U.S. 854, 99 S. Ct. 165, 58 L. Ed. 2d 160 (1978). At this time, this motion shall be denied.
Motion in Limine to Exclude any Reference to the Alleged Loss Incurred by Peoples, Its Depositors, Holding Company or any Governmental Agency (Doc. # 126)
Defendant seeks to prohibit the government or any of its witnesses from making any reference (1) to the amount of the financial loss in this case; (2) to the approximately $105,000,000 in financial losses to the financial institutions involved in this indictment; and (3) to the alleged financial gain by the defendant as a result of the allegations in the indictment, as well as whether any other loans in the indictment are in default. Defendant contends that these matters are irrelevant or immaterial to the issues in this case since the government is not required to prove any personal monetary gain or loss in order to prove the offenses charged.
The government argues that, while they do not have present evidence showing any loss, they can produce such evidence when it shows the intent of the defendants. We agree. Evidence of default, loss, and the benefits received by the defendants is relevant to the defendants' intent and knowledge. Accordingly, this motion shall be denied.
Motion to Excuse Local Counsel (Doc. # 130)
Defendant requested that local counsel be excused from the trial of this case. The government has no objection to this motion. In accordance with our usual practice, this motion shall be granted.
Motion for Leave to Issue Subpoena Duces Tecum Requiring Trial Production of Documents pursuant to Fed.R.Crim.P. 17(c) (Doc. # 138)
Defendant seeks an order granting leave to issue subpoena duces tecum pursuant to Fed.R.Crim.P. 17(c) to the following individuals or entities: (1) Custodian of Records, Resolution Trust Corporation; (2) *278 Custodian of Records, Federal Home Loan Bank Board; (3) Custodian of Records, Peoples Heritage Federal Savings and Loan Association/RTC in Salina, Kansas; (4) Custodian of Records, Peoples/RTC in Kansas City, Missouri; (5) FBI Agent Farrell; (6) Don S. Jackson of Jenkens and Gilchrist; and (7) Richard Hathaway. The proposed subpoenas to the individuals or entities identified in 1, 2, 3, 4 and 6 all request the following: "All records pertaining to Peoples Heritage Savings Associations' financial transactions with Ray A. Gressett, or any joint venture, partnership or other entity with which Ray A. Gressett was associated." The subpoena for Agent Farrell is more specific and contains five requests for various documents, reports, memoranda and correspondence. The subpoena for Mr. Hathaway seeks the closing files for certain loans referred to in Counts 2, 6 and 10 of the indictment.
The government contends that the defendant has made an insufficient showing to require the issuance of any subpoenas under Rule 17(c). The government asserts that the defendant is seeking to obtain discovery through the use of Rule 17(c), and that the rule is not intended for that purpose.
Rule 17(c) provides that the court "may direct that books, papers, documents or objects designated in the subpoena be produced before the court at a time prior to trial ... and may upon production permit the [items] ... to be inspected by the parties and their attorneys." The courts have repeatedly recognized that Rule 17(c) is not intended to be used as a discovery device. 2 Wright, Federal Practice and Procedure: Criminal 2d § 274 (1982). In United States v. Nixon, 418 U.S. 683, 699-700, 94 S. Ct. 3090, 3103, 41 L. Ed. 2d 1039 (1974), the Supreme Court set forth the following requirements for production of documents prior to trial under Rule 17(c): (1) that the documents are evidentiary and relevant; (2) that they are not otherwise procurable reasonably in advance of trial by exercise of due diligence; (3) that the party cannot properly prepare for trial without such production and inspection in advance of trial, and that the failure to obtain such inspection may tend unreasonably to delay the trial; and (4) that the application is made in good faith and is not intended as a general "fishing expedition."
The court finds that the defendant has failed to meet the requirements established in Nixon. The defendant has offered only conclusory statements concerning these requirements. Accordingly, the motion should be denied.
Motion for Individual Voir Dire (Doc. # 55)
Defendant seeks an order permitting counsel for both sides to conduct individual voir dire of the prospective jurors either in chambers or apart from the balance of the panel in this case. Defendant believes that this procedure will prevent the possibility of any "contamination" of the entire panel by the answer of a prospective juror who has made up his mind based on pretrial publicity. In the alternative, defendant asks that the court conduct the individual voir dire either in chambers or apart from the balance of the panel. The defendant believes that either of these procedures will facilitate whether a fair and impartial jury can be impaneled in this case in this division, or whether this case should be transferred. The defendant has submitted a long list of questions that he requests be submitted to prospective jurors or, in the alternative, asked during voir dire.
The government contends that the defendant has not made sufficient showing of prejudicial publicity to require individual voir dire. The government asserts that the pretrial publicity has not been sufficiently inflammatory or malicious to mandate the use of the individual voir dire procedure.
Individual voir dire is required only in the most extraordinary circumstances, where "massive, inflammatory publicity [creates] a hostile climate requiring extremely close scrutiny of the jurors." United States v. Hall, 536 F.2d 313, 324 (10th Cir.1976), cert. denied, 429 U.S. 919, 97 S. Ct. 313, 50 L. Ed. 2d 285 (1976). Individual voir dire is an unnecessarily time-consuming process when such a showing *279 has not been made. United States v. Whitt, 718 F.2d 1494, 1499 (10th Cir.1983). The court does not find that the defendant has made a showing sufficient to justify individual voir dire by either counsel or the court. Accordingly, this motion shall be denied. The court shall also deny defendant's request to have his proposed questionnaire submitted to the jury panel prior to trial. The court shall follow its usual practice of conducting some voir dire and then allowing the parties to supplement the court's examination.
Motion in Limine Concerning Other Crimes and Uncharged Conduct (Doc. # 60)
Defendant seeks an order precluding the government or its witnesses from making any direct or indirect reference at trial to any crimes or misconduct by the defendant or other defense witnesses other than those set forth in the indictment until a hearing outside the presence of the jury is conducted.
This motion shall be granted. If the government seeks to introduce other crimes and uncharged conduct during the trial, they should inform the court and we will conduct a hearing outside the presence of the jury to determine if the evidence will be allowed.
Motion for Separate Hearing to Determine Existence of Conspiracy for Invocation of Fed.R.Evid. 801(d)(2)(E) (Doc. # 58)
Defendant requests a separate hearing to determine the admissibility of any co-conspirator's statements which the government intends to introduce under the co-conspirator's exception to the hearsay rule.
The defendants do not have a right to a pretrial determination of the existence of a conspiracy for the purposes of Rule 801(d)(2)(E). United States v. Hernandez, 829 F.2d 988 (10th Cir.1987), cert. denied, 485 U.S. 1013, 108 S. Ct. 1486, 99 L. Ed. 2d 714 (1988). We do not find that the defendants have sufficiently demonstrated the need for a pretrial hearing, particularly given the potentially time-consuming nature of such a hearing. Accordingly, this motion shall be denied.
SAVAGE'S MOTIONS
Motion for Individual Voir Dire (Doc. # 75)
Defendant seeks to conduct limited individual examination of prospective jurors outside the presence of the remainder of the jury panel for the purpose of determining the impact of pretrial publicity and existence of prejudice or opinion on the part of prospective jurors which would affect their ability to be fair.
For the reasons stated previously, this motion shall be denied.
Motion for Severance (Doc. # 77)
Defendant seeks a severance from co-defendants Thomas Burger, James Cruce and Thomas Dunn. Since these defendants are no longer in the case, this motion is moot.
FELLOWS' MOTIONS
Motion to Determine Existence of Conspiracy and Fellows' Membership in Conspiracy Prior to Trial (Doc. # 142)
Defendant requests that the court conduct a pretrial hearing to determine the existence of the conspiracy and his membership in it. For the reasons stated previously, this motion shall be denied.
Motion for List of Government Witnesses (Doc. 143)
Defendant asks that the government inform the defense at least three days in advance of when particular witnesses are going to testify. Defendant notes that this procedure will allow preparation of cross-examination in advance. Defendant states that the government has already agreed to provide the defense with a list of their witnesses, and the defense will reciprocate.
The government has agreed to provide upcoming witnesses within twenty-four hours of their testimony. The court finds that twenty-four hours is sufficient.
Motion to Dismiss Counts Three through Ten on Grounds of Multiplicity (Doc. # 144)
Defendant contends that counts 3 through 10 are multiplicitous of count 2. *280 Relying on Grady v. Corbin, 495 U.S. 508, 110 S. Ct. 2084, 109 L. Ed. 2d 548 (1990), defendant argues that dismissal of counts 3 through 10 is appropriate because the conduct charged in counts 3 through 10 is the same as charged in count 2.
The government contends that counts 3 through 10 are not multiplicitous of count 2 because they properly charge separate executions or attempted executions of the defendants' scheme to defraud Peoples.
An indictment is multiplicitous if it charges one offense in several counts. United States v. Kazenbach, 824 F.2d 649, 651 (8th Cir.1987). The danger in multiplicity of charges is that it may lead to multiple sentences for a single offense, or it may unduly prejudice the jury by creating the impression that the defendant has committed several offenses where there may have been one violation. United States v. Duncan, 850 F.2d 1104, 1108 n. 4 (6th Cir.1988). In order to decide whether one offense or separate offenses are charged, courts have applied the traditional test first established in Blockburger v. United States, 284 U.S. 299, 304, 52 S. Ct. 180, 182, 76 L. Ed. 306 (1932), which requires a determination of whether each count requires proof of a fact that the other does not.
The defendant contends that the Supreme Court's decision in Grady has changed the standard to be applied in considering the issue of multiplicity. In Grady, the Supreme Court fashioned a new test for determining whether the double jeopardy clause has been violated. First, the offenses must satisfy the Blockburger test. 110 S.Ct. at 2090. Second, if Blockburger is satisfied, then the double jeopardy clause bars a subsequent prosecution "if, to establish an essential element of an offense charged in that prosecution, the government will prove conduct that constitutes an offense for which the defendant has already been prosecuted." Id., 110 S.Ct. at 2087.
The court disagrees with the defendant's contention that Grady has changed the standard for determining multiplicity. By its own terms, Grady only applies to subsequent prosecutions. 110 S.Ct. at 2087, 2090, 2093-94. Recently, in United States v. Raymer, 941 F.2d 1031 (10th Cir.1991), the Tenth Circuit rejected the contention Grady established a new rule on multiplicity: "Although the Blockburger test recently has been supplemented in the double jeopardy subsequent prosecution context, see Grady, 110 S.Ct. at 2090, we believe that it remains the test in the multiple punishment context." 941 F.2d at 1044. Also see United States v. McKinney, 919 F.2d 405, 417 n. 13 (7th Cir.1990).
In applying the Blockburger test, we find no merit to the defendant's contention. The charges stated in Counts 3 through 10 of the indictment are not multiplicitous with Count 2. Each of the counts requires proof of a fact which the other does not. Under the bank fraud statute, an offense occurs upon each execution or attempted execution of the scheme to defraud. United States v. Poliak, 823 F.2d 371, 372 (9th Cir.1987), cert. denied, 485 U.S. 1029, 108 S. Ct. 1586, 99 L. Ed. 2d 901 (1988). Accordingly, the defendant's motion to dismiss shall be denied.
Motion to Dismiss Indictment for Failure to State an Offense (Doc. # 145)
Defendant contends that the counts of the indictment fail to state offenses against him. He argues that the offenses based on 18 U.S.C. § 1344 fail to state an offense for the failure to disclose certain matters to Peoples because he did not have a duty to disclose such matters. He further argues that the offenses based on 18 U.S.C. § 1001 fail to state an offense because failure to disclose is not a violation of 18 U.S.C. § 1001.
The government responds that the defendant is not charged with merely failing to disclose certain information, but rather is charged with affirmative false representations. We agree. The court finds that the government has sufficiently alleged charges of bank fraud, false statements to a federal agency, and conspiracy to commit bank fraud and make false statements to a *281 federal agency. Accordingly, this motion shall be denied.
Motion for Change of Venue (Doc. # 146)
Defendant seeks a change of venue because of the extensive and prejudicial pretrial publicity surrounding this case. Defendant argues that it would be impossible for him to receive a fair trial in the District of Kansas. Defendant has also asked for a change of venue for the convenience of the parties and the witnesses. Defendant asks that this case be transferred to the Northern District of Texas.
The court shall deny defendant's motion for a change of venue pursuant to Rule 21(a) for the reasons previously stated in this order. The court shall also deny defendant's motion for a change of venue for the convenience of the parties and the witnesses. The court, in the interest of justice, may transfer a criminal case for the convenience of the parties and the witnesses. Fed.R.Crim.P. 21(b). The decision whether to grant a motion for change of venue rests in the sound discretion of the trial court. United States v. Calabrese, 645 F.2d 1379, 1384 (10th Cir.1981), cert. denied, 451 U.S. 1018, 101 S. Ct. 3008, 69 L. Ed. 2d 390 (1981). The court finds that the defendant has not sufficiently shown that a transfer is necessary in this case.
Motion to Dismiss Counts 1, 2, 3, 4, 5, 6, 7 and 11 Based on the Statute of Limitations (Doc. # 147)
Defendant contends that counts 1, 2, 3, 4, 5, 6, 7 and 11 should be dismissed because they are barred by the statute of limitations. The government has conceded that count 11 should be dismissed because it is barred by the statute of limitations. The government contends that the remainder of the motion should be denied.
The court shall dismiss count 11. However, the remaining charges are not barred by the statute of limitations. The court finds the defendant's argument concerning the aiding and abetting statute to be without merit. The applicable statute of limitations for the offense of aiding and abetting under 18 U.S.C. § 2 is the statute for the substantive offense charged. United States v. Musacchia, 900 F.2d 493, 499 (2d Cir.1990).
Motion for Additional Time to File Motions (Doc. # 148)
Defendant seeks additional time to file additional motions. The government has no objection to this motion but asks that the deadline for such motions be at least two weeks prior to trial. The court shall grant the defendant's motion. The court shall allow the defendants until August 23, 1991 in which to file additional motions. The government shall have until September 4, 1991 in which to file a response.
IT IS THEREFORE ORDERED that the following motions be hereby denied:
Motion to Dismiss Indictment or, in the Alternative, to Strike the Surplusage (Doc. # 131);
Second Motion to Dismiss Indictment or, in the Alternative, to Strike the Surplusage (Doc. # 132);
Third Motion to Strike Surplusage (Doc. # 133);
Fourth Motion to Strike Surplusage (Doc. # 134);
Fifth Motion to Strike Surplusage (Doc. # 135);
Sixth Motion to Strike Surplusage (Doc. # 136);
Motion to Dismiss Counts 1, 2 and 10 (Doc. # 152);
Motion to Dismiss Indictment for Failure of the Government to Comply with the Pretrial Order of May 15, 1991 (Doc. # 161);
Motion to Dismiss for Grand Jury and Prosecutorial Abuse (Doc. # 127);
Motion to Dismiss Count One of the Indictment for Failure to Allege an Offense (Doc. # 128);
Motion to Transfer Cause for Trial (Doc. # 129);
Motion in Limine to Exclude any Reference to the Alleged Loss Incurred by Peoples, Its Depositors, Holding Company, or Any Governmental Agency (Doc. # 126);
Motion for Leave to Issue Subpoena Duces Tecum Requiring Trial Production of *282 Documents Pursuant to Fed.R.Crim.P. 17(c) (Doc. # 138);
Motion for Individual Voir Dire (Doc. # 55);
Motion for Separate Hearing to Determine Existence of Conspiracy for Invocation of Fed.R.Evid. 801(d)(2)(E) (Doc. # 58);
Motion for Individual Voir Dire (Doc. # 75);
Motion to Determine Existence of Conspiracy and Fellows' Membership in Conspiracy Prior to Trial (Doc. # 142);
Motion to Dismiss Counts Three Through Ten on Grounds of Multiplicity (Doc. # 144);
Motion to Dismiss Indictment for Failure to State an Offense (Doc. # 145);
Motion for Change of Venue (Doc. # 146).
IT IS FURTHER ORDERED that the following motions are hereby granted as set forth in the foregoing memorandum:
Motion to Excuse Local Counsel (Doc. # 130);
Motion in Limine Concerning Other Crimes and Uncharged Conduct (Doc. # 60);
Motion for List of Government Witnesses (Doc. # 143).
IT IS FURTHER ORDERED that the following motions are hereby denied as moot:
Motion for Severance (Doc. # 77).
IT IS FURTHER ORDERED that the following motions are hereby granted in part and denied in part as set forth in the foregoing memorandum:
Motion to Dismiss Counts 1, 2, 3, 4, 5, 6, 7 and 11 Based on the Statute of Limitations (Doc. # 147).
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1718994/ | 455 So. 2d 1175 (1984)
Constance A. OTTO
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
No. 83-C-0620.
Supreme Court of Louisiana.
September 10, 1984.
Thomas L. Giraud, Charles A. Verderame, Giraud, Cusimano & Verderame, New Orleans, for applicant.
Edward P. Lobman, Alice M. Lewis, Lobman & Carnahan, Metairie, for respondent.
LEMMON, Justice.[*]
This case involves a highway collision between plaintiff's automobile and an oncoming 18-wheel tractor-trailer which occurred in the truck's lane of traffic. Plaintiff's suit against her uninsured motorist carrier alleged that she was struck in the rear by an unknown motorist, causing her to lose control. The trial court dismissed plaintiff's suit on the basis that plaintiff was presumed to be negligent because the collision occurred in the opposing lane of traffic. The court of appeal affirmed on the basis of the manifest error rule. 426 So. 2d 709 (La.App.1982). We granted certiorari. 433 So. 2d 157 (La.1983). Concluding that it was improper for the trial court to apply such a presumption in a liability determination between the plaintiff and a party other than the motorist in whose lane plaintiff collided, we reverse the judgment and render judgment in favor of plaintiff on the basis of the evidence in the record.
The accident occurred in mid-afternoon on a clear, dry day on a two-lane highway. The left front of plaintiff's car struck the *1176 front left side of an oncoming tractor-trailer unit driven by Lipton Rivet, after Rivet attempted to pull onto the right shoulder to avoid the collision. Plaintiff's car bounced off the truck and came to rest across the road, perpendicular to her prior path of travel, near the point of impact. The truck came to rest in the ditch, forward from the point of impact. There were skid marks only in the truck's lane.
According to plaintiff's testimony, she had been traveling west at a speed of approximately 40 miles per hour behind a passenger car when the traffic in front of her suddenly slowed. She felt a "tap or little bump" and saw through the rearview mirror a woman in a camper or van immediately behind her. The woman suddenly hit her again and pushed her into the opposing lane of traffic, and she remembered nothing further (not even seeing the 18-wheel tractor-trailer). However, she expressly denied at trial that she had attempted to pass the preceding vehicles.
Because she was unconscious after the accident, plaintiff could not then relate her version of the occurrence. Consequently, the investigating officers did not search for debris in the area of the claimed first impact or for a witness to that collision. When the tube was removed from plaintiff's throat seven weeks after the accident, she immediately told the story she related in her trial testimony.
In support of her claim, plaintiff introduced a photograph taken by police at the scene, which showed damage to plaintiff's car on the extreme right of the bumper and on the right rear fender, as well as an extensive scratch along the side of her right rear fender and right rear door.[1] Those damages do not appear to be related to the damage to the left front area of plaintiff's car which was sustained in the collision with the truck. She also presented the testimony of her son and daughter-in-law, who stated that they were familiar with plaintiff's car (which formerly belonged to plaintiff's son), that they had washed and waxed the car two weeks before the accident and had parked behind the car in plaintiff's driveway on the morning of the accident, and that there were no dents on the rear of the vehicle prior to the accident except for a small dent on the bottom of the middle section of the bumper.
Deborah Rees, who was driving the passenger car directly in front of plaintiff, gave a statement (to defendant's adjuster) which was introduced into evidence by stipulation. Plaintiff's car had been directly behind her for several miles while she was driving about 45 miles per hour in heavy traffic. Just before the accident, she glanced into her rearview mirror and saw plaintiff's car in the eastbound lane of traffic, and immediately thereafter she saw the collision. She did not know how plaintiff's car got into the eastbound lane. Miss Rees' mother, who was a passenger in the vehicle driven by her daughter, corroborated plaintiff's claim of a slow-down in traffic just prior to the accident by testifying that a slow-moving vehicle directly in front of them made a left turn from the highway about 200 yards before the point of the accident.
Paul Polos, a passenger in Rivet's truck, testified that plaintiff suddenly came out of bumper-to-bumper traffic, almost hitting the car in front of her, and appeared suddenly in their lane in front of them. He stated that her head was down on the steering wheel when he saw her about 15 feet away.
Rivet testified by deposition following the trial that plaintiff moved into his lane of traffic, about 40 yards ahead of him, that she "came around a van and a camper", and that "it looked like she was trying to pass them". In an attempt to avoid the collision, he slowed down and pulled as far over to his right as possible. Immediately before the collision, he saw plaintiff's head lowered onto the steering wheel. At no *1177 time did his vehicle make any contact with the rear of plaintiff's car. Interestingly, he emphatically stated that the van was directly in front of plaintiff's car (directly contrary to the testimony of Miss Rees and her mother that plaintiff had been following directly behind them for several miles and also contrary to Polos' testimony that plaintiff as she pulled out almost hit the car in front of her) and that a camper (or "home on wheels") was in front of the van. He further stated that a woman was driving the camper, that plaintiff was at a point between the van and the camper when the collision occurred, and that the camper and van had pulled partially off the highway at the moment of impact.[2]
The trial court, in reasons for judgment, determined that plaintiff, in addition to the burden of proving the accident was caused by the negligence of the unknown hit-and-run driver, also had the burden of overcoming the presumption of her own negligence on the basis that the accident occurred in the opposing lane of traffic. Concluding that plaintiff had not borne this higher burden, the court rendered judgment in favor of defendant. The court of appeal, without discussing this additional burden of proof imposed upon plaintiff, held that the trial court was not manifestly erroneous in concluding that plaintiff had failed to prove by a preponderance of the evidence that she was struck from the rear by a third vehicle.
The presumption applied by the trial court has been invoked by defendants when the evidence showed that the defendant-motorist was in his proper lane of traffic at the time of the collision and the plaintiff-motorist was not. Noland v. Liberty Mutual Ins. Co., 94 So. 2d 671 (La.1957); Meskill v. Allstate Ins. Co., 247 So. 2d 163 (La.App. 3rd Cir.1971). Whatever validity such a presumption would have had if plaintiff in this case had sued the tractor-trailer driver, no such presumption flows in favor of a motorist who allegedly ran into the rear end of plaintiff's vehicle in plaintiff's own lane. Neither can the presumption favor plaintiff's uninsured motorist carrier, who is contractually liable to pay the damages the hit-and-run motorist would be legally liable to pay. Plaintiff's only burden of proof was to show by a preponderance of the evidence that she had been struck in the rear in her lane of traffic by a hit-and-run driver and that this impact caused her to veer into the opposite lane of traffic.
The trial judge erred in applying incorrect law to the facts of the case. When the trial court applies the wrong law, no weight should be accorded to the judgment of the trial court, and the manifest error rule does not apply. Ragas v. Argonaut Southwest Ins. Co., 388 So. 2d 707 (La. 1980); Gonzales v. Xerox Corp., 320 So. 2d 163 (La.1975). The court of appeal, therefore, improperly relied on the manifest error rule. Accordingly, the judgments of both lower courts must be set aside.
When a judgment of the court of appeal is reversed because of incorrect application of the manifest error rule, the normal procedure would be to remand to the court of appeal for determination of liability and quantum on the basis of the record. However, the parties have stipulated that, if plaintiff is entitled to recovery, her damages exceed the limits of insurance coverage. Because of this stipulation, and because it was necessary for this court to review the entire record on liability in order to decide that the manifest error was applied erroneously, judicial efficiency *1178 dictates disposition of the liability issue by this court.
We have independently reviewed the record, without according any weight to the erroneous trial court judgment, and have determined that plaintiff is entitled to recovery on the record. There was uncontradicted evidence that the rear end of plaintiff's car had considerable damage after the accident which had not been there earlier that day. Rivet disclaimed any contact between his truck and the rear of plaintiff's car. The additional damage to the right rear bumper and right fender does not appear to be the result of the truck's impact with plaintiff's left front. Moreover, an impact to the right rear is the type of impetus which would propel a moving car to the left of the prior path of travel.
Plaintiff's testimony that she was following a car was corroborated by Miss Rees, Mrs. Rees and Polos, all of whom contradicted Rivet's confusing testimony about plaintiff's attempt to pass a van and camper. Still, Rivet's testimony did corroborate the presence of a camper driven by a woman, as claimed by plaintiff.
Certainly, the oncoming 18-wheel tractor-trailer was visible to one in plaintiff's position who might contemplate a passing maneuver. Moreover, plaintiff had no reason to pass a car she had been following for several miles in heavy traffic when she was to make a right turn off the highway about half a mile from the accident. Finally, a passing attempt in heavy traffic by plaintiff at that point in time was unlikely, in view of Mrs. Rees' testimony that a slow-moving vehicle had just turned off the road and her daughter had just accelerated for about 200 yards when the accident occurred.
For these reasons, the judgment of the lower courts are reversed, and judgment is rendered in favor of Constance A. Otto and against State Farm Mutual Automobile Insurance Company in the amount of $100,000, together with legal interest from the date of judicial demand until paid, and for all costs of these proceedings.
NOTES
[*] Bailes, Justice, ad hoc, sitting for Justice Marcus.
[1] The officer testified that he photographed the obvious damage on the rear of plaintiff's car "to indicate any other damage that might have occurred", but that there was no indication that the damage in that area was caused by the collision with Rivet's truck.
[2] Rivet also testified that he gave a statement to his employer after the accident. Contending that he had sought such a statement by interrogatories and been informed that no statement had been taken, plaintiff's counsel filed a motion in the court of appeal to remand the case to permit further cross-examination of Rivet. Counsel reurges that motion, contending that Rivet's statement (finally obtained after the trial court rendered judgment) contains a diagram showing plaintiff's path at an angle, inconsistent with the appearance of a normal passing maneuver. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326678/ | Kaplan, Mitchell H., J.
INTRODUCTION
This is an administrative appeal pursuant to G.L.c. 30A, §14. The plaintiff, Bernard Brady, seeks judicial review of a decision of the defendant, Contributory Retirement Appeal Board (“CRAB”). The defendant, State Board of Retirement (the “Board”), denied Brady’s request that he be classified as a member of Group 4 under G.L.c. 32, §3(2)(g) and instead classified him as a member of Group 2.2 Brady timely appealed this decision to CRAB, which then assigned the appeal to the Massachusetts Division of Administrative Law Appeals (“DALA”), as required by G.L.c. 32, §16(4). A DALA magistrate conducted an evidentiary hearing and then issued a decision affirming the Board. Brady timely appealed the DALA decision to CRAB. CRAB adopted DALA’s findings of fact as its own, noting that they appeared to be undisputed, and affirmed DALA’s decision. Brady then filed this action for judicial review. The matter is currently before the court on Brady’s Motion for Judgment on the Pleadings in which he asks that CRAB’s decision be vacated and the court order the Board to classify him as a member of Group 4. For the reasons explained below, Brady’s Motion for Judgment on the Pleadings is DENIED and CRAB’s decision AFFIRMED.
BACKGROUND
The material facts on which this appeal turns are taken from the administrative record and are not in dispute.
Brady was born on March 31, 1954. He began working for the Department of Correction (the “DOC”) in 1977, as a Correction Officer I, and has continued to be employed by the DOC continuously since 1977. Over the following several years, Brady was promoted a number of times. In 1990, he became “permanent” in the civil service position of Correction Officer III. Then, in 1992, Brady was promoted to the position of Deputy Superintendent. In 2004, he was again promoted; this time to Acting Superintendent; and, in 2007, he accepted a voluntary demotion to Deputy Superintendent. From 2007, to the present, he has been a deputy superintendent for operations and security at the Massachusetts Treatment Center at Bridgewater. Since 1992, Brady has held senior management level positions within the DOC that were not civil service positions. In March 2008, Brady requested that the Board classify him under §3(2)(g) as a member of Group 4 and submitted forms necessary to have the Board act on his request. On April 24, 2008, he was informed that the Board had classified him as a member of Group 2, not 4.
*303On March 11, 2003, the Deputy Director of the Division of Human Resources of the DOC wrote a letter to the Chief Human Resources Officer of the DOC in which he commented that some unnamed individual had informed him that a permanent civil service employee, who had been promoted to a non-civil service management position, such as Brady, would have to be placed on an approved leave of absence, in order to have the right to revert to his permanent civil service title. He enclosed a list of individuals who were apparently similarly situated to Brady, and asked that they be approved for leaves of absences. In a letter dated July 14, 2003, this same Deputy Director wrote Brady that he had been approved for a leave of absence from his permanent civil service title of Correction Officer III.
DISCUSSION
Standard of Review
The scope of review for an agency’s decision is defined by G.L.c. 30A, §14. Howard Johnson Co. v. Alcoholic Beverages Control Comm’n, 24 Mass.App.Ct. 487, 490 (1987). Pursuant to G.L.c. 30A, §14, the court may affirm, remand, set aside or modify an agency’s decision if it determines that the substantial rights of any party may have been prejudiced because the agency’s decision is: (1) based upon an error of law; (2) unsupported by substantial evidence; (3) unwarranted by facts found by the court on the record submitted; or (4) arbitrary or capricious, an abuse of discretion, or otherwise not in accordance with the law. G.L.c. 30A, §14(7).
The party appealing an administrative decision bears the burden of demonstrating the decision’s invalidity. Merisme v. Board of Appeals on Motor Vehicle Liab. Policies and Bonds, 27 Mass.App.Ct. 470, 474 (1989). In reviewing the agency’s decision, the courtis required to give due weight to the agency’s experience, technical competence, specialized knowledge, and the discretionary authority conferred upon it by statute. Flint v. Commissioner of Pub. Welfare, 412 Mass. 416, 420 (1992). The reviewing court may not substitute its judgment for that of the agency. Southern Worcester County Reg'l Vocational Sch. Dist. v. Labor Relations Comm’n, 386 Mass. 414, 420-21 (1982).
The court does not act as a de novo fact finder, nor is the court’s review a trial de novo on the record that was before the CRAB. Fergione v. Director of the Div. of Employment Sec., 396 Mass. 281, 283 (1985).
“(RJetirement law is notoriously complex” and the CRAB has been charged with interpreting G.L.c. 32. Namay v. Contributory Ret. Appeal Bd., 19 Mass.App.Ct. 456, 463 (1985). “It is settled that the findings and decisions of [CRAB] are to be sustained whenever possible and are not to be reversed unless they are wholly lacking in evidentiary support or are tainted by errors of law.” See Woolfall’s Case, 13 Mass.App.Ct. 1070 (1982), rev. denied by 386 Mass. 1104 (1982) (internal quotations and citations omitted).
In the present case the facts are straightforward and not in dispute. The question before the court is whether CRAB erred in its application of the classification criteria set out in G.L.c. 32, §3(2)(g) to Brady. In reviewing CRAB’s interpretation of this section, the court is mindful that it should “normally accord great weight to an administrative agency’s interpretation ... of the law which the agency is charged to administer,” especially, in an area as “notoriously complex” as retirement law. Namay, 19 Mass.App.Ct. at 463.
As relevant to this case, §3(2)(g) provides that the Board shall classify the following employees in Group 4:
[EJmployees of the department of correction who are employed at any correctional institution or prison camp under the control of said department and who hold the position of correction officer, female correction officer, industrial instructor, recreation officer, assistant industrial shop manager, industrial shop manager, assistant to the supervisor of industries, supervisor of industries, senior correction officer, senior female correction officer, supervising correction officer, supervising female correction officer, prison camp officer, senior prison camp officer, supervising prison camp officer, assistant deputy superintendent . . .
Since Brady was promoted to the position of Deputy Superintendent in 1992, the positions at which Brady has been employed by the DOC are not among those listed for DOC employees who the Board is to classify in Group 4. In Gaw v. Contributory Retirement Appeal Bd., 4 Mass.App.Ct. 250, 253 (1976), the Appeals Court rejected plaintiffs argument that, under §3(2)(g), the Board should classify an employee based on whether he has provided some of the same services to his employer that employees whose positions are listed in this section provide. In so doing, the Appeals Court reflected on the legislative history of this section:
As originally created Group 4 included only members of police and fire departments not classified in Group 1. Its purpose, as explained in the special report of the Retirement Law Commission recommending it, was to encourage earlier retirement of police officers and firemen in order to make room for younger men better able to perform the arduous and hazardous tasks expected of such employees. Group 4 was thereafter enlarged by successive amendments to include... other classes of employees. It is fair to assume that the additions were made for reasons similar to those underlying the creation of Group 4 in its original form... [W]e note that the Legislature has consistently described employees falling within Group 4 by naming their positions or titles rather than by describing the type of work they perform. (Internal quotations and citations omitted.)
*304It would appear, therefore, that the Board and CRAB were correct in concluding that Brady should not be classified as a member of Group 4, because at the time of his request for classification he did not work in a position named in §3(2)(g), and had not since 1992.
Brady, however, argues that there are features of his employment histoiy and leave of absence status that establish that an error of law was committed when he was not classified in Group 4. First, Brady points out that in 1992, immediately prior to being promoted to deputy superintendent, he was a Correction Officer III, making him then both a “permanent” civil service employee and a member of Group 4. He then directs the court’s attention to G.L.c. 30, §46D. That statute encourages the promotion of employees or lower level managers of the Commonwealth to senior management level positions, whenever practicable. The statute then goes on to provide that:
In every instance of a manager or employee so promoted . . . from a position in which at the time of promotion he shall have tenure by reason of section nine A of this chapter, upon termination of his service in the position to which he was so promoted, the manager or employee shall, if he so requests, be restored to the position from which he shall have been promoted, or to a position in the same state agency, without impairment of his civil service status or his tenure by reason of said section nine A or loss of the seniority, retirement and other rights to which uninterrupted service in such position would have entitled him; . . .
Brady argues that this statute, even without regard to his special status as an employee on leave of absence from his position as a Correction Officer III, entitles him to Group 4 classification. He reasons that, under G.L.c. 30, §46D, he could demand to be terminated as a deputy superintendent and “restored” to his position as a Correction Officer III. He then would be entitled to the retirement rights of a Correction Officer III, i.e., the right to be classified in Group 4. The court has some question as to whether §46D gives a senior manager, such as a deputy superintendent, the right to demand that he be terminated from his senior management position and then restored to the civil service status that he last enjoyed some twenty years earlier. Another interpretation of this section might be that it provides protection to a civil servant who accepts a senior position and is later terminated, perhaps because a new secretary or commissioner is appointed as part of a new administration and wants his/her own management team, but does not offer the employee the right to demand demotion from senior management back to a civil service employee. The court, however, need not wrestle with that question, as Brady never asked to be demoted to a Correction Officer III so that he could retire earlier, but rather argues only that he should be classified in Group 4, because he could do that. The court is convinced that G.L.c. 30, §46D, even if it gives Brady the right to be restored to his prior civil service position at any time he chooses, does not serve as an unstated proviso or supplement to the language of G.L.c. 32, §3(2)(g).
It may also be noted that, many years ago, in Maddocks v. Contributory Retirement Appeal Bd., 369 Mass. 488 (1976), the Supreme Judicial Court made it clear that when an employee accepts a promotion from what might be described as a line or direct care position to a supervisory position, this may carry with it a loss of certain early retirement benefits that went with the prior position. The employee receives the benefit of higher pay and status and cannot later complain that she has lost retirement benefits, even if she did not make inquiry and therefore was unaware of this consequence when she accepted the promotion. Brady accepted the position of deputy superintendent in 1992. That appears to be a position with substantially greater responsibility, prestige, and, presumably, pay than Correction Officer III. There is no reason to read into §3(2) (g) some unstated right to be classified in Group 4, because many years ago Brady was promoted from a position that offered the opportunity for earlier retirement.
As noted above, Brady also argues that because he is on a continuing leave of absence from the position of Correction Officer III, he must be found to “hold” that position, within the meaning of §3(2) (g), as well as the position of Deputy Superintendent, and he therefore falls within the statutory definition of a member of Group 4. Brady points out that while some descriptions of employees who are to be classified in Group 4 make reference to employees of an agency or department “who are employed as” certain designated workers3 the DOC provisions of §3(2)(g) speak of “employees of the department of correction who are employed at any correctional institution or prison camp under the control of said department and who hold the position of . . .” (emphasis supplied). Brady asserts that the use of the words “hold the position” instead of “employed as” has special significance. Since he is on leave of absence from the position of Correction Officer III, he still “holds” that position, even if he has not been employed as a Correction Officer III since 1992.
Neither Brady nor CRAB can point the court to any useful authority that touch upon the definitions of “hold” and/or “leave of absence,” or the way these terms may relate to one another in the circumstances presented by this case. Does a person such as Brady hold the position of Correction Officer III because he was granted a perpetual leave of absence from it in 2003, some eleven years after he was promoted to the position of deputy superintendent? Certainly, a reasonable interpretation of the language in question is that, as used in §3 (2) (g), one holds the position in which he is, and for many years has been, working, not the position from which he is on leave of absence *305and to which he could be “restored” under G.L.c. 30, §46B, if he were ever terminated from his senior management position. In G.L.c. 32, §20(l)(b), the legislature provided that: “The state employees’ retirement system shall be managed by the state board of retirement. . . Said board shall have the general powers and duties set for the in subdivision (5) of this section.” Subdivision (5) then states in relevant part: “Any such board may adopt by-laws and make rules and regulations consistent with law . . . ,” subject to the approval of the Public Employee Retirement Administration Commission. Clearly, the Board and this Commission are the agencies the legislature has designated to implement the laws governing the contributory retirement system. The legislature also created CRAB to hear appeals from decisions made by the Board, among other retirement boards, so that CRAB could add its learning and expertise to the administrative review process. See Namay, 19 Mass.App.Ct. at 463-64. This court cannot say that the Board and CRAB erred in concluding that the position that Brady holds, within the meaning of §3(2)(g), is the position in which he is working, not that from which he was granted an indefinite leave of absence. Indeed, that would appear to be an interpretation consistent with the purpose for which Group 4 was created, as the Appeals Court described that purpose in Gaw.
Finally, the Court notes that the Board, but not CRAB, relied, in part, in its decision on a Group Classification Policy established by the Board which states that an employee seeking classification in a particular group must “certify that he has been actively working in the position under consideration for twelve consecutive months prior to retirement.” Brady argues that this policy is inconsistent with the language of §3(2) (g), and, in any event, constitutes a regulation that was imposed on all employees but was not promulgated in compliance with the requirements of G.L.c. 30A, §§2-6D, which generally include notice of the proposed regulation, a hearing, and filing of the regulation with the Secretary of State. See, e.g., Kneeland Liquor v. Alcoholic Beverages Control Comm’n, 345 Mass. 228 (1962). The court concludes that CRAB was correct in concluding that it need not address the validity of this Policy, because the administrative record demonstrates that Brady did not request/demand demotion to Correction Officer HI, but rather sought classification while employed as the Deputy Superintendent of the Treatment Center. The question whether the DOC could restore Brady to his Correction Officer in position for some brief period to allow him to be classified in Group 4, for purposes of retirement, consistent with the Supreme Judicial Court’s interpretation of G.L.c. 30, §3(2) (g) set out in Pysz v. Contributory Retirement Appeal Bd., 403 Mass. 514 (1988),4 is not presented by this case.
ORDER
For the foregoing reasons, the plaintiffs motion for judgment on the pleadings is DENIED and CRAB’S decision AFFIRMED.
As a practical matter, this difference in classification means that Brady’s rights to receive superannuation retirement benefits begin at age fifty-five rather than a younger age and his maximum benefits accrue at age 60 rather than age 55. See G.L.c. 32, §5(2)(a). See also Gallagher v. Contributory Retirement Appeal Bd., 4 Mass.App.Ct. 1, 4, n.8 (1976).
See, e.g., “employees of the Massachusetts Port authority who are employed as . . .”
In Pysz, the SJC held that an employee would not be permitted to increase his retirement benefits by accepting a direct patient care position two weeks before retirement because this “would circumvent the intent of the legislature when it adopted the classification system.” Id. at 518. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/2577120/ | 113 F.Supp.2d 915 (2000)
PEOPLE FOR THE ETHICAL TREATMENT OF ANIMALS, INC., Plaintiff,
v.
Michael T. DOUGHNEY, Defendant.
No. CIV.A. 99-1336-A.
United States District Court, E.D. Virginia, Alexandria Division.
June 12, 2000.
*916 *917 David Neil Ventker, Huff, Poole & Mahoney, P.C., Virginia Beach, VA, for People for Ethical Treatment of Animals, Inc., plaintiff.
Richard Taylor Rossier, McLeod, Watkinson & Miller, Washington, DC, for Michael T. Doughney, defendant.
MEMORANDUM OPINION
HILTON, Chief Judge.
This matter comes before the Court on Plaintiff's Motion for Partial Summary Judgment and Renewed Motion to Strike, Plaintiff's Motion for Summary Judgment and Defendant's Motion for Summary Judgment. The parties agree that there are no issues of material fact in dispute and this case may be decided on the motions for summary judgment.
This lawsuit arose from a dispute between Plaintiff, People for the Ethical Treatment of Animals ("PETA"), and Defendant, Michael Doughney ("Doughney"), regarding the use of the internet domain name "PETA.ORG." PETA is a non-profit, charitable corporation established in August 1980. PETA has affiliated animal protection organizations in the United Kingdom, Germany, the Netherlands and India who all operate under the name PETA. On August 4, 1992, PETA was given U.S. Trademark Registration Number 1,705,510 duly issued by the United *918 States Patent and Trademark Office for the service mark "PETA" for "educational services; namely providing programs and seminars on the subject of animal rights welfare," and, "promoting the public awareness of the need to prevent cruelty and mistreatment of animals." PETA has used the PETA trademark and trade name continuously in interstate commerce and foreign commerce since 1980.
Defendant, Michael Doughney ("Doughney"), registered many domain names in September 1995, including "PETA.ORG." At that time, PETA had no web sites of its own. Doughney registered "PETA.ORG" with Network Solutions, Inc. for "People Eating Tasty Animals" which he represented to Network Solutions, Inc. was a non-profit organization. No such organization was in existence at the time of the registration of the web site or since that time. Doughney also represented to Network Solutions, Inc. that the name "PETA.ORG" "does not interfere with or infringe upon the rights of any third party."
Doughney's "PETA.ORG" web site contained information and materials antithetical to PETA's purpose. When in operation, "www.peta.org" contained the following description of the web site: "A resource for those who enjoy eating meat, wearing fur and leather, hunting, and the fruits of scientific research." There were over thirty links on the web site to commercial sites promoting among other things the sale of leather goods and meats. Until an internet user actually reached the "PETA.ORG" web site, where the screen read "People Eating Tasty Animals," the user had no way of knowing that the "PETA.ORG" web site was not owned, sponsored or endorsed by PETA.
On January 29, 1996, PETA send Doughney a letter requesting that he relinquish his registration of the "PETA.ORG" name because "it uses and infringes upon the longstanding registered service mark of People for the Ethical Treatment of Animals, whose service mark `PETA' currently is in full force and effect."
PETA then complained to Network Solutions, Inc. and on or about May 2, 1996, Network Solutions, Inc. placed the "PETA.ORG" domain name on "hold" status. Pursuant to Network Solutions, Inc.'s "hold" status designation, the "PETA.ORG" domain name may not be used by any person or entity. After "PETA.ORG" was put on "hold" status, Doughney transferred the contents of that web site to the internet address "www. mtd.com/tasty."
PETA brought this suit alleging claims for service mark infringement in violation of 15 U.S.C. § 1114 (Count I), unfair competition in violation of 15 U.S.C. § 1125(a) and Virginia common law (Counts II and VI), service mark dilution and cybersquatting in violation of 15 U.S.C. § 1125(c)(Count VII). PETA has voluntarily withdrawn Counts III, IV and V of its Amended Complaint. Doughney claims there is no infringement because its web site is a parody. PETA has dropped its claim for damages and seeks the following equitable relief: to enjoin Doughney's unauthorized use of its registered service mark "PETA" in the internet domain name "PETA.ORG," to force Doughney's assignment of the "PETA.ORG" domain name to PETA.
Summary Judgment is appropriate where there is no genuine issue as to any material fact. See FED. R. CIV. P. 56(c). Once a motion for summary judgment is properly made and supported, the opposing party has the burden of showing that a genuine dispute exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). A material fact in dispute appears when its existence or non-existence could lead a jury to different outcomes. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A genuine issue exists when there is sufficient evidence on *919 which a reasonable jury could return a verdict in favor of the non-moving party. See id. Mere speculation by the non-moving party "cannot create a genuine issue of material fact." Beale v. Hardy, 769 F.2d 213, 214 (4th Cir.1985); See also Ash v. United Parcel Serv., Inc., 800 F.2d 409, 411-12 (4th Cir.1986). Summary judgment is appropriate when, after discovery, a party has failed to make a "showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). When a motion for summary judgment is made, the evidence presented must always be taken in the light most favorable to the non-moving party. See Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 675 (4th Cir. 1996)(en banc). This case is ripe for Summary Judgment as all the evidence is before the Court and the facts are undisputed.
To make out a case for service or trade mark infringement and/or unfair competition, a Plaintiff must prove the following elements: (1) that Plaintiff possesses a Mark; (2) that Defendant uses the Plaintiff's Mark; (3) that such use occurs in commerce; (4) in connection with the sale or offering for sale, distribution, or advertising of goods or services; and (5) in a way that is likely to cause confusion among consumers. 15 U.S.C. §§ 1114, 1125(a). Lone Star Steakhouse & Saloon v. Alpha of Virginia, 43 F.3d 922, 930 (4th Cir.1995).
First, PETA owns the PETA Mark and Defendant admits the PETA Mark's validity and incontestability. The PETA Mark is thus presumed to be distinctive as a matter of law. Jews for Jesus v. Brodsky, 993 F.Supp. 282, 295 (D.N.J.1998), aff'd 159 F.3d 1351 (3rd Cir.1998); Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 497(2nd Cir.). Second, Doughney used the identical PETA Mark to register "PETA.ORG" and posting a web site at the internet address "www. peta.org." Third, Doughney admits that his use of the PETA Mark was "in commerce."
The fourth element requires that Defendant's use of the PETA Mark be made in connection with the sale, distribution, or advertising of goods or services. This does not require that Defendant actually caused goods or services to be placed into the stream of commerce. Jews for Jesus, 993 F.Supp. at 309. The term "services" has been interpreted broadly to include the dissemination of information, including purely ideological information. United We Stand America, Inc. v. United We Stand America New York, 128 F.3d 86, 89-90 (2nd Cir.1997) (citations omitted). Defendant's use of the PETA Mark was "in connection" with goods and services because the use of a misleading domain name has been found to be "in connection with the distribution of services" when it impacts on the Plaintiff's business:
[I]t is likely to prevent Internet users from reaching [PETA]'s own Internet web site. The prospective users of [PETA]'s services who mistakenly access Defendant's web site may fail to continue to search for [PETA]'s own home page, due to anger, frustration, or the belief that the Plaintiff's home page does not exist
Planned Parenthood Federation of America v. Bucci, 42 U.S.P.Q.2d 1430, 1435 (S.D.N.Y.); Jews for Jesus, 993 F.Supp. at 309. In addition, the "PETA.ORG" web site contained over thirty separate hyperlinks to commercial operations offering goods and services, including fur, leather, magazines, clothing, equipment and guide services. Under the law, even one such link is sufficient to establish the commercial use requirement of the Lanham Act. Jews for Jesus, 993 F.Supp. at 308-09; Planned Parenthood, 42 U.S.P.Q.2d at 1435.
Last, Defendant's use of PETA's Mark did cause confusion. Doughney copied *920 the Mark identically. This creates a presumption of likelihood of confusion among internet users as a matter of law. New York State Society of Certified Public Accountants v. Eric Louis Associates, Inc., 79 F.Supp.2d 331, 340 (S.D.N.Y.1999). In addition, there was evidence of actual confusion by those using the internet who were trying to locate PETA and instead found Doughney's web site.
Doughney's web site certainly dilutes the Mark of PETA. To win on summary judgment for a claim for dilution under 15 U.S.C. § 1125(c)(1), Plaintiff must show that the undisputed facts demonstrate that Defendant's use of "PETA.ORG" diluted the PETA Mark's distinctive quality. Dilution is "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake or deception." 15 U.S.C. § 1127; Ringling Bros. v. Utah Division of Travel, 170 F.3d 449, 452 (4th Cir.1999). Dilution can occur by "tarnishment" or "blurring." Jews for Jesus, 993 F.Supp. at 305; Ringling Bros., 170 F.3d at 452.
Defendant is guilty of "blurring" the famous PETA Mark because (1) Defendant used the identical PETA Mark to mentally associate PETA.ORG to the PETA Mark; and (2) such use caused; (3) actual economic harm to the PETA Mark by lessening its selling power as an advertising agent for PETA's goods and services. Ringling Bros., 170 F.3d at 458. Doughney's site included materials antithetical to the purpose and message of PETA in that "PETA.ORG" included links to commercial enterprises engaged in conduct directly contrary to PETA's animal protection efforts.
PETA is also entitled to Summary Judgment under the Anticybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d)(1)(A). To succeed on Summary Judgment, Plaintiff must show that Defendant (1) has a bad faith intent to profit from using "PETA.ORG;" and (2) the "PETA.ORG" domain name is identical or confusingly similar to, or dilutive of, the distinctive and famous PETA Mark. 15 U.S.C. § 1125(d)(1)(A). The second element has been proved for reasons stated above. As to the first element, under the ACPA, there are nine factors a court must consider in making a determination of whether the Defendant had a bad faith intent. 15 U.S.C. § 1125(d)(1)(B). Applying these factors, it appears that Doughney had the requisite bad faith intent.
First, Defendant possessed no intellectual property rights in "PETA.ORG" when he registered the domain name in 1995. Second, the "PETA.ORG" domain name is not the Defendant, Michael T. Doughney's legal name or any name that is otherwise used to identify the Defendant. Third, Defendant had not engaged in prior use of the "PETA.ORG" domain name in connection with the bona fide offering of any goods or services prior to registering "PETA.ORG." Fourth, Defendant used the PETA Mark in a commercial manner. Fifth, Defendant clearly intended to confuse, mislead and divert internet users into accessing his web site which contained information antithetical and therefore harmful to the goodwill represented by the PETA Mark. Sixth, on Doughney's "PETA.ORG" web site, Doughney made reference to seeing what PETA would offer him if PETA did not like his web site. Seventh, Defendant, when registering the domain name "PETA.ORG," falsely stated that "People Eating Tasty Animals" was a non-profit educational organization and that this web site did not infringe any trade mark. Eighth, Defendant has registered other internet domain names which are identical or similar to either marks or names of famous people or organizations he opposes. Ninth, the PETA Mark used in the "PETA.ORG" domain name is distinctive and famous and was so at the time *921 Defendant registered this site in September 1995.
Doughney contends there is no infringement in that his web site was a parody. A parody exists when two antithetical ideas appear at the same time. In this instance, an internet user would not realize that they were not on an official PETA web site until after they had used PETA's Mark to access the web page "www.peta.org." Only then would they find Doughney's People Eating Tasty Animals. Doughney knew he was causing confusion by use of the Mark and admitted that it was "possible" that some internet users would be confused when they activated "PETA.ORG" and found the "People Eating Tasty Animals" web site. He also admitted that "many people" would initially assume that they were accessing an authentic PETA web site at "www. peta.org." Only after arriving at the "PETA.ORG" web site could the web site browser determine that this was not a web site owned, controlled or sponsored by PETA. Therefore, the two images: (1) the famous PETA name and (2) the "People Eating Tasty Animals" web site was not a parody because not simultaneous.
The Defendant's affirmative defense of trademark misuse is inapplicable. In 1998, PETA registered the domain names "ringlingbrothers.com," "voguemagazine.com," and "pg.info." Each web site contained messages from PETA criticizing Ringling Bros.-Barnum & Bailey Combined, Vogue Magazine and Procter & Gamble Company for mistreatment of animals. In each instance, "ringlingbrothers," "voguemagazine" and "pginfo" were not and are not registered trademarks. PETA received complaints from Conde Nast Publications that owns Vogue Magazine and from the Ringling Bros.-Barnum & Bailey Combined Shows regarding PETA's web sites bearing their names. In each case, PETA voluntarily and immediately assigned the domain names to the complaining party. At no time did PETA receive any correspondence of any kind from Procter & Gamble Company complaining about PETA's registration and use of the internet domain name "pginfo.net." Doughney had no relation to any of these web sites and suffered no damages from PETA's operation of any of these web sites.
Defendant's affirmative defense is based in part on a constitutional argument. Doughney contends that this case is an attempt to quash his First Amendment rights to express disagreement with their organization. PETA does not seek to keep Doughney from criticizing PETA. They ask that Doughney not use their mark. When Network Solutions, Inc. placed "PETA.ORG" on "hold" status, Doughney transferred the entire web page to one of his other internet sites, "mtd.com/tasty." PETA has not complained about that web site and even concedes that Doughney has a right to criticize PETA or any organization.
Defendant also raises as a his trademark misuse affirmative defense an "unclean hands" argument. However, the doctrine of unclean hands applies only with respect to the right in suit. What is material is not that the plaintiff's hands are dirty, but that he dirtied them in acquiring the right he now asserts. Estee Lauder, Inc. v. Fragrance Counter, 189 F.R.D. 269, 272 (S.D.N.Y.1999); see also Precision Instrument Mfg. Co. v. Automotive Maintenance Machinery Co., 324 U.S. 806, 65 S.Ct. 993, 89 L.Ed. 1381 (1945). The purported grounds for Defendant's "unclean hands"i.e. PETA's disputes with Ringling Bros. and Vogue, and PETA's web site that is critical of Procter & Gamble are not at issue in this suit and thus, are not properly the subject of an unclean hands defense.
As PETA has proven its case for its infringement and dilution claims and Doughney can offer no viable defenses to PETA's claims, Summary Judgment should be granted in favor of PETA.
An appropriate Order shall issue.
*922 ORDER
For reasons stated in accompanying Memorandum Opinion, it is hereby
ORDERED that Plaintiff's Motion for Summary Judgment is GRANTED, that the Defendant's Motion for Summary Judgment is DENIED and that Defendant is ORDERED to relinquish the registration of the domain name PETA.ORG; to transfer its registration of such domain name to PETA; and to limit his use of a domain name to those that do not use PETA's marks and/or any colorable imitation of such marks, or any thing or mark confusingly similar thereto. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2347650/ | 6 F. Supp. 2d 560 (1998)
ROGERS, et al.
v.
WAL-MART STORES, INC., et al.
Civil Action No. 97-2718.
United States District Court, E.D. Louisiana.
June 3, 1998.
*561 Richard A. Tonry, Tonry & Ginart, Chalmette, LA, for Plaintiffs.
Geoffrey J. Orr, Catherine Michelle Williams, Lisa Miley Geary, Roy C. Beard, Campbell, McCranie, Sistrunk, Anzelmo & Hardy, Metairie, LA, for Defendants.
PORTEOUS, District Judge.
This cause came for hearing on a previous date upon the motion of defendants, Wal-Mart Stores, Inc. and Rodney Brown for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Oral argument was waived and the matter was taken under submission on the briefs.
The Court, having studied the legal memoranda submitted by the parties if fully advised in the premises and ready to rule.
I. BACKGROUND
The plaintiffs, Herman Rogers ("Mr.Rogers") and Emma Rogers ("Ms.Rogers") filed the instant diversity action for damages sustained when Mr. Rogers allegedly slipped and fell in a restroom at the Wal-Mart store in Chalmette, Louisiana. On or about August 16, 1996, Mr. Rogers claims he visited the Wal-Mart store located at 8333 W. Judge Perez Drive in Chalmette, Louisiana. See Plaintiffs' Petition, paragraph IV. Mr. Rogers asserts the he was using the restroom when suddenly and without warning he slipped and fell as the result of urine which had accumulated by the urinal of said restroom. See Plaintiffs' Petition, paragraph VI.
Defendants bring this summary judgment alleging no issues of material fact and they are entitled to a judgment as a matter of law. Defendants contend Mr. Rogers cannot show that a Wal-Mart employee created the alleged condition on the floor or that the alleged condition was on the floor for such a period of time that Wal-Mart should have discovered it in exercise of reasonable care.
Plaintiffs oppose the summary judgment motion arguing there are issues of material fact concerning the existence of the hazardous condition on the floor. Plaintiffs contend that a store bathroom must be held to a high standard as it is more likely or foreseeable that a hazardous condition will appear. Moreover, plaintiffs assert there are issues of material fact concerning whether Wal-Mart had actual or constructive notice of the condition which caused plaintiffs' damages. Plaintiff offers several hypothetical situations upon which it could be arguably established that the hazardous condition existed prior to the alleged accident at issue. For example, plaintiffs claim that since over 100 Wal-Mart employees use the restroom each day they should have known of the problem. Further, plaintiffs contends there was a Wal-Mart employee right outside the restroom when Mr. Rogers exited. Plaintiffs also submit they need to conduct additional discovery and that this motion is premature.
Defendants filed a reply memorandum wherein they argue the plaintiffs fail to produce evidence that Wal-Mart had any knowledge that there was a liquid on the floor in *562 the restroom. Defendants further suggest that this motion is not premature in that plaintiffs have had since April 23rd, 1997 to conduct discovery. Moreover, defendants submit plaintiffs have conducted written discovery in the form of interrogatories and requests for production of documents. See Attached exhibits to defendants' reply memorandum.
II. LEGAL ANALYSIS
A. Law on Summary Judgment
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment should be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact." Stults v. Conoco, 76 F.3d 651 (5th Cir.1996), (citing Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.)) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986)). When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. The nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 588, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (emphasis supplied); Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995).
Thus, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no "genuine issue for trial." Matsushita Elec. Industrial Co., 475 U.S. at 588, 106 S. Ct. 1348. Finally, the court notes that substantive law determines the materiality of facts and only "facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).
B. Premises Liability
Louisiana Revised Statute 9:2800.6 provides in pertinent part:
"B. In a negligence claim brought against a merchant by a person lawfully on the merchant's premises for damages as a result of an injury, death or loss sustained because of a fall due to a condition existing in or on a merchant's premises, the claimant shall have the burden of proving, in addition to all other elements of his cause of action, that:
(1) The condition presented an unreasonable risk of harm to the claimant and that risk of harm was reasonably foreseeable;
(2) The merchant either created or had actual or constructive notice of the condition which caused the damage, prior to the occurrence;
(3) The merchant failed to exercise reasonable care.
C. Definitions:
(1) `Constructive notice' means the condition existed for such a period of time that it would have been discovered if the merchant had exercised reasonable care."
In Welch v. Winn-Dixie Louisiana, Inc. 94-2331 (La.5/22/95), 655 So. 2d 309, the Louisiana Supreme Court concluded that a claimant had carried her burden of proving constructive notice by showing the absence of "written inspection procedures," lack of "written documentation of performance of inspections" and the lack of "company directives on a consistent inspection policy," and because the factfinder could have disbelieved the defendant's positive evidence of the lack of the spill some minutes before the fall.
However, the Louisiana Supreme Court recently addressed the issue of constructive notice under La.R.S. 9:2800.6. White v. Wal-Mart Stores, Inc., 97-0393 (La.9/9/97), 699 *563 So.2d 1081, rehearing denied, (La.10/10/97). In White, the Louisiana Supreme Court overruled Welch and found the court of appeal erroneously shifted the burden to the defendant to prove that the spill had not been there at an earlier time.
Instead, the Louisiana Supreme Court enunciated that La.R.S. 9:2800.6 is clear and unambiguous in that a claimant must prove each of the enumerated requirement of Section "B." White, 699 So.2d at 1083-1084. Thus, the claimant must make a positive showing of the existence of the condition prior to the fall. A defendant merchant does not have to make a positive showing of the absence of the existence of the condition prior to the fall. Id. The statute does not provide for a shifting of the burden. Id.
"Whether the period of time is sufficiently lengthy that a merchant should have discovered the condition is necessarily a fact question; however, there remains the prerequisite showing of some time period." Id. at 1084. Further, the Louisiana Supreme Court said, "The fatal flaw in Welch was that there was no showing of any time period of time as required by the statute." Id. Requiring the defendant to disprove the existence of a condition is shifting the burden which is impermissible under the statute. Id. Therefore, to prove constructive notice, the claimant must show that the substance remained on the floor for such a period of time that the defendant merchant would have discovered its existence through the exercise of ordinary care. Id. at 1085.
The plaintiff in White failed to see the liquid on the floor as did her grandchild. Moreover, there was no evidence the employee Robinson could see the spill or even that area of the floor from her station. Id. at 1085. The Court said there was no positive evidence the spill was in existence or that it could be seen from Robinson's zone. Id.
Recently, Judge McNamara granted a summary judgment in favor of Delchamp's, Inc. (where a customer slipped and fell on a grape) finding the plaintiff failed to meet the required showing of the condition's existence for some period of time. Audibert v. Delchamps, Inc., 1997 WL 602193 (E.D.La.). In that case, Judge McNamara said that under White, "the defendant is not required to prove the negative, i.e., that the grape was not there for a period of time. Instead, the plaintiff must make a positive showing that the grape existed on defendant's floor for any period of time however brief prior to the fall." Id. at 1.
In the instant case, Mr. Rogers was the only person in the restroom at the time he allegedly slipped and fell. See Deposition of Herman Rogers, p. 29, In. 5-8. Further, Mr. Rogers did not notice anyone coming or going into the restroom either prior to or right after his alleged accident. Id. at In. 9-14, p. 30, In. 20-25.
Concerning the alleged liquid on the floor, Mr. Rogers testified as follows,
"...
Q. So before the accident happened you didn't notice anything unusual about the bathroom?
A. No, I never.
...
Q. ... Now, before you had your fall, did you notice anything on the floor of the bathroom?
A. No, I never.
Q. Did you feel anything slippery under your feet before the accident happened?
A. No, I never.
Q. Did you notice any dirt or other substance anywhere in the bathroom, anything that wasn't supposed to be there before the accident happened?
A. No, I never.
...
Q. After you accident did you notice anything on the floor of the bathroom?
A. Not until I saw it all over my clothes, and I crawled around to the wash basin to get up. I had dirt. It wasn't no water, it was just dirt on my clothes. My clothes were dirty.
...
*564 Q. So you don't remember feeling a liquid soaked through your clothes or on your clothes?
A. No, not really.
Q. You're saying it's possible that it was there, but that you don't remember it now?
A. I don't remember it being there. I never seen it.
..."
Deposition of Herman Rogers, p. 14, In. 11-14, p. 20, In. 9-21, p. 21, In. 2-9, p. 23, In. 17.
Mr. Rogers further testified that he did not see the alleged liquid on the floor until after he fell.
"Q. So the first time you noticed a liquid on the floor was after you had pulled yourself up at the wash basin
A. Right.
...
Q. What did it look like?
A. It was just wet.
Q. Did it look like a puddle or did it just look like dampness, a gloss on the tile, or can you describe it at all?
A. It looked like water had whatever it was had just it was a pretty good area like that, but it wasn't smeared on the floor; it was just a puddle of water."
Deposition of Herman Rogers, p. 24, In. 21-25, p. 25, In. 7-17.
Mr. Rogers cites the case of Cobb v. Wal-Mart Stores, Inc., 624 So. 2d 5 (La.App. 5th Cir.1993) for the proposition that the finding of constructive notice can be based upon the fact the condition was close to store employees. In Cobb, the plaintiff slipped and fell on spilled popcorn. The Louisiana Fifth Circuit found the store could be held liable based on constructive notice where it was not disputed that popcorn was on the floor and within the clear view of employees prior to the accident. Cobb, 624 So.2d at 7. The court further found that the employees, who were four to five feet from the spilled popcorn, failed to notice the popcorn and failed to do something about the spillage after noticing. Id.
The instant case is distinguishable from Cobb in several respects. First, it is disputed whether there was a liquid present on the floor in the men's restroom. Second, the employees at the layaway counter and those allegedly standing outside the restroom had no way of noticing a spillage in the men's restroom, where there was a door blocking any alleged view the employees might have. Third, Cobb arose prior to the Louisiana Supreme Court's decision in White.
In the case sub judice, the plaintiff is unable to establish that any water and/or urine existed prior to his alleged slip and fall. Mr. Rogers offers no testimony of Wal-Mart employees or any person who might have seen a puddle of liquid on the restroom floor prior to his alleged slip and fall. Mr. Rogers should have been able to discover from any employee or person whether they had observed a puddle in the restroom prior to his alleged slip and fall. Nonetheless, Mr. Rogers testified he did not notice anyone leaving or entering the restroom. The Court cannot infer constructive notice absent some showing of a temporal element. See White, 699 So.2d at 1084-1085.
This court is satisfied the plaintiff fails to present any evidence that there was a puddle of liquid on the restroom floor for any length of time prior to his fall. This lack of evidence falls short of carrying the requisite burden of proving the liquid was on the floor for a period of time that Wal-mart should have discovered its existence.
C. Liability of Rodney Brown
Since this Court finds the plaintiff fails to establish the necessary temporal element required by White, there is no evidence that Rodney Brown, the store manager, breached a duty delegated to him by Wal-Mart, his employer. In other words, there is no showing there was a liquid on the restroom floor prior to Mr. Roger's alleged fall. Thus, this court is satisfied the claims against Rodney Brown should also be dismissed.
Accordingly,
IT IS ORDERED that the motion of defendants, Wal-Mart Stores, Inc. and Rodney Brown for summary judgment pursuant to *565 Rule 56 of the Federal Rules of Civil Procedure, be, and the same is hereby GRANTED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2471492/ | 129 F. Supp. 2d 1033 (2001)
E. & J. GALLO WINERY, Plaintiff,
v.
SPIDER WEBS LTD., Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, Defendants.
No. CIV. A. H-00-450.
United States District Court, S.D. Texas.
January 29, 2001.
*1034 Craig William Weinlein, Carrington Coleman et al, Dallas, TX, for E & J Gallo Winery, plaintiff.
Bernard Lilse Mathews, III, Hocker Morrow et al, Spring, TX, for Spider Webs Ltd, Steve E Thumann, Pierce A Thumann, Fred H Thumann, Trustee, defendants.
MEMORANDUM AND ORDER
CRONE, United States Magistrate Judge.
I. Introduction
Pending before the court is Plaintiff E. & J. Gallo Winery's ("Gallo") Motion for Partial Summary Judgment (# 32). Gallo contends that there exist no issues of material fact on its claims that Defendants Spider Webs Ltd., Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, (collectively "Spider Webs") are jointly and severally liable for violations of the Texas Anti-Dilution Statute, TEX. BUS. & COM. CODE ANN. § 16.29 (Vernon 2000), and the federal Anti-Cybersquatting Consumer Protection Act ("ACPA"), 15 U.S.C. § 1125(d) (1999 & Supp.2000). Having reviewed the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that partial summary judgment is warranted.
II. Factual Background
Gallo is a California corporation that manufactures and sells alcoholic beverages and related goods under the trade names THE WINERY OF ERNEST & JULIO GALLO, E. & J. GALLO WINERY, ERNEST AND JULIO GALLO WINERY, and GALLO WINERY, among others. According to Gallo, these trade names derive from the names of two brothers, Ernest Gallo and Julio Gallo, who founded the company. Between March 24, 1953, *1035 and March 9, 1999, Gallo registered twelve trademarks on the Principal Register in the United States Patent and Trademark Office, including GALLO, ERNEST & JULIO GALLO, GALLO SONOMA, and ERNEST AND JULIO GALLO & DESIGN. In particular, Gallo registered the mark ERNEST & JULIO GALLO on October 20, 1964, as Registration No. 778,837. Gallo also owns or controls several Internet domain names that incorporate Gallo's registered trademarks, including: GALLO.DE, EJGALL.DE, ERNEST-JULIOGALLO.COM, GALLOWINERY.COM, EJGALLO.COM, and GALLOWINE.COM. Gallo has sold more than four billion bottles of wine bearing the Gallo family of trademarks and has spent more than $500 million promoting the brand.
Defendants, brothers Steve and Pierce Thumann and their father, Fred Thumann, Trustee, operate Doortown, Incorporated, a family-owned prehanging millwork business in Houston, Texas. The business has been in operation for more than fifty years. Fred Thumann is the President and Chairman of the Board, Steve Thumann is Vice-President, and Pierce Thumann's title is "Inside Sales." In approximately June 1999, the Thumanns created Spider Webs Ltd. as a Texas general partnership. Steve and Pierce Thumann and Fred Thumann, Trustee, are the sole partners. Fred Thumann is a partner in his capacity as trustee of the Fred H. Thumann Trust. Spider Webs Ltd. does not have any employees and is operated at the same business address as Doortown, Inc. According to Steve Thumann, Spider Webs' business plan is to develop Internet address names. He further described the business as "an internet-type business, consumer advocates, building web sites." Since its creation, Spider Webs has registered nearly 2,000 Internet domain names for an average of $70.00 each, including the names of cities, the names of buildings, names related to a business or trade (such as air conditioning or plumbing), and the names of famous companies. It offers many of these names for sale on its web site and through the online auction site Ebay.com, although ERNESTANDJULIOGALLO.COM is apparently not among them.
On August 26, 1999, through a company called Network Solutions, Inc., Spider Webs registered the domain name "ERNESTANDJULIOGALLO.COM" in the name of Spider Webs Ltd. Steve Thumann stated in his deposition that Spider Webs regarded the domain name as "real estate" and that they intended to hold onto and eventually make a profit from the name. On February 11, 2000, Gallo filed its Original Complaint, alleging violations of the ACPA, dilution under federal and Texas law, trademark infringement under federal and Texas law, and unfair competition under federal and Texas law. Gallo seeks a permanent injunction to prevent Spider Webs from "a. using the Internet domain name ERNESTANDJULIOGALLO.COM; b. registering any domain name that contains the word `Gallo'; and c. registering any Internet domain name that contains the words `Ernest' and `Julio.'" Gallo also seeks an order requiring Spider Webs to transfer to Gallo the domain name "ERNESTANDJULIOGALLO.COM" as well as any Internet web sites, domain names, databases, programs, or other storage means using the Gallo name or name similar to the Gallo marks. Gallo further requests statutory damages, punitive damages, court costs, and attorneys' fees.
Approximately six months after the commencement of this action, Spider Webs published a web site at ERNESTANDJULIOGALLO.COM, devoting space to discussions of the pending litigation as well as the risks associated with alcohol use and alleged misrepresentations made by corporations. As of the date of this opinion, the web site accessed by typing in the Internet address ERNESTANDJULIOGALLO.COM is called "SpinTopic," which appears to be a site for accessing anti-corporate articles and opinions, including a section for commentary about the use of alcohol. It is unclear whether Spider Webs is affiliated with SpinTopic. On August *1036 31, 2000, Gallo moved for partial summary judgment on its claims of violations of the Texas Anti-Dilution Statute and the ACPA.
III. Analysis
A. Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986); Colson v. Grohman, 174 F.3d 498, 506 (5th Cir.1999); Marshall v. East Carroll Parish Hosp. Serv. Dist., 134 F.3d 319, 321 (5th Cir.1998); Wenner v. Texas Lottery Comm'n, 123 F.3d 321, 324 (5th Cir.1997), cert. denied, 523 U.S. 1073, 118 S. Ct. 1514, 140 L. Ed. 2d 667 (1998). The moving party, however, need not negate the elements of the nonmovants' case. See Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996) (citing Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994)).
Once a proper motion has been made, the nonmoving parties may not rest upon mere allegations or denials in the pleadings, but must present affirmative evidence, setting forth specific facts, to show the existence of a genuine issue for trial. See Celotex Corp., 477 U.S. at 322-23, 106 S. Ct. 2548; Anderson, 477 U.S. at 257, 106 S. Ct. 2505; Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Colson, 174 F.3d at 506; Marshall, 134 F.3d at 321-22; Wallace, 80 F.3d at 1047; Little, 37 F.3d at 1075. All the evidence must be construed "in the light most favorable to the non-moving party without weighing the evidence, assessing its probative value, or resolving any factual disputes." Williams v. Time Warner Operation, Inc., 98 F.3d 179, 181 (5th Cir.1996) (citing Lindsey v. Prive Corp., 987 F.2d 324, 327 n. 14 (5th Cir.1993)); see Colson, 174 F.3d at 506; Marshall, 134 F.3d at 321; Messer v. Meno, 130 F.3d 130, 134 (5th Cir.1997), cert. denied, 525 U.S. 1067, 119 S. Ct. 794, 142 L. Ed. 2d 657 (1999); Hart v. O'Brien, 127 F.3d 424, 435 (5th Cir.1997), cert. denied, 525 U.S. 1103, 119 S. Ct. 868, 142 L. Ed. 2d 770 (1999); Songbyrd, Inc. v. Bearsville Records, Inc., 104 F.3d 773, 776 (5th Cir.1997). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255, 106 S. Ct. 2505; Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49 n. 5, 111 S. Ct. 401, 112 L. Ed. 2d 349 (1990); see Marshall, 134 F.3d at 321. Nonetheless, "`only reasonable inferences can be drawn from the evidence in favor of the nonmoving party.'" Eastman Kodak Co. v. Image Tech. Servs., 504 U.S. 451, 469 n. 14, 112 S. Ct. 2072, 119 L. Ed. 2d 265 (1992) (emphasis in original) (quoting H.L. Hayden Co. of New York, Inc. v. Siemens Med. Sys., Inc., 879 F.2d 1005, 1012 (2d Cir.1989)). "If the [nonmoving party's] theory is ... senseless, no reasonable jury could find in its favor, and summary judgment should be granted." Id. at 468-69, 112 S. Ct. 2072.
The nonmovants' burden is not satisfied by "some metaphysical doubt as to material facts," conclusory allegations, unsubstantiated assertions, speculation, the mere existence of some alleged factual dispute, or "only a scintilla of evidence." Little, 37 F.3d at 1075; see Hart, 127 F.3d at 435; Wallace, 80 F.3d at 1047; Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir.1996) (citing Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, *1037 513 U.S. 871, 115 S. Ct. 195, 130 L. Ed. 2d 127 (1994)); State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990) (citing Anderson, 477 U.S. at 247-48, 106 S. Ct. 2505). Summary judgment is mandated if the nonmovants fail to make a showing sufficient to establish the existence of an element essential to their case on which they bear the burden of proof at trial. See Nebraska v. Wyoming, 507 U.S. 584, 590, 113 S. Ct. 1689, 123 L. Ed. 2d 317 (1993); Celotex Corp., 477 U.S. at 322, 106 S. Ct. 2548; Wenner, 123 F.3d at 324. "In such a situation, there can be `no genuine issue as to any material fact' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp., 477 U.S. at 322-23, 106 S. Ct. 2548.
B. Texas Anti-Dilution Statute
Gallo asserts that it is entitled to summary judgment on its claim under the Texas Anti-Dilution Statute. The statute provides:
A person may bring an action to enjoin an act likely to injure a business or to dilute the distinctive quality of a mark registered under this chapter or Title 15, U.S.C., or a mark or trade name valid at common law, regardless of whether there is competition between the parties or confusion as to the source of goods or services. An injunction sought under this section shall be pursuant to Rule 680 et seq. of the Texas Rules of Civil Procedure.
TEX. BUS. & COM. CODE ANN. § 16.29. Therefore, in order to establish a dilution claim under the Texas Anti-Dilution Statute, Gallo must show that it owns a distinctive mark and that there is a likelihood of dilution. See Pebble Beach Co. v. Tour 18 I, Ltd., 942 F. Supp. 1513, 1564 (S.D.Tex. 1996), aff'd, 155 F.3d 526 (5th Cir.1998); see generally RESTATEMENT OF THE LAW (3D) UNFAIR COMPETITION § 25 (1995). "The purpose of an anti-dilution statute is to prevent the gradual `whittling away' of a party's distinctive trademark or trade name." Pebble Beach Co., 942 F.Supp. at 1564 (citing Fruit of the Loom, Inc. v. Girouard, 994 F.2d 1359, 1363 (9th Cir.1993)). Unlike the federal anti-dilution statute, which requires that a defendant's acts constitute a "commercial use" of a registered mark, the broader Texas version does not contain language requiring a commercial use.
Under the Texas statute, there is no requirement that the plaintiff and defendant be business competitors or that likely consumer confusion exist. See Exxon Corp. v. Oxxford Clothes, Inc., 109 F.3d 1070, 1081 (5th Cir.), cert. denied, 522 U.S. 915, 118 S. Ct. 299, 139 L. Ed. 2d 231 (1997). "Dilution is a concept most applicable where a subsequent user uses the trade-mark of a prior user for a product so dissimilar from the product of the prior user that there is no likelihood of confusion of the products or sources, but where the use of the trademark by the subsequent user will lessen the uniqueness of the prior user's mark with the possible future result that a strong mark may become a weak mark." Holiday Inns, Inc. v. Holiday Out in Am., 481 F.2d 445, 450 (5th Cir.1973). Dilution legislation flowed from a desire to prevent "hypothetical anomalies" such as "Dupont shoes, Buick aspirin tablets, Schlitz varnish, Kodak pianos, Bulova gowns, and so forth." Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir.1989).
"In order to establish a dilution claim, the plaintiff must show (1) ownership of a distinctive mark and (2) a likelihood of dilution." Pebble Beach Co., 942 F.Supp. at 1564 (citing Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 506 (2d Cir.1996)). "Distinctiveness for dilution purposes often has been equated with the strength of a mark for infringement purposes." Mead Data Cent., Inc., 875 F.2d at 1030. Distinctiveness can be proved through the uniqueness of the mark or because it has acquired a secondary meaning. See id. at 1032. "A trademark has a secondary meaning if it has become so associated in the mind of the *1038 public with that entity ... or its product that it identifies the goods sold by that entity and distinguishes them from goods sold by others." Id. (citations omitted). A registered mark is "presumed to be distinctive and should be afforded the utmost protection." Lois Sportswear, U.S.A., Inc. v. Levi Strauss & Co., 799 F.2d 867, 871 (2d Cir.1986). Current registration of a trademark is "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b); see Hubbard Feeds, Inc. v. Animal Feed Supplement, Inc., 182 F.3d 598, 601 n. 2 (8th Cir.1999). The Texas statute does not require a mark to be famous in order for it to be distinctive. See Advantage Rent-A-Car, Inc. v. Enterprise Rent-A-Car Co., 238 F.3d 378, 380-81 (5th Cir.2001).
Currently, Gallo owns several registered trademarks that contain the names "ERNEST," "JULIO," and "GALLO." In particular, it owns the registered trademark "ERNEST & JULIO GALLO." These registrations establish the validity and distinctiveness of Gallo's mark. See Lois Sportswear, U.S.A., Inc., 799 F.2d at 871. Furthermore, "Gallo" is the family name of Gallo's founders, and "a family name is entitled to protection as a mark so long as it has acquired a recognized `secondary meaning' through use, advertising, and public recognition." E. & J. Gallo Winery v. Consorzio del Gallo Nero, 782 F. Supp. 457, 462 (N.D.Cal.1991) (citing Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th Cir.1988); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1218 (9th Cir.1987)). As noted by other courts, "`Gallo' has clearly become associated with wine in the United States such that its evolution to `secondary meaning' status may not be seriously questioned." Id.; accord E. & J. Gallo Winery v. Pasatiempos Gallo, S.A., 905 F. Supp. 1403, 1407, 1413 (E.D.Cal.1994). "By virtue of widespread sales and promotion for over half a century, the Winery's GALLO mark has become extraordinarily strong and distinctive." Id. at 1407. At deposition, Steve Thumann acknowledged that the Gallo mark is well known as a brand of wine:
Q. Okay. At the time you registered the domain the domain address to ernestandjuliogallo.com, would you agree that Ernest & Julio Gallo was a famous brand name for wines?
A. It was well-known. Whether famous as starlike Yes.
Thus, Gallo has shown that its trademark is distinctive.
Gallo must also prove that Spider Webs' actions create a likelihood of dilution of Gallo's distinctive trademarks. "A likelihood of dilution may be shown under two separate theories: dilution by `blurring' or `tarnishment.'" Pebble Beach Co., 942 F.Supp. at 1564 (citing Hormel Foods Corp., 73 F.3d at 506; Jordache Enters. Inc. v. Hogg Wyld, Ltd., 828 F.2d 1482, 1489 (10th Cir.1987)); accord Exxon Corp., 109 F.3d at 1081. Dilution by blurring occurs when there has been "a diminution in the uniqueness and individuality of the mark." Id.; see Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1326 n. 7 (9th Cir.1998). Dilution by tarnishment requires "an injury resulting from another's use of the mark in a manner that tarnishes or appropriates the goodwill and reputation associated with the plaintiff's mark." Exxon Corp., 109 F.3d at 1081.
As explained by the Seventh Circuit:
The gravamen of a dilution complaint is that the continuous use of a mark similar to plaintiff's works an inexorably adverse effect upon the distinctiveness of the plaintiff's mark, and that, if he is powerless to prevent such use, his mark will lose its distinctiveness entirely.... [D]ilution is an infection which, if allowed to spread, will inevitably destroy the advertising value of the mark.
Polaroid Corp. v. Polaraid, Inc., 319 F.2d 830, 836 (7th Cir.1963) (citations omitted); accord Intermatic Inc. v. Toeppen, 947 F. Supp. 1227, 1240 (N.D.Ill.1996). Federal *1039 courts have held that a defendant's preventing a plaintiff from identifying its goods and services on the Internet constitutes dilution. See Sporty's Farm L.L.C. v. Sportsman's Mkt., Inc., 202 F.3d 489, 495 (2d Cir.), cert. denied, 530 U.S. 1262, 120 S. Ct. 2719, 147 L. Ed. 2d 984 (2000); Panavision Int'l, L.P., 141 F.3d at 1327; Intermatic Inc., 947 F.Supp. at 1240. These courts have reasoned that the unauthorized registration of a trademark lessens the capacity of the trademark owner to identify uniquely and to distinguish its goods and services. See id.
In the case at bar, Spider Webs has used a web site accessed through the Internet address ERNESTANDJULIOGALLO.COM to display information about the E. & J. Gallo Winery and the risks associated with alcohol consumption as well to comment about the instant lawsuit, including posting on the web site a letter from Gallo to Steve Thumann regarding its claims against Spider Webs. In a sworn declaration, Craig W. Weinlein ("Weinlein"), an attorney representing Gallo in this matter, states that "[o]n August 15, 2000, [Weinlein] accessed the web site hosted at WWW.ERNESTANDJULIOGALLO.COM and made a printout of the contents of the web site ... attached hereto." On the first page, containing an icon for "SW Ltd." in the upper left-hand corner and the Internet address "http: //www.ernestandjuliogallo.com/press.htm" in the lower left-hand corner, is a picture of the upper-half of a wine bottle marked "Whiney Winery." It is captioned, "As Consumer Advocates, We Welcome Your Visit To Our Site!" and "Bringing You The Facts About Alcohol." Its table of contents lists "Alcohol Awareness," "Our Mission," "Press Release," "Real Corporate Dialogue," "Who Are We?," and "Contact Us." The Alcohol Awareness page states:
1. Fetal Alcohol Syndrome (FAS) Is One Of The Leading Causes Of Birth Defects And Developmental Disabilities In The United States, And
Is One Of The Leading Causes Of Mental Retardation In The Western Hemispere [sic].
2. A Daily Glass Of Wine Can Increase Your Weight By As Much As 10 Pounds A Year.
3. Alcohol And Related Crimes Take Up An Estimeted [sic] 50% Of Law Enforcement Time, And Nearly 1/3 Of Their Total Budget
4. As Many As 360,000 Of The Nation's 12 Million Undergraduates Will Die From Alcohlo [sic] Related Causes While In School. This Is More Than The Number That Will Receive M.A. And Ph.D. Degrees!
5.79% Of Alcohol Related Violence Begins In The Home
Gallo points out the crude formatting and the misspellings on the page. The "Our Mission" page explains:
Corporate America Spends Billions Of Dollars Yearly To Promote Their Products And Services To The Consumers Of The World. As People, We Tend To Take These "Advertisements" In Stride Simply Due To The Fact That We Are Constantly Assaulted By Them Every Day Of Our Lives. Unfortunately, Not Everyone Can See Beyond "These Imaginary Worlds" Created By Big Corporations. For Example, Children Often See Their Icons And Wish To Emulate Them. Some Of It Is Harmless, But When It Comes To Products Such As Alcohol And Tobacco, WE NEED TO DRAW A LINE! It Is Our Goal To Make Certain That The Internet Is A Free Space To Speak Your Mind, And Inform Others Of Facts That Are Often Misrepresented To The Public By The Corporate World.
The following page reads:
"Press Release"
Gallo Wine Attempts To harvest More Than Grapes. Gallo Sues Texas Entrepreneurs Who Legally Registered A Dot Com Address Before November 1999, Which Incorporates A Portion Of The Name Which Was Trademarked In The Physical World.
*1040 The Computer Language Registered By The Good Folks In Texas Is Not Trademarked. The Texas Entrepreneurs Claim Their 1st And 14th Amendment Rights Are Being Violated, And Vow To Clear Their Good Names, And Be Exonerated From The Damaging Classification As Traffickers, And Cybersquatters.
The Texans Can Only Assume "BIG BUSINESS" Through Their Lobbyist Have Influenced Certain Politicians, And Penned A Law Attempting To Harness The Internet; Crossing International Borders.
The Passing Of The "Anticybersquatting Consumer Protection Act" Was A Violation Of All Americans Rights To Freedom OF Speech, And The Right To Due Process Before Your Property Can Be Seized.
This Law Was Signed Into Existence Without The Knowledge Of The World, And Against The Will Of The President Of The United States Of America.
The pages designated "Real Corporate Dialogue" contain a letter sent by Gallo Associate General Counsel Paul W. Reidl to Steve Thumann by electronic mail and certified mail on December 22, 1999, explaining Gallo's position that Spider Webs' registration of Gallo's trademark as an Internet domain name is unlawful and that Gallo will take all necessary action to protect its mark. The remaining two entries listed in the table of contents are not part of the record. While the first page of the web site contains, in small text, the disclaimer "This Site Is Not Affiliated With Ernest & Julio Gallo® Wineries," none of the other pages contains such language. Spider Webs contends that this web site was active for only about forty-eight hours but has submitted no evidence to support this assertion. The court notes that the pages previously accessible by the domain name at issue in this case are now available through the domain names "spiderwebsltd.com" and "modestocalifornia.org."
The web site currently accessed by typing in the Internet address ERNESTANDJULIOGALLO.COM is called "SpinTopic," which appears primarily to be a site for articles and opinions critical of corporations, but which also includes a section designated for commentary on alcohol. While it is unclear whether "SpinTopic" is a web site controlled by Spider Webs, its access through the domain name address at issue indicates that the domain name has been developed by Spider Webs. At deposition, Steve Thumann explained:
A. Well, we come to find out ... what would happen if if you typed in a domain address that we had registered and not developed.
Q. What happens?
A. A page comes up that says unknown host.
* * * * * *
... And that may change from time to time. Sometimes it just says page not found. Sometimes it finds comes up unknown host.
Thus, at present, when a user types in the domain name ERNESTANDJULIOGALLO.COM, he reaches a developed web site rather than a message such as "unknown host" or "page not found." Pages printed off of the SpinTopic web site when accessed through the name ERNESTANDJULIOGALLO.COM contain the header "http://www.ernestandjuliogallo.com" on the upper right-hand corner. Therefore, it is apparent that Spider Webs is currently using or at least is giving another person or entity use of the domain name.
In Intermatic Inc., the court found that "[t]he fact that `intermatic.com' will be displayed on every aspect of the web page is sufficient to show that Intermatic's mark will likely be diluted." See 947 F.Supp. at 1241. "Dilution of Intermatic's mark is likely to occur because the domain name appears on the web page and is included on every page that is printed from the web page." Id. at 1240. In this case, "Ernestandjuliogallo.com" is displayed on every page printed off of the web site accessed by that domain name by Weinlein and on the pages printed off the SpinTopic web *1041 site when accessed by the same name. Hence, as in Intermatic Inc., these facts are sufficient to show the likelihood of dilution of Gallo's mark.
"A significant purpose of a domain name is to identify the entity that owns the web site." Panavision Int'l, L.P., 141 F.3d at 1327. "`A customer who is unsure about a company's domain name will often guess that the domain name is also the company's name.'" Id. (quoting Cardservice Int'l, Inc. v. McGee, 950 F. Supp. 737, 741 (E.D.Va.), aff'd, 129 F.3d 1258, 1997 WL 716186 (4th Cir.1997)). The value of a trademark is diluted when the domain name does not belong to the company sharing that name because potential customers "will be discouraged if they cannot find its web page by typing `[plaintiff's name].com,' but instead are forced to wade through hundreds of web sites." Id. "`Prospective users of plaintiff's services who mistakenly access defendant's web site may fail to continue to search for plaintiff's own home page, due to anger, frustration or the belief that plaintiff's home page does not exist.'" Id. (quoting Jews for Jesus v. Brodsky, 993 F. Supp. 282, 306-07 (D.N.J.), aff'd, 159 F.3d 1351 (3d Cir.1998)). Moreover, "`[i]f [defendants] were allowed to use `[plaintiff's name].com,' [plaintiff's] name and reputation would be at [defendants'] mercy and could be associated with an unimaginable amount of messages on [defendants'] web page.'" Id. (quoting Intermatic Inc., 947 F.Supp. at 1240).
The court in Intermatic Inc. explained that "Toeppen's registration of the intermatic.com domain name lessens the capacity of Intermatic to identify and distinguish its goods and services by means of the Internet. Intermatic is not currently free to use its mark as its domain name." 947 F. Supp. at 1240. In a similar vein, Spider Webs' ownership of the domain name ERNESTANDJULIOGALLO.COM gives Spider Webs exclusive control over the use of Gallo's trademark "ERNEST & JULIO GALLO" on the Internet, effectively preventing Gallo from ensuring the ability of its mark to serve as a unique identifier for its goods and services. Gallo owns the mark "ERNEST & JULIO GALLO." The only differences between Gallo's mark and Spider Webs' domain name ERNESTANDJULIOGALLO.COM are the lack of spaces between the words, the use of the word "AND" rather than an ampersand, and the inclusion of the suffix ".COM." These differences are insignificant, however. All Internet domain names must end in a top level domain name, such as ".COM," ".ORG," or ".NET."[1]See Sporty's Farm L.L.C., 202 F.3d at 492; Morrison & Foerster, LLP v. Wick, 94 F. Supp. 2d 1125, 1126 (D.Colo.2000). Moreover, as admitted by Steve Thumann at deposition, an Internet domain name cannot contain spaces between words or an ampersand symbol. Hence, Spider Webs has effectively usurped Gallo's trademark, as Gallo is not free to use its mark as its domain name.
Gallo alleges that Spider Webs' use of the "ERNESTANDJULIOGALLO.COM" web site tarnishes its trademark because the web site hosted by Spider Webs directs Gallo's customers and potential customers to a web site where Spider Webs has posted disparaging remarks about Gallo. Gallo asserts that the negative content and poor quality of the web page has *1042 tarnished its registered mark. Federal courts have noted that a defendant's ownership of a domain name that contains the plaintiff's registered trademark puts the plaintiff's reputation and name at the mercy and whim of the defendant. See Panavision Int'l, L.P., 141 F.3d at 1327; Jews for Jesus, 993 F.Supp. at 307; Intermatic Inc., 947 F.Supp. at 1240. The court in Jews for Jesus recognized that, in these situations, the trademark owner has lost control over the use of its mark. See 993 F.Supp. at 307. Here, Gallo has shown that it owns a distinctive mark and that there is a likelihood of dilution. Thus, Gallo is entitled to summary judgment on its claim that Spider Webs has violated the Texas Anti-Dilution Statute.
The Texas Anti-Dilution Statute provides for injunctive relief. See TEX. BUS. & COM. CODE ANN. § 16.29. It offers broader protection for trademarks than does federal law, allowing injunctive relief "`regardless of whether there is competition between the parties or confusion as to the source of goods or services.'" Service Merch. Co. v. Service Jewelry Stores, Inc., 737 F. Supp. 983, 993 (S.D.Tex.1990) (quoting TEX. BUS. & COM. CODE ANN. § 16.29); accord Pebble Beach Co. v. Tour 18 I, Ltd., 155 F.3d 526, 550 (5th Cir.1998); Pebble Beach Co., 942 F.Supp. at 1563-64. Gallo seeks to enjoin Spider Webs from using the Internet domain name "ERNESTANDJULIOGALLO.COM" and from registering any domain name that contains the word "Gallo" and/or the words "Ernest" and "Julio" in combination.
"[I]njunctive relief may only be granted upon a showing of (1) the existence of a wrongful act; (2) the existence of imminent harm; (3) the existence of irreparable injury; and (4) the absence of an adequate remedy at law." Jim Rutherford Inv., Inc. v. Terramar Beach Community Ass'n, 25 S.W.3d 845, 849 (Tex.App. Houston [14th Dist.] 2000, no pet.); accord Kenneth Leventhal & Co. v. Reeves, 978 S.W.2d 253, 259 (Tex.App. Houston [14th Dist.] 1998, no pet.). Under Texas law, injunctive relief may be either prohibitory, preventing conduct, or mandatory, requiring conduct. See RP&R, Inc. v. Territo, 32 S.W.3d 396, 400 (Tex.App. Houston [14th Dist.] 2000, no pet. h.); LeFaucheur v. Williams, 807 S.W.2d 20, 22 (Tex.App. Austin 1991, no writ). To obtain injunctive relief, Gallo must show that imminent, irreparable harm would arise from the failure of the court to issue an injunction. See National Football League Props. v. Playoff Corp., 808 F. Supp. 1288, 1294 (N.D.Tex.1992); Operation Rescue-Nat'l v. Planned Parenthood of Houston & Southeast Tex., Inc., 975 S.W.2d 546, 554 (Tex.1998); Chandler v. Chandler, 991 S.W.2d 367, 402 (Tex.App. El Paso 1999, pet. denied), cert. denied, 529 U.S. 1054, 120 S. Ct. 1557, 146 L. Ed. 2d 462 (2000). In Jews for Jesus, the court held that the plaintiff's loss of control of its trademark by the defendant's unauthorized use of it on the Internet and the possibility that views contrary to those of the plaintiff would be disseminated constituted proof that irreparable harm would result absent an injunction. See 993 F.Supp. at 311-13.
Here, Spider Webs' wrongful use of the web site, particularly to make disparaging remarks regarding the instant litigation and alcohol use in general, indicates the existence of imminent and irreparable harm. No remedy at law exists that would adequately protect Gallo's mark. Accordingly, Gallo's request for a permanent injunction has merit. Spider Webs shall be permanently enjoined from using the Internet domain name "ERNESTANDJULIOGALLO.COM" and from registering any domain name that contains the word "Gallo" or the words "Ernest" and "Julio" in combination. Spider Webs shall further be ordered to transfer to Gallo the domain name "ERNESTANDJULIOGALLO. COM" within ten days from the entry of the order.
C. Anti-Cybersquatting Consumer Protection Act
On November 29, 1999, Congress passed the ACPA "`to protect consumers *1043 and American businesses, to promote the growth of online commerce, and to provide clarity in the law for trademark owners by prohibiting the bad-faith and abusive registration of distinctive marks as Internet domain names with the intent to profit from the goodwill associated with such marks a practice commonly referred to as `cybersquatting.''"[2]Sporty's Farm L.L.C., 202 F.3d at 495 (quoting S. REP. No. 106-140, at 4 (1999)). As explained by the Second Circuit:
Cybersquatting involves the registration as domain names of well-known trademarks by non-trademark holders who then try to sell the names back to the trademark owners. Since domain name registrars do not check to see whether a domain name request is related to existing trademarks, it has been simple and inexpensive for any person to register as domain names the marks of established companies. This prevents use of the domain name by the mark owners, who not infrequently have been willing to pay "ransom" in order to get "their names" back.
Id. at 493 (citing H.R. REP. No. 106-412, at 5-7 (1999); S. REP. No. 106-140, at 4-7 (1999)). While the ACPA was enacted after Spider Webs' August 26, 1999, registration of the domain name at issue, the Act states that it applies "to all domain names registered before, on, or after the date of enactment of this Act." 1999 ACTS, P.L. 106-113, § 3010, 113 STAT. 1536. The statute further provides, in relevant part:
A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person
(I) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and
(ii) registers, traffics in, or uses a domain name that
(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;
(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or
(III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36.
15 U.S.C. § 1125(d)(1)(A).
As discussed in detail above, Gallo has shown that it has a distinctive and famous trademark and that the domain name "ERNESTANDJULIOGALLO.COM" is nearly indistinguishable from Gallo's "ERNEST & JULIO GALLO" trademark. In Sporty's Farm L.L.C., the Second Circuit held that the domain name "Sportys.com" was indistinguishable and confusingly similar to the plaintiff's trademark "Sporty's." See 202 F.3d at 498. The court found that the only difference between the two names, the lack of an apostrophe in the domain name, did not destroy the similarity because apostrophes are not valid characters for domain names. See id. at 497-98. Other federal courts have agreed that domain names that are substantially the same as a trademark are confusingly similar and create a presumption of confusion. See People for the Ethical Treatment of Animals, Inc. v. Doughney, 113 F. Supp. 2d 915, 920 (E.D.Va.2000); Shields v. Zuccarini, 89 F. Supp. 2d 634, 639 (E.D.Pa.2000); OBH, Inc. v. Spotlight Magazine, Inc., 86 F. Supp. 2d 176, 188 (W.D.N.Y.2000). In this instance, Spider Webs' domain name "ERNESTANDJULIOGALLO.COM" is confusingly similar to Gallo's registered trademark "ERNEST & JULIO GALLO."
*1044 The ACPA lists nine factors a court may consider when determining whether a domain name was registered in bad faith:
(I) the trademark or other intellectual property rights of the person, if any, in the domain name;
(II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;
(III) the person's prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;
(IV) the person's bona fide noncommercial or fair use of the mark in a site accessible under the domain name;
(V) the person's intent to divert consumers from the mark owner's online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
(VI) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person's prior conduct indicating a pattern of such conduct;
(VII) the person's provision of material and misleading false contact information when applying for the registration of the domain name, the person's intentional failure to maintain accurate contact information, or the person's prior conduct indicating a pattern of such conduct;
(VIII) the person's registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and
(IX) the extent to which the mark incorporated in the person's domain name registration is or is not distinctive and famous.
15 U.S.C. § 1125(d)(1)(B). The statute further provides, however, that "[b]ad faith intent described under subparagraph (A) shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful." Id. The court is "not limited to considering just the listed factors when making [its] determination of whether the statutory criterion has been met. The factors are, instead, expressly described as indicia that `may' be considered along with other facts." Sporty's Farm L.L.C., 202 F.3d at 498 (citing 15 U.S.C. § 1125(d)(1)(B)(i)); see Northern Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 64-65 (1st Cir.2001) (describing the factors as "nonexhaustive").
In Sporty's Farm L.L.C., the Second Circuit, in the first appellate-level interpretation of the ACPA, ordered a cybers-quatter to relinquish a domain name. See id. at 500. Plaintiff Sporty's Farm filed suit seeking a declaration that it had the right to continue using the domain name "Sportys.com" despite the fact that another entity held the registered trademark "Sporty's." See id. at 494. Sporty's Farm maintained a web site at that address for the sale of Christmas trees. See id. Defendant Sportsman's Market owned the registered trademark "Sporty's," which it used in connection with a catalog business selling aviation-related merchandise, tools, and home accessories. See id. at 493-94. The court found that Sporty's Farm had acted with a bad faith intent to profit by using the "Sportys.com" domain name. See id. at 499. The Second Circuit reached its conclusion, in part, because Sporty's Farm had no intellectual property interest in the domain name, the domain *1045 name did not consist of the legal name of the party that registered it, and Sporty's Farm did not start using the web site at "Sportys.com" until the litigation began. See id. at 498-99.
In the case at bar, a review of the nine factors provides ample evidence that Spiders Webs used, registered, or trafficked in the domain name ERNESTANDJULIOGALLO.COM with a bad faith intent to profit from the sale of the domain name. Gallo has a registered trademark in the name "ERNEST & JULIO GALLO," while Spider Webs has no intellectual property interest in the name "ERNESTANDJULIOGALLO" aside from its registered domain name. Furthermore, the domain name "ERNESTANDJULIOGALLO.COM" does not include the legal name of Spider Webs Ltd., the company that registered the domain name, or of its partners, Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee.
As admitted in Defendants' responses to Requests for Admission Nos. 279, 281, 283, and 285, Spider Webs has never used the domain name in connection with the bona fide offering of any goods or services. It has, however, used the name to develop a web site on which it has made derogatory comments about the instant litigation and about alcohol. In Sporty's Farm L.L.C., the Second Circuit held that when the first use of a web site occurs after litigation is commenced, it undermines any claim that the domain name was registered in good faith. See 202 F.3d at 499; Shields, 89 F.Supp.2d at 640. Moreover, Spider Webs' use of the web site to criticize E. & J. Gallo Winery and to comment on the present litigation served only to disparage Gallo and diminish its goodwill. At deposition, Steve Thumann admitted that the domain name is valuable because of the goodwill that Gallo has developed:
Q. When Spider Webs registered ernestandjuliogallo.com
A. Yes.
Q. would you agree with me that ernestandjuliogallo.com is more valuable than fredandharrygallo.com?
A. Yes.
Q. Okay. And the reason for that being that Ernest & Julio Gallo is a well-known name compared to Fred and Harry Gallo. Correct?
A. Well, sure. It's a more expensive piece of property.
Q. Okay. How did the name Ernest & Julio Gallo become more well-known, more valuable than Fred and Harry Gallo?
A. Fred and Harry Gallo hadn't made wine for 50 years in the United States.
In another case involving the E. & J. Gallo Winery, a federal district court held:
When the senior user's trademark is famous in the marketplace and where the junior user was aware of the trademark and of its fame, a presumption of bad faith arises from the choice of the same name because it is inferrable that the junior user adopted the mark for the purpose of profiting from the aura of goodwill surrounding the senior user's mark.
E. & J. Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657, 1675 (E.D.Cal.1989), aff'd, 967 F.2d 1280 (9th Cir.1992). Here, Gallo's mark is famous, and Spider Webs was aware of the trademark and its fame when it registered the domain name.
In Doughney, the plaintiff, which held a registered trademark in the name "PETA," standing for "People for the Ethical Treatment of Animals," sued the defendant, who had registered the domain name "PETA.ORG," purporting to connote an organization called "People Eating Tasty Animals." 113 F. Supp. 2d at 917-18. The defendant posted information on its web site that was antithetical to PETA's purpose, including the description of the web site, "A resource for those who enjoy eating meat, wearing fur and leather, hunting, and the fruits of scientific research." Id. at 918. The court noted that "[u]ntil an internet user actually reached the `PETA.ORG' web site, where the screen read `People Eating Tasty Animals,' *1046 the user had no way of knowing that the `PETA.ORG' web site was not owned, sponsored or endorsed by PETA." Id. The court found the defendant in violation of the ACPA in part because "Defendant clearly intended to confuse, mislead and divert internet users into accessing his web site which contained information antithetical and therefore harmful to the goodwill represented by the PETA mark." Id. at 920. Similarly, in this instance, an Internet user accessing the domain name "ERNESTANDJULIOGALLO.COM" would have no way of knowing that the web site is not connected to Gallo until after reaching it, where he would encounter anti-alcohol messages, anti-corporate sentiment, and disparaging remarks about Gallo itself.
At deposition, Steve Thumann conceded that Spider Webs has acquired approximately 2000 domain names, a number of which contain famous trademarks or company names, and that it offers many of these domain names for sale on its web site, "spiderwebsltd.com." He further commented that many of Spider Webs' domain names are offered for sale for millions of dollars. While the domain name at issue currently does not appear on the list of names for sale, Steve Thumann revealed at deposition that Spider Webs acquired the ERNESTANDJULIOGALLO.COM domain name with a view to holding it as "real estate" and eventually realizing a profit from it, preferably from Gallo itself:
A. We we I think that we hoped that Gallo would contact us and we could assist them in some way.
Q. But you were specifically anticipating Gallo contacting Spider Webs because what you registered was ernestandjuliogallo.com. Correct?
A. Yes.
He added, however, that Spider Webs' current plan is to await a declaration that the ACPA is unconstitutional before selling the domain name.
As explained by the Second Circuit, however, the United States Senate "made clear" that the ACPA was passed, in part, to counteract plans such as Spider Webs':
"While the [Federal Trademark Dilution Act] has been useful in pursuing cybersquatters, cybersquatters have become increasingly sophisticated as the case law has developed and now take the necessary precautions to insulate themselves from liability. For example, many cybersquatters are now careful to no longer offer the domain name for sale in any manner that could implicate liability under existing trademark dilution case law. And, in cases of warehousing and trafficking in domain names, courts have sometimes declined to provide assistance to trademark holders, leaving them without adequate and effective judicial remedies."
Sporty's Farm L.L.C., 202 F.3d at 495-96 (quoting S. REP. No. 106-140, at 7 (1999)). In any event, the record shows that Spider Webs has registered approximately three hundred domain names that contain either company names or famous trademarks, including the names FIRESTONETIRES.COM, BRIDGESTONETIRES. COM, and OREOCOOKIES.COM. The court in Doughney based its finding of liability in part on the fact that the defendant had "registered other internet domain names which are identical or similar to either marks or names of famous people or organizations he opposes." 113 F. Supp. 2d at 920. The ACPA singles out this type of behavior as indicative of bad faith. See 15 U.S.C. § 1125(d)(1)(B)(VII); Northern Light Tech., 236 F.3d at 64-65.
Spider Webs cannot legitimately contend that it believed or had reasonable grounds to believe that its registration and use of the domain name ERNESTANDJULIOGALLO.COM was a fair use or was otherwise lawful. Prior to the enactment of the ACPA, a number of courts had found cybersquatting to be unlawful under both federal and state anti-dilution laws. See Panavision Int'l, L.P., 141 F.3d at 1327; Jews for Jesus, 993 F.Supp. at 307; Intermatic Inc., 947 F.Supp. at 1240. *1047 Thus, the fact that Spider Webs registered the domain name before the ACPA took effect is not dispositive of the issue of bad faith. Moreover, at deposition, Steve Thumann admitted that Spider Webs did not seek advice from counsel prior to acquiring the domain name at issue as to whether it might be engaging in infringing conduct. Courts addressing the issue have found that such a failure supports a finding of bad faith. See OBH, Inc., 86 F.Supp.2d at 189; Consorzio del Gallo Nero, 782 F.Supp. at 476.
Spider Webs maintains, however, that the ACPA is unconstitutional "because (A) it is overbroad and can not be fairly enforced, and (2) provides for an unlawful taking and deprivation of property." In challenging the constitutionality of a statute, Spider Webs bears the burden of proof. See Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S. Ct. 2882, 49 L. Ed. 2d 752 (1976); Seoane v. Ortho Pharms., Inc., 660 F.2d 146, 151 (5th Cir. 1981). Spider Webs cites no authority for its position and, in fact, concedes that it has found none. Gallo, on the other hand, cites to numerous cases upholding the constitutionality of the ACPA and its remedies. See Sporty's Farm L.L.C., 202 F.3d at 502 (application of the ACPA is not unconstitutionally retroactive because cybersquatting is a continuing wrong); Shields, 89 F.Supp.2d at 642 (defendant failed to show that retroactive application of the ACPA was an unconstitutional taking without due process of law in violation of the Fifth Amendment); Caesars World, Inc. v. Caesars-Palace.Com, 112 F. Supp. 2d 502, 503-05 (E.D.Va.2000) (in rem jurisdiction under the ACPA does not violate due process); see also Doughney, 113 F.Supp.2d at 921; OBH, Inc., 86 F.Supp.2d at 196-97. In line with these authorities, the court finds no basis for holding the ACPA unconstitutional.
Under these circumstances, the facts established by Gallo provide adequate evidence that Spider Webs registered "ERNESTANDJULIOGALLO.COM" with a bad faith intent to profit from its actions, in direct violation of the ACPA. Thus, summary judgment is warranted on Gallo's claims under the ACPA.
Under the ACPA, "[i]n any civil action involving the registration, trafficking, or use of a domain name under this paragraph, a court may order the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark." 15 U.S.C. § 1125(d)(1)(C); see Sporty's Farm L.L.C., 202 F.3d at 495. Moreover,
[i]n a case involving a violation of [15 U.S.C. § 1125(d)(1)] the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just.
15 U.S.C. § 1117(d); see Sporty's Farm L.L.C., 202 F.3d at 496 n. 9. Here, Gallo seeks the transfer of the domain name to it and elects to recover an award of statutory damages. Gallo suggests that "a just award would be $100,000, which would have the effect of deterring defendants from their unlawful conduct and which would compensate Gallo for the time and trouble of having to prosecute a federal court action to have returned the domain name corresponding to its admittedly famous and valuable trademark."
Spider Webs correctly points out that the applicability provisions of the ACPA and 15 U.S.C. § 1117(a) and (d) provide that damages "shall not be available with respect to the registration, trafficking, or use of the domain name that occurs before the date of the enactment of this Act." 1999 ACTS, P.L. 106-113, § 3010, 113 STAT. 1536. While the domain name in dispute was registered before the enactment of the ACPA, Gallo argues that Spider Webs has been using or allowing the use of the domain name since at least August 15, 2000, as evidenced by the record. This activity occurred well after the November 29, 1999, enactment of the ACPA. As reflected by the language of *1048 the ACPA and the case law interpreting it, there is no requirement, as Spider Webs urges, that the "use" be a commercial use to run afoul of the ACPA.
The record reflects that, although Spider Webs has acted in bad faith, it did not utilize the domain name to do anything as egregious as, for example, using the web site to sell poor quality wine or to market tawdry items bearing the Gallo name. Gallo has presented no evidence that it has lost any business as a result of Spider Webs' activities. Nevertheless, Spider Webs' actions, including posting information on the web site accessible by the domain name ERNESTANDJULIOGALLO.COM regarding this litigation and the dangers of alcohol consumption, have placed Gallo at risk of losing business and of having its business reputation tarnished. "`[A] domain name mirroring a corporate name may be a valuable corporate asset, as it facilitates communication with a customer base.'" Panavision Int'l, L.P., 141 F.3d at 1327 (quoting MTV Networks v. Curry, 867 F. Supp. 202, 203-04 n. 2 (S.D.N.Y.1994)). Accordingly, the court finds an award of statutory damages in the amount of $25,000.00 to be just.
C. Joint and Several Liability
Gallo claims that Defendants Spider Webs Ltd., Steve Thumann, Pierce Thumann, and Fred Thumann, Trustee, should be held jointly and severally liable for violation of the Texas Anti-Dilution Statute and the ACPA. Generally, under Texas law, a general partnership and all of its partners are liable jointly and severally for all debts and obligations of the partnership. See TEX. REV. CIV. STAT. ANN. art. 6132b-3.01 & 3.04 (Vernon 2000). Spider Webs Ltd. is a Texas general partnership, and Steve and Pierce Thumann, along with Fred H. Thumann, Trustee, are its sole general partners. As a result, under Texas law, Defendants Spider Webs Ltd., Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, may be held jointly and severally liable to Gallo for the sum of $25,000.00.
IV. Conclusion
Accordingly, Gallo's Motion for Partial Summary Judgment is GRANTED. There exist no outstanding issues of material fact as to Gallo's claims under the Texas Anti-Dilution Statute and the ACPA, and Gallo is entitled to judgment as a matter of law.
Spider Webs Ltd., Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, are permanently enjoined from using the Internet domain name "ERNESTANDJULIOGALLO.COM," registering any domain name that contains the word "Gallo," and registering any Internet domain name that contains the words "Ernest" and "Julio" in combination.
Spider Webs Ltd., Steve E. Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, are further ordered to transfer to Gallo the registered domain name "ERNESTANDJULIOGALLO.COM" within ten days from the entry of this order.
Spider Webs Ltd., Steve Thumann, Pierce A. Thumann, and Fred H. Thumann, Trustee, are jointly and severally liable to Gallo in the amount of $25,000.00.
NOTES
[1] "Web pages are designated by an address called a domain name. A domain name consists of two parts: a top level domain and a secondary level domain. The top level domain is the domain name's suffix. Currently, the Internet is divided primarily into six top level domains: (1) .edu for educational institutions; (2) .org for non-governmental and non-commercial organizations; (3) .gov for governmental entities; (4) .net for networks; (5) .com for commercial users; and (6) a nation-specific domain, which is .us in the United States. The secondary level domain is the remainder of the address, and can consist of combinations of letters, numbers, and some typographical symbols. To take a simple example, in the domain name `cnn.com,' cnn (`Cable News Network') represents the secondary level domain and .com represents the top level domain. Each domain name is unique." Sporty's Farm L.L.C., 202 F.3d at 492-93.
[2] "`Cyber' is the prefix used to denote Internet-related things. The realm of the Internet is often referred to as `cyberspace.'" Sporty's Farm L.L.C., 202 F.3d at 493 n. 5. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/4517113/ | IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
COMMONWEALTH OF PENNSYLVANIA, : No. 2 MM 2020
:
Respondent :
:
:
v. :
:
:
LEROY ANTONIO WILSON, :
:
Petitioner :
ORDER
PER CURIAM
AND NOW, this 17th day of March, 2020, the Application for Leave to File Original
Process is GRANTED, the Petition for Writ of Mandamus and/or Extraordinary Relief is
DENIED, and the Petition to File Response Nunc Pro Tunc is DISMISSED AS MOOT. | 01-03-2023 | 03-17-2020 |
https://www.courtlistener.com/api/rest/v3/opinions/2467067/ | 739 S.W.2d 19 (1987)
BEECH AIRCRAFT CORPORATION, et al., Petitioners,
v.
Dr. Wiley J. JINKINS, III, Respondents.
No. C-4807.
Supreme Court of Texas.
July 8, 1987.
Rehearing Denied November 25, 1987.
Patricia J. Kerrigan, Fulbright & Jaworski, Roger Rider and Robert M. Roach, Mayor, Day and Caldwell, Houston, for petitioners.
Suzanne B. Baker, Gilpin Pohl & Bennett, William L. Maynard, Beirne, Maynard & Parsons, Houston, for respondents.
MAUZY, Justice.
This case concerns the contribution rights of a settling party under both statutory and common law contribution schemes. The specific issue is whether a defendant, who settles a plaintiff's entire claim, may preserve a right to contribution from an alleged joint tortfeasor who does not participate in the settlement. The trial court rendered summary judgment denying the settling defendants any opportunity to establish their right to contribution. The court of appeals affirmed, holding that the settling defendants were, as a matter of law, not entitled to seek contribution under either the common law or statute. 698 S.W.2d 722. For reasons different from *20 those expressed by the court of appeals, we affirm.
Wiley Jinkins and Richard Weiner were injured in the crash of Jinkins' private plane. At the time of the accident, Jinkins was the pilot and Weiner was his passenger.
Jinkins and Weiner filed separate lawsuits, later consolidated, alleging theories of negligence and products liability against Beech Aircraft Corporation, Teledyne Continental Motors, Aircraft Products Division, and Houston Beechcraft, Inc. The defendants each filed counterclaims against pilot Jinkins, alleging negligence.
The defendants subsequently settled passenger Weiner's claims and obtained a release. Although Weiner had not sued Jinkins, the settlement agreement released Jinkins from liability to Weiner also, and expressed the intent of defendants Beech, Teledyne and Houston Beechcraft to seek contribution from Jinkins. Pursuant to the settlement agreement, Weiner dismissed his claims with prejudice and the defendants amended their counterclaims against Jinkins to include contribution claims purportedly reserved in the settlement agreement with Weiner.
Jinkins moved for summary judgment on defendants' counterclaim for contribution, arguing that the settlement agreement which released Beech, Teledyne, and Houston Beechcraft also extinguished their respective rights to contribution. The trial court granted Jinkins' motion for summary judgment and severed the contribution claims so that the defendants might appeal. The summary judgment did not, in fact could not, identify the applicable contribution scheme because the trial court disposed of the contribution claims prior to a determination of the liability issues.
At present we have three distinct contribution systems in Texastwo based on statute and one created at common law. Tex.Civ.Prac. & Rem.Code Ann. § 32.001 et seq. (Vernon 1987) (the original contribution statute); Tex.Civ.Prac. & Rem.Code Ann. § 33.001 et seq. (Vernon 1987) (the comparative negligence statute); Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984) (common law contribution by comparative causation). The applicable contribution scheme is determined by the liability theories adjudged against the joint tortfeasors. For example, if liability is established exclusively in negligence, the comparative negligence statute applies. If liability is established under products liability theory or if joint liabilities must be compared under mixed theories, the common law scheme controls contribution rights. Any remaining tort actions not covered by common law or the comparative negligence statute are the domain of the original contribution statute. Tex.Civ. Prac. & Rem.Code Ann. § 32.001(a) and (b) (Vernon 1987).
Because the pleadings in the present case included allegations of both negligence and products liability, neither of which was established prior to judgment on the contribution claims, it was unknown whether the common law or the comparative negligence statute, if either, should control contribution rights. The court of appeals therefore considered the settling parties' rights under both. With one justice dissenting, the court of appeals concluded that the settling parties were not entitled to contribution under either the statutory or common law schemes and, accordingly, affirmed the judgment of the trial court.
That court observed, however, that contribution might be available under the comparative negligence statute, provided certain conditions were met. One of these conditions was that the settling party be cast as a "judgment debtor" which might be accomplished simply by incorporating the terms of the settlement agreement into the judgment of non-suit. Because Beech, Teledyne and Houston Beechcraft had neglected to do this, the court held they had waived any potential right to contribution under the comparative negligence statute.
As the court of appeals points out we have previously recognized a settling party's right to contribution, but only under the original statute. Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935); Callihan Interests, Inc. v. Duffield, *21 385 S.W.2d 586 (Tex.Civ.App.Eastland 1964, writ ref'd). Subsequent decisions have interpreted Callihan and the original statute as requiring a judgment to preserve contribution rights, hence, the court of appeals' conclusion that a settling party's right to statutory contribution depends on its status as a "judgment debtor." See Iowa Manufacturing Company v. Weisman Equipment Company, 667 S.W.2d 209 (Tex.App.Austin 1983, writ ref'd n.r.e.); Lubbock Manufacturing v. International Harvester Company, 584 S.W.2d 908 (Tex.Civ.App.Dallas 1979, writ ref'd n.r.e.). Following Singleton v. New York Underwriters Ins. Company, 739 F.2d 198 (5th Cir.1984), the court of appeals extended the "judgment debtor" prerequisite to settling defendants seeking contribution under the comparative negligence statute.
While we agree that a judgment adverse to the party seeking contribution is an essential prerequisite to contribution, we do not accept the court of appeals' conclusion that such a judgment may be created by agreement of the parties following settlement. The essential prerequisites for a contribution claim are a judgment finding the party seeking contribution to be a joint tortfeasor and the payment by such party of a disproportionate share of the common liability. An agreed judgment incorporating a settlement does not provide a basis for subsequent contribution claims.
We have not previously recognized the contribution rights of a settling party under the comparative negligence statute, and we do not view our previous decisions under the original contribution statute as compelling such recognition. Other than their general subject matter, there is little similarity between the two contribution statutes. The original contribution statute defines its right of action in terms of "(a) person against whom a judgment is rendered...." TEX.CIV.PRACT. & REM.CODE ANN. § 32.002 (Vernon 1987). This language provides some basis for those cases holding "judgment debtor" status to be a prerequisite to a settling party's contribution claim. The comparative negligence statute, however, does not define its right of action in terms of a judgment debt.
Additional differences exist in the context of settlements. The original contribution statute does not discuss the possibility of settlement or its impact on contribution rights. The comparative negligence statute, in contrast, deals in some detail with the subject, but only with regard to a joint tortfeasor's right of contribution against a settling party. TEX.CIV.PRACT. & REM. CODE ANN. §§ 33.014 and 33.015 (Vernon 1987). The comparative negligence statute does not mention the contribution rights of a settling party. The legislature did not see fit to create a contribution right in favor of a settling party and we likewise decline to do so in comparative negligence cases.
The court of appeals also held that contribution was not available to the settling parties under the common law scheme adopted in Duncan v. Cessna Aircraft Co., 665 S.W.2d 414 (Tex.1984). Although we have difficulty following the court of appeals' discussion of the common law scheme, we understand that court's ultimate conclusion to be that a settling party has no right to common law contribution because he can settle only his proportionate share of liability and not the plaintiff's entire claim as the defendants attempted here. The court of appeals' conclusion rested on its interpretation of both Duncan and Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816 (Tex.1984). Our confusion arises because the court of appeals reads Bonniwell as additional authority for the requirement that a settlement must be incorporated into a judgment which suggests that contribution rights may be preserved to a settling party even under common law, if certain procedural formalities are followed. 698 S.W.2d at 727.
We agree that the common law scheme adopted in Duncan permits settlement of only a party's proportionate share of liability. In Duncan we discussed the effects of partial settlements and the operation of contribution in favor of the non-settling defendant. Duncan, 665 S.W.2d at 429-432. In that context we said, "Because *22 each defendant's share can now be determined, it logically follows that each may settle just that portion of the plaintiff's suit." Id. We reiterate that statement now in the context of attempted, complete settlements. We see no advantage in allowing defendants responsible for the plaintiff's injuries a right to, in effect, buy the plaintiff's claims and prosecute the other jointly responsible parties. It is not apparent that such settlements will result in any significant savings of time or resources. We can, however, envision that the settling defendant's unusual posture as surrogate plaintiff, co-defendant and cross-plaintiff will confuse a jury and possibly prejudice the remaining parties. We hold that a defendant can settle only his proportionate share of a common liability and cannot preserve contribution rights under either the common law or the comparative negligence statute by attempting to settle the plaintiff's entire claim.
We are mindful of the general rule that a cause of action for damages for personal injuries may be sold or assigned. Bradshaw v. Baylor University, 126 Tex. 99, 84 S.W.2d 703 (1935); Monk v. Dallas Brake & Clutch Service, Inc., 697 S.W.2d 780, 782 (Tex.App.Dallas 1985, writ ref'd n.r.e.); Duke v. Brookshire Grocery Company, 568 S.W.2d 470, 472 (Tex.Civ.App. Texarkana 1978, no writ). Our holding in the present case is an exception to this general rule. A settling defendant who is jointly responsible for personal injuries to a common plaintiff may not preserve contribution rights either by obtaining a complete release for all other parties allegedly responsible or by obtaining assignment of the plaintiff's entire claim.
The judgment of the court of appeals is affirmed.
RAY, J., files a dissenting opinion in which GONZALEZ, J., joins.
RAY, Justice, dissenting.
I respectfully dissent. I would hold that a joint tortfeasor, who settles a plaintiff's entire claim, may seek contribution from the other parties jointly responsible for the damages to the common plaintiff.
We have not previously considered the contribution rights of a party who settles a plaintiff's entire claim. The court of appeals suggests that we have in both Bonniwell v. Beech Aircraft Corporation, 663 S.W.2d 816 (Tex.1984) and Duncan v. Cessna Aircraft Company, 665 S.W.2d 414 (Tex.1984), but this is incorrect.
In Bonniwell, we held that a defendant who settles his liability and obtains a release for himself has no right to thereafter seek contribution. Bonniwell, 663 S.W.2d at 819. The settlement in that instance extinguished the settling party's contribution rights because the settling defendant bought his peace, not the plaintiff's entire claim.
Likewise, Duncan did not consider the issue now before us. In Duncan we discussed the effects of partial settlements and the operation of contribution in favor of the non-settling defendant. Duncan, 665 S.W.2d at 429-32. We did not discuss the consequences of a complete settlement, such as we have here, and we have not previously considered the possibility of a settling party preserving contribution rights under common law.
Under the proper circumstances a settling defendant should be permitted contribution. The right to contribution is based in equity. 18 Am.Jur.2d, Contribution, §§ 1 & 5 (1985). Its purpose, whether arising under statute or common law, is to distribute equitably the burden of the common wrong between or among those responsible. This purpose is not offended by permitting a joint tortfeasor, who settles a plaintiff's entire claim, a right to seek contribution from other alleged joint tortfeasors. The underlying equities are not subverted so long as the nonsettling parties are given the opportunity to litigate their comparative liability and the reasonableness of the settlement figure.
Further, the weight of authority favors permitting a tortfeasor, who settles the plaintiff's claim, a right to contribution. In the absence of legislation to the contrary, "it is almost invariably held that one who settles without judgment can recover contribution." *23 W. Keeton, Prosser & Keeton on the Law of Torts, § 50 at 339 (5th ed. 1984). The uniform acts also recognize the right of a tortfeasor, who enters into a reasonable settlement with a claimant, to recover contribution from another tortfeasor whose liability is extinguished by the settlement. Uniform Contribution Among Tortfeasor's Act (1955), §§ 1(d) and 4(a), 12 U.L.A. at 63, 98 (1975); Uniform Comparative Fault Act (1977), § 4(b), 12 U.L.A. at 45 (West Supp.1987).
A joint tortfeasor need not wait for the injured party to obtain a judgment against him, but can enter into a fair and reasonable compromise with the injured party without endangering his right to contribution provided his joint tortfeasor is also released by the settlement. 3 F. Harper, F. James, Jr. & O. Gray, The Law of Torts § 10.2 (2d ed. 1986). The tortfeasor from whom contribution is sought is not prejudiced by the fact that judgment has not first been rendered in favor of the person injured because the nonsettling defendant will have his day in court to defend against liability and the reasonableness of the amount paid in settlement of the plaintiff's original claim. 1 J. Dooley, Modern Tort Law § 26.31 (B. Lindahl ed. 1982 & Supp. 1987).
It is unclear what policies the court furthers by forbidding a settling party any rights to seek contribution. The court suggests that such settlements will not save time or resources, but it seems evident that they will. Assuming the settling defendant has acted reasonably in settling the plaintiff's claims, how can there not be savings? Surely the court agrees that trying only the secondary contribution claims is less burdensome than trying both the plaintiff's primary claims and the secondary contribution claims. It also seems more plausible that allowing contribution claims under these circumstances will encourage settlements and result in the speedier resolution of the plaintiff's claims. Surely the plaintiff would agree that it is less burdensome to be made whole by settlement.
While I agree with the court that the settlement agreement, whether or not incorporated into a judgment, is not the predicate for contribution, I do not agree that the existence of such a settlement should automatically foreclose contribution rights. A direct analogy can be drawn between a complete settlement by one joint tortfeasor and a plaintiff's election to sue and take judgment against only one of several parties jointly responsible for his injuries. In the latter situation, the payment of the plaintiff's claim by the defendant singled out for retribution, matures that party's right to seek contribution. Having paid the plaintiff's "bill in full," the defendant may then collect contribution from any other party he proves jointly responsible with him for the damage done the common plaintiff. Why then cannot a defendant compromise the plaintiff's entire claim and pursue a similar right to contribution. Comparing the two situations, I cannot help wondering why this court wants to force a defendant to litigate a suit he might otherwise be inclined to settle.
I would reverse the judgment of the court of appeals and remand the cause for trial.
GONZALEZ J., joins in this dissenting opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1211311/ | 724 P.2d 78 (1986)
Susan McALONAN, Plaintiff-Appellee,
v.
U.S. HOME CORPORATION, Defendant-Appellant.
No. 84CA0074.
Colorado Court of Appeals, Div. I.
January 30, 1986.
Rehearing Denied February 27, 1986.
Certiorari Denied August 25, 1986.
*79 Renner & Rodman, Paul D. Renner, Denver, for plaintiff-appellee.
Walberg Law Offices, Wendelyn K. Walberg, Denver, for defendant-appellant.
Certiorari Denied (U.S. Home) August 25, 1986.
PIERCE, Judge.
U.S. Home Corporation (U.S. Home) appeals from a judgment entered upon a jury verdict in favor of plaintiff, Susan McAlonan (McAlonan). We affirm.
Soon after buying a condominium from U.S. Home in 1981, McAlonan noticed defects requiring repair throughout the unit, including severe cracks in the foundation. In 1982, an arbitrator's award required U.S. Home to repair 24 enumerated defects to the condominium.
In 1983, McAlonan filed a complaint alleging that U.S. Home had failed to comply with the arbitrator's award. In addition, McAlonan alleged negligence in design, breach of an implied warranty to construct in a workmanlike manner, breach of an implied warranty of habitability, severe emotional distress, and intentional trespass; she sought compensatory as well as exemplary damages. At trial, the jury returned a general verdict awarding McAlonan $150,000 in actual damages and $150,000 in exemplary damages.
I.
U.S. Home first argues that the trial court erred in instructing the jurors, if they found for McAlonan, to:
"[A]ward as her actual damages the reasonable cost of repairing the property, together with the decrease in market value, if any, to the property, as repaired."
We disagree.
U.S. Home tendered the following instruction as a substitute for the one above which stated: "When purchasers retain the property, the proper measure of damages for a breach of a builder's warranty of workmanship is the cost of bringing the property into conformity with the warranty."
Under the circumstances here, U.S. Home's tendered instruction could have improperly limited plaintiff's recovery. Plaintiff is entitled to such damages as necessary to make her whole. Bullerdick v. Pritchard, 90 Colo. 272, 8 P.2d 705 (1932). Here, there is a possibility that the property, as repaired, may nevertheless have a reduced market value; thus, the given instruction, unlike the one tendered, properly instructed the jury so as to make plaintiff whole. See CJI Civ.2d 6:12 (1980).
U.S. Home further contends that, at the very least, the complete instruction stated in CJI Civ.2d 6:12 (1980) should have been given. The paragraph of the pattern instruction omitted here reads as follows: "If the cost of (repairs) (rebuilding) together with any decrease in market value of the property as (repaired) (rebuilt) exceeds the market value of the property before the *80 occurrence, your award shall be limited to the market value of the property before the occurrence."
The instructions as contained in Colorado Jury Instructions are used when they are "applicable to the evidence." C.R.C.P. 51.1. Here, inclusion of the omitted paragraph from the pattern instruction, by limiting recovery to the "before occurrence" market value, would have allowed McAlonan to recover only her purchase price, thereby denying her recovery of any appreciation.
Fair market value may not always be the appropriate measure of damages. See Bullerdick, supra. Appreciation or added value may properly be considered a loss. See generally Medema Homes, Inc. v. Lynn, 647 P.2d 664 (Colo.1982); Kroulik v. Knuppel, 634 P.2d 1027 (Colo.App.1981); Hein Enterprises, Ltd. v. San Francisco Real Estate Investors, 720 P.2d 975 (Colo. App.1985). Thus, the given jury instruction was correct in not limiting McAlonan's recovery to the market value of her condominium before the occurrence.
U.S. Home also argues that the given instruction required the jury to include the cost of repairs twice, once by itself and once as a part of the diminution of value. We do not read the instruction to so dictate. On the contrary, the instruction properly directed the jury to measure damages as the cost of repair plus any diminution in market value, as repaired. This instruction did not lead to double recovery and adequately informed the jury of Colorado law under the facts of this case. See Hotchkiss v. Preble, 33 Colo. App. 431, 521 P.2d 1278 (1974).
II.
U.S. Home also challenges several other jury instructions. Contrary to U.S. Home's contention, the record shows that the jury was properly instructed concerning U.S. Home's theory that the arbitrator's award acted as a bar to this litigation. As concerns the other challenged instructions, the record shows no objection to these instructions by U.S. Home; therefore, its challenges are not properly reviewable. C.R.C.P. 51. Ross v. Colorado National Bank, 170 Colo. 436, 463 P.2d 882 (1969).
The other allegations of error raised by U.S. Home are without merit.
The judgment is affirmed.
TURSI and BABCOCK, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1553546/ | 238 B.R. 842 (1999)
UNITED STATES of America, Plaintiff-Appellant,
v.
Amada ZAMORA, Defendant-Appellee.
No. CV 98-336 TUC-JMR. Bankruptcy No. 97-4679 SV-JMM. Adversary No. 98-023.
United States District Court, D. Arizona.
March 31, 1999.
James E. Mueller, United States Attorney, Tucson, AZ, for United States of America, plaintiff.
Larry Dennis Scheafer, Sierra Vista, AZ, for Amada Zamora, defendant.
Henry K. Zipf, Tucson, AZ, trustee, pro se.
ORDER
ROLL, District Judge.
Appellant United States appeals from a decisions stated by the United States Bankruptcy Court. For the reasons stated below, the Court vacates the bankruptcy *843 court's order and remands for further proceedings.
Facts
On January 21, 1994, Debtor Amada Zamora agreed to act as a surety on a bail bond issued to secure the appearance of a defendant in a federal criminal case being prosecuted in the Southern District of California.[1] Debtor agreed to pay $25,000 in the event that the defendant did not appear in court. Debtor paid no cash and the obligation was unsecured.
The bond signed by Debtor stated in part:
Forfeiture of this bond for any breach of its conditions may be declared by any United States District Court having cognizance of the above-entitled matter at the time of such breach and if the bond is forfeited and if the forfeiture is not set aside or remitted, judgment may be entered upon motion in such United States District Court against each debtor jointly and severally. . . . [2]
The criminal defendant failed to appear in court as ordered, and in April 1994, the government filed a forfeiture action in order to collect the $25,000 personal appearance bond. On July 10, 1994, the district court ruled that the bond "was and is forfeited" and entered a judgment of default against Debtor in the amount of $25,000, with interest to accrue annually.
On October 21, 1997, Debtor filed for Chapter 7 bankruptcy. In her bankruptcy filing, Debtor listed a debt to the United States on the forfeited bail bond in the amount of $26,359. Thereafter, on February 6, 1998, the United States filed an adversary complaint seeking a determination from the bankruptcy court that the debt on the forfeited bail bond was nondischargeable[3] pursuant to 11 U.S.C. § 523(a)(7). The United States filed a motion for judgment on the pleadings and following briefing and argument, the bankruptcy court entered a memorandum decision on June 30, 1998. The bankruptcy court held that the bail bond debt was dischargeable in bankruptcy. The United States filed a notice of appeal to this Court on July 10, 1998.
Standard of Review
The Court reviews the bankruptcy court's findings of fact under a clearly erroneous standard. See In re Daniels-Head & Assocs., 819 F.2d 914, 918 (9th Cir.1987). The Court exercises de novo review of the bankruptcy court's conclusions of law. Id.
Issue Presented
The parties do not dispute the relevant facts. The only issue presented here is whether the bankruptcy court correctly determined that an obligation to the United States arising out of a forfeited bail bond is dischargeable, where the debtor acted as a surety on the bond to secure the appearance of a third party criminal defendant.
Discussion
The Bankruptcy Code, 11 U.S.C. § 523(a)(7), excepts from discharge certain fines or penalties owed to a governmental entity. To be non-dischargeable, a debt must be:
a) a fine, penalty, or forfeiture,
b) payable to and for the benefit of a governmental unit, and
c) not compensation for actual pecuniary loss.
11 U.S.C. § 523(a)(7).
Here, Debtor's obligation on the forfeited bail bond appears to fall squarely within *844 the parameters of § 523(a)(7). By its own terms, the obligation is a forfeiture; it arose from the forfeiture of the personal appearance bond when the criminal defendant failed to appear. The obligation is payable to and for the benefit of a governmental entity and it is not compensation for actual pecuniary loss.
In Kelly v. Robinson, 479 U.S. 36, 52-53, 107 S. Ct. 353, 93 L. Ed. 2d 216 (1986), the United States Supreme Court interpreted § 523(a)(7) as it applied to restitution orders as a condition of probation in conjunction with a state court conviction. Because restitution on its face was not a "fine, penalty, or forfeiture" under the first prong of § 523(a)(7), the Court analyzed whether restitution was the type of obligation intended to be non-dischargeable under § 523(a)(7). In so doing, the Court distinguished between obligations stemming from pecuniary loss and obligations serving penal or broader societal interests. In holding that restitution orders were non-dischargeable under § 523(a)(7), the Court stated:
Because criminal proceedings focus on the State's interests in rehabilitation and punishment, rather than the victim's desire for compensation, we conclude that restitution orders imposed in such proceedings operate "for the benefit of" the State. Similarly, they are not assessed "for . . . compensation" of the victim. The sentence following a criminal conviction necessarily considers the penal and rehabilitative interests of the State. Those interests are sufficient to place restitution orders within the meaning of § 523(a)(7).
Id. at 53, 107 S. Ct. 353.[4]
Aside from Kelly's interpretation of § 523(a)(7), there is limited case law as to whether a surety's obligation arising from a forfeited bail bond is dischargeable in bankruptcy. Although no authority exists in the Ninth Circuit on the issue, three bankruptcy courts in two districts from other circuits have found such debts dischargeable.[5] Here, the bankruptcy court adopted the reasoning of one of those cases, County of Berks v. Damore (In re Damore), 195 B.R. 40 (Bankr.E.D.Pa. 1996), and found that the obligation on the forfeited bail bond was dischargeable.
In apparent reliance upon Kelly, both the bankruptcy court in this action and Damore focused on the nature of the obligation, concluding that it was contractual rather than penal in nature:
[W]here . . . the debtor is not the defendant who failed to appear in the underlying . . . criminal proceeding, but rather, is merely the surety on a forfeited bail bond who had no penal sanctions imposed against him, the debtor's obligation on the bail bond is contractual rather than penal in nature and is not rendered nondischargeable by Section 523(a)(7).
Memorandum Decision at 4 (quoting Damore, 195 B.R. at 42) (footnote omitted)).
The Court does not find Damore persuasive. In resolving whether the obligation here is non-dischargeable, the Court need not address whether a surety's obligation *845 on a forfeited bail bond is penal or contractual in nature. Here, the obligation falls expressly under the statute as a forfeiture. Unlike Kelly, which involved restitution, the Court need not go beyond the statute to determine whether the debt obligation is the type of obligation intended to be non-dischargeable under § 523(a)(7).
Applying the statute to this factual setting, the obligation is a forfeiture payable to and for the benefit of a governmental entity that is not compensation for pecuniary loss. The obligation is non-dischargeable under 11 U.S.C. § 523(a)(7).
For the reasons stated above, the order of the bankruptcy court is VACATED and the matter is REMANDED for further proceedings.
NOTES
[1] Debtor posted the bond on behalf of her nephew, who was indicted on one count of possession with intent to distribute marijuana.
[2] Upon the Court's request for supplementation of the record, and the parties having no objection, a copy of the bond and Judgment of Default were obtained from the Southern District of California and filed in this matter under separate Order.
[3] As the term implies, a non-dischargeable debt is not discharged in bankruptcy and the debtor remains liable for the entire balance of the claim.
[4] Justice Marshall, with whom Justice Stevens joined, dissented, stating:
While I am wholly in sympathy with the policy interests underlying the Court's opinion . . . Congress might have amended the code to achieve the result reached here. . . . I would affirm the judgment and permit Congress, if it were so inclined, to amend the Bankruptcy Code specifically to make criminal restitution obligations nondischargeable in bankruptcy.
479 U.S. at 58-59, 107 S. Ct. 353. Here, Congress designated all forfeitures payable to the government and not constituting "compensation for actual pecuniary loss" as nondischargeable.
[5] These are Pioneer General Ins. Co. v. Paige (In re Paige), 1988 WL 62500 (Bankr.D.Colo. 1988), Pioneer General Ins. Co. v. Midkiff (In re Midkiff), 86 B.R. 239 (Bankr.D.Colo.1988), and County of Berks v. Damore (In re Damore), 195 B.R. 40 (Bankr.E.D.Pa.1996). Both Paige and Midkiff are decisions from the bankruptcy court in the District of Colorado and Midkiff summarily adopted the reasoning of Paige. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2633973/ | 180 P.3d 623 (2008)
JONES
v.
STATE.
No. 97315.
Court of Appeals of Kansas.
April 11, 2008.
Decision Without Published Opinion. Affirmed. | 01-03-2023 | 11-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1531027/ | 72 B.R. 503 (1987)
In re Wallace Stine BEAN and Mattie Mae Bean, Debtors/Appellants,
v.
PEOPLE OF the STATE OF COLORADO, Appellee.
Civ. A. No. 86-K-2476, Bankruptcy No. 86 B 06788 J.
United States District Court, D. Colorado.
April 17, 1987.
John A. Cimino, Cimino, Gonzales & Jirak, Denver, Colo., for debtors/appellants.
*504 Norman Early, Jr., Dist. Atty., Michelle Conklin, Deputy Dist. Atty., Denver, Colo., for appellee.
MEMORANDUM OPINION AND ORDER
KANE, District Judge.
This is an appeal from a final order issued by the bankruptcy court on October 16, 1986. In re Bean, 66 B.R. 454 (Bankr. D.Colo.1986). Jurisdiction lies under 28 U.S.C. § 158 and Rule 8001(a) of the Rules of Bankruptcy Procedure.
The facts of this controversy are not disputed by the litigants. The Beans' son, Quintin Wortham, was convicted in a Colorado state criminal proceeding of first-degree criminal trespass. Mr. Wortham was released on bond pending an appeal from this conviction. The Beans posted a $10,000 bond to guarantee his appearance and pledged their Denver home as security. In re Bean, at 455.
During the pendency of the appeal, Mr. Wortham became a suspect in a series of rapes which wracked Denver's Capitol Hill neighborhood in 1986. Appellants' Opening Brief, at 2. Subsequently, he failed to appear for his scheduled court date in Denver District Court. By order of that court, the bond was forfeited and an order entered on the forfeiture. Judge Edward E. Carelli stayed execution of the order for two weeks to allow appellants time to produce the criminal defendant. On the day the stay expired, appellants filed their bankruptcy petition.
The sole issue on appeal is whether the stay exception of 11 U.S.C. § 362(b)(4) operates under these facts to prevent the Beans from making use of the automatic stay provided by 11 U.S.C. § 362(a). Appellants' Brief, at 1. Section 362(b)(4) states:
(b) The filing of a petition under section 301, 302 or 303 of this title does not operate as a stay
* * * * * *
(4) under subsection (a)(1) of this section, of the commencement or continuation of an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power.
In deciding this issue, the bankruptcy court concluded:
Weighing the circumstances in this case, therefore, the Court must conclude that the overriding objective of the State in executing on the judgment is to promote the crucial public welfare goal of preserving the integrity of the State's bail system. That the government must do this in a way which affects property of the debtor does not, without more, remove the action from the scope of the exemption contained in § 362(b)(4), or place it in the restriction against enforcement of money judgments contained in § 362(b)(5). The State's proceeding against the debtors' collateral is an exercise of its legitimate police powers, and the automatic stay does not apply.
66 B.R. at 457.[1]
For the purposes of this appeal, the dispositive language of § 362(b)(4) is the phrase "an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power."[2]
The Beans argue § 362(b)(4) has no application here because "allowing relief from stay would only advance the State's pecuniary interest in public safety and welfare. Advancing the pecuniary interest of the State is clearly not the purpose of 11 U.S.C. § 362(b)(4)." Appellants' Brief, at 5. To *505 the extent this argument espouses a purely abstract legal principle, it is undoubtedly correct. See United States v. Standard Metals Corporation, 49 B.R. 623, 624 (D.Colo.1985) ("[i]t has been established that an action by a governmental unit to protect a pecuniary interest is stayed by § 362(a)(1)"); In re George G. Solar Co., Inc., 44 B.R. 828, 830 (Bankr.M.D.Fla.1984) (bankruptcy court will not permit state "to use criminal prosecution for the sole purpose of collecting a debt dischargeable in bankruptcy, or to use law enforcement as a collection agency," quoting from Johnson v. Lindsey, 16 B.R. 211, 212 (Bankr.M.D. Fla.1981)). Indeed, the bankruptcy court clearly accepted this position. Recognition of the principle was integral to the bankruptcy court's decision below. 66 B.R. at 456.
This principle, however, has no application to the case at bar. Few proceedings could possibly occupy a more central role in the operation of the state's traditional police power than the enforcement of criminal bail proceedings as part of a criminal prosecution. See Chicago, B. & Q.R. Co. v. Illinois, 200 U.S. 561, 592, 26 S. Ct. 341, 349-50, 50 L. Ed. 596 (1906) (broadly defining the police power of a state as embracing "regulations designed to promote the public convenience or the general prosperity, as well as regulations designed to promote the public health, the public morals or the public safety"). Appellants frankly admit the state's goal in pursuing relief from the stay "is to secure the return of Quintin Wortham so that it may serve him with an arrest warrant and prosecute him as the Capitol Hill rapist." Appellants' Brief, at 3. Thus, the state is not pursuing a pecuniary interest in the instant proceeding.
Appellants paradoxically aver "[t]he sole motivation for relief from stay is not the protection of the public health, welfare, morals, or safety but the return of the alleged Capitol Hill rapist Quintin Wortham." Id. at 4. I can conceive of no motivation more illustrative of protection of the public health and safety than the return and prosecution of an alleged rapist. The state's motivation falls squarely within the parameters of the police power contemplated by § 362(b)(4).
This conclusion is supported by at least two compelling policy arguments. First, federal courts should generally restrain from interfering with traditional functions of state government. In re Pellegrino, 42 B.R. 129, 134 (Bankr.D.Conn.1984), citing Younger v. Harris, 401 U.S. 37, 91 S. Ct. 746, 27 L. Ed. 2d 669 (1971). "Bankruptcy laws are no exception, particularly where criminal proceedings are involved." Pellegrino, at 134.
Secondly, the scheme Congress has carefully crafted in § 362 would be seriously subverted were I to accept the Beans' arguments. "It is the purpose of § 362(b)(4) to prevent endangerment of the public that would result from permitting a bankrupt to avoid statutes and regulations enacted in furtherance of governmental police powers." Standard Metals, at 625. If every criminal bond surety were permitted to avoid § 364(b)(4), then the purpose of the bail statute would be seriously undermined. Further, criminal defendants could completely evade the stricture of § 362(b)(1)[3] by having someone other than themselves post bond. The third-party surety could then ameliorate or alleviate the harshness of forfeiture by entering bankruptcy himself. Again, the result would be seriously detrimental to enforcement of the bail laws. Subsection § 362(b)(4) is designed to prevent any such untoward consequences.
The bankruptcy court was sensitive to the "serious and tragic" effect of its holding for the Beans, but concluded "this effect is secondary to the public welfare objectives served by the State's action." 66 Bankr. at 456. I too am acutely aware of this concern. The Beans' remedy, however, does not lie in a misapplication of the *506 bankruptcy laws. Rather, the Colorado bail statutes specifically provide for remission of forfeiture "if it appears that justice so requires." Colo.Rev.Stat. § 16-4-109(3). The instant case appears to qualify for consideration of remission, whether in whole or in part. See, e.g., People v. Saviano, 677 P.2d 414, 416 (Colo.App.1983).
Moreover, forfeiture procedures can include provision for monthly payments. See, e.g., Owens v. People, 194 Colo. 389, 572 P.2d 837, 838 (1977). In the absence of a remission, such an arrangement presumably would effectuate one of the purposes behind the Beans' bankruptcy petition. Appellee's Brief, at 13. In short, the Beans need not lose their home.
I therefore reject appellants' claim that the state failed to protect its own interest in this action. Appellants' Brief at 4. To the contrary, the state protected its legitimate police power interests by following the procedure of the criminal bail statutes enacted by the legislature. Appellants' course of action properly lies in pursuing those procedures in state court.
To the extent the Beans might not be permitted remission by the state, I do not find enforcement of the bail forfeiture provision to constitute punishment. Appellants' Brief, at 4-5. Rather, the Beans would be compelled to comply with the terms of the contract they executed with the state. This question, in any event, is one for the state court criminal proceeding rather than a federal bankruptcy action.
Accordingly, IT IS ORDERED that the judgment of the bankruptcy court is AFFIRMED. The order of December 11, 1986 staying execution pending appeal is hereby vacated. The clerk is directed to enter judgment in compliance with this order. The parties shall bear their own costs and fees.
NOTES
[1] Section 362(b)(5) provides that the automatic stay of § 362(a)(2) does not apply to "the enforcement of a judgment, other than a money judgment, obtained in an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power." Appellants' brief on appeal does not raise § 362(b)(5) as an issue, much less dispute the bankruptcy court's decision under that statute. Nevertheless, that portion of § 362(b)(5) which is operative on these facts, namely "an action or proceeding by a governmental unit to enforce such governmental unit's police or regulatory power," is identical to the key language under § 362(b)(4). Therefore, my analysis of this phrase applies to both subsections.
[2] See note 1.
[3] Subsection 362(b)(1) precludes the automatic stay under subsection (a) for "the commencement or continuation of a criminal action or proceeding against the debtor." See In re Gay, 3 B.R. 336, 338 (Bankr.D.Colo.1980) ("[t]he automatic stay triggered by the filing of a bankruptcy petition does not restrain the commencement or continuation of any criminal action against the debtors"). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/108213/ | 400 U.S. 18 (1970)
LINES
v.
FREDERICK ET AL.
No. 412.
Supreme Court of United States.
Decided November 9, 1970
ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.
PER CURIAM.
This case presents the question of whether a bankrupt wage earner's vacation pay, accrued but unpaid at the time of the filing of his petition, passes to the trustee in bankruptcy as "property" under § 70a (5) of the Bankruptcy Act, 30 Stat. 565, as amended, 11 U.S. C. § 110 (a) (5). The facts are not in dispute. Respondent Frederick, employed by a large manufacturing company, had accrued vacation pay of $137.28 at the time he filed his petition. He could collect this sum either during the annual period when his employer shut down the plant in which he worked, or on final termination of his employment. Respondent Harris had accrued vacation pay of $144.14, which he could draw either on termination or under a conventional voluntary vacation plan of his employer. In each case, the referee in bankruptcy made a "turnover order" requiring the bankrupt to pay to the trustee on receipt all of his accrued vacation pay, less one-half of that part accrued during the 30 days prior to the filing of the petition (the deducted sum being exempt under Cal. Code Civ. Proc. § 690.11 (Supp. 1970)).
The District Court affirmed the referee in both cases, but the Court of Appeals for the Ninth Circuit reversed, holding that accrued but unpaid vacation pay is not "property" under the statute, and therefore finding it *19 unnecessary to decide whether such accrued pay meets the further statutory requirement of being "transferable." As the Court of Appeals noted, its decision was squarely in conflict with that of the Court of Appeals for the Fifth Circuit in Kolb v. Berlin, 356 F.2d 269.
In Segal v. Rochelle, 382 U.S. 375, 379, we said that "[t]he main thrust of § 70a (5) is to secure for creditors everything of value the bankrupt may possess in alienable or leviable form when he files his petition. To this end the term `property' has been construed most generously and an interest is not outside its reach because it is novel or contingent or because enjoyment must be postponed." But we pointed out that " `[i]t is impossible to give any categorical definition to the word "property," nor can we attach to it in certain relations the limitations which would be attached to it in others.' "
The most important consideration limiting the breadth of the definition of "property" lies in the basic purpose of the Bankruptcy Act to give the debtor a "new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. The various provisions of the bankruptcy act were adopted in the light of that view and are to be construed when reasonably possible in harmony with it so as to effectuate the general purpose and policy of the act." Local Loan Co. v. Hunt, 292 U.S. 234, 244-245 (citations omitted).
In Segal v. Rochelle, supra, the question was whether loss-carryback tax refunds arising out of business losses immediately prior to bankruptcy but not collected until the end of the calendar year were property subject to a turnover order in favor of the trustee. In that case, as in this one, the problem of classification for purposes of the Bankruptcy Act could not be resolved simply by reference to the time when the right to the payment "vested," or to definitions of property drawn from other *20 areas of the law. The Court looked to the purposes of the Act and concluded that the tax refund claim was "sufficiently rooted in the pre-bankruptcy past and so little entangled with the bankrupt's ability to make an unencumbered fresh start that it should be regarded as `property' under § 70a (5)." 382 U.S., at 380.
Applied to the set of facts before us here, the principles reflected in the earlier cases compel a decision for the bankrupt. In Segal, a business had ceased to operate and the task of the trustees in bankruptcy was to marshal whatever assets were left for distribution to the creditors. The tax refund claim, arising out of the operations of the business and specifically out of the losses that had precipitated its failure, was such an asset. By contrast, the respondents here are wage earners whose sole source of income, before and after bankruptcy, is their weekly earnings. The function of their accrued vacation pay is to support the basic requirements of life for them and their families during brief vacation periods or in the event of layoff. Since it is a part of their wages, the vacation pay is "a specialized type of property presenting distinct problems in our economic system." Sniadach v. Family Finance Corp., 395 U.S. 337, 340. Where the minimal requirements for the economic survival of the debtor are at stake, legislatures have recognized that protection that might be unnecessary or unwise for other kinds of property may be required. See, e. g., the Consumer Credit Protection Act, § 301, 82 Stat. 163, 15 U.S. C. § 1671 (1964 ed., Supp. V).
The wage-earning bankrupt who must take a vacation without pay or forgo a vacation altogether cannot be said to have achieved the "new opportunity in life and [the] clear field for future effort, unhampered by the pressure and discouragement of preexisting debt," Local Loan Co. v. Hunt, supra, which it was the purpose of the statute to provide.
*21 The motion of respondent Harris to proceed in forma pauperis is granted. The motion of respondent Frederick to dispense with printing his brief in opposition is granted. The petition for certiorari is granted and the judgment is affirmed.
THE CHIEF JUSTICE is of the opinion that the petition for writ of certiorari should be denied.
MR. JUSTICE HARLAN, dissenting.
In my view this case is another instance in which the pressure of an overcrowded docket has led the Court to deal summarily with an issue which, if deserving of our attention at all, is deserving of full-dress treatment. Cf. United States v. Maryland Savings-Share Insurance Corp., ante, p. 4; United States v. Chicago, ante, p. 8. Moreover, the Court disposes of the case despite the opaqueness of the record and the uncertainty with regard to relevant California law.
Under the terms of respondent Frederick's employment, his employer credited him with one day's vacation pay for each month's work.[1] From September 15, the date of bankruptcy, to December 23, the beginning of the shutdown and the enforced "vacation," Mr. Frederick presumably became entitled to a little over three days' pay. The same amount would have accrued to a person starting work on the date of bankruptcy with no debts or assets, the paradigm of "an unencumbered fresh start." Indeed, the order not only permitted Mr. Frederick a fresh start; it gave him a head start, to the extent *22 of half a day's pay.[2]Segal v. Rochelle, 382 U.S. 375 (1966), and Local Loan Co. v. Hunt, 292 U.S. 234 (1934), therefore tend to support the position of the trustee rather than "compel a decision for the bankrupt." Ante, p. 20. However, respondents can muster forceful arguments in their support, even on the assumption that the accrued vacation pay was subject to the claims of creditors a point of California law which the court below found it unnecessary to decide.
Since the question tendered for review is close and has split the courts of appeals, I would set the case for argument.
NOTES
[1] While neither the stipulated facts nor the opinions below reveal the rate of accrual of vacation pay, I take as true the uncontested representation in Mr. Frederick's petition for review of the referee's order.
[2] The case of respondent Harris is similar, but it is complicated by the fact that he could have chosen to forgo his vacation. As he observed in his petition to review the turnover order, the record is silent on whether such a choice would have wiped out his accrued vacation time and left nothing for him to turn over. | 01-03-2023 | 04-28-2010 |
https://www.courtlistener.com/api/rest/v3/opinions/1897154/ | 514 So. 2d 540 (1987)
John L. ROBERT, Jr., D.D.S., Plaintiff-Appellee,
v.
BAYOU BERNARD MARINE, INC. and AMF, Inc., Defendant-Appellee, Bayou Bernard Marine, Inc., Defendant-Appellant, AMF, Inc.
No. 86-201.
Court of Appeal of Louisiana, Third Circuit.
September 22, 1987.
Writs Denied December 11, 1987.
*542 Theall and Fontana, Anthony Fontana, Jr., Abbeville, for defendant-appellant.
Calvin Woodruff, Jr., Abbeville, for plaintiff-appellee.
Jeansonne and Briney, Katherine M. Loos, LaFayette, for defendant-appellee.
Before DOUCET, LABORDE and KING, JJ.
KING, Judge.
The issue presented by this appeal is whether or not the trial court erred in finding the manufacturer solely liable for damages in an action in quanti minoris.
Dr. John L. Robert, Jr. (hereinafter Robert) filed suit in redhibition for damages sustained as a result of his purchase of a fishing boat (hereinafter boat), engines, tackle, and trailer from Bayou Bernard Marine, Inc. (hereinafter Bayou). Bayou filed a third party demand against the boat manufacturer, AMF, Inc. (hereinafter AMF), *543 seeking indemnification, specified damages, and attorney's fees. At trial, the suit was converted by Robert to an action in quanti minoris. After trial judgment was rendered on the main and third party demands and a judgment was signed. Bayou filed a motion for a new trial. After granting the motion for a new trial, for reargument only, the trial court rendered judgment in favor of Robert and against AMF for diminution in value of the boat, engines, and trailer, for inconvenience, mental anguish, loss of use, etc., for interest paid in financing the boat, for insurance on the boat, for the cost of gasoline lost in the use of the boat, for the cost of certain repairs to the boat, and for attorney's fees. Judgment was also rendered on the third party demand in favor of Bayou and against AMF for the cost of other repairs to the boat, for attorney's fees, for legal interest, and for all court costs of the proceeding. AMF appeals. Both Robert and Bayou answer the appeal, seeking an increase in the award of attorney's fees. We amend and render judgment.
FACTS
Robert arranged to purchase a 1981 Robalo fishing boat from Bayou whose business premises were located in Gulfport, Mississippi. The boat had been previously sold and later returned to the manufacturer, AMF, for repair of cracks in the gelcoat finish of the hull. AMF repaired the cracking in the gelcoat finish of the boat's hull and had the boat in stock for sale at a reduced price. AMF advised Bayou's employee that the boat had been reconditioned because of some cracking in the gelcoat finish of the boat's hull and he informed Robert. Robert agreed to purchase the boat through Bayou and made a deposit on the purchase price. Bayou installed twin 115 Evinrude engines, tackle, spray hood, and other accessories, and sold the boat, engines, tackle, and trailer to Robert for a total sales price of $20,383.00, being $8,400.00 for the boat, $4,500.00 each for two engines, $1,600.00 for the trailer, $888.00 for the tackle and accessories, and $495.00 for trailer brakes. On August 10, 1982 Bayou delivered the boat to Robert in Abbeville, Louisiana where the sale documents were also delivered. Bayou, through its employee, Anthony Jones, told Robert that the boat was being sold as a new boat with a full warranty. A manufacturer's statement of origin, furnished at the time of the sale, showed the sale of the boat as a new sale from AMF to Bayou. A written new boat warranty statement from AMF was also furnished to Robert at the time of sale and Robert executed a boat warranty registration form on August 10, 1982 which had typed at the bottom "Structural Hull Warranty Only".
Robert first used the boat on August 14, 1982. At that time, he put approximately 48 gallons of gas in the 128 gallon inboard tank and operated the boat for a short while without any apparent difficulty.
On August 19, 1982, Robert took the boat to the gas station to fill the inboard tank to its maximum capacity in preparation for a trip the following weekend. After filling the inboard tank with approximately 115 gallons of gas, Robert felt that something was possibly wrong. One of the attendants walked around to the back of the boat and discovered that gas was seeping through one of the bolt holes, where the port motor mount was bolted to the transom of the boat. When the hull's bilge drain plug in the boat's transom was pulled, gasoline shot out from the drain in a steady stream. The gas station attendants then attached a vacuum hose to the boat and pumped approximately 21 gallons of gas from the bilge of the boat. Robert took the boat home and drained about 10 more gallons of gas from the bilge of the boat.
Robert immediately contacted the Bayou salesman, Anthony B. Jones, and reported the problem. Jones called the AMF factory and spoke with a representative, who informed him that the foam in the boat hull would possibly have to be ripped out and replaced. Jack Markowitz, Bayou's general manager, told Jones he did not think that Bayou was qualified to rip out the entire inside of the boat. Jones reported this information to Robert, who testified that he was told there was a possibility that if *544 the foam could not be removed, the hull would have to be completely replaced.
The boat was returned to Bayou for repairs on August 31, 1982. Bayou's mechanics disassembled the boat and discovered that the screws on the fuel sending unit and the unit itself were loose. Markowitz called AMF when the problem was identified and located. AMF suggested that Bayou replace the fuel sending unit, wash out the hull, and reassemble the boat, since there was no further damage. AMF claims that Bayou was informed at that time that AMF was not willing to replace the foam flotation in the boat's hull, as it was made of closed cell foam which would not absorb liquids such as gas or water, since it could not have been damaged by the fuel overflow. Bayou denied that it was told this at this time.
Bayou informed Robert that it had located and identified the problem, and Robert then contacted AMF to determine whether Bayou was qualified to perform the repairs. Robert was informed by AMF that the boat had been sold as a used boat, and that he was fortunate that AMF was willing to do anything at all about the problem. Robert then contacted Markowitz who informed him that the boat was sold as a new boat and that it was covered under AMF's new boat warranty.
On September 2, 1982, Robert's attorney wrote a letter to both AMF and Bayou. AMF responded to the letter of Robert's attorney and stated that the boat was sold as a used boat without a new boat warranty but with only a structural hull warranty. Robert then requested that Bayou obtain some type of certification from a qualified individual that there was no danger that the boat would explode due to the possibility of any gasoline or fumes remaining in the foam flotation in the boat after it was reassembled. Bayou advised AMF of Robert's request and also informed AMF that it was unable to get the Coast Guard to certify that the boat was safe.
On October 1, 1982, Robert drove to Gulfport, Mississippi to inspect the boat at Bayou's premises. At that time the boat was still disassembled and Robert detected an "extremely strong odor of gasoline" through the drain hole which ran from the bilge of the boat. Robert then informed Bayou that he refused to take the boat without it being certified for safety. The boat remained in Bayou's possession, in its disassembled condition until April 6, 1984, when AMF's expert finally certified that the boat was safe and free from any explosive fuel or vapors. Robert agreed to accept the boat in June, 1984. Bayou replaced the fuel sending unit in the boat and then reassembled and returned the boat to Robert in August, 1984. Bayou's cost for these repairs was $769.50.
After receiving the boat, Robert experienced problems with the motor tilt trim control and other minor problems, which he had repaired at a local dealership at a cost of $345.39. Robert then discovered that the motors had been improperly installed on the boat by Bayou. Robert had a local dealer cut the transom of the boat and rehang the two motors at the proper height at a cost of $200.00. Shortly thereafter, Robert found a bent wheel on the trailer sold to him by Bayou and discovered that the trailer was the wrong size for the boat. He traded in the trailer he had purchased from Bayou and purchased a new one from a local dealership losing $600.00 in the trade in of the trailer.
Robert filed suit in redhibition against Bayou and AMF on October 27, 1982. Bayou then filed a third party demand against AMF for indemnification, or in the alternative, contribution and for specified damages and attorney's fees. At trial on the merits, the action was converted by Robert into a suit for reduction in the purchase price, related damages, and attorney's fees.
After trial on the merits the trial court originally held both Bayou and AMF equally liable for Robert's damages and assessed damages in the amount of $30,577.92, which consisted of $4,066.00 for lost interest, $658.00 for insurance payments, $5,000.00 for inconvenience, mental anguish, loss of use, etc., $345.39 for repairs, $600.00 for trailer depreciation, $2,965.00 for boat depreciation, $4,266.00 for engine depreciation, and $12,677.52 for attorney's *545 fees. Judgment was rendered in favor of Robert and against AMF for $120.00 for lost gas. Judgment was awarded in favor of Bayou on its third party demand and against AMF for repairs of $769.50, and for attorney's fees of $6,744.40. The costs of the proceedings were taxed equally to Bayou and AMF. After a hearing on a motion for a new trial filed by Bayou, the court amended its judgment and assessed all damages, costs, and attorney's fees solely against AMF. The court then granted judgment in favor of Bayou on its third party demand against AMF for attorney's fees of $13,488.80, and for the cost of repairs of $769.50, together with legal interest. All court costs of the proceedings were taxed to AMF.
AMF suspensively appealed from the judgment, with the amount of the appeal bond fixed and ordered posted as required by law. We note that the record does not show that a suspensive appeal bond was ever posted. The jurisprudence requires that although an appeal may be dismissed as suspensive, it must be considered as devolutive, if the appeal was taken within the delays for taking a devolutive appeal. Ward-Steinman v. Karst, 446 So. 2d 999 (La.App. 3 Cir.1984), aff'd, 465 So. 2d 227 (La.App. 3 Cir.1985); Estate of Boudreaux v. Verdin, 425 So. 2d 873 (La. App. 1 Cir.1982); Aucoin v. Williams, 291 So. 2d 504 (La.App. 3 Cir.1974), rev'd on other grounds, 295 So. 2d 868 (La.App. 3 Cir.1974). This appeal was timely taken within the delays for applying for a devolutive appeal. For this reason we maintain this appeal as a devolutive appeal.
AMF appeals asserting that the trial court erred:
(1) In finding that a defect existed in the boat;
(2) In not applying the recognized legal standards for a diminution in price;
(3) In allowing Bayou indemnification from the manufacturer; and
(4) In awarding damages for mental anguish and inconvenience.
Robert and Bayou both answered the appeal, requesting additional attorney's fees.
ASSIGNMENT OF ERROR NUMBER 1
AMF first asserts that the trial court erred in finding that a defect existed in the boat. Under the provisions of LSA-C.C. Articles 2530 and 2541, a purchaser may maintain an action for a reduction in price or quanti minoris by proving that a defect existed in the thing sold, at the time of the sale, which diminished the value of the thing and it is not necessary that the purchaser prove the cause of the redhibitory vice or defect in the thing. Broussard v. Breaux, 412 So. 2d 176 (La.App. 3 Cir. 1982), writ den., 416 So. 2d 115 (La.1982). Such an action is proper when the thing sold is so defective that it is useless and altogether unsuitable for its intended purpose or when the defect is such as to diminish its value. Harris v. Automatic Enterprises of Louisiana, Inc., 145 So. 2d 335 (La.App. 4 Cir. 1962).
Robert contends that the evidence is absolutely uncontroverted that the fuel sending unit affixed to the top of the inboard gasoline tank was improperly attached, which allowed gasoline to flow from the fuel tank compartment or well into the interior of the boat. Both AMF and Bayou admit that the screws on the sending unit were loose, but claim that the exact cause of the problem was never determined.
The testimony of the parties and experts corroborates the fact that it was improper for such a great amount of gasoline to have escaped into the interior hull of the boat from the bottom of the compartment or well under the fuel tank and then to the bilge of the boat. An expert for AMF also testified that there should not have been a leak of fuel outside of the fuel cell, without overfilling the inboard fuel tank, as the fuel sending unit was on top of the inboard fuel tank. He also stated that the inboard fuel tank should not have become overfilled, since the handle of a gasoline pump should have released itself when the tank of the boat was topped off.
Although the exact cause of the accumulation of gasoline into the bilge inside of the boat was not determined, the evidence *546 is uncontroverted that the boat failed to perform in the intended matter under conditions of normal use. If the plaintiff proves that the product purchased is not reasonably fit for its intended use it is sufficient, and the object is thus defective, without plaintiff being required to prove the exact or underlying cause for the product's malfunction. Gamble v. Bill Lowrey Chevrolet, Inc., 410 So. 2d 1155 (La.App. 3 Cir. 1981); Rey v. Cuccia, 298 So. 2d 840 (La.1974).
While it is well settled that a plaintiff need not prove the underlying cause of the defect, it is incumbent that a plaintiff does prove the existence of a defect at the time of the sale. Commercial Union Ins. v. Ryland, 457 So. 2d 255 (La.App. 3 Cir.1984). The jurisprudence has provided that in the absence of other explanations, a defect appearing soon after the thing is put into use may be inferred to have preexisted the sale, when such defect does not usually result from ordinary use. Rey v. Cuccia, supra; Griffin v. Coleman Oldsmobile, 424 So. 2d 1116 (La.App. 1 Cir.1982); Perrin v. Read Imports, Inc., 359 So. 2d 738 (La.App. 4 Cir.1978).
In this case, the sale of the boat was completed on August 10, 1982 and the boat delivered to Robert. Robert took the boat on a short excursion four days later where everything appeared normal. On August 19, 1982, which was only nine days after the sale, Robert experienced major problems when he attempted to fill the boat's inboard fuel tank with gasoline, which is certainly an ordinary use of the boat. Since the defect appeared soon after the boat was put into ordinary use, the defect may be inferred to have pre-existed the sale.
In his oral reasons for judgment, the trial judge found that the boat was defective since it was not fit for the purpose intended. The trial court's determination of the existence of a redhibitory vice is a question of fact that should not be disturbed in the absence of manifest error. Boyd v. Chrysler Corp., 487 So. 2d 768 (La.App. 3 Cir.1986); Ball v. Ford Motor Co., 407 So. 2d 777 (La.App. 1 Cir.1981).
We do not find the trial court was manifestly in error in finding the boat defective.
ASSIGNMENT OF ERROR NUMBER 2
In its second assignment of error AMF contends that the trial court did not apply the proper legal standards for a reduction in the purchase price, which is the difference between the sale price and the price a reasonable buyer and seller would have agreed upon if they had known of the defects. AMF further asserts that one of the principal elements in formulating reduction of price is the cost of repairs, citing Griffin v. Coleman Oldsmobile, supra; Ball v. Ford Motor Co., supra; and Capitol City Leasing Corp. v. Hill, 404 So. 2d 935 (La.1981).
The cost of repairs, however, is not necessarily the sole measure of the diminution in value resulting from defects. When the repair of the defects are lengthy, a greater reduction is warranted, because a forewarned buyer would not reasonably pay the full price if he knew that repair of the defects would significantly curtail his use and cause him considerable inconvenience and aggravation. Menville v. Stephens Chevrolet, Inc., 300 So. 2d 858 (La. App. 4 Cir.1974), writ den., 303 So. 2d 186 (La.1974).
AMF contends that although the trial judge recognized that the action was in quanti minoris, he based his judgment on damages that would be appropriate in a redhibition action. It is well established that the action for reduction of price is subject to the same rules and to the same limitations as the redhibitory action. LSA-C.C. Art. 2544; Gonzales v. Schultis, 427 So. 2d 669 (La.App. 4 Cir.1983); Borne v. Mike Persia Chevrolet Co., Inc., 396 So. 2d 326 (La.App. 4 Cir.1981), writ den., 401 So. 2d 976 (La.1981).
The trial court has reasonable discretion to assess the amount of recovery in quanti minoris based on the facts and circumstances of the case. LeMoine v. Hebert, 395 So. 2d 353 (La.App. 1 Cir.1980). In estimating the amount of reduction in the purchase price, the trial judge may *547 appropriately consider not only the cost of repairs, but also the numerous problems, the frequent inconvenience, loss of use, depreciation, and the overall poor performance in relation to that expected. Lehn v. Clearview Dodge Sales, Inc., 400 So. 2d 317 (La.App. 4 Cir.1981), writ den., 406 So. 2d 608 (La.1981); Bendana v. Mossy Motors, Inc., 347 So. 2d 946 (La.App. 4 Cir.1977).
In this case the trial judge emphasized that Robert was greatly inconvenienced by the fact that he was deprived of the use of his boat for almost two years. He also assessed the depreciation of the boat, engines and trailer during this period of time. The function of the appellate court is to determine whether the trial judge's estimate of damages is reasonable. Bendana v. Mossy Motors, Inc., supra.
We find no merit in the assignment of error that the trial judge did not consider the proper standards in diminishing the sales price. The trial judge considered the appropriate factors in assessing the amount of recovery in quanti minoris. In reviewing the evidence in the record, we do not find that the trial judge's estimate of damages was unreasonable or manifestly in error.
ASSIGNMENT OF ERROR NUMBER 3
In its third assignment of error, AMF contends that the trial court erred in allowing indemnification to Bayou on its third party demand seeking indemnification. LSA-C.C. Articles 2531 and 2545 provide the seller with a redhibition cause of action in the nature of indemnity against the manufacturer. Austin v. North American Forest, 656 F.2d 1076 (5th Cir.1981).
In any case in which the seller is held liable because of redhibitory defects in the thing sold, the seller has a corresponding and similar right of action against the manufacturer for any losses sustained by the seller. LSA-C.C. Art. 2531; LaFrance v. Abraham Lincoln Mercury, Inc., 462 So. 2d 1291 (La.App. 5 Cir.1985); Cox v. Lanier Business Products, Inc., 423 So. 2d 690 (La.App. 1 Cir.1982), writ den., 429 So. 2d 129 (La.1983). If the redhibitory vice is caused solely by the manufacturer, then indemnity is due the seller, however, the manufacturer and seller can be held liable in solido if the seller is also negligent when there is a defect. See LaFrance supra at 1294; Lehn v. Clearview Dodge Sales, Inc., 400 So. 2d 317 (La.App. 4 Cir.1981), and cases cited therein. Clearly, the jurisprudence has stated a negligent seller cannot escape the repercussions of its own negligent conduct simply by the existence of a defect in the thing sold. Perrin v. Read Imports, Inc., 359 So. 2d 738 (La.App. 4 Cir.1978); Landry v. Nobility Homes, Inc., 488 So. 2d 726 (La.App. 3 Cir.1986); LaFrance, supra. If dilatory tactics or negligent repairs aggravates the defect or creates more damage, then the seller can be held liable. Lehn, supra; Lokey v. Dixie Buick, Inc., 400 So. 2d 322 (La.App. 4 Cir.1981). As the seller and the manufacturer can be held liable in solido each may seek contribution from the co-obligor of his virile share. See LSA-C.C. art. 1804; Lokey, supra.
AMF contends that while a seller is normally entitled to recover his losses in a redhibition action from the manufacturer, indemnification is denied to the seller when the loss is caused by the seller's fault such as failure to remedy easily repairable defects, the seller's dilatory actions, or the seller's tardiness in repairing the vice in the thing sold, or when the seller's negligence is a substantial factor in aggravating or maintaining the defects, citing Wheeler v. Clearview Dodge Sales, 462 So. 2d 1298 (La.App. 5 Cir.1985); Fernandez v. Clearview Dodge Sales, Inc., 437 So. 2d 1188 (La.App. 5 Cir.1983); Perrin v. Read Imports, Inc., supra; Lehn, supra; LaFrance, supra; Landry, supra; and Lokey, supra.
AMF's own expert testified that there were a number of explanations as to how gas could have escaped into the interior of the hull. The trial court found that there had not been a definite showing that Bayou was at fault in not timely completing the repairs. Bayou was not negligent in discovering and correcting the problem with the fuel sending unit and washing *548 out the boat. Bayou's representative only told Robert what AMF's representative had told it, that the foam in the boat might have to be ripped out and replaced because of the fuel leak. Robert called AMF to determine if Bayou was capable of performing such repair work and only then found out that AMF would not treat the boat as a new boat under warranty, but was taking the position that it would only warrant the boat as to structural hull defects. The delay in Robert accepting the boat after repair of the fuel sending unit was his fear of the danger that might have been created by the leak of gas into the boat if he operated the boat. After reviewing the evidence we do not find that the trial judge was clearly in error in finding AMF, as the manufacturer of the boat, liable for the subsequent damages caused by the delay in the return of the boat to Robert. In the absence of such a showing, Bayou as the seller, is entitled to reimbursement from the manufacturer, AMF, for any losses sustained by it. Ball v. Ford Motor Co., supra.
AMF also contends that it should not be liable for the damages assessed for depreciation on the trailer and the two engines, as well as the repair work associated with the engines, since Bayou as the seller of the equipment should be solely responsible for the damages resulting to this equipment. It is not disputed that AMF sold only the boat to Bayou. After the boat arrived at the dealership, the boat's transom was adjusted by Bayou to fit two engines which were supplied and installed by Bayou. Bayou also supplied the trailer for the boat.
After the boat was reassembled and repaired by Bayou, after being certified as safe and Robert had agreed to accept it, and it was returned to Robert, he experienced several problems which were unrelated to the initial repairs arising from the defective fuel sending unit. Robert had a problem with one of the engine's power trim tilt control pumps and rotten fuel lines, which were repaired by a local area dealership at a cost of $345.39. When Robert experienced additional problems with the engines, it was discovered that the transom had been cut too high by Bayou and had to be cut down and restructured and the engines rehung at a cost of $200.00. Shortly thereafter, Robert found a bent wheel on the trailer and was told that the trailer that Bayou had supplied was undersized for the boat. Robert traded in the trailer for $1,000.00 and purchased a new one.
AMF also asserts that since it did not manufacture, warrant, sell, or install the engines or trailer supplied by Bayou, it should not be held liable for any depreciation or attorney's fees incurred in relation to this equipment. AMF only sold the hull of the boat to Bayou for $8,000.00. Prior to the sale to Robert, Bayou modified the boat's transom, and attached two engines, provided appropriate tackle, and supplied a trailer which was all then sold to Robert.
Since Bayou supplied and sold the trailer and the two engines of the boat, AMF should not be assessed for the damages associated with that equipment. Bell v. Fiat Distributors, Inc., 357 So. 2d 607 (La.App. 1 Cir.1978). The amounts of $345.39 for repairs to the motor trim tilt control pump and $4,266.00 for depreciation on the engines are hereby deleted from the judgment against AMF. The amount of $600.00 for depreciation on the wrong size trailer, which is the difference in the original price of $1,600.00 and the $1,000.00 trade-in, is also hereby deleted from the judgment against AMF. The judgment in favor of Bayou and against AMF is thus modified accordingly. Since Robert has not appealed the judgment finding Bayou not liable we cannot assess these damages on appeal against Bayou. The trial judge awarded Bayou $13,488.80 for its attorney's fees and $769.50 for repairs to the fuel sending unit and reassembly of the boat on its third party demand against AMF. We find that the evidence supports these awards and that the trial judge was not manifestly in error or clearly wrong in making these awards. Since Bayou supplied the two engines and trailer, it should be held liable for the repairs and depreciation to these items. Therefore, we hereby reduce the judgment awarded in favor of Robert and against AMF by $5,211.39, being *549 the sums of $4,266.00 for depreciation to the engines, $600.00 for depreciation to the trailer, and $345.39 for motor trim pump repairs and other repairs.
ASSIGNMENT OF ERROR NUMBER 4
In its final assignment of error, AMF contends that the trial court erred in awarding damages for mental anguish and inconvenience. The trial judge awarded $5,000.00 to Robert for "frustration, inconvenience, mental anguish, loss of use, etc." AMF argues that this was error because Robert made no showing that the fishing boat was for intellectual enjoyment, citing Meador v. Toyota of Jefferson, Inc., 332 So. 2d 433 (La. 1976), and subsequent cases.
In Meador, supra, the Supreme Court held that nonpecuniary damages are not recoverable where the object of a contract is physical gratification or anything other than intellectual gratification. The Supreme Court has recently stated that the rule today is that nonpecuniary loss may not be recovered in a simple breach of contract case unless the contract is intended to gratify a nonpecuniary interest. Lafleur v. John Deere Co., 478 So. 2d 1390 (La.App. 3 Cir.1985), writ granted, 481 So. 2d 1326 (La.1986), aff'd, amended and rendered, 491 So. 2d 624 (La.1986). Since this case arose in 1982, before LSA-C.C. Art. 1934(3) was replaced by LSA-C.C. Art. 1998 in 1984, the law to be applied is that "nonpecuniary damages are not allowed in a simple breach of contract case unless the contract has for its object the gratification of some intellectual enjoyment." Lafleur, supra, at page 630.
At trial, Robert testified that fishing was his only hobby and that during the season he fished as often as three to four times a week. He also stated that the purchase of the Robalo fishing boat had been a fantasy of his. During the period in which he was without the boat, Robert testified that he became so anxious and frustrated that he eventually consulted a psychologist, Dr. Ken Bouillion. Dr. Bouillion confirmed that Robert had suffered a great deal of frustration and anxiety through his problems with the boat. He also testified that fishing and boating was Robert's primary recreational outlet, and that it was important for a professional like Robert, who was a dentist, to have an outlet in which to release his stress.
The trial judge awarded $5,000.00 in damages for "frustration, desparation [sic], anger ... for not being able to fish for two seasons, between eight and ten months, including the one consultation with Dr. Bouillion ..." The judge found that the damages were sustained during the two years, prior to certification of the safety of the boat, in which Robert was deprived of the use of his boat and related equipment.
Meador established the rule that where the principle or exclusive object of a contract is intellectual enjoyment, nonpecuniary damages are recoverable as well as damages for mental distress, aggravation, and inconvenience resulting from such loss, or denial of intellectual enjoyment. Applying this principle of law to the present case, we do not find that the trial judge was manifestly in error in concluding that Robert is entitled to recover damages for mental anguish and inconvenience as the evidence shows that the boat was purchased exclusively for recreational purposes which had as its principal object the intellectual enjoyment of Robert, notwithstanding that the peripheral, or incidental, or perhaps even concurrent object of the boat purchase might be the physical gratification of Robert. See Guillory v. Jim Tatman's Mobile Homes, Inc., 490 So. 2d 1185 (La. App. 3 Cir.1986); Guitreau v. Juneau, 479 So. 2d 431 (La.App. 1 Cir.1985); B & B Cut Stone, Inc. v. Resneck, 465 So. 2d 851 (La. App. 2 Cir.1985); McManus v. Galaxy Carpet Mills, Inc., 433 So. 2d 854 (La.App. 3 Cir.1983); Whitener v. Clark, 356 So. 2d 1094 (La.App. 2 Cir.1978), writ den., 358 So. 2d 638, 641 (La.1978); Ducote v. Arnold, 416 So. 2d 180 (La.App. 4 Cir.1982), writ den., 421 So. 2d 238 (La.1982).
AMF is liable for the damages incurred by the two-year delay in repairs since it could have easily had the boat certified as safe and saved the expenses of the suit. AMF's position that it should not have been required to have the boat certified *550 safe from the possible danger caused by the leak is even more untenable in view of the dispute about whether or not it had told Bayou the foam in the boat had to be replaced when they knew this was what Robert had been told. Since the delay in repairs was attributable solely to the fault of AMF, we find that the trial court was not manifestly in error in assessing damages for mental anguish solely against AMF.
ATTORNEY'S FEES
Bayou and Robert also requested an increase in the award for attorney's fees for work in answering the appeal taken by AMF. Attorney's fees are awardable in a redhibition action when the trial court orders a reduction in price rather than a rescission of the sale. Ball, supra. Attorney's fees are allowable to the plaintiff under LSA-C.C. Art. 2545 and may be fixed by an appellate court. Albritton v. McDonald, 363 So. 2d 925 (La.App. 2 Cir. 1978); Boudreaux v. Mazda Motors of America, Inc., 347 So. 2d 504 (La.App. 4 Cir.1977), writ den., 350 So. 2d 1223 (La. 1977). We therefore find that Robert is entitled to an increase in attorney's fees for this appeal.
Ordinarily, the seller would also be entitled to an increase for additional attorney's fees on appeal. John Deere Indus v. Willett Timber Co., 380 So. 2d 182 (La.App. 3 Cir.1980), writ den., 381 So. 2d 1234 (La. 1980). In this case, however, Bayou is not entitled to an increase of attorney's fees on appeal since it has been held solely liable for some of the damages claimed by Robert. For this reason Bayou is therefore not entitled to indemnification by AMF for any additional attorney's fees on appeal.
For the foregoing reasons, we grant Robert's request for additional attorney's fees on appeal and set them in the sum of $1,000.00 and render judgment for this sum against AMF. We deny Bayou's request for an increase in its attorney's fees on appeal.
JUDGMENT
For the foregoing reasons, the judgment of the trial court in favor of Robert assessing all damages, interest, costs, and attorney's fees against AMF is amended and reduced by the sum of $5,211.39, which is the sum of $343.39 for repairs to the engines, $4,266.00 for depreciation of the engines, and $600.00 for depreciation on the trailer. It is further ordered that the award of attorney's fees for the cost of this appeal in favor of Robert be increased by $1,000.00 and assessed against AMF. All costs of this appeal are taxed one-half (½) to the defendant-appellant, AMF, Inc., and one-half (½) to the defendant-appellee, Bayou Bernard Marine, Inc.
AMENDED AND RENDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1922466/ | 254 B.R. 834 (2000)
In re GI NAM.
No. 00-347.
United States District Court, E.D. Pennsylvania.
November 3, 2000.
*835 MEMORANDUM
DALZELL, District Judge.
This bankruptcy appeal raises a close question our Court of Appeals has not yet addressed, namely, whether a bail bond surety's debt to the Commonwealth of Pennsylvania arising from the defendant's failure to appear is dischargeable in the surety's Chapter 7 bankruptcy. This question, which implicates uncommonly interesting policy issues, has a personal pungency *836 here, as the surety is the father of the defendant-son.
I. Background
A. Facts[1]
Gi Nam's son, David Nam, was charged on September 22, 1997 with various offenses, including murder, robbery, and burglary following the shooting death of Anthony Schroeder during a robbery on March 5, 1997. Bail was set at $1,000,000, and by a Certification of Bail and Discharge dated January 12, 1998, Gi Nam agreed to serve as a surety for the bail,[2]see Compl. Ex. A. The operative portion of the Certification of Bail and Discharge reads: "WE THE UNDERSIGNED, defendant and surety, our successors, heirs and assigns, are jointly and severally bound to pay the Commonwealth of Pennsylvania in the sum of ONE MILLION dollars ($1,000,000). WE are bound by the CONDITIONS of this bond as shown on both sides of this form."
The Certification contained the signatures of David Nam and Gi Nam, and includes the surety's acknowledgment that he is "legally responsible for the full amount of the bail." The Certification also includes a number of conditions of the bond, including that the defendant appear before the courts as directed, submit to all court orders, commit no criminal act, and comply with any conditions of release. The Certification requires that "[t]he DEFENDANT and the SURETY must give written [notice] to the issuing authority . . . of any change in his address within forty-eight hours of the date of his address change." The Certification contains a confession of judgment provision, and further states, "If defendant performs the conditions as set forth herein, then this bond is to be void, otherwise the same shall remain in full force and this bond in the full sum thereof shall be forfeited."
On March 12, 1998, David Nam failed to appear for a pre-trial status listing in the criminal case, and thereafter, on April 6, 1998, a Judgment was entered in the Court of Common Pleas of Philadelphia County, Criminal Section, against Gi Nam in the amount of $1,000,018.50[3] as a result of David Nam's failure to appear.[4] The notice of entry of judgment, see Compl. Ex. B, stated that the judgment was entered against Gi Nam and that it was entered in the case of "Commonwealth of Pennsylvania vs David H. Nam". The notice stated, "You may reduce your financial responsibility by producing the defendant forthwith and filing a petition with the Clerk of Quarter Sessions to vacate, in total or in part, the judgement [sic] against you," *837 and was signed by "Alex Bonavitacola, President Judge, Court of Common Pleas of Philadelphia." David Nam evidently remains a fugitive.
B. Procedural History
The Debtor, Gi Yeong Nam, petitioned for bankruptcy under Chapter 7 of the Bankruptcy Code on May 19, 1999. On August 27, 1999, the City of Philadelphia filed its Complaint in Adversary No. 99-815, alleging that Gi Nam had listed the bail bond judgment as an "unsecured nonpriority claim" in the schedules he had filed in the bankruptcy case, and that this debt was in fact not dischargeable pursuant to 11 U.S.C. § 523(a)(7). The Debtor subsequently filed a motion to dismiss the Complaint on September 22, 1999, pursuant to Fed.R.Civ.P. 12(b)(6), maintaining that the bail bond debt was dischargeable. After briefing, Bankruptcy Judge Sigmund held a hearing on the motion on October 25, 1999 and by a Memorandum Opinion and Order dated December 8, 1999 she granted the Debtor's motion. This appeal followed[5].
C. The Bankruptcy Court's Opinion
Before moving forward with our discussion, we pause to review the findings the court below reached, see In re Gi Yeong Nam, 255 B.R. 149 (Bankr.E.D.Pa.1999).
The Bankruptcy Court first addressed the scope of the exceptions to dischargeability provided by § 523(a)(7), and as an initial matter concluded that it was unclear that the term "forfeiture" used in the statute necessarily applied to the circumstances of Debtor's obligation to the Commonwealth, see In re Gi Yeong Nam, 255 B.R. at 152. Judge Sigmund then reviewed the cases Debtor cited to the effect that a debt owed to the government by a surety on a forfeited bail bond is not within the scope of the § 523(a)(7) exception. After reviewing the reasoning of these cases, Judge Sigmund rejected the City's claim that it could be distinguished from the facts of this case on the ground that the Debtor's cited cases involved civil judgments, while this case, the City maintained, involved a criminal judgment, see In re Gi Yeong Nam, 255 B.R. at 156.
The Bankruptcy Court then examined the City's authority for the proposition that a surety's bail bond debts are nondischargeable pursuant to § 523(a)(7), and concluded that most[6] of these cases relied, in reaching that decision, on those courts' concerns for the integrity of the bail bond system, which might suffer if bail bond debts were dischargeable, see In re Gi Yeong Nam, 255 B.R. at 157. Judge Sigmund concluded that "there is merit to the view that the integrity of the bail bond system may be jeopardized if individuals who are not professional bondsmen but agree to act as sureties on bail bonds are permitted to avoid their obligations on the bonds by filing for Chapter 7 bankruptcy," In re Gi Yeong Nam, 255 B.R. at 159. Judge Sigmund then proceeded to examine the historical precursors to § 523(a)(7) and its legislative history, and concluded that Congress only intended the exception provided in § 523(a)(7) to go to obligations that were penal in nature that is, that were imposed on the debtor as punishment *838 for the debtor's wrongdoing, see In re Gi Yeong Nam, 255 B.R. at 161.
Having so found, the Bankruptcy Court then examined Pennsylvania law and concluded that the obligation of a bail bond surety is civil, and not penal, in nature, and that therefore Gi Nam's debt resulting from his suretyship on the bail bond was dischargeable, see In re Gi Yeong Nam, 255 B.R. at 161.
II. Issues on Appeal
As the City notes,[7] the issues on appeal are as follows:
1. Whether the lower court erred as a matter of law in finding that the criminal bail surety judgment entered against Mr. Nam is not a non-dischargeable find, penalty or forfeiture pursuant to 11 U.S.C. § 523(a)(7) including, but not limited to:
a. Whether the lower court erred as a matter of law in looking beyond 11 U.S.C. § 523(a)(7)'s express statutory language;
b. Whether the lower court's finding that criminal bail surety judgments are incapable of being precluded from discharge as "fines, penalties or forfeitures" under 11 U.S.C. § 523(a)(7) is contrary to and undermining of the Commonwealth of Pennsylvania's and Philadelphia County's bail surety process; and
c. Whether, in light of the factual distinction between private bail bondsmen and "bail surety municipalities", the lower court erred as a matter of law in finding that the criminal bail surety judgment entered against Mr. Nam is not a fine, penalty or forfeiture payable under 11 U.S.C. § 523(a)(7).
2. Whether the lower court erred in finding that despite the Complaint's allegations, attachments, and all reasonable inferences that can be drawn therefrom, and even when viewed in a light most favorable to the City of Philadelphia the City of Philadelphia was unable to prove any set of facts supporting its claim that the criminal bail surety judgment entered against Mr. Nam is a non-dischargeable "fine, penalty or forfeiture" under 11 U.S.C. § 523(a)(7) and entitling the City of Philadelphia to the relief of non dischargeability.[8]
III. Appellate Jurisdiction and the Standard of Review
A. Appellate Jurisdiction
We have jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a).
B. Standard of Review
Generally, in reviewing a bankruptcy court's decisions, we review its legal determinations de novo, its factual findings for clear error, and its exercise of discretion for abuse thereof, see In re Trans World Airlines, Inc., 145 F.3d 124, 131 (3d Cir.1998). Here, as we consider an appeal from the Bankruptcy Court's legal determination dismissing the City's Complaint pursuant to Fed.R.Civ.P. 12(b)(6), our review is de novo.
IV. Analysis[9]
Our analysis here comes down to three issues: (1) the scope of the exception to *839 discharge delineated by 11 U.S.C. § 523(a)(7), (2) the character of the debt owed to the Commonwealth by Gi Nam, and (3) whether that debt consequently falls within § 523(a)(7).
A. Construction of 11 U.S.C. § 523(a)(7)
11 U.S.C. § 523 states, in pertinent part:
(a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt -
. . . .
(7) to the extent such debt is for a[1] fine, penalty, or forfeiture [2] payable to and for the benefit of a governmental unit, and [3] is not compensation for actual pecuniary loss
. . . .
"To determine whether [a debt] is dischargeable under § 523(a)(7), we must determine whether [the] debt meets the three requirements of the section." In re Rashid, 210 F.3d 201, 206 (3d Cir.2000). For the purposes of this appeal, there is no dispute between the parties that Gi Nam's debt as alleged is payable and for the benefit of a governmental unit, either or both of the Commonwealth of Pennsylvania and the City of Philadelphia, nor is there any dispute that the $1,000,000[10] bail bond debt, as alleged, is not compensation for any pecuniary loss by those governmental units or anyone else[11].
Thus, we need only concern ourselves with the scope of the statute's "fine, penalty, or forfeiture" language. The City argues that since Gi Nam's bail bond debt is in fact a "forfeiture" of the bond amount resulting from his son's failure to appear, the debt falls within the plain language of the statute. The Debtor, conversely, argues that the statute only creates an exception for penal debts, into which category Nam's obligation does not fall.
We first note that both the Supreme Court and the only Court of Appeals to address the question of the dischargeability under § 523(a)(7) of a surety's bail bond debt have found that § 523(a)(7) applies to penal sanctions. In considering this provision in Kelly v. Robinson, 479 U.S. 36, 107 S. Ct. 353, 93 L. Ed. 2d 216 (1986), the Supreme Court found that "[o]n its face, [§ 523(a)(7)] creates a broad exception for all penal sanctions, whether they be denominated fines, penalties, or forfeitures," Kelly, 479 U.S. at 51, 107 S. Ct. at 362[12].
*840 Similarly, the Fourth Circuit, considering an issue identical to that we face here[13] , found that "[t]he nondischargeable `fine, penalty, or forfeiture' under § 523(a)(7) is an obligation that is essentially penal in nature," In re Collins, 173 F.3d 924, 931 (4th Cir.1999). In Collins, the debtor (Collins) was a professional bail bondsman in Norfolk, Virginia who had failed to pay off the bonds of several defendants who had skipped their court appearances. Collins declared bankruptcy under Chapter 7, and ultimately sought a determination that the debts owed on these bonds were dischargeable in the bankruptcy. The panel found, as quoted above, that the language of § 523(a)(7) showed that the exception it delineates is for penal sanctions. In reaching this conclusion, the panel relied upon the Supreme Court's construction in Kelly, noting that Kelly had distinguished obligations arising from "contractual, statutory, or common law dut[ies]", which are not covered by the exception, from those "rooted in the traditional responsibility of a state to protect its citizens by enforcing its criminal statutes and to rehabilitate an offender by imposing a criminal sanction intended for that purpose." In re Collins, 173 F.3d at 931 (quoting Kelly, 479 U.S. at 52, 107 S. Ct. at 362). The Collins panel went on to note that this treatment was consistent with prior decisions in the Fourth Circuit that had held that court costs assessed against a criminal defendant were not dischargeable under § 523(a)(7) because such a debt operated in conjunction with the penal and sentencing goals of the criminal justice system, see In re Collins, 173 F.3d at 931-32 (discussing Thompson v. Com., 16 F.3d 576 (4th Cir.1994)).
Our own analysis of the language of the § 523(a)(7) supports Collins, and we hold that the exception to discharge in § 523(a)(7) applies only to penal sanctions that result from the debtor's wrongdoing. *841 In examining the use of "forfeiture,"[14] we begin with that word's definition. Forfeiture is
[a] comprehensive term which means a divestiture of specific property without compensation; it imposes a loss by the taking away of some preexisting valid right without compensation. A deprivation or destruction of a right in consequence of the nonperformance of some obligation or condition. Loss of some right or property as a penalty for some illegal act. Loss of property or money because of breach of a legal obligation. . . .
Black's Law Dictionary 650 (6th ed.1990) (citations omitted). As is clear from this definition, "forfeiture" is an extremely broad term, embracing both deprivations of rights resulting from a party's wrongdoing, as in "a penalty for some illegal act", as well as those deprivations not associated with wrongdoing as such.
We therefore must interpret the meaning of "forfeiture" in this context by reference to the terms that accompany it.[15] "Under the principle of ejusdem generis, when a general term follows a specific one, the general term should be understood as a reference to subjects akin to the one with specific enumeration," Norfolk & Western Rwy. Co. v. American Train Dispatchers Ass'n, 499 U.S. 117, 129, 111 S. Ct. 1156, 1163, 113 L. Ed. 2d 95 (1991). "Similarly, the canon of construction noscitur a sociis instructs that a provision should not be viewed in isolation but in light of the words that accompany it and give [it] meaning." Folger Adam Sec., Inc. v. DeMatteis/MacGregor JV, 209 F.3d 252, 258 (3d Cir.2000) (internal quotation marks omitted). With respect to this latter canon, the Supreme Court has stated that "The maxim noscitur a sociis, that a word is known by the company it keeps, while not an inescapable rule, is often wisely applied where a word is capable of many meanings in order to avoid the giving of unintended breadth to Acts of Congress," Folger Adam Sec., 209 F.3d at 258 (quoting Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307, 81 S. Ct. 1579, 1582, 6 L. Ed. 2d 859 (1961)). Further, our statutory interpretation is also guided by the "familiar principle[] that words grouped in a list should be given related meaning," Massachusetts v. Morash, 490 U.S. 107, 114-15, 109 S. Ct. 1668, 1673, 104 L. Ed. 2d 98 (1989) (internal quotation marks omitted).
Applying these canons of construction, we observe that the generality of forfeiture's dictionary definition stands in contrast to the other terms used in the statute, since "penalties" and, especially, "fines," both refer exclusively to a punishment levied for an actor's wrongdoing.
A penalty is "[an] elastic term with many different shades of meaning; it involves idea of punishment, corporeal or pecuniary, or civil or criminal, although its meaning is generally confined to pecuniary punishment." Black's Law Dictionary 1133 (6th ed.1990).[16] While this definition *842 by its own terms is also quite broad, it illustrates that the central concept surrounding a penalty is that of punishment. Similarly, the applicable definition from the Oxford English Dictionary states that a penalty is "[a] punishment imposed for breach of law, rule, or contract; a loss, disability, or disadvantage of some kind, either ordained by law to be inflicted for some offence or agreed upon to be undergone in case of violation of a contract," XI Oxford English Dictionary 461 def. 2a (2d ed.1989). Again, the theme of punishment for wrongdoing pervades the definition.
With respect to fine, Black's defines this word only as a verb, to mean "[t]o impose a pecuniary punishment or mulct. To sentence a person convicted of an offense to pay a penalty in money." Black's Law Dictionary 632 (6th ed.1990). The Oxford English Dictionary defines[17]fine as "[a] certain sum of money imposed as the penalty for an offence" V Oxford English Dictionary 926 def. 7c. Here, the use of "fine" in § 523(a)(7) can only be an unambiguous reference to a penal measure.
We therefore find that § 523(a)(7) includes in series two terms, "fine" and "penalty", which clearly refer to penal sanctions and a third, "forfeiture", which refers generally to any loss of a right, whether or not penal. We must conclude that Congress intended that this more general term be construed in a similar light as the two more specific terms, and we therefore conclude that "forfeiture" as used in § 523(a)(7) refers only to a penal sanction resulting from a party's wrongdoing, and not more generally to any loss of a right.
We observe that this interpretation finds support both under the policy behind bankruptcy law in general and under judicial application of § 523(a)(7). The central purpose of the Bankruptcy Code is "to provide a procedure by which certain insolvent debtors can reorder their affairs, make peace with their creditors, and enjoy a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debts," Grogan v. Garner, 498 U.S. 279, 286, 111 S. Ct. 654, 659, 112 L. Ed. 2d 755 (1991) (internal quotation marks omitted). The Bankruptcy Code limits this "fresh start" "opportunity for a completely unencumbered new beginning to the `honest but unfortunate debtor.'" Grogan, 498 U.S. at 286-87, 111 S. Ct. at 659. Thus, the exceptions to dischargeability reflect a Congressional conclusion that in some instances the creditor's interest in full repayment outweighs the debtor's interest in a fresh start, Grogan, 498 U.S. at 287, 111 S. Ct. at 659.[18] Our interpretation of § 523(a)(7) serves this goal by limiting the exception to discharge to those debts resulting from the debtor's own wrongdoing.
*843 We are fortified in our conclusion when we examine how courts have applied § 523(a)(7) to cases outside of debts arising from criminal convictions. Even when courts find that § 523(a)(7) renders nondischargeable a debt that did not arise from an actual criminal conviction, such nondischargeable debts still arise from the debtor's own wrongdoing, see, e.g., In re Edwards, 233 B.R. 461, 477 (Bankr.D.Idaho 1999) (civil penalty resulting from, inter alia, debtor's sale of "gray market" tractors is nondischargeable pursuant to § 523(a)(7)); In re Lee, 222 B.R. 32, 34-35 (Bankr.W.D.N.Y.1998) (contempt award resulting from debtor's failure to abide by stipulation with state agency to settle environmental charges is nondischargeable pursuant to § 523(a)(7)); In re Carlson, 202 B.R. 946, 950-51 (Bankr.N.D.Ill.1996) (costs assessed against debtor by Attorney Registration and Disciplinary Commission as result of disciplinary hearing which led to debtor's temporary suspension from practice are nondischargeable pursuant to § 523(a)(7)); In re Telsey, 144 B.R. 563, 565 (Bankr.S.D.Fla.1992) (disgorgement resulting from debtor's violation of an SEC order is nondischargeable pursuant to § 523(a)(7)); In re Renfrow, 112 B.R. 22, 24 (Bankr.W.D.Ky.1989) (civil penalties arising from debtor's violations of state coal mining regulations nondischargeable pursuant to § 523(a)(7)). Again, our point here is that while courts have held § 523(a)(7) to apply to a variety of debts not resulting strictly from a criminal proceeding, in each case the debt arises from the debtor's own wrongdoing.
We conclude, therefore, that § 523(a)(7)'s exception to discharge is limited to penal sanctions for a debtor's wrongdoing.[19] Having arrived at this in *844 terpretation of § 523(a)(7), we now move to examine the nature of Gi Nam's debt to the Commonwealth.
B. Character of Gi Nam's Debt
Under our interpretation of § 523(a)(7), we must consider whether Gi Nam's debt resulting from his suretyship for his son's bail bond is a penal sanction resulting from Gi Nam's own wrongdoing. The debt cannot fairly be so characterized.
As this is an appeal from a dismissal pursuant to Rule 12(b)(6), we refer in the first instance to the allegations in the City's Complaint. As discussed above, the City alleges that the Debtor agreed to serve as a surety on his son's bail, see Compl. ¶ 8, that both the Debtor and his son signed the document, thereby agreeing to give notice of any change of address for the son, see Compl. ¶ 9, and that a judgment was entered against the Debtor "[a]fter David Nam failed to appear for a pre-trial status listing in the Criminal Proceeding," Compl. ¶ 10.
We first observe that these allegations in the Complaint do not amount to a claim that Gi Nam himself engaged in wrongdoing outside of the requirements of the bond. There is no suggestion, for example, that Gi Nam caused his son's failure to appear and thereby, by his own acts, triggered the judgment. Rather, the allegation is that as a result of his son's failure to appear which is to say an act (if of omission) by the son this debt accrued by the operation of the bail bond. We must therefore look to the nature of the obligations the bond per se created, which the law of the Commonwealth of Pennsylvania defines.
Pa. R.Crim. P. 4016 addresses "Procedures upon violation of conditions [of bail]: revocation of release and forfeiture; bail pieces; exoneration of surety." Under subparagraph (A)(2)(a), entitled "Sanctions", the Rule states that, "When a monetary condition of release has been imposed and the defendant has violated a condition of the bail bond, the bail authority may order the cash or other security forfeited[20] and shall state in writing or on the record the reasons for so doing," Pa. R.Crim. P. 4016(A). Correspondingly, the Philadelphia County Court of Common Pleas, Criminal Division, Rule 510, entitled "Bench Warrant Bail Forfeiture" states in paragraph (A) that "THE SURETY IS UNDER OBLIGATION TO PRODUCE THE DEFENDANT FOR ALL REQUIRED COURT APPEARANCES UNDER PENALTY OF FORFEITURE OF *845 HIS BAIL BOND. NO OTHER NOTICE TO THE SURETY SHALL BE REQUIRED." However, that same rule states that "[i]t shall be the responsibility of the defendant to appear for any scheduled Court action." Philadelphia Cty. C.C.P.Crim. Div. R. 510(A).
These provisions do not show that Gi Nam's bail bond surety debt is a penal sanction resulting from his own wrongdoing under § 523(a)(7).[21] It is abundantly clear from the express language of the bond and from the texts of the rules quoted above that in a case where a bail bond is forfeited because the defendant fails to appear, the wrongdoing is on the part of the missing defendant, not on the part of his surety. The conditions of the bond, in particular, repeatedly outline what it is that the defendant must do, and Pa. R.Crim. P. 4016 states that the bond may be forfeited as a result of the defendant's actions in violation of the conditions of the bond. We can only see two duties of action that the bond might impose for the surety. The first is the bond's requirement that both the defendant and the surety have the obligation to inform the issuing authority of any address change, and the second is the surety's obligation, pursuant to Local Rule 510, to produce the defendant for court appearances.
With respect to this second duty, we find it significant that the surety's obligation to produce the defendant is nowhere explicitly stated in the bond itself;[22] instead, as noted above, the bond itself lists, almost exclusively, duties of the defendant. Moreover, absent some affirmative role by the surety in the defendant's failure to *846 appear,[23] a surety's "violation" of the requirement that he ensure the defendant's presence cannot reasonably be said to constitute "wrongdoing" for the purposes of placing the resultant bond debt within § 523(a)(7).
The reasoning is similar for the surety's obligation to disclose the defendant's change of address. Unless the surety's failure to disclose such a change was associated with an active effort to hide the defendant's location, such an action is not "wrongdoing" sufficient to turn the bail forfeiture into a "penal sanction". Also, we note here that giving notice of a change of address presupposes that the defendant both had a new address and that the surety was aware of it, neither of which were in any way alleged in the Complaint.
We therefore conclude that Gi Nam's liability to the Commonwealth arising from the bail bond was not a penal sanction arising from his own wrongdoing. The wrongdoing here was only the son's, who failed to meet his obligation to appear.[24]
C. Application of § 523(a)(7) to Gi Nam's Debt
We have above concluded that § 523(a)(7) excepts from discharge in Chapter 7 bankruptcy only a "fine, penalty, or forfeiture" that is a penal sanction arising from the debtor's wrongdoing, and we have also concluded that Gi Nam's own debt resulting from the bail bond in this case was not such a penal sanction. Our holding therefore immediately follows: Gi Nam's debt to the Commonwealth does not come under the exception to dischargeability in § 523(a)(7) and therefore is dischargeable in his bankruptcy.
Having reached that decision, we now as a final matter address the argument, which the City forcefully forwards, that such an interpretation of the scope of § 523(a)(7) cannot stand in the face of powerful public policy to the contrary. Interpreting § 523(a)(7) in Kelly v. Robinson, the Supreme Court noted that the language of that provision must "reflect the . . . deep conviction that federal bankruptcy courts should not invalidate the results of state criminal proceedings," Kelly, 479 U.S. at 47, 107 S. Ct. at 360, and that such statutory construction must be performed "in light of the history of bankruptcy court deference to criminal judgments and in light of the interests of the States in unfettered administration of their criminal justice system," Kelly, 479 U.S. at 43-44, 107 S. Ct. at 358.[25] Based on these policy concerns, the City argues with much force that Kelly's real import to this case is to show that the only significant inquiry in *847 determining whether a debt falls under § 523(a)(7) is whether allowing discharge of that debt would interfere with a state criminal prosecution,[26] and that a holding such as ours here constitutes just such an interference.
We will begin with an outline of the concern that the City identifies. The City contends that the purpose of bail is to ensure the defendant's presence at trial, and that where the surety on the bond is a family member the defendant's incentive to appear is linked to the financial harm that will accrue to the surety if the bond is forfeited. Similarly, when a family member is a surety, the financial harm resulting from the forfeiture of the bond is the surety's incentive not to assist the defendant in fleeing the jurisdiction.
Were we to allow a family member surety's bail bond debt to be discharged in bankruptcy, the City argues, we would effectively eliminate these financial incentives on the defendant and the surety and will irreparably harm the bail system. If the defendant and the surety know that the liability for the bond will be erased if the surety enters bankruptcy, the City contends that there is much less reason for the defendant to appear, since his family member surety will be able to deflect the financial harm of forfeiture, and on the same logic there will be much less reason for the family member surety to refrain from assisting the defendant's flight. Thus, so the City's argument goes, an interpretation of § 523(a)(7) that frees family member bail bond sureties from their bond obligations after a petition for bankruptcy would impede the states' ability successfully to prosecute criminal offenders, and would require states to deploy additional scarce law enforcement resources to finding and capturing fugitives. Moreover, the City argues, this eventuality would redound to the disadvantage of defendants, because states would, in this regime, become less willing to grant bail in the first place. With particular reference to this case, the City notes that if Gi Nam is permitted to discharge his debt to the Commonwealth, David Nam will have little incentive to return to the jurisdiction to face the grave charges against him, while such an incentive will remain if Gi Nam is still subject to the debt.[27]
*848 As an initial matter, we acknowledge, as did Judge Sigmund in her opinion, that these concerns have much merit, and we cannot fault the logic in the City's incentive analysis. We cannot, however, let these policy concerns determine the outcome here.
First, and most significantly, we do not think that the interpretive concerns expressed in Kelly go to the issue in this case. It is certainly true that Kelly repeatedly mentions the importance of not interfering with state criminal prosecutions, but in assessing the significance of these pronouncements we must look to the context in which they were made. In Kelly the Court examined whether a payment of "restitution" made as a condition of probation by a woman convicted of the wrongful receipt of welfare benefits fell under the exception to dischargeability of § 523(a)(7). The Supreme Court therefore had to consider whether such a payment, whose designation as "restitution" seemed to put it outside of the plain language of § 523(a)(7), was in fact properly construed to be within that provision, and in analyzing this question the Court focused on the fact that the "restitution" was part of a criminal judgment against the woman and thus furthered the state's interests in rehabilitation and punishment, see Kelly, 479 U.S. at 53, 107 S. Ct. at 362. In light of this analytic process, it is not surprising that the Supreme Court stressed the need to avoid interfering with state criminal proceedings.
More than this, however, the language that Kelly used suggests that the Supreme Court was particularly concerned with interfering with a state's punishment of a convict, see Kelly, 479 U.S. at 44, 107 S. Ct. at 358 ("Courts traditionally have been reluctant to interpret federal bankruptcy statutes to remit state criminal judgments."), id., 479 U.S. at 47, 107 S. Ct. at 360 ("federal bankruptcy courts should not invalidate the results of state criminal proceedings"). As discussed above in the margin, while Gi Nam's debt resulted from a judgment entered by the Criminal Division of the Court of Common Pleas, it was not in any meaningful sense of the word a "criminal judgment", and certainly did not result from any criminal conduct on Gi Nam's part.[28]
The policy concerns expressed in Kelly on their face go to federal interference with sentences states impose upon convicts, and there is nothing to suggest that the Supreme Court was mandating that construction of § 523(a)(7) must depend on whether the debt in question might in some fashion, however attenuated, affect the states' administration of criminal justice.[29]*849 We consequently find that the policy concerns identified in Kelly do not necessarily encompass whatever bad effects are inflicted upon the states' criminal justice system because bail bond surety debts are dischargeable in bankruptcy.
Second, even if the policy concerns in Kelly do encompass the harms caused by the discharge of bail bond surety debts, it is unclear why the presence of these concerns would compel a result contrary to that which we have reached here. For one thing, although Kelly directs us to interpret § 523(a)(7) in light of the concerns regarding the effect on the state criminal justice system, we equally cannot ignore the application of the canons of construction, discussed in our analysis above, which mandate that we look to the immediate context of the language at issue. We found that these interpretive tools compel us to conclude that Congress's use of "forfeiture" in § 523(a)(7) encompasses only those forfeitures that are penal sanctions, and there is nothing in Kelly to suggest that the law enforcement policy concerns trump these time-honored canons of statutory construction. That is, even to the extent that our holding here interferes in some way with state law enforcement, this is not a reason for us to find that the statute has a meaning other than what its language reflects.[30]
Third, the policy implication that the City identifies is at best difficult to quantify. Certainly, the City's incentive analysis works at the margin: if a private surety was strongly considering helping the defendant flee, the possibility that the debt could be discharged in bankruptcy might tilt the decisional balance and impel that surety to assist the defendant to skip bail. However, even given this marginal effect, the cumulative effect of the availability of discharge remains an imponderable, in part because there remain countervailing incentives to the surety and the defendant. For one thing, irrespective of our decision here, sureties lose the money they pay up front on the bond when the defendant fails to appear. In this case, Gi Nam has lost the $100,000 (or ten percent of the total bond value) that he paid at the execution of the bond, hardly a paltry sum. Moreover, entering bankruptcy is itself a far from costless event, with grave implications for the debtor's credit. While these costs do not eradicate the concerns created by discharging bail bond surety debts, their existence shows that the balancing of competing interests and policies here presents a difficult calculus for any court to perform with any hope of precision.
In the end, we agree with Judge Sigmund and find that to the extent that these policy concerns should come to a different balance, it is for Congress, and not this Court, to address them by amending the statute.
III. Conclusion
We hold that 11 U.S.C. § 523(a)(7) excepts from discharge in Chapter 7 fines, penalties, and forfeitures that are penal sanctions resulting from the debtor's wrongdoing. Thus, Debtor Gi Nam's debt to the Commonwealth of Pennsylvania resulting from the forfeiture on his son's bail bond does not meet this requirement and is thus dischargeable. We will therefore affirm the Bankruptcy Court's dismissal of the City of Philadelphia's Complaint in Adversary No. 99-815 pursuant to Fed. R.Civ.P. 12(b)(6).
NOTES
[1] As we discuss below, the City of Philadelphia here appeals the Bankruptcy Court's December 8, 1999 Order granting Debtor's motion to dismiss the City's Complaint in Bankruptcy No. 99-16565DWS and Adversary No. 99-815, pursuant to Fed.R.Civ.P. 12(b)(6). We therefore consider the facts as they are alleged in the Complaint or as they are disclosed in the public documents attached as exhibits thereto, see Pension Ben. Guar. Corp. v. White Consol. Ind., 998 F.2d 1192, 1196 (3d Cir.1993)("To decide a motion to dismiss, courts generally consider only the allegations contained in the complaint, exhibits attached to the complaint and matters of public record.").
[2] Although this is not clear from the Complaint, it would appear that the Debtor-father paid ten percent of the bail amount, or $100,000, in cash, see Compl. Ex. A (Certification of Bail and Discharge with space labeled "Amount of Bail Paid" filled out as "100,000").
[3] The $1,000,000 bail plus $18.50 in costs.
[4] From the terms of the Certification of Bail and Discharge, it would appear that the judgment was in favor of the Commonwealth of Pennsylvania. As noted above, however, it is the City of Philadelphia that commenced this adversary action. The Bankruptcy Court noted this concern without addressing it, and in its papers the City maintains that it is the real party in interest pursuant to 42 Pa. Con. Stat. Ann. § 3572. In any event, particularly as the court below made no rulings with respect to this question, we see no reason to address it here, and shall assume without deciding that the City is indeed the proper party in interest here.
[5] We express our appreciation to both parties for their exceptionally well-organized and thorough briefs, which have greatly aided our consideration of this difficult issue.
[6] The exception, which we will discuss further below, is United States v. Zamora, 238 B.R. 842 (D.Ariz.1999), in which the court held that the plain language of § 523(a)(7) (rather than policy concerns) showed that the bail surety's obligation came under the § 523(a)(7) exception to discharge. Judge Sigmund noted that unlike Zamora, she found that the term "forfeiture" did not have clear application here, see In re Gi Yeong Nam, 255 B.R. at 157.
[7] See Designation of Items to Be Included In Appellate Record and Statement of Issues to Be Presented On Appeal, R. at Tab 4.
[8] Although these are the issues the City sets forth in its Statement of Issues on Appeal, the City's Appellate brief itself is not organized around these discrete questions, although it does ultimately address each of them. Instead, the Appellant's brief states that the issue presented is, "Did the Bankruptcy Court erroneously discharge the debtor's bail bond forfeiture obligation, in excess of $1 million, in granting the debtor's motion to dismiss the City of Philadelphia's complaint, where the Bankruptcy Code explicitly exempts forfeitures from discharge, and where discharging the forfeiture impermissibly interferes with the criminal prosecution of the debtor's son?" Appellant's Br. at 1. We find that given the nature of the Bankruptcy Court's decision, the exact statement of the issues on appeal is of little moment to the manner in which we address the parties' arguments here.
[9] As we here review a decision made under Fed.R.Civ.P. 12(b)(6), we apply the corresponding standard. When considering a motion to dismiss a complaint for failure to state a claim under Fed.R.Civ.P. 12(b)(6), we must "accept as true the facts alleged in the complaint and all reasonable inferences that can be drawn from them. Dismissal under Rule 12(b)(6) . . . is limited to those instances where it is certain that no relief could be granted under any set of facts that could be proved," Markowitz v. Northeast Land Co., 906 F.2d 100, 103 (3d Cir.1990), see also H.J. Inc. v. Northwestern Bell Tel. Co., 492 U.S. 229, 249-50, 109 S. Ct. 2893, 106 L. Ed. 2d 195 (1989).
[10] We suppose that there might be some question as to whether the $18.50 in costs levied on Nam is in compensation for a pecuniary loss, but undoubtedly the $1,000,000 value of the bond itself is not.
[11] Ultimately, the burden of showing that a particular debt is nondischargeable under § 523 is on the creditor, who must establish this by a preponderance of the evidence, see In re Cohn, 54 F.3d 1108, 1114 (3d Cir.1995), but these standards are not in play in the Rule 12(b)(6) context here.
[12] In Kelly, the Supreme Court addressed the question of whether restitution paid as a condition of probation to the state probation department by a person convicted of larceny was a debt dischargeable in Chapter 7 bankruptcy. The Court ultimately found that such a restitution payment was penal in nature, and that it therefore fell under the § 523(a)(7) exception, notwithstanding that "restitution" as such is not included in the statute. In reaching this conclusion, the Court construed the statute as quoted in the text, that is, as encompassing all penal sanctions. We recognize that given the context in which it was made, the Supreme Court's construction of § 523(a)(7) in Kelly does not necessarily foreclose the application of that provision to a bail bond surety's debt. Nonetheless, as did the Fourth Circuit in In re Collins, which we discuss below, we grant significant weight to the Supreme Court's construction.
[13] As noted above, Collins is the only decision of a Court of Appeals addressing the application of § 523(a)(7) to a surety's bail bond obligation. The parties have, however, directed us to a number of District and Bankruptcy Court decisions on this issue. Cases holding that a bail bond surety debt does not fall under § 523(a)(7) and is dischargeable, are In re Damore, 195 B.R. 40 (Bankr.E.D.Pa.1996); In re Midkiff, 86 B.R. 239 (Bankr.D.Colo. 1988); and In re Paige, Nos. 86 B 8072, 87 E 194, 1988 WL 62500 (Bankr.D.Colo. Apr.15, 1988). As Judge Sigmund noted in her opinion, both Damore and Midkiff rely on Paige, and therefore for our purposes we only need discuss Paige. In construing § 523(a)(7), the Paige court closely examined the Supreme Court's opinion in Kelly v. Robinson, and concluded that § 523(a)(7) applies to obligations that are "essentially penal in nature," In re Paige, 1988 WL 62500 at *3. The court found further support for this holding in pre-Code case law discussed in Kelly. Paige then noted that under Colorado law, a surety bond was treated just like any other contractual obligation, and consequently held that the bail bond surety debt did not fall under § 523(a)(7), noting that to find that a bail bond surety debt was nondischargeable "would, in effect, impose a penal sanction where one was never imposed in the first instance," In re Paige, 1988 WL 62500 at *4.
The City cites to several other lower court cases that addressed the status of bail bond surety debts in support of its argument that such debts are nondischargeable under § 523(a)(7): United States v. Zamora, 238 B.R. 842 (D.Ariz.1999); In re Grooms, No. 96-00071-C, 1997 WL 578752 (W.D.Va. Aug.29, 1997); In re Scott, 106 B.R. 698 (Bankr.S.D.Ala.1989), and In re Bean, 72 B.R. 503 (D.Colo.1987). In Zamora, which we discuss more below, the court found that on the plain language of the statute, a bail bond surety's "forfeiture" falls under § 523(a)(7). Grooms, Scott, and Bean each approached this issue in a slightly different legal posture: rather than addressing the question of whether § 523(a)(7) covers bail bond surety debts, they addressed the question of whether attempts to collect such debts are not subject to automatic stay pursuant to 11 U.S.C. § 362(b)(4), which excepts from stay "an action or proceeding by a governmental unit to enforce such governmental unit's . . . police or regulatory power." The primary force of these cases in support of the City's contention lies in their discussion of the policy concerns surrounding our treatment of bail bond surety debts, and we will discuss this issue more below.
[14] The City makes no argument, nor could it, that Nam's debt is either a "penalty" or a "fine", and we therefore focus on "forfeiture".
[15] It is at this point in the analysis that we part from the reasoning of the court in United States v. Zamora, the case upon which the City most directly relies. In Zamora, the court faced an identical situation as we do here, namely, the question of whether the bail bond surety liabilities of a debtor are nondischargeable under § 523(a)(7), see United States v. Zamora, 238 B.R. 842, 843 (D.Ariz. 1999). Zamora concluded that such debts are not dischargeable because the debt resulted, by the terms of the bond, from a "forfeiture", that therefore "Debtor's obligation on the forfeited bail bond appears to fall squarely within the parameters of § 523(a)(7)," Zamora, 238 B.R. at 844, and that "the obligation falls expressly under the statute as a forfeiture," Zamora, 238 B.R. at 845. While we recognize the elegant directness of Zamora's approach, with due respect to our sister court we find that § 523(a)(7)'s language requires a more involved analysis.
[16] This is the first definition for penalty given in Black's Law Dictionary. An additional definition or example Black's gives is "[t]he sum of money which the obligor of a bond undertakes to pay in the event of his omitting to perform or carry out the terms imposed upon him by the conditions of the bond." Black's Law Dictionary 1133. Again, this definition reflects that a penalty is imposed upon a party for his wrongdoing, in this case, a failure to meet the conditions of a bond. While this definition might seem at first glance to apply to our facts here, it does not, since, as we will discuss more below, it was not Gi Nam, but instead his son, who failed to act in accordance with the bond. We note that Black's also refers to a penalty with reference to contract penalties, but an examination of § 523(a)(7)'s language shows that this is not the sort of "penalty" contemplated in that section. A "penalty" provision in a contract that is unreasonable in light of the loss caused by the breach, or a "penalty" provision in a bond that provides for the payment of an amount in excess of the loss caused by nonperformance, are both unenforceable as against public policy, see Restatement (Second) of Contracts § 356, see also Uniform Commercial Code § 2-718. Conversely, § 523(a)(7) explicitly requires that the exception to discharge only applies to payments that are not in compensation for actual pecuniary loss, and thus no enforceable contract "penalty" would fall under this provision.
[17] Again, we provide the definition pertinent to the context.
[18] We further note that the "exceptions to discharge are to be strictly construed in favor of the debtor," In re Fegeley, 118 F.3d 979, 983 (3d Cir.1997).
[19] As discussed above, we find this interpretation to be the only one that comports with the language used in the statute. We note that the Debtor's own arguments in support of this interpretation rely on pre-Code bankruptcy practice and on the provision's legislative history, but we do not find either of these sources useful or convincing for the purposes of our analysis.
We begin with the pre-Code bankruptcy practice. The Debtor notes that courts interpreting the present Bankruptcy Code have referred to the practices under the Act of 1898 that preceded it, and in construing provisions of the Code that were codifications of earlier judge-made law, as § 523(a)(7) evidently was, courts interpret the codification to match the prior judge-made law absent evidence of specific intent that it be interpreted otherwise, see Kelly, 479 U.S. at 44, 47, 107 S. Ct. at 358, 359.
Valid though this may be as an interpretive tool, it does not help us here where prior to the present Code courts treated bail bond surety obligations both as dischargeable and as nondischargeable, compare United States v. Hawkins, 20 F.2d 539 (S.D.Cal.1927) (holding that debts owed to the United States for liabilities of the debtor as a surety on bail bonds are "of a class as to which a discharge in bankruptcy is a release") with In re Caponigri, 193 F. 291, 292 (S.D.N.Y.1912) (Hand, J.) (holding that a bail bond surety debt was not an "allowable" debt in bankruptcy because it is a penalty) and Matter of Lake, XXII Am. Bankr.R. (N.S.) 168 (F.Ref.Minn.1932) (citing Caponigri and holding that bail bond debts are a penalty or forfeiture and that were therefore not allowed pursuant to section 57j of the Act); cf. Kelly, 479 U.S. at 44-45, 107 S. Ct. at 358 (discussing the interplay between sections 57 and 17 of the Act of 1898). In view of such mixed practice prior to the Code, we are hesitant to base our analysis of the statute upon it.
Debtor also argues that the legislative history of § 523(a)(7) and related provisions shows that "fine, penalty, or forfeiture" was meant only to address penal sanctions. The portion of the legislative history of the Bankruptcy Reform Act of 1978 that refers to § 523(a)(7) reads as follows:
Paragraph (7) makes nondischargeable certain liabilities for penalties including tax penalties if the underlying tax with respect to which the penalty was imposed is also nondischargeable (sec.523(a)(7)). These latter liabilities cover those which, but are penal in nature, [sic] as distinct from so-called "pecuniary loss" penalties which, in the case of taxes, involve basically the collection of a tax under the label of a "penalty."
S. Rep. No. 95-989 at 79, reprinted in 1978 U.S.C.C.A.N. 5787, 5865.
The Debtor argues that this text shows that Congress intended § 523(a)(7) to go only to "penalties" that is, debts involving "punishment" and that therefore a bail bond surety debt is not within the provision. We do not find this convincing. Even taking the text at face value, we are left with the fact that the statute does not list only "penalties" but also "fines" and "forfeitures" and therefore the Senate Report does not foreclose an interpretation which finds the statute applicable to the bail bond debt on the basis of the provision's inclusion of "forfeiture".
The Debtor also seeks to make use of the legislative history of § 726(a)(4) of the Bankruptcy Code, which deals with the priorities for distribution of the estate's assets, and which also employs the "fine, penalty, or forfeiture" diction. Debtor notes that the legislative history for this section refers to "punitive penalties", S.Rep. No. 95-989 at 97, reprinted in 1978 U.S.C.C.A.N. 5787, 5883. On the proposition that the same words used in different parts of an act should be given the same meaning, Debtor again argues that the "fine, penalty, or forfeiture" in § 523(a)(7) must therefore refer only to a "punitive penalty" because § 426(a)(4)'s legislative history gave that meaning to the same string of terms used in that section.
We cannot accept this use of § 426(a)(4)'s legislative history. First, as the City notes, § 726(a)(4) applies to any "fine, penalty, or forfeiture" but does not specify that they be payable to the government, and therefore it is unclear that this section refers to the same subject matter addressed in § 523(a)(7). Even if it did, the mere use of the words "punitive penalty" in the legislative history does not foreclose any application of this provision to a bail bond surety debt where the Congress used words other than "penalty" to characterize the debts involved. We consequently do not find the legislative history the Debtor cites to be convincing evidence of the proper interpretation of § 523(a)(7).
[20] As we noted above, the mere use of cognates of the word forfeiture does not of course place the debt within § 523(a)(7).
[21] We note here that the Debtor cites to several Pennsylvania cases in an effort to show that Pennsylvania bail bond surety debts are civil, and not penal, in nature. We do not find that this case law would necessarily support this position. In Ruckinger v. Weicht, 356 Pa.Super. 455, 514 A.2d 948 (1986), the panel held impermissible a county's local rule that a surety's bail money was to be used to pay costs, fines, or restitution levied in the defendant's case. The Debtor argues that this decision highlights the distinction between bail money, on the one hand, and penal sanctions, on the other. While this is true as far as it goes, it is crucial to recognize that Ruckinger considered circumstances where the surety's bail money would be used to pay the defendant's sanctions, and therefore the holding does not tell us whether the surety's debt on a forfeiture of bail is itself penal. Significantly, Ruckinger based its decision partly on the idea that bail was intended to ensure the presence of the defendant, not to guarantee the payment of monetary punishments, see Ruckinger, 514 A.2d at 949. Again, this does not touch on our situation here, where the forfeited bail money was only used in an effort to secure David Nam's presence.
The Debtor also cites to several Pennsylvania cases that held a bail agreement to be a contract that is properly interpreted using rules of construction applicable to contracts generally, see, e.g., In re Marshall's Estate, 416 Pa. 64, 204 A.2d 243, 245 (1964). Again, we cannot find that this holding determines the outcome here. Simply because the bond is viewed as a contract, and must be interpreted commensurately, does not mean necessarily that the forfeiture of the full amount of the bond based on the defendant's non-appearance cannot be considered a penal sanction under § 523(a)(7). For example, as discussed in the text above, courts have construed § 523(a)(7) to render nondischargeable a debt resulting from the failure to abide by a stipulation that settled environmental charges against the debtor, though it would seem quite likely that such a stipulation would also be subject to rules of construction pertinent to civil documents. Thus, the mere fact that the bail agreement might be a "civil" document in some sense does not show that any debt arising from that document will not come under § 523(a)(7).
To the extent that the Debtor cites to these cases in support of his argument that Gi Nam's debt is not the same as a penalty assessed against his son in the underlying criminal case, we agree that this is a fundamental difference. Even so, the question remains whether Gi Nam's bail bond surety debt arose as a penal sanction for his own wrongdoing associated with his son's failure to appear, independent of an adjudication of the charges against his son per se.
[22] At least, we are unable to locate any such statement in the copy of the bond that the City has provided with its pleadings, though owing evidently to repeated faxings and photocopyings of the exhibit, several of the sentences in our copy of the bond are completely illegible.
[23] As noted above, the City's Complaint contains no suggestion that Gi Nam had a role in his son's failure to appear, and therefore we do not face here the difficult question of whether such a role would constitute wrongdoing sufficient to place the forfeited bail within § 523(a)(7). We note from a later opinion of the Bankruptcy Court that Gi Nam and his wife ultimately invoked their Fifth Amendment rights in response to interrogatories from the Trustee that sought to examine the circumstances surrounding the bond and the judgment, see In re Gi Yeong Nam, 245 B.R. 216, 222 (Bankr.E.D.Pa.2000). From the discussion in this later opinion, it also appears that David Nam decamped for South Korea. These interesting and speculative facts are not before us and can in no way guide our decision here.
[24] The City makes much of the fact that the judgment entered against Gi Nam was issued by the Criminal Division of the Court of Common Pleas in the criminal action against David Nam. Although the judgment may be thus styled a "criminal judgment" since it emanated from the criminal division, we find that such a label by itself cannot determine our course here, as we must look to substance and not to form.
[25] Kelly noted that this concern was reflected in the pre-Code judicial practices by which courts found that judgments of state criminal courts were not discharged in bankruptcy despite that the strict application of the letter of the Act of 1898 would have discharged them, see Kelly, 479 U.S. at 44-48, 107 S. Ct. at 358-60. The Court noted that "[c]ourts traditionally have been reluctant to interpret federal bankruptcy statutes to remit state criminal judgments," Kelly, 479 U.S. at 44, 107 S. Ct. at 358.
[26] We note that the City's position on statutory interpretation is somewhat inconsistent here. As it began its interpretation of § 523(a)(7), Kelly noted that "the starting point in every case involving construction of a statute is the language itself. . . . But the text is only the starting point. . . . In expounding a statute, we must not be guided by a single sentence or member of a sentence, but look to the provisions of the whole law, and to its object and policy," Kelly, 479 U.S. at 43, 107 S. Ct. at 357-58 (citations omitted). Here, the City wants us, on the one hand, to go no farther than the words of the statute and hold that because the bail bond debt is a "forfeiture" pursuant to the Pennsylvania Rules, it must fall under § 523(a)(7), while also arguing, on the other hand, that in our holding must be guided by the policies allegedly undergirding the statute. In any event, we have above rejected the proposition that the use of "forfeiture" in the statute compels a result here, and we discuss below the City's policy concerns.
[27] As the above discussion suggests, the City notes that these policy arguments do not apply equally to debtors who are professional bail bondsmen. Because bail bondsmen have no relationship with the defendants, they have no incentive whatever to aid the defendant's flight, and every incentive to capture a fugitive defendant in order to recoup the value of the bond. Moreover, a bail bondsman who faced regulatory examination has a disincentive to declare bankruptcy and may in any event be less prone to doing so because a bondsman can account for the probability of forfeiture in the premium he charges.
Having noted this difference in incentives, the City then notes that most of the cases discussed above holding that the bail bond debts are dischargeable, notably including the Fourth Circuit's decision in In re Collins, involved professional bail bondsmen rather than family member sureties. Thus, the City contends, those cases are in fact inapposite to our situation here because the policy concerns arising from allowing a bail bondsman to discharge his bond debts are so much less salient than those at issue here with a family member surety. The City argues that in our circumstances the policy concerns loom much larger and compel a different result. In the immediate context, it is appropriate to note that bail bondsmen are prohibited from bonding defendants in Philadelphia County.
We again agree with the City's incentive analysis. It would seem apparent that the policy concerns implicated by the discharge in bankruptcy of bail bond debts are less severe when the debtor is a bail bondsman than when the debtor is a family member. However, this difference does not change our decision here.
For one thing, as discussed below in text, we do not find the policy concerns surrounding the family member sureties to be compelling. David Nam has, after all, cost his father at least the $100,000 premium as well as his future credit. Moreover, to the extent that we relied upon In re Collins in our interpretation of § 523(a)(7), we cannot see how its holding regarding the scope of the statute was really affected by the fact that the debtor was a bail bondsman, although we recognize that the Collins court discussed that fact at length in addressing the policy concerns associated with its ruling. With respect to this, we note that it is rare indeed to interpret the same statute to mean two different things when applied to two different individuals, particularly when there is no hint in the language of the statute that Congress contemplated such a differentiation. As we will remark at the conclusion, to the extent that such differentiation would be a good thing, it is for Congress, and not us, to make it.
[28] We note here again that the result here might be different if there were allegations that Gi Nam had aided his son's flight, but that is not this case.
[29] We recognize that Kelly did broadly state that the interpretation of § 523(a)(7) must proceed "in light of the interests of the States in unfettered administration of their criminal justice systems," Kelly, 479 U.S. at 44, 107 S. Ct. at 358, but we find that the scope of this sweeping pronouncement is limited by the more specific remarks quoted in the text.
[30] We also observe that the concern for the state criminal justice systems is not the only policy concern at play here. We have mentioned above that the central goal of the bankruptcy system is to permit "honest but unfortunate" debtors an opportunity for a fresh start, and our decision must reflect this goal as well. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1930333/ | 266 B.R. 638 (2001)
In re HYDRO-ACTION, INC., Debtor.
Hydro-Action, Inc., Plaintiff,
v.
Bruce A. Craig, Julie Craig, Larry K. Jernigan, Lisa E. Jernigan, and Latrelle Mouton, Defendants.
Bankruptcy No. 01-10209, Adversary No. 01-1030.
United States Bankruptcy Court, E.D. Texas, Beaumont Division.
August 31, 2001.
*639 *640 Michael E. Gazette, Tyler, TX, for Bruce A. Craig, Julie Craig & LaTrelle Mouton.
Michael J. Lindsay, Beaumont, TX, for Larry K. & Lisa E. Jernigan.
Frank J. Maida, Tagnia Fontana, Maida Law Firm, P.C., Beaumont, TX, for Hydro-Action, Inc.
MEMORANDUM OF DECISION
BILL PARKER, Bankruptcy Judge.
Before the Court for consideration are three "Motions to Compel Arbitration" filed by three of the respective Defendants, Bruce A. Craig, Julie Craig (referenced jointly as the "Craig Defendants") and LaTrelle Mouton, in the above-referenced *641 adversary proceeding.[1] The Court conducted a hearing on the motion on August 21, 2001. At the conclusion of the hearing, the Court took the matter under advisement to review the authorities relied upon by each party. This memorandum of decision disposes of all issues pending before the Court.[2]
Factual And Procedural Background
The facts germane to the determination of these motions are not in serious dispute. In 1998, Gig Drewery was the president and majority shareholder of three corporations involved in the business of wastewater treatment, one of which was the current Debtor and Debtor-in-Possession, Hydro-Action, Inc. At that time, Drewery reached an agreement with Bruce Craig whereby Craig agreed to contribute his management, financial and administrative expertise to these three businesses and would thereby be entitled to obtain an ownership interest in the businesses from Drewery. On January 19, 1998, Drewery and Craig, along with their respective spouses, Trina Drewery and Julie Craig, executed a "Master Transaction Agreement" (the "MTA") which set forth the agreement of the parties.[3] Included in the agreement was the following provision:
18. Resolution of Disputes. Gig and Bruce will mutually cooperate with each other in good faith in an attempt to resolve any disputes between them and to resolve any issue on which they are "deadlocked" and split on their vote. In the event they remain unable to resolve any such dispute or issue, then they agree to participate in good faith in mediation proceedings to be conducted in Jefferson or Hardin County, Texas, before an independent mediator mutually acceptable to Gig and Bruce. The cost of the mediation shall be shared equally by Gig and Bruce. If after mediation they still are deadlocked or unable to resolve the dispute, then they agree to participate in binding arbitration proceedings, to be conducted in Jefferson or Hardin County, Texas. Gig and Bruce shall each select one arbitrator, and the two arbitrators shall select a third arbitrator. Each of the arbitrators chosen shall be impartial and independent of all parties involved in the dispute or deadlock. The three arbitrators shall then proceed to arbitrate the dispute between Gig and Bruce. The arbitration shall be conducted in accordance with the rules of the American Arbitration Association. The three arbitrators shall hear and decide upon the resolution of the dispute by majority vote. The decision of the arbitrators shall be final and binding. Gig and Bruce shall each be entitled to have legal counsel to represent them in the arbitration proceeding. The charges and expenses of the arbitrators shall be shared equally by Gig and Bruce. The arbitration shall be conducted to preserve its privacy and confidentiality. Alternatively, in order to resolve any deadlock in vote between Gig and Bruce, they may mutually agree that such *642 deadlock may be resolved by referring the matter to Brian and Kelly Birch for a tie-breaker vote.
Following the execution of the MTA and the initiation of Bruce Craig's involvement with Hydro-Action, the remaining Defendants in this action, Larry K. Jernigan, Lisa Jernigan and LaTrelle Mouton, were each employed by Hydro-Action in 1998. Each of these Defendants executed a "Confidentiality, Non-Disclosure, and No Competition Agreement" (the "Employee Agreements") in conjunction with his or her employment by Hydro-Action, Inc. and its sister corporation, Aqua Drip Innovations, Inc. Each of these three Employee Agreements contained the following provision:
9. ARBITRATION: All claims, disputes, controversies and differences of every kind and nature, including questions of law and fact, which may arise between the parties hereto relating to or in any manner connected with any provision of this Agreement or the performance or breach thereof shall be arbitrated in Kountze, Texas. Furthermore, if there is a breach of this contract by the Signatory and the Manufacturer elects to turn it over to an Attorney or Arbitrator, then the Signatory will be responsible for all reasonable Attorneys Fees, arbitration or court costs.
All of these Defendants were employed by Hydro-Action at the time that it filed its voluntary petition for relief under Chapter 11 of the Bankruptcy Code on February 2, 2001. Mr. Craig was serving as its president and chief executive officer at that time. Approximately two months later, in April, 2001, all of the Defendants were terminated from their respective positions with the Debtor corporation.
Subsequently, on June 14, 2001, the Debtor initiated this adversary proceeding, alleging that each of the Defendants were engaged in continuous violations of various covenants of their respective employment agreements with Hydro-Action designed to protect the trade secrets, customer lists, proprietary processes, and other valuable assets of the Debtor corporation. The Plaintiffs further seek a revocation of the purported release of the Jernigans from their employment agreements in March, 2001.[4] The Defendants have now answered and, other than activity based upon the Plaintiff-Debtor's request for injunctive relief which has now been withdrawn, little case administration has occurred in this adversary proceeding.
The Defendants through their motions seek to compel the arbitration of this dispute pursuant to the arbitration provisions in the MTA and the Employee Agreements, respectively. Though the Debtor corporation was not an actual signatory to the MTA, the Craig Defendants essentially assert that Hydro-Action should be bound by its terms since it was a third-party beneficiary to the MTA as recognized by the fact that the Debtor is seeking to enforce such an agreement against the Craigs in this proceeding. The Employee Agreements involving the Jernigans and Ms. Mouton were actually executed by Hydro-Action and those Defendants seek to enforce the arbitration provision contained in those Employee Agreements. The objection to such requests by the Debtor corporation is primarily based upon its assertion that this adversary proceeding is a core proceeding before this Court, an allegation which is disputed by the Defendants, and that this Court's interest in exercising its core jurisdiction supersedes any pre-petition contractual provision mandating *643 arbitration. The Debtor corporation further asserts that its complaint primarily seeks permanent injunctive relief and that the arbitration process is not equipped to resolve such equitable disputes.
Discussion
Contractual agreements to arbitrate disputes and the enforcement of such contractual provisions has prompted considerable jurisprudence in recent years. The passage of the Federal Arbitration Act ("FAA") and the recognition that the FAA "applies to all suits in state or federal court when the dispute concerns a contract evidencing a transaction involving commerce," Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269-70 (Tex.1992), In re Valle Redondo, S.A., 47 S.W.3d 655, 661 (Tex. App. Corpus Christi 2001, orig. proceeding),[5] has triggered a number of cases describing the appropriate circumstances under which a court, whether state or federal, should yield to an alternative means of dispute resolution based upon the contractual agreement of the involved parties, notwithstanding the fact that the jurisdiction and judicial power of that court has been properly invoked.
In deciding whether a court is compelled to submit a contractual dispute to arbitration, one must first acknowledge the existence of a strong federal policy favoring the arbitration process which is embodied in the text of the FAA[6] and which is increasingly enforced in the jurisprudence in this area.[7]
*644 The United States Supreme Court has in a series of decisions recognized four basic principles which serve as the initial guideposts regarding the arbitrability of disputes in the federal courts. First, federal courts recognize that "arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed to submit." AT & T Techs., Inc. v. Communications Workers of America, 475 U.S. 643, 648, 106 S. Ct. 1415, 1418, 89 L. Ed. 2d 648 (1986). Secondly, in the absence of clear and unmistakable language to the contrary, the arbitrability of a dispute is a question of law for the Court to decide. Third, any decision regarding the arbitrability of a dispute is to be made without reference to the potential merits of the underlying claims. Finally, a presumption of arbitrability exists; however, an express provision excluding a particular type of dispute from arbitration will overcome the presumption and be enforced.[8]
Thus, as a threshold matter, a court must determine whether the particular dispute presented is subject to arbitration. This involves two specific determinations: (1) whether a valid, enforceable arbitration agreement exists, and (2) if so, whether the claims asserted fall within the scope of the agreement.[9] These determinations are generally based upon state law,[10] but the court must give due regard to the federal and state policies favoring arbitration and construe any ambiguities in favor of arbitration.[11] Obviously each of the two agreements invoked in this dispute must meet this test for the affected Defendant Movants to prevail.
As for the construction of each of the Employee Agreements [the "Confidentiality, Non-Disclosure, and No Competition Agreement"] executed by and between the Debtor, Hydro-Action, Inc. and Defendants, Larry K. Jernigan, Lisa Jernigan and LaTrelle Mouton, respectively, the determination regarding the arbitrability of the dispute is relatively straightforward and must be answered in the affirmative. Each of those documents evidence and memorialize a specific agreement between the Debtor corporation and the affected employee regarding his or her knowledge, activities, and conduct. Each agreement specifies that arbitration shall be used to resolve disputes. ¶ 9 of the Employee *645 Agreement is unambiguous and comprehensive in scope. It subjects "all claims, disputes, controversies and differences of every kind and nature ... which may arise between the parties hereto relating to or in any manner connected with any provisions of this Agreement or the performance or breach thereof ..." to arbitration (emphasis added).[12] Notwithstanding the proclivities of a recent Chief Executive to the contrary, the meanings of these three comprehensive words are not subject to serious dispute. "All" means all. "Every" means every. "Any" means any. Accordingly, the Court concludes that each of the similar disputes between Hydro-Action and the respective Defendants, Larry K. Jernigan, Lisa Jernigan and LaTrelle Mouton, are subject to the presumption of mandatory arbitration unless, as the Debtor corporation contends, there are sufficient grounds to override such a presumption.
The determination of whether the Debtor's disputes with Bruce and Julie Craig are subject to mandatory contractual arbitration is more complicated. At first glance, it appears doubtful that an enforceable arbitration agreement exists between Hydro-Action and the Craig Defendants since there is no dispute that the "Master Transaction Agreement" was executed solely by the Drewerys and the Craigs in their respective individual capacities and that Hydro-Action was not a formal party to the MTA. However, the Craig Defendants assert that the Debtor's reliance upon the various protective provisions of the MTA as the foundation for bringing its complaint against them demonstrates that Hydro-Action was a third-party beneficiary of the MTA and that the Debtor should therefore be bound by the arbitration provision contained therein.[13] At the hearing, the Debtor argued that the numerous references to the MTA in the Debtor's complaint were included "by mistake" and that such issues should only be germane to the pending state court action.
The jurisprudence is clear that, in limited circumstances, one who is not a signatory or direct party to a contract containing an arbitration clause, but whose position or conduct vis-a-vis that contract or one of the parties thereto is such that one may be deemed a third party beneficiary of the contract or otherwise held to be bound by the terms thereof through state law principles of contract and agency law, may be compelled to arbitrate a dispute arising out of or relating to the contract.[14] Included among such principles are: (1) incorporation by reference; (2) assumption; (3) agency; (4) veil-piercing/alter ego; and (5) estoppel.[15] However, because the arbitrability of disputes is strictly a matter of contract, the extension of the obligation to arbitrate is narrowly construed.
Although there is a general presumption against them, third party beneficiary contracts have, in fact, been recognized by Texas courts when it can be shown that the contracting parties intended to secure some benefit for the third party. As the Supreme Court of Texas has stated:
*646 To qualify as one for whose benefit the contract was made, the third party must show that he is either a donee or creditor beneficiary of, and not one who is benefited (sic) only incidentally by the performance of, the contract. One is a donee beneficiary if the performance promised will, when rendered, come to him as a pure donation. If, on the other hand, that performance will come to him in satisfaction of a legal duty owed to him by the promisee, he is a creditor beneficiary.... [T]his duty may be an indebtedness, contractual obligation or other legally enforceable commitment owed to the third party.... The intention to contract or confer a benefit to a third party must be clearly and fully spelled out or enforcement by the third party must be denied. Consequently, a presumption exists that parties contracted for themselves unless it "clearly appears" that they intended a third party to benefit from the contract.
MCI Telecommunications Corp. v. Texas Utilities Elec. Co., 995 S.W.2d 647, 651 (Tex.1999) (citations omitted).
There is little doubt that Hydro-Action is asserting itself as a third party beneficiary of the MTA in this case. Its complaint is primarily based upon its ability to enforce the terms of the MTA against the Craigs. ¶ 8 of the complaint alleges that the Craigs owe fiduciary duties to the Hydro-Action arising from the execution of the MTA, "whereby the Craigs agreed to keep confidential and not disclose, reveal or use any of the knowledge obtained or trade secrets, customer lists, proprietary processes used by Hydro-Action." ¶ 11 of the complaint alleges that the Craigs' alleged post-dismissal employment activities "violates the Master Transaction Agreement and could potentially cause substantial harm to Hydro-Action." In ¶ 12 of the complaint, Hydro-Action further complains that "... such conduct by Bruce and Julie Craig is in violation of the Master Transaction Agreement and causes harm to Hydro-Action by reducing the value of the company and threatening property of the Bankruptcy estate." ¶ 13 complains that "[I]n blatant violation of the Master Transaction Agreement, Bruce and Julie Craig have conspired with the other Defendants to appropriate to themselves Hydro-Action's confidential matters...." Finally, ¶ 14 of the Debtor's complaint asserts that "Craig, through misappropriation, is using the dealer lists and computer software of Hydro-Action, in direct competition with Hydro-Action, thereby causing damage to the company in its reorganization process." The primary means through which the Debtor can claim a misappropriation by the Craigs is through the protections offered by the Master Transaction Agreement.
Without addressing the actual merits of the complaint, it is clear that Hydro-Action is within its rights to attempt to seek enforcement of the covenants of the MTA. The MTA specifically references Hydro-Action, Inc. as one of the businesses for which the business expertise of Bruce and Julie Craig is sought. Under ¶ 7 of the MTA, Bruce Craig is specifically employed as a full time employee of Hydro-Action and two of his existing employees are hired as employees of Hydro-Action under ¶ 13. Thus, it clearly appears that Hydro-Action is a third party creditor beneficiary of the MTA between the Drewerys and the Craigs.
The Craigs, therefore, assert that the arbitration provision should be enforced against Hydro-Action since the Debtor is a third party beneficiary of the MTA. This presents an unusual circumstance since, in most of the arbitration jurisprudence reviewed by the Court, arbitration under a third party beneficiary theory is usually *647 advocated by the third party who is seeking to enforce an arbitration agreement. Here, however, it is the signatory who is seeking to enforce the arbitration provisions against a non-signatory beneficiary. Under these circumstances, the obligation to arbitrate is more precisely characterized as one of estoppel. As expressed by the Seventh Circuit in Hughes Masonry Co., Inc. v. Greater Clark County School Bldg. Corp., 659 F.2d 836 (7th Cir.1981):
Hughes now argues, however, that it cannot be required to arbitrate because [the Defendant] is not entitled to invoke the arbitration provision of the Hughes-Clark agreement since it is not a party to that agreement. Whatever the merit of this argument, we believe that Hughes [the Plaintiff] is equitably estopped from asserting it in this case, because the very basis of Hughes' claim against J.A. [the Defendant] is that J.A. breached the duties and responsibilities assigned and ascribed to J.A. by the agreement between Clark and Hughes.... In substance, however, Hughes is attempting to hold J.A. to the terms of the Hughes-Clark agreement. Hughes' complaint is thus fundamentally grounded in J.A.'s alleged breach of the obligations assigned to it in the Hughes-Clark agreement. Therefore, we believe it would be manifestly inequitable to permit Hughes to both claim that J.A. is liable to Hughes for its failure to perform the contractual duties described in the Hughes-Clark agreement and at the same time deny that J.A. is a party to that agreement in order to avoid arbitration of claims clearly within the ambit of the arbitration clause. In short, plaintiff cannot have it both ways. It cannot rely on the contract when it works to its advantage, and repudiate it when it works to its disadvantage.
Id. at 838-39 (internal quotations and citations omitted). In compelling arbitration, the Seventh Circuit concluded that since "[u]ltimately, therefore, Hughes must rely on the terms of the Hughes-Clark agreement in its claims against J. A...., Hughes is estopped from repudiating the arbitration clause of this agreement, upon which it relies." Id. at 841. Other circuit courts of appeal have endorsed this estoppel theory when the asserted claims are "intimately founded in and intertwined with the underlying contract obligations."[16]
Though these cases primarily involve non-signatory defendants seeking to compel arbitration against signatory-plaintiffs, the estoppel rationale is equally applicable in the rare circumstances presented by this case. The Debtor corporation in this case is attempting in its own name to hold the Craig Defendants to the terms of the MTA. Its complaint is, in the words of the Seventh Circuit, "fundamentally grounded" in the alleged breaches of the MTA by the Craig Defendants. As in the cases involving signatory-plaintiffs, this Court concludes that it would be manifestly unjust and inequitable under these circumstances to permit Hydro-Action to assert the benefits of the MTA on its own behalf and to seek enforcement of the Craigs' alleged duties under that agreement, but at the same time to allow Hydro-Action to deny that it is under any duty to arbitrate because it was not an actual signatory to the MTA. Hydro-Action cannot have it both ways. Thus, because of the manifest unfairness which would result otherwise, *648 Hydro-Action can be compelled to arbitrate its disputes with the Craig Defendants as asserted in this adversary proceeding, even though it is not technically a signatory to the agreement containing the mandatory arbitration clause.
As to whether the claims asserted by Hydro-Action in this action fall within the scope of the agreement to arbitrate, the Court concludes that they do. The scope of the arbitration provision in the MTA is less definite than the provision in the Employee Agreements only because the precise scope of the MTA itself is rather amorphous. Still, the MTA provision ultimately requires arbitration "to resolve any dispute between them and to resolve any issue on which they are `deadlocked'..." Thus, to the extent that Hydro-Action can base its claims against the Craig Defendants upon the provisions of the MTA, those claims are encompassed by the MTA arbitration provision. This conclusion is buttressed by the fact that ambiguities regarding the scope of the arbitration clause are resolved in favor of arbitration[17] and the fact that the Debtor offered absolutely no evidence to demonstrate that the current disputes do not fall within the scope of the respective arbitration provisions.
Instead, the Debtor corporation asserts that this Court should reject the Defendants' demands for arbitration because this dispute is allegedly within the core jurisdiction of this Court and should be decided exclusively in this venue. Placed in the parlance of the jurisprudence in this area, the Debtor asserts that the arbitration of this dispute "would seriously jeopardize the objectives of the Bankruptcy Code."[18]
In support of its proposition, the Debtor cited the decision of Insurance Company of North America v. NGC Settlement Trust & Asbestos Claims Mgmt. Corp. (In re National Gypsum), 118 F.3d 1056 (5th Cir.1997). While the National Gypsum decision undoubtedly controls this situation, it does not support the Debtor's position. The Fifth Circuit in National Gypsum rejected the concept that the core or non-core nature of a proceeding is absolutely determinative of whether arbitration agreements will be enforced in bankruptcy proceedings. Relying on prior directives from the United States Supreme Court that the Federal Arbitration Act mandates enforcement of contractual arbitration provisions in the absence of an inherent conflict with the purpose of another federal statute,[19] the Fifth Circuit stated:
The core/non-core distinction conflates the inquiry set forth in McMahon and Rodriguez with the mere identification of the jurisdictional basis of a particular bankruptcy proceeding. Certainly not all core bankruptcy proceedings are premised on provisions of the Code that "inherently conflict" with the Federal Arbitration Act; nor would arbitration of such proceedings necessarily jeopardize *649 the objectives of the Bankruptcy Code. Although, as appellees suggest, "the core/non-core distinction is a practical and workable one," it is nonetheless too broad. The "discretion" that ACMC and the Trust urge should exist only where a particular bankruptcy proceeding meets the standard for nonenforcement of an arbitration clause set forth in McMahon and Rodriguez. It is doubtful that "core" proceedings, categorically, meet the standard.
Id. at 1067 (citations omitted). Thus, as to whether a bankruptcy court has the discretion to refuse to enforce an otherwise applicable arbitration provision solely because a proceeding happens to fall within its core jurisdiction, the Fifth Circuit reached the following conclusion:
[W]e refuse to find such an inherent conflict based solely on the jurisdictional nature of a bankruptcy proceeding. Rather, ... we believe that nonenforcement of an otherwise applicable arbitration provision turns on the underlying nature of the proceeding, i.e., whether the proceeding derives exclusively from the provisions of the Bankruptcy Code and, if so, whether arbitration of the proceeding would conflict with the purposes of the Code. In this regard, ... the discretion enjoyed by a bankruptcy court to refuse enforcement of an otherwise applicable arbitration provision depends upon a finding that the standard set forth in McMahon has been met.
Id. at 1067.
The referenced McMahon standard pertains to the proper allocation of the burden of persuasion in this context. The Supreme Court in McMahon concluded that:
The [Federal] Arbitration Act, standing alone, therefore mandates enforcement of agreements to arbitrate statutory claims. Like any statutory directive, the Arbitration Act's mandate may be overridden by a contrary congressional command. The burden is on the party opposing arbitration, however, to show that Congress intended to preclude a waiver of judicial remedies for the statutory rights at issue.
McMahon, 482 U.S. at 227, 107 S. Ct. at 2337 (emphasis added).[20]
Thus, once it was demonstrated that the claims asserted in the adversary proceeding were actually within the scope of the applicable arbitration provisions, the Debtor, as the party opposing arbitration, assumed the burden to demonstrate that the enforcement of the arbitration provisions would conflict with the actual text or the underlying purposes of the Bankruptcy Code. As the Fifth Circuit has stated, that burden cannot be sustained by the Debtor merely by the fact that the matter before the court is a core proceeding.[21] However, the Debtor failed to produce any evidence to demonstrate the existence of any conflict which precludes the enforcement of the arbitration provisions.[22]
*650 The Debtor's argument that arbitration must be denied because its complaint now only seeks injunctive relief must also be rejected. It is generally recognized that arbitrators have the power to fashion broad equitable relief, so long as the applicable arbitration rules do not restrict the type of relief which may be awarded.[23] The applicable rules of the American Arbitration Association invoked under the MTA provide, as to employment disputes, that "[t]he arbitrator may grant any remedy or relief that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the parties had the matter been heard in court,"[24] and, since the Employee Agreements comprehensively bind the parties to arbitrate "all claims, disputes ... of every kind and nature ...," such expansive language can be reasonably interpreted as an intention of the parties "to resolve through arbitration any dispute that would otherwise be settled in a court, and to allow the chosen dispute resolvers to award the same varieties and forms of damages or relief as a court would be empowered to award." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 61, 115 S. Ct. 1212, 1218, n. 7, 131 L. Ed. 2d 76 (1995)[upholding the right of an arbitrator to award punitive damages, though the agreement contained no express reference to punitive damage claims]. Thus, there is no basis for the Debtor's contention that the equitable relief which it seeks is unavailable in the arbitration process.
Therefore, this Court does not possess the discretion to refuse to enforce the arbitration provisions in the contractual agreements presented in this case since there has been no showing whatsoever that enforcement of those provisions would conflict in any way with the purpose or provisions of the Bankruptcy Code. Accordingly, the Court will grant the Defendants' motions and compel the arbitration of the claims asserted in this adversary proceeding. Further, though not actually raised at the hearing, the Court is cognizant that the Defendants have filed corresponding motions to stay the prosecution of this adversary proceeding pending the arbitration of this dispute and the Court finds that, pursuant to 9 U.S.C. § 3, such motions for stay should be granted as well.
This memorandum of decision constitutes the Court's findings of fact and conclusions *651 of law[25] pursuant to Fed.R.Civ.P. 52, as incorporated into bankruptcy adversary proceedings by Fed. R. Bankr.P. 7052. Appropriate orders will be entered which are consistent with this opinion.
NOTES
[1] Though not initially listed as movants in the motions, the remaining two Defendants, Larry K. and Lisa Jernigan, joined their fellow Defendants in the request for arbitration at the hearing. Such joinder will be permitted since it will cause no prejudice to the respondents due to the fact that the rights of Mr. and Ms. Jernigan are governed by the same employment agreement already put into issue by Ms. Mouton.
[2] This Court has jurisdiction to consider the Motions pursuant to 28 U.S.C. §§ 1334, § 157(a), and 157(c)(1).
[3] The MTA was executed by the four persons in their respective individual capacities and there was no formal execution of the agreement on behalf of any of the three referenced corporations.
[4] A corresponding proceeding has been filed by Drewery in his individual capacity against these same defendants in the 58th Judicial District Court of Jefferson County, Texas.
[5] A written arbitration provision in a contract evidencing a transaction involving commerce extends to any contract affecting commerce, as far as the Commerce Clause of the United States Constitution will reach. Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 268, 115 S. Ct. 834, 836, 130 L. Ed. 2d 753 (1995). The issue is not whether the parties' dispute affects interstate commerce, but whether their dispute concerns a transaction that affects interstate commerce. Anglin, 842 S.W.2d at 272. The FAA does not require a substantial effect on interstate commerce; rather, it requires only that commerce be involved or affected. In re L & L Kempwood Associates, L.P., 9 S.W.3d 125, 127 (Tex.1999). The parties herein have not disputed that the various issues of proprietary misconduct raised by the Plaintiff's Complaint involve commerce to a degree sufficient to place this issue under the auspices of the FAA. The Court would note, however, that the terms of these arbitration agreements could also be enforced under the provisions of the Texas General Arbitration Act, TEX. CIV. PRAC. & REM.CODE §§ 171.001 et. seq., since neither agreement fits within any of the exclusions therefrom. TEX. CIV. PRAC. & REM.CODE ANN. §§ 171.002. (West.Supp.2001).
[6] The FAA provides that:
A written provision in...a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be 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.A. § 2 (West 1999)
If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.
9 U.S.C.A. § 3 (West 1999).
[7] See, e.g. Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 89, 121 S. Ct. 513, 521, 148 L. Ed. 2d 373 (2000) [recognizing that the purpose of the FAA is "to reverse the longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts," citing Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S. Ct. 1647, 1651, 114 L. Ed. 2d 26 (1991)]; In re FirstMerit Bank, N.A., 52 S.W.3d 749, at p. 753, 44 Tex. Sup.Ct. J. 900 (Tex.2001) ["Because federal and state policies continue to favor arbitration, a presumption exists favoring agreements to arbitrate under the FAA."].
[8] See also, Smith Barney Shearson, Inc. v. Boone, 47 F.3d 750, 752 (5th Cir.1995); PaineWebber, Inc. v. Hofmann, 984 F.2d 1372, 1376-77 (3d Cir.1993).
[9] See, e.g., Webb v. Investacorp, Inc., 89 F.3d 252, 257-58 (5th Cir.1996); Prevot v. Phillips Petroleum Co., 133 F. Supp. 2d 937, 939 (S.D.Tex.2001); In re Copeland, 45 S.W.3d 348, 349 (Tex.App. Texarkana 2001, orig. proceeding).
[10] Id. at 350.
[11] See, e.g., Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 475-76, 109 S. Ct. 1248, 1253-54, 103 L. Ed. 2d 488 (1989); General Motors Corp. v. Pamela Equities Corp., 146 F.3d 242, 251 (5th Cir.1998) ["The weight of this presumption is heavy: arbitration should not be denied unless it can be said with positive assurance that an arbitration clause is not susceptible of an interpretation that could cover the dispute at issue." (internal quotations and citations omitted)]. The same presumption is followed by Texas courts. See, e.g., FirstMerit Bank, N.A., 52 S.W.3d 749, at 753 (Tex.2001) Cantella & Co., Inc. v. Goodwin, 924 S.W.2d 943, 944 (Tex.1996); Ikon Office Solutions, Inc. v. Eifert, 2 S.W.3d 688, 693 (Tex.App. Houston [14th Dist.] 1999, no pet.).
[12] See supra, page 642, for a complete text.
[13] See supra, pp. 641-42 for the arbitration provision in the Master Transaction Agreement.
[14] See, e.g., Employers Ins. of Wausau v. Bright Metal Specialties, Inc., 251 F.3d 1316, 1322 (11th Cir.2001); International Paper Co. v. Schwabedissen Maschinen & Anlagen GMBH, 206 F.3d 411, 416-17 (4th Cir.2000); Smith/Enron Cogeneration Ltd. Partnership, Inc. v. Smith Cogeneration International, Inc., 198 F.3d 88, 97 (2d Cir.1999).
[15] Id.
[16] See, e.g., Long v. Silver, 248 F.3d 309, 320 (4th Cir.2001) Grigson v. Creative Artists Agency, 210 F.3d 524, 527 (5th Cir.), cert. denied, 531 U.S. 1013, 121 S. Ct. 570, 148 L. Ed. 2d 488 (2000); McBro Planning and Dev. Co. v. Triangle Elec. Constr. Co., 741 F.2d 342, 344 (11th Cir.1984).
[17] See supra note 11.
[18] See generally, Hays and Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 885 F.2d 1149 (3d Cir.1989) [holding that the arbitration of a debtor-derived, non-core adversary proceeding would not so jeopardize the objectives of the Code].
[19] See, e.g. Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 227, 107 S. Ct. 2332, 2337-38, 96 L. Ed. 2d 185 (1987)["[I]f Congress did intend to limit or prohibit waiver of a judicial forum for a particular claim, such an intent will be deducible from [the statute's] text or legislative history, or from an inherent conflict between arbitration and the statute's underlying purposes." (internal quotations and citations omitted) ] and Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 109 S. Ct. 1917, 104 L. Ed. 2d 526 (1989).
[20] See also, Rodriguez, 490 U.S. at 483, 109 S.Ct. at 1921["[T]he party opposing arbitration carries the burden of showing that Congress intended in a separate statute to preclude a waiver of judicial remedies, or that such a waiver of judicial remedies inherently conflicts with the underlying purposes of that other statute."].
[21] It should be noted that the Court has not actually determined the dispute between the parties as to whether this adversary is, in fact, a core proceeding, and finds that, in this context, it need not do so.
[22] Though such a level of analysis was never really invoked by the Debtor's evidentiary presentation, the Fifth Circuit concluded in National Gypsum that drawing the line of demarcation as to whether a bankruptcy court is mandated to enforce an otherwise applicable arbitration provision begins by distinguishing between those actions derived from the debtor and those created by the Bankruptcy Code. It observed that:
There can be little dispute that where a core proceeding involves adjudication of federal bankruptcy rights wholly divorced from inherited contractual claims, the importance of the federal bankruptcy forum provided by the Code is at its zenith.... [A]ssuming an otherwise applicable arbitration provision, the adjudication of these actions outside the federal bankruptcy forum could in many instances present the type of conflict with the purpose and provisions of the Bankruptcy Code alluded to in McMahon.
Id. at 1068. The court concluded that:
We think that, at least where the cause of action at issue is not derivative of the prepetition legal or equitable rights possessed by a debtor but rather is derived solely from the federal rights conferred by the Bankruptcy Code, a bankruptcy court retains significant discretion to assess whether arbitration would be consistent with the purpose of the Code, including the goal of centralized resolution of purely bankruptcy issues, the need to protect creditors and reorganizing debtors from piecemeal litigation, and the undisputed power of a bankruptcy court to enforce its own orders.
Id. at 1069.
[23] Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 21, 111 S. Ct. 1647, 1650, 114 L. Ed. 2d 26 (1991); Bowen v. Amoco Pipeline Co., 254 F.3d 925, 939 (10th Cir.2001).
[24] AAA Employment Disputes Rule 34(d) cited in Brown v. Coleman Co., Inc., 220 F.3d 1180, 1183-84 (10th Cir.2000)
[25] To the extent that any finding of fact is construed to be a conclusion of law, it is hereby adopted as such. To the extent any conclusion of law is construed to be a finding of fact, it is hereby adopted as such. The Court reserves the right to make additional findings and conclusions as necessary or as may be requested by any party. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1109594/ | 541 So.2d 1044 (1989)
Morris GRAY
v.
EDGEWATER LANDING, INC.
No. 58411.
Supreme Court of Mississippi.
April 5, 1989.
*1045 Michael P. Younger, Johnston & Younger, Brandon, for appellant.
Anna C. Furr, Jackson, for appellee.
Before HAWKINS, P.J., and ROBERTSON and PITTMAN, JJ.
ROBERTSON, Justice, for the Court:
I.
This appeal arises from a breach of lease dispute between a landlord and his corporate restaurateur tenant. The landlord claims that the restaurateur's neglect resulted in severe damage to the leased premises. He seeks to hold the shareholders individually as well. After the Circuit Court had directed a verdict exonerating the shareholders, the jury found for the landlord and against his corporate ex-tenant. As it seems unlikely he will obtain any degree of satisfaction from the now-dormant corporation, the landlord appeals the discharge of the shareholders. We affirm.
II.
A.
Morris Gray lives in Rankin County, Mississippi, and owns a long-term leasehold interest in land bordering the Ross Barnett Reservoir. On March 8, 1977, Gray leased the premises and its improvements to Edgewater Landing, Inc. for five years, with an option to renew for a like term. Edgewater agreed to renovate the existing building at its expense, and to operate a restaurant therein. The lease contained a common clause that upon termination the lessee would return the premises in good condition, reasonable wear and tear excepted.
Edgewater successfully operated a restaurant and lounge on the premises for one and one-half years. At that point Billy Stegall, Edgewater's original shareholder, sold all of his shares in the corporation to Tom Bradley, who continued to run the restaurant. Sometime thereafter, Bradley transferred one-half of the stock to a third party. These shares eventually were acquired by Sandra Martin, Bradley's bookkeeper. Sandra Martin's husband, Randy, acted as the manager of the restaurant.
The corporate restaurateur exercised its option to continue occupancy for an additional five years, thus scheduling the leasehold to terminate on March 31, 1987. Prior to that time, however, on September 29, 1986, the restaurant's liquor license expired, and the corporation was unable to renew it. This contretemps triggered the termination of the lease.
Gray assumed control of the restaurant on September 30, 1986. He was unhappy with what he found. The roof leaked, causing tiles from the suspended ceiling to become watersoaked. The waterfront patio area was overgrown with weeds. Numerous floor tiles had peeled up. Much of the wooden trim on the outside of the building was rotted. Gray denied access to employees of Edgewater Landing, Inc. when they returned to clean the restaurant and to reclaim their personal effects and equipment.
B.
On October 6, 1986, Edgewater Landing, Inc. commenced this civil action by filing its complaint in the Circuit Court of Madison County, Mississippi, naming Morris Gray as defendant and asserting a claim for conversion. *1046 Gray filed a counterclaim charging breach of the lease agreement and joining individually as third party defendants on the lease breach claim Tom Bradley and Sandra L. Martin, shareholders of Edgewater Landing, Inc. Venue was changed to the Circuit Court of Rankin County, Mississippi.
Trial commenced on May 5, 1987, at the close of which the Circuit Court directed a verdict in favor of the individual third party defendants, holding Gray's evidence insufficient as a matter of law to "pierce the corporate veil." On Edgewater's conversion claim, the jury returned a verdict for Gray. On Gray's breach of lease counterclaim, the jury returned a verdict in his favor and against Edgewater and assessed damages in the amount of $102,342.00.
From the directed verdict for Bradley and Martin, Gray has perfected this appeal.
III.
Gray's four separate assignments may be reduced to a single complaint: that the Circuit Court erred when it refused to submit to the jury the matter of the personal liability vel non of the shareholders of Edgewater Landing, Inc., Sandra Martin and Tom Bradley.
Directed verdicts are procedurally prescribed and proscribed by Rule 50(a), Miss. R.Civ.P. The Official Comment to that rule told the Circuit Court to look "solely to the testimony on behalf of the opposing party; if such testimony, along with all reasonable inferences which can be drawn therefrom, could support a verdict for that party, the case should not be taken from the jury."
Many of our cases make the same point. When a party moves for a directed verdict at the close of the evidence, the Circuit Court must consider the evidence before it at that time in the light most favorable to the party against whim the motion has been made, giving that party the benefit of all favorable inferences that may reasonably be drawn therefrom. See Hall v. Mississippi Chemical Express, Inc., 528 So.2d 796, 798 (Miss. 1988); Dale v. Bridges, 507 So.2d 375, 377 (Miss. 1987); Hickox By and Through Hickox v. Holleman, 502 So.2d 626, 628 (Miss. 1987); T.C.L., Inc. v. Lacoste, 431 So.2d 918, 921 (Miss. 1983). We take a like view of the evidence when considering on appeal the charge that the Circuit Court erred in directing a verdict.
Where, in the context of an action for breach of a lease or other similar consensual undertaking, a party seeks to pierce the veil of the corporation with whom he has contracted and to hold the shareholders personally liable, our focus is fixed upon the expectations of the parties in concluding the bargain. Since contract liability arises from an essentially consensual relationship, courts generally decline to disregard the corporate entity, choosing instead to enforce the contract as written. 1 Fletcher Cyc. Corp., § 41.85 (perm. ed. 1983).
As do most courts, this Court has reserved piercing the corporate veil for factual circumstances which are clearly extraordinary where to do otherwise would "subvert the ends of justice." Johnson & Higgins of Mississippi, Inc. v. Commissioner of Insurance, 321 So.2d 281, 284 (Miss. 1975). Among this Court's reports may be found a long string of decisions reflecting our law's commitment to the legal integrity of the corporate entity and the concomitant limited liability of shareholders. See e.g. Illinois Central Railroad Co. v. Cotton Seed Products Co., 166 Miss. 579, 589, 148 So. 371, 372 (1933) (exonerating parent corporation); Berry Sons' Co., Inc. v. Owen, 176 Miss. 562, 570, 169 So. 685, 687 (1936) (same); Murdock Acceptance Corp. v. Adcox, 245 Miss. 151, 164, 138 So.2d 890, 892 (1962) (same); Rauch Industries, Inc. v. Poloron Products of Mississippi, Inc., 362 So.2d 605, 607 (Miss. 1978) (same); see also Gardner v. Jones, 464 So.2d 1144, 1151 (Miss. 1985) (exonerating principal shareholder and president acting as corporate agent); see also T.C.L., Inc. v. Lacoste, 431 So.2d 918, 922 (Miss. 1983).
Nothing in Thames & Co. v. Eicher, 373 So.2d 1033 (Miss. 1979) is to the contrary. Moreover, this case is wholly distinguishable from Gibson v. Manuel, 534 So.2d 199 (Miss. 1988). In Gibson we held a corporate *1047 officer to a fiduciary obligation to the plaintiff who was pledgee of all corporate stock. Here we perceive no basis for charging Bradley and Martin with any fiduciary status vis-a-vis Gray.
A corollary point should be noted. The lease agreement sued upon was executed by the corporation only. Bradley and Martin, in addition to being shareholders, were agents of the corporation as well. Gray complains that Bradley and Martin were the individuals whose actions for the corporation offended the corporation's obligations under the lease agreement. As agents for a disclosed principal, however, they incur no individual liability, absent fraud or other equivalent conduct. Gardner v. Jones, 464 So.2d 1144, 1151 (Miss. 1985); Thames & Co. v. Eicher, 373 So.2d 1033, 1035 (Miss. 1979).
The prior holdings of this Court are consonant with the great weight of authority elsewhere to the effect that, in contract actions, the corporate fiction will not be disregarded in cases of simple negligence. See Kaites v. Dept. of Environmental Resources, 108 Pa.Cmwlth. 267, 529 A.2d 1148, 1151 (1987) ("He may be held liable for misfeasance but not for simple nonfeasance"). A corollary of this general statement is that the breach of a contract, without more (i.e., a showing of fraud) does not justify the disregard of the corporate entity. Grayson v. Nordic Construction Co., Inc., 22 Wash. App. 143, 589 P.2d 283, 286 (1978). As one authority has stated:
The attempt to hold another party liable where the claim asserted is of contractual origin presents difficulties. The question which must be met and answered is why one who contracted with a selected party and received the promise he bargained for should be allowed to look to another merely because he is disappointed in the selected party's performance. The answer under contract law is that he may not hold the other liable without additional compelling facts.
Fletcher Cyc.Corp., § 41.85 (perm. ed. 1983) (footnotes omitted); see also Condenser Service & Engineering Co. v. Brunswick Port Authority, 87 Ga. App. 469, 74 S.E.2d 398, 402 (1953) (finding no liability to a parent corporation for the negligent performance by its subsidiary under a leasing agreement).
Just as the corporation's negligent performance of contractual duties does not justify the disregard of the corporate entity, neither does the fact that the principal shareholder oversees the day-to-day operation.
Because the cardinal rule of corporate law is that a corporation possesses a legal existence separate and apart from that of its officers and shareholders . .. the mere operation of corporate business does not render one personally liable for corporate acts.... Sole ownership of a corporation by one person or another corporation is not a factor, and neither is the fact that the sole owner uses and controls it to promote his ends.
Amason v. Whitehead, 186 Ga. App. 320, 367 S.E.2d 107, 108 (1988) (citations omitted) (emphasis added).
To cause a court to disregard the corporate entity and justify shareholder liability, the complaining party must demonstrate: (a) some frustration of contractual expectations regarding the party to whom he looked for performance; (b) the flagrant disregard of corporate formalities by the defendant corporation and its principals; (c) a demonstration of fraud or other equivalent misfeasance on the part of the corporate shareholder. T.C.L., Inc. v. Lacoste, 431 So.2d 918, 922 (Miss. 1983); Thames & Co. v. Eicher, 373 So.2d 1033, 1035 (Miss. 1979). To present a jury issue on a demand that the corporate veil be pierced, a party must present some credible evidence on each of these points.
Applying these standards to today's case, we find that Gray has failed to offer proof sufficient to create a jury issue on any of these three requisites. First, Gray admits that, despite the change in ownership, he had no doubt that he was contracting with a corporate party, not Billy Stegall or Tom Bradley personally. As a businessman himself, Gray appreciated this distinction. *1048 Second, Gray offered no proof that corporate formalities were not followed by Edgewater Landing, Inc. Indeed, the evidence suggests the contrary, that formalities were at all times adhered to. Third, Gray has put forth no proof that the corporate agent/shareholders perpetrated upon him any fraud. To the contrary, the proof adduced at trial indicates that the lessee and its agents were guilty of no more than simple negligence in the maintenance of the leased premises.
AFFIRMED.
ROY NOBLE LEE, C.J., HAWKINS, P.J., and PRATHER, SULLIVAN, ANDERSON, PITTMAN and BLASS, JJ., concur.
DAN M. LEE, P.J., dissents without written opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1937191/ | 420 B.R. 57 (2009)
In re Luis Soto RIOS; Brenda Tosado Arbelo d/b/a Ferreteros Soto; Ferreteros Soto Inc.; Ferreteria Soto Inc., Debtors.
Luis Soto Rios; Brenda Tosado Arbelo d/b/a Ferreteros Soto; Ferreteros Soto Inc.; Ferreteria Soto Inc., Plaintiffs
v.
Banco Popular De Puerto Rico, Defendant.
Bankruptcy No. 08-01890. Adversary No. 09-00063.
United States Bankruptcy Court, D. Puerto Rico.
November 30, 2009.
*60 Andres Garcia Arregui, Garcia Arregui & Fullana, San Juan, PR, for Plaintiffs.
Patrick D. O'Neill, O'Neill & Gilmore, P.S.C., San Juan, PR, for Defendant.
OPINION AND ORDER
ENRIQUE S. LAMOUTTE, Bankruptcy Judge.
This adversary proceeding is before the court upon the motion for summary judgment filed on August 20, 2009 by Luis Soto Rios and Brenda Tosado Arbelo (hereinafter referred to as "Debtors" or "Plaintiffs") (Docket No. 32). Plaintiffs argue that in conformity with the Mortgage Law of the Commonwealth of Puerto Rico and the Puerto Rico Civil Code, unrecorded mortgage liens at the time of the filing of the bankruptcy petition are not valid against a bona fide purchaser of real property of the debtor, and thus the same may be set aside and avoided under the "strong arm powers" pursuant to 11 U.S.C. § 544(a) of the Bankruptcy Code. Plaintiffs also argue that pursuant to 11 U.S.C. § 547(b) the unrecorded mortgage liens are voidable as a preferential transfer since they were not perfected at the time of the filing of the bankruptcy petition. Banco Popular de Puerto Rico on September 17, 2009 filed an Opposition to Plaintiffs' Motion for Summary Judgment and Cross Motion for Summary Judgment (Docket No. 19) in essence arguing that Section 362(b)(3) of the Bankruptcy Code creates an exception to the automatic stay for "any act to perfect, or to maintain or continue the perfection of, an interest in property to the extent that the trustee's rights and powers are subject to such perfection under Section 546(b)" of the Bankruptcy Code, thus allowing for the postpetition perfection of mortgage liens or the maintenance or continuation of perfection of an interest in property. For the reasons set forth below Plaintiffs' motion for summary judgment is denied and Banco Popular de Puerto Rico's cross motion for summary judgment is granted.
Facts and Procedural Background
Plaintiffs filed a bankruptcy petition under Chapter 11 of the Bankruptcy Code on March 29, 2008. The 341 meeting of creditors was scheduled for May 5, 2008 (Docket No. 5 in lead case) and was subsequently continued on May 16, 2008, (Docket No. 12 in lead case) May 30, 2008 (Docket No. 16 in lead case) and finalized on June 23, 2008 (Docket No. 24). Plaintiffs failed to include in their Schedule D-Creditors Holding Secured Claims or in their Schedule F-Creditors Holding Unsecured Non-Priority Claims, the mortgage notes which were all guaranteed with the unrecorded mortgage liens in controversy (Docket Nos. 1, 13 & 22 in lead case[1]). On July 14, 2008, Banco Popular de Puerto Rico (hereinafter referred to as "Defendant" or "Creditor") filed secured proof of claim number 35-1 in the amount of $2,594,269.81[2]. Included in proof of claim number *61 35-1 are the mortgage notes and the corresponding mortgage deed pertaining to the three (3) mortgage deeds which were unrecorded at the time of the filing of the bankruptcy petition.
On March 25, 2009, Plaintiffs filed the instant adversary proceeding alleging several causes of action which include the following: (i) the recordation of the mortgage deeds in controversy constitutes a post-petition transfer that is avoidable pursuant to 11 U.S.C. § 549 of the Bankruptcy Code; (ii) the mortgage deeds were not recorded at the time of the filing of the bankruptcy petition, meaning that perfection of the same may be avoided as a preferential transfer pursuant to 11 U.S.C. § 547(b) of the Bankruptcy Code since the Defendant did not have a real estate interest on debtors' properties; and (iii) at the time of the filing of the bankruptcy petition, the mortgage liens had not been recorded and thus, pursuant to 11 U.S.C. § 544 of the Bankruptcy Code, the debtor in possession may avoid these liens as a hypothetical judicial lien holder or a bonafide purchaser of real property.
On April 14, 2009, Defendant filed a Motion to Dismiss Complaint Under Fed. R.Civ.P. 12(b)(6) in which it argues the following: (i) Section 362(b)(3) of the Bankruptcy Code provides an exception to the automatic stay to perfect or continue to perfect an interest in property pursuant to Section 546(b) of the Bankruptcy Code; (ii) Section 546(b) of the Bankruptcy Code limits debtors' avoidance powers hampering their ability to avoid post-petition transfers under Section 549(a) of the Bankruptcy Code if under applicable state law a lien which is perfected post-petition may relate back to a time before the commencement of the case; (iii) Article 53 of the Mortgage Law of Puerto Rico, 30 L.P.R.A. § 2256 "establishes that the recorded titles shall have effect against third parties from the date of their registration and that the registration date shall be the date of the original presentation of the documents at the Registry;" (Docket No. 6, paragraph 34) (iv) the Supreme Court of Puerto Rico has emphasized that registration of mortgage deeds in the Registry of Property becomes effective from the date of presentation; (v) the entry of presentation ("asiento de presentation") serves as an implicit notice to the public until the document is duly registered; (vi) the Mortgage Law of Puerto Rico nor the Regulations for Execution of the Mortgage Law establish a specific term for the Property Registrar to pass judgment on the titles presented for registration; (vii) the mortgage deeds that create the mortgage liens in controversy were presented to the corresponding Registries of Property on the following dates: (a) October 18, 2004 (mortgage deed #328); (b) August 11, 2005 (mortgage deed #281) and August 30, 2005 (mortgage deed # 283); (viii) the entries of presentation for the mortgage liens in controversy remain in effect at the corresponding Registries of Property since the same have not been cancelled, extinguished nor the deeds by which the entries of presentation were created have been removed or withdrawn; and (ix) Section 547(e)(1)(A) of the Bankruptcy Code is inapplicable to this adversary proceeding because recordation of a mortgage is not avoidable as a preferential transfer since the Mortgage Law of Puerto Rico relates back to a time before the commencement of the case.
Plaintiffs on May 12, 2009 filed a reply to Defendant's motion to dismiss by which *62 it alleges that their complaint states various causes of actions upon which relief may be granted based on the following allegations: (i) Defendant's premise that the presentation of a deed of mortgage to the Registry of Property is sufficient to create a valid lien against third parties is incorrect; (ii) the act of recordation of a mortgage lien is a constituting act which produces real effects and is enforceable erga omnes, thus an unrecorded mortgage deed is not a valid property right enforceable against third parties; (iii) the Registrar of the Property is stayed from performing any review "calificación registral" of the mortgage liens presented since it would constitute a violation of the automatic stay pursuant to 11 U.S.C. § 362(a)(4); (iv) for the exception to the automatic stay pursuant to Section 362(b)(3) of the Bankruptcy Code to apply the following three requirements must exist; (a) an act to perfect; (b) an "interest in property;" and (c) under circumstances in which the perfection-authorizing statute fits within the contours of 11 U.S.C. § 546(b)(1)(A); (v) Plaintiffs argue that Defendant fails to comply with the first requirement because absent recordation, a creditor only has a personal obligation since the mortgage lien has not been created; (vi) Defendant fails to satisfy the second requirement because a mortgage lien is created after it is duly recorded by the Registrar of the Property, thus there is no property interest to perfect (the presentation of a deed of mortgage is not an act of perfection and until the mortgage is recorded, the creditor has no property interest on the debtor's property); and (vii) Plaintiffs in conformity with 11 U.S.C. § 544(a)(1) of the Bankruptcy Code have the rights of a judgment lien creditor and as such have priority over an unperfected security interest and may avoid the same (Docket No. 10).
Subsequently, Defendant on May 19, 2009 filed a Motion for Leave to File Sur-Reply to Plaintiffs' reply to Motion to Dismiss along with the sur-reply (Docket Nos. 11 and 12). In its Sur-Reply, Defendant basically argues that it complies with the three (3) requirements of Section 362(b)(3) of the Bankruptcy Code due to the following reasons: (i) the existence of a property interest is defined in conformity with state law thus, under the laws of the Commonwealth of Puerto Rico the legal issue of whether a creditor has a property interest in a real property when the mortgage deed has been presented but not recorded is an open question; (ii) an interest in property is much more than just a perfected lien; (iii) it has presented pre-petition to the corresponding Registries of Property the three (3) mortgage deeds in controversy and should not be prejudiced by the Property Registrar's delay in recording the same; (iv) Defendant's interest in the properties is superior when compared to other acts which are necessary to establish a valid property interest; (v) any acts undertaken by Defendant to continue the perfection will not be barred by the automatic stay; (vi) Section 546(b)(1)(B) applies to the instant case because Defendant has undertaken all the necessary acts to record its mortgage liens over Plaintiffs' properties; (vii) pursuant to Section 546(b) of the Bankruptcy Code, "the rights and powers of the trustee are subject to state statute that provides that perfection, or maintenance or continuation of perfection of the property interest relates back in time; with the effect that the party who takes action to perfect, or to maintain or continue the perfection, has priority or superpriority over the interest acquired by a third party before the date of perfection or the date on which action is taken to effect the maintenance or continuation of perfection in the property." (Docket No. 12, paragraph 35); (viii) the trustee or debtor in possession is subject to the relation *63 back provision of the Mortgage Law of Puerto Rico and as such cannot avoid the perfection or continuation of perfection of the mortgage liens and (ix) the mortgage deeds in controversy were presented three to four years pre-petition, thus the perfection of these mortgage liens is not subject to the trustee's avoidance powers pursuant to Sections §§ 544, 545 or 549 of the Bankruptcy Code (Docket No. 12). On June 19, 2009, Plaintiffs filed an Objection to Defendant's Sur-Reply presenting the following arguments: (i) Section 546(b)(1)(A) is inapplicable to the instant case because at the time of the bankruptcy petition, Defendant did not have a pre-petition property interest over debtors' properties since the mortgage liens had not been duly recorded by the Property Registrar; and (ii) pursuant to Section 544(a)(1) of the Bankruptcy Code, Plaintiffs as debtor in possession, has the status of a hypothetical judicial lien holder and thus has priority over an unperfected security interest and may request the avoidance of the unrecorded liens.
On July 24, 2009 both parties filed the Joint Pre-Trial Report (Docket No. 14). Plaintiffs' statement of issues consisted of the following: (i) "[a]t the time of the filing of the bankruptcy petition the liens had not been created pursuant to state law and thus the amounts owed are unsecured;" (ii) "[u]nder the avoidance provisions of the Code the debtor can request that the avoidance of such alleged liens;" and (iii) "[o]nce the petition is filed the Registrar of the Property is stayed from recording or registering the deeds and any such action is null and void." (Docket No. 14). Defendant's statement of issues consisted of the following (i) "[w]hether Banco Popular of Puerto Rico is the holder of a valid, perfected and enforceable secured claim and if such secured lien may be avoided by the trustee;" and (ii) "[u]nder state and bankruptcy law the debtor cannot avoid the continuation or perfection of the mortgage liens that are pending for recordation in the Registry of the Property." (Docket No. 14). The pretrial conference was held on July 31, 2009 in which the court determined that the legal issues in this adversary proceeding as well as in adversary proceeding 09-00049 were substantially similar and could be disposed of by summary judgment (Docket No. 15).
On August 20, 2009, Plaintiffs filed a Motion for Summary Judgment and a Statement of Material Uncontested Facts (Docket Nos. 17 and 18). Plaintiffs' basis for its motion for summary judgment consists of the following legal arguments: (i) Section 544 of the Bankruptcy Code grants the trustee (or debtor in possession) with the rights of a judgment lien creditor and as such the same has priority over an unperfected security interest, which in this cases consists of the unrecorded mortgage liens which can be set aside and avoided in conformity with this section; (ii) section 546(b)(1)(A) of the Bankruptcy Code is inapplicable in this case because at the time of the filing of the bankruptcy petition, Defendant's mortgage liens were not recorded by the Property Registrar, thus Defendant is devoid of a pre-petition property interest and has only a personal obligation against Plaintiffs; and (iii) under the provisions of Section 547 of the Bankruptcy Code the unrecorded mortgage liens may be avoided as a preferential transfer since the same were not perfected at the time of the filing of the bankruptcy petition. (Docket No. 17).
Subsequently, on September 17, 2009, Defendant filed its Opposition and Cross Motion to Plaintiffs' Motion for Summary Judgment based on the following legal arguments: (i) the rights of the trustee pursuant to Section 544(a)(3) of the Bankruptcy Code are subject to the perfection or maintenance or continuation of perfection *64 of an interest in property under the provisions of Section 546(b)(1) which permits the post-petition perfection of liens if, absent the bankruptcy filing and permitted by applicable law, the interest holder could have perfected the lien against a person acquiring rights before the date of perfection or maintenance or continuation of perfection; (ii) pursuant to Section 546(b) the rights and powers of the trustee (debtor in possession) are subject to state statute that provides for the perfection, or maintenance or continuation of perfection of the property interest under a relation back provision which has priority or superpriority over the interest acquired by the party before the date of perfection or the date on which action is taken to effect the maintenance or continuation of perfection in the property; (iii) the interplay between Section 547(e)(1)(A) and the applicable law, namely, Articles 52 and 53 of the Mortgage Law of Puerto Rico, 30 L.P.R.A. §§ 2255 & 2256 (relation back provision) is that the trustee (debtor in possession) is subject to the applicable law and as such once the mortgage deeds are recorded they are effective against third parties (including the trustee or debtor in possession) from the initial date of presentation, thus the debtor in possession may not avoid the recordation of Defendant's mortgage liens; and (iv) the post-petition recordation of the mortgage liens is an exception to the automatic stay since it satisfies the three (3) requirements under Section 362(b)(3) of the Bankruptcy Code. (Docket No. 19). On September 17, 2009, Defendant filed a statement opposing certain of Plaintiffs' undisputed material facts and including other undisputed material facts (Docket No. 20).
In a nutshell, the legal controversies in the instant case are whether Defendant's unrecorded mortgage liens meet the necessary requirements under the exception to the automatic stay provided under Section 362(b)(3) of the Bankruptcy Code and whether under the provisions of Section 547 of the Bankruptcy Code the unrecorded mortgage liens may be avoided as a preferential transfer since the same were not perfected at the time of the filing of the bankruptcy petition.
Standard for Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure, is applicable to this proceeding by Rule 7056 of the Federal Rules of Bankruptcy Procedure, provides that summary judgment should be entered "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Bankr.P. 7056; see also, In re Colarusso, 382 F.3d 51 (1st Cir.2004), citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
"The summary-judgment procedure authorized by Rule 56 is a method for promptly disposing of actions in which there is no genuine issue as to any material fact or in which only a question of law is involved." 10A Wright, Miller & Kane, Federal Practice and Procedure 3d § 2712 at 198. "Rule 56 provides the means by which a party may pierce the allegations in the pleadings and obtain relief by introducing outside evidence showing that there are no fact issues that need to be tried." Id. at 202-203. Summary judgment is not a substitute for a trial of disputed facts; the court may only determine whether there are issues to be tried, and it is improper if the existence of a material fact is uncertain. Id. at 205-206.
Summary judgment is warranted where, after adequate time for discovery and upon motion, a party fails to make a showing sufficient to establish the existence of an *65 element essential to its case and upon which it carries the burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The moving party must "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).
For there to be a "genuine" issue, facts which are supported by substantial evidence must be in dispute thereby requiring deference to the finder of fact. Furthermore, the disputed facts must be "material" or determinative of the outcome of the litigation. Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975), cert. denied, 425 U.S. 904, 96 S.Ct. 1495, 47 L.Ed.2d 754 (1976). When considering a petition for summary judgment, the court must view the evidence in the light most favorable to the nonmoving party. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962); Daury v. Smith, 842 F.2d 9, 11 (1st Cir.1988).
The moving party invariably bears both the initial as well as the ultimate burden in demonstrating its legal entitlement to summary judgment. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). See also López v. Corporation Azucarera de Puerto Rico, 938 F.2d 1510, 1516 (1st Cir.1991). It is essential that the moving party explain its reasons for concluding that the record does not contain any genuine issue of material fact in addition to making a showing of support for those claims for which it bears the burden of trial. Bias v. Advantage International, Inc., 905 F.2d 1558, 1560-61 (D.C.Cir.1990), cert. denied, 498 U.S. 958, 111 S.Ct. 387, 112 L.Ed.2d 397 (1990).
The moving party cannot prevail if any essential element of its claim or defense requires trial. López, 938 F.2d at 1516. In addition, the moving party is required to demonstrate that there is an absence of evidence supporting the nonmoving party's case. Celotex, 477 U.S. at 325, 106 S.Ct. 2548. See also, Prokey v. Watkins, 942 F.2d 67, 72 (1st Cir.1991); Daury, 842 F.2d at 11. In its opposition, the nonmoving party must show genuine issues of material facts precluding summary judgment; the existence of some factual dispute does not defeat summary judgment. Kennedy v. Josephthal & Co., Inc., 814 F.2d 798, 804 (1st Cir.1987). See also Kauffman v. Puerto Rico Telephone Co., 841 F.2d 1169, 1172 (1st Cir.1988); Hahn, 523 F.2d at 464. A party may not rely upon bare allegations to create a factual dispute but is required to point to specific facts contained in affidavits, depositions and other supporting documents which, if established at trial, could lead to a finding for the nonmoving party. Over the Road Drivers, Inc. v. Transport Insurance Co., 637 F.2d 816, 818(1st Cir.1980).
The moving party has the burden to establish that it is entitled to summary judgment; no defense is required where an insufficient showing is made. López, 938 F.2d at 1517. The nonmoving party need only oppose a summary judgment motion once the moving party has met its burden. Adickes, 398 U.S. at 159, 90 S.Ct. 1598.
Uncontested Material Facts
1. Plaintiffs are the owners of the following real properties:
A. Lot located in Barrio Cacao in the municipality of Quebradillas, Puerto Rico with a surface area of 800.08 square meters that has a two-story reinforced concrete structure, the first story is used for commercial purposes and the second story is used for residential purposes. This lot is segregated from property 2061 registered in Folio 47 of Tome 44 of Quebradillas. *66 Mortgage deed # 328 was presented for inscription on October 18, 2004. The mortgage deed was executed on September 23, 2004 in favor of Banco Popular de Puerto Rico for the amount of $165,000.00 of which $104,000.00 was allocated to this property, before Notary Public Agustin F. Soto Hernandez. Mortgage deed #283 which was presented for inscription on August 30,2005. This mortgage deed was executed on August 11, 2005 in favor of Banco Popular de Puerto Rico for the amount of $220,000.00 of which $170,000.00 was allocated to this property, before Notary Public Agustin F. Soto Hernandez.[3]
B. Lot located in Barrio Cacao in the municipality of Quebradillas, Puerto Rico with a surface area of 1127.50 square meters. This lot is segregated from property 1038 registered in Folio 27 of Tome 19 of Quebradillas. This lot is registered at Folio 51, Tome 44 of Quebradillas, 7th inscription. Mortgage deed # 328 was presented for inscription on October 18, 2004. The mortgage deed was executed on September 23, 2004 in favor of Banco Popular de Puerto Rico for the amount of $165,000.00 of which $61,000.00 was allocated to this property, before Notary Public Agustin F. Soto Hernandez. Mortgage deed #283 was presented for inscription on August 30, 2005. The mortgage deed was executed on August 11, 2005 in favor of Defendant for the amount of $220,000.00 of which $50,000.00 was allocated to this property, before Notary Public Agustin F. Soto Hernandez.[4]
*67 C. Lot located in Barrio Pueblo in the municipality of Hatillo, Puerto Rico with a surface area of 641.00 square meters. This lot is registered at Folio 65, Tome 346 of Hatillo, property number 3,466. Mortgage deed # 281 was presented for inscription on August 30, 2005. The mortgage deed was executed on August 11, 2005 in favor of Defendant for the amount of $19,000.00 before Notary Public Agustin F. Soto Hernandez.[5]
2. Plaintiffs executed the following promissory and mortgage notes in favor of Defendant.
3. On August 11, 2005, Plaintiffs executed a mortgage note in favor of Defendant for the amount of $220,000.00 and in guarantee of this note, Plaintiffs executed Mortgage Deed # 283 in Aguadilla, Puerto Rico before Notary Public Agustin F. Soto Hernandez, on the same date. Mortgage Deed # 283 was presented for recordation (inscription) at the Puerto Rico Real Property Registry of Arecibo, Section II, on August 30, 2005.
4. On August 11, 2005, Plaintiffs executed another mortgage note in favor of Defendant for the principal amount of $19,000.00 and in guarantee of this note, Plaintiffs executed Mortgage Deed #281 in Aguadilla, Puerto Rico before Notary Public Agustin F. Soto Hernández, on the same date. Mortgage Deed #281 was presented for recordation (inscription) at the Puerto Rico Real Property Registry of Arecibo, Section II, on August 30, 2005.
5. On September 23, 2004, Plaintiffs executed another mortgage note in favor of Defendant for the principal amount of $165,000.00 and in guarantee of this mortgage note, Plaintiffs executed Mortgage Deed # 328, in Aguadilla, Puerto Rico before Notary Public Agustin F. Soto Hernandez, on the same date. Mortgage Deed # 328 was presented for recordation (inscription) at the Puerto Rico Real Property Registry of Arecibo, Section II, on October 18, 2004.
6. The referenced mortgage deeds had not been recorded at the time of the filing of the bankruptcy petition, the same were pending recordation prior to the filing of the bankruptcy petition.
*68 7. The referenced mortgage deeds have not been recorded post-petition, the recordation of the same is pending.
Applicable Law and Analysis
Automatic Stay under 11 U.S.C. § 362(a)
The automatic stay provision is one of the fundamental debtor protections in the Bankruptcy Code. It gives the debtor a "breathing spell" from creditors and it stops all collection efforts, all harassment, and all foreclosure actions. H.R.Rep. No. 95-595, 95th Cong. 1st Sess. 340-342 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 54-55 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5840, 6296-97. "It allows the debtor to attempt a repayment or reorganization plan or simply be relieved of the financial pressures that drove him into bankruptcy." Id. The automatic stay prohibits "any act to create, perfect, or enforce any lien against property of the estate." 11 U.S.C. § 362(a)(4). Despite the fundamental importance of the automatic stay, Congress has allowed certain exceptions to the automatic stay, such as those included under Section 362(b) of the Bankruptcy Code. See 229 Main St. Ltd. Pshp. v. Mass. EPA (In re 229 Main St.), 262 F.3d 1, 3-4 (1st Cir.2001).
Exception to Automatic Stay under 11 U.S.C. § 362(b)(3)
Section 362(b)(3) of the Bankruptcy Code provides an exception to the automatic stay, under subsection (a) of Section 362 of the Bankruptcy Code by allowing, "any act to perfect, or to maintain or continue the perfection of, an interest in property to the extent that the trustee's rights and powers are subject to such perfection under Section 546(b) of this title." 11 U.S.C. § 362(b)(3). To qualify for this particular exception, the trustee or debtor in possession[6] must satisfy the following three (3) requirements: (i) an act to perfect; (ii) an interest in property; and (3) under the circumstances in which the perfection-authorizing statute fits within the parameters of Section 546(b) of the Bankruptcy Code. In re 229 Main St., 262 F.3d at 5. Thus, Section 362(b)(3) depends on the limitations imposed on the trustee's avoiding powers pursuant to Section 546(b) of the Bankruptcy Code. The purpose behind Section 546(b)(1) is to "protect, in spite of the surprise intervention of a bankruptcy petition, those whom State law protects by allowing them to perfect their liens as of an effective date that is earlier than the date of perfection." Alan N. Resnick & Henry J. Sommer, 5 Collier on Bankruptcy ¶ 546.03[1] (15th ed.2009) quoting S.Rep. No. 989, 95th Cong., 2d Sess. 86-87 (1978), reprinted in App. Pt. 4(e)(1) infra; H.R.Rep. No. 595, 95th Cong., 1st Sess. 371-371 (1977) reprinted in App. Pt. 4(d)(i) infra.
Section 546(b)(1) exempts from the trustee's avoiding powers under Sections 544, 545 and 549 of the Bankruptcy Code "any generally applicable law that permits the perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection; or provides for the maintenance or continuation of perfection of an interest in property to be effective against an entity that acquires rights in such property before the date on which action is taken to effect such maintenance or continuation." 11 U.S.C. §§ 546(b)(1)(A) & 546(b)(1)(B). "Thus, simply stated, if a creditor possesses a prepetition interest in property, and state law establishes a time period for perfection of a lien based upon that interest, the `lien *69 does not lose its preferred standing by reason of the fact that it [is] not perfected until after the commencement of a bankruptcy' so long as it is perfected within the time period established by state law." Lincoln Sav. Bank, FSB v. Suffolk County Treasurer (In re Parr Meadows Racing Ass'n), 880 F.2d 1540, 1546 (2d Cir.1989), cert, denied, 493 U.S. 1058, 110 S.Ct. 869, 107 L.Ed.2d 953 (1990) (quoting Poly Industries, Inc. v. Mozley, 362 F.2d 453, 457 (9th Cir.1966)). A creditor must satisfy the following requirements for Section 546(b)(1) to be applicable: (i) it must act pursuant to the law of general applicability[7]; (ii) the law must permit the creditor to perfect an interest in property; and (iii) such perfection must be effective against previously acquired rights in the property. In re 229 Main St., 262 F.3d at 9. Moreover, the "gist of section 546(b)(1)(A) is that `the filing of a bankruptcy petition does not prevent the holder of an interest in property from perfecting its interest if, absent the bankruptcy filing, the interest holder could have perfected its interest against an entity acquiring rights in the property before the date of perfection.'" In re 229 Main St., 262 F.3d at 12 (quoting 5 Collier on Bankruptcy ¶ 546.03[2][a]).
In the instant case, one of the requirements that must be satisfied under both Sections 362(b)(3) and 546(b)(1) is whether Creditor had a prepetition property interest in the aforementioned real properties. Debtors' argue that Creditor did not have a property interest over the real properties because the mortgage deeds of the same had not been recorded at the time of the bankruptcy filing, thus pursuant to the Mortgage Law of Puerto Rico, the mortgage liens had not been created. Creditor equates property interest with the creation of a lien, meaning that in order for there to exist a property interest there must be a lien. However, the United States Court of Appeals for the First Circuit in the case of In re 229 Main St. held that "the term `interest in property' as used in section 362(b)(3) is broader than the term `lien.'" In re 229 Main St. 262 F.3d at 6. In the instant case, Creditor had a right to record various liens on three (3) of Debtors' real estate properties as result of three (3) mortgage notes and three (3) mortgage deeds which all had been executed well over two and a half years prior to Debtors' filing of their bankruptcy petition. Creditor's prepetition property interest in the real properties is based on taking all possible administrative steps (presenting the mortgage deeds to the corresponding Registrar of Properties well over two and a half years prior to Debtors' filing of their bankruptcy petition) in order for its property interest to be duly recorded by the Property Registrar so that their mortgage liens could become effective from the date the mortgage deeds were presented to the Property Registry pursuant to Article 53 of the Mortgage Law of Puerto Rico, 30 L.P.R.A. § 2256.
The second requirement for the exception of the automatic stay pursuant to Section 362(b)(3) of the Bankruptcy Code is "an act to perfect, or to maintain or continue the perfection, of an interest in property." The United States Court of Appeals for the First Circuit In re 229 Main St. held that, "section 362(b)(3) says that the filing of a bankruptcy petition does not automatically stay an act to perfect, the simultaneous postpetition creation and perfection of a lien may come within the pertinent exception to the automatic *70 stay so long as the creditor holds a valid prepetition interest in the property." In re 229 Main St., 262 F.3d at 9. In the instant case, pursuant to Article 53 of the Mortgage Law of Puerto Rico, 30 L.P.R.A. § 2256, the mortgage liens will be simultaneously constituted and perfected on the date the Property Registrar records the same. However, the constitution and perfection of the mortgage liens will relate back to the date the same were presented for recordation (registration) to the Property Registrar. Moreover, it is important to note that, "the process of inscription begins when the mortgage deed is presented and recorded in the daily book of presentations kept by the Registrar. This entry is recorded in the daily books, applying the principle of prior tempore potior iure." Doral Mortg. Corp. v. Segarra-Miranda, 412 B.R. 72, 74 (D.P.R.2009). Furthermore, ". . . registered titles become effective for third parties from the date of recordation, the date of their presentation shall be the decisive moment for this recordation to become effective, because the effects of recordation in the Registry are retroactive to the specific date of presentation." Gasolinas de Puerto Rico Corporation v. Vazquez, 155 D.P.R. 652, 675 (2001) citing II Ramón M. Roca Sastre, Derecho Hipotecario: Fundamentos de la Publicidad Registral 5, Barcelona, Ed. Bosch (8th ed.1995); Luis R. Rivera Rivera, Derecho Registral Inmobiliario Puertorriqueño, pg. 188 (2000); Ponce Federal v. Registrador, 105 D.P.R. 486 (1976). Thus, Creditor's security interest in the real properties will be considered constituted and perfected as of the date of the presentation of the three (3) mortgage deeds. It is important to note that, Article 52 of the Mortgage Law of Puerto Rico requires that deeds be recorded by the Property Registrar within sixty (60) days after the date of their presentation, except "for just cause that is duly justified and admitted by the Director." 30 L.P.R.A. § 2255. However, this term is illusory, given the various types of situations that may fall under just causes pursuant to Article 66.2 of the Mortgage Law Regulations. Luis R. Rivera Rivera, Derecho Registral Inmobiliario Puertorriqueño, pg. 181 (2002). In the majority of cases, three to five years elapse between the date of presentation and the date the Property Registrar qualifies the pertinent documentation. Id. at 182.
Under the Debtors' interpretation, mortgage deeds which had been duly presented to the Property Registry prepetition, but had not been recorded by the Property Registrar prior to the filing of the bankruptcy petition would never qualify for the automatic stay exemption and would in essence make ineffective a creditor's secured interest (through the mechanism of employing mortgage liens) because of the Property Registrar's backlog and delay in registering mortgage deeds. The result being that a creditor that loaned monies relying on a lien will experience its interest being transformed to an unsecured interest (personal obligation) by the filing a bankruptcy petition prior to the date of the recordation of the mortgage lien.
Lastly, the third requirement for the exception to the automatic stay to apply is that Creditor meets the requirements set forth in Section 546(b)(1) of the Bankruptcy Code, namely; (i) that the creditor must act pursuant to the law of general applicability; (ii) that law must allow the creditor to perfect an interest in property; and (iii) such perfection must be effective against previously acquired rights in the property. The first two (2) elements established pursuant to Section 546(b)(1) were previously discussed under the requirements of Section 362(b)(3) of the Bankruptcy Code. Both parties agree that the law of general applicability is the Mortgage Law and Regulations of Puerto *71 Rico and that this law in particular, Article 53 of the same has a specific relation back provision which provides that perfection of the creditor's secured interest (interest in property) relate back to the date of presentation. 30 L.P.R.A. § 2256. The third requirement is basically whether absent the bankruptcy filing, the creditor could have perfected its interest against an entity acquiring rights in the property before the date of perfection. This third requirement is intimately related to Mortgage Law of Puerto Rico's relation back provision, since any other liens or encumbrances presented or registered with a prior date to the filing of the bankruptcy petition but with a subsequent date to the dates the mortgage liens were presented would not take precedence over the mortgage liens based on the principle "prior tempore potior iure."
Avoidance Action under 11 U.S.C. § 544(a)(l) & 544(a)(3)
Sections 544(a)(1) and 544(a)(3) of the Bankruptcy Code provides in relevant part that:
"[t]he trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by(1) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains, at such time and with respect to such credit, a judicial lien on all property on which a creditor on a simple contract could have obtained such a judicial lien, whether or not such a creditor exists; (3) a bona fide purchaser of real property, other than fixtures, from the debtor, against whom applicable law permits such transfer to be perfected, that obtains the status of a bona fide purchaser at the time of the commencement of the case, whether or not such a purchaser exists [and has perfected such transfer]." 11 U.S.C. §§ 544(a)(1) & 544(a)(3).
The rights of a trustee under 11 U.S.C. § 544 are determined by state law. Abboud v. The Ground Round, Inc., 482 F.3d 15, 20 (1st Cir.2007) (holding Pennsylvania law determined the rights of a hypothetical lien creditor under 11 U.S.C. § 544(a)(1)); See In re Santos & Nieves, Inc., 814 F.2d 57, 61 (1st Cir.1987) citing Carina Mercury, Inc. v. Igaravides, 344 F.2d 397 (1st Cir.1965). Moreover, the extent of the trustee's rights as a judicial lien creditor or a bona fide purchaser of real property is dictated by the state law of the jurisdiction governing the property in question. Alan N. Resnick & Henry J. Sommer, 5 Collier on Bankruptcy ¶ 544.03[1] (15th ed.2009). The purpose of the trustee's avoiding powers is simply "to foster the equal distribution of a debtor's assets among its general non-priority creditors." Segarra v. Osario (In re Rubero), 2006 WL XXXXXXXXXXX Bankr.Lexis 3912 (Bankr.D.P.R.2006). However, the trustee's avoiding powers under Section 544(a) are subject to Section 546(b) of the Bankruptcy Code, which provides an important exception to the trustee's avoiding powers since the same are subject to "any generally applicable law that permits" relation back. Alan N. Resnick & Henry J. Sommer, 5 Collier on Bankruptcy ¶ 544.04 (15th ed.2009). As discussed herein, this court concludes that Creditor satisfies the requirements under Section 546(b) of the Bankruptcy Code, thus falling within the exception to the trustee's avoiding powers pursuant to Section 544(a) of the Bankruptcy Code.
Preferential Transfers under 11 U.S.C. § 547(b) & 547(e)(1)(A)
Section 547(b) of the Bankruptcy Code allows the trustee to avoid, as a preference,
*72 "any transfer of an interest of the debtor in property(1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made; (3) made while the debtor was insolvent; (4) made(A) on or within 90 days before the date of the filing of the petition; or (B) between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and (5) that enables such creditor to receive more that such creditor would receive if(A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of this title." 11 U.S.C. § 547(b).
Moreover, "the trustee has the burden of proving the avoidability of a transfer under subsection (b) of this section." 11 U.S.C. § 547(g).
Section 547(e)(1)(A) provides, "a transfer of real property other than fixtures, but including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona fide purchaser of such property from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of the transferee." 11 U.S.C. § 547(e)(1)(A). Moreover, Section 547(e)(3) establishes that, "a transfer is not made until the debtor has acquired rights in the property transferred." 11 U.S.C. § 547(e)(3). Perfection as to real property depends entirely upon state law. See Alan N. Resnick & Henry J. Sommer, 5 Collier on Bankruptcy ¶ 547.06[1] (15th ed.2009). As discussed herein, the applicable state law is Article 53 of the Mortgage Law of Puerto Rico, 30 L.P.R.A. § 2256, which has a relation back mechanism that establishes that mortgage liens become effective against third parties from the date the mortgage deeds were presented to the Property Registry. It is important to note that, "the entry of presentation is constructive notice to all the world until the document is recorded." Flores v. Arroyo, 43 D.P.R. 282, 283 (1932). Thus, the transfers of the three (3) mortgages between Debtors and Creditor occurred well over two and a half years from the date of the filing of the bankruptcy petition, meaning that in order for a bonafide purchaser to acquire an interest superior to Creditor's interest in these properties the same had to present to the Property Registrar for recordation a mortgage deed prior to the date in which Creditor presented its mortgage deeds.
Conclusion
For the reasons stated above, this court finds that the Mortgage Law of Puerto Rico satisfies the requirements of Sections 362(b)(3) and 546(b)(1) of the Bankruptcy Code, thus falling within the exception to the automatic stay and the exception to the trustee's avoiding powers under Section 544(a) of the Bankruptcy Code. This court also concludes that Plaintiffs have failed to establish all the necessary elements of a preferential transfer under Section 547(b) and 547(e)(1)(A) of the Bankruptcy Code.
In view of the foregoing, Plaintiffs' motion for summary judgment is hereby DENIED and Defendant's cross motion for summary judgment is hereby GRANTED. Therefore, it is now ordered that the instant complaint be and it is hereby dismissed.
Judgment shall be entered accordingly.
NOTES
[1] References to the lead case are to the entries and documents filed in the bankruptcy case, case number 08-01890(ESL).
[2] The supporting documentation presented by the Creditor for claim number shows that the amount of $2,594,269.81 consists of the following: (i) $2,525,767.45 for loan number XXXXXXX-XXXX which is guaranteed by various mortgage notes (the principal for this promissory note was $2,500,000.00); (ii) $40,796.24 for loan number XXXXXXX-XXXX which is guaranteed by various mortgage notes (the principal of this loan was for $50,000.00); (iii) $360.24 for an overdraft in "flexicuenta" account number XXX-XXXXXX; (iv) $5,000.00 for an overdraft in "flexicuenta" account number XXX-XXXXXX; and (v) $22,345.65 for an overdraft and reserve in "flexicuenta" account number XXX-XXXXXX. To guarantee the payment of the two (2) loans, Debtors signed various promissory notes which were all guaranteed by mortgage deeds in favor of Creditor. The three (3) mortgage notes and mortgage deeds in controversy were amongst the mortgage notes which were provided by Debtors to guarantee these two (2) loans.
[3] "RUSTICA: Solar radicado en el Barrio Cacao, del termino municipal de Quebradillas, Puerto Rico, con una cabida superficial del 800.08 metro cuadrados. En lindes al Norte, en 34.10 metro con terrenos propiedad de Francisco Avila; por el Sur y Oeste, en 31.38 metros y 19.85 metros respectivamente, con el remanente de la finca principal de la cual se segrega propiedad de Miguel A. Garciá y por el Este, en 31.00 metros con la carretera estatal # 2. Enclava una estructura de dos plantas de concreto reforzado dedicada la parte inferior a comercio y su parte superior a vivienda.
TRACTO: Es segregación de la finca 2061 inscrita al Folio 47 del Tomo 44 de Quebradillas.
GRAVAMENES: Por su procedencia: Se encuentra libre de cargas.
DOCUMENTOS PRESENTADOS: Al asiento 1113 del Diario 296 se presento el 18 de octubre de 2004 la escritura # 328 de Hipoteca otorgada el 23 de septiembre de 2004 ante el notario Agustin F. Soto Hernandez, por la cual los titulares registrales constituyen HIPOTECA sobre esta y otra propiedad en garantia de un pagare a favor de Banco Popular de Puerto Rico por la suma de $165,000.00 respondiendo por $104,000.00 con intereses al Prime rate anual y vencimiento a la presentación. Complementarios: N/A.
Al asiento 1612 del Diario 299 se presentó el 30 de agosto de 2005 la escritura # 283 de Hipoteca otorgada el 11 de agosto de 2005 ante el notario Agustin F. Soto Hernández por la cual los titulares registrales constituyen HIPOTECA sobre esta y otra propiedad en garantia de un pagaré a favor de Banco Popular de Puerto Rico por la suma de $220,000.00 respondiendo por $170,000.00 con intereses al Prime Rate anual y vencimiento a la presentatión. Complementarios: N/A." (Docket No. 18).
[4] "RUSTICA: Predio de terreno radicado en el Barrio Cacao, del término municipal de Quebradillas, Puerto Rico, con una cabida superficial de 1127.50 metros cuadrados, igual a 0.2868 cuerdas. En lindes por el Norte, con Villa Julia, antes Francisco Avila; por el Sur, con solar letra A del piano de inscription y predio de uso público; por el Este, con Rafael Valverde y por el Oeste, con Villa Julia, antes Francisco Avila.
TRACTO: Es segregación de la finca 1038 inscrita al Folio 27 del Tomo 19 de Quebradillas.
GRAVAMENES: Por su procedencia: Se encuentra libre de cargas.
Por sí: inscrita al Folio 51 vuelto del Tomo 44 de Quebradillas, inscription 7ma. (246/240).
DOCUMENTOS PRESENTADOS: Al asiento 1113 del Diario 296 se presentó el 18 de octubre de 2004 la escritura # 328 de Hipoteca otorgada el 23 de septiembre de 2004 ante el notario Agustin F. Soto Hernández por la cual los titulares registrales constituyen HIPOTECA sobre esta y otra propiedad en garantía de un pagaré a favor de Banco Popular de Puerto Rico por la suma de $165,000.00 respondiendo por $61,000.00 con intereses al Prime Rate anual y vencimiento a la presentatión. Complementarios: N/A.
Al asiento 1612 del Diario 299 se presentó el 30 de agosto de 2005 la escritura # 283 de Hipoteca otorgada el 11 de agosto de 2005 ante el notario Agustin F. Soto Hernández por la cual los titulares registrales constituyen HIPOTECA sobre esta y otra propiedad en garantia de un pagaré a favor de Banco Popular de Puerto Rico por la suma de $220,000.00 respondiendo por $50,000.00 con intereses al Prime Rate anual y vencimiento a la presentación. Complementarios: N/A." (Docket No. 18).
[5] "RUSTICA: Remanente radicado en el Barrio Pueblo de Hatillo, Puerto Rico, compuesto de Seiscientos Cuarenta y Un Metros Cuadrados (641.00) de terreno. En lindes por el NORTE, con un área dedicada a Uso Público, por el SUR, con solar cinco (5); por el ESTE, con area dedicada a Uso Publico y por el OESTE, con Inocencia Viuda de Arana. Es el resto de esta finca luego de reducidas las segregaciones que se indican al margen.
INSCRITA AL FOLIO 65, TOMO 346 de Hatillo, FINCA Numero 3,466.
PENDIENTE: Asiento 1613, Diario 299 Escritura numero 281, sobre Hipoteca otorgada en Aguadilla, Puerto Rico, el 11 de agosto de 2005, ante el notario Agustín F. Soto Hernández para que se inscriba Hipoteca a favor del Banco Popular de Puerto Rico, o a su orden por $19,000.00, con intereses a New York Prime Rate, vencimiento a la presentación, Affidávit 11,564; $1,900.00 para costas, gastos y honorarios de abogados en el caso de ejecución." (Docket No. 18).
[6] 11 U.S.C. § 1107(a) provides that a bankruptcy debtor in possession stands in the shoes of a bankruptcy trustee, thus having basically all the same rights, powers, duties and functions. 11 U.S.C. § 1107(a).
[7] Usually the law of general applicability is state law but federal law may also apply. Alan N. Resnick & Henry J. Sommer, 5 Collier on Bankruptcy ¶ 546.03[2][c](15th ed.2009). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1937196/ | In re: MICHAEL LESHAWN BANKS, Chapter 7, Debtor.
PATINA, INC., Plaintiff,
v.
MICHAEL LESHAWN BANKS, Defendant.
Case No. 6:08-bk-07885-ABB, Adv. Pro. No. 6:08-ap-00230-ABB.
United States Bankruptcy Court, M.D. Florida, Orlando Division.
December 17, 2009.
MEMORANDUM OPINION
ARTHUR B. BRISKMAN, Bankruptcy Judge
This matter came before the Court on the: (i) Complaint Objecting to Discharge of Debtor (Doc. No. 1) ("Complaint") filed by the Plaintiff Patina, Inc. ("Plaintiff") against Michael Leshawn Banks, the Defendant and Debtor herein ("Debtor"), seeking a denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a); (ii) the Debtor's Counterclaims (Doc. No. 6) seeking sanctions against Plaintiff for alleged conversion and violation of the automatic stay; and (iii) the Debtor's Objection to Plaintiff's proof of claim (Main Case Doc. No. 33), which was consolidated with this adversary proceeding pursuant to the Order entered on September 15, 2009 (Doc. No. 58).
The final evidentiary hearing was held on August 25 and August 26, 2009 at which the Debtor, counsel for the Debtor, Plaintiff's principal Nancy Fleming, counsel for Plaintiff, and the Chapter 7 Trustee Marie E. Henkel ("Trustee") appeared. Judgment is due to be entered in favor of the Debtor on Counts I through V of the Complaint and his claim objection is due to be sustained in part. Judgment is due to be entered in favor of Plaintiff on Counts I and II of the Counterclaim. The Court makes the following Findings of Fact and Conclusions of Law after reviewing the pleadings and evidence, hearing live testimony and argument, and being otherwise fully advised in the premises.
Marcia Weber Deposition Transcript Designations
The parties, pursuant to the Court's directive, filed deposition transcript designations and post-hearing briefs (Doc. Nos. 54, 55, 56, 57, 60). Plaintiff designates numerous portions of the deposition transcript of Marcia Weber and requests the admission of the exhibits attached to her deposition transcript labeled Exhibit Numbers 14, 25, 35, 46, 37, 41, and 94 pursuant to Federal Rule of Evidence 801(6) (Doc. No. 54). The Debtor objects to virtually all of the deposition designations on various grounds including relevancy, vagueness, and lack of predicate (Doc. No. 55). He objects to the admissibility of the exhibits primarily on hearsay and lack of predicate grounds.
The Debtor designates numerous portions of Weber's deposition transcript (Doc. No. 56). Plaintiff does not object to such designations. The Debtor's objections to Plaintiff's designations and exhibits are overruled. The complete transcript of Weber's deposition and Exhibit Nos. 14, 25, 35, 46, 37, 41, and 94 attached to the deposition transcript are admitted into evidence as Plaintiff's composite Exhibit No. 87.
FINDINGS OF FACT
Introduction
The Debtor is a thirty-seven year old self-taught artist from northern Alabama. His folk art paintings have been exhibited in national exhibitions and galleries in Alabama. He has struggled with alcohol and drug addictions for ten years. He discussed his difficulties with candor. His difficulties have caused him to be easily manipulated. Plaintiff, a gallery in Fairhope, Alabama, has been aggressively pursuing the Debtor, asserting it has an exclusivity contract with him. The Debtor, having no other options available to him, sought bankruptcy protection. Plaintiff continues to aggressively pursue the Debtor and seeks a denial of his discharge.
Pre-petition Events
The Debtor sells his paintings to galleries through consignment and outright sales. He, in an outright sale, typically sells a series of paintings for a fixed price, referred to as the "wholesale price." He sets the consignment prices for his works and negotiates the sale prices for the outright sales. The consignment sale prices are higher than the outright sales prices, due to the inclusion of a commission for the consignment gallery. The common consignment percentage is 50/50; the consignment gallery retains fifty percent of the sale price and the Debtor receives fifty percent. His works vary in size and the larger pieces garner a higher value. His artwork is worth what a purchaser is willing to pay.
The Debtor had relationships with Plaintiff and Marcia Weber, who owns the Marcia Weber Art Objects, Inc. gallery in Montgomery, Alabama. Plaintiff is owned by Nancy Fleming ("Fleming") and managed by James Wilmoth ("Wilmoth"), who is a director of Plaintiff. Fleming and Wilmoth have worked together for more than twenty-five years. The Debtor sold paintings to Plaintiff and Weber on consignment and through outright sales.
The Debtor testified at length and was credible. He was respectful and composed, in spite of Plaintiff's aggressive stance, throughout this proceeding. He discussed how his drug and alcohol addictions caused the demise of his marriage to Jennifer Banks ("Mrs. Banks") and estrangement from his two minor children. For stretches of time he has been homeless, living on the street. He has spent significant amounts of time in rehabilitation facilities and at the time of trial had completed seven months of a twelve-month rehabilitation program in Sanford, Florida.
The Debtor suffers from memory lapses resulting from his addictions. He has pawned most of his assets, maintained few financial records, and does not recall the whereabouts of many of his paintings. He has gifted many of his paintings to individuals. The Debtor has received assistance from several persons. Some have acted as agents, assisting him with marketing and selling his paintings, and some as benefactors providing him with money, shelter, and necessities. Not all have acted with good intentions and have taken advantage of him. Many of his paintings are missing.
Relationship with Plaintiff
Wilmoth met the Debtor at a folk art exhibition in 2006 and he introduced the Debtor to Fleming in August 2006. She was impressed with his work and wanted to feature him in her gallery. The Debtor provided paintings to Plaintiff on a consignment basis and through outright sales. Their verbal consignment arrangement was a 50/50 split of the sale proceeds of a consigned piece. Plaintiff held a show for the Debtor in March 2007, which was highly successful resulting in the sale of ten to twelve pieces of the Debtor's artwork. Plaintiff and the Debtor planned future shows and intended to have an on-going relationship.
Plaintiff knew the Debtor had drug and alcohol addictions. The Debtor and Mrs. Banks on occasion asked Fleming for money and she gave money to them, which they repaid. Fleming and Wilmoth gave the Debtor food, art supplies, and cash from time to time.
The Debtor's unstable behavior and "irrational disposal of artworks" caused Mrs. Banks to institute in 2006 a divorce proceeding against the Debtor (Debtor's Ex. 5) and a civil injunctive action against the Debtor, Weber, and her gallery (Id.).[1] The Alabama State Court entered an Order on November 9, 2006 prohibiting Weber and her gallery from selling, destroying or disposing of any of the Debtor's artwork (Id.). Plaintiff was subsequently joined as a party defendant in the litigation captioned Jennifer Leigh Banks v. Michael LeShawn Banks, Marcia Weber, Marcia Weber-Art Objects, Inc., Patina, Inc., and Anissa Banks, Civil Action No. DR06-200419.01 (Id.).
Mrs. Banks and the Debtor entered into a Settlement Agreement on January 22, 2007 in which they globally resolved the marital and injunctive issues. The Settlement Agreement was executed by Mrs. Banks and the Debtor and filed in Civil Action No. DR06-200419.01. Mrs. Banks, pursuant to the Settlement Agreement, was:
(i) granted sole custody of the children;
(ii) granted exclusive right and possession to the marital home located in Albertville, Alabama;
(iii) appointed the Debtor's "exclusive agent to handle all financial matters in relation to defendant's artwork, including but not limited to the arrangement of art shows displaying defendant's artwork, the arrangement of private sales of defendant's artwork and the receipt of all revenue derived from the sale of defendant's artwork." Debtor agreed "that he shall not be authorized to receive any income from the sale of his artwork for a period of one year and that all sums shall be paid directly to plaintiff for management and investment";
(iv) entitled to use the sales proceeds for support of herself, the children, and the Debtor, "to be determined at plaintiff's discretion."
(Debtor's Ex. 5). Plaintiff, Weber, and Weber's gallery are named as party defendants in the case caption of the Settlement Agreement. Paragraph 7 of the Settlement Agreement provides:
This Agreement shall be binding upon the parties for one year. Any vendors of defendant's artwork or any person purchasing defendant's artwork may rely on this Agreement in paying the sales price for the artwork directly to plaintiff.
(Id., ¶7, emphasis added). The Alabama State Court approved the Settlement Agreement and incorporated it into the Judgment of Legal Separation entered on June 6, 2007 in Civil Action No. DR06-200419.01 (Id.). Plaintiff is named as a party defendant in the case caption of the June 6, 2007 Judgment. The Settlement Agreement and June 6, 2007 Judgment were served on Plaintiff.
Mrs. Banks, pursuant to the Settlement Agreement and Judgment, handled all of the Debtor's financial affairs, including providing information to an accountant for the preparation of their joint 2006, 2007, and 2008 Federal income tax returns (Debtor's Ex. 2, 3). Plaintiff knew Mrs. Banks controlled the Debtor's financial affairs.
Plaintiff desired to have an exclusive relationship with the Debtor whereby Plaintiff would obtain and sell all of the Debtor's artwork. Wilmoth, on or about May 9, 2007, drove to the Debtor's home in Albertville, Alabama, a five-hour drive from Fairhope. Wilmoth, at the Debtor's home, drafted a one-page handwritten agreement dated May 9, 2007 which the Debtor and Wilmoth executed:
Michael Banks and Patina Gallery hereby agree that in addition to Patina's exclusivity for Mr. Banks works within a 200 mile radius of Fairhope that Patina will arrange for three additional shows for Mr. Banks within the next year for which Mr. Banks will supply 30+ paintings and at least 6 large (= 4' x 4') for each show. Patina will notify Michael at least 30 days in advance and shall work with Mr. Banks to avoid conflicts with other shows already previously booked. Mr. Banks and Patina agree to keep communications open and to stay in touch regularly.
(Plaintiff's Ex. 8). Plaintiff, despite knowing Mrs. Banks controlled the Debtor's finances, did not make her a party to the May 9, 2007 agreement. Mrs. Banks was a necessary party to any agreement between Plaintiff and the Debtor pursuant to the January 22, 2007 Settlement Agreement and the June 6, 2007 Judgment.
Wilmoth and Fleming had discussed the terms of the agreement prior to Wilmoth's trip to Albertville, but they did not prepare a written contract for him to present to the Debtor. The Debtor's ability to enter into a contract was questionable based upon his history. The Debtor executed no other agreements with Plaintiff.
The relationship between Debtor and Plaintiff deteriorated. Plaintiff scheduled a show for the Debtor in Atlanta and he failed to appear. Plaintiff rejected some pieces the Debtor presented to it. The Debtor refused to provide artwork to Plaintiff. He entered the Serenity Care rehabilitation facility in Mobile, Alabama and was unable to produce artwork or have showings for significant periods of time.
Wilmoth and Fleming made trips to Albertville to investigate the Debtor's whereabouts. They hired a private investigator to determine whether the Debtor was exhibiting at art shows. Plaintiff instituted a civil action in 2007 in the Alabama State Court ("Patina Litigation") against the Debtor, Mrs. Banks, and Melvin Richardson, the owner of Serenity Care, contending, primarily, the Debtor breached alleged verbal agreements and the May 9, 2007 agreement. An Order was entered on May 22, 2008 awarding Plaintiff attorneys' fees and costs of $13,435.80 against the Debtor and Mrs. Banks jointly and severally for their failures to respond to discovery.
Bankruptcy Filing and Post-Petition Events
The Debtor moved to Sanford, Florida in January 2008 while the Patina Litigation was pending. He lives in an apartment located at 213 First Street, No. 8, Sanford, Florida 32771 in a building owned by Howard S. Marks, Esquire ("Marks"). The building has an art gallery on the ground floor, the Jeanine Taylor Folk Art Gallery; Marks has an ownership interest in the gallery and is an art collector. Marks represented the Debtor in the Patina Litigation and is a collector of his artwork. Plaintiff knew the Debtor had moved to Florida and its State Court counsel had on-going communications with Marks (Debtor's Ex. 14, 15, 16, 17, 18, 20).
The Debtor, through bankruptcy counsel, filed a Chapter 7 bankruptcy case on September 4, 2008 ("Petition Date") and the automatic stay of 11 U.S.C. Section 362(a) immediately arose by operation of law staying the Patina Litigation. Marks faxed a letter to Plaintiff's State Court counsel on the Petition Date advising him of the bankruptcy filing. Plaintiff knew on the Petition Date the Debtor had filed for bankruptcy. Plaintiff filed a Suggestion of Bankruptcy in the Patina Litigation on September 8, 2008 (Plaintiff's Ex. 55). Plaintiff took no further action in the Patina Litigation. No final judgment on the merits was rendered by the Alabama State Court in the Patina Litigation.
Plaintiff continued to investigate the Debtor post-petition. Wilmoth, in October 2008 and with Fleming's knowledge, drove Fleming's car to Sanford, Florida. He, with an unidentified woman, attended a function at the Jeanine Taylor Folk Art Gallery on October 24, 2008. He took pictures of the Debtor's artwork in the gallery and the exterior of Marks' building (Plaintiff's Ex. 32). Marks confronted Wilmoth and asked him to leave the property. Marks instituted a Florida State Court civil proceeding against Wilmoth and Fleming for trespass (Plaintiff's Ex. 75, 76).
Bankruptcy Case Events and Disclosures
Marie E. Henkel is the Chapter 7 Trustee ("Trustee") and conducted the Debtor's 11 U.S.C. Section 341 meeting of creditors on October 16, 2008 and October 30, 2008. No challenges to the Debtor's bankruptcy filing have been made pursuant to 11 U.S.C. Section 707(b) and no transfer recovery or turnover actions have been instituted. No party has filed a motion to transfer venue. Plaintiff is the only party to have instituted an adversary proceeding. Plaintiff did not initiate an 11 U.S.C. Section 523(a) nondischargeability proceeding. The Trustee testified she has no intention of instituting any adversary proceedings. The Debtor has cooperated with the Trustee throughout his Chapter 7 case and has complied with all filing requirements.
Schedules A and B: The Debtor owns no real property. He listed assets valued at $40,500.00 in Schedule B consisting of:
(i) Checking account valued at $0.00;
(ii) Bed, washer, dryer valued at $75.00;
(iii) Clothing valued at $50.00;
(iv) An account receivable owed by Plaintiff of $5,175.00;
(v) An account receivable owed by Weber of $8,000.00;
(vi) 2006 Mercedes 240 in Mrs. Banks' possession valued at $6,000.00;
(vii) Three paintings entitled "Taming the Minde Beast," "Plastig," and "Atomic Number" on consignment with Weber valued at $1,200.00;
(viii) Five paintings held by Patina valued at $20,000.00; and
(ix) Twenty paintings designated by number codes held in storage with no value listed.
(Main Case Doc. No. 8). He amended Schedule B to include a 1993 Volvo 940 with a value of $0.00 (Main Case Doc. No. 14).
Schedule C: The Debtor claimed the bed, washer, dryer, and accounts receivable as exempt. The exemption claims are unopposed (Main Case Doc. No. 30).
Schedules D and E: He listed Family Security Credit in Schedule D, which holds a security interest in the Mercedes, and no unsecured priority claims in Schedule E.
Schedule F: He listed general unsecured claims of $217,988.87. The largest general unsecured debt is Plaintiff's claim, Claim No. 8-1, for $119,210.80 with the remaining debts consisting of credit card, medical, legal debts, and a loan of $20,000.00 from Marks for rent and living expenses. The claims bar date has passed and no secured or priority unsecured claims have been filed. General unsecured claims totaling $163,406.87 are pending, which includes Plaintiff's disputed claim.
Schedules G and H: The Debtor listed "None" in Schedule G for executory contracts and unexpired leases. He listed no co-debtors in his original Schedule H and filed an Amended Schedule H listing Mrs. Banks as a co-debtor of the Family Security Credit vehicle debt (Main Case Doc. No. 16).
Schedules I and J: Schedule I sets forth estimated gross monthly income of $2,916.00 based upon the Debtor's previous artwork sales. He was unemployed on the Petition Date (Main Case Doc. No. 10) and remained unemployed throughout the trial.
He listed monthly expenses of $4,445.00 in Schedule J. He is represented primarily on a pro bono basis by his bankruptcy counsel and Marks in the adversary proceeding (Main Case Doc. No. 12).[2]
Statement of Financial Affairs: The Debtor listed in his Statement of Financial Affairs ("SOFA") gross income of $52,268.00 in 2006, $40,000.00 approximately in 2007, and $35,000.00 approximately from January 2008 through September 2009 (Main Case Doc. No. 8). He stated "None" for pre-petition payments to creditors, transfers, gifts, and losses. He listed the Albertville, Alabama address as his address from 2003 to 2006.
The Trustee declared this case an asset case and as of August 26, 2009 had collected $18,942.64 from the liquidation of estate assets (Plaintiff's Ex. 71), including accounts receivable and sale proceeds turned over by Weber and an account receivable of $5,175.00 turned over by Plaintiff. She estimates the Debtor will receive $8,000.00 of this recovery for his allowed claims of exemption. Additional funds are expected through the post-petition sales of paintings held by Weber and Plaintiff.
The Trustee engaged Weber to assist her in selling the Debtor's three paintings located in Weber's Gallery: (i) #9570 "Taming the Minde Beast"; (ii) #9700 "Plastig"; and (iii) #9715 "Atomic Number" (Main Case Doc. Nos. 36, 39). The appraised values of the paintings (unframed) are, respectively, $720.00, $640.00, and $400.00. Weber is to be compensated the cost of framing plus fifty percent of the net sale price. Plaintiff did not oppose Weber's employment. Weber withdrew her general unsecured proof of claim for $166.38. The Trustee's Motion (Main Case Doc. No. 43) to sell the three paintings is unopposed.
The Trustee filed a Motion (Doc. No. 44) to sell twenty-one paintings held by Plaintiff for $200.00 per painting, for a total of $4,200.00, to Marks. An appraisal was conducted and each painting was appraised between $100.00 and $200.00 each. The sale Motion is unopposed.
Plaintiff's Complaint
Plaintiff filed a five-count Complaint objecting to the Debtor's discharge pursuant to Sections 727(a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), and (a)(5) of the Bankruptcy Code. The Complaint is a conglomeration of allegations. Plaintiff asserts the Debtor failed to disclose assets, transfers, debts, and his place of residence. Plaintiff has expended considerable energy and resources in pursuing the Debtor. Fleming's testimony was not credible. She would not reveal Plaintiff's actual motivations for pursuing the Debtor with such vigor.
Venue
Plaintiff asserts venue is improper in this Court because the Debtor resided in Alabama during the 180-day pre-petition period and presented an Alabama driver's license as identification at his Section 341 meeting. The Debtor moved to Sanford, Florida in January 2008. He lives in the apartment provided by Marks and has participated in a year-long drug rehabilitation program in Sanford, Florida. He travelled to Alabama on occasion pre-petition to visit his family and friends. During one of the visits the Debtor was ticketed for a traffic violation.
Plaintiff knew the Debtor had moved to Florida and directed its Patina Litigation communications to Marks. The Trustee testified the Alabama license has no special meaning to her. The Debtor credibly testified he resided in Sanford, Florida for the majority of the 180-day pre-petition period. He made no false statements regarding his residency. The Debtor's residence was Sanford, Florida for the longer portion of the 180-day prepetition period. Venue is proper in this Court.
11 U.S.C. Section 727(a)(2)(A)
Plaintiff asserts Debtor fraudulently transferred approximately sixty original paintings valued at $132,634.00 to Weber within one year of the Petition date and did not disclose the transfer in his Schedules and in Question 3 (Payments to creditors) or Question 10 (Other transfers) of his SOFA. Question No. 10 required the Debtor to:
List all other property, other than property transferred in the ordinary course of the business or financial affairs of the debtor, transferred either absolutely or as security within two years immediately preceding the commencement of this case.
Plaintiff contends the Debtor, with the intent to hinder, delay and defraud his creditors, concealed paintings at the Jeanine Taylor Folk Art Gallery in Sanford, Florida and with Melvin Richardson in Alabama.
Weber and the Debtor had a business relationship that began in 2001 and were friends. The Debtor paints prolifically and Weber estimates she sold hundreds, possibly a thousand, of his paintings between 2001 and June 2009 (Plaintiff's Ex. 87, p. 210). She, on occasion, returned consigned paintings to the Debtor if they had not sold in several months. She did not keep exacting records of their artwork transactions. She lent the Debtor money for living expenses and provided a place for him to live and paint. She paid expenses for the Debtor of more than $12,070.00 (Plaintiff's Ex. 14).
The Debtor delivered to Weber fifty paintings in March 2008 for an art show in Chicago and thirty-eight paintings in April or May 2008 for an art show in Atlanta (Plaintiff's Ex. 11, 12; Plaintiff's Ex. 87, pp. 167-170). Weber paid him $100.00 per painting, with certain offsets for inventory corrections for a total of $6,930.00 (Plaintiff's Ex. 87, pp. 114-115). The Debtor did not receive any additional funds from Weber for these paintings nor did he expect any due to the living expenses she had paid for him. He did not list these transfers in Schedule B or in his SOFA. He listed in Schedule B the paintings held by Webber on consignment and the account receivable owed to him by Weber.
The Debtor was not required to list the eighty-eight transferred paintings in Schedule B because they did not constitute assets of the Debtor on the Petition Date. He transferred ownership of the paintings to Weber outright in compensation for the living expenses she had paid on his behalf. The paintings were not on consignment; they were the property of Weber.
It, as explained previously, was the Debtor's customary course of dealing to sell paintings in bulk, particularly when a significant art show was scheduled, and he had a course of conduct whereby he would repay those who assisted him with artwork. The Debtor explained he did not list the transfers in Question 3 or Question 10 of his SOFA because he considered the transfers to be within the ordinary course of his business and financial affairs. His testimony was credible. His transfers to Weber were for the Chicago and Atlanta art shows and were to repay her for her assistance. The transfers were consistent with the Debtor's established course of conduct and he was not required to list them in his SOFA.
The Debtor did not transfer any paintings to Weber with the intent to hinder, delay or defraud his creditors. Plaintiff presented no evidence substantiating its allegations the Debtor concealed paintings at any galleries or with Melvin Richardson. Plaintiff did not establish a basis for a denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(2)(A).
11 U.S.C. Section 727(a)(2)(B)
Plaintiff asserts the Debtor, post-petition, transferred nine paintings having a total value of $11,200.00 which are property of the estate. Plaintiff presented no evidence to support these allegations. Plaintiff did not establish a basis for denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(2)(B).
11 U.S.C. Section 727(a)(3)
Plaintiff asserts the Debtor has concealed, falsified or failed to keep or preserve any financial records or destroyed such records. The Debtor is a struggling artist who has been seriously impaired by his addictions. He has not maintained financial records. His inability to manage his affairs is so profound, the Alabama State Court placed Mrs. Banks in control of his affairs. Plaintiff does not have clean hands regarding recording-keeping. Its records of business transactions with the Debtor, consisting mainly of handwritten notes, are imprecise and incomplete.
The Debtor has adequately and convincingly explained his failure to maintain financial records. His lack of financial records is justified based upon the totality of the circumstances. He has fully cooperated with the Trustee. Plaintiff has failed to establish the Debtor's lack of financial records constitutes a basis for the denial of his discharge pursuant to 11 U.S.C. Section 727(a)(3).
11 U.S.C. Section 727(a)(4)(A)
Plaintiff asserts the Debtor knowingly and fraudulently made false statements and omissions in his Petition, Schedules, and Statement of Financial Affairs and at his Section 341 meeting of creditors conducted by the Trustee on October 30, 2008:
1. The Debtor listed one bank account in Schedule B, but testified at the 341 meeting he had other accounts.
2. He failed to disclose the transfer of ten paintings to Weber prepetition in his SOFA.
3. He walks everywhere and does not own a car.
4. He receives mail at his attorney's office.
5. His lease agreement with Marks is not listed in Schedule G.
6. His Schedule J expenses of $4,445.00 are not paid by him.
7. He has not listed all known creditors.
8. He has failed to disclose the locations of original paintings being held by third parties.
9. He falsely testified he lived in Florida from January 2008 through the Petition Date.
10. He misrepresented his income for tax year 2007 in SOFA.
11. He misrepresented his income for tax year 2008 in his SOFA.
12. His paintings are being concealed by the Jeanine Taylor Gallery, Melvin Richardson, and Weber.
The Debtor did not knowingly or fraudulently make any false oath or account in connection with his bankruptcy case. He completed his bankruptcy papers to the best of his abilities and recollection. Many of his paintings are simply missing. Those in the possession of Weber and Plaintiff, or their sales proceeds, have been fully accounted for to the Trustee. Mrs. Banks had control of the Debtor's finances and sales proceeds were often paid directly to her. She supplied all of the financial information to the accountant who prepared the joint Federal income tax returns for tax years 2006, 2007, and 2008. The returns were not available to the Debtor when he completed his SOFA because they were prepared post-petition (Debtor's Ex. 2, 3). The Debtor's income disclosures in his SOFA are his best estimates of his income for 2006, 2007, and 2008.
The Debtor amended his Schedule B to include the Volvo, which was omitted from his original Schedule B through an inadvertent oversight. Despite owning the Volvo he mostly walks and relies on friends for transportation. He failed to list his informal rental agreement with Marks as an executory contract in Schedule G through an inadvertent oversight. The omission of the lease agreement is not a material omission. Plaintiff knew pre-petition the Debtor was living in Marks' building. Marks assists the Debtor with his living expenses and pays many of the expenses listed in Schedule J. The Debtor did not falsely list his expenses.
The Debtor made no fraudulent statements or fraudulent material omissions in his Schedules or SOFA. Plaintiff has failed to establish a basis for denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(4)(A).
11 U.S.C. Section 727(a)(5)
Plaintiff asserts the Debtor failed to explain the loss of: (i) sixty paintings valued at $132,634.00; (ii) proceeds of sales; (iii) income of $92,375.00 for tax year 2007; (iv) income of $61,513.98 from tax year 2008; and (v) the loss of original paintings which could be sold to satisfy his liabilities. These allegations are reconstituted allegations found in Plaintiff's previous counts and are without merit. Plaintiff bases its income loss allegations on the Debtor's and Mrs. Banks' Federal income tax returns. The returns were prepared post-petition by an accountant pursuant to information provided by Mrs. Banks. The Debtor was not involved in the preparation of the returns. Plaintiff has not established any of the Debtor's income was "lost."
The Debtor's explanations of his assets and the transfers of his paintings were credible. Some of his paintings are missing due to persons who have taken advantage of his situation. He, over the years, gifted many paintings to persons who have helped him. His bankruptcy papers fully and accurately account for the paintings that constituted property of the Debtor or the bankruptcy estate on the Petition Date.
Plaintiff has failed to establish the Debtor formerly owned substantial, identifiable assets that are now unavailable to distribute to creditors pursuant to 11 U.S.C. Section 727(a)(5). The assets in the possession of Weber and Plaintiff have been fully accounted for and liquidated, or will be liquidated, by the Trustee.
Plaintiff has failed to establish a basis for denial of the Debtor's discharge pursuant to Section 727(a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), or (a)(5) of the Bankruptcy Code. Judgment is due to be entered in favor of the Debtor and against Plaintiff on Counts I through V of the Complaint.
Debtor's Counterclaims
Banks filed a two-count Counterclaim against Plaintiff asserting: (i) Plaintiff willfully violated the automatic stay by proceeding with the Alabama State Court litigation; and (ii) Plaintiff converted twenty-five paintings belonging to Banks or his bankruptcy estate.
Count I: Stay Violation
The Debtor asserts Plaintiff willfully violated the automatic stay of 11 U.S.C. Section 362(a) by: (i) proceeding with the Patina Litigation after receiving the September 4, 2008 notice of the Debtor's bankruptcy filing; and (ii) appearing at the Debtor's residence in Sanford, Florida with the intent to "harass and annoy" the Debtor (Doc. No. 6).
Plaintiff did not continue the Patina Litigation post-petition. It, upon receipt of Debtor's counsel's September 4, 2008 letter notifying Plaintiff of the bankruptcy filing, filed the Suggestion of Bankruptcy in the Alabama State Court. It took no further action in the Patina Litigation.[3] Wilmoth's post-petition visit to Sanford, while suspicious and not adequately explained, does not constitute a violation of the automatic stay. Wilmoth attended a public, advertised function at the Jeanine Taylor Art Gallery and took pictures of the exterior of Marks' building. He took no action constituting an attempt to collect, assess or recover a debt from the Debtor. He did not harass or threaten the Debtor.
Plaintiff did not take any action in violation of 11 U.S.C. Section 362(a). Judgment is due to be entered in favor of Plaintiff on Count I of the Debtor's Counterclaim.
Count II: Conversion
The Debtor contends in Count II the Plaintiff has in its possession twenty-five paintings valued at more than $26,000.00 and sale proceeds of $5,175.00 which constitute property of the Debtor and/or the bankruptcy estate. He asserts, despite turnover demands, Plaintiff has refused to return these assets to him. Count II apparently relates to civil conversion, not criminal, which is a state law cause of action. The Debtor did not elucidate the elements of conversion or what state law governs his conversion claim. Count II constitutes a core proceeding and the Court has jurisdiction to determine the conversion claim on the basis it concerns the administration of the estate.
Plaintiff has fully cooperated with the Trustee. The Trustee has initiated no actions against Plaintiff. The account receivable of $5,175.00 owed by Plaintiff to the Debtor constitutes property of the bankruptcy estate which Plaintiff turned over to the Trustee (Plaintiff's Ex. 71). Plaintiff has fully accounted for all of the Debtor's paintings in its possession and the twenty-one remaining paintings in its possession are being sold to Marks pursuant to the Trustee's unopposed sale motion.
The Debtor did not establish Plaintiff converted any assets of the Debtor or the bankruptcy estate. Judgment is due to be entered in favor of Plaintiff on Count II of the Debtor's Counterclaim.
Claim Objection
Plaintiff asserts a general unsecured claim of $119,210.80 for "breach of contract." The claim amount consists of two portions: (i) $13,435.80 from the July 8, 2008 Final Judgment in the Patina Litigation; and (ii) lost commissions of $99,850.00 based upon Wilmoth's Affidavit dated August 29, 2008. Wilmoth asserts in the Affidavit Plaintiff's fifty-percent share of the total sale proceeds would have been $114,000.00 had the Debtor produced paintings to Plaintiff pursuant to their "contract" and the Debtor's alleged verbal commitments. He asserts:
However, for the purposes of Patina's present motion only, it is my opinion that a fair and accurate estimate of the retail proceeds generated by the sale of eighteen (18) 4' x 4' paintings and ninety (90) smaller paintings (the minimum called for by the parties' written contract) would be approximately $153,000.00. I am also of the opinion that, with Michael Banks' active and good faith participation, gallery sales should have exceeded a minimum of five (5) paintings per month, which would have a retail value in the range of $50,000-$100,000 or a mid-range of $75,000.00. These values are based upon an estimated average retail price of $4,000.00 for Mr. Banks' 4' x 4' paintings and an average estimated retail price of $900 for his 2' x 2' paintings, which are consistent with other gallery prices and internet sales listings.
Pursuant to the customary arrangements between Patina, Inc., and Michael Banks prior to the disputes involved in this lawsuit, the proceeds from the sale of Mr. Banks' paintings were to be split 50/50 between Patina, Inc. and Mr. Banks. Accordingly, Patina, Inc.'s share of the total proceeds described above would be approximately $114,000.00.
(Claim No. 8-1, Affidavit at p. 2). Plaintiff seeks the sum of $99,850.00 ($114,000.00 less a setoff of $5,775.00 for the account receivable owed to the Debtor) for lost profits from the alleged breach. (Id.).
The Debtor objects to Plaintiff's claim asserting the May 9, 2007 agreement is unenforceable because: (i) no consideration was paid to the Debtor; (ii) Wilmoth lacked legal authority to execute it on behalf of Plaintiff; (iii) it was procured by fraud and undue influence over the Debtor; and (iv) Plaintiff committed a prior material breach. The Debtor asserts the damages claim is too speculative and uncertain to be recoverable (Doc. No. 33). The Debtor conceded Plaintiff has an allowed general unsecured claim of $13,435.80 based upon the Judgment. He requests the remainder of the claim be disallowed.
Plaintiff asserts Debtor lacks standing to object to its claim because no money will flow to him from the estate. The Debtor has standing to object to the claim because there is a reasonable possibility disallowance of the claim, or a significant portion of it, will result in a surplus after distribution. He has a pecuniary interest in the estate.
Plaintiff has not established the May 9, 2007 agreement constitutes a binding contract. Substantial questions remain whether the Debtor had the capacity to enter into the agreement and if he executed the agreement under duress. The agreement, ultimately, is not enforceable because it violates the January 22, 2007 Settlement Agreement and June 6, 2007 Judgment of Legal Separation. Mrs. Banks was a necessary party to the May 9, 2007 agreement. Plaintiff knew Mrs. Banks had been granted control of the Debtor's finances, but did not make her a party to the agreement.
Plaintiff's lost profit assertions are unsubstantiated, exaggerated, and based upon an unenforceable agreement. They are contrary to Plaintiff's financial history. Fleming testified Plaintiff, in its best year, received gross income of $200,000.00 generated from the sales of all artists represented by Plaintiff. Plaintiff has never received annual gross income in excess of $200,000.00. Plaintiff's contention it would have received gross income of $228,000.00, and net revenues of $114,000.00, from the sales of the Debtor's artwork is speculative and without basis.
The Debtor's objection to Claim No. 8-1 is due to be sustained in part. Plaintiff holds an allowed general unsecured claim of $13,435.80 pursuant to the July 9, 2008 Order and Final Judgment entered by the Alabama State Court. The balance of its claim, $105,775.00, is due to be disallowed.
CONCLUSIONS OF LAW
The Plaintiff seeks denial of the Debtor's discharge pursuant to 11 U.S.C. Sections 727(a)(2)(A), (a)(2)(B), (a)(3), (a)(4)(A), and (a)(5). Objections to discharge are strictly construed against the objecting party and liberally in favor of the debtor. Schweig v. Hunter (In re Hunter), 780 F.2d 1577, 1579 (11th Cir. 1986). "[T]he reasons for denying a discharge must be real and substantial, not merely technical and conjectural." Equitable Bank v. Miller (In re Miller), 39 F.3d 301, 304 (11th Cir. 1994).
Venue
Section 1403 of Chapter 28 of the United States Code provides a bankruptcy case "may be commenced in the district court for the district"
In which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of such case have been located for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than the domicile, residence, or principal place of business, in the United States, or principal assets in the United States, of such person were located in any other district.
28 U.S.C. § 1408(1). "A bankruptcy case is presumed to have been filed in the proper venue." In re Cauley, 374 B.R. 311, 314 n.3 (Bankr. M.D. Fla. 2007).
The Debtor moved to Sanford, Florida in January 2008 and resided in Sanford for the longer portion of the 180-day pre-petition period. The Debtor meets the venue requirement of 28 U.S.C. Section 1408(1). Venue in this Court is proper in this Court. 28 U.S.C. § 1408(1). Plaintiff's venue objection is due to be overruled.
11 U.S.C. Sections 727(a)(2)(A) and 727(a)(2)(B)
Section 727(a) of the Bankruptcy Code sets forth the Debtor shall be granted a discharge unless certain abuses have been committed by him. A discharge will be denied where:
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed
(A) property of the debtor, within one year before the date of the filing of the petition; or
(B) property of the estate, after the date of the filing of the petition.
11 U.S.C. §§ 727(a)(2)(A), (a)(2)(B).
Plaintiff bears the significant burden of establishing actual fraudulent intent. Equitable Bank v. Miller (In re Miller), 39 F.3d 301, 306 (11th Cir. 1994) (citing Wines v. Wines (In re Wines), 997 F.2d 852, 856 (11th Cir. 1993)). Constructive fraud is not adequate. Id. "Concealment under this section occurs when a debtor's interest in the property is not obvious, but the debtor continues to reap the benefits the property has to offer." In re Greene, 340 B.R. 93, 98 (Bankr. M.D. Fla. 2006) (citation omitted). Grounds for the denial of a discharge do not exist where a debtor completes his bankruptcy papers to the best of his abilities and attempts to be complete and accurate. In re Burns, 395 B.R. 756, 769 (Bankr. M.D. Fla. 2008).
The Debtor completed his Schedules and SOFA to the best of his abilities and tried to be complete and accurate. When more information was available to him he filed amendments. Mrs. Banks controlled his finances and his income disclosures in his SOFA were his best good faith estimates of his income. The tax returns were not available to him because they were prepared post-petition.
He listed the paintings held by Weber on consignment, the paintings held by Plaintiff, and accounts receivable. The eighty-eight paintings he transferred to Weber pre-petition are not property of the Debtor or the estate. He retained no ownership interest in the paintings; they are the property of Weber. The transfers were consistent with his established course of dealings. He transferred the paintings to Weber in the ordinary course of his business and was not required to disclose the transfers in his SOFA. He did not make any misrepresentations or fraudulent statements in his Schedules or SOFA. He, throughout these proceedings, has made no attempt to evade or deceive his creditors. He has been forthright and cooperative.
The Debtor did not transfer any paintings with the intent to hinder, delay or defraud his creditors. He did not conceal any paintings at any galleries or with Melvin Richardson. He did not transfer any paintings constituting property of the estate post-petition. Plaintiff did not establish a basis for a denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(2)(A) or Section 727(a)(2)(B).
11 U.S.C. Section 727(a)(3)
Section 727(a)(3) of the Bankruptcy Code provides the Court shall grant a debtor a discharge unless:
the debtor has concealed, destroyed, mutilated, falsified or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all the circumstances of the case. . . .
11 U.S.C. §727(a)(3). The purpose of Section 727(a)(3) is to make certain the creditors and the Trustee are given sufficient information to understand the debtor's financial condition. In re Juzwiak, 89 F.3d 424, 427 (7th Cir. 1996). The Debtor must justify a lack of adequate record keeping. 11 U.S.C. § 727(a)(3); Meridian Bank v. Alten, 958 F.2d 1226, 1234 (3d Cir. 1992). Each case must be determined on its own facts and the level of a debtor's business acumen and sophistication are relevant. In re Milam, 172 B.R. 371, 375 (Bankr. M.D. Fla. 1994); Meridian Bank, 958 F.2d at 1231.
The Debtor has kept few business records documenting his financial dealings. He has been severely impaired by his difficulties and his wife was placed in control of his finances by the Alabama State Court. None of the galleries he dealt with, and Plaintiff in particular, kept adequate, complete records of their transactions with him. Plaintiff, from the start of its relationship with the Debtor, has had full knowledge of his financial situation. The Debtor gave a full and accurate account of his financial affairs in his bankruptcy papers and to the Trustee.
The Debtor's lack of record keeping is justified based upon his circumstances. Meridian Bank, 958 F.2d at 1231. Plaintiff did not establish a basis for a denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(3).
11 U.S.C. Section 727(a)(4)(A)
Section 727(a)(4)(A) of the Bankruptcy Code provides the Court shall grant the debtor a discharge, unless "the debtor knowingly and fraudulently, in or in connection with the case made a false oath or account." 11 U.S.C. § 727(a)(4)(A). The party objecting to discharge in a Section 727(a)(4)(A) proceeding must establish the debtor made a false oath knowingly and fraudulently. Chalik v. Moorefield (In re Chalik), 748 F.2d 616, 619 (11th Cir. 1984). A discharge should be denied where an omission is both fraudulent and material. Swicegood v. Ginn, 924 F.2d 230, 232 (11th Cir. 1991); In re Chalik, 748 F.2d at 618. "Discharge may not be denied where the untruth was the result of mistake or inadvertence." Keefe v. Rudolph (In re Rudolph), 233 Fed. Appx. 885, 889 (11th Cir. 2007) (citation omitted).
The Debtor did not knowingly or fraudulently make any false oath or account in connection with his bankruptcy case. He completed his bankruptcy papers to the best of his abilities and recollection. All of his assets have been fully listed and accounted for to the Trustee. His failure to list the Volvo in his original Schedule B and his lease agreement with Marks in Schedule G were inadvertent oversights. He amended his schedules to correct these oversights. He made no misstatements in his Petition.
The Debtor made no fraudulent statements or fraudulent material omissions in his Schedules, SOFA, or Petition. Plaintiff has failed to establish a basis for denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(4)(A).
11 U.S.C. Section 727(a)(5)
Section 727(a)(5) of the Bankruptcy Code provides for the denial of a discharge where:
the debtor has failed to explain satisfactorily, before determination of denial of discharge, under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities.
11 U.S.C. § 727(a)(5). Plaintiff has the initial burden of establishing its Section 727(a)(5) objection to discharge. Hawley v. Cement Indus., Inc. (In re Hawley), 51 F.3d 246, 249 (11th Cir. 1995). Plaintiff, to sustain the initial burden, must establish "the debtor formerly owned substantial, identifiable assets that are now unavailable to distribute to creditors." Murphy v. Rivertree Landing, LLC (In re Murphy), Case No. 6:08-cv-198O-rl-31, 2008 WL 2224835 *5 (M.D. Fla. May 27, 2008). The burden then shifts to the Debtor to satisfactorily explain the loss. In re Hawley, 51 F.3d at 249.
Whether a debtor has satisfactorily explained a loss of assets is a finding of fact. Id. at 248. "To be satisfactory, an explanation must convince the judge . . . . Vague and indefinite explanations of losses that are based upon estimates uncorroborated by documentation are unsatisfactory." In re Chalik, 748 F.2d are 619 (internal citations omitted).
The assets in the possession of Weber and Plaintiff have been fully accounted for and liquidated by the Trustee. The Debtor's income disclosures are his best estimates of his 2006, 2007, and 2008 income. The eighty-eight paintings transferred to Weber prepetition are assets of Weber, not the Debtor or the estate. There are no "lost" assets or income as Plaintiff asserts. Plaintiff has failed to establish the Debtor formerly owned substantial, identifiable assets that are now unavailable to distribute to creditors. Plaintiff has failed to establish a basis for denial of the Debtor's discharge pursuant to 11 U.S.C. Section 727(a)(5).
Debtor's Counterclaims
Count I: Violation of the Automatic Stay
The Debtor has the burden of proof to establish Plaintiff violated the automatic stay of 11 U.S.C. Section 362(a) and its violation was willful. Hardy v. I.R.S. (In re Hardy), 97 F.3d 1384, 1390 (11th Cir. 1996). Plaintiff took no action against the Debtor post-petition in violation of the automatic stay. The Debtor has not established Plaintiff violated the automatic stay.
Count II: Conversion
The Florida Bankruptcy Courts apply the state law definition of conversion in addressing conversion allegations. In re Jacobs, 243 B.R. 836, 846 (Bankr. M.D. Fla. 2000). Neither party raised the issue of whether Florida or Alabama law governs the Debtor's conversion allegation. The Florida and Alabama courts recognize the common law tort of conversion and the elements to establish conversion in each jurisdiction are similar. City of Cars, Inc. v. Simms, 526 So.2d 119, 120 (Fla. 5th DCA), rev. denied, 534 So.2d 401 (Fla. 1988) ("[C]onversion occurs when a person asserts a right of dominion over chattel which is inconsistent with the right of the owner and deprives the owner of the right of possession."); South Trust Bank v. Donely, 925 So.2d 934, 939 (Ala. 2005) ("To establish conversion, one must present proof of a wrongful taking, an illegal assumption of ownership, an illegal use or misuse of another's property, or a wrongful detention or interference with another's property.").
The Debtor has not established the elements of conversion pursuant to either Florida or Alabama law. He did not establish Plaintiff converted assets of the Debtor or of the estate. Plaintiff turned over to the Trustee the account receivable funds and the twenty-one paintings in its possession are being sold pursuant to the Trustee's sale motion. Judgment is due to be entered in favor of Plaintiff and against the Debtor on Counts I and II of his Counterclaim.
Claim Objection
The Debtor has standing to object to Claim No. 8-1 because there is a reasonable possibility disallowance of the claim, or a significant portion of it, will result in a surplus after distribution. He has established he has a pecuniary interest in the estate. In re Cult Awareness Network, Inc., 151 F.3d 605, 608 (7th Cir. 1998); In re Walker, 356 B.R. 834, 848 (Bankr. S.D. Fla. 2006).
Plaintiff has established, and the Debtor has conceded, it holds an allowed general unsecured claim of $13,435.80 pursuant to the July 9, 2008 Order and Final Judgment entered by the Alabama State Court. The balance of Plaintiff's claim is based upon an unenforceable agreement, is unsubstantiated, speculative, and contrary to Plaintiff's income history. The balance of the claim is due to be disallowed.
Conclusion
The Debtor has had many difficulties. He has been beleaguered by Plaintiff whose pursuit of him has been intense. He sought bankruptcy protection as a last resort to obtain a fresh start. He filed his case in good faith and has acted in good faith throughout. He is an honest debtor who is entitled to a fresh start.
A separate judgment consistent with these Findings of Fact and Conclusions of Law shall be entered contemporaneously.
NOTES
[1] The parties' briefs indicate Mrs. Banks instituted two separate civil proceedings in the Circuit Court of Marshall County, Alabama. The Alabama State Court pleadings presented reference Civil Action No. DR06 ____ and Civil Action No. DR06-200419.01; they do not elucidate whether two separate civil proceedings were instituted by her.
[2] Bankruptcy counsel's Federal Rule of Bankruptcy Procedure 2016(b) Statement of Compensation (Main Case Doc. No. 12) sets forth counsel received $91.00 from Marks pre-petition and the Debtor has agreed to pay counsel "fees on a contingent basis . . . [of] one-half (50%) of all amounts that the Debtor receives from the items owed to him by Marcia Weber and Patina, Inc., which have been claimed as exempt."
[3] Plaintiff states in its Complaint it "obtained a Final Judgment in Alabama against Banks on September 10, 2008 because Debtor's Voluntary Chapter 7 Bankruptcy Case was deliberately concealed from Patina, Inc. who expended time and money with their lawyer post-petition at this hearing" (Doc. No. 1, ¶15). No evidence was presented establishing a Final Judgment was entered post-petition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1954902/ | 770 So.2d 824 (2000)
Willie HILL, Jr.
v.
William J. ABRAHAM, Jr. and Allstate Insurance Company.
No. 00-CA-327.
Court of Appeal of Louisiana, Fifth Circuit.
September 26, 2000.
*825 Gerald P. Webre, Webre Law Firm, Metairie, Louisiana, Counsel for plaintiff-appellee.
Christopher E. Lozes, New Orleans, Louisiana, Counsel for defendants-appellants.
Court composed of Judges SOL GOTHARD, CLARENCE E. McMANUS and H. CHARLES GAUDIN, Pro Tempore.
McMANUS, Judge.
In this matter we are asked to review an award of damages entered against Appellant, who caused one of two accidents contributing to Appellee's back injury. Finding no error in the trial judge's assessment of what degree of harm was caused by Appellant, we affirm.
FACTS AND PROCEDURAL HISTORY
This matter originated with a suit for damages filed by Appellee, Willie Hill, Jr., against William J. Abraham, Jr., and his auto liability insurer, Appellant Allstate Insurance Company. The suit arises out of an automobile accident which occurred on May 8th, 1995; liability is not an issue here. The matter was tried before a judge only on September 13th, 1999, and the following testimony was produced at trial.
Hill testified that the accident had occurred as he was driving on the interstate approaching Causeway Boulevard from Kenner. Hill's was the second car struck from behind in a three car collision caused by Defendant insured Abraham. Hill testified that though he had been able to stand and walk immediately after the accident, he had been unable to go to work. He testified that within a day after the accident he had begun to suffer severe pain in his lower back and some pain in his neck. Hill had been unable to return to work for three or four days, and had begun to treat with Dr. Richard Hages, a chiropractor, within a day after the accident.
Though Hill's back complaints continued over the next month, he testified that he had not suffered with any discomfort in his legs between the automobile accident and an on the job accident which occurred on June 12th, 1995.
At the time of Hill's second accident, he was working for Diversified Foods, and had been required as part of his duties to lift sacks and barrels containing various cooking ingredients and which could weigh as much as a hundred pounds each. Hill's work accident occurred as he had been lifting a barrel of meat marinade: Hill testified that he had fallen to the floor after his back had "gone out." He had been unable to stand after the accident, and had gone to the emergency room at East Jefferson General Hospital for treatment immediately afterwards. Hill had been bedridden for "at least" a month after this accident and (as of the trial date) had not been back to work.
Hill testified that he had experienced problems with his legs after the second accident and was suffering "throbbing" pain in his back and "constant" pain in both of his legs even as of the trial date.
Dr. Richard Hages had first seen Hill on May 8th, 1995, the date of Hill's auto accident, and continued to treat Hill through August 18th of that year. At Hill's first visit, he had complained of low back, neck and shoulder pain, and Dr. *826 Hages found positive symptoms corresponding with Hill's complaints. Dr. Hages initially diagnosed a mild neck sprain and a low back sprain, noting that the back injury had aggravated a congenital abnormality located in Hill's lower back. Dr. Hages continued to treat Hill, using various modes of therapy and seeing Hill roughly once a week. At a June 7th visit, after Hill had complained of increased pain with forward bending, Dr. Hages changed Hill's therapy regimen.
Dr. Hages saw Hill within a day of Hill's on the job accident, and at this time Hill complained of a severe increase in lower back pain and leg pain. Hill's therapy was continued, and Dr. Hages testified that though Hill had begun to improve, he had eventually recommended Hill to an orthopedic specialist.
Finally, Dr. Hages testified that he had ultimately suspected a more serious injury than the sprains originally diagnosed after the automobile accident. Dr. Hages would not rule out the automobile accident as the cause of a possible disc injury: he testified that Hill's complaints of increased pain caused by bending forward, made before the second accident, are a "traditional" symptom of disc involvement. Likewise, Dr. Hages stated that radicular pains (Hill's complaints of leg pain, made after the workplace accident) often do not start immediately after an accident though (the auto) accident may have caused a disc injury.
Dr. George A. Murphy, M.D., an orthopedic specialist, treated Hill on Dr. Hages's referral. When Dr. Murphy first saw Hill, on July 27th, 1995, his exam did reveal some lingering positive symptoms. He recommended an MRI and prescribed muscle relaxers and anti-inflammatory medication.
The results of the MRI revealed the presence of some degenerative changes to Hill's lower back in addition to a herniated disc, also located in the lower back. An EMG, done at a later date, showed some nerve damage down both sides of Hill's low back.
Dr. Murphy initially recommended a single epidural steroid injection; it was unavailing, however, as was the therapy which Dr. Murphy recommended after the steroids failed. Dr. Murphy ultimately recommended that Hill undergo surgery, and though Hill had not had surgery as of the trial date, Dr. Murphy testified that the surgery is indicated as long as Hill is displaying the above symptoms.
Dr. Murphy agreed with Dr. Hages that the disc injury may have been present as early as the auto accident, noting, as had Dr. Hages, that radicular complaints typically develop slowly after an accident. Dr. Murphy testified that it is not really possible to say how much each accident contributed to the "ultimate disc problem" which led to the recommendation of surgery. Finally, Dr. Murphy stated that the degenerative changes would have played a part in Hill's worsening back problem, noting that each injury would have "kind of added" to an already unstable condition.
At the conclusion of trial, the judge awarded Hill twenty-seven thousand dollars in general damages plus medical special damages and court costs. A written judgment was signed September 20th, 1999.
Allstate's Motion and Order for Suspensive Appeal was filed on October 7th, 1999, and Allstate now raises only this one assignment of error:
The trial court failed to apportion $27,000.00 damages amongst separate accidents occurring weeks apart where evidence indicated a significant change in appellee's physical condition before and after the second accident.
LAW AND ANALYSIS
As Allstate's only assignment of error, they argue that the trial judge was in error for having failed to "apportion" damages between the two accidents described in Hill's testimony. However, we know of *827 no mechanism available to divide liability between a worker's compensation payee and a tort defendant when the negligence action does not arise out of a work-related accident. This notwithstanding, Hill should not be unable to recover whatever damages he can prove were caused by the party responsible in tort. And we note that Allstate does, in fact, raise the issue of causation in the body of their brief (and briefly, quantum).
The issue of causation is a proper subject for review on this record and as between these two parties, and, in addition, it is within our purview to review what has been fairly raised in brief. See, for example, Bowman v. Weill Const. Co., 494 So.2d 314 (La.1986). The issue, therefore, is what degree of causation was proved against Allstate as one of two parties each contributing to Hill's ultimate harm. Further, on the record under review, we have no doubt that the trial judge also isolated the issue of causation as the controlling consideration, and that he held Allstate liable only for those damages actually caused by their insured.
We begin our discussion by acknowledging the elemental principle that the assessment of damages is well within the discretion of the trier of fact. LSA-C.C. art. 2324.1; Youn v. Maritime Overseas Corp., 623 So.2d 1257, 1261 (La.1993); Hymel ex rel. Hymel v. Thomas, 99-826, at 17 (La.App. 5 Cir. 12/21/99), 758 So.2d 201, 210; Stevenson v. Louisiana Patient's Compensation Fund, 97-709, at 3-4 (La. App. 5 Cir. 4/9/98), 710 So.2d 1178, 1181. The instant case presents a plaintiff with a herniated disc, a treating physician who has recommended surgery, and a general damage award of twenty-seven thousand dollars. So, though it is defendant who appeals here, we cannot imagine any circumstances under which this award would not be so low as to constitute a serious abuse of even vast discretionary powers. If there had been no question of causation. And while we see no error in the trial judge's award, there is no question that causation of damages was problematic under the facts presented.
The plaintiff in a personal injury action has the burden of proving by a preponderance of evidence that the injury complained of was caused by the accident giving rise to the suit. Maranto v. Goodyear Tire & Rubber Co., 94-2603, at 3 (La.2/20/95), 650 So.2d 757, 759; Crane v. Diamond Offshore Drilling, Inc., 99-166, at 19 (La.App. 5 Cir. 9/15/99), 743 So.2d 780, 792-3. Further, it is the plaintiffs burden to demonstrate that the injuries were not caused by an intervening act. Guillie v. Comprehensive Addiction Programs, Inc., 98-2605, at 8 (La.App. 4 Cir. 4/21/99), 735 So.2d 775, 778; Knight v. Miller, 503 So.2d 120, 125 (La.App. 5 Cir. 1987).
Even the evidence produced during Hill's case-in-chief left open the possibility that Hill's serious condition had been partly caused by his second accident, the one which occurred in the course and scope of Hill's employment. Further, Dr. Hages's tests revealed a congenital abnormality, and both Dr. Hages and Dr. Murphy found some degenerative changes to Hill's lower spine. There was no question, therefore, that Hill's greater harmthe need for back surgeryhad several contributing causes. And we can't believe that the trial judge awarded damages without having considered this.
Though Allstate argues that the trial judge did not "apportion" the damages between the two accidents, we cannot agree that the trial judge did not factor in an intervening cause in his assessment of damages attributable to the automobile accident. To say this would be to say that the trial judge simply ignored a substantial part of the evidence produced at trial. We cannot, we will not, say as much. Hill and both of his witnesses were questioned extensively on each accident and the symptoms experienced after each. The record shows that the trial judge himself questioned the medical experts. And even if *828 the findingthat Allstate's insured is only partly responsible for Hill's damages must be read into the judgment appealed, we must remember that even implicit findings of fact fall under the manifestly wrong standard of review. Virgil v. American Guarantee and Liability Ins. Co., 507 So.2d 825, 826 (La.1987). Though, as noted, the trial judge was without authority to "apportion" damages between Allstate and Hill's employer, we have no doubt that the trial judge did cast Allstate for only those damages caused by them out of what, given Hill's ultimate condition, would have been a much, much greater award had there not been an intervening cause to consider.
Nor do we find any manifest error in the percentage of harm the trial judge did ascribe to the automobile accident. It must be remembered that there is a possibility that Hill's herniated disc was caused by the automobile accident. Though Allstate argues that the more serious symptomsHill's complaints of leg pain, the symptoms which indicate nerve root damagedeveloped after the second accident, both treating physicians testified that such complaints typically occur several weeks after the accident which causes a spinal injury. In addition, Hill had exhibited other symptoms of a disc injury, pain caused by bending forward, before the workplace accident.
Causation is a fact specific inquiry; great deference must be accorded the trier of fact on the question of factual causation. Rick v. State, Dept. of Transp. and Development, 93-1776, at 7-8 (La.1/14/94), 630 So.2d 1271, 1275; Crane, 99-166 at 20, 743 So.2d at 793. The trial judge was required to make a difficult decision on causation when both treating physicians were hard pressed to definitely pinpoint percentages of harm attributable to each accident. We don't see why the trial judge should be asked to do a better job than two medical experts; we know we could not.
Finally, we come full circle to the principle with which we began this discussion: we see no manifest error in the amount of damages awarded by the trial judge. As we noted immediately above, and hope we have stressed, Hill's award would have been significantly increased had he been able to recover damages for a herniated disc from a single tort defendant. There is no question that the automobile accident caused some degree of harm; there was an intervening, but not superseding, cause, resulting from an accident coming close behind the first one. We find the trial judge's computation of damages due Hill from Allstate to be well within his discretion.
For the above reasons, we affirm the judgment of the trial court with Appellant to pay all costs of this appeal.
AFFIRMED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2158196/ | 133 Cal.App.3d 256 (1982)
184 Cal. Rptr. 34
JERRY SHAPIRO et al., Plaintiffs and Appellants,
v.
UNITED CALIFORNIA BANK, Defendant and Respondent.
Docket No. 61736.
Court of Appeals of California, Second District, Division One.
June 30, 1982.
*258 COUNSEL
Miller & Daar and David Daar for Plaintiffs and Appellants.
Severson, Werson, Berke & Melchior, Claire D. Johnson and Jan T. Chilton for Defendant and Respondent.
OPINION
HANSON (Thaxton), J.
Plaintiffs Jerry and Sylvia Shapiro, individually and on behalf of all others similarly situated, appeal from an order of dismissal entered following a nonsuit granted in favor of defendant United California Bank (hereinafter referred to as UCB) in this class action for damages based on alleged unlawful penalties charged by UCB for processing checks drawn on checking accounts without sufficient funds.
FACTS
On October 9, 1974, plaintiffs instituted this class action suit against UCB for damages arising from an alleged unlawful penalty imposed by UCB on its customers for the processing of checks drawn on checking accounts without sufficient funds (NSF checks).[1] Plaintiffs' complaint, which contained nine causes of action, sought, inter alia, a declaration that UCB's practice of assessing NSF charges is illegal, and a permanent injunction restraining UCB from enforcing NSF charges.[2]
UCB filed a demurrer to plaintiffs' complaint in November 1974. The demurrer was sustained without leave to amend as to four of the nine causes of action. Another cause of action, that for fraud, was dismissed by class certification order on September 5, 1979.
*259 The remaining four causes of action were all predicated on the theory that UCB's practice of assessing NSF charges constituted an unlawful penalty within the meaning of former section 1670 of the Civil Code.
In April 1978, UCB filed a motion for summary adjudication of issues without substantial controversy, which sought a determination that the NSF charges assessed by UCB on its customers did not constitute penalties as defined by Civil Code section 1670. This motion was denied by the trial court.
In September 1979, the trial court issued an amended order certifying the class of plaintiffs and specifying the common issues of law and fact to be tried.[3] The trial court then ordered UCB to publish class notices in various newspapers throughout California.
The case proceeded to trial before a jury on November 1, 1979. At that time UCB filed a motion for a separate trial on the issue whether the signature cards plaintiffs executed upon opening an account with UCB contained an implied covenant that the plaintiffs would not write NSF checks.[4] UCB's motion was made on the basis that under former Civil Code sections 1670 and 1671, the issue of liquidated damages arises only if there has been a breach of agreement. In its motion UCB *260 argued that "if plaintiffs cannot prove that there was an implied obligation to not write NSF checks, then they have no theory upon which to base a recovery against defendant, and all of the other issues certified for trial become moot."
The trial court granted UCB's motion to bifurcate the trial. Plaintiffs then presented evidence on the issue whether the signature card agreement contains an implied promise not to write NSF checks.
Plaintiffs attempted to prove that an implied promise not to write NSF checks was incorporated in the signature card agreement because the agreement provided that the depositor's accounts would be governed by the "practices of the Bank in force from time to time...." They introduced evidence of the bank's practices. Plaintiffs' expert on the banking industry, Dr. Michael R. Darby, testified in pertinent part that it was the general practice of banks to discourage NSF checks because "[p]roper financial management dictates that sufficient funds be on deposit each time checks are written by a depositor," and that it "is the obligation of the customer not to write such a check."
When plaintiffs rested their case, UCB made a motion for nonsuit pursuant to Code of Civil Procedure section 581c, or in the alternative, for directed verdict in favor of UCB. This motion was denied without prejudice to renewal.
UCB then presented its case, introducing the testimony of bank personnel to show that the bank did not regard UCB customers as being under a contractual obligation to refrain from writing NSF checks. When UCB rested its case, plaintiffs presented evidence in which they attempted to show that UCB in its own bank manual treated NSF charges as a penalty. UCB then renewed its motion for nonsuit or directed verdict. This motion was granted, the trial court finding that "there is no evidence of sufficient substance to support a verdict for plaintiff...." Accordingly, the trial court issued an order of dismissal pursuant to Code of Civil Procedure section 581c in favor of UCB, and denied plaintiffs leave to amend their complaint.
ISSUE
(1) Plaintiffs contend on appeal that the trial court erred in granting UCB's motion for nonsuit because plaintiffs, as a matter of law, produced *261 evidence sufficient to support a verdict that the signature agreement between plaintiffs and UCB contained an implied covenant not to write NSF checks and thus the charge was in effect a penalty.
DISCUSSION
"A nonsuit or directed verdict in favor of a defendant is proper when, disregarding conflicting evidence and indulging every legitimate inference in favor of plaintiff's evidence, there is no evidence of sufficient substantiality to support a decision in plaintiff's favor. [Citations.]" (Hoffman v. Security Pacific Nat. Bank (1981) 121 Cal. App.3d 964, 968 [176 Cal. Rptr. 14].)
In the instant case, plaintiffs attempted to prove that NSF charges imposed by UCB on its customers constituted an unlawful penalty within the meaning of former Civil Code section 1670.
Section 1670 at the time of trial stated that "[e]very contract by which the amount of damage to be paid, or other compensation to be made, for a breach of an obligation, is determined in anticipation thereof, is to that extent void, except as expressly provided in [former Civil Code section 1671]." Former Civil Code section 1671 allowed the parties to a contract to agree in advance "upon an amount which [would] be presumed to be the amount of damage sustained by a breach of [their contract]."[5]
By their terms, sections 1670 and 1671 together applied only to liquidated damage provisions which were to take effect when there had been a "breach of an obligation." (Garrett v. Coast & Southern Fed. Sav. & Loan Assn. (1973) 9 Cal.3d 731, 737 [108 Cal. Rptr. 845, 511 P.2d 1197].) In order for plaintiffs to prove that the NSF charges imposed by UCB constituted a penalty under sections 1670 and 1671, they were required first to prove that the signature agreement contained an implied promise by plaintiffs not to write NSF checks.
Generally, implied covenants are not favored in the law because they interfere with the parties' right to freely set such contractual terms as *262 they choose. (Walnut Creek Pipe Distributors, Inc. v. Gates Rubber Co. (1964) 228 Cal. App.2d 810, 815 [39 Cal. Rptr. 767].)
In Cousins Inv. Co. v. Hastings Clothing Co. (1941) 45 Cal. App.2d 141, 149 [113 P.2d 878], the law concerning judicial authority to imply covenants into contracts was summarized as follows: "... (1) the implication must arise from the language used or it must be indispensable to effectuate the intention of the parties; (2) it must appear from the language used that it was so clearly within the contemplation of the parties that they deemed it unnecessary to express it; (3) implied covenants can only be justified on the grounds of legal necessity; (4) a promise can be implied only where it can be rightfully assumed that it would have been made if attention had been called to it; (5) there can be no implied covenant where the subject is completely covered by the contract...."[6]
In the instant case, plaintiffs introduced the testimony of Dr. Michael R. Darby, a qualified banking expert, who testified in substance that the signature card agreement executed by plaintiffs constituted the agreement between UCB and plaintiffs; that the signature card agreement incorporates the practices of the bank as part of the contract; that it is a policy of UCB to discourage its depositor from writing NSF checks; and that the writing of an NSF check constitutes a breach of the depositor's obligation to the bank not to write such checks.
While Darby's testimony may have been sufficient to establish that UCB considered it an obligation of plaintiffs not to write NSF checks, it was not sufficient to establish plaintiffs' implied promise not to write NSF checks. Plaintiffs' express promise to pay "any and all service charges now or hereafter established" does not necessarily carry with it an implied promise to refrain from writing NSF checks. Since plaintiff did not introduce evidence sufficient to satisfy the requirements of Cousins, no covenant may be implied into the signature card agreement binding plaintiffs to refrain from writing NSF checks.
Plaintiffs attempted to prove that custom and usage in the banking industry prohibited the writing of NSF checks without prior agreement. *263 They argue that as a consequence, a promise not to write such checks should be implied as a term of the signature card agreement.
In Hoffman v. Security Pacific Nat. Bank, supra, 121 Cal. App.3d 964, 969, a case remarkably similar to the case at bench, the appellate court held that the "... statutes governing the obligations of banks and their depositors, which are incorporated into and become part of the contract between a bank and its depositors [citations], treat an overdraft as an application for advance credit rather than as a breach of an express or implied covenant. California Uniform Commercial Code section 4401 specifically authorizes a bank to pay overdrafts and to charge customers' accounts to recover amounts paid, even when payments result in overdrafts on the account. While a bank has a statutory obligation to honor any check drawn by a depositor for an amount not exceeding the balance in his account, and while the depositor has a contractual obligation to pay a service charge when he presents a NSF check, the depositor has no statutory or contractual obligation to refrain from drawing checks for amounts in excess of the balance in his account. (Cal. U. Com. Code, § 4401.)"
Plaintiffs in the instant case made no showing of industry custom which required inclusion of an implied covenant in the signature card agreement that was breached upon plaintiffs' negotiation of an NSF check.
(2) (See fn. 7.) Accordingly, the trial court did not err in granting UCB's motion for nonsuit pursuant to Code Civil Procedure section 581c.[7]
*264 DISPOSITION
The judgment of the trial court is affirmed. Each party to bear its own costs on appeal.
Dalsimer, Acting P.J., and Cooperman, J.,[*] concurred.
Appellants' petition for a hearing by the Supreme Court was denied September 8, 1982. Bird, C.J., and Mosk, J., were of the opinion that the petition should be granted.
NOTES
[1] In the banking industry, a check drawn on an account lacking sufficient funds is referred to as a nonsufficient fund check (NSF check). Charges for processing NSF checks are generally assessed by banks against the accounts of the offending customers regardless of whether the bank honors the check or, alternatively, refuses to pay and returns the check.
[2] Plaintiffs declared in their title that the complaint was for "damages, money, money had and received, unjust enrichment, restitution, fraud, conversion, and demand for an accounting."
[3] The trial court's amended order re class action issues of September 5, 1979, amending its order of August 22, 1979, defined the class of proper plaintiffs as follows: "All natural persons who are now residents of the State of California who have had nonbusiness checking accounts in any branch of defendant United California Bank in California, who have during the period from October 8, 1970 to June 30, 1978 had their checking account charged by said bank for non-sufficient fund charges, and in fact paid said charges, more particularly defined as the charge levied by defendant bank against a depositors' account when said depositor has written a check which has created or increased an overdraft or which has been rejected for insufficient funds (`NSF check'), where not covered by `Balance Plus' Overdraft Protection."
In the same order the trial court stated the first issue common to both parties as follows: "In the contract of deposit between each class member and the defendant bank was there an implied covenant that said depositor would (will) not write checks which, in total amount, at time of presentation, exceed his balance or increase his overdraft and that for each said check (which when presented creates or increases an overdraft) the bank will charge his account an amount as liquidated damages or a penalty in violation of Civil Code section 1670?"
[4] The signature card agreement executed by a depositor upon opening an account with UCB states in pertinent part that the depositor agrees that "this account shall be carried as a ____ REGULAR ____ SPECIAL checking account, and shall be governed by the bylaws, rules, regulations and practices of the Bank in force from time to time, and shall be subject to any and all service charges now or hereafter established."
[5] On July 1, 1978, the Legislature repealed section 1670 and amended section 1671 in order to express a new policy favoring liquidated damage provisions in contracts of this kind. (Civ. Code, § 1671, subds. (b) and (c).)
[6] In Addiego v. Hill (1965) 238 Cal. App.2d 842, 846 [48 Cal. Rptr. 240], the appellate court held that in implying a covenant "[t]he usual and reasonable terms found in similar contracts may be considered, unexpressed provisions of the contract may be inferred from the writing, external facts may be relied upon, and custom and usage may be resorted to in an effort to supply a deficiency if it does not alter or vary the terms of the agreement. [Citations.]" We perceive no conflict between the principles set forth in Addiego and the criteria stated in Cousins.
[7] Plaintiff contends that the trial court erred in excluding certain evidence which plaintiff attempted to introduce in order to prove that NSF charges are actually a penalty. Plaintiffs' evidence would have included testimony concerning UCB's "Balance Plus" overdraft protection program and testimony indicating that UCB itself in its bank manual labels NSF charges a "penalty." Since the issue being tried was whether the signature card agreement contained plaintiffs' implied promise not to write NSF checks, the trial court properly excluded plaintiffs' evidence under Evidence Code section 352.
Plaintiffs also contend that the trial court erred in denying plaintiff leave to amend their complaint and prove that UCB's NSF charges violated the express provisions of the signature card agreement because they were, by UCB's own bank manual, a "penalty" charge, rather than a "service" charge permitted by the agreement. The claim involved the penalty aspects of UCB's service charges within the meaning of Civil Code section 1670. Since the trial court properly determined that there was no contractual obligation, this issue, which had been deferred, was rendered moot.
[*] Assigned by the Chairperson of the Judicial Council. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2158198/ | 612 N.E.2d 980 (1993)
243 Ill. App.3d 795
184 Ill.Dec. 104
Loetta NELSON, Plaintiff-Appellee,
v.
UNITED AIRLINES, INC., Defendant (Andy Frain, Inc., Defendant-Appellant).
No. 2-92-0477.
Appellate Court of Illinois, Second District.
April 27, 1993.
*981 Stephen W. McCarty, Rockford, Robert L. Sklodowski, Sklodowski & Franklin, Chicago, Richard J. Puchalski, Doss, Puchalski & Keenan, Ltd., Chicago, for United Airlines, Inc.
Robert A. Calgaro, Conde, Stoner & Killoren, Rockford, for Loetta Nelson.
Justice UNVERZAGT delivered the opinion of the court:
Defendant, Andy Frain, Inc. (Frain), appeals the circuit court's order of April 3, 1992, denying in part Frain's petition to vacate as void a default judgment entered on October 21, 1991, against it in the amount of $175,000 after Frain failed to appear or answer. The court vacated only the money damages portion of the default judgment, but let stand an order finding defendant liable which the court had entered on October 4, 1991. The April 3 order also provided for a further hearing on the issue of damages. Defendant, United Airlines, Inc., was earlier dismissed from the action with prejudice and is not a party to the appeal.
Defendant Frain argues that service of process was not properly made upon any officer or agent of the corporation (see Ill.Rev.Stat.1991, ch. 110, par. 2-204) having authority to accept service where an employee-dispatcher was served by the Cook County sheriff at its offices in Chicago, Illinois, and the allegedly improper service resulted in a lack of personal jurisdiction. According to Frain, any order which the court entered was void ab initio and Frain may attack such an order at any time, directly or collaterally, since void orders may be set aside more than 30 days after their entry.
We conclude that this appeal is premature as it is taken from a nonfinal order; this prevents this court from acquiring jurisdiction. We therefore dismiss the appeal.
The record reveals that plaintiff, Loetta Nelson, filed a complaint on March 16, 1990, in which she alleged that she sustained injuries through the negligence of defendants when she was required to deplane at O'Hare Airport without the benefit of a wheelchair she had requested. Plaintiff requested the Cook County sheriff to *982 serve Andy Frain, Inc., at 310 West Chicago Avenue in Chicago. The return of service shows that, on March 22, 1990, at 11:39 a.m., a deputy served a 38-year-old black male named Mr. Macids.
On plaintiff's motion, the court entered a finding of default against Frain on September 7, 1990, for failure to appear in the cause. On October 4, 1991, plaintiff filed a motion for a default judgment. On October 4, having considered the affidavits and depositions submitted in support of the motion, the court entered a default judgment against Frain on the issue of liability only. A hearing on the issue of damages was scheduled for October 11, 1991. On October 21, 1991, the court entered judgment for plaintiff in the amount of $175,000. (The clerk of the court filed the order on October 22, 1991.)
On February 19, 1992, Frain filed a motion to vacate the default judgment of October 22, 1991, awarding money damages of $175,000 to plaintiff. Frain alleged that Macids was not a registered agent, but was one of several dispatchers; he did not work in a supervisory capacity. Frain maintained that it had a duly registered agent at the time of service. Defendant also averred that it was sued under the wrong name, but this issue has not been raised on appeal.
According to the affidavit of Stephen Cohen, Frain's president, Andy Frain Services, Inc., was located at 310 West Chicago Avenue in Chicago, Illinois. Macids was employed by Blair Communications Corporation, d/b/a Andy Frain Services, Inc., but Macids was not an officer or a registered agent of the corporation. Cohen stated that, to the best of his knowledge, Blair Communications Corporation, d/b/a Andy Frain Services, never received a copy of the summons and complaint given to Macids.
Cohen's affidavit also stated that Andy Frain Services, Inc., was first notified of the pending default judgment on January 10, 1992, when a citation to discover assets was sent to Frain via regular mail. However, the affidavit of Robert A. Calgaro, plaintiff's attorney, states that the citation was personally served on Frain on January 9, 1992, at 10:10 a.m. by Deputy Sims on Mr. Carter, a black 55-year-old male at Frain's corporate offices at 310 West Chicago Avenue; this service produced the response of Frain, which filed a motion to vacate the default judgment on February 19, 1992.
Among other things, Calgaro's affidavit stated that United Airlines' insurance carrier, United States Aviation Underwriters, had forwarded Calgaro's letter on behalf of plaintiff to Frain at its West Chicago Avenue location. The letter was appended to the affidavit. In that letter of August 22, 1989, the insurance carrier stated that Andy Frain, Inc., provided wheelchair assistance for United Airlines at O'Hare Airport. United Airlines' insurer also expressed its belief that Frain's representative would be contacting Calgaro in the near future.
On April 3, 1992, the court denied Frain's motion to vacate the judgment as to liability, but vacated the judgment as to damages and ordered the parties to schedule a hearing date on the issue of damages. Defendant Frain filed a timely appeal from the orders of October 22, 1991, and April 3, 1992.
On appeal, Frain argues that the service was not made upon an officer or agent with authority to accept service on the corporation and any order entered by the court should be deemed void for lack of personal jurisdiction. Frain further states that restrictions governing relief from judgments do not apply to or affect the right to relief from a void order which may be set aside even after 30 days from the entry of judgment. See R.W. Sawant & Co. v. Allied Programs Corp. (1986), 111 Ill.2d 304, 309, 95 Ill.Dec. 496, 489 N.E.2d 1360 (the time limitations or requirements of a section 2-1401 petition to vacate (Ill. Rev.Stat.1991, ch. 110, par. 2-1401) do not apply to the right to relief from a void order).
A private corporation may be served by leaving a copy of the process with its registered agent or any officer or agent of the corporation found anywhere in the State. (Ill.Rev.Stat.1991, ch. 110, par. 2-204.) *983 Defendant claims that service is improper where service is made upon an employee who does not have the requisite level of authority to receive process as an actual "agent" of the corporation for that purpose. Defendant cites Slates v. International House of Pancakes, Inc. (1980), 90 Ill.App.3d 716, 46 Ill.Dec. 17, 413 N.E.2d 457; and Mason v. Freeman National Printing Equipment Co. (1977), 51 Ill. App.3d 581, 9 Ill.Dec. 504, 366 N.E.2d 1015.
Plaintiff responds that service was effectuated upon an employee and dispatcher of personnel of Frain's and, in the absence of sufficient proof that Macids was not an "agent" of Frain's, the fact of agency was sufficiently established. Plaintiff argues that an employee may be deemed an "agent" for the service of process unless the evidence established that the employee was unable to understand the import of the papers served. Plaintiff relies on this court's decision in Megan v. L.B. Foster Co. (1971), 1 Ill.App.3d 1036, 1038, 275 N.E.2d 426 (service upon an intelligent clerk-receptionist was sufficient).
Plaintiff also argues that this court does not have jurisdiction because the partial vacatur of the default judgment which left the issue of damages pending renders the order nonfinal and therefore nonappealable. Defendant replies that the "motion" to vacate should be treated as a section 2-1401 petition and that the denial of its "motion" is made appealable by virtue of Supreme Court Rule 304(b)(3), which provides that a judgment or order is appealable without a Rule 304(a) finding (no reason to delay enforcement or appeal) if it is a "judgment or order granting or denying any of the relief prayed in a petition under section 2-1401 of the Code of Civil Procedure." (134 Ill.2d R. 304(b)(3).) All of the other provisions of Rule 304(b) concern final dispositions. (134 Ill.2d Rules 304(b)(1), (b)(2), (b)(4).) By its own terms, section 2-1401 of the Code of Civil Procedure provides for relief from final judgments. (Ill.Rev.Stat.1991, ch. 110, par. 2-1401.) Frain initially argues that a motion or petition to vacate a void judgment is not governed by the requirements of a section 2-1401 petition. Indeed, it is now well settled that a motion to vacate a judgment as void for lack of proper service or jurisdiction is not a petition under section 2-1401 (formerly section 72) notwithstanding the label that the parties apply to the motion. Home State Savings Association v. Powell (1979), 73 Ill.App.3d 915, 917-18, 29 Ill.Dec. 901, 392 N.E.2d 598; Mason, 51 Ill.App.3d at 585, 9 Ill.Dec. 504, 366 N.E.2d 1015; G. Brock Stewart, Inc. v. Valenti (1976), 43 Ill.App.3d 673, 674, 2 Ill.Dec. 203, 357 N.E.2d 180; see also People ex rel. McGraw v. Mogilles (1985), 136 Ill.App.3d 67, 70-72, 90 Ill.Dec. 831, 482 N.E.2d 1114.
Even if we were to characterize defendant's motion as a section 2-1401 petition, this would not necessarily render the order partially vacating the judgment a final and appealable order, particularly where the court manifested an intention to retain jurisdiction by reserving an issue for further consideration. Gatto v. Walgreen Drug Co. (1975), 61 Ill.2d 513, 518-20, 337 N.E.2d 23 (Rule 304(b)(3) when read in conjunction with section 72 (now section 2-1401) was not intended to make immediately and separately appealable every order that disposes of any portion of the total relief sought; order was not appealable where court continued cause for further proceedings).
For this court to have jurisdiction, the order of the trial court must be a final order unless it comes within the exceptions set forth by the supreme court rules. (Pottorf v. Clark (1985), 134 Ill.App.3d 349, 351, 89 Ill.Dec. 348, 480 N.E.2d 533.) A final judgment is one which fixes absolutely and finally the rights of the parties in the lawsuit; it is final if it determines the litigation on the merits so that, if affirmed, the only thing remaining is to proceed with the execution of the judgment. (Flores v. Dugan (1982), 91 Ill.2d 108, 113, 61 Ill.Dec. 783, 435 N.E.2d 480.) An order vacating a prior judgment and ordering a hearing on damages is not a final order because it does not finally terminate the litigation or dispose of the issues between the parties; rather, it is an interlocutory and nonappealable order (Rotogravure Service, Inc. *984 v. R.W. Borrowdale Co. (1975), 36 Ill. App.3d 606, 610, 344 N.E.2d 554), unless the order can be appealed with leave of the court, for example, under Rules 306 or 308 (134 Ill.2d Rules 306, 308).
Although some cases have stated that an appellate court can review a void order "at any time," this court has held that a notice of appeal from a void order must be filed within the time specified after the entry of a final judgment or within the time allowed by the appellate court. (People v. Green (1989), 188 Ill.App.3d 1027, 1030, 136 Ill.Dec. 532, 544 N.E.2d 1307.) In Green, this court found no authority which would allow an appellate court to obtain jurisdiction over a void judgment other than as permitted by Rules 303 or 306 (134 Ill.2d Rules 303, 306), citing with approval Cain v. Sukkar (1988), 167 Ill.App.3d 941, 947, 950-51, 118 Ill.Dec. 599, 521 N.E.2d 1292 (Green, P.J., specially concurring).
The supreme court rules make no provision for appeals from void orders, and raising the issue of voidness does not render final an order not otherwise final; rather, the issue whether an order is void can always be raised in a case properly before a court of review. (See Cain, 167 Ill. App.3d at 947, 118 Ill.Dec. 599, 521 N.E.2d 1292 (Green, P.J., specially concurring).) We agree with the reasoning of Presiding Justice Green. We hold that where, as in this case, a party challenges a judgment on the basis that it is void and the order which sets aside the judgment leaves a claim at issue or the order manifests the court's intention to retain jurisdiction of the cause, the order setting aside the judgment is not a final order and is not immediately appealable.
We adhere to the rule that an appeal may be taken only from a final Order or judgment unless an exception is permitted by rule or by precedent. To hold otherwise could result in abusive delay and piecemeal appeals if an appeal were immediately allowed from any interlocutory order where the party has challenged the court's judgment on the basis of voidness or lack of jurisdiction. See Cain, 167 Ill. App.3d at 950-51, 118 Ill.Dec. 599, 521 N.E.2d 1292 (Green, P.J., specially concurring).
In the case at bar, the defendant has appealed from a nonfinal order and has cited insufficient authority to establish the jurisdiction of this court. We therefore do not reach the merits of the appeal. The appeal must be dismissed.
Dismissed.
WOODWARD and QUETSCH, JJ., concur. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2158199/ | 667 F.Supp. 901 (1987)
Gerald E. GREENBERG, et al.
v.
Thomas MYNCZYWOR, et al.
Civ. No. 86-56-D.
United States District Court, D. New Hampshire.
July 31, 1987.
*902 David J. KillKelley, Laconia, N.H., for plaintiffs.
Malcolm R. McNeill, Jr., Dover, N.H., for Finethy.
Mark F. Weaver, Manchester, N.H. for Thomas Mynczywor and Town of Alton.
Jerome H. Grossman, Rochester, N.H. for Town of Alton.
ORDER
DEVINE, Chief Judge.
Plaintiffs Gerald and Anna Greenberg bring this civil rights action pursuant to 42 *903 U.S.C. §§ 1983 and 1988 against three defendants: the Town of Alton, New Hampshire, a municipal corporation ("Alton"); Thomas Mynczywor, in his official capacity as Alton Chief of Police and in his personal capacity; and Dean Finethy, an individual. Plaintiffs allege that these defendants conspired to criminally prosecute Mr. Greenberg in order to force him to pay a disputed debt and that the prosecution culminated in his wrongful arrest, thereby infringing his civil rights under the First, Fourth, Fifth, and Fourteenth Amendments to the United States Constitution and unspecified state constitutional and statutory law. Plaintiffs seek compensatory and enhanced damages, attorneys' fees, expungement of Mr. Greenberg's file from police records, and costs. Subject matter jurisdiction is alleged by way of 28 U.S.C. §§ 1331, 1343, and 1441;[1] the Court's power of pendent jurisdiction, United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); and diversity jurisdiction, 28 U.S.C. § 1332, the parties being diverse and the amount in controversy exceeding $10,000 exclusive of interest and costs.
Two motions are before the Court. Plaintiffs have moved to amend their complaint under Rule 15(a), Fed.R.Civ.P., and defendants Alton and Chief Mynczywor have moved for dismissal of the claims against them or for summary judgment in their favor under Rules 12 and 56, Fed.R. Civ.P. As defendant Finethy has neither objected to plaintiffs' motion nor joined in his co-defendants' motion, hereinafter in this Order the term "defendants" will refer only to Alton and Chief Mynczywor. The Court resolves the motions on the documents as filed. See Rule 11(g), Rules of the United States District Court for the District of New Hampshire.
Factual Background
On or about June 16, 1984, plaintiffs rented a house located in Alton, New Hampshire, for a monthly rental of $400. In the course of this transaction and at other times pertinent to this litigation, plaintiffs dealt with Dean Finethy, agent and caretaker for Kristen Zani, owner of the property.[2]
On March 2, 1985, Mr. Finethy was notified by the local utility company that it was about to shut off service to the house because the utility bills were unpaid. According to defendants, upon receipt of this notice Mr. Finethy realized for the first time that the Greenbergs were no longer residing in the Zani house and that they had left town owing four months' rent, a total of $1,600. He reported such to Chief Mynczywor, informing the Chief that the Greenbergs had given no prior notice of their intent to leave. Several days later, Mr. Finethy also informed Chief Mynczywor that the Greenbergs could be found in Putney, Vermont.
Mr. Greenberg disputes this version of events. He alleges that he and his wife experienced serious and unremitting problems with the house which rendered it effectively uninhabitable and that, despite being informed of the problems, Mr. Finethy and Ms. Zani did nothing. Mr. Greenberg alleges that he had informed Mr. Finethy of the impending termination of the lease approximately ten days prior to the date they left and that they had at the same time apprised Mr. Finethy that they were disputing the amount of rent due because of the problems they had experienced. Affidavit of Gerald E. Greenberg ("Greenberg Affidavit") at 1-2.
Allegedly ignorant of the rental dispute, and acting on the information supplied him *904 by Mr. Finethy, Chief Mynczywor sent a letter to the Putney, Vermont, Police Department requesting that department to supply information about the Greenbergs and to "advise him [Mr. Greenberg] that [complaints or warrants] will be forthcoming unless he makes payment to Mr. Finethy." Letter from Thomas Mynczywor to Chief of Police, Putney, Vermont (Mar. 12, 1985). A Vermont deputy sheriff visited the Greenberg residence in Putney and advised Mr. Greenberg to contact Chief Mynczywor and the Alton Police Department, which he did the following morning.
Chief Mynczywor was absent when Mr. Greenberg called. Mr. Greenberg asserts that he spoke with a representative of the department and was told that there was concern over the back rent due on the Zani premises, but no warrants were outstanding and he would be contacted if problems arose. Greenberg Affidavit at 3. Mr. Greenberg made no further attempt to contact the Alton Police, id. at 3-4, and Chief Mynczywor made no attempt to return Mr. Greenberg's call or otherwise contact him. Greenberg Affidavit, Attachment A (Deposition of Thomas Mynczywor) [hereinafter "Chief Deposition"] at 31-34. On March 25, 1985, having conducted no further substantive investigation of Mr. Finethy's allegations, Chief Mynczywor drafted a complaint, supporting affidavit, and arrest warrant charging Mr. Greenberg with the New Hampshire crime of Theft of Services, New Hampshire Revised Statutes Annotated ("RSA") 637:8 (1986), a Class A felony. Chief Deposition at 33-34, 44-46.[3] The complaint was signed by the Alton Town Clerk, sent to the Windham County Sheriff, and, pursuant thereto, on April 9, 1985, Mr. Greenberg was arrested, booked, and jailed in Brattleboro, Vermont.
On June 17, 1985, a Belknap County grand jury indicted Mr. Greenberg for violation of RSA 637:8. On September 9, 1985, the charges were dismissed by New Hampshire Superior Court Justice William Cann on Mr. Greenberg's motion to dismiss. This litigation followed.
Plaintiffs' Motion to Amend the Complaint
The complaint in the instant action was filed on February 3, 1986, and alleges three causes of action. Plaintiffs' "First Cause of Action" ("Count I") is brought against Chief Mynczywor and Dean Finethy and is a state law claim for malicious prosecution. Plaintiffs' "Second Cause of Action" ("Count II"), also brought against Chief Mynczywor and Dean Finethy, combines federal claims arising out of alleged violations of the First, Fourth, Fifth, and Fourteenth Amendments to the United States Constitution with pendent state claims arising out of alleged violation of unspecified New Hampshire statutory and constitutional law. Plaintiffs' "Third Cause of Action" ("Count III") is brought against the Town of Alton on a theory of liability based on inadequate training of police personnel, combining the same federal and state claims asserted in Count II. Finally, although not entitling such as a cause of action, the complaint asserts a claim under state law for Mrs. Greenberg's alleged loss of spousal consortium, which claim the Court hereinafter refers to as "Count V".
On June 15, 1987, the deadline for filing pretrial materials, plaintiffs filed a motion pursuant to Rule 15(a), Fed.R.Civ.P., seeking *905 to amend their complaint to add factual allegations to Count II and to assert, under the state law doctrine of vicarious liability, a "Fourth Cause of Action" ("Count IV") against the Town of Alton for Chief Mynczywor's alleged negligence. Defendants object on the basis that the close of discovery and the length of time since the complaint was filed would cause them undue prejudice were the Court to grant plaintiffs leave to amend.
The decision to grant or deny a Rule 15(a) motion to amend lies within the sound discretion of the district court, Tiernan v. Blyth, Eastman, Dillon & Co., 719 F.2d 1, 4 (1st Cir.1983), but within limits: it is mandated that leave to amend "shall be freely given when justice so requires," Rule 15(a), Fed.R.Civ.P.; Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Amendments are not to be denied solely on the basis of delay. Carter v. Supermarkets Gen'l Corp., 684 F.2d 187, 192 (1st Cir.1982). However, a district court must consider prejudice to the opposing party; if considerable delay has occurred, the burden shifts to the movant to show a valid reason for the Court to excuse the delay. See, e.g., id; Stepanischen v. Merchants Despatch Transp. Corp., 722 F.2d 922, 933 (1st Cir.1983).
In the instant action there was no undue delay. Discovery closed on June 1, 1987, and plaintiffs filed their motion within two weeks, prior to the deadline for filing pretrial materials. Furthermore, considerations of delay aside, defendants will suffer no prejudice by the granting of leave to amend because the amendments here sought raise no new issues.
The first requested amendment entails adding an allegation to Count II that Chief Mynczywor was, as Police Chief of Alton, the official policymaker in Alton vis-a-vis police procedures. This issue was not only impliedly raised in the pleadings, but was addressed by defendants in their memorandum. See Defendants' Memorandum of Law in Support of Motion to Dismiss and for Summary Judgment at 5 (citing City of Oklahoma City v. Tuttle, [471 U.S. 808, 823-24,] 105 S.Ct. 2427, 2436, 85 L.Ed.2d 791, reh'g denied, 473 U.S. 925, 106 S.Ct. 16, 87 L.Ed.2d 695 (1985)).
Plaintiffs' second requested amendment posits an additional legal theory of liability, but imposes no evidentiary burden upon defendants they do not already face. In the Count IV here sought to be added by amendment, plaintiffs seek to charge Alton with liability for Chief Mynczywor's alleged negligence based on the doctrine of vicarious liability and state law theories of imputed negligence and respondeat superior. However, inasmuch as a requisite element of vicarious liability is the existence of an underlying tort (in this instance, Chief Mynczywor's alleged negligence), see, e.g., S. Speiser, K. Krause & A. Gans, The American Law of Torts § 4.1, at 533 (1983); W. Prosser, The Law of Torts § 69, at 458 nn. 2-3 and accompanying text (4th ed. 1971), and Count II in its unamended form already charges Chief Mynczywor with negligence, defendants are put to no additional proof by the allowance of amendment; that is, whether or not leave to amend is granted, Chief Mynczywor's alleged negligence is at issue.
Amendment having been sought in a timely manner and defendants facing neither prejudice nor further delay should the Court grant plaintiffs' motion, the Court finds that leave to amend should be granted. Accordingly, plaintiffs' Motion to Amend Complaint (document no. 34) is granted in full. The Court proceeds to consider defendants' motion to dismiss and for summary judgment, viewing the complaint in its amended form. See Rule 15(c), Fed.R.Civ.P.
Defendants' Motion to Dismiss and for Summary Judgment The Summary Judgment Standard
In considering the merits of a motion to dismiss pursuant to Rule 12(b)(6), Fed.R. Civ.P., a district court is limited to the allegations of the complaint. Litton Indus. v. Colon, 587 F.2d 70, 74 (1st Cir. 1978). However, if matters outside the pleadings are presented to the court, the court may treat the motion as one for summary judgment. Rule 12(b), Fed.R.Civ.P. *906 In the instant case, affidavits, exhibits, and portions of deposition transcripts have been so presented, there has been ample opportunity for the disputants to respond to the presentations, and there has been no suggestion that exclusion of any material is warranted; accordingly, the Court disposes of defendants' motion as provided in Rule 56. Id.; Moody v. Town of Weymouth, 805 F.2d 30, 31 (1st Cir.1986).
The acid test for survival against a motion for summary judgment is whether the nonmovant has produced sufficient evidence to establish that a jury could reasonably find in his or her favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511-12, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate and trial unnecessary, on the other hand, if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The burden is upon the moving party to establish the lack of a genuine and material factual issue, Finn v. Consolidated Rail Corp., 782 F.2d 13, 15 (1st Cir.1986), and the court must view the record in the light most favorable to the nonmovant, according the nonmovant all beneficial inferences to be discerned from the evidence, Ismert & Assoc. v. New England Mut. Life Ins. Co., 801 F.2d 536, 537 (1st Cir.1986).
Official Capacity Claims and Claims Against Alton Under § 1983
Defendants contend that summary judgment in Alton's favor as to both the federal and state claims in Count III is warranted by Monell v. Department of Social Serv. of City of New York, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). In Monell, the Supreme Court held that local governmental units are subject to suit under 42 U.S.C. § 1983 and thus civilly liable for damages and injunctive relief directed at them, but only if an "official policy" or "custom" is "the moving force of the constitutional violation." Id. at 694-95, 98 S.Ct. at 2037-38. The Court broadly defined "custom" as any "persistent and widespread" practice which is "permanent and well settled," "and explicitly found that "custom" is not limited to behavior which has received formal approval from the governmental body's official decision-making channels. Id. at 690-91, 98 S.Ct. at 2035-36. Defendants argue that Chief Mynczywor's actions constituted only a single incident, not the requisite Monell "official policy" or "custom". Plaintiffs counter that Alton's policy was to leave Chief Mynczywor to his own devices and that such purposeful failure to appropriately train, supervise, and instruct Chief Mynczywor regarding the proper filing of criminal complaints in itself meets the Monell standard for section 1983 liability.
A municipality's negligent failure to train, supervise, and instruct its law enforcement personnel can constitute a "custom" or "official policy" for the purpose of satisfying Monell and establishing section 1983 municipal liability. See, e.g., Tuttle, supra, 471 U.S. at 822-24, 105 S.Ct. at 2435-36; Wierstak v. Heffernan, 789 F.2d 968, 974 (1st Cir.1986); Kibbe v. City of Springfield, 777 F.2d 801, 804-06 (1st Cir.1985), cert. granted, ___ U.S. ___, 106 S.Ct. 1374, 89 L.Ed.2d 600 (1986), cert. dismissed, ___ U.S. ___, 107 S.Ct. 1114, 94 L.Ed.2d 293 reh'g denied, ___ U.S. ___, 107 S.Ct. 1966, 95 L.Ed.2d 537 (1987). However, in order for municipal liability to be premised on an unarticulated governmental policy, custom or practice passive, as opposed to affirmative, municipal conduct evidence of more than a single wrongful act is required; that is, one incident of police misconduct does not in and of itself permit the Court to infer a "policy" of inadequate training. See, e.g., Tuttle, supra, 471 U.S. at 823-24, 105 S.Ct. at 2436-37; Wierstak, supra, 789 F.2d at 974; Kibbe, supra, 777 F.2d at 805; Thompson v. Sanborn, 568 F.Supp. 385, 392 (D.N.H. 1983). Rather, in order for the plaintiffs to prevail on an "inadequate training" theory based on one incident, the incident must have been "brutal and outrageous", Scarpa v. Murphy, 624 F.Supp. 33, 36-37 (D.Mass.1985) (and citations therein), or the *907 training of Chief Mynczywor "nonexistent or reckless, or grossly, palpably, and culpably negligent," Leite v. City of Providence, 463 F.Supp. 585, 589 (D.R.I.1978); see also Kibbe, supra, 107 S.Ct. at 1121 (O'Connor, J., dissenting from dismissal of certiorari, joined by Rehnquist, C.J., and White, Powell, JJ.); Annotation, Liability of Supervisory Officials and Government Entities for Having Failed to Adequately Train, Supervise, or Control Individual Peace Officers Who Violate Plaintiff's Civil Rights Under 42 U.S.C. § 1983, 70 A.L.R. Fed. 17 § 2(a) at 22 (1984 & Supp. Oct.1986) (collecting cases and expressing view that majority of courts have rejected simple negligence standard and instead require conduct exhibiting gross negligence, recklessness, deliberate indifference to constitutional rights, or the like).
In support of their stance that Chief Mynczywor was adequately trained, supervised, and instructed and that plaintiffs have presented only a single incident of less than "brutal" alleged misconduct, defendants have provided the Court with two exhibits: the apparently extensive and comprehensive Rules and Regulations of the Alton Police Department (Defendants' Memorandum, Exhibit D, 49 pp. with app.), and a list entitled "Schools Attended by Chief Thomas J. Mynczywor" (Id., Exhibit E), attesting to the Chief's purportedly extensive training and experience in different facets of police work. Defendants' Memorandum at 6. Defendants have not provided the Court with evidence establishing that said Rules and Regulations were followed as a matter of course; however, neither have plaintiffs provided evidence to show that the Rules and Regulations were ignored that Alton had an affirmative "do nothing" policy with regard to overseeing police operations.
Construed in the light most favorable to plaintiffs, the evidence before the Court shows only that Chief Mynczywor failed to properly investigate the facts before drawing up the complaint filed against Mr. Greenberg. While such actions might be characterized as slipshod and uncommendable, they hardly rise to the level of being "brutal" or "outrageous". Thus, even if proven at trial, Chef Mynczywor's actions on this occasion, standing alone, do not constitute a colorable constitutional claim against Alton under Monell and its progeny. As plaintiffs have alleged no other instances of similar misconduct, the facts upon which the Greenbergs rely to support their allegations are not susceptible of the interpretation the Greenbergs give them, and summary judgment is appropriate. Ismert & Assoc., supra, 801 F.2d at 537.
As an alternative argument, plaintiffs assert that summary judgment is precluded by Pembaur v. City of Cincinnati, 475 U.S. 469, 106 S.Ct. 1292, 89 L.Ed.2d 452 (1986). In Pembaur, the Supreme Court held that "where action is directed by those who establish government policy, the municipality is equally responsible whether that action is to be taken only once or to be taken repeatedly." Id., 106 S.Ct. at 1299. Plaintiffs have produced no evidence tending to establish that Chief Mynczywor was the policymaker in Alton with regard to police matters. Defendants' evidence, the Rules and Regulations of the Alton Police Department (Defendants' Memorandum, Exhibit D), cuts the other way, as the Rules appear to have been promulgated and signed by the Alton Board of Selectmen.
While plaintiffs are clearly entitled to all favorable inferences, Ismert & Assoc., supra, 801 F.2d at 537, they are not entitled to build their case "on the gossamer threads of whimsy, speculation and conjecture," White v. Hearst Corp., 669 F.2d 14, 19 (1st Cir.1982) (quoting Manganaro v. Delaval Separator Co., 309 F.2d 389, 393 (1st Cir.1962)). Despite having had adequate time in which to conduct discovery, including one extension of time, plaintiffs have failed to show the Court that they are capable of establishing the existence of elements essential to their case, upon which they will bear the burden of proof at trial. Accordingly, summary judgment as to claims in Count III brought pursuant to 42 U.S.C. § 1983 must be granted in favor of Alton. See Celotex Corp. v. Catrett, 477 *908 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986); Floyd v. Farrell, 765 F.2d 1, 5 (1st Cir.1985) (party opposing summary judgment may not create dispute by "bare" allegations, but must point to specific facts in affidavits and other materials supporting its position). And, inasmuch as a suit brought against a person in his or her official capacity is generally "only another way of pleading an action against an entity of which an officer is an agent," Monell, supra, 436 U.S. at 690 n. 55, 98 S.Ct. at 2035 n. 55, summary judgment must also be granted in favor of Chief Mynczywor as to federal claims in Count II brought against him in his official capacity. See Scarpa v. Murphy, supra, 624 F.Supp. at 36 (citing Wolf-Lillie v. Sonquist, 699 F.2d 864, 870 (7th Cir.1983)).
Finally, inasmuch as defendants' arguments regarding Alton's liability for the Town's allegedly inadequate training address only federal case law and the viability of actions brought pursuant to section 1983, state law issues remain unaddressed. Accordingly, summary judgment in defendants' favor as to state law claims in Counts II and III is inappropriate.
Defendants' Claims to Qualified Immunity
Defendants argue that because Chief Mynczywor was acting in his official capacity when the acts at issue in this litigation occurred, the doctrine of qualified immunity provides both the Chief and Alton with a complete defense to liability. Whether this defense may be invoked is a purely legal issue, properly determined by the Court prior to trial, Donta v. Hooper, 774 F.2d 716, 719 (6th Cir.1985), cert. denied, ___ U.S. ___, 107 S.Ct. 3261, 97 L.Ed.2d 760 (1987), and preferably on a motion for summary judgment, Harlow v. Fitzgerald, 457 U.S. 800, 818-19, 102 S.Ct. 2727, 2738-39, 73 L.Ed.2d 396 (1982); see also Mitchell v. Forsyth, 472 U.S. 511, 525-26, 105 S.Ct. 2806, 2815, 86 L.Ed.2d 411 (1985); Crooker v. Mulligan, 788 F.2d 809, 812-13 (1st Cir.1986).
Not only is the issue of Alton's liability on plaintiffs' federal claims moot in light of the Court's ruling above, but, in any event, local government entities are precluded from invoking the qualified immunity defense against damages liability stemming from federal claims. Owen v. City of Independence, Mo., 445 U.S. 622, 657-58, 100 S.Ct. 1398, 1418-19, 63 L.Ed.2d 673 (1980); Blackburn v. Snow, 771 F.2d 556, 571 n. 13 (1st Cir.1985). Similarly, Alton is foreclosed from asserting the defense to ward off state law claims. If the Town is insured, it may not plead qualified immunity to the extent that it has obtained liability insurance which covers the risk in the underlying action. RSA 412:3 (1983); Brown v. City of Laconia, 118 N.H. 376, 378, 386 A.2d 1276, 1277 (1978). And if the Town is uninsured, the defense is foreclosed unless the actions at issue entailed an executive or planning function the making of a basic policy decision such as would be characterized by exercising "a high degree of official judgment or discretion." See Merrill v. City of Manchester, 114 N.H. 722, 729-30, 332 A.2d 378, 383 (1974); see also RSA 507-B:2 (1983); Tilton v. Dougherty, 126 N.H. 294, 300, 493 A.3d 442, 446 (1985) (characterizing medical negligence as "claim of mere inaction or inattention rather than a claim that the defendant exercised discretion negligently"); State v. Brosseau, 124 N.H. 184, 200-02, 470 A.2d 869, 879-81 (1983) (Douglas, Batchelder, JJ., concurring). The claim herein is not that Chief Mynczywor failed to properly execute an executive or planning function; rather, the claim entails merely an alleged failure to properly investigate a complaint before bringing charges. This is inattention to detail, not the deliberate exercise of discretion. Accordingly, the Court holds that the defense of qualified immunity is not available to Alton on the state claims herein asserted. Chief Mynczywor's liability in his official capacity as to the state claims being derivative to Alton's liability, see Monell, supra, 436 U.S. at 690 n. 55, 98 S.Ct. at 2035 n. 55; Scarpa v. Murphy, supra, 624 F.Supp. at 36, the defense is similarly uninvocable by him in his official capacity.
*909 As to plaintiffs' federal claims against Chief Mynczywor in his individual capacity, the standard for determining whether a government official may invoke qualified immunity is objective. In performing discretionary functions, such officials are generally shielded from liability for civil damages "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, supra, 457 U.S. at 818, 102 S.Ct. at 2738; Fernandez v. Leonard, 784 F.2d 1209, 1214 (1st Cir.1986). With regard to arrest warrants and the issuance thereof, immunity is lost only "if, on an objective basis, it is obvious that no reasonably competent officer would have concluded that a warrant should issue; but if officers of reasonable competence could disagree on this issue, immunity would be recognized." Malley v. Briggs, 475 U.S. 335, 106 S.Ct. 1092, 1098, 89 L.Ed.2d 271 (1986). If a reasonably well-trained police officer knows or should know that an affidavit is insufficient to establish probable cause and that application for an arrest warrant is improvident, such application is not objectively reasonable because it creates the unnecessary danger of an unlawful arrest, and qualified immunity is lost. Id.; Floyd v. Farrell, supra, 765 F.2d at 5.[4] Inquiries as to an official's state of mind at the time of the acts at issue (e.g., inquiries into bad faith or malice) are irrelevant in this determination. Malley v. Briggs, supra, 106 S.Ct. at 1096; Harlow, supra, 457 U.S. at 815-19, 102 S.Ct. at 2736-39; Floyd v. Farrell, supra, 765 F.2d at 4-5; Kaltner v. Pebbles, supra note 4, 628 F.Supp. at 98. But see B.C.R. Transp. Co. v. Fontaine, supra note 4, 727 F.2d at 10 (even if defendant officer lacked probable cause for obtaining and executing search and arrest warrants, officer can still avoid section 1983 liability by demonstrating his subjective good faith in obtaining warrants), cited with approval in Crooker v. Mulligan, supra, 788 F.2d at 812.
Probable cause to arrest exists if the facts and circumstances within the arresting officer's knowledge and of which the officer has reasonably trustworthy information are such to warrant a person of reasonable caution and prudence to believe that the arrestee has committed or is in the process of committing a crime. Floyd v. Farrell, supra, 765 F.2d at 5 (citing State v. Lemire, 121 N.H. 1, 4-5, 424 A.2d 1135, 1138 (1981)); Kaltner v. Pebbles, supra note 4, 628 F.Supp. at 98-99. Where, as in the case at bar, the facts as to the information upon which the arresting officer acted are not in dispute, the existence of probable cause is a question of law for the Court to determine. Kay v. Bruno, 605 F.Supp. 767, 774 (D.N.H.1985) (and cases cited therein), aff'd, 821 F.2d 31 (1st Cir.1987) (per curiam).
It is undisputed that Chief Mynczywor's only information as to the alleged fact a crime had been committed came from the agent of the alleged victim. Chief Deposition at 46. While probable cause determinations based on information supplied by alleged victims are generally considered reliable, in this Circuit such information, standing alone, does not constitute probable cause to search, seize, or arrest an alleged perpetrator. B.C.R. Transp. Co. v. Fontaine, supra note 4, 727 F.2d at 9-10.
Plaintiffs have produced the sworn and attested-to written report of Steven C. Byers, a former Chief of Police for the Town of Barnstead, New Hampshire. See Greenberg Affidavit, Attachment. In his report Mr. Byers clearly implies that properly instituted criminal proceedings must be based upon investigation. This is further borne out by Chief Mynczywor's deposition in which he stated that his general practice relative to disputed debts and police *910 involvement is to talk to both parties in order to find out the true circumstances. Chief Deposition at 12-16. In reality, this is common sense; for the Court to hold otherwise that less is required would provide incentive for police officers to act without caution and without pause for reflecting on the danger of instigating an unlawful arrest. See, e.g., Malley v. Briggs, supra, 106 S.Ct. at 1097.
The Court need not address what minimum amount of investigation is needed to establish reasonable probable cause; in the case herein there was no investigation, which clearly falls short of the standard. In accordance therewith, the Court hereby finds and rules that Chief Mynczywor lacked probable cause to seek an arrest warrant and may not invoke the qualified immunity defense. Defendants' motion for summary judgment is denied as to federal and state claims brought in Count II against Chief Mynczywor in his personal capacity.
Claims for Malicious Prosecution
Count I asserts a claim for malicious prosecution. This cause of action has three elements: (i) the bringing of a criminal prosecution, (ii) without probable cause and with malice, and (iii) resolution of the criminal proceeding in the plaintiff's favor. Kay v. Bruno, supra, 605 F.Supp. at 774; Stock v. Byers, 120 N.H. 844, 846, 424 A.2d 1122, 1123 (1980). It is undisputed in this litigation that the first and third elements are met. Defendants argue for summary judgment in their favor on the basis that the second element is absent; i.e., that probable cause existed for Chief Mynczywor to bring criminal charges and that there is no evidence to indicate that the prosecution was motivated by malice or ill will.
In the preceding section of this Order, the Court found that probable cause for Chief Mynczywor to seek an arrest warrant was absent; accordingly, the Court need only address defendants' contention that there was an absence of malice motivating Chief Mynczywor's prosecution.
Because proof of malice often turns on circumstantial evidence, the issue is not readily adaptable to summary disposition. Nash v. Keene Publishing Corp., 127 N.H. 214, 223, 498 A.2d 348, 354 (1985) (citing Hutchinson v. Proxmire, 443 U.S. 111, 1120 n. 9, 99 S.Ct. 2675, 2680 n. 9, 61 L.Ed.2d 411 (1979)). Furthermore, in the instant case there are factual matters in dispute. Plaintiffs allege that Chief Mynczywor's prosecution of Mr. Greenberg was improperly motivated by small-town politics, supporting their allegations with reference to Chief Mynczywor's deposition. See Plaintiffs' Final Objection and Memorandum of Law in Opposition to Defendant[s'] Motion to Dismiss and for Summary Judgment at 905-06. Additionally, construed in the light most favorable to plaintiffs, the facts known to Chief Mynczywor that a long-term rental was at issue, that plaintiffs' new address was known, that the complaining party had an interest in the outcome of the action, and that the alleged perpetrator of the "crime" had attempted unsuccessfully to contact the Chief militate in favor of finding that indicia of criminal intent were absent and that a jury could reasonably find that Chief Mynczywor's motives for seeking the warrant were thus suspect. See Hogan v. Robert H. Irwin Motors, Inc., 121 N.H. 737, 740-41, 433 A.2d 1322, 1325 (1981).
With reference to summary judgment, a dispute of fact is considered "material" if it "affects the outcome of the litigation," Finn v. Consolidated Rail Corp., supra, 782 F.2d at 15 (quoting Pignons S.A. de Mecanique v. Polaroid Corp., 657 F.2d 482, 486 (1st Cir.1981)), and "genuine" if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," Anderson v. Liberty Lobby, Inc., supra, 106 S.Ct. at 2510. Whether Chief Mynczywor's prosecution of Mr. Greenberg was motivated by malice is clearly material, genuine, and in dispute. Accordingly, summary judgment is inappropriate. Defendants' motion is denied as to Count I.
Conclusion
Plaintiffs' motion to amend the complaint (document no. 34) is granted in full.
*911 With regard to defendants' motion for summary judgment (document no. 18), the Court rules as follows:
Count I the motion is denied;
Count II the motion is granted in favor of Chief Mynczywor as to federal claims brought against him in his official capacity, but denied as to federal claims brought against him in his personal capacity and denied as to state law claims brought against him in both his personal and his official capacities;
Count III the motion is granted in favor of Alton as to federal claims, but denied as to state law claims;
Because defendants' motion did not address the claims made in Counts IV and V and plaintiffs' claim for enhanced and punitive damages, defendants' motion is herewith denied as to those claims.
SO ORDERED.
NOTES
[1] 28 U.S.C. § 1441 appears to have become caught in plaintiffs' jurisdictional net in error, as the case was originally brought in this court, not removed from state court.
[2] The complaint also named Ms. Zani as a defendant. On July 16, 1987, pursuant to Rule 41(a)(1)(ii), Ms. Zani's counsel filed a written stipulation to her dismissal signed by all parties. Although counsel sought the Court's approval, such approval is unnecessary and, if given, without force of law; Rule 41(a)(1)(ii) stipulations of dismissal are effective when filed. See C. Wright & A. Miller, 9 Federal Practice and Procedure § 2363 at 160 & n. 51 (1971 & Supp.1986); J. Moore, J. Lucas & J. Wicker, 5 Moore's Federal Practice ¶ 41.02[2] at 41-21 & n. 18 (1986 & Supp.1986-87).
[3] RSA 637:8 provides in pertinent part:
Theft of Services.
I. A person commits theft if he obtains services which he knows are available only for compensation by deception, threat, force, or any other means designed to avoid the due payment therefor....
II. A person commits theft if, having control over the disposition of services of another, to which he knows he is not entitled, he diverts such services to his own benefit or to the benefit of another who he knows is not entitled thereto.
III. As used in this section, `services' includes, but is not necessarily limited to, ... hotel, motel, tourist cabin, rooming house and like accommodations....
Violation of RSA 637:8 is a Class A felony if the value of the services at issue exceeds $1,000. RSA 637:11. Under the New Hampshire Criminal Code, Class A felonies are punishable by any or all of the following: imprisonment of up to fifteen years, imposition of a fine of up to $2,000 or twice the value of services unlawfully gained, and a period of probation of up to five years. RSA 651:2 (1986).
[4] The mere fact that a warrant issued does not insulate Chief Mynczywor from liability. Approval of an arrest warrant does not bar the civil rights liability of an officer who obtains a warrant if the officer should have known that the facts recited in the affidavit did not constitute probable cause. Malley v. Briggs, supra, 106 S.Ct. at 1098-99; B.C.R. Transp. Co. v. Fontaine, 727 F.2d 7, 10 n. 1 (1st Cir.1984); Kaltner v. Pebbles, 628 F.Supp. 96, 98 (E.D.Mich.1986) (and cases therein cited). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2614721/ | 604 P.2d 4 (1979)
Johnston JEFFRIES, Appellant,
v.
GLACIER STATE TELEPHONE COMPANY, Appellee.
No. 4298.
Supreme Court of Alaska.
December 7, 1979.
*6 James K. Tallman, Anchorage, Johnston Jeffries, Kenai, for appellant.
Louis R. Veerman, Ely, Guess & Rudd, Anchorage, for appellee.
Before CONNOR, BOOCHEVER and MATTHEWS, JJ., DIMOND, Senior Justice, and COOKE, J.
BOOCHEVER, Justice.
When the 1968 volume of the Kenai Peninsula Telephone Directory was published, attorney Johnston Jeffries discovered that his professional telephone number was listed erroneously in the classified section (more commonly known as the "Yellow Pages"). On March 8, 1968, plaintiff Jeffries filed a complaint in superior court seeking damages for the erroneous listing from defendant Glacier State Telephone Company based on allegations of the latter's negligence. On April 8, 1968, Jeffries amended his complaint to contain a second count seeking compensatory and punitive damages for alleged inadequate telephone service. Thus, Count I sought damages for the erroneous listing of Jeffries' telephone number;[1] Count II sought damages for negligent telephone service.
A tangled series of procedural disputes followed,[2] resulting in an order entered by Judge Fitzgerald on December 13, 1971, staying the superior court action and remanding the case to the Public Utilities Commission based on its primary jurisdiction.[3]
Pursuant to the court's order, the Commission conducted a hearing on June 9, 1972, receiving evidence from Jeffries, other telephone customers, and representatives of Glacier State. The Commission found that although the level of local telephone service during the period in question[4] was "below a desirable standard of service," it was nevertheless a "reasonable level of telephone *7 service under the conditions existing at the time." The Commission further found that Glacier State had not discriminated against Jeffries in the matter of service. Based upon these findings, the Commission entered an order dismissing Jeffries' complaint on December 30, 1972. Jeffries did not appeal or otherwise seek judicial review of this order.[5]
On November 2, 1973, Jeffries moved for an order directing the cause to continue in superior court. On January 16, 1974, the superior court, per Judge Burke, entered an order allowing Jeffries to proceed with his action for damages.
Glacier State moved for judgment on the pleadings[6] as to Count II based on the doctrine of "administrative res judicata." In a memorandum decision dated August 25, 1977, Judge Rowland concluded that Jeffries was precluded from litigating Count II of the complaint by the doctrine of res judicata.[7] Accordingly, the court entered judgment dismissing Count II of Jeffries' supplemental and amended complaint.
Glacier State moved for an award of attorney's fees pursuant to Civil Rule 82. On May 31, 1978, the superior court awarded Glacier State attorney's fees in the amount of $1,000.00.
Jeffries appeals the court's judgment dismissing Count II of the complaint and the order awarding Glacier State $1,000.00 in attorney's fees. In his brief, Jeffries develops two broad assignments of error.[8] He contends:
(1) that the superior court erred in giving res judicata effect to the Commission's findings regarding the issue of Glacier State's liability for inadequate telephone service.
(2) that the superior court erred in awarding defendant attorney's fees because (a) it is not possible to determine which party prevailed in the litigation, or (b) the public interest exception applies.
Based on the unique procedural circumstances involved in this case, we believe that Jeffries is entitled to have the superior court review the Commission's findings in the context of an administrative appeal. We do not reach Jeffries' subsidiary argument concerning his right to jury trial since we find that the issue was not properly raised before the superior court. Finally, we believe it would be premature to rule on the merits of the award of attorney's fees to Glacier State since further proceedings with respect to Count II will be necessary.
I. ADMINISTRATIVE RES JUDICATA
Relying on the doctrine of primary jurisdiction,[9] the superior court "remanded" *8 the case to the Commission and "stayed" the superior court proceedings. This decision is not attacked directly in this appeal. Pursuant to the court's order and after conducting hearings, the Commission concluded that although Glacier State's service was below a "desirable standard," it was nevertheless reasonable and non-discriminatory as applied to Jeffries. Jeffries did not timely appeal the findings of the Commission.[10] Finding that both parties had an opportunity to be heard before the Commission and that the Commission acted in an adjudicatory capacity when it considered Jeffries' second claim for relief, Judge Rowland ruled that Jeffries was precluded from attacking the Commission's unappealed findings that Glacier State had provided a reasonable level of service. Accordingly, the superior court dismissed Count II of Jeffries' complaint on the basis of res judicata.[11]
Jeffries argues that the Commission's findings should not be accorded res judicata effect because the Commission is without jurisdiction to adjudicate tort liability for negligence in providing telephone service. Jeffries also contends that to give res judicata effect to the Commission's findings would deprive him of his constitutional right to a jury trial. Glacier State argues that the Commission's findings should be given res judicata effect because the Commission was acting in an adjudicatory capacity pursuant to a statutorily authorized grant of jurisdiction.
Although the principles of issue preclusion have been developed in a judicial setting,[12] we agree with the modern and now generally accepted view that the doctrine of res judicata may be applied to adjudicative determinations made by administrative agencies.[13] Although authorities caution against rigid application of the rules developed in the judicial setting, they agree that in many cases the reasons for finality of determinations apply with as much force in the administrative arena as they do in the judicial forum.[14] Thus, Professor Davis concludes:
*9 That the doctrine of res judicata should be applied in full force to some administrative action seems clear beyond question. The doctrine is at its best as it applies to an adjudication of past facts, where the second proceeding involves the same claim or the same transaction.
2 K. Davis, Administrative Law Treatise § 18.03, at 559 (1958). Each case, of course, must be examined on its facts to determine whether application of res judicata is warranted.[15] Moreover, the judicial doctrine itself is filled with requirements and qualifications, and each must be satisfied before a court may hold that a party is bound by a prior determination.
We need not reach the issue of whether this is a proper case for applying the doctrine of res judicata, for we believe that Jeffries is entitled to a judicial review of the Commission's finding. This case went to the Public Utilities Commission in a unique procedural posture. In 1971, Judge Fitzgerald "remanded" the case to the Commission pursuant to the doctrine of primary jurisdiction and "stayed" the superior court proceeding pending the Commission determination. It appears that the superior court retained jurisdiction over Jeffries' action, for the court did not dismiss Jeffries' complaint. Jeffries moved for an order directing the cause to continue in superior court on November 2, 1973.[16] Although Jeffries' motion to continue the cause was not filed within thirty days of the Commission's determination,[17] we hold that the superior court had continuing jurisdiction over the action and that the time limitation specified for appeals from agency determinations did not begin to run against Jeffries. Jeffries' motion to continue the cause in superior court should be treated as an administrative appeal for purposes of judicial review of the Commission's finding.[18] In the future, such appeals should be timely filed in accordance with the provisions of the Administrative Procedure Act. *10 We refuse, however, to impose upon Jeffries the time limitations governing appeal from agency decisions, for he could have reasonably believed the superior court's retention of jurisdiction allowed him to continue his action there at any time.
We shall now discuss the issues that remain to be decided by the superior court. Jeffries' complaint contained two counts: Count I sought damages for a specific instance of negligence which affected only Jeffries, while Count II sought damages for generally inadequate phone service which affected the public in general, including Jeffries.
II. TELEPHONE SERVICE
When a disgruntled phone subscriber seeks to recover damages for inadequate telephone service which is common to the public, we believe that the complaint may properly be referred to the Public Utilities Commission for exercise of primary jurisdiction.[19] Pursuant to its authority to prescribe "just and reasonable standards . . and practices" to be observed in furnishing services and facilities,[20] and its authority to hear complaints,[21] the Commission may determine ("find") whether the public utility's service or facilities meet the Commission's standards of reasonableness and adequacy. Such findings, of course, may be appealed to the superior court for review in accordance with the Administrative Procedure Act, but the initial determination should be made by the Commission.[22] When, however, a phone customer alleges that he has suffered from acts or omissions of the utility which result in inadequate service which is different from that provided to the public as a whole, the complaint should be handled as a traditional common law action, and the superior court should determine the issues in accordance with settled principles of tort liability. In this case, Jeffries' only allegation of a particular invasion of his individual interests was contained in Count I, which has been settled by the parties. As we read *11 Jeffries' complaint, all allegations of Glacier State's negligent or willful conduct contained in Count II would have affected the public as a whole.[23] Thus, the task remaining before the superior court is that of reviewing the Commission's findings and conclusions in accordance with the procedures specified in AS 44.62.570.[24]
III. RIGHT TO JURY TRIAL
In a subsidiary argument, Jeffries asserts that allowing the Commission to determine whether Glacier State is liable to him for damages would deprive him of his constitutional right to trial by jury.[25] Jeffries contends that his suit was a common law action because his complaint sought damages.
Although Jeffries requested a jury trial, the issue regarding his constitutional right to a jury trial was not properly raised or briefed at the superior court level.[26] Moreover, he failed to include this issue in his statement of points on appeal. Given this state of the record, the issue is not properly before this court.[27]
IV. ATTORNEY'S FEES
Glacier State, at the conclusion of the litigation, moved for an award of attorney's fees. Glacier State claimed actual attorney's fees and related costs of $9,871.70. Of this sum, Glacier State claimed that $7,835.19 was attributable to the defense of Count II. The superior court awarded Glacier State $1,000.00 in attorney's fees.
Jeffries argues that the award of attorney's fees to Glacier State was improper on two grounds. First, he asserts that there was no "prevailing party" in the litigation. Second, he argues that an award of attorney's fees was improper because the litigation involved a question of genuine public interest which was brought in good faith. Glacier State disputes both of these assertions.
We find it unnecessary to determine whether the award of attorney's fees was proper. Given our disposition of the case, further proceedings with respect to Count II will be necessary in the superior court. Accordingly, any ruling on attorney's fees would be premature at this time.
*12 The judgment on Count II of Jeffries' complaint is REVERSED, and the cause is REMANDED to the superior court for proceedings not inconsistent with this opinion.
RABINOWITZ, C.J., and BURKE, J., not participating.
NOTES
[1] On December 5, 1977, the parties entered into a settlement agreement which disposed of Count I of the complaint. Under the terms of the agreement, the parties agreed that Jeffries would receive judgment on Count I pursuant to his unopposed motion for partial summary judgment and that his damages would be fixed at the amount of $500.00. On January 6, 1978, the superior court, by Judge Rowland, entered partial summary judgment in favor of Jeffries.
[2] Initially, the superior court dismissed Count II of Jeffries' complaint, directing him to submit a complaint before the Public Service Commission (hereinafter referred to as the "Commission"). In 1970, AS 42.05.010 was amended changing the name of the Public Service Commission to the Public Utilities Commission. The superior court was referring to the Commission by its earlier name. On July 12, 1968, the Commission "dismissed" Jeffries' complaint upon the grounds that he had failed to exhaust his administrative remedies. Jeffries thereupon filed a "Supplemental and Amended Complaint" in September in the superior court which essentially paralleled his earlier filed two-count amended complaint. The supplemental complaint, in addition, detailed specific instances of alleged inadequate telephone service and recited Jeffries' unsuccessful efforts to obtain satisfaction from Glacier State and the Commission. On November 14, 1968, the superior court issued a mandatory order directing the Public Service Commission "to hear, act upon and finally dispose of the complaint filed by plaintiff." The court vacated this order on December 5, 1968, apparently for the reason that the Public Service Commission wished to intervene in the proceedings. On February 5, 1969, the superior court granted the Commission's motion to intervene. The superior court, per a memorandum of decision dated October 28, 1969, requested further briefing on the issue of primary jurisdiction.
[3] Jeffries requested a clarification of the court's ruling, and Judge Fitzgerald responded by letter on January 18, 1972. In part, the letter stated:
The cases, which I relied upon in my ruling, indicated that primary jurisdiction of claims such as advanced by the plaintiff should be first dealt with by the administrative agency having jurisdiction. The cases also suggested procedures for implementing a suitable remedy for the plaintiff if the claim was established. Hence, I have remanded the matter to the Commission for further proceedings. If the proceedings terminate in plaintiff's favor, then if it should be necessary, the implementation of plaintiff's remedy may be sought in Superior Court.
[4] The Commission limited its examination to the period of time between April 3, 1967, and September 12, 1968.
[5] AS 42.05.551(a), which is applicable to the Alaska Public Utilities Commission, provides:
All final orders of the commission are subject to judicial review in accordance with AS 44.62.560-44.62.570 of the Administrative Procedure Act.
[6] The superior court treated the motion as one for summary judgment because it was requested to consider matters outside the pleadings.
[7] Judge Rowland based his decision on the Commission's unappealed finding that Glacier State had provided a reasonable level of telephone service under the circumstances.
[8] In his statement of points on appeal, Jeffries specified four instances of error in the superior court proceedings. We will treat as abandoned those points specified in the points on appeal but not discussed in appellant's brief. Nordin Constr. Co. v. Whitney Bros. Plumbing & Heating, Inc., 441 P.2d 122, 123 (Alaska 1968).
[9] We have previously explained the rationale behind the doctrine of primary jurisdiction in Greater Anchorage Area Borough v. City of Anchorage, 504 P.2d 1027, 1032-33 (Alaska 1972) (footnotes omitted):
Under the so-called "doctrine of primary jurisdiction", a court may, in appropriate cases, stay or dismiss pending litigation so as to enable a proper agency to initially pass upon an aspect of the case calling for administrative expertise. In order for such a judicial reference to be valid, at least some part of the case must fall within the exclusive jurisdiction of the administrative agency. The jurisdiction of the agency, in turn, depends upon the administrative authority conferred upon it by the relevant statutes.
Professor Davis explains that agency expertise is not the principal reason for invoking the doctrine of primary jurisdiction:
Whether the agency happens to be expert or not, a court should not act upon subject matter that is peculiarly within the agency's specialized field without taking into account what the agency has to offer, for otherwise parties who are subject to the agency's continuous regulation may become the victims of uncoordinated and conflicting requirements.
See 3 K. Davis, Administration Law Treatise § 19.01, at 5 (1958).
[10] Final orders of the Commission are judicially reviewable in accordance with AS 44.62.560-.570 of the Administrative Procedure Act. See AS 42.05.551(a), set forth in note 5 supra. Section 560(a) of the Administrative Procedure Act specifies, in part, that an appeal from an agency determination must be filed within thirty days after the last day on which reconsideration can be ordered. See note 17 infra. The power to order reconsideration expires thirty days after the delivery or mailing of the decision to the respondent. See AS 44.62.540(a).
[11] The superior court and the parties use the term res judicata in a broad sense to include the doctrines of merger, bar, collateral estoppel, and direct estoppel. This is the usage adopted by the Restatement of Judgments. See Restatement of Judgments, Introductory Note to § 41-77, at 160 (1942).
Although we do not dispose of this case on res judicata grounds, we note that it involves the principle of "direct estoppel," an uncommon creature in the field of former adjudication. The doctrine of "estoppel" relates to the effect of a prior judgment as conclusively determining disputed issues which arise again in a second proceeding. When the subsequent action is based upon a different cause of action, "collateral estoppel" bars the relitigation of issues actually determined in the first proceedings. When the subsequent action is based upon the same claim or cause of action, "direct estoppel" precludes relitigation of issues actually determined in the first proceedings. See 2 K. Davis, Administrative Law Treatise § 18.01 n. 5, at 547 (1958). The issue determined by the Commission in the administrative proceeding relates to the same claim Jeffries advances in his complaint in superior court: damages for negligent telephone service.
[12] For example, in Scott v. Robertson, 583 P.2d 188 (Alaska 1978), we stated:
[H]oldings of a court in prior civil litigation are regarded as conclusive under the doctrine of collateral estoppel.
Id. at 193 (footnote omitted and emphasis added).
[13] See 2 F. Cooper, State Administrative Law 503 (1965); 2 K. Davis, Administrative Law Treatise § 18.02, at 548 (1958).
[14] See, e.g., Hazel v. Alaska Plywood Corp., 16 Alaska 642, 648 (Alaska 1957); 2 K. Davis, Administrative Law Treatise § 18.02, at 548 (1958).
[15] For instance, in this case, were we to reach the issue of administrative res judicata, we would be confronted with the question of whether the doctrine should be applied to agency determinations rendered pursuant to an exercise of primary jurisdiction.
[16] Then Judge Burke of the superior court entered an order allowing Jeffries to proceed with his action for damages on January 16, 1974.
[17] AS 42.05.551(a), set forth in note 5 supra, provides that final orders of the Commission may be judicially reviewed in accordance with AS 44.62.560-.570 of the Administrative Procedure Act. AS 44.62.560(a) provides:
Judicial review. (a) Judicial review by the superior court of a final administrative order may be had by filing a notice of appeal in accordance with the applicable rules of court governing appeals in civil matters. Except as otherwise provided in this section, the notice of appeal shall be filed within 30 days after the last day on which reconsideration can be ordered, and served on each party to the proceeding. The right to appeal is not affected by the failure to seek reconsideration before the agency. [emphasis added]
[18] AS 44.62.570 delineates the scope of review to be exercised by the superior court.
(a) An appeal shall be heard by the superior court sitting without a jury.
(b) Inquiry in an appeal extends to the following questions: (1) whether the agency has proceeded without, or in excess of jurisdiction; (2) whether there was a fair hearing; and (3) whether there was a prejudicial abuse of discretion. Abuse of discretion is established if the agency has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence.
(c) The court may exercise its independent judgment on the evidence. If it is claimed that the findings are not supported by the evidence, abuse of discretion is established if the court determines that the findings are not supported by (1) the weight of the evidence, or (2) substantial evidence in the light of the whole record.
(d) The court may augment the agency record in whole or in part, or hold a hearing de novo. If the court finds that there is relevant evidence which, in the exercise of reasonable diligence, could not have been produced or which was improperly excluded at the hearing, the court may (1) enter judgment as provided in (e) of this section and remand the case to be reconsidered in the light of that evidence; or (2) admit the evidence at the appellate hearing without remanding the case.
(e) The court shall enter judgment setting aside, modifying, remanding, or affirming the order or decision, without limiting or controlling in any way the discretion legally vested in the agency.
.....
[19] See, e.g., Valentine v. Michigan Bell Tel. Co., 31 Mich. App. 18, 187 N.W.2d 249, 250 (1971), aff'd, 388 Mich. 19, 199 N.W.2d 182 (1972); Grevers v. Michigan Bell Tel. Co., 18 Mich. App. 422, 171 N.W.2d 476, 477 (1969); Warren v. New York Telephone Co., 70 Misc.2d 794, 335 N.Y.S.2d 25, 29 (1972); Meyerson v. New York Telephone Co., 65 Misc.2d 693, 318 N.Y.S.2d 900, 902-03 (1971).
[20] AS 42.05.291(c) provides in full:
The commission may, upon its own motion or upon complaint after providing reasonable notice and opportunity for hearing, prescribe as to service and facilities, including the crossing of facilities, just and reasonable standards, classifications, regulations, and practices to be furnished, imposed, observed, and followed by public utilities; prescribe adequate and reasonable standards for the measurement of quantity, quality, pressure, initial voltage, or other conditions pertaining to the supply of the service of public utilities; prescribe reasonable regulations for the examinations and testing of the service, and for the measurement of it; prescribe or approve reasonable regulations, specifications, and standards to secure the accuracy of meters and appliances for measurement; and provide for the examination and testing of appliances used for the measurement of a service of a public utility. In doing so, the commission shall conform to the standard practices of the industry.
[21] AS 42.05.291(d) provides in full:
If the commission, upon its own motion or upon complaint, after providing reasonable notice and opportunity for hearing, finds that the service or facilities of a public utility are unreasonable, unsafe, inadequate, insufficient, or unreasonably discriminatory, or otherwise in violation of this chapter, the commission shall prescribe, by regulation or order, the reasonable, safe, adequate, sufficient service or facilities to be observed, furnished, enforced, or employed, including all repairs, changes, alterations, extensions, substitutions, or improvements in facilities that are reasonably necessary and proper for the safety, accommodation, and convenience of the public.
[22] Professor Davis makes this principle clear:
The doctrine of primary jurisdiction does not necessarily allocate power between courts and agencies, for it governs only the question whether court or agency will initially decide a particular issue, not the question whether court or agency will finally decide the issue. Even if the agency is held to have primary jurisdiction with respect to an issue, a court may still set aside or modify what the agency has done, in accordance with the law governing the scope of review.
3 K. Davis, Administrative Law Treatise § 19.01, at 3 (1958) (footnote omitted, emphasis in original).
[23] There are a couple of possible exceptions to this characterization. Jeffries alleges that due to inordinate delay in connecting the telephone in his office and his secretary's office, his practice was disrupted. He also alleges that Glacier State has failed to move the location of the telephone in his residence despite numerous requests. These alleged instances of inadequate telephone service may or may not be common to the public. On remand, the superior court should determine whether these instances of service failure were of a type suffered by the public as a whole.
Jeffries alleges that Glacier State's failure to make available service from Soldotna to Kenai, which is required by its tariff, has forced him to use the long distance service on many occasions, at an additional cost of at least $1,000.00. Again, the superior court should determine whether this type of alleged inadequate service was of a type common to the public or was in the nature of a special injury suffered by Jeffries.
Jeffries finally alleges that since the repair service number is frequently busy or not answered, "it is necessary to make a trip to ... the office headquarters of the Defendant [in Kenai] in order to report the need of repair service." Jeffries does not allege, however, that he has ever made such a trip.
[24] See note 18 supra.
[25] The seventh amendment to the United States Constitution provides:
In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury shall be otherwise re-examined in any court of the United States, than according to the rules of the common law.
Article I, section 16, of the Alaska Constitution provides, in part:
In civil cases where the amount in controversy exceeds two hundred fifty dollars, the right of trial by a jury of twelve is preserved to the same extent as it existed at common law.
[26] The only reference to the plaintiff's right to jury trial appears in his memorandum in opposition to motion for judgment on the pleadings. He briefly states:
Plaintiff ... in addition would like to point out to the Court that there was no possible way for plaintiff to have his jury trial in the administrative proceedings before the Commission.
[27] See Alaska R.App.P. 9(e). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2614724/ | 604 P.2d 424 (1979)
43 Or.App. 775
Kenneth H. COLEMAN and Nancy C. Coleman, Appellants,
v.
PARRY CENTER FOR CHILDREN, an Oregon Non-Profit Corporation, Respondent.
No. 22943; CA 13959.
Court of Appeals of Oregon.
Argued and Submitted October 19, 1979.
Decided December 24, 1979.
*425 Sam Kyle, Albany, argued the cause for appellants. With him on the briefs were Donald V. McCallum, P.C., Bend, and Emmons, Kyle, Kropp & Kryger, Albany.
James N. Westwood, Portland, argued the cause for respondent. With him on the brief were Clifford N. Carlsen, Jr., and Miller, Anderson, Nash, Yerke & Wiener, Portland.
Before JOSEPH, P.J., and LEE and RICHARDSON, JJ.
RICHARDSON, Judge.
This is a suit for specific performance of a real property sales contract. The plaintiffs appeal from a decree in favor of defendant.
The case was submitted to the court on stipulated facts. On September 2, 1977, the plaintiffs as purchasers offered, in an earnest money agreement, to purchase on contract certain real property held by defendant sellers. In a letter response defendant counteroffered by making the agreement subject to several conditions, one of which was a certain release provision. This letter included the following notice:
"The terms and conditions of any final agreement between the Parry Center and the Colemans are subject to final approval by the Board of Trustees for the Parry Center for Children. When we reach agreement as to all of the applicable terms and conditions, the proposal will be presented to a Board of Trustees meeting for such approval."
The plaintiffs failed to take action on the specified conditions, and on November 1, 1977, the counteroffer was withdrawn. Following termination of the earnest money agreement, the plaintiffs' attorney contacted defendant's attorney and reopened negotiations. The defendant was unaware of this development. On November 10, 1977, defendant's attorney prepared a second draft agreement for the sale of the property, without the authority of defendant, and submitted it to plaintiffs' attorney. This draft revised substantially the lot release provision of the earlier proposal.[1] It was accompanied by a letter from defendant's attorney which indicated that no agreement would be final until approval by the defendant's Board of Trustees.
At the November 17, 1977, meeting of the Board the attorney, who was also a member of defendant's Board of Directors, reported that the plaintiffs were now anxious to proceed with the purchase. He moved that the Board accept the offer but the Board was concerned about accepting any agreement without having the written contract before it. The attorney then made a motion, which was passed, that the Board accept the plaintiffs' offer, "based on the *426 strict terms of the original (September) contract." The attorney then advised plaintiffs that the Board had confirmed the sale according to the November draft. That was inconsistent with the Board's action. The plaintiffs executed the November draft, returned it to the attorney with a down payment, and an escrow was set up. The Board did not consider or accept the November draft. On December 13, 1977, the plaintiffs contacted defendant's new attorney and offered to conform the November draft to the September agreement. The Board rejected this modified offer. Plaintiffs filed suit.
It is plaintiffs' theory that defendant's attorney was acting as an agent and that defendant gave him the authority to bind it to the land sales contract. The defendant argues that in accepting the November draft the attorney acted beyond his authority and that the plaintiffs were aware that the attorney's authority was limited to the presentation of offers to the Board. In addition, defendant argues that any agreement would be void because it violated the statute of frauds, ORS 41.580.
The statute of frauds disposes of this matter. ORS 41.580 reads in pertinent part:
"In the following cases the agreement is void unless it, or some note or memorandum thereof, expressing the consideration, is in writing and subscribed by the party to be charged, or by his lawfully authorized agent; * * *
"* * *
"(5) An agreement for the leasing for a longer period than one year, or for the sale of real property, or of any interest therein.
"(6) An agreement concerning real property made by an agent of the party sought to be charged unless the authority of the agent is in writing.
"* * *."
The requirement that an agent's authority to bind its principal in contracts concerning land be in writing has been a part of the Oregon statute of frauds since its inception. 1862 Deady's Code, ch. 9, § 775(7). It has been consistently construed to void agreements that do not conform. Hage et ux. v. Harvey et al., 210 Or. 652, 656-57, 313 P.2d 448 (1957); Marshall v. Strauss, 160 Or. 265, 274, 84 P.2d 502 (1938); Union Cent. Life Ins. Co. v. Toliver, 152 Or. 185, 193, 52 P.2d 1129 (1936); Ramsey v. Wellington Co., 114 Or. 355, 369, 235 P.2d 297 (1925); Bessler v. Derby, 80 Or. 513, 519, 157 P. 791 (1916); Toomey v. Casey, 72 Or. 290, 295, 142 P. 621 (1914); Walk v. Hibberd, 65 Or. 497, 504-05, 133 P. 95 (1913); Chick v. Bridges, 56 Or. 1, 107 P. 478, AC' 1912B 1293 (1910). See Kallstrom v. O'Callaghan, 259 Or. 210, 227, 485 P.2d 1200 (1971); Johnson v. Davis, 252 Or. 472, 475, 450 P.2d 758 (1969).
In this instance the Board and the attorney expressly informed the plaintiffs of the attorney's limited authority. The minutes of the November 17, 1977, Board meeting indicate that the Board passed a motion that it accept the offer in the strict terms of the original agreement. It knew nothing of the revised draft. Even if this signed memorandum of the meeting could be construed to vest the attorney with additional power, such power would extend only to accepting, on behalf of the Board, the September agreement in its strict terms and not to offering the November draft in its stead. By the Board's own terms any deviation from the original agreement was unacceptable.
Where a writing is required under ORS 41.580(6), it must be explicit and of such a character that it clearly specifies the authority delegated to the agent. Chick v. Bridges, supra; Marshall v. Strauss, supra. While the statute of frauds was not designed to shield against the perpetration of a fraud, Young v. Neill et al., 190 Or. 161, 166, 220 P.2d 89, 225 P.2d 66 (1950), a party is bound at its peril to ascertain the extent of an agent's authority. Bessler v. Derby, supra.
Affirmed.
NOTES
[1] This paragraph concerned the manner in which parcels of the real property were to be released from the security interest of the seller upon periodic contract installment payments by the buyer. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2614728/ | 604 P.2d 578 (1979)
B-E-C-K CONSTRUCTORS, a joint venture composed of Koon-Boen, Inc. and Cummins-Egge, Inc., Appellant,
v.
STATE of Alaska, DEPARTMENT OF HIGHWAYS, Appellee.
No. 3610.
Supreme Court of Alaska.
December 21, 1979.
*579 Dale R. Martin, Barokas & Martin, Seattle, Wash., Thomas A. Sofo, Robertson, Monagle, Eastaugh & Bradley, Juneau, for appellant.
Michael M. Holmes, Faulkner, Banfield, Doogan & Holmes, Juneau, for appellees.
Before RABINOWITZ, C.J., and CONNOR, BOOCHEVER, BURKE and MATTHEWS, JJ.
OPINION
BURKE, Justice.
In 1971 a state highway bridge across the Copper River collapsed. As a result of the bridge collapse and the consequent loss of access to the work site, B-E-C-K Constructors (BECK) experienced delays and increased costs in its work on other state highway bridges. BECK sued the State of Alaska to recover the extra costs. The superior court granted the State's motion for summary judgment, and we affirm that decision.
Following competitive bidding, BECK was awarded a contract by the State of *580 Alaska, Department of Highways,[1] to build several new highway bridges across the Copper River. These bridges were to replace existing bridges which had been destroyed or damaged in the 1964 earthquake.[2] In designing the project the State realigned the roadway so that existing Bridge 331 (the bridge which eventually collapsed) would be replaced by two new bridges new Bridge 331 and Bridge 1187 which would be located 100 feet upstream from old Bridge 331. The contract called for BECK to construct the two new bridges and to demolish old Bridge 331. The contract included no terms relating to the use of old Bridge 331 during the project. The contract, however, did contain descriptions of all existing bridges to be removed under the contract, including old Bridge 331:
(a) The existing bridges, or remains thereof, to be removed are as follows:
(1) The existing Copper River Bridge No. 331, a damaged steel and concrete structure approximately 2437 feet along [sic] and located approximately 100 feet downstream of Centerline from Station 137 + 70 ± to Station 162 + 20 ±. This structure consists of three simply supported steel through trusses with timber decks followed by a trestle system of eighteen steel stringer spans with concrete decks followed by four simple through truss spans with timber decks and terminated by a final trestle system of ten steel stringer spans with concrete decks. The substructure consists of eight massive concrete piers, a concrete abutment and the pile bents for trestle system. [Emphasis added.]
The only other reference to Bridge 331 in the contract appeared in a report which accompanied the bid package. That report, prepared by the Engineering Geology Section of the Department of Highways, included an "engineering analysis" of old Bridge 331:
2. Bridge Foundations
The Copper River and Northwestern Railroad constructed a bridge over the Flag Point channel which is still standing. It was three large piers designed to have both high strength and stability. They were specifically designed to resist large ice forces, etc. (A photo of these piers is enclosed with this report.) According to the Engineering Record description, (1910) the piers are supported on footings approximately 14' wide and 54' long. The footing is approximately 2' thick and supported on 114 timber piles with an average penetration of 36' into the "sand and gravel of the river bed". This description correlates very well with subsurface data obtained during recent drilling operations. That is, a bearing stratum was encountered between 20 and 40 feet below the river bed in all borings put down at this site. The piers supporting the railroad bridge do not appear to have undergone any critical settlement since their original construction in 1909. It is also noted that they suffered very little damage during the earthquake of March 27, 1964 which totally destroyed numerous bridges along the Copper River Highway. [Emphasis added.]
The bid package notified bidders of the availability of other information about old Bridge 331: a 1910 engineering report on the original railroad bridge, contract plans for the trestle portion of the bridge, and shop plans for the structural steel for the truss and trestle portions of the bridge. This notice, however, was accompanied by the following disclaimer:
The information shown in the above is for information only. It is expressly understood that the State will not be responsible *581 for any deduction, interpretation or conclusion drawn therefrom by the contractor. This information is made available so that the contractor may have access to the same information as the State.
Prior to submitting its bid, BECK sent two employees to inspect the work site. According to BECK's project manager, he asked the men to
look at the bridges, particularly the precast concrete deck span sections ... because they were damaged, from evidence in the photographs, and to look at them with a view to repairing them for our use in obtaining access across the river, and also to generally look at the major railroad spans to determine what would have to be done to all them for access across the river.
The project manager testified in his deposition that he did not ask the men to inspect the piers under the bridge "[b]ecause from the information that was supplied by the State of Alaska with the bid documents it was my belief that the concrete piers for the major railroad bridges were sound, and there was no need to consider them."
After being awarded the contract, BECK started the project in the fall of 1970. It did repair work to the superstructure of Bridge 331 and used the bridge to gain access to the work site on the other side of the channel.[3] On July 21, 1971, while BECK was moving a crane across the bridge, a pier of the bridge collapsed, dropping two spans into the river.[4] Two men died in the accident. BECK's access to the work site across the channel was cut off for about thirty days.
After the State rejected BECK's administrative claim for extra costs, BECK filed this action against the State. Following extensive discovery, the State filed a motion for summary judgment. The superior court granted that motion and subsequently filed a memorandum of decision detailing the rationale for the decision. The court concluded that the State had made no explicit representations that Bridge 331 was suitable for use as a means of access, that the State had not implicitly warranted the integrity of the bridge as a means of access, and that the State had no duty to disclose additional records it had pertaining to the bridge.
Final judgment was entered for the State, including an award of $23,000 in costs and attorney's fees. BECK appeals both the decision to grant the State's motion for summary judgment and the award of attorney's fees.[5]
*582 In order to prevail upon appeal, a party against whom a motion for summary judgment has been granted must persuade this court either that a genuine issue of material fact did exist, see Alaska R.Civ.P. 56(c); Champion Oil Co. v. Herbert, 578 P.2d 961, 963 (Alaska 1978), or that the moving party was not entitled to a judgment as a matter of law. See Jennings v. State, 566 P.2d 1304, 1309 (Alaska 1977). Appellant "need not establish that it will ultimately prevail at trial, but only that there exists a genuine issue of fact to be litigated." Alaska Rent-A-Car, Inc. v. Ford Motor Co., 526 P.2d 1136, 1139 (Alaska 1974). We are of the opinion that no genuine issue regarding any fact material to the subject contract has been specifically set forth by BECK sufficient to withstand the motion for summary judgment.[6]
I. Misrepresentation
The only description of old Bridge 331 in the contract itself was in a section entitled "Removal of Bridges, Culverts and Other Drainage Structures, General Description." This section explicitly described the bridge as "a damaged steel and concrete structure." BECK, however, bases its claim of misrepresentation on two statements included in documents that accompanied the bid package. We conclude that, in the context in which they were made, the statements do not constitute misrepresentations.
The first alleged misrepresentation is the statement in the bid package that the piers supporting the bridge "suffered very little damage during the earthquake." This statement was in the report of the Engineering Geology Section. Considering the report as a whole, the obvious reason for including this report in the bid package was to provide bidders with information on the soil conditions in the riverbed in connection with the construction of the new bridges. Given the purpose of the report, it is clear that the statement regarding the piers of the bridge was intended to impart information about the stability of the soils in the riverbed and not to warrant the structural integrity of the piers themselves.[7]
The second alleged misrepresentation is the statement in the bid package that the additional information on the existing structures "is made available so that the contractor may have access to the same information as the State." The "existing structures," however, were pertinent to the contract only as structures which were to be demolished. In this context, we believe it is clear that the purpose of the "additional data," consisting of an engineer's report and various plans for the steel portion of the bridge, was to assist the contractor in estimating the cost of demolition. Although the State had information in its files pertaining to Bridge 331 that was not *583 included in the bid package,[8] and the contractor, therefore, did not actually "have access to the same information as the State," there is no indication that the information was pertinent to demolition of the bridge. We conclude that the statement in question did not misrepresent the extent of the State's knowledge concerning the bridge.
Considering the context in which the two statements were made and considering the contract's clear statement that Bridge 331 was "a damaged ... structure," we conclude that there was no misrepresentation.
II. Breach of Implied Warranty
BECK's second theory of liability is that the State breached an implied warranty that Bridge 331 was suitable for use as a means of access. The superior court found that there was no warranty. The basis for that finding was the fact that use of the old bridge for access was not contemplated by the terms of the contract.[9] We agree with the superior court.
Our decision in A.R.C. Industries, Inc. v. State, 551 P.2d 951 (Alaska 1976), supports this conclusion. That case involved a contractor's claim for additional costs incurred when a weir collapsed during construction. The trial court found that the plans and specifications did not specify the method of closing the weir and that the collapse was caused by the closure method selected by the contractor. Id. at 956. We held that there was no misrepresentation and no breach of implied warranty:
Since the plans and specifications provided by the state were silent on the matter of closure, and since A.R.C., alone, selected the location and method of closure, it would not appear that the state breached even an implied warranty. In leaving closure to the contractor, there were no misrepresentations made to A.R.C. by the state.
Id. at 960. The factual analogy to the case at bar is obvious: BECK was not required by the contract to use old Bridge 331 as access, and BECK could have chosen some other means of access.
A.R.C., however, can be distinguished. In that case there was no indication that the State in fact expected the contractor to use any particular method of closure. In the case at bar, on the other hand, there is substantial, undisputed evidence that the State's design of the new bridge project was premised on the use of the old bridge for access. The record includes many statements by State personnel which indicate that the use of the old bridge for access would greatly reduce the cost of the project. The statements reveal that use of the old bridge was an underlying assumption of the project. Although the Federal Highway Administration questioned that assumption and suggested that the costs for access by barge should be added to the cost estimate for the project, there is no indication that the State ever contemplated a project that did not rely on the reduced cost made possible by use of the old bridge. We conclude, however, that the State's assumption that the contractor would use the old bridge for access did not give rise to an implied warranty of the bridge's suitability for such use.
Our conclusion is supported by Chris Berg, Inc. v. United States, 389 F.2d 401, 182 Ct.Cl. 23 (1968). That case involved a government contract for the construction of a new tramway, parallel to the old tramway, at a remote Air Force radar site at *584 Cape Newenham, Alaska. The contract included the following provision: "The existing towers and tramway may be used in erecting the new towers and tramway."[10] In fact, however, the old tramway proved to be too deteriorated for safe use, and the contractor had to move the components of the new tower into place by other, more expensive methods. Id. at 403-04. When the contractor appealed the administrative denial of its claim for extra costs, the court held that the contract language "may be used" referred only to "permissive use and not to any specific suitable or intended use." Id. at 405. Thus, even though the contract explicitly authorized the use of the old tramway, the government was found not to have warranted its suitability for the authorized use. In the case at bar there is even less of a basis for finding a warranty, since the contract terms do not contemplate even the permissive use of the old bridge for access. We therefore conclude that there was no implied warranty.[11]
III. Breach of Duty to Disclose Superior Knowledge
BECK's third theory of liability is that the State breached a duty to disclose all of its information about old Bridge 331. Specifically, BECK contends that the State had a duty to disclose various reports that were compiled by the Department of Highways following the 1964 earthquake evaluating the extent of damage suffered by the bridge.[12] The superior court found that the State's failure to disclose information which it had about old Bridge 331 did not give rise to liability because the State did not have any "superior knowledge" about the bridge. We agree.
Under our holding in Morrison-Knudsen Co. v. State, 519 P.2d 834 (Alaska 1974), the State had no duty to disclose the earthquake damage reports. Morrison-Knudsen involved a contractor's claim for extra costs in connection with the construction of the airport in Sitka, Alaska. Although the bid documents had included a drawing indicating that certain underwater areas were "Areas Proven Suitable For Dredging," the areas in fact proved unsuitable, and the contractor was forced to obtain fill material from a distant site and haul it by barge to the construction site. Id. at 836-38. On appeal we held that, although the State had *585 learned prior to letting the contract that the designated dredging site was unsuitable, it had no duty to disclose that information to bidders. We reached that conclusion because the information which the State had about the quality of the fill material was equally available to the contractor. In fact, the State had learned of the unsuitability of the material from two other bidders, one of whom had simply inspected the site from a boat.
In Morrison-Knudsen, relying on a series of Court of Claims cases, we established the following test to determine when the State has a duty to disclose information to a contractor:
[D]id the state occupy so uniquely-favored a position with regard to the information at issue that no ordinary bidder in the plaintiff's position could reasonably acquire that information without resort to the State? Where resort to the state is the only reasonable avenue for acquiring the information, the state must disclose it, and may not claim as a defense either the contractor's failure to make an independent request or exculpatory language in the contract documents.
519 P.2d at 841.
The earthquake damage reports which BECK contends the State should have disclosed were all based on information obtained by simple visual inspection of the bridge. One report, for example, was based on a one-day inspection trip during which the engineer inspected approximately thirty-eight bridges. Since BECK could easily have obtained the information included in the reports by having an engineer inspect the bridge, the State was under no duty to disclose the information.
IV. Attorney's Fees
The final judgment of the superior court included an award to the State of $23,000 in costs and attorney's fees. See Rules 79 & 80, Alaska R.Civ.P. The $23,000 represents $11,700, which was originally allowed for costs and fees for the State's private counsel, plus $11,300 which was subsequently allowed as a fee for staff of the attorney general's office who participated in the case.[13]
On appeal BECK challenges the superior court's award of attorney's fees. BECK contends that our holding in Continental Insurance Co. v. United States Fidelity & Guaranty Co., 552 P.2d 1122 (Alaska 1976), disallowing fees for in-house counsel, precludes an award for work performed by staff of the attorney general's office. The State on the other hand contends that the more recent decision in Greater Anchorage Area Borough v. Sisters of Charity, 573 P.2d 862 (Alaska 1978), allowing an award for work performed by the borough's legal staff, is authority for making an award for work performed by the attorney general's office. In Sisters of Charity we commented on our holding in Continental: "We [do] not intend to express a prohibition against awarding attorney's fees when a party's active representation in litigation is by in-house counsel rather than retained counsel." 573 P.2d at 863. We now hold that, where a party is represented by both private counsel and in-house counsel who actively participate in the preparation of the case, the party may recover partial fees for both private and in-house counsel.[14] The superior court's award of attorney's fees is therefore affirmed.
AFFIRMED.
NOTES
[1] Now the Department of Transportation and Public Facilities.
[2] The original bridges over the river had been railroad bridges which were built around 1910 and abandoned in the late 1930's. In 1953, when work began on the Copper River Highway, the old railroad bridges were converted to highway bridges. Following the 1964 earthquake, the highway was closed because of damage to the roadway and bridges. In 1967 the State learned it was eligible for federal assistance in repairing earthquake damage to the highway and started making plans for the construction projects.
[3] Other means of access were possible. The project manager testified in his deposition that there were three possible methods of access: a temporary wooden bridge, barges, and access berms. These methods were considered in determining how to gain access to the piers of the new bridge being constructed. The existing bridge was to be used to move equipment and material across the channel.
[4] The cause of the bridge collapse is in dispute. BECK, the contractor, contends that the wooden pilings supporting the concrete piers were sheared by the 1964 earthquake and that the bridge collapsed when the pilings failed. The State contends that the bridge collapse was caused by excess scouring of the river bottom brought about by the earth berms constructed by BECK which constricted the river flow to a narrow opening. For purposes of the motion for summary judgment, however, earthquake damage was assumed to be the cause of the collapse. This assumption was required, since "[i]n ruling on a motion for summary judgment all reasonable inferences from the proofs offered are drawn against the moving party, and are viewed in the light most favorable to the party opposing the motion." Valkama v. Harris, 575 P.2d 789, 790 (Alaska 1978). Accord, Champion Oil Co. v. Herbert, 578 P.2d 961 (Alaska 1978). Otherwise, the court found that there were no genuine issues of material fact and, therefore, considered the case as one fit for a decision on the merits under the state's motion for summary judgment. Champion Oil Co. v. Herbert, 578 P.2d 961 (Alaska 1978); Howarth v. First Nat'l Bank of Anchorage, 540 P.2d 486, 489 (Alaska 1975), aff'd on rehearing, 551 P.2d 934 (1976); Alaska Rent-A-Car, Inc. v. Ford Motor Co., 526 P.2d 1136, 1138 (Alaska 1974).
[5] BECK filed its notice of appeal from the judgment on August 23, 1977, and its Statement of Points on Appeal, required by Appellate Rule 9(e), was filed on August 25, 1977. Both of these documents were filed before the court announced its award of attorney's fees on August 30. Consequently, the attorney's fee issue was not originally included in BECK's Statement of Points on Appeal, and BECK has not amended that statement as permitted under Appellate Rule 7(a)(5) to include the attorney's fee issue. Appellate Rule 9(e) provides that "[t]he court will consider nothing but the points so stated [in the Statement of Points]." Since both parties have briefed the issue, however, we will relax the rule and consider the issue. See Rule 46, Alaska R.App.P. We note, however, that a party who wishes to appeal an award of attorney's fees entered after the filing of the statement of points should amend the statement to include the fee issue.
[6] Cf., Howarth v. First Nat'l Bank of Anchorage, 540 P.2d 486, 489-90 (Alaska 1975) ("[o]nce the [movant] made out a prima facie case, [appellant] was required, in order to prevent entry of summary judgment, to set forth specific facts showing that he could produce admissible evidence reasonably tending to dispute or contradict the [movant's] evidence, and thus demonstrate that a material issue of fact exist[s]"). As our discussion, infra, demonstrates, the trial court was correct in finding that certain of the relevant, albeit contested, facts presented by BECK were not material to the resolution of appellant's claims, or that, as a matter of law, the material facts could not reasonably admit of dispute. See generally Braund, Inc. v. White, 486 P.2d 50, 53-55 (Alaska 1971).
[7] Even if the statement were construed as an assurance that the piers were sound, it would not necessarily be a misrepresentation. The statement in the report referred only to the concrete piers. BECK's theory as to the cause of the bridge collapse is that the wooden pilings which supported the concrete piers failed as a result of damage caused by the 1964 earthquake. See note 4 supra.
[8] See note 12 and accompanying text infra.
[9] The pertinent portion of the superior court's Memorandum of Decision reads as follows:
These materials admit of only one interpretation as to what the contract intended with respect to the railroad bridge. This is that plaintiff, as successful bidder, was required to remove the bridge as a part of the project, and any representations concerning it were directed solely to the responsibilities connected with that task. That defendant became aware, upon award of the contract to this bidder, that the bridge might be used for access to the site of the new construction, is not material. This consideration was no part of the basis of the bargain struck between the parties. There is nothing in the bid specifications or other contract documents to suggest any representations as to the suitability of the old bridge for access purposes.
[10] The clause also provided: "The contractor assumes all liability in the use of the existing tramway for erection purposes." 389 F.2d at 404. In a companion case to Chris Berg the court concluded that this sentence referred only to liability to third parties and that it did not pertain to liabilities of the contracting parties to one another. S.S. Mullen, Inc. v. United States, 389 F.2d 390, 182 Ct.Cl. 1 (1968).
[11] While we affirm the superior court's finding in favor of the State on this issue, we note that it would have been preferable if the parties had included explicit terms on means of access in the contract. Given the peculiar difficulties of access to construction sites in Alaska and the litigation that continues to arise from accessrelated disputes, we strongly encourage the State and the construction industry to explicitly deal with potential access problems in their contracts. For other cases involving access to construction sites, see Northern Corp. v. Chugach Electric Assoc., 523 P.2d 1243 (Alaska 1974); Merl F. Thomas Sons, Inc. v. State, 396 P.2d 76 (Alaska 1964).
[12] A report dated April 10, 1964, prepared by a state bridge engineer commented on Bridge 331 in part as follows:
This huge structure was severely damaged by the earthquake and, for all practical purposes, is impassable.
The entire bridge shows signs of being violently shaken. The massive concrete piers and abutments appear to have sustained no damage, whereas the 3-rail trestle bents are severely damaged.
A report by another state engineer, dated April 24, 1964, included the following notation on Bridge 331: "Bearings shifted, truss rollernest tipped over, concrete pedestal on Pier # 4 broken, 3-rail piles broken on many piers." A more detailed report by the same engineer, dated July 13, 1964, commented on Bridge 331 in part as follows:
This structure has been subjected to severe shaking and some gross movements. All of the short trestle spans have been subjected to considerable stress and movement, and it would be false economy to attempt to utilize any of the pile bents for reconstruction. As mentioned in the introduction to this section, the total extent of damage to these piles is difficult if not impossible to assess.
Other reports contained detailed recommendations on anticipated repair work to the bridge.
[13] The attorney's fees requested were $41,825.00 on behalf of the Attorney General's Office and $16,662.50 on behalf of private counsel. The court apparently reduced the Attorney General's fee to the amount of time involved in actual litigation and awarded partial attorney's fees for the time expended by the Attorney General's Office and private counsel in accordance with our decision in Malvo v. J.C. Penney Co., 512 P.2d 575 (Alaska 1973).
[14] See Malvo v. J.C. Penney Co., 512 P.2d 575 (Alaska 1973). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2186070/ | 782 F. Supp. 457 (1991)
E. & J. GALLO WINERY, Plaintiff,
v.
CONSORZIO DEL GALLO NERO, Defendant.
No. C-90-1498-DLJ.
United States District Court, N.D. California.
August 13, 1991.
*458 *459 G. Kip Edwards and Matthew D. Powers of Orrick, Herrington & Sutcliffe, San Francisco, Cal., for plaintiff.
Griffith B. Price, Jr., Mark S. Sommers of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., and John H. Bickel of Landels, Ripley & Diamond, San Francisco, Cal., for defendant.
ORDER
JENSEN, District Judge.
On July 31, 1991, this Court heard the parties' cross-motions for summary judgment and plaintiff's cross-motion for expenses. G. Kip Edwards of Orrick, Herrington & Sutcliffe appeared for plaintiff E. & J. Gallo Winery. Griffith B. Price, Jr., of Finnegan, Henderson, Farabow, Garrett & Dunner appeared for defendant Consorzio del Gallo Nero. Having considered the papers submitted, the arguments of counsel, the applicable law, and the entire record herein, the Court GRANTS summary judgment in favor of plaintiff on all causes of action, DENIES defendant's motion for summary judgment on its claim for declaratory relief, and DENIES plaintiff's cross-motion for expenses for the following reasons.
I. BACKGROUND
This is an action for trademark infringement and dilution brought by plaintiff E. & J. Gallo Winery ("Gallo") against defendant Consorzio del Gallo Nero ("Gallo Nero"). Gallo, the largest winery in the United States, produces and sells a variety of wines featuring the "Gallo" trademark and is the owner of several federal registrations of the "Gallo" mark. Since 1933, Gallo has consistently used the "Gallo" *460 name in relation to its wines and has sold some 2 billion bottles of wine bearing the "Gallo" mark to consumers through retail establishments of all types, including restaurants, grocery stores, wine shops, and liquor stores. Finally, over the past 50 years, Gallo has spent some $500 million in promoting the "Gallo" brand of wines, and Gallo's advertising is presently calculated to reach every consumer in the United States approximately 50-70 times a year.
Defendant Gallo Nero is an Italian trade association based in Florence, Italy, that promotes Chianti Classico wine produced by its individual members in the Chianti region of Italy. Prior to the formation of Gallo Nero in 1987, Chianti Classico producers were represented by the Consorzio Vino Chianti Classico ("CVCC"), which was formed in 1924. CVCC had consistently utilized the symbol of a black rooster, or "gallo nero," to represent its wines, a symbol with a history of strong association with the Chianti region of Italy. In particular, the symbol appeared on the neck seal of its bottles, surrounded by the designation "Consorzio Vino Chianti Classico." The name of the successor organization, Consorzio del Gallo Nero, was selected on the basis of this association between the symbol and the wines of the Chianti region, and defendant has continued the tradition of using the black rooster symbol on its neck seals, substituting the designation "Consorzio del Gallo Nero" for the previous one. However, although Gallo Nero has produced such neck seals, they have not yet been used on any Gallo Nero wine distributed in the United States.
In late 1986, CVCC published a full-page advertisement in the Wine Spectator using the words "Gallo Nero" to promote Chianti Classico wine. Plaintiff sent a cease-and-desist letter to CVCC in early 1987, warning that such use in the United States constituted trademark infringement. CVCC stopped its U.S. marketing campaign based, in part, on the warning letter from Gallo. In 1989, defendant Gallo Nero launched a second U.S. marketing campaign, again utilizing the words "Gallo Nero." In addition, a Gallo Nero marketing plan for years 1989-91 stated as its object the "increased trade and consumer recognition and awareness" of the Gallo Nero name in promoting its wine in the United States.
Following the use of the "Gallo Nero" name in the 1989 advertising, plaintiff filed the present action, stating claims for trademark infringement and dilution through defendant's use of the term "Gallo" in connection with the U.S. promotion and distribution of its wines. Gallo Nero subsequently counterclaimed, seeking a declaration of non-infringement and non-dilution of the Gallo mark by defendant's use of the term "Gallo Nero" in conjunction with other words and distinguishing features.
At the outset of the litigation, the parties entered into settlement discussions. Gallo's initial proposal was that it would waive all attorneys' fees if defendant agreed to an injunction restraining Gallo Nero's use of the word "Gallo" in the United States. This proposal was rejected, and although subsequent proposals were made over the course of the months following, Gallo never moved from its requirement that defendant cease all use of the term "Gallo" in its promotion and distribution of wines in the United States. On June 25, 1991, Magistrate Judge Wilken of this District communicated Gallo Nero's latest settlement offer, which mirrored the terms of the original proposal in August 1990: no use of "Gallo" in the United States, with Gallo to bear its costs and attorneys' fees. Finally, as of July 10, 1991, Gallo Nero has voluntarily discontinued all use of the term "Gallo" in the United States unless otherwise permitted by order of this Court.
II. LEGAL STANDARD FOR SUMMARY JUDGMENT
Under Rule 56(c) of the Federal Rules of Civil Procedure, a district court may grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
*461 Recognizing that summary judgment motions can contribute significantly to the resolution of litigation when there are no factual issues, the Supreme Court and the Ninth Circuit have established the following standards for consideration of such motions: "If the party moving for summary judgment meets its initial burden of identifying for the court those portions of the materials on file that it believes demonstrates the absence of any genuine issues of material fact," the burden of production then shifts so that "the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, `specific facts showing that there is a genuine issue for trial.'" T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987) (quoting Fed.R.Civ.P. 56(e) (emphasis added) and citing Kaiser Cement Corp. v. Fischbach & Moore, Inc., 793 F.2d 1100, 1103-04 (9th Cir.), cert. denied, 479 U.S. 949, 107 S. Ct. 435, 93 L. Ed. 2d 384 (1986) and Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 2553, 91 L. Ed. 2d 265 (1986)). With respect to these specific facts offered by the non-moving party, the court does not make credibility determinations or weigh conflicting evidence, and is required to draw all inferences in a light most favorable to the non-moving party. T.W. Elec. Serv., 809 F.2d at 630-31 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538 (1986)).
Rule 56(c) nevertheless requires this Court to enter summary judgment, "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 106 S.Ct. at 2552. The mere existence of a scintilla of evidence in support of the nonmoving party's position is insufficient: "[T]here must be evidence on which the jury could reasonably find for the [nonmoving party]." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202 (1986). This Court thus applies to either a defendant's or plaintiff's motion for summary judgment the same standard as for a motion for directed verdict: "[W]hether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id.
III. DISCUSSION
Gallo seeks summary judgment on all its claims, contending that Gallo Nero's use or intended use in the United States of the "Gallo" name in conjunction with defendant's wines constitutes infringement and dilution of Gallo's trademarks. Gallo Nero in response contends that plaintiff's motion is moot in that as of early July 1991, defendant has discontinued any use of the "Gallo Nero" name in the United States unless otherwise authorized by this Court. In pursuit of the latter, Gallo Nero seeks summary judgment on its request for a declaration that it may use the "Gallo Nero" name under its full name or in conjunction with other distinguishing matter without infringing or diluting the "Gallo" mark.
A. Gallo's claim for trademark infringement.
Trademark infringement under the Lanham Act is established when the infringer's use of the plaintiff's trademark creates a "likelihood of confusion." Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1217 (9th Cir.1987); see also 15 U.S.C. § 1114(1). In the Ninth Circuit, courts consider several factors in determining whether an allegedly infringing product creates a likelihood of confusion with a protected one:
(1) strength of the plaintiff's mark;
(2) similarity between plaintiff's and defendant's marks in sound, appearance, and meaning;
(3) similarity in the class of goods sold;
(4) similarity in the marketing channels used;
(5) degree of care likely to be exercised by the purchaser (i.e., sophisticated consumers carefully selecting expensive goods versus "impulse" buying of "purchase-type" goods);
*462 (6) evidence of actual confusion; and
(7) evidence of defendant's intent in adopting the allegedly infringing mark.
Eclipse Assocs. Ltd. v. Data General Corp., 894 F.2d 1114, 1117 (9th Cir.1990) [hereinafter Eclipse]. The Court examines each of these factors in turn.
1. Strength of plaintiff's mark.
A registered mark is "presumed to be distinctive and should be afforded the utmost protection." Lois Sportswear USA, Inc. v. Levi Strauss & Co., 799 F.2d 867, 871 (2d Cir.1986). Indeed, proper and current registration of a trademark is "conclusive evidence of the validity of the registered mark and of the registration of the mark, of the registrant's ownership of the mark, and of the registrant's exclusive right to use the registered mark in commerce." 15 U.S.C. § 1115(b). Therefore, in light of Gallo's current federal registration of several versions of the "Gallo" mark, plaintiff has established as an initial matter the validity and distinctiveness of the mark and Gallo's exclusive right to use the mark in promoting and selling its wines in the United States.
In addition to these statutory presumptions, the Gallo mark itself has been held by a sister court of this Circuit to have achieved "virtually universal recognition as a trademark for wine," and that it is "universally known both nationally and in California, and has become an extraordinarily strong and distinctive mark." E. & J. Gallo Winery v. Gallo Cattle Co., 12 U.S.P.Q.2d 1657, 1661, 1667, 1989 WL 159628 (E.D.Cal.1989). This conclusion is further supported by Gallo's undisputed showing that it has used the Gallo mark in relation to its wines for over 50 years; it has spent some $500 million in advertising its wines distributed under the mark; and it has sold to consumers some 2 billion bottles of wine bearing the Gallo mark. See Century 21 Real Estate Corp. v. Sandlin, 846 F.2d 1175, 1179 (9th Cir.1988) [hereinafter Century 21].
Gallo Nero contests the strength of the Gallo mark by noting that there are numerous third-party uses of the "Gallo" name, and that "Gallo" itself is merely a common surname and basic element of Italian vocabulary. However, "[e]vidence of other unrelated potential infringers is irrelevant to claims of trademark infringement," Eclipse, 894 F.2d at 1119, and Gallo Nero has not shown that these third-party uses are in any way connected to the production, promotion, and sale of wine, much less that any of these uses has achieved significant consumer recognition. See Scarves by Vera, Inc. v. Todo Imports Ltd., 544 F.2d 1167 (2d Cir.1976); Charles Schwab & Co. v. Hibernia Bank, 665 F. Supp. 800 (N.D.Cal.1987); Elizabeth Taylor Cosmetics Co. v. Annick Goutal, S.A.R.L., 673 F. Supp. 1238 (S.D.N.Y.1987). Therefore Gallo Nero's evidence of third-party users and uses is neither persuasive nor relevant to the issue of the strength of the "Gallo" mark.
Secondly, a family name is entitled to protection as a mark so long as it has acquired a recognized "secondary meaning" through use, advertising, and public recognition. Century 21, 846 F.2d at 1179; Rodeo Collection, Ltd. v. West Seventh, 812 F.2d 1215, 1218 (9th Cir.1987). As set forth more fully in Gallo Cattle and as supported by the present record, "Gallo" has clearly become associated with wine in the United States such that its evolution to "secondary meaning" status may not be seriously questioned.
In conclusion, the Court finds that Gallo has established both its exclusive right to use the "Gallo" trademark under federal law and that the trademark itself is exceptionally strong when used in relation to the promotion and sale of wine in the United States. While the strength of plaintiff's mark is but one of several issues to be considered in determining whether there is a likelihood of confusion between the parties' products, Academy of Motion Picture Arts and Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1455 (9th Cir.1991), the Court notes that "[a] strong mark is `afforded the widest ambit of protection from infringing uses.'" Id. (quoting AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir.1979)).
*463 2. Similarity of marks used.
Similarity of marks is judged by their sound, appearance, and meaning. Century 21, 846 F.2d at 1179. Gallo contends that the two marks share the total identity of the substantive term "Gallo" and are therefore substantially similar for purposes of trademark infringement. Id. ("The identical dominant term ... is the lead word in each entity's name"); see also Rodeo Collection, 812 F.2d at 1219.
Gallo Nero in opposition argues that its use of surrounding terms, i.e., Consorzio del Gallo Nero, sufficiently distinguishes the latter from the "Gallo" mark to render the two uses dissimilar. However, it is undisputed that Gallo has valid, current federal registrations of the "Gallo" mark used in conjunction with other words, e.g., "Ernest & Julio Gallo," and that Gallo has consistently combined the word "Gallo" with other descriptive terms, e.g., "Gallo Premium Blush" and "Gallo Classic Burgundy." Therefore, as Gallo argues, there is a logical conclusion that consumers are accustomed to seeing the "Gallo" mark used in conjunction with other terms or surrounded by other words.[1] The distinctive term in each instance is "Gallo," which, as discussed above, has clearly obtained a unique status when coupled with wine. Finally, this characteristic would seem to be particularly maintained with regard to non-Italian-speaking consumers when the "Gallo" mark is surrounded by the foreign terms "Consorzio" and "Nero." Again, for English speakers, the "stand out" or significant term in the phrase "Consorzio del Gallo Nero" is the word "Gallo" when the phrase is encountered on or in connection with a bottle of wine.
Gallo Nero also argues that the presentation of the terms on the bottle sufficiently distinguish the two uses such that defendant's use is dissimilar to plaintiff's. Thus, even if the subject marks are identical, "their similarity must be considered in light of the way the marks are encountered in the marketplace and the circumstances surrounding the[ir] purchase." Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240, 1245 (9th Cir.1984), cert. denied, 469 U.S. 1188, 105 S. Ct. 955, 83 L. Ed. 2d 962 (1985); see also Century 21, 846 F.2d at 1179 ("[T]he district court judge, who had the opportunity to view examples of both parties' yard sign designs, found them to be sufficiently similar to hazard confusion."). Gallo Nero notes that the use of the term "Gallo" is always in conjunction with the term "Nero," and its proposed limitation to small script on the neck seal strengthens the immediate dissimilarity arising from the otherwise clearly different labels attached to the parties' bottles of wine.
Gallo does not respond to this particular argument, but the Court finds that Gallo Nero's argument, while having some merit, is neither dispositive nor persuasive on the issue of similarity between marks. As an initial matter, Gallo Nero is arguably well aware of the similarity of the "Gallo Nero" name to that of "Gallo" in light of defendant's interactions with foreign trademark offices. Specifically, in August 1984, defendant's predecessor, CVCC, sought to register the words "Gallo Nero" as a trademark in Canada. The application, however, was rejected because the Canadian trademark office concluded that "Gallo Nero" was likely to be confused with Gallo's registered marks. Moreover, just prior to commencing its U.S. marketing campaign, Gallo Nero opposed plaintiff's application to register "Ernest and Julio Gallo" in the United Kingdom on the ground that this mark would be "deceptive or confusing" with "Gallo Nero." See Supplemental Declaration of G. Kip Edwards exh. H.
*464 In conclusion, the Court finds that the continued use of the term "Gallo" as a manifestation of a federally registered mark or in conjunction with other terms establishes not only that the mark itself is strong, but that the consuming public will find the single term "Gallo" to be wholly and uniquely distinctive whenever it is used in conjunction with the promotion or sale of wine in the United States.[2] Therefore, because "Gallo" is the single "dominant" or "substantive" term used by plaintiff on all its products including the 2 billion bottles of wine already sold defendant's use of the term "Gallo" even on a facially distinctive label or in conjunction with other terms does not divert this Court from its conclusion that, as a matter of law, the two terms are significantly similar for purposes of a finding of a likelihood of confusion between the two uses.
3. Similarity of goods sold.
"When the goods produced by the alleged infringer compete for sales with those of the trademark owner, infringement usually will be found if the marks are sufficiently similar that confusion can be expected." AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir.1979); see also Lindy Pen Co. v. Bic Pen Corp., 796 F.2d 254, 255 (9th Cir.1986) (AMF "expressed the obvious conclusion that a likelihood of confusion is more readily found when the goods compete and the marks are very similar."). Both parties are involved in the sale of wine, although of arguably different varieties. Gallo notes, however, that the Patent and Trademark Office has repeatedly found that wines of all types constitute a single class of goods. Krug Vins Fins de Champagne v. Rutman Wine Co., 197 U.S.P.Q. 572 (T.T.A.B.1977); L.N. Renault & Sons, Inc. v. Etablissements Leon Rigault, 31 U.S.P.Q. 101 (Op. of Comm'r 1936). In fact, if Gallo Nero sought to register its name as a trademark, it would fall into the same class of goods as Gallo's trademarks. See 37 C.F.R. §§ 6.1, 6.2 (1990).
Gallo Nero in opposition contends that the wines themselves are distinct, one produced in Italy while the other in the United States. Moreover, Gallo Nero's members produce only chianti wines, whereas Gallo effectively produces everything but Italian chianti. However, Gallo Nero cites no authority for finding a distinction between the wines produced by the parties, and representatives of Gallo Nero have themselves stated that Gallo Nero wines distributed in the United States are "in competition with every red wine that is being produced." See Deposition of Dario Lanzoni 282:12-17 [hereinafter Lanzoni Depo.] (Director of the Consorzio del Gallo Nero).
Therefore, the Court finds that the goods produced by Gallo and Gallo Nero are substantially similar for purposes of establishing a likelihood of confusion.
4. Similarity of marketing channels used.
Both parties market their products through retail establishments like wine shops and liquor stores, and utilize magazines for advertizing purposes. Gallo Nero effectively does not dispute Gallo's showing on this issue; indeed, Gallo Nero notes use of the same retail establishment in Washington, D.C., the Mayflower Wine & Spirits Shop, by both parties in selling their respective wines. Moreover, the above deposition testimony that Gallo Nero wines are in direct competition with those of other producers also supports a finding that the wines are marketed by similar means. Therefore the Court finds as a matter of law that both parties use similar marketing channels to distribute their wines.
5. Degree of care exercised by purchasers.
Confusion between marks is generally more likely where the goods at *465 issue involve relatively inexpensive, "impulse" products to which the average, "unsophisticated" consumer does not devote a great deal of care and consideration in purchasing. Grey v. Campbell Soup Co., 650 F. Supp. 1166, 1175 (C.D.Cal.1986), aff'd, 830 F.2d 197 (9th Cir.1987); Toys "R" Us, Inc. v. Canarsie Kiddie Shop, Inc., 559 F. Supp. 1189, 1199 (E.D.N.Y.1983). Wine has been deemed an "impulse" product, and certainly so with respect to the average consumer, effectively compelling the consumer's reliance "on faith in the maker." Taylor Wine Co. v. Bully Hill Vineyards, Inc., 569 F.2d 731, 733-34 (2d Cir. 1978); see also id. ("The average American who drinks wine on occasion can hardly pass for a connoisseur of wines."). Indeed, Gallo Nero employees themselves have testified that the average American consumer is unlearned in the selection of wine. See Deposition of Doreen Schmid 347:13-22 [hereinafter Schmid Depo.]; Declaration of Matthew D. Powers exh. E, at 179.
The only opposition Gallo Nero offers to Gallo's characterization of the wine-buying public is a single 1959 case from the Middle District of Alabama, stating that "the wine-buying public insofar as their selection and purchase of wine is concerned is a highly discriminating group." E. & J. Gallo Winery v. Ben R. Goltsman & Co., 172 F. Supp. 826, 830 (M.D.Ala.1959). That case, however, involved plaintiff's "THUNDERBIRD" fortified wine with the "Gallo" name above versus the defendant's "THUNDERBOLT" with the words "Private Stock" immediately below both products arguably failing any classification as "fine wines." Moreover, with all due respect to Alabama, it would seem common knowledge that wine was not a widely appreciated beverage in the South in 1959.
On balance then, the Court finds that Gallo Nero has failed to contest either through evidence or legal support the characterization of the wine-buying public as generally unsophisticated "impulse" buyers who are an "easy mark for a [trademark] infringer." Taylor Wine Co., Inc., 569 F.2d at 733-34. Therefore the Court finds that the lack of consumer sophistication significantly enhances the likelihood of confusion between the two products.
6. Evidence of actual confusion.
While evidence of actual consumer confusion provides strong support for a finding of a likelihood of confusion, "`the failure to prove instances of actual confusion is not dispositive'" of an infringement claim. Eclipse, 894 F.2d at 1118 (quoting AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 353 (9th Cir.1979)). Thus evidence of actual confusion "is merely one factor to be considered ... and it is not determinative" if it is not shown. Park 'N Fly, Inc. v. Dollar Park and Fly, Inc., 782 F.2d 1508, 1509 (9th Cir.1986). Therefore, at a minimum, the absence of actual confusion will not defeat an otherwise successful claim of infringement by Gallo as this Court must find only a likelihood of confusion.
Gallo Nero relies in significant part on the survey conducted by Dr. Jacob Jacoby, Merchants Council Professor of Consumer Behavior and Retail Management at the Stern School of Business, New York University, entitled "Consumer Perceptions of Wine Bottles Bearing the Consorzio del Gallo Nero Neck Seal" (the "Jacoby Survey"), to show that there is no likelihood of confusion between the parties' respective uses of the "Gallo" name. In the survey, individual participants were shown an array of eight bottles of red wine, including two bottles of Gallo wines and two bottles of Gallo Nero wines. Participants were then asked a series of questions designed to assess the likelihood of "point-of-sale" confusion as to the source of the respective wines. Dr. Jacoby found "only a trivial level of likely confusion as to source among these consumers," as "only three of the 216 respondents (1.4%) identified one or more E & J Gallo bottles and one or more Consorzio del Gallo Nero bottles as coming from the same source." Jacoby Survey at 3.
Gallo in response contends that the survey itself is irrelevant, and that even if it were, only 10 of the 216 respondents even referred to the neck seal. Thus Gallo argues that it is unclear whether each of the *466 respondents even saw the critical mark being tested. Moreover, Gallo emphasizes that failure to show "actual" confusion under survey conditions is not dispositive of an infringement claim. Indeed, Gallo notes that it would be impossible at this stage to show actual confusion other than in the artificial setting of a survey as Gallo Nero has not sold a single bottle of wine in the U.S. bearing the words "Gallo Nero." Finally, Gallo proffers its own survey evidence conducted by Robert Lavidge of Elrick & Lavidge, a custom marketing research firm (the "Lavidge Survey"). In that survey, 512 respondents were shown the neck seal with the "Consorzio del Gallo Nero" designation, and another 512 were shown the advertisement which appeared in the Wine Spectator in 1986. Gallo reports that 43% of the respondents unequivocally associated the neck seal with the Ernest & Julio Gallo Winery, and 38% did so with regard to the advertisement.[3] Lavidge Survey at 9-10.
Numerous courts hold a side-by-side comparison like the one conducted by Dr. Jacoby to be legally irrelevant in determining whether defendant's use of a similar mark leads to a finding of a likelihood of confusion.
The proper test for likelihood of confusion is not whether consumers would be confused in a side-by-side comparison of the products, but whether confusion is likely when a consumer, familiar with the one party's mark, is presented with the other party's goods alone.
Elizabeth Taylor Cosmetics Co. v. Annick Goutal, S.A.R.L., 673 F. Supp. 1238, 1248 (S.D.N.Y.1987); see also Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir.1980) ("It is axiomatic in trademark law that `side-by-side' comparison is not the test."); James Burrough, Ltd. v. Sign of Beefeater, Inc., 540 F.2d 266, 275 (7th Cir. 1976) ("Side-by-side comparison is not the test in determining likelihood of confusion," because "the test is not whether the public would confuse the marks" (emphasis in original)); cf. 1 J. Gilson, Trademark Protection and Practice § 5.03, at 5-70 (1991) (it is "well established that one word or other feature of a composite trademark may be considered the salient feature and be given greater weight than the surrounding elements"). Based on the foregoing, it would seem that Gallo Nero's survey evidence is irrelevant to the issue of infringement and that Gallo's own evidence is both relevant and dispositive.
On the other hand, other authorities maintain that the proper survey evidence is that which attempts to most closely replicate the marketplace setting in which consumers will typically encounter the competing marks. Lindy Pen Co. v. Bic Pen Corp., 725 F.2d 1240 (9th Cir.1984), cert. denied, 469 U.S. 1188, 105 S. Ct. 955, 83 L. Ed. 2d 962 (1985); 2 J. McCarthy, Trademarks and Unfair Competition § 24:13 (2d ed. 1984) ("[T]he closer the survey context comes to market place conditions, the greater the evidentiary weight it has."). Under such a view, then clearly the Gallo Nero survey has relevance in gauging a likelihood of consumer confusion when confronted with bottles of wine sporting the "Consorzio del Gallo Nero" name.
On summary judgment, drawing all inferences in the non-movant's favor, the Court finds nonetheless that there is some evidence of a likelihood of confusion under both surveys, even if the Jacoby Survey results in only a "trivial" showing. Moreover, even accepting that Gallo has overstated the results of its own survey, the "adjusted" statistics nonetheless establish that, again, there is some evidence of a likelihood of confusion as to source when a consumer is presented with the allegedly infringing "Gallo Nero" name. While such showings are not overwhelming, given that no bottle of defendant's wine bearing the "Gallo Nero" name has ever been sold in *467 the United States, and that failure to show actual confusion is not a prerequisite to finding a likelihood of confusion, the Court finds that Gallo Nero has sustained its burden on summary judgment with respect to this factor as well.
7. Defendant's intent in adopting the "Gallo Nero" name.
Just as with actual confusion, a showing of intent is not necessary to support a finding of a likelihood of confusion. Century 21, 846 F.2d at 1178. However, where an infringer adopts a particular name with knowledge of plaintiff's mark, courts presume that there was an intent to copy the mark. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 354 (9th Cir.1979); Citibank, N.A. v. City Bank of San Francisco, 206 U.S.P.Q. 997, 1009 (N.D.Cal.1980) ("One who adopts the mark of another for similar good[s] acts at his own peril and any doubt concerning the similarity of the mark must be resolved against him.").
The record here establishes that Gallo Nero was aware of the "Gallo" mark prior to beginning its U.S. marketing campaign in 1989, as demonstrated both by its predecessor's direct knowledge of the potentially infringing use of "Gallo" in its advertisements of "Gallo Nero" as well as the communications with the trademark offices of Canada and the United Kingdom. See Schmid Depo. 377:11-18.
Gallo Nero in opposition contends that there was no intent to infringe Gallo's marks because the adoption of the "Gallo Nero" name was made in good faith and for sound business reasons. The Court readily acknowledges the extensive and colorful tradition surrounding the relation between the "Gallo Nero" symbol and the Chianti region of Italy. Moreover, neither the Court nor Gallo has any qualms with Gallo Nero's continued use of the black rooster symbol to identify and distinguish its products in the U.S. marketplace. However, the present issue is not whether Gallo Nero had admirable motivations when it initially adopted its name in 1987, but whether Gallo Nero had knowledge of the potentially infringing effect its use of the "Gallo Nero" and "Consorzio del Gallo Nero" marks would have when it entered the U.S. wine market. The record establishes that Gallo Nero was so aware, and while there may be a question whether such knowledge rises to the level of willful infringement or bad faith, see General Mills, Inc. v. Kellogg Co., 824 F.2d 622 (8th Cir.1987); Nalpac, Ltd. v. Corning Glass Works, 784 F.2d 752 (6th Cir.1986), it shows nonetheless that Gallo Nero was at least cognizant of the potentially infringing nature of its use of the "Gallo" name.[4]
8. Conclusion.
Balancing the foregoing factors, the Court concludes that Gallo has established as a matter of law that it is entitled to summary judgment on its trademark infringement claim. Clearly the "Gallo" mark is a mighty fortress in the U.S. wine market, and use of that name on a bottle of competing wine marketed through similar channels leads to an initial finding of infringement. Compounded with defendant's knowledge that its use of the term "Gallo" in any combination would be deemed an infringement by Gallo if not, in fact, by a federal district court and some evidence showing a likelihood of confusion, the foregoing is sufficient to find that defendant's use of the term "Gallo" in conjunction with the promotion and sale of its wines in the United States would lead to a likelihood of consumer confusion with Gallo's products. *468 Therefore Gallo is entitled to summary judgment on its infringement claim.
9. Other considerations.
(a). Mootness.
Gallo Nero's opposition is based in large part on its contention that since it has voluntarily discontinued all use of the "Gallo" term as of earlier this month, plaintiff's motion is effectively moot. However, as the Ninth Circuit has noted,
a trademark plaintiff `entitled to relief, is entitled to effective relief; and any doubt in respect of the extent thereof must be resolved ... against the [defendant]'.... If the defendants sincerely intend not to infringe, the injunction harms them little; if they do, it gives [plaintiff] substantial protection of its trademark.
Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1135-36 (9th Cir.1986) (quoting William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 532, 44 S. Ct. 615, 618, 68 L. Ed. 1161 (1924)).
In the present case, Gallo Nero's past conduct does not reasonably ensure continued adherence to its present position. Gallo Nero commenced its 1989 U.S. marketing campaign after having received notice that use of the "Gallo Nero" term would be deemed an infringement by Gallo. Moreover, throughout the present action and its own cross-motion for summary judgment, Gallo Nero has continued to maintain that it may legitimately use the "Gallo Nero" mark within certain guidelines which await this Court's approval. In light of the foregoing, the Court finds that Gallo Nero's continued non-use of the "Gallo Nero" name is not assured, and therefore injunctive relief is warranted. Moreover, even if the Court does Gallo Nero a disservice in reaching this conclusion, issuance of the injunction will not likewise do Gallo Nero any harm.
Therefore the present motion is not rendered moot by Gallo Nero's voluntary discontinued use of the "Gallo Nero" mark.
(b). Laches.
Gallo Nero contends that Gallo has permitted the continued use of the "Gallo Nero" name in connection with the U.S. retail wine trade for more than a decade, and that Gallo knew of and acquiesced to such use. Therefore Gallo Nero contends that Gallo's "unreasonable delay" in bringing the present action provides Gallo Nero with a laches defense to Gallo's present attempt to enforce its trademark rights. Specifically, Gallo Nero contends that the continued display since 1980 of its wines and a large poster bearing the term "gallo nero" in a single liquor store in downtown Washington D.C., the Mayflower Wine & Spirits Shop, creates a laches defense to the present infringement claims because Gallo has never protested such use, even though it sold its wines through that same store.
A critical element of a laches defense in an action for trademark infringement is establishing the junior user's detrimental reliance on the senior user's delay in enforcing its rights to the mark. American Int'l Group, Inc. v. American Int'l Bank, 926 F.2d 829, 831, 833 (9th Cir.1991). In the present case, Gallo was prompt in notifying both Gallo Nero and its predecessor, CVCC, following commencement of the respective U.S. marketing campaigns that any use of the term "Gallo" in relation to defendant's wines in the United States constituted infringement of plaintiff's marks. More significantly, the display in the Mayflower Shop itself had been constructed without Gallo Nero's knowledge, see Lanzoni Depo. 242:4-22, thereby precluding a finding of detrimental reliance in defendant's favor.[5]Id. at 833.
*469 In conclusion, then, the Court finds that a single instance of a continuous display in a lone U.S. liquor store does not constitute a defense to Gallo's infringement claims, especially where, as here, such display was constructed and maintained without the defendant's knowledge. Therefore Gallo Nero's laches defense is without merit. Moreover, as it does not raise a genuine issue of material fact, it does not preclude the granting of summary judgment in Gallo's favor.[6]
B. Gallo's dilution claim.
Gallo claims dilution of its "Gallo" mark under California Business and Professional Code section 14330. Under California law, a plaintiff is not required to show either a likelihood of confusion or actual injury in order to succeed on a dilution claim. Century 21, 846 F.2d at 1180; Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1362 (9th Cir.1985). Instead, a plaintiff need show a likelihood "of dilution of the distinctive quality of a mark." Cal. Bus. & Prof'l Code § 14330 (West 1984). Thus Gallo need show only that "the distinctive value of the [`Gallo'] mark is likely to be diluted." Academy of Motion Picture Arts and Sciences v. Creative House Promotions, Inc., 944 F.2d 1446, 1457 (9th Cir.1991) (emphasis in original). Moreover, while "tarnishment" is required in showing a "likelihood of injury to business reputation" under the first prong of section 14300, the second prong "is directed at protecting an owner's right to strong, well recognized marks." McDonald's Corp. v. Arche Technologies, Inc., 17 U.S.P.Q.2d 1557, 1560 (N.D.Cal.1990).
While Gallo Nero is correct in noting that anti-dilution statutes extend protection to strong marks against uses of the mark in non-competing goods, i.e., situations where there is no likelihood of confusion nor finding of trademark infringement under the Lanham Act, see 2 J. McCarthy, Trademarks and Unfair Competition § 24:13, at 213 (1984), the fact that the goods or services are competing does not foreclose a finding of dilution. See, e.g., id. § 24:13, at 214-15 ("In several cases, where traditional likelihood of confusion of sponsorship is found, the court will also find, almost as an after thought, that there has been dilution. This seems to be a harmless redundancy...."); Century 21, 846 F.2d at 1180. Instead, the true injury sought to be prevented is the "risk of erosion of the public's identification of [the] very strong mark with plaintiff alone, thus diminishing its distinctiveness." Tiffany & Co. v. Boston Club, Inc., 231 F. Supp. 836, 844 (D.C.Mass.1964).
As discussed above, plaintiff has established the virtually unparalleled strength of the "Gallo" mark in the context of U.S. wines. Moreover, the Court finds that defendant's use of the name "Gallo" in connection with its wines constitutes dilution of plaintiff's mark within the meaning of section 14330 as such use is likely to detract from the distinctiveness of the "Gallo" mark in that market.[7] Therefore *470 the Court finds that Gallo is entitled to summary judgment on its dilution claim as well.
C. Gallo Nero's request for declaratory relief.
Gallo Nero requests a declaration by this Court that its use of the term "Gallo" in its full name and in conjunction with other distinguishing terms does not constitute infringement or dilution of the "Gallo" mark.
For the reasons stated above, and given the established strength of the "Gallo" mark in the field of wine, the Court finds that any use of the term "Gallo" in conjunction with any wine marketed in the United States would constitute infringement of plaintiff's marks. Instead, the Court finds that regardless of the print size or number of words involved, there is a likelihood that a consumer will assume some connection with plaintiff when encountering the word "Gallo" in conjunction with wine. For such reasons, Gallo Nero's motion for summary judgment on its counterclaim for declaratory relief is denied.
D. Cross-motion for expenses.
On July 24, 1991, Gallo filed a cross-motion for expenses against Gallo Nero pursuant to Federal Rule of Civil Procedure 56(g), and against counsel for Gallo Nero pursuant to 28 U.S.C. § 1927. The Court examines each of these arguments in turn.
1. Motion against a party under Rule 56(g).
Under Rule 56(g), where affidavits submitted in relation to a Rule 56 motion are made
in bad faith or solely for the purpose of delay, the Court shall forthwith order the party employing them to pay to the other party the amount of the reasonable expenses which the filing of the affidavits caused the other party to incur, including reasonable attorney's fees, and any offending party or attorney may be adjudged guilty of contempt.
Fed.R.Civ.P. 56(g) (emphasis added). Affidavits filed pursuant to Rule 56(f) fall within the scope of Rule 56(g). 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2742, at 562-63 (2d ed. 1983).
Gallo contends that Gallo Nero's Rule 56(f) motion delaying Gallo's original summary judgment motion for some four months was made in bad faith because: (1) Gallo Nero failed to take any of the six depositions deemed so critical to its opposition to the motion; and (2) Gallo Nero's extensive opposition to the present motion failed to include a single document produced by Gallo following several expensive and time-consuming discovery bouts and motions.
This Court, however, is not persuaded that Gallo Nero's Rule 56(f) motion was taken in bad faith or with an intent to delay the proceedings such that an award of expenses is warranted. At the time of Gallo's original motion, it was known that Gallo Nero planned to pursue a motion to compel discovery before the Magistrate Judge, and that Gallo Nero further intended to pursue appropriate additional discovery based on the results of that motion. The motion to compel was made and heard in a timely manner, and the decision on that motion which was in fact granted in part for Gallo Nero was not issued until late April. Moreover, the Rule 56(f) motion was granted by this Court based in part on Gallo Nero's need to complete the Jacoby Survey, which again was completed and extensively utilized in the present motions. Finally, the decision not to pursue certain depositions or to submit any Gallo-produced documents was a logical consequence of Gallo Nero's decision to voluntarily discontinue any and all uses of the "Gallo" term in the United States. While that decision does not, as Gallo Nero contends, render Gallo's motion moot or significantly narrow the scope of the present motions, the decision to discontinue such use would seem to *471 argue against the needless taking of depositions.
Therefore, the Court finds that neither Gallo Nero's Rule 56(f) motion nor the affidavits in filed in support thereof were made in bad faith or solely to delay the proceedings such that expenses are warranted under Rule 56(g).
2. Motion against counsel under section 1927.
Gallo also moves for expenses against counsel for Gallo Nero pursuant to 28 U.S.C. section 1927. Under section 1927,
[a]ny attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of said conduct.
28 U.S.C. § 1927 (emphasis added). Thus this Court may award sanctions under section 1927 only where it finds that counsel acted "recklessly or in bad faith." Barnd v. City of Tacoma, 664 F.2d 1339, 1343 (9th Cir.1982).
Gallo contends that it is entitled to expenses against defense counsel based on the same reasons as above, i.e., attestations of a need for "critical" and "essential" discovery never taken or utilized in Gallo Nero's opposition. In addition, Gallo contends that it is entitled to all expenses incurred to date in light of the fact that Gallo Nero in late June proposed a settlement along terms identical to one proposed by Gallo ten months prior.
The Court has already found that expenses are not warranted in relation to Gallo Nero's alleged abuse of its Rule 56(f) motion. Moreover, this Court is unwilling to hold that finally acceding to the most favorable terms offered by plaintiff some ten months after during which time escalating settlement offers were presumably made is so "vexatious" to warrant an award of expenses for the bulk of the action as such conduct seems more commonplace than dilatory. More importantly, although Gallo Nero belatedly "came around" in June 1991 and offered those original terms of settlement proposed in August 1990, Gallo rejected that offer, thereby necessitating the extensive expense of briefing and arguing the present motion rather than resolving the action at that time. Therefore at least a portion of those expenses would seem to be attributed to Gallo's own delay in settling the case.
Thus the Court denies Gallo's motion under section 1927 as counsel's conduct did not approach the level of recklessness or bad faith warranting imposition of sanctions, particularly where, as here, settlement of the action was arguably further delated by the movant's own conduct.
IV. CONCLUSION
For the foregoing reasons, the Court ORDERS as follows:
1. Plaintiff Gallo's motion for summary judgment on its trademark and dilution claims is GRANTED. The Court hereby enjoins defendant's use of the word "Gallo" in conjunction with the promotion and sale of its wines in the United States. However, this ruling in no way affects defendant's continued use of the black rooster symbol in connection with its wines.
2. Defendant Gallo Nero's cross-motion for summary judgment on its claim for declaratory relief is DENIED.
3. Plaintiff Gallo's cross-motion for expenses pursuant to Federal Rule of Civil Procedure 56(g) and 28 U.S.C. § 1927 is DENIED.
4. Gallo is hereby directed to submit a proposed form of judgment to this Court within fifteen (15) days of the filing of this Order, having first provided opposing counsel with a copy of the proposed judgment. Opposing counsel may file any comment on the proposed form of judgment within twenty-five (25) days of the filing of this Order.
IT IS SO ORDERED.
NOTES
[1] In a footnote, Gallo Nero contends that Gallo is not entitled to assert an interest in the expanded "family" of terms incorporating the "Gallo" name with generic descriptions of a particular variety of wine. However, Gallo Nero provides no support for its proposition, nor is the Court persuaded that the term "Gallo Chablis Blanc" necessarily weakens the strength and clarity of the Gallo mark. See 1 J. Gilson, Trademark Protection and Practice § 5.04 (1991) ("If a business uses a group of trademarks which have a single component in common, the use of a mark having that component may be forbidden to others if the public believes it to be one of a `family' of marks from a single source.").
[2] It is on this basis that the Court distinguishes the court-approved remedies reached in the Gallo Cattle case as here the allegedly infringing use is on a product which belongs to the same class of goods as plaintiff's. Cf. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979) (infringement can be found on the sole grounds that a similar mark is used on a similar, competing product).
[3] Gallo Nero contends that the Gallo results are overstated as Gallo "assumed" that an answer of "Gallo" unequivocally indicated the plaintiff, rather than merely the respondent's reading of the word without making such a connection. While not amounting to the taking of judicial notice, the Court notes the general tendency in California to refer to plaintiff by the single term "Gallo." Therefore the Court is persuaded that easily the majority of persons immediately answering "Gallo" were referring to the Ernest & Julio Gallo Winery.
[4] Gallo Nero also claims that, based on the superior quality of its wines, defendant clearly would not wish to be associated with plaintiff's economy-priced vintages. See Reply Memorandum in Support of Defendant's Cross-Motion for Summary Judgment 15:23-26 ("[I]t can be presumed that the Consorzio will take pains to avoid and/or dispel any possibility of confusion with the Winery and its products."). However, beyond the logical conclusion that Gallo Nero, for its own benefit, should adopt a different name, the burden is on the defendant as a "new" entrant to the U.S. market under the name of Gallo Nero to find a non-infringing mark. Citibank, N.A. v. City Bank of San Francisco, 206 U.S.P.Q. 997, 1009 (N.D.Cal.1980) ("One who adopts the mark of another for similar good[s] acts at his own peril and any doubt concerning the similarity of the mark must be resolved against him.").
[5] Gallo Nero argues that while its director, Dr. Lanzoni, was unaware of the display at the Mayflower Shop, "members of the Consorzio Vino Chianti Classico were aware of that use in 1980." Reply Memorandum in Support of Defendant's Cross-Motion for Summary Judgment 5:17-18. However, in support of this statement, Gallo Nero relies on the declaration of Sidney Moore, owner of the Mayflower Shop, which merely states as follows:
My father is the only American member of the technical tasting committee of the Consorzio Chianti Classico Gallo Nero. The signs displayed in my store ... are from the Consorzio Chianti Classico Gallo Nero and were sent to me back in 1980.
Reply Declaration of Sidney Moore ¶ 2 (executed July 29, 1991).
This showing hardly establishes an intentional connection between Gallo Nero and the single display such that detrimental reliance for purposes of nationwide marketing of wine can be inferred, much less presumed or found. Instead, the fact that the head of Gallo Nero was unaware of the display as well as the rather roundabout circumstances whereby the signs were obtained is sufficient for this Court to find that Gallo Nero did not intend that such display be constructed, much less that it might be found to have detrimentally relied on the display's continued existence.
[6] Gallo Nero effectively contends that this defense is further supported by "the parties' long coexistence without confusion" in the wine marketplace. See Reply Memorandum in Support of Defendant's Cross-Motion for Summary Judgment 2:21-22. However, as noted previously, no bottles of "Chianti Classico" bearing the words "Gallo Nero" have yet been sold in the United States. Thus even though consumers have for years "looked for the Gallo Nero," these customers were effectively looking only for the symbol of the black rooster rather than any words to that effect. Thus such "continued use" based on reference to the symbol does not establish detrimental reliance on the ability to use the word "Gallo."
[7] Indeed, under Gallo Nero's arguments that the parties' respective wines are distinct on the basis of price and quality, one could argue that defendant's use of "Gallo" in relation to its higher-priced wines would detract from the general perception of plaintiff's wines as being economically priced vintages, thus detracting from the perception of the "Gallo" mark as representing lower quality at a lower cost. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1774144/ | 742 So. 2d 113 (1999)
Jack EUBANKS, et al., Plaintiffs-Appellants,
v.
BAYOU D'ARBONNE LAKE WATERSHED DISTRICT, et al., Defendants-Appellees.
No. 32,334-CA.
Court of Appeal of Louisiana, Second Circuit.
September 22, 1999.
Writ Denied December 17, 1999.
*114 James M. Wilkerson, Jay B. McCallum, Farmerville, Counsel for Appellants.
Richard Ieyoub, Attorney General, Counsel for Appellees Bayou D'Arbonne Lake Watershed District and The Board of Commissioners of Bayou D'Arbonne Lake Watershed District.
Frances Jones Pitman, Assistant Attorney General, Walker, Tooke & Lyons by S. Judd Tooke, Abrams & Lafargue by Julie Lafargue, Counsel for Appellee State of Louisiana, DOTD.
Before WILLIAMS, STEWART and DREW, JJ.
STEWART, Judge.
The plaintiffs in this class action filed suit for damages and injunctive relief after their property located on and around Bayou D'Arbonne Lake flooded in 1991. The Bayou D'Arbonne Lake Watershed District, the Board of Commissioners of the Bayou D'Arbonne Lake Watershed District (the "Lake Commission"), and the State of Louisiana, through the Department of Transportation and Development ("DOTD") were all named as defendants. The trial court determined that the plaintiffs' action for damages had prescribed under La. R.S. 9:5624 and denied their claim for injunctive relief. Thereafter, the plaintiffs filed this appeal. We now affirm the trial court's judgment.
FACTS
The plaintiffs' class is comprised of 157 owners of homes and camps located in the vicinity of Bayou D'Arbonne Lake in Union Parish. Bayou D'Arbonne Lake (hereinafter referred to as "the lake") is a manmade lake created in conjunction with the damming of Bayou D'Arbonne and the building of a spillway. The dam and spillway project began in 1958 and was completed in 1963. It was conducted under the direction of the Bayou D'Arbonne Lake Watershed District, a political subdivision of the State of Louisiana governed by the Lake Commission. The lake reached its normal pool stage of 80 feet mean sea level ("80' MSL") in 1964. The Lake Commission purchased perpetual servitudes from the plaintiffs' ancestors in *115 title over all land below the 80' contour line of the lake.
The D'Arbonne dam is an earthen dam a quarter of a mile long with a 799 foot concrete spillway. The spillway is an "uncontrolled" spillway, meaning that there is no control over the amount of water that is discharged from the lake. The level of the lake fluctuates with the amount of rainfall in its watershed. The spillway was not designed for flood control purposes. It has four small gates, each five feet by five feet, which can be opened for lake management purposes. However, the gates provide no benefit for flood management purposes. In designing the lake, engineers calculated "design surcharges" which indicate how high the lake can be expected to rise during certain rain events. The design surcharges were calculated for 2-year, 5-year, 10-year, 25-year, and 100-year storms to be 84 feet, 85 feet, 85.6 feet, 86.2 feet, and 90 feet respectively. These calculations show, for instance, that a two year storm would produce a rise of four feet above the lake's normal pool stage of 80' MSL and that a 100 year storm would produce a rise of ten feet above the normal pool stage. All of the plaintiffs' homes and camps were built below the 100-year flood level.
Since the lake reached pool stage in 1964, the lake has risen above that level each year. Dates of significant high water readings include June 11, 1974 when the lake rose to 85.83 feet; February 5, 1975 when the lake rose to 84.60 feet; December 28, 1982 when the lake rose to 85.40 feet; and July 1, 1989 when the lake rose to 84.90. In the years prior to the 1991 flood, persons living in the lake area complained about damages caused by high water flooding as indicated by various documents submitted into evidence.
This evidence indicates that as early as 1979 there were complaints from property owners along the lake. A letter dated March 26, 1979 from the Lake Commission to state government officials refers to numerous calls from people who constructed improvements too close to the 80' contour line of the lake and refers to the need to clean up debris which accumulated along the shoreline as a result of high water. A response from DOTD on April 30, 1979 states that clean up of debris would be limited to public property, that it would not be feasible to make improvements to reduce the lake's flooding, and that landowners around the lake failed to heed advice not to construct in the surcharge area of the lake. Additionally, a Lake Commission letter dated August 12, 1980 refers to the thousands of dollars in damages caused to permanent residences, camps, docks, boat houses, piers, and, other improvements bordering the lake and states that property owners are discouraged by the "continual expensive maintenance caused by periodic high water...." This same letter also refers to a suggestion made by a property owner as to how to best handle the high water during the rainy season so as to provide relief. In 1986, the Union Parish Police Jury prepared a resolution addressed to DOTD requesting a study of whether the spillway gates could be used to regulate the lake level during periods of excessive rain. This resolution refers to difficulties experienced by families in accessing their homes. A Lake Commission letter dated July 6, 1989 again referred to high water causing substantial damage to docks, seawalls, and boat houses. Then, in 1990, a property owner suggested converting the spillway to a hydraulic system in an effort to alleviate damages caused by high water. The property owner's presentation to the Lake Commission referred to roads becoming flooded when the lake reaches 82.5 feet and impairing homeowners access to their homes and services. Reference is also made to damage to boat docks, piers, and homes caused by high waves.
In response to the ongoing complaints and flooding problems, DOTD determined that the cost of expanding the spillway to significantly reduce the lake's surcharge would be $35,000,000. It was also determined *116 that opening the spillway gates would provide no significant reduction in the high water levels of the lake due to the fact that the gates would provide only an additional 100 square foot area of discharge in comparison to the 4,000 square foot discharge capacity over the spillway.
The flooding from which this suit arises occurred in 1991 when the water level of the lake rose 4.27 feet after thirty percent of the yearly rainfall total fell over the lake area during a thirteen hour period on April 28 and April 29 of 1991. According to Edward R. Duranczyk, Jr., a meteorologist who testified as an expert on the defendants' behalf, the rainfall resulted from a train echo effect. Duranczyk explained that a train echo effect is a series of thunderstorms which occur continuously over an area during a short period of time. The train echo effect is an extremely rare meteorological event which cannot be predicted until it is already underway. Durancyzk described the rainfall as a 400-year event that will probably not occur again in the D'Arbonne area over a lifetime. Prior to this rain event, up to fifteen inches of rain, or just under four times the average rainfall for April, had fallen in the area of the lake from April 1 to April 25, 1991. The train echo effect resulted in an additional 12 to 14 inches of rain over the lake's basin. The April 1991 storm is now the "storm of record" against which other area rainfall is measured.
An expert in hydraulic engineering, Dr. Chester Watson, testified that the high water level of the lake peaked on April 30, 1991, and that the lake levels were the highest recorded. Watson explained that the flooding resulted not only from the record rainfall, but also from the damming effect caused by the Ouachita River which also experienced record highs and which backed up into Bayou D'Arbonne and consequently into the lake. According to Watson's analysis of the flood event, the high water level was higher than 90' MSL, the 100-year storm surcharge, all around the lake.
In the instant suit, the plaintiffs asserted claims of negligence based primarily upon the failure of the defendants to warn of the danger and extent of flooding associated with the lake. The plaintiffs also asserted a claim for injunctive relief based on the alleged violation of a natural servitude of drain whenever the lake rises above 80' MSL, the limit of the servitudes purchased by the defendants from the plaintiffs' ancestors in title. Recognizing the hardships that would arise from injunctive relief, the plaintiffs instead requested an award of damages in lieu of an injunction.
The trial court rejected the plaintiffs' negligence claims as well as their claim for injunctive relief. First, the trial court applied La. R.S. 9:5624 and determined that the plaintiffs' claims for damages prescribed. This determination was based upon a finding that flooding above 80' MSL and damages were common occurrences during the twenty years prior to the 1991 flood. Next, the trial court's denial of injunctive relief was based upon findings that the plaintiffs, pursuant to their deeds, consented to the alteration of the natural drain and that they should have known that the dam and spillway were not flood control structures. The trial court also found that the rain event which resulted in the flooding was an act of God and not an event that would subject the defendants to an injunction or liability for damages.
DISCUSSION
Prescription
The plaintiffs first assert that the trial court erred in finding that their action for damages prescribed. The two arguments raised by the plaintiffs are that the trial court did not consider their claim that the defendants were negligent in failing to warn of the danger of flooding and that La. R.S. 9:5624 does not apply to bar a claim for damages to homes that did not exist at the time of the completion of the *117 dam and spillway project because damage to such homes cannot be considered a necessary consequence of the construction of the dam and spillway.
In finding that the plaintiffs' claim for damages prescribed, the trial court applied the pre-1987 version of La. R.S. 9:5624 which provides:
When private property is damaged for public purposes any and all actions for such damages are prescribed by the prescription of two years, which shall begin to run when the damages are sustained.[1]
This statute serves to limit the exposure of the state and its political subdivisions by requiring that "any and all actions" be brought within two years after damages are sustained. Lyman v. Town of Sunset, 500 So. 2d 390 (La.1987); Nuckolls v. Louisiana State Highway Dept., 337 So. 2d 313 (La.App. 2 nd Cir.1976), overruled in part by Gaharan v. State, Through Dept. of Transportation and Development, 579 So. 2d 420 (La.1991). The language of the statute construed in light of its purpose precludes bringing any suit for damages after two years from the first occurrence of any damage upon completion of the public work. Nuckolls, supra. See also Wilson v. City of Baton Rouge, 96-0015 (La.App. 1st Cir. 11/8/96), 683 So. 2d 382, writ denied, 96-2936 (La.1/31/97), 687 So. 2d 408. However, the prescriptive period of R.S. 9:5624 does not apply when the act which caused the damages was not a necessary consequence or result of the public construction project. Roberts v. Murphy Oil Corp., 577 So. 2d 308 (La.App. 4 th Cir.1991), writ denied, 580 So. 2d 670 (La.1991).
There is no dispute that the construction of the dam and spillway and creation of the lake were public purpose projects. Since the lake reached pool stage, flooding above 80' MSL has occurred on a yearly basis. The spillway was not designed as a flood control device and cannot be used as such. Rather, the level of the lake fluctuates with the amount of rainfall in the watershed and flooding occurs. In designing the lake, surcharge calculations were made to determine how high the lake could be expected to rise during certain rain events. Thus, flooding above pool stage was clearly expected and did in fact occur on a regular basis as a consequence of the design of the lake and construction of the uncontrolled spillway.
Although the plaintiffs base their claim for damages on the failure to warn theory, the damages allegedly sustained by the plaintiffs resulted from flooding. Evidence indicates significant complaints beginning in 1979 and 1980 regarding damages to property, including permanent residences, camps, boat houses, and other improvements in the area of the lake, caused by flooding. The fact that the plaintiffs' homes were not yet built at the time the dam and spillway project was completed does not preclude application of the prescriptive period to bar their claim for damages filed over ten years after damages to private property, including improvements built in the area of the lake, became apparent. The plaintiffs no doubt chose to build in the lake area in order to enjoy the lifestyle, scenery, and recreational pursuits afforded by lake living. Just as the dangers of hurricanes are apparent to persons who choose to build improvements on the coastline of the Gulf of Mexico, the dangers of potential flooding should likewise be apparent to persons who choose to build improvements along a *118 lake, particularly one created in part by an uncontrolled spillway.
The flood damages sustained by the plaintiffs in 1991 and those damages sustained in the years since completion of the dam and spillway project are necessary consequences of the design and construction of the dam and spillway. Because the flooding of the lake area and the resulting damages to private property and improvements became apparent as early as 1980, we find no error in the trial court's application of La. R.S. 9:5624 to find the plaintiffs' claim for damages prescribed.[2]
Injunctive Relief
The plaintiffs assert that they are entitled to injunctive relief, or damages in lieu of injunctive relief, because any rise in the level of the lake above the 80' MSL contour line is an interference with their natural servitude of drain. The parties stipulated that prior to construction of the dam and spillway, the plaintiffs' property drained naturally into Bayou D'Arbonne. After construction of the dam and spillway, the plaintiffs' property drained into the lake. When the dam and spillway were constructed, the Lake Commission purchased perpetual servitudes from the plaintiffs' ancestors in title over property lying below the 80' MSL contour line of the lake. The written agreement which is included in each of the plaintiffs' chain of title provides, in part:
The parties hereto take cognizance of the fact that the Louisiana Legislature by Act No. 9 of 1956 has created a Watershed District out of Bayou D'Arbonne, Bayou Corney, Bayou Little D'Arbonne, Bayou Middle Fork, and the watershed of each one of the said streams and has made an appropriation to the Department of Public Works, State of Louisiana, to construct a dam and spillway on Bayou D'Arbonne for the purpose of impounding the waters of the said streams and of creating a recreational facility and water conservation reservoir, and it is understood by and between the parties hereto that by virtue of the servitude herein granted the said Board of Commissioners for the Bayou D'Arbonne Lake Watershed District, its successors, assigns, contractors, agents, servants and workmen shall have and enjoy the right at any time and for all time hereafter to inundate all or any part of the above described property with the waters of the said streams as it shall see fit, and to use and administer the same as a recreation and water conservation facility as contemplated by said Act No. 9 of 1956.
A natural servitude of drain is owed by an estate situated below to receive the surface waters that naturally flow from an estate situated above. La. C.C. art. 655. The owner of the servient estate may not do anything to prevent the flow of water. La. C.C. art. 656. Injunctive relief is available to the owner of the dominant estate to require the owner of the servient to remove obstacles which interfere with the natural drainage. Gaharan v. State, Through Dept. of Transportation and Development, supra. Because injunctive relief is a distinctly different form of relief than that afforded for damages to private property for public purposes, the prescriptive period provided in La. R.S. 9:5624 does not bar plaintiffs' claim for injunctive relief. Gaharan, supra. Furthermore, while injunctive relief is the preferred remedy for the owner of a servient estate which is owed a servitude of drain, exceptional circumstances may make granting of injunctive relief inappropriate or impermissible. In such cases, an alternative remedy, such as compensatory damages, may be available.
Gaharan, supra; Freestate Indus. Development Co. v. T. & H., Inc., 188 So. 2d 746 (La.App. 2nd Cir.1966).
*119 However, both legal and natural servitudes may be altered by agreement if the public interest is not affected adversely. La. C.C. art. 730. Such agreements must be in writing and of record to bind subsequent property owners. O'Neill v. Miramon, 477 F. Supp. 82 (E.D.La.1979); Cornett v. Hebert, 31 So. 2d 446 (La.App. 1st Cir.1947).
Our reading of the servitude agreement included in each of the plaintiffs' chain of title convinces us that the plaintiffs' ancestors in title agreed to and acquiesced in an alteration in the natural servitude of drain existing prior to the creation of the lake and construction of the dam and spillway. As expressed in the servitude agreement, the dam and spillway were to be constructed on Bayou D'Arbonne to impound the waters for the purpose of creating the lake. As a result of this action, no longer would the property now owned by the plaintiffs drain naturally into Bayou D'Arbonne; rather, the property would drain into Bayou D'Arbonne Lake created by the dam and spillway and subject to no flood control devices. Construction of the dam and spillway were the actions which resulted in the change in the natural drainage of the area surrounding the lake, and the construction project was clearly set forth in the servitude agreements. Dr. Chester Watson explained that construction of the dam changed the natural drainage of Bayou D'Arbonne by impounding the water and slowing it down in order to create a reservoir, the lake, for public use. Simply because servitudes were purchased only up to the 80' MSL contour line does not establish a violation of the natural drainage when the lake level rises naturally, through no action or fault on the part of the defendants, to higher levels. For these reasons, we find, as did the trial court, that the plaintiffs failed to prove their entitlement to injunctive relief.
Our affirmance of the trial court's ruling is buttressed by the severity of the storms and flooding in 1991 which led to the filing of this suit. The testimony of Edward R. Duranczyk, Jr., established the rarity and severity of the storm system which preceded and produced the flooding. Dr. Chester Watson's testimony, as well as exhibits entered into evidence, established that flooding was widespread and not limited only to the area of the lake. High water existed not only in the area of the lake, but also along Bayou D'Arbonne and the Ouachita River and its tributaries. Twentyone new maximum record stages were set along the Ouachita River. According to the 1993 Flood Hazard Evaluation by the Corps of Engineers, approximately 1,555,000 acres were flooded by the 1991 event. Perhaps the most relevant consideration to the plaintiffs' claim is that, according to Dr. Watson, the peak on April 30, 1991, produced flooding all around the lake above 90' MSL, the surcharge level predicted for a 100 year storm. Furthermore, Dr. Watson's studies indicated that flooding above 80' MSL, and above 90' MSL in at least one area of the lake, would have resulted even in the absence of the dam.
The term "act of God" or, in civilian parlance, force majeure is defined as
a providential occurrence or extraordinary manifestation of the forces of nature which could not have been foreseen and the effect thereof avoided by the exercise of reasonable prudence, diligence, and care or by the use of those means which the situation renders reasonable to employ.
Saden v. Kirby, 94-0854 and 94-0926 (La.9/5/95), 660 So. 2d 423; Southern Air Transport v. Gulf Airways, 215 La. 366, 40 So. 2d 787 (1949); Caldwell v. Let The Good Times Roll Festival, 30,800 (La.App. 2nd Cir. 8/25/98), 717 So. 2d 1263, writ denied, 98-2489 (La.11/25/98), 729 So. 2d 566. The trial court determined that the extraordinary rainfall which resulted in the flooding was an Act of God. In light of the considerations discussed above, we find no error in this determination.
*120 CONCLUSION
For the reasons discussed, we affirm the judgment of the trial court denying the plaintiffs' claim for damages and request for injunctive relief or damages in lieu of such relief. Costs of this appeal are assessed to the plaintiffs.
AFFIRMED.
NOTES
[1] Although La. R.S. 9:5624 was amended by No. 339 of Acts 1987 to provide that prescription begins to run after completion and acceptance of the public work, it has been held that the amended version shall not apply retroactively to deprive a party of vested prescriptive rights. See Small v. Avoyelles Parish Police Jury, 589 So. 2d 1132 (La.App. 3rd Cir.1991), writ denied, 593 So. 2d 373 (La.1992); Lyman v. Town of Sunset, 567 So. 2d 1171 (La.App. 3 rd Cir.1990), writ denied, 571 So. 2d 648 (La. 1990); LeBlanc v. City of Lafayette, 558 So. 2d 259 (La.App. 3rd Cir.1990). As will be discussed infra, the trial court was correct in applying the pre-1987 version of R.S. 9:5624 to the plaintiffs' claim for damages.
[2] In making this finding, we follow the First Circuit in interpreting R.S. 9:5624 as precluding claims for all damages, special and general, arising from damage to private property for public purposes. See Wilson v. City of Baton Rouge, supra. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1805574/ | 991 F. Supp. 329 (1998)
Matthew ALEXANDER, Petitioner,
v.
John KEANE, Superintendent, Sing Sing Correctional Facility, Respondent.
No. 97 Civ. 2526(SS).
United States District Court, S.D. New York.
January 14, 1998.
Opinion Denying Reconsideration March 5, 1998.
*330 *331 Matthew Alexander, pro se.
Robert T. Johnson, District Attorney, Bronx County, New York City, Nancy D. Killian, New York City, for Respondent.
MEMORANDUM OPINION AND ORDER
SOTOMAYOR, District Judge.
Respondent moves to dismiss this habeas petition on the ground that the claims asserted by petitioner are barred by the one-year limitations period of § 101 of the Antiterrorism and Effective Death Penalty Act ("AEDPA"), Pub.L. 104-132, 110 Stat. 1217 (April 24, 1996), codified at 28 U.S.C. § 2244(d). The petitioner filed this petition approximately eleven months after the effective date of the AEDPA, and over six years after exhausting state direct review of his conviction. For the reasons to be discussed, I grant respondent's motion to dismiss the habeas petition as untimely.
BACKGROUND
Petitioner was convicted on June 15, 1988, following a jury trial in New York State Supreme Court, Bronx County, of Murder in the Second Degree (N.Y.Penal Law § 125.25(3)) and Robbery in the First Degree (N.Y.Penal Law § 160.15(3)). Petitioner was sentenced to an indeterminate prison term of twenty years to life on the murder count and a term of from eight and one-third to twenty five years on the robbery count. Petitioner is currently incarcerated at Sing Sing Correctional Facility
Petitioner appealed his conviction to the Supreme Court, Appellate Division, First Department, on the grounds that 1) the prosecution failed to establish his guilt beyond a reasonable doubt, 2) the evidence did not corroborate the accomplice testimony, 3) the trial court erred in failing to give a circumstantial evidence charge, and 4) the trial court's sentence was excessive. On August 10, 1989, the Appellate Division affirmed petitioner's conviction. See People v. Alexander, 153 A.D.2d 507, 544 N.Y.S.2d 595 (1st Dep't 1989). On May 3, 1990, the New York State Court of Appeals affirmed. See People v. Alexander, 75 N.Y.2d 979, 556 N.Y.S.2d 508, 555 N.E.2d 905 (1990). Petitioner did not file for certiorari with the United States Supreme Court.
On May 11, 1991 petitioner filed a motion in the trial court, pursuant to N.Y.Crim.Proc. Law § 440.10, to vacate the conviction on the grounds of ineffective assistance of trial counsel; this motion was denied on July 16, 1991, and the Appellate Division denied leave to appeal on September 26, 1991. See People v. Alexander, No. M-4181, 1991 N.Y.App. Div. Lexis 12470 (1st Dep't Sept. 26, 1991). Finally, on March 11, 1992, petitioner filed in *332 the Appellate Division for a writ of error coram nobis, raising the same grounds as his unsuccessful § 440.10 motion. The petition was denied on May 14, 1992, see People v. Alexander, 183 A.D.2d 1110, 592 N.Y.S.2d 542 (1st Dep't 1992), and the Court of Appeals denied leave to appeal on August 5, 1992. See People v. Alexander, 80 N.Y.2d 900, 588 N.Y.S.2d 826, 602 N.E.2d 234 (1992).
On March 31, 1997, this Court received the instant petition, dated March 21, 1997, for a writ of habeas corpus under 28 U.S.C. § 2254. Respondent submitted its motion to dismiss on July 29, 1997, and petitioner opposed the motion on September 18, 1997. Respondent submitted a reply on November 6, 1997, and the petitioner submitted a surreply on November 9, 1997.
DISCUSSION
Petitioner filed this petition after April 24, 1996, the effective date of the AEDPA. The AEDPA amended the habeas corpus statute to require that habeas petitions "be filed no later than one year after the completion of state court review." 28 U.S.C. § 2244(d)(1)(A) (1997). However, "[t]ime during which a properly filed state court application for collateral review is pending is excluded from the one year period." Reyes v. Keane, 90 F.3d 676, 679 (2d Cir.1996); see 28 U.S.C. § 2244(d)(2). The Second Circuit in Peterson v. Demskie, 107 F.3d 92, 93 (2d Cir.1997), recognized that it would be unfair to deny access to the federal courts to prisoners who did not have notice of the new time limits of the AEDPA. Although other circuits have ruled that "habeas petitioners should have a full year after the effective date of the AEDPA to file their petitions in federal district court," Lindh v. Murphy, 96 F.3d 856, 866 (7th Cir.1996) (en banc), rev'd on other ground, ___ U.S. ___, 117 S. Ct. 2059, 138 L. Ed. 2d 481 (1997); United States v. Simmonds, 111 F.3d 737 (10th Cir.1997); Calderon v. United States District Court for Central District of California, 112 F.3d 386, 389 (9th Cir.1997), this Circuit has held that "a habeas corpus petitioner is entitled to a `reasonable time' after the effective date of the AEDPA to file a petition." Peterson, 107 F.3d at 92. Furthermore, "in circumstances ... where a state prisoner has had several years to contemplate bringing a federal habeas corpus petition, we see no need to accord a full year after the effective date of the AEDPA." Peterson, 107 F.3d at 93.
Following Peterson, district courts in this circuit have found petitions filed near the end of the year following the enactment of the Act to be untimely. See Rashid v. Khulmann, No. 97 Civ. 3037, 1998 U.S. Dist. Lexis ___, at *___, 1998 WL9379, at *2 (S.D.N.Y. Jan. 8, 1998) (collecting cases). The Second Circuit in Peterson also cautioned, however, that "we do not think that the alternative of a `reasonable time' should be applied with undue rigor." Peterson, 107 F.3d at 93. Accordingly, courts in this circuit have found petitions filed after the effective date of AEDPA to be timely where the petition was filed well before the conclusion of the one year period following the effective date of the Act or soon after state review concluded. See id.
The Second Circuit in Peterson provided little guidance as to what factors should be considered in determining whether a petition is filed within a reasonable time after the effective date of the AEDPA, except to say that "where a state prisoner has had several years to contemplate bringing a federal habeas corpus petition, we see no need to accord a full year ...." Peterson, 107 F.3d at 93. The implication of this statement is that the length of time since conviction is a factor to be considered, with more recently convicted petitioners afforded longer time, perhaps even up to one full year. See Morillo v. Crinder, No. 97 Civ. 3194, 1997 U.S. Dist. Lexis 18295, at *5-6, 1997 WL 724656, at *2 (S.D.N.Y. Nov. 18, 1997) (petition filed 350 days after AEDPA timely because, inter alia, petitioner who filed 370 days after conviction "did not have years to contemplate bringing his petition"); Jones v. Artuz, No. CV 97-2394, 1997 U.S. Dist. Lexis 15581, at *2-3 (E.D.N.Y. Sept. 13, 1997) (petition filed 357 days after AEDPA not untimely where filed only fourteen months after conviction).
In addition to this factor, the district courts applying Peterson have relied on a *333 number of common factors in making their analysis: (1) whether the federal petition merely restates claims made to the state courts, and thus does not require extensive additional preparation, see Avincola v. Stinson, No. 97 Civ. 1132, 1997 U.S.Dist.Lexis 17078, at *6, 1997 WL 681311, at *2 (S.D.N.Y. Oct. 31, 1997) (petition filed 266 days after AEDPA untimely because, inter alia, "[t]he claims raised here are identical to those raised in state court"); White v. Garvin, No. 97 Civ. 3244, 1997 U.S.Dist.Lexis 15577, at *5, 1997 WL 626396, at *2 (S.D.N.Y. Oct. 8, 1997) ("Because petitioner raised the same claims in his prior appeals, he did not have to do much, if any, legal research or writing to complete his petition.") (petition filed 341 days after the AEDPA untimely); Berger v. Stinson, 977 F. Supp. 243, 245 (W.D.N.Y.1997) ("[I]t is difficult to see why an extended period of time was necessary to prepare and file a habeas corpus petition based on the same facts" as a previous state collateral motion); (2) whether the petitioner is proceeding pro se or is represented by counsel, see Morillo, 1997 U.S.Dist. Lexis 18295, at *6, 1997 WL 724656, at *2 (filing pro se "can substantially increase the time involved in preparation of court documents") (petition timely); Rivalta v. Artuz, 1997 U.S. Dist. Lexis 10282, at *2 n. 1, 1997 WL 401819, at *1 n. 1 (S.D.N.Y.1997) (petition filed six months after AEDPA timely "in light of the ... liberal treatment traditionally conferred by this Circuit on pro se parties"); but see Rosa v. Senkowski, No. 97-2468, 1997 U.S. Dist. Lexis 11177, at * 10-11, 1997 WL 436484, at *4 (S.D.N.Y. Aug. 1, 1997) ("[T]o allow the absence of counsel to extend the filing period would render the `reasonable' time limitations imposed by the Second Circuit void in the substantial number of pro se habeas corpus petitions brought in this district."); (3) whether the petitioner was pursuing state collateral relief during the post-AEDPA period, see Newton v. Strack, No. CV 97-2812, 1997 U.S.Dist. Lexis 17511, at *6-7, 1997 WL 752348, at *2 (E.D.N.Y. Oct. 15, 1997); Johnson v. Kelly, No. CV 97-1298, 1997 U.S.Dist. Lexis 15580, at *6-7 (E.D.N.Y. Sept. 12, 1997); and (4) the difficulty or complexity of the issues raised by the petition, see Carmona v. Artuz, No. 96 Civ. 8045, 1997 U.S.Dist. Lexis 15791, at *15 (S.D.N.Y. Oct. 3, 1997) (magistrate judge report and recommendation). Generally speaking, petitions filed within a month or two of the one-year anniversary of the AEDPA have been presumed untimely absent compelling explanation. See Pacheco v. Artuz, No. 97 Civ. 3171, 1997 U.S. Dist. Lexis, at *5, 1997 WL 724774, at *2 (S.D.N.Y. Nov. 17, 1997); Garcia v. New York State Dep't of Correctional Services, No. 97 Civ. 3867, 1997 U.S.Dist. Lexis 17079, at *7, 1997 WL 681313, at *2 (S.D.N.Y. Oct. 28, 1997).
In this case, petitioner's application is not timely. The petition was filed, at the earliest, on March 21, 1997[1] almost eleven months after the effective date of the AEDPA, and over six years after his conviction had become final.[2] The claims raised in this petition are essentially the same as petitioner raised in his state court proceedings. Petitioner is not raising any new claims of unusual difficulty or magnitude. Petitioner offers no compelling explanation as to why the petition could not have been filed much earlier. *334 The petition is therefore untimely under Peterson.
Petitioner's arguments that the AEDPA statute of limitations should not be applied retroactively have been addressed by the Second Circuit in Peterson and in Reyes v. Keane, 90 F.3d 676 (2d Cir.1996), and are therefore foreclosed. To the extent that petitioner's arguments raise a claim under the Ex Post Facto Clause, U.S. Const. art I., § 9, cl. 3, this Court addressed that claim in a recent opinion, see Rashid, 1998 U.S. Dist. Lexis ___, at *, 1998 WL 9379, at *2, and rejected it for essentially the reason that the AEDPA statute of limitations does not "`retroactively punish[ ] as a crime an act previously committed, which was innocent when done,' `make more burdensome the punishment for a crime, after its commission,' or `deprive[ ] one charged with crime of any defense available according to law at the time when the act was committed.'" Doe v. Pataki, 120 F.3d 1263, 1272 (2d Cir.1997) (quoting Beazell v. Ohio, 269 U.S. 167, 169-70, 46 S. Ct. 68, 68-69, 70 L. Ed. 216 (1925)).
Likewise, petitioner's argument that the respondent's motion to dismiss is actually raised under Rule 9(a) of the Rules Governing Section 2254 Cases in the United States District Courts ("Habeas Rules"), and that prejudice must therefore be shown, is incorrect. The respondent is not invoking Habeas Rule 9(a), but rather 28 U.S.C. § 2244(d). There is no requirement of prejudice in the AEDPA statute of limitations.
In Rosa v. Senkowski, No. 97 Civ. 2468, 1997 U.S.Dist. Lexis 11177, 1997 WL 436484 (S.D.N.Y. Aug. 1, 1997), certified for interlocutory appeal, 1997 U.S.Dist. Lexis 18310, 1997 WL 724559 (S.D.N.Y. Nov. 19, 1997), appeal docketed, No. 97-2974 (2d Cir. Dec. 31, 1997), Judge Robert J. Sweet refused to dismiss a petition that was time-barred under Peterson on grounds that the statute of limitations in the AEDPA violates the Suspension Clause, see U.S. Const. art. I, § 9, cl. 2, and the Due Process Clause of the Fourteenth Amendment, see U.S. Const. amend. XIV, § 1. See also Montalvo v. Portuondo, No. 97 Civ. 3336, U.S.Dist. Lexis 19288, 1997 WL 752728 (S.D.N.Y. Dec.4, 1997) (Sweet, J.) (reaffirming Rosa holding). In a recent opinion, this Court declined to follow Judge Sweet's holding. See Rodriguez v. Artuz, 990 F. Supp. 275, 277 (S.D.N.Y. 1998).
In Rodriguez, this Court stated that "at least where no claim of actual or legal innocence has been raised, as long as the procedural limits on habeas leave petitioners with some reasonable opportunity to have their claims heard on the merits, the limits do not render habeas inadequate or ineffective to test the legality of detention and, therefore, do not constitute a suspension of the writ in violation of Article I of the United States Constitution." Id. Furthermore, this Court held that in general Peterson afforded petitioners such a reasonable opportunity. Id.
In Rodriguez, however, this Court did not need to pass upon the question of whether a claim of "actual innocence" could override the AEDPA's statute of limitations or, more precisely, whether the dismissal of a claim of actual innocence as time-barred would be a violation of the Suspension Clause because no claim of actual innocence was raised in that case, nor did it appear from the face of the petition that the claims Rodriguez raised were sufficient in any case to make such a claim. The petitioner here, however, does appear to assert such a claim. See Pet. Mem. in Opp., at 18-19 ("This petitioner is innocent of the crime in which he is presently unlawfully imprisoned in violation of his constitutional rights.... [T]he state seeks to convince this Court to merely dismiss this action as a means of dispensing with justice. This is not what Congress intended when drafting of federal habeas review.... Nor would the framers of the United States Constitution sanction the outright summary dismissal of this petitioner's cause...."). While not expressly stating that the Suspension Clause requires an actual innocence exception to a statute of limitations, this Court believes that a fair reading of petitioner's argument, construed liberally as required when a pro se petitioner is involved, requires this Court to more fully explore the issue it left open in Rodriguez.
"Actual innocence" in habeas jurisprudence refers to a means by which petitioners can avoid certain procedural bars to *335 having their habeas petitions considered on the merits. As described by the Supreme Court, the type of actual innocence claim asserted by petitioner in this case "is `not itself a constitutional claim, but instead a gateway through which a habeas petitioner must pass to have his otherwise barred constitutional claim considered on the merits.'" Schlup v. Delo, 513 U.S. 298, 314, 115 S. Ct. 851, 861, 130 L. Ed. 2d 808 (1995) (quoting Herrera v. Collins, 506 U.S. 390, 404, 113 S. Ct. 853, 862, 122 L. Ed. 2d 203 (1993)).[3] The Court has usually allowed actual innocence to serve as a substitute for showing "cause and prejudice," the usual standard for overcoming procedural bars in habeas cases. See Schlup, 513 U.S. at 314, 115 S.Ct. at 861. The availability of the actual innocence gateway has been reiterated in cases where petitions would be barred for state procedural defaults, see Coleman v. Thompson, 501 U.S. 722, 750, 111 S. Ct. 2546, 2565, 115 L. Ed. 2d 640 (1991); Murray v. Carrier, 477 U.S. 478, 495-96, 106 S. Ct. 2639, 2649, 91 L. Ed. 2d 397 (1986); or where they would be barred as abusive, see McCleskey v. Zant, 499 U.S. 467, 494, 111 S. Ct. 1454, 1470, 113 L. Ed. 2d 517 (1991); or where they would be barred as successive, see Kuhlmann v. Wilson, 477 U.S. 436, 454, 106 S. Ct. 2616, 2617, 91 L. Ed. 2d 364 (1986) (plurality opinion); id. at 471 n. 5, 106 S.Ct. at 2636 n. 5 (Brennan, J., dissenting); id. at 476, 106 S.Ct. at 2639 (Stevens, J., dissenting). In Schlup, the Court simply described the petitioner as facing "various procedural bars" to which the actual innocence exception would apply, which at least suggests that any procedural bar may be overcome by meeting the actual innocence test.
However, the Supreme Court has never addressed whether actual innocence (or even cause and prejudice) is available to overcome the procedural bar of a statute of limitations, because prior to the enactment of the AEDPA there was no statute of limitations affecting habeas petitions. Moreover, the Supreme Court has never had to address whether the actual innocence exception is constitutionally required, because it has always been applied either to overcome procedural hurdles of the Court's own making, see, e.g., Coleman, 501 U.S. at 729-32, 111 S.Ct. at 2554-55 (procedural default rules created by Court in interests of comity and federalism); or as a means of giving content to a discretionary power vested in the courts by statute, see, e.g., Kuhlmann, 477 U.S. at 448-52, 106 S.Ct. at 2624-26 (under version of 28 U.S.C. § 2244(b) then in effect, courts "need not entertain" successive or abusive petitions; "permissive language" gives court discretion to consider claims of innocence). Prior to the AEDPA, there had never been a provision in the habeas statutes which strictly prevented a court from issuing the writ on behalf of a person "in custody in violation of the Constitution or laws or treaties of the United States," 28 U.S.C. § 2241(c)(3), except for the provision that required exhaustion of remedies, see 28 U.S.C. § 2254(b) ("An application for a writ of habeas corpus ... shall not be granted unless it appears that the applicant has exhausted the remedies available in the courts of the state....") (emphasis added). Even then, this provision only postponed the possibility of federal relief. The Supreme Court has always been able to fit an exception for actual innocence comfortably into the statutes, and thus the constitutional nature of the exception has never been squarely presented.
Similarly, the Second Circuit, in the recent decision of Triestman v. United States, 124 F.3d 361 (2d Cir.1997), was able to avoid directly addressing the issue of whether federal habeas must be available, at least at some point,[4] to adjudicate a claim of actual *336 innocence, because the language of 28 U.S.C. § 2255 contains a "safety valve," namely, that the writ of habeas corpus under 28 U.S.C. § 2241 is still available to federal prisoners if "the remedy by motion [under § 2255] is inadequate or ineffective to test the legality of [the prisoner's] detention." 28 U.S.C. § 2255. By holding that the procedural bars on Triestman's claim rendered § 2255 "inadequate and ineffective," and that therefore habeas corpus relief under § 2241, to which the gatekeeping procedures do not apply, remained open to him, the Second Circuit was able to avoid directly addressing the extent to which federal habeas is constitutionally required. See Triestman, 124 F.3d at 380.
For purposes of this petition, however, what Triestman does confirm is that procedurally barring a claim of actual innocence raises serious constitutional issues. See id. at 378-79.[5] Moreover, Triestman also confirms that the concern that habeas be available to hear claims of actual innocence is not necessarily limited to capital cases, because Triestman was not under a sentence of death for his crime. See Triestman, 124 F.3d at 379 (noting "the distinct possibility that the continued incarceration of an innocent person violates the Eighth Amendment"); see also Borrego v. United States, 975 F. Supp. 520, 525 (S.D.N.Y.1997) (actual innocence exception extends to noncapital sentencing issues).
It must be noted, however, that Triestman differs from the instant case in a potentially significant way. The Triestman court found that Triestman "could not have raised his claim of innocence ... in an effective fashion at an earlier time." Triestman, 124 F.3d at 379. The petitioner here, however, is not in such a situation he does not rely on any newly discovered evidence or new legal rulings, and this Court's finding that his filing was unreasonable under Peterson virtually forecloses a finding that he did not have sufficient opportunity to raise his claim. The *337 issue before this Court is therefore slightly different from Triestman: not, as in that case, whether the Constitution requires Congress to provide (at least) one meaningful opportunity for federal review of an innocence claim, but whether the federal habeas doors must, in effect, remain perpetually open to such a claim, at least until the claim has been adjudicated on the merits. Although Triestman did not address this issue, this Court believes that the concerns of that court, as well as a consistent line of Supreme Court jurisprudence, also indicate that procedural bars to hearing actual innocence claims even if there was some prior opportunity (but not a prior federal rejection of the merits) raise serious constitutional concerns.
The Triestman court noted, for instance, that "[i]t is certainly arguable ... that the continued imprisonment of an actually innocent person would violate just such a fundamental principle." Id. It also noted that "serious due process questions would arise if Congress were to close off all avenues of redress in such cases, especially when the prisoner could not have raised his claim of innocence ... in an effective fashion at an earlier time." Id. (emphasis added). The fair implication of this last statement is that "such cases" refers to more than just those in which the actual innocence claim could not have been effectively raised earlier.
This is confirmed by the Supreme Court's decision in Murray v. Carrier, 477 U.S. 478, 106 S. Ct. 2639, 91 L. Ed. 2d 397 (1986). In Carrier, the Court held that, although failure to raise a claim on direct appeal constituted procedural default which would normally bar federal habeas review, the default could be overcome by a showing of "cause and prejudice." The Court specifically noted that "a showing that the factual or legal basis for a claim was not reasonably available to counsel ... would constitute cause ..." and also that "[i]neffective assistance of counsel ... is cause for a procedural default." Id. at 488, 106 S.Ct. at 2645. The Court then went on to state the following:
"[i]n appropriate cases" the principles of comity and finality that inform the concepts of cause and prejudice "must yield to the imperative of correcting a fundamentally unjust incarceration." We remain confident that, for the most part, "victims of a fundamental miscarriage of justice will meet the cause-and-prejudice standard." But we do not pretend that this will always be true. Accordingly, we think that in an extraordinary case, where a constitutional violation has probably resulted in the conviction of one who is actually innocent, a federal habeas court may grant the writ even in the absence of a showing of cause for the procedural default.
Id. at 495-96, 106 S.Ct. at 2649 (quoting Engle v. Isaac, 456 U.S. 107, 135, 102 S. Ct. 1558, 1576, 71 L. Ed. 2d 783 (1982). Any case in which a claim of actual innocence could not have been raised earlier would obviously meet the "cause" standard set out above (factual or legal basis not reasonably available). Cf. Triestman, 124 F.3d at 367-69 (prior to AEDPA, district courts would have been able to reach merits of claim that could not have been raised earlier but was now viable due to intervening change in law). Clearly, this does cover most actual innocence claims, because they are normally based on new evidence that was either unavailable earlier or was omitted due to ineffective assistance of counsel. However, that the Carrier Court felt this did not exhaust the universe of cognizable actual innocence claims strongly suggests that the prior availability of an actual innocence claim does not necessarily remove it from the universe of "fundamentally unjust incarcerations." See also Kuhlmann v. Wilson, 477 U.S. 436, 452, 106 S. Ct. 2616, 2626, 91 L. Ed. 2d 364 (1986) (plurality opinion) ("Even where ... the many judges who have reviewed the prisoner's claims in several proceedings provided by the State and on his first petition for federal habeas corpus have determined that his trial was free from constitutional error, a prisoner retains a powerful and legitimate interest in obtaining his release from custody if he is innocent of the charge for which he was incarcerated.") (holding that federal habeas court may hear claim previously litigated in federal habeas if prisoner makes a "colorable showing of factual innocence.").
*338 The Supreme Court has long noted that the "concern about the injustice that results from the conviction of an innocent person has long been at the core of our criminal justice system." Schlup, 513 U.S. at 324, 115 S.Ct. at 866; see also O'Neal v. McAninch, 513 U.S. 432, 442, 115 S. Ct. 992, 997, 130 L. Ed. 2d 947 (1995) (describing as "basic purpose[ ] underlying the writ" the correction of an error "that risks an unreliable trial outcome and the consequent conviction of an innocent person"). In fact, the Supreme Court has often justified pruning back the scope of federal habeas review by cutting away those aspects which do not bear on actual innocence. See, e.g., Teague v. Lane, 489 U.S. 288, 312-13, 109 S. Ct. 1060, 1076-77 (1989) (retroactivity on collateral review limited to those new rules of constitutional law which either "place[ ] `certain kinds of primary, private individual conduct beyond the power of the criminal law-making authority to proscribe' or are designed to eliminate `procedure[s] which create an impermissibly large risk that the innocent will be convicted'") (quoting Mackey v. United States, 401 U.S. 667, 672, 91 S. Ct. 1160, 1163, 28 L. Ed. 2d 404 (1971) (opinion of Harlan, J.) and Desist v. United States, 394 U.S. 244, 262, 89 S. Ct. 1030, 1041, 22 L. Ed. 2d 248 (1969) (Harlan, J., dissenting)); Kuhlmann, 477 U.S. at 454, 106 S.Ct. at 2627 (federal court may entertain successive habeas petitions only where colorable showing of actual innocence is made); Stone v. Powell, 428 U.S. 465, 491 n. 31, 96 S. Ct. 3037, 3051 n. 31, 49 L. Ed. 2d 1067 (1976) (Fourth Amendment claims not cognizable in federal habeas because petitioner "is usually asking society to redetermine an issue that has no bearing on the basic justice of his incarceration" and does not remove a "safeguard against compelling an innocent man to suffer an unconstitutional loss of liberty").
The point of the above discussion is this: If there is any core function of habeas corpus any constitutionally required minimum below which the scope of federal habeas may not be reduced it would be to free the innocent person unconstitutionally incarcerated. Thus, the question which began this inquiry does the Suspension Clause require that an exception for actual innocence be made to the AEDPA statute of limitations? translates into the more basic question: Does the Suspension Clause require Congress to provide any federal habeas relief for state prisoners whatsoever?
This is an extremely difficult question, implicating as it does some of the most fundamental and fiercely contested issues of constitutional law relations among the three branches of the federal government, relations between the federal and state governments, and the balancing of individual liberty interest against society's need for a criminal justice system that at some point rests in its adjudication of guilt. The Supreme Court itself avoided these questions in Felker v. Turpin, 518 U.S. 651, 116 S. Ct. 2333, 135 L. Ed. 2d 827 (1996), when it simply assumed, for purposes of decision, that the Suspension Clause protects the federal writ for state prisoners "as it exists today." Id. at 2340. When such momentous issues are involved, particularly where, as here, no clear guidance can be found from higher courts, this Court is mindful of the longstanding maxim of judicial restraint that it is "`our duty to avoid deciding constitutional questions presented unless essential to proper disposition of the case.'" Dean v. Superintendent, Clinton Correctional Facility, 93 F.3d 58, 61 (2d Cir.1996) (quoting Harmon v. Brucker, 355 U.S. 579, 581, 78 S. Ct. 433, 434-35, 2 L. Ed. 2d 503 (1958)). Thus, the Court turns to petitioner Alexander's claims to see whether, assuming an "actual innocence" exception to the statute of limitations exists, he could take advantage of it to have this Court hear his petition on the merits notwithstanding its being time-barred.
This Court is mindful that it is undertaking the difficult task of applying an unclear standard the colorable factual showing of actual innocence which would be necessary to overcome a statute of limitations. This Court, however, is not without guidance. The Supreme Court has defined two standards for actual innocence in the habeas context, and this Court believes that, because the basic question in all of these cases, including this petition, is the threshold showing necessary to overcome a procedural bar to adjudication *339 on the merits, one of these two standards is applicable.
In Carrier, the Supreme Court defined actual innocence as a showing by an otherwise-barred petitioner that "a constitutional violation has probably resulted in the conviction of one who is actually innocent." Carrier, 477 U.S. at 496, 106 S.Ct. at 2639. Subsequent to Carrier, however, in Sawyer v. Whitley, 505 U.S. 333, 348, 112 S. Ct. 2514, 2523, 120 L. Ed. 2d 269 (1992), the Court held that "actual innocence" in the capital sentencing context required that the petitioner show "by clear and convincing evidence that but for constitutional error, no reasonable juror would find him eligible for the death penalty...." Id. (emphasis added). No explanation was given for the apparent increase in the burden placed on petitioners. In Schlup, the Court clarified its earlier cases, and held that in a habeas petition challenging a conviction, the Carrier standard applied, while in a challenge to capital sentencing, the Sawyer standard applied. See Schlup, 513 U.S. at 323-27, 115 S.Ct. at 865-67.
Schlup cited two reasons for distinguishing between the two standards. First, it noted that claims of actual innocence of the crime are much less likely to be successful than a challenge to a capital sentence, and thus "[t]he threat to judicial resources, finality, and comity posed by claims of actual innocence ... is significantly less than that posed by claims relating only to sentencing." Id. at 324, 115 S.Ct. at 866. Second, the Court felt that the injustice of executing (or incarcerating) one innocent of the crime is greater than imposing a too-severe sentence upon one who is factually guilty, and therefore "the overriding importance of this greater individual interest merits protection by imposing a somewhat less exacting standard of proof ...." Id. at 325, 115 S.Ct. at 866. This reasoning would be no less applicable in overcoming a statute of limitations here than in overcoming the various procedural bars in Schlup, and thus this Court will evaluate the instant petition's claims under the Carrier standard, as explicated in Schlup.
Under Schlup, "the petitioner must show that it is more likely than not that no reasonable juror would have found petitioner guilty beyond a reasonable doubt." Id. at 327, 115 S.Ct. at 867. The Court emphasized that this is a question of actual innocence, and thus "the district court is not bound by the rules of admissibility that would govern at trial" but instead "must make its determination ... `in light of all the evidence, including that alleged to have been illegally admitted (but with due regard to any unreliability of it) and evidence tenably claimed to have been wrongly excluded or to have become available only after the trial.'" Id. at 327-28, 115 S.Ct. at 867 (quoting Henry Friendly, Is Innocence Irrelevant? Collateral Attack on Criminal Judgments, 38 U.Chi.L.Rev. 142, 160 (1970)).
The Schlup burden, it should be noted, is not whether no reasonable juror could find petitioner guilty, and is therefore less than the insufficiency of evidence standard of Jackson v. Virginia, 443 U.S. 307, 99 S. Ct. 2781, 61 L. Ed. 2d 560 (1979). See Schlup, 513 U.S. at 330, 115 S.Ct. at 868. It is, however, a significantly higher burden than showing prejudice, which only requires a reasonable probability that the factfinder would have reasonable doubt, and moreover is evaluated only in light of the evidence that should have properly been before the factfinder. See id. at 332-33, 115 S.Ct. at 870 (O'Connor, J., concurring). In order to pass through the actual innocence gateway, a petitioner's case must be "truly extraordinary." Id. at 327, 115 S.Ct. at 867.
The instant petition is not such a case. To begin with, the Court notes the admonition in Schlup that "to be credible, [a claim of actual innocence] requires petitioner to support his allegations of constitutional error with new reliable evidence ... that was not presented at trial." Id. at 324, 115 S.Ct. at 865; see also id. at 329, 115 S.Ct. at 868 ("a petitioner does not meet the threshold requirement unless he persuades the district court that, in light of the new evidence, no juror, acting reasonable, would have voted to find him guilty beyond a reasonable doubt") (emphasis added). This Court does not understand "new" evidence to be limited to evidence that was unavailable at trial, see id. at 328, 115 S.Ct. at 867 (court must evaluate *340 "in light of ... evidence tenably claimed to have been wrongly excluded or to have become available only after the trial"), but that a claim of actual innocence must at least present evidence that the original factfinder did not consider to be cognizable. Accord Embrey v. Hershberger, 131 F.3d 739, 1997 U.S.App. Lexis 35624, at *6-9, 1997 WL 773359, at *3-4 (8th Cir.1997) (en banc). Given the probabilistic standard of Schlup, a claim without new evidence unseen by the jury, to be successful, would put the court in the position of asserting that none of the jurors acted reasonably. Accordingly, petitioner's claims that the trial evidence was insufficient to convict and of ineffective assistance of counsel on direct appeal will not be considered.
The only claims asserted by petitioner which raise "new evidence" are that (1) the jury should have been allowed to visit the site where a key eyewitness, Ertha Lee, viewed petitioner enter and leave the crime scene, and that this visit would have revealed that it was impossible for the witness to have seen the petitioner, and (2) a prosecution witness, Beverly Eason, testified that she had not been originally charged with the murder for which petitioner was convicted (and was testifying pursuant to a cooperation agreement), and when defense counsel presented records to the contrary and asked the prosecution to stipulate to their accuracy, the prosecutor "merely mouthed the word `agreed'" rather than "correct the falsity of the trial testimony." Pet.Opp. Mem., at 5. These claims do not come close to meeting the Schlup standard.
As to the first claim, the site visit could have at most cast doubt on the credibility of this one witness. As noted by the Appellate Division in Alexander's direct appeal, there was significant other evidence at trial. Eason testified that she planned the robbery which led to the murder along with Alexander, took part making sure the victim was alone and witnessed the petitioner at the crime scene, and that the petitioner confessed the robbery to her the following day. Moreover, in addition to the testimony the petitioner challenged here, Ms. Lee testified that she had witnessed the petitioner near the crime scene shortly before the crime, wearing a jacket that was similar to one found by the victim's body. See People v. Alexander, 153 A.D.2d 507, 507-08, 544 N.Y.S.2d 595, 596-97 (1st Dep't 1989). Under these circumstances, petitioner's complaint about the jury visit is hardly sufficient to cause this Court to find that no reasonable juror would have found petitioner guilty.
As to the second claim, it is barely "new evidence" at all. Petitioner agrees that his trial counsel got evidence in, with the prosecutor's stipulation, of Eason's falsehood on whether she was originally charged in the case. Petitioner only complains that the prosecutor was not more forceful in disavowing Eason's testimony on this point. Significantly, petitioner does not assert that Eason's testimony was perjurious on the most damning evidence. Actual innocence must be based on much stronger evidence than this. Accordingly, this Court finds that petitioner has not made a colorable showing of actual innocence, and therefore does not need to reach the difficult constitutional issues raised above. The petition must therefore be dismissed as time-barred.
CONCLUSION
For the reasons discussed, respondent's motion to dismiss is granted. The petition for a writ of habeas corpus is denied and dismissed.
SO ORDERED
OPINION & ORDER ON RECONSIDERATION
Petitioner Alexander moves this Court to reconsider its judgment of January 13, 1998, dismissing his petition for a writ of habeas corpus as time-barred. Alternatively, the petitioner requests a Certificate of Appealability (COA), pursuant to 28 U.S.C. § 2253(c). For the reasons to be discussed, the motion for reconsideration is denied, but the request for a COA is granted in part.
Alexander was convicted on June 15, 1988, in the New York State Supreme Court, Bronx County, of Murder in the Second Degree and Robbery in the First Degree. Petitioner's direct state review was completed, *341 and his conviction therefore "final" for purposes of 28 U.S.C. § 2244(d)(1), on August 1, 1990, ninety days after the New York Court of Appeals affirmed his conviction. On March 21, 1997, Alexander filed a petition for a writ of habeas corpus in this Court pursuant to 28 U.S.C. § 2254.
In an Opinion and Order dated January 14, 1998, this Court denied and dismissed the petition as time-barred. See Alexander v. Keane, 991 F. Supp. 329, 1998 WL 17737, 1998 U.S. Dist. Lexis 350 (S.D.N.Y.1998). The Court dismissed the petition because it was not filed within a "reasonable time" after the effective date of the Antiterrorism and Effective Death Penalty Act, Pub.L. No. 104-132, 110 Stat. 1217 (April 24, 1996) ("AEDPA"), and was thus untimely under the Second Circuit's decision in Peterson v. Demskie, 107 F.3d 92, 93 (2d Cir.1997). The Court also rejected challenges that the AEDPA time limitations (as interpreted by Peterson) could not be applied to the petitioner on retroactivity grounds, and that the time limitations were unconstitutionally applied to petitioner in violation of the Ex Post Facto and Suspension Clauses of Article I. Finally, this Court addressed the issue of whether a claim of actual innocence could overcome the time bar of a statute of limitations, but decided that even if it could, Alexander had not met the standards required for such a claim.
On January 29, 1998, the petitioner filed this motion. Petitioner argues the Court did not adequately consider two claims in dismissing his habeas petition. First, relying on a statement made by the district court in Mitchell v. Cain, 971 F. Supp. 1064, 1066 (W.D.La.1997), petitioner asserts that Janet Reno, the United States Attorney General, has issued a directive to all United States Attorneys that they should concede that there is a full one-year grace period after the effective date of the AEDPA for filing motions under 28 U.S.C. § 2255. Second, the petitioner argues that by dismissing his petition as time-barred, this Court inappropriately applied the AEDPA statute of limitations retroactively. Neither claim merits reconsideration.
As for the first argument, this Court has no evidence, apart from the cited opinion, that the purported order by the Attorney General has in fact been given. However, even if given, such an order is irrelevant to this case. Whether the United States chooses to waive the statute of limitations defense in § 2255 cases does not in any way bind the state of New York to do likewise with respect to petitions for habeas corpus under 28 U.S.C. § 2254. In Mitchell, the case cited by petitioner, the district court referred to the alleged Attorney General order only as persuasive authority for giving state habeas petitioners a full one year grace period; that court, however, had no binding precedent to the contrary because the Fifth Circuit had not decided the issue. See Mitchell, 971 F.Supp. at 1065, 1066. In contrast, the Second Circuit has decided in Peterson that a full year grace period need not be given, and that precedent, not Mitchell, is binding upon this Court.
As to the second issue, this Court did address directly retroactivity in its January 14 Order. See Alexander, 991 F.Supp. at 333 ("Petitioner's arguments that the AEDPA statute of limitations should not be applied retroactively have been addressed by the Second Circuit in Peterson and in Reyes v. Keane, 90 F.3d 676 (2d Cir.1996), and are therefore foreclosed."). In Reyes, the Second Circuit held that the AEDPA statute of limitations provisions would not apply to petitions filed before the Act's effective date i.e., April 24, 1996 but reserved the question of whether and to what extent the statute of limitations would apply to petitions filed after that date when the underlying judgment of conviction became final (the date on which the AEDPA's limitations period begins to run) prior to April 24, 1996. See Reyes, 90 F.3d at 679. That question was answered in Peterson, where the Second Circuit held that petitioners whose convictions became final prior to April 24, 1996, would have only a "reasonable time" thereafter in which to file. See Peterson, 107 F.3d at 93.
Contrary to petitioner's claim, the Supreme Court's subsequent decision in Lindh v. Murphy, ___ U.S. ___, 117 S. Ct. 2059, 138 L. Ed. 2d 481 (1997), does not affect Peterson's *342 applicability. In Lindh, the Supreme Court decided that the provisions of the AEDPA which affected Chapter 153 of Title 28, United States Code (28 U.S.C. § 2241-2255) "generally apply only to cases filed after the Act became effective." Lindh, ___ U.S. at ___, 117 S.Ct. at 2068 (emphasis added). As noted, Peterson dealt precisely with those cases, such as the petitioner's, which were filed after the AEDPA was enacted, but in which the conviction became final prior to the Act. Moreover, Reyes had already held precisely the same result as the Supreme Court reached in Lindh, and the Peterson court saw no conflict between its ruling and that in Reyes. This Court is bound to follow Peterson until and unless it is overruled by the Second Circuit or by the Supreme Court, and Lindh in no way calls Peterson into question. Nor does United States v. Perez, 129 F.3d 255 (2d Cir.1997), cited by petitioner, require a different result. In Perez, the Second Circuit held that its ruling in Lozada v. United States, 107 F.3d 1011, 1013 n. 1 (2d Cir.1997), that the COA requirements of the AEDPA applied to § 2255 petitions filed prior to the AEDPA's effective date, could not withstand the Supreme Court's decision in Lindh. See Perez, 129 F.3d at 260. Again, however, this decision merely recognizes that the AEDPA amendments to Chapter 153 do not apply to petitions filed prior to April 24, 1996. Alexander filed his petition after that date, and Peterson is still fully applicable. The petitioner's motion for reconsideration is therefore denied.
Petitioner also requests that he be granted a Certificate of Appealability in order to appeal the denial of his habeas petition. The AEDPA bars appeal from the denial of a habeas petition "unless a circuit justice or judge issues a certificate of appealability." 28 U.S.C. § 2253(c)(1). The Second Circuit has determined that district court judges may issue a COA. See Lozada, 107 F.3d at 1016.
In order to warrant a COA, a petitioner must make "a substantial showing of the denial of a constitutional right." 28 U.S.C. § 2253(c)(2). The Second Circuit has held that the standard for a COA is the same as for the Certificate of Probable Cause formerly required by 28 U.S.C. § 2253 prior to the AEDPA. See Reyes, 90 F.3d at 680. Under this standard, "`the petitioner need not show that he should prevail on the merits. Rather, he must demonstrate that the issues are debatable among jurists of reason; that a court could resolve the issues in a different manner; or that the questions are adequate to deserve encouragement to proceed further.'" Nelson v. Walker, 121 F.3d 828, 832 (2d Cir.1997) (quoting Barefoot v. Estelle, 463 U.S. 880, 893 n. 4, 103 S. Ct. 3383, 3395 n. 4, 77 L. Ed. 2d 1090 (1983)).
Neither of the two issues Alexander presses on his motion for reconsideration meets this standard, the first because it is beyond debate that the Attorney General's directive is irrelevant to Alexander's petition, and the second because the retroactivity of the AEDPA is a matter of statutory interpretation, not constitutional right. See Lindh, ___ U.S. at ___, 117 S.Ct. at 2063 ("normal rules of [statutory] construction apply" to determination of AEDPA's temporal reach). Only to the extent that the Ex Post Facto Clause of the Constitution is implicated a claim not pressed by Alexander in this motion would a constitutional right be involved. The Court rejected such a claim in its January 14 order, see Alexander, 991 F.Supp. at 333, and does not believe this issue warrants further review on appeal.
On one issue, however, the Court believes a serious constitutional question is raised, and that is whether the application of a time limitation to bar a first federal habeas petition is a violation of the Suspension Clause, see U.S. Const. art I, § 9, cl. 1 ("The Privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.").[1] Although this Court has *343 held that the Suspension Clause is not violated by the AEDPA's limitations period, see Rodriguez v. Artuz, 990 F. Supp. 275, 1998 U.S. Dist. Lexis 131, 1998 WL 9377 (S.D.N.Y. 1998), Judge Robert J. Sweet of this district has taken the opposite view, and the Second Circuit has granted an interlocutory appeal on this question. See Rosa v. Senkowski, No. 97 Civ. 2468, 1997 U.S. Dist. Lexis 11177, 1997 WL 436484 (S.D.N.Y. Aug. 1, 1997), appeal docketed, No. 97-2974 (2d Cir.1997). Because the Second Circuit has seen fit to take the issue on appeal, it follows virtually a fortiori that the COA standard has been met. Accordingly, this Court grants petitioner's request for a COA.
CONCLUSION
For the foregoing reasons, the Court denies Alexander's motion for reconsideration of its January 14, 1998, Order dismissing his habeas petition. This Court grants petitioner a Certificate of Appealability limited to the issue of whether the application of the AEDPA statute of limitations to time-bar his petition violates the Suspension Clause of the United States Constitution.
SO ORDERED.
NOTES
[1] The timeliness of a prisoner filing is measured from the date the papers were given to prison authorities for mailing. See Peterson, 107 F.3d at 93.
[2] Alexander's conviction was affirmed by the New York Court of Appeals on May 3, 1990. Adding the 90-day period during which a petition for certiorari could have been filed, see Sup. Ct.R. 13, the conviction became final on August 1, 1990. See & 28 U.S.C. § 2244(d)(1)(A) (for AEDPA statute of limitations, conviction becomes final "by the conclusion of direct review or the expiration of the time for seeking such review"), cf. Caspari v. Bohlen, 510 U.S. 383, 114 S. Ct. 948, 953-54, 127 L. Ed. 2d 236 (1994) (for Teague retroactivity analysis, state conviction becomes final "when the availability of direct appeal to the state courts has been exhausted and the time for filing a petition for a writ of certiorari has elapsed or a timely filed petition has been finally denied").
Although not necessary for the disposition of this case, the Court rejects the respondent's argument that the statute of limitations begins to run from the time the Court of Appeals affirmed the conviction without adding the ninety days in which a petition for certiorari could have been filed. See Albert v. Strack, No. 97 Civ. 2978, 1998 U.S.Dist. Lexis ___, at *___ n. 2, 1998 WL 9382, at *4 n. 2 (S.D.N.Y. Jan. 13, 1998).
[3] In Herrera, the Supreme Court was faced with a claim that execution of an actually innocent person would in itself be unconstitutional i.e., even if no constitutional error infected the adjudication of his guilt. Petitioner's claim here is not a Herrera claim, but rather, as in Schlup, an attempt to have the Court look past a procedural bar to reach the merits of his claims of constitutional errors at trial.
[4] Triestman involved a petitioner who was attempting to file a second motion under 28 U.S.C. § 2255, raising the claim that his 1992 plea to using a firearm in connection with a drug trafficking offense, see 18 U.S.C. § 924(c), should be overturned because the Supreme Court's subsequent decision in Bailey v. United States, 516 U.S. 137, 116 S. Ct. 501, 133 L. Ed. 2d 472 (1995), made it clear that his conduct did not violate § 924(c) and that therefore he was actually innocent of the offense. The Triestman court first found that the "gatekeeping" provisions of the AEDPA, under which the Court of Appeals may authorize a second § 2255 motion only if there is newly discovered evidence going to actual innocence or a new Supreme Court rule of constitutional law, see 28 U.S.C. § 2255, barred Triestman from filing his § 2255 motion. See Triestman, 124 F.3d at 372. However, because Triestman had a petition for certiorari pending in the Supreme Court at the time Bailey was decided, and because the Supreme Court denied certiorari only two days before the AEDPA took effect, the Triestman court held that, "as a practical matter, [Triestman] would not have been able to raise this fundamental claim of actual innocence any sooner." Id. at 369.
[5] The Triestman court stated only that serious constitutional issues arose under the Eighth Amendment and the Fifth Amendment Due Process clauses, and specifically declined to address whether the barring of an actual innocence claim raised issues under the Suspension Clause serious enough to render § 2255 inadequate and ineffective. See Triestman, 124 F.3d at 378 n. 21. The court's reasoning for differentiating between Suspension Clause and the Eighth Amendment and Due Process Clauses stemmed from the question of whether the Suspension Clause protected the writ "as it exists today, rather than the very limited habeas jurisdiction that existed at the time of the ratification of the Constitution." Id. As this Court did in Rodriguez, and as the Supreme Court did in Felker v. Turpin, 518 U.S. 651, ___, 116 S. Ct. 2333, 2340, 135 L. Ed. 2d 827 (1996), there is no need to address this issue because this Court finds no violation in any case. This issue to one side, then, this Court believes that the concerns raised by Triestman under the Fifth and Eighth Amendments are equally applicable to the Suspension Clause.
In fact, it is probable that only the Suspension Clause is implicated (if at all); note that Triestman concerned federal relief for federal prisoners hence, the court was dealing with a situation in which the federal government had imposed punishment on an (allegedly) innocent person and was denying access to its own courts for relief. It is not clear how either the Eighth Amendment or the Fifth Amendment (or, for that matter, the Fourteenth Amendment Due Process Clause) applies when, as here, a state is imposing the punishment but it is access to the federal courts that is sought. For example, assuming (under Triestman's analysis) that the state incarceration of an innocent person raises significant constitutional concerns, those would not be issues under the Eighth Amendment itself but only as it is incorporated through the Fourteenth Amendment; yet, it is difficult to see how the Fourteenth Amendment, directed as it is against the states, can serve to restrict Congress's ability to limit access to federal habeas. It is only the Suspension Clause that could possibly cover such a situation, and it is for that reason that this Court considers the actual innocence issue raised by the instant petition to be a concern of the Suspension Clause and not, as in Triestman, the Fifth and Eighth Amendments. See Martinez-Villareal v. Stewart, 118 F.3d 628, 632 (9th Cir.), cert. granted, ___ U.S. ___, 118 S. Ct. 294, 139 L. Ed. 2d 226 (1997).
[1] Although petitioner's request for a COA does not expressly mention a Suspension Clause claim, he does ask for a COA "to allow the Second Circuit to decide this constitutional issue concerning the retroactive effect" of the statute of limitations. Consistent with this Court's obligation to read pro se petitions liberally, the Court construes the request as one for a COA on any constitutional issue raised by the application of the statute of limitations to bar his petition. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1849771/ | 103 So. 2d 91 (1958)
235 La. 206
SUCCESSION of Edward F. TURNER.
No. 43545.
Supreme Court of Louisiana.
May 26, 1958.
*92 Titche & McDermott, Bernard T. Titche, Jr., Stanley McDermott, Jr., New Orleans, for appellant.
J. L. Warren Woodville, New Orleans, for defendant-appellee.
TATE, Justice ad hoc.
Plaintiff appeals from the dismissal, after trial, of her suit to be recognized as the surviving half-sister of the deceased Edward Turner and thus entitled to share in his estate, LSA-C.C. Art. 911.
Made defendant was Alice Smith Turner, decedent's mother,[1] who had been recognized by a 1934 judgment of the Civil District Court as his sole heir soon after decedent died intestate, unmarried, and without descendant, upon said mother's allegations that she was the sole surviving parent and that there were no collateral heirs, LSA-C.C. Arts. 888, 903, 907, cf., LSA-C.C. Art. 922. Decedent's estate consisted of certain immovable property he had purchased during his lifetime.
Plaintiff's suit is founded upon her allegation that Charles Turner was the father both of herself and of decedent by different marriages. The aforesaid Charles Turner had died in 1924, thus predeceasing decedent.
The evidence in the record, chiefly the defendant mother's testimony corroborated by 1900 baptismal and hospital records, clearly shows that decedent Edward "Turner" was born to her out of wedlock in 1900 and that his father was Willie Charles. Decedent's mother and Charles Turner were not married until 1918. (Following this marriage, the decedent assumed his stepfather's surname and was known as Edward "Turner".) Thus, the claimant is totally unrelated by blood or by law to the decedent and has no claim whatsoever to his property.
Plaintiff contends, however, that the defendant mother is estopped to deny that Charles Turner was decedent's father and is bound by her judicial confession to this *93 effect[2] in her petition for possession of decedent's estate in 1934 and (at least implied) in a 1947 deposition taken in an abandoned earlier 1946 suit by plaintiff based upon the same cause of action as the present. Plaintiff cites in support of this contention LSA-C.C. Art. 2291, which pertinently provides:
"The judicial confession is the declaration which the party, or his special attorney in fact, makes in a judicial proceeding.
"It amounts to full proof against him who has made it. * * *"
This contention is without merit. An earlier judicial admission does not in a subsequent proceeding bind the person making same, nor does it estop him from denying the correctness thereof, unless the other party claiming the benefit of a judicial estoppel resulting therefrom has been deceived by such judicial confession and has relied or acted thereon to his prejudice. Sun Oil Co. v. Smith, 216 La. 27, 43 So. 2d 148, 149; Slaton v. King, 214 La. 89, 36 So. 2d 648; Janney v. Calmes, 212 La. 756, 33 So. 2d 510; Succession of Land, 212 La. 103, 31 So. 2d 609; Robinson v. Hunt, 211 La. 1019, 31 So. 2d 197; Sanderson v. Frost, 198 La. 295, 3 So. 2d 626. No detrimental reliance or change of position by plaintiff is shown to have resulted from the defendant mother's incorrect judicial allegations in question.
Further, it is of some interest to note that, even accepting plaintiff's factual theory that she was a legitimate daughter of Charles Turner who was also the father of decedent, the evidence tendered by her would show that Charles Turner and her mother were married prior to 1896 and that this marriage was dissolved by her mother's death in 1908. Since decedent would thus have been illegitimate at his birth in 1900, and furthermore an adulterous bastard, LSA-C.C. Art. 182, who could not prior to 1948 be legitimated by the subsequent marriage of his parents, LSA-C.C. Art. 198, plaintiff as his legitimate half-sister could not inherit from him, Succession of Wesley, 224 La. 182, 69 So. 2d 8, and thus would be without interest to dispute the surviving mother's claim to his estate.
For the reasons assigned, the judgment of the District Court is affirmed. All costs to be paid by plaintiff.
Affirmed.
HAWTHORNE, J., takes no part.
NOTES
[1] Subsequent to lodgment of the appeal with this court, Alice Smith Turner, the decedent's mother and the defendant-appellee, died and her testamentary heir was substituted as party appellee in her place.
[2] Decedent's mother testified that the reason therefor was: "I was ashamed to let anybody know that I had birthed a baby out of wedlock." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1886327/ | 195 B.R. 378 (1996)
In the Matter of Thomas A. BEISEL, Debtor.
Bankruptcy No. 94-12902.
United States Bankruptcy Court, S.D. Ohio, Western Division.
February 13, 1996.
*379 Alan J. Statman and Thomas J. Utaski, Cincinnati, Ohio, for Debtor.
Terry Serena, Cincinnati, Ohio, and Beth A. Westerman, Tax Division, Department of Justice, Washington, DC, for Internal Revenue Service.
ORDER GRANTING THE INTERNAL REVENUE SERVICE'S MOTION FOR ABSTENTION
J. VINCENT AUG, Jr., Bankruptcy Judge.
This matter is before the Court on the Internal Revenue Service's (IRS) Motion for Abstention (Doc. 41,42), and the Debtor's Response (Doc. 45).
The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334 and the General Order of Reference entered in this District on July 30, 1984. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B) and 11 U.S.C. § 505.
The issue presented is whether the Court should exercise discretionary abstention "in the interest of justice" 28 U.S.C. § 1334(c)(1) and pursuant to its discretion under 11 U.S.C. § 505 on the underlying issue of whether the Debtor's tax debts were the result of the IRS's alleged improper reclassification of the Debtor's workers from independent contractors to employees.
The Debtor, Thomas A. Beisel, fdba T and S Leasing and Beisel Trucking, operated a trucking business until 1992. In 1990, the Internal Revenue Service audited the Debtor for the tax years 1988 and 1989 and determined that the Debtor's truck drivers were not independent contractors, as the Debtor had them classified, but employees under the common law and, therefore, subject to various employment taxes. The Debtor made adjustments to his operations intending to make his workers independent contractors according to the IRS guidelines. The Debtor was audited in 1992 for tax years 1990 and 1991 and was again found to have wrongly classified his workers as independent contractors and not employees. The Debtor was again assessed employment taxes and penalties.
On August 10, 1994, the Debtor filed a voluntary Chapter 7 petition. The Debtor listed in his petition disputed claims to the IRS in excess of $150,000.00. The Trustee reported that the estate had no assets (Doc. 9). The IRS did not file a proof of claim. The Debtor filed an objection to the IRS claim (Doc. 14) as well as a complaint to determine dischargeability of federal tax debt (Doc. 1, Adv. No. 94-1183). Subsequently, in the main case, the IRS filed its motion for abstention.
The IRS contends that this Court should abstain from adjudicating the Debtor's tax liability since the litigation would serve no separate bankruptcy purpose. The IRS also contends that other factors to be considered by the Court in determining whether to abstain weigh in favor of abstention. The Debtor contends that a proper bankruptcy purpose is that which includes the interest of the Debtor. The Debtor also contends that the factors to be considered by the Court in determining whether to abstain weigh against abstention.
Pursuant to 11 U.S.C. § 505(a)(1):
. . . the court may determine the amount or legality of any tax, any fine or penalty relating to tax, or any addition to tax, whether or not previously assessed, whether or not paid, and whether or not contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction.
Section 505(a)(1) allows but does not require the Bankruptcy Court to determine a debtor's tax liabilities. The purposes of § 505(a)(1) are twofold: First, it "afford[s] a forum for the ready determination of the legality or amount of tax claims, which determination, if left to other proceedings, might delay conclusion of the administration of the bankruptcy estate". In re Diez, 45 B.R. 137, 138 (Bankr.S.D.Fla.1984). This purpose has no application in a no-asset case involving no parties other than the debtor and the IRS. See e.g., id. See also In re Thornton, Case No. 92-40405, 1995 WL 442192 (Bankr. *380 M.D.Ga. June 23, 1995) and cases cited therein. But see In re Anderson, 171 B.R. 549 (Bankr.N.D.Va.1994); In re D'Alessio, 181 B.R. 756 (Bankr.S.D.N.Y.1995). Second, § 505(a)(1) provides an opportunity for the trustee, on behalf of the creditor, to contest the validity and amount of a tax claim when the debtor has been unwilling or unable to do so. In re Millsaps, 133 B.R. 547, 554 (Bankr.M.D.Fla.1991).
Bankruptcy Courts, including this Court, have incorporated these policies into six factors to be considered in deciding whether to abstain from a § 505 tax review:
(1) Complexity of the tax issues to be decided;
(2) Need to administer bankruptcy case in orderly and efficient manner;
(3) Burden on bankruptcy court's docket;
(4) Length of time required for trial and decision;
(5) Asset and liability structure of debtor; and
(6) Prejudice to debtor and potential prejudice to the taxing authority.
Building Technologies Corp. v. City of Hannibal, 167 B.R. 853, 858 (Bankr.S.D.Ohio 1994) (Perlman, J.) (citing In re Galvano, 116 B.R. 367 (Bankr.E.D.N.Y.1990)). See also, In re Huddleston, Case No. 94-50342, 1994 WL 764193 (Bankr.W.D.La. Dec. 2, 1994) at *7 and In re D'Alessio, 181 B.R. at 759-60.
The tax issue in the present case, i.e., whether the Debtor's employees were improperly reclassified by the IRS as employees rather than independent contractors, is fact intensive and would require this Court to apply detailed treasury regulations and interpret revenue rulings. (See Doc. 14). Inconsistent interpretations of these tax laws would be detrimental to both the IRS and future taxpayers.
Also, this is a no-asset case. While this Court is sensitive to the fact that the Debtor wishes to resolve his tax liability as expeditiously as possible, this case does not require a ready determination of that issue for the benefit of the Debtor's creditors. Nor is this a case where the Debtor has failed to contest the IRS actions. See In re Millsaps, 133 B.R. at 554; and In re Diez, 45 B.R. at 138. Because of the complexity of the issue involved and since there is no need for a determination of this tax issue for estate administration purposes, this Court is not the proper forum for this litigation. Building Technologies Corp., 167 B.R. at 858. This does not leave the Debtor without an alternative remedy as he may pay a portion of the tax at issue, file an administrative claim, and, if necessary, a refund suit in District Court. (See Doc. 42, p. 4, fn. 2).
For the reasons set forth above, the motion to abstain (Doc. 41) is GRANTED.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2396268/ | 825 S.W.2d 444 (1992)
Pattilou DAWKINS, Relator,
v.
Fred MEYER, as State Chairman of the Republican Party of Texas, et al., Respondents.
No. D-2032.
Supreme Court of Texas.
February 25, 1992.
Rehearing Overruled April 1, 1992.
*445 John Mozolo, Wolf Puckett, Harlow Sprouse, Amarillo, for relator.
David Crawford, Amarillo, Fred Meyer, John W. Tunnell, John Hannah, Jr., Austin, Tex Lezar, Houston, Ken Anderson, Dallas, Robert D. Daniel, Houston, Bonnie Schomp, Amarillo, Toni Hunter, Gary Bledsoe, Austin, David Swinford, Dumas, Dan Morales, Austin, for respondents.
OPINION
CORNYN, Justice.
In this original proceeding we decide whether Pattilou Dawkins, a member of the Board of the Texas Department of Mental Health and Mental Retardation (hereinafter, MHMR) whose term of office will end after the next regular session of the legislature begins, is eligible to be a candidate for the state House of Representatives. Dawkins has been declared ineligible by Fred Meyer, Chairman of the Republican Party of Texas, under his interpretation of the limitation on eligibility contained in article III, section 19 of the Texas Constitution. Because we agree that Dawkins is currently ineligible to be a candidate for the House of Representatives under the provisions of article III, section 19 of the Texas Constitution, we deny Dawkins' petition for writ of mandamus.
I.
The facts are undisputed. Pattilou Dawkins was appointed to a term on the board of MHMR which ends on January 31, 1993, shortly after the next general session of the legislature is to begin. Board members, under a series of appropriation acts, have been entitled to receive reimbursement for expenses for transportation, for meals and lodging up to $75 per day, as well as compensation of $30 per day for each day of service.[1] On January 3, 1992, *446 Dawkins applied to be a candidate in the Republican primary for State Representative, District 87. Fred Meyer, Chairman of the Republican Party of Texas, initially accepted her application and certified her as a candidate.
In a letter dated January 27, however, Meyer declared Dawkins ineligible for the legislative term she sought under the provisions of article III, section 19 of the Texas Constitution[2] on the grounds that she held, for an overlapping term, a "lucrative office" of the state. Meyer explained that the public record established that Dawkins was appointed to a term on the MHMR board which was to end on January 31, 1993, after the legislative term was to begin. He further explained that, as a member of the MHMR board, Dawkins was entitled to receive per diem compensation above and beyond reimbursement for actual and necessary expenses.
Dawkins filed this original proceeding, countering that her office cannot be considered lucrative because her expenses incurred in performing her duties on the MHMR board exceed the total of funds she is paid. Thus, she contends, her MHMR board membership cannot be a lucrative office within the meaning of article III, section 19 because she has suffered a net pecuniary loss from her public service on the MHMR board. She further contends that Meyer is relying on a superseded code provision and that, consequently, he wrongly assumed that she received compensation for each day of service in addition to full reimbursement for actual expenses. In her uncontroverted affidavit Dawkins avers that in her four and half years on the board she has incurred unreimbursed expenses of at least $2,000. See Whitehead v. Julian, 476 S.W.2d 844, 845 (Tex.1972) (uncontroverted affidavit must be accepted as true). Second, Dawkins contends that this court should apply a canon of constitutional construction, ejusdem generis, in construing article III, section 19, and should thus conclude that her board membership is not the type of office which makes her ineligible to run for the legislature. We cannot agree with either of Dawkins' assertions.[3]
II.
Dawkins' first argument directly challenges this court's holding in Willis v. Potts that any compensation, no matter how meager, renders an office "lucrative." See 377 S.W.2d 622, 623 (Tex.1964). Doyle Willis was a Fort Worth city councilman who was entitled to receive $10 per diem for attending meetings, up to $520 per year, in addition to all necessary expenses. The Court rejected Willis's argument that $10 per day was not "adequate" compensation and that, therefore, his office was not "lucrative" within the meaning of the constitution. This court held, relying on a case decided by the Wyoming Supreme Court, that the amount of the salary or compensation attached to an office is not material. Id. (citing Baker v. Board of Comm'rs, 9 Wyo. 51, 59 P. 797 (1900), quoting MECHEM, PUBLIC OFFICE § 13). Dawkins offers no compelling reason for overruling Willis.
Had Dawkins received only reimbursement for her expenses and no compensation for her activities with the MHMR, her position would not be considered *447 lucrative. Reimbursement for expenses alone does not render an office "lucrative". Whitehead v. Julian, 476 S.W.2d 844, 845 (Tex.1972). In Whitehead, the Court held that a mayor who received a $50 per month expense allowance, and whose expenses were greater than or equal to the expense allowance did not hold a "lucrative office." The court continued to define a lucrative office as one in which the holder received a salary, fees, or "other compensation." In this case, Dawkins receives more than reimbursement for expensesshe is compensated $30 per day independent of any expenses she incurred. Consequently, we defer to our own precedent and hold that her position on the board of the MHMR is lucrative.
Dawkins' argument that her position cannot be considered lucrative because her expenses exceed her compensation is superficially attractive but, on closer scrutiny, is fraught with insurmountable problems. First, were we to adopt such a test, MHMR board members who do not incur additional expenses for meals or lodging because they live in or near Austin, or because they stay with relatives, would not be eligible to run for the legislature; and those, like Dawkins, who spend in excess of their allotment for expenses and per diem would be eligible. Such disparate treatment of eligibility based on geography and differences in individual spending habits is insupportable.
Second, such a test could render article III, section 19 an irrational standard against which to judge eligibility for legislative office. If the test for whether an office is "lucrative" is that an office holder's compensation exceeds his or her expenses, an office holder's eligibility would be determined based purely on the level of his or her expenses. The resulting lack of a certain, meaningful standard is obvious.
These factors militate heavily against adopting a test for "lucrative" which measures an office holder's compensation against his or her expenses. Instead, we stand by the rule we announced in Willis v. Potts that an office is lucrative if the office holder receives any compensation, no matter how small. Consequently, we hold that Dawkins' position with MHMR is a lucrative position within the meaning of article III, section 19 of the Texas Constitution.
III.
Dawkins next argues that a canon of constitutional and statutory construction, the doctrine of ejusdem generis, requires us to hold that board membership is not the type of a lucrative office covered by the constitutional prohibition at issue. Under the doctrine of ejusdem generis, where specific and particular enumerations of persons or things are followed by general words in a constitutional provision, the general words are not to be construed in their widest meaning or extent, but are treated as limited and applying only to persons or things of the same kind or class as those expressly mentioned. Stanford v. Butler, 142 Tex. 692, 181 S.W.2d 269, 272 (1944); San Antonio Indep. School Dist. v. Dechman, 173 S.W. 525, 526 (Tex.Civ.App.San Antonio 1915, writ ref'd). The purpose of the rule is to prevent general words used loosely with specific terms from including things not intended. Phillips v. Houston Nat'l Bank, 108 F.2d 934, 936 (5th Cir. 1940).
Ultimately, the goal of every rule of construction, including the rule of ejusdem generis, is to determine the intent of those who wrote the words in question. The rule of ejusdem generis can, therefore, only be used as an aid in ascertaining the intended coverage of article III, § 19, not to subvert that intent once ascertained. See United States v. Gilliland, 312 U.S. 86, 93, 61 S. Ct. 518, 522, 85 L. Ed. 598 (1941). No constitutional provision should be construed in such a way as to defeat its very purpose. Cramer v. Sheppard, 140 Tex. 271, 167 S.W.2d 147, 154 (1942). Analyzed with these principles in mind, we hold that article III, section 19 renders Dawkins ineligible to run for the legislature.
A.
The standards by which we interpret our constitution are plain. As we have recently stated:
*448 The Texas Constitution derives its force from the people of Texas. This is the fundamental law under which the people of this state have consented to be governed. In construing [its] language ... we consider `the intent of the people who adopted it.' In determining that intent, `the history of the times out of which it grew and to which it may be rationally supposed to have direct relationship, the evils intended to be remedied and the good to be accomplished, are proper subjects of inquiry.' However, because of the difficulties inherent in determining the intent of voters over a century ago, we rely heavily on the literal text. We seek its meaning with the understanding that the Constitution was ratified to function as an organic document to govern society and institutions as they evolve through time.
Edgewood v. Kirby, 777 S.W.2d 391, 394 (Tex. 1989) (citations omitted); Damon v. Cornett, 781 S.W.2d 597, 599 (Tex.1989). Judges are not free to question the wisdom of our constitution, but must give full effect to its plain language. Cramer v. Sheppard, 167 S.W.2d at 154. On the other hand, we must also be mindful that any constitutional or statutory provision which restricts the right to hold public office should be strictly construed against ineligibility. Willis, 377 S.W.2d at 623; see also Sears v. Bayoud, 786 S.W.2d 248, 251 (Tex. 1990); Brown v. Meyer, 787 S.W.2d 42, 45 (Tex.1990).
B.
Dawkins contends that the framer's intent in adopting article III, section 19 will not be defeated by allowing a person holding a part-time, unprofitable position on an appointed board to run for the legislature.
Article III, section 19's historical antecedents date to a 1701 act of Parliament which rendered a "Person who [had] an Office or Place of Profit under the King or receive[d] a Pention from the Crown" ineligible to serve in the House of Commons. 12 & 13 Gul., ch. II, § 3. A 1707 statute stated that if a member of the House of Commons accepted an "Office of Profit" from the Crown, that member's election to the House would be void "as if such Person so accepting was naturally dead." 6 Anne, ch. 41, § 25. The policy underlying such prohibitions, including article III, section 19, is the doctrine of separation of powers which was considered a means of mitigating undue influence by the executive upon the legislative branch. 1 GEORGE D. BRADEN, THE CONSTITUTION OF THE STATE OF TEXAS: AN ANNOTATED AND COMPARATIVE ANALYSIS 134 (1977).
The framers' intent behind article III, section 19,to bolster the separation of powers doctrineas well as this court's decisions interpreting that section, control our decision in this case. Whether we agree or disagree with the wisdom of the constitutional method chosen to accomplish the framers' intent is beside the point. We are not free, by implementing a rule of construction, to "stretch" the meaning of unambiguous words to achieve a result we might consider to be more desirable, or even better public policy. See Anguiano v. Jim Walter Homes, Inc., 561 S.W.2d 249, 253 (Tex.Civ.App.San Antonio 1978, writ ref'd n.r.e.). This is precisely what acceptance of Dawkins' arguments would require us to do. Because Dawkins' proffered construction of article III, section 19 would violate the intent of the framers of our constitution, we decline to adopt it.
C.
Dawkins' reliance on the doctrine of ejusdem generis is similarly misplaced. First, Dawkins' argument ignores the fact that we have held other offices, dissimilar to those specifically mentioned in article III, section 19, to be covered by the terms of the provision. See, e.g., Willis v. Potts, 377 S.W.2d 622, 623 (Tex.1964) (city councilman); Lee v. Daniels, 377 S.W.2d 618 (Tex. 1964) (county commissioner); Kirk v. Gordon, 376 S.W.2d 560 (Tex.1964) (district attorney); Burroughs v. Lyles, 142 Tex. 704, 181 S.W.2d 570 (1944) (county superintendent of schools); see also Smith v. Dean, 554 F. Supp. 29 (N.D.Tex.1982) (mayor of Mesquite disqualified under this article). Thus, having held that article III, *449 section 19 applies to a city councilman, a county commissioner, a district attorney, a county superintendent of schools, and a mayor, application of the rule of ejusdem generis cannot compel a different result for an MHMR board member.
D.
Second, Dawkins herself concedes that the purpose of section 19 is to mitigate the executive's influence on the legislature. The doctrine would therefore require disqualification of all officeholders who were members of the executive branch in a way akin to the offices enumerated in section 19, for example, a "clerk of any court of record." It logically follows, then, that a member of the MHMR board, which is an agency within the executive department holding significant policy-making powers[4], is even closer to the intended purpose of the prohibition than a clerk of court would be. The purposes of separation of powers are better served by preventing a policymaking member of the executive department from running for the legislature than a clerk of the court. Under this logic, ejusdem generis actually argues against Dawkins' position.
E.
Although Dawkins correctly contends that none of our decisions have interpreted the phrase "lucrative office" in light of the ejusdem generis doctrine, Illinois Supreme Court has done so. People v. Capuzi, 20 Ill. 2d 486, 170 N.E.2d 625 (1960). The Capuzi court interpreted article IV, section 3[5] of the Illinois constitution which at that time provided in part:
No judge or clerk of any court, secretary of state, attorney general, state's attorney, recorder, sheriff, or collector of public revenue, member of either house of congress, or person holding any lucrative office under the United States or this state, or any foreign government, shall have a seat in the general assembly: provided, that appointments in the militia and the offices of notary public and justice of the peace, shall not be considered lucrative.
The Illinois court concluded in Capuzi that the offices of deputy coroner and deputy clerk, whose duties were largely ministerial and could be discharged at the caprice of their superiors, were not lucrative offices within the meaning of the Illinois constitution. The court reasoned that the preface of specific offices must have been intended to modify the phrase "any lucrative office." The "enumerated offices stand as the guide or standard for determining the kind of office intended to be included within the means [meaning] of section 3 of article IV of the constitution." 170 N.E.2d at 629-30.[6] The court reasoned that deputy coroners *450 and deputy clerks were not part of the same class as the enumerated officeholders because the deputies did not exercise governmental sovereignty in the performance of their duties and could be dismissed at the will of the office holdersthe clerk and coroner.
Dawkins argues that the office of deputy clerk and deputy coroner are far more similar to the enumerated offices in the Illinois's constitution than is the office of MHMR board member to the enumerated offices in the Texas Constitution. Dawkins contends that the general words "any person holding a lucrative office under the United States, or this State ..." is restricted by the designation of particular offices, i.e., Judges, the Secretary of State, the Attorney General, Clerks of any court of record. She argues that the listed positions are strikingly different from the position of a member of the MHMR board because they are full time jobs paying substantial salaries. They are not, she argues, of the same class as the $30 per diem compensation paid to part-time board members. In essence, Dawkins would have us distinguish our prior interpretations of the scope of article III, section 19 by effectively interlineating a "full-time" employment distinction within the section's prohibition.
However, we had this opportunity in Willis and rejected it, holding that section 19's prohibition applies to a part-time councilman.[7] Dawkins fails to inform us of any authority which would permit us to reverse field on the distinction Dawkins urges.
IV.
The language of the constitution and our previous interpretations of article III, section 19 constrain us to hold that Dawkins is not currently eligible to be a candidate for the House of Representatives. Were we to decide otherwise under the banner of ejusdem generis and through overly technical and strained distinctions with our prior holdings, the application of article III, section 19 would be rendered uncertain and unpredictable. We will not countenance a construction of our constitution that would so plainly generate uncertainty concerning the eligibility of legislative candidates. To hold otherwise would unnecessarily complicate the already difficult duties performed by election officials and unwittingly encourage additional litigation on this issue. We acknowledge the harshness of the result of the decision we make today. However, the power to change such a result by amending our constitution lies not in our hands, but in the hands of the sovereign people of the State of Texas.[8]
* * * * * *
*451 For the foregoing reasons, Dawkins' petition for writ of mandamus is denied.
Dissenting opinion by GONZALEZ, J., joined by HIGHTOWER, J.
Dissenting opinion by GAMMAGE, J., joined by MAUZY, J.
GONZALEZ, Justice, dissenting.
Pattilou Dawkins, a member of the MHMR board, is free to be a candidate for President of the United States, United States Senator, member of Congress, Governor, Lieutenant Governor, Railroad Commissioner, county judge, county commissioner, mayor, and numerous other offices. Today, however, the Court declares that Ms. Dawkins is not free to run for the Texas Legislature.
The Court states that it is compelled and duty bound to follow what seems to me to be a ridiculous judicial gloss contained in this court's past interpretations of an ambiguous provision of the Texas Constitution. I would overrule or modify the decisions relied on by the Court and hold that an MHMR board member does not hold a "lucrative office" as defined by article III, section 19 of the Texas Constitution.[1] Furthermore, the fact that section 19's prohibition affects certain offices and not others raises some serious equal protection and First Amendment questions regarding its constitutionality. The Court did not address these constitutional questions, because Ms. Dawkins did not raise them. However, in an appropriate case, we will have to address them.
I believe that the Court has erred by relying on improvident precedent to give article III, section 19 an overbroad interpretation fraught with constitutional problems.
Article III, section 19 provides that: No judge of any court, Secretary of State, Attorney General, clerk of any court of record, or any person holding a lucrative office under the United States, or this State, or any foreign government shall during the term for which he is elected or appointed, be eligible to the Legislature,
(emphasis added).
In the over 100 years that this provision has been in existence, the Texas Legislature has not adopted a comparable provision to bar candidacy for any other office.
The fundamental issues in this case depend on how we interpret the scope of the prohibition under article III, section 19. The broadest interpretation of this provision would disqualify someone from running for the legislature if he or she holds a "lucrative" office which, according to the Court, is one for which the legislature denominates payment as "compensation" rather than "reimbursement." This simplistic analysis of the constitutional provision is the basis for today's inequitable holding. Thus, the legislature's choice of words, not the amount of money involved, determines whether a job is "lucrative." If the legislature designated $30,000 remuneration for an office as reimbursement, then that job would not be "lucrative," and the officeholder could run for the legislature. But if the legislature designated $1 as payment for a particular position, and called it compensation, then that office is "lucrative" and prohibits candidacy. I object to hinging the right of public spirited officeholders like Ms. Dawkins to run for the legislature on the legislatively-selected label placed on an office's remuneration.[2]
*452 If possible, we should adopt an interpretation of section 19 that preserves the principle, recently reiterated by this court, "that constitutional provisions which restrict the right to hold public office should be strictly construed against ineligibility." Brown v. Meyer, 787 S.W.2d 42, 45 (Tex. 1990); see also Sears v. Bayoud, 786 S.W.2d 248, 251 (Tex.1990). We can construe section 19 to preserve Brown v. Meyer's directive by applying section 19 only to those offices which are the holder's principal, if not exclusive, occupation. Compensation is relevant in that these offices provide a livelihood so that the officeholder can dedicate his or her efforts exclusively to the work required. The MHMR board of which Ms. Dawkins is a member meets about four times a year, and the $30 per diem she receives does little to change the essentially charitable nature of her service. Under this preferable interpretation of section 19, Ms. Dawkins would not be prohibited from running. We should permit neither sketchy history nor poor precedent to steamroll Ms. Dawkins' rights; but the Court does just that.
The Court states that the amendment's history supports the Court's result, asserting that section 19 is descended from a 1707 English statute that prohibited employees of the Crown from serving in the House of Commons. Majority opinion at 448. That statute, however, essentially proscribed dual officeholding; it said nothing of the rights of a Crown employee to run for the House of Commons. The policy advanced by this historical reference seeks, as the Court notes, to preserve the separation of powers by preventing dual officeholding. This policy argument neither fits this case nor supports the Court's decision to deny Ms. Dawkins' candidacy. For Ms. Dawkins is not seeking to hold two offices at the same time. Reading the Texas Constitution as a whole, which we must do, reveals that article III, section 19 is not principally a prohibition against dual officeholding, because that problem is addressed by other articles of our constitution. Tex. Const, art. XVI, §§ 12, 33, 40. These other constitutional provisions would compel Ms. Dawkins, upon election to the legislature, to resign her position with MHMR. These provisions also indicate that section 19 must stand for something other than separation of powers.
The United States Supreme Court analyzed article III, section 19 in Clements v. Fashing, 457 U.S. 957, 102 S. Ct. 2836, 73 L. Ed. 2d 508 (1982). Clements involved several justices of the peace running for the legislature. They challenged section 19 on First Amendment and equal protection grounds, and a plurality of the court held that section 19 did not violate the United States Constitution. 457 U.S. at 971, 102 S.Ct. at 2848. The court concluded that a rational predicate for the "temporary" denial of candidacy existed due to: 1) Texas' interest in maintaining the integrity of the judiciary; 2) the likelihood that the demands of a political campaign would tempt a judge to devote less than was required by his or her current office; and 3) the need to discourage a judge from leaving office before the end of the term. 457 U.S. at 968, 102 S.Ct. at 2846. These three purposes are ill-served (or irrationally served) by the group of officeholders covered by section 19. Only those officeholders whose terms happen to overlap with the legislative term are prohibited from running for the legislature. Those whose terms do not overlap with that of the legislature are left free to campaign for the legislature while remaining in office. See Chapa v. Whittle, 536 S.W.2d 681 (Tex.Civ.App.Corpus Christi 1976, no writ).
Additionally, if these are legitimate state interests, then why do they only apply to officeholders who run for the legislature and not to those running for other offices? And why do these interests only limit the rights of an officeholder whose term overlaps the legislative term? And what of a federal judge who is appointed to a lifetime position; is he or she forever precluded from running for the state legislature, despite resignation from the judicial post. What if an officeholder like Ms. Dawkins waives compensation? In my opinion, it is very questionable whether the classifications embodied in section 19 have any *453 meaningful relationship to the state interests expressed in Clements.
The plurality in Clements carefully limited its holding to the case before it. In short, it found a sufficient state interest in maintaining the integrity of the judiciary to satisfy an equal protection analysis; but the plurality pointedly observed that such an interest would not necessarily be as compelling when applied to other state officeholders. Clements, 457 U.S. at 966 n. 3, 968 n. 5, 102 S. Ct. at 2845 n. 3, 2846 n. 5.
The dissent in Clements was not as charitable. In particular, it questioned whether our court's decision in Lee v. Daniels, 377 S.W.2d 618 (Tex.1964), created equal protection and First Amendment problems and whether the state interests advanced by the amendment as interpreted would pass even minimal scrutiny. 457 U.S. at 980 n. 4, 102 S. Ct. at 2852 n. 4 (Brennan, J., dissenting). Justice Brennan commented that section 19, as interpreted in our prior opinions, served no purpose but to function as a legislative incumbent's protection "act." Clements, 457 U.S. at 979, 102 S. Ct. at 2852. He concluded that "[t]he only conceivable state interest in barring these candidacies would be the impermissible one of protecting Texas legislative seats against outside competition." Id. I agree; and because such a policy cannot have been the intent of the framers and ratifiers of our constitution, we must reexamine whether this provision as interpreted by existing precedent frustrates rather than effectuates the framers' conceivable intent.[3]
In 1964, this court rendered two decisions within a week of one another whose misguided interpretations of section 19 unfortunately shape today's holding. See Willis v. Potts, 377 S.W.2d 622 (Tex 1964); Lee v. Daniels, 377 S.W.2d 618 (Tex.1964). First, the court held in Lee that even after an officeholder resigns from office, the candidate is not eligible to run for the legislature if the term of the original office overlaps with the legislative term. 377 S.W.2d at 619-20. This ludicrous decision had an unfortunate impact on this case. Ms. Dawkins stated at oral argument that, but for our holding in Lee, she would have resigned from the MHMR board before announcing her candidacy for the legislature. Thus, I would remove this unwise impediment to elective office and overrule Lee and its progeny.
Second, this court held in Willis v. Potts that a "lucrative" office is one in which an officeholder receives any "compensation," no matter how insignificant. 377 S.W.2d at 627. In Willis, a city councilman who received ten dollars per day compensation, not to exceed $520 in total, was determined to be ineligible to run for the Texas Senate. 377 S.W.2d at 627. The councilman argued that the per diem was not adequate to compensate him for the time he spent discharging his duties, and therefore he did not hold a "lucrative office" within the meaning of the constitution. Willis, 377 S.W.2d at 623. The court disagreed and determined that he was ineligible under the amendment without considering the underlying purpose of the amendment and the nature of the office involved. The court cited with approval Baker v. Board of Comm'rs, a 1900 Wyoming Supreme Court case. 9 Wyo. 51, 59 P. 797 (1900). Perhaps ten dollars a day in 1900 was "lucrative," but it is ridiculous to assert such by today's standards. In my opinion, Willis and its predecessors and progeny should be overruled. See, e.g., Kirk v. Gordon, 376 S.W.2d 560 (Tex.1964); Burroughs v. Lyles, 142 Tex. 704, 181 S.W.2d 570 (1944).
The Court has concluded that precedent compels today's decision. While the doctrine *454 of stare decisis shapes this court's decision-making, it does not render our rules immutable.[4] To the contrary, there are rare occasions when "[tjhere are justifiable escapes and liberations from the rigidities and inflexibilities of stare decisis." United States v. Cocke, 399 F.2d 433, 448 (5th Cir.1968). In the words of Justice Cardozo:
Through one agency or another, either by statute or by decision, rules, however well established, must be revised when they are found after fair trial to be inconsistent in their workings with an attainment of the ends which [the] law is meant to serve. The revision is a delicate task, not to be undertaken by gross or adventurous hands, lest certainty and order be unduly sacrificed, yet a task also not to be shirked through timidity or sloth.
Cocke, 399 F.2d at 448 (quoting Cardozo, The Growth of the Law 120 (1924)).
In my opinion, this case favors a rare departure from the doctrine of stare decisis. Reflexive reliance upon the doctrine forces the Court to reach an unjust and irrational result, and to grant a judgment which it is loath to render. If the Court is not willing to reconsider whether we wrongly decided our earlier decisions on this question, we will forever be burdened with these misguided holdings. In most situations, if the legislature disagrees with the law we announce, it may simply pass a new statute. If necessary, the legislature can submit a proposal for a constitutional amendment to the people. As previously noted, there is in this case, understandably no motivation for incumbents in the legislature to muster the necessary two-thirds vote to allow the people of Texas to vote on whether to annul section 19. If stare decisis is viewed as precluding further review, unless the United States Supreme Court decides that the provision as applied violates the United States Constitution, we are forever condemned to repeat our original mistake.[5]
Though I think the Court has reached the wrong result, I concur with one point in its opinion. Ms. Dawkins asserts that her expenses exceeded any remuneration and therefore the position is not "lucrative." I agree that this "net profit" test would prove to be an unworkable standard. The amount of "net profit," or even the total amount of compensation, cannot be a litmus test to determine whether a particular position is a lucrative office; but it may be indicative of whether the office is one intended to be within the prohibition of article III, section 19. For example, a Railroad Commissioner with an appropriated salary of over $74,000, and whose duties contemplate sustained day-to-day effort, clearly is precluded from running for the legislature while still in office. At the other extreme, Ms. Dawkins, who receives $30 per day for a few days' service per year, would not come within the prohibition.
Finally, our goal is to give effect to the original intent of article III, section 19, if it can be discerned. We must perhaps rhetorically ask whether the people of Texas truly intended to delay the entry into the legislature of public spirited persons who serve on State boards for only token compensation. Permitting Ms. Dawkins to remain on the ballot would not produce any injurious or unjust consequences. Since we can give constitutional effect to section 19 without violating our stated presumption against finding a potential candidate ineligible to run, we should allow Ms. Dawkins' candidacy and liberate our elective process from the unwise precedents this court has previously and imprudently imposed.
*455 I am convinced that today's decision sadly will deprive us of the service of persons who have a demonstrable public spirit without appreciably advancing any significant state interest. Although I am aware that we should not abandon precedent lightly, I am also convinced that we need not endure bad law in order to pristinely preserve the doctrine of stare decisis. Since, we can more precisely tailor our interpretation of article III, section 19 to advance legitimate state concerns, thereby giving greater effect to the constitutional rights of candidates and voters, we should do so.
For the foregoing reasons, I would grant Ms. Dawkins' petition for writ of mandamus.
HIGHTOWER, J., joins this opinion.
GAMMAGE, Justice, dissenting.
I dissent.
Restrictions on the right to hold public office should be "strictly construed against ineligibility." Brown v. Meyer, 787 S.W.2d 42, 45 (Tex.1990) (emphasis added) (citations omitted). Today, the majority pays lip service to this principle by reciting it and then promptly abandoning it to zealously pursue a contrary course.
The majority, likewise, articulates the principle of ejusdem generis (when specific and particular enumerations of persons or things in a statutory or constitutional provision are followed by general words, the general words are to have limited application extending only to persons or things of the same kind or class as those particularly described, Stanford v. Butler, 142 Tex. 692, 698, 181 S.W.2d 269, 272 (1944)), then just as promptly abandons this doctrine. In a cloud of obfuscation which ignores the more rational and recent precedent of Whitehead v. Julian, 476 S.W.2d 844 (Tex. 1972), the majority goes beyond mere slavish obedience to bad precedents in which ejusdem generis was neither raised nor considered, and, in an act of exaggerated credulity, reinforces the historical absurdity of this court's earlier mistakes in Willis v. Potts, 377 S.W.2d 622, 623 (Tex.1964); Lee v. Daniels, 377 S.W.2d 618 (Tex.1964); Kirk v. Gordon, 376 S.W.2d 560 (Tex.1964); and Burroughs v. Lyles, 142 Tex. 704, 181 S.W.2d 570 (1944). As wrongly decided as these cases are, they are distinguishable from the case before us because none of them involved citizen-volunteers such as Pattilou Dawkins; all involved officeholders exercising daily executive or administrative authority in full-time positions.
The majority continues its contortion of legal principles by misconstruing and misapplying caselaw from a sister state interpreting similar constitutional language.[1] In People v. Capuzi, 20 Ill. 2d 486, 170 N.E.2d 625 (1960), the Illinois Supreme Court applied ejusdem generis to its thenexisting constitutional provision and reasoned that, among others, village president Elmer U. Conti (whose "lucrative" office provided for both compensation and retirement benefits) was not included within the constitutional prohibition because his office did not involve actual day-to-day control, which was vested in the hands of a municipal manager. Id. 170 N.E.2d at 630.
Pattilou Dawkins performs citizen service on the board of the Texas Department of Mental Health and Mental Retardation (MHMR). The board is required to meet *456 four times a year and she receives a nominal per diem and partial reimbursement for the expense of performing this service. As in Capuzi, her office does not involve actual day-to-day management and control. Such authority is vested in a full-time commissioner.[2] Her office is neither "lucrative" under any contemporary definition, nor is it of the kind or class (judges, the Secretary of State, the Attorney General, and court clerks) particularly described in art. Ill, § 19. See Stanford, 142 Tex. at 698, 181 S.W.2d at 272.
In its decision today, the majority ignores the very standards of review and principles of construction it cites, and instead strives mightily and achieves a ludicrous consistency with an absurd past.[3] If this court's precedents in Willis, Lee, Kirk, and Burroughs cannot be distinguished from this case, they should be overruled to the extent they conflict.
Pattilou Dawkins is not ineligible to hold legislative office[4] and her certification as a candidate in the Republican primary election should be restored.
MAUZY, J., joins this dissent.
NOTES
[1] See, e.g., Act of August 30, 1991, 72d Leg., C.S., ch. 19, art. V, § 4, 1991 Tex.Gen.Laws 365, 1004 (1991-1993) approproiations act).
[2] Article III, section 19 provides:
No judge of any court, Secretary of State, Attorney General, clerk of any court of record, or any person holding a lucrative office under the United States, or this State, or any foreign government shall during the term to which he is elected or appointed, be eligible to the Legislature.
This provision has been characterized by the United States Supreme Court as imposing a "waiting period" for state officials before they become eligible for the legislature. Clements v. Fashing, 457 U.S. 957, 967, 102 S. Ct. 2836, 2846, 73 L. Ed. 2d 508 (1982). That is, they must wait until their term of office expires before they are eligible for service in the legislature.
[3] Justice GONZALEZ's dissent speculates how we might have answered contentions that Dawkins has not made arising under the United States Constitution; but these are only strawmen which he raises and then proceeds to knock down. Similarly, Justice GONZALEZ'S arguments as to how we would have decided this case had Dawkins resigned her position on the MHMR board are only conjecture because that question is not before us.
[4] See TEXAS HEALTH & SAFETY CODE § 532.015. The MHMR board is responsible for, among other things, developing rules and general policies to guide MHMR. Id MHMR is a immense state agency with an annual budget of more than one billion dollars. Act of August 30, 1991, 72d Leg., C.S., ch. 19, art. II, § 1, 1991 Tex.Gen.Laws 365, 742 (1991-1993 appropriations act).
[5] The provision of the Illinois constitution interpreted by the Capuzi court has been amended and now reads, in pertinent part:
No member of the General Assembly shall receive compensation as a public officer or employee from any other governmental entity for time during which he is in attendance as a member of the General Assembly.
No member of the General Assembly during the term for which he was elected or appointed shall be appointed to a public office which shall have been created or the compensation for which shall have been increased by the General Assembly during that term. ILL. CONST, art. IV, § 2. While the "lucrative office" language has been deleted in the amended version of the provision, the analysis performed by the Capuzi court demonstrates the weakness of Dawkins' argument based on the rule of ejusdem generis.
[6] The Capuzi court also rebuffed a separate argument under its general separation of powers provision, art. II, since the defendants were not exercising governmental sovereignty in the performance of their duties under their local positions, and since article IV, § 3 specifically dealt with the qualifications of members of the General Assembly. The suit started out as a declaratory judgment action filed concerning various members of the Assembly, and was converted to a quo warranto action. The court also emphasized that the Constitution obviously contemplated outside employment, since Assembly members received at that time only $5 per day, and that these positions were only minor ministerial appointments, held at the will and pleasure of the appointing authoerites. And while one was civil service all suich employees were not officers.
[7] Justice GONZALEZ's dissent advances a different standardone that depends on whether the office holder's position is "the holder's principal, if not exclusive occupation." At 452 (Gonzalez, J., dissenting). However, this standard is troublesome because it would require the collection of evidence and perhaps the kind of fact finding that courts normally perform.
However, it is not the courtsat least in the first instancewho would be drawing the fine distinctions Justice GONZALEZ would have them draw. Instead, election officials, who are restricted to considering factors that appear as a matter of public record, Garcia v. Carpenter, 525 S.W.2d 160, 161 (Tex.1975); Weatherly v. Fulgham, 153 Tex. 481, 271 S.W.2d 938, 941 (1954), would be forced to make such decisions. And, if a dispute about the facts arose, election officials would be unable to determine a candidate's eligibility because they have no power or authority to determine disputed questions of fact relating to a candidate's eligibility for office. Canady v. Democratic Executive Comm., 381 S.W.2d 321, 323 (Tex.1964); Baker v. Porter, 160 Tex. 488, 333 S.W.2d 594, 595 (1960).
[8] Contrary to Justice GONZALEZ's argument, a constitutional amendment, initiated by the legislature, is not the sole means of restoring the eligibility of Dawkins and other similarly-situated appointees to state boards and commissions. If the next appropriation act passed by the legislature provides that the monies paid such persons will consist of only legitimate expense reimbursements, no bar to legislative candidacy will exist. Here, Dawkins receives both such an expense reimbursement and an additional per diem compensation fixed by statute.
Furthermore, we cannot agree with the cynical argument that the legislature, as the elected representatives of the people, will steadfastly resist the entreaties of the electorate should Texans deem a constitutional amendment desirable. We point out the obvious: each legislator's continuation in office depends on his or her responsiveness to the collective will of his or her constituents.
[1] The Court laments the harshness of its holding by stating that "the power to change such a result by amending our constitution lies not in our hands, but in the hands of the sovereign people of the State of Texas." Majority opinion at 450. However, in all likelihood, the sovereign people of the State of Texas will never have the opportunity to repeal this provision. It takes the affirmative vote of two-thirds of both houses for a proposed amendment to be submitted to the people for a vote; and since there is no incentive for incumbents to increase the pool of their possible competition, the reality is that such a bill would die in committee. See Tex. Const, art. XVII, § 1.
[2] Under today's holding, if Ms. Dawkins, rather than being on the board of MHMR, was Assistant Chief of Protocol for the government of Kuwait for $1.00 per year or the Vice-Consul of Liechtenstein for the same remuneration, she would be ineligible to run for the legislature.
[3] If incumbent protection was the intent of this provision, it is illegitimate and cannot withstand constitutional scrutiny. The Court states that "[t]he intent behind article III, section 19 [is] to bolster the separation of powers...." Majority opinion at 448. The Court cites no primary authority for this statement. In reality, the true purpose of article III, section 19 is unclear, and the Court is forced to admit as much upon concluding that "Ms. Dawkins' interpretation of article III, section 19 runs counter to what we perceive to be the intent of the framers...." Majority opinion at 449. Because the Court cannot cite any historical analysis of the debates or other evidence of the framers' intent, the Court is forced to guess what that intent might have been.
[4] As the court noted in Gutierrez v. Collins, 583 S.W.2d 312, 317 (Tex.1979):
[T]he doctrine of stare decisis does not stand as an insurmountable bar to overruling precedent. Stare decisis prevents change for the sake of change; it does not prevent any change at all. It creates a strong presumption in favor of the established law; it does not render that law immutable. Indeed, the genius of the common law rests in its ability to change, to recognize when a timeworn rule no longer serves the needs of society, and to modify the rule accordingly.
[5] When the trail down the mountain comes to a cliff, it is time to search for a new trail, and we ought to do this ourselves without having it done for us by the United States Supreme Court.
[1] Article IV, section 3 of the Illinois Constitution of 1870 provided in relevant part:
No judge or clerk of any court, secretary of state, attorney general, state's attorney, recorder, sheriff, or collector of public revenue, member of either house of congress, or person holding any lucrative office under the United States or this state ... shall have a seat in the general assembly....
ILL. CONST, art. IV, § 3 (1870). After its state constitution was declared unconstitutional under the one-man, one-vote principles of the United States Constitution, Illinois through constitutional convention in 1970 eliminated this provision from its constitution entirely. The limitations substituted in the successor provision have nothing to do with this case, and would not disqualify Ms. Dawkins. See Majority Opinion, at 449 n. 5. Cf. TEX. CONST, art. Ill, § 19:
No judge of any court, Secretary of State, Attorney General, clerk of any court of record, or any person holding a lucrative office under the United States, or this State, or any foreign government shall during the term for which he is elected or appointed, be eligible to the Legislature.
TEX. CONST, art. Ill, § 19.
[2] See TEX.HEALTH & SAFETY CODE ANN. § 532.011 (Vernon 1992) (providing for commissioner). Ironically, the commissioner, as an at-will state employee, is eligible to run for the legislature under art. Ill, § 19, even though his or her office is executive/administrative, full-time, and lucrative.
[3] "A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines." Ralph Waldo Emerson, Essays: First Series (1841).
[4] Upon taking office as a legislator, Dawkins' MHMR board membership would be automatically vacated under Tex. Const art. XVI, § 40. See Pruitt v. Glen Rose Indep. Sch. Dist. No. 1, 126 Tex. 45, 49, 84 S.W.2d 1004, 1006 (1935). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2277708/ | 6 S.W.3d 742 (1999)
Ambrose ABOUD, M.D. and Columbia/HCA Healthcare Corporation, Appellants,
v.
A. Lee SCHLICHTEMEIER, M.D., Appellee.
No. 13-97-4412-CV.
Court of Appeals of Texas, Corpus Christi.
November 18, 1999.
*744 Jeffrey Blake Thompson, Alto, NM, Harry M. Reasoner, Marie R. Yeates, Kathleen Bone Spangler, Stephanie K. Crain, Vinson & Elkins, Houston, Lawrence J. Fossi, Houston, David Carroll Mattka, Dennis L. Roossien, Jr., Munsch, Hardt, Kopf, Harr & Dinan, Dallas, for Appellants.
Rowe Jack Ayres, Dallas, Thomas A. Albright, Scott, Douglass & Luton, Austin, Doug Sigel, Cynthia Saiter Connolly, Scott, Douglass & McConnico, Austin, for Appellee.
Before Justices DORSEY, HINOJOSA, and KENNEDY.[1]
OPINION ON MOTION FOR REHEARING
Opinion by Justice KENNEDY.
We withdraw the opinion previously entered and substitute this opinion in its place.
The parties to this appeal are Ambrose Aboud (Aboud), a medical doctor, and Columbia/HCA Healthcare Corporation (Columbia or EPHS) who were sued by appellee, Lee Schlichtemeier, also a medical doctor. The case arose out of an attempt by the parties to form an association for the purpose of conducting a cancer treatment center in El Paso. The negotiations between the two doctors and a third doctor (who later withdrew) began in 1988 and, in 1989, resulted in the formation of a partnership called Oregon Rim Partners (ORP or the partnership). Appellant Columbia owned hospitals in El Paso which it operated under the name of "El Paso Healthcare Systems" (EPHS). EPHS became involved in the negotiations. Detailed negotiations were had between the parties hereto and other entities in an effort to achieve the desired result, however, by 1992 the negotiations fell through and ORP made a settlement with EPHS.
Schlichtemeier alleges that the settlement resulted in a loss to the partnership and that the settlement was procured by fraud and breach of fiduciary duty by Aboud. Specifically, he alleges that he discovered the existence of letters and other communications which passed between Aboud and EPHS while negotiations were going on between the partnership and EPHS. Schlichtemeier discovered these communications as the result of evidence which came out in another, unrelated lawsuit.
He further alleges, 2) participation in the breach of duty by Columbia, 3) fraud, fraudulent non-disclosure, misrepresentation and deceit by Aboud, 4) tortious interference with contractual interests (ORP) by Columbia, and 5) a conspiracy by Aboud and Columbia to commit the foregoing acts. He sought actual and exemplary damages.
Columbia answered by general denial, special denials challenging Schlichtemeier's capacity to sue and further challenging the existence of a partnership between Schlichtemeier and Aboud at the time of the conduct about which Schlichtemeier complains. The answer also alleges eleven affirmative defenses.
Columbia also filed a cross-claim against Aboud alleging that, in the event plaintiff prevails, the communications plaintiff complains of were had with Aboud based upon Aboud's representations that Aboud's relationship with Schlichtemeier had terminated.
Prior to the aforesaid cross-claim, Aboud had filed a cross-claim against Columbia alleging that a representative of Columbia had told him that the benefits promised Aboud in his private negotiations with Columbia had been simultaneously offered to Schlichtemeier. Aboud further alleged that he first learned that this was not so when discovery was underway in the present suit.
*745 The crux of the primary suit, Schlichtemeier's suit against Columbia and Aboud, is the allegation that he (Schlichtemeier) was still a partner with Aboud in negotiations with Columbia to make some sort of arrangement for a cancer treatment center to include all three parties and that Aboud, by inducement from Columbia, entered into a secret deal with Columbia which eliminated Schlichtemeier. Schlichtemeier first learned of the secret deal after he and Aboud had terminated their partnership.
In the trial before the jury, the trial judge severed the cross-actions of Aboud and Columbia and proceeded upon Schlichtemeier's claims against Aboud and Columbia. He also bifurcated these causes into two phases. Phase one was tried on all issues except the amount of punitive damages, which issue was tried in phase two. The jury's answer on both phases resulted in a judgment for actual damages against Aboud and Columbia, jointly and severally, in the amount of $1,430,000, plus prejudgment interest. Punitive damages were awarded in the amount of $50,000 against Aboud and $5,000,000 against Columbia, together with post-judgment interest.
Both Columbia and Aboud have filed appellant's briefs, however, Aboud's brief contains an explanatory note in which he states "... Aboud asks the court to take note that this brief is, in significant part, identical to the opening brief filed by Columbia." We also note that Aboud's four "issues presented" are the same as, or are incorporated into, Columbia's first three issues and part (a) of Columbia's issue number six. By addressing all of Columbia's issues we will address all issues presented in this appeal.
Columbia's issue number one alleges no evidence and insufficient evidence that Aboud and/or Columbia's conduct caused Schlichtemeier to lose the opportunity to own and practice in the cancer treatment center. The jury found that Aboud breached a fiduciary duty that caused damage to Schlichtemeier.[2] It also found that Columbia knowingly participated in the breach of fiduciary duty by Aboud.
We review a no evidence point of error by viewing the evidence in a light tending to support the finding of a disputed fact and we disregard all inferences to the contrary. Weirich v. Weirich, 833 S.W.2d 942, 945 (Tex.1992). If there is any evidence of probative force supporting the finding, we overrule the point of error and uphold the jury's findings. Leitch v. Hornsby, 935 S.W.2d 114, 118 (Tex.1996).
When we review a factual insufficiency of the evidence claim we will consider and weigh all of the evidence, not just the evidence which supports the verdict. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 407 (Tex.1998). If we determine that the evidence supports the jury's verdict we are not required to detail all the evidence supporting the judgment when we affirm the trial court's judgment (except as hereinafter recited as punitive damages). Id at 407. On the other hand, when reversing a trial court's judgment for factual insufficiency we must detail all the evidence relevant to the issue and clearly state why the jury's finding is factually insufficient or so against the great weight and preponderance of the evidence that it is manifestly unjust. Id at 407.
In answer to the question in his deposition, "with hind sight, sir, do you think that you treated Lee Schlichtemeier unfairly?" Aboud answered "yes." Further, he was asked, "did anyone from Columbia counsel you either to discuss that issue with Dr. Schlichtemeier or to not discuss that issue [an arrangement with Columbia independent of the partnership]?" His answer was:
*746 A. I was instructed not to.
Q. By whom?
A. Richard Scott, Lonnie Busby and Russ Schneider.[3]
In addition to the foregoing, the jury heard testimony about a conversation between Russ Schneider of Columbia and Aboud, which Schneider asked Aboud to "keep on the Q.T."[4] This phone conversation was taped by Aboud, unknown to Schneider at the time, and the tape was played for the jury during the trial. Aboud admitted that Schlichtemeier was kept in the dark about a proposal made by Schneider in the conversation to benefit Aboud only.
The jury also heard evidence that on July 5, 1991 Aboud wrote a letter to Mr. Rick Scott at Columbia asking for a binding proposal from Columbia at which time he would dissolve his partnership with Schlichtemeier. When Aboud received the requested letter from Scott, he did not give a copy to Schlichtemeier because of instructions he had received from Columbia's representatives.
Schlichtemeier testified that the first he knew of Aboud's deal with Columbia was when Frank Ainsa, an attorney, told him about it in 1995. Ainsa learned of the deal while he was a witness in a lawsuit between a company named Piping Rock and EPHS. On that occasion, Ainsa was shown "certain letters that involved Dr. Aboud and Columbia which he had not been aware of and he presumed that I [Schlichtemeier] had not been aware of." When Schlichtemeier heard of this he became "rather angry," and within a very short period of time "I contacted legal counsel about the matter."
Appellants Columbia and Aboud, argue that there is no proof, or insufficient proof that this conduct caused Schlichtemeier to lose the opportunity to own and practice in the cancer treatment center. We disagree.
On July 5, 1991, when Aboud wrote the letter to Rick Scott, previously referred to, in which he requested "a binding proposal from Columbia," he referred, in his opening statement, to the "proposed cancer center in which I am involved." When Aboud was asked about the letter, in his deposition, the following occurred:
Q. Now, is that the cancer treatment center that you and Dr. Schlichtemeier, as partners in ORP, were attempting to develop and have built?
A. Yes.
Q. And a cancer treatment center indeed eventually was constructed?
A. Yes.
On cross-examination of Aboud at trial he confirmed his lawyer's statement (in a letter dated in February of 1995) that "one of two things was going to happen, either you and Dr. Schlichtemeier were going to do your own center, or you were going to be involved in the cancer treatment center actually constructed by El Paso Healthcare Center." Then the following occurred:
Q. Is it true that in February of 1995, that but for the conduct of Columbia you and Dr. Schlichtemeier would either have done your own center or you would have been involved in the center by El Paso Healthcare System?
A. That is correct.
It is impossible to say with certainty what would have happened in any scenario where a wrongdoing interrupts the course of events. We hold that the jury could reasonably have believed that, but for Aboud's secret agreement with Columbia, and considering the relationship and goals the two doctors shared, some sort of cancer treatment center, beneficial to both *747 doctors, would have been a reality. We overrule appellants' first issue.
Appellants' second and third issues will be considered together. They are:
2. Were the lost profit damages that Schlichtemeier claimed in this case susceptible of proof by reasonably certain evidence, and did Schlichtemeier present reasonably certain evidence of those lost profit damages?
3. Was the jury free to leap entirely outside the record and find that Aboud's conduct caused 1.43 million in actual damages?
When there are firmer reasons to expect a business to yield a profit, the business is not prohibited from recovering merely because it is new. Texas Instruments v. Teletron Energy Mgt., 877 S.W.2d 276, 280 (Tex.1994).[5] The focus is on the experience of the persons involved in the enterprise and the nature of the business activity, and the relative market. Id at 280.
As stated earlier, Aboud admitted that, but for the conduct of Columbia, he and Schlichtemeier would have joined in some form of enterprise. The evidence shows that Aboud had a large and successful practice in El Paso. Schlichtemeier had been a radiation oncologist for nearly twenty-five years and he had been successful in developing and operating facilities, similar to the one proposed, in other locations. In the early conversations with each other, Aboud told Schlichtemeier that the present radiation center in El Paso was totally inadequate; that it could not even provide a patient with a urinalysis test if he needed one.
A study conducted for Columbia prior to the lawsuit was very upbeat about the future of free standing radiation oncology centers. The study predicted a net income from the second through the fifth years totaling $1,436,236 with a net loss the first year of $67,331.
Aboud testified that he authorized his lawyer to send a demand letter to Rick Scott and others claiming five million dollars for the damages the conduct of Columbia, Rick Scott, and others caused him to suffer. His testimony continued as follows:
Q. And what is it that you were deprived of that caused you to be harmed or damaged to the extent of 5 million?
A. The inability to own half the cancer center.
Q. Would you agree with me, sir, that Dr. Schlichtemeier also lost the opportunity to own the cancer center?
A. Yes.
Q. Is the 5 million figure, sir, is that for a half interest or a whole interest in the building?
A. A half interest.
Schlichtemeier called as an expert witness James R. Vinson who has a bachelor's degree in banking and finance, two masters' degrees in economics, and a Ph.D. degree, primarily in economics. Vinson testified in detail to the methodology used to prepare him to testify in the case. He was finally asked, and he answered as follows:
Q. Dr. Vinson, what is your opinion as to the present value of the business opportunities that Dr. Schlichtemeier was unable to pursue in this matter based upon a reasonable degree of certainty?
At this point, opposing counsel took the witness on voir dire and, following several pages of questions and answers, moved to strike his testimony. The motion was denied and the testimony continued:
Q. Dr. Vinson, what is your opinion as to the amount?
*748 A. In my opinion, the present value of the lost business opportunities for technical services, business, the professional services opportunity and the radiation therapy building for the years 1993 through the year 2000, and for the sale of the business at the end of that time period discounted back to present value is $30,504,236.
In opposition, Columbia called Donald A. Erickson as an expert witness on damages. Erickson is a partner in the firm of Ernst and Young, a financial and management consulting firm. Mr. Erickson is solely involved in business valuations. He holds an undergraduate degree in business economics from Santa Clara University and an MBA degree in finance from the University of Oregon, and is certified in business evaluation by the American Society of Appraisers.
Mr. Erickson was critical of the Vinson report and stated his reasons why. A summary of his testimony is that the present value of the proposed center is zero.
In Tenngasco Gas Gathering Co. v. Bates, 645 S.W.2d 496, 498 (Tex.App.-Corpus Christi, 1982, writ ref'd. n.r.e.), this court said:
In the case before us it appears that in estimating values the jury did blend the testimony of the two experts to arrive at figures which were between the two opinions. We hold, therefore, that there was some evidence and sufficient evidence to support the jury's answer to the before and after taking special issues.
Hunt v. Ellisor & Tanner, Inc., 739 S.W.2d 933 (Tex.App.-Dallas, 1987, writ denied), was a case where the testimony of two witnesses offered a range of zero to three million dollars. The jury found damages of $41,500. The court said:
... the complex nature of the witness' testimony, both direct and cross-examination, afforded the jury much opportunity to accept and reject what they were hearing. Expert opinion testimony is but evidentiary, and is never binding upon the trier of fact. Thus, the fact finder is not cut off from exercising considerable personal judgment about how far such opinions are to be relied upon.
See also City of Houston v. Harris County Outdoor Advertising Assn., 879 S.W.2d 322, 334-6 (Tex.App.-Houston [14th Dist.] 1994, writ denied), cert. denied, 516 U.S. 822, 116 S. Ct. 85, 133 L. Ed. 2d 42 (1995); Parallax Corp., N.V. v. City of El Paso, 910 S.W.2d 86, 92 (Tex.App.-El Paso 1995, writ denied)(the jury finding will survive a factual sufficiency attack if it falls within a narrower "range" of the expert testimony).
To support its third issue, Columbia cites Callejo v. Brazos Electric Power Co-op., 755 S.W.2d 73 (Tex.1988); First State Bank v. Keilman, 851 S.W.2d 914 (Tex. App.-Austin 1993, writ denied); and Shearer's, Inc. v. Lyall, 717 S.W.2d 128 (Tex.App.-Houston [14 th Dist.] 1986, no writ). We find these cases distinguishable. Callejo was a condemnation case where the value placed on the "after" value by the jury was ten times the highest value testified to.
Keilman, as pointed out in appellee's brief, is an either/or proposition. The amounts of interest owed was either $7,161.44 unauthorized or $169.92, none of which was unauthorized. Neither side could explain the figure $360.00 found by the jury, and there was no way to justify it. Even in Keilman, the court in its opinion reiterates the general rule that the trier of fact has broad discretion in assessing damages where the law provides no precise legal means, and the jury's findings will not be disregarded merely because the jury's reasoning in arriving at its figures may be unclear.
Shearer's was a bench trial involving the intrinsic value of five pine trees and five oak trees bulldozed from plaintiff's land. The only value testified to was $72,500. The appellate court agreed with the trial court's reasoning that the $72,500 figure *749 was unrealistic, however, it found an abuse of discretion in the judge's finding of $2,250 in actual damages. Once again the appellate court reaffirmed the "wide latitude given the jury."
In the case before us the testimony of both experts was lengthy and detailed. Together, they contained many components to be considered and many estimates of values to be assigned to each. It is fundamental that a jury may believe all, some or none of a witness' testimony.
We hold that there is evidence to support the jury's finding in regard to actual damages. We overrule issues two and three.
Appellants' fourth issue is, "did the trial court properly find Columbia liable for $1.43 million in actual damages and $5 million in punitive damages even though the jury did not find, and was not asked to find, that Columbia's conduct caused any actual damages?" We divide the issue into two parts, i.e., that part which challenges the sufficiency of the finding to permit an award for actual damages and that part which would permit an award for punitive damages.
We first respond to appellants' issue insofar as it relates to actual damages. The jury answered in question six that Aboud committed fraud against Schlichtemeier. In question eight the jury awarded the $1.43 million dollars to Schlichtemeier as compensation for damages proximately caused by Aboud's fraud. In question nine the jury answered that Aboud and Columbia engaged in a civil conspiracy to defraud Schlichtemeier. In a portion of question nine the jury was required to find that there were "damages as a proximate result" of the conspiracy. We hold that these answers, taken together, negate any necessity for a separate finding that Columbia's conduct caused any actual damages to Schlichtemeier. Columbia's reliance on this court's holding in Chachere v. Drake, 941 S.W.2d 193, 196-7 (Tex.App.-Corpus Christi, 1996, writ denied), is misplaced. In Chachere, appellee argued that because appellant failed to offer proof of, or obtain a finding on, actual tort damages, appellant should not be entitled to recover actual or punitive damages on his fraud claim. This court agreed and so held. As stated above, the jury here found fraud by Aboud and that Columbia was a conspirator in the fraud.
We overrule Columbia's fourth issue insofar as actual damages are concerned.
Insofar as punitive damages are concerned, we join issue four to issue five which presents a different problem with respect to punitive damages. Columbia's original brief challenges the definition of "malice" in question number five in the court's charge for not following the statutory definition. Following the jury's answer of "yes" to this question, in the second portion of the bifurcated trial, the issue of punitive (exemplary) damages was submitted in a single broad-form question containing both "malice" and "conspiracy" theories of punitive damages.
On July 1 of this year, and since both oral and written submission of this case, the supreme court decided Crown Life Insurance Co. v. Casteel, No. 98-0218, 1999 WL 450773 (Tex. July 1, 1999). In Crown Life an agent and an insured sued Crown Life.[6] The agent (Casteel) sued under Article 21.21 of the Texas Insurance Code and also under the provisions of the Deceptive Trade Practices Act (DTPA) as a consumer. The court held that Casteel had standing to sue under article 21.21 of the insurance code but not as to claims requiring consumer status under the DTPA. The trial court had submitted the damages issue as a broad-form issue containing alleged acts under both the insurance code and the DTPA and the jury gave one *750 answer to the amount of damages. The supreme court said "we also hold that submitting invalid theories of liability in a single broad-form jury question is harmful error when it cannot be determined whether the jury based its verdict on one or more of the invalid theories." In Crown Life, the supreme court was dealing with damages, however, we see no distinction to be made in the problems connected with a broad-form submission of a damage issue and a similar submission of a liability issue.
Schlichtemeier's original position was that "the jury's conspiracy finding independently supports punitive damages." He argues, "because the underlying tort warranted punitive damages, a punitive damage award against a co-conspirator was proper even though there was no separate malice finding against the co-conspirator. (Citation omitted). Applied to the present case, Akin[7] supports the award of punitive damages against Columbia based on the conspiracy finding alone."
We hold that, in view of the holding in Crown Life, this argument has no merit. The jury was required to find both malice and conspiracy in order to award punitive damages according to Crown Life. Thus, it is necessary to decide whether the definition given the jury of "malice" in the original charge will support an award of punitive damages.
The definition of "malice" given in question number five is:
`Malice' means conduct that is specifically intended by Columbia to cause substantial economic damage to Dr. Schlichtemeier, or an act that is carried out with a flagrant disregard for the rights of Dr. Schlichtemeier and with an actual awareness on the part of Columbia that the act will, in reasonable probability, result in substantial economic damage.
This was the manner in which appellee chose to submit the issue.
The Legislature has given us the proper definition of "malice" which, at the time of the alleged acts of appellants, was:
(6) `Malice' means:
(A) Conduct that is specifically intended by the defendant to cause substantial injury to the claimant; or
(B) An act that is carried out by the defendant with a flagrant disregard for the rights of others and with actual awareness on the part of the defendant that the act will, in reasonable probability, result in human death, great bodily harm, or property damage.
Acts 1987, 70th Leg., 1st C.S., ch. 2 § 2.12, eff. Sept. 2, 1987. Amended by Acts 1995, 74 th Leg., ch. 19 § 1, eff. Sept. 1, 1995.
The definition of malice given the jury in this case is more restrictive than the legislative definition. Obviously, the legislative definition is designed to cover a broad spectrum of situations. The definition in the Charge does not enlarge upon the legislative definition. It is tailored to fit the facts of this case. We hold that it was proper to submit the definition as it appeared in the court's charge. In any event, no harm occurred to Columbia because of the more restrictive submission. And, finally, Columbia and Aboud made no objection to the Court's definition of malice in the court's charge and thereby waived any complaint about its wording.
Having carefully examined the lengthy record in this case, we cannot say that there was no evidence or insufficient evidence of Columbia's conduct sufficiently egregious to support an award of punitive damages. We cite examples of such evidence[8] which, taken from the record of the trial, are (in addition to those previously referred to):
*751 1. On November 16, 1990 Schneider telephoned Aboud, offering to help Aboud. He accused Schlichtemeier of being the "problem with the project." During this conversation he said to Aboud:
But, what I'd like to do, if I can have your permission to do this ... you know, you don't have to acknowledge it, if you were subpoenaed you can deny it ... but I'd like to solicit a proposal from a different radiation therapy operator. On the absolute "QC" so I can have a comparative proposal and so I can come to you and say the reason this deal is not as attractive as it was when we started ... is not because of the market or of financing or anything, its because of Frank Ainsa and Lee Schlichtemeier.
2. On January 11, 1991, Schneider and Aboud had another telephone conversation in which Schneider offered to Aboud the possibility of increasing his (Aboud's) interest from 50 percent to 51 percent upon Schlichtemeier's exit.
3. On February 19, 1991 Schneider sent a letter to Aboud in which he stated "if you choose to relinquish your ownership interest with Oregon Rim Partners and become a tenant in the facility, then we would propose that you have the opportunity to participate as a direct owner in up to a 50 percent ownership position in the new facility. Schneider also instructed Aboud to conceal this letter from Schlichtemeier.
4. On July 3, 1991, Busby wrote a confidential letter to Aboud in which he clearly stated his intent to exclude ORP. He stated therein "... our intention to develop this project with your support and the involvement of CDP, but without the participation of Oregon Rim Partners.
5. On July 5, 1991, Aboud wrote Scott, Columbia's chairman and CEO, to get written confirmation of the secret deal from Columbia's highest authority. Scott had instructed Aboud to make the letter "personal and confidential." Aboud was clear in his letter that ORP had not been dissolved.
6. Scott answered this letter on July 15, 1991 which Aboud concealed on instruction from Columbia.
7. Subsequently, Aboud secretly wrote a letter to EPHS, with whom ORP was still negotiating, and said: "I have requested that Mr. Frank Ainsa accept the recent offer made to us by your attorney, Mr. Cavanaugh." Aboud wrote directly to EPHS despite his agreement that all settlement communications were to go through Ainsa.
8. The record shows the following questions to Aboud and his answers:
A. (Aboud) In hind sight I feel that I should have asked Dr. Schlichtemeier had he got the same offer as I had from Columbia. My problem was implicit trust of Columbia, on their word that they were going to take care of both me and Dr. Schlichtemeier.
Q. Who at Columbia told you that?
A. The above-mentioned people that I
Q. Mr. Scott?
A. Mr. Scott, Lonnie Busby and Russ Schneider.
Q. Why didn't you ask Dr. Schlichtemeier if he was being offered some deal or arrangement independently of the ORP partnership?
A. It was based on my trust of Columbia. I should have asked Dr. Schlichtemeier. It was an error on my part and a mistake.
Q. Did anyone from Columbia council urge you either to discuss that issue with Dr. Schlichtemeier or to not discuss that issue?
A. I was instructed not to.
Q. By whom?
*752 A. Richard Scott, Lonnie Busby and Russ Schneider.
9. On January 27, 1992 EPHS and ORP entered the settlement agreement. The agreement contained an entireties clause that was false because there was no mention of the side deals with Aboud. The jury found the agreement was procured by fraud.
10. Aboud testified that Columbia did get rid of Schlichtemeier and he blamed Columbia for what happened to Schlichtemeier. The following is an excerpt from Aboud's deposition which was read to the jury:
A. I don't feel responsible for what happened to Dr. Schlichtemeier.
Q. Who is?
A. I believe that whatever transpired between Dr. Schlichtemeier and I occurred because of Columbia.
We overrule issues four and five and deny the relief sought therein.
Issue number six challenges the award of prejudgment interest in the following particulars:
a. Did the trial court properly award Cavnar prejudgment interest on unsegregated past and future damages?
b. Did the trial court properly award Cavnar prejudgment interest even though Schlichtemeier failed to prove or obtain a jury finding of the date his supposed actual damages accrued?
c. Did the trial court use the proper accrual date in its award of prejudgment interest?
d. Did the trial court properly order prejudgment interest to be compounded daily?
In addressing part a. of this issue we follow the reasoning set forth in Winograd v. Clear Lake City Water Authority, 811 S.W.2d 147, 157 (Tex.App.-Houston [1st Dist.] 1991 writ denied). In that case, as in the case before us, the plaintiff presented his evidence of lost profits (opportunities) in such a manner as to represent their value at the time of the occurrence giving rise to the lawsuit. In this case, there was no independent evidence of future damages, thus there was nothing to segregate. As presented by Schlichtemeier's expert witness all of the damage occurred on the date of the alleged breach.
For the remainder of this issue we observe that the jury was not asked to find a date upon which we can establish when appellee's accrual of prejudgment interest should begin. For this reason, we hold that prejudgment interest began to accrue on the date suit was filed, which was August 30, 1995. The interest should be computed as simple interest. Johnson v. Kenneco Energy, 962 S.W.2d 507, 532 (Tex.1998).
We affirm that portion of the trial court's judgment which was awarded $1,430,000 as actual damages against Aboud and Columbia, jointly and severally. We REFORM the award of prejudgment interest in order that it may be calculated as simple interest at the rate of ten percent (10%) from August 30, 1995. We AFFIRM the award of punitive damages against Columbia in the amount of $5 million dollars together with post judgment interest at the rate of ten percent (10%). We AFFIRM the remainder of the trial court's judgment.
NOTES
[1] Retired Justice Noah Kennedy assigned to this Court by the Chief Justice of the Supreme Court of Texas pursuant to Tex. Gov't Code Ann. § 74.003 (Vernon 1988).
[2] In connection with this issue, the jury was charged by the court that, "a venturer has no duty to offer to his former venturers a business opportunity which arises after the partnership or joint venture has been terminated."
[3] All of whom represent Columbia.
[4] The term used was "Q.C.", which in hospital terminology stands for "quality control," however, Schneider, in his deposition, admitted he meant Q.T.
[5] Teletron was a case where an award for damages for future earnings of a business was reversed as too speculative, however, Teletron involved a totally new product being put on the market for the first time.
[6] Casteel was the agent who was sued, along with Crown Life, by the insured. Casteel filed a cross-action against Crown Life.
[7] Akin v. Dahl, 661 S.W.2d 917 (Tex.1983).
[8] As required by Transportation Insurance Co. v. Moriel, 879 S.W.2d 10, 31 (Tex.1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2434787/ | 610 S.W.2d 147 (1980)
SHRINER'S HOSPITAL FOR CRIPPLED CHILDREN OF TEXAS et al., Petitioners,
v.
Ola Mae STAHL et al., Respondents.
No. B-8611.
Supreme Court of Texas.
December 31, 1980.
Rehearing Denied January 28, 1981.
*148 Mark White, Atty. Gen., Amie Rodnick, Asst. Atty. Gen., Austin, Tinsman & Houser, H. David Peeples, San Antonio, Wynn, Brown, Mack, Renfro & Thompson, Henry C. Meyer, Fort Worth, James H. Walker and Leonard E. Choate, Dallas, Pat Beard, Waco, for petitioners.
Philip E. Hamner, San Antonio, for respondents.
SPEARS, Justice.
This is a will construction case. The issues are (1) whether a specific devise of property was adeemed by extinction when the testatrix sold the subject property before her death and, (2) if adeemed, whether the note received from the sale of that property passes by partial intestacy or under the residuary clause of the will. The term ademption describes the extinction of a specific bequest or devise because of the disappearance of or disposition of the subject matter given from the estate of the testator in his lifetime.
*149 The trial court rendered judgment that the devise was adeemed and passed under the residuary clause of the will. The court of civil appeals reversed and remanded, holding that though the devise was adeemed, it was the intent of the testatrix that the note received in the sale pass to her heirs under the laws of descent and distribution by intestacy. 581 S.W.2d 227. We reverse the judgment of the court of civil appeals and affirm the judgment of the trial court.
The testatrix, Eloise Williams, executed her will on December 12, 1973 and codicils on January 23, 1974 and May 19, 1976. In the will, drafted by an attorney, paragraphs 4, 5, and 6 devised her 103 acre "home place" to nephews Jack Williams and Billy Jo Stahl and nieces Esta Germer, Joyce Dawson, and Martha Kasprzyk under these terms:
4.
I will my home place (consisting of 103 acres of land, more or less, in the A. Trevino Grant, Survey No. 11, in Wilson County, Texas) and conveyed to me by deed of record in Vol. 185, Page 327, Deed Records of Wilson County, Texas) as follows: In regard to the Northwest 40 acres of same, my nephew, Thomas J. (Jack) Williams shall have the option to purchase same by making the following payments: $2,000.00 to Julia Mattke (or to her daughters, share and share alike, if the said Julia Mattke shall predecease me); $2,000.00 to Mittie Anderson or to her husband, Fred Anderson, if the said Mittie Anderson shall predecease me; $2,000.00 to my cousin, Lillie Belle Carey, or to her husband, Jack Carey, if the said Lillie Belle Carey shall predecease me; and $1,000.00 to my nephew, Jimmy Cross (at the request of my deceased husband, Norris Williams) or to Norris Cross, if the said Jimmy Cross shall predecease me. Said option shall be exercised by the said Thomas J. (Jack) Williams within a reasonable time after my death, and in no event, later than six months after the payment by my hereinafter named executor of any and all State Inheritance Taxes and Federal Estate Taxes, that is, when the respective Governments agree as to how much tax is owed. My said nephew, Thomas J. (Jack) Williams, may encumber said 40 acres, in order to make said payments.
5.
The balance of my said home place (being the Southeast 63 acres of said tract, more or less) I will to Billy Jo Stahl, Esta Germer, Joyce Dawson and Martha Kasprzyk, share and share alike.
6.
The above named parties may take possession of said land when my Executor shall surrender such land, in his sole discretion, to such parties, and they shall thereafter receive all rents and revenues from the respective tracts of land.
After describing several specific bequests, the will provides in paragraphs 11 and 12:
11.
If any bequest shall lapse because there shall be no taker of such bequest at the time of my death, such lapsed bequest shall form and be a part of my residuary estate as next below described.
12.
All the rest, residue and remainder of my estate and property (and in this connection, all lapsed special bequests shall pass to and become a part of my residuary estate described in this paragraph) I will to Clark Murray, in Trust ....
The trust described in paragraph 15 was for the initial purpose of providing care and maintenance for testatrix's brother, John Dawson. Paragraphs 16 and 17 then provided that if John died, whether before or after testatrix's death, the entire trust estate, i. e., the residuary estate, would pass to the "Masonic Home or Homes for Crippled Children" for use in Texas.
16.
The Trust shall continue so long as the said John Dawson shall live, and upon his *150 death, the entire Trust estate (including corpus or principal, and income) shall vest in fee simple in the Masonic Home or Homes for Crippled Children, to be used only in Texas, subject to all other provisions of this Will and subject to administration of my estate.
17.
If the said John Dawson shall be deceased at the time of my death, there shall be no Trust, and my entire residuary estate, as above described in paragraph 12, shall vest in fee simple, in said Masonic Home or Homes for Crippled Children and to be used in Texas only, subject to the above and foregoing provisions of this Will, and subject to administration.
John Dawson did predecease the testatrix; he died in September 1976. The next month, on October 5, testatrix sold the "home place" to a third party, receiving a note for $80,000.00 secured by a deed of trust and vendor's liens. Three months after the sale, on January 7, 1977, testatrix died. The executor of the will filed this suit to construe the will and determine who shall receive the proceeds of the $80,000.00 note.
We have four petitioners. Three of them, the Shriner's Hospital for Crippled Children of Texas, the Texas Scottish Rite Hospital for Crippled Children, and the Attorney General of Texas (joined as a party under Article 4412a, Tex.Rev.Civ.Stat.Ann.) contend that the court of civil appeals erred in holding that the $80,000.00 note passed by intestacy. Petitioner Irene T. Williams, Independent Executrix of the Estate of Thomas J. "Jack" Williams (who died while this case was pending in the court of civil appeals and his executrix substituted as a party), contends that the court of civil appeals erred in holding that testatrix's devise of her "home place" was adeemed. Irene Williams argues that the $80,000.00 note, remaining separate, identifiable, and uncomingled with the rest of her property, should pass not to the heirs at law by intestacy but should be apportioned to the devisees who would have taken the "home place" under the will.
We agree with the holdings of the trial court and of the court of civil appeals that the phrase in the residuary clause of the will "Masonic Home or Homes for Crippled Children" entitled the Texas Scottish Rite Hospital for Crippled Children and the Shriner's Hospital for Crippled Children to receive the bequest of the residuary clause to carry out the charitable purpose set out in the will. See Bode v. Loeffler, 540 S.W.2d 465 (Tex.Civ.App. San Antonio 1976, writ ref'd). This holding is not challenged by any party here.
We further agree with the holding that the devise of the "home place" was adeemed by extinction when the testatrix sold the property before her death. Absent a contrary intention expressed in the will, the alienation or disappearance of the subject matter of a specific bequest from the testator's estate adeems the devise or bequest. Rogers v. Carter, 385 S.W.2d 563, 565 (Tex.Civ.App. San Antonio 1965, writ ref'd n. r. e.); Burch v. McMillen, 15 S.W.2d 86, 89 (Tex.Civ.App. Eastland 1929, no writ). A will speaks at the time of the testator's death, and it is the estate he then possessed that passes according to the terms of that will. Haley v. Gatewood, 74 Tex. 281, 12 S.W. 25, 26 (1889); Henderson v. Ryan, 27 Tex. 670, 674 (1864).
Although there are recognized exceptions to the ademption rule, circumstances warranting an exception do not exist here. After the testatrix sold her home place, she did not change her will during the three months after her brother died. There is no indication in the will that testatrix wished that the proceeds from the sale of the home place or any property that might be acquired through the sale or exchange of the home place pass to the devisees named in paragraphs 4 and 5 of the will. Nor was there any involuntary conversion of the subject property or sale by a guardian under circumstances in which testatrix had no capacity or opportunity to adjust her testamentary disposition. See Paulus, Ademption by Extinction: Smiting *151 Lord Thurlow's Ghost, 2 Tex.Tech.L.Rev. 195, 208-215 (1971).
All rules of construction must yield to the basic intention and purpose of the testator as reflected by the entire instrument. Welch v. Straach, 531 S.W.2d 319, 322 (Tex.1975); Petsch v. Slator, 573 S.W.2d 849, 853 (Tex.Civ.App. Austin 1978, writ ref'd n. r. e.); Morris v. Finkelstein, 442 S.W.2d 452, 455 (Tex.Civ.App. Houston [14th Dist.] 1969, n. r. e.). The intent of the testator, however, must be ascertained from the language used within the four corners of the instrument. Welch v. Straach, supra; Huffman v. Huffman, 161 Tex. 267, 339 S.W.2d 885, 888-9 (1960); Repub. Nat'l Bank of Dallas v. Fredericks, 155 Tex. 79, 283 S.W.2d 39, 42 (1955). The question is not what the testatrix intended to write, but the meaning of the words she actually used. Rekdahl v. Long, 417 S.W.2d 387, 389 (Tex.1967); Kirk v. Beard, 162 Tex. 144, 345 S.W.2d 267, 273 (1961); In re Estate of Kirby, 516 S.W.2d 284, 286 (Tex.Civ. App. Waco 1974, writ ref'd n. r. e.). We do not agree with the contention that the devise of the home place did not adeem because the $80,000.00 note remained separate from and uncomingled with the rest of the testatrix's property. The will contains no mention of or reference to the $80,000.00 note, nor does the will allude to it indirectly. The courts may not redraft the will, vary or add provisions under the guise of construction of the language of the will in order to reflect some presumed intention of the testatrix. Welch v. Straach, supra, 531 S.W.2d at 322; Huffman v. Huffman, supra, 339 S.W.2d at 888; 4 Page on Wills (Lifetime Ed.) § 1617, p. 627.
Having held that the devise of the home place was adeemed by its sale, we must determine whether the $80,000.00 note received for it passes under the residuary clause of the will to the Masonic charities or, as the court of civil appeals has held, passes by partial intestacy to the heirs of the testatrix.
The testatrix was survived by four heirs at law: Ola Mae Stahl, a sister, and Esta Germer, Joyce Dawson and Martha Kasprzyk, nieces. Two devisees, not heirs at law, who would have benefited from the provisions of the will absent ademption are: Thomas J. (Jack) Williams, the testatrix's deceased husband's nephew,[1] and Billy Jo Stahl. The four named persons who would have received payments from Jack Williams are not heirs at law: Julia Mattke and Mittie Anderson, nieces of the testatrix's deceased husband; Jimmy Cross, nephew of the testatrix; and Lillie Belle Curry, a half-cousin. If the note were to pass by partial intestacy, we would have the incongruous result that only four of the nine intended recipients of the home place would receive a share of the note. Moreover, Jack Williams, who was to receive a major share of 40 acres, would receive nothing, while Ola Mae Stahl, a sister, who was to receive no part of the home place under the will would receive a fourth of the note. There is no evidence in the record from which any such intent can be inferred.
Well established rules of construction militate against partial intestacy as to the note. The mere making of a will is evidence that the testator had no intent to die intestate and creates a presumption that the testator intended to dispose of his entire estate, and that he did not intend to die intestate as to the whole or any part of his property. Haile v. Holtzclaw, 414 S.W.2d 916, 922 (Tex.1967); Briggs v. Peebles, 144 Tex. 47, 188 S.W.2d 147, 150 (1945); Kuehn v. Bremer, 132 S.W.2d 295, 297 (Tex.Civ. App. Waco 1939, writ ref'd); Cole v. Harris, 332 S.W.2d 119, 121 (Tex.Civ.App. Amarillo 1959, no writ). Further, if a will is open to two constructions, that interpretation will be given it which prevents intestacy. Ferguson v. Ferguson, 121 Tex. 119, 45 S.W.2d 1096, 1097; Annot., 79 A.L.R. 1163 (1931). Where the will contains a residuary clause, the presumption against intestacy is especially strong. Ellet v. *152 McCord, 41 S.W.2d 110, 113 (Tex.Civ.App. Austin 1931, writ ref'd); Calloway v. Estate of Gasser, 558 S.W.2d 571, 574 (Tex.Civ. App. Tyler 1977, writ ref'd n. r. e.); Knebel v. Capital Nat'l Bank in Austin, 469 S.W.2d 458, 461 (Tex.Civ.App. Austin 1971, writ ref'd n. r. e.); Morris v. Finkelstein, supra, 442 S.W.2d 452, at 455. As this court in Briggs v. Peebles stated:
Where a person makes a will the general presumption prevails that the testator intended to dispose of all of his property, and there is no presumption that the testator intended to die intestate as to part of his estate if the words used in the will may carry the whole of his property. 144 Tex. 47, 188 S.W.2d 147, 150 (1945).
In this case, the residuary clause in paragraph 12 specifically included lapsed special bequests. In paragraph 17, the testatrix specified that her "entire residuary estate" vest in fee simple in the Masonic Homes for Crippled Children. In the absence of qualifying words used by the testatrix, the use of the terms "rest and residue" of the estate will be presumed to have been used in the normal and usual sense. Sinnot v. Gidney, 159 Tex. 366, 322 S.W.2d 507, 511 (1959); Williams v. Smith, 146 Tex. 269, 206 S.W.2d 208, 213-15 (1947). The residuary is what is left after all debts and legal charges have been paid and other testamentary gifts have been satisfied.
It is well settled that lapsed bequests pass into the residuary absent a contrary intent expressed clearly in the will. Kuehn v. Bremer, supra; Lightfoot v. Poindexter, 199 S.W. 1152, 1159, 1160 (Tex.Civ. App. Austin 1917, writ ref'd); Petsch v. Slator, 573 S.W.2d 849, 852 (Tex.Civ.App. Austin 1978, writ ref'd n. r. e.); Cole v. Harris, supra. It is only in exceptional cases, i. e., when the testator's intent that the subject property not pass under the residuary clause appears in the provisions of the will, that courts have upheld a partial intestacy. See Bittner v. Bittner, 45 S.W.2d 148 (Tex.Com.App.1932); Neinast v. Brauckmuller, 401 S.W.2d 113, 116 (Tex.Civ.App. Houston [1st Dist.] 1966, no writ). We hold that the same rules of construction applicable to lapsed bequests and devises apply to adeemed bequests and devises. To the extent that Lenz v. Sens, 66 S.W. 110 (Tex. Civ.App.1901, writ ref'd) is in conflict, it is overruled.
Our holding is supported by decisions from other jurisdictions. The case of In Re Bernier's Will, 15 Misc. 2d 156, 181 N.Y.S.2d 385 (N.Y.Surr.1958) involved facts similar to ours. In following the "identity rule" of the doctrine of ademption, the court held that when a specific devise of realty was adeemed because of its sale by the testatrix prior to her death, the beneficiaries of the realty under the will were not entitled to the proceeds of the purchase money mortgage; rather, the proceeds passed under the residuary clause of the will. The same result was reached in Worthen Bank & Trust Co. v. Green, 237 Ark. 785, 376 S.W.2d 275 (1964) and Lewis v. Thompson, 52 N.E.2d 331 (Ohio 1943).
We hold that when the bequest or devise is adeemed, absent a contrary intention expressed in the language of the will itself, the subject property passes under the residuary clause instead of by partial intestacy. Since the testatrix here expressed no contrary intention in her will, title to the $80,000 note passes under the residuary clause of her will.
The judgment of the court of civil appeals is reversed, and the judgment of the trial court is affirmed.
BARROW, J., not sitting.
NOTES
[1] Jack Williams was not technically a devisee since the will merely gave him a limited "option" to receive the 40 acres of the home place upon the payment of certain sums of money within a specified time, but the distinction is immaterial for the purposes of this opinion. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2446756/ | 664 S.W.2d 355 (1984)
R.Q. McGOWAN, Appellant,
v.
The STATE of Texas, Appellee.
Nos. 65964, 65965.
Court of Criminal Appeals of Texas, En Banc.
February 22, 1984.
*356 Donald C. Adams, Dallas, for appellant.
Henry Wade, Dist. Atty., and Jeffrey B. Keck, Cathy Crier and Reed Prospere, Asst. Dist. Attys., Dallas, Robert Huttash, State's Atty., Austin, for the State.
Before the court en banc.
*357 OPINION
McCORMICK, Judge.
Appellant was convicted of two cases of aggravated assault. Punishment was assessed at ten years' confinement in each case.
In a supplemental brief, appellant challenges the sufficiency of the evidence. We now turn to a review of the facts. About 1:00 p.m. on November 30, 1979, Mildred Wesley, the 14-year-old complainant in Cause No. 65,964, was walking home with some friends when she saw appellant approaching her. Appellant came up to Mildred, grabbed her and began beating on her. Appellant made no verbal threat to Mildred. Mildred saw her mother across the street and yelled out to her for help. Mrs. Mack, Mildred's mother, came across the street, broke up the struggle and then escorted her daughter to a nearby grocery store. Appellant followed them to the store. After leaving the store, Mildred and her mother started for home. In order to go home, they were required to go through a small alley where they were again accosted by appellant. Appellant pushed Mildred on the ground and began beating her, demanding that she come with him and clean his house. Appellant then stabbed Mildred in the stomach and began kicking her. Mildred testified that after she was stabbed she saw appellant holding an open pocket knife. Mildred testified that she then asked appellant not to cut her. Mildred further testified that appellant threatened her with imminent bodily injury.
Shortly after Mildred was pushed to the ground, Mrs. Mack, the complaining witness in Cause No. 65,965, reached down to help Mildred. Appellant stabbed Mrs. Mack in the back of the head. Although Mrs. Mack testified that she did not see what she had been hit with, she did state that she felt the blow and immediately felt blood dripping down from where she had been hit. Mildred testified that she saw appellant stab her mother in the head. Appellant then ran off and Mildred and her mother helped each other up. After they made their way home, other family members took them to a hospital. Mrs. Mack further stated that she was threatened with imminent bodily injury by the appellant.
Because of her injuries, Mildred was required to undergo surgery and was hospitalized three weeks. Mrs. Mack also underwent surgery and was hospitalized for two weeks.
Dr. James Dyll, a neuro-surgeon, testified that he observed two cuts in Mrs. Mack's scalp. Because X-rays showed there was metal extending into Mrs. Mack's innercranial cavity, surgery was performed and the tip of a knife blade was removed from Mrs. Mack's head. Dr. Dyll stated that the weapon from which the blade tip had broken off was capable of causing death.
In both cases, the indictment alleges that appellant
"... did unlawfully, then and there knowingly and intentionally, use a deadly weapon, to-wit: a knife, to threaten (the victim) with imminent bodily injury by use of the said deadly weapon."
Appellant argues that although the evidence does show that appellant committed aggravated assault by causing bodily injury by using a deadly weapon, the evidence fails to show that any threats were made with the knife.
It is well established that threats can be conveyed in more varied ways than merely a verbal manner. Church v. State, 552 S.W.2d 138 (Tex.Cr.App.1977); Horn v. State, 647 S.W.2d 283 (Tex.Cr.App.1983). A threat may be communicated by action or conduct as well as words. Horn v. State, supra; Berry v. State, 579 S.W.2d 487 (Tex. Cr.App.1979).
In Cause No. 65,965, it is undisputed that Mrs. Mack did not know what appellant struck her with. Mrs. Mack was merely trying to pull her daughter away from appellant. There is no evidence that prior to stabbing her appellant threatened her in any way. She never saw appellant holding a knife nor did she testify that appellant threatened her with a knife. Finally, the evidence shows that after appellant stabbed *358 Mrs. Mack, he fled. Thus, we are constrained to hold that the evidence is insufficient in Cause No. 65,965, to show aggravated assault by threats even though it shows bodily injury. See, Taylor v. State, 637 S.W.2d 929 (Tex.Cr.App.1982); Benjamin v. State, 621 S.W.2d 617 (Tex.Cr.App.1981).
In Cause No. 65,964, however, the evidence is sufficient to sustain the conviction. The evidence showed that after she was initially stabbed by appellant Mildred saw him holding the knife and began begging appellant not to cut her. She further testified that appellant threatened her with imminent bodily injury. The evidence is sufficient in Cause No. 65,964. See, Horn v. State, 647 S.W.2d 283 (Tex.Cr.App.1983).
Appellant complains that the trial court committed reversible error when it responded to a jury note. The record shows that during the deliberations on punishment the jury sent the following note to the judge:
"Is the 2 to 10 year sentence total or for each indictment?
"If for each indictment, do they run concurrently?"
The trial court responded to the jury in writing telling the jury that the answer to the first question was "for each indictment" and the answer to the second question was "they run concurrently." Appellant voiced a general objection to the answers given. The record is silent as to whether the jury was returned to open court and the answers read to them or whether the appellant waived this requirement. Article 36.27, V.A.C.C.P. Appellant contends that the court's answer to the first question amounted to an additional instruction and thus the procedure used violated Article 36.27, V.A. C.C.P. Furthermore, he argues that the court's answer to the second question was an incorrect statement of the law according to Article 42.08, V.A.C.C.P.
As noted above, appellant voiced a general objection to the trial court's answers. Appellant failed to object to the failure of the trial court to read the answers in open court. Moreover, he failed to specify to the court why he objected to the trial court's answers.
Article 36.27, supra, provides in part that the court:
"... shall first submit the question and also submit his answer to the same to the defendant or his counsel or objections and exceptions, in the same manner as any other written instructions are submitted to such counsel...."
Thus, it appears that objections to the court's answer should be treated like any other objection to the court's charge. Failure to specify the grounds for objection waives error, if any. McClennon v. State, 492 S.W.2d 524 (Tex.Cr.App.1973); Bilbrey v. State, 594 S.W.2d 754 (Tex.Cr.App.1980). A general objection is equivalent to making no objection at all. Thus, nothing is preserved for review. Smith v. State, 513 S.W.2d 823 (Tex.Cr.App.1974); Calicult v. State, 503 S.W.2d 574 (Tex.Cr.App.1974).
Turning to the merits of appellant's argument, we see that this Court has held that a communication between the court and the jury, although not made in compliance with provisions of the statutes, which does not amount to an additional instruction by the court upon the law or some phase of the case does not constitute reversible error. Nacol v. State, 590 S.W.2d 481, 486 (Tex.Cr. App.1979); Brown v. State,, 505 S.W.2d 850, 857 (Tex.Cr.App.1974); Arrevalo v. State, 489 S.W.2d 569, 572 (Tex.Cr.App.1973); Allaben v. State, 418 S.W.2d 517, 520 (Tex.Cr. App.1967).
The court's answer to the first question was clearly not an additional instruction to the jury. The court had submitted two charges to the jury, one for each case. Each charge instructed the jury panel that the punishment for the offense of aggravated assault as charged in the indictment was confinement for two to ten years. Thus, it was clear from the original instructions that the punishment of two to ten years was for each indictment. The court's first answer was proper.
Although the court's second answer may be construed as an additional instruction to the jury, appellant has demonstrated *359 no harm. The judge instructed the jury that the sentence would run concurrently and indeed that is how appellant was sentenced.
A similar answer was given in response to a post-retirement question by the jury in Haliburton v. State, 578 S.W.2d 726 (Tex. Cr.App.1979). Judge W.C. Davis, writing for the majority, stated:
"Our examination of the record does not reflect any harm to appellant that might be traced to the additional charge. The record before us shows only that the jury was concerned with concurrent sentencing and requested information from the court. There is no showing that the jury's consideration of the information supplied by the court worked to the detriment of appellant. (footnote omitted)
"Further, we are unable to presume harm in this situation. Knowledge that the sentence would run concurrently is a two-edged sword, the information could have been used to increase the punishment or, just as easily, used to reduce the number of years to avoid excessive punishment. We cannot determine from the record which path the jury took and, with these alternatives, harm will not be presumed. (footnote omitted)."
This ground of error is overruled.
Next, appellant complains of the failure of the court to instruct the jury on the law of circumstantial evidence. Such an instruction was not necessary here because the State did not wholly rely upon circumstantial evidence. Furthermore, we have recently held that an instruction on the law of circumstantial evidence is no longer required. Hankins v. State, 646 S.W.2d 191 (Tex.Cr.App.1981). Appellant's second ground of error is overruled.
In his third ground of error, appellant complains that his jail card was improperly admitted into evidence. Appellant argues that since there was no proof that Deputy Justice, the custodian of the records, had personal knowledge of the entries contained on the jail card, there was no evidence that the record was made in the regular course of business by someone with personal knowledge of the surrounding events. Article 3737e, V.A.C.S.
Deputy Justice testified that he was the custodian of the jail records, that the jail records were kept in the normal course of business, that the records were kept on a day-to-day basis, that the entries on the records were made by jail employees who had personal knowledge of the events they recorded, and that the entries were recorded at or near the time the events occurred.
The proponent of a business record must prove that (1) it was made in the regular course of business, (2) it was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event, or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record; and (3) it was made at or near the time of the act, event or condition or reasonably soon thereafter. Article 3737e, Section 1, supra. The fact that Deputy Justice did not have personal knowledge of the information contained in the jail records does not affect the admissibility of the records. Article 3737e, Section 2, supra. We hold that the proper predicate was laid and the jail card was properly admitted into evidence. Aubrey v. State, 624 S.W.2d 291 (Tex.App. - Dallas, 1981). This ground of error is overruled.
The conviction in Cause No. 65,964 is affirmed. Because we have found the evidence insufficient in Cause No. 65,965, the judgment in that cause must be reversed, and the cause is reformed to show an acquittal. Burks v. United States, 437 U.S. 1, 98 S. Ct. 2141, 57 L. Ed. 2d 1 (1978); Greene v. Massey, 437 U.S. 19, 98 S. Ct. 2151, 57 L. Ed. 2d 15 (1978).
It is so ordered.
W.C. DAVIS, J., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1161709/ | 764 P.2d 56 (1988)
The PEOPLE of the State of Colorado, Plaintiff-Appellant,
v.
Glenne FUQUA, Defendant-Appellee.
No. 87SA118.
Supreme Court of Colorado, En Banc.
November 7, 1988.
*57 Barney Iuppa, Dist. Atty., Robert B. Harward, Deputy Dist. Atty., Colorado Springs, for plaintiff-appellant.
David F. Vela, State Public Defender, Thomas R. Williamson, Deputy State Public Defender, Denver, for defendant-appellee.
QUINN, Chief Justice.
The People appeal from a judgment which construed Crim.P. 35(b) as authorizing a sentencing court to retain jurisdiction for the purpose of deciding a motion for reduction of sentence filed within 120 days following the imposition of sentence but not decided by the court until sometime after the expiration of the 120-day filing period mandated by the rule. We vacate the judgment of the district court and remand the case for further proceedings.
I.
The facts are not in dispute. On January 11, 1985, the defendant, Glenne Fuqua, was sentenced to a term of twenty-three years as a result of his guilty pleas to second degree murder and a crime of violence. On May 10, 1985, 119 days subsequent to the imposition of sentence, the defendant, *58 through his attorney, filed a motion for reduction of sentence pursuant to Crim.P. 35(b). The court took no action on the motion until November 21, 1986, approximately eighteen months after the expiration of the 120-day filing period, when it conducted a hearing on the motion. During the hearing the People made no objection to the jurisdiction of the court to reduce the sentence. Immediately after the hearing the court entered an order reducing the twenty-three year sentence to twenty-two years.
On December 12, 1986, the People, claiming that the court's jurisdiction to rule on the motion terminated upon the expiration of the 120-day filing period set out in Crim.P. 35(b), filed a motion to reinstate the original sentence. In denying the motion the district court concluded that "[t]imely filing of a motion for reduction of sentence, without further action of any kind by a defendant, should and does operate under [Rule 35(b) ] to preserve indefinitely the jurisdiction of the sentencing court." The People thereafter filed this appeal.
II.
The People argue that the court lost jurisdiction to rule on the defendant's Crim.P. 35(b) motion upon the expiration of the 120-day filing period. We conclude that when, as here, the defendant has filed a motion for reduction of sentence within 120 days after the imposition of sentence, Crim. P. 35(b) vests the court with jurisdiction to rule on the motion for reduction of sentence, but that the motion may be deemed abandoned when the court fails to resolve the motion within a reasonable time after the expiration of the 120-day filing period and when the defendant concomitantly fails to take reasonable efforts to secure an expeditious ruling on the motion.
A.
In 1961 the Colorado Supreme Court adopted the Colorado Rules of Criminal Procedure. The original version of Rule 35(a) authorized a court "to correct an illegal sentence at any time," but contained no provision permitting the sentencing court to reduce an otherwise legal sentence. See The Colorado Rules of Criminal Procedure, 34 Rocky Mtn. L.Rev. 1, 63-65 (1961). In 1970 the court adopted new Rules of Criminal Procedure, including Crim.P. 35(a), which authorized a court not only to correct an illegal sentence at any time but also expressly provided as follows:
The court may reduce a sentence within 120 days after the sentence is imposed, or within 120 days after receipt by the court of a remittitur issued upon affirmance of the judgment or dismissal of the appeal, or within 120 days after entry of any order or judgment of the Supreme Court denying review, or having the effect of upholding a judgment of conviction.
Crim.P. 35(a), 1963 C.R.S. (1970 Rev.).
The 1970 version of Crim.P. 35(a) remained in effect until 1979, when the present Rule 35 was adopted. The present version of Crim.P. 35(a) permits a court to correct an illegal sentence at any time, and Crim.P. 35(b), which is central to this case, states as follows:
The court may reduce the sentence provided that a motion for a reduction of sentence is filed (1) within 120 days after the sentence is imposed, or (2) within 120 days after receipt by the court of a remittitur issued upon affirmance of the judgment or sentence or dismissal of the appeal, or (3) within 120 days after entry of any order or judgment of the appellate court denying review or having the effect of upholding a judgment of conviction or sentence. The court may, after considering the motion and supporting documents, if any, deny the motion without a hearing. The court may reduce a sentence on its own initiative within any of the above periods of time.
Crim.P. 35(b), 7B C.R.S. (1984) (emphasis added).
B.
In construing Crim.P. 35(b) we employ the same interpretive rules applicable to statutory construction. See Regular Route Common Carrier Conference v. *59 Public Utilities Commission, 761 P.2d 737, 745-46 (Colo.1988). We thus look first to the language of the rule itself, and if the rule is plain and unambiguous, we apply the rule as written. See Colorado Common Cause v. Meyer, 758 P.2d 153, 160 (Colo.1988); People v. Guenther, 740 P.2d 971, 975 (Colo.1987); People v. District Court, 713 P.2d 918, 921 (Colo.1986). In the case of a defendant who has not appealed his conviction or sentence, the only jurisdictional limitation in Crim.P. 35(b) on a court's authority to reduce the sentence is the requirement that the defendant file the motion for reduction within 120 days after the imposition of the original sentence, or, if no such motion is filed, that the court reduce the sentence on its own initiative within 120 days following the imposition of the original sentence. The rule does not state that the court loses jurisdiction if it fails to act on a motion for reduction timely filed within the 120-day period, nor does the rule delineate a specific time within which the court must act on a timely filed motion. The plain sense of the text of Crim.P. 35(b), therefore, is to permit the court to rule on a motion for reduction of sentence after the expiration of the 120-day filing period as long as the motion itself was filed in a timely manner. Stated conversely, a court is divested of jurisdiction to reduce the sentence only in those cases in which the defendant has failed to file a motion within the respective 120-day periods mandated by the rule, or, if no motion is filed, the court declines to reduce the sentence on its own motion within those 120-day periods set forth in the rule.[1]
Our construction of Crim.P. 35(b) takes on added weight when the present version of Crim.P. 35(b) is compared with the pre-1979 version of Crim.P. 35. As pertinent to this case, the first part of the present version of Crim.P. 35(b) states that "[t]he court may reduce the sentence provided that a motion for reduction is filed (1) within 120 days after the sentence is imposed." Prior to November 13, 1979, the effective date of the present rule, Crim.P. 35(a) stated, in relevant part, that "[t]he court may reduce the sentence within 120 days after the sentence is imposed." The clear import of the 1979 revision of Crim.P. 35 is to make clear that a sentencing court is not required to rule on the motion for reduction within 120 days after the imposition of the original sentence but rather may rule on the motion beyond the 120-day period so long as the motion itself is filed within 120 days after the imposition of sentence.
The construction we herein adopt is also consistent with the purpose of Crim.P. 35(b), which is to suspend the finality of the original sentence for a period of 120 days for the limited purpose of either permitting the defendant to request a reduction of sentence or allowing the court to reduce the sentence on its own initiative. See People v. Smith, 189 Colo. 50, 51, 536 P.2d 820, 822 (1975) (the 1970 version of Crim.P. 35(a) "suspends the finality" of a sentence for limited purpose of sentence reduction *60 and does not violate separation of powers doctrine or executive power of commutation). The rule thus permits a court one opportunity to reconsider in timely fashion a previously imposed sentence in light of all relevant and material factors which may or may not have been initially considered by the court and, in the exercise of sound judicial discretion, to resentence the defendant to a lesser term within the statutory limits if warranted in the interests of justice. Smith, 189 Colo. at 52, 536 P.2d at 822. The basic purpose of Crim.P. 35(b) would be significantly frustrated if, in the case of a timely filed motion for reduction, the finality of the sentence were not further suspended for such reasonable time as necessary for the court to make an informed judicial decision on the motion. The suspension of the finality of sentence for such additional time as necessary for proper resolution of the motion assures reliability in the sentencing process without, however, abridging the principle that the executive department, rather than the judiciary, has the sole authority to modify a legally imposed sentence after the sentence becomes final. See People v. Akins, 662 P.2d 486 (Colo.1983);[2]People v. Lyons, 44 Colo.App. 126, 618 P.2d 673 (1980).
Finally, our construction of Crim.P. 35(b) is reinforced by a consideration of the consequences of a contrary interpretation. To construe Crim.P. 35(b) as creating a 120-day limitation on the sentencing court's jurisdiction to reduce a previously imposed sentence would hold out the potential for adverse consequences for the sentencing court, the defendant, and the prosecution, especially in cases where the motion is filed near the end of the 120-day period. In such instances, the court would likely be hampered in obtaining information necessary to reach an informed decision on the motion, as would the defendant in securing a thoughtful judicial consideration of the motion and the prosecution in developing a response to the motion. Indeed, under such a construction, a timely filed motion for reduction of sentence would be aborted by operation of law simply due to the court's inability to rule on the motion within the 120-day period. We decline to interpret the rule in such a wooden and formalistic fashion.[3]
We thus conclude that when, as here, a defendant has not appealed his conviction or sentence and files a motion for reduction of sentence within 120 days after the imposition of sentence, the sentencing court does not lose jurisdiction to rule on the motion upon the expiration of the 120-day filing period set out in Crim.P. 35(b). In similar fashion, when a defendant has appealed his conviction or sentence and files a motion for reduction of sentence within 120 days after the sentencing court's receipt of a remittitur upon affirmance of the judgment or sentence or dismissal of the appeal, or within 120 days after entry of an order or judgment of the appellate court denying appellate review or upholding the judgment of conviction or sentence, the sentencing court does not lose jurisdiction to rule on the motion upon the expiration of the 120-day period. In the absence of a timely filed motion for reduction of sentence, the plain terms of Crim.P. 35(b) vest *61 the sentencing court with jurisdiction to reduce a sentence on its own initiative only if it acts within the respective 120-day periods set out in the rule.
C.
In the case of a timely filed motion for reduction, the extension of the sentencing court's jurisdiction to rule on a motion beyond the 120-day period is not interminable. It is the responsibility of the court to rule on the motion within a reasonable time after its filing.[4] When the sentencing court is not disposed to grant the motion, there can be little reason for delay. In this respect, Crim.P. 35(b) provides that the court, after considering the motion and supporting documents, may deny the motion "without a hearing."
A timely ruling on the motion is necessary for several reasons. Expeditious resolution of the motion accords due deference to the principle of finality by recognizing that, once finality of sentence is achieved, any further relief from the sentence must be obtained through the executive department by way of commutation, and not through the judiciary. Akins, 662 P.2d at 487; People v. Herrera, 183 Colo. 155, 516 P.2d 626 (1973). Moreover, a court's timely resolution of the motion not only serves to relieve the sentenced defendant of needless uncertainty regarding the finality of the original sentence but also enhances the ability of the Department of Corrections to structure a suitable program for the inmate and assign him to an appropriate correctional facility during his period of incarceration. See §§ 17-40-101 to -107, 8A C.R.S. (1986).
When the sentencing court fails to act on a timely filed motion for reduction of sentence within a reasonable period of time, it then becomes the defendant's obligation to make reasonable efforts to secure an expeditious ruling on the motion. In the absence of any reasonable effort by the defendant to obtain an expeditious ruling, the motion for reduction should be deemed abandoned. What constitutes a "reasonable period of time" and "reasonable efforts by the defendant" will necessarily vary with the circumstances of the case.
III.
In this case, the defendant filed his motion within the 120-day filing period mandated by Crim.P. 35(b), and the district court retained jurisdiction to rule on the motion within a reasonable period of time after its filing. The district court, however, apparently laboring under the notion that its jurisdiction was interminable, failed to rule on the motion until approximately eighteen months following the expiration of the 120-day filing period. Since the district court did not have the benefit of our opinion in this case, it had no reason to consider whether its ruling was "within a reasonable period of time" following the expiration of the 120-day filing period and whether, if not within a reasonable period of time, the defendant took reasonable efforts to secure an expeditious ruling on the motion. We believe that under these circumstances the defendant and the prosecution should be afforded an opportunity to develop an adequate evidentiary record on these aspects of the case.
We accordingly vacate the judgment and remand the case to the district court for further proceedings consistent with the views herein expressed.
NOTES
[1] When read in isolation, some language in Swainson v. People, 712 P.2d 479 (Colo.1986), might be viewed as engrafting on Crim.P. 35(b) a 120-day dispositional limitation on the court's jurisdiction to reduce a sentence. The facts of the case, however, belie such an interpretation. In Swainson, the defendant was sentenced on November 4, 1977, and did not file a motion for reduction of sentence until well over two years after the imposition of the original sentence. In his Crim.P. 35(b) motion, Swainson claimed that he requested his attorney to file the motion within 120 days after the sentence, but that his attorney failed to do so in violation of his right to effective assistance of counsel. In the course of our opinion we briefly referred to Crim.P. 35 and stated that "[o]nce the 120-day limit expires, the trial court's jurisdiction to reduce or change the sentence terminates." 712 P.2d at 480. We went on to hold, however, that the district court had jurisdiction to extend the time limit for filing a Crim.P. 35(b) motion beyond the 120-day filing limitation if the court found that the defendant was deprived of the opportunity to file a timely motion because of ineffective assistance of counsel. The brief reference in Swainson to the expiration of the trial court's jurisdiction to reduce the sentence, when viewed in the context of the holding of that case, simply means that a sentencing court's jurisdiction to reduce a sentence will normally terminate if a motion for reduction is not filed within 120 days after the imposition of sentence, but that extraordinary circumstances, such as the failure to timely file due to ineffective assistance of counsel, will extend the time limit for filing the motion. Swainson, 712 P.2d at 480.
[2] In People v. Akins, 662 P.2d 486 (Colo.1983), we held that when the defendant does not appeal the original sentence but later files a Crim. P. 35(c) motion beyond the expiration of the 120-day filing period of Crim.P. 35(b), the original sentence becomes final, for purposes of Crim.P. 35(b), upon the expiration of the 120-day period. The denial of a Crim.P. 35(c) motion, in other words, does not trigger a new 120-day period for filing a motion for reduction of sentence. Nothing in our opinion today is intended to modify our prior decision in Akins.
[3] In their brief, the People argue that it was incumbent on the defendant to file a motion under Crim.P. 45(b) to enlarge the time for the district court to act on the motion for reduction of sentence. We find this argument devoid of merit. Crim.P. 45(b) permits the court to extend the time for performing an act if an application for extension is made before the expiration of the requisite period for performing the act, as originally prescribed or extended by prior order, or if a motion is filed after the expiration of the specified period when the failure to act was a result of excusable neglect. Since the defendant's motion for reduction of sentence was filed within the 120-day limitation period prescribed by Crim.P. 35(b), there was no need whatever for the defendant to seek an enlargement of that filing deadline. Crim.P. 45(b) is therefore irrelevant to the issue before us.
[4] We note that some federal courts have construed the former version of Fed.R.Crim.P. 35(b), which authorized a court to reduce a sentence within 120 days after the sentence was imposed, to require the court to determine the motion for reduction "within a reasonable time." See, e.g., United States v. DeMier, 671 F.2d 1200 (8th Cir.1982); United States v. Smith, 650 F.2d 206 (9th Cir.1981); United States v. Mendoza, 581 F.2d 89 (5th Cir.1978); United States v. Stollings, 516 F.2d 1287 (4th Cir.1975). Consistent with these cases, the federal rule was amended and became effective in August 1985 to expressly provide that "[t]he court shall determine the motion within a reasonable time." 105 F.R.D. 179, 183. As part of the Comprehensive Crime Control Act of 1984, Fed.R.Crim.P. 35 was totally rewritten in a way that eliminated the former provisions for reduction of sentence. Pub.L. No. 98-473, 98 Stat. 1837, 2015-16 (1984). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1261952/ | 644 P.2d 951 (1982)
The PEOPLE of the State of Colorado, Plaintiff-Appellant,
v.
John TURNER, Defendant-Appellee.
No. 82SA48.
Supreme Court of Colorado.
May 10, 1982.
Dennis E. Faulk, Dist. Atty., Canon City, Steven B. Rich, Deputy Dist. Atty., Fairplay, for plaintiff-appellant.
No Appearance for defendant-appellee.
QUINN, Justice.
On this appeal the People request us to determine whether section 16-7-403(2), C.R.S.1973 (1978 Repl. Vol. 8), which provides that upon revocation of a deferred judgment and sentence "the court shall enter judgment and impose sentence," prohibited the district court from granting the defendant probation when it revoked his deferred judgment and sentence for felony *952 theft, and, instead, required the court to impose a sentence of imprisonment. We conclude that the court had the authority to grant probation to the defendant and, therefore, we affirm the judgment.
The facts are not in dispute. On September 11, 1980, an information was filed charging the defendant with felony theft, a class 4 felony, in violation of section 18-4-401, C.R.S.1973 (1978 Repl. Vol. 8). Pursuant to a plea agreement with the district attorney the defendant tendered a plea of guilty to the charge on March 17, 1981. The court accepted the guilty plea, deferred the entry of judgment and the imposition of sentence for a period of two years, and placed the defendant under the supervision of the probation department. The written terms and conditions of the supervision were acknowledged and accepted by the defendant. On November 18, 1981, the probation department filed a petition to revoke the deferred judgment and sentence because the defendant had violated the terms and conditions of his probationary supervision. After an evidentiary hearing the court sustained the petition to revoke and entered a judgment of conviction on the defendant's plea of guilty to felony theft. The defendant previously had not been convicted of any prior felonies and, therefore, was eligible for probation under section 16-11-201(2), C.R.S.1973 (1978 Repl. Vol. 8).[1] The court granted the defendant probation and ordered the defendant to serve 15 weekends in the county jail as one of the conditions of probation.[2] It is this order granting the defendant probation which the district attorney challenges on this appeal.
Section 16-7-403(1), C.R.S.1973 (1978 Repl. Vol. 8), authorizes the court, upon the written stipulation of the defendant, the defendant's attorney and the district attorney, to accept a plea of guilty and to defer the entry of judgment and the imposition of sentence for a period of two years, during which time the defendant may be placed under the supervision of the probation department. Section 16-7-403(2), C.R.S.1973 (1978 Repl. Vol. 8), outlines the consequences flowing from such a disposition:
"Upon full compliance with such conditions by the defendant, the plea of guilty previously entered shall be withdrawn and the action against the defendant dismissed with prejudice. Such stipulation shall specifically provide that, upon a breach by the defendant of any condition regulating the conduct of the defendant, the court shall enter judgment and impose sentence upon such guilty plea. Whether a breach of condition has occurred shall be determined by the court without a jury upon application of the district attorney and upon notice of hearing thereon of not less than five days to the defendant or his attorney of record. The burden of proof at such hearing shall be by a preponderance of the evidence, and the procedural safeguards required in a revocation of probation hearing shall apply" (emphasis added).
The People contend that the statutory language "the court shall ... impose sentence" requires the court to impose a sentence of imprisonment rather than some *953 other alternative to imprisonment, such as probation. We disagree with the People's contention.
A "sentence" generally refers to that part of a judgment which describes the punishment imposed by the court following the defendant's conviction for a criminal offense. See, e.g., Korematsu v. United States, 319 U.S. 432, 63 S.Ct. 1124, 87 L.Ed. 1497 (1943). To constitute a "sentence," the punishment need not take the form of imprisonment. The Colorado Code of Criminal Procedure expressly refers to various forms of sentences, which include the following: a sentence to imprisonment at a correctional facility, sections 16-11-101(1)(b) and 16-11-301, C.R.S.1973 (1978 Repl. Vol. 8 and 1981 Supp.); a sentence to the payment of a fine, sections 16-11-101(1)(e) and 16-11-502(2), C.R.S.1973 (1978 Repl. Vol. 8 and 1981 Supp.); and a sentence "to comply with any other court order authorized by law," section 16-11-101(1)(f) (1978 Repl. Vol. 8). Clearly, a sentence "to comply with any other court order authorized by law" includes an order placing the defendant on probation. In fact, various sections of the Colorado Code of Criminal Procedure refer to a grant of probation as a form of sentence. For example, section 16-11-204(1), C.R.S.1973 (1978 Repl. Vol. 8 and 1981 Supp.), requires the court to provide "as explicit conditions of every sentence to probation that the defendant not commit another offense...." Section 16-11-203, C.R.S.1973 (1978 Repl. Vol. 8 and 1981 Supp.), outlines the criteria for granting probation and permits the court to exercise its discretion in granting probation unless "it is satisfied that imprisonment is a more appropriate sentence for the protection of the public because ... (c) A sentence to probation will unduly depreciate the seriousness of the defendant's crime or undermine respect for the law...." Given the legislative ascription of various forms of judicial punishment to the word "sentence" throughout the Colorado Code of Criminal Procedure, we do not believe the use of the word "sentence" in section 16-7-403(2) requires the court to impose a sentence to imprisonment, to the exclusion of other forms of punishment expressly sanctioned by statute.
Our recent decision in People v. Widhalm, Colo. 642 P.2d 498 (1982), implicitly recognizes probation as a form of sentence within the intendment of section 16-7-403(2). We there held that
"where the court conducts a revocation hearing and, as here, finds by a preponderance of the evidence that the defendant has violated the terms of the deferred judgment, section 16-7-403(2) requires the court to enter a judgment of conviction and, after an appropriate presentence hearing, to either sentence the defendant to a term of imprisonment or, in the court's discretion, to a term of probation if he is otherwise eligible therefor."
See also People v. Ray, 192 Colo. 391, 560 P.2d 74 (1977) (quoting with approval § 1.1(b) of the ABA Standards Relating to Probation which defines probation as "a sentence not involving confinement which imposes conditions and retains authority in the sentencing court to modify the conditions of the sentence or to resentence the offender if he violates the conditions"). This same view of probation as a form of sentence finds support in the current American Bar Association Standards For Criminal Justice:
"Probation is an attempt by society to impose a sanction that will accomplish its goals, just as any other sentence is. That it happens to be less restrictive of liberty is irrelevant to the question of definition. To be sure, a sentence of probation is distinctive in that, once imposed, it can be increased on the occurrence of events amounting to a violation of its conditions. In reality, this may be less distinctive than appears at first glance, since sentences to total confinement are generally indeterminate and thus permit considerable increase above the expected date of release. Sentences to total confinement also often permit temporary releases or furloughs. In any event, the status of probation as a sentence in its own right should not be denied because of the possibility *954 of revocation, since this possibility will in fact ripen into fact in only a small minority of cases." III ABA Standards For Criminal Justice, Commentary, Sentencing Alternatives and Procedures at 18.80 (1980).
We hold that probation is a form of sentence within the meaning of section 16-7-403(2) and, as long as a defendant is otherwise eligible for probation, see section 16-11-201, C.R.S.1973 (1978 Repl. Vol. 8), a court may grant him probation upon the revocation of a deferred judgment and sentence. Since in this case the judgment of conviction for felony theft constituted the defendant's first felony conviction, he was eligible for probation and it was within the discretion of the court to grant him probation upon the revocation of the deferred judgment and sentence.
The judgment is affirmed.
NOTES
[1] Section 16-11-201(2), C.R.S.1973 (1978 Repl.Vol. 8), states:
"A person who has been twice convicted of a felony in this state or another state prior to the conviction on which his application is based shall not be eligible for probation."
[2] Section 16-11-202, C.R.S.1973 (1978 Repl. Vol. 8), provides as follows:
"When it appears to the satisfaction of the court that the ends of justice and the best interest of the public, as well as the defendant, will be served thereby, the court may grant the defendant probation for such period and upon such terms and conditions as it deems best. In addition to imposing other conditions, the court has the power to commit the defendant to any jail operated by the county or city and county in which the offense was committed during such time or for such intervals within the period of probation as the court determines. The aggregate length of any such commitment whether continuous or at designated intervals shall not exceed ninety days for a felony, sixty days for a misdemeanor, or ten days for a petty offense unless it is a part of a work release program pursuant to section 16-11-212. That the defendant submit to commitment imposed under this section shall be deemed a condition of probation." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1309624/ | 749 P.2d 395 (1988)
The PEOPLE of the State of Colorado, Petitioner,
v.
Eric FLENNIKEN, Respondent.
No. 86SC96.
Supreme Court of Colorado, En Banc.
January 11, 1988.
As Modified on Denial of Rehearing February 7, 1988.
Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Clement P. Engle, Asst. Atty. Gen., Denver, for petitioner.
R.D. Jorgensen, Pueblo, for respondent.
ROVIRA, Justice.
The People appeal a decision of the Colorado Court of Appeals, People v. Flenniken, 720 P.2d 617 (Colo.App.1986), which held that the defendant, Eric Flenniken, could not be sentenced, absent a finding of extraordinary aggravating circumstances, to a period of probation longer than the maximum sentence in the presumptive range for the crimes to which he pleaded guilty. The court of appeals also held that when the original sentence is reversed, the trial court cannot impose a harsher sentence on remand. We reverse the judgment of the court of appeals and return the case to that court with directions to remand *396 it to the district court for further proceedings consistent with this opinion.
I.
In January of 1984, the Federal Bureau of Investigation notified the Pueblo Police Department that it had evidence that defendant, an officer of the First Colorado Bank of Pueblo, had stolen money from the bank. The Pueblo Police Department began its own investigation, but before any charges were filed the prosecution and defendant entered into a plea agreement, under the terms of which defendant pleaded guilty to two counts of theft, § 18-4-401(2)(c), 8 C.R.S. (1978). The plea agreement provided that defendant would receive concurrent sentences on the two counts.[1]
The trial court accepted the plea agreement and sentenced defendant to a term of four years imprisonment plus one year of parole on each count, with the sentences to run concurrently. The court then stayed execution of both sentences and placed the defendant on probation for sixteen years, eight years on each count with the terms to run consecutively. As a condition of probation, the court ordered the defendant to serve 180 days in the county jail (two consecutive terms of ninety days), and to make restitution in the amount of $43,680.
Defendant moved to modify the terms and conditions of probation on two grounds: First, that the court had calculated the amount of restitution incorrectly; and second, that the plea agreement required that the 90-day jail sentences run concurrently. The court modified the amount of restitution to $32,047.63, but let the consecutive jail sentences stand.
Defendant then filed a motion to correct an illegal sentence under Crim.P. 35(a). He once again argued that the two 90-day jail terms should run concurrently pursuant to the plea agreement. In addition he contended that since four years was the longest term of imprisonment to which he could have been sentenced under the plea agreement, absent any finding of extraordinary aggravating circumstances, the court had no authority to order a term of probation greater than four years on each count, to run concurrently. The motion was denied.
On appeal the defendant asserted the same errors in sentencing as he had asserted in his Rule 35(a) motion. The People conceded that the probation periods, as well as the 90-day jail terms, should have been ordered to run concurrently in accordance with the plea agreement. The People argued, however, that the trial court had the authority to impose an eight-year term of probation on each count. Finally, the People contended that the case should be remanded for resentencing to give the trial court an opportunity to either accept the plea agreement, including the sentence concession as correctly interpreted, or reject the plea agreement, in which case the trial court should allow the defendant to withdraw his guilty pleas, or to affirm his guilty pleas and stand ready to accept a sentence inconsistent with the plea agreement.
The Colorado Court of Appeals, relying on People v. Knaub, 624 P.2d 922 (Colo. App.1980), held that because probation is a statutory creation, the duration of probation must be no longer than the allowable term of confinement under the applicable statute. Accordingly, since the trial court made no findings of extraordinary aggravating circumstances which would authorize sentencing beyond the presumptive range, the maximum term of probation could not exceed four years on each count. It also held that the trial court erred in *397 imposing consecutive periods of probation and county jail terms contrary to the plea agreement. After vacating the defendant's sentence and remanding for resentencing, the court of appeals held that the defendant could not receive a harsher sentence on remand than he received originally, and thus directed that:
[the district court] shall resentence defendant to the Colorado Department of Corrections for concurrent terms not to exceed four years, plus one year of parole, as it originally did, and it shall stay execution of those sentences and grant defendant probation for concurrent terms not to exceed four years.
Flenniken, 720 P.2d at 619.
We granted certiorari to consider whether the court of appeals erred in holding: (1) that the trial court could not impose a harsher sentence on remand when the original sentence is reversed, and (2) that a trial court is required to make findings of extraordinary aggravating circumstances when it imposes a term of probation which exceeds the maximum sentence in the presumptive range.
II.
Before we consider the issue of whether the trial court is prohibited from imposing a harsher sentence on remand we must first consider whether the original sentence was an illegal sentence.
The criminal code's sentencing scheme and the history of that scheme help shed light on the structure of the law under which defendant was sentenced. Prior to 1971, each section of the criminal code which defined an offense also specified a sentence the court was required to impose. The penalty provision of the section defining larceny is typical: "Stealing from the person of another shall, upon conviction, be punished by imprisonment in the penitentiary for a term of not less than one year nor more than ten years." § 40-5-2(6), 1963 C.R.S.
Although such provisions mandated the imposition of a term of imprisonment, the criminal code also provided that:
When it shall appear to the satisfaction of the court that the ends of justice and the best interest of the public, as well as the defendant, will be best served thereby, the court shall have the power to suspend the imposition or execution of sentence for such period and upon such terms and conditions in conformity with this article as it may deem best. Such court, subject to the provisions of this article, may revoke or modify any condition of probation, or may change the period of probation.
§ 39-16-6(1), 1963 C.R.S.
That grant of authority to suspend a term of imprisonment "was conceptually necessary because probation was not expressly within statutory sentencing alternatives. Therefore, to grant probation a sentencing court had to suspend imposition or execution of the statutorily mandated sentence." People v. District Court, 673 P.2d 991, 996 n. 6 (Colo.1983).
The criminal code was substantially rewritten in 1971 and 1972, and the legislature provided options under which imprisonment and probation were among alternative sentences from which a court could choose. Ch. 121, sec. 1, § 40-1-303(1), 1971 Colo.Sess.Laws 388, 393; Ch. 44, sec. 1, § 39-11-101 to -212, 1972 Colo.Sess. Laws 190, 239-48. The law as codified at the time of defendant's crimes was substantially the same as in 1972, and provided that:
Alternatives in sentencing. (1) Within the limitations of the penalties provided by the classification of the offense of which a person is found guilty, and subject to the provisions of this title, the trial court has the following alternatives in entering judgment imposing a sentence:
(a) The defendant may be granted probation unless the offense of which he is convicted makes him ineligible for probation....
(b) Subject to the provisions of section 18-1-105, C.R.S., in class 2, class 3, class 4, and class 5 felonies, the defendant *398 may be sentenced to imprisonment for a definite period of time.
. . . . .
§ 16-11-101, 8A C.R.S. (1986).
Because the new sentencing scheme did not require that offenders be sentenced to imprisonment, it was unnecessary to grant judges authority to suspend the imposition or execution of such a sentence in order to place an offender on probation. The provision granting judges such power was therefore repealed. See Ch. 44, sec. 1, § 39-11-101 to -212, 1972 Colo.Sess.Laws 190, 239-48; People v. District Court, 673 P.2d at 995-96 & n. 6 (under law after 1972, judge has no authority to suspend sentence, then impose term of probation).
The trial court's action in imposing a sentence to imprisonment, suspending that sentence, then sentencing defendant to a term of probation violates section 16-11-101. The order of the court of appeals requiring the trial court to impose a similar sentence on remand also violates section 16-11-101. The sentence is, therefore, illegal in light of the the principles announced in People v. District Court.
Defendant urges us to limit People v. District Court to the unique facts of that case, in which we found that the trial court had attempted to "circumvent legislative dictates" by expressly rejecting probation, then "sentencing within prescribed parameters, suspending the sentence, and then imposing conditions which are authorized only in connection with probation." People v. District Court, 673 P.2d at 996. Our justification for finding the sentence illegal was not that an attempt was made to circumvent the sentencing law, but rather that there was no statutory authority permitting a court to suspend execution of a sentence to imprisonment. As we noted in our opinion: "Defining crimes and prescribing punishments are legislative prerogatives. A court may not impose a sentence that is inconsistent with the terms specified by statutes." 673 P.2d at 995.
Because the trial court had no authority under the sentencing statute to impose the sentence at issue here, it is immaterial whether defendant is correct in asserting that the trial court always intended to reject imprisonment in favor of a term of probation.
The original sentence was illegal and therefore void. The trial court may, as a consequence, impose any sentence on remand that is consistent with the criminal codeand of course, consistent with the plea agreement if the court chooses to accept the agreementregardless of whether the sentence is more severe than that originally imposed. As we pointed out in People v. District Court, 673 P.2d 991, 997 (Colo.1983), "[g]ranting defendants a right to benefit from illegal sentences serves no sound public policy."
III.
The court of appeals held that the trial court could not fix a term of probation longer than the maximum sentence in the presumptive range absent a finding of extraordinary aggravating circumstances. The court reasoned,
Because probation is purely a statutory creation, the duration of probation must be no longer than the allowable term of confinement under the applicable statute. People v. Knaub, 624 P.2d 922 (Colo. App.1980). And, under the applicable sentencing scheme, unless the court determines that there are extraordinary aggravating circumstances, the sentence it may impose for a class 4 felony may not exceed 4 years.
People v. Flenniken, 720 P.2d 617, 618 (Colo.App.1986). We disagree.
Defendant pleaded guilty to two counts of class 4 felony theft. At the time of the commission of the crimes, the maximum sentence in the presumptive range for class 4 felonies was four years. § 18-1-105(1)(a)(I), 8B C.R.S. (1986). The statute also provided that a court could impose a sentence of incarceration up to twice the maximum in the presumptive range, or eight years for a class 4 felony, if it concluded that there were extraordinary aggravating circumstances. § 18-1-105(6), 8B C.R.S. (1986). In cases in which the court imposed a sentence beyond the presumptive *399 range, it was required to "make specific findings on the record of the case, detailing the specific extraordinary circumstances which constitute the reasons for varying from the presumptive sentence." § 18-1-105(7), 8B C.R.S. (1986).
The court of appeals did not adopt defendant's argument that a term of probation can never exceed the maximum presumptive sentence for a particular crime, but held that absent a finding of extraordinary aggravated circumstances the trial court could not impose a term of probation greater than four years on each count.
We believe that the permissible probationary term must be determined without reference to the presence or absence of extraordinary aggravating circumstances. Probation by its very nature is imposed only when substantial mitigating factors exist. See generally § 16-11-203, 8A C.R.S. (1986). It thus makes no sense to look for extraordinary aggravating circumstances to justify a term of probation beyond the presumptive range of imprisonment. To the extent that the court of appeals' opinion may be read as authorizing a term of "aggravated probation" upon such findings, it is incorrect. We also do not agree with the conclusion that the defendant asks us to draw: that a term of probation is absolutely limited to the maximum presumptive term of imprisonment.
The sentencing scheme under the criminal code permits a court to choose between a sentence of imprisonment and a sentence of probation. A sentence to imprisonment is governed by Article 11, Part 3 of Title 16 of the statutes, and is expressly subject to the limitations on the length of imprisonment set out in section 18-1-105. See §§ 16-11-101(1)(b) & -302, 8A C.R.S. (1986).
A sentence to probation, however, is governed only by Article 11, Part 2 of Title 16. The section authorizing probation states: "the court may grant the defendant probation for such period and upon such terms and conditions as it deems best." § 16-11-202, 8A C.R.S. (1986). Neither that section nor section 16-11-101(1)(a) (listing probation as an alternative sentence) expressly refers to section 18-1-105 as limiting the period of probation that may be ordered.[2]
Although we acknowledge that the general, introductory language of section 16-11-101[3] might be read as imposing the limitations of section 18-1-105 on probation terms, such a reading would render the express limitations in sections 16-11-101(1)(b) and 16-11-302 mere surplusage. We therefore decline to adopt the interpretation suggested by defendant.
In addition, there are sound policy reasons for not limiting a term of probation to the maximum presumptive term of incarceration authorized by statute. Although incarceration is primarily punitive, probation is primarily rehabilitative. There is no reason to believe that the legislature's judgment concerning an appropriate term of punishment by imprisonment was intended to fix, or is even related to, the term of probation that may be required to rehabilitate the offender. There may be many cases in which the goals of probation simply cannot be achieved within the time constraints the legislature has placed on imprisonment. Accordingly, we conclude that the maximum sentence in the presumptive range as set out in section 18-1-105 does not establish the maximum period of probation to which a defendant may be *400 sentenced.[4]
The judgment of the court of appeals is reversed, and the case remanded to the court of appeals for remand to the district court. Upon remand, the district court may accept the plea agreement and resentence defendant or reject the plea agreement and offer the defendant an opportunity to withdraw his pleas.
NOTES
[1] Paragraph 3 of the plea agreement provided that:
There is no agreement as to imposition of sentence in this matter, and whether or not the Defendant gets probation or receives a penal sentence is up to the Court. Should it become appropriate, the District Attorney agrees not to oppose the sentencing of the Defendant to Rocky Mountain Community Corrections. Should the Court impose probation, the terms and conditions of probation are totally up to the Court, including the amount of restitution to be made and under what circumstances said restitution would be made. However, the parties agree that any sentence imposed by the Court shall be concurrent.
[2] Moreover, it is apparent from the history of the statute that the legislature deliberately chose not to impose an express limitation on the permissible length of probation. Prior to 1972, the statute provided that "[t]he period of probation, together with any extension thereof, shall not exceed five years [or one year if the crime was a misdemeanor]." § 39-16-6(1), 1963 C.R.S. That limitation was deleted in the 1972 changes. Ch. 44, sec. 1, § 39-11-101 to -212, 1972 Colo. Sess.Laws 190, 239-48.
[3] Within the limitations of the penalties provided by the classification of the offense of which a person is found guilty, and subject to the provisions of this title, the trial court has the following alternatives in entering judgment imposing a sentence....
§ 16-11-101(1), 8A C.R.S. (1986).
[4] In People v. Knaub, 624 P.2d 922 (Colo.App. 1980), the court of appeals held that a term of probation may not exceed the maximum term of imprisonment that may be imposed for a particular offense. In Knaub, defendant was sentenced upon his plea of guilty to one class 2 misdemeanor and one class 1 petty offense. The penalties for misdemeanors and petty offenses are not stated in terms of presumptive sentence ranges, and the provision for sentencing on the basis of extraordinary aggravating or mitigating factors does not apply to misdemeanors or petty offenses. See §§ 18-1-105(6), -106 & -107, 8B C.R.S. (1986 & 1987 Supp.). The court of appeals' reliance on Knaub as limiting the term of probation to the maximum presumptive sentence absent a finding of extraordinary aggravating circumstances was therefore misplaced.
The terms of probation to which defendant was sentenced were each within the maximum term of imprisonment in the aggravated range for class 4 felonies under section 18-1-105(1)(a)(I) and -105(6), 8B C.R.S. (1986). We thus are not faced withand therefore do not addressthe question of whether a term of probation may exceed the maximum sentence in the aggravated range for the offense for which a defendant is sentenced. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1381591/ | 951 F.Supp. 109 (1997)
Matthews SMITH, et al, Plaintiffs,
v.
TEXACO INC., Texaco Chemical Company and Star Enterprise, Inc., Defendants.
No. 1:96-CV-0749.
United States District Court, E.D. Texas, Beaumont Division.
January 2, 1997.
James Erick Payne, Provost & Umphrey, Beaumont, TX, for Plaintiffs.
Stephen Fred Fink, Thompson & Knight, Dallas, TX and Paul W. Gertz, Germer & Gertz, Beaumont, TX, for Defendant Texaco, Inc.
V. Scott Kneese, Bracewell & Patterson, Houston, TX and Robert J. Hambright, Orgain, Bell & Tucker, Beaumont, TX, for Star Enterprise.
MEMORANDUM OPINION
COBB, District Judge.
Before the court is Plaintiff Matthews Smith's (Smith) motion seeking to remand this case to state court, and defendants' Texaco, Inc. (Texaco) and Star Enterprise, Inc. *110 (Star Enterprise) motions seeking to dissolve the temporary restraining order (TRO) previously entered by the state district court in this removal action pursuant to Fed.R.Civ.P. 65(b) and to deny a temporary injunction.
The court has conducted a preliminary injunction hearing and reviewed the parties' written submissions and oral arguments. For the reasons given below, both the plaintiff's and the defendants' motions will be denied.
Background
Plaintiff Smith is employed by the Human Resources Department at the Port Arthur, Texas refinery operated by Star Enterprise, previously owned by Texaco. On December 6, 1996, Smith obtained a TRO from state court, which enjoined defendants from moving, altering or deleting any records which might pertain to Smith's (personal and as an anticipated class representative) claims of employment discrimination against Star Enterprise (and possibly Texaco).
Star Enterprise was formed as a joint venture under New York partnership law on January 1, 1989. Star Enterprise is owned 50% by an indirect subsidiary of Texaco and 50% by Saudi Refining, Inc.
The state court TRO pertains to Texaco because Texaco shares all employee performance and appraisal records with Star Enterprise to determine seniority or when employees chose to switch employment between these two companies. This occurs with some regularity, but not on a scheduled basis.
Specifically, Smith alleges that Star Enterprise's facially neutral employee appraisal and promotion system discriminates against him and other African-American employees. At the preliminary injunction hearing held before this court, it was determined that of about 50 people at Star Enterprise's nationwide human resources group only 1 or 2 are African-Americans. The evidence also showed that while between 17 to 21 people worked in Star Enterprise's Port Arthur facility's Human Resources Department, Smith was the only African-American in that department since 1984. Despite having high qualifications, a Master's Degree in Public Administration with an emphasis in Budgeting and Personnel Services, Smith was the only employee in the Star Enterprise's Port Arthur facility's Human Resources Department who has not been promoted since 1985, a period of 11 years. Other persons who are caucasian, but with less educational background and with less seniority have been promoted, received raises, and given supervisory positions during those 11 years. But not Smith.
The evidence also showed that even as the state court issued its TRO on December 6, 1996, Star Enterprise attempted to move certain files from the "Old Records Room" in the Port Arthur plant to Tulsa, Oklahoma. The record indicates that but for Smith's efforts to enforce the TRO, Star Enterprise would have moved out of Texas to a Texaco records storage facility in Tulsa, Oklahoma certain employment records, possibly essential for making Smith's case, and certainly relevant to the claim or the defense. Texaco has the exclusive control of the Tulsa records center.
Discussion
1. This Case was Properly Removed to Federal Court
A defendant may remove a state court action to federal court if such an action could have been filed in the federal court originally. 28 U.S.C. § 1441; Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1160-1161 (5th Cir.1989). When, as in the present case, there is no diversity jurisdiction, a federal question must appear on the face of the plaintiff's "well-pleaded complaint" for removal to be proper. Id.; see also Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 366 (5th Cir.1995) ("A defendant ... must show that a federal right is an element, and an essential one, of the plaintiff's cause of action.") (citations omitted). The general rule, thus, is that a federal defense to a state law claim does not create removal jurisdiction. Aaron, 876 F.2d at 1161.
In the present case, the plaintiff's pleading in the state court action, on its face, asserts an essentially federal claim. (See Appendix) The relevant portion of the plaintiff's pleading alleges:
*111 Defendants have engaged and are continuing to engage in unfair and racially motivated discriminatory practices against Plaintiff and other African-American employees of Star Enterprise. There are discriminatory practices and policies at Defendants' facilities that determine promotions, advancement opportunities and compensation which apply Company-wide throughout the United States. The specific practice includes "facially-neutral" decision-making systems that, in their application, have a disproportionate adverse impact on African-American employees.
Plaintiff's Application for Temporary Restraining Order at III (emphasis added).
Defendants properly point out that the above-quoted allegation states a cause of action which is exclusively federal in nature. 42 U.S.C. § 1981 makes it unlawful for an employer to discriminate on the basis of race in promotion and wage decisions. Page v. U.S. Industries, 726 F.2d 1038 (5th Cir.1984); Boykin v. Georgia-Pacific Corp., 706 F.2d 1384 (5th Cir.1983). A prima facie case of such racial discrimination may be shown by demonstrating that African-Americans are "disparately impacted" by the employer's wage and promotion policies; that is, "Where gross statistical disparities can be shown, they alone may ... constitute prima facie proof of a pattern or practice of discrimination."[1]Boykin, 706 F.2d at 1390 (quoting Hazelwood School Dist. v. United States, 433 U.S. 299, 307-08, 97 S.Ct. 2736, 2741, 53 L.Ed.2d 768 (1977)).
Indeed, when the plaintiff alleges that Star Enterprise's promotion policies where determined by:
`facially-neutral' decision-making systems that, in their application, have a disproportionate adverse impact on African-American employees,
he conforms perfectly to the Fifth Circuit's requirements for pleading the issue of disparate impact under section 1981:
A prima facie case of disparate impact must be shown by identification of a neutral employment practice coupled with proof of its discriminatory impact on one class of employees in the employer's workforce.
Page, 726 F.2d at 1053 (emphasis added). Accordingly, a section 1981 claim is clearly discernable from the face of the plaintiff's pleadings.
While the plaintiff argues that there is no federal question jurisdiction because an employment discrimination case may be brought under the Texas Commission on Human Rights Act (TCHRA), Tex.Lab.Code Ann. §§ 21.001 et seq., it is fatal to his argument that he alleges that Star Enterprise's discrimination practices were "Company-wide throughout the United States,"[2] while TCHRA pertains to Texas employers only. Tex.Lab.Code Ann. §§ 21.001. Thus, a federal question, specifically a section 1981 claim, necessarily appears on the face of the plaintiff's pleading. Therefore, the plaintiff's Motion to Remand is in all things denied.
2. Preliminary Injunction
This court may grant a preliminary injunction if: "(1) the movant has a substantial likelihood of eventual success on the merits; (2) irreparable injury will be suffered unless the injunction issues; (3) the threatened injury to the movant outweighs the damage *112 which the injunction may cause the opponent; and (4) the injunction would not be adverse to the public interest." Productos Carnic, S.A. v. Cent. Am. Beef, Etc., 621 F.2d 683 (5th Cir.1980).
a. Success on the Merits.
The court finds that the evidence presented at the hearing on December 20, 1996 shows that the plaintiff met his burden of showing a likelihood of success on the merits. Statistical evidence may be used to prove that a subjective promotional system has a classwide discriminatory impact. Page, 726 F.2d at 1046-1047. This court finds it startling that of at least 50 people in Star Enterprise's nationwide human resources group only one or possibly two are African-Americans. Though there were between 17 to 21 people in the Star Enterprise's Port Arthur facility's Human Resources Department, Smith was the only African-American to work in that department since 1984. Despite having high qualifications, a Master's Degree in Public Administration with an emphasis in Budgeting and Personnel Services, Smith, who is forty-two was the only employee in the Star Enterprise's Port Arthur facility's Human Resources Department who has not been promoted since 1985, a period of 11 years.[3] At the very least, this court is persuaded that there is a substantial likelihood that Smith will succeed on the merits were he to bring a section 1981 claim.
b. Irreparable Injury.
The evidence before this court indicates that on December 6, 1996, or the day on which the state court issued its TRO, Star Enterprise has attempted to move certain files from its "Old Records Room" in the Port Arthur refinery to Tulsa, Oklahoma for storage in the Texaco records center. The evidence shows that the files which Star Enterprises attempted to move might have been essential for making the plaintiff's case. It is also clear that but for Smith notifying Star Enterprise of the state court's TRO, documents which could prove his case would have been removed from Port Arthur, Texas. If any documents relevant to the plaintiff's discrimination claim are removed, destroyed, or altered, the plaintiff and the class he anticipates he will represent will likely suffer irreparable harm in proving their racial discrimination claim.
c. Balancing the Equities.
Defendants argue that compliance with the injunction might cause more harm than good, viz. disruption of ordinary business activity. To accommodate the defendants' concerns, the court will modify the original state court TRO to permit the moving of certain documents, and certain notations concerning payroll, if doing so is in the ordinary and usual course of the defendants' business; provided, however, that the plaintiffs' rights to inspect documents relevant to their race discrimination case shall not be impaired. Moreover, to mitigate the high costs associated with electronic document storage, the court will permit defendants to delete electronic records in the ordinary and usual course of business; provided, however, that hard copy records be made and kept of any and all electronic records of the various Human Resources records, as well as any new data used to report various actions, and the status of employees to any governmental authority, state local, or federal, if the defendants choose to delete such records. With such modifications, the threat of harm to the plaintiffs outweighs any harm to the defendants which the injunction might cause.
d. Public Policy.
Sound public policy abhors racial discrimination in employment promotions. Indeed, such discrimination is insidious, and violates our sense of human decency. Accordingly, an injunction which would enable the plaintiff to litigate fully and adequately his race discrimination claim fosters sound public policy.
Conclusion
For the reasons given above, the plaintiffs' Motion to Remand is in all things denied and *113 the defendants' Motions to Dissolve the Temporary Restraining Order and Deny a Temporary Injunction are denied.
APPENDIX
42 U.S.C. § 1981. Equal rights under the law
(a) Statement of equal rights
All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens ...
(b) "Make and enforce contracts" defined
For purposes of this section, the term "make and enforce contracts" includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of contractual relationship.
(c) Protection against impairment
The rights protected by this section are protected against impairment by nongovernmental discrimination and impairment under color of State law.
Paragraph III of Plaintiff's Petition
Defendants have engaged and are continuing to engage in unfair and racially motivated discriminatory practices against Plaintiff and other African-American employees of Star Enterprise. There are discriminatory practices and policies at Defendants' facilities that determine promotions, advancement opportunities and compensation which apply Company-wide throughout the United States. The specific practice includes "facially-neutral" decision-making systems that, in their application, have a disproportionate adverse impact on African-American employees. More specifically Plaintiff, Matthews Smith has been subjected to discriminatory practices and policies in Defendants' evaluation system, job posting, compensation/pay-grade systems and promotions. By using these discriminatory practices and policies, Defendants have engaged in a pattern and practice of intentional discrimination against Plaintiff and other African-American employees of Star Enterprise.
NOTES
[1] This court is aware that Title VII also prohibits discrimination in employment on the basis of race. See 42 U.S.C. § 2000e. However, Title VII establishes an administrative procedure i) file timely charge with the EEOC; ii) receive notice of right to sue which a complaining employee must follow before filing a lawsuit in federal court. Alexander v. Gardner-Denver Co., 415 U.S. 36, 47, 94 S.Ct. 1011, 1019, 39 L.Ed.2d 147 (1974); 42 U.S.C. § 2000e-5(b), (c), (e). Because the plaintiff failed to plead the procedural prerequisites for a federal lawsuit under Title VII, this court cannot construe a plausible federal question over this lawsuit under Title VII. However, a disparate impact claim may be made under section 1981 even if such a claim may not be brought pursuant to Title VII. Page v. U.S. Industries, Inc., 726 F.2d 1038, 1041 n. 2 (5th Cir.1984).
[2] During a hearing before this court the plaintiff has alleged that such discriminatory practices may occur not merely in Port Arthur, Texas, but also at Star Enterprise's refineries in Delaware City, Delaware, and Convent, Louisiana, and in Star Enterprise's principal marketing facility in Atlanta, Georgia.
[3] Even if Brown v. Board of Education, 349 U.S. 294, 75 S.Ct. 753, 99 L.Ed. 1083 (1955) (decided when the plaintiff was an infant), had eradicated race discrimination once and for all (wishful thinking) this court cannot help but wonder that given the evidence before it whether Smith, 42, could possibly assert a cognizable claim of age discrimination. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1511295/ | 939 F.Supp. 1297 (1996)
Dr. Jackson WAGNER, Plaintiff,
v.
TEXAS A & M UNIVERSITY, Dr. James R. West, and Dr. Elvin E. Smith, Defendants.
Civil Action No. H-95-5426.
United States District Court, S.D. of Texas, Houston Division.
September 10, 1996.
*1298 *1299 *1300 *1301 *1302 *1303 *1304 *1305 Travis Brewer, West, Webb, Allbritton & Gentry, Bryan, TX, for Plaintiff.
Dedra L. Wilburn, Office of Texas Attorney General, Austin, TX, for Defendants.
MEMORANDUM AND ORDER
CRONE, United States Magistrate Judge.
Pending before the court is Defendant Texas A & M University ("TAMU"), Dr. James West ("West") and Dr. Elvin E. Smith's ("Smith") (collectively, the "Defendants") Motion for Summary Judgment (# 25). The Defendants seek summary judgment on Plaintiff Dr. Jackson Wagner's ("Wagner") claims asserting discrimination under the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. ("ADA"), violations of his civil rights under 42 U.S.C. § 1983, retaliation in violation of TEX.GOV'T CODE ANN. § 554.001 (the "Texas Whistleblower Act"), negligent and intentional infliction of emotional distress, defamation, and fraudulent concealment.
Having reviewed the motion, the submissions of the parties, the pleadings, and the applicable law, this court is of the opinion that the Defendants' motion for summary judgment should be granted in part and denied in part.
I. Background
Wagner is a professor in the Department of Human Anatomy and Medical Neurobiology (the "Department") within the College of Medicine at TAMU in College Station, Texas. Wagner has been employed by TAMU since 1974 and tenured as a professor since 1976. The Department is comprised of three core subjects: Neuroanatomy, Gross Anatomy, and Microscopic Anatomy. According to Wagner, each of the subjects is a separate specialty. Wagner has focused his entire career on Neuroanatomy. Wagner acted as the Course Coordinator of Neuroanatomy at TAMU College of Medicine continuously until 1990, and then again in 1993. In addition, from 1974 to 1989, Wagner was Head of the Department at TAMU College of Medicine.
Frictions in the Department began on September 16, 1987, when Wagner, then Department Head, alleged that another professor in the Department, Dr. Michael Trulson ("Trulson"), had engaged in scientific fraud. According to Wagner, Trulson had plagiarized, falsified, and fabricated results of dozens of experiments as well as falsely represented himself to be a medical doctor. In response to Wagner's allegations, Trulson allegedly accused Wagner of homosexuality and improprieties such as drug abuse, theft, fraud, and improper use of prescription medicine. Wagner requested legal assistance from TAMU to defend himself against countercharges by Trulson, but his request was denied. Wagner contends that because Trulson was a martial arts expert, he feared violence in the office, which motivated him to carry a handgun with him to school.
TAMU designated a Board of Inquiry to assess the charges made by Wagner against Trulson. On January 8, 1988, the Board of Inquiry issued a report that found Trulson had engaged in serious academic misconduct and should be terminated. TAMU submitted the report to the National Institutes of Health ("NIH"), and it was accepted by NIH. Following the report of the Board of Inquiry, TAMU and Trulson negotiated a settlement that allowed Trulson to voluntarily resign effective May 31, 1988, and prevented TAMU from placing negative references in his personnel file. Wagner, who had hired Trulson, continued to press for broader inquiry into and disclosure of the allegations and findings of misconduct.
In 1989, Wagner stepped down as Department Head. The circumstances of his resignation are a matter of considerable debate. Wagner contends that he was forced out because of his frequent demands for greater disclosure of the "Trulson Affair." The Defendants claim that Wagner left voluntarily because he had been neglecting his Department Head duties and lacked the support of the Department. According to Wagner, Richard DeVaul ("DeVaul"), then Dean of the College of Medicine, promised Wagner $80,000 in start-up research funds as an offset *1306 for being required to step down as Department Head. Wagner never received these funds.
Wagner continued to object to TAMU's failure to pursue Trulson aggressively. As a result, officials at TAMU met with Dr. Suzanne Hadley ("Hadley") at the Office of Scientific Integrity ("OSI"), an investigative arm of the NIH, at which time TAMU and NIH jointly determined to reopen the Trulson investigation. On November 8, 1989, TAMU appointed an Investigation Committee to complete the investigation of the allegations made by Wagner. The Investigative Panel was formally charged on October 16, 1989. In March 1990, the committee issued a report (the "Norris Committee Report") which found that Trulson had committed serious academic misconduct. The Norris Committee Report recommended, among other things, that various funding and publication organizations that Trulson had worked with be notified of the findings of misconduct, that Trulson be barred from receiving NIH funds in the future, and that Trulson's personnel records at TAMU include the findings of the Panel.
In 1991, Wagner took a sabbatical. Wagner contends that when he returned from sabbatical, he was prohibited from teaching or attending the Neuroanatomy class. Wagner therefore, instructed the University Bookstore to remove from its shelves a lab manual that he had authored on the subject of Neuroanatomy, the copyright ownership of which was later disputed. Defendant Smith, the Associate Dean under DeVaul in the College of Medicine, allegedly ordered Wagner not to remove the materials, indicating that the removal would be a breach of the terms of appointment as a faculty member, i.e., grounds for termination.
On December 12, 1991, Wagner reported to the OSI that TAMU allegedly was in violation of the ethical standards designed to safeguard whistleblowers. In 1992, the Office of Research Integrity ("ORI"), the successor to the OSI, ordered TAMU to conduct an investigation into whether Wagner's claims were well-founded. On January 14, 1993, TAMU issued the "Milford Committee Report," which concluded that Wagner's reputation had been damaged because of TAMU's handling of the Trulson affair or that at least his reputation had not been protected as NIH required. The Milford Committee Report recommended that Wagner be "reintegrated" immediately and completely back into the College of Medicine. The Milford Committee Report also recommended that TAMU publish the true circumstances of the Trulson case. The ORI accepted the findings of the Milford Committee Report, and in February 1993, TAMU undertook to accomplish Wagner's reintegration into the College of Medicine. On the issues of reintegration and research funding, TAMU Associate Provost and Dean of Faculties William L. Perry ("Perry") was named the arbitrator between Wagner and the College of Medicine. Wagner contends that the arbitration process was a special "grievance procedure" established to implement the Milford Committee Report's recommendations. The ORI later found this procedure to be in compliance with federal regulation and requested that it be informed when TAMU published a report of the Trulson Affair, which would close the ORI's case file on Wagner's retaliation claims.
In 1993, Wagner again served as Course Coordinator for Neuroanatomy. In July 1993, Wagner, at the advice of his physician, requested and was granted a six-month medical leave of absence to correct certain health problems, including intermittent depression, gastrointestinal disorder, nervous and physical exhaustion, respiratory insufficiency, and lower back pain. The medical leave time was deducted from his sick leave time accumulated over the years. At the same time, Defendant West became the new Department Head.
While Wagner was on medical leave and upon his return in early 1994, Perry, the arbitrator, negotiated with Wagner. During these negotiations, on April 18, 1994, TAMU offered Wagner $225,000 after taxes, plus lifetime health insurance coverage, in exchange for his immediate retirement. According to Wagner, in reliance on good faith efforts to negotiate his retirement, TAMU and Wagner agreed to his taking a one-year faculty development leave from April 1994 to *1307 April 1995, during which time negotiations would continue. At the end of 1994, Defendant Smith replaced DeVaul as Interim Vice President for Health Affairs and Interim Dean of Medicine at TAMU, which placed him in a position to oversee much of the "reintegration" of Wagner into the College of Medicine. On March 1, 1995, while still on leave, Wagner wrote Perry a memorandum accepting TAMU's offer. Perry responded by a memorandum dated March 3, 1995, stating that no proposals were on the table.
On April 21, 1995, West, the current Head of the Department, informed Wagner by memorandum that he would be teaching Microscopic Anatomy (also called Microanatomy) in the Spring 1996 semester rather than Neuroanatomy. Wagner had no prior experience teaching Microanatomy. According to West's memorandum, Wagner's two-year absence from Neuroanatomy had necessitated fully staffing the course, leaving no vacancy.
In June 1995, Wagner's counsel, Gaines West ("Gaines"), notified TAMU by letter that Wagner was suffering from a chronic, serious health condition that required his taking leave under the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq. ("FMLA"). By this letter, Wagner also alleged that his illness constituted a disability under the ADA and that he was entitled to a reasonable accommodation, specifically a part-time and modified work schedule. Wagner reported for full-time duty on September 4, 1995. Wagner allegedly worked intermittently from June to September but was charged for full-time sick leave. Wagner requested an adjustment to his leave records. On December 15, 1995, Smith notified Wagner by memorandum that on June 26, 1995, he was placed on full-time sick leave. Smith stated that Wagner never requested that his leave be changed to intermittent; therefore, Smith declined to adjust Wagner's sick leave record. On September 19, 1995, Wagner accepted the teaching reassignment from Neuroanatomy to Microanatomy.
Wagner initiated this action on November 30, 1995. On June 27, 1996, Wagner filed a second amended complaint alleging employment discrimination under the ADA, violations of his civil rights by deprivation of tenured teaching positions and free speech interests without due process of law in violation of 42 U.S.C. § 1983, retaliation in violation of the Texas Whistleblower Act, negligent and intentional infliction of emotional distress, defamation, and fraudulent concealment of information that would have allowed Wagner to file suit earlier.
In December 1995, Smith, in a memorandum to Wagner, informed him that the Neuroanatomy Course Coordinator had expressed concern for the safety of the Neuroanatomy faculty and the enrolled students should Wagner be permitted to interact with them. In addition, Smith stated that other faculty members had received threatening statements from Wagner regarding the use of firearms. Smith directed Wagner not to attend the lectures or laboratories for the Neuroanatomy course. Although the memorandum to Wagner was stamped "confidential," copies were sent to three other faculty members as well as the special assistant to the Executive Vice President, Provost, and General Counsel of TAMU Dr. John Gelderd ("Gelderd"), Perry, West, and Ms. Ruth Prescott ("Prescott").
Wagner remains on faculty as a tenured professor at TAMU, currently earning $117,000 annually in salary and benefits.
II. Analysis
A. Summary Judgment Standard
Rule 56(c) provides that "[summary] judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The party seeking summary judgment bears the initial burden of informing the court of the basis for his motion and identifying those portions of the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits, if any, which he believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 *1308 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986); Williams v. Adams, 836 F.2d 958, 960 (5th Cir.1988). Once a proper motion has been made, the non-moving party may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts showing the existence of a genuine issue for trial. Celotex Corp., 477 U.S. at 322-23, 106 S.Ct. at 2552-53; Anderson, 477 U.S. at 257, 106 S.Ct. at 2514-15; Wallace v. Texas Tech Univ., 80 F.3d 1042, 1047 (5th Cir.1996); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc). The controverted evidence must be viewed in the light most favorable to the non-movant, and all reasonable doubts must be resolved against the moving party. Palmer v. BRG of Ga., Inc., 498 U.S. 46, 49 n. 5, 111 S.Ct. 401, 402 n. 5, 112 L.Ed.2d 349 (1990); Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14; Judwin Properties, Inc. v. United States Fire Ins. Co., 973 F.2d 432, 435 (5th Cir.1992). Summary judgment is mandated if the non-movant fails to make a showing sufficient to establish the existence of an element essential to his case on which he bears the burden of proof at trial. Celotex Corp., 477 U.S. at 322, 106 S.Ct. at 2552. "In such a situation, there can be `no genuine issue as to any material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. at 2552.
B. Americans with Disabilities Act
Wagner maintains that he has been discriminated against in violation of Title II of the ADA. Specifically, Wagner claims that: (1) he has not been reassigned to teach the class he has traditionally taught; (2) jobs and benefits have been denied to his acquaintances; and (3) he has been exposed to unfair public ridicule intended to prey on his disability. Wagner alleges that his disability is depression and post-traumatic stress syndrome.
The Defendants argue in their motion for summary judgment that Wagner may not allege claims of employment discrimination under the ADA because he failed to file a timely charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"). The Defendants correctly point out that employees making claims under Title I of the ADA are required to follow the procedures for Title VII actions, which require the timely filing of an EEOC charge. See 42 U.S.C. § 12117(a); Stafford v. Radford Community Hosp., Inc., 908 F.Supp. 1369, 1374 (W.D.Va.1995); Patridge v. Runyan, 899 F.Supp. 291, 293 (N.D.Tex. 1995); Oswald v. Laroche Chem., Inc., 894 F.Supp. 988, 992 n. 4 (E.D.La.1995); Bent v. Mount Sinai Medical Ctr., 882 F.Supp. 353, 355 (S.D.N.Y.1995); Lewis v. Board of Trustees of Ala. State Univ., 874 F.Supp. 1299, 1302 (M.D.Ala.1995). In his second amended complaint, however, Wagner asserts a claim under Title II of the ADA, which has no filing requirement. See 42 U.S.C. § 12131 et seq.; Noland v. Wheatley, 835 F.Supp. 476, 483 (N.D.Ind.1993).
Title II, sometimes referred to as the "Public Services" title of the ADA, provides:
Subject to the provisions of this subchapter, no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities of a public entity, or be subjected to discrimination by any such entity.
42 U.S.C. § 12132. "Public entity" includes any state or local government and any department, agency or other instrumentality of a state or local government. 42 U.S.C. § 12131(1)(A) and (B). Unlike Title I, which adopts the procedures set forth in Title VII requiring the exhaustion of administrative remedies, Title II adopts the "the remedies, procedures, and rights" as set forth in the Rehabilitation Act of 1973, 29 U.S.C. § 794a. See 42 U.S.C. § 12133. "The Rehabilitation Act, from which Title II of the ADA draws it procedures and remedies, does not require the exhaustion of administrative remedies." Doe v. County of Milwaukee, 871 F.Supp. 1072, 1076 (E.D.Wis.1995) (citing Cook v. Rhode Island Dep't of Mental Health, Retardation & Hosps., 783 F.Supp. 1569, 1571-72 (D.R.I.1992), aff'd, 10 F.3d 17 (1st Cir.1993)); Petersen v. University of Wis. Bd. of Regents, 818 F.Supp. 1276, 1280 (W.D.Wis. *1309 1993). "A primary purpose of Title II was to extend the reach of the Rehabilitation Act to all public entities, regardless of whether or not they receive federal funds." Ethridge v. Alabama, 860 F.Supp. 808, 812 n. 6 (M.D.Ala. 1994) (citing H.Rep. No. 485(II), 101st Cong., 2d Sess. 84 (1990), reprinted in 1990 U.S.C.C.A.N. 267, 366).
Although it is not apparent from the plain language of § 12132, the regulations issued by the Department of Justice make it clear that the prohibition against discrimination by public entities includes employment discrimination. Ethridge, 860 F.Supp. at 812. "No qualified individual with a disability shall, on the basis of disability, be subjected to discrimination in employment under any service, program, or activity conducted by a public entity." 28 C.F.R. § 35.140(a). The regulations promulgated under Title II cross-reference Title I of the Act in outlining the standards by which to judge employment discrimination under Title II of the Act:
(b)(1) For purposes of this part, the requirements of Title I of the Act, as established by the regulations of the Equal Employment Opportunity Commission in 29 CFR part 1630, apply to employment in any service, program, or activity conducted by a public entity if that entity is also subjected to the jurisdiction of Title I.
Petersen, 818 F.Supp. at 1278 (citing 28 C.F.R. § 35.140). Subsection (b)(2) of the same regulation provides that if the public entity is not also subject to the jurisdiction of Title I, the requirements of section 504 of the Rehabilitation Act of 1973 will apply. Id. Therefore, "[d]iscrimination as proscribed by Title II includes employment discrimination." Ethridge, 860 F.Supp. at 812. Like Title I, Title II draws its enforcement method from other statutes. Part 1630 of the EEOC regulations interpreting Title I of the Act, covers the purpose of the Act, definitions, prohibitions, defenses, and specific activities permitted. Petersen, 818 F.Supp. at 1280 (citing 29 C.F.R. §§ 1630.1-1630.16). Part 1630 does not contain any reference to exhaustion of administrative remedies or any other procedural requirements to be imposed on plaintiffs. Id. "Instead the regulations that address processing administrative complaints under Title I of the Act are contained in a separate section of the Equal Employment Opportunity Commission regulations." Id. (citing 29 C.F.R. Part 1641). There is no reason to assume the inclusion of Title I's procedural requirements in Title II where the regulatory reference to the EEOC requirements specifically omitted the procedural requirements found in 29 C.F.R. Pt. 1641. Silk v. City of Chicago, No. 95-C-0143, 1996 WL 312074, at *13 (N.D.Ill. June 7, 1996); Petersen, 818 F.Supp. at 1280.
Furthermore, Subpart F of the regulations governing Title II of the Act, which sets forth compliance procedures for administrative enforcement of the Act, explains in detail the jurisdiction over claims under the Act of both the EEOC and the Department of Justice. See 28 C.F.R. §§ 35.170-178. "[T]he Department of Justice's analysis of Subpart F states clearly that available administrative channels under Title II of the Act are optional and that plaintiffs may proceed directly to federal court if they choose to do so." Petersen, 818 F.Supp. at 1279. In addition, in the Appendix to Subpart F, in an analysis of 28 C.F.R. § 35.172 governing resolution of complaints, the regulations restate the rule of no exhaustion.
The Act requires the Department of Justice to establish administrative procedures for resolution of complaints, but does not require complainants to exhaust these administrative remedies. The Committee Report makes clear that Congress intended to provide a private right of action with the full panoply of remedies for individual victims of discrimination. Because the Act does not require exhaustion of administrative remedies, the complainant may elect to proceed with a private suit at any time.
Id. at 1279-80 (quoting 28 C.F.R. § 35.172, App. A). Based on the language of Title II, the regulations promulgated by the Department of Justice, and the scant case law, there appears to be no requirement that plaintiffs file an administrative complaint or otherwise follow the procedural requirements of Title I when filing a Title II claim. Dertz v. City of Chicago, 912 F.Supp. 319, 324 (N.D.Ill.1995); Finley v. Giacobbe, 827 F.Supp. 215, 219 (S.D.N.Y.1993).
*1310 In their reply brief, the Defendants make several intricate policy and statutory interpretation arguments urging that Wagner ought not be able to evade Title I's procedures with Title II's looser terms. The Defendants point out that Congress's words in adopting Title VII enforcement procedures for ADA Title I claims may encompass possible employment actions under Title II:
The powers, remedies and procedures set forth in sections 2000e-4, 2000e-5, 2000e-6, 2000e-8, and 2000e-9 of this title shall be the powers, remedies and procedures this subchapter provides to the Commission, to the Attorney General or to any person alleging discrimination on the basis of disability in violation of any provision of this chapter, or regulations promulgated under Section 12116 of this title, concerning employment.
42 U.S.C. § 12117(a) (emphasis added). Wagner's claim concerns employment and falls in the same chapter as ADA Title I. Contrary to the Defendants' assertion, the language of § 12117(a) is not expressive of clear Congressional intent. The cited passage refers to violations of the chapter but then specifically refers only to regulations promulgated under § 12116. Silk, 1996 WL 312074, at *13. Congress apparently chose not to refer to regulations promulgated under Title II's sections, although they also encompass employment claims. Thus, there can be no finding of a clear intent to impose Title VII procedures on all possible employment claims. Id.
The Defendants also point out the apparent inconsistency in permitting public sector employees to sue their employers without regard to whether they exhaust administrative procedures while private sector employees are required to comply with exhaustion requirements. "However logical such an argument may be, the statute itself is at least ambiguous on this point. In the face of this ambiguity, it is necessary to look to the regulations promulgated by the Department of Justice, whose interpretation of Title II of the Act is entitled to controlling weight." Petersen, 818 F.Supp. at 1279. As described above, the regulations indicate that public employees are entitled to proceed directly to court.
Finally, the Defendants cite Lakoski v. James for the proposition that the Fifth Circuit is wary of creating such policy anomalies. See 66 F.3d 751, 754 (5th Cir. 1995), petition for cert. filed, 64 U.S.L.W. 3625 (U.S. Mar. 8, 1996) (No. 95-1439). Lakoski, however, is inapposite. In Lakoski, the court determined that an public employee could not use Title IX to avoid Title VII's enforcement procedures for sex discrimination claims. Id. Two factors supported that determination: (1) Congress had intended Title IX to establish a separate (bureaucratic) mechanism to enforce a previously-established right, not to establish a new and separate right and (2) the regulations promulgated under Title IX indicated that it was not intended to provide an alternative to Title VII. Id. at 756-57 and n. 4. Here, the situation is the opposite. ADA Title I and ADA Title II created separate and distinctly enforceable rights. Title I addresses primarily the rights of disabled individuals in workplaces, while Title II addresses the rights of disabled citizens vis-a-vis the government. Further, the regulations promulgated under ADA Title II support a separate and parallel claim, as opposed to the situation in Lakoski, where the regulations forced a narrower reading of the statute.
While the court agrees that imposing different standards on public and private sector employees is undesirable from a policy standpoint, given the Department of Justice's regulatory posture, this court will not fill the gaps in the ADA in an attempt to effectuate a purported Congressional intent that is not entirely evident. Thus, Wagner's claim under the ADA is not barred due to his failure to file a timely complaint with the EEOC.
Title II does not contain a statute of limitations. "When a federal civil rights law does not contain a statute of limitations, courts should borrow the statutes of limitations from state statutes governing personal injury suits, and must also refer to state rules for tolling statutes of limitations." Doe, 871 F.Supp. at 1077 (citing Cheeney v. Highland Community College, 15 F.3d 79, 81-82 (7th Cir.1994)). The Fifth Circuit has *1311 deemed civil rights actions brought under 42 U.S.C. §§ 1981, 1983, 1985, and 1988 analogous to Texas tort actions, and therefore, the applicable limitations period is the two years fixed by TEX.CIV.PRAC. & REM.CODE ANN. § 16.003. Helton v. Clements, 832 F.2d 332, 334 (5th Cir.1987). In addition, the Seventh Circuit has held that the most appropriate statute of limitations to borrow for § 504 of the Rehabilitation Act of 1973 is the one "governing personal injury suits." Cheeney, 15 F.3d at 81-82. This is significant because of the relationship between the Rehabilitation Act and Title II. Doe, 871 F.Supp. at 1078. Hence, as applied to this case, any alleged acts of discrimination under Title II of the ADA occurring after November 30, 1993, will be considered at trial; any prior acts are time-barred.
C. 42 U.S.C. § 1983
Wagner asserts claims under 42 U.S.C. § 1983 against Defendants West and Smith. Section 1983 provides a vehicle for redressing the violation of federal law by those acting under color of state law. Middlesex County Sewerage Auth. v. National Sea Clammers Ass'n, 453 U.S. 1, 19, 101 S.Ct. 2615, 2625-26, 69 L.Ed.2d 435 (1981); Maine v. Thiboutot, 448 U.S. 1, 4, 100 S.Ct. 2502, 2504, 65 L.Ed.2d 555 (1980). To prevail on a § 1983 claim, the plaintiff must prove that a person acting under color of state law caused a deprivation of a right secured by the constitution or laws of the United States. 42 U.S.C. § 1983; Daniels v. Williams, 474 U.S. 327, 330, 106 S.Ct. 662, 664, 88 L.Ed.2d 662 (1986); Augustine v. Doe, 740 F.2d 322, 324 (5th Cir.1984). A § 1983 complainant must support his claim with specific facts demonstrating a constitutional deprivation and may not simply rely on conclusory allegations. Schultea v. Wood, 47 F.3d 1427, 1433 (5th Cir.1995); Fee v. Herndon, 900 F.2d 804, 807 (5th Cir.), cert. denied, 498 U.S. 908, 111 S.Ct. 279, 112 L.Ed.2d 233 (1990); Angel v. City of Fairfield, 793 F.2d 737, 739 (5th Cir.1986); Elliott v. Perez, 751 F.2d 1472, 1482 (5th Cir.1985). Thus, for Wagner to prevail, he must show that Smith or West deprived him of a right guaranteed by the constitution or laws of the United States. Baker v. McCollan, 443 U.S. 137, 139, 99 S.Ct. 2689, 2692, 61 L.Ed.2d 433 (1979); Thomas v. Sams, 734 F.2d 185, 191 (5th Cir.1984), cert. denied, 472 U.S. 1017, 105 S.Ct. 3476, 87 L.Ed.2d 612 (1985). Wagner must also prove that the alleged constitutional or statutory deprivation was intentional or due to deliberate indifference not the result of mere negligence. Farmer v. Brennan, 511 U.S. 825, ___, 114 S.Ct. 1970, 1977, 128 L.Ed.2d 811 (1994); Davidson v. Cannon, 474 U.S. 344, 348, 106 S.Ct. 668, 670-71, 88 L.Ed.2d 677 (1986); Daniels, 474 U.S. at 328, 106 S.Ct. at 663; Estelle v. Gamble, 429 U.S. 97, 105, 97 S.Ct. 285, 291-92, 50 L.Ed.2d 251 (1976). The points of contention with regard to Wagner's § 1983 claims relate to whether he suffered a rights deprivation cognizable under the law and whether the defendants are entitled to qualified immunity for their actions giving rise to the claims.
1. Property Interest in Benefits of Teaching Position
Wagner claims that he was deprived without due process of law of the benefits of his teaching position, including the particular class he taught and seats on various boards and committees. The Defendants contend, however, that these items do not constitute a property interest, and because Wagner has no cognizable property interest, there can be no deprivation actionable under 42 U.S.C. § 1983.
While the constitution protects property interests, the definition of property interests is for "existing rules or understandings that stem from an independent source such as state law." Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). The employment-related property interest in dispute in most § 1983 cases is a property interest in a job itself or the compensation associated with that job. Wagner makes no claims relating to economic benefits he does not claim to have been discharged and or deprived of his compensation. Indeed, not only was Wagner assigned to teach again, he suffered no decreases in salary despite having a lighter course load and reduced administrative responsibilities. Therefore, the laws of Texas and Wagner's established contractual *1312 rights must be examined to determine whether he had any property interest in his Neuroanatomy teaching assignment, seats he had or may have been granted on various boards and committees, or his position as Department Head.
Wagner cites two cases in support of his position that he had a valid property interest in the responsibilities and noneconomic benefits of his position. See Thomas v. Board of Trustees of Galveston Ind. Sch. Dist., 515 F.Supp. 280, 285 (S.D.Tex.1981); Courtney v. University of Tex. Sys., 806 S.W.2d 277, 286 (Tex.App. Fort Worth 1991, writ denied). Neither, however, supports his contention. In Courtney, the court held that a non-tenured professor working under a contract guaranteeing reassignment given satisfactory teaching has a tenure-like property interest in his continued employment. 806 S.W.2d at 286. This is a traditional economic benefit, not the kind of noneconomic perquisite of which Wagner claims to have been deprived. Similarly, in Thomas, the court's holding is limited to rights and benefits created under a contract of employment. 515 F.Supp. at 285. Here, Wagner has made no claims of breach of an employment contract. He has presented no written agreements between himself and TAMU and has not attempted to prove any verbal understandings or oral agreements indicating that he would retain the noneconomic benefits of his position. Hence, Wagner must rely on the argument that he cannot be deprived of any once-held benefits or responsibilities without due process of law, even when those benefits are noneconomic in nature.
The Fifth Circuit has held that employees suffer no compensable damage from employment terminations when they receive their full compensation. Kinsey v. Salado Indep. Sch. Dist., 950 F.2d 988, 997 (5th Cir.), cert. denied, 504 U.S. 941, 112 S.Ct. 2275, 119 L.Ed.2d 201 (1992); Davis v. Mann, 882 F.2d 967, 973 (5th Cir.1989) (citing Robinson v. Boyer, 825 F.2d 64, 67 (5th Cir.1987); Jett v. Dallas Indep. Sch. Dist., 798 F.2d 748, 753-54 (5th Cir.1988), aff'd in part, vacated in part, and remanded on other grounds, 491 U.S. 701, 109 S.Ct. 2702, 105 L.Ed.2d 598 (1989)). Even where a contract specifies what an employee's duties and responsibilities are, duties outlined in the contract do not constitute protectible, noneconomic property interests under the contract. Davis, 882 F.2d at 967. If contractual understandings guarantee that an employee will not be demoted or reassigned to a position of less responsibility, a property interest may arise. Winkler v. County of DeKalb, 648 F.2d 411, 414 (5th Cir.1981). Such a contractual understanding must be mutual and explicit. Jett, 798 F.2d at 754 (citing Perry v. Sindermann, 408 U.S. 593, 601, 92 S.Ct. 2694, 2699-2700, 33 L.Ed.2d 570 (1972)). In this case, there is no claim that a contract or even a custom hampered the discretion of TAMU officials to assign professors as needed. Absent a contractual provision limiting the University's right to reassign Wagner, he has no property interest in his teaching assignment, or in teaching classes at all. Dooley v. Fort Worth Indep. Sch. Dist., 686 F.Supp. 1194, 1199 (N.D.Tex.1987), aff'd, 866 F.2d 1418 (5th Cir.), cert. denied, 490 U.S. 1107, 109 S.Ct. 3158, 104 L.Ed.2d 1021 (1989); Harris v. Mississippi Valley State Univ., 899 F.Supp. 1561, 1574 n. 15 (N.D.Miss.1995). An assignment of other duties cannot amount to a deprivation of a property interest unless it is so unreasonable that it amounts to a constructive discharge. Quives v. Campbell, 934 F.2d 668, 671 (5th Cir.1991); Kelleher v. Flawn, 761 F.2d 1079, 1087 (5th Cir.1985). Here, there is no claim of constructive discharge, as Wagner remains employed by TAMU.
Wagner's appointments to boards and committees, likewise, cannot support a property interest claim. There is no evidence that these appointments afforded Wagner any compensation that would rise to the level of a protectible interest. Work responsibilities that are uncompensated do not create protectible property interests under § 1983. Raju v. Rhodes, 809 F.Supp. 1229, 1239 (S.D.Miss.1992), aff'd, 7 F.3d 1210 (5th Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1543, 128 L.Ed.2d 194 (1994).
Because Wagner has no property interest in his teaching assignment or in his various administrative duties and responsibilities, summary judgment on Wagner's due process *1313 claims under § 1983 related to his position is proper.
2. Free Speech Interest
Wagner claims that he was retaliated against because he exercised his rights to speak freely on matters of public concern, depriving him of his liberty without due process of law. In the Defendants' motion for summary judgment, Smith and West argue that Wagner has not suffered an adverse employment action that would support his claim of an endangered liberty interest. Their argument assumes that Wagner's restricted liberty involves his freedom to work or freedom from adverse employment determinations. The Defendants, however, misapply the law on Wagner's free speech claim. The only deprivation Wagner needs to show is that of his right to speak freely, i.e., that he has been retaliated against because he chose to speak.
The Defendants correctly point out that in order to make a claim under the First Amendment, Wagner must show that he engaged in protected speech and that such activity was a substantial and motivating factor in adverse action against him. Mount Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274, 287, 97 S.Ct. 568, 576, 50 L.Ed.2d 471 (1977). The Defendants do not dispute Wagner's claims that he engaged in protected speech or that such speech could have motivated any actions determined to be adverse. Instead, the Defendants contend that Wagner has not suffered any adverse employment actions. The Defendants cite Pierce v. Texas Dep't of Criminal Justice, Inst. Div. for the proposition that only a limited number of actions are adverse under the law:
To establish a First Amendment violation, a public employee must demonstrate that she has suffered an adverse employment action for exercising her right to free speech. McCabe v. Sharrett, 12 F.3d 1558, 1563 (11th Cir.1994). Adverse employment actions are discharges, demotions, refusals to hire, refusals to promote, and reprimands. Id.
37 F.3d 1146, 1149 (5th Cir.1994), cert. denied, ___ U.S. ___, 115 S.Ct. 1957, 131 L.Ed.2d 849 (1995). The quotation above could, as Defendants suggest, be read as limiting what can constitute an adverse employment action. The authority cited therein, McCabe, does not appear to limit the scope of adverse actions to the same list, and the precedent McCabe cites, Goffer v. Marbury, offers these actions only as examples of adverse employment actions. See McCabe, 12 F.3d at 1562-63; Goffer v. Marbury, 956 F.2d 1045, 1049 n. 1 (11th Cir.1992). In fact, the court in Pierce went further to assess whether the retaliation suffered by the plaintiff resulted in an adverse employment action and did not merely rely on its "short list" of adverse actions; it evaluated the employment actions for adverse results. See 37 F.3d at 1150. In light of the precedent relied on by the Fifth Circuit in Pierce, this court will not resolve seemingly conflicting approaches to limit the scope of adverse actions at the summary judgment stage.
Other Fifth Circuit precedent indicates a more expansive reading of what may be considered an adverse employment action. Any important condition of employment may qualify for protection under § 1983:
Where, as here, important conditions of employment are involved, a public employee will not be foreclosed from § 1983 relief merely because the impermissible retaliation did not result in the termination of his employment.
Bickel v. Burkhart, 632 F.2d 1251, 1255 (5th Cir.1980). In Bickel, a fireman was not promoted as he expected due to retaliation for negative comments he had made at a department meeting. Id. at 1253. The plaintiff was not discharged and he suffered no decrease in pay. Id. In a subsequent case, deputies transferred from law enforcement positions to jail guard duty in retaliation for their candidacies for sheriff were found to state a claim under § 1983:
Money alone, however, does not buy happiness. The Perry Court spoke of "benefits" generally, not just salary. The evidence adduced at trial strongly supports the proposition that jobs in the jail are not as interesting or prestigious as jobs in the law enforcement section.... In short, Click and Falcon's transfers to the jail could be *1314 considered demotions, even though they suffered no reduction in salary.
Click v. Copeland, 970 F.2d 106, 110 (5th Cir.1992) (citing Perry, 408 U.S. at 597, 92 S.Ct. at 2697-98). In a more recent case, the Fifth Circuit confirmed the applicability of retaliatory transfer analysis to First Amendment claims: "[T]he law was clearly established [in Copeland] that a retaliatory transfer to a less interesting, less prestigious position could implicate the First Amendment, even if the transfer did not result in a decrease in pay." Vojvodich v. Lopez, 48 F.3d 879, 887 (5th Cir.), cert. denied, ___ U.S. ___, 116 S.Ct. 169, 133 L.Ed.2d 111 (1995). The Defendants' reliance on Dorsett v. Board of Trustees for State Colleges & Univs. to narrow the scope of adverse employment actions is misplaced. See 940 F.2d 121, 124 (5th Cir.1991). The court in Dorsett failed to foreclose the chance that teaching reassignments and intrafaculty disputes create a cognizable constitutional claim under a liberty interest analysis, as the court determined that there was no protected speech involved in the case. Id. Hence, any comments about faculty disputes were merely dicta.
The Defendants next argue that Wagner must satisfy the traditional "stigma plus" test in order to show a violation of a liberty interest. See Vander Zee v. Reno, 73 F.3d 1365, 1369 (5th Cir.1996). The Defendants, however, misconstrue the law. Wagner would have to show "stigma plus" if he were alleging that some defamation infringed his liberty, i.e., in the sense of restricting his right to pursue his career or find new employment, or that the Defendants infringed on a liberty created under state law, as in the § 1983 property interest claim. Wagner alleges instead that he was retaliated against because of past free expression and that such retaliation has a chilling effect on his subsequent free expression.
The Schultea case, cited by the Defendants, demonstrates that a plaintiff may simultaneously pursue separate § 1983 claims one based on the liberty to pursue employment and another based on retaliation for First Amendment protected speech. See 47 F.3d at 1429, 1434. In Schultea, a former police chief who had been reassigned to assistant chief maintained that he had been deprived of his liberty interest to be employed in his position and to clear his name. Id. at 1429. He additionally alleged a retaliatory violation of his First Amendment rights. Id. Although he had no protectible property interest in his employment, he was allowed to maintain an action for First Amendment violations under § 1983. Id. at 1429, 1434.
The Supreme Court also recognizes the dichotomy between due process rights that protect interests established outside the constitution and interests established by the constitution. Paul v. Davis, 424 U.S. 693, 710, 96 S.Ct. 1155, 1164-65, 47 L.Ed.2d 405 (1976). A "variety of interests" within the terms "liberty" and "property" are afforded due process protection "by virtue of the fact that they have been initially recognized and protected by state law." Id. Even where a defendant does not deprive a claimant of "liberty" or "property" interests "recognized by state or federal law," a claimant may still allege and show violations of rights guaranteed by the constitution. Id. at 712, 96 S.Ct. at 1165-66. A reassignment within the workplace to positions that are less productive and less satisfying, though it does not implicate property interests, may still serve as the basis for a First Amendment claim. See Fyfe v. Curlee, 902 F.2d 401, 404 (5th Cir.), cert. denied, 498 U.S. 940, 111 S.Ct. 346, 112 L.Ed.2d 310 (1990). Indeed, a non-tenured teacher, who concededly has no property interest in his position or assignment, may, nonetheless, assert a valid First Amendment claim. White v. South Park Indep. Sch. Dist., 693 F.2d 1163, 1167 n. 5 (5th Cir.1982) (citing Mount Healthy City Sch. Dist. Bd. of Educ., 429 U.S. at 283, 97 S.Ct. at 574). Retaliation by way of demotion, transfer, or reassignment undermines the ability of public employees to speak or testify truthfully without fear of reprisal and thus impinges on their right to free speech under the First Amendment. Johnston v. Harris County Flood Control Dist., 869 F.2d 1565, 1578 (5th Cir.1989), cert. denied, 493 U.S. 1019, 110 S.Ct. 718, 107 L.Ed.2d 738 (1990); Reeves v. Claiborne *1315 County Bd. of Educ., 828 F.2d 1096, 1100 (5th Cir.1987).
Wagner has asserted a viable claim under § 1983. His preference for the Neuroanatomy assignment, while not rising to the level of a property interest, may provide the basis of a First Amendment claim. The affidavits of Wagner and Ian Russell ("Russell"), a professor at TAMU, suggest that a reassignment to Microanatomy could embarrass or burden a professor who had taught in a different area for years and was approaching retirement. Under these circumstances, such a reassignment can serve as an adverse employment action; no "stigma" test need be met. Therefore, Wagner may proceed to trial on this claim.
3. Property Interest in the "Reintegration Agreement"
Wagner claims that he is a third-party beneficiary of an agreement between TAMU and the ORI to "reintegrate" and protect Wagner and that West and Smith have deprived him of property interests in this agreement. Wagner has failed to show the existence of such an agreement, that such an agreement was breached, or that he would be the intended beneficiary of such an agreement. Therefore, the "reintegration agreement" provides no basis for a claim under § 1983.
A third party has a heavy burden to prove third-party beneficiary status. Missouri Pac. R.R. Co. v. Harbison-Fischer Mfg. Co., 26 F.3d 531, 540 (5th Cir.1994); RTC v. Kemp, 951 F.2d 657, 662 (5th Cir. 1992). "A third party is entitled to recover upon a contract made between other parties only if the parties intended to secure some benefits to that third party, and only if the contract was entered into directly and primarily for the third party's benefit." Economy Forms Corp. v. Williams Bros. Constr. Co., 754 S.W.2d 451, 456 (Tex.App. Houston [14th Dist.] 1988, no writ) (citing Dairyland County Mut. Ins. Co. v. Childress, 650 S.W.2d 770, 775 (Tex.1983)); Republic Nat'l Bank v. National Bankers Life Ins. Co., 427 S.W.2d 76, 79 (Tex.Civ.App. Dallas 1968, writ ref'd n.r.e.). Specifically, in order to establish third-party beneficiary status, a noncontracting party must show: (1) that he is not privy to a contract; (2) that the contract was made for the claimant's benefit; and (3) that the contracting parties intended for the claimant to benefit by their contract. Palma v. Verex Assurance, Inc., 79 F.3d 1453, 1457 (5th Cir.1996); Missouri Pac. R. Co., 26 F.3d at 540; Talman Home Fed. Sav. & Loan Ass'n v. American Bankers Ins., 924 F.2d 1347, 1350-51 (5th Cir.1991); Hellenic Inv., Inc. v. Kroger Co., 766 S.W.2d 861, 864 (Tex.App. Houston [1st Dist.] 1989, no writ). Hence, in the absence of a contract, one cannot assert rights as a third-party beneficiary.
There are three types of third party beneficiaries donee, creditor, and incidental. Bruner v. Exxon Co., U.S.A., 752 S.W.2d 679, 682 (Tex.App. Dallas 1988, writ denied); Merit Drilling Co. v. Honish, 715 S.W.2d 87, 92 (Tex.App. Corpus Christi 1986, writ ref'd n.r.e.). A party is a donee beneficiary "`[i]f the performance promised ... will, when rendered, come to the person as a pure donation.'" Brunswick Corp. v. Bush, 829 S.W.2d 352, 354 (Tex.App. Fort Worth 1992, no writ) (quoting Breaux v. Banker, 107 S.W.2d 382, 389 (Tex.Civ.App. Beaumont 1937), rev'd on other grounds, 133 Tex. 183, 128 S.W.2d 23 (1939)); see also Suthers v. Booker Hosp. Dist., 543 S.W.2d 723, 727 (Tex.Civ.App. Amarillo 1976, writ ref'd n.r.e.). A party is a creditor beneficiary "`[i]f ... that performance will come to him in satisfaction of a legal duty owed to him by the promisee.'" Brunswick Corp., 829 S.W.2d at 354 (quoting Breaux, 107 S.W.2d at 389); see also Suthers, 543 S.W.2d at 727. Although donee and creditor beneficiaries may enforce a contract to which they are not a party, an incidental beneficiary one who is benefitted only incidentally by the performance of the contract has no such right of enforcement. Tennessee Gas Pipeline Co. v. Lenape Resources Corp., 870 S.W.2d 286, 295 (Tex.App. San Antonio 1993), aff'd in part and rev'd in part on other grounds, 925 S.W.2d 565 (Tex.1996); Bruner, 752 S.W.2d at 682; Republic Nat'l Bank, 427 S.W.2d at 80.
*1316 Moreover, there is a presumption that the parties to a contract entered into the contract for themselves, and, therefore, the contract will not be construed to benefit a third party unless it clearly appears that this was the intention of the contracting parties. Oliver Resources PLC v. International Fin. Corp., 62 F.3d 128, 131 (5th Cir.1995); Missouri Pac. R.R. Co., 26 F.3d at 540; Kemp, 951 F.2d at 662; Talman Home Fed. Sav. & Loan Ass'n, 924 F.2d at 1351; Thomson v. Espey Huston & Assocs., Inc., 899 S.W.2d 415, 418 (Tex.App. Austin 1995, no writ). The intent of the parties to the contract is of "controlling significance to a determination that a third party may enforce" a contract. Oliver Resources PLC, 62 F.3d at 131; see also Old Stone Bank v. Fidelity Bank, 749 F.Supp. 147, 152 (N.D.Tex.1990). Any intent of the contracting parties to benefit a third party must be derived solely from the language of the contract. Talman Home Fed. Sav. & Loan Ass'n, 924 F.2d at 1351; Republic Nat'l Bank, 427 S.W.2d at 79. "It is the intention and purpose of the contracting parties, as disclosed within the four corners of the instrument, which should control." Talman Home Fed. Sav. & Loan, 924 F.2d at 1351 (citing Republic Nat'l Bank, 427 S.W.2d at 79). If there is any doubt concerning the intent to benefit a third party, such doubt must be construed against such intent. Id.; Tennessee Gas Pipeline Co., 870 S.W.2d at 295.
Here, Wagner points to no instrument, no language, and no terms of an agreement by which the intent of the parties may be construed. Wagner cannot show that he is an intended beneficiary of TAMU's compliance "agreement." There is no evidence of intent on the part of TAMU with respect to this "agreement" to do anything but comply with federal law to avoid sanctions. TAMU's letters addressing compliance with federal regulations cannot be viewed as a contract or an agreement between the university and the government, as they merely acknowledge TAMU's preexisting obligations under the law. Even if an agreement were found to exist, Wagner, at best, could be considered an incidental beneficiary and, as such, without standing to enforce the terms of the agreement.
Wagner further contends that TAMU voluntarily assumed a duty to protect him in discussions with ORI and that he may benefit from TAMU's actions. His reliance on the "Good Samaritan" doctrine is unfounded. First, Wagner must still show that he is an intended beneficiary, which he has not done. Second, he must show that TAMU "voluntarily undertook" a duty. See Mafrige v. United States, 893 F.Supp. 691, 702 (S.D.Tex.1995); Brownsville Navigation Dist. v. Izaguirre, 829 S.W.2d 159, 161 (Tex. 1992); Northwest Bank v. Garrison, 874 S.W.2d 278, 280 (Tex.App. Houston [1st Dist.] 1994, no writ). Wagner has failed to show any voluntary assumption of duties on the part of TAMU. If anything, it appears that TAMU undertook any obligations it did solely to avoid federal censure. To the extent that an agreement could be discerned in this haze, it is apparent that it has not been breached. The communication from ORI to Dr. Bowen, President of TAMU, indicates that the only matter it considers to be incomplete is the making of a final statement on the matter, the draft of which is still in Wagner's hands. Because one of the alleged parties to the purported agreement considers the Wagner matter to be resolved, Wagner's claim that he has been deprived of contractual rights is tenuous at best. Without some showing of an agreement of which Wagner can be more than an incidental beneficiary, there can be no deprivation of property rights cognizable under § 1983. Therefore, summary judgment is warranted as to this claim.
4. Statute of Limitations as to § 1983 Claims
West and Smith allege that because the events giving rise to Wagner's claim occurred more than two years prior to Wagner filing suit on November 30, 1995, Wagner's claims are time-barred. Alternatively, West and Smith contend that only those events occurring on or after November 30, 1993, may give rise to valid § 1983 claims.
There is no specific federal statute of limitations governing claims brought under § 1983. Federal courts, therefore, *1317 look to the law of the state in which the action arose to determine the appropriate limitations period, usually borrowing the state's general personal injury limitations period. Hardin v. Straub, 490 U.S. 536, 538, 109 S.Ct. 1998, 2000, 104 L.Ed.2d 582 (1989); Owens v. Okure, 488 U.S. 235, 236, 109 S.Ct. 573, 574, 102 L.Ed.2d 594 (1989); Wilson v. Garcia, 471 U.S. 261, 269, 105 S.Ct. 1938, 1943, 85 L.Ed.2d 254 (1985); Pedraza v. Jones, 71 F.3d 194, 195 n. 1 (5th Cir.1995); Rodriguez v. Holmes, 963 F.2d 799, 803 (5th Cir.1992); Burrell v. Newsome, 883 F.2d 416, 418 (5th Cir.1989). It is undisputed that the events giving rise to the case at bar occurred in Texas. Because § 1983 claims are most analogous to Texas personal injury claims, the applicable statute of limitations is two years, as set forth in TEX.CIV.PRAC. & REM. CODE ANN. § 16.003. See Russell v. Board of Trustees of Firemen, Policemen & Fire Alarm Operators' Pension Fund, 968 F.2d 489, 492 (5th Cir.1992), cert. denied, 507 U.S. 914, 113 S.Ct. 1266, 122 L.Ed.2d 662 (1993); Rodriguez, 963 F.2d at 803; Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir.1992); Burrell, 883 F.2d at 418; Helton, 832 F.2d at 334. While state law determines the limitations period, federal law determines when a cause of action accrues. Board of Regents v. Tomanio, 446 U.S. 478, 483-86, 100 S.Ct. 1790, 1794-96, 64 L.Ed.2d 440 (1980); Rodriguez, 963 F.2d at 803; Brummett v. Camble, 946 F.2d 1178, 1184 (5th Cir.1991), cert. denied, 504 U.S. 965, 112 S.Ct. 2323, 119 L.Ed.2d 241 (1992); Burrell, 883 F.2d at 418; Helton, 832 F.2d at 334-35.
Under federal law, a cause of action accrues when the plaintiff knows or has reason to know of the injury that is the basis of his action. Gartrell v. Gaylor, 981 F.2d 254, 257 (5th Cir.1993); Burrell, 883 F.2d at 418. "The statute of limitations therefore begins to run when the plaintiff is in possession of the `critical facts that he has been hurt and who has inflicted the injury....'" Gartrell, 981 F.2d at 257 (quoting Lavellee v. Listi, 611 F.2d 1129, 1130 (5th Cir.1980)); accord Brummett, 946 F.2d at 1184; Burrell, 883 F.2d at 418. "A plaintiff's awareness encompasses two elements: (1) The existence of the injury; and (2) causation, that is, the connection between the injury and the defendant's actions." Piotrowski v. City of Houston, 51 F.3d 512, 516 (5th Cir.1995); see also Moore v. McDonald, 30 F.3d 616, 620-21 (5th Cir. 1994); Glover v. Johnson, 831 F.2d 99, 100 (5th Cir.1987); Kline v. North Tex. State Univ., 782 F.2d 1229, 1232 (5th Cir.1986). Therefore, events occurring prior to November 30, 1993, will not form the basis of a claim in this case unless Wagner is entitled to rely on the principles of equitable tolling. "Where a state statute of limitations is borrowed, the state's rules for tolling the statute are borrowed as well." Hickey v. Irving Indep. Sch. Dist., 976 F.2d 980, 984 n. 8 (5th Cir.1992) (citing Tomanio, 446 U.S. at 485, 100 S.Ct. at 1795-96); see also Rodriguez, 963 F.2d at 803; Jackson v. Johnson, 950 F.2d 263, 265 (5th Cir.1992). None of the equitable tolling doctrines claimed by Wagner, however, assists him in this case.
(a). Unsound Mind
In Wagner's second amended complaint, he alleges that his condition, depression and related health problems, reasonably delayed his discovery of the harm caused by the Defendants. In Texas, the statute of limitations is suspended for those under legal disability. TEX.CIV.PRAC. & REM. CODE ANN. § 16.001(b). The disability exclusion protects those plaintiffs who lack access to the courts or are unable "to participate in, control, or even understand the progression and disposition of their lawsuit." Ruiz v. Conoco, Inc., 868 S.W.2d 752, 755 (Tex.1993). A person claiming the benefit of suspension of limitations must raise the issue of his "unsound mind." Hargraves v. Armco Foods, Inc., 894 S.W.2d 546, 547 (Tex.App. Austin 1995, no writ); TEX.CIV.PRAC. & REM. CODE ANN. § 16.001(a). An "unsound mind" generally is considered equivalent to insanity or incompetency, though an individual need not be adjudicated insane or incompetent to warrant protection. Hargraves, 894 S.W.2d at 547; Casu v. CBI Na-Con, Inc., 881 S.W.2d 32, 34 (Tex.App. Houston [14th Dist.] 1994, no writ).
It is the plaintiff's burden to show that he is of unsound mind and to demonstrate when such period of disability *1318 ended, if it is not ongoing. Smith v. Erhard, 715 S.W.2d 707, 709 (Tex.App. Austin 1986, writ ref'd n.r.e.). Wagner has not met his burden. He has not shown that he is or was legally disabled; he only makes vague references to "reasonable delay" without citing authority for recognizing such a delay. Wagner also does not allege what harm caused by the Defendants he was unable to discover or during what periods his condition prevented discovery. There is no evidence before the court that Wagner has been impaired to such an extent that he was incapable of understanding or appreciating the events in controversy at any time during the eight-year period before he filed suit. Rather, it appears that during this period, Wagner was able to write lengthy and insightful letters concerning his situation and to negotiate a retirement package with TAMU representatives. Hence, his alleged condition affords no basis for the suspension of limitations.
(b). Participation in Internal Grievance Procedure
Wagner next claims a tolling benefit from his participation in an internal grievance procedure. The court need not determine whether negotiations between Wagner and TAMU constitute a grievance procedure, because grievance procedures and collateral reviews of employment decisions do not toll the running of limitations periods under § 1983. See Delaware State College v. Ricks, 449 U.S. 250, 261, 101 S.Ct. 498, 505-06, 66 L.Ed.2d 431 (1980). The pendency of an internal grievance procedure does not suspend limitations, particularly when the grievance procedure would not rectify the problem giving rise to the grievance. Barrow v. New Orleans S.S. Ass'n, 932 F.2d 473, 478 (5th Cir.1991). If the negotiations were deemed a grievance procedure, their end goal was not the return of Wagner to the position of Department Head or an equivalent position. Rather, their goal was his retirement and/or the settlement of his claims. If the negotiation process had been successful and Wagner had retired with full benefits, he arguably could still maintain a claim for infringement of his right to free speech unless specifically released. Because the resolution of his "grievance" was not an intrinsic purpose of the negotiations, the negotiations are particularly unsuited for purposes of tolling. Thus, the statute of limitations was not tolled by the series of conferences between Wagner and TAMU.
(c). Fraudulent Concealment
Furthermore, as a separate cause of action, Wagner claims that discovery in this case has revealed substantial fraudulent concealment on the part of the Defendants. Wagner seeks to invoke this affirmative defense in an effort to toll the two-year statute of limitations.
"Under Texas law, fraudulent concealment is an affirmative defense to an assertion that the statute of limitations has run." Timberlake v. A.H. Robins Co., 727 F.2d 1363, 1366 (5th Cir.1984). The Texas Supreme Court explained:
When the defendant is under a duty to make a disclosure but fraudulently conceals the existence of a cause of action from the one to whom it belongs, the guilty party will be estopped from relying on the defense of limitations until the right of action is, or in the exercise of reasonable diligence should be, discovered.
Id. (quoting Nichols v. Smith, 507 S.W.2d 518, 519 (Tex.1974)). To prove fraudulent concealment, a plaintiff must show: (1) that the defendants had actual knowledge of a wrong to the plaintiff; (2) that the defendants had a fixed purpose to conceal the wrong from the plaintiff; and (3) that the defendants had a duty to expose the wrong. Casey v. Methodist Hosp., 907 S.W.2d 898, 903 (Tex.App. Houston [1st Dist.] 1995, no writ); Waters ex rel Walton v. Del-Ky, Inc., 844 S.W.2d 250, 256 (Tex.App. Dallas 1992, no writ). "The `mere failure to disclose a cause of action, or its mere concealment,' does not constitute fraudulent concealment for purposes of tolling the statute of limitations." Timberlake, 727 F.2d at 1366 (quoting Stiles v. Union Carbide Corp., 520 F.Supp. 865, 868-69 (S.D.Tex.1981)). "Rather, the plaintiff is under a duty to exercise reasonable diligence to discover his or her cause of action." Id. Thus, the Fifth Circuit has stated, "`There cannot be fraudulent *1319 concealment of facts which admittedly were or should have been known by [the plaintiff].'" Id. at 1367 (quoting Fusco v. Johns-Manville Prods. Corp., 643 F.2d 1181, 1184 (5th Cir.1981)).
Here, in support of his fraudulent concealment argument, Wagner asserts that: (1) there are at least five versions of the Board of Inquiry Report and the version given to him had been carefully edited to delete its recommendation that Wagner lose his position as Department Head because of the original Trulson investigation; (2) TAMU's files on him contain untrue allegations of theft, drug use, alcohol addiction, misuse of prescriptions, a homosexual affair with another professor, scientific fraud, and other improprieties, and these allegations were distributed widely without his knowledge; (3) Trulson and TAMU made a secret agreement in 1988 that Trulson would resign instead of being fired and that his TAMU file would not reflect anything negative, such as scientific misconduct, and that TAMU had waived its right to make findings against Trulson or properly publicize his wrongdoing; (4) TAMU fraudulently concealed the secret agreement with Trulson, which prevented TAMU from vindicating Wagner officially; (5) Smith and West for years have shared the secret belief that he has a violent, threatening, and dangerous nature; (6) Smith intentionally misled him as to what TAMU general counsel's office had decided to do about the ownership of his teaching materials in Fall 1991, secretly taking steps to fire him; and (7) Sam Black ("Black"), the acting Dean of the College of Medicine had strongly disagreed with the administration's decision to cut the secret deal with Trulson.
It is unnecessary to determine whether Wagner has established that any events were fraudulently concealed, as he has not shown that any fraudulently concealed events give rise to viable claims. The only concealed events Wagner can point to are the Trulson settlement agreement and the Board of Inquiry report recommending Wagner's "demotion." Neither of these would have given rise to a claim on the day of their occurrence, much less years later. Even if they were meaningful, Wagner has been aware that Trulson was not being pursued aggressively by TAMU since at least 1988, when his frequent complaints went ignored, and he was aware of his "demotion" when it happened in 1989. Without some showing of a fraudulently concealed fact that would have led Wagner to file suit earlier had he been aware of it, the issue of the Defendants' purpose to conceal and their duty to expose the wrong need not be considered. Thus, the doctrine of fraudulent concealment affords Wagner no relief from the statute of limitations.
Finally, Wagner claims that the statute of limitations would not start running until such time as TAMU's failure to reintegrate him was apparent. Wagner correctly asserts that the limitations period does not begin to run until the cause of action accrues. Kline, 782 F.2d at 1232. Wagner would not have had a claim on the day that TAMU informed the OSI of its intent to adopt the Milford Committee Report February 2, 1993. As of that day, he reasonably could have believed that TAMU had committed itself to cease the circulation of rumors about Wagner's teaching and integrity, affirmatively protect his reputation, and "reintegrate" him into teaching and other responsibilities. Whether TAMU accomplished those goals is for the finder of fact. Because the Defendants do not allege that Wagner had any reason before November 30, 1993 (while he was on leave) to believe that TAMU would not fulfill the recommendations of the report, his claims concerning reintegration are not foreclosed. Hence, Wagner's claim that he was retaliated against after November 30, 1993, for free speech on matters of public concern may proceed, without regard to whether those events relate in some way to TAMU's ORI compliance efforts commencing prior to November 30, 1993. Claims relating to his "demotion" from Department Head, the denial of an $80,000 grant, and any other event prior to November 30, 1993, however, are barred by the statute of limitations.
5. Qualified Immunity
Defendants West and Smith assert that they are entitled to qualified immunity in this case. Under the doctrine of qualified immunity, government officials performing *1320 discretionary functions are shielded from liability for civil damages "insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known." Harlow v. Fitzgerald, 457 U.S. 800, 818, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982); Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1405 (5th Cir.1996). Qualified immunity is available to defendant officials in suits arising under § 1983 and must be pled as an affirmative defense. Siegert v. Gilley, 500 U.S. 226, 231, 111 S.Ct. 1789, 1792-93, 114 L.Ed.2d 277 (1991); Harlow, 457 U.S. at 816, 102 S.Ct. at 2737; Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 1923-24, 64 L.Ed.2d 572 (1980). It is an immunity from suit, extending beyond a defense to liability to include all aspects of civil litigation, including discovery. Jacquez v. Procunier, 801 F.2d 789, 791 (5th Cir.1986); see also Mitchell v. Forsyth, 472 U.S. 511, 526, 105 S.Ct. 2806, 2815-16, 86 L.Ed.2d 411 (1985).
When determining whether qualified immunity is available, the actions of a reasonably competent official are assessed in the light of the legal rules that were clearly established at the time the action was taken. Anderson v. Creighton, 483 U.S. 635, 638, 107 S.Ct. 3034, 3038, 97 L.Ed.2d 523 (1987); Harlow, 457 U.S. at 818, 102 S.Ct. at 2738; Mitchell, 472 U.S. at 530, 105 S.Ct. at 2817-18; Mangieri v. Clifton, 29 F.3d 1012, 1016 (5th Cir.1994); Bennett v. City of Grand Prairie, 883 F.2d 400, 408 (5th Cir.1989). A legal right is clearly established if the contours of the right are sufficiently clear that a reasonable official would understand that what he is doing violates that right. Anderson, 483 U.S. at 640, 107 S.Ct. at 3039; Hale v. Townley, 45 F.3d 914, 919 (5th Cir. 1995); Foster v. City of Lake Jackson, 28 F.3d 425, 429 (5th Cir.1994); Bennett, 883 F.2d at 408.
A party seeking damages from an official asserting qualified immunity bears the burden of overcoming that defense. Id.; United States v. Burzynski Cancer Research Inst., 819 F.2d 1301, 1310 (5th Cir.1987), cert. denied, 484 U.S. 1065, 108 S.Ct. 1026, 98 L.Ed.2d 990 (1988); Saldana v. Garza, 684 F.2d 1159, 1163 (5th Cir.1982), cert. denied, 460 U.S. 1012, 103 S.Ct. 1253, 75 L.Ed.2d 481 (1983). In order to defeat an official's assertion of qualified immunity, a plaintiff must show that: (1) he has asserted a violation of a constitutional right; (2) this right was clearly established at the time of the official's actions and (3) the official's actions were objectively unreasonable. Eugene v. Alief Indep. Sch. Dist., 65 F.3d 1299, 1305 (5th Cir.1995), cert. denied, ___ U.S. ___, 116 S.Ct. 1680, 134 L.Ed.2d 782 (1996). Stated alternatively, it must be determined (1) whether the plaintiff has alleged a violation of a clearly established constitutional right under currently applicable constitutional standards, and (2) if the officer's conduct was unconstitutional, whether it was nevertheless objectively reasonable in light of judicial precedent at the time of the infraction. Kelly v. Foti, 77 F.3d 819, 821 (5th Cir.1996). The plaintiff must show that the official knew or reasonably should have known that the action he took within his sphere of official responsibility would violate the constitutional rights of the plaintiff. Harlow, 457 U.S. at 816, 102 S.Ct. at 2737; Schultea, 47 F.3d at 1431; see Eugene, 65 F.3d at 1305. The plaintiff must set forth facts underlying the claim, not mere conclusions, before he may subject public officials to trial or to pretrial discovery in a § 1983 case. Schultea, 47 F.3d at 1430, 1434; Jacquez, 801 F.2d at 791; Elliott, 751 F.2d at 1478.
Much of the debate on this point concerns whether Wagner had a clearly established right in the reintegration "agreement" between TAMU and the ORI. Because the court has already determined that Wagner had no constitutionally protectible property interest, there is no need to address the issue of immunity in that context.
The remaining issue is whether Smith and West are immune from Wagner's claim asserting the deprivation of a liberty interest. Defendants do not contest that the freedom of free speech is a long and clearly established constitutional right. They simply insist that no adverse employment action was taken, and, therefore, West and Smith cannot have been expected to know that their actions violated clearly established rights. The court has determined that Wagner's adverse *1321 employment claim asserts a violation of his rights, which the Fifth Circuit deemed clearly established as of 1992. "[T]he law was clearly established [in Copeland] that a retaliatory transfer to a less interesting, less prestigious position could implicate the First Amendment, even if the transfer did not result in a decrease in pay." Vojvodich, 48 F.3d at 887 (citing Copeland, 970 F.2d at 110). Wagner asserts that he was reassigned to a less prestigious and more burdensome teaching position in order to retaliate against him for speaking about the Trulson matter. West and Smith cannot claim that a reasonable official would not have been aware that retaliation for speech of this type would violate an individual's rights.
In addition to proving the violation of a clearly established right, Wagner must also prove that the Defendants' conduct was not objectively reasonable in light of the law at the time of the conduct. Kiser v. Garrett, 67 F.3d 1166, 1170 (5th Cir.1995) (citing Pfannstiel v. City of Marion, 918 F.2d 1178, 1185 (5th Cir.1990)); Duckett v. City of Cedar Park, 950 F.2d 272, 279 (5th Cir.1992). Because all § 1983 claims arising from events prior to November 30, 1993, are time-barred, there is no need to examine those events further. The Fifth Circuit has described the right to be free from retaliation for exercising free speech rights as being clearly established by 1992 at the latest. Vojvodich, 48 F.3d at 887. Thus, qualified immunity is not available to Smith and West as to Wagner's liberty interest claims under § 1983 alleging the abridgment of his First Amendment right to free speech.
D. Texas Whistleblower Act
Wagner claims that the Defendants have retaliated against him in violation of the Texas Whistleblower Act. According to Wagner, the Defendants' specific wrongful acts include, without limitation:
forcing Dr. Wagner to resign as Head of the Department, refusing to investigate properly Dr. Wagner's claims against Dr. Trulson, failing to properly report wrongdoing of Dr. Trulson and lack of wrongdoing by Dr. Wagner, refusing to follow the recommendations of TAMU's committee of scientists or the ORI to reintegrate Dr. Wagner back into the College of Medicine, stripping Dr. Wagner of his privileges, forcing Dr. Wagner to accept a teaching change into a course in which he has no teaching background, refusing to credit Dr. Wagner with hours he worked, personally attacking Dr. Wagner, refusing to follow through on promises of start-up research funding, ostracizing Dr. Wagner, slandering and libeling Dr. Wagner with false statements, failing to grant any merit increases in salary, and unfairly failing to promote another professor who was connected to Dr. Wagner.
Wagner further asserts that the violations have been continuing in nature, even after this suit was filed. The Defendants contend that Wagner's claims are time-barred for failure to initiate a grievance or for failure to file suit within the time period required after the conclusion of the grievance procedure.
The Texas Whistleblower Act is remedial in nature and should be liberally construed. Davis v. Ector County, 40 F.3d 777, 785 (5th Cir.1994); Stinnett v. Williamson County Sheriff's Dep't, 858 S.W.2d 573, 575 (Tex.App. Austin 1993, writ denied); Castaneda v. Texas Dep't of Agric., 831 S.W.2d 501, 503 (Tex.App. Corpus Christi 1992, writ denied). Traditionally, the Whistleblower Act has been applied to public employees who were discharged in retaliation for reporting their employer's violations of law that are detrimental to the public good or to society in general. Stinnett, 858 S.W.2d at 575. The Act is designed to enhance openness in government and compel the government's compliance with the law by protecting those who inform authorities of wrongdoing. Castaneda, 831 S.W.2d at 503.
Section 554.002 of the Whistleblower Act prohibits retaliation for reporting a violation. See TEX.GOV'T CODE ANN. § 554.002 (Vernon Supp.1996). "To establish a whistle-blower claim, an employee must demonstrate that (a) the employee reported an alleged violation of law to an appropriate law enforcement authority; (b) the employee made the report in good faith; (c) the employer took an adverse employment action against the employee because the employee made the *1322 report; and (d) the employer's action proximately caused the employee's injuries." Forsyth v. City of Dallas, 91 F.3d 769, 775 (5th Cir.1996). Section 554.005, entitled "Limitation Period," provides:
Except as provided by Section 554.006, a public employee who seeks relief under this chapter must sue not later than the 90th day after the date on which the alleged violation of this chapter: (1) occurred; or (2) was discovered by the employee through reasonable diligence.
TEX.GOV'T CODE ANN. § 554.005 (Vernon Supp.1996). In § 554.006, entitled "Exhaustion of Grievance or Appeal Procedures," the Act states:
(a) A public employee must initiate action under the grievance or appeal procedure of the employing state or local governmental entity relating to suspension or termination of employment or adverse employment action before suing under this chapter.
(b) The employee must invoke the applicable grievance or appeal procedures not later than the 90th day after the date on which the alleged violation of this chapter:
(1) occurred; or
(2) was discovered by the employee through reasonable diligence.
(c) Time used by the employee in acting under the grievance or appeal procedures is excluded, except as provided by Subsection (d), from the period established by Section 554.005.
(d) If a final decision is not rendered before the 61st day after the date procedures are initiated under Subsection (a), the employee may elect to:
(1) exhaust the applicable procedures under Subsection (a), in which event the employee must sue not later than the 30th day after the date those procedures are exhausted to obtain relief under this chapter; or
(2) terminate procedures under Subsection (a), in which event the employee must sue within the time remaining under Section 554.005 to obtain relief under this chapter.
TEX.GOV'T CODE ANN. § 554.006 (Vernon Supp.1996). Because the Whistleblower Act was amended effective June 15, 1995, the events in the case at bar must be examined in relation to the effective date of the amendment. See TEX.GOV'T CODE ANN. § 554.001 et seq. (Vernon Supp.1996).
1. Wagner's Pre-June 15, 1995, Claims
Events occurring before June 15, 1995, are subject to the previous version of § 554.006. The ninety-day requirement for bringing suit contained in § 554.005, however, was in effect prior to the 1995 amendment. With respect to exhaustion of grievance or appeal procedures, the preamendment version of § 554.006 provided:
(a) An employee of a local government must exhaust that government's grievance or appeal procedure relating to suspension or termination of employment or unlawful discrimination before suing under this chapter.
(b) The employee must invoke the grievance or appeal procedures not later than the 90th day after the date on which the alleged violation of this chapter:
(1) occurred; or
(2) was discovered by the employee through reasonable diligence.
(c) Time used by the employee in exhausting the grievance or appeal procedures is excluded from the period established by Section 554.005.
(d) This section does not apply if a final decision is not rendered before the 31st day after the date on which the employee initiated the grievance or appeal.
Thus, the Act required only local government employees to exhaust administrative remedies. Other public employees were not required to file grievances and were not entitled to the resultant limitation-tolling provisions. See Acts 1993, 73rd Leg., R.S., ch. 268, § 1, amended by Acts 1995, 74th Leg., R.S., ch. 721, § 6. Contrary to Wagner's assertions, § 554.006 is inapplicable in this situation. Wagner concedes in his supplemental brief that he is an employee of a state agency, not of a local government. Therefore, under the express terms of § 554.006 in effect at that time, Wagner was *1323 not included within the category of employees for whom the resort to grievance procedures was mandatory and equitable tolling was available.
Assuming arguendo that § 554.006 applied and that Wagner participated in some form of grievance proceeding, Wagner was informed by letter dated August 16, 1994, from the President of TAMU, "While it is regrettable that you believe you have been wronged, the University will take no further action regarding your case. The matter is considered closed." Thus, as the Defendants correctly point out, despite any equitable tolling to which he may have been entitled, Wagner still was obligated to bring his claim within ninety days after the termination of the "grievance proceeding." Exhaustion of internal remedies was not a prerequisite for bringing suit if the procedure was not completed within thirty-one days. Turner v. Richardson Indep. Sch. Dist., 885 S.W.2d 553, 560 (Tex.App. Dallas 1994, writ denied). Wagner did not file this action, however, until November 30, 1995. Although Perry stated at deposition that Wagner can still file a grievance at TAMU, this is contrary to Wagner's assertion that an internal grievance procedure is still on-going. It demonstrates, however, that the grievance procedure at TAMU remains available to Wagner.
Therefore, under the pre-amendment version of the Act, Wagner was required to file suit within ninety days of the occurrence or the discovery of any adverse employment action. Wagner, however, did not file suit until November 30, 1995, months or years after the disputed actions occurred. Thus, Wagner's whistleblower claims relating to events prior to June 15, 1995, are barred by limitations.
2. Events Occurring after June 15, 1995
The current version of the Whistleblower Act is applicable only to those adverse personnel actions occurring on or after the effective date of the Act, June 15, 1995. Whistleblower Act, 74th Leg., R.S., ch. 721, § 11. As previously noted, § 554.006 requires a public employee to initiate action under the agency's grievance procedure not later than the ninetieth day after the alleged adverse action. TEX.GOV'T CODE ANN. § 554.006(a) and (b) (Vernon Supp.1996). If a final decision is not rendered internally before the sixty-first day after the grievance was filed, the employee may choose either to exhaust those procedures and sue within thirty days after their exhaustion or terminate those procedures and sue within the time remaining on the ninety-day period. TEX.GOV'T CODE ANN. § 554.006(d)(1) and (2) (Vernon Supp. 1996). If the employee chooses the latter, he still must bring suit within ninety days after the occurrence or discovery of the alleged adverse action; however, the ninety-day period is tolled during the time he was pursuing the internal grievance procedure. Id.
Here, because Wagner brought suit on November 30, 1995, he may raise claims of adverse employment actions taken against him during the ninety days preceding November 30, 1995, i.e., those actions taken after August 30, 1995. If Wagner invoked the grievance procedure, this ninety-day period would be extended by the amount of time he spent pursuing the internal grievance. In no event would the grievance procedure toll the statute beyond June 15, 1995, the effective date of the amendments. Thus, it must be determined whether the statute of limitations was tolled from June 15, 1995 to August 30, 1995.
The Defendants assert that Wagner never filed a formal grievance, and, therefore any events occurring more than ninety days before November 30, 1995, are time-barred. In response to the motion for summary judgment and in supplemental briefing, Wagner claims that when he engaged in settlement negotiations with TAMU, he believed he was utilizing an internal grievance procedure. At Wagner's deposition, however, the following exchange took place:
Q: Did you ever file a grievance with Texas A & M University?
A: Did I ever fill out a form that says this is the formal grievance procedure that I will follow?
Q: Okay.
A: I did not do that, if that's what you're asking.
*1324 The Defendants attached to their reply brief, as Exhibit "1," TAMU Faculty Grievance Procedures. The Defendants assert that these procedures provide a specific course to be followed by faculty members who have a grievance. The Defendants contend that, in contrast to Wagner's current depiction of the settlement negotiations, at the time they were on-going, Wagner referred to negotiating a "settlement agreement" with TAMU. In a memorandum from Wagner to Perry dated June 22, 1993, Wagner submitted a settlement demand and used the term "settlement agreement" three times. Letters from Wagner's representative, Charles Zucker ("Zucker") Executive Director of the Texas Faculty Association, indicate Wagner's awareness that he was engaged in settlement negotiations. A letter dated June 10, 1994, from Zucker to the Chancellor of TAMU listed Wagner's settlement demands. Another letter from Zucker, dated September 2, 1994, to the ORI stated that TAMU "declined to meet Dr. Wagner's request for a retirement settlement of $325,000." Yet, Wagner contends that the negotiation and reintegration process, "arbitrated" by Perry, was an ad hoc grievance procedure, entitling him to tolling under the Act. The Defendants argue, however, that a grievance must be properly filed under TAMU's official, written grievance procedure and that the negotiation process did not entail a properly filed grievance.
Neither the Texas Government Code nor Texas jurisprudence offers insight into whether an "unofficial" ad hoc grievance procedure has the same tolling effect as an official, systematic procedure. Paragraph (a) of § 554.006 simply states that employees must "initiate action under the grievance or appeal procedures" of the entity involved. TEX.GOV'T CODE ANN. § 554.006(a) (Vernon Supp.1996). The use of the plural "procedures" implies that the Act does not contemplate that a single, systematic method is necessary to toll limitations. The purposes of the Act are better effectuated by an interpretation that allows those state entities which do not have clearly written procedures to use their own informal procedures. Further, to the extent that Wagner must follow TAMU's formal grievance procedure, it does not encompass the claims that Wagner makes. The "Faculty Grievance Procedures" document offered by the Defendants states that it applies to disputes "Not Concerning Questions of Tenure, Dismissal, or Constitutional Rights." Wagner's dispute centers around the alleged violation of his First Amendment rights to speak freely on matters of public concern.
In any event, the first activity alleged by Wagner during this two and a half month period was his occasional appearance in the office while he was classified as being on full-time leave under the FMLA. Wagner does not allege that any adverse employment action relating to his part-time work occurred until TAMU refused to credit him for days worked, a decision that was made in December 1995. As to the merits of this claim, the Defendants assert as an affirmative defense under § 554.004(b) that TAMU would have taken the action, i.e., denying credit for these hours, based solely on information, observation, or evidence that is not related to the fact that Wagner allegedly blew the whistle.
By letter dated June 16, 1996, Wagner's counsel, Gaines, notified TAMU's General Counsel that Wagner had developed a chronic, serious health condition requiring leave under the FMLA. Attached to the letter was a note from Wagner's doctor, Dr. Gary R. Newsome ("Newsome"), which stated that Wagner was not to return to work until significant improvement occurred. In a subsequent letter, dated July 11, 1995, Gaines again notified TAMU's General Counsel that Newsome had required Wagner not to return to work until his condition improved in order to protect his health. Additionally, on July 26, 1995, Wagner submitted a report in which Newsome stated that Wagner was unable to work at that time. Wagner has not produced evidence of any subsequent medical certification that he submitted to TAMU, as required by TAMU in accordance with the FMLA, clearing him to return to work part-time. The regulations enacted under the FMLA permit an employer to require an employee, whose FMLA leave was occasioned by the employee's own serious health condition, as a condition for restoring his job, to present *1325 certification from the employee's health care provider that the employee is able to resume work. See 29 C.F.R. § 825.310. Hence, absent evidence that the certification requirement was applied differently to Wagner than to non-whistleblowers, the Defendants are entitled to rely on this requirement as an affirmative defense. Moreover, Newsome's letters support TAMU's contention that Wagner was unable to work during this time period, and, hence, could not have worked part-time as he claimed. Thus, summary judgment is warranted as to Wagner's claim for credit for days allegedly worked while on medical leave.
Other events urged by Wagner during the time period from June 15, 1995 to August 30, 1995, include his continual "pressing" of his desire to teach Neuroanatomy, negotiating the draft of a full disclosure of the "Trulson Affair," and general reintegration efforts. All of these events, however, began prior to the June 15, 1995, amendments. As such, they are governed by the prior Act and cannot be preserved by any alleged on-going grievance procedure.
With respect to Wagner allegedly being forced to accept a teaching reassignment from Neuroanatomy to Microanatomy on September 15, 1995, the Defendants assert that this does not rise to the level of an adverse employment action. The Defendants also assert as an affirmative defense under § 554.004(b) that they would have reassigned Wagner based solely on information, observation, or evidence that is not related to the fact that Wagner purportedly blew the whistle. In support of their contention that they would have reassigned Wagner in any event, the Defendants cite to memoranda from West to Wagner dated April 21, and May 11, 1995, explaining that because Wagner was absent from the Neuroanatomy Department for two years, West looked elsewhere to staff the course. Although West acknowledged that Wagner's leave involved sick leave, negotiation for retirement, and faculty development, he contends that because the Neuroanatomy course was fully staffed he could not back out of those assignments. Fact questions exist, however, as to the whether another Neuroanatomy faculty member more properly could have been reassigned rather than Wagner and whether Wagner would have been absent from the Neuroanatomy Department for two years had he not reported Trulson and allegedly been retaliated against for doing so. Because outstanding issues of material fact exist with respect to Wagner's claims of retaliation in violation of the Whistleblower Act with regard to his teaching reassignment, this issue will proceed to trial.
E. Negligent and Intentional Infliction of Emotional Distress
In ¶ 37 of his second amended complaint, Wagner alleges that Defendants West and Smith "acted negligently, or, in the alternative, intentionally or recklessly for the purpose of humiliating and demeaning Dr. Wagner and subjecting him to public ridicule." Wagner further claims that the conduct of West and Smith was "so extreme and outrageous in character as to go beyond all possible bounds of decency." Wagner contends that, as a result, he has suffered damages to his health, his business, his reputation, and severe emotional distress. Additionally, Wagner maintains that he has experienced severe disappointment, indignation, wounded pride, shame, despair, and depression, as well as post traumatic stress syndrome, due to his treatment by the Defendants. Wagner asserts that he is now diagnosed as having clinical depression and post traumatic stress syndrome allegedly directly caused by the Defendants' actions.
1. Negligent Infliction of Emotional Distress
Wagner's claim for negligent infliction of emotional distress is not cognizable under Texas law. Texas does not recognize the tort of negligent infliction of emotional distress. Hirras v. National R.R. Passenger Corp., 44 F.3d 278, 280 n. 3 (5th Cir.1995) (citing Boyles v. Kerr, 855 S.W.2d 593, 597 (Tex.1993)); Daniels v. Equitable Life Assurance Soc'y, 35 F.3d 210, 215 n. 8 (5th Cir.1994); Watkins v. Fibreboard Corp., 994 F.2d 253, 258 (5th Cir.1993); Garza v. United States, 881 F.Supp. 1103, 1108 (S.D.Tex. 1995); Kipp v. LTV Aerospace & Defense, 838 F.Supp. 289, 294 (N.D.Tex.1993). Wagner *1326 cites no cases or authority to support the proposition that this court should recognize such a claim under these circumstances. Therefore, the Defendants are entitled to summary judgment on Wagner's claim for negligent infliction of emotional distress.
2. Intentional Infliction of Emotional Distress
To prevail on his claim of intentional infliction of emotional distress, Wagner must establish: (1) the Defendants acted intentionally or recklessly; (2) the Defendants' conduct was extreme and outrageous; (3) the Defendants' actions caused him emotional distress; and (4) the emotional distress he suffered was severe. Burden v. General Dynamics Corp., 60 F.3d 213, 218 (5th Cir. 1995); MacArthur v. University of Tex. Health Ctr., 45 F.3d 890, 898 (5th Cir.1995); McKethan v. Texas Farm Bureau, 996 F.2d 734, 742 (5th Cir.1993), cert. denied, 510 U.S. 1046, 114 S.Ct. 694, 126 L.Ed.2d 661 (1994); Ugalde v. W.A. McKenzie Asphalt Co., 990 F.2d 239, 243 (5th Cir.1993); Ramirez v. Allright Parking El Paso, Inc., 970 F.2d 1372, 1375 (5th Cir.1992); Johnson v. Merrell Dow Pharmaceuticals, Inc., 965 F.2d 31, 33 (5th Cir.1992); Dean v. Ford Motor Credit Co., 885 F.2d 300, 306 (5th Cir.1989); Randall's Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex.1995) (citing Twyman v. Twyman, 855 S.W.2d 619, 621-22 (Tex. 1993)); Wornick Co. v. Casas, 856 S.W.2d 732, 734 (Tex.1993).
While "extreme and outrageous," as used in the second element of this standard is an amorphous phrase that escapes precise definition, there appears to be a consensus that conduct is "outrageous" if it is "atrocious" and surpasses "all possible bounds of decency," such that it is "utterly intolerable in a civilized community." See MacArthur, 45 F.3d at 898; Ugalde, 990 F.2d at 243; Johnson, 965 F.2d at 33; Dean, 885 F.2d at 306; Randall's Food Mkts., Inc., 891 S.W.2d at 644; Wornick, 856 S.W.2d at 734. In Dean, the Fifth Circuit (citing RESTATEMENT (SECOND) OF TORTS § 46, comment d (1965)) stated:
Liability [for outrageous conduct] has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.... Generally, the case is one in which a recitation of the facts to an average member of the community would lead him to exclaim, "Outrageous."
885 F.2d at 306. Liability does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities. Ugalde, 990 F.2d at 243; Johnson, 965 F.2d at 33; Wilson v. Monarch Paper Co., 939 F.2d 1138, 1143 (5th Cir.1991). There is no occasion for the law to intervene in every case where someone's feelings are hurt. Id.
Specifically, in the employment context, the Fifth Circuit, applying Texas law, has repeatedly stated that a claim for intentional infliction of emotional distress will not lie for "mere employment disputes." MacArthur, 45 F.3d at 898; Johnson, 965 F.2d at 33. The courts recognize that in order to manage its business properly, an employer must be able to supervise, review, criticize, demote, transfer, and discipline employees. Id. at 34; Wilson, 939 F.2d at 1143. Even actions that may be illegal in an employment setting may not be the sort of behavior that constitutes "extreme and outrageous" conduct for purposes of an intentional infliction of emotional distress claim. Ugalde, 990 F.2d at 243; see Honea v. SGS Control Servs., Inc., 859 F.Supp. 1025, 1031 (E.D.Tex. 1994); Sebesta v. Kent Elecs. Corp., 886 S.W.2d 459, 462-63 (Tex.App. Houston [1st Dist.] 1994, writ denied).
In their motion for summary judgment, the Defendants correctly note that to be actionable, any such actions must have occurred after November 30, 1993, because claims for intentional infliction of emotional distress are subject to a two-year statute of limitations. See TEX.CIV.PRAC. & REM.CODE ANN. § 16.003(a); Twyman, 855 S.W.2d at 625; Bhalli v. Methodist Hosp., 896 S.W.2d 207, 211 (Tex.App. Houston [1st Dist.] 1995, writ denied). The Defendants contend that Wagner has failed to show that any of the Defendants' conduct was "extreme and outrageous." The Defendants observe that *1327 Wagner merely claims in his second amended complaint that West and Smith acted "intentionally and recklessly for the purpose of humiliating and demeaning Dr. Wagner and subjecting him to public ridicule." The Defendants argue that Wagner has not alleged that he was disciplined or discharged, nor has he specifically described any atrocious affronts to his dignity.
In his response to the Defendants' motion for summary judgment, Wagner maintains that the January 1993 Milford Committee Report found that his reputation had been damaged, that he was forced to step down as Department Head, that he was accused of criminal activities and character flaws, and that he was ostracized. Wagner also suggests that he need not meet the traditional requirements for an intentional infliction of emotional distress claim because the Defendants possessed an outrageous motive to retaliate against a whistleblower. Wagner declares in his response that he "did nothing but seek the truth in the scientific community. He had nothing to gain. The result was a brain-numbing pounding from the College from 1987-93, as found by the Milford Committee, and even further and more outrageous attacks since then."
Although Wagner may be suffering from emotional distress, he has not shown any extreme and outrageous conduct by the Defendants during the relevant time period. As noted above, only events that occurred after November 30, 1993, fall within the applicable statute of limitations. The Milford Committee Report addresses actions that occurred prior to January 13, 1993. The conduct alleged by Wagner after November 30, 1993, is far less egregious that other actions found not to constitute intentional infliction of emotional distress as matter of law in a number of cases. See, e.g., Ramirez, 970 F.2d at 1376-77; Johnson, 965 F.2d at 34; Guthrie v. Tifco Indus., 941 F.2d 374, 379 (5th Cir.1991), cert. denied, 503 U.S. 908, 112 S.Ct. 1267, 117 L.Ed.2d 495 (1992); Clayton v. Nabisco Brands, Inc., 804 F.Supp. 882, 888 (S.D.Tex.1992); Horton v. Montgomery Ward & Co., 827 S.W.2d 361, 369 (Tex. App. San Antonio 1992, writ denied). Only in the most unusual of situations does conduct move out of the "realm of an ordinary employment dispute," into the classification of "extreme and outrageous," as required for the tort of intentional infliction of emotional distress. Prunty v. Arkansas Freightways, Inc., 16 F.3d 649, 654 (5th Cir.1994) (quoting Dean, 885 F.2d at 305). Indeed, Wagner does not state with specificity any particular acts or conduct by the Defendants that he deems to be extreme but rather makes conclusory allegations of "outrageous attacks." While the Defendants' actions may have been thoughtless and perhaps unlawful under other theories, their conduct was not so vile and reprehensible that it surpassed "all possible bounds of decency" or can be viewed as "utterly intolerable in a civilized community." Under these circumstances, summary judgment is proper as to Wagner's claim for intentional infliction of emotional distress.
F. Defamation
Wagner asserts in his second amended complaint that Smith made unprivileged slanderous and libelous false statements, causing severe damage to his physical and emotional state, to his reputation, and to his business. Wagner's allegations stem from a December 1995 memorandum written by Smith to Wagner and copied to four other individuals. In the memorandum, Smith informed Wagner that the Neuroanatomy Course Coordinator had expressed concern for the safety of the Neuroanatomy faculty and the enrolled students should Wagner be permitted to "interact with the course." In addition, Smith stated that Wagner had made threatening statements to other faculty members regarding the use of firearms. Smith directed Wagner not to attend the lectures or laboratories for the Neuroanatomy course. Although the memorandum to Wagner was stamped "confidential," Gelderd, Perry, West, and Prescott received copies. Gelderd was the Course Coordinator for Neuroanatomy. Perry was the Associate Provost and Dean of Faculties who was assigned by the President of TAMU to work with the College of Medicine and Wagner to resolve Wagner's difficulties with TAMU. West was the Head of Wagner's Department who reassigned Wagner. Prescott was special assistant to the Executive Vice President and Provost *1328 who assisted both Perry and the General Counsel in addressing Wagner's concerns.
A statement is defamatory if it tends to harm the reputation of a person, lower the person in the estimation of the community, deter third persons from associating or dealing with him or her, or tends to expose the person to public hatred, contempt, or ridicule. Hardwick v. Houston Lighting & Power Co., 881 S.W.2d 195, 197 (Tex. App. Corpus Christi 1994, writ dism'd w.o.j.). Libel is a written defamatory statement which tends to injure a person's reputation, thus exposing him to "public hatred, contempt, ridicule, or financial injury, or impeach any person's honesty, integrity, virtue, or reputation." See TEX.CIV.PRAC. & REM. CODE ANN. § 73.001; Halbert v. City of Sherman, 33 F.3d 526, 530 (5th Cir.1994) (quoting Sellards v. Express-News Corp., 702 S.W.2d 677, 679 (Tex.App. San Antonio 1985, writ ref'd n.r.e.)); Cain v. Hearst Corp., 878 S.W.2d 577, 580 (Tex.1994); Musser v. Smith Protective Servs., Inc., 723 S.W.2d 653, 654-55 (Tex.1987); Leyendecker & Assocs., Inc. v. Wechter, 683 S.W.2d 369, 374 (Tex.1984). Slander is a defamatory statement published orally to a third person without legal excuse. Halbert, 33 F.3d at 530; Randall's Food Mkts., Inc., 891 S.W.2d at 646.
1. Sovereign Immunity
Smith contends that the doctrine of sovereign immunity precludes a defamation claim against him in his official capacity.
Under Texas law, a suit against a state officer in his official capacity is a suit against the state. Liberty Mut. Ins. Co. v. Sharp, 874 S.W.2d 736, 737 (Tex.App. Austin 1994, writ denied); Pickell v. Brooks, 846 S.W.2d 421, 425 (Tex.App. Austin 1992, writ denied). Officials acting in their official capacity enjoy the same immunity as the state itself. Bowles v. Reed, 913 S.W.2d 652, 655 (Tex.App. Waco 1995, writ denied); Dear v. City of Irving, 902 S.W.2d 731, 735 (Tex.App. Austin 1995, writ denied). The Texas Tort Claims Act "waives governmental immunity in three general areas: use of publicly owned vehicles, premises defects, and injuries arising from conditions or use of property." City of Hempstead v. Kmiec, 902 S.W.2d 118, 122 (Tex.App. Houston [1st Dist.] 1995, no writ) (citing TEX.CIV.PRAC. & REM.CODE ANN. § 101.021; Salcedo v. El Paso Hosp. Dist., 659 S.W.2d 30, 31 (Tex. 1983)). Defamatory statements, even when they are reduced to tangible property in the form of documents, do not escape sovereign immunity. See Dallas County v. Harper, 913 S.W.2d 207, 207-08 (Tex.1995) (citing University of Tex. Medical Branch v. York, 871 S.W.2d 175, 179 (Tex.1994)). Furthermore, the Texas Tort Claims Act does not waive immunity for intentional torts such as defamation. Kmiec, 902 S.W.2d at 122 (citing TEX.CIV.PRAC. & REM.CODE ANN. § 101.057(2)).
Because there has been no statutory or legislative consent for a defamation suit against Smith in his official capacity, summary judgment is appropriate on this claim.
2. Official Immunity
Smith also claims that Wagner's defamation claim against him in his individual capacity is barred under the doctrine of official immunity.
Official immunity is an affirmative defense in Texas. City of Beverly Hills v. Guevara, 911 S.W.2d 901, 903 (Tex.App. Waco 1995, no writ); Kmiec, 902 S.W.2d at 120; Perry v. Texas A & I Univ., 737 S.W.2d 106, 110 (Tex.App. Corpus Christi 1987, writ ref'd n.r.e.). When a defendant moves for summary judgment on an affirmative defense, the burden is on the defendant to establish all of the elements as a matter of law. Saldana v. Garza, 684 F.2d 1159, 1162-63 and n. 14 (5th Cir.1982), cert. denied, 460 U.S. 1012, 103 S.Ct. 1253, 75 L.Ed.2d 481 (1983); Howard v. Vandiver, 731 F.Supp. 1290, 1295 n. 17 (N.D.Miss.1990). "Under Texas law, `[g]overnment officials are entitled to immunity from suit arising from performance of their (1) discretionary duties in (2) good faith as long as they are (3) acting within the scope of their authority.'" Cantu v. Rocha, 77 F.3d 795, 808 (5th Cir.1996) (quoting City of Lancaster v. Chambers, 883 S.W.2d 650, 653 (Tex.1994); Kmiec, 902 S.W.2d at 120; Albright v. Texas Dep't of Human Servs., 859 S.W.2d 575, 579 (Tex. App. Houston [1st Dist.] 1993, no writ); *1329 Boozier v. Hambrick, 846 S.W.2d 593, 597 (Tex.App. Houston [1st Dist.] 1993, no writ).
In the case at bar, Smith was acting within the scope of his authority when he wrote the allegedly defamatory memorandum concerning Wagner's supposed threats with firearms. In an affidavit attached to the Defendants' motion for summary judgment, Smith describes some of his duties as "protecting the welfare of students and faculty and ensuring the quality of education received by students in the College of Medicine." The memorandum from Smith directing Wagner not to attend Neuroanatomy class describes warnings from another faculty member that Wagner's presence would be a disruption to the class because of Wagner's prior belligerent statements that no one ought to change the course "if they know what's good for them." It was within Smith's duties as the Dean of the College of Medicine to issue directives addressing the effectiveness of teaching and safety of faculty and students attending class.
Smith also was performing a discretionary act when he wrote the memorandum. Immunity attaches to state employment that involves discretionary, rather than ministerial, acts. Albright, 859 S.W.2d at 579. "Discretionary acts require deliberation, decision and judgment, whereas ministerial acts involve `obedience to orders, or the performance of a duty as to which the actor is left no choice.'" Id. (quoting Baker v. Story, 621 S.W.2d 639, 645 (Tex.App. San Antonio 1981, writ ref'd n.r.e.)); see Chambers, 883 S.W.2d at 654; City of Dallas v. Half Price Books, Records, Magazines, Inc., 883 S.W.2d 374, 376 (Tex.App. Dallas 1994, no writ). There is no evidence that any policies, rules, or directives required Smith to write the memorandum to Wagner. Smith's composition of the memorandum and subsequent copying of it to additional interested parties was completely within his discretion, as it required deliberation, decision, and judgment.
Finally, Smith contends that he acted in good faith when he wrote the memorandum. In Chambers, the Texas Supreme Court clarified the good faith standard in official immunity cases. 883 S.W.2d at 656. "[A]n officer acts in good faith if a `reasonably prudent officer, under the same or similar circumstances, could have believed that' his acts were justified." Half Price Books, Records, Magazines, Inc., 883 S.W.2d at 377 (quoting Chambers, 883 S.W.2d at 656); see Kmiec, 902 S.W.2d at 121. The test for good faith is one of objective, legal reasonableness. Chambers, 883 S.W.2d at 656; Gallia v. Schreiber, 907 S.W.2d 864, 869 (Tex.App. Houston [1st Dist.] 1995, no writ).
Here, faculty members had expressed concerns to Smith about possible threats from Wagner. Attached to the defendants' motion for summary judgment are affidavits by Gelderd, Black, and Wayne Sampson ("Sampson"). In Gelderd's affidavit, he stated, among other things, "He [Wagner] contacted me while I was on sabbatical and threatened that I had better not make any changes in the course [neuroanatomy] if I `knew what was good' for me." Gelderd further stated that he "believed this to be his way of attempting to intimidate me with threats of violence." According to Gelderd, he communicated all of these matters to Smith because it was his belief that Wagner "posed a threat of violence to me and others." Black stated in his affidavit that Wagner went to his office and revealed to him that he thought violence could break out on the second floor. Black stated that Wagner's concerns related to violence from Trulson. Black further stated in his affidavit, "Dr. Wagner made me aware at that time that he (Dr. Wagner) was armed with a weapon and asked me something of the general nature of `how do you feel about sitting across from someone who is armed.'" Black asserted that "[t]his did have an intimidating and unnerving effect" that left me concerned about his having a weapon on his body in the College of Medicine, but I did not feel personally threatened. Sampson stated in his affidavit that, when Wagner visited him at his laboratory and Sampson asked him if he was carrying a gun, Wagner indicated that he was and that he carried one all the time. Sampson asserted in his affidavit that later the same day, Wagner called him into his office and told him that he did not want Trulson and Gelderd to use his laboratory *1330 for "clandestine meetings." Sampson stated that Wagner told him, "If you know what's good for you, you will not allow these clandestine meetings in your laboratory." Sampson stated that Wagner said this while he "patted the side of his coat where he had earlier indicated that he was carrying a gun." Sampson viewed this as a threat against him and communicated this incident to Smith. Based on Gelderd's, Black's, and Sampson's affidavits, it was reasonable for a supervisor in Smith's position to prohibit Wagner from participating in the Neuroanatomy course and to write a memorandum to him explaining this prohibition, as well as to advise interested parties of his action.
In order to defeat a motion for summary judgment based on official immunity, "the nonmovant must show that `no reasonable person could have thought the facts were such that they justified the defendant's acts.'" Kmiec, 902 S.W.2d at 121 (quoting Chambers, 883 S.W.2d at 657). "In other words, `if officers of reasonable competence could disagree on this issue, immunity should be recognized.'" Id. Here, Wagner merely contends that Smith had a job duty to prevent the spreading of unfounded rumors about Wagner because the Milford Committee report directed TAMU to prevent such rumors. Wagner suggests that if such were the case, Smith could not be acting within his duties by writing a letter that perpetuated an allegedly unfounded rumor. Wagner offers a 1993 letter from E. Dean Gage, Senior Vice President and Provost at TAMU, which includes the following assurance to the OSI:
The President of Texas A & M University will, by memorandum, notify Dr. Richard DeVaul [Smith's predecessor] as chief administrative officer of the College of Medicine, that the University will assiduously protect Dr. Wagner's reputation. The Dean of Faculties [Perry] will be charged to oversee compliance. Dr. Wagner will be asked to meet regularly with the Dean of Faculties to ensure maximum communications on these matters.
This statement falls short of defining one of Smith's duties as the protection of Wagner's reputation. The letter may place a duty on Perry and TAMU, but not on Smith, personally, as the administrative officer of the College of Medicine. Further, while the passage perhaps suggests that Smith had an obligation to protect Wagner's reputation, it in no way implies that it was an absolute duty. The passage does not establish that Smith had a duty to protect Wagner's reputation when doing so would compromise his other duties, e.g., to ensure teaching effectiveness and the safety of other faculty members and students. Because Smith, as the Dean of the College of Medicine, was not specifically charged with overseeing compliance, he did not exceed the scope of his authority by perpetuating a rumor, regardless of its truth. Most importantly, it cannot be said that no reasonable person could have thought that the incidents communicated to Smith would have justified his writing the memorandum. Smith's actions were not so far removed from an appropriate response to reports he had received from faculty members to be deemed unreasonable per se. At a minimum, school officials of reasonable competence could disagree on this issue. Under these circumstances, official immunity must be accorded to Smith.
Accordingly, Wagner's defamation claim against Smith in his individual capacity is barred under the doctrine of official immunity.
3. Qualified Privilege
In the alternative, Smith maintains that even if he were acting outside the scope of his authority, his statements are protected by a qualified privilege.
Under Texas law, "a communication made on a subject matter in which the person making it has an interest is privileged if made to persons having a corresponding interest or duty." Danawala v. Houston Lighting & Power Co., 14 F.3d 251, 254 (5th Cir.1993) (citing Boze v. Branstetter, 912 F.2d 801, 806 (5th Cir.1990)); see Duffy v. Leading Edge Prod., Inc., 44 F.3d 308, 312 (5th Cir.1995). "This privilege protects statements made by an employer concerning an employee." Danawala, 14 F.3d at 254 (citing Bergman v. Oshman's Sporting Goods, Inc., 594 S.W.2d 814, 816 (Tex.Civ. App. Tyler 1980, no writ)). A qualified *1331 privilege is "`based on a public policy that recognizes the need for the free information to protect business and personal interests. To encourage open communication, it is necessary to afford protection from liability for misinformation given in an appropriate effort to protect or advance the interests involved.'" Id. (quoting Gaines v. CUNA Mut. Ins. Soc'y, 681 F.2d 982, 986 (5th Cir. 1982)).
A party loses his qualified privilege when he acts with "actual malice." ContiCommodity Servs., Inc. v. Ragan, 63 F.3d 438, 442 (5th Cir.1995), cert. denied, ___ U.S. ___, 116 S.Ct. 1318, 134 L.Ed.2d 471 (1996); Duffy, 44 F.3d at 312-13; Danawala, 14 F.3d at 254; Seidenstein v. National Medical Enter., Inc., 769 F.2d 1100, 1103-04 (5th Cir. 1985); Gaines, 681 F.2d at 986; Hurlbut v. Gulf Atlantic Life Ins. Co., 749 S.W.2d 762, 768 (Tex.1987). To show actual malice, Wagner must show that Smith published the statement knowing it to be false or with a high degree of awareness of its probable falsity. See Danawala, 14 F.3d at 255 (citing Seidenstein, 769 F.2d at 1104); Carr v. Brasher, 776 S.W.2d 567, 571 (Tex.1989); Casso v. Brand, 776 S.W.2d 551, 558 (Tex. 1989). "Actual malice in the defamation context does not include ill will, spite or evil motive, but rather requires `sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.'" Hagler v. Proctor & Gamble Mfg. Co., 884 S.W.2d 771, 772 (Tex.1994) (quoting Casso, 776 S.W.2d at 558); see ContiCommodity Servs., Inc., 63 F.3d at 442-43; Carr, 776 S.W.2d at 571. Once any underlying factual disputes are resolved, whether a qualified privilege exists is a question of law. Danawala, 14 F.3d at 254; Boze, 912 F.2d at 806; Schauer v. Memorial Care Sys., 856 S.W.2d 437, 449 (Tex. App. Houston [1st Dist.] 1993, no writ) (citing Houston v. Grocers Supply Co., 625 S.W.2d 798, 800 (Tex.App. Houston [14th Dist.] 1981, no writ)).
In this case, Smith maintains that the limited number of TAMU officials who received the memorandum had an interest in Wagner's status. The letter contained comments about an employee, Wagner, and was directed only to the following individuals: Wagner; Gelderd the Course Coordinator for Neuroanatomy; Perry the Associate Provost and Dean of Faculties who was assigned by the President of TAMU to work with the College of Medicine and Wagner to resolve Wagner's difficulties with TAMU; Prescott Special Assistant to the Executive Vice President and Provost who assisted both Perry and the General Counsel in addressing Wagner's concerns; and West Head of the Department who reassigned Wagner. As the Defendants correctly point out, each of these people had an interest or duty in the matters which the letter addressed. "Accusations against an employee by his employer or another employee, made to a person having a corresponding interest or duty in the matter to which the communication relates, are qualifiedly privileged." Bergman, 594 S.W.2d at 816.
Wagner does not dispute the potential applicability of the privilege. Instead, Wagner alleges that Smith acted in bad faith when he wrote the 1995 memorandum. The relevant paragraph of that memorandum reads:
I [Smith] have been notified by the course coordinator for the Neuroanatomy course [Dr. John Gelderd] that you [Wagner] have made threats to him and to other faculty members. He cites your conversation with him in which you state that no one will change anything in the Neuroanatomy course "if they know what's good for them." The course coordinator expresses concern for the safety of the faculty involved in the course and for the students in attendance should you be permitted to interact with the course. Other faculty members are willing to state that they have received threatening statements from you regarding the use of firearms.
Wagner suggests that this statement was based solely on unfounded rumors begun by Dr. Gelderd in a 1992 letter. At deposition, Smith discussed that letter:
Q. You believed that Dr. Wagner did those things [made threats]?
A. I have individuals willing to state under oath that Dr. Wagner made those statements and allegations. I have no *1332 reason to dispute them and at that point in time, no reason to take action.
Q. Did you believe it in 1992?
A. Yes, I believed that.
Q. Did you believe that Dr. Wagner was a threat to faculty and students back in 1992?
A. I believed that those individuals believed that Dr. Wagner was a threat and that Dr. Wagner had on occasions previously alluded to the use of firearms as a method of dispute resolution.
Later at deposition, Wagner's counsel suggested that Smith had casually used language that suggested there was a larger group of threatened people than actually existed.
Q. Do you mean it [the statement in Smith's letter that "Other faculty members are willing to state that they have received threatening statements from you regarding the use of firearms"] might mean "he" instead of "they"?
A. That is conceivable. What I am telling you on the record is that there are a number of individuals who are willing to state either they have felt personally threatened by Dr. Wagner or have firsthand knowledge of Dr. Wagner's statement and action that led to my conclusion to ask Dr. Wagner to refrain from attending the course.
* * * * * *
Q. All right, if a person read that and assumed that what it really meant was what it said, that more than one person had received a threatening statement, is that true or not true?
A. I believed that to be true. I believed that there are two or more individuals other than Dr. Gelderd who will testify that they believe Dr. Wagner has made statements which would be interpreted as a threat.
* * * * * *
A. I am willing to state that at the time I wrote this statement, I believed Dr. Black to be willing to confirm the statement.
Q. All right, but you hadn't spoken to him in years about the subject?
A. That is correct.
A defendant's failure to investigate a statement's truth is insufficient to show malice. Schauer, 856 S.W.2d at 449-50 (citing Mayfield v. Gleichert, 484 S.W.2d 619, 627 (Tex.Civ.App. Tyler 1972, no writ)). The focus is on Smith's state of mind at the time of publication. See Danawala, 14 F.3d at 254. "`Proof of falsity in fact is not enough, nor is proof of a combination of falsehood and general hostility.'" Id. (quoting Seidenstein, 769 F.2d at 1104). Wagner has failed to meet his burden to prove actual malice by Smith. See Duffy, 44 F.3d at 313-14; Schauer, 856 S.W.2d at 449. Wagner has not presented evidence that Smith seriously doubted the truth of his statement. "Under the actual malice standard, a determinative factor is whether the defendant entertained serious doubts as to the truth of the communication; the privilege is not lost if the defendant actually believed the defamatory statement to be true." Duffy, 44 F.3d at 314. At deposition, Smith named two persons other than Gelderd whom he believed could corroborate the fact that Wagner had made threats in the past. Although Smith was unable to identify as many individuals who were actually threatened themselves, his allegedly defamatory statement does not necessarily imply that all the individuals supporting his statement were personally threatened. The fact that Smith failed carefully to check and update the sources of older information about Wagner does not prove that he in any way doubted the verity of his statement.
Because Smith's statement is protected by a qualified privilege, as well as by the doctrine of official immunity, summary judgment on Wagner's defamation claim is warranted.
III. Conclusion
The Defendants' Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART. Outstanding issues of material fact exist with respect to Wagner's claims of disability discrimination under the *1333 ADA as to events occurring after November 1, 1993, violations of his First Amendment speech rights under 42 U.S.C. § 1983 which relate to events occurring after November 1, 1993, and violations of the Texas Whistleblower Act with regard to events arising after August 30, 1995.
The Defendants are GRANTED summary judgment on Wagner's claims of disability discrimination under the ADA with regard to events occurring before November 1, 1993, civil rights violations under 42 U.S.C. § 1983 arising prior to November 1, 1993, property interest deprivation under 42 U.S.C. § 1983, violations of the Texas Whistleblower Act as to events occurring prior to August 30, 1995, fraudulent concealment, negligent and intentional infliction of emotional distress, and defamation.
IT IS SO ORDERED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1515333/ | 116 N.H. 760 (1976)
R. J. BERKE & CO., INC. & a.
v.
J. P. GRIFFIN, INC. & a.
J. P. GRIFFIN, INC. & a.
v.
R. J. BERKE & CO., INC. & a.
No. 7242.
Supreme Court of New Hampshire.
December 30, 1976.
Sheehan, Phinney, Bass & Green and Joseph F. Devan (Mr. Devan orally) for the plaintiff R. J. Berke Co., Inc.
Griffin, Harrington & Brigham and Letoile, Murphy & O'Reilly (of *761 Massachusetts) (Mr. Lindsey R. Brigham and John R. Murphy orally) for the defendants J. P. Griffin, Inc. and Aetna Casualty and Surety Company.
PER CURIAM.
These consolidated appeals involve contract disputes between J. P. Griffin, Inc., the general contractor and the R. J. Berke Co., a subcontractor. They arose out of the construction of a sewage treatment plant and related facilities for the town of Newmarket, New Hampshire.
The town of Newmarket and Green Engineering Affiliates, Inc., were joined as parties defendant in the cross-action of Griffin v. Berke, but those actions have been disposed of and form no part of the appeals. The two insurance companies provided bonds for the remaining principal parties.
The history of the dispute, as briefly as possible, may be summarized as follows:
On August 6, 1968, Griffin entered into a $1,047,650 general contract with the town to construct additions to the sewage treatment plant. The Aetna Insurance Company furnished bond. Green Engineering Affiliates, Inc., was designated as the engineer and authorized to act as the town's representative in construction matters. Griffin entered into a subcontract for Berke to perform certain work for a price of $225,000. The St. Paul Fire and Marine Insurance Company furnished bond. All parties agreed that the completion time was 540 days from August 6, 1968. From the beginning, the actual construction work did not go well. The engineer had estimated that 4,100 cubic yards of ledge would need to be excavated but the actual amount encountered was approximately 12,000 cubic yards.
Numerous disputes as to the adequacy of the performance of each party's contractual obligations arose and were compounded by personality clashes for which both were at fault. Griffin's complaints included charges that Berke failed to adequately man the job thereby causing delays; performed sloppy work; failed to cooperate with other construction personnel in matters of scheduling; and failed to timely pay subcontractors. Berke's complaints included charges that Griffin failed to pay for labor and materials as the job progressed; to pay for extras; to provide proper working conditions; to adequately prepare the work site; and to generally cooperate so that the work could be reasonably coordinated.
*762 Friction between the two companies reached the point where on February 13, 1970, with a substantial amount of the contract performed, Berke walked off the job. Berke returned to work on March 16, 1970, pursuant to a "letter agreement" negotiated March 12, 1970. Under this agreement, Berke was permitted to return to the site and complete the contract on the following conditions: (1) its guarantee "to provide sufficient competent personnel and all necessary materials to complete [its] portion of the treatment plant immediately"; (2) a proviso that no further funds would be paid to the company until it demonstrated that it had made all past payments owed to its subcontractor Standard Plumbing and Heating Corporation; and (3) a proviso that no further payments would be made to Berke "until completion and final acceptance by the Engineer of the project." Troubles persisted even after Berke's return to the job site. Griffin charged that Berke again had failed to adequately man the job and was still not timely in its payment to its subcontractors. On June 3, 1970, Berke was ordered to cease all work and to leave the premises. Griffin thereafter called in various subcontractors to complete or correct Berke's unfinished work.
On March 11, 1970, the instant litigation was started by Berke through a bill in equity seeking payment under the bond issued to Griffin by the defendant Aetna. The petition alleged that the work was 97% completed and sought the balance due on the contract price. An amendment to the pleadings was filed on October 10, 1972, adding counts in assumpsit and quantum meruit and including a claim for "extras" and for additional unspecified damages.
Griffin filed a cross-action against Berke and its bonding company the St. Paul Fire and Marine Insurance Company. The action alleged inadequate performance by Berke and sought recovery for the damages incurred, including recovery for the penalty paid for failure to timely complete the contract.
The proceedings, heard by a Judicial Referee (Blandin, J.), were lengthy resulting in a voluminous record and many exhibits. The parties showed little inclination to reduce this complexity or to assist the trial court. The parties ignored the design of RSA 491:15 as succinctly set forth in Concord General Mutual Insurance Company v. Haynes, 110 N.H. 76, 79, 260 A.2d 99, 101 (1969), and the plaintiff filed 177 requests for findings and rulings and the defendant 993 such requests.
*763 The trial court found that both parties had materially breached their respective contracts in substantially the manner alleged in their pleadings; that the construction delays occurring prior to the time of the letter agreement were attributable to these breaches as well as to the unanticipated ledge conditions and to personality conflicts for which both parties were at fault. It concluded that "justice in this equitable proceeding requires that neither recover from the other for damage suffered prior to the letter agreement."
The referee observed that the meaning of the letter agreement was "obscure" but construed it as an intent "to get the job done," and not "intended to revitalize the original sub-contract ... with its mass of provisions, some highly technical, contained in the hundreds of pages and integrated proposals and drawings." He further found that Berke breached the terms of the letter agreement and that Griffin was justified in ordering it to cease all work and leave the premises. The referee thus concluded that Griffin alone was entitled to damages arising after the letter of agreement.
The court ruled that the fair market value of materials and labor, including extras furnished by Berke, was $240,562.18; credits awarded Griffin included its partial payment to Berke in the amount of $170,377.20, plus $33,299.05 admittedly due by Berke, and post letter agreement damages of $27,457.64 (including $6,000 as Berke's share of liquidated damages for delay). The result was a net balance due Berke in the amount of $9,428.29.
Both parties have appealed from the verdict and all exceptions were reserved and transferred by Bois, J. Berke has indicated that it does not intend to press its exception should the appeal be resolved in its favor.
Griffin's contentions are fourfold: (1) Berke was not entitled to relief in quantum meruit; (2) Berke was not entitled to payment for the extras; (3) the referee erred in apportioning the liquidated damages for project time overruns; (4) the referee was in error in his method of determining the damages to be set off by Griffin.
I.
Griffin's argument in contesting the recovery in quantum meruit is twofold. It argues that as a matter of law such recovery is not allowed (1) where substantial performance has not been *764 rendered and (2) where the defaulting party's breach has been willful.
In support of its first contention, Griffin relies on Albre Marble & Tile Co. v. Goverman, 353 Mass. 546, 233 N.E.2d 533 (1968), wherein it was held that substantial performance of the contract was a prerequisite to quantum meruit recovery. This position apparently is attributable to the strict view which Massachusetts generally takes towards quantum meruit recovery. See 3A A. Corbin, Contracts § 707, at 330-31 (1960).
Quantum meruit is a restitutionary remedy intended for use by contracting parties who are in material breach and thus unable to sue "on contract." See J. Calamari & J. Perillo, Contracts § 159 (1970); 5A A. Corbin, Contracts § 1124 (1964). It follows that the defaulting party recovering in quantum meruit will generally not have rendered substantial performance. We have permitted recovery to plaintiffs who have failed to substantially perform. See Francoeur v. Stephen, 97 N.H. 80, 81 A.2d 308 (1951); Britton v. Turner, 6 N.H. 481 (1834). There is no compelling reason to adopt a contrary position in this case.
As to the defendants' second argument it is true that generally quantum meruit recovery will not be awarded where the conduct has been "wilful." Corbin notes that the term is not easily defined, and that a breach is not ordinarily considered willful if there is involved an honest dispute as to contract obligation. See 5A A. Corbin, Contracts § 1123 (1964). It has been suggested that the quality of the breach bears no logical relationship to the theory of quantum meruit recovery, and that the willful defaulter should thus not be denied relief. Nordstrom & Woodland, Recovery by Building Contractor in Default, 20 Ohio St. L. J. 193, 211-14 (1959). In Britton v. Turner, supra at 492, the court emphasized the principle that "where the party receives value takes and uses the materials, or has advantage from the labor, he is liable to pay the reasonable worth of what he has received."
We have spoken with approval of recovery for the plaintiff who "by his voluntary failure to fully perform the work he agreed to do" has conferred a net benefit on the defendant. Anderson v. Shattuck, 76 N.H. 240, 242-43, 81 A. 781, 782 (1911) (emphasis added). And in Stanley v. Kimball, 80 N.H. 431, 436, 118 A. 636, 638 (1922), we held unjust enrichment "a sufficient foundation" for permitting recovery. We have denied recovery to one whose conduct was "willful" where the plaintiff through a fraudulent *765 scheme had "bamboozled" the defendant out of a substantial sum of money. Welch v. Coleman, 95 N.H. 399, 64 A.2d 691 (1949).
The finding here that the plaintiff had been "sincere in wishing not to fail ... to complete a job he had agreed to do" does not support Griffin's charge of bad faith.
II.
Griffin's broad contention is that extras should not have been considered as they were not claimed according to the terms of the contract. The court found that Griffin had "waived any rights it might have." It is suggested that the referee erroneously relied on a provision in the letter agreement stating that "no further discussions will be entered into on back charges, liabilities or other claims until final acceptance of the project ...."
Whatever its merits, the issue of waiver is irrelevant insofar as Berke's recovery is not on the contract but in quantum meruit. In the absence of some explicit understanding between the parties that quantum meruit for extras would be barred, see Page v. Marsh, 36 N.H. 305, 308-09 (1858), they were properly included in the calculation of the gross benefit conferred. Cf. Danforth v. Freeman, 69 N.H. 466, 43 A. 621 (1898).
III.
The general contract called for completion no later than February 17, 1970, but in fact the project was not completed until November 29, 1970. As a result of the penalty clause Griffin faced a potential liability of approximately $29,000. Credits were obtained and Griffin settled with the town for $18,000. The referee found that "The fundamental causes of the delays ... were (a) gross miscalculation as to the amount of ledge to be removed. This was the fault of neither Berke nor Griffin .... (b) [p]ersonality clashes for which both were at fault; (c) breaches by both ...." Berke was held responsible for $6,000 of this amount.
Griffin argues strenously that no apportionment should have been made, and that the record mandates a finding that all the delay for which it was penalized was due to Berke. This argument is based on its conclusion that no significant part of the delay could be attributed to its own conduct. It does not support this conclusion with any evidence as to how the referee's contrary conclusion was necessarily in error. If the full length of the delay is *766 apportioned evenly over the contract period, a substantial amount of the delay will fall in the pre-letter agreement phase of the work. Griffin has failed to show why its role in the pre-letter agreement period was not a factor in the overall delay and thus a proper basis for the apportionment of the liquidated damages.
IV.
Griffin's final contention is that the referee erred in measuring the damages to which it was entitled. Specifically, Griffin argues that the referee erred in that his calculations (1) credited Berke with having completed the subcontract (2) treated certain credits owed by Berke substantively, rather than as mere "bookkeeping" devices (3) failed to include Griffin's expenses in completing Berke's unfinished performance.
It is true that the referee obtained Griffin's gross benefit by adding together the subcontract price and the value of the extras. However, the referee subsequently deducted from this figure Griffin's damages in completing Berke's unfinished work. With a construction contract of the type involved here, this method does not confer any unfair advantage. As we observed in a previous case involving a construction contract:
"Estimating his liability under the contract completely performed at the contract price, the benefit received, for which he should pay on the basis of the contract, is conveniently ascertained by deducting from the contract price the damage occasioned by the builders' failure to perform the contract."
Danforth v. Freeman, 69 N.H. 466, 468-69, 43 A. 621, 623 (1898). See also Anderson v. Shattuck, 76 N.H. 240, 243, 81 A. 781, 782 (1911).
Similarly, we find no unfair benefit conferred on Berke by the manner in which the referee handled the "credits." These items constituted, and were treated as, mere bookkeeping devices.
Finally, we find no error in the referee's decision to award Griffin less than the full amount of its claimed expenses in finishing Berke's subcontract. It was not incumbent on the referee to accept Griffin's damage schedule at face value.
We acknowledge that our review of the above matters has necessarily been circumscribed by the virtually unmanageable nature of this case. The avalanche of proposed findings and rulings *767 nearly 1,200 in number (not counting component parts), occupying 122 pages in the reserved case placed a heavy burden on the referee. This excess, rehashing nearly every scintilla of evidentiary detail, was obviously intended to serve not as an aid to the trial process, but rather as "a device to ensnare [the trier of fact] into error." Stella v. Curtis, 348 Mass. 458, 461, 204 N.E.2d 457, 460 (1965).
Proposed findings and rulings, by providing a simple method of "presenting to the law court the questions of law arising on the facts proven, as distinguished from the evidence," should work to expedite the trial process. Concord General Mut. Ins. Co. v. Haynes, supra at 79, 260 A.2d at 101. "[E]very lawyer is an arm of the court and owes the cause of justice the obligation of refraining from submitting overburdensome improper Proposed Decisions which do not serve a client's posture ...." Coratti v. State, 307 N.Y.S.2d 103, 105 (Ct. Cl. 1969). This obligation of restraint was not met in the instant case.
This case demonstrates that the matter of requests to find facts is one of increasing difficulty to the trial court. RSA 491:15 states simply that if either party requests it, the judge shall "give his decision in writing, stating the facts found and his rulings of law ...." The purpose of this section is to provide a basis for presenting to this court the questions of law arising on the facts found by the trial court, as distinguished from the evidence. Tilton v. Sharpe, 84 N.H. 393, 151 A. 452 (1930). This purpose is fulfilled if the trial court files, in narrative form, the findings of essential facts which are sufficient to support his decision. Oullette v. Ledoux, 92 N.H. 302, 30 A.2d 13 (1943).
"Under all the circumstances of this case the findings which were made, considered as a whole, were consistent with the decree and warranted by the evidence." Concord General Mut. Ins. Co. v. Haynes, supra at 79, 260 A.2d at 101-02.
Exceptions overruled.
BOIS, J., did not sit; the others concurred. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2002804/ | 822 F.Supp. 125 (1993)
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Petitioner,
v.
Sarah Wall Stephenson SHADDOCK, William F. Stephenson, as Personal Representative of the Estate of Audrey J. Stephenson, and Scott Webster Stephenson, Respondents.
MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Petitioner,
v.
William F. STEPHENSON, Respondent.
Nos. 92 Civ. 8115 (WCC), 92 Civ. 8116 (WCC).
United States District Court, S.D. New York.
May 20, 1993.
*126 Orrick, Herrington & Sutcliffe, New York City (Lawrence E. Fenster, of counsel), for petitioner.
Vinton, Waller, Slivka & Panasci, Richard P. Slivka, Patrick D. Vellone, Denver, CO, Brandeis, Bernstein & Wasserman by Katherine Nathan, New York City, for respondents Scott Webster Stephenson, William F. Stephenson, as Personal Representative of the Estate of Audrey J. Stephenson and Sarah Wall Stephenson Shaddock.
Cohen Brame & Smith, P.C., Jeffrey L. Smith, Marisa L. Williams, Denver, CO, Brandeis, Bernstein & Wasserman by Katherine Nathan, New York City, for respondent William F. Stephenson.
OPINION AND ORDER
WILLIAM C. CONNER, District Judge.
These two related cases were consolidated in this Court upon removal from New York State Supreme Court under 28 U.S.C. § 1446. Petitioner Merrill Lynch, Pierce, Fenner & Smith Inc., ("Merrill Lynch"), moves for an order permanently staying the arbitration proceedings initiated by respondents before the National Association of Securities Dealers, Inc. ("NASD"), on or about September 22, 1992. Respondents move for dismissal pursuant to Rule 12(b)(2), Fed. R.Civ.P., for lack of personal jurisdiction, and under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. For the reasons discussed below, respondents' motion to dismiss for want of personal jurisdiction is denied. Merrill Lynch's petition for an order staying arbitration is also denied and consequently respondents' motion to dismiss under Rule 12(b)(6) is granted.
*127 BACKGROUND
The two arbitrations that are the subject of the actions consolidated in this Court are classic "Black Monday" cases. Respondents' claims are based on trading in uncovered equity options, beginning in 1985 and 1986, through accounts with petitioner Merrill Lynch, that ultimately resulted in respondents suffering substantial losses on October 19, 1987. Respondents allege causes of action for breach of fiduciary duty, negligent supervision, unsuitable trading, churning, federal and state securities violations, fraud, and negligent misrepresentation.
Respondents' association with Merrill Lynch began in 1977 when respondent Stephenson entered into a relationship with Robert Swartz, a registered representative in Merrill Lynch's Denver office. Respondents, none of whom are New York residents, assert that their customer relationship with Merrill Lynch was maintained exclusively through Merrill Lynch's Denver office and that respondents had no contact with the State of New York or Merrill Lynch's New York offices either directly or via telephone communications in connection with any of the transactions that form the basis of respondents' claims. Respondents maintain that their only relevant contact with New York occurred in September 1992, when, in order to initiate arbitration proceedings before the NASD, respondents were required by NASD rules to file their claims initially with the NASD principal offices in New York. The claims remain before the NASD in New York through the pleading stage, after which they will be sent to the NASD regional offices in Denver, selected by respondents as the suitable location for arbitration of their claims.
Respondents' Customer Agreement with Merrill Lynch ostensibly the standard contract form used by Merrill Lynch contains the following arbitration clause:
11. Agreement to Arbitrate Controversies
It is agreed that any controversy between us arising out of your business or this agreement shall be submitted to arbitration conducted under the provisions of the Constitution and Rules of the Board of Governors of the New York Stock Exchange, Inc., or pursuant to the Code of Arbitration Procedure of the National Association of Securities Dealers, Inc., as the undersigned may elect. If the controversy involves any security or commodity transaction or contract related thereto executed on an exchange located outside the United States, then such controversy shall, at the election of the undersigned, be submitted to arbitration conducted under the constitution of such exchange or under the provisions of the Constitution and Rules of the Board of Governors of the New York Stock Exchange, Inc., or the Code of Arbitration Procedure of the National Association of Securities Dealers, Inc. Arbitration must be commenced by service upon the other of a written demand for arbitration or a written notice of intention to arbitrate, therein electing the arbitration tribunal. In the event the undersigned does not make such designation within five (5) days of such demand or notice, then the undersigned authorizes you to do so on behalf of the undersigned.
After the arbitration clause appears the following choice-of-law provision:
12. The Laws of the State of New York Govern
This agreement and its enforcement shall be governed by the laws of the State of New York; shall cover individually and collectively all accounts which the undersigned may open or reopen with you, and shall enure to the benefit of your successors whether by merger, consolidation or otherwise, and assigns, and you may transfer the accounts of the undersigned to your successors and assigns and this agreement shall be binding upon the heirs, executors, administrators, successors and assigns of the undersigned.
After respondents initiated arbitration proceedings before the NASD, Merrill Lynch petitioned New York State Supreme Court, County of New York, seeking a permanent stay of the arbitrations pursuant to New York C.P.L.R. §§ 7502 and 7503, on grounds that respondents' claims were barred by applicable statutes of limitations. Respondents removed the actions to this Court on the basis of diversity jurisdiction, and now move *128 for dismissal on grounds of lack of personal jurisdiction. Merrill Lynch moves to stay permanently the pending arbitration proceedings, to which respondents reply with a cross-motion to dismiss for failure to state a claim upon which relief can be granted.
DISCUSSION
I. Motion to Dismiss For Lack of Personal Jurisdiction
The primary basis advanced by petitioner for the assertion of personal jurisdiction over respondents is grounded in the arbitration clause contained in Merrill Lynch's Customer Agreement signed by respondents. By virtue of agreeing to arbitrate "any controversy" in a New York forum (under the auspices of either the NYSE or the NASD), petitioner maintains that respondents have effectively consented to personal jurisdiction in the New York courts.
Respondents initially claim that the arbitration clause is not a "choice-of-forum" provision but "simply a choice-of-law" provision so that respondents' consent to jurisdiction before a New York arbitral forum cannot support a finding of consent to personal jurisdiction in New York courts. In attempting to demonstrate that the arbitration provision does not subject respondents to the Court's jurisdiction, respondents misleadingly quote both the arbitration provision and the choice-of-law provision as if they were one clause in the contract and improperly assert that the two clauses are simply one choice-of-law provision. Respondents then cite cases standing for the proposition that a choice-of-law provision is not sufficient to confer personal jurisdiction.
Respondents tactic is unavailing. Even a quick glance at the Customer Agreement reveals that the arbitration provision, designated with the heading "Agreement to Arbitrate Controversies," stands separate and distinct from the choice-of-law provision, designated with the heading "The Laws of the State of New York Govern." Under the arbitration provision, respondents have clearly consented to arbitrate the current controversy before a panel of either the NYSE or the NASD. The only remaining question is whether consent to arbitrate before one of these two panels is sufficient basis for inferring consent to personal jurisdiction in New York courts.
It is well settled that forum-selection clauses are regularly enforced as valid consents to jurisdiction in a particular forum under the principles articulated in Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). See Luce v. Edelstein, 802 F.2d 49, 57 (2d Cir.1986); Maritime Ventures Intl, Inc. v. Caribbean Trading & Fidelity, Ltd., 689 F.Supp. 1340, 1348 (S.D.N.Y.1988). An arbitration agreement is a special type of forum-selection clause, and is subject to the same principles. Maritime Ventures Intl., 689 F.Supp. at 1348 (citing Scherk v. Alberto-Culver Co., 417 U.S. 506, 519, 94 S.Ct. 2449, 2456, 41 L.Ed.2d 270 (1974)). Thus, agreements to arbitrate in a particular forum have been held to constitute consent to personal jurisdiction in the courts of that forum. Maritime Ventures Intl., 689 F.Supp. at 1348 (citing Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lecopulos, 553 F.2d 842, 844 (2d Cir.1977); see also Intermeat, Inc. v. American Poultry, Inc., 575 F.2d 1017, 1023 (2d Cir.1978); Babitt v. Frum, 606 F.Supp. 680, 682 (S.D.N.Y.1985); Merrill Lynch v. Noonan, 1992 WL 196741, *2-3 (S.D.N.Y.1992); Merrill Lynch v. Lorey, Index No. 12997/91 (N.Y.Sup.Ct.1992).
Respondents do not take issue with these principles. Rather, respondents argue that a party may only be deemed to have consented to personal jurisdiction in the courts of a particular forum where the party had contracted to arbitrate "in a specified geographical location." According to respondents, consent to personal jurisdiction in New York courts may not be found where the parties have merely agreed to arbitrate before the NYSE or NASD; rather the parties must specifically agree that arbitration will be conducted in New York. Indeed, in most of the cases cited by petitioner finding consent to personal jurisdiction in a particular forum, the court noted that the parties had contractually agreed to conduct arbitration proceedings in a particular city or location within that forum. See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. at 508-09, n. 1, 94 S.Ct. *129 at 2451-52, n. 1; Intermeat, Inc., 575 F.2d at 1023; Maritime Ventures Intl., 689 F.Supp. at 1345-46. In the instant case, although the parties have contracted to arbitrate controversies under the aegis of the NYSE or NASD, both of which are principally located in New York, the contract does not require that arbitration proceedings actually take place in New York. And although respondents have initiated arbitration proceedings by filing with the NASD office in New York as required, respondents have selected the NASD regional office in Denver as the site of the arbitration hearings. Consequently, respondents maintain that they cannot be deemed to have consented to personal jurisdiction in New York.
Petitioner indicates it has never claimed that the basis for invoking personal jurisdiction over respondents was the choice of a "particular place" or "specified geographical location" where arbitration hearings would actually proceed. Merrill Lynch maintains that under the authorities it cites, an agreement to conduct arbitration proceedings in a "specified situs" is not the sine qua non of a finding of consent to personal jurisdiction; rather, "an agreement to arbitrate under the auspices of a New York forum," regardless of where the ultimate "situs of the arbitration hearings will be," is sufficient to confer personal jurisdiction in a New York court. According to petitioner, because the parties have agreed to arbitrate all controversies before the NYSE or NASD, both of which are "unquestionably" New York fora, and because the respondents decision to proceed before the NASD necessitates initiating their claims in New York, respondents must be deemed to have consented to personal jurisdiction in New York.
Merrill Lynch relies principally on three cases, Merrill Lynch v. Lecopulos, 553 F.2d 842 (2d Cir.1977), Merrill Lynch v. Noonan, 1992 WL 196741 (S.D.N.Y.1992), and Merrill Lynch v. Lorey, Index No. 12997/91 (N.Y.Sup.Ct.1992), where contractual arbitration provisions virtually identical to the ones currently before this Court were held to constitute consent to personal jurisdiction in New York. Each of these cases involved an arbitration provision from a Merrill Lynch standard Customer Agreement and in none of these cases did the arbitration provision require that arbitration hearings ultimately proceed in New York.
In the leading case of Merrill Lynch v. Lecopulos, the arbitration provision required controversies to be "submitted to arbitration conducted under the provisions of the Constitution and Rules of the Board of Governors of the New York Stock Exchange."[1] 553 F.2d at 843-44, n. 1. The Second Circuit in Lecopulos found this provision amounted to consent to personal jurisdiction in New York courts:
In addition to choosing the jurisdiction in which disputes are to be litigated, the parties can also designate a specific type of forum, e.g. arbitration, see Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 [94 S.Ct. at 2449, 2556] (1974), in appropriate cases. Against this background, Merrill Lynch argues that the agreement to resolve disputes by arbitration in New York constituted consent to personal jurisdiction in New York. Merrill Lynch is correct. In Victory Transport Inc. v. Comisaria General, 336 F.2d 354, 363 (2d Cir.1964), cert. denied, 381 U.S. 934 [85 S.Ct. 1763, 14 L.Ed.2d 698] (1965) we said: By agreeing to arbitrate in New York, where the United States Arbitration Act makes such agreements specifically enforceable, the Comisaria General must be deemed to have consented to the jurisdiction of the court that could compel the arbitration proceeding in New York. To hold otherwise would be to render the arbitration clause a nullity. (Citing cases) (Emphasis added).
553 F.2d at 844. The Second Circuit apparently considered a contractual provision requiring arbitration under the aegis of the NYSE as constituting an "agreement to resolve disputes by arbitration in New York." The NYSE, like the NASD, has its principal arbitration offices in New York City through *130 which all arbitrations are initially processed. See Noonan, 1992 WL 196741 at *2, *3. Petitioner argues that because the Customer Agreement in Lecopulos did not contain any reference to the place where arbitration hearings were ultimately to be held, the Second Circuit's decision can only mean that an agreement to submit disputes to the NYSE "a New York forum" constitutes consent to personal jurisdiction in New York. Respondents maintain that Lecopulos stands only for the proposition the Second Circuit specifically articulated: that an "agreement to resolve disputes by arbitration in New York constituted consent to personal jurisdiction in New York." Why the Second Circuit found consent to jurisdiction in Lecopulos without New York being specified in the contract as the location for the arbitration proceedings is a question respondents are admittedly unable to answer.
The issue was addressed by Judge Kram in Merrill Lynch v. Noonan, 1992 WL 196741 (S.D.N.Y.1992), within the context of an arbitration clause offering the Merrill Lynch customer more than one arbitral entity before which to proceed. The Agreement in Noonan did not specify a geographic location where the arbitration hearings would take place. Nevertheless, the Court found the parties had consented to personal jurisdiction in New York:
Moreover the Second Circuit has held that agreements to resolve disputes by arbitration in New York constitute consent to personal jurisdiction in New York. The court noted that to hold otherwise would be to render the arbitration clause a nullity. In this case, the Noonan Agreements provide for arbitration before `the New York Stock Exchange, Inc., the American Stock Exchange, Inc., or arbitration facility provided by any other exchange, the National Association of Securities Dealers, Inc., or the Municipal Securities Rulemaking Board.' Although New York City is not specifically mentioned as a site in the Noonan Agreements, there are several references to New York City. First, the New York Stock Exchange and the National Association of Securities Dealers both have their principal arbitration offices in New York City where all arbitrations are initially processed. Moreover, Merrill Lynch has its principal place of business in New York. Thus the contract is akin to an arbitration agreement which states that the respondents will resolve their disputes by arbitration in New York. Accordingly, the Court finds that the Noonan Agreements constitute consent to personal jurisdiction in New York City.
1992 WL 196741, *3 (citations omitted). Petitioner emphasizes that the factors on which the Noonan court focused in finding consent to personal jurisdiction are also present in the instant case.
Finally, in Merrill Lynch v. Lorey, Index No. 12937/91 (N.Y.Sup.Ct.1992), a lower New York state court construed an agreement to arbitrate before the NASD as constituting consent to personal jurisdiction in New York. Whether the Court did so because it considered an agreement to submit disputes to an arbitral entity principally located in New York sufficient to confer personal jurisdiction, or because the Court simply assumed the parties had agreed that arbitration hearings would ultimately proceed in New York is unclear. From petitioner's perspective, however, the salient feature of Lorey lies in the fact that the parties were held to have consented to jurisdiction in New York, though the contract did not specifically indicate that arbitration hearings would take place in New York.
Under the authority of these decisions, we are constrained to hold that this Court has personal jurisdiction over respondents. The arbitration provision in the Merrill Lynch Customer Agreement with respondents is identical, or virtually identical, to the one facing the courts in Lecopulos, Noonan, and Lorey. The principal difference is that in Lecopulos, the contract required that arbitration proceed before the NYSE, whereas in the current controversy, respondents were offered a choice between the NYSE and the NASD, and chose to proceed before the NASD. Respondents are unable to explain why this distinction should be considered meaningful: like the NYSE, the NASD is principally located in New York and requires that arbitration be initiated by filing all claims in New York. See Noonan, 1992 WL *131 196741, *2, *3. In each of the cases, the court was faced with a contractual provision that required disputes to be submitted to a New York arbitral entity but did not specify the location where the arbitration hearings would ultimately proceed, and in each of these cases the provision was held to constitute consent to personal jurisdiction in New York. Respondents are unable to offer any rationale as to why we should not be bound by the Second Circuit's decision in Lecopulos or persuaded by the decisions rendered in Noonan and Lorey.
Respondents also contend that even if the arbitration provision is deemed to constitute consent to personal jurisdiction, the Court must still engage in long-arm analysis under N.Y. CPLR § 302 before asserting jurisdiction. Respondents are wrong. See Lecopulos, 553 F.2d at 844 (no need to consider whether § 302 confers jurisdiction where jurisdictional argument based upon consent to arbitrate deemed determinative).[2] Consequently, respondents' motion to dismiss for want of personal jurisdiction is denied.
II. Motion to Stay Arbitration Permanently
Petitioner contends that respondents' claims are time-barred by various statutes of limitations,[3] and accordingly petitions the Court to stay permanently the two arbitration proceedings before the NASD. Respondents counter that because a binding agreement to arbitrate controversies exists between the parties, all statute of limitations questions must be submitted to an arbitrator for determination. Consequently, respondents insist Merrill Lynch's petition must be dismissed for failure to state a claim upon which relief can be granted, citing Louis Dreyfus Corp. v. Cook Indus., Inc., 505 F.Supp. 4, 6 (S.D.N.Y.1980).
The primary issue posed by these motions is whether federal law or New York arbitration law applies to the current controversies. Merrill Lynch argues for the application of New York arbitration law, whereas respondents maintain that federal arbitration law must be invoked where a controversy involves interstate commerce. The issue is of dispositive importance. Under New York law, upon the express authority of N.Y. CPLR §§ 7502 and 7503, a court is permitted to stay actions due to failure to comply with limitations periods,[4]see County of Rockland v. Primiano Constr. Co., 51 N.Y.2d 1, 431 N.Y.S.2d 478, 482 & n. 2, 409 N.E.2d 951, 955 & n. 2 (1980); Paver & Wildfoerster v. Catholic High School Assn., 38 N.Y.2d 669, 382 N.Y.S.2d 22, 24, 345 N.E.2d 565, 567 (1976); Merrill Lynch v. Lorey, Index No. 12997/91 (N.Y.Sup.Ct.1992), whereas under federal law, "any limitations defense whether stemming from the arbitration agreement, arbitration association rule, or state statute is an issue to be addressed by the arbitrators." Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 121 (2d Cir.1991) (emphasis in original) (citing Conticommodity Serv. v. *132 Philipp & Lion, 613 F.2d 1222, 1224-25 (2d Cir.1980)); see also, Reconstruction Fin. Corp. v. Harrisons & Crosfield, Ltd., 204 F.2d 366 (2d Cir.), cert. denied, 346 U.S. 854, 74 S.Ct. 69, 98 L.Ed. 368 (1953). The law in this Circuit is clear: "[o]nce it is determined that parties to a contract have created an enforceable arbitration clause, then the policies inherent in the Federal Arbitration Act dictate that `any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.'" McDonnell Douglas Fin. v. PA Pwr. & Light Co., 858 F.2d 825, 831 (2d Cir.1988) (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 941-42, 74 L.Ed.2d 765 (1982)).
Merrill Lynch initially intimates that the Federal Arbitration Act (FAA) may not apply to this case because federal jurisdiction is predicated upon diversity and hence the Court is obliged to employ state arbitration law.[5] This proposition lacks merit. It is well-settled that the FAA applies where federal subject matter jurisdiction is predicated upon diversity, see Barbier v. Shearson Lehman Hutton, Inc., 948 F.2d at 117, 120 (2d Cir.1991); Moses H. Cone Mem. Hosp., 460 U.S. 1, 25 n. 32, 103 S.Ct. 927, 942 n. 32, 74 L.Ed.2d 765 and where the contract calling for arbitration concerns a transaction involving interstate commerce. 9 U.S.C. § 2; Barbier, 948 F.2d at 120. There is little dispute as to the interstate nature of the transactions underlying this controversy: they involve investors from Colorado, a New York financial institution, and the execution of trades involving financial instruments on a national exchange. On this ground at least, respondents' reliance on the FAA is unimpeachable.
The FAA comprises a "body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." Moses H. Cone Mem. Hosp., 460 U.S. at 24, 103 S.Ct. at 941. Once it is determined that a dispute is covered by the Act, federal law as set forth in the Act and in court decisions construing it governs the scope and interpretation of the agreement. Cook Chocolate Co. v. Salomon, Inc., 684 F.Supp. 1177, 1182 (S.D.N.Y.1988). That the Act and subsequent court decisions embrace a clear federal policy in favor of arbitration is now virtually axiomatic and, thus, the numerous decisions underscoring a strong presumption in favor of arbitrability need not be recounted here at length. It suffices to state that where the agreement contains a "broad" arbitration clause, such as the one at issue here, purporting to submit to arbitration "any controversy between us arising out of your business or this agreement," the strong presumption in favor of arbitrability has been held to apply with even greater force. Wagoner, 944 F.2d at 121; McDonnell Douglas Finance, 858 F.2d at 832 (citing AT & T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643, 650, 106 S.Ct. 1415, 1419, 89 L.Ed.2d 648 (1986)). Under this presumption, any doubts as to the arbitrability of particular issues must be resolved in favor of arbitration; moreover, statute of limitations defenses have been specifically held by the Second Circuit to be an issue for the arbitrators. Wagoner, 944 F.2d at 121.
Against this background, Merrill Lynch argues that the existence of a choice-of-law provision in the Customer Agreement, designating that "[t]his agreement and its enforcement shall be governed by the laws of the state of New York," requires this Court to look solely to New York arbitration law and thereunder to determine if respondents' claims are time-barred under the various statutes of limitations referenced by petitioner. Merrill Lynch relies heavily on the Supreme Court's decision in Volt Info. Sciences, Inc. v. Board of Trustees of Leland Stanford *133 Jr. Univ., 489 U.S. 468, 109 S.Ct. 1248, 103 L.Ed.2d 488 (1989) to advance its position. In Volt, the appellant initiated arbitration proceedings pursuant to a contract clause, while the appellee filed suit in California Superior Court. The parties' contract contained a provision indicating that California law would govern its enforcement.[6] The Superior Court stayed arbitration pursuant to a California arbitration rule permitting such a stay, and the state appellate court affirmed. The California Court held that because the parties' contract designated California law as applicable, California rules of arbitration should govern. The Supreme Court affirmed, holding that it would not disturb a state court ruling that the choice-of-law provision in the contract was intended by the parties to encompass California arbitration law. Volt, 489 U.S. at 474-76, 109 S.Ct. at 1253-54, 103 L.Ed.2d 488.[7] The Court explained:
We do not think the [California] Court of Appeal offended the Moses H. Cone principle by interpreting the choice-of-law provision to mean that the parties intended the California rules of arbitration, including the § 1281.2(c) stay provision, to apply to their arbitration agreement. There is no federal policy favoring arbitration under a certain set of procedural rules; the federal policy is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate. Interpreting a choice-of-law clause to make applicable state rules governing the conduct of arbitrationrules that are manifestly designed to encourage resort to the arbitral processsimply does not offend the rule of liberal construction set forth in Moses H. Cone, nor does it offend any other policy embodied in the FAA.
489 U.S. at 476, 109 S.Ct. at 1254.
Based on Volt, petitioner argues that where a contract contains a choice-of-law provision specifying the application of New York law, the Court is bound to apply New York rather than federal arbitration law. Petitioner also cites Fahnestock & Co., Inc. v. Waltman, 935 F.2d 512, 517-19 (2d Cir. 1991), cert. denied, ___ U.S. ___, 112 S.Ct 1241, 117 L.Ed.2d 474 (1992), and Barbier v. Shearson Lehman Hutton, Inc., 948 F.2d 117, 121-22 (2d Cir.1991) in support of the proposition that the Second Circuit has "reaffirmed Volt's deference to state law" in instances where the parties' agreements so warrant. Both these cases applied New York state law to vacate the punitive damages portion of an arbitral award where New York law strictly prohibited such an award, and the parties' agreement had not specified that punitive damages may be granted. The two cases are relevant insofar as they underscore the principle discussed in Volt that parties are "generally free to structure their arbitration agreements as they see fit," and that the FAA requires only "that private agreements to arbitrate be enforced in accordance to their terms." Barbier 948 F.2d at 122 (quoting Volt, 489 U.S. at 478-79, 109 S.Ct. at 1255-56); Fahnestock, 935 F.2d at 518 (same). In Barbier, the case closest on point, the parties' contract contained a choice-of-law provision designating New York law as governing.[8] The district court had held that the choice-of-law provision implicated only New York substantive law and not New York arbitration law so that the arbitrators were not constrained by the New York prohibition on arbitral punitive damage *134 awards. In overturning this decision, the Second Circuit did not set aside the lower court's characterization of the choice-of-law provision as not implicating New York arbitration law. Rather, the Circuit Court held that the measure of damages was a matter of state substantive law so that the choice-of-law provision operated to preclude the arbitrators, under New York substantive law, from awarding punitive damages. Barbier, 948 F.2d at 122.
Respondents, on the other hand, maintain that this Court is bound by Shearson Lehman Hutton, Inc. v. Wagoner, 944 F.2d 114, 121 (2d Cir.1991), a case that post-dates the Supreme Court's decision in Volt and that specifically addresses the issue before this Court: whether statute of limitations defenses are within the province of arbitrators or the Court. As in the instant case, the parties' contract in Wagoner contained a broad arbitration provision and a clause designating New York law as governing. 944 F.2d at 121. Despite the choice-of-law provision, the Court applied federal law to refer all limitations issues to the arbitrators. The Court's opinion did not refer to the Supreme Court's decision in Volt, or discuss why the choice-of-law provision did not require the Court to apply New York arbitration law and, under N.Y. CPLR §§ 7502 and 7503, decide the limitations issues itself.[9] The Court's holding, however, was unequivocal: "any limitations defense whether stemming from the arbitration agreement, arbitration association rule, or state statute is an issue to be addressed by the arbitrators." 944 F.2d at 121; see also, Merrill Lynch v. Noonan, 1992 WL 196741, *8-9 (S.D.N.Y.1992) (citing Wagoner as referring limitations issues to arbitrators in controversy involving a similar Merrill Lynch customer agreement). Respondents argue that Wagoner compels this Court to dismiss Merrill Lynch's petition and permit the NASD arbitration panel to address petitioner's limitations defenses.
Merrill Lynch struggles to skirt the holding in Wagoner: in addition to misstating the facts of the case[10], petitioner also maintains that the Second Circuit's holding "plainly is not controlling authority for a federal court" because the Circuit Court failed to address Volt, relying entirely on pre-Volt decisions, and also failed to refer to New York law. Merrill Lynch's difficulty in reconciling Wagoner with Volt stems from the expansive conclusion it seeks to draw from the Supreme Court's holding in Volt. Contrary to petitioner's suggestions, Volt does not stand for the proposition that any time an arbitration agreement contains a choice-of-law provision which does not expressly encompass state arbitration rules, such a provision, by operation of law, obliges a Court to apply state rather than federal arbitration law. Rather, the Court merely held that it would not disturb a state court's determination that the parties to the contract in Volt intended the choice-of-law provision to invoke California arbitration law. See Volt, 489 U.S. at 474-76, 109 S.Ct. at 1253-54. Justice Brennan's dissent in Volt underscored this distinction. The dissent noted it did not disagree with the majority's conclusion that the FAA does not pre-empt state arbitration rules where the parties to a contract have agreed to arbitrate according to those rules to the exclusion of federal arbitration law. 489 U.S. at 481 n. 4, 109 S.Ct. at 1257 n. 4. However, the dissent challenged the majority's unwillingness to review the state court's interpretation of the contract, concluding that the choice-of-law provision could not be held to implicate state arbitration law:
It seems to me beyond dispute that the normal purpose of such choice-of-law clauses is to determine that the law of one State rather than that of another State will be applicable; they simply do not speak to any interaction between state and federal law. A cursory glance at standard conflicts *135 texts confirms this observation: they contain no reference at all to the relation between federal and state law in their discussions of contractual choice-of-law clauses.
Volt, 489 U.S. at 488, 109 S.Ct. at 1260 (Brennan, J., dissenting).
Since Volt, other federal courts confronting contractual language in contexts similar to that at issue here, have found that a choice-of-law provision did not require the Court to apply state rules of arbitration instead of federal arbitration law. See Todd Shipyards Corp. v. Cunard Line, Ltd., 943 F.2d 1056, 1062 (9th Cir.1991) (federal rather than state arbitration rules apply, though contract contained New York choice-of-law provision); Ackerberg v. Johnson, 892 F.2d 1328, 1333-34 (8th Cir.1989) (Minnesota choice-of-law provision does not prevent arbitration of claims that are non-arbitrable under Minnesota law where such claims otherwise arbitrable under federal law); Booth v. Hume Pub., Inc., 902 F.2d 925, 928-29 (11th Cir. 1990) (in accordance with state law prevailing at time of contract negotiation, choice-of-law provision not intended to require application of state rather than federal arbitration law); Appalachian Regional Healthcare, Inc. v. Beyt, Rish, Robbins Group, Architects, 963 F.2d 373 (6th Cir.1992) (Table) (text in Westlaw) (choice-of-law provision does not operate to require application of state rather than federal arbitration law); Barbier v. Shearson Lehman Hutton, Inc., 752 F.Supp. 151, 156-58 (S.D.N.Y.1990), (choice-of-law provision implicates only state substantive law and not state arbitration rules), rev'd on other grounds, 948 F.2d 117, 121-22 (2d Cir. 1991)[11].
Under general state law principles of contract interpretation, it is clear that at the time the parties entered into the agreement, New York courts considered choice-of-law provisions in arbitration agreements to designate only the substantive law to be applied by the arbitrators and not to displace application of federal arbitration law. See Goldfarb v. Goldfarb, 86 A.D.2d 459, 450 N.Y.S.2d 212, 214 (1982) (contracts made by parties necessarily construed in light of the applicable law at time of execution); Rothberg v. Loeb, Rhoades & Co., 445 F.Supp 1336, 1339 (S.D.N.Y.1978) (New York courts apply federal, not state, arbitration law where underlying transactions involve interstate commerce, even though contract contains New York choice-of-law provision); Hornblower & Weeks-Hemphill Noyes, Inc. v. Csaky, 427 F.Supp. 814, 818-19 (S.D.N.Y.1977) (contract contained New York choice-of-law provision; court "consulted" New York law and found that New York courts apply federal and not state arbitration law); see also Buck Creek Indus. v. Beattle Mfg. Co., 96 Misc.2d 812, 409 N.Y.S.2d 575 (N.Y.Sup.Ct.1978); A/S J. Ludwig Mowinckles Rederi v. Dow Chemical Co., 25 N.Y.2d 576, 307 N.Y.S.2d 660, 255 N.E.2d 774 (1970); Aaacon Auto Transp. Inc. v. Newman, 77 Misc.2d 1069, 356 N.Y.S.2d 171, 173 (1974); Louis Dreyfus Corp. v. Cook Indus., Inc., 505 F.Supp. 4, 5-6 (S.D.N.Y.1980). Merrill Lynch's assertion that these cases are "expressly" overruled by Volt is incorrect. As discussed above, Volt does not dictate the result sought by petitionernamely that every court must perforce assign the same interpretation to a contractual choice-of-law provision as that assigned by the California Court in Volt.
The numerous New York state cases cited by Merrill Lynch are largely inapposite: they do not involve courts construing a choice-of-law provision to require New York arbitration rules to be invoked where federal arbitration law would otherwise apply. See, e.g., County of Rockland v. Primiano Constr. Co., Inc., 431 N.Y.S.2d 478 (1980); Paver & Wildfoerster v. Catholic High School Assn., 38 N.Y.2d 669, 382 N.Y.S.2d 22, 345 N.E.2d 565 (1976); Matter of United Nations Dev. v. Norkin Plumbing, 45 N.Y.2d 358, 408 N.Y.S.2d 424, 380 N.E.2d 253 (1978); Matter of Town of Greenburgh, 125 A.D.2d 315, 508 N.Y.S.2d 599 (2d Dept.1986); Aetna Cas. & *136 Sur. Co. v. Cochrane, 64 N.Y.2d 796, 486 N.Y.S.2d 915, 476 N.E.2d 314 (1985). Respondents do not dispute that New York courts are entitled to apply N.Y. C.P.L.R. §§ 7502 and 7503 and thereunder rule upon issues of time-barred claims when dealing with contracts invoking only state arbitration law. Merrill Lynch most strenuously points to Charles Schwab v. Altabet, Index No. 2484/92 (N.Y.Sup.Ct.1992), a lower New York state court decision which does not advance petitioner's position very far. The parties' contract in Altabet contained a California choice-of-law provision and the petitioner argued that applicable California statutes of limitations barred respondents' claims. The New York court held that, despite the California choice-of-law provision, respondents' claims were subject to New York statutes of limitations. Moreover, the Court applied New York rather than California arbitration law, and, under N.Y. C.P.L.R. § 7502, decided most of the limitations issues, leaving a limitations question on an ERISA claim for the arbitrators.[12]
We also note that construing the choice-of-law provision to encompass New York rules of arbitration would result in the contract containing two potentially conflicting provisions: one, a broad arbitration provision, requiring "any controversy" that arises to be submitted to arbitration, and the other, a provision requiring disputes over compliance with limitations periods to be submitted to a court. We are naturally reluctant to strain to impose on a contract an interpretation that appears contrary to the weight of authority particularly where such an interpretation may also render the contract internally inconsistent or ambiguous.
For these reasons, we do not find that the choice-of-law provision in the parties' contract requires us to apply New York rules of arbitration in place of federal arbitration law. Hence, the Court is not compelled under N.Y. C.P.L.R. § 7502 and § 7503 to address petitioner's statute of limitation defenses. Rather, under the clear direction of the law in this circuit, these defenses must be submitted to the NASD arbitration panel for resolution. Wagoner, 944 F.2d at 121.[13] Consequently, Merrill Lynch's motion for a permanent stay of the pending arbitration proceedings is denied.
CONCLUSION
For the foregoing reasons, the Court denies respondents' motion to dismiss for want of personal jurisdiction. Petitioner's motion for a permanent stay of the NASD arbitration proceedings is also denied and, as a result, the Court grants respondents' motion to dismiss Merrill Lynch's petition for failure to state a claim upon which relief can be granted.
SO ORDERED.
NOTES
[1] Unlike the clause in Merrill Lynch's current standard Customer Agreement, the arbitration clause in Lecopulos did not give the customer a choice of arbitral entities between the NYSE and the NASD.
[2] The cases referred to by respondents in support of this theory are cited out of context. See, e.g., Intermeat, Inc. v. Am. Poultry, Inc., 575 F.2d 1017, 1023 (2d Cir.1978) (fact that defendant had consented to arbitration in New York in previous transactions considered a factor in assessing whether court may assert quasi-in-rem jurisdiction over nonresident defendant); ACLI Intern. v. E.D. & F. Man (Coffee) Ltd., 76 A.D.2d 635, 430 N.Y.S.2d 858 (1980) (same).
[3] Merrill Lynch relies on assorted limitations periods from New York, Colorado, and federal law to support its contention. Respondents insist that their claims are not time-barred under the appropriate limitations periods.
[4] N.Y.CPLR § 7502(b) provides that:
"If, at the time that a demand for arbitration was made or a notice of intention to arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration on an application to the court as provided in section 7503 or subdivision (b) of section 7511. The failure to assert such bar by such application shall not preclude its assertion before the arbitrators, who may, in their sole discretion, apply or not apply the bar."
N.Y. CPLR § 7503(b) provides that:
"Subject to the provision of subdivision (c), a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration, may apply to stay arbitration on the ground that a valid agreement was not made or has not been complied with or that the claim sought to be arbitrated is barred by limitation under subdivision (b) of section 7502."
[5] Petitioner's position on this point is vague. Merrill Lynch's initial brief, in discussing the relevance of the FAA remarks that "this Court, sitting in a diversity action must apply state law." In a subsequent submission, however, Merrill Lynch states it "does not contend that the Court must apply New York law solely because this is a diversity action," and later acknowledges that the Second Circuit, in Barbier v. Shearson Lehman Hutton, Inc., 948 F.2d 117, 120 (2d Cir.1991), found the FAA applicable where jurisdiction was based upon diversity.
[6] We take note that respondents flagrantly misstate the facts of Volt. Respondents represent that the agreement in Volt "explicitly" and "specifically" incorporated California rules of arbitration. In fact the choice of law provision only required that "the law of the place where the project is located" would govern. Indeed, the very issue before the California Court was whether this provision implicated California rules of arbitration as well as California substantive law.
[7] The Supreme Court declined to review this holding of the California Court, noting that "the interpretation of private contracts is ordinarily a question of state law, which this Court does not sit to review." 489 U.S. at 474, 109 S.Ct. at 1253.
[8] Petitioner's representation of the parties' contract in Fahnestock as also containing a New York choice-of-law provision is inaccurate. Rather, the issue in Fahnestock was governed by state law because the Court, sitting in diversity, held that absent an agreement by the parties on the subject, federal substantive law did not preempt state law on the question of the propriety of a punitive damages award.
[9] The parties in Wagoner may not have argued, as petitioner does here, that the choice-of-law provision required the Court to apply New York arbitration law rather than federal law.
[10] Merrill Lynch conspicuously misrepresents the essential facts of Wagoner by repeatedly asserting that the Wagoner court was not faced with an arbitration agreement specifying that New York law governed. In fact the relevant clause, quoted in full within the text of the Circuit Court's opinion, provided that the resolution of any controversy "shall be governed by the laws of the State of New York." 944 F.2d at 121.
[11] As noted above, the Second Circuit in Barbier, 948 F.2d 117, did not set aside the district court's conclusion that the choice-of-law provision did not mandate application of New York arbitration law. Rather, the Court reversed on the grounds that the state law at issue was incorrectly characterized by the lower court as arbitration law instead of New York substantive law which the court was required to apply under the choice-of-law provision.
[12] The state court believed there were factual issues concerning the point of time at which the respondent became aware of his ERISA claim. The Court considered these questions were best left to an arbitrator.
[13] Merrill Lynch also points to decisions from the Third, Sixth and Seventh Circuits which, according to Merrill Lynch, suggest that "arbitrability and timeliness issues are undeniably for courts not arbitrators to decide." See Paine-Webber Inc. v. Hartmann, 921 F.2d 507, 510-514 (3rd Cir.1990); Roney & Co. v. Kassab, 981 F.2d 894, 897-900 (6th Cir.1992); Edward D. Jones & Co. v. Sorrells, 957 F.2d 509, 511-14 (7th Cir. 1992). First, this proposition runs directly counter to the rule in this Circuit requiring timeliness issues to be submitted to arbitration, as was expressly recognized by the Third and Sixth Circuits. See Hartmann, 921 F.2d at 512 (noting the abundant authority from other circuits that time-bar defenses may be submitted to arbitration); Kassab, 981 F.2d at 898 (same). Second, the decisions cited involved time limitations imposed by the arbitral entity's own rules, compliance with which was required before a controversy could, by the express terms of the rules, be considered "eligible for submission to arbitration." The courts found this provision to constitute a substantive limitation on the life of the obligation to arbitrate, see Sorrells, 957 F.2d at 514, or an "eligibility" requirement, non-compliance with which prevented the obligation to arbitrate from arising, see Hartmann, 921 F.2d at 513; Kassab, 981 F.2d at 898-99. This eligibility requirement was explicitly differentiated from compliance with statutes of limitations, which remained for the arbitrators to decide. Hartmann, 921 F.2d at 513-14. We note that there is no allegation here that respondents have failed to comply with the NASD's similar "eligibility" requirements. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/3355091/ | [EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] MEMORANDUM OF DECISION
Plaintiff brings this action pursuant to Title 47 of the Connecticut General Statutes seeking to quiet and settle title to certain real property located in the South Britain section of Southbury. Connecticut. Title to that property is also claimed by the defendant. The real property in question is shown as three contiguous parcels on Defendant's Exhibit E, General Location Survey. They are parcel X which has an area of 1,985 square feet; Parcel A with an area of 0.048 acres; and Parcel B with an area of 0.573 acres.
The plaintiff claims that these three parcels lie within Platt Park which it owns. There is no conflict between the parties as to any other realty.
Plaintiff in its four count complaint alleges that it holds. good marketable title to the land in question; that the defendant has slandered its title; that the defendant has wrongfully placed a cloud on its title, and that, in the alternative, it acquired title from the defendant by adverse possession. In response, defendant filed her answer joining issue.
Before finding the facts of the matter, the court sets out certain legal tenants governing the claims brought by the plaintiff.
In an action to quiet title, the plaintiff must prevail on the strength of his own title and not on the weakness of his adversary's. Mt. MaumeePartnership v. Peet, 40 Conn. App. 752; Marquis v. Drost, 155 Conn. 317;Lake Garda Improvement Association v. Battistoni, 155 Conn. 287; Ball v.Town of Branford, 142 Conn. 13. While title to a particular tract of land, in the absence of any evidence to the contrary, draws possession CT Page 6278 with it, general possession of the tract will not avail as regards any particular piece of land unless it is satisfactorily shown to have been a part of that tract. As applied to the instant case, the defendant's denial of plaintiff's complaint, places the burden on the plaintiff to prove the correct boundary line and its ownership of the tract in dispute. Pepe v.Acceto, 119 Conn. 282, 286; Texas Co. v. Slosberg, 112 Conn. 357, 358;Ferrie v. Sperry, 85 Conn. 337.
The court finds the following proven by a fair preponderance of the credible evidence presented during a two-day bench trial of the matter.
On June 1, 1852, Ambrose Ryon conveyed to Henry Bradley by warranty deed a 3/4 acre parcel of land located in the South Britain section of Southbury, Connecticut, bordered northerly and easterly by land of Mitchell N. Canfield, southerly by land of Gamaliel Benham and westerly by highway. (Defendant's Exhibit F).
Thereafter, on March 14, 1853, Mitchell M. Canfield conveyed to Henry Bradley by warranty deed a 1/2 acre (more or less) parcel of land, adjoining the parcel described above, and bounded northerly and easterly by remaining other land of Mitchell M. Canfield, southerly by land of Gamaliel Benham and by the parcel described above and westerly by the parcel described above and highway. (Defendant's Exhibit G). As indicated in their respective descriptions, each of the parcels have frontage on a highway and the 1/2 acre parcel adjoins other land of Bradley.
On June 13, 1868, Henry Bradley, as lessor, granted to Calvin Lines, as lessee, the right to take water from a spring on Bradley's land located about fifteen rods (about 247-1/2 feet) easterly of Bradley's dwelling house. Said lease grants " . . . the right and privilege of taking the waters from said spring in a lead pipe of the dimentions (sic) of three eights (sic) of an inch . . .". (Defendant's Exhibit H). The location of said spring about 15 rods easterly of Bradley's dwelling house places it where it is depicted in Defendant's Exhibit E and well beyond the boundary of Defendant's land as depicted in the Somers' survey of Platt Park. (Plaintiff's Exhibit 14). After his death, on May 28, 1898, his heirs conveyed to Carrie B. Manville six parcels of land in the Town of Southbury totaling 31-1/4 acres, more or less. The second parcel described in said deed is the same 3/4 acre parcel conveyed to Henry Bradley by Ambrose Ryon in 1852 and the third parcel is the same A acre parcel conveyed to Henry Bradley by Mitchell M. Canfield in 1853. Further, the deed from Bradley's heirs to Carrie B. Manville recites that the grant of these six parcels " . . . is free from all encumbrances whatsoever except whatever rights owned by the adjoining owner of the second above described piece of land as to rights of water and pipes, digging the same over said second piece. . .". (Plaintiff's Exhibit CT Page 6279 16).
On October 25, 1909, Carrie B. Manville granted a lease to George W. Mitchell to ". . . lay and maintain as far as my land extends a half inch pipe which shall be placed in the spring now furnishing his and my dwelling with water . . . This lease in the place of the three eighths inch privilege now granted and owned by him by lease of Henry Bradley to Calvin Lines as per record in the year 1868 . . .". (Defendant's Exhibit I). During her life and after acquiring the six parcels contained in Plaintiff's Exhibit 16, Carrie B. Manville made two conveyances of land by warranty deed. The first was a conveyance of 17-1/2 acres more or less to one Cass (Plaintiff's Exhibit 19) and the second was a conveyance of 17 acres more or less to one Sperry (Plaintiff's Exhibit 18). Neither conveyance to Cass or Sperry recites in its boundary descriptions that either of these parcels was bounded by "other land of Carrie B. Manville" or "by remaining land of Carrie B. Manville", or "by my own land". The court concludes from the facts found that it is reasonable to infer that neither of the conveyances to Cass or Sperry included the second or third parcels in Plaintiff's Exhibit 16 since the boundary description recited therein made no reference to being bounded by Manville's own land or remaining land or other land of the grantor.
On the date of her death, November 27, 1947, Carrie B. Manville still owned the real property described as the second and third pieces in plaintiff's Exhibit 16 and owned no other real estate. At the time of death, her real property vested in her sole heir at law, Allen S. Bryant. Foote v. Brown, 81 Conn. 218, 224; Stevens v. Smoker, 84 Conn. 569,574.
On November 29, 1947 she filed an inventory with the Woodbury Probate Court for the Manville estate which listed a single parcel of real estate of 1/2-acre more or less bounded on three sides by land of Eunice Mitchell and southerly by Flood Bridge Road and which was subject to a water (right) as recorded in Volume 26, Page 147 of the Southbury Land Records. Thereafter, on August 19, 1948, the Woodbury Probate Court issued a Certificate of Distribution from the Manville estate distributing the real property listed in the inventory to Allen S. Bryant, Manville's sole heir at law. On August 17, 1953, Allen S. Bryant conveyed to Catherine L. McCarthy, individually, the entire parcel which had been distributed to him from the Manville estate, and on July 11, 1983, Catherine L. McCarthy conveyed to the defendant the entire parcel which she purchased from Allen S. Bryant in 1953.
The inventory filed by Catherine McCarthy in the Manville estate, the Certificate of Distribution to Allen S. Bryant, the deed from Bryant to McCarthy and the deed from McCarthy to the defendant all contained the CT Page 6280 same description and listed the water riqht in Volume 26 at Page 147 as an encumbrance thereon. The water right listed as an encumbrance in all of said conveyances is the same as that originally granted by Henry Bradley to Calvin Lines in 1868 to take water from a spring located about 247-1/2 feet easterly of Bradley's then-existing dwelling house.
After defendant purchased her land from McCarthy in 1983, she became aware of plaintiff's claim of ownership of a portion of that same property. The plaintiff's claim arises out of its acquisition of two parcels of land comprising what is known as Platt Park.
Prior to October 1973, the plaintiff engaged Stuart Somers, a registered land surveyor, to prepare a survey of that land. Before drafting the survey, Somers first consulted the assessor's records to obtain deed reference and determine abutting owners, he then contacted certain owners and walked their boundaries with them and finally, he searched the titles of the parcel to be surveyed and the abutting parcels to determine boundary conflicts, if any. Somers title search of the McCarthy parcel commenced with the Manville estate in 1947. As a result of that search he thought that there was, possible, some problem with distribution out of her estate . . ." (Defendant's Exhibit B), and would have considered different boundaries between the McCarthy parcel and Platt Park if a corrective deed purporting to transfer any remaining property out of the Manville estate to McCarthy had been of record at the time he prepared the Platt Park survey, but that was not the case.
Somers, while surveying in the field, located a spring within a fenced in area on land sharing a common boundary with what he concluded was the 1/2 acre McCarthy parcel. However, its interesting to note that the only spring located on either the parcel which plaintiff claims or the fenced in parcel, to the rear of defendant's house, which both parties claim, is shown on Defendant's Exhibit E, well within the boundaries of the land claimed by the plaintiff.
On February 14, 1990, as a result of the boundary issues between plaintiff and defendant, Catherine McCarthy, as Administratrix, submitted under oath, to the Woodbury Probate Court, an Application to Sell or Mortgage Real Property from the estate of Carrie B. Manville. Said application, which was prepared by an Attorney retained by the defendant, recites that all land owned by Manville at her death was distributed to Allen S. Bryan, her sole heir at law but that said property was improperly described in the original estate inventory and that the Certificate of Distribution from Manville's estate also misdescribed the property, as did all subsequent deeds in the chain of title. On the same date, Catherine McCarthy submitted an Amended Inventory of the real property in the Manville estate to the Woodbury Probate Court and on CT Page 6281 February 27, 1990, the Woodbury Probate Court entered a decree authorizing her as Administratrix of the Manville estate to transfer (not sell) to Claudette J. Negri the original parcel conveyed from Ambrose Ryon to Henry Bradley in 1852.
Certainly the real property owned by Manville at her death consisted of two parcels containing approximately 1-1/4 acres and that property is subject to certain spring or water rights.
Using a composite description, the Administratrix attempted to describe the two parcels as one in the decedent's inventory without success. The court finds that the description which first appears in the original inventory of the Manville estate does not describe either of the two parcels originally conveyed to Henry Bradley in 1852 and 1853 and to Manville in 1898, but rather describes those two parcels together, as one parcel, by virtue of the boundary references to Eunice Mitchell as the adjoining owner on three sides. Further, the court finds that the Application to Sell real Estate filed by Catherine McCarthy was not due to the discovery of land which had been left out of the Manville estate inventory, but due to an error in the description in the land included in said inventory and that the Administratrix's Deed from Catherine McCarthy to the defendant did not convey any real estate, but merely corrected the description of land that had already been conveyed.
After purchasing her property from Catherine McCarthy, the defendant posted "No Trespassing" signs on trees and fence posts along the entire perimeter of the 1-1/4 acres she claims to own. As a result, the public has not used any portion of the fenced in area located to the rear of her house and shown as Parcel B on Defendant's Exhibit E, and no employee or agent of the plaintiff has maintained or exercised any dominion or control over it. However, public access to Platt Park has not been denied by plaintiff's actions because the hiking trail from Library Road leading to the Park, runs parallel to the northwesterly fence line of said Parcel B.
When title is claimed by adverse possession, the burden of proof is on the claimant. Loewenberg v. Wallace, 147 Conn. 689, 699. The essential elements of adverse possession are that the owner shall be ousted from possession and kept out uninterruptedly for fifteen years under a claim of right by an open, visible and exclusive possession of claimant without license or consent of the owner. Stevens v. Smoker, 84 Conn. 569, 574. Such a possession is not to be made out by inference, but by clear and positive proof, Robinson v. Myers, 156 Conn. 510, 517, and such has not been made out in the instant case.
In addition to claiming, in the alternative, title by adverse CT Page 6282 possession, plaintiff also claims that the defendant recognized and acquiesced in the location of its boundary lines as shown on Somers' survey of the Platt property, Plaintiff's Exhibit 14.
The court in Delbuono v. Brown Boat Works, Inc., 45 Conn. App. 524,532, quoting from 69 A.L.R. 1431, said that "The doctrine of recognition of and acquiescence in a boundary line is upheld by many authorities. it is sometimes referred to as acquiescence in or as a practical location of, or as an implied agreement as, a boundary."
"Whether there was an implied agreement presents a question of fact essentially dependent upon the question of intention, to be determined in light of all of the significant surrounding circumstances." Martel v.Malone, 138 Conn. 385, 390-391. The court in Lowndes v. Wicks, 69 Conn. 15,30, defined the Doctrine of Equitable Acquiescence as "Quiescence under such circumstances that assent may be reasonably inferred from it. . . ."
In support of its claim, plaintiff contends that two Class A-2 surveys filed by the defendant in the Town of Southbury "clearly shows that defendant does not own the `neck' shaped Park entrance nor any land to the rear of the one-half acre parcel known as 52 Library Road."
The two maps referred to by plaintiff are: "Map Prepared For Claudette J. Negri Southbury, Connecticut Area = 46,985 sq. ft. = 1.08 ac, dated October 25, 1989," and filed in the Southbury's Town Clerks Office on November 1, 1989, as Map #2783, (Plaintiff's Exhibit 12) and "Boundary Survey and House Asbuilt prepared for Claudette J. Bleidner Library Road South Britain, CT Scale 1" = 20 ft., 7/15/90" and filed in the Southbury Zoning Office Files. (Plaintiff's Exhibit 26). Map #2788 dated October 25, 1989, shows the defendant's claim of 1.08 acres which includes the land lying "to the rear of the 1/2 acre parcel known as 52 Library Rd." and also indicates that the Town of Southbury was to quit claim to the defendant any interest it may have had in or to said parcel. Consequently, this map does not support plaintiff's exclusive claim to the land lying to the rear of the 1/2 acre parcel. At best, it is ambiguous, indicating that both parties make claim to the same real property but showing title in neither. This map does support the proposition that defendant recognized and acquiesced in the plaintiff's claim to the "neck" shaped Park entrance, however, since no part of that area was included within the boundaries of the land claimed by the defendant, as shown on said map. Rather, the "neck" shaped parcel providing access to the Park is shown on the map as serving a part of "Other Land of the Town of Southbury".
The Map entitled "Boundary Survey and House Asbuilt Prepared For Claudette J. Bleidner Library Road South Britain, CT Scale 1" = 20 ft., CT Page 6283 7/15/90" was filed with the zoning office of Southbury to show the house "as built" by the defendant and, among other things, its proximity to side, front and rear lot lines and to wet land areas. It was not filed on the Southbury land records. And while it also purports to be a boundary survey, the surveyor sought his boundary line reference from the Platt Property Maps (Platt Park) prepared by Stuart Somers.
Further, reflecting on the unreliability of the boundary lines as depicted, the surveyor indicates the following on the map, "Note: Vol. 26 Pg. 147, Water Rights, Carrie Manville to George Mitchell spring right, 1/2" pipe, 10/25/1909, crossing Negri Property to South Side of Library Road" and "Vol. 22 Pg. 290 Spring Rights, 3/4 and 1/2 acre Piece Presumed Spring Right" and "statutory affidavit by Catherine L. McCarthy, Feb. 14, 1990 Paragraph 8, Spring Right From Spring to Home of Carrie B. Manville. Home is Presumed To Be Old Foundation Hole Shown On Map." While it would follow from the recitation on the map of the correct deeds evidencing the spring and water rights in conjunction with the reference to the 1/2 and 3/4 acre pieces that this information should have triggered further searching by the surveyor, in order to determine the actual location of the spring and the boundaries of defendant's property, it did not. Consequently, the map is of little value in that regard, however, it does buttress plaintiff's claim to the title of the irregularly shaped parcel of land referred to in its brief as the "Neck" shaped park entrance off of Library Road. The map provides uncontroverted evidence that defendant recognized and acquiesced in the location of a portion of plaintiff's boundary line because it shows that her driveway was relocated so as to eliminate its encroachment into the "neck" shaped park entrance area. (Being a part of Parcel A on Defendant's Exhibit E)
The only other piece or parcel of land in controversy, that both plaintiff and defendant claim to own and that the court has not yet considered in this opinion, is parcel "X" as shown and depicted on the defendant's General Location Survey. (Defendant's Exhibit E). Such consideration can be summary, however, in as much as it is clear from a fair preponderance of the credible evidence that title to same is in the plaintiff.
Now therefore, in accordance with the foregoing, judgment will enter settling and quieting title in the plaintiff to Parcel X as shown on General Location Survey, Defendant's Exhibit E; further, judgment will enter settling and quieting title in the plaintiff to the following described irregularly shaped piece or parcel of land.
Commencing at a concrete monument located at the south westerly corner of Parcel A as shown on General Location Survey, (Defendant's Exhibit E), thence running N 33° 39' 36" W 13.87' to a wood post with wire CT Page 6284 (Barway Post), thence turning and running N 59° 19' 28" E 185.39' to a concrete monument marking the north easterly most terminus of the parcel, thence turning and running S 48° 17' 42" W 47.06' to a drill hole in stone foundation remains, thence running S 51° 12' 04" W 35.53' to an iron pin, thence running S 59° 05' 12" W 51.62' to a 3/4" iron bar, thence running S 59° 45' 20" W 51.69' to the point or place of beginning. Said irregularly shaped parcel runs to a point on its north easterly terminus and is bounded on its three sides as follows, southerly by Library Road, so called, northerly by other land of the plaintiff (shown and depicted as Parcel X on Defendant's Exhibit E) and southerly by other land of the defendant (shown and depicted as parcel A on Defendant's Exhibit E).
Judgment on the remaining claims of the plaintiff may enter for the defendant.
Judgment will enter without costs to either party.
So ordered,
THOMAS G. WEST, J. | 01-03-2023 | 07-05-2016 |
https://www.courtlistener.com/api/rest/v3/opinions/2130866/ | 914 F.Supp. 119 (1996)
William R. HARRELL, Plaintiff,
v.
PINELAND PLANTATION, LTD., and Joseph Land & Co., Inc., Defendants.
Civ. A. No. 2:95-0309-18.
United States District Court, D. South Carolina, Charleston Division.
February 6, 1996.
John E. Parker, Hampton, SC, Carl E. Pierce, II, Charleston, SC, for Plaintiff.
Bert Glenn Utsey, III, Joseph J. McGee, Charleston, SC, for Defendants.
ORDER
NORTON, District Judge.
Before the court are motions by Defendant Pineland Plantation ("Pineland") to alter or amend this court's order of October 23, 1995, which remanded this case to state court and a motion to reconsider by Defendant Joseph Land & Co. ("Land"). Having heard oral argument and reviewed the briefs submitted by the parties, this court denies the Defendants' motions because it finds that this court's remand order is not subject to review.
I. BACKGROUND
This is a personal injury action instituted by Plaintiff, a South Carolina resident, against Defendants Pineland and Land. Plaintiff was injured on a South Carolina property called "Pineland Plantation" which was owned by Pineland, a California limited partnership. Land, a South Carolina corporation, originally owned the property when a rope swing and pond were constructed on it.[1] Land later sold the property to Pineland. Plaintiff was rendered a quadriplegic in 1993 after diving head first into the pond from the rope swing.
After being served with the Summons and Complaint, Pineland learned that its co-defendant Land had changed its name to Archway Transportation Company and had filed a petition in bankruptcy court.[2] Based on Land's bankruptcy, Pineland removed this case to federal court alleging diversity of citizenship and contending service of Land was ineffective because of Land's bankruptcy stay. In its order of March 24, 1995, (hereinafter, the "March Order"), this court held that the original service of a Summons and Complaint on Land was null and void as a result of the automatic stay of 11 U.S.C. § 362. The court denied Plaintiff's Motion to Remand because at that time Land was not a party to the action. However, this court concluded the March Order by stating: "If, *120 within the appropriate time frame, Plaintiff obtains relief from the automatic stay and properly serves Land as a defendant, and if the court is convinced at that time that Land's joinder is meritorious despite its status as a bankruptcy petitioner, the court will remand the action to state court." (March Order at 7).
On October 23, 1995, the court considered a second motion by Plaintiff to remand. Plaintiff made this motion subsequent to obtaining relief from the bankruptcy court's automatic stay and after Defendant Land's filing an Answer in this action. Although Defendant Pineland filed a Motion to Dismiss prior to Plaintiff's filing of his Second Motion to Remand, this court decided it was proper to address the jurisdictional issues raised in Plaintiff's Second Motion to Remand first. Order of October 23, 1995, at 3-4 (hereinafter the "October Order"). After granting Plaintiff's Second Motion to Remand, the court refused to address Defendant Pineland's Motion to Dismiss. Further, this court held that it could not find Plaintiff's joinder of Land was fraudulent based on the standard announced in Marshall v. Manville Sales Corp., 6 F.3d 229, 232-33 (4th Cir. 1994). October Order at 4-5.
II. ANALYSIS
This court agrees with Defendants that the October decision to remand was made pursuant to 28 U.S.C. § 1447(e). The issue before the court at that time was whether to allow the joinder of Land, a non-diverse party which would destroy diversity, after the Defendant Pineland had removed the case to federal court based on diversity.
Section 1447(e) states:
If after removal, the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to State Court.
28 U.S.C. § 1447(e) (emphasis added). The court therefore has only two options when considering post-removal joinder of a non-diverse party: (1) it may deny joinder or (2) it may permit joinder and then remand the case. In this case, the court permitted joinder and remanded the case.
The issue presently before the court is whether the bar to reviewability of a remand order provided in § 1447(d), which is clearly applicable to remands made pursuant to § 1447(c), is also applicable to a remand made pursuant to § 1447(e). Section 1447(d) states:
An order remanding a case to the State Court from which it was removed is not reviewable on appeal or otherwise ...
28 U.S.C. § 1447(d) (emphasis added).
This court finds that 28 U.S.C. § 1447(d) precludes the court from reviewing its October remand decision made pursuant to § 1447(e).[3] Once a district court remands a case, the action should generally go forward in state court without further delay of an appeal and without regard to whether the district court was correct or incorrect. Robertson v. Ball, 534 F.2d 63 (5th Cir.1976).[4]
*121 This issue has already been directly addressed by the Fourth Circuit. In Washington Suburban Sanitary Comm's v. CRS/Sirrine, Inc., 917 F.2d 834 (4th Cir.1990), the Fourth Circuit Court of Appeals relied on the Supreme Court's opinion in Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976) to determine the bar to reviewability of a remand order under § 1447(d) applied not only to § 1477(c) remands, but also included remands made pursuant to § 1447(e). Washington Suburban was a case in a procedural posture very much similar to this case in that the court remanded the case pursuant to § 1447(e) after non-diverse defendants were joined to the removed action. 917 F.2d at 836. The Washington Suburban court acknowledged that in Thermtron, the Supreme Court stated that the nonreviewability of § 1447(d) only applied to § 1447(c) remands, but also recognized that § 1447(e) was not enacted until twelve years after Thermtron. The court interpreted Thermtron to hold that § 1447(d) prohibited review of cases "remanded on a ground expressly provided for in § 1447." Id. at 836. Further, the court noted that although § 1447(e) did not exist when Thermtron was decided, it was logical to extend the bar to reviewability of § 1447(d) to § 1447(e).
The Washington Suburban court explained:
We note that much of the language in Thermtron is cast in terms of the grounds given for remand in § 1447(c). Section 1447(e) was not added to § 1447 by Congress until 1988. We fail to see any reason to treat the grounds for remand authorized by § 1447(e) in a different way than the Supreme Court treated the grounds authorized in § 1447(c). Our opinion is reinforced by the policy behind the Congressional decision to limit review of remand orders. In the words of the Supreme Court, "[t]here is no doubt that in order to prevent delay in the trial of remanded cases by protracted litigation of jurisdictional issues, ... Congress immunized from all forms of appellate review any remand order issued on the grounds specified" in the statute. Thermtron, 423 U.S. at 351, 96 S.Ct. at 593 (citation deleted). It seems to us that the interest in preventing delay is the same whether the remand is based on the grounds authorized in § 1447(c) or based on the grounds authorized in § 1447(e).
Id. at 836 n. 5; see Murray v. State Farm Fire and Casualty Co., 870 F.Supp. 123, 125 (S.D.W.Va.1994) ("Our Court of Appeals has upheld remand where a party was joined after removal, thereby defeating diversity jurisdiction, and held a remand based upon such grounds to be beyond review."); cf. Meyer v. Callon Petroleum Oil Co., 1995 WL 301365 (E.D.La.1995) (unpublished opinion, text available on Westlaw) ("While explicitly citing only subsection (e) of 1447, it is patent that the Court is also relying upon (c) in remanding the case. The reason for the remand is lack of subject matter jurisdiction").
Defendants disregard Washington Suburban and rely on Jamison v. Wiley, 14 F.3d 222 (4th Cir.1994), to argue that § 1447(d) only applies to § 1447(c) remands and does not bar review of a § 1447(e) remand. Although a cursory reading of the language in Jamison appears to support Defendant Pineland's position, a closer analysis of that case and others relied on by Pineland reveal otherwise.
Defendants rely on the following passage from Jamison:
On its face, § 1447(d) appears to preclude appellate review of all remand orders, regardless of basis. But as we all know, the Supreme Court has declined to give § 1447(d) such a literal meaning, holding instead that it insulates from review only those remand orders that are based on grounds specified in 28 U.S.C. § 1447(C).
Id. at 231 (citing Thermtron 423 U.S. at 346, 96 S.Ct. at 590). However, the Jamison court further noted that under the facts in *122 the case, the "district court was remanding not because it believed it lacked jurisdiction over the removed action, but because it thought it had discretion to decline to exercise that jurisdiction once it decided that the United States was not the proper defendant and thus that there was no FTCA claim in the case." Id. at 233. Therefore, at issue in Jamison was a discretionary remand as opposed to a mandatory remand governed by the subsections of § 1447.[5]
Because this court finds that Washington Suburban clearly applies in this situation, this court is precluded from reviewing its previous remand order. Additionally, this court finds that the severability doctrine discussed in Powers v. Southland Corp., 4 F.3d 223, 230 (3rd Cir.1993) is not applicable to this court's decision. See id. at 230 n. 8.
III. CONCLUSION
For the foregoing reasons, it is therefore,
ORDERED that Defendant Pineland's Motion to Alter or Amend is DENIED,
ORDERED that Defendant Land's Motion for Reconsideration is DENIED,
AND IT IS SO ORDERED.
NOTES
[1] The swing apparently consists of a rope, a swing, and a tower device built over a man-made pond that were placed on the property when Land owned it.
[2] In order to minimize confusion, although this court recognizes Land's name change, it will continue to refer to Archway as Land in this Order.
[3] Further, although once the clerk of court certifies the remand order to the clerk of state court, this court is without jurisdiction to entertain further matters, see United States v. Rice, 327 U.S. 742, 66 S.Ct. 835, 90 L.Ed. 982 (1946), the court is considering these motions to resolve the apparent confusion surrounding § 1447(e) remands. The remand order was issued on October 23, 1995, and Defendants' motions were filed on November 2, 1995. Prior to filing its Motion for Reconsideration, Defendant Land verbally notified the court of its intentions to do so, and the court agreed to hear the matter. The case file was mailed to state court on October 26, 1995.
[4] To the extent that this court relied in its October order on the test for determination of fraudulent joinder in Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir.1994), this court agrees that the more appropriate test would have been a "balance of equities" approach announced by the Fifth Circuit Court of Appeals in Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir.1987), cert. denied, 493 U.S. 851, 110 S.Ct. 150, 107 L.Ed.2d 108 (1989). Although it appears that the Fourth Circuit Court of Appeals has not had the opportunity to adopt the Hensgens balancing of equities approach, many other courts have used these factors to interpret and apply § 1447(e). See Jarriel v. General Motors Corp., 835 F.Supp. 639, 640-41 (N.D.Ga.1993); Carter v. Dover Corp., 753 F.Supp. 577, 579 (E.D.Pa.1991) (citing cases); Hughes v. Promark Lift, Inc., 751 F.Supp. 985, 987 (S.D.Fla.1990). "Virtually every court to address the joinder question since the enactment of § 1447(e) views the statute as signaling a departure from a strict Rule 19 analysis and providing a flexible, broad discretionary approach of the type described in Hensgens." Carter, 753 F.Supp. at 579. However, even under the Hensgens balance of equities approach, this court believes that remand is appropriate in this case.
[5] Pineland states that "[n]umerous recent cases have recognized the fact that the nonreviewability provisions of 28 U.S.C. § 1447(d) extend only to orders of remand pursuant to § 1477(c)." Pineland's Reply Memorandum at 2. Although there is some truth to this statement, it is somewhat misleading when considered in terms of § 1447(e) remands. None of these cases specifically address the issue of the nonreviewability of a § 1447(e) remand. In the cases cited by Pineland, the nonreviewability provision of § 1447 did not apply because the grounds for remand were not those "expressly stated" in the statute. See Bogle v. Phillips Petroleum Co., 24 F.3d 758, 761 (5th Cir.1994) (discretionary remand involving pendant state law claims considered to be a "non-Section § 1447(c) remand."); PAS v. Traveler's Ins. Co., 7 F.3d 349, 351-52 (3rd Cir.1993) (discretionary remand under § 1367 supplemental jurisdiction); Doughty v. Underwriters at Lloyd's London, 6 F.3d 856, 860 (1st Cir.1993) (review of remand not precluded because district court remanded based on Burford abstention); Hamilton v. Aetna Life & Casualty. Co., 5 F.3d 642, 644 (2nd Cir.1993), cert. denied, ___ U.S. ___, 114 S.Ct. 1100, 127 L.Ed.2d 413 (1994) (review of remand allowed because remand on grounds of procedural defect, not § 1447(c)). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1782749/ | 647 S.W.2d 283 (1983)
Dennis Obed HORN, Appellant,
v.
The STATE of Texas, Appellee.
No. 63527.
Court of Criminal Appeals of Texas, Panel No. 1.
March 23, 1983.
Jimmy Phillips, Jr., Angleton, for appellant.
John B. Holmes, Jr., Dist. Atty., Calvin A. Hartmann, and Ira Jones, Asst. Dist. Attys., Houston, Robert Huttash, State's Atty., and Alfred Walker, Asst. State's Atty., Austin, for the State.
Before TOM G. DAVIS and W.C. DAVIS, JJ.
OPINION
TOM G. DAVIS, Judge.
Appeal is taken from a conviction for aggravated assault. V.T.C.A. Penal Code, Sec. 22.02. The jury found appellant guilty and after finding he had been twice convicted of prior felonies, the court assessed punishment at life.
While we reverse this cause because of the trial court's failure to respond to a timely objection to the charge, we first address appellant's contention that the evidence is insufficient to support the conviction. See Burks v. United States, 437 U.S. *284 1, 98 S. Ct. 2141, 57 L. Ed. 2d 1 (1978). The indictment against appellant alleged "he did intentionally and knowingly threaten imminent bodily injury to Clyde J. Lester with the use of a deadly weapon, namely, a knife." (Emphasis Added.) Appellant contends there is no evidence that he threatened complainant with a knife.
Clyde Lester, the complainant, testified that on July 11, 1977 he and his family were returning home from having dinner at a restaurant in Houston. Clyde was riding in a car with his son Ralph Lester and both were accompanied by their wives. At a location in the 2800 block of the South Loop East the automobile in which they were driving was overtaken by another car driven by Clyde's second son, Fred Lester. Clyde testified his son Fred was being chased by a van whose occupants had thrown beer cans at his car. Clyde then observed the van overtake Fred's car and run into the side of the car. The van also struck the car in which Clyde was a passenger. Both of the Lester cars then began chasing the van. After a pursuit which included trips on and off the freeway the van stopped beside the freeway guardrail and Ralph and Fred pulled their cars in back and front of the van. Clyde attempted to see the license number of the van. Ralph left the car and walked to the front of the van to inquire if his brother Fred was all right. After Ralph did not return, Clyde also left the car to investigate. He observed the appellant and appellant's brother wrestling with his sons on the ground. Clyde climbed over the guardrail and approached appellant. Appellant chased Clyde back to the guardrail. Clyde was hit repeatedly by the appellant, and suffered stab wounds in the ear, back, and arm. Clyde stated he did not know at the time that the blows were inflicted with a knife, though he did see an object in appellant's hand while he was being hit. Clyde stated he did not provoke the appellant's attack, nor did he attempt to defend himself with a weapon of any kind. His only response to appellant's attack was to say "Oh, my God, why are you doing this to me?" The appellant and his brother then fled. Clyde was hospitalized for a week as a result of the stab wounds.
Fred, Clyde's son, also testified. He explained how the van's occupants had thrown beer cans at his car and how the high speed chase on the southwest freeway ensued. Fred witnessed the appellant attack both Ralph and his father Clyde. Fred also suffered multiple stab wounds. Fred testified, however, that it was appellant's brother rather than appellant who stabbed him.
Alvin Grant, Allen Mable and Marcella Charles all testified that they were passing motorists who stopped at the scene when they saw what appeared to be an accident. They witnessed the fight between the occupants of the van and the Lesters. All of the witnesses saw appellant cut Clyde with a knife.
Grant saw appellant "flick" at Clyde and, "it ended up, the older man ended up with his ear being cut." Grant also testified that appellant swung at Clyde.
Mable testified that appellant "grinched his teeth" at Mable to keep him back. Clyde, "run back and started kicking at Dennis Horn to try to, you know, stop what he was doing." Horn, "hit at him, and he cut back here." Mable also testified that appellant swung at Clyde, and, "nipped at him and cut him in the back."
Charles saw appellant grab Clyde and toss him against the guardrail. Clyde, "come off and he was stuck in the back."
Appellant and his brother Larry both testified that only Larry had a knife and stabbed people on the night in question.
Appellant and Larry both feared for their lives and fought the Lesters only in self-defense.
It is well established that threats can be conveyed in more varied ways than merely a verbal manner. Church v. State, 552 S.W.2d 138 (Tex.Cr.App.1977). A threat can be communicated by action or conduct as well as words. Berry v. State, 579 S.W.2d 487 (Tex.Cr.App.1979); Seaton v. State, 564 S.W.2d 721 (Tex.Cr.App.1978); Blount v. State, 542 S.W.2d 164 (Tex.Cr. App.1976).
*285 In the instant case, there was testimony that appellant swung, hit, knicked, flicked, and nipped at the complainant and chased him to the guardrail while holding a knife. This was sufficient to prove a threat of imminent bodily injury with a dealy weapon. The complainant was stabbed by appellant, but this does not mean he could not have also been threatened.
This case is distinguishable from Benjamin v. State, 621 S.W.2d 617 (Tex.Cr.App. 1981) and Mitchell v. State, 543 S.W.2d 637 (Tex.Cr.App.1976). In Benjamin we found no evidence of threat, but there the victim was an innocent bystander struck by a bullet intended for another. In Mitchell, the appellant pled guilty and stipulated only to causing serious bodily injury to the appellant. Here, by way of contrast, appellant's actions both threatened the complainant with imminent bodily injury and caused such injury. Appellant's tenth ground of error is overruled.
In his first ground of error, appellant complains that the trial court should have instructed the jury on the law of self-defense from multiple assailants. Appellant made a timely objection to the court's charge.
It is uncontested that when the appellant's van stopped on the South Loop, Ralph and Fred had been chasing it in their respective autos. It is also uncontested that Ralph and Fred boxed in the appellant's van by parking on each end of it. No witness denied the testimony of appellant, his brother, and his half-brother, that Ralph and Fred chased the occupants of the van over the guardrail and onto the other side of South Loop East.
Some witnesses testified that Clyde kicked appellant before appellant attacked him, and it is undisputed that shortly after appellant and his brother began fighting with Ralph and Fred, Clyde approached appellant in an effort to aid Ralph.
Both appellant and his brother testified to fearing for their lives. Larry testified that he used his knife on all of his attackers. He stated that his attackers broke his nose and hit him in the face at least three times before he took his knife out. His attackers were hitting him with something flexible. Appellant admitted to hitting and fighting with his attackers who he characterized as being, "insane with fury." They were kicking him severely in the head, as well as on the side of his head and his ribs. They cut his chin and closed one eye.
Thus, at least some testimony showed an attack by multiple assailants. Appellant was entitled to a charge on self-defense as it relates to multiple assailants. Sanders v. State, 632 S.W.2d 346 (Tex.Cr.App.1982); Matthews v. State, 582 S.W.2d 832 (Tex.Cr. App.1979); McCuin v. State, 505 S.W.2d 831 (Tex.Cr.App.1974); Black v. State, 65 Tex. Cr.R. 336, 145 S.W. 944.
The State contends that appellant waived his right to such a charge by testifying that he had no knife.
This argument ignores the testimony of several witnesses that appellant did possess and use a knife. Even if the jury did not believe that appellant had no knife, it could have believed his self-defense argument. In fact, he was given a charge on self-defense as it related to the complainant alone. Further, there was a charge on the lesser included offense of assault and appellant's theory of self-defense against multiple actors was relevant to that offense irrespective of whether he used a knife. Finally, an instruction on the law of parties was given. Since appellant's brother did testify to using a knife against multiple assailants and appellant could have been convicted as a party, appellant was entitled on that ground alone to his requested charge. Misner v. State, 610 S.W.2d 502 (Tex.Cr.App. 1981).
The judgment is reversed and the cause is remanded. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1220006/ | 547 P.2d 1368 (1976)
CONTINENTAL PLANTS CORPORATION, a corporation, Respondent-Cross-Appellant,
v.
MEASURED MARKETING SERVICE, Inc., a corporation, doing business as Taylor & Co., Appellant-Cross-Respondent.
Supreme Court of Oregon, In Banc.
Argued and Submitted February 6, 1976.
Decided April 2, 1976.
*1370 Glenn H. Prohaska of Day & Prohaska, P.C., Portland, argued the cause and filed briefs for appellant cross-respondent.
Morris J. Galen of Tonkon, Torp & Galen, Portland, argued the cause and filed a brief for respondent cross-appellant.
HOLMAN, Justice.
Plaintiff brought an action for damages for breach of contract. Defendant appeals from a judgment for plaintiff after a trial by the court without a jury, and plaintiff cross-appeals.
Plaintiff, whose home base was in Portland, Oregon, was an auctioneer of industrial machinery. It purchased for its own account a plant of metal fabricating machinery situated in Louisiana. The price was $40,000 plus one-half of whatever the machinery would bring at auction over $45,000. It was estimated that its cost of auctioning the machinery would be $5,000. It entered into a contract with defendant to mail brochures advertising the sale to prospective purchasers in the metal fabricating field in nine states in the southeastern United States as such purchasers were listed in Category 3400 of the National Business List. Through defendant's error, 5,750 brochures were mailed to Category 2400, which contained only wood fabricators. Plaintiff claims that few people attended the auction, the sale was a failure, and it was damaged as a result.
The sale was advertised and conducted on a no-limit, no-reserve basis and brought only $11,712.50. However, there were no bids for three of the larger, more valuable pieces of equipment, which were presses, each weighing in the neighborhood of 200,000 to 300,000 pounds. The sale was conducted on January 17 and possession of the premises upon which the machinery was situated had to be delivered on February 2. There was evidence to sustain a finding by the trier of the facts that because there were only three pieces of equipment left after the auction, there was an insufficient number of items with which to conduct successfully another auction. Plaintiff thereafter attempted to sell the three pieces of equipment by telephone. It made approximately 100 calls and finally, on the last day possible, sold two of the presses for $12,000. The third piece of equipment was scrapped by the owners of the premises and represented a total loss to plaintiff. Thus, a total of $23,712.50 was realized from all of the equipment.
Plaintiff claims the market value of the property upon resale was $87,800. The trial judge found the property would have brought $87,800 at auction but that plaintiff had failed to mitigate properly its damages upon the resale of the presses because it had failed to store and sell them when the opportunity was presented. Therefore, he deducted $30,000 from the difference between $87,800 and $23,712.50, which resulted in a judgment for plaintiff of $34,087.50 plus certain minor adjustments which are not in substantial dispute.
Defendant first contends plaintiff failed to sustain its burden of proof that defendant's failure to mail the brochures to the correct parties was a cause in fact of the sale's lack of success because plaintiff failed to produce evidence of any potential buyer who would have purchased equipment had he been given notice of the sale. If a plaintiff is held to the kind of proof of cause in fact of the failure of a sale which defendant claims is necessary, it would be virtually impossible for one in plaintiff's position ever to prove a case; however, the law does not require such exactitude of proof. Defendant argues that cause in fact of damages was not proved with reasonable certainty as required by Parker v. Harris Pine Mills, Inc., 206 Or. 187, 206, 291 P.2d 709, 56 A.L.R. 2d 382 (1955). What is actually meant by "reasonable certainty" is discussed in McCormick, Damages 100, § 27 (1935), in which it is stated,
"* * * [I]t appears that the epithet `certainty' is overstrong, and that the standard is a qualified one, of `reasonable certainty' merely, or, in other words, of `probability.'"
*1371 Plaintiff introduced evidence that the number of persons who registered for its sales were in a fairly constant proportion to the number of brochures which were mailed, and that the number of persons who purchased at its auctions were in constant proportion to the number who registered for the sale. It then showed that the proportion of registrants to the number of brochures mailed for the sale in question was enormously reduced as compared with 13 prior and subsequent sales it conducted over a period of 18 months. Plaintiff also introduced evidence that the average return from the 13 other sales was 157.5 per cent of the machinery's cost, while the return from the sale in question was only 29 per cent of plaintiff's cost, and that the present sale was the only one in which it had suffered a loss. The very purpose of the contract was to notify persons of the auction who dealt in the kind of merchandise plaintiff had for sale and to generate in them interest in becoming purchasers. We cannot escape the conclusion that there was sufficient evidence for the finder of facts to conclude that the failure to mail the brochures to the proper businesses was the probable cause of the failure of plaintiff's auction and resulted in damage to plaintiff.
Defendant next contends it had no knowledge that plaintiff was selling the machinery for its own account, and, therefore, defendant could foresee only a loss of commissions as possible damages and not loss resulting from the sale of an ownership interest. The applicable rule in determining whether pecuniary harm caused in fact by the breach is compensable is set forth in the English case of Hadley v. Baxendale, 9 Exch. 341 (1854) in the following words:
"Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally; i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract as the probable result of the breach."
The rule is basically one of foreseeability and is stated in 5 Corbin on Contracts 79, § 1010 (1964) as follows:
"* * * All that is necessary, in order to charge the defendant with a particular loss, is that it is one that ordinarily follows the breach of such a contract in the usual course of events, or that reasonable men in the position of the parties would have foreseen as a probable result of breach. It is not necessary that the parties should have given the matter a moment's thought or should have expressed themselves on the subject * * *."
The testimony of plaintiff and defendant's employee who regularly dealt with plaintiff was somewhat equivocal, but defendant's employee did testify as follows:
"Q. Now, basically you knew at the time of the first order that he said he bought a metal fabricating plant and that he wanted 3400, is that not correct?
"A. Yes." (Emphasis added.)
This testimony was sufficient to allow the trial judge to find that defendant was aware that plaintiff was selling for its own account and, therefore, the loss of an ownership interest rather than a commission was foreseeable.
Defendant also argues that it is not responsible for any of the loss suffered on the three large presses for which there were no bids at auction because defendant could not foresee that, if there were no bids, the equipment would have to be disposed of in approximately ten days because the building in which it was situated had been sold. Defendant could anticipate that some of the items might not be sold if the notices of sale were misdirected. It was aware that plaintiff's business was based in *1372 Portland, Oregon, and, therefore, there was little likelihood that plaintiff would have readily available any business organization, premises or facilities in Louisiana. After reasoning so far, it does not take much imagination to anticipate that plaintiff might be subject to considerable financial distress and disadvantage resulting in an unusual loss in attempting at such a distant location to dispose of the enormously large presses which were pictured in the brochure which defendant was mailing for plaintiff. While it is a close question, we believe, under such circumstances, that an unusual loss from an attempted resale of the presses could be found to be foreseeable as that term is used under the rule of Hadley v. Baxendale, supra. As Corbin says, "Nor is it possible to say just how much actual knowledge is required before it constitutes reason to know more." 5 Corbin on Contracts 89, § 1012 (1964). The question whether or not defendant would, in fact, foresee, or would have had reason to foresee, the injury that plaintiff has suffered is a question of fact. 5 Corbin on Contracts 89, § 1012 (1964).
Defendant also contends that plaintiff failed to prove the amount of its damages with reasonable certainty. Plaintiff and another machinery dealer, both of whom qualified as experts, testified to the reasonable market value of the items purchased by plaintiff. From this sum was deducted the amount for which the machinery was actually sold. While the evidence of the market value at auction of the machinery is an expert's estimate, it is of sufficient competence and certainty to furnish a basis for a finding of a specific amount of damages. If such was not the case, most, if not all, damages arising out of the breach of contracts to purchase would go uncompensated. It is not a sufficient reason for disallowing damages claimed that they cannot be exactly calculated. It is sufficient if, from proximate estimates of witnesses, a satisfactory conclusion can be reached. Buck v. Mueller, 221 Or. 271, 283, 351 P.2d 61 (1960). In 5 Corbin on Contracts 125-26, § 1020 (1964), it is stated:
"* * * The process of valuation or appraisal always involves an expression of `opinion' and `judgment.' The fact that these are variable, among `experts' as well as among men in general, is not sufficient ground for rejecting their testimony or for nonacceptance of their results. If the end to be attained is properly kept in view (e.g. compensation instead of punishment), the courts permit a considerable degree of variation in the method of attaining it. * * *.
"There are many cases in which, by reason of the ordinary experience and belief of mankind, the trial court is convinced that substantial pecuniary harm has been inflicted, even though its amount in dollars is incapable of proof. If the defendant had reason to foresee this kind of harm and the difficulty of proving its amount, the injured party will not be denied a remedy in damages because of the lack of certainty. * * *." (Footnotes omitted.)
The next issue is whether plaintiff is entitled to the full difference (less any sum for failure to mitigate damages) between the amount which the machinery brought ($23,712.50) and its market value on resale by auction, which was found by the court from the expert testimony to be $87,800. The contract provision between plaintiff and the former owner was as follows:
"Continental Plants Corp. hereby agrees to purchase * * * machinery and equipment as per attached schedule `A' for a purchase price of $40,000. This equipment is located at Poloron Products plant in Ruston, Louisiana.
"Title to this equipment shall be conveyed free and clear of all liens and encumberances [sic].
"It is further understood that Continental Plants Corp. will hold an auction sale *1373 at your Ruston facility on January 17, 1973. If the gross proceeds of the attached list generate more than $45,000 net of sales tax, Continental Plants Corp. will additionally pay you 50% of any amount over $45,000."
Defendant argues that pursuant to this agreement one-half of the amount which the property would have brought over $45,000 would have to have been paid to the former owner and that it represents no loss to plaintiff. Plaintiff argues that, under its contract with the former owner, plaintiff must pay one-half of everything it receives over $45,000 and, therefore, it cannot be fully reimbursed for its losses until it recovers the full difference between the amount the property would have brought had the brochures been properly mailed and the amount which was actually received. The trial judge computed the damages as if plaintiff will have to pay the original owner one-half of everything it receives over $45,000. We agree with the trial judge. While there were no proceeds received in excess of $45,000 from the auction, we believe any sums received by plaintiff from this case would be in lieu of those sums which would have been received through auction and, therefore, such sums must be treated by plaintiff the same as auction proceeds in fulfilling its contract with the former owner. One-half of the receipts over $45,000 is nothing more than part of plaintiff's purchase price for which it must be reimbursed before it is fully compensated.
Defendant also contends the trial court erred in allowing plaintiff to amend its complaint by which amendment it raised the amount of its alleged damages to conform to its proof. During the taking of testimony plaintiff moved to amend. The motion was denied with leave to renew. The testimony was complete on October 2, after which briefs were to be filed with the court. Plaintiff renewed its motion during the time the briefs were being filed, and the motion was allowed. The information upon which the motion was based was in the hands of defendant's attorney prior to trial. Such an amendment is within the discretion of the trial judge, ORS 16.390, and his decision is reversible error only for an abuse of discretion. Cutsforth v. Kinzua Corp., 267 Or. 423, 431-32, 517 P.2d 640 (1973). There was no abuse of discretion in this case.
Defendant also argues the amendment was offered after the case was submitted to the court and that this is not permissible under the statute, citing Cordrey v. Steamship "Bee," 102 Or. 636, 201 P. 202, 20 A.L.R. 1079 (1921). It is our opinion that the filing of the motion before the briefing for the court was complete, was a filing prior to the time the case was submitted to the trial court as contemplated by the statute.
Plaintiff cross-appealed, claiming there is insufficient evidence to justify the trial court's conclusion that plaintiff could have mitigated its damages in the sum of $30,000 by adopting other means of selling the large presses subsequent to their failure to sell at auction. Plaintiff testified that the cost of dismantling, transporting and storing the two presses (which brought only $12,000) would have been $8,000 to $10,000 and that their value was actually $54,000. There is also testimony by plaintiff that after it sold the presses, there was interest in their purchase by a machinery firm in Texas. It is our conclusion that the evidence, although somewhat skimpy, is sufficient to permit the factfinder to come to such a conclusion as the trial court came to in this case; i.e., plaintiff should have stored the presses and awaited a more propitious opportunity for sale.
The judgment of the trial court is affirmed. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1805588/ | 744 So. 2d 676 (1999)
Harold Glen SCOGGINS and Marie B. Scoggins
v.
John Lloyd FREDERICK[1] and Aswell J. Robertson.
Harold Glen Scoggins and Marie B. Scoggins
v.
Aswell J. Robertson.
Joseph A. Gladney, Individually, and Joseph A. Gladney and Associates, et al.
v.
John Lloyd Frederick and Mildred Blount Robertson and Marie B. Scoggins, and Heirs of Harold G. Scoggins, et al.
Nos. 98 CA 1814 to 98 CA 1816.
Court of Appeal of Louisiana, First Circuit.
September 24, 1999.
Order Granting Rehearing for Limited Purpose November 18, 1999.
*679 Richard C. Macaluso, Hammond, Counsel for Appellant John Lloyd Fredrick.
John O. Charrier, Jr., Baton Rouge, Counsel for Appellee Billie B. Albritton.
Before: GONZALES, FITZSIMMONS, and WEIMER, JJ.
WEIMER, J.
John Lloyd Fredrick appeals a judgment that ordered a certain plot of immovable property located in Tangipahoa Parish be re-conveyed and re-titled in the names of Mildred Blount Robertson and her husband, Aswell J. Robertson, as a result of a finding of a simulated sale. Finding no error by the trial court, we affirm.
FACTS
Three suits were filed and subsequently consolidated in the district court and have been consolidated on appeal. All three law suits involve an act of cash sale dated February 1, 1975, purporting to convey to Mr. Fredrick 82½ acres of land then owned by Aswell J. and Mildred B. Robertson (the "Robertsons"), who are now deceased.[2] The late Mrs. Robertson was the half sister of Mr. Fredrick.
Suit number 57,436 (98CA1814) was filed on September 26, 1979, by Harold G. and Marie B. Scoggins, (the "Scogginses"), through their attorney, Joseph A. Gladney, against Mr. Fredrick. The Scogginses urged they were the judgment creditors of Mr. Robertson and that the 1975 sale was a simulation designed to put the Robertsons' property beyond their reach as judgment creditors. They ask that the sale be set aside, thus clearing the way for execution of their judgments.[3]
Suit number 60,259 (98CA1815) was filed on September 9, 1980, by the Scogginses, through their attorney, Joseph A. Gladney, against Mr. Robertson and was a petition to make two 1979 judgments in the personal injury suit executory in the Twenty-First Judicial District Court, for the purpose of executing on the Robertsons' property. On August 27, 1981, the Scogginses discharged Mr. Gladney and hired Larry *680 S. Bankston, Mrs. Scoggins' nephew, as their attorney. The Gladney law firm intervened in the suit to assert an attorney's lien and privilege on the proceeds of the sale of the property. Mrs. Robertson, as administratrix of her then-deceased husband's estate, procured a preliminary injunction, which was reduced to judgment filed on May 31, 1983, preventing a sheriff's sale, and which was still pending at the time of the trial.
Suit number 73,319 (98CA1816) was a separate suit filed on October 31, 1984, by the Gladney law firm against multiple defendants, re-urging that the sale was a simulation and opposing an alleged settlement between the Scogginses and Mr. Fredrick to divide the property in kind.
On November 7, 1984, an order consolidating the three suits was signed. On May 10, 1994, Mrs. Robertson filed a cross claim against Mr. Fredrick, seeking to have the cash sale declared a simulation. After Mrs. Robertson's death, her niece, Billie B. Albritton, as administratrix of the estate of her aunt, filed a petition to be substituted as a party in the proceedings.
The matters were not brought to trial until August 28, 1997. By that time, the Scogginses and the Robertsons were all deceased, and a settlement had been reached between the Scoggins interests and the Robertson interests. Thus, the trial court was informed that the only issue presented for trial was whether the 1975 sale was a simulation; all other issues were moot. The trial court took the matter under advisement and rendered judgment on February 3, 1998, ordering reconveyance and re-titling of the property.
Without explanation, on two dates, October 29, 1997, and November 26, 1997, the trial court provided written reasons for judgment. With one minor exception,[4] the reasons were substantively consistent with each other and with the judgment. The trial court's findings were: 1) the 1975 sale was a simulation; 2) because the Robertsons retained a life usufruct in the act of sale and continued to reside on the property, Mr. Fredrick had the burden of proving the sale was not a simulation; 3) Mr. Fredrick did not carry his burden of proof; 4) the court credited the opinion of the plaintiffs' handwriting expert that the signatures on a counterletter were authentic; 5) the court credited documents produced by two bank officers as proof that the cash withdrawn by the Robertsons prior to the 1975 sale was used by Mr. Fredrick as a simulated "payment" for the property; and 6) the court noted the testimony about the money was unrefuted, as Mr. Fredrick refused to testify how he procured the cash.
THRESHOLD ISSUES
On appeal, Mr. Fredrick raises several threshold issues[5] which we will address prior to discussion of the simulated sale, the sole issue on the merits decided by the trial court. The first issue is abandonment, and the second is prescription, including the failure of the Scogginses to *681 have the judgment against the Robertsons reinscribed.[6]
Mr. Fredrick maintains the three suits should have been declared abandoned for inactivity for five years prior to trial. This argument is without merit because, regardless of whether the three suits in which Mrs. Robertson was a defendant were abandoned or whether the original plaintiffs' causes of action were prescribed, Mrs. Robertson had a separate, independent cause of action sufficient to have the sale declared a simulation. Mrs. Robertson filed the cross claim against Mr. Fredrick to have the sale declared a simulation on May 19, 1994, a little over three years prior to the trial. Mrs. Robertson's action was timely, as the action to have a simulated sale declared a nullity never prescribes.[7] LSA-C.C. arts. 2030 and 2032. Thus, the cause of action for simulation was not prescribed.[8]
Because of the unique characteristic of an action for simulation never prescribing, we hold the cross claim acted as a separate action. Because Mrs. Robertson's cross claim was filed within five years prior to trial, there was no abandonment.[9] We limit our holding regarding the cross claim acting as a separate action to the particular facts of this case.[10]
A related issue is expressed in Mr. Fredrick's specification of error number 8, which states: "As a matter of law the Court could not ignore and disregard the prior pleadings, admissions and statements made by Mildred B. Robertson personally and as representative of her deceased husband's estate in support of the validity of the sale from Aswell J. Robertson to John Lloyd Fredrick." Apparently, Mr. Fredrick refers to the pleadings filed on Mrs. Robertson's behalf in the consolidated suits and to the deposition she gave on September 24, 1980, in suit number 57,436 (98CA1814).
Initially, we note that a party is not inexorably bound by testimony given on the witness stand or by factual allegations contained in pleadings from a prior suit. Jackson v. Gulf Insurance Company, 250 La. 819, 832, 199 So. 2d 886, 891 (1967). See also, Sanderson v. Frost, 198 La. 295, 309-310, 3 So. 2d 626, 631 (1941), a contest over title to immovable property wherein the court held that allegations contained in tutorship proceedings, which were relied upon by the plaintiffs as constituting judicial confessions, were made in another proceeding and not in the case at bar, making LSA-C.C. art. 2291 (now LSA-C.C. *682 art. 1853)[11] inapplicable. Such allegations constituted evidence, but not conclusive presumptions or estoppels. Other cases have further indicated that a party litigant is not even bound by factual allegations made in the same suit unless his adversary was mislead or deceived by those allegations to his detriment. J.H. Jenkins Contractors, Inc. v. Farriel, 261 La. 374, 395, 259 So. 2d 882, 890 (1972); DeMaupassant v. Clayton, 214 La. 812, 820, 38 So. 2d 791, 793 (1949); Mouledous v. Poirier, 221 So. 2d 291, 295 (La.App. 4 Cir.1969). Further, judicial admissions in the same suit have been held not to bar curative amendments. Guidry v. Barras, 368 So. 2d 1129, 1132 (La.App. 3 Cir.1979). In the instant case, the cross claim of Mrs. Robertson is tantamount to a separate suit and has an effect similar to a curative amendment.
Regardless, our review of the pleadings reveals Mrs. Robertson made no judicial confession, as defined in LSA-C.C. art. 1853 and interpreted in the jurisprudence.[12] The only pleading filed by Mrs. Robertson in suit number 73,319 contained exceptions of no right and no cause of action; the pleading contains no admissions. The only pleading filed by Mrs. Robertson in suit number 60,259 was a petition for injunction; the pleading contains no admissions. In suit number 57,436, an answer was filed on behalf of Mr. Robertson, prior to his death; it is in the form of a general denial and contains no admissions of fact. After Mr. Robertson's death, Mrs. Robertson filed a motion to have herself substituted as party defendant; this pleading contains no admissions. The next pleading filed by Mrs. Robertson was the cross claim against Mr. Frederick in suit number 57,436, in which she claims the cash sale in which she participated was a simulation. Thus, there is no pleading in the records of the three suits that could be interpreted as a judicial admission which is contrary to the position assumed in her cross claim. Cf. Hyde v. Hibernia National Bank in Jefferson Parish, 584 So. 2d 1181, 1183-1184 (La.App. 5 Cir. 1991), wherein the court held that an admission of fact in a party's answer, as contrasted with a denial of fact, constituted a judicial confession.[13]
*683 Further, under the jurisprudence, Mrs. Robertson's deposition testimony that the sale was not a simulation cannot be considered a judicial confession sufficient to estop her subsequent cross claim alleging that the sale was a simulation. Hyde, 584 So.2d at 1183-1184. In Jackson, 250 La. at 832, 199 So.2d at 891, the court held that the disserving or contradictory factual testimony of a party-witness was not a judicial confession under LSA-C.C. art. 2291 (now LSA-C.C. art. 1853). The Louisiana Supreme Court pointed out that the judicial confession is distinct from a party's factual testimony, as the Louisiana codes have distinguished the judicial confession of a party from testimonial proof. Jackson, 250 La. at 831, 199 So.2d at 891. The court stated an admission must be an intentional waiver relating to the opponent's proof and not merely an assertion made for some independent purpose, such as a statement made for the purpose of giving testimony. Id. To be an effective agency of truth, the trier of fact must be allowed to weigh the disserving testimony of a party, as well as other evidence. When the truth is found elsewhere, the party's disserving testimony must yield in order to achieve the ends of justice. The supreme court specifically rejected as unsound the concept that equates a party's disserving factual testimony with a judicial confession and held that a party's disserving testimony is not a judicial confession or a conclusive admission. Id. Thus, a trial court is not precluded from disbelieving a party litigant's disserving testimony and may decide the case on the entire record. We note the Jackson decision was heralded as "most fellcitous" by the preeminent authority on evidence, Professor George W. Pugh. See G.W. Pugh, The Work of the Louisiana Appellate Courts for the 1966-1967 TermEvidence, 28 La.L.Rev. 312, 439. We note diametrically opposed testimony under oath may give rise to a charge of perjury, but, based on the decision of the supreme court, such testimony does not necessarily serve as a judicial confession or conclusive admission.
Nevertheless, Mr. Fredrick's arguments concerning these matters are irrelevant, including his motion in this court to strike the second deposition from the record, because the trial court apparently did not rely on either of Mrs. Robertson's depositions or on the testimony of her niece who was present at the second deposition.
Next, Mr. Fredrick raises the issue of failure to name an indispensable party, specifically, his wife, Mardell Davis Fredrick, who was not made a party to this litigation. Mr. Fredrick's argument that his wife should have been made a party to any adjudication of community property is based on the premise that the 1975 act of sale vested title in him as head and master of the community. The issue of community versus separate property is immaterial. Mr. Fredrick's assertion of lack of an indispensable party is without merit because title to property involved in an absolute simulation is not transferred from the purported vendor to the purported vendee, although the purported vendee becomes the record title holder. See LSA-C.C. art. 2026;[14]Ridgedell v. Kuyrkendall, 98-1224 (La.App. 1 Cir. 5/18/99), 740 So. 2d 173, 176-177. Thus, Mrs. Fredrick, who was neither a record title holder nor a purported vendee, was not an indispensable party to these suits.[15]
Mr. Fredrick also urges the Scoggins plaintiffs and the Gladney plaintiffs-intervenors *684 had no cause or right of action.[16] Discussion of this issue is unnecessary because trial on the merits was limited to the cross claim of Mrs. Robertson. The right of any party other than Mr. Fredrick and the original owners, Mr. and Mrs. Robertson, and their derivatives is not before us on appeal. (See discussion of derivatives, Note 21, infra.) Nevertheless, we note the well established jurisprudence is to the effect that a transfer may be declared an absolute simulation at the demand of any person in interest. Adams v. Trichel, 304 So. 2d 740, 742 (La.App. 2 Cir.1974), quoting Spiers v. Davidson, 233 La. 239, 246, 96 So. 2d 502, 504 (1957).
Finally, Mr. Fredrick complains about the settlement between the Scoggins interests and the Robertson interests, which he labels a "Mary Carter" agreement. He claims he was prejudiced by the settlement and should have been granted a continuance to investigate the settlement. The term "Mary Carter" agreement refers to a contract between a plaintiff and one co-defendant, typically with the following features: (1) secrecy; (2) the contracting defendant remains a party to the suit; (3) the contracting defendant's liability will be reduced proportionately by increasing the liability of its co-defendants; and (4) the contracting defendant guarantees the minimum recovery to the plaintiff. See Thibodeaux v. Ferrellgas, Inc., 97-1267 (La.App. 3 Cir. 9/9/98), 717 So. 2d 668, 670. There is no evidence in the record to suggest the settlement in the instant case was a Mary Carter agreement. Furthermore, the settlement reached between the parties who were the original plaintiffs and defendants in the tort suit, along with their former attorneys, did not have any effect whatsoever on the determination by the court of the issue of a simulated sale. Mr. Fredrick's argument concerning the settlement is without merit.[17]
SIMULATED SALE
Our review of the record convinces us the trial court committed neither an error of law, nor manifest error, in its factual findings.
In an action en declaration de simulation, the initial evidence to be considered is the act of sale which is being attacked. In the instant case, that document is a "Cash Sale" dated February 1, 1975, and signed by Aswell J. Robertson and John Lloyd Fredrick. The cash sale recites a price of $40,000.00 and contains a description of the property purportedly conveyed. The document also contains the following: "The usufruct of the above described property is hereby retained by Aswell J. Robertson and Mary Blount Robertson until their deaths." The reservation of usufruct was accompanied by corporeal possession when the Robertsons maintained their residence on the property until Mr. Robertson's death and Mrs. Robertson's stroke. After her stroke, she moved to a nursing home, and the house was occupied by family members other than Mr. Fredrick. These facts were established at trial by testimony of the Robertsons' nieces and nephew. There was no evidence that Mr. Fredrick ever occupied the premises, as he maintained his residence in another state.
The effect of the reservation of usufruct and corporeal possession of the property by the purported vendors was to shift the burden of proof at the trial of the action for declaration of simulation. Instead of the parties who urged simulation having to come forth with evidence to support the charge of simulation, the purported vendee had the burden of proof that the sale was not a simulation. Where the seller has reserved the usufruct and has continued to reside on the property, the case falls within the contemplation of *685 LSA-C.C. art. 2480, which provides: "When the thing sold remains in the corporeal possession of the seller the sale is presumed to be a simulation, and, where the interest of heirs and creditors of the seller is concerned, the parties must show that their contract is not a simulation." See Succession of Terral, 312 So. 2d 296, 298 (La.1975). The burden of establishing the reality of a sale many years after the fact is an onerous one, and the burden is compounded when the party so charged must overcome a legal presumption that the purported sale is a simulation. Id. On appeal, Mr. Fredrick has pointed to no evidence presented by him which satisfies this burden.
The second item of evidence to be considered by the trial court was a counterletter signed by Mr. Robertson and Mr. Fredrick. The importance of a counterletter in an action en declaration de simulation is well established. A simulation is defined in LSA-C.C. art. 2025 as a contract which "by mutual agreement... does not express the true intent of the parties." The same article defines a counterletter as follows: "If the true intent of the parties is expressed in a separate writing, that writing is a counterletter." An absolute simulation exists "when the parties intend that their contract shall produce no effects between them. That simulation, therefore, can have no effects between the parties." LSA-C.C. art. 2026. The true intent of the parties to an absolute simulation is given effect when, for example, an apparent transferee confirms by counterletter that the subject property still belongs to the transferor. LSA-C.C. art. 2026, Comments (b). The apparent transferor may not succeed in attacking an absolute simulation in the absence of a counterletter. Id.
The Louisiana jurisprudence distinguishes "sham transactions," which have no effect at all, from "disguised donations," which are intended by the parties to be valid, but are not represented as donations on their face. LSA-C.C. art. 2026, Comments (a) and cases cited therein. In an absolute simulation, the parties pretend to transfer property from one to the other, but they intend that the transferor retain ownership. In a relative simulation, a sale appears to be valid on its face, but is intended by the parties to be a gift rather than a sale.[18]See Owen v. Owen, 336 So. 2d 782, 786 (La.1976); Bonnett v. Mize, 556 So. 2d 228, 231 (La.App. 2 Cir.), writ denied, 559 So. 2d 1360 (1990).
The treatment of simulations in the Louisiana statutes and jurisprudence is the subject of Thomas B. Lemann's detailed analysis, Some Aspects of Simulation in France and Louisiana, 29 Tul.L.Rev. 22 (1954).[19] The author discusses, among other cases, contests between the supposed transferor of immovable property and the supposed transferee.[20] Persons who trace their titles to either are called "derivatives."[21] 29 Tul.L.Rev. at 33-34.
*686 The law imposes a strict rule of evidence in contests between the parties to a simulationonly written proof will suffice to establish the true agreement where one party disputes it. In a non-transfer simulation the world sees the apparent contract, but does not see the verbal or written secret contract that expresses the true will of the parties. The law requires written proof of the true will of the parties because the courts have been unwilling to allow themselves to be open to a potential contest of veracities every time property is sold. 29 Tul.L.Rev. at 29; Ridgedell v. Kuyrkendall, 740 So.2d at 177.
It can be said unequivocally that a supposed transferor cannot establish an absolute simulation unless he produces a written counterletter. 29 Tul. L.Rev. at 31. See Sherman v. Nehlig, 154 La. 25, 30, 97 So. 270, 272 (1923). The issue of whether a sale was simulated is an issue of fact, but normally it cannot reach the court because all non-written evidence bearing on the issue is excluded by operation of law, and the written evidence is so unequivocal as to be conclusive of the facts. Thus, in contests between the purported vendor and the purported vendee, no questions of fact are presented, but only questions of law. Ridgedell v. Kuyrkendall, 740 So.2d at 177. Also in contests between the purported vendor and the purported vendee of immovable property, counterletters are admissible evidence; the testimony of witnesses is not. LSA-C.C. art. 2026, Comments (b); 5 SAUL LITVINOFF, LOUISIANA CIVIL LAW TREATISE, THE LAW OF OBLIGATIONS, § 12.97, at 399 (1992) ("If the simulation is absolute, that is, if the parties intended that their act should produce no effects between them, testimonial proof that the written act is actually a simulation may not be admitted when the apparent or simulated act contained in a writing purports to effect a transfer of immovable property.")[22] In the instant case, the trial court was presented with an issue of law, interpretation of the cash sale and the counterletter, and an issue of fact, whether the counterletter was authentic.
The counterletter in the instant case consists of the following:
Feb[.] 1975
We know this is not a real sale[.] Me and Loyd do this to protect my property[.] I give him [$]40,000 [of] my money in [Hobart] Pardue's [office.] He give it back[.] When trouble is over Loyd will give me back my property in my name[.] Mil[dred] trust[s] [Lloyd's] word [but] this is business[.]
The counterletter is signed by Aswell J. Robertson and John L. Fredrick. In addition to having the counterletter in evidence, the trial court heard the testimony of witnesses on behalf of the Robertson interests' witnesses concerning the counterletter.
Shirley Faye Blount Robertson testified that she was the blood niece of both Mildred B. and Aswell J. Robertson. Together with her ten siblings, she lived just down the road from her aunt and uncle when she was growing up. During 1994, she searched the old Robertson home and found the counterletter. She testified she *687 recognized the counterletter as containing the handwriting of her uncle. Mr. Fredrick presented no evidence at trial to refute Ms. Robertson's testimony. On appeal, he merely argues his personal opinion that her finding of the counterletter was implausible.
J. Robert Murray, Jr. was qualified as an expert on forensic handwriting examination. He testified that he examined "standards" to determine if the signatures on the counterletter were authentic. The standards provided to him were the two men's signatures on other documents. The witness went into detail about the methods he used to compare the admitted signatures with the questioned signatures.[23] In conclusion, he stated, unequivocally, "It is my unqualified opinion that John L. Fredrick did sign the counter letter based on examination of the standards." Concerning the signature of Mr. Robertson, the testimony was:
Q. Do you have an opinion on the question of whether the signature on the counter letter is the actual signature of Aswell Robertson?
A. It is the actual signature. He did sign that.
On appeal, Mr. Fredrick attacks the testimony of the Robertsons' handwriting expert on several grounds, in the following assignments of error:
9. The trial Court erred in failing to exclude the testimony of the Robertson's [sic] questioned document examiner.
10. The trial Court erred in ... not allow[ing] Mr. Fredrick's counsel a fair opportunity to examine the questioned documents examiner both as to his expertise and with regards to bias, interest, corruption or credibility.
11. The trial Court erred by failing to allow Mr. Fredrick's questioned documents examiner to render testimony or an opinion with regards to the document in question.[24]
12. The trial Court erred in not ordering the pre-trial production of the report of the Robertson's [sic] questioned document examiner.
13. The trial Court erred by failing to appoint its own experts.
14. The trial Court erred in failing to allow Mr. Fredrick an opportunity to examine the questioned document prior to trial and in denying appellant's motions both pre-trial and during trial with regards to this issue and in denying a continuance.
Assignments of error numbers 9 through 14, which Mr. Fredrick addresses in brief in globo, are clearly without merit for the following reasons. First, Mr. Fredrick's attack on the witness's testimony goes to the weight of the evidence, not the admissibility of the testimony. As the trier of fact, the court was free to accept or reject, in whole or in part, the testimony of any witness. Morrison v. Morrison, 97-0295, p. 5 (La.App. 1 Cir. 9/19/97), 699 So. 2d 1124, 1127. Furthermore, where there is conflicting testimony about factual matters, the resolution of which depends upon a determination of the credibility of the witnesses, reasonable inferences of fact should not be disturbed on appeal. See Miley v. Louisiana Farm Bureau Casualty Insurance Company, 599 So. 2d 791, 809 (La.App. 1 Cir.), (Lanier, J., concurring in *688 part and dissenting in part), writ denied, 604 So. 2d 1313 (1992). The trial court in the instant case accepted Mr. Murray's testimony as credible when it reached its decision that the counterletter was authentic.
In this appeal, although the interpretation of the counterletter is a legal issue, the trial court's findings regarding its authenticity are factual findings, which require the manifest error or clearly wrong standard of appellate review. Because Mr. Murray was an expert witness, the following discussion in Lirette v. State Farm Insurance Company, 563 So. 2d 850, 852-853 (La.1990) is applicable:
It is well settled that a court of appeal may not set aside a finding of fact by a trial court or a jury in the absence of "manifest error" or unless it is "clearly wrong," and where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable. (Citations omitted.)
When findings are based on determinations regarding the credibility of witnesses, the manifest errorclearly wrong standard demands great deference to the trier of fact's findings; for only the fact finder can be aware of the variations in demeanor and tone of voice that bear so heavily on the listener's understanding and belief in what is said. (Citations omitted.)
The rule that questions of credibility are for the trier of fact applies to the evaluation of expert testimony, unless the stated reasons of the expert are patently unsound. (Citations omitted.)
When making a manifest error (clearly wrong) fact review, an appellate court is not required to consider the three evidentiary elements of weight, credibility, and inferences in the light most favorable to the prevailing party; the court only must accept reasonable evaluations of credibility and reasonable inferences and may determine if the overall weight of the evidence is clearly wrong. Miley, 599 So.2d at 809.
In the instant case, if we review the entire record, and the testimony of Mr. Murray in particular, pursuant to the rules set forth in Lirette, 563 So.2d at 852-853, we cannot say that the reasons given by Mr. Murray for his conclusion that the signatures were genuine are patently unsound.
Furthermore, we have reviewed the entire record in light of the errors in pretrial and trial procedure alleged in assignments of error numbers 9 through 14. The trial court found that the plaintiffs had responded sufficiently to discovery devices, and Mr. Fredricks has failed to show how these errors, if any existed, prejudiced his defense and amounted to more than harmless error.
CONCLUSION
Having found no error of law or manifest error in the trial court's determination that the purported sale was an absolute simulation, we affirm. We cast Mr. Fredrick with all costs of this appeal.
AFFIRMED.
ON REHEARING
WEIMER, J.
In his application for rehearing, defendant John Lloyd Fredrick clarifies an argument he made in his original brief concerning court costs. Mr. Fredrick points out that, despite the fact that three separate suits had been filed, the Scoggins interests and the Robertson interests had reached a settlement prior to the trial on the merits of the issue raised in the cross claim filed by Mrs. Robertson on May 10, 1994.
The judgment which declared the act of sale a simulation cast Mr. Fredrick with all costs. However, our review of the record *689 leaves us in doubt as to what those costs were. We agree with Mr. Fredrick that he should not be cast for costs associated with the original suits to which he was not a party.
Accordingly, we grant a rehearing for the limited purpose of amending the judgment of the trial court concerning costs. We cast the defendant, Mr. Fredrick, and the succession representative, Billie B. Albritton, with his and her own costs incurred in the litigation of the cross claim for simulation filed on May 10, 1994.
In all other respects, the application for rehearing is denied.
JUDGMENT AMENDED; REMANDED TO ASSESS COSTS. REHEARING OTHERWISE DENIED.
NOTES
[1] Although the petition identified the defendant as "John Lloyd Frederick" the record reveals the correct spelling of the name is "Fredrick."
[2] Mr. Robertson died on December 10, 1981; Mrs. Robertson died on March 20, 1997.
[3] The Scogginses had procured two judgments against the Robertsons in a personal injury lawsuit in the Nineteenth Judicial District Court. The first judgment on September 25, 1979, was for a sum which, with interest, allegedly exceeded $300,000.00. The second judgment on November 27, 1979, entitled "Judgment Denying Application for New Trial with Amendments," contained substantive changes. The Gladney law firm represented the Scogginses in that litigation, which arose from a November 4, 1973 automobile accident.
[4] The minor exception is that the reasons filed in October stated costs would be assessed against Mr. Fredrick, while the reasons filed in November provided that costs be shared. The conflict between the two is immaterial, as the judgment assessed Mr. Fredrick with all costs. Where there is a discrepancy between the judgment and the reasons for judgment, the judgment prevails. Louisiana Insurance Guaranty Association v. International Insurance Company, 551 So. 2d 50, 51 (La.App. 1 Cir.1989). Furthermore, there is no merit to Mr. Fredrick's argument that the trial court erred in assessing him with all costs. We note that, "[e]xcept as otherwise provided by law, the court may render judgment for costs, or any part thereof, against any party, as it may consider equitable." LSA-C.C.P. art. 1920. The trial court has broad discretion in assessing court costs. Earles v. Ahlstedt, 591 So. 2d 741, 747 (La.App. 1 Cir.1991). We do not find the trial court's decision to cast Mr. Fredrick with costs to be inequitable or an abuse of the court's much discretion; therefore, we will not disturb this decision.
[5] In appellant's brief, matters are listed which are referred to as so-called "specifications of error." Counsel for appellant then proceeds to address these so-called specifications of erroroccasionally, individuallybut occasionally in groups of five at a time in random fashion. The brief of appellant, as written, in many areas provides this court little guidance in determining if there was error by the trial court. Nevertheless, we have endeavored to reach the proper result within the confines of the rules. See Uniform Rules, Courts of Appeal, Rule 2-12.4.
[6] Because of the settlement between the other parties, leaving only the action for simulation to be determined at trial, it is unnecessary to discuss this argument.
[7] In Successions of Webre, 247 La. 461, 472, 172 So. 2d 285, 288 (1965), the court noted that a simulated sale constitutes an absolute nullity.
[8] Further discussion of Mr. Fredrick's specifications of error numbers 1, 2, 5, 6, 7, 16, 18, and 20, dealing with abandonment and prescription, is unnecessary. Additionally, the sufficiency of Mrs. Robertson's cross claim makes it immaterial whether issue was joined in the suit filed by the Gladney law firm, thus making discussion of assignment of error number 21 unnecessary.
[9] LSA-C.C.P. art. 561 formerly, and at all times relevant to this matter, provided that an action is abandoned after a period of five years.
[10] As mentioned previously, the claims of the original plaintiffs in all other suits are not before us on appeal, and no inferences concerning their claims should be drawn from our holding that Mrs. Robertson's cross claim was neither abandoned nor prescribed.
[11] LSA-C.C. art. 1853 provides:
A judicial confession is a declaration made by a party in a judicial proceeding. That confession constitutes full proof against the party who made it.
A judicial confession is indivisible and it may be revoked only on the ground of error of fact.
[12] A judicial admission or confession is a party's express acknowledgment of the correctness of the fact or the act charged against him by his adversary. First Homestead Federal Savings and Loan Association v. Coleman, 446 So. 2d 551, 553 (La.App. 3 Cir.1984). Such a confession is designed to dispense with evidence and has the effect of withdrawing the subject matter of the confession from issue. See Jackson, 250 La. at 831, 199 So.2d at 890-891, and our discussion of that case infra.
[13] Mr. Fredrick argues the stipulations made in the pre-trial statement of April 25, 1994, constitute admissions. In Mrs. Robertson's statement of "Defendant's claim and supporting legal authorities," she denies that the sale was a simulation or that it was made to defraud Mr. Robertson's creditors. This statement is no different from the denial referred to in Hyde. However, in the admitted and stipulated facts section of the pre-trial order, the following facts are admitted: that Mr. Robertson sold the land to Mr. Fredrick for $40,000 by cash deed, which was recorded; that the sale was carried out in the offices of a notary public, before the named witnesses and attorneys; that Mr. Robertson was deceased; and that Mrs. Robertson had been a resident of a nursing home for the last three years.
We do not interpret these stipulated facts as admissions which would withdraw the issue from proof at trial. Indeed, the intent of Mrs. Robertson to so bind herself by the stipulation is clearly lacking, especially in light of the "intent of the parties to the sale" being listed as a contested fact in the pre-trial order, along with "[a]ny other facts as a result of conflict within the pleadings or testimony of witnesses."
As discussed previously, even if the pre-trial order contains admissions, Mrs. Robertson would not be bound by them in her cross claim.
[14] LSA-C.C. art. 2026 provides: "A simulation is absolute when the parties intend that their contract shall produce no effects between them. That simulation, therefore, can have no effects between the parties."
[15] Further discussion of Mr. Fredrick's assignments of error numbers 3, 17, and 19, and his exception filed in this court, dealing with proper parties defendant, is unnecessary. Also, the fact that Mr. Fredrick was made defendant in Mrs. Robertson's cross claim makes the fact that he was not named as a party in one of the consolidated suits immaterial.
[16] This assertion is in Mr. Fredrick's assignment of error number 4.
[17] Mr. Fredrick apparently makes this argument pursuant to a "catch-all" assignment of error, number 15, which states: "The Judgment is in error as a matter of fact and law."
[18] In his brief to this court, Mr. Fredrick appears to argue that if the trial court was convinced the cash sale was a simulation, it should have declared it a relative simulation. We find no error in the trial court's rejection of Mr. Fredrick's meager evidence concerning the Robertsons' intention that he have the property, nor in the trial court's acceptance of the counterletter as expressing the true intent of the parties.
[19] Mr. Lemann's thorough treatment of the subject of simulation is cited by Professor Saul Litvinoff in 5 LOUISIANA CIVIL LAW TREATISE, THE LAW OF OBLIGATIONS § 12.97 at 399 (1992), and in the Louisiana Civil Code Revision Comments, LSA-C.C. art. 2026, Comments (b).
[20] Mr. Fredrick's argument that the Robertsons were barred from attacking the cash sale by the doctrine of "clean hands" is clearly without merit as the law specifically provides for an action such as asserted in Mrs. Robertson's cross claim. LSA-C.C. art. 2025, et seq.
[21] Examples of derivatives of the supposed transferor are ordinary heirs and universal successors. A universal successor is defined by LSA-C.C. art. 3506(28) as one who represents the person of the deceased, and succeeds to all his rights and charges. As a universal successor or as administratrix of Mrs. Robertson's estate, Billie B. Robertson had a right to bring the action for simulation following Mrs. Robertson's death. Mr. Fredrick's argument on appeal that only a forced heir could continue the proceedings after Mrs. Robertson's death is clearly contrary to the established law regarding simulation. See authorities cited in Footnote 19. Mr. Fredrick cites no authority for his assertion that an action for simulation was personal to the deceased.
[22] Mr. Fredrick's argument that the Robertson interests could not attack the authentic act of cash sale ("estoppel by deed") is consistent with the rule that testimonial proof is inadmissible as between the parties. However, his argument ignores the rule, that counterletters are effective between the parties, stated in LSA-C.C. art. 2239 (1870) and recognized and enforced by the Louisiana jurisprudence. See LSA-C.C. art. 2026, Comments (b).
[23] Mr. Fredrick admitted his signature on a number of documents, including the errata sheet of his deposition. However, at trial, when asked about his signature to the counterletter, he gave the following answers: "I don't know about this." "I don't think it could be." "I can't go for this one." "That is not mine. I did not write that name."
[24] Although this assignment is not related to Mr. Fredrick's attack on his opponents' expert witness, we have included it here because of the way Mr. Fredrick handled it in his brief. This assignment appears to urge error in the trial court's handling of the testimony of the expert called by Mr. Fredrick. That portion of the transcript was not designated part of the record on appeal. Therefore, there is nothing for us to review in regard to this alleged error. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1259941/ | 673 P.2d 991 (1983)
The PEOPLE of the State of Colorado, Petitioner,
v.
The DISTRICT COURT OF the CITY AND COUNTY OF DENVER, State of Colorado, and Alvin D. Lichtenstein, one of the Judges thereof, Respondents.
Clarence BURNS, Petitioner,
v.
DISTRICT COURT In and For the SECOND JUDICIAL DISTRICT and Alvin D. Lichtenstein, one of the Judges Thereof, Respondents.
Nos. 83SA284, 83SA266.
Supreme Court of Colorado, En Banc.
December 5, 1983.
Rehearing Denied January 9, 1984.
*992 Norman S. Early, Jr., Dist. Atty., O. Otto Moore, Asst. Dist. Atty., Brooke Wunnicke, Chief Appellate Deputy Dist. Atty., Denver, for petitioner.
Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., Nathan B. Coats, Deputy Atty. Gen., John Daniel Dailey, First Asst. Atty. Gen., Denver, for amicus curiae, Atty. Gen.
Donnell, Davis & Salomon, Cathlin Donnell, Pfaff & St. Joan, Jacqueline St. Joan, Denver, for amicus curiae, Colo. Coalition for Justice for Abused Women.
Colo. Women's Bar Ass'n, Suzanne Saunders, President, Mary T. Hoagland, Pamela A. Ray, Denver, for amicus curiae, Colo. Women's Bar Ass'n.
Haddon, Morgan & Foreman, P.C., Bryan Morgan, Mitch Geller, Denver, for respondent Alvin D. Lichtenstein.
David F. Vela, State Public Defender, David D. Wymore, Chief Deputy State Public Defender, John A. Sadwith, Michael J. Heher, Deputy State Public Defenders, Denver, for Clarence Burns.
ROVIRA, Justice.
In People v. District Court, No. 83SA284, we issued a rule to show cause why respondent district court should not be directed to vacate the sentences imposed on Clarence Burns on June 22 and June 29, 1983. In Burns v. District Court, No. 83SA266, we issued a rule to show cause why respondent district court should not be directed to vacate the sentence imposed on defendant on June 29, 1983. We consolidated these original proceedings and now make the rule absolute in both proceedings.
I.
Patti Burns and Clarence Burns (defendant) were married in 1967. One son, Darren, was born of this marriage. In late June or July 1982, Mrs. Burns met with an attorney, Terre Rushton, to discuss obtaining a divorce from her husband. On August 4, 1982, she left the marital home and took her son, Darren, and some of their *993 belongings with her. She left no explanation and no indication of their whereabouts.
When defendant came home from work, he did not realize that his wife had left him until later that evening when he was served with divorce papers and a Temporary Restraining Order which prohibited him from having any contact with his wife, her parents, or Darren. On August 5, Ms. Rushton spoke with Mr. Burns and set up a meeting to be held on August 17 in her office. She told him that he could meet with his wife at that time to discuss visitation with Darren and to determine if counseling would be appropriate. That meeting never occurred.
On August 13, defendant redeemed his .38 caliber revolver from the Mile Hi Pawn Shop. Two days later, he saw his wife's car near her parents' house. He climbed into the trunk and hid there until Mrs. Burns and Darren drove to their apartment. Defendant then got out of the trunk and followed them inside. Mr. and Mrs. Burns went into the bedroom to discuss the situation. At one point, Darren saw the defendant with a gun at his head threatening to commit suicide if Mrs. Burns would not come back to him. Darren ran outside. Exactly what happened next is not clear. But the defendant's subsequent statements and his plea of guilty to second-degree murder established that the defendant shot his wife five times at close range in her head and upper body with the revolver that he had recently redeemed. She died as a result of these wounds. The defendant was then charged with first-degree murder and mandatory sentence for a crime of violence.
Subsequently, the People and the defendant entered into a plea bargain, and the respondent court conducted a Crim.P. 11 hearing. Under the plea-bargaining agreement set forth in the record, the district attorney agreed to dismiss the first-degree murder charge and mandatory sentence for crime of violence, and to ask for a sentence of no more than ten years in exchange for defendant's plea of guilty to second-degree murder. Before accepting his guilty plea, respondent warned defendant that the court would not be bound by the People's recommendation as to an appropriate sentence. In response to questions from the respondent, defendant acknowledged that he was knowingly and voluntarily entering a plea of guilty and that nothing presently affected his ability to understand the proceedings and to think clearly. The respondent then advised the defendant of his constitutional rights and asked a series of questions concerning defendant's mental state at the time of the shooting. Defendant admitted that on August 15 he was mentally aware that he was shooting his wife and that her death was a practical certainty as a result of his acts.[1] Respondent also explained the elements of second-degree murder,[2] and defendant answered in the affirmative when asked if he was freely, voluntarily, and intentionally entering his plea of guilty to that crime, without undue influence, coercion, or threats from anyone. In addition, the prosecutor offered a factual basis for the charge. Defendant again admitted that he shot his wife five times and did not dispute the prosecutor's version of the essential facts. The defendant's plea of guilty to second-degree murder was accepted, he was granted leave to apply for probation, and his bond was continued.
The first sentencing hearing occurred on June 22. After considering the presentence report prepared by the probation department, and hearing testimony and arguments, respondent ruled that extraordinary mitigating circumstances justified a sentence *994 below the presumptive range for second-degree murder. Respondent sentenced defendant to four years in prison and one year of parole, which is one-half of the lowest sentence within the presumptive range.[3] Then, respondent suspended defendant's sentence upon the following conditions: he must participate in a work-release program for two years at the Denver County Jail, must continue therapy with Michael Lindsay for two years or until Mr. Lindsay discharged him, and must not possess or carry any weapon for two years. Respondent discharged defendant's bond and placed him in the sheriff's custody. The mittimus was signed and issued. Defendant began serving his sentence.
On June 28, sua sponte and without notice to the parties of the reason, respondent notified the parties to be in court on June 29. At that time, the respondent stated that his decision to suspend defendant's sentence had been based "solely" on concerns about defendant's son, Darren. He said that on June 27 he was informed for the first time by a member of the media that Mrs. Burns had left a legacy of approximately $100,000 to Darren.[4] He took judicial notice of the exact amount of the legacy ($82,571.18) from Probate Court Case No. 82PR1451. Respondent then said that this financial support "eliminates the very foundation upon which the sentence was imposed and the suspension of sentence was based." Respondent, believing that the double jeopardy clauses of the United States and Colorado Constitutions prevented an alteration of the sentence itself, then revoked the suspension of defendant's sentence and placed him in the custody of the Department of Corrections for four years, plus one year of parole.
The defendant objected to the revocation of the suspended sentence on the grounds that he had done nothing to warrant revocation, and was being denied the opportunity for a hearing on the issue. The district attorney then asked the respondent if he would consider resentencing if double jeopardy did not apply, and respondent stated that he would be inclined to impose a stiffer sentence within the mitigating range if he was not precluded from doing so by the double jeopardy clauses of the United States and Colorado Constitutions.
The People, in 83SA284, seek relief in the nature of a writ of mandamus under C.A.R. 21 from the rulings of the trial court. They argue that the respondent acted in excess of his jurisdiction, grossly abused his discretion, and imposed void sentences because extraordinary mitigating circumstances did not exist as a matter of law. They ask this court to vacate the sentences, to find extraordinary aggravating circumstances, and to impose a sentence within the aggravated range; or, at least, to impose a sentence within the presumptive range for second-degree murder.
Defendant argues that an original petition for relief in the nature of a writ of mandamus is an inappropriate mode of appeal of a defendant's sentence by the People. He asserts that since no statute or rule of criminal procedure allows the People to appeal a sentence, a writ in the nature of mandamus should not be available. In addition, defendant argues that the evidence supports a sentence within the extraordinary mitigating range. The defendant also claims that any enhancement of his sentence by this court or the respondent would violate his constitutional right to be free from being twice put in jeopardy.
The respondent claims that both a legal foundation and evidence sustained his finding of extraordinary mitigating circumstances and the sentences were legally imposed. The respondent did not address the issues raised by the defendant, but adopted *995 the arguments and positions offered by him.
II.
The exercise of jurisdiction in an original proceeding in the nature of mandamus is discretionary and governed by the circumstances of the case. If an issue of sufficient public importance is involved, we have often exercised original jurisdiction. Colo. Const. art. VI, sec. 3; Sanchez v. District Court, 624 P.2d 1314 (Colo.1981); Stull v. District Court, 135 Colo. 86, 308 P.2d 1006 (1957); Shore v. District Court, 127 Colo. 487, 258 P.2d 485 (1953). Issues in this case concerning the nature of sentencing are of sufficient public importance to warrant consideration by this court in the exercise of its original jurisdiction.
Nevertheless, questions regarding the scope of our jurisdiction remain. In general, sentencing is a matter of discretion with the trial court. But that discretion is not completely unfettered. A sentence which is beyond the statutory authority of the court is illegal. See Hemphill v. District Court, 197 Colo. 431, 593 P.2d 972 (1979); see People ex rel. Gallagher v. District Court, 632 P.2d 1009 (Colo.1981).
Although we have not addressed the specific question of whether a sentence can be reviewed if review might result in an increased sentence, other courts have permitted such review when the initial sentence is illegal.[5]United States v. DiFrancesco, 449 U.S. 117, 101 S. Ct. 426, 66 L. Ed. 2d 328 (1980); State v. Fry, 61 Haw. 226, 602 P.2d 13 (1979); State v. Thompson, 88 Wash.2d 60, 558 P.2d 245 (1977); United States v. McGarr, 461 F.2d 1 (7th Cir.1972). Also, the correction of an illegal sentence is an extraordinary cause for which mandamus is available. United States v. Ferri, 686 F.2d 147 (3d Cir.1982); People ex rel. Carey v. Bentivenga, 83 Ill. 2d 537, 48 Ill. Dec. 228, 416 N.E.2d 259 (1981); United States v. Jackson, 550 F.2d 830 (2d Cir.1977); United States v. Norton, 539 F.2d 1082 (5th Cir.1976), cert. denied, 429 U.S. 1103, 97 S. Ct. 1129, 51 L. Ed. 2d 553 (1975); State v. Pringle, 83 Wash.2d 188, 517 P.2d 192 (1973); McGarr, 461 F.2d at 5; United States v. Pregerson, 448 F.2d 404 (9th Cir.1971); see Ex Parte United States, 242 U.S. 27, 37 S. Ct. 72, 61 L. Ed. 129 (1916) (mandamus issued to set aside an unauthorized order designed to suspend permanently execution of a sentence). The Fifth Circuit stated that "an appellate court has the duty, with minimal margin for judgment, to correct an illegal sentence" and "petitions to correct illegal sentences by mandamus have routinely been granted." United States v. Denson, 603 F.2d 1143, 1147-48 (5th Cir.1979). We conclude that this court does have jurisdiction to review defendant's sentence if the trial court's sentence was illegal.
III.
Defining crimes and prescribing punishments are legislative prerogatives. A court may not impose a sentence that is inconsistent with the terms specified by statutes. People v. Hinchman, 196 Colo. 526, 589 P.2d 917, cert. denied, 442 U.S. 941, 99 S. Ct. 2883, 61 L. Ed. 2d 311 (1979). Section 16-11-101, C.R.S.1973 (1978 Repl.Vol. 8) (1982 Cum.Supp.) authorizes the trial court to grant probation, unless the defendant is ineligible for probation, or to impose a sentence of imprisonment for a definite period of time.
During the June 22 sentencing hearing, the respondent trial judge stated:
"I must consider along with rehabilitation the concept of punishment as well as deterrence to other members of society as well as to the Defendant; and the Court, in light of all of the facts known to it in this case, is giving that factor a great deal of consideration and is rejecting the concept as to outright probation.
. . . .
*996 "[T]he Court finds that having considered probation as such, the Court is going to discard that concept.
"The Court is going to enter a judgment of conviction. I'm going to impose a sentence to the Department of Corrections for a period of four years with one year of parole....
"The Court is going to suspend the sentence to the Department of Corrections and I'm going to place the Defendant under the supervision of the probation department with the following condition. That under XX-XX-XXX, the Defendant be placed in the Denver County Jail under the work-release program for a flat period of time of two years; that during this period of time he also have the condition that he continue with and have the benefit of his therapy with his therapist, Michael Lindsay, until such time as Mr. Lindsay would discharge him from therapy; that during that period of time he not own, possess, carry in any way any weapon whether it be a firearm, a knife, or any other weapon of any sort."
A trial court, having rejected probation, cannot circumvent legislative dictates by sentencing within prescribed parameters, suspending the sentence, and then imposing conditions which are authorized only in connection with probation. Section 16-11-212, C.R.S.1973 (1978 Repl.Vol. 8) (1982 Cum.Supp.); see Hinchman, 196 Colo. at 531, 589 P.2d at 920; see People ex. rel. Gallagher v. District Court, 197 Colo. 481, 593 P.2d 1372 (1979). Here, the combination of a sentence for a definite period with a work-release program which is only permitted as a condition of probation results in an illegal sentence.[6]
In People v. Ray, 192 Colo. 391, 560 P.2d 74 (1977), a divided court held that the probationary power of sentencing courts authorized the granting of a deferred judgment before such a procedure was authorized by statute. In People v. Henderson, 196 Colo. 441, 586 P.2d 229 (1978), we held that section 16-11-101, et seq., C.R.S.1973 (1976 Supp.) did not limit the power of trial courts to suspend sentences. We now overrule Henderson and Ray to the extent that they may be read contrary to the views expressed in this opinion. In light of the important need for stability in sentencing and because issues of sentencing illegality are not essentially related to the truth-finding function of a criminal trial, this opinion shall have prospective effect only. People in the Interest of C.A.K., 652 P.2d 603 (Colo.1982); People v. Hardin, 199 Colo. 229, 607 P.2d 1291 (1980).
At the June 29 sentencing hearing, the respondent said that he was "prevented by the double jeopardy clause ... from altering the sentence itself"[7] and he ordered, "pursuant to the sentence originally imposed, that [defendant] be placed in the custody of ... the Department of Corrections... for a period of four years plus one year of parole." The sentence that defendant received on June 29 is inextricably intertwined with the illegal June 22 sentence. Therefore, defendant has not received a legal sentence.
IV.
The defendant argues that vacating his sentence and remanding for resentencing would violate his constitutional right to be free from double jeopardy because of the possibility that his sentence might be increased. We do not agree.
*997 The tripartite protection afforded by the double jeopardy clause can be summarized as follows:
"It protects against a second prosecution for the same offense after acquittal. It protects against a second prosecution for the same offense after conviction. And it protects against multiple punishments for the same offense." (Footnotes omitted.)
North Carolina v. Pearce, 395 U.S. 711, 717, 89 S. Ct. 2072, 2076, 23 L. Ed. 2d 656 (1969); People v. Lowe, 660 P.2d 1261, 1266 (Colo.1983).
In United States v. DiFrancesco, 449 U.S. 117, 101 S. Ct. 426, 66 L. Ed. 2d 328 (1980), the United States Supreme Court drew a distinction between the double jeopardy ramifications of an acquittal and of a pronouncement of sentence. Acquittals receive much greater protection. Without double jeopardy protections for acquittals, the chances of an erroneous finding of guilt are increased. The ordeal of retrial on the basic issue of guilt or innocence is more burdensome than anxieties about the length of one's sentence.
Our holding on the double jeopardy claim is in accord with other decisions of the United States Supreme Court and the United States Courts of Appeals. In Bozza v. United States, 330 U.S. 160, 167, 67 S. Ct. 645, 649, 91 L. Ed. 818 (1947), the trial court failed to impose the mandatory sentence required by statute. Later, it corrected its mistake. The defendant claimed that the court's actions constituted double jeopardy. The Court said: "the court `only set aside what it had no authority to do and substitute[d] directions required by the law to be done upon the conviction of the offender.'... It did not twice put petitioner in jeopardy for the same offense." The Second, Fifth, and Tenth Circuits have also held that when an original sentence is illegal, resentencing does not constitute double jeopardy under the United States Constitution even if the subsequent sentence is longer than the original, and even though the defendant has begun serving the original sentence. United States v. Romero, 642 F.2d 392 (10th Cir.1981) (illegal sentence of indeterminate to seven years can be corrected by increasing it to the statutorily prescribed sentence of indeterminate to ten years); Stuckey v. Stynchcombe, 614 F.2d 75 (5th Cir.1980) (five-year probated sentence providing for incarceration during weekends for six months was below the statutory minimum; a resentence of eight years did not implicate double jeopardy); Garcia v. United States, 492 F.2d 395 (10th Cir.1974) (the defendant's sentence was invalid because it did not contain a statutorily mandated parole term; it could be increased by adding the parole term because the rule that a sentence cannot be increased after the defendant begins to serve it is applicable only when the sentence is legal); United States ex rel. Ferrari v. Henderson, 474 F.2d 510 (2d Cir.), cert. denied, 414 U.S. 843, 94 S. Ct. 102, 38 L. Ed. 2d 81 (1973).
As the Court recognized in DiFrancesco, limiting the reach of double jeopardy in sentencing serves important public policy interests. Sentencing is one of the areas most in need of reform. DiFrancesco, 449 U.S. at 142, 101 S.Ct. at 440. Narrowly interpreting the effect of double jeopardy in sentencing protects society's legitimate interest in adequate sentences for convicted criminals and in the overall uniformity of sentences imposed on similarly situated violators. Granting defendants a right to benefit from illegal sentences serves no sound public policy.[8]
V.
Because we find that the respondent court imposed an illegal sentence, we do not deem it necessary to consider the People's request that we impose sentence in the presumptive range or in the "extraordinary aggravating circumstances" range.[9]*998 Also, since defendant's sentence contains an illegal mix of incarceration and probation and must be vacated, it is unnecessary to consider the propriety of the June 29 resentencing raised by the defendant in Case No. 83SA266. The causes are remanded for further proceedings in accordance with the views expressed in this opinion.
Rule made absolute in both cases.
DUBOFSKY, J., does not participate.
NOTES
[1] The mental culpability requirement of "knowingly," which is an element of second-degree murder, is defined as follows:
"A person acts `knowingly' ... with respect to conduct or to a circumstance described by a statute defining an offense when he is aware that his conduct is of such nature or that such circumstance exists. A person acts `knowingly' ... with respect to a result of his conduct, when he is aware that his conduct is practically certain to cause the result."
Section 18-1-501(6), C.R.S.1973 (1978 Repl.Vol. 8).
[2] The elements are: (1) causing the death of a person, (2) causing that death knowingly, (3) but not after deliberation. Section 18-3-103, C.R.S.1973 (1978 Repl.Vol. 8).
[3] Section 18-3-103, C.R.S.1973 (1978 Repl.Vol. 8); section 18-1-105, C.R.S.1973 (1978 Repl.Vol. 8) (1982 Cum.Supp.).
[4] Later in the second sentencing hearing, respondent admitted that, prior to the pronouncement of the first sentence, respondent had known that the defendant had renounced any interest in certain insurance proceeds arising from the death of Mrs. Burns. However, respondent maintained that he did not know of the amount until after the first sentence had been rendered.
[5] Righi v. People, 145 Colo. 457, 359 P.2d 656 (1961), held that a court does not have jurisdiction to increase a sentence after an accused has begun serving it. But the increased sentence in Righi was not a correction of a prior illegal sentence. See Crim.P. 35(a) "the court may correct an illegal sentence at any time ...."
[6] Prior to 1972, sentencing judges had "power to suspend the imposition or execution of a sentence" when imposing probation. This was conceptually necessary because probation was not expressly within statutory sentencing alternatives. Therefore, to grant probation a sentencing court had to suspend imposition or execution of the statutorily mandated sentence. In 1972, the legislature included probation within its statutory sentencing alternatives and removed sentencing courts' power to suspend sentences in connection with grants of probation. C.R.S.1963, 39-16-6; Colo.Sess.Laws 1972, ch. 44, 39-11-102 et seq.
[7] As explained in part IV, infra, respondent could have resentenced defendant without violating the double jeopardy clauses of the United States and Colorado Constitutions.
[8] See R. Stern, Government Appeals of Sentences: A Constitutional Response to Arbitrary and Unreasonable Sentences, 18 Am.Crim.L.Rev. 51, 89 (1980).
[9] We note that as part of the plea bargain, the People agreed to ask for a sentence of not more than ten years. The People are now in no position to request a sentence which exceeds ten years unless the defendant is given the opportunity to withdraw his plea of guilty. See Santobello v. New York, 404 U.S. 257, 92 S. Ct. 495, 30 L. Ed. 2d 427 (1971). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/819151/ | Case: 12-10382 Date Filed: 02/04/2013 Page: 1 of 5
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-10382
Non-Argument Calendar
________________________
D.C. Docket No. 4:08-cr-00087-BAE-GRS-1
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
FRED COWART,
Defendant - Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
________________________
(February 4, 2013)
Before TJOFLAT, PRYOR and BLACK, Circuit Judges.
PER CURIAM:
Case: 12-10382 Date Filed: 02/04/2013 Page: 2 of 5
Fred Cowart appeals his 75-month sentence, imposed after he pled guilty to
one count of unauthorized use of an access device in violation of 18 U.S.C.
§ 1029(a)(2). On appeal, Cowart argues his sentence (1) is substantively and
procedurally unreasonable and (2) violates the Double Jeopardy Clause. After
review, we affirm Cowart’s sentence.
I.
Cowart contends his above-Guidelines sentence is both substantively and
procedurally unreasonable. We review the reasonableness of a sentence under a
deferential abuse-of-discretion standard. Gall v. United States, 128 S. Ct. 586,
591 (2007). The party challenging the sentence on appeal has the burden of
establishing the sentence is unreasonable in light of the record and the § 3553(a)
factors. United States v. Talley, 431 F.3d 784, 788 (11th Cir. 2005).
In determining reasonableness, we engage in a two-step process of review.
Gall, 128 S. Ct. at 597. First, we ensure no significant procedural error has
occurred, such as failing to calculate the Guidelines range, failing to treat the
Guidelines as Advisory, failing to consider the § 3553(a) factors, selecting a
sentence based on clearly erroneous facts, or failing to adequately explain the
sentence. Id. Once we have determined the sentence is procedurally reasonable,
we examine whether the sentence is substantively reasonable in light of the totality
2
Case: 12-10382 Date Filed: 02/04/2013 Page: 3 of 5
of the circumstances, including evaluating whether the statutory factors in
§ 3553(a) support the sentence. United States v. Gonzalez, 550 F.3d 1319, 1324
(11th Cir. 2008).
When the district court imposes a sentence greater than the Guidelines
range, it can do so using either an upward departure or an upward variance. See
U.S.S.G. § 4A1.3(a)(4)(B); 18 U.S.C. § 3553. We have held that a variance rather
than an upward departure was imposed when the district court calculated the
guideline range, considered the adequacy of the Guidelines range in light of the
evidence and the § 3553(a) factors, and imposed a sentence outside the Guidelines
range because the range did not adequately address a factor under § 3553(a). See
United States v. Irizarry, 458 F.3d 1208, 1211-12 (11th Cir. 2006).
The district court’s decision to impose a 75-month sentence was both
procedurally and substantively reasonable. The district court correctly calculated
the Guidelines range, treated the Guidelines as advisory, adopted accurate factual
findings from the Presentence Report, and adequately explained the reasons for the
sentence. Gall, 128 S. Ct. at 597. The district court did not err in failing to follow
procedures for an upward departure pursuant to U.S.S.G. § 4A1.3 because it
imposed a variance under § 3553(a). Irizarry, 458 F.3d at 1211-12. Further, the
district court fully explained its conclusion that the Guidelines sentence did “not
3
Case: 12-10382 Date Filed: 02/04/2013 Page: 4 of 5
sufficiently address [Cowart’s] history and characteristics or the continual nature
of sophisticated crimes,” noting, among other factors, the “cunning” of Cowart in
carrying out his fraud, the amount of money involved, and Cowart’s “pattern of
nearly continuous criminal activity.” The sentence is also substantively
reasonable in light of the circumstances and the § 3553(a) factors. See Gonzalez,
550 F.3d at 1324. An upward variance was warranted to reflect the seriousness of
the offenses, the need to deter Cowart where previous sentences have failed, and
the need to protect the public from his almost continual criminal conduct. Thus,
the district court did not abuse its discretion in imposing a 75-month sentence.
II.
Cowart argues, for the first time on appeal, that his sentence violates the
Double Jeopardy Clause because Cowart served a sentence in the Western District
of North Carolina for violations of the same statute for purchases made using the
same counterfeit credit card. Where a defendant has not raised the issue of double
jeopardy before the district court, we review his claim for plain error. United
States v. Bobb, 577 F.3d 1366, 1371 (11th Cir. 2009). The error must be “obvious
and clear under current law.” United States v. Eckhardt, 466 F.3d 938, 948 (11th
Cir. 2006).
4
Case: 12-10382 Date Filed: 02/04/2013 Page: 5 of 5
Generally, when a defendant pleads guilty, he waives all non-jurisdictional
challenges to a conviction, including a double jeopardy challenge. United States
v. Smith, 532 F.3d 1125, 1127 (11th Cir. 2008). A defendant does not waive the
challenge where, on the basis of the record at the time of the guilty plea, the claim,
on its face, is one that the government cannot constitutionally prosecute. United
States v. Bonilla, 579 F.3d 1233, 1240 (11th Cir. 2009). To make this
determination, we look at (1) whether the defendant’s assertion that he was
improperly convicted and punished twice for a single offense contradicts the
indictment, and (2) whether he needs to depend on facts outside the plea hearing
record to prove a violation of the Double Jeopardy Clause. Id. at 1240–41.
Cowart waived his right to assert a double jeopardy violation when he pled
guilty under 18 U.S.C. § 1029(a). Cowart’s assertion that he was improperly
punished twice contradicts the indictment, such that he would have to rely on facts
outside the plea hearing record to challenge his convictions. Bonilla, 579 F.3d at
1240–41. Furthermore, whether or not the North Carolina documentation is
considered, it is not clear or obvious that a double jeopardy violation exists. See
Eckhardt, 466 F.3d at 948. Therefore, the district court did not plainly err in
imposing a sentence under 18 U.S.C. § 1029(a)(2).
AFFIRMED.
5 | 01-03-2023 | 02-04-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2586315/ | 162 P.3d 331 (2007)
213 Or. App. 521
Roseanna SPRAGUE, individually and on behalf of all others similarly situated, Plaintiff-Respondent,
v.
QUALITY RESTAURANTS NORTHWEST, INC., an Oregon corporation, dba Chili's Grill & Bar, Defendant-Appellant.
No. 050504650; A131182.
Court of Appeals of Oregon.
Argued and Submitted March 14, 2007.
Decided June 27, 2007.
*332 John A. Schwimmer, Portland, argued the cause for appellant. With him on the briefs were Jeff D. Brecht and Sussman Shank LLP.
Jacqueline L. Koch argued the cause for respondent. With her on the brief were Koch & Deering, and J. Dana Pinney and Bailey, Pinney & Associates.
Before LANDAU, Presiding Judge, and SCHUMAN[*] and ORTEGA, Judges.
SCHUMAN, J.
Plaintiff brought this putative class action against defendant, the owner of the restaurant where she once worked, alleging violations of Oregon's wage and hour statutes. Defendant filed a motion to compel arbitration pursuant to an arbitration clause in the parties' employment agreement. In response, plaintiff argued that the arbitration clause was unconscionable and therefore unenforceable. The trial court agreed with plaintiff and issued an order denying defendant's motion to compel arbitration. Defendant appeals. ORS 36.730(1)(a) (permitting appeal from order denying motion to compel arbitration). We hold that the arbitration clause is not unconscionable. We therefore reverse and remand.
The allegations underlying this case concern two paychecks that plaintiff received after ending her employment at a restaurant owned by defendant.[1] She claims that she *333 received the first, for approximately $247, seven days after she was terminated, and the second, for $20.64, approximately one month later. The second check was returned for insufficient funds. According to plaintiff, these facts amounted to violations of ORS 652.110 (checks issued by employers must be negotiable), ORS 652.120 (wages must be paid within 35 days of last regular payday), ORS 652.140 (wages must be paid within one business day of discharge or termination by mutual agreement), and ORS 653.025 (establishing minimum wage). Plaintiff filed a class action against defendant on behalf of herself and all of defendant's other similarly situated current and past employees.
Defendant disputed plaintiff's factual allegations and moved to compel arbitration, relying on a mandatory arbitration clause in the employee manual and a signed acknowledgment from plaintiff that she had read the manual. The acknowledgment also restates the following terms of the agreement:
"By my signature below, I acknowledge that I have received and read (or had the opportunity to read) the Employee Advantages, LLC Dispute Resolution Program and Mutual Agreement to Arbitrate. I understand that the Alternative Dispute Resolution requires all employment-related disputes involving my legally protected rights to be submitted to a mediator and (if necessary) an arbitrator, rather than a judge and jury in court. In anticipation of gaining the benefits of a fair and efficient method for resolving such disputes, I agree to all of the terms of and to use the procedure described in this Policy for the resolution of all covered claims. I also agree that any award made by an arbitrator will be binding on both Employee Advantages, LLC and me and my representatives, parents, guardians, assigns, beneficiaries, spouse, children and heirs."
(Italics in original.) The employee manual contained a similar arbitration agreement, stating, in part, "The claims shall be settled exclusively by binding arbitration in accordance with the Employment Dispute Resolution Rules of the American Arbitration Association." (Italics in original.) Neither agreement contained any provisions permitting or prohibiting class actions. Both required that arbitration be commenced within two years. Plaintiff raised numerous arguments in opposition to defendant's motion to compel arbitration, but the court relied on only one in denying defendant's motion: that the arbitration agreements are unconscionable and therefore unenforceable. Unconscionability, then, is the sole issue before us in this interlocutory appeal.
Although the arbitration clause is governed by the Federal Arbitration Act (FAA), 9 U.S.C. sections 1 to 16, we apply Oregon law to determine whether it is unconscionable. 9 U.S.C. § 2; Motsinger v. Lithia Rose-FT, Inc., 211 Or.App. 610, 613-14, 156 P.3d 156 (2007). Further, because plaintiff's unconscionability challenge is to the arbitration clause alone and not to the entire employment contract, the issue is to be decided by the court and not the arbitrator. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 126 S. Ct. 1204, 163 L. Ed. 2d 1038 (2006); Vasquez-Lopez v. Beneficial Oregon, Inc., 210 Or.App. 553, 563, 152 P.3d 940 (2007).
Under Oregon law, unconscionability is determined based on the facts as they existed at the time the contract was formed. Best v. U.S. National Bank, 303 Or. 557, 560, 739 P.2d 554 (1987). Plaintiff, as the party asserting unconscionability, bears the burden of demonstrating that the arbitration clause is unconscionable. W.L. May Co. v. Philco-Ford Corp., 273 Or. 701, 707, 543 P.2d 283 (1975). We have recently summarized the Oregon law regarding unconscionability as follows:
"Unconscionability in Oregon, as elsewhere, has both a procedural and a substantive component. Procedural unconscionability generally refers to the conditions of contract formation and
*334 "`focuses on two factors: oppression and surprise. Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. Surprise involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the terms.'
"Substantive unconscionability generally refers to the terms of the contract as opposed to the circumstances of formation and `focuses on the one-sided nature of the substantive terms.' In some jurisdictions, unconscionability requires both components. In others, the courts may invalidate a contract or a contract term on either procedural or substantive grounds. Oregon has not adopted a formal template. Rather, this court has described the analysis as follows:
"`The primary focus * * * appears to be relatively clear: substantial disparity in bargaining power, combined with terms that are unreasonably favorable to the party with the greater power may result in a contract or contractual provision being unconscionable. Unconscionability may involve deception, compulsion, or lack of genuine consent, although usually not to the extent that would justify rescission under the principles applicable to that remedy. The substantive fairness of the challenged terms is always an essential issue.'
"Carey [v. Lincoln Loan Co., 203 Or.App. 399, 422-23, 125 P.3d 814 (2005), aff'd, 342 Or. 530, 157 P.3d 775 (2007)]. Thus, both procedural and substantive unconscionability are relevant, although only substantive unconscionability is absolutely necessary. With that proviso, each case is decided on its own unique facts."
Vasquez-Lopez, 210 Or.App. at 566-67, 152 P.3d 940 (some citations omitted).
The arbitration agreement at issue here is not entirely free from procedural unfairness. It is part of a classic contract of adhesion, that is, an agreement between parties of unequal bargaining power, offered to the weaker party on a "take-it-or-leave-it" basis. Reeves v. Chem Industrial Co., 262 Or. 95, 101, 495 P.2d 729 (1972). Thus, the circumstances of contract formation were somewhat oppressive. However, under Oregon law, the fact that a contract is adhesive does not alone render it unenforceable. Best, 303 Or. at 560-61, 739 P.2d 554. Further, there is no evidence of any other oppressive circumstances, nor was the agreement brought about by deception, as was the arbitration clause in Vasquez-Lopez, 210 Or. App. at 568, 152 P.3d 940. Rather, it is clearly and fully described in the employee handbook, with the key provisions set off in italics and boldface; the acknowledgment form as well sets off the agreement in italics. The language is not technical and the typeface is large. We therefore conclude that, procedurally, the agreement was no more unconscionable than the typical employment, consumer, or service contracts that are a common feature of contemporary commercial life and that Oregonians sign (and Oregon courts enforce) as a matter of course.
Plaintiff cites two substantive features of the arbitration agreement in support of her argument that it is unenforceable: its two-year limitation period and its silence with respect to class actions.
The wage claims that plaintiff alleges would, in court, have three- and six-year statutes of limitation. ORS 12.080 (action on liability created by statute must be commenced within six years); ORS 12.100(2) (action on statute for penalty must be commenced within three years). Defendant contends that the shorter period in the arbitration agreement is irrelevant in the present case because plaintiff filed her complaint within two years. We reject that argument, because, as noted above, unconscionability is determined based on the facts as they existed at the time the contract was formed. Best, 303 Or. at 560, 739 P.2d 554. Inescapably, the shorter period in the arbitration agreement imposes a burden on plaintiff that is not shared by defendant. That burden, however, is not unalloyed; although the shorter period can impose hardship on those who would bring claims, it also provides them with an incentive to do so while the disputed events are fresh in the memories of *335 witnesses and parties. Perhaps recognizing that fact, the trial court's decision did not mention the two-year limitation period and plaintiff does not develop an argument on that issue on appeal.
The trial court was troubled mainly by the fact that the agreement was silent with respect to the availability of class action arbitrations; the court's colloquy with counsel for the parties clearly establishes that it found the arbitration agreement unconscionable because the availability of class relief under the agreement would be decided by the arbitrator, and the arbitrator might have decided that such relief was not available:
"THE COURT: If the arbitrator says, `No, this arbitration agreement does not permit class actions,' that's the end of the matter and the plaintiff's stuck with no class action; is that correct? Is that your position?
"[DEFENSE COUNSEL]: Yes.
"THE COURT: Well, that's unconscionable."
The court went on to explain that the possibility that the arbitrator might find class relief to be unavailable would, in essence, deprive many employees with relatively small wage claims of their day in court:
"THE COURT: In the context of wage claims in particular, * * * denying class action where the individual claim amounts may be insufficient to warrant private Attorney General intervention, meaning insufficient to make it economically feasible for private attorneys to take each and every case to arbitration and expect to get an attorney fee award sufficient to justify the result, it is, in my view, inadequate to provide for arbitration without also ensuring class relief if the grounds for class relief and the bases are present."
The court's reasoning, however, was based on an erroneous interpretation of the FAA as that statute was construed by the Supreme Court in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444, 451-52, 123 S. Ct. 2402, 156 L. Ed. 2d 414 (2003). Defendant argued, and the court agreed, that, under Bazzle, when an arbitration agreement under the FAA is silent with respect to class relief, the question of whether class relief is nonetheless available is in most circumstances one of contract interpretation to be decided by the arbitrator and not the court. Bazzle, however, did not deal with unconscionability; the issue before the Court was whether the FAA preempted state law on the same subject, and the inquiry regarding the availability of class relief in arbitration was merely incidental. Bazzle, 539 U.S. at 447, 123 S. Ct. 2402. Further, Bazzle created an exception; the court, not the arbitrator, decides arbitration-related matters involved in "certain gateway matters, such as whether the parties have a valid arbitration agreement at all." Id. at 452, 123 S. Ct. 2402.
The more relevant cases are Prima Paint v. Flood & Conklin, 388 U.S. 395, 87 S. Ct. 1801, 18 L. Ed. 2d 1270 (1967), and Buckeye Check Cashing, Inc., 546 U.S. 440, 126 S. Ct. 1204. Those cases, as noted above, hold that when a plaintiff levels an unconscionability challenge to an arbitration agreement in a contract, as opposed to challenging the entire contract for unconscionability, the determination of unconscionability is for the court. See Vasquez-Lopez, 210 Or.App. at 563, 152 P.3d 940 (describing holdings in Prima Paint and Buckeye Check Cashing, Inc.). Where, as here, the question whether an arbitration agreement permits class action is one aspect of the larger question whether the arbitration agreement is unconscionable, both questions are for the court. Any other reading of the cases would lead to the logically absurd rule that the court cannot decide whether an arbitration agreement is unconscionable (and therefore could not decide whether to send the case to an arbitrator) until an arbitrator had decided whether the agreement permitted class actions.
Thus, under the FAA properly construed, the court and not the arbitrator should have decided whether the employment contract between plaintiff and employer permits a class action. Further, we note that the arbitration agreement provides,
"The claims shall be settled exclusively by binding arbitration in accordance with *336 the Employment Dispute Rules of the American Arbitration Association."
Those rules, in turn, provide,
"[T]he American Arbitration Association will administer demands for class arbitration pursuant to its Supplementary Rules for Class Arbitrations if (1) the underlying agreement specifies that disputes arising out of the parties' agreement shall be resolved by arbitration in accordance with any of the Association's rules, and (2) the agreement is silent with respect to class claims, consolidation or joinder of claims."
American Arbitration Association, American Arbitration Policy on Class Actions (2005), http://www.adr.org/Classarbitrationpolicy. We therefore conclude that the trial court could have reached only one legally correct conclusion: because the arbitration agreement invoked the rules of the AAA and was silent with respect to class claims, the arbitrator would have decided that class claims were permitted. That being the case, the arbitration agreement itself permitted class claims. That conclusion, in turn, leads us to hold that, despite the fact that the arbitration agreement was in a contract of adhesion and imposed a slightly reduced statute of limitations, the trial court erred in finding the agreement to be unconscionable.
Reversed and remanded.
NOTES
[*] Schuman, J., vice Brewer, C.J.
[1] According to defendant, plaintiff was actually employed by a different entity, Employee Advantages, LLC. However, the trial court ruled that the named defendant, Quality Restaurants Northwest, Inc., could properly seek to enforce the arbitration agreement because it was a third party beneficiary of the employment contract. That issue is not before us. Our references to "defendant" as the employer do not imply that we decide it. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1781159/ | 940 S.W.2d 344 (1997)
John Frank COOK Jr., Appellant,
v.
The STATE of Texas, Appellee.
Nos. 07-96-0167-CR, 07-96-0168-CR.
Court of Appeals of Texas, Amarillo.
February 14, 1997.
Rehearing Overruled March 17, 1997.
*346 Warner, Finney & Warner, Michael A. Warner, Pampa, for appellant.
Roland Saul, Criminal District Attorney, Wm. Chris Strowd, Hereford, for appellee.
Before DODSON, QUINN and REAVIS, JJ.
REAVIS, Justice.
In a consolidated trial, upon a plea of not guilty, appellant John Frank Cook Jr. was convicted by a jury of two offenses of making terroristic threats.[1] In cause number 95-0396 (our cause No. 07-96-0167-CR), the jury assessed punishment at seventy five days in jail and a $2,000.00 fine. In cause number 95-0397 (our cause No. 07-96-0168-CR), the jury assessed punishment at seventy five days in jail, probated for two years, and a $2,000.00 fine. Appellant now challenges his convictions by four points of error. We affirm.
The evidence reveals that on the evening of August 17, 1995, appellant twice telephoned Timothy Stagner, a former employee, and left two voice-mail messages. In addition, appellant left Stagner at least one other voice-mail message on August 20, 1995.
All three messages were recorded and played for the jury. During trial, upon agreement of appellant and the State, the two charged offenses of terroristic threat based upon the first two telephone messages were consolidated. At trial, appellant was not charged with the third message, but it was introduced into evidence by the State for the limited purpose of establishing appellant's specific intent to place Stagner in fear of imminent serious bodily injury.
Although we were initially reluctant to give judicial recognition to appellant's vulgar language by transcribing the messages into this opinion, we did so because it is necessary for proper sufficiency of the evidence review.
The contents of the three messages are as follows:
Message # 1
Hello this is John Cook my phone number is 364-2205. I was calling to tell the little no good spineless c__ksucking little motherf__er that if he would like to get his god damn head beat in, that he should come out to P.O. Box 157 Route 2 because I will sh__t in your f__king neck you little c__ksucker. Thank you very much, you have a wonderful day, you little spineless f__king prick.
Message # 2
Hey you little spineless c__ksucker, I want you to understand, yes this is John Cook I am calling you to tell you I'm going to beat the sh__t out of you. You f__king find me and I'll take care of your ass. Yes, John Cook, P.O. Box [751] Hereford, TX. You little prick I'm going to beat your f__king head in. You come and find me, yes this is a god damn threat so I suggest you keep this message and you use it because your gonna need it, you little spineless motherf__ker you. You better call me and you better call me quick O.K.? You little f__king c__ksucker, you understand what I'm saying. Thank you very much, you little prick.
Message # 3
Tim this is John Cook, you don't need my name and number, this is John Cook, I'm going to tell you something you little c__ksucker, you f__king show up and I'll pull your motherf__king head off. And if you want to give this to the police you f__king show up c__ksucker because I will pull your motherf__king head off. You show up and I will kick your f__king ass and I think you'd better listen to this god damn message. You turn this over to the D.A. because I want `em to hear it because I'm going to f__k up your god damn ass. You little no good c__ksucking motherf__ker I'm looking for your ass and when I find you I will f__k you up. Don't forget it asshole. You're a c__ksucking motherf__ker, you got it, goodbye.
Emphasis added.
During the guilt-innocence phase of trial, appellant stipulated to the fact that he left all *347 three voice-mail messages, although he maintained that he could not remember doing so. Appellant's sole contention at trial, as now, is that these threats do not support a finding that he intended to place anyone in fear of "imminent serious bodily injury," as is required to establish the offense of terroristic threat under section 22.07 of the Texas Penal Code. Based upon the evidence presented, the jury found appellant guilty of committing two offenses of terroristic threat.
In points of error one, two and four, appellant challenges the sufficiency of the evidence to support his convictions. Specifically, he contends that because his telephone messages were "conditional threats" of future harm, they cannot support a finding that he intended to place Stagner in fear of "imminent serious bodily injury." Further, he contends that because the threats were left on Stagner's voice-mail, and because Stagner was out of town when the threats were made, they cannot be considered "imminent" as is required to support his convictions for terroristic threat. Because appellant does not explicitly state whether he is contesting the factual or legal sufficiency of the evidence, and due to the recent decision in Clewis v. State, 922 S.W.2d 126 (Tex.Cr.App.1996), we will, in the interest of justice, review the evidence in light of both of the respective evidentiary standards of review.
In reviewing the legal sufficiency of the evidence to support a conviction, this Court is required to make the critical inquiry as to whether, after viewing the evidence in a light most favorable to the verdict, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. Jackson v. Virginia, 443 U.S. 307, 318-19, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560, 573 (1979); Moreno v. State, 755 S.W.2d 866, 867 (Tex.Cr.App.1988). The legal sufficiency of the evidence is thus a question of law. Johnson v. State, 903 S.W.2d 496, 497 (Tex. App. Fort Worth 1995, no pet'n).
A person commits the offense of terroristic threat if he threatens to commit any offense involving violence to any person ... with intent to place any person in fear of imminent serious bodily injury. Tex. Pen. Code Ann. § 22.07(a)(2) (Vernon 1994).[2] A threat is defined as, "a declaration of intention or determination to inflict punishment, loss or pain on another, or to injure another by the commission of an unlawful act." Black's Law Dictionary 1480 (6th ed. 1990). A person acts intentionally, or with intent, with respect to the nature of his conduct or to a result of his conduct when it is his conscious objective or desire to engage in the conduct or cause the result. Tex. Pen.Code Ann. § 6.03(a) (Vernon 1994). Imminent has been defined as meaning "near at hand; mediate rather than immediate; close rather than touching; impending; on the point of happening; threatening; menacing; perilous." Devine v. State, 786 S.W.2d 268, 270 (Tex.Cr.App.1989).
The accused's threat of violence, made with the intent to place the victim in fear of imminent serious bodily injury, is what constitutes the offense. Dues v. State, 634 S.W.2d 304, 306 (Tex.Cr.App.1982). The requisite intent can be inferred from the acts, words, and conduct of the accused. Beltran v. State, 593 S.W.2d 688, 689 (Tex. Cr.App.1980).
Section 22.07 does not require the victim or anyone else to be actually placed in fear of imminent serious bodily injury. Dues v. State, 634 S.W.2d at 305. The offense is complete if the accused, by his threat, sought as a desired reaction, to place a person in fear of imminent serious bodily injury. Id. at 306. It is immaterial to the offense whether the accused had the capability or the intention to carry out his threat. Id. at 305.
The evidence showed that appellant left not one, not two, but three messages on Stagner's voice-mail, the first two of which were in rapid succession. Since intent can be inferred from words, acts and conduct, we believe that a rational jury could reasonably find, both from the number of messages, and from the appellant's choice of words, that he *348 intended to put Stagner in fear of imminent serious bodily injury. In fact, appellant states in his second message that, "this is a g__damn threat," and encourages Stagner to keep the message and use it against him. During the third message, appellant stated that he was looking for Stagner and that he would injure him when he found him. A rational jury could extrapolate from these words, and from the repetitive nature of the messages, that serious bodily injury was at hand; impending; on the point of happening; threatening; menacing and; perilous. Devine v. State, 786 S.W.2d 268, 270 (Tex.Cr. App.1989). We therefore determine that, when viewed in the light most favorable to the verdict, the evidence is legally sufficient to support the conviction.
To determine whether or not the evidence is factually sufficient to support appellant's conviction, this Court must review all the evidence without the prism of "in the light most favorable to the prosecution," and must set aside the verdict only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Clewis v. State, 922 S.W.2d at 129. Furthermore, in viewing the factual sufficiency of the evidence to support a conviction, this Court will look at all of the evidence in the case that was adduced at both phases of the trial, not just that offered or presented by the State. Davis v. State, 440 S.W.2d 291, 293 (Tex.Cr. App.1969). Evidence presented at the punishment phase may be considered by this Court in determining whether the evidence is sufficient to sustain a guilty verdict. DeGarmo v. State, 691 S.W.2d 657, 661 (Tex.Cr. App.) cert. denied, 474 U.S. 973, 106 S. Ct. 337, 88 L. Ed. 2d 322 (1985); Mata v. State, 867 S.W.2d 798, 806 (Tex.App.El Paso 1993, no pet'n).
The question now before this Court is whether the evidence is factually sufficient to support the jury's finding that appellant had the requisite specific "intent" to place Stagner in fear of "imminent" serious bodily injury when he left the voice-mail messages. Appellant contends that since his threats were "conditioned" upon Stagner coming out to his P.O. Box, they cannot support a finding that he intended to create an "imminent" threat. To support this contention, he relies upon Bryant v. State, 905 S.W.2d 457 (Tex. App.Waco 1995, pet'n ref'd). However, Bryant is not applicable because the messages here are substantially different.
In Bryant, the defendant was so angry about the condition of the county road in front of his house, that he told the county commissioner if he was not out grading the road by the next day he was going to "kick his god damn ass." Because the Waco Court found this language to be too "conditional" to be an "imminent" threat, it reversed the appellant's conviction for insufficient evidence. In Bryant, the defendant made one threat that was clearly conditioned upon the victim not showing up to grade the road the next day. By contrast, in this case appellant made repeated threats which were not unequivocally conditioned upon the occurrence or non-occurrence of a particular event. In direct contrast to the facts in Bryant, appellant here stated in the third message that he was looking for Stagner. Furthermore, three messages can be reasonably interpreted to mean that he intended to place Stagner in fear, regardless of what Stagner did or didn't do.
Moreover, conditioning a threat of harm on the occurrence or non-occurrence of a future event does not necessarily mean that the harmful consequences threatened are not imminent. One must look to the proximity of the threatened harm to the condition. Green v. State, 567 S.W.2d 211, 213 (Tex.Cr.App. 1978).
In the instant case, appellant left three extremely vulgar telephone messages. Although some, or parts of the statements, when considered independently and out of context, as appellant would have us do, may appear to be conditioned upon Stagner going to appellant's P.O. Box, a rational person hearing these messages would likely consider them in their totality. When these messages are considered in their entirety, as they were by the jury, their cumulative effect gives credence to the jury's finding that appellant intended to place Stagner in fear of imminent serious bodily injury. Furthermore, it would be an intellectual injustice and a farce for us to methodically dissect the messages word by *349 word, and phrase by phrase to determine some ratio of conditional to non-conditional language. It is clear, both from appellant's choice of words and from his persistence in leaving the three messages, that he intended their effect to be cumulative.
Appellant also contends that because the messages were made by voice-mail, and because Stagner was out of town at the time, the evidence is insufficient to support the convictions. As previously noted, the crime is complete if the accused sought, as a desired reaction, to place a person in fear of imminent serious bodily injury. Dues v. State, 634 S.W.2d at 306. It is immaterial to the offense whether the accused had the capability or the intention to carry out his threat. Id. at 305. Consequently, it makes no difference whether the intended victim is out of town, because the crime does not require the victim to be actually placed in fear of imminent serious bodily injury. Id. Furthermore, we are not persuaded that threats by voice-mail messages which state that a person is being sought, should prevent a threat from being imminent. When appellant telephoned with the specific intent to put the listener in fear of imminent serious bodily injury, then it is of no consequence whether the message was heard live, or recorded and heard later. We, therefore, conclude that when the evidence is viewed in its totality, it is factually sufficient to sustain appellant's conviction.
Furthermore, it is well settled in Texas law that when, at the punishment phase of trial, the defendant admits his guilt to the crime of which he has been found guilty, he waives all nonjurisdictional defects which may have occurred during the guilt-innocence phase of trial. DeGarmo v. State, 691 S.W.2d at 661; Barrett v. State, 900 S.W.2d 748, 750 (Tex.App.Tyler 1995, pet'n ref'd). At the punishment phase, the following testimony was elicited from appellant by the State:
Q. Mr. Cook, you've heard the jury and their verdict in this case that you're guilty; is that correct?
A. Yes, sir.
Q. Do you respect this jury's verdict?
A. Yes, sir, I do.
Q. Are you sorry for what has happened?
A. Very, extremely.
Q. Are you sorry, Mr. Cook, that you committed these two crimes?
A. Yes, sir, I am.
When appellant stated he was sorry he committed these two crimes, he effectively made a judicial admission. By doing so, appellant waived any and all potential sufficiency of the evidence points of error arising from the guilt-innocence phase of his trial. DeGarmo v. State, 691 S.W.2d at 661; Gordon v. State, 651 S.W.2d 793 (Tex.Cr.App. 1983); Brown v. State, 617 S.W.2d 234, 236 (Tex.Cr.App.1981). For all the aforementioned reasons, appellant's points of error one, two and four are overruled.
By his third point of error, appellant contends the trial court committed reversible error when it permitted the State to make an improper jury argument during the guilt-innocence phase. He correctly states that there was no evidence presented at trial upon which the trial court could justify overruling his objection to the State's reference to him as a "con man" during closing argument. Although we agree that the trial court erred, we disagree that it was reversible error. By admitting his guilt at the punishment phase, appellant waived any error which occurred when the State improperly made reference to him as a "con man" during closing arguments. Barrett v. State, 900 S.W.2d at 751. Further, during the guilt-innocence phase of trial, appellant stipulated that he made the three voice mail messages. Any error is therefore harmless error. Tex.R.App. P. 81(b)(2). Appellant's third point of error is overruled.
Accordingly, each judgment is affirmed.
NOTES
[1] A person commits the misdemeanor offense of terroristic threat if he "threatens to commit any offense involving violence to any person or property with intent to ... place any person in fear of imminent serious bodily injury...." Tex. Penal Code Ann. § 22.07(a)(2) (Vernon 1994).
[2] References herein to Section 22.07 are to that Section of the Texas Penal Code Annotated (Vernon 1994). | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1830752/ | 735 So. 2d 881 (1999)
Melvin SUTHERLAND
v.
Mylia BABIN, Reliance National Insurance Company, The Home Indemnity Company and State Farm Mutual Automobile Insurance Company.
No. 98-CA-923.
Court of Appeal of Louisiana, Fifth Circuit.
May 19, 1999.
*882 Thomas M. Richard, Chopin, Wagar, Cole, Richard, Reboul & Kutcher, L.L.P., Mandeville, Louisiana, Attorneys for Defendant-Appellant The Home Indemnity Company.
Terry B. Loup Morris Bart, P.L.C., New Orleans, Louisiana, Attorneys for Plaintiff-Appellee Melvin Sutherland.
Court composed of Judges CHARLES GRISBAUM, Jr., MARION F. EDWARDS and SUSAN M. CHEHARDY.
CHEHARDY, Judge.
This is a lawsuit for personal injuries arising from a rear-end auto collision in which judgment was rendered against an uninsured/underinsured motorist (UM) insurance carrier in the amount of $300,000. The judgment was based on a jury's finding that the UM coverage rejection form did not, in and of itself, give the insured the option to select UM coverage equal to bodily injury limits. The trial court found the form was insufficient to reduce the statutorily-mandated coverage for the full amount of the bodily injury liability limits (in this case, $1,000,000) and rendered the judgment on stipulated damages.
We affirm, finding that the insured's selection of uninsured/underinsured motorist (UM) insurance coverage limits of less than the liability limits was invalid because it was made on a form that did not meet legal standards.
The plaintiff, Melvin Sutherland, was injured while riding as a passenger in a vehicle owned by his employer, DynMc-Dermott Petroleum Operations, Inc.. Among other defendants he sued his employer's automobile insurer, The Home Indemnity Company, under the UM provisions of the policy. Home provided DynMcDermott with auto liability coverage with bodily injury limits of $1,000,000. The policy included a UM rejection/selection form which indicated UM limits of $20,000 for bodily injury and $10,000 for property damage.
Home tendered $20,000 to plaintiff unconditionally, but plaintiff rejected the offer. He asserted that the UM selection/rejection form executed by DynMe-Dermott did not comply with the requirements for a valid written selection of lower UM coverage limits because it failed to give the insured the option of selecting a UM limit equal to the liability limit for bodily injury.
The plaintiff settled with and dismissed his claims against the tortfeasor and her insurer. The remaining parties stipulated to liability, causation and damages, so the only issue remaining for trial was whether DynMcDermott's UM limits were $20,000 or $1,000,000.
The case was tried to a jury, which rendered a verdict pursuant to interrogatories, in which they found Home had not proven that the UM rejection form gave the insured the option to select UM coverage equal to bodily injury limits. Based on the verdict, the court rendered judgment awarding plaintiff $300,000.[1] Home Insurance Company has appealed.
*883 The form used by Home reads as follows:
REJECTION OF UNINSURED MOTORISTS COVERAGE OR SELECTION OF LIMIT
OF LIABILITY LOUISIANA
* * *
The Louisiana Insurance Code (Section R.S. 22:1406), amended, permits you, the insured named in the policy, to reject the Uninsured Motorists Coverage or to select a limit of liability higher or lower than the limit for Bodily Injury Coverage in the policy but not less than the basic financial responsibility limit. Uninsured Motorists Coverage provides insurance for the protection of persons insured under the policy who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom.
In accordance with the Louisiana Insurance Code (Section R.S. 22:1406), amended, the undersigned insured (and each of them)
(Applicable item marked [X])
[ ] agrees that the Uninsured Motorists Coverage afforded in the policy is hereby deleted.
[X] agrees that the following limit of liability applies with respect to the Uninsured
Motorists Coverage afforded in the policy:
$ each person (enter limit if applicable);
$ 20,000 BI each accident.
10,000 PD
Thus, the form provides a series of check-boxes and blanks in which the insured may either delete the UM coverage afforded in the policy or select a particular limit of UM coverage.
Edward Copeland of McGriff, Seibels & Williams, DynMcDermott's insurance broker, testified he addressed the UM options available to the company on two occasions, first in a formal presentation to the company management personnel and again in telephone discussions with Kirkland Jones, the company risk manager. He said the presentation included detailed discussions regarding each type of coverage, including UM coverage, although he could not recall the precise words used. Copeland is a broker based in Alabama and he did not advise DynMcDermott as to the requirements of Louisiana law.
Copeland testified the proposal to DynMcDermott offered a UM coverage limit of $20,000 for bodily injury and $10,000 for property damage. He said after the presentation DynMcDermott selected the $20,000/$10,000 UM limit. Further, he said, Jones telephoned him prior to executing the UM selection/rejection form. Copeland again discussed the various UM options available, including that if Jones did not sign the form the UM coverage would be the full policy limit.
Kirkland Jones corroborated Copeland's testimony. He confirmed that he specifically discussed UM coverage and limit waivers with Copeland on two occasions, one at a formal meeting and later, after he received the insurance forms, he asked Copeland what would happen if he *884 did not return the UM endorsement form. He said Copeland told him if the form was not returned the UM coverage limit would be $1,000,000. Jones stated the company decided to select lower limits because employees were already covered in most instances by worker's compensation.
Jones further testified he understood the full range of limits from zero up to a million dollars and he also discussed the substantial premium increase the company would incur if UM limits of $1,000,000 were selected. He did not think he had been misled or coerced at any time when he signed the form.
The jury's verdict form consisted of the following interrogatories:
1. Do you find that the Home Indemnity Company
proved by a preponderance of the evidence that
the UM Form in and of itself gives DynMcDermott
Petroleum, Inc. the Option to select UM
coverage equal to bodily injury limits?
YES ____ NO x
IF YOU ANSWERED "NO" TO QUESTION
NO. 1 GO NO FURTHER. SIGN AND DATE
THIS FORM.
IF YOU ANSWERED "YES" TO QUESTION
NO. 1, PLEASE ANSWER THE FOLLOWING
QUESTION.
2. Do you find that the Home Indemnity Company
proved by a preponderance of the evidence that
DynMcDermott Petroleum, Inc. made a meaningful
and informed selection of UM coverage
limits at the time the policy was issued?
YES ____ NO ____
Because the jury responded "no" to the first interrogatory, they did not answer the second interrogatory.
On appeal Home makes the following assignments: (1) The Home UM selection/rejection form is valid as a matter of law and DynMcDermott made an informed selection of UM limits. (2) The trial court erred in denying Home's motion for directed verdict, because the issue of DynMc-Dermott's selection of lower UM limits should never have been decided by the jury. (3) The trial court erred in using Jury Interrogatory No. 1, which precluded the jury from considering extrinsic evidence and in failing to use Home's proposed jury interrogatory. (4) The trial court erred in failing to use Home's proposed jury interrogatories and jury instructions, because the instructions used did not allow the jury to consider applicable legal principles and render a correct judgment based on the facts and the law.
At the time of the accident here, the law on uninsured motorists coverage, La. R.S. 23:1406, stated as follows:
D. The following provisions shall govern the issuance of uninsured motorist coverage in this state:
(1)(a)(i) No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state ... unless coverage is provided therein or supplemental thereto, in not less than the limits of bodily injury liability provided by the policy, ... for the protection of persons insured thereunder who are legally entitled to recover nonpunitive damages from owners or operators of uninsured or under-insured motor vehicles because of bodily injury, sickness, or disease, including death resulting therefrom; however, the coverage required under this Subsection shall not be applicable where any insured named in the policy shall reject in writing, as provided herein, the coverage or selects lower limits. In no event shall the policy limits of an uninsured motorist policy be less than the minimum liability limits required under R.S. 32:900....
(ii) After September 1, 1987, such rejection or selection of lower limits shall be made only on a form designed by each insurer. The form shall be provided by the insurer and signed by the named insured or his legal representative. The form signed by the named insured or his legal representative which initially rejects such coverage or selects lower limits shall be conclusively presumed to become a part of the policy or contract when issued and delivered, *885 irrespective of whether physically attached thereto.[2] [Emphasis added.]
Plaintiff contends the form is defective because it does not inform the insured that it can select UM limits in an amount equal to bodily injury limits, nor does it inform the insured that Louisiana law provides automatic UM coverage in the same amount as the bodily injury coverage unless modified by the insured. Nor does the form itself provide the insured with the option to select UM coverage with limits equal to the policy's bodily injury limits. Plaintiff asserts the form violates the requirements of La.R.S. 22:1406, as delineated in Tugwell v. State Farm Insurance Company, 609 So. 2d 195 (La.1992).
In Tugwell the Supreme Court held that the form used by the insurance company must give the applicant the opportunity to make a "meaningful selection" from his options provided by La. R.S. 22:1406(D): UM coverage equal to bodily injury limits in the policy, UM coverage lower than bodily injury limits in the policy, or no UM coverage. 609 So.2d at 197. The court stated, "Implicit in the statute's requirement that the insurer make available to the insured the option of selecting lower limits is the idea that the insured be made aware of that option." 609 So.2d at 199.
On April 8, 1997 (the date of the trial in this case), the Louisiana Supreme Court rendered Daigle v. Authement, 96-1662 (La.4/8/97) 691 So. 2d 1213, which clarified Tugwell. In Daigle, the Supreme Court stated that the form need not inform the insured of an unavailable option (for example, where an insured elects to purchase only the minimum bodily injury limits allowable, the option of selecting UM coverage at limits lower than those in the policy is foreclosed by law). 691 So.2d at 1215. The statute requires an affirmative act by the insured only if UM coverage is rejected altogether or, in an appropriate case, where lower UM limits are statutorily permitted and desired. 691 So.2d at 1216.
Tugwell held that a UM selection/rejection form does not meet statutory requirements if it fails to inform the applicant of an available option or forecloses an available option. Daigle held that the UM law does not require a UM rejection/selection form be designed in any particular way nor that any particular language is sacrosanct. 691 So.2d at 1215. Rather, the form must be adequate for the purpose intended by the legislature, to fairly effectuate the intent of the law. Id.
Plaintiff argues that Daigle is distinguishable from the situation in this case, because in Daigle the liability portion of the policy had $20,000 bodily injury limits, the minimum allowed by law, and therefore the insured could not select lower limits. Here, however, the insured had three options: no UM coverage, UM coverage lower or higher than the bodily injury liability limits, or UM coverage equal to the bodily injury liability limits. Plaintiff contends the form is insufficient and fails to inform the insured of its options, because the form does not state that the insurer must provide coverage equal to the bodily injury limit unless the insured specifically decides otherwise. Plaintiff notes that Daigle reiterated the Tugwell standard that a form does not meet statutory requirements if it fails to inform the applicant of an available option or forecloses an available option.
It is the rejection of UM coverage, and not the acceptance, that must be the affirmative act of the insured. Henson v. Safeco Ins. Companies, 585 So. 2d 534, 539 (La.1991).
Any affirmative signature or mark accepting coverage would be mere surplusage, since the coverage is automatically extended by operation of law. An applicant does not have to sign a separate document opting for coverage already *886 provided in the policy. Such a document could be thrown away after the insured's execution of it without any effect whatsoever. The statute requires an affirmative act only if UM coverage is rejected altogether or, in an appropriate case, where lower UM limits are statutorily permitted and desired.
Daigle, supra, at 1216.
"LSA-R.S. 22:14069(D)(1)(a) requires that a rejection of UM coverage be in writing. LSA-R.S. 22:1406(D)(1)(a) %65 does not require that an acceptance of UM coverage be in writing.... There is no need to do the vain and useless task of executing a written election for what is given by law. The only matter of legal consequence is the making of an informed decision. Any reasonable manner of execution of that informed decision should be acceptable as the statute mandates no other form than the rejection of UM coverage be in writing.... The intent of LSA-R.S. 22:1406(D)(1)(a) was to protect the insured from unwittingly being without UM coverage." [Emphasis in original.]
Gordon v. Southern United Fire Ins. Co., 95-2388 (La.App. 4 Cir. 8/21/96) 679 So. 2d 582, 584, writ denied, 96-2326 (La.5/30/97) 694 So. 2d 241.
Home contends the testimony of Copeland and Jones refutes the argument that the UM rejection form did not allow the insured to make a meaningful selection of UM coverage, because Jones is clearly a sophisticated consumer rather than an average layperson, he relied on an experienced broker, and the choice was a well-informed business decision.
Parol evidence may be used to establish the circumstances surrounding UM selection. See, e.g., White v. Shoalmire, 30,158 (La.App. 2 Cir. 1/21/98) 706 So. 2d 588; Longo v. Bercegeay, 96-1129 (La. App. 3 Cir. 3/5/97) 692 So. 2d 531; Anderson v. Allstate Ins. Co., 93 1102 (La. App. 1 Cir. 4/8/94) 642 So. 2d 208; Hicks v. Somers, 577 So. 2d 299 (La.App. 4 Cir. 1991), writ denied, 580 So. 2d 671 (La.1991).
The insurer must place the insured in a position to make an informed rejection of UM coverage. Henson, supra. "To effect a valid exclusion, the form itself must be clear, unmistakable and unambiguous for an affirmative act to be informed and intelligently made." Holbrook v. Holliday, 93-1639 (La.App. 3 Cir. 6/1/94) 640 So. 2d 804, 808, writ denied, 94-1735 (La.10/7/94) 644 So. 2d 642.
The law imposes UM coverage in this state notwithstanding the language of the policy, the intentions of the parties, or the presence or absence of a premium charge or payment. Roger v. Estate of Moulton, 513 So. 2d 1126, 1131-1132 (La. 1987).
Here, the policy itself contains an endorsement called "Louisiana Uninsured Motorists CoverageBodily Injury," which states the limit of insurance will be the limit of uninsured motorists coverage shown in the declarations. The rejection/selection form states that the Louisiana Insurance Code permits the insured to reject the uninsured motorists coverage or to select a limit of liability higher or lower than the limit for bodily injury coverage in the policy, but not less than the basic financial responsibility limit. The form then sets out a check-box with which to reject the UM coverage and another check-box/fill-in-blank combination in which to select a limit of liability.
Nowhere in these documents, in either the endorsement or the rejection/selection form, is there a statement to inform the insured that failure to reject coverage or select lower limits will result in UM coverage equal to the bodily injury liability limits. We deem this form facially insufficient to comply with the requirements of the statute and the jurisprudence. Although, ironically, it is clear from the testimony that it was the intent of the insured to limit UM coverage to $20,000/$10,000, *887 that testimony cannot overcome the invalidity of the form.
"The expression of a desire not to have UM coverage, however clear, does not necessarily constitute a valid rejection if the expression of rejection does not meet the formal requirements of law." Savant v. American Co., 98 542 (La.App. 3 Cir. 12/9/98), 725 So. 2d 43, 46; Absire v. Reliance Nat. Indem. Co., 97-1498 (La.App. 3 Cir. 4/15/98), 711 So. 2d 413, writ denied, 98-1373 (La.7/2/98), 724 So. 2d 735; Wilkinson v. Louisiana Indemnity-Patterson Ins., 96 0447 (La.App. 1 Cir. 11/8/96), 682 So. 2d 1296, 1301, writ denied, 96-2920 (La.6/13/97), 695 So. 2d 964; Jordan v. Honea, 407 So. 2d 503, 506 (La.App. 1 Cir. 1981), writ denied, 409 So. 2d 654, 409 So. 2d 660 (La.1982).
Our conclusion is bolstered by the following statement of legislative intent in Acts 1987, No. 436, § 2:
The legislature expressly declares its intent that legally enforceable rejection of uninsured motorist coverage or selection of lower limits shall be made only on the standard form provided for in this Act. Other writings, letters, communications, or miscellaneous documents shall not be deemed evidence of the intent of any insured in this matter. [Emphasis added.]
With respect to defendant's remaining assignments, we find no reversible error. Assignment No. 2, concerning denial of the motion for directed verdict, is moot. As for Assignment No. 3, we agree that the trial court erred in using Jury Interrogatory No. 1, but not because it prevented the jury from considering the extrinsic evidence; rather, it was an erroneous statement of the law. The interrogatory asks the jury to determine whether "the UM Rejection Form in and of itself" gives the insured "the option to select UM coverage equal to bodily injury limits. [Emphasis added.]" As clarified in Daigle and cases cited therein, however, the statutory default is coverage equal to bodily injury liability limits and the insured need take no action to select it. Accordingly, a UM rejection form need not list that as a selectable option.
Nevertheless, it does not eliminate the requirement that the form contain sufficient information to enable an insured to make an informed decision. Where, as here, the form does not advise the insured of the consequences of failure to sign the form or to indicate rejection or selection of different limits, it must be considered insufficient.
In view of our conclusion, Assignment No. 4 merits little attention. Defendant argues the court committed reversible error in failing to use Defendant's Proposed Jury Instructions No. 4, 5, 6 and 9.[3] Although numbers 4 and 6 are correct statements of the law, the failure to give them is harmless error under the circumstances. The court did not err in refusing to give Numbers 5 and 9, however, because those matters can be considered only if it is *888 determined that the UM rejection form is valid on its face.
For the foregoing reasons, the judgment of the district court is affirmed. Pursuant to the stipulation of the parties, the parties are to pay their own costs.
AFFIRMED.
NOTES
[1] The parties also stipulated that if it were decided that Home provided UM limits of $20,000, a judgment would be entered in favor of plaintiff against his personal UM insurer, State Farm Automobile Insurance Company, in the amount of $100,000, without legal interest, each party to bear its own costs, and with no credits against the judgment for any payments previously tendered to plaintiff by any person or entity. If it were decided that Home provided UM limits of $1,000,000, a judgment would be entered in favor of plaintiff against Home in the amount of $300,000, without legal interest, each party to bear its own costs, and with no credits against the judgment for any payments previously tendered to plaintiff by any person or entity.
[2] We note that in 1997 the statute was amended to provide that the rejection or selection is to be made only on a form prescribed by the commissioner of insurance. La. R.S. 22:1406(D)(1)(a)(ii), as amended by Acts 1997, No. 1476, § 3, eff. Sept. 6, 1998.
[3] No. 4:
A UM selection form that does not require the insured to make an `X' or some other sort of pen stroke or other affirmative act in favor of UM coverage, is not considered to be invalid. Likewise, the form does not have to provide boxes, blanks or some means for the insured to choose UM coverage, in an amount equal to limits for Bodily Injury Coverage, since such coverage is automatically provided.
No. 5: "In determining whether an insurer validly selects lower limits of UM coverage, the only matter of legal consequence is the making of an informed decision."
No. 6: "The intent of the UM statute is to protect an insured from unwittingly being without UM coverage."
No. 9: "In deciding whether or not DynMc-Dermott made an informed choice, you may consider not only his knowledge, but the knowledge of its broker, Eddie Copeland. DynMcDermott, as a principal, is legally charged with constructive knowledge of facts pertinent to transactions by its broker which the broker knew or could have ascertained by reasonable diligence." | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1871140/ | 21 S.W.3d 732 (2000)
ACADEMY CORP., Appellant,
v.
INTERIOR BUILDOUT & TURNKEY CONSTRUCTION, INC. and Thomas Stuckey, Appellees.
No. 14-98-00885-CV.
Court of Appeals of Texas, Houston (14th Dist.).
June 15, 2000.
Rehearing Overruled July 13, 2000.
*736 Charles Herring, Jr., Tim N. Sims, Austin, for appellants.
Brian D. Womac, Richard N. Countiss, Houston, for appellees.
Panel consists of Justices MAURICE E. AMIDEI, EDELMAN, and WITTIG.
OPINION
MAURICE E. AMIDEI, Justice.
Academy Corp. ("Academy"), appeals the judgment entered in favor of Interior Buildout and Turnkey Construction, Inc. ("Turnkey") on its claim for breach of contract. Academy also appeals the trial court's judgment that it take nothing on its claims against Turnkey and Thomas Stuckey ("Stuckey"). We affirm, in part, and reverse and remand, in part.
I. Background
Academy owns a chain of retail sporting goods stores. Turnkey is a construction company, which remodels interiors. Academy and Turnkey entered into two contracts for the remodeling of two of Academy's stores located in San Antonio and League City (the "San Antonio and League City contracts"). Asserting claims for breach of contract, quantum meruit, and verified account, Turnkey sued Academy for withholding payments totaling $235,811.11 under the San Antonio and League City contracts. In response, Academy brought counterclaims against Turnkey, and joined Stuckey, the owner of Turnkey, as a third-party defendant, for breach of contract, fraud, conspiracy to commit fraud, and unjust enrichment.
The case was tried to a jury, which found against Academy on: (1) its breach of contract, fraud, and conspiracy claims, and (2) its defense that its withholding of the $235,811.11 was excused. The jury further awarded Turnkey $150,000 in attorney's fees for services rendered for trial; $20,000 in the event of appeal to the court of appeals; $5,000 if review is sought in the Texas Supreme Court; and $5,000 if review is granted. Based on the jury's verdict, the trial court entered judgment awarding Turnkey $235,811.11 on its breach of contract claim and attorney's fees in accordance with the amount awarded by the jury. The trial court further ordered that Academy take nothing on its counterclaims against Turnkey and its third-party action against Stuckey.
II. Subject Matter Jurisdiction
In its first issue, Academy asserts that the trial court lacked subject matter jurisdiction over this case at the time of trial. Academy joined Ronnie Bartee, a former Academy employee, as a third-party defendant. Bartee, however, filed for bankruptcy *737 and Academy removed the case to the United States Bankruptcy Court, Southern District of Texas. On May 1, 1998, the bankruptcy court ordered Academy's claims against Bartee severed, and remanded the remaining claims to state court. On May 4, 1998, the trial court called the case to trial.
The Federal Rules of Bankruptcy Procedure provide a ten-day period after the entry of a judgment or order in which to file a notice of appeal. See Fed. R. Bankr. P. 8002(a). Academy claims the trial court lacked subject matter jurisdiction to try the case on May 4, because that was still within the ten-day period in which to appeal the bankruptcy court's remand order; therefore, the bankruptcy court retained exclusive jurisdiction. We note that in its brief to this court, Academy states that it "chose not to appeal" the bankruptcy court's remand order.
The bankruptcy court acquired jurisdiction over this case upon removal to that court. See Stewart Title Co. v. Street, 731 S.W.2d 737, 739 (Tex.App.-Fort Worth 1987, no writ); Henke Grain Co. v. Keenan, 658 S.W.2d 343, 346 (Tex.App.-Corpus Christi 1983, no writ). However, once the bankruptcy court ordered the case remanded and mailed a certified copy of the remand order to the state district court, that court was revested with jurisdiction over this case. See Dallas Bank & Trust Co. v. Frigiking, Inc., 692 S.W.2d 163, 165 (Tex.App.-Dallas 1985, writ ref'd n.r.e.) (finding the termination of the bankruptcy court's jurisdiction was complete when it mailed a certified copy of the remand order to the district clerk of Dallas County); see also Quaestor Inv., Inc. v. State of Chiapas, 997 S.W.2d 226, 227 (Tex.1999) (per curiam) (holding that the state court is revested with jurisdiction when a federal district court executes the remand order and mails a certified copy of the order to the state court).
Academy alternatively contends that this case was stayed under an automatic stay provision set forth in the Rules of Bankruptcy Procecure. See Fed. R. Bankr. P. 7062. Rule 7062 states that the ten-day stay of the enforcement of judgments provided by Federal Rule of Civil Procedure 62 applies in adversary proceedings. See id. Rule 7062, however, further provides that when relief is granted from 11 U.SC. § 362, which is the relief that was granted in the bankruptcy court's order in this case, there is no automatic stay provided by Rule 62. See id. Therefore, Academy may not rely on Rule 7062.
Moreover, even if Academy had appealed the remand order, it would have had to obtain a stay of the state court proceedings from the federal district court or the federal court of appeals. Without a stay, the state court is free to proceed. See Fosdick v. Dunwoody, 420 F.2d 1140, 1141 (1st Cir.1970) (observing that "absent a supersedeas, an appeal does not vacate orders of the district court, further state proceedings are not avoidable"); Citizens Bank & Trust Co. v. Carr, 583 So. 2d 864, 866 n. 2 (La.App. 1st Cir.), writ denied, 588 So. 2d 109 (La.1991) (determining that the state court has jurisdiction while an appeal of a remand order is pending and further state court proceedings are appropriate unless a stay of the state court proceedings has been obtained); Drew v. Unauthorized Practice of Law Comm., 970 S.W.2d 152, 156 (Tex.App.-Austin 1998, pet. denied) (finding that state trial court did not err in continuing its proceedings after remand from federal district court while appeal of remand order was pending, in light of the appellant's failure to obtain stay of the state court proceedings from either the federal district court or court of appeals). In any event, Academy did not seek or obtain a stay of the state trial court proceedings. We find that the trial court had subject matter jurisdiction over this case and, accordingly, overrule Academy's first issue.
III. Sales and Employment Taxes
A. Exclusion of Evidence
In its second issue, Academy claims that the trial court erred in excluding *738 evidence from the jury concerning Turnkey's failure to withhold and pay sales and employment taxes, which formed one basis for Academy's breach of contract claim. The admission or exclusion of evidence rests within the sound discretion of the trial court. See City of Brownsville v. Alvarado, 897 S.W.2d 750, 753 (Tex.1995). To obtain reversal of a judgment based upon error in the admission or exclusion of evidence, the appellant must show: (1) that the trial court did in fact commit error, and (2) that the error was reasonably calculated to cause and probably did cause the rendition of an improper judgment. See Tex. R. App. P. 44.1; Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989). Therefore, the appellant must show the judgment turns on the particular excluded or admitted evidence. See Alvarado, 897 S.W.2d at 753-54.
Academy offered the testimony of Gary Winkler, Academy's comptroller, to show that from 1991 to 1996, Turnkey failed to pay sales taxes to the State in connection with goods and services Turnkey provided to Academy, and employment taxes on its employees. According to Academy, such evidence established: (1) Turnkey's breach of the San Antonio and League City contracts, (2) Academy's defense to Turnkey's breach of contract claim, and (3) Academy's claims against Turnkey. The trial court "admit[ed] all of the testimony regarding the sales tax audits before the Court to determine whether or not there are any fact issues to go to the jury on this issue or whether it's a matter of law." After hearing the testimony, the trial court determined there were no fact issues concerning the tax matters, but instead, such matters were questions of law for the court.
Academy claims that under the San Antonio and League City contracts, it was entitled to withhold all sums due on those contracts until Turnkey had paid all taxes related to the work it performed under the contracts:
10. Taxes. The Contract Amount includes all federal, state and local taxes and duties. All taxes levied or assessed against Owner or Contractor arising out of the furnishing or installation by Contractor or materials, equipment or any other kind of personal property in the improvement of the Property shall be paid by Contractor, and all such taxes are included in the Contract Amount. If the applicable taxing authority does not require Contractor to pay all or part [of] such taxes, or Contractor obtains a refund in whole or in part of any such tax which was included in the Contract Amount, then in either even the Contract Amount shall be correspondingly decreased. Contractor's failure to pay any federal, state or local taxes or duties shall entitle Owner to withhold any sum due to Contractor under this Contract, and if such taxes are not paid within forty-eight (48) hours after notice from Owner to Contractor of such unpaid taxes, Owner may forthwith terminate this Contract without further liability to Contractor and/or pay such taxes directly and deduct the amount thereof from the Contract Amount.
(Emphasis added).
Pursuant to Paragraph 10, if Turnkey failed to pay taxes that had been levied or assessed under the contract, Academy could temporarily withhold any sums due to Turnkey under the contract. Academy was then required to give notice to Turnkey of the amount of unpaid taxes due, and if Turnkey did not pay the taxes "within forty-eight (48) hours after notice," Academy could pay the taxes owed, deduct the payment from the amount owed under the contract, and terminate the contract. Academy did not pursue any of the contractual remedies available to it. At trial, Academy did not want to have a judgment entered in its favor for the unpaid taxes. Instead, Academy wanted to retain in its bank account the $235,811.11 it withheld from Turnkey until Turnkey had paid those taxes. In view of Academy's position *739 at trial, it was not an abuse of discretion for the trial court to exclude from the jury testimony regarding unpaid taxes. Academy's second issue is overruled.
B. Findings of Fact and Conclusions of Law
In its third issue, Academy asserts that the trial court erred in refusing to make findings of fact and conclusions of law on its claims and defenses arising from Turnkey's failure to pay sales and employment taxes pursuant to the Academy contracts. As previously observed, rather than submit the tax issues to the jury, the trial court decided that those issues were to be tried to the court.
If findings of fact and conclusions of law are properly requested, the trial court has a mandatory duty to file findings and conclusions. See Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex.1989). Such failure is presumed harmful, unless the record affirmatively shows that the complaining party suffered no injury. See id. An appellant is harmed if there are two or more possible grounds on which the trial court could have ruled, and the appellant is left to guess the basis for the trial court's ruling. See Zieba v. Martin, 928 S.W.2d 782, 786 (Tex.App.-Houston [14 th Dist.] 1996, no writ); Goggins v. Leo, 849 S.W.2d 373, 379 (Tex.App.-Houston [14 th Dist.] 1993, no writ).
The trial court informed Academy that there were no disputed facts regarding the tax issues and further informed Academy that Academy's position in not wanting a judgment on the unpaid taxes, but instead, wanting to withhold the unpaid amounts due to Turnkey until the taxes were paid was untenable. Therefore, there was not more than one basis on which the trial court could have ruled and Academy was not left to "guess" the basis for the trial court's ruling.[1] Academy's third issue is overruled.
IV. Exclusion of Evidence Concerning the "Kickback" Scheme
In its fourth issue, Academy asserts that the trial court erred in excluding evidence establishing its claim that Bartee and Turnkey were involved in a kickback scheme in which Turnkey paid Bartee in exchange for Turnkey being awarded the San Antonio and League City contracts. Academy contends that the alleged kickback scheme breached the provision in the contracts, which prohibited Academy and Turnkey from entering into any other agreements with third parties concerning the remodeling of the San Antonio and League City stores.
Most of the excluded evidence consists of the testimony of Tim Baker ("Baker"), the owner of Baker Lighting & Signs Maintenance, regarding money he paid to Bartee in return for obtaining contracts with Academy. Although Academy lists many incidents which occurred allegedly in furtherance of the kickback scheme, most of those incidents concern Baker's involvement with Bartee, and do not concern Turnkey or Stuckey.[2]
*740 A. Rule of Evidence 404(b)
Academy claims that Baker's testimony showed Bartee's intent, preparation, and plan to engaged in a concerted scheme to collect kickbacks from Academy's contractors, including Turnkey. Academy argues such evidence is admissible under Texas Rule of Evidence 404(b), which provides that while evidence of other wrongs or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith, it may be admissible to show motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident. See Tex. R. Evid. 404(b).
Any evidence that Baker and Bartee intended to, and prepared to, engage in a kickback scheme with other contractors or on projects other than the San Antonio and League City projects is not evidence as to Turnkey's alleged involvement. The evidence does not detail or explain Turnkey's or Stuckey's involvement in the Bartee/Baker scheme. Nor does this evidence conclusively establish any wrongdoing on the part of Turnkey or Stuckey regarding the Academy projects. See First S.W. Lloyds Ins. Co. v. MacDowell, 769 S.W.2d 954, 957 (Tex.App.-Texarkana 1989, writ denied). Baker's testimony was not admissible under Rule 404(b).
B. Rule of Evidence 801(e)(2)(E)
Academy also asserts its excluded evidence was admissible as an exception to the hearsay rule under Rule 801(e)(2)(E). A statement is not hearsay if it is offered against a party and is by a co-conspirator of a party made during the course, and in furtherance, of the conspiracy. See Tex. R. Evid. 801(e)(2)(E). Academy argues that even if Stuckey and Turnkey were not aware of all the details of the conspiracy's activities, the excluded evidence regarding Bartee's involvement with other contractors was admissible. Evidence is relevant if it has a tendency to make the existence of a fact more or less probable than it would be without the evidence. See Tex. R. Evid. 401. Evidence which is not relevant is not admissible. See Tex. R. Evid. 402. Baker's testimony regarding his own payments to Bartee is not relevant to show that Turnkey and Stuckey were involved with Bartee in a kickback scheme. Therefore, Baker's testimony was not admissible under Rule 801(e)(2)(E).
C. Rule of Evidence 803(24)
Academy further claims that Bartee's statements to Baker regarding another contractor's initial refusal and subsequent agreement to pay kickbacks, how bids were to be rigged, and Bartee's receipt of $3,000 at Baker's birthday party attended by many of Academy's contractors, were admissible as statements against Bartee's interest because such statements subjected Bartee to potential criminal and civil liability. See Tex. R. Evid. 803(24). None of these statements establish any involvement by Turnkey or Stuckey, only Bartee's involvement with Baker and possibly other undisclosed contractors. Such evidence is not relevant and, therefore, was not admissible under Rule 803(24). See Tex.R. Evid. 401, 402.
D. Rule of Evidence 613
Academy claims the trial court erred in excluding testimony by Baker of kickbacks he paid to Bartee and Bartee's demands for kickbacks because such evidence was relevant to impeach Bartee's denial that he was involved in any kickback conspiracy to defraud Academy. See Tex. R. Evid. 613. Again, this evidence does not connect Turnkey or Stuckey to Bartee's kickback scheme. Because it is not relevant, it was not admissible under Rule 613. See Tex. R. Evid. 401, 402. In sum, we find that the trial court did not abuse its discretion in excluding Baker's testimony regarding his own involvement with Bartee. Academy's fourth issue is overruled.
*741 V. Exclusion of Evidence Concerning Academy's Damages
In its fifth issue, Academy contends that the trial court's exclusion of Baker's testimony prejudiced its affirmative claim for damages because that testimony would have shown Academy's damages of at least $500,000 arising from the kickback scheme. Baker would have testified that he paid between 10% and 15% of his revenues from Academy as kickbacks to Bartee. Turnkey received more than $3,500,000 in revenues from Academy. Therefore, applying the "kickback formula," Academy's damages from Turnkey's and Stuckey's alleged kickback payments to Bartee were at least $350,000. Furthermore, as alleged co-conspirators, Academy claims that Turnkey and Stuckey are each liable for any wrongful actions committed by the other co-conspirators and, therefore, Stuckey and Turnkey are liable for the $150,000 in kickbacks that Baker admitted paying to Bartee. Without any evidence that Turnkey and Stuckey were part of a conspiracy with Bartee and Baker, the trial court did not abuse its discretion in excluding this testimony, and Academy's fifth issue is overruled.
VI. Exclusion of Evidence of Unjust Enrichment
In its sixth issue, Academy claims that the trial court erred in excluding evidence on its claim for unjust enrichment for Turnkey's failure to pay federal and state taxes related to work Turnkey performed for Academy, as required in the contracts. A party may recover under the theory of unjust enrichment when one person has obtained a benefit from another by fraud, duress, or the taking of an undue advantage. See Heldenfels Bros., Inc. v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex.1992). Unjust enrichment, however, is not a proper remedy merely because it might appear expedient or generally fair that some recompense be afforded for an unfortunate loss to the claimant, or because the benefits to the person sought to be charged amount to a windfall. See id. at 42. Moreover, a plaintiff cannot recover under unjust enrichment "`if the same subject is covered by an express contract.'" TransAmerican Natural Gas Corp. v. Finkelstein, 933 S.W.2d 591, 600 (Tex.App.-San Antonio 1996, writ denied) (quoting Lone Star Steel Co. v. Scott, 759 S.W.2d 144, 154 (Tex.App.-Texarkana 1988, writ denied)); see also Zapata Corp. v. Zapata Gulf Marine Corp., 986 S.W.2d 785, 788 (Tex.App.-Houston [1st Dist.] 1999, no pet.); Amoco Prod. Co. v. Smith, 946 S.W.2d 162, 164 (Tex.App.-El Paso 1997, no writ).
Because the San Antonio and League City contracts expressly provide for the payment of taxes, Academy cannot recover for unjust enrichment. Therefore, it was not an abuse of discretion for the trial court to exclude Academy's evidence purportedly establishing its entitlement to recover for unjust enrichment. Academy's sixth issue is overruled.
VII. Turnkey's Attorney's Fees
In its seventh issue, challenging the legal sufficiency of the evidence supporting Turnkey's award of attorneys fees, Academy claims the trial court erred in not granting its motion for instructed verdict, motion for judgment n.o.v., and motion for new trial on Turnkey's award for attorney's fees because Turnkey failed to present evidence on three of the eight factors set forth by the Texas Supreme Court for determining the reasonableness and necessity of attorney's fees.[3] Those *742 eight factors are: (1) the time and labor involved, the novelty and difficulty of the questions involved, and the skill required to perform the legal services properly; (2) the likelihood that the acceptance of the particular employment will preclude other employment by the lawyer; (3) the fee customarily charged in the locality for similar legal services; (4) the amount involved and the results obtained; (5) the time limitations imposed by the client or the circumstances; (6) the nature and length of the professional relationship with the client; (7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and (8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered. See Arthur Andersen & Co. v. Perry Equip. Corp., 945 S.W.2d 812, 818 (Tex.1997).
Academy claims Turnkey did not present evidence of the second, fifth, and sixth factors; therefore, the evidence is legally insufficient to support an award of attorney's fees. There is nothing in Perry Equip. Corp. to suggest that the eight factors are elements of proof, rather than guidelines which the factfinder "should consider when determining the reasonableness of a fee." See id.; see also Tex. Disciplinary R. Prof'l Conduct 1.04, reprinted in Tex. Gov't Code Ann., tit. 2, subtit. G app. A (Vernon 1998) (TEX. STATE BAR R. art. X, § 9) (listing "factors that may be considered in determining the reasonableness of a fee include, but not to the exclusion of other relevant factors").
Turnkey's counsel, Brian Womac ("Womac"), testified as to attorney's fees. Womac, who is board certified in commercial real estate law, stated that he had been practicing law for thirteen years, had experience with commercial contracts, and had represented property owners in retail establishments and contractors. Womac's firm had expended 1200 hours of attorney's time on this case. Womac believed that all the services his firm had rendered were reasonable and necessary to prosecute Turnkey's claims. He testified that it was necessary to prepare demand letters, propound written discovery, respond to Academy's discovery, and take depositions. Womac also stated additional work was performed because of Academy's counterclaims and Academy's joining Stuckey as a third-party defendant. Additionally, the parties could not agree on the issues and Turnkey filed a motion for summary judgment.
Womac's billing rate was $150 per hour and his associates' billing rate was $100 per hour. Based on his experience and familiarity with fees other attorneys charge for this type of work on similar cases, Womac believes their fees are reasonable and that $150,000 is the amount reasonable and necessary to the prosecution of Turnkey's claims through trial, $20,000 for appeal to the court of appeals, $5,000 in the event that review is sought in the Texas Supreme Court, and $5,000 if review is granted. Under the factors set forth in Perry Equip. Corp., we find this to be more than a scintilla of evidence in support of the judgment awarding Turnkey attorney's fees.
Academy further complains that the jury was not instructed on the eight factors or that Turnkey needed to establish all eight factors to recover attorney's fees. A review of the record reflects that while Academy objected to the charge on the basis of legal insufficiency of the evidence, it did not object to the charge for failing to instruct the jury on the Perry Equip. Corp. factors, but instead, waited to object on this basis in its motion for judgment n.o.v. and motion for new trial. To preserve error in the jury charge, a party must make the trial court aware of the complaint, timely and plainly, and obtain a ruling. See State Dep't of Highways & Public Transp. v. Payne, 838 S.W.2d 235, 241 (Tex.1992). Objections must be made before the charge is read to the jury. See Missouri Pac. R.R. Co. v. Cross, 501 S.W.2d 868, 873 (Tex.1973); Operation Rescue-Nat'l v. Planned Parenthood of Houston & S.E. Tex., Inc., 937 S.W.2d 60, 69 (Tex.App.-Houston [14 th Dist.] 1996), *743 aff'd as modified on other grounds, 975 S.W.2d 546 (Tex.1998). By not objecting to the failure to instruct the jury on the Perry Equip. Corp. factors prior to the charge being submitted to the jury, Academy has waived any error with regard to this complaint.
Academy also asserts that the trial court erred in excluding expert testimony, which it claims shows that Turnkey's attorney's fees were unreasonable. According to Academy, such evidence established that: (1) Turnkey's objections to Academy's discovery were unreasonable; (2) Turnkey failed to confer with Academy's trial counsel prior to filing discovery motions; and (3) summary judgment issues could have been resolved by stipulation.
With respect to Academy's claims that Turnkey's discovery requests were unreasonable, the trial judge responded that no unnecessary motions were filed in this case, and that she encourages the parties to seek protection from, and present their discovery objections to, the court. She further informed Academy that she did not find that any lawyer's conduct in this case was improper. In any event, a review of the record establishes that Academy was allowed to cross-examine Womac about Turnkey's unsuccessful objections to Academy's pretrial discovery. A copy of the trial court's order ordering Turnkey to turnover a number of documents and answer certain interrogatories, and ordering the continuation of the depositions of two of Turnkey's witnesses, which had ceased on Turnkey's objections, was admitted into evidence.
With respect to Academy's claim that Turnkey's counsel failed to confer with opposing counsel before filing motions, the trial judge reminded Academy that she does not require a certificate of conference for motions filed in her court and, therefore, there was no violation of that rule. Finally, with respect to Academy's claim that certain issues could have been resolved by stipulation rather than by summary judgment, a review of the record does not show that Academy attempted to introduce, or objected to the exclusion of, that evidence. Academy has waived this complaint. See Tex. R. App. P. 33.1.
In sum, the trial court refused to permit testimony regarding discovery practices which were not found to be abusive or in violation of any rules. Such matters are properly within the trial court's authority to control its docket. Therefore, we find that the trial court did not abuse its discretion in excluding the above evidence. Academy's seventh issue is overruled.
VIII. Academy's Attorney's Fees
In its eighth and ninth issues, Academy claims that the jury's refusal to award it attorney's fees was based, in part, on the trial court's having erroneously excluded Academy's expert witness testimony regarding the actions its own attorney's had to take in response to Turnkey's "improper efforts to stymie Academy's discovery" and "excessive and unnecessary motions for summary judgment." Academy further challenges the jury's failure to award it any attorney's fees as legally insufficient or, in the alternative, against the great weight and preponderance of the evidence.
In Texas, attorney's fees are recoverable only by statute or by contract. See Jackson v. Biotectronics, Inc., 937 S.W.2d 38, 44 (Tex.App.-Houston [14 th Dist.] 1996, no writ). Because attorney's fees are not recoverable on tort claims, the only basis upon which Academy could have recovered attorney's fees was on its breach of contract claim pursuant to Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8) (Vernon 1997). See Metropolitan Life Ins. Co. v. Haney, 987 S.W.2d 236, 243-44 (Tex.App.-Houston [14 th Dist.] 1999, pet. denied) (stating that attorney's fees are not recoverable on tort claims); Villasenor v. Villasenor, 911 S.W.2d 411, 420 (Tex.App.-San Antonio 1995, no writ) (same). To recover attorney's fees under § 38.001, the party must (1) prevail on a cause of action for which attorney's fees are recoverable, and (2) recover damages. See Green Int'l, *744 Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997); State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 437 (Tex.1995).
Here, Academy did not recover on any of its claims and was not awarded any damages and, therefore, is not entitled to recover attorney's fees. Because of our disposition of Academy's other issues and of this case, we need not address Academy's challenge to the exclusion of its expert testimony. Academy's eighth and ninth points of error are overruled.
IX. Prejudgment Interest
In its tenth issue, Academy contends the trial court erred in calculating prejudgment interest. The judgment provides that the prejudgment interest began to accrue on August 23, 1996, at a rate of 10% per annum.
Neither the San Antonio contract nor the League City contract specifies the rate of interest at which prejudgment interest on damages is to be calculated. When the underlying contract does not specify the rate of interest, the rate of prejudgment interest is calculated at a rate of 6% if the amount payable can be ascertained. See Tex. Fin. Code Ann. § 302.002 (Vernon Supp.2000). A contract is one "ascertaining the sum payable" when it provides the conditions upon which liability depends and fixes a measure by which the sum payable can be ascertained with reasonable certainty, in light of the attending circumstances. See Great Am. Ins. Co. v. North Austin Mun. Util. Dist. No. 1, 950 S.W.2d 371, 372-73 (Tex.1997). On the other hand, if the amount payable cannot be ascertained from the contract, prejudgment interest accrues at a rate of 10%. See Tex. Fin. Code Ann. § 304.003 (Vernon Supp.2000).
We conclude that the sum due and payable to Turnkey is ascertainable from the contracts.[4] Therefore, the 6% interest rate set forth in § 302.002 is the correct rate, and the trial court erroneously calculated prejudgment interest at a rate of 10%. Section 302.002 further provides that prejudgment interest begins to accrue thirty days after the date the amount becomes due and payable. The amount owed to Turnkey was due and payable as of July 24, 1996; therefore, August 23, 1996, is the correct date from which to begin calculating interest. Academy's tenth issue is sustained.
X. Conclusion
We remand the prejudgment interest portion of this case to the trial court to recalculate the prejudgment interest in accordance with this opinion at a rate of 6% interest, starting from August 23, 1996, and affirm the remainder of the judgment. Accordingly, the judgment of the trial court is affirmed, in part, and reversed and remanded, in part.
NOTES
[1] Academy argues the proper remedy for the trial court's failure to make findings of fact and conclusions of law is reversal and remand for a new trial. Contrary to Academy's contention, if harm is shown by the court's failure to issue findings of fact and conclusions of law, the appropriate remedy is to abate the appeal and direct the trial court to correct its error pursuant to Tex. R. App. P. 44.4. See Cherne Indus., Inc., 763 S.W.2d at 773; Zieba, 928 S.W.2d at 786.
[2] One of the listed incidents includes Red Stuckey, the brother of Stuckey and a Turneky employee. Baker testified that Bartee asked Baker to pay for eyeglasses, which Red Stuckey broke when he got into a fight with an employee of Four Star Air Conditioning at Academy's store in Humble. The Four Star employee picked up a piece of extra electrical equipment that Baker had saved aside and was going to sell, splitting the proceeds of the sale with Bartee. Red Stuckey hit the Four Star employee. Baker testified that he paid for the glasses in an effort to cover up the theft scheme. Bartee warned Baker that if Mr. Gochman, the president of Academy, found out about the incident, then their scheme would be in jeopardy.
[3] When reviewing a challenge to the legal sufficiency of the evidence, i.e., a "no evidence" issue, the reviewing court may consider only the evidence and inferences that support the challenged finding and should disregard all evidence and inferences to the contrary. See Southwestern Bell Mobile Sys. v. Franco, 971 S.W.2d 52, 54 (Tex.1998) (per curiam). A no evidence point will be sustained if there is no more than a scintilla of evidence to support the finding. See General Motors Corp. v. Sanchez, 997 S.W.2d 584, 588 (Tex.1999).
[4] Turnkey conceded in its brief to this court that the amount was ascertainable from the contracts in accordance with Tex. Fin. Code Ann. § 302.002. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1476101/ | 145 F.2d 431 (1944)
THE MARET.
No. 8450.
Circuit Court of Appeals, Third Circuit.
Argued January 7, 1944.
Decided October 17, 1944.
*432 *433 Perry A. Beck, of New York City (Denzil Noll, of St. Thomas, V. I., on the brief), for appellant.
Charles Recht, of New York City (Osmond K. Fraenkel and Hyman Oppenheim, both of New York City, on the brief), for respondents.
Before BIGGS, JONES, and GOODRICH, Circuit Judges.
BIGGS, Circuit Judge.
The SS Maret, a ship of Estonian registry the beneficial ownership of which apparently rested in a number of Estonian citizens in a shipping copartnership under the style of "Tallinn Shipping Company, Ltd.",[1] arrived at the Port of St. Thomas in the Virgin Islands July 27, 1940.[2] The Maret had been engaged in carrying bauxite from Georgetown in British Guiana to St. Thomas. J. H. Winchester & Co., Inc., of New York City (hereinafter referred to as "Winchester") were her general agents. The Maret was under a time charter to Saguenay Terminals, Ltd. (hereinafter referred to as "Saguenay"), which required delivery of the Maret at a safe port north of Cape Hatteras.[3]
On June 17, 1940, the armies of the Union of Soviet Socialist Republics occupied Estonia and thereafter the Soviet Socialist Republic of Estonia was created. The Soviet Republic of Estonia promulgated certain decrees and enacted various statutes[4] which purported to nationalize ships of Estonian registry. An Estonian State Steamship Line was organized pursuant to a decree promulgated on October 29, 1940, by the People's Commissar of the Maritime Fleet.[5] By a proclamation published in the Estonian State Gazette[6] the Maret was transferred to the Estonian State Steamship Line. On July 19, 1940, a time charter was executed between "The Tallinn Shipping Company, Limited" as "owners" of the Maret and All Union Chartering Company (hereinafter referred to as "Sovfracht"),[7] a juridical entity or corporation organized under the laws of the Union of Soviet Socialist Republics. Sovfracht is the agency employed by the Soviet Republics and by the Estonian State Steamship Line for the chartering of vessels. The charter referred to provided for one "Far East round voyage", the charterer to supply bunkers and supplies. It was stipulated by the parties that Amtorg Trading Company (hereinafter referred to as "Amtorg"), a New York corporation, acted as "agent" for Sovfracht in connection with the Maret.[8]
*434 On or about July 31, 1940, the Maret being at St. Thomas, her master, Captain Jakob Hall, received from Winchester information that the Maret had been nationalized. Hall thereupon cabled Amtorg for instructions. Amtorg by a cablegram dated August 7, 1940, ordered Hall to procure bunkers and supplies and to proceed immediately to Murmansk. Hall then cabled Amtorg and asked for instructions as to the disposition of the charter party made with Saguenay, having in mind that clause of the charter providing that the Maret should be delivered to a safe port north of Cape Hatteras. He was instructed by Amtorg to disregard the provisions of the charter. Hall then cabled for instructions to certain individuals whom he considered to be the managers of the Maret and received contradictory directions from certain of them.[9] He then decided to take the Maret to Murmansk and requested advances from Amtorg to pay his crew and himself and to buy supplies, including bunkers for a "six thousand mile" voyage. The nature and dates of these advances will be discussed at a later point in this opinion.
On August 5, 1940, the Honorable Johannes Kaiv, acting Estonian Consul General at New York City, directed Hall to disregard any instructions to take the Maret to Murmansk. Since Hall was uncooperative, on August 13, 1940, Mr. Kaiv, acting purportedly pursuant to the authority of Article XXII of the Treaty between the United States and Estonia signed on December 23, 1925, 44 Stat. 2387,[10] and Paragraph 84 of the Estonian Consular Law,[11] sent him a cable dismissing him as master of the Maret. On September 17, 1940 the Consul General appointed Captain Leopold Truberg, an Estonian citizen and apparently one of the beneficial owners of the Maret, as her captain. Hall, however, refused to relinquish his command to Truberg and Truberg never took command of the ship.
At various times during the dispute as to ownership and control of the Maret, powers of attorney were executed by individuals who were among the beneficial owners of the Maret. In certain of these powers of attorney Mr. Kaiv as Consul General or a representative to be appointed by him were named as attorney-in-fact to take such acts as should be necessary to preserve the private property interests in the Maret. Other individuals who also were beneficial owners of the Maret, but who were resident in Estonia, executed powers of attorney making Mr. Charles Recht, one of the proctors for Amtorg in the case at bar, their attorney-in-fact. Some of the latter powers were revoked by subsequent instruments executed before the United States Consul at Helsinki.[12] We think that it is sufficiently clear from the record that Mr. Kaiv represented and does now represent several individuals who, absent the requisition of the Maret by the United States Maritime Commission, hereinafter referred to, would have beneficial interests in the Maret and who presently have an interest in preserving the fund in the hands of the Treasurer of the United States.
On August 3, 1940, Sovfracht cabled Amtorg in New York naming about eighteen "Estonian Latvian" ships, described as being "chartered on time charter * * * at present in American and Canadian port waters",[13] and directed Amtorg to follow the movement of the ships, to get in touch with the captain of each and, if necessary, *435 to arrange to have an agent supply bunkers and provisions for them. Sovfracht also directed Amtorg to telegraph or cable information concerning the status of each steamship.
On the back of Exhibit 18, a cablegram dated August 2, 1940, from Amtorg to the Maret, appears a message written in pencil which was sent apparently by Saguenay to some undisclosed person, perhaps Winchester or West Indian Company, Ltd. (hereinafter referred to as "West Indian"), the latter apparently being an agent for the Maret at St. Thomas, requesting that instructions be given to the Maret to proceed to Norfolk, Virginia, in ballast in order that the ship might be delivered in accordance with the terms of her charter to Saguenay. This message ends with the sentence, "Captain replenish bunkers sufficient reach Norfolk with safe margin telegraph acknowledgment and sailing." On the 7th of August Amtorg cabled the Maret, "Tallinn transferred you 6,000 dollars take necessary bunkers and proceed to Murmansk direct."[14] It appears from the record that Captain Hall did not receive this money. On August 8, 1940, a cable signed "Amtorg Vassiliev" was sent to Sovfracht at Moscow quoting a cable sent by Hall to Amtorg, stating that he needed 750 tons of coal and provisions which would cost $11,000 to enable the Maret to proceed to Murmansk.[15] On August 12, 1940, Amtorg cabled to Hall, "Sovfracht transferring $11,000 to Winchester wire when sailing Murmansk."[16] It appears that Sovfracht did not transfer this money to Winchester, but that funds were received later as indicated in the following paragraph. On August 19, 1940 Sovfracht cabled Amtorg, "Maret money being transmitted by Tallinn."[17]
On August 27, 1940, Amtorg transferred by cable to Hall as master of the Maret $3,000 for "crew's wages".[18] On September 9, 1940, Amtorg cabled to West Indian $11,000 following further requests by Hall for funds.[19]
Claimant's Exhibit No. 9 is a bill of West Indian totalling $11,342.77, dated September 13, 1940. It includes a charge of $7,545.91 for 849 tons of coal, shipchandler's charges of $1,339.73, a charge of cash delivered to Captain Hall of $1,500, and other smaller charges for water, pilotage, medical attention, and similar items. Johannes Rasmussen, an accountant for West Indian, testified that no coal was put on board the Maret until West Indian had received the cabled draft from Amtorg referred to. He subsequently modified this statement by saying that 199 tons of coal were put on board the Maret on July 30, 1940, and 650 tons on September 12, 1940.[20] The evidence as to the date of payment by West Indian of the Maret's shipchandler's bill cannot be definitely settled from the present record,[21] nor is it clear when the other disbursements included in West Indian's bill were made by that company on behalf of the Maret.[22] It also appears that Mr. Charles Recht gave Mr. Julius Niin, the first officer of the Maret, the sum of $300[23] while on a trip to St. Thomas. This payment was made about March 26, 1941.
*436 In the latter part of 1940[24] Captain Truberg filed[25] a possessory libel against the Maret in the District Court of the Virgin Islands at "Civil No. 29 1940." Amtorg intervened in this suit. Because of a joint petition by the parties to the court for a general continuance, this case was not decided and has now probably become moot by reason of the requisitioning of the Maret by the War Shipping Administration, referred to more specifically hereinafter. Some of the evidence taken in the proceeding and certain exhibits were introduced into the case at bar by stipulation of the parties.[26]
On September 16, 1941, the Maret, still at St. Thomas, was requisitioned by the War Shipping Administration acting for the United States Maritime Commission.[27] The requisition was effected in accordance with an Executive Order of the President of the United States, made pursuant to the Act of June 6, 1941, c. 174, 55 Stat. 242. Section 1 of the Act, 50 U.S.C.A.Appendix § 1271, provides that upon the requisitioning of a foreign vessel by the Maritime Commission "* * * just compensation shall be determined and made to the owner * * * of any such vessel in accordance with the applicable provisions of section 902 of the Merchant Marine Act, 1936, as amended * * *." Section 1 requires also "That such compensation * * * shall be deposited with the Treasurer of the United States * * * and shall be subject to be applied to the payment of the amount of any valid claim by way of * * * maritime lien * * * upon such vessel * * * subsisting at the time of such requisition * * *."
By Section 3(a) of the Act of March 24, 1943, c. 26, 57 Stat. 45, 50 U.S. C.A.Appendix § 1271, the second proviso of Section 1 of the Act of June 6, 1941 was amended to read as follows: "Provided further, That such compensation hereunder, or advances on account thereof, shall be deposited with the Treasurer of the United States, and the fund so deposited shall be available for the payment of such compensation, and shall be subject to be applied to the payment of the amount of any valid claim by way of mortgage or maritime lien or attachment lien upon such vessel, or of any stipulation therefor in a court of the United States, or of any State, subsisting at the time of such requisition or taking of title or possession; the holder of any such claim may commence prior to June 30, 1943, or within six months after the first such deposit with the Treasurer and publication of notice thereof in the Federal Register, whichever date is later, and maintain in the United States district court from whose custody such vessel has been or may be taken or in whose territorial jurisdiction the vessel was lying at the time of requisition or taking of title or possession, a suit in admiralty according to the principles of libels in rem against the fund, which shall proceed and be heard and determined according to the principles of law and to the rules of practice obtaining in like cases between private parties, and any decree in said suit shall be paid out of the first and all subsequent deposits of compensation; and such suit shall be commenced in the manner provided by section 2 of the Suits in Admiralty Act. * * *"[28]
*437 The Commission deposited with the Treasurer of the United States "on account of just compensation for the * * * [Maret] * * *" the sum of $25,000. See note 28 supra. This deposit is now available to compensate the holders of valid maritime liens on the Maret existing at the time of the requisition.
Pursuant to the amendment effected by Section 3(a) of the Act of March 24, 1943, Amtorg brought its suit in the court below seeking payment to it of a portion of the fund deposited with the Treasurer of the United States. Mr. Kaiv filed an answer as Consul General of the Republic of Estonia, as trustee or custodian under the principle of Estonian law known as negotiorum gestor,[29] and as attorney-in-fact for some of the owners of beneficial private interests in the Maret. The court below gave judgment for Amtorg in the amount of $15,187.77. Mr. Kaiv has appealed.
The primary question presented for our determination is whether or not Amtorg has a valid maritime lien for the advances made by it to Captain Hall or made by it to West Indian. A preliminary question must be disposed of, however. It is asserted by the appellee that Mr. Kaiv, as consul general or otherwise, has no standing in the suit and hence no right to appeal. We think that this contention cannot be sustained.
The libel alleges and the answer admits *438 that title to the Maret has passed by requisition to the United States Maritime Commission. Section 1 of the Act of June 6, 1941, 55 Stat. 241, provided in material part that just compensation shall be determined and paid by the Commission as authorized by the section to the person entitled thereto. The amendment to the second proviso provides for the payment of valid maritime claims against the vessel.[30] Obviously the compensation to be paid by the United States to the owner of a requisitioned vessel may be reduced by the amount of valid maritime liens or claims which may be asserted against the vessel. It follows that the owners of the Maret are interested in seeing to it that the vessel and its value are not subjected to invalid maritime claims which might be paid since the amount of their compensation for the vessel would be reduced correspondingly.
Mr. Kaiv's right to appear as a party and his right to appeal are based on the three contentions which we have stated. Properly executed powers of attorney from persons having beneficial interests in the Maret, filed in this proceeding, are in themselves sufficient to warrant his standing as a party and an appellant. The Treaty between the United States and Estonia is still in full force and effect and Mr. Kaiv's standing as a general consular agent for his government cannot be impeached successfully.[31] It has long been the law that the consular agents of nations are to be accorded the right to appear in our courts to protect their nationals and their nationals' property. The Bello Corrunes: The Spanish Consul, Claimant, 6 Wheat. 152, 5 L. Ed. 229. Mr. Kaiv's right to appear and to appeal is thus settled.
Section 30, subsection P of the Merchant Marine Act of June 5, 1920, c. 250, 41 Stat. 1005, 46 U.S.C.A. § 971, provides, "Any person furnishing * * * supplies * * *, or * * * necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel." Section 30, subsection R of the same Act, 46 U.S. C.A. § 973, provides in part that "* * * nothing in this chapter shall be construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence could have ascertained, that because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the * * * supplies, or other necessaries was without authority to bind the vessel therefor."
The Government of the United States has not recognized the absorption of the Republic of Estonia by the Union of Soviet Socialist Republics.[32] The Secretary of State of the United States has certified that "* * * the legality of the so-called `nationalization' laws and decrees, or of any of the acts of the regime now functioning in Estonia, is not recognized by the Government of the United States."[33] From the record before us it is apparent that the Soviet Republic of Estonia or the Union of Soviet Socialist Republics is the real party in interest in the suit at bar. The Estonian State Steamship Company and *439 Sovfracht are agencies of the Governments named. Amtorg is the general agent of Sovfracht for the Maret as is shown by the cablegrams passing between Sovfracht and Amtorg. Since the decrees purporting to nationalize the Maret have not been recognized by the Government of the United States, should it follow that the asserted ownership of the Maret by the Estonian State Steamship Company may not be recognized by the District Court of the Virgin Islands or by this court? Should the ownership of the Maret therefore be deemed to remain as it was prior to June 17, 1940, insofar as the record in this case discloses such ownership? Section 30, subsection P of the Act of June 5, 1920, as amended, the Merchant Marine Act, which we have quoted, provides that any person furnishing supplies or necessaries to a vessel upon the order of the owner of such vessel or of a person authorized by the owner, shall have a lien upon her. Since the decrees of nationalization made by the authorities and agencies of the Soviet Republic of Estonia and the Union of Soviet Socialist Republics have not been recognized by the Executive, should it be held that the supplies furnished to the Maret were not furnished upon the order of the owner?
A subsidiary question immediately suggests itself. Does Amtorg have the right in the light of the facts referred to in the preceding paragraph, to bring the suit at bar? We think that it has such a right.[34] Amtorg is a corporation of the State of New York and, without regard for its relation to its principal or principals, as a corporation of New York it must be held to be entitled to bring the suit at bar.[35]
A far more difficult question is raised in respect to the ownership of the Maret by the Estonian State Steamship Company. Whatever may have been the precise ownership of the Maret prior to the absorption of Estonia (see note 1, supra), it is clear that the beneficial interest in the Maret was possessed by citizens of the Republic of Estonia or by an Estonian corporation. It also may not be controverted that on June 17, 1940, the Union of Soviet Socialist Republics occupied Estonia and thereafter created the Soviet Socialist Republic of Estonia. That the government thus created was a government exercising general jurisdiction throughout the whole of Estonia is a matter of common knowledge. That government, as we have stated, passed the decrees of nationalization purporting to transfer ownership and title of vessels owned by Estonian nationals and of Estonian registry to the Estonian State Steamship Company. The question presented by the facts of the case at bar, however, are different in essential respects from those which were before the courts in such cases as M. Salimoff & Co. v. Standard Oil Co.,[36] 262 N.Y. 220, 186 N.E. 679, 89 A.L.R. 345; Banco de Espana v. Federal Reserve Bank, 114 F.2d 438, 441-445,[37] and The Denny,[38] 127 F.2d 404, decided by this court. Though the authorities *440 cited throw some light upon the controversy before us, they are not decisive and it is necessary therefore to embark upon a somewhat extended discussion of the point at issue under this phase of the case.
It is conceded by all authorities that the acts of the Executive in the "political" field are binding upon our courts. This was reiterated by the Supreme Court of the United States in its recent decision in United States v. Pink, 315 U.S. 203, 62 S. Ct. 552, 86 L. Ed. 796. In the Pink case Mr. Justice Douglas said at page 229, of 315 U.S. at page 565 of 62 S.Ct., 86 L. Ed. 796, "The powers of the President in the conduct of foreign relations included the power, without consent of the Senate, to determine the public policy of the United States with respect to the Russian nationalization decrees." The Court of Appeals of New York had disregarded the "assignment" provisions of the Litvinov Agreement which the Supreme Court held were binding upon all courts within the United States. After citing the Guaranty Trust Co. case, Mr. Justice Douglas said that the authority of the Executive to determine a political matter such as the recognition of a foreign government "* * * is not limited to a determination of the government to be recognized. It includes the power to determine the policy which is to govern the question of recognition." We think that the solution to our problem is suggested by the sentence last quoted. See also United States v. Belmont, 301 U.S. 324, 328, 57 S. Ct. 758, 81 L. Ed. 1134, and Oetjen v. Central Leather Co., 246 U.S. 297, 38 S. Ct. 309, 62 L. Ed. 726.
Obviously the recognition or nonrecognition of the Soviet Republic of Estonia is a political question for the determination of the Executive. But is the question of recognition or nonrecognition of the decrees of an unrecognized government which actually governs likewise a political matter for the sole determination of the Executive under the circumstances of the case at bar? To so conclude would mean that the nonrecognition of decrees by the Executive would be binding on the courts of this country adjudicating interests in property within the jurisdiction of the United States, interests now claimed by an agency of the unrecognized government but which belonged formerly to other persons, persons now subject to the decrees of the unrecognized government. This frames the issue before us.
Much has been written as to the proper determination of such issues and the views expressed by the decisions of the courts and by the writers of learned articles are not in harmony. In "The Unrecognized Government in the American Courts", it is urged that recognition or nonrecognition by the Executive should have little or no effect upon judicial determinations by the courts made in respect to rights in property claimed by a foreign sovereign or by foreign nationals. Mr. Borchard asserts, "The question is one of the plaintiff's existence as a government, not its diplomatic recognition. Whether the plaintiff is a government is susceptible of proof quite independent of executive pronouncement. The right to sue is more than a mere matter of diplomatic comity; it is an elementary consequence of the right to possess property."[39] See also Connick, "The Effect of Soviet Decrees in American *441 Courts", 34 Yale Law Journal 499, 505 et seq., and Fraenkel, "The Juristic Status of Foreign States, Their Property and Their Acts", 25 Columbia Law Review 544. Compare, however, the early decision of the Supreme Court in United States v. Rice, 4 Wheat. 246, 4 L. Ed. 562. Mr. Borchard suggests that there is a logical approach to the problem on the ground as to whether or not the foreign law invoked is or is not in conflict with the public policy of the forum. Such an approach was attempted by Judge Cardozo in Fred S. James & Co. v. Second Russian Ins. Co., 239 N.Y. 248, 146 N.E. 369, 37 A.L.R. 720. Judge Cardozo elucidated a similar approach in Sokoloff v. National City Bank of New York, 239 N.Y. 158, 145 N.E. 917, 37 A.L.R. 712. Cf. Judge Crane's opinion in Sokoloff v. National City Bank of New York, 250 N.Y. 69, 164 N.E. 745. See also Wulfsohn v. Russian, etc., Republic, 234 N.Y. 372, 138 N.E. 24, which cites decisions of the English courts as authority for the proposition that except where the existence of a government becomes a political question affecting neutrality laws, the recognition of the decrees of prize courts or similar questions, the fact of the existence of such a government may be proved in other ways than by the determination of the Executive. Cf. Banque de France v. Equitable Trust Co., D.C., 33 F.2d 202, 206. In the cited case Judge Goddard, after referring to the views expressed by Judge Cardozo in the Sokoloff case, said, "Justice requires that effect should be given by our courts, even though we do not recognize the Russian Government, to those acts in Russia upon which the rights of our citizens depend, provided that in so doing our judicial department does not encroach upon or interfere with the political branch of our government."[40] citing Hervey, "Legal Effects of Recognition in International Law", Chapter 7. It will be noted that Judge Goddard laid emphasis on the fact that "American" nationals were involved and that to prohibit them from asserting title to the gold, or to the chose-in-action which represented it, would in all probability have subjected them to double liability. This was in substance the ratio decidendi of Russian Reinsurance Co. v. Stoddard, 240 N.Y. 149, 147 N.E. 703. But in the case last cited, Judge Lehman stated at page 158 of 240 N.Y., 147 N.E. at page 705, "* * * until the State Department has recognized the new establishment [the U.S.S.R.], the court may not pass upon its legitimacy or ascribe to its decrees all the effect which inheres in the laws or orders of a sovereign." Judge Lehman went on to say, however, "It [the Executive] cannot determine how far the private rights and obligations of individuals are affected by acts of a body not sovereign, or with which our government will have no dealings. That question does not concern our foreign relations. It is not a political question, but a judicial question. The courts in considering that question assume as a premise that until recognition these acts are not in full sense law. Their conclusion must depend upon whether these have nevertheless had such an actual effect that they may not be disregarded. In such case we deal with result rather than cause. We do not pass upon what such an unrecognized governmental authority may do, or upon the right or wrong of what it has done; we consider the effect upon others of that which has been done, primarily from the point of view of fact rather than of theory."
It will be observed from the words quoted that the Court of Appeals of New York has considered recognition by our Executive as an affirmative declaration of policy which forecloses our courts from questioning the legal effects of decrees made by the recognized government. On the other hand the New York Court has treated nonrecognition of a foreign sovereign by our Executive as having a purely negative effect, one which leaves our courts free to determine the result of what has been done by the unrecognized sovereign. While the facts upon which the Court of Appeals rendered its decision in Russian Reinsurance Co. v. Stoddard may be distinguished from those of the case at bar since neither a foreign sovereign nor the agent of a foreign sovereign claimed the funds and securities in the Russian Reinsurance Co. case, the fact remains that that Court regarded nonrecognition by the Executive as freeing it from a regard for the *442 executive action. This we think is contrary to the doctrine enunciated by Mr. Justice Douglas in the Pink case which we have quoted. We conclude that no valid distinction can be drawn between the political or diplomatic act of nonrecognition of a sovereign and nonrecognition of the decrees or acts of that sovereign. As Mr. Justice Douglas said in the Pink case, the political matter of the recognition of a foreign government is not limited to a determination of the government to be recognized, but "It includes the power to determine the policy which is to govern the question of recognition." We think that these words are as apt to a policy of nonrecognition of a foreign sovereign when demonstrated by our Executive as they are to a policy of recognition by our Executive.[41] Nonrecognition of a foreign sovereign and nonrecognition of its decrees are to be deemed to be as essential a part of the power confided by the Constitution to the Executive for the conduct of foreign affairs as recognition.
When the fact of nonrecognition of a foreign sovereign and nonrecognition of its decrees by our Executive is demonstrated as in the case at bar, the courts of this country may not examine the effect of decrees of the unrecognized foreign sovereign and determine rights in property, subject to the jurisdiction of the examining court, upon the basis of those decrees.[42] A policy of nonrecognition when demonstrated by the Executive must be deemed to be as affirmative and positive in effect as a policy of recognition.[43]
We think that what we have just said is the underlying principle which governs the decisions of such cases as Silberberg v. The Kotkas, D.C., 35 F. Supp. 983; The Regent, D.C., 35 F. Supp. 985; The Kuressaar, 1941 A.M.C. 1190, 1192-1193; The Signe, D.C., 39 F. Supp. 810, affirmed sub nom. The Florida, 5 Cir., 133 F.2d 719, certiorari denied 319 U.S. 774, 63 S. Ct. 1439, 87 L. Ed. 1721, sub nom. Tiedemann et al. v. Estoduras S. S. Co., Inc.[44] But in the case at bar, we have pointed out, an unrecognized sovereign itself, the Soviet Republic of Estonia, is the actual party in interest. A fortiori it may not be heard to assert a claim based upon ownership of the Maret. To permit it to do so would nullify the effect of nonrecognition by our Executive. We think that the Supreme Court in the Pink case in effect states this principle. Cf. the decision of the House of Lords in The Arantzazu Mendi, [1939] App.Cas. 256. Compare also the cases of Russian Government v. Lehigh Valley R. Co., D.C., 293 F. 133; Id., D.C., 293 F. 135.
We conclude, therefore, in view of the position taken by the Executive, that neither the District Court of the Virgin Islands nor this tribunal can recognize the Estonian State Steamship Company as the owner of the Maret.[45] Since the decrees of nationalization and transfer made by the Soviet Republic of Estonia may not be recognized, we cannot hold that the supplies furnished to the Maret were furnished upon the order of her owner.
While it is the law that the captain of a vessel is deemed to be generally authorized by the owner to procure supplies necessary for her operation or preservation *443 and Captain Hall was in charge of the Maret when the supplies furnished by West Indian were put aboard her, the effect of such implied authorization is destroyed by the language of Section 30, subsection R of the Merchant Marine Act of June 5, 1920, c. 250, 41 Stat. 988, 1005, 46 U.S.C. A. § 973, which specifically provides that no lien shall be conferred "* * * when the furnisher knew, * * * for any other reason, the person ordering the * * * supplies, or other necessaries was without authority to bind the vessel therefor." Amtorg knew that the charter party made by the charterers with Saguenay required the vessel to be delivered to a safe port north of Hatteras. Amtorg expressly ordered Hall to disregard this clause of the charter party with Saguenay. Amtorg knew, or with reasonable diligence could have ascertained and was in fact chargeable with the knowledge that the decrees of nationalization and transfer of the Maret were not recognized by the Government of the United States and that therefore the Estonian State Steamship Company or the Soviet Republic of Estonia were not the owners of the Maret and were without authority to bind a maritime lien upon her. It follows, therefore, that Amtorg cannot be subrogated generally to West Indian's furnisher's lien assuming that West Indian itself had such a lien.
But quite aside from the foregoing, it is clear that Amtorg was purporting to act as the general agent for the Maret under the direction of Sovfracht. The Maritime Lien Acts did not change the general maritime law. Marshall & Co. v. The President Arthur, 279 U.S. 564, 567, 49 S. Ct. 420, 73 L. Ed. 846. It has been repeatedly held that a general agent cannot obtain a maritime lien. The West Irmo, 3 Cir., 1 F.2d 87; The Eurana, 3 Cir., 1 F.2d 684. See particularly The M. Vivian Pierce, D.C., 48 F.2d 644. Nor is a general agent entitled to subrogation to the lien of the supplier of necessaries under the circumstances presented by the case at bar. See Galatis v. Galatis, 5 Cir., 55 F.2d 571, 574. Compare The Cimbria, D.C., 214 F. 128, 129. Since Amtorg is shown by the record to have acted as a general agent it can have no lien by way of subrogation for the sums advanced by it to Captain Hall and to West Indian except perhaps to the very limited extent dealt with hereafter in this opinion. On the other hand, if Amtorg had no authority to deal with the Maret because its principals were not the vessel's owners, the decrees and proclamations of the Soviet Socialist Republic of Estonia being incapable of recognition by the courts of this country, Amtorg, as we have pointed out, can have no lien under subsection P of Section 1 of the Merchant Marine Act.
But aside from the foregoing, most of Amtorg's claim to a maritime lien is void for other cogent reasons. The greater part of the coal put on board the Maret was delivered after West Indian had received the cabled draft for $11,000 from Amtorg. 199 tons were put upon the Maret on July 30, 1940. 650 tons were put on board on the night of September 11-12, 1940.[46] According to the bill of West Indian to the Maret (Claimant's Exhibit No. 9), 849 tons in all were furnished to the Maret at a price of $7,545.91. The cost was 44 shillings a ton. It is obvious that 650 tons of coal of a value of about $5,775 were paid for in advance by Amtorg and West Indian could have had no lien for this sum and therefore no lien existed to which Amtorg conceivably could have been subrogated.[47] It also appears that at least $900 of the shipchandler's bill of $1,339.73 was paid by West Indian on the 14th of September and we think that the evidence warrants a finding that the shipchandler's supplies were delivered about September 10th or 11th, also after Amtorg's advance to West Indian had been received by the latter.[48] West Indian therefore could not *444 have had a lien upon the Maret for at least $900 of the shipchandler's bill. It also appears from Claimant's Exhibit No. 9 that the sum of $1,500 was advanced to Captain Hall apparently for the payment of his wages. It is so well settled as not to require citation of authority that a captain of a vessel cannot have a lien upon her for his salary. There is also an "agency fee" of $150 for which Amtorg could scarcely claim reimbursement.
The total of Claimant's Exhibit No. 9, West Indian's bill for advances to the Maret, is $11,342.77. If we deduct all of the items referred to from this total there is left the sum of approximately $3,000. Included in this amount are items which cannot be allocated as to time or in relation to the proposed voyage to Murmansk or to the necessity of preserving the Maret or outfitting her for a voyage to a safe port north of Hatteras or for further operations under the Saguenay charter. These items include charges for pilotage, medical attention, running lines, motor launch and motor car service, cable charges, commission on disbursements, and a charge shown as "Expenses: Sailor E. Sepman." Some of these items (pilotage is an example) might have been authorized by Captain Hall in his capacity as captain of the Maret prior to any dispute as to the ownership of the vessel or as to where she should voyage. See subsection Q of Section 30 of the Merchant Marine Act, 46 U.S.C.A. § 972. Such authorization would be valid without regard to the subsequent purported nationalization of the Maret or the events that transpired thereafter. In short, West Indian may have had a valid lien on the Maret for some of these advances properly incurred for the preservation and maintenance of the ship. See The Anna R. Heidritter, D.C., 289 F. 112, 114, and The Ascutney (Spice v. United States), D.C., 278 F. 991. If there are such items and Amtorg paid them by its advances to West Indian, Amtorg may be entitled to subrogation to the extent of its reimbursement of West Indian. Amtorg would be entitled to a lien to such a limited extent as would any other person who advanced money to pay the claim of one who had supplied necessaries to a ship. Such advances would not be made by Amtorg as the general agent of the Maret under the direction of Sovfracht. Amtorg could not be considered to be a mere volunteer in making the advances for in fact it would have reimbursed the ship's agent, West Indian, which had paid for supplies or itself had supplied necessaries to the Maret at the request of her captain acting for the benefit of the ship and her beneficial owners, the Estonian citizens hereinbefore referred to or as required to effect a valid and subsisting charter party, the Saguenay charter.
The record, however, is chaotic and insufficient evidence has been proffered to enable us to decide the questions referred to in the previous paragraph. The findings of fact made by the lower court are incomplete and no opinion was filed by it. We think that on the present record we can go no further to resolve the contentions of the parties. Without additional evidence we cannot determine the liability of the fund in the hands of the Treasurer of the United States in respect to the items referred to in the last preceding paragraph. Consequently, we deem it necessary to appoint a commissioner upon an open commission to take further evidence as to these issues. Our order will provide that on application to the commissioner, and in his discretion, leave may be granted to the parties to make new allegations, pray for different relief, or interpose new defenses in respect to the issues which remain undecided.[49]
Requests for findings of fact and conclusions of law to be based upon the opinion of this court shall be filed by the respective parties at such time or times as we shall direct.
Pending the report of the commissioner and the submission of requests for findings of fact and conclusions of law by the parties no final order will be entered by this court unless for cause hereafter shown.
GOODRICH, Circuit Judge (concurring).
This Court is not alone in finding difficulty in picking its way through the hard problems of political and legal consequences of recognition or nonrecognition, as the authorities cited above show. When our government recognizes the government of a foreign country that recognition can be in such terms and conditions as are mutually agreed upon. These terms and conditions are binding because, representing action by the federal government in its constitutional field, they are the supreme law *445 of the land. I find difficulty in seeing a parallel in the case of nonrecognition which seems to me simply absence of recognition. But in the absence of recognition of the foreign government, it seems not improper, in a litigated matter, to deny effect to an act of that government which purports to change the ownership of a chattel many hundreds of miles away from its borders. Therefore, I think the result reached is the correct one.
NOTES
[1] It is impossible on the record before us to ascertain the ownership of the vessel even prior to the occupation of Estonia. No finding of fact as to this issue was made by the court below.
[2] See appendix p. 24.
[3] A rider attached to this charter, designated "Baltime 1920 War Risks Clause", provided in part, "Steamer not to be sent on any voyage before Owners have been able to cover her full value against war risk". Libelant's Exhibit 12-A. Whether or not this charter had expired is not clear from the record.
We will give each exhibit the precise designation given to it in the court below. Inconsistencies and imperfections in designation and labeling of exhibits will be noted due in part at least to the introduction of most of the exhibits from the possessory libel action (at No. 29 1940 in the District Court of the Virgin Islands). See note 8, infra.
[4] See for example Claimant's Exhibit A-12, Claimant's Exhibit B-13 and Claimant's Exhibit E-16.
[5] See Claimant's Exhibit D-15.
[6] The "Riigi Teataja". See Libelant's Exhibits 113 and 122.
[7] "Sovfracht" is simply the cable name of All Union Chartering Company. We will use this designation since All Union Chartering Company is frequently thus referred to.
[8] A stipulation entered into by the parties at No. 29 1940 in the District Court of the Virgin Islands (this suit being a possessory libel referred to more specifically at a later point in this opinion), provides inter alia, "That the English name of Sovfracht * * * is The All Union Chartering Company, and [it] is an independent juridical entity organized under the laws of the Union of Soviet Socialist Republics, * * * under the general control of the People's Commissariat of Foreign Trade, which Commissariat is a governmental body; and that the Amtorg Trading Corporation acted as agent for Sovfracht in connection with the * * * Maret."
[9] See Exhibits Nos. 21 and 23. It does not appear whether these exhibits were introduced by the libelant or claimant in the suit at No. 29 1940.
[10] See "Treaty Series, No. 736", published by the Government Printing Office at Washington, D. C. We take judicial notice of this treaty.
[11] See Libelant's Exhibit No. 107, p. 9, as follows:
"If, on the complaint of the crew or in any other manner, the Consul shall ascertain that a master is not fitted to be in charge of a vessel without manifest peril to the crew, the vessel or its cargo, he shall immediately report the matter to the owner of the vessel or to the latter's local agent.
"If, due to circumstances, it is impossible to await the arrival of instructions from the owners of the vessel the Consul may discharge the master of the vessel and replace him provisionally by another master."
[12] See Libelant's Exhibits Nos. 11, 13.
[13] See Exhibit No. 25.
[14] See Exhibit No. 27.
[15] See Exhibit No. 34.
[16] See Exhibit No. 41.
[17] See Exhibit No. 52.
[18] See Exhibit No. 70.
[19] See Exhibit No. 90.
[20] See appendix, p. 76.
[21] See appendix, pp. 76-77.
[22] Amtorg originally claimed there was due to it a total of $15,642.77. The claim was amended without formal pleading (See Appellant's appendix, p. 18) to eliminate $500. Mr. Patten, of counsel for Amtorg, stated: "We are amending our claim to eliminate $500, an amount which we now find was handled by the West Indian Company and not by Amtorg Trading Corporation. Our claim is therefore reduced by the amount of $500; the sum now being $15,142.77 plus interest thereon at the rate of 6% from September 11, 1940, plus costs. That is our statement of what we are claiming in this case."
The court found for Amtorg in the sum of $15,187.77, plus interest and costs. It is not clear how the court arrived at the amount of its judgment. The sum of $500 eliminated by Mr. Patten apparently was advanced on April 17, 1941 by West Indian Company. See paragraph "Twelfth" of the libel in rem appendix, p. 5. See receipt signed by Mr. Niin and the members of the Maret presently attached to "P's" Exhibit No. 1 (introduced in the case before the District Court at No. 69 1942), letter of West Indian Company to Messrs. Rounds, Dillingham and Nagle.
The sum of $500 advanced on May 23, 1941, was not excluded. It does not appear from the record who made this advance. Apparently no proof was offered in this respect.
[23] See Libelant's Exhibit No. 2.
[24] The exact date is not apparent from the record and we have neither pleadings nor docket-entries in the suit at No. 29 1940 before us.
[25] See notes 4 and 8, supra.
[26] We note in passing that Finding of Fact No. 8 made by the court below states, "That the intervention and claim of the Amtorg Trading Corporation in Civil No. 29 1940 and the libel and complaint in this cause have been incorporated together for a trial and decision of these two causes." We assume that this finding of fact was entered by inadvertence. We think the finding amounts to nothing more than a statement by the District Court that certain evidence and documents received in evidence in No. 29 1940 have been received as evidence in this case.
[27] Executive Order of Feb. 7, 1942, No. 9054 (See 7 F.R., No. 28,837, Feb. 10, 1942) established the War Shipping Administration and transferred to it certain functions and duties of the United States Maritime Commission.
[28] There is no issue raised in the case at bar as to the period of limitation set out in Section 3(a) of the Act of March 24, 1943. On July 2, 1942, notice of the deposit with the Treasurer of the United States by the War Shipping Administration vice the Maritime Commission was published in the Federal Register. See F.R. Doc. 42-6221. The suit at bar in the District Court of the Virgin Islands at its No. 69 1942, was filed November 17, 1942.
While Section 3(a) gives a right to the claimant to bring suit in "the United States district court" from the custody of which the vessel was taken, we think that it was the intention of Congress to include such suits within the jurisdiction of the District Court of the Virgin Islands despite the fact that that court is not, speaking strictly, a "United States district court". For analogy see Balzac v. Porto Rico, 258 U.S. 298, 312, 42 S. Ct. 343, 66 L. Ed. 627; Ex parte Bakelite Corp., 279 U.S. 438, 49 S. Ct. 411, 73 L. Ed. 789; O'Donoghue v. United States, 289 U.S. 516, 535, 53 S. Ct. 740, 77 L. Ed. 1356. The District Court of the Virgin Islands has frequently been included in legislation pertaining to the United States Courts. See Act of Aug. 7, 1939 c. 501, 53 Stat. 1223, 28 U.S.C.A. § 444 et seq. providing for the Administration of the United States Courts. This act treats the District Courts for the various territories and possessions in the same manner as the United States Courts in continental United States. The term United States District Court as used in Section 3(a) was undoubtedly employed in the sense of a United States court having admiralty jurisdiction. See also Sec. 28 of the Act of June 22, 1936, c. 699, 49 Stat. 1814, 48 U.S.C.A. § 1406 specifying the jurisdiction of the District Court of the Virgin Islands.
The Act of June 6, 1941, 55 Stat. 242, 50 U.S.C.A.Appendix § 1271, authorizes the President to requisition "any foreign merchant vessel which is lying idle in waters within the jurisdiction of the United States, including the Philippine Islands and the Canal Zone, * * * necessary to the national defense." We think that the inclusion of the Philippine Islands and the Canal Zone is not by way of limitation of the powers of the President but by way of their enlargement. Obviously, a vessel lying in a port in the Virgin Islands is in waters subject to the jurisdiction of the United States. The bill (H.R. 4466) as originally drafted did not contain the phrase "including the Philippine Islands and the Canal Zone". Senate Report No. 277 (77th Cong. 1st Sess.) explains the purpose of the amendment as follows: "* * * [it] expressly includes as part of the United States for the purposes of the section, the Canal Zone and the Philippine Islands, which have a special character under existing statutes and may not otherwise be included in the jurisdiction of the United States for the purposes of the bill." The report contains a letter from Chairman E. S. Land to the Hon. S. O. Bland, Chairman, Committee on Merchant Marine and Fisheries. Admiral Land declares in urging the enactment of the bill that "some 70 vessels (Danish, Italian, and German) in ports of the United States and its possessions, including the Canal Zone and the Philippine Islands, have been taken into protective custody. It is suggested that the bill be amended so as to permit the use, under its provisions, of any immobilized tonnage that may be acquired by the United States by means other than voluntary transfer." It is evident that the legislature intended to include ships in the ports of territorial possessions such as the Virgin Islands. See the Virgin Islands Acquisition Act, 48 U.S.C.A. § 1391, 1394-1396. Since Congress intended vessels there lying idle to be acquired by the President for war purposes, Congress must have intended persons holding liens upon such vessels to be compensated as provided by the Act of March 24, 1943.
[29] This is a doctrine of the civil law. It embraces a principle of volunteer trusteeship of property entered into by some person in the absence or incapacity of the owner of the property in order to protect it. See 2 Bouv. Law Dict., Rawle's Third Revision, p. 2331.
[30] The amendment was effected, as we have said by Section 3(a) of the Act of March 24, 1943, 57 Stat. 45.
[31] A letter dated December 20, 1940, signed by Mr. Loy W. Henderson, Assistant Chief, Division of European Affairs, addressed to Mr. Beck, of counsel for Mr. Kaiv, states, inter alia, that the government of the United States "regards as still in force the Treaty of Friendship, Commerce, and Consular Rights between the United States and Estonia, signed on December 23, 1925." and states that "This government also continues to recognize Mr. Johannes Kaiv as Acting Consul General of Estonia in New York."
This letter, which accompanied a copy of the treaty referred to in note 10, supra, is marked "Libell #3 for identification not admitted." We will admit it for the purpose of this suit since the case at bar is before us de novo. The admission, however, is made subject to subsequent objection by the parties as to its authenticity or relevancy.
[32] See the Certificate of the Secretary of State, Libelant's Exhibit 117.
[33] See Libelant's Exhibit 118. The certificate of the Secretary of State is dated April 15, 1941. It refers to the Soviet Republic of Estonia. The City of Tallinn did not fall to the Germans until August 29, 1941. See Americana Annual, Americana Corporation, p. 264.
[34] In so deciding it is not necessary to deal with any question raised by the nonrecognition by the Executive of the decrees purporting to nationalize the Maret. See such cases as Russian S. F.S. Republic v. Cibrario, 235 N.Y. 255, 139 N.E. 259, and Republic of China v. Merchants' Fire Assur. Corp. of New York, 9 Cir., 30 F.2d 278, which have been criticized by learned writers. See Borchard, "The Unrecognized Government in the American Courts", 26 American Journal of International Law 261, but observe that certain of these cases were cited by Mr. Justice Stone in Guaranty Trust Co. v. United States, 304 U.S. 126, 137, 58 S. Ct. 785, 82 L. Ed. 1224, as definitive of the proposition that an unrecognized government could not maintain a suit in our courts.
[35] See the interesting commentary on the employment of this corporate entity in Briggs, "Non-Recognition in the Courts: The Ships of the Baltic Republic.", 37 American Journal of International Law, 585, 595-596.
[36] In the cited case, Salimoff sought to maintain an action in the Supreme Court of New York for oil expropriated by the Union of Soviet Socialist Republics. The Court of Appeals of New York stated, "The oil property confiscated was taken in Russia from Russian nationals. A recovery in conversion is dependent upon the laws of Russia. * * * When no right of action is created at the place of wrong, no recovery in tort can be had in any other state on account of the wrong." [262 N.Y. 220, 186 N.E. 682, 89 A.L.R. 345].
[37] In this case the then Spanish Ambassador, recognized by the State Department, arranged for the transfer of silver to the Federal Reserve Bank at New York. Before any payments were made, the Spanish Government which had arranged for the transfer was overthrown. The Treasury Department of the United States none the less paid the amount due on the silver and completed the acquisition of possession. Judge Clark, speaking for the Circuit Court of Appeals for the Second Circuit (See 114 F.2d at pages 442, 443) stated that the courts will leave for the Executive the determination of all "political" issues; that this meant such matters in the international field "as the recognition of new governments or the making of treaties, not the direct determination of questions of property." He went on to say, "The governmental acts of a foreign country done within its own borders are not subject to examination in our courts." The Court held that since the governmental acts performed by the former Spanish Government were valid when done and since "* * * there has been * * * prompt acceptance of the money payments made by our government * * *", the assertion that the Federal Reserve Bank had engaged in a void or voidable transaction could not be countenanced.
[38] In The Denny, 127 F.2d 404, this court held that acknowledgments and authentications of powers-of-attorney made before a public officer (the equivalent of a notary) of the Soviet Republic of Lithuania were sufficient and were admissible as evidence of proof of agency. The corporations which had owned The Denny and her cargo had been nationalized by the Soviet Republic of Lithuania.
[39] See "The Unrecognized Government in the American Courts", at p. 266, cited in note 34 supra.
[40] In this case the Equitable Trust Co. had received gold which the Banque de France had entrusted for safe keeping to the State Bank of the Russian Empire at Petrograd. The State Bank of the Union of Soviet Russian Republics had taken over the Bank of the Empire and had sent the gold to New York where it was claimed by the Bank of France.
[41] Compare the circumstances of the Pink case.
[42] See and compare Kelsen, "Recognition in International Law. Theoretical Observations", 35 American Journal of International Law, 605, and the comment thereon by Mr. Brown and Mr. Borchard in 36 American Journal of International Law, at pp. 106 and 108 respectively.
[43] Indeed the Executive has made its position doubly plain, not only negatively by nonrecognition, but by affirmative orders "freezing" the property of citizens of the Baltic Republics, including the former Republic of Estonia, to prevent their transfer to the detriment of their nationals. See Executive Order No. 8389 of April 10, 1940, amending Executive Order No. 6560 of January 15, 1934, as supplemented by Executive Order No. 8484 of July 15, 1940, 12 U.S. C.A. § 95 note.
[44] See the cases cited and discussed in Briggs, "Non-recognition in the Courts, etc.", supra.
[45] There is an apparent inconsistency in holding that Amtorg, an agent of an unrecognized principal, may bring the suit at bar, while not recognizing the right of the principal to recover. This apparent inconsistency will disappear, we believe, on careful consideration of the facts and the law. Without embarking on a prolonged discussion of this subject, we think that it is enough to say that an agent frequently may have the capacity to bring a suit which on the facts must be decided against him and his principal. See the comment in Mr. Briggs' article cited in note 43 supra.
[46] See appendix p. 76.
[47] In making this statement we are not unmindful of the provisions of subsection P of Section 30 of the Act of June 5, 1920, the Merchant Marine Act, 46 U.S.C.A. § 971, that any person furnishing supplies or other necessaries to a vessel shall have a lien "and it shall not be necessary to allege or prove that credit was given to the vessel." This provision was contained in Section 1 of the Act of June 23, 1910, 36 Stat. 604, 46 U.S.C.A. § 971 note, and was discussed at length by this court in The Yankee, 3 Cir., 233 F. 919, 922-925. The language of subsection P permits the libelant in the words of Judge Woolley in The Yankee, supra, 233 F. at page 925 "* * * [to] dispense with proof that credit was given the vessel * * *," but the language of the subparagraph will not serve to create a lien where supplies are paid for in advance. In such a case there is no debt or charge to be secured by lien or otherwise.
[48] See appendix pp. 76-77.
[49] See our Rule 25. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2379040/ | 866 S.W.2d 706 (1993)
NATIONAL COMMERCE BANK, Appellant,
v.
David C. STIEHL and Patricia Stiehl, Appellees.
No. 01-92-00663-CV.
Court of Appeals of Texas, Houston (1st Dist.).
November 10, 1993.
Kathleen Cynthia Pickett, Kathleen Cynthia Pickett & Associates, Houston, for appellant.
Woodrow Epperson, Houston, for appellees.
Before OLIVER-PARROTT, C.J., and O'CONNOR and WILSON, JJ.
*707 OPINION
OLIVER-PARROTT, Chief Justice.
In accordance with Tex.R.App.P. 79(e) and 90(e), Justice Mirabal requested en banc consideration of this case. The request was overruled by a vote of six to three.
This is an appeal from a judgment: (1) declaring no liability on a deficiency claim in favor of David C. and Patricia A. Stiehl, appellees; and (2) awarding nothing to National Commerce Bank (NCB),[1] appellant, on its counterclaim. We reverse and remand.
Background
On December 21, 1988, appellees, along with their son and daughter-in-law, Steve and Shannon Stiehl (the Stiehl Children), executed a note for $24,000. On the same day, as part of the same transaction, the Stiehl Children executed a second note in the amount of $20,000. Both notes contained identical cross-collateralization provisions secured by certain real estate owned by the Stiehl Children, under a deed of trust executed only by the Stiehl Children as grantors and owners of the property. Additionally, both notes contained identical cross-default provisions, essentially stating that a default in either note would constitute a default in the other note.
On August 7, 1990, the Stiehl Children defaulted on the $20,000 note, and NCB gave timely, certified mail notices of default and foreclosure to the Stiehl Children. No payment was made, and NCB declared default and posted the realty for foreclosure. All notices referenced the $20,000 note only. After the foreclosure sale, appellees defaulted on the $24,000 note and instituted suit seeking a declaratory judgment relieving them from liability on the $24,000 note on the grounds of wrongful foreclosure, due to NCB's failure to provide notice to appellees of the actions it took pertaining to the $20,000 note and the realty. NCB filed a counterclaim seeking payment on the outstanding principal and interest of the note and attorney's fees.
In its first point of error, NCB asserts the trial court erred in refusing to make additional, omitted, and amended findings and conclusions as requested.
A trial judge is required to file findings that were made by him in support of his judgment. Wagner v. Riske, 178 S.W.2d 117, 119 (Tex.1944); Hazelwood v. Jinkins, 580 S.W.2d 33, 35 (Tex.Civ.App.Houston [1st Dist.] 1979, no writ). The trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence to support them. Nelkin v. Panzer, 833 S.W.2d 267, 268 (Tex.App.Houston [1st Dist.] 1992, writ dism'd w.o.j.). The same standards are applied in reviewing the legal or factual sufficiency of the evidence supporting a jury's answer to a jury question. Polland & Cook v. Lehmann, 832 S.W.2d 729, 734 (Tex. App.Houston [1st Dist.] 1992, writ denied). Although a trial court's conclusions of law may not be challenged for factual insufficiency, the trial court's conclusions drawn from the facts may be reviewed to determine their correctness. Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App.Houston [1st Dist.] 1986, writ ref'd n.r.e.).
After a trial judge has filed findings of fact and conclusions of law, a party may request additional findings, and the judge is required to prepare and furnish amended findings and conclusions as may be proper. Tex.R.Civ.P. 298.
In this case, the trial judge did not make a finding on appellees' legal status under the $20,000 note or the deed of trust. The record shows that NCB made several requests for additional, omitted, and amended findings on the ultimate issues raised by the pleadings and the evidence, and necessary to understanding the trial court's judgment. Therefore, we cannot presume that there are facts, or that the trial court found facts, necessary to support and uphold its conclusions and judgment. Gunter v. Pogue, 672 S.W.2d 840, 841-42 (Tex.App.Corpus Christi 1984, writ ref'd n.r.e.); Hazelwood, 580 S.W.2d at 33.
*708 The first point of error is sustained.
In its second point of error, NCB contends, as a matter of law, there is no evidence to support the court's findings, conclusions, or judgment. The resolution of this appeal turns on the legal effect of the cross-default provisions in the two separate notes, and whether they elevate appellees' legal status to make them debtors in default on the $20,000 note.
Compliance with notice conditions contained in a deed of trust and as prescribed by law is a prerequisite to the right of the trustee to make a sale. Houston First American Sav. v. Muscik, 650 S.W.2d 764, 768 (Tex.1983). The holder of the debt is only required to serve the "debtor in default under the deed of trust" with the requisite written notice. Tex.Prop.Code Ann. § 51.002(d) (Vernon Supp.1993). The record reflects that NCB served the Stiehl Children, the debtors in default under the deed of trust, with requisite notice.
Appellees concede that they did not execute the $20,000 note; however, they argue that each note contains provisions concerning default in the other and collateral of the other, and thus, they were liable on both notes.[2] The only evidence introduced by appellees to support this proposition was the testimony by appellees that they believed they are liable on the $20,000 note, therefore, they were entitled to notice of the foreclosure sale on the property under the deed of trust.
However, the record clearly shows: (1) the only signatories to the $20,000 note were the Stiehl Children; (2) appellees neither signed, guaranteed, nor endorsed the $20,000 note; (3) the Stiehl Children were the sole grantors under, signatories to, and owners of the property covered by the deed of trust, and with the bank, were the only parties to the deed of trust; and (4) NCB foreclosed the property under the deed of trust solely as a result of the default under the $20,000 note and at no time, prior to the foreclosure, declared the $24,000 note in default.
There is no requirement under the deed of trust, for NCB to serve notice of the foreclosure sale on appellees because of the Stiehl Children's default on the $20,000 note. Hausmann v. Texas Sav. & Loan Ass'n, 585 S.W.2d 796, 797-800 (Tex.Civ.App.El Paso 1979, writ ref'd n.r.e.).
The second point is sustained.
In light of the disposition of the first two points of error, we reverse the trial court's judgment and remand for a new trial in accordance with this opinion.
MIRABAL, J., dissents from the refusal to hear the case en banc in an opinion in which DUGGAN and COHEN, JJ., join.
MIRABAL, Justice, dissenting.
I dissent from the refusal of the Court to hear this case en banc.[1]
The majority opinion states:
There is no requirement under the deed of trust, for NCB to serve notice of the foreclosure sale on appellees because of the Stiehl Children's default on the $20,000 note.
Op. at 708 (citation omitted). I disagree. The deed of trust clearly, and unambiguously, *709 required notice of the foreclosure sale to be sent to appellees prior to the sale.[2]
The Stiehl Children wanted to buy a home, but could not qualify for the needed financing on their own. To enable their son and daughter-in-law to obtain $44,000.00 worth of financing for the purchase of a home, appellees agreed to be co-signatories with the Stiehl Children on a note for $24,000. Additionally, the Stiehl Children, alone, signed a separate note for the balance of the financing, $20,000.00. The payment of both notes was secured by the home the Stiehl Children bought, both notes being "purchase-money notes" for the home.
The deed of trust defines the "Indebtedness" covered by the mortgage as:
All sums due pursuant to those 2 promissory notes ... of even date hereof ($24,000 and $20,000 notes) executed by Grantor [the Stiehl Children], and David C. Stiehl and Patricia Stiehl [appellees]....
The default provisions of the deed of trust include the requirement that, before the secured property (the home) is sold at a foreclosure sale, the
Beneficiary shall at least twenty-one (21) days preceding the date of the sale serve written notice of the proposed sale by certified mail on each debtor obligated to pay the Indebtedness according to the records of beneficiary.
(Emphasis added.)
The deed of trust is clear and unambiguous: The "Indebtedness" included the $24,000 note, signed by appellees as debtors. As a matter of law, appellees were entitled to prior notice of the foreclosure sale in accordance with the terms of the deed of trust. Houston First American Sav. v. Musick, 650 S.W.2d 764, 768 (Tex.1983) (compliance with the notice conditions contained in a deed of trust is a prerequisite to the right of the trustee to make a sale). This Court should address the effect of the lack of the required notice on the claims of the parties.
DUGGAN and COHEN, JJ., join in this opinion.
NOTES
[1] The notes were originally executed in favor of Plaza Del Oro National Bank, which was succeeded in interest by National Commerce Bank.
[2] The $20,000 Note:
Maker's failure to pay any principal or accrued interest owing on this note when due or the occurrence of any default under the deed of trust or any writing related to this note shall constitute default under this note, whereupon the holder of this note may elect to exercise any or all rights, powers, and remedies afforded (a) under the deed of trust and all writings related to this note and (b) by law, including the right to accelerate the maturity of this entire note.
(Emphasis added.)
The $24,000 Note:
Contemporaneously with execution of this promissory note, Maker hereof has executed a promissory note in the original sum of $24,000.00 payable to the Payee. Maker acknowledges and agrees that any default in its obligations as set forth in such $24,000 promissory note shall constitute an event of default herein and Payee or any other holder of this Note shall be entitled to exercise any and all of its remedies as set forth in this note.
(Emphasis added.)
[1] In accordance with TEX.R.APP.P. 79(e) and 90(e), a request was made for an en banc consideration of the case. The request was denied by a majority of the en banc court. I dissent from that vote refusing to hear this case en banc.
[2] Because the deed of trust is clear, I would hold the failure of the trial court to file additional findings of fact and conclusions of law was harmless. See Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex.1989); TEX.R.APP.P. 81(b). Accordingly, I would overrule NCB's first point of error. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2379043/ | 119 A.2d 444 (1956)
James C. JOHNSON, Appellant,
v.
DISTRICT OF COLUMBIA, Appellee.
No. 1721.
Municipal Court of Appeals for the District of Columbia.
Argued November 28, 1955.
Decided January 4, 1956.
Rehearing Denied January 20, 1956.
Myer Koonin, Washington, D. C., for appellant.
Richard W. Barton, Asst. Corp. Counsel, with whom Vernon E. West, Corp. Counsel, Chester H. Gray, Principal Asst. Corp. Counsel, Milton D. Korman and Hubert B. Pair, Asst. Corp. Counsel, were on the brief, for appellee.
Before CAYTON, Chief Judge, and HOOD and QUINN, Associate Judges.
QUINN, Associate Judge.
Appellant was convicted by a jury of driving an automobile while under the influence of intoxicating liquor.[1] The only error assigned is the refusal of the trial court to strike the testimony of the arresting officer. The appellant contends that his arrest, which was made without a warrant, was illegal because no misdemeanor was committed in the officer's presence or within his view.
The events leading up to the arrest took place on the morning of April 13, 1955. A police officer was patrolling his beat in the fifty-four hundred block of Georgia Avenue at approximately 3 A.M., heard a crash, looked in that direction and saw a man leave the Toddle House, a restaurant, enter a taxicab and drive away. A citizen drove up and gave the officer certain information,[2] as a result of which he got into the car and proceeded south on Georgia Avenue. When they were about a half a block north of the Toddle House, the officers saw a taxicab pull away from the *445 curb in a fairly normal fashion and proceed south. He overtook this vehicle and ordered the driver (appellant) to pull to the curb.
The officer testified that while conversing with appellant, he noticed appellant was unsteady on his feet, his speech fair, his eyes bloodshot, and his clothing soiled. He further testified that he called appellant's attention to loose change strewn on the front seat of the taxicab and observed that when appellant attempted to pick it up, he had trouble doing so. Based on these observations and appellant's statement to him that he had had "two beers that evening," it was the officer's conclusion that appellant had been driving under the influence of intoxicating liquor. Thereafter, the officer drove appellant back to the Toddle House, where it was ascertained that appellant had been in an argument with the counterman over the amount of his food check, and then to the precinct where he was charged with "driving while drunk."
Appellant argued in the lower court and urges here that his arrest being illegal, all "information or evidence that he [the officer] procured as a result of the arrest constitutes unlawful search and seizure * * *." We cannot accept this contention. The first question to decide is whether the arrest was unlawful. Here the officer, in the early hours of the morning, heard a crash; received certain information from a citizen and stopped appellant, and after conversing with and observing him, concluded that he was intoxicated. These circumstances justified the officer in stopping appellant and making inquiry. Exercising that right, he was not obliged to close his eyes to the condition of appellant, and mere observation did not constitute a "search."[3] If, after observing appellant, the officer believed him intoxicated, then a crime was committed in his presence justifying arrest without a warrant.[4] Courts are well aware that a person driving a vehicle on the public streets while under the influence of intoxicating liquor is a potential killer. The officer having a right to stop appellant, it was his basic duty to arrest him if, in his judgment, he concluded that he was operating the vehicle under the influence of intoxicating liquor.
Affirmed.
NOTES
[1] Code 1951, § 40-609(b).
[2] There was testimony that the citizen departed before the officer was able to obtain his name.
[3] Ellison v. United States, 93 U.S.App. D.C. 1, 206 F.2d 476.
[4] Holmes v. United States, 56 App.D.C. 183, 11 F.2d 569. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2379049/ | 20 N.J. 181 (1955)
119 A.2d 1
HYMAN KUTCHER AND JAMES KUTCHER, PLAINTIFFS-RESPONDENTS,
v.
HOUSING AUTHORITY OF THE CITY OF NEWARK, A BODY CORPORATE, DEFENDANT-APPELLANT.
The Supreme Court of New Jersey.
Argued October 10, 1955.
Decided December 19, 1955.
*182 Mr. Augustine J. Kelly argued the cause for appellant.
Mr. Emil Oxfeld argued the cause for respondents (Messrs. Rothbard, Harris & Oxfeld, attorneys).
*183 The opinion of the court was delivered by HEHER, J.
The plaintiff Hyman Kutcher was a tenant of the Housing Authority of the City of Newark, in Seth Boyden Terrace, a federally-aided low-rent housing project, and the co-plaintiff James Kutcher, Hyman's son, resided there in his father's apartment, when on December 18, 1952 the Authority demanded of the plaintiff Hyman Kutcher, by letter, "a certificate that no member of the family occupying" his apartment "is a member of any organization listed by the Attorney General of the United States as subversive," and set down, it was said, in the form of certificate enclosed. Of this, more hereafter. The addressee was advised that "If you and the members of your family do not belong to any of the organizations listed, have the head of the family sign the certificate," and the signature witnessed, and return it, dated, within three days, and that the Authority "will be obliged to take action to evict those families who do not file a signed certificate." Reference was made to the proviso of the Independent Offices Appropriation Act of 1953, Public Law 455, 82d Congress, 66 Stat. 403, 42 U.S.C.A., section 1411c, approved July 5, 1952, commonly known as the "Gwinn Amendment," that no housing unit constructed under the United States Housing Act of 1937, as amended, "shall be occupied by a person who is a member of an organization designated as subversive by the Attorney General," and the "foregoing prohibition shall be enforced by the local housing authority."
The plaintiff tenant refused to sign the tendered certificate.
It was stipulated below that the federal and state regulations "require that only those persons or families with income in the lowest income groups be permitted to occupy these dwellings as tenants"; that under the lease the plaintiff tenant "agreed to surrender possession whenever requested to do so by" the Authority, "upon the receipt of thirty days notice in writing," and "Further provision was made * * * for re-entry by the landlord in case of default in any of the provisions of the lease, with or without notice of an intention *184 to do so"; and that the plaintiff Hyman Kutcher "alleges that he is not a member of any organization of (sic) the Attorney General's list and his son" James, who resides in his apartment, "is a member of the Socialist Workers Party, an organization whose name does appear on said list."
Defendant was enjoined from bringing eviction proceedings. The finding was that the proposed certification was not within the requirement of the Gwinn Amendment. Plaintiffs say the Amendment cannot be constitutionally applied to them and, if it be constitutional, the Authority's action was beyond the statute and ultra vires. The Authority insists the Amendment is applicable and, moreover, it has "contractual rights" entitled to recognition and protection, "irrespective of [its] motive in asserting those rights," i.e., its contractual right to "terminate the monthly tenancy created by the lease," which it elected to do, "by the giving of the notice as provided in the agreement"; and the tenant having failed to vacate at the time specified in the notice, the court "has no power, under the law of this State, to interfere with the exercise of the rights conferred" upon the Authority "by the contract voluntarily" made by the parties.
The asserted constitutional deficiency, as we understand it, is that the tenant's association with a listed organization does not of itself establish, even prima facie, reasonable grounds for belief in the tenant's disloyalty, and a state agency may not "discriminate against members of any such organization solely on the basis of membership therein," nor "arbitrarily prevent any of its citizens from enjoying these statutorily created privileges"; and the "exclusion of otherwise qualified persons solely because of membership in organizations designated as subversive by the Attorney General has no tendency whatever to further" the statutory purpose of eliminating "slums" and providing "housing for persons of low income" and, since association alone is enough, even though innocent, there is that "indiscriminate classification" which must fall as an exertion of arbitrary power, and the "oath offends due process." The argument is drawn from these cases, among others: Wieman v. Updegraff, 344 U.S. *185 183, 73 S.Ct. 215, 97 L.Ed. 216 (1952); Housing Authority of City of Los Angeles v. Cordova, 130 Cal. App.2d Supp. 883, 279 P.2d 215 (App. Dept. Super. Ct. 1955).
The Supreme Court of Wisconsin lately declared that "there is a complete absence of any congressional finding, of any activity of subversive organizations which threatened the carrying out of federally aided housing projects, to support the enactment of the Gwinn Amendment, or of any evidence produced before congressional committees tending to establish the existence of such evil," and the court "deems the possible harm which might result in suppressing the freedoms of the First Amendment (of the United States Constitution) outweigh any threatened evil posed by the occupation by members of subversive organizations of units in federally aided housing projects," and for that reason the state action taken under the Gwinn Amendment was "unconstitutional and void," and, "as a necessary corollary thereof," it also "violates either sec. 3 or 4, Art. I, of the Wisconsin Constitution or both," which "guarantee the same freedom of speech and right of assembly and petition as do the First and Fourteenth amendments of the United States constitution." Lawson v. Housing Authority of City of Milwaukee, 270 Wis. 269, 70 N.W.2d 605 (Sup. Ct. 1955). The Federal Supreme Court, subsequent to the argument in the cause now before us, denied certiorari, without more. Housing Authority of City of Milwaukee v. Lawson, 350 U.S. 882, 76 S.Ct. 135, 100 L.Ed. ___ (1955).
It would seem that the mere denial of certiorari imports no expression of opinion upon the merits of the case. When the reasons are given, the denial will have the effect indicated by the reasons stated, and none other. Mr. Justice Frankfurter recently said:
"We have repeatedly indicated that a denial of certiorari means only that, for one reason or another which is seldom disclosed, and not infrequently for conflicting reasons which may have nothing to do with the merits and certainly may have nothing to do with any view of the merits taken by a majority of the Court, there were not four members of the Court who thought the case should be *186 heard." Brown v. Allen, 344 U.S. 443, 491, 73 S.Ct. 397, 97 L.Ed. 469, 507 (1953).
But there is no occasion to consider the constitutional issue raised; and it is ordinary practice not to undertake the determination of constitutional questions not necessary to the disposition of the cause. See Rescue Army v. Municipal Court, 331 U.S. 549, 67 S.Ct. 1409, 91 L.Ed. 1666 (1947).
The Gwinn Amendment forbids the occupation of a housing unit of the given class by a person who is a member of an organization designated as "subversive" by the Attorney General. Here, the tenant was required to certify that he was not a member of "any" of the organizations included in the "Consolidated List, Dated November 19, 1952, of Organizations Designated by the Attorney General of the United States as within Executive Order No. 9835," which authorized consideration, "in connection with the determination of disloyalty" of government employees, of various matters including "Membership in, affiliation with or sympathetic association with any foreign or domestic organization, association, movement, group or combination of persons, designated by the Attorney General as (1) totalitarian, (2) fascist, (3) communist, or (4) subversive, or (5) as having adopted a policy of advocating or approving the commission of acts of force or violence to deny other persons their rights under the Constitution of the United States, or (6) as seeking to alter the form of government of the United States by unconstitutional means."
Executive Order 9835, 5 U.S.C.A., section 631, note, 12 Fed. Reg. 1935, was promulgated by the President on March 21, 1947, as part of the Employees Loyalty Program in the Executive Branch of the Government. The order established a Loyalty Review Board; and it was provided that the Board be "currently furnished" by the Department of Justice with the name of each foreign or domestic organization, association, or combination of persons of the several stated categories, classified by the Attorney-General "after appropriate investigation and determination." The Consolidated List thus provided by the Attorney-General *187 named 194 organizations. The Consolidated List embodied in the certification demanded here named all these organizations; there were no classes or categories and no indication that the Attorney-General had designated any as "subversive." It signified that all had been "designated" by the Attorney-General "as within Executive Order No. 9835," nothing more.
For some four years the Attorney-General had divided the listed organizations into six categories, only one of which was described as "subversive"; and there were but six so designated in 1948, 12 when the Gwinn Amendment became effective, and 13 when enforcement began. Rudder v. United States, 226 F.2d 51 (D.C. Cir. 1955); Peters v. New York City Housing Authority, 307 N.Y. 519, 121 N.E.2d 529 (Ct. App. 1954).
Executive Order No. 10450, effective April 27, 1953, Code of Red. Reg., Title 3, Supp. pp. 72, 76, 18 Fed. Reg. 2489, 5 U.S.C.A., section 631, revoked Executive Order No. 9835, but the revocatory clause, section 12, requires the Department of Justice to "continue to furnish the information described in paragraph 3 of Part III" of Executive Order No. 9835, classified according to the nature of the organization "totalitarian, fascist, communist or subversive," "but directly to the head of each department and agency."
The refusal of the plaintiff tenant thus to certify nonmembership in the organizations named in the Attorney-General's Consolidated List, intended for use in screening employees, not tenants, was not a sufficient ground for his eviction from the leased premises. The refusal to deny membership in any organization on the Consolidated List was not proof that the tenant was a member of a subversive organization or one designated as such by the Attorney-General. Even proof that the tenant was a member of an organization of the proscribed class, knowing nothing of its character, would not sustain an administrative decision to evict a tenant from public housing. Rudder v. United States, supra; Wieman v. Updegraff, supra. As said in Rudder, if the Authority had used supposed membership only as "prima facie evidence of disqualification," a different question would *188 have been presented, citing Adler v. Board of Education of City of New York, 342 U.S. 485, 72 S.Ct. 380, 96 L.Ed. 517 (1952). In demanding of the plaintiff tenant a disavowal of membership in organizations named on the Consolidated List other than those "designated as subversive by the Attorney General," the Authority exceeded its powers under the Gwinn Amendment, an enactment that by its very nature is to be strictly construed. As in Rudder, this case does not present the question of whether it would be arbitrary to evict the tenant if it were proved that a particular organization was "subversive"; that he was a member of it, and that he was aware of its character. Compare Garner v. Board of Public Works of City of Los Angeles, 341 U.S. 716, 71 S.Ct. 909, 95 L.Ed. 1317 (1951); Adler v. Board of Education of City of New York, supra.
It is enough to say in conclusion, as in Rudder, that "most of the organizations on the Consolidated List were not designated as subversive by the Attorney General," and the plaintiff tenant was not shown to be a member of "any organization."
Insisting upon its contractual right to terminate the tenancy, the Authority invokes the principle of Davis v. Flagg, 35 N.J. Eq. 491 (E. & A. 1882), Beasley, C.J., that the "legal pursuit of one's right, no matter what may be the motive of the promoter of the action, cannot be deemed either illegal or inequitable."
But the Authority cannot act arbitrarily, for, unlike private landlords, it is subject to the requirements of due process. Rudder v. United States, supra; Camden County v. Pennsauken Sewerage Authority, 15 N.J. 456 (1954). Regardless of the existence of an abstract right to public employment, it is "sufficient to say that constitutional protection does extend to the public servant whose exclusion pursuant to a statute is patently arbitrary or discriminatory." Wieman v. Updegraff, supra. So here, the exclusory action was arbitrary and capricious; and arbitrary exclusion is violative of constitutional precept. The State may not condition a privilege which it may deny altogether on a surrender *189 of constitutional right. Frost v. Railroad Commission of State of California, 271 U.S. 583, 46 S.Ct. 605, 70 L.Ed. 1101 (1926). See also Terral v. Burke Const. Co., 257 U.S. 529, 42 S.Ct. 188, 66 L.Ed. 352 (1922). Due process and the equal protection of the laws mean equality of treatment under like circumstances and conditions both in the privileges conferred and in the burdens imposed. These constitutional principles secure the individual against an arbitrary exercise of the powers of government. Connolly v. Union Sewer Pipe Co., 184 U.S. 540, 22 S.Ct. 431, 46 L.Ed. 679 (1902), Harlan, J.
Affirmed.
WACHENFELD, J., concurring in result.
For affirmance Chief Justice VANDERBILT, and Justices HEHER, OLIPHANT, WACHENFELD, BURLING, JACOBS and BRENNAN 7.
For reversal None. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2450694/ | 569 S.W.2d 568 (1978)
James R. GARRETT and Efton M. Henson, Appellants,
v.
Edwin E. KOEPKE and William H. Wood, Jr., et al., Appellees.
No. 19493.
Court of Civil Appeals of Texas, Dallas.
June 30, 1978.
Rehearing Denied August 18, 1978.
*569 Ivan R. Williams, Jr., Price & Williams, Austin, for appellants.
Hugh L. Berryman, Reppeto & Berryman, Herbert W. Marshall, Shearin, Collins & Marshall, Dallas, for appellees.
AKIN, Justice.
The principal question presented by this appeal is whether limited partners lose their limited liability status, as a matter of law, where the partnership had failed to comply with the Uniform Limited Partnership Act, Tex.Rev.Civ.Stat.Ann. art. 6132a (Vernon 1970), which requires filing with the Secretary of State a certificate setting forth certain information pertaining to the limited partnership. A corollary question is whether certain limited partners lost their status with respect to limited liability where they exercised control over the partnership assets. We hold that since art. 6132a is a notice statute and since appellants already had the information that would have been provided by compliance with the statute prior to dealing with the limited partnership, the failure to comply with art. 6132a does not cause appellees to lose their status as limited partners. We also hold that, under the facts here, the *570 limited partners did not become liable as general partners by exercising control of certain partnership assets. Accordingly, we affirm.
This is an appeal from three separate summary judgments denying appellants any recovery against appellees. Appellants, Garrett and Henson, sued appellees for a debt resulting from the alleged breach of a lease for a motel sign. Appellants had formerly owned the Continental Longview Motor Inn but sold it to a partnership in which appellees were limited partners. The partnership had assumed and had agreed to pay the sign payments. This limited partnership was created by an agreement executed in February of 1971 for the purpose of purchasing and operating the Continental in Longview, Texas. Appellees were denominated as limited partners in this agreement. Neither the limited partnership agreement nor a certificate containing the information required by art. 6132a was filed with the Secretary of State. Appellant Garrett's deposition shows, however, that he knew that he was dealing with a limited partnership and understood the consequences of dealing with such an entity. In September 1972, because the general partner resigned, appellees assumed control of the partnership to effect collection of partnership assets so that they could be distributed to the limited partners.
Appellants argue first that since a certificate of limited partnership was never filed with the Secretary of State, a question is presented as to whether the partnership became a general one, thus making appellees liable as general partners. Secondly, they assert that even if a valid limited partnership was formed, an issue exists as to whether when certain of the limited partners took control of the business, they lost their limited liability. Finally, appellants urge that because the limited partners failed to promptly renounce their respective interests in the partnership assets when they discovered that no limited partnership certificate had been filed, they lost their limited liability, citing Tex.Rev.Civ.Stat. Ann. art. 6132a § 12 (Vernon 1970). We hold, however, that since appellants were on notice that the entity with which they were dealing was in fact a limited partnership, appellees' failure to comply with art. 6132a is immaterial. We hold further that no limited partner took such a part in the control of the business so as to lose his shield of limited liability. In view of these holdings, we do not address whether the limited partners promptly renounced their interests.
Appellees admit that they had failed to file a certificate of limited partnership as required by Tex.Rev.Civ.Stat. Ann. art. 6132a (Vernon 1970). Appellants contend, therefore, that appellees are liable for the debt sued upon as general partners. We cannot agree with this contention. We see no logical reason to strip appellees of their limited liability under their partnership agreement merely because they failed to comply with art. 6132a. The purpose of the filing requirements under the act is to provide notice to third persons dealing with the partnership of the essential features of the partnership arrangement. Hoefer v. Hall, 75 N.M. 751, 411 P.2d 230 (1966); Tiburon National Bank v. Wagner, 265 Cal. App. 2d 868, 71 Cal. Rptr. 832 (1968); Davis v. Davis, 247 Or. 352, 429 P.2d 808 (1967). Since appellants knew that the entity with which they were dealing was a limited partnership, as well as the consequences of dealing with such an entity, they were in no way prejudiced by the failure to comply with the statute. We see no compelling policy reason here for holding that appellees became general partners by requiring technical compliance with these notice provisions. Indeed, such was not the intent of the legislature in enacting the statute; instead, its' intent was to provide notice of limited liability of certain partners to third parties dealing with a partnership. R. H. Sanders Corp. v. Haves, 541 S.W.2d 262, 265 (Tex.Civ.App.Dallas 1976, no writ). The nature and legal existence of a partnership does not depend upon any filing required by a statute. Tracy v. Tuffly, 134 U.S. 206, 226, 10 S. Ct. 527, 33 L. Ed. 879 (1890). We hold, therefore, that where a party has knowledge that the entity with which he is *571 dealing is a limited partnership, that status is not changed by failing to file under art. 6132a. Indeed, the Houston Court of Civil Appeals in Voudouris v. Walter E. Heller & Co., 560 S.W.2d 202, 207 (Tex.Civ.App. Houston [1st Dist.] 1977, writ pending) held that the failure to file the limited partnership agreement with the Secretary of State did not result in the formation of a general partnership.
Appellants rely on Lowe v. Arizona Power & Light Co., 5 Ariz.App. 385, 427 P.2d 366 (1967) and Hoefer v. Hall, supra, for the proposition that in order to obtain protection as a limited partner, there must be compliance with the statutory requirements. In Lowe, a certificate of limited partnership had been filed but after the withdrawal of one of the general partners the remaining partners executed and filed a certificate of partnership which did not indicate whether a general or limited partnership was intended. The court held that even though the certificate of partnership did not specify a general partnership it did not refer back to the certificate of limited partnership nor indicate an amendment to it and, therefore, the second certificate of partnership superceded the limited partnership certificate. Accordingly, that court held Lowe liable as a general partner. Lowe is distinguishable on the ground that plaintiffs there did not have actual notice that a limited partnership existed. Thus, we do not consider it controlling. Hoefer held that the failure to record a certificate of limited partnership did not preclude the existence of the partnership insofar as the parties to the agreement are concerned. Although Hoefer quotes the "rule" requiring compliance with the statute in order to have a limited partnership, that court arrived at the same conclusion as we have here where all parties had knowledge of the nature of the partnership. We do not agree, however, with Hoefer insofar as it states that compliance with the statute is necessary to have a limited partnership.
Appellants next contend that some of the limited partners lost their shield of limited liability when they took a control position in the business of the partnership citing art. 6132a, § 8. We cannot agree. The debt upon which appellants are suing arose when the general partner controlled the motel. The alleged participation of appellees in the business that may jeopardize their limited liability occurred after this debt was incurred. Thus, assuming that they participated in the management and control of the limited partnership so as to make them liable as general partners, their liability for obligations incurred before they were general partners can only be satisfied out of partnership property. Consequently, they cannot be held personally liable for this debt. Tex.Rev.Civ.Stat.Ann. art. 6132b, § 17 (Vernon 1970); Miller v. Doughty, 520 S.W.2d 586 (Tex.Civ.App.Corpus Christi 1975, no writ).
Affirmed.
GUITTARD, C. J., not participating. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472528/ | 137 F. Supp. 2d 919 (2001)
UNITED STATES of America, Plaintiff/Respondent,
v.
Lupe HERNANDEZ, Defendant/Petitioner.
No. 3:94CR779. No. 3:00CV712.
United States District Court, N.D. Ohio, Western Division.
March 30, 2001.
*920 *921 *922 Lupe Hernandez, Lisbon, OH, petitioner pro se.
Deborah Kovac Rump, Office Of The U.S. Attorney, Toledo, OH, for United States of America, respondent.
OPINION AND ORDER
JOHN W. POTTER, Senior District Judge.
This action is before the Court on Lupe Hernandez's motion to vacate, set aside, or correct sentence under 28 U.S.C. § 2255, the government's reply and supplemental brief and petitioner's response and supplemental brief.
As an initial matter, in § 2255 proceedings, evidentiary hearings are not required when the record conclusively shows *923 that the petitioner is entitled to no relief. Blanton v. United States, 94 F.3d 227, 235 (6th Cir.1996) (citing Fontaine v. United States, 411 U.S. 213, 215, 93 S. Ct. 1461, 36 L. Ed. 2d 169 (1973)). Because the record in this case conclusively shows that petitioner is not entitled to relief, the Court finds that an evidentiary hearing is not needed. Rule 8 of the Rules Governing § 2255 Proceeding. For the reasons hereinafter stated, the § 2255 motion will be denied.
In order for petitioner to prevail under § 2255 on the basis of a nonconstitutional error, the record must reflect a fundamental defect in the proceedings that inherently results in a complete miscarriage of justice or an omission inconsistent with the rudimentary demands of fair procedure. Reed v. Farley, 512 U.S. 339, 114 S. Ct. 2291, 2300, 129 L. Ed. 2d 277 (1994); United States v. Todaro, 982 F.2d 1025, 1028 (6th Cir.1993). In order to obtain relief under § 2255 on the basis of a constitutional error, the record must reflect an error of constitutional magnitude which had a substantial and injurious effect or influence on the proceedings. Brecht v. Abrahamson, 507 U.S. 619, 637, 113 S. Ct. 1710, 123 L. Ed. 2d 353 (1993); United States v. Ross, 40 F.3d 144, 146 (7th Cir. 1994).
Hernandez and eight co-defendants were indicted on December 7, 1994, in a six count indictment. Hernandez was charged in Count 1 with conspiracy to possess and distribute heroin, cocaine and marijuana, in violation of 21 U.S.C. §§ 841(a)(1) and 846; in Count 2 with conspiracy to import heroin and marijuana from a place outside the United States, in violation of 21 U.S.C. §§ 960(a)(1) and 963; in Count 3 with conspiracy to launder the proceeds, in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), (b)(1) and (g); and in Count 6 with a forfeiture count pursuant to 21 U.S.C. § 853. On October 12, 1995, Hernandez pled guilty pursuant to an oral plea agreement to each count in which he was charged. Five of his co-defendants had previously pled guilty and had agreed to testify against him. After a lengthy sentencing hearing, Hernandez was sentenced on August 26, 1997 to 264 months imprisonment on Counts 1 and 2 and 240 months imprisonment on Count 3, to run concurrently.
Hernandez appealed his conviction and sentence, challenging the validity of his plea, based in part on a claim of ineffective assistance of counsel, and the calculation of his sentence. Specifically, he argued that his guilty plea was not knowingly and voluntarily made due to the fact that he believed the government had agreed not to forfeit two residences per his request and that a comment of counsel led him to believe that he would receive no more than 21 years imprisonment. In addition, he argued that the plea agreement was breached when he was sentenced to 22, rather than 21, years in prison and that this Court erred in several respects in calculating his sentence. The Court of Appeals rejected petitioner's arguments and affirmed his conviction and sentence.
Hernandez raises the following grounds for relief in his motion to vacate sentence: (1) the government violated two provisions of the oral plea agreement; (2) he received ineffective assistance of trial counsel; and (3) he received ineffective assistance of appellate counsel. In addition, the Court requested supplemental briefs on the applicability in this case of Apprendi v. New Jersey, 530 U.S. 466, 120 S. Ct. 2348, 147 L. Ed. 2d 435 (2000).
In his first ground for relief, petitioner attempts to challenge his guilty plea by arguing that the government violated the terms of an oral plea agreement, namely, that the government would not object to sentencing at the low end of the *924 guidelines and that it would not forfeit two residences as requested by petitioner. However, a federal prisoner may not relitigate in a § 2255 motion to vacate sentence claims that were raised and considered on direct appeal. See United States v. Jones, 918 F.2d 9, 10 (2d Cir.1990); Barton v. United States, 791 F.2d 265, 267 (2d Cir. 1986). A federal prisoner is further barred from asserting claims that could have been brought on direct appeal, absent a showing of cause and prejudice for the failure to bring those claims. See United States v. Frady, 456 U.S. 152, 167-68, 102 S. Ct. 1584, 71 L. Ed. 2d 816 (1982).
The Court of Appeals specifically addressed on direct appeal petitioner's argument as it relates to the forfeiture of certain real property and, in essence, found that the criminal forfeiture in this case was consistent with the government's representations at the plea hearing. United States v. Hernandez, 182 F.3d 919 (Table), 1999 WL 486620, *4 (6th Cir. July 1, 1999). The Court of Appeals stated as follows:
The government could both guarantee two terms (no objection to a reduction and to a sentence at the low end) and promise nothing more than a good-faith effort regarding a third term (forfeiture). Hernandez's comments at the hearing suggest that he realized the difference. Near the end of the hearing, the court asked, "Have any promises, other than what Ms. Rump stated, about a two-level reduction, have any other promises been made to cause you to change your pleas?" Hernandez responded, "Just not to the low end of the guidelines."
Id. Thus, petitioner may not relitigate this issue in the instant motion.
Petitioner's claim that the government violated its agreement not to object to sentencing at the low end of the guidelines could have been, but was not, raised on direct appeal. To the extent that petitioner argues ineffective assistance of appellate counsel as cause for this default, for the reasons set forth later in the opinion, the Court finds the argument not well taken. Because he has failed to demonstrate cause or actual prejudice, petitioner is barred from asserting this claim in this § 2255 motion.
In his second ground for relief, petitioner contends that he received ineffective assistance of trial counsel.[1] A petitioner alleging ineffective assistance of counsel must show both that counsel's performance was deficient and that this deficient performance prejudiced the defense so as to render the proceeding unfair and the result unreliable. Strickland v. Washington, 466 U.S. 668, 687, 104 S. Ct. 2052, 80 L. Ed. 2d 674 (1984). In order to show that counsel's performance was deficient, petitioner must demonstrate that counsel's representation fell below an objective standard of reasonableness under prevailing professional norms. Id. at 688, 104 S. Ct. 2052. In the guilty plea context, in order to show that counsel's performance was sufficiently prejudicial, a petitioner must show that "there is a reasonable probability that, but for counsel's errors, he would not have pleaded guilty and would have insisted on going to trial." Sparks v. Sowders, 852 F.2d 882, 884 (6th Cir.1988) (citing Hill v. Lockhart, 474 U.S. 52, 59, 106 S. Ct. 366, 88 L. Ed. 2d 203 (1985)); Ludwig v. United States, 162 F.3d 456, 458 (6th Cir.1998).
Petitioner first contends that trial counsel rendered ineffective assistance in representing to him that the government would not object to sentencing at the low end of the guidelines. However, counsel was clearly justified in making this representation *925 since the government explicitly so stated at the plea hearing.
Petitioner next argues that he would not have pled guilty had counsel not represented to him that certain real estate would not be forfeited. However, even if counsel's alleged representation was constitutionally deficient, which the Court does not so find, petitioner has failed to demonstrate that he was prejudiced. As noted above, the Court of Appeals found that petitioner's comments at the plea hearing indicate that he realized that the government made no such promise as a term of his plea agreement and that no such promise caused him to change his plea.
Petitioner also argues that counsel filed no pre-trial motions for discovery, thereby allegedly failing to conduct an independent investigation of the case. Petitioner contends that, had counsel conducted such discovery, he would have been able to determine whether "a plausible line of defense existed ... or whether to negotiate a plea agreement." Petition, p. 16. He further contends that counsel's failure to investigate also affected sentencing counsel's performance in that he failed to call any witnesses to rebut the government's witness regarding relevant conduct. Petition, pp. 17, 19. However, petitioner does not note any potential defenses that counsel failed to uncover, nor does he indicate any potential witness testimony that would rebut testimony offered by the government regarding relevant conduct. The Court notes that counsel thoroughly cross-examined the government's sole witness with respect to relevant conduct and prepared a sentencing brief on the issue as well.[2] Furthermore, counsel did in fact file several pre-trial motions, including a motion for bill of particulars, motion for order to preserve investigative notes and tapes, motion for notice of other crimes, and motion for release of Giglio materials. In any event, the mere fact that a motion for discovery was not filed by a particular defendant does not mean that counsel failed to investigate the facts of the case.[3] The Court finds that petitioner has not demonstrated that counsel's performance was constitutionally deficient, nor has he demonstrated a reasonable probability that he would not have pled guilty or that he was prejudiced in any way.
Petitioner next argues that trial counsel was ineffective in failing to obtain a written plea agreement. However, the Court finds this argument without merit. Petitioner pled guilty to all counts in which he was charged. The only agreement made by the government was to not object to a two-level reduction for acceptance of responsibility and to not object to sentencing at the low end of the guideline range. This agreement was set forth on the record at the plea hearing and was confirmed by petitioner at that hearing. Doc. # 153, pp. 13, 20. Petitioner has failed to satisfy either prong of the Strickland analysis.
Petitioner also contends that trial counsel was ineffective "in informing him that no adverse consequences would befall him from the debriefing process engaged in with the government." Petition, p. 20. However, petitioner fails to indicate what occurred at the "debriefing" or how that occurrence adversely affected him. Thus, the Court finds petitioner's argument without merit.
*926 Petitioner also argues that appellate counsel rendered ineffective assistance because his argument did not include all aspects of the oral plea agreement and he failed to argue that the plea agreement was between petitioner and the government. The Court of Appeals opinion clearly indicates that there was no confusion as to whom were parties to the plea agreement. To the extent that petitioner is arguing that counsel should have raised additional arguments regarding his plea agreement, the Court finds his argument without merit. Appellate counsel is not ineffective simply because he or she decides not to raise every possible argument on appeal. Wright v. United States, 182 F.3d 458, 466 (6th Cir.1999) citing Jones v. Barnes, 463 U.S. 745, 751-54, 103 S. Ct. 3308, 77 L. Ed. 2d 987 ("A brief that raises every colorable issue runs the risk of burying good arguments"). Counsel not only raised several issues relating to his guilty plea, but also sentencing issues regarding drug quantity and whether petitioner acted as an organizer or leader of the conspiracy. Petitioner has failed to demonstrate that counsel was not functioning as the "counsel" guaranteed by the Sixth Amendment. See Strickland, 466 U.S. at 687, 104 S. Ct. 2052.
The Court next addresses the issue of the applicability of Apprendi v. New Jersey, 530 U.S. 466, 120 S. Ct. 2348, 147 L. Ed. 2d 435 (2000), to the case sub judice. In Apprendi, the defendant challenged a New Jersey sentencing scheme that allowed a state judge to enhance a defendant's penalty beyond the prescribed statutory maximum upon finding, by a preponderance of the evidence, that the defendant committed the underlying crime with a purpose to intimidate a person or group because of race. Apprendi, 120 S.Ct. at 2351. The Supreme Court held 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." Id. at 2362-63. The Court explained that in determining whether a factual finding is an essential element of the offense or merely a sentencing factor, "the relevant inquiry is one not of form, but of effect does the required finding expose the defendant to a greater punishment than that authorized by the jury's guilty verdict?" Id. at 2365.
In the case sub judice, defendant pled guilty to two drug conspiracy counts under 21 U.S.C. §§ 846 and 963, as well as to a money laundering conspiracy count. Contrary to the government's contention, none of these counts alleged a specific quantity of drugs.[4] Sections 841 and 960 set forth the maximum penalties *927 applicable to petitioner's convictions under §§ 846 and 963. Sections 841(b)(1)(C) and 960(b)(3) provide for a maximum penalty of 240 months unless the crime involves a quantity of drugs as set forth in other subsections of those statutes. Sections 841(b)(1)(A) and 960(b)(1) provide, in relevant part, for a minimum penalty of 10 years and a maximum penalty of life imprisonment if the crime involved at least 1 kilogram of heroin, 5 kilograms of cocaine, or 1000 kilograms of marijuana. Sections 841(b)(1)(B) and 960(b)(2) provide, in relevant part, for a minimum penalty of 5 years and a maximum penalty of 40 years if the crime involved at least 100 grams of heroin, 500 grams of cocaine, or 100 kilograms of marijuana.
After a lengthy sentencing hearing, this Court determined, by a preponderance of the evidence, that petitioner was responsible for a total of 26,451 kilograms of marijuana and its equivalents, as converted under the Sentencing Guidelines. Specifically, petitioner was found responsible for 2,632.7 kilograms of marijuana, 93 kilograms of cocaine, and 5.218 kilograms of heroin. Based on these drug quantities, petitioner faced a statutory mandatory minimum sentence of 10 years and a maximum sentence of life imprisonment on the drug conspiracy counts. 21 U.S.C. §§ 841(b)(1)(A), 960(b)(1). Petitioner was sentenced to 264 months imprisonment on these counts.
Because petitioner's guilty plea did not address any quantity of drugs involved in the conspiracies, it supports a conviction under the catch-all provisions of §§ 841(b)(1)(C) and 960(b)(3) only and not under those subsections that provide for maximum penalties greater than 240 months. Thus, relying on the holding in Apprendi, petitioner alleges in his supplemental brief the following additional grounds for relief: (1) the Court's determination of drug amounts by a preponderance of the evidence in order to enhance his sentence beyond the maximum penalty of 20 years is prohibited under Apprendi; (2) every count on which petitioner was convicted is "condemned by Apprendi"; (3) § 841 is unconstitutional under Apprendi; (4) any quantity of a drug must be pleaded and proven beyond a reasonable doubt, not just amounts that affect the maximum sentence; and (5) appellate counsel was ineffective for failing to raise the foregoing claims. Petitioner's Supplemental Brief, pp. 27, 31, 33, 36, 39.
Initially, the Court rejects petitioner's argument that appellate counsel was ineffective in failing to raise any claims under Apprendi. Apprendi was decided well after the conclusion of petitioner's direct appeal. Counsel's performance did not fall below an objective standard of reasonableness under prevailing professional norms. Strickland, 466 U.S. at 688, 104 S. Ct. 2052. Furthermore, as explained later in this opinion, petitioner was not prejudiced by counsel's failure to argue any Apprendi issues on appeal.
As to petitioner's remaining Apprendi arguments, the Court must, as a threshold matter, determine whether Apprendi may be applied retroactively to cases on collateral review. In Teague v. Lane, 489 U.S. 288, 310, 109 S. Ct. 1060, 103 L. Ed. 2d 334 (1989), the Supreme Court stated that as a general rule, "new constitutional rules of criminal procedure will not be applicable to those cases which have become final before the new rules are announced." The Court has recognized two exceptions to this rule. First, a new rule should be applied retroactively if it places "certain kinds of primary, private individual conduct beyond the power of the criminal law-making authority to proscribe." Teague, 489 U.S. at 311, 109 S. Ct. 1060. Second, a new rule should be applied retroactively if it "requires the observance *928 of those procedures that are implicit in the concept of ordered liberty." Id. (citations omitted). However, the Supreme Court explained that Teague only applies if the case announces a new procedural rule; it is inapplicable if the new case involves the substantive construction of a criminal statute. Bousley v. United States, 523 U.S. 614, 118 S. Ct. 1604, 140 L. Ed. 2d 828 (1998); Murr v. United States, 200 F.3d 895, 905 (6th Cir.2000). Thus, this Court must first determine whether Apprendi involves matters of substantive law or whether it announces a new rule of criminal procedure.
In Apprendi, the question presented was "whether the Due Process Clause of the Fourteenth Amendment requires that a factual determination authorizing an increase in the maximum prison sentence for an offense ... be made by a jury on the basis of proof beyond a reasonable doubt." Apprendi, 120 S.Ct. at 2351. As explained by the Sixth Circuit, the Court's holding in resolution of this question is basically twofold.:
First, that courts must count any "fact" that increases the "penalty beyond the prescribed statutory maximum" as an element of the offense "except for one important exception," i.e., "the fact of a prior conviction;" and second, that it "is unconstitutional for a legislature" to treat "facts that increase the prescribed range of penalties to which a criminal defendant is exposed" as mere sentencing factors, rather than facts to be established as elements of the offense.
United States v. Ramirez, 242 F.3d 348 (6th Cir.2001).
With respect to the first prong of the holding, the Supreme Court clarified the difference between an "element of the offense" and a "sentencing factor." It noted that historically "facts that exposed a defendant to a punishment greater than that otherwise legally prescribed were by definition `elements' of a separate legal offense." Apprendi, 120 S.Ct. at 2359. The Court recognized that "[w]hen a judge's finding based on a mere preponderance of the evidence authorizes an increase in the maximum punishment, it is appropriately characterized as `a tail which wags the dog of the substantive offense.'" Id. at 2365. Thus, it stated that "merely because the state legislature placed its hate crime sentence `enhancer' within the sentencing provisions of the criminal code `does not mean that the finding of a biased purpose to intimidate is not an essential element of the offense.'" Id. Due to the elemental nature of facts that expose a defendant to a greater punishment than that authorized by a jury's guilty verdict, the Court concluded that such facts must be submitted to a jury and found beyond a reasonable doubt. Id. at 2363, 2365.
The fact that the Supreme Court engaged in such deliberations in order to arrive at its conclusion clearly indicates the substantive nature of its decision. In Bousley, the Supreme Court considered the retroactivity of its decision in Bailey v. United States, 516 U.S. 137, 116 S. Ct. 501, 133 L. Ed. 2d 472 (1995), which interpreted the meaning of "using" a firearm in violation of 18 U.S.C. § 924(c). The Court found Teague inapplicable to Bailey since that decision construed the meaning of a criminal statute and was, thus, substantive in nature. Bousley, 118 S.Ct. at 1610. Although Apprendi was decided in the context of New Jersey's hate crimes statute, its holding was not limited to that statute. Rather, Apprendi's holding encompasses a substantive construction, based on constitutional law, of any statute that treats facts that increase the penalty for a crime beyond the prescribed statutory maximum as a sentencing factor rather than as an element of the crime. Several courts, including the Sixth Circuit, have recognized that Apprendi has clarified the essential elements of an offense in violation *929 of § 841 or a conspiracy to violate § 841. See e.g., United States v. Flowal, 234 F.3d 932, 938 (6th Cir.2000) (recognizing that, under Apprendi, the provisions of § 841 set forth three separate offenses, rather than one offense with three different penalties); United States v. Rebmann, 226 F.3d 521, 524-25 (6th Cir.2000) (finding that, in light of Apprendi, facts that increase the maximum penalty for a violation of 21 U.S.C. § 841(a)(1) are elements of the offense); Burton v. United States, 237 F.3d 490 (5th Cir.2000) (same); United States v. Henderson, 105 F. Supp. 2d 523, 535 (S.D.W.Va.2000) (same). In light of the foregoing, this Court concludes that Apprendi involves a substantive change in the law and, as such, should apply retroactively. See Darity v. United States, 124 F. Supp. 2d 355, 360-361 (W.D.N.C.2000) (finding Apprendi is a substantive decision to which Teague's retroactivity rules do not apply); but see Ware v. United States, 124 F. Supp. 2d 590, 595-96 (M.D.Tenn. 2000) (finding Apprendi merely imposes procedural safeguards and, therefore, applying Teague in finding Apprendi is not retroactive).
Nevertheless, the Court notes that most courts that have addressed the retroactivity of Apprendi have found that it is not retroactive, having applied Teague after finding without discussion that the decision announced a constitutional rule of criminal procedure. See, Jones v. Smith, 231 F.3d 1227, 1236 (9th Cir.2000); United States v. Latney, 131 F. Supp. 2d 31 (D.D.C.2001); Panoke v. United States, ___ F.Supp.2d ___, 2001 WL 46941 (D.Hawai'i 2001); United States v. Johnson, 126 F. Supp. 2d 1222 (D.Neb.2000); Klein v. United States, 125 F. Supp. 2d 460, 467 (D.Wyo.2000); United States v. Gibbs, 125 F. Supp. 2d 700, 703 (E.D.Pa.2000); West v. United States, 123 F. Supp. 2d 845, 846 (D.Md.2000); United States v. Pittman, 120 F. Supp. 2d 1263, 1267 (D.Or.2000). Because the second prong of Apprendi's holding deals with the proper procedure in making factual determinations that increase the maximum sentence to which a defendant is exposed, this Court also considers the decision in light of Teague.
Because the nonretroactivity rules of Teague apply only to "new" rules of criminal procedure, the Court must first determine whether the rule in question, if considered a rule of criminal procedure, is a new rule. Even if the Court determines that it is a new rule, it may still be applied retroactively if it falls within one of the two narrow exceptions to the nonretroactivity principle. Caspari v. Bohlen, 510 U.S. 383, 390, 114 S. Ct. 948, 127 L. Ed. 2d 236 (1994). Although petitioner argues that Apprendi did not announce a new rule, as defined in Teague, a rule is new if it "breaks new ground or imposes a new obligation on the States or the Federal Government" or, put differently, if "the result was not dictated by precedent existing at the time the defendant's conviction became final." Teague, 489 U.S. at 301, 109 S. Ct. 1060. The holding in Apprendi was not dictated by precedent and clearly imposes a new obligation on the government to prove certain facts to a jury beyond a reasonable doubt when, prior to Apprendi, it needed only to prove such facts to a judge by a preponderance of the evidence. Thus, the Court concludes that Apprendi announces a new rule under Teague. As such, it may not be applied retroactively unless it falls within one of the two exceptions set forth in Teague. The government contends, without further argument or citation of authority, that neither exception applies.[5]
*930 The first exception requires that a new rule be applied retroactively if it "places certain kinds of primary, private individual conduct beyond the power of the criminal law-making authority to proscribe." Teague, 489 U.S. at 307, 109 S. Ct. 1060. Apprendi does not fall under this exception. A second exception exists if the new rule is a "watershed rule of criminal procedure" that implicates the fundamental fairness of the criminal proceeding. Id. at 311-12, 109 S. Ct. 1060. In order to fall within this exception, the new rule "must not only improve the accuracy [of a criminal proceeding], but also `alter our understanding of the bedrock procedural elements' essential to the fairness of a proceeding." Sawyer v. Smith, 497 U.S. 227, 242, 110 S. Ct. 2822, 111 L. Ed. 2d 193 (1990) (citations omitted). The Courts that have addressed the applicability of this exception to Apprendi have reached different conclusions.
The Ninth Circuit is the only circuit court that has addressed the issue. In Jones v. Smith, 231 F.3d 1227 (9th Cir. 2000), the court declined to apply Apprendi retroactively, finding that it did not fall within the second exception under Teague. However, the court's holding was limited to the facts of that case. In Jones, the court considered California's treatment of premeditation as a sentencing factor rather than as an element of attempted murder. As a sentencing factor, premeditation was not alleged in the information charging the petitioner with attempted murder. Under California law, the absence of premeditation meant the difference between first and second degree murder. Nevertheless, at trial, both the prosecution and the defense argued before the jury the issue of whether the petitioner acted with premeditation, and the court instructed the jurors to decide whether the attempted murder was premeditated. The jury found the petitioner guilty and found that he had acted with premeditation. Jones, 231 F.3d at 1230. The petitioner's habeas claim was based on the variance between the crime alleged in the information and the charge actually submitted to the jury. Although the court recognized that Apprendi called into question California's treatment of premeditation as a sentencing factor, it found that
[w]here the defendant has actual notice of the nature and cause of the accusation against him, as well as the possible sentences he might receive, the omission of particular key words from the written information neither increases the risk that an innocent person will be convicted nor hinders the fundamental fairness of the trial.
Id. at 1238. Thus, the court found that Apprendi should not be retroactively applied "insofar as it effects discrepancies between an information and jury instructions. ..." Id.
Significantly, however, Jones did not address issues directly raised in Apprendi, namely, the validity of a sentence that was *931 enhanced beyond the prescribed statutory maximum based on facts decided by a judge under a preponderance of the evidence standard.[6] A number of district courts that have addressed this issue have declined to apply Apprendi retroactively, finding that the rule in Apprendi does not increase the accuracy of the proceeding or implicate fundamental fairness. See Panoke v. United States, ___ F.Supp.2d ___, 2001 WL 46941 (D.Hawai'i 2001); United States v. Latney, 131 F. Supp. 2d 31 (D.D.C. 2001); Klein v. United States, 125 F. Supp. 2d 460, 467 (D.Wyo.2000); United States v. Gibbs, 125 F. Supp. 2d 700, 706 (E.D.Pa.2000); United States v. Johnson, 126 F. Supp. 2d 1222, 1225-26 (D.Neb.2000); West v. United States, 123 F. Supp. 2d 845 (D.Md.), aff'd on other grounds, 2001 WL 208508 (4th Cir.2001) (affirmed on ground that Apprendi claim was procedurally defaulted); United States v. Pittman, 120 F. Supp. 2d 1263, 1270 (D.Or.2000); Ware v. United States, 124 F. Supp. 2d 590, 598-600 (M.D.Tenn.2000). Two courts, however, have concluded that Apprendi falls within the second Teague exception and should, therefore, be applied retroactively. Darity, 124 F. Supp. 2d 355, 358-61 (W.D.N.C. 2000); United States v. Murphy, 109 F. Supp. 2d 1059 (D.Minn.2000).
This Court disagrees with the reasoning of the courts that have concluded that the Apprendi rule does not increase the accuracy of a conviction or sentence. In Apprendi, the Supreme Court recognized that the "`reasonable doubt' requirement `has a vital role in our criminal procedure for cogent reasons'" relating to accuracy. Apprendi, 120 S.Ct. at 2359 (quoting In re Winship, 397 U.S. 358, 363, 90 S. Ct. 1068, 25 L. Ed. 2d 368 (1970)). The Court explained:
We thus require this, among other procedural protections in order to "provid[e] concrete substance for the presumption of innocence," and to reduce the risk of imposing such deprivations erroneously. If a defendant faces punishment beyond that provided by statute when an offense is committed under certain circumstances but not others, it is obvious that both the loss of liberty and the stigma attaching to the offense are heightened; it necessarily follows that the defendant should not at the moment the State is put to proof of those circumstances be deprived of protections that have until than point, unquestionably attached.
Id. (internal citations omitted). As indicated earlier in this opinion, prior to Apprendi the finding of certain facts that exposed a defendant to a sentence beyond the maximum penalty imposed by statute was made by a judge under a preponderance of the evidence standard. This Court must conclude that requiring these facts to be determined beyond a reasonable doubt will have a profound impact on the accuracy of the proceedings, thus, implicating the fundamental fairness of the proceedings.[7] To conclude otherwise trivializes the importance and purpose of that standard.
The Court not only finds that the rule in Apprendi increases the accuracy of the criminal proceedings, but also finds that it *932 "alter[s] our understanding of the bedrock procedural elements essential to the fairness of a criminal proceeding." Sawyer, 497 U.S. at 242, 110 S. Ct. 2822. In making this determination, the Court finds the language used by the Supreme Court in Apprendi telling:
At stake in this case are constitutional protections of surpassing importance: the proscription of any deprivation of liberty without "due process of law," Amdt. 14, and the guarantee that "[i]n all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury," Amdt. 6. Taken together, these rights indisputably entitle a criminal defendant to "a jury determination that [he] is guilty of every element of the crime with which he is charged, beyond a reasonable doubt."
Apprendi, 120 S.Ct. at 2355-56. That the reasonable doubt standard is a "bedrock procedural element essential to the fairness of a criminal proceeding," was made clear by the Supreme Court in In re Winship:
The reasonable-doubt standard plays a vital role in the American scheme of criminal procedure. It is a prime instrument for reducing the risk of convictions resting on factual error. The standard provides concrete substance for the presumption of innocence that bedrock "axiomatic and elementary" principle whose "enforcement lies at the foundation of the administration of our criminal law." *** "[A] person accused of a crime ... would be at a severe disadvantage, a disadvantage amounting to a lack of fundamental fairness, if he could be adjudged guilty and imprisoned for years on the strength of the same evidence as would suffice in a civil case."
* * * * * *
[T]he reasonable-doubt standard is indispensable, for it "impresses on the trier of fact the necessity of reaching a subjective state of certitude of the facts in issue."
In re Winship, 397 U.S. at 363-64, 90 S. Ct. 1068 (internal citations omitted). Apprendi clearly altered our understanding of this "bedrock procedural element" by requiring that it be applied to certain facts that previously were subject to a preponderance of the evidence standard only. As Justice O'Connor noted, the Apprendi decision "will surely be remembered as a watershed change in constitutional law." Apprendi, 120 S.Ct. at 2380 (O'Connor, J., dissenting).
In light of the foregoing, this Court concludes that the rule set forth in Apprendi should be applied retroactively to timely, initial habeas petitions either as a substantive change in the law or as a new rule of criminal procedure that falls within the second Teague exception.
Nevertheless, there are additional procedural hurdles that petitioner must clear before the Court may consider his Apprendi claims. Petitioner's Apprendi claims were not raised on direct appeal. A § 2255 motion cannot be used as a substitute for direct appeal. United States v. Addonizio, 442 U.S. 178, 184, 99 S. Ct. 2235, 60 L. Ed. 2d 805 (1979). Failure to raise a ground for relief on direct appeal results in a waiver of that ground unless the petitioner can show cause to excuse his failure to appeal and actual prejudice, or actual innocence. United States v. Frady, 456 U.S. 152, 167-68, 102 S. Ct. 1584, 71 L. Ed. 2d 816 (1982); Bousley v. United States, 523 U.S. 614, 118 S. Ct. 1604, 1611, 140 L. Ed. 2d 828 (1998); Murr v. United States, 200 F.3d 895, 900 (6th Cir. January 7, 2000).
As cause for procedurally defaulting his claims, petitioner first contends that-the factual and legal basis for his Apprendi claims were not available during his appeal. *933 While it is true that a claim that is "`so novel that its legal basis is not reasonably available to counsel' may constitute cause for a procedural default," Bousley, 118 S.Ct. at 1611 (internal citation omitted), petitioner's claim does not so qualify. Apprendi-like arguments were not novel and have for years been argued on appeal. See e.g., United States v. Dorlouis, 107 F.3d 248, 252 (4th Cir.1997); United States v. Rigsby, 943 F.2d 631, 640-43 (6th Cir.1991) (discussing Apprendi-like arguments with approval but finding that precedent required that the argument be rejected) (cited by petitioner); United States v. Vera, 894 F.2d 410 (Table), 1990 WL 4727 *2-3 (9th Cir.1990); United States v. Wood, 834 F.2d 1382, 1389 (8th Cir.1987); United States v. Crockett, 812 F.2d 626, 629 (10th Cir.1987); United States v. Alvarez, 735 F.2d 461, 468 (11th Cir.1984). Moreover, nearly three months before the Court of Appeals' issued its opinion in petitioner's case, the Supreme Court decided Jones v. United States, 526 U.S. 227, 119 S. Ct. 1215, 143 L. Ed. 2d 311 (1999), wherein the Court set forth in dicta the rule that it, in essence, adopted as its holding in Apprendi.
Petitioner also attempts to demonstrate cause by arguing that any attempt to raise his Apprendi claims on appeal would have been futile given the precedent in the Sixth Circuit. However, the Supreme Court rejected a similar argument in Bousley, stating that "futility cannot constitute cause if it means simply that a claim was `unacceptable to that particular court at that particular time.'" Bousley, 118 S.Ct. at 1611 (quoting Engle v. Isaac, 456 U.S. 107, 102 S. Ct. 1558, 71 L. Ed. 2d 783 (1982)).
Even if petitioner could show cause for his default, the Court finds that he is unable to demonstrate actual prejudice. Applying Apprendi to this case, the Court was limited to statutory maximum penalties of twenty years on each of the two drug conspiracy counts. For sentencing purposes, the drug conspiracy counts were grouped, and petitioner was sentenced to a term of 264 months. Generally, grouped counts are to be served concurrently. However, U.S.S.G. § 5G1.2(d) provides that "[i]f the sentence imposed on the count carrying the highest statutory maximum is less than the total punishment, then the sentence imposed on one or more of the other counts shall run consecutively, but only to the extent necessary to produce a combined sentence equal to the total punishment." Thus, applying this provision of the Sentencing Guidelines, petitioner's term of imprisonment would remain unchanged. See United States v. Page, 232 F.3d 536, 544-45 (6th Cir.2000); United States v. Henderson, 105 F. Supp. 2d 523, 536-37 (S.D.W.Va.2000).
Finally, petitioner has failed to establish his actual innocence; that is, that "it is more likely than not that no reasonable juror would have convicted him." Bousley, 118 S.Ct. at 1611. Accordingly, petitioner's Apprendi claims are not well taken.
Further, for the foregoing reasons, the Court certifies, pursuant to 28 U.S.C. § 1915(a)(3), that an appeal from this decision could not be taken in good faith, see Fed.R.App.P. 24(a), and that there is no basis upon which to issue a certificate of appealability. 28 U.S.C. § 2253(c); Fed. R.App.P. 22(b); Slack v. McDaniel, 529 U.S. 473, 120 S. Ct. 1595, 1603-4, 146 L. Ed. 2d 542 (2000); Lyons v. Ohio Adult Parole Authority, 105 F.3d 1063, 1073 (6th Cir.1997).
THEREFORE, for the foregoing reasons, good cause appearing, it is
ORDERED that the motion to vacate, set aside, or correct sentence be, and hereby is, DENIED; and it is
*934 FURTHER ORDERED that petitioner is denied a certificate of appealability; and it is
FURTHER ORDERED that petitioner is denied leave to file an appeal in forma pauperis.
NOTES
[1] The Court notes that petitioner retained new counsel for purposes of sentencing.
[2] As a result of sentencing counsel's efforts, petitioner was found responsible for 26,451 kilograms of marijuana and its equivalents, whereas the government argued that he was responsible for 33,805 kilograms.
[3] The Assistant United States Attorney in this case indicated that petitioner's trial counsel spent several hours interviewing the agents assigned to the case and reviewing the documents seized as evidence.
[4] The government incorrectly contends that petitioner's plea to the drug conspiracy charges admits the conduct alleged in the overt acts, which included allegations of specific amounts of drugs. However, a guilty plea serves only as an "admission of all the elements of a formal charge." United States v. Skinner, 25 F.3d 1314, 1316 (6th Cir.1994) (citing McCarthy v. United States, 394 U.S. 459, 466, 89 S. Ct. 1166, 22 L. Ed. 2d 418 (1969)). A conviction on drug conspiracy charges brought pursuant to §§ 846 and 963 does not require proof of any overt acts. See, e.g., United States v. Myers, 102 F.3d 227, 235 (6th Cir.1996) (citing United States v. Shabani, 513 U.S. 10, 17, 115 S. Ct. 382, 130 L. Ed. 2d 225 (1994)); United States v. Rodriguez, 215 F.3d 110, 118 (1st Cir.2000). "[T]he criminal agreement itself is the actus reus." Shabani, 513 U.S. at 16, 115 S. Ct. 382. Thus, petitioner's guilty plea does not constitute an admission of the overt acts since the overt acts are not elements of the drug conspiracy charges. See United States v. Cazares, 121 F.3d 1241, 1247 (9th Cir.1997) ("allegations not necessary to be proved for a conviction in this case the overt acts are not admitted by a plea"). Furthermore, the plea colloquy did not include an admission of any particular quantity of drugs.
[5] Although the government cites several cases for the proposition that "the circuit courts of appeal that have heard this issue have declined to apply [Apprendi] to cases on collateral review," Respondent's Supplemental Reply, p. 4, all but one of the cases cited involved a second or successive petition. Those courts reasoned that the language in § 2255 regarding successive petitions mandates that the Supreme Court actually hold that a new rule is retroactive before it can be applied retroactively by lower courts. See Sustache-Rivera v. United States, 221 F.3d 8 (1st Cir.2000); Talbott v. Indiana, 226 F.3d 866 (7th Cir.2000); Rodgers v. United States, 229 F.3d 704 (8th Cir.2000); United States v. Falls, 2000 WL 1610733 (8th Cir.2000); In re Joshua, 224 F.3d 1281 (11th Cir.2000). The government has not cited, and the Court is not aware of, any authority extending the holdings of those decisions to an initial § 2255 petition. The sole case cited by the government that did not involve a successive petition, involved a habeas petition filed pursuant to § 2254. In that case, the Court did not decide the retroactivity issue but, rather, found that the claim was procedurally defaulted. Scott v. Baldwin, 225 F.3d 1020, 1023 n. 7 (9th Cir.2000).
[6] In Apprendi, the Court specifically noted that the defendant had not asserted a constitutional claim based on the omission of any reference to sentence enhancement factors in the indictment and that it does not separately address the indictment question. Apprendi, 120 S.Ct. at 2356, n. 3.
[7] This Court further notes that evidence of such facts, formerly considered sentencing factors, was not subject to the Federal Rules of Evidence. See Fed.R.Evid. § 1101(d)(3); United States v. Davis, 170 F.3d 617, 622 (6th Cir.1999). As such, hearsay evidence was permitted, which also implicates the defendant's Sixth Amendment right to confront and cross-examine witnesses. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2472335/ | 29 F. Supp. 2d 1161 (1998)
BALLY TOTAL FITNESS HOLDING CORPORATION, Plaintiff,
v.
Andrew S. FABER, Defendant.
No. CV 98-1278 DDP (MANX).
United States District Court, C.D. California.
December 21, 1998.
*1162 David Huebner, Glenn W. Trost, Coudert Bros., Los Angeles, CA, Eric E. Cohen, A. Sidney Katz, Eric C. Cohen, Welsh & Katz, Chicago, IL, for Plaintiff.
Kirk N. Sullivan, Gary Patrick Simonian, Jody Damon Angel, Hagenbaugh & Murphy, Glendale, CA, for Defendant.
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
PREGERSON, District Judge.
Andrew S. Faber's motion for summary judgment came before the Court for oral argument on November 23, 1998. After reviewing and considering the materials submitted by the parties and hearing oral argument, the Court GRANTS Faber's motion for summary judgment.
BACKGROUND
Bally Total Fitness Holding Corp. ("Bally") brings this action for trademark infringement, unfair competition, and dilution against Andrew S. Faber ("Faber") in connection with Bally's federally registered trademarks and service marks in the terms "Bally," "Bally's Total Fitness," and "Bally Total Fitness," including the name and distinctive styles of these marks. Bally is suing Faber based on his use of Bally's marks in a web site he designed.
Faber calls his site "Bally sucks." The web site is dedicated to complaints about Bally's health club business. When the web site is accessed, the viewer is presented with Bally's mark with the word "sucks" printed across it. Immediately under this, the web site states "Bally Total Fitness Complaints! Un-Authorized."
Faber has several web sites in addition to the "Bally sucks" site. The domain[1] in which Faber has placed his web sites is "www.compupix.com." Faber's other web sites within "www.compupix.com" include the "Bally sucks" site (URL address "www.compupix.com/ballysucks"); "Images of Men," a web site displaying and selling photographs of nude males (URL address "www.compupix.com/index.html"); a web site containing information regarding the gay community (URL address "www.compupix.com/gay"); a web site containing photographs of flowers and landscapes (URL address "www.compupix.com/fl/index.html"); and a web site advertising "Drew Faber Web Site Services" (URL address "www.compupix.com/biz.htm").
On April 22, 1998, Bally applied for a temporary restraining order directing Faber to withdraw his web site from the Internet. Bally represents that when its application for a TRO was initially filed, the "Bally sucks" site contained a direct link to Faber's "Images of Men" site. In his opposition to the application for a TRO, Faber indicated that this link had been removed. The Court denied Bally's application on April 30, 1998.
Bally brought a motion for summary judgment on its claims of trademark infringement, trademark dilution, and unfair competition which the Court denied on October 20, 1998. In that order, the Court ordered Faber to bring a motion for summary judgment. This motion is now before the Court.
DISCUSSION
I. Faber's Motion for Summary Judgment
A. Legal Standard
Summary judgment is appropriate where "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). A genuine issue exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party," and material facts are those "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 *1163 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's claim is insufficient to defeat summary judgment. Id. at 252, 106 S. Ct. 2505. In determining a motion for summary judgment, all reasonable inferences from the evidence must be drawn in favor of the non moving party. Id. at 242, 106 S. Ct. 2505.
B. Trademark Infringement
The Lanham Act provides the basic protections that a trademark owner receives. To find that Faber has infringed Bally's marks the Court would have to find that Bally has valid protectable trademarks and that Faber's use creates a likelihood of confusion. 15 U.S.C. § 1114(1)(a). Faber asserts that Bally cannot meet this standard as a matter of law.
1. Validity of Bally's marks
Bally has demonstrated that it has invested a substantial amount of money and effort to create valuable trademarks. Bally's marks are registered on the Principle Register of the U.S. Patent and Trademark Office. Additionally, Bally asserts that "[s]ince 1990, Bally has spent over $500,000,000.00 (one-half billion dollars) in advertising the Bally name in the health club industry." Further, "[i]n 1996, Bally spent over $5,000,000 in external signage for its clubs nationwide." Finally, Bally argues that it is the only business in the health club industry which uses the Bally marks. These facts establish that Bally has valid protectable marks.
2. Likelihood of confusion
In determining whether a defendant's use of a plaintiff's trademarks creates a likelihood of confusion, the courts apply an eight-factor test, including:
(1) strength of the mark;
(2) proximity of the goods;
(3) similarity of the marks;
(4) evidence of actual confusion;
(5) marketing channels used;
(6) type of goods and the degree of care likely to be exercised by the purchaser;
(7) defendant's intent in selecting the mark; and
(8) likelihood of expansion of the product lines.
See AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir.1979).
The Sleekcraft factors apply to related goods. Id. at 348. Bally is involved in the health club industry. Faber is an Internet web page designer who believes that Bally engages in unsatisfactory business practices. Faber operates a web site which is critical of Bally's operations. Bally, however, states that it uses the Internet to communicate with its members and to advertise its services. Consequently, Bally asserts that the parties have related goods because both parties use the Internet to communicate with current and potential Bally members.
"Related goods are those goods which, though not identical, are related in the minds of consumers." Levi Strauss & Co. v. Blue Bell, Inc., 778 F.2d 1352, 1363 (9th Cir.1985). Several courts have addressed whether goods are related. See id. (shirts and pants are related goods); Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 152-53 (9th Cir.1963) (beer and whiskey are related goods); Yale Elec. Corp. v. Robertson, 26 F.2d 972 (2d Cir.1928) (locks and flashlights are related goods). The modern rule protects marks against "any product or service which would reasonably be thought by the buying public to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner." 3 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 24:6 at 24-13 (1997).
The Court finds that the goods here are not related. Web page design is a service based on computer literacy and design skills. This service is far removed from the business of managing health clubs. The fact that the parties both advertise their respective services on the Internet may be a factor tending to show confusion, but it does not make the goods related. The Internet is a communications medium. It is not itself a product or a service. Further, Faber's site states that it is "unauthorized" and contains the words "Bally sucks." No reasonable consumer comparing Bally's official web site with Faber's site would assume Faber's site *1164 "to come from the same source, or thought to be affiliated with, connected with, or sponsored by, the trademark owner." Therefore, Bally's claim for trademark infringement fails as a matter of law.
However, even assuming that these goods are related, Bally's claims also fail to satisfy the Sleekcraft factors.
a. Strength of mark
This factor tips greatly toward Bally. Bally owns registered marks. Bally uses these marks extensively throughout the United States and Canada. Bally spends a significant amount of money each year to promote its marks. Finally, Bally asserts that no other company uses these marks in connection with health clubs, and that these marks are arbitrary. These facts demonstrate that Bally has strong marks.
b. Similarity of the marks
Bally argues that the marks are identical. Bally argues that the only difference between the marks is that Faber attached the word "sucks" to Bally's marks. Bally argues that this is a minor difference.
"Sucks" has entered the vernacular as a word loaded with criticism. Faber has superimposed this word over Bally's mark. It is impossible to see Bally's mark without seeing the word "sucks." Therefore, the attachment cannot be considered a minor change. See Int'l Ass'n of Machinists & Aerospace Workers v. Winship Green Nursing Ctr., 103 F.3d 196, 202-03 (1st Cir.1996).
This factor cuts against Bally.
c. Competitive proximity of the goods
Bally argues that the goods are in close proximity because both parties use the Internet. Bally uses the Internet to generate revenue and disseminate information to its customers in support of its health clubs. Faber uses his web site to criticize Bally and to provide others with a forum for expressing their opinions of Bally. Faber does not attempt to pass-off his site as Bally's site. Faber states that his site is "unauthorized." Bally asserts that its site offers similar services because it has a complaints section and it provides information about Bally's services and products.
The Court finds that Faber's site does not compete with Bally's site. It is true that both sites provide Internet users with the same service information about Bally. These sites, however, have fundamentally different purposes. Bally's site is a commercial advertisement. Faber's site is a consumer commentary. Having such different purposes demonstrates that these sites are not proximately competitive.
Therefore, this factor cuts against Bally.
d. Evidence of actual confusion
Bally does not offer evidence of actual confusion. Instead, Bally states, "consumer confusion is patently obvious in this case because of the strength of the Bally marks, combined with the obvious similarities in appearance and proximity of the marks, although there is no evidence of actual confusion."
Faber's states that his site is "unauthorized" and he has superimposed the word "sucks" over Bally's mark. The Court finds that the reasonably prudent user would not mistake Faber's site for Bally's official site.
Therefore, this factor cuts against Bally.
e. Marketing channels used
Bally argues that both parties use the Internet to reach current and potential Bally members. Bally states that it uses the Internet to disseminate information and generate revenue. Bally contends that it has spent over $500,000,000 in advertisements including the Internet, television, radio, billboards and signage since 1990. Therefore, Bally has a broad marketing strategy which includes the Internet.
Bally has not shown that Faber uses all of these channels for marketing. Instead, Bally has shown that Faber has one site which offers his services for web design, and this site included a reference to his "Bally sucks" site for some time. However, this site no longer includes this link.
Arguably, listing the "Bally sucks" site as one of many sites Faber has created in order to advertise his web design services is a form of marketing. This fact, however, does not change the primary purpose of the "Bally sucks" site which is consumer commentary. Bally's goods and Faber's goods are not related. *1165 Therefore, the fact that marketing channels overlap is irrelevant.
This factor is, at best, neutral, and likely cuts against Bally.
f. Degree of care likely to be exercised
Bally argues that individual users may mistakenly access Faber's site rather than the official Bally site. Bally argues that this may happen when users employ an Internet search engine to locate Bally's site. Bally argues that the search result may list Faber's site and Bally's site. The result, it argues, will be that "[p]rospective users of plaintiff's services who mistakenly access defendant's web site may fail to continue to search for plaintiff's own home page, due to anger, frustration or the belief that plaintiff's home page does not exist." (Bally's Mot. for Sum. Judg. 19:1-3, quoting Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1327 (9th Cir.1998).) The Panavision case, however, concerned an individual who engaged in commercial use of plaintiff's registered mark in his Internet domain name, "Panavision.com." See Panavision, 141 F.3d at 1324.
Here, Faber uses the Bally mark in the context of consumer criticism. He does not use Bally in his domain name. He communicates that the site is unauthorized and that it is not Bally's official site. Moreover, Faber's use of the Bally mark does not significantly add to the large volume of information that the average user will have to sift through in performing an average Internet search. See Teletech Customer Care Management (California), Inc. v. Tele-Tech Co., Inc., 977 F. Supp. 1407, 1410 (C.D.Cal.1997) (noting that average search can result in 800 to 1000 "hits"). Whether the average user has to sift through 799 or 800 "hits" to find the official Bally site will not cause the frustration indicated in Teletech and Panavision because Faber is not using Bally's marks in the domain name. Moreover, even if Faber did use the mark as part of a larger domain name, such as "ballysucks.com", this would not necessarily be a violation as a matter of law.[2]
Further, the average Internet user may want to receive all the information available on Bally. The user may want to access the official Internet site to see how Bally sells itself. Likewise, the user may also want to be apprised of the opinions of others about Bally. This individual will be unable to locate sites containing outside commentary unless those sites include Bally's marks in the machine readable code[3] upon which search engines rely. Prohibiting Faber from using Bally's name in the machine readable code would effectively isolate him from all but the most savvy of Internet users.
Therefore, this factor cuts against Bally.
g. Defendant's intent in selecting the mark
Here, Faber purposely chose to use Bally's mark to build a "web site that is `dedicated to complaint, issues, problems, beefs, grievances, grumblings, accusations, and gripes with Bally Total Fitness health clubs.'" Faber, however, is exercising his right to publish critical commentary about Bally. He cannot do this without making reference to Bally.[4] In this regard, Professor McCarthy states:
*1166 The main remedy of the trademark owner is not an injunction to suppress the message, but a rebuttal to the message. As Justice Brandeis long ago stated, "If there be time to expose through discussion the falsehood and fallacies, to avert the evil by the process of education, the remedy to be applied is more speech, not enforced silence."
5 McCarthy, § 31:148 at 31-216.
Applying Bally's argument would extend trademark protection to eclipse First Amendment rights. The courts, however, have rejected this approach by holding that trademark rights may be limited by First Amendment concerns. See L.L. Bean, Inc. v. Drake Publishers, Inc., 811 F.2d 26 (1st Cir.), cert. denied, 483 U.S. 1013, 107 S. Ct. 3254, 97 L. Ed. 2d 753 (1987).
Therefore, this factor is neutral.
h. Likelihood of expansion of the product line
Bally essentially concedes that there is no likelihood that Bally will expand its product lines into the same areas in which Faber operates. However, Bally claims that Faber's intentional acts reduce the significance of this factor. Bally, though, relies on conclusions rejected by the Court. (See supra Part I-B-2-g.)
It is apparent that the parties will not expand into the other's line of business. Bally intends to use the Internet as a means of increased communication. However, Bally has not represented that it intends to enter the web design business or that it intends to operate an official anti-Bally site. Further, Faber has not indicated that he intends to operate a health club.
Therefore, this factor also cuts against Bally.
3. Conclusion
Bally owns valuable marks. However, Faber has established that there is no likelihood of confusion as a matter of law. Therefore, the Court grants Faber's motion for summary judgment on trademark infringement.
C. Trademark Dilution
The elements of a dilution claim are that:
(1) The plaintiff is the owner of a mark which qualifies as a "famous" mark as measured by the totality of the eight factors listed in § 43(c)(1),
(2) The defendant is making commercial use,
(3) In interstate commerce,
(4) Of a mark or trade name,
(5) And defendant's use began after the plaintiff's mark became famous,
(6) And defendant's use causes dilution by lessening the capacity of the plaintiff's mark to identify and distinguish goods or services.
3 McCarthy, § 24:89 at XX-XXX-XX (footnote omitted). Dilution may be either by blurring or by tarnishment. See Id. §§ 24:69, 24:68, at XX-XXX-XX. Here, Bally argues that Faber has tarnished its mark by associating it with pornography.
Commercial use is an essential element of any dilution claim. Here, Bally argues that Faber has used Bally's mark to demonstrate his skills as a web site designer and to show current members how to effectively cancel their memberships with Bally. Bally asserts that Faber listed the "Bally sucks" web site on the "Drew Faber Web Site Services" site in an effort to advertise Faber's services.
Bally cites several "cybersquatting" cases in which individuals registered the trademarks of others as domain names for the purpose of selling or ransoming the domain name to the trademark owner. Bally asserts that these cases hold that using another's mark on the Internet is per se commercial use. The mere use of another's name on the Internet, however, is not per se commercial use. See 3 McCarthy, § 24:97.2 at 24-172.
Here, Faber used Bally's marks in connection with a site devoted to consumer product review of Bally's services. In congressional hearings, Senator Orrin Hatch stated that *1167 the dilution statute "will not prohibit or threaten noncommercial expression, such as parody, satire, editorial and other forms of expression that are not a part of a commercial transaction." 141 Cong.Rec. S19306-10 (Daily ed. Dec. 29, 1995). Therefore, this exception encompasses both parodies and consumer product reviews. See Panavision Int'l, L.P. v. Toeppen, 945 F. Supp. 1296, 1303 (C.D.Cal.1996).
Faber has shown that Bally cannot demonstrate that he is using Bally's mark in commerce. Bally argues that Faber's listing of the "Bally sucks" site, among others, in a site listing his available services and qualifications uses the Bally mark to promote a service. This argument is unpersuasive. Faber is not using the Bally mark to sell his services. Faber is not using Bally's mark to identify his goods in commerce. Faber merely listed the "Bally sucks" site as one of several web sites that he has designed so that those who are interested in his services may view his work. This is akin to an on-line resume.
Further, the courts have held that trademark owners may not quash unauthorized use of the mark by a person expressing a point of view. See L.L. Bean, 811 F.2d at 29, citing Lucasfilm Ltd. v. High Frontier, 622 F. Supp. 931, 933-35 (D.D.C.1985). This is so even if the opinion may come in the form of a commercial setting. See Id. at 33 (discussing Maine's anti-dilution statute). In L.L. Bean, the First Circuit held that a sexually-oriented parody of L.L. Bean's catalog in a commercial adult-oriented magazine was noncommercial use of the trademark. See Id. The court stated:
If the anti-dilution statute were construed as permitting a trademark owner to enjoin the use of his mark in a noncommercial context found to be negative or offensive, then a corporation could shield itself from criticism by forbidding the use of its name in commentaries critical of its conduct. The legitimate aim of the anti-dilution statute is to prohibit the unauthorized use of another's trademark in order to market incompatible products or services. The Constitution does not, however, permit the range of the anti-dilution statute to encompass the unauthorized use of a trademark in a noncommercial setting such as an editorial or artistic context.
Id.
Here, Bally wants to protect its valuable marks and ensure that they are not tarnished or otherwise diluted. This is an understandable goal. However, for the reasons set forth above, Faber's "Bally sucks" site is not a commercial use.
Even if Faber's use of Bally's mark is a commercial use, Bally also cannot show tarnishment. Bally cites several cases such as the "Enjoy Cocaine" and "Mutant of Omaha" cases for the proposition that this site and its relationship to other sites tarnishes their mark. See Mutual of Omaha Ins. Co. v. Novak, 648 F. Supp. 905 (D.Neb.1986) (discussing both infringement and disparagement), aff'd 836 F.2d 397 (8th Cir.1987) (addressing infringement, but not disparagement); Coca-Cola v. Gemini Rising, Inc., 346 F. Supp. 1183 (E.D.N.Y.1972).
There are, however, two flaws with Bally's argument. First, none of the cases that Bally cites involve consumer commentary. In Coca-Cola, the court enjoined the defendant's publication of a poster stating "Enjoy Cocaine" in the same script as Coca-Cola's trademark. See Coca-Cola, 346 F.Supp. at 1192. Likewise, in Mutual of Omaha, the court prohibited the use of the words "Mutual of Omaha," with a picture of an emaciated human head resembling the Mutual of Omaha's logo on a variety of products as a means of protesting the arms race. See Mutual of Omaha, 836 F.2d at 398. Here, however, Faber is using Bally's mark in the context of a consumer commentary to say that Bally engages in business practices which Faber finds distasteful or unsatisfactory. This is speech protected by the First Amendment. See L.L. Bean, 811 F.2d at 29; McCarthy, § 24:105 at 24-191. As such, Faber can use Bally's mark to identify the source of the goods or services of which he is complaining. This use is necessary to maintain broad opportunities for expression. See Restatement (Third) of Unfair Competition § 25(2), cmt. i (1995) (stating "extension of the antidilution statutes to protect against damaging non-trademark uses raises substantial free speech issues and duplicates other potential *1168 remedies better suited to balance the relevant interests").
The second problem with Bally's argument is that it is too broad in scope. Bally argues that the proximity of Faber's "Images of Men" site tarnishes the good will that Bally's mark enjoys because it improperly creates an association between Bally's mark and pornography. If the Court accepted this argument it would be an impossible task to determine dilution on the Internet. It is true that both sites are under the same domain name, "Compupix.com." Furthermore, it is also true that at a variety of times there were links between Faber's various sites. However, at no time was any pornographic material contained on Faber's "Bally sucks" site. From its inception, this site was devoted to consumer commentary. Looking beyond the "Bally sucks" site to other sites within the domain or to other linked sites would, to an extent, include the Internet in its entirety. The essence of the Internet is that sites are connected to facilitate access to information. Including linked sites as grounds for finding commercial use or dilution would extend the statute far beyond its intended purpose of protecting trademark owners from use that have the effect of "lessening ... the capacity of a famous mark to identify and distinguish goods or services." 15 U.S.C. § 1127. Further, it is not logical that a reasonably prudent Internet user would believe that sites which contains no reference to a trademark and which are linked to, or within the same domain as, a site that is clearly not sponsored by the trademark owner are in some way sponsored by the trademark owner.
Therefore, the Court grants Faber's motion for summary judgment on the claim of trademark dilution.
D. Unfair Competition
Bally relies on the claims of trademark dilution and trademark infringement to establish its claim of unfair competition. Because Faber has shown that he is entitled to summary judgment on the trademark infringement and dilution claims, the Court grants Faber's motion for summary judgment on the unfair competition claim as well.
II. Faber's motion for attorney's fees
In Faber's reply to Bally's opposition he raises the claim that he is entitled to attorney's fees under the Lanham Act because the plaintiff's claims have no substance. Because Faber did not include this argument in his motion, the Court declines to address this issue because Bally has not had an opportunity to respond.
III. Conclusion
The explosion of the Internet is not without its growing pains. It is an efficient means for business to disseminate information, but it also affords critics of those businesses an equally efficient means of disseminating commentary. Here, trademark infringement and trademark dilution do not provide a remedy for Bally.
The Court GRANTS Faber's motion for summary judgment on the claims of trademark infringement, trademark dilution, and unfair competition.
NOTES
[1] "Domains" are used to provide organization to the Internet. The domain name is a word or series of words followed by ".edu" for education; ".org" for organizations; ".gov" for government entities; ".net" for networks; and ".com" as the catchall for other Internet users. Within each of these top level domains, there are many different sub-domains. An example of a domain name would be "www.Bally.com." Domain names are licensed to individuals by Network Solutions, Inc. Within any domain, the domain owner may place additional sub-domains and multiple web pages or may merely have one web site.
[2] The Court notes that there is a distinction between this example and cases like Panavision where an individual appropriates another's registered trademark as its domain name. In the "cybersquatter" cases like Panavision, there is a high likelihood of consumer confusion reasonably prudent consumers would believe that the site using the appropriated name is the trademark owner's official site. Here, however, no reasonably prudent Internet user would believe that "Ballysucks.com" is the official Bally site or is sponsored by Bally.
[3] The machine readable code is the hidden part of the Internet upon which search engines rely to find sites that contain content which the individual user wishes to locate. The basic mechanics is that the web page designer places certain keywords in an unreadable portion of the web page that tells the search engines what is on a particular page.
[4] Bally concedes that Faber has some right to use Bally's name as part of his consumer commentary. However, Bally argues that Faber uses more than is necessary when making his commentary and that he has alternative means of communication. Specifically, Bally argues that Faber could use the name "Bally" or "Bally Total Fitness" in block lettering without using Bally's stylized "B" mark or distinctive script. This argument, however, would create an artificial distinction that does not exist under trademark law. Trademarks are defined broadly to include both names and stylized renditions of those names or other symbols. 15 U.S.C. §§ 1051, 1127 (1997). Furthermore, the purpose of a trademark is to identify the source of goods. Id. § 1127. An individual who wishes to engage in consumer commentary must have the full range of marks that the trademark owner has to identify the trademark owner as the object of the criticism. (See infra Part I-C.) | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/250574/ | 276 F.2d 876
James M. MOORE and Rogers Boone, Appellants,v.Lee HENSLEE, Superintendent of the Arkansas State Penitentiary, Appellee.James Albert BOYD and Willie H. Byrd, Appellants,v.Lee HENSLEE, Superintendent of the Arkansas State Penitentiary, Appellee.
No. 16433.
No. 16434.
United States Court of Appeals Eighth Circuit.
March 29, 1960.
W. Harold Flowers, Pine Bluff, Ark., and Harold B. Anderson, Little Rock, Ark., for appellants.
Thorp Thomas, Asst. Atty. Gen., for appellee.
Before SANBORN, VAN OOSTERHOUT, and MATTHES, Circuit Judges.
PER CURIAM.
1
James M. Moore, Rogers Boone, James Albert Boyd and Willie H. Byrd, all Negroes, were jointly charged in an information filed by the Prosecuting Attorney within and for the Eighth Judicial Circuit of the State of Arkansas, of which Miller County is a part, with murdering M. R. Hamm, an aged white man, on May 9, 1956. They were first tried together in the summer of 1956, in the Circuit Court of Miller County, Arkansas, the situs of the crime, found guilty by a jury of first degree murder, and in due time were sentenced to death. This judgment was reversed by the Supreme Court of Arkansas. Moore v. State, 227 Ark. 544, 299 S.W.2d 838.
2
On remand and after a severance was obtained, Moore was again tried, found guilty and sentenced to die. This judgment was affirmed by the Supreme Court of Arkansas. Moore v. State, Ark., 315 S.W.2d 907, and on January 26, 1959, certiorari was denied by the Supreme Court of the United States. Moore v. State of Arkansas, 358 U.S. 946, 79 S.Ct. 356, 3 L.Ed.2d 353.
3
Boone, also having obtained a severance, was next tried, found guilty and sentence of death was imposed by the court. This judgment was affirmed by the Supreme Court of Arkansas. Boone v. State, Ark., 327 S.W.2d 87. Review by the Supreme Court of the United States was not requested.
4
Boyd and Byrd were tried jointly, and following a verdict of guilty, they also received the death sentence. The Supreme Court of Arkansas affirmed. Boyd v. State, Ark., 328 S.W.2d 122. Neither Boyd nor Byrd petitioned the Supreme Court of the United States for certiorari.
5
On February 11, 1960, the day before Moore and Boone were scheduled to die, they sought relief in the federal court by petition for writ of habeas corpus filed in the United States District Court for the Eastern District of Arkansas, Western Division. On the same day Honorable J. Smith Henley, of that court, entered an order to show cause why a writ of habeas corpus should not issue, and the executions of Moore and Boone were stayed. On February 17, 1960, Boyd and Byrd, who were scheduled to die on February 19, 1960, pursued the course taken by Moore and Boone. The District Court directed that the two petitions for writs of habeas corpus be consolidated for the purpose of trial.
6
A plenary hearing on the petitions for writs of habeas corpus was held in the district court on February 17, 1960. Appellants were present and afforded full opportunity to be heard and to offer testimony. After consideration, and on February 18, the court dismissed the petitions for writs of habeas corpus, vacated the order to show cause issued in connection with the petition of Moore and Boone, denied a certificate of probable cause, and refused a further stay of execution. On March 1, 1960, Judge Henley filed a memorandum opinion which contained his findings and conclusions.
7
On February 24, 1960, upon application of the appellants, this Court issued certificate of probable cause and stays of execution of the death sentences of Moore and Boone scheduled for February 26, 1960, and of Boyd and Byrd scheduled for March 4, 1960. Oral arguments on the appeals were heard on March 9, 1960.
8
In seeking discharge from custody, appellants contend that their convictions were obtained as the result of deprivation of their constitutional rights as guaranteed by the Fourteenth Amendment to the Constitution of the United States. Specifically, they claim, (1) that their trial on information, rather than on an indictment by a Grand Jury, violated their rights as guaranteed by the Fifth Amendment, as enforced under the Fourteenth Amendment; (2) that Negroes were systematically excluded from jury service in the Miller County Circuit Court, or illegally limited in number; (3) that their confessions were involuntary and improperly admitted.
9
At the outset we observe that the question of the guilt of appellants is not an issue. In this situation and in view of the posture of the cases in this Court, it is wholly unnecessary to abstract the facts and circumstances attending commission of the crime. They are reported in Moore v. State, 227 Ark. 544, 299 S.W.2d 838.
Information Issue.
10
The trial court disposed of this issue summarily as being without merit. We agree. The Supreme Court of the United States has consistently recognized that state prosecutions initiated by the filing of an information by the Prosecuting Attorney, here authorized by Ark. Const. Amend. 21, do not violate the constitutional rights of the accused under the Fourteenth Amendment. Hurtado v. People of State of California, 110 U.S. 516, 538, 4 S.Ct. 111, 292, 28 L.Ed. 232; Gaines v. State of Washington, 277 U.S. 81, 86, 48 S.Ct. 468, 72 L.Ed. 793; Bute v. People of State of Illinois, 333 U.S. 640, 657, 68 S.Ct. 763, 92 L.Ed. 986.
The Jury Issue.
11
After reversal of the first conviction, appellants filed their joint motion to quash the jury panel on the ground that Negroes had systematically been excluded from jury panels solely on account of their race. After a full hearing was conducted by the circuit court on this issue the motion was denied. With respect to Moore, the district court found there was no evidence to substantiate the charge of racial discrimination in the selection of the jury which decided his case.
12
Nothing that we may utter can add to or affect the principle so firmly established and so recently re-enunciated by the Supreme Court, "* * * state exclusion of Negroes from grand and petit juries solely because of their race denie(s) Negro defendants in criminal cases the equal protection of the laws required by the Fourteenth Amendment. Strauder v. West Virginia, 100 U.S. 303 [25 L.Ed. 664]. (1880)." Patton v. State of Mississippi, 332 U.S. 463, 465, 68 S.Ct. 184, 185, 92 L.Ed. 76. Compare, Akins v. State of Texas, 325 U.S. 398, 65 S.Ct. 1276, 89 L.Ed. 1692; Cassell v. State of Texas, 339 U.S. 282, 70 S.Ct. 629, 94 L.Ed. 839. An examination of the record bearing upon the course pursued in Miller County, Arkansas, in the selection of juries makes it quite apparent that appellants' charge of systematic exclusion and studied evasion is without foundation in proof. As demonstrated by the Supreme Court of Arkansas in its opinion in Moore v. State, supra, 315 S.W.2d at pages 910-911-912, the facts are that from November, 1953, to and including June, 1957, with the exception of the November, 1956 term, the jury commissioners of Miller County, Arkansas, have consistently selected from one to ten Negroes for jury service in that county.
13
The focal point of appellants' contention, as advanced in their brief and in oral argument, is that discrimination in the selection of jury panels in Miller County, Arkansas, is necessarily practiced because the Negro race is not represented on the jury commission which is composed of three citizens. It is suggested that "it is almost impossible" for an all-white jury commission to keep informed of the habits and qualifications of the Negro population so that eligible members of that race can be selected for jury duty. We are not persuaded by this novel argument which fails to find support in either precedent or logic. Adoption of the principle contended for would require indulgence in the unwarranted presumption that jury commissioners entirely of one race will not discharge their "duty to familiarize themselves fairly with the qualifications of the eligible jurors of the county without regard to race and color." Cassell v. State of Texas, 339 U.S. 282, at page 289, 70 S.Ct. at page 633.1 Moreover, we are satisfied that the theory advanced by appellants would in reality lead to complexities in the administration of an important facet of our system of trial by juries. Application of the principle contended for, could not, in our view, be limited to the white and negro races. It would encompass all races, and the numerous nationalities and religious denominations existent in this country. The words of Mr. Justice Reed, speaking for the Court in Akins v. State of Texas, 325 U.S. 398, at page 403, 65 S.Ct. 1276, at page 1279, seem to be peculiarly appropriate:
14
"The number of our races and nationalities stands in the way of evolution of such a conception of due process or equal protection. Defendants under our criminal statutes are not entitled to demand representatives of their racial inheritance upon juries before whom they are tried. But such defendants are entitled to require that those who are trusted with jury selection shall not pursue a course of conduct which results in discrimination `in the selection of jurors on racial grounds.'" (Emphasis supplied.)
15
Beyond peradventure of a doubt, the test to be applied in the selection of juries, as laid down by the Supreme Court, is simple and understandable and application thereof should cause no insurmountable problems or difficulties. Our careful and considered examination of the pertinent evidence in light of the governing rule, convinces us that the test was satisfied in the trial of these cases.
Confessions.
16
In oral argument, counsel for appellants, with candor, stated that the circumstances surrounding the obtaining of the individual confessions from each of the appellants are accurately reflected in the opinions of the Supreme Court of Arkansas. Moore v. State, Ark., 315 S.W.2d 907; Boone v. State, Ark., 327 S.W.2d 87; Boyd v. State, Ark., 328 S.W.2d 122. Our review of the factual aspect of the confessions will be limited to those essentials necessary to a proper understanding and determination of the pertinent questions before us. At this point it should be said that in each trial, the circuit judge conducted an extensive hearing out of the presence of the jury for the purpose of determining whether the confessions were obtained as the result of methods which would render them inadmissible. In each instance the defendant or defendants on trial testified at length and, while conceding that they were not subjected to physical abuse of any type, they undertook to convince the court that they confessed as the result of fear and intimidation instilled by threats of danger to their lives made by police officers while appellants were being transported to Arkadelphia, Arkansas, and during the course of the questioning in the prosecutor's office. All such testimony was controverted by a Mrs. Merrill, the reporter who transcribed the statements, and by the officers who participated in the investigation. Each stoutly contended that the defendants were treated well and that the confessions were freely and voluntarily made. After each in-chambers hearing on the question, the court ruled, in effect, that upon the showing made it would not rule the confessions illegal, and the question would be submitted to the jury, which practice was followed in each of the trials. None of the appellants chose to testify before the jury, and thus the uncontroverted evidence of the officers stood alone.2
17
The present contention of appellants stems from the events which transpired during the trial of Boyd and Byrd. In the hearing before the judge in chambers, as in the prior trials, the evidence failed to satisfy the court that the confessions, as a matter of law, were the result of coercion of any kind. When the trial was resumed before the jury, it appeared for the first time from the testimony of one of the officers, that while Boyd was in his custody, the officer repeatedly stated to him that a group of white people was searching for Hamm's body and that Boyd might be in danger if the group discovered the body before the officers did. After this statement Boyd admitted to the officer that he had participated in the robbery of Hamm, but denied that Hamm had been killed. Later Boyd repeated his admission in the presence of Boone, who also admitted participating in the robbery of Hamm. Then Boyd and Boone took the officers to the place where the robbery had taken place and the body of Hamm was discovered within that area.
18
When this evidence made its appearance, the court promptly ruled that Boyd's oral admissions to the officer and his later written confession would be excluded because made after threats of mob violence. However, the court did admit as against Boyd, the confessions of Moore, Boone and Byrd, and as against Byrd, the confessions of Moore and Boone as well as his own confession. These rulings were approved by the Supreme Court of Arkansas in the Boyd and Byrd case. 328 S.W.2d 122, 125, 126.3
19
Now, and for the first time, the theory is advanced that the threats of violence, which were ruled sufficient to invalidate the admissions and confession of Boyd, were communicated by Boyd to the other appellants before their confessions were made, and that such communicated threats, considered in light of the whole situation and surroundings of the appellants while in custody, rendered all the confessions involuntary and consequently inadmissible.
20
In view of the contention that the confessions are the product of coercion, we have made our own examination of the record to determine the meritoriousness of the claim, Payne v. State of Arkansas, 356 U.S. 560, at page 562, 78 S.Ct. 844, 2 L.Ed.2d 975, having in mind, however, that in the same case the Court stated that "(e)nforcement of the criminal laws of the States rests principally with the state courts, and generally their findings of fact, fairly made upon substantial and conflicting testimony as to the circumstances producing the contested confession — as distinguished from inadequately supported findings or conclusions drawn from uncontroverted happenings — are not this Court's concern; * *." Ibid, 356 U.S. at page 562, 78 S.Ct. at page 847. Furthermore,
21
"A jury and the trial judge — knowing local conditions, close to the scene of events, hearing and observing the witnesses and parties — have the same undeniable advantages over any appellate tribunal in determining the charge of coercion of a confession as in determining the main charge of guilt of the crime. When the issue has been fairly tried and reviewed, and there is no indication that constitutional standards of judgment have been disregarded, we will accord to the state's own decision great and, in the absence of impeachment by conceded facts, decisive respect." (Emphasis supplied.) Stein v. People of State of
22
New York, 346 U.S. 156, at pages 180, 181, 182, 73 S.Ct. at page 1091.
23
There are several vital factors which convince us that the previous rulings by the Arkansas State Courts and the United States District Court were proper and must stand. The claim that the confessions of Moore, Boone and Byrd were induced because of threat of mob violence made to Boyd, was never suggested by any of the appellants in any of the trials or on appeal. As stated, that circumstance was first introduced in the last trial by one of the State's witnesses. None of the appellants testified that he had been influenced or frightened by the warning given to Boyd, although each had ample opportunity to do so. But assuming, arguendo, that the threat which rendered Boyd's confession inadmissible was communicated to the other appellants, we are not persuaded that the confessions made by Moore, Boone and Byrd, several hours later and at a point approximately 75 miles from where they had been apprehended, and under the circumstances presented by the evidence, were the product of methods which render them involuntary as a matter of law. It is important to keep in mind that these confessions were made when any danger of violence from any group was removed. Furthermore, after signing the confessions, all of the appellants were removed to the Arkansas State Penitentiary, a prevailing custom in that state, and about three days later, each confession was read aloud before all four defendants and each appellant ratified his confession in the presence of the others, at which time each was given the opportunity to correct any misstatement which appeared in the confessions as transcribed by the court reporter. Some minor corrections were in fact made. At that time none of the appellants contended that his confession was induced or influenced by the threat or warning made to Boyd upon which appellants now rely.
24
Thus, it appears that this is a typical case where we have a direct conflict in the oral testimony with respect to what transpired at and prior to the time the confessions were actually made. We do not have a situation where, admittedly, other undisputed facts tended to corroborate defendants' allegations. See Blackburn v. State of Alabama, 361 U.S. 199, 80 S.Ct. 274, 4 L.Ed.2d 242; Payne v. State of Arkansas, 356 U.S. 560, 78 S.Ct. 844, 2 L.Ed.2d 975; Fikes v. State of Alabama, 352 U.S. 191, 77 S.Ct. 281, 1 L.Ed.2d 246; Ashcraft v. State of Tennessee, 322 U.S. 143, 64 S.Ct. 921, 88 L. Ed. 1192; Ward v. State of Texas, 316 U.S. 547, 62 S.Ct. 1139, 86 L.Ed. 1663; Brown v. State of Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Brown v. State, 198 Ark. 920, 132 S.W.2d 15.
25
Furthermore, the Supreme Court has ruled that the effect of threats made at the time of arrest may be tempered by removal to a place of safety, holding that a confession given at such later time is admissible. See Thomas v. State of Arizona, 356 U.S. 390, 78 S.Ct. 885, 2 L.Ed. 2d 863.
26
After careful consideration of all of the circumstances, we agree with Judge Henley who found that the action of the trial court in admitting the confessions did not constitute a denial of due process of law to any of the appellants.
Exhaustion of State Remedies.
27
Because we are dealing with a capital offense, we have chosen to dispose of the points raised by appellants on the merits. Additionally, we are convinced that there is substance in the appellee's contention that appellants are not entitled to relief in these proceedings because of their failure to exhaust their state remedies as required by 28 U.S.C.A. § 2254. Although they joined in the petition to quash the jury panel in Moore's trial, neither Boone nor Boyd and Byrd made any further claim that systematic discrimination or studied exclusion had been practiced. It is quite evident that in each of the trials the jury composition was different; Moore was tried July 10, 1957, Boone was not retried until September 29, 1958, and Boyd and Byrd were not retried until the November, 1958 term. There was no evidence whatever that racial discrimination was practiced in the selection of the jury panels for the September and November, 1958 terms of court. It would thus appear that the failure of Boone, Boyd and Byrd to challenge the process pursued in the selection of the panels from which the jurors were chosen to try them, or to raise the question in either the Circuit Court or Supreme Court of Arkansas, constitutes an effective waiver of the point under the doctrine of exhaustion of state remedies. Bailey v. Henslee, 8 Cir., 264 F.2d 744, certiorari denied 361 U.S. 945, 80 S.Ct. 408, 4 L.Ed.2d 364; Carruthers v. Reed, 8 Cir., 102 F.2d 933, 939, certiorari denied 307 U.S. 643, 59 S.Ct. 1047, 83 L.Ed. 1523; Hollman v. Manning, 4 Cir., 262 F.2d 656, certiorari denied 359 U.S. 996, 79 S.Ct. 1131, 3 L.Ed.2d 984.
28
As to the confessions, as we have seen, the precise point presented here was not raised by any of the appellants in their trials or on appeals from the convictions. Additionally, neither Boone nor Boyd and Byrd petitioned the United States Supreme Court for writ of certiorari, and, finally, none of the appellants has sought relief by writ of habeas corpus in the state courts. See Darr v. Burford, 339 U.S. 200, 70 S.Ct. 587, 94 L.Ed. 761; Ex parte Hawk, 321 U.S. 114, 116, 117, 64 S.Ct. 448, 88 L.Ed. 572; Hollman v. Manning, 4 Cir., 262 F.2d 656, 658, certiorari denied 359 U.S. 996, 79 S.Ct. 1131, 3 L.Ed.2d 984; Guy v. Utecht, 8 Cir., 144 F.2d 913, 916.
29
Judge Henley, who is more familiar with the local situation, concluded that "(t)he Hamm murder case has been tried four times by an able, fair and experienced trial judge, and has been the subject of four full opinions of the Supreme Court of Arkansas." From our own review of the records made in the trials of this particularly vicious crime, we too are impressed with the conscientious efforts of the trial judge in assuring that defendants' constitutional rights were respected at every step, and we are fully convinced that appellants have not been denied due process of law as guaranteed by the Fourteenth Amendment to the Constitution of the United States.
30
The judgments are affirmed. Mandates will issue ten days after the filing of this opinion.
Notes:
1
After our review of the testimony at the hearing on the motion to quash the jury panel, we are impressed with the sincerity and good faith of the commissioners who were responsible for making up the panel in the Moore trial. It is also apparent that the trial judge bent every effort to assure that defendants' right to a constitutionally selected jury was fully recognized and given meaningful effect
2
See and compare Stein v. People of State of New York, 346 U.S. 156, 73 S. Ct. 1077, 97 L.Ed. 1522. In the Moore case, defendant's father, who established Moore's age, was the only defense witness. Boone, Boyd and Byrd offered no defense witnesses
3
The confessions of each defendant's "co-conspirators," which had been read aloud in the presence of all four, were admitted for the purpose of allowing the jury to consider each defendant's expressions and reactions to accusation by his fellow-defendants | 01-03-2023 | 08-23-2011 |
https://www.courtlistener.com/api/rest/v3/opinions/1515337/ | 367 A.2d 213 (1976)
STATE of Maine
v.
Richard Wayne McLAIN.
Supreme Judicial Court of Maine.
December 17, 1976.
*215 Michael E. Povich, Dist. Atty., Howard M. Foley, Asst. Dist. Atty., Ellsworth, Sandra Hylander Collier, Student, for plaintiff.
Silsby & Silsby by Herbert T. Silsby, II, William S. Silsby, Jr., Ellsworth, for defendant.
Before DUFRESNE, C. J., and POMEROY, WERNICK, ARCHIBALD, DELAHANTY and GODFREY, JJ.
*216 GODFREY, Justice.
After a jury trial, appellant was convicted on two separate charges of breaking, entering, and larceny in the daytime in violation of former 17 M.R.S.A. § 2103. He makes timely appeal from (1) the denial of his pretrial motion to suppress certain evidence as improperly seized, (2) the admission of certain photographic evidence during trial, and (3) the denial of his motions for acquittal and new trial on the ground of statements allowed in evidence. We deny the appeal.
The jury would have been warranted in finding that the facts of the case were as follows: On or about November 13-15, 1974, a summer residence in Blue Hill, Maine, was broken into. Stolen were some antiques, including, among other things, a desk, a musket, several oil paintings, and an antique harpsichord bearing the inscription "JOSEPH JOANNES COVCHET MEFECIT ANTVERPIAE 1679" in large letters over the keyboard.
On December 2, 1974, Inspectors Peterson and Jordan of the San Francisco Police Department visited appellant's home in California to investigate a report by a credible informant who claimed to have seen the stolen harpsichord in the dining room of that house. While still outside the house, the police were met and held at bay by a large guard dog. A resident of the house, one Mulldune, came out of the house, collared the dog, and accosted the visitors. They identified themselves as police inspectors, said they would like to talk to him, and asked him to remove the dog. Mulldune took the dog inside. While leading the dog back into the house with one hand, Mulldune held the outside door open behind him with the other in a manner which the inspectors interpreted as permission to enter the house. Once inside, the police eventually observed in plain view numerous antiques, including the harpsichord with the distinctive inscription. The police seized the instrument and several paintings as stolen property taken in the Blue Hill break.
After talking with appellant and the two other residents of the house about how they had come into possession of the property, the police decided not to make any arrests. Continuing their investigation, the police learned two days later that other antiques appellant had recently delivered to a San Rafael auction gallery were also stolen from Blue Hill. Shortly thereafter, appellant was arrested.
I
Appellant appeals first from the denial of his pretrial motion to suppress evidence of the property seized in his California home on December 2, 1974, and of property seized at the auction gallery on December 4, 1974. The two seizures must be considered separately.
Appellant argues that the warrantless seizure of the harpsichord and paintings in his home was unlawful under the Fourth and Fourteenth Amendments and that the evidence derived from the seizure must be excluded. Mapp v. Ohio, 367 U.S. 643, 81 S.Ct. 1684, 6 L.Ed.2d 1081 (1961).
The Fourth and Fourteenth Amendments guarantee that a citizen's home will be free from arbitrary intrusion by the police. Therefore, the entry into appellant's home without a warrant was unreasonable in itself unless justified under one of a few exceptions to the requirement of a warrant issued by a disinterested magistrate on a showing of probable cause. An established exception to the warrant requirement is a search conducted pursuant to a valid consent. Schneckloth v. Bustamonte, 412 U.S. 218, 93 S.Ct. 2041, 36 L. Ed.2d 854 (1973). For valid consent to exist there must be some objective manifestation of consent given. It can be given by words or by gesture. Robbins v. MacKenzie, 364 F.2d 45 (1st Cir. 1966). Consent must be freely and voluntarily *217 given and cannot be achieved by implied threat or covert force. Bumper v. North Carolina, 391 U.S. 543, 88 S.Ct. 1788, 20 L.Ed.2d 797 (1968). Finally, the person giving consent must bear an appropriate relationship to the property to be searched. United States v. Matlock, 415 U.S. 164, 94 S.Ct. 988, 39 L.Ed.2d 242 (1974).
Whether valid consent was given is a question of fact to be determined from all the circumstances existing at the time of the search. Schneckloth, supra. The State has the burden of proving by a preponderance of the evidence that consent existed. Lego v. Twomey, 404 U.S. 477, 92 S.Ct. 619, 30 L.Ed.2d 618 (1972); State v. Koucoules, 343 A.2d 860 (Me.1974).
Inspector Peterson testified that before entering appellant's home the police identified themselves and the general nature of their visit to Mulldune, the resident of the house who had come outside to collar the guard dog. Explaining how the police got inside the house, Peterson testified as follows:
"A He walked in front of us with the dog.
Q Did he open the door to the house?
A Yes he did.
Q Did he hold it open for you people?
A He opened up the door to the residence. And as he . . . he turned towards us and looked at us, I believe, keeping his hand on the door, indicatting that he was allowing the door to remain open while we entered behind him . . .."
Standing in the entrance hallway of the house, the police could see part of the dining room. They saw a large and apparently antique object sitting in one corner of the room. Pointing to the object, which was in fact an antique desk, Peterson asked Mulldune if it was the harpsichord which the police had said they were looking for. Mulldune's response was, "No, that's not it, it's around the corner." As he spoke, Mulldune made a pointing, circling gesture with his hands indicating that the harpsichord was around a corner of the dining room which the police could not see from the hallway. The police told Mulldune that they would like to examine the harpsichord. Mulldune again gestured toward the dining room with upturned palm and pointing index finger. Later testifying that he could only interpret such a gesture as permission to enter the dining room, Peterson and his partner entered. There they observed a harpsichord bearing the inscription "JOSEPH JOANNES COVCHET MEFECIT ANTVERPIAE 1679" in large letters over the keyboard.
While the police were examining the harpsichord in the dining room, the door to an adjacent bedroom was opened by Mrs. Soucy, another resident of the house. Behind her, and in plain view, were four paintings which appeared to be old. Nearby was an antique musket. After identifying themselves, the police asked Mrs. Soucy where the paintings had come from. She told them that appellant had brought them and the harpsichord to California from Maine a week earlier. Later that day, believing the harpsichord and paintings to be fruits of the Blue Hill larceny, the police had the property taken downtown and impounded for positive identification.
The trial judge, the finder of fact at the suppression hearing, found that entry into McLain's home was made pursuant to the voluntary consent of Mr. Mulldune. Mulldune's apparently helpful attitude toward the police and his gestures support this conclusion. The findings of a single justice in cases such as this will not be set aside unless clearly erroneous. State v. MacKenzie, 161 Me. 123, 210 A.2d 24 (1965). While the testimony of Peterson was controverted in some particulars by Mulldune, we must give due regard to the opportunity of the trial court to judge *218 the credibility of witnesses. There being sufficient evidence in the record to support a finding, by a fair preponderance of the evidence, that consent to enter the premises was freely given, we cannot hold that the conclusion reached by the presiding justice was clearly erroneous.
Mulldune bore an appropriate relationship to the property to consent effectively to an entry by the police. While the house in question was rented in the name of appellant McLain, Mulldune had lived there for seven or eight months. He had full use of the house, and he and McLain conducted business from the premises. Those factors gave Mulldune sufficient control over the house to give consent in his own right to the entry of the police. United States v. Matlock, 415 U.S. 164, 94 S.Ct. 988, 39 L.Ed.2d 242 (1974); State v. Thibodeau, 317 A.2d 172 (Me.1974).
Having determined that the police were authorized to be where they were, namely, in McLain's home and, more specifically, in his dining room, we conclude that the harpsichord and the paintings which were seen in plain view were subject to seizure. Harris v. United States, 390 U.S. 234, 88 S.Ct. 992, 19 L.Ed.2d 1067 (1968); State v. Cowperthwaite, 354 A.2d 173 (Me.1976).
Even when there has been a lawful search or when no search has been necessary, the accompanying seizure must be based on reasonable grounds to believe that the property falls within a category of goods warranting seizure. See Warden, Maryland Penitentiary v. Hayden, 387 U.S. 294, 307, 87 S.Ct. 1642, 1650, 18 L.Ed.2d 782, 792 (1967). The inscription on the antique harpsichord made it a highly unusual piece. The presence of this instrument and the four antique paintings in close proximity, coupled with Mrs. Soucy's statement that all the items had just been brought back from Maine, afforded reasonable and adequate grounds for their seizure as stolen goods and as evidence to be used in any future prosecution. Warden, Maryland Penitentiary v. Hayden, supra.
The seizure of the musket and desk at the San Rafael auction gallery was also proper. While appellant apparently does not object to the entry of the police upon the gallery premises, he does object to the seizure on the grounds that the desk and musket were not sufficiently distinguishable from other property to permit a reasonable belief that they were the items stolen from Blue Hill.
Just before the seizure, Inspector Peterson telephoned a Mrs. Chamberlain, daughter of the Blue Hill larceny victim, from the San Rafael art gallery. Mrs. Chamberlain, who had spent numerous summers at the Blue Hill residence, had gone there shortly after the larceny and had had occasion to observe which items were missing. From the gallery, the inspector described to Mrs. Chamberlain some of the property before him. One item described was a handcarved desk with a carving of a lion on it. On the legs of the desk were carvings of birds with grapes in their beaks. Mrs. Chamberlain thought she recognized this as one of the items stolen from her mother's home. To be absolutely sure, however, she told the police that she knew of a secret compartment in the desk and that if they followed her instructions, the compartment would open. Following these coast-to-coast instructions, the police opened certain drawers, pulled a particular knob, and a secret compartment sprang open. At that point the police had reasonable and adequate grounds to believe that the desk was stolen from Blue Hill.
Mrs. Chamberlain's identification of the musket was less dramatic. She knew only that an "old Springfield musket" was missing. The gun described over the phone by Peterson was a wooden-handled, percussion-type musket bearing the words "Springfield 1847" on the side. On the barrel were the initials "A R-1". These features were identical to those of the musket *219 found next to the stolen paintings in appellant's home two days earlier. Mrs. Chamberlain's description of the gun as an "old Springfield musket", coupled with the fact that it had previously been seen near the stolen paintings and had later been found with the stolen desk, provided reasonable grounds to believe that it, too, was fruit of the Blue Hill theft and therefore properly seizable. State v. Mosher, 270 A.2d 451 (Me.1970).
II
Appellant's second argument on appeal is that it was error to permit the state to admit into evidence photographs of the stolen property rather than the property itself. He contends that this alleged error deprived him of an opportunity to conduct adequate cross-examination.
Two witnesses at trial testified that the antiques seized by the police in San Francisco were the property stolen from the summer home in Blue Hill. Before trial, both witnesses had gone to California to make positive, in-person identifications of the property. At trial they testified that the photographs introduced by the state were fair and reasonable representations of the objects that they had identified in California. The photographs were introduced merely to illustrate the direct testimony of the witnesses and were not used as the actual means of identification.
If the essential elements of a crime are established by testimonial evidence of sufficient force, physical evidence is not a prerequisite for conviction. State v. Creamer, 359 A.2d 603 (Me.1976). In this case, the stolen property was identified by two corroborating witnesses who were familiar with the property and who had gone to California to make positive identifications. Their testimony was of sufficient force to identify the property without physically introducing it into evidence. While those witnesses were on the stand, their intelligence, acuity, and credibility were open to attack through appellant's questioning. Appellant was not denied an opportunity to conduct adequate cross-examination.
III
Appellant challenges the admissibility of certain statements he made to the police during the course of their investigation.
On December 2, 1974, the police had reasonable grounds to believe that appellant had certain stolen property in his possession. However, the police did not know how appellant had come into possession or who the thief was. Talking to the police in his own home on the night of December 2, McLain admitted having been in Bangor, Maine, in mid-November, the time of the theft, and of taking the antiques to California. However, he explained that he periodically returned to Maine, his birthplace, to visit friends, go hunting, and buy antiques for resale, and he gave a reasonably convincing account of how he had purchased the antiques in question from a man named Joseph McGinnis whom he said he met while hunting in Dedham, Maine. Appellant said that McGinnis, claiming to have inherited the antiques, had sold them to appellant for $1,000. In some detail, appellant described McGinnis, the kind of car he drove, and the location of the house in Machias where the property had been stored. Appellant had not asked for any bill of sale, he said, and none had been given.
Giving some credence to this story because of its plausibility and detail and because of appellant's apparently cooperative attitude, the San Francisco police relayed this information to Officer Maddocks at the sheriff's office in Hancock County, Maine, who attempted to locate McGinnis and the house in Machias. Unable to do so, he telephoned San Francisco the next day to see if the police there could get better directions to the house in Machias.
*220 The San Francisco inspectors therefore revisited appellant's home at seven o'clock in the evening of December 3, 1974. At first reluctant to talk because of illness, appellant again recounted his story about buying the antiques from McGinnis. During neither of their two visits, did the police give Miranda warnings to appellant.
Over defense objections at trial, Inspector Peterson testified as to appellant's explanation of his possession of the stolen property. No doubt highly probative to the jury were appellant's admissions that he had been in Maine at the time of the theft, that he had acquired possession of the property in Maine, and that he had personally transported it back to California. Appellant argues that these admissions were acquired in violation of his Miranda rights and therefore inadmissible.
In Miranda v. Arizona, 384 U. S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966), the United States Supreme Court held that a criminal defendant must be informed of his right to remain silent and his right to counsel before being subjected to questioning pursuant to a custodial interrogation. Otherwise any statements made by the defendant are inadmissible. A custodial interrogation occurs whenever a defendant has been taken into custody or otherwise deprived of his freedom by the authorities in any significant way and is subjected to questioning. Whether police conduct amounts to a significant deprivation of freedom depends on the many circumstances then existing. United States v. Hall, 421 F.2d 540 (2d Cir. 1969). As we observed in State v. Inman, 350 A.2d 582, 597 (Me.1976), the court must examine the facts of each particular case to determine whether the line between general investigation and custodial interrogation has been crossed.
In this case appellant was questioned in his own home, at a reasonable hour, and in the presence of his friends, Mr. Mulldune and Mrs. Soucy. He was free to move about the house and no physical or other restraints were placed upon him by the police. The purpose of the investigation was to identify and locate Mr. McGinnis, not to inculpate appellant. Any suspicions aroused by the discovery of stolen property in his home were apparently allayed by his convincing explanation and cooperative manner. Inspector Peterson testified that appellant did not become a suspect until a day after the last conversation, when it was learned that certain antiques which appellant had removed from his home to the auction gallery soon after the first visit were also stolen from Blue Hill.
We conclude that at the two times appellant spoke to the police, the police were still conducting a general investigation and that appellant's statements were not made in the course of a custodial interrogation. Moreover, we find nothing in the record to indicate that his statements were the product of coercion or duress. The presiding justice's finding that the statements were voluntary beyond a reasonable doubt is supported by the evidence. Because there was no custodial interrogation requiring a Miranda warning and because the statements were voluntarily made, they were properly admitted in evidence.
At trial, Officer Maddocks testified that as a result of instructions given to him over the telephone by Inspector Peterson he made a search of Machias for a Mr. McGinnis. Appellant objected to this testimony on the ground that it was hearsay. His objection having been overruled, he now raises this as error on appeal.
In the case before us Maddocks did not relate the content of statements made by any other declarants. Specifically, he did not say what the inspector or appellant had said. He merely stated that after receiving certain instructions he acted in a particular manner. This was not hearsay and therefore not inadmissible on that ground.
*221 IV
Appellant's final contention is that it was error to deny his motions for acquittal and a new trial.
In establishing appellant's guilt the state relied in part on the principle that exclusive possession of stolen property, soon after the occurrence of the theft, may permit an inference by the jury that the person in possession is the thief. State v. James, 312 A.2d 531 (Me.1973). Appellant urges that his possession of stolen goods two and one-half weeks after the break was too remote in time to be considered "recent" possession. Therefore, in his view, the inference of his guilt from possession was impermissible as a matter of law.
We pointed out in James that the amount of time elapsing after a larcenous act does not in itself determine whether possession is sufficiently recent to bring the inference into operation. Other factors to be considered, in addition to the passage of time, are the kind of stolen property involved, the amount and volume thereof, and the ease or difficulty with which it can pass into legitimate channels of trade. State v. James, supra, at 534. See also Aron v. United States, 382 F.2d 965, 971 (8th Cir. 1967).
Appellant was found in possession of at least seven antiques all stolen from the same premises in Maine. Two of the items in particular, the desk and the harpsichord, were bulky, distinctive, and valuable. The harpsichord alone was said by one expert to be worth as much as fifty thousand dollars. Its size, value, and antiquity made it difficult to dispose of into legitimate trade channels. It could be reasonably inferred that the person in possession of such an item, only two and a half weeks after its theft, was the thief. That inference gains additional support from the fact that several distinctive items that had been stolenthe unusual desk, musket, paintings, and harpsichordwere still together in appellant's possession.
When appellant testified at trial he again admitted having been in Bangor, Maine, at the time of the break and of having the goods in his exclusive possession not more than five days after the theft. His testimony, if believed, made his possession of stolen goods much more recent than two and one-half weeks.
A jury may properly find a defendant guilty of breaking, entering and larceny "in reliance on the inference of fact arising from recent and exclusive possession of stolen goods alone, if as fact-finders, they conclude on all the evidence such inference is valid and if the inference convinces them of guilt beyond a reasonable doubt and not otherwise." State v. Poulin, 277 A.2d 493, 500 (Me.1971).
In the instant case the jury could have found that appellant was in the general vicinity of the crime at the time it occurred and that he was in exclusive possession of the stolen property shortly thereafter. They could have found incredible his testimony that he bought a fifty-thousand-dollar harpsichord and other valuable antiques for a thousand dollars, with no bill of sale, from a stranger he met in the woods. Their finding of guilt beyond a reasonable doubt was supported by the evidence and by permissible inferences that could have been validly derived from that evidence. It was not error to deny appellant's motions for acquittal and a new trial.
The entry will be:
Appeal denied.
All Justices concurring. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/1515338/ | 615 F.Supp. 916 (1985)
HOWARD GAULT COMPANY, Barrett-Fisher Company, E.C. Reinauer & Sons, Inc., Griffin and Brand Sales Agency, Inc., T.J. Power and Company, Tri-Frye Brand, La Mantia-Cullum-Collier and Company of Dimmitt, Deck Produce Company, Dimco Industries, Inc., Smith Potato, Inc., Barrett Produce Company, Colville and Wilson, Inc., H & S Produce Company, Walker Brothers Produce Company, Inc., Boozer Produce Company, High Plains Vegetable Growers and Shippers Council, Inc., and Texas Citrus and Vegetable Growers and Shippers, Inc., Counter-Defendants,
v.
TEXAS RURAL LEGAL AID, INC., Texas Farm Workers Union, Edward J. Tuddenham, Inez Flores, Jesus Moya and S.T. Rendon, Counter-Plaintiffs.
TEXAS FARM WORKERS UNION, Texas Rural Legal Aid, Inez Flores, and Delia Gamez Prince, Plaintiffs,
v.
Travis McPHERSON, Colonel James B. Adams, the Texas Department of Public Safety, Roland Saul, Jerry Smith, Don Davis, Granvill Martin, Charles Tue, Bobby Henderson and Jim Mattox, Attorney General of the State of Texas, Defendants.
Civ. A. Nos. CA-2-80-127, CA-2-80-129.
United States District Court, N.D. Texas, Amarillo Division.
August 7, 1985.
*917 *918 *919 *920 *921 Edward B. Cloutman, III, Mullinax, Wells, Baab & Cloutman, Dallas, Tex., for Texas Rural Legal Aid.
William H. Beardall and Edward J. Tuddenham, Texas Rural Legal Aid, Hereford, Tex., for Texas Farm Workers Union, Moya, and Prince.
William O. Goodman, Asst. Atty. Gen., Austin, Tex., for State of Tex.
A.B. Hankins, Gibson, Ochsner & Adkins, Amarillo, Tex., for Howard Gault Co., et al.
TABLE OF CONTENTS
I. Introduction .................................... 921
II. Jurisdiction .................................... 922
III. Factual Background .............................. 922
A. June 24, 1980 The Picketing Begins ......... 922
B. Texas Rural Legal Aid ........................ 923
C. Deaf Smith County Sheriff Travis McPherson ... 923
1. During the Strike ......................... 923
2. Outside the Strike Period ................. 924
D. The Temporary Restraining Order .............. 926
IV. Procedural History of the Litigation ............ 928
A. No. 2-80-127: The TRO and the Counterclaim
for Violation of Civil Rights ................ 928
B. No. 2-80-129: Constitutionality of the Texas
Picketing Statutes ........................... 929
C. The Consolidated Actions ..................... 930
V. Moya's Claims ................................... 930
A. § 1983 ....................................... 930
1. Color of State Law ........................ 930
2. Deprivation of Rights ..................... 933
(a) 1st Amendment, Substantive ............ 933
(b) 1st Amendment, Procedural ............. 935
(c) 6th Amendment ......................... 936
(d) Legal Services Corporation Act ........ 936
(e) Malicious Prosecution ................. 938
B. § 1985 ....................................... 938
VI. Immunity ........................................ 939
VII. Damages ......................................... 940
VIII. Recovery Against the TRO Bond ................... 941
A. Liability .................................... 941
B. Damages ...................................... 942
IX. Historical Background to the Constitutional
Challenges in No. 2-80-129: Of Medrano v.
Allee .......................................... 942
X. Standing ........................................ 944
XI. The Merits of the Constitutional Challenges ..... 945
A. Article 5154d, § 1(1) ........................ 945
B. Article 5154d, § 1(2) ........................ 947
C. Article 5154d, § 2 ........................... 947
D. Article 5154d, § 3 ........................... 950
E. Article 5154f ................................ 953
F. Article 5154g, § 2 ........................... 954
XII. Summary of Holdings ............................. 957
OPINION OF THE COURT
MARY LOU ROBINSON, District Judge.
I. Introduction
In the summer of 1980, the Texas Farm Workers Union ("TFWU") attempted to organize onion harvest and packing shed workers in the Hereford, Deaf Smith County, Texas area. The TFWU picketed the onion fields and packing sheds of several growers.
Seventeen growers, packers, and trade associations, determined to stop the picketing activities, filed suit in state district court against the union, its organizers and its attorneys. They alleged multiple violations of Texas picketing statutes and obtained an ex parte temporary restraining order which allegedly devastated the union's organizing efforts. The state suit was removed to federal court (No. 2-80-127), civil rights counterclaims filed, and an original action seeking declaratory and injunctive relief regarding the constitutionality of the picketing statutes was also filed (No. 2-80-129). The growers, packers, and trade associations eventually voluntarily dismissed their claims, leaving only the civil *922 rights counterclaims and the constitutional challenges to be tried.
The consolidated actions were tried to the Court. This Opinion constitutes the Court's Findings of Fact and Conclusions of Law. It first discusses, at some length, the factual context of the onion field strike and then considers, in turn, the civil rights claims and the constitutional challenges to the Texas picketing statutes.
II. Jurisdiction
This Court has jurisdiction over No. 2-80-127 and No. 2-80-129 under 28 U.S.C. §§ 1331 and 1343(a).
III. Factual Background
Onions in the Hereford area are harvested for 6-8 weeks each year beginning in mid- to late-June. A tractor with a blade lifts the onions out of the ground and leaves them lying on the surface. Fieldworkers then clip the tops and bottoms and sack the onions for curing in the field. If onions are left lying in the sun for more than a day or two, they scald and become worthless.
In June of 1980, Jesus Moya ("Moya") a paid farm worker organizer for the TFWU, began organizing onion field and packing shed workers around Hereford, Texas. Moya had been a union organizer since 1978 and had participated in TFWU organizing campaigns in the lower Rio Grande Valley.
The TFWU arrived in Hereford knowing that a harvest season strike would threaten area onion growers with rotting onions in the fields and large monetary losses. The TFWU hoped the growers would agree to the workers' demands for higher wages and better working conditions, such as drinking water and toilets in the fields.
Preparation for the 1980 organizational campaign had begun many months earlier. Moya himself had made several trips to the area in an effort to familiarize himself with the people and the surrounding farms.
At trial, Moya stated that the primary objectives of his 1980 organizational efforts in Hereford were to obtain representation for migrant workers by the TFWU and to obtain higher wages for farm workers in the area. To achieve these objectives, Moya planned to use the following methods: (1) picket lines, marches, demonstrations, protests, hunger strikes, and strikes at the points of production, i.e., the onion fields; (2) education of workers about their basic legal rights concerning minimum wages and farm labor contractors; and (3) organization of a class of farm workers to lobby for workers' compensation, collective bargaining rights, pesticide control laws, and other civil rights legislation.
In Moya's words, "[w]e explain to them that the growers get rich by stealing the labor of the workers. We explain to them that one of the main reasons as to why they are suffering such misery is because of the thirst for profits by these growers."
A. June 24, 1980 The Picketing Begins
In the early morning hours of June 24, 1980, Moya, Roy Hernandez and Delia Gamez Prince two other TFWU organizers set up the first picket line at a Howard Gault Company ("Gault") onion field. The day before, Moya had spoken with several workers from the Gault fields and they had told him that the harvest had begun. Moya selected Gault because he had heard that the field workers were not being paid the minimum wage then $3.10 per hour and that they had no drinking water or toilet facilities in the fields. Moya instructed his volunteers to man a picket line on June 24, 1980, early in the morning, alongside the public road close to the field being harvested.
With his picket line in place, Moya instructed his volunteers to talk to the workers as they arrived for work in the field and to hand out leaflets.
The picketers remained on the public road that paralleled the field. They did not attempt to block the field's entrances, nor did they attempt physically to prevent workers from entering the field to work.
The picket line that day was successful. Few workers went into the Gault field. Many workers joined the picket line bordering *923 the Gault onion field. Activity along the picket line was generally peaceful. The workers carried flags or signs, and discussed their demands among themselves.
The picketing at the Gault onion field continued for the rest of that week. Support for Moya's efforts to organize the workers grew at a rapid pace. Pickets were eventually set up at the Griffin & Brand fields as well as various packing sheds in the area.
Neither Moya nor his supporters on the picket line entered the fields to talk to workers. Instead, they shouted to the workers or used a loudspeaker. They urged the workers to come out of the fields and shouted "huelga" strike and "come join us, companeros. Come and join us, fellow brothers, so that we can win." Although some picketers also reviled and denounced the workers who remained in the fields, no threats were made against either the growers or the workers remaining in the fields. There was no violence along the picket lines.
The ranks of picketers swelled to over 200 workers at times between June 24 and 30, 1980. When pickets were established at the Griffin & Brand fields and other Gault onion fields, nearly all of the workers left the fields. At least one negotiation occurred in which Gault agreed to raise the wage per bushel basket of onions harvested from 45 cents to 60 cents, to provide drinking water, and to put toilets in the fields.
The Meat Cutters Union, LULAC, the GI Forum, and churches in Houston, Austin and San Antonio were providing money and assistance. Five days into the strike, Antonio Orendein, the director of the TFWU, and Martha Owen, a paralegal with the TFWU Law Project, arrived in Hereford to direct an expansion of the strike into surrounding counties.
B. Texas Rural Legal Aid
Texas Rural Legal Aid, Inc., ("TRLA"), is a federally funded legal aid organization with an office in Hereford.
Before 1980, it had represented the TFWU in actions relating to TFWU organizing activities in the lower Rio Grande Valley. It also represented numerous field and packing shed workers in the Hereford area in minimum wage and farm labor contractor claims against growers, such as Gault, and packing shed operators, such as Griffin & Brand.
TRLA attorneys Edward Tuddenham, Bill Beardall, and Inez Flores were at the picket lines on numerous occasions to render legal advice. If legal questions arose, the workers were able to ask an attorney from TRLA for advice.
The TFWU wanted TRLA at the picket lines to advise workers that they could file lawsuits for minimum wage violations and to mediate between the workers and the police or growers should the need arise. The TFWU also used TRLA attorneys to advise them concerning the trespass laws.
C. Deaf Smith County Sheriff Travis McPherson
1. During the Strike
Travis McPherson was the Sheriff of Deaf Smith County during this period of time. When the picketing began, Sheriff McPherson sent several deputies to the Gault field to investigate reports that children were running across the road and that there might be some violence relating to the picketing activity. No children were ever reported as having been injured, nor did the deputies ever report violence on the picket lines.
Sheriff McPherson had had "intelligence reports" from the Valley that there might be an onion field strike in Deaf Smith County, as had the growers. Before any picketing activity by the TFWU, Sheriff McPherson advised his deputies that the TFWU was coming and that his deputies would have to go out to the fields to help keep the peace.
Sheriff McPherson himself viewed much of the picketing activity at the Gault onion field and saw no violence, no blocking of ingress to or egress from the fields, and no commission of any otherwise unlawful acts. *924 No arrests were ever made for picketing activities. Delia Gamez was arrested, later in the summer, for trespassing after entering a Gault onion field to speak with a worker about a wage claim.
Sheriff McPherson considered it unwise to escalate matters by arresting participants or making a show of force, so long as the picketing remained, for the most part, lawful in nature. Nonetheless, he felt "there was some possibility of some very dangerous, terroristic-type activities going on." He believed that the TFWU, TRLA, and Moya were conspiring to disrupt the onion harvest and that the TFWU organizers were "outside agitators, communists and terrorists."
Sheriff McPherson and his deputies began videotaping the picketers to record any incident of lawbreaking. McPherson himself parked across the street from the TRLA offices in Hereford and began videotaping persons entering and leaving. He also recorded the license plate numbers of the cars parked outside TRLA's offices and ran makes to determine how many were from the Valley. The Sheriff's department used both its own videotape equipment and some supplied by the growers. After the equipment broke down, McPherson instructed his deputies to continue pointing the camera at the picketers, apparently for deterrent effect. By the time of this trial, all of the videotapes had been lost and were unavailable for viewing.
Several picketers testified that the videotapes served to inhibit their activities and created a fear of blacklisting among workers familiar with a similar videotaping incident in the Valley.
2. Outside the Strike Period
Neither Moya, the TFWU, nor TRLA have been well received in Hereford. TRLA's minimum wage, farm labor contractor and employment discrimination lawsuits have created a bitter animosity from citizens outraged that their federal tax dollars are being used to finance lawsuits against them.
One of the TFWU's and TRLA's most outspoken critics is Sheriff McPherson. He has spoken openly and candidly of his opposition to the TFWU and TRLA's presence in Hereford.
In mid-February of 1981, Sheriff McPherson attended a conference of the Hi-Plains Vegetable Growers and Shippers Council which was attended by many of the growers and packers in the Deaf Smith County area. He spoke on problems relating to picketing and striking by field laborers:
MR. FISHER: Travis, if you would. Incidently, this is informal. If anybody has a question at anytime, just holler. Interrupt.
MR. MCPHERSON: Well, needless to say, these people are not my greatest fans. I'll tell you. To tell you a little bit about the things that we run into and the things that we're going to do in the future, we fully intend to take every measure to try to prevent any disruption of the production of the crops.
These people are outsiders and they have no business in our area and I'm not going to cater to them. I think I've made that clear to them time and time again, but however, they still come back.
We're going to treat this just as they do in a terrorist situation. They're operating in the same manner. They're using the same techniques and all and we're going to use counter-intelligence, we're going to use dogs and we're going to use television. This seems to be a thing that really helps us.
Now, they've got people running around with them from El Salvador, the Socialist Alliance and a number of others.
Now, you know, these people are involved in communism. Moya, he goes around preaching communism all the time. The same Cuban Doctrine.
Now, you know, we can't ignore this type of thing. We either hang together or we're going to hang separate. So, you know, I fully intend to try to do my job. And I fully intend to try to keep these people where they belong.
*925 Jesus Moya is down at the Capital now and he's down there trying to do his little thing. This guy is not dumb, by any means. But I don't think he's the biggest problem. I fully agree with Wes. I think that the Texas Rural Legal Aid is the problem because they're supplying these people with the information and they're telling them all about the Federal laws and everything.
And, you know, it's causing you some real serious problems. It's going to continue until we stop the type of abuse as we have with Texas Rural Legal Aid. The only way we're going to stop it is get ahold of our congressman, our senators and get their money stopped.
And I'm going to do everything I can. I hope you do, too. But we've got to work hard on this. And we're going to do it. Bill Sarpalius is our new senator from this area and he's head of some the agricultural ... I think chairman of some of the committees or something down there and working on some laws to put more teeth into our trespass laws and this will help us a great deal.
But one thing about it is, for God's sakes, don't do anything. Don't take it upon yourself to commit any violence or anything. You should leave it up to your law enforcement because we know what we can do. We've been trained in it. We know exactly how far to go. We know what to look for.
The people in this area, we have some new sheriffs around us and all and we're going to have regular meetings. We're going to have meetings with the growers and the shippers. We're going to have meetings with the people out in the fields and, in fact, I've already been contacted by these people and they say they don't want Jesus Moya back up here.
So, you know, we're going to do everything we can in this area and if you want to grow onions, you grow them. Because they're not going to bother you in this area or in my county, anyway.
So that about sums up my comments. I tell you, I think it's just a terrible injustice when our tax money is being used against us. But this is what's happening with Texas Rural Legal Aid. And I don't think this is the American way.
Thank you.
In April of 1981, another meeting was held, attended by city and county officials from Deaf Smith and Castro Counties, as well as law enforcement officials, businessmen and farmers from the Hereford area, and a representative from the Foundation For Law In Society ("FFLS"). A local news report indicated that none of the meeting's participants knew about it until personally contacted by Sheriff McPherson the day before. The topic of discussion was TRLA's operations in Hereford.
Travis McPherson had invited the president of the FFLS, Lewis Ingram, to visit with various community leaders concerning TRLA's operation in Hereford. Ingram told the group of ways to force TRLA to leave Hereford. News reports of the meeting indicate that Ingram told those present that the best way to force TRLA to leave Hereford was to apply political pressure to have their funds halted on the national level. Ingram advised local citizens to treat TRLA as their enemy. He advised local merchants, for example, to band together in refusing to sell goods to any TRLA lawyer or their family and to have law enforcement officials use any means necessary and available to harass them.
Animosity toward the TFWU and TRLA's activities is further exhibited in a 1979 song which was written by a Deaf Smith County Deputy Sheriff. The song, entitled "The Ballad of Deaf Smith County," praises the virtues of Sheriff McPherson and criticizes the efforts of TRLA. It was written and recorded in the Hereford area by Phil Sciumbata and the "Singin' Sheriffs", as a voice-over to the Battle Hymn of the Republic:
Glory, glory, hallelujah. Glory, glory, hallelujah. Glory, glory, hallelujah. His truth goes marching on.
*926 In the Panhandle of Texas, which you all know well,
There sets two thousand square miles of county which is a living hell.
It's called Deaf Smith. An odd sort of a name.
But listen to my story and I'll try to explain.
And of the people there and the problems they share.
Some are good, some are bad and some don't care.
Travis McPherson is the Sheriff of this land.
He's fair and he's honest. A mountain of a man.
He's a friend of those who respect the law.
For truth and justice, he's a walkin' tall.
One day out of nowhere, like a storm they came.
A group of so-called attorneys trying to make a name.
They said, listen here, Sheriff, we are going to explain.
An illegal alien and a U.S. citizen are one and the same.
We're going to raise hell and we're going to sue.
And we're going to do anything to get the best of you.
And when it's all over, well, we're going to run.
'Cause stirring up trouble is our way of fun.
Ol' Travis stood tall and said with a grin,
You carpetbaggers are not going to win.
I aim for justice and the American way. So get out of Hereford, TRLA.
The Anglo, the Blacks, the Mexican, too,
They're all my people, so to hell with you.
Illegal aliens will get the jobs of the people I serve.
They'll take over our country which they don't deserve.
This is America. Don't give it away.
For me and my people, well, we're here to stay.
I remember the meeting at the town hall square.
A handful of people with grudges to bear.
They came face to face with the law that night.
They said, we defy your law, and we've got the right.
I sat and I watched as the tension grew.
A lawman spoke, as he was asked to do.
A voice cried out, "lawmen lie.
To live by your law, I'd rather die."
The room grew still, the silence broke,
The Sheriff stood up and in a soft voice, he spoke.
I aim for justice and the American way.
So get out of Hereford, TRLA.
The Anglo, the Blacks, the Mexicans, too.
They're all my people, so to hell with you.
Illegal aliens will get the jobs of the people I serve.
They'll take over our country which they don't even deserve.
This is America. Don't give it away.
For me and my people, well, we're here to stay.
A local radio station in Hereford refused to air the song because they felt it was "inflammatory and would serve no purpose." They did, however, receive telephone requests to broadcast the song. A radio station in Dimmitt, Texas, twenty miles south of Hereford, broadcasted the song. The Dimmitt radio station can be heard in Hereford.
D. The Temporary Restraining Order
Late in the evening of Thursday, June 26, 1980, Roland Saul, Deaf Smith County Criminal District Attorney, and Gerald ("Jerry") Smith, one of his assistants, were having dinner at a local country club after the return of a jury verdict. Saul and Smith had spent the first few days of the strike trying back-to-back felony cases. While they were eating, Wes Fisher, a local grower and packer, approached and asked if there was anything that could be done about the strikers. This overture lead to a series of meetings and telephone calls with growers, packers and trade associations *927 over the next few days as Jerry Smith and the law firm of Saul, Smith & Davis, prepared a lawsuit designed to break the strike.
On Monday, June 30, 1980, the Howard Gault Company, the Griffin & Brand Sales Agency, and 15 other growers, packers and/or trade associations (the "growers"), filed suit in the 222nd Judicial District Court in Hereford, Deaf Smith County, against TRLA; the TFWU; Edward Tuddenham and Inez Flores, TRLA attorneys who had been at the picket lines; Moya and S.T. Rendon. Many of the state court plaintiffs had been neither picketed nor struck, but joined in the lawsuit as a sort of preemptive strike and a show of solidarity.
The suit alleged that numerous violations of the Texas picketing statutes had been committed and that the defendants had entered into a conspiracy to trespass on the growers' property, to block entrances to the onion fields, to use obscene and defamatory language against the growers and their employees, and to engage in mass picketing in violation of Texas law. The growers also alleged that TRLA, a regulated grantee under the Legal Services Corporation Act, 42 U.S.C. § 2996 et seq. (1982), through its employees, had violated the provisions of the Act by improperly spending federal money to support, advocate and encourage organizing activities by the TFWU and others.
At 1:30 p.m., on the 30th, State District Judge David Wesley Gulley issued an ex parte temporary restraining order which restrained the state court defendants as follows:
(a) From placing or causing to be placed more than two (2) pickets at any time within either fifty (50) feet of any entrance to any premises being picketed, or within fifty (50) feet of any other picket or pickets.
(b) From placing or causing to be placed pickets which constitute or form any character of obstacle to the free ingress and egress from any entrance to any premises being picketed or to any other premises either by obstruction [sic] said free ingress or egress by their persons, or by-and-through their agents, servants, and employees, or by the placing of vehicles or other physical obstructions.
(c) From acting, singly, or in concert with others, by use of insulting, threatening or obscene language, to interfere with, hinder, construct or intimidate, another in the exercise of his lawful vocation, or from freely entering or leaving any premises.
(d) From singly, or in concert with others, engaging in picketing or any form of picketing activities, where any part of such picketing is accompanied by slander, liable [sic], or the public display or publication of oral or written misrepresentations.
(e) From acting singly, or in concert with others, establishing, calling, participating in, aiding or abetting a secondary picketing.
(f) From acting singly, or in concert with others, establishing, calling, participating in, aiding or abetting secondary boycott.
(g) From, acting singly, or in concert with others, establishing, calling, maintaining, participating in, aiding or abetting any strike or picketing, an object of which is to urge, compel, force or coerce any employer to recognize or bargain with, or any employee or group of employees to join or select as their representative, any labor union or labor organization which is not in fact the representative of a majority of the employees of an employer or, if the employer operates two (2) or more separate and distinct places of business, is not in fact the representative of a majority of such employees at the place or places of business subject to such strike or picketing.
TRLA was additionally restrained:
(a) From engaging in any public demonstration, picketing, boycott, or strike or encouraging others to engage in any public demonstration, picketing, boycott, or strike.
*928 (b) From engaging in or encouraging others to engage in any other illegal activity.
A hearing on the growers' motion for a temporary injunction was set for 9:00 a.m., on July 10, 1980. The growers posted a bond of $10,000 and had sheriff's deputies serve the TRO.
Jerry Smith had been at the courthouse trying to see the judge and obtain the TRO since early morning. Judge Gulley had several changes made in the TRO before he signed it. No notice was given to TRLA, even though their offices are only a stone's throw from the courthouse in Hereford.
The strike was devastated. Almost immediately picketers began returning to work and fieldworkers ceased coming out of the fields to join the strike. Many feared arrest. The TRLA attorneys at the picket lines were replaced with Martha Owen, the TFWU Law Project paralegal. Those on the picket line were afraid to use the same strident language they had used in the past. The number of workers picketing dropped from near 200 to 20-30. The picketers used a tape measure to keep the 50-foot spacing under the watchful eye of the Sheriff's videotaping.
Moya's reputation with TFWU executives was damaged because they questioned his capacity to organize a peaceful strike. The workers' confidence in him was shaken.
Nevertheless, TFWU's organizing activities continued throughout the onion harvest season with some success. In Moya's words, "the intensity of our success was diminished."
IV. Procedural History of the Litigation
A. No. 2-80-127: The TRO and The Counterclaim for Violation of Civil Rights
On June 30, 1980, TRLA filed its petition for removal and the case was removed to this Court.
On July 1, 1980, TRLA, on behalf of all of the state court defendants, filed its Motion to Dissolve or Modify Temporary Restraining Order. In their motion, they contended, inter alia, that the ex parte granting of the temporary restraining order by Judge Gulley was improper because there was nothing to indicate that the growers made any effort to contact the defendants to allow them an opportunity to be heard, that the TRO placed unconstitutional burdens upon defendants' First Amendment rights, that the statutory basis of part of the order had been declared unconstitutional by a federal district court in the Southern District of Texas, and that the growers had failed to establish the necessity for a TRO.
On July 3, 1980, this Court modified the temporary restraining order to delete the language pertaining to the placing of more than two pickets at any time within either fifty feet of any entrance to any premises being picketed, or within fifty feet of any other picket.
On July 8, 1980, the growers moved to extend the temporary restraining order, which was due to expire on July 10, 1980, at 9:00 a.m. On July 9, 1980, the state court defendants moved to dissolve the temporary restraining order. Since the action had already been removed to this Court and the presiding judge of this Court was on vacation, the motions were heard in the Lubbock Division of the Northern District of Texas, the Honorable Halbert O. Woodward, presiding.
Judge Woodward denied the defendants' motion to dissolve the temporary restraining order because it expired by its own terms on July 10, 1980. He declined to make any finding or ruling regarding the growers' allegation that Tuddenham, a TRLA attorney, violated the provisions of 42 U.S.C. § 2996e(b)(5) (1982), stating that the testimony failed to justify the issuance of any further injunctive relief on this point.
He found that the growers failed to meet their burden under the Norris-LaGuardia Act, 29 U.S.C. §§ 107 & 108 (1982) (pertaining to the issuance of injunctions in labor disputes by United States Courts), and denied *929 their request for an extension of the temporary restraining order.
Judge Woodward found that "the evidence presented at the evidentiary hearing will not support any finding and does not establish that any unlawful acts will be committed in the future, unless restrained."
On July 21, 1980, TRLA filed its answer. The TFWU and Moya filed a separate answer and counterclaim the same day. The TFWU and Moya claimed that they were entitled to relief under 42 U.S.C. §§ 1983, 1985(2) & 1985(3) (1982) for deprivation of rights secured to them by the Constitution and laws of the United States. They sought $150,000 in actual and punitive damages, as well as injunctive relief.
On March 9, 1983, the growers moved to dismiss this case in its entirety, including TFWU's and Moya's counterclaim. In their motion, the growers allege that "[t]he suit has, in effect, been abandoned for the reason that it has become moot. The picketing ended in the Summer of 1980. There was no picketing in 1981 or 1982, nor at any time following about August 1, 1980." The growers stated that they did not desire to pursue any further injunctive relief. Defendants opposed any dismissal as to their counterclaim.
On May 12, 1983, the Court dismissed the growers' action against TRLA, the TFWU, and Moya, and ordered that the case proceed as to TFWU's and Moya's counterclaim.
On June 2, 1983, the growers filed an amended pleading in No. 2-80-127 in which they stated that they no longer sought to prosecute their cause of action against TRLA, the TFWU, and Moya, and formally responded to the counterclaim asserted by the TFWU and Moya.
B. No. 2-80-129: Constitutionality of the Texas Picketing Statutes
On July 1, 1980, the TFWU and TRLA filed a class action complaint in which they sought declaratory and injunctive relief concerning the constitutionality of the Texas picketing statutes. Named as defendants in this action were: (1) the sheriffs of Deaf Smith, Castro, Hale, and Bailey Counties, Texas, in their official capacities, (2) Colonel James B. Adams, Director of the Texas Department of Public Safety, in his official capacity; (3) Roland Saul, in his capacity as Criminal District Attorney for Deaf Smith County, and (4) Jerry Smith and Don Davis, in their capacities as Assistant Criminal District Attorneys for Deaf Smith County.
On July 3, 1980, Plaintiffs amended their complaint to add Delia Gamez (Prince), a seasonal farm worker and a member of the TFWU, as an additional Plaintiff, and Mark White, then Attorney General of the State of Texas, as an additional Defendant.
In their First Amended Complaint, Plaintiffs allege that the language of the temporary restraining order parallels the provisions of Tex.Rev.Civ.Stat.Ann. arts. 5154d, 5154f, and 5154g (Vernon 1971). These provisions of Texas law pertain to labor disputes and provide for both civil and criminal enforcement by either the County or District Attorney.
In No. 2-80-129, Plaintiffs ask the Court to declare Art. 5154d, §§ 1-3; Art. 5154f, §§ 2(b), 2(d), and 2(e); and Art. 5154g, § 2 (Vernon 1971) unconstitutional. Because they anticipate future enforcement of these statutes against them, they seek a permanent injunction enjoining enforcement of the statutes.
Plaintiffs' claims against the sheriffs of Hale, Castro, and Bailey Counties, as well as their claim against Colonel Adams, were dismissed by the Court. Defendant Charles Tue's, sheriff of Hale County, counterclaim and third-party action were also dismissed. At the time of trial, the remaining defendants were: Travis McPherson, Sheriff of Deaf Smith County; Roland Saul, Jerry Smith, and Don Davis, Criminal District and Assistant Criminal District Attorneys for Deaf Smith County; and Jim Mattox, Attorney General of the State of Texas.
This case did not proceed as a class action because of Plaintiffs' failure to comply with Local Rule 10.2(b), which provides *930 that "within 90 days of the filing of a complaint alleging a class action, the attorney for the plaintiff shall move for certification."
C. The Consolidated Actions
On April 6, 1983, No. 2-80-127 was consolidated with No. 2-80-129 for purposes of trial. On June 13, 1983, the consolidated actions came on for trial before the Court, sitting without a jury. The TFWU, through its attorney, moved that its causes of action, filed as a Counter-Plaintiff in No. 2-80-127 and as a Plaintiff in No. 2-80-129, be severed and that they be granted a continuance as to that portion of those cases. The Court denied the motion.
Counsel for the TFWU, Bill Beardall of TRLA, then stated, on the record, that he would not present any evidence or request any relief on behalf of the TFWU. He stated that all evidence presented would be on behalf of Counter-Plaintiff Moya (No. 2-80-127) and Plaintiffs TRLA and Delia Gamez (No. 2-80-129). He further stated that even if evidence offered on behalf of another party might also bear on TFWU's claim, that, at the instruction of the TFWU, he was not seeking any relief on its behalf. Accordingly, the Court dismissed all causes of action of the TFWU in both actions, leaving Moya as the only claimant for relief in No. 2-80-127, and TRLA and Delia Gamez as the only claimants in No. 2-80-129.
V. Moya's Claims
Moya contends that his civil rights were violated by the growers' actions.
Specifically, Moya contends that the growers:
(1) "[A]greed and conspired to file this lawsuit to obtain a TRO;"
(2) "[C]onspired to take these actions maliciously and without according [him] ... due process of law;"
(3) "[E]ntered into this conspiracy with the purpose and intention of denying [him and other members of the TFWU] and other Mexican-American farm worker employees of [the growers] ..., as a class, their rights to freedom of speech and assembly, their right to organize to pursue minimum wage claims, and their right to due process of law, and further with the purpose and intention of harassing [them] ... in the free exercise of those rights;"
(4) Conspired with the Criminal District Attorneys' office in Deaf Smith County to file this action and obtain a temporary restraining order "in bad faith and with malicious abuse of process" because they "knew they had no possibility of success on the merits and that certain of their claims for relief were based upon unconstitutional provisions of Art. 5154 et seq.;" and
(5) Conspired with the state judge who issued the temporary restraining order against him to use "the full coercive powers of the State courts to enforce the growers unlawful objectives."
A. § 1983
To recover under § 1983, Moya must show that the growers (1) acted under color of state law, and (2) while so acting, deprived him of a right secured by the Constitution and laws of the United States.
1. Color of State Law.
In Lugar v. Edmondson Oil Co., 457 U.S. 922, 102 S.Ct. 2744, 73 L.Ed.2d 482 (1982), the Supreme Court set forth a two-step test for determining whether an action is taken under color of state law for purposes of § 1983:
First, the deprivation must be caused by the exercise of some right or privilege created by the State or by a rule of conduct imposed by the State or by a person for whom the State is responsible ... Second, the party charged with the deprivation must be a person who may fairly be said to be a state actor. This may be because he is a state official, because he has acted together with or has obtained significant aid from state officials, or because his conduct is otherwise chargeable to the State. Id. at 937, 102 S.Ct. at 2753-54.
The Court noted each case must be examined on its own facts and that its holding was "limited to the particular context of prejudgment attachment." Id. at 939 & n. *931 21, 102 S.Ct. at 2755 & n. 21. Consistent with this holding, the Fifth Circuit has found private litigants to have acted under color of state law when they invoked Louisiana's attachment law, Folsom Investment Co. v. Moore, 681 F.2d 1032, 1037 (5th Cir.1982), and Mississippi's replevin statute, Hollis v. Itawamba County Loans, 657 F.2d 746 (5th Cir.1981). At the same time, it has affirmed that:
Private misuse of a state statute alone does not describe conduct that can be attributed to the state. It is the procedural scheme created by the statute that is state action, and therefore subject to constitutional restraints.
Earnest v. Lowentritt, 690 F.2d 1198, 1201 (5th Cir.1982).
Thus, insofar as [plaintiffs] have alleged that the [statutory] scheme is violative of the constitution, the private parties who set that scheme in motion acted under color of state law. Folsom Investment, 681 F.2d at 1037.
Here, the growers who filed suit against Moya were private litigants, not state officials. They sought injunctive relief under the Texas picketing statutes, which prescribe certain rules of conduct for picketers and explicitly provide a private right of action for violations. Arts. 5154f, § 4 and 5154g, § 4.
In District 28, United Mine Workers of America v. Wellmore Coal Corp., 609 F.2d 1083 (4th Cir.1979), the Court found that coal companies which had obtained ex parte injunctions from state courts restricting the picketing activities of the plaintiff unions had not acted under color of state law. Accord, Louisville Area Inter-Faith Committee for United Farm Workers v. Nottingham Liquors, 542 F.2d 652 (6th Cir.1976).
The Fifth Circuit reached the opposite conclusion in a pre-Lugar case, Gresham Park Community Organization v. Howell, 652 F.2d 1227 (5th Cir.1981). In Gresham Park, a community organization began picketing a new liquor store it opposed. The liquor store owner sued in state court and obtained a TRO enjoining the picketing. After efforts to obtain relief in state court proved unsuccessful, the community organization filed suit in federal court under § 1983. The defendants argued, among other things, that they had not acted under color of state law. After an extended discussion, the Fifth Circuit concluded that:
[W]here a state court makes a ruling arguably infringing upon first amendment rights and the ruling is based on a state-created prohibitory rule, be it common law or statutory, the suit loses its private nature.... Because the same factor is present here, we find state action. Id. at 1239.
Gresham Park is not controlling in this case because the Fifth Circuit's analysis stops short after the first Lugar factor. Here, as in Gresham Park, any deprivation was "caused by the exercise of some right or privilege created by the state or by a rule of conduct imposed by the State," thus meeting the first Lugar requirement. But while the Fifth Circuit stopped here in Gresham Park, a pre-Lugar case, this Court must continue to the second Lugar requirement: may the growers fairly be said to be state actors?
In Lugar, a creditor obtained, ex parte, a writ of attachment from the Clerk of the state court. The writ was executed by the County Sheriff. Citing its earlier holding in Adickes v. S.H. Kress & Co., 398 U.S. 144, 152, 90 S.Ct. 1598, 1605, 26 L.Ed.2d 142 (1970), that "[p]rivate persons, jointly engaged with state officials in the prohibited action, are acting under color of law for purposes of [§ 1983]," the Court concluded that the second requirement had been met, "[w]hatever may be true in other contexts." 457 U.S. at 942, 102 S.Ct. at 2756.
Here, it may fairly be said that the growers were state actors because they acted together with and obtained significant aid from state officials.
The growers employed Roland Saul, Jerry Smith and Don Davis as their attorneys in the civil suit. As discussed above, Saul was the Criminal District Attorney of Deaf *932 Smith County. Smith and Davis were his assistants. Under Texas law:
The Criminal District Attorney and his assistants shall have the right and it shall be their primary duty to represent the State of Texas in criminal and civil cases in the District Court and inferior courts of Deaf Smith County. He shall have and exercise in addition to the specific powers given and duties imposed upon him and his assistants by this Act, all powers, duties, and privileges within Deaf Smith County as are now by law conferred and which may hereafter be conferred on County Attorneys and District Attorneys in various counties and judicial districts of this State relative to criminal and civil matters for and in behalf of the County and the State of Texas.
Tex.Rev.Civ.Stat.Ann. art. 326k-64 (Vernon 1973) (emphasis added).
Of course, simply retaining as counsel a person who also serves as a county or district attorney does not mean that a private litigant is acting under color of state law in any subsequent litigation. Here, Saul's, Smith's, and Davis' civil representation closely interlocked with their criminal prosecution duties. The picketing statutes authorize county or district attorneys to institute suits for injunctive relief for picketing violations. Arts. 5154f, § 5; 5154g, § 5. The mass picketing and secondary picketing statutes provide misdemeanor criminal sanctions for their violation. Arts. 5154d, § 5; 5154f, § 3. The same conduct which will support a civil suit by a private litigant for injunctive relief and damages will also support a criminal prosecution or a suit for injunctive relief brought in the name of the State.
Jerry Smith served as lead counsel for the growers. He handled both his private practice and his assistant criminal district attorney's duties out of the firm offices of Saul, Smith & Davis. While preparing the growers' state court petition, he telephoned Gilbert Pena, an attorney with the County and State Division of the Attorney General's office in Austin to discuss the enforceability and constitutionality of the picketing statutes. (This appears to be the same Gilbert Pena who represented the State of Texas and signed the final judgment on behalf of the State in the Medrano litigation, discussed in Part IX of this Opinion, infra.) Smith testified that he asked for relief based on the mass picketing statute "because of the advice given me by the Attorney General's office." Smith also testified that it was Pena who first suggested asking for a TRO. Because of the "totality of the facts," Smith decided on a private civil suit instead of a criminal prosecution or an injunctive relief suit brought on behalf of the State. A probable consideration in this decision was his ability to bill the growers for private representation, something he could not do for discharging his public duties.
Smith's consultation with the Attorney General's office could only have been in his official capacity as an Assistant Criminal District Attorney for Deaf Smith County. Under Art. 4399, the Attorney General may "advise the several district and county attorneys of the State, in the prosecution and defense of all actions in the district or inferior courts, wherein the State is interested, whenever requested by them," but is expressly prohibited from "giving legal advice or written opinions to any other than the officers or persons named herein." Private civil counsel are not named in the statute.
Roland Saul had conversations with several deputy sheriffs to find out what was happening on the picket lines, with an interest from both the civil side and "the law enforcement angle."[1] He obtained affidavits *933 from two deputies, which were used to support the issuance of the TRO.
Don Davis met with deputies during the strike to explain the trespass and picketing laws, including the 50-foot spacing rule in the mass picketing statute.
Larry Burlsmith, an investigator employed by the Criminal District Attorney's office, who is authorized to make arrests and has "all the rights and duties of a peace officer in criminal cases," Art. 326k-64, § 4, went to view the picket lines on his work time and reported his observations to Saul. He accompanied Sheriff McPherson when the TRO was served on TRLA.
McPherson and his deputies served the TRO on the various state court defendants. After the TRO's issuance, county deputies continued to observe and videotape the picketers. After the sheriff's department's videotape equipment broke down, the Texas Citrus & Vegetable Growers Association, one of the state court plaintiffs, loaned the sheriff's department some equipment they had brought up from the Valley.
The Court concludes that the growers were acting under color of state law. They acted together with and obtained significant aid from state officials, including the Criminal District Attorney's office, the sheriff's department, and the Texas Attorney General's office. As the Fifth Circuit has said, "[t]he application of the tests for state action is not mechanical.... State action may manifest itself in a wide variety of forms, some of which do not fit neatly in any category." Roberts v. Louisiana Downs, Inc., 742 F.2d 221, 224 (5th Cir. 1984).
2. Deprivation of Rights.
(a) 1st Amendment, Substantive
If Texas law required Moya to abide by the terms of the TRO, then his First Amendment rights clearly would have been infringed for the reasons discussed in Part *934 XI of this Opinion, infra, relating to the constitutionality of the picketing statutes.
Moya argues that he had no choice but to obey the TRO after it was issued because defiance would have led to contempt proceedings in which his constitutional claims could not have been raised. Walker v. City of Birmingham, 388 U.S. 307, 87 S.Ct. 1824, 18 L.Ed.2d 1210 (1967). This is not the law in Texas. If Moya had violated the terms of the TRO, he could have raised his constitutional claims in the subsequent state court proceedings. Ex parte Pierce, 161 Tex. 524, 342 S.W.2d 424 (1961); Ex parte Twedell, 158 Tex. 214, 309 S.W.2d 834 (1958); Ex parte Henry, 147 Tex. 315, 215 S.W.2d 588 (1948).
In Henry, for example, the relators had been incarcerated for violating a temporary injunction enjoining them from picketing within 100 feet of some railroad tracks. There was no question that they had violated the terms of the temporary injunction. In an original habeas corpus proceeding, the Supreme Court of Texas found that:
[W]hen the trial court ordered relators not to picket within 100 feet of the spur tracks when the railways were using or about to use them, he was abridging the right of free speech guaranteed them by the Constitution. So, in so far as the injunction judgment entered by the trial court attempted to restrain peaceful picketing at, near, across or within 100 feet of the railway tracks across Pickett Street, it is void.... [T]he order of commitment for contempt is likewise void. One cannot be punished for contempt for violating an order which a court has no authority to make. Id. 215 S.W.2d at 596-97.
The relators were discharged from custody. Similarly, the relator in Twedell, another picketing injunction case, successfully raised his preemption argument in the Texas Supreme Court and was discharged from custody. At the same time, though, Moya could not have challenged the sufficiency of the evidentiary basis for the TRO in a contempt proceeding. Pierce, 342 S.W.2d at 427. The United States Supreme Court has recognized and applied this practice in reviewing decisions of the Texas Supreme Court. See, e.g., Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430 (1945) (reversing, on First Amendment grounds, the Texas Supreme Court's denial of habeas corpus relief to a union organizer found in contempt for giving a speech in violation of a state district court's temporary injunction); but see Vance v. Universal Amusement Co., 445 U.S. 308, 316, 100 S.Ct. 1156, 1161, 63 L.Ed.2d 413 (1980) (assuming Texas law to be otherwise).
Nonetheless, even if one accepts that Moya's ability to raise his constitutional claims in a contempt proceeding precludes classifying the TRO as a prior restraint on his speech, the facts of this case plainly disclose that Moya's exercise of his First Amendment rights was chilled by the TRO. Thus those rights were violated.
Where the use of coercive power is threatened, First Amendment rights may be violated by the chilling effect of governmental action that falls short of a direct prohibition against speech. The exercise of First Amendment freedoms may be deterred almost as potently by the threat of sanctions as by their actual application.
Aebisher v. Ryan, 622 F.2d 651, 655 (2d Cir.1980) (citations omitted); Dombrowski v. Pfister, 380 U.S. 479, 486, 85 S.Ct. 1116, 1120, 14 L.Ed.2d 22 (1965). The growers' vigorous prosecution of the suit, their use of the Criminal District Attorney and his assistants as counsel, and the presence of sheriff's deputies with videotape equipment on the picket lines constituted an open threat of using the state's coercive power. As one scholar has commented:
Even if the [constitutional claims could be raised in a contempt proceeding], it might well remain the case that prepublication restraints, especially those affirmatively singling out the would-be disseminator, would deter far more protected conduct than criminal statutes ordinarily would. The latter is essentially a mute, impersonal threat; being told personally not to publish is apt to cause more second *935 thoughts no matter what defenses are ultimately available.
L. Tribe, American Constitutional Law, § 12-32 at 726 n. 2 (1978). Accord, Bernard v. Gulf Oil Co., 619 F.2d 459, 469 n. 15 (5th Cir.1980) (en banc), aff'd, 452 U.S. 89, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981) ("One who may be willing to violate a statute, and thus risk criminal penalties, may be less willing to act in direct defiance of an injunction or court order and thus subject himself to the court's potential contempt power.")
This case exemplifies such a situation. The criminal sanctions in the picketing statutes failed to deter the picketers, but the TRO, which essentially prohibited no more than the statutes, dramatically reduced Moya's exercise of his First Amendment rights. The TRO intimidated many of the picketers, causing them to return to work in the fields. At a time when creating trust and confidence in the TFWU was essential, Moya could hardly risk a contempt citation. As noted above, after the TRO issued, even some TFWU officers questioned Moya's ability to organize peacefully. Any protracted contempt proceedings would have destroyed the immediacy of Moya's picketing and speeches because of the short term of the onion harvest season. "First Amendment rights are often lost or prejudiced by delay." Id. at 470.
(b) 1st Amendment, Procedural
Moya also claims that the ex parte procedure used by the growers to obtain the TRO violated his First Amendment rights.
In Carroll v. President and Commissioners of Princess Anne, 393 U.S. 175, 89 S.Ct. 347, 21 L.Ed.2d 325 (1968), members of a "white supremacist" organization called the National States Rights Party held a public rally in the town of Princess Anne at which they gave agressively and militantly racist speeches directed at Blacks and Jews. Because of the tense atmosphere, more than 60 police officers were present to keep the peace. At the end of the rally, the organizers announced that another rally would take place the following night, at which time they would "raise a little bit of hell for the white race." The next day, city and county officials sought and obtained a court order restraining the organizers from holding another rally for ten days. The order was issued ex parte, with no notice to the organizers, or even any informal communication with them. The Supreme Court concluded that the procedure followed in obtaining the restraining order infringed on the organizers' First Amendment rights:
The 10-day order here must be set aside because of a basic infirmity in the procedure by which it was obtained. It was issued ex parte, without notice to petitioners and without any effort, however informal, to invite or permit their participation in the proceedings. There is a place in our jurisprudence for ex parte issuance, without notice, of temporary restraining orders of short duration; but there is no place within the area of basic freedoms guaranteed by the First Amendment for such orders where no showing is made that it is impossible to serve or to notify the opposing parties and to give them an opportunity to participate. Id. at 180, 89 S.Ct. at 351.
The TRO in this case was issued ex parte, without formal or informal notice to Moya or his attorneys. Jerry Smith, who spent upwards of five hours at the courthouse in Hereford trying to obtain the TRO, testified at trial as to why no notice was given:
Q. Did you at any of that ... during any of that time give notice to TRLA you were seeking a restraining order?
A. No, sir.
Q. Why not?
A. My experience in dealing with them in the past, it would have done absolutely no good to visit with them. They will not compromise in any respect, will not rationally discuss anything in any respect....
Q. Now, aside from the hearing on temporary injunction, I take it, you did not read [Tex.R.Civ.P. 680] to suggest you *936 should give notice of the seeking of a temporary restraining order so that counsel who wished to oppose it could be heard, at least, in chambers or in conference?
A. I believe that was up to the Court.
Q. Not up to you? You don't have an obligation under the Rules?
A. I believe that's up to the Court to decide.
Q. And I ask you, do you have an obligation under the Rules?
A. No, sir.
The TRLA offices in Hereford are within walking distance of the courthouse. Nothing prevented Smith from giving notice. Instead, he made no attempt whatsoever.
The Court concludes that the procedure followed in obtaining the TRO violated Moya's First Amendment rights.
(c) 6th Amendment
Moya asserts that the TRO also deprived him of his Sixth Amendment right to counsel. This contention is without merit. The Sixth Amendment right to counsel attaches at the time adversary judicial proceedings are initiated by way of formal charge, preliminary hearing, indictment, information or arraignment. See Brewer v. Williams, 430 U.S. 387, 398, 97 S.Ct. 1232, 1239, 51 L.Ed.2d 424 (1977); Kirby v. Illinois, 406 U.S. 682, 688-89, 92 S.Ct. 1877, 1881-82, 32 L.Ed.2d 411 (1972). The express terms of the Amendment limit its protections to criminal prosecutions. Since no criminal prosecution was initiated against Moya during the time relevant here, his Sixth Amendment right to counsel never attached and, thus, he could not have been deprived of that right.
(d) Legal Services Corporation Act
Moya finally contends that the growers deprived him of his statutory right to free legal counsel under the Legal Services Corporation Act, 42 U.S.C. § 2996, et seq. (1982).
A deprivation under color of state law of a right secured by the laws of the United States is actionable under § 1983. Maine v. Thiboutot, 448 U.S. 1, 4, 100 S.Ct. 2502, 2504, 65 L.Ed.2d 555 (1980). There are two exceptions to this principle: (1) "[w]hen the remedial devices provided in a particular Act are sufficiently comprehensive, they may suffice to demonstrate congressional intent to preclude the remedy of suits under § 1983," Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 20, 101 S.Ct. 2615, 2626, 69 L.Ed.2d 435 (1981); and (2) there is no remedy under § 1983 if the statute violated is not of the kind that creates enforceable "rights" under § 1983, id. at 19, 101 S.Ct. at 2626. See Pennhurst State School and Hospital v. Halderman, 451 U.S. 1, 28, 101 S.Ct. 1531, 1545, 67 L.Ed.2d 694 (1981); Irby v. Sullivan, 737 F.2d 1418, 1428 (5th Cir.1984).
To establish the first exception:
[T]he burden is properly placed on the defendant to show that Congress, in enacting the particular substantive statute at issue, intended an exception to the general rule of § 1983. A defendant may carry this burden by identifying express statutory language or legislative history revealing Congress' intent to foreclose the § 1983 remedy, or by establishing that Congress intended that the remedies provided in the substantive statute itself be exclusive.
Sea Clammers, 453 U.S. at 27 n. 11, 101 S.Ct. at 2630 n. 11 (Stevens, J., concurring and dissenting); cf. id. at 20 n. 31, 101 S.Ct. at 2626 n. 31. The growers have not suggested that this exception applies and, thus, have not carried the burden of establishing its applicability.
With respect to the second exception, the question is whether the Legal Services Corporation Act creates rights which are enforceable under § 1983.
The Legal Services Corporation was established by Congress in 1974 as a private, nonmembership nonprofit corporation in the District of Columbia to provide "financial support for legal assistance in noncriminal proceedings or matters to persons financially unable to afford legal assistance." *937 42 U.S.C. § 2996b(a). The Corporation itself does not provide legal assistance. It provides financial assistance, through annual Congressional appropriations received by the Corporation, to qualified programs furnishing legal assistance to individuals who qualify under financial eligibility criteria prescribed by the Corporation. 42 U.S.C. §§ 2996e(a)(1) & 2996f(a)(2).
TRLA is a nonprofit Texas corporation and a recipient of funds from the Corporation. As a recipient, it was responsible for establishing the maximum annual income level for persons to be eligible to receive legal assistance, and priorities for the allocation of its resources. 45 CFR §§ 1611.3 & 1620 (1980). Any "right" of Moya to receive legal aid depended on his meeting the eligibility criteria established by TRLA, within the regulatory guidelines, and presenting a need of sufficient priority for TRLA to allocate resources to his representation.
A client who feels that he has improperly been denied legal services may pursue an administrative client grievance procedure, 45 CFR § 1621 (1980), but he cannot sue in federal court. Nabke v. U.S. Department of Housing and Urban Development, 520 F.Supp. 5 (W.D.Mich.1981). Similarly, there is no private cause of action under the Act for persons aggrieved by violations of the Act. Grassley v. Legal Services Corp., 535 F.Supp. 818 (S.D.Iowa 1982).
The Act is designed to provide a mechanism for funding legal assistance to those unable to afford it. The Act does not create in the indigent any right to legal services which is enforceable under § 1983. See Pennhurst, 451 U.S. at 18-20, 101 S.Ct. at 1540-41 (no enforceable rights arising from "bill of rights" provision of the Developmentally Disabled Assistance and Bill of Rights Act of 1975); Boatowners and Tenants Association v. Port of Seattle, 716 F.2d 669 (9th Cir.1983) (no enforceable rights arising from the River and Harbor Improvements Act); Perry v. Housing Authority of the City of Charleston, 664 F.2d 1210, 1217 (4th Cir.1981) ("The plaintiffs have not pointed to any substantive provisions of the various housing acts which give them any tangible right, privilege, or immunity").
Even if the Court assumes that Moya had such an enforceable right, no deprivation could be found. Moya's counsel removed the state suit to federal court the day it was filed. The next day, they moved to dissolve or modify the TRO; filed an opt-in FLSA class action alleging minimum wage violations against the Howard Gault Co., one of the key players in the suit against Moya (Lucio v. Howard Gault Co., Civil Action No. 2-80-130); and filed No. 2-80-129, challenging the constitutionality of the Texas picketing statutes. Two days later, they obtained a modification of the TRO. By the end of July, Moya had successfully opposed any extension of the TRO, moved for a union representation election, and noticed the depositions of every state court plaintiff.
This vigorous representation aside, Moya argues that he was deprived of his right to receive legal advice while on the picket line. The Legal Services Corporation Act provides that:
The Corporation shall insure that no employee ... of any recipient (except as permitted by law in connection with such employee's own employment situation), while carrying out legal assistance activities under [the Act], engage in, or encourage others to engage in, any public demonstration or picketing, boycott, or strike.... 42 U.S.C. § 2996e(b)(5)(A).
Pursuant to this direction, the Corporation has promulgated a regulation prohibiting such activities, 45 CFR § 1612.2(a) (1980), with an explanation:
Nothing in this part shall prohibit an attorney from ... [a]ttending a public demonstration, picketing, boycott, or strike for the purpose of providing legal assistance to a client.... Id. § 1612.3(b).
Those portions of the TRO directed solely at TRLA tracked this statutory language, thus facially not prohibiting anything *938 more than was already prohibited by statute and regulation. Ed Tuddenham, a TRLA attorney, testified that the TRO's effect went beyond its words. Prior to the TRO, Tuddenham had gone out to the picket lines almost every day; afterwards, he went only occasionally. All of the TRLA attorneys maintain that they never engaged in any prohibited conduct.
Moya was unable to describe any particular deprivation that he suffered. TRLA continued to represent both him and the TFWU. Picketers on several occasions went to the TRLA offices in Hereford, albeit under surveillance by the sheriff's department, and received legal advice. Moya's testimony concerning any deprivation was abstract:
Q Mr. Moya, could you explain to the Court if and why having attorneys present on the picket line is important to you instead of just having them in an office to advise you?
A Well, it's for us ... it's comfortable, you know, to have an attorney present because the fear of being arrested, you know, and knowing your rights, it's ... you know, it's present, you know.
Q Are there any things that you need to have someone present there immediately to give you advice about, that you wouldn't have time, for instance, to go to an office to obtain?
A That is correct. We need them right there in the area where we're striking.
The record lacks the concrete facts necessary for finding any deprivation or injury. Thus, even assuming that the Act gives Moya a right to counsel enforceable under § 1983 and, further, a right to receive legal advice on a picket line enforceable under § 1983, no deprivation has been shown.
(e) Malicious Prosecution
The parties have argued at some length the question of whether Moya pleaded a counterclaim based on malicious prosecution. As the growers point out, Moya's three counterclaims are based on three provisions of the Civil Rights Act of 1871: § 1983, § 1985(2), and § 1985(3). No pendent state law claim for malicious prosecution has been pleaded.
To the extent that Moya's malicious prosecution claim is cognizable under § 1983, see Wheeler v. Cosden Oil & Chemical Co., 734 F.2d 254 (5th Cir.1984); Shaw v. Garrison, 467 F.2d 113 (5th Cir. 1972), he cannot prevail because the state court proceeding was civil, not criminal. Both Wheeler and Shaw rest on the protections afforded criminal defendants by the Fourth and Fourteenth Amendments, protections that do not extend to defendants in civil suits even if the civil action is brought by persons acting under color of state law. Beker Phosphate Corp. v. Muirhead, 581 F.2d 1187 (5th Cir.1978). In Beker Phosphate, Sarasota County, Florida, allegedly systematically misused legal procedure to delay opening of a phosphate mine by filing a series of appeals when it lacked standing. Using the term "misuse of legal procedure" to encompass malicious prosecution, wrongful civil proceedings, and abuse of process, the Fifth Circuit concluded that "§ 1983 does not provide a remedy for such a claim of misuse of legal procedure." Id. at 1188 n. 1 & 1189.
B. § 1985
Our discussion of Moya's claims under §§ 1985(2) and (3) is much abbreviated by the Supreme Court's recent decision in United Brotherhood of Carpenters and Joiners of America v. Scott, 463 U.S. 825, 103 S.Ct. 3352, 77 L.Ed.2d 1049 (1983).
In relevant part, § 1985(2) prohibits conspiracies "for the purpose of impeding, hindering, obstructing, or defeating, in any manner, the due course of justice in any State or Territory, with intent to deny to any citizen the equal protection of the laws;" and § 1985(3) prohibits conspiracies "for the purpose of depriving, either directly or indirectly, any person or class of persons of the equal protection of the laws."
"Each of these portions of the statute contains language requiring that the conspirators' actions be motivated by an intent to deprive their victims of the equal protection *939 of the laws." Kush v. Rutledge, 460 U.S. 719, 103 S.Ct. 1483, 1487, 75 L.Ed.2d 413 (1983).
"The language requiring intent to deprive of equal protection ... means that there must be some racial, or perhaps otherwise class-based, invidiously discriminatory animus behind the conspirators' action." Griffin v. Breckenridge, 403 U.S. 88, 102, 91 S.Ct. 1790, 1798, 29 L.Ed.2d 338 (1971).
In Scott, the Supreme Court discussed the type of animus required by this language in § 1985(3):
We ... cannot construe § 1985(3) to reach conspiracies motivated by economic or commercial animus. Were it otherwise, for example, § 1985(3) could be brought to bear on any act of violence resulting from union efforts to organize an employer or from the employer's efforts to resist it, so long as the victim merely asserted and proved that the conduct involved a conspiracy motivated by an animus in favor of unionization, or against it, as the case may be. 103 S.Ct. at 3360-61.
Presumably the same language has the same effect on the second portion of § 1985(2), i.e., the second portion of § 1985(2) does not reach conspiracies motivated by economic or commercial animus.
The conspiracy against Moya stood squarely on a bedrock of anti-union animus. The growers acted in what they perceived to be their own economic and commercial best interests. Moya was not sued because he was Hispanic or an outsider. He was sued because his union organizing efforts interfered with the growers' onion harvest. TRLA was sued for the same reason and also because the growers couldn't resist taking a shot at these "carpetbaggers" from Harvard. This latter motive, though, did not relate to Moya, and the suit as a whole "generally rest[ed] on economic motivations." See Id. Without the requisite discriminatory animus, Moya's claims under § 1985 must fail.
VI. Immunity
In Folsom Investment Co. v. Moore, 681 F.2d 1032, 1033 (5th Cir.1982), the Fifth Circuit held that "a private party who invokes a presumptively valid state ... statute is entitled to a good faith immunity from monetary liability under § 1983." The court adopted the standard prescribed by the Supreme Court for state officials performing discretionary functions. Id. at 1037. See Harlow v. Fitzgerald, 457 U.S. 800, 818-19, 102 S.Ct. 2727, 2738, 73 L.Ed.2d 396 (1982).
This inquiry, applied to this context, turns on whether the unconstitutionality of the statute was clearly established at the time the action occurred. "If the law at that time was not clearly established, an official could not reasonably be expected to anticipate subsequent legal developments, nor could he fairly be said to `know' that the law forbade conduct not previously identified as unlawful." Id. at 818, 102 S.Ct. at 2738. Accord, Davis v. Scherer, ___ U.S. ___, 104 S.Ct. 3012, 3021, 82 L.Ed.2d 139 (1984).
As discussed in Part IX of this Opinion, infra, the first federal court to consider the constitutionality of many of the picketing statutes relied on by the growers, initially found several of them unconstitutional, but ultimately rendered no decision on the constitutional issues. Medrano v. Allee, 347 F.Supp. 605 (S.D.Tex.1972) (3-judge court), vacated in relevant part, 416 U.S. 802, 94 S.Ct. 2191, 40 L.Ed.2d 566 (1974). Thus Medrano did not clearly establish the unconstitutionality of Art. 5154d §§ 1(1) and 1(2), and Art. 5154f. Similarly, no court had even suggested that Art. 5154d, §§ 2 and 3, and Art. 5154g, § 2 were unconstitutional.
Nonetheless, the unconstitutionality of the minority picketing provisions of Art. 5154f, relied on by the growers in obtaining the TRO, had been clearly established more than three decades earlier by the Texas Supreme Court. International Union of Operating Engineers v. Cox, 148 Tex. 42, 219 S.W.2d 787 (1949); Construction and General Labor Union v. Stephenson, 148 Tex. 434, 225 S.W.2d 958 (1950). See Part XI, E of this Opinion, infra. The unconstitutionality *940 of the ex parte procedure used by the growers to obtain the TRO had been clearly established twelve years earlier in Carroll v. President and Commissioners of Princess Anne, 393 U.S. 175, 89 S.Ct. 347, 21 L.Ed.2d 325 (1968). Thus the growers do not have immunity from monetary liability for the damages flowing from use of the minority picketing provisions of Art. 5154f and the ex parte TRO procedure.
VII. Damages
The right to demonstrate is a significant strand of the cluster of First Amendment rights. The vindication of these rights warrants more than token acknowledgment.... Compensation for denial of First Amendment rights should not be extravagant, say to the point of awarding the equivalent of what would be a year's, or even six month's compensation for the average person. Correspondingly such a compensation award should not be approached in a [miserly] spirit. It is in the public interest that there be a reasonably spacious approach to a fair compensatory award for denial or curtailment of the right to demonstrate.
Tatum v. Morton, 562 F.2d 1279, 1282 (D.C.Cir.1977) ($100 did not suffice to compensate plaintiffs for the interruption of their Quaker vigil in front of the White House; on remand, each plaintiff was awarded approximately $1000, Hobson v. Wilson, 556 F.Supp. 1157, 1191 (D.D.C. 1982)). Cf. Hobson v. Wilson, 737 F.2d 1, 58 (D.C.Cir.1984) ($3125 excessive compensation for FBI's denial, through planned disruptions of antiwar and civil rights demonstrations, of plaintiff's full association with other persons for pursuit of his social and political causes); Dellums v. Powell, 566 F.2d 167 (D.C.Cir.1977) ($7500 excessive compensation for the actual loss of an opportunity to demonstrate caused by unlawful removal from the steps of the U.S. Capitol and detention by police; on remand the district court fixed damages at $750, Dellums v. Powell, No. 2271-71 (D.D.C. Dec. 13, 1979), cited in Hobson, 556 F.Supp. at 1191 n. 41).
The basic purpose of a § 1983 damages award is to compensate persons for injuries caused by the deprivation of constitutional rights. Carey v. Piphus, 435 U.S. 247, 254, 98 S.Ct. 1042, 1047, 55 L.Ed.2d 252 (1978). Mere proof of the violation of a right will not support an award of damages absent proof of actual injury. Id. at 262-63, 98 S.Ct. at 1051-52; Familias Unidas v. Briscoe, 619 F.2d 391, 402 (5th Cir.1980). If no actual injury is shown as the result of a deprivation of First Amendment rights, only nominal damages not to exceed one dollar may be awarded. Carey, 435 U.S. at 266-67, 98 S.Ct. at 1053-54; Familias Unidas, 619 F.2d at 402.
Mental or emotional distress may be compensated with an award of damages. Carey, 435 U.S. at 263-64, 98 S.Ct. at 1052; Franks v. Smith, 717 F.2d 183, 186 (5th Cir.1983). "We use the term `distress' to include mental suffering or emotional anguish. Although essentially subjective, genuine injury in this respect may be evidenced by one's conduct and observed by others.... [A]n award of damages must be supported by competent evidence concerning the injury." Carey, 435 U.S. at 264 n. 20, 98 S.Ct. at 1052 n. 20.
Injury to reputation may also be compensated as an element of damages suffered as a result of the deprivation of First Amendment rights. Marrero v. City of Hialeah, 625 F.2d 499, 514 (5th Cir. 1980), cert. denied, 450 U.S. 913, 101 S.Ct. 1353, 67 L.Ed.2d 337 (1981). "[T]o the extent the unconstitutional conduct caused injury to appellants' personal or business reputations, the injury is compensable as an element of damages flowing from the unlawful conduct." Id.
At trial, Moya testified:
Q How did this effect you personally?
A Well, personally, I mean, I have committed my whole life to improving the conditions of farm workers. My family is involved in it.
I personally, you know, feel proud, you know, to be involved in this struggle to *941 better the situation of these farm workers that have been discriminated for such such a long time.
And when all of a sudden, I'm presented with a restriction order that makes me the person, you know, that has been struggling for justice and equality, a criminal, it definitely has a tremendous impact on my personality and on myself. Because, you know, in the eyes of ... I lost face in the eyes of people.
Q What do you mean you lost face in the eyes of people?
A You know, on the one hand, here we have a peaceful picketing in this area, and then all of a sudden, there is coming out in the news, you know, with this restriction order that we've been slanderous, that there was rock throwing, that we were being violent, you know.
So all those things, you know, effect my image that I'm trying to portray to the workers to be able to persuade them to join us in our just cause for justice and equality.
Q Did ... the issuance of the restraining order effect your reputation within the union in any way?
A Yes. It did.
Q Can you explain to the Court how that happened?
A In some ways, I was reprimanded, you know, that, you know, why are you carrying out such ... you know, there were doubts about the capacity, you know, that I have to organize strikes. You know, I've been doing this for ... I've been in charge of the striking activities and the picketing activities for the last, you know, five years in this organization and all of a sudden, you know, my expertise, if you will, you know, to be able to carry out peaceful strikes is being questioned by the leadership of the organization.
The Court finds that Moya should be awarded $500 as compensatory damages for injury sustained as a consequence of being restrained under the minority picketing provisions of Art. 5154f, and of the improper ex parte procedure used to obtain the TRO.
Punitive damages may awarded in a § 1983 action "when the defendant's conduct is shown to be motivated by evil motive or intent, or when it involves reckless or callous indifference to the federally protected rights of others." Smith v. Wade, 461 U.S. 30, 103 S.Ct. 1625, 1640, 75 L.Ed.2d 632 (1983). The Court finds that an award of punitive damages against the growers in this case is not justified, however questionable the conduct of others may have been.
VIII. Recovery Against the TRO Bond
Apart from the civil rights claims, both Moya and TRLA assert that they are entitled to recover under state law against the bond posted by the growers for damages they sustained because of the wrongfully issued TRO. The growers argue that Moya and TRLA failed to plead properly for any recovery against the bond. The Court agrees that Moya has failed to plead properly for any recovery against the bond, but finds that the question of TRLA's recovery against the bond has been adequately raised by the Pretrial Order.
No recovery may be had against the sureties, Kenneth Rogers and Roland Saul, because they were never served with the papers in this action.
A. Liability
In Texas, requiring a bond as a condition of granting a temporary restraining order is to secure payment to the enjoined party of the actual damages which he may sustain as a result of the temporary restraining order, and costs, in the event the order is later held to have been wrongfully issued and is dissolved, in whole or in part, even though the order was not sought maliciously or without probable cause. City of Houston v. Plantation Land Co., 440 S.W.2d 691, 695-96 (Tex.Civ.App. Houston [14th Dist.] 1969, writ ref'd n.r.e.); Cone v. City of Lubbock, 431 S.W.2d 639, 646 (Tex.Civ.App. Amarillo 1968, writ ref'd n.r.e.). The enjoined party must show that the restraint was *942 obtained or continued in effect by the wrongful act of the applicant and that it prevented his doing that which he had a legal right to do. Craddock v. Overstreet, 435 S.W.2d 607, 609 (Tex.Civ.App. Tyler 1968, writ ref'd n.r.e.); Sanitary Appliance Co. v. French, 58 S.W.2d 159, 164 (Tex.Civ.App. Amarillo 1933, writ dism'd). An applicant's voluntary withdrawal of his suit after the issuance of a restraining order and prior to a determination on the merits constitutes "a prima facie case of the right to recover damages, and the burden of proof passes to him who obtained the injunction to establish his justification." Payne v. Nichols, 176 S.W.2d 961, 964 (Tex.Civ.App. Galveston 1943, writ ref'd w.o.m.).
Here, as discussed above, the growers voluntarily dismissed their action before trial. The TRO itself was modified by this Court on July 3, 1980, three days after its issuance, by eliminating the 50-foot spacing rule. As discussed elsewhere in this opinion, the TRO effectively prevented TRLA attorneys from counseling their clients at the picket lines. The Court need not decide whether the TRO was wrongfully issued because TRLA has not made any showing of compensable damages.
B. Damages
Since this bond was posted in state court pursuant to the state rules of civil procedure, state law controls the damages recoverable on the bond. Wright & Miller, Federal Practice & Procedure, § 2974 at 657 (1973). Under Texas law, "an applicant who secures a temporary restraining order wrongfully is liable for the damages caused by the injunction." Craddock, 435 S.W.2d at 609.
The damages that may be recovered from a wrongful injunction include only those damages that result from the operation of the wrongfully obtained injunction. If the injunction was proper in part and improper in part, only the damages that resulted from the improper part may be recovered. 31 Tex.Jur.2d, Injunctions § 233 at 363 (1962).
The party wrongfully enjoined cannot recover punitive damages even if the applicant for injunction acted maliciously or fraudulently. Womack v. McMillan, 47 S.W.2d 437, 439 (Tex.Civ.App. Amarillo 1932, no writ). Similarly, he cannot recover attorney's fees incurred in defending against the application for injunction or prosecuting the claim for wrongful injunction. Garrett v. Kelley, 6 S.W.2d 414, 417 (Tex.Civ.App. Amarillo 1928, writ ref'd).
The only damage claim made by TRLA is for $7,170.43 (Px 10), representing the actual cost of staff attorney time spent dealing with the TRO. This is simply a claim for attorney's fees which, as noted above, is not compensable under Texas law. See Galveston, H. & S.A. Ry. v. Ware, 74 Tex. 47, 11 S.W. 918, 920 (Tex.1889) (acknowledging that weight of authority in other states is otherwise). The Court finds that TRLA is not entitled to any recovery for damages against the bond.
IX. Historical Background to the Constitutional Challenges in No. 2-80-129: Of Medrano v. Allee
In No. 2-80-129, TRLA and Delia Gamez, the remaining plaintiffs seeking relief, have asked the Court to declare that certain of the Texas picketing statutes are facially unconstitutional, on either vagueness or overbreadth grounds. This is not the first constitutional challenge to these statutes to come before the federal courts.
In 1966-67, farm worker organizing efforts in the lower Rio Grande Valley by the United Farm Workers Organizing Committee of the AFL-CIO were badly disrupted and finally stopped altogether through state-sanctioned union-busting tactics focused on strict enforcement of the Texas picketing statutes. After extensive harassment and numerous arrests, the union and a group of farm workers brought suit in federal court seeking, inter alia, a declaration that Art. 5154d, § 1, relating to mass picketing, and Art. 5154f, relating to secondary strikes, picketing and boycotts, were facially unconstitutional on vagueness and overbreadth grounds. A threejudge *943 district court declared Art. 5154d, § 1, and Art. 5154f unconstitutional on overbreadth grounds. Medrano v. Allee, 347 F.Supp. 605, 622-28 (S.D.Tex.1972). On appeal, the Supreme Court vacated this part of the judgment and remanded the case for further findings and reconsideration in light of Steffel v. Thompson, 415 U.S. 452, 94 S.Ct. 1209, 39 L.Ed.2d 505 (1974). Allee v. Medrano, 416 U.S. 802, 820, 94 S.Ct. 2191, 2202, 40 L.Ed.2d 566 (1974). In Steffel, decided after the district court's decision in Medrano, the Court had discussed when federal declaratory and injunctive relief regarding the constitutionality of a state statute was appropriate, if there were no pending state criminal prosecutions for violation of the statute.
On remand, the plaintiffs withdrew their challenge to the facial constitutionality of the statutes. The district court entered an amended final judgment which provided, in relevant part:
8. The Court has been advised by the parties and finds that no criminal prosecutions of any kind or character are pending against Plaintiffs or any member of the class represented by Plaintiffs as described in Paragraph 2 of this Judgment, and Plaintiffs have advised the Court that they withdraw any claim of relief on account of the claimed unconstitutionality of Sections 1 and 2 of Article 5154f of Vernon's Civil Statutes of the State of Texas (secondary picketing and boycotting)....
[T]his Court makes no adjudication concerning the constitutionality of any of said statutes, either upon its face or as applied.
. . . . .
10. ... As to Section 1 of Article 5154d of Vernon's Civil Statutes of the State of Texas, to the extent quoted below, to-wit,
"Section 1. It shall be unlawful for any person, singly or in concert with others, to engage in picketing or any form of picketing activity that shall constitute mass picketing as herein defined.
"`Mass picketing,' as that term is used herein, shall mean any form of picketing in which:
"1. There are more than two (2) pickets at any time within either fifty (50) feet of any entrance to the premises being picketed, or within fifty (50) feet of any other picket or pickets."
the Court finds from the evidence adduced upon the trial of this case that Plaintiffs were arrested and incarcerated or threatened with arrest and incarceration or dispersed by Defendants and others acting in concert with them on the sole ground that Plaintiffs and members of their class engaged in picketing or some form of picketing activity in which more than two pickets were located within fifty (50) feet of any other picket or pickets even without the creation or existence of any obstacle to free ingress and egress from any premises and without any obstruction or threat of obstruction or without the existence or threat of physical harm or intimidation in any form. The Court is of the opinion that the application of said portion of Article 5154d to such specific circumstances was and is unconstitutional. Therefore, the Court hereby renders declaratory judgment under [Title] 28 U.S.C. Section 2201 and declares and adjudges that Section 1 of Article 5154d was and is unconstitutionally applied to Plaintiffs and members of their class to the extent that such portion of said statute was or may be applied to them on the sole ground that more than two pickets were located within fifty (50) feet of any other picket or pickets.
Final Judgment as Modified Pursuant to Remand by the Supreme Court of the United States at 3-5, Medrano v. Allee, No. 67-B-36 (S.D.Tex., filed June 24, 1976). The Judgment does not make any mention of Art. 5154d, § 1(2), the entrance obstruction prohibition.
In a sense, then, we pick up where Medrano left off.
*944 X. Standing
"Article III of the Constitution imposes limits on the cases federal courts may hear. This includes the requirement, broadly described as the justiciability doctrine, that there be a `case or controversy.' The very use of the terms `case or controversy' implies that the dispute must be real, not hypothetical, and that the plaintiff must be personally affected and thus have standing to sue." KVUE v. Austin Broadcasting Corp., 709 F.2d 922, 927 (5th Cir.1983), aff'd, ___ U.S. ___, 104 S.Ct. 1580, 80 L.Ed.2d 114 (1984).
"The essence of the standing inquiry is whether the parties seeking to invoke the Court's jurisdiction have `alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the Court so largely depends for illumination of difficult constitutional questions.'" Duke Power Co. v. Carolina Environmental Study Group, 438 U.S. 59, 72, 98 S.Ct. 2620, 2630, 57 L.Ed.2d 595 (1978), quoting Baker v. Carr, 369 U.S. 186, 204, 82 S.Ct. 691, 703, 7 L.Ed.2d 663 (1962).
To establish standing for a challenge to the constitutionality of a state statute, a litigant "must demonstrate a realistic danger of sustaining a direct injury as a result of the statute's operation or enforcement." Babbitt v. United Farm Workers National Union, 442 U.S. 289, 298, 99 S.Ct. 2301, 2308, 60 L.Ed.2d 895 (1979).
A person who desires to violate a statute that he considers unconstitutional need not disobey the law and await his prosecution before challenging its unconstitutionality. Steffel v. Thompson, 415 U.S. 452, 459, 94 S.Ct. 1209, 1215, 39 L.Ed.2d 505 (1974).
"When the plaintiff has alleged an intention to engage in a course of conduct arguably affected with a constitutional interest, but proscribed by statute, and there exists a credible threat of prosecution thereunder, he `should not be required to await and undergo a criminal prosecution as the sole means of seeking relief.'" Babbitt, 442 U.S. at 298, 99 S.Ct. at 2309, quoting Doe v. Bolton, 410 U.S. 179, 188, 93 S.Ct. 739, 745, 35 L.Ed.2d 201 (1973).
Delia Gamez Prince was a volunteer TFWU organizer working with Moya during the strike. She participated in the initial picketing of the Howard Gault Company field, speaking with workers and handing out leaflets. She also participated in picketing Griffin & Brand. After the TRO issued, her picketing was severely limited. She obeyed the 50-foot spacing rule and used less strident language for fear of violating the TRO's language prohibitions. Because her First Amendment rights were thus infringed, she sustained a direct injury as a result of the Texas picketing statutes' operation and enforcement.
Gamez desires to picket in the future. William Edward Weeks of the Texas Citrus and Vegetable Association, Wesley Fisher of the Barrett-Fisher Co., and David W. Smith of Smith Potato and the High Plains Vegetable Growers and Shippers Council, all testified at trial that they would seek restraining orders under the picketing statutes in the future should similar picketing recur. Their respective organizations were all plaintiffs in the state court suit. The Barrett-Fisher Company signed the TRO bond as a principal.
The Court finds that Gamez has standing to challenge the constitutionality of the statutes in question. Even if, as the growers assert, there has been no picketing since August of 1980, this does not deprive Gamez of standing. As the Supreme Court said in Medrano, "[w]e may not assume that because during this period they directed their efforts to the judicial battle, they have abandoned their principal cause. Rather, the very purpose of the suit was to seek protection of the federal court so that the efforts at unionization could be renewed. It is settled that an action for an injunction does not become moot merely because the conduct complained of has terminated, if there is a possibility of recurrence, since otherwise the defendants *945 `would be free to return to [their] old ways.'" 416 U.S. at 810-11, 94 S.Ct. at 2198.
TRLA, on the other hand, presented no evidence at trial that either it or its employees intend to engage in any activity prohibited by the challenged statutes. In fact, TRLA has maintained steadfastly throughout this litigation that the attorneys it employs have never engaged in any form of picketing, but have only advised clients while at the picket lines. Thus there is no threatened injury to TRLA from the operation of the statutes. The trial evidence is unpersuasive that TRLA suffered any actual injury from the operation of the statutes. Instead, any chilling effect on the activities of TRLA's attorneys stemmed from the TRO language which tracked the Legal Services Corporation Act and the regulations promulgated thereunder.
Since neither threatened nor actual injury is present, TRLA fails to satisfy the crucial Article III requirement of injury-infact and lacks standing to raise its constitutional challenges to the picketing statutes. See Secretary of State of Maryland v. Joseph H. Munson Co., ___ U.S. ___, 104 S.Ct. 2839, 2848, 81 L.Ed.2d 786 (1984); Singleton v. Wulff, 428 U.S. 106, 112, 96 S.Ct. 2868, 2873, 49 L.Ed.2d 826 (1976); Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 44-45, 96 S.Ct. 1917, 1927, 48 L.Ed.2d 450 (1976).
XI. The Merits of the Constitutional Challenges
A. Art. 5154d, § 1(1)
Article 5154d, § 1(1) provides:
Section 1. It shall be unlawful for any person, singly or in concert with others, to engage in picketing or any form of picketing activity that shall constitute mass picketing as herein defined.
"Mass picketing," as that term is used herein, shall mean any form of picketing in which:
1. There are more than two (2) pickets at any time within fifty (50) feet of any entrance to the premises being picketed, or within fifty (50) feet of any other picket or pickets.
Gamez argues that § 1(1) is unconstitutionally overbroad.
A statute is unconstitutionally overbroad if it, as written and as construed by the authoritative state court, reaches a substantial amount of constitutionally protected conduct as well as unprotected conduct. Broadrick v. Oklahoma, 413 U.S. 601, 93 S.Ct. 2908, 37 L.Ed.2d 830 (1973). Where a statute imposes a direct restriction on protected First Amendment activity, and where the defect in the statute is that the means chosen to accomplish the state's objectives are too imprecise, so that in all its applications the statute creates an unnecessary risk of chilling free speech, the statute is properly subject to facial attack for overbreadth. Joseph H. Munson, 104 S.Ct. at 2853.
The overbreadth doctrine originated in the well-known labor picketing case of Thornhill v. Alabama, 310 U.S. 88, 60 S.Ct. 736, 84 L.Ed. 1093 (1940). In that case, the Court concluded that the very existence of some broadly written statutes may have such a deterrent effect on free expression that they should be subject to challenge even by a party whose own conduct may be unprotected. See Members of the City Council of Los Angeles v. Taxpayers for Vincent, 466 U.S. 789, 104 S.Ct. 2118, 2125, 80 L.Ed.2d 772 (1984). The Thornhill court said:
It is not merely the sporadic abuse of power by the censor but the pervasive threat inherent in its very existence that constitutes the danger to freedom of discussion. One who might have had a license for the asking may therefor call into question the whole scheme of licensing when he is prosecuted for failure to procure it. A like threat is inherent in a penal statute, like that in question here, which does not aim specifically at evils within the allowable area of state control but, on the contrary, sweeps within its ambit other activities that in ordinary circumstances constitute an exercise of freedom of speech or of the press. The *946 existence of such a statute, which readily lends itself to harsh and discriminatory enforcement by local prosecuting officials, against particular groups deemed to merit their displeasure, results in a continuous and pervasive restraint on all freedom of discussion that might reasonably be regarded as within its purview. 310 U.S. at 97-98, 60 S.Ct. at 742.
"[T]he mere fact that one can conceive of some impermissible applications of a statute is not sufficient to render it susceptible to an overbreadth challenge. On the contrary, the requirement of substantial overbreadth stems from the underlying justification for the overbreadth exception itself the interest in preventing an invalid statute from inhibiting the speech of third parties who are not before the Court.... [T]here must be a realistic danger that the statute itself will significantly compromise recognized First Amendment protections of parties not before the Court for it to be facially challenged on overbreadth grounds." Taxpayers for Vincent, 104 S.Ct. at 2126. Where the statute unquestionably attaches sanctions to protected conduct, the likelihood that the statute will deter that conduct is ordinarily sufficiently great to justify an overbreadth attack. Id. at 2126 n. 19, citing Erznoznik v. City of Jacksonville, 422 U.S. 205, 217, 95 S.Ct. 2268, 2276, 45 L.Ed.2d 125 (1975).
The unconstitutional overbreadth of § 1(1) was well analyzed in the district court's opinion in Medrano, although this discussion was later rendered dicta by the final disposition of the action. The Court finds § 1(1) unconstitutionally overbroad and adopts as its reasoning the discussion set forth in Medrano, 347 F.Supp. at 622-24, beginning with the section titled "(A). Picketing.", and ending with the last full paragraph on page 624 (i.e., ending with: "Little imagination is required to envisage circumstances where groups of demonstrators, substantially larger than two persons, standing at closer quarters than fifty feet would not threaten the safe flow of traffic nor unreasonably interfere with free ingress or egress from nearby buildings.").
The only argument advanced by the State of Texas in support of § 1(1)'s constitutionality is without merit. The State argues:
Without the limiting construction given to the statute in Medrano it would be conceded that the statute offends the constitutional principal that "a government purpose to control or prevent activities constitutionally subject to state regulation may not be achieved by means which sweep unnecessarily broadly and thereby invade the area of protected freedom." Zwickler v. Koota, 389 U.S. 241 [88 S.Ct. 391, 19 L.Ed.2d 444] (1967). By requiring a prior showing that the picketing has become violent, or that there is evidence of threats of violence, or that the picketing has obstructed or hindered ingress or egress before a number distance formula injunction will lie, the Court in Medrano salvaged the constitutionality of § 1(1).
This reasoning is wrong on three counts.
One, the Medrano court made no narrowing construction of § 1(1). The original district court judgment declared § 1(1) facially unconstitutional, hence null and void. This finding was vacated by the Supreme Court and withdrawn by the district court after the Medrano plaintiffs withdrew their facial challenge to the statute. The final Medrano judgment found § 1(1) unconstitutional as applied, but imposed no narrowing construction. Indeed, if the Attorney General's office truly believes that Medrano imposed a limiting construction on § 1(1), one must wonder why Gilbert Pena, the Assistant Attorney General who signed the final judgment in Medrano on behalf of the State, failed four years later to inform Jerry Smith of this significant limitation on § 1(1) when Pena and Smith were discussing the legal underpinnings of the state court suit which began this litigation.
Two, neither the Medrano court nor this one has the power to furnish a saving construction for a state statute. While the federal courts have the power to *947 construe Congressional enactments, they "lack jurisdiction authoritatively to construe state legislation." United States v. Thirty-seven Photographs, 402 U.S. 363, 369, 91 S.Ct. 1400, 1405, 28 L.Ed.2d 822 (1971). See Hill v. City of Houston, 764 F.2d 1156, 1164 (5th Cir.1985); Beckerman v. City of Tupelo, 664 F.2d 502, 509 (5th Cir.1981). The Medrano court itself expressly recognized this limitation on its power to supply a narrowing construction. 347 F.Supp. at 625.
Three, even if a narrowing construction could be supplied, the Court "may not, in doing so, rewrite the language or do violence to its plain language." Long Island Vietnam Moratorium Committee v. Cahn, 437 F.2d 344, 348 (2d Cir.1970). The language of § 1(1) is plain and straightforward. Picketing in violation of an arbitrary numbers and distance formula is prohibited without reference to the surrounding circumstances. "The clarity and preciseness of the provision in question make it impossible to narrow its indiscriminately cast and overly broad scope without substantial rewriting." Aptheker v. Secretary of State, 378 U.S. 500, 515, 84 S.Ct. 1659, 1669, 12 L.Ed.2d 992 (1964).
B. Art. 5154d, § 1(2)
Article 5154d, § 1(2) gives a second definition of prohibited "mass picketing":
"Mass picketing," as that term is used herein, shall mean any form of picketing in which:
. . . . .
2. Pickets constitute or form any character of obstacle to the free ingress to and egress from any entrance to any premises being picketed or to any other premises, either by obstructing said free ingress or egress by their persons or by the placing of vehicles or other physical obstructions.
The Medrano court originally found this provision to be unconstitutionally overbroad, but, as noted above, this holding was withdrawn and the Medrano court made no final determination of its constitutionality.
In 1981, the Texas Court of Criminal Appeals narrowly construed § 1(2), saying:
As we construe this statute, in a criminal prosecution for its violation, the State must prove that a person
(1) Singly, or in concert with others
(2) intentionally, knowingly or recklessly
(3) engaged in picketing in which
(4) pickets constituted or formed any character (type) of obstacle
(5) which by their person or by the placing of vehicles or any other physical obstructions
(6) rendered impassable or unreasonably inconvenient or hazardous the free ingress to or egress from any entrance to any premises being picketed or to any other premises.
Sherman v. State, 626 S.W.2d 520, 527-28 (Tex.Crim.App.1981) (en banc).
Since the parties agree that § 1(2), as narrowly construed in Sherman, does not unconstitutionally infringe upon First Amendment rights, this case presents no challenge to the statute and the Court makes no judgment concerning § 1(2)'s constitutionality.
C. Art. 5154d, § 2
Article 5154d, § 2 provides:
It shall be unlawful for any person, singly or in concert with others, by use of insulting, threatening or obscene language, to interfere with, hinder, obstruct, or intimidate, or seek to interfere with, hinder, obstruct, or intimidate, another in the exercise of his lawful right to work, or to enter upon the performance of any lawful vocation, or from freely entering or leaving any premises.
Article 5154d was passed in 1947. Texas has had an analogous criminal statute since 1887. Former Penal Code Article 1146 provided:
Any person who shall by threatening words or by acts of violence or intimidation prevent or attempt to prevent another from engaging in or from performing the duties of any lawful employment shall be fined not less than twenty-five nor more than five hundred dollars, or be *948 confined not less than one nor more than six months in jail.
"The statute was enacted as a means of preventing persons from interfering with others who are performing labor or engaging in some lawful business by means of which they [are] earning a support and maintenance...." Franklin v. State, 61 Tex.Crim. 235, 134 S.W. 702, 703 (1911). An early survey of state picketing acts found that Texas was the only state to specifically criminalize "threatening words." Hellerstein, Picketing Legislation and the Courts, 10 N.C.L.Rev. 158, 168-69 (1932). Although Article 1146 survived until its repeal with the enactment of the new Texas Penal Code, effective January 1, 1974, the paucity of reported cases suggests that it was little used. In part, this reflects the sea change at the turn of the century from the use of the criminal prosecution as the chief legal action against labor to the use of the labor injunction issued by a court of equity. Hellerstein, supra, at 161-63. It also reflects the Texas Court of Criminal Appeals' determination that acts which constituted an offense under both Article 1146 and the O'Neill Act of 1941, Former Penal Code Article 1621b ("It shall be unlawful for any person by the use of force or violence, or threat of the use of force or violence, to prevent or attempt to prevent any person from engaging in any lawful vocation within this State"), had to be prosecuted under Article 1621b. Pittman v. State, 165 Tex. Cr.R. 569, 310 S.W.2d 103 (1958). None of the decided cases under Article 1146 provide any guidance in construing Article 5154d, § 2.
According to the Table of Dispositions printed in Vernon's Texas Penal Code Annotated, Article 1146 was scattered into three sections of the 1974 Penal Code: § 22.01 (assault), § 22.07 ("terroristic threat"), and § 42.01 (proscribing fighting words or acts in a public place). Article 1621b apparently wound up as the remarkably opaque language of § 42.02(a)(3), the riot statute. Again, the few decided cases do not provide any guidance in construing Article 5154d, § 2. (The spirit of the "threatening words" clause of Article 1146 most clearly survives in the "terroristic threat" statute, § 22.07(a)(3), which provides that "[a] person commits an offense if he threatens to commit any offense involving violence to any person or property with intent to prevent or interrupt the occupation or use of a ... place of employment or occupation." Since it is not a necessary element of the offense that a defendant had the capability or intention to carry out a threat, or, by analogy to the case law construing § 22.07(a)(2), that any occupation or use of a place of employment or occupation was actually prevented or interrupted, Dues v. State, 634 S.W.2d 304 (Tex. Crim.App.1982); Jarrell v. State, 537 S.W.2d 255 (Tex.Crim.App.1976), application of this statute in the labor picketing context will prove interesting.)
Gamez argues that Article 5154d, § 2 is an unconstitutionally overbroad regulation of pure speech. The State argues that:
Section 2 of the Texas statute focuses on "words coupled with conduct." The Texas Supreme Court authoritatively limited the scope of the section in Dallas General Drivers, Warehousemen and Helpers v. Wamix, Inc., of Dallas [156 Tex. 408], 295 S.W.2d 873 (Tex.1956). It is not the words that are actionable, but words that in the context of the situation intimidate or coerce....
[T]he Texas statute "`as construed, does no more than prohibit the face to face words plainly likely to cause a breach of the peace.'" Chaplinsky v. New Hampshire, 315 U.S. 568, 573 [62 S.Ct. 766, 770, 86 L.Ed. 1031] (1942), quoting State v. Chaplinsky, 91 N.H. 310, 321, 18 A.2d 754, 762 (1941) .... [A] prior showing of violence or the evidence of the threat of violence must be made before an injunction will lie.
"Fighting words" those that provoke immediate violence are not protected by the First Amendment, Chaplinsky, 315 U.S. at 572, 62 S.Ct. at 769, but "mere advocacy of the use of force or violence does not remove speech from the *949 protection of the First Amendment." NAACP v. Claiborne Hardware Co., 458 U.S. 886, 102 S.Ct. 3409, 3433, 73 L.Ed.2d 1215 (1982). In Brandenburg v. Ohio, 395 U.S. 444, 89 S.Ct. 1827, 23 L.Ed.2d 430 (1969), for example, the Court reversed the conviction of a Ku Klux Klan leader for threatening "revengeance" if the "suppression" of the white race continued. The Court relied on "the principle that the constitutional guarantees of free speech and free press do not permit a State to forbid or proscribe advocacy of the use of force or of law violation except where such advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action." Id. at 447, 89 S.Ct. at 1829. Where these conditions are met, the speech may be enjoined. In Milk Wagon Drivers Union v. Meadowmoor Dairies, 312 U.S. 287, 61 S.Ct. 552, 85 L.Ed. 836 (1941), for example, the Court affirmed a state court injunction against all picketing in a violence-ridden strike. The Court reaffirmed, however, that a state cannot enjoin peaceful picketing merely because it may provoke violence in others, id. at 296, 61 S.Ct. at 556, and emphasized that "the right of free speech cannot be denied by drawing from a trivial rough incident or a moment of animal exuberance the conclusion that otherwise peaceful picketing has the taint of force." Id. at 293, 61 S.Ct. at 555.
The "fighting words" exception is, thus, quite narrow. That speech is intended to exercise a coercive impact on its listeners does not remove it from the reach of the First Amendment. Organization for a Better Austin v. Keefe, 402 U.S. 415, 419, 91 S.Ct. 1575, 1577, 29 L.Ed.2d 1 (1971). "Speech does not lose its protected character simply because it may embarass others or coerce them into action." Claiborne Hardware, 102 S.Ct. at 3424. In Claiborne Hardware, the Court found a speech in which a boycott organizer, Charles Evers, said, "If we catch any of you going in any of them racist stores, we're gonna break your damn neck," 102 S.Ct. at 3420, to be constitutionally protected:
The emotionally charged rhetoric of Charles Evers' speeches did not transcend the bounds of protected speech set forth in Brandenburg. The lengthy addresses generally contained an impassioned plea for black citizens to unify, to support and respect each other, and to realize the political and economic power available to them. In the course of these pleas, strong language was used.... Strong and effective extemporaneous rhetoric cannot be nicely channeled in purely dulcet phrases. An advocate must be free to stimulate his audience with spontaneous and emotional appeals for unity and action in a common cause. When such appeals do not incite lawless action, they must be regarded as protected speech. Id. at 3434.
On its face, § 2 is not limited to the "fighting words" context. It criminalizes precisely the type of speech found constitutionally protected in Claiborne Hardware, Keefe and Brandenburg. It is not limited to labor picketing, though apparently no Texas case has applied it outside this context. It extends to the spoken, broadcast and written word. It criminalizes both act and attempt. Its overbreadth is breathtaking.
We turn, then, to the State's contention that the Texas Supreme Court's Wamix decision authoritatively construed § 2 as being limited to the Chaplinsky "fighting words" situation.
In Wamix, an employer obtained a temporary injunction against a striking union, which prohibited, among other things, the use of "insulting, threatening, and indecent language toward any Wamix employees, who desire to work, for the purpose of interfering with, hindering and intimidating such employees." 295 S.W.2d at 879. This language plainly is patterned on § 2. The issue before the Texas Supreme Court was whether the evidence supported granting the injunction. It said:
The real question here, then, is this: does the [evidence] justify the conclusion that unless restrained and enjoined therefrom defendants would, in reasonable probability, *950 use such insulting, threatening and indecent language toward Wamix employees as was calculated to intimidate and coerce them not to perform their duties to their employer? Id. (emphasis added).
The Court answered the question in the negative, because the record disclosed only a single isolated use of the phrase "damned scab," and dissolved that portion of the injunction.
Wamix does not in any way limit § 2. The test applied by the Texas Supreme Court whether the language "was calculated to intimidate and coerce them not to perform their duties to their employer" does not even remotely resemble the Brandenburg test of whether the language "is directed to inciting or producing imminent lawless action and is likely to incite or produce such action." Not performing one's duties to one's employer is not "lawless action" in Texas. Wamix, then, reads § 2 to mean what it says and fails to provide the narrowing construction necessary to save it from constitutional infirmity.
The Court finds that § 2 is unconstitutionally overbroad. See Ex parte Bell, 19 Cal.2d 488, 122 P.2d 22 (1942) (Traynor, J.) (invalidating similar provisions of a county ordinance on overbreadth grounds).
D. Art. 5154d, § 3
Article 5154d, § 3 provides:
It shall be unlawful for any person, singly or in concert with others, to engage in picketing or any form of picketing activities, where any part of such picketing is accompanied by slander, libel, or the public display or publication of oral or written misrepresentations.
The State of Texas concedes that § 3 is unconstitutional "to the extent that when the section is applied in tandem with Art. 5154f, § 5, the issuance of an injunction would constitute an unconstitutional prior restraint on otherwise protected speech."
Article 5154f, § 5 provides, in relevant part:
The State of Texas, through its Attorney General or any District or County Attorney, may institute a suit in the District Court to enjoin any person ... from violating any provision of this Act.
It is not immediately obvious that the State may obtain relief under Article 5154f, § 5 for violations of Article 5154d, § 3. Although both articles were enacted by the 1947 Legislature, Article 5154d appears at 1947 Tex.Gen.Laws, ch. 138, at 239, while Article 5154f appears at 1947 Tex.Gen. Laws, ch. 387, at 779. Article 5154d was captioned: "An Act to regulate picketing...." Article 5154f was captioned: "An Act to prohibit secondary strikes...." They appear to be separate acts. For example, the criminal penalty for violation of Article 5154d is a fine of $25-$500 and up to 90 days imprisonment. Id. § 5. The equivalent section of Article 5154f imposes a fine of up to $500, with no minimum, and up to 6 months imprisonment. Id. § 3. Interestingly, while Article 5154f, § 4 gives a private right of action for damages and injunctive relief for violations of that Act, no similar provision appears in Article 5154d. Be this as it may, Texas courts have never questioned their power to enjoin violations of Article 5154d, including § 3. See, e.g., Alamo Express v. International Brotherhood of Teamsters, 215 S.W.2d 936 (Tex.Civ.App. San Antonio 1948, no writ) (denying injunction based on facts presented). But see Amalgamated Meat Cutters v. Carl's Meat & Provision Co., 475 S.W.2d 300 (Tex.Civ.App. Beaumont 1971, writ dism'd w.o.j.) (finding that district court had no jurisdiction to issue an injunction preventing the publication of false information by picketers during a strike because such a prior restraint would be in violation of the First Amendment and Article I, § 8 of the Texas Constitution; no mention of Article 5154d, § 3). Accord Hajek v. Bill Mowbray Motors, 647 S.W.2d 253 (Tex.1983) (absent threat of danger, Tex. Const. art. I, § 8 prohibits a state court from subjecting speech to the prior restraint of a temporary injunction); Ex parte Tucker, 110 Tex. 335, 220 S.W. 75 (1920) (discharging union officer found in *951 contempt for violating an injunction against "vilifying, abusing, or using opprobrious epithets to or concerning any party or parties in the employment of plaintiff" because injunction violated Tex. Const. art. I, § 8; "Let it once be admitted that courts may arrogate the authority of deciding what the individual may say and may not say, what he may write and may not write, and by an injunction writ require him to adapt the expression of his sentiments to only what some judge may deem fitting and proper, and there may be readily brought about the very condition against which the constitutional guaranty was intended as a permanent protection. Liberty of speech will end where such control of it begins."); Mitchell v. Grand Lodge Free & Accepted Masons of Texas, 56 Tex.Civ.App. 306, 121 S.W. 178 (1909, no writ). The TRO issued in this case contained a provision which tracked the language of § 3 verbatim.
Gamez argues that, beyond the prior restraint question conceded by the State, § 3 is unconstitutionally overbroad. She relies primarily on two Supreme Court decisions: Linn v. United Plant Guard Workers of America, 383 U.S. 53, 86 S.Ct. 657, 15 L.Ed.2d 582 (1966), and Old Dominion Branch No. 496, National Association of Letter Carriers v. Austin, 418 U.S. 264, 94 S.Ct. 2770, 41 L.Ed.2d 745 (1974).
In Linn, an assistant general manager of Pinkerton's Detective Agency brought suit under state libel laws against the Plant Guard Workers in a diversity action in federal court. Linn alleged that statements made in a union leaflet during a campaign to organize the company's employees were false and defamatory. The District Court found that the state law action had been pre-empted by § 8(b) of the National Labor Relations Act, 29 U.S.C. § 158(b), and that the National Labor Relations Board had exclusive jurisdiction over the subject matter of the complaint. It dismissed the action and the Court of Appeals affirmed.
In a 5-4 decision, the Supreme Court held that the NLRA did not completely pre-empt the application of state laws to libels published during labor disputes. The Court found, however, that § 8(c) of the NLRA "manifests a congressional intent to encourage free debate on issues dividing labor and management," 383 U.S. at 62, 86 S.Ct. at 663, and adopted the liability standards enunciated in New York Times Co. v. Sullivan, 376 U.S. 254, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), to guard against "unwarranted intrusion upon free discussion envisioned by the Act." 383 U.S. at 65, 86 S.Ct. at 664. Recovery could be had only for defamatory statements published with knowledge of their falsity or with reckless disregard of whether they were true or false. The Court premised its holding entirely on the NLRA, decided no constitutional issues, and emphasized that its adoption of the New York Times standard was "by analogy, rather than under constitutional compulsion." Id. at 67, 65, 86 S.Ct. at 664.
In Letter Carriers, three nonunion employees sued the letter carriers' union in state court for libel after their names were published in an union newsletter under the heading "List of Scabs." The list was accompanied by a disparaging definition of the word "scab." The state trial court interpreted Linn to allow recovery where the libel had been published with actual malice, in the sense of evil motive. The Plaintiffs prevailed and the Virginia Supreme Court affirmed.
The Supreme Court reversed. As federal employees, the plaintiffs were covered by Executive Order No. 11491 rather than the NLRA. The basic provisions of the Executive Order establish a labor-management relations system for federal employees which is quite similar to the scheme of the NLRA. The Court reasoned that "application of Linn must turn on whether the defamatory publication is made in a context where the policies of the federal labor laws leading to protection for freedom of speech are significantly implicated," and concluded that "any publication made during the course of union organizing efforts, which is arguably relevant to that organizational activity, is entitled to the protection of *952 Linn." 418 U.S. at 279, 94 S.Ct. at 2779. The Court reached this conclusion even though certain language in the NLRA, relied on in Linn, was absent from the Executive Order. Because the lower court had not applied the New York Times standard adopted in Linn, the Court reversed. The Court noted that its holding was based on federal law and did not consider the First Amendment arguments raised by the petitioners. Id. at 283 n. 15, 94 S.Ct. at 2781 n. 15.
In a concurring opinion, Justice Douglas stated his belief that the holding should be based on the First Amendment and not simply on federal labor policy. Id. at 287, 94 S.Ct. at 2783 (Douglas, J., concurring).
We said in Thornhill v. Alabama, 310 U.S. 88, 102 [60 S.Ct. 736, 744, 84 L.Ed. 1093] (1940), that, "[i]n the circumstances of our times the dissemination of information concerning the factors of a labor dispute must be regarded as within that area of free discussion that is guaranteed by the Constitution." ... I do not think that discussion is free in the constitutional sense when it subjects the speaker to the penalty of libel judgments.... Id. at 288-89, 94 S.Ct. at 2783.
Neither Linn nor Letter Carriers are applicable here because no federal labor law governs the type of agricultural union organizing Gamez is concerned with. Without any express statutory policies, such as those contained in the NLRA and the Executive Order, Gamez can only rely on her First Amendment arguments. As noted above, neither Linn nor Letter Carriers reached the First Amendment questions.
Passing on the constitutionality of Article 5154d, § 3 is made somewhat easier because it imposes strict criminal liability. It forbids any oral or written misrepresentation concerning anything, any person, or any matter, without regard to knowledge of the falsity of the misrepresentation or any other standard of fault. In Smith v. California, 361 U.S. 147, 80 S.Ct. 215, 4 L.Ed.2d 205 (1959), the Supreme Court held that strict criminal liability cannot be imposed on speech, even if the speech is otherwise constitutionally unprotected. Smith involved a bookseller convicted under a municipal ordinance which imposed strict criminal liability for possession of obscene material in a bookstore, regardless of the bookseller's lack of knowledge of the obscene nature of the material. Reversing Smith's conviction, the Court said:
The appellee and the Court below analogize this strict liability penal ordinance to familiar forms of penal statutes which dispense with any element of knowledge on the part of the person charged, food and drug legislation being a principal example. We find the analogy instructive in our examination of the question before us. The usual rationale for such statutes is that the public interest in the purity of its foods is so great as to warrant the imposition of the highest standard of care on distributors in fact an absolute standard which will not hear the distributor's plea as to the amount of care he has used. His ignorance of the character of the food is irrelevant. There is no specific constitutional inhibition against making the distributors of food the strictest censors of their merchandise, but the constitutional guarantees of the freedom of speech and of the press stand in the way of imposing a similar requirement on the bookseller. By dispensing with any requirement of knowledge ... the ordinance tends to impose a severe limitation on the public's access to constitutionally protected matter. [The bookseller] will tend to restrict the books he sells to those he has inspected; and thus the State will have imposed a restriction upon the distribution of constitutionally protected as well as obscene literature. Id. at 152-53, 80 S.Ct. at 218.
As Justice Frankfurter observed in a concurring opinion, "there is an important difference in the scope of the power of a State to regulate what feeds the belly and what feeds the brain." Id. at 162, 80 S.Ct. at 223. See also New York Times, 376 U.S. at 278-79, 84 S.Ct. at 724-25. This *953 principle of no liability without fault was echoed fifteen years later in Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974), where the Court held that states may define their own standards of liability in defamation actions brought by private persons against the news media "so long as they do not impose liability without fault." Id. at 347, 94 S.Ct. at 3010. If the institutional media cannot be held civilly liable without fault, then surely largely uneducated and illiterate farm workers cannot be held criminally liable without fault, at least insofar as the speech at issue relates to matters of public concern. See Dun & Bradstreet v. Greenmoss Builders, ___ U.S. ___, 105 S.Ct. 2939, 86 L.Ed.2d 593 (1985). The labor relations speech on which § 3 most directly impacts has long been recognized as a matter of public concern.
It is recognized now that satisfactory hours and wages and working conditions in industry and a bargaining position which makes these possible have an importance which is not less than the interests of those in the business or industry concerned. The health of the present generation and of those as yet unborn may depend on these matters, and the practices in a single [field] may have economic repercussions upon a whole region and affect widespread systems of marketing. The merest glance at state and federal legislation on the subject demonstrates the force of the argument that labor relations are not matters of mere local or private concern. Free discussion concerning the conditions in industry and the causes of labor disputes appears to us indispensable to the effect and intelligent use of the processes of popular government to shape the destiny of modern industrial society.
Thornhill v. Alabama, 310 U.S. 88, 102-103, 60 S.Ct. 736, 744, 84 L.Ed. 1093 (1940). See also Thomas v. Collins, 323 U.S. 516, 65 S.Ct. 315, 89 L.Ed. 430 (1945).
By criminalizing any misrepresentation without fault and without regard to whether the speech is on a matter of public concern, § 3 proscribes a significant amount of constitutionally protected speech and is unconstitutionally overbroad. Picketers faced with § 3 must inevitably sharply curtail their comments on a strike, fearful not only of unknowing misrepresentations, but also of being prosecuted for the "loose language or undefined slogans that are part of the conventional give-and-take in our economic and political controversies," and are constitutionally protected. Cafeteria Employees Union v. Angelos, 320 U.S. 293, 295, 64 S.Ct. 126, 127, 88 L.Ed. 58 (1943) (suggesting that a state could enjoin "continuing representations unquestionably false").
Because the lack of any standard of fault is fatally defective to § 3, the Court does not reach the issue left open in Linn and Letter Carriers, namely what standard of fault is compelled by the First Amendment in this context.
Although the preceding analysis has focused most heavily on the libel, slander, and misrepresentation aspects of Article 5154d, § 3, it must be remembered that the core of § 3 is its prohibition on picketing, even peaceful picketing for a lawful purpose, which is accompanied by slander, libel, or misrepresentation. While the State's "strong and legitimate," Gertz, 418 U.S. at 348, 94 S.Ct. at 3011, interest in compensating private individuals for injury to their reputation and in deterring future injury allows the imposition of appropriate civil and criminal sanctions for slander and libel, this interest cannot be met with an overly broad statute such as § 3, which outlaws plainly protected speech, e.g., peaceful picketing for a lawful purpose, simply because it is accompanied by unprotected speech.
E. Art. 5154f
Article 5154f, § 1 provides:
It shall be unlawful for any person or persons, or association of persons, or any labor union, incorporated or unincorporated, or the members or agents thereof, acting singly or in concert with others, to establish, call, participate in, aid or abet a secondary strike, or secondary picketing, *954 or a secondary boycott, as those terms are defined herein.
Article 5154f, § 2(b) defines "secondary strike" as:
[A] temporary stoppage of work by the concerted action of two or more employees of an employer where no labor dispute exists between the employer and such employees, and where such temporary stoppage results from a labor dispute to which such two or more employees are not parties.
Article 5154f, § 2(d) defines "secondary picketing" as:
[T]he act of establishing a picket or pickets at or near the premises of any employer where no labor dispute, as that term is defined in this Act, exists between such employer and employees.
Article 5154f, § 2(e) defines a "secondary boycott" as a plan or agreement entered into or any concerted action by two or more persons to cause injury or damage to any person or firm for whom they are not employees. The section then lists the different ways in which this "plan" to "cause injury or damages" may be carried out. Picketing is one of the methods listed. Also, the "aid or abet" clause of § 1 is available to prohibit picketing designed to bring about injury or damage by one of the other five methods listed in § 2(e).
Article 5154f, § 2(h) defines "labor dispute" as:
[A]ny controversy between an employer and the majority of his employees concerning wages, hours or conditions of employment; provided that if any of such employees are members of a labor union, a controversy between such employer and a majority of the employees belonging to such union, concerning wages, hours or conditions of employment, shall be deemed, as to the employee members only of such union, a labor dispute within the meaning of this Act.
Gamez asserts that Art. 5154f unconstitutionally restricts protected picketing rights of unions which do not represent a majority of workers. The State of Texas concedes that Art. 5154f is unconstitutional, but "the unconstitutionality of 5154f is conceded only to the extent that it forbids picketing by less than a majority of a company's employees. The statutory prohibition against secondary picketing and boycotts clearly is constitutional."
The constitutional infirmities of Art. 5154f were explored in Medrano, 347 F.Supp. 625-28. As discussed above in Part IX of this Opinion, the Medrano court's determination that several sections of Art. 5154f are unconstitutional was vacated by the Supreme Court and no final judgment was ever rendered on the constitutional question.
Less than two years after passage, the Texas Supreme Court found Art. 5154f unconstitutional to the extent that it restricts the meaning of a "labor dispute" to a controversy between an employer and his employees and prohibits picketing except where such a controversy exists. International Union of Operating Engineers v. Cox, 148 Tex. 42, 219 S.W.2d 787 (1949); Construction and General Labor Union v. Stephenson, 148 Tex. 434, 225 S.W.2d 958 (1950). See generally, Williams, Picketing and Free Speech A Texas Primer, 30 Tex.L.Rev. 206, 221-27 (1951). With this keystone gone, several sections of the statute must fall. The Court finds that Art. 5154f, §§ 2(b), 2(d) and 2(e) are unconstitutionally overbroad and adopts the reasoning of the Medrano court set forth in the section captioned "ARTICLE 5154f.," at 347 F.Supp. 625-28.
F. Art. 5154g, § 2
Article 5154g, § 2 prohibits:
[A]ny strike or picketing, an object of which is to urge, compel, force or coerce any employer to recognize or bargain with, or any employee or group of employees to join or select as their representative, any labor union or labor organization which is not in fact the representative of a majority of the employees of an employer or, if the employer operates two or more separate and distinct places of business, is not in fact the representative of a majority of such employees *955 at the place or places of business subjected to such strike or picketing.
The Act provides for civil liability for its violation and allows injunctive relief to be sought by either private litigants or the State. Id. §§ 4 and 5.
The last remaining constitutional challenge is to Art. 5154g, § 2. Gamez asserts that it, like Art. 5154f, unconstitutionally restricts protected picketing rights of unions which do not represent a majority of workers. In its Amended Answer, the State admits that Art. 5154g, § 2 "denies plaintiff[s] and others rights secured by the First Amendment in that it prohibits picketing by a union representing less than a majority of the picketed employer's employees," and submits that § 2 was held unconstitutional by the Texas Supreme Court in the Cox case.
In the Pretrial Order, the State contends:
[A]rt. 5154g to the extent that it limits a labor dispute to "any controversy between an employer and the majority of his employees" and thereby prohibits picketing by persons who form less than a majority of employees violates the rights of plaintiffs and others which are secured by the First Amendment, and is therefore unconstitutional.
This contention confuses Art. 5154g, which contains no definition of a "labor dispute," with Art. 5154f, which contains the quoted language. The constitutionality of Art. 5154g, § 2 is not addressed in the State's brief. The Plaintiffs' brief treats Arts. 5154f and 5154g, § 2 as functionally equivalent and devotes no separate analysis to Art. 5154g. Both sides apparently misconceive the statute.
Unlike the picketing statutes previously analyzed in this Opinion, Art. 5154g, § 2 is not principally concerned with who may picket and how. Instead, it outlaws any picketing whose objective is either (1) to compel an employer to recognize or bargain with a minority union, or (2) to compel an employee to join a minority union or select one as his bargaining representative.
Article 5154g was enacted in 1955 (six years after the Cox decision which the State suggests held it unconstitutional sub silentio), as the culmination of a series of statutes known as the Right-to-Work laws. The O'Daniel Act of 1941, Former Penal Code art. 1621b, made violence in the course of a labor dispute a penal offense. The Manford Act of 1943, Art. 5154a, imposed a variety of regulations on unions operating in the State. The 1947 Legislature passed Acts creating civil liability for picketing in breach of a contract, Art. 5154b; outlawing collective bargaining and strikes by public employees, Art. 5154c; banning mass picketing, Art. 5154d; prohibiting a dues check-off without individual authorization, Art. 5154e; prohibiting secondary strikes, picketing and boycotts, Art. 5154f; outlawing employment discrimination on the basis of membership or nonmembership in a labor union, and closedshop contracts, Art. 5207a; and bringing some union objectives within the ambit of the state antitrust laws, Arts. 5154 and 7428, § 3. The Parkhouse Bill of 1951, Art. 7428-1, placed contracts containing union security clauses under the state antitrust laws. Finally, in 1955, the passage of Art. 5154g outlawed discrimination on the basis of membership or nonmembership in a labor union, a reification of Art. 5207a. See generally, J. Dempsey, The Operation of the Right-to-Work Laws 21-22 (1961). "A recall of the tenor of the times (public concern about labor unrest and strikes) when Texas enacted these ... labor restrictive laws, and a review of the laws' contents, mandates the conclusion that the individual's right within labor's ranks was considered by the legislature to be paramount to the rights of a labor organization." Sayre v. Mullins, 681 S.W.2d 25, 27 (Tex.1984). The statutes "were designed to curtail labor organization activities in Texas." Id. at 26.
Art. 5154g, § 2 outlaws even peaceful picketing on the basis of its objective, an approach which is constitutional in the main. "[P]icketing continues to be constitutionally privileged so long as it is not for an unlawful objective. On the other hand, picketing may constitutionally be outlawed *956 in those areas where the object of that picketing can constitutionally be outlawed. This is true not only when the purpose of the picketing is to force someone else to be do an unlawful act; it also is true when the objective of the picketing itself is made unlawful." Williams, 30 Tex.L.Rev. at 218. See Medrano, 347 F.Supp. at 626-27. The constitutionality of Art. 5154g, § 2 then, would normally turn on whether the prohibited objectives recognition and bargaining by an employer, joining and selection as bargaining representative by an employee may constitutionally be outlawed.
The Supreme Court has recognized that states constitutionally may enjoin peaceful picketing whose objective is prohibited by state Right-to-Work provisions such as those contained in Arts. 5154g, § 1 and 5207a. Local Union No. 10, United Association of Journeymen Plumbers & Steamfitters v. Graham, 345 U.S. 192, 73 S.Ct. 585, 97 L.Ed. 946 (1953).
The problem with Art. 5154g, § 2 is that it outlaws picketing whose objectives are not otherwise unlawful. That is, it is not unlawful for an employer to recognize or bargain with a minority union, nor is it unlawful for any employee or group of employees to join a minority union or to select one as their representative. Indeed, Article 5152, passed in 1899, provides that "[i]t shall be lawful for any and all persons engaged in any kind of work or labor, manual or mental, or both, to associate themselves together and form trades unions and other organizations for the purpose of protecting themselves in their personal work, personal labor, and personal service in their respective pursuits and employments." In Flenoy v. Yarbrough, 318 S.W.2d 15, 16-17 (Tex.Civ.App. Austin 1958, writ ref'd n.r.e.), decided three years after the enactment of Art. 5154g, the court recognized that the members of a minority union have the right to organize and to bargain with an employer. This being true, Art. 5154g, § 2 prohibits peaceful picketing to attain a lawful objective, a constitutionally impermissible restaint. See American Federation of Labor v. Swing, 312 U.S. 321, 61 S.Ct. 568, 85 L.Ed. 855 (1941).
Even if one accepts the proposition that Art. 5154g, § 2 itself outlaws recognition or bargaining with a minority union by an employer, and joining a minority union or selecting one as a bargaining representative, the statute remains unconstitutionally overbroad. The state cannot constitutionally prohibit an employee from joining a minority union because an individual's right to form and join a union is protected by the First Amendment. Thomas v. Collins, 323 U.S. 516, 534, 65 S.Ct. 315, 324, 89 L.Ed. 430 (1945); Orr v. Thorpe, 427 F.2d 1129, 1131 (5th Cir.1970); AFSCME v. Woodward, 406 F.2d 137, 139 (8th Cir. 1969); McLaughlin v. Tilendis, 398 F.2d 287, 289 (7th Cir.1968); Atkins v. City of Charlotte, 296 F.Supp. 1068, 1077 (W.D.N. C.1969) (3-judge court). As the Supreme Court said in NAACP v. Alabama, 357 U.S. 449, 460, 78 S.Ct. 1163, 1171, 2 L.Ed.2d 1488 (1958), "[i]t is beyond debate that freedom to engage in association for the advancement of beliefs and ideas is an inseparable aspect of the `liberty' assured by the Due Process Clause of the Fourteenth Amendment, which embraces freedom of speech."
Determining whether the state may constitutionally prohibit an employer from recognizing or bargaining with a minority union requires a look at Art. 5154g, § 2 in the context of the Texas Right-to-Work laws and at § 8(b)(7) of the National Labor Relations Act, on which § 2 appears to be patterned in part. The philosophical premise of the Texas Right-to-Work laws is that the right to bargain over wages and working conditions belongs to the individual.
[I]t is clear that one person has the right to bargain individually and may exercise it even though a majority of his fellow employees, as an individual preference, desire to exercise their right to bargain in a collective manner. The result is to remove the requirement that one who wants to bargain at all must associate himself with a majority that is of like *957 mind. Under Article 5207a, two, three, a minority or a majority of employees have the right to bargain collectively with their employer, leaving the others who prefer individual bargaining as is their right under the law, to deal on an individual basis. Dempsey, supra, at 91.
In contrast, the fundamental premise of the NLRA is that the right to bargain belongs to the certified representative of a majority of the employees. Thus § 8(b)(7) of the Act, 29 U.S.C. § 158(b)(7) (1982), whose constitutionality has been upheld, prohibits picketing "any employer where an object thereof is forcing or requiring an employer to recognize or bargain with a labor organization as the representative of his employees, or forcing or requiring the employees of an employer to accept or select such labor organization as their collective bargaining representative, unless such labor organization is currently certified as the representative of such employees...." Under § 9(a) of the Act, 29 U.S.C. § 159(a), a certified representative is the exclusive representative for all the employees "for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment."
The unlawful objective on which § 8(b)(7) is based is the goal of a minority union to bargain on behalf of all of the members of a bargaining unit, an objective which may constitutionally be outlawed. Art. 5154g, § 2 outlaws picketing even where the minority union seeks only to represent its own members in a primary dispute over wages and working conditions, an objective which, in the context the Texas laws, may not be constitutionally outlawed. As one commentator has said, "[s]o long as the government is committed to the collective bargaining process, it appears to be impossible to outlaw all picketing, since picketing is an integral part of that process. This follows because it would not be possible to make the objective of the picketing unlawful so long as that objective was limited solely to the process of establishing wages and working conditions in the collective bargaining tradition." Williams, 30 Tex.L. Rev. at 219.
Finally, Art. 5154g, § 2 also suffers from the same "aid or abet" language contained in Art. 5154f. See Medrano at 627.
The court concludes that Art. 5154g, § 2 is unconstitutionally overbroad.
XII. Summary of Holdings
1. The Court has jurisdiction under 28 U.S.C. §§ 1331 and 1343(a).
2. The Counter-Defendants in No. 2-80-127, acting under color of state law, deprived Counter-Plaintiff Jesus Moya of his rights under the First Amendment. Moya was not deprived of any other rights secured to him by the Constitution and laws of the United States.
3. The Counter-Defendants in No. 2-80-127 are not entitled to qualified immunity.
4. Counter-Plaintiff Moya is entitled to recover $500 in compensatory damages from the Counter-Defendants in No. 2-80-127.
5. Moya has not adequately pleaded for any recovery against the TRO bond. TRLA is not entitled to any recovery of damages against the TRO bond.
6. In No. 2-80-129, Plaintiff Delia Gamez has standing to raise her constitutional claims. Plaintiff TRLA lacks standing to raise its constitutional claims.
7. The following statutes contained in the Texas Revised Civil Statutes Annotated are unconstitutional, hence null and void:
Article 5154d, § 1(1) Article 5154d, § 2 Article 5154d, § 3 Article 5154f, § 2(b) Article 5154f, § 2(d) Article 5154f, § 2(e) Article 5154g, § 2
Judgment will be entered accordingly.
It is so ORDERED.
NOTES
[1] The aura of official action inherent in private civil representation by a public prosecutor has resulted in special ethical constraints on prosecutors, lest their private representation be confused for action on behalf of the state.
Saul, Smith and Davis all proceeded on the assumption that they could undertake civil representation of the growers so long as they disqualified themselves from any subsequent criminal prosecution arising out of the TFWU's organizing efforts. In decisions under the Canons of Ethics, replaced by the Code of Professional Responsibility in 1971, the State Bar of Texas Committee on Interpretation of the Canons of Ethics held that this conduct is inappropriate.
In Opinion No. 332 (1967), reprinted in 23 Baylor L.Rev. 863-65 (1972), the Committee said:
The client of a prosecuting attorney is the public body and his primary duty is to the public. That duty requires him to investigate complaints within his jurisdiction and to proceed in accordance with the interests of justice.... Obviously no outside interest should be permitted to conflict with or interfere with the performance of those duties and it seems apparent that if a public prosecutor undertakes the representation of a civil litigant in a case arising out of an occurrence which is also the subject of a criminal investigation there would likely be a conflict of interest which ... would disqualify the public prosecutor from representing the civil litigant.... In Opinion 312 (1966), [reprinted in 23 Baylor L.Rev. 836 (1972)], we further held that it is unethical for a prosecuting attorney to represent a civil litigant when his duty might require investigation or prosecution of a criminal action arising out of the same facts. We reaffirm [that opinion].
The controlling principle which we here lay down is that if a public prosecutor is in fact employed or contemplates being employed to represent one of the parties in a civil matter at any time when his duties as public prosecutor require investigation of a potential criminal charge or prosecution of a criminal charge against one of the parties to the transaction which is or will be involved in the civil matter, he is disqualified by reason of an actual or potential conflict of interest. If however, his duties as public prosecutor have been fully performed and terminated at the time he is approached with respect to civil representation and if he has gained no confidential information by reason of his public office, he would not be ethically disqualified to represent one of the parties in the civil matter.
In representing civil litigants, a public prosecutor must also carefully avoid the use of his official office and its facilities, investigators, etc.
Accord, American Bar Association Opinion No. 135 (March 15, 1935).
Here, Saul's, Smith's, and Davis' duties as public prosecutors had not been fully performed and terminated at the time they undertook civil representation of the growers. Instead, as discussed above, Saul was actively interested in "the law enforcement angle." (Indeed, in 1982, while Saul, Smith and Davis were still counsel of record for the growers in this litigation, the Deaf Smith County Criminal District Attorney's office undertook the criminal prosecution of Moya on an unrelated trespass charge.) They also received regular reports from deputy sheriffs and from the investigator employed by the Criminal District Attorney's Office. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/832280/ | 776 N.W.2d 899 (2010)
Shaun BONKOWSKI, Plaintiff-Appellant,
v.
ALLSTATE INSURANCE COMPANY, Defendant-Appellee.
Docket No. 137672. COA No. 273945.
Supreme Court of Michigan.
January 22, 2010.
Order
On November 5, 2009, the Court heard oral argument on the application for leave to appeal the October 2, 2008 judgment of the Court of Appeals. On order of the Court, the application is again considered, and it is DENIED, because we are not persuaded that the questions presented should be reviewed by this Court.
MARILYN J. KELLY, C.J. (dissenting).
I respectfully dissent from the Court's order denying plaintiff's application for leave to appeal. Because I question whether the Court of Appeals properly interpreted MCL 500.3142, I would grant leave to appeal.
Factual Background and Procedural History
Plaintiff sustained severe brain and spinal cord injuries after being struck by a car. His father underwent training to provide skilled, multidisciplinary support to his injured son, and has since provided 24-hour care, seven days per week.
*900 Defendant, plaintiff's no-fault insurer, paid attendant care benefits to plaintiff's father at the rate of $19 per hour. Plaintiff contended that his father was entitled to a higher hourly rate because of the specialized care he provided. A jury agreed and awarded plaintiff roughly $1.3 million in attendant care benefits not already paid by defendant. It also awarded approximately $350,000 in no-fault penalty interest under MCL 500.3142, for a total verdict of approximately $1.7 million. The trial court entered a final judgment of over $2.5 million, including costs and no-fault attorney fees, and over $500,000 in interest under the Revised Judicature Act (RJA) provision for interest on money judgments, MCL 600.6013. The court declined to award plaintiff additional attorney fees and denied his request for 12 percent penalty interest under § 3412 for the period ending with satisfaction of the judgment. The trial judge also denied defendant's motion for judgment notwithstanding the verdict.
In a published opinion, the Court of Appeals affirmed the denial of defendant's motion for judgment notwithstanding the verdict, thus leaving the jury verdict intact. Germane to this appeal, the Court of Appeals also affirmed the trial court's denial of penalty interest under § 3142. The Court of Appeals reasoned that interest awarded under § 3142 is a substantive element of damages. Once a judgment has been entered, it concluded, postjudgment interest is limited to the interest rate applicable under the RJA.[1] It further noted that nothing in the no-fault act supports the conclusion that a trial court is authorized to enhance an award of substantive damages. Instead, the Court held that postjudgment interest is permissible only under the RJA.
Analysis
Plaintiff argues that the Court of Appeals erred in holding that 12 percent penalty interest under § 3412 does not continue to accrue until the judgment is satisfied.
Section 3412 provides:
(1) Personal protection insurance benefits are payable as loss accrues.
(2) Personal protection insurance benefits are overdue if not paid within 30 days after an insurer receives reasonable proof of the fact and of the amount of loss sustained. If reasonable proof is not supplied as to the entire claim, the amount supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. Any part of the remainder of the claim that is later supported by reasonable proof is overdue if not paid within 30 days after the proof is received by the insurer. For the purpose of calculating the extent to which benefits are overdue, payment shall be treated as made on the date a draft or other valid instrument was placed in the United States mail in a properly addressed, postpaid envelope, or, if not so posted, on the date of delivery.
(3) An overdue payment bears simple interest at the rate of 12% per annum. [Emphasis added.]
Whether § 3142 permits interest to accrue postjudgment is a question of statutory *901 interpretation. The primary goal of statutory interpretation is to give effect to the intent of the Legislature.[2] The first step in ascertaining such intent is to focus on the language of the statute itself.[3] In its analysis of § 3142, the Court of Appeals utterly failed to consider the language of the statute. The Court instead focused exclusively on extra-statutory considerations, such as unrelated interest provisions of the RJA, the general rule of merger and judgments, and its disapproval of the Court of Appeals decision in Johnston v. DAIIE.[4] I believe that this Court should consider whether the Court of Appeals failure to analyze and apply the language of § 3142 was fatal to its holding.
Subsection (2) of § 3142 plainly provides that "personal protection insurance benefits are overdue if not paid within 30 days. . . ." Thus, the operative language of the statute dictates that benefits are overdue until they are actually paid. The statute makes no reference to the date of entry of a judgment as controlling whether a party is entitled to penalty interest. Plaintiff argues that the Court of Appeals erred in concluding that § 3142 precludes an award of postjudgment interest. In essence, plaintiff asserts, the Court of Appeals usurped the power of the Legislature by replacing the words "if not paid within 30 days . . ." with "until a judgment is entered." It is plaintiff's position that the Legislature could have used the entry of a judgment as the relevant benchmark for determining when benefits are no longer overdue, but it chose not to do so. Instead it used actual payment as the time at which benefits cease to be overdue.
Moreover, plaintiff asserts that § 3142(2) clearly indicates how overdue benefits lose their "overdue" status. That subsection states that "for the purpose of calculating the extent to which benefits are overdue, payment shall be treated as made on the date a draft or other valid instrument was placed in the . . . mail . . ." Therefore, it seems that until such mailing is made, payment remains overdue and continues to "bear[] simple interest at a rate of 12% per annum" pursuant to § 3142(3). Again, the statute contains no language indicating that entry of a judgment renders unpaid benefits no longer overdue.
In Johnston, the plaintiffs brought suit seeking overdue no-fault benefits from the defendants. The trial court entered summary disposition in favor of the plaintiffs and the defendants appealed. The Court of Appeals held that the plaintiffs may recover interest on the overdue benefits under both § 3142 and § 6013, the applicable judgment interest provision of the RJA. The Court noted that the purpose of the judgment interest statute is to compensate the prevailing party for the expense of bringing an action and the delay in receiving money damages. It noted that the 12 percent interest provision of § 3142 is intended to penalize a recalcitrant insurer, not compensate a claimant. Accordingly, the Court of Appeals explicitly recognized that the interest provisions of the RJA and no-fault act are not mutually exclusive.
Johnston also held that 12 percent interest under § 3142 is to be assessed "until *902 the judgment is satisfied."[5] The Court of Appeals engaged in a thorough analysis of the interest that the plaintiff was entitled to in that case, holding:
[T]he plaintiff is entitled to the following interest on his overdue no-fault personal protection benefits: interest at 12% per annum from the time his benefits became overdue on December 12, 1978, until the day before he filed his complaint on February 23, 1979; interest at 18% per annum from February 23, 1979 until June 1, 1980; and interest at 24% per annum from June 1, 1980, until the judgment is satisfied. [Emphasis added.][[6]]
Plaintiff argues that Johnston strongly supports the proposition that § 3142 interest continues to accrue postjudgment. Likewise, the Court of Appeals in this case failed to take into consideration Johnston's explicit recognition of the purpose of judgment interest under the RJA and penalty interest under § 3142.
Conclusion
In sum, I believe this Court should grant leave to appeal to more thoroughly consider whether § 3142 interest continues to accrue postjudgment. The Court of Appeals analysis ignores the statutory language and the persuasive holding of Johnston that § 3142 interest accrues postjudgment.
HATHAWAY, J., would grant leave to appeal.
NOTES
[1] In this case, MCL 600.6013(8) provides the means for calculating the applicable interest rate.
[2] Petersen v. Magna Corp., 484 Mich. 300, 307, 773 N.W.2d 564 (2009) (opinion by KELLY, C.J.).
[3] Id.
[4] Johnston v. DAIIE, 124 Mich.App. 212, 333 N.W.2d 517 (1983).
[5] Id. at 215, 333 N.W.2d 517.
[6] To fully understand the implication of this holding, it may be easier to break down the interest award. The first award of interest at 12 percent from the day benefits became overdue until the filing of the complaint is simply § 3142 interest of 12 percent on overdue benefits. The second award of 18 percent interest amounts to § 3142 interest of 12 percent plus 6 percent interest under the RJA. The third award of 24 percent interest is § 3142 interest of 12 percent plus 12 percent RJA interest. Johnston applied § 6013(2) of the RJA because of the date on which the complaint in that case was filed. Section 6013(2) does not apply to this case. However, in order to properly understand the Court of Appeals interest award in Johnston, it is important to note that § 6013(2) is analogous to § 6013(8), which applies in this case. | 01-03-2023 | 03-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/832282/ | 776 N.W.2d 906 (2010)
PEOPLE of the State of Michigan, Plaintiff-Appellee,
v.
Paul David-Buckley HENDERSON, Defendant-Appellant.
Docket No. 139375. COA No. 285331.
Supreme Court of Michigan.
January 22, 2010.
Order
On order of the Court, the application for leave to appeal the June 12, 2009 order of the Court of Appeals is considered and, pursuant to MCR 7.302(H)(1), in lieu of granting leave to appeal, we REMAND this case to the Court of Appeals. That court shall treat the defendant's brief on appeal as having been timely filed and shall reinstate the appeal. The defendant's attorney acknowledges that the defendant did not contribute to the delay in filing and admits his sole responsibility for the error. Accordingly, the defendant was deprived of his appeal of right as a result of constitutionally ineffective assistance of counsel. See Roe v. Flores-Ortega, 528 U.S. 470, 477, 120 S.Ct. 1029, 145 L.Ed.2d 985 (2000); Peguero v. United States, 526 U.S. 23, 28, 119 S.Ct. 961, 143 L.Ed.2d 18 (1999).
Costs are imposed against the attorney, only, in the amount of $250, to be paid to the Clerk of this Court.
We do not retain jurisdiction.
CORRIGAN, J. (concurring).
I concur in the order reinstating defendant's appeal because he was deprived of *907 the effective assistance of appellate counsel. I would also refer his appellate attorney, William T. Street, to the Attorney Grievance Commission (AGC) to investigate Street's failure to successfully prosecute the appeal. Street admits that he was solely responsible for the filing delays that caused the Court of Appeals to dismiss the appeal for want of prosecution. He now applies for leave to appeal to this Court on defendant's behalf, effectively asking that we provide a remedy for his deficient performance.
I would refer attorneys to the AGC under these circumstances for several reasons. Most significantly, when a defendant's appeal is reinstated due to ineffective assistance of counsel, he has no incentive to contact the AGC himself concerning his attorney's failures; he has already received relief for the failures. Yet, to protect future defendants, it is important for the AGC to identify attorneys who may consistently provide ineffective assistance, in order to take any appropriate disciplinary action. Further, referral to the AGC in these cases avoids encouraging attorneys to use this Court to correct for their own ineffective representation at the Court of Appeals.
This Court will consider, as an administrative matter, whether to consistently refer attorneys to the AGC if a defendant's appeal is reinstated as a result of ineffective assistance of counsel. I would urge that we do so as a matter of course in order to treat attorneys uniformly and for the AGC to identify patterns of attorney malfeasance that may constitute professional misconduct. | 01-03-2023 | 03-01-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/8326679/ | Fabricant, Judith, J.
This action arises out of plaintiffs’ investment in two hedge funds, Dutchess Private Equities, L.P. and Dutchess Private Equities Fund, Ltd. Plaintiffs Cannonball Fund, Ltd., Cannonball Plus Fund, Ltd., East Orient, Ltd., Mark Wenzel, The Trustees of the Geraldine Schwab Irrevocable Trust, and The Carrswold Partnership bring this action individually and derivatively in their capacity as limited partners of nominal defendant Dutchess L.P. and shareholders of nominal defendant Dutchess Ltd. against defendants Dutchess Capital Management, LLC, Dutchess Advisors, LLC, Michael Novielli, Douglas Leighton, Theodore Smith (collectively, the Dutchess defendants), Sullivan Billie, P.C., and Dundee Leeds Management Services. The matter is now before the court on the Dutchess defendants’ and Dundee Leeds’s motion to dismiss and Sullivan Bille’s motion to dismiss. For the reasons explained, the motions will be allowed.
BACKGROUND
For the purposes of these motions, the Court takes as true the following factual allegations of the complaint, as well as all reasonable inferences drawn *306therefrom in the plaintiffs’ favor. See, e.g., Warner-Lambert Co. v. Execuquest Corp., 427 Mass. 46, 47 (1998); Marshall v. Stratus Pharmaceuticals, Inc., 51 Mass.App.Ct. 667, 670-71 (2001).,Plaintiffs Cannonball, Cannonball Plus and East Orient (collectively, the Dutchess Ltd. plaintiffs) are all investors in nominal defendant Dutchess Ltd.1 Plaintiffs Wenzel, the Schwab Trust and Carrswold (collectively, the Dutchess L.P. plaintiffs) are limited partners in Dutchess L.P.2 Nominal defendants Dutchess L.P. and Dutchess Ltd. are both hedge funds, or investment vehicles, that feed their assets into a master fund, nominal defendant Dutchess Private Equities Fund, Ltd., incorporated in the Cayman Islands.3 Dutchess L.P. is a limited partnership organized under the laws of Delaware.4 Dutchess Ltd. is a corporation formed in 2006 under the law of the Cayman Islands. The Court will refer to Dutchess L.P. and Dutchess Ltd. collectively as the funds, where appropriate. The plaintiffs all invested in Dutchess L.P. and/or Dutchess Ltd., both of which, in turn, invested all, or substantially all, of their assets in the master fund.
Dutchess Capital is a Connecticut LLC that does business in Massachusetts and is the general partner of Dutchess L.P. and Dutchess Advisors, and the investment manager of Dutchess Ltd. Dutchess Advi-sors is a Connecticut LLC that does business in Massachusetts and served as a consultant to Dutchess L.P. and Dutchess Ltd.5 The individual defendants are all affiliated with Dutchess Capital. Leighton and Novielli are principals/managing members of Dutchess Capital and directors of Dutchess Ltd. Smith is Dutchess Capital’s chief operating officer and Dutchess L.P.’s director of corporate finance. Dundee Leeds acted as administrator for both Dutchess L.P. and Dutchess Ltd. Sullivan Bille is a Massachusetts professional corporation that audited Dutchess L.P.’s statements of financial condition as of December 31, 2005, and 2006, and provided unqualified audit opinions for those periods dated March 3, 2006, and April 14, 2007, respectively.
According to the complaint, the Dutchess defendants represented both orally and in writing that prospective investors’ investments in the funds would be protected in three ways. First, companies targeted for investment would have a positive cash flow with which they could repay the funds. Second, the funds would invest only in freely tradable and liquid companies that would permit the funds to convert debt securities into newly-issued stock at less than market price. Third, the funds would lend money only to companies with sufficient assets to secure a substantial portion of the funds’ investments. The Dutchess defendants assured investors that their due diligence would involve evaluating the business forecast, performance and stability of the target companies. They also asserted that they would refrain from any conduct that would create a conflict of interest between Dutchess Capital and Dutchess Advisors (and their individual members and directors) on the one hand and the funds and their investors on the other hand.6
The gist of the plaintiffs’ complaint is that the Dutchess defendants misrepresented their stated investment objectives and breached their fiduciary duties by making a series of questionable investments in two companies, Challenger Powerboats, Inc. and Siena Technologies, starting in 2003. The complaint alleges that the Dutchess defendants departed from their standards and procedures concerning conflicts of interest when, beginning in 2003, they caused Dutchess L.P. and Dutchess Ltd. to invest approximately $30 million in Challenger and Siena for the purpose of enriching themselves personally through fees, stock grants and other compensation. They did so despite auditors’ going concern qualifications for both companies year after year.7 After the Dutchess defendants’ efforts to salvage those companies failed, Dutchess Capital by letter dated Februaiy 27, 2008, informed the plaintiffs that it would freeze their redemption rights in Dutchess L.P. and Dutchess Ltd. effective Februaiy 29, 2008. On April 16, 2008, the Dutchess defendants announced a $31 million write-down of three portfolios.8, 9
The plaintiffs filed a verified complaint in the Delaware Court of Chanceiy on April 13, 2010, asserting essentially the same claims against the defendants named in this action.10 Some of the defendants asserted lack of personal jurisdiction. Following an October 21, 2010, hearing on motions for jurisdictional discoveiy, the plaintiffs voluntarily dismissed the action without prejudice on November 5,2010. They filed this action, setting forth twelve counts, on June 21, 2011.11, 12 All defendants now move for dismissal.
DISCUSSION
To withstand a motion to dismiss, a plaintiffs complaint must contain “allegations plausibly suggesting (not merely consistent with) an entitlement to relief, in order to reflect [a] threshold requirement. . . that the plain statement possess enough heft to sho[w] that the pleader is entitled to relief.” Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 (2008), quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1966, 550 U.S. 544, 557 (2007) (internal quotations omitted). While a complaint need not set forth detailed factual allegations, a plaintiff is required to present more than labels and conclusions, and must raise a right to relief “above the speculative level . . . [based] on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. See also Harvard Crimson, Inc. v. President & Fellows of Harvard Coll., 445 Mass. 745, 749 (2006).
Defendants raise a list of grounds for dismissal under the legal principles applicable to the various claims. For reasons that will become apparent, the Court will address only three of them: the Dutchess, Ltd. plaintiffs lack standing to bring their derivative claim under Cayman Islands law; the statute of limi*307tations bars all the other claims; and the Court lacks personal jurisdiction over Dundee Leeds.13
1. Breach of Fiduciary Duty (Count I) with Respect to Dutchess Ltd.
The Dutchess Ltd. plaintiffs seek to bring their claim of breach of fiduciary duty derivatively on behalf of that entity. As the plaintiffs acknowledge, Cayman Islands law, which in effect means English law, governs the issue of whether those plaintiffs have derivative standing.14 Subject to narrow exceptions, English law generally prohibits derivative actions brought by shareholders. See Winn v. Schafer, 499 F.Sup.2d 390, 396 (S.D.N.Y. 2007), citing Foss v. Harbottle, 2 Hare 461 (Eng. 1843). The only exception that could have any potential application to an action of this type is for situations that constitute “fraud on the minority.” See Winn, supra. To invoke that exception, a prospective derivative plaintiff must plead and prove both that the alleged wrongdoers have control over a majority of the voting stock, and that they benefitted from their misconduct at the company’s expense. Id.
Here, the complaint itself is silent as to stock ownership. The Placement Memorandum referenced in it refers to 4,990,000 non-voting shares and 1,000 voting shares “which are held by the Investment Manager.” Dutchess Capital is the Investment Manager. The complaint does not allege that Dutchess Capital benefitted from any wrongdoing. To the contrary, the complaint alleges that it was Leighton, Novielli and Smith who reaped the benefit. Because the Dutchess Ltd. plaintiffs have failed to plead that the same wrongdoer both controlled the company and benefit-ted from the misconduct, they lack standing to bring count I derivatively against Dutchess Ltd.
2. The Statute of Limitations
Counts I (as to Dutchess L.P.), II and III are governed by Delaware law.15 Under 10 Del. Code Ann. §8106, the limitations period for both tort and contract claims is three years.16 With respect to count I, alleging breach of fiduciary duly, it is well settled that the three-year statute of limitations applies to such claims. 10 Del. Code Ann. §8106; Dofflemeyer v. W.F. Hall Printing Co., 558 F.Sup. 372, 379 (D.Del. 1983) (applying Delaware law). See also In re Dean Witter Partnership Litig., 1998 WL 442456 at*4 (Del.Ch., July 18, 1998).
Absent fraudulent concealment, which is not alleged here, the limitation period begins to run at the time of the wrongful act. Isaacson, Stolper & Co. v. Artisans’ Sav. Bank, 330 A.2d 130, 132 (Del. 1974). The Dutchess L.P. plaintiffs claim that Dutchess Capital and the individual defendants breached their fiduciary duty by causing Dutchess L.P. to make investments in and loans to Challenger and Siena, and by collecting fees and stock grants from those transactions. On the facts alleged, that conduct occurred not later than February 2008, and the plaintiffs were fully on notice of it at least by April 25, 2008, when Challenger filed for bankruptcy.17 Thus, the cause of action accrued not later than April 25, 2008. The plaintiffs filed this complaint more than three years later, on June 21, 2011.
The Dutchess L.P. plaintiffs’ breach of contract claim, count II, alleges that Dutchess Capital breached the Partnership Agreement on Februaiy 29, 2008, when it suspended their right to make withdrawals from the fund. Delaware follows the general rule that a cause of action for breach of contract accrues at the time of the breach. Nardo v. Guido DeAscanis & Sons, 254 A.2d 254, 255, 256 (Del.Super., 1969); Youell v. Maddox, 692 F.Sup. 343, 355 (D.Del., 1988). Thus, under lODel. CodeAnn. §8106, the plaintiffs had until March 1, 2011 to assert this claim. They brought this action some four months after that date.
Count III, breach of the covenant of good faith and fair dealing, similarly falls under the Delaware three-year statute of limitations. The Dutchess L.P. plaintiffs claim equitable tolling based on the individual defendants’ alleged self-dealing. Delaware law does permit equitable tolling in some circumstances, but only so long as a plaintiff reasonably relies on the competence and good faith of a fiduciary — that is, only until a plaintiff knew or had reason to know of the facts constituting the alleged wrong. Fike v. Ruger, 754 A.2d 254, 261 (Del.Ch., 1999). “The limitations period . . . is tolled only until the plaintiff discovers (or exercising reasonable diligence should have discovered) his injury. Thus, the limitations period begins to run when the plaintiff is objectively aware of the facts giving rise to the wrong, i.e., on inquiry notice.” In re Dean Witter, 1998 WL 442456 at *6. “Inquiry notice does notrequire actual discovery of the reason for the injury. Nor does it require plaintiffs’ awareness of all of the aspects of the alleged wrongful conduct. Rather, the statute of limitations begins to run when plaintiffs should have discovered the general fraudulent scheme.” Id. at *7 Emphasis in original.
The plaintiffs cite to Yaw v. Talley, 1994 WL 89019 at *5 (Del.Ch., March 2, 1994), where the court commented that, “fiduciaries who benefit personally from their wrongdoing, especially as a result of fraudulent self-dealing, will not be afforded the protection of the statute of limitations.” As the Court in that same case observed, however, the limitations period begins to run when a plaintiff “knew or had reason to know the facts alleged to give rise to the wrong.” Id. at *7. “Plaintiffs were not entitled to sit idly by, blindly relying on defendants’ assurances, when the documents and disclosures plaintiffs received regularly were so suggestive of mismanagement.” In re Dean Witter, 1998 WL 442456 at *9.
Here, on the facts pled, the plaintiffs were on inquiry notice of the facts constituting the alleged breach at least by the time Dutchess Capital informed them *308of the freeze on February 29, 2008, and they received actual notice of their claimed injury on April 16, 2008, when Dutchess Capital announced the write-down. Both dates were more than three years before the plaintiffs filed this action.
Counts V-VII, IX and X assert tort claims, as to which both Massachusetts and Delaware provide a three-year limitations period.18 In Massachusetts, as in Delaware, a cause of action accrues when some harm has occurred, “even though the full extent and nature of that harm has not and cannot be established immediately.” Doherty v. Admiral’s Flagship Condominium Trust, 80 Mass.App.Ct. 104, 107 (2011). The discovery rule tolls the running of the limitations period, however, “in circumstances where the plaintiff did not know or could not reasonably have known that he or she may have been harmed by the conduct of another.” Id. at 107-08 (internal quotations and citations omitted). Thus an action accrues “when an event or events have occurred that were reasonably likely to put the plaintiff on notice that someone may have caused her injury.” Id. at 108.
As set forth supra, counts V through VII, all brought by the Dutchess L.P. plaintiffs directly, allege that Dutchess Capital and the individual defendants misrepresented that their investments in Dutchess L.P. and/or Dutchess Ltd. would be protected in various ways, and that defendants failed to disclose material information about their intentions. On the facts alleged, as recited supra, the plaintiffs were on notice of the claimed misrepresentations and omissions at the very latest by the time of the write-down on April 16, 2008, more than three years before they filed this action.
The claim for unjust enrichment, count IX, suffers from the same defect. Unjust enrichment is the “retention of money or property of another against the fundamental principles of justice or equity and good conscience.” Santagate v. Tower, 64 Mass.App.Ct. 324, 329 (2005). To state a claim for unjust enrichment, a plaintiff must allege facts indicating “unjust enrichment of one party and unjust detriment to another party.” Massachusetts Eye & Ear Infirmary v. QLT Phototherapeutics, Inc., 552 F.3d 47, 57 (1st Cir. 2009).
For purposes of the statute of limitations, courts have treated claims of unjust enrichment as sounding either in tort or in contract, depending on the nature of the claim. E.g. Cambridge Literary Properties, Ltd. v. W. Goebel Porzellanfabrik G.m.b.H. & Co., 448 F.Sup.2d 244, 263 (D.Mass., 2006) (applying tort statute of limitations to claims for unjust enrichment); see Goldstein v. Savings Bank Life Ins. Co. of Massachusetts, 435 Mass. 760, 761 n.2 (2002) (referring to “tort claims for unjust enrichment”); Williamson v. DT Management, Inc., 17 Mass. L. Rptr. 606 (Mass.Super. March 10, 2004) (treating unjust enrichment claim as quasi-contract); see generally Hendrickson v. Sears, 365 Mass. 83, 85 (1974) (court looks to the “gist of the action or the essential nature of plaintiffs claim” to determine which limitations period applies).
Here, plaintiffs expressly disclaim any contract-based theory of unjust enrichment, recognizing that their express contract with Dutchess Capital would preclude recovery on such a theory. It follows that, if the claim is viable at all, it sounds in tort, and is subject to a three-year limitations period. For the same reasons discussed supra with respect to other claims, the plaintiffs were on notice of the conduct that forms' the basis for the unjust enrichment claim, and the alleged harm, at the latest, by April 25, 2008, when Challenger filed for bankruptcy. The cause of action therefore accrued by that date, and the three-year limitations period had expired at least two months before the plaintiffs filed this action.
The same conclusion follows, for the same reasons, with respect to the Dutchess L.P. plaintiffs’ derivative claim against Sullivan Bille for professional malpractice. The plaintiffs allege that Sullivan Bille negligently issued unqualified audit opinions of Dutchess L.P.’s financial condition on March 3, 2006, and April 17, 2007. For the same reasons discussed supra, plaintiffs knew the reality of the situation by April 16, 2008; their cause of action against Sullivan Bille therefore accrued not later than the date of the latest audit opinion, April 17, 2007.
Thus, counts I, II, III, V-VII, IX and X are all time-barred unless, as plaintiffs argue, the claims are saved by the Massachusetts Savings Statute, G.L.c. 260, §32.19 That statute permits refiling, within one year, of an action that was timely brought but dismissed “for any matter of form.” The parties do not dispute that the Delaware action was timely brought. The record establishes that the plaintiffs dismissed it, voluntarily, on November 5, 2010, less than one year before they filed this action. The question, then, is whether the plaintiffs’ voluntary dismissal constitutes dismissal “for any matter of form,” within the meaning of the statute.
Plaintiffs contend that they dismissed the Delaware action because of certain defendants’ motions to dismiss for lack of jurisdiction, and the Delaware Court’s receptive response to those motions, as conveyed in comments of the Vice Chancellor at the hearing on their motion for jurisdictional discovery. Thus, the argument goes, the plaintiffs’ dismissal of their own action was motivated by a “matter of form,” within the scope of the savings statute.
“It is settled that a dismissal for want of jurisdiction is for a ‘matter of form’ within the meaning of the statute.” Boutiette v. Dickinson, 54 Mass.App.Ct 817, 818 (2002). See also Ciampa v. Beverly Airport Comm’n, 38 Mass.App.Ct. 974, 974 (1995); Rodi v. Southern New England Sch. of Law, 389 F.3d 5, 17-19 (1st Cir. 2004). But these cases involved dismissals by court order on grounds of jurisdiction, not voluntary *309dismissal as occurred here. Plaintiffs have cited no case, and the Court has found none, treating a voluntary dismissal as a matter of form for purposes of the statute.20
Here, the only action taken by the Delaware Court in connection with the dismissal was its approval of an unopposed motion for voluntary dismissal, without any ground stated. Such an action by a court is essentially pro forma; it does not constitute a ruling on personal jurisdiction or any other “matter of form.’’21 The plaintiffs’ argument would make application of the statute depend on determination of the plaintiffs’ subjective motive for their own voluntary action. That cannot be what the legislature intended. The Court concludes, therefore, that the savings statute does not apply, and counts I (as to the Dutchess L.P. plaintiffs), II, III, V-VII, IX and X are time-barred.
3. Professional Malpractice Against Dundee Leeds (Count XI).
Dundee Leeds seeks dismissal of the claim against it on the ground that the allegations of the complaint fail to establish personal jurisdiction.22 The Court agrees. Determination of personal jurisdiction over a nonresident defendant requires a two-fold inquiry: (1) whether the plaintiffs assertion of jurisdiction is authorized by the Commonwealth’s longarm statute, and (2) whether the defendant has the requisite minimum contacts with the forum so that the exercise of personal jurisdiction is consistent with the due process requirements of the United States Constitution. Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 5-6 (1979). Only when both questions are answered affirmatively can the court properly exercise jurisdiction. The plaintiffs bear the burden of making a prima facie showing of sufficient facts, taken in the light most favorable to the plaintiffs, to support the exercise of personal jurisdiction. Cepeda v. Kass, 62 Mass.App.Ct. 732, 738-39 (2004). Thus, to survive a motion to dismiss for lack of jurisdiction, the plaintiffs must allege some facts to indicate a basis for jurisdiction that would satisfy both prongs.
The plaintiffs here have failed to meet that requirement. The only conduct alleged as to Dundee Leeds that might involve any contact with Massachusetts is that, acting as the administrator of the funds, it made and circulated net asset value calculations. The complaint alleges that two of the plaintiffs have a place of business in Massachusetts, but it does not allege that Dundee Leeds sent its calculations to those plaintiffs here, or otherwise communicated with them here. Nor does it allege that Dundee Leeds solicited any business in Massachusetts. The Court is not persuaded that these facts constitute “transacting business” in the Commonwealth, even under the broad sweep of c. 223A, §3(a). See, e.g., Tatro v. Manor Care, Inc., 416 Mass. 763, 767 (1994); Heins v. Wilhelm Loh Wetzlar Optical Mach., 26 Mass.App.Ct. 14, 17 (1988). Nor is there anything to indicate that Dundee Leeds committed any tort in Massachusetts. The Court therefore has no occasion to consider the constitutional question of minimum contacts. Count XI thus must fail.
CONCLUSION AND ORDER
For the reasons stated, Defendants Dutchess Capital Management, LLC, Dutchess Advisors, LLC, Michael Novielli, Douglas Leighton, Theodore Smith and Dundee Leeds Management Services’ Motion to Dismiss Counts I-IX and XI is ALLOWED. Defendant Sullivan Bille P.C.’s Motion to Dismiss Count X is also ALLOWED.
between March and July 2007, Cannonball invested $5,000,000 in Dutchess Ltd. Between February 1, 2007 and August 1, 2007, Cannonball Plus invested $2,500,000 in Dutchess Ltd. On April 1, 2007, East Orient invested $300,000 in Dutchess Ltd.
Between April 2004, and November 2006, Wenzel, an Ohio resident, invested $480,000 in and became a limited partner of Dutchess L.P. The Schwab Trust invested in and became a limited partner of Dutchess L.P. on March 1, 2006. In 2006 and 2007, Carrswold invested $3,800,000 in, and became a limited partner of Dutchess L.P.
Nhis type of hedge fund is known as a “feeder fund.”
Delaware L.P. was formed in 2000; it acquired another limited partnership, Dutchess II, L.P., in 2007.
Dutchess L.P., Dutchess Ltd., the master fund, Dutchess Capital and Dutchess Advisors all have their principal place ofbusiness at 50 Commonwealth Avenue, Boston, MA 02116.
According to the complaint, the Dutchess defendants made these written representations in a 2000 Dutchess L.P. Offering Memo and a 2007 Dutchess Ltd. Placement Memo, which were similar in all material respects. The plaintiffs assert that they relied on these, as well as on a 2003 PowerPoint presentation distributed to potential investors, due diligence questionnaires dated 2004 and 2006, a November 2006 “Hedge Connection” marketing e-mail, and multiple unqualified audits of Dutchess L.P. They also point to oral representations in a series of meetings with Leighton in 2006 and 2007, and in conversations between Leighton and Wenzel on February 28, 2008.
With respect to Challenger, the plaintiffs contend that, as a condition of the investment, the Dutchess defendants required Challenger to hire first Novielli and Leighton, and subsequently Smith, as consultants, in exchange for substantial shares of Challenger stock. Novielli, Leighton and Smith joined Challenger’s board of directors in June 2006, eventually becoming the board’s only members. According to the complaint, each year the auditors issued a “going concern” qualification, expressing the view that the company might not be able to survive the year. Regardless of Challenger’s financial difficulties, and what the plaintiffs argue was a series of bad acquisitions on Challenger’s part, the Dutchess defendants continued to prop Challenger up with multiple cash infusions and loans totaling nearly $20 million of the funds’ assets, $9 million of which was contributed between January 2007 and January 2008. The plaintiffs assert that Novielli, Leighton and Smith received substantial stock and cash from their involvement with Challenger, while the funds recovered only about $900,000. The facts alleged with respect to Siena are very much the same. According to the plaintiffs, Novielli and Leighton served on Siena’s board of directors, and the funds entered into a series of loans for transactions that proved disastrous. Although Siena posted net losses of $4.2 million in 2004 and $15.5 million in 2005, the Dutchess defendants entered into two loan restructuring agreements whereby Dutchess L.P. forgave $7.6 million of debt in return for an unsecured promissory note in a lesser *310amount, allowed Siena to borrow without the funds’ consent, and waived certain of the funds’ claims regarding Siena’s loans. The complaint alleges that Novielli and Leighton reaped large consulting fees and other compensation.
The master fund wrote down $19,600,000 of its remaining investment in Challenger, $7,500,000 of its investment in Execute Sports, and approximately $4,000,000 of its investment in DNA Print Genomics. The plaintiffs make no claims with respect to any investments in Execute Sports and DNA Print Genomics.
The Dutchess defendants last invested in Siena in July 2007. Challenger filed for bankruptcy on April 25, 2008.
The Delaware complaint also listed as a defendant Marcum & Kliegman, LLP, a New York company that audited both the statement of assets and liabilities of Dutchess Ltd. and the statement of financial condition of Dutchess L.P. for the year ending December 31, 2007, and provided audit opinions dated June 21, 2008. The plaintiffs are pursuing an action against Marcum in New York.
The complaint, consisting of 316 paragraphs spanning 82 pages is anything but short and plain, risking dismissal on that basis alone. See, e.g., Schaer v. Brandeis Univ., 432 Mass. 474, 477 (2000). See also Driscoll v. Board of Trustees of Milton Academy, 70 Mass.App.Ct. 285, 299 (2007).
Count I of the complaint, for breach of fiduciary duty, is brought derivatively by the Dutchess L.P. plaintiffs on behalf of Dutchess L.P., and by the Dutchess Ltd. plaintiffs on behalf of Dutchess Ltd. against Dutchess Capital, Novielli, Leighton and Smith. Count II for breach of contract is brought directly by the Dutchess L.P. plaintiffs against Dutchess Capital for breach of the Dutchess Limited Partnership Agreement. Count III, for breach of the covenant of good faith and fair dealing, is brought derivatively by the Dutchess L.P. plaintiffs on behalf of Dutchess L.P. against Dutchess Capital. Counts V and VI, for fraud, are brought by the plaintiffs in their individual capacity against Dutchess Capital, Novielli, Leigh-ton and Smith. Counts VII and VII [sic], for negligent misrepresentation, are brought by the plaintiffs in their individual capacity against Dutchess Capital, Novielli, Leighton and Smith. Count IX, for unjust enrichment, is brought derivatively by the Dutchess L.P. plaintiffs on behalf of Dutchess L.P. and by the Dutchess Ltd. plaintiffs on behalf of Dutchess Ltd. against Dutchess Capital, Dutchess Advisors, Novielli, Leighton and Smith. Count X, for professional malpractice/negligence, is brought by the Dutchess L.P. plaintiffs on behalf of Dutchess L.P. against Sullivan Bille. Count XI, for professional malpractice/negligence, is brought derivatively by the Dutchess L.P. plaintiffs on behalf of Dutchess L.P. and by the Dutchess Ltd. plaintiffs on behalf of Dutchess Ltd. against Dundee Leeds. The complaint has no count IV and two counts VII.
In addition to these grounds for dismissal, the Dutchess defendants contend that the claims of fraud and negligent misrepresentation (counts V-VII) are not pled with particularity as required by Mass.R.Civ.P. 9(b); and that the investment risk disclaimers in the Offering and Placement Memos negate reasonable reliance; and that the Dutchess L.P. and Dutchess Ltd. plaintiffs have no recourse to a claim of unjust enrichment (count IX) because they have a contractual relationship with the Dutchess defendants. As to the claim against Sullivan Bille (count X), Sullivan Bille argues that the plaintiffs stand in the shoes of Dutchess L.P., which could not have relied on an allegedly negligent audit since its controlling insiders were aware of the matters that an accurate audit would have revealed. Sullivan Bille further argues that it had no duty to ensure that Dutchess L.P.’s investment strategy would conform to the offering memorandum.
In Massachusetts, “the State of incorporation dictates the choice of law regarding the internal affairs of a corporation.” Harrison v. NetCentric Corp., 433 Mass. 465, 471 (2001), and cases cited.
Section 9.07 of the Dutchess L.P.’s Partnership Agreement includes a Delaware choice of law clause. Such contractual choice of law provisions are enforceable where, as here, “the state of the chosen law has some substantial relationship to the parties or the contract.” Restatement (Second) of Conflict of Laws, §187; see also Restatement (Second) of Conflict of Laws, §11, comment 1 (1971); see generally New England Tel Co. v. Gourdeau Constr. Co., 419 Mass. 658, 661 (1995).
10 Del. Code Ann. §8106 reads, in relevant part: “No action to recover damages for trespass, no action to regain possession of personal chattels, no action to recover damages for the detention of personal chattels, no action to recover a debt not evidenced by a record or by an instrument under seal, no action based on a detailed statement of the mutual demands in the nature of debit and credit between parties arising out of contractual or fiduciary relations, no action based on a promise, no action based on a statute, and no action to recover damages caused by an injury unaccompanied with force or resulting indirectly from the act of the defendant shall be brought after the expiration of 3 years from the accruing of the cause of such action.”
The last investment in Siena occurred in 2007. The individual defendants last collected compensation in February 2008.
See G.L.C. 260, §2A.
G.L.c. 260, §32 reads in relevant part as follows: “If an action duly commenced within the time limited in this chapter is dismissed ... for any matter of form . . . the plaintiff . . . may commence a new action for the same cause within one year after the dismissal... of the original action."
To the contrary, the cases the parties have identified under similar statutes in other jurisdictions have held that voluntary dismissal does not constitute dismissal for a matter of form. See, e.g., Parrott v. Meacham, 290 A.2d 335, 335 (Conn. 1971) (when plaintiff withdraws the original action, that withdrawal “cannot by the most liberal construction constitute accidental failure of suit for matter of form” as provided by the saving statute); Baker v. Baningoso, 58 A.2d 5, 8 (Conn. 1948) (observing that if a plaintiff can begin over again by voluntary withdrawal, he can keep his case alive indefinitely); Marshall v. Kansas City S. Rys. Co., 7 So.3d 210, 214 (Miss. 2009) (voluntary dismissal without prejudice generally not considered a “matter of form” under Mississippi savings statute); Graleski v. ILC Dover, 26 A.3d 213, 2011 WL 3074710 at *5 (Del.Super., July 26, 2011) (unpublished disposition) (voluntary withdrawal of a complaint does not constitute dismissal or stay based on a matter of form).
The Court notes that, according to the facts alleged in the complaint in this action, Dutchess L.R, Dutchess Capital, Leighton, Novielli and Smith were clearly subject to personal jurisdiction in Delaware. Dutchess L.R is a Delaware limited partnership; Dutchess Capital is its general partner; and the individual defendants controlled Dutchess L.R See, e.g., Werner v. Miller Technology Management, L.P., 831 A.2d 318, 328 (Del.Ch., 2003), citing RJ Associates, Inc. v. Health Payors' Organization Ltd. Partnership, 1999 WL 550350 at *5 (Del.Ch., July 16, 1999). Only defendants Dutchess Ltd., Dutchess Advisors, Dundee Leeds and Sullivan Bille claimed lack of personal jurisdiction in the Delaware action.
Although the statute of limitations analysis set forth supra would appear to apply to this claim, as to the other tort claims, Dundee Leeds argues only lack of personal jurisdiction. | 01-03-2023 | 10-17-2022 |
https://www.courtlistener.com/api/rest/v3/opinions/1148567/ | 591 So.2d 1278 (1991)
SEVARG CO., INC., Plaintiff-Appellant,
v.
ENERGY DRILLING CO., Defendant-Appellee.
No. 90-668.
Court of Appeal of Louisiana, Third Circuit.
December 18, 1991.
Rehearing Denied January 29, 1992.
Writ Denied April 3, 1992.
*1279 Liskow & Lewis, Joseph C. Giglio, Lafayette, for plaintiff-appellant.
Gold, Weems, Bruser, Sues & Rundell, Dee D. Drell, Alexandria, for defendant-appellee.
Before LABORDE, YELVERTON and KNOLL, JJ.
YELVERTON, Judge.
Sevarg Co., Inc., as operator, entered into a contract with Energy Drilling Co., as contractor, for Energy to drill an oil well for Sevarg in Rapides Parish. The well was not a success. Sevarg filed suit against Energy for damages based on a breach of contract. Sevarg alleged in its petition that the breach was the failure to comply with the mud control program specified in the contract. The contract was attached to the petition. Sevarg alleged that the failure to comply with the terms of the contract resulted in skin damage, which in turn inhibited production. Sevarg alleged that Energy intentionally maintained deficient mud properties in order to accelerate the drilling process and to save money for itself. Sevarg further alleged that the skin damage was caused by the defendant through its intentional and bad faith breach of the contract. Damages were itemized: (a) the price paid under the contract, $193,100; (b) the costs of completing, equipping, operating, reworking the well and attempting to remedy the defective performance, $400,000 +; and (c) the lost production income and profits, $325,000 +.
The written contract contained certain indemnity obligations. Energy filed an exception of no cause of action grounded on *1280 these obligations in the contract. The trial judge partially maintained the exception by ordering the last two items of damages stricken from the petition, overruling the exception as to Item (a) of damages, the claim for $193,100 for the return of the price paid under the contract.
Sevarg appealed. We reverse the judgment which partially maintained the exception of no cause of action, and overrule the exception in its entirety.
Energy also filed an exception of no right of action in the trial court. That exception was overruled. By answer to the appeal, Energy appealed the overruling of its exception of no right of action, as well as the trial court's decision overruling the exception of no cause of action as to Item (a) of damages. We dismiss Energy's answer to the appeal. The rulings appealed by Energy were interlocutory and are not appealable. La.C.C.P. art. 2083; Bank of Jena v. Clark, 452 So.2d 428 (La.App. 3rd Cir.), writ denied, 458 So.2d 476 (La.1984).
EXCEPTION OF NO CAUSE OF ACTION
Although the trial court did not give reasons for judgment, its apparent reason for partially maintaining the exception of no cause of action was the asserted ground for that exception: Energy based its exception on the ground that Sevarg had agreed to indemnify it for liability for the very damages claimed in this lawsuit. Energy argued that because the indemnity agreement was contained in the contract, and because the contract was attached to the petition, on the face of the papers the plaintiff did not have a cause of action for the damages itemized as (b) and (c), above.
The sections of the contract said to preclude a cause of action were 18.8, 18.14, and 18.15. These sections read as follows:
18.8 Underground Damage: Operator agrees to defend and indemnify Contractor for any and all claims against Contractor resulting from operations under this Contract on account of injury to, destruction of, or loss or impairment of any property right in or to oil, gas, or other mineral substance or water, if at the time of the act or omission causing such injury, destruction, loss, or impairment, said substance had not been reduced to physical possession above the surface of the earth, and for any loss or damage to any formation, strata, or reservoir beneath the surface of the earth.
18.14 Consequential Damages: Neither party shall be liable to the other for special, indirect or consequential damages resulting from or arising out of this Contract, including, without limitation, loss of profit or business interruptions, however same may be caused.
18.15 Indemnity Obligation: Except as otherwise expressly limited herein, it is the intent of parties hereto that all indemnity obligations and/or liabilities assumed by such parties under terms of this Contract, including without limitation, paragraphs 18.1 through 18.14 hereof, be without limit and without regard to the cause or causes thereof (including pre-existing conditions), the unseaworthiness of any vessel or vessels, strict liability, or the negligence of any party or parties, whether such negligence be sole, joint or concurrent, active or passive. The terms and provisions of paragraphs 18.1 through 18.14 shall have no application to claims or causes of action asserted against Operator or Contractor by reason of any agreement of indemnity with a person or entity not a party hereto.
Pleadings must be construed reasonably so as to afford litigants their day in court, to arrive at the truth, and to do substantial justice. Kuebler v. Martin, 578 So.2d 113 (La.1991). When it can reasonably do so, the court should maintain a petition against a peremptory exception so as to afford the litigant an opportunity to present his evidence. Id. The purpose of an exception of no cause of action is to determine the sufficiency in law of the petition and is triable on the face of the *1281 papers; for the purpose of determining the issues raised by this exception, the well pleaded facts in the petition and any annexed documents must be accepted as true. Id.
The general rule is that where a petition states a cause of action as to any ground or portion of a demand, the exception of no cause of action should be denied. Ward v. Tenneco Oil Co., 564 So.2d 814 (La.App. 3rd Cir.1990). The only exception to this rule that has been recognized is when separate and distinct causes of action are included in one petition. Id.
Sevarg's petition clearly set forth a cause of action for breach of contract. The three items of damage stated were the alleged elements of damages suffered as a result of the breach. Sevarg alleged the existence of a contract, attaching it to the petition. Sevarg alleged a breach, specifically that the mud weight and water loss rates were maintained at unacceptable levels. Sevarg alleged damages as a result of the breach, particularizing the damages.
In addition, Sevarg alleged that Energy's breach was intentional or was the result of gross fault. Malice, intent, knowledge and other conditions of mind of a person may be alleged generally. LSA-C.C.P. art. 856; Zeagler v. Town of Jena, 503 So.2d 1137 (La.App. 3rd Cir.1987). Therefore, Sevarg's allegation that Energy's breach relative to the mud supply program was intentional sets forth a well-pleaded fact, as is the allegation that the breach was the result of Energy's gross fault. Gross fault is defined as "that which proceeds from inexcusable negligence or ignorance; it is considered as nearly equal to fraud." LSA-C.C. art. 3556(13). The petition's allegations must be accepted as true when ruling on an exception of no cause of action.
Finally, Energy cannot interpose the indemnity provisions of the contract as effectively canceling Sevarg's cause of action. Sections 18.8, 18.14, and 18.15 of the contract, given the interpretation espoused by Energy, are null, because they, in advance, exclude or limit the liability of Energy for intentional or gross fault that causes damage to Sevarg. La.C.C. art. 2004 provides in part:
"Any clause is null that, in advance, excludes or limits the liability of one party for intentional or gross fault that causes damage to the other party."
Ramirez v. Fair Grounds Corp., 575 So.2d 811 (La.1991).
For the foregoing reasons, the judgment of the trial court is reversed, and the exception of no cause of action is overruled, at Energy's costs.
REVERSED. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2305978/ | 652 F.Supp. 1056 (1987)
Karen BOXER, Plaintiff,
v.
Manuel GOTTLIEB, Renault U.S.A., Inc. and Renault S.V.S.E., Defendants.
No. 83 Civ. 3375 (MGC).
United States District Court, S.D. New York.
January 15, 1987.
*1057 Gair, Gair & Conason by Candice Singer Ram, New York City, for plaintiff.
*1058 Byrnes & Sullivan by Maureen Sullivan, New York City, for defendant Gottlieb.
Alexander, Ash, Schwartz & Cohen, P.C. by Christopher P. Di Giulio, New York City, for defendant Renault U.S.A., Inc.
Sullivan & Cromwell by Hyman L. Schaffer, New York City, for defendant Renault S.V.S.E.
OPINION
CEDARBAUM, District Judge.
Defendants Renault U.S.A., Inc. ("Renault U.S.A.") and Renault Service Ventes Speciales Exportation ("Renault S.V.S.E.") have moved for summary judgment dismissing the complaint. The motions are opposed by plaintiff Karen Boxer ("Boxer") and defendant Manuel Gottlieb ("Gottlieb"). The issue on these motions is whether the New York "guest motorist" statute, Section 388 of the New York Vehicle and Traffic Law, applies to an automobile accident in France caused by the negligence of the driver of an automobile that was rented only for delivery, use and operation in France.
In August 1983, while vacationing in France, plaintiff was injured in a single car accident. She was a passenger in a car driven by Gottlieb. The driver lost control, and the vehicle went off the road and ran into a stone wall. Plaintiff sued Gottlieb, as the driver, and Renault U.S.A. and Renault S.V.S.E. as the owners of the car, to recover for injuries she sustained from the accident. Her only claim is negligence; she makes no claim of breach of warranty or defective equipment. Plaintiff sues the Renault defendants under a theory of vicarious liability.
In support of its motion for summary judgment, Renault S.V.S.E. urges that French law applies and that, under French law, in the absence of an employment or agency relationship, automobile owners are not vicariously liable for accidents caused by a third party's negligent operation, even if the driver is operating the car with the owner's permission. Renault S.V.S.E. also argues that even if New York law were to be applied, it cannot be liable because the plaintiff herself, not Renault S.V.S.E., was the owner of the car.
Renault U.S.A. makes essentially the same arguments as Renault S.V.S.E. First, that French law applies, and would impose no liability upon Renault U.S.A. Secondly, even under New York law, that Renault U.S.A. cannot be liable because it has never owned the vehicle involved in the accident.
For the reasons set forth below, I find that French law applies to determine the liability of both Renault S.V.S.E. and Renault U.S.A. and that as a matter of law, neither is vicariously liable for plaintiff's injuries. Therefore, I grant the motions for summary judgment dismissing the complaint as against Renault S.V.S.E. and Renault U.S.A.
Background
1. The Parties
Plaintiff is a United States citizen and a resident of the State of New York. Defendant Gottlieb is also a United States citizen and a resident of the State of New York.
Defendant Renault U.S.A. is a corporation organized under the laws of the State of New York. Plaintiff alleges, and Renault U.S.A. has not disputed, that Renault U.S.A. is a wholly owned subsidiary of Renault France.
According to the affidavit of Louis Costet, General Counsel to Regie Nationale des Usines France ("Renault France"), defendant Renault S.V.S.E. is the office of Renault France which handles requests for tax-free sales and deliveries of Renault vehicles intended for export. It is neither a separate corporation nor even a division of Renault France. Renault France was created by governmental "ordonnance" on January 16, 1945 as an "establishment" of the French government. According to Costet, "establishment" indicates that it is owned and controlled by the state. The Republic of France directly holds 95% of the equity of Renault France; the other 5% *1059 is held by present and former employees of the company.
Foremost Eurocar Corporation ("Foremost"), although not a defendant in this action, is a corporation organized under the laws of California.
2. The Facts
Plaintiff was interested in procuring a car for use during her vacation in France. She called the French Tourist Agency for assistance and was given the names of Renault New Jersey and Foremost in California. Foremost acts as an agent for Renault U.S.A. and arranges for rentals and sales of Renault automobiles for vacations in Europe. Plaintiff called Foremost because she had an "800" number for the company. She also requested information regarding prices and the types of automobiles available. Plaintiff placed a second call to Foremost and, according to the plaintiff's version of the facts, arranged to rent, for a three-week period, a Renault to be picked up and returned in Paris. Foremost took Boxer's order, transmitted it to Renault U.S.A. which, in turn, telexed the order to Renault France. On August 4, 1979, Boxer sent a letter to Foremost enclosing a check for $595.25 "to cover the rental of a Renault ... It is my understanding that your fee includes complete insurance coverage."
Plaintiff claims she received only two one-page documents from Foremost which confirmed her lease of the Renault. The order application (one of the documents) shows that the place of delivery and return of the vehicle was Paris, and that the period of the lease was three weeks. Plaintiff claims that she received no further documents from Renault U.S.A., or anyone else with respect to a financed purchase-repurchase plan. When plaintiff arrived in Paris to pick up the car, she signed other papers which she claims were in French and were not explained to her. One of the papers she signed was a promissory note for 20,591 French francs, payable to the order of Renault S.V.S.E. On August 18, 1979, plaintiff took possession of a new Renault-manufactured vehicle bearing license number 902 TTB92.
The ownership of the automobile is a sharply disputed issue. Plaintiff contends that she merely rented the car for a 22-day period, and had no intention of buying it. She paid $595, as a "rental fee" before leaving the United States, claims to have signed no purchase-repurchase agreement, and contends that the promissory note she signed in Paris prior to taking possession of the car was not intended as the balance of the purchase price. Defendants claim that the agreement was a purchase-repurchase agreement and that plaintiff became the owner of the car when she signed the promissory note. The car was registered with the French police in plaintiff's name.
Renault France applied for, obtained and paid for the insurance policy for the automobile. It obtained the insurance from Le Secours, a French insurance company. Coverage extended only to use in France. The car was registered in France in Boxer's name, listing her New York address. In its answers to plaintiff's interrogatories, Renault France stated that the registration was "a temporary authorization to use a tax-free vehicle." The registration was filed by Renault France in Boxer's behalf. Plaintiff received the registration certificate and the "insurance passport" for the car on August 18, 1979, when she took possession of the car. No other registration documents or papers that would indicate ownership have been introduced by any of the parties.
The accident that caused Boxer's injuries occurred on August 24, 1979 in France. At the time of the accident, Gottlieb, who had accompanied Boxer to France, was driving the car, with plaintiff's permission. The parties do not dispute that the accident occurred as a result of Gottlieb's negligence.
Discussion
1. The Applicable Law
Plaintiff originally filed this action in New York Supreme Court. Renault *1060 France removed it, pursuant to 28 U.S.C. § 1441(d), which provides, in pertinent part:
Any civil action brought in a State court against a foreign state as defined in section 1603(a) of this title may be removed by the foreign state to the district court and division embracing the place where such action is pending. Upon removal the action shall be tried by the court without jury....
Section 1441 was amended and subsection (d) was added in 1976 as part of the enactment of the Foreign Sovereign Immunities Act of 1976 ("the Act"), 28 U.S.C. § 1602 et seq. (1976).
A suit against a foreign sovereign is a suit "between a State, or the Citizens thereof, and foreign States" U.S. Const., art. III § 2, cl. 1, and comes within the judicial power of the federal courts by way of the constitutional grant of diversity jurisdiction. See Texas Trading & Milling Corp. v. Fed. Republic of Nigeria, 647 F.2d 300 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982). The Act was not intended to create a new federal cause of action; instead it provides access to the federal courts for the resolution of ordinary legal disputes involving a foreign sovereign. The House Report on the Act states: "The Bill is not intended to affect the substantive law of liability." H.Rep.U.S.Code Cong. & Admin. News 1976, pp. 6604, 6610, as quoted in Verlinden B. V. v. Central Bank of Nigeria, 647 F.2d 320, 326 (2d Cir.1981), rev'd on other grounds, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). Verlinden also quotes the 1973 Hearings as evidence that the Act was not intended to create any substantive right:
That is "whether state or federal law is to be applied will depend on the nature of the issue before the court," not the presence of a foreign state. "Under the Erie doctrine state substantive law, including choice of law rules, will be applied if the issue before the court is non-federal." 1973 Hearings at 47 (Dep't of State, Section-by-Section Analysis of 173 bill). Accord, House Report at 6621.
Id. at 326, n. 19. In fact, under Section 1606 of the Act, "the foreign state shall be liable in the same manner and to the same extent as a private individual under like circumstances...." 28 U.S.C. § 1606.
Accordingly, in this diversity case, I must look to New York's choice of law rules to determine what law governs the liability of Renault France and Renault U.S.A. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under New York's choice of law rules, my first inquiry is whether there is a conflict between the law of New York and the law of France.
A. New York Law
Section 388 of the New York Vehicle and Traffic Law provides in relevant part:
1. Every owner of a vehicle used or operated in this state shall be liable and responsible for death or injuries to person or property resulting from negligence in the use or operation of such vehicle, in the business of such owner or otherwise, by any person using or operating the same with the permission, express or implied, of such owner.
The vicarious liability created by this statute is in derogation of the common law. See Caldararo v. Au, 570 F.Supp. 39, 41 (S.D.N.Y.1983); Plath v. Justus, 28 N.Y.2d 16, 319 N.Y.S.2d 433, 268 N.E.2d 117 (1971).
Decisions interpreting Section 388 have held that it is not necessarily limited to accidents occurring within New York's borders. See, e.g., Matter of Sentry Insurance Co., 36 N.Y.2d 291, 367 N.Y.S.2d 480, 327 N.E.2d 635 (1975); Cunningham v. McNair, 48 A.D.2d 546, 370 N.Y.S.2d 577 (1st Dep't 1975); (applying New York law to an accident in Maryland); White v. Smith, 398 F.Supp. 130 (D.N.J.1975) (applying New York law to an accident in New Jersey).
In Johnson v. Hertz Corp., 315 F.Supp. 302 (S.D.N.Y.1970), the court noted:
Section 388 of the Vehicle and Traffic Law has been interpreted by the New *1061 York courts to express "the policy that one injured by the negligent operation of a motor vehicle should have recourse to a financially responsible defendant" (citation omitted). It has also been ruled that when an analysis of the interests of competing jurisdictions indicates that New York has the predominant interest in the issue being litigated, this section of the Vehicle and Traffic Law will be applied to accidents which take place outside New York (citation omitted).
Id. at 304.
Thus, New York's interests in applying its law are both to protect innocent victims of automobile accidents and to ensure that a New York automobile owner is fully responsible for injuries caused by the owner's automobile, even if someone other than the owner is driving.
B. French Law
Under Rule 44.1 of the Federal Rules of Civil Procedure, the determination of foreign law is a matter for the court and in making that determination, I may consider "any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Since plaintiff has not provided the court with any authority contrary to that which Renault France submitted on the law of France, I assume that plaintiff agrees with the authority Renault France has submitted, including governing code sections and the decisions of French courts interpreting those sections.
According to the Declaration of Jean Herbaut, French law does not impose liability on the basis of ownership. Article 1384 of the Civil Code, which is the applicable statute, provides in pertinent part:
A person is responsible not only for the damage which he causes owing to his own act, but also for that which is caused by the acts of persons for whom he is answerable or by things which are in his custody.[1]
Herbaut, who is an attorney and a member of the bar of Paris, France, represents that, under French law, the "custodian," if he has taken over control from the owner, is the individual who has the responsibility for the object in question. Liability attaches to the garde, rather than to the object itself. The definition of garde is connected with "l'usage, la direction et le controle de la chose." Connot c. Franck, 2 dec. 1941, D.C.1942, 25. See discussion in F.H. Lawson & B.S. Markesinis, Tortious Liability for unintentional harm in the Common law and the Civil law, Vol. 1, pp. 142-178 (1982).
When the object in question is an automobile, the owner can be held liable when he has retained some degree of control over the automobile. For example, in France c. Union des Assurances, 17 dec. 1984, Cass. 2° civ., the owner was held liable for injuries from an accident where the owner's son had turned over driving to another, but remained in the front passenger seat. The court ruled that since the son could have resumed control at any time, custody had never been surrendered. And in 22 juin 1943 d.c. 1947, 145, the Cour de Cassation ("Court of Cassation") held that the owner retained custody and was liable for an accident caused by a mechanic who was driving the car, on the ground that the owner was in the car seated next to the mechanic, and had established the route to be followed and the time of departure. The court reasoned that the owner remained the sole master of the vehicle, regardless of the mechanic's reckless driving of the car, and could have directed the mechanic at any time.
When the object is a rental car, the individual renting the car, and not the car's owner, is considered the "garde" or custodian. (See p. 9 of Herbaut declaration and cases of the Court of Cassation attached as *1062 Exs. H-M). In Bouchaid ben Ahmed ben Said v. Schneider, the Court of Cassation considered whether Bouchaid, the owner of a vehicle, was to be presumed liable for injuries suffered by Schneider in an accident in Bouchaid's car that had been rented to a third party, Lugassy. The lower court had imposed liability on Bouchaid. The court stated:
Whereas as a result of the rental contract, the custody of the vehicle had been transferred to Lugassy, who had the use, direction, and control thereof, and whereas the defect in the thing rented could not create a presumption of liability on the part of Bouchaid, the presumption applying to Lugassy alone in his character as custodian;
It follows from this that the opinion appealed from violated the above-mentioned law.
A non-driver owner would be held liable under French law in cases in which an agency or employment relationship exists between the driver and the owner, and in which the owner is in the car at the time of the accident. The presumption of responsibility in favor of the guardian was created on the ground that the guardian is in a better position than the dispossessed owner to discover any defect in the object or control the object which may cause damage. Thus, the French policy appears to be not only to ensure swift compensation of victims but also to encourage, through imposition of liability, responsible use of automobiles.
Thus, there is a conflict between the New York law and the French law, and I must determine which law a New York court would apply.
2. New York Choice of Law
Traditionally, choice-of-law conflicts in tort actions have been resolved by applying the law of the place of the wrong. With Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963), however, New York courts began to apply "the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." 12 N.Y.2d at 482, 240 N.Y.S.2d at 749, 191 N.E.2d at 283.
In Schultz v. Boy Scouts of America, Inc., 65 N.Y.2d 189, 491 N.Y.S.2d 90, 480 N.E.2d 679 (1985), the Court of Appeals summarized the post-Babcock cases:
Interest analysis became the relevant analytical approach to choice of law in tort actions in New York. "[T]he law of the jurisdiction having the greatest interest in the litigation will be applied and * * * the [only] facts or contacts which obtain significance in defining State interests are those which relate to the purpose of the particular law in conflict" (Miller v. Miller) [22 N.Y.2d 12, 290 N.Y.S.2d 734, 237 N.E.2d 877 (1968)]).... Under this formulation, the significant contacts are, almost exclusively, the parties' domiciles and the locus of the tort (citations omitted).
65 N.Y.2d at 197, 491 N.Y.S.2d at 95, 480 N.E.2d at 683. Schultz points out that "[t]hese decisions also establish that the relative interests of the domicile and locus jurisdictions in having their laws apply will depend on the particular tort issue in conflict in the case." Id.
The issue of which law governs liability must be determined separately for each defendant, since the competing interests involved may differ. See Schultz, supra.
A. The Law Applicable to Renault France
Plaintiff argues that Renault France's liability should be determined under New York law. Plaintiff contends that because Renault rents vehicles in New York or solicits business within New York State, the public policy of the State reflected in Section 388 should be honored, and Renault should not be permitted to evade liability. Plaintiff also notes that the public policy of France is to ensure that injured persons are financially protected by insurance. French law permits a direct action by the injured party against the insurer. From this, plaintiff concludes "[s]ince plaintiff *1063 cannot sue the French insurance company here in New York as there is no jurisdiction over that entity, the only means by which the French public policy can be accomplished by this court is to apply the New York statute" (Plaintiff's memo at 29).
Under New York choice of law principles, I find that the liability of Renault France is governed by French law. In Neumeier v. Kuehner, 31 N.Y.2d 121, 335 N.Y.S.2d 64, 286 N.E.2d 454 (1972), the Court of Appeals adopted three rules for conflicts-of-law situations involving guest statutes. These rules remain applicable today. Schultz v. Boy Scouts of America, supra, 65 N.Y.2d 195, 491 N.Y.S.2d 90, 480 N.E.2d 679. The second rule is most applicable to the choice of law problem here:
When the driver's conduct occurred in the state of his domicile and that state does not cast him in liability for that conduct, he should not be held liable by reason of the fact that liability would be imposed upon him under the tort law of the state of the victim's domicile. Conversely, when the guest was injured in the state of his own domicile and its law permits recovery, the driver who has come into that state should notin the absence of special circumstancesbe permitted to interpose the law of his state as a defense.
31 N.Y.2d at 128, 335 N.Y.S.2d at 70, 286 N.E.2d at 457. In this instance, Renault France is not even the driver of the car so there is less reason to apply New York law.
To impose liability on a French company under a New York state statute, which on its face applies to an "owner of a vehicle used or operated" in New York for an automobile accident occurring in France, involving an automobile insured by a French insurance company, and for conduct for which there is no liability under French law, would be an improper intrusion of New York law into the affairs of another jurisdiction. See Belisario v. Manhattan Motor Rental, Inc., 48 A.D.2d 477, 370 N.Y.S.2d 574 (1st Dep't 1975) (resident of New York injured while working in New Jersey by a tractor trailer owned by a New Jersey corporation and driven by a New Jersey resident; the court held it was not an "in transit" case where the plaintiff's presence in New Jersey was fortuitous: "in the circumstances it would be sheer impertinence to invoke New York law.")
Most of the cases which extend the application of New York traffic laws to accidents occurring outside New York's borders are cases in which the location of the accident was entirely fortuitous. See White v. Smith, 398 F.Supp. 130 (D.N.J. 1975) (Section 388 applied to accident in New Jersey); Cunningham v. McNair, 48 A.D.2d 546, 370 N.Y.S.2d 577 (1st Dep't 1975) (Section 388 applied to accident in Maryland); Farber v. Smolak, 20 N.Y.2d 198, 282 N.Y.S.2d 248, 229 N.E.2d 36 (1967) (New York law applicable to accident in North Carolina); see also Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963) (Ontario guest statute not applicable where fact that accident occurred in Ontario was entirely fortuitous).
In this case, the site of the accident is not fortuitous. Plaintiff arranged to rent a car with delivery in France for the express purpose of travelling around in France. None of the parties contemplated that the car would ever be "used or operated" in New York. Therefore, these automobile accident cases extending New York law to accidents "in transit" beyond New York's borders are not persuasive.
After oral argument of this motion, plaintiff submitted a recent decision of the Second Department, Scharfman v. Nat'l Jewish Hospital and Research Center, 122 A.D.2d 939, 506 N.Y.S.2d 90 (2d Dep't 1986). In Scharfman, the court refused to apply a Colorado statute which immunized a hospital for the negligence of its employees in a medical malpractice action to recover for damages which plaintiff sustained allegedly as a result of improper treatment at the defendant hospital in Denver, Colorado. Plaintiff, a resident of New York, was an infant who suffered permanent brain damage allegedly from his treatment with experimental drugs. The court found that:
*1064 the plaintiff's New York residency and the defendant's activities conducted from a New York office which screens potential patients, constitute significant contacts, and that New York has a significant interest in protecting its residents from Colorado's hospital quasi-immunity law which would bar recovery.
Id. 506 N.Y.S.2d at 92.
Scharfman is also distinguishable from the present case. First, plaintiff is not completely barred from recovery by the application of French law. Plaintiff is entitled to insurance proceeds from the Le Secours policy taken out by Renault France. While plaintiff's attorney intimated at oral argument that the insurer intended to deny coverage, it was not even established that plaintiff has, in fact, applied for the proceeds of the policy. Moreover, French law provides plaintiff with a direct cause of action against the insurer. While it would be a great inconvenience for plaintiff to pursue this litigation in France, plaintiff is not barred from a remedy. Second, I am not faced with an "anachronistic" statute of France. Liability based on custody rather than on ownership is a concept that pervades all of French tort law. Unlike the immunity statute in Scharfman, Article 1384 of the Civil Code is not a statute with limited application.
For all of these reasons, under New York choice of law rules, Renault France's liability should be governed by French law. Because French law imposes vicarious liability on an automobile owner only in cases in which the owner is in the automobile at the time of the accident or in which the driver is an agent or employee of the owner, on the undisputed facts of this case, Renault France is entitled to summary judgment.
B. The Law Applicable to Renault U.S.A.
Plaintiff also seeks to hold Renault U.S.A. liable under New York's vicarious liability law. Although the analysis is slightly different with regard to Renault U.S.A., because it is a New York corporation, the outcome is the same. To apply Section 388 to an automobile accident in France involving an automobile that was never registered or insured in New York or intended for use in New York, would be an improper extension of New York law.
Plaintiff seeks to hold Renault U.S.A. liable as the alleged owner of the automobile. She attaches as an exhibit to her moving papers, documents from Foremost which indicate that the arrangement was for the lease of a Renault rather than a sale-repurchase. Plaintiff alleges in her complaint:
Sixteenth: upon information and belief, that at all the times hereinafter mentioned, the defendant, Renault U.S.A., Inc., was the owner of a certain motor vehicle bearing license registration number 902 TTB92.
In paragraph 17, plaintiff makes the identical allegation as to Renault S.V.S.E. Plaintiff's theory of Renault U.S.A.'s ownership is by no means clear and she has not submitted any documentary evidence which shows that Renault U.S.A. was the owner of the car. Nor does the complaint allege any further facts that establish Renault U.S.A.'s ownership of the vehicle.
Plaintiff argues that Renault U.S.A. and Renault France are, in reality, the same entity and that ownership of the vehicle by Renault U.S.A. was effected through internal accounting procedures between Renault France and Renault U.S.A.
Even assuming that Renault U.S.A. is the owner of the automobile, Section 388 is not applicable. On its face, Section 388 applies to "[e]very owner of a vehicle used or operated in this state ..." (emphasis added). Although plaintiff is correct that New York courts have applied Section 388 to accidents occurring beyond New York's borders, in almost all of these cases, the site of the accident was entirely fortuitous.
Johnson v. Hertz, 315 F.Supp. 302 (S.D. N.Y.1970), discussed supra at 1061, is relevant with regard to this issue. In Johnson, the court traced the relationship of Section 388 to the New York automobile *1065 insurance laws. Section 388(4) provides, in pertinent part, that "policies of insurance issued to the owner of any vehicle subject to the provisions of this section shall contain a provision for indemnity or security against the liability and responsibility provided in this section." Recognizing that the purpose of the insurance laws is to protect those who may be injured as a result of the activities of New York vehicle registrants, the court stated:
The express yoking of section 388 to the insurance laws makes it clear that imputed owner liability is part of the general scheme of the insurance laws and therefore must share its stated ends of protecting the innocent victims of tortfeasors. New York has an interest in having its law applied on this issue so that those regulated by its auto insurance policies will be required to fulfill the ends at which those policies were aimed.
Id. at 304-305 (emphasis added).
Plaintiff urges this court to impose on Renault U.S.A. the obligation to procure insurance coverage, to the extent required by New York statute, for vehicles having no connection with New York State, solely because the vehicle is allegedly owned by a New York corporation, and regardless of whether it registers, owns or operates vehicles within New York State.
I must determine both jurisdictions' interest in applying their own law. France's interest in applying its law is the same with regard to Renault U.S.A., as it is with Renault France, to the extent that the policy behind Article 1384 is to encourage responsible operation and caution in the custodian's use of an automobile. France, therefore, has an interest in applying its law. New York's interest in seeing its law apply in this case is less clear. New York's only significant contact with this particular accident is that the victim is a New York resident. The fact that Renault U.S.A., the alleged owner of the vehicle, is a New York corporation cannot have the significance that it does in many of the cases which plaintiff cites, because in this case, Renault U.S.A. is not the vehicle registrant. New York's stated interests are to protect accident victims and to ensure that New York vehicle registrants act responsibly with regard to vehicles they own and operate in New York and elsewhere. To the extent that New York would like to protect all New York accident victims, New York has an interest in applying its law.
The majority of the decisions which have applied New York law to accidents occurring outside New York involved automobiles that were registered and insured in New York. See, e.g., Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963); Farber v. Smolak, 20 N.Y.2d 198, 282 N.Y.S.2d 248, 229 N.E.2d 36 (1967); Tooker v. Lopez, 24 N.Y.2d 569, 301 N.Y.S.2d 519, 249 N.E.2d 394 (1969); White v. Smith, 398 F.Supp. 130 (D.N.J. 1975); Johnson v. Hertz, 315 F.Supp. 302 (S.D.N.Y.1970). In addition, as previously noted, many of these decisions have applied New York law to accidents outside New York because the location of the accident was fortuitous, and no other state had as significant an interest as New York. For example, in support of its decision to apply New York law in Babcock v. Jackson, supra, the Court of Appeals explained that Ontario had "no conceivable interest in denying a remedy to a New York guest against his New York host" simply because the place of the accident was in Ontario. 12 N.Y.2d at 482, 240 N.Y.S.2d at 750, 191 N.E.2d at 284.
Only Cunningham v. McNair, 48 A.D.2d 546, 370 N.Y.S.2d 577 (1st Dep't 1975) lends support to plaintiff's position on the applicability of New York law. In that case, the court stressed the Legislature's intention to enlarge the vehicle owner's vicarious liability and held Avis-Rent-A-Car ("Avis") liable for an accident in Maryland caused by a vehicle owned by Avis, registered in Virginia and leased in Maryland to a Virginia resident. In Cunningham, *1066 however, a divided court found that no other state had an interest as great as New York's in seeing its law apply. It also relied on the fact that Avis was a nationwide car rental agency that maintained fleets in nearly every state and that, under those circumstances, Avis' place of incorporation or where the car was rented was of little significance. Moreover, Cunningham has been criticized as such a far-reaching application of New York law that it is "presumably a violation of due process." See Herzog, Conflict of Laws, 27 Syracuse L.Rev. 17, 30 (1976), and the discussion in Klippel v. U-Haul Co. of Northeastern Michigan, 759 F.2d 1176, 1181 (4th Cir.1985).
New York automobile insurance laws do not impose such far-reaching coverage even on New York vehicle registrants. Section 311(4)(a) of the New York Vehicle and Traffic Law provides that a car owner's insurance coverage must extend to any claim arising from an accident "within the state of New York, or elsewhere in the United States in North America or the Dominion of Canada ..."
While New York has an interest in protecting innocent victims of automobile accidents, its laws should not be interpreted to provide protection in addition to what the law of France provides, for an injury which occurred in a vehicle having no connection with New York, cf. Klippel v. U-Haul Co. of Northeastern Michigan, supra, at 1183.
Conclusion
Because I find that French law governs the liability of both Renault S.V.S.E. and Renault U.S.A., and that under French law, neither would be liable even if it owned the automobile and had merely leased it to plaintiff, defendants' motions for summary judgment are granted and the complaint is dismissed as against Renault S.V.S.E. and Renault U.S.A.
SO ORDERED.
NOTES
[1] This is a translation from the French which provides as follows:
On est responsable non seulement du dommage que l'on cause par son propre fait, mais encore de celui qui est cause par le fait des personnes dont on doit repondre, ou des choses que l'on a sous sa garde. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2398331/ | 86 F. Supp. 2d 617 (2000)
WASHINGTON LEGAL FOUNDATION, et al.,
v.
TEXAS EQUAL ACCESS TO JUSTICE FOUNDATION, et al.
No. A-94-CA-081 JN.
United States District Court, W.D. Texas, Austin Division.
January 4, 2000.
*618 Steven W. Smith, Law Offices of Steven W. Smith, Austin, TX, Daniel J. Popeo, Richard A. Samp, Washington, DC, for Washington Legal Foundation, William R. Summer, plaintiffs.
Michael J. Mazzone, Dow, Cogburn & Friedman, Houston, TX, for Michael J. Mazzone, plaintiff.
Darrell E. Jordan, Hughes & Luce, L.L.P., Dallas, TX, H. Robert Powell, Hughes & Luce, Austin, TX, Brittan L. Buchanan, Hughes & Luce, L.L.P., Austin, TX, Richard A. Johnston, Hale and Dorr, L.L.P., Washington, DC, Francine Rosenzweig, Hale & Dorr, L.L.P., Boston, MA, Geoffrey S. Stewart, Jones, Day, Reavis & Pogue, Washington, DC, for Texas Equal Access to Justice Foundation, defendant.
H. Robert Powell, Brittan L. Buchanan, Richard A. Johnston, David A. Wilson, Hale and Dorr, L.L.P., Washington, DC, Francine Rosenzweig, Geoffrey S. Stewart, Jones, Day, Reavis & Pogue, Washington, DC, for W. Frank Newton, Chairman, Texas Equal Access to Justice Foundation, defendant.
Darrell E. Jordan, H. Robert Powell, Harry G. Potter, III, Attorney at Law, Austin, TX, Brittan L. Buchanan, Hale and Dorr, L.L.P., Washington, DC, Nancy A. Trease, Assistant Attorney General, Austin, TX, for Thomas R. Phillips, Chief Justice, Raul Gonzales, Justice, Jack Hightower, Justice, Nathan L. Hecht, Justice, Bob Gammage, Justice, Craig T. Enoch, Justice, John Cornyn, Justice, Rose Spector, Justice, defendants.
Rande K. Herrell, Attorney General's Office, Austin, TX, for Supreme Court DFTS, defendant.
Scott J. Atlas, Vinson & Elkins, Houston, TX, J. David Bickham, Jr., Vinson & Elkins, Austin, TX, Robert A. Long, Jr., Caroline M. Brown, Covington & Burling, Washington, DC, Robbi B. Hull, Vinson & Elkins, LLP, Austin, TX, for IOLTA Programs (NAIP), amicus.
ORDER
NOWLIN, District Judge.
Before the Court are: the Justices of the Texas Supreme Court's Motion for Judgment on the Pleadings (Clerk's Doc. No. 78); Plaintiffs' Response to the Supreme Court Justices' Motion for Judgment on the Pleadings (Clerk's Doc. No. 98); and, Reply of the Justices of the Texas Supreme Court to Plaintiffs' Response to Motion for Judgment on the Pleadings (Clerk's Doc. No. 102).
I. Background
The Plaintiffs in this cause of action are: the Washington Legal Foundation, a nonprofit public interest law and policy center; Michael Mazzone, a Texas resident and attorney licensed to practice law by the State Bar of Texas; and William Summers, a Texas resident and consumer of legal services. Plaintiffs bring this case pursuant to 42 U.S.C. § 1983 asserting that Defendants' mandatory Interest on *619 Lawyers' Trust Account ("IOLTA") program violates the First and Fifth Amendments of the United States Constitution. The IOLTA program is implemented and overseen by Defendant the Texas Equal Access to Justice Foundation ("TEAJF"). In 1984, Defendants the Texas Supreme Court Justices adopted Article XI of the Rules of the State Bar of Texas which established the IOLTA program.
By Order dated January 19, 1995, this district court granted summary judgment for the Defendants on the basis that the Plaintiffs could not establish a constitutionally cognizable property interest because, but for the IOLTA program, no interest could be earned on the funds in the IOLTA account. Washington Legal Foundation v. Texas Equal Access to Justice Foundation, 873 F. Supp. 1, 7 (W.D.Tex.1995). The Fifth Circuit reversed this court, concluding that the interest earned on client funds held in IOLTA accounts is a property interest within the reach of the Fifth Amendment. Washington Legal Foundation v. Texas Equal Access to Justice Foundation, 94 F.3d 996 (5th Cir.1996). The Supreme Court affirmed the Fifth Circuit's decision and determined that clients have a "property interest" in the interest income generated by the Texas IOLTA program. Phillips v. Washington Legal Foundation, 524 U.S. 156, 118 S. Ct. 1925, 1934, 141 L. Ed. 2d 174 (1998). This holding was limited to its determination of the existence of a property interest in the interest income. Id. The Supreme Court remanded the case for consideration of whether or not IOLTA funds have been "taken" by the State, as well as the amount, if any, of just compensation due the Plaintiffs. Thus this Court must once again consider the fate of IOLTA. Before the Court may address that issue, the Court must first consider whether the Texas Supreme Court Justice Defendants are immune from suit as they posit in their Motion for Judgment on the Pleadings. In their Motion for Judgment on the Pleadings, the Justices argue that: (a) they are immune from monetary damages asserted against them in their official capacities; (b) they possess legislative immunity for actions taken in a legislative capacity; and (c) that injunctive relief requested by plaintiffs is not yet ripe, and in any event, is also barred by legislative immunity.
II. Motion for Judgment on the Pleadings
A motion brought pursuant to FED. R.CIV.P. 12(c) is designed to dispose of cases where the material facts are not in dispute and a judgment on the merits can be rendered by looking to the substance of the pleadings and any judicially noticed facts. 5A Wright & Miller, Federal Practice & Procedure, § 1367 at 509-10 (1990); see J.M. Blythe Motor Lines Corp. v. Blalock, 310 F.2d 77, 78-79 (5th Cir.1962). The facts of the instant case are not in dispute. A motion brought under FED. R.CIV.P. 12(c) is specifically designed to facilitate this inquiry. 5A Charles A. Wright & Arthur R. Miller, Federal Practice & Procedure, § 1367 at 511 ("The motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted in the pleadings and only questions of law remain.").
Rule 12(c) motions may be filed after the pleadings are closed. Such motions will be treated as a motion for judgment on the pleadings based on a failure to state a claim on which relief may be granted. See National Ass'n of Pharmaceutical Mfrs. v. Ayerst Laboratories, 850 F.2d 904, 909 n. 4 (2d Cir.1988).
III. Monetary Damages
The named Defendant Texas Supreme Court Justices assert that they are absolutely immune from suit and should be dismissed from this cause of action. First, they assert that they possess official capacity immunity from monetary damages. Will v. Michigan Dep't of State Police, 491 U.S. 58, 109 S. Ct. 2304, 105 L. Ed. 2d 45 (1989). The Plaintiffs agree and assert that there are no claims for monetary damages extant against the Supreme Court Justices. In light of this, the Court *620 grants Defendants' Motion for Judgment on the Pleadings with regard to all claims against them for monetary damages.
IV. The Justices' Claims of Legislative Immunity
Plaintiffs however, continue to claim that they are entitled to injunctive relief against the Supreme Court Justice Defendants. Along with their request for declaratory relief that this Court find the IOLTA program unconstitutional, Plaintiffs request that this Court enjoin the currently sitting Texas Supreme Court Justices from "adopting any rules that purport to require attorneys, as a condition for practicing law in Texas, to handle client trust account funds in a manner designed to ensure that interest on those funds will accrue to anyone not designated by the client." See Plaintiffs' Complaint at 15. Plaintiffs further seek to enjoin the Justices from imposing disciplinary sanctions on attorneys who fail to comply with the IOLTA rules. Id.
The Texas Supreme Court Defendants claim that they are absolutely immune from suit for injunctive relief because in adopting the IOLTA rules they were acting in a legislative capacity. Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 731-34, 100 S. Ct. 1967, 64 L. Ed. 2d 641 (1980). Plaintiffs agree that the Justices of the Court enjoy absolute immunity for their legislative acts in adopting IOLTA. Plaintiffs assert that their claims against the Texas Supreme Court Justices are not brought against them in their legislative capacity, but in capacity of the Texas Supreme Court Justices' ability to enforce the IOLTA rules. Id.; Snoeck v. Brussa, 153 F.3d 984 (9th Cir.1998). Plaintiffs assert that the Supreme Court of Texas is a proper defendant in an action to enjoin it from "taking disciplinary action against any attorney for failing to place client trust funds into an IOLTA account." See Complaint at 15.
A. Legislative Immunity
Legislative immunity is derived from the "speech and debate clause" found in the United States Constitution. U.S. Const. art. I, § 6; see also Tenney v. Brandhove, 341 U.S. 367, 372-73, 71 S. Ct. 783, 95 L. Ed. 1019 (1951). The Supreme Court has determined that the Speech or Debate Clause immunizes Congressmen from suits for either prospective relief or damages. Eastland v. United States Servicemen's Fund, 421 U.S. 491, 502-503, 95 S. Ct. 1813, 44 L. Ed. 2d 324 (1975). The purpose of this immunity[1] is to insure that the legislative function may be performed independently without fear of outside interference. Ibid. To preserve legislative independence, the Supreme Court determined that "legislators engaged `in the sphere of legitimate legislative activity,' Tenney v. Brandhove [341 U.S. 367, 376, 71 S. Ct. 783, 95 L. Ed. 1019 (1951)], should be protected not only from the consequences of litigation's results but also from the burden of defending themselves." *621 Dombrowski v. Eastland, 387 U.S. 82, 85, 87 S. Ct. 1425, 18 L. Ed. 2d 577 (1967). Individuals who are not legislators, but who are acting in a capacity comparable to that of a legislator, are also entitled to the immunity. Hughes v. Lipscher, 852 F. Supp. 293, 298 (D.N.J.1994). Not all actions taken by officials with legislative duties, however, are protected by legislative immunity. Hughes v. Tarrant County, 948 F.2d 918, 920 (5th Cir.1991). Legislative immunity protects only those duties that are functionally legislative. Id. Although there is no absolute standard by which to distinguish between legislative and nonlegislative acts, courts have consistently recognized a distinction between the legislative act of establishing a policy, act, or law and the nonlegislative act of enforcing or administering that policy, act, or law. See Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 731-34, 100 S. Ct. 1967, 64 L. Ed. 2d 641 (1980).
B. Supreme Court of Virginia
Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 731-34, 100 S. Ct. 1967, 64 L. Ed. 2d 641 (1980), holds that in the instance of a court promulgating a rule, in that case the Virginia Code of Professional Responsibility, a court acts in its legislative capacity and is therefore immune from suit. However, the Supreme Court goes on to say that, because the Virginia Court possessed independent enforcement power "beyond that of merely adjudicating complaints filed by others and beyond the normal authority of the courts to punish attorneys for contempt," the Virginia Court was not shielded by immunity in its enforcement capacity. Id. The Court's decision hinged on the fact that various sections of the Virginia Code of Professional Responsibility empowered the Virginia Court with "independent power of its own to initiate proceedings against attorneys." Id. at 736, 100 S. Ct. 1967. Thus this Court's decision regarding the immunity of the Supreme Court Justices depends at least in part on whether the Court finds that the Justices have the independent authority to enforce the IOLTA rules.
C. Independent Authority to Enforce IOLTA
Plaintiffs argue that the Supreme Court of the State of Texas retains the independent power to enforce the IOLTA rules for immunity purposes. First, Plaintiffs cite to the Preamble to the Texas Rules of Disciplinary Procedure:
The Supreme Court of Texas has the constitutional and statutory responsibility within the State for lawyer discipline and disability system, and has inherent power to maintain appropriate standards of professional conduct and to dispose of individual cases of lawyer discipline.
See TEX. GOV'T CODE ANN., tit. 2, subtit. G, App A-1 (Vernon 1998). According to the Plaintiffs, the Supreme Court Justices maintain the independent authority to enforce the IOLTA rules, and that for this reason they are appropriate defendants. Although this argument is not without merit, it is ultimately unpersuasive. In Supreme Court of Virginia, the United States Supreme Court's decision that the Virginia Court was not immune was not based only upon its "inherent power to discipline attorneys;" but rather upon the fact that "[the Virginia statute in issue] expressly provides that if the Virginia Court or any other court of record observes any act of unprofessional conduct, it may itself, without any complaint being filed by the State Bar or by any other third party, issue a rule to show cause against the offending attorney." Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 724, 100 S. Ct. 1967, 64 L. Ed. 2d 641 (1980). In the instant case TEAJF and the State Bar play an integral part in the pursuit of attorney compliance with IOLTA. It is these entities that initiate all noncompliance proceedings. See Rules Governing the Operation of the Texas Equal Access *622 to Justice Foundation, Rule 24 (West's Rules of Court 1999). Moreover, the Preamble cited by Plaintiff goes on to state that "the responsibility for administering and supervising lawyer discipline and disability is delegated to the Board of Directors to the State Bar of Texas." See TEX. GOV'T CODE ANN., tit. 2, subtit. G, App A-1 (Vernon 1998). The Court finds that based upon this Plaintiffs' argument is devoid of merit.
D. Rule 24
Rule 24 [2] of the Rules Governing the Operation of the Texas Equal Access to Justice Foundation delineates the procedure an attorney must follow to be compliant with IOLTA. See Rules Governing the Operation of the Texas Equal Access to Justice Foundation, Rule 24 (West's Rules of Court 1999). Plaintiffs argue that the language of Rule 24 makes it clear that the Supreme Court retains the ability to discipline attorneys directly.
Defendants respond that Rule 24 provides no role for the Justices of the Supreme Court in the process of disciplining lawyers for failure to comply with IOLTA. Defendants assert that the Supreme Court cannot independently take action under Rule 24; it can only take action if the Texas Equal Access to Justice Foundation and State Bar take action, which they are capable of doing without any involvement from the Supreme Court of Texas.
Plaintiffs rely on the language in 24(d)(ii) "the attorney shall be immediately suspended as an attorney licensed to practice law in the State of Texas until a compliance statement is filed" as stating that the Supreme Court Justices retain the independent authority to suspend attorneys. Plaintiffs argue that because Rule 24 mandates automatic suspension of any attorney who fails to comply, and does not specifically state that the State Bar or some other entity should suspend the non-compliant attorney, the Court has not delegated this power.
The Court finds it difficult to follow Plaintiffs' reasoning. The Court finds that reading Rule 24, it is apparent that after being notified by the State Bar and at the behest of the State Bar, the Clerk of the Supreme Court of Texas is the individual responsible for suspending noncompliant attorneys. Although the Rule does not directly specify in the clause in issue a subordinate body to perform the ministerial act of suspension, it is clear that the Supreme Court Justices do not themselves perform this act. When read in its entirety, it is evident that after the State Bar notifies the Clerk of the Supreme Court of *623 a lawyer's failure to provide a compliance statement, the Clerk of the Supreme Court is charged with taking action. The Justices themselves are not referred to in the chain of noncompliance. Therefore, the Justices do not have the independent power to enforce Rule 24.
E. Rule 24, Read Along With Rule 25
Plaintiffs further argue that when read along with Rule 25[3], which Plaintiffs allege provides that the Supreme Court is the final arbiter regarding whether an attorney is entitled to an exemption, Rule 24 provides the Justices with independent enforcement power of IOLTA. Defendants assert that this reading is erroneous. Defendants assert that the Texas Supreme Court has no independent enforcement power of this rule. Defendants assert that Supreme Court of Virginia holds that the ability to initiate disciplinary actions deprives the Justices of immunity. Defendants argue that in this case the Supreme Court Justices do not have that ability. This Court agrees.
Moreover, Defendants argue that Plaintiffs reading of Rules 24 and 25 is incorrect. Defendants assert that Plaintiffs are attempting to apply Rule 25 even though it has no relationship to the facts of this case. Rule 25 provides for judicial review of adverse decisions of the Board of Directors of the State Bar when an attorney requests exemption from the IOLTA program, an extension of time to comply, an extension of time to comply with a deficiency notice or an extension of time to file a compliance statement. This rule has no relation to Rule 24 and its command that attorneys who fail to file a compliance statement should be suspended as an attorney licensed to practice in the State of Texas. Therefore these two rules cannot be read in conjunction in order to create an independent enforcement power on behalf of the Supreme Court Justices.
Plaintiffs further rely on a Ninth Circuit case, Snoeck v. Brussa, 153 F.3d 984 (9th Cir.1998), in support of their claims. In that case the Ninth Circuit found that the only proper defendant for a challenge to a rule promulgated by the Nevada Commission on Judicial Discipline was the Nevada Supreme Court. This decision was based upon the fact that the Nevada Supreme Court had the sole authority to enforce the *624 rule by holding violators in contempt of court. Plaintiffs assert that since the Justices adopted Rule 24(d), which provides for the automatic suspension of attorneys who fail to comply with the compliance statement requirements, they have not ceded their independent enforcement power of the IOLTA rules.
First the Court notes that Snoeck is a Ninth Circuit case and thus has no precedential value in this Circuit. The Court further finds that Snoeck is distinguishable from the instant case and from Supreme Court of Virginia. Snoeck deals with Eleventh Amendment immunity and not legislative immunity unlike the instant case and Supreme Court of Virginia. Also, the Court finds that the dissent in that case is instructive in its argument that the members of the Nevada Commission on Judicial Discipline were in fact the proper defendants and not the Supreme Court of Nevada:
In all of these cases, the named officers could, at most, initiate proceedings to enforce the challenged statutewhich is exactly what the Commission does. Those officers had no power to hold wrongdoers in contempt or other wise to impose any punishment. That, to repeat, is the function of the courts. Thus, it is irrelevant that the Commission, like all prosecutorial authorities, cannot actually impose punishment.
Snoeck 153 F.3d at 990.
The Court finds that the independent power to enforce IOLTA does not in fact lie with the Justices of the Supreme Court of Texas and that therefore they are immune pursuant to Supreme Court of Virginia v. Consumers Union of the United States, Inc., 446 U.S. 719, 731-34, 100 S. Ct. 1967, 64 L. Ed. 2d 641 (1980). The Court finds the Justices of the Supreme Court of Texas are entitled to legislative immunity in the face of Plaintiffs' claims against them. The Texas Supreme Court Justices, unlike those in Supreme Court of Virginia, do not possess the independent power to initiate disciplinary actions against attorneys. Since the Texas Supreme Court Justice Defendants do not possess independent enforcement powers the Court finds they are absolutely immune pursuant to Supreme Court of Virginia.
V. Case or Controversy
Since the Court has found that the Justices possess legislative immunity, it is unnecessary to address their assertions regarding whether or not this case presents a justiciable case or controversy pursuant to Article III of the Constitution.
VI. Order
IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that the Supreme Court Justices' Motion for Judgment on the Pleadings (Clerk's Doc. No. 78) is hereby GRANTED.
IT IS FURTHER ORDERED that all of Plaintiffs' claims against the named Supreme Court Defendants, Defendants Thomas R. Phillips, Raul Gonzales, Jack Hightower, Nathan L. Hecht, Lloyd A. Doggett, Bob Gammage, Craig Enoch, John Cornyn, Rose Spector, and the individuals currently serving on the Texas Supreme Court are hereby DISMISSED.
NOTES
[1] Legislative immunity is a different concept from Eleventh Amendment immunity. The Eleventh Amendment prohibits the federal courts from entertaining "any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. CONST. AMEND. XI. The bar imposed by the Eleventh Amendment has been extended, by judicial construction, to suits brought against states by their own citizens. See Hans v. Louisiana, 134 U.S. 1, 10 S. Ct. 504, 33 L. Ed. 842 (1890); see also Edelman v. Jordan, 415 U.S. 651, 662, 94 S. Ct. 1347, 39 L. Ed. 2d 662 (1974). The Eleventh Amendment bars suits brought directly against a state, absent the state's consent, irrespective of the nature of the relief sought. See Hutto v. Finney, 437 U.S. 678, 700, 98 S. Ct. 2565, 57 L. Ed. 2d 522 (1978); see also Alabama v. Pugh, 438 U.S. 781, 98 S. Ct. 3057, 57 L. Ed. 2d 1114 (1978). The Eleventh Amendment does not, however, bar suits seeking declaratory or injunctive relief against state officers. See Ex Parte Young, 209 U.S. 123, 28 S. Ct. 441, 52 L. Ed. 714 (1908). The Eleventh Amendment is jurisdictional in the sense that it limits the federal court's power, and therefore can be raised at any stage in the proceedings. Calderon v. Ashmus, 523 U.S. 740, 118 S. Ct. 1694, 140 L. Ed. 2d 970 (1998).
[2] RULE 24. COMPLIANCE
(a) On or after June 1 of each year, all attorneys licensed by the Supreme Court of Texas shall report IOLTA compliance in a manner to be prescribed by the Texas Equal Access to Justice Foundation and the State Bar of Texas. Such compliance statements may require such information as is deemed reasonably necessary by the Foundation and the State Bar of Texas and shall be signed by the reporting attorney.
(b) Each attorney must complete an annual compliance statement and return it to the Foundation by the date stated on the compliance statement. If the compliance statement is timely filed, indicating compliance, there will be no acknowledgement. The presumption of compliance after timely filing shall obtain, absent some evidence to the contrary.
(c) Should a compliance statement filed by an attorney fail to evidence compliance, the Foundation shall contact the attorney and attempt to resolve administratively the non-compliance.
(d) The Foundation shall furnish annually to the State Bar of Texas a list of all attorneys licensed by The Supreme Court of Texas (i) who have not timely filed a compliance statement or (ii) as to whom the Foundation has been unable administratively to resolve any impediment to the proper filing of a compliance statement. The State Bar of Texas shall send to each person so reported, by certified mail, return receipt requested, a non-compliance notice. Should the attorney fail or refuse to file the compliance statement within thirty (30) days of such notice, the State Bar of Texas shall so notify the Clerk of The Supreme Court of Texas, and the attorney shall be immediately suspended as an attorney licensed to practice law in the State of Texas until a compliance statement is filed.
[3] RULE 25. REVIEW AND APPEAL
(a) An attorney may file a written request based upon good cause for exemption from compliance with any of the requirements of these Rules, an extension of time for compliance, an extension of time to comply with a deficiency notice, or an extension of time to file an annual compliance statement. Such request shall be reviewed and determined by a Committee established by the State Bar or by such committee as the chairperson may, from time to time, designate. The attorney shall be promptly notified of the decision by the Committee.
(b) "Good cause" shall exist when an attorney is unable to comply with this Article because of extraordinary hardship or extenuating circumstances which were not willful on the part of the attorney and were beyond his or her control.
(c) Should the decision of the Committee be adverse to the attorney, the attorney may request the Board of Directors of the State Bar to review the decision by making such request in writing to the Executive Director of the State Bar within thirty days of notification of the decision of the Committee. The Chairman of the Board may appoint a committee of the Board to review the decision of the Committee and make a recommendation to the Board. The decision shall be made by the Board.
(d) Should the decision of the Board be adverse to the attorney, the attorney may appeal such decision by filing suit within thirty days of notification of the Board's action, failing which the decision of the Board shall be final. Such suit shall be brought against the State Bar, and shall be filed in a district court in Travis County, Texas. Trial shall be de novo, but the burden of proof shall be on the attorney appealing, the burden shall be by a preponderance of the evidence, and the attorney shall prove the existence of "good cause" as defined herein. The trial court shall proceed to hear and determine the issue without a jury. Either party shall have a right to appeal
(e) Any suspension of an attorney shall be vacated during the administrative review process and while any suit filed is pending. | 01-03-2023 | 10-30-2013 |
https://www.courtlistener.com/api/rest/v3/opinions/2498864/ | 274 P.3d 466 (2012)
In re 2011 REDISTRICTING CASES.
No. S-14441.
Supreme Court of Alaska.
March 14, 2012.
Before: CARPENETI, Chief Justice, Matthews, Senior Justice, Fabe, Winfree, and Stowers, Justices.
Order
IT IS ORDERED:
1. Both petitions for review of the superior court's orders regarding the Redistricting Board's Proclamation Plan of June 13, 2011, are GRANTED.[1]
2. This case is REMANDED to the superior court with instructions to further remand to the Board to formulate a plan in accordance with this order.
3. At the outset, we commend the Board for its diligence and dedication throughout the redistricting process. The record demonstrates that the Board endeavored to weigh competing constitutional and statutory provisions, considered a great deal of input from Alaska's citizens, and sought to create a plan that would accommodate both the Alaska Constitution and the federal Voting Rights Act. The redistricting process in Alaska is difficult, and, in this case, the Board made conscientious efforts in discharging its duties.[2]
*467 4. We also commend the superior court, the Honorable Michael McConahy presiding, for its expedited processing of the challenges to the Board's Proclamation Plan. After extensive motion practice the court held a trial beginning on January 9, 2012 and concluding on January 17, 2012. Following trial the court issued a 136-page Memorandum Decision and Order that is impressively thoughtful and thorough.
5. In Hickel v. Southeast Conference, we considered a Proclamation Plan that, like the Plan in this case, "accorded minority voting strength priority above other factors, including the requirements of article VI, section 6 of the Alaska Constitution."[3] We cautioned that while compliance with the Voting Rights Act takes precedence over compliance with the Alaska Constitution, "[t]he Voting Rights Act need not be elevated in stature so that the requirements of the Alaska Constitution are unnecessarily compromised."[4] We then described the process the Board must follow to ensure that our constitutional redistricting principles are adhered to as closely as possible. After receiving the decennial census data, "[t]he Board must first design a reapportionment plan based on the requirements of the Alaska Constitution. That plan then must be tested against the Voting Rights Act. A reapportionment plan may minimize article VI, section 6 requirements when minimization is the only means available to satisfy Voting Rights Act requirements."[5]
6. It is undisputed that the Board began redistricting in March and April of 2011 by focusing on complying with the Voting Rights Act, thereby ignoring the process we mandated in Hickel. This focus resulted in the creation of five effective Native house districts, one "influence" house district, and three effective Native senate districts. The superior court found that two of these house districts violated the Alaska Constitution and were not necessary to achieve Voting Rights Act compliance. In his petition, Riley alleges other constitutional defects, including one related to the Board's use of excess population from the Fairbanks North Star Borough to complete one of these Native districts. And the superior court expressed unease with the "influence" district created in the southeast and invited us to consider its validity sua sponte.
7. Because it did not follow the Hickel process, the Board cannot meaningfully demonstrate that the Proclamation Plan's Alaska constitutional deficiencies were necessitated by Voting Rights Act compliance, nor can we reliably decide that question. The Hickel process provides the Board with defined procedural steps that, when followed, ensure redistricting satisfies federal law without doing unnecessary violence to the Alaska Constitution. The Board must first design a plan focusing on compliance with the article VI, section 6 requirements of contiguity, compactness, and relative socioeconomic integration; it may consider local government boundaries and should use drainage and other geographic features in describing boundaries wherever possible. Once such a plan is drawn, the Board must determine whether it complies with the Voting Rights Act and, to the extent it is noncompliant, make revisions that deviate from the Alaska Constitution *468 when deviation is "the only means available to satisfy Voting Rights Act requirements."[6]
8. The Hickel process assures compliance with the Alaska Constitution's requirements concerning redistricting to the greatest extent possible. The Hickel process also diminishes the potential for partisan gerrymandering and promotes trust in government. We have previously noted that the article VI, section 6 requirements were designed to prevent gerrymandering by ensuring "that the election district boundaries fall along natural or logical lines rather than political or other lines."[7] A redistricting plan that substantially deviates from these constitutional requirements undermines trust in the process.
9. Cases decided by the United States Supreme Court subsequent to Hickel have made adherence to the Hickel process even more critical. In a series of cases, the Supreme Court has established that under the Voting Rights Act, a jurisdiction cannot unnecessarily depart from traditional redistricting principles[8] to draw districts using race as "the predominant, overriding factor."[9] Following the Hickel process will facilitate compliance with federal constitutional law by ensuring that traditional redistricting principles are not "subordinated to race."[10]
10. We recognize that the Board is faced with a difficult task in attempting to harmonize the requirements of the Alaska Constitution and the Voting Rights Act. We have previously characterized the redistricting process in Alaska as "a task of `Herculean proportions,'"[11] and we do not diminish the considerable efforts made by the Board in this case. But these difficulties do not limit the Board's responsibility to create a constitutionally compliant redistricting plan, nor do they "absolve this court of its duty to independently measure each district against constitutional standards."[12] Moreover, advances in computer software appear to have streamlined the redistricting process and reduced the burden felt by the Board in past cycles.[13] The Hickel process is designed to "ensure that the requirements of article VI, section 6 of the Alaska Constitution are not unnecessarily compromised by the Voting Rights Act"[14]; it may not be disregarded for reasons of expediency when drafting a permanent plan.
11. On remand, the Board must follow the Hickel process. If deviation from the Alaska Constitution is the only means available to satisfy the Voting Rights Act's requirements, the Board must endeavor to adopt a redistricting plan that includes the least deviation reasonably necessary to satisfy the Act, thereby preserving the mandates of the Alaska Constitution to the greatest extent possible.[15]
12. Because the new plan eventually formulated by the Board may moot the claims raised in this case, we decline to decide them at this time with the exceptions set out in the following paragraphs. If the Board is unable *469 to draft a plan that complies with this order in time for the 2012 elections, it may petition this court for an order that the 2012 elections be conducted using the Proclamation Plan as an interim plan.[16] But legislative districts for subsequent elections will be defined by the plan ultimately arrived at by the Board after following the Hickel process.
13. We address one legal question raised by Riley: whether the superior court erred in ruling that "the anti-dilution rule cannot be violated if the City [of Fairbanks] cannot support a senate district based on its population." It is undisputed that the population of the City of Fairbanks makes up 89 percent of an ideal senate district. That fact does not preclude Riley's voter dilution claim. Indeed, in Kenai Peninsula Borough v. State, we allowed a group of Anchorage voters making up only 51 percent of an ideal senate district to bring a similar voter dilution claim, indicating that ".51 senate seat underrepresentation ... tends toward disproportionality."[17] The superior court's legal ruling was therefore error, and, based on this incorrect premise, the superior court did not proceed to evaluate the merits of Riley's voter dilution claim. Depending on how the districts are redrawn on remand, this issue may or may not recur. But if it does, and a similar challenge is raised, the superior court will need to make findings on the elements of a voter dilution claim, including whether a politically salient class of voters existed and whether the Board intentionally discriminated against that class.[18]
14. We also address one legal question raised by the Board: whether the superior court erred in ruling that House Districts 37 and 38 did not comply with the Alaska Constitution based on the rationale that "all five of the [Native] effective House Districts have more Native VAP [voting age population] than necessary." Given the under-population of the five Native effective house districts, this particular rationale does not justify concluding that Districts 37 and 38 were not necessary under the Voting Rights Act because, as the superior court elsewhere concluded, "[i]t was not a matter of whether excess population needed to be added to rural Native districts but only a matter of where to access this excess urban population...."
Entered by direction of the court.
NOTES
[1] One petition for review was filed by George Riley and Ron Dearborn (Riley), plaintiffs in the superior court. The Alaska Redistricting Board, the defendant in the superior court, filed a separate petition for review.
[2] The Redistricting Board is an independent entity created under article VI, section 8 of the Alaska Constitution. It consists of five members, two appointed by the Governor, one appointed by the presiding officer of the Senate, one appointed by the presiding officer of the House of Representatives, and one appointed by the Chief Justice of the Supreme Court.
Under article VI, section 10 of the Alaska Constitution, the Board is required to adopt one or more proposed redistricting plans within 30 days after the official reporting of the decennial census. The Board is required to hold public hearings on the proposed plan and no later than 90 days after the reporting of the decennial census the Board must adopt a final plan and issue a Proclamation of Redistricting.
Under article VI, section 11 any qualified voter may apply to the superior court to correct any error in redistricting within 30 days following the adoption of the final redistricting plan. On appeal from the superior court this court is to review the cause "on the law and the facts." Under section 11, all dispositions by the superior court and this court should be expedited and shall have priority over all other matters. Section 11 also provides that "upon a final judicial decision that a plan is invalid, the matter shall be returned to the Board for correction and development of a new plan. If that plan is declared invalid, the matter may be referred again to the Board."
[3] 846 P.2d 38, 51 n. 22 (Alaska 1992).
[4] Id.
[5] Id.
[6] Id.
[7] Id. at 45.
[8] Bush v. Vera, 517 U.S. 952, 959-60, 116 S. Ct. 1941, 135 L. Ed. 2d 248 (1996).
[9] Miller v. Johnson, 515 U.S. 900, 920, 115 S. Ct. 2475, 132 L. Ed. 2d 762 (1995).
[10] Bush, 517 U.S. at 959, 116 S. Ct. 1941 (internal citation and quotation marks omitted).
[11] In re 2001 Redistricting Cases, 44 P.3d 141, 147 (Alaska 2002) (quoting Egan v. Hammond, 502 P.2d 856, 865-66 (Alaska 1972)).
[12] Id.
[13] See Holt v. 2011 Legislative Reapportionment Comm'n, ___ Pa. ___, ___ A.3d ___ (2012) (Pa. 2012) ("[T]he development of computer technology appears to have substantially allayed the initial, extraordinary difficulties in achieving acceptable levels of population deviation without doing unnecessary violence to other constitutional commands.").
[14] Hickel v. Se. Conference, 846 P.2d 38, 51 n. 22 (Alaska 1992).
[15] In order to expedite further judicial review we recommend that the Board make findings, in furtherance of the Hickel process, that the initially designed plan complies with the requirements of the Alaska Constitution, that it either does or does not comply with the Voting Rights Act and, if the latter, that the new Proclamation Plan ultimately adopted by the Board deviates from the requirements of the Alaska Constitution to the least degree reasonably necessary to ensure compliance with the Voting Rights Act.
[16] In such case we would expect the Board to have modified the Proclamation Plan with respect to House Districts 1 and 2 as ordered by the superior court because those modifications are not contested.
[17] 743 P.2d 1352, 1373 (Alaska 1987).
[18] See In re 2001 Redistricting Cases, 44 P.3d 141, 144 (Alaska 2002). | 01-03-2023 | 10-30-2013 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.