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UNITED STATES ARMY COURT OF CRIMINAL APPEALS
Before
KERN, CARLTON, and YOB
Appellate Military Judges
UNITED STATES, Appellee
v.
Private First Class MICAH S. ROCHET
United States Army, Appellant
ARMY 20100732
Headquarters, Fort Carson
Mark Bridges, Military Judge
Colonel Randy T. Kirkvold, Staff Judge Advocate (pretrial)
Major Jeffrey S. Thurnher, Acting Staff Judge Advocate (post-trial)
For Appellant: Lieutenant Colonel Imogene M. Jamison, JA; Major Laura R.
Kesler, JA; Captain Richard M. Gallagher, JA (on brief).
For Appellee: Colonel Michael Mulligan, JA; Major Amber Williams, JA;
Captain Kenneth W. Borgnino, JA; Captain Christopher L. Simons, JA (on
brief).
29 July 2011
---------------------------------
SUMMARY DISPOSITION
---------------------------------
Per Curiam:
A military judge sitting as a general court-martial convicted
appellant, pursuant to his pleas, of absence without leave and possession
of child pornography, in violation of Articles 86 and 134, Uniform Code of
Military Justice [hereinafter UCMJ], 10 U.S.C. §§ 866 and 934 (2008). The
military judge sentenced appellant to reduction to E1, confinement for
eleven months, and a bad conduct discharge. The convening authority
approved the sentence as adjudged.
On appeal, appellant raised a single assignment of error regarding the
possession of child pornography specification of which he was convicted.[1]
That specification alleged appellant knowingly and wrongfully possessed a
laptop computer containing [numerous] images and files of child
pornography. The stipulation of fact, admitted into evidence pursuant to
appellant’s guilty plea, indicates that there were 78 images and 9 videos
on the laptop computer of apparent minors engaging in sexually explicit
conduct. Appellant now takes issue with one image, which was listed as a
representative example within the specification:
9yo_nude_preteen_girlrealkiddymov preteen lolita ddoggpornincest sister
daddy kiddy little girl teen kiddie underage qwerty child porn illegal rape
dad.jpg. The image under this file name depicted a topless young girl
wearing a swimsuit bottom in a pose that appellant argues is not sexual.
We review a military judge’s decision to accept a plea of guilty “for
an abuse of discretion and questions of law arising from the guilty plea de
novo.” United States v. Inabinette, 66 M.J. 320, 322 (C.A.A.F. 2008). A
guilty plea will be set aside on appeal only if an appellant can show a
substantial basis in law or fact to question the plea. Id. (citing United
States v. Prater, 32 M.J. 433, 436 (C.M.A. 1991)). The Court applies this
“substantial basis” test by determining whether the record raises a
substantial question about the factual basis of appellant’s guilty plea or
the law underpinning the plea. Id. See Article 45, UCMJ; Rule for Court-
Martial 910(e).
During the providence inquiry, the military judge clarified and
appellant affirmed his understanding that Specification 1 of Charge II and
his plea of guilty to that specification were for many more images and
videos than just the file names listed in the specification. Appellant
affirmed that the file names listed in the specification were just some
examples. Of the numerous images and videos contained on the laptop for
which the appellant was charged, appellant contests only the one JPG image
as not constituting child pornography and argues that the military judge
failed to question the appellant on his belief as to why that particular
image constituted child pornography. Our review also finds the military
judge failed to question the appellant as to why that particular image
constituted child pornography. Therefore we find the military judge’s
inquiry factually deficient.
The court affirms only so much of the finding of Specification 1 of
Charge II as finds the appellant did, between on or about 1 January 2009
and on or about 21 May 2009, at Fort Carson, Colorado, knowingly and
wrongfully possess an HP Laptop Computer, SN: 2CE848178S, containing images
and video(s) files of child pornography, including: 9yo littlegirl
displays her sweet yng cunt – PART2 – Pussy licking now (2min7sec)(Orig
duogil l)-real kiddymov Lolita preteen young incest kiddie porno.sex xxx
ddoggprn.mpg, which conduct was prejudicial to good order and discipline or
of a nature likely to bring discredit upon the armed forces. The remaining
findings of guilty are affirmed.
Reassessing the sentence on the basis of the error noted, the entire
record, and in accordance with the principles of United States v. Sales, 22
M.J. 305 (C.M.A. 1986) and United States v. Moffeit, 63 M.J 40 (C.A.A.F
2006), to include the factors identified by Judge Baker in his concurring
opinion, the court affirms the sentence as approved by the convening
authority.
FOR THE COURT:
MALCOLM H. SQUIRES, JR.
Clerk of Court
-----------------------
[1] Appellant assigned the following error: THE MILITARY JUDGE ABUSED HIS
DISCRETION IN ACCEPTING APPELLANT’S GUILTY PLEA IN FULL BECAUSE THE “JPG”
IMAGE ALLEGED IN SPECIFICATION 1 OF CHARGE II DID NOT CONTAIN CHILD
PORNOGRAPHY.
|
No. 1–00–1796 First Division
October 15, 2002
THE PEOPLE OF THE STATE OF ILLINOIS ) Appeal from the
) Circuit Court of
Plaintiff-Appellee, ) Cook County.
)
) 99 CR 7770
)
IGNACIO BATREZ, ) The Honorable
) Edward M. Fiala, Jr.,
Defendant-Appellant. ) Judge Presiding.
JUSTICE COHEN delivered the opinion of the court:
Following a bench trial, defendant Ignacio Batrez was found legally accountable (720 ILCS 5/5-2(c) (West 1998)) for the offense of delivery of a controlled substance (cocaine) in an amount greater than 15 but less than 100 grams (720 ILCS 570/401(a)(2)(A) (West 1998)). Defendant was sentenced to six years' imprisonment. On appeal, defendant argues that he is entitled to a new trial because: (1) the trial court erred in permitting a police officer to testify as to the substance of her telephone conversation with defendant where the State failed to properly disclose the substance of that conversation to defendant prior to trial pursuant to Supreme Court Rule 412(a)(ii) (134 Ill. 2d R. 412(a)(ii)); (2) defendant was deprived of effective assistance of counsel where counsel failed to investigate the substance of the telephone conversation and such ineffectiveness rendered defendant's jury waiver invalid; and (3) the trial court erred in admitting, pursuant to the coconspirator exception to the hearsay rule, a statement made by the codefendant. For the following reasons, we affirm.
BACKGROUND
Defendant and codefendant Jose Pico were charged by indictment with the unlawful delivery of more than 15 but less than 100 grams of a controlled substance (cocaine) (720 ILCS 570/401(a)(ii)(A) (West 1998)). Defendant and Pico were tried separately.
At the beginning of defendant's trial, defense counsel indicated that defendant wished to waive his right to a jury trial. Upon questioning by the trial judge, defendant acknowledged both that his lawyers had explained "what a jury is" and that he understood "what a jury is." Defendant confirmed that he wished to give up his right to a jury. Defendant acknowledged his signature on the jury waiver form and stated that his lawyers had explained the waiver form to him. The trial court accepted defendant's jury waiver and the matter proceeded to a bench trial.
Officer Donna Salvage testified that on September 10, 1998, she was performing undercover work in controlled narcotics transactions as part of a team. During the afternoon of September 10, 1998, Officer Salvage telephoned defendant, whom she knew by the nickname "Nacho." Officer Salvage testified that, at the time of this telephone call "we
(footnote: 1) were on the street in a prearranged location near the area of the buy." The prosecution then asked Officer Salvage to indicate the nature of her telephone conversation with defendant. Defense counsel objected, arguing that the State had failed to disclose the substance of the telephone conversation pursuant to Supreme Court Rule 412. The State responded that "the summary of the conversation" was contained within Officer Salvage's police report, which had been disclosed to defendant prior to trial.
Officer Salvage's police report states in relevant part as follows:
"After a prearranged phone call between UCO Salvage and [defendant,] a mobile and stationary surveillance had been established in the area, this UCO then approached the area and parked her UCV at the prearranged parking lot (4713 S. Justine). UCO waited in this lot approx. 15 minutes from phone call, when UCO Salvage was met by [defendant] and [codefendant] Pico who pulled up in a white 4 door car. UCO Salvage was approached by both offenders and asked by [defendant] 'how much coke (street term for cocaine) do you want'? [
sic
] UCO Salvage said, '3 oz's['] (street term for 28 grams which is an ounce of cocaine)."
The trial court overruled defendant's objection, noting:
"I have considered first of all I don't see a surprise to the defense, in that they were apprized that there had been a conversation between this witness and the defendant. And thereafter, something else was set up. I think that you would have the opportunity to interview this witness if you chose to do so. And I don't see any prejudice."
Officer Salvage then testified that "the nature of the phone conversation" with defendant was "[s]etting up a drug deal for that day." Officer Salvage testified that she asked defendant if he could "provide [her] with some cocaine." According to Officer Salvage, defendant agreed to provide the cocaine, told Officer Salvage "the amount that it would cost," and selected a time and location for the transaction. Officer Salvage then proceeded to the arranged location in her undercover vehicle. Defendant arrived at the location a short time later driving a white Chevrolet Celebrity (hereafter, the Chevrolet) with codefendant Pico sitting in the front passenger seat. Defendant and Pico exited the Chevrolet and approached Officer Salvage. Defendant asked Officer Salvage how much cocaine she needed and she asked for three ounces (approximately 84 grams). Defendant then told Officer Salvage to "give [him] five minutes and [he would] be right back." Pico and defendant then left in the Chevrolet.
Approximately five minutes later, Pico returned alone in the white Chevrolet, parked and motioned for Officer Salvage to come to the vehicle. Officer Salvage approached and entered the Chevrolet. The prosecuting attorney asked Officer Salvage about a discussion she then had with Pico. Defense counsel objected, arguing that any statements made by Pico were inadmissible hearsay and that the State had not presented sufficient independent evidence of a conspiracy to permit admission of Pico's statement pursuant to the coconspirator exception to the hearsay rule. The trial judge overruled the objection. Officer Salvage proceeded to testify that she asked Pico, "Where the hell is [defendant]?" and Pico responded, "[H]e had shit to do, and *** I am his partner. You can deal with me." Defense counsel renewed his objection, citing
People v. Deatherage
, 122 Ill. App. 3d 620 (1984) as an analogous case. After reviewing
Deatherage,
the trial judge found that a joint venture between Pico and defendant had been established by a preponderance of the evidence and again overruled the objection.
Finally, Officer Salvage testified that Pico exited the Chevrolet, removed a black plastic bag from behind the rear driver's side hubcap, and returned to the driver's seat. Pico then removed three smaller, clear plastic bags which he tendered to Officer Salvage in exchange for $2,500 cash. Officer Salvage returned to her vehicle with the plastic bags, waited for Pico to leave, and then radioed her team that "it was a positive narcotics transaction." The three plastic bags were later inventoried at the police station.
Officer Salvage identified several photographs taken by a surveillance team that were then admitted into evidence. Officer Salvage testified that the first photograph depicted defendant and Pico in the white Chevrolet when they first arrived at the scene of the narcotics transaction. The second photograph, taken from behind, also depicted defendant and Pico in the Chevrolet. A third photograph revealed the license plate of the white Chevrolet. These photographs were not included in the record on appeal.
On cross-examination, Officer Salvage was unable to recall the telephone number she had used to call defendant to arrange the narcotics transaction and admitted that she had no documentary evidence that the call had been placed. Officer Salvage further admitted that she did not summarize the content of her telephone conversation with defendant in her written police report. After defense counsel asked if Officer Salvage had seen any surveillance photograph corroborating her testimony that defendant and Pico approached the officer's vehicle to negotiate the transaction, the parties stipulated that no such photograph existed.
Finally, the State submitted into evidence a certified record from the office of the Secretary of State demonstrating that the white Chevrolet belonged to defendant. The parties then stipulated that, if called, forensic scientist Fumi Moka would testify that the plastic bags inventoried by Officer Salvage contained 84.9 grams of a chunky powder which tested positive for cocaine. The State rested.
The trial court denied defendant's motion for a directed verdict.
Testifying on his own behalf, defendant denied having a telephone conversation on September 10, 1998, with Officer Salvage regarding a narcotics transaction, denied going to the location of the transaction with Pico receiving any money from Pico on that date, and denied that he owned the white Chevrolet on that date. Defendant testified that he had sold the white Chevrolet to Pico in August 1998 but, because Pico was paying installments on the price of the vehicle, defendant had not yet transferred registration of the title to Pico. Defendant denied that he was depicted in the State's photographic exhibits, although he acknowledged that the person depicted "may look like" him. Finally, defendant testified to a series of occurrences that took place in August and September 1999 in which defendant, his wife and his two children were photographed in public places by people they did not know. On cross-examination, defendant testified that Pico had returned the Chevrolet to defendant after the car broke down and that the vehicle is currently stored at defendant's father's house. The defense then rested.
The trial court found defendant guilty based on accountability (720 ILCS 5/5-2(c) (West 1998)) of delivery of a controlled substance (cocaine) in an amount greater than 15 but less than 100 grams (720 ILCS 570/401(a)(2)(A) (West 1998)). The trial court denied defendant's posttrial motion for a new trial and sentenced him to six years' imprisonment. Defendant appeals.
ANALYSIS
I. Failure to Disclose
Defendant first argues that the trial court erred in allowing Officer Salvage to testify regarding the substance of her telephone conversation with defendant where the State failed to properly disclose the substance of that conversation despite defendant's written motion pursuant to Supreme Court Rule 412 (134 Ill. 2d R. 412). Supreme Court Rule 412(a)(ii) requires the State, upon written motion of defendant, to disclose "any written or recorded statements and the substance of any oral statements made by the accused *** and a list of witnesses to the making and acknowledgment of such statements." 134 Ill. 2d R. 412(a)(ii). Supreme Court Rule 412(a)(ii) was promulgated to protect a defendant against surprise, unfairness, and inadequate preparation.
People v. Cisewski
, 118 Ill. 2d 163, 172 (1987). While Supreme Court Rule 412(a)(ii) does not require the prosecution to disclose a defendant's oral statements verbatim, the State is obligated to disclose the substance of those statements.
People v. Hemphill
, 230 Ill. App. 3d 453, 464 (1992).
A. Waiver
The State asserts that defendant, by failing to request a continuance, has waived any claim that the trial court erred in permitting testimony regarding the telephone conversation. Our supreme court in
People v. Robinson
, 157 Ill. 2d 68, 78-79 (1993), found that a defendant waived the issue of late disclosure by failing to request a continuance where a continuance would have remedied the problem of late disclosure. The court reasoned that a "defendant cannot request only the most drastic measures, such as either an immediate mistrial or the total exclusion of testimony by a witness, and then on appeal argue that he is entitled to a new trial when these requests are not granted."
Robinson
, 157 Ill. 2d at 78-79. Defendant contends that "the
Robinson
decision cites no authority for its holding and should be limited to its facts." We note, however, that
Robinson
is a decision of our supreme court, which we are bound to follow.
People v. Tisdel
, 316 Ill. App. 3d 1143, 1155 (2000). As nothing in
Robinson
suggests that the court's holding is limited to the facts of that case and because we are bound to follow supreme court precedent, we find
Robinson
directly applicable in this case and conclude that the issue is waived.
Robinson
, 157 Ill. 2d at 78-79.
Defendant further responds that he "gets around the waiver issue" by claiming his counsel was ineffective for failing to request a continuance. Defendant, however, did not assert in his opening brief that counsel was ineffective for failing to request a continuance but only that counsel was ineffective for failing to investigate the substance of the telephone conversation. Arguments not raised in the appellant's opening brief are waived. 177 Ill. 2d R. 341(e)(7);
People v. Berg
, 39 Ill. App. 3d 455, 457 (1976).
B. Prejudice
Even had defendant properly preserved for review his challenge based on the State's failure to disclose the telephone statement, he would not have prevailed. It must be noted, we agree with defendant that Officer Salvage's police report clearly did not satisfy the State's burden under Supreme Court Rule 412(a)(ii). The record demonstrates that Officer Salvage's report disclosed neither the substance of defendant's telephone statement nor a list of witnesses to the making or acknowledgment of the statement, as required under Rule 412(a)(ii). Indeed, Officer Salvage expressly admitted at trial that she did not summarize the telephone conversation in her police report. The State's suggestion that the substance of the conversation could be inferred from the report's description of the circumstances which developed immediately following the conversation is not well taken. Supreme Court Rule 412(a)(ii) requires the State to disclose–not merely hint at–the substance of a defendant's oral statements. See
People v. Pasch
, 152 Ill. 2d 133, 193 (1992) ("Rule 412 was not designed to require defense counsel to make assumptions ***.") "However, the failure to comply with discovery requirements does not in all instances necessitate a new trial."
Cisewski
, 118 Ill. 2d at 172.
"A new trial should only be granted if the defendant is prejudiced by the discovery violation and the trial court failed to eliminate the prejudice."
Cisewski
, 118 Ill. 2d at 172. The burden of showing surprise or prejudice is upon the defendant.
Robinson
, 157 Ill. 2d at 78. Among the factors to be considered in determining whether a new trial is warranted are the closeness of the evidence, the strength of the undisclosed evidence, and the likelihood that prior notice could have helped the defense discredit the evidence.
Cisewski
, 118 Ill. 2d at 172.
Here, the evidence of defendant's guilt was not close. Defendant argues that the case turned on a credibility contest between defendant and Officer Salvage. The record, however, reflects that no evidence was presented corroborating defendant's testimony. In contrast, Officer Salvage's testimony was corroborated by: (1) certified records demonstrating defendant's ownership of the white Chevrolet Celebrity used in the narcotics transaction; (2) defendant's own testimony that the Chevrolet was in his possession and stored at his father's house at the time of trial; and (3) photographs depicting defendant in the driver's seat of the white Chevrolet at the scene of the crime. Although defendant testified that the photographs only depicted someone who "look[ed] like" him, neither the photographs nor evidence of defendant's appearance at the time of trial was made part of the record on appeal. Any doubts arising from the incompleteness of the record will be construed against defendant whose responsibility it was as appellant to present a complete record on review.
People v. Adams
, 128 Ill. App. 3d 725, 729 (1984);
Foutch v. O'Bryant
, 99 Ill. 2d 389, 391-92 (1984).
Furthermore, the evidence of defendant's telephone statements was not particularly damaging. Although the statements indicated that defendant agreed to deliver cocaine to Officer Salvage at a designated time and place, this evidence was merely cumulative. Defendant's agreement to deliver cocaine was independently established by Officer's Salvage's testimony that: (1) defendant approached her vehicle, asked "how much cocaine do you need?"; and (2) when Officer Salvage told defendant she wanted three ounces, defendant responded, "give me five minutes and I will be right back.".
Incredibly, defendant suggests that without the statement made in the telephone conversation, the question in the police report as to how much "coke" Officer Salvage wanted was "meaningless because, without the non-disclosed [
sic
]
statement evidencing knowledge of the illicit nature of the transaction, the State cannot prove that the 'coke' statement was made with the intent to promote or facilitate the offense." This court, however, is hardly so naive as to entertain a belief that defendant was offering to sell three ounces of a brand name cola beverage or bituminous coal residue to a random motorist. See,
e.g.
, American Heritage Dictionary 290 (2d College ed. 1982) (defining "coke" as: (1) a trademark for a soft drink; (2) a solid carbonaceous residue obtained from bituminous coal; or (3) slang for cocaine).
Finally, defendant failed to establish any likelihood that earlier disclosure would have helped him to discredit the evidence against him. In arguing that he was prejudiced, defendant focuses on the damaging nature of the testimony, arguing that "[w]ithout such evidence, [defendant] is not accountable for a transaction completed by Mr. Pico." Our inquiry, however, is not whether the evidence itself was damaging (in this sense, all evidence tending to establish guilt is "prejudicial") but rather whether defendant was prejudiced by the State's failure to properly disclose the evidence prior to trial.
Cisewski
, 118 Ill. 2d at 172 ("A new trial should only be granted if the defendant is prejudiced
by the discovery violation
***" (emphasis added)). Defendant does not suggest how earlier disclosure would have enabled him to discredit Officer Salvage's testimony. Indeed, defense counsel's failure to request a continuance " 'is persuasive evidence that the prejudice alleged was in fact trivial.' "
People v. Weaver
, 92 Ill. 2d 545, 559 (1982), quoting
People v. Foster
, 76 Ill. 2d 365, 384 (1979).
Even had defendant not waived this issue by failing to request a continuance, after weighing the relevant factors we would not find that he was prejudiced by the late disclosure.
II. Ineffective Assistance of Counsel
A. Failure to Investigate
Defendant alternately argues that his trial counsel, having received the above-mentioned police report, was ineffective for failing to investigate the nature and substance of the telephone conversation.
In order to establish a claim of ineffective assistance of counsel, the defendant must show that: (1) counsel's representation fell below an objective standard of reasonableness; and (2) counsel's shortcomings were so serious as to " 'deprive the defendant of a fair trial, a trial whose result is reliable.' "
People v. Albanese
, 104 Ill. 2d 504, 525-27 (1984), quoting
Strickland v. Washington
, 466 U.S. 668, 80 L. Ed. 2d 674, 104 S. Ct. 2052 (1984). To meet the second prong of this test, a defendant must demonstrate that there is a reasonable probability that, but for counsel's unprofessional errors, the result of the proceeding would have been different.
People v. Nieves
, 192 Ill. 2d 487, 494 (2000). If a defendant's claim of ineffective assistance can be disposed of based on a failure to establish prejudice, then the court need not examine whether counsel's performance was deficient.
People v. Mahaffey
, 194 Ill. 2d 154, 175 (2000).
Even assuming
arguendo
that defendant's trial counsel fell below an objective standard of reasonableness by failing to investigate the substance of the telephone conversation, defendant has failed to demonstrate that further investigation would have altered the outcome of the trial. Defendant does not suggest and the record does not indicate that further investigation would have uncovered exculpatory evidence or evidence discrediting Officer Salvage's testimony. Rather, defendant argues that, "[h]ad he known [the substance of the telephone conversation,] he could have better evaluated his decision to go to trial" and "could have pursued other avenues, short of trial, in an attempt to avoid a mandatory minimum for a Class X felony conviction." Defendant seems to be suggesting that, had counsel learned of the substance of the telephone conversation, he could have advised defendant to plead guilty in exchange for lesser charges. Nothing in the record demonstrates a reasonable probability that: (1) the State would have been willing to enter into a plea bargain, (2) defense counsel's advice to defendant on this point would have changed had he known the substance of the conversation; or (3) defendant–who at trial vigorously denied even being present at the transaction–would have been willing to plead guilty. Defendant's claim of ineffectiveness fails as defendant has failed to demonstrate that he was prejudiced by counsel's alleged unprofessional error.
Nieves
, 192 Ill. 2d at 494.
B. Jury Waiver
Defendant argues separately that his trial counsel's ineffectiveness in failing to investigate the substance of the telephone conversation "rendered defendant's jury waiver invalid." When a defendant's challenge to a jury waiver is predicated on a claim of ineffective assistance of counsel, the court must determine: (1) whether counsel's performance fell below an objective standard of reasonableness; and (2) "whether there exists a reasonable likelihood that the defendant would not have waived his jury right in the absence of the alleged error. "
People v. Maxwell
, 148 Ill. 2d 116, 142-43 (1992).
Defendant argues that his trial counsel clearly relied on a technical legal defense that defendant's mere presence at the scene was insufficient to establish legal accountability for Pico's delivery of the cocaine. According to defendant, Officer Salvage's testimony regarding the substance of her telephone conversation with defendant "turned a legal issue case into a credibility case." Defendant, quoting
People v. Dixon
, 184 Ill. App. 3d 90, 99 (1989), notes that "waiver [of the right to be tried by jury is] a legitimate trial strategy *** [where the] defendant's defense was a very technical one and a jury might not fully understand or accept such a defense." Defendant insists that he was "in effect forced to take a bench trial and forgo a jury based on the mistake of trial counsel, who believed that the defense in the case was a legal one."
While we acknowledge that a jury waiver is a legitimate strategy where the defense is technical in nature (
Dixon
, 184 Ill. App. 3d at 99), we are aware of–and defendant points to–no authority suggesting that a jury waiver is somehow not a legitimate strategy where credibility is at issue. We reject any such contention. Defendant does not and could not persuasively demonstrate a "reasonable probability" that a jury would have reached a different conclusion as to credibility than that reached by the trial judge.
People v. Elliott
,
299
Ill. App. 3d
766, 776 (1998).
Further, contrary to defendant's assertion that the undisclosed statement "turned a legal case into a credibility case," the record demonstrates that proof of defendant's accountability rested on a credibility determination even without Officer Salvage's testimony regarding the telephone conversation. To establish defendant's accountability for Pico's delivery of cocaine, the State was required to prove that defendant "[e]ither before or during the [delivery], and with the intent to promote or facilitate [the delivery], *** solicit[ed], aid[ed], abet[ted], agree[d] or attempt[ed] to aid [Pico] in the planning or commission of [the delivery of cocaine]." 720 ILCS 5/5–2(c) (West 1998). Officer Salvage testified at trial (consistent with her previously disclosed police report) that defendant had approached her undercover vehicle and asked, "how much cocaine do you need?" Evidence that defendant asked this question undeniably demonstrates defendant's role in intentionally facilitating the narcotics transaction and supports a finding that defendant was legally accountable for the sale ultimately consummated by codefendant Pico. Absent evidence regarding the substance of the telephone conversation, this case still turned on whether the trier of fact found Officer Salvage's testimony more credible than defendant's testimony.
Even were we to accept defendant's suggestion that testimony regarding the substance of the telephone conversation somehow dramatically altered the nature of his defense, defendant has failed to demonstrate "a reasonable likelihood that [he] would not have waived his jury right" had defense counsel learned the substance of the telephone conversation prior to trial.
Maxwell
, 148 Ill. 2d at 143. Significantly, nothing in the record suggests that defendant chose to waive his right to a jury trial based on any advice of counsel that the defense in this case rested on a technical legal issue rather than on credibility. Indeed, "the record is silent on the reason for defendant's jury trial waiver."
Elliot
, 299 Ill. App. 3d at 774. We reject defendant's claim that counsel's failure to investigate invalidated defendant's jury waiver.
Maxwell
, 148 Ill. 2d at 143.
III. Coconspirator Hearsay
Finally, defendant argues that the trial court erred in allowing Officer Salvage to testify regarding codefendant Pico's hearsay statement that Pico was defendant's "partner." The declarations of a coconspirator made in furtherance of the conspiracy are admissible against a defendant upon an independent,
prima facie
showing of a conspiracy or joint venture between the declarant and defendant.
People v. Steidl
, 142 Ill. 2d 204, 234 (1991). In order to establish a
prima facie
showing of a conspiracy or joint venture, the State must prove by a preponderance of the evidence (independent of the coconspirator's hearsay statements) that: (1) two or more persons intended to commit a crime; (2) they engaged in a common plan to accomplish the criminal goal; and (3) an act or acts were done by one or more of them in furtherance of the conspiracy.
People v. Roppo
, 234 Ill. App. 3d 116, 123 (1992);
People v. Barnett
, 226 Ill. App. 3d 397, 411 (1992).
The existence of a conspiratorial agreement need not be proven by direct evidence but, rather, may be inferred from all surrounding facts and circumstances, including the acts and declarations of the accused.
People v. Melgoza
, 231 Ill. App. 3d 510, 521 (1992). Because of the clandestine nature of conspiracy, Illinois courts permit broad inferences to be drawn from the circumstances, acts, and conduct of the parties.
Melgoza
, 231 Ill. App. 3d at 523. Coconspirators' "suspicious activities together while the illegal transaction was in progress are sufficient to show a joint venture together."
Melgoza
, 231 Ill. App. 3d at 524. It is not mandatory that evidence supporting a
prima facie
showing of a conspiracy be introduced prior to admission of the coconspirator's hearsay statement.
People v. Goodman
, 81 Ill. 2d 78, 284 (1980).
Defendant argues that no evidence was presented independent of Pico's statement which would establish a
prima facie
showing of conspiracy or joint venture. The record, however, belies defendant's argument. At trial, Officer Salvage testified that after defendant and Pico pulled up in the white Chevrolet, the two exited their vehicle and approached the officer. Defendant then asked, "how much cocaine do you need?" When Officer Salvage requested three ounces of cocaine, defendant told her to "give [him] five minutes and [he would] be right back." Pico then returned five minutes later, removed three ounces of what later proved to be cocaine from behind the hubcap of the white Chevrolet, and completed the transaction with Salvage. Certified records were presented demonstrating that defendant is the registered owner of the white Chevrolet. Photographic evidence corroborated Officer Salvage's testimony by depicting defendant's presence at the scene of the crime.
Defendant argues that mere presence, association, knowledge or approval of a conspiracy is insufficient to establish that defendant was involved in a conspiracy or joint venture. See
People v. Deatherage
, 122 Ill. App. 3d 620 (1984);
People v. Roppo
, 234 Ill. App. 3d 116 (1992). The above evidence, however, demonstrates more than defendant's mere presence at the scene of the illegal transaction. Rather than standing idly by, defendant drove to the arranged location and negotiated the amount of cocaine to be sold. Defendant's vehicle was used for concealing the drugs and for making the final delivery. Defendant's and Pico's suspicious activities together under the circumstances described are clearly adequate to permit an inference that defendant and Pico were involved in a conspiracy or joint venture to deliver cocaine.
Melgoza
, 231 Ill. App. 3d 523-24.
Because the State established a
prima facie
showing of conspiracy by a preponderance of the evidence, the trial court did not err in admitting Pico's statement pursuant to the coconspirator exception to the hearsay rule.
CONCLUSION
For the foregoing reasons, the judgment of the circuit court is affirmed.
Affirmed.
McNULTY and COUSINS, JJ., concur
FOOTNOTES
1:
It is unclear from the record precisely to whom the "we" referred.
|
ILLINOIS OFFICIAL REPORTS
Appellate Court
Wells Fargo Bank, N.A. v. Zwolinski, 2013 IL App (1st) 120612
Appellate Court WELLS FARGO BANK, N.A., Successor by Merger to Wells Fargo
Caption Home Mortgage, Inc., Plaintiff-Appellee, v. ALFRED ZWOLINSKI,
Defendant-Appellant (Harris N.A., Corby S. Hagan, Beata Zwolinski,
Unknown Heirs and Legatees of Alfred Zwolinski, Defendants).
District & No. First District, First Division
Docket No. 1-12-0612
Filed May 6, 2013
Held In a mortgage foreclosure action, defendant’s appeal from the trial court’s
(Note: This syllabus denial of his motion to reconsider the denial of his motion to quash
constitutes no part of service of summons was dismissed due to his failure to serve any of the
the opinion of the court other parties with his notice of appeal pursuant to the circuit court’s rules
but has been prepared and the significant prejudice suffered by the other parties.
by the Reporter of
Decisions for the
convenience of the
reader.)
Decision Under Appeal from the Circuit Court of Cook County, No. 09-CH-50400; the
Review Hon. David B. Atkins, Judge, presiding.
Judgment Appeal dismissed.
Counsel on Stephen Richek, of Chicago, for appellant.
Appeal
Noonan & Lieberman, Ltd., of Chicago (James V. Noonan and Ruth B.
Sosniak, of counsel), for appellee.
Panel JUSTICE CUNNINGHAM delivered the judgment of the court, with
opinion.
Justices Rochford and Delort concurred in the judgment and opinion.
OPINION
¶1 This appeal arises from a January 30, 2012 order entered by the circuit court of Cook
County which denied defendant-appellant Alfred Zwolinski’s (Alfred) motion to reconsider
an order denying his motion to quash service. On appeal, Alfred argues that: (1) service of
process was invalid because plaintiff-appellee Wells Fargo Bank, N.A. (Wells Fargo),
successor by merger to Wells Fargo Home Mortgage, Inc., failed to comply with Cook
County Circuit Court Rule 7.3 (Cook Co. Cir. Ct. R. 7.3 (Oct. 1, 1996)) when it sought leave
to serve Alfred by publication; and (2) service of process was invalid because Wells Fargo
did not conduct due inquiry and diligent inquiry before filing an affidavit for service by
publication pursuant to section 2-206(a) of the Illinois Code of Civil Procedure (Code) (735
ILCS 5/2-206(a) (West 2010)). For the following reasons, we dismiss this appeal for
violation of Illinois Supreme Court Rule 303(c) (eff. May 30, 2008).
¶2 BACKGROUND
¶3 On June 1, 2003, Alfred executed a promissory note in the principal amount of $90,355
payable to Wells Fargo in return for a loan. Also, on June 1, 2003, Alfred secured the loan
by executing a mortgage on real property located at 6151 West Roscoe Street, Chicago,
Illinois (Roscoe property). Defendant Beata Zwolinski (Beata) signed the mortgage as a
“non-vested spouse.”
¶4 On December 16, 2009, Wells Fargo filed a complaint in the circuit court of Cook
County to foreclose the mortgage. The complaint alleged that Alfred defaulted on monthly
payments for the period of September 2009 to December 2009, and that the balance due as
of the time of the complaint was $35,324.16, plus interest. The following parties were joined
as defendants: Beata; Corby S. Hagan (Hagan), a judgment creditor; Harris N.A. (Harris),
a junior mortgagee; and unknown heirs and legatees of Alfred. Additionally, on December
16, 2009, the clerk of the court issued a mortgage foreclosure summons to be served on each
defendant. The mortgage foreclosure summons instructed the process server to serve Alfred
and Beata at the Roscoe property.
-2-
¶5 Maricruz Garcia (Garcia), a special process server and employee of ProVest, LLC
(ProVest), executed an affidavit which stated that on December 19, 2009, she attempted to
serve Beata at the Roscoe property. The affidavit stated that the Roscoe property was a one-
story, single-family home that was occupied and was not for sale. Further, the affidavit stated
that Garcia allegedly spoke with a tenant of the Roscoe property who stated that Beata was
the landlord of the Roscoe property and that she lived “somewhere in Elmwood Park.”
Additionally, on December 19, 2009, Garcia executed a second affidavit which stated that
on that date, she attempted to serve Alfred at the Roscoe property. Garcia’s second affidavit
contained a description of the Roscoe property identical to the description in her first
affidavit. Further, Garcia’s second affidavit stated that the alleged tenant of the Roscoe
property stated that he “has never [heard] of [Alfred] and does not reside here.”
¶6 On December 29, 2009, Garcia successfully effectuated personal service on Beata at
2731 North 73rd Avenue, Elmwood Park, Illinois (Elmwood Park property). In January
2010, Lynda Hansell (Hansell), an employee of ProVest, executed an affidavit of due and
diligent search which stated that “[a]fter diligent search and inquiry by [Hansell], the
residence of [Alfred] is unknown to [Hansell].” Hansell’s affidavit listed Alfred’s last known
address as the Roscoe property. Further, Hansell’s affidavit stated that the following inquiries
were made in an effort to find an alternate address for Alfred: a search using his social
security number; an employment comprehensive database search; an inquiry of creditors; a
directory assistance search; a vessel search; a voter registration search; a department of state
professional licenses search; a nationwide masterfile death search; a nationwide aircraft
search; a nationwide pilot search; a department of corrections inquiry; a Freedom of
Information Act (FOIA) inquiry; a county jail inquiry; a property tax inquiry; and a federal
prison search. The only inquiries that yielded any results were the social security number
inquiry, the inquiry of creditors, and the FOIA inquiry, which all listed the Roscoe property
as Alfred’s last known address. Hansell’s affidavit stated that the Roscoe property is the only
address at which an attempt to serve Alfred was made.
¶7 On January 28, 2010, Juliet Rowland, a special process server and employee of ProVest,
filed an affidavit stating that Beata and Harris had been served. The affidavit also stated that
Alfred and Hagan had not been served. On February 4, 2010, counsel for Wells Fargo filed
an affidavit for service by publication pursuant to section 2-206(a) of the Code. The affidavit
stated that on due inquiry, Alfred, Hagan and Alfred’s unknown heirs and legatees could not
be found. The affidavit also stated that the following actions were taken to ascertain the
whereabouts of the unserved defendants: ordered and reviewed credit reports on the
defendants on or about December 8, 2009; reviewed Wells Fargo’s foreclosure information
package for possible addresses on or about December 9, 2009; reviewed the deed to the
defendants for possible additional addresses on or about December 9, 2009; reviewed public
records of the Cook County probate court for a pending probate case on or about December
15, 2009; made two attempts to serve the unserved defendants; ordered and reviewed the
property inspection report to determine occupants of the subject property on or about
December 16, 2009. Further, the affidavit stated that the last known address for the unserved
defendants was the Roscoe property.
¶8 On February 10, 17, and 24, 2010, Wells Fargo served Alfred, Hagan, and Alfred’s
-3-
unknown heirs and legatees by publication in the Chicago Daily Law Bulletin. On August
30, 2010, the trial court entered a judgment of foreclosure and sale. The trial court found that
Alfred was indebted to Wells Fargo in the amount of $42,187.31 and ordered that the Roscoe
property be sold.
¶9 In July 2011, Alfred filed an appearance through counsel. On July 15, 2011, the Roscoe
property was sold to Marek and Jolanta Nowakowski (collectively, the Nowakowskis) for
$106,000, creating a surplus of $52,223.55. On August 31, 2011, Wells Fargo filed a motion
to approve the sale of the Roscoe property. Also, on August 31, 2011, Alfred filed a motion
to quash service. In the motion to quash service, Alfred argued that service by publication
should be quashed because Wells Fargo only made one attempt to serve him. Attached to
Alfred’s motion to quash service was an affidavit executed by Alfred which stated that upon
due inquiry, he could have been found at the Roscoe property. On September 19, 2011, Wells
Fargo filed a response to the motion to quash service. In its response to the motion to quash
service, Wells Fargo argued that service by publication was valid because it complied with
all the requirements of section 2-206(a) of the Code.
¶ 10 On October 12, 2011, the trial court denied Alfred’s motion to quash service. Also, on
October 12, 2011, the trial court entered an order approving the sale of the Roscoe property
and ordered that the Roscoe property be turned over to the Nowakowskis. The trial court also
ordered that the surplus funds be turned over to the clerk of the court. On November 7, 2011,
Alfred filed a motion to reconsider the trial court’s October 12, 2011 order which denied his
motion to quash service. In his motion to reconsider, Alfred argued that Wells Fargo did not
conduct “due diligence” in making only one attempt to serve him at the Roscoe property.
Additionally, Alfred requested an evidentiary hearing to determine if the “due diligence”
requirement was satisfied. Wells Fargo then filed a response to Alfred’s motion to
reconsider.1 In January 2012, Alfred filed a reply to Wells Fargo’s response to the motion to
reconsider. Attached to Alfred’s reply to Wells Fargo’s response to the motion to reconsider
was an affidavit executed by Alfred which stated that: he continuously lived at the Roscoe
property since 1991; since 2007 he has rented out the basement and part of the first floor of
the Roscoe property; he, and not Beata, collected rent for the Roscoe property; and since
1997, the Roscoe property has been a two-story home with a basement. Also attached was
a picture of the Roscoe property from the Cook County assessor’s website.
¶ 11 On January 30, 2012, the trial court denied Alfred’s motion to reconsider. On February
14, 2012, the trial court entered an order which directed the clerk of the court to issue
payment of the surplus funds in the amounts of $33,574.42 to Hagan, and $18,649.13 to
Harris. On February 27, 2012, Alfred filed a timely notice of appeal pursuant to Illinois
Supreme Court Rule 303 (eff. May 30, 2008).
¶ 12 ANALYSIS
¶ 13 Wells Fargo argues that Alfred’s appeal should be dismissed because he failed to comply
1
Despite careful examination of the record, we cannot determine the date on which this
motion was filed.
-4-
with Rule 303(c). Specifically, Wells Fargo argues that although Alfred filed a notice of
appeal, he did not serve any of the parties with the notice of appeal as required by Rule
303(c). Wells Fargo states that it only became aware of the appeal when it received notice
of the filing of the record on appeal. Wells Fargo contends that even if this court finds that
it was not prejudiced by Alfred’s violation of Rule 303(c), the violation is inexcusable
because there is no indication that any of the other parties (including the new owners of the
Roscoe property, the Nowakowskis) are even aware that this case has been appealed or that
their right to the Roscoe property is in jeopardy.
¶ 14 Rule 303(c) states, in pertinent part “[t]he party filing the notice of appeal *** shall,
within 7 days, file a notice of filing with the reviewing court and serve a copy of the notice
of appeal upon every other party and upon any other person or officer entitled by law to
notice.” Ill. S. Ct. R. 303(c) (eff. May 30, 2008). If the appellant fails to serve a copy of the
notice of appeal on an opposing party, the appellate court is not deprived of jurisdiction
because the filing of the notice of appeal is the only jurisdictional step in appealing from a
decision of the circuit court. Kawa v. Harnischfeger Corp., 204 Ill. App. 3d 206, 209 (1990).
“An appeal will not be dismissed on the basis that the opposing party was not served with
a copy of the notice of appeal if there was no evidence of prejudice to the party.” Id. A party
is not prejudiced by the appellant’s failure to serve a copy of the notice of appeal on the party
if the party could file appellate briefs and argue orally. Id.; Simmons v. Chicago Housing
Authority, 267 Ill. App. 3d 545, 551 (1994). However, failure to serve a copy of the notice
of appeal on parties who may be adversely affected by the appellate court’s decision may
result in dismissal of the appeal. Leyden Fire Protection District v. Township Board of
Leyden Township, 26 Ill. App. 3d 569, 572-73 (1975).
¶ 15 We note that Alfred has forfeited any argument regarding Rule 303(c) because he did not
file a reply brief and did not respond to Wells Fargo’s argument on this issue. See
Department of Central Management Services/The Department of State Police v. Illinois
Labor Relations Board, State Panel, 2012 IL App (4th) 110356, ¶ 26. Additionally, when
asked about the violation of Rule 303(c) during oral argument, Alfred’s counsel provided no
explanation as to why none of the parties were served with a notice of appeal. Thus, we agree
with Wells Fargo that Alfred violated Rule 303(c) by failing to serve any of the parties with
the notice of appeal.
¶ 16 The trial court’s orders were in favor of the defendants Hagan and Harris, and against
Alfred. Although Alfred, Hagan and Harris were originally all listed as defendants before the
trial court, on appeal it is clear that Alfred’s interests are adverse to the interests of Hagan
and Harris. Thus, if Hagan and Harris were participating in this appeal, they would in
substance be appellees. Because Alfred failed to serve a copy of the notice of appeal on
Hagan and Harris, who would be substantive appellees, they remain officially unaware of the
appeal. Consequently, they were unable to file briefs on appeal or argue orally. In other
words, they have been deprived of the opportunity to protect their interests through
participation in this appeal. It is thus clear that Hagan and Harris were significantly
prejudiced by Alfred’s failure to serve a notice of appeal upon them.
¶ 17 Moreover, the prejudice caused by Alfred’s violation of Rule 303(c) can be readily
recognized by examining the practical consequences to the unserved parties in interest if this
-5-
court were to reverse the judgment of the trial court. Clearly, Hagan and Harris would be put
in the very unfortunate position of having to repay the surplus funds which they were
awarded following the sale of the Roscoe property. It is pointless to speculate about the
current availability of funds disbursed well over a year ago. Furthermore, if the judgment of
the trial court were reversed and the sale of the Roscoe property unwound, the purchasers of
the Roscoe property, the Nowakowskis, would also be greatly disadvantaged. Although the
Nowakowskis are not parties of record, they are certainly parties in interest. Thus, not only
did Alfred fail to notify the parties of record, he also failed to notify all parties in interest
as best practices would dictate. Even though Wells Fargo was not prejudiced by Alfred’s
violation of Rule 303(c) because it was aware of the appeal, the other parties are in a far
more untenable position. Hagan and Harris, as well as the Nowakowskis, would be seriously
prejudiced because of a lack of opportunity to participate in the legal process and to defend
their rights. Therefore, we dismiss this appeal due to Alfred’s blatant, unexplained violation
of Rule 303(c) and the significant prejudice to the parties of record.
¶ 18 For the foregoing reasons, this appeal is dismissed.
¶ 19 Appeal dismissed.
-6-
|
376 F.2d 42
Laurice Lamer PRINCE, Appellant,v.UNITED STATES of America, Appellee.
No. 23593.
United States Court of Appeals Fifth Circuit.
April 28, 1967.
Jerome Pratt, Palmetto, Fla., for appellant.
E. J. Salcines, Asst. U.S. Atty., Tampa, Fla., Edward F. Boardman, U.S. Atty., Middle Dist. of Florida, for appellee.
Before PHILLIPS,1 THORNBERRY and DYER, Circuit Judges.
PER CURIAM:
1
Appellant was convicted by jury verdict on all counts of a five-count indictment charging him with embezzlement of bank funds in violation of 18 U.S.C. 656. He was sentenced to concurrent four-year terms under each of the first four counts. Imposition of sentence under the fifth count was suspended and appellant was placed on probation for five years to commence at the expiration of his sentence.
2
On this appeal, appellant urges that the indictment under which he was convicted was fatally defective, that there was no evidence to support his conviction, and that the conduct and remarks of the court during the trial together with its failure to admonish the jurors not to read newspaper accounts of the trial constituted prejudicial error.
3
Convicted after a careful review of the entire record that there occurred no reversible error, we accordingly
4
Affirm.
1
Of the Tenth Circuit, sitting by designation
|
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT June 24, 2003
Charles R. Fulbruge III
No. 02-51120 Clerk
Summary Calendar
DANIEL A. RAMIREZ,
Petitioner-Appellant,
versus
DIRECTOR, OFFICE OF WORKER’S COMPENSATION PROGRAMS, U.S.
DEPARTMENT OF LABOR,
Respondent-Appellee.
Appeal from the United States District Court
for the Western District of Texas
(EP-02-CV-188-DB)
Before BARKSDALE, DeMOSS, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Daniel A. Ramirez appeals, pro se, the denial of his
application for a temporary restraining order. We lack
jurisdiction. See, e.g., Faulder v. Johnson, 178 F.3d 741, 742
(5th Cir.), cert. denied, 527 U.S. 1018 (1999) (generally no
appellate jurisdiction over denial of application for temporary
restraining order); Matter of Lieb, 915 F.2d 180, 183 (5th Cir.
1990) (same).
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
DISMISSED
2
|
822 F.2d 600
1987 A.M.C. 2887
Michael LANDOWSKI and Diane Landowski, Plaintiffs-Appellants,v.GRAND TRUNK WESTERN RAILROAD COMPANY, Defendant-Appellee.
No. 85-1649.
United States Court of Appeals,Sixth Circuit.
Argued Oct. 14, 1986.Decided June 24, 1987.
Robert N. Dunn (argued), Detroit, Mich., Jaimie A. Kleinstiver, for defendant-appellee.
James C. Howell (argued), Otto and Otto, Saginaw, Mich., for plaintiffs-appellants.
Before NELSON and RYAN, Circuit Judges, and ENSLEN, District Judge.*
RYAN, Circuit Judge.
1
The Landowskis appeal the trial court's dismissal of their action alleging that defendant Grand Trunk Western Railroad Company ("the Railroad") maintained a nuisance upon the navigable waters of the Saginaw River which caused a boating accident in which Michael Landowski was injured. The trial court dismissed the action on the ground that the nuisance existed pursuant to a permit issued to the Railroad by the federal government and that, as a result, the Railroad is immune from liability.
2
We affirm.
I.
3
In 1912, the Railroad obtained a permit from the War Department to construct a bridge across the Saginaw River. The bridge stood for 30 years until the Railroad, under a permit issued by the War Department, removed the entire steel superstructure of the bridge, as well as three of the "piers" or masonry units upon which the superstructure had rested. Five piers, however, were left in place. The result was a widened navigation channel with five piers, numbered one through five, protruding from the shallower water outside of the marked navigation channel. Pier number five was closest to the channel, approximately 150-200 feet away, and stood in the geographic center of the river. The War Department's decision to allow the piers to remain in the river was expressly based upon an engineer's report, which stated that: "It does not appear that the remaining piers will provide an unreasonable obstruction to small boat navigation."
The permit stated:
4
"[This permit] does not authorize any injury to private property or invasion of private rights, or any infringement of Federal, State or Local Laws or Regulations, nor does it obviate the necessity of obtaining State assent to the work authorized. It merely expresses the assent of the Federal Government so far as concerns the public rights of navigation. Cummings v. Chicago, 88 U.S. 410 [23 S.Ct. 472, 47 L.Ed. 525 (1903) ].
5
The permit was also made subject to certain conditions, including:
6
"(f) That if future operations of the United States require an alteration in the position of the structure or work herein authorized, or if, in the opinion of the Secretary of War, it shall cause an unreasonable obstruction to the free navigation of said water, the owner will be required, upon due notice from the Secretary of War, to remove or alter the structural work or obstructions caused thereby without expense to the United States, so as to render navigation reasonably free, easy and unobstructed ...
7
"(h) That if the display of lights and signals on any work hereby authorized is not otherwise provided for by law, such lights and signals as may be prescribed by the U.S. Coast Guard, shall be installed and maintained by and at the expence of the owner."
8
Some time after the Railroad removed the bridge, the public boat ramp was moved closer to the piers. Over the years, small boat traffic in the area increased significantly. In the early 1960's, the Mayor of Bay City sought to have the piers removed, but the Army Corps of Engineers declined to take action. There is evidence that at least one accident involving the piers occurred prior to the accident that gave rise to this litigation.
9
In 1982, 40 years after the removal of the bridge, appellants went boating on the Saginaw River with several friends. Michael Landowski was at the wheel of his 18-foot speedboat. By the end of the evening, it had become quite dark on the water, Michael Landowski was legally intoxicated, and the party was cruising at something over 30 miles per hour up the river. The boat struck pier number five, which at that time protruded approximately three feet above the water. One of the passengers died; others were injured.
II.
10
Appellants sued both the Railroad and the United States. Summary judgment was granted in favor of the United States. This appeal is addressed only to the dismissal of the Railroad.
11
Appellants relied at trial upon a common law theory of intentional nuisance. At the close of the evidence, the trial court, sitting as the trier of fact, found that the pier was a nuisance, an "unreasonable hazard." He also found that the appellants had both been injured as a result of this hazard, Michael suffering $95,000 worth of damages, and Dianne $10,000. Finally, he found that Michael's comparative negligence was 90%. When pressed by counsel, the judge noted that, while the Railroad certainly "intended to leave it there," their "fault, if any, is in negligence, not in intentional wrong."
12
The trial court then noted, apparently as a conclusion of law, that he saw "no preemption to apply comparative negligence to the damages." All of these findings, however, were made provisionally, in event that this court should reverse the trial court's dispositive legal holdings, as follows:
13
"Congress has given the Secretary of War, the Corps of Engineers, if you will, the authority to make a determination of what is and what is not a hazard at the time. They have given them the authority to cause it to be removed.
14
"I agree 100 percent with the logic of the cases cited by counsel, the Potomac River case, that in effect says that there is absolutely immunity to a railroad or anybody else that puts in a railroad or an object or leaves in an object with a permit, and for that reason, I think there should be a grant of no cause of action."
III.
15
The trial court rested its dismissal upon principles stated in Potomac River Association v. Lundeberg Maryland Seamanship School, Inc., 402 F.Supp. 344 (D.Md.1975). Potomac was a suit by two environmental organizations against a private company, the United States Army Corps of Engineers, and certain named federal employees. The private company obtained permits from the Corps to dredge and fill a Maryland creek. The plaintiffs resorted to various federal statutes and other theories in order to halt the desecration of the creek, arguing both that the permits should not have been issued and that the company's activities had gone beyond what the permits authorized. Among other things, the court analyzed the Corps' obligations under the Rivers and Harbors Act of 1899, 33 U.S.C. Secs. 401 et seq. (1986).
16
The district court in Potomac reviewed the criteria the Corps must take into account in considering permit applications under Sec. 10, the same section under which the permit was issued in this case, and noted: "It is clear, then, that the Corps has been given the task of deciding to which uses the navigable waterways of the United States should be put." Id. at 355. The Potomac court concluded that the environmentalists could maintain an action against the private company only to the extent that the company's activities had exceeded the scope of its permits. As to the activities within the scope of the permits, the court held:"The maintenance of a cause of action by one private party against another for injunctive relief or damages due to injury caused by a use which has already been implemented and which has received the Corps' authorization would interfere with the permit scheme established by the regulations."
17
Id. at 356. Thus, while the court might entertain such limited review of the Corps' actions in issuing the permits as the Administrative Procedure Act allows, no cause of action against the private defendant premised upon activities authorized by permit could be allowed.
18
Separately addressing the issue of "whether the five Corps permits issued to the defendants authorizing dredging and filling foreclosed recovery for public or private injury which occurred pursuant to activity under the permits"--specifically, allegations of nuisance--the Potomac court concluded that they did. The court explained:
19
"To put the question in a different light, although under some circumstances pollution of a river which results in the killing of fish may be considered a nuisance, the Corps may immunize acts which would otherwise be nuisances in much the same way as zoning under a state's police power may cause some curtailment of rights by restricting uses. See, e.g., McMahon v. City of Dubuque, 255 F.2d 154 (8th Cir.), cert. denied, 358 U.S. 833, 79 S.Ct. 53, 3 L.Ed.2d 70 (1958).
20
"This is merely another way of stating that the Corps of Engineers may regulate the use of navigable waters and may allocate the cost of those uses, because it has been designated the trustee of a common property resource. Once uses of the common property have been authorized, they cannot be nuisances because they have been condoned by the Government."
21
Id. The trial court in this case found the Potomac court's reasoning both pertinent and persuasive, and since there were no serious allegations that the Railroad had in any way exceeded the scope of its permit, the trial court dismissed the action against the Railroad.
IV.
22
In Southern Pacific Co. v. Olympian Dredging Co., 260 U.S. 205, 43 S.Ct. 26, 67 L.Ed. 213 (1922), the Supreme Court granted immunity to a railroad on facts strikingly similar to those in this case. The railroad in that case dismantled a bridge over the Sacramento River pursuant to specifications provided by the Secretary of War. Those specifications called for the removal of the piers upon which the old bridge rested to a level seven feet below the surface of the river. The railroad actually exceeded these specifications by several feet, cutting the piers down to a level at or below the riverbed. Subsequently, dam building and dredging operations of the United States lowered the riverbed by approximately seven feet. A dredge struck one of the old piers, which by this time protruded several feet above the bed of the river.
23
The district court dismissed a libel brought by the owner of the dredge. The Court of Appeals reversed, concluding that the railroad could be held liable. The Supreme Court reversed, affirming the district court's dismissal:
24
"To hold, as did the circuit court of appeals, that [the Secretary of War's] determination afforded no protection to petitioners, but that they relied upon it only at their peril, we think is conclusion without warrant. Having complied with the direction of the Secretary, and having no further interest in anything at that point on the river, it seems altogether unreasonable to hold them to an indefinite and speculative responsibility for future changed conditions. The piles had been removed early in 1896, with an overgenerous observance of the directions of the Secretary. As matters then stood, the removal of the piles, so far as they constituted any obstruction or menace to navigation, was complete; that they afterwards became an obstruction was due to changes of a most radical character in the channel of the river, brought about, in the main, by the dredging operations of the government itself. Was the petitioner guilty of negligence in not anticipating the effect of these changes, which did not culminate in the conditions complained of until twenty-two years later? The question must be answered in the negative.
25
Id. at 209, 43 S.Ct. at 27.
26
We consider Southern Pacific to be much better authority for the existence of immunity on the facts before us than the Potomac case the Railroad relied upon below. In Potomac, the district court considered ongoing dredging activities that were precisely within the scope of a recent government permit. There was no lapse of time between the actions pursuant to permit and the alleged injury, and there were no allegations that the private company had breached a duty to the public by failing to respond to changed circumstances.
27
Before this court, the Railroad also cites a number of cases generally tending to establish a "rule" that "the courts will not hold conduct to constitute a nuisance where authority therefor exists by virtue of legislative enactment." Smith v. Tennessee, 436 F.Supp. 151, 154 (E.D.Tenn.1977). Similarly, in Ferris v. Wilbur, 27 F.2d 262, 264 (4th Cir.1928), the court reasoned: "[I]t is unthinkable that the courts should enjoin as a nuisance the use of government property by a co-ordinate branch of the government, the executive, where such use is authorized by a valid act by the other co-ordinate branch, the legislative." In Southern Pacific, the Supreme Court expressly refused to distinguish between a legislative enactment and a permit issued in an exercise of executive discretion: "Congress intended by its legislation to give the same force and effect to the decision of the Secretary of War that would have been accorded to direct action by it on the subject." 260 U.S. at 210, 43 S.Ct. at 27. Southern Pacific appears to require that we affirm the district court's dismissal in this case.
28
In Central Rivers Towing, Inc. v. City of Beardstown, 750 F.2d 565 (7th Cir.1984), however, the court held that a continuing duty to respond to changed circumstances can exist, and may give rise to liability, despite full compliance with a federal permit. The City of Beardstown demolished a bridge in accordance with Army Corps of Engineers specifications, which provided that several of the bridge piers could remain in place. The piers were to be left visible above the waterline, but, perhaps as a result of several collisions, the piers became submerged. After several accidents, the United States Coast Guard marked the underwater obstruction with a buoy. The evidence established that the City was "well aware of the risk posed by the submerged pier." Id. at 569. Over twenty years after the bridge removal, and at a time when the Coast Guard buoy was missing from one of the piers, a tow boat struck the unmarked, submerged pier. The court allowed recovery against both the City and the federal government on a negligence theory, although its reasoning could also lead to the denial of immunity where public nuisance is alleged.
29
The Seventh Circuit distinguished Southern Pacific on its facts as a case where there was "nothing to indicate that either of the petitioners had actual knowledge of the changed conditions which brought about the protrusion of the old piles above the bed of the river, or any knowledge that these piles were a menace to navigation." Southern Pacific, 260 U.S. at 207, 43 S.Ct. at 26. In Beardstown, on the other hand, the City had actual knowledge of both the changed circumstances and the resulting hazard. Under these circumstances, the Seventh Circuit did not believe the principle of immunity set forth in Southern Pacific could be absolute:
30
"Because the City in the present case originally complied with the minimum Corps of Engineers specifications for demolition of the bridge, it contends it cannot be held liable for subsequent changes that resulted in the pier's becoming a submerged hazard. But we do not find Southern Pacific controlling. We do not think Southern Pacific stands for the proposition that compliance with government specifications for removing a bridge forever insulates the bridge owner from liability for damages later caused by the bridge remains. Compliance with the government's specifications in Southern Pacific demonstrated only that the owner was not negligent in the way it removed the bridge piers at the time of the original demolition; in the presentcase the compliance with government specifications, in itself, established nothing about whether the owner was negligent in failing to take action later, if changed conditions made the pier remains hazardous."
31
We find this reading of Southern Pacific unpersuasive. We note initially that the Beardstown court appeared to assume that Sec. 10 of the Rivers and Harbors Act, 33 U.S.C. Sec. 403 (1986), creates a private right of action in favor of those injured by obstructions to navigation. See Beardstown, 750 F.2d at 571 n. 1. The implication of such a right was expressly rejected by the Supreme Court in California v. Sierra Club, 451 U.S. 287, 101 S.Ct. 1775, 68 L.Ed.2d 101 (1981). Following the approach taken in Beardstown would require us to address the issue (alluded to, but not resolved, in Sierra Club ) of whether the Rivers and Harbors Act not only fails to create a private right of action, but also preempts recovery on a common-law theory of nuisance for injuries caused by obstructions to navigation. See Sierra Club, 451 U.S. at 296 n. 7, 101 S.Ct. at 1780 n. 7. While we need not decide that issue here, we simply observe that the viability, under federal maritime law, of a nuisance recovery for injuries caused by obstructions to navigation is, at best, an open question. With respect to nuisances in the form of water pollution, compare Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 11, 101 S.Ct. 2615, 2621, 69 L.Ed.2d 435 (1981), with Louisiana v. M/V Testbank, 752 F.2d 1019, 1030-31 & n. 13 (5th Cir.1985) (en banc), cert. denied, --- U.S. ----, 106 S.Ct. 3271, 91 L.Ed.2d 562 (1986).
32
More importantly, we reject the notion that a private party that complies with a federal permit by partially removing structures in a navigable waterway has a continuing responsibility to prevent those structures from becoming navigational hazards. Responsibility for the piers left in the Saginaw River by the Railroad rested squarely upon the federal government. By the terms of the permit itself, it was the duty of the Secretary of War (later, the Secretary of the Army) to determine whether any of the piers had become "an unreasonable obstruction to the free navigation" of the river, and then to order the Railroad to carry out any alterations deemed necessary. The permit also placed responsibility upon the United States Coast Guard to determine whether any lights or signals needed to be placed upon the piers.
33
Despite the Court's passing reference, in Southern Pacific, to the defendant's lack of knowledge of the changed conditions, we do not believe the Railroad's knowledge, or lack of knowledge, is material to its claim of immunity here. Under 33 U.S.C. Secs. 1 and 403 (1986), as well as the terms of the permit issued to the Railroad, it is the continuing duty of the Secretary of the Army, and not the Railroad, to prevent obstructions to navigation in the Saginaw River. As the Court declared in Southern Pacific, the Railroad here was "justified in proceeding upon the assumption that what the Secretary, in the exercise of his lawful powers, declared to be no obstruction to navigation, was in fact no obstruction." 260 U.S. at 210, 43 S.Ct. at 27. Under these circumstances, we decline to impose liability upon the Railroad.
34
AFFIRMED.
*
The Honorable Richard A. Enslen, United States District Court for the Western District of Michigan, sitting by designation
|
217 Cal.App.2d 332 (1963)
JOHN M. WOODS, Plaintiff and Respondent,
v.
WILLIAM KILPATRICK et al., Defendants and Appellants.
Civ. No. 20914.
California Court of Appeals. First Dist., Div. Three.
June 19, 1963.
Thomas M. O'Connor, City Attorney, and R. J. Reynolds, Deputy City Attorney, for Defendants and Appellants.
Molly H. Minudri, for Plaintiff and Respondent.
DRAPER, P. J.
Peremptory writ of mandate directed appellants, the members of the San Francisco Civil Service Commission, to reinstate respondent employee to a rank from which he had been reduced. This appeal followed.
Respondent Woods, a city employee, was named in a list of eligibles for promotion to the next higher classification (F410c Engineer [Electrical]). A vacancy occurred, the man next above Woods on the promotional list waived his right, and Woods was promoted. Five months later, a "retrenchment order" eliminated the position, and Woods was reduced to his former rank. The higher position was later reestablished, and the higher man on the promotional list withdrew his waiver of promotion, as the civil service regulations *334 permitted him to do. He, rather than Woods, was promoted to the restored position May 26, 1958.
Woods learned of these facts about a year later. Civil Service Association of San Francisco, a private organization, wrote to the commission in October 1959 asking "clarification of this problem" and "a ruling on Mr. Woods' status." The commission determined that Woods was not entitled to reinstatement because he had not served the full probationary period of six months in the F410c position. No request for reconsideration was filed by the association. Early in 1960, Woods' attorney wrote to the commission demanding Woods' reinstatement as of May 1958 and requested a hearing. Ruling was adverse to Woods on the ground that request for reconsideration had not been made within 30 days of the "ruling" of October 1959. Timely request for reconsideration was then made and denied. Meanwhile, on July 1, 1959, Woods had been appointed to a new vacancy in the F410c classification, and he still holds that rank.
In 1960, an examination for promotion to a still higher classification was given. Two years' service in the F410c rank was required. With his prior service, Woods fell slightly short of this requirement. If he had been restored to that rank in May 1958, he would have substantially more than the required two years.
The trial court ordered his reinstatement as of May 26, 1958, thus establishing his eligibility for the promotional examination of 1960, and also awarded him $531 as pay he should have received in the F410c position from May 26, 1958 to July 1, 1959. (The pleadings and proof do not authorize mandate to compel this payment (Tevis v. City & County of San Francisco, 43 Cal.2d 190, 200 [272 P.2d 757]). The record contains no peremptory writ. The judgment is ambiguous and we construe its reference to this sum as a judgment for money, and not as a writ directing payment.)
[1] The principal question is whether Woods' service of five months in the F410c class entitled him to preference for return to that position when it was reestablished in May 1958, or whether, as appellants contend, he must have served the full six months' probationary period in that post to be entitled to such preference. The issue is one of construction of sections 4 and 5 of rule 26, Rules of the Civil Service Commission.
Section 4 provides: "Whenever ... because of retrenchment, a person becomes separated from a position he has *335 held through a promotive appointment, ... [he] shall, for a period of five years thereafter, be preferred for reinstatement to the position from which he was reduced. ..."
Section 5: "Any appointee who has served his probationary period in a permanent position ... who has been laid off ... for purposes of retrenchment, shall, during such lay-off, be termed a holdover and ... shall be returned to duty in such classification ... when a vacancy either of a temporary or permanent character exists, ... [T]he holdover status" shall cease after five years.
Appellant concedes that Woods held his F410c position "through a promotive appointment." Thus he is brought within section 4, which on its face does not require service of the probationary period as a condition to preference in reinstatement. Appellant argues that sections 4 and 5 must be read together, thus applying the probationary service requirement to both sections. We cannot agree.
By its terms, section 4 applies to one whose position "is held through a promotive appointment," while section 5, in failing to specify its application, appears to apply to one whose appointment was not promotive. Section 4 describes the displaced employee as one "reduced in rank," whereas section 5 refers to one "who has been laid off," indicating one removed from the first civil service post he has held. To construe section 5 as applying both to promoted and initial appointees would render section 4 mere surplusage, in violation of a cardinal rule of construction (45 Cal.Jur.2d 626-627). To limit section 4 by adding to it the phrase "who has served his probationary period" would be to rewrite that section, which we have no authority to do.
[2] It is urged that the commission has long construed the rules in the manner for which appellants here contend. But, while longstanding administrative construction is entitled to great weight, it does not govern the courts when plainly erroneous (cf. Whitcomb Hotel, Inc. v. California Emp. Com., 24 Cal.2d 753 [151 P.2d 233, 155 A.L.R. 405]; Douglas Aircraft Co. v. California Unemp. Ins. Appeals Board, 180 Cal.App.2d 636, 642 [4 Cal.Rptr. 723]). Sections 4 and 5, the only portions of rule 26 in the record before us, are unambiguous, and the construction reached by the trial court is the only one permitted by their language.
[3] Appellants also urge that Woods cannot seek judicial relief because he has failed to exhaust his administrative remedies. The contention is that he should have applied for *336 reconsideration by the commission when the ruling sought by Civil Service Association of San Francisco was adverse to him (Alexander v. State Personnel Board, 22 Cal.2d 198 [137 P.2d 433]). The only rule on this subject in the record here (portion of rule 41, 1) limits the period for filing such an application to 30 days "after the original decision" by the commission. In the absence of some definition of "original decision," there is difficulty in determining whether the commission's 1959 letter is within the rule. It is clear, however, that the request for clarification was filed by a private association, rather than by Woods or his counsel. Determinative, therefore, is the failure of the rule before us to make any provision for notice to Woods, and the absence of any showing that he had any knowledge of the commission's 1959 ruling until its 1960 reply to his attorney's demand for his reinstatement. At that time, he made timely request for reconsideration. We cannot upset the finding of the trial court that Woods had not failed to exhaust his administrative remedies.
Judgment affirmed.
Salsman, J., and Devine, J., concurred.
|
306 F.2d 71
A. Matthew BUDER, Petitioner-Appellee,v.Thomas E. BELL, Sheriff of Genesee County, Michigan, Respondent-Appellant.
No. 14701.
United States Court of Appeals Sixth Circuit.
July 27, 1962.
COPYRIGHT MATERIAL OMITTED Robert F. Leonard, Flint, Mich. (Walter P. Kuta, Prosecuting Atty., Robert F. Leonard, Asst. Prosecutor, Flint, Mich., on brief), for appellant.
Paul V. Gadola, Jr., A. Matthew Buder, Flint, Mich., per se, for appellee.
Before MILLER, Chief Judge, and CECIL and WEICK, Circuit Judges.
CECIL, Circuit Judge.
1
This is an appeal from an order of the United States District Court for the Eastern District of Michigan, Northern Division, granting a writ of habeas corpus to the petitioner-appellee, A. Matthew Buder.
2
The petitioner and a co-defendant were tried and convicted in the Circuit Court for the County of Genesee, Michigan, on an information charging them with soliciting a personal injury case, in violation of Section 28.642, M.S.A., Comp. Laws 1948, § 750.410. The offense is a misdemeanor and the petitioner was placed on probation with a provision that he was to pay costs in the amount of twelve hundred dollars ($1200) and spend the first thirty-five days in jail.
3
Petitioner applied to the Supreme Court of Michigan for leave to appeal, which was denied without opinion. Thereafter he began serving his sentence in the Genesee County Jail. After denial of leave to appeal he made application to the Supreme Court of the United States for a stay of execution. Attached to this was a petition for a writ of certiorari. The application for stay of execution was denied and the petition for certiorari was not filed, for the reason that the petitioner had served approximately half of his time and he thought the time would expire before it could be heard.
4
A petition for writ of habeas corpus was filed in the Michigan Supreme Court, after the District Judge had first refused to entertain such a petition on the ground that he had not exhausted his state remedies. This was denied and the present action was begun in the District Court by a petition for reconsideration of the original action.
5
Upon a hearing, the District Judge found that the state trial judge abused his discretion, amounting to a denial of due process of law, (1) in that he refused to allow the defense to recall the people's witness, Maxine McCord, for recross-examination; (2) in failing to instruct the jury on reasonable doubt and presumption of innocence, when giving an instruction requested by both sides, on the jury's duty to agree, after it had indicated that it was deadlocked; and (3) in refusing to permit the appellee to introduce proofs relative to his professional relationship to his co-defendant, John Bogart. On these findings he entered an order, May 10, 1961, releasing the petitioner from custody.
6
The respondent filed a motion for rehearing May 24th, which was denied June 1, 1961. On the same day a notice of appeal and a petition and motion for certificate of probable cause were filed. The District Judge refused to issue a certificate of probable cause on June 20th. (Dates taken from clerk's transcript of docket and journal entries.) He also refused to sign an order extending the time to prepare and file the record for docketing the case in the Court of Appeals. A judge of this Court, on July 10, 1961, issued a certificate of probable cause and granted an extension of sixty days for preparing and forwarding the record of the District Court to the Court of Appeals and for docketing the appeal.
7
The petitioner filed a motion in this Court to quash the certificate of probable cause and to dismiss the appeal. He claimed that the failure to have such certificate issued within thirty days of either the date when the order of release was first issued (May 10th) or the date of denying the motion for rehearing (June 1st) was a fatal defect which deprived this Court of jurisdiction to grant it. This motion was denied as well as a motion for rehearing and the petitioner was given leave to raise the question again in his brief and argument on the merits of the appeal.
8
It should be noted that Section 2253, Title 28 U.S.C., which requires a certificate of probable cause, fixes no time limit for its issuance. It should also be noted that although the motion for the certificate was filed within thirty days of the original order, the judge did not enter his order of denial for twenty days. We are of the opinion that the motion was timely filed. A timely applicant should not be prejudiced by the delay of a judge in ruling on the application. Ex parte Farrell, 189 F.2d 540, C.A.1, cert. denied, Farrell v. O'Brien, 342 U.S. 839, 72 S.Ct. 64, 96 L.Ed. 634; Boyden v. Webb, 208 F.2d 201, C.A.9.
9
There are other cases which seem to require that the certificate be issued within thirty days. Strand v. Schmittroth, 233 F.2d 598, C.A.9, (the opinion in this case cited by appellee was withdrawn, 251 F.2d 590); United States ex rel. Carey v. Keeper of Montgomery County Prison, 202 F.2d 267, C.A.3, cert. denied 345 U.S. 930, 73 S.Ct. 793, 97 L. Ed. 1360; United States ex rel. Kreuter v. Baldwin, 49 F.2d 262, C.A.7.
10
We consider the better rule to be stated in Ex parte Farrell cited above.
11
It was held in United States ex rel. Tillery v. Cavell, 3 Cir., 294 F.2d 12, 14, that it was not necessary for a state or its representatives to obtain a certificate of probable cause when it appealed from an order releasing a prisoner on a writ of habeas corpus. This is a well-reasoned opinion, the principle announced is sound, and we follow it now, as we did in denying the motion to quash. Our jurisdiction is thus sustained on two grounds.
12
The respondent-appellant questions the jurisdiction of the District Court to hear the appellee's petition, on the ground that he did not apply to the Supreme Court of the United States. The District Judge assumed jurisdiction without such application for certiorari, as stated in his order of June 1, 1961, for the reason, as he found, that the petition for reconsideration related such exceptional circumstances as to cause any other process to be unavailable to the petitioner. One of the claims made in the petition is that due to the imminence of the expiration of the sentence it would have been futile to make application to the Supreme Court of the United States for a writ of certiorari. It was indicated in Darr v. Burford, 339 U.S. 200, 70 S.Ct. 587, 94 L.Ed. 761 and Frisbie v. Collins, 342 U.S. 519, 72 S.Ct. 509, 96 L.Ed. 541, rehearing denied, 343 U.S. 937, 72 S.Ct. 768, 96 L.Ed. 1344, that an application for certiorari must be made unless excused by "exceptional circumstances." We cannot say that a finding by the District Judge that this constituted "exceptional circumstances," is clearly erroneous or an abuse of discretion. We, therefore, do not find that the District Court was without jurisdiction to hear the petition.
13
As heretofore stated, the District Judge found three areas of conduct on the part of the trial judge in which the petitioner was denied due process of law. Only these three are argued by counsel for the appellant, but the petitioner raises five questions, all of which were apparently presented to the District Judge. We will discuss each of them.
14
It is a well-established principle of law that a habeas corpus proceeding cannot be used as a substitute for an appeal. Woolsey v. Best, Warden, 299 U.S. 1, 57 S.Ct. 2, 81 L.Ed. 3; Hicks v. People of the State of Michigan, 281 F.2d 645, C.A.6; Armstrong v. Bannan, 272 F.2d 577, C.A.6, cert. denied 362 U.S. 925, 80 S.Ct. 679, 4 L.Ed.2d 743; Wooten v. Bomar, 267 F.2d 900, C.A.6, cert. denied 361 U.S. 888, 80 S.Ct. 161, 4 L.Ed.2d 122. The question immediately arises whether the complaints made by the petitioner, growing out of the conduct of the trial, rise to the level of a denial of due process or are merely matters of error to be determined on appeal.
15
In Michigan, appeal to the Supreme Court in criminal cases is granted only on leave. (28.1100, M.S.A., Comp. Laws 1948, § 770.3.) All of the questions here presented, concerning the conduct of the trial, were or could have been submitted to the Supreme Court in the application for leave to appeal. That court issued an order that after "due consideration" the application was denied. We must assume that the court did its duty and considered all of the questions, to the extent of determining that they were not meritorious. Washington v. Smyth, 4 Cir., 167 F.2d 658, 659.
16
The first charge of misconduct in the trial made by the petitioner relates to the selection of the jury. He recites six deviations from the provisions of the Michigan statutes in drawing jurors. These are all technical in nature and there is no evidence that any of the jurors did not meet the qualifications of jurors for the state of Michigan. Neither is there any evidence that there was any intentional or planned departure from the statutes or that any particular group of society was excluded from the jury lists. Even though there had been strict compliance with the statutes, the character of the jury and the type of jurors would have been the same. Hoyt v. Florida, 368 U.S. 57, 59, 82 S.Ct. 159, 7 L.Ed.2d 118; Fay v. New York, 332 U.S. 261, 67 S.Ct. 1613, 91 L.Ed. 2043. We find no unfairness to the petitioner in the trial resulting from the method of selecting the jury. "It is well settled that the Fourteenth Amendment due process clause does not guarantee the right to a jury trial in state criminal proceedings. Maxwell v. Dow, 1900, 176 U.S. 581, 20 S.Ct. 494, 44 L.Ed. 597; Jordan v. Commonwealth of Mass., 1912, 225 U.S. 167, 32 S.Ct. 651, 56 L.Ed. 1038; Fay v. People of the State of New York, 1947, 332 U.S. 261, 67 S.Ct. 1613, 91 L.Ed. 2043; Application of Tune, 3 Cir., 1956, 230 F.2d 883; Hughes v. Heinze, 9 Cir., 1959, 268 F.2d 864. It has been said that a State may partially or completely do away with a jury system without violating the Fourteenth Amendment; Jordan v. Commonwealth, supra; Hughes v. Heinze, supra. However, while the Fourteenth Amendment does not require the state to grant a jury trial, it does require that the accused be given a fair trial." United States ex rel. Tillery v. Cavell, 294 F.2d 12, 19. See also: Snyder v. Massachusetts, 291 U.S. 97, 105, 54 S.Ct. 330, 78 L.Ed. 674.
17
The District Judge made no finding of violation of the due process clause in the manner of selecting the jury. We conclude that there was no such violation.
18
Another claim made by the petitioner, upon which the District Judge made no finding, is to the effect that the trial judge had prejudged his case and was thus disqualified to conduct the trial. In denying the petitioner's motion to dismiss the charge because of errors of the examining magistrate, the judge said: "The Court from the reading of such testimony (before the examining magistrate) being convinced that the testimony establishes the fact that the crime charged had been committed and that there was probable cause to believe the Respondent, A. Matthew Buder, had committed it," —
19
Section 28.931, M.S.A., Comp.Laws 1948, § 766.13 provides, in part, "If it shall appear to the magistrate upon the examination of the whole matter, that an offense * * * has been committed and there is probable cause for charging the defendant therewith, said magistrate shall forthwith bind such defendant to appear before the circuit court of such county * * * for trial." The trial judge had to make a finding that an offense had been committed in order to sustain the charge. We think he did not go beyond the bounds of propriety — he did not express an opinion as to the guilt or innocence of the petitioner. We find no merit to the claim that it amounted to a denial of due process of law.
20
Other questions raised are evidentiary in character. They relate to the admission of evidence, and recalling and cross-examining witnesses. These matters are peculiarly within the province of the trial judge. Glasser v. United States, 315 U.S. 60, 83, 62 S.Ct. 457, 86 L.Ed. 680; Lohman v. United States, 266 F.2d 3, C.A.6, cert. denied 361 U.S. 923, 80 S.Ct. 290, 4 L.Ed.2d 239; Gariepy v. United States, 220 F.2d 252, 263, cert. denied 350 U.S. 825, 76 S.Ct. 53, 100 L.Ed. 737. He has a wide latitude and discretion in these respects in the conduct of a trial and if he errs it may be the subject of an appeal. Rarely would such errors warrant a collateral attack on a judgment of conviction as being a denial of due process of law. We find no merit to the petitioner's contention that his constitutional rights were invaded by the trial judge's ruling on evidentiary questions.
21
Lastly, the petitioner contends that the trial judge erred to the extent of denying him due process in giving the jury the Allen charge, (Allen v. United States, 164 U.S. 492, 501, 17 S.Ct. 154, 41 L.Ed. 528) when it appeared to be deadlocked. Both the prosecution and the defense requested the charge, in order that the jury might reach an agreement, rather than have to retry the case. The objection is that in giving the charge, the judge did not charge on reasonable doubt and presumption of innocence. The charge is in all other respects correct. The judge had adequately and correctly instructed the jury on presumption of innocence and reasonable doubt in his original instructions. The purpose of the instruction was to urge the jurors to give due consideration to each other's arguments and reasoning and see if by further consideration they could not agree on a verdict. The petitioner claimed that he understood the entire charge would be repeated. There was no question about the substantive law involved. It is not customary to repeat the entire charge when the Allen charge is given nor do we see any reason why it should have been done here. We find no error here, much less a denial of due process.
22
The Supreme Court has defined due process as follows: "Due process of law is a summarized constitutional guarantee of respect for those personal immunities which, as Mr. Justice Cardozo twice wrote for the Court, are `so rooted in the traditions and conscience of our people as to be ranked as fundamental,' * * * or are `implicit in the concept of ordered liberty'." Denial of due process is conduct that "shocks the conscience" and offends "`a sense of justice'." Rochin v. California, 342 U.S. 165, 169, 172, 173, 72 S.Ct. 205, 96 L.Ed. 183. See also: Brown v. Mississippi, 297 U.S. 278, 56 S.Ct. 461, 80 L.Ed. 682; Snyder v. Massachusetts, 291 U.S. 97, 54 S.Ct. 330, 78 L.Ed. 674.
23
In hearing the arguments and in studying the briefs in this case, the Court could not escape the feeling that it was being presented on direct appeal. Whatever merit there may be to the claims made by the appellee, they are purely matters to be passed on in an appellate proceeding rather than a collateral attack on the judgment. They do not rise to the level of violations of the due process clause of the Fourteenth Amendment of the Constitution of the United States. The judgment of the District Court is contrary to law and cannot be sustained.
24
The judgment of the District Court is reversed, the case remanded to the District Court with instructions to enter judgment for the respondent, and order the petitioner returned to the custody of the respondent.
|
Court of Appeals
of the State of Georgia
ATLANTA,____________________
June 09, 2016
The Court of Appeals hereby passes the following order:
A16D0340. PREMIER ELEVATOR COMPANY, INC. et al. v. MICHAEL
EDWARDS.
Upon consideration of the Motion for Reconsideration filed on behalf of
appellants in the above appeal, the Motion for Reconsideration is hereby GRANTED
and the judgment of this Court issued on May 15, 2016 dismissing the discretionary
application is hereby vacated.
It is further ordered that the application for discretionary appeal be GRANTED.
Appellant shall have ten days from the date of this order to file a Notice of Appeal
with the trial court. The clerk of the trial court is directed to include a copy of this
order in the record transmitted to the Court of Appeals.
Court of Appeals of the State of Georgia
Clerk’s Office,
06/09/2016
Atlanta,____________________
I certify that the above is a true extract from
the minutes of the Court of Appeals of Georgia.
Witness my signature and the seal of said court
hereto affixed the day and year last above written.
, Clerk.
|
759 N.W.2d 297 (2008)
2008 SD 125
Keith CLOUGH, Plaintiff and Appellee,
v.
Lorraine NEZ, Defendant and Appellant.
Nos. 24675, 24677.
Supreme Court of South Dakota.
Argued on October 1, 2008.
Decided December 23, 2008.
*299 Stephen C. Hoffman, Patricia A. Meyers of Costello, Porter, Hill, Heisterkamp, Bushnell & Carpenter, LLP, Rapid City, South Dakota, Attorneys for plaintiff and appellee.
Dana L. Hanna, Rapid City, South Dakota, Attorney for defendant and appellant.
ZINTER, Justice.
[¶ 1.] Lorraine Nez appeals the circuit court's award of visitation to Keith Clough, a nonparent. Because the circuit court found extraordinary circumstances for an award of visitation to a nonparent, we affirm.
*300 Facts and Procedural History
[¶ 2.] This case involves a visitation dispute regarding five-year-old C.C., who was born on May 26, 2003. Clough claimed that he had sexual intercourse with Nez in August 2002. Clough further claimed that Nez subsequently told him she was pregnant and he was the father. Nez denied that she had sexual intercourse with Clough, but that in order to relieve a "big mental strain," she wanted Clough and his girlfriend Lee Ann Strenstrom (Nez's half-sister) to raise C.C. until Nez was "out of school, and stable." According to Nez, she made an agreement with Clough and Strenstrom that they would share the responsibility of raising C.C. According to Clough, however, Strenstrom had little involvement as he and she were only dating "on and off. She wasn't living with me and what not. Basically, an on-and-off girlfriend at that point[.]" Notwithstanding this dispute regarding the nature of the Clough-Strenstrom relationship, there is no dispute that on June 10, 2003, Nez and Clough executed a sworn acknowledgment of paternity expressly indicating Clough was C.C.'s biological father. A birth certificate was thereafter issued reflecting Clough's surname.
[¶ 3.] According to Clough, he took C.C. from Mission to live with him in Sioux Falls two days after her birth.[1] Clough testified that when he took C.C. to Sioux Falls, he and Strenstrom were not living together, and that he alone raised C.C. He further testified that Strenstrom only "occasionally" saw C.C. Conversely, Nez claimed that Strenstrom and Clough were living together "every day," and that they raised C.C. together until July 2004. The circuit court resolved this factual dispute adversely to Nez. The circuit court's finding, which has not been challenged, treats Clough as the primary caretaker. And more importantly, it is not disputed that during the first four years of C.C.'s life, Nez provided no support, and Nez's contact with C.C. was limited and infrequent.
[¶ 4.] In 2004, Clough was charged with simple assault involving Strenstrom.[2] Upon his arrest, Clough's mother took C.C. from Sioux Falls to temporarily care for her in Mission. Although Nez then started two tribal court proceedings to obtain custody, both actions were dismissed for lack of jurisdiction. C.C. was subsequently returned to Sioux Falls to again live with Clough.[3] In January of 2005, Clough and C.C. moved to Rapid City. Although the circuit court found that Nez knew or could have determined Clough's new location, Nez had no contact with C.C. from December 2004 through March 2006.
[¶ 5.] On September 21, 2006, Clough commenced this suit seeking legal and physical custody of C.C. Nez objected, denying that Clough was C.C.'s father. Nez also sought custody and requested court-ordered DNA tests to determine whether Clough was the biological father. Clough objected to the DNA test because the time for contesting paternity had expired under the statute of limitations. The circuit court ruled that this Court declared the statute of limitations unconstitutional[4] and *301 ordered Clough to take a DNA test. The test indicated that Clough was not C.C.'s biological father.
[¶ 6.] At the beginning of trial, Clough conceded that he was not the biological father and he withdrew his claim for custody. He did, however, request that the court award him visitation. After hearing the evidence, the circuit court awarded Nez custody. The court further ruled that even though Clough did not dispute Nez's fitness, and even though Clough was not the biological father, visitation would be allowed because extraordinary circumstances justified visitation, namely: (1) Clough was C.C.'s primary caretaker since the time of her birth, (2) Clough and C.C. were closely bonded, (3) rupturing the connection between Clough and C.C. would be extremely harmful and detrimental to C.C.'s welfare, and (4) Clough had provided for C.C.'s physical, emotional and other needs her entire life. The court concluded that "[p]ursuant to SDCL 25-5-29 and 25-5-30, extraordinary circumstances exist [that] require the relationship between [Clough] and [C.C.] be continued." The court awarded Clough visitation that included a full weekend each month, summer visitation, and alternate holidays.
[¶ 7.] Nez does not appeal the nature or extent of the visitation ordered. Instead, she appeals the award of any visitation, arguing that Clough failed to show the extraordinary circumstances required for a nonparent to obtain visitation. Nez also argues that the circuit court erred by failing to give deference to her wishes as the biological parent and by failing to apply the correct burden of proof. By notice of review, Clough appeals the circuit court's award of custody to Nez.
Decision
[¶ 8.] These arguments require our review of the statutes and decisional law governing a nonparent's right to custody and visitation of children. The arguments also require our review of the circuit court's extraordinary circumstances findings. We "review the trial court's findings of fact under the clearly erroneous standard [and] will overturn ... findings of fact on appeal only when a complete review of the evidence leaves the Court with a definite and firm conviction that a mistake has been made." Miller v. Jacobson, 2006 SD 33, ¶ 19, 714 N.W.2d 69, 76. "Statutory interpretation is a question of law, reviewed de novo." Scheller v. Faulkton Area Sch. Dist. No. 24-3, 2007 SD 42, ¶ 5, 731 N.W.2d 914, 916.
[¶ 9.] The Due Process Clause of the United States Constitution protects parents' rights to generally raise their children as they wish. Medearis v. Whiting, 2005 SD 42, ¶ 17, 695 N.W.2d 226, 230-31 (citing Troxel v. Granville, 530 U.S. 57, 66, 120 S.Ct. 2054, 147 L.Ed.2d 49 (2000)) (noting, "it cannot now be doubted that the Due Process Clause of the Fourteenth Amendment protects the fundamental right of parents to make decisions concerning the care, custody, and control of their children"). Accordingly, a court may not presume that visitation with a nonparent is in the best interests of a fit parent's child. Id. ¶ 18, 695 N.W.2d at 231 (citing Troxel, 530 U.S. at 69, 120 S.Ct. at 2062). Further, the burden of disproving that a nonparent's visitation would be in the best interests of the child may not be placed *302 upon a fit parent. Id. Ultimately, "[i]n order to grant a nonparent visitation rights with a minor child over the objections of a parent, a clear showing of gross misconduct, unfitness, or other extraordinary circumstances affecting the welfare of the child is required." D.G. v. D.M.K., 1996 SD 144, ¶ 46, 557 N.W.2d 235, 243 (citing Cooper v. Merkel, 470 N.W.2d 253, 255-56 (S.D.1991)).
[¶ 10.] "`Extraordinary circumstances' denotes more than a simple showing that visitation would be in the child's best interest." Id. (citing Quinn v. Mouw-Quinn, 1996 SD 103, ¶ 13, 552 N.W.2d 843, 846). Although discussed in the analogous area of custody disputes, courts have identified a number of extraordinary circumstances that are sufficient to rebut the constitutional presumption of deference due parents.
These circumstances must be only those that result in serious detriment to the child. They include the abandonment or persistent neglect of the child by the parent; the likelihood of serious physical or emotional harm to the child if placed in the parent's custody; the extended, unjustifiable absence of parental custody; the abdication of parental responsibilities; the provision of the child's physical, emotional, and other needs by persons other than the parent over a significant period of time; the existence of a bonded relationship between the child and the nonparent custodian sufficient to cause significant emotional harm to the child in the event of a change in custody; the substantial enhancement of the child's well-being while under the care of the nonparent; the extent of the parent's delay in seeking to reacquire custody of the child; the demonstrated quality of the parent's commitment to raising the child; the likely degree of stability and security in the child's future with the parent; the extent to which the child's right to an education would be impaired while in the custody of the parent; and any other circumstances that would substantially and adversely impact the welfare of the child.
Meldrum v. Novotny, 2002 SD 15, ¶ 58, 640 N.W.2d 460, 470-71 (Konenkamp, J. concurring in part) (citations omitted).
[¶ 11.] Following Meldrum, these rebutting circumstances were codified in SDCL 25-5-29 and 25-5-30. SDCL 25-5-29 expressly authorizes nonparents to petition for custody or visitation if they have served as the child's primary caretaker, are closely bonded as a parental figure, or have otherwise formed a significant and substantial relationship. Even then, however, they may petition for custody or visitation only when the constitutional presumptions due parents are rebutted. The statute finally identifies a number of those rebutting circumstances.
Except for proceedings under chapter 26-7A, 26-8A, 26-8B, or 26-8C, the court may allow any person other than the parent of a child to intervene or petition a court of competent jurisdiction for custody or visitation of any child with whom he or she has served as a primary caretaker, has closely bonded as a parental figure, or has otherwise formed a significant and substantial relationship. It is presumed to be in the best interest of a child to be in the care, custody, and control of the child's parent, and the parent shall be afforded the constitutional protections as determined by the United States Supreme Court and the South Dakota Supreme Court. A parent's presumptive right to custody of his or her child may be rebutted by proof:
(1) That the parent has abandoned or persistently neglected the child;
*303 (2) That the parent has forfeited or surrendered his or her parental rights over the child to any person other than the parent;
(3) That the parent has abdicated his or her parental rights and responsibilities; or
(4) That other extraordinary circumstances exist which, if custody is awarded to the parent, would result in serious detriment to the child.
SDCL 25-5-29. In this case, the circuit court relied on rebutting presumption (4), which involves any extraordinary circumstance resulting in serious detriment to the child.
[¶ 12.] SDCL 25-5-30 defines that "serious detriment" element of subdivision (4). It identifies ten extraordinary circumstances that constitute the serious detriment necessary to interfere in parents' decisions regarding their children. Circumstances (3) and (4) are at issue in this case.
Serious detriment to a child may exist whenever there is proof of one or more of the following extraordinary circumstances:
(1) The likelihood of serious physical or emotional harm to the child if placed in the parent's custody;
(2) The extended, unjustifiable absence of parental custody;
(3) The provision of the child's physical, emotional, and other needs by persons other than the parent over a significant period of time;
(4) The existence of a bonded relationship between the child and the person other than the parent sufficient to cause significant emotional harm to the child in the event of a change in custody;
(5) The substantial enhancement of the child's well-being while under the care of a person other than the parent;
(6) The extent of the parent's delay in seeking to reacquire custody of the child;
(7) The demonstrated quality of the parent's commitment to raising the child;
(8) The likely degree of stability and security in the child's future with the parent;
(9) The extent to which the child's right to an education would be impaired while in the custody of the parent; or
(10) Any other extraordinary circumstance that would substantially and adversely impact the welfare of the child.
SDCL 25-5-30.
[¶ 13.] Although both parties agreed at trial that SDCL 25-5-29 and 25-5-30 governed these proceedings, a number of Nez's appellate arguments implicitly question whether these extraordinary circumstances statutes apply in a visitation dispute. Nez argues that the reference to "visitation" in SDCL 25-5-29 only relates to standing, suggesting that the remaining language in SDCL 25-5-29 and 30 does not govern the proof necessary to award visitation. If applicable, these statutes dispose of a number of Nez's arguments. We therefore first consider whether the statutes apply to a visitation dispute.
[¶ 14.] SDCL 25-5-29 and SDCL 25-5-30 were enacted in 2002, as a part of 2002 Sess Laws ch 126, "An Act to revise and modify certain provisions relating to the award of child custody and to declare an emergency." Although this title only mentions the word "custody," three of the Act's five substantive sections reflect that it was intended to govern both custody and visitation. See SDCL 25-5-29 (SL 2002, ch 126, § 1) (providing that a nonparent may petition any court of competent jurisdiction "for custody or visitation" under certain enumerated circumstances); SDCL 25-5-31 (SL 2002, ch 126, § 3) (providing *304 that nothing in SDCL 25-5-29 creates any right on behalf of a stepparent to seek "custody or visitation" with certain stepchildren); and SDCL 25-5-32 (SL 2002, ch 126, § 4) (providing that if a court determines a person other than a parent should be awarded "custody or visitation," the court need not terminate either parent's parental rights over the child). There are also obvious reasons why the three remaining provisions of the Act did not expressly refer to visitation.[5] Because the relevant substantive provisions expressly contemplate an award of custody or visitation, we conclude that the Legislature intended this Act to cover both.
[¶ 15.] Moreover, even if the statutes were not expressly intended to govern visitation, we see no reason why the common law regarding extraordinary circumstances, as expressed in Meldrum, supra, and later codified in these statutes, should not apply to both custody and visitation. As we have previously noted, "[t]he right of visitation derives from the right of custody and is controlled by the same legal principles." Cooper, 470 N.W.2d at 255. Therefore, even if the statutes did not expressly apply, the common-law legal principles codified therein are the type of extraordinary circumstances necessary to satisfy due process concerns. Consequently, we review the circuit court's decision under SDCL 25-5-29 and 25-5-30 to determine whether Clough proved one or more of those extraordinary circumstances necessary for a nonparent to obtain visitation.
[¶ 16.] The circuit court's decision was predicated on findings of fact all emanating from the undisputed circumstance that Nez had never supported or been the caretaker of her child. Thus, there can be no substantial dispute with the court's finding that Clough "served as the primary caretaker for the minor child since the time of her birth until the time of hearing regarding custody and visitation on May 1, 2007," a period of four years. This finding alone was sufficient to rebut Nez's presumptive rights as a parent under SDCL 25-5-29(4) and 25-5-30(3) (extraordinary circumstances causing serious detriment to a child exist when the child's needs have been provided by a nonparent over a significant period of time). As Justice Konenkamp observed in Meldrum, "extraordinary circumstances ... include... the provision of the child's physical, emotional, and other needs by persons other than the parent over a significant period of time[.]" 2002 SD 15, ¶ 58, 640 N.W.2d 460, 470-71 (Konenkamp, J., concurring in part).[6]
*305 [¶ 17.] There is also no real dispute with the court's finding that Clough "has closely bonded as a parental figure with [C.C.] and has otherwise formed a significant and substantial relationship with [C.C.]. More importantly, the child has bonded with [Clough]." Clough testified that C.C. calls him "dad," and he and C.C. "have a very good father/daughter relationship. We love doing things.... We're real close." Clough further testified that "if she were to lose me, I don't now what her reaction would be. I think she would probably be pretty pained. It would be pretty detrimental to her[.]" Thus, this finding further, independently rebutted Nez's presumptive rights under SDCL 25-5-29(4) and 25-5-30(4) (extraordinary circumstances exist when there is "[t]he existence of a bonded relationship between the child and the person other than the parent sufficient to cause significant emotional harm to the child").
[¶ 18.] Although Nez points out that no expert testified that C.C. would actually suffer a serious detriment without visitation, expert testimony is not required to establish the probability of emotional harm to a child. That "assessment can be made within ordinary experience, no expert is necessary." Laurie S. v. Superior Court, 26 Cal.App.4th 195, 31 Cal.Rptr.2d 506, 510 (1994). Nez's argument also fails to acknowledge that the circuit court gave her legal and physical custody, and she conceded at trial that forbidding visitation "would put [C.C.] through ... mental stress." Under these circumstances, we affirm the circuit court's finding that rupturing the connection between Clough and C.C. would be extremely harmful and detrimental to C.C.'s welfare.
[¶ 19.] Nez next contends that a number of the circuit court's statements reflect that it did not place the burden on Clough to prove that a denial of visitation would result in serious detriment to C.C.; rather, the court incorrectly assumed that visitation would be in C.C.'s best interest. For example, Nez points out that at the beginning of trial, the court stated:
And the question is, can somebody establish to me that the child will not be harmed by the sudden and arbitrary seemingly arbitrary decision that you can never see the person you have regarded as your father for three (sic) years?
We note, however, that the court's question was rhetorical and clearly linked to the undisputed factual circumstance that the child had formed a parental relationship with Clough because he, rather than Nez, had provided the child's care and support for her entire life. Consequently, when viewed in context, it is apparent that the court did not make improper assumptions or apply improper burdens. Indeed, immediately after making this statement, the circuit court clearly expressed its correct understanding of the proper allocation of burdens of proof that it was going to apply at trial. Immediately after the foregoing statement, the following exchange occurred:
Nez's counsel: "Clough ... has the burden of showing extraordinary circumstances[.]"
The court: "I agree."
Nez's counsel: "That's where we're at."
The court: "I agree absolutely."
[¶ 20.] Nez also notes that after Clough testified (and before Nez testified), the court stated: "And the question is, she's grown up with [Clough as] her daddy. And you know, you got a mountain to climb to get me to cold terminate any contact that he's going to have with the child under those circumstances." The court further stated before Nez testified: "Somebody is going to have to show me, *306 given the history we have, as to why I should terminate his relationship with the child. And I can't think of a reason at this point." Again, however, these statements were expressly qualified by the "history" and "circumstances" of Clough's bonded relationship and Nez's undisputed failure to support or care for her child, which rebutted the presumption of parental fitness. See SDCL 19-11-1 (Rule 301) (providing that when substantial, credible evidence has been introduced to rebut a presumption, it shall disappear from the action or proceeding). Therefore, under the undisputed circumstances and history of this case, Clough had satisfied his burden of rebutting the parental presumption, and the circuit court appropriately began to focus on the best interests of the child. For the same reason, the circuit court's statements do not indicate that it failed to follow the constitutional and statutory presumptions and burden of proof applicable in such cases.[7]
[¶ 21.] Nez next argues the circuit court gave no deference or special weight to her determination that it was in C.C.'s best interests to deny or limit Clough's visitation. See Troxel, 530 U.S. 57, 120 S.Ct. 2054, 147 L.Ed.2d 49, in which the Supreme Court required that a trial court "must accord at least some special weight to the parent's own determination." See also Medearis, 2005 SD 42, ¶ 22, 695 N.W.2d at 232, in which this Court acknowledged Troxel's holding that "some `special weight' must be given the parent's own determination." Nez points out there was no contention that she was an unfit parent, and therefore, her determination concerning Clough's visitation should have been given deference and special weight.
[¶ 22.] Nez's argument is misplaced under the facts of this case. Although the special weight and presumption discussed in Troxel and Medearis is applicable in situations involving a fit parent, the presumption disappears in situations where there are also extraordinary circumstances rebutting that parent's presumptive right to make custody/visitation decisions with respect to his or her child. The language of Troxel clearly reflects that a fit parent is entitled to that deference only when there are no extraordinary circumstances. When, however, as in this case, a parent fails to care for his or her child, extraordinary circumstances exist and the presumption disappears:
The law's concept of the family rests on a presumption that parents possess what a child lacks in maturity, experience, and capacity for judgment required for making life's difficult decisions. More important, historically it has recognized that natural bonds of affection lead parents to act in the best interests of their children.
*307 Accordingly, so long as a parent adequately cares for his or her children (i.e., is fit), there will normally be no reason for the State to inject itself into the private realm of the family to further question the ability of that parent to make the best decisions concerning the rearing of that parent's children.
Troxel, 530 U.S. at 68-69, 120 S.Ct. at 2061 (citing Parham v. J.R., 442 U.S. 584, 602, 99 S.Ct. 2493, 2504, 61 L.Ed.2d 101 (alternations in original)). Therefore, deference and special weight must be given only when a fit parent has adequately cared for his or her children, i.e., when no extraordinary circumstances apply. When extraordinary circumstances have been shown, the presumption disappears. See SDCL 19-11-1 (Rule 301).
[¶ 23.] We have recognized this qualification in both visitation and custody contexts. After discussing the usual prerequisite of unfitness required to rebut the presumption in custody proceedings, we explicitly noted that "extraordinary circumstances affecting the welfare of the children can ... operate to defeat the custody preference of a parent." In re Guardianship of Sedelmeier, 491 N.W.2d 86, 88 (S.D.1992). And, in the visitation context, we have noted that "[i]n order to grant a nonparent visitation rights with a minor child over the objections of a parent, a clear showing of gross misconduct, unfitness, or other extraordinary circumstances affecting the welfare of the child is required." D.M.K., 1996 SD 144, ¶ 46, 557 N.W.2d at 243 (emphasis added). Therefore, although Nez started with a parental presumption requiring deference and special weight to her decisions, that deference disappeared once Clough established the extraordinary circumstance that Nez had effectively never cared for or supported her child. Under those circumstances, Nez was no longer entitled to the special deference normally afforded a fit parent, and the circuit court's focus on the best interests of the child was appropriate.
[¶ 24.] Nez also fails to acknowledge that the circuit court had serious questions about Nez's credibility. Although her testimony about Clough's fitness and Nez's wishes regarding visitation would ordinarily raise concerns, the circuit court rejected these concerns expressly finding that Nez's assertions regarding Clough "raise serious questions about [Nez's] credibility and clearly indicate a willingness to `stretch the truth' if necessary." Nez argues that this finding is erroneous because the court based its finding on counsel's cross-examination of Clough regarding Clough's alleged criminal historyallegations Nez could not prove at trial.[8] Nez argues that "questions by counsel are certainly no evidence at all as to his client's credibility as a witness." Counsel's questions are not, however, the extent of the record regarding Nez's lack of credibility.
[¶ 25.] In Nez's pro-se answer to Clough's complaint, which she signed, she made the same or equivalent allegations as those involved in cross-examination. Those allegations seriously and adversely reflected on Nez's credibility. Furthermore, regardless of Nez's credibility, the *308 circuit court effectively deferred to Nez's determination of appropriate visitation because the court awarded Clough the roughly equivalent amount of visitation that Nez deemed appropriate absent a court order.
[¶ 26.] Nez finally argues that the circuit court erred in considering the effect of the termination of contact between Clough and C.C., claiming that she never testified she would completely terminate all visitations between C.C. and Clough. At the beginning of the trial, however, Nez's counsel specifically informed the court that Nez objected to "any legally enforceable rights of visitation." Concededly, during trial, Nez testified:
Q: If the court does not give [Clough] legal enforceable visitation rights, would you do itdo you intend to allow [Clough] to have some contact and visitations with [C.C.]?
A: Yes.
Q: Under what circumstances?
A: Nothing a lot. I was just thinking like one weekend a month. That type of deal. One week in the summer.
But, Nez ultimately clarified:
Q: You want to make that decision rather than the court?
A: Yes.
And, at oral argument Nez's counsel reiterated, "[t]he issue here is who's going to make the decision, a fit parent or the court?" Counsel was then asked by this Court: "So ... she'd be coming to the South Dakota Supreme Court even if the judge had awarded him one day a year, she'd still be here on principal saying, I want to decide when...." Counsel replied, "That very well may be the case." Thus, the record does not support Nez's argument that no court order was necessary to facilitate visitation with the only parent C.C. has ever known. We affirm the circuit court's order of visitation.
Notice of Review: Clough's Request for Custody
[¶ 27.] By notice of review, Clough appeals the circuit court's award of custody to Nez. Clough argues that under the best interest test, he should be awarded custody. Clough points out that under the paternity acknowledgment signed by both parties, he is the presumptive father. Because Nez did not challenge paternity within the time allowed by the statute of limitations,[9] and because Clough contends the statute is constitutional, he argues the DNA test was improper. Absent the DNA test, Clough argues he is the presumptive father who, under the acknowledgment of paternity, is entitled to seek custody under the lesser best interest test. Clough requests a remand for a new custody determination in his favor based solely on C.C.'s best interests.
[¶ 28.] At the beginning of trial, however, Clough expressly withdrew his request for custody of C.C. And, at the conclusion of the trial, he neither requested the circuit court to award custody nor proposed findings and conclusions requesting such an award. Because Clough did not seek custody at trial, he may not raise the issue for the first time on appeal. See Action Mech., Inc. v. Deadwood Historic Pres. *309 Comm'n, 2002 SD 121, ¶ 50, 652 N.W.2d 742, 755 (providing, "[a]n issue not raised at the trial court level cannot be raised for the first time on appeal").
[¶ 29.] Affirmed.
[¶ 30.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and MEIERHENRY, Justices, concur.
NOTES
[1] This point is also in dispute. Clough testified "from that point on basically I would be taking care of her and raising her the best way I could." Nez, however, claimed that she kept C.C. in Mission for nearly three months.
[2] This matter was resolved by Clough's plea to disorderly conduct and the entry of a protection order.
[3] During the time Clough's mother was caring for C.C. in Mission, Clough obtained a protection order prohibiting Strenstrom from having any contact with Clough or C.C.
[4] In 2004, a majority of this Court declared the statute of limitations in SDCL 25-8-59 unconstitutional. Dep't of Soc. Serv. ex rel. Wright v. Byer, 2004 SD 41, 678 N.W.2d 586 (Byer I). On rehearing, a majority held that declaration in abeyance until paternity tests were completed and the majority could better assess the statute's constitutionality. Dep't of Soc. Serv. ex rel. Wright v. Byer, 2005 SD 37, 694 N.W.2d 705 (Byer II). Because the Byer II dispute never returned to the Court, this Court's suspension of its unconstitutionality declaration is our last ruling on this issue.
[5] Although the three remaining provisions do not expressly mention visitation, they either implicitly reference visitation or that subject is not relevant to that specific section's purpose. See SDCL 25-5-30 (SL 2002, ch 126, § 2) defining the serious detriment referred to in SDCL 25-5-29, which expressly refers to both custody and visitation; SDCL 25-5-33 (SL 2002, ch 126, § 5), which only deals with the issue of child support should custody be given to a nonparent, a subject not at issue in a visitation dispute. Finally, based upon the language and time of enactment, it is obvious that this Act was adopted in response to this Court's custody decision in Meldrum. See supra ¶ 11. Because the Legislature apparently wished the Act to apply to that pending custody proceeding, the Legislature adopted SDCL 25-5-34 (SL 2002, ch 126, § 6), which provided for the Act's immediate application to pending custody proceedings.
[6] A similar factual situation was presented in Meldrum, wherein Justice Konenkamp noted:
The child ha[d] been in [the nonparent's] custody for more than eight years. Much of that time the [parent] acquiesced in the situation. There were many years where there was no contact between [parent] and [child].
2002 SD 15, ¶ 59, 640 N.W.2d at 471.
[7] Nez argues the circuit court made other statements indicating that it misplaced the burden when it ruled from the bench. When ruling, the court stated:
We come to the position ... that for virtually four years, [C.C] is raised by the person she believes to be her father.... [H]e filled the role and that is the factor that is of concern to me. I cannot conceive of any way that terminating that role is of benefit to [C.C.].
The court also stated:
My findings of fact are this: number one, that [Nez][is] the mother. Number two [Clough] [is] not the father. Number three, [Clough] [has] acted in the parental role for virtually all of the child's life. There is no evidence before me that that role was harmful to the child[.]"
Like the statements discussed above, Clough's burden of rebutting the parental presumption had been satisfied, and when viewed in context, the circuit court was correctly focusing on the best interests of the child.
[8] The court found:
During the course of the trial, [Clough] was repeatedly questioned about voluntary commitments, criminal offenses in other states, protection orders against him, and the like. Those questions, upon review of medical and criminal records, were without meaningful factual basis and [Clough's] responses to those questions were candid and proven correct. There is no reason to seriously question his credibility, though the court must always be alert for the warping of memory and observations by the emotional prism associated with domestic/custody disputes.
[9] SDCL 25-8-59 provides in relevant part:
Any action contesting a rebuttable presumption of paternity ... shall be commenced in circuit court either sixty days after the creation of the presumption of paternity or the date of any administrative or judicial proceedings relating to the child including proceedings to establish a support obligation[.]
(Emphasis added.) Therefore, in this case, Nez was required to commence an action to challenge Clough's paternity within sixty days of June 10, 2003.
|
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 07-15102 June 17, 2008
Non-Argument Calendar THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 05-03252-CV-TCB-1
CHET GRIMSLEY,
Plaintiff-Appellant,
versus
MARSHALLS OF MA, INC.,
TJX COMPANIES, INC.,
DAVID FARRY,
Defendants-Appellees.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(June 17, 2008)
Before TJOFLAT, BLACK and HULL, Circuit Judges.
PER CURIAM:
Plaintiff Chet Grimsley appeals the district court’s grant of summary
judgment in favor of his former employer, Marshalls of MA, Inc., its parent
company, TJX Companies, Inc., and his former supervisor, David Farry,
(collectively referred to as “Marshalls”) on his claims of race discrimination under
Title VII of the Civil Rights Act, 42 U.S.C. § 2000e et seq. (“Title VII”), and 42
U.S.C. § 1981, prohibited medical inquiry under the Americans with Disabilities
Act (“ADA”), 42 U.S.C. § 12112, and intentional infliction of emotional distress
and negligent supervision/retention under Georgia law. After review, we affirm.
I. BACKGROUND
A. Grimsley’s Employment at Marshalls
Grimsley worked at a Marshalls warehouse as a night-shift shipping
supervisor. The warehouse had approximately 900 employees and was about
800,000 square feet in area. Grimsley supervised between thirty and sixty
employees who sorted and loaded trucks with merchandise to be shipped to stores.
Grimsley was one of two white supervisors who worked at the warehouse. The
2
other white supervisor was Michael Love. The remaining supervisors and most of
the warehouse employees were black.1
From 1999 until 2004, David Farry, a white processing manager, was
Grimsley’s supervisor. Grimsley and Farry had been close personal friends and
had worked together at Marshalls in the past. However, beginning in 2000,
Farry’s treatment of Grimsley became abusive and forms the basis for Grimsley’s
claims.
As to his race claim, Grimsley presented evidence that Farry was reluctant
to interact with black employees and supervisors under Farry’s supervision.
Rather than communicate directly with black employees and supervisors, Farry
would tell Grimsley to pass on instructions to them. To some warehouse
employees, it appeared that Farry was uncomfortable working with or was scared
of black people.
Some employees overheard Farry make racist comments. Chris Almond
overheard Farry (1) state that he would not let two black employees drive a truck
together and (2) refer to one black supervisor as a “GED Nigger.” Several
1
Marshalls’ warehouse employees were not only African American, but also from various
other nationalities and/or ethnic groups, including Somalians, Ethiopians and Sudanese.
3
employees heard Farry refer to the Somalian employees as “lazy Somalians” and
to black employees as “lazy niggers.”
Grimsley, a white supervisor, presented evidence that Farry treated him
differently than the black warehouse supervisors. For example, Farry would yell
and curse at Grimsley, make Grimsley work through his breaks and lunch and tell
Grimsley to perform manual labor tasks usually reserved for the hourly employees,
such as sweeping the floor or retaping lines on the floor.
Farry sometimes required Grimsley to stay late or work on weekends to
clean up the areas of black supervisors. One black employee, Belinda Reid,
testified that, instead of disciplining black supervisors who left their areas messy,
Farry would make Grimsley clean their areas. Several employees reported seeing
Grimsley sweeping black supervisors’ areas, including an area called the hi-bay
that was as large as a football field. These employees testified that they did not
see other supervisors sweeping and that this was a job usually reserved for hourly
associates. Several employees observed that Farry allowed black supervisors to
take long breaks.
Besides Grimsley, the only other white warehouse supervisor under Farry’s
supervision was Michael Love. Farry assigned Love and Grimsley more work
than the black supervisors. Love said that although both he and Grimsley worked
4
harder than black supervisors, Farry “reserved his harshest treatment” for
Grimsley. According to Love, Farry made Grimsley perform extremely hard
physical labor or perform tasks alone that actually required multiple people. When
Love asked Farry why he worked him (Love) and Grimsley harder, Farry would
reply that the “black guys won’t do any work” and “the niggers are lazy.” Farry
told Grimsley that he had to do additional work because “I can’t get those lazy
niggers to work.” On one occasion, Farry required Grimsley and Love to get on
their hands and knees and tape the warehouse floor. Love asked Farry why they
were taping the floor in other supervisors’ areas. Farry responded that the
“niggers” were “too lazy” and “too stupid” to do it right.
In one confrontation, Farry told Grimsley they were not meeting production
standards and Farry believed he was going to get a bad review and lose his bonus.
Farry yelled at Grimsley. Among other things, Farry told Grimsley that, because
Grimsley was white, he was supposed to do better and that he was not “one of the
lazy Niggers like the rest of the people . . . .”
According to Grimsley, when senior management visited the warehouse,
Farry would tell Grimsley and Love to sweep other black supervisors’ areas.
When they asked why they were having to do the black supervisors’ work, Farry
said it was because the black supervisors were lazy. Grimsley complained to Farry
5
that he was tired of doing the black supervisors’ work because Farry “was scared
to put them into a position where they were held accountable.” Grimsley
repeatedly told Farry that Farry needed to hold his black supervisors accountable
and that Farry’s treatment was race discrimination.
Grimsley testified that “lazy” was Farry’s favorite word and that he referred
to employees as “lazy Somalians,” “lazy Muslims,” and “lazy Niggers.” Farry
referred to the black employees as “Niggers” about once a week. Farry also called
Grimsley a “lazy White boy” six or seven times.
Farry also made comments about Grimsley’s bi-polar disorder. For
example, Farry joked in employee meetings that he hoped Grimsley had taken his
medication, called Grimsley crazy and advised Grimsley to “double up” on his
“fucking medication” in front of other employees. Farry frequently asked
Grimsley whether he was taking his medication, particularly when Farry was not
satisfied with Grimsley’s work performance.
In October 2004, Grimsley could not tolerate Farry’s treatment any longer
and resigned.
B. District Court Proceedings
6
Grimsley filed this action alleging race discrimination under Title VII and
§ 1981, disability discrimination under the ADA, intentional infliction of
emotional distress and negligent supervision and retention under Georgia law.2
Following extensive discovery, Marshalls moved for summary judgment on
all claims. The magistrate judge’s report (“R&R”) recommended that summary
judgment be granted in favor of Marshalls.
As to Grimsley’s claim of disparate treatment based on race, the R&R
concluded that Grimsley presented no direct evidence of race discrimination and
failed to establish the adverse-employment-action element of the prima facie case
using circumstantial evidence. As to Grimsley’s ADA claim of a prohibited
medical inquiry, the R&R concluded that the ADA had not been violated because
Grimsley voluntarily disclosed his bipolar disorder. As to the Georgia law claims,
the R&R concluded Farry’s conduct toward Grimsley was not sufficiently
2
The facts in the light most favorable to Grimsley do show a racially-charged workplace.
However, Grimsley did not complain or use any of the many available outlets for complaining,
including Marshalls’ telephone hotline. Thus, the district court granted summary judgment as to
Grimsley’s racial harassment claim based on the Faragher/Ellerth defense.
Grimsley’s complaint contained thirteen counts. On appeal, Grimsley does not challenge
the district court’s entry of summary judgment on his claims of: (a) racially hostile work
environment under Title VII and § 1981 (Counts 2 & 3), (b) hostile work environment and
constructive discharge religious discrimination under Title VII (Count 4), (c) hostile work
environment disability discrimination under the ADA (Count 10), (d) age discrimination under
the Age Discrimination in Employment Act (Count 8), and (e) retaliation for complaining about
religious, race, age and disability discrimination (Counts 5, 6, 7, 9, 11). We do not address these
claims further.
7
egregious “to meet the high threshold of outrageousness” to sustain a claim of
intentional infliction of emotional distress and Grimsley failed to present sufficient
evidence that Marshalls was on notice of Farry’s propensity to engage in the
challenged conduct to survive summary judgment on his negligence claim.
Grimsley filed objections to the R&R. The district court adopted the R&R
as to the claims of intentional infliction of emotion distress and negligence. As to
Grimsley’s disparate treatment, race discrimination claim, the district court
concluded Grimsley presented direct evidence of discriminatory intent.
Nonetheless, the district court granted summary judgment because Grimsley failed
to show he suffered an adverse employment action.
As to Grimsley’s ADA claim for prohibited medical inquiries, the district
court agreed with the R&R’s conclusion that Grimsley’s voluntary disclosure of
his bipolar disorder precluded recovery. However, the district court cited
Grimsley’s failure to plead this claim in his complaint as “a more fundamental
reason” to grant summary judgment.
Grimsley timely appealed.3
3
We review de novo a district court’s grant of summary judgment, applying the same
standards as the district court. Maniccia v. Brown, 171 F.3d 1364, 1367 (11th Cir. 1999).
Summary judgment is appropriate if, construing the facts in the light most favorable to the non-
moving party, there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Id.
8
II. DISPARATE TREATMENT RACE DISCRIMINATION CLAIM
Under Title VII it is unlawful for an employer “to fail or refuse to hire or to
discharge any individual, or otherwise to discriminate against any individual with
respect to [her] compensation, terms, conditions, or privileges of employment,
because of such individual’s race . . . .” 42 U.S.C. § 2000e-2(a)(1). The elements
of a § 1981 race discrimination claim in the employment context are the same as a
Title VII disparate treatment claim. Rice-Lamar v. City of Fort Lauderdale, 232
F.3d 836, 843 n.11 (11th Cir. 2000).4 On appeal, the parties do not challenge the
district court’s conclusion that Grimsley presented direct evidence of intent to
discriminate based on race and, thus, we do not address that issue.
A. Adverse Employment Action Requirement
In order to establish a disparate treatment race claim, a plaintiff must also
show that an adverse employment action was taken against him “regardless of
whether he is relying on direct evidence of discrimination or employing the
burden-shifting approach . . . for cases in which only circumstantial evidence is
available.” Hipp v. Liberty Nat’l Life Ins. Co., 252 F.3d 1208, 1231 n.34 (11th
4
Section 1981 makes it unlawful to discriminate on the basis of race in the making and
enforcing of contracts. 42 U.S.C. § 1981(a). The phrase “make and enforce contracts” is defined
to include “the making, performance, modification, and termination of contracts, and the
enjoyment of all the benefits, privileges, terms, and conditions of the contractual relationship.”
Id. § 1981(b).
9
Cir. 2001). Although an adverse employment action need not be an ultimate
employment decision, such as termination, failure to hire or demotion, it must
meet a “threshold level of substantiality.” Davis v. Town of Lake Park, 245 F.3d
1232, 1238-39 (11th Cir. 2001) (quotation marks omitted). Although evidence of
“direct economic consequences” is not always required, “to prove adverse
employment action in a case under Title VII’s anti-discrimination clause, an
employee must show a serious and material change in the terms, conditions, or
privileges of employment.” Id. at 1239. The employee’s subjective perception of
the seriousness of the change is not controlling; rather this issue is viewed
objectively from the perspective of a reasonable person in the circumstances. Id.5
The Davis court recognized that a change in work assignments could
amount to a “substantial and material” change in the terms, conditions or
privileges of employment in “unusual instances” and cited as an example McNely
v. Ocala Star-Banner Corporation, 99 F.3d 1068 (11th Cir. 1996). Id. at 1245. In
5
We reject Grimsley’s argument that the decision in Burlington Northern & Santa Fe
Railway Co. v. White, 548 U.S. 53, 126 S. Ct. 2405 (2006) applies to claims of disparate
treatment discrimination. The “materially adverse” standard in Burlington Northern was
explicitly limited to claims brought under Title VII’s anti-retaliation provision, and the Supreme
Court was careful to note that a different standard applied to substantive claims of
discrimination. See id. at 67, 126 S. Ct. at 2414 (concluding that “Title VII’s substantive
provision and its anti-retaliation provision are not coterminous,” and that the anti-retaliation
provision forbids conduct not prohibited by the anti-discrimination provision). Therefore, we
continue to apply the standard articulated in Davis to claims of substantive discrimination under
Title VII.
10
McNely, a supervisor at a newspaper was reassigned the duties of a janitor,
including cleaning bathrooms, and then transferred to the shipping department,
where he was required to perform physically strenuous tasks. See McNely, 99
F.3d at 1078. The Davis court noted, however, that ‘[i]n the vast majority of
instances, . . . an employee alleging a loss of prestige on account of a change in
work assignments, without any tangible harm, will be outside the protection
afforded by Congress in Title VII’s anti-discrimination clause–especially where,
as here, the work assignment at issue is only by definition temporary and does not
affect the employee’s permanent job title or classification.” Davis, 245 F.3d at
1245.
The district court found that Grimsley’s evidence showed he was subjected
to an increased workload, denied breaks while black supervisors were not, and
forced to perform certain manual labor outside his job description. However,
applying the standard in Davis, the district court concluded that this “unfair
treatment does not, under Eleventh Circuit precedent, constitute the type of
‘adverse employment action’ necessary to support a disparate treatment claim.”
Grimsley argues that he was not required to show an adverse employment
action because it is undisputed that Farry’s job assignments were based on race.
As support for his contention, Grimsley relies heavily on Ferrill v. The Parker
11
Group, Inc., 168 F.3d 468 (11th Cir. 1999). Ferrill, however, is not instructive
because it does not even mention, let alone address, the adverse employment
action element of a disparate treatment claim. Instead, Ferrill focuses on the intent
element of a disparate treatment claim.6 See Ferrill, 168 F.3d at 472-73. Although
Ferrill states that “an employee who adduces direct evidence of disparate treatment
on the basis of race makes out a prima facie case of intentional discrimination,” id.
at 472, we do not read this language to eliminate the requirement that the
employee show he or she suffered an adverse employment action.
B. Grimsley’s Job Assignments
Alternatively, Grimsley argues that the job assignments Farry gave him
were sufficiently substantial and material to constitute adverse employment
actions. We disagree. Although Grimsley’s workload sometimes increased and he
was occasionally assigned additional tasks, these kinds of temporary assignments,
without a change in compensation or position, do not amount to a “serious and
material change in the terms, conditions, or privileges of employment.” See
Davis, 245 F.3d at 1239 (emphasis omitted). We cannot say, under the
circumstances, that Farry’s sporadic assignment of additional tasks to Grimsley
6
The plaintiff in Ferrill sued under only § 1981. Ferrill 168 F.3d at 471. However, as
Ferrill notes, the analysis for a disparate treatment claim based on race is the same under § 1981
and Title VII. Id. at 472.
12
outside his job title caused Grimsley any tangible harm or was an “unusual
instance” in which a change in work assignments is sufficiently material and
substantial to constitute an adverse employment action. Accordingly, the district
court properly granted summary judgment on Grimsley’s disparate treatment race
discrimination claims under Title VII and § 1981.
III. ADA Claim
The ADA prohibits an employer from “requir[ing] a medical examination”
or “mak[ing] inquiries of an employee as to whether such employee is an
individual with a disability or as to the nature or severity of the disability, unless
such examination or inquiry is shown to be job-related and consistent with
business necessity.” 42 U.S.C. § 12112(d)(4)(A). The ADA also requires an
employer to keep confidential any information about an employee’s medical
condition or history gleaned from a permissible medical examination or inquiry.
42 U.S.C. § 12112(d)(3)(B), (d)(4)(C). However, when an employee voluntarily
discloses this information to the employer rather than provides it to the employer
in response to a permissible inquiry or examination, the employee cannot establish
an unlawful disclosure under the ADA. See Cash v. Smith, 231 F.3d 1301, 1307
(11th Cir. 2000).
13
Grimsley argues that the district court erred in concluding that his voluntary
disclosure of his bipolar disorder to Farry preluded his ADA claim. Grimsley
argues that his claim is a prohibited medical inquiry claim pursuant to
§ 12112(d)(4)(A) and not a unlawful disclosure claim pursuant to
§ 12112(d)(3)(B), and that only the latter is precluded by a voluntary disclosure.
We need not address this issue, however, because we agree with the district
court’s alternative ground for granting summary judgment on this claim, that is,
that Grimsley did not properly plead this claim in his complaint.
Federal Rule of Civil Procedure 8 requires a complaint to contain “a short
and plain statement” of each claim showing that the plaintiff is entitled to relief.
Fed. R. Civ. P. 8(a)(2). “The point is to give the defendant fair notice of what the
claim is and the grounds upon which it rests.” Davis v. Coca-Cola Bottling Co.
Consol., 516 F.3d 955, 974 (11th Cir. 2008) (quotation marks omitted). In
addition, Rule 10 requires each claim founded on a separate transaction or
occurrence to be stated in separate counts if needed for clarity. Fed. R. Civ. P.
10(b).7 “These rules work together to require the pleader to present his claims
7
In December 2007, Rules 8 and 10 were amended as part of a general restyling of the
Federal Rules of Civil Procedure. These amendments did not change the substantive
requirements of Rules 8 and 10. Fed. R. Civ. P. 1, 8 & 10 advisory committee notes to 2007
Amendment.
14
discretely and succinctly, so that his adversary can discern what he is claiming and
frame a responsive pleading, the court can determine which facts support which
claims and whether the plaintiff has stated any claims upon which relief can be
granted, and, at trial, the court can determine that evidence which is relevant and
that which is not.” Davis, 516 F.3d at 980 n.57 (quotation marks omitted).
Grimsley’s complaint contained only two counts alleging ADA violations,
one retaliation count and one discrimination count.8 The discrimination count,
Count 10, reincorporated all thirty-five factual allegations in the complaint by
reference.9 The next five paragraphs of Count 10, paragraphs 57 through 61,
alleged that Grimsley had a “disability” as defined under the ADA, was able to
perform the essential functions of his job with or without accommodation and that
he was a “qualified individual with a disability” under the ADA. Paragraph 62
8
The complaint also alleged an ADA retaliation claim, which is not at issue in this appeal.
9
One of those thirty-five paragraphs of factual allegations was paragraph 19, which
alleged that “[w]hen Farry wanted to criticize Plaintiff’s performance, he would routinely ask in a
demanding tone whether Plaintiff had taken his medication, which is a violation of the
Americans with Disabilities Act’s prohibition of medical inquiries not related to the job.” Other
paragraphs in the complaint alleged that Farry had denied Grimsley breaks and subjected him to
different terms and conditions of employment because of his bipolar disorder, had openly
harassed and ridiculed Grimsley based on his bipolar disorder, had repeatedly screamed at
Grimsley to take his “damn medication” or “double-up” on his medication in front of
subordinates, had discussed Grimlsey’s bipolar disorder in front of others and had deliberately
attempted to humiliate Grimlsey to try to “throw Plaintiff into a manic phase” so that Grimsley
would work harder.
15
alleged that the defendants had created a hostile work environment based on his
disability, as follows:
Defendants’ harassment of Plaintiff and their subjecting Plaintiff to
disparate terms and conditions of employment, making repeated
public and mean-spirited non-business related medical inquiries of
Plaintiff, their repeated disparagement of Plaintiff due to his disability
and their constructive discharge of Plaintiff’s employment based on
his disability created a hostile working environment based on
Plaintiff’s disability, in violation of 42 U.S.C. §§ 12101, et seq.
Paragraph 63 alleged that “Defendant’s actions constituted discrimination” under
the ADA for which Grimsley was entitled to relief and the final paragraphs of
Count 10 alleged that the defendants’ conduct had been willful, wanton and
reckless and identified Grimsley’s damages.
Under a fair reading of Count 10, the only disability discrimination
Grimsley alleged is a hostile work environment claim. Although paragraph 62
mentions “public and mean-spirited non-business related medical inquiries,” it
does so only as part of a list of conduct the defendants allegedly engaged in to
create the hostile work environment. Count 10, as drafted, does not give the
defendants fair notice of a prohibited medical inquiries claim under the ADA and
is not “a short and plain statement” of such a claim under Rules 8 and 10.
IV. STATE CLAIMS
16
Although Grimsley presented evidence from which a reasonable jury could
conclude that Farry treated him unfairly, verbally abused him and shamelessly
presumed on their personal friendship, we agree with the district court that these
facts are insufficient to sustain a claim of intentional infliction of emotional
distress under Georgia law. Georgia law imposes liability for this tort only for the
most extreme forms of conduct, requiring the employer’s conduct to have been so
outrageous that “the ‘recitation of the facts to an average member of the
community would arouse his resentment against the actor, and leave him to
exclaim “Outrageous!”’” Yarbray v. So. Bell Tel. & Tel. Co., 261 Ga. 703, 706
(1991). While Farry’s alleged conduct was unprofessional and unacceptable, it
does not meet this threshold level of outrageousness.
Furthermore, because Grimsley’s underlying claim for intentional infliction
of emotional distress cannot survive summary judgment, the district court properly
granted summary judgment on Grimsley’s derivative negligent retention and
supervision claim. See MARTA v. Mosley, 280 Ga. App. 486, 469 (2006) (“A
claim for negligent retention is necessarily derivative and can only survive
summary judgment to the extent the underlying substantive claims survive the
same.”).
V. CONCLUSION
17
For all these reasons, the district court’s grant of summary judgment in
favor of Marshalls is affirmed.
AFFIRMED.
18
|
NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS OCT 28 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SONIA BRAUN-SALINAS; GUILLERMO No. 14-35369
SALINAS, husband and wife; ESTER
MACEDO, individually, D.C. No. 3:13-cv-00264-AC
Plaintiffs-Appellants,
MEMORANDUM
v.
AMERICAN FAMILY INSURANCE
GROUP, DBA American Family Mutual
Insurance Company, a foreign business
corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Oregon
John V. Acosta, Magistrate Judge, Presiding
Submitted October 3, 2016
Portland, Oregon
Before: CLIFTON, MURGUIA, and NGUYEN, Circuit Judges.
Sonia Braun-Salinas, Guillermo Salinas, and Ester Macedo (the “Insureds”)
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
The panel unanimously concludes this case is suitable for decision without oral
argument. Fed. R. App. P. 34(a)(2).
appeal the grant of summary judgment to American Family Insurance Group
(“American”) as to claims for negligence per se and breach of the implied
covenant of good faith and fair dealing. We have jurisdiction under 28 U.S.C. §
1291. We affirm.
We review the grant of summary judgment de novo. Nolan v. Heald Coll.,
551 F.3d 1148, 1153 (9th Cir. 2009). However, if a party opposing summary
judgment fails to alert the district court that an outstanding discovery motion
precludes summary judgment, the timing of the grant of summary judgment is
reviewed for abuse of discretion. Lane v. Dep’t of Interior, 523 F.3d 1128, 1135
(9th Cir. 2008).
I. Negligence Per Se Claim
The Insureds contend that Oregon recognizes a negligence per se claim
based on an insurer’s failure to pay insurance benefits in violation of the standard
of care set forth in Oregon Revised Statute § 746.230. Oregon’s highest and
intermediate courts, however, have allowed a negligence per se claim only where a
“negligence claim otherwise exists.” Deckard v. Bunch, 370 P.3d 478, 483 n.6
(Or. 2016). Because the Insureds cannot bring a negligence claim under a statutory
or common law theory, they are also precluded from bringing a hybrid negligence
2
per se claim.
The Oregon Court of Appeals has rejected a statutory theory, holding that a
violation of the statute at issue here “does not give rise to a tort action.”
Employers’ Fire Ins. Co. v. Love It Ice Cream Co., 670 P.2d 160, 164–65 (Or. Ct.
App. 1983) (rejecting bad faith claim for refusal to pay fire insurance benefits in
violation of ORS 746.230); Richardson v. Guardian Life Ins. Co. of Am., 984 P.2d
917, 923 (Or. Ct. App. 1999) (rejecting bad faith claim for refusal to pay disability
insurance benefits in violation of ORS 746.230 because such a violation was “not
independently actionable”).
The Insureds argue that those cases bar a statutory claim—meaning a private
right of action created by statute—whereas the Insureds bring a common law claim
for negligence per se that relies on the statute only to determine that claim’s
“standard of care” element. This argument is unpersuasive because the Oregon
Court of Appeals has also declined to recognize a common law negligence claim
for failure to pay first-party insurance benefits. See Strader v. Grange Mut. Ins.
Co., 39 P.3d 903, 906–07 (Or. Ct. App. 2002).
The Insureds’ remaining arguments rely on inapposite authority. They cite
to Georgetown Realty, Inc. v. Home Ins. Co., which recognized a breach of
3
fiduciary duty claim where the liability insurer, after undertaking a defense, failed
to adhere to the standard of care applicable to defending the insured against a third
party’s lawsuit. 831 P.2d 7, 12–14 (Or. 1992). Georgetown Realty has no
application here because that ruling has been limited to cases where a “special
fiduciary-like relationship” exists between the insurer and insured due to the
insured delegating authority to exercise judgment on its behalf. Strader, 39 P.3d at
906. Because the Insureds have not established the special relationship element of
a common law negligence claim, they cannot succeed on a common law
negligence per se claim. See Deckard, 370 P.3d at 483 n.6 (“A statute that sets a
standard of care addresses only one element of a negligence claim; other elements
remain unaffected and must be established.”).
The Insureds also cite two Oregon intermediate court cases that recognize
negligence per se claims based on statutes outside the insurance context. See
Abraham v. T. Henry Constr., Inc., 217 P.3d 212, 217–18 (Or. Ct. App. 2009)
(recognizing negligence per se claim based on building code), aff’d on other
grounds 249 P.3d 534 (Or. 2011); Simpkins v. Connor, 150 P.3d 417, 421 (Or. Ct.
App. 2006) (recognizing negligence claim where statute requiring the production
of medical records created a duty owed to patients or persons authorized to request
4
such records). In the insurance context, however, Oregon courts have declined to
recognize a claim based on failure to pay first-party insurance benefits under both a
statutory and common law negligence theory.
II. Breach of the Implied Covenant of Good Faith and Fair Dealing Claim
The Insureds argue that the district court erred in granting summary
judgment on their breach of the implied covenant of good faith and fair dealing
claim before ruling on their motion to compel. However, the Insureds did not
oppose summary judgment below on the grounds that they needed more evidence,
nor did they file a motion under Federal Rule of Civil Procedure 56(d) seeking
time to gather such evidence or otherwise timely alert the district court that
summary judgment should be delayed. Given these failures, the district court did
not abuse its discretion in granting summary judgment on the breach of the implied
covenant of good faith and fair dealing claim. See Lane, 523 F.3d at 1135.
AFFIRMED.
5
FILED
Braun-Salinas v. American Family Insurance Group, No. 14-35369
OCT 28 2016
CLIFTON, Circuit Judge, concurring: MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
I concur completely in the disposition. Nonetheless, I write separately to
express concern regarding the district court’s decision to enter this judgment as
final under Rule 54(b). That was problematic.
Rule 54(b) explicitly provides that the court may direct entry of a final
judgment of fewer than all claims or parties “only if the court expressly determines
that there is no just reason for delay.” There was no such determination here.
More broadly, it is not obvious why there was no just reason for delay in
entering a final judgment as to this element of the case, or, alternatively, what
reason there was to certify this case for interlocutory appeal. This appears to be a
routine insurance dispute raising claims whose partial adjudication is likewise
routine. Entering a Rule 54(b) final judgment promoted a disfavored piecemeal
appeal. See Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 10 (1980).
Adjudicating the bad faith and negligence per se claims in this appeal does not
guarantee that we will not be faced with another appeal on the remaining contract
claim. Indeed, allowing the contract claim to proceed at the district court might
have resulted in a settlement, obviating the need for an appeal altogether. It is
doubtful that the interests of judicial administration were served by this appeal.
See Wood v. GCC Bend, LLC, 422 F.3d 873, 881 (9th Cir. 2005). At a minimum,
the district court failed to provide an explanation that we could consider.
In addition, the district court’s order reflects an incomplete understanding of
how appeals in pending cases are to be brought. In response to a motion, the
district court both entered judgment under Rule 54(b) and granted permission to
file an interlocutory appeal under 28 U.S.C. § 1292(b). Rule 54(b) and section
1292(b) provide alternative, non-overlapping bases for appeal. See James v. Price
Stern Sloan, Inc., 283 F.3d 1064, 1068 n.6 (9th Cir. 2002). The district court did
not distinguish between these two grounds when entering its order and judgment of
dismissal, and it did not explain its reason for either. We have treated the
judgment as final, and that makes sense at this point for reasons of efficiency and
simplicity, but this is not a course that should be repeated in the future.
2
|
NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 26 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
MELVIN HODGES, Jr., No. 17-35408
Petitioner-Appellant, D.C. No. 2:16-cv-01521-JLR
v.
MEMORANDUM*
UNITED STATES OF AMERICA,
Respondent-Appellee.
Appeal from the United States District Court
for the Western District of Washington
James L. Robart, District Judge, Presiding
Submitted July 26, 2019**
Seattle, Washington
Before: BERZON and HURWITZ, Circuit Judges, and DEARIE,*** District
Judge.
Melvin Hodges, Jr. appeals a district court order denying a 28 U.S.C. § 2255
motion to vacate his sentence. We have jurisdiction under 28 U.S.C. § 2253 and
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Raymond J. Dearie, United States District Judge for
the Eastern District of New York, sitting by designation.
affirm.
The Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA)
generally requires that a § 2255 motion be filed within one year after a conviction
becomes final. 28 U.S.C. § 2255(f)(1). Hodges filed his motion more than one year
after his conviction became final. He argues that it is nonetheless timely because he
was sentenced as a career offender under the residual clause in § 4B1.2(a)(2) of the
then-mandatory Sentencing Guidelines, and that the logic of the Supreme Court’s
decision in Johnson v. United States, 135 S. Ct. 2551 (2015), makes that provision
unconstitutional. See 28 U.S.C. § 2255(f)(3) (providing that if a § 2255 motion is
based on a right “newly recognized by the Supreme Court and made retroactively
applicable to cases on collateral review,” the limitations period begins to runs on the
date that the Court first recognized the right). But the Supreme Court has not applied
Johnson to mandatory sentences under the Guidelines. Hodges’ motion is therefore
untimely. See United States v. Blackstone, 903 F.3d 1020, 1026–28 (9th Cir. 2018),
cert. denied, No. 18-9368, 2019 WL 2211790 (U.S. June 24, 2019).
AFFIRMED.
2
FILED
JUL 26 2019
Hodges v. United States, No. 17-35408 MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
BERZON, Circuit Judge, concurring:
I concur in the disposition because this court’s decision in United States v.
Blackstone controls. See 903 F.3d 1020, 1026–28 (9th Cir. 2018), cert. denied, No.
18-9368, 2019 WL 2211790 (U.S. June 24, 2019). I write separately to note that in
my view, Blackstone was wrongly decided.
There is a circuit split over the applicability of 28 U.S.C. § 2255(f)(3) to
section 2255 motions based on Johnson v. United States, 135 S. Ct. 2551 (2015),
where the challenged sentence was mandatorily enhanced by a residual clause with
language parallel to the clause found unconstitutionally vague in Johnson, but
contained in a different statute from the one Johnson considered. The Seventh
Circuit, the First Circuit, and district courts have persuasively reached a conclusion
contrary to our decision in Blackstone. See Cross v. United States, 892 F.3d 288,
294 (7th Cir. 2018) (section 2255 motion filed within one year of Johnson was
timely under 28 U.S.C. § 2255(f)(3), broadly interpreting Johnson to newly
recognize “a right not to have his sentence dictated by the unconstitutionally vague
language of the mandatory residual clause”); Moore v. United States, 871 F.3d 72,
82–83 (1st Cir. 2017) (employing the same interpretation of Johnson in certifying a
successive motion under section 2255, and rejecting the Fourth and Sixth Circuit’s
contrary, narrower interpretation of Johnson); United States v. Meadows, No. 04-
1
cr-14-LY, 2019 WL 2995929 (W.D. Tex. July 9, 2019). I believe the Seventh and
First Circuits have correctly decided this question. However, because Blackstone
controls here, I concur in the judgment.
2
|
632 F.Supp. 858 (1985)
Andrew ADAMS, By his parent, Susan ADAMS, and Susan Adams, Plaintiffs,
v.
Robert A. HANSEN, Superintendent of the Napa Valley Unified School District; Napa Valley Unified School District; Austin Kelly, Director of Special Education, Napa Valley Unified School District; Jana Jack, Lynne Vaughan, Craig Templeton, Allan Knudsen, John Wagenknecht, Linda Mallett, Dorothy Searcy, Jay Goetting, individually and as members of the Board of Education of the Napa Valley Unified School District; The State of California Department of Education, Defendants.
No. C-85-3089 RFP.
United States District Court, N.D. California.
October 21, 1985.
*859 *860 Kathryn D. Dobel, Berkeley, Cal., for plaintiffs.
Diana K. Smith and Mark G. Intrieri, Breon, Galgani, Godino & O'Donnell, San Francisco, Cal., for defendant Napa Valley Unified School Dist.
John Klee, Deputy Atty. Gen., San Francisco, Cal., for defendant State of Cal. Dept. of Educ.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
PECKHAM, Chief Judge.
BACKGROUND
This action involves a dispute about the appropriate education for Andrew Adams. Andy is a fifth-grade student who resides within the geographical boundaries of the Napa Valley Unified School District ("NVUSD" or "District"). He is nearly twelve years old, and was enrolled in District schools for six years. During that time, he repeated Kindergarten and third grade. He was identified at the end of the second grade as an individual with exceptional needs entitled to special education and related services under federal and state law. Andy is of average intelligence, but has a learning disability, specifically identified as "specific language disability," but more commonly referred to as dyslexia.
During his two years in the third grade, Andy was enrolled in a regular class, and had an "individualized education program" ("IEP") that called for daily contact with a resource specialist. From September 1982 through March 1984, he was pulled out of his regular class for up to sixty minutes a day to work with the resource specialist or an aide. In March 1984, pursuant to his mother's request for more intense services, he began to work with the resource specialist *861 or aide for up to ninety minutes each day.
In Spring 1984, the parties met to discuss Andy's placement for the 1984-85 school year. In response to Susan Adam's request that her son be offered a non-public placement, the District suggested that she visit some of the special day classes within the district. The District also agreed to send district personnel to the Charles Armstrong School, a school that Mrs. Adams believed would provide her son with an appropriate education. Plaintiff visited Alta Heights School and later visited El Centro School. District personnel visited the Charles Armstrong School. By June 12, 1984, the parties had not resolved the issue of Andy's placement.
On June 20, 1985, Susan Adams unilaterally enrolled Andy in the Charles Armstrong School. She did not attend a meeting scheduled with district personnel on that day. On September 18, 1985, Mrs. Adams filed for a due process hearing, and mediation between the parties began.
During the mediation process, the parties reached agreement on all issues within the IEP, except the issue of when the plan would begini.e., when Andy would return to the District. A due process hearing was held, and the state hearing officer found that the District's proposed placement was appropriate. Plaintiffs seek review of that decision pursuant to section 615(e) of the Education of the Handicapped Act, 20 U.S.C. § 1415(e).
FINDINGS OF FACT
The crux of the controversy is whether the District has an appropriate placement for Andy. There are several collateral issues that are important if the District has such a placement. The court will consider those first.
A. Mrs. Adams Unilateral Decision to Place Andy at the Charles Armstrong School
Defendants contend that the Susan Adams was not justified in removing her son from the District and unilaterally placing him in the Charles Armstrong School. They assert that, although Andy was progressing in the Resource Specialist (RS) Program, he was offered a special-day-class ("SDC") placement in the Spring of 1984. Defendants also assert that the IEP process was prematurely aborted by Susan Adams, depriving them of an opportunity to place Andy in a class where he could get an appropriate education.
Mrs. Adams, on the other hand, contends that the District had only recommended that Andy continue in the RS Program. Since she believed that the RS Program had not been productive for Andy, Mrs. Adams felt that it was necessary for her to place him elsewhere. She states that Andy was not offered an SDC placement until mediation in November 1985. Her testimony is corroborated by that of Ernest Wing, her advocate at the IEP meetings.
Upon a review of the testimony at the due process hearing and at trial, the court finds that the testimony of District witnesses is inconsistent, contradictory, and plagued by lapses in memory. It therefore resolves these disputed factual issues in favor of the more consistent and credible testimony of Susan Adams and Ernest Wing. Based on this testimony, and on consideration of assessment materials offered by both sides, the court finds: (1) that Andy did not make sufficient academic progress in the two years that he was in the RS Program; (2) that in spite of Andy's lack of progress in the RS program, it was the program recommended by the District on June 12, 1985; and (3) that the District did not recommend an SDC placement until after Andy had been enrolled in the Charles Armstrong School.
1. Ineffectiveness of Resource Specialist Program
The ineffectiveness of the Resource Specialist Program is illustrated by Andy's lack of progress during the two years that he was in third grade. As measured by the Woodcock-Johnson battery of tests, Andy's academic growth over a period of 20 months was only 4 months in total reading, *862 and 8 months in math. When the same test was administered at the beginning of Andy's second year at the Charles Armstrong School, it indicated that Andy's growth in reading was more than 2 years for a similar period of time. This dramatic increase in Andy's academic rate of growth makes it clear that his prior lack of growth was due to the ineffectiveness of the RS Program.
The District offers Stanford Achievement Test ("SAT") scores as evidence that Andy made tremendous growth during the two years in third grade. Those scores suggest that Andy's growth in the first year of third grade was more than a year in reading and more than 2 years in both math and listening. His growth in the second year of third grade is shown to be almost 2 years in reading, more than a year in math, and 6 months in listening. The SAT scores show Andy as working above-grade level in all of these areas.
The SAT scores are contradicted by scores from other tests that are more consistent with each other, see Joint Exhibit 34; with the decision to keep Andy in third grade for an extra year; and with Andy's third-grade teacher's continued reservations, even after his second year in third grade, about his readiness for fourth grade. Moreover, Andy was measured against average third graders; and the District was unable to provide testimony that explained the effect of Andy's age and the extra year in third grade on the validity of the test scores. Plaintiff's expert witnesses, Arlee Maier and Ernest Wing, both testified that those factors would inflate the SAT scores. District personnel also indicated that other assessments, reflecting below-grade level achievement, were more accurate. See 3 Hearing Transcript 36 [hereinafter HT]; 5 HT 142; id. at 180.
2. Placement Recommended by the District
Even during the due process hearing, the District had a great deal of trouble keeping track of what it was and was not offering or recommending for Andy in terms of placement. After initially listing eight placements that would be available and appropriate for Andy, see 1 HT 34-36, including the RS Program and seven listed SDC's, the District later stated that the RS Program was not being offered, see 2 HT 138. As the hearing progressed, it became clear that the District was only recommending three programs: Alta Heights, El Centro, and Pueblo Vista Schools. Alta Heights was later withdrawn because of the teacher's health, and El Centro was withdrawn when a question arose as to whether the teacher there held appropriate credentials.
This type of inconsistency plagued the District's testimony about what programs were offered or recommended to Susan Adams. The district asserts that it offered an SDC placement in early Spring 1984. Yet, there is evidence that the team that assessed Andy at Mrs. Adams's request did not recommend at any IEP meeting that Andy be placed in an SDC. See 5 HT 204-05. Andy's third-grade teacher indicated that she had recommended a carefully chosen fourth-grade teacher and continuation in the RS Program. And, witnesses from both sides testified that Linda Barbour, a special education teacher in the diagnostic program who had helped assess Andy, had voiced the opinion that an SDC would be inappropriate because the students were more disabled than Andy. See 5 HT 207, 6 HT 60. There is also evidence that Robert Hansen, Superintendent of NVUSD, told Mrs. Adams that his staff did not believe that an SDC was an appropriate placement for Andy. See Joint Exhibit 18; see also 1 HT 128-29.
Throughout the state hearing and this trial, the District has maintained that either the RS Program or SDC would be appropriate for Andy. Given the District's equivocal position on what placement is appropriate for Andy, and the fact that the SDC's were shown to Mrs. Adams only in response to her request for a non-public placement, the court does not believe that Andy was offered an SDC placement in Spring 1984.
*863 A great deal of testimony centered around whether and what the District had recommended for placement at the last IEP meeting before Andy was enrolled in Charles Armstrong School. Both Susan Adams and Ernest Wing testified that the facilitator, Tom Spencer, had taken a poll, and that the District members had each recommended continuing the RS Program. Mr. Spencer confirmed that it was his usual practice to take such a poll, but that he did not remember the results. Other District-employed members did not remember the poll, the results, or their own recommendations. That meeting ended without goals being written and without a written statement about the recommended placement. The court finds that Mrs. Adam's account of the two-and-one-half hour meeting, which is supported by testimony from both Mr. Wing and Mr. Spencer, is credible. That is, the parties were unable to write goals and objectives, because the District continued to recommend the RS program, and Ms. Adams would not accept that recommendation.
Finally, the District points to a letter from Nancy Reinke to Mrs. Adams dated August 22, 1984, as evidence that the District offered an SDC placement before the 1984-85 school year began. See Joint Exhibit 51. Although this letter states that the "recommendation ... is that we consider a special class placement for Andy," it is not clear whether the reference is to a special day class, or merely to a carefully chosen class such as that recommended by Phyllis Payne. Moreover, even if the phrase "special class" is construed to mean "special day class," the letter does not recommend such a placement, but merely that it be considered. Finally, it is clear from Mrs. Adams response, see Joint Exhibit 52, that she believed that the District was continuing to offer the RS Program. And there is no evidence of a responsive letter from the District contradicting that belief. Therefore, the court finds that the District did not offer an SDC placement to Andy until November 1984.
B. Appropriateness of District Placements
The District asserts that Andy is a marginal student with a common disability, and that the RS Program and the SDC Program are equally appropriate. The District stated several times that there were other students with problems similar to Andy's, but no evidence was offered to support this statement. The court finds that, although there may be students within the District with problems of the same general nature, Andy's particular deficiencies are unique. The court also finds that the District has not offered a placement that will address Andy's unique needs.
Andy's specific language disability involves deficits in all three learning modalities auditory, visual, and sensory-motor. Unlike many dyslexics, Andy has no relative strength in or preference for either the auditory or visual mode. Plaintiffs' experts testified that because of this lack of relative strength and the weakness in all modalities, Andy needs an intensive simultaneous multi-sensory approach. Each of these witnesses had personal contact with Andy and based his or her opinion on a personal assessment of him. These witnesses were of the opinion that the Pueblo Vista SDC was an excellent program, but not appropriate for Andy because it would not provide a sufficiently structured sequential simultaneous multi-sensory approach.
Defendants' expert witnesses were less helpful. Two that testified at trial had not personally assessed Andy, and could speak only in generalities after a review of his record. Such testimony does not outweigh the opinions of experts with personal knowledge of Andy's needs. Even the SDC teacher recommended for Andy by the District indicated that she would be unwilling to rely solely on the assessments in Andy's file, or offer an instructional plan for Andy until she had assessed him herself. One expert witness, Thomas Cooke, refused to accept the premise that Andy was equally deficient in each modality, and *864 was unresponsive to hypotheticals reflecting that diagnosis.
Testimony from District witnesses at the due process hearing also reflected some confusion or lack of knowledge about Andy's specific needs. It was clear that Gerald Perez was sometimes testifying about another youngster tested under similar circumstances at about the same time. See 5 HT 182-86; 6 HT 54; id. at 62. And Marge Plecki's testimony indicated that she was not sure of Andy's age. 6 HT 26-27. This is not unusual given the number of students for whom these witnesses must provide services. It does make it difficult, however, for this court to give such testimony great weight.
There was also conflicting testimony about the type of instruction that Andy would get in the Pueblo Vista School SDC. The District asserts that it can provide a structured, sequential, simultaneous multi-sensory approach for Andy at Pueblo Vista School. The SDC teacher, Arden Mowrey, indicated that she used a variety of techniques involving the three modalities. However, it became apparent from her testimony, and from the testimony of other witnesses, that she does not use a structured sequential simultaneous multi-sensory approach. There is also evidence that Andy would be distracted in her classroom because of the variety of activities that are going on at any given time. Finally, since the District has indicated that the RS and SDC programs are equally appropriate for Andy, the court assumes that similar results would be produced in either program. Thus, there is no reason to believe that the SDC would be any more effective than the RS Program has been.
The court has also considered evidence that while attending schools within NVUSD Andy developed behavioral problems due to his frustration at being unable to learn. This led, in March 1984, to the addition of 94-142 counseling services to Andy's IEP. Mrs. Adams testified that she would be concerned about Andy's self-esteem if he attended the Pueblo Vista SDC, because she heard the Pueblo Vista teacher make discouraging comments to and about students, such as "You can't do this," and "They're sending his brains by mail." While it may have been an oversight by the defendants' counsel, that testimony went unchallenged and uncontradicted. The parties agree that Andy's self-esteem is of great importance, and it is clear that such comments would be detrimental to his continued progress.
On the other hand, the Charles Armstrong School has provided Andy with effective instruction, as indicated by the Woodcock-Johnson test scores, above, and other instruments used to assess Andy's academic growth. For example, the Wide-Range Achievement Test ("WRAT") indicated a growth over a period of seven months of 7 months in spelling, 8 months in math, and over a year in word recognition. Ms. Adams and Andy's present teacher, Mary Judd, indicate that Andy's behavior problems have disappeared, and that he indicates that he is proud of himself because he is learning and because he is more self-sufficient.
Defendants contend that the Charles Armstrong School is inappropriate for Andy because it relies on one type of instruction to the exclusion of others, and because all of the youngsters at the school have the same type of disability. The court finds these arguments unpersuasive. The Charles Armstrong School has been approved by the State of California for non-public placement by school districts of youngsters with dyslexia. As for the policy of relying on a single method of instruction, the court merely notes that it has been effective in teaching Andy. Finally, with respect to the contention that Andy cannot be "mainstreamed" at the Charles Armstrong School, the court has considered testimony showing that many of the students are not identifiable as learning disabled students. All are of average or higher intelligence, and many are working at grade level. Such students would be considered regular students in a public setting, in spite of their specific language disabilities. Thus the court finds that *865 Andy can be "mainstreamed" at Charles Armstrong School.
CONCLUSIONS OF LAW
The Education of the Handicapped Act ("EHA" or "Act"), 20 U.S.C. § 1401 et seq., requires a state receiving federal financial assistance thereunder to provide a "free appropriate public education" to all handicapped children within its borders. Id. § 1412. A "free appropriate education" consists of instruction specifically designed to meet the unique needs of the handicapped child, supported by such services as are necessary to permit the child to benefit from the instruction. Hendrick Hudson District Board of Education v. Rowley, 458 U.S. 176, 188-89, 102 S.Ct. 3034, 3041-42, 73 L.Ed.2d 690 (1982). The instruction and services must meet the State's educational standards, and comport with the child's "individualized education program" ("IEP"). 20 U.S.C. § 1401(18).
A. Appropriate Education
In suits brought under the EHA, the court's inquiry is whether the responsible agency has created a plan which conforms with statutory requirements, and whether the IEP is reasonably calculated to enable the child to receive educational benefits. Rowley, 458 U.S. 206 & n. 27, 102 S.Ct. 3050-51 & n. 27. The court must make an independent determination of the appropriateness of the child's placement, and need not defer to the findings of administrative agencies. 20 U.S.C. § 1415(e)(2); see also Age v. Bullitt County Public School, 673 F.2d 141, 144 (6th Cir.1982). The issues in this trial are: (1) whether the provisions of the November 1984 IEP call for a simultaneous multi-sensory approach; (2) whether the IEP can be or could have been implemented within the District; (3) whether it can be or has been implemented at the Charles Armstrong School; and (4) whether the March 1985 IEP is appropriate.
1. Andy's IEP
During the mediation process, the parties agreed upon an IEP for Andy that states that he requires "[an] intensive multi-sensory approach, especially in reading and lang[uage] instruction; minimal distractions; auditory sequencing; visual-motor integration; small group instruction." Long range goals include participation in a regular classroom on a full-time basis with support services as needed, and the ability to write two paragraphs with correct capitalization, punctuation, spelling and grammar. After reviewing Andy's previous IEP's and the mediation agreement developed in conjunction with the November IEP meetings it is clear that when the parties used "intensive multi-sensory approach" they meant a simultaneous multi-sensory approach such as the one used at the Charles Armstrong School. None of Andy's prior IEP's had called for an intensive multi-sensory approach, and the only place that he had received that type of instruction was the Charles Armstrong School. Although the District contends that the mediation agreement is not part of the IEP, it was drafted contemporaneously and was originally intended to be incorporated. It must be viewed as a surrounding circumstance providing the background against which the IEP was signed. The specification in the mediation agreement calling for the use of the Slingerland approach, "with other multi-sensory approaches to be phased in," makes it clear that the parties had Slingerland-like approaches in mind.
2. The Appropriateness of Pueblo Vista's SDC
The District presented evidence that the Pueblo Vista teacher had been exposed to the Slingerland approach, but other testimony indicated that such exposure is insufficient to allow her to make effective use of the approach. She does not consistently use a simultaneous multi-sensory approach, and her responses at trial indicated that she did not feel such an approach was necessary. Therefore, the "intensive multi-sensory approach" required by Andy's IEP cannot be implemented at Pueblo Vista School.
*866 Andy's IEP also calls for minimal distractions. He is easily distracted due to auditory attention deficits. Given the level of noise and distractions generated by a constant change in activities, the court finds that this aspect of Andy's IEP cannot be implemented at Pueblo Vista School.
3. The Appropriateness of Charles Armstrong School
The District contends that Andy's IEP cannot be implemented at the Charles Armstrong School because it calls for integration during recess, lunch, and sports programs with regular students. The District also questions whether Andy receives 20-30 minutes twice a week with a speech/language therapist as required by his IEP. This court has already indicated that Andy is integrated with regular students in class as well as at lunch, recess, and sports programs. And Carol Murray of the Charles Armstrong School indicated that a speech/language therapist works with Andy's class for more than the time required by his IEP. Finally, Andy's present teacher at the Charles Armstrong School, Mary Judd, testified that Andy has already met or exceeded the goals from the November IEP.
4. The Appropriateness of the March 1985 IEP
The March 1985 IEP is inappropriate because it lists goals and objectives that have already been met. Moreover, they are not ambitious enough given the rate of Andy's progress during the past year. The parties will need to meet and draft goals and objectives that are based on Andy's present level of achievement, and his expected growth based on appropriate instruction.
B. Reimbursement After Unilateral Placement
Having determined that the District failed to offer an appropriate placement for Andy before he was enrolled in Charles Armstrong School, the court must now decide whether Susan Adams is to be reimbursed for the costs of Andy's education for the 1984-85 and 1985-86 school years. Section 615(e)(3) of the EHA, provides that "during the pendency of any proceedings conducted pursuant to [that] section, ... the child shall remain in the then current educational placement of such child, ..." 20 U.S.C. § 1415(e)(3). Many courts have read this provision to preclude reimbursement when the parent moves the child before the IEP process has been resolved in their favor. See, e.g., Scokin v. State of Texas, 723 F.2d 432 (1984); Mountain View-Los Altos Union High School District v. Sharron B.H., 709 F.2d 28 (9th Cir.1983); Newport-Mesa Unified School District of Orange County v. Hubert, 132 Cal.App.3d 724, 183 Cal.Rptr. 334 (1982). However, the United States Supreme Court held recently in Burlington School Committee v. Department of Educations, ___ U.S. ___, 105 S.Ct. 1996, 85 L.Ed.2d 385 (1985), that parental violation of § 1415(e)(3) does not constitute a waiver of reimbursement. 105 S.Ct. at 2004. Thus, retroactive reimbursement is an available remedy where the court determines that a private placement was proper. Id. at 2003.
The Rowley court held that if a child is being educated in the regular classrooms of the public education system, the IEP and personalized instruction should be reasonably calculated to enable the child to achieve passing marks and advance from grade to grade. 458 U.S. 203-04, 102 S.Ct. at 3049-50. Under this standard, it is clear that before Susan Adams enrolled Andy in the Charles Armstrong School he had been deprived of a "free appropriate public education" for at least two years. Moreover, in spite of this deprivation, the District failed to offer a more appropriate placement for the 1984-85 school year. Therefore, this court finds that Susan Adams was justified in moving Andy to the Charles Armstrong School, and that she is entitled to reimbursement of tuition and travel expenses for the Summer of 1984, and for the 1984-85 school year. The court also finds that the District currently does *867 not have a suitable placement or IEP for Andy, and that it would be inappropriate to change Andy's placement before the end of the current school year. Therefore, the court orders the school District to reimburse and/or pay Andy's tuition and transportation costs for the 1985-86 school year.
C. Attorney's Fees and Room and Board
Plaintiffs do not have a separate claim under 42 U.S.C. § 1983, and are not entitled to greater relief under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794, than they are under the EHA. Attorney's fees are not available under the EHA, which provides the exclusive remedy in a case of this kind. Smith v. Robinson, 468 U.S. 992, 104 S.Ct. 3457, 82 L.Ed.2d 746 (1984). Therefore, the plaintiffs are entitled to costs, but they are not entitled to attorney's fees.
Finally, since the Charles Armstrong School is a day school, Andy's placement in a private residence does not constitute a "related service" as defined in section 602 of the Act, 20 U.S.C. § 1401(17). Therefore, the plaintiffs are not entitled to reimbursement for room and board.
CONCLUSION
Andrew Adams will remain at the Charles Armstrong School for the rest of the 1985-86 school year. He will return to the Napa Valley Unified School District at the beginning of the 1986-87 school year, if the District has an appropriate placement for him at that time. The cost of Andy's tuition and transportation while attending Charles Armstrong will be borne in the future by the District. The District shall reimburse Susan Adams for Andy's tuition and transportation costs for his attendance from June 1984 through the date of this decision. Finally, the parties will meet immediately to develop an appropriate IEP for Andy.
IT IS SO ORDERED.
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667 F.2d 1026
Fieldsv.Secretary of Health, Education and Welfare
80-3480
UNITED STATES COURT OF APPEALS Sixth Circuit
10/14/81
S.D.Ohio
AFFIRMED
|
731 N.W.2d 646 (2007)
2007 WI App 113
STATE of Wisconsin, Plaintiff-Respondent,[]
v.
Terrill J. HINTZ, Defendant-Appellant.
No. 2006AP217-CR.
Court of Appeals of Wisconsin.
Submitted on Briefs January 23, 2007.
Opinion Filed March 1, 2007.
On behalf of the defendant-appellant, the cause was submitted on the briefs of Steven D. Phillips, Assistant State Public Defender of Madison.
On behalf of the plaintiffs-respondents, the cause was submitted on the briefs of Eileen W. Pray and Shunette T. Campbell, Assistant Attorneys General, and Peggy A. Lautenschlager, Attorney General.
Before LUNDSTEN, P.J., DYKMAN and HIGGINBOTHAM, JJ.
¶ 1 DYKMAN, J.
Terrill Hintz appeals from an order denying his postconviction motion for sentence credit under WIS. STAT. § 973.155(1)(b) (2005-06).[1] Hintz argues that he is entitled to sentence credit for the time he was in custody on an extended supervision hold because the hold was at least in part due to the course of conduct that resulted in his new conviction. We agree, and therefore reverse.
Background
¶ 2 The following facts are not in dispute. In 2001, Terrill Hintz was convicted of operating a motor vehicle while intoxicated (OMVWI), fifth offense, and sentenced to five years, with eighteen months' initial confinement and forty-two months' extended supervision. In October 2003, Hintz was released from prison and began serving his extended supervision sentence. In November 2003, Hintz's probation agent issued an apprehension request for Hintz after Hintz failed to report as scheduled *647 and after the Plover Police Department notified the agent that Hintz was a suspect in a fight in which Hintz had been drinking and possessed a firearm.
¶ 3 In December 2003, Hintz participated in two burglaries, one of which underlies his conviction in this case. Later that day, Hintz was taken into custody on the apprehension request issued by his probation agent the previous month. The same day, Hintz's probation agent was notified that Hintz was a suspect in the burglaries. On December 28, 2003, after learning that Hintz had been taken into custody, Hintz's probation agent cancelled the apprehension request and placed an extended supervision hold on Hintz. The court allowed Hintz to sign a signature bond for the burglary charges, but Hintz remained in custody on the extended supervision hold.
¶ 4 Hintz's extended supervision for OMVWI, fifth offense, was revoked in March 2004. In July 2004, the court reconfined Hintz to one year and nineteen days for the OMVWI conviction, with 211 days of sentence credit. In November 2004, after Hintz pled guilty or no contest to three counts arising from one of the burglaries,[2] the court sentenced Hintz to four years, with two years' initial confinement and two years' extended supervision, to run concurrently with the OMVWI sentence. Hintz then moved the court for sentence credit on the burglary sentence, for the time he was in custody on the extended supervision hold. Hintz appeals from the court's denial of his postconviction motion for sentence credit.
Standard of Review
¶ 5 This case requires that we interpret WIS. STAT. § 973.155(1)(b), a question of law that we review de novo. See State v. Dentici, 2002 WI App 77, ¶ 4, 251 Wis.2d 436, 643 N.W.2d 180. Thus, we independently determine whether Hintz should receive sentence credit under § 973.155(1)(b). See State v. Lange, 2003 WI App 2, ¶ 41, 259 Wis.2d 774, 656 N.W.2d 480. However, we will uphold any factual determinations by the circuit court unless those findings are clearly erroneous. Noll v. Dimiceli's, Inc., 115 Wis.2d 641, 643, 340 N.W.2d 575 (Ct.App.1983).
Discussion
¶ 6 Under WIS. STAT. § 973.155(1)(a), a defendant is entitled to sentence credit "for all days spent in custody in connection with the course of conduct for which sentence was imposed." Section 973.155(1)(b) specifies that credit is to be given for custody due to an extended supervision hold "placed upon the person for the same course of conduct as that resulting in the new conviction." To receive sentence credit, a defendant must establish (1) that the defendant was in custody for the period of time at issue, and (2) that, during that time, the defendant was in custody "in connection with" the course of conduct that resulted in the new conviction. Lange, 259 Wis.2d 774, ¶ 41, 656 N.W.2d 480.
¶ 7 The parties agree that, from December 28, 2003, to and including July 18, 2004, a period of 204 days, Hintz was in custody on an extended supervision hold.[3] They dispute whether the extended supervision *648 hold was "for the same course of conduct as that resulting in the new conviction."
¶ 8 Hintz asserts, and the State concedes, that sentence credit must be awarded under WIS. STAT. § 973.155(1)(b) for time in custody on an extended supervision hold if the hold was at least in part due to the conduct resulting in the new conviction. We agree that this self-evident interpretation of § 973.155(1)(b) is consistent with the language and policy of the statute.
¶ 9 The State asserts, however, that even though Hintz would be entitled to sentence credit if his extended supervision hold was at least in part due to the conduct resulting in his new conviction, the record establishes that Hintz was in custody solely for separate violations of his extended supervision. We disagree. Contrary to the State's assertions, the circuit court found that Hintz's involvement in the burglary was one of the reasons that Hintz was in custody on the extended supervision hold, and that finding is supported by the record. The court said:
I don't think he's entitled to the time because it's not solely because of this case that he's being revoked. There's other factors involved, and it's not solely because of this case that he's being held. . . .
I think if in fact it was a situation where he gets arrested on these charges, he's on a probation hold, they decide to revoke because of this case, then I would agree with the defense; he's entitled to the credit because I think the statute tells me that I have to do that. But when you have all these other factors, then I don't think that that's the case because he's not held because of this case. This is just one of the factors.
¶ 10 Thus, the court specifically addressed the reasons underlying Hintz's extended supervision hold, and found that the hold was based on multiple factors, including Hintz's involvement in the burglary that led to his new convictions. This finding is supported by the record and thus not clearly erroneous. See Noll, 115 Wis.2d at 643-44, 340 N.W.2d 575. The pre-sentence investigation report states: "An Apprehension Request was issued and the defendant was detained after his involvement in the thefts from the poker machines." The extended supervision revocation petition also states that Hintz's probation agent learned that he was involved in the burglary before issuing the hold. Thus, the court's finding that the hold was placed in part due to Hintz's involvement in the burglary was not clearly erroneous.
¶ 11 Finally, the State argues that Hintz was not in custody in connection with the burglary because he was released on signature bond with respect to charges in that matter during the disputed time period. Thus, the State argues, Hintz was in custody solely for the extended supervision hold, which was based on his original OMVWI conviction. However, just because a judicial officer released Hintz on a signature bond does not mean that Hintz's agent could not take the alleged behavior into account when placing the hold. Thus, we conclude that our interpretation of WIS. STAT. § 973.155(1) as allowing sentence credit for time in custody that is in part due to the conduct resulting in the new conviction resolves this issue.
¶ 12 Because we affirm the circuit court's finding that the extended supervision hold was placed in part due to the conduct resulting in the burglary conviction, we conclude that Hintz is entitled to 204 days of sentence credit. Accordingly, we reverse and remand for proceedings consistent with this opinion.
*649 Order reversed and cause remanded for proceedings consistent with this opinion.
NOTES
[] Petition for Review filed.
[1] All references to the Wisconsin Statutes are to the 2005-06 version unless otherwise noted.
[2] The other burglary charges were dismissed and read in for sentencing purposes.
[3] Hintz concedes that after he was sentenced on July 19, 2004, following his extended supervision revocation, any connection between his custody and the new crime was severed. See State v. Beets, 124 Wis.2d 372, 379, 369 N.W.2d 382 (1985). Hintz therefore seeks sentence credit only for the time before his reconfinement on his OMVWI conviction.
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687 F.Supp. 902 (1988)
Wilhemenia SMITH, Plaintiff,
v.
Otis R. BOWEN, Secretary of Health and Human Services, Defendant.
No. 86 CIV. 2856 (SWK).
United States District Court, S.D. New York.
June 17, 1988.
*903 Harlem Legal Services, New York City by Fernando A. Candia, for plaintiff.
Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City by Mark S. Sochaczewsky, Annette H. Blum, Peter O'Malley, Asst. U.S. Attys., for defendant.
MEMORANDUM OPINION AND ORDER
KRAM, District Judge.
Plaintiff brought this action pursuant to Sections 205(g) and 1631(c)(3) of the Social Security Act, as amended, (the "Act"), 42 U.S.C. §§ 405(g) and 1383(c)(3), challenging a final determination by the Secretary of Health and Human Services (the "Secretary") which denied plaintiff's application for Supplemental Security Income ("SSI") benefits based upon disability. On November 5, 1986, pursuant to Rule 12(c) of the Federal Rules of Civil Procedure ("Rule"), defendant moved for judgment on the pleadings. The action was referred to Magistrate Nina Gershon who issued a Report and Recommendation ("Report") on July 13, 1987 recommending that the Secretary's decision be reversed and that the case be remanded to the Secretary for further administrative proceedings. Presently before this Court are the Magistrate's recommendation and the Secretary's timely, Rule 72(b) objections.
BACKGROUND
Plaintiff filed an application for SSI benefits on July 30, 1984, claiming disability due to sarcoidosis[1], asthma, high blood pressure and arthritis. Both initially and upon reconsideration, plaintiff's application was denied. At plaintiff's request, a hearing was held on September 3, 1985 before Administrative Law Judge ("ALJ") Newton Greenberg who considered the case de novo. The ALJ's decision to deny plaintiff's SSI claim became the final determination of the Secretary when it was approved by the Appeals Council on December 23, 1985.
Plaintiff testified before the ALJ that her symptoms first appeared "around" 1975, and that she is unable to work because she is unable to sit, stand, bend or lift for long periods of time. From September 3 to September 10, 1983 plaintiff was a patient at Harlem Hospital, where Dr. J. Comer issued a report listing plaintiff's principal diagnosis as aseptic meningitis[2] and secondary diagnoses of sarcoidosis, asthma and hypertension. Dr. D.L. Washington, a Harlem Hospital physician who examined plaintiff, issued a letter on April 11, 1984 stating that plaintiff was being treated for sarcoidosis and that "she should not return to work at this time."
Dr. John Cohn, from a consultative examination performed on May 17, 1984, issued a diagnosis of pulmonary sarcoidosis, *904 bronchial asthma, pulmonary insufficiency, arthralgia[3] and morbid obesity. Dr. Cohn noted that "the stress test could not be performed since the patient could not tolerate the exercise," and stated additionally that plaintiff was "being followed at the Harlem Hospital Chest Clinic every four to six weeks."
Also in the record are three residual functional capacity assessments ("RFCA's") issued between July 11, 1984 and January 24, 1985 by state reviewing physicians and based exclusively on reviews of plaintiff's medical records. These RFCA's, with minor limitations, found plaintiff to be capable of a range of activity standing, walking, sitting, pushing, pulling and occasional lifting which would enable her to perform some kind of substantial, gainful work. The third RFCA stated that, because of plaintiff's obesity, she would be capable of performing only "medium work."
Plaintiff was represented before the ALJ by a paralegal. The ALJ determined that plaintiff presented medical evidence of morbid obesity, controlled hypertension, controlled bronchial asthma, arthralgia and a history of sarcoidosis, without clinical findings. The ALJ concluded that plaintiff did not suffer "an impairment or combination of impairments listed in, or medically equal to one listed in" Part A of Appendix 1, 20 C.F.R. Part 404, Subpart P; that plaintiff's impairments "do not prevent [her] from performing her past relevant work"; and that Dr. Washington's opinion that plaintiff "should not return to work" was entitled to little weight because the doctor "did not offer any clinical findings in support of [that] opinion but merely restated what he was told."
The Magistrate decided that the ALJ did not properly substantiate his failure to accord any weight to the opinion of Dr. Washington, as a treating physician, that plaintiff "should not return to work." The Magistrate cites Schisler v. Heckler, 787 F.2d 76 (2d Cir.1986), for the proposition that "there is no requirement that the physician's medical testimony be supported by objective clinical or laboratory findings." Id., at 81-82 n. 2. The Magistrate maintains, additionally, that the ALJ failed to assist the plaintiff affirmatively in developing the record and that the ALJ ignored, without explanation, other evidence consistent with plaintiff's claim.
Defendant objects to the Magistrate's recommendation on two grounds. First, the Secretary argues that the language quoted by the Magistrate from Schisler was specifically rejected in that case as a part of the Second Circuit's "treating physician rule" and that the ALJ, therefore, was justified in according little weight to "Dr. Washington's unsubstantiated conclusory opinion." Secondly, the Secretary claims that plaintiff was represented by counsel at the administrative hearing and that the ALJ therefore had no such responsibility to assist plaintiff as the Magistrate asserts.
DISCUSSION
Plaintiff bears the burden of proving her own disability. Bluvband v. Heckler, 730 F.2d 886, 891 (2d Cir.1984). In the absence of legal error, the Secretary's finding that plaintiff is not disabled is conclusive if supported by substantial evidence. 42 U.S.C. § 405(g); Bluvband, supra, 730 F.2d at 891. The Secretary, however, must render a decision on the basis "of all the relevant evidence." Ceballos v. Bowen, 649 F.Supp. 693, 700 (S.D. N.Y.1986) (emphasis in original); see also 42 U.S.C. §§ 423(d)(5)(B), 1382c(a)(5). Although the ALJ is not required to reconcile every ambiguity and inconsistency of medical testimony, Ferraris v. Heckler, 728 F.2d 582, 587 (2d Cir.1984), he cannot pick and choose evidence that supports a particular conclusion. Fiorello v. Heckler, 725 F.2d 174, 175-76 (2d Cir.1983); Ceballos, supra, 649 F. Supp at 700. His "failure to acknowledge relevant evidence or to explain its implicit rejection is plain error." *905 Ceballos, supra, 649 F.Supp. at 702 (citing Valente v. Secretary of Health and Human Services, 733 F.2d 1037, 1045 (2d Cir. 1984)). Furthermore, the ALJ must affirmatively assist the plaintiff in developing the record, especially where the claimant is not represented by a lawyer. Bluvband, supra, 730 F.2d at 892; see Hankerson v. Harris, 636 F.2d 893, 896 (2d Cir.1980).
The treating physician rule in the Second Circuit provides that "a treating physician's opinion on the subject of medical disability, i.e., diagnosis and nature and degree of impairment, is: (i) binding on the fact-finder unless contradicted by substantial evidence; and (ii) entitled to some extra weight because the treating physician is usually more familiar with a claimant's medical condition than are other physicians." Schisler, supra, 787 F.2d at 81; Bluvband, supra, 730 F.2d at 892-93.
In Bluvband, the Court enunciated a third prong of the rule, holding "that there is no requirement that the [treating] physician's medical testimony be supported by objective clinical or laboratory findings" to be binding upon the fact-finder. Bluvband, supra, 730 F.2d at 893 (citations omitted). The Schisler court noted that Congress may have overruled this element of the rule in Section 3(a)(1) of the Reform Act which became law in 1984. Schisler, supra, 787 F.2d at 81-82 n. 2; see 42 U.S.C. § 423(d)(5)(A).[4] Courts have applied this third, Bluvband element sub silentio in some later cases. Morales v. Bowen, 664 F.Supp. 75, 78 (S.D.N.Y.1987); Salvati v. Heckler, 632 F.Supp. 1202, 1208 (S.D.N.Y. 1986). The Court has subsequently noted that the amendments may have overruled this third prong in Brandon v. Bowen, 666 F.Supp. 604, 608 n. 5 (S.D.N.Y.1987), but it does not appear that any court has decided the question. It should be noted, for its bearing on the instant debate, that the language of § 423(d)(5)(A) may only mean that an "individual" claimant must support his disability claim with clinical and laboratory findings. It is not clear that the language places a similar burden upon a claimant's physician. However, in view of the ALJ's failure to fully develop the record and to give appropriate weight to portions of the record supportive of plaintiff's claim, it is unnecessary for the Court to reach at the present time the question of whether the third portion of the treating physician rule as stated in Bluvband remains valid in the Second Circuit.
It is probable, considering Dr. Washington's report and plaintiff's regular attendance at the Harlem Hospital clinic, that Dr. Washington was familiar with plaintiff's medical history and with any clinical or laboratory findings included in her Harlem Hospital records. But it is not clear from the record whether Dr. Washington was in fact plaintiff's regular treating physician. If Dr. Washington was not a treating physician then, of course, the treating physician rule does not render his medical opinion binding upon the ALJ. If Dr. Washington was plaintiff's treating physician, however, the ALJ erred in not substantiating his failure to endorse Dr. Washington's opinion that plaintiff "should not return to work." Then, insofar as the ALJ relies solely upon the opinions of other physicians *906 who did not themselves treat or even examine plaintiff, his reliance would be unfounded. "[T]he opinion of a non-examining doctor by itself cannot constitute the contrary substantial evidence required to override the treating physician's diagnosis." Hidalgo v. Bowen, 822 F.2d 294, 297 (2d Cir. 1987).
In a case such as this, the ALJ must not only weigh the evidence but must assist the plaintiff affirmatively in developing the record. It may be true, as the Secretary contends, that "plaintiff was represented by Harlem Legal Services, which has considerable expertise in litigating Social Security Claims." But plaintiff's actual representative before the ALJ was a paralegal. The proceedings in cases involving social security benefits "are not designed to be adversarial." Donato v. Secretary of Dept. of Health, 721 F.2d 414, 418 (2d Cir.1983) (quoting Schauer v. Schweiker, 675 F.2d 55, 57 (2d Cir.1982)). "The Social Security Act is a remedial statute which must be `liberally applied'; its intent is inclusion rather than exclusion." Marcus v. Califano, 615 F.2d 23, 29 (2d Cir.1979) (quoting Cutler v. Weinberger, 516 F.2d 1282, 1285 (2d Cir.1975) (citation omitted)). The ALJ's duty to develop the comprehensive record requisite for an equitable determination of disability is greatest when claimant is unrepresented; but the duty still exists when plaintiff is represented and even more, as here, where plaintiff is represented at hearing by a paralegal.
The ALJ in the case before us did not adequately perform this duty. He neither questioned the plaintiff concerning Dr. Washington's status, nor requested an RFCA from Dr. Washington. And he did not attempt to obtain complete records on plaintiff from Harlem Hospital, even though the Secretary's own consultant, Dr. Richard Woronoff, stated that such records "would make documentation of [her] diagnosis much easier." The ALJ erred additionally in failing to address certain evidence favorable to the claimant such as Dr. Cohn's notation of plaintiff's inability to perform the stress test and other elements of Dr. Cohn's report consistent with the findings of plaintiff's physician.
CONCLUSION
This Court accordingly adopts the Magistrate's recommendation, reversing the Secretary's decision and remanding this matter to the ALJ for further proceedings consistent with the aforegoing. The ALJ should procure all hospital records not previously obtained, RFCA's from the treating as well as the consulting physicians and such further information from Dr. Washington as is necessary. The ALJ should then evaluate all the evidence to determine whether, in combination, plaintiff's medical conditions render her disabled.
SO ORDERED.
NOTES
[1] Sarcoidosis is defined as a "systemic granulomatous disease of unknown cause, especially involving the lungs with resulting fibrosis, but also involving lymph nodes, skin, liver, spleen, eyes, phalangeal bones, and parotid glands." Stedman's Medical Dictionary, Fifth Lawyers Edition, 1982.
[2] Meningitis is defined as an "inflammation of the membranes of the brain or spinal cord." Id.
[3] Arthralgia is defined as "severe pain in a joint." Stedman's Medical Dictionary, Fifth Lawyer's Edition, 1982.
[4] 42 U.S.C. § 423(d)(5)(A) reads in relevant part:
An individual shall not be considered to be under a disability unless he furnishes such medical and other evidence of the existence thereof as the Secretary may require. An individual's statement as to pain or other symptoms shall not alone be conclusive evidence of disability as defined in this section; there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment that results from anatomical, physiological, or psychological abnormalities which could reasonably be expected to produce the pain or other symptoms alleged and which, when considered with all evidence required to be furnished under this paragraph (including statements of the individual or his physician as to the intensity and persistence of such pain or other symptoms which may reasonably be accepted as consistent with the medical signs and findings), would lead to a conclusion that the individual is under a disability. Objective medical evidence of pain or other symptoms established by medically acceptable clinical or laboratory techniques (for example, deteriorating nerve or muscle tissue) must be considered in reaching a conclusion as to whether the individual is under a disability.
|
61 So.3d 1128 (2011)
WRIGHT
v.
STATE.
No. 2D10-4876.
District Court of Appeal of Florida, Second District.
May 11, 2011.
DECISION WITHOUT PUBLISHED OPINION
Affirmed.
|
827 S.W.2d 372 (1992)
Nathaniel WILTZ, Appellant,
v.
The STATE of Texas, Appellee.
No. 01-90-00517-CR.
Court of Appeals of Texas, Houston (1st Dist).
January 30, 1992.
Rehearing Denied March 26, 1992.
W. Troy McKinney, Houston, for appellant.
Michael J. Guarino, Dist. Atty., B. Warren Goodson, Asst., Galveston, for appellee.
Before BASS, DUNN and HUGHES, JJ.
*373 OPINION
HUGHES, Justice.
Appeal is taken from a conviction for attempted aggravated sexual assault. Appellant pled not guilty. After hearing the evidence and argument, the jury found appellant guilty as charged in the indictment. The trial court assessed punishment at five-years incarceration.
We reverse in part and remand the case to the trial court to reassess punishment.
This is the second appeal of this cause. Appellant's first conviction was reversed and remanded due to a Batson[1] violation. Wiltz v. State, 749 S.W.2d 519 (Tex.App. Houston [14th Dist.] 1988, no pet.).
In his first three points of error, appellant asserts that the trial court erred by assessing a more severe sentence after the second conviction (five-years confinement) than was assessed after the first conviction. Punishment, after the first conviction, was assessed by the trial judge at 10-years probation. Wiltz, 749 S.W.2d at 520.
Unless there is evidence that a defendant's subsequent conduct justifies an increase, a trial court on remand may not assess greater punishment than was assessed in the first trial. North Carolina v. Pearce, 395 U.S. 711, 726, 89 S.Ct. 2072, 2081, 23 L.Ed.2d 656 (1969); Bingham v. State, 523 S.W.2d 948 (Tex.Crim.App. 1975). The State concedes that there was no evidence presented, at the hearing on punishment, that would warrant the assessment of a more severe sentence. However, the State argues that the punishment assessed in this instance is less severe than the punishment originally assessed.
In support of its position, the State cites to Lechuga v. State, 532 S.W.2d 581 (Tex. Crim.App. 1975). There, Lechuga was sentenced to three-years confinement for passing bad checks. A new trial was granted after which Lechuga was sentenced to fivey-ears punishment and then placed on probation. Lechuga's probation was revoked, he was sentenced to 5-years imprisonment, and he appealed. On rehearing, the Court of Criminal Appeals determined that the second sentence was more severe than the first and that it was therefore unconstitutional. Lechuga, 532 S.W.2d at 588. The court then remanded the case to the trial court for resentencing. Id. We cannot agree with the State's proposition that the Court of Criminal Appeals, by holding Lechuga's second sentence was unconstitutional, implicitly holds appellant's second sentence constitutional in this case.
The rationale for the Pearce rule is simply to prevent the fear of vindictiveness against a defendant, for having successfully attacked his first conviction, or chill the defendant's decision to appeal. Pearce, 395 U.S. at 725, 89 S.Ct. at 2080; United States v. Colunga, 812 F.2d 196, 199 (5th Cir.1987). It seems axiomatic to us that the fear that probation could be lost, merely by successfully appealing a conviction, would have a chilling effect on a defendant's decision to appeal. Consequently, we hold that the sentence imposed here is unconstitutional.
Appellant's first three points of error are sustained.
In points of error four and five, appellant complains that the trial judge erred in sustaining the State's objection to portions of his closing argument.
Proper jury argument includes: 1) summation of evidence; 2) reasonable deductions from the evidence; 3) answers to the argument of opposing counsel; 4) a plea for law enforcement. Alejandro v. State, 493 S.W.2d 230, 231 (Tex.Crim.App.1973).
In this case, appellant complains that the trial court improperly sustained the State's objection to his closing argument because his argument properly summarized the evidence and made a reasonable deduction from the evidence. The record shows the following: the sexual assault occurred in the complainant's back yard; during the course of the assault the complainant's mother entered the back yard from the house and saw the assault; the complainant called out to her mother to call the police; the assailant then left the *374 back yard through a gate; appellant was picked up a few blocks from the complainant's home; and after the police brought the appellant before her, the complainant identified him as the person who had assaulted her.
During the evidentiary portion of the trial, appellant vigorously attempted to establish that the complainant had misidentified him. In closing argument, appellant's trial counsel tried to reinforce this theory by: 1) pointing out that appellant had been arrested walking down a moderately lit street in downtown Galveston while looking in a music store window; and 2) hypothesizing that the assailant would have hidden in an alleyway to avoid apprehension. The State objected on the basis that appellant's trial counsel's argument called for speculation and personal opinion. The statements and objections occurred as follows:
Appellant's counsel: This was a person that was hiding. The person that was her assailant hid from her until he had the opportunity to rush at her and knock her down. Now, would thatif Nathaniel Wiltz was the assailant and had taken the opportunity to hide in that alleyway, would he then skirted right out of the alleyway and walk down a moderately lit street in downtown Galveston in the same clothing, looking in the window at the music store? Is that the kind of activity you would suspect? He would have been in the alleyway. The State: Objection. Calls for speculation.
The court: Sustained. Appellant's counsel: Ladies and gentlemen of the jury, the testimony from the officers is that there is a lot of alleyways between 15th and 21st. A lot of alleyways where this person could have been, and I am telling you I am pretty sure he probably did. The person that was the assailant.
The State: Objection, your Honor. The counsel is injecting his personal opinion into the argument.
The court: Sustained.
The State: Thank you your Honor.
Appellant's counsel: And you can draw your own inferences from the evidence that you hear, and I hope that you don't just skirt across the face of the evidence. You better dig a little deeper.
We agree with appellant's assessment that the statements were within the bounds of permissible argument. However, we cannot reverse a criminal conviction when we find beyond a reasonable doubt that the trial court's error made no contribution to the conviction or punishment. Tex.R.App.P. 81(b)(2). In concluding that no harm was caused by the error here, we note that the State's objections were made after appellant's counsel had made his argument that the assailant was hiding in the alleyway. Moreover, the trial court merely sustained the State's objection, and did not instruct the jury to disregard appellant's counsel's argument.
Points of error four and five are overruled.
In points of error six and seven, appellant asserts that the State knowingly permitted the jury to hear perjured testimony.
These points of error concern conflicting testimony given by complainant's mother regarding her ability to identify appellant. Two hours prior to trial, at a pretrial identification hearing, the complainant's mother was asked whether, during the assault, she would have recognized her daughter in the back yard had her daughter not cried out for help. She answered, "I don't know that I could have at that time." During trial, she testified that she could recognize her daughter during the assault and saw appellant's face well enough to positively identify him. Appellant asserts that the testimony at trial was perjured and the State had a duty to correct it.
In support of this argument, appellant sites to Ex parte Adams, 768 S.W.2d 281 (Tex.Crim.App.1989). In that case, the Court of Criminal Appeals, in setting aside Adams' conviction, chastised the Dallas County District Attorney's office for intentionally failing to disclose witnesses' prior inconsistent statements, knowingly using a witness' perjured testimony, failing to correct *375 perjured testimony, and improperly coaching witness. Adams, 768 S.W.2d at 291-93.
In this case, the purported perjured testimony was elicited during appellant's crossexamination of the witness. Appellant has offered no evidence to show the State failed to disclose, or even knew whether or not, the testimony was perjured. Appellant's points of error are overruled.
The judgment is affirmed, the sentence reversed, and the cause remanded for resentencing.
DUNN, J., dissenting in part; concurring in part.
DUNN, Justice, concurring and dissenting.
I agree that the judgment should be affirmed; however, I do not find that appellant received a more severe sentence on retrial than he received in his first trial.
The majority is correct in holding that unless a defendant's conduct after the first trial justifies a more severe sentence, a trial court on retrial may not assess a defendant a more severe sentence than he or she received in the first trial. North Carolina v. Pearce, 395 U.S. 711, 726, 89 S.Ct. 2072, 2081, 23 L.Ed.2d 656 (1969).
The majority then holds that the five-years confinement appellant received on retrial was a more severe sentence than the 10-year probated sentence he received in his first trial. The majority makes this assumption without citing any authority to support the proposition that a five-year confinement sentence is more severe than a 10-year probated sentence. The Pearce and Bingham cases cited by the majority did not involve a situation such as the one involved in this case.
In Pearce, the defendant received a prison term of 12 to 15 years at his first trial and then the trial court, on retrial, added another eight years confinement to the prison term assessed in the first trial. 395 U.S. at 713-14, 89 S.Ct. at 2074-75. The Supreme Court held that the harsher sentence on retrial could not stand because the defendant was denied his constitutional rights under the due process clause of the fourteenth amendment. Id. at 725-26, 89 S.Ct. at 2080-81. In Bingham, the defendant received a 10-year prison sentence in his first trial. Bingham v. State, 523 S.W.2d 948, 949 (Tex.Crim.App.1975). On retrial, the trial court assessed the defendant a 12-year prison sentence. Id. The court held that the sentence on retrial was a harsher sentence and could not stand under the reasoning of Pearce. Id. at 949-50. Both cases involved comparing prison sentences, not a probated sentence with a prison sentence.
The Texas case which has dealt with the issue of whether a prison sentence is a more severe sentence than a probated sentence is Lechuga v. State, 532 S.W.2d 581 (Tex.Crim.App. 1975). In Lechuga, the trial court gave the defendant a three-year prison sentence at his first trial. Id. at 582. On retrial, the trial court gave the defendant a five-year prison sentence, which was probated for five years. Id. The defendant's probation was later revoked. Id. The Texas Court of Criminal Appeals held that the defendant was denied due process under the fourteenth amendment because the sentence he received on retrial was more severe than the sentence he received in his first trial. Id. at 587-88. In Lechuga, the State argued that a five-year prison sentence, which was probated for five years, was less severe than a three-year prison sentence. Id. at 586. The court rejected this argument because a five-year prison sentence is longer and more severe than a three-year prison sentence, notwithstanding the fact that the five-year prison sentence was probated. Id. at 587-88. The court held that the fact that the defendant received a probated sentence on retrial did not make the sentence received on retrial less severe. Id. at 588. "Does the granting of probation for five (5) years cure such constitutional error? We think not." Id.
The Lechuga court, following McCulley v. State, 486 S.W.2d 419 (Mo.1972), found that probation is not part of the definition of "sentence." Id. at 587. The court went on to hold that "to give the words `more *376 severe' as used in Pearce a different meaning than longer sentence would make every question of whether Pearce has been violated `purely subjective' defying `objective application.'" Id. The court reasoned that only the length of the prison sentence should be considered when determining whether a sentence is more severe, not what impact the prison sentence, coupled with probation, may have on the individual defendant. Id. at 587.
As the Lechuga court points out, if it is held that a five-year prison sentence is more severe than a 10-year probated sentence, where will the lines be drawn for future cases? Id. at 587 n. 2. The majority implies that because any defendant would opt for probation over confinement, a prison sentence is more severe than a probated sentence. Applying the majority's reasoning, that the impact on the defendant determines whether a sentence is more or less severe than another, the question must be asked, is a two-month prison sentence more severe than a 10-year probated sentence? A six-month prison sentence? A one-year prison sentence? A two-year prison sentence? Where will the line be drawn?
Also, if the impact on the defendant is used to determine whether a sentence is more or less severe than another, must courts then consider "good time credits" a person may earn in prison, which would make the defendant eligible for parole after serving a fraction of his or her sentence? See Lechuga, 532 S.W.2d at 587 n. 2.
The majority opinion departs from the holding and reasoning adopted by the Texas Court of Criminal Appeals in Lechuga. As the court in Sanders v. State, 580 S.W.2d 349, 352 (Tex.Crim.App.1978) stated:
The State cites Lechuga ... for the proposition that five years probation is a greater punishment than three years confinement. That was not the holding in Lechuga. In the majority opinions on both original submission and on rehearing it was held that assessment of punishment at five years was greater than that of three years.
Using simple arithmetic and supported by the Lechuga case, which was reaffirmed by the Sanders case, I would find in this case that a five-year prison sentence on retrial is not a longer or more severe sentence than the ten-year prison sentence that was probated, and originally imposed at the first trial.
I would overrule appellant's points of error.
I would affirm the judgment.
NOTES
[1] Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986).
|
NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 15a0543n.06
Case No. 14-5990 FILED
Jul 30, 2015
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR
) THE EASTERN DISTRICT OF
SHERYL BRUNER, ) KENTUCKY
)
Defendant-Appellant. )
) OPINION
)
BEFORE: BOGGS and DONALD, Circuit Judges; QUIST, District Judge.*
BERNICE BOUIE DONALD, Circuit Judge. A jury convicted Defendant-Appellant
Sheryl Bruner (“Bruner”) of fourteen counts involving bankruptcy fraud, money laundering,
Social Security fraud, making a false statement, and theft of government money. Between 2003
and 2013, Bruner fraudulently collected Social Security income by making false statements that
she was unable to work and by concealing her income and assets. Bruner also made false
declarations when she filed for bankruptcy and subsequently engaged or attempted to engage in
several financial transactions with the proceeds from her bankruptcy fraud. At trial, Bruner
relied on an advice-of-counsel defense, wherein she alleged that the false declarations she made
on her bankruptcy petition were the result of advice she received from her attorneys. The district
*
The Honorable Gordon J. Quist, United States District Judge for the Western District of Michigan, sitting by
designation.
Case No. 14-5990, United States v. Sheryl Bruner
court denied Bruner’s request for a jury instruction on her advice-of-counsel defense, and Bruner
appeals her bankruptcy fraud and money laundering convictions based on that denial. Because
we find the district court did not abuse its discretion in finding that Bruner had failed to adduce
sufficient evidence warranting an advice-of-counsel instruction, we AFFIRM Bruner’s
conviction and sentence on these charges.
I.
A.
For approximately ten years, Bruner fraudulently collected Supplemental Security
Income (“SSI”) by making false statements that her depression, anxiety, and obesity rendered her
unable to work, and by concealing her income and assets. Specifically, Bruner failed to disclose
to the Social Security Administration that she ran an in-home business that provided services to
Medicaid patients; that she billed Medicaid for over $7.8 million between 2007 and 2013; and
that she was paid, through a company she subcontracted with, $204,293 in 2012 and $119, 605 in
2013. Bruner also owned three homes and four vehicles.
On May 16, 2013, Bruner filed for bankruptcy and stopped making mortgage payments
on her home at 233 Stable Way in Nicholasville, Kentucky—the one home she had reported to
the Social Security Administration. In her bankruptcy petition, Bruner claimed to have only
$1,500 in cash and investments, one home at 233 Stable Way, and $5,100 in personal property
(including one vehicle she valued at $1,500). Among other things, Bruner failed to disclose her
monthly SSI income and vastly underreported her business income. Further, Bruner falsely
declared that she did not hold or control any property for anyone else and that, during the past
ten years, she had not transferred any property into any trust that claimed her as a beneficiary.
-2-
Case No. 14-5990, United States v. Sheryl Bruner
On December 5, 2013, during an unrelated investigation into Bruner’s Medicaid
reimbursement claims, the Kentucky Attorney General’s Office of Medicaid Fraud and Abuse
Control Unit searched Bruner’s home—also the address for her business—to obtain patient
records. During this search, investigators discovered over $223,000 in cash that had been stored
in a safe in an attic space behind a locked door in a bedroom closet.
The following day, December 6, 2013, Bruner wired $19,000 from her TD Ameritrade
account to Town & Country Bank and Trust in Nicholasville, Kentucky, and withdrew the
money in cash. On December 9, 2013, Bruner sent three more wire transfers to the Town &
Country account and withdrew $3,240 in cash. Later that same day, Bruner attempted to wire
and withdraw an additional $493,000, and Town & Country closed her account. The following
day, December 10, 2013, Bruner opened an account at Central Bank in Lexington, Kentucky.
From this account, Bruner continued to wire and withdraw cash, including a $153,000 wire on
December 17, 2013, and a $25,000 cash withdrawal on December 24, 2013.
In the midst of these financial transactions, on December 20, 2013, Bruner attended a
bankruptcy hearing with her bankruptcy attorney, Justin O’Malley (“O’Malley”). During this
hearing, Bruner initially denied but then admitted to owning or being the trustee controlling two
homes and three vehicles that she had not disclosed on her bankruptcy petition.
B.
On February 6, 2014, a grand jury indicted Bruner on fourteen counts: one count of theft
of government money, in violation of 18 U.S.C. § 641; one count of concealment and failure to
disclose assets, in violation of 42 U.S.C. § 1383a(a)(3); one count of making false and fictitious
statements, in violation of 18 U.S.C. § 1001; one count of bankruptcy fraud/concealment of
-3-
Case No. 14-5990, United States v. Sheryl Bruner
assets, in violation of 18 U.S.C. § 152(3); and ten counts of money laundering, in violation of 18
U.S.C. § 1956(a)(1)(B)(i).1
A jury trial commenced on March 10, 2014. Bruner’s counsel advised the district court
on the second day of trial that Bruner intended to waive the attorney-client privilege and also
intended to request that the court give an advice-of-counsel instruction and a good faith defense
instruction to the jury. Defense counsel further indicated that “one of the determining factors in
whether or not my client is going to decide to testify is whether we can present enough evidence
to justify the giving of one of these instructions without her testifying.” The district court
subsequently secured a waiver of the attorney-client privilege from Bruner with respect to two
attorneys: Bruner’s trusts and estates attorney, William Legg (“Legg”), and Bruner’s bankruptcy
attorney, O’Malley.
Legg testified that as early as 2000, he placed Bruner’s business and assets into several
trusts, which she exclusively controlled as the grantor and trustee. Legg agreed that Bruner had
“disclosed to [him] all the pertinent facts that [he] needed . . . in order to give her the advice that
[he] gave her.” Among other things, Legg advised Bruner that “property she placed into the trust
was owned by the trust and not by her.” Legg further agreed that Bruner appeared to be relying
on the advice he gave her, as evidenced by notes Bruner had taken. Additionally, Legg
acknowledged that Bruner had informed him that she had over $220,000 in cash in her home.
Legg also agreed that when he spoke to Bruner after she had filed her 2013 bankruptcy petition,
she told him that she had relied on advice from her bankruptcy lawyer in completing the petition.
1
Bruner was initially charged with two counts of making false and fictitious statements. Prior to trial, however,
Bruner moved to dismiss one of these counts as duplicitous. The government did not respond and did not include
this charge in the verdict sheet completed by the jury. Post-trial, the district court granted Bruner’s motion to
dismiss. United States v. Bruner, No. 5:14-CR-5-KKC, 2014 WL 2921840, at *6 (E.D. Ky. June 27, 2014).
-4-
Case No. 14-5990, United States v. Sheryl Bruner
Following Legg’s testimony, the government informed the district court of its opposition
to Bruner’s request for an advice-of-counsel instruction. After argument, the district court
directed defense counsel to provide “some cases in terms of what the defendant must show
before this instruction is given” and gave the defense “fair warning” that, “based on what [the
court had] heard to date,” the instruction was not justified.
The following day, as part of her defense, Bruner presented O’Malley’s testimony.
O’Malley testified that Bruner’s principal concern was the effect filing bankruptcy would have
on trusts that Bruner said she had established for the benefit of her infirm mother and disabled
sister. Defense counsel and O’Malley had the following exchange:
Q. All right. And what did you tell her [in response to her concerns]?
A. Told her that as a general principle of law, property held in an irrevocable
trust for the benefit of someone other than the debtor would not be deemed
property of her bankruptcy estate.
Q. Did you tell her she did not have to disclose the trust in the bankruptcy
petition?
A. I did not.
Q. Okay. Did you ask to look at the trust documents to see if in your opinion
they were the type of trusts that might need—that might have to be disclosed?
A. I did not because this was our initial meeting prior to tendering any
substantive materials, so my presumption was the thrust of her question was that
trust[s] that were held exclusively by her mother and sister would not be impacted
by her filing bankruptcy. So I understood the substance of her question to run not
to her as a debtor but to her mother and sister in their assets.
Q. Okay. And that was the end of the discussion about the trust[s]?
A. Correct.
Q. Okay. Now . . . were you hired to represent her?
-5-
Case No. 14-5990, United States v. Sheryl Bruner
A. I was.
Q. Okay. And did you sit down with her and go over each question in the
bankruptcy petition?
A. I did. I gave her an intake packet.
Q. Okay. Did you sit down with her and go over each question in the bankruptcy
petition, or did you give her this intake packet?
A. I gave her the intake packet.
Q. Okay.
A. And . . . I provided [an] explanatory explanation of how to proceed through
each section of that packet and conferred with her to make certain she didn’t have
any questions or concerns.
Q. All right. You went through what you put into your—in your intake packet?
A. Correct.
Q. How many pages is an intake packet?
A. Five pages of instructions and approximately 36 pages of substantive material,
for a total of 42 pages, and it’s written to mirror the schedules and the statement
of financial affairs, which is required in any bankruptcy petition, irrespective of
which chapter a debtor were to file under.
Q. Okay. I’m just trying to get at what is in the packet. Is it copies of the
statement of affairs and statement of financial condition and the actual petition, or
is it—is it your work product that reproduces the statements and schedules?
A. My work product that reproduces the statements and schedules.
Q. Okay. Did she fill it out there in your office?
A. She began filling it out and then completed it at home and mailed me the
completed copy, along with the check to retain my services.
-6-
Case No. 14-5990, United States v. Sheryl Bruner
The defense rested without calling Bruner to testify. Without offering further argument
or legal authority, defense counsel formally requested the advice-of-counsel instruction. The
district court denied the advice-of-counsel instruction for lack of evidentiary basis, but did give
an instruction on Bruner’s good-faith defense.
The jury convicted Bruner on all fourteen counts. Bruner moved for a new trial, arguing
that the district court erred in declining to give the advice-of-counsel instruction. The district
court denied the motion. In a judgment entered on August 8, 2014, the district court sentenced
Bruner to seven years of imprisonment. This timely appeal followed.
II.
“We review a district court’s decisions concerning whether to give a particular jury
instruction for abuse of discretion.” United States v. Capozzi, 723 F.3d 720, 725 (6th Cir. 2013)
(quoting United States v. Sloan, 401 F. App’x. 66, 68 (6th Cir. 2010)). Under this standard of
review, we may reverse a district court’s denial only if the proposed instruction “is (1) a correct
statement of the law, (2) not substantially covered by the charge actually delivered to the jury,
and (3) concerns a point so important in the trial that the failure to give it substantially impairs
the defendant’s defense.” United States v. Franklin, 415 F.3d 537, 553 (6th Cir. 2005) (internal
quotation marks and citation omitted).
III.
In asserting an advice-of-counsel defense, a defendant alleged to have performed a
criminal act argues that she did so on her lawyer’s advice, and therefore lacked the requisite
mens rea element of the offense. United States v. Swafford, 512 F.3d 833, 839 (6th Cir. 2008);
see also United States v. Ragsdale, 426 F.3d 765, 778 (5th Cir. 2005) (“The advice of counsel
defense is only applicable where it may negate willful violation of the law.”) To receive a jury
-7-
Case No. 14-5990, United States v. Sheryl Bruner
instruction for an advice-of-counsel defense, a defendant must offer evidence of “(1) full
disclosure of all pertinent facts to counsel, and (2) good faith reliance on counsel’s advice.”
United States v. Lindo, 18 F.3d 353, 356 (6th Cir. 1994) (emphasis added). “[A] defendant who
identifies any evidence supporting the conclusion that he or she has fully disclosed all pertinent
facts to counsel, and that he or she has relied in good faith on counsel’s advice, is entitled to a
reliance jury instruction.” Id. Conversely, “it is well established that an instruction should not
be given if it lacks evidentiary support or is based upon mere suspicion or speculation.” Id.; see
also United States v. Morgan, 216 F.3d 557, 566 (6th Cir. 2000) (“A district court must grant an
instruction on the defendant’s theory of the case if the theory has some support in the evidence
and the law.”) (citations omitted).
In the present case, Bruner’s appeal of the advice-of-counsel instruction issue is limited
to her bankruptcy-fraud and subsequent money-laundering convictions.2 Accordingly, the
question before us is whether the district court correctly found Bruner had not adduced sufficient
evidence that she fully disclosed all the relevant facts to her attorneys and relied in good faith on
her attorneys’ advice, and therefore did not “knowingly and fraudulently make[] a false
declaration, certificate, verification, or statement under penalty of perjury” during her bankruptcy
proceedings. 18 U.S.C. § 152(3).
We find that Bruner failed to demonstrate a sufficient foundation in the evidence to merit
an advice-of-counsel jury instruction. As the district court aptly explained in denying Bruner’s
motion for new trial:
Bruner’s argument for an advice of counsel instruction is complicated in that she
insists she relied on a patchwork of advice from two separate attorneys who
worked on two very different matters several years apart. The factual
applicability of an advice of counsel defense is further obscured by the fact that
2
This is in contrast to the arguments Bruner made in her motion for new trial, where she argued that all of her
convictions should be vacated and a new trial ordered.
-8-
Case No. 14-5990, United States v. Sheryl Bruner
Bruner was charged with several separate crimes. In her motion, Bruner lumps
her arguments together, as though she had only one attorney and was charged
with only one crime. In her motion, she insists, “The trial transcript contains a
plethora of support for both required elements to merit the advice to [sic] counsel
instruction.” Bruner’s argument is misplaced. Bruner failed to present any
evidence at trial to establish either element of the advice of counsel instruction as
to any particular charge.
Bruner, 2014 WL 2921840, at *2 (citation omitted).
Bruner improperly conflates the advice she received from Legg with the advice she
received from O’Malley. Bruner implicitly argues that she established the two elements of an
advice-of-counsel instruction by cobbling together her interactions—over the course of at least a
decade—with Legg and O’Malley. Stated differently, Bruner claims the first prong of an advice-
of-counsel defense is satisfied because she fully disclosed all pertinent facts regarding her
financial assets to Legg, and the second prong is satisfied because she relied in good faith on the
advice of O’Malley during her subsequent bankruptcy proceedings. Bruner cites no authority,
however, establishing that an advice-of-counsel instruction is warranted on facts such these:
where one attorney—in one legal context—gives a defendant certain legal advice, and then a
second attorney—years later, unaware of the advice of the previous attorney, and in a very
different legal context—gives a defendant other legal advice.
Legg’s uncontroverted testimony was that he was not involved in Bruner’s bankruptcy
proceedings, and was not even aware that Bruner had filed for bankruptcy until after the fact.
Indeed, in contradiction to Bruner’s defense, Legg explicitly testified that Bruner told him that
she had relied on advice from her bankruptcy lawyer in filling out the intake packet, which
formed the basis of her bankruptcy petition. Accordingly, Legg’s testimony is that Bruner did
not rely on Legg’s advice in completing O’Malley’s intake packet. To the extent Bruner claims
that she, in good faith, misapplied Legg’s trusts-and-estates advice to the bankruptcy context,
this argument is unpersuasive; Legg testified that he advised Bruner that “[t]he IRS considers
-9-
Case No. 14-5990, United States v. Sheryl Bruner
[the trust property] her property” for tax purposes, and that he “was not knowledgeable enough
to know” whether Bruner’s trust income needed to be reported as personal income or property to
the Social Security Administration. This should have been sufficient to inform Bruner that
Legg’s trusts-and-estates advice was not readily generalizable to other legal contexts. Cf. Lindo,
18 F.3d at 356-57 (finding that, although the defendant had shown past reliance on counsel’s
advice, he had failed to provide evidence of full disclosure to counsel regarding the particular
issue on appeal so as to be entitled to an advice-of-counsel instruction).
With respect to O’Malley, Bruner argues that (1) he advised her, during their initial
meeting, that an irrevocable trust for the benefit of someone other than the debtor generally
would not be deemed property of her bankruptcy estate, and (2) O’Malley’s intake packet
advised that Social Security income was not part of the bankruptcy estate. Based on this advice,
Bruner argues, she excluded both her trust income and her Social Security income from her
bankruptcy petition, thus justifying an advice-of-counsel instruction. There are several problems
with this argument, however. First, even assuming O’Malley incorrectly advised Bruner
regarding her trust and Social Security income, there were still other categories of income and
assets that Bruner fraudulently excluded from her bankruptcy petition: namely, over $223,000 in
cash found in her residence at 233 Stable Way, two other homes, and several vehicles. Thus,
Bruner’s non-disclosure to the bankruptcy court was not limited to her trusts or her Social
Security income. Moreover, no evidence establishes that O’Malley provided Bruner any advice
regarding these other categories of income and assets.
Second, there is ample room to question whether Bruner fully disclosed all pertinent facts
regarding the trusts to O’Malley. O’Malley testified, unrebutted by Bruner, that Bruner asked
him only a general question about a “trust that [was] held exclusively by her mother and sister”
- 10 -
Case No. 14-5990, United States v. Sheryl Bruner
and how it could be “impacted by her filing bankruptcy.” In response to this general question,
O’Malley “[t]old her that as a general principle of law, property held in an irrevocable trust for
the benefit of someone other than the debtor would not be deemed property of her bankruptcy
estate.” A general, incomplete question that elicits only a general, incomplete response cannot
constitute full disclosure sufficient to justify an advice-of-counsel instruction. See United States
v. Reesor, 10 F. App’x 297, 308 (6th Cir. 2001). At no point did Bruner give the trust documents
to O’Malley. Further, O’Malley testified that if Bruner had told him that “she had access to the
money in the corpus of the trust,” he would have advised her that the trust property “would have
been property of the bankruptcy estate because the debtor would have an interest.”
Third, Bruner suggests on appeal that O’Malley is at fault because he did not ask Bruner
sufficient questions or ask for relevant documents prior to Bruner completing O’Malley’s intake
packet or prior to O’Malley filing Bruner’s bankruptcy petition. For instance, Bruner notes that
O’Malley did not request to see the trust documents and did not provide Bruner with adequate
guidance in completing the intake packet. Bruner further suggests that the directions in the
intake packet were misleading. These arguments, however, only serve to undermine Bruner’s
advice-of-counsel defense. Regardless of whose position one accepts—i.e., whether Bruner
consciously omitted relevant information in her interactions with O’Malley prior to the filing of
her bankruptcy petition (the government’s theory) or O’Malley did not make sufficient inquiries
to allow Bruner to accurately answer the questions in the intake packet (Bruner’s theory)—the
end result is the same: Bruner did not disclose all pertinent facts to O’Malley. In the absence of
full disclosure, Bruner cannot credibly claim to have relied in good faith on O’Malley’s advice.
IV.
- 11 -
Case No. 14-5990, United States v. Sheryl Bruner
For the foregoing reasons, Bruner’s judgment of conviction is AFFIRMED.
- 12 -
|
269 F.Supp. 893 (1967)
SECURITY TRUST & SAVINGS BANK, a corporation, Plaintiff,
v.
FEDERAL RESERVE BANK OF MINNEAPOLIS, a corporation, Defendant.
Civ. A. No. 470.
United States District Court D. Montana, Billings Division.
June 19, 1967.
Crowley, Kilbourne, Haughey, Hanson & Gallagher, Billings, Mont., for plaintiff.
Anderson, Symmes, Forbes, Peete & Brown, Billings, Mont., for defendant.
OPINION AND ORDER
RUSSELL E. SMITH, District Judge.
This case was by stipulation submitted for decision upon the documents in the court file.
From the pleadings, stipulations, depositions and affidavits on file it appears without dispute that: Northwest Investors Service Inc. drew a check on Security Trust & Savings Bank on June 21, 1963, payable to the order of Crow, Brourman & Chatkin, Pittsburgh brokers, and mailed the check to the payee. The payee deposited the check, without endorsement of any kind, in the Western Pennsylvania National Bank at Pittsburgh, Pennsylvania (hereinafter called Pennsylvania Bank) on June 24, 1963. On June 25, the Pennsylvania Bank forwarded the check to the Pittsburgh Branch of the Federal Reserve Bank of Cleveland endorsed "Pay to the Order of Any Bank or Banker or any Federal Reserve Bank. Prior Endorsements guaranteed. Western Pennsylvania National Bank Washington Trust Office." The Cleveland Federal Reserve Bank forwarded the check to the defendant Minneapolis Federal Reserve Bank, which in turn sent the check to the plaintiff. On June 26, 1963, plaintiff paid the check by stamping it paid, and charging it to the maker's account, and placed it in the file with other checks of the maker.
In paying the check, plaintiff was acting under a mistake of fact. The maker's account had an apparent balance sufficient to cover the check when it was first presented only because an uncollected draft had been provisionally credited to the account. Through a clerical error a "hold" which had been placed on said account pending collection of the draft was not fed to the computer and the maker's check was therefore cleared *894 and paid on June 26. The error in paying the check was discovered upon return of the draft unpaid on July 19, 1963, and at the same time the plaintiff discovered the missing endorsement of the payee. On that date, therefore, plaintiff returned the check with a notation marked "endorsement missing" to defendant with the intention that it be returned to the Pennsylvania Bank. The check was sent with entry (meaning that plaintiff's account at the defendant would be credited with the amount of the check). Plaintiff's account with defendant was in fact credited with the amount of the check. Defendant returned it through the Federal Reserve System to the Pennsylvania Bank which received it on July 23, 1963, with entry. On the same day the Pennsylvania Bank stamped the check with the following endorsement: "Credited to the account of the within named payee in accordance with payee's instructions. Absence of endorsement guaranteed. Western Pennsylvania National Bank, Porter Building Office, Pittsburgh, Pennsylvania." The check was then returned through the Federal System to plaintiff and was received by plaintiff on July 29, 1963. On July 30, it was protested for nonpayment and returned to the Pennsylvania Bank and through the Federal Reserve System with a notation attached indicating it was returned because of "nonsufficient funds and personal endorsement required." The Pennsylvania Bank received it on August 2, 1963, and on August 5 returned the check to the Pittsburgh Branch of the Federal Reserve Bank of Cleveland, after obtaining the payee's endorsement. The Pennsylvania Bank apparently accepted and returned said check in early August without entry. The check was returned through the Federal Reserve System to plaintiff on August 12, 1963, and on August 13 was returned by plaintiff to defendant marked "insufficient funds."
Prior to July 30, when the check was protested for insufficient funds, the maker advised the plaintiff that he had issued the check to the payee in payment for 1,000 shares of stock in Jerome, Richard & Co. Inc., a corporation, being purchased by the maker from another securities' firm, Frederick, Cirlin & Associates, but that the stock purchased had not been received by him. The maker had resold the securities to a broker in Iowa in turn, and had drawn the aforementioned draft on the Iowa broker against the delivery of the securities. Because Northwest Securities, the maker, did not receive the stock certificates from either Frederick, Cirlin & Associates or Crow, Brourman & Chatkin, he was unable to deliver them to the Iowa broker, who thereupon refused to honor the draft.
The Northwest Securities check was received by the Pennsylvania Bank with entry on August 16, 1963, and on the same day was charged to the payee's account and returned to the payee.
No immediate attempt was made by the Pennsylvania Bank to charge the check back to the Federal Reserve System. On or about August 26, the payee commenced suit against the Pennsylvania Bank for the amount of the check, and on August 27, the Pennsylvania Bank's attorney obtained the check from the payee and forwarded it to the Pittsburgh Branch of the Federal Reserve Bank of Cleveland with the demand that the Pennsylvania Bank's account be credited with the amount of it.
This demand was not transmitted to plaintiff, and neither the defendant nor any other Federal Reserve Bank communicated further with the plaintiff concerning this check until November, 1963, except that late in September an official of the defendant informed plaintiff that litigation had been commenced by the payee against the Pennsylvania Bank. On November 1, 1963, an officer of the defendant orally advised Mr. Jorgenson, Chairman of the Board of the plaintiff, that the check was being returned to plaintiff, and on November 2, Mr. Vaughan, plaintiff's Vice President, orally advised the General Counsel of the defendant that plaintiff was refusing to accept its return. The check was received *895 by defendant's Helena Branch on November 4, which charged it against plaintiff's account and advised plaintiff that in view of its refusal to accept the item, they would retain physical possession to avoid shuffling it back and forth, between plaintiff and defendant's Helena Branch.
The charging of this check to plaintiff's account has never been reversed, and plaintiff has commenced this action for the amount thereof, together with protest fees.
The regulations of the Federal Reserve System adopted by the Board of Governors, pursuant to Congressional authority,[1] insofar as pertinent here, provide, in substance, that any item forwarded to a drawee bank and by it paid, may be returned for credit prior to midnight of the following day.[2] Regulation J gives each Federal Reserve Bank power to promulgate rules governing details in the clearing and collection of checks.[3]
The Federal Reserve Bank of Minneapolis, by Operating Letter Number Five, provided that all banks sending items to the Federal Reserve Bank would be understood to have agreed to the terms of the operating letter and Regulation J.[4]
Section 11 of Operating Letter No. 5 provides, in part, as follows:
"Each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (4) of Section 5 of Regulation J or the applicable law; and any refund, deduction or credit made, allowed or given by this bank for any item returned after the time allowed by Regulation J or the applicable law may be recovered or revoked if such late return is not acquiesced in by our sending bank. A bank may, however, return to us without entry a cash item which it has failed to return in time, with a request that we ask our sending bank to make refund therefor; in which event we shall make refund to the returning bank and charge our sending bank only if the latter specifically authorizes us to do so."
Section 12 of the Operating Letter provides:
"The attention of sending banks is called to our `Instructions to collecting and remitting banks' to the effect that, (a) each bank returning cash items for credit or refund represents that such items are returned within the time allowed by paragraph (4) of Section 5 of Regulation J or the applicable law; and (b) that any refund, deduction or credit made, allowed or given by this bank for any item returned after the time allowed by Regulation J or the applicable law may be recovered or revoked if such late return is not acquiesced in by our sending bank. We do not undertake to examine all returned cash items to confirm that such items are returned within the time permitted under the provisions of paragraph (4) of Section 5 of Regulation J or the applicable law."
Plaintiff urges under these facts and these regulations it was entitled to charge the check back, even though the time specified in Regulation J had elapsed, because the check had not been endorsed by the payee. It also urges that the acts of the Pennsylvania bank in charging its payee's account and in delaying the return of the item operates to make the defendant liable.
These contentions are without merit.
*896 If the lack of the payee's endorsement had in any way damaged the drawer or the drawee bank plaintiff would have had some rights, and perhaps as a matter of "applicable law" would have been entitled to a refund. The authorities cited by plaintiff are to this effect.[5] Here, however, the payee, the person whom the maker intended to pay, received the money. The lack of payee's endorsement has caused no damage to anyonethe maker, the payee, or the drawee bank. Under these circumstances plaintiff may not use the lack of an endorsement as an excuse for returning a check which it has paid.[6]
It is possible that the delays in the Pittsburgh Branch of the Cleveland Federal Reserve Bank and the Pennsylvania bank after July 20th may have caused plaintiff some damage, although that is speculative on the record here. It does not follow, however, that the defendant is responsible. The rules heretofore noted contemplate that an item be returned the next day for credit and if it is returned later that it be returned without entry; that is, as an item which changes the account of neither the drawee bank or the Federal Reserve System. The check here was sent as a cash item. Plaintiff was advised that the Federal Reserve Bank would, without checking the time, credit its account. Had the plaintiff followed the rules it would not have received credit for the returned item on the defendant's books on July 19 or 20. Had the plaintiff returned the check as a non-entry item the defendant would have sent it up the line and made a refund to the plaintiff only if the sending bank had authorized it to do so. When on November 4, 1963, defendant finally charged plaintiff's account with the amount of the check it was only recouping the money which should never have left the defendant's account, and would not have left the defendant's account except for the plaintiff's representation (by the inclusion of the check in the cash letter) that the check was returned within the time provided by Regulation J. The rights are as though the credit had not been given to plaintiff and the money at all times retained in the defendant's account. By hiding this item in the cash letter plaintiff could not increase its rights nor enlarge the defendant's responsibility. Defendant's duty when the check was returned late was to refund if it had the acquiescence of the sending bank. It had no duty to force that acquiescence, nor were there time limits within which it was required to act. Because the defendant had no duty to the plaintiff to collect the check it was not liable for any of the delays or mistakes which may have been made by other Federal Reserve Banks or by the Pennsylvania Bank. It is not claimed that the defendant itself was guilty of any delay.
This opinion constitutes the findings of fact and conclusions of law of this court.
It is directed that the plaintiff be denied all relief.
NOTES
[1] 12 U.S.C. § 248(j) and (o) and 342.
[2] Regulation J, 12 CFR, § 210.5(d), in effect at the time of this dispute.
[3] Regulation J, supra Footnote 2, § 210.6.
[4] Section 2 of Operating Letter No. 5 provides, in part, as follows: "Every bank sending cash items to us or to another Federal Reserve bank direct for our account, by such act, will be understood to have agreed to the terms and conditions of this Operating Letter, of our Time Schedules, and of Regulation J in effect at the time such cash items are received by the Federal Reserve bank."
[5] American National Bank v. First National Bank, 130 Colo. 557, 277 P.2d 951 (1954), where one of two joint payees did not endorse and did not receive any of the proceeds of the check; United States Fidelity and Guaranty Co. v. Peoples National Bank, 24 Ill.App.2d 275, 164 N.E. 2d 497 (1960), where the draweedrawee of a draft was actually damaged because the draft was paid without the endorsement of two of the three payees; Roswell Bank v. Citizens & Southern DeKalb Bank, 104 Ga.App. 291, 121 S.E.2d 706 (1961), another case involving the failure of one of two joint payees to endorse in which the drawee bank did pay the maker because of the lack of endorsement.
[6] Gilbert v. Chase National Bank, S.D. N.Y.1952, 108 F.Supp. 229, indicates that the maker cannot recover under these circumstances, and if the maker cannot it is difficult to see why the drawee bank should.
|
780 N.W.2d 814 (2010)
PEOPLE of the State of Michigan, Plaintiff-Appellee,
v.
Danta Roger WRIGHT, Defendant-Appellant.
Docket No. 140228. COA No. 292257.
Supreme Court of Michigan.
April 27, 2010.
Order
On order of the Court, the application for leave to appeal the October 26, 2009 order of the Court of Appeals is considered, and it is DENIED, because the defendant has failed to meet the burden of establishing entitlement to relief under MCR 6.508(D).
|
22 Cal.App.3d 883 (1972)
99 Cal. Rptr. 670
RICHARD E. RADER, Plaintiff and Appellant,
v.
ELBRIDGE WELDON THRASHER et al., Defendants and Respondents.
Docket No. 28345.
Court of Appeals of California, First District, Division Two.
January 14, 1972.
*885 COUNSEL
Richard E. Rader, in pro. per., for Plaintiff and Appellant.
C. Dan Lange, in pro. per., for Defendants and Respondents.
OPINION
TAYLOR, P.J.
This is an appeal by plaintiff, Richard Rader, from a judgment granting the motion of defendants, Thrasher and Lange, for a summary judgment (Code Civ. Proc., § 437c) in Rader's action for defamamation on grounds of absolute privilege (Civ. Code, § 47, subd. 2). Rader contends that the motion should have been denied as: 1) the statements were not privileged as they were not reasonably related to the judicial proceedings; 2) there were triable issues of fact; and 3) the declaration of Lange was not in proper form to qualify as an affidavit.
The first cause of action of Rader's complaint filed on June 25, 1969, alleged that on May 5, 1969, in San Francisco, Thrasher publicly made a slanderous statement accusing Rader, his former attorney, of blackmail by the use of confidential information. At the hearing in the instant matter, the trial court took judicial notice of the fact that this statement (also realleged as paragraph 8 of the second cause of action) was made by Thrasher during the taking of his deposition by Rader in the divorce action (Santa Clara County, No. 170,532), in which Rader represented *886 Thrasher's former wife, Frances. When questioned about the nature of the blackmail attempts, Thrasher stated that from the excessive demand for attorney's fees in the divorce action, he had surmised blackmail on the basis of Rader's confidential knowledge as an attorney.
The second cause of action accused Thrasher and Lange of conspiring to defame Rader and quoted seven separate statements made by Thrasher between August 1, 1966, and March 13, 1969, accusing Rader of breaches of his fiduciary duties arising out of his previous employment as Thrasher's attorney, as well as realleging the above statement that is the basis of the first cause of action.
The record indicates that each of the written statements set forth in paragraphs one through seven of the second cause of action was made in a pleading in two of the many proceedings that resulted from the divorce of the Thrashers (Santa Clara County, No. 170,532, the divorce,[1] or Mendocino County, No. 28,635,[2] the shareholder action concerning Elk Cove Lumber Company). These actions are hereafter respectively referred to as the Santa Clara action and Mendocino action. In each of the above proceedings and appeals,[3] as well as the many other ancillary proceedings[4] between the Thrashers related to their divorce and division of property, Lange represented Thrasher and Rader, Frances.
As to the second cause of action, the record indicates that: the statement set forth in paragraph 1 was made in opposition to the motion for attorney's fees and costs and alimony on appeal; the statements in paragraphs 2 and 3 were made respectively in the declarations in support of the motion for an order requiring security in the Mendocino County action, and had reference to the litigation that culminated in Rader v. Thrasher, 57 Cal.2d 244 [18 Cal. Rptr. 736, 368 P.2d 360]; the statements in paragraphs 4 and 5 were made in Thrasher's declarations in support of his 1967 motion to *887 terminate alimony in the Santa Clara action; in paragraph 6, in a further declaration in support of the order requiring security in the Mendocino action; and in paragraph 7, in Thrasher's declaration in support of his 1969 motion to terminate alimony in the Santa Clara action.
Civil Code section 47, subdivision 2, provides, so far as pertinent: "A privileged publication or broadcast is one made ____
".... .... .... .... ...
"2. In any (1) legislative or (2) judicial proceeding, or (3) in any other official proceeding authorized by law; provided, that an allegation or averment contained in any pleading or affidavit filed in an action for divorce or an action prosecuted under Section 137 of this code made of or concerning a person by or against whom no affirmative relief is prayed in such action shall not be a privileged publication or broadcast as to the person making said allegation or averment within the meaning of this section unless such pleading be verified or affidavit sworn to, and be made without malice, by one having reasonable and probable cause for believing the truth of such allegation or averment and unless such allegation or averment be material and relevant to the issues in such action."
(1) If no triable issue of fact is presented and the sole question is one of law, the question of law may be determined on a motion for summary judgment (Smith v. Hatch, 271 Cal. App.2d 39, 44 [76 Cal. Rptr. 350]). (2) The applicable law was recently summarized by this court (Division One) in Smith v. Hatch, supra, at pages 45 and 46: "Publications made in the course of a judicial proceeding are absolutely privileged under the provisions of subdivision 2 of section 47 (Albertson v. Raboff, 46 Cal.2d 375, 379 [295 P.2d 405]; Gosewisch v. Doran, 161 Cal. 511, 513-515 [119 P. 656, Ann.Cas. 1913D 442]) even though they are made with actual malice. (Gosewisch v. Doran, supra.) (3) The absolute privilege attaches to any publication that has any reasonable relation to the action and is permitted by law if made to achieve the objects of the litigation, `even though the publication is made outside the courtroom and no function of the court or its officers is invoked.' (Albertson v. Raboff, supra, at p. 381.) Accordingly, `it is not limited to the pleadings, the oral or written evidence, to publications in open court or in briefs or affidavits.' (Albertson v. Raboff, supra, at p. 381.)
(4) "To be privileged under subdivision 2 of section 47 the defamatory matter need not be relevant, pertinent or material to any issue before the court, it only need have some connection or some relation to the judicial proceeding. (Thornton v. Rhoden, 245 Cal. App.2d 80, 90 [53 Cal. Rptr. *888 706]; Jordan v. Lemaire, 222 Cal. App.2d 622, 625 [35 Cal. Rptr. 337]; Lewis v. Linn, 209 Cal. App.2d 394, 399 [26 Cal. Rptr. 6]; Rest., Torts, §§ 585-589.)
(5) "Although section 47 refers to the `publication' made in a `judicial proceeding,' and does not list the persons who are absolutely privileged, the privilege therein provided has been extended to judges (Lewis v. Linn, supra), attorneys (Jordan v. Lemaire, supra; Friedman v. Knecht, 248 Cal. App.2d 455 [56 Cal. Rptr. 540]; Thornton v. Rhoden, supra, 245 Cal. App.2d 80), and to parties to private litigation (Jordan v. Lemaire, supra; and see Albertson v. Raboff, supra, 46 Cal.2d 375, 378-379). In Thornton, supra, the rule of the Restatement which lists judicial officers (§ 585), attorneys (§ 586), parties (§ 587), witnesses (§ 588), and jurors (§ 589) as persons entitled to the absolute privilege in judicial proceedings is equated to the rule declared in subdivision 2 of section 47. (P. 90.)"
(6) The leading case of Thornton v. Rhoden, supra, at page 89, clearly indicates that the statute is broadly construed pursuant to the Restatement of Torts, despite the proviso related to divorce actions added in 1927.
(7) Applying the above principles to the instant situation, we conclude that the trial court properly ruled that all of the statements were the subject of the absolute privilege afforded to judicial proceedings. We note the adversary positions of Rader and Lange over a number of years in the representation of their respective clients in the many proceedings related to the Thrasher divorce, and that the statements set forth in paragraphs 2, 3, and 6 of the second cause of action referred to the contingent fee contract which was the subject of Rader v. Thrasher, 57 Cal.2d 244 [18 Cal. Rptr. 736, 368 P.2d 360]. The exception included in the 1927 amendment to Civil Code section 47, subdivision 2, relating to divorce actions, is clearly not applicable here as plaintiff Rader was not only seeking affirmative relief for his client in the various actions involved, but indirectly for himself as well in the form of attorney's fees.[5]
*889 Rader, however, insists that the statements set forth in paragraphs 1, 4, 5, 7 and 8 of the second cause of action (made in the Santa Clara divorce proceeding) had "no connection" to the particular alimony reduction or termination proceedings. Citing Dean v. Dean, 59 Cal.2d 655 [31 Cal. Rptr. 64, 381 P.2d 944], Double v. Double, 248 Cal. App.2d 650 [56 Cal. Rptr. 687], and Friedman v. Friedman, 222 Cal. App.2d 217 [35 Cal. Rptr. 111], Rader maintains that only financial circumstances of the parties are relevant in relation to the termination or reduction of alimony. We do not think that the term "judicial proceedings" requires such a narrow construction in view of the many years of the litigation between the Thrashers conducted by the same attorneys. The record indicates that besides termination of alimony, the conduct of the parties with respect to the properties in dispute was also the subject of the proceedings. We hold that under the circumstances, all of the statements had "some relation" to the protracted and complex judicial proceedings related to the Thrasher divorce and property division.
Rader's assertions that there were triable issues of fact are all based on the erroneous assumption that malice is a factor. (8) With the single inapplicable exception noted in section 47, subdivision 2, of the Civil Code, publications made in the course of judicial proceedings are absolutely privileged, even though made with malice (Smith v. Hatch, supra).
Finally, Rader maintains that the trial court abused its discretion in granting the motion for summary judgment as the declaration of Lange and the attached documents were not in the proper form of an affidavit. (9) He maintains that Lange's declaration failed to state that it was executed within the State of California (Code Civ. Proc., § 2015.5) and was based on the personal knowledge of a declarant who was competent to testify thereto at trial (Code Civ. Proc., § 437c). The contention based on Code of Civil Procedure section 2015.5 was waived and cannot be raised for the first time on appeal (Fuller v. Goodyear Tire & Rubber Co., 7 Cal. App.3d 690, 693 [86 Cal. Rptr. 705]). In any event, Lange's declaration referred to the attached copies of pleadings in the various proceedings, all properly sworn and executed. (10) On a motion for summary judgment, a court may properly take judicial notice of matters that are the subject of records in other proceedings where adequately referred to in the affidavits (Thomson v. Honer, 179 Cal. App.2d 197 [3 Cal. Rptr. 791]). Under such circumstances, personal knowledge of the *890 affiant is immaterial (Newport v. City of Los Angeles, 184 Cal. App.2d 229 [7 Cal. Rptr. 497]). The trial court did not abuse its discretion here.
The judgment is affirmed.
Kane, J., and Rouse, J., concurred.
A petition for a rehearing was denied February 11, 1972, and appellant's petition for a hearing by the Supreme Court was denied March 8, 1972. Mosk, J., was of the opinion that the petition should be granted.
NOTES
[1] Currently pending on appeal to this court, No. 30051. In a prior appeal from the property division portion of the interlocutory decree, this court, in an unpublished opinion (No. 24154) revised the lower court's finding that the two lumber companies and certain other property were the separate property of Mr. Thrasher, and directed a tracing of the funds used to acquire these assets.
[2] Currently pending on appeal to this court, No. 28848.
[3] The records of this court indicate the following proceedings related to the pending appeals mentioned above: Nos. 27456, 27511 and 28639.
[4] The record before us indicates the existence of: Santa Clara No. 172,169 concerning partition of joint tenancy property; Humboldt No. 46821 to set aside a deed of trust disposing of one of the lumber companies; Mendocino County No. 28,641 concerning dissolution of the lumber companies, and another Mendocino action to annul Mr. Thrasher's second marriage.
[5] At the oral argument, Rader asserted that Meadow v. Superior Court, 59 Cal.2d 610 [30 Cal. Rptr. 824, 381 P.2d 648], and Diowchi v. Superior Court, 216 Cal. App.2d 525 [31 Cal. Rptr. 214], indicate that as to the attorney's fees, he was not seeking affirmative relief for himself. Meadow and Diowchi, however, only go to the procedural point that the application for attorney's fees, pursuant to Civil Code section 137.5, must be made in the name of the wife and not the attorney, whose right thereto is derivative. We do not consider these cases apposite to a reasonable interpretation of section 47 of the Civil Code. The exception noted in subdivision 2 thereof relates to one who has no affirmative interest in the outcome of the litigation (Rutherford v. Johnson, 250 Cal. App.2d 316 [58 Cal. Rptr. 546]).
|
794 F.Supp. 1148 (1992)
The B.F. GOODRICH COMPANY, Plaintiff,
v.
UNITED STATES, Defendant.
Court No. 90-05-00228.
United States Court of International Trade.
May 12, 1992.
Supplemental Order June 9, 1992.
Thompson, Hine and Flory, Lewe B. Martin, Peter A. Greene and John C. Steinberger, on brief, Washington, D.C., for plaintiff.
Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Civ. Div., U.S. Dept. of Justice, *1149 Carla Garcia-Benitez, Washington, D.C., for defendant.
OPINION
MUSGRAVE, Judge.
I. INTRODUCTION
This case involves "substitution same condition drawback," ("SSC drawback") 19 U.S.C. § 1313(j)(2) (1991), of polyvinyl chloride ("PVC") resins. Plaintiff The B.F. Goodrich Company ("Goodrich") exported PVC resins made in Western Canada by its Canadian subsidiary to its customers in the Western United States in 1986, and later exported fungible goods made by Goodrich in the Eastern United States to its Eastern Canadian customers. The Customs Service denied Goodrich's claim for SSC drawback on the grounds that Goodrich did not have possession of the imported PVC resins while those goods were in the United States. Plaintiff's Statement of Material Facts, at 3-4. Goodrich's subsequent protest was deemed denied on December 15, 1989. Id. at 4.
Goodrich argues that § 1313(j)(2) does not require that an exporter have possession of the imported goods after importation but before exportation of the substituted same condition goods, and that Customs unjustifiably required that Goodrich have had possession of the imported goods.[1] The government argues that because Goodrich did not legally possess the imported merchandise after importation, it did not comply with 19 U.S.C. § 1313(j)(2), and the Customs Service regulations interpreting it, primarily 19 C.F.R. § 191.141(h). Defendant's Opposition, at 9.
Goodrich claims that 19 C.F.R. § 191.141(h), is a substantive (or "legislative") rule and that its promulgation violated the Administrative Procedure Act ("APA") because it lacked prior notice or an opportunity for public comment. 5 U.S.C. § 553 (1991), Plaintiff's Brief, at 8. The government argues that because the regulation was one of several regulations updated following passage of the Trade and Tariff Act of 1984, neither an explanation nor prior notice or comment is required. Defendant's Brief, at 21-30.
Noting the similarities between this case and Central Soya Co. v. United States, 15 CIT ___, 761 F.Supp. 133 (1991), upheld and adopted, 953 F.2d 630 (1992), and reading the clear language of the statute (as set out below), the Court finds that there is no requirement in 19 U.S.C. § 1313(j)(2) that a drawback claimant possess the imported goods upon which a claim for drawback arises after importation. Furthermore, Customs regulation 19 C.F.R. § 191.141(h) is invalid as a notice and comment procedure is required under 5 U.S.C. § 553.
II. STANDARD OF REVIEW
The controlling case on review of an agency's construction of a statute is Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984).
When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute.
Chevron U.S.A. v. N.R.D.C., 467 U.S. 837, *1150 842-43, 104 S.Ct. 2778, 2781-82 (1984).[2]
III. DISCUSSION
The first question presented is whether Congress has spoken to the issue at hand. The issue in this case is whether § 1313(j)(2), which only tangentially mentions imported goods, requires that a drawback claimant possess those goods in the United States. Section 1313(j)(2) provides in pertinent part:
(j) Same condition drawback.
. . . . .
(2) If there is, with respect to imported merchandise on which was paid any duty, tax, or fee imposed under Federal law because of its importation, any other merchandise (whether imported or domestic) that
(A) is fungible with such imported merchandise;
(B) is, before the close of the three-year period beginning on the date of importation of the imported merchandise, either exported or destroyed under Customs supervision;
(C) before such exportation or destruction
(i) is not used within the United States, and
(ii) is in the possession of the party claiming drawback under this paragraph; and
(D) is in the same condition at the time of exportation or destruction as was the imported merchandise at the time of its importation; then upon the exportation or destruction of such other merchandise the amount of each such duty, tax, and fee paid regarding the imported merchandise shall be refunded as drawback, but in no case may the total drawback on the imported merchandise, whether available under this paragraph or any other provision of law or any combination thereof, exceed 99 percent of that duty, tax, or fee.
19 U.S.C. § 1313(j)(2) (1991) (emphasis added).
Section 1313(j)(2) does not state with the absolute precision which might be desired when the drawback claimant must possess the exported goods. The operative portion of § 1313(j)(2) for purposes of this case can be condensed, to clearly state:
with respect to [duty-paid] imported merchandise ..., any other [fungible] merchandise ... [which] is ... exported ... [and] ... before such exportation ... is in the possession of the party claiming drawback [is qualified for drawback].
From this Court's reading of the statute, it is clear that the possession requirement attaches only to the exported goods, not to the imported goods. The operative portion of § 1313(j)(2) with regard to imported goods mentions only that a duty, tax or fee was paid because of their importation. Therefore, § 1313(j)(2) requires only that a drawback claimant have paid the duty, tax or fee for the privilege of importing the goods.
The Customs regulation in question, 19 C.F.R. § 191.141(h) provides:
(h) Substitution same condition drawback. If legal person X possesses imported merchandise (the designated merchandise) during some time interval in period A (defined below) and also possesses other merchandise fungible with it (the substituted merchandise) during the same or different time interval in period A, then 99 percent of the duty paid on the designated merchandise will be refunded as drawback, provided that:
(1) The designated merchandise was in the same condition as imported either at the time of substitution, the time X used it in manufacturing, or at the time X transferred it to another person, whichever occurs first;
(2) The substituted merchandise is in the same condition when exported or destroyed under Customs supervision as was the designated merchandise when imported;
*1151 (3) X does not issue a certificate of delivery covering the designated merchandise nor a certificate of manufacture and delivery covering articles manufactured or produced therefrom; and
(4) X maintains records to establish requirements, (1), (2), and (3) of this section and also complies with all relevant requirements of § 191.141(a) through (g) of this chapter.
Period A (referred to above) begins when X receives the merchandise and ends three years after the importation of said merchandise.
19 C.F.R. § 191.141(h) (1991) (emphasis added).
A. Congressional Intent
The parties agree that Congress intended by enacting 19 U.S.C. § 1313(j)(2), to expedite merchandise handling and inventory control and to simplify the procedures and requirements for obtaining a refund of duties paid. See, H.Rep. 1015, 98th Cong., 2d Sess. 64 (1984), 1984 U.S.Code Cong. & Admin.News 4960, 5023. Necessarily, that intent involves both domestic and multinational companies which import and export fungible goods on a regular basis. There is no indication that Congress intended to limit the benefits of § 1313(j)(2) to companies with domestic operations only. Congress likely intended to aid all companies, domestic and multinational, to obtain drawback for fungible exported goods without undue administrative bookkeeping.
Customs argues that Congress intended by implication to require commingling of the imported and exported goods and that as a result the imported goods must be made part of the claimant's domestic inventory. The government argues, in essence, that Congress intended to require drawback claimants to use only their inventory in the United States as a basis for drawback claims. One implication of the commingling argument is that § 1313(j)(2) would favor American companies without foreign operations, because only those companies would be able to integrate SSC drawback into the normal course of business. Import/export operations which would qualify for SSC drawback almost inevitably require subsidiaries outside the United States to handle administrative affairs in the host country. Defendant would discriminate against these companies by requiring that imports from foreign subsidiaries pass thru the inventory of the U.S. parent. Multinational companies such as Goodrich would be unable to ship goods produced abroad directly to U.S. customers and claim drawback for fungible exports from their U.S. plants. They would be forced to import the goods to a U.S. plant, then re-ship them to their U.S. customers. The operations of U.S.-only businesses would not be affected because their exports and imports would necessarily come from or go to the U.S. company.
Plaintiff points out that Customs had granted same condition drawback on a FIFO basis before Congress enacted § 1313(j)(2). Plaintiff's Reply, at 17, and citations contained therein. The previous system required that drawback claimants keep separate the substituted and imported goods. Allowing 19 C.F.R. § 191.141(h) to stand would, in effect, nullify the newer, more liberal requirements for SSC drawback enacted by Congress. Customs may not backslide to the previous restrictions on drawback when Congress has clearly eased those requirements.
B. Legislative History Of § 1313(j)(2) Is Not Contrary To The Language Of The Statute
Goodrich argues that Congress did not include any language requiring possession of imported merchandise in the bill as passed, and that the language cited by the government from the so-called legislative history was deleted from the final version. Plaintiff's Reply, at 3-5. Although the Court finds the statute clear on its face, the legislative history should be consulted to discover if Congress' actual intent was contrary to the language of the statute. Section 191.141(h) might be upheld if the legislative history contains "a `clearly expressed legislative intention' contrary to [the language of the statute], which would *1152 require us to question the strong presumption that Congress expresses its intent through the language it chooses." I.N.S. v. Cardoza-Fonseca, 480 U.S. 421, 432 n. 12, 107 S.Ct. 1207, 1213, n. 12, 94 L.Ed.2d 434 (1987) (citations omitted). The legislative history is clear enough to determine only that Congress did not intend to require possession of the imported goods. See, Central Soya Co. v. United States, 15 CIT ___, ___, 761 F.Supp. 133, 139 (legislative history of § 1313(j)(2) is not a "model of clarity").
Central Soya noted that several versions of what became 19 U.S.C. § 1313(j)(2) were proposed. Central Soya, 15 CIT at ___, ___, 761 F.Supp. at 139. The first bill (H.R. 4316) required that a drawback claimant be the same person as the importer of the designated merchandise. Central Soya, 15 CIT at ___, 761 F.Supp. at 138. The final version of the bill (H.R. 3398) required only that the substituted (exported) merchandise must have been in the possession of the party claiming drawback. Id. The Conference Committee Reports for each bill contained identical language, that "[d]rawback is provided if the same person requesting drawback ... exports from the United States ... fungible merchandise. ..." H.R.Rep. No. 1015, 98th Cong., 2d Sess. 64, reprinted in 1984 U.S.Code Cong. & Admin.News 4960, 5023, cited in Central Soya, 15 CIT at ___, 761 F.Supp. at 138. The Conference Report language relied upon by the government is clearly unrelated to the text of the final bill, an interpretation supported by a letter from the Congressman who drafted both bills. Central Soya, 15 CIT at ___, 761 F.Supp. at 139. As a result, the Court may ignore that section of the Report. American Hospital Assoc. v. N.L.R.B., ___ U.S. ___, ___, 111 S.Ct. 1539, 1545-46, 113 L.Ed.2d 675, 687-88 (1991), citing Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158, 168, 109 S.Ct. 2854, 2861, 106 L.Ed.2d 134 (1989) (legislative history that cannot be tied to the enactment of specific statutory language ordinarily carries little weight in judicial interpretation of the statute).
The statute clearly does not include the possession requirement that Customs attempts to graft onto it. The statute is conspicuously silent as to that requirement. There is no other indication from the legislative history that such a requirement is to be inferred. The plain language of the statute states that, with respect to imported goods "on which was paid any duty ...," certain other exported goods might qualify for drawback. 19 U.S.C. § 1313(j)(2). "No other condition is stated [for imported merchandise to qualify as the basis of a drawback claim], and the only rational interpretation is, none is meant." Madison Galleries, Ltd. v. United States, 7 Fed.Cir. (T) 56, 60, 870 F.2d 627, 631 (1989).
The possession requirement was considered by Congress but rejected when it enacted § 1313(j)(2). Neither the statutory language nor the legislative history supports Customs' requirement that the claimant of SSC drawback have been the importer of the duty-paid merchandise.
C. 19 U.S.C. § 1313 Is Not So Silent Or Ambiguous That § 191.141(h) Is Permissible
That the statute does not include the requirement that Customs would impose does not automatically mean that the Court must proceed to the second step of the Chevron analysis. Chevron instructs that "if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Chevron, 467 U.S. at 843, 104 S.Ct. at 2781. The government argues that the statutory language is silent or ambiguous on the requirement of possession, and that Customs' interpretation is a permissible construction of the statute, in light of the legislative history. Defendant's Reply, at 6, citing Neptune Mut. Ass'n, Ltd. of Bermuda v. United States, 862 F.2d 1546, 1549 (Fed.Cir.1988) ("Because a literal interpretation of the statute leads to a result at variance with the policy of the [statute], [the court should] turn to the legislative history of the statutes in question ...").
*1153 The government's argument under Neptune Mutual is backwards. As is often the case, the legislative history of § 1313(j)(2) is ambiguous, not the statute. Indeed, as shown above, the language in the Conference Report of H.R. 3398 is an unreliable indicator of the intent of the drafters of the bill. A literal interpretation of the statute delivers results in accordance with the liberalizing policy behind the statute.
Section 1313(j)(2) is not so silent or ambiguous that the Court should prefer the Conference Report, or other portions of the legislative history, to the language of the statute. The requirements for imported merchandise are simple; indeed, most of § 1313(j)(2) deals with the requirements that exported merchandise must meet. Section 1313(j)(2) clearly and unambiguously states that imported merchandise, "on which was paid any duty, tax, or fee imposed under Federal law because of its importation" qualifies for drawback if the substituted goods fulfill the other requirements (fungibility, exportation, possession before export, etc.). 19 U.S.C. § 1313(j)(2). To hold otherwise would ignore the plain language of the statute. Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82 (courts must give effect to "the unambiguously expressed intent of Congress").
Congress' intent to lift some of the administrative burden of SSC drawback is clearly expressed in § 1313(j)(2). One of the burdensome requirements of the FIFO drawback system which preceded § 1313(j)(2), was that a claimant needed to show which merchandise entered into the domestic inventory at which time, and to keep those inventories separate. See, cases cited at p. 17 of Plaintiff's Memorandum. The Court finds that Congress intentionally eliminated this requirement when presented with the option to retain some sort of possession requirement for imported goods.
D. A Possession Requirement Cannot Be Inferred From Other Sections Of 19 U.S.C. § 1313
The government argues that the possession requirement may be inferred from the design of the drawback statute taken as a whole. Defendant's Reply, at 3. Because § 1313(j)(2) does not specifically address the relationship between the drawback claimant and the imported merchandise, the government infers a possession requirement from the manufacturing drawback statute, 19 U.S.C. § 1313(b) (1991). Defendant's Reply, at 6. However, it is clear that such inferences may not be drawn. Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 300, 78 L.Ed.2d 17 (1983) ("`[W]here Congress includes particular language in one section of a statute but omits it in another section of the same act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion'") (quoting United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir.1972)).
Customs may not graft onto the apparent purpose behind § 1313(j)(2) (easing the administrative burden of SSC drawback) the additional requirement that a claimant possess the goods once imported. See, M.M. & P. Maritime Advancement, Training, Educ. & Safety Program (Mates) v. Dept. of Commerce, 729 F.2d 748, 752, 2 Fed.Cir. (T) 36, 40 (1984) (Customs improperly required that goods imported for "educational or scientific" purposes must be used in formal science-oriented training in order to qualify for duty-free entry).
IV. THE REGULATION WAS ENACTED IN VIOLATION OF THE ADMINISTRATIVE PROCEDURE ACT
Customs enacted 19 C.F.R. § 191.141(h) following passage of the Trade and Tariff Act of 1984, which liberalized requirements for SSC drawback. Customs argues that it did not follow the APA notice and comment procedures because the changes made were "nonsubstantive and essentially ... procedural." T.D. 85-123, 19 Cust.Bull. 276 (1985). Customs stated at the time that "[i]nasmuch as these amendments merely conform the Customs Regulations to existing law or practice, pursuant to 5 U.S.C. § 553(b)(B), [sic] notice *1154 and public procedure thereon are unnecessary. ..." Id., at 282.
Under the APA, 5 U.S.C. § 553, et. seq., advance publication and an opportunity for public participation are required for all rules except "interpretive rules, general statements of policy, or rules of agency organization, procedure or practice," or "when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefor in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest." 5 U.S.C. § 553(b)(3)(A)-(B) (1988). Customs claims that 19 C.F.R. § 191.141(h) simply interprets and updates longstanding requirements following the passage of the Trade and Tariff Act of 1984. Customs enacted § 191.141(h) "merely [to clarify] the requirements Congress intended to exact before a drawback claim could be allowed." Defendant's Opposition, at 34 (footnote omitted). The rule enacted does not include a statement that notice and public comment were impracticable, unnecessary or contrary to the public interest. Customs argues that none is required because the rule was an interpretation that "merely clarifies the existing duties of a drawback claimant." Defendant's Opposition, at 38.
However, Customs established a substantive new requirement that does not exist in the statute. As such, 19 C.F.R. § 191.141(h) is a substantive rule for which a notice and comment period, among other things, is required. 5 U.S.C. § 553(b)-(c); Batterton v. Marshall, 648 F.2d 694, 208 U.S.App.D.C. 321 (1980).
A. Customs' Mandate To Interpret § 1313(j)(2) Does Not Extend To Adding Requirements
The Central Soya Court addressed and rejected the Customs Service's argument that it had "an extraordinarily broad mandate," within the grant of legislative authority given in 19 U.S.C. § 1313(l), to "`prescribe' substantive rules regarding specific subjects, which include `the designation of the person to whom any refund or payment of drawback shall be made.'" Central Soya, 15 CIT at ___, 761 F.Supp. at 139.
It is axiomatic that even if the APA requirements were complied with (i.e. notice and comment, hearings, etc.) the Customs Service would not automatically be authorized to amend and enlarge the scope of 19 U.S.C. § 1313(j)(2). Batterton v. Marshall, 648 F.2d at 701-702 (legislative or substantive rules can only be issued if Congress has delegated to the agency the power to promulgate binding regulations in the relevant area).
As it now stands, 19 C.F.R. § 191.141(h) is a modification, rather than an interpretation of 19 U.S.C. § 1313(j)(2). The requirement that drawback claimants have possession of the goods in the United States is not merely an interpretation of the statutory language because it actually prescribes new requirements not found anywhere in the statute. Batterton v. Marshall, 648 F.2d at 705-706 and 711 ("Normally a judicial determination of a procedural defect requires invalidation of the challenged rule"). The Court again rejects the government's contention that the Customs Service has "an extraordinarily broad mandate" to interpret § 1313(j)(2). The regulation, 19 C.F.R. § 191.141(h), is invalid.
In Central Soya, the Court ordered that Customs amend 19 C.F.R. § 191.141(h) in accordance with that decision. Customs must also comply with the APA notice and comment procedures until a new regulation is promulgated. Until such procedures are complied with, 19 U.S.C. § 191.141(h) is suspended and shall have no force or effect, although Customs shall not use the invalidation of the regulation as an excuse to refuse drawback to otherwise qualified claimants. Until a new rule is promulgated, Customs shall allow SSC drawback claims based solely on the language of 19 U.S.C. § 1313(j)(2), and case law interpreting it.
V. CONCLUSION
Customs improperly required that Goodrich demonstrate that it possessed the imported merchandise from which Goodrich's drawback claim arose: 19 U.S.C. *1155 § 1313(j)(2) contains no such requirement. A careful consideration of the legislative history demonstrates that Congress did not intend otherwise. 19 C.F.R. § 191.141(h) was an improperly promulgated substantive rule, with no justification in either the statute or the legislative history. As a result, it must have no force or effect.
Because of this Court's ruling, Counts 3 and 4 of the Complaint are moot and hereby dismissed.
SO ORDERED.
JUDGMENT ORDER
After due deliberation and consideration of the briefs filed and arguments made in this case, it is hereby ORDERED:
1. That plaintiff The B.F. Goodrich Company's ("Goodrich") motion for summary judgment is hereby granted as to counts I and II of plaintiff's complaint; and further,
2. That the District Director of Customs at the Port of Cleveland shall reliquidate, annotate, and mark Drawback Entries XX-XXXXXXX-X, XX-XXXXXXX-X, XX-XXXXXXX-X, XX-XXXXXXX-X, within sixty days after this judgment becomes final to determine the final drawback amount; and within ninety days after this judgment becomes final, the District Director shall pay plaintiff any additional amount by which the final drawback amount exceeds the amount already paid to plaintiff, or if the District Director finds that the amount paid pursuant to paragraph one of this order exceeds the final drawback amount, the District Director shall request repayment of, and plaintiff shall repay, the overpayment within 90 days after this decision becomes final; and further,
3. That the District Director of Customs at the Port of Cleveland shall refund Goodrich immediately the amounts claimed by Goodrich under Drawback Entries XX-XXXXXXX-X, XX-XXXXXXX-X, XX-XXXXXXX-X, XX-XXXXXXX-X together with interest from May 1, 1990, as provided by 28 U.S.C. § 2644 within thirty days of this judgment; and further,
4. That to the extent that the Customs regulation codified at 19 C.F.R. § 191.141(h) imposes a requirement that a drawback claimant possess within the United States the imported merchandise on which drawback is claimed, such regulation is in excess of Customs' statutory authority and is an abuse of discretion; and further,
5. That the Customs regulation codified at 19 C.F.R. § 191.141(h) was promulgated without public notice and comment as required by the Administrative Procedure Act, 5 U.S.C. § 553, and without any reasoned explanation for its adoption, and shall have no force or effect unless the procedures outlined in 5 U.S.C. § 553 et seq. are followed; and further,
6. That the Customs Service is hereby enjoined from enforcing the Customs regulation codified at 19 C.F.R. § 191.141(h) to the extent that it requires possession of imported merchandise and is inconsistent with this decision; and further,
7. That the Customs Service shall continue to grant substitution same condition drawback claims based on the requirements established by 19 U.S.C. § 1313(j)(2), and case law construing it; and further,
8. That the Customs Service shall file with the Court, within one hundred and twenty days after the judgment becomes final, a report outlining the measures it has taken to comply with this judgment, and
9. That plaintiff's claims in counts III and IV of its complaint are dismissed as moot.
SO ORDERED.
SUPPLEMENTAL ORDER
After due deliberation and consideration of the briefs filed and arguments made on the government's motion to alter or amend the judgment in this case, it is hereby ORDERED:
1. That the Customs Service must pay plaintiff the amount claimed in its Complaint, viz. $191,153.07, plus applicable interest from May 1, 1990, as provided in 28 U.S.C. § 2644, on or before June 25, 1992. *1156 Editor's Note: The amendments have been incorporated in the published Judgment Order
NOTES
[1] Plaintiff's Brief, at 7-8. Although Goodrich may have had legal possession of the PVC resins after importation, it is assumed for the purposes of the cross-motions for summary judgment that they did not possess the imported goods. Id. at 7.
[2] See also, Scalia, JUDICIAL DEFERENCE TO ADMINISTRATIVE INTERPRETATIONS OF LAW, 1989 Duke L.J. 511.
|
662 A.2d 881 (1995)
WATERGATE EAST, INC., et al., Petitioners,
v.
DISTRICT OF COLUMBIA PUBLIC SERVICE COMMISSION, Respondent.
Washington Gas Light Company, Intervenor.
No. 94-AA-1187.
District of Columbia Court of Appeals.
Argued June 21, 1995.
Decided July 17, 1995.
*883 Tanja M. Shonkwiler, with whom Wallace L. Duncan, Thomas L. Rudebusch, Michael R. Postar, and David H. Cox, Washington, DC, were on the brief, for petitioners.
Pressley R. Reed, Jr., with whom Daryl L. Avery and Edwin E. Huddleson, III, Washington, DC, were on the brief, for respondent.
L. Patrice Latimer, with whom John K. Keane, Jr., Excetral K. Caldwell, and Douglas V. Pope, Washington, DC, were on the brief, for intervenor.
*884 Before TERRY and FARRELL, Associate Judges, and TIGNOR, Associate Judge of the Superior Court of the District of Columbia.[*]
FARRELL, Associate Judge:
The Public Service Commission of the District of Columbia (the Commission) rejected petitioners' claim that intervenor Washington Gas Light Co. (WGL) had overcharged them for the cost of fuel during a 17-year period. In this court, petitioners challenge the Commission's decision on several grounds, among which is that the Commission failed to adhere to the "filed rate" doctrine. We reject this and petitioners' related contentions, and affirm.
I. Procedural History
On November 22, 1993, petitioners[1] filed a complaint with the Commission alleging that from 1976 through 1993, WGL overbilled them by more than $2.1 million by charging them a cost for fuel different from that set forth in WGL's contract rate for the Watergate complex (the Watergate). WGL's contract rate for the Watergate for these years was set forth in a schedule, Rate Schedule W, filed by WGL with the Commission in 1975. The complaint asserted that WGL had calculated the Watergate's fuel adjustment based upon Rate Schedule No. 3, the schedule applicable since 1976 to WGL's "interruptible" customers, rather than upon an earlier Rate Schedule I pertaining to the same class of customers, and to which Rate Schedule W referred. Petitioners alleged that WGL's billing of the Watergate for fuel based on Rate Schedule No. 3 violated the "filed rate" doctrine and D.C.Code § 43-529 (1990),[2] and that petitioners had not received adequate notice that WGL's rate for the Watergate might be changed. On December 3, 1993, WGL filed an answer to the complaint.
In Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10419 (Pub.Serv.Comm'n April 29, 1994), the Commission issued an opinion dismissing petitioners' complaint without a hearing. It determined that once WGL, in conformance with the rate increase for interruptible customers granted in In re Washington Gas Light Co., Formal Case No. 647, Order No. 5833, 16 PUR 4th 261 (1976), had filed Rate Schedule No. 3 with the Commission, Rate Schedule I ceased to existregardless of whether Rate Schedule W still referred to it. The Commission further found that, in early 1976, petitioners received adequate notice that in the proceeding culminating in Order No. 5833, WGL's rate for the Watergate might be changed. And it concluded that neither the filed rate doctrine nor D.C.Code § 43-529, its statutory counterpart, had been violated, because Rate Schedule No. 3 had superseded Rate Schedule I.
On May 31, 1994, petitioners filed with the Commission an application for reconsideration of Order No. 10419. In Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10457 (Pub. Serv.Comm'n July 15, 1994), the Commission denied the application, holding that D.C.Code § 43-608 did not require the Commission to provide a formal hearing on petitioners' complaint, and reiterating that "the rates set in [Order No. 5833] were intended to apply to [the] Watergate" and that pursuant to Order No. 5833 and WGL's filing with the Commission of Rate Schedule No. 3, "Rate Schedule No. 3 supplanted Rate Schedule I for purposes of [the purchased fuel adjustment clause of] Rate Schedule W."
Petitioners then filed the instant petition for review of Orders No. 10419 and 10457.
*885 II. The Facts
A. WGL's service to the Watergate
WGL is a public utility with three types of customers: (1) "firm" customers, (2) "interruptible" customers, and (3) "steam and chilled water" customers. Firm customers are customers whom WGL supplies with natural gas. Interruptible customers are customers whom WGL supplies with fuel; for any given period, this fuel may be, in WGL's discretion, either natural gas or a substitute fuel (usually oil). See Office of People's Counsel v. Public Serv. Comm'n, 482 A.2d 404, 412 (D.C.1984). Steam and chilled water customers are customers whom WGL supplies with steam and chilled water. The Watergate is WGL's only steam and chilled water customer. See Watergate Complex Council v. Washington Gas Light Co., Formal Case No. 932, Order No. 10457 at 3 n. 1 (Pub.Serv.Comm'n July 15, 1994).
WGL supplies steam and chilled water to the Watergate for heating and air conditioning. To generate steam and chilled water, the plant facilities, which are located on the Watergate's premises, use natural gas as fuel. Oil is used as a substitute fuel at the Watergate whenever WGL suspends gas service to its interruptible customers. WGL's rate for the Watergate contains two main components: "demand" charges and "commodity" charges. See In re Washington Gas Light Co., Formal Case No. 922, Order No. 10307 at 199, 1993 WL 565426 (Pub.Serv. Comm'n Oct. 8, 1993). Demand charges cover the wages of workers who operate and maintain the plant facilities on the Watergate's premises. Commodity charges cover the cost of natural gas and, when substituted, oil.
B. WGL's contract rate for the Watergate
On July 29, 1964, WGL and the Watergate entered into a contract entitled "Agreement for Services" which set forth WGL's proposed rate for the Watergate. On March 18, 1965, the Commission approved the contract between WGL and the Watergate, subject to minor conditions. See In re Washington Gas Light Co., Formal Case No. 503, Order No. 4902, 58 PUR 3rd 1, 5, 23-24 (1965), aff'd per curiam sub nom. Association of Fair Competitive Practices in Air Conditioning, Inc. v. Public Serv. Comm'n, 125 U.S.App.D.C. 361, 372 F.2d 934 (1967). On a number of occasions from 1965 to the present, the Commission has, on application by WGL, modified WGL's rate for the Watergate. See, e.g., Watergate Improvement Associates v. Public Serv. Comm'n, 326 A.2d 778, 791-92 (D.C. 1974).
On March 21, 1975, WGL filed with the Commission a schedule, Rate Schedule I, setting forth WGL's rate for interruptible customers. On September 29, 1975, WGL filed with the Commission another schedule, Rate Schedule W, which set forth WGL's rate for the Watergate. The "purchased fuel adjustment" clause of Rate Schedule W revealed that WGL's commodity charges for the Watergate would be calculated partly by reference to the rate set forth in Rate Schedule I. Specifically, the commodity charge for the Watergate would increase or decrease each month along with that month's "[ ]cost[ ] for fuel input." Cost for fuel input, in turn, would be calculated in part by "[p]ric[ing] therms of gas used during the billing month at the billing month's rate per therm for [WGL]'s Schedule `I' rate minus $0.0324 per therm."
On September 30, 1975, WGL filed an application with the Commission requesting a rate increase of over $7.4 million. Order No. 5833, 16 PUR 4th at 262. On January 5, 1976, the Commission published in the D.C. Register a Public Notice and Notice of Prehearing Conference in Formal Case No. 647, which stated that WGL was proposing "three new firm rate schedules and a substantially amended interruptible schedule." 21 D.C.Reg. 3360-61 (1976). The public notice continued:
Interruptible customers' rates would be increased to $.20 for each therm of gas purchased.
In addition, [WGL] proposes numerous changes in its tariffs.... And [WGL] proposes to modify the purchased gas adjustment provision of its tariff.
Notice is hereby given that a prehearing conference has been scheduled [giving *886 time, date, and place]. The Commission advises that the issues in this proceeding may encompass not only [WGL]'s rate proposals, but also increases or decreases in any of [WGL]'s rates and other changes in rate design or tariffs.
21 D.C.Reg. 3361.
In Order No. 5833, the Commission granted WGL a rate increase of over $6.7 million, including an increase in the rate for interruptible customers. Order No. 5833, 16 PUR 4th at 262, 281-83. In the same case, the Commission addressed the Watergate by name, declaring that "determinations herein of [WGL's] revenue need will include[, along with WGL's other operations,] the results of [WGL]'s Watergate chilled water and steam services."[3]See 16 PUR 4th at 265 n. 5.
On October 29, 1976, WGL filed with the Commission a schedule, Rate Schedule No. 3, effective the following day, which conformed to the rate increase for WGL's interruptible customers previously granted by the Commission in Order No. 5833. Rate Schedule 3 thus replaced Rate Schedule I as the schedule applicable to WGL's interruptible customers. See Order No. 10457 at 17.
WGL did not, until October or December of 1993, file with the Commission a schedule replacing Rate Schedule W as the schedule applicable to the Watergate. Thus, the purchased fuel adjustment clause of Rate Schedule W, indicating that WGL's commodity charges for the Watergate would be calculated partly by reference to Rate Schedule I, remained on file with the Commission until late 1993. From 1976 to 1993, WGLwithout protestbased the Watergate's commodity charges on Rate Schedule No. 3 rather than Rate Schedule I.
III. Discussion
A. Standard of review
This court's review of an order of the Commission, governed by D.C.Code § 43-906 (1990), is "limited to questions of law, including constitutional questions; and the findings of fact by the Commission shall be conclusive unless it shall appear that such findings of the Commission are unreasonable, arbitrary, or capricious." Id. This scope of review "is the narrowest judicial review in the field of administrative law." Office of People's Counsel v. Public Serv. Comm'n, 610 A.2d 240, 243 (D.C.1992) (citations and internal quotation marks omitted). "Of course, the [Commission] must fully and carefully explain its ruling," id. at 243; but once it provides such an explanation, the petitioner challenging its order assumes "the heavy burden of demonstrating clearly and convincingly a fatal flaw in the action taken." See Washington Gas Light Co. v. Public Serv. Comm'n, 450 A.2d 1187, 1194 (D.C. 1982). Moreover, as § 43-906 implies, this court is bound by the Commission's findings of fact if supported by substantial evidence. See Watergate Improvement Associates, 326 A.2d at 783.
B. Rate Schedule 3 versus Rate Schedule I
Petitioners' basic challenge is to the Commission's determination that Rate Schedule No. 3 replaced Rate Schedule I in 1976 in the purchased fuel adjustment governing the Watergate. This determination is not in essence a factual finding, but rather a conclusion about the legal effect of WGL's filings and the Commission's rate determinations in the 1975-76 period. See infra part D. But, although we therefore do not give the Commission's conclusion the same deference *887 owed factual determinations, we nonetheless will sustain it if it is "reasonable [and] based upon factors within the Commission's expertise." Diamond Int'l Corp. v. Federal Communications Comm'n, 201 U.S.App.D.C. 30, 33, 627 F.2d 489, 492 (1980).
The Commission determined that when WGL, in late 1975, applied for an increase in its rate for interruptible customers (among others), it was seeking at the same time an increase in its commodity charges, and hence its utility rate, for the Watergate. This followed from the fact that the Watergate's rate was tied by Rate Schedule W directly to the existing schedule for interruptible customers. Thus, when the Commission granted the requested increase and WGL thereafter filed Rate Schedule No. 3 for its interruptible customers,[4] that schedule replaced Rate Schedule I as the applicable referent in the Watergate's purchased fuel adjustment clause.
Petitioners counter that since the January 5, 1976 public notice of WGL's rate increase application did not mention either the Watergate or WGL's steam and chilled water customers, the Commission was wrong in concluding that the proposed increase was intended to apply to the Watergate; orat the very leastit was wrong in finding that the notice adequately informed the Watergate that its rates might be affected. We are not persuaded. Well before publishing the January 5, 1976 public notice, the Commission had made clear the fact that WGL's commodity charges for the Watergate were based upon WGL's rate for interruptible customers. In In re Washington Gas Light Co., Formal Case No. 567, Order No. 5571, 99 PUR 3d 139 (1973), the Commission, in granting WGL's application for an increase of WGL's rate for the Watergate, had stated:
It is sensible ... to expect that the gas used [by WGL] in providing the steam and chilled water [to the Watergate] will produce revenues in excess of its cost at least equal to the amount which would be produced if the gas were sold [by WGL] at the interruptible rate. Moreover, this [WGL's rate for interruptible customers] was clearly the basis used for "costing" gas in setting the original Watergate rates and we reject as inherently improbable, any claim that Watergate did not understand that this was the basis for setting its rate at that time.
99 PUR 3d at 145 (emphasis added). Indeed, two years before the Commission published the 1976 public notice, this court, rejecting a lack-of-notice argument almost identical to the one petitioners now raise, had acknowledged that WGL's rate for the Watergate depended, at least in part, on WGL's rate for its interruptible customers. In Watergate Improvement Associates, the Court stated:
Petitioner correctly points out that WGL's initial application and public notice were captioned as requests for increases in gas rates and thus did not clearly indicate that changes in steam and chilled water rates were also being sought. It is important to note, however, that the steam and chilled water rates are partially dependent on the interruptible gas rate charged other WGL customers and to that extent Watergate was on notice that its rates might be changed.
326 A.2d at 786 (emphasis in original).
Finally, of course, Rate Schedule W made explicit reference to the then-existing schedule for interruptible customers, and in Order No. 5833 (granting the increase in the interruptible customer rate) the Commission explicitly took into account WGL's provision of chilled water and steam to the Watergate in determining WGL's revenue need. All told, we cannot say that the Commission was unreasonable in concluding that Order No. 5833 approved an increase in WGL's rate for the Watergate, and that the January 5, 1976 public notice informed petitioners that "the interruptible rate ... would possibly be amended" in Order No. 5833, "thus affecting *888 [the] rate [for the Watergate]." Order No. 10419 at 13.
Petitioners seek contrary support from the fact of the parallel 1976 proceeding that explicitly dealt with the Watergate. In In re Washington Gas Light Co., Formal Case No. 648, Order No. 5771 (Pub.Serv. Comm'n March 1, 1976), the Commission approved an application by WGL for an increase in its rate for the Watergate. Petitioners argue that since the Commission published public notice of the proceeding underlying Order No. 5771 and the proceeding underlying Order No. 5833 on the same date, see 21 D.C.Reg. 3360-63 (1976), the latter proceeding must have addressed an increase in the rate for interruptible customers only, whereas the Commission "separately" addressed the increase in WGL's rate for the Watergate in Order No. 5771. The Commission persuasively answered this argument, explaining that Orders No. 5771 and 5833 "did not address the same issues and are not comparable." Order No. 10457 at 9. Order No. 5771 did not deal with the issue of what rate (namely, the rate set forth in Rate Schedule No. 3 or that in Rate Schedule I) WGL's commodity charges for the Watergate were to be based on, but rather with the issue of whether WGL was to be allowed to realize a profit when it used oil, rather than natural gas, to generate steam and chilled water for the Watergate.[5]Id. By contrast, Order No. 5833 "was a general rate case" in which the Commission explicitly took into account the results of WGL's provision of steam and chilled water to the Watergate in determining WGL's revenue need. Id. Though petitioners view this skeptically as a post hoc differentiation, the Commission's interpretation of the particular contexts in which its proceedings arose is certainly a matter "within [its] expertise," Diamond Int'l Corp., 201 U.S.App.D.C. at 33, 627 F.2d at 492, and to which we therefore defer. Since, as the Commission reasonably determined, Order No. 5771 was not a comprehensive ruling on increases in WGL's rate for the Watergate, it was not inconsistent with Order No. 5833's approval of an increase not just in WGL's rate for interruptible customers, but in its rate for the Watergate as well.
C. The filed rate doctrine
In what is really only a variation on the previous arguments, petitioners contend that the filed rate doctrine required the Commission to base WGL's 1976-1993 commodity charges for the Watergate on Rate Schedule I rather than Rate Schedule No. 3, inasmuch as WGL did not, until 1993, file a schedule replacing Rate Schedule W (incorporating Schedule I) as the tariff applicable to the Watergate.
The filed rate doctrine "forbids a regulated entity to charge rates for its services other than those properly filed with the appropriate ... regulatory authority." Arkansas Louisiana Gas Co. v. Hall, 453 U.S. 571, 577, 101 S.Ct. 2925, 2930, 69 L.Ed.2d 856 (1981). As the Commission pointed out, Order No. 10457 at 12, the doctrine acts as a check on the courts, requiring them to defer to the ratemaking agency's determination that a filed rate is (or is not) reasonable. See Arkansas Louisiana Gas Co., 453 U.S. at 578-80, 101 S.Ct. at 2930-32 (utilizing filed rate doctrine to strike down a lower court's substitution of its judgment for that of the ratemaking agency concerning what rate is "reasonable"); Montana-Dakota Utilities Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 250-52, 71 S.Ct. 692, 694-96, 95 L.Ed. 912 (1951) (same). This use furthers the doctrine's oft-stated purpose of "preserv[ing]... the agency's primary jurisdiction over reasonableness of rates...." Arkansas Louisiana Gas Co., 453 U.S. at 577, 101 S.Ct. at 2930 (citation omitted).
In this case, of course, there is no question that the Commission considers the rate charged the Watergate by WGL since 1976 to be reasonable. Petitioners, however, *889 point to another purpose of the doctrine which they say the Commission contravened by refusing to recognize the continuing application of Rate Schedule W to the Watergate. That purpose is exemplified by Electrical Dist. No. 1 v. Federal Energy Regulatory Comm'n, 249 U.S.App.D.C. 190, 774 F.2d 490 (1985) (Scalia, J.), in which the United States Court of Appeals invalidated a FERC policy as frustrating a core purpose of the filed rate doctrineto insure the "predictability" of rates and prevent "unforeseeable liabilities" on the part of utilities and purchasers. Id. at 193, 774 F.2d at 493. We of course have no quarrel with this as one of the doctrine's aims.[6] But petitioners' reliance on it in essence merely restates their disagreement with the Commission's characterization of the effect of the 1975-76 proceedings. In January 1976, petitioners were on notice that if the Commission granted WGL's application for (among other changes) an increase in its rate for interruptible customers, WGL's commodity charges for the Watergate, and thus its rate for the Watergate, would also increase. Petitioners thus experienced no unforeseeable liability, a fact of which, we think, their failure to challenge the modified rate for the next seventeen years provides substantial confirmation.
Petitioners' citation to D.C.Code § 43-529, which amounts to a codification of the filed rate doctrine, fares no better.[7] As the Commission explained, since Rate Schedule I had been superseded, "Rate Schedule No. 3 is the only interruptible rate schedule in force which can be used to calculate [the] Watergate's rate under Rate Schedule W." Order No. 10457 at 15. Accordingly, Rate Schedule W's continued reference to Rate Schedule I was, in effect, a dead letter on which petitioners could notand did not in the intervening yearsplace any reliance. The "specified" rate under § 43-529 was Rate Schedule 3.
D. A Hearing
Petitioners contend that D.C.Code § 43-608 required the Commission to provide a formal hearing on their complaint.[8] Section 43-608 provides in relevant part:
Upon its own initiative or upon reasonable complaint made against any public utility that any of the rates, tolls, charges, or schedules, or services, ... are in any respect unreasonable or unjustly discriminatory, or that any time schedule, regulation, or act whatsoever affecting or relating to ... the production, transmission, delivery, or furnishing of heat, light, water, or power, or any service in connection therewith, is in any respect unreasonable, insufficient, or unjustly discriminatory, ... the Commission may, in its discretion, proceed, with or without notice, to make such investigation as it may deem necessary or convenient. But no order affecting said rates, tolls, charges, schedules, regulations, or act complained of shall be entered by *890 the Commission without a formal hearing. [Emphasis added.]
Section 43-608 thus requires the Commission to hold a "formal hearing" before entering an "order affecting," among other things, "rates" or "schedules." This court has not had occasion to define an "order affecting ... rates ... [or] schedules" for purposes of that statute.[9] It is therefore an open question whether an order granting or denying a request for a rate refund "affect[s] ... rates... [or] schedules," thereby necessitating a formal hearing pursuant to § 43-608.[10]
We need not determine, however, whether a rate refund proceeding would otherwise require a formal hearing, because
[e]ven when an agency is required by statute or by the Constitution to provide an oral evidentiary hearing, it need do so only if there exists a dispute concerning a material fact. An oral evidentiary hearing is never required if the only disputes involve issues of law or policy.
1 KENNETH C. DAVIS & RICHARD J. PIERCE, JR., ADMINISTRATIVE LAW TREATISE (3d ed. 1994) (emphasis in original). This "fundamental principle," id., applies to hearings before the Commission. See Potomac Elec. Power Co. v. Public Serv. Comm'n, 457 A.2d 776, 789 (D.C.1983) ("A hearing is not necessary where no material facts are in dispute or where the disposition of claims turns not on the determination of facts, but inferences and legal conclusions to be derived from facts already established"); see also Citizens for Allegan County, Inc. v. Federal Power Comm'n, 134 U.S.App.D.C. 229, 232, 414 F.2d 1125, 1128 (1969) ("no evidentiary hearing is required where there is no dispute on the facts and the agency proceeding involves only a question of law"). Here, the only issues asserted to be in dispute are (in petitioners' words) "the contradictory and ambiguous tariffs filed by WGL, and the effect, if any, of WGL filings in [the respective proceedings underlying Orders No. 5771 and 5833] (involving Rate Schedule W.)" But there is no dispute, let alone a material dispute, about the dates on which WGL filed schedules with the Commission, or about the language contained in any of these schedules. The parties disagree only on the interpretation and effect to be given the schedules filed by WGL setting forth WGL's rates for the Watergate and interruptible customers. As the Commission recognized, these disputes involve issues of law, not fact. A formal hearing was unnecessary to their proper resolution.[11]
*891 IV. Conclusion
For the foregoing reasons, Orders No. 10419 and 10457 of the Commission are
Affirmed.
NOTES
[*] Sitting by designation pursuant to D.C.Code § 11-707(a) (1995).
[1] Petitioners are: Watergate East, Inc., Watergate South, Inc., Watergate West, Inc., Lincoln Property Company, Watergate Investors Limited Partnership, Watergate Management Corporation, Nikko Company, and Trusthouse Forte. According to petitioners, Watergate Investors Limited Partnership is a successor in interest; Nikko Company and Trusthouse Forte own the Watergate Hotel; and Lincoln Property Company is the managing agent for John Hancock Mutual Life Insurance.
[2] The complaint cited D.C.Code § 43-612, but as § 43-612 does not even arguably concern the filed rate doctrine, petitioners undoubtedly meant D.C.Code § 43-529.
[3] In full, this passage read:
Evidence submitted by the staff touched on the question of whether the revenues, expenses, and rate base associated with [WGL]'s chilled water and steam operations for the Watergate complex of buildings should be included in [WGL]'s other operations in determining its revenue need. It may possibly be that, as a matter of regulatory policy, [WGL]'s Watergate operations should be separated out. But the [C]ommission has previously made it clear that it considered Watergate results to be an element of [WGL]'s overall public utility functions. See [Order No. 5571]. We are reluctant to change this policy absent a thorough discussion on the record of the arguments for and against its continuation. This record contains no such discussion. Accordingly, our determinations herein of [WGL]'s revenue need will include the results of [WGL]'s Watergate chilled water and steam services.
Order No. 5833, 16 PUR 4th at 266 n. 5.
[4] At oral argument, counsel for petitioners emphasized that the table of contents of WGL's October 29, 1976 conformance filing, see supra p. 886, referred to a nonexistent page which was to state the rate for steam and chilled water customers. We believe this lacuna adds nothing to the conceded fact that WGL did not, until late 1993, file with the Commission a schedule replacing Rate Schedule W as the schedule applicable to the Watergate. Supra p. 886.
[5] See Order No. 5771 at 4 ("[WGL] seeks to modify the PFA [purchased fuel adjustment] so as to permit it to realize at least 3.24 cents per therm `profit' regardless of whether gas or oil is used"); id. at 4-7. As the Commission recognized, prior to its issuance of Order No. 5771, "the use of oil [to generate steam and chilled water for the Watergate] provided no opportunity for profit [for WGL]." Order No. 10457 at 9; see Order No. 5771 at 4 ("the current PFA [purchased fuel adjustment] does not operate to permit [WGL] a profit on the use of oil").
[6] See also Illinois Bell Tel. Co. v. Federal Communications Comm'n, 296 U.S.App.D.C. 197, 199-201, 966 F.2d 1478, 1480-82 (1992) (FCC may not order telephone utilities to refund rates assessed during period prior to FCC's suspension of the filed rates; such retroactive alteration of rate would deny utilities statutorily prescribed notice and opportunity for hearing concerning suspension); Transwestern Pipeline Co. v. Federal Energy Regulatory Comm'n, 283 U.S.App.D.C. 116, 122-27, 897 F.2d 570, 576-81 (1990) (where, on the particular facts, a natural gas customer lacked "meaningful notice" of commodity charges, FERC violated filed rate doctrine by ruling that these charges accrued prior to FERC's issuance of order approving the involved application by utility for a rate increase), cert. denied, 498 U.S. 952, 111 S.Ct. 373, 112 L.Ed.2d 335 (1990).
[7] Section 43-529 reads:
It shall be unlawful for any public utility to charge, demand, collect, or receive a greater or less compensation for any service performed by it within the District of Columbia, or for any service in connection therewith, than is specified in such printed schedules, including schedules of joint rates, as may at the time be in force, or to demand, collect, or receive any rate, toll, or charge not specified in such schedules. The rates, tolls, and charges named therein shall be the lawful rates, tolls, and charges until the same are changed as provided in Chapters 1-10 of this title.
[8] Petitioners also contend, for the first time in this court, that the Commission erred in failing to provide an informal hearing on their complaint pursuant to 15 DCMR § 103.6 (1991). But § 103.6 is phrased in permissive terms, stating that the Commission "may, from time-to-time" order informal hearings in certain circumstances, not that it must do so.
[9] The Commission incorrectly held in Order No. 10457, and the Commission and WGL mistakenly contend in their briefs to this court, that the court addressed this issue in Washington Gas Light Co. v. Public Serv. Comm'n, 455 A.2d 384 (D.C.1982), and Office of People's Counsel v. Public Serv. Comm'n, 572 A.2d 410 (D.C.1990). See Order No. 10457 at 19-20. In Washington Gas Light Co., the court defined a "rate case" for purposes of D.C.Code § 43-612(a)(3), holding that this statutory term means "a proceeding, including a formal hearing, which results in a Commission order fixing any of the rates of a utility." 455 A.2d at 389. In Office of People's Counsel, the court stated that the Washington Gas Light court had held that a "rate case" for purposes of § 43-612(a)(3) means "a proceeding in which ... some of the rates of a given utility are set." 572 A.2d at 413.
Section 43-612(a)(3) provides that in (among other types of cases) a "rate case" neither the Commission nor the Office of People's Counsel may individually seek reimbursement of its expenses from the company that is the subject of the proceeding in an amount exceeding 0.25% of the "jurisdictional valuation" of that company. See D.C.Code § 43-612(a)(3); 43-612(a)(1). The statute at issue here, § 43-608, deals with the very different subject of the proceedings in which the Commission must provide a formal hearing. Nor does § 43-608 contain the term "rate case." As the Commission itself conceded, §§ 43-608 and 43-612 "ha[ve] nothing to do with" one another. Order No. 10457 at 18 n. 4.
[10] This court has held that, under D.C.Code § 1-1509(b) (1991), "an application for a rate increase by a public utility requires that a hearing be held before the Commission." United States v. Public Serv. Comm'n, 465 A.2d 829, 833 (D.C. 1983) (emphasis added). Petitioners in this case plainly did not apply for a rate increase (or, for that matter, a rate decrease). The instant proceedings addressed only WGL's past commodity charges for the Watergate, specifically, the charges assessed from 1976 to 1993. As the Commission stated, "Under no theory presented by either party will a rate be set in this proceeding." Order No. 10457 at 19.
[11] Petitioners' remaining contention merits only summary treatment. They argue that the Commission erred in denying their motion for leave to file a reply to WGL's response to petitioners' application for reconsideration of Order No. 10419. As the Commission recognized, its rules and regulations do not provide for the filing of a response to an application for reconsideration. See 15 DCMR § 140.1-140.8 (1991). The Commission's refusal to waive, pursuant to 15 DCMR § 146.1, its rules and regulations governing reconsideration was proper, particularly given its finding after review of the proffered reply that "[the petitioners are] merely attempting to bolster arguments previously stated in [their] Application." Order No. 10457 at 2.
|
321 Md. 324 (1990)
582 A.2d 1225
SAMUEL R. OLSEN
v.
MAYOR AND CITY COUNCIL OF BALTIMORE ET AL.
No. 10, September Term, 1989.
Court of Appeals of Maryland.
December 21, 1990.
Anthony P. Palaigos (Blum, Yumkas, Mailman, Gutman & Denick, P.A., on brief), Baltimore, for appellant.
Sandra R. Gutman, Asst. City Sol. (Neal M. Janey, City Sol., Ambrose T. Hartman, Deputy City Sol., on brief), Neil J. Ruther (Jeffrey P. McEvoy, Melnicove, Kaufman Weiner & Smouse, P.A., on brief), Baltimore, for appellees.
Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS[*], and BLACKWELL,[*] JJ.
McAULIFFE, Judge.
This appeal involves a satellite dish antenna, more formally referred to by the Federal Communications Commission (FCC) as a satellite receive-only earth station. Samuel R. Olsen sought the approval of Baltimore City officials to maintain a ten foot wire mesh satellite dish antenna on the roof of his home in the Federal Hill area of the City. His request was denied, and has been denied at each administrative and judicial level where he thereafter sought relief. Before us, he argues that the ordinances relied upon by the City have been preempted by an FCC regulation codified at 47 C.F.R. § 25.104 (1986).
I.
Olsen owns a three story single-family dwelling located on East Henrietta Street in Baltimore City. The property is zoned R-8, General Residential, and is located within the area governed by the Montgomery Urban Renewal Plan. Olsen's predecessor in title, a corporate entity of which Olsen is president, erected a ten foot aluminum satellite dish antenna on the rear portion of the roof of the dwelling. Olsen was apparently advised that the antenna should not have been installed without approval of the City, and therefore filed a "permit application" with the Department of Housing and Community Development. The application was denied based upon the fact that a wire mesh satellite dish antenna exceeding six feet in width was not allowed as an accessory use in the R-8 zone.
Olsen filed an appeal to the Board of Municipal and Zoning Appeals (the Board), stating that an antenna of the size permitted as an accessory use would not produce a signal adequate for television reception. This appeal was intended to serve also as an application for a conditional use. The Board circulated the notice of appeal to various City bureaus and departments for comment. The Commissioner of the Department of Housing and Community Development refused to consent, noting that the antenna violated a requirement of the Montgomery Urban Renewal Plan that "[a]ntennae ... shall not be visible from any front or side elevation or visible from any point of the street." The Director of the Department of Planning recommended disapproval for the same reason, and also noted that "[t]he dish cannot be screened."
At a hearing conducted by the Board, Olsen offered evidence, based upon published data and on-site tests, that an antenna having a diameter of eight to ten feet was required for adequate reception at his location.[1] That evidence was not refuted. Olsen also proved that ground installation was not possible because surrounding buildings obstructed the line-of-sight "reception window" needed between the antenna and the satellites.[2]
Representatives of the Federal Hill Neighborhood Association testified in opposition to the application, pointing out that the dish antenna could be seen from immediately adjacent streets, and that it was not in compliance with Baltimore City's zoning regulations or the requirements of the Montgomery Urban Renewal Plan. They also testified that the presence of the roof-mounted antenna was inconsistent with the national, city, and community desires to maintain the historic and traditional architecture of the area.[3] Neighbors testified that the dish antenna was obtrusive, an "eyesore," and a "detriment" to surrounding properties. One witness described the antenna as "so huge that it looks like a spaceship launched on top of a rooftop, in scale to the size of the building."[4]
In reply, Olsen argued that the City ordinances had been preempted by federal regulations; that denial of the application would be tantamount to a total denial of the federally guaranteed right to receive satellite signals by use of a satellite dish antenna; and, that the evidence was insufficient to justify denial of a conditional use.
The Board denied the application. It found that the proposal to maintain the antenna at its present location met neither the requirements of the Montgomery Urban Renewal Plan, nor the standards of Baltimore City's zoning code for the authorization of a conditional use.
Olsen appealed to the Circuit Court for Baltimore City. That court affirmed the decision of the Board, and Olsen appealed to the Court of Special Appeals. We issued a writ of certiorari before consideration by the intermediate appellate court, and we affirm.
II.
The FCC regulation relied upon by Olsen to support his claim of federal preemption provides, in pertinent part, as follows:
State and local zoning or other regulations that differentiate between satellite receive-only antennas and other types of antenna facilities are preempted unless such regulations:
(a) Have a reasonable and clearly defined health, safety or aesthetic objective; and
(b) Do not operate to impose unreasonable limitations on, or prevent, reception of satellite delivered signals by receive-only antennas or to impose costs on the users of such antennas that are excessive in light of the purchase and installation cost of the equipment.
47 C.F.R. § 25.104 (1986). The Supreme Court has held that under the Supremacy Clause of the Federal Constitution, the FCC, in an appropriate case, has the authority to preempt State and local law by regulation. City of New York v. FCC, 486 U.S. 57, 65-66, 108 S.Ct. 1637, 100 L.Ed.2d 48 (1988); Louisiana Public Service Comm'n v. FCC, 476 U.S. 355, 368-69, 106 S.Ct. 1890, 1898-99, 90 L.Ed.2d 369 (1986). Unlike many other preemption cases, there is no need here to determine whether the federal body intended preemption it expressly said that it did, under certain defined circumstances. The question then, is whether those circumstances exist with respect to the relevant Baltimore City ordinances.
The threshold issue, in determining whether there is preemption, is whether the ordinance "differentiate[s] between satellite receive-only antennas and other types of antenna facilities...." If it does not, it is not preempted by the regulation. If it does, it is preempted unless the ordinance meets both of the reasonableness tests set forth in the FCC regulation.
III.
The Baltimore City zoning code fails the threshold test of differential treatment of satellite dish antennas. Article 30, § 4.1 b. 1b,[5] allows, as accessory uses,
Accessory free standing microwave antennas (satellite dishes) mounted on a single stanchion when six feet or less in diameter and less than ten feet in height and constructed of expanded aluminum mesh or wire screen.
Mounted mesh satellite antennas exceeding six feet in diameter are permitted only as conditional uses. A conditional use requires the approval of the Board of Municipal and Zoning Appeals. Antennas other than satellite dish antennas are not subjected to the same restriction. Thus, the zoning code provisions of the Baltimore City Code can survive preemption only if they pass both of the reasonableness tests established by the FCC regulation.
Olsen argues that the City's zoning regulations fail both of the tests. He asserts that the standards established for the granting or denial of conditional uses largely speak in general terms of health, safety, general welfare, and morals, and do not approach the particularized and specifically tailored provisions that the FCC regulation requires in order to ensure that a fair balance is struck between the strong federal interest in preserving the rights of individuals to construct and use antennas to receive satellite delivered signals, and the legitimate interests of state and local governments in regulating land uses. He points to certain language employed by the FCC in the explanatory text accompanying the regulation:
If a community chooses to enact an ordinance which differentiates in its treatment of different types of antennas, it must bear a high burden.
* * * * * *
Moreover, an ordinance which discriminates cannot impose size restrictions only on receive-only antennas which would effectively preclude reception. (Footnote omitted.)
51 Fed.Reg. 5523, 5524 (1986).
Olsen further contends that the single specific standard developed by the City in connection with the grant or denial of conditional uses for satellite antennas is deficient in that it fails to require, as opposed to simply permitting, consideration of the right to effectively receive satellite signals. The standard in question provides:
In the case of the placement or erection of microwave antennas (satellite dishes), the Board may consider the quality of signal reception but must find that the antenna will not interfere with the rights of the adjacent and neighboring properties to light, air and sun. In addition, the Board may specify the placement of the antenna and require screening.
Baltimore City Code, Article 30, § 11.0-5(a)14 (1976, 1983 Repl.Vol., 1989 Supp.).
The City responds that the standards established by the code are sufficient under the test established by the FCC regulation. Interestingly, and without explaining how permissive language becomes directory, the City argues that section 11.0-5(a)14 "directs the Zoning Board to give consideration to the quality of signal reception...." Appellees' Brief at 16.
The question of the preemptive effects of the FCC regulation has been discussed in several recent cases. See, e.g., Van Meter v. Township of Maplewood, 696 F. Supp. 1024 (D.N.J. 1988) (local ordinance limiting satellite dish antenna size to six feet and requiring screening preempted by FCC regulation where evidence showed ten foot dish and 14 degree elevation required for adequate reception); Brophy v. Town of Castine, 534 A.2d 663 (Me. 1987) (narrowly drawn local zoning ordinance valid even though effectively foreclosing satellite signal reception by applicant; no preemption in absence of showing that ordinance as written or applied differentiated in treatment of satellite dish antennas); Hunter v. City of Wittier, 209 Cal. App.3d 588, 257 Cal. Rptr. 559 (1989) (broad standards of city ordinance insufficient to satisfy requirements of FCC regulation, and are therefore preempted); Alsar Technology v. Zon. Bd. of Adj., 235 N.J. Super. 471, 563 A.2d 83 (1989) (local ordinance preempted as discriminatory and imposing unreasonable burden on satellite signal reception); Minars v. Rose, 123 A.D.2d 766, 507 N.Y.S.2d 241 (N.Y.App. 1986) (FCC regulation preempts local ordinance if interpreted to effectively bar, or unreasonably restrict, installation of satellite dish antennas in certain use districts). See also M. Richardson, Dealing with Dishes: Satellite Television and Local Zoning, 65 Mich.B.J. 1120 (1986).
IV.
As interesting as the question of federal preemption of the provisions of the Baltimore City zoning code may be, we find that we are not obliged to answer it. Instead, this appeal may be resolved by reference to the City ordinances enacting and amending the Montgomery Urban Renewal Plan, which are not a part of the zoning ordinance,[6] and which contain a non-discriminatory prohibition against the roof-top installation of any antennas that may be seen from the street.
The Montgomery Urban Renewal Plan, adopted in 1979 by Ordinance 1014, applies to the subject property. One of the stated objectives of the plan is "[t]o preserve and enhance the historic and architectural character of the neighborhood and the structures." The plan establishes standards applicable to modifications of properties in the project area, and provides that no permit should issue unless the proposed modification conforms to the established standards. As originally written, the standard pertaining to antennas provided:
Antennae, air conditioning equipment, grills and other contemporary elements shall be as inconspicuous as possible.
In December of 1986, by Ordinance 849, the standard was revised to read:
Antennae, air-conditioning equipment, grills, roof decks, satellite dishes, and other contemporary elements shall not be visible from any front or side elevation or visible from any point of the street, unless otherwise approved by the Commissioner of the Department of Housing and Community Development.
Olsen does not argue that this standard is invalid. Nor does he dispute that the dish antenna installed on his roof top violates the requirements of the standard. The antenna can be seen from the adjacent street, and it is clear from the record that the Commissioner of the Department of Housing and Community Development has not approved this installation. Indeed, the Commissioner has specifically disapproved it.
The standard established by the Montgomery Urban Renewal Plan does not differentiate between satellite receive-only antennas and other types of antennas. It does not cross the threshold established by the FCC regulation, and it is not, therefore, preempted by the regulation. Indeed, the standard appears to be consistent with the language employed by the FCC when promulgating the regulation:
Communities wishing to preserve their historic character may limit the construction of "modern accoutrements" provided that such limitations affect all fixed external antennas in the same manner. In adopting this rule we intend that it be a valid accommodation of local interests as well as of two federal interests, namely promoting interstate communications and historic preservation. Communities which are truly concerned with preserving their unique historic character may do so if they do not discriminate against satellite receive-only antennas.
51 Fed.Reg. 5523 (1986).
Olsen seeks to avoid the impact of the urban renewal ordinance by arguing that the proceedings which have generated this appeal deal only with the zoning code. He notes that his initial application for a permit was rejected because the antenna constituted a "zoning violation." He contends that his appeal challenged only that ruling, and was on a printed form entitled "appeal from the decision of the zoning administrator under the zoning ordinance." Thus, he argues, the Board should have restricted its consideration to the zoning ordinance, and should not have considered the urban renewal ordinance.
We do not agree. Even if Olsen is correct in his assertion that the provisions of the zoning ordinance which discriminate against satellite antennas have been preempted by the FCC regulation, he cannot escape the fact that the separate, self-standing urban renewal ordinance, which does not discriminate and is therefore not preempted, stands as a complete bar to the issuance of the permit he seeks. It is immaterial that the zoning official initially denying the request for a permit may have relied solely upon the zoning ordinance. When the matter was brought to the attention of the Board on appeal, the Board was made aware of the applicable urban renewal ordinance. The Board, in its findings, noted that the antenna failed to comply with that ordinance. The Board did not err in refusing to issue the permit on that ground.
JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AFFIRMED, WITH COSTS.
ELDRIDGE, Judge, concurring.
I concur in both the result and in the Court's opinion. In one respect, however, I would go further than the Court's opinion. The Court reserves the question of whether the Baltimore City Zoning Code, which treats conventional and receive-only satellite antennas differently, is preempted by the FCC regulation governing satellite receive-only antennas. 47 C.F.R. § 25.104 (1986). The Court finds it unnecessary to address the question because it holds that the Montgomery Urban Renewal Plan Ordinance does not discriminate in its treatment of conventional and satellite receive-only antennas and is determinative of the case. Nevertheless, because the resolution of the Zoning Code issue seems clear, and because future guidance is appropriate, I would expressly hold that the Baltimore City Zoning Code relating to the use of satellite receive-only antennas is preempted by the FCC regulation. See Van Meter v. Township of Maplewood, 696 F. Supp. 1024, 1029-1032 (D.N.J. 1988); Alsar Technology v. Zon. Bd. of Adj., 235 N.J. Super. 471, 477-483, 563 A.2d 83, 86-89 (1989); Hunter v. City of Whittier, 209 Cal. App.3d 588, 595-599, 257 Cal. Rptr. 559, 563-566 (1989); See also Minars v. Rose, 123 A.D.2d 766, 507 N.Y.S.2d 241, 242 (1986); Brophy v. Town of Castine, 534 A.2d 663 (Me. 1987).
Furthermore, I concur with the Court's holding with respect to the Montgomery Urban Renewal Ordinance because the Ordinance is neutral on its face and appears to be neutral as applied. The Urban Renewal Ordinance prohibits the use of any type of antenna that is "visible from any front or side elevation or visible from any point of the street...."
A prohibition may appear to be neutral on its face but, because of other circumstances or characteristics, may operate in a discriminatory manner. For example, in light of the technology regarding satellite dishes and conventional antennas, and the different types of rooftops which exist, one might envision an area where functional receive-only satellite antennas on roofs were by their nature visible from the street whereas functional conventional outdoor antennas would not be. In this situation, although an ordinance like the Montgomery Urban Renewal Ordinance would appear to be neutral, only the use of conventional antennas would be permitted because satellite antennas would never conform to the requirements of the Urban Renewal Plan. An ordinance operating in this manner would be preempted by the FCC regulation. See Van Meter v. Township of Maplewood, supra, 696 F. Supp. at 1032; Hunter v. City of Whittier, supra, 209 Cal. App.3d at 593, 257 Cal. Rptr. at 562. In the present case, however, absolutely no evidence was presented before the Board of Zoning Appeals which might suggest such discrimination. On the contrary, the testimony at the administrative hearing indicated that conventional outdoor antennas were visible from the street and were deemed in violation of the Urban Renewal Ordinance unless erected prior to the effective date of the provision.
In addition, a neutral ordinance may be discriminatorily applied by those administering it. At the administrative hearing in the case at bar, counsel for Mr. Olsen elicited testimony from two witnesses that conventional antennas, visible from the street, are currently in use in the Montgomery Urban Renewal area. Both witnesses, however, indicated that these antennas were erected prior to the effective date of the Montgomery Urban Renewal Ordinance. No evidence was presented suggesting that the installation of conventional rooftop antennas has been permitted since the passage of the Urban Renewal Ordinance. If in a subsequent case it were found that the use of visible conventional antennas has been permitted after the passage of that Ordinance, then the Montgomery Urban Renewal Ordinance would be preempted by the FCC regulation as an unreasonable limitation on the reception of satellite delivered signals. See Brophy v. Town of Castine, supra, 534 A.2d at 664-665.
NOTES
[*] Adkins, J., and Blackwell, J., now retired, participated in the hearing and conference of this case while active members of this Court but did not participate in the decision and adoption of this opinion.
[1] In its commentary of 13 February 1986, accompanying the adoption of 47 C.F.R. § 25.104, the FCC noted that "[u]nder current technology, an antenna must be at least 8 to 12 feet in diameter to adequately receive video signals transmitted by satellite." 51 Fed.Reg. 5519, 5524 n. 77 (1986).
[2] Transmitting satellites are in geostationary orbit 20,000 miles above the equator, located between 69 degrees and 139 degrees West. In the Baltimore area, the approximate range of the required elevation above the horizon for a receiving dish antenna is between 12 degrees and 43 degrees, depending upon which satellite is selected for reception.
[3] The President of the neighborhood association testified that the property is located within the Federal Hill National Historic District.
[4] The townhouse on which the ten foot dish antenna is mounted is eleven and one-half feet wide.
[5] The Baltimore City code sections cited here for accessory and conditional uses apply to the R-1 zone. They are made applicable to the R-8 zone by subsections b. and c. of § 4.8-1.
[6] Section 16 of the Montgomery Urban Renewal Plan Ordinance provides that where a provision of the ordinance is found to be in conflict with any zoning ordinance, "the provision which establishes the higher standard for the promotion and protection of the public health and safety shall prevail." The Urban Renewal Ordinance also provides, at section 8, that the standards applicable to modifications of properties within the plan area shall be "additional standards," which are "over and above the codes and ordinances of the City of Baltimore."
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-1460
In re: JOHN A. BRYANT,
Petitioner.
On Petition for Writ of Mandamus.
(3:09-CR-00347-REP-1)
Submitted: September 23, 2014 Decided: September 25, 2014
Before NIEMEYER and GREGORY, Circuit Judges, and HAMILTON,
Senior Circuit Judge.
Petition denied by unpublished per curiam opinion.
John A. Bryant, Petitioner Pro Se.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
John A. Bryant petitions for a writ of mandamus,
alleging the district court has not responded to his inquiries
into the status of his 28 U.S.C. § 2255 (2012) motion. He seeks
an order from this court directing the district court to act.
Our review of the district court’s docket reveals that the
district court entered an order on June 17, 2014, appointing
counsel for Bryant, directing the filing of briefs on an issue
identified by the court, and staying action on Bryant’s § 2255
motion pending further order of the court. Accordingly, because
the district court recently informed Bryant of the status of his
§ 2255 motion, we deny the mandamus petition as moot. We grant
leave to proceed in forma pauperis. We dispense with oral
argument because the facts and legal contentions are adequately
presented in the materials before this court and argument would
not aid the decisional process.
PETITION DENIED
2
|
112 F.3d 518
NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.UNITED STATES of America, Plaintiff-Appellee,v.Dante Lamont LOFTON, Defendant-Appellant.
No. 96-10239.
United States Court of Appeals, Ninth Circuit.
Submitted April 21, 1997.*Decided April 23, 1997.
Before: BROWNING, THOMPSON, and HAWKINS, Circuit Judges.
1
MEMORANDUM**
2
Dante Lamont Lofton, a federal prisoner, appeals pro se the district court's denial of his motion to modify imprisonment under 18 U.S.C. § 3582(c)(2). Lofton contends that the district court erred by: (1) considering expunged prior convictions when computing his criminal history category; and (2) failing to consider mitigating circumstances.
3
As the district court properly concluded, these are issues to be raised in a motion under 28 U.S.C. § 2255. However, "nonconstitutional sentencing errors that have not been raised on direct appeal have been waived and generally may not be reviewed by way of 28 U.S.C. § 2255." See United States v. Schlesinger, 49 F.3d 483, 485 (9th Cir.1995).
4
Moreover, Lofton presents no evidence that his prior convictions were set aside or expunged, nor does he provide any mitigating circumstances that would justify a downward departure.
5
Accordingly, we affirm the district court's order.
AFFIRMED.1
*
The panel unanimously finds this case suitable for decision without oral argument. See Fed.R.App.P. 34(a); 9th Cir.R. 34-4
**
This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3
1
On appeal Lofton also contends that the district court erred by engaging in double counting by sentencing him under Criminal History Category V based on prior convictions that were also used to enhance his offense level. We do not address this issue because it was raised for the first time in Lofton's traverse, filed after the district court issued its order. See United States v. Johnson, 988 F.2d 941, 945 (9th Cir.1993); see also Cacoperdo v. Demosthenes, 37 F.3d 504, 507 (9th Cir.1994) (cannot raise additional grounds for relief in traverse)
|
327 F.2d 939
W. Willard WIRTZ, Secretary of Labor, United StatesDepartment of Labor, Appellant,v.HOOPER-HOLMES BUREAU, INC. and William R. McBroome, Appellees.
No. 20368.
United States Court of Appeals Fifth Circuit.
Feb. 7, 1964.
Bessie Margolin, Assoc. Sol., Jacob I. Karro, Deputy Assoc. Sol., Charles Donahue, Sol. of Labor, Jack H. Weiner, Atty., U.S. Dept. of Labor, Washington, D.C., Beverley R. Worrell, Regional Atty., for appellant.
Charles L. Gowen, Atlanta, Ga., William L. O'Conor, Jr., New York City, William K. Meadow, King & Spalding, Atlanta, Ga., King & O'Conor, New York City, for appellees.
Before CAMERON, WISDOM and GEWIN, Circuit Judges.
GEWIN, Circuit Judge.
1
This is an appeal from an order of dismissal of a complaint filed by the Secretary of Labor seeking to enjoin alleged violations of the Fair Labor Standards Act. The dismissal was ordered after the Secretary refused to comply with an order of the Court requiring him to furnish to the defendant, at least ten days prior to trial, a list of the witnesses that the Secretary would call or would have available at the trial.
2
Rule 10(c) of the Local Rules of the Northern District of Georgia require that counsel for the parties meet in a pre-trial conference at least 15 days prior to the pre-trial hearing and further, that plaintiff's counsel file a proposed pre-trial order within 10 days after the pre-trial conference, which proposed order shall cover 'all matters referred to in this Local Rule of Court, the appendix attached thereto, and as further ordered by the Court.' The portion of said appendix pertinent to this case reads as follows:
3
'In the absence of reasonable notice to opposing counsel to the contrary, plaintiff will call or will have available at the trial the witnesses whose names appear on Exhibit 'K' attached hereto (the general subject matter of the testimony of each witness also being given).'
4
The Secretary filed a proposed pre-trial order which complied with all the requirements of the local rules except that instead of furnishing a list of witnesses that he would either have available, or call at the trial, the Secretary furnished a list of persons believed to have knowledge of the facts. At the same time, the Secretary filed 'Objections to Furnishing Witness List' and a 'Formal Claim of Privilege and Confidentiality'. The court then entered an order stating:
5
'The Court will not require the plaintiff to give the names of any informers, but the plaintiff is required to comply with the rules of this Court pertaining to pre-trials and trials and is ordered to furnish a list to opposing counsel of the witnesses that he will call or will have available at the trial, together with the general subject matter of the testimony of each witness. Such list of witnesses shall also be filed as an exhibit to the pre-trial order.'
In a later order the court stated:
6
'The Secretary urges that by producing a list of witnesses it would, in effect, be revealing the identity of certain informers. Accordingly, the Secretary made a formal claim of privilege. 'Conceding that the Secretary may avail himself of the privilege to refuse to disclose the identity of an informer it must be noted that such a privilege is however, completely distinguishable from the local rule requiring a party to list the witnesses it will have available at the trial. It has been the practice of this Court for some time to require each party to attach a list of witnesses that will be available at the trial to the Proposed Final Pre-Trial Order, Rule 16(6), Federal Rules of Civil Procedure, 28 U.S.C.A.; Local Rule 10(d), (g).' 'The essential purposes of these rules is to promote fairness by eliminating the 'sporting' disadvantage attendant upon the production of an unfamiliar witness. It may be, as the Secretary urges, that some of the witnesses produced will be informers, but this fact does not detract from the eventuality that their identities will certainly be revealed upon the trial-- a choice ultimately made by the Secretary or his agents. Therefore, it is not unreasonable to require their disclosure ten days before the trial by completing the Pre-Trial Order, Exhibit 'K'.'1
7
The Secretary however still refused to submit the list of witnesses and the court dismissed the complaint.
8
On this appeal we are called upon to determine whether the rule which requires the parties to furnish a list of the witnesses which each will call or have available at the trial is improper and unlawful;2 and if such a rule is proper and authorized, should the Secretary of Labor be exempted from compliance with it in a suit brought under the Fair Labor Standards Act. The Secretary contends: (1) the District Court had no authority to enter the order of dismissal for failure to comply with the rule; and (2) even if the rule is authorized and lawful, the same should not be applied in an action to enforce the wage and hour requirements of the Fair Labor Standards Act, because to do so would subject the Secretary's witnesses to improper pressures by the employer. We agree with the trial court and affirm the judgment.
9
We look first to the U.S. Code, Title 28 U.S.C.A. 2071 provides:
10
'The Supreme Court and all courts established by Act of Congress may from time to time prescribe rules for the conduct of their business. Such rules shall be consistent with Acts of Congress and rules of practice and procedure prescribed by the Supreme Court. June 25, 1948, c. 646, 62 Stat. 961; May 24, 1949, c. 139, 102, 63 Stat. 104.'
11
Next, Rule 83 of the Federal Rules of Civil Procedure provides:
12
'Each district court by action of a majority of the judges thereof may from time to time make and amend rules governing its practice not inconsistent with these rules. Copies of rules and amendments so made by any district court shall upon their promulgation be furnished to the Supreme Court of the United States. In all cases not provided for by rule, the district courts may regulate their practice in any manner not inconsistent with these rules.'
13
Finally, Rule 16 of the Federal Rules of Civil Procedure provides in part:
14
'In any action, the court may in its discretion direct the attorneys for the parties to appear before it for a conference to consider
15
'(6) Such other matters as may aid in the disposition of the action.'
16
The power of courts to make such a rule has been widely discussed by text writers, lecturers at seminars and members of various committees on federal procedure. The subject has not received consideration in numerous appellate opinions, perhaps for the reason stated by Professor Charles Allen Wright that, 'Though there is little occasion for the practice to be mirrored in reported cases, it apparently is used frequently and properly.'3 Similar rules have been promulgated and extensively used. See 29 F.R.D. 259, 285, 382 & 411; Mitchell v. Johnson, 5 Cir. 1960, 274 F.2d 394, 398, footnotes 11 & 14. In September of 1961, the Judicial Conference of the United States authorized its Committee on Pre-Trial Procedure to conduct a series of seminars for newly appointed district judges for the purpose of acquainting them with the problems arising in the operation of their courts. Seminars were held in several places throughout the country and the discussions at such seminars have been published. Such discussions reveal the wide-spread use and application of rules similar to the one under consideration. See 'Proceedings of the Seminars for Newly Appointed United States District Judges' (West 1961). In its report of 1955, the Committee of the Supreme Court on Federal Rules, in considering a possible amendment to Rule 16 with respect to the authority to promulgate and enforce such a rule, concluded as follows:
17
'The Committee is of the opinion that in many cases this practice is properly and wisely followed, but that this is a matter requiring decision according to the circumstances of each case. Since the power exists and is being exercised, the Committee has concluded that no amendment is required.' 3 Moore Fed. Practice (2d Ed.1958) P16.01(4)
18
The Secretary relies heavily on Miner v. Atlass, 363 U.S. 641, 80 S.Ct. 1300, 4 L.Ed.2d 1462, but we do not consider that case in point for the reason that the Supreme Court was there dealing with discovery procedure in Admiralty cases. A number of other cases are cited by the Secretary, but the leading ones deal with the disclosure of the names of witnesses by discovery. Professor Wright points out the distinction in the following language:
19
'It is generally held that a party is not entitled to find out, by discovery, which witnesses his opponent intends to call at the trial, although the court may require disclosure of this information at a pre-trial conference.' Federal Courts, Charles Allen Wright, (Hornbook Series 1963) p. 310.
20
There is a substantial difference in a rule requiring disclosure of the names and identity of witnesses during discovery and in one requiring such disclosure at pre-trial.
21
In Globe Cereal Mills v. Scrivener, 10 Cir. 1956, 240 F.2d 330, the court had under consideration the refusal of the trial court to permit a witness to testify because the name of the witness was not on the list of witnesses submitted by the parties without objection. The Court held:
22
'The matter was within the discretion of the trial court and the record discloses no abuse of that discretion or manifest injustice.'
23
This Circuit has tacitly approved a similar rule in Mitchell v. Johnson, supra, and the Second Circuit tacitly approved such a rule in Padovani v. Bruchhausen, 2 Cir., 293 F.2d 546 (1961).4 See also Hicks v. Bekins, 9th Cir. 1940, 115 F.2d 406; Dowling v. Isthmian SS Corp., 3rd Cir. 1950, 184 F.2d 758; MacNeil v. Hearst Corp., D.Del.1958, 160 F.Supp. 157; Guilford Nat'l Bank of Greensboro v. Southern Rlwy. Co., M.D.N.C.1960, 24 F.R.D. 493.
24
The Secretary further contends that in this particular case the court should not require him to comply with the rule, even if the rule is determined to be valid. It is undoubtedly true that the authority of the district court in any given case is limited by the Federal Rules of Civil Procedure and applicable statutes in the making of local rules. It is also true that a district court may abuse its authority and discretion in the application and enforcement of local rules, which are otherwise valid. Local rules for the conduct of trial courts are desirable and necessary, and such rules should not be ignored or declared invalid except for impelling reasons. In this case the Secretary has failed to show any abuse of discretion or that injustice will result from an enforcement of the rule. It is apparent that the trial court gave proper consideration to the several requests of the Secretary. The names of informers were not ordered to be disclosed, the specific provisions of the rule were relaxed, and the order required the furnishing of the list only 10 days before the date set for trial. The rule does not require a disclosure of the names of witnesses at discovery. From aught that appears in the record no problem exists in the Northern District of Georgia arising from undue pressure by employers in the circumstances here present; or that the trial court could not effectively deal with such a problem, if presented. We conclude that the local rule under consideration and the order of the District Court requiring the Secretary to comply with the rule come within the inherent power of a trial court to prescribe rules for the conduct of the court's business.
25
The judgment is affirmed.
26
CAMERON, Circuit Judge, dissents.
1
The following statement is attributed to Mr. Justice Brennan:
'* * * The public is fed up with systems under which neither side of lawsuit knows until the actual day of trial what the other side will spring in the way of witnesses or facts. The technique of playing the cards close to the vest and hoping by surprise or maneuver at the trial to carry the day, whether or not right and justice lies on the side of one's client, won't be tolerated. It was and is great sport, but hardly defensible as a system for determining causes according to truth and right. In pretrial procedure, made effective through a precedent broad discovery practice, lies the best answer yet devised for destroying surprise and maneuver as twin allies of the sporting theory of justice.' Package Mach. Co. v. Hayssen Mfg. Co., 164 F.Supp. 904, 910 (E.D.Wis.1958), aff'd, 266 F.2d 56 (7th Cir. 1959), quoting Mr. Justice Brennan's address to the American College of Trial Lawyers April, 1958.
2
The rule provides for reasonable notice to opposing counsel in circumstances in which there cannot be compliance with the rule due to the absence of witnesses or the discovery of witnesses not listed. In any event, the enforcement of the rule and relaxation of its specific requirements are matters to be decided within the discretion of the trial court
3
See Federal Practice & Procedure, Barron & Holtzoff (Wright rev. 1960) Vol. 1A, 472, p. 841
'It would seem that this power is one which can be helpful in particular cases where a party, by learning whether his opponent intends to call a particular witness, can determine whether to go to trouble and expense preparing to cross-examine that witness. Though there is little occasion for the practice to be mirrored in reported cases, it apparently is used frequently and properly.'
4
The Second Circuit there stated:
'* * * We are not disposed, however, to rule that a court in a pre-trial conference may not inquire of counsel as to his then plans as to the calling of witnesses, including the hiring of experts.'
|
Opinion issued December 11, 2008
In The
Court of Appeals
For The
First District of Texas
____________
NOS. 01-07-00892-CR
01-07-00893-CR
____________
QUINTIN WOODS, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 178th District Court
Harris County, Texas
Trial Court Cause Nos. 1004608 and 1095514
MEMORANDUM OPINION
Appellant, Quintin Woods,
pleaded guilty, in cause number 1004608, to the
offense of possession of a controlled substance with intent to deliver. The trial court
deferred a finding of guilt, placed appellant on community supervision for a period
of three years and assessed a fine of $100. Appellant was subsequently charged and
indicted for a new law violation, in cause number 1095514, for the felony offense of
possession of a controlled substance with intent to deliver cocaine, and filed a motion
to suppress. The State filed a motion to adjudicate, in cause number 1004608, that
was based in part on the subsequent law violation of possession of a controlled
substance with intent to deliver cocaine.
The trial court consolidated the hearings for the state’s motion to revoke
probation in cause number 1004608 and appellant’s motion to suppress evidence in
cause number 1095514.
After hearing evidence, the trial court denied appellant’s motion to suppress,
and the trial court granted the State’s motion to adjudicate guilt after finding that
appellant had violated community supervision by committing the law violations of
evading detention and possession of cocaine. The trial court found appellant guilty
of the offense of possession of a controlled substance with intent to deliver, in cause
number 1004608, and sentenced appellant to confinement for 10 years.
Following the hearing, appellant pleaded guilty to the reduced charge of
possession of a controlled substance, and the trial court sentenced appellant, in cause
number 1095514, to confinement for two years.
Appellant gave notice of appeal in each case. We affirm.
Appellant’s counsel on appeal has filed a brief stating that the records present
no reversible error, that the appeals are without merit and are frivolous, and that the
appeals must be dismissed or affirmed. See Anders v. California, 386 U.S. 738, 87
S.Ct. 1396, (1967). The brief meets the requirements of Anders by presenting a
professional evaluation of the record and detailing why there are no arguable grounds
for reversal. Id. at 744, 87 S.Ct. at 1400; see also High v. State, 573 S.W.2d 807, 810
(Tex. Crim. App. 1978).
Counsel represents that she has served a copy of the brief on appellant.
Counsel also advised appellant of his right to examine the appellate record and file
a pro se brief. See Stafford v. State, 813 S.W.2d 503, 510 (Tex. Crim. App. 1991).
More than 30 days have passed, and appellant has not filed a pro se brief. Having
reviewed the record and counsel’s brief, we agree that the appeals are frivolous and
without merit and that there is no reversible error. See Bledsoe v. State, 178 S.W.3d
824, 826-27 (Tex. Crim. App. 2005).
We affirm the judgments of the trial court and grant counsel’s motion to
withdraw.
PER CURIAM
Panel consists of Justices Jennings, Hanks, and Bland.
Do not publish. Tex. R. App. P. 47.2(b).
|
447 F.Supp.2d 1205 (2006)
Eunice CAMPBELL, Plaintiff,
v.
GAMBRO HEALTHCARE, INC., Defendant.
Civil Action No. 04-2416-CM.
United States District Court, D. Kansas.
January 18, 2006.
*1206 *1207 Alan V. Johnson, Sloan, Eisenbarth, Glassman, McEntire & Jarboe, L.L.C., Stephen D. Lanterman, Sloan, Listrom, Eisenbarth, Sloan & Glassman, LLC, Topeka, KS, for Plaintiff.
Bradley J. Miller, Brenton S. Bean, John C. Stivarius, Jr., Kimberly Noel Martin, Teresa Butler Stivarius, Epstein, Becker & Green, PC, Atlanta, GA, Katherine R. Sinatra, Jack D. Rowe, Lathrop & Gage, LC, Kansas City, MO, for Defendant.
MEMORANDUM AND ORDER
MURGUIA, District Judge.
This is an employment case arising under the Family and Medical Leave Act ("FMLA"), 29 U.S.C. § 2601, et seq., and 42 U.S.C. § 1981. Plaintiff Eunice Campbell asserts three theories of recovery against defendant Gambro Healthcare, Inc.: (1) interference with plaintiff's rights under the FMLA; (2) retaliation against plaintiff for exercising her FMLA rights, and (3) race discrimination in violation of § 1981. This matter comes before the court on defendant's Motion for Summary Judgment (Doc. 46). For the reasons set forth below, the court grants defendant's Motion in its entirety.
I. Facts[1]
A. Defendant's Structure
Defendant is headquartered in Denver, Colorado, and provides healthcare services in the area of end-stage renal dialysis and related services. Defendant is an employer subject to the requirements of the FMLA.
Defendant purchased RMI in 2001, including the Atchison clinic where plaintiff was employed. The Atchison clinic is open three days a week, for approximately ten to twelve hours per day, for dialysis patient treatment. The optimal patient census (the number of patients receiving treatment) at the Atchison clinic is approximately twenty-four to twenty-six. A patient census of twenty-four to twenty-six would require two patient care technicians to work approximately forty hours per *1208 week. In a dialysis clinic, the patient census is always in a state of flux. The regional director over the Atchison clinic during plaintiff's employment was Richard Pedrick. The center director for the Atchison clinic during plaintiff s employment was Ilene Dwyer. Pedrick testified that center directors generally had responsibility for employee back-up, as part of their general responsibility for staffing the clinic, including drawing upon defendant's employees from another clinic.
B. Plaintiff's Employment
Plaintiff, a black female, began her employment with defendant on April 1, 2001. Throughout her employment with defendant, plaintiff acknowledged she was an atwill employee. While employed by defendant, plaintiff worked exclusively at the Atchison clinic.
Defendant hired plaintiff as a patient care technician ("PCT"). A PCT performs assigned patient care responsibilities under the direct supervision of a registered nurse and in accordance with defendant's policies, procedures and guidelines, federal statutes such as OSHA, HCFA, AAMI, and federal, state and local regulations.
The duties of a PCT include setting up, operating, cleaning and disinfecting dialysis and related equipment in accordance with policies and procedures as well as monitoring equipment and patient status during dialysis treatments. A PCT also obtains vital signs and appropriate data, initiates treatment, prepares, administers and records medications, documents and communicates patient status to nurse, reports changes in patient condition, documents treatment information, maintains confidentiality, participates in emergency care, participates in the QA/CQI process, maintains cleanliness in the area, participates in team care, assists other staff in performance of their duties, and performs other positions as needed, including reuse technician, inventory technician and unit secretary.
Plaintiff was promoted to PCT II effective June 15, 2002. The duties of a PCT II are the same as a PCT I; the distinction reflects a raise in pay. It is uncontroverted that plaintiff was considered to be an exemplary PCT who demonstrated an excellent commitment to the organization, tackled assignments with creativity, had a value-added questioning nature, had a sense of urgency and was considered an expert at her level. In addition to her role as a PCT II, plaintiff also was responsible for the duties of inventory technician and unit secretary within the Atchison clinic. Plaintiff contends that Dwyer assisted plaintiff with the unit secretary duties.
An inventory technician is responsible for maintaining the clinic's inventory, inventory records, logs, files, manual purchase orders and ensuring appropriate levels of supplies, medications and equipment are available at all times using the automated physical inventory computer system ("PICS"). An inventory technician also is responsible for maintaining inventory on a first in/first out basis, ensuring that supplies do not expire before usage, and recording inventory receipts, issues and transfers on a timely basis. An inventory technician is to count the quantity of inventory on the shelf for each item and write that number on the count sheet, which is then entered into the PICS. Additionally, an inventory technician is responsible for printing and reviewing audit trail reports on a daily, weekly and monthly basis and communicating and reviewing the reports with the center director. Defendant sent plaintiff to its one-week inventory technician training course in Brentwood, Tennessee in November 2001. Plaintiff completed the PICS inventory training course on November 29, 2001.
*1209 The unit secretary performs a variety of clerical and administrative duties associated with facility operations. The unit secretary's responsibilities include assembling and preparing new patients' charts, keeping accurate patient records (including copying Medicaid and Medicare cards every month and verifying that the cards are up to date), filing patient data, purging and archiving patient information, calling clients who are late for appointments, and file and send out the mail. Defendant sent plaintiff to its one-week unit secretary training course in Florida.
Each year that plaintiff and Dwyer worked together, Dwyer had to fill out annual evaluations of plaintiff, which covered all of her duties as PCT, unit secretary, and inventory clerk. On each evaluation Dwyer rated plaintiff in all areas of the evaluation as either average or above average. In the annual evaluation for 2002, Dwyer rated plaintiff as having "outstanding competency" in the handling of inventory.
From February 2001 to January 2004, the Atchison clinic employed two PCTs: plaintiff and Pat Jackson, another black female. Both plaintiff and Jackson had been employed as PCTs (Jackson as a PCT I and plaintiff as a PCT II) at the Atchison clinic since August 31, 1999. The record reflects that, for benefits purposes, plaintiff and Jackson had the same seniority date with defendant because their hire dates were based on the date that defendant bought the Atchison clinicboth plaintiff and Jackson were working at the clinic when defendant bought it. However, Jackson had more experience in the PCT position than plaintiff. Both defendant and plaintiff recognize that Jackson was more experienced in her work as a PCT, even though Jackson and plaintiff had the same technical seniority dates with defendant. Prior to plaintiff taking FMLA leave, Jackson had taken FMLA leave with no adverse employment action as a result.
C. Defendant's Attendance/Absentee Policy
Defendant's attendance policy allows each clinic to establish its own local call-in practice and procedure, by which employees of a clinic are supposed to advise defendant when they are going to be absent. Defendant contends that the policy for calling in sick at the Atchison Clinic is to notify the center director directly at least one hour in advance of any unexpected absence so that alternate staffing arrangements could be made. Pedrick testified that he has no knowledge of any local policy for notification specifically used at the Atchison clinic. Plaintiff contends that the Atchison clinic had its own local call-in practice of having an employee call the other PCT and then the center director.
If the center director is absent or on vacation, and in the event that the center director is unavailable via cellular phone, a center director from a nearby clinic is assigned as the designated supervisor for calling about being absent. Defendant contends that the employees at the Atchison clinic all knew that Dwyer was available by cell phone when she was away from the clinic.
Under defendant's attendance policy, an unscheduled absence equals one occurrence point. Under defendant's progressive discipline policy, it typically takes three occurrence points to necessitate the issuance of a corrective action form, or there must be a failure to follow the local call-in practice. However, defendant's progressive discipline policy also provides that the failure of an employee to notify her manager of an absence within one hour of scheduled start time or per local call-in practice, even if the time off is covered with paid time for compensation *1210 purposes, may result in corrective action up to and including termination of employment, regardless of the number of occurrence points accumulated.
D. Cutbacks at the Atchison Clinic
Beginning in approximately May 2003, the patient census at the Atchison clinic began to significantly decline. By July 2003, the patient census at the Atchison clinic was only thirteen.[2] The available work hours for PCTs decline as patient census declines; thus, as a result of the decreased patient census in 2003, the hours for the PCTs at the Atchison clinic were reduced. Continuing to operate the Atchison clinic in July 2003 with the staffing in place greatly affected its profitability to the extent that closing the Atchison clinic altogether was discussed.
Defendant contends that the only business strategy under the circumstances to keep the Atchison clinic open was to reduce staffing. Defendant contends that, in July 2003, it determined that it might be necessary to lay off one of the PCTs, unless one of the PCTs would work part-time at another clinic. Pedrick testified that one of the options for handling the dwindling patient census at the Atchison clinic was to lay off one of the patient care technicians. The record is unclear whether Pedrick discussed the possibility of a lay off with either plaintiff or Jackson. Plaintiff contends that the only options discussed in fall 2003 were either to reduce the hours of the current staff or to have the current staff pick up hours at another clinic.
In early August 2003, Pedrick, Dwyer, Jackson and plaintiff met to discuss the dwindling patient census. During this meeting, Jackson and plaintiff were advised of the necessary reduction in available hours due to patient census and were offered the opportunity to supplement hours by working at defendant's St. Joseph or Platte Woods clinics. Neither Jackson nor plaintiff took advantage of the opportunity to supplement hours at other nearby clinics. Defendant contends that plaintiff remained silent regarding a reduced hour option or a transfer. Plaintiff contends that both she and Jackson elected to reduce their hours rather than pick up hours at another clinic.
E. Plaintiffs Back Injury and Subsequent FMLA Leave
Plaintiff has suffered from spinal spondylolisthesis, a degenerative back ailment, since at least April 2002. Plaintiff first sought treatment for this ailment from Dr. Robert M. Drisko, a doctor referred to her by Dwyer, on April 30, 2002. Between April 30, 2002 and October 15, 2003, plaintiff sought treatment from Dr. Drisko on eight occasionsApril 30, 2002, May 7, 2002, June 11, 2002, June 25, 2002, June 24, 2002, September 2, 2003, September 30, 2003 and October 15, 2003.
On or about October 9, 2003, Dwyer went on vacation. During Dwyer's absence, Ruby Thompson, the center director for defendant's St. Joseph clinic, acted as the center director in charge of the Atchison clinic.
On October 12, 2003 at approximately 11:00 p.m., plaintiff fell in her home, injuring her back. Plaintiff was walking down the stairs of her residence when she slipped on the last two stairs, fell forward, hit the doorway with her shoulder, then smashed her knee on the floor, before coming to rest lying on her side. Plaintiff claims that she called her co-worker, Jackson, at about 11:30 that night to advise Jackson that she was not going to be able *1211 to work on her next scheduled work shift, October 13, 2003. Plaintiff did not contact Dwyer on her cell phone to let Dwyer know that she was going to be absent. Plaintiff did not show up for work on October 13, 2003.
Defendant contends that plaintiff did not notify Dwyer or Thompson, the acting center director, at any time prior to her shift on October 13, 2003, that she would not be coming into work, which was a violation of defendant's attendance policy. During her deposition, plaintiff claimed that she left a message at the St. Joseph clinic to advise Thompson that plaintiff would be absent and unable to come to work on October 13, 2003. Plaintiff testified that she then had her daughter take her to the Atchison clinic so that plaintiff could send an e-mail to Thompson advising her that plaintiff would be absent and unable to come to work on October 13th. Plaintiff further claims that she "text messaged" Thompson on October 13th to let her know that she would not be at work. Plaintiff had never sent Thompson a text message before, and there is no record that Thompson ever received the message or that Thompson's phone could even accept text messages. The record reflects that Thompson did not receive a message or a phone call from plaintiff prior to the start of plaintiff's October 13, 2003 shift.[3] Defendant issued plaintiff a corrective action form on January 5, 2004, in part for plaintiff's failure to follow defendant's policy and notify a center director in advance of her October 13, 2003 absence.
Plaintiff visited Dr. Drisko on October 15, 2003, at which time Dr. Drisko advised plaintiff to have surgery on her back. Plaintiffs back surgery was scheduled for November 10, 2003. Plaintiff applied and was approved for FMLA leave dating from October 13, 2003 through January 5, 2004. During plaintiff's leave, defendant had Gaylene Caples, who worked at defendant's St. Joseph clinic, handle the inventory technician duties. Cindy Keling, who also worked at defendant's St. Joseph clinic, handled the unit secretary duties during plaintiff's absence.
Initially, Dwyer told Pedrick that she was angry that plaintiff took time off while she was away from the clinic on vacation. Dwyer was concerned that she could not depend on plaintiff while she was on vacation, and that plaintiff would take time off whenever she wanted, regardless of Dwyer's vacation plans. Dwyer felt that plaintiff's unplanned absence left the clinic in disarray because Dwyer was also away from the clinic. However, at the time that Dwyer initially became angry about the circumstances, Dwyer was unaware that plaintiff had injured her back and taken FMLA leave to have surgery. When Dwyer provided plaintiff's address to defendant's human resources department so that it could send plaintiff a "leave packet," Dwyer noted that she hoped plaintiff would not be gone until Dwyer could return from vacation, but that Dwyer should be used to this kind of activity. Dwyer was concerned that things would not run well in the unit if plaintiff was on FMLA leave at the same time Dwyer was on vacation. However, Dwyer testified that she did not feel that it was wrong for plaintiff to go ahead with her back surgery even though Dwyer was on vacation at the time.
*1212 F. Coverage of the Unit Secretary and Inventory Technician Duties During Plaintiff's Leave
Defendant contends that, during plaintiffs leave, it discovered that plaintiff failed significantly in both her unit secretary and inventory technician duties. First, defendant claims that, upon reviewing the Atchison clinic inventory, Caples discovered that plaintiff had failed to follow company policy for conducting inventory. Specifically, while performing the inventory technician tasks in October 2003, Caples discovered nearly $6,500 worth of inventory that was listed in the PICS system inventory but that had no corresponding product items on the shelves.
Defendant's policy mandates that an inventory be done each week and a physical inventory be conducted each month at every clinic. The inventory is to be conducted by the inventory technician. The inventory technician is to count the quantity of inventory on the shelf for each item and write that number on the count sheet. Next, the inventory technician enters the item number and quantity into the PICS system. Once the item type and quantity are entered, the PICS system automatically calculates the clinic's usage and supply expense. Inventory items that are transferred to another clinic or items that have been returned or have been rendered obsolete must be accounted for in the PICS system. Defendant's policy requires that inventory technicians process adjustments, returns to vendors or transfers in every case whenever supplies are removed from the clinic.
Plaintiff contends that she did not mishandle any inventory and that she followed the policies of the Atchison clinic. Plaintiff contends that when an item was no longer in use, plaintiff and Dwyer would see if another clinic could use it and would then transfer the item to the other clinic. Plaintiff contends that, once she returned from her FMLA leave, she was also able to explain where she thought the missing inventory items were.[4] However, as defendant points out, plaintiffs failure was in not accounting for the items in the PICS system. Defendant contends that plaintiffs own inventory lists showed numerous items that were not on the shelf at the Atchison clinic when Caples conducted inventory in October 2003, but which remained on the inventory list. It is undisputed that this could only be the result of plaintiffs failure to properly update the inventory at the time it was removed from the Atchison clinicwhether or not she could later account for the location of the inventory. Plaintiff did not provide any reason for her poor record keeping and why the items were left on the inventory after they were no longer at the Atchison clinic.
Defendant contends that plaintiff had numerous opportunities while performing periodic inventory counts over several months prior to her FMLA leave to make proper accounting entries to transfer, return or dispose of supplies that were obsolete. Instead, plaintiff continued to carry these items worth more than $6,500 as inventory assets when, in fact, they had been taken out of stock. As a result, the Atchison clinic had to enter a supply expense of $6,500 for October 2003, which increased the supply expense per treatment cost and significantly contributed to a total $9,455.68 loss for the Atchison clinic in October 2003. Defendant contends that this is a significant loss for a clinic the size of the Atchison clinic. Defendant considered the inventory errors a result of plaintiff's *1213 failure to properly perform her inventory technician duties and considered the failure in her duties a terminable offense. Based on plaintiff's performance failures with respect to her inventory technician duties, Pedrick determined that plaintiff was no longer qualified to handle these tasks, pending the results of an investigation into the matter and an explanation by plaintiff of where the unaccounted for inventory items were. It is undisputed that the inventory problems were due to poor recording keeping by plaintiff and not theft. Although defendant considered plaintiff's performance of the inventory duties a basis upon which it could have terminated her employment, a decision to terminate her employment was not made at that time.
Defendant's second discovery centered on plaintiff's unit secretary duties. Specifically, in October 2003, while handling the unit secretary duties during plaintiff's leave, Keling reported a concern to her center director, Thompson, that she had discovered several thousand sheets of old patient records that had been purged from active charts and allowed to pile up on shelves in plaintiff's back office. Defendant's policy requires a monthly purging of charts and prompt filing of purged records into inactive files stored in locked file cabinets or file boxes, sorted by patient and kept at the clinic or at an off-site storage area.
Keling was shocked at the sheer volume of the backlogged files created by plaintiff's failure over some period of time to purge these files and comply with defendant's policy regarding these records. Keling worked overtime to ensure that the Atchison clinic was within compliance with state and federal regulations. It took Keling nearly two months to properly prepare and archive the backlog of records.
Plaintiff acknowledges that there was some backlog in the files, but contends that the responsibility was also Dwyer's. Specifically, plaintiff admitted that she had been trying to get the patient charts updated, but that other tasks prevented her from making the updated filing of the patient charts a priority. Dwyer had offered her assistance to plaintiff in archiving old files in order to help get the files up to date.
Based upon plaintiff's performance failures with respect to her unit secretary duties, Pedrick determined at that time that plaintiff was no longer qualified to handle these tasks. Plaintiff denies that there were any performance failures and contends that she performed all aspects of her duties satisfactorily.
On December 26, 2003, when plaintiff was preparing to be released from FMLA leave, she sent an e-mail to Thompson and copied Pedrick, indicating her desire to try to supplement her hours at the St. Joseph clinic. Pedrick responded via e-mail by stating, "NOT a good option in my opinion."
G. Plaintiff's Return from FMLA Leave
Plaintiff timely returned from FMLA leave on January 5, 2004. Plaintiff's hourly compensation and benefits on January 5, 2004, were the same as when she took leave on October 13, 2003, although both her work hours and Jackson's work hours had been reduced to part-time status as a result of the low patient census.[5] Defendant contends that plaintiff's status as a PCT II, seniority and privileges of employment were also the same as when she took leave on October 13, 2003, and the same that she would have had if she had not *1214 taken leave. Further, despite the fact that neither she nor Jackson was working full-time hours at that point, defendant contends that plaintiff returned to working the same hours she would have been working even if she had not taken leave due to the low patient census.[6] However, plaintiff was relieved of her unit secretary and inventory technician duties based on the discoveries defendant made while plaintiff was on leave. Plaintiff still did some of the filing, but she no longer handled billing.[7]
Plaintiff contends that she was not brought back to an equivalent position after her FMLA leave because her job duties and status had changed. Specifically, plaintiff contends that when she returned from FMLA leave, she was still termed a PCT, but she did not actually perform any PCT duties. Instead, Dwyer assigned plaintiff whatever duties Dwyer felt were appropriate at the time. Defendant contends that plaintiffs PCT duties were the same as before her leave, but before resuming those duties she first was asked to address the inventory errors that had been discovered during her leave, specifically the location of the items that were still in the PICS system but not at the Atchison clinic, and to clear out backlogged files.
The day that plaintiff returned to work from FMLA leave, plaintiff went to the Atchison clinic, clocked in, and was immediately called into Dwyer's office and given a corrective action form. Pedrick, Dwyer and defendant's human resources department discussed the fact that plaintiff would be given a corrective action form for improper absence notification on October 13, 2003. However, Dwyer did not consult with anyone while drafting the corrective action form itself. The corrective action form, which was prepared by Dwyer and signed by Dwyer, states that the "nature of problem" is "incorrect procedure for calling in for STD."[8] The description section of the form states:
Staff member had been having back problems for several months and had been under doctor's care. She had been off for a few days at a time on other time periods. She had been questioned numerous times regarding the possibly [sic] that she was going to have surgery. Staff members [sic] response was always, no I can't afford to take that much time off. CD was going on vacation and West 4 Regional Meeting on October 10. I again questioned staff member on her back situation. "No problem" was the response. I left on vacation on the 9th of October. I have a cell phone that is always on for family or employee emergencies. When I checked my email prior to leaving my vacation spot and going to Galveston for the W4 meeting, I discovered several emails telling me that this staff member had called the other PCT at home and told her that she wouldn't be back to work due to pending back surgery. The other PCT covered. The RN covering me was very upset and called the CD covering my unit while I was gone. It was several days before this staff member notified that CD and that was to tell her that she needed *1215 paper work for STD. It caused a serious situation in the unit due to the other PCT not having any training with inventory and unit secretary duties. The inventory for the Atchison unit will now be covered by the Inventory Tech in the St. Joseph Unit # 0536. The billing will be covered by the US, also at the St. Joseph unit. This has caused serious difficulties in the Atchison unit for getting everything back up to date following the time span with no one taking care of the filing, etc.
The action plan section of the form states: "[s]taff member will no longer be doing the inventory or Billing duties in the unit. Staff member will be instructed as to what duties she will be allowed to do." Plaintiff refused to sign the corrective action form, because she claimed that she did call Thompson to inform her of her absence on October 13, 2003.
Prior to receiving the January 5, 2004 corrective action form, plaintiff had never been issued any kind of discipline or corrective action forms. The January 5, 2004 corrective action form does not state any problems with plaintiff's performance as the inventory technician or as the unit secretary. Dwyer testified that she filed the corrective action form to "save" plaintiffs job. In an e-mail to Pedrick on January 5, 2004, Dwyer advised Pedrick that she had issued a corrective action form and that she "hoped that by Friday this is all over and done with." Dwyer testified that she meant that she hoped a decision would be made by that Friday (January 9) whether plaintiff would accept a transfer, a severance package, or be terminated. Pedrick testified that it was not defendant's plan as of January 5, 2004, to terminate plaintiff's employment.
Plaintiff wrote Pedrick on January 8, 2004, stating that she felt she was being treated differently, that she had been demoted from a PCT II to a PCT I, and that she had her work hours reduced. Plaintiff requested a private meeting with Pedrick.
H. Elimination of Plaintiff's PCT Position at the Atchison Clinic
Because the patient census at the Atchison clinic had not improved since July 2003, Pedrick determined as of January 7, 2004, that, in order to mitigate any further loss at the clinic, one of the PCT positions would be eliminated.[9] Based on a totality of performance evaluation and seniority, Pedrick determined that Jackson would remain as the Atchison clinic's only PCT, despite the fact that plaintiff was a PCT II, while Jackson was a PCT I.
Defendant contends that it wanted to maintain plaintiff's employment as a PCT at a different clinic. On January 9, 2004, Pedrick and Dwyer met with plaintiff at the Atchison clinic to discuss the inventory issue and the elimination of plaintiff's position at the Atchison clinic. Pedrick gave plaintiff two options: (1) apply for transfer to a PCT position at another clinic, such as the St. Joseph or Platte Woods clinics, which Pedrick would facilitate if there was a suitable opening; or (2) voluntarily resign, sign a release stating that she would not take legal action against defendant, and receive six weeks of severance pay (covering forty hours per week) and benefits. Pedrick gave plaintiff until the end of January to decide which option to take. If she did not take either option, her employment would be terminated.
The same day, Pedrick sent plaintiff a written memorandum via e-mail outlining the two options and noting that, due to the *1216 inventory issues that were discovered during her FMLA leave, defendant's human resources had strongly advised that they terminate plaintiff's employment instead of offering the other alternatives.[10] In the memorandum, Pedrick reminded plaintiff that she had until the end of January to make her decision.
Plaintiff contends, however, that because she had been given a corrective action form on January 5, 2004, she thought that, under defendant's policy, she was prevented from transferring or relocating to another location for six months. Pedrick testified that, although defendant's policy prohibited an employee who had received a corrective action from transferring for six months from the date of the corrective action, defendant made an exception to the policy in plaintiff's case and offered her the option to transfer anyway. Pedrick testified that he was in favor of plaintiff transferring to another clinic at that time.
Plaintiff further contends that she thought, under defendant's policies, that severance pay was not allowed when an employee is terminated for cause, voluntarily resigns, or when defendant has offered a comparable job. While defendant agrees that its severance policy generally does not allow for severance pay in those situations, defendant contends that the policy also states that there may be other circumstances in which it will negotiate a separation agreement that includes a payment and a release of all claims against defendant, as it had proposed in plaintiff's case.
Plaintiff appears to have believed that she could not transfer because of her January 5, 2004 corrective action, and that any severance package was negated by defendant's severance policy, in light of the offer of a transfer. Essentially, plaintiff claims that defendant offered her options that she could not take. However, defendant has asserted that it made an exception to both the corrective action policy and the severance policy in plaintiff's case. Moreover, it does not appear that plaintiff ever asked whether the transfer option or severance package were really options in light of her understanding of the policies and did not attempt to pursue either option before her employment ended.
On January 14, 2004, Dwyer advised plaintiff that her work hours were being changed to 6:00 a.m. to 1:00 p.m., which defendant claims was due to the low patient census. Plaintiff had previously worked from 5:00 a.m. to 3:00 p.m. Plaintiff turned in her keys to Dwyer and asked that Dwyer write out the schedule that plaintiff was to work. Plaintiff contends that when she handed Dwyer her keys, Dwyer put them in a baggie on her desk and told plaintiff to finish the work day breaking down machines and setting them up. Dwyer testified that, when plaintiff handed in her keys, Dwyer asked plaintiff to reconsider the transfer offer, but that plaintiff went home instead. Dwyer also testified that plaintiff told her that she wanted the severance payment but was not going to sign any papers. Plaintiff testified that she did not believe, nor did she indicate, that she intended to resign when she handed Dwyer her keys on January 14, 2004. However, Pedrick and Dwyer both testified that they interpreted plaintiff handing in her keys as representing her desire to quit and saw no other reason for plaintiff to turn in her keys.[11] When plaintiff left on January 14, 2004, she was scheduled to return to work on January 16, 2004.
*1217 Pedrick testified that, because plaintiff had not accepted the severance package or transfer and had handed in her keys, defendant thought that plaintiffs intent to resign was clear. Thus, when plaintiff worked on January 16, 2004, defendant told plaintiff that it would be her last day. Plaintiff ended her employment without requesting a transfer to another clinic or accepting the severance package. Defendant considered plaintiff to have resigned her employment effective January 16, 2004. Plaintiff contends that her employment was terminated at the end of the day on January 16, 2004, which removed the option of a transfer or a severance package. Dwyer filled out a separation form for plaintiff, which states that plaintiff resigned.
I. Performance of Plaintiff's Duties After Her Employment Ended
Since plaintiffs employment ended, the Atchison clinic has been staffed by one registered nurse and one PCT, Jackson. The PCT position formerly held by plaintiff has never been filled, and defendant is not seeking to hire any additional PCTs. Plaintiffs former unit secretary duties are being handled by Sheila Harris, a unit secretary at another of defendant's clinics. Plaintiffs former inventory technician duties are being handled by Rhonda Everett, an inventory technician at another of defendant's clinics. There are no Atchison clinic unit secretary or inventory technician positions. As of May 2005, the patient census at the Atchison clinic was approximately thirteen.[12]
II. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).
III. Analysis
A. FMLA Claims
The FMLA provides in relevant part that "an eligible employee shall be entitled to a total of 12 work weeks of leave during any 12-month period for one or more of the following: . . . (D) Because of a serious health condition that makes the employee unable to perform the functions of the position of such employee." 29 U.S.C. § 2612(a)(1)(D). Section 2615(a) of the FMLA allows two avenues of recovery for an employer's interference with an employee's FMLA rights. First, "[i]t shall be unlawful for any employer to interfere with, restrain, or deny the exercise of or the attempt to exercise, any right provided under [the FMLA]." Id. § 2615(a)(1). Second, "[i]t shall be unlawful for any employer to discharge or in any other manner discriminate against any individual for opposing any practice made unlawful by [the FMLA]." Id. § 2615(a)(2). Upon return from FMLA leave, an employee is entitled to keep her previous employment position or be given an equivalent position with equivalent pay, benefits and other conditions of employment. Id. § 2614(a)(1). However, a restored employee is not entitled to "any right, benefit, or position of employment other than any right, benefit, or position to which the employee would have been entitled had the employee not taken the leave." Id. at 2614(a)(3); see *1218 also 29 C.F.R. § 825.216(a) ("An employee has no greater right to reinstatement or to other benefits and conditions of employment than if the employee had been continuously employed during the FMLA leave period."). "Taking FMLA leave does not insulate an employee from being fired for other reasons." Dry v. The Boeing Co., 92 Fed.Appx. 675, 677-78 (10th Cir.2004) (citing Gunnell v. Utah Valley State Coll., 152 F.3d 1253, 1262 (10th Cir. 1998)).
Plaintiff claims that defendant interfered with her exercise of her FMLA rights and retaliated against her for taking FMLA leave. The Tenth Circuit, in Smith v. Diffee Ford-Lincoln-Mercury, Inc., 298 F.3d 955, 960 (10th Cir.2002), identified § 2615(a)(1) as the "interference/entitlement theory" and § 2615(a)(2) as the "retaliation/discrimination theory." The Tenth circuit noted:
The interference or entitlement theory is derived from the FMLA's creation of substantive rights. If an employer interferes with the FMLA-created right to medical leave or to reinstatement following the leave, a deprivation of this right is a violation regardless of the employer's intent. In such a case, "the employee must demonstrate by a preponderance of the evidence only entitlement to the disputed leave. . . . [T]he intent of the employer is immaterial." However, we are also mindful that "[u]nder FMLA, an employee who requests leave or is on leave has no greater rights than an employee who remains at work."
Smith, 298 F.3d at 960-61 (internal citations omitted).
1, Interference
To establish a prima facie claim for FMLA interference, plaintiff must show: "(1) that [s]he was entitled to FMLA leave, (2) that some adverse action by the employer interfered with h[er] right to take FMLA leave, and (3) that the employer's action was related to the exercise or attempted exercise of h[er] FMLA rights." Jones v. Denver Pub. Schs., 427 F.3d 1315, 1319 (10th Cir.2005) (citing Bones v. Honeywell Ina. Inc., 366 F.3d 869, 877 (10th Cir.2004)). In support of her interference claim, plaintiff contends that defendant issued her discipline for taking leave, failed to reinstate her to the same or substantially similar position once her leave ended, and terminated her employmentwhich plaintiff claims was motivated in part by her notification that she was taking FMLA leave and in part because plaintiff's leave left the Atchison clinic "in disarray."
In this case, plaintiff applied for and was permitted to take FMLA leave from October 13, 2003, through January 4, 2004, exactly twelve weeks. Plaintiff successfully took the entirety of her FMLA leave and did not experience any adverse employment decision until after her leave ended. At the conclusion of her FMLA leave, plaintiff returned to her position as a PCT II with the same pay and benefits, but with reduced work hours because of the low patient census at the Atchison clinic. It is undisputed that both plaintiff and Jackson, the other PCT at the Atchison clinic, were working reduced hours in January 2004 because of the reduced patient census. Moreover, both plaintiff and Jackson had been working reduced hours prior to plaintiff's FMLA leave, since at least August 2003, due to the low patient census and because neither PCT took advantage of defendant's offer to supplement their hours by working at other clinics.
The only difference in plaintiffs job duties upon her return from FMLA leave was that defendant removed her unit secretary and inventory technician duties as a result of the problems that it had discovered with her performance of those duties while plaintiff was on FMLA leave. Thus, *1219 plaintiff was reinstated to her PCT II position, at the same rate of hourly pay, without having to perform the additional duties as unit secretary and inventory technician that she previously performed for the same amount of hourly pay before her leave. Plaintiff's hours would have remained reduced even if she had not gone on leave because of the low patient census. There is no evidence that defendant set about reducing PCT hours at the Atchison clinic in August 2003 in anticipation of plaintiffs FMLA leave later that year, or that defendant continued to cut PCT hours at the Atchison clinic because plaintiff took FMLA leave. Moreover, defendant would have removed plaintiffs unit secretary and inventory technician duties even if she had not gone on leave, once it discovered the problems with her performance of those duties.
It is undisputed that Dwyer issued plaintiff a corrective action form immediately upon plaintiffs return from leave, on which Dwyer recited several frustrations with plaintiff surrounding the circumstances of her absence on October 13, 2003, including plaintiffs failure to properly notify a center director of her intent to be absent beginning on October 13, 2003. The corrective action form also stated problems that plaintiff's unexpected leave created with coverage of the unit secretary and inventory technician duties, especially because Dwyer was out of the office. While Dwyer expressed frustration with the circumstances surrounding plaintiffs leave, Dwyer also testified that she did not think it was wrong for plaintiff to take FMLA leave to have back surgery even though Dwyer was away from the clinic at that time. The result of the corrective action was that plaintiff would no longer be handling inventory or billing dutieswhich apparently had been decided by Pedrick in light of the problems discovered while plaintiff was on leave. Plaintiff had no greater rights or entitlement to benefits because she took FMLA leave, and her employment could have been terminated for reasons not related to her FMLA leave. See 29 U.S.C. § 2614(a)(3); C.F.R. § 825.216(a); Dry, 92 Fed.Appx. at 677-78; Smith, 298 F.3d at 960, Gunnell, 152 F.3d at 1262. Plaintiff was bound to abide by defendant's policies for notifying a center director of her October 13, 2003 absenceeven if the absence was FMLA-protected. Bones, 366 F.3d at 878 (holding that plaintiffs request for FMLA leave did not shelter her from the obligation, which was the same as that of any other employee, to comply with defendant's employment policies, including defendant's absence policy).
In this case, plaintiff took an unencumbered twelve weeks of FMLA leave. Defendant took actions regarding plaintiffs employment, such as reducing her PCT hours due to patient census, which occurred well before plaintiff ever went on leave, and removing her inventory technician and unit secretary duties, that were unrelated to plaintiffs FMLA leave. Defendant also issued plaintiff the January 5, 2004 corrective action as a result of her failure to notify a center director of her October 13, 2003 absence in accordance with defendant's absence policy. However, defendant's January 5, 2004 corrective action form did not alter or reduce plaintiffs pay, benefits, or her duties as a PCT. Accordingly, even viewing the facts in a light most favorable to plaintiff, the only truly adverse action that plaintiff experienced upon her return from FMLA leave, that also creates the appearance of being casually related to plaintiffs FMLA leave, was the end of plaintiffs employment on January 16, 2004.
The essence of plaintiffs FMLA claims is that defendant terminated her employment within a few weeks following her return from leave, which plaintiff claims *1220 was motivated in part by her taking FMLA leave. In this circumstance, plaintiffs claims are more properly analyzed as a single retaliation claimnot as separate interference and retaliation claims. See Metzler v. Fed. Home Loan Bank of Topeka, 2004 WL 2413594, at *7 (D.Kan. Sept.21, 2004) (finding that where plaintiff claims the real reason for her termination is her exercise of her FMLA rights, it is a claim that defendant offered a pretextual reason for plaintiffs termination, which is a "classic retaliation claim"); Dressler v. Comm. Serv. Comms., Inc., 275 F.Supp.2d 17, 23-4 (D.Me.2003) (finding that plaintiffs claim of interference with a right to restoration was really a retaliation claim when defendant provided plaintiff with all the leave he had requested and plaintiff claimed that he was not restored to his position because he took FMLA leave); see also Alifano v. Merck & Co., 175 F.Supp.2d 792, 797 (E.D.Pa.2001) (finding that plaintiff could not prove she was discouraged from taking FMLA leave because it was undisputed that she took leave).
The crucial difference in the analysis of these two claims is that the intent of the employer is relevant in a retaliation context, whereas the employer's intent makes no difference if plaintiff has established a prima facie interference claim. See Smith, 298 F.3d at 960; King v. Preferred Technical Group, 166 F.3d 887, 891 (7th Cir.1999); see also Hodgens v. Gen. Dynamics Corp., 144 F.3d 151, 160(1st Cir.1998) ("[Plaintiff] claims that his termination violated the FMLA because it was prompted by the fact that he took sick leave to which he was entitled under the statute. In such a case, the employer's motive is relevant, and the issue is whether the employer took the adverse action because of a prohibited reason or for a legitimate nondiscriminatory reason."); Dressler, 275 F.Supp.2d at 24-5 (noting that the "firing-is-a-denial-of-restoration-argument is simply a clever way of trying to shortcut" plaintiffs burden of persuasion). Because the court finds defendant's motive in eliminating plaintiffs PCT position relevant to an analysis of plaintiff s claims, the court turns to plaintiffs retaliation claim.
2. Retaliation Claim
a. Prima Facie Case
Plaintiff must demonstrate that: "(1) [s]he availed h[er]self of a protected right under the FMLA, (2) an employment decision adversely affected h[er], and (3) a causal connection between the two actions exists" in order to establish a prima facie case for FMLA retaliation. Buettner v. N. Okla. County Mental Health Ctr., 2005 WL 3164698, at *4 (10th Cir. Nov.29, 2005) (citing Morgan v. Hilti, Inc., 108 F.3d 1319, 1325 (10th Cir.1997)). When evaluating a retaliation claim under the FMLA, the court must first determine whether the plaintiff has presented direct evidence of retaliatory intent. Morgan, 108 F.3d at 1323 n. 3. If no direct evidence of retaliatory intent is presented, this court must apply the burden shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Richmond v. ONEOK Inc., 120 F.3d 205, 208-9 (10th Cir.1997). Under the McDonnell Douglas framework, defendant has an opportunity to rebut a prima facie case of retaliation by offering legitimate, nonretaliatory reasons for the adverse action. Id. Once defendant proffers such reasons, plaintiff must present evidence that defendant's reasons are unworthy of belief, or are pretextual. Plaintiff has the ultimate burden of demonstrating that the challenged employment decision was the result of intentional retaliation. See Gunnell, 152 F.3d at 1263.
*1221 Plaintiff contends that there is direct evidence of retaliatory intent in this case. Plaintiff contends that defendant intended to terminate plaintiff's employment and that this was motivated at least in part by plaintiff taking FMLA leave which is demonstrated by: (1) e-mails between Pedrick and Dwyer that show that Dwyer was angry at plaintiff for taking FMLA leave while Dwyer was on vacation; (2) the January 5, 2004 corrective action form states that the only problem was plaintiff's taking leave[13]; and (3) Pedrick's January 9, 2004 memorandum to plaintiff, which stated that part of the reason defendant was taking the action was due to the manner in which she initiated her absence. The court finds that the purportedly direct evidence to which plaintiff points is better characterized as evidence that tends to show defendant's motives and is more appropriately addressed under the pretext prong of the McDonnell Douglas burdenshifting framework.
The parties agree that plaintiff meets the first element of her prima facie case. Defendant contends that, even if its actions toward plaintiff after her return from leave ended constituted an adverse employment action, plaintiff cannot establish a causal connection between her leave and the adverse action. The court disagrees, based on the proximity between plaintiff's return from FMLA leave on January 5, 2004, and the January 9, 2004 meeting between plaintiff, Dwyer and Pedrick, during which Pedrick told plaintiff that her position at the Atchison clinic was being eliminated and that she could either apply for a transfer or resign her employment; if she chose neither, her employment would be terminated by the end of January. The Tenth Circuit has determined that "[t]he burden of establishing a prima facie case is not onerous. It is because of this relatively lax burden that we allow temporal proximity between a protected activity and an adverse action to establish a prima facie case. . . ." Annett v. Univ. of Kan., 371 F.3d 1233, 1241 (10th Cir.2004) (internal citations omitted). Accordingly, the court finds that plaintiff has established her prima facie case for retaliation.
b. Legitimate, Nonretaliatory Reason
Defendant contends that it has set forth legitimate, nonretaliatory reasons for its actions toward plaintiff following her return from leave. Defendant contends that it eliminated plaintiff's position because of the low patient census at the Atchison clinic and that plaintiff was the proper choice for job elimination based on the recent discoveries about her performance of her unit secretary and inventory technician positions. In any case, defendant contends that it had grounds on which to terminate plaintiff because of her deficient performance of her inventory technician duties that was discovered during her leave. Instead of terminating plaintiff once she returned from leave, defendant gave plaintiff an opportunity to explain her performance deficiencies and offered her the opportunity to transfer to another clinic or resign her employment. The court finds that defendant has met its "exceedingly light burden" of offering a nonretaliatory reason for its actions. See Goodwin v. Gen. Motors Corp., 275 F.3d 1005, 1013 (10th Cir.2002).
c. Pretext
At this point, plaintiff may avoid summary judgment only by presenting evidence that defendant's reasons for its decision *1222 following her return from FMLA leave are pretextual (unworthy of belief) or by introducing evidence of a retaliatory motive. See Danville v. Reg'l Lab Corp., 292 F.3d 1246, 1250 (10th Cir.2002). Plaintiff may accomplish this by demonstrating "such weaknesses, implausibilities, inconsistencies, incoherencies, or contradictions in the employer's proffered legitimate reasons for its action that a reasonable fact finder could rationally find them unworthy of credence." Morgan, 108 F.3d at 1323 (quoting Olson v. Gen. Elec. Astrospace, 101 F.3d 947, 951-52 (3d Cir. 1996)). However, plaintiff's "mere conjecture that [his] employer's explanation is a pretext for intentional discrimination is an insufficient basis for denial of summary judgment." Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir.1988). "The relevant inquiry is not whether defendant's reasons for its . . . decisions were `wise, fair or correct,' but whether defendant . . . `honestly believed those reasons and acted in good faith upon those beliefs.'" Kaster v. Safeco Ins. Co. of Am., 212 F.Supp.2d 1264, 1274 (D.Kan.2002) (quoting Bullington v. United Air Lines, Inc., 186 F.3d 1301, 1318 (10th Cir.1999)); see also Exum v. United States Olympic Comm., 389 F.3d 1130, 1137-38 (10th Cir. 2004).
Defendant contends that plaintiff cannot establish pretext in this case. Defendant contends that Pedrick and defendant made a justified decision to relieve plaintiff of her unit secretary and inventory technician duties following the discoveries made while she was on leave. Pedrick also made the decision to eliminate the PCT position at the Atchison clinic, and that position has not been re-filled. Because of plaintiff's performance deficiencies that were discovered while she was on leave, even though those deficiencies were not related to plaintiff's performance of her PCT duties, defendant determined that it would be plaintiff's position that was eliminated. Defendant contends that, instead of terminating plaintiffs employment once she returned from leave, it gave her an opportunity to transfer or voluntarily resign her employment and that plaintiff failed to take advantage of these alternatives. Defendant contends that Pedrick was the actual decision-maker and that he honestly believed that plaintiffs performance was deficient and that the Atchison clinic had to eliminate a PCT position in order to remain open. Defendant urges the court to review the facts as they appeared to Pedrick, the decision-maker, and not to sit as a "super-personnel department" and second-guess defendant's business judgment in the actions it took toward plaintiff.
Plaintiff contends that she has established pretext through: (1) the fact that the alleged adverse actions against plaintiff began immediately following her return from FMLA leave on January 5, 2004 (issuance of the corrective action, alteration of plaintiffs job duties, responsibilities and hours of employment, the notice that plaintiffs position was being eliminated, and ultimately her termination eleven days later on January 16, 2004); (2) the alleged adverse actions themselves; (3) defendant's treatment of plaintiff prior to October 2003 compared to her treatment upon her return from FMLA leave; (4) defendant's alleged violation of its own attendance, corrective action, FMLA, severance, and transfer policies; and (5) the allegedly suspect explanations that defendant gave for the actions it took with regard to plaintiff after her FMLA leave (such as Dwyer being angry at plaintiff for taking FMLA leave while she was on vacation, but then stating that she issued plaintiff a corrective action form to help save plaintiffs job; defendant offering plaintiff the option to transfer or take a severance package when plaintiff believed she was prohibited from doing so by defendant's policies).
*1223 First, plaintiff's temporal proximity argument, while sufficient to establish her prima facie case, does not by itself establish pretext. As the Tenth Circuit has stated:
The burden of establishing a prima facie case is not onerous. It is because of this relatively lax burden that we allow temporal proximity between a protected activity and the adverse action to establish a prima facie case; for the same reason we have not imported this lessened standard to pretext analysis where the burden is more demanding and requires a plaintiff to assume "the normal burden of any plaintiff to prove his or her case at trial."
Annett, 371 F.3d at 1241 (internal citations omitted).
Second, the fact that defendant issued plaintiff a corrective action form upon her return from FMLA leave, reduced her hours, removed her unit secretary and inventory technician duties, and eliminated her position soon after her leave ended do little to support plaintiff's argument that her termination was based, in part, on her taking of FMLA leave. As the facts demonstrate, defendant issued plaintiff the January 5, 2004 corrective action for her failure to properly notify defendant of her intent to take leave under its policies. Even if plaintiff relied on defendant's local call-in policy for the Atchison clinic, she has admitted that she should have contacted the other PCT and notified the center director prior to her absence. It is undisputed that she did not contact Dwyer, who was on vacation. The record further reflects that, although plaintiff notified Thompson, the acting center director, of her absence at some point, there is no evidence that Thompson was notified of her absence prior to the start of plaintiff's shift on October 13, 2003, which violated defendant's policy. As the court has previously noted, plaintiff was bound to abide by defendant's policies for notifying a center director of her October 13, 2003 absenceeven if the absence was FMLA-protected. Bones, 366 F.3d at 878.
Moreover, even though the corrective action form that Dwyer drafted expresses Dwyer's frustration with plaintiff taking unexpected leave, it is uncontroverted that Pedrick was the one who decided to remove plaintiff's unit secretary and inventory technician duties as a result of the discoveries that were made about plaintiff's poor performance of those duties while she was on leave. Again, plaintiff was entitled to no greater protection from discipline or termination for non-FMLA-related reasons than if she had been working during the time she was on leave. See 29 U.S.C. § 2614(a)(3); 29 C.F.R. § 825.216(a); Dry, 92 Fed.Appx. at 677-78; Smith, 298 F.3d at 960; Gunnell, 152 F.3d at 1262.
The fact that defendant removed plaintiff's unit secretary and inventory technician duties upon her return from leave, in light of the fact that plaintiff remained a PCT II and was paid at the rate of PCT II, even though defendant did ask plaintiff to spend some time explaining the missing inventory items and catching up on some filing upon her return, do not amount to a failure to reinstate plaintiff to her position as a PCT II. Moreover, despite plaintiff's claim that defendant reduced her hours once she returned from leave, the record reflects that the reduction in hours at that point was minimal (from 23.17 hours the week before plaintiff went on leave to 21 hours per week upon plaintiff's return). Both plaintiff's and Jackson's hours were reduced well before plaintiff went on FMLA leave, and that reduction continued once plaintiff returned from FMLA leave because the patient census had not improved.
Pedrick has testified, and his January 9, 2004 memorandum to plaintiff stating her *1224 options for working with defendant make clear, that defendant's human resources department recommended that plaintiff's employment be terminated based solely on the discovery regarding her performance of her unit secretary and inventory technician duties. Instead, Pedrick chose to offer plaintiff an opportunity to apply for a transfer or to take a severance package. All of these decisions were set in the framework of the low patient census at the Atchison clinic, and the fact that PCT hours had been reduced since before plaintiff went on leave. Defendant's ultimate decision that only one PCT would remain at the Atchison clinic appears to have nothing to do with the fact that plaintiff took FMLA leave, but rather on defendant's business considerations of which plaintiff was aware prior to her FMLA leave, which was permissible. See Dry, 92 Fed.Appx. at 677-78; Smith, 298 F.3d at 960; Gunnell, 152 F.3d at 1262. Further, the fact that defendant/Pedrick chose to eliminate plaintiffs position instead of Jackson's was based on plaintiff's deficiencies in the performance of her unit secretary and inventory technician duties and the undisputed fact that Jackson was a more experienced PCT than plaintiff. Notably, plaintiff did nothing to explore the possibility of a transfer and declined the severance package without asking any questions about whether those were real options for her based on her understanding of defendant's corrective action, transfer and severance policies. Thus, even viewing each of plaintiff's claimed adverse actions individually and in the aggregate, they are simply insufficient to establish pretext under these facts.
Third, the court finds little support for plaintiffs allegation that defendant's treatment of plaintiff prior to October 2003 compared to her treatment upon her return from FMLA leave supports her pretext argument. As the court has thoroughly discussed above, defendant made discoveries during plaintiffs FMLA leave regarding deficiencies in her performance that led to a change in her duties following her FMLA leave. Plaintiff s deficiencies, in defendant's view, violated defendant's policies. Prior to plaintiff being on leave and other defendant employees handling her unit secretary and inventory technician duties, defendant was unaware of the extent of the problems with plaintiff s performance in those areas. "Pretext is not established by virtue of the fact that an employee has received some favorable comments in some categories or has, in the past, received some good evaluations." Metzler, 2004 WL 2413594, at *11 (quoting Ezold v. Wolf, Block, Schorr & Solis-Cohen, 983 F.2d 509, 528 (3d Cir.1992)). Moreover, defendant never questioned plaintiff's skill or work in her PCT duties. However, when presented with the need to eliminate a PCT position, Pedrick chose plaintiff based on the problems with her performance in her other duties and the fact that Jackson had more seniority as a PCT. Plaintiffs argument on this issue fails to establish pretext for retaliation.
Fourth, plaintiff's argument that defendant violated its own attendance, corrective action, FMLA, severance, and transfer policies fails to establish pretext for retaliation. The record does not establish that defendant violated its attendance, corrective action or FMLA policies. The court does not find it necessary to repeat its discussion of defendant's application of these policies to plaintiff. Further, with regard to plaintiff's contention that defendant violated its severance and transfer policies, defendant has acknowledged that it made an exception to those policies for plaintiffs benefit so that she could apply for a transfer or receive severance. Defendant told plaintiff in the January 9, 2004 meeting and in the January 9, 2004 memorandum that she could apply for a transfer or receive severance if she signed *1225 a waiver of her rights. Plaintiff never asked whether she would be permitted to exercise either option in light of defendant's policies. Defendant's willingness to make an exception to its policies for plaintiffs benefit does not amount to pretext for retaliation. Rather, it appears that defendant, through Pedrick's advocacy, was trying to provide plaintiff with alternatives in light of the pending elimination of her position.
Finally, the allegedly suspect explanations that defendant gave for the actions it took with regard to plaintiff after her FMLA leave (such as Dwyer being angry at plaintiff for taking FMLA leave while she was on vacation, but then stating that she issued plaintiff a corrective action form to help save plaintiffs job, and defendant offering plaintiff the option to transfer or take a severance package when plaintiff believed she was prohibited from doing so by defendant's policies) do nothing to further plaintiffs pretext claim.
While the record is clear that Dwyer was frustrated with plaintiff for taking leave while Dwyer was on vacation, Dwyer testified that she did not think it was wrong for plaintiff to take FMLA leave in October 2003 to have her back surgery. Moreover, while the court is unclear how Dwyer issuing the corrective action form would have saved plaintiffs job, which ultimately it did not, it is irrelevant in light of the entire rest of the record. Dwyer, Pedrick and human resources discussed the need for the corrective action form before Dwyer issued it, as a result of plaintiffs failure to properly notify a center director of her absence on October 13, 2003. Although neither Pedrick nor a human resources representative reviewed the form that Dwyer prepared before she gave it to plaintiff, the only result of the corrective action form was that some of plaintiff s duties were removed, but it did not affect her PCT position or her rate of pay. Moreover, Dwyer was not the ultimate decision-maker with regard to the removal of plaintiffs unit secretary and inventory technician duties or the elimination of plaintiffs position. Further, as the court fully discussed above, the fact that defendant offered plaintiff the option to transfer or take a severance package, which was an exception to defendant's policies on those issues, does not create an inference of pretext for retaliation.
In sum, the record before the court fails to establish that defendant's reasons for its actions toward plaintiff following her return from FMLA leave are unworthy of belief, and plaintiff has failed to provide evidence of a retaliatory motive by defendant/Pedrick, who was the decision-maker on all of the allegedly adverse decisions made about plaintiffs employment. Accordingly, the court finds that defendant is entitled to summary judgment on plaintiffs FMLA claims.
B. § 1981 Claim
The court points out that § 1981 was enacted to prevent discrimination against an individual on the basis of his or her race or ethnic background. Saint Francis Coll. v. Al-Khazraji, 481 U.S. 604, 613, 107 S.Ct. 2022, 95 L.Ed.2d 582 (1987). Accordingly, a plaintiff claiming discrimination under § 1981 must make a showing of racial animus. Patrick v. Miller, 953 F.2d 1240, 1250 (10th Cir.1992). In this case, there is simply no evidence in the record before the court that defendant acted with racial animus toward plaintiff. In fact, the only remaining PCT at the Atchison clinic, who was also employed during plaintiffs employment, is another black female who plaintiff concedes was more experienced in the PCT position. Because of the utter lack of evidence supporting plaintiffs race discrimination claim, defendant *1226 is entitled to summary judgment on this claim.
IT IS THEREFORE ORDERED that defendant's Motion for Summary Judgment (Doc. 46) is granted.
NOTES
[1] The court construes the facts in the light most favorable to plaintiff as the nonmoving party pursuant to Fed.R.Civ.P. 56.
[2] During her deposition, Dwyer estimated the patient census in late summer or early fall 2003 to be between ten and fifteen, but could not recall the exact number.
[3] Plaintiff's deposition testimony surrounding the date of her back injury in October 2003 and the steps she took to notify a center director of her subsequent absence, compared to the record of her days worked and the actual notice that Thompson received, is somewhat contradictory and confusing. Accordingly, the court, having compared plaintiff's testimony and the rest of the record, has sorted out the facts as clearly as possible for the purposes of this Order.
[4] Defendant contends that plaintiff accounted for about only half of the missing inventory items.
[5] During her deposition, Dwyer estimated that the patient census in January 2004 was between ten and fifteen but could not recall the exact number.
[6] The record reflects that the week immediately prior to taking her FMLA leave, plaintiff worked 23.17 hours. When plaintiff returned from FMLA leave, she was working approximately 21 hours per week.
[7] Pedrick testified, however, that with some retraining and different supervision, plaintiff could have been an acceptable unit secretary.
[8] The term "STD" is not defined on the form; however, based on the context in which it was written, the court believes STD means short term disability.
[9] Prior to this time, the Atchison clinic had never laid off any employee or terminated an employee due to patient census.
[10] The memorandum did not reference any issues regarding plaintiff's alleged deficiencies in her unit secretary duties.
[11] There is no indication in the record that anyone at defendant requested that plaintiff turn in her keys on this day.
[12] Again, Dwyer testified that the patient census at the time of plaintiff's leave was between ten and fifteen patients but could not recall the exact number.
[13] While the court, based on the record before it, disagrees with plaintiff's characterization of this piece of evidence, the court will address plaintiff's arguments in the pretext section of this analysis.
|
732 A.2d 713 (1999)
Ann Marie TERRY
v.
CENTRAL AUTO RADIATORS, INC.
No. 98-108-Appeal.
Supreme Court of Rhode Island.
July 1, 1999.
*714 Present WEISBERGER, C.J., and LEDERBERG, BOURCIER, FLANDERS, and GOLDBERG, JJ.
Paul S. Cantor, Providence, for Plaintiff.
Mark C. Hadden, James R. Baum, Providence, for Defendant.
OPINION
PER CURIAM.
This case came before the Court for oral argument on May 19, 1999, pursuant to an order directing the parties to appear and show cause why the issues raised in the plaintiff's appeal should not be summarily decided. After hearing the arguments of counsel and examining the memoranda filed by the parties, we conclude that cause has not been shown and we proceed to decide the plaintiff's appeal at this time.
In this negligence case, the plaintiff, Ann Marie Terry (plaintiff), seeks review of the trial court's entry of judgment as a matter of law in favor of the defendant Central Auto Radiators, Inc. (defendant).
I
Case Travel Facts
On January 9, 1991, at approximately 10 a.m., the plaintiff brought her automobile to the defendant's place of business for repair. She parked it at the front of the shop leading to the repair bays and was told that she could return for it later in the day. At that time, and throughout the whole day into the evening, the weather consisted of a mixture of snow and freezing rain. When the plaintiff returned at *715 approximately 4:00 p.m. to pay for the repairs and to retrieve her automobile, it was nowhere to be seen. She was informed that the car had been repaired and had been placed behind the defendant's business premises some one hundred feet distant.
After paying for the repair charges, she was handed the keys to her automobile and told to go and get the vehicle. At the same time, Michael Wirkerman, one of the defendant's employees, told her to be careful in walking to the rear of the building because of the icy conditions. The plaintiff safely managed the long walk along the side of the defendant's building, but upon reaching the rear area, she slipped and fell on rutted ice and was injured. She later filed this civil action for damages in the Superior Court.
The plaintiff's case was reached for trial before a jury. Following the presentation of her case in chief, the defendant moved for judgment as a matter of law. The trial justice, relying upon our holding in Fuller v. The Housing Authority of Providence, 108 R.I. 770, 279 A.2d 438 (1971), concluded that the defendant business invitor owed no duty to the plaintiff business invitee to remove snow, or ice or to sand or salt any icy areas on its premises during the ongoing storm, but could wait a reasonable time after the storm had ceased before having any duty to do so. The plaintiff's appeal followed.
In this appeal, the plaintiff contends that the defendant, by requiring her to walk some one hundred feet over unfamiliar icy terrain to retrieve her automobile, served to exacerbate the normal risk that she reasonably expected to encounter had her automobile been placed in a convenient and accessible place. She asserts that the defendant, by forcing her to walk that extended distance under dangerous icy conditions, created an "unusual circumstance." That unusual circumstance, she claims, served to revive the defendant's hitherto postponed duty under Fuller and required the defendant to take some affirmative action to alleviate the increased risk that it had created in addition to and apart from the ongoing storm.
II
Analysis
"When reviewing the decision of a trial justice on a motion for judgment as a matter of law, this Court, like the trial justice, views the evidence in the light most favorable to the nonmoving party and gives to that party the benefit of all reasonable and legitimate inferences that may properly be drawn from the evidence, without weighing the evidence or assessing the credibility of the trial witnesses." Morrocco v. Piccardi 713 A.2d 250, 252-53 (R.I.1998). "If there is evidence supporting the nonmoving party's position or evidence upon which reasonable minds could differ, the jury is entitled to decide the facts, and the motion for judgment as a matter of law should be denied." Id. at 253.
As a preliminary matter, we must first determine whether any legally cognizable duty existed on the part of the defendant to the plaintiff See Kenney Manufacturing Co. v. Starkweather & Shepley, Inc., 643 A.2d 203, 206 (R.I.1994). "[N]o clear-cut formula for creation of a duty exists that can be mechanically applied to each and every negligence case." Id. We noted in Ferreira v. Strack 636 A.2d 682 (R.I.1994) that:
"In the past this court has recognized the difficulty of crafting a workable test to determine whether a duty exists in a particular case. * * * (`[T]he problem of duty is as broad as the whole law of negligence, and * * * no universal test for it ever has been formulated') * * *. This court has avoided `definitively commit[ting] itself to [a specific] * * * analytical approach' and has instead adopted an ad hoc approach of considering all relevant factors. * * * ([T]he test to determine duty `remains nebulous'). We recognize that the factors *716 utilized in a particular case should reflect considerations of public policy, as well as notions of fairness." Id. at 685.
Consequently, on the particular circumstances of this case, the first issue we address is whether the defendant owed the plaintiff any duty to maintain in a reasonably safe condition that portion of its premises over which it directed the plaintiff to walk. In addressing that issue, we premise our considerations upon the defendant's actions in placing the plaintiff's vehicle where it had, because we believe that such action determines the scope of any duty owed to the plaintiff. See Haynesworth v. D.H. Stevens Co., 645 A.2d 1095, 1098 (D.C.App.1994).
In this case, we pick up from where we left off in Fuller. In Fuller we abandoned our earlier holding in Pomfret v. Fletcher, 99 R.I. 452, 208 A.2d 743 (1965),[1] wherein we had adopted the snow and ice facet of landlord and tenant law as espoused in the so-called no duty/no-liability Massachusetts Rule, and instead, opted for the so-called Connecticut Rule, conceived in Reardon v. Shimelman, 102 Conn. 383, 128 A. 705 (1925). Fuller, 108 R.I. at 774, 279 A.2d at 441.
In adopting the Connecticut Rule, with specific reference to a landlord-tenant situation, we acknowledged that while a landlord "is not a guarantor for the safety of his [or her] tenants," the landlord does have a duty to reasonably maintain those portions of the premises "reserved for the common use of his [or her] tenants" and can be held "liable for injuries sustained by his [or her] tenant which are due to * * * an accumulation" of snow and ice. Fuller 108 R.I. at 774, 279 A.2d at 441. However, we added that the landlord's duty during an ongoing storm was suspended and the landlord "must be given a reasonable time after the storm has ceased to remove the accumulation of snow or ice found on the common ways or to take such measures as will make the common areas reasonably safe * * *." Id. In short, we simply provided that during a snow storm, a landlord has no immediate duty to shovel snow, or remove or salt and sand ice, because such duty is postponed for at least a reasonable period after the storm has abated. Id.
In this case, we do not have before us a landlord-tenant situation; rather, we have that of a business invitor and its business invitee involved in a situation in which the invitee fell and was injured on the business premises during an ongoing snow and freezing sleet storm. We believe in such a case, the business invitor, like the landlord, is not a guarantor for the safety of those persons who might be expected to come upon its property. However, as we know, the business invitor does have a duty to maintain the business premises in a reasonably safe condition for the purpose of the invitations that are made to the prospective business invitees. See O'Brien v. State, 555 A.2d 334, 338 (R.I.1989); Shea v. First National Stores, Inc., 63 R.I. 85, 7 A.2d 196 (1939).
The question that then presents itself to us in this case is two-fold. First, does the Connecticut Rule apply to a business invitor/business invitee situation? Second, is the business invitor's duty to maintain in a reasonably safe condition those portions of the business premises that are expected to be used by its business invitees postponed during a snow or ice storm? We believe that both questions should be answered in the affirmative, tempered however, with the caveat expressed in Fuller that the business invitor is given a reasonable time after the storm has ceased to remove the accumulation of any snow or ice or to take some such measures as will make the owner's premises "safe from the hazards arising from such a condition." Fuller 108 R.I. at 774, *717 279 A.2d at 441. Accordingly, we continue to follow the Connecticut Rule as intended by Fuller.[2]
However, the Connecticut Rule, as it has been both recognized and explained in its place of origin, is somewhat more expansive than as initially referenced by this Court in Fuller. The actual and complete Connecticut Rule permits a landlord, or in this case the business invitor, to "await a reasonable time after the end of a storm to clear snow and ice `only in the absence of unusual circumstances.'" Cooks v. O'Brien Properties, Inc., 48 Conn. App. 339, 710 A.2d 788, 792 (1998) (quoting Kraus v. Newton 211 Conn. 191, 558 A.2d 240, 243 (1989)). (Emphasis added.) In Cooks the defendant there had requested a jury instruction as follows:
"If you find that the plaintiff fell during an ongoing storm of freezing rain, sleet and/or snow, and that the ice or snow caused the fall, then you must find for the defendants." Cooks, 710 A.2d at 792.
That requested instruction mirrors the defendant's argument in this case and is precisely the reason given by the trial justice in granting the defendant's motion for judgment as a matter of law. However, as Justice DuPont, writing for the Connecticut Appellate Court noted, the "requested charge does not state correctly the [Connecticut Rule]" because it fails to add that the landlord's duty to await a reasonable time after the storm to clear snow and ice is postponed "only in the absence of unusual circumstances." Id. at 792. (Emphasis added.)
The obvious and crucial question that then arises in this appeal is whether, on the facts of this particular case, did any unusual circumstance exist during the storm in question that served to remove the defendant's cloak of exemption from its duty to make that particular portion of its business premises, over which it directed the plaintiff to traverse, reasonably safe for the plaintiff's use. Whether any particular duty did emerge from the relevant trial evidence in this case was in the first instance a question of law to be decided by the trial justice. See Kenney Manufacturing Co., 643 A.2d at 207. The trial justice in this case did not, however, consider whether any unusual circumstance existed, but simply applied a storm-in-progress/no-duty/end-of-consideration approach. We believe that an unusual circumstance in this case did arise and that the trial justice, pursuant to his obligation to view all of the evidence in a light most favorable to the plaintiff, erred in failing to recognize the existence of that unusual circumstance.
That unusual circumstance was that when the plaintiff, who in early winter dusk and during an ongoing storm, had returned to pick up her automobile at a place where she had originally left it with the defendant, she found that it was no longer there. Instead, it had been removed by one of the defendant's employees to a rear lot some one hundred feet distant. After paying for the repair, the plaintiff was handed the keys to her automobile and told to go and get her vehicle. She also was told to be careful of the accumulating snow and ice on the very portion of property that she was directed to use in walking the extended distance to her vehicle.
There is no question but that the plaintiff, by returning to the defendant's place of business during the continuance of the storm, subjected herself to the risk of falling on the snow and ice. However, that anticipated risk was reasonably expected to be more limited than actually encountered when she returned to the premises. The defendant, by having removed the vehicle *718 to the rear of its business premises and by having directed the plaintiff to retrieve it from there, had exacerbated and increased the risk of the plaintiff's falling when it required her to walk some one hundred additional feet over snow and ice that had been accumulating on unknown and difficult terrain. She was left with no choice but to do as directed if she wished to retrieve her vehicle. The very fact that the defendant's employee had informed the plaintiff that conditions were dangerous is clear evidence that the defendant was aware of the serious risk that existed. Consequently, it should have refrained from actively increasing that risk by placing her vehicle so far distant and then directing her to make the longer walk over the treacherous icy terrain. [3]See, e.g., Restatement (Second) Torts § 343A cmt. f, illus. 5 and cmt. g, illus. 8 (1965).[4] "The linchpin in determining the existence of any duty owed to [a plaintiff is] the foreseeability of the risk of injury to [him or her] by [the defendant's] actions." Splendorio v. Bilray Demolition Co., 682 A.2d 461, 466 (R.I. 1996).
The defendant business invitor, as we perceive from the facts in this case, chose to impose upon its business invitee a virtual Hobson's Choice.[5] She had to choose between either making the long walk over slippery terrain in order to get to her vehicle, or to return home without it during the ongoing storm as best she could. We believe that choice which was fostered upon her, triggered in the defendant at least the minimal duty of taking some action to make safe that portion of the walkway leading to the parked vehicle. The defendant, however, did absolutely nothing. Whether that inaction amounted to a breach of the duty owed to its business invitee was a question of fact which should have been put to the trial jury.
In view of our comparative negligence rule and statute in this state, whether, under the circumstances in this case, the plaintiff should have refused to walk the extended distance to her vehicle, constituted a material factual question for the trial jury to determine. That jury might very well have concluded that both the plaintiff and the defendant had each failed to act as the reasonable prudent person would have acted under the existing circumstances. Such a finding would not, however, have precluded the plaintiff from recovering for the portion of any negligence attributable to the defendant. [6]
In determining the existence of a duty on the part of the defendant, we have considered the relevant factors such as the relationship of the parties; the scope and burden of the obligations imposed upon the defendant business invitor; public policy considerations; and notions of fairness. See Kenney Manufacturing Co. 643 A.2d at 206. In light of those considerations and in view of the unique facts present in this case,[7] we weigh the nature of the *719 defendant's particular duty as well as the plaintiff's reasonable expectations of safety as a business invitee and conclude that the plaintiff's equities weigh more heavily in her favor.
For the reasons herein above set out, the plaintiff's appeal is sustained. The judgment of the Superior Court is vacated. The papers in this case are returned to the Superior Court for a new trial.
NOTES
[1] Both Fuller v. The Housing Authority of Providence, 108 R.I. 770, 279 A.2d 438 (1971) and Pomfret v. Fletcher, 99 R.I. 452, 208 A.2d 743 (1965) were decided by divided (3-2) Court majority opinions.
[2] In doing so, we are not unmindful that the vast majority of jurisdictions that have considered ice and snow slip and fall cases are not aligned to either rule and utilize an ad hoc approach in each case in light of those considerations set out in Restatement (Second) Torts § 343A (1965); Gregory G. Sarno, Annotation, Liability for Injuries in Connection with Ice or Snow on Nonresidential Premises, 95 A.L.R.3d 15 (1979).
[3] In carrying on any activity, a property owner must use reasonable care for the safety of invitees and refrain from activities that increase the danger to invitees. See J.D. Lee & Barry A. Lindahl, 3 Modern Tort Law § 39.10 (rev. ed. and Cum.Supp.1998).
[4] Ward v. K Mart Corp., 136 Ill.2d 132, 143 Ill.Dec. 288, 554 N.E.2d 223, 228-32 (1990), offers a concise scholarly review of Restatement (Second) Torts § 343A.
[5] A "Hobson's choice," which entails the absence of a real alternative, is named after Thomas Hobson (1544-1631) of Cambridge, England "who rented horses and gave his customer only one choice, that of the horse nearest the stable door." Random House Unabridged Dictionary 909 (2d ed.1993).
[6] As regards the trial justice's passing reference to the plaintiff's possible assumption of the risk in coming to pick up her automobile during the storm, that was an issue for the trial jury to resolve. Hennessey v. Pyne 694 A.2d 691, 699-701 (R.I.1997).
[7] Nothing in this opinion is intended to suggest that a business invitor is required to retrieve and/or return an article or vehicle left with that business invitor, or with his or her employees, to the exact point or location where the article or vehicle was originally left by the customer. All we hold is that under the Connecticut Rule and the reasonable prudent person standard, any duty owed by a business invitor to an invitee is to be evaluated in light of any unusual circumstances that have been created by the business invitor and left to exist at the particular time and place and which results in injury to the business invitee.
|
6 Utah 2d 198 (1957)
310 P.2d 388
STATE OF UTAH, PLAINTIFF AND RESPONDENT,
v.
FREDERICK RAY SIBERT, DEFENDANT AND APPELLANT.
No. 8564.
Supreme Court of Utah.
April 25, 1957.
Gordon I. Hyde, Salt Lake City, for appellant.
E.R. Callister, Jr., Atty. Gen., Gary L. Theurer, Asst. Atty. Gen., for respondent.
CROCKETT, Justice.
Frederick Ray Sibert appeals from conviction of robbery. The principal errors assigned relate to the admission of the testimony and penciled notes of the investigating officer.
The robbery was committed upon Lyle Thomas Butters at his service station in Salt Lake City on the evening of January 21, 1956. At the trial Butters related the details of the robbery and identified the defendant whom he had previously picked out in a "line-up" at the police station. Upon cross-examination he was confronted with a claimed inconsistency in his testimony that at the preliminary hearing he had said the robber's car was a green Pontiac of the early 1940 models, whereas his instant testimony was that it was a cream colored Pontiac, 1947 model. To bolster the testimony of Butters the State called as a witness Police Officer John J. Ferrin, who, over counsel's objection, was allowed to testify that Butters had told him immediately after the robbery that it was a cream colored Pontiac of the early 1940 models. However, Officer Ferrin was permitted to go further and detail the story of the robbery as he had received it from Butters, including the description of the robber, the license number of the car and the conversation between the robber and Butters. He was then handed a set of penciled notes which he identified as his own, made during his interview with Butters immediately after the crime, which notes were also admitted in evidence over objection.
In making their respective arguments as to the admissibility of this evidence, the parties are at odds as to whether it is hearsay: The defendant contending that it is; the State that it is not.
The term hearsay is applied to testimony offered to prove facts of which the witness has no personal knowledge, but which have been told to him by others.[1] He is thus not testifying from his own knowledge or observation, but is acting as a conduit to relay that of others. The general rule, to which there are admittedly many exceptions, is that such testimony is not admissible on the ground that it lacks trustworthiness for two basic reasons: (1) The person who purports to know the facts is not stating them under oath; (2) he is not present for cross-examination.[2] Other reasons assigned for its unreliability are the danger of inaccuracy in the witness relaying what he has been told, and the fact that the jury does not have the opportunity to see the person whose declarations are offered as evidence.[3] However, it is not every instance in which a witness relates what he heard someone else say that he is purporting to represent that the statement he heard is true. The purpose of his testimony may be simply to prove that someone else made a statement without regard to whether it be true or false. Testimony of this nature does not violate the hearsay rule since the witness is asserting under oath a fact he personally knows, that is, that the statement was made,[4] and he is subject to cross-examination concerning such fact.
It is the position of the State that the rehabilitating aspects of Officer Ferrin's testimony are of the type of testimony just mentioned. It is obvious that the purpose of his testimony concerning Butters' statement as to the color and model of the car was not given to prove the color or model of the car. Those facts were not in issue; it was not important what the color or model of the car the robber used was. Ferrin's statement that he heard Butters say on the prior occasion that the car was a cream colored Pontiac of the early 1940 models was given only to prove that he had in fact heard him make such a statement. This would serve only to demonstrate to the jury that Butters had on the earlier occasion made a statement consistent with his present testimony. If viewed strictly in that light, it would seem that the testimony would not be regarded as hearsay in the usual sense of that term.
On the other hand, it is argued, not without support in reason, that the testimony of Ferrin as to Butters' statements concerning the color and model of the car might be regarded by the jury as substantive proof of such matters, and if so regarded by them, Ferrin would in fact be acting as a conduit for Butters' knowledge and observations concerning those facts. Ergo, looked upon in that light, the testimony would properly be regarded as hearsay. As we view it, this divergence between the parties as to the exact nature of this testimony is not necessary to a decision of the real issue. The matter of critical moment is whether the evidence was competent and admissible.
There is some conflict in the decisions in the various states as to the admissibility of such statements. Those courts rejecting such evidence state as a basis for doing so that:
"* * * once the impeaching damage is done, it cannot be undone, irrespective of the volume and weight of the rehabilitating evidence, because the fact remains that the witness was inconsistent as to one matter and the inference remains that, once inconsistent, the witness may be inconsistent with respect to any or all matters encompassed by his testimony. To save trial time and to reduce possibilities of confusing juries, prior out-of-court statements consistent with oral testimony are held inadmissible."[5]
The foregoing consideration does not appeal to us as controlling. We think the better view is that where there has been an attempt to impeach or discredit a witness, prior statements consistent with his present testimony may be offered to offset the impeachment.[6] Such procedure has previously been approved by this court. In State v. Mares, the doctor who performed the autopsy on the deceased had made a statement allegedly inconsistent with his statements at the trial concerning his theory of the direction a bullet entered the deceased's skull. To rehabilitate his testimony portions of the original autopsy report were allowed to be read in court, correctly limited to that part of the report which supported the questioned testimony.[7] We believe the admission of this testimony was based on sound principles. The function of evidence is to assist the jury in arriving at the truth, and if it has any logical tendency to destroy or support the veracity of the witness, it is relevant to be considered as bearing upon his credibility.[8] When evidence of inconsistent statements has been introduced, or insinuations made by cross-examination that such inconsistent statements were uttered, it comports with reason and experience to admit prior consistent statements to rebut any inference that the witness was telling a recently fabricated story[9] or was relating tailor-made evidence given him by someone else, such as the police who might be overzealous in trying to obtain a conviction.
Insofar as Officer Ferrin's testimony actually supported the parts of Butters' testimony upon which impeachment was attempted, that is, as to the color and model of the robber's car, his evidence was properly admitted as rehabilitating testimony.[10] In the instant case, however, the officer was permitted to go beyond the character of evidence just discussed and to give the other details of Butters' story of the crime. In doing so, Ferrin was in fact serving as a conduit to relay Butters' knowledge to the jury. Thus, such testimony was hearsay in the true sense of that term, and therefore was improperly admitted.
Closely related to the conclusion just stated is the problem arising from the admission of Officer Ferrin's notes. These notes were not used for the purpose of refreshing the officer's recollection; nor do the notes, as they were used by the witness, come within the contention of the State that, "* * * by verifying and adopting the record of past recollection the witness makes it useable testimonially,[11] * * *." These notes were handed to the officer for identification after he had testified concerning his investigation and his conversation with Butters. Therefore, the only purpose they could serve was to corroborate his testimony. It is well settled that when a witness can and does testify to the facts without resort to his memorandum, it cannot be used to bolster his testimony.[12] The admission of the notes was also error.
The State maintains that even if the court committed error in receiving the officer's evidence, the defendant's guilt was so plainly manifest that to receive it did not result in prejudice in the cause. With deference to our statute which does not allow us to presume prejudice from mere error,[13] we do not believe that it can fairly be stated with assurance that the errors were harmless. In attempting to prove the guilt of the accused beyond a reasonable doubt, it must be assumed that all of the State's evidence was presented for that purpose. The jury may well have regarded the officer's evidence as more persuasive than that of Mr. Butters. From the record it appears that he was more confident and self-assured, and was able to be more definite as to the detail of the crime than the complaining witness himself. It is a delicate task for a reviewing court to attempt to appraise what weight particular evidence may have had with the jury. It would be going a long way indeed for us to entirely discount the possibility that it had some effect upon their deliberations. It is the exclusive prerogative of the jury to judge the weight of the evidence and the facts to be found therefrom. It is of grave importance, particularly in criminal trials, that such prerogative be left to them and that the proceedings be conducted in such manner as to assure every safeguard to the rights of defendants. We conclude that the admission of this evidence is not the type of error which could properly be regarded as a mere irregularity or of such inconsequential nature that it could not have been prejudicial.
A further matter of which the defendant complains is that the trial judge refused to grant him probation solely on the ground that he would not admit his guilt of the crime. In view of the necessity for reversal of the conviction and remand for a new trial, the question might seem to be moot. However, it is our responsibility to pass on matters which may be pertinent in the event of a retrial,[14] and we make these observations apropos this question.
Probation is not a matter of right, and this is so no matter how unsullied a reputation one convicted of crime may be able to demonstrate to the trial judge. The granting or withholding of probation involves considering intangibles of character, personality and attitude, of which the cold record gives little inkling. These matters, which are to be considered in connection with the prior record of the accused, are of such nature that the problem of probation must of necessity rest within the discretion of the judge who hears the case. This is not to say that if it were clearly shown that the trial judge would have granted probation except for some wholly irrelevant, improper or inconsequential consideration, such refusal might be so capricious and arbitrary as to warrant the conclusion that he did not in fact exercise his discretion and justify a review of his action. Suffice it to say that such does not appear to be the fact here.
It is true that in discussing the request for probation the trial judge pointed out to the defendant the obstacle presented by the fact that, "* * * you deny your guilt in this matter, and, of course, we do not put defendants on probation as a rule, where they do that, because there is no reformation to be made. They are not guilty in their own minds, so there is nothing that the probation department can do for them." It is contended that the effect of such reasoning is to force the defendant to either testify against himself, or have probation denied, which would violate the constitutional protections against self-incrimination.[15] He has no refuge in such provisions after he has been convicted of the crime in question. However, it is realized that if this were the sole reason for the denial of probation, under some circumsances a grave injustice may be wrought upon an accused who might otherwise be of exemplary character, and it is not inconceivable, may have been wrongly convicted. But a fuller examination of the colloquy between the court and the defendant as shown by the record leaves room for the conclusion that this was not the sole reason, but was only one of the reasons for denying probation. The judge also stated: "* * * your record is not favorable and your attitude is not favorable to probation and for that reason you are committed forthwith."
A new trial is ordered.
McDONOUGH, C.J., and WADE and HENRIOD, JJ., concur.
WORTHEN, Justice (concurring and dissenting).
I concur with the result reached by the majority opinion and agree that the case must be reversed. I am of the opinion, however, that it was error for the trial court to admit any testimony of Officer John J. Ferrin intended to rehabilitate the testimony of Butters. I entertain the view that it violates the hearsay evidence rule and does not fall within any recognized exceptions, nor do I wish to be understood as subscribing to the statement that the testimony of Officer Ferrin was admissible for any purpose. I believe the witness should be limited to explaining that he was mistaken at the time he testified at the preliminary hearing, and that he had further considered and reflected on the matter and had concluded that he was in error when he testified at the hearing. If the jury or the trier of the facts are persuaded by his integrity and straightforwardness, he will probably be able to show to the satisfaction of the court and jury that the facts were as testified to by him on the stand in the instant hearing.
Of course, the testimony of Officer Ferrin leaves the waters as muddy as they were before he entered. The opinion of the court observes:
"* * * Upon cross-examination he was confronted with a claimed inconsistency in his testimony that at the preliminary hearing he had said the robber's car was a green Pontiac of the early 1940 models, whereas his instant testimony was that it was a cream colored Pontiac, 1947 model. To bolster the testimony of Butters the State called as a witness Police Officer John J. Ferrin, who, over counsel's objection, was allowed to testify that Butters had told him immediately after the robbery that it was a cream colored Pontiac of the early 1940 models."
It is a blind spot freak that justifies the admission of such hearsay evidence on the ground that Officer Ferrin was testifying to a fact the fact that Butters told Officer Ferrin something. The prosecutor is not interested in any statement made by Butters except the statement by Ferrin which will rehabilitate Butters.
To open the door and to permit A, B, C and X, Y, Z to tell what Butters told them would unfairly extend the trial and would compel the party against whom the evidence was offered to lose one of his best weapons a weak, discredited witness a witness discredited by himself.
I can see some better reason for permitting C to bolster the testimony of B by attacking the testimony given against B by Witness A.
But to just let the uncontrolled witnesses with no basis for cross-examination run wild usually leads, as here, to further confusion and next the prosecuting attorney will want to prove that Officer Ferrin didn't describe the car as a cream colored 1940 model and so on ad infinitum.
NOTES
[1] Coureas v. Allstate Ins. Co., 198 Va. 77, 92 S.E.2d 378, 383; Cross v. Commonwealth, 195 Va. 62, 77 S.E.2d 447, 453.
[2] 5 Wigmore on Evidence (1940) Sec. 1362.
[3] McCormick, Evidence § 224 (1954).
[4] 6 Wigmore on Evidence (1940) Sec. 1770. See also Hawkins v. Perry, Utah, 253 P.2d 372.
[5] State v. Murley, Wash., 212 P.2d 801, 803. See also 4 Wigmore on Evidence (1940) Sec. 1126.
[6] State v. Mares, 113 Utah 225, 192 P.2d 861; see also State v. Fouts, 1950, 169 Kan. 686, 221 P.2d 841; Peterson v. Richards, 73 Utah 59, 272 P. 229; State v. Seyboldt, 65 Utah 204, 236 P. 225.
[7] Boykin v. United States, 5 Cir., 11 F.2d 484; Tyrrel v. State, 177 Ind. 14, 97 N.E. 14; Hicks v. State, 165 Ind. 440, 75 N.E. 641.
[8] 4 Wigmore on Evidence (1940) Sec. 1126. See also 140 A.L.R. 21 (1942).
[9] See State v. Moon, 20 Idaho 202, 117 P. 757.
[10] This type of rehabilitating evidence is also permitted by the proposed Utah Rules of Evidence, Rule 20. See also proposed Rule 63(1) (c). We are not unaware that this court in two instances has denied the admission of rehabilitating statements, but in both cases the statements were made by a party to a civil action and excluded as being self-serving. Ewing v. Keith, 16 Utah 312, 52 P. 4; Silva v. Packard, 10 Utah 78, 37 P. 86. See also Peterson v. Richards, 73 Utah 59, 272 P. 229, 236.
[11] 3 Wigmore on Evidence (1940) Sec. 754, p. 97.
[12] People v. Allen, 37 Cal. App. 180, 174 P. 374.
[13] Sec. 77-42-1, U.C.A. 1953.
[14] State v. Hutchinson, 4 Utah 2d 404, 295 P.2d 345, 347. Cf. Rule 76(a), U.R.C.P.
[15] United States Constitution, Amend. V; Utah Constitution, Art. I, Sec. 12.
|
T.C. Memo. 2014-5
UNITED STATES TAX COURT
GATEWAY HOTEL PARTNERS, LLC, GATEWAY INTEREST
ACQUISITION CORP., TAX MATTERS PARTNER, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 19182-07. Filed January 9, 2014.
Dustin M. Covello, Herbert Odell, and Philip Karter, for participants.
Dana E. Hundrieser and Lawrence C. Letkewicz, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
GOEKE, Judge: The issues in this case arise out of the financing and
redevelopment of the former Statler and Lennox Hotels, two historic properties in
downtown St. Louis, Missouri. Respondent issued a notice of final partnership
administrative adjustment (FPAA) for 2002 and 2003 (years at issue) under
-2-
[*2] section 6223(a)1 to Gateway Hotel Partners L.L.C.’s (GHP) former tax
matters partner. In the FPAA, respondent made certain adjustments to the income,
expense, and deduction items GHP reported on Forms 1065, U.S. Return of
Partnership Income, and imposed accuracy-related penalties under section 6662.
GHP’s former tax matters partner filed on GHP’s behalf a petition for
redetermination of partnership items.
The parties have settled several issues; however, there remain three issues
for decision. The principal issue is whether GHP must recognize $18,455,0002 of
income from three transfers it made of certain Missouri Historic Preservation Tax
Credits (MHTCs) in 2002. The answer turns on whether the transfers represented
partnership distributions or taxable sales. We hold that two of the transfers were
properly characterized as partnership distributions. However, a portion of the
third transfer produced a taxable sale, and we sustain respondent’s determination
with respect to that portion. The second issue is whether GHP must include in
income the return of $3,088,000 that it had previously contributed to a fund
established in connection with the hotel project. We hold the return is not
1
Unless otherwise indicated, all section references are to the Internal
Revenue Code in effect for the years at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
2
All amounts are rounded to the nearest dollar.
-3-
[*3] includible in income. The final issue is whether GHP is liable for the
accuracy-related penalty for 2002 on the portion of any underpayment resulting
from GHP’s purported sale of the MHTCs. We sustain the accuracy-related
penalty resulting from the underpayment attributable to the nondistribution portion
of the third transfer.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The stipulation of
facts, the supplemental stipulation of facts, and the attached exhibits are
incorporated by this reference.
I. Hotel Project Background
In the late 1990s the City of St. Louis sought to spur the private
development of a 1,000 room hotel project near its downtown convention center.
A major aspect of the City’s plan was to encourage the rehabilitation of the
historic Statler and Lennox Hotels and the construction of complimentary facilities
adjacent to the convention center (collectively, hotel project). Financing for the
hotel project was expected to come from public sources, including tax increment
financing, revenue bonds, HUD grants, Federal and State tax-credit equity, and
private funding.
-4-
[*4] II. Hotel Project Participants
A. Owner
GHP was organized to own, develop, construct, and operate the
rehabilitation portion of the hotel project.3 GHP elected partnership treatment for
Federal tax purposes, and its principal place of business was in Missouri when the
petition was filed. At all relevant times, Washington Avenue Historic Developer
(WAHD), a Missouri limited liability company, and Housing Horizons, LLC
(HH), a Texas limited liability company, were GHP’s members. At all relevant
times, GHP’s profits and losses were allocated 1% to WAHD and 99% to HH
under GHP’s amended and restated operating agreement (GHP amended operating
agreement).
B. Developer
WAHD was engaged by GHP to perform on its behalf development services
in connection with the hotel project. It was responsible for all the day-to-day
operations of GHP, including procuring hotel project financing and managing the
various aspects of the development and construction of the hotel project. WAHD
3
A related entity, Gateway Tower Partners, L.L.C., was organized to
construct and own a new hotel tower intended to accompany the historic
rehabilitation. The aspects of the hotel project that concern this entity are not
germane to this case.
-5-
[*5] was GHP’s managing member and tax matters partner and held a 30%
membership interest in GHP. WAHD elected partnership treatment for Federal tax
purposes.
WAHD was majority owned and controlled by Historic Restoration, Inc.
(HRI). HRI was WAHD’s managing member. HRI was a real estate developer,
engaged in adaptive reuse of historic structures, among other real estate activities,
and was based in New Orleans, Louisiana. HRI elected S corporation treatment
for Federal tax purposes.
C. Investor
HH was a passive investor in the hotel project and held a 70% membership
interest in GHP. HH was majority owned and controlled by Kimberly-Clark Corp.
(KC), a Delaware corporation. HH and KC (collectively, participating partners)
elected to participate in these proceedings pursuant to section 6226(c)(2) and Rule
245(b).
III. MHTCs as a Source of Financing
One of the sources of financing HRI planned to use to finance the hotel
project was MHTCs it expected to receive from the completion of the hotel
project. The MHTC program started in 1998. The MHTC program’s purpose is to
aid in the redevelopment of historic structures in the State of Missouri. Under the
-6-
[*6] program, any person, firm, partnership, trust, estate, or corporation incurring
qualifying costs and expenses for the rehabilitation of eligible property is entitled
to MHTCs. The amount of MHTCs available is 25% of the total costs and
expenses of the rehabilitation. MHTCs were not earned or issued until the
completion of the relevant rehabilitation project. Taxpayers having earned
MHTCs could transfer, sell, or assign them.
A taxpayer desiring to receive MHTCs must apply to the Missouri
Department of Economic Development (MDED) for such credits through a
multistep application procedure. In connection with the hotel project, GHP
applied for entrance into the MHTC program. In December 1999 the MDED
granted preliminary approval of GHP’s application. In December 2002 it granted
final approval.
IV. The Bridge Loan Financing
The MHTCs HRI expected to use as a source of financing were not
available until completion of the hotel project. To include the MHTCs as a source
of funds at the beginning of the hotel project, bridge financing was required. The
Missouri Development Finance Board (MDFB) was approached about making a
$18,455,000 bridge loan to HRI in connection with the hotel project. The MDFB
is an agency created by statute as a body corporate and politic. Its mission is to
-7-
[*7] assist infrastructure and economic development projects in Missouri by
providing financial support for otherwise unfeasible projects that private lenders
are unwilling to finance. The MDFB is self-funded, and the funds that it lends for
development projects typically come from the issuance of revenue bonds.
A. Due Diligence
The MDFB undertook due diligence to determine HRI’s creditworthiness.
In particular, it sent several representatives to HRI’s New Orleans, Louisiana,
headquarters to review its financial records. Ultimately, the MDFB satisfied itself
that HRI had sufficient potential assets in the event of a default on the bridge loan.
The MDFB viewed HRI as a more reliable borrower than GHP because GHP was
a single-project company whose assets were limited to the hotel project, whereas
HRI was not.
B. Authority to Enter into the Bridge Loan Agreement
The MDFB passed a board resolution authorizing its participation in the
hotel project and authorizing it to make the bridge loan to HRI. HRI, WAHD, and
GHP all executed closing certificates for the hotel project financing containing
certain resolutions to enter into the bridge loan agreement. The HRI closing
certificate contains a resolution under which HRI resolves to “enter into” the
bridge loan agreement on “its own behalf”, “on behalf of” WAHD, and “on behalf
-8-
[*8] of” GHP. The WAHD closing certificate contains a resolution under which
WAHD resolves to “enter into” the bridge loan agreement “on behalf of” GHP.
Finally, the GHP closing certificate contains a resolution under which GHP
resolves to “enter into” the bridge loan agreement.
C. The Bridge Loan Agreement
In December 2000 HRI entered into the bridge loan agreement with the
MDFB. The bridge loan agreement designated HRI as the “borrower” of the
bridge loan. The bridge loan agreement recitals reflect that HRI applied for the
bridge loan for the purpose of providing funds to WAHD to make a capital
contribution to GHP. The bridge loan agreement reflects that the bridge loan
matured in December 2005 or upon the final payment for the purchase of MHTCs
under a certain tax credit purchase agreement (discussed infra). It also reflects that
the principal amount of the bridge loan bore interest at an annual rate of 9.5%. It
further reflects that HRI was required to deposit with the MDFB $3,285,000 to
prepay two years of interest on the bridge loan.
To induce the MDFB to make the bridge loan, HRI made various
nonmonetary representations, covenants, and warranties on behalf of GHP and
WAHD. For example, HRI represented and warranted on GHP’s and WAHD’s
behalf that: (1) their assets and interests in the hotel project were free and clear of
-9-
[*9] all liens and encumbrances; (2) they did not have knowledge of pending
litigation against them; (3) they would use the bridge loan proceeds only as
specified in the bridge loan agreement; (4) they were not in default; (5) they had
not incurred any “material” liabilities and had not entered into any “material”
transactions; and (6) they did not have knowledge of certain environmental issues
concerning the hotel project properties.
HRI executed the bridge loan agreement as the “borrower”. On a signature
page for acknowledging and approving the form of the bridge loan agreement, a
representative of HRI signed the bridge loan agreement on behalf of WAHD and
GHP. The MDFB intended HRI to be the sole borrower and be solely liable for
repayment of the bridge loan in the event of default.
V. Contributions of the Bridge Loan Proceeds
Under the first amendment to WAHD’s operating agreement (WAHD
amended operating agreement), HRI agreed to make a capital contribution of the
bridge loan proceeds to WAHD (HRI contribution) concurrently with the funding
of the bridge loan, and WAHD was in turn required to contribute those proceeds to
GHP. HRI was entitled to a 9.5% preferred return on the HRI contribution from
the date of the contribution until an extraordinary event distribution, i.e., a
distribution received by WAHD from GHP because of an extraordinary event as
- 10 -
[*10] defined in the GHP amended operating agreement. Upon an extraordinary
event, HRI was entitled to a preferred return of capital with a distribution of net
cashflow or, alternatively, a distribution of property having an agreed fair market
value equal to HRI’s contribution plus any accrued but unpaid preferred return
thereon through the date of such return of capital.
Similarly, under the GHP amended and restated operating agreement (GHP
amended operating agreement), WAHD was to immediately use the bridge loan
proceeds contributed by HRI to make an $18,455,000 capital contribution to GHP
(WAHD contribution). Under section 4.3 of the GHP amended operating
agreement, WAHD was entitled to an annual preferred return of 9.5% on the
WAHD contribution, payable out of operating profits to the extent of available
cashflow from the date of contribution until the occurrence of an “extraordinary
event”.
The GHP amended operating agreement defines an “extraordinary event” as
the creation of new property by GHP, other than the completion of the project or
any portion thereof, the creation of which is subject to the entrepreneurial risks of
development, construction, and completion, any distribution with respect to which
occurs more than 24 months after the date the WAHD contribution is made. The
definition of “extraordinary event” includes the issuance of MHTCs.
- 11 -
[*11] Upon the occurrence of an “extraordinary event,” WAHD was entitled to a
preferred return of capital from GHP under section 4.3 of the GHP amended
operating agreement which provides in pertinent part:
Upon the occurrence of an Extraordinary Event, WAHD shall be
entitled to a preferential return of capital (WAHD’s preferred return
of capital right) in the form of a distribution of available Cash Flow
(subject to the provisions of the Master indenture), or, alternatively,
in the sole discretion of * * * [HH], a distribution of property having
an agreed fair market value equal to * * * [the WAHD contribution],
plus any accrued but unpaid Preferred Return thereon through the
date of such return of capital.
VI. Securing Repayment of the Bridge Loan
The MDFB required HRI to provide certain security for the bridge loan. In
this connection, the MDFB and HRI executed a collateral assignment agreement
(HRI collateral assignment agreement I) under which HRI collaterally assigned to
the MDFB and granted it a security interest in all beneficial rights HRI had with
respect to its membership interest in WAHD. HRI also executed a collateral
assignment agreement under which HRI assigned and granted the MDFB a
security interest in all rights HRI might have from the sale of the MHTCs it
expected to receive as a preferred return of capital (discussed infra).
Similarly, HRI required WAHD to provide it with certain security for the
HRI contribution. To this end, HRI and WAHD executed a collateral assignment
- 12 -
[*12] agreement (WAHD collateral assignment) and recorded a financing
statement with the State of Missouri. Through the WAHD collateral assignment
and the corresponding financing statement, WAHD assigned to HRI and granted
HRI a security interest in all its benefits, payments, and other rights under the
GHP amended operating agreement and under the master credit and disbursement
indenture (master indenture), including rights to insurance proceeds relating to the
issuance or nonissuance of MHTCs expected to be generated by the completion of
the hotel project.
The WAHD collateral assignment contained an “intervention” section with
certain terms and provisions to which HH agreed. In paragraph “F” of the
“intervention” HH agreed to waive certain rights relating to the WAHD
contribution as follows:
Notwithstanding any other provisions of the * * * [GHP amended
operating agreement] to the contrary, only Assignor [WAHD] shall be
entitled to the rights provided for in Section 4.3 thereof, and Housing
Horizons [HH] hereby waives any interest it may have in such rights
and covenants and agrees that if and when such rights become due
and owing, such amounts due shall be distributable to and be the sole
property of Assignor [WAHD] or its pledgees, free and clear of any
encumbrances of the * * * [GHP amended operating agreement], and
Housing Horizons [HH] waives any right or claims it may have with
respect to such amounts due, including any rights created by
operation of law or by the * * * [GHP amended operating agreement].
- 13 -
[*13] The MDFB also recorded with the State of Missouri a financing statement
(GHP financing statement) listing GHP as the “debtor” and the MDFB as the
“secured party”. The financing statement reflects that it covers the following types
of property: all benefits, payments, and other rights GHP might have under any
and all insurance policies relating to the issuance or nonissuance of MHTCs as a
result of damage to or destruction of the hotel project. The record does not reflect
that GHP executed a collateral assignment agreement or security agreement
corresponding to the GHP financing statement.
VII. Plan and Agreement To Sell Expected MHTCs
HRI anticipated that GHP would earn a certain amount of MHTCs from the
hotel project and distribute those MHTCs as a preferred return of capital to
WAHD, who HRI expected would make a further distribution of MHTCs to it as a
preferred return of capital. In anticipation of receiving the credits, HRI entered
into a tax credit purchase agreement with Firstar Community Development Corp.
(Firstar CDC).4 Under the terms of the tax credit purchase agreement, Firstar CDC
4
In October 2000 this entity became a subsidiary of U.S. Bancorp and
changed its name to U.S. Bancorp Community Development Corp. However, the
distinction between these entities in their pre- and post-acquisition forms is
irrelevant for purposes of this case. Therefore, for convenience, the designation
“Firstar CDC” will be used to refer to this entity both before and after it was
acquired by U.S. Bancorp.
- 14 -
[*14] agreed to purchase up to a certain amount of MHTCs expected to be
generated by the hotel project for 82 cents per $1 of credit. When the tax credit
purchase agreement was executed, HRI assigned its right to the payment of the
purchase price for the MHTCs to the MDFB.
VIII. Relevant Aspects of the Hotel Project Development and Construction
A. Development Agreement
WAHD agreed to provide development services for the hotel project under a
development agreement that it entered into with GHP. The development services
included identifying and negotiating financing for the hotel project, overseeing
construction services, and other matters related to the completion of the hotel
project. Under the development agreement, GHP promised to pay WAHD for its
services a development fee not to exceed $9,265,000.
The development fee was to be paid in installments. On the hotel project
closing date, GHP was required to pay the first installment of $3,088,340 of the
deferred developer fee to WAHD and deposit $3,454,000 into the deferred-
development-fees fund established by the master trustee of the master indenture.
And upon receipt of certain Brownfield tax credits (a tax incentive for
environmental remediation), GHP was required to deposit an additional
$2,723,000 in the deferred-development-fees fund.
- 15 -
[*15] The installments from the deferred-development-fees fund were to be paid
in the following manner: the first installment was to be paid upon completion of
the Lennox Hotel rehabilitation, the second installment upon the commencement-
of-operations date of the hotel project, and the final installment upon the
achievement of a certain debt service coverage ratio for one full fiscal year after
the commencement-of-operations date.
The master indenture provided that the deferred portion of the funds in the
deferred-development-fees fund could be used by the master trustee to fund
certain deficits including GHP operating deficits. Under the GHP amended
operating agreement, WAHD promised to fund GHP’s operating deficits by
transferring up to 25% of certain fees paid to it by GHP, including the deferred
development fees (operating deficit guaranty). The GHP amended operating
agreement provides that any transfer from the deferred-development-fees fund
shall be treated as a deemed payment by WAHD to GHP in satisfaction of its
operating deficit guaranty. The GHP amended operating agreement instructs that
such a deemed payment shall not be treated as a loan or capital contribution to
GHP, and the deemed payment of such amounts shall not affect the membership
interests or allocations of GHP’s profits and losses to its members.
- 16 -
[*16] B. Master Credit and Disbursement Indenture
GHP entered into the master indenture to incur certain indebtedness, to pool
credit resources, and to promote the efficient financing of the hotel project. State
Street Bank & Trust Co. of Missouri, N.A., was named master trustee under the
master indenture.5 Under the master indenture, GHP along with other hotel project
participants were required to make certain representations and warranties. It also
required financing from all sources, including the bridge loan proceeds, to be
deposited with the master trustee in a project fund that contained various accounts.
The master trustee was to disburse the funds in accordance with the hotel project
budget and other specified terms and conditions contained in the master indenture,
including certain restrictions and priorities regarding the use of project funds.
The master indenture required GHP to immediately pay $3,285,000 of the
deposited bridge loan proceeds to WAHD as a prepaid preferred return on the
WAHD contribution that WAHD agreed to make to GHP. WAHD was to pay the
same amount to HRI as a prepaid preferred return on the HRI contribution that
HRI agreed to make to WAHD. HRI agreed to collaterally pledge its rights with
5
In 2001 State Street Bank & Trust Co. of Missouri, N.A., was acquired by
UMB Bank, which became the master trustee. The distinction between these two
entities is irrelevant for purposes of this case. Therefore, both are referred to
herein as the master trustee.
- 17 -
[*17] respect to such payments to secure its obligations to the MDFB, including
its obligation to prepay two years of interest on the bridge loan. In satisfaction of
the foregoing series of obligations, the master trustee was to transfer $3,285,000 of
the bridge loan proceeds to the MDFB at closing as prepaid interest from HRI on
the bridge loan.
Under the master indenture, GHP was required to (and in fact did) obtain
insurance to protect the hotel project against financial losses, including losses of
Federal and State tax credit equity, caused by property damage or casualty.
IX. Operative Events Occurring on or after Closing of the Hotel Project
A. Disbursement of the Bridge Loan Proceeds and Prepayment of Interest
and Fees on the Bridge Loan
The $18,455,000 of bridge loan proceeds was transferred to and deposited
directly with the master trustee of the master indenture. The direct transfer of the
bridge loan proceeds to the master trustee’s account was consistent with the
MDFB’s normal procedures for loan closings. The master trustee used the
deposited bridge loan proceeds to prepay the interest required under the bridge
loan agreement.
- 18 -
[*18] B. Transfer From the Deferred-Development-Fees Fund to GHP To Fund
Operating Deficits
As of February 13, 2003, GHP had an operating deficit. Shortly thereafter,
$3,088,000 of the unpaid deferred development fee was contributed back to GHP
to fund its operating deficits in accordance with the master indenture. GHP treated
these draws as an equity contribution from WAHD for accounting purposes.
Likewise, GHP reported the transfer as an equity contribution by WAHD on its
2003 tax return.
C. Receipt and Transfer of Hotel Project MHTCs
GHP qualified for and received the MHTCs on two occasions in 2002. The
MDED transferred $6,178,656 of MHTCs (Lennox MHTCs) to GHP on June 19,
2002, after GHP completed the Lennox Hotel rehabilitation. Per HRI’s
instructions, the MDED transferred those MHTCs first to HRI (as WAHD’s
assignee) and then to Firstar CDC in accordance with the tax credit purchase
agreement.6
6
HRI sent the MDED a letter in April 2002 instructing it to transfer these
MHTCs first from GHP to HRI (as WAHD’s assignee) then from HRI to Firstar
CDC. Contrary to these instructions, on June 14, 2002, the MDED inadvertently
transferred the MHTCs directly from GHP to Firstar CDC (i.e., omitting HRI).
When this occurred, the MDED was contacted to request that it reissue and
transfer the MHTCs correctly as instructed. Consequently, on June 19, 2002, the
MDED voided the June 14 transfer and documented new transfers consistent with
(continued...)
- 19 -
[*19] The completion of the Statler Hotel rehabilitation caused the hotel project to
incur more MHTC-eligible expenses than anticipated and thus earn more MHTCs
than had been initially anticipated. On December 16, 2002, in anticipation of
GHP’s receiving MHTCs from the Statler Hotel rehabilitation, HRI (on GHP’s
behalf) instructed the MDED in certain Missouri Forms HTC-T and cover letters
accompanying those forms to transfer Statler-related MHTCs with a credit value
of $13,388,503 from GHP to HRI in satisfaction of WAHD’s and HRI’s respective
preferred equity and instructed that any excess MHTCs be transferred on GHP’s
behalf to Firstar CDC. On December 30, 2002, the MDED issued Statler-related
MHTCs to GHP entitling their holder to a tax credit equal to $17,620,978. That
same day, consistent with HRI’s December 16 instructions, the MDED transferred
$13,388,503 of MHTCs (Statler tranche 1 MHTCs) from GHP to HRI (as
WAHD’s assignee) and then to Firstar CDC. Also pursuant to HRI’s December
16 instructions, the MDED transferred the remaining $4,232,475 of Statler-related
MHTCs (Statler tranche 2 MHTCs) from GHP to Firstar CDC. In
6
(...continued)
HRI’s instructions, i.e., from Gateway to HRI (as WAHD’s assignee) to Firstar
CDC. Because the June 14 transfer was voided within the taxable year, under the
rescission doctrine that transfer had no effect for tax purposes. See Rev. Rul. 80-
58, 1980-1 C.B. 181.
- 20 -
[*20] exchange for the Statler tranche 2 MHTCs, Firstar CDC transferred certain
proceeds to the MDFB, which it applied against the bridge loan balance.
On January 8, 2003, an accounting firm representing GHP notified the
MDED that the amount of MHTCs that GHP requested to be transferred on the
relevant Missouri Forms HTC-T was incorrect. The accounting firm requested
that the MDED void the initial December 30, 2002, transfer of the Statler tranche
1 MHTCs and the Statler tranche 2 MHTCs and retransfer GHP’s MHTCs. To
that end, it provided the MDED with new Missouri Forms HTC-T requesting the
transfer of MHTCs with a credit value of $16,327,443 from GHP to HRI and then
from HRI to Firstar CDC, and requesting the transfer of MHTCs with a credit
value of $1,293,535 (the remaining MHTCs) from GHP to Firstar CDC. It also
requested that the MDED change its records to reflect the new requested transfer
amounts of MHTCs. The MDED accepted the new Missouri Forms HTC-T and
changed its transfer records accordingly.
D. Repayment of the Bridge Loan
The bridge loan was repaid in 2002 with proceeds from the sale of certain
MHTCs to Firstar CDC.
- 21 -
[*21] X. Reporting Positions
GHP filed a Form 1065 for 2000. The Form 1065 does not reflect that GHP
received a capital contribution from WAHD equal to the amount of the bridge loan
proceeds. Additionally, GHP’s financial statements for 2000 do not reflect such a
capital contribution either. The record does not reflect that HRI reported making
an $18,455,000 capital contribution to WAHD on its financial statements or tax
return. Similarly, the record does not reflect that WAHD reported making an
$18,455,000 capital contribution to GHP on its financial statements or tax return.
GHP filed a Form 1065 for 2002. GHP’s Form 1065 for 2002 and its
financial statements for that year do not reflect that it made a distribution of
MHTCs in any amount to WAHD. Additionally, WAHD’s Form 1065 for 2002
does not reflect it received a distribution of MHTCs from GHP or that it made a
distribution of MHTCs to HRI. Likewise, HRI’s financial statements and its
Federal tax return for 2002 do not reflect that it received a distribution of MHTCs
from WAHD.
GHP did not report on any Federal tax return that it had income from its
transfers of the Lennox MHTCs, the Statler tranche 1 MHTCs, and $2,938,940
- 22 -
[*22] (credit value) of the Statler tranche 2 MHTCs.7 GHP also did not report as
income on any Federal tax return its receipt of the $3,088,000 transferred to it
from the deferred-development-fees fund.
XI. Tax Opinion
The law firm of Baker & McKenzie provided a tax opinion regarding
whether a distribution of MHTCs by GHP to WAHD would be respected as a
distribution to a recipient partner or recharacterized as some form of taxable
transaction. The tax opinion was rendered before GHP made any transfers of the
MHTCs it received from the hotel project. It does not address GHP’s attempt to
rescind the initial December 30, 2002, transfer of the Statler tranche 2 MHTCs or
the treatment of their transfer to Firstar CDC.
XII. The FPAA
Respondent issued WAHD, GHP’s tax matters partner, an FPAA covering
2002 and 2003. The FPAA determined that GHP failed to report $18,455,000 of
income from its transfers of the Lennox MHTCs, the Statler tranche 1 MHTCs,
and the Statler tranche 2 MHTCs. Respondent also determined that GHP failed to
7
Consistent with its view that the initial transfer of the Statler tranche 2
MHTCs was ineffective, GHP took the position that it sold the Statler tranche 2
MHTCs having a credit value equal to $1,293,535 and reported on its return the
corresponding sale proceeds totaling $1,060,699.
- 23 -
[*23] report as income $3,088,000 transferred to it from the deferred-
development-fees fund. WAHD filed a petition on behalf of GHP seeking a
redetermination of the adjustments in the FPAA.
OPINION
We must decide whether GHP must include in income $18,455,000 of gain
from certain transfers it made of MHTCs. We also must decide whether GHP
must include in income money transferred to it from the deferred-development-
fees fund. Finally, we must decide whether GHP is liable for the accuracy-related
penalty. We first address the burden of proof.
I. Burden of Proof
The taxpayer generally bears the burden of proving the Commissioner’s
determinations are erroneous. Rule 142(a). The burden of proof may shift to the
Commissioner if the taxpayer satisfies certain conditions. Sec. 7491(a).
Participating partners have not argued that section 7491(a) applies nor established
their compliance with its requirements. Therefore, the burden of proof remains on
participating partners. See Rule 142(a).
II. Tax Consequences of GHP’s MHTCs Transfers
Respondent contends that GHP sold the Lennox MHTCs, the Statler tranche
1 MHTCs, and the Statler tranche 2 MHTCs to Firstar CDC and failed to report
- 24 -
[*24] $18,455,000 of taxable gain from the sales. Participating partners contend
that GHP’s transfer of the relevant MHTCs should be respected as a nontaxable
partnership distribution under section 731(b). We first address the treatment of
GHP’s transfers of the Lennox MHTCs and the Statler tranche 1 MHTCs and then
turn to the treatment of the Statler tranche 2 MHTCs.
A. Lennox MHTCs and Statler Tranche 1 MHTCs
Participating partners contend that the MDFB made the bridge loan to HRI,
that HRI contributed the bridge loan proceeds to WAHD in exchange for
preferred-equity rights, and that WAHD contributed those same proceeds to GHP
in exchange for preferred-equity rights. They further contend that GHP’s transfers
of the Lennox MHTCs and the Statler tranche 1 MHTCs to HRI (as WAHD’s
assignee) were distributions in redemption of WAHD’s preferred equity. On this
basis, they take the position that GHP’s transfer of MHTCs is properly
characterized as a distribution by a partnership to a partner and thus assert that no
gain or loss is recognizable on the transfers under section 731(b).
Respondent contends that the transfers of MHTCs to HRI (as WAHD’s
assignee) did not redeem WAHD’s preferred equity because WAHD never made
the relevant preferred-equity contribution. Respondent argues that even if GHP’s
transfer of the Lennox and Statler tranche 1 MHTCs were made in redemption of
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[*25] WAHD’s preferred equity, the transactions should be recast as taxable sales
under the substance over form doctrine, the step transaction doctrine, or disguised
sale concepts.
Section 731(b) provides: “No gain or loss shall be recognized to a
partnership on a distribution to a partner of property, including money.” For
reasons elucidated below, we agree with participating partners that GHP’s
transfers of the Lennox MHTCs and the Statler tranche 1 MHTCs are properly
characterized as distributions in redemption of WAHD’s preferred equity, and we
disagree with respondent that the relevant transactions should be recast as taxable
sales. Accordingly, we hold that under section 731(b) GHP was not required to
recognize any gain or loss on the transfers of the Lennox MHTCs and Statler
tranche 1 MHTCs. We now turn to the findings and reasoning on which we base
our holding.
1. Whether GHP’s Transfers of the Lennox MHTCs and the Statler
Tranche 1 MHTCs Were Preferred-Equity Distributions
Respondent argues that GHP’s transfers of the Lennox MHTCs and the
Statler tranche 1 MHTCs were not a redemption of WAHD’s preferred equity for
two main reasons. First, respondent contends that the transfers could not have
been distributions in redemption of WAHD’s preferred equity because the bridge
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[*26] loan was made directly to GHP, thus precluding WAHD from having made
the capital contribution that participating partners contend entitled it to a
preferred-equity distribution of the relevant MHTCs. Second, respondent
contends that irrespective of the borrower’s identity under the bridge loan, WAHD
never actually contributed the bridge loan proceeds to GHP since they were
transferred directly from the MDFB to GHP.
We agree with respondent that if the bridge loan was made to GHP then
HRI could not have made the relevant capital contribution that would entitle it to a
preferred-equity distribution of the Lennox MHTCs and the Statler tranche 1
MHTCs. However, we disagree with respondent’s second contention that the
MDFB’s transfer of the bridge loan proceeds directly to GHP precludes WAHD
from having made a capital contribution of those same proceeds to GHP, and we
dispense with it now.
HRI was obligated under its operating agreement to contribute the bridge
loan proceeds to WAHD, and WAHD was obligated under its operating agreement
to contribute those same proceeds to GHP. To obviate the need for three separate
transfers, MDFB dispensed the proceeds directly to GHP. If HRI was the
borrower under the bridge loan agreement, we find the single transfer in substance
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[*27] resulted in deemed capital contributions from HRI to WAHD and then from
WAHD to GHP.
Thus, whether WAHD made a capital contribution entitling it to a preferred-
equity distribution of the Lennox MHTCs and the Statler tranche 1 MHTCs
depends on whether HRI or GHP was the borrower under the bridge loan.
Respondent argues that the form and substance of the bridge loan reflect that it
was made solely to GHP. Participating partners argue the form and substance of
the bridge loan reveal that HRI was the true borrower.
a. Form of the Bridge Loan
State law determines the legal interests and rights upon which Federal
income tax consequences depend. United States v. Nat’l Bank of Commerce, 472
U.S. 713, 722 (1985); Morgan v. Commissioner, 309 U.S. 78, 80-81 (1940).
Under Missouri law, the obligor of a loan is generally the party designated as the
borrower in the governing loan instruments. See generally Ethridge v. TierOne
Bank, 226 S.W.3d 127, 131-132 (Mo. 2007). HRI was the designated borrower in
the bridge loan agreement and executed it as such. Moreover, the bridge loan
agreement does not reference any other person as the borrower.
Respondent argues for two main reasons that despite HRI’s designation as
the “borrower” under the bridge loan agreement, the form of the transaction
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[*28] reflects that GHP was the borrower. First, respondent contends that GHP
was the borrower because HRI entered into the bridge loan agreement solely in its
representative capacity “on behalf of GHP”. We agree with respondent that if
GHP entered into the bridge loan solely in a representative capacity on behalf of
GHP, that would lend support to respondent’s claim that the form of the bridge
loan transaction reflects GHP was the borrower. However, the record does not
reflect that HRI entered into the bridge loan agreement or served as the borrower
solely in a representative capacity on behalf of GHP.
As support for the contention that HRI acted solely in a representative
capacity, respondent points to certain certified resolutions of GHP, WAHD, and
HRI. Those resolutions together grant HRI authority to “enter into” the bridge
loan agreement on “its own behalf” and “on behalf of” WAHD and GHP.
Respondent argues that these resolutions show that HRI acted as GHP’s agent in
borrowing the bridge loan proceeds and thus bound GHP to repay the bridge loan.
We disagree. It does not necessarily follow from the resolutions that HRI
borrowed the funds under the bridge loan or entered into the bridge loan
agreement solely in its representative capacity. All the resolutions show is that
HRI had authority to enter into the bridge loan agreement on its own behalf and on
behalf of GHP; they do not show how HRI exercised that authority. Accordingly,
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[*29] we look to the bridge loan agreement to determine the manner and capacity
in which HRI exercised its authority to enter into the bridge loan agreement.
The bridge loan agreement does not reflect that HRI acted as GHP’s agent
(or solely in a representative capacity) in borrowing the proceeds under the bridge
loan. As previously mentioned, the bridge loan agreement designates HRI as the
unequivocal “borrower”. And HRI signed its name under the “borrower”
signature block in its individual capacity, not “on behalf of” GHP or as GHP’s
“agent”.
Instead, the bridge loan agreement reveals that HRI exercised its authority
to enter into the bridge loan agreement on behalf of GHP only with respect to
certain warranties, representations, and covenants. None of the representations,
covenants, or warranties obligated GHP to repay the bridge loan principal or
interest accruing thereon. So while HRI did have authority to enter into the bridge
loan agreement on behalf of GHP, the bridge loan agreement establishes that HRI
did not exercise that authority so as to bind GHP to repay the bridge loan.
Respondent argues that GHP’s approval of the form of the bridge loan
agreement shows that HRI entered into the bridge loan agreement on behalf of
GHP. While it is true that GHP (as well as WAHD) executed the bridge loan
agreement in addition to HRI, the bridge loan agreement reflects that GHP
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[*30] executed it only for purposes of “approv[ing] its form”. Such approval in
and of itself does not obligate GHP to repay the bridge loan principal or interest.
Cf. Ethridge, 226 S.W.3d at 131-132 (wife’s signature underneath the signature
block on a deed of trust does not change the deed’s plain description of the
husband as the sole borrower).
Respondent secondly contends that the form of the bridge loan transaction
reflects that GHP was the bridge loan borrower because GHP obligated itself to
repay the bridge loan by transferring its MHTC rights to the MDFB through the
WAHD collateral assignment agreement (including the attached intervention by
HH) and the GHP financing statement. The record does not support the predicate
for respondent’s claim.
GHP did not execute a collateral assignment agreement or otherwise assign
its MHTC rights. Under section 4.3 of the GHP amended operating agreement,
WAHD was entitled to a preferred return of capital upon the issuance of the
MHTCs “in the form of a distribution of available cash flow, * * * or,
alternatively, in the sole discretion of * * * [HH], a distribution of property having
an agreed fair market value equal to the * * * [WAHD contribution] amount”.
Accordingly, HH could prevent a transfer of the MHTCs under the GHP amended
operating agreement. Respondent argues, however, that HH waived this right
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[*31] under paragraph F of the intervention attached to the WAHD collateral
assignment. Participating partners dispute that HH waived the right. The parties’
dispute over the meaning of paragraph F of the intervention presents an issue of
contract interpretation.
The WAHD collateral assignment agreement and the attached intervention
are governed by Missouri law. “The cardinal principle of contract interpretation is
to ascertain the intention of the parties and to give effect to that intent.” Dunn
Indus. Group, Inc. v. City of Sugar Creek, 112 S.W.3d 421, 428 (Mo. 2003) (per
curiam). In interpreting a contract, we read the contract as a whole and give its
terms their “plain, ordinary and usual meaning.” Id. We also construe each of the
contract’s terms to avoid rendering the other terms meaningless, and we prefer a
“construction that attributes a reasonable meaning to all the provisions of the
agreement * * * to one that leaves some of the provisions without function or
sense.” Id. The parties’ intent is determined on the basis of language in the
contract alone unless the contract is ambiguous. Baum v. Helget Gas Prods., Inc.,
440 F.3d 1019, 1023 (8th Cir. 2006) (applying Missouri law). An ambiguity is not
created simply because the parties disagree about the contract’s interpretation. Id.
The test, rather, is “‘whether the disputed language, in the context of the entire
agreement, is reasonably susceptible of more than one construction giving the
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[*32] words their plain and ordinary meaning as understood by a reasonable
average person.’” Id. (quoting Speedie Food Mart, Inc. v. Taylor, 809 S.W.2d
126, 129 (Mo. Ct. App. 1991).
With these principles in mind, we turn to paragraph F of the intervention.
Paragraph F provides:
Notwithstanding any other provisions of the * * * [GHP amended
operating agreement] to the contrary, only Assignor [WAHD] shall be
entitled to rights provided for in Section 4.3 thereof, and Housing
Horizons [HH] hereby waives any interest it may have in such rights
and covenants and agrees that if and when such rights become due
and owing, such amounts due shall be distributable to and be the sole
property of Assignor [WAHD] or its pledgees, free and clear of any
encumberances of the * * * [GHP amended operating agreement], and
Housing Horizons [HH] waives any rights or claims it may have with
respect to such amounts due, including any rights created by
operation of law or by the * * * [GHP amended operating agreement].
The critical question is what are “the rights provided for in Section 4.3” of
the GHP amended operating agreement to which paragraph F refers? Is it the
preferred return right and the preferred return of capital right? HH’s right to
decide to satisfy WAHD’s right to a preferred return of capital with a distribution
from available cashflow or with a distribution of property, e.g., the MHTCs? Or
both?
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[*33] We think the WAHD collateral assignment agreement taken as a whole and
in context unambiguously reflects that the “rights provided for in Section 4.3”
means: (1) the preferred return right and (2) preferred return of capital right.8
Paragraph F states that only WAHD shall be entitled to “the rights provided for in
Section 4.3”. Paragraph F goes on to provide that HH waives any interest it may
have in “such rights” and agrees that if and when “such rights become due and
owing, such amounts due shall be distributable to and be the sole property of
WAHD”. (Emphasis added.)
We think a plain reading of “such rights * * * due and owing” means rights
that give rise to an obligation to make payment, i.e., of money or property. Our
interpretation is bolstered by the phrase “such amounts due” modifying “such
rights become due and owing”. The modification indicates the “rights provided
for in Section 4.3” are the kind that give rise to an obligation to make a payment of
an amount. HH’s discretionary right to decide how to satisfy WAHD’s preferred
return of capital right did not give rise to a payment obligation or any other
obligation for that matter. It simply gave HH the right to decide the form of the
payment obligation arising from the preferred return of capital right. Accordingly,
we do not read paragraph F, as respondent urges, to remove HH’s discretion to
8
For the relevant parts of “sec. 4.3” see supra p. 11.
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[*34] decide how to satisfy the preferred return of capital right. We therefore
reject respondent’s argument that the WAHD collateral assignment agreement
effectively obligated GHP to repay the bridge loan.
Respondent also argues that GHP transferred its rights to receive the
MHTCs to the MDFB through the GHP financing statement, thus demonstrating
GHP was responsible for repaying the bridge loan. Again, we disagree. A
financing statement’s purpose is to give notice to a third party to make further
inquiry as to specific collateral. In re Payless Cashways, Inc., 273 B.R. 789, 790
(Bankr. W.D. Mo. 2002). While a financing statement may in limited
circumstances give rise to a security interest in a purported obligor’s property, it
generally does not. See Shelton v. Erwin, 472 F.2d 1118, 1120 (8th Cir. 1973);
Centerre Bank Nat’l Ass’n v. Mo. Farmers Ass’n, Inc., 716 S.W.2d 336, 341 (Mo.
Ct. App. 1986) (“A financing statement is merely evidence of the creation of a
security interest and does not itself constitute a security agreement.”). Rather, the
creation of an enforceable security interest is created by a security agreement. See
Centerre Bank Nat’l Ass’n, 716 S.W.2d at 341.
The record does not reflect that GHP executed any agreement specifically
referred to as the “security agreement” or otherwise functioning as a “security
agreement” that corresponds to the GHP financing statement. While a financing
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[*35] statement may constitute a security agreement if certain requirements are
met, we find that this financing statement does not.
A security agreement must contain granting language that conveys a
security interest in the relevant property. Shelton, 472 F.2d at 1120. Listing
covered collateral is insufficient to grant a security interest. See Starman v. John
Wolfe, Inc., 490 S.W.2d 377, 383-384 (Mo. Ct. App. 1973); see also In re
Modafferi, 45 B.R. 370, 373 (Bankr. S.D.N.Y. 1985); Needle v. Lasco Indus., Inc.,
89 Cal. Rptr. 593, 595-596 (Ct. App. 1970). An examination of the GHP
financing statement reveals that it merely describes covered collateral. It does not
contain language granting the MDFB a security interest in the covered collateral.
Accordingly, the GHP financing statement fails to convey to the MDFB a security
interest in the covered property described in the GHP financing statement.
Another reason the financing statement fails to create a security interest is
that it does not identify the obligation to be secured by the covered collateral. A
security interest provides an interest in collateral that secures payment or
performance of an obligation. Needle, 89 Cal. Rptr. at 596. At a minimum, then,
a security agreement must recite the obligation to be secured. See In re Modafferi,
45 B.R. at 373-374; Needle, 89 Cal. Rptr. 593. Here, nothing on the face of the
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[*36] GHP financing statement indicates the obligation that the covered collateral
is to secure.
Because the GHP financing statement does not constitute a security
agreement, it failed to create a security interest in any of GHP’s property.
Respondent’s argument that GHP transferred its rights to receive the MHTCs to
the MDFB through the GHP financing statement is predicated on its having
created a “security interest” in GHP’s rights to the expected MHTCs in favor of
the MDFB. As a result, respondent’s argument fails.
In conclusion, we find that the form of the bridge loan transaction reflects
that HRI, not GHP, was the borrower, and we do not find persuasive any of
respondent’s arguments to the contrary.
b. Substance of the Bridge Loan
i. The Substance Over Form Doctrine
Respondent contends that even if the form of the bridge loan transaction
reflects that HRI was the borrower, the substance of the transaction reveals that
GHP, not HRI, was the true borrower. Participating partners dispute that GHP
was the borrower in substance. It is well established that the tax consequences
resulting from a transaction depend on the transaction’s substance rather than its
form. Commissioner v. Court Holding Co., 324 U.S. 331, 334 (1945) (“The
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[*37] incidence of taxation depends upon the substance of a transaction.”);
Gregory v. Helvering, 293 U.S. 465 (1935); Calumet Indus., Inc. v. Commissioner,
95 T.C. 257, 288 (1990) (“[T]he substance of the transaction is controlling, not the
form in which it is cast or described.”).
A loan, in essence, involves a transaction whereby one person (the lender)
advances money to another (the borrower) for her promise to repay it upon such
terms as to time and rate of interest, or without interest, as the parties may agree.
See Welch v. Commissioner, 204 F.3d 1228, 1230 (9th Cir. 2000), aff’g T.C.
Memo. 1998-121. Accordingly, a borrower’s essential obligation is to repay the
loan. Given this, we think a person bearing the economic risk of loss for loan
repayment strongly indicates that the person is the borrower in substance. As
discussed above, HRI’s designation as “borrower” in the bridge loan agreement
and execution of the agreement in its individual capacity as such obligated HRI to
repay the bridge loan. This is consistent with both the MDFB’s and HRI’s view of
who the borrower was in the bridge loan transaction. The MDFB’s top executive
Robert Miserez and general counsel, David Queen, credibly testified that the
MDFB, an unrelated third-party lender, intended to make the bridge loan to HRI,
not GHP, and looked to HRI, not GHP, for repayment. Likewise, HRI regarded
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[*38] the repayment of the bridge loan as its obligation, according to the testimony
of HRI’s chief operating officer and president.
However, even though a party is legally obligated to repay a loan, it may not
be the primary obligor if the lender is really looking to a secondary obligor for
repayment. See, e.g., Selfe v. United States, 778 F.2d 769 (11th Cir. 1985);
Plantation Patterns, Inc. v. Commissioner, 462 F.2d 712 (5th Cir. 1972), aff’g T.C.
Memo. 1970-182. This is not one of those cases. The MDFB, an unrelated third-
party lender, reviewed HRI’s financial records and determined that HRI had
sufficient assets or potential assets to repay the bridge loan in the event of default.
Moreover, HRI pledged its membership interest in WAHD, which included HRI’s
preferred return and preferred return of capital rights, as collateral for repayment
of the bridge loan.
But even if HRI could not repay the bridge loan, the record does not reflect
that another party was obligated through guaranties, side agreements, or otherwise
to repay HRI’s obligation under the bridge loan in the event of default. The
MDFB could seek recourse for default only against HRI.9 Accordingly, this is not
a case where the lender was in substance relying on a person secondarily
9
We note certain HRI partners made guaranties with respect to obligations
under the bridge loan, but their guaranties did not cover repayment of principal or
interest under the bridge loan.
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[*39] responsible for repayment. See, e.g., Selfe, 778 F.2d 769; Plantation
Patterns, Inc. v. Commissioner, 462 F.2d 712.
Respondent urges the Court to use a “bona fide” indebtedness analysis to
determine whether HRI was the borrower under the bridge loan. See, e.g., Welch
v. Commissioner, 204 F.3d at 1230; Calloway v. Commissioner, 135 T.C. 26
(2010), aff’d, 691 F.3d 1315 (11th Cir. 2012); Haag v. Commissioner, 88 T.C.
604, 615-616 (1987), aff’d without published opinion, 855 F.2d 855 (8th Cir.
1988); Fisher v. Commissioner, 54 T.C. 905, 909 (1970); Goldstein v.
Commissioner, T.C. Memo. 1980-273. That analysis generally focuses on whether
a transaction constitutes genuine indebtedness or something else, e.g., a sale. See
e.g., Welch v. Commissioner, 204 F.3d at 1230. There is no dispute between the
parties that the bridge loan created indebtedness. Rather, the parties disagree
about the identity of the bridge loan borrower. Accordingly, the bona fide
indebtedness analysis is not persuasive to us given the facts of this case.
Respondent also argues that certain facts and circumstances surrounding the
bridge loan show that GHP, rather than HRI, was the borrower in substance. In
this regard, respondent contends that: (1) HRI failed to execute a promissory note
with respect to the bridge loan; (2) HRI did not reflect the bridge loan obligations
on its financial statements or tax returns; (3) HRI lacked sufficient
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[*40] creditworthiness for the MDFB to extend the bridge loan to it; (4) the bridge
loan proceeds were transferred directly to GHP; (5) GHP paid interest on the
bridge loan; (6) GHP was entitled to the remaining funds set aside in an account to
pay interest on the bridge loan; and (7) GHP paid certain bridge loan fees. We
recognize that courts have analyzed such factors in the S corporation context when
determining whether the loan obligor in substance is the entity or its owner. See,
e.g., Maloof v. Commissioner, 456 F.3d 645 (6th Cir. 2006), aff’g T.C. Memo.
2005-75; Bolding v. Commissioner, 117 F.3d 270 (5th Cir. 1997), rev’g T.C.
Memo. 1995-326; Reser v. Commissioner, 112 F.3d 1258 (5th Cir. 1997), aff’g in
part, rev’g in part T.C. Memo. 1995-572; Harris v. United States, 902 F.2d 439
(5th Cir. 1990).
We begin by noting that of the factors respondent relies on, only the
creditworthiness and the payment of interest and fees factors are probative of
whether HRI or GHP was primarily responsible for repaying the bridge loan and
thus are the only ones that we believe are entitled to significant weight. The
record contradicts respondent’s claim that HRI was not creditworthy for reasons
already explained.10
10
See discussion supra p. 38.
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[*41] As for respondent’s claim that GHP made the $3,285,000 prepayment of
two years’ interest on the bridge loan, we do not find this factor helpful under
these circumstances. The master indenture required that $3,285,000 of the bridge
loan proceeds deposited with the master trustee be immediately used to prepay the
respective preferred returns owed to WAHD and HRI for their contributions of
capital. The prepaid preferred return of $3,285,000 was to be paid directly to the
MDFB because the preferred return rights were pledged and collaterally assigned
to the MDFB under WAHD collateral assignment agreement and the HRI
collateral assignment agreement I. It follows then that for the $3,285,000 prepaid
interest payment made to the MDFB to have been paid by GHP, we would have to
disregard the preferred-equity return obligations of WAHD and HRI. This would
require us to assume in respondent’s favor the very question that we are analyzing:
Is HRI or GHP the borrower in substance?
Likewise, respondent’s argument that GHP was entitled to the remaining
amounts in the interest deposit account suffers from the same problem. This is
because GHP would ultimately be owed any remaining amount in the prepaid
interest account for overpaying its preferred return obligation unless we disregard
the preferred return obligations of GHP and WAHD and assume GHP was the
borrower. Accordingly, we do not find that GHP’s transfer of a portion of the
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[*42] bridge loan proceeds that were used toward interest owed on the bridge loan,
or GHP’s entitlement to amounts remaining in the interest account, show that GHP
was the borrower.
As for the bridge loan fees, the record reflects that GHP paid the loan fees
out of its operating account. The record also reflects that the MDFB sent the
invoice for the bridge loan fees to HRI, indicating that the MDFB expected HRI to
pay the fee. We think this factor supports respondent’s position but is not fatal to
finding that HRI was the true borrower in substance.
We find the remaining factors respondent cites insufficient to establish that
HRI was not the borrower in substance. While it is true that HRI failed to execute
promissory notes, we attach little significance to this failure. A promissory note is
not required to evidence indebtedness. See Burk v. Walton, 86 S.W.2d 92, 95
(Mo. 1935); Kam, Inc. v. White, 675 S.W.2d 459, 461-462 (Mo. Ct. App. 1984);
Reifeiss v. Barnes, 192 S.W.2d 427, 430 (Mo. Ct. App. 1946); see also Sandra
Schnitzer Stern, Struct. & Drafting Com. Loan Agr. sec. 1.04 (1999). Indeed, a
debt obligation may be evidenced by reference to the lender’s books and records.
See Stern, supra, sec. 1.04. We think HRI’s execution of the bridge loan
agreement itself was sufficient to evidence HRI’s indebtedness to the MDFB for
the bridge loan.
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[*43] We also attach little significance to the MDFB’s transfer of the bridge loan
proceeds directly to GHP. We recognize some courts have found this factor to
contribute to a finding that the recipient of the proceeds was the borrower in
substance. See, e.g., Estate of Leavitt v. Commissioner, 90 T.C. 206, 213-214
(1988), aff’d without published opinion, 875 F.2d 420 (4th Cir. 1989); Salem v.
Commissioner, T.C. Memo. 1998-63, aff’d, 196 F.3d 1260 (11th Cir. 1999); Reser
v. Commissioner, T.C. Memo. 1995-572. These cases generally involved
situations where the taxpayer and her S corporation were co-obligors on the
indebtedness, or the taxpayer was claiming basis notwithstanding her status as a
mere guarantor or surety. Nonetheless, the disbursement and use of the loan
proceeds by an entity controlled by the claimed borrower is not dispositive of the
borrower’s identity in a loan transaction. See Bolding v. Commissioner, 117 F.3d
270; Raynor v. Commissioner, 50 T.C. 762 (1968); Miller v. Commissioner, T.C.
Memo. 2006-125; Gilday v. Commissioner, T.C. Memo. 1982-242.
Finally, respondent points out that HRI failed to reflect the bridge loan
obligation on its financial statements or tax returns. While this failure could
indicate that HRI did not view itself as the borrower under the bridge loan, it does
not change that the MDFB viewed HRI as the borrower and as responsible for
repayment of the bridge loan. Nor does it change that HRI was in fact legally
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[*44] obligated to repay the bridge loan under the bridge loan agreement. We do
not find that HRI’s omission of the bridge loan obligation on its financial
statements or tax returns is fatal to concluding HRI was in substance the bridge
loan borrower.
In sum, we recognize there were certain peculiarities surrounding the bridge
loan transaction. Nevertheless, we find that the totality of circumstances shows
that HRI and not GHP was in substance the bridge loan borrower.
ii. The Step Transaction Doctrine
Respondent argues that we should apply the step transaction doctrine to
disregard the form of the bridge loan and recast GHP as the bridge loan borrower.
The step transaction doctrine is a variation of the substance over form doctrine.
Penrod v. Commissioner, 88 T.C. 1415, 1428-1430 (1987). Under the step
transaction doctrine, a particular step in a transaction is disregarded for tax
purposes if the taxpayer could have achieved its objective more directly but
instead included the step for no other purpose than to avoid tax liability.
Long-Term Capital Holdings, LP v. United States, 150 Fed. Appx. 40, 43 (2d Cir.
2005) (citing Del Commercial Props., Inc. v. Commissioner, 251 F.3d 210, 213
(D.C. Cir. 2001)). On the other hand, the Commissioner may not “‘generate
events which never took place just so an additional tax liability might be
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[*45] asserted.’” Grove v. Commissioner, 490 F.2d 241, 247 (2d Cir. 1973)
(quoting Sheppard v. United States, 361 F.2d 972, 978 (Ct. Cl. 1966), aff’g T.C.
Memo. 1972-98. Courts generally apply one of three alternative tests in deciding
whether to invoke the step-transaction doctrine and disregard a transaction’s
intervening steps: (1) the binding commitment test; (2) the end result test; and (3)
the interdependence test. Superior Trading, LLC v. Commissioner, 137 T.C. 70,
88 (2011), aff’d, 728 F.3d 676 (7th Cir. 2013).
The doctrine’s disregard or recharacterization of steps under any of the three
tests is predicated on the steps’ being meaningless and done for the sole purpose
of avoiding tax. Turner Broadcasting Sys., Inc. v. Commissioner, 111 T.C. 315,
327 (1998); Esmark Inc. v. Commissioner, 90 T.C. 171, 195 (1988), aff’d without
published opinion, 886 F.2d 1318 (7th Cir. 1989); see also Linton v. United States,
630 F.3d 1211 (9th Cir. 2011). Moreover, the existence of an overall plan by itself
does not justify the application of the step transaction doctrine. Turner
Broadcasting Sys., Inc. v. Commissioner, 111 T.C. at 327.
As a threshold matter, the record does not reflect that the MDFB’s making
the bridge loan to HRI was a meaningless or unnecessary step taken for the sole
purpose of avoiding Federal income tax. Testimony at trial by the MDFB’s top
executive established that on the basis of HRI’s and GHP’s risk profiles, the
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[*46] MDFB considered HRI a more attractive borrower than GHP. This point is
not insignificant. The favorableness of terms on which a borrower can obtain a
loan is primarily based on the borrower’s creditworthiness. Accordingly, HRI
should have been able to obtain the bridge loan on better terms than GHP. We
find that HRI serving as the borrower in the bridge loan transaction was neither
meaningless nor occasioned solely to avoid tax. It follows that the successive
capital contributions were also not meaningless and not arranged for the sole
purpose of avoiding tax. We hold that the step transaction doctrine is not relevant
to the bridge loan transaction.
iii. Conclusion
In conclusion, participating partners established that HRI was the bridge
loan borrower in form and substance. It follows, the MDFB’s transfer of the
bridge loan proceeds (totaling $18,455,000) directly to GHP constituted a deemed
capital contribution of them by HRI to WAHD and then a deemed capital
contribution of those proceeds by WAHD to GHP. See supra pp. 26-27. It further
follows that GHP’s transfers of the Lennox MHTCs and Statler tranche 1 MHTCs
to HRI as WAHD’s assignee should be treated as partnership distributions in
redemption of WAHD’s preferred equity rights, unless they are otherwise properly
recharacterized as taxable transfers.
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[*47] 2. Whether GHP’s Transfer of the Relevant MHTCs Should Be
Recast as a Taxable Sale
Respondent argues that GHP’s transfers of the Lennox MHTCs and the
Statler tranche 1 MHTCs to WAHD must be recast as taxable sales under the
substance over form doctrine, the step transaction doctrine, or alternatively under
the disguised sale provisions of section 707(a)(2)(B). We address each of these
arguments in turn.
a. Respondent’s Substance Over Form and Step Transaction
Arguments
Respondent argues that GHP disposed of the Lennox MHTCs and the
Statler tranche 1 MHTCs to Firstar CDC for consideration used to pay the bridge
loan. GHP did not transfer the relevant MHTCs to Firstar CDC. Rather, HRI
transferred the Lennox MHTCs and the Statler tranche 1 MHTCs to Firstar CDC
after receiving them (as WAHD’s assignee) from GHP. Respondent argues,
however, that GHP disposed of them to Firstar CDC through a series of
assignments by GHP, WAHD, HRI, and the MDFB. After careful consideration,
we found above that GHP did not assign the rights to the Lennox and Statler
tranche 1 MHTCs to WAHD. Without these initial assignments, respondent’s
argument that the credits were in substance disposed of by GHP to Firstar CDC
through a series of assignments falls apart.
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[*48] Respondent also argues that GHP’s transfers of the relevant MHTCs should
be recast as a taxable sale under the step transaction doctrine. As previously
explained, the existence of an overall plan by itself does not justify the application
of the step transaction doctrine. Turner Broadcasting Sys., Inc. v. Commissioner,
111 T.C. at 327. Rather, the doctrine is applied to combine a series of individually
meaningless steps or steps lacking a business purpose into a single transaction. Id.
The distributions of the Lennox MHTCs and the Statler tranche 1 MHTCs were
made pursuant to WAHD’s preferred-equity rights. Those rights flowed from
WAHD’s deemed capital contribution, which was not a meaningless or
unnecessary step in the transaction. Because a legitimate step created the rights,
we find that the step satisfying the rights also was legitimate. Accordingly, we
decline to alter the form of the transaction under the step transaction doctrine.
b. Respondent’s Disguised Sale Argument
Respondent also argues that part of WAHD’s transfer of the bridge loan
proceeds to GHP and GHP’s transfer of the Lennox MHTCs and Statler tranche 1
MHTCs to WAHD taken together constitute a disguised sale under section
707(a)(2)(B) of subchapter K. As a general rule, if a partner engages in a
transaction with a partnership other than in his capacity as such, the transaction
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[*49] shall be treated as occurring between the partnership and one who is not a
partner. Sec. 707(a)(1). A non-partner-capacity transaction includes related
transfers between a partner and a partnership that when viewed together are
properly characterized as a sale or exchange of property. Sec. 707(a)(2)(B). Such
a transaction is commonly referred to as a disguised sale.
Section 1.707-3, Income Tax Regs., provides rules for identifying disguised
sales. That section, however, by its terms applies to situations where a partner
transferred property to a partnership in exchange for money or other property.
WAHD transferred money rather than property to GHP and received property, i.e.,
the Lennox MHTCs and the Statler tranche 1 MHTCs, instead of money from
GHP in a subsequent transfer. Section 1.707-6, Income Tax Regs., instructs that
rules similar to those provided in section 1.707-3, Income Tax Regs., apply to
determine whether a transfer of property by a partnership to a partner and a
transfer of money or other consideration by a partner to a partnership are treated as
a disguised sale. Accordingly, we apply similar rules to those in section 1.707-3,
Income Tax Regs., to determine whether the transfers between WAHD and GHP
constitute a disguised sale. We now turn to the relevant rules.
Section 1.707-3(b)(1), Income Tax Regs., instructs that a disguised sale
occurs if on the basis of all the facts and circumstances two conditions are met:
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[*50] (1) the partnership would not have transferred money or property to the
partner but for the transfer of money or property to the partnership, and (2) in
cases of transfers that are not simultaneous, the subsequent transfer is not
dependent on the entrepreneurial risks of the partnership operations.
Two rebuttable presumptions apply to nonsimultaneous transfers. First,
transfers occurring more than two years apart are presumed not to constitute a
disguised sale unless the facts and circumstances clearly establish that the
transaction is a disguised sale. Sec. 1.707-3(d), Income Tax Regs. Second,
transfers occurring within two years are presumed to be a sale unless the facts and
circumstances clearly establish otherwise. Sec. 1.707-3(c), Income Tax Regs.
WAHD’s deemed transfer of the bridge loan proceeds to GHP occurred on
December 14, 2000. A distribution of the Lennox MHTCs occurred in June 2002.
The distribution of the Statler tranche 1 MHTCs occurred on December 30, 2002,
more than two years after WAHD made the WAHD contribution to GHP.
Accordingly, there is a rebuttable presumption that the Lennox MHTC distribution
was a disguised sale and that the Statler tranche 1 MHTC distribution was not a
disguised sale. With these presumptions in mind, we evaluate whether the facts
and circumstances show that the relevant transactions constitute a disguised sale.
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[*51] Section 1.707-3(b)(2), Income Tax Regs., provides a nonexhaustive list of
factors taken into account on the earliest of the two transfers that may tend to
prove the existence of a disguised sale. Those factors include:
(1) the timing and amount of the subsequent transfer is reasonably
determinable at the time of the earlier transfer;
(2) the transferor has a legally enforceable right to the subsequent transfer;
(3) the partner’s right to receive the subsequent transfer is secured;
(4) other persons have made or are legally obligated to make a contribution
to the partnership to permit it to make the subsequent transfer;
(5) other persons have loaned or agreed to loan to the partnership the
money or other consideration required to make the subsequent transfer, taking into
account whether any obligations to lend are subject to contingencies of the
partnership operation;
(6) the partnership incurs or is required to incur debt to provide the
property to make the subsequent transfer, taking into account the ability of the
partnership to incur said debt;
(7) the partnership has assets beyond the needs of its business which are
available to make the subsequent transfer;
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[*52] (8) the partnership distributions, allocations, or control of partnership
operations are designed to effect an exchange of the burdens and benefits of
ownership of property;
(9) the partnership distributions to the partner are disproportionately large
in relation to the partner’s general and continuing interest in partnership profits;
and
(10) the partner has no obligation to repay to the partnership the property
transferred or such obligation is so distant in time that its value is small in relation
to the property transferred to the other partner. Sec. 1.707-3(b)(2), Income Tax
Regs.
Section 1.707-3(f), Example (3), Income Tax Regs., also indicates that these
factors may disprove the existence of a sale. We now evaluate the enumerated
factors to determine whether the transfers at issue are properly characterized as a
disguised sale.
The first factor considers whether the timing and amount of a subsequent
transfer are determinable with reasonable certainty at the time of an earlier
transfer. Sec. 1.707-3(b)(2)(i), Income Tax Regs. When WAHD made the
WAHD contribution to GHP, GHP did not promise to pay any amount of MHTCs
at any time to WAHD. The GHP amended operating agreement entitled WAHD to
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[*53] a preferred return of capital upon the occurrence of an extraordinary event,
which the agreement defined as the creation of new property, e.g, the issuance of
MHTCs to GHP. That return was to be a distribution of available cashflow, or
alternatively, in the sole discretion of HH, a distribution of property having an
agreed fair market value equal to WAHD’s capital contribution of the bridge loan
proceeds. Accordingly, even if an extraordinary event occurred, the amount and
timing of any subsequent transfer of MHTCs were uncertain because HH could
choose to have GHP sell the credits and satisfy the preferred return of capital
obligation from GHP’s available cashflow.
HH’s discretion to determine whether GHP would use property or available
cashflow to satisfy WAHD’s preferred return of capital right was more than a
trivial right. The record reflects that the discretionary right was valuable to KC.
In this regard, KC’s Vice President of Tax testified that around the time of the
hotel project KC was considering certain tax planning to use losses, including
capital losses, from its foreign operations. He further testified that there was a
“good possibility” that gain from selling MHTCs at the GHP level could have
been used by KC to offset excess capital losses or capital loss carryovers that
might otherwise expire unused. Under such circumstances, 99% of the gain from
the relevant sales of MHTCs would have flowed through to KC without any tax
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[*54] paid on the allocation of gain, providing the company with additional basis
in its GHP membership interest equal to the amount of gain (thereby reducing its
gain on a subsequent disposition).11
The amount and timing of any subsequent distribution from available
cashflow was also uncertain. GHP’s available cashflow equaled its cash receipts
reduced by its cash expenses for a given fiscal period. Accordingly, GHP could
not make the preferred return of capital distribution to WAHD to the extent it had
an operating deficit for a fiscal period. Whether GHP would incur an operating
deficit depended on GHP’s operations. That GHP would incur an operating deficit
was not an insignificant risk given the complexity and scale of the hotel project.
Indeed, such risk materialized during the hotel project.
Moreover, even if GHP had available cashflow, its ability to distribute it as
a preferred return of capital was limited. GHP’s cash receipts included proceeds
GHP obtained from various financings to fund the hotel project. The master
indenture placed restrictions on the use of the proceeds and the priorities of
payments from the proceeds, thus restricting GHP’s ability to distribute available
11
If GHP sold the credits, HH would be entitled to 99% of the income from
the sale and be required to pick up 99% of the gain.
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[*55] cashflow.12 Accordingly, we find that the amount of any preferred return of
capital to WAHD, whether in the form of MHTCs or cash, was not determinable
with reasonable certainty.
Respondent argues that the first factor weighs in favor of finding a
disguised sale because the amount and timing of the MHTCs generated by the
hotel project could be determined with reasonable certainty. We have doubts
about whether the MHTCs the hotel project would generate could be determined
with reasonable certainty given the significant business, economic, and legal risks
associated with a complex real estate development project such as the hotel
project.13 Moreover, even if the parties could have determined with reasonable
certainty the timing and amount of MHTCs the hotel project would generate, the
12
We also note that under Missouri law, WAHD was treated as an equity
holder. See Mo. Ann. Stat. sec. 347.015(11) (West 2001). Consequently, GHP
was prohibited from making any distribution to WAHD to the extent it would (i)
prevent it from paying its obligations as they became due, or (ii) the distribution
would render GHP insolvent. See id. sec. 347.109.
13
For example, with respect to the timing of the MHTCs, the project
completion date could have been significantly extended by a variety of factors,
including labor strife, latent conditions, weather events, or the mismanagement of
the project. The amount of the MHTCs generated by the hotel project could have
been less than expected if the hotel project was completed under budget, given the
MHTCs generated by the hotel project were a function of eligible expenses. And
legislative action by the State of Missouri could have reduced or eliminated the
value of the MHTCs at a time when WAHD’s preferred equity remained at risk.
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[*56] amount and timing of the transfer of any MHTCs to WAHD still remained
uncertain because of HH’s discretionary right to decide whether GHP would
satisfy WAHD’s preferred equity right with MHTCs or available cashflow. We
find that the first factor weighs against disguised sale treatment.
The second factor considers whether the transferor had a legally enforceable
right to the subsequent transfer. Sec. 1.707-3(b)(2)(ii), Income Tax Regs. As we
previously found, HH had unrestricted discretion to satisfy WAHD’s preferred
return of capital right by distributing available cashflow as allowed under the
master indenture, or alternatively by distributing property having a fair market
value equal to WAHD’s capital contribution. Accordingly, WAHD did not have a
legally enforceable right to the MHTCs. This factor weighs against disguised sale
treatment.
The third factor is whether the partner’s right to receive the transfer of
money or other consideration is secured in any manner, taking into account the
period during which it is secured. Sec. 1.707-3(b)(2)(iii), Income Tax Regs.
Respondent argues that this factor is met because HH waived its discretion to
make the distribution of the MHTCs to WAHD under the GHP amended operating
agreement, thus ensuring that the MHTCs once generated would be distributed to
WAHD. As previously explained, HH did not waive its discretion to distribute the
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[*57] MHTCs as a preferred return of capital to WAHD. Accordingly,
respondent’s argument fails. Additionally, the record does not otherwise reflect
that WAHD’s potential right to a preferred return of capital was secured by GHP’s
assets or otherwise.14 This factor weighs against disguised sale treatment.
Under the fourth factor we consider whether any person has made or is
legally obligated to make “contributions” to the partnership to allow the
partnership to make the transfer of money or other consideration. Sec.
1.707-3(b)(2)(iv), Income Tax Regs. Respondent argues that the insurance
company that provided insurance coverage against the nonreceipt of MHTCs was
obligated to make a contribution so that GHP could make the preferred return of
capital to GHP.
We understand the term “contribution” under the fourth factor to mean the
transfer of property or money that gives the transferor some equity interest in the
partnership. The insurance company agreed to insure against GHP’s non-receipt
of the MHTCs in consideration for insurance premiums paid by GHP. Hence,
14
GHP insured against the nonreceipt of the MHTCs. We do not view this
as “securing” WAHD’s right to receive the preferred return of capital because
WAHD did not have a direct or sole interest in the insurance proceeds; thus,
proceeds could be used to satisfy GHP’s obligations, including claims of third-
party creditors. That is, we understand “secured” in the traditional sense as
providing an interest in property.
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[*58] GHP’s receipt of the insurance proceeds would not give the insurance
company an equity interest in GHP. Accordingly, GHP’s argument that the
insurance coverage shows a third party was obligated to make a contribution to
GHP to permit GHP to make the preferred return of capital distribution to WAHD
lacks merit.15
The record does not otherwise reflect that any person contributed or was
obligated to make a contribution to GHP to allow it to make a preferred return of
capital distribution to WAHD. We find this factor weighs against disguised sale
treatment.
Under the fifth and sixth factors we consider whether a third party or the
partnership has incurred debt or is obligated to incur debt to enable the partnership
to make the second transfer. Sec. 1.707-3(b)(2)(v) and (vi), Income Tax Regs.
15
We note that even if GHP’s receipt of the insurance proceeds constituted a
contribution, the record does not reflect that that contribution would have been
made to permit GHP to satisfy WAHD’s preferred return of capital right. That is,
while the receipt of the insurance proceeds would have increased GHP’s cash
receipts, the record does not reflect that the insurance coverage was maintained for
the specific purpose of allowing GHP to satisfy WAHD’s preferred return of
capital right. Nor does the record reflect that the proceeds would necessarily be
used for that purpose. As previously discussed, a cash distribution to satisfy
WAHD’s preferred return of capital right could only be made from GHP’s
available cashflow and then only if the master indenture permitted the distribution.
The proceeds then could have been used to satisfy GHP’s operating expenses or
other obligations that took priority under the master indenture.
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[*59] The record does not reflect the incurring or obligation to incur such debt by
a third party or GHP. This factor weighs against finding that a disguised sale
occurred.
The seventh factor is whether the partnership has excess liquid assets that it
can use to make the subsequent transfer. Sec. 1.707-3(b) (2) (vii), Income Tax
Regs. Respondent does not address this factor in his analysis. We note, however,
that GHP did not have excess liquid assets to allow it to make the distribution to
WAHD. In fact, GHP had no liquid assets until the moment the MHTCs were
issued to it. All of GHP’s property was held by the master trustee and pledged to
the master trustee to service GHP indebtedness incurred in connection with the
hotel project.
Under the eighth factor we consider whether the partnership distributions,
allocation, or control of partnership operations is designed to effect an exchange
of the burdens and benefits of ownership of property. Sec. 1.707-3(b)(2)(viii),
Income Tax Regs. Respondent contends that the GHP amended operating
agreement and HH’s intervention in the WAHD collateral assignment agreement
transferred to WAHD all rights to GHP’s expected MHTCs from the hotel project.
Respondent contends that this purported transfer was designed to effect an
exchange of the burdens and benefits of ownership of the MHTCs. Again, we
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[*60] disagree that the relevant agreements transferred the ownership rights of the
expected MHTCs to WAHD. Consequently, respondent’s argument fails. We
find this factor weighs against disguised sale treatment.
The ninth factor is whether the transfer of money or property by the
partnership to the partner is disproportionately large in relation to the partner’s
interest in partnership profits. Sec. 1.707-3(b)(2)(ix), Income Tax Regs. WAHD
had a 1% interest in the profits and losses of GHP and received 100% of the
MHTCs. Accordingly, the transfer of the MHTCs did not bear any relationship to
WAHD’s general and continuing interest in GHP profits. This factor points
toward disguised sale treatment.
Finally we consider whether the partner has no obligation to return or repay
the subsequent distribution to the partnership. Sec. 1.707-3(b)(2)(x), Income Tax
Regs. Neither the GHP amended operating agreement nor any other agreement
obligated WAHD to return or repay GHP for the Lennox MHTCs and the Statler
tranche 1 MHTCs when it made the deemed transfer of the bridge loan proceeds to
GHP. Accordingly, WAHD received those MHTCs unencumbered.
Participating partners contend that WAHD was required to fund certain
GHP operating deficits and in fact did fund GHP operating deficits during 2003.
Participating partners conclude on these facts that WAHD was obligated to repay a
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[*61] substantial portion of the value of the MHTCs it received. We are not
persuaded. Under this factor, we focus on obligations arising from the subsequent
transfer, not general partnership obligations that a partner has independent of the
transfer, such as WAHD’s obligation to fund certain operating deficits. This
factor weighs in favor of finding a disguised sale occurred.
On balance, 2 of the 10 factors support disguised sale treatment; the
remaining factors weigh against such treatment. The weight to be given to each of
the factors depends on the particular case. Sec 1.707-3(b)(2), Income Tax Regs.
In this case we find the first and second factors most compelling. In our
evaluation of the first factor, we determined that the timing and amount of any
distribution of MHTCs or their economic equivalent by GHP to WAHD was
uncertain. And applying the second factor, we concluded that WAHD never had a
legal right to any MHTCs GHP earned. These factors strongly indicate that
WAHD’s preferred-equity contribution was subject to the entrepreneurial risk of
GHP’s partnership operations. Upon our evaluation of all the factors, we decline
to recharacterize GHP’s transfers of the Lennox and Statler tranche 1 MHTCs as a
disguised sale.
Participating partners argue that if they did constitute a disguised sale, the
gain from the sale would have been reportable for 2000, a closed year, because
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[*62] WAHD’s deemed transfer of the bridge loan proceeds to GHP constituted an
advance payment. We agree. The disguised sale is considered to occur when
under general principles of Federal tax law the partnership is considered the owner
of the property. Sec. 1.707-3(a)(2), Income Tax Regs. Advance payments,
however, for goods or services are generally taxable in the year of receipt.
Schlude v. Commissioner, 372 U.S. 128 (1963); Am. Auto. Ass’n v. United States,
367 U.S. 687 (1961); Auto. Club of Mich. v. Commissioner, 353 U.S. 180,188-
190 (1957); see also sec. 1.451-1(a), Income Tax Regs.; cf. Commissioner v.
Indianapolis Power & Light Co., 493 U.S. 203, 208 n.3 (1990). The receipt of
money generally constitutes an advance payment where the taxpayer has the
unconditional right to keep the money so long as the taxpayer fulfills his or her
side of the bargain. Cf. Commissioner v. Indianapolis Power & Light Co., 493
U.S. at 210-211.
Assuming GHP’s transfers of the Lennox MHTCs and the Statler tranche 1
MHTCs constituted a disguised sale, part of WAHD’s deemed capital contribution
of the bridge loan proceeds to GHP in 2000 constituted the purchase price for the
MHTCs. Hence, WAHD’s capital contribution was GHP’s to keep so long as it
transferred the purchased credits. Accordingly, WAHD’s capital contribution to
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[*63] GHP was an advance payment made in 2000 and thus was includible in
GHP’s income in a prior year not before this Court.
Respondent argues that the participating partners’ argument lacks merit
because the deemed transfer of the bridge loan proceeds by WAHD to GHP was a
loan (which was satisfied by the transfer of MHTCs in 2002) or a deposit for the
future sale of MHTCs. Consequently, respondent concludes that disguised sale
income from the relevant transfers would be reportable in 2002. Respondent’s
argument is untenable on its face. If we assume a disguised sale occurred, as
respondent contends, then part of WAHD’s deemed transfer of the bridge loan
proceeds to GHP necessarily constituted consideration for the purchase of the
Lennox MHTCs and the Statler tranche 1 MHTCs and therefore could not have
been a loan or a deposit.
Respondent also argues that the duty-of-consistency doctrine bars GHP
from taking the position that 2000 is the correct tax year for reporting income
attributable to a disguised sale of the Lennox MHTCs and the Statler tranche 1
MHTCs. The duty-of-consistency doctrine precludes a taxpayer from taking one
position one year and a contrary position in a later year, after the limitations period
has run for the first year. Herrington v. Commissioner, 854 F.2d 755, 757 (5th
Cir. 1988), aff’g Glass v. Commissioner, 87 T.C. 1087 (1986).
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[*64] We do not believe the duty-of-consistency doctrine is applicable because
GHP has not changed its position. GHP maintained on its returns and throughout
this case that it did not sell the Lennox MHTCs or the Statler tranche 1 MHTCs.
Moreover, despite respondent’s assertion to the contrary, GHP’s taking the
position that any income attributable to a disguised sale is includible in 2000 does
not constitute a change of position. That is, we think GHP’s taking a position
about the legal effects flowing from the Court’s rejecting its primary position and
sustaining respondent’s position does not constitute a change of position for
purposes of the duty-of-consistency doctrine.
3. Conclusion
We found WAHD made a deemed capital contribution of the bridge loan
proceeds to GHP entitling it to a preferred return of capital and could receive cash
or property, including MHTCs, in redemption of its preferred equity. We found
unpersuasive respondent’s argument that GHP’s transfer of the Lennox MHTCs
and the Statler tranche 1 MHTCs should be recast as a taxable sale under the
substance over form doctrine, step transaction doctrine, or the disguised sale rules.
For these reasons, we agree with participating partners that GHP’s transfers of the
Lennox MHTCs and the Statler tranche 1 MHTCs to HRI as WAHD’s assignee
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[*65] are properly characterized as partnership distributions. Consequently, under
section 731(b) GHP was not required to recognize any gain or loss on those
distributions.
B. The Statler Tranche 2 MHTCs
We now address the treatment of GHP’s transfer of the Statler tranche 2
MHTCs. Participating partners contend that GHP sold $1,293,935 of the Statler
tranche 2 MHTCs to Firstar CDC and distributed the remaining $2,938,940 to HRI
as WAHD’s assignee. Respondent argues that GHP sold all the Statler tranche 2
MHTCs to Firstar CDC and therefore must include all the proceeds from that sale
in income. We agree with respondent.
Participating partners argue that the form of the January 8, 2003, transfer
controls the transaction’s character. GHP transferred all of the Statler tranche 2
MHTCs to Firstar CDC on December 30, 2002. On January 8, 2003, GHP asked
the MDED to amend its transfer records to reflect that a portion of the Statler
tranche 2 MHTCs transfer represented a distribution to HRI. We find that the
December 30, 2002, transfer controls our analysis of the transaction. While GHP
attempted to rescind the initial December 30, 2002, transfer of the Statler tranche 2
MHTCs, rescission must occur in the same tax year as the initial transaction if the
initial transaction is to be disregarded for tax purposes. See Rev. Rul. 80-58,
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[*66] 1980-1 C.B. 181. GHP did not attempt to rescind the initial transfer until
after its 2002 tax year. Accordingly, the rescission attempt was ineffective. The
December 30, 2002, transfer constituted a sale of the full amount of the Statler
tranche 2 MHTCs, and GHP must include all of the proceeds in income.
Without citing any authority, participating partners suggest that we should
ignore the initial December 30, 2002, transfer of the Statler tranche 2 MHTCs
because the MDED made a mistake in making the transfer; i.e., the transfer was
not intended. On this point, participating partners contend that GHP intended to
request that the MDED transfer MHTCs with a fair market value of $13,388,503
to HRI and any MHTCs in excess of that amount to Firstar CDC through the
December 16, 2002, cover letters accompanying the Missouri Forms HTC-T, also
dated December 16, 2002.16 They argue that the MDED misinterpreted the
transfer request instructions in those cover letters, which HRI sent to the MDED
on GHP’s behalf. As a result, they contend the MDED transferred MHTCs with a
credit value of $13,388,503 to HRI instead of fair market value of that amount,
16
As of December 16, 2002, the exact amount of MHTCs that would be
generated by the Statler project was uncertain, and it did not become certain until
December 30, 2002. Apparently as a result of this, GHP left blank the amount of
MHTCs to be transferred to Firstar CDC on the Missouri Form HTC-T dated
December 16, 2002. It requested, however, that the MDED fill in the blank with
the amount of MHTCs exceeding the “the first $13,388,503 of the awarded
credits” once the amount of MHTCs generated by the Statler project was finalized.
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[*67] causing more MHTCs than they intended to be transferred directly to Firstar
CDC. They claim the transfer request instructions in the cover letter were
misinterpreted because they were vague. We are not persuaded.
The cover letters are arguably vague as to whether MHTCs with a credit
value or fair market value of $13,388,503 are to be transferred to HRI and
consequently the amount of excess MHTCs that are to be transferred to Firstar
CDC. However, the accompanying Missouri Forms HTC-T dated December 16,
2002, and executed by GHP and HRI provide important context regarding the
meaning and intent of the cover letter instructions and more generally GHP’s
intent to make the Statler tranche 2 MHTCs transfer. In the Missouri Forms HTC-
T dated December 16, 2002, GHP and HRI both reference the credit value of the
relevant MHTCs to be transferred as $13,388,503 and acknowledge that those
credits were to be sold at .83 cents per credit for a total of approximately $11.1
million, i.e., the MHTCs fair market value. This undercuts participating partners’
contention that the MDED misinterpreted the cover letter instructions and that
GHP did not intend to transfer MHTCs with a credit value of $13,388,503 to HRI
and consequently did not intend to transfer the excess Statler MHTCs having a
credit value of $4,232,475 (i.e., the Statler tranche 2 MHTCs) to Firstar CDC.
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[*68] On the basis of our review of the cover letters and the Missouri Forms
HTC-T, we are not convinced that the Statler tranche 1 MHTCs transfer was
unintended. It follows that GHP has also failed to prove that the Statler tranche 2
MHTCs transfer was unintentional because the amount of MHTCs from the Statler
project that GHP intended to transfer to Firstar CDC depended on the amount of
the Statler MHTCs that it instructed the MDED to transfer to HRI. Accordingly,
we will not disregard the Statler tranche 2 MHTCs transfer.
We thus now consider the tax consequences of the Statler tranche 2 MHTCs
transfer. In that transfer, GHP sold all of the Statler tranche 2 MHTCs to Firstar
CDC. Firstar CDC transferred $1,293,535 of the proceeds directly to GHP. GHP
does not dispute that these proceeds are includible in income. The remainder of
the sale proceeds were transferred to the MDFB, which applied them against
HRI’s bridge loan liability. That GHP did not actually receive the proceeds does
not allow it to avoid having to take the proceeds into income.
Section 61(a) provides in part that “gross income means all income from
whatever source derived”. It is fundamental to our system of taxation that income
must be taxed to the one who earns it. See Commissioner v. Culbertson, 337 U.S.
733, 739-740 (1949). The incidents of taxation cannot be avoided through an
anticipatory assignment of income. See United States v. Basye, 410 U.S. 441,
- 69 -
[*69] 447, 449-450 (1973); Lucas v. Earl, 281 U.S. 111, 114, 115 (1930). A
taxpayer realizes income if he controls the disposition of that which he could have
received himself but diverts to another as a means of procuring the satisfaction of
his goals. The receipt of income by the other party under such circumstances is
merely the fruition of the taxpayer’s economic gain. See Commissioner v.
Sunnen, 333 U.S. 591, 605-606 (1948); Helvering v. Horst, 311 U.S. 112, 116-117
(1940). GHP could have received all of the proceeds from the Statler tranche 2
MHTCs sale but chose, if not directly then tacitly, to divert a certain amount of the
proceeds to the MDFB for use against HRI’s bridge loan liability. Accordingly,
under the assignment-of-income doctrine those proceeds are includible in GHP’s
income.17
17
We note that participating partner’s alternative argument that any
unreported income from the sale of MHTCs is includible for 2000, a closed year,
does not apply to GHP’s income from the Statler tranche 2 MHTCs transfer. That
argument is predicated on WAHD’s capital contribution in 2000 having been
treated under the disguised sale rules as a payment to GHP for the MHTCs it
subsequently transferred to WAHD in 2002. The sale of the Statler tranche 2
MHTCs was to Firstar CDC, not WAHD. Moreover, Firstar CDC did not make
any payment to GHP in 2000; rather, it made payments to GHP directly and
indirectly in 2002. Accordingly, Firstar CDC did not make any advance payment
in a closed year to GHP as contemplated under participating partner’s alternative
argument for excluding income from the sale of MHTCs for 2002.
- 70 -
[*70] III. Treatment of the Developer Fee
The next issue we address is whether GHP must include in income the
$3,088,000 transferred to it from the deferred developer fees fund. The transfer
occurred in February 2003 when GHP had an operating deficit and before the
commencement-of-operations date had been reached. The GHP amended
operating agreement treats the transfer as a deemed payment by WAHD to GHP in
satisfaction of its obligation to fund certain GHP operating deficits. But the GHP
amended operating agreement instructs that the deemed payment shall not be
treated as a loan or capital contribution to GHP by WAHD and shall not affect
WAHD’s membership interest or allocation of profits or losses.
Respondent argues that because the GHP amended operating agreement
treats the transfer as a payment from WAHD and GHP received the transfer with
no corresponding obligation to WAHD, GHP had an accession to wealth and the
receipt of funds constitutes income. See sec. 61. Participating partners argue that
the transfer is properly characterized as a capital contribution and is therefore
excludible from GHP’s income. Both respondent’s argument and participating
partners’ argument assume that WAHD made the transfer or payment of the
$3,088,000 amount from the deferred developer fees fund to GHP. We find that
- 71 -
[*71] assumption is incorrect and therefore disagree with both respondent’s and
participating partners’ characterization of the transfer.
GHP transferred money to the deferred-development-fees fund, including
the $3,088,000 transferred from the fund to GHP. The money in the deferred-
development-fees fund was held by the master trustee in trust and was to be
applied in accordance with the master indenture. Both WAHD and GHP had
certain rights to money in the deferred-development-fees fund after GHP
transferred it.
Before the commencement-of-operations date, GHP had the right to use any
unpaid money to fund its operating deficits and had no obligation to repay any
amounts withdrawn. WAHD had a right to three installments of the development
fee if certain construction and financial targets were met. The first installment
from the deferred-development-fees fund was to be paid upon the completion of
the rehabilitation of the Lennox Hotel, the second upon the commencement-of-
operations date, and the final upon a certain debt service coverage ratio for one
full year after the commencement-of-operations date. If the relevant achievements
occurred, the amount of the second and third installments depended on the amount
of funds available in the deferred-development-fees fund on the achievement
- 72 -
[*72] dates.18 Accordingly, GHP’s use of money in the deferred-development-fees
fund could reduce the amount of the second and third installments. With these
rights in mind, we turn to the characterization of the transfer of the $3,088,000
from the deferred-development-fees fund to GHP.
While the GHP amended operating agreement characterizes the transfer as a
deemed payment from WAHD to GHP, the incidence of taxation must turn on the
transaction’s substance. Commissioner v. Court Holding Co., 324 U.S. at 334.
Because the $3,088,000 was transferred to GHP before the commencement-of-
operations date, GHP had the right to use the money in the deferred-development-
fees fund to fund its operating deficits with no obligation to return the money.
WAHD, on the other hand, had not earned the $3,088,000 transferred to GHP.
Accordingly, WAHD had no right to the amount once used by GHP as the transfer
was before the commencement-of-operations date and the transfer reduced the
amount of any potential second installment. Hence, GHP never relinquished its
beneficial ownership of the $3,088,000 from the time it transferred the money into
the deferred-development-fees fund until it was returned to GHP. The transfer of
18
For example, if there was less than $3,088,000 upon the commencement-
of-operations date, the amount of the second installment would be zero. And if
one year after the commencement-of-operations date there were no funds in the
deferred-development-fees account, the amount of the third installment would be
zero.
- 73 -
[*73] the $3,088,000 from the deferred-development-fees fund to GHP then was in
substance a return of principal and is not taxable income to GHP.
IV. Accuracy-Related Penalty
Respondent contends that GHP is liable for a 20% accuracy-related penalty
for 2002 under section 6662(a) and (b)(1) on any underpayment resulting from
GHP’s omitting the Statler tranche 2 MHTCs sale income because the
underpayment was due to negligence or disregard of rules or regulations.
Negligence is defined as any failure to make a reasonable attempt to comply with
the Code or to exercise ordinary and reasonable care in the preparation of a tax
return. Sec. 1.6662-3(b)(1), Income Tax Regs. A return position that has a
“reasonable basis” is not attributable to negligence. Id. The term “disregard” is
defined as any careless, reckless, or intentional disregard. Disregard of rules or
regulations is careless if the taxpayer does not exercise reasonable diligence to
determine the correctness of a tax return position that is contrary to rules or
regulations. Sec. 1.6662-3(b)(2), Income Tax Regs.
GHP transferred the Statler tranche 2 MHTCs to Firstar CDC in exchange
for consideration during its 2002 tax year. It later attempted to unwind that
transfer. As we previously held, GHP failed to establish that the initial transfer of
the Statler tranche 2 MHTCs to Firstar CDC should be disregarded for Federal tax
- 74 -
[*74] purposes. Considering all the facts, we believe GHP lacked a reasonable
basis to believe the initial transfer was ineffective. Accordingly, we find that its
failure to report part of the income from that sale was negligent or at least a
careless disregard of the relevant rules or regulations. Thus, respondent has made
a prima facie case for imposing the penalty.
The section 6662(a) accuracy-related penalty does not apply to any portion
of the underpayment as to which the taxpayers establish that they acted with
reasonable cause and in good faith. See sec. 6664(c)(1); Neonatology Assocs.,
P.A. v. Commissioner, 115 T.C. 43, 98 (2000), aff’d, 299 F.3d. 221 (3d Cir. 2002).
The decision as to whether the taxpayer acted with reasonable cause and in good
faith depends upon all the pertinent facts and circumstances, including the
taxpayer’s efforts to assess his proper tax liability, the taxpayer’s knowledge and
experience, and the reliance on the advice of a professional. See sec. 1.6664-
4(b)(1), Income Tax Regs. For a taxpayer to reasonably rely on the advice of a
professional so as to possibly negate a section 6662 accuracy-related penalty, the
taxpayer must prove by a preponderance of the evidence that he meets each
requirement of the following three-prong test: (1) the adviser was a competent
professional who had sufficient expertise to justify reliance; (2) the taxpayer
provided necessary and accurate information to the adviser; and (3) the taxpayer
- 75 -
[*75] actually relied in good faith on the adviser’s judgment. Neonatology
Assocs., P.A.v. Commissioner, 115 T.C. at 99.
Participating partners argue that the reasonable cause and good faith defense
applies here because they relied on the Baker & McKenzie tax opinion in omitting
the relevant portion of income from the sale of the Statler tranche 2 MHTCs. We
disagree.
The Baker & McKenzie tax opinion addresses the treatment of anticipated
distributions of MHTCs from GHP to WAHD. The opinion was provided to GHP
two years before the Statler tranche 2 MHTCs were transferred to Firstar CDC. It
does not opine on or even mention the tax treatment, including the effectiveness,
of the initial December 30, 2002, transfer of the Statler tranche 2 MHTCs to
Firstar CDC. Put another way, the opinion does not analyze the transaction
resulting in the underpayment. It follows that GHP could not have relied in good
faith on the Baker & McKenzie tax opinion in omitting income from its sale of the
Statler tranche 2 MHTCs to Firstar CDC. Consequently, we find that participating
partners have failed to show GHP reasonably relied on professional advice or
acted with reasonable cause or in good faith in taking the position resulting in the
underpayment. Accordingly, we sustain the accuracy-related penalty on the
- 76 -
[*76] portion of the underpayment due to GHP’s failure to report income from its
sale of the Statler tranche 2 MHTCs to Firstar CDC.
We have considered all remaining arguments the parties have made and, to
the extent not addressed, we find them to be irrelevant, moot, or meritless.
To reflect the foregoing,
Decision will be entered under Rule
155.
|
73 Cal.App.3d 860 (1977)
141 Cal. Rptr. 83
BOARD OF MEDICAL QUALITY ASSURANCE, Petitioner,
v.
THE SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; FRED A. AENGST, Real Party in Interest.
Docket No. 51415.
Court of Appeals of California, Second District, Division Two.
October 3, 1977.
*861 COUNSEL
Evelle J. Younger, Attorney General, and Kenneth M. Stern, Deputy Attorney General, for Petitioner.
No appearance for Respondent.
Hiestand & Bower and Allan M. Bower for Real Party in Interest.
OPINION
BEACH, J.
Petition for writ of prohibition, treated as mandate, to require respondent court to vacate the order of June 27, 1977, requiring the appearance of James M. House, M.D., for the taking of his deposition in a pending administrative proceeding. We issued an alternative writ.
*862 FACTS
Petitioner, the Board of Medical Quality Assurance of the State of California (Board), filed an accusation against real party in interest Fred A. Aengst, M.D., alleging that he was guilty of unprofessional conduct within the meaning of section 2361, subdivision (b) of the Business and Professions Code in that he had been grossly negligent in the treatment of a patient. On April 13, 1977, real party was served with a notice that a hearing would be held before an administrative law judge or a medical quality review committee of the State of California beginning October 3, 1977. A prehearing conference was set for August 12, 1977.
On or about May 13, 1977, real party served Board with a petition for writ of mandate pursuant to California Code of Civil Procedure section 1094.5, alleging lack of jurisdiction, denial of due process, abuse of discretion, and bias and prejudice on the part of the witness James M. House, M.D. On June 10, 1977, the Board was served with a notice of taking deposition of James House, and later filed opposition after obtaining a stay or continuance of the deposition. The motion of Board for order that the deposition not be taken was heard June 27, 1977, and was denied the same day.
DISCUSSION:
(1) California Code of Civil Procedure section 1094.5 deals with the review of final administrative orders or decisions. In the present case there is no administrative order or decision whatsoever, and certainly no final order. Sections 11500 et seq. of the Government Code provide for the method of administrative adjudication. Government Code section 11501 expressly includes the Board of Medical Quality Assurance, each of its three divisions, and the Medical Quality Review Committees. Government Code section 11507.5 expressly declares that the provisions of Government Code section 11507.6 provide the exclusive right to and method of discovery.
It is therefore clear that the purported proceeding under Code of Civil Procedure section 1094.5 was untimely and improper, and the order of June 27, 1977, was an abuse of discretion, without authority of law, and in excess of the court's jurisdiction.
*863 Let a peremptory writ of mandate issue requiring respondent court to vacate the order of June 27, 1977, denying petitioner's motion for protective order, and to enter a new and different order (1) granting said motion, and (2) dismissing the purported "Petition for Writ of Mandamus" filed by real party in interest on or about May 11, 1977.
Fleming, Acting P.J., and Compton, J., concurred.
|
920 N.E.2d 1074 (2009)
234 Ill.2d 525
MAZZOCCO
v.
WILLOW INDUSTRIES, INC.
No. 109023.
Supreme Court of Illinois.
November 1, 2009.
Disposition of Petition for Leave to Appeal[*] Denied.
NOTES
[*] For Cumulative Leave to Appeal Tables see preliminary pages of advance sheets and Annual Illinois Cumulative Leave to Appeal Table.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-6334
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
JAIME PADRON-YANEZ,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Anderson. G. Ross Anderson, Jr., Senior
District Judge. (8:08-cr-00628-GRA-15; 8:11-cv-03124-GRA)
Submitted: June 21, 2012 Decided: July 19, 2012
Before DUNCAN and DAVIS, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Jaime Padron-Yanez, Appellant Pro Se. Alan Lance Crick,
Assistant United States Attorney, Greenville, South Carolina;
Stanley Duane Ragsdale, Assistant United States Attorney,
Columbia, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Jaime Padron-Yanez seeks to appeal the district
court’s order denying relief on his 28 U.S.C.A. § 2255 (West
Supp. 2012) motion. The order is not appealable unless a
circuit justice or judge issues a certificate of appealability.
28 U.S.C. § 2253(c)(1)(B) (2006). A certificate of
appealability will not issue absent “a substantial showing of
the denial of a constitutional right.” 28 U.S.C. § 2253(c)(2)
(2006). When the district court denies relief on the merits, a
prisoner satisfies this standard by demonstrating that
reasonable jurists would find that the district court’s
assessment of the constitutional claims is debatable or wrong.
Slack v. McDaniel, 529 U.S. 473, 484 (2000); see Miller-El v.
Cockrell, 537 U.S. 322, 336-38 (2003). When the district court
denies relief on procedural grounds, the prisoner must
demonstrate both that the dispositive procedural ruling is
debatable, and that the motion states a debatable claim of the
denial of a constitutional right. Slack, 529 U.S. at 484-85.
We have independently reviewed the record and conclude
that Padron-Yanez has not made the requisite showing.
Accordingly, we deny his motion for a certificate of
appealability and dismiss the appeal. We dispense with oral
argument because the facts and legal contentions are adequately
2
presented in the materials before the court and argument would
not aid the decisional process.
DISMISSED
3
|
ACCEPTED
14-14-00306-CR
FOURTEENTH COURT OF APPEALS
HOUSTON, TEXAS
3/31/2015 6:56:15 PM
CHRISTOPHER PRINE
CLERK
Nos. 14-14-00306-CR, 14-14-00307-CR, 14-14-00308-CR, 14-14-00309-CR, &
14-14-00310-CR
FILED IN
14th COURT OF APPEALS
In the HOUSTON, TEXAS
Court of Appeals 3/31/2015 6:56:15 PM
For the CHRISTOPHER A. PRINE
Clerk
Fourteenth District of Texas
At Houston
Nos. 1909495, 1909496, 1909497, 1909498, & 1909499
In County Criminal Court at Law Number Six
Of Harris County, Texas
ERIC L. BAUMGART
Appellant
V.
THE STATE OF TEXAS
Appellee
STATE’S THIRD MOTION FOR EXTENSION OF TIME
WITHIN WHICH TO FILE APPELLATE BRIEF
TO THE HONORABLE COURT OF APPEALS:
THE STATE OF TEXAS, pursuant to TEX. R. APP. P. 10.1, 10.5(b) and
38.6(d), moves for an extension of time within which to file its appellate brief. In
support of its motion, the State submits the following:
1. Appellant was convicted of five counts for the offense of violating
the Private Security Act and sentenced to two years of community
supervision.
2. Appellant filed written notice of appeal on March 13, 2014.
3. Appellant filed his brief on December 1, 2014.
4. The State’s reply brief is due on March 31, 2015.
5. The State seeks an extension until April 30, 2015, to file its brief.
6. This is the State’s third request for an extension in this case. The
State’s first extension was sought on account of the State not having
timely received a copy of appellant’s brief.
7. The following facts are relied upon to show good cause for the
requested extension:
My completion of this brief has been delayed by my
completion of three other appellate briefs over the past
five weeks, as well as by my preparation for and
presentation of an oral argument before this Court. I also
have four other appellate briefs due in the coming month.
Additionally, I missed several days of work over the past
month due to my spouse’s recent surgery.
I am currently working on the brief for this case and
intend to continue to work on it until it is completed, to
the exclusion of all other cases assigned to me.
2
WHEREFORE, the State prays that this Court will grant the requested
extension.
Respectfully submitted,
/s/ Dan McCrory
DAN MCCRORY
Assistant District Attorney
Harris County, Texas
1201 Franklin, Suite 600
Houston, Texas 77002-1901
(713) 755-5826
TBC No. 13489950
Mccrory_daniel@dao.hctx.net
CERTIFICATE OF SERVICE
This is to certify that a copy of the foregoing instrument has been mailed to
the following email address via TexFile:
Renato Santos, Jr.
Attorney at Law
Renato.santos3@att.net
/s/ Dan McCrory
DAN MCCRORY
Assistant District Attorney
Harris County, Texas
1201 Franklin, Suite 600
Houston, Texas 77002-1901
(713) 755-5826
TBC No. 13489950
Date: March 31, 2015
3
|
356 U.S. 617 (1958)
INTERNATIONAL ASSOCIATION OF MACHINISTS ET AL.
v.
GONZALES.
No. 31.
Supreme Court of United States.
Argued December 12, 1957.
Decided May 26, 1958.
CERTIORARI TO THE DISTRICT COURT OF APPEAL OF CALIFORNIA, FIRST APPELLATE DISTRICT.
Plato E. Papps and Eugene K. Kennedy argued the cause for petitioners. With them on the brief was Bernard Dunau.
Lloyd E. McMurray argued the cause and filed a brief for respondent.
*618 MR. JUSTICE FRANKFURTER delivered the opinion of the Court.
Claiming to have been expelled from membership in the International Association of Machinists and its Local No. 68 in violation of his rights under the constitution and by-laws of the unions, respondent, a marine machinist, brought this suit against the International and Local, together with their officers, in a Superior Court in California for restoration of his membership in the unions and for damages due to his illegal expulsion. The case was tried to the court, and, on the basis of the pleadings, evidence, and argument of counsel, detailed findings of fact were made, conclusions of law drawn, and a judgment entered ordering the reinstatement of respondent and awarding him damages for lost wages as well as for physical and mental suffering. The judgment was affirmed by the District Court of Appeal, 142 Cal. App. 2d 207, 298 P. 2d 92, and the Supreme Court of California denied a petition for hearing. We brought the case here, 352 U. S. 966, since it presented another important question concerning the extent to which the National Labor Relations Act, 49 Stat. 449, as amended, 29 U. S. C. §§ 141-188, has excluded the exercise of state power.
The crux of the claim sustained by the California court was that under California law membership in a labor union constitutes a contract between the member and the union, the terms of which are governed by the constitution and by-laws of the union, and that state law provides, through mandatory reinstatement and damages, a remedy for breach of such contract through wrongful expulsion. This contractual conception of the relation between a member and his union widely prevails in this country and has recently been adopted by the House of Lords in Bonsor v. Musicians' Union, [1956] A. C. 104. It has been the law of California *619 for at least half a century. See Dingwall v. Amalgamated Assn. of Street R. Employees, 4 Cal. App. 565, 88 P. 597. Though an unincorporated association, a labor union is for many purposes given the rights and subjected to the obligations of a legal entity. See United Mine Workers v. Coronado Coal Co., 259 U. S. 344, 383-392; United States v. White, 322 U. S. 694, 701-703.
That the power of California to afford the remedy of reinstatement for the wrongful expulsion of a union member has not been displaced by the Taft-Hartley Act is admitted by petitioners. Quite properly they do not attack so much of the judgment as orders respondent's reinstatement. As Garner v. Teamsters Union, 346 U. S. 485, could not avoid deciding, the Taft-Hartley Act undoubtedly carries implications of exclusive federal authority. Congress withdrew from the States much that had theretofore rested with them. But the other half of what was pronounced in Garnerthat the Act "leaves much to the states"is no less important. See 346 U. S., at 488. The statutory implications concerning what has been taken from the States and what has been left to them are of a Delphic nature, to be translated into concreteness by the process of litigating elucidation. See Weber v. Anheuser-Busch, Inc., 348 U. S. 468, 474-477.
Since we deal with implications to be drawn from the Taft-Hartley Act for the avoidance of conflicts between enforcement of federal policy by the National Labor Relations Board and the exertion of state power, it might be abstractly justifiable, as a matter of wooden logic, to suggest that an action in a state court by a member of a union for restoration of his membership rights is precluded. In such a suit there may be embedded circumstances that could constitute an unfair labor practice under § 8 (b) (2) of the Act. In the judgment of the *620 Board, expulsion from a union, taken in connection with other circumstances established in a particular case, might constitute an attempt to cause an employer to "discriminate against an employee with respect to whom membership in such organization has been denied or terminated on some ground other than his failure to tender the periodic dues and the initiation fees uniformly required as a condition of acquiring or retaining membership. . . ." 61 Stat. 141, 29 U. S. C. § 158 (b) (2). But the protection of union members in their rights as members from arbitrary conduct by unions and union officers has not been undertaken by federal law, and indeed the assertion of any such power has been expressly denied. The proviso to § 8 (b) (1) of the Act states that "this paragraph shall not impair the right of a labor organization to prescribe its own rules with respect to the acquisition or retention of membership therein . . . ." 61 Stat. 141, 29 U. S. C. § 158 (b) (1). The present controversy is precisely one that gives legal efficacy under state law to the rules prescribed by a labor organization for "retention of membership therein." Thus, to preclude a state court from exerting its traditional jurisdiction to determine and enforce the rights of union membership would in many cases leave an unjustly ousted member without remedy for the restoration of his important union rights. Such a drastic result, on the remote possibility of some entanglement with the Board's enforcement of the national policy, would require a more compelling indication of congressional will than can be found in the interstices of the Taft-Hartley Act. See United Constr. Workers v. Laburnum Constr. Corp., 347 U. S. 656.
Although petitioners do not claim that the state court lacked jurisdiction to order respondent's reinstatement, they do contend that it was without power to fill out this *621 remedy by an award of damages for loss of wages and suffering resulting from the breach of contract. No radiation of the Taft-Hartley Act requires us thus to mutilate the comprehensive relief of equity and reach such an incongruous adjustment of federal-state relations touching the regulation of labor. The National Labor Relations Board could not have given respondent the relief that California gave him according to its local law of contracts and damages. Although, if the unions' conduct constituted an unfair labor practice, the Board might possibly have been empowered to award back pay, in no event could it mulct in damages for mental or physical suffering. And the possibility of partial relief from the Board does not, in such a case as is here presented, deprive a party of available state remedies for all damages suffered. See International Union, United Automobile Workers v. Russell, post, p. 634.
If, as we held in the Laburnum case, certain state causes of action sounding in tort are not displaced simply because there may be an argumentative coincidence in the facts adducible in the tort action and a plausible proceeding before the National Labor Relations Board, a state remedy for breach of contract also ought not be displaced by such evidentiary coincidence when the possibility of conflict with federal policy is similarly remote. The possibility of conflict from the court's award of damages in the present case is no greater than from its order that respondent be restored to membership. In either case the potential conflict is too contingent, too remotely related to the public interest expressed in the Taft-Hartley Act, to justify depriving state courts of jurisdiction to vindicate the personal rights of an ousted union member. This is emphasized by the fact that the subject matter of the litigation in the present case, as the parties and the court conceived it, was the breach of a contract governing the *622 relations between respondent and his unions.[*] The suit did not purport to remedy or regulate union conduct on the ground that it was designed to bring about employer discrimination against an employee, the evil the Board is concerned to strike at as an unfair labor practice under § 8 (b) (2). This important distinction between the purposes of federal and state regulation has been aptly described: "Although even these state court decisions may lead to possible conflict between the federal labor board and state courts they do not present potentialities of conflicts in kind or degree which require a hands-off directive to the states. A state court decision requiring restoration of membership requires consideration of and judgment upon matters wholly outside the scope of the National Labor Relations Board's determination with reference to employer discrimination after union ouster from membership. The state court proceedings deal with arbitrariness and misconduct vis-a-vis the individual union members and the union; the Board proceeding, *623 looking principally to the nexus between union action and employer discrimination, examines the ouster from membership in entirely different terms." Isaacson, Labor Relations Law: Federal versus State Jurisdiction, 42 A. B. A. J. 415, 483.
The judgment is
Affirmed.
MR. JUSTICE BLACK took no part in the consideration or decision of this case.
MR. CHIEF JUSTICE WARREN, with whom MR. JUSTICE DOUGLAS joins, dissenting.
By sustaining a state-court damage award against a labor organization for conduct that was subject to an unfair labor practice proceeding under the Federal Act, this Court sanctions a duplication and conflict of remedies to which I cannot assent. Such a disposition is contrary to the unanimous decision of this Court in Garner v. Teamsters C. & H. Local Union, 346 U. S. 485.
In Garner, we rejected an attempt to secure preventive relief under state law for conduct over which the Board had remedial authority. We held that the necessity for uniformity in the regulation of labor relations subject to the Federal Act forbade recourse to potentially conflicting state remedies. The bases of that decision were clearly set forth:
"Congress evidently considered that centralized administration of specially designed procedures was necessary to obtain uniform application of its substantive rules and to avoid these diversities and conflicts likely to result from a variety of local procedures and attitudes toward labor controversies.[1]
.....
*624 "Further, even if we were to assume, with petitioners, that distinctly private rights were enforced by the state authorities, it does not follow that the state and federal authorities may supplement each other in cases of this type. The conflict lies in remedies, not rights. The same picketing may injure both public and private rights. But when two separate remedies are brought to bear on the same activity, a conflict is imminent."[2]
The two subsequent opinions of this Court that have undertaken to restate the holding in Garner, one of them written by the author of today's majority opinion, confirm its prohibition against duplication of remedies. Weber v. Anheuser-Busch, 348 U. S. 468, 479;[3]United Constr. Workers v. Laburnum Constr. Corp., 347 U. S. 656, 663, 665.[4] And if elucidating litigation was required to dispel the Delphic nature of that doctrine, the requisite concreteness has been adequately supplied. This Court has consistently turned back efforts to utilize state remedies for conduct subject to proceedings for relief under the Federal Act. District Lodge 34, Int'l *625 Assn. of Machinists v. L. P. Cavett Co., 355 U. S. 39; Local Union 429, Int'l Brotherhood of Electrical Workers v. Farnsworth & Chambers Co., 353 U. S. 969; Retail Clerks International Assn. v. J. J. Newberry Co., 352 U. S. 987; Pocatello Building & Constr. Trades Council v. C. H. Elle Constr. Co., 352 U. S. 884; Building Trades Council v. Kinard Constr. Co., 346 U. S. 933. With the exception of cases allowing the State to exercise its police power to punish or prevent violence, United A., A. & A. I. W. v. Wisconsin Employment Relations Board, 351 U. S. 266; Youngdahl v. Rainfair, Inc., 355 U. S. 131, the broad holding of Garner has never been impaired. Certainly United Constr. Workers v. Laburnum Constr. Corp., supra, did not have the effect. The Laburnum opinion carefully notes that the Federal Act excludes conflicting state procedures, and emphasizes that "Congress has neither provided nor suggested any substitute"[5] for the state relief there being sustained.[6]
The principles declared in Garner v. Teamsters C. & H. Local Union, supra, were not the product of imperfect consideration or untried hypothesis. They comprise the fundamental doctrines that have guided this Court's preemption decisions for over a century. When Congress, acting in a field of dominant federal interest as part of a comprehensive scheme of federal regulation, confers rights and creates remedies with respect to certain conduct, it has expressed its judgment on the desirable scope of regulation, and state action to supplement it is as "conflicting," offensive and invalid as state action in derogation. E. g., Pennsylvania v. Nelson, 350 U. S. 497; Missouri *626 P. R. Co. v. Porter, 273 U. S. 341; Houston v. Moore, 5 Wheat. 1, 21-23. This is as true of a state common-law right of action as it is of state regulatory legislation. Texas & P. R. Co. v. Abilene Cotton Oil Co., 204 U. S. 426. As recently as Guss v. Utah Labor Relations Board, 353 U. S. 1, we had occasion to re-emphasize the vitality of these pre-emption doctrines in a labor case where, due to NLRB inaction, the conduct involved was either subject to state regulation or it was wholly unregulated. We set aside a state-court remedial order directed at activity that had been the subject of unfair labor practice charges with the Board, declaring that: "the [secession of jurisdiction] proviso to § 10 (a) is the exclusive means whereby States may be enabled to act concerning the matters which Congress has entrusted to the National Labor Relations Board."[7]
That the foregoing principles of pre-emption apply to the type of dispute involved in this case cannot be doubted. Comment hardly need be made upon the comprehensive nature of the federal labor regulation in the Taft-Hartley Act. One of its declared purposes is "to protect the rights of individual employees in their relations with labor organizations whose activities affect commerce . . . ."[8] The Act deals with the very conduct involved in this case by declaring in § 8 (b) (2) that it shall be an unfair labor practice for a labor organization to cause or attempt to cause an employer to discriminate in regard to hire or tenure of employment against an employee who has been denied union membership on some ground other than failure to tender periodic dues.[9] The evidence disclosed the probability of a § 8 (b) (2) unfair labor practice in the union's refusal to *627 dispatch Gonzales from its hiring hall after his expulsion from membership and his inability thereafter to obtain employment. If a causal relation between the nondispatch and the refusal to hire is an essential element of § 8 (b) (2),[10] there was ample evidence to satisfy that requirement. A few months after Gonzales' expulsion, the union signed a multiemployer collective bargaining agreement with a hiring-hall provision. One witness testified that there was no material difference between hiring procedures before and after the date of that agreement.[11] There were other indications to the same effect.[12] In any event, since the uncontested facts disclose the probability of a § 8 (b) (2) unfair labor practice, the existence of the same must for pre-emption purposes be assumed. As we said in Weber v. Anheuser-Busch, supra, at 478, "The point is rather that the Board, and not the state court, is empowered to pass upon such issues in the first instance."
Assuming that the union conduct involved constituted a § 8 (b) (2) unfair labor practice,[13] the existence of a conflict of remedies in this case cannot be denied. Section 10 (c) of the Act empowers the Board to redress such conduct by requiring the responsible party to reimburse the worker for the pay he has lost. Relying upon the identical conduct on which the Board would premise its back-pay *628 award,[14] the state court has required of the union precisely what the Board would require: that Gonzales be made whole for his lost wages. Such a duplication and conflict of remedies is the very thing this Court condemned in Garner.
The further recovery of $2,500 damages for "mental suffering, humiliation and distress" serves to aggravate the evil. When Congress proscribed union-inspired job discriminations and provided for a recovery of lost wages by the injured party, it created all the relief it thought necessary to accomplish its purpose. Any additional redress under state law for the same conduct cannot avoid disturbing this delicate balance of rights and remedies. The right of action for emotional disturbance, like the punitive recovery the plaintiff sought unsuccessfully in this case, is a particularly unwelcome addition to the scheme of federal remedies because of the random nature of any assessment of damages. Without a reliable gauge to which to relate their verdict, a jury may fix an amount in response to those "local procedures and attitudes toward labor controversies" from which the Garner case sought to isolate national labor regulation. The prospect of such recoveries will inevitably exercise a regulatory effect on labor relations.
The state and federal courts that have considered the permissibility of damage actions for the victims of job discrimination lend their weight to the foregoing conclusion. While most sustain the State's power to reinstate members wrongfully ousted from the union, they are unanimous in denying the State's power to award damages *629 for the employer discriminations that result from nonmembership.[15]
The legislative history and structure of the Federal Act lend further support to a conclusion of pre-emption. While § 8 (b) (2) and the other provisions defining unfair labor practices on the part of labor organizations were first introduced in the Taft-Hartley Act, similar conduct by an employer had been an unfair labor practice under § 8 (3) of the Wagner Act, 49 Stat. 452. Committee reports dealing with that provision leave no doubt that the Congress was prescribing a complete code of federal labor regulation that did not contemplate actions in the state court for the same conduct.
"The Board is empowered, according to the procedure provided in section 10, to prevent any person from engaging in any unfair labor practice listed in section 8 `affecting commerce', as that term is defined in section 2 (7). This power is vested exclusively in the Board and is not to be affected by any other means of adjustment or prevention.
.....
"The most frequent form of affirmative action required in cases of this type is specifically provided for, i. e., the reinstatement of employees with or without back pay, as the circumstances dictate. No private right of action is contemplated."[16] (Emphasis supplied.)
*630 There is nothing in the Taft-Hartley amendments that detracts in the slightest from this unequivocal declaration that private rights of action are not contemplated within the scheme of remedies Congress has chosen to prescribe in the regulation of labor relations.[17] It is consistent with every indication of legislative intent. As the Act originally passed the House, § 12 created a private right of action in favor of persons injured by certain unfair labor practices.[18] The Senate rejected that approach, and the Section was deleted by the Conference.
Special considerations prompted adoption of a Senate amendment creating an action for damages sustained from one unfair labor practice, the secondary boycott.[19]*631 Aside from the obvious argument that the express inclusion of one private action in the scheme of remedies provided by the Act indicates that Congress did not contemplate others, the content of § 301 furnishes another distinguishing feature. The right of action is federal in origin, assuring the uniformity of substantive law so essential to matters having an impact on national labor regulation.[20] The right of action that the majority sanctions here, on the other hand, is a creature of state law and may be expected to vary in content and effect according to the locality in which it is asserted. Free to operate as what Senator Taft characterized "a tremendous deterrent"[21] to the unfair labor practice for which it gives compensation, this damage recovery constitutes a state-created and state-administrated addition to the structure of national labor regulation that cannot claim even the virtue of uniformity.
Since the majority's decision on the permissibility of a state-court damage award is at war with the policies of the Federal Act and contrary to the decisions of this Court, it is not surprising that the bulk of its opinion is concerned with the comforting irrelevancy of the State's conceded power to reinstate the wrongfully expelled. But it will not do to assert that the "possibility of conflict with federal policy" is as "remote" in the case of damages as with reinstatement. As we have seen, the Board has no power to order the restoration of union membership rights, while its power to require the payment of back pay is well recognized and often exercised. If a state court may duplicate the latter relief, and award exemplary or pain and suffering damages as well, employees will be deterred from resorting to the curative machinery of the *632 Federal Act. The majority apparently blinks at that result in order that the state court may "fill out this remedy." To avoid "mutilat[ing]" the state equity court's conventional powers of relief, the majority reaches a decision that will frustrate the remedial pattern of the Federal Act. How different that is from Guss v. Utah Labor Relations Board, supra, where the remedial authority of a State was denied in its entirety because Congress had "expressed its judgment in favor of uniformity."
The majority draws satisfaction from the fact that this was a suit for breach of contract, not an attempt to regulate or remedy union conduct designed to bring about an employer discrimination. But the presence or absence of pre-emption is a consequence of the effect of state action on the aims of federal legislation, not a game that is played with labels or an exercise in artful pleading. In a pre-emption case decided upon what now seem to be discarded principles,[22] the author of today's majority opinion declared: "Controlling and therefore superseding *633 federal power cannot be curtailed by the State even though the ground of intervention be different than that on which federal supremacy has been exercised." Weber v. Anheuser-Busch, supra, at 480. I would adhere to the view of pre-emption expressed by that case and by Garner v. Teamsters C. & H. Local Union, supra, and reverse the judgment below.
NOTES
[*] "In determining the question of whether the exclusive jurisdiction to grant damages in a case of this kind lies in the Labor Relations Board, it is first necessary to determine the character of the pleadings and issues in this case. The petition alleged a breach of contract between the union and plaintiff, one of its members. . . . It took the form of a petition for writ of mandate because damages alone would not be adequate to restore to petitioner the things of value he had lost by reason of the breach. No charge of `unfair labor practices' appears in the petition. The answer to the petition denied its allegations and challenged the jurisdiction of the court, but said nothing about unfair labor practices. The evidence adduced at the trial showed that plaintiff, because of his loss of membership, was unable to obtain employment and was thereby damaged. However, this damage was not charged nor treated as the result of an unfair labor practice but as a result of the breach of contract. Thus the question of unfair labor practice was not raised nor was any finding on the subject requested of, or made by, the court." 142 Cal. App. 2d 207, 217, 298 P. 2d 92, 99.
[1] 346 U. S., at 490.
[2] 346 U. S., at 498-499.
[3] "In Garner the emphasis was not on two conflicting labor statutes but rather on two similar remedies, one state and one federal, brought to bear on precisely the same conduct."
[4] "In the Garner case, Congress had provided a federal administrative remedy, supplemented by judicial procedure for its enforcement, with which the state injunctive procedure conflicted. . . . The care we took in the Garner case to demonstrate the existing conflict between state and federal administrative remedies in that case was, itself, a recognition that if no conflict had existed, the state procedure would have survived."
And see Guss v. Utah Labor Relations Board, 353 U. S. 1, 6: "The National Act expressly deals with the conduct charged to appellant which was the basis of the state tribunals' actions. Therefore, if the National Board had not declined jurisdiction, state action would have been precluded by our decision in Garner v. Teamsters Union, . . . ."
[5] 347 U. S., at 663.
[6] Speaking of the Laburnum case in Weber v. Anheuser-Busch, 348 U. S. 468, 477, the Court stated that "this Court sustained the state judgment on the theory that there was no compensatory relief under the federal Act and no federal administrative relief with which the state remedy conflicted."
[7] 353 U. S., at 9.
[8] 29 U. S. C. § 141.
[9] 29 U. S. C. § 158 (b) (2).
[10] But cf. International Union of Operating Engineers, Local No. 12, 113 N. L. R. B. 655, 662-663, enforcement granted, 237 F. 2d 670.
[11] Reply Brief for Petitioner, p. 4; R. 73-74, 134.
[12] The state appellate court concluded that "employers of the type of labor provided by members of this organization only hire through the union hiring hall." 142 Cal. App. 2d 207, 214, 298 P. 2d 92, 97. The opening statement for Gonzales in the trial court declared that "everytime he applies for a job, he is told to go to the hall to get a clearance . . . ." R. 36. Gonzales' testimony on that subject was excluded as hearsay. R. 60-61.
[13] It is unnecessary to consider whether a § 8 (b) (1) (A) violation was also involved.
[14] The cause of action under state law arose when the union denied Gonzales the benefits of membership by refusing dispatch. Subsequent employer refusals to hire merely established the damages. With the unfair labor practice, on the other hand, employer refusal or failure to hire is an essential element of the wrongful conduct. In either case Gonzales is required to prove the same union and employer conduct to qualify for compensation.
[15] Born v. Laube, 213 F. 2d 407, rehearing denied, 214 F. 2d 349; McNish v. American Brass Co., 139 Conn. 44, 89 A. 2d 566; Morse v. Local Union No. 1058 Carpenters and Joiners, 78 Idaho 405, 304 P. 2d 1097; Sterling v. Local 438, Liberty Assn. of Steam and Power Pipe Fitters, 207 Md. 132, 113 A. 2d 389; Real v. Curran, 285 App. Div. 552, 138 N. Y. S. 2d 809; Mahoney v. Sailors' Union of the Pacific, 45 Wash. 2d 453, 275 P. 2d 440.
[16] H. R. Rep. No. 1147 on S. 1958, 74th Cong., 1st Sess. 23-24; H. R. Rep. No. 972 on S. 1958, 74th Cong., 1st Sess. 21; H. R. Rep. No. 969 on H. R. 7978, 74th Cong., 1st Sess. 21.
[17] The new Act deleted the provision in § 10 (a) that the Board's power to prevent unfair labor practices was "exclusive," but the Committee reports make abundantly clear that the deletion was only made to avoid conflict with the new provisions authorizing a federal-court injunction against unfair labor practices (§ 10 (j) and (l), 29 U. S. C. § 160 (j) and (l)), and the provision making unions suable in the federal courts (§ 301, 29 U. S. C. § 185). H. R. Conf. Rep. No. 510 on H. R. 3020, 80th Cong., 1st Sess. 52. Amazon Cotton Mill Co. v. Textile Workers Union, 167 F. 2d 183.
[18] H. R. 3020, 80th Cong., 1st Sess.; H. R. Rep. No. 245 on H. R. 3020, 80th Cong., 1st Sess. 43-44.
[19] § 303, Labor Management Relations Act of 1947, 29 U. S. C. § 187. An examination of the Committee reports and debates concerning this provision reveals that the additional relief was a product of congressional concern that, for this type of conduct, the Board's ordinary cease-and-desist order was "a weak and uncertain remedy." Corrective action was entirely in the discretion of the Board, and the delay involved in setting its processes in motion could work a great hardship on the victims of the boycott. S. Rep. No. 105 on S. 1126, Supp. Views, 80th Cong., 1st Sess. 54-55; 93 Cong. Rec. 4835-4838. The Senate rejected a proposal for injunctive relief in the state courts (93 Cong. Rec. 4847), but created this federal right of action for damages. Senator Taft, the author of the amendment, voiced its two objectives: it would effect restitution for the injured parties (93 Cong. Rec. 4844, 4858), and "the threat of a suit for damages is a tremendous deterrent to the institution of secondary boycotts and jurisdictional strikes" (93 Cong. Rec. 4858).
[20] "By this provision [§ 303], the Act assures uniformity, otherwise lacking, in rights of recovery in the state courts . . . ." United Constr. Workers v. Laburnum Constr. Corp., 347 U. S. 656, 665-666.
[21] 93 Cong. Rec. 4858.
[22] Compare the characterization of the Laburnum case in Weber v. Anheuser-Busch, supra, with the proportions that case has assumed in today's decision.
Then: "United Constr. Workers v. Laburnum Constr. Corp., 347 U. S. 656, was an action for damages based on violent conduct, which the state court found to be a common-law tort. While assuming that an unfair labor practice under the Taft-Hartley Act was involved, this Court sustained the state judgment on the theory that there was no compensatory relief under the federal Act and no federal administrative relief with which the state remedy conflicted." 348 U. S., at 477.
Now: "If, as we held in the Laburnum case, certain state causes of action sounding in tort are not displaced simply because there may be an argumentative coincidence in the facts adducible in the tort action and a plausible proceeding before the National Labor Relations Board, a state remedy for breach of contract also ought not be displaced by such evidentiary coincidence when the possibility of conflict with federal policy is similarly remote." Ante, p. 621.
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931 F.2d 887Unpublished Disposition
NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit.Floyd TUCKER, Plaintiff-Appellant,v.Melvin BITTINGER, Jerry Helms, Defendants-Appellees.
No. 90-7181.
United States Court of Appeals, Fourth Circuit.
Submitted March 27, 1991.Decided April 25, 1991.
Appeal from the United States District Court for the District of Maryland, at Baltimore. Daniel E. Klein, Jr., Magistrate Judge. (CA-89-81-JH)
Floyd Tucker, appellant pro se.
Glenn William Bell, Office of the Attorney General of Maryland, Baltimore, Md., for appellees.
D.Md.
AFFIRMED.
Before PHILLIPS and CHAPMAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.
PER CURIAM:
1
Floyd Tucker appeals from a jury verdict in favor of the defendant correctional officers in his 42 U.S.C. Sec. 1983 action in which he alleged assault and use of excessive force. Upon a thorough review of the trial transcript, we find that the verdict is sufficiently supported and there are no other issues meriting reversal. Therefore, we affirm the judgment. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the Court and argument would not aid the decisional process.
2
AFFIRMED.
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96 Ariz. 28 (1964)
391 P.2d 586
STATE of Arizona, Appellee,
v.
Jose Santa Cruz HERNANDEZ, Appellant.
No. 1321.
Supreme Court of Arizona, In Division.
April 22, 1964.
*30 Robert W. Pickrell, Atty. Gen., Charles N. Ronan, County Atty. of Maricopa County, and Robert J. Corcoran, Deputy County Atty., Phoenix, for appellee.
Ronald G. Cooley, Phoenix, for appellant.
STRUCKMEYER, Justice.
Appellant Jose Santa Cruz Hernandez and one Daniel Vega Ponce, a seventeen-year-old boy, were charged with the offense of illegal sale of marijuana, a felony. Appellant was convicted and brings this appeal.
Appellant was employed as a truck driver between Phoenix, Arizona, and Juarez, Mexico. It was his duty to locate used tires, cut them into appropriate sizes and return with them to Mexico where they were used by appellant's employer as soles for Mexican huraraches. On the night of October 16, 1962, Joseph J. Villa, a police officer for the City of Phoenix assigned to the narcotic section, who speaks "Mexican" Spanish, went to 41st Avenue and Weir Drive in the company of police officers Richard Newton and James Gardner. The latter two hid in the bushes about ten feet from Officer Villa. At about 7:30 p.m. appellant drove up in his truck, got out and walked over to Villa who asked him if he had the "grifa" meaning marijuana.
After some conversation, appellant handed to Villa a package containing 1.2 pounds of a leafy green substance later determined to be marijuana. Villa gave $100.00 to appellant. Thereafter appellant was immediately arrested. Later that evening, upon being interrogated at the offices of the State Liquor Control, appellant admitted that he knew the contents of the package was grifa and that he had sold it for $100.00 to Villa.
Appellant urges that as a matter of law the evidence supports a defense of entrapment. The defense arises out of appellant's testimony to this effect: That on the day in question appellant and Ponce arrived in Phoenix from Mexico; that they were in the habit of using a lot on the Salt River bed in Phoenix as a place to sleep and cut up used tires; that they were at this location, going about their work when they were approached by one Ramon Guajardo who asked the appellant if he would deliver a package for him for the reason that he, Guajardo, had to be at work later on that day; that Guajardo took the appellant to the location at 41st *31 Avenue and Weir Drive and told him to give the package to a man who would be there about 7:30 p.m.; that later that afternoon Guajardo left the package with him and told him that he was to receive $100.00 in return for it.
Guajardo testified at the trial that he had been convicted of the sale of marijuana and had received a five-year suspended sentence; that about noon he saw the appellant and Ponce near the Salt River; that he went there for the purpose to see if appellant had any marijuana; that after arriving he told appellant he knew a person who would buy marijuana; that he had made arrangements for Villa and the other two police officers to be present at 7:30 p.m. at the meeting place; that he had never seen the package, a paper bag, or its contents and he did not ask appellant to deliver the package for him.
Appellant's position is that Guajardo planted the seed of the crime in appellant's mind and that the intent to sell marijuana originated in the mind of the state's informer. Appellant is correct in his argument that a crucial element of the defense of entrapment is that the intent to commit the crime must not arise in the mind of the accused. Hoy v. State, 53 Ariz. 440, 90 P.2d 623, and see Silva v. United States, 9 Cir., 212 F.2d 422; Lutfy v. United States, 9 Cir., 198 F.2d 760, 33 A.L.R.2d 879. However, the defense of entrapment does not arise where one is ready to commit the offense given but the opportunity, Bloch v. United States, 9 Cir., 226 F.2d 185; Cline v. United States, 9 Cir., 9 F.2d 621.
In the latter case, the court said:
"* * * the officers did nothing to induce the defendant to acquire the contraband. They merely offered to buy that which they were advised the defendant was ready to sell. This does not constitute entrapment * * *."
In the instant case, the jury could believe, under the conflict in the evidence, that the informer Guajardo was merely the go-between; that the appellant knew of the nature of the contents of the package; that the police officers did nothing personally to induce the appellant to acquire the marijuana; and that they merely offered to buy what the defendant was willing to sell.
It was the prosecution's burden to establish with whom the intent to sell the marijuana originated. The jury had before it all the evidence. It could view the attitude and demeanor of the witnesses. It was properly instructed on the defense of entrapment and decided the facts against appellant. On appeal, the evidence and all reasonable inferences therefrom must be considered in the strongest light in favor of the verdict. State v. Hilliard, 89 Ariz. 129, 359 P.2d 66; State v. Milton, 85 Ariz. *32 69, 331 P.2d 846; State v. Stephens, 66 Ariz. 219, 186 P.2d 346.
Appellant urges that the county attorney, in his argument, twisted one of the court's instructions on entrapment to appellant's prejudice by arguing, in effect, that to have entrapment the witness Guajardo must have given the package of marijuana to appellant. We do not so understand the prosecution's argument. This statement was made:
"If you find that he [Guajardo] gave this marijuana to these defendants and they did not know what it was, and they delivered it to Officer Villa and simply collected a hundred dollars for it as a favor to Guajardo, you just find the defense of entrapment is good and bring in a verdict of not guilty." (Emphasis supplied.)
This portion of the argument is consistent with the appellant's testimony to the effect that he obtained the marijuana from Guajardo, that he did not know what was in the package, that he delivered it to Officer Villa and collected the $100.00 simply as a favor to Guajardo. If the jury believed that appellant did not know he was selling marijuana, no criminal intent would exist and appellant would not be guilty of the offense charged. And this would be true whether appellant was induced to sell marijuana by an agent or informer of the State or by another, a third person, who had no connection with the police.
The factual situation presented by the defendant, that he did not know what was in the package, if believed by the jury, would of course constitute a complete defense to the charge independent of the law of entrapment. Scienter, knowledge by appellant that there was contraband in the package, is as necessary here as in other criminal statutes. See State v. Locks, 91 Ariz. 394, 372 P.2d 724. The prosecution's argument simply stated one set of circumstances under which the appellant would not be guilty.
The appellant argues that "it would make no difference in the defense of entrapment if the witness Guajardo gave the said marijuana to the Defendant, or if this Defendant had the said marijuana with him at the time of his arrival in Phoenix." But the trial court properly covered this latter contingency with this instruction:
"If you find as a fact that Ramon Guajardo was acting as an agent of the State and originated the criminal intent to commit the crime of the illegal sale of marijuana into the minds of the defendants, and the said defendants acted upon the advice of said Ramon Guajardo and sold marijuana to Officer Villa, then you must find the defendants not guilty."
We are of the opinion that the county attorney's argument did not result in prejudice to appellant.
*33 Appellant urges that the county attorney was guilty of misconduct in asking a question on cross-examination which tended to prejudice the jury against appellant. The prosecution first asked the question:
"You have stated on direct examination that you never sold marijuana to anyone, is that correct?"
The appellant answered:
"I have never sold it to anyone."
The prosecution then asked this question:
Does that include Ramon Guajardo?"
The last question tended to suggest to the jury that appellant had previously sold marijuana to Guajardo, that therefore appellant was in the business of selling marijuana and that he was a "bad man" having committed prior felonies. However, reversible error was not committed under the peculiar circumstances of this case.
Appellant's attorney objected to the question and his objection was sustained. No request was made that the jury be admonished to disregard the inference suggested by the question. Where there is a failure to request an instruction that the jury disregard the question or to ask for a mistrial, no predicate for an appeal exists. The trial court must be given the opportunity to correct asserted errors before an appellate court will listen to a plea that an injustice has been perpetrated. See Mong Ming Club v. Tang, 77 Ariz. 63, 266 P.2d 1091; Bruno v. San Xavier Rock & Sand Co., 76 Ariz. 250, 263 P.2d 308.
In any event, we doubt that prejudice resulted to appellant. At the conclusion of the evidence and the arguments, the court gave a cautionary instruction to the jury to the effect that as to any offer of evidence rejected by the court the jury was not to enter into conjecture as to what the answer might have been. We cannot assume other than that the jury confined its deliberations within the bounds of the court's instructions.
Appellant urges error in the closing argument of the county attorney wherein he referred to evidence contained in a transcript of the preliminary hearing which had not been received in evidence. Appellant did not object to the county attorney's argument and hence such may not be the predicate for the assignment of error in this Court. State v. Evans, 88 Ariz. 364, 356 P.2d 1106; State v. Boozer, 80 Ariz. 8, 291 P.2d 786; State v. Aldrich, 75 Ariz. 53, 251 P.2d 653. For a similar reason, the reference by the county attorney to a police report which was not introduced in evidence was not error.
Judgment of the court below is affirmed.
UDALL, C.J., and JENNINGS, J., concur.
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Electronically Filed
Intermediate Court of Appeals
CAAP-12-0000083
31-DEC-2014
01:35 PM
|
104 Ill. App.3d 969 (1982)
433 N.E.2d 967
THE PEOPLE OF THE STATE OF ILLINOIS, Plaintiff-Appellee,
v.
DAVID STRIBLING, Defendant-Appellant.
No. 80-919.
Illinois Appellate Court First District (1st Division).
Opinion filed March 8, 1982.
*970 Daniel D. Yuhas and James G. Woodward, both of State Appellate Defender's Office, of Springfield, for appellant.
Richard M. Daley, State's Attorney, of Chicago (Michael E. Shabat, Michele A. Grimaldi, and Michael J. Kelly, Assistant State's Attorneys, of counsel), for the People.
Reversed and remanded.
JUSTICE McGLOON delivered the opinion of the court:
Following a jury trial, David Stribling was convicted of murder. He was sentenced to a term of imprisonment of not less than 250 years and not more than 500 years. Defendant now appeals his conviction.
On appeal, defendant argues that the trial court erred: (1) in failing to order a fitness hearing; (2) in denying his motion to suppress his post-arrest statement as the fruit of an unlawful arrest; and (3) in failing to comply with the requirements of Supreme Court Rule 401 regarding waiver of counsel.
We reverse and remand for a new trial.
On June 8, 1974, Jack Fuerst was found dead in the service garage of his car dealership at 8159 S. Stoney Island in Chicago. In December of *971 1975, David Stribling (defendant) was first implicated in the Fuerst murder by an informant. On January 20, 1976, in an unrelated criminal proceeding, defendant was found unfit to stand trial and was committed to the Department of Mental Health. In February of 1977, defendant was found fit to stand trial. He was tried and convicted of the unrelated criminal matter. He served a sentence in the Illinois State Penitentiary and was paroled on December 15, 1977. Defendant was arrested by Chicago police officers on April 20, 1978, as he left a courtroom in which he had appeared on another unrelated matter. He was charged by indictment with murder and armed robbery. Following a jury trial, defendant was found guilty of murder and sentenced to serve a minimum of 250 years to a maximum of 500 years imprisonment in the Illinois Department of Corrections. Other pertinent facts will be mentioned in the opinion which follows.
1, 2 Defendant argues that the trial court erred in failing to hold a hearing on his fitness to stand trial. In Illinois, a defendant is considered fit to stand trial if he possesses two abilities. A defendant must be able to understand the nature and purpose of the proceedings against him and to assist in his defense. (See Ill. Rev. Stat. 1977, ch. 38, par. 1005-2-1(a)(1), (2).) The critical inquiry is whether the facts present a bona fide doubt as to whether a defendant possessed these two abilities. (People v. Murphy (1978), 72 Ill.2d 421, 431, 381 N.E.2d 677.) The question of a defendant's fitness may be raised by the State, the defendant himself, or the trial court. (Ill. Rev. Stat. 1977, ch. 38, par. 1005-2-1(b).) Even if neither the defendant nor the State raises the issue, it is incumbent upon the trial court to order a fitness hearing once facts are brought to its attention which raise a bona fide doubt of a defendant's fitness. See 72 Ill.2d 421, 430.
In the present case, neither defendant nor the State requested a fitness hearing. Two different trial judges were apprised of the fact that defendant previously had been found unfit to stand trial, but neither ordered a fitness hearing. On May 15, 1979, defendant moved to dismiss the charges against him on the ground that there was a 42-month delay between the Fuerst murder and the date when he was indicted. An oral stipulation of facts was presented to the court for the purpose of establishing defendant's whereabouts between the date of the offense and the time of his arrest. It was stipulated that on January 20, 1976, in an unrelated criminal proceeding, defendant was found unfit and committed to the Department of Mental Health. It was further stipulated that approximately one year later he was found fit. He was tried and convicted on the unrelated matter. He served his sentence in the Illinois State Penitentiary and was paroled on December 15, 1977. On April 20, 1978, he was arrested and charged with the Fuerst murder.
*972 On July 15, 1979, in a hearing before another judge on defendant's motion to quash the arrest, the fact that defendant previously had been found unfit was again mentioned. The police officer who had arrested defendant for the Fuerst murder testified that police investigators were aware that defendant had been in a mental institution as a result of having been found unfit to stand trial on an unrelated charge. Defendant corroborated the officer's testimony and further stated that he had been restored in front of a judge.
3-5 Generally, evidence of a prior adjudication of unfitness raises a presumption that the condition of unfitness remains. (People v. Williams (1980), 92 Ill. App.3d 608, 612, 415 N.E.2d 1192.) This presumption continues until there has been a valid hearing adjudicating him fit. (92 Ill. App.3d 608, 612.) Although the record in the instant case contains no documentation verifying defendant's restoration, the fact that it was stipulated that he had been judicially restored effectively negates any presumption of unfitness. Defendant cannot on appeal complain of evidence which he has stipulated into the record. (People v. Hawkins (1963), 27 Ill.2d 339, 341, 189 N.E.2d 252.) Nevertheless, we believe that the fact that defendant previously had been adjudicated unfit to stand trial is one factor which must be considered in deciding whether a fitness hearing should have been ordered in the trial court.
The record contains other evidence which brings into question whether defendant actually was able to understand the nature and purpose of the proceedings against him and to assist in his defense. When his case was called for trial on July 31, 1979, defendant demanded that his court-appointed attorney be dismissed. He accused the attorney of entering into a conspiracy with the prosecution and police. Defendant persisted in demanding that his trial attorney be dismissed. The trial judge warned defendant that his complaints and obstinate behavior in the jury's presence could prejudice his cause. In response to the judge's admonishment, defendant said, "I don't understand what your honor is saying." Eventually, the trial judge was convinced that defendant's attitude toward his court-appointed attorney required that the representation be terminated and defendant proceeded pro se. Defendant's comments during trial and his pro se appellate brief indicate that he was obsessed with the notion that he had been conspired against and that he was irrationally suspicious of everyone involved in the trial court proceeding.
To support his allegation of the existence of a conspiracy, defendant tendered to the trial court a list of 83 witnesses he wanted to subpoena. In opening argument, defendant stated that he intended to prove that the Fuerst murder never happened. He presented no evidence whatsoever in support of either his conspiracy allegation or his defense theory.
*973 The State argues that defendant's cross-examination of witnesses, his own testimony and his objections during trial demonstrate his "cunning ability" to understand the nature of the proceedings and to cooperate with his counsel. It is evident from the record that defendant is relatively familiar with legal terminology and courtroom procedure. Defendant's familiarity with legal jargon and procedure, however, does not necessarily indicate that he was able to understand the nature of the proceedings against him or to assist in his defense. In our opinion, defendant's cross-examination of State's witnesses, his constant interjection of inappropriate objections "for the record," and his rambling closing argument demonstrate an inadequate ability to assist in his own defense.
6 As the United States Supreme Court stated in Drope v. Missouri, "[t]here are * * * no fixed or immutable signs which invariably indicate the need for further inquiry to determine fitness to proceed; the question is often a difficult one in which a wide range of manifestations and subtle nuances are implicated." (Drope v. Missouri (1975), 420 U.S. 162, 180, 43 L.Ed.2d 103, 118, 95 S.Ct. 896, 898.) In our judgment, the fact that defendant previously had been diagnosed as unfit to stand trial, coupled with his conduct at trial, raised a bona fide doubt of his fitness to stand trial. We, therefore, reverse and remand for a fitness hearing and a new trial.
Defendant also contends that the trial court erred in denying his motion to suppress his confession. He argues that his confession was the fruit of an arrest that was not based on probable cause. We find no merit in this contention. Additionally, he claims that the trial court erred in forcing him to trial without counsel in that it failed to comply with the requirements of Supreme Court Rule 401 regarding waiver of counsel. We need not address this issue in light of our reversal on the fitness issue.
Judgment reversed; cause remanded for a new trial.
CAMPBELL, P.J., and O'CONNOR, J., concur.
|
286 S.W.3d 63 (2009)
Demetrick Cortez CHRISTIAN, Appellant,
v.
The STATE of Texas, Appellee.
No. 06-07-00163-CR.
Court of Appeals of Texas, Texarkana.
Submitted April 2, 2009.
Decided April 24, 2009.
*64 Mary Ann Rea, Longview, for appellant.
Carl Dorrough, Dist. Atty., W. Ty Wilson, Zan Colson Brown, Asst. Dist. Atty's, Longview, for appellee.
Before MORRISS, C.J., CARTER and MOSELEY, JJ.
OPINION
Opinion by Justice CARTER.
Demetrick Cortez Christian[1] appeals from the denial of a motion to quash an indictment alleging he committed murder in the course of delivering a controlled substance. Section 1.03 of the Texas Penal Code states that Titles 1 through 3 of the Code apply to offenses defined by other laws. TEX. PENAL CODE ANN. § 1.03 (Vernon 2003). In his sole argument on appeal, Christian contends this Section impliedly bars the use of a violation of a drug offense in the Texas Health and Safety Code as the felony required to prove an element of murder. See TEX. PENAL CODE ANN. § 19.02(b)(3) (Vernon 2003) (commonly called felony murder). We disagree and affirm the trial court's decision denying the motion to quash.
I. FACTUAL AND PROCEDURAL HISTORY
A. A Drug Deal Gone Bad
Christian admitted to brokering a crack cocaine deal between dealer Brandon Mayfield and Pedro Santos. He brought the dealer to Santos' house to complete delivery of the crack cocaine. According to Christian, Santos' girlfriend, Mary Colbert, opened the door and invited the men inside. Colbert testified she was walking out of the front door on her way to work when two men wearing bandannas over their faces came up behind her with a gun and told her to step back inside.[2]
According to Christian, Santos refused to pay after Mayfield delivered the crack cocaine. This led Mayfield to beat Santos over the head several times with a Glock 40, while Christian held a gun to Colbert's side to keep her at bay. During the bloody beating, which resulted in a "pool of blood" cumulating on the bathroom floor, the gun fell to the ground. Mayfield picked the gun up and cocked it. Fearing for his life, Santos struggled with Mayfield for control of the gun. Amidst the melee, Mayfield was shot, and he promptly fled Santos' home with Christian in tow.
Several Longview police officers were dispatched to the scene. They observed Santos standing on his porch in a pool of blood with a blood-soaked towel on his head. Although Santos was quickly transported to the emergency room, his brain hemorrhaged and he died as a result of the blunt-force injury.
B. Procedural History
*65 Christian was indicted under several counts and convicted only on the charge that he:
did then and there intentionally or knowingly commit or attempt to commit an act clearly dangerous to human life, to-wit: beat Pedro Santos with a firearm, that caused the death of Pedro Santos, and the defendant was then and there in the course of intentionally or knowingly committing a felony, to-wit: delivery of a controlled substance, and the death of Pedro Santos was caused while the defendant was in the course of and in furtherance of the commission or attempt of said felony.
Christian filed a motion to quash this indictment, alleging that this paragraph was "defective in that it fail[ed] to state an offense under the penal code in that Title 5 of the Penal Code do[es] not apply to the Controlled Substances Act." The trial court held a hearing in which Christian's counsel referred to Section 1.03 of the Texas Penal Code and argued "the only three sections of the Penal Code that incorporate other law that create felonies are in Titles 1, 2, and 3." The motion to quash was denied, and Christian was sentenced to twenty-five years' incarceration and a $5,000.00 fine.[3]
II. ANALYSIS
Since the sufficiency of a charging instrument presents a question of law, we review de novo a trial court's decision denying a motion to quash an indictment. State v. Barbernell, 257 S.W.3d 248, 251-52 (Tex.Crim.App.2008); Lawrence v. State, 240 S.W.3d 912, 915 (Tex.Crim.App. 2007); Tollett v. State, 219 S.W.3d 593, 596 (Tex.App.-Texarkana 2007, pet. ref'd).
The Texas Penal Code states a person commits an offense if he or she:
commits or attempts to commit a felony, other than manslaughter, and in the course of and in furtherance of the commission or attempt ... he commits or attempts to commit an act clearly dangerous to human life that causes the death of an individual.
TEX. PENAL CODE ANN. § 19.02(b)(3) (Vernon 2003).
Christian alleges the State failed to "state a criminal offense." Although both murder and delivery of a controlled substance are felonies, Christian argues that Texas precedent and the language of Section 1.03 prohibit the application of the Texas Penal Code to the Texas Health and Safety Code. See TEX. HEALTH & SAFETY CODE ANN. § 481.112 (Vernon 2003).
The elemental principle of transferred intent is ingrained in the history of our criminal law. Lomax v. State, 233 S.W.3d 302, 304 (Tex.Crim.App.2007) (deciding that felony murder statute "dispenses with culpable mental state is consistent with the historical purpose of the felony-murder rule, the very essence of which is to make a person guilty of an `unintentional' murder when he causes another person's death during the commission of some type of a felony"). Thus, in essence, Christian argues intent to deliver cocaine cannot be transferred to satisfy the requirements of Section 19.02, i.e., there is no underlying offense. To aid our determination in this matter, we will begin by interpreting the plain meaning of the felony murder statute.
A. The Plain Meaning of the Felony Murder Statute
*66 If the language of a statute is clear and unambiguous, extrinsic aids and rules of statutory construction are inappropriate, and the statute should be given its common everyday meaning. City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex.2008); Rodriguez v. State, 953 S.W.2d 342, 353 (Tex.App.-Austin 1997, pet. ref'd). If a word is clearly and unambiguously defined by the Legislature, the definition is binding on the courts. Transport Ins. Co. v. Faircloth, 898 S.W.2d 269, 274 (Tex. 1995). "The provisions of [the Penal Code] shall be construed according to the fair import of their terms, to promote justice and effect the objectives of the code." TEX. PENAL CODE ANN. § 1.05 (Vernon 2003).
Section 19.02(b)(3) of the Texas Penal Code allows the transfer of intent of any person who "commits or attempts to commit a felony, other than manslaughter." Threadgill v. State, 146 S.W.3d 654, 665 (Tex.Crim.App.2004). The definition of "felony" is "an offense so designated by law or punishable by death or confinement in a penitentiary." TEX. PENAL CODE ANN. § 1.07(a)(23) (Vernon Supp.2008). The Code further defines "law" as including "the constitution or a statute of this state or of the United States." TEX. PENAL CODE ANN. § 1.07(a)(30) (Vernon Supp.2008). Since the Health and Safety Code is a Texas law that designates delivery of cocaine as a felony, and this felony is not manslaughter, the plain reading of the statute leads us to conclude delivery of a controlled substance can be used to supply the underlying offense in a felony murder charge.
B. Canons of Construction
One familiar canon firmly grounded in Texas jurisprudence is the rule of expressio unius est exclusio alterius,[4] reasoning that a statute's inclusion of a specific limitation excludes all other limitations of that type. United Servs. Auto. Ass'n v. Brite, 215 S.W.3d 400, 403 (Tex.2007); State v. Mauritz-Wells Co., 141 Tex. 634, 175 S.W.2d 238, 241 (1943); Rodriguez, 953 S.W.2d at 354 (citing Guinn v. State, 696 S.W.2d 436, 438 (Tex.App.-Houston [14th Dist.] 1985, pet. ref'd)). Here, the felony murder statute exempts only manslaughter as an underlying offense. Application of expressio unius est exclusio alterius suggests that all other felonies can serve as an underlying offense.
Another canon of construction mandates the presumption that the Legislature knew of prior court decisions before enacting or amending a statute. Cases decided before the amendments made to the felony murder statute in 1994, and wherein petitions for discretionary review were refused by the Texas Court of Criminal Appeals, specifically included the application of extra-penal offenses to the felony murder rule. Nevarez v. State, 847 S.W.2d 637, 641, 648 (Tex.App.-El Paso 1993, pet. ref'd) (affirming denial of motion to quash a felony murder indictment with possession of marihuana as underlying offense); Bryant v. State, 793 S.W.2d 59, 60 (Tex.App.-Austin 1990, pet. ref'd) (upholding conviction based on felony murder indictment with possession of marihuana as underlying offense); Stanford v. State, No. 01-87-00899-CR, 1988 WL 113997, at *1-3 (Tex. App.-Houston [1st Dist.] Oct. 27, 1988, pet. ref'd) (mem. op., not designated for publication) (upholding trial court's denial of defendant's motion to quash indictment based on argument that possession and delivery of cocaine could not supply mens rea for felony murder statute). Thus, the Legislature was presumed to know Texas courts were approving the use of offenses in the Texas Health and Safety Code to *67 supply the felony required in the felony murder statute, but did nothing in subsequent amendments which would exhibit disagreement with these holdings. See Davis v. State, Nos. 05-98-02108-CR, 05-98-02109-CR, 2000 WL 768632, at *4 (Tex. App.-Dallas June 15, 2000, pet. ref'd) (mem. op., not designated for publication) (discussing application of felony murder statute to drug sale).
C. Christian's Cited Cases Are Distinguishable
Despite our holding that the plain meaning of the felony murder statute is dispositive of Christian's point of error, we must address the three cases forming the majority of his argument. In each of these cases, the defendant was charged with attempting or conspiring to commit an offense not found in the Texas Penal Code.
The first case is Moore v. State, 545 S.W.2d 140 (Tex.Crim.App.1976). In Moore, an appeal was taken from a conviction of attempt to obtain a controlled substance through fraud. Id. at 141. Moore did not violate the Controlled Substances Act in the Texas Health and Safety Code on which the indictment was based because the statute required actual possession of the substance. In order to circumvent this obvious deficiency, the State argued that the Legislature intended for the general criminal attempt provision enumerated in Title 4 of the Texas Penal Code to apply to violations of the Controlled Substances Act. Id. Reasoning that Section 1.03(b) of the Texas Penal Code specifically stated only "Titles 1, 2, and 3 of this code apply to offenses defined by other laws," and aptly noting there was no law that prohibited attempted possession, the Texas Court of Criminal Appeals concluded that the attempt provision in Title 4 of the Penal Code was not meant to combine with the Health and Safety Code to create a new offense. Id. at 142. The court held the indictment did not allege an offense and, therefore, the conviction was void. Id.
This ruling was affirmed in Baker v. State, decided the following year. 547 S.W.2d 627 (Tex.Crim.App.1977). Baker was charged with conspiracy to sell marihuana. Id. at 628. Once again, the Controlled Substances Act under which Baker was charged required an intentional or knowing delivery of marihuana. Id. The State argued that the Texas Penal Code's general criminal conspiracy statute contained in Title 4 could latch onto the Controlled Substances Act to create a new offensethe conspiracy to sell marihuana. Id. at 629. The court rejected the State's argument, employing the same reasoning as in Moore, and held the criminal conspiracy statute did not apply to the Controlled Substances Act. Id. Consequently, the Texas Court of Criminal Appeals found the underlying conviction was void because the charging instrument did not allege an offense against the laws of the state. Id.
The last case addressed by Christian was State v. Colyandro, 233 S.W.3d 870 (Tex.Crim.App.2007). John Colyandro, James Ellis, and Tom Delay were charged with conspiracy to violate certain provisions of the Texas Election Code, including conspiracy to make an unlawful political contribution. Id. None of the provisions of the Texas Election Code with which they were charged made mere conspiracy to violate the Code an offense. As in Baker, the State argued that the general criminal conspiracy statute could tag onto the Texas Election Code to create a new violation. Id. The Texas Court of Criminal Appeals granted review on the State's allegation that the lower court erred in holding that "the criminal conspiracy provisions of section 15.02 of the Texas Penal Code did not apply to the felony offense of *68 making an illegal contribution under the Texas Election Code." Id. at 874.
In Colyandro, the majority reaffirmed and relied on Baker and Moore, which they stated "yielded broad implicit holdingsthat the inchoate offenses contained in Title 4 do not apply to offenses defined outside the Penal Code."[5] In other words, the court was bound by the principle of stare decisis and held the conspiracy statute could not apply to the Election Code to create a new offense. Id. at 874-76, 884. The majority also noted that, after Baker and Moore were decided, the Legislature amended many, but not all, extra-penal code provisions to specifically include conspiracy. Based on the rationale that the Legislature had ratified its decision in Baker and Moore, the court determined not to globally apply conspiracy to extra-penal code offenses. Id. at 878. The court upheld the trial court's finding that the indictment failed to allege an offense and its quashing of the "Election Code-based conspiracy charges." Id. at 885.[6]
In contrast with these three cases, Christian was charged with a violation of the Penal Code: murder. Murder is committed if a person:
(1) intentionally or knowingly causes the death of an individual;
(2) intends to cause serious bodily injury and commits an act clearly dangerous to human life that causes the death of an individual; or
(3) commits or attempts to commit a felony, other than manslaughter, and in the course of and in furtherance of the commission or attempt, or in immediate flight from the commission or attempt he commits or attempts to commit an act clearly dangerous to human life that causes the death of an individual.
TEX. PENAL CODE ANN. § 19.02.
The three methods of committing murder set forth in the statute are different manner and means of committing the same offense, not distinct and separate offenses. Gandy v. State, 222 S.W.3d 525, 529 (Tex.App.-Houston [14th Dist.] 2007, pet. ref'd) (citing Aguirre v. State, 732 S.W.2d 320, 325-26 (Tex.Crim.App.1982) (holding that, where indictment contained two paragraphs, the first alleging murder under Section 19.02(b)(1) and the second alleging murder under Section 19.02(b)(3), the allegations were merely two different manner and means of committing the same offense)).
Christian was convicted for committing the offense of murder by the third manner and means authorized by the statute, usually referred to as the felony murder rule. Therefore, to convict Christian of murder by this manner and means, the State had to present evidence that he committed a felony. This indictment did not authorize a conviction for an offense that did not exist in law, but merely delineated the proof necessary to meet the statute's requirements for this particular manner and means of committing murder. In Baker, Moore, and Colyandro, each of the offenses *69 were created and defined by incorporating provisions from Title 4 (not 1, 2, or 3) of the Penal Code into violations of the law found outside the Penal Code. Here, the offense is promulgated in a well-established provision of the Texas Penal Code, which simply sets forth the methods for proving the statute was violated. We find these cases are distinguishable.
The holding of Colyandro, which is binding precedent, is that "the inchoate offenses contained in Title 4 do not apply to offenses defined outside the Penal Code." Colyandro, 233 S.W.3d at 874-75. However, in dictum[7] the Texas Court of Criminal Appeals also stated that the Texas Penal Code "directs the export of the provisions contained only in Titles 1, 2, and 3" and "contemporaneously bars the import of extra-penal offenses to offenses in Titles 4 through 11 of the Penal Code." Id. at 884. The dissent pointed out the difficulty of this dictum.
We need not apply this dictum to our case. The Moore, Baker and Colyandro opinions all dealt with fact situations that clearly did not amount to offenses under the extra-penal code sections with which those defendants were charged. In other words, there was no such crime as conspiracy or attempt to violate the Texas Health and Safety Code or the Texas Election Code. In those cases, the State could only survive a motion to quash if it could somehow attach an attempt or conspiracy provision to a statute outside the Texas Penal Code. Basically, the courts had to deal with the issue of whether a creative indictment could create a new offense for which the Legislature did not provide.
Here, the felony offense of murder, contained in the Penal Code, was charged by the indictment. The manner and means of proving this form of murder was by the commission of a felony. This felony offense supplied the intent for felony murder as has historically been understood and applied in this State. No new offense was created in the indictment and no absurd result bars the application of the plain meaning of the statute. For this reason, we need not venture into Colyandro's dictum. Moreover, we do not think that Colyandro, in its limited ruling, intended to overturn Texas felony murder jurisprudence as commonly understood in the courts of this State.
III. CONCLUSION
We affirm the trial court's judgment denying Christian's motion to quash the indictment.
NOTES
[1] The indictment and pleadings in his first trial (ending in mistrial) refer to Demetrick Christian, while all the pleadings in the second trial before us refer to Demectrick Christian.
[2] Colbert's version of the story is corroborated by Christian's and Santos' employer, Troy Morgan.
[3] Christian also objected to the inclusion of this indictment language in the trial court's charge.
[4] Literal translation: The expression of one thing is the exclusion of another.
[5] Before enactment of the Texas Penal Code, criminal statutes were scattered throughout Texas jurisprudence. When the Texas Penal Code was enacted, Titles 1 through 3, which involved general provisions and principles of criminal responsibility and punishments, were expressly applied to extra-penal offenses through Section 1.03 as a general framework for all criminal statutes.
[6] A vigorous dissent was filed by Judge Cochran and three other members of the court. Judge Price wrote a concurring opinion which indicated he agreed with Judge Cochran's reasoning, but felt bound by stare decisis. Judge Price further served notice that future reliance on Moore and Baker would be, "at best, unwise." Colyandro, 233 S.W.3d at 886.
[7] Dicta is language in an opinion that is unnecessary to the disposition of the case. State v. Brabson, 976 S.W.2d 182, 186 (Tex.Crim. App.1998). This Court is duty bound to accept the guidance of decisions of the Texas Court of Criminal Appeals (even though they are five-four decisions) unless the language of the decision in question is only dicta and not a part of the ratio decidendi. Dunkins v. State, 838 S.W.2d 898, 900 n. 1 (Tex.App.-Texarkana 1992, pet. ref'd).
|
573 F.2d 1309
U. S.v.Holladay
No. 77-5189
United States Court of Appeals, Fifth Circuit
5/8/78
N.D.Miss., 566 F.2d 1018
|
798 F.Supp. 458 (1992)
Joseph FERNANDEZ
v.
POWERQUEST BOATS, INC., a Michigan corporation, f/k/a Power Play Boats, Inc.
No. 1:90-CV-709.
United States District Court, W.D. Michigan, S.D.
August 13, 1992.
*459 Harold S. Sawyer, Grand Rapids, Mich., for plaintiff.
Mark R. Smith, Sandra S. Hamilton, Grand Rapids, Mich., for defendant.
MEMORANDUM OPINION
McKEAGUE, District Judge.
This case presents an action by a sales representative to recover commissions with respect to sales consummated after he was terminated. Both parties move for summary judgment, agreeing that the relevant facts are not disputed and that the matter is ripe for disposition as a matter of law. The Court has reviewed the briefs and other matters presented, heard arguments on August 3, 1992, and concludes that defendant is entitled to summary judgment.
I. FACTUAL BACKGROUND
In 1986, plaintiff Joseph Fernandez entered into an oral agreement with defendant Powerquest Boats, Inc. (manufacturer of power pleasure boats) to serve as sales representative in a territory including parts of the northeast coast from Maine to Virginia. As compensation, plaintiff was to receive commissions equalling 4% of gross boat sales made by Powerquest dealers recruited and serviced by plaintiff. The agreement was undisputedly indefinite as to duration and as to entitlement to commissions on sales completed after plaintiff's termination. Plaintiff was terminated on November 23, 1988, purportedly because of poor performance. He was paid all commissions due him for sales completed prior to termination.
In this action, plaintiff does not challenge the rightfulness of his discharge, conceding the relationship was terminable at will. Rather, plaintiff seeks payment of 4% commissions on all sales of boats made by Powerquest since November 23, 1988, to dealers he recruited and serviced. Plaintiff claims commissions totalling $42,939.24 through July 31, 1991. Plaintiff further seeks an accounting for each year thereafter until further order of the Court. Defendant Powerquest contends plaintiff's entitlement to commissions ended when he was terminated.
II. SUMMARY JUDGMENT STANDARD
The motions for summary judgment ask the Court to evaluate the factual support for the parties' positions. The Court must look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The standard for determining whether summary judgment is appropriate is "whether 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." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. *460 2505, 2512, 91 L.Ed.2d 202 (1986). "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-248, 106 S.Ct. at 2510 (emphasis in original). If the movant carries its burden of showing there is an absence of evidence to support a claim or defense, then the opponent must demonstrate by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). An issue of fact is "genuine" if the evidence is such that a reasonable jury could find for the opponent. Anderson, 477 U.S. at 248, 106 S.Ct. at 2510. An issue of fact concerns "material" facts only if establishment thereof might affect the outcome of the lawsuit under governing substantive law. Id. A complete failure of proof concerning an essential element of a claim or defense necessarily renders all other facts immaterial. Celotex Corp. v. Catrett, supra, 477 U.S. at 322-23, 106 S.Ct. at 2552-53.
III. DUTY TO PAY POST-TERMINATION COMMISSIONS
The parties agree that the oral "contract" was silent as to entitlement to post-termination commissions. (See Kevin Hirdes Affidavit, ¶ 4; Fernandez Dep. Tr., pp. 28-30). The parties also agree that the governing law on this issue is set forth in Reed v. Kurdziel, 352 Mich. 287, 293-95, 89 N.W.2d 479 (1958):
An examination of the law with reference to commissions allowed agents or brokers seems to indicate that it is difficult to determine a set line of decisions, particularly with reference to the right of an agent with an exclusive agency to recover commissions on sales made where he is the procuring cause. However, when they are viewed as a whole and brought into proper focus, they disclose the law applicable to the question is well settled and that the seeming confusion results from the application of that law to the particular facts of the specific cases in question. 12 ALR2d 1360, 1363, states as follows:
"The relationship between agent or broker and principal being a contractual one, it is immediately apparent that whether an agent or broker employed to sell personalty on commission is entitled to commissions on sales made or consummated by his principal or by another agent depends upon the intention of the parties and the interpretation of the contract of employment and that, as in the other cases involving interpretation, all the circumstances must be considered. ... This rule is recognized and stated in the American Law Institute, 2 Restatement, Agency, § 449, Comment a."
It would appear that underlying all the decisions is the basic principle of fair dealing, preventing a principal from unfairly taking the benefit of the agent's or broker's services without compensation and imposing upon the principal, regardless of the type of agency or contract, liability to the agent or broker for commissions for sales upon which the agent or broker was the procuring cause, notwithstanding the sales made have been consummated by the principal himself or some other agent. In Michigan, as well as in most jurisdictions, the agent is entitled to recover his commission whether or not he has personally concluded and completed the sale, it being sufficient if his efforts were the procuring cause of the sale. Reade v. Haak, 147 Mich. 42 [110 N.W. 130 (1907)]; Case v. Rudolph Wurlitzer Co, 186 Mich. 81 [152 N.W. 977 (1915)]; MacMillan v. C & G Cooper Co., 249 Mich. 594 [229 N.W. 593 (1930)]. In Michigan the rule goes further to provide if the authority of the agent has been cancelled by the principal, the agent would nevertheless be permitted to recover the commission if the agent was the procuring cause. Heaton v. Edwards, 90 Mich. 500 [51 N.W. 544 (1892)]; McGovern v. Bennett, *461 146 Mich. 558 [109 N.W. 1055 (1906)]; MacMillan v. C & G Cooper Co, supra.
Quoted in Butterfield v. Metal Flow Corp., 185 Mich.App. 630, 635-36, 462 N.W.2d 815 (1990) (emphasis added).
Thus, it is agreed that plaintiff's entitlement to post-termination commissions depends upon the parties' intentions as determined from the contract and other circumstances. Inasmuch as the oral agreement is silent on the question, defendant Powerquest contends it is clear the parties contemplated no such right. Plaintiff, on the other hand, urges the Court to construe the contract's silence as evidence that the parties intended that plaintiff would receive sales commissions ad infinitum for sales to dealers that he had recruited and serviced. Neither party has made any circumstantial showing to support its proffered interpretation of the agreement.
On the face of things, defendant Powerquest has made the requisite showing, in support of its motion for summary judgment, that there is an absence of evidence tending to show the parties intended that plaintiff would receive post-termination commissions. Plaintiff has not rebutted this showing factually by affidavit, deposition or otherwise. Indeed, plaintiff's deposition testimony indicates essentially that the only basis for his claim is his lawyer's representation as to the state of Michigan law. (Dep. Tr., pp. 32-38).[1] Consistent therewith, plaintiff's argument in support of his motion for summary judgment and in opposition to defendant's is a legal one.
To be sure, whether there is or is not a genuine issue of material fact must be determined under the governing substantive law. Anderson, supra, 477 U.S. at 248, 106 S.Ct. at 2510. The standards enunciated in Reed, supra, have been interpreted in relevant respect as follows:
Where the contract is silent, the agent is entitled to recover a commission on a sale, whether or not he personally concluded it, only where it can be shown that his efforts were the "procuring cause."
Roberts Associates, Inc. v. Blazer Int'l Corp., 741 F.Supp. 650, 652 (E.D.Mich. 1990). In other words, where the contract and other circumstances offer no guidance as to the parties' intentions, a duty to pay post-termination commissions may be implied-at-law to enforce notions of "fair dealing" and prevent the principal from unfairly taking advantage of the agent's services. Reed, supra. By imposing the duty upon the principal only with respect to sales as to which the agent's efforts were the "procuring cause," the Michigan law is designed to yield fair results for the principal as well as the agent.
Attached to plaintiff's motion for summary judgment is a listing of 39 post-termination boat sales to northeast territory dealers. No information is provided as to the extent of plaintiff's participation in the negotiations leading to these sales. Plaintiff argues, however, that inasmuch as there was no northeast territory and no Powerquest dealers there before he began working as sales representative in 1986, his efforts were directly or indirectly the procuring cause of each sale.
Such an expansive definition of "procuring cause" has been rejected. In Roberts Associates, supra, the court observed that Michigan cases interpret the concept of procuring cause quite narrowly. 741 F.Supp. at 652-53. The court observed that "where the agent does not participate in the negotiation of a given contract of sale with a customer, he is not the procuring cause, even though the agent may have originally introduced the customer to the principal." Id. at 653. Echoing the determination of an unpublished Sixth Circuit ruling, William Kehoe Associates v. Indiana Tube Corp., 891 F.2d 293 (6th Cir.1989), the court concluded the procuring cause doctrine protects acquisition of *462 orders, not acquisition of customers. Id. The court expressly rejected the construction of the procuring cause doctrine here urged by plaintiff, distinguishing the decision relied upon by plaintiff, Militzer v. Kal-Die Casting Co., 41 Mich.App. 492, 200 N.W.2d 323 (1972).
In Militzer, the Michigan Court of Appeals upheld entitlement to post-termination commissions even where the efforts of the plaintiff manufacturer's representative were arguably not the procuring cause of subsequent sales. The defendant Kal-Die Casting had orally agreed to pay the plaintiff a 5% commission on all sales to customers he procured in western Michigan. It was understood that the plaintiff was to be particularly aggressive in soliciting Eaton. After the plaintiff, through expenditure of "much time and energy" had obtained the Eaton account and the first two part orders, Kal-Die attempted to change the contractual arrangement and assigned a sales manager to the Eaton account. The plaintiff was terminated and sued to recover commissions, in accordance with the original agreement, on all sales to Eaton both before and after his termination.
The Court of Appeals held the plaintiff was entitled to commissions on all Eaton sales occurring before termination, in accordance with the parties' agreement. As to post-termination sales, however, he was held entitled to commissions only on sales which constituted reorders of parts first ordered before his termination. That is, notwithstanding the open-ended terms of the parties' agreement, the Militzer court did not hold the plaintiff was forever entitled to commissions on all sales of parts to Eaton. It restricted the award of post-termination commissions to those sales with respect to which the plaintiff's efforts were the "procuring cause," not in the narrow sense described in Roberts Associates, but in the broad sense which had been implicitly recognized in the parties' agreement.
Viewed in the light of the Roberts Associates analysis, the Militzer expansion of "procuring cause," ostensibly to serve the equities of the case, is questionable. Yet, even in Militzer, entitlement to post-termination commissions was deemed limited.... limited by the notion that the sales representative's recovery must be commensurate, in some manner, with his efforts.
Here, plaintiff Fernandez has been paid full commissions on all sales to northeast territory dealers occurring before his termination. In addition, he seeks full commissions on all post-termination sales. However, neither he nor defendant has suggested any means of limiting post-termination commissions so as to reasonably compensate him while observing notions of fair dealing for both parties. The present facts do not lend themselves to the sort of "reorder" limitation applied in Militzer. The 39 post-termination orders of power pleasure boats are not in the nature of reorders of fungible goods.
Further distinguishing the present case from Militzer is plaintiff's promise, in consideration of receiving the agreed to 4% commission, to not only recruit dealers in the northeast territory, but also to service them. In Militzer, the plaintiff had, at the time of termination, fully performed, through securing the Eaton account, the condition precedent to entitlement to limited post-termination commissions. Here, plaintiff Fernandez's performance of the conditions precedent to payment of ongoing commissions, recruitment and servicing of dealers, was not fully completed and ceased at the time of termination.
Under these circumstances, the Court concludes that application of the traditional, narrow procuring cause doctrine described in Roberts Associates is appropriate and just. The Roberts Associates ruling is not, of course, binding upon this Court, but it contains an excellent discussion of Michigan law, is well-reasoned, and is persuasive. Like Judge Avern Cohn in the Eastern District of Michigan, this Court is satisfied that the Michigan Supreme Court would adopt the narrow interpretation of the procuring cause doctrine if called upon to do so. Roberts Associates, 741 F.Supp. at 653. Accordingly, the Court concludes that plaintiff is entitled to posttermination *463 commissions only for sales with respect to which his efforts, in the form of customer servicing or negotiations, were the procuring cause.
Because no evidence has been presented by either party concerning plaintiff's involvement with the 39 post-termination boat sales, it would appear that genuine issues of material fact remain. However, the Court's interrogation of counsel during the hearing on August 3, 1992, pursuant to Fed.R.Civ.P. 56(d), revealed that plaintiff is not prepared to offer proof that his efforts were the procuring cause of any of the 39 sales. Plaintiff's counsel made it clear that the claim of entitlement to post-termination commissions is based entirely on the theory that plaintiff's initial recruitment of the dealers in the northeast territory makes him, ipso facto, the procuring cause of all subsequent sales to those dealers. Counsel further made it clear that this case is ripe for disposition as a matter of law based on the present record.
Based on this record, there being no evidence that plaintiff's efforts were the procuring cause, as defined in Roberts Associates, of any sales of Powerquest boats to northeast territory dealers after his termination, the Court concludes there is no genuine issue as to any material fact and defendant is entitled to summary judgment. Celotex, supra, 477 U.S. at 322-23, 106 S.Ct. at 2552-53 (a complete failure of proof concerning an essential element of a claim renders all other facts immaterial).
In reaching this conclusion, the Court emphasizes that it is enforcing the implied-at-law "procuring cause" doctrine, as it has evolved in Michigan law to secure fairness for both parties where they have failed to demonstrate a different intention. The result might well have been different had the parties discussed and reached an agreement as to post-termination commissions. In the absence of such an agreement, it is for the Court not to renegotiate the parties' contract, but merely to apply the law to enforce the agreement that they reached. This the Court has done.[2]
Accordingly, defendant's motion for summary judgment will be granted; plaintiff's cross-motion for summary judgment will be denied. An order consistent with this opinion shall issue forthwith.
NOTES
[1] The deposition testimony includes discussion of plaintiff's impression that there is an industry practice or standard providing for payment of post-termination commissions. Plaintiff admitted, however, that his impression is vague and that he has no evidence of this practice or standard.
[2] This result renders evaluation of defendant's statute of frauds defense unnecessary.
|
32 B.R. 777 (1983)
In re Carl R. YODER and Sharon L. Yoder, husband and wife, Debtors.
Carl R. YODER and Sharon L. Yoder, husband and wife, Plaintiffs,
v.
The UNITED STATES of America, Department of Agriculture, Farmers Home Administration, and Dale National Bank, a corporation, Defendants.
Bankruptcy No. 82-3681, Adv. No. 82-2581.
United States Bankruptcy Court, W.D. Pennsylvania.
August 16, 1983.
*778 James R. Walsh, Spence, Custer, Saylor, Wolfe & Rose, Johnstown, Pa., for debtors.
Beverly Weiss Manne, U.S. Dept. of Agr., Harrisburg, Pa., Dale Nat. Bank, Johnstown, Pa., Judith K. Giltenboth, Asst. U.S. Atty., Pittsburgh, Pa., for Farmers Home Admin.
MEMORANDUM OPINION
JOSEPH L. COSETTI, Bankruptcy Judge.
The Debtors bring an action in several counts to avoid liens. In Count I the Debtors raise 11 U.S.C. § 506(a) to determine that all or part of certain secured liens held by Farmers Home Administration ("FmHA") and Dale National Bank in their *779 real property are not supported by value and should be found to be unsecured debt. In Count II the Debtors claim exemptions in tools of the trade, raising § 522(f)(2)(A) and (B) and § 522(d)(5). In Count III the Debtors urge the Court to find that certain breeding animals are also implements or tools of the trade, as described in § 522(d)(6) and § 522(f)(2)(B). These actions raise several issues. A hearing was held. Stipulations have been filed and the attorneys have briefed each of them in a thorough manner.
Count I
Market Value Issue
The purpose of the § 506(a) valuation of the real estate is that the Debtors desire to retain the farm by reinstating these mortgages in an amount that this Court finds is supported by value. The parties dispute the standard of valuation to be used. The Debtors ask the Court to use "liquidation value" as the standard for this § 506(a) purpose. The FmHA urges the Court to determine that "fair market value" is the standard to be used. FmHA believes that $94,000 is the fair market value of this property. Their belief is based on their appraisal and the appraisal of Dale National Bank. Testimony was not taken on value. The parties agreed to stipulate as to the market value, if that standard were chosen. The FmHA admits that at a public sale they will only bid the first and second mortgages, which are owed approximately $87,000. Dale National Bank holds a third mortgage and the FmHA holds a fourth mortgage.
Nothing prevents the FmHA from bidding the first two mortgages at a liquidation sale. Such a bid by the FmHA at a "liquidation" sale would be supported by their belief that the property is worth more than the value of their two mortgages.
We do not know of an accepted standard or definition for a liquidation value. It is thought to be a distress sale and less than market value, but that may not always be the case. Particularly in this case, market value would prevent a secured party from using its greater financial strength to bid more than market value at an actual liquidation sale. As is the case here, FmHA's and Dale National Bank's actual mortgages are greater than the market value. Under these circumstances, an actual liquidation sale could be used to thwart the purposes of a debtor and defeat the purpose of § 506(a).
Accordingly, in general for bankruptcy purposes, unless special circumstances are presented, market value is a preferred standard for many reasons. In this case and for this purpose, market value is the correct standard to apply. We find the market value of this property to be the actual value of the first and second FmHA mortgages. The Dale National Bank, the holder of the third mortgage, did not answer and is defaulted. The Debtors and FmHA are to submit an Order consistent with this opinion.
Claim Need Not Be Filed By Creditor
The FmHA raises by brief the argument that FmHA has not filed a Proof of Claim and therefore there is no reason for disallowance under § 502 and the Court cannot apply § 506(d). The FmHA believes that a creditor is required to file a claim before the debtor can proceed under § 506(d). The FmHA relies on In re Nefferdorf, 26 B.R. 962 (Bkrtcy.E.D.Pa.1983) and In re Hotel Associates, Inc., 3 B.R. 340 (Bkrtcy.E.D.Pa.1980).
This issue was not raised at trial by the FmHA, but was presented in FmHA briefs. It is purely a legal issue. The facts are not in dispute. The Debtors object to its consideration. Nevertheless, the Court considers it.
Section 502 deals with disputed claims which may be disallowed. Section 506(a) deals with the valuation of an allowed claim which is secured by a lien. The mortgage claims of the FmHA are not disputed by the Debtor.
Under the Act, similar action could be brought under Rule 306(d). The Code does not deny the debtor as a party in interest from filing a claim on behalf of a secured party. When, for tactical or other reasons, a creditor does not file a claim, the Bankruptcy *780 Court is not denied jurisdiction to value the collateral and to determine what portion of a claim is secured and what portion is unsecured. The Debtor could have raised § 502; however, by raising only § 506(a), the Debtor has admitted and treated the claim as undisputed and allowed. We hold that the bringing of an action by the Debtor under § 506(a) constitutes the filing of an allowed claim by the Debtor.
Nefferdorf dealt with § 506(d), not § 506(a). Section 506(d) is not raised in this proceeding. Hotel Associates would appear to permit only the creditor to file a claim. This theory would permit a creditor to avoid Bankruptcy Court jurisdiction. This Court believes that a petition under § 506(a) constitutes a filing of an allowed secured claim by the Debtor. We do not follow Hotel Associates in this particular issue.
Count II
Tools and Implements
In Count II the Debtors claim exemption under § 522(f)(2)(A) and (B) and § 522(d)(5) for certain tools of the trade. The FmHA defends on several bases.
FmHA argues further that Congress did not intend "implements and tools of the trade" to encompass large pieces of farm equipment. This Court finds that Augustine v. U.S., 675 F.2d 582 (3rd Cir.1982) is dispositive. In Augustine, the 3rd Circuit found for the debtors on this very issue. We follow the Circuit.
Is a farmer who also earns non-farm income permitted to exempt farm implements and tools?
The FmHA argues that the Yoders are not farmers for purposes of the definition in § 101(17) and urge the Court not to grant the exemption outlined in § 522(f)(2)(B). FmHA argues that Yoder is by profession a full-time hospital employee. The parties have stipulated as to income received from farm and non-farm sources. Three years of information are stipulated. The year 1982 will suffice for this issue. The 1982 farm income was $23,133 and nonfarm income was $24,118.28 or farm income was 49% of total income. Carl Yoder works at two jobs. He uses hospital employee vacation time, weekends and holidays and he hires part-time employees to assist with the farm.
Section 101(17) provides:
"Farmer" means person that received more than 80 percent of such person's gross income during the taxable year of such person immediately preceding the taxable year of such person during which the case under this title concerning such person was commenced from a farming operation owned or operated by such person.
Admittedly Carl Yoder does not meet this 80% test. The Debtor argues that § 101(17) is a definition and should only be utilized when the Code uses the specific word farmer in order to define a farmer's unique right or responsibility. For example, under § 303(a), the word farmer is actually used. It provides that an involuntary case cannot be commenced against a farmer who meets this definition. The Debtor argues that this definition cannot be used for the purpose of depriving a debtor of an exemption under § 522(f) because he is also a farmer.
The technical position taken by the FmHA would eliminate those farmers who had other jobs with earnings greater than 25% of their farm income. The FmHA theory would not exclude bigger farms or smaller farms, only farmers with 25% or more non-farm income would be excluded.
This Court believes that the application of the farmer definition to limit the use of § 522(f)(2)(B) by a debtor is not appropriate and not intended by Congress.
Debtor is also a defined word in § 101(12). Debtor is not defined to exclude farmers with outside income. Debtor, as used in § 522(f), contains no unique exclusion. If that were the intent of the language, such a classification of debtors would be suspect and subject to constitutional attack. FmHA urges the Court to follow In re Holman, 26 B.R. 110 (Bkrtcy.M. D.Tenn.1983) and In re Liming, 22 B.R. 740 *781 (Bkrtcy.W.D.Okl.1982). We do not believe Holman and Liming stand for this proposition. Holman had ceased all efforts at farming. Liming met the definition in the Code.
The Court believes the Debtor need only prove that he is legitimately engaged in a trade which currently and regularly uses the specific implements or tools being exempted. The language of § 522(f)(2)(B) is broad; it also permits a "dependent of the debtor" to claim such an exemption in their trade tools and implements. Exemptions are to be liberally construed. In re Dubrock, 5 B.R. 353, 2 C.B.C.2d 776 (Bkrtcy.W.D.Ky.1980). There is no question that Yoder is a bona fide farmer and uses these tools and implements, even though he also is a hospital employee.
Although § 522(d)(6) limits lien avoidance initially to property valued at $750, the Debtor is permitted in § 522(d)(5) to exempt $400 in cash and the unused amount of $7,500 under § 522(d)(1) "in any property".
Count III
Breeding Stock Not Implements or Tools
In Count III the Debtor raises an additional issue concerning the classification of various breeding stock. This Debtor is a farmer in the business of breeding swine and claims the breeding stock is included in the concept of tools or implements of the trade. We agree that the concept of breeding stock, seed crops and tools and implements are similar, in that their exemption provides the Debtor with a fresh start. The plain words do not include animals. Animals and crops are words used in other exemption sections to describe property of the Debtor. Animals constitute property of the Debtor, which the Debtor can exempt under § 522(d)(3) and § 522(d)(5) and can avoid under § 522(f)(2)(A). The Debtor is not provided with authority to avoid non-purchase money security interest in breeding stock under § 522(f)(2)(B), even though breeding stock may be exempt under § 522(d)(5).
Novation or Not
After the above preliminary arguments, the major issue remaining in Counts II and III is whether the consolidation note constitutes a novation. The FmHA argues that certain of their security agreements predate the Code and were properly perfected and continued. The Debtor argues that the three notes dated June 26, 1973, June 5, 1978 and October 2, 1978 were consolidated by a note and mortgage on December 19, 1980 and that this consolidation constitutes a novation.
The Debtor argues that FmHA was given additional security in the form of a mortgage and that a significantly higher interest rate was given. FmHA answers by challenging the value of this fourth mortgage. By hindsight, the fourth mortgage appears to have little value; whether it had value at the time was not heard. The FmHA defends mainly by raising the actual language of the note, which specifically provides that the existing security instruments are to remain in effect as security for the notes.
The actual language of the consolidation note provides:
This note is given to consolidate, reschedule or reamortize, but not in satisfaction of the unpaid principal and interest on the following described note(s) . . . (and lists by face amount, interest rate, original date and borrower and last installment due date, the notes dated June 26, 1973, June 5, 1978 and October 2, 1978). Security instruments taken in connection with the loans evidenced by these described notes and other related obligations are not effected by the consolidating . . . The security instruments shall continue to remain in effect and the security given for the loans evidenced by the described notes shall continue to remain as security for the loan evidenced by this note and for other related obligations.
We conclude that the priority dates of the financing statements and security agreements originally recorded for the three notes are preserved and now constitute perfection for the new consolidation note. The *782 consolidation note clearly provides that the unpaid principal and interest was not satisfied and that $47,000 of that unpaid principal and interest is represented as debt in the new note. Was this new consolidation note a novation? In what manner do the actual original notes continue to have vitality?
Under Pennsylvania law, the essential elements of a novation are the displacement and extinction of a valid contract, the substitution for it of a valid new contract, a sufficient legal consideration therefor, and the consent of the parties. Yoder v. J.F. Scholes, Inc., 404 Pa. 242, 173 A.2d 120 (1961), First Pennsylvania Bank, N.A. v. Triester, 251 Pa.Super. 372, 380 A.2d 826 (1977).
Applying these requirements to the facts, we conclude that the old notes do not have continued vitality and that the new consolidation note is a novation of the three original contracts. Although the old debt was not satisfied by payment, it was equitably satisfied by substitution of a new note.
"(S)atisfaction (in equity) is always something given either in whole or in part as a substitute or equivalent for something else and not . . . something that may be construed as the identical thing covenanted to be done." Black's Law Dictionary 1509 (Rev. 4th ed. 1968).
While its language preserves the priority dates of the old notes, the new note is intended as a substitute for the old. The terms in the new note have been substantially changed to a much higher interest rate, 5-8% to 10½%. There is also a change in the terms of payment from the earlier notes and additional security given. For these reasons we find a valid new and different note with sufficient legal consideration.
However, this Court distinguishes between the novation of such a consolidation note and the relation back of the consolidation note to the former financing statement for perfection and priority.
In United States v. Security Industrial Bank, ___ U.S. ____, 103 S.Ct. 407, 74 L.Ed.2d 235 (1982), the Supreme Court found no intent by Congress for retroactive application in § 522(f)(2) and interpreted Holt v. Henley, 232 U.S. 637, 34 S.Ct. 459, 58 L.Ed. 767 as requiring a clear, explicit expression in the statute divesting a property interest retroactively. When the parties entered into this consolidation note on December 19, 1980, the Code had been enacted. We distinguish between the priority dates which were retained by FmHA and which predate the Code (6/26/73, 6/5/78 and 10/2/78) and the date of the novation (12/19/80).
In dealing with a similar problem related to judicial liens, the Court of Appeals for the 3rd Circuit has distinguished between the date of execution judgment from the date of confessed judgment. See In re Ashe, On Remand from the Supreme Court of the United States, 712 F.2d 864, 868 (1983), U.S. Court of Appeals for the Third Circuit. Similarly the date of perfection of a security interest of the consolidation note of December 19, 1980 can be distinguished from the date of its priority, June 26, 1973, June 5, 1978 and October 2, 1978, and we find a portion of it may be avoided under § 522(f).
The Debtors and the FmHA may submit an Order consistent with this opinion.
Sovereign Immunity
The FmHA defends by raising objections to the application of § 522(f) to the United States, claiming the sovereign immunity bars the application of § 522(f) to the United States. The FmHA urges a reading of § 106(c) as imposing upon the statute a requirement to use the three prescribed nouns "creditor", "entity" or "governmental unit". Whereas, § 522(f) speaks about the avoiding of "the fixing of a lien on an interest of the debtor in property" and does not use these specific words. We find little merit in this defense. The addition of one of these words as an adjective preceding the word lien would be redundant. The word lien carries the implication that it is a creditor's lien. The style of § 522(f) is drafted as an action "in rem" with the avoiding action directed to the *783 rem. The "in rem" nature of § 551 makes this clearer.
The real effect of definition in § 106(c) is to waive governmental immunity, except when a specific exception is made explicit by the Code. This style of drafting is apparent in § 362 where the drafters included everything and then in § 362(b) excluded certain governmental actions from its effect. In Augustine at page 583, the Court of Appeals also discusses this issue and finds little merit in the argument. Additionally, the Supreme Court in Whiting Pools by inference and dicta appears to give it little weight (see United States v. Whiting Pools, Inc., ___ U.S. ____, ____, 103 S.Ct. 2309, 2315, 76 L.Ed.2d 515 (1983). We hold that the Code applies to the United States in this case and that sovereign immunity cannot be raised to defeat an exemption in this case.
The parties are requested to submit a proposed order consistent with this opinion.
|
573 F.2d 1293
Mau Kwai Chengv.Immigration and Naturalization Service
No. 77-4144
United States Court of Appeals, Second Circuit
12/6/77
1
B.I.A.
2
PETITION FOR REVIEW DISMISSED*
*
Oral opinion delivered in open court in the belief that no jurisprudential purpose would be served by a written opinion. An oral opinion or a summary order is not citable as precedent. Local Rule Sec. 0.23
|
474 F.2d 1344
82 L.R.R.M. (BNA) 3092, 70 Lab.Cas. P 13,537
dC. G. Conn, Ltd.v.N.L.R.B.
72-2386
UNITED STATES COURT OF APPEALS Fifth Circuit
March 29, 1973
1
N.L.R.B., Tex.
|
722 S.E.2d 212 (2012)
JERNIGAN
v.
McLAMB.
No. COA11-1100.
Court of Appeals of North Carolina.
Filed March 6, 2012.
Case Reported Without Published Opinion
Affirmed.
|
NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
STATE OF ARIZONA, Appellee,
v.
CHASE GARRETT ALTER, Appellant.
No. 1 CA-CR 15-0716
FILED 1-4-2017
Appeal from the Superior Court in Maricopa County
No. CR2014-156813-001
The Honorable Dean M. Fink, Judge
AFFIRMED
COUNSEL
Arizona Attorney General’s Office, Phoenix
By Jillian Francis
Counsel for Appellee
Maricopa County Public Defender’s Office, Phoenix
By Carlos Daniel Carrion
Counsel for Appellant
STATE v. ALTER
Decision of the Court
MEMORANDUM DECISION
Judge Peter B. Swann delivered the decision of the Court, in which
Presiding Judge Andrew W. Gould and Judge Patricia A. Orozco (Retired)
joined.
S W A N N, Judge:
¶1 Chase Garrett Alter was convicted of one count of possession
of marijuana after a bench trial. He appeals, arguing that his possession
was lawful under the Arizona Medical Marijuana Act (“AMMA”). We hold
that the court, sitting as the finder of fact, acted within its discretion in
determining that Alter failed to meet his burden to prove that the marijuana
he was transporting in vacuum-sealed bags was not “useable marijuana”
under the AMMA. We therefore affirm.
FACTS AND PROCEDURAL HISTORY
¶2 On the afternoon of August 8, 2014, Officer Pledger was
patrolling when he stopped Alter’s car for an unrelated vehicular violation.
While talking to Alter as Alter sat in his vehicle, the officer smelled
marijuana. Alter admitted he had a small quantity of marijuana, and he
gave Ofc. Pledger a bag containing 0.01 ounces of marijuana and his valid
AMMA card, which also allowed him to cultivate marijuana. Ofc. Pledger
determined that Alter’s driver’s license was suspended and impounded the
vehicle in accordance with police procedure. While searching the vehicle,
Ofc. Pledger found five bags of marijuana weighing 5.8 ounces.
¶3 Alter was indicted for possession of marijuana. The state
designated the charge a class 1 misdemeanor and requested a bench trial.
Alter agreed. He was found guilty, and now appeals.
DISCUSSION
¶4 A.R.S. § 36-2811(B) provides immunity from prosecution for
possession of marijuana “if the registered qualifying patient does not
possess more than the allowable amount of marijuana.” The allowable
amount is 2.5 ounces. A.R.S. § 36-2801(1)(a)(i). “In claiming protection
under this statutory immunity, it is a defendant’s burden to ‘plead and
prove,’ by a preponderance of the evidence, that his or her actions fall
2
STATE v. ALTER
Decision of the Court
within the range of immune action.” State v. Fields ex rel. Cty. of Pima, 232
Ariz. 265, 269, ¶ 15 (2013).
¶5 Alter’s sole argument on appeal is that the court
misinterpreted the AMMA’s language concerning the amount of marijuana
he was allowed to possess. He contends that because the marijuana in
question was “wet,” it was not “useable” and therefore not subject to the
2.5-ounce limit. The state counters that because Alter filed no pretrial
motion to dismiss based on statutory construction, the only issue on appeal
is the trial court’s implicit factual finding that the marijuana he possessed
was useable. We agree with how the state frames the issue: the record
contains no legal ruling to demonstrate that the trial court relied on an
incorrect construction of the AMMA in convicting Alter.1 The issue,
therefore, is whether the court could properly have rejected the evidence
Alter produced to demonstrate that the marijuana he possessed was not
useable. “When the evidence supporting a verdict is challenged on appeal,
an appellate court will not reweigh the evidence. The court must view the
evidence in the light most favorable to sustaining the conviction, and all
reasonable inferences will be resolved against a defendant.” State v. Lee, 189
Ariz. 590, 603 (1997).
¶6 An “allowable amount of marijuana” is up to 2.5 ounces of
“useable marijuana” in addition to “[m]arijuana that is incidental to
medical use, but is not usable marijuana.” A.R.S. § 36-2801(1)(a)(i), (1)(c).
“Useable marijuana” is the “dried flowers of the marijuana plant . . . but
does not include the seeds, stalks and roots.” A.R.S. § 36-2801(15).
“Marijuana that is incidental to medical use, but is not usable marijuana
. . . , shall not be counted toward a qualifying patient’s . . . allowable amount
of marijuana.” A.R.S. § 36-2801(1)(c). If, as here, the cardholder is
authorized to cultivate marijuana, the cardholder may have up to 12
marijuana plants. A.R.S. § 36-2801(1)(a)(ii). A cardholder may give
marijuana to another cardholder provided nothing of value is given in
exchange and the giver does not knowingly cause the recipient to possess
more than 2.5 ounces. A.R.S. §§ 36-2801(1)(a)(i); -2811(B)(3).
¶7 Alter testified that he knew of the 2.5-ounce limitation, and
knew that a single marijuana plant could produce anywhere from a few
grams to pounds of useable marijuana. He also knew that he could not
control the amount plants produce. He testified that once a plant has
finished growing, it must be dried and cured, which takes four to eight
1 Alter presented his statutory construction argument as part of his
closing argument, and the trial court then took the verdict under
advisement. The final verdict did not include the court’s reasoning.
3
STATE v. ALTER
Decision of the Court
weeks. To deal with the quantity limitation, Alter testified that he staggers
his harvests and stops the drying and curing process by vacuum-sealing the
marijuana.
¶8 Two days before encountering Ofc. Pledger, Alter harvested
marijuana. After starting the drying process, he realized that the plants
would probably produce more than the allowed amount. He put the
marijuana into vacuum-sealed bags. When he encountered Ofc. Pledger,
Alter was transporting the excess marijuana to two other cardholders. At
the police station, Ofc. Pledger opened the vacuum seal on the bags and
weighed the marijuana in them along with the marijuana Alter initially
handed him. The six bags contained a total of 5.81 ounces of marijuana.
Both Alter and Ofc. Pledger testified that the plants were wet when Alter
was arrested.
¶9 The state argues that Alter has the burden to show compliance
with the AMMA and that to do so he must produce expert testimony on the
quantity of marijuana. While we disagree that expert testimony is required
as a matter of law, Alter’s failure to present such testimony left the court to
evaluate his credibility as the sole source of proof for his defense. Here, the
court did not articulate the reasons for its verdict, and it was not required
to do so. At sentencing, however, the trial court commented that it “was
not swayed by the argument that the manner in which the marijuana was
packed and, therefore, wet, exempted it from the statute.”
¶10 The court was presented with a mixed question of fact and
law. The legal question was whether marijuana in excess of the 2.5-ounce
limit was “useable.” The factual question was whether it was sufficiently
“dried” to qualify as useable. Based on the evidence before it, the court
could reasonably have concluded that marijuana that has been harvested,
is in the process of being cured and was sufficiently cured to warrant its
delivery to others was, in fact, “useable.” Under our standard of review,
we have no basis upon which to question the superior court’s verdict.
CONCLUSION
¶11 For the foregoing reasons, we affirm Alter’s conviction.
AMY M. WOOD • Clerk of the Court
FILED: AA
4
|
Petition for Writ of Mandamus Dismissed and Opinion filed October 13, 2016.
In The
Fourteenth Court of Appeals
NO. 14-16-00742-CV
IN RE TE'QUANDRA JACK, Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
246th District Court
Harris County, Texas
Trial Court Cause No. 2012-61048
MEMORANDUM OPINION
On September 20, 2016, relator Te'Quandra Jack filed a petition for writ of
mandamus in this court. See Tex. Gov’t Code Ann. § 22.221 (West 2004); see also
Tex. R. App. P. 52. In the petition, relator asks this court to compel the Honorable
Charley Prine, presiding judge of the 246th District Court of Harris County, to set
aside his Order of Capias, signedSeptember 20, 2016.
On October 5, 2016, real party-in-interest David Jack filed a motion to
dismiss the petition for writ of mandamus, indicating that the petition is moot
because the trial court signed an order on September 22, 2016, reversing the Order
of Capias.. Relator also filed a notice with this court indicting that the trial court
had withdrawn the Order of Capias.
It appears from the facts stated in the real party-in-interest’s motion to
dismiss and the relator’s notice that the petition for writ of mandamus is now moot.
Accordingly, we dismiss the petition.
PER CURIAM
Panel consists of Chief Justice Frost and Justices Boyce and Christopher.
2
|
907 F.Supp. 4 (1995)
BONTERRA AMERICA, INC., Plaintiff,
v.
Lothar BESTMANN, Defendant.
Civ. A. No. 95-633 SSH.
United States District Court, District of Columbia.
November 22, 1995.
*5 Morris Kletzkin, Friedlander, Misler, Friedlander, Sloan & Herz, Washington, DC, for Plaintiff.
Joseph Holland, Ralph A. Mittelberger, Fish & Richardson, Washington, DC, for Defendant.
MEMORANDUM OPINION
STANLEY S. HARRIS, District Judge.
Plaintiff BonTerra America ("BonTerra") filed this action against defendant Bestmann in March of this year, seeking a declaratory judgment that United States Letters Patent No. 5,338,131 (the "'131 patent") is invalid or unenforceable. Defendant Bestmann owns the '131 patent. Bestmann has moved to dismiss plaintiff's action under Fed.R.Civ.P. 12(b)(6) for lack of subject matter jurisdiction. Upon careful consideration of defendant's motion, plaintiff's opposition thereto, defendant's reply, and the entire record, defendant's motion to dismiss is granted.[1]
Background Facts
The United States Patent and Trademark Office (PTO) issued Lothar Bestmann the '131 patent on August 16, 1994. The '131 patent applies to certain forms of fibrous rolls and mats designed to retard erosion and reclaim eroded land mass. Immediately after the '131 patent issued, Bestmann's attorney, Richard Crowley, sent letters to other companies and individuals in the erosion control industry informing those persons of the existence of the '131 patent and offering a nonexclusive license of the '131 patent. (Bestmann has given an exclusive license for the patent to Bestmann Green Systems (Bestmann Green).)
Donald Knezick, the president of Pinelands Nursery, received one of the letters from Crowley. Knezick operates a BonTerra warehouse at Pinelands Nursery, and Knezick also apparently engaged in direct marketing of BonTerra shoreline erosion control products until September 1994. On August 27, 1994, after receiving the Crowley letter informing him of the existence of the Bestmann patent, Knezick wrote to Crowley asking a number of specific questions about the *6 impact of the Bestmann patent on his ability to market and sell certain BonTerra products. On September 6, 1994, Wendi Goldsmith, the President of Bestmann Green, called Knezick and informed him that Crowley would be responding in writing to Knezick's letter.
The parties dispute exactly what transpired during Goldsmith's telephone call to Knezick. Goldsmith has submitted a declaration stating that she did not express any view to Knezick on whether BonTerra erosion control products infringed the Bestmann patent, and that she informed Knezick that he should consult his own attorney to determine whether he was selling any products which infringed the Bestmann patent. Goldsmith also states in her declaration that she did not threaten to sue Pinelands Nursery for patent infringement if Pinelands did not take a license from Bestmann, nor did she suggest that Bestmann or Bestmann Green would sue BonTerra for infringement of the '131 patent. Def.'s Mot. To Dismiss, Ex. C (Decl. of Wendi Goldsmith).
However, after the telephone conversation between Knezick and Goldsmith concluded, Knezick, sent a letter to the president of BonTerra stating that Goldsmith "informally" told Knezick that it was the position of Bestmann Green that Knezick "would be in violation of the patent" if he were to sell certain BonTerra shoreline stabilization products. Def.'s Mot. To Dismiss, Ex. B (Knezick letter to Toney Driver, President of BonTerra). Knezick also wrote that Goldsmith "inferred [sic] that the sale of any product similar to what is illustrated in the patent for the purpose of shoreline stabilization would also be a violation." Id. Knezick concluded that he would "no longer directly market any BonTerra products for shoreline erosion control until the situation is resolved," but that he would continue to operate the BonTerra warehouse at Pinelands. Id.
On September 7, 1994, Crowley responded in writing to Knezick's letter of August 27. Crowley wrote that Knezick's letter "raise[d] a number of factual and legal issues. It is not the responsibility of the patentee to respond to such questions." Crowley then "strongly urged" Knezick to "seek the advice of [his] patent counsel" with respect to the '131 patent and Knezick's activities. Def.'s Mot. To Dismiss, Ex. C (Attachment B to Goldsmith Decl.) On March 31, 1995, plaintiff filed this action for declaratory judgment.[2]
Analysis
The Declaratory Judgment Act, 28 U.S.C. § 2201 (1994), provides that federal courts may issue declaratory judgments only in cases which present an "actual controversy" between the parties involved:
In a case of actual controversy within its jurisdiction, ... any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.
28 U.S.C. § 2201(a). The Federal Circuit has developed a two-part test to determine whether an actual controversy exists in an action involving a patent dispute. A court may exercise jurisdiction over a declaratory judgment action (1) if the conduct of the defendant patentee has "created on the part of the declaratory plaintiff a reasonable apprehension that it will face an infringement suit if it commences or continues the activity in question," and (2) when the declaratory plaintiff has "actually produced the accused device" or has "prepared to produce such a device." Indium Corp. of America v. Semi-Alloys, *7 Inc., 781 F.2d 879, 883 (Fed.Cir.1985) (quoting Jervis B. Webb Co. v. Southern Sys., Inc., 742 F.2d 1388, 1398-99 (Fed.Cir.1984)). See also BP Chemicals, Ltd. v. Union Carbide Corp., 4 F.3d 975, 978 (Fed.Cir.1993). This test is an objective one; the declaratory plaintiff must have a reasonable apprehension of suit for infringement at the time it files its suit for declaratory judgment. Id. "A purely subjective apprehension of an infringement suit is insufficient to satisfy the actual controversy requirement." Id.
The declaratory plaintiff has the burden of establishing by a preponderance of the evidence that an actual controversy exists between the parties to the action. BP Chemicals Ltd. v. Union Carbide Corp., 757 F.Supp. 303, 305 (S.D.N.Y.1991) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936)), aff'd, 4 F.3d 975 (Fed.Cir.1993). Plaintiff has failed to meet this burden; the Court therefore finds that this case should be dismissed for lack of subject matter jurisdiction.
BonTerra has met the second prong of the two-part test for determining whether an "actual controversy" exists between the parties: BonTerra has produced and continues to produce a potentially infringing product. BonTerra falls short, however, of meeting the requirements in the first prong of the test for determining whether an actual controversy exists: it has not shown by a preponderance of the evidence that it has a reasonable apprehension that Bestmann will file an infringement suit against BonTerra.
Bestmann was issued the '131 patent in August 1994. Since that patent was issued, three relevant communications have occurred. First, Bestmann's attorney sent out a letter to people involved in the erosion control industry, informing them that the '131 patent existed and advising them that they could seek a non-exclusive license from Bestmann if they so desired. The offer of a patent license, in and of itself, does not suffice to create an actual controversy. Phillips Plastics Corp. v. Kato Hatsujou Kabushiki Kaisha, 57 F.3d 1051, 1053 (Fed.Cir. 1995).
Second, Donald Knezick, a customer of and/or marketing representative of BonTerra, had a conversation with Wendi Goldsmith, the president of Bestmann Green, in which Goldsmith allegedly stated that Knezick "would be in violation of the ['131] patent" if he continued to sell certain BonTerra erosion control products, and in which Goldsmith allegedly "inferred" (the Court assumes the writer meant to use "implied") that "the sale of any product similar to what is illustrated in the patent ... would also be a violation." Goldsmith denies making these statements and denies making any threats to sue Knezick or BonTerra itself for patent infringement. Third, following the telephone conversation between Goldsmith and Knezick, Bestmann's attorney, Crowley, sent Knezick a letter stating that Knezick had raised legal questions that the patentee had no responsibility to answer, and "strongly urg[ing]" Knezick to consult his attorney with such questions.
Even assuming that Knezick's recollection and representations are accurate, which Goldsmith disputes, the statements allegedly made by Goldsmith and the follow-up letter from Crowley do not suffice to establish that BonTerra possessed a reasonable apprehension of a patent infringement suit. Defendant's conduct "must be such as to indicate defendant's intent to enforce its patent." Arrowhead Indus. Water, Inc., v. Ecolochem, Inc., 846 F.2d 731, 736 (Fed.Cir. 1988); see also Shell Oil Co. v. Amoco Corp., 970 F.2d 885, 888 (Fed.Cir.1992). Where, as here, no express charges of infringement were made to plaintiff, the Court must look at the totality of circumstances to determine whether plaintiff reasonably feared prior to instituting its suit for declaratory judgment that defendant would institute a suit for infringement. See Shell Oil Co., 970 F.2d at 888.
In this case, the totality of circumstances amounts to (1) a letter offering a nonexclusive license arrangement, which, as noted above, in itself does not create an "actual controversy"; (2) statements allegedly made to Knezick, an individual not a party to this action, that certain of plaintiff's products were in violation of the '131 patent; and (3) a *8 letter to Knezick from Bestmann's attorney in which the attorney declined to answer legal questions about the '131 patent and directed Knezick to seek counsel from an attorney regarding such questions.[3] No allegations have been made by BonTerra that Bestmann has contacted BonTerra and informed it that its products are in violation of the patent. No allegations have been made that Bestmann has conveyed to BonTerra either expressly or implicitly that it intends to sue to enforce its patent, and no allegations have been made that Bestmann has ever before sued another entity for infringement. While "the requirement that the declaratory plaintiff be under a reasonable apprehension of suit does not require that the patentee be poised on the courthouse steps," Phillips Plastics, 57 F.3d at 1054, plaintiff must show more than this to establish that it reasonably fears suit for infringement. Defendant's conduct prior to the filing of this action does not suffice to indicate its intent to enforce its patent against BonTerra.
BonTerra contends that defendant's conduct prior to the issuance of the '131 patent is relevant and compelling evidence of Bestmann's intent to sue BonTerra to protect its interest in the '131 patent. BonTerra has submitted as exhibits in this case certain affidavits submitted in support of its 1993 litigation against Bestmann to support its contention that Bestmann presently intends to sue BonTerra. See, e.g., Dykas Aff., Ex. D (1993 Aff. of Thomas Weed). These affidavits (and the statements allegedly attributable to Bestmann or his agent) were made well prior to the issuance of the '131 patent, and their utility is quite diminished as a result. The Court is of the opinion that defendant's conduct after the issuance of the patent should carry the far greater weight in its analysis than statements allegedly made months, if not years, prior even to the issuance of the patent.
Accordingly, because the Court finds that plaintiff has failed to prove by a preponderance of the evidence that it reasonably fears a suit for infringement, plaintiff's action for declaratory judgment is dismissed for lack of subject matter jurisdiction.
SO ORDERED.
NOTES
[1] In deciding a motion to dismiss a case for lack of subject matter jurisdiction, the Court may consider evidentiary matters outside the pleadings. See, e.g., Indium Corp. of America v. Semi-Alloys, Inc., 781 F.2d 879, 884 (Fed.Cir.1985); Gordon v. National Youth Work Alliance, 675 F.2d 356, 362-63 (D.C.Cir.1982) (concurring opinion of Chief Judge Bazelon).
[2] One side note is necessary here: prior to the issuance of the '131 patent, and prior to the filing of this action, Bestmann and BonTerra had once before been adverse parties in a lawsuit. In September 1993, BonTerra filed an action against Bestmann in the United States District Court for the District of Massachusetts, alleging, inter alia, that Bestmann had committed anti-trust violations and had falsely represented that Bestmann possessed a United States patent for its erosion control products when in fact it did not. Pl.'s Opp. to Def.'s Mot. To Dismiss, Aff. of Frank J. Dykas ("Dykas Aff."), Ex. A. Bestmann denied any wrongdoing and subsequently settled the 1993 action. Dykas Aff., Ex. F.
[3] The fact that Knezick apparently curtailed his relationship with BonTerra after his conversation with Goldsmith is not of much weight. Knezick's decision to avoid any possible risk of suit for infringement does not serve to create in BonTerra a reasonable fear that Bestmann would sue BonTerra for infringement.
|
510 U.S. 868
EF Operating Corp., t/a West Motor Freight of Pennsylvaniav.S. S. Fisher Steel Corp. et al.
No. 93-191.
Supreme Court of United States.
October 4, 1993.
1
Appeal from the C. A. 3d Cir.
2
Certiorari denied. Reported below: 993 F. 2d 1046.
|
NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted January 21, 2010*
Decided January 29, 2010
Before
JOHN L. COFFEY, Circuit Judge
JOEL M. FLAUM, Circuit Judge
MICHAEL S. KANNE, Circuit Judge
No. 09‐1980
ROY AUSTIN SMITH, Appeal from the United States District
Plaintiff‐Appellant, Court for the Northern District of Indiana,
South Bend Division.
v.
No. 3:07‐CV‐207 PPS
DAWN BUSS, et al.
Defendants‐Appellees. Philip P. Simon,
Judge.
O R D E R
Roy Austin Smith, an inmate in the custody of the Indiana Department of Correction
(“IDOC”), claims in this suit under 42 U.S.C. § 1983 that he was subjected to cruel and
unusual punishment in violation of the Eighth Amendment. The district court granted
summary judgment for the defendants, reasoning that Smith had failed to exhaust his
*
After examining the briefs and the record, we have concluded that oral argument is
unnecessary. Thus, the appeal is submitted on the briefs and the record. See FED. R. APP. P.
34(a)(2).
No. 09‐1980 Page 2
administrative remedies. See 42 U.S.C. § 1997e(a). Smith appeals. We vacate the judgment
and remand for further proceedings.
Smith’s complaint alleges that in 2004 the defendants—the acting superintendent
and two guards at the Wabash Valley Correctional Facility—falsely labeled him a “snitch”
in documents that were distributed to other inmates, leading another prisoner to attack and
seriously injure him on November 25, 2005. Smith claims that the defendants were
deliberately indifferent to his safety and security. If Smith’s allegations are true, the
defendants could be liable under § 1983.
The defendants dispute Smith’s version of events, but this appeal concerns only their
motion for summary judgment, in which they narrowly contended that Smith had not
exhausted all available administrative remedies before filing his § 1983 suit, as required by
§ 1997e(a). The defendants presented evidence—in the form of a declaration from the
secretary to an executive assistant at the prison—that a grievance procedure was in effect
when Smith was allegedly attacked; that Smith’s claims were grievable; that her search of
prison records had uncovered two grievances filed six months and more than a year after
the alleged attack, far outside the time limit of 20 working days set forth in the manual of
grievance policies and procedures; that the time limit was enforced because Smith had not
shown good cause for waiting so long to file his grievances; and that she had found no
record of any other properly filed grievance from Smith about the attack. Smith countered
the secretary’s declaration with his own declaration and two more from other inmates, but
the district court reasoned that his submission was not enough to demonstrate a disputed
issue of material fact. In the court’s view, Smith’s evidence did not establish that he filed a
timely grievance or that he had a valid reason for that omission; the court’s decision implies
that Smith’s unwillingness to follow instructions was the root of his difficulty with the
exhaustion requirement.
We review a district court’s grant of summary judgment de novo. Salas v. Wisc. Dept.
of Corr., 493 F.3d 913, 921 (7th Cir. 2007). Summary judgment is appropriate when there is
no genuine issue of material fact and the moving party is entitled to judgment as a matter of
law. Jenkins v. Bartlett, 487 F.3d 482, 492 (7th Cir. 2007). Failure to exhaust administrative
remedies is an affirmative defense; prison officials bear the burden of proof. Obriecht v.
Raemisch, 517 F.3d 489, 492 (7th Cir. 2008).
Smith argues on appeal that the district court erred by failing to recognize that the
defendants put up “barriers” that kept him from filing a timely grievance. If prison officials
prevent an inmate from exhausting administrative remedies by ignoring properly filed
grievances or by impeding the use of the grievance system through actions such as
withholding necessary forms, destroying inmate submissions, or announcing additional
No. 09‐1980 Page 3
steps not mandated by regulation or rule, those remedies are not “available” to the prisoner
and he has not forfeited his ability to file suit. See Pavey v. Conley, 544 F.3d 739, 742 (7th Cir.
2008); Kaba v. Stepp, 458 F.3d 678, 684‐85 (7th Cir. 2006); Dale v. Lappin, 376 F.3d 652, 656 (7th
Cir. 2004); Strong v. David, 297 F.3d 646, 649‐50 (7th Cir. 2002).
Smith provided sufficient evidence at summary judgment to create a genuine issue
of material fact as to whether remedies were available to him. He stated under oath in his
response to the defendants’ motion for summary judgment that immediately after the
altercation on November 25 he was placed in the prison’s Special Management Unit and
refused access to pencils, paper, and grievance forms, and told that those materials would
be provided to him only with the shift captain’s permission, after Smith had been in the unit
for seven days. IDOC grievance procedures, however, required the prison to maintain a
supply of grievance forms in each unit and called for inmates to be given forms within one
working day of a request. When prison officials fail to provide inmates with forms
necessary to file a grievance, administrative remedies are not available. Kaba, 458 F.3d at
684; Dale, 376 F.3d at 656.
On November 29, Smith was transferred to a pre‐segregation unit where, according
to his declaration, a guard told him that his issue was not grievable because he was going to
face criminal charges stemming from the November 25 incident. He also asserts that his
requests for grievance forms were ignored or returned with instructions to informally
resolve his grievances. IDOC policy did require prisoners to attempt to informally resolve
grievances before filing formal grievances, but administrative remedies are unavailable if
prison officials simply do not respond to grievances. Lewis v. Washington, 300 F.3d 829, 833
(7th Cir. 2002).
Smith was transferred on December 12 to the prison’s disciplinary segregation unit,
where, he says, he did submit grievance forms beginning in December—he does not
provide specific dates, so it is not clear whether he attempted to submit the forms within 20
working days of November 25—but that the forms were returned to him, unfiled, because
they did not bear the approval and signature of the officer in charge of the unit. The
defendants did not offer additional evidence contradicting either point, nor did they
produce any evidence that IDOC grievance procedures in effect at that time imposed a
requirement that the supervising officer approve or sign a grievance. If prison officials
erroneously impose requirements on the grievance process, administrative remedies are not
available. See Kaba, 458 F.3d at 684; Brown v. Croak, 312 F.3d 109, 111‐12 (3d. Cir. 2002)
(remedies unavailable when officials told prisoner he had to wait until investigation was
complete before filing grievance); Strong, 297 F.2d 646, 649‐50.
Finally, Smith asserts that he filed two grievances regarding the November 25
incident in early April 2006, but that they were returned to him because he had not shown
No. 09‐1980 Page 4
that he had attempted to resolve his grievance informally. (The defendants agree that those
grievances were not returned for being untimely.) Smith asserts in his declaration that on
April 12 he handed the grievance forms and all of his documentation about his attempts to
informally resolve his grievance to his unit counselor, but that he received no response until
he contacted the secretary to the executive assistant on May 2. According to Smith, she
informed him on May 3 that his grievances had been closed because the executive assistant
had not received the grievances or information about his attempts to resolve things
informally—all of that material had apparently been lost, misplaced, or thrown away.
When a prisoner follows proper procedures and prison officials are responsible for
mishandling his grievance, we cannot say that the prisoner has failed to exhaust his
remedies. Dole v. Chandler, 438 F.3d 804, 811 (7th Cir. 2004).
The defendants argue that Smith did not exhaust available remedies because the
grievances he did file were untimely, but they do not deny or refute his allegations of
actions—the denial of grievance forms, the ignoring of grievances he attempted to file, the
imposition of an unwritten requirement that his grievances be signed and approved by the
officer in charge of his unit, the mishandling of his grievances—that would have prevented
him from exhausting. Because we must, at this stage, accept Smith’s version of these events
as true, Lewis v. Downey, 581 F.3d 467, 472 (7th Cir. 2009), the defendants have not met their
burden of establishing that administrative remedies were available to Smith, see Kaba, 458
F.3d at 686.
Accordingly, we VACATE the judgment and REMAND for the court to hold an
evidentiary hearing, as outlined in Pavey, 544 F.3d at 742, to resolve the issue of exhaustion.
|
64 F.3d 41
UNITED STATES of America, Appellee,v.Elpidio G. SANTOS, also known as Indio, and Victor Alejo,Defendants-Appellants,Juan Garcia, Defendant.
Nos. 1881, 1882, Dockets 94-1602(L), 94-1618.
United States Court of Appeals,Second Circuit.
Argued June 28, 1995.Decided July 28, 1995.
Christine E. Yaris, New York City, for defendant-appellant Elpidio G. Santos.
Juan A. Campos, New York City, for defendant-appellant Victor Alejo.
David C. Esseks, Asst. U.S. Atty., New York City (Mary Jo White, U.S. Atty., Alexandra Rebay, Asst. U.S. Atty., for the S.D.N.Y., New York City, of counsel), for appellee.
Before VAN GRAAFEILAND, JACOBS, and CABRANES, Circuit Judges.
JACOBS, Circuit Judge:
1
Defendants-appellants Elpidio Gerardo Santos and Victor Alejo challenge their conviction and sentencing for use of a firearm equipped with a silencer during and in relation to a drug trafficking crime, pursuant to 18 U.S.C. Sec. 924(c)(1). They argue that the evidence was insufficient to show beyond a reasonable doubt that the silenced firearm, which was in a paper bag stowed in an oven drawer, was "used" in the drug transaction for which they were convicted; that the thirty-year sentence specified in the statute--mandatory and consecutive--violates the Eighth Amendment; and that the statute is vague and offends due process. We affirm.
BACKGROUND
2
The judgments of conviction were entered in the United States District Court for the Southern District of New York (Haight, J.). Each defendant was found guilty, following a jury trial, of one count of conspiracy to distribute, and to possess with intent to distribute, cocaine in violation of 21 U.S.C. Sec. 846; one count of distributing, and possessing with intent to distribute, cocaine within 1000 feet of a school, in violation of 21 U.S.C. Secs. 841(b)(1)(B) and 860 and 18 U.S.C. Sec. 2; and one count of using and carrying firearms during and in relation to a drug trafficking offense, in violation of 18 U.S.C. Secs. 2 and 924(c). The district court sentenced each defendant principally to seventy months' imprisonment on the conspiracy and substantive possession counts and to the consecutive term of thirty years' imprisonment mandated on the firearms count. Both defendants are currently serving their sentences.
3
Santos and Alejo operated a cocaine distribution center in an apartment on West 188th Street in New York City. In June 1991 the Drug Enforcement Agency ("DEA") enlisted a confidential informant to make a two-kilogram cocaine purchase from the defendants. The informant conducted inconclusive negotiations with Santos on a street corner in the vicinity of the apartment. Later that month, the informant met with Santos again on the same street corner. This encounter was interrupted by two other men who approached Santos about another two-kilogram deal. The informant tagged along as Santos and the two men went up to the apartment, where Alejo and another individual were counting money. Santos retrieved two kilograms of cocaine from another room and, after some discussion of quality and an exchange of the goods for two other kilograms, the two men accepted the cocaine, paid for it, and carried it from the apartment. Santos then told the informant that they should discuss their own deal later.
4
On August 13, 1991, the informant telephoned Santos, who invited the informant to see him. The informant, accompanied by another DEA informant posing as a buyer, went to the address of the upper Manhattan apartment, where they encountered Santos and Alejo on the street. The informant told Santos that his colleague was ready to purchase the two kilograms they had discussed, and made the usual introductions. Santos told them that he was expecting a delivery of cocaine shortly. The courier arrived shortly thereafter and went upstairs with Alejo. Santos and the purported buyer followed; when they arrived, Alejo was talking on the telephone, holding a firearm in his hand, and the courier was sitting next to a coffee table on which was placed a single kilogram of cocaine. After an inspection of the single kilogram, Santos and the buyer left the apartment with the courier, ostensibly so that the buyer could get the purchase money. DEA agents arrested Santos and the courier in the hallway. Alejo was apprehended shortly after, having climbed out a window, broken into the apartment above, and attempted to escape down the stairway.
5
The agents entered the apartment pursuant to a previously issued search warrant, and found the single kilogram of cocaine on the living room coffee table, together with a loaded 9mm semiautomatic handgun; a second 9mm handgun next to an open window in the living room; a .38 caliber revolver loaded with hollow point bullets on the top shelf of the living room closet; another loaded firearm, $21,000 in cash and several small packets of cocaine in the bedroom; as well as scales, razor blades, packaging materials, sales records, and other paraphernalia.
6
When the agents looked in the broiler drawer of the oven, they found a second kilogram of cocaine. Just above the cocaine was a .22 caliber firearm equipped with a silencer. This gun, loaded and ready to fire, was wrapped in brown paper and had been put in the oven with the grip toward the front of the broiler drawer. DEA Special Agent Don Bullard noted at trial that the gun did not have to be unwrapped to be fired: "All you had to do was stick your finger through the bag and it was ready to go."
7
The district court denied the defendants' motion, at the close of the government's case, for a judgment of acquittal on the 924(c) firearms count in respect of the silencer-equipped gun. The defense rested without putting on a case, and the jury returned a verdict of guilty on all counts. The defendants then renewed their challenge in respect of the silenced firearm, as well as previously raised Eighth Amendment and due process challenges to section 924(c)'s mandatory thirty-year sentence for the use of a silenced firearm in relation to a drug trafficking offense. In a thorough Memorandum Opinion and Order, the district court again denied all defense motions.
DISCUSSION
A. Sufficiency of Evidence
8
In respect of the silenced .22 caliber firearm, the defendants contend that the evidence adduced at trial was insufficient to establish that they "used" this firearm "in relation to" a drug trafficking offense. A defendant who challenges the sufficiency of evidence, following conviction by a jury, takes up a heavy burden. See United States v. Gelzer, 50 F.3d 1133, 1142 (2d Cir.1995). The appellate court considers the evidence in the light most favorable to the government, and must "credit[ ] all inferences and credibility assessments that the jury might have drawn in favor of the government." United States v. Aulicino, 44 F.3d 1102, 1114 (2d Cir.1995). Moreover, the verdict may be based entirely on circumstantial evidence, United States v. Taylor, 18 F.3d 55, 59 (2d Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 2720, 129 L.Ed.2d 845 (1994), and there is no requirement that the government demonstrate that it has disproved every possible theory inconsistent with guilt. United States v. Sureff, 15 F.3d 225, 228 (2d Cir.1994). In short, we must affirm the conviction if "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, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979).
9
The elements of a section 924(c) violation are (1) that the defendant "use[d] or carrie[d] a firearm," and (2) that such use or carrying of the firearm was "during and in relation to ... [a] drug trafficking crime." 18 U.S.C. Sec. 924(c)(1). Defendants contend that neither of these elements was satisfied.
10
In respect of the "use" element, the government must adduce:
11
i) Proof of a transaction in which the circumstances surrounding the presence of a firearm suggest that the possessor of the firearm intended to have it available for possible use during the transaction; or
12
ii) The circumstances surrounding the presence of a firearm in a place where drug transactions take place suggest that it was strategically located so as to be quickly and easily available for use during such a transaction.
13
United States v. Feliz-Cordero, 859 F.2d 250, 254 (2d Cir.1988). In other words, " 'use' requires possession of a gun under circumstances where the weapon is so placed as to be an integral part of the offense." United States v. Meggett, 875 F.2d 24, 29 (2d Cir.), cert. denied, 493 U.S. 858, 110 S.Ct. 166, 107 L.Ed.2d 123 (1989).
14
Such use must be "during and in relation to" a drug trafficking offense. Defendants do not appeal their drug trafficking convictions and, therefore, the silenced gun--which was present in the oven during the commission of those offenses--was concededly possessed "during" a drug trafficking offense. As for the "in relation to" requirement, "the firearm must have some purpose or effect with respect to the drug trafficking crime; its presence or involvement cannot be the result of accident or coincidence." Smith v. United States, --- U.S. ----, ----, 113 S.Ct. 2050, 2059, 124 L.Ed.2d 138 (1993). However, "[t]he phrase 'in relation to' is expansive," and if the firearm had even the potential to facilitate a drug trafficking crime we will affirm the conviction. Smith, --- U.S. at ---- - ----, 113 S.Ct. at 2058-59.
15
In the light of this precedent, we have no trouble affirming these convictions. Defendants argue that the silenced firearm was merely being "stored" in the oven. However, we have never required that a firearm be outwardly brandished to sustain a conviction under section 924(c). The required nexus with a drug trafficking offense may be established by proof that would permit a jury to infer that the defendant intended to make use of a weapon should the need or opportunity arise. See, e.g., United States v. Lindsay, 985 F.2d 666, 672 (2d Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 103, 126 L.Ed.2d 70 (1993). Particular circumstances will support an inference of use in relation to a drug trafficking offense even when the gun is in a closet, see United States v. Fermin, 32 F.3d 674, 678 (2d Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1145, 130 L.Ed.2d 1104 (1995), or on a bedroom dresser, see United States v. Medina, 944 F.2d 60, 66-67 (2d Cir.1991), cert. denied, 503 U.S. 949, 112 S.Ct. 1508, 117 L.Ed.2d 646 (1992), or under a mattress, see United States v. Torres, 901 F.2d 205, 217-18 (2d Cir.), cert. denied, 498 U.S. 906, 111 S.Ct. 273, 112 L.Ed.2d 229 (1990), or even in a locked safe, see United States v. Alvarado, 882 F.2d 645, 654 (2d Cir.1989), cert. denied, 493 U.S. 1071, 110 S.Ct. 1114, 107 L.Ed.2d 1021 (1990).
16
In this case, the silenced firearm shared the broiler drawer with a kilogram of cocaine. Moreover, the deal arranged between the informant and Santos called for two kilograms; only one was on the living room table. A jury could infer that the kilogram in the oven--near the gun--was the second kilogram of this deal. Moreover, even though the gun was wrapped in paper, it was placed handle-out for ease of access (as the jury could infer), and was ready to fire: "All you had to do was stick your finger through the bag...." We therefore affirm both defendants' section 924(c) convictions in respect of the silenced .22 caliber firearm.
B. Eighth Amendment
17
"[T]he Eighth Amendment prohibits imposition of a sentence that is grossly disproportionate to the severity of the crime." Rummel v. Estelle, 445 U.S. 263, 271, 100 S.Ct. 1133, 1138, 63 L.Ed.2d 382 (1980). "Rummel stands for the proposition that federal courts should be reluctan[t] to review legislatively mandated terms of imprisonment, and that successful challenges to the proportionality of particular sentences should be exceedingly rare." Hutto v. Davis, 454 U.S. 370, 374, 102 S.Ct. 703, 705, 70 L.Ed.2d 556 (1982) (per curiam) (internal quotation marks and citation omitted).
18
"In view of the substantial deference that must be accorded legislatures and sentencing courts, a reviewing court rarely will be required to engage in extended analysis to determine that a sentence is not constitutionally disproportionate." Solem v. Helm, 463 U.S. 277, 290 n. 16, 103 S.Ct. 3001, 3009 n. 16, 77 L.Ed.2d 637 (1983). Nevertheless, "as a matter of principle ... a criminal sentence must be proportionate to the crime for which the defendant has been convicted." Id. at 290, 103 S.Ct. at 3009. In deciding the constitutionality of a sentence,
19
a court's proportionality analysis under the Eighth Amendment should be guided by objective criteria, including (i) the gravity of the offense and the harshness of the penalty; (ii) the sentences imposed on other criminals in the same jurisdiction; and (iii) the sentences imposed for commission of the same crime in other jurisdictions.
Id. at 292, 103 S.Ct. at 3011.1
20
Defendants argue that the mandatory thirty-year consecutive sentence of section 924(c) "will, in most cases, result in a de facto life sentence," because ordinarily the "relatively sophisticated offenders" who "have access to silencers" will already face substantial sentences on their underlying drug offenses. Defendants also advance the self-refuting argument that the challenged provision is disproportionate because it will have the severest impact on the most "sophisticated offenders." We have previously noted that "a silencer transforms an unmuffled gun into a far more threatening weapon." United States v. Bakhtiari, 913 F.2d 1053, 1062 (2d Cir.1990), cert. denied, 499 U.S. 924, 111 S.Ct. 1319, 113 L.Ed.2d 252 (1991). The only purpose of a silencer-equipped firearm is stealth--to kill without warning, commotion or detection. It adjusts the calculus of risks and rewards for the user in a way that makes the gun more dangerous to a potential victim. Viewed in this light, the decision of the Congress to multiply the sentence that would apply absent the silencer cannot be considered "grossly disproportionate" to the offense.
21
Courts have regularly rejected Eighth Amendment challenges to sentences in circumstances arguably more compelling than those presented here. See, e.g., Harmelin v. Michigan, 501 U.S. 957, 996, 111 S.Ct. 2680, 2702, 115 L.Ed.2d 836 (1991) (life without parole for possession of 672 grams of cocaine); Hutto, 454 U.S. at 372-73, 102 S.Ct. at 704-05 (forty-year sentence for possession with intent to distribute nine ounces of marijuana); Rummel, 445 U.S. at 285, 100 S.Ct. at 1145 (life sentence under state recidivist statute, where the three predicate offenses were fraudulent use of a credit card to obtain $80 worth of goods, passing a forged check in the amount of $28.36, and obtaining $120.75 by false pretenses); United States v. Valdez, 16 F.3d 1324, 1334 (2d Cir.) (life without parole for "merely middle-level drug dealers"), cert. denied, --- U.S. ----, 115 S.Ct. 60, 130 L.Ed.2d 18 (1994).
22
Nor does a disproportion appear when we compare the mandatory sentence for drug-trafficking use of a silenced firearm with other federal firearms provisions. Section 924(c) imposes the same mandatory thirty-year sentence if the drug trafficker employs a machine gun. An Eighth Amendment challenge to that provision was rejected by the Ninth Circuit. See United States v. Martinez, 967 F.2d 1343, 1348 (9th Cir.1992). We have upheld against an Eighth Amendment challenge the fifteen-year minimum penalty for individuals with three prior narcotics or violent felony convictions who are convicted of simple possession of a (non-silenced) firearm in or affecting commerce. See United States v. Mitchell, 932 F.2d 1027, 1028-29 (2d Cir.1991) (per curiam) (reviewing challenge to 18 U.S.C. Sec. 924(e)); accord United States v. Crittendon, 883 F.2d 326, 331 (4th Cir.1989); United States v. Gilliard, 847 F.2d 21, 27 (1st Cir.1988), cert. denied, 488 U.S. 1033, 109 S.Ct. 846, 102 L.Ed.2d 978 (1989).
23
Finally, although no state has on its books a specific penalty for use of a silencer-equipped firearm during and in relation to a drug trafficking offense, a number of states punish the simple possession of a silencer with long imprisonment. See R.I. Gen. Laws Sec. 11-47-20 (maximum life term); Cal. Penal Code Sec. 12520 (same); Mont. Code Ann. Sec. 45-8-336 (maximum thirty-year sentence); Ark. Code Ann. Secs. 5-73-104, 5-4-401 (maximum twenty-year sentence). The discretionary character of the sentences allowed by these statutes does not impair the comparability of these state provisions: "There can be no serious contention ... that a sentence which is not otherwise cruel and unusual becomes so simply because it is 'mandatory.' " Harmelin, 501 U.S. at 995, 111 S.Ct. at 2701.
24
We have stated that the "Eighth Amendment condemns only punishment that shocks the collective conscience of society." United States v. Gonzalez, 922 F.2d 1044, 1053 (2d Cir.), cert. denied, 502 U.S. 1014, 112 S.Ct. 660, 116 L.Ed.2d 751 (1991). "[T]he excessiveness of one prison term as compared to another is invariably a subjective determination, there being no clear way to make 'any constitutional distinction between one term of years and a shorter or longer term of years.' " Hutto, 454 U.S. at 373, 102 S.Ct. at 705 (quoting Rummel, 445 U.S. at 275, 100 S.Ct. at 1140). The sentence imposed by section 924(c) does not violate the Eighth Amendment.
C. Due Process
25
Defendants' challenge to section 924(c) on due process grounds is meritless. They argue that the thirty-year sentence for using a silencer-equipped gun fails to further the purpose of the statute in a rational way. As discussed above, however, equipping a firearm with a silencer transforms the gun into something extraordinarily dangerous to potential victims. The determination of Congress to impose a greater sanction upon those who would use such weapons is entirely rational.
26
Defendants also argue that the statute's reference to silencers is impermissibly vague. "[V]agueness challenges that do not involve the First Amendment must be examined in light of the specific facts of the case at hand and not with regard to the statute's facial validity." United States v. Nadi, 996 F.2d 548, 550 (2d Cir.) (citing Chapman v. United States, 500 U.S. 453, 467, 111 S.Ct. 1919, 1928-29, 114 L.Ed.2d 524 (1991)), cert. denied, --- U.S. ----, 114 S.Ct. 347, 126 L.Ed.2d 311 (1993); accord United States v. Powell, 423 U.S. 87, 92, 96 S.Ct. 316, 319-20, 46 L.Ed.2d 228 (1975). "Because the statute is judged on an as applied basis, one whose conduct is clearly proscribed by the statute cannot successfully challenge it for vagueness." Nadi, 996 F.2d at 550 (citing Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 495 n. 7, 102 S.Ct. 1186, 1191 n. 7, 71 L.Ed.2d 362 (1982)).
27
Section 924(c) imposes a thirty-year sentence on "[w]hoever, during and in relation to any ... drug trafficking crime ... uses or carries a firearm ... equipped with a firearm silencer or firearm muffler...." 18 U.S.C. Sec. 924(c). The terms "firearm silencer and firearm muffler" are defined as "any device for silencing, muffling, or diminishing the report of a portable firearm...." 18 U.S.C. Sec. 921(a)(24). According to expert testimony at trial, the .22 caliber weapon found in the oven was equipped with "a perforated tube or vented tube," the only purpose of which was to reduce the report of the weapon from 144 decibels to 114. According to the expert, this thirty-decibel reduction in sound level qualified the device as "a very good silencer."
28
The gun in the broiler drawer was equipped with a device that is easily classified as a silencer. The statute therefore "give[s] the person of ordinary intelligence a reasonable opportunity to know what is prohibited," and "provide[s] explicit standards for those who apply [it]." Grayned v. City of Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 2299, 33 L.Ed.2d 222 (1972). We hold that section 924(c) is not unconstitutionally vague.
Conclusion
29
We have considered defendants' other arguments and find them to be devoid of merit. For the foregoing reasons, we affirm the judgment of conviction and sentences imposed upon these defendants.
1
The government invites us to consider the viability of the three-part proportionality analysis of Solem in light of the plurality opinion in Harmelin v. Michigan, 501 U.S. 957, 111 S.Ct. 2680, 115 L.Ed.2d 836 (1991). Although a parsing of the various concurring opinions in that case could support the conclusion that the second and third parts of Solem are no longer necessary, we have continued to apply Solem after Harmelin. See United States v. Certain Real Property & Premises Known as 38 Whalers Cove Drive, Babylon, N.Y., 954 F.2d 29, 38-39 (2d Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 55, 121 L.Ed.2d 24 (1992). Because the outcome of this case would be the same regardless of which approach we take, we defer the resolution of this issue to another day. See, e.g., Pinaud v. County of Suffolk, 52 F.3d 1139, 1154 (2d Cir.1995) ("we think it is appropriate to await another case--one in which ... the issue is necessarily determinative--to explore that case's effect" on this court's analysis)
|
116 Ariz. 566 (1977)
570 P.2d 508
The STATE of Arizona, Appellant,
v.
David KENNEDY and Tennis Kennedy, Appellees.
No. 2 CA-CR 959.
Court of Appeals of Arizona, Division 2.
May 6, 1977.
Rehearing Denied July 11, 1977.
Review Denied September 15, 1977.
*568 Bruce E. Babbitt, Atty. Gen., Phoenix, Stephen D. Neely, Pima County Atty. by David R. Cole, Deputy County Atty., Tucson, for appellant.
Stolkin, Weiss & Tandy by Stephen M. Weiss, Tucson, for appellee David Kennedy.
Scholl & Kurlander by William L. Scholl, Tucson, for appellee Tennis Kennedy.
OPINION
HOWARD, Chief Judge.
The state appeals from the granting of appellees' motion to suppress certain statements made by appellees just prior to the time they were arrested for attempted murder and conspiracy to commit murder.
The record shows that appellees had hired a former employee, Leo Beisler, to murder their partner, Tony Rodriguez, so that they could gain complete ownership of the partnership business, Kenler Pest Control. The plan was that Beisler was to use a ruse to gain entrance to the Rodriguez residence where he was to murder both Rodriguez and his wife.
Beisler contacted an assistant Pima County Public Defender and after explaining his involvement was taken to the Pima County Attorney's office. The police equipped him with an electronic listening device and he succeeded in recording an incriminating conversation with appellees. At that time it was mentioned that the murders were to take place at 10:00 p.m. on May 3, 1976. To provide appellees with an alibi, they were going to give a party on the night of May 3rd. On May 3rd Beisler was again "bugged". He went to appellees' apartment where the plan was further discussed. This conversation was monitored by Detective Marmion of the Tucson Police Department and several other detectives.
At about 10 o'clock on the evening of May 3rd, Det. Marmion and Sgt. Bunting approached the Kennedys in the pool area at their apartment complex where they had gone for the purpose of arresting the appellees. The detectives were not in uniform. There were backup officers and units in the area but they were not visible from the pool.
The two detectives told the Kennedys that Mr. and Mrs. Rodriguez had been murdered and that a man had been seen running from the residence. The statements were not true and were made in order to see how the Kennedys would react and what kind of story they would tell the detectives. Neither Kennedy had been advised of his "Miranda Rights". At no time was there any discussion involving a possible trip to the police station. In fact, Det. Marmion told the Kennedys that he would attempt to make telephone contact with them the next day to find out if they had any idea who might have committed the murders. The conversation between the detectives and the Kennedys took place in the immediate vicinity of the pool and other individuals were in the area. A few minutes after the interview appellees were arrested.
A motion to suppress the conversation at the poolside was granted although the trial judge indicated that in the light of the evidence the appellees could not have believed that they were in custody prior to the time they were actually arrested.
Appellees contend that under Arizona law the "Miranda warning" must be given if the police have probable cause to arrest the defendant. In support of this proposition they cite the following cases: State v. Melot, 108 Ariz. 527, 502 P.2d 1346 (1972); State v. Mumbaugh, 107 Ariz. 589, 491 P.2d 443 (1971); State v. Thomas, 104 Ariz. 408, 454 P.2d 153 (1969); and State v. Tellez, 6 Ariz. App. 251, 431 P.2d 691 (1967). We do not agree. The "Miranda warning" is required to be given prior to custodial interrogation which is defined as questioning initiated by law enforcement officers *569 after a person has been taken into custody or otherwise deprived of his freedom of action in any significant way. Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966); State v. Bainch, 109 Ariz. 77, 505 P.2d 248 (1973). The danger of custodial interrogation is intimidation either mental or physical. State v. Tellez, supra. The most the cases cited by appellees stand for is that the existence of probable cause is one factor, to be considered with the rest of the circumstances, in determining whether or not there was custodial interrogation. The existence of probable cause does not in and of itself trigger the necessity to give a Miranda warning. United States v. Harris, 528 F.2d 914 (4th Cir.1975). Custody is the crucial issue in determining whether such warning is necessary. As stated in State v. Bainch, supra:
"... The vital point is whether, examining all the circumstances, the defendant was deprived of his freedom of action in any significant manner, and the defendant was aware of such restraint. In the latter instance the Miranda warnings are required to be given before the statements of the defendant may be received in evidence against him." 109 Ariz. at 79, 505 P.2d at 250.
Custody is an objective condition. The subjective intent of the interrogator to arrest the suspect is not, in itself, a sufficient basis upon which to conclude that custody exists. People v. Kelley, 66 Cal.2d 232, 57 Cal. Rptr. 363, 424 P.2d 947 (1967). When an arrest has not yet taken place, the factors to be considered in deciding whether the custody has attached are many. Among the most important are (1) the site of the interrogation; (2) whether the investigation has focused on the suspect; (3) whether the objective indicia of arrest are present; and (4) the length and form of the interrogation. People v. Herdan, 42 Cal. App.3d 300, 116 Cal. Rptr. 641 (1974).
Under the facts here, there was no custodial interrogation and the Miranda warning was not necessary.
Nor are appellees' statements made at poolside inadmissible on the grounds that they were induced by fraud or trickery. A statement induced by fraud or trickery is not made involuntary unless there is additional evidence indicating that the defendant's will is overborne or that the confession was false or unreliable. State v. Winters, 27 Ariz. App. 508, 556 P.2d 809 (1976). There was no evidence here of threats, promises or physical coercion which in addition to the uncontroverted deception would indicate an involuntary waiver by appellees of their Fifth Amendment rights. The totality of the circumstances indicates that their will was not overborne by the police deception to a degree sufficient to render their statements false or unreliable.
The order granting the motion to suppress is vacated and set aside.
HATHAWAY and RICHMOND, JJ., concur.
|
45 So.2d 792 (1950)
Clyde NOLEN
v.
STATE.
7 Div. 65.
Supreme Court of Alabama.
April 20, 1950.
Hugh Reed, Jr., of Centre, for petitioner.
A. A. Carmichael, Atty. Gen., and Robt. Straub, Asst. Atty. Gen., opposed.
FOSTER, Justice.
Petition for certiorari to the Court of Appeals by Clyde Nolen to review and revise the judgment and decision of that court in the case of Nolen v. State, 45 So.2d 786.
We have examined the petition for certiorari in connection with the opinion of the Court of Appeals and are of the opinion that the petition is without merit.
Writ denied.
BROWN, LAWSON and STAKELY, JJ., concur.
|
USCA1 Opinion
[NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 97-1427
UNITED STATES,
Appellee,
v.
MICHAEL MERRIC,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
___________
Boudin and Stahl, Circuit Judges.
______________
____________________
Michael Merric on brief pro se.
______________
Jay P. McCloskey, United States Attorney, and Margaret D.
__________________ ____________
McGaughey, Assistant United States Attorney, on Memorandum of Law in
_________
Support of Motion Pursuant to Loc. R. 27.1 for Summary Disposition for
appellee.
____________________
AUGUST 19, 1997
____________________
Per Curiam. Assuming without deciding that we have
___________
jurisdiction to hear this appeal, and having carefully
reviewed the briefs and record, we find no clear error in the
order of commitment pursuant to 18 U.S.C. 4241(d).
We will not second-guess the district court's
determination of the credibility of the psychiatric reports,
even supposing that issue of credibility was not waived
before the district court. Further, in the context of this
interlocutory appeal from the 4241(d) commitment order, we
have no call to review defendant's complaints about his
medication and the underlying criminal charges.
The order is affirmed. See 1st Cir. Loc. R. 27.1.
________ ___
Appellant's motion for stay pending appeal is denied as
______
moot.
-2-
|
864 F.2d 792
U.S.v.Green**
NO. 88-3078
United States Court of Appeals,Eleventh Circuit.
DEC 05, 1988
1
Appeal From: M.D.Fla.
2
AFFIRMED.
**
Local Rule: 36 case
|
38 Cal.Rptr.3d 562 (2006)
136 Cal.App.4th 165
D & M FINANCIAL CORPORATION, Plaintiff and Respondent,
v.
CITY OF LONG BEACH et al., Defendant and Appellant.
No. B173977.
Court of Appeal, Second District, Division Three.
January 30, 2006.
*563 Robert E. Shannon, City Attorney, and Randall C. Fudge, Deputy City Attorney, for Defendant and Appellant.
Dapeer, Rosenblit & Litvak, William Litvak; Alexander Litvak and Alexander Litvak, Los Angeles, for Plaintiff and Respondent.
Certified for Partial Publication.[*]
*564 KITCHING, J.
I. INTRODUCTION
The City of Long Beach appeals from a judgment for inverse condemnation in favor of D & M Financial Corporation, which held a security interest in real property on which the City of Long Beach demolished an alleged substandard apartment building. The main issue in this appeal is whether, before demolishing a structure which it had declared to be substandard, the City of Long Beach satisfied its obligation to provide due process of law to D & M Financial Corporation. We reject the claim by the City of Long Beach that recordation of a "Declaration of Substandard Property" placed D & M Financial Corporation on notice that a building on its real property security would be demolished. We further conclude that the City of Long Beach failed to comply with its own practice of updating title reports to determine current ownership of property declared to be substandard. In addition, even after it had actual notice of the security interest held by D & M Financial Corporation, the City of Long Beach failed to comply with its ordinances requiring notice to mortgagees of property declared to be substandard. The City of Long Beach also failed to give D & M Financial Corporation the opportunity to repair defects at the property. Therefore the City of Long Beach violated the due process rights of D & M Financial Corporation. We affirm the judgment in favor of D & M Financial Corporation.
II. PROCEDURAL HISTORY
In the operative complaint, a second amended complaint filed on September 23, 2002, plaintiff D & M Financial Corporation ("plaintiff" or "D & M Financial") alleged that without notice to D & M Financial, defendant City of Long Beach ("the City") demolished an apartment building on real property in which D & M held a trust deed to secure a promissory note executed by Rahim Pashmaki, who acquired the property on February 7, 2001. The complaint alleged causes of action for deprivation of due process in violation of section 1983 of title 42 of the United States Code and for inverse condemnation.
The court tried the matter pursuant to the parties' stipulated statement of facts, other evidence by declaration and deposition, and trial exhibits.
The trial court rendered judgment for D & M, which was to recover $273,500 in damages from the City, plus attorney fees and costs. The City filed a timely notice of appeal from the judgment.
III. FACTS
The City demolished a four-unit apartment building at 1462-1468 Henderson Avenue in Long Beach on August 14, 2001. The history of this demolition is as follows.
In May 2000, Loren Patten, a Senior Combination Building Inspector for the City of Long Beach, inspected the building at 1462-1468 Henderson Avenue and on June 30, 2000, issued a declaration of substandard building. On July 6, 2000, Patten sent a letter titled "Notice of Substandard Building" to the then-owner and served copies on interested parties, including the then-trust deed holder. On July 17, 2000, a "Declaration of Substandard Property" for the Henderson Avenue property was recorded with the Los Angeles County Recorder pursuant to Long Beach Municipal Code section 18.20.110 et seq., relating to substandard buildings.
Patten estimated it would cost $20,000 to bring the building into compliance with applicable codes and to repair deficiencies *565 identified in the Declaration of Substandard Property.
On November 10, 2000, the City of Long Beach "Findings of the Building Official" found the apartment building at 1462-1468 Henderson Avenue to be substandard and a public nuisance. The building, constructed in 1924, had been vacant since before the July 6, 2000, Notification of Substandard Building. An attachment identified 38 defects needing repair or replacement, and found the structure to be a safety hazard.
Also on November 10, 2000, the City sent a "Notice of Hearing" for a hearing on November 20, 2000, to the property owner, 777 Cyber, Inc., to the then-trust deed holder, and to interested parties.
At a November 20, 2000, hearing, the Board of Examiners, Appeals and Condemnation ("BEAC") adopted the Building Official's Findings as the BEAC's findings. On November 22, 2000, a "Notice of Board Determination" was sent to 777 Cyber, Inc. and to the then-trust deed holder. The notice reflected the BEAC's determination that the apartment building on the Henderson Avenue property was substandard and a public nuisance, and its order that the owner demolish or rehabilitate the structure by December 20, 2000. This notice was not recorded.
By December 13, 2000, Aztec Financial had acquired the Henderson Avenue property through foreclosure. On that date Aztec Financial requested an extension of time to complete repairs on the Henderson Avenue property. A letter from Aztec Financial stated that it would obtain permits on December 15 and would start construction on December 18, 2000. On December 15, 2000, the City issued permits for repairs identified in the Building Official's Findings.
On January 8, 2001, the BEAC approved a request for a time extension, with rough inspections to be completed by February 8, 2001, and an additional 30 days to March 8, 2001, for completion of the project.
During the period from February 8 to August 10, 2001, the City's records indicated that seven different site inspections showed insufficient work to repair the Henderson Avenue property.
By a February 2, 2001, grant deed, 1462-1468 Henderson Avenue was sold to Rahim Pashmaki. Daaz Financial Services, Inc. made a $247,500 loan to Pashmaki, secured by a trust deed recorded February 15, 2001, in the Los Angeles County Recorder's Office. Also recorded on February 15, 2001, was the assignment of the Daaz Financial Services trust deed to D & M Financial Corporation.
City policy is to issue a 10-day notice of intent to demolish, and to mail the 10-day notice of intent to demolish to all persons listed in the City's files, the title report, and the lot book update. It was the City's practice to obtain a title report/lot book update before sending a 10-day notice of intent to demolish. The City did not obtain a lot book update before sending out the 10-day notice regarding the Henderson Avenue property. On February 26, 2001, the City sent Aztec Financial a 10-day notice of intent to demolish, but sent no copy to D & M Financial.
Dale Wiersma, Principal Building Inspector of the City of Long Beach Department of Planning and Building, acknowledged that he was told in April of 2001 that there had been a change of title and that D & M Financial held a trust deed on the Henderson Avenue property. On April 6, 2001, the City obtained an updated title report, showing that D & M Financial was a beneficiary under a trust deed recorded on February 15, 2001.
*566 On April 10, 2001, Wiersma sent a letter to Pashmaki stating that pursuant to a February 26, 2001, Notice of Intent to Demolish, the City was preparing a contract to demolish structures at 1462-1468 Henderson Avenue, and requested Pashmaki's approval for unrestricted access to the properties on April 16, 2001. On May 15, 2001, the City obtained a warrant to inspect the Henderson Avenue apartment building and garage foundation. On May 21, 2001, the City obtained a warrant to inspect the premises for asbestos for future demolition purposes. On May 22, 2001, the City sent Pashmaki a "Notice to Clean Premises." On June 1, 2001, the City sent Pashmaki a "Notice to Pay Public Nuisance Abatement Levy." On June 19 and July 2, 2001, the City sent a Notice of Lien for costs to abate a nuisance at the Henderson Avenue property to the Office of the Los Angeles County Recorder. The City sent no copies of these documents to D & M Financial.
On August 7 and 10, 2001, the City obtained warrants to inspect the Henderson Avenue property for the purpose of demolition. The City sent a copy of the August 7, 2001, warrant to D & M Financial by certified mail. It was delivered to D & M on August 13, 2001.
It is the City's policy to issue a 48-hour notice of intent to demolish before demolishing a building. On Friday, August 10, 2001, the City mailed a "48-Hour Notice of Intent to Demolish" to Pashmaki, and sent a copy to D & M Financial Corp. at its address in Belleville, New Jersey. Wiersma testified that he did not take into consideration that he was sending the 48-hour notice over a weekend, or that it was being sent to a party in New Jersey. D & M Financial received the "48-Hour Notice of Intent to Demolish" on Monday, August 13, 2001. On that date DeSantis of D & M Financial spoke to Wiersma.
From the time it acquired its interest in the Henderson Avenue property on February 15, 2001, until it received the 48-hour notice and the inspection warrant on August 13, 2001, D & M Financial received no notice from the City that the City had commenced any proceeding to demolish the property.
DeSantis contacted Wiersma several times on August 13 and 14, 2001. Wiersma had authority to stop demolition. The City began demolition of structures at the property on August 14, 2001, and on that date informed D & M Financial that demolition had already commenced. Cleanup of the site was concluded by August 28, 2001.
On September 21, 2001, the City sent Pashmaki a demand for payment of $11,615.20 costs for demolition and enforcement, and recorded a notice of lien for $11,675.20.
On July 29, 2003, pursuant to the deed of trust recorded on February 15, 2001, the trustee under the deed of trust sold the Henderson Avenue property to D & M Financial Corporation for $70,500 cash.
The parties agreed and stipulated that if the City were found to be liable, damages suffered by D & M Financial for demolition of the building would be calculated as (1) $330,000 for the value of the property had demolition of improvements not taken place, and (2) $70,000 as the value of the property after demolition of improvements. Thus damages awarded to plaintiff would be calculated as $330,000 less the $70,000 residual value, for a total of $260,000. D & M Financial would also be entitled to removal of the City's $11,500 lien on the property, and if the lien was not removed within 10 days of entry of the court's order for judgment, $13,500 would be added for a total judgment of $273,500 if the court ordered judgment in favor of D & M Financial. If the City were found *567 liable, D & M Financial would also be entitled to recover its costs and attorney fees upon entry of the judgment.
As stated, the trial court entered judgment for D & M Financial in the amount of $273,500, plus attorney fees and costs.
IV. ISSUE
The City's primary argument on appeal is that the judgment erroneously imposes a notice requirement beyond that imposed by the Fourteenth Amendment of the United States Constitution.
V. DISCUSSION
A. Before Demolishing the Structure, the City of Long Beach Failed to Provide Due Process to D & M Financial
1. Due Process Requirements for Demolition of Substandard Property
"Under its police power to protect public health and safety a city may destroy private property without liability to the property owner, but when it does this it must afford the owner due process of law." (Friedman v. City of Los Angeles (1975) 52 Cal.App.3d 317, 321, 125 Cal.Rptr. 93.) When a city threatens to demolish structures, due process requires that the city provide the property owner and other interested parties with notice, with the opportunity to be heard, and with the opportunity to correct or repair the defect before demolition.
Before taking an action which will affect a property interest protected by the Due Process Clause of the Fourteenth Amendment, a state must provide "notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." (Mullane v. Central Hanover Tr. Co. (1950) 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865.) Constitutionally sufficient notice is "such as one desirous of actually informing the [interested parties] might reasonably adopt to accomplish it." (Id. at p. 315, 70 S.Ct. 652.) "The notice must be of such nature as reasonably to convey the required information[.]" (Id. at p. 314, 70 S.Ct. 652.)
Except in emergencies, due process of law also requires an opportunity to be heard. (Friedman v. City of Los Angeles, supra, 52 Cal.App.3d at p. 321, 125 Cal.Rptr. 93.) Procedural due process, guaranteed by the Fifth and Fourteenth Amendments to the United States Constitution and by article I, section 7 of the California Constitution, exists "to provide affected parties with the right to be heard at a meaningful time and in a meaningful manner." (Ryan v. California Interscholastic Federation-San Diego Section (2001) 94 Cal.App.4th 1048, 1072, 114 Cal.Rptr.2d 798; United States v. James Daniel Good Real Property (1993) 510 U.S. 43, 49-52, 114 S.Ct. 492, 126 L.Ed.2d 490.)
"The right to prior notice and a hearing is central to the Constitution's command of due process. `The purpose of this requirement is not only to ensure abstract fair play to the individual. Its purpose, more particularly, is to protect his use and possession of property from arbitrary encroachment to minimize substantively unfair or mistaken deprivations of property[.]'" (United States v. James Daniel Good Real Property, supra, 510 U.S. at p. 53, 114 S.Ct. 492.)
Finally, when a city threatens demolition of structures, due process also requires the city to give a property owner the opportunity to correct defects or repair a structure constituting a nuisance before demolition. (Hawthorne Savings & Loan Assn. v. City of Signal Hill (1993) 19 Cal.App.4th 148, 158-159, 23 Cal.Rptr.2d 272; *568 see Duffy v. City of Long Beach (1988) 201 Cal.App.3d 1352, 1358, 247 Cal.Rptr. 715.)
2. D & M Financial Had a Sufficient Ownership Interest to Bring an Inverse Condemnation Action
The authorities speak of due process which must be accorded to owners of property and to "interested parties." Between its acquisition of the trust deed and note on February 15, 2001, and the demolition of the building at the Henderson Avenue property, D & M Financial held the note and trust deed and had a security interest in that property. The owner of the Henderson Avenue property during this period was not joined as a party to this action.[1] We conclude that the circumstances of this case made trust deed holder D & M Financial an "interested party" with standing to bring an inverse condemnation action without joining the mortgagors.
"Article I, section 19, of the California Constitution provides that property may be taken or damaged for public use only if just compensation is paid to the owner. That provision authorizes not only an eminent domain proceeding instituted by a public entity to acquire private property, but also an inverse condemnation action initiated by a landowner to obtain compensation for a claimed taking or damaging of his or her property." (Barthelemy v. Orange County Flood Control Dist. (1998) 65 Cal.App.4th 558, 563-564, 76 Cal.Rptr.2d 575.) An inverse condemnation action is the equivalent of an eminent domain proceeding, except that the plaintiff is the property owner, not the condemnor. Equivalent principles govern the parties' rights in both actions. (Id. at p. 564, 76 Cal.Rptr.2d 575; Breidert v. Southern Pac. Co. (1964) 61 Cal.2d 659, 663, fn. 1, 39 Cal.Rptr. 903, 394 P.2d 719.)
To be constitutionally entitled to compensation for inverse condemnation, a plaintiff must show it owned a property interest taken by the state. Parties with interests sufficient to bring an inverse condemnation action include holders of fee interests, easements, rights-of-way, and building restrictions (County of San Diego v. Miller (1975) 13 Cal.3d 684, 687-688, 119 Cal.Rptr. 491, 532 P.2d 139), a holder of an unexercised option to purchase property (id. at p. 693, 119 Cal.Rptr. 491, 532 P.2d 139), a mortgagor whose interest has been foreclosed, the executor of a property owner's estate in which the decedent held an interest with a spouse, and an insurer-subrogee seeking recovery in the name of the insurer or of its insured (McMahan's of Santa Monica v. City of Santa Monica (1983) 146 Cal.App.3d 683, 690-691, 194 Cal.Rptr. 582).
The entitlement to due process compensation does not turn on strict categories of estates in real property or contractual rights. "`[T]he right to compensation is to be determined by whether the condemnation has deprived the claimant of a valuable right rather than by whether his right can technically be called an "estate" or "interest" in the land.'" (County of San Diego v. Miller, supra, 13 Cal.3d at p. 691, 119 Cal.Rptr. 491, 532 P.2d 139; italics omitted.)
We find that the beneficiary of a deed of trust on property has a sufficient ownership interest to be entitled to just compensation in inverse condemnation. Such a party has a "compensable interest" in an eminent domain proceeding as to the *569 property. (Carson Redevelopment Agency v. Adam (1982) 136 Cal.App.3d 608, 613, 186 Cal.Rptr. 615.)
Ordinarily the "compensable interest" of the beneficiary of a trust deed to recover an inverse condemnation award derives from the owner/mortgagor's recovery. When a portion of the property constituting the security is taken by eminent domain, the trust deed holder's remedy is to participate in an apportionment proceeding to recover an amount equivalent to the impairment of the security interest. (People ex rel. Dept. of Transportation v. Redwood Baseline, Ltd. (1978) 84 Cal.App.3d 662, 670-671, & 682, fn. 12, 149 Cal.Rptr. 11, citing Code Civ. Proc., §§ 1260.220, 1268.710.) However, an agreement between parties to the trust deed creating the security interest can permit the trust deed holder to recover an inverse condemnation award directly. (Redwood Baseline, at pp. 670-671, 149 Cal.Rptr. 11; see also Carson Redevelopment Agency v. Adam, supra, 136 Cal.App.3d at p. 613, 186 Cal.Rptr. 615.)
The mortgagor and D & M Financial had such an agreement. The trust deed creating the security interest of D & M Financial in Pashmaki's Henderson Avenue property defined "Miscellaneous Proceeds" as "any compensation, settlement, award of damages, or proceeds paid by any third party ... for: ... (ii) condemnation or other taking of all or any part of the Property[.]" That trust deed required that such miscellaneous proceeds from a partial taking of the secured property be applied to reduce the debt secured by the trust deed.[2] Such a provision is valid and enforceable. (People ex rel. Dept. of Transportation v. Redwood Baseline, Ltd., supra, 84 Cal.App.3d at p. 671, fn. 7, 149 Cal.Rptr. 11.)
According to the stipulated facts, the value of the Henderson Avenue property would have been $330,000 had demolition of improvements not taken place. The security instrument and trust deed recorded February 15, 2001, which was assigned to D & M Financial, secured a promissory note signed by Rahim Pashmaki in the amount of $247,500. Thus the quoted trust deed clause regarding disposition of miscellaneous proceeds from an inverse condemnation involving a partial taking of the Henderson Avenue property applies, because "the fair market value of the Property immediately before the partial taking, destruction, or loss in value [was] equal to or greater than the amount of the sums secured by this Security Instrument immediately before the partial taking, destruction, or loss in value[.]" This assignment of a right to recover an inverse condemnation judgment gives D & M Financial a sufficient ownership interest in the Henderson Avenue property to bring the inverse condemnation action.
As we subsequently determine, the City's own ordinances required it to serve mortgagees with notices and orders provided for in the chapter governing administration and enforcement of housing. *570 (Long Beach Mun.Code, § 18.20.260.) This ordinance recognizes that a mortgagee has a sufficient property interest to entitle the property owner to due process when the City takes actions which affect the mortgagee's property right. It supports a mortgagee's right to bring an inverse condemnation suit when those actions constitute a "taking" of mortgaged property without due process of law.
3. The City Did Not Give Notice to D & M Financial of Its Intention to Demolish the Substandard Building
One fundamental requirement of due process is the necessity of giving notice of demolition of structures to parties with an interest in the property. At numerous times as it proceeded toward demolition, the City failed to provide this notice.
a. The Recorded Declaration of Substandard Property Did Not Give Notice of the City's Intention to Demolish the Substandard Building
On July 17, 2000, the City recorded a Declaration of Substandard Property for the Henderson Avenue property with the Los Angeles County Recorder. It stated: "Notice is hereby given that pursuant to the provisions of Section 18.20.110 et seq. of the Long Beach Municipal Code, the property described below has been inspected and found to be substandard, as defined in Section 18.08.200 of the above ordinance and the owner has been or will be so notified. The owner is responsible for any costs, including incidental enforcement expenses, incurred by the City to correct the substandard condition. [¶] This document will be terminated only when the Superintendent of Building and Safety of the City of Long Beach finds that the public nuisance has been abated and either that such abatement has been accomplished at no cost to the City or that any such cost[s] have been repaid to the City, or that such costs have been placed upon the tax rolls as a special assessment. Detailed information may be obtained by contacting the Housing Section, Building and Safety Bureau."
The City contends that this recorded Declaration of Substandard Property put all present and future interested parties on notice that the building could be demolished. The City argues that this declaration satisfied any due process requirements. We disagree.
This Declaration of Substandard Property makes no reference to demolition of structures, and gives no express notice that demolition of structures will occur or is even contemplated. It states only that the property has been found to be substandard, the owner has been or will be so notified, and that the owner is responsible for the City's costs incurred to correct the substandard condition. The declaration also advises that it will be terminated only when the City finds that the public nuisance has been abated. It does not advise that demolition will occur if the public nuisance is not abated.
One of the ordinances referred to in the declaration, Long Beach Municipal Code section 18.20.110, states: "Whenever the building official determines by inspection that an existing building is substandard, or constitutes a nuisance, he shall institute proceedings to cause the repair, rehabilitation, vacation or demolition of such building." (Italics added.) The City argues that by identifying Long Beach Municipal Code section 18.20.110, the recorded declaration placed D & M Financial, as a subsequent encumbrancer, on constructive notice of the possibility of demolition of the Henderson Avenue Property. Demolition, however, is only one of four possible *571 outcomes of proceedings instituted after the building inspector determines that a building is substandard. In addition, Long Beach Municipal Code section 18.20.230 permits demolition only after a BEAC hearing at which persons claiming an interest in the building that is the subject of the hearing may appear and object, and a determination by the BEAC, with written findings, that total demolition is required.[3] Since it was issued and recorded before any BEAC determination, the Declaration of Substandard Property could not and did not give notice that the City would demolish the building at 1462-1468 Henderson Avenue. Thus it does not constitute recordation of an intention to demolish, which would have the effect of placing a prospective buyer on notice of the City's projected action. (See Friedman v. City of Los Angeles, supra, 52 Cal.App.3d at p. 322, 125 Cal.Rptr. 93.)
We reject the notion that recordation of the Declaration of Substandard Property put D & M Financial on inquiry or constructive notice that the City would demolish a structure at the Henderson Avenue property. We also reject the claim that recording the Declaration of Substandard Property satisfied due process.
b. The City Failed to Comply With the Requirement in Its Own Ordinances That It Give Notice of Demolition to Mortgagees Such as D & M Financial
The Long Beach Municipal Code section 18.20.260(A) states, in relevant part: "All notices and orders provided for by this Chapter shall be in writing, shall state in general terms wherein the building or structure is unsafe or dangerous, or in what manner it is substandard, or in what manner it constitutes a public nuisance, and the minimum requirements for its correction, or total costs that will be charged to the owner of the property. Service of such order shall be upon the owner thereof or upon the person causing or permitting the condition to exist, or the person having the custody, control, maintenance, occupancy, use or management of the building, and upon any lessee or mortgagee thereof if shown on the official records of the County, by delivering the same to either of said persons or their agents in charge of the building." (Italics added.) Chapter 18.20 provides for such notices in at least eight situations.[4]
*572 This ordinance codifies the constitutional due process principle that the City must give notice (1) reasonably calculated under all circumstances to apprise interested parties of the City's action, and (2) in a manner which someone who desired to give actual notice to the interested party might reasonably adopt to accomplish such actual notice. (Mullane v. Central Hanover Tr. Co., supra, 339 U.S. at pp. 314-315, 70 S.Ct. 652.)
Thus the City's own ordinance requires express notice to mortgagees of orders and notices which affect buildings or structures found to be unsafe, dangerous, or substandard. The City failed to comply with those requirements, even after it had actual notice of the change of ownership and actual notice that D & M Financial held a security interest in the Henderson Avenue property.
c. The City Violated Its Own Procedures When It Failed to Obtain an Updated Title Report
Although it was the City's practice to obtain a title report/lot book update before sending a 10-day notice of intent to demolish, the City did not obtain a lot book update before sending the 10-day notice regarding the Henderson Avenue property. Thus, for example, on February 26, 2001, the City sent a 10-day notice of intent to demolish to Aztec Financial, but sent no copy to D & M Financial.
A City cannot rely on notice to prior owners of record as determined by an out-of-date title search, and must make a timely title search to determine current ownership of property. (Friedman v. City of Los Angeles, supra, 52 Cal.App.3d at p. 322, 125 Cal.Rptr. 93.) In Friedman, city ordinances required only that the city give notice of impending demolition to owners listed on tax rolls, which did not provide accurate and timely information. Otherwise the city made no attempt to investigate current ownership of the property at the time of demolition, and relied instead on a title search made 16 months earlier. During that period ownership had changed twice. Thus for five months before demolition of a building, the property owner was someone other than the owner listed on the tax rolls. The city's failure to investigate current ownership of the property or to give notice to a new owner violated that new owner's due process rights. (Friedman v. City of Los Angeles, supra, 52 Cal.App.3d at p. 321, 125 Cal.Rptr. 93.) The city in Friedman also failed to record its intention to demolish, which again gave no notice to a prospective purchaser and new owner. (Id. at p. 322, 125 Cal.Rptr. 93.)
*573 The City of Long Beach failed to obtain an updated title report when it sent its notice of demolition, and thus sent no notice to D & M Financial. It had recorded no intention to demolish as of the date D & M Financial acquired its security interest in the Henderson Avenue property. As in Friedman, these omissions violated the due process rights of D & M Financial.
d. Four Months Before Demolition, the City Had Actual Notice of the Interest of D & M Financial in the Henderson Avenue Property
In April 2001, the City had actual notice of D & M Financial and its interest in the Henderson Avenue property. Dale Wiersma, Principal Building Inspector of the City of Long Beach Department of Planning and Building, acknowledged he was told in April of 2001 that there had been a change of title and that D & M Financial was a trust deed holder. On April 6, 2001, the City obtained an updated title report, which showed that D & M Financial was a beneficiary under a trust deed recorded on February 15, 2001.
The City sent a letter to Pashmaki on April 10, 2001, regarding preparation of a contract for demolition, obtained warrants to inspect on May 15 and May 21, 2001, sent Pashmaki a notice to clean premises on May 22, 2001, a notice requesting payment of a public nuisance abatement levy on June 2, 2001, and a notice of lien for recordation with Los Angeles County on June 18 and July 2, 2001. Even though the City now had actual notice of D & M Financial and its secured interest in the Henderson Avenue property, it sent no notice of any of these documents to D & M Financial.
The City sent no notice to D & M Financial until it sent a copy of a warrant to inspect the Henderson Avenue property for the purpose of demolition on August 7, 2001, by certified mail. D & M Financial received that copy on August 13, 2001, the same day D & M Financial received the 48-Hour Notice of Intent to Demolish, which the City had mailed on August 10, 2001. From the time it acquired its interest in the Henderson Avenue property on February 15, 2001, until August 13, 2001, the date demolition occurred, D & M Financial had not received any notice issued by the City of its proceeding to demolish the property.
Thus the City failed to comply with its own statutory notice requirements and its own procedures, even after it had actual knowledge of the interest of D & M Financial in the Henderson Avenue property.
e. The City, Even Under the Legal Authority on Which It Relies, Failed to Satisfy Due Process Requirements
The City argues that under the due process clause of the Fourteenth Amendment of the United States Constitution, its recordation of a Declaration of Substandard Property seven months before D & M Financial acquired its security interest in the Henderson Avenue property gave adequate notice to D & M Financial that demolition of a building would occur at the property. We find that the legal authority relied on by the City does not support its position.
The City primarily relies on Kornblum v. St. Louis County, Mo. (8th Cir.1995) 72 F.3d 661. Kornblum held that because the county contemplated demolition of a house, notice to the owners by mail or personal service was constitutionally required if their names and addresses were reasonably ascertainable, and some form of notice to future purchasers was required. (Id. at p. 663.) Kornblum found that a county's unreasonable failure to *574 comply with its own recording ordinance violated due process. (Id. at p. 664.)
We have already found that the City's July 17, 2000, recorded Declaration of Substandard Property for the Henderson Avenue property did not place a prospective encumbrancer on notice that City intended to demolish a structure on that property. Neither did the action by the BEAC on November 20, 2000. That action stated that "no person claiming any interest in the properties, buildings or structures" had appeared before the BEAC to object to the Building Official's findings, that the BEAC adopted the Building Official's findings as the BEAC's findings, and that the BEAC determined "that the buildings or structures described in the Findings are substandard and public nuisances, and order the owners to demolish or rehabilitate the buildings or structures in the manner and within the time frame described in staff's `Suggested Board Action.'" This order also had alternative provisions, giving the property owner the option to rehabilitate or demolish. This order was not recorded. Thus it gave no notice to a prospective purchaser such as D & M Financial.
Under Kornblum, neither of these documents placed D & M Financial on constructive notice of the City's intent to demolish structures at that property.
As occurred in Kornblum, "delay in demolishing the property contributed significantly to the unreasonableness of the notice in this case." (Kornblum v. St. Louis County, Mo., supra, 72 F.3d at p. 664.) More than a year passed between the July 17, 2000, recordation of notice of substandard property and the ultimate demolition of structures at 1462-1468 Henderson Avenue on August 14, 2001. As in Kornblum, the City is charged with knowing that because of such delay, the identity of people who want notice frequently changes over time. The more than one-year delay before demolition "created a foreseeable and appreciable risk that [the City's] action would affect a set of interested parties different from those whose interests were affected when the [building] was declared a nuisance." (Ibid.) This foreseeable risk that new parties would acquire ownership interests in the Henderson Avenue property in the period between the initial notice of substandard property and the ultimate demolition makes it reasonable to require additional efforts by the City to determine those parties and to give them actual notice of actions affecting structures on the Henderson Avenue property. The City failed to do so.
f. Absence of Notice to D & M Financial of Pending Demolition Affected Its Due Process Right to Receive Notice That It Could Correct Problems by Repair
The absence of notice of pending demolition also affected the due process rights of D & M Financial by failing to give it notice that it had the right to correct the problems with the structures by repairing them. Before destroying a building, a municipality must give the owner sufficient notice, a hearing, and an opportunity to repair the building. (Hawthorne Savings & Loan Assn. v. City of Signal Hill, supra, 19 Cal.App.4th at p. 159, 23 Cal.Rptr.2d 272.) Health and Safety Code section 17980, subdivision (b) codifies a property owner's constitutional right to choose to repair or to demolish a building that is substandard or a nuisance. (Hawthorne, at pp. 159-160, 23 Cal.Rptr.2d 272.) Although this constitutional right is subject to several conditions, where no emergency exists and the City has not afforded a property owner the choice between repair and demolition, the City violates the property owner's right to due process and *575 violates Health and Safety Code section 17980. (Hawthorne, at pp. 160-161, 23 Cal.Rptr.2d 272.) Although a change of ownership does not extend the time period for repair of substandard property, due process does require that succeeding owners be given notice that the City has offered the option to repair or demolish and of the time within which to exercise this option. (Id. at p. 162, 23 Cal.Rptr.2d 272; see also Friedman v. City of Los Angeles, supra, 52 Cal.App.3d at pp. 321-322, 125 Cal.Rptr. 93.) The City's failure to provide notice to D & M Financial precluded D & M Financial from exercising its repair option, and thereby violated its due process rights.
4. Conclusion
We find that by demolishing structures after failing to provide D & M Financial with notice, an opportunity to be heard, and the opportunity to correct defects at the property, the City of Long Beach violated the due process rights of D & M Financial. Therefore the judgment for inverse condemnation is affirmed.
B.-C.[**]
VI. DISPOSITION
The judgment is affirmed. Costs on appeal are awarded to plaintiff D & M Financial Corporation.
We concur: CROSKEY, Acting P.J., and ALDRICH, J.
NOTES
[*] Pursuant to California Rules of Court, rules 976(b) and 976.1, this opinion is certified for publication with the exception of part V(B) and (C).
[1] As stated earlier, D & M Financial became the owner of 1462-1468 Henderson Avenue through foreclosure on July 29, 2003.
[2] The relevant clause in the trust deed states: "In the event of a partial taking, destruction, or loss in value of the Property in which the fair market value of the Property immediately before the partial taking, destruction, or loss in value is equal to or greater than the amount of the sums secured by this Security Instrument immediately before the partial taking, destruction, or loss in value, unless Borrower and Lender otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the Miscellaneous Proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the partial taking, destruction, or loss in value divided by (b) the fair market value of the Property immediately before the partial taking, destruction, or loss in value. Any balance shall be paid to Borrower."
[3] Long Beach Municipal Code section 18.20.230(A) states, in relevant part: "Following the filing by the building official of his findings in connection with the condemnation of a building as being substandard or as being a public nuisance, the building official shall notify the members of the board of examiners, appeals and condemnation of such filing and shall notify other interested persons of the time and place for a hearing before the board for the purpose of passing upon the findings of the building official." (Italics added.) Subdivision (B) provides for service of notice of the time and place of the BEAC hearing to the owner and other parties owning an interest in the building. Subdivision (C) describes who may appear before the BEAC to object to the condemnation, and requires the BEAC to "take such evidence as may be necessary to determine whether the building or structure is substandard or is a public nuisance. Upon or after the conclusion of the hearing, the Board shall determine whether the building or structure is substandard or a nuisance and what alterations or repairs, if any, could be made in order to correct the substandard conditions or to abate the nuisance, or whether the total demolition thereof is required[.]" (Italics added.)
[4] Notices provided for by chapter 18.20 of the Long Beach Municipal Code include:
a. Notice of substandard building by the building official specifying inadequacies and hazards to be corrected (City of Long Beach Mun.Code, § 18.20.120).
b. Notice of posting and a copy of a notice of substandard building posted on a substandard building (City of Long Beach Mun.Code, § 18.20.160).
c. After the building official files findings in connection with a condemnation of a building as substandard or as being a public nuisance, notice of the time and place of a hearing before the BEAC must be given by the secretary of the board (City of Long Beach Mun.Code, § 18.20.230(A) & (B)).
d. After the hearing, a copy of the BEAC's written findings of its determination must be served on the same persons previously served with notice of the BEAC hearing (City of Long Beach Mun.Code, § 18.20.230(D)).
e. Notice of a determination by the City Council in any appeal filed from the BEAC order concerning correction of substandard conditions or abatement of a nuisance (City of Long Beach Mun.Code, § 18.20.240(B)).
f. When a notice of a substandard building, or that a building constitutes a public nuisance, is posed at the property, within five days an additional copy of such notices is to be served on the owner of the building, or of any interest therein, including lessees and mortgagees (City of Long Beach Mun.Code, § 18.20.260(C)).
g. Notices relating to abatement charges (City of Long Beach Mun.Code, §§ 18.20.280 & 18.20.290).
h. Notice to secure structure (City of Long Beach Mun.Code, § 18.20.370).
[**] See footnote *, ante.
|
485 F.Supp.2d 1302 (2006)
ESSEX BUILDERS GROUP, INC., Plaintiff,
v.
AMERISURE INSURANCE COMPANY and Pennsylvania General Insurance Company,[1] Defendants.
No. 6:04-cv-1838-Orl-22JGG.
United States District Court, M.D. Florida, Orlando Division.
December 13, 2006.
Order Denying Clarification or Reconsideration January 22, 2007.
*1303 *1304 Brenton Neil Ver Ploeg, Stephen A. Marino, Jr., Ver Ploeg & Lumpkin, P.A., Miami, FL, Robert Patrick Major, Winderweedle, Haines, Ward & Woodman, P.A., Orlando, FL, for Plaintiff.
John Bond Atkinson, Rebecca Ann Brownell, Atkinson & Brownell, P.A., Miami, FL, Jeffrey Russell Davis, Stuart J. Freeman, Brasfield, Fuller, Freeman, & O'Hern, PA, St. Petersburg, FL, for Defendants.
ORDER
CONWAY, District Judge.
I. INTRODUCTION
This cause comes before the Court for consideration of pending motions in this insurance coverage dispute. After carefully considering these motions and associated filings, the Court issues the rulings set forth herein.
II. BACKGROUND
In March 1999, Plaintiff Essex Builders Group, Inc. ("Essex") entered into an agreement to act as general contractor on an apartment construction project. Reliance Insurance Company, the predecessor to Travelers Casualty & Surety Company ("Travelers"), issued a performance bond on behalf of Essex. Following project completion, the owner discovered water damage to the apartment buildings. After incurring substantial costs to remedy the problem, the owner demanded reimbursement from Essex. The owner also made a claim against the bond. Essex's commercial general liability ("CGL") insurers, Defendants Pennsylvania General Insurance Company ("PGIC") and Amerisure Insurance Company ("Amerisure"), received notice of the claim against Essex, but did not pay it. Ultimately, Travelers paid the project owner $6.25 million to resolve the owner's claim.
In the present lawsuit, Essex sues PGIC and Amerisure for breach of the CGL insurance contracts. Essex maintains that Travelers' bond payment to the project owner rendered Essex unbondable and thereby "severely impaired and/or destroyed" its business. Joint Final Pretrial Statement ("PTS") (Doc. 336) at 3-4. Essex seeks "consequential damages for the injury to its business, as well as the damages, costs and attorney's fees associated with defending against the Claim and . . . bringing this action." Id. at 4.
III. SUMMARY JUDGMENT STANDARD
A motion for summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "The party seeking summary judgment bears the initial burden of identifying for the district court those portions of the record `which it believes demonstrate the absence of a genuine issue of material fact.'" Cohen v. United Am. Bank of Cent. Fla., 83 F.3d 1347, 1349 (11th Cir.1996) (quoting Cox v. Adm'r U.S. Steel & Carnegie, 17 F.3d 1386, 1396, modified on other grounds, 30 F.3d 1347 (11th Cir.1994)). "There is no genuine issue for trial unless the non-moving party establishes, through the record presented to the court, that it is able to prove evidence sufficient for a jury to return a verdict in its favor." Cohen, 83 F.3d at 1349. The Court considers the evidence and all inferences drawn therefrom in the light most favorable to the non-moving party. See Hairston v. Gainesville Sun Pub. Co., 9 F.3d 913, 918 (11th Cir.1993).
*1305 IV. PGIC'S MOTION FOR PARTIAL SUMMARY JUDGMENT[2]
At the outset, PGIC denies that Essex can prove it was forced out of business as a result of the CGL insurers' failure to pay the project owner's claim. PGIC further maintains that even if Essex can prove this injury, "it is not entitled, as a matter of law, in its Breach of Contract claim, to recover the consequential damages it is seeking as a result of its being forced to go out of business." Doc. 298 at 2.[3] To support this argument, PGIC relies on two cases: Swamy v. Caduceus Self Ins. Fund, Inc., 648 So.2d 758 (Fla. 1 st DCA 1994), and Frenz Enters., Inc. v. Port Everglades, 746 So.2d 498 (Fla. 4th DCA 1999).
In Swamy, a liability insurer failed to settle a medical malpractice claim against a physician, resulting in a judgment that greatly exceeded policy limits. This prompted Dr. Swamy to sue his insurer for bad faith. In that suit, the doctor "sought damages to compensate [him] for the excess judgment, a loss of profits due to reduced referrals, and damage to professional reputation." 648 So.2d at 759. Thereafter, the insurer paid the tort plaintiff the $1 million policy limit, and later agreed to pay her "an additional $2 million in return for a satisfaction of the judgment and [the tort plaintiffs] unconditional release of Dr. Swamy and [the insurer]." Id. The insurer then "moved for summary judgment in Dr. Swamy's suit, arguing that its satisfaction of the excess judgment precluded further recovery by Dr. Swamy and, in essence, extinguished Swamy's cause of action for bad faith." Id. The lower court agreed and granted summary judgment in the insurer's favor.
On appeal, Florida's First District first determined that an insured tortfeasor's damages are not necessarily limited to the amount of an excess judgment; and that "additional damages may be recovered." Id. at 759-760. The appellate court then confronted the question "whether the damages actually pled by Dr. Swamy were recoverable in his action for bad faith at common law or pursuant to section 624.155, Florida Statutes." Id. at 760 (footnote omitted).
The First DCA noted that in Florida, an insured's bad faith claim against its insurer for failure to settle a third party's claim sounds in contract, rather than in tort. Id. Consequently, the recoverable damages "are limited to those that can be said to have been contemplated by the parties at the time of the formation of the insurance contract." Id. Applying this legal principle to the facts in Swamy, the appellate court stated:
In the instant case, once the excess judgment was satisfied, Dr. Swamy's remaining damage claims consisted of alleged lost profits due to reduced referrals, and damage to his professional reputation. In essence, Dr. Swamy sought to recover for losses resulting from the attendant negative publicity of the large excess judgment. Such damages are, at best, an indirect consequence of Caduceus' failure to settle, More importantly, the loss of reputation and referral cannot be said to have been within the contemplation of the parties to the insurance contract.
*1306 Presumably, Dr. Swamy procured insurance to protect himself from the serious risks involved in practicing medicine. Insured and insurer must have contemplated that the insurer's bad faith in failing to settle a claim could jeopardize the insured's security by exposing him to an excess judgment. In such an event, the carrier could be liable for the amount of the excess judgment or damages resulting from execution. The possibility that negative publicity would be generated, which would then result in a loss of reputation and business, cannot be deemed the natural or contemplated result of the carrier's breach. In short, the damages claimed by Dr. Swamy were not recoverable in Florida, and the trial court properly entered summary judgment for [the insurer].
Id. at 760-761 (alteration added).
In Frenz Enterprises, the plaintiff ("Frenz") appealed a final judgment awarding it damages on its breach of contract claim against Port Everglades and Broward County for dredging work. Among other things, Frenz argued that the trial court committed error when it denied Frenz's proposed jury instructions regarding lost profits. On that point, Florida's Fourth District stated:
The trial court ruled Frenz's claim seeking lost profits based on an alleged inability to obtain a bond as a result of its dealings with the Port was inappropriate because such damages were not foreseeable. We agree. To recover damages for lost profits in a breach of contract action, a party must prove a breach of contract, that the party actually sustained a loss as a proximate result of that breach, that the loss was or should have been within the reasonable contemplation of the parties, and that the loss alleged was not remote, contingent, or conjectural and the damages were reasonably certain. See Crain Automotive Group[, Inc.] v. J & M Graphics [Inc.], 427 So.2d 300, 301 (Fla. 3d DCA 1983) (reciting the elements of a claim for damages for lost profits as a result of the late placement of an advertisement). Here, the evidence did not establish that Frenz's drop in revenues from $6,000,000 to zero was proximately caused by the Port's failure to pay Frenz the amount it expected under the contract and the Port's filing of a counterclaim seeking liquidated damages. Frenz failed to establish that such a large loss was or should have been within the reasonable contemplation of the parties, or that the Port should have known Frenz would lose his bond line. To the contrary, it would have been reasonable to expect Frenz's business to continue to some extent. Frenz has failed to establish an abuse of discretion under this point.
746 So.2d at 504 (alterations added).
PGIC essentially argues that Swamy and Frenz Enterprises establish that the types of damages Essex seeks here are not recoverable as a matter of law, on the ground that they cannot be considered to have been within the contemplation of the parties at the time of contract formation, i.e., the date on which the CGL policies were issued. However, PGIC places undue importance on these decisions. They do stand for the proposition that contract damages are limited to those within the contemplation of the parties at the time of contract formation, and, also, that a litigant who fails to establish such a connection cannot recover consequential damages. However, these cases do not suggest that the types of consequential damages Essex seeks here can never be recovered. In fact, there, is Florida decisional authority suggesting that in appropriate circumstances, an insured may recover consequential damages when its insurer's breach of contract *1307 causes the insured's business to fail. See Travelers Ins. Co. v. Wells, 633 So.2d 457 (Fla. 5th DCA 1993). At bottom, Swamy and Frenz Enterprises are largely failure-of-proof cases. They do little to resolve the question presented here, i.e., whether the plaintiff in this case has proved that the damages claimed here are legally compensable.
Hence, the salient question is whether Essex has identified evidence, sufficient to present a jury question, that the alleged destruction of Essex's business as a result of the CGL insurers' refusal to pay the project owner's claim was a consequence within the contemplation of the parties at the time the insurance policies were issued. In an effort to thwart entry of summary judgment, Essex asserts that it was "commonly known that a bond payment would be fatal to Essex." Doc. 331 at 6 (capitalization omitted)[4] To support this contention, Essex quotes the testimony of a representative (Marcelle Houston) of Essex's bond surety (Travelers), who stated that no principal wants its surety to pay a bond claim because that guarantees the principal will never again be able to obtain bonding. Essex also relies on the testimony of one of Essex's owners (Ed Storey), the company's bonding agent (Dave Carr), and a representative (Tom Finn) of another entity that issued corporate surety bonds (Zurich American Insurance Company). Collectively, this testimony supports Essex's position that after Travelers paid the bond claim, Essex became unbondable, was therefore precluded from working on any projects requiring a bond, and ceased doing business as a result. Essex maintains this evidence establishes that "[i]t was . . . no secret that if Defendants failed to defend and indemnify Essex, it would lose the ability to secure additional bonds." Id. at 7.
This evidence may show that these consequences were no secret to Essex, the company's bonding agent, Travelers, or others in the surety bond business, but it is insufficient to prove that they were within the actual or constructive knowledge of PGIC and Amerisure. In that regard, Essex has presented no evidence that PGIC or Amerisure knew or should have known at the time of contracting that the natural consequence of denying coverage to Essex for an owner's claim arising from a construction project would be that Essex would lose its ability to obtain bonding, and that the company would be severely damaged or forced out of business as a result. Essex's position really boils down to this: what was common knowledge to those associated with corporate surety bonding necessarily was universally understood among those writing CGL policies. This is too great a leap of faith to withstand intellectual scrutiny. Supposition is not the same as reasonable inference, and speculation cannot substitute for evidence. Additionally, Essex has not shown what percentage of its work required bonds, or that its CGL insurers were familiar enough with Essex's business operations that they knew or should have known that the bonded portion of Essex's work was significant enough that the loss of that business would severely damage Essex or lead to the company's demise.
In sum, then, Essex has presented no evidence that PGIC or Amerisure ever contemplated at the time of contracting that a denial of a third-party claim against the CGL policies would result in Essex losing bonding capacity and failing as a business. Similarly, Essex has failed to *1308 present any evidence that it was universally understood in the CGL insurance industry that a refusal to pay an underlying claim such as this would necessarily result in a loss of a building contractor's bonding eligibility, and, proceeding yet another step, that a loss of bonding capacity would necessarily (or even likely) lead to severe damage to or destruction of an insured construction business.
Perhaps Essex might have established these things through depositions of PGIC's and Amerisure's representatives, or through an expert witness; perhaps not. It could be that these matters are indeed common knowledge throughout the insurance industry, and CGL insurers invariably know what corporate bond sureties know. However, the fact remains that Essex has presented no actual evidence of this. Consequently, in the final analysis, this is a failure of proof akin to that in Swamy and Frenz Enterprises.[5] Accordingly, PGIC (and, by adoption, Amerisure) is due summary judgment on Essex's claimed damages associated with the demise of, or severe injury to, Essex's construction business.[6]
V. ESSEX'S MOTION FOR SUMMARY JUDGMENT
A. Essex's Positions
The PGIC policy provided coverage for the period November 11, 1999 through November 11, 2000. PTS, § 9, ¶ G, at 6. The Amerisure policy afforded coverage for the following one-year term, from November 11, 2000 through November 11, 2001. Id., ¶ H, at 6.[7] Essex seeks summary judgment against both Amerisure and PGIC on the asserted basis that the project owner's claim "falls within the [CGL] policies' covering agreement, and no exclusions or policy conditions apply to bar coverage." Doc. 301 at 1. More specifically, Essex maintains that the water damage to the apartments constitutes "property damage" and an "occurrence" under the CGL policies. Essex then states:
The undisputed facts show that the damage to the Construction Project first became *1309 visible in late 2001. The damage itself, however, began within a short period of time after each building within the project was completed, then continued over time until it was observed. The undisputed facts also show that the buildings within the project were turned over to the Project Owner between March and December of 2000. The [PGIC] policy period ran from November 11, 1999 through November 11, 2001 [sic]; the Amerisure policies incepted on November 11, 2000 and ran for two years (including a policy renewal), through November 11, 2002. The Claim, and the damage incorporated therein, clearly falls within the policy periods of both Amerisure and [PGIC].
Doc. 301 at 10 (footnotes omitted).[8]
B. PGIC's Response
For present purposes, PGIC does not dispute that the damage to the apartment buildings first manifested itself in late 2001, and that the buildings were turned over to the owner between March and December of 2000. Doc. 317 at 3-4. However, PGIC does challenge Essex's position that the property damage occurred within the PGIC policy period, i.e., from November 11, 1999 to November 11, 2000.
On that point, PGIC contends that when damage continuously occurs, the "trigger" for CGL coverage is the point at which the damage manifests itself or is discovered. To support this contention, PGIC cites Auto Owners Ins. Co. v. Travelers Cas. & Surety Co., 227 F.Supp.2d 1248 (M.D.Fla.2002). In that case, Magistrate Judge Jenkins of this Court construed policy language virtually identical to that present in the instant case, surveyed the four generally accepted "trigger of coverage" theories,[9] and stated that "Florida courts follow the general rule that the time of occurrence within the meaning of an `occurrence' policy is the time at which the injury first manifests itself." 227 F.Supp.2d at 1266 (citing, inter alia, Travelers Ins. Co. v. C.J. Gayfer's & Co., 366 So.2d 1199 (Fla. 1 st DCA 1979)[10]).[11] PGIC reasons that because Essex's position is that the damage or injury to the apartment buildings did not manifest itself until late 2001, there was no occurrence before the PGIC policy's coverage ended in November 2000. On this asserted basis, says PGIC, Essex's summary judgment motion must be denied.
The undersigned judge agrees with Judge Jenkins' reasoning in Auto Owners regarding the "trigger of coverage" issue.[12]*1310 Because Essex's position is that the damage to the apartment buildings was not visible until late 2001, and the PGIC policy expired in November 2000, there was no occurrence within the policy period. Accordingly, Essex's summary judgment motion regarding coverage is due to be denied as to PGIC.[13] Alternatively, based on the deposition testimony cited in PGIC's response to Essex's motion, even if the injury-in-fact trigger theory applies, there are still unresolved issues of fact concerning whether the property damage occurred during the term of the PGIC policy. On that additional basis, Essex's summary judgment motion must be denied as to PGIC.
C. Amerisure's Response
Amerisure points out that from January 2004 to February 2006, Essex was being defended from claims arising from the apartment construction project by another insurer, Liberty Mutual, due to Essex's status as an additional insured under one of its' subcontractors' policies. Building on that point, Amerisure relies on provisions in its policy regarding "excess" insurance and argues that Amerisure's duty to defend was not triggered until Liberty Mutual withdrew its defense of Essex. The Court does not find this argument dispositive of Essex's summary judgment motion. While these circumstances may impact Amerisure's liability for alleged failure to defend, Amerisure has not demonstrated how it would extinguish the insurer's separate duty to indemnify Essex.
Amerisure advances a second argument in response to Essex's summary judgment motion. Like PGIC, Amerisure argues that material issues of fact exist concerning when the damage to the apartment buildings actually occurred and, more to the point, whether that damage occurred within the policy period. As previously noted, Amerisure's CGL policy ran from November 11, 2000 to November 11, 2001. Amerisure takes the position that "the property damage first occurred at various times throughout each building's construction, i.e., between March 1999 and December 2000." Doc. 320 at 12 (emphasis omitted). Most of this period pre-dated the commencement date of the Amerisure policy. Consequently, Amerisure asserts that Essex has not demonstrated conclusively that property damage occurred during the CGL policy period, and fact issues remain which must be resolved at trial.
Unlike PGIC, Amerisure has not expressly addressed the "trigger of coverage" issue. Rather, the insurer seemingly assumes that the injury-in-fact trigger theory applies. However, the Court reiterates that under Florida law, the general rule is that "the time of occurrence within the meaning of an `occurrence' policy is the time at which the injury first manifests itself." Auto Owners, 227 F.Supp.2d at 1266. Here, according to Essex, at least, the damage "first became visible in late 2001." Doc. 301 at 10. "Late 2001" could mean sometime after November 11, 2001, the last date Amerisure's CGL policy was in force. Moreover, Essex has not specified whether the "visible" damage in "late 2001" manifested itself in just one building, or more than one structure. Based on these considerations, the Court determines that under the manifestation trigger theory of coverage, Essex has failed to demonstrate as a matter of law that an "occurrence" took place within the Amerisure policy period. Alternatively, if the injury-in-fact *1311 trigger theory applies, as Amerisure points out, there are still unresolved issues of fact concerning whether the property damage occurred during the term of the Amerisure policy. Either way, Essex has not demonstrated its entitlement to summary judgment against Amerisure.
D. The "Confession to Judgment" Issue
In a footnote to its summary judgment motion, Essex raises a point it previously argued in connection with its motion seeking leave to file a supplemental complaint adding bad faith claims. In that regard, Essex contends that all of the issues it addresses in its summary judgment motion have already "been resolved in favor of Essex by Defendants' assumption of their duty to defend Essex and payment of the Claim to Travelers." Doc. 301 at 1 n. 1. In other words, Essex contends the Defendants' have essentially confessed to judgment in the sense of admitting liability on Essex's breach of contract claims, which seek millions of dollars in consequential damages arising from the alleged destruction of Essex's business. To support this position, Essex principally relies on decisions addressing confession of judgment in the context of determining prevailing party status under Fla. Stat. § 627.428, an attorney's fee provision contained in Florida's insurance code. However, the Court does not find the cases addressing confession of judgment in that context to be analogous to the very different circumstances of the case at bar. It is one thing to subject a settling insurer to liability for attorney's fees under a fee-shifting statute, and quite another to expose the insurer to potential liability for consequential damages. The consequential damages Essex seeks are wholly distinct from the sums the Defendants are contractually obligated to pay under the CGL policies (assuming coverage and liability on the part of the insured). Additionally, based on the May 2, 2006 tender letter from Essex's counsel, Robert Major, to Defendants' attorneys, Ex. "E" to Doc. 292, there appears to be a fact question concerning whether the Defendants' eventual assumption of Essex's defense was undertaken under a reservation of rights. In the end, the Court is not convinced that, as a matter of law, the Defendants exposed themselves to potential liability to Essex for consequential damages merely by assuming Essex's defense and settling with Travelers.
VI. AMERISURE'S MOTION IN LIMINE
Amerisure seeks an order precluding Essex from offering evidence relating to a second CGL policy Amerisure issued Essex, covering the period November 11, 2001 to November 11, 2002, as well as an umbrella policy covering Essex. Based on Essex's response to the motion, the Court concludes that these insurance policies may be admissible to rebut Amerisure's impossibility defense. Accordingly, Amerisure's motion will be denied insofar as it seeks a pretrial exclusionary ruling. A final determination concerning admissibility will be made at trial.
VII. CONCLUSION
Based on the foregoing, it is ORDERED as follows:
1. Defendant Pennsylvania General Insurance Company's Motion for Partial Summary Judgment as to Essex Builder's Group, Inc.'s Consequential Damage Claim (Doc. 298), filed July 31, 2006, is GRANTED. Summary judgment is awarded in favor of PGIC and its codefendant, Amerisure Insurance Company, on Plaintiffs claim for consequential damages arising from the alleged destruction of Plaintiffs business. This ruling will be incorporated in a final judgment entered at the conclusion of the entire case.
2. Plaintiff Essex Builder's Group, Inc.'s Motion for Summary Judgment *1312 (Doc. 301), filed August 1, 2006, is DENIED.
3. Defendant Amerisure Insurance Company's Motion In Limine (Doc. 326), filed September 1, 2006, is DENIED insofar as it seeks a pretrial exclusionary ruling concerning the admissibility of the two insurance policies that are the subject of the motion.
4. On or before December 18, 2006, counsel for the parties shall confer and shall submit a written filing (a) identifying the issues remaining for trial and (b) estimating how long the case will take to try. The Court prefers a joint submission. Failing agreement, the parties may file separate memoranda.
DONE and ORDERED.
ORDER ON MOTION
This cause comes before the Court for consideration of Plaintiff Essex Builders Group, Inc.'s Motion for Clarification or, in the Alternative, Reconsideration of the December 13, 2006 Order (Doc. 354), filed on December 22, 2006, and Defendant Amerisure Insurance Company's Opposition (Doc. 361) to that motion.[1]
By means of this Motion, Essex seeks clarification of the Court's December 13, 2006 Order (Doc. 348) in the following respects:
. . . to specify that: (1) Amerisure's and PGIC's settlement of the Travelers claim operates as a confession of judgment with respect to the claim for contractual damages caused by Defendants' failure to defend and indemnify Essex against the Claim; (2) Essex is entitled to attorney's fees and costs under Fla. Stat. § 627.428 as the prevailing party with regard to Defendants' contractual duties to defend and indemnify Essex; and (3) Essex is not barred from seeking consequential damages in a bad faith action under the standard provided by Fla. Stat. § 624.155. In the alternative, Essex respectfully requests that this Court reconsider its holding regarding whether Essex presented sufficient evidence regarding its entitlement to consequential damages under the common law standard for contractual damages.
Doc. 354 at 2.
In its December 13th Order, the Court ruled that Amerisure and PGIC's settlement with Travelers did not constitute a confession of judgment on Essex's claims against Amerisure and PGIC in this suit. The Court's principal concern at that time was that it would be legally improper to subject the CGL insurers to liability for consequential damages under a confession of judgment theory. In that regard, the Court stated:
Essex contends the Defendants have essentially confessed to judgment in the sense of admitting liability on Essex's breach of contract claims, which seek millions of dollars in consequential damages arising from the alleged destruction of Essex's business. To support this position, Essex principally relies on decisions addressing confession of judgment in the context of determining prevailing party status under Fla. Stat. § 627.428, an attorney's fee provision contained in Florida's insurance code. However, the Court does not find the cases addressing confession of judgment in that context to be analogous to the very different circumstances of the case at bar. It is one thing to subject a settling insurer to liability for attorney's fees under a fee-shifting statute, and quite another to expose the insurer to potential liability for consequential *1313 damages. The consequential damages Essex seeks are wholly distinct from the sums the Defendants are contractually obligated to pay under the CGL policies (assuming coverage and liability on the part of the insured). Additionally, based on the May 2, 2006 tender letter from Essex's counsel, Robert Major, to Defendants' attorneys, Ex. "E" to Doc. 292, there appears to be a fact question concerning whether the Defendants' eventual assumption of Essex's defense was undertaken under a reservation of rights. In the end, the Court is not convinced that, as a matter of law, the Defendants exposed themselves to potential liability to Essex for consequential damages merely by assuming Essex's defense and settling with Travelers.
Doc. 348 at 14-15.
In the December 13th Order, the Court also ruled that Amerisure and PGIC were entitled to summary judgment on Essex's claimed consequential damages associated with the demise of, or severe injury to, Essex's construction business. Id. at 3-9. Now, Essex seeks a determination that Amerisure's settlement with Travelers constitutes a confession of judgment as to Amerisure's liability for the other contractual damages Essex seeks (apart from consequential damages) based on Amerisure's refusal to defend and indemnify Essex. To support this position, Essex cites Wollard v. Lloyd's & Cos. of Lloyd's, 439 So.2d 217, 218 (Fla.1983), in which the Florida Supreme Court stated: "When the insurance company has agreed to settle a disputed case, it has, in effect, declined to defend its position in the pending suit. Thus, the payment of the claim is, indeed, the functional equivalent of a confession of judgment or a verdict in favor of the insured."
In response, Amerisure concedes the holding in Wollard. Additionally, Amerisure does not argue that payment by it to Travelers would not constitute a confession of judgment under Florida law. In the Court's view, this effectively concedes the point that such payment would amount to a confession of judgment in this particular case. However, Amerisure asserts that Essex has failed to offer any proof that Amerisure actually paid money to Travelers as a part of the settlement. Amerisure points out that Essex attempted to reopen discovery for the purpose of obtaining a copy of the settlement papers in order to establish payment, but the assigned magistrate judge denied that motion on the ground that Essex had been dilatory. See Docs. 322 & 332. Continuing, Amerisure states:
Consequently, the Record is devoid of any terms of the settlement agreement including whether there was a payment of monies by Amerisure or PGIC to Travelers and, as such, Plaintiff has not proved that Amerisure's settlement with Travelers constitutes a confession of judgment as to Plaintiffs contractual damages. Consequently, this Court should deny Plaintiffs Motion for Clarification of the Court's Order to specify that Amerisure's and PGIC's settlement with Travelers constitutes a confession of judgment.
Doc. 361 at 4 (emphasis in original).
Amerisure is correct in stating that, presently, there is no evidence in the record that Amerisure paid Travelers money to settle Travelers' claims against Essex. Accordingly, Essex has not, at least at this juncture, demonstrated that it is entitled to a favorable ruling on its confession of judgment theory. However, Essex has preserved this issue in the initial and amended pretrial statements. Does. 336, § 12.A, at 9 ("Whether PGIC's and Amerisure's settlement with Travelers constitutes an admission of coverage for the Claim") & 364, § 12.A, at 10 (same). Accordingly, *1314 this is a fair subject of inquiry at trial. If Essex is able to establish through the trial witnesses that Amerisure paid money to Travelers as a part of the settlement,[2] the Court will consider what measures might be appropriate to remedy Amerisure's litigation gamesmanship on this point. In that regard, the Court will not be favorably impressed if jurors, witnesses, parties and attorneys are put to the trouble of appearing for a trial that is unnecessary.
Turning to the issue of whether Essex is entitled to attorney's fees and costs under Fla. Stat. § 627.428, the Court is presently unable to rule on this point because the confession of judgment issue remains outstanding and a judgment has not otherwise been entered against Amerisure.
Next, on the issue of whether Essex may seek consequential damages via a bad faith suit, Essex's motion for clarification essentially constitutes a request for an advisory opinion, which, of course, the Court cannot issue.
Finally, concerning Essex's alternative request for reconsideration of the Court's ruling that Essex cannot pursue its claim for consequential damages arising from destruction of Essex's business, Essex has not presented any valid basis for reconsideration.
Based on the foregoing, it is ORDERED that Plaintiff Essex Builders Group, Inc.'s Motion for Clarification or, in the Alternative, Reconsideration of the December 13, 2006 Order (Doc. 354), filed on December 22, 2006; is DENIED.
DONE and ORDERED.
NOTES
[1] Pennsylvania General Insurance Company was formerly known in this case as OneBeacon Insurance Company. On July 17, 2006, OneBeacon filed an Unopposed Motion to Amend Name of Party, which sought to "correct a misnomer as to the name of the insurer of the policy of insurance issued to Essex." Doc. 291 at 2. More specifically, OneBeacon sought to "amend its name to Pennsylvania General Insurance Company." Id. at 1. By Order dated August 4, 2006, the Court granted the motion. Doc. 304. In that Order, the Court expressly stated: "Henceforth, OneBeacon Insurance Company shall be referred to in this lawsuit as Pennsylvania General Insurance Company." Id. at 2.
[2] This motion was filed in OneBeacon's name, before the Court granted OneBeacon's motion to change its name to PGIC for the purposes of this lawsuit. Amerisure has joined in PGIC's motion for summary judgment. Doc. 300.
[3] The Court will assume, purely, for present analytical purposes, that PGIC and Amerisure breached the CGL insurance contracts, that the breach rendered Essex unbondable, and that this forced Essex out of business.
[4] The quoted passage is lifted from the title to section IV of Essex's opposition memorandum.
[5] In its summary judgment response, Essex cites cases suggesting that a party may demonstrate entitlement to consequential contract damages by showing either that they were within the reasonable contemplation of the parties or "ar[o]se naturally from the breach." Doc. 331 at 12 (quoting T.D.S., Inc. v. Shelby Mut. Ins. Co., 760 F.2d 1520, 1531 n. 11 (11th Cir.1985)). As a matter of law, Essex's claimed consequential damages are equally unavailable under the "arising naturally" standard. Based largely on the factors this Court has already discussed, these damages are too attenuated to be characterized as naturally flowing from PGIC's and Amerisure's alleged contract breach.
[6] This ruling is not inconsistent with the Court's September 3, 2006 Order denying the Defendants' prior motion for partial summary judgment. See Doc. 327. There, the issue was proximate cause. Here, the issue is whether Essex has presented evidence that the resulting damages meet the legal standard for recovery of consequential damages in a breach of contract action.
[7] In its summary judgment motion, Essex states: "[T]he Amerisure policies incepted on November 11, 2000 and ran for two years, (including a policy renewal), through November 11, 2002." Doc. 301 at 10. While it appears true that there are two one-year Amerisure policies (and even an umbrella policy), Essex's Complaint identified just one: policy number CPP XXXXXXXXXXXXX, which covered the period November 11, 2000 to November 11, 2001. See Doc. 1, ¶ 8, at 2 & Ex. "B." On June 28, 2006, Essex sought to supplement its pleadings to include the other CGL policy and the umbrella policy (and to add bad faith claims), but the Court denied Essex's motion. Consequently, the Court will not consider the second CGL policy for summary judgment purposes. However, that policy and the umbrella policy may still be admissible at trial to rebut Amerisure's impossibility defense. See § VI, infra.
[8] Essex presents additional arguments regarding the inapplicability of certain policy exclusions. However, the Court need not address those arguments given its determinations regarding the question of whether there has been an "occurrence" within the CGL policy periods. See § V.B & C, infra.
[9] The four theories are (1) exposure, (2) manifestation, (3) continuous trigger, and (4) injury in fact. 227 F.Supp.2d at 1266.
[10] C.J. Gayfer's states: "The term `occurrence' is commonly understood to mean the event in which negligence manifests itself in property damage or bodily injury[.]" 366 So.2d at 1202.
[11] District Judge Merryday adopted Judge Jenkins' report and recommendation. 227 F.Supp.2d at 1253.
[12] Respectfully, however, the undersigned judge disagrees with that part of Auto Owners that discusses LaMarche v. Shelby Mut. Ins. Co., 390 So.2d 325 (Fla.1980), for the reasons expressed in the September 21, 2005 Order (Doc. 133) entered in the instant case. The Court continues to adhere to its prior rulings regarding LaMarche, State Farm Fire & Cas. Co. v. CTC Dev. Corp., 720 So.2d 1072 (Fla. 1998), and J.S.U.B., Inc. v. U.S. Fire Ins. Co., 906 So.2d 303 (Fla. 2d DCA 2005), and the impact of those decisions on the coverage afforded by CGL policies. Accordingly, the Court declines the Defendants' invitations to revisit those issues.
[13] If PGIC had moved for summary judgment on this point, the Court likely would have granted such a motion based on the same reasoning. However, PGIC did not move for summary judgment, and the Court does not believe it can fairly grant summary judgment sua sponte in PGIC's favor without affording Essex an opportunity to be fully heard on the issue.
[1] Essex and Amerisure's co-defendant, Pennsylvania General Insurance Company ("PGIC") have reached a settlement.
[2] The Court reserves ruling on whether this inquiry must be pursued outside the jury's presence.
|
667 So.2d 1112 (1995)
Barry H. HOBBS, Sr. et al.,
v.
Charles W. RHODES, et al.
No. 95-C-1937.
Court of Appeal of Louisiana, Fourth Circuit.
November 30, 1995.
Rehearing Denied February 22, 1996.
*1113 Brian Carl Bossier, Mickal P. Adler, Blue Williams, L.L.P., Metairie, for Relator, National Union Fire Ins. Co.
Anthony Louis Glorioso, Metairie, for Respondents, Barry J. Hobbs, Sr. and Kristina C. Hobbs.
William G. Argeros, Dan Richard Dorsey, Porteous, Hainkel, Johnson & Sarpy, New Orleans, for Respondent, State Farm Mutual Automobile Ins. Co.
Before LOBRANO, ARMSTRONG and WALTZER, JJ.
WALTZER, Judge.
STATEMENT OF THE CASE
Plaintiff, Barry Hobbs, Sr., is a forklift truck mechanic employed by Briggs-Weaver, Inc. Mr. Hobbs performed on-site repairs of forklifts through contracts that Briggs-Weaver holds with other companies. While he was walking across the "yard area" at the Reily Foods job site, an uninsured motor vehicle injured Mr. Hobbs. This vehicle had *1114 entered the "yard" in order to retrieve scrap metal from that area. Both the driver and the owner of the vehicle were uninsured motorists.
Plaintiff claims uninsured motorist (UM) coverage under his employer's insurance policy. (Reily Foods and their insurer have also been named in the lawsuit.) The Briggs-Weaver insurer is National Union Fire Insurance Company (National Union), who holds auto liability insurance for the employer in several states. The insurer moved for summary judgment on two grounds: first, claiming that UM coverage was waived for the State of Louisiana. Secondly, and in the alternative, even if UM coverage was not waived, the plaintiff is not covered because he is not an insured under the terms of the policy.
The trial court denied the motion for summary judgment. The defendant insurer, National Union, seeks supervisory relief. We granted certiorari, and after review of the application and the opposition thereto, we affirm the trial court judgment.
FIRST ASSIGNMENT OF ERROR
In its first assignment of error, Relator contends that the trial court erred in denying its motion for summary judgment because UM coverage was clearly waived.
In Louisiana, UM coverage is provided for by statute and reflects a strong public policy. The statute promotes recovery of damages for innocent victims of automobile accidents when the tortfeasor is without insurance, and as an additional or excess coverage when he is inadequately insured. Consequently, the statute is liberally construed in order to carry out this public policy objective. This means that UM coverage accompanies any automobile insurance policy unless that coverage has been clearly and unmistakably rejected. Roger v. Estate of Moulton, 513 So.2d 1126, 1130 (La.1987).
The courts have imposed strict requirements for the effective waiver of UM coverage in Louisiana. LSA-R.S. 22:1406(D)(1)(a)(i) states that UM coverage is provided in "not less than the limits of bodily injury liability provided by the policy," although "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 Roger, the Louisiana Supreme Court interpreted this language to mean:
"[T]he insured or his authorized representative must expressly set forth in a single document that UM coverage is rejected in the State of Louisiana as of a specific date in a particular policy issued or to be issued by the insurer. A writing, regardless of the intention of the insured, of a less precise nature is insufficient to effect a valid rejection." Roger, 513 So.2d at 1132.
The same issue was more recently addressed by the Supreme Court in Tugwell v. State Farm Ins. Co., 609 So.2d 195 (La. 1992). In that case, the court required that the form used to deny UM coverage must give a "meaningful selection" to the insured under LSA-R.S. 22:1406(D)(1)(a)(i). Tugwell, 609 So.2d at 197, citing Henson v. Safeco Ins. Co., 585 So.2d 534, 539 (La.1991): "The insurer must place the insured in a position to make an informed rejection." More precisely, the form must set out at least three options: 1) UM coverage equal to the bodily injury policy limits; 2) UM coverage lower than the bodily injury policy limits; or 3) no UM coverage at all. Tugwell, 609 So.2d at 197.
In its application for writs, the relator claims that the insured, plaintiff's employer, validly waived UM coverage in Louisiana by virtue of having signed a "generic waiver" as well as having signed waivers in other states: New Jersey, South Dakota, Connecticut, California, Hawaii, Kansas, North Carolina and Washington. Furthermore, the insured signed a waiver which ostensibly applies to the state of Florida but which the relator claims can be analogized to Louisiana since it fulfills the requirements for the waiver of UM rights under Roger and Tugwell. National Union supports its argument that the Florida waiver should apply because the word "Florida" does not appear at the heading of the waiver. However, on the second page of that waiver, "Florida" appears at the bottom of the page as an indication that this *1115 waiver is to apply to the State of Florida and to no other states. Moreover, the "Florida" waiver nowhere rejects UM coverage "in the State of Louisiana" as required by statute.
National Union also points to the "generic" waiver signed by the insured, but this waiver does not fulfill the statutory and jurisprudential requirements for waiving UM coverage. The insured must be given the opportunity to make an informed rejection of coverage to the limits of bodily injury liability or below the full coverage. However, the generic waiver in the policy simply states:
In those jurisdictions that have no state requirements for uninsured motorist coverage and/or underinsured motorist coverage or allow an insured to reject his right to such coverage, by signing this endorsement, the insured evidences that no such coverage [is] required. Also, by signing this endorsement the insured further evidences that any and all such coverage as may be waived or rejected is hereby waived or rejected.
This waiver does not contain the requisite language regarding the option to select UM coverage below the limits of regular bodily injury liability. Tugwell specifically states that the insured must make an informed decision and be given the options of full coverage, less than full coverage, or no coverage. Tugwell, 609 So.2d at 198-99. This generic waiver simply does not meet those requirements. Furthermore, this waiver fails to specify the date on which coverage was rejected as required in Roger, 513 So.2d at 1132. Moreover, the generic waiver nowhere rejects UM coverage "in the State of Louisiana" as required by the statute. LSA-R.S. 22:1406(D)(1)(a)(i).
Finally, the insurance policy contains several addenda and endorsement changes to the policy that are specific to certain states. The policy contains sections entitled "Louisiana Changes" and "Louisiana Changes Cancellation and Nonrenewal." However, there is no individual waiver of UM coverage for Louisiana, notwithstanding several other individualized UM waivers.
For these reasons we find that UM coverage was not validly waived by the insured in the State of Louisiana.
SECOND ASSIGNMENT OF ERROR
In the alternative, National Union contends that the trial court erred in denying summary judgment because even if UM coverage was not validly waived, the plaintiff in this case is not covered by the policy. First, National Union claims that the policy does not cover employees. Second, National Union claims that the plaintiff was not anywhere in or near the covered vehicle, therefore making UM coverage inapplicable. We find neither contention has merit.
In Mills v. Hubbs, 597 So.2d 87, 89 (La.App. 4th Cir.1992), writ denied 600 So.2d 677 (La.1992), this Court held:
The Louisiana Uninsured Motorist Statute, LSA-R.S. 22:1406 requires that, unless it is waived, all policies issued in Louisiana shall provide UM coverage for persons who qualify as "insureds" under the policy.
Applying Mills, an employee who is an insured under the policy would also have UM coverage unless that coverage had been waived.
The Mills holding is confirmed in Howell v. Balboa Ins. Co., 564 So.2d 298 (La.1990), in which the Louisiana Supreme Court held:
[A]ny person who enjoys the status of insured under a Louisiana motor vehicle liability policy which includes uninsured/underinsured motorist coverage enjoys coverage protection simply by reason of having sustained injury by an uninsured/underinsured motorist. Howell, 564 So.2d at 301.
We find that the policy covers Briggs-Weaver's employees. The general liability policy contains a specific addendum which includes employees in the general liability coverage. This addendum appears to amend the section of the "Business Auto Coverage Form" which states that an employee is not insured under the employer's policy if said employee is driving his own car. The addendum states:
The following is added to the LIABILITY COVERAGE WHO IS AN INSURED provision: Any employee of your is an "insured" while using a covered "auto" you *1116 don't own, hire or borrow in your business or personal affairs.
This addendum extends liability coverage as it applies to employees to include not only company-owned cars driven by employees, but also to include, among others, employee-owned cars driven by employees in the scope of their employment.
Secondly, even if the addendum referring to employees did not exist, the "Business Auto Coverage Form" includes a section entitled "Who is an insured," which states:
The following are "Insureds:"
a. You for any covered "auto."
b. Anyone else while using with your permission a covered "auto" you own, hire or borrow, except:
. . . . .
(2) Your employee if the covered auto is owned by that employee or a member of his or her household[1]....
(4) Anyone other than your employees, partners, a lessee or borrower or any of their employees, while moving property to or from a covered "auto." (Emphasis added.)
Section b(4) excludes employees from the exception; in other words, an employee, partner or lessee is covered for general bodily injury liability. Since Briggs-Weaver failed to waive UM coverage, then under LSA-R.S. 22:1406(D)(1)(a)(i), Mills, and Howell, UM coverage would extend to the amount of full bodily injury liability, and to all those who are insured under the general policy.
National Union claims that employees cannot be covered under the policy because in the "uninsured Motorist Coverage" portion of the policy, Section "B" declares who is an insured:
1. You.
2. If you are an individual, any "family member."
3. Anyone else "occupying" a covered "auto" or temporary substitute for a covered "auto." The covered "auto" must be out of service because of its breakdown, repair, servicing, loss or destruction.
4. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."
National Union claims that because employees are not listed in this section, the employee must not be covered. National Union points out that a similar situation was addressed in Davis v. Brock, 602 So.2d 104 (La.App. 4th Cir.1992), writ denied, 605 So.2d 1146 (La.1992), in which this Court held that the plaintiff was not covered under the UM "Who is an Insured" portion of the policy. However, the Court found that the plaintiff in Davis was not in the course and scope of his employment when he was injured. Davis, 602 So.2d at 107. Therefore, because he would not have been covered under the general liability section of the policy, he could not have UM coverage.
In the case before us, it has been established that employees are, in fact, covered under the general liability section of the policy. It is also clear that Mr. Hobbs was in the course and scope of his employment when he was injured. Because Louisiana law requires that UM coverage shall extend to ALL insureds under the policy, and employees are included as insureds in the general liability section of the policy, employees must also be included in the UM coverage. The strict interpretation of UM waivers mandated by the courts requires that UM coverage be rejected specifically. Since the UM Coverage portion of the policy says nothing about employees, we assume that employees are covered to the extend of the general liability. This result is consistent with the strong public policy of providing UM coverage for all insureds. Roger, 513 So.2d at 1130.
As to the insurer's contention that there must be a relationship between plaintiff and the covered auto, the Louisiana Supreme Court held in Howell that UM coverage cannot be qualified by such a requirement. Howell, 564 So.2d at 301. The court held:
UM coverage attaches to the person of the insured, not the vehicle, and that any provision of UM coverage purporting to limit *1117 insured status to instances involving a relationship to an insured vehicle contravenes LSA-R.S. 22:1406(D). Id. (Emphasis added.)
In the instant case, Mr. Hobbs had been walking across the "yard area" to retrieve a screwdriver and to go to the tool shed where he intended to wash his hands. Only after washing his hands was he going to get into his employer's van and insurance policy, it is not necessary that he be closer to the covered vehicle.
This tenet that UM coverage attaches to the person, not the vehicle, is well established in Louisiana. In Elledge v. Warren, 263 So.2d 912, 918 (La.App. 3rd Cir.1972), writ refused 262 La. 1096, 266 So.2d 223 (1972), the court held:
The uninsured motorists protection covers the insured ... while riding in uninsured vehicles, while riding in commercial vehicles, while pedestrians or while rocking on the front porch.
In Frois v. Bullock, 94-0061 (La.App. 4 Cir. 6/30/94), 639 So.2d 1218, writ denied, 94-2056 (La. 11/11/94), 644 So.2d 391, a law firm employee was struck while crossing the street and was found to be covered under the firm's general liability policy and thus UM coverage applied. Since we have determined that the employee is covered under the UM portion of the policy, it is irrelevant that Mr. Hobbs was not actually getting into the company van when he was hit by the uninsured vehicle.
CONCLUSION
A motion for summary judgment should be granted if, and only if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to material fact and that the mover is entitled to judgment as a matter of law. La.C.C.P. art. 966; Dibos v. Bill Watson Ford, Inc., 622 So.2d 677, 680 (La.App. 4th Cir.1993). Under that standard, National Union is not entitled to summary judgment, and the trial court correctly denied its motion.
WRIT GRANTED.
RELIEF DENIED.
NOTES
[1] See, discussion infra regarding the addendum to this section.
|
FILED
NOT FOR PUBLICATION AUG 26 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
DENNIS R. HOPKINS, No. 08-35130
Plaintiff - Appellant, D.C. No. CV-07-05621-RBL
v.
MEMORANDUM *
TACOMA MUNICIPAL COURT; et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the Western District of Washington
Ronald B. Leighton, District Judge, Presiding
Submitted August 10, 2010 **
Before: HAWKINS, McKEOWN, and IKUTA, Circuit Judges.
Dennis Hopkins appeals pro se from the district court’s order dismissing his
complaint. We have jurisdiction under 28 U.S.C. § 1291. We review for abuse of
discretion a denial of leave to proceed in forma pauperis, Calhoun v. Stahl, 254
F.3d 845, 845 (9th Cir. 2001) (per curiam), and a dismissal for failure to follow the
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
district court’s order to pay the filing fee, Yourish v. Cal. Amplifier, 191 F.3d 983,
986 (9th Cir. 1999). We affirm.
The district court did not abuse its discretion in denying Hopkins’s
application for leave to proceed in forma pauperis because Hopkins did not account
for his different statements regarding his employment history or otherwise verify
his claim of poverty. See United States v. McQuade, 647 F.2d 938, 940 (9th Cir.
1981) (per curiam).
The district court did not abuse its discretion by dismissing Hopkins’s
complaint because Hopkins did not comply with the district court’s previous order
to pay the filing fee. See Yourish, 191 F.3d at 986.
AFFIRMED.
2 08-35130
|
NOT RECOMMENDED FOR PUBLICATION
File Name: 20a0214n.06
Case No. 19-5279
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT FILED
Apr 15, 2020
DEBORAH S. HUNT, Clerk
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR
v. ) THE EASTERN DISTRICT OF
) KENTUCKY
RAMIRO RICO DE LEON, )
)
Defendant-Appellant. )
BEFORE: CLAY, COOK and WHITE, Circuit Judges.
COOK, Circuit Judge. After Ramiro Rico De Leon pled guilty to a controlled substance
offense, the district court sentenced him to prison followed by supervised release. De Leon
challenges both the court’s computation of his sentencing range and a post-release condition.
Because the court neither abused its discretion in calculating the sentencing range nor plainly erred
in imposing the condition, we AFFIRM.
I.
A. De Leon’s Criminal History Score
In calculating De Leon’s criminal history score, the district court assessed one point for a
2013 Kentucky controlled substance conviction that Kentucky later voided. De Leon posits that
the court abused its discretion by counting that voided point in sentencing him.
Case No. 19-5279, United States v. De Leon
The Sentencing Guidelines assign at least one criminal history point to “each prior
sentence.” U.S.S.G. § 4A1.1. “The term ‘prior sentence’ means any sentence previously imposed
upon adjudication of guilt.” U.S.S.G. § 4A1.2(a)(1). But “[s]entences for expunged convictions
are not counted.” U.S.S.G. § 4A1.2(j). Did Kentucky expunge De Leon’s 2013 conviction (and
sentence)? If so, the district court abused its discretion by including it. Gall v. United States,
552 U.S. 38, 51 (2007); United States v. Shor, 549 F.3d 1075, 1077 (6th Cir. 2008).
We review a district court’s criminal history score calculations for abuse of discretion,
accepting factual findings unless clearly erroneous and scrutinizing anew its legal conclusions.
Gall, 552 U.S. at 51–52; United States v. Rayyan, 885 F.3d 436, 440 (6th Cir.), cert. denied, 139 S.
Ct. 264 (2018); United States v. Talley, 470 F. App’x 495, 496 (6th Cir. 2012).
De Leon contends that Kentucky effectively expunged his conviction when it “void[ed]”
and “seal[ed]” it, arguing that a void conviction “is tantamount to” and “equivalent to an
expunged” one. The Government disagrees, maintaining that Kentucky’s voiding here did not
equate to “expunging” under the Guidelines.
Because the answer to the question is not self-evident from the text of the Guideline, we
consult the Guidelines Commentary that addresses the differing import accorded to various
procedures by which states may “set aside” prior convictions. See U.S.S.G. § 4A1.2, cmt. n.10.
The Commentary confirms the distinction the drafters accorded to post-conviction indulgences
“for reasons unrelated to innocence or errors of law.” Id. That is, if the convicting jurisdiction
later grants a pardon, the Commentary explains that those convictions are to be counted in the
defendant’s criminal history score, but expunged convictions (innocence or legal error established)
are not counted. Id.
-2-
Case No. 19-5279, United States v. De Leon
Our cases concerning which type of prior convictions merit criminal history points scoring
adhere to this Commentary by distinguishing between those post-conviction developments driven
by guilt concerns, and those that stem from some form of indulgence. In Shor, Michigan sentenced
the juvenile defendant under a diversion program featuring no “civil disability or loss of right or
privilege.” 549 F.3d at 1076–78. We upheld the district court’s counting that conviction in the
criminal history score as within its discretion, referencing the “quite clear” Guidelines
Commentary “distinguish[ing] between” convictions that a jurisdiction expunged and those
retaining an “adjudication of guilt.” Id. at 1078 (citing U.S.S.G. § 4A1.2, cmt. n.10). Because
Steven Shor’s “adjudication of guilt” persisted under his diversion program, “the district court
properly counted” the conviction. Id. at 1077–78.
We made a similar distinction in United States v. Sturgill, 761 F. App’x 578 (6th Cir.),
cert. denied sub nom. Owens v. United States, 139 S. Ct. 2704 (2019). Though Kentucky
“expunged” three of Melissa Owens’s convictions, we upheld their inclusion in her criminal
history score because “Kentucky’s expungement procedure does not demand a showing of
innocence or legal error, and [the defendant] offered nothing at sentencing to show that such
considerations led to the expungements in her case.” Id. at 582–83.
For the same reasons, the district court sentenced within its discretion here. Yes, Kentucky
voided De Leon’s conviction. But the sentencing court found that he failed to establish that
Kentucky did so due to circumstances affecting validity or guilt. See United States v. French, 974
F.2d 687, 701 (6th Cir. 1992) (“The burden is upon the defendant to prove the invalidity and/or
unconstitutionality of the prior conviction.”). Indeed, according to the Commonwealth’s order,
Kentucky voided the conviction because De Leon “ha[d] successfully completed the terms of
treatment, probation or sentence[.]”
-3-
Case No. 19-5279, United States v. De Leon
Well what about this court’s recent Havis decision, argues De Leon in response? He points
to the en banc opinion as instructing courts to avoid reliance on the Commentary to understand the
meaning of the Guidelines. But De Leon misreads the court’s decision in United States v. Havis,
927 F.3d 382 (6th Cir. 2019) (en banc) (per curiam). True, the court recognized that “the
application notes are interpretations of, not additions to, the Guidelines themselves.” Id. at 386
(quoting United States v. Rollins, 836 F.3d 737, 742 (7th Cir. 2016)) (emphasis deleted). But the
court also explained that Commentary is binding when “the guideline which the commentary
interprets will bear the construction.” Id. (quoting Stinson v. United States, 508 U.S. 36, 46
(1993)). Because § 4A1.2, cmt n.10 explains the un-defined term “expunged,” and so conforms
to the permissible Commentary interpretation of the Guideline, we are bound to follow it. Id.;
United States v. Thomas, 933 F.3d 605, 610 (6th Cir. 2019) (noting that Commentary “helps
interpret” obstruction-of-justice Guideline by defining the term “obstructed”); United States v.
Buchanan, 933 F.3d 501, 514 n.2 (6th Cir. 2019) (finding Guidelines Commentary that “explains
the meaning of” an un-defined term “binding on federal courts under . . . Havis”). Havis, by
contrast, asked the Circuit to review Commentary that modified a Guideline by expanding an
existing definition. Havis, 927 F.3d at 386–87.
De Leon also attempts to distinguish Shor and Sturgill. He faults Shor for “[f]ocusing on
the prior adjudication of guilt” rather than the permissible “future use[s]” of the defendant’s
conviction under Michigan law. Federal courts, however, need not concern themselves with state
courts’ use of state convictions. Indeed, the Guidelines Commentary directs our attention away
from such considerations and toward a simple question: has the defendant proffered evidence of a
post-conviction determination of innocence or legal error? U.S.S.G. § 4A1.2, cmt. n.10. Here, as
in Shor, no.
-4-
Case No. 19-5279, United States v. De Leon
His quarrel with Sturgill fares no better. De Leon points out that Kentucky voided his
conviction under different Kentucky statutes than used in Sturgill. If anything, this distinction
hurts De Leon’s case. The statute in Sturgill permits the “expungement” of certain convictions,
Ky. Rev. Stat. Ann. § 431.078, while the statutes here “void” convictions, Ky. Rev. Stat. Ann.
§§ 218A.275(8), 218A.276(8). These labels alone suggest that Kentucky never expunged De
Leon’s conviction. Plus, under Sturgill’s statute, a conviction “shall be deemed never to have
occurred,” Ky. Rev. Stat. Ann. § 431.078(6), while the provisions at bar here merely seal records
and make the void conviction “not be deemed a first offense” under Kentucky’s penal code, Ky.
Rev. Stat. Ann. §§ 218A.275(8)–(10), 218A.276(8)–(10). The district court thus proceeded within
its discretion in concluding that, even after Kentucky voided his conviction, De Leon’s
adjudication of guilt stands.
B. Supervised Release Condition
De Leon contends that the court imposed an unconstitutionally vague supervised release
condition when it barred him from “frequent[ing] places where controlled substances are illegally
sold, used, distributed or administered.” Because he failed to object to this condition at sentencing,
we review for plain error. United States v. Vonner, 516 F.3d 382, 386 (6th Cir. 2008) (en banc).
First, a word about the Government’s view that De Leon’s challenge here is not ripe for
decision. As both parties acknowledge, when it “is mere conjecture” whether the Government will
ever enforce a condition, we lack jurisdiction to consider it. United States v. Lee, 502 F.3d 447,
450–51 (6th Cir. 2007). The Government sees De Leon’s challenge as unripe because he faces
mandatory deportation upon release and thus “is extremely unlikely to be subjected to the
condition.” De Leon counters that we may review the condition now because it imposes a
“mandatory” prohibition.
-5-
Case No. 19-5279, United States v. De Leon
It seems this court has yet to decide whether a defendant facing deportation upon release
immediately may appeal a supervised release condition. Two other circuits have, and they found
review constitutionally permissible. The Ninth reasoned that because a supervised release
condition “is a part of the district court’s sentence, which is a final judgment subject to immediate
appeal,” “a defendant may challenge . . . [it on] direct appeal.” United States v. Rodriguez-
Rodriguez, 441 F.3d 767, 771–72 (9th Cir. 2006). So too the Tenth: “Conditions of supervised
release form a part of the criminal judgment and thus, in the Article III sense, a challenge to them
involves a genuine case or controversy because the judgment is a final court order binding on an
incarcerated defendant at the time of his appeal.” United States v. Vaquera-Juanes, 638 F.3d 734,
736 (10th Cir. 2011).
The Government contends that the Tenth Circuit case supports its position because the
Circuit dismissed the appeal as unripe. But as the Government recognizes, that resolution resulted
from prudential matters not affecting the question we consider here, i.e., our constitutional
jurisdiction to decide the issue. Vaquera-Juanes, 638 F.3d at 736; see also Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 559 U.S. 662, 670 n.2 (2010). “[W]here, as here, the issue of ripeness
goes only to prudential considerations as opposed to constitutional concerns, we are free to
exercise jurisdiction over the case.” Rucci v. Cranberry Twp., 130 F. App’x 572, 576 n.7 (3d Cir.
2005); see also Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1013 (1992); cf. Susan B. Anthony
List v. Driehaus, 573 U.S. 149, 167 (2014) (explaining that “a federal court’s obligation to hear
and decide cases within its jurisdiction is virtually unflagging” (citation and internal quotation
marks omitted)). “[F]or reasons of finality and judicial economy,” Rucci, 130 F. App’x at 576 n.7,
we reach the merits of De Leon’s challenge.
-6-
Case No. 19-5279, United States v. De Leon
As for the vagueness argument, both parties acknowledge that the challenged condition
lacks an explicit mens rea requirement. To De Leon, this renders the condition unconstitutionally
vague and “exposes [him] to strict liability for any violations.” The Government responds that a
“commonsense” reading of the challenged condition reveals “an implicit requirement that De Leon
have knowledge that a place he is frequenting is involved with drugs[.]” Because we review for
plain error, Vonner, 516 F.3d at 386, De Leon’s argument fails.
Even where a district court errs, it does not plainly err if it “lack[ed] binding case law that
answers the question presented,” United States v. Al-Maliki, 787 F.3d 784, 794 (6th Cir. 2015), or
if other circuits split on the issue, United States v. Madden, 515 F.3d 601, 608 (6th Cir. 2008).
Both situations exist here.
This court issued one non-precedential decision addressing supervised release conditions
that don’t specify a mens rea. If anything, that case supports rejecting De Leon’s challenge. In
United States v. Smith, we rejected a similar challenge where the defendant objected to standard
conditions of supervision that the Northern District of Ohio had since clarified “to provide, among
other things, a ‘knowledge’ requirement.” 695 F. App’x 854, 858 (6th Cir. 2017). These changes
reflected corresponding revisions to the Guidelines that took effect in 2016. Id. (citing N.D. Ohio
Gen. Order No. 2016-24 App’x B; U.S.S.G. § 5D1.3(c)). In light of the intervening changes, we
declined to read the conditions at issue as imposing strict liability. Id. Here, De Leon’s judgment
shows that the Eastern District of Kentucky has likewise incorporated a knowledge requirement
into its standard conditions of supervision. Although the particular condition De Leon challenges
is a special condition and does not include an explicit knowledge requirement, as in Smith, it would
defy common sense to interpret it as imposing strict liability where it is otherwise clear that the
court has incorporated a mens rea requirement into its conditions of supervision.
-7-
Case No. 19-5279, United States v. De Leon
And it seems other circuits split on this same issue of whether a condition of supervision
must specify a mens rea. The Seventh Circuit struck down a condition that, if “read literally,
improperly imposes strict liability because there is no requirement that [the defendant] know or
have reason to know or even just suspect that [prohibited] activities are taking place.” United
States v. Kappes, 782 F.3d 828, 849 (7th Cir. 2015) (internal quotation marks omitted). But the
Ninth and Tenth Circuits upheld similar conditions because a “reasonable” person would
understand that they require knowledge of nearby controlled substances. See United States v.
Muñoz, 812 F.3d 809, 822–23 (10th Cir. 2016); United States v. Phillips, 704 F.3d 754, 768 (9th
Cir. 2012). Given this circuit split, the district court did not plainly err. Madden, 515 F.3d at 608.
II.
We AFFIRM.
-8-
|
[Cite as State v. Bump, 2012-Ohio-337.]
COURT OF APPEALS
ASHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STATE OF OHIO
Plaintiff-Appellee
-vs-
CHRISTOPHER M. BUMP
Defendant-Appellant
JUDGES:
Hon. Patricia A. Delaney, P.J.
Hon. W. Scott Gwin, J.
Hon. William B. Hoffman, J.
Case No. 11-COA-028
OPINION
CHARACTER OF PROCEEDING: Appeal from the Ashland County Common
Pleas Court, Trial Court Number
11-CRI-008
JUDGMENT: Affirmed
DATE OF JUDGMENT ENTRY: January 27, 2012
APPEARANCES:
For Plaintiff-Appellee For Defendant-Appellant
RAMONA FRANCESCONI ROGERS ERIN N. POPLAR
Ashland County Prosecutor Erin Poplar Law, LLC
110 Cottage Street, Third Floor 1636 Eagle Way
Ashland, Ohio 44805 Ashland, Ohio 44805
PAUL T. LANGE
Assistant Prosecuting Attorney
110 Cottage Street, Third Floor
Ashland, Ohio 44805
Hoffman, J.
(¶1) Defendant-appellant Christopher M. Bump appeals his sentence entered
by the Ashland County Court of Common Pleas. Plaintiff-appellee is the State of Ohio.
STATEMENT OF THE CASE
(¶2) On February 25, 2011, the Ashland County Grand Jury indicted Appellant
on one count of grand theft of a vehicle, in violation of R.C. 2913.02(A)(1), a fourth
degree felony; one count of unauthorized use of a vehicle, in violation of R.C.
2913.02(A)(1), a fifth degree felony; and two counts of theft, in violation of R.C.
2913.02(A)(1), fifth degree felonies. At arraignment, Appellant entered pleas of not
guilty to all the charges.
(¶3) On April 26, 2011, Appellant changed his plea to guilty on Count II,
unauthorized use of a vehicle and Count III, theft. The State then moved to dismiss the
remaining counts of the Indictment.
(¶4) Via Sentencing Entry of June 24, 2011, the trial court sentenced Appellant
to ten months in prison on Count II, unauthorized use of a vehicle, and ten months on
Count III, theft. The court ordered the terms be served consecutively.
(¶5) Appellant now appeals, assigning as error:
(¶6) “THE TRIAL COURT ERRED WHEN IT IMPOSED CONSECUTIVE 10-
MONTH SENTENCES FOR TWO FIFTH DEGREE FELONY CONVICTIONS SUCH
THAT THE AGREEGATE [SIC] SENTENCE EXCEEDED THE MAXIMUM PRISON
TERM ALLOWED BY OHIO REVISED CODE 2929.14(A) FOR THE MOST SERIOUS
OFFENSE OF WHICH THE APPELLANT WAS CONVICTED, 12 MONTHS.”
(¶7) The Supreme Court of Ohio in State v. Kalish, 120 Ohio St.3d 23, 2008–
Ohio–4912 set forth a two step process for examining felony sentences. The first step is
to “examine the sentencing court's compliance with all applicable rules and statutes in
imposing the sentence to determine whether the sentence is clearly and convincingly
contrary to law.” Kalish at ¶ 4. If this first step “is satisfied,” the second step requires the
trial court's decision be “reviewed under an abuse-of-discretion standard.” Id.
(¶8) The relevant sentencing law is now controlled by the Ohio Supreme
Court's decision in State v. Foster, i.e. “ * * * trial courts have full discretion to impose a
prison sentence within the statutory range and are no longer required to make findings
or give their reasons for imposing maximum, consecutive, or more than the minimum
sentences.” 109 Ohio St.3d 1, 30, 2006–Ohio–856 at ¶ 100, 845 N.E.2d 470, 498.
(¶9) The record herein reflects Appellant was sentenced to a prison term of ten
months for the fifth degree felony of unauthorized use of a motor vehicle, and on the
fifth degree felony of theft, the court ordered Appellant also serve ten months. The
sentences were within the statutory guidelines and parameters.
(¶10) The record further reflects the trial court considered the purposes and
principles of sentencing and the seriousness and recidivism factors as required in
Sections 2929.11 and 2929.12 of the Ohio Revised Code, and advised Appellant
regarding post release control. Therefore, the sentences are not clearly and
convincingly contrary to law.
(¶11) Having determined the sentences are not contrary to law, we must now
review the sentences, pursuant to an abuse of discretion standard. Kalish at ¶ 4; State
v. Firouzmandi, supra at ¶ 40. In reviewing the record, we find that the trial court gave
careful and substantial deliberation to the relevant statutory considerations.
(¶12) The failure to indicate at the sentencing hearing the court has considered
the factors in R.C. 2929.11 and 2929.12 does not automatically require reversal. State
v. Reed, 10th Dist. No. 09AP–1163, 2010–Ohio–5819, ¶ 8. “When the trial court does
not put on the record its consideration of R.C. 2929.11 and 2929.12, it is presumed that
the trial court gave proper consideration to those statutes.” Id., citing Kalish at ¶ 18, fn.
4. “The Code does not specify that the sentencing judge must use specific language or
make specific findings on the record in order to evince the requisite consideration of the
applicable seriousness and recidivism factors.” State v. Arnett, 88 Ohio St.3d 208, 215,
2000–Ohio–302.
(¶13) Further, the Supreme Court of Ohio held in State v. Hodge, 128 Ohio
St.3d 1, 2010–Ohio–6320, “For all the foregoing reasons, we hold that the decision of
the United States Supreme Court in Oregon v. Ice [ (2009), 555 U.S. 160, 129 S.Ct.
711, 172 L.Ed.2d 517], does not revive Ohio's former consecutive-sentencing statutory
provisions, R.C. 2929.14(E)(4) and 2929.41(A), which were held unconstitutional in
State v. Foster. Because the statutory provisions are not revived, trial court judges are
not obligated to engage in judicial fact-finding prior to imposing consecutive sentences
unless the General Assembly enacts new legislation requiring that findings be made.”
See, State v. Fry, Delaware App. No. 10CAA090068, 2011–Ohio–2022 at ¶ 16–17.
(¶14) At the sentencing hearing in this matter, the trial court stated:
(¶15) “In reviewing the Pre-Sentence Investigation Report, I note there are a
number of recidivism more than likely factors, and there is one recidivism less likely
factor in that you have had no prior Juvenile Delinquency adjudications, but quite a
history, criminal history as an adult.
(¶16) “And the Court has considered and weighed those factors, and I am
further finding that, in fact, you have served a prior prison term, and that it’s appropriate
in this case after weighing the seriousness and recidivism factors, it’s finding that prison
is consistent with the purposes and principles of the Sentencing Statutes and that you
are not amenable to the Community Control Sanctions, because it appears to the Court
that the prior Courts have tried just about every conceivable Community Control
Sanction and you continue to commit crimes.
(¶17) “I’m finding that you have the future ability to be employed, and to pay
financial sanctions, and further finding based on your prior criminal history and the fact
that it appears most of the types of crimes that you are committing, Mr. Bump, are not
victimless crimes, that, in fact, your crimes are having an impact on the lives of other
individuals, law-abiding citizens.
(¶18) “And I am therefore finding that consecutive prison terms in this case are
necessary to protect the public and they are not disproportionate to the nature of the
crime.”
(¶19) Tr. at 11-12
(¶20) Based on the above, we find the trial court did not abuse its discretion in
imposing consecutive sentences. Appellant’s sole assignment of error is overruled.
(¶21) Appellant's sentence in the Ashland County Court of Common Pleas is
affirmed.
By: Hoffman, J.
Delaney, P.J. and
Gwin, J. concur
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
IN THE COURT OF APPEALS FOR ASHLAND COUNTY, OHIO
FIFTH APPELLATE DISTRICT
STATE OF OHIO :
:
Plaintiff-Appellee :
:
-vs- : JUDGMENT ENTRY
:
CHRISTOPHER M. BUMP :
:
Defendant-Appellant : Case No. 11-COA-028
For the reasons stated in our accompanying Opinion, Appellant's sentence in the
Ashland County Court of Common Pleas is affirmed. Costs to Appellant.
s/ William B. Hoffman _________________
HON. WILLIAM B. HOFFMAN
s/ Patricia A. Delaney _________________
HON. PATRICIA A. DELANEY
s/ W. Scott Gwin _____________________
HON. W. SCOTT GWIN
|
173 U.S. 116 (1899)
MULLEN
v.
WESTERN UNION BEEF COMPANY.
No. 153.
Supreme Court of United States.
Argued and submitted January 18, 1899.
Decided February 20, 1899.
ERROR TO THE COURT OF APPEALS OF THE STATE OF COLORADO.
*119 Mr. T.B. Stuart for plaintiffs in error. Mr. W.C. Kingsley filed briefs for the same.
Mr. C.S. Thomas and Mr. W.H. Bryant for defendant in error submitted on their brief, on which was also Mr. H.H. Lee.
MR. CHIEF JUSTICE FULLER delivered the opinion of the court.
We are met on the threshold by the objection that the writ of error runs to the judgment of the Court of Appeals, and cannot be maintained, because that is not the judgment of the highest court of the State in which a decision could be had.
The Supreme Court of Colorado is the highest court of the State, and the Court of Appeals is an intermediate court, created by an act approved April 6, 1891, (Sess. Laws, Col. 1891, 118,) of which the following are sections:
"SECTION 1. No writ of error from, or appeal to, the Supreme Court shall lie to review the final judgment of any inferior court, unless the judgment, or in replevin, the value found exceeds two thousand five hundred dollars, exclusive of costs. Provided, this limitation shall not apply where the matter in controversy relates to a franchise or freehold, nor where the construction of a provision of the Constitution of the State or of the United States is necessary to the determination of a case. Provided, further, that the foregoing limitation shall not apply to writs of error to county courts."
"SECTION 4. That the said court shall have jurisdiction:
"First To review the final judgments of inferior courts of record in all civil cases and in all criminal cases not capital.
"Second It shall have final jurisdiction, subject to the limitations stated in subdivision 3 of this section, where the judgment, or in replevin the value found is two thousand five hundred dollars, or less, exclusive of costs.
*120 "Third It shall have jurisdiction, not final, in cases where the controversy involves a franchise or freehold, or where the construction of a provision of the Constitution of the State, or of the United States, is necessary to the decision of the case; also, in criminal cases, or upon writs of error to the judgments of county courts. Writs of error from, or appeals to, the Court of Appeals shall lie to review final judgments, within the same time and in the same manner as is now or may hereafter be provided by law for such reviews by the Supreme Court."
The Supreme Court of Colorado has held in respect of its jurisdiction under these sections, that whenever a constitutional question is necessarily to be determined in the adjudication of a case, an appeal or writ of error from that court will lie; that "it matters but little how such question is raised whether by the pleadings, by objections to evidence or by argument of counsel, provided the question is by some means fairly brought into the record by a party entitled to raise it;" but "it must fairly appear from an examination of the record that a decision of such question is necessary, and also that the question raised is fairly debatable," Trimble v. People, 19 Colorado, 187; and also that "when it appears by the record that a case might well have been disposed of without construing a constitutional provision, a construction of such provision is not so necessary to a determination of the case as to give this court jurisdiction to review upon that ground," Arapahoe County v. Board of Equalization, 23 Colorado, 137; and, again, that "unless a constitutional question is fairly debatable, and has been properly raised, and is necessary to the determination of the particular controversy, appellate jurisdiction upon that ground does not exist." Madden v. Day, 24 Colorado, 418.
This record discloses that defendant insisted throughout the trial that the acts of Congress relied on by plaintiffs were unconstitutional if construed as authorizing the particular regulations issued by the Secretary.
When plaintiffs offered the rules and regulations in evidence, which they contended defendant had violated, defendant *121 objected to their admission on the two grounds that they were not authorized by the acts of Congress, and that, if they were, such acts were unconstitutional. The objection was overruled and defendant excepted.
The regulations having been introduced in evidence, plaintiffs called as a witness, among others, a special agent of the Department of Agriculture, who was questioned in respect of their violation, to which defendant objected and excepted on the same grounds.
At the conclusion of plaintiffs' case, a motion for non-suit was made by defendant, the unconstitutionality of the acts under which the regulations were made being again urged, and an exception taken to the denial of the motion.
The trial then proceeded, and, at its close, defendant requested the court to give this instruction: "The court instructs the jury that the act of Congress and the rules and regulations made under the same which the plaintiffs allege to have been violated, are not authorized by the Constitution of the United States, and are not valid subsisting laws or rules and regulations with which the defendant is bound to comply, and any violation of the same would not, of itself, be an act of negligence, and you are not to consider a violation of the same as an act of negligence in itself in arriving at a verdict in this case."
This instruction was objected to and was not given, though no exception appears to have been thereupon preserved.
On behalf of plaintiffs the court was asked to instruct the jury as follows:
"If the jury are satisfied from the evidence that the defendant company failed to comply with paragraph two of the rules and regulations of the United States Department of Agriculture of April 23, 1891, and that the defendant company did not put its cattle in pens or on trails or ranges that were to be occupied or crossed by the plaintiffs' cattle going to eastern markets before December, 1891, so that these two classes should not come in contact, then that constitutes negligence and want of reasonable care on the part of the defendant, and you need not look to any other evidence to find that the defendant did *122 not use reasonable care in this case, and that the defendant was guilty of negligence."
This was refused by the court and plaintiffs excepted. But the court charged the jury that the rule promulgated by the Secretary of Agriculture "would have the effect to give to this defendant notice that the United States authorities having in charge the animal industries, so far as the Government of the United States may control it, were of the opinion that it was unsafe to ship cattle from Kimble County at that period of the year into Colorado and graze them upon lands that were being occupied by other cattle intended for the eastern market, or to allow them to co-mingle with them." To this modification of the instruction requested plaintiffs saved no specific exception.
After the affirmance of the judgment by the Court of Appeals, plaintiffs filed a petition for a rehearing, the eighth specification of which was that
"This court erred in holding and deciding that the rules and regulations promulgated by the Secretary of Agriculture on April 23, 1891, as shown by the record herein, were not applicable to the herd of cattle which the defendant in error imported into Colorado in June, 1891, as shown by the record herein, for the reason, as this court held, that after said cattle were domiciled in Colorado their management must be regulated by the state laws, and not by the act of Congress, and that the disposition of said cattle afterwards was not within the scope of Federal authority."
It thus appears that if the trial court and the Court of Appeals had been of the opinion that the Secretary's rules and regulations were within the terms of the authority conferred by the statutes, and that non-compliance therewith would have constituted negligence per se, those courts would have been necessarily compelled to pass upon the constitutionality of the acts, which question was sharply presented by defendant. And it is also obvious that if the Supreme Court had been applied to and granted a writ of error, and that court had differed with the conclusions of the Court of Appeals, arrived at apart from constitutional objections, the validity of the acts and regulations would have been considered.
*123 The Court of Appeals seems to have been of opinion that after the cattle arrived in Colorado, Congress had no power to regulate their disposition, and hence that the regulations were not binding. And the question of power involved the construction of a provision of the Constitution of the United States. At the same time its judgment may fairly be said to have rested on the view that the statutes did not assert the authority of the United States, but conceded that of the State, in this regard; and that the regulations were not within the terms of the statutes. But, if the case had reached the Supreme Court, that tribunal might have ruled that the judgment could not be sustained on these grounds, and then have considered the grave constitutional question thereupon arising.
And although the Supreme Court might have applied the rule that where a judgment rests on grounds not involving a constitutional question it will not interfere, we cannot assume that that court would not have taken jurisdiction, since it has not so decided in this case, nor had any opportunity to do so.
We must decline to hold that it affirmatively appears from the record that a decision could not have been had in the highest court of the State, and, this being so, the writ of error cannot be sustained. Fisher v. Perkins, 122 U.S. 522.
Writ of error dismissed.
|
Court of Appeals
of the State of Georgia
ATLANTA,____________________
November 01, 2017
The Court of Appeals hereby passes the following order:
A18D0136. DEBORAH SIMMS v. MARK BUTLER, COMMISSIONER,
GEORGIA DEPARTMENT OF LABOR et al.
Deborah Simms filed a petition in the superior court seeking judicial review of
an administrative ruling of the Department of Labor Board of Review (the “Board”)
that found Simms ineligible for the receipt of unemployment benefits. On June 26,
2017, the superior court affirmed the Board’s decision. Simms1 filed this pro se
application for discretionary appeal on October 10, 2017. We, however, lack
jurisdiction.
A discretionary application must be filed within 30 days of entry of the judgment
sought to be appealed. OCGA § 5-6-35 (d). The requirements of OCGA § 5-6-35 are
jurisdictional, and this Court cannot accept an application for appeal not made in
compliance therewith. Boyle v. State, 190 Ga. App. 734, 734 (380 SE2d 57) (1989); see
also In the Interest of B. R. F., 338 Ga. App. 762, 762 (791 SE2d 859) (2016) (filing
deadline for discretionary applications “is jurisdictional, and this court is unable to
accept an untimely application”). Because Simms filed this application 106 days after
entry of the judgment she seeks to appeal, it is untimely, and we lack jurisdiction to
consider it. Accordingly, this application is hereby DISMISSED.
1
On July 3, 2017, Simms initially filed a direct appeal from the superior court’s
order affirming the Board’s decision. We dismissed the appeal, however, because of
her failure to comply with the discretionary appeal procedures. See Case No.
A18A0185 (decided September 27, 2017); Dunlap v. City of Atlanta, 272 Ga. 523, 524
(531 SE2d 702) (2000) (under OCGA § 5-6-35 (a) (1), appeals from orders of superior
courts reviewing decisions of state administrative agencies must be initiated by filing
an application for discretionary review).
Court of Appeals of the State of Georgia
Clerk’s Office, Atlanta,____________________
11/01/2017
I certi fy that the above is a true extract from
the minutes of the Court of Appeals of Georgia.
Witness my si gnature and the seal of said court
hereto affixed the day and year last above written.
, Clerk.
|
447 F.Supp.2d 766 (2006)
PIZZA MAGIA INTERNATIONAL, LLC, et al., Plaintiffs and
Ohio Casualty Insurance Co., Intervening Plaintiff
v.
ASSURANCE COMPANY OF AMERICA, Defendant.
Civil Action No. 3:00CV-548-H.
United States District Court, W.D. Kentucky, at Louisville.
August 3, 2006.
*767 *768 Clay M. Stevens, Thompson Miller & Simpson PLC, Louisville, KY, for Plaintiffs.
Michael S. Maloney, Schiller, Osbourn & Barnes PLLC, Louisville, KY, for Intervening Plaintiff.
Arnold Taylor, O'Hara, Ruberg, Taylor, Sloan & Sergent, Covington, KY, Jack A. Jeziorski, Jack Allen Wheat, Jamie K. Neal, Marc S. Murphy, T. Morgan Ward, Jr., Thad M. Barnes, Stites & Harbison, PLLC, Christopher P. O'Bryan, O'Bryan, Brown & Toner, Louisville, KY, Gwendolyn Renae Pinson, Stoll, Keenon & Park, Jeffery Todd Barnett, P. Douglas Barr, Stoll Keenon Ogden PLLC, Lexington, KY, Tamela Ann Biggs, Frankfort, KY, for Defendant.
MEMORANDUM OPINION
HEYBURN, Chief Judge.
This litigation has now been pending for over six years. The remaining issues concern Assurance Company of America's ("Assurance") duty to indemnify and defend Pizza Magia International, LLC ("Pizza Magia") and Ohio Casualty Insurance Co. ("Ohio Casualty") for the settlement costs and other expenses incurred in the underlying litigation. Discovery is now complete on this last phase. The parties have filed excellent memoranda concerning the legal issues and have made helpful presentations during oral argument.
The Court must address four legal issues: (1) whether the underlying claims for trade dress and trademark infringement constitute an "advertising injury" within the meaning of Assurance's Commercial General Liability ("CGL") policy; (2) whether the loss-in-progress doctrine bars coverage for those claims; (3) whether Assurance nevertheless had a duty to defend Pizza Magia in the underlying action; and (4) whether Assurance can be liable for bad faith based on its failure to do so. To do so requires the Court to predict how Kentucky courts would act in several instances. The result is a mixed one.
I.
The current insurance coverage dispute has its origins as far back as 1999 when certain former executives, franchisees and employees of Papa John's International, Inc. ("Papa John's") terminated their various relationships with that company and began planning a new business venture. In June, 1999, they incorporated Pizza Magia *769 as a business to own, operate and franchise carry-out pizza stores. Pizza Magia opened its first store in late August, 1999.
Papa John's soon grew concerned that its former employees and franchisees were engaging in various kinds of illegal activity. On October 29, 1999, Papa John's wrote Pizza Magia, complaining about the violation of various agreements, misappropriation of trade secrets and other possible legal activity. Direct contact and other letters between the parties followed. The parties were unable to resolve their differences; so on September 12, 2000, Papa John's filed suit against Pizza Magia, alleging, inter alia, trademark and trade dress infringement.
During the time between September 1, 1999, through August 30, 2000, Ohio Casualty provided CGL coverage to Pizza Magia. As of September 1, 2000, Pizza Magia changed its insurance coverage. From that date forward Assurance provided coverage under a virtually identical policy. At the outset of the litigation, however, Pizza Magia demanded that both Ohio Casualty and Assurance provide coverage for Papa John's claims. Initially, Ohio Casualty asked this Court to declare that it owed no duties of defense or indemnification to Pizza Magia. Notwithstanding this request, from the outset Ohio Casualty provided a defense for Pizza Magia. Assurance eventually denied coverage and declined to provide a defense under its policy.
For almost three years Papa John's and Pizza Magia vigorously and contentiously battled one another before finally reaching a settlement, in which Ohio Casualty and Pizza Magia ended up paying equal amounts to Papa John's. Assurance declined to participate in the settlement. Since that settlement, the subsequent insurance coverage dispute has begun to rival the underlying litigation in both its complexity and its duration. Ohio Casualty argues that Assurance should share pro rata in any expenses Ohio Casualty has incurred. Pizza Magia argues that it is entitled to indemnification under the Assurance policy for the amounts that it paid to settle the lawsuit.
The applicable Assurance policy provision describes coverage for " lajdvertising injury' caused by an `offense' committed in the course of advertising your goods, products or services." Only five of Papa John's original claims are relevant here.[1] Those claims are contained in Count IX and Count X of the First Amended Complaint. Count IX alleges violations of the Federal Trademark Act. Count X alleges violations of the Kentucky law of trade secrets, service mark, trade dress and unfair competition. Generally, Papa John's alleged that Pizza Magia (1) adopted a product and business model virtually identical to it; (2) used dough and sauce strikingly similar in taste and texture to Papa John's; and *770 served customers garlic butter as a matter of course. Papa John's considered the service of garlic butter a "unique selling technique" that it had developed.
According to Ohio Casualty and Pizza Magia, these allegations in the Complaint assert that Pizza Magia had misappropriated Papa John's style of doing business, i.e., Papa John's comprehensive manner of operating its business. The First Amended Complaint alleges that Pizza Magia "copied and misappropriated virtually all material aspects of plaintiffs operations and methods of doing business" including "advertising and promotional items." The Complaint alleges that Pizza Magia, like Papa John's, is a pizza carry-out and delivery restaurant in Kentucky and Indiana and that Pizza Magia's officers conspired together to make pizza based on Papa John's trade secret formulas in order to trade on Papa John's reputation for quality. The Complaint notes that "Papa John's overall appearance of its traditional pizza, including its full-bodied, raised border crust, its cheese on top of its ingredients and its topping ingredients poking through the cheese, acquired distinctiveness and was famous in the marketplace prior to Defendant Pizza Magia's opening for business." First Amended Complaint, p. 33, para. 117.
Ohio Casualty and Pizza Magia point out that other portions of the Complaint allege that Pizza Magia misappropriated Papa John's advertising idea, or "promotional technique," of including free garlic sauce with each order without customer request. The Complaint states that "the individual defendants . . . copied Papa John's signature promotional technique of providing free garlic sauce with each order of pizza." First Amended Complaint, pp. 9-10, para. 22. Finally, the Complaint asserts that Pizza Magia copied and then advertised an imitation of Papa John's traditional pizza. Specifically, the Complaint alleges that "Defendant Pizza Magia has advertised and sold pizzas which use or constitute a colorable imitation of the overall appearance of Papa John's traditional pizza." First Amended Complaint, p. 35, para. 125. In other words, Papa John's alleged that Pizza Magia advertised an imitation of Papa John's traditional pizza to promote its own pizza sales.
All of these allegations must ultimately be compared to the coverage provisions contained in the Assurance policy. That policy defines an "advertising injury" to include misappropriation of advertising ideas and style or doing business:
"Offense" means one or more of the following:
. . . . .
b. With respect to "advertising injury".
(1) Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
(2) Oral or written publication of material that violates a person's right to privacy;
(3) Misappropriation of advertising ideas or style of doing business; or
(4) Infringement of copyright, title or slogan.
Pizza Magia and Ohio Casualty argue that the conduct alleged in the Complaint and the First Amended Complaint constitutes "misappropriation of advertising ideas or style of doing business."
II.
This Court must apply Kentucky law to determine the meaning of this insurance policy. Thus, the Court must look at the policy as a whole and give every provision its full meaning and operative effect. Kemper Nat'l Ins. Cos. v. Heaven *771 Hill Distilleries, 82 S.W.3d 869, 875-76 (Ky.2002). The plain and ordinary meaning of the policy language governs if it is clear and unambiguous. Nationwide Mut. Ins. Co. v. Nolan, 10 S.W.3d 129, 131 (Ky.1999). Because the insurance carrier typically drafts the policy, where policy language is ambiguous, that language is to be construed in the light most favorable to the insured. Kentucky Farm Bureau Mut. Ins. Co. v. McKinney, 831 S.W.2d 164, 166 (Ky.1992) (internal citations omitted). Here, Sections III and V of this Memorandum Opinion concern insurance contract interpretation: applying unambiguous contract language to undisputed facts. In such an instance, the Court decides these issues as a matter of law.
On the other hand, sections IV and VI of this Memorandum Opinion concern issues which require a combination of actual factfinding and defining legal standards. Under these circumstances, the Court's authority to render a final decision is more circumscribed. Summary judgment is appropriate if no genuine issue of material facts exists and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. Pro. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A dispute is genuine when "the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).
III.
Pizza Magia has settled claims of federal trade dress infringement, trademark infringement, copyright infringement claims as well as state law claims of trade secret and service mark violation, and unfair competition. This Court must decide whether the Assurance policy covers any injury that the settlement agreement compensates. That question requires this Court to decide, first, whether the causes of action in the underlying case gave rise to an "advertising injury," and, if so, whether a "causal connection" exists between that injury and the "advertising activity" that Pizza Magia undertook. Cincinnati Ins. Co. v. Zen Design Group, Ltd., 329 F.3d 546, 553 (6th Cir.2003). The insurance policy lists four categories of covered harms that may constitute "advertising injuries." The parties agree, and this Court concurs, however, that only the provision encompassing "misappropriation of advertising ideas or style of doing business" is relevant in this case.[2] Thus, the precise question presented is whether the trade dress infringement and related claims in the underlying suit constitute a "misappropriation of advertising ideas or style of doing business."
A.
In answering that question, this Court must decide first whether trade dress infringement, which forms the gravamen of Papa John's complaint, can ever be a "misappropriation of advertising ideas or style of doing business." Recently, the Sixth Circuit held that trade dress infringement cannot constitute "misappropriation of advertising ideas or style of doing business" when it interpreted a policy with identical language as ours. See Advance Watch Co. v. Kemper Nat'l Ins. Co., 99 F.3d 795, 802 *772 (6th Cir.1996) (concluding that "`misappropriation of advertising ideas or style of doing business' does not refer to a category or grouping of actionable conduct which includes trademark or trade dress infringement"). However, in that case the Sixth Circuit interpreted the relevant policy language under Michigan law. The Sixth Circuit's interpretation of Michigan law, although persuasive, is not binding authority. No Kentucky state court has ever addressed the issue and no other court has attempted to interpret Kentucky law. What this Court is bound to do in this situation is to "ascertain from all available data . . . what the state's highest court would decide if faced with the issue." Grantham and Mann, Inc. v. American Safety Products, Inc., 831 F.2d 596, 608 (6th Cir.1987).
It would be easy enough to simply adopt the Sixth Circuit's view. In these circumstances, however, that is not this Court's charge. Nor is a Sixth Circuit opinion necessarily a safe haven. For starters, Advance Watch represents a minority view. Although it has been reaffirmed within the Sixth Circuit,[3] other jurisdictions have repeatedly criticized it. See, e.g., Frog, Switch & Mfg. Co. v. Travelers Ins. Co., 193 F.3d 742, 747 (3d Cir.1999) ("Advance Watch has been sharply criticized for ignoring the real contours of intellectual property litigation, which often proceeds under a bewildering variety of different labels covering the same material facts.") (citation omitted); Gemmy Indus. Corp. v. Alliance General Ins. Co., 190 F.Supp.2d 915, 920 (N.D.Tex.1998) (finding that adopting the reasoning of Advance Watch "would circumvent well-established principles of contract construction"). Indeed, the majority rule is that trade dress infringement and trademark infringement can constitute "misappropriation of advertising ideas and style of doing business," depending on the nature of the factual allegations in the underlying action. See, e.g., Hyman v. Nationwide Mut. Fire Ins. Co., 304 F.3d 1179, 1191 (11th Cir.2002) (Florida law); R.C. Bigelow, Inc. v. Liberty Mut. Ins. Co., 287 F.3d 242, 247-48 (2d Cir.2002) (Connecticut law); Applied Bolting Technology Products, Inc. v. U.S. Fidelity & Guar. Co., 942 F.Supp. 1029, 1034 (E.D.Pa.1996). For these reasons, this Court has doubts that the Kentucky Supreme Court would adopt the Sixth Circuit's reasoning.
In making any analysis, Kentucky courts would begin with the language of the coverage section. Because the policy does not define the terms in that provision, each must be accorded its ordinary meaning. See Nationwide Mut. Ins. Co., 10 S.W.3d at 131. Initially, as it is commonly understood, advertising means the "`action of calling something to the attention of the public.'" Hyman, 304 F.3d at 1188 (quoting Adolfo House Distrib. Corp. v. Travelers Prop. & Cas. Ins. Co., 165 F.Supp.2d 1332, 1339 (S.D.Fla.2001)). Therefore, "[a]n `advertising idea,' . . . can be any idea or concept related to the promotion of a product to the public." Id. (citing Black's Law Dictionary (7th ed.1999)); see also Sentex Sys., Inc. v. Hartford Accident & Indem. Co., 93 F.3d 578, 580 (9th Cir.1996) ("In this day and age, advertising cannot be limited to written sales materials, and the concept of marketing includes a wide variety of direct and indirect advertising strategies."). At first glance, the term "style of doing business" appears to be a rather general formulation. It has been routinely defined as "referring to `a company's comprehensive *773 manner of operating its business.'" Novell, Inc. v. Fed. Ins. Co., 141 F.3d 983, 987 (10th Cir.1998) (citations omitted). However, as the Eleventh Circuit noted in Hyman, "it is important to recognize that the phrase is meant to describe an `advertising injury.'" Hyman, 304 F.3d at 1188. Therefore, this Court agrees with the Eleventh Circuit and concludes that the most natural reading of the phrase "must include the manner in which a company promotes, presents, and markets its products to the public." Id. at 1189.
Trade dress is defined as "the total image of a product and may include features such as size, shape, color or color combinations, textures, graphics, or even particular sales techniques." John H. Harland Co. v. Clarke Checks, Inc., 711 F.2d 966, 980 (11th Cir.1983) (citations omitted). Therefore, although " the classic trade dress infringement action involved the packaging or labeling of goods' . . . it may `extend to marketing techniques' and can include certain `sales techniques designed to make the product readily identifiable to consumers and unique in the marketplace.'" Hyman, 304 F.3d at 1189 (citations omitted). Because trade dress encompasses marketing or packaging designed to draw attention to a product, it may constitute an "advertising idea" or "style of doing business" as those terms are defined above.[4] In sum, a product's trade dress may constitute an "advertising idea" or a "style of doing business" under Kentucky law although it may not always do so.
In its First Amended Complaint, Papa John's generally asserted that the Pizza Magia product and business model were virtually identical to Papa John's; that the taste and the texture of Pizza Magia's pizza were a colorable imitation of its own; and that like Papa John's, Pizza Magia served customers free garlic butter with each order without customer request. In sum, Pizza Magia plainly designed the look of the pizza, the taste of the pizza and the provision of free garlic sauce to promote its products by appropriating ideas and a certain style from Papa John's. This Court concludes that these aspects of the trade dress for the pizzas Pizza Magia produced and marketed constitute an "advertising idea" or "style of doing business" as Kentucky courts would define those terms.
B.
Next, this Court must determine whether a causal connection exists between the advertising injury and Pizza Magia's advertising activity. This requirement originates from the policy's coverage for "advertising injury caused by an offense committed in the course of advertising." Thus, " the injury for which coverage is sought must be caused by the advertising itself.'" Hyman, 304 F.3d at 1192 (quoting Microtec Research, Inc. v. Nationwide Mutual Ins. Co., 40 F.3d 968, 971 (9th Cir.1994)); see also Advance Watch, 99 F.3d at 806 ("The policy . . . requires some nexus between the ground of asserted liability and the insured's advertising activities before there is coverage or a duty to defend.").
Again relying on Advance Watch, Assurance argues that no such causal connection exists because the only specific reference to advertising in the complaint is that Pizza Magia "advertised and sold" pizzas that imitated the Papa John's appearance. In Advance Watch, the Sixth Circuit held that even assuming that the insured's alleged trademark and trade dress infringement *774 constituted misappropriation of style of doing business, the required causal nexus between advertising and the injury was lacking. The court so held even though the insured published catalogues and advertisements displaying the alleged infringing product. It reasoned that the appearance and shape of the product itself and not the advertising had caused the injury. The court in Advance Watch stated:
Contrary to the district court's conclusion, we conclude that even if Advance could be said to have misappropriated Cross' advertising ideas or style of doing business, it cannot reasonably be said to have done so in the course of advertising its writing instruments, when it is the shape and appearance of the writing instruments themselves which Cross claimed to have caused injury. Advance argues that the appearance of its Pierre Cardin writing instruments was in itself advertising, but this argument proves too much, for it would invoke advertising injury coverage and the duty to defend whenever a product is merely exhibited or displayed.
Id. at 807; see also Simply Fresh Fruit, Inc. v. Continental Ins. Co., 94 F.3d 1219, 1223 (9th Cir.1996) (in order to invoke the coverage of the policy, "the advertising activities must cause the injurynot merely expose it."). In other words, under Advance Watch, if the offense is merely revealed by advertising, no connection is present.
Outside the Sixth Circuit, courts seem more lenient in finding a causal nexus in the area of trademark and trade dress infringement. Indeed, because trademark rights involve the appearance of a product, a number of courts have found the required causal nexus on the theory that advertisements displaying the infringing product must be deemed to be harmful. See, e.g., Hyman, 304 F.3d at 1193; R.C. Bigelow, Inc. v. Liberty Mutual Ins. Co., 287 F.3d 242, 248 (2d Cir.2002). For example, in R.C. Bigelow, the Second Circuit explained that in a trade dress action, "the alleged `offense' is creating consumer confusion by the use of copied trade dress. . . ." R.C. Bigelow, 287 F.3d at 248. Finding the requisite causal connection, the court reasoned that, the insured's "ads displayed the allegedly infringing trade dress. If, as [the plaintiff] alleges, [the insured's] copied trade dress created consumer confusion, the ads could have been found to have contributed to such confusion." Id.
Under this reasoning, the allegations here establish the requisite causal nexus because the ads could have contributed to consumer confusion. This Court need not determine which approach the Supreme Court of Kentucky would adopt, however, because Papa John's has made an allegation that distinguishes our case from those like Advance Watch. Here, Papa John's alleged that Pizza Magia copied Papa John's promotional technique of providing free garlic sauce with each order without a customer request. This is not just an advertising idea; it is an act of advertising. Therefore, it establishes the required causal nexus.
Based upon this analysis, the Court concludes that the language of the Assurance policy taken alone requires Assurance to indemnify and defend Pizza Magia in its underlying litigation with Papa John's.
IV.
Assurance argues that even though its policy may cover the loss, the "loss-in-progress" or "known loss" doctrine bars Pizza Magia's claim. This doctrine precludes coverage when the insured is aware of an ongoing progressive loss at the time the policy becomes effective. See, e.g., Am. & Foreign Ins. Co. v. Sequatchie Concrete Servs., 441 F.3d 341, 344 (6th Cir. 2006) (applying Tennessee law). In some *775 form or another, the "loss-in-progress" doctrine is widely accepted as a fundamental principle of insurance law. Inland Waters Pollution Control, Inc. v. Nat'l Union Fire Ins. Co., 997 F.2d 172, 179 (6th Cir. 1993) ("We are unaware of any case in which a court has rejected the doctrine as internally fallacious or inconsistent with the general principles of insurance law. . . ."). Cf. 7 Couch on Insurance § 102:9 ("The known risk, known loss, and loss-in-progress defenses are generally considered to be part of the `fortuity' requirement that runs throughout insurance law."). It embodies " the principle that losses which exist at the time of the insuring agreement, or which are so probable or imminent that there is insufficient "risk" being transferred between the insured and the insurer, are not proper subjects of insurance.'" Am. & Foreign Ins. Co., 441 F.3d at 344 (quoting 7 Couch on Insurance § 102:8). Despite the concept's widespread acceptance, courts have not settled upon a uniform standard for its application and even where the standard is uniform, it is difficult to apply it to the facts of a given case in a consistent way.
A.
No Kentucky case has expressly spoken on the "loss-in-progress doctrine." However, the Supreme Court of Kentucky recently reaffirmed a related doctrine, the principle of fortuity in Aetna Cas. & Sur. Co. v. Commonwealth, 179 S.W.3d 830 (Ky. 2005).[5] The principle of fortuity and the loss-in-progress doctrine are variations of the same basic concept. See National Union Fire Insurance Company of Pittsburgh, Pa. v. The Stroh Companies, Inc., 265 F.3d 97, 106 (2d Cir.2001) (discussing fortuity and loss-in-progress). The fortuity principle, like the loss-in-progress doctrine, presumes that the purpose of insurance is to spread risk; therefore, where the insured intentionally or willfully causes the loss at issue, the loss is uninsurable. 7 Couch on Insurance § 101:22; see also Aetna Cas. & Sur. Co., 179 S.W.3d at 835 ("`Fortuity' is the principle that an insured cannot have coverage for those things that are `expected or intended' from the covered conduct.").[6]
The Aetna case concerned radioactive materials intentionally deposited in a disposal facility. Many years later the EPA required the owner to cleanup the hazard. The owner's current insurance company refused to defend or indemnify them. The Kentucky Supreme Court concluded that the insurance companies were entitled to a jury instruction on the concept of fortuity. The court reasoned that "the requirement that loss be fortuitous, i.e. not intended, is a concept inherent in all liability policies." Aetna Cas. & Sur. Co., 179 S.W.3d at 836. The court held that the trial court should have instructed the jury that the Commonwealth was entitled to insurance coverage "unless it specifically and subjectively intended *776 to cause the migration of radioactive contamination." Id. at 836. By reaffirming the fortuity defense, the Supreme Court of Kentucky reaffirmed the principle that a loss is insurable only where the loss is sufficiently uncertain.
Indeed, the Aetna court relied upon the rationale set out by a federal district court's discussion of the known loss doctrine. See Aetna Cas. & Sur. Co., 179 S.W.3d at 836(citing Aetna Cas. & Sur. Co. v. Dow Chemical Co., 10 F.Supp.2d 771, 790 (E.D.Mich.1998)).[7] The Sixth Circuit also endorsed the loss-in-progress doctrine, holding that both the Supreme Court of Tennessee and the Supreme Court of Michigan would adopt it if afforded the opportunity. Am. & Foreign Ins. Co., 441 F.3d at 344 (6th Cir.2006); Inland Waters, 997 F.2d at 178-79 (interpreting Michigan laws). Based on the Kentucky Supreme Court's recent discussion of the fortuity doctrine and the Sixth Circuit's persuasive authority, this Court today likewise concludes that the Kentucky Supreme Court would adopt the loss-in-progress doctrine.
The Court must also settle upon the precise standard that describes the doctrine. In Inland Waters the Sixth Circuit held that the loss-in-progress doctrine precludes coverage where "the insured is aware of a threat of loss so immediate that it might fairly be said that the loss was in progress and that the insured knew it at the time the policy was issued or applied for." Inland Waters, 997 F.2d at 178. As defined here, the loss-in-progress doctrine, does not apply only where the insured knows that a lawsuit has been filed against it or that it has incurred actual legal liability. Am. & Foreign Ins. Co., 441 F.3d at 346. Rather, the doctrine may apply where the insured has subjective knowledge of the damages that could underlie a legal claim against it. Id.[8]
For the doctrine to apply, those damages must form the basis of the legal claim for which the insured now seeks coverage. See Aetna Cas. & Sur. Co. v. Dow Chemical Co., 10 F.Supp.2d 771, 790 (E.D.Mich. 1998) ("The crucial issue is whether [the insured] was aware, at a minimum, of an immediate threat of the [injury] for which it was ultimately held responsible and for which it now seeks coverage . .").
The Court concludes that the Kentucky Supreme Court would adopt the Sixth Circuit's formulation of the loss-in-progress doctrine. In Aetna, the Kentucky Supreme Court relied on the Eastern District of Michigan's definition of the loss-in-progress doctrine in its analysis of the fortuity doctrine. Aetna Cas. & Sur. Co., 179 S.W.3d at 836. In fact, the Kentucky Aetna court expressly incorporated the definition of the loss-in-progress doctrine enunciated in Dow Chemical Co. into its definition of the fortuity doctrine. Id. That definition is perfectly consistent with the formulation of the doctrine explained above.
B.
Now the Court must apply this standard to our facts. To determine whether the *777 loss-in-progress doctrine precludes coverage here, the Court must determine whether Pizza Magia was "aware of a threat of loss so immediate that it might fairly be said that the loss was in progress and that the insured knew it at the time the policy applied for." Inland Waters, 997 F.2d at 178. The "loss" at issue in this case is the harm that Papa John's suffered as a result of Pizza Magia's trademark and trade dress infringement. Accordingly, the question is whether Pizza Magia was subjectively aware of the harm caused by its infringing activities prior to September 1, 2000. That harm, unlike the injury in a pollution case like Aetna, is intangible and difficult to identify. Therefore, it is especially difficult for the Court to determine when Papa John's identified those injuries and when Pizza Magia became aware of them.
Assurance has set out the following factual grounds for the loss-in-progress defense. Counsel for Papa John's sent three letters to J. Daniel Holland ("Holland"), who was the Chief Executive Office of Pizza Magia, threatening legal action before Pizza Magia purchased its CGL policy from Assurance. Papa John's counsel sent the first letter on October 29, 1999. That letter began by expressing Papa John's concern about Holland's breach of fiduciary duty, and went on to make the following statements:
Our firm has been retained by Papa John's International Inc. . . . to investigate other potential claims against you and officers or directors of Pizza Magia. These claims include . . . misappropriation of trade secrets and tortious interference with Papa John's business.
* * * * * *
Section 17 of your Franchise Agreements (and comparable sections of the Development Agreements) specifically prohibits the use of confidential or proprietary information of Papa John's, including at any time after the expiration or termination of the franchise. This prohibition applies to all aspects of Papa John's operations, including "knowledge or know-how concerning the recipes, food products, advertising, marketing, designs, plans software, programs or methods of operation." Your recent venture with Pizza Magia, and the tactics employed by its officers, directors and agents in developing this competing business, further breaches both the Franchise and Development Agreements.
It is apparent that Pizza Magia's concept, processes and products not only imitate but are directly derived from those of Papa John's. We believe that copying these and other processes of Papa John's is a misappropriation of protected recipes and methods of operations belonging to Papa John's and is likely to cause confusion among consumers as to whether Pizza Magia is somehow affiliated with Papa John's. * * * Accordingly, Pizza Magia must immediately cease its attempt to duplicate the recipes, products and methods of operations of Papa John's.
* * * * * *
You must immediately cease all involvement with Pizza Magia, stop the duplication of Papa John's processes and products by Pizza Magia and halt any further opening of Pizza Magia restaurants. If necessary, Papa John's will seek court intervention to obtain injunctive relief against you and Pizza Magia to enforce the terms of your Franchise and Development Agreements with Papa John's, and will further pursue costs, legal fees and monetary damages.
In short, Papa John's threatened suit for misappropriation of trade secrets, breach of fiduciary duty, tortious interference *778 with its business, and breach of confidentiality and non-competition agreements.
Pizza Magia responded by denying any wrong doing. On November 15, 1999, Papa John's counsel sent a letter similar to the first. Papa John's counsel sent a final letter on December 14, 1999, stating that "Papa John's will seek redress from . . . Pizza Magia unless Pizza Magia can demonstrate that its methods of operation and product are not materially derived from confidential information of Papa John's." On September 13, 2000, that is precisely what Papa John's did. Based on this evidence, a reasonable juror could conclude that Pizza Magia was subjectively aware of the harm it had caused Papa John's by infringing its trademarks and trade dress when it applied for the policy.
However, a reasonable juror could also conclude that Pizza Magia was unaware of the relevant injuries. Papa John's letters never mentioned trade dress infringement, trademark infringement or any other theory of liability sought to be covered now. The absence of those warnings suggests that not even Papa John's was aware of the harm caused by Pizza Magia's trade dress and trademark infringement at that time. Moreover, Papa John's did not express any dissatisfaction with Pizza Magia's manner of conducting business for a nine-month period between December 14, 1999 and September 13, 2000. Accordingly, a reasonable juror could conclude that Pizza Magia had no reason to believe that it had caused Papa John's harm until after it entered into the policy at issue. Therefore, summary judgment is inappropriate at this time.
Relying on KRS § 304.20-320, Pizza Magia and Ohio Casualty argue that Assurance waived the right to assert the loss-in-progress doctrine because it failed to cancel the policy after learning that Papa John's had filed suit. That provision authorizes an insurer to cancel an insurance policy within 60 days of the effective date of the policy. According to Pizza Magia and Ohio Casualty, Assurance learned of Papa John's lawsuit within the 60-day window but decided to issue the policy anyway.[9] However, even if Assurance had the right to cancel, their failure to do so did not constitute a waiver. Waiver, as applied to contracts of insurance, requires a "voluntary and intentional relinquishment of a known, existing right or power under the terms of an insurance contract." Howard v. Motorists Mut. Ins. Co., 955 S.W.2d 525, 526 (Ky.1997) (citation and internal quotations omitted). In this case, Assurance did not discover the evidence supporting the loss-in-progress defense until well after the 60 days had expired. Therefore, Assurance did not intentionally relinquish a known legal right by failing to cancel the policy pursuant to § 304.20-320.
Based on the foregoing analysis, the Court concludes that a genuine issue of material fact exists as to whether the loss-in-progress doctrine precludes indemnity coverage in this case.
V.
The Court must next address whether Assurance is liable for failing to defend Pizza Magia. In Kentucky, the duty to defend is separate and distinct from an obligation to pay a claim. James Graham Brown Found., Inc. v. St. Paul Fire & Marine Ins. Co., 814 S.W.2d 273, 280 (Ky.1991). An insurer has a duty to *779 defend if there is an allegation that potentially, possibly or might come within the coverage terms of the policy. Aetna Cas. & Sur. Co., 179 S.W.3d at 841 (citation omitted). The determination of whether a defense is required must be made at the outset of the litigation by reference to the complaint and known facts. Lenning v. Commercial Union Ins. Co., 260 F.3d 574, 581 (6th Cir.2001) (applying Kentucky law) (citing Brown Found., 814 S.W.2d at 279).
Here, the Complaint alleged, among other things, that Pizza Magia engaged in trade dress infringement by advertising and selling pizzas that were confusingly similar in look and taste to Papa John's pizzas. At the time the Complaint was filed, a number of courts in other jurisdictions had held that claims of trade dress infringement do constitute an "advertising injury" under identical CGL policies. See, e.g., St. Paul Fire & Marine v. Advanced Int'l Sys., Inc., 824 F.Supp. 583 (E.D.Va.1993); Elcom Tech., Inc. v. Hartford Ins. Co. of the Midwest, 991 F.Supp. 1294 (D.Utah 1997); Indus. Molding Corp. v. American Mfr. Mutual Ins. Co., 17 F.Supp.2d 633 (N.D.Tex.1998). Although it was then an open question in Kentucky, the law of this case is now that the allegations here do constitute an "advertising injury" within the meaning of the policy.
Another important fact is that when the Complaint was filed, Assurance did not know of any facts extrinsic to the Complaint that justified a refusal to defend. To be sure, Assurance eventually discovered grounds for the loss-in-progress defense. But Assurance had no factual basis for asserting that defense until after the filing of the First Amended Complaint, two and a half years after the onset of the litigation. Only then did Assurance first learn that Papa John's had repeatedly threatened suit prior to the inception of the policy. During the intervening two-and-a-half year period, Assurance was without any basis to categorically deny coverage. Consequently, it had a duty to defend. Their failure to provide the defense was a breach of contract and Pizza Magia is entitled to recover all naturally flowing damages irrespective of any limit in the policy. Eskridge v. Educator and Executive Insurers, Inc., 677 S.W.2d 887, 889 (Ky.1984).
VI.
Pizza Magia claims that Assurance's failure to defend constitutes bad faith under Kentucky law. It alleges that Assurance received notice of the lawsuit on or about September 14, 2000, and after conferring with in-house counsel, declined coverage because the allegations did not constitute an "advertising injury." But there is a factual dispute as to when Assurance communicated its denial to Pizza Magia.
Assurance claims that it notified Pizza Magia of the coverage denial by telephone in October of 2000 and again in a letter dated October 10, 2001. Pizza Magia says that the alleged phone conversation never took place and that it never received that letter. Pizza Magia claims that it received no response to its demand until February 26, 2003.
In Kentucky, a claim for bad faith based on an insurer's denial of coverage requires proof of the following: (1) the insurer was obligated to pay the claim under the terms of the policy; (2) the insurer lacked a reasonable basis in law or fact for denying the claim; and (3) the insurer either knew that there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed. Wittmer v. Jones, 864 S.W.2d 885, 890 (Ky.1993) (citation omitted); see also Ky.Rev.Stat. Ann. § 304.12-230.
*780 In this case, although Assurance had a contractual duty to defend Pizza Magia, its decision not to do so cannot constitute bad faith. Bad faith is not established if an insurer's failure to provide a defense is based upon a reasonable interpretation of the insurance policy. Wittmer, 864 S.W.2d at 890 (an insurer is "entitled to challenge a claim and litigate it if the claim is debatable on the law or the facts") (quotation and citation omitted). Although Assurance's interpretation of the policy was incorrect, it was not recklessly unreasonable. In fact, the Sixth Circuit had already adopted Assurance's reasoning in Advance Watch, holding that trade dress infringement does not constitute an "advertising injury" as defined in an identical CGL policy.
The question then is whether Assurance's alleged failure to communicate its denial can constitute bad faith under Kentucky law. This Court concludes that it cannot. Generally, a claim of bad faith requires proof of "`conduct that is outrageous, because of the defendant's evil motive or his reckless indifference to the rights of others.'" Guaranty Nat'l Ins. Co. v. George, 953 S.W.2d 946, 949 (Ky.1997) (quoting Wittmer, 864 S.W.2d at 890). In this case, there is no proof that Assurance's claims adjuster acted recklessly or with an evil motive. On the contrary, the uncontroverted evidence is that the adjuster read the Complaint, read the policy, requested a coverage opinion from the legal department and decided to deny the claim based on the advice he received. There is no evidence that the adjuster acted with reckless indifference when he allegedly failed to notify Pizza Magia that the claim had been denied. The adjuster knew that Ohio Casualty had already agreed to defend the claims; he, therefore, knew that Assurance's failure to defend could not effectively prejudice Pizza Magia's defense; and accordingly, Assurance's failure to defend could not have been reckless or intentionally harmful. Therefore, summary judgment on Pizza Magia's bad faith claim is appropriate.
The Court will enter an order consistent with this Memorandum Opinion.
NOTES
[1] In total, Papa John's First Amended Complaint alleged multiple causes of action against Pizza Magia and a number of its employees and officers including, trademark and trade dress infringement, service mark infringement, unfair competition, misappropriation, breach of non-competition and confidentiality agreements, tortious interference with contract, violations of Federal Computer Fraud and Abuse Act, and copyright infringement under the Federal Copyright Act. By Joint Stipulation entered on December 23, 2002, Pizza Magia stipulated that the Ohio Casualty policy was not applicable to and did not provide coverage for any of the foregoing causes of action except for the claims at issue in this case: violations of the Federal Copyright Act, violations of the Federal Trademark Act, and various violations of the Kentucky law of unfair competition. Pizza Magia and Ohio Casualty are only seeking indemnification from Assurance for those claims given that the language of Assurance's policy is identical to Ohio Casualty's.
[2] Papa John's asserted a claim against Pizza Magia for violating the Federal Copyright Act in Count VIII of the First Amended Complaint. That count alleged that Pizza Magia plagiarized Papa John's business documents and manuals. No one has argued that this claim triggers a duty to indemnify even though copyright infringement is expressly included in the policy's definition of "advertising injury." Presumably, this is because there is no clear causal connection between Pizza Magia's misappropriation of the business documents and advertising.
[3] See ShoLodge, Inc. v. Travelers Indem. Co. of Illinois, 168 F.3d 256 (6th Cir.1999) (interpreting Tennessee law); Weiss v. St. Paul Fire and Marine Ins. Co., 283 F.3d 790 (6th Cir. 2002) (Ohio law).
[4] For its part, a trademark is defined as "any word, name, symbol, or device, or any combination thereof" which is used or intended to be used by a person "in commerce . . . to identify and distinguish his or her goods. . . ." 15 U.S.C. § 1127.
[5] Justices Cooper and Roach dissent and their writing is actually helpful understanding the scope of the doctrine that the majority adopted.
[6] The doctrine of fortuity and the loss-in-progress doctrine address these concerns about risk and uncertainty in two different ways. The loss-in-progress doctrine bars coverage where the insured is aware that a specific loss is imminent or still occurring at the time the policy becomes effective. "It is the fact the causative agent can be identified, and that this agent increases the likelihood of loss substantially above what it was before these facts were known, that supports the use of the doctrine." 7 Couch on Insurance § 102:8. The fortuity doctrine, on the other hand, applies where the insured expects or intends the harm to occur, which substantially increases the risk of harm regardless of when the harm occurs. Accordingly, the Court does not mean to imply that the doctrines are equivalent or to imply that the fortuity doctrine could bar coverage in this case.
[7] Both defenses go to the basic "insurability" of the risk. The fact that the Kentucky Supreme Court in Aetna cited a federal case that defined the known loss doctrine demonstrates how closely the two doctrines are related.
[8] In Am. & Foreign Ins. Co., a contractor advised the insured-manufacturer that its products were malfunctioning. The insured denied liability. During this same time the insured purchased a new insurance policy. Then the contractor sued the insured. The Sixth Circuit found that the loss-in-progress doctrine barred coverage because, at the time of the policy's inception, the insured had subjective knowledge of damages that could underlie a legal claim against it even though no suit had yet been filed. Am. & Foreign Ins. Co., 441 F.3d at 346.
[9] There is some question as to whether Assurance had the right to cancel the policy during the 60-day period. Assurance argues that it did not have the right to cancel the policy under the language actually employed in the policy. However, the Court need not address that question because the Court finds that Assurance's failure to cancel the contract did not constitute a waiver in any event.
|
103 F.3d 113
George L. Koynokv.Estate of Mary C. Koynok, Deceased, Mildred H. Antonich,Executrix, Mario P. Melucci, Mary P. Portis, NathanSchwartz, S.J. Orphans' Court, Allegheny County,Pennsylvania Department of Revenue, Inheritance Tax Division
NO. 96-3274
United States Court of Appeals,Third Circuit.
Nov 19, 1996
Appeal From: W.D.Pa., No. 96-CV-00169,
Cindrich, J.
1
AFFIRMED.
|
104 F.3d 356
NOTICE: THIS SUMMARY ORDER MAY NOT BE CITED AS PRECEDENTIAL AUTHORITY, BUT MAY BE CALLED TO THE ATTENTION OF THE COURT IN A SUBSEQUENT STAGE OF THIS CASE, IN A RELATED CASE, OR IN ANY CASE FOR PURPOSES OF COLLATERAL ESTOPPEL OR RES JUDICATA. SEE SECOND CIRCUIT RULE 0.23.Maureen O'CONNOR, Plaintiff-Appellant,v.VIACOM INC./VIACOM INTERNATIONAL INC., Defendant-Appellee.
No. 96-7641.
United States Court of Appeals, Second Circuit.
Dec. 16, 1996.
APPEARING FOR DEFENDANT-APPELLEE: MAUREEN O'CONNOR, pro se, Bronx, NY. KENNETH A. MARGOLIS, Kauff, McClain & McGuire (David A. Lebowitz, of counsel), New York, NY.
PRESENT: VAN GRAAFEILAND, JACOBS, and CALABRESI, Circuit Judges.
1
This cause came on to be heard on the transcript of record from the United States District Court for the Southern District of New York, and was argued pro se.
2
ON CONSIDERATION WHEREOF, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the judgment of the district court is AFFIRMED.
3
Maureen O'Connor appeals pro se from a judgment of the District Court for the Southern District of New York (McKenna, J.) granting summary judgment to her former employer, Viacom Inc., and dismissing O'Connor's Title VII and ADEA complaint for failure to establish that the stated reasons for her termination were pretextual.
4
O'Connor, who classifies her ancestry as "South of Ireland-Irish," worked as a "producer reporting analyst" at Viacom from 1985 until her termination on February 15, 1991. She was hired by the then-supervisor of her department, and received two performance evaluations of "competent" (the middle ranking on a five-level scale). The first evaluation, dated December 1986, indicated that she needed improvement in typographical accuracy and punctuality. The second, dated December 1987, recited that her prior deficiencies had been "fully improved upon."
5
O'Connor began to receive more critical evaluations after Carolyn Moore was hired in 1987 as the new department manager. Moore's duties included the preparation of performance evaluations, which were subject to review by Janis Millerman, a vice-president of Viacom. Millerman had hired Moore shortly after her duties were adjusted to include greater responsibility for the Producer Reporting Department.
6
O'Connor's evaluations in December 1988 and December 1989 characterized her performance as merely "adequate" (the second-lowest ranking on the five-level scale). These evaluations specified that O'Connor lacked judgment, punctuality, and technical competence, and that she required significant supervision. In her May 1990 evaluation, O'Connor received a rating of "needs improvement."1 O'Connor responded in a series of letters, arguing, inter alia, that she had expected an excellent review because of the extra work she had performed and her significant quantity of overtime; that another employee had received a promotion over her, even though he was unable to complete his work on time and made an error in a report which O'Connor had caught; and that she felt she was being reviewed more harshly than her co-workers.
7
In July 1990, Moore and Millerman sent O'Connor a memorandum listing numerous specific problems with her work, and indicating that her overall performance needed improvement. In January 1991, a final warning was issued, reiterating O'Connor's problems and her failure to remedy them. On February 15, 1991, Moore sent O'Connor a termination letter, which stated that she lacked efficient planning and organizational skills, and that her difficulties in using her computer properly demonstrated an inability to meet the requirements of her position. O'Connor was 55 years old at that time. After O'Connor's termination, her position was upgraded to "Senior Producer Reporting Analyst," and the salary was increased by half. Moore and Millerman hired Joe DiGeso, a 24 year old who had had experience with a variety of computer programs and was able to prepare complex reports using the programs.
8
On April 13, 1993, O'Connor filed a pro se complaint in the Southern District of New York. O'Connor's complaint, which was amended twice, initially alleged that her termination from Viacom violated Title VII. O'Connor alleged that her supervisors, Moore and Millerman, had 1) evaluated her unfairly in relation to non-Irish employees, 2) refused to grant her raises or promotions because she was Irish, 3) terminated her because she was Irish and because she had filed a charge with the New York State Department of Human Rights, and 4) harassed her by making derogatory remarks concerning her national origin. The second amendment to the complaint added an age discrimination claim under the ADEA, alleging that Moore had 1) conspired before joining the Producer Reporting Department to terminate O'Connor, 2) intentionally downgraded O'Connor's performance evaluations and used a different evaluation method than the one used for younger employees, and 3) promoted younger staff members who were no more qualified or competent than O'Connor.
9
At her deposition, O'Connor testified that Millerman, who is not Irish, told her in 1989 that she would not go to the St. Patrick's Day parade because the Irish were "like animals." O'Connor also alleged that Moore, who is of mixed Irish, Scottish, and English descent, called her a "mick" on two occasions: once after handing her a low performance evaluation and again after handing her a final warning. O'Connor did not discuss these remarks with a superior or anyone else.
10
On March 14, 1995, Viacom moved for summary judgment, on the grounds that 1) O'Connor had failed to make out a prima facie case of national origin and age discrimination, 2) Viacom had articulated legitimate, nondiscriminatory reasons for O'Connor's discharge, 3) O'Connor had offered no evidence to show that the decision to terminate her for poor performance was a pretext for intentional discrimination, and 4) O'Connor had failed to establish a prima facie case of retaliation.
11
The district court filed a Memorandum and Order on April 23, 1996, granting Viacom's motion for summary judgment. The court proceeded on the assumption that O'Connor had established a prima facie case of national origin discrimination, noted that Viacom had come forward with evidence of a non-discriminatory explanation for the adverse employment action, and held that O'Connor had failed to show that the explanation was pretextual. The court also found that O'Connor had not supported her age discrimination claim. This appeal followed. On August 8, 1996, we denied a motion by Viacom for summary affirmance.
12
On appeal, O'Connor argues that the district court improperly granted summary judgment on her national origin and age discrimination claims because 1) she made out a prima facie case of discrimination, and 2) Viacom's explanation for her termination was pretextual.
13
We review a grant of summary judgment de novo, viewing the evidence in the light most favorable to the non-moving party and drawing all reasonable inferences in her favor. Aslanidis v. United States Lines, Inc., 7 F.3d 1067, 1072 (2d Cir.1993). However, the "mere existence of a scintilla of evidence in support of the [non-movant's] position" is insufficient to warrant a grant of summary judgment; a juror must be able to "reasonably find" for the non-movant. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). We therefore must determine whether a reasonable factfinder could find that O'Connor had shown that Viacom's explanation for the termination was pretextual. Because we believe that no reasonable factfinder could do so, we need not address the issue of whether O'Connor made out a prima facie case of discrimination.
14
The record is replete with evidence indicating O'Connor's poor job performance. A jury may reject employer evaluations as justification for termination, see Kirschner v. Officer of the Comptroller, 973 F.2d 88, 94-95 (2d Cir.1992), but O'Connor had received two mediocre performance reviews even before Moore and Millerman became her supervisors.
15
The only grounds offered for attributing O'Connor's termination to her ancestry are the three isolated remarks made by Moore and Millerman. We conclude that these remarks are insufficient to show that Viacom's legitimate explanation for O'Connor's termination was a pretext.
16
Stray workplace remarks, without a clearly demonstrated nexus to the adverse employment action at issue, do not alone suffice to defeat a motion for summary judgment. See Rush v. McDonald's Corp., 966 F.2d 1104, 1116 (7th Cir.1992); Gagne v. Northwestern Nat'l Ins. Co., 881 F.2d 309, 314-16 (6th Cir.1989); see also Price Waterhouse v. Hopkins, 490 U.S. 228, 251 (1989) (plurality opinion); id. at 277 (O'Connor, J., concurring). O'Connor has shown no connection whatsoever between Millerman's comment on the St. Patrick's Day parade and O'Connor's termination. O'Connor therefore offers no evidence to suggest that Millerman's role in the adverse evaluations, the final warning, and the termination decision was motivated by racial animus. As to Moore's use of the term "mick," Moore denies it and Viacom does not concede that it would be a slur if used. For present purposes, we assume that Moore used the term, and that it is a slur. But the sole nexus to O'Connor's termination is that O'Connor heard the term once after Moore handed O'Connor a negative evaluation and again after handing O'Connor the final warning. However, the required nexus is not established solely by proximity in time. We agree with the Seventh Circuit that such stray remarks cannot defeat summary judgment in favor of an employer unless they are both proximate and related to the employment decision in question. See Rush, 966 F.2d at 1116; McCarthy v. Kemper Life Ins. Co., 924 F.2d 683, 686-87 (7th Cir.1991).
17
We have examined O'Connor's remaining contentions, and notwithstanding her powerful oral argument, find them to be without merit. The judgment of the district court is AFFIRMED.
1
Sometime in 1990, the steps of the scale were renamed. "Needs improvement" under the new scale, like "adequate" under the old scale, was the second-lowest ranking on a five-level scale
|
654 S.E.2d 190 (2007)
LAWYERS TITLE INSURANCE CORPORATION
v.
NEW FREEDOM MORTGAGE CORPORATION.
No. A07A1070.
Court of Appeals of Georgia.
November 9, 2007.
*191 Nelson, Mullins, Riley & Scarborough, Jeffrey L. Mapen, Kenneth L. Millwood, Atlanta, for appellant.
Smith, Gambrell & Russell, Thomas M. Barton, Aaron P.M. Tady, Atlanta, for appellee.
BERNES, Judge.
New Freedom Mortgage Corporation filed a contractual indemnification claim against Lawyers Title Insurance Corporation. The jury found in favor of New Freedom, and Lawyers Title appeals, challenging the jury instructions and the exclusion of certain evidence. For the reasons that follow, we reverse.
This Court recently issued a decision in a related case involving the same parties and similar facts and issues. See Lawyers Title Ins. Corp. v. New Freedom Mtg. Corp., 285 Ga.App. 22, 645 S.E.2d 536 (2007), cert. denied, New Freedom Mtg. Corp. v. Lawyers Title Ins. Corp., 2007 Ga. LEXIS 562 (July 12, 2007). In that case and the instant case, Lawyers Title issued a lenders title insurance policy to New Freedom in connection with a residential loan closing. Lawyers Title also issued an indemnification agreement to New Freedom as New Freedom required for all loans known as a "closing protection letter" ("CPL"). The CPL obligated Lawyers Title to indemnify New Freedom for actual losses incurred in connection with residential real estate closings arising out of, inter alia, (1) the issuing agent's or approved attorney's failure to comply with written closing instructions regarding the payment or collection of funds, or (2) "[f]raud or dishonesty of the [i]ssuing [a]gent or [a]pproved attorney in handling [New Freedom's] funds or documents in connection with such closings." The parties concede that the CPL was in effect and that its terms applied to the closing.
Construed in favor of the verdict, the evidence adduced at trial showed that the property sale at issue involved mortgage fraud with a significantly inflated property appraisal. The buyer defaulted on the loan, resulting in the foreclosure and sale of the property for significantly less than the appraised value as listed on the HUD-1 settlement statement, and this caused substantial losses to New Freedom. The principal issue at trial was whether the actions of the closing attorney involved in the sale of the property at the inflated price a lawyer with Brochstein & Bantley required Lawyers Title to indemnify New Freedom for its losses under the CPL. The jury found that it did and awarded $308,242.55 to New Freedom. This appeal followed.
1. Lawyers Title contends that the trial court's charge to the jury regarding misrepresentation and concealment requires reversal. We agree.
The trial court charged the jury that
Misrepresentation of a material fact, if acted on by the opposite party, constitutes legal fraud where such misrepresentation whether such misrepresentation was intentional or not. If there is a willful misrepresentation of a material fact which was made to induce another person to act and caused that person to act and the person is injured, then the person who is injured has a right of action. Mere concealment of a fact, unless done in a manner to deceive and mislead, will not support an action. In all cases of deceit, knowledge of the falsehood constitutes an essential element. However, fraud or reckless misrepresentation of facts as true, which the party may not know to be false, if intended to deceive, is equivalent to a knowledge of a falsehood.
(Emphasis supplied.)
The trial court's charge is substantially the same as the misrepresentation charge given in the previous case, where we concluded that the charge was an inapplicable statement of the law. See Lawyers Title Ins. Corp., 285 Ga.App. at 24-27(1), 645 S.E.2d 536. Specifically, we held in that case that the statement in the charge that fraud could be established without proof of fraudulent intent was not tailored to the law and evidence, since the language of the CPL required proof of actual, rather than merely constructive, fraud. See id. The same reasoning applies here. Accordingly, we conclude *192 that the trial court's misrepresentation charge was legally erroneous.
New Freedom nonetheless argues that, although Lawyers Title objected to the misrepresentation charge, it waived its right to appeal this issue by failing to specify the grounds of its objection as required by OCGA § 5-5-24(a).[1] See Queen v. Lambert, 259 Ga.App. 385, 388(3), 577 S.E.2d 72 (2003). However, we must "consider and review erroneous charges where there has been a substantial error in the charge which was harmful as a matter of law, regardless of whether objection was made hereunder or not." OCGA § 5-5-24(c). "Substantial errors in the charge on the essential elements are usually harmful as a matter of law so as to invoke OCGA § 5-5-24(c)." Phelps v. State, 192 Ga.App. 193, 195(1), 384 S.E.2d 260 (1989), citing Foskey v. Foskey, 257 Ga. 736, 737, 363 S.E.2d 547 (1988). Likewise, erroneous jury charges on legal principles that go to the "crux" of the appellant's case are considered substantial and harmful as a matter of law. See Pearson v. Tippmann Pneumatics, 281 Ga. 740, 744(3), 642 S.E.2d 691 (2007).
Here, the trial court erroneously charged the jury that an essential element of actual fraud fraudulent intent did not have to be proven. And, the question of fraudulent intent went to the crux of Lawyers Title defense that it was not required to indemnify New Freedom under the language of the CPL. Specifically, Lawyers Title presented evidence that the Brochstein lawyer who handled the closing did not act with fraudulent intent, did not collude with the other wrongdoers, and complied with New Freedom's written closing instructions in good faith as he reasonably understood them. In contrast, New Freedom presented evidence that the Brochstein lawyer colluded with others to commit mortgage fraud, intentionally disregarded the written closing instructions in order to hide the fraud, and misrepresented information on the HUD-1 settlement statement for the same purpose. Under these circumstances, where the erroneous charge concerned legal principles central to Lawyers Title's defense, we conclude that the trial court's charge was substantially erroneous and harmful as a matter of law. See, e.g., Lawrence v. State, 206 Ga.App. 404-405(1), 425 S.E.2d 411 (1992) (erroneous charge that element of intent did not have to be proven constituted substantial error requiring reversal); Jackson v. State, 205 Ga. App. 513, 514-515(3), 422 S.E.2d 673 (1992) (same).
2. In five additional enumerations, Lawyers Title challenges the trial court's instructions to the jury regarding causation and confidential relationship, and argues that the trial court erred in excluding evidence of any other cause of New Freedom's loss in addition to that involving the closing attorney. Because we previously considered and rejected these arguments in Lawyers Title Ins. Corp., 285 Ga.App. at 27-33(2)-(4), 645 S.E.2d 536 we decline to readdress them here.
3. We will, however, address Lawyers Title's remaining enumeration of error because it is likely to recur during the retrial of the case. Lawyers Title contends that the trial court erred in instructing the jury that New Freedom "did not have a duty to mitigate or lessen its damages." Notably, Lawyers Title does not maintain that the instruction was an incorrect statement of the law. Instead, it argues that it was not tailored to the evidence and therefore "confused the issues in the case and injected into the case issues not made by the pleadings or the evidence, harming [Lawyers Title]." We disagree.
After the closing, New Freedom assigned the loan to Impac Funding Corporation. After the borrower defaulted on the loan and the property had been foreclosed, New Freedom reimbursed Impac for the deficiency balance remaining on the loan after the property was sold. Before trial, the court ruled in limine that evidence of New Freedom's failure to mitigate its damages was irrelevant and inadmissible. However, Lawyers Title *193 introduced evidence at trial that the property was sold for less than it was worth.
A trial court does not err in giving a jury instruction that accurately states the law and is supported by even slight evidence. See Polite v. State, 273 Ga.App. 235, 241-242(8), 614 S.E.2d 849 (2005); Ware v. Henry County Water & Sewerage Auth., 258 Ga. App. 778, 784(7), 575 S.E.2d 654 (2002). Because the evidence at trial suggested that New Freedom's damages might have been inflated, we find no error in the trial court's mitigation instruction to the jury. See Ware, 258 Ga.App. at 784(7), 575 S.E.2d 654; Kroger Co. v. Strickland, 248 Ga.App. 613, 616(3), 548 S.E.2d 375 (2001).
Judgment reversed.
BLACKBURN, P.J., and RUFFIN, J., concur.
NOTES
[1] OCGA § 5-5-24(a) provides in part that "in all civil cases, no party may complain of the giving or the failure to give an instruction to the jury unless he objects thereto before the jury returns its verdict, stating distinctly the matter to which he objects and the grounds of his objection."
|
43 F.3d 674
Woodard (Claude)v.Groose (Michael)
NO. 94-1360
United States Court of Appeals,Eighth Circuit.
May 17, 1994
Appeal From: W.D.Mo., No. 93-4538-CV-C-5
1
AFFIRMED.
|
Case: 12-1630 Document: 39 Page: 1 Filed: 12/10/2012
NOTE: This order is nonprecedential.
United States Court of Appeals
for the Federal Circuit
__________________________
Q. I. PRESS CONTROLS, B.V.,
Appellant,
v.
DAVID J. KAPPOS, DIRECTOR,
UNITED STATES PATENT AND TRADEMARK
OFFICE,
Appellee,
v.
QUAD/TECH, INC.,
Cross-Appellant.
__________________________
2012-1630, -1631
(Reexamination No. 95/000,526)
__________________________
Appeal from the United States Patent and Trademark
Office, Board of Patent Appeals and Interferences.
__________________________
ON MOTION
__________________________
ORDER
Q.I. Press Controls, B.V. moves for a 60-day extension
of time to file its principal brief.
Case: 12-1630 Document: 39 Page: 2 Filed: 12/10/2012
Q. I. PRESS CONTROLS V. KAPPOS 2
Upon consideration thereof,
IT IS ORDERED THAT:
The motion is granted. Q.I. Press Controls, B.V.’s
principal brief is due January 28, 2013. No further exten-
sions should be anticipated.
FOR THE COURT
/s/ Jan Horbaly
Jan Horbaly
Clerk
s21
|
515 F.Supp. 1310 (1981)
HARNISCHFEGER CORPORATION, a Delaware Corporation, and Koehring Company, a Wisconsin Corporation, and The Warner & Swasey Company, an Ohio Corporation, Plaintiffs,
v.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, and Douglas M. Costle, the Administrator of the Environmental Protection Agency, Defendants.
Civ. A. No. 79-C-179.
United States District Court, E. D. Wisconsin.
June 9, 1981.
*1311 Andrew O. Riteris and K. Thor Lundgren, Milwaukee, Wis., for plaintiffs Harnischfeger and Koehring; Toni Lee Bonney, Michael, Best & Friedrich, Milwaukee, Wis., of *1312 counsel; George B. Knight, Milwaukee, Wis., of counsel for plaintiff Harnischfeger; Charles W. Walton, and Ralph C. Camp, Brookfield, Wis., of counsel for plaintiff Koehring.
Ridgway M. Hall, Jr., and David R. Case, Crowell & Moring, Washington, D. C., for plaintiff Warner & Swasey; Woods King, Jr., Cleveland, Ohio, of counsel.
Joseph P. Stadtmueller, U. S. Atty., by Charles H. Bohl, Asst. U. S. Atty., Milwaukee, Wis.; Raymond W. Mushal, Atty., Pollution Control Section, Land and Natural Resources Div., Dept. of Justice, Samuel I. Gutter, Atty., Air, Noise & Radiation Div., E. P. A., Washington, D. C., for defendants.
REYNOLDS, Chief Judge.
This is an action for declaratory relief arising under the Noise Control Act of 1972, 42 U.S.C. §§ 4901-4918, and certain of the regulations enacted by the defendant Administrator of the Environmental Protection Agency ("EPA"), specifically, 40 C.F.R. Part 205, Subparts A and B, dealing with transportation equipment noise emission controls.
The plaintiffs are machine manufacturers. On February 9, 1979, plaintiffs were ordered by the defendant EPA, pursuant to 40 C.F.R. § 205.54, to perform noise emission control tests on certain types of mobile construction equipment manufactured by them. The plaintiffs seek a declaration that the types of equipment at issue are not subject to regulation under 40 C.F.R. Part 205. The defendants have counterclaimed, pursuant to 42 U.S.C. § 4910(c), for enforcement of the test orders.
The action is presently before the court on cross-motions for summary judgment. For the following reasons the plaintiffs' motion will be granted and the defendants' motion will be denied.
The Regulatory Scheme
Subpart B of 40 C.F.R. Part 205 is entitled "Medium and Heavy Trucks." Section 205.50 provides that the subpart is applicable to:
"(a) * * * any vehicle which has a gross vehicle weight rating (GVWR) in excess of 10,000 pounds, which is capable of transportation of property on a highway or street and which meets the definition of the term `new product' in the Act.
"(b) The provisions of the subpart do not apply to highway, city, and school buses or to special purpose equipment which may be located on or operated from vehicles. * * * For purposes of this regulation special purpose equipment includes, but is not limited to, construction equipment, * * *."
The definitional section, 205.51, provides in relevant part that:
"(29) `Vehicle' means any motor vehicle, machine or tractor, which is propelled by mechanical power and capable of transportation of property on a street or highway and which has a gross vehicle weight rating in excess of 10,000 pounds and a partially or fully enclosed operator's compartment."
The section also provides that:
"(12) `Capable of Transportation of Property on a street or highway' means that the vehicle:
"(i) Is self propelled and is capable of transporting any material or fixed apparatus, or is capable of drawing a trailer or semi-trailer;
"(ii) Is capable of maintaining a cruising speed of at least 25 mph over level, paved surface;
"(iii) Is equipped or can readily be equipped with features customarily associated with practical street or highway use, such features including but not being limited to: A reverse gear, and a differential, fifth wheel, cargo platform or cargo enclosure, and
"(iv) Does not exhibit features which render its use on a street or highway impractical, or highly unlikely, such features including, but not being limited to, tracked road means, an inordinate size or features ordinarily associated with combat or tactical vehicles."
Plaintiffs manufacture construction equipment which is designed to be mobile *1313 both at the construction site and between sites on the highway. They concede that their equipment at issue in this case meets the specifications of 40 C.F.R. § 205.51(12)(ii)-(iv), but argue that it is not "capable of transporting any material or fixed apparatus" within the meaning of subsection (i), because the equipment is designed as a unit and the construction portion is not transported on the vehicle portion, but the two are instead an integral machine. Plaintiffs also argue that 40 C.F.R. Part 205 is intended to apply only to trucks. Defendants argue that the plaintiffs' equipment consists of a usual nonmobile piece of construction equipment mounted on a mobile frame, which is a vehicle capable of transporting a fixed apparatus, i. e., the construction equipment. Defendants also argue that since plaintiffs' equipment fits literally within the definitions contained in Subpart B of Part 205, the Court should not look beyond the language of the regulations to determine their applicability.
Jurisdiction
A threshold issue in this case to which the parties have devoted much attention is the court's subject matter jurisdiction to hear the case. Both sides agree that the court has general federal question jurisdiction under 28 U.S.C. § 1331 to decide whether the regulations on their face apply to plaintiffs' products. Plaintiffs argue in addition, and defendants contest, that the court has jurisdiction under § 1331 and the Declaratory Judgment Act, 28 U.S.C. § 2201, to decide whether the defendant Administrator complied with the statutory procedure set forth in 42 U.S.C. § 4904 and with the Administrative Procedure Act, 5 U.S.C. § 701 et seq., prior to developing and promulgating the regulations. The distinction is not significant for purposes of deciding this case.
Section 4915 of Title 42 U.S.C. provides in part that:
"(a) A petition for review of action of the Administrator of the Environmental Protection Agency in promulgating any standard or regulations under section 4905 * * * may be filed only in the United States Court of Appeals for the District of Columbia Circuit, * * *. * * * Action of either Administrator with respect to which review could have been obtained under this subsection shall not be subject to judicial review in civil or criminal proceedings for enforcement."
Section 4905 sets forth the types of noise emission standards for which regulations shall be proposed and the procedure for publication and promulgation of the proposed regulations. Under subsection (a)(1) the Administrator is required to publish proposed regulations for each product
"(A) which is identified (or is part of a class identified) in any report published under section 4904(b)(1) of this title as a major source of noise[.]"
Section 4904 sets forth the procedure which the Administrator shall follow in identifying major noise sources:
"(a)(1) The Administrator shall * * * develop and publish criteria with respect to noise. Such criteria shall reflect the scientific knowledge most useful in indicating the kind and extent of all identifiable effects on the public health or welfare which may be expected from differing quantities and qualities of noise.
* * * * * *
"(b) The Administrator shall * * * compile and publish a report or series of reports (1) identifying products (or classes of products) which in his judgment are major sources of noise, and (2) giving information on techniques for control of noise from such products, including available data on the technology, costs, and alternative methods of noise control. * * *"
In Chrysler Corporation v. Environmental Protection Agency, 600 F.2d 904, 911 (D.C. Cir.1979), the Court noted that § 4915 precludes review anywhere but in the D. C. Circuit of actions taken by the Administrator under § 4905, including actions
"* * * that although not expressly designated as a subject of review, * * * would be a reviewable action because it was taken in the course of and was a necessary prerequisite to promulgation of final * * * [regulations]. * * *" *1314 Thus designation of a source as a "significant contributor" to pollution under the Clean Air Amendments is a necessary prerequisite to the promulgation of final emission standards. 600 F.2d at 911. Similarly, it would seem that designation of products which are a major source of noise under § 4904 is a necessary prerequisite to promulgation of noise emission standards under § 4905 and, therefore, that review of such designations is precluded except in the D. C. Circuit. This Court, therefore, cannot excuse the plaintiffs from complying with otherwise applicable regulations on the ground that the Administrator failed to comply with all of the preconditions to enactment of the regulations set forth in §§ 4904 and 4905.
On the other hand, jurisdiction over enforcement actions lies in the district courts. Chrysler Corporation v. Environmental Protection Agency, supra; Atlas Copco, Inc. v. EPA, 642 F.2d 458, 14 ERC 1904 (D.C. Cir., 1980). Plaintiffs' challenge to the applicability of the regulations arises out of the enforcement orders issued to them by the EPA.
"Only by straining the meaning of the words `approving' and `promulgating' could it be said that challenges to interpretations or applications of EPA regulations constitute attacks on `the Administrator's action in approving or promulgating' any * * * [regulation]. * * *" Utah Power & Light Company v. Environmental Protection Agency, 553 F.2d 215, 218 n. 14 (D.C.Cir.1977).
An administrative regulation, like a statute, is subject to the normal rules of statutory construction and is to be construed to effectuate the intent of the enacting body. Rucker v. Wabash Railroad Company, 418 F.2d 146, 149 (7th Cir. 1969). Thus its language should be reviewed in light of the purpose which it was intended to achieve, Atchison, Topeka and Santa Fe Railway Company v. United States, 617 F.2d 485, 490 (7th Cir. 1980), and in so doing a Court may consider both the circumstances under which it was enacted and the object sought to be accomplished by the enacting body. United States v. Curtis-Nevada Mines, Inc., 611 F.2d 1277 (9th Cir. 1980). An agency's interpretation of a statute or regulation which it helped to develop is also persuasive evidence of the meaning of the statute or regulation. Miller v. Youakim, 440 U.S. 125, 99 S.Ct. 957, 59 L.Ed.2d 194 (1979); Quern v. Mandley, 436 U.S. 725, 98 S.Ct. 2068, 56 L.Ed.2d 658 (1978). Thus the procedure followed by the Administrator in promulgating the regulations set forth in 40 C.F.R. Part 205 is relevant to determining the intended scope of the regulations, and subsequent actions taken by the Administrator with regard to enforcement of the regulations are also relevant as evidence of his interpretation of their scope. Consideration of those two factors in this case leads to the conclusion that the regulations do not apply to the plaintiffs' mobile construction equipment.
The Applicability of 40 C.F.R. Part 205
According to the enforcement orders issued by the EPA, at issue in this case are certain cranes and excavators manufactured by Harnischfeger with model numbers T-145, T-150, T-180, and T-200; cranes and excavators manufactured by Koehring with Bantam model numbers T-588, T-888, T-644, and T-744, and Lorain model numbers MCH 275, MC 35H, and MCH 350; and excavators manufactured by Warner & Swasey with Gradeall model numbers G-440 and G-660.
Due to the hybrid character of the equipment at issue, it is not clear from the face of the regulations contained in 40 C.F.R. Part 205 whether they were intended to apply to the "vehicles" at issue in this case. The Title of Subpart B of the regulations states that they apply to "medium and heavy trucks," although the body of the regulations refers to "vehicles" meeting certain specifications. Defendants' enforcement orders are premised on the conclusion that plaintiffs' equipment constitutes vehicles rather than trucks, and defendants have admitted in the brief filed June 6, 1980, at page 7 n. 14, that "the term `truck' * * * could carry different connotations." 40 C.F.R. § 205.50(a) states that the regulations *1315 are applicable to any vehicle having a certain "gross vehicle weight rating (GVWR)." GVWR is defined in § 205.51(15) as "the value specified by the manufacturer as the loaded weight of a single vehicle." According to affidavits filed by employees of the plaintiffs, because the equipment at issue is designed and manufactured as integrated machinery which does not carry a load, the equipment is not given a loaded weight value by the manufacturer but rather is given a "gross vehicle weight" (GVW), which is a term of art having a connotation distinct from GVWR in the industry. (See, e. g., Robert L. Greivell affidavit filed June 9, 1980, at ¶ 3.) In order to be a qualifying vehicle, the vehicle must also be "capable of transportation of property," 40 C.F.R. § 205.50(a), which means that it must be "capable of transporting any material or fixed apparatus," 40 C.F.R. § 205.51(12)(1). Defendants maintain that plaintiffs' equipment consists of a chassis and frame "capable of transporting" construction equipment. (Guttar affidavit filed September 21, 1979.) Plaintiffs maintain that their equipment is designed and manufactured as a single, integrated mobile machine which is not capable of carrying any other apparatus. (Greivell affidavit filed June 9, 1980, ¶ 3; Wacht affidavit filed June 9, 1980, ¶ 3.)
If an ambiguity exists in the language of a statute or regulation, or if a literal application of the language would thwart the purpose of the enacting body, the Court may look beyond the language to determine intent. United States v. Tex-Tow, Inc., 589 F.2d 1310 (7th Cir. 1978). An examination of the legislative history of these regulations and of the practical construction given to them after enactment by those charged with their administration leads to the conclusion that the regulations were not intended to cover plaintiffs' equipment.
During 1973 and 1974 the EPA hired outside consultants to study and identify major sources of noise. (Plaintiffs' Appendix II, Tabs 4-7.) The studies resulted in several reports, including a final separate report dated October 30, 1974, on "The Technology and Cost of Quieting Medium and Heavy Trucks." (Plaintiffs' Appendix II, Tab 6.) None of the plaintiffs are included in the list of manufacturers whose vehicles were studied. On February 27, 1974, the EPA published an advance notice of proposed rulemaking "for new medium and heavy duty trucks." 39 FR 7595 (Appendix II, Tab 1.) On June 21, 1974, the EPA published an "Identification of Products as Major Sources of Noise." 39 FR 22297 (Appendix II, Tab 2.) Transportation vehicles, including medium and heavy trucks over 10,000 GVWR, were identified separately from construction equipment. On October 30, 1974, the proposed regulations for medium and heavy trucks were published, identifying their subject for the first time by use of the word "vehicle." 39 FR 38338 (Appendix II, Tab 3.) On April 13, 1976, following several public hearings, the final regulations were published. 41 FR 15538 et seq. In a background document to the regulations issued by the EPA in March 1976, plaintiffs are once again not mentioned in the list of truck manufacturers whose products were studied. (Appendix II, Tab 10, pages 2-9.)
Subsequent to the promulgation of the regulations, the EPA on November 29, 1977, published a notice of interim warranty available for use by "[a]ll vehicle manufacturers subject to the truck regulation * *." 42 FR 60741 (Appendix II, Tab 11.) The notice states that "[c]opies of the letter presented below have been sent to all vehicle manufacturers subject to 40 CFR Part 205, Subpart B, * * *." None of the plaintiffs is on the list of manufacturers, nor were they notified in any other manner of the interim warranty. (Gano, Greivell, and Wacht affidavits filed June 9, 1980.)
In the meantime, on May 28, 1975, the EPA published a separate "Interim Identification of Products as Major Sources of Noise." 40 FR 23105 (Appendix II, Tab 9.) Included on the list of products identified is construction/industrial equipment, and within that category mobile cranes are listed. The notification made reference to the *1316 proposed medium and heavy truck regulations and stated that the products now listed were among the "other candidates for possible future identification" as major sources of noise. 40 FR 23106. It also specifically identified earth moving equipment (i. e., excavators) as a major source of noise. 40 FR 23107.
In either late 1976 or 1977, all of the plaintiffs were contacted by the EPA and asked for assistance in gathering information on earth moving equipment for use in drawing up proposed noise emission control regulations. At various construction equipment trade association meetings held during 1977, representatives of the EPA appeared to discuss with the manufacturers the standards to be used in the proposed regulations. A background report was completed for the EPA in December 1977. (Appendix II, Tab 12.) In April 1978, the parties were notified that due to the reassignment of the person in charge, the rulemaking procedure for earth moving equipment was being temporarily suspended. To date, it has not been resumed and no proposed regulations have been promulgated for earth moving equipment or for mobile cranes. (Griffin affidavit filed July 9, 1980, ¶¶ 4-17 and 19; supplemental Griffin affidavit; Greivell affidavit filed June 9, 1980, ¶ 7; Wacht affidavit filed June 9, 1980, ¶ 7.)
In opposition to the legislative history the defendants have submitted affidavits filed September 24, 1979 and July 18, 1980, signed by Mr. Henry E. Thomas IV, the Director of the Standards and Regulations Division of the Office of Noise Abatement and Control of the EPA, stating that when promulgated the medium and heavy truck regulations were intended to apply to plaintiffs' mobile construction equipment while in its "transportation mode," while the subsequent regulations which were never completed were intended to apply to plaintiffs' equipment in its "operational on-site" or nontransportation mode. Defendants also point to the enforcement orders and preceding correspondence between the EPA and the parties as evidence of the agency's intent that the regulations cover plaintiffs' equipment.
The affidavits and other materials submitted by the EPA are singularly unpersuasive in light of the substantial amount of contrary objective evidence contained in the legislative history, itself created for the most part by the EPA, which the plaintiffs have submitted. While the interpretation given to a regulation by the agency charged with its enforcement is generally persuasive of the meaning of the regulation, that is so only if the interpretation "has a reasonable basis in law." American Trucking Associations, Inc. v. United States, 602 F.2d 444, 450 (D.C.Cir.1979), cert. denied 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420. The EPA's current interpretation of the regulations at issue in this case does not have a reasonable basis. Furthermore, its current interpretation is not consistent with its own prior interpretation of the regulations during the rulemaking proceedings and subsequent to them in its identification of truck manufacturers, not including the plaintiffs, subject to the regulations, and in its initiation of separate rulemaking proceedings for construction equipment, including mobile cranes and excavators. There is no evidence in the legislative history to support defendants' current differentiation of the transportation and nontransportation modes of plaintiffs' equipment. In sum, a Court is not obliged to, and in this case will not, defer to an agency's administrative construction of a regulation or statute if there are, as there are in this case, compelling reasons why the agency's construction is wrong. Atchison, Topeka and Santa Fe Railway Company v. United States, 617 F.2d 485 (7th Cir. 1980).
ORDER
For the foregoing reasons,
IT IS ORDERED that the plaintiffs' motion for summary judgment is granted, and the defendants' motion for summary judgment is denied.
IT IS FURTHER ORDERED that judgment be entered dismissing the defendants' counterclaim with prejudice; declaring that the regulations contained in Subparts A and *1317 B of 40 C.F.R. Part 205 are inapplicable to the mobile construction equipment which the plaintiffs manufacture; and enjoining the defendants, their agents, and employees from ordering plaintiffs to comply with any of the provisions of 40 C.F.R. Part 205 with respect to plaintiffs' mobile construction equipment identified in the attachments to their amended complaint.
|
433 A.2d 412 (1981)
Roy D. FRANZOSE
v.
ALCO PACKING COMPANY and St. Paul Fire and Marine Insurance Company.
Supreme Judicial Court of Maine.
Argued June 11, 1981.
Decided August 11, 1981.
*413 Harry N. Starbranch (orally), Augusta, for plaintiff.
Gross, Minsky, Mogul & Singal, P. A., George Z. Singal (orally), Bangor, for defendant.
Before McKUSICK, C. J., WERNICK, GODFREY, ROBERTS and CARTER, JJ., and DUFRESNE, A. R. J.
DUFRESNE, Active Retired Justice.
Employee Roy Franzose appeals a pro forma judgment of the Superior Court, Kennebec County, affirming the denial of his petition for award of workers' compensation. The Workers' Compensation Commission found that any disability from which the employee may be suffering is not work related. The single issue presented is whether competent evidence supports the Commission's finding. Because there is such evidence, we affirm the judgment.
The employee is a tractor-trailer driver for Alco Packing Company. On October 21, 1977, he was in Lyndonville, Vermont, loading calves onto a truck for his employer. The animals, which weighed between 80 and 150 pounds, had to be grasped by the employee around the neck and hind legs, lifted above his chest, and thrown into one of the truck's side doors. In the course of loading, the employee suddenly felt severe pain in his chest and left arm accompanied by shortness of breath, sweating, and faintness. Shortly thereafter he passed out. Although others completed loading the truck, the employee, instead of consulting a doctor in Vermont, drove the truck back to his employer's plant in Winslow, Maine, a distance of over 200 miles. The chest pain and faintness persisted during the drive, forcing him to stop periodically to rest. Upon his arrival in Winslow, he parked the truck, went home, and on the following morning called his family doctor. An appointment was scheduled with the doctor for October 28, at which time, apparently, the employee was given a day of testing in a local hospital.
He attempted to return to work for Alco Packing Company, but found that because of the resulting left arm and chest pain he could not do the job. He has not worked since.
On May 4, 1978, having given timely notice of his injury, the employee filed a petition for award of compensation. In the proceedings that followed, the depositions of two expert medical witnesses were admitted into evidence. The only other witness to testify was the employee himself, who stated that he continues to experience chest pain whenever he uses his left arm too much.
The first deposition was that of Dr. Elliot Sagall, a specialist in cardiology from Boston. Dr. Sagall's diagnosis, based primarily upon a medical history taken from the employee on January 4, 1979, was that the calf-loading incident of October 21, 1977, had caused an acute myocardial infarction, or heart attack; that since that October the employee has been suffering from post infarction angina pectoris, the symptoms of which have been exacerbated by cardiac neurosis; and that the employee is permanently disabled from engaging in any work, including his work at Alco, that might require mildly strenuous effort.
The second deposition was that of Dr. Bernard Givertz, a specialist in cardiovascular *414 disease from Portland. Dr. Givertz had examined the employee on December 12, 1978. Although Dr. Givertz would not rule out all possibility that the employee had suffered a heart attack when loading calves on October 21, 1977, he considered this to be unlikely. Instead, he believed it to be "quite possible" that the pain experienced by the employee at that time represented "an acute musculoskeletal strain" while the concurrent collapse, in the Doctor's view, was due to fatigue.
At the time of his examination, Dr. Givertz found no evidence of post infarction angina pectoris. He did find a mitral valve prolapse, which, according to both doctors, can present a pain syndrome similar but not identical to that of angina. He stated that he personally would encourage the employee to return to work as soon as possible.
On the above evidence, the Workers' Compensation Commission summarily denied the employee's petition. Pursuant to 39 M.R.S.A. § 99, the employee moved for findings of fact and conclusions of law. In response, the commissioner essentially set forth what has been summarized above, then declared:
I have followed the opinion of Dr. Givertz and concluded that the employee's problems did not arise as a result of the job incident which occurred on October 21, 1977. I do conclude that the employee did incur symptoms and discomfort as a result of the incident on October 21, 1977, but I do find and conclude that the disability that he may be suffering from was not occasioned by a work related incident.[1]
Because the determination of whether a current disability is or remains causally connected to a work related incident is a question of fact, e. g. Rowe v. Bath Iron Works Corp., Me., 428 A.2d 71, 73 (1981), we must sustain the commissioner's determination if it is supported by competent evidence, e. g. Bruton v. City of Bath, Me., 432 A.2d 390 (1981); Dunton v. Eastern Fine Paper Co., Me., 423 A.2d 512, 518 (1980). The burden of proving the causal connection rests on the employee. E. g. Rioux v. Franklin County Memorial Hospital, Me., 390 A.2d 1059, 1061 (1978); Houle, Aplt. v. Tondreau and Aetna, 148 Me. 189, 193, 91 A.2d 481, 483 (1952).
The crucial testimony, that upon which the commissioner expressly relied, came from the deposition of Dr. Givertz who declared:
[I]n my professional opinion, this [continuing chest] pain is not related to coronary heart disease, is not angina pain, and most likely represents a typical chest pain, probably musculoskeletal or possibly related to the mitral valve prolapse syndrome that he has, but certainly in no way related to ... his accident or questionable heart attack. (emphasis added)
From Dr. Givertz's testimony, the commissioner could reasonably conclude that whatever pain the employee still suffers is not connected to heaving calves in October, 1977. Whether the October, 1977, incident aggravated a preexisting susceptibility to musculoskeletal strain or caused the infirmity in the mitral valve to pass from an asymptomatic to a symptomatic condition, Dr. Givertz was not asked. On this record, we cannot say that the commissioner erred in determining that the employee's current disability is not work related.
The entry will be:
Judgment affirmed.
*415 Further ordered that the employer pay to the employee an allowance for counsel fees in the amount of $350.00, together with his reasonable out-of-pocket expenses for this appeal.
All concurring.
NOTES
[1] Among the reasons for choosing to rely on the opinion of Dr. Givertz, the commissioner listed the following:
(1) Dr. Sagall found a normal electrocardiogram, yet diagnosed a myocardial infarction despite his testimony that electrocardiograms often reveal myocardial infarctions; (2)the employee did not see his family doctor until one week after the calf loading incident and was at that time admitted to the hospital for no more than a day despite Dr. Sagall's observation that the family doctor had diagnosed a heart attack; (3) Dr. Givertz's discovery of a mitral valve problem is consistent with, and tends to explain, Dr. Sagall's detection of a systolic murmur; (4) Dr. Givertz's conclusions were consistent with an individual who has intermittent chest pain, yet tests normally. Each of these explanations are derived from record testimony.
|
526 F.2d 591
Walker-Beyv.Strickland
74-1944
UNITED STATES COURT OF APPEALS Fourth Circuit
6/9/75
1
E.D.Va.
REMANDED
|
107 F.3d 876
NOTICE: Eighth Circuit Rule 28A(k) governs citation of unpublished opinions and provides that they are not precedent and generally should not be cited unless relevant to establishing the doctrines of res judicata, collateral estoppel, the law of the case, or if the opinion has persuasive value on a material issue and no published opinion would serve as well.UNITED STATES of America, Appellee,v.Michael WATSON, Appellant.
No. 96-3316.
United States Court of Appeals, Eighth Circuit.
Feb. 26, 1997.
Before McMILLIAN, FAGG, and LOKEN, Circuit Judges.
PER CURIAM.
1
On appeal from his cocaine-related sentence, Michael Watson contends he should have received an acceptance-of-responsibility reduction. We disagree. Having reviewed the record, we conclude Watson's state arrest for possessing cocaine while on bond awaiting sentencing in this case--after removing an electrical monitoring device he was required to wear as a condition of his release--provides ample justification for the district court's decision to deny the reduction. See U.S. Sentencing Guidelines Manual § 3E1.1 cmt. note 1(b); United States v. Nguyen, 52 F.3d 192, 194 (8th Cir.1995) (affirming denial of § 3E1.1 reduction when defendant committed similar type of offense while on bond). We affirm Watson's sentence.
|
RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1869-18T2
IN THE MATTER OF THE CIVIL
COMMITMENT OF D.S.
____________________________
Argued January 15, 2020 – Decided January 29, 2020
Before Judges Koblitz, Whipple and Mawla.
On appeal from the Superior Court of New Jersey, Law
Division, Union County, Docket No. UNCC00181418.
Thomas G. Hand, Designated Counsel, argued the
cause for appellant D.S. (Joseph E. Krakora, Public
Defender, attorney; Christina Joanne Lewis and Daniel
Farrell O'Brien, Assistant Deputy Public Defenders, on
the brief).
Kerry E. Higgins, Assistant Union County Counsel,
argued the cause for respondent Office of the Union
County Adjuster (Robert E. Barry, Union County
Counsel, attorney; Kerry E. Higgins, on the brief).
PER CURIAM
D.S. appeals from a January 2, 2019 order where a checked box indicates
"Defendant is committed." It also orders "patient to be rescreened." D.S. was
a voluntary patient who expressed her desire to be released at the January 2
review hearing. Both parties agree the January 2 order was incorrect. It was
superseded by a January 3, 2019 temporary order of commitment that is not
being appealed. Because the patient could be kept for forty-eight hours prior to
release after expressing her desire to leave, N.J.S.A. 30:4-27.20, the January 2
order did not deprive D.S. of her liberty. We therefore dismiss this appeal as
moot. "An issue is 'moot' when the decision sought in a matter, when rendered,
can have no practical effect on the existing controversy." N.J. Div. of Youth &
Family Servs. v. A.P., 408 N.J. Super. 252, 261 (App. Div. 2009) (quoting
Greenfield v. N.J. Dep't of Corrs., 382 N.J. Super. 254, 257–58 (App. Div.
2006)).
Dismissed.
A-1869-18T2
2
|
18 S.W.3d 914 (2000)
Robert CAMPBELL, Appellant,
v.
The STATE of Texas, Appellee.
No. 09-99-152 CR.
Court of Appeals of Texas, Beaumont.
Submitted March 16, 2000.
Decided June 21, 2000.
*916 Cynthia Viol, Texas Dept. of Crim. Justice-State Counsel for Offenders, Huntsville, for appellant.
Mark Mullin, Special Prosecution Unit, Huntsville, for state.
Before WALKER, C.J., BURGESS and STOVER, JJ.
OPINION
WALKER, Chief Justice.
Robert Campbell was tried on an indictment that alleged Campbell and eight other individuals murdered another with the intent to establish, maintain, or participate in a combination or in the profits of a combination. TEX. PEN.CODE ANN. § 19.03(a)(5)(B) (Vernon 1994). The indictment against Campbell, Thomas Armstrong, *917 and Stephen Brumfield was presented to a jury in a joint trial in which the three men were convicted of capital murder and sentenced to confinement for life in the Texas Department of Criminal Justice, Institutional Division.[1] The judgment reflects the life sentence shall be served consecutively to the forty year sentence Campbell was serving at the time of the offense. Campbell raises four issues on appeal.
In his first point of error, Campbell contends the evidence is legally insufficient to support the conviction because the State failed to prove that Campbell caused the death of Ryan Osgood with the intent to establish, maintain, or participate in a group of three or more persons who collaborate in carrying on criminal activities. Campbell relies upon a recent opinion of the Court of Criminal Appeals, which we find to be factually distinguishable because the prosecution in the case before us adduced evidence of a continuing course of criminal activity absent in that case. See Nguyen v. State, 1 S.W.3d 694 (Tex.Crim. App.1999).
Terrell Unit cellmates Ryan Osgood and Marc Ashbrook were members of the White Knights, a penitentiary gang. Campbell, Brumfield, Armstrong, Daniel Bean, Michael Bingham, Clyde Haynes, Bobby Stephens, Troy Smith, and Shane Jaggers were all members of the Aryan Circle who were housed in the same row as Osgood and Ashbrook.[2] The Aryan Circle is a penitentiary gang engaged in activities involving "a little bit of everything, extortion, prostitution, drugs."
On September 12, 1997, Osgood attacked Terry Rayborn, the vice-president of the Aryan Circle and the highest ranking Aryan Circle member in the penitentiary at that time. Ashbrook testified he and Campbell had a conversation, and "they expressed concern about the incident and possible solutions, and Ashbrook "told them that it should be over with." On October 6, 1997, after some twenty-one days of lockdown, during which the inmates were not permitted out of their cells, the doors to the entire row of cells opened and all the inmates were ordered to exit their cells for dinner. On cross-examination, Armstrong testified:
[T]he rumor was that Ryan Osgood had attempted to harm another inmate, an A.C. member, and then they retaliated. There were some retaliations on the other side of the unit, and they locked all of the close custody up. I guess they figured we was going to do something, too. Then they put Osgood over there and he was laughing about it and such and such and such and such; and I figured since Rayborn didn't get got like they wanted him to, they were going to try to harm him again. And there wasit was just normal tension. If two groups get into a riot fight situation like that, there's going to be tension.
Ashbrook walked out ahead of Osgood and was halfway down the stairs to the dayroom when he realized Osgood was not behind him. When Ashbrook reached the bottom, he turned around and saw Campbell and Brumfield run to Osgood and attack him. Brumfield grabbed Osgood's arms while Campbell stabbed Osgood five times with a piece of sharpened plexiglass. While not fatal, the loss of blood associated with the stab wounds contributed to Osgood's death. Then Campbell, Armstrong, *918 and Bean stomped on Osgood. Meanwhile, in an attempt to support Osgood, Ashbrook fought Stephens, then Smith, Jaggers, and Haynes as well. Brumfield and Armstrong left Osgood and pursued Ashbrook, who dropped from the second floor to the ground floor. Brumfield, Armstrong, Jaggars and Haynes fought Ashbrook in the day room until prison personnel shot chemical agents into the area. Campbell went into his cell, then returned to Osgood and kicked and stomped on Osgood's head. The pathologist attributed cause of death to the cerebral contusion with subgluteal and subdural hemorrhage due to blunt trauma of the head.
According to Ashbrook, Osgood's "disrespectful" attack on Rayborn was the motive for the attack on Osgood. According to Armstrong, Osgood's "people ... were supposed to take care of it" but did not because of the lockdown. According to Stephens, Osgood "tried to take our vice-president".... [s]o, we had to get backwe had to get back at him for doing that." Stephens testified a message, or "kite," had passed among the inmates, and that as a result he expected either Campbell and Brumfield or Smith and Richard Shosa would have "problems" with Ashbrook and Osgood when they walked by,"[b]ecause they were White Knights." According to Jaggers, in the organizations in prison, it is "pretty much" literally "an eye for an eye." Asked, "so if somebody attacks one of your guys, you respond in kind?", Jaggars replied, "Most of the time."
Campbell argues the State failed to prove the Aryan Circle was a "combination" "of three or more persons who collaborate in carrying on criminal activities." See TEX. PEN.CODE. ANN. § 71.01 (Vernon Supp.2000). The testimony just described established three or more people associated as the "Aryan Circle" and those people collaborated in the homicidal assault on Ryan Osgood. The gang-related motive established for the attack was directly related to the cultivation of deference for Aryan Circle members among the prison population. Although the inmates depicted their respective gangs as helpful"brotherhoods" or "tribes" organized for "mutual protection," that the members of the Aryan Circle collaborated in a continuing course of criminal conduct is supported by testimony that the Aryan Circle was involved in extortion, prostitution, and drugs. Regarding other criminal offenses, one indicted Aryan Circle member testified, "the Aryan Circle used him [another inmate not involved in the attack] as far as extortion. We extorted money from him. He paid us for protection .... [from] any problems that he might have as far as somebody trying to fight him." Armstrong admitted that to "blood in" to the Aryan Circle, a man could "take a case for an A.C. member." Stephens testified, "The Aryan Circle had put a hit on me" and that his and his wife's lives were in danger from the Aryan Circle because he testified. Campbell's agreement to work with the other members of the Aryan Circle in the gang's continuing course of criminal activity is proven by Campbell's conduct in the commission of the murder of Ryan Osgood.
Considering all of the evidence adduced at trial in the light most favorable to the prosecution, we hold a rational trier of fact could have found beyond a reasonable doubt that the State proved beyond a reasonable doubt that Campbell possessed the specific intent to establish, maintain, or participate in a group of three or more persons who collaborate in carrying on criminal activities. Point of error one is overruled.
Point of error two urges the trial court erred in denying Campbell's motion for new trial based upon jury misconduct. The motion for new trial alleged "misconduct of the jury, to wit: The jurors *919 reached their verdict improperly prior to the receipt of all of the evidence in the case.... One juror improperly placed the burden on the Defendant to prove his innocence...." The motion for new trial does not allege the jury considered Campbell's failure to testify as a circumstance against the accused.
In the motion for new trial hearing, defense counsel asked juror F.B. if there was any discussion of the defendants' failure to testify. F.B. replied, "No. We might have said something that they didn'tthey didn't testify, but that was the extent of it." Juror A.E. agreed the subject probably came up in conversation during deliberations, but that he took into account the judge's instructions "not to hold that against the defendant." Juror B.H. did not recall if the subject arose, but recalled and stated he followed the judge's instruction to not consider the defendants' failure to testify. A mere reference by jurors to the fact that a defendant did not testify does not amount to reversible error. Powell v. State, 502 S.W.2d 705, 711 (Tex. Crim.App.1974). To constitute reversible error, the reference must amount to a discussion by the jurors or have been used as a circumstance against the accused. Id. Such is not the case here.
Far more disturbing is the testimony of F.B. regarding her personal opinions. Defense counsel asked, "You believe that we should have proved our client, Mr. Robert Campbell, innocent?" F.B. replied, "I believe that was your intention." F.B. agreed with the prosecutor's statement that the State's evidence was "pretty compelling." The prosecutor asked, "Once you heard all of that, if the defense had put on something that showed there was another side and that they weren't guilty, would you have found the defendants not guilty?" F.B. replied, "That's right. I would have." F.B. agreed the State's evidence was sufficient to prove the defendants guilty, and that if it had not been, she would have said not guilty, but she never heard any evidence to sway her that way. On redirect, defense counsel asked, "You believe that the defendants should have testified?" F.B. replied, "I do." Defense counsel asked, "And the fact that he didn't, that Mr. Brumfield and Mr. Campbell didn't testify, that affected your verdict, didn't it?" F.B. replied, "Yes."
F.B.'s testimony in the motion for new trial hearing is quite similar to that found to be reversible jury misconduct in Reyna v. State, 846 S.W.2d 498, 502-03 (Tex. App.-Corpus Christi 1993, no pet.)("In deliberating on the verdict, we took into consideration that the defendant did not testify on his own behalf. I think he should have testified. I feel he should have spoken up and defended himself.") Placed in context, however, it is not clear whether F.B. was considering the effect of the defendant's failure to testify in retrospect rather than admitting that she considered Campbell's failure to testify as a circumstance against him in deciding whether he was guilty. F.B. testified she voted in favor of guilt because the State's evidence, which included a videotape recording of Campbell stomping on Osgood, was sufficient to prove the defendant's guilt. She also testified that she considered all of the evidence that came in, and decided after all of the evidence was presented, thus refuting Campbell's alleged basis for jury misconduct.
The trial court determined, on conflicting evidence, that the alleged misconduct did not in fact occur. Accordingly, the denial of the motion for new trial was within the trial court's discretion. Point of error two is overruled.
Point of error three contends the trial court erred in instructing the jury on the law of parties over defense objection. Campbell relies upon a recent Court of Appeals opinion that held that for the evidence *920 in a prosecution for engaging in organized criminal activity to be legally sufficient, the State must prove the appellant himself performed an overt act in furtherance of a criminal act. McLaren v. State, 2 S.W.3d 595 (Tex.App.-El Paso 1999, pet. granted). In McLaren there was no evidence that the appellant was a direct participant in the underlying abduction. Id. at 598. The Court of Appeals reasoned that the State could not rely upon the overt acts of the other members of the combination to prove the appellant's guilt under the law of parties. Id. at 599. Campbell contends the law of parties is not applicable to a prosecution for capital murder under Section 19.03(a)(5)(B) because the offense contains a "combination" element identical to that of engaging in organized criminal activity.
The application paragraph authorized the jury to convict if it found Campbell "acting alone or as a party, as defined herein, did, while incarcerated in a penal institution, namely, the Terrell Unit, and with intent to establish, maintain, or participate in a combination consisting of, but not limited to [the indicted persons], intentionally or knowingly cause the death of Ryan Osgood ...." [emphasis added] The trial court also instructed the jury separately on the requirements of a combination and on the law of parties.
Contrary to the State's position in McLaren, in this case the State is not relying on the acts of co-defendants to supply the proof that the appellant conspired to commit the underlying offense. The gerund phrase in the application paragraph "acting alone or as a party" modified "Robert Campbell"; the affected verb phrase is "did ... cause the death." The parties charge in this case applied to the defendant's acts causing the death of Ryan Osgood by stomping, kicking, hitting, and stabbing, not to the fact of incarceration or to the intent to participate in a combination. "While incarcerated in a penal institution ... "and with the intent to establish, maintain, or participate in a combination" are parenthetical phrases that are not modified by the phrase referring to criminal responsibility as a party to the offense. The jury was authorized to convict Campbell only if it found that he murdered Osgood while either acting alone or as a party, and that Campbell was then incarcerated in the Terrell Unit and intended to participate in a combination.
We hold the trial court did not err in submitting to the jury an instruction on the law of parties. See TEX. PEN.CODE. ANN. § 7.02(a) (Vernon 1994). Point of error three is overruled.
Point of error four urges Texas Penal Code Section 19.03(a)(5)(B) is unconstitutionally vague under the Fifth and Fourteenth Amendments to the United States Constitution. The test to determine if a statute is so vague as to violate due process is whether it (1) gives a person of ordinary intelligence a reasonable opportunity to know what is prohibited, and (2) provides explicit standards for those who apply it. Grayned v. Rockford, 408 U.S. 104, 108, 92 S.Ct. 2294, 33 L.Ed.2d 222, 227-28 (1972).
Campbell argues that in Nguyen the Court of Criminal Appeals defined the "combination" element of engaging in organized criminal activity as a continuing course of conduct; therefore, Section 19.03(a)(5)(B) prohibits the commission of murder with the intent to commit undefined, contingent, criminal activities in the future. We disagree with the appellant's construction of the statute. As the Court of Criminal Appeals made perfectly clear in the context of prosecutions for engaging in organized criminal activity in Nguyen, it is the present intent to commit a continuing series of criminal acts, not the actual commission of a series of criminal offenses, that the State must prove in order to *921 secure a conviction. See Nguyen, 1 S.W.3d at 697. Likewise, to secure a conviction for capital murder under Section 19.03(a)(5)(B), the State must prove that the accused committed the murder with the present intent to commit a continuing series of criminal acts. Being a matter of specific intent, the capital element of the offense cannot be supplied through inadvertent conduct.
We also reject Campbell's argument that Section 19.03(a)(5)(B) encourages arbitrary prosecution. The appropriateness of the aggravating circumstance is evident in this case: Campbell is a tattooed member of a race-based penitentiary gang that employs physical violence, in this case murder, to protect its members. Confined where they do not have access to weapons, Campbell and eight other gang members used their hands and feet and sharpened plexiglass to kill a rival gang member in retaliation for his attack on one of their own. The State, having incarcerated serious offenders, has a compelling interest in preventing further criminal conduct on their part, especially where a threat to the safety of those confined is involved and where the impetus for the crime is control over other inmates. Since the State must prove the accused committed the murder with the intent to participate in a combination, the State cannot apply the statute arbitrarily to offending inmates coincidentally affiliated with an organized gang.
Section 19.03(a)(5)(B) both reasonably informs citizens of the proscribed conduct and provides adequate guidelines for enforcement. We hold Penal Code Section 19.03(a)(5)(B) is not unconstitutionally vague. Point of error four is overruled.
The judgment of the trial court is affirmed.
AFFIRMED.
NOTES
[1] Armstrong's and Brumfield's convictions were affirmed in appeals decided today. See Armstrong v. State, 18 S.W.2d 928 (Tex.App.-Beaumont 2000, no pet. h.); Brumfield v. State, 18 S.W.3d 921, (Tex.App.-Beaumont 2000, no pet. h.).
[2] These individuals were charged with capital murder in the same indictment as Campbell, Armstrong, and Brumfield, but were not tried in the same proceeding.
|
275 So.2d 143 (1973)
In re SOUTHERN NATURAL GAS COMPANY, a corporation
v.
Kenneth ROSS et al.
Ex parte Southern Natural Gas Company, a corporation.
SC 46.
Supreme Court of Alabama.
March 8, 1973.
Rehearing Denied April 5, 1973.
Huey, Stone & Patton, Bessemer, for petitioner.
Lee Bains, Bessemer, for respondents.
*144 MERRILL, Justice.
Petitioner, Southern Natural Gas Company, filed a petition to condemn a right of way across the Ross property on April 22, 1965. The probate court ordered the condemnation and both parties appealed to circuit court. More than five years later, the cause was tried to a jury and Ross and his wife were awarded $1,600.00 and interest. Petitioner appealed to the Court of Civil Appeals and the judgment was affirmed, 49 Ala.App. 625, 275 So.2d 138. We granted the writ of certiorari and the cause was argued and submitted in this court on February 13, 1973.
The two questions raised in the Court of Civil Appeals were whether the condemnees were entitled to interest, and if so, when it began, and secondly, whether the amount of the award was excessive.
The amount of compensation awarded was within the range of the testimony and we agree with the opinion of the Court of Civil Appeals on that question. We also agree with that court that the condemnees were entitled to interest, but we disagree with the date in the opinion from which the interest is to be computed.
Both the trial court and the Court of Civil Appeals fixed the date for the beginning of interest as June 22, 1965. The opinion we are reviewing does not state what happened on June 22, 1965, but the briefs of all parties and the record show that June 22 was the date of the order of the probate court condemning the property after showing that the amount of the award had been paid into court.
The opinion of the Court of Civil Appeals states:
"In the case at bar the condemnor obtained the right of entry simultaneously with the order of condemnation by virtue of having paid the amount of the award into court; and, even though condemnor appealed to the Circuit Court, it did not lose the right of entry previously obtained because it filed the bond prescribed by Title 19, Section 18, Code of Alabama 1940, as Recompiled 1958.
"Therefore, condemnor obtained the right to possession of the property condemned on June 22, 1965."
Title 19, § 16, Code 1940, requires the probate court to "make orders of condemnation in pursuance thereof (the report of the commissioners) upon the payment of the damages and compensation so assessed and reported or the deposit of the same in court."
Here, the amount of the award was paid into court and the probate court properly condemned the property for the right of way and properly entered in its judgment that "the petitioner hereby is given and awarded the right to the immediate possession of the property hereinafter described for the uses and purposes set out in the said petition."
The trial court and the Court of Civil Appeals treated this probate court judgment as final and said that the "condemnor obtained the right to possession of the property condemned on June 22, 1965."
The only times such a probate court judgment becomes final are those where the condemnee accepts the award and no appeal is taken by either party within thirty days. When this happens, the condemnation proceeding is ended and there is no interest, and the question of interest does not arise.
We think the import of Chapter 1, Eminent Domain, Tit. 19, §§ 1-31, is that, except for situations described in the preceding paragraph, the judgment in the probate court is not final or absolute. To illustrate, we cite two sections. Section 17 provides:
"Any of the parties may appeal from the order of condemnation to the circuit court of the county within thirty days after the making of the order of condemnation, by filing in the court rendering the judgment, a written notice of appeal,
*145 a copy of which shall be served on the opposite party, or his attorney, and on such appeal, the trial shall be de novo, and it shall be necessary to send up the proceedings only as to the parties appearing or against whom an appeal is taken."
Either party has the right to appeal and the trial is de novo. On appeal under this section, we have held that the court tries de novo not only the question of damages and compensation but also the right to condemn under Tit. 19, § 7; with the question of damages and compensation being a question for the jury, and the right to condemn to be determined by the court without the aid of the jury. Housing Authority of City of Jasper v. Deason, 284 Ala. 431, 225 So.2d 838; Cooper v. State, 274 Ala. 683, 151 So.2d 399; Calhoun County v. Logan, 262 Ala. 586, 80 So.2d 529; City of Birmingham v. Brown, 241 Ala. 203, 2 So.2d 305.
Title 19, § 25, provides:
"The applicant may pay the damages and compensation assessed at any time within six months after the assessment thereof, or, in case an appeal is taken, within six months after the appeal is determined; but if he fails to pay the same within such time, such assessment shall cease to be binding on the owner of the lands or other party interested therein, and the rights of the applicant thereunder shall determine; and, upon such failure, the applicant shall be liable to the owner or other party for all damages the latter may have sustained by the institution of such proceedings, including a reasonable attorney's fee for defending the same."
It is apparent that condemnation proceedings may go through the circuit court, but if the award has not been paid into court, perhaps because the condemnor considered the award excessive, then the order of condemnation is no longer effective, nor is the amount of the award payable to the landowner.
In Alabama Midland Railway Co. v. Newton, 94 Ala. 443, 10 So. 89, this court, per Coleman, J., the grandfather of Mr. Justice Coleman of the present court, said:
"Under our system, not only must the compensation be paid as a condition precedent to the vesting of the title, but a time is fixed within which it must be paid, or the rights of the applicant will determine. It seems clear from the statute that its purpose was not to give to the verdict of the jury and the order of condemnation the force and effect of an absolute judgment, conclusive for all purposes and time upon the parties. It is conclusive for a period of six months, in so far as it adjudicates the amount of compensation to be paid by the applicant, and his right to the land condemned, upon its payment. It is also conclusive upon the land-owner for the same period of time, so far as it fixes his compensation, and estops him from exercising any rights over or making any disposition of the property in conflict with the order of condemnation. * * *"
To the same effect are Stout v. Limestone County, 211 Ala. 227, 100 So. 352[1], and State v. Pettis, 275 Ala. 450, 156 So.2d 137 [2].
We think we have demonstrated that the probate court judgment is not absolute when an appeal is taken, as here, and we have already stated that the award was paid into probate court.
The condemnor appealed from the June 22 judgment on June 29 and the condemnee cross-appealed on July 9, 1965, and this transferred the cause to the circuit court because the appeals were taken within thirty days.
There is no question but that the condemnor went into possession and installed the pipeline long before the hearing in circuit court, and acting pursuant to Tit. 19, § 18, as amended, filed the bond to permit it the right of entry on the land. Section 18, as amended, which is in accord
*146 with Section 235, Constitution of Alabama 1901, provides:
"No appeal shall suspend the judgment, or deprive the applicant of the right of entry, provided the amount of the damages assessed for the parties who appeal or against whom an appeal is taken, shall have been paid into court in money, and a bond shall have been given in double the amount of such damage, with good and sufficient surety, to pay such damages as the property owners may sustain. Said amount of damages may be paid into court and said bond in double the amount of such damage, with good and sufficient surety may be given, at the time of taking the appeal or at any time thereafter that the applicant may desire the right of entry pending the appeal. Provided, however, that in condemnation proceedings in which any county having a population of four hundred thousand inhabitants or more, or any city having a population of three hundred thousand inhabitants or more, according to the last or any subsequent federal census, is a party and where an appeal is taken, such county or city shall have the immediate right of entry pending said appeal as if a good and sufficient bond had been filed as described above."
When this bond in double the amount of the award was approved, the condemnor for the first time had the right to enter the land and start to work. That was the first time in this proceeding that the owners lost the right to use the condemned strip as they pleased. This was the first day on which interest could have started, and we think that the interest should have been computed from the day the bond was approved and filed, July 26, 1965.
In Alabama Power Company v. Nichols, 282 Ala. 704, 213 So.2d 912, the condemnor had made the bond required by § 18, as amended, pending trial in circuit court and had taken possession of the lands and flooded some of it, but then sought to dismiss its appeal in circuit court. This court held that the appeal could not be dismissed and affirmed the judgment secured by the condemnee in that court. The opinion quoted the following from Jefferson County v. Adwell, 267 Ala. 544, 103 So.2d 143:
"`At the time the condemnor sought to abandon the proceeding, the easement in the suit property had not been fully acquired, but as shown above, the condemnor had taken complete possession of the property and had so used it that it was unsuitable for private use. The landowner had, at that time, at least a vested right to be compensated, and to have the amount of compensation determined in the condemnation proceeding then pending. § 235 Constitution of 1901.'"
In Adwell, this court also said:
"The trial court correctly awarded interest from March 24, 1953, the day on which the property was occupied by the State of Alabama, which was the day on which the land was appropriated by the condemnor and on which it became precluded from abandoning the proceeding. Southern Railway Co. v. Cowan, supra [129 Ala. 577, 29 So. 985]; Morton Butler Timber Co. v. United States, 6 Cir., 91 F.2d 884; Haig v. Wateree Power Company, 119 S.C. 319, 112 S.E. 55."
We think Nichols and Adwell are plain that once the condemnor has taken possession of the condemned land, the condemnor cannot then change its mind and dismiss or abandon the proceeding without the condemnee's consent, and the condemnee has a right to a trial in circuit court.
A second reason for holding the date of the approval and filing of the bond as the date interest begins is that the law has long been in this state that if a party which has the right to condemn property, goes into possession of the property prior to filing condemnation proceedings, the interest begins as of the date of entry. It was so held in Southern Railway Co. v. *147 Cowan, 129 Ala. 577, 29 So. 985, and followed in Hays v. Ingham-Burnett Lumber Co., 217 Ala. 524, 116 So. 689, and Southern Ry. Co. v. Clark, 220 Ala. 555, 126 So. 855, where it was said:
"`* * * Where a railroad company or such person who has the right of condemnation to acquire the actual possession of the real property of another for a right of way, has taken that possession before acquiring the same by condemnation under the law, and has continued in such possession, lawful interest, or damages in the nature thereof, will be allowed upon the amount of damages as a part of the just compensation from the time of the taking possession to the time of the trial.'"
A third reason is that the filing and approval date on the bond required by § 18, as amended, is certain, a matter of public record and is self-proving and does not require additional proof to ascertain the date from which the interest begins.
Petitioner argues that it was held in both Adwell, supra, and McLemore v. Alabama Power Co., 285 Ala. 20, 228 So.2d 780, that (quoting from McLemore):
"We are also of opinion that the rule of Adwell is correct in allowing interest from the day on which condemnor takes possession of the condemned property until the day of the judgment in the circuit court."
This statement is correct and is supported by the cases. Ordinarily, no condemnor puts up the bond required by § 18, as amended, unless it is ready to take possession of the condemned property. But since there could be a dispute as to the actual date of taking possession, and since the filing of the approved bond makes the date on which the condemnor became precluded from abandoning the condemnation proceeding, and also marks the date when the condemnor may take possession of the condemned property without becoming a trespasser, and without having paid the amount of compensation and damagesbecause it has not been finally determined as the case has been appealedwe think the better and more definite date on which interest begins to accrue is the date of filing the approved bond under § 18, as amended, and that date in the instant case was July 26, 1965.
It follows that the opinion of the Court of Civil Appeals should be corrected and affirmed.
One point not involved in the instant case should be noted to avoid confusion in those cases where the State, or exempted counties and municipalities (See Tit. 19, § 18, as amended), is the condemnor.
Title 7, § 72, Code 1940, exempts the State from making bonds or giving security. We have specifically held that the State is not required to give the bonds required by Tit. 7, § 760 (double bond ad quod damnum proceedings) and Tit. 19, § 23, in eminent domain proceedings. State v. Barnhill, 280 Ala. 574, 196 So.2d 691. Under that case and the authorities cited, it is evident that the State is not required to give the bonds required in Tit. 19, § 18, as amended, or any other sections in the eminent domain chapter. That being true, what is the date when interest begins to accrue when the State or an exempted political subdivision desires to enter the condemned property pending appeal?
The answer in such cases is that interest begins to accrue when the amount of the last adjudicated award is paid into court. The State does not usually pay the award made in the probate court until it desires possession of the property. It then pays the amount of the award and goes into possession and its obligations are the same from that moment on as with any other condemnor as already discussed, that is, it cannot dismiss the proceedings without the consent of the condemnee and it must pay whatever amount is finally awarded the condemnee. So, the definite date of public record, the date of the payment of the award into court is the date from which interest would accrue.
Corrected and affirmed.
All the Justices concur.
|
163 N.W.2d 875 (1969)
183 Neb. 692
Merritt INGRAM, Appellant,
v.
William BRADLEY, dba Starlite Drive Inn Theatre, et al., Appellees.
Consolidated in District Court with Martha Ingram, Appellant,
v.
William Bradley, dba Starlite Drive Inn Theatre, et al., Appellees.
No. 36974.
Supreme Court of Nebraska.
January 10, 1969.
*876 Kryger & Kryger, Neligh, Brogan & Monen, Norfolk, for appellant.
Deutsch & Hagen, Norfolk, for appellees.
Heard before WHITE, C. J., SPENCER, BOSLAUGH, SMITH, McCOWN, and NEWTON, JJ., and STUART, District Judge.
McCOWN, Justice.
Plaintiffs' claims for workmen's compensation benefits were denied by the single judge Workmen's Compensation Court and by the district court. The apparent basis for the denial was that the injuries were caused by a severe wind and rain storm and, therefore, did not arise out of the employment.
Merritt and Martha Ingram, husband and wife, were both employed at the defendant's outdoor theatre, southeast of Neligh, Nebraska. On June 3, 1966, they arrived at the theatre a few minutes after 7 p. m. Mr. Ingram, as usual, turned on the lights, opened the entrance gate, and closed the exit gate. Mrs. Ingram reported first to the snack bar building where she picked up the money to take to the ticket booth. There was approximately $400 to $500, and the money was Mrs. Ingram's responsibility. Both of the Ingrams then went to their station at the ticket booth of the theatre. Their usual procedure was for Mr. Ingram to work outside the booth, handing tickets and money back and forth between Mrs. Ingram at the ticket window and the patrons in the automobiles. It was required that at least one of them be in the booth at all times.
The ticket booth itself was a small 6 x 8 foot frame building. It was moveable, mounted on 4 x 4 foot skids, and had no foundation. It had been built of new and used lumber in 1953 or 1954. It had glass in the upper portion of three sides and the door was on the fourth side. Two of the glass windows were cracked and the window on the west had been broken into four pieces since the previous fall. The management had been notified of the condition, but nothing had been done. Mr. Ingram had put scotch tape on this window to hold it. The booth was equipped with 2 or 3 chairs, a cash register, and a couple of fans. There was no telephone or other means of communication between the booth and the main building called the "snack bar."
The "snack bar" was a concrete block building which housed food service facilities, projection booth, and rest rooms. This building is located about 155 feet northwest of the screen. The screen was some 88 or 89 feet west of the ticket booth. Four other employees and the manager were on duty at the snack bar building at the time.
When the Ingrams arrived at work, they saw a cloud moving in from the northwest. They noticed nothing unusual about it. After the preparations for the evening's business were completed, Mr. Ingram was sitting outside the ticket booth. It started to rain, and he stepped inside the booth with *877 Mrs. Ingram. No patrons had yet arrived. Shortly thereafter, the Ingrams discussed whether or not it would be safer to go to their car, which was parked some 40 feet away. Moments later, the ticket booth was blown over. The Ingrams ended up in the debris of the ticket booth on the edge of the road to the southeast of where the booth had been. The wooden theatre screen was blown down at approximately the same time.
Mrs. Ingram suffered severe facial lacerations from glass which required over 92 stitches. Her nose was nearly severed and she sustained a compound nasal fracture. There was considerable tissue loss, retraction and scarring about the eye, tearing of one eye, and impairment of vision. She also sustained a comminuted fracture of the left leg, as well as contusions and abrasions. Her injuries required extensive hospitalization and the uncontradicted medical testimony was that she sustained a 25 percent permanent disability of the body as a whole as a result of the accident.
Mr. Ingram suffered a laceration of the right wrist with scarring, was hospitalized 2 days, but did not sustain any permanent disability.
Except for the screen and the ticket booth, there was no other damage to the theatre area or to the snack bar building, except for one window in a combination door. No one else in the theatre area, the City of Neligh, nor the vicinity was injured by the storm. The telephones and electricity were off for a short time in Neligh; a considerable number of tree limbs were blown down generally over the town; and some television antennas were down. No storm warnings were given by the weather bureau. The sheriff of Antelope County and the police chief of Neligh saw no occasion to give any severe weather warnings to the weather bureau or other agencies, and although they thought the storm was severe, they saw nothing unusual about it as a summer storm. They had seen at least one storm that severe in the past 3 or 4 years.
Plaintiffs' claims were consolidated for all purposes for trial. Thereafter, the district court found against the plaintiffs and affirmed the judgment of the Nebraska Workmen's Compensation Court dismissing plaintiffs' petitions.
The basic issue here is whether the plaintiffs' injuries arose out of their employment. The defendants rely heavily on the case of Gale v. Krug Park Amusement Co., 114 Neb. 432, 208 N.W. 739, 46 A.L.R. 1213, and on Crow v. Americana Crop Hail Pool, Inc., 176 Neb. 260, 125 N.W.2d 691, which reaffirmed the holding of the Krug Park case. Those cases established that "injuries resulting from exposure to the elements, such as abnormal heat, cold, snow, lightning, or storms, are generally classed as risks to which the general public is exposed, and as not coming within the purview of workmen's compensation acts, unless the record discloses a hazard imposed upon the employee by reason of the employment greater than that to which the public generally is subjected."
There are obvious factual distinctions between the case at bar and either of the two cases referred to. There may even be some question as to whether the storm here was sufficiently severe and unusual as to be abnormal. Even as to a storm classed as an act of God, the general rule is: "* * * if an employee, by reason of his employment, is exposed to a risk of being injured by storm `which is greater than the risk to which the public in that vicinity is subject, or if his employment necessarily accentuated the natural hazard from the storm, which increased hazard contributed to the injury,' it is an `injury arising out of the employment, although unexpected and unusual.'" 6 Schneider, Workmen's Compensation Text (Perm.Ed.), s. 1552, p. 78.
As stated in 1 Larson, Workmen's Compensation Law, s. 8.00, p. 51: "All courts agree that injury due to lightning, *878 windstorms, earthquake, freezing, sunstroke, and exposure to contagious diseases arises out of the employment if the employment increases the risk of this kind of harm."
A definite exception to the doctrine which permits recovery only when a hazard is imposed upon the employee, by reason of the employment greater than that of the general public, has been developed. That exception has been adopted by a large number of courts. "Although the original force, such as hurricane, lightning, or earthquake, did not arise out of the employment under the increased-risk test, the injury may be compensable to the extent that it results from physical contact, produced by that force, with some part of the working environment. In less abstract terms, while claimant cannot recover for the effects of the direct impact of the tornado on him, he can recover if the tornado blows down a wall which in turn falls on him." 1 Larson, Workmen's Compensation Law, s. 8.30, p. 60. A recent expression of the contact with the premises rule is stated in Whetro v. Awkerman, 11 Mich.App. 89, 160 N.W.2d 607. Such cases generally stem from Caswell's Case (1940), 305 Mass. 500, 26 N.E.2d 328.
Although phrased in terms of the increased risk test, many courts have long recognized the rule that where an employee, by reason of his duties, is exposed to a special or peculiar danger from the elements by reason of his employment, and sustains an unexpected injury by reason of the elements, the injury constitutes an accident arising out of and in the course of his employment. See, Annotation, 83 A.L.R. 234, and cases there cited.
"The test has been said to be `not whether the injury was caused by an act of God,' but `whether the one injured was by his employment specially endangered by the act of God.'" 6 Schneider, Workmen's Compensation Text (Perm.Ed.), s. 1552, p. 78.
Even under the increased risk test of the Krug case, the plaintiffs here were exposed to a greater hazard than the general public, because the general public was not in a 6 x 8 foot frame ticket booth, with cracked windows, and skids for foundations during a severe windstorm. It is noteworthy that none of the other employees in a more substantial building on the same premises, nor any member of the general public in the area, was injured by the storm. It is also clear that the plaintiffs' injuries were caused by direct contact with the glass and boards of the structure in which they were required to be and not simply by the direct impact of the windstorm on their bodies.
The physical condition of the structure where the plaintiffs' employment required them to be directly increased the natural risk of injury from the storm, and that increased risk contributed to the injuries. Their employment brought the plaintiffs to that place. Under such circumstances, their injuries arose out of their employment.
We hold that where the conditions of the plaintiffs' employment environment accentuate the natural hazard from a severe windstorm, which increased hazard contributed to the injury, it is an injury arising out of the employment, and is compensable under the Workmen's Compensation Act.
The judgment of the district court is reversed and the cause remanded.
Reversed and remanded.
|
259 S.E.2d 808 (1979)
43 N.C. App. 709
STATE of North Carolina
v.
Walter Lee SINCLAIR.
No. 7912SC525.
Court of Appeals of North Carolina.
November 20, 1979.
*809 Atty. Gen. Rufus L. Edmisten by Sp. Deputy Atty. Gen. Edwin M. Speas, Jr. and Susan G. Kelly, Raleigh, for the State.
Arthur L. Lane by Paul B. Eaglin, Fayetteville, for defendant-appellant.
ARNOLD, Judge.
It is recognized as established law that "a felony conviction may not be based upon or sustained by a naked extrajudicial confession of guilt uncorroborated by any other evidence." State v. Jenerett, 281 N.C. 81, 85-86, 187 S.E.2d 735, 738 (1972). This principle appeared in North Carolina case law as early as 1797, where a defendant was indicted for horse-stealing. State v. Long, 2 N.C. 455 (per curiam). The only evidence in that case was that the horse had been missing, that two men had brought the horse and the defendant to the house of the owner, and that the defendant had confessed that he had taken the horse and had begged forgiveness. The court said:
Where A makes a confession, and relates circumstances which are proven to have actually existed as related in the confession, that may be evidence sufficient for a jury to proceed upon to convict the prisoner; but a naked confession, unattended with circumstances, is not sufficient. A confession, from the very nature of the thing is a very doubtful species of evidence, and to be received with great caution. It is hardly to be supposed that a man perfectly possessed of himself would make a confession to take away his own life. It must generally proceed from a promise or hope of favor, or from a dread of punishment, and in such situations the mind is agitated the man may be easily tempted to go further than the truth. Besides, the witness, respecting the confession, may have mistaken his meaning. How easy is it to understand the speaking differently from *810 what he meant; and the smallest mistake in this particular might prove fatal. As there are no confirmatory circumstances in the present case, it is better to acquit the prisoner.
Id. at 456. More recently, however, the court has stated that while "there must be evidence aliunde the confession of sufficient probative value to establish the fact that a crime of the character charged has been committed," the independent evidence need not also identify the defendant as the one who committed the crime, State v. Cope, 240 N.C. 244, 247, 81 S.E.2d 773, 776 (1954), and that language has been relied upon in almost every case on the point.
In the majority of the cases dealing with the rule the independent evidence has in fact shown some connection between the defendant and the crime. E. g. State v. Jenerett, supra (testimony of witnesses that defendant was the robber); State v. Moore, 275 N.C. 141, 166 S.E.2d 53 (1969) (defendant seen running from the scene near time of crime); State v. Crawford, 260 N.C. 548, 133 S.E.2d 232 (1963) (evidence that deceased was seen with defendant shortly before she disappeared and that her body was found where he said he had placed it, injured as he had said); State v. Hauser, 257 N.C. 158, 125 S.E.2d 389 (1962) (stolen goods found in defendant's possession). And on occasion the court has found that there was insufficient independent evidence to sustain a conviction. In State v. Bass, 253 N.C. 318, 116 S.E.2d 772 (1960), the court found the evidence insufficient, saying, "[t]here is no direct evidence to connect defendant with the commission of the crime. The evidence offered is circumstantial, conjectural, and speculative." Id. at 323, 116 S.E.2d 776. Likewise in State v. Cope, supra the court reversed the defendant's conviction, there because there was no independent evidence that the sexual offenses with which the defendant was charged had ever been committed.
Several decisions from this court have upheld convictions where there was no independent evidence connecting the defendant with the crime. E. g. State v. Thomas, 17 N.C.App. 152, 193 S.E.2d 297 (1972); State v. Thomas, 15 N.C.App. 289, 189 S.E.2d 765, cert. denied 281 N.C. 763, 191 S.E.2d 360 (1972); State v. Macon, 6 N.C.App. 245, 170 S.E.2d 144 (1969), aff'd 276 N.C. 466, 173 S.E.2d 286 (1970). And recently, in the case of State v. Green, 295 N.C. 244, 244 S.E.2d 369 (1978), our Supreme Court upheld the defendant's convictions on charges of rape and murder where the only evidence which could have connected the defendant to the crimes was that he had been employed in the area where the victim worked and that the morning after the crimes he had told two people that he had engaged in sexual intercourse the night before. In light of the Green decision, we find that there was sufficient corroborating evidence in the instant case to take the case to the jury, though Officer Merritt testified that he found nothing of Fulmore's in defendant's possession and that "[t]he only evidence I have which connects Sinclair to this breaking is his statement."
We find that defendant cannot prevail on his other assignments of error. He argues first that there was a fatal variance between the allegation in the indictment that the crimes were committed on 17 March and the proof at trial. However, as defendant recognizes, a variance which relates to the date of a larceny is not fatal unless time is of the essence or the statute of limitations is at issue. State v. Locklear, 33 N.C.App. 647, 236 S.E.2d 376, cert. denied 293 N.C. 363, 237 S.E.2d 851 (1977). Defendant argues that time was of the essence here because there were two break-ins on successive nights and the items defendant confessed to stealing were taken on the second night, while the indictment charged him with the theft on the first night. The record is not clear as to which night the enumerated items were taken, however. Fulmore first testified that in the first break-in the items taken included "some clothes and some food from the refrigerator. . . stereo equipment and mag wheels." He later testified that those items were missing when he returned after the second night. In view of the fact that *811 defendant has not relied upon an alibi for either of the nights in question, and that there was some evidence from which the jury could find that the items defendant confessed to stealing were taken in the first break-in, we find no fatal variance.
Defendant also argues that his confession should not have been admitted into evidence because of questions as to whether it was voluntarily and understandingly made. See State v. Thompson, 287 N.C. 303, 214 S.E.2d 742 (1975), death penalty vacated 428 U.S. 908, 96 S.Ct. 3215, 49 L.Ed.2d 1213 (1976). It appears in defendant's brief, though not in the record, that defendant moved prior to trial to suppress the confession, and his motion was denied. Also according to defendant's brief, "[a] copy of the Order denying the Motion could not be found in the defendant's file maintained by the Clerk of Superior Court." No reference to the motion to suppress appears in the record. When the State offered defendant's statement into evidence, defendant objected and his objection was overruled.
Since the court's order denying the motion to suppress does not appear, we are not able to determine what facts, if any, were found by the trial court to support its decision that the confession was admissible. Furthermore defendant's counsel has not included in the record the substance of that order, so we have no basis for review. We do note, however, that sufficient evidence appears in the record to support a finding that the confession was both voluntarily and understandingly made. Officer Merritt testified that he had known the defendant for years, and that defendant did not appear frightened while in his presence. Merritt used a normal tone of voice, and questioned defendant for 20-30 minutes. He read defendant the rights form and explained it to him, and he also read the statement to defendant and explained what it said before defendant signed it. Upon these facts we do not find as a matter of law that this statement was involuntary or made without understanding. See State v. Thompson, supra. In defendant's trial we find
No error.
WEBB and WELLS, JJ., concur.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-4985
UNITED STATES OF AMERICA,
Plaintiff – Appellee,
v.
CEDRIC LLAWENLLYN SURRATT,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Martin K. Reidinger,
District Judge. (1:12-cr-00055-MR-DLH-1)
Submitted: September 25, 2014 Decided: September 29, 2014
Before WILKINSON and AGEE, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
Ross Hall Richardson, Acting Executive Director, Ann L. Hester,
FEDERAL DEFENDERS OF WESTERN NORTH CAROLINA, INC., Charlotte,
North Carolina, for Appellant. Anne M. Tompkins, United States
Attorney, Amy E. Ray, Assistant United States Attorney,
Asheville, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Cedric Llawenllyn Surratt was found guilty of being a
felon in possession of a firearm, in violation of 18 U.S.C.
§ 922(g) (2012). The district court sentenced Surratt to 100
months’ imprisonment. On appeal, Surratt questions whether the
district court procedurally erred when it ordered his federal
sentence to run consecutively to an unrelated, undischarged
state sentence. Finding no error, we affirm.
Surratt contends that his sentence is procedurally
unreasonable because the district court made a mistake of fact
and also did not give proper consideration to his mitigation
arguments. We review the sentence for reasonableness “under a
deferential abuse-of-discretion standard.” Gall v. United
States, 552 U.S. 38, 41 (2007). A sentence is procedurally
reasonable if the court properly calculates the defendant’s
advisory Sentencing Guidelines range, gives the parties an
opportunity to argue for an appropriate sentence, considers the
18 U.S.C. § 3553(a) (2012) factors, does not rely on clearly
erroneous facts, and sufficiently explains the selected
sentence. Id. at 49–51. “[I]f a term of imprisonment is
imposed on a defendant who is already subject to an undischarged
term of imprisonment, the terms may run concurrently or
consecutively.” 18 U.S.C. § 3584(a) (2012); see also U.S.
Sentencing Guidelines Manual § 5G1.3(c) (2012).
2
We conclude that the district court acted well within
its discretion in imposing the sentence to run consecutively to
the state sentence. The court properly considered the 18 U.S.C.
§ 3553(a) factors in deciding whether to run the sentence
concurrently or consecutively. See 18 U.S.C. § 3584(b) (2012)
(court must consider § 3553(a) factors in deciding whether the
federal term is to run concurrently or consecutively). The
court did not make a factual error in stating that the defendant
had a history of both drug and firearm offenses. Surratt’s
criminal conduct underlying his most recent state drug offense
conviction occurred just over one year before the conduct giving
rise to the federal offense.
As to Surratt’s argument that the district did not
sufficiently consider his mitigation arguments, the court also
did not err. The explanation of sentence given “must be
sufficient to satisfy the appellate court that the district
court has considered the parties’ arguments and has a reasoned
basis for exercising its own legal decisionmaking authority.”
United States v. Allmendinger, 706 F.3d 330, 343 (4th Cir.)
(internal alterations, quotation marks, and citations omitted),
cert. denied, 133 S. Ct. 2747 (2013). We are satisfied that the
district court considered Surratt’s arguments for mitigation.
Accordingly, we affirm the judgment. We dispense with
oral argument because the facts and legal contentions are
3
adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
4
|
700 S.W.2d 384 (1985)
Paul KORDENBROCK, Appellant,
v.
COMMONWEALTH of Kentucky, Appellee.
Supreme Court of Kentucky.
September 5, 1985.
Rehearing Denied December 19, 1985.
*385 Paul Isaacs, Public Advocate, Edward C. Monahan, Asst. Public Advocate, Timothy T. Riddell, Asst. Public Advocate, Frankfort, for appellant.
David L. Armstrong, Atty. Gen., Penny R. Warren, Asst. Atty. Gen., Cicely D. Jaracz, Asst. Atty. Gen., Frankfort, for appellee.
STEPHENSON, Justice.
Paul Kordenbrock was convicted of first-degree robbery, KRS 515.020, attempted murder of William Thompson, KRS 506.010, and the murder of Stanley Allen, KRS 507.020(2) and KRS 532.025. He was sentenced to twenty years' imprisonment on the first-degree robbery conviction and a consecutive term of twenty years on the attempted murder conviction.
Kordenbrock was sentenced to death for the murder of Stanley Allen. He appeals this sentence. We affirm.
The crimes were committed in a Western Auto Store owned by William Thompson. Two days prior to the incident, Kordenbrock and a friend, Michael Kruse, entered the store, browsed around, and looked at wood-cutting tools. Thompson observed them and became suspicious of their actions. The next day Kordenbrock and Kruse again visited the store, looked at guns in a glass display case, and purchased a small hatchet. Kordenbrock asked Thompson to show one of the guns in the case. Thompson again became suspicious of their motives for visiting the store. Thompson was alone in the store on both visits.
On the day of the murder, Kordenbrock, armed with a pistol, and Kruse entered the store about 9:30 a.m. Pointing the gun, Kordenbrock ordered Thompson and his employee, Allen, to the rear of the store and ordered them to lie face down. Kordenbrock stood over them. A customer entered the store, and Kruse answered a query about repair of chain saws. The customer left. Thompson heard glass break in the store, then heard a shot, and felt a searing sensation on the back of his head. He then heard a second shot. Allen was dead from the gunshot wound. Thompson survived.
Kordenbrock and Kruse divided the stolen guns after leaving the store. About 10:00 a.m., they arrived at the residence of a friend, Gary Ramell. Kordenbrock sold Ramell two of the guns. Ramell testified Kordenbrock appeared mellow, and nothing seemed to be unusual.
*386 Next, the pair arrived at the home of Richard Fehler. Kordenbrock sold Fehler two guns. Fehler testified that the pair seemed jittery and that Kordenbrock took Quaaludes.
The following day Kordenbrock drove to a cousin's house, and a Larry Hensley arrived and negotiated with Kordenbrock over the purchase of the guns.
In the meantime, Ramell had seen a news story about the murder and robbery. When Kordenbrock returned from his cousin's, Ramell questioned him about where the guns came from; he had noticed they were in a Western Auto box. Ramell, Fehler, and Hensley cooperated with the police and testified at the trial.
Hensley loaned the police his truck after he arranged to meet Kordenbrock to pay for the guns he had purchased. Kordenbrock was arrested at 10:10 p.m., and after interrogation, made a full confession.
Thompson testified at trial and identified Kordenbrock. Kordenbrock testified at trial and offered testimony that he was intoxicated and on drugs and did not intend to shoot or kill either of the men. After a finding of guilt, the same jury heard testimony in the penalty phase of the trial and recommended the death penalty.
It is in this setting that Kordenbrock argues twenty-nine assertions of error. Those assertions, which we do not address in this opinion, are nevertheless considered and rejected.
Kordenbrock asserts he was improperly sentenced to death without the assistance and testimony of a psychiatrist who had examined him.
This entire controversy centers on the Ohio psychiatrist who examined Kordenbrock, refusing to file a report until he was paid for the work accomplished to that point. The crimes occurred in January 1980; in April 1980, Kordenbrock requested funds to employ a psychiatrist. At a later hearing, the Commonwealth and the trial court agreed that the defense was entitled to a psychiatrist. It is interesting at this point to note that the agreement by the Commonwealth was premised on the assumption there would be an insanity defense or defense of mental disease. The trial court, at a later hearing at which the Commonwealth was excluded, stated that he assumed this need for expert assistance was for the purpose of an insanity defense, and that he had no qualms about experts for diminished capacity or insanity. At the conclusion of the hearing, the trial court ordered funds be made available to employ a psychiatrist. Kordenbrock was examined by a psychiatrist, and we begin a series of continuances based on the controversy surrounding payment of the psychiatrist. The trial was finally commenced and concluded in July of 1981, after the trial court, on June 12, 1981, declined to grant further continuances.
It appears that defense counsel made an agreement with the psychiatrist that he would be paid in two stages. He had completed the examination and demanded payment before he filed his report. The trial court declined to order the fiscal court to pay the fees until the report was filed. The situation was aggravated by a public announcement that the fiscal court would not pay for the expert assistance. This impasse continued, and the case went to trial without the testimony of the psychiatrist.
KRS 31.200(1) provides that any direct expense incurred in representing an indigent "is a charge against the county on behalf of which the service is performed." The trial court had undoubted authority to order the fiscal court to pay the fees ordered. We are of the opinion, however, that the trial court acted prudently in declining to order payment until the report was filed. The proper procedure would have been for the report to be filed and then a proceeding to compel the fiscal court to pay according to the statute. Whether this statute is or is not fair is irrelevant. It is the legislature who determines this. We are of the opinion the trial court committed no error in this respect. If the entire matter were left here, it would provide a difficult problem, particularly if Kordenbrock *387 had raised a defense of insanity. However, there was no insanity defense or any pretense of a defense of mental disease or insanity. In a letter to a psychiatrist, Kordenbrock's lawyer stated he did not presently feel Kordenbrock was insane at the time of the offense.
From a perusal of the hearing and other statements, it appears that the underlying basis for psychiatric testimony was primarily for the penalty phase of the trial. The arguments made in Kordenbrock's brief exemplify this conclusion. His lawyers argue:
Without the assistance of a psychiatrist, defense counsel were unable to present expert testimony on (1) Paul's mental state at the time of his confession; (2) on whether Paul's actions in the Western Auto Store were less than intentional whether they were wanton, did he act under extreme emotional disturbance; (3) the meaning of and effect on Paul of his motorcycle wreck, his military service, his relationship with his mother and father; (4) the explanation for his heavy use of drugs; (5) what effect Michael Kruse had on Paul; (6) whether Paul was a follower or leader; (7) whether he could be rehabilitated; (8) what factors mitigated Paul's acts.
KRS 31.110(1) provides that indigent defendants are entitled "to be provided with the necessary services and facilities of representation, including investigation and other preparation."
We are of the further opinion Kordenbrock was not entitled to funds for the employment of a psychiatrist to present expert testimony on the above eight subjects. This does not present a case of reasonably necessary expert testimony for the defense in this case. We do not have an Ake v. Oklahoma, ___ U.S. ___, 105 S.Ct. 1087, 84 L.Ed.2d 53 (1985), situation here. There, the defense was insanity; not so here. We do not believe a defendant in a case such as this has a right to a psychiatric fishing expedition at public expense, or an in-depth analysis on matters irrelevant to a legal defense to the crime.
Kordenbrock was offered a psychiatric test at a state facility. Upon being advised this facility would provide only an objective evaluation, Kordenbrock was sent to this facility but was advised by his lawyer not to communicate with the psychiatrist. The examining psychiatrist reported that Kordenbrock was calm, coherent, and exhibited no unusual activity suggestive of mental illness. We find Lockett v. Ohio, 438 U.S. 586, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978), not applicable to this situation. Lockett struck down an Ohio statute for the reason the statute did not permit the consideration of mitigating factors other than the narrow factors authorized by the death penalty statute.
Kordenbrock requested a change of venue. A hearing was held, and the motion denied by the trial court. A hearing was held pursuant to KRS 452.210, which provides that the judge may order the trial to be held in an adjacent county ". . . if it appears that the defendant or the state cannot have a fair trial in the county where the prosecution is pending. . . ." At the hearing, the trial court was presented with evidence by Kordenbrock about the amount of publicity and percentages of people in the county who knew of the crime, and who thought Kordenbrock was guilty, etc. The Commonwealth presented twenty-four affidavits that public opinion in the county was not such that Kordenbrock could not receive a fair trial.
We are of the opinion there is no showing that the finding of the trial court is clearly erroneous. It is not the amount of publicity which determines that venue should be changed; it is whether public opinion is so aroused as to preclude a fair trial. Here, eighteen months elapsed between the commission of the crime and the trial. Kordenbrock did not introduce any proof by affidavit or otherwise that public opinion was such that he could not receive a fair trial. This is the test. See Garr v. Commonwealth, Ky., 463 S.W.2d 109 (1971). The trial court has discretion in *388 this determination and will not lightly be disturbed.
A perusal of the voir dire which covers fifteen volumes of transcript discloses nothing more than knowledge of the case and some instances of opinion of guilt. This is not a case where prejudicial publicity pervaded the entire trial, such as Shepard v. Maxwell, 384 U.S. 333, 86 S.Ct. 1507, 16 L.Ed.2d 600 (1966).
Kordenbrock asserts that a confession signed by him was involuntary. He now argues that his "will was overborne." The trial court conducted a suppression hearing and, at the conclusion of the hearing, denied the motion to suppress.
The interrogation leading to the confession began at about 11:30 p.m. and continued for two and one-half to three hours. The interrogation was transcribed and is forty pages in length. The two officers conducting the inquiry informed Kordenbrock that William Thompson was alive and would identify him and outlined the other evidence against him. He was told that the Cincinnati police would pick up the girls at the apartment where Kordenbrock had spent the prior night. One of these girls was picked up with Kordenbrock. He stated he had dated one of the other girls off and on for about three months. Most of the transcript consists of observations and questions by the officers. At page 6, when asked why he didn't take the money out of the cash register, he answered that he didn't know how to operate it. When asked why he went to the extent he did, Kordenbrock answered that something "snapped." On page 7, he stated he realized too late what was happening. On page 8, when asked about the gun he used, he stated it was in the river, under the suspension bridge. On page 9, he stated it was a thirty-eight. On page 11, he stated one guy started to get up when the customer came in. On page 24, he stated: "I did it," and answered "yes" to a question as to whether he pulled the trigger; "I just tried to shoot them so they wouldn't get up."
The officers had asked earlier why Kordenbrock didn't tell them what happened instead of pulling it out a little bit at a time.
At the suppression hearing, the officers testified that no threats were made and that the entire interrogation was conducted in a normal tone of voice.
Kordenbrock testified at the hearing. He stated that the transcript was accurate except for remarks by the officers accusing him of other robberies. He acknowledged that this accusation could have taken place while the tape was turned off. He testified that he signed the paper (confession) because he thought he was going to get a phone call and that he didn't want his friends hassled. He further stated that he signed for the reason that he thought something was going to happen to the girls or him, physically possibly.
There is nothing in the record to suggest physical harm was threatened or implied, and Kordenbrock does not state why he felt this way. He further does not state that his will was overcome or any of the badges of coercion in obtaining a confession.
We are of the opinion the remarks by the police officers relative to the girl with Kordenbrock (who was being interrogated separately) or the other two girls were not of such a nature as to overcome his will and coerce the confession. Kordenbrock testified that he was "laid back" and "mellow" during the interrogation. He does not suggest what he now argues.
The same can be said of the assertion now that he attempted to stop the interrogation. At the suppression hearing, he did not so contend, and a perusal of the transcript of interrogation does not support this assertion.
Next, there is the argument that Kordenbrock was entitled to question the trial court as to his impartiality, etc. We will not comment on this absurd argument, other than to observe it is a waste of time for all concerned.
*389 Finally, Kordenbrock asserts the Commonwealth was allowed to emphasize that the jury's sentence was only a recommendation. We have examined the record in this respect and are of the opinion this assertion of error has no merit. The word "recommend" was used, but not to such an extent as to denigrate the responsibility of the jury in imposing a death penalty. The voir dire went extensively into each juror's ability to impose the death penalty. We do not have a series of remarks such as occurred in Ward v. Commonwealth, Ky., 695 S.W.2d 404, decided May 23, 1985. A significant portion of the argument on this point is based on the remarks made by the Commonwealth's attorney at a bench conference, out of the hearing of the jury.
We have thoroughly examined the record and are of the opinion no reversible error was committed during the guilt or innocence phase of the trial.
We have further reviewed the penalty phase of the trial and the assertions of error made by Kordenbrock. We are of the further opinion that no reversible error was committed in the penalty phase of the trial. We do not comment on the arguments made in this respect for the reason that we consider these assertions to be without merit.
The one aspect of the case that stands out is the casual killing of a human being, not in anger or out of fear, or any other strong emotion, but just a casual murder.
We have conducted our review of the death sentence in accordance with the provisions of KRS 532.075. We are of the opinion from the record that the sentence of death was not imposed under the influence of passion, prejudice, or any other arbitrary factor and that the evidence supports the finding of an aggravating circumstance. KRS 532.025(2)(a).
We have considered whether the sentence of death is excessive or disproportionate to the penalty imposed in similar cases and have in this regard considered the crimes committed here and all of the evidence surrounding Kordenbrock and his background.
The data for our use in this regard have been compiled in accordance with KRS 532.075(6)(a), (b), and (c). We have considered all of the cases in which the death penalty was imposed after January 1, 1970. These cases are cited in Harper v. Commonwealth, Ky., 694 S.W.2d 665, decided May 2, 1985.
In making a comparative study of these cases and the circumstances in this case, we are of the opinion the sentence of death here is not excessive or disproportionate to the penalty imposed in the enumerated cases.
The judgment is affirmed.
STEPHENS, C.J., and AKER, GANT, STEPHENSON and WINTERSHEIMER, JJ., concur.
LEIBSON, J., dissents and files a separate dissenting opinion.
LEIBSON, Justice, dissenting.
Respectfully, I dissent.
This case should be reversed and remanded for a new trial for the following reasons:
1) Failure to require payment of the defense psychiatrist.
The Commonwealth had agreed before trial that the defense was entitled to employ a psychiatrist to investigate potential issues concerning the accused's mental state. The court had authorized the employment and ordered the county to pay the bill. Notwithstanding, the county authorities refused to accept responsibility for payment and thereafter the psychiatrist who had been employed, who was from Ohio and could not be subpoenaed, refused to participate further in appellant's defense.
There were a number of potential issues bearing on appellant's mental state at the time of the crime, relating to both the question of intentional murder and to the appropriate punishment, which supported *390 the appointment of a psychiatrist in the circumstances of this case. Certainly, the court was acting within its authority when it decided that the psychiatrist's services should be employed, and when it ordered the County to pay for such services. KRS 31.110(1); KRS 31.200(1).
In my judgment it was then incumbent upon the trial court to take necessary steps to enforce its order of payment against the County, and the failure to do so was reversible error. The recent case of Ake v. Oklahoma, ___ U.S. ___, 105 S.Ct. 1087, 84 L.Ed.2d 53 (1985) reenforces the accused's right to access to a psychiatrist's assistance at his trial when it is clear that his mental state at the time of the offense is a substantial factor in his defense. While perhaps Ake can be distinguished in certain respects, it applies in the circumstances of this case. Likewise, the right to present evidence in mitigation when charged with a capital offense made the appointment of a psychiatrist reasonable in the circumstances of this case. See, Lockett v. Ohio, 438 U.S. 586, 98 S.Ct. 2954, 57 L.Ed.2d 973 (1978).
The issue here is not whether a psychiatrist should have been provided that decision had already been made but what should have been done when the County indicated it would refuse to pay a psychiatrist. The court's order should have been enforced against the county. Failing to do so was reversible error.
2) The confession.
The written confession introduced into evidence against the appellant was challenged on grounds that it was the product of coercion. Rogers v. Richmond, 365 U.S. 534, 81 S.Ct. 735, 5 L.Ed.2d 760 (1961). There were circumstances surrounding the taking of the confession which lend considerable support to this claim, although not necessarily compelling this conclusion. This includes the extended interrogation, evidence of psychological intimidation, and the accused's condition with reference to the taking of drugs.
Of equal or greater importance, in itself the written statement used against the accused suggests that on a number of occasions the appellant attempted to stop the questioning, as was his constitutional right, but his will was overridden. It is essential to have the tape recording to make this critical decision.
The record shows that clerical personnel in the police department erased the audio tape of this interrogation two or three days after the confession was procured, at the direction of the police officer in charge.
The tone of voice which would be evident from the audio tape, the pattern of interruption, and other non-verbal elements of this interrogation, have been destroyed. The tape recording of the conversation was the best evidence from which to decide the issues bearing on its admissibility. It has been disposed of so that the trial judge could not fairly decide, and we cannot review, this important issue.
In the circumstances of this case, where the written confession indicates a number of significant points at which the tone of voice and the manner of questioning would be critical to deciding whether the confession should have been suppressed, neither the trial court nor this court should affirm the use of the confession when the tape has been destroyed. In Lego v. Twomey, 404 U.S. 477, 92 S.Ct. 619, 30 L.Ed.2d 618 (1972), the United States Supreme Court directs that a coerced confession shall not be used, "whether true or false," because the method used to obtain it "offends constitutional principles." 404 U.S. at 485, 92 S.Ct. at 624. Faced with the shocking circumstances of the present offense, enforcing this constitutional principle places a disagreeable duty and an onerous responsibility on the court called upon to do so, but nevertheless a duty to be performed however disagreeable.
In Hendley v. Commonwealth, Ky., 573 S.W.2d 662 (1978), in similar circumstances we state:
"The interrogation of appellant was subject to proper inquiry and the tapes on which the questions and answers were *391 recorded were likewise the proper subject of inquiry. This court cannot overemphasize the importance of not only retaining such evidence, but of promptly making it available to counsel for the accused when requested and if it is in existence." 573 S.W.2d at 667.
In Hendley, there was nothing to indicate that the missing tape made a difference. Where, as here, the written transcription used as evidence raises serious questions about the manner of questioning, questions which could only be answered properly by listening to the tape, preserving the tape becomes crucial to the use of the confession. Without it, the written statement should have been suppressed.[1]
3) Improperly suggesting to the jury that in imposing the death sentence it makes only a recommendation.
Caldwell v. Mississippi, ___ U.S. ___, 105 S.Ct. 2633, 86 L.Ed.2d 231 (1985), removes any lingering doubt about the impropriety of referring to the responsibility of the jury in imposing a death sentence as only a recommendation.
In Kentucky, the jury's decision is more than a recommendation because it is critical to whether the death penalty can be imposed. The trial court cannot impose a death sentence unless the jury first decides that it is proper.
But without regard to whether this set of circumstances should or should not be termed a "recommendation," we are bound by the United States Supreme Court decision in Caldwell v. Mississippi, supra, where, in circumstances substantially identical to ours, the court stated:
"[W]e conclude that it is constitutionally impermissible to rest a death sentence on a determination made by a sentencer who has been led to believe that the responsibility for determining the appropriateness of the defendant's death rests elsewhere. . . .
. . . Belief in the truth of the assumption that sentencers treat their power to determine the appropriateness of death as an `awesome responsibility' has allowed this Court to view sentencer discretion as consistent with and indeed as indispensable to the Eighth Amendment's `need for reliability in the determination that death is the appropriate punishment in a specific case.'" ___ U.S. at ___, 105 S.Ct. at 2639-40, 86 L.Ed.2d at 239-40.
The importance of Caldwell v. Mississippi is that it makes clear that what is critical is telling the jury that its sentence is only a recommendation, without regard to the argument over the word "recommendation" as technically correct.
Whereas, perhaps, it may still be arguable that where the term has not been used so extensively as to be pervasive, it is not reversible error, no such argument can be made in the present case. Over objection, each of the twelve jurors who decided appellant's fate were qualified with the express understanding that their sentencing function was only to recommend a sentence to the trial judge. The jury was told in opening statement that its duty was to "recommend" to the trial judge a sentence to "fit the crime of this case," and in the prosecutor's closing argument the sentence function was relegated to the level of "recommendation" on five different occasions. There was a repeated and then a continuing objection to the Commonwealth's reference to the jury's sentencing function as on a recommendation.
It is probably true that the emphasis on the jury's sentence as only a recommendation exceeded the bounds of propriety as discussed by this court in Ice v. Commonwealth, Ky., 667 S.W.2d 671 (1984). But we need not decide, because beyond question *392 the use of the term recommendation in this case exceeded the limitations in Caldwell v. Mississippi, supra.
For the reasons stated, this case should be reversed and remanded to be tried properly.
NOTES
[1] It is noteworthy that appellant's contention that his confession was involuntary was based in part on his claim that he was under the influence of drugs at the time his statement was taken. When arrested he had in his possession a bottle of pills, the contents of which bore directly on this question, which was never analyzed because, once again, the police had misplaced the evidence.
|
561 F.3d 573 (2009)
Johnella Richmond MOSES, Personal Representative of the Estate of Marie Moses Irons, deceased, Plaintif-Appellant,
v.
PROVIDENCE HOSPITAL AND MEDICAL CENTERS, INC. and Paul Lessem, Defendants-Appellees,
Christopher Walter Howard, Third-Party Defendant.
No. 07-2111.
United States Court of Appeals, Sixth Circuit.
Argued: December 5, 2008.
Decided and Filed: April 6, 2009.
*575 ARGUED: Mark Granzotto, Mark Granzotto, P.C., Royal Oak, Michigan, for Appellant. Susan Healy Zitterman, Kitch, Drutchas, Wagner, DeNardis, Valitutti & Sherbrook, Detroit, Michigan, for Appellee.
ON BRIEF: Mark Granzotto, Mark Granzotto, P.C., Royal Oak, Michigan, for Appellant. Susan Healy Zitterman, Kitch, Drutchas, Wagner, DeNardis, Valitutti & Sherbrook, Detroit, Michigan, for Appellee.
Before: CLAY and GIBBONS, Circuit Judges; STAMP, District Judge.[*]
OPINION
CLAY, Circuit Judge.
Plaintiff Johnella Richmond Moses, as representative of the estate of Marie Moses-Irons ("Moses-Irons"), brings claims against Defendants Providence Hospital and Medical Centers, Inc. (the "hospital") and Paul Lessem ("Dr.Lessem") pursuant to the Emergency Medical Treatment and Active Labor Act ("EMTALA"), 42 U.S.C. § 1395dd, and common law negligence. *576 Plaintiff alleges that Defendants violated EMTALA by releasing Moses-Irons' husband from the hospital ten days before he murdered Moses-Irons. Plaintiff appeals the district court's decision to grant Defendants' motion for summary judgment and dismiss Plaintiff's claims. For the following reasons, we REVERSE the district court and REMAND for further proceedings with respect to the hospital, but AFFIRM with respect to Dr. Lessem.
BACKGROUND
I. Factual Background
On December 13, 2002, Moses-Irons took Howard to the emergency room of Providence Hospital in Southfield, Michigan because Howard was exhibiting signs of illness. Howard's physical symptoms included severe headaches, muscle soreness, high blood pressure and vomiting. Howard was also experiencing slurred speech, disorientation, hallucinations and delusions. Moses-Irons reported these symptoms to the emergency room staff, and also informed them that Howard had "demonstrated threatening behavior, which made her fearful for her safety." (Joint Appendix ("J.A.") at 31-32.) The emergency room physicians decided to admit Howard to conduct more tests. Among the physicians who evaluated Howard during his stay at the hospital were Mark Silverman ("Dr. Silverman"), a neurologist; Dr. Lessem, a psychiatrist; and Djeneba Mitchell ("Dr. Mitchell"), an internist.
Dr. Silverman examined Howard on December 14, 2002. Dr. Silverman determined that Howard "was acting inappropriately" and "appeared to be somewhat obtunded," but had "no overt outward signs of trauma." (J.A. at 153.) In addition to informing Dr. Silverman of Howard's symptoms, Moses-Irons also told him that Howard had told her that he "had bought caskets." (J.A. at 150.) Dr. Silverman learned from Moses-Irons that Howard had recently tried to board a plane with a hunting knife. Dr. Silverman ordered a magnetic resonance imaging exam, though it is unclear from the record whether the exam ever took place. Dr. Silverman also "felt that a psychiatric evaluation would be warranted," as well as a "lumbar puncture." (J.A. at 154, 158.) His notes from the evaluation indicate his belief that "an acute psychotic episode [must] be ruled out." (J.A. at 153, 158.)
Dr. Lessem examined Howard several times during Howard's stay at the hospital. On December 17, 2002, Dr. Lessem determined that Howard was not "medically stable from a psychiatric standpoint," and decided that Howard should be transferred to the hospital's psychiatric unit called "4 [E]ast" to "reassess him." (J.A. at 165.) According to Dr. Lessem, 4 East is intended for patients "who are expected to be hospitalized and stabilized and who are acutely mentally ill." (J.A. at 165.) Dr. Lessem felt Howard could be more closely observed at 4 East, and planned to conduct "reality testing" of Howard there to determine the extent of Howard's delusions. (J.A. at 168.) Dr. Lessem's order notes from December 17, 2002 state, "will accept [patient] to 4 [E]ast if [patient]'s insurance will accept criteria" and "please observe carefully for any indications of suicidal ideation or behavior." (J.A. at 172.) Under the heading "orders for 4 [E]ast," Dr. Lessem wrote, "suicide precautions." (J.A. at 173.) The notes also indicate that Dr. Lessem believed Howard had an "atypical psychosis" and "depression." (J.A. at 172.)
Howard was never transferred to the psychiatric unit, and instead was informed on December 18, 2002 that he would be released. A hospital clinical progress report signed by Dr. Mitchell that day stated *577 that "[patient] declines 4 [E]ast, wants to go home. His affect is brighter. No physical symptoms now. [Patient] wishes to go home, wife fears him. Denies any suicidality." (J.A. at 219.) Howard stated in a deposition that he never declined going to 4 East. In Howard's discharge summary form filled out on December 18, 2002, the hospital's "final diagnosis" of Howard, written by a resident, was that he had a "migraine headache" and an "atypical psychosis [with] delusional disorder." (J.A. at 178.) A report dated December 19, 2002, signed by Dr. Mitchell, indicated that Howard would be "[discharged] home today ... cannot stay as he is medically stable and now does not need 4E." (J.A. at 89.) Howard was released on December 19, 2002, and on December 29, 2002, Howard murdered Moses-Irons.
On December 14, 2004, Plaintiff filed a federal suit against the hospital and Dr. Lessem, alleging a violation of EMTALA and various negligence claims. On January 5, 2005, Defendants filed a motion to dismiss the complaint, on the ground that EMTALA only provides a right of action for a plaintiff who sought treatment as a hospital's patient. On February 28, 2005, the district court denied Defendants' motion from the bench, stating, inter alia, that "the plain language of the statute does not preclude a lawsuit by the injured third party." (J.A. at 181.) Plaintiff filed an amended complaint on September 29, 2005. On January 6, 2006, Defendants filed a third-party complaint against Howard.
II. Motion for Summary Judgment
On May 14, 2007, Defendants filed a motion for summary judgment. In their brief supporting their motion, Defendants raised two arguments: (1) that Plaintiff does not have standing to sue, because only the individual patient who seeks treatment at the hospital has standing under EMTALA; and (2) that EMTALA imposes no further obligation on a hospital once the hospital has admitted a person as an inpatient. Defendants' motion did not refer to any factual record, and they attached only the EMTALA statute and applicable regulations to their motion.
At oral argument before the district court on July 30, 2007, Defendants argued for the first time that the hospital physicians, after conducting the proper screening, did not diagnose Howard as having an emergency medical condition. At oral argument, Defendants referred in general terms to the testimony and documentation of the hospital physicians who attended to Howard to support this third argument, without producing the evidence they were referencing. Neither the December 18, 2002 progress report stating that Howard had no physical symptoms and denied "suicidality," nor the December 19, 2002 progress report in which Dr. Mitchell stated that Howard was stable, was attached to Defendants' summary judgment motion; however, both documents were attached to Defendants' response to a separate motion to compel discovery filed on April 13, 2007. During oral argument, Defendants also referred to letters from Howard's insurance company indicating that the insurance company did not deny coverage for Howard's treatment until January 2003, after Howard had been released; those letters were not submitted with Defendants' motion papers, nor are they included in the record on appeal.
Following oral argument, the district court granted Defendants' summary judgment motion from the bench, dismissing the EMTALA claim and choosing not to exercise jurisdiction over the negligence claims. In dismissing the EMTALA claim, the district court stated that summary judgment must be granted "regardless of *578 the standing issue." (J.A. at 216.) The entirety of the district court's reasoning for granting summary judgment was as follows:
First of all, the EMTALA statute was not designed or intended to establish guidelines for patient care or to provide a suit for medical negligence or malpractice. Under the clear and unambiguous language of the statute, the Plaintiff's claim must be dismissed. The hospital admitted Howard and did not turn him away, as was required by the Sixth Circuit in Cleland [v. Bronson Health Care Group Inc., 917 F.2d 266 (6th Cir. 1990)]. The patient was undisputedly completely screened, as the statute requires, even if on the basis of a wrong diagnosis; and he was thereafter admitted to the Defendant hospital, and no emergency medical condition was recognized on the screening. So, for all of those reasons ... the motion of the Defendants must be granted.
(J.A. at 216.) Plaintiff timely appealed.
On appeal, Plaintiff asserts that she did not receive fair notice that during oral argument Defendants would rely on evidence that the doctors believed Howard did not have an emergency medical condition. Had Plaintiff received proper notice, she asserts, she would have filed with her pleadings an expert report by Harold J. Bursztajn ("Dr. Bursztajn"), a professor of psychiatry at Harvard Medical School, who concluded that Howard did have an emergency medical condition upon arriving at the hospital, and had not stabilized by the time he was discharged. Dr. Bursztajn based his conclusion on Dr. Lessem's own notes from December 17, 2002, in which Dr. Lessem had diagnosed Howard as having an atypical psychosis and possibly suicidal behavior. Dr. Bursztajn concluded that "the symptoms and mental state described by Dr. Lessem could not be resolved in one to two days, yet the decision to discharge Mr. Howard was made one day later." (J.A. at 68-69.) Dr. Bursztajn's expert report was served and filed on October 25, 2006, as part of Plaintiff's reply materials in connection with an earlier motion to compel a mental examination of Howard. Plaintiff includes this expert report in the record on appeal.
DISCUSSION
I. Standard of Review
This Court reviews a district court's grant of summary judgment de novo. Monette v. Electronic Data Sys. Corp., 90 F.3d 1173, 1176 (6th Cir.1996). Summary judgment is appropriate 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 movant is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). As the moving party, Defendants bear the burden of showing the absence of a genuine issue of material fact as to at least one essential element of Plaintiff's claim. See Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Plaintiff, as the non-moving party, must then present sufficient evidence from which a jury could reasonably find for her. See Anderson v. Liberty Lobby, Inc., U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). This Court must then determine "whether the evidence presents 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. at 251-52, 106 S.Ct. 2505. In making this determination, this Court must draw all reasonable inferences in favor of Plaintiff. See Nat'l Enters., Inc. v. Smith, 114 F.3d 561, 563 (6th Cir.1997).
*579 II. Overview of EMTALA
For all hospitals that participate in Medicare and have an "emergency department," EMTALA sets forth two requirements. First, for any individual who "comes to the emergency department" and requests treatment, the hospital must "provide for an appropriate medical screening examination ... to determine whether or not an emergency medical condition... exists." 42 U.S.C. § 1395dd(a). Second, if "the hospital determines that the individual has an emergency medical condition, the hospital must provide either (A) within the staff and facilities available at the hospital, for such further medical examination and such treatment as may be required to stabilize the medical condition, or (B) for transfer of the individual to another medical facility[.]" § 1395dd(b). Thus, for any individual who seeks treatment in a hospital, the hospital must determine whether an "emergency medical condition" exists, and if the hospital believes such a condition exists, it must provide treatment to "stabilize" the patient. Thornton v. Sw. Detroit Hosp., 895 F.2d 1131, 1134 (6th Cir.1990).
The statute defines "emergency medical condition" as "a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in ... [inter alia] placing the health of the individual ... in serious jeopardy[.]" § 1395dd(e)(1)(A)(i). "To stabilize" a patient with such a condition means "to assure, within reasonable medical probability, that no material deterioration of the condition is likely to result from or occur during the transfer of the individual from a facility[.]" § 1395dd(e)(3)(A). "Transfer" is defined in the statute to include moving the patient to an outside facility or discharging him. § 1395dd(e)(4).
Including the argument made for the first time during oral argument before the district court, Defendants appear to have moved for summary judgment on three grounds: (1) Plaintiff lacks standing to sue under EMTALA; (2) EMTALA's requirements were satisfied when the hospital admitted Howard on December 13, 2002; and (3) because Howard was indisputably screened and diagnosed as not having an emergency medical condition, EMTALA did not apply. Because any one of these grounds would have been sufficient for the district court to grant summary judgment to the Defendants, we address each of them in turn.
III. Standing
In deciding Defendants' motion for summary judgment, the district court did not reach the issue of whether, as a non-patient, Plaintiff has standing under EMTALA to bring a claim, although it did deny Defendants' previous motion to dismiss on that ground. Because Defendants prevailed below, this Court may consider affirming summary judgment based on Plaintiff's lack of standing. See Dandridge v. Williams, 397 U.S. 471, 475 n. 6, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970) ("The prevailing party may, of course, assert in a reviewing court any ground in support of his judgment, whether or not that ground was relied upon or even considered by the trial court.").
Pursuant to EMTALA's civil enforcement provision, "[a]ny individual who suffers personal harm as a direct result of a participating hospital's violation of a requirement of this section may, in a civil action against the participating hospital, obtain those damages available for personal injury under the law of the State in which the hospital is located, and such equitable relief as is appropriate." 42 U.S.C. § 1395dd(d)(2)(A). Neither this *580 subsection, nor any other part of EMTALA, includes any mention of non-patients. Moreover, this Court is not aware of any federal appellate court that has addressed whether non-patients who allege harm as a result of a hospital's violation of EMTALA have standing to sue. Defendants cite two district court decisions from other circuits, which hold that the relatives of a patient who suffers harm cannot sue a hospital in their individual capacities for harm suffered by the patient. See Zeigler v. Elmore County Health Care Auth., 56 F.Supp.2d 1324 (M.D.Ala.1999); Sastre v. Hosp. Doctor's Center, Inc., 93 F.Supp.2d 105 (D.Puerto Rico 2000). However, because the estate of the individual who suffered an actual personal injury brings the suit in this case, claiming personal harm as a direct result of the hospital's decision, those decisions are inapposite and of limited persuasive value.
"In the absence of an indication to the contrary, words in a statute are assumed to bear their `ordinary, contemporary, common meaning.'" Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202, 207, 117 S.Ct. 660, 136 L.Ed.2d 644 (1997) (quoting Pioneer Inv. Servs. Co. v. Brunswick Ass'ns Ltd. P'ship, 507 U.S. 380, 388, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)). The plain language of the civil enforcement provision of EMTALA contains very broad language regarding who may bring a claim: "any individual who suffers personal harm as a direct result" of a hospital's EMTALA violation may sue. § 1395dd(d)(2)(A) (emphasis added). This language would seem to include Plaintiff, whose suit alleges that Moses-Irons' death was the direct result of the hospital's decision to release her husband before his psychiatric emergency medical condition had stabilized.
In arguing that only harmed patients may sue, Defendants contend that the phrase "any individual" in § 1395dd(d)(2)(A) must be read in the context of other parts of the statute. Because the medical screening requirement in § 1395dd(a) refers to an "individual" who "comes to the emergency department" and the stabilization requirement in § 1395dd(b) refers to an "individual" who "comes to a hospital," the term "any individual" in the civil enforcement provision should also be so limited. There are two problems with reading the statute this way. First, the medical screening requirement and the stabilization requirement do not refer to the same "individual"the medical screening requirement of § 1395dd(a) only applies to individuals who come to an "emergency department," presumably a smaller subset of individuals than those "who come[] to a hospital" and are the subject of § 1395dd(b). This differing language indicates that Congress did not intend EMTALA's entire statutory scheme to apply to the same "individual" in every part of the statute. Second, the fact that the statute expressly limits the individual to whom the hospital owes its EMTALA obligations in §§ 1395dd(a) and (b) further indicates that the breadth of the civil enforcement provision was no accident. "[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983); see also Gozlon-Peretz v. United States, 498 U.S. 395, 404-05, 111 S.Ct. 840, 112 L.Ed.2d 919 (1991). If Congress had intended to limit the right of action to any individual who "comes to a hospital" as a patient, it could have done so, just as it did in other parts of the statute. See United States v. Parrett, 530 F.3d 422 (6th Cir. *581 2008) ("Plain meaning is examined by looking at the language and design of the statute as a whole.").
Defendants also argue that EMTALA's legislative history supports their narrower construct of the civil enforcement provision. The original bill, reported out of the House Ways and Means Committee, extended the private right of action to "any person or entity that is adversely affected directly by a participating hospital's violation[.]" H.R.Rep. No. 99-241, pt. 1, at 132, reprinted in 1986 U.S.C.C.A.N. 579, 605. The bill was referred to the House Judiciary Committee, which amended the civil enforcement provision to a version essentially the same as its current form, changing "adversely affected" to "suffers harm as a direct result," and changing "person or entity" to "individual." H.R.Rep. No. 99-241, pt. 3 at 6, reprinted in 1986 U.S.C.C.A.N. 726, 728. The report from the House Judiciary Committee states that as a result of its amendment to the bill, the only individual who can sue is the "individual patient who suffers harm as a direct result of hospital's failure to appropriately screen, stabilize, or properly transfer that patient." Id.
However, where a House committee's explanation of the meaning of a statute seems to differ from the statute's actual wording, this Court should not rely on that committee's statement as the exclusive explanation for the meaning of the statute. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) ("[J]udicial reliance on legislative materials like committee reports, which are not themselves subject to the requirements of Article I, may give unrepresentative committee membersor, worse yet, unelected staffers and lobbyistsboth the power and the incentive to attempt strategic manipulations of legislative history to secure results they were unable to achieve through the statutory text."). In this case, the parties have not pointed to any further legislative history, other than the one statement from the report of the House Judiciary Committee, as proof of Congress' intent with respect to the scope of the civil enforcement provision. We have also failed to uncover any substantive debate over the provision on either the House or Senate floors. As this Court has previously noted in examining EMTALA's legislative history, "[t]he only clear guidance from the legislative history is that Congress intended to prevent hospitals from dumping patients who suffered from an emergency medical condition because they lacked insurance to pay the medical bills." Thornton, 895 F.2d at 1134.
Regardless of the paucity of the legislative record on the standing issue, we believe that the civil enforcement provision, read in the context of the statute as a whole, plainly does not limit its reach to the patients treated at the hospital. We therefore need notand ought notconsult an isolated statement in a committee report. See United States v. Choice, 201 F.3d 837, 840 (6th Cir.2000) ("The language of the statute is the starting point for interpretation, and it should also be the ending point if the plain meaning of that language is clear.").
We recognize that our interpretation of the civil enforcement provision may have consequences for hospitals that Congress may or may not have considered or intended. However, our duty is only to read the statute as it is written, as we have in our past analysis of EMTALA. In Cleland v. Bronson Health Care Group, Inc., 917 F.2d 266, 269 (6th Cir.1990), the defendants argued that because Congress sought to protect the rights of the indigent and uninsured in enacting EMTALA, only the indigent or uninsured should be allowed *582 to sue under the act. This Court expressly rejected this narrow reading of the civil enforcement provision, stating that "[u]nfortunately for this theory, Congress wrote a statute that plainly has no such limitation on its coverage." Id. Similarly here, EMTALA's plain language belies Defendants' argument that Congress intended to deny non-patients the right to sue in every circumstance.
Thus, for the foregoing reasons, we conclude that Plaintiff has standing to sue pursuant to EMTALA.
IV. The Hospital's Obligations Upon Finding an Emergency Medical Condition
Defendants argue that, if Howard did have an emergency medical condition when he came to the hospital, the hospital's decision to admit him for six days and perform further testing satisfied its obligations under EMTALA to treat so as to stabilize the patient. We disagree.
Contrary to Defendants' interpretation, EMTALA imposes an obligation on a hospital beyond simply admitting a patient with an emergency medical condition to an inpatient care unit. The statute requires "such treatment as may be required to stabilize the medical condition," § 1395dd(b), and forbids the patient's release unless his condition has "been stabilized," § 1395dd(c)(1). A patient with an emergency medical condition is "stabilized" when "no material deterioration of the condition is likely, within reasonable medical probability, to result from or occur during" the patient's release from the hospital. § 1395dd(e)(3)(B). Thus, EMTALA requires a hospital to treat a patient with an emergency condition in such a way that, upon the patient's release, no further deterioration of the condition is likely. In the case of most emergency conditions, it is unreasonable to believe that such treatment could be provided by admitting the patient and then discharging him.
In Thornton, this Court examined whether EMTALA requires hospitals to do more for patients with emergency medical conditions than just admit them. 895 F.2d at 1134. In that case, it was undisputed that the patient initially had an emergency medical condition when the defendant hospital admitted her to the emergency room for a stroke; the issue was whether the hospital violated EMTALA by releasing her twenty-one days later from the hospital's regular inpatient care unit. Id. Although ultimately affirming summary judgment because the patient's condition had stabilized prior to her release, this Court first rejected the hospital's argument that once it transferred the patient from the emergency room to inpatient care, its obligations under EMTALA were fulfilled:
Congress sought to insure that patients with medical emergencies would receive emergency care. Although emergency care often occurs, and almost invariably begins, in an emergency room, emergency care does not always stop when a patient is wheeled from the emergency room into the main hospital. Hospitals may not circumvent the requirements of the Act merely by admitting an emergency room patient to the hospital, then immediately discharging that patient. Emergency care must be given until the patient's emergency medical condition is stabilized.
Id. at 1135 (emphasis added). Thus, the statute requires more than the admission and further testing of a patient; it requires that actual care, or treatment, be provided as well. Accordingly, Defendants could not satisfy their EMTALA obligations merely by screening Howard and admitting him to conduct further testing.
*583 To support their narrower reading of EMTALA's requirements, Defendants point to a rule promulgated by the Centers for Medicare and Medicaid Services ("CMS"), the agency responsible for implementing EMTALA, that effectively ends a hospital's EMTALA obligations upon admitting an individual as an inpatient. 42 C.F.R. § 489.24(d)(2)(i). According to the CMS regulation, "[i]f a hospital has screened an individual under paragraph (a) of this section and found the individual to have an emergency medical condition, and admits that individual as an inpatient in good faith in order to stabilize the emergency medical condition, the hospital has satisfied its special responsibilities under this section with respect to that individual." Id.
Although "[a]n agency's construction of a statutory scheme that it is entrusted to administer is entitled to a degree of deference .... we must ... `reject administrative constructions which are contrary to clear congressional intent.'" Gallagher v. Croghan Colonial Bank, 89 F.3d 275, 277-78 (6th Cir.1996) (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). The CMS rule appears contrary to EMTALA's plain language, which requires a hospital to "provide ... for such further medical examination and such treatment as may be required to stabilize the medical condition[.]" § 1395dd(b)(1)(A) (emphasis added). Although "treatment" is undefined in the statute, it is nevertheless unambiguous, because it is unreasonable to believe that "treatment as may be required to stabilize" could mean simply admitting the patient and nothing further. Moreover, the statute requires the patient to be "stabilized" upon release; "[i]f an individual at a hospital has an emergency medical condition which has not been stabilized ... the hospital may not transfer the individual unless" the patient requests a transfer in writing or a physician or qualified medical person certifies that the risks of further treatment outweigh the benefits. § 1395dd(c)(1)(A). Therefore, a hospital may not release a patient with an emergency medical condition without first determining that the patient has actually stabilized, even if the hospital properly admitted the patient. Such a requirement would be unnecessary if a hospital only needed to admit the patient in order to satisfy EMTALA. Because the CMS rule is contrary to the plain language of the statute, this Court does not afford it Chevron deference. See Gallagher, 89 F.3d at 278.
Even if the CMS regulation could somehow be deemed consistent with the statute, its promulgation in 2003, after Howard's stay in the hospital ended, would preclude this Court from applying it to this case. "As a general rule, a court `must apply the law in effect at the time it renders its decision. Because `[r]etroactivity is not favored in the law,' however, courts should not construe `congressional enactments and administrative rules ... to have retroactive effect unless their language requires this result.'" BellSouth Telecomms., Inc. v. Se. Tel., Inc., 462 F.3d 650, 657 (6th Cir.2006) (quoting Landgraf v. USI Film Prods., 511 U.S. 244, 263-64, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994)). To determine whether a regulation should be applied to events arising prior to the regulation's enactment, courts first inquire whether the regulation expressly reaches retroactively; if the regulation is silent on the issue, then the court asks "`whether applying the statute to the person objecting would have a retroactive consequence in the disfavored sense of affecting substantive rights, liabilities, or duties on the basis of conduct arising before its enactment.'" *584 Id. at 658 (quoting Fernandez-Vargas v. Gonzales, 548 U.S. 30, 37, 126 S.Ct. 2422, 165 L.Ed.2d 323 (2006)). If such rights are affected, then courts must apply a presumption against retroactivity. Id. Here, the CMS regulation is silent on retroactivity, and because the regulation would affect the extent of the care that Howard could have expected upon admission as an inpatient, the regulation "attaches legal consequences to events completed before its enactment," Landgraf, 511 U.S. at 270, 114 S.Ct. 1483. The CMS regulation therefore does not apply to this case, regardless of whether its interpretation of the statute is reasonable.
In short, the hospital was required under EMTALA not just to admit Howard into the inpatient care unit, but to treat him in order to stabilize him. Accordingly, Defendants are not entitled to summary judgment simply on the ground that the hospital admitted Howard as an inpatient and subjected him to several days of testing.
V. Existence of an Emergency Medical Condition
The district court's reasoning in granting summary judgment was partially predicated on its finding that the hospital conducted an appropriate screening, and that "no emergency medical condition was recognized on the screening." (J.A. at 216.) We believe that whether Howard had an emergency medical condition that the hospital recognized upon screening him is an issue of fact that the court should have left for a jury to decide.
As an initial matter, "before summary judgment may be granted against a party, Fed.R.Civ.P. 56(c) mandates that the party opposing summary judgment be afforded notice and a reasonable opportunity to respond to all issues to be considered by the court." Routman v. Automatic Data Processing, Inc., 873 F.2d 970, 971 (6th Cir.1989). "Rule 56(c) requires at a minimum that an adverse party be extended at least ten days notice before summary judgment may be entered." Id. "Noncompliance with the time provision of the rule deprives the court of authority to grant summary judgment, unless ... [inter alia] there has been no prejudice to the opposing party by the court's failure to comply with this provision of the rule." Kistner v. Califano, 579 F.2d 1004, 1006 (6th Cir.1978) (citations omitted).
In this case, the district court granted summary judgment from the bench at the end of oral argument, and based its decision in part on the fact that the hospital never detected an emergency medical conditiona ground that Defendants had not raised prior to oral argument. Moreover, Defendants' briefs in support of their summary judgment motion did not include any supporting evidence whatsoever, as their written arguments were based purely on statutory interpretation; to the extent that the district court relied on any evidence at all with respect to this ground, such evidence came from exhibits Defendants attached to previous filings. Although there is no rule prohibiting the district court from considering previously submitted evidencesee Fed.R.Civ.P. 56(c) (allowing court to consider "the pleadings, the discovery and disclosure materials on file" in resolving a motion for summary judgment) (emphasis added)it is still difficult to discern how Plaintiff could have received sufficient notice of this argument, or a reasonable opportunity to oppose it with evidence, without being advised that this issue would determine the district court's ruling on the motion.
With respect to prejudice, Plaintiff argues that had she known Defendants would raise the absence of an emergency medical condition at oral argument, she *585 would have included Dr. Bursztajn's expert report in her opposition to Defendants' motion. Defendants had notice of Dr. Bursztajn's report, because it was filed in connection with a previous motion to compel during discovery. We therefore will consider Dr. Bursztajn's report on appeal. In reviewing this report as well as the remainder of the evidence in the record, we find that issues of fact exist with respect to whether the hospital physicians actually believed Howard lacked an emergency medical condition.
An "emergency medical condition" is "a medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in ... [inter alia] placing the health of the individual... in serious jeopardy[.]" § 1395dd(e)(1)(A)(i). The language in the statute does not appear to preclude classifying a psychiatric condition as an emergency medical condition, and "the health of the individual" could certainly include the individual's mental health. Moreover, we are not aware of any discussion of this issue in the legislative history. Without such guidance, we hold that a mental health emergency could qualify as an "emergency medical condition" under the plain language of the statute.
A. Howard's Condition Upon Arrival at the Hospital
At the time he came to the hospital, Howard was experiencing slurred speech, disorientation, hallucinations and delusions, and was making threatening statements, including telling his wife that he had "bought caskets." (J.A. at 150.) Howard's condition included physical symptoms such as severe headaches, muscle soreness, high blood pressure and vomiting. Moreover, Dr. Bursztajn's report, based on a review of Howard's hospital records, concluded that Howard had an emergency medical condition upon arriving at the hospital. Thus, there is plenty of evidence in the record to create an issue of fact with respect to whether Howard's condition was a mental health emergency.
However, in order to trigger further EMTALA obligations, the hospital physicians must actually recognize that the patient has an emergency medical condition; if they do not believe an emergency medical condition exists because they wrongly diagnose the patient, EMTALA does not apply. Roberts ex rel. Johnson v. Galen of Virginia, Inc., 325 F.3d 776, 786 (6th Cir. 2003).[1] Yet while actual knowledge is required, "any hospital employee or agent that has knowledge of a patient's emergency medical condition might potentially subject the hospital to liability under EMTALA." Id. at 788.
Howard was admitted to the hospital so that the hospital physicians could conduct further tests, including an MRI, a lumbar puncture and a psychiatric evaluation. On the first day of testing, Dr. Silverman's note that "an acute psychotic episode [must] be ruled out" indicated both the possible seriousness of Howard's condition and the need for further testing before a complete diagnosis could be made. (J.A. at 153, 158.) Dr. Lessem diagnosed Howard on December 17, 2002 as having "atypical psychosis," determined that Howard should be transferred to 4 East, and instructed 4 East doctors to take "suicide precautions." (J.A. at 173.) A legitimate *586 possibility that the patient might commit suicide would appear to "place the health of the individual ... in serious jeopardy," and could thus fall under the category of "emergency medical condition." See § 1395dd(e)(1)(A)(i). It is noteworthy that Dr. Lessem recommended Howard be transferred to 4 East, the unit for patients "who are acutely mentally ill." (J.A. at 160.) This evidence supports Plaintiff's claim that the hospital physicians believed Howard had an emergency medical condition upon his admission.
B. Howard's Condition Upon Discharge
Defendants argue further that, to the extent that Howard had an emergency medical condition at the time of his admission, the hospital physicians no longer believed that he had such a condition when they released himi.e., that he was stable upon discharge. In Cleland, this Court, in affirming summary judgment for the defendant, explained why it was clear that the responsible doctors reasonably believed the patient had been stable upon discharge:
To all appearances, the plaintiff's condition was stable. He was not in acute distress, neither the doctors nor the patient or his parents made the slightest indication that the condition was worsening in any way, or that it presented any risk that might become life-threatening, or that it would worsen markedly by the next day.
917 F.2d at 271.
Plaintiff has introduced evidence that challenges whether any of these signs of stability noted in Cleland existed with respect to Howard. First, the "final diagnosis" of Howard upon discharge of an "atypical psychosis [with] delusional disorder" was substantially the same as Dr. Lessem's diagnosis on December 17, 2002, which included "atypical psychosis." (J.A. at 169, 178.) Moreover, Dr. Bursztajn's report concludes that "the symptoms and mental state described by Dr. Lessem could not be resolved in one to two days, yet the decision to discharge Mr. Howard was made one day later." (J.A. at 68-69.) The doctors were aware on the day they released Howard that Howard's wife did not think he had improved, and in fact still "fear[ed] him." (J.A. at 219.) Finally, Dr. Lessem's note dated December 17, 2002, in which he writes "will accept [Howard] to 4 east if [Howard]'s insurance will accept criteria" (J.A. at 172), creates at the very least a credibility issue with respect to whether the hospital physicians actually believed that no emergency condition existed upon Howard's release.
To support their argument, Defendants cite Dr. Mitchell's progress note dated December 18, 2002, which states, "[Howard's] affect is brighter. No physical symptoms now. [He] wishes to go home, wife fears him. Denies any suicidality." (J.A. at 219.) Defendants also cite Dr. Mitchell's progress report dated December 19, 2002 stating that Howard "cannot stay as he is medically stable and now does not need 4 [East]." (J.A. at 89.) First, these notes do not refute Plaintiff's evidence that Dr. Lessem believed Howard was still unstable at the time of his release. But more importantly, while these notes may arguably provide a basis for a jury to find for Defendants, for the reasons discussed, Plaintiff's evidence still raises a dispute of fact with respect to whether Howard had an emergency condition on the day of his release, and what the hospital's doctors believed when they released him.
Because issues of fact exist relating to Howard's medical conditionupon his initial screening as well as prior to his releasethe district court erred in granting summary judgment on this ground.
*587 VI. Plaintiff's EMTALA Claim Against Dr. Lessem
Plaintiff has brought suit against both the hospital and Dr. Lessem. EMTALA's provision authorizing private suits expressly allows claims "against the participating hospital," but does not refer to claims against individuals. 42 U.S.C. § 1395dd(d)(2)(A). Although the question of whether EMTALA allows a private right of action against an individual physician is one of first impression for this Court, other circuits to have considered the issue have held or opined that EMTALA does not authorize an action against an individual physician. See Baber v. Hosp. Corp. of Am., 977 F.2d 872, 877-78 (4th Cir.1992); King v. Ahrens, 16 F.3d 265, 271 (8th Cir.1994); Eberhardt v. City of L.A., 62 F.3d 1253, 1256-57 (9th Cir.1995); Delaney v. Cade, 986 F.2d 387, 393-94 (10th Cir.1993); Gatewood v. Wash. Healthcare Corp., 933 F.2d 1037, 1040 n. 1 (D.C.Cir.1991) (dicta).
We agree with our sister circuits that EMTALA does not authorize a private right of action against individuals. "The question of the existence of a statutory cause of action is, of course, one of statutory construction." Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979). It is possible that Congress meant to include individual physicians in the civil enforcement provision and simply neglected to do so; however, in comparing the civil enforcement provision with the government enforcement provision that precedes it, the omission of any reference to physicians in the civil enforcement provision appears intentional. The government enforcement provision authorizes the Department of Health and Human Services to commence its own actions against violators of EMTALA. 42 U.S.C. § 1395dd(d)(1). Unlike the civil enforcement provision, the provision authorizing government enforcement expressly states that "any physician who is responsible for the examination, treatment, or transfer of an individual in a participating hospital, including a physician on-call for the care of such an individual, and who negligently violates a requirement of this section ... is subject to a civil penalty" and exclusion from further participation in government programs. § 1395dd(d)(1)(B). As previously discussed, "where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello, 464 U.S. at 23, 104 S.Ct. 296. Congress clearly knew how to make individuals responsible under the statute, because it did so in the provision subjecting violators to federal enforcement. Given the contrast in these two consecutive subsections of the statute, Congress' omission of any reference to individuals in the civil enforcement provision must have been intentional.
Moreover, to the extent that the absence of such a reference arguably causes ambiguity with respect to this issue, the legislative history reveals an intent to preclude private suits against individuals. According to the report of the House Judiciary Committee, the committee recommended amendments changing the civil enforcement provision to its current form in order to "clarif[y] that actions for damages may be brought only against the hospital which has violated the requirements of [the statute]." H.R.Rep. No. 99-241, pt. 1, at 132, reprinted in 1986 U.S.C.C.A.N. 579, 728. No other statement from Congress suggests any alternative reading of the provision. Because the statute contains no language plainly at odds with this stated purpose, we view the Judiciary Committee's report as further support for our conclusion that private *588 plaintiffs may not sue individuals under EMTALA.
Thus, the district court's grant of summary judgment dismissing Plaintiff's claim against Dr. Lessem pursuant to EMTALA is affirmed.
CONCLUSION
For the reasons set forth above, with respect to Plaintiff's claims against the hospital, the judgment of the district court is REVERSED and REMANDED for further proceedings consistent with this opinion. With respect to Plaintiff's claim against Dr. Lessem pursuant to EMTALA, the district court's order granting summary judgment is AFFIRMED.
NOTES
[*] The Honorable Frederick P. Stamp, Jr., Senior United States District Judge for the Northern District of West Virginia, sitting by designation.
[1] To the extent Plaintiff argues that the hospital's physicians were negligent in failing to recognize that Howard had an emergency medical condition, such an allegation is reserved for state malpractice law. See, e.g., Bryant v. Adventist Health Sys., 289 F.3d 1162, 1166 (9th Cir.2002).
|
77 S.W.3d 624 (2002)
Annette HOPKINS, Plaintiff/Appellant,
v.
Brenda MILLS-KLUTTZ, Defendant/Respondent.
No. ED 78315.
Missouri Court of Appeals, Eastern District, Division One.
January 15, 2002.
Application for Transfer Denied February 20, 2002.
*625 Michael A. Gross, St. Louis, MO, for appellant.
Thomas Carter, II, Beverly R. Kinds Steward, St. Louis, MO, for respondent.
Application for Transfer to Supreme Court Denied February 20, 2002.
KATHIANNE KNAUP CRANE, Judge.
Plaintiff filed a lawsuit against two physicians to recover damages for the wrongful death of her husband. Plaintiff settled with one defendant and obtained a default judgment against the other defendant. The trial court granted a motion to set aside the default judgment and held a trial on liability. Plaintiff appeals from the verdict in defendant's favor on the grounds that the trial court erred in setting aside the default judgment and in denying her motion for judgment notwithstanding the verdict. We affirm.
PROCEDURAL BACKGROUND
On January 11, 1993 plaintiff, Annette Hopkins, filed a six-count petition against H.A. Osaghae-Morgan, M.D., and Brenda Mills Kluttz, M.D., to recover damages for the wrongful death of her husband, Richard Hopkins. On March 15, 1993 the court entered an interlocutory order of default against Dr. Mills-Kluttz, which Dr. Mills Kluttz moved to set aside. In 1996 plaintiff settled her claims against Dr. Osaghae-Morgan for $300,000.
On July 11, 1997 the trial court called Dr. Mills-Kluttz's July 29, 1993 motion to set aside the interlocutory order of default. Dr. Mills-Kluttz did not appear. The court overruled the motion and entered a default judgment against Dr. Mills-Kluttz in the amount of $500,000. On July 1, 1998, Dr. Mills-Klutz was garnished. On July 8, 1998, Dr. Mills-Kluttz filed, through new counsel, a motion to set aside the July 11, 1997 default judgment. In her affidavit in support of her motion, Dr. Mills-Kluttz attested that, after being served, she retained counsel at all times throughout the entire proceeding. She averred that she was unaware of the July 11, 1997 hearing, at which no one appeared on her behalf. Additionally, she attested that she did not receive notice of the default judgment until she was garnished on July 1, 1998.
The trial court subsequently granted Dr. Mills-Kluttz's motion to set aside the default judgment. It found that Dr. Mills-Kluttz not only demonstrated an arguable theory that would defeat plaintiff's claim, but set out specific and detailed facts and evidence "supporting a cogent argument that she was not responsible for [Mr. Hopkins's] *626 care and diagnosis at the time relevant to this lawsuit." It found good cause in that defendant had continuously maintained her same defense, but her former counsel at that time had failed to appear at the hearing on the motion to set aside the interlocutory order. The trial court noted that her former counsel had since been suspended for conduct involving violations of the rules of professional responsibility concerning the proper handling of clients' matters. It found that Dr. Mills-Kluttz had not intentionally or recklessly attempted to impede the judicial process. It also found that plaintiff would not suffer injustice if the court set aside the judgment. It ordered a trial on liability.
The jury returned a verdict in favor of Dr. Mills-Kluttz. Plaintiff filed a motion for judgment notwithstanding the verdict, on the grounds that Dr. Mills-Kluttz had admitted facts at trial that contradicted the facts in the affidavit relied upon to set aside the default judgment. The trial court denied the motion.
DISCUSSION
1. Set Aside of Default Judgment
For her first point, plaintiff contends the trial court erred in granting Dr. Mills-Kluttz's motion to set aside the default judgment because it was filed 362 days after the entry of the default judgment and not within a reasonable time under Rule 74.05(d).
A motion to set aside a default judgment rests within the sound discretion of the trial court. Distribution Transp. Svcs., Inc. v. Salihovic, 2 S.W.3d 822, 824 (Mo.App.1999). The discretion to not set aside a default judgment is narrower than that to set aside a default judgment. Id. at 824-25. The rationale for this distinction is that our system dislikes default judgments and favors a trial on the merits. Id. We will find an abuse of discretion only where the record convincingly demonstrates abuse. Klaus v. Shelby, 42 S.W.3d 829, 831 (Mo.App.2001).
Rule 74.05(d) directs, in part, that a default judgment may be set aside upon a motion which "shall be made within a reasonable time not to exceed one year after the entry of the default judgment." Dr. Mills-Kluttz filed her motion within one year after entry of the default judgment. The question is whether the filing 362 days after that entry was within a "reasonable time."
In determining reasonableness, we look at the underlying circumstances surrounding the delay. We consider whether the delay resulted in substantial harm to plaintiff and whether anything happened during the period of the delay that would adversely affect plaintiff's ability to pursue her cause of action on the merits. See Keltner v. Lawson, 931 S.W.2d 477, 482 (Mo.App.1996).
The record does not indicate that plaintiff was adversely affected by the 362-day delay. This lawsuit had already been subject to significant other delays over the previous five years. There was a four-year delay from the time the interlocutory default was entered until the time the default judgment was entered and another delay of eleven months before plaintiff attempted to execute on the judgment. See Meramec Valley Bank v. Joel Bianco Kawasaki Plus, Inc., 14 S.W.3d 684, 689 (Mo. App.2000). Dr. Mills-Kluttz's defense was first asserted in the motion to set aside the interlocutory order of default and remained the same throughout the course of the litigation. Further, nothing in the record suggests that Dr. Mills-Kluttz or her attorneys delayed in moving to set aside judgment to gain any tactical advantage. Under these circumstances, the trial court did not err in failing to find the 362-day *627 delay to be unreasonable. See Clark v. Brown, 814 S.W.2d 634, 638 (Mo.App. 1991).
The trial court did not abuse its discretion in setting aside the default judgment. Point one is denied.
2. Denial of Motion JNOV
For her second point plaintiff asserts that the trial court abused its discretion in denying her motion for judgment notwithstanding the verdict. Plaintiff first contends the trial court erred in denying the motion for judgment notwithstanding the verdict because the motion to set aside should not have been granted because Dr. Mills-Kluttz failed to file it within a reasonable time. We have disposed of this contention in our discussion of Point One.
Plaintiff next asserts that the trial court erred in denying the motion for judgment notwithstanding the verdict because Dr. Mills-Kluttz's trial testimony established that her affidavit in support of the motion to set aside the default judgment was false and she therefore failed to prove she had a meritorious defense as required by Rule 74.05(d). Plaintiff argues that Dr. Mills-Kluttz ultimately failed to show facts constituting a meritorious defense because she "admitted at trial that she was Hopkins'[s] primary care physician and always had been responsible for monitoring his medical condition and that she had spoken with Dr. Osaghae-Morgan about Mr. Hopkins after she referred Mr. Hopkins to Dr. Osaghae-Morgan and after Mr. Hopkins'[s] surgery was completed."
Dr. Mills-Kluttz attested in her affidavit as follows:
4. That in the year of 1988 and 1989 I saw Richard Hopkins in my office for a routine physical examination. He came back to the office in 1990 with a prostate complaint.... He saw Dr. H.A. Osaghae-Morgan and was apparently hospitalized... for prostate surgery. I was not the attending physician nor the consulting physician while he was in the hospital.... I did not see the patient again until March or April, 1992 when.... I referred him to Dr. Yates [and] ... Dr. Yates diagnosed Richard Hopkins with cancer.
5. [D]uring the hospitalization ... [Hopkins was] under the care and treatment of Dr. Osaghae-Morgan....
6. That no communication was ever had between myself or Dr. Osaghae-Morgan concerning the care, custody and treatment of Richard Hopkins, either before, during or after his hospitalization.
7. I did not occupy the position of Mr. Hopkins'[s] primary care physician nor a consulting physician while he was in the care and treatment of Dr. Osaghae-Morgan.
9. I did not serve [in] any capacity [as] the treating or admitting physician when Richard Hopkins was admitted [to the hospital].... I was not the treating or admitting physician.... I was not informed of Mr. Hopkins'[s] cancerous condition.
These allegations supported a meritorious defense. A referral of a patient by one physician to another competent physician, absent partnership, employment, or agency, does not impose liability on the referring physician. Mincey v. Blando, 655 S.W.2d 609, 612 (Mo.App.1983). The mere referral of a patient by one doctor to another competent doctor does not by that fact impose liability on the physician who refers for the negligence of the other. Sall v. Ellfeldt, 662 S.W.2d 517, 526 n. 4 (Mo.App. 1983). A referring physician is not liable for the negligence of the treating physician if the referring physician *628 merely referred the patient whereupon the treating physician assumed responsibility, did not participate in the operation, was not alleged to be negligent in his referral, and was not claimed to be engaged in any partnership with the treating physician. Mincey, 655 S.W.2d at 612.
Plaintiff argues that Dr. Mills-Kluttz's trial testimony contradicted the averments in her affidavit and the trial court should have entered a judgment notwithstanding the verdict for this reason. This argument has no merit.
We do not reach the question of whether inconsistent trial testimony can be a basis for restoring a default judgment because Dr. Mills-Kluttz's trial testimony did not contradict the averments in her affidavit and because her trial defense was the same defense she asserted in her affidavit. She clearly testified that the doctor patient-relationship terminated during the period of time Mr. Hopkins was under the specialist's care and resumed again after the specialist released him as a patient. Her conversations with the specialist while Mr. Hopkins was under his care do not show that Mr. Hopkins remained under Dr. Mills-Kluttz's care. The specialist merely called her to thank her for the referral and called her again on the day of Mr. Hopkins's surgery and told her that Mr. Hopkins was doing fine, that he would follow the patient, and that he would call her if anything out of the ordinary happened, but did not. By its verdict, the jury determined from the trial evidence that Dr. Mills-Kluttz was not responsible for the patient's care during the time relevant to this lawsuit, the same defense that was set out in the affidavit.
The trial court did not abuse its discretion in denying the motion for judgment notwithstanding the verdict. Point two is denied.
The judgment of the trial court is affirmed.
WILLIAM H. CRANDALL, JR., P.J., and ROBERT G. DOWD, JR., J., concur.
|
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HOOMAN ASHKAN PANAH, No. 13-99010
Petitioner-Appellant,
D.C. No.
v. 2:05-cv-07606-
RGK
KEVIN CHAPPELL, Warden of
California State Prison at San
Quentin, OPINION
Respondent-Appellee.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted June 26, 2019
Pasadena, California
Filed August 21, 2019
Before: Kim McLane Wardlaw, Jacqueline H. Nguyen,
and John B. Owens, Circuit Judges.
Opinion by Judge Owens
2 PANAH V. CHAPPELL
SUMMARY *
Habeas Corpus
The panel affirmed the district court’s denial of Hooman
Panah’s habeas corpus petition challenging his State of
California conviction and sentence for the first-degree
murder and sexual assault of an eight-year-old girl.
The district court granted a certificate of appealability as
to Panah’s claim brought pursuant to Napue v. Illinois, 360
U.S. 264 (1959), in which Panah, relying on post-conviction
DNA reports, contended that he was prejudiced by the
State’s presentation of serology testimony which, he argued,
the State knew was false and misleading. The panel held that
the California Supreme Court reasonably rejected this claim.
The panel held that even assuming there was no reasonable
basis for the state court to deny the claim as to the first two
Napue requirements – that the testimony was false or
misleading, and that the State knew or should have known
that – the panel could not say that it would be unreasonable
to conclude that the testimony did not satisfy the third
requirement – materiality. Observing that even setting aside
the serology testimony, the case against Panah was
devastating, the panel held that the California Supreme
Court would not have erred in finding no reasonable
likelihood that the testimony could have affected the verdict.
The panel expanded the certificate of appealability to
encompass Panah’s claim that his trial counsel rendered
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
PANAH V. CHAPPELL 3
ineffective assistance by failing to conduct a reasonable
investigation and therefore not rebutting the State’s serology
and pathology evidence. The panel expressed concern with
counsel’s lack of pre-trial investigation, but held that even
assuming counsel’s performance was deficient, it could not
say – in light of the overwhelming evidence of Panah’s guilt
and the deference owed the state court judgment – that the
California Supreme Court would have erred in finding no
reasonable probability that, but for counsel’s unprofessional
errors, the result of the proceeding would have been
different.
COUNSEL
Joseph A. Trigilio (argued), Mark R. Drozdowski, and Susel
B. Carrillo-Orellana, Deputy Federal Public Defenders;
Hilary Potashner, Federal Public Defender; Office of the
Federal Public Defender, Los Angeles, California; Firdaus
F. Dordi, Los Angeles, California; for Petitioner-Appellant.
Toni R. Johns Estaville (argued), Ana R. Duarte, A. Scott
Hayward, and Dana M. Ali, Deputy Attorneys General;
Lance E. Winters, Senior Assistant Attorney General;
Gerald A. Engler, Chief Assistant Attorney General; Xavier
Becerra, Attorney General; Office of the Attorney General,
Los Angeles, California; for Respondent-Appellee.
4 PANAH V. CHAPPELL
OPINION
OWENS, Circuit Judge:
California state prisoner Hooman Panah appeals from
the district court’s denial of his habeas corpus petition
challenging his conviction and sentence for the first-degree
murder and sexual assault of eight-year-old Nicole Parker.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
In the early afternoon of November 20, 1993, Parker
went missing from her father’s apartment complex, where
Panah also lived with his mother. While searching for her in
the complex, Parker’s father knocked on Panah’s door and
asked if Panah had seen her. Panah responded something
like, “oh, is she missing.” He then offered to help Parker’s
father look for her, “persistent[ly]” suggesting they search
outside the apartment complex. Soon after, the police
arrived and conducted a door-to-door search for Parker,
including Panah’s apartment. The police did not find Parker
or any clues as to her whereabouts.
That day, Panah reported to work in the mid-afternoon.
Around 5:30 pm, his mother, who was with two police
officers, called Panah. The officers asked him if he knew
Parker or had seen her that day. He responded that he knew
her only “vaguely” and denied having seen her that day.
Shortly after the officers’ inquiry – hours before his shift
ended – Panah left work without telling anyone. He later
called his manager to say that he would not return “because
some people that he knew [were] trying to get him in trouble
and would [his manager] please inform his mother to get out
PANAH V. CHAPPELL 5
of town.” Panah also paged his co-worker, Rauni Campbell,
asking for help. He told her that he “d[id] something very
bad,” “so big” that she would find out.
The next morning, Panah showed up without warning at
Campbell’s apartment. His wrists were cut, and he requested
sleeping pills, which she helped him buy. Campbell asked
Panah if he had anything to do with “the little girl that was
missing from his apartment complex.” He said yes. She
then asked him whether Parker was still alive. He said no.
At this point, Campbell surreptitiously called the police.
When they arrived, Panah tried to evade arrest but was
eventually caught and taken to the hospital. At the hospital,
under the influence of drugs and reportedly in a psychotic
state, Panah told police, in response to questions about
Parker, that he “liked her very much, even [to] carry her
skeleton remains around.”
Later that evening, the police, armed with a search
warrant, returned to Panah’s apartment. In his bedroom
closet, they found Parker’s naked body, wrapped in a
bedsheet and stuffed in a suitcase. The police then gathered
evidence from Panah’s bedroom, including examining his
bed and Parker’s body for evidence of sexual assault.
Panah was indicted on charges of first-degree murder
with special circumstances alleging that the murder occurred
during a kidnapping, sodomy, lewd acts on a person under
fourteen years old, and oral copulation of a person under
fourteen years old. He was also charged with the substantive
counts of kidnapping, sodomy by force, lewd acts on a
person under fourteen years old, penetration of genital or
anal openings by a foreign object with a person under
fourteen years old, and oral copulation of a person under
fourteen years old. Panah pled not guilty.
6 PANAH V. CHAPPELL
Panah was initially represented by a family friend,
Syamak Shafi-Nia, who had limited criminal law
experience. But prior to trial, the court appointed Robert
Sheahen, a veteran criminal lawyer, as lead counsel, and
allowed Shafi-Nia to stay on as second counsel. Sheahen
had requested this appointment, promising the court that he
would facilitate a settlement, which would “save[] a great
deal of time and the taxpayers would be saved a great deal
of money” by avoiding “an extremely costly trial.”
In July 1994, several months before trial, the State
notified the court and defense that it had ordered DNA
testing on evidence found at the crime scene. While
awaiting the test results in September, the court urged
Sheahen to “find a DNA expert to assist you” and “see if
there’s any basis for questioning the results.” In October,
two months before trial, the State shared the DNA test results
with the defense. Again, the court advised Sheahen to retain
an expert, to which Sheahen responded, “That will be taken
care of.”
However, as trial approached, the State decided not to
introduce the DNA evidence. The court pressed defense
counsel why he had not yet independently tested the DNA.
Counsel explained that doing so “would put us in the
position of confirming the prosecution results,” and that he
instead planned to argue that the State’s “failure to do DNA
testing should be held against” them. The court approved of
this strategy, calling counsel’s “tactics . . . very sound in this
particular case.”
PANAH V. CHAPPELL 7
Panah’s trial began on December 5, 1994. With jury
selection set to begin, Sheahen notified the court that Shafi-
Nia was no longer able to serve as second counsel but did
not request a continuance. Accordingly, Panah began jury
selection with just one lawyer. Shortly after, the court
appointed new second counsel to replace Shafi-Nia, but
second counsel was required to familiarize himself with the
case during trial.
The State’s theory was felony murder. It emphasized the
abundance of circumstantial evidence against Panah and
focused on “Parker’s body bloody and battered,” which was
“tied up in a sheet inside a zipped suitcase” in Panah’s closet.
It also highlighted Panah’s incriminating behavior soon after
Parker went missing, including that Panah was “anxious” to
encourage Parker’s father to search outside the apartment
complex; “had fled” work hours before his shift ended after
receiving a call about Parker from his mother and police; and
made numerous admissions about his involvement in
Parker’s murder. Panah’s manager and Campbell testified
about his statements on the day of and after Parker’s
disappearance.
The State also presented forensic evidence as part of its
case-in-chief.
The coroner, Dr. Heuser, testified that Parker’s physical
injuries occurred premortem. Describing the violent nature
of the assault, she explained that Parker suffered “blunt
force” injuries, including bruising on her forehead, eye,
8 PANAH V. CHAPPELL
neck, lip, arms, and buttocks; scratches on her inner thighs;
and brain swelling. Dr. Heuser also testified to Parker’s
sexual assault injuries. Parker had bruising, as well as signs
of bleeding and tears, in the vaginal and rectal areas. Her
vaginal opening was “very widely” open – most likely
consistent with digital penetration. Her anal opening was
also “widely open and very lax looking,” “consistent with
the insertion of a penis into her rectum.”
Dr. Heuser also testified that Parker’s death was due to
“traumatic injuries,” either the result of “manual
strangulation” or force to Parker’s rectum.
Serologist William Moore testified about stains found on
three items in Panah’s bedroom: (1) the bedsheet Parker was
wrapped in, (2) a robe found on Panah’s bed, 1 and (3) a
tissue from a wastebasket in Panah’s bathroom.
Preliminarily, Moore noted that Panah’s blood type was B
and Parker’s was A. Because his testing discovered that
stains on each item contained a mixture of A and B antigens,
Moore posited that this was consistent with a mixture of
Parker’s and Panah’s bodily fluids and thus sexual contact
between them.
As to the bedsheet, Moore described the stains as
“indicative of a mixture of physiological fluids” – blood,
semen, and amylase (a constituent of saliva and other bodily
fluids) – that included both A and B antigens. Because the
bloodstain was “consistent” with Parker’s type A blood, he
surmised the other stains were consistent with semen from
Panah and saliva from Parker. He also noted that the pattern
1
The district court’s opinion calls the robe a kimono.
PANAH V. CHAPPELL 9
of the stains “could . . . be consistent with the spewing of
semen across the bed sheet.”
Moore similarly testified that the tissue “bore semen
stains, and high amylase activity,” likely from a mix of
Parker’s and Panah’s bodily fluids. Again, he remarked that
this stain “could be consistent with the product of an oral
copulation.” Lastly, he testified that Panah’s robe had a
large stain with a mix of A and B antigens. Because the
robe’s bloodstain was consistent with Parker, he
hypothesized that the B antigens came from Panah’s saliva.
Moore also briefly testified about evidence collected
from the sexual assault examination, although he did not
conduct it. He acknowledged that the oral and anal swabs
had not produced any signs of semen, nor was “the presence
of semen conclusively” found anywhere on Parker’s body.
On cross-examination, Moore admitted that he could not
“establish any certainty” that either Parker or Panah was a
contributor to the stains because of the relatively high
statistical frequency of the A and B antigens matching other
people. Moore further testified that his theory would not
bear out if the A and B antigens on the three items came from
one person with AB blood type. 2
The defense consisted of testimony from Dr. John
Palmer, the emergency room doctor who treated Panah the
day after Parker went missing, and several character
witnesses. Dr. Palmer reported that Panah was “acutely
2
After the State presented its case, the court granted the defense’s
motion for acquittal on the substantive charges of kidnapping and the
special circumstance allegation of kidnapping.
10 PANAH V. CHAPPELL
psychotic” and suicidal when brought into the emergency
room that day.
The State summarized its evidence: “We have blood
typing that matches. We have the body in his suitcase in his
closet, and we have statements he makes that show
knowledge before the body was found. We have his
involvement in the crime clearly established.” The State
focused on where Parker’s body was found: “You have a
body in his closet, in his suitcase. There isn’t a whole lot
more you need to do after that in terms of looking and
investigating outside of the obvious, which is that Mr. Panah
is the person involved.” It also focused on Panah’s
statements after Parker went missing: “Those aren’t crazed
remarks. Those are the remarks of an individual who is
telling exactly what happened.” The State then reminded the
jury of Moore’s testimony, arguing it was “not a harebrained
prosecution theory.” It particularly used his testimony to
prove the alleged oral copulation:
We think the evidence that was presented to
you is very consistent with the fact that he
ejaculated in her mouth, that he allowed her
to spit it out in a Kleenex, because we have
the evidence of semen of his blood type, high
amylase content, indicating a saliva which
matches her blood type on the Kleenex, as
well as having a spattering on the bed sheet
of a mixture of semen and saliva – again the
high amylase indicating saliva – of his type B
and her type A.
It also said that “the one possible inference that can be
drawn” from Moore’s testimony about the robe is that the B
PANAH V. CHAPPELL 11
antigens came from “the saliva of the defendant” during the
sodomy.
Acknowledging that none of this was “conclusive
evidence,” the State argued that, “when taken with
everything else[, this] would indicate that there had been an
act of oral copulation, that there was ejaculate in Nicole
Parker’s mouth.” The State also responded to the defense’s
assertion that its case was weak because of the lack of DNA,
claiming that DNA testing is “usually ordered in a situation
where you don’t have other types of proof available. In this
situation we have the proof available.”
In its closing, the defense questioned the reliability of the
serology evidence, calling Moore’s theory “hogwash,” and
insisted that the stains proved nothing. Rather, counsel
highlighted the lack of DNA evidence, which “could tell us
who’s the source of this stuff . . . [and] whether it, in fact,
could be traced to the deceased or whether it could be traced
to any number of other people.”
The jury convicted Panah of first-degree murder and the
other felonies. The jury also found true the special
circumstance allegations that the murder was committed
while engaged in the crime of sodomy and lewd acts on a
person under the age of fourteen. The jury did not find true
the special circumstance allegation that the murder occurred
in the commission of oral copulation. After the penalty
phase, the jury returned a death sentence.
On March 14, 2005, the California Supreme Court
affirmed Panah’s conviction and sentence, People v. Panah,
12 PANAH V. CHAPPELL
107 P.3d 790 (Cal. 2005), and the United States Supreme
Court subsequently denied certiorari, Panah v. California,
546 U.S. 1216 (2006). About a year later, the California
Supreme Court summarily denied Panah’s first habeas
petition. After filing a protective habeas petition in the
District Court for the Central District of California, Panah
filed a second state habeas petition and a first amended
petition in the district court. The district court stayed
proceedings during the pendency of Panah’s state habeas
proceedings. On March 16, 2011, the California Supreme
Court again summarily denied Panah’s second state habeas
petition, and the district court lifted the stay on Panah’s
federal habeas proceedings.
In his habeas petitions, Panah provided new evidence,
including two reports detailing post-conviction DNA testing
on the stains that Moore testified about at trial. The first
report (“Calandro Report”), prepared in 2004, disagreed
with much of Moore’s testimony. But because the Calandro
Report yielded several inconclusive results, additional
testing was conducted two years later, leading to the second
report (“Inman Report”). Both reports doubted the
foundation of Moore’s mixture theory. The Calandro Report
called “Mr. Moore’s approach . . . biased and indefensible,”
and the Inman Report wrote that “[n]o biological evidence
exists to support the hypothesis that a mixture of biological
fluids from Mr. Panah and Ms. Parker was present on the
tissue, bedsheet, or kimono.”
More specifically, both reports “contradict[ed]” Moore’s
testimony about the tissue. While Moore testified that Panah
and Parker were both possible contributors to the tissue stain,
the reports eliminated any possibility that Parker was a
source. On appeal to this court, the State concedes that
Moore’s tissue testimony was false.
PANAH V. CHAPPELL 13
However, the post-conviction testing produced
inconclusive results regarding the bedsheet and robe stains.
Neither report could definitively eliminate Parker as a
contributor to several stains on the bedsheet. While they
conclusively found that two stains were consistent only with
Panah, they could not conclusively rule Parker out as a
contributor to the three other bedsheet stains. Although this
left open the possibility that Moore’s mixture theory was
correct, the reports opined that this at minimum refuted his
assumption that “Ms. Parker ‘spit out’ ejaculate onto the bed
sheet” because one would then expect to “detect Ms.
Parker’s DNA in significant quantities on the bed sheet.” As
for the robe, the reports agreed with Moore that the
bloodstain was consistent with Parker’s blood type. But,
unlike Moore’s serology testimony, they found no trace of
Panah’s DNA on the robe.
Panah’s habeas petitions also included declarations from
his three trial lawyers. Each declaration acknowledged there
had been almost no pre-trial investigation and only a limited
penalty-phase investigation, nor were any experts retained to
independently analyze the State’s serology and pathology
evidence. Instead, “all of [defense counsel’s] efforts had
gone into the aborted settlement.”
On November 14, 2013, the district court denied Panah’s
petition. As for Panah’s Napue v. Illinois, 360 U.S. 264
(1959), claim, the district court held that, even if post-
conviction DNA testing rendered a portion of Moore’s
testimony false, the California Supreme Court could have
reasonably concluded that it did not render all of the
testimony false and that his testimony was immaterial in
light of the other evidence. In this discussion, the district
court also rejected Panah’s claim of ineffective assistance for
failure to investigate the State’s forensic evidence because
14 PANAH V. CHAPPELL
the California Supreme Court reasonably could have
concluded that Panah was not prejudiced.
The district court granted a certificate of appealability
(“COA”) for Panah’s Napue claim, discussed below in
section III. On appeal, Panah has raised a number of
uncertified issues in his opening brief, which we treat as a
request to expand the COA. 9th Cir. R. 22-1(e). After
asking the State to respond to several of the uncertified
issues, we expand the COA to encompass Panah’s guilt-
phase ineffective assistance claim, addressed below in
section IV, but deny Panah’s request to expand the COA as
to the other uncertified claims. We evaluate Panah’s two
certified claims in turn.
We review the district court’s denial of habeas relief de
novo. Lewis v. Mayle, 391 F.3d 989, 995 (9th Cir. 2004).
Because Panah filed his federal habeas petition after
April 24, 1996, it is subject to the Antiterrorism and
Effective Death Penalty Act of 1996 (“AEDPA”). See
Murray v. Schriro, 745 F.3d 984, 996 (9th Cir. 2014). Under
AEDPA, we may grant relief only if the adjudication
“resulted in a decision that was contrary to, or involved an
unreasonable application of, clearly established Federal law,
as determined by the Supreme Court of the United States,”
28 U.S.C. § 2254(d)(1), or “was based on an unreasonable
determination of the facts in light of the evidence presented
in the State court proceeding,” id. § 2254(d)(2).
Although we typically “look through” a summary
disposition to the last reasoned state court decision, Ylst v.
Nunnemaker, 501 U.S. 797, 806 (1991), here there is no
reasoned state court decision addressing either certified
PANAH V. CHAPPELL 15
claim. Therefore, we independently review the record to
determine whether the California Supreme Court had any
reasonable basis to deny Panah relief. See Reis-Campos v.
Biter, 832 F.3d 968, 974 (9th Cir. 2016) (citing Harrington
v. Richter, 562 U.S. 86, 102 (2011)).
Relying on the two post-conviction DNA reports, Panah
contends that he was prejudiced by the State’s presentation
of Moore’s serology testimony, which he argues the State
knew was false or misleading.
In Napue, the Supreme Court held “that a conviction
obtained through use of false evidence, known to be such by
representatives of the State, must fall under the Fourteenth
Amendment.” 360 U.S. at 269. Nonetheless, a Napue claim
succeeds only if three elements are satisfied. See United
States v. Zuno-Arce, 339 F.3d 886, 889 (9th Cir. 2003).
First, the testimony or evidence in question must have been
false or misleading. See id.; see also Alcorta v. Texas,
355 U.S. 28, 31 (1957) (considering whether “testimony,
taken as a whole, gave the jury [a] false impression”).
Second, the State must have known or should have known
that it was false or misleading. See Zuno-Arce, 339 F.3d
at 889; see also Maxwell v. Roe, 628 F.3d 486, 506 (9th Cir.
2010) (“[E]ven false evidence presented in good faith . . .
hardly comports with fundamental fairness.” (quoting
Killian v. Poole, 282 F.3d 1204, 1209 (9th Cir. 2002))). And
third, because “Napue does not create a ‘per se rule of
reversal,’” the testimony or evidence in question must be
material. Sivak v. Hardison, 658 F.3d 898, 912 (9th Cir.
2011) (quoting Jackson v. Brown, 513 F.3d 1057, 1076 (9th
Cir. 2008)); see also Zuno-Arce, 339 F.3d at 889.
16 PANAH V. CHAPPELL
Materiality under Napue requires a “lesser showing of
harm . . . than under ordinary harmless error review.” Dow
v. Virga, 729 F.3d 1041, 1048 (9th Cir. 2013). But, after
weighing the effect of alleged Napue violations collectively,
see Phillips v. Ornoski, 673 F.3d 1168, 1189 (9th Cir. 2012),
there still needs to be a “reasonable likelihood that the false
testimony could have affected the judgment of the jury.”
Hayes v. Brown, 399 F.3d 972, 985 (9th Cir. 2005) (en banc)
(quoting Belmontes v. Woodford, 350 F.3d 861, 881 (9th Cir.
2003)). Thus, a Napue claim fails if, absent the false
testimony or evidence, the petitioner still “received a fair
trial, understood as a trial resulting in a verdict worthy of
confidence.” Hayes, 399 F.3d at 984 (quoting Hall v. Dir.
of Corr., 343 F.3d 976, 984 (9th Cir. 2003) (per curiam)).
Even if we assume there was no reasonable basis for the
state court to deny Panah’s claim as to the first two Napue
requirements, we cannot say that it would be unreasonable
to conclude that Moore’s testimony was immaterial. See
Towery v. Schriro, 641 F.3d 300, 308 (9th Cir. 2010) (not
reviewing all three requirements because petitioner’s
“argument fails at the second Napue prong”). The State
presented a powerful case of Panah’s guilt, with substantial
evidence linking him to Parker’s murder and sexual assault.
Moore’s testimony was just one – and not a crucial – piece
of that presentation. Because the “verdict” is still reasonably
“worthy of confidence,” Phillips, 673 F.3d at 1189 (quoting
Sivak, 658 F.3d at 912), we hold that the California Supreme
Court would not have erred in finding no “reasonable
likelihood that [Moore’s testimony] could have affected the
judgment of the jury.” Hayes, 399 F.3d at 985 (quoting
Belmontes, 350 F.3d at 881); see also Phillips, 673 F.3d
at 1190 (“[T]he prosecution’s Napue violations, although
‘pernicious’ and ‘reprehensible,’ were not material to
PANAH V. CHAPPELL 17
[petitioner’s] conviction of first-degree murder.” (quoting
Hayes, 399 F.3d at 981)).
Even setting aside Moore’s testimony, the case against
Panah was devastating. Parker’s naked body was found in a
suitcase in Panah’s bedroom closet. Blood stains matching
Parker’s blood type – according to both Moore and the post-
conviction reports – were found on Panah’s robe. Moreover,
Panah’s behavior on the day of and after Parker went missing
was highly suspicious. Hours after she disappeared, Panah
tried to divert her father away from where her body was later
found. Then, after the police called Panah at work to ask if
he had seen Parker, he left without explanation, later telling
his manager and Campbell that he was in serious trouble.
The next morning, Panah even confided in Campbell that he
was involved in Parker’s death. See Arizona v. Fulminante,
499 U.S. 279, 296 (1991) (“A confession is like no other
evidence. Indeed, ‘the defendant’s own confession is
probably the most probative and damaging evidence that can
be admitted against him.’” (quoting Bruton v. United States,
391 U.S. 123, 139 (1968) (White, J., dissenting))). And then,
particularly incriminating in light of his statements, Panah
attempted suicide the morning after Parker’s disappearance.
The jury then heard Dr. Heuser’s impactful testimony
about the crime itself. She described Parker’s extensive
injuries from the sexual assault, including significant trauma
to Parker’s vaginal and rectal areas, indicative of digital and
penile penetration. In addition, Dr. Heuser described the
violent nature of the assault: Parker was hit with “blunt
force,” consistent with her “head striking . . . a wall or a
floor” or being hit with a “fist.” As a result, Parker’s brain
was swollen from this “significant impact,” and she had
bruises – some caused by “manual strangulation” – along her
face, neck, arms, buttocks, and legs, and scratches on her
18 PANAH V. CHAPPELL
legs. Dr. Heuser cited strangulation and sodomy as “the
most lethal injuries.”
Although Dr. Heuser’s testimony did not directly
implicate Panah, it was nonetheless critical. It established
that a crime – and a brutal one – took place. When added to
the evidence the jury heard about where Parker’s body was
found and Panah’s statements, it was more than sufficient for
the jury to render a guilty verdict. And, while Panah
contends that Moore’s testimony was prejudicial because of
its at-times graphic descriptions, particularly of oral
copulation, Dr. Heuser’s testimony offered an even more
graphic and detailed description of the entire sexual assault
and murder. As the State itself said, Dr. Heuser’s testimony
is “probably the most telling evidence of what happened.”
The state court also reasonably could have found
Moore’s testimony to be an immaterial part of the State’s
case because it offered the jury, at most, hypotheticals and
wavering findings. Unlike Dr. Heuser’s straightforward
testimony about Parker’s injuries, Moore acknowledged that
his findings rested on a number of assumptions, such as that
the A and B antigens came from two people rather than one
with AB blood type. And even if he was correct that the A
and B antigens came from two people, Moore neither could
definitively say they came from Parker and Panah, nor could
he even narrow the pool of possible matches to less than
hundreds of thousands of people. He said frankly on the
stand: “I cannot establish any certainty based on
conventional serology. I can only demonstrate consistency.”
For this reason, Moore’s testimony was couched in
inconclusive terms, such as “could have originated from” or
were “consistent” with. The State even acknowledged this
weakness in Moore’s findings in closing argument:
PANAH V. CHAPPELL 19
Now the question is, did a person with AB
blood leave . . . body fluids such as blood,
semen[,] and saliva, on the sheets, on the
toilet paper, on the robe. That is one
interpretation. The other interpretation, of
course, is that you have two separate people,
one of whom has type A, and one has type B.
Therefore, at best, Moore’s testimony required the jury
to draw its own inferences. This was not the case of
impactful expert testimony telling the jury that there was a
one-in-a-million chance the evidence matched anyone but
Panah. Rather, any effect Moore’s findings may have had
on the jury – which was reasonably none – was fully
dependent on the other weighty evidence presented by the
State. For instance, without having found Parker’s body in
Panah’s bedroom, no juror could have reasonably inferred
that Parker was the A antigen contributor.
The jury’s verdict removes any lingering doubt about the
materiality of Moore’s testimony. If the State needed
Moore’s testimony at all, it was to prove the special
circumstance allegation and substantive charge of oral
copulation. In its closing, for instance, the State referred to
Moore’s findings of mixed bodily fluids on the tissue and
bedsheet to prove this sexual act. Yet, the jury did not find
true the special circumstance allegation that Parker’s murder
was committed while in the commission of oral copulation.
Although the jury did find Panah guilty of the felony of oral
copulation, the verdict is still telling. A reasonable
interpretation of the jury’s rejection of this special
circumstance is that the jury was not entirely persuaded by
Moore’s mixture theory. In contrast, this highlights the
effectiveness of Dr. Heuser’s testimony. The State relied on
her findings to prove the special circumstance allegations
20 PANAH V. CHAPPELL
and substantive charges of sodomy and lewd acts, which the
jury found to be true.
Still, Panah contends that Moore’s testimony was
material because it was the only evidence identifying him as
the perpetrator. Although creative, this argument makes
little headway. It ignores the substantial evidence tying
Panah to Parker’s murder and sexual assault. This was not a
case where the police had no leads on a suspect. Nor was it
a case where the prosecution needed Moore’s serology
evidence to place Panah at the crime scene. Rather, as the
State emphasized in its closing: “You have a body in his
closet, in his suitcase. There isn’t a whole lot more you need
to do after that in terms of looking and investigating outside
of the obvious, which is that Mr. Panah is the person
involved.” And, as previously mentioned, Panah’s own
admissions linked him to the assault. Thus, even without
Moore’s testimony, the State had no difficulty proving
identity.
For these reasons, Panah’s reliance on Miller v. Pate,
386 U.S. 1 (1967), is unavailing. In Miller, the petitioner
was also charged with the murder and sexual assault of a
young girl without any eyewitnesses to the crime. Id. at 2–
3. The State’s only evidence linking petitioner to the victim
was male underwear, which an expert said had blood stains
on it matching the victim, found near the crime scene. Id.
at 3–4. Post-conviction testing proved the underwear stains
were paint, not blood, and that the State had known this at
trial. Id. at 5–6. The Supreme Court reversed petitioner’s
conviction because, while the State successfully used the
underwear as “an important link in the chain of
circumstantial evidence against the petitioner,” in reality it
was “virtually valueless as evidence.” Id. at 4, 6.
PANAH V. CHAPPELL 21
Miller is clearly distinguishable. First, although the
parties agree that the tissue testimony was false, post-
conviction testing did not render the majority of Moore’s
testimony false. Neither post-conviction report conclusively
refuted his findings as to the bedsheet or robe stains.
Therefore, unlike in Miller, the evidence in question here did
not become “virtually valueless” to convict. Id. at 6.
Second, Moore’s testimony was not the “important link” in
proving Panah’s guilt. Id. at 4. The State did not even need
Moore’s testimony to convict Panah. This case differs
significantly from Miller because here the state court could
reasonably rely on an abundance of other evidence to still
have confidence in the conviction.
Panah’s reliance on Alcorta, 355 U.S. 28, also is
misplaced. There, the Court overturned petitioner’s
conviction because the false “testimony was seriously
prejudicial to petitioner” and “tended squarely to refute his
claim.” Id. at 31. Had the false testimony been corrected,
petitioner’s defense would have been corroborated. But,
here, even if Moore’s testimony had been corrected or
entirely excluded, the jury would not have heard a
significantly different presentation of evidence. At most,
although we think unlikely, the State’s case may have
become marginally weaker.
Rather, this case is quite similar to Sivak, 658 F.3d 898,
in which we rejected a guilt-phase Napue claim because the
court had “full confidence that the jury would still have
convicted.” Id. at 913. There, we held: “[E]ven if the jury
disbelieved [the false testimony] entirely . . . there still is no
‘reasonable likelihood that the false testimony could have
affected the judgment of the jury.’” Id. at 914 (quoting
Jackson, 513 F.3d at 1076). As in Sivak, we think the
California Supreme Court reasonably still could have had
22 PANAH V. CHAPPELL
“full confidence” that the jury would have returned the same
verdict even in absence of Moore’s testimony. Id. at 913.
In sum, we do not think Moore’s testimony was critical
in convicting Panah. Excluding Moore’s testimony, the
State’s case was still devastating and largely unchallenged.
Moore’s testimony was certainly not “the centerpiece of the
prosecution’s case.” Hayes, 399 F.3d at 985. Rather, in light
of the overwhelming evidence against Panah and the jury’s
rejection of the oral copulation special circumstance, it is
reasonable to conclude that his testimony had essentially no
effect on the jury’s decision making. Cf. Dow, 729 F.3d
at 1049–50 (concluding that false testimony was material
because “[t]he evidence against [petitioner] was weak”);
Maxwell, 628 F.3d at 508 (holding that false testimony was
material because it came from a “‘make-or-break’ witness
for the State” and there was a “paucity of other evidence”);
Hall, 343 F.3d at 984 (reversing under Napue “[i]n light of
the already scant evidence on which the conviction was
based”). As such, we conclude that the California Supreme
Court reasonably rejected Panah’s Napue claim.
We next turn to Panah’s guilt-phase ineffective
assistance claim. To prevail, Panah must show that his
counsel’s performance “fell below an objective standard of
reasonableness” and “a reasonable probability that, but for
counsel’s unprofessional errors, the result of the proceeding
would have been different.” Strickland v. Washington,
466 U.S. 668, 688, 694 (1984). “The likelihood of a
different result,” however, “must be substantial, not just
conceivable.” Richter, 562 U.S. at 112. This already
imposing standard becomes doubly difficult to satisfy once
AEDPA deference is tacked on. See Cullen v. Pinholster,
563 U.S. 170, 189 (2011) (“[T]he benchmark for judging any
PANAH V. CHAPPELL 23
claim of ineffectiveness [under Strickland] must be whether
counsel’s conduct so undermined the proper functioning of
the adversarial process that the trial cannot be relied on as
having produced a just result.” (quoting Strickland, 466 U.S.
at 686)).
Panah argues that his trial counsel was ineffective for
failing to conduct a reasonable investigation and therefore
not rebutting the State’s serology and pathology evidence.
In support of his claim, Panah notes that his counsel never
retained an expert to independently analyze the pathology
and serology evidence or to testify at the guilt phase.
Instead, defense counsel essentially seemed to accept the
State’s evidence as true. In post-conviction proceedings,
counsel acknowledged that his inordinate focus on
settlement resulted in too little, if even any, pre-trial
investigation.
While we are instructed to “avoid the temptation to
second-guess [counsel’s] performance,” Mayfield v.
Woodford, 270 F.3d 915, 927 (9th Cir. 2001) (en banc), we
are concerned with defense counsel’s lack of pre-trial
investigation. See Duncan v. Ornoski, 528 F.3d 1222, 1235
(9th Cir. 2008) (“[L]awyers [have] considerable discretion
to make strategic decisions about what to investigate, but
only after those lawyers ‘have gathered sufficient evidence
upon which to base their tactical choices.’” (quoting
Jennings v. Woodford, 290 F.3d 1006, 1014 (9th Cir.
2002))). But we “need not determine whether counsel’s
performance was deficient before examining the prejudice
suffered by the defendant as a result of the alleged
deficiencies.” Strickland, 466 U.S. at 697. Here, even
assuming counsel’s performance was deficient, we cannot
say – in light of the overwhelming evidence of Panah’s guilt
and the deference we owe the state court judgment – that the
24 PANAH V. CHAPPELL
California Supreme Court would have erred in finding no
“reasonable probability that, but for counsel’s
unprofessional errors, the result of the proceeding would
have been different.” Id. at 694.
After weighing counsel’s deficiencies cumulatively with
“the strength of the government’s case,” Rios v. Rocha,
299 F.3d 796, 808–09 (9th Cir. 2002) (quoting Eggleston v.
United States, 798 F.2d 374, 376 (9th Cir. 1986)), we believe
the state court reasonably rejected Panah’s assertion that the
trial’s outcome “would have been dramatically different”
had counsel’s performance not been deficient. Our
reasoning on prejudice bears significant similarities to why
we reject Panah’s Napue claim. We do not wish to harp on
what was detailed in the preceding section, but the State had
a uniquely strong case against Panah. Parker’s body was
found in his bedroom; Panah’s behavior the day of and after
her disappearance was incriminating; Panah admitted his
own involvement in her death; and Parker’s serious physical
injuries, including to her genitalia, were well-documented.
Defense counsel even acknowledged that this evidence was
the foundation of the State’s case: “The critical pieces of
evidence are obviously that the child’s body is found in Mr.
Panah’s closet, her naked body with a considerable amount
of blood. There is evidence . . . that the child was beaten.”
It is, therefore, inconceivable, even had defense counsel
independently investigated the serology and pathology
evidence, that the jury would have reached a different
verdict. See Williams v. Filson, 908 F.3d 546, 570 (9th Cir.
2018) (“We have long recognized . . . that ‘prejudice
resulting from ineffective assistance of counsel must be
“considered collectively, not item by item.”’” (quoting Doe
v. Ayers, 782 F.3d 425, 460 n.62 (9th Cir. 2015))). Even if
the weaknesses in Moore’s and Dr. Heuser’s findings that
PANAH V. CHAPPELL 25
came to light post-conviction were raised at trial, that would
have done nothing to reasonably change the outcome. Not
only was there no “strong, unequivocal, exculpatory
evidence available,” Rios, 299 F.3d at 813, but there was
nothing to substantively challenge the serology or pathology
evidence. It is true that counsel could have told the jury that
Moore’s findings as to the tissue were wrong. But counsel
could not have refuted Moore’s findings as to the bedsheet
and robe stains, and even a different outcome on the felony
of oral copulation would not affect Panah’s guilty verdict
and death sentence. Also, Panah’s contention that he was
prejudiced by counsel’s failure to rebut Moore’s mixture
theory because it put him at the crime scene fails to
acknowledge that finding Parker’s body in his bedroom
alone was sufficient to do that. Therefore, whatever rebuttal
of the State’s expert witnesses that Panah believes he was
deprived of and thus prejudiced by would not have overcome
the other significant evidence of guilt.
Moreover, for however deficient defense counsel’s
investigation was, the state court also could have reasonably
found no prejudice because counsel adequately challenged
the State’s expert witnesses on the stand. See Richter,
562 U.S. at 111 (“In many instances cross-examination will
be sufficient to expose defects in an expert’s presentation.”).
During Moore’s cross-examination, defense counsel
attempted to cast doubt on his findings. His questions
pushed Moore to acknowledge the high statistical
probability of persons other than Panah and Parker
contributing to the stains, and that Moore could not even
“determine when th[e] stains were deposited.” Counsel also
remarked that Moore offered nothing more than
“inconclusive blood typing,” hypothesized that Moore
simply “construct[ed] some sort of theory whereby you can
link that blood to Mr. Panah or to the deceased,” and
26 PANAH V. CHAPPELL
questioned why the jury was “not offered DNA evidence.”
Notably, even one of the post-conviction reports described
the cross-examination of Moore as “reasonably successful.”
Similarly, we do not think there was anything in the
defense’s questioning of Dr. Heuser that would have
changed the outcome. There was nothing to rebut her
detailed testimony about Parker’s extensive injuries. Panah
instead alleges that he was prejudiced by counsel’s failure to
rebut Dr. Heuser’s assessment of the cause and time of death.
But at trial, counsel did flag concerns with this part of her
testimony. Thus, we agree with the district court’s
conclusion that, “in light of the ‘setting of a sexual assault,’”
further challenging Dr. Heuser’s testimony on the cause of
death “would have been no more palatable to the jury.”
As a result, the state court would not have unreasonably
determined that counsel’s casting-doubt strategy was
appropriate, even effective, and thus found a lack of
prejudice. With little to do about the State’s formidable
evidence against Panah, counsel still sought to inform the
jury of weaknesses in the experts’ testimony. See id. (“When
defense counsel does not have a solid case, the best strategy
can be to say that there is too much doubt about the State’s
theory for a jury to convict.”). And here the strategy even
seems to have been somewhat successful, as the jury rejected
the special circumstance allegation of oral copulation. Like
in the Napue analysis, this is probative evidence that the jury
did not give persuasive weight to the serology testimony,
presumably because of defense counsel’s strategy and cross-
examination.
Our analysis is further guided by Richter, in which the
Supreme Court rejected a similar ineffective assistance
claim based on counsel’s failure to present an expert to rebut
the State’s forensic evidence. Id. at 111–13. The Court’s
PANAH V. CHAPPELL 27
reasoning is almost entirely applicable here. Holding that
the petitioner was not prejudiced, the Court concluded that
there was little chance of a different outcome because the
post-conviction evidence did not exonerate petitioner and
because some of petitioner’s post-conviction evidentiary
concerns were already raised by counsel at trial before the
jury. The Court went on to determine – as is also applicable
here – that the petitioner also did not prove any likelihood of
a different outcome because he had done nothing to rebut the
other “sufficient conventional circumstantial evidence
pointing to [his] guilt.” 3 Id. at 113.
We do not hold that counsel should not have done more.
But, based on the particular facts before us, we recognize
there was “nothing more than a theoretical possibility” of a
different verdict. Id. at 112. The evidence of Panah’s guilt
was so strong that there remained an “ample basis for the
California Supreme Court to think any real possibility of
[Panah’s] being acquitted was eclipsed by the remaining
evidence pointing to guilt.” Id. at 113. Therefore, we affirm
the district court’s denial of Panah’s ineffective assistance
claim.
AFFIRMED.
3
Panah’s attempt to analogize his case to several out-of-circuit cases
falls short. For instance, in Elmore v. Ozmint, 661 F.3d 783, 871–72 (4th
Cir. 2011), the Fourth Circuit held that the petitioner was prejudiced by
counsel’s failure to investigate any of the prosecution’s forensic
evidence. But, there, “[t]he case was a real ‘who-done-it,’” and, with a
proper “investigation, the jury undeniably would have seen a drastically
different – and significantly weaker – prosecution case.” Id. at 861, 870.
None of that is true here.
|
463 P.2d 326 (1969)
The STATE of Montana on the Relation of the GREAT FALLS NATIONAL BANK, A National banking Corporation, Relator,
v.
The DISTRICT COURT OF the EIGHTH JUDICIAL DISTRICT of the State of Montana, IN AND FOR the COUNTY OF CASCADE, and the Honorable Paul G. Hatfield, District Judge, Respondents.
No. 11762.
Supreme Court of Montana.
Submitted October 27, 1969.
Decided December 30, 1969.
Alexander, Kuenning & Hall, Paul Miller argued, and Edward C. Alexander appeared, Great Falls, for relator.
Hoyt & Bottomly, Richard Bottomly argued, Great Falls, for respondents.
*327 HASWELL, Justice.
Original application for supervisory control by a building owner, The Great Falls National Bank, named as defendant in a Scaffold Act case. Relator was sued in the district court by a workman injured in a fall from a scaffold during exterior renovation of relator's bank building. The district court ordered two of relator's defenses stricken from its answer. Subsequently the district court ordered summary judgment on the issue of liability in favor of the injured workman, leaving only the amount of damages to be determined by the jury at the trial. Relator seeks to have both orders set aside.
The factual background of this case is clear from the exhaustive discovery procedures utilized by the parties. Relator owns a 5-story building in downtown Great Falls on which it began a renovation program in 1966. Relator contracted with several different contractors to perform various phases of the work, one of which was Premier Waterproofing Company covering the cleaning and waterproofing of the exterior of the building.
One of Premier's employees on this job was Richard L. Kible, plaintiff in the district court, who arrived on the job three days after it started. Kible had two coworkers, Valzar Pena and Roy S. Cook. There is some difference in the descriptions and characterizations of Kible's job status among the various parties and witnesses, but it is undisputed that he was an employee of Premier and had supervisory duties in addition to performing the manual labor involved in the renovation. All three employees of Premier were experienced workmen.
Premier's own scaffolds were used to accomplish the exterior renovation. These consisted of a deck or platform on which the workmen stood. Metal stirrups encircled the platform and attached to rope falls consisting of a block and tackle used to raise and lower the deck. The block and tackle was attached by a hook to hangers consisting of a circular cable loop or collar secured together by cable clamps. The hangers slid over the end of the lookouts and were affixed to one side thereof by six penny nails. These lookouts extended a foot or so over the top edge of the building so that the hanger permitted the fall lines to hold the swinging scaffold away from the building by use of the stirrups attached to the scaffold deck.
The lookouts were moved from place to place on the roof of the bank building as the work progressed. The lookouts were not only movable, but were capable of being reversed. At about 10:00 a.m. on November 26, 1966, one lookout had in fact become reversed so that the circular cable hung supported only by six penny nails instead of being supported by the lookout and the weight of the platform. At this time Kible stepped onto the scaffold, the six penny nails pulled loose, and Kible and Cook fell to the sidewalk 60 feet below. At the same time the scaffold deck became disengaged from the rest of the assembly *328 and fell on the injured workmen lying on the sidewalk.
In February 1968, Kible filed an action for damages for his personal injuries in the district court of Cascade county, naming relator as the sole defendant. Kible's suit charged relator as owner of the building with violation of the Montana Scaffold Act, specifically section 69-1401, R.C.M. 1947. Relator answered, setting up the following defenses: (1) failure to state a claim on which relief can be granted; (2) general denial of liability; (3) the sole negligence involved was that of plaintiff as superintendent and alter ego of his employer who had sole exclusive control of the scaffold; and (4) the sole proximate cause of plaintiff's injuries was his own acts and omissions.
Plaintiff Kible moved to strike the last two defenses. After hearing and argument, the district court ordered them stricken on August 22, 1968. Thereafter on March 31, 1969, plaintiff Kible moved for summary judgment on the question of negligence and proximate cause. This motion was heard, argued, and granted by district court order dated April 30, 1969, reading in material part as follows:
"IT IS ORDERED, ADJUDGED and DECREED that the plaintiff's motion for summary judgment is granted. Section 69-1401 imposes upon the owner absolute liability to insure that all scaffolds shall be well and safely supported and properly secured so as to insure the safety of persons using them and to prevent the falling thereof. The Court finds there is no genuine issue of fact for jury determination insofar as a violation of the statute in question and that such violation was a proximate cause of the plaintiff's injury. Therefore, the only question of fact that shall be presented to the jury is the question of what damage, if any, was suffered by the plaintiff as a result of violation of the scaffold act."
Relator now seeks a writ of supervisory control from this Court to the end that the district court's orders of August 22, 1968 and April 30, 1969 be vacated and set aside.
Three underlying issues are presented: (1) Is supervisory control a permissible remedy? (2) Is plaintiff barred from relief under the Scaffold Act where his sole negligence is the sole proximate cause of his injuries? (3) Is a landowner not in direct supervision and control of the work liable for a violation of the Scaffold Act?
The first issue involves procedural matters only. Relator here seeks supervisory control to review two orders of the district court: (1) the order striking two defenses from its answer, viz. plaintiff's contributory negligence and that plaintiff's own acts and omissions were the sole proximate cause of the accident, and (2) the order granting plaintiff summary judgment on the issue of liability. These orders are not directly appealable, neither being denominated an appealable order in Rule 1, M.R.App.Civ.P., presumably because each is interlocutory in character and reviewable on appeal from final judgment.
But an appeal from a final judgment here would impose undue hardship on relator and be wholly inadequate as a remedy. Relator would be forced to go to trial with its liability already established and no longer an issue when in fact its basic defense is that it is not liable at all. Supervisory control has heretofore been granted by this Court to prevent needless litigation, the rationale being that under such circumstances the remedy by appeal is not adequate. State ex rel. Eacker v. District Court, Mont., 459 P.2d 686, 26 St.Rep. 604; State ex rel. Buttrey Foods, Inc. v. District Court, 148 Mont. 350, 420 P.2d 845; State ex rel. Ryder v. District Court, 148 Mont. 56, 417 P.2d 89; State ex rel. Stand. Life & Acc. Ins. Co. v. Dist. Ct., 149 Mont. 107, 423 P.2d 291. Accordingly we hold that supervisory control is an available remedy in the instant case.
Proceeding to the second underlying issue, relator contends that plaintiff is *329 barred from relief because his own negligence was the sole proximate cause of his injury and damages. Relator argues that any violation of the Scaffold Act for which it could be held liable was committed by the plaintiff himself. Thus, relator claims, plaintiff was in pari delicto with it and, having himself violated a penal statute, cannot now recover for his injuries resulting from such violation.
This issue, at this stage of the proceeding, need not be answered since it is contained within the first two defenses raised in the answer and no motion for summary judgment has been made by the defendant. In our handling of the third issue hereafter, further proceedings in the district court are indicated and this second issue may or may not be involved in any attempted amendment of pleadings. Accordingly, we find it unnecessary to rule on this issue at this time.
The third issue set forth above is the principal issue in this case. It has not heretofore been presented to this Court for ruling although there is dictum in Pollard v. Todd, 148 Mont. 171, 418 P.2d 869 and in Joki v. McBride, 150 Mont. 378, 436 P.2d 78, suggesting an answer. The issue, simply stated, is this: Is a landowner not in direct supervision and control of the work liable in damages for violation of the Scaffold Act by an employee of an independent contractor?
The injured employee contends that the Scaffold Act is a safety statute designed to protect a specific class of persons, viz. those who must work on and around scaffolds, and therefore in the light of such purpose imposes a different duty than that existing at common law. Specifically, according to the injured workman, an absolute nondelegable duty is imposed on the landowner for the dual purpose of (1) preventing scaffold accidents from occurring, and (2) providing remedies for scaffold workers who are injured in accidents. Accordingly, the injured employee argues, absolute liability is fixed upon the landowner irrespective of fault or negligence on his part, on the part of the independent contractor, or on the part of the injured employee or his fellow workmen, because of the extrahazardous nature of the work. For this reason, the injured employee claims, the landowner cannot insulate himself against liability by having the work done by an independent contractor.
On the other hand, relator contends that the landowner here, lacking the necessary expertise itself, contracted with an expert to do the work and should not be held liable for any mistakes of such independent contractor. Relator points out that this is the only means it has of protecting itself and it would be unjust and inequitable to hold it liable under such circumstances. Finally, relator argues, a fair reading of the Scaffold Act indicates that the legislature intended to impose liability only on persons in control of the work and not upon landowners per se, contrary dictum in Pollard, supra, and Joki, supra, notwithstanding.
At the outset we note that plaintiff's claim against relator is grounded on negligence per se resulting from violation of a safety statute (the Scaffold Act) enacted for the protection of a class (scaffold workmen and others) of which plaintiff is a member. This basis of liability has long been recognized in Montana. Williams v. Maley, 150 Mont. 261, 434 P.2d 398; Burns v. Fisher, 132 Mont. 26, 313 P.2d 1044, 67 A.L.R.2d 1; Daly v. Swift & Co., 90 Mont. 52, 300 P. 265. Thus we must recognize initially that liability, if any, in the instant case is still based upon and controlled by negligence principles; describing liability here as vicarious liability, without fault, strict liability and similar inexact terms does not change these negligence principles one bit, but on the contrary results in nothing but confusion.
We now direct our attention to the Scaffold Act itself. Montana's Scaffold Act was enacted by the 1909 legislature, appearing initially as Chapter 107 of the 1909 Session Laws and later codified as sections 69-1401 to 69-1405 inclusive, R.C.M. *330 1947. The basic duty owing to scaffold workers and others is clear from the plain language of the Act which provides in material part:
"All scaffolds erected in this state for use in the erection, repair, alteration, or removal of buildings shall be well and safely supported, and sufficient width, and properly secured, so as to insure the safety of persons working thereon or passing thereunder, or by the same, and to prevent the falling thereof, or of any material that may be used, placed, or deposited thereon." Section 69-1401, R.C.M. 1947.
The purpose of this statute has previously been held by this Court to be for the protection of workmen and others from the extraordinary hazards associated with scaffolds (Pollard v. Todd, supra), which holding was later quoted with approval by this Court in Joki v. McBride, supra.
Breach of this basic duty is established by proving a violation of the Scaffold Act. Such breach constitutes negligence per se. If such negligence per se proximately causes injury to the workman, he is entitled to recover. Pollard v. Todd, supra.
But against whom is the injured workman entitled to recover? Or stated another way, who owes the basic duty imposed by the Scaffold Act? We must look to the Scaffold Act itself to determine the answer to this question. Section 69-1402, R.C.M. 1947, imposes a duty on "every owner, person, or corporation who shall have the direct and immediate supervision or control of the construction or remodeling of any building having more than three framed floors" to provide a temporary planked floor "which shall be laid to form a good substantial temporary floor for the protection of employees and all persons engaged above or below, or on such temporary floor in such building". (Emphasis supplied.)
Section 69-1404, R.C.M. 1947, provides that "It shall be the duty of all owners, contractors, builders, or persons having the direct and immediate control or supervision of any buildings" under construction to protect stairways, elevator openings, flues, and all other openings in the floors. (Emphasis supplied.)
Section 69-1405, R.C.M. 1947, provides that "Any person violating any of the provisions" of the Act shall be fined and places a duty in the building inspector, through the county attorney, "in case of failure of such owner, person, or corporation to comply with this act promptly" to take the necessary steps to enforce the Act. (Emphasis supplied.)
It should be noted that the particular section of the Scaffold Act imposing the basic duty involved in the instant case is expressed in the passive voice and does not specify what persons owe the duty imposed. As a consequence some judicial interpretation is necessary.
There is language in Pollard, supra, and Joki, supra, indicating that the landowner owes an absolute nondelegable statutory duty to protect workmen and others from the extraordinary hazards associated with scaffolds. However, this language must be construed in the context of the case in which it was used. Pollard involved a landowner in control of the work and giving orders directly to the workmen involved, while Joki involved a situation where there was no violation of the Scaffold Act. Neither case involved a situation where there was a violation of the Act and the landowner was not in control of the work. Consequently whatever was said in either case about the liability of a landowner not in charge of the work for a violation of the Scaffold Act is pure dictum and not controlling precedent. By way of clarification, we expressly overrule any dictum in Pollard, supra, or Joki, supra, suggesting that a landowner not in control of the work owes an absolute, nondelegable statutory duty to a scaffold worker or others, a violation of which by anyone renders him liable to the injured workman.
In our view neither the language nor the purpose of the Scaffold Act suggests *331 any intention by the legislature to grant multiple remedies or damages to injured workmen by granting one recovery against the landowner, another recovery against the general contractor, a third recovery against the subcontractor using the scaffolding, and so on ad infinitum. On the contrary it is clear to us from the language of the Act construed in the light of its purpose that the legislature intended only to make the injured workman whole by granting him relief to the extent of his injuries and damages against the person, firm or corporation having direct and immediate control of the work involving the use of scaffolding.
Plaintiff contends that this Court and the federal courts have "considered the obligation of a landowner or contractee to third persons where work is performed by an independent contractor and has fixed liability on such landowner or contractee where the work was deemed extrahazardous", citing A.M. Holter Co. v. Western Mtg. Etc. Co., 51 Mont. 94, 149 P. 489, L.R.A. 1915F, 835; Neyman v. Pincus, 82 Mont. 467, 267 P. 805; Shope v. City of Billings, 85 Mont. 302, 278 P. 826; Ulmen v. Schwieger, 92 Mont. 331, 12 P.2d 856; Fegles Const. Co. v. McLaughlin Const. Co. (9th Cir.1953), 205 F.2d 637; O'Leary v. James & Wunderlich (D.C. 1960), 192 F. Supp. 462; Zimmer v. California Company (1959), 174 F. Supp. 757. Suffice it to say that although these cases discuss the liability of a landowner or contractee to third persons, the cases themselves simply do not involve situations where an owner not in control of the work who hires an independent contractor is held liable for the latter's negligence.
Accordingly, we vacate and set aside the district court's order dated April 30, 1969, granting plaintiff summary judgment against the owner on the issue of liability. This cause is remanded to the district court for further proceedings not inconsistent herewith.
JAMES T. HARRISON, C.J., and CASTLES and JOHN C. HARRISON, JJ., concur.
|
79 F.Supp.2d 720 (1999)
ENVIRO PETROLEUM, INC.
v.
KONDUR PETROLEUM, S.A., Setiawan Djody d/b/a The Setdco Group, Far Eastern Hydrocarbons, Ltd., Bakrie Group, Indra Bakrie, Aburizal Bakrie and Nirwan Bakrie
No. Civ.A. G-99-405.
United States District Court, S.D. Texas, Galveston Division.
December 20, 1999.
*721 Richard Lee Melancon, Melancon and Hogue, Friendswood, TX, for Enviro Petroleum, Inc., plaintiff.
Charles W. Cunningham, McKool Smith, Dallas, TX, for Kondur Petroleum, S.A., Far Eastern Hydrocarbons, Ltd., defendants.
Robert J. King, Liddell Sapp et al., Houston, TX, for Setiawan Djody dba The Sedtco Group, defendant.
ORDER DENYING KONDUR PETROLEUM'S AND SETIAWAN DJODY'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION
KENT, District Judge.
REQUEST FOR SUPPLEMENTAL BRIEFING
Plaintiff Enviro Petroleum and Defendants Kondur Petroleum and Defendant Setiawan Djody entered into a contract to build and operate a multi-million dollar oil *722 refinery, to be located in the Republic of Kazakhstan. Djody and Kondur were to provide the financing for the project. Enviro was to oversee construction of a "skidmounted refinery" which was later to be shipped to Kazakhstan. Needless to say, the present action was instituted because the financing was never forthcoming. Plaintiff brought suit in this Court alleging breach of contract, fraud, and misrepresentation. Now before the Court is Defendant Setiawan Djody's Motion To Dismiss Pursuant to Rule 12(b)(2), filed August 2, 1999, and Kondur Petroleum's and Far Eastern Hydrocarbon's Joint Motion to Dismiss For Lack of Personal Jurisdiction, filed August 31, 1999. For reasons explained more fully below, Djody's Motion is DENIED, and Kondur Petroleum's Motion is DENIED. At this time, the Court withholds judgement as to Far Eastern Hydrocarbon's Motion.
I. FACTUAL SUMMARY
Djody, d/b/a the Setdco Group, Kondur Petroleum, and Enviro entered into a contract known to the parties as the "Cooperation Agreement Regarding the Kyzyl-Orda Refinery Project" dated August 14, 1996 ("Contract"). Enviro was to oversee the design and construction of a skid mounted refinery. Once built, this refinery was to be shipped to the Republic of Kazakhstan. Enviro had previously negotiated all the necessary agreements, related to the refinery project, with the Kazakhstani authorities.
Kondur and Djody were to supply the necessary financing, expected to be about $80 million. Once the refinery was up and running, Enviro, Kondur, and Djody were each to receive 1/3 of the profits. The financing was never forthcoming, and the project was never completed. Enviro has brought suit alleging breach of contract, fraud, and misrepresentation. As to the fraud and misrepresentation causes of action, Enviro alleges that even prior to the execution of the Contract, Defendants had no intention of providing the necessary financing. According to Enviro, Defendants were only interested in exploiting Enviro's knowledge and expertise related to overseas opportunities in the oil business: Defendants subsequently used Enviro's knowledge and expertise to execute various lucrative contracts which excluded Enviro.
Plaintiff Enviro is a Texas corporation with its principal place of business in Houston. Roger Shani is the owner and chairman of Enviro. Defendant Kondur is a foreign corporation, organized under the laws of Indonesia, with its principal place of business in Jakarta, Indonesia. Defendant Djody is an international businessman whose principal place of operations is Jakarta. Plaintiff alleges that Defendant Setdco Group is Djody's alter ego. Kondur is or was a wholly owned subsidiary of Defendant Far Eastern Hydrocarbon, which is a foreign corporation organized under the laws of Indonesia, with its principal place of business in Indonesia.
On September 27, 1999 Plaintiff filed its First Amended Complaint, adding as Defendants The Bakrie Group, Indra Bakrie, Aburizal Bakrie and Nirwan Bakrie. These newly added Defendants have not submitted any Motions for the Court's consideration. What is now before the Court is Defendant Setiawan Djody's Motion To Dismiss Pursuant to Rule 12(b)(2), filed August 2, 1999, and Kondur Petroleum's and Far Eastern Hydrocarbon's Joint Motion to Dismiss For Lack of Personal Jurisdiction, filed August 31, 1999.
II. ANALYSIS
In Federal Court, personal jurisdiction over a nonresident defendant is proper if: (1) the defendant is amenable to service of process under the forum state's long-arm statute; and (2) the exercise of personal jurisdiction over the defendant is consistent with due process. See Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir.1992). The Texas long-arm statute authorizes service of process on a nonresident defendant if the defendant is determined to be "doing business" in Texas. See Tex.Civ.Prac. & *723 Rem.Code Ann. § 17.042. Because the phrase "doing business" has been interpreted to reach as far as the United States Constitution permits, the jurisdictional inquiry under the Texas long-arm statute collapses into a single due-process inquiry. See Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th Cir.1993).
Whether the exercise of personal jurisdiction over Defendants is consistent with the Due Process Clause of the United States Constitution likewise requires a two-pronged inquiry. First, the Court must conclude that Defendants have "minimum contacts" with Texas. See International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Second, the Court must determine that requiring Defendants to litigate in Texas does not offend "traditional notions of fair play and substantial justice." Id.; see also Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.1994); Ruston Gas Turbines, 9 F.3d at 418. The "minimum contacts" aspect of due process can be satisfied by either finding specific jurisdiction or general jurisdiction. See Wilson, 20 F.3d at 647.
If the conduct of a defendant that supports personal jurisdiction is related to a stated cause of action, personal jurisdiction is known as "specific jurisdiction." See Ruston Gas Turbines, 9 F.3d at 418-19. The minimum contacts prong for specific jurisdiction can be satisfied by a single act if the nonresident defendant "purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefit and protection of its laws." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (holding that a defendant establishes minimum contacts by purposely engaging in conduct directed toward the forum state "such that [the defendant] should reasonably anticipate being haled into court there"); Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958); see also Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir.1990) ("It is well settled that specific jurisdiction may arise without the nonresident defendant's ever stepping foot upon the forum state's soil").
Alternatively, if a defendant has insufficient contacts related to a stated cause of action to support specific jurisdiction, contacts unrelated to the cause of action may confer general jurisdiction. However, these contacts with the foreign state must be both "continuous and systematic" and "substantial." See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 1873, 80 L.Ed.2d 404 (1984); Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1496 (5th Cir.1993) abrogated on other grounds, Marathon Oil Co. v. A.G. Ruhrgas, 145 F.3d 211, 224 (5th Cir.1998).
At the outset, the Court notes that although the burden is on Plaintiff, he need only make a prima facie showing of jurisdiction, and his allegations in that regard are to be taken as true unless controverted; moreover, any conflicts are to be resolved in his favor. See Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 785 (5th Cir. 1990). The Court will examine Plaintiff's arguments with respect to each of the Defendants.
A. Djody, d/b/a Setdco Group and Kondur Petroleum
On the basis of the competent evidence submitted by Enviro, the Court concludes that Enviro has made a prima facie showing of the following facts which are relevant for purposes of determining the propriety of exercising personal jurisdiction over Defendants. Kondur and Djody, through his alter ego the Setdco Group, were parties to a contract with Enviro. As previously described, this contract concerned the design and construction of an oil refinery, which was to be transported to the Republic of Kazakhstan. According to Article 2.2 of the contract, Setdco and Kondur were to contribute the necessary financing for this project, estimated to be about $80 million. Article 2.2 further provides that Setdco and Kondur were to *724 "share the risk of financing the Project equally, i.e. 50% by each party."
Article 2.3 sets out various responsibilities to be shared by Enviro, Kondur and Setdco. Of particular significance to the personal jurisdiction analysis, Article 2.3 provides that the shared responsibilities included:
Selection of EPC firm (Engineering, Procurement & Construction) who will design and construct the Refinery
Negotiation and execution of "Lump-Sum-Turn-Key" ("LSTK") Contract with EPC firm
Project Management
Selection of Technology
Plan start-up, commissioning
Operations & Maintenance (O & M) of the Refinery
Paul Vickery, a resident of Houston, was employed by Djody as Director of International Project Development. Enviro, a Houston based corporation, did not initiate the contacts with Defendants. On the contrary, it appears that Defendants were interested in overseas investment opportunities in the oil business, and employed Vickery to seek out Enviro, in Texas, and negotiate a mutually satisfactory contract. Vickery, in his capacity as agent to Djody and likely Kondur as well, helped draft the terms of the contract, and did so in Houston.
Article 2.3 of the contract indicates that the parties expressly contemplated the selection of EPC firms, negotiation of contracts with those EPC firms, and project oversight, by Enviro, over the construction of the refinery. Enviro, as a Houston based oil company, not surprisingly selected a variety of Texas based firms to perform the EPC work, including Petrofac, a firm based in Tyler, Texas. Not only was it foreseeable to Djody and Kondur that Enviro would select Texas based firms to fulfill its obligations under Article 2.3 of the contract, but Djody and Kondur knew and approved of the use of Texas based EPC firms, even before execution of the contract. There appears to have been voluminous correspondence between the parties concerning the formation of the contract, the selection of the EPC firms, and other matters.
Not only did Defendants know and approve of the construction of the refinery in Texas, it is also apparent that Defendants knew that, once built, Enviro would be managing the refinery out of their Houston facilities. The project was to be insured by a Texas company. It appears that Enviro's share of the profits would have been mailed to Enviro in Houston. After execution of the contract, Enviro partially performed under the contract, in Texas, and Defendants were well aware of this fact.
The Court concludes that by having actively solicited a contract in Texas, with a Texas firm, and having negotiated a contract, in Texas, which called for substantial, long-term performance in Texas, Djody and Kondur have certainly established sufficient "minimum contacts" with the state of Texas so as to support the exercise of specific jurisdiction over them in this breach of contract action. See Burger King, 471 U.S. at 475, 105 S.Ct. at 2183 (finding that a defendant establishes minimum contact by purposely engaging in conduct directed toward the forum state "such that the [defendant] should reasonably anticipate being haled into court there."); Jones, 954 F.2d at 1068-69 (observing that the Fifth Circuit "has consistently looked to the place of contractual performance to determine whether the making of a contract with a Texas resident is sufficiently purposeful to satisfy minimum contacts" and further noting that "the place of contracting and the law governing the contract, while not necessarily determinative, are relevant factors for determining purposeful activity."); Barnstone v. Congregation Am Echad, 574 F.2d 286, 288 (5th Cir.1978) ("[I]t is the place of performance rather than execution, consummation or delivery which should govern the determination of [personal] jurisdiction."); *725 Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 492 (5th Cir.1974) ("performance, contemplated or accomplished, is the touchstone"); Beechem v. Pippin, 686 S.W.2d 356, 362 (Tex.App. Austin, no writ) (active solicitation of a contractual relationship with a Texas resident is sufficient to establish personal jurisdiction over non-resident defendant).
Under the circumstances, Kondur and Djody should have "reasonably anticipated" that if they breached their contract with Houston based Enviro, they might be haled into a Texas court. Indeed, on these facts, Defendants should not merely have "anticipated" that Plaintiff would sue in Texas; Defendants should have positively expected Plaintiffs to choose a Texas forum. The Court is satisfied that Kondur and Djody have sufficient "minimum contacts" with the state of Texas to justify this Court's exercise of personal jurisdiction over them.
Having concluded that Defendants have sufficient minimum contacts with Texas, the Court turns to the next prong of the personal jurisdiction inquiry: whether requiring Defendants to litigate in Texas comports with "traditional notions of fair play and substantial justice." International Shoe, 326 U.S. at 316, 66 S.Ct. at 158. In making this determination, five factors are considered by the Court: the defendant's burden; the interests of the forum state; the plaintiffs interest in convenient and effective relief; the interstate judicial system's interest in efficient resolution of controversies; and the shared interest of the several states in furthering fundamental substantive social policies. See Asahi Metal Indus., 480 U.S. at 113, 107 S.Ct. at 1033; World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980); Ruston Gas Turbines, 9 F.3d at 421. Once a court has found that minimum contacts exist, "[o]nly in rare cases ... will the exercise of jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully established minimum contacts with the forum state." Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex.1991). Indeed, once minimum contacts are established, a defendant must present "a compelling case that the presence of some consideration would render jurisdiction unreasonable." Burger King, 471 U.S. at 477, 105 S.Ct. at 2184.
No doubt Setdco and Kondur will experience some slight inconvenience by being forced to litigate this matter in a Texas forum. But in light of the fact that Defendants are highly sophisticated international business concerns, with multi-million dollars projects scattered throughout the world, it is hard for this Court to find it too burdensome to Defendants to answer in a Texas forum for their alleged breach of a Texas contract they actively solicited from a Texas corporation. See Burger King, 471 U.S. at 474, 105 S.Ct. at 2183 ("because modern transportation and communications have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity, it usually will not be unfair to subject him to the burdens of litigating in another forum for disputes relating to such activity.") (internal quotations omitted). The state of Texas obviously has a strong interest in seeing that Texas corporations have a Texas forum to litigate breach of contract actions with nonresident defendants who have actively solicited a contract in Texas. As compared to a forum in Indonesia, the provision of a Texas forum may go a long way towards satisfying Plaintiff's interest in "obtaining convenient and effective relief." World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. at 564. The Court concludes it is hardly contrary to "traditional notions of fair play and substantial justice" to require Kondur and Setdco to appear in a Texas forum.
The Court finds that the activities of Kondur and Setdco in soliciting, negotiating, and executing the contract at issue, established minimum contacts sufficient to *726 support the exercise of specific jurisdiction in a suit alleging breach of that contract. It is not contrary to traditional notions of fair play and substantial justice to require Setdco and Kondur to defend in a Texas forum. Accordingly, the exercise of personal jurisdiction over Kondur and Setdco is consistent with the due process clause of the 14th Amendment. Kondur's and Setdco's Motion To Dismiss for Lack of Personal Jurisdiction is DENIED.
B. Far Eastern Hydrocarbons
The Court is not satisfied with the state of Plaintiff's pleadings and briefing with respect to the existence of personal jurisdiction over Defendant Far Eastern Hydrocarbons. Kondur Petroleum is or was a wholly owned subsidiary of Far Eastern. While the Court agrees that there is personal jurisdiction over Kondur, Plaintiff's case for personal jurisdiction over the parent corporation, Far Eastern, is at best murky. The unclarity is partly due to Plaintiff's promiscuous use of the term "Defendants," a generic term which on any given occurrence may or may not refer to Far Eastern. In light of the fact that only Defendants Kondur and Setdco were signatories to the contract, it is difficult for the Court to determine on what basis Plaintiff believes personal jurisdiction exists over Far Eastern.
Generally, one corporation's contacts with a forum cannot serve as the basis for holding a parent or subsidiary corporation amenable to personal jurisdiction in that forum. See Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983) (citing 2 J. Moore & J. Lucas, Moore's Federal Practice ¶ 4.25[6], at 4-272 (2d ed.1982)). However, under certain circumstances, a sufficiently close relationship between a parent and its subsidiary may subject one corporation to personal jurisdiction based on the contacts of the other. See id. (citing Walker v. Newgent, 583 F.2d 163, 167 (5th Cir.1978); Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 492 (5th Cir.1974); Turner v. Jack Tar Grand Bahama, Ltd., 353 F.2d 954, 956 (5th Cir.1965)). To impute the contacts of one corporation to another, there must be evidence of one corporation exercising sufficient control over the other to make the other its agent or alter ego. See id.; see also Donatelli v. National Hockey League, 893 F.2d 459, 465 (1st Cir.1990). The United States Court of Appeals for the Fifth Circuit has articulated a list of factors to determine whether corporate entities are sufficiently related to impose jurisdiction on one based on the forum contacts of the other. Those factors include: the amount of stock owned by the parent of the subsidiary; whether the two corporations have separate headquarters; whether the two corporations share common officers and directors; whether corporate formalities are observed; whether separate accounting systems are maintained; whether one exercises complete authority over the other's general policy; and whether one exercises complete authority over the other's daily operations. See Hargrave, 710 F.2d at 1160.
At this time, the Court DECLINES TO RULE on Far Eastern's Motion to Dismiss for Lack of Personal Jurisdiction. Plaintiff is given 30 DAYS, from the date of this Order, to prepare and submit supplemental briefing directed specifically to the existence of personal jurisdiction over Far Eastern. Far Eastern is given 15 DAYS, from the date of Plaintiff's submission, to reply to Plaintiff's Supplemental Brief. Neither brief should exceed 25 pages, exclusive of exhibits and attachments.
III. Arbitration
Even at this nascent stage of the litigation, the Court has been forced to wade through a nearly foot high stack of briefs. This case is already showing a marked potential to become muddled. Consequently, the Court proposes to refocus the efforts of counsel towards what the Court perceives to be the heart of the case: the validity of the arbitration provision in Article 4 of the Contract.
Article 4 provides:
*727 This Agreement shall in all respects be interpreted in accordance with the Laws of Switzerland.
In case of any dispute or disagreement between the parties hereof regarding this Agreement, such dispute or disagreement shall be resolved amicably. Failing amicable resolution, the dispute or disagreement shall be settled by means of arbitration according to the Rules of Arbitration of International Chamber of Commerce by a sole arbitrator approved in accordance with the said Rules. The arbitration procedures will be carried out in Geneva, Switzerland.
Because the Court considers the current state of the briefing on this crucial issue to be unsatisfactory, the parties are invited to submit supplemental briefing focusing exclusively on the issue of arbitration.
The following observations are offered in the hopes that they will sharpen the presentation of the arguments in the supplemental briefing.
A. Federal Arbitration Act
Enviro is cautioned that if Article 4 of the Contract is indeed a valid arbitration clause, under the Federal Arbitration Act, this Court must issue a stay. See 9 U.S.C. § 3; Dean Witter Reynolds v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 1241, 84 L.Ed.2d 158 (1985); Sedco, Inc. v. Pemex, 767 F.2d 1140, 1147 (5th Cir.1985). If Enviro, Setdco, and Kondur, three highly sophisticated commercial entities, have agreed to a valid arbitration clause, this Court has neither the power nor the inclination to rewrite their agreement so as to better conform to Enviro's present desire to avoid arbitration.
B. Waiver of Right to Arbitrate
"There is a strong presumption against waiver of arbitration." Subway Equip. Leasing Corp. v. Forte, 169 F.3d 324, 326 (5th Cir.1999); see also Lawrence v. Comprehensive Bus. Servs. Co., 833 F.2d 1159, 1164 (5th Cir.1987) ("Waiver of arbitration is not a favored finding and there is a presumption against it."). The Court frankly does not understand Enviro's argument that Defendant Djody has waived his right to arbitrate. Enviro claims that it demanded arbitration on numerous occasions, and there is some suggestion in the record that Enviro did threaten to commence arbitration proceedings if the promised financing was not soon forthcoming. Yet Enviro never actually initiated such proceedings, in this Court or any other forum. Indeed, Enviro is not now asking this Court to enforce the arbitration agreement. Moreover, the assertion that Enviro was keenly desirous of arbitration in the past, and was on the verge of actually initiating such proceedings, is in obvious tension with Enviro's present claim that arbitration is prohibitively expensive and ineffective. If Enviro truly cannot afford to arbitrate its claims against Defendants now, how could it have afforded to arbitrate its claims against Defendants in the past?
It appears to the Court that Enviro's waiver argument boils down to the claim that Djody waived his right to arbitrate because he did not actively assist and partially finance Enviro's desire to pursue a claim against him. But it was Enviro, not Djody, who was dissatisfied with the turn of events after execution of the Contract. It strikes the Court as absurd to suggest that a Defendant must initiate and finance a claim against itself on pain of waiving an otherwise valid contractual arbitration provision.
Finally, in light of the fact that Djody immediately moved to stay and enforce the contractual arbitration provision, the Court invites Enviro to explain how Djody has waived his right to arbitrate, since he has not "substantially invoked the judicial process." See Miller Brewing Co. v. Fort Worth Distrib., 781 F.2d 494, 497 (5th Cir.1986) ("Waiver will be found when the party seeking arbitration substantially invokes the judicial process to the detriment or prejudice of the other party"); Walker v. J.C. Bradford & Co., 938 F.2d 575, 578 *728 (5th Cir.1991) (holding that "[p]re-suit activity does not invoke the judicial process and cannot support a finding of waiver"). Enviro's citations to authorities outside the Fifth Circuit are not particularly helpful to this Court.
C. Fraudulent Inducement
In order for Enviro to present a claim that this Court can adjudicate, Enviro must show that the arbitration clause itself, as opposed to the contract as a whole, was induced by fraud. See Shearson Lehman Bros., Inc. v. Kilgore, 871 S.W.2d 925, 928 (Tex.App. Corpus Chrisi 1994, no writ); Gutierrez v. Academy Corp., 967 F.Supp. 945, 946-47 (S.D.Tex.1997) (Kent, J.). The Court is unpersuaded by Enviro's initial argument that the arbitration clause was itself fraudulently induced. Enviro has not identified any sort of material misrepresentation made by Defendant with respect to the arbitration provision.
In essence, Enviro seems to be complaining that Djody failed to fully inform Enviro of the potentially adverse consequences of the arbitration provision. However, this was an arms-length commercial transaction between two highly sophisticated business entities; Djody certainly did not stand in a fiduciary relationship towards Enviro. Consequently, the Court does not understand why Djody's factual omissions in this regard amounts to fraudulent inducement of the arbitration agreement. See Palm Harbor Homes, Inc. v. McCoy, 944 S.W.2d 716, 722 (Tex.App. Ft. Worth 1997, no writ) (finding mobile home seller had no duty to disclose effects of arbitration provision in sales contract because "a party has an affirmative duty to disclose only where a confidential fiduciary relationship exists or where a party later learns that a previous affirmative representation was false."). If the mobile home seller in Palm Harbor Homes had no affirmative duty to disclose the effects of an arbitration agreement to an inexperienced buyer in the context of a retail consumer transaction, it is hard to understand why Djody had an affirmative obligation to disclose the effects of an arbitration clause to a sophisticated Houston oil businessman negotiating a half-billion dollar Kazakhstan oil refinery contract. Enviro is invited to submit to the Court's attention whatever authority it can find for the proposition that an arbitration agreement between sophisticated business entities can be invalidated on the basis of mere fraud in the omission.
D. Unconscionability
Plaintiff argues that the arbitration provision is unconscionable because Enviro cannot afford to pay the fee necessary to initiate the arbitration proceedings. Plaintiff bears the burden of establishing that the arbitration provision is unconscionable. See Arkwright-Boston Mfgr's Mutual Ins. Co. v. Westinghouse Elec. Corp., 844 F.2d 1174, 1184 (5th Cir.1988). By its own admission, Enviro is a major Houston based business with enough savvy and sophistication to broker an oil refinery project in the Republic of Kazakhstan. It is absolutely preposterous for such a company to complain that it cannot afford to arbitrate a dispute related to one of its multi-million dollar business contracts.
Moreover, in response to a question about the arbitration provision prior to the execution of the contract, Enviro's chairman, Roger Shani, wrote "Switzerland arbitration ok, but this is not a major point." In light of such written comments by a sophisticated businessman, the Court is hard-pressed to understand how Enviro proposes to make out a case of procedural unconscionability. The arbitration provision cannot be held unconscionable unless it is both substantively and procedurally unconscionable. See id. ("Under Texas law, Arkwright must prove both substantive and procedural unconscionability to prevail on the unconscionability issue."). The Court would appreciate any light Plaintiff might be able to shed on this issue.
E. Enforceability of Arbitral Award
The Court is not satisfied with Djody's response to Plaintiff's concerns that any *729 arbitral award would be effectively unenforceable in Indonesia. It appears that Djody has simply argued that it would be improper for this Court to prejudge the Indonesian legal system on the basis of Plaintiff's allegations. As a practical matter, this is an exceedingly tepid response given that Plaintiff has indicated genuine concern about the ultimate enforceability of an arbitral award.
The Court has not made a determination that an award would be unenforceable in Indonesia, but does invite the Defendants to explain why this issue should not be of concern to this Court. In particular, the Court would find it helpful for the parties to brief the issue of whether an eventual arbitral award could be enforced in a forum outside Indonesia. Defendants should also identify any steps it might be willing to take to ensure that arbitration is not a pointless exercise in the event the arbitrator issues a ruling adverse to Defendants.
The parties are also invited to submit their thoughts about the proper location for the arbitration proceedings, should the Court decide to order arbitration. Obviously Switzerland is one possibility, but a New York or Houston arbitral forum might also be agreeable to the parties.
Plaintiff's and Defendants' Supplemental Briefs focusing exclusively on the issue of arbitration should not exceed 25 pages, exclusive of exhibits and attachments. Plaintiff is given 30 days from the date of this Order in which to submit the Supplemental Brief. Djody is given 15 days from the date of Plaintiff's submission in which to reply. The Court notes that Kondur has not yet moved to enforce the arbitration provision, although it indicated a desire to do so in its August 31, 1999 Motion to Dismiss for Lack of Personal Jurisdiction. In the event Kondur elects to move for enforcement of the arbitration provision, Kondur is invited to reply to Plaintiff's Supplemental Brief, subject to the same limitations as apply to Djody.
IV. CONCLUSION
For the reasons set forth above, Djody's and Kondur's Motions to Dismiss for Lack of Personal Jurisdiction are DENIED. No ruling has yet been made on Far Eastern's Motion to Dismiss for Lack of Personal Jurisdiction, but Plaintiff is given 30 DAYS from the date of this Order to submit supplemental briefing specifically addressing this issue. Far Eastern is given 15 DAYS from the date of Plaintiff's submission of its Supplemental Brief in which to reply. Neither brief should exceed 25 pages, exclusive of exhibits and attachments.
Enviro is invited to submit an additional Supplemental Brief directed exclusively to the issue of ARBITRATION within 30 DAYS of the date of this Order. Djody is given 15 DAYS from the date of Plaintiff's submission in which to reply. Neither brief should exceed 25 pages, exclusive of exhibits or attachments. In the event Kondur elects to move for enforcement of the arbitration provision, Kondur is invited to submit a reply to Plaintiff's Supplemental Brief.
Defendants Setdco and Kondur are ORDERED to file no further motions, including motions to reconsider and the like, with respect to the Court's denial of their Motions to Dismiss for Lack of Personal Jurisdiction. The parties are ORDERED to bear their own taxable costs and expenses incurred herein to date.
IT IS SO ORDERED.
|
383 B.R. 90 (2007)
In re Nancy E. KOVACS, Debtor.
Nancy E. Kovacs, Plaintiff,
v.
United States of America, Defendant.
Bankruptcy No. 01-27782-jes,
Adversary No. 05-2462.
United States Bankruptcy Court, E.D. Wisconsin.
September 11, 2007.
*91 *92 *93 *94 David V. Meany, Timothy M. Van de Kamp, Dewitt Ross & Stevens, S.C., Brookfield, WI, Douglas H. Frazer, for Plaintiff.
Hilarie Snyder, U.S. Department of Justice, Janene Marie Marasciullo, Tax Division, U.S. Department of Justice, Washington, DC, for Defendant.
DECISION
JAMES E. SHAPIRO, Bankruptcy Judge.
This adversary proceeding is a classic illustration of how a mistake by both sides on the issue of dischargeability of certain tax debts and which issue has been fueled by extensive overlawyering can turn a mole hill into a huge mountain.
This is a core proceeding under 28 U.S.C. §§ 157(b)(2)(A) and (O).
FACTUAL BACKGROUND
The key events involved occurred over a span of the following three time periods:
1. Prior to the commencement of this adversary proceeding (March 2002 through August 2005) (Phase I);
2. From commencement of adversary proceeding to commencement of trial (August 2005 to March 2007) (Phase II); and
3. The trial and related post-trial matters (March, 2007 to present time) (Phase III).
PHASE I
On September 3, 1996, Nancy Kovacs ("Kovacs"), the debtor in the above-entitled adversary proceeding, and the Internal Revenue Service ("IRS"), entered into an offer in compromise ("OIC") resolving Kovacs' tax liabilities for the years 1990, 1991, 1993, 1994, and 1995 ("tax years in question"). One requirement of the OIC was that Kovacs timely file her federal tax returns and pay all taxes due for the five years after the 1996 OIC was accepted by the IRS.
Kovacs was unable to pay her federal tax liability for the year 1999 in the amount of approximately $2,300. On September 13, 2000, the IRS informed Kovacs that she had defaulted under the terms of the OIC and that her failure to pay the 1999 tax liability could result in the termination of the OIC. On January 29, 2001, the IRS notified Kovacs that, because of her failure to pay the 1999 tax liability, the OIC was being terminated immediately and any outstanding unpaid liabilities for the years in question were being reinstated.
On July 3, 2001, Kovacs filed a petition in bankruptcy under chapter 7. She received her bankruptcy discharge on October 10, 2001. On February 26, 2002, Kovacs' chapter 7 bankruptcy case was closed.
On November 5, 2001 (during the time this bankruptcy case was still pending but after Kovacs received her discharge), the IRS notified Kovacs that it had applied $300 from her tax refund due for the year 2000 to her outstanding tax liability for the year 1991.
On March 5, 2002, Kovacs wrote a letter to the IRS seeking to reinstate the terminated 1996 OIC. She also informed the IRS that she had filed a petition in bankruptcy under chapter 7 in "August of 2001."[1] Kovacs further informed the IRS *95 that she received her bankruptcy discharge in October of 2001.
On March 7, 2002, Kovacs met with Atty Douglas H. Frazer who had represented her in negotiating the 1996 OIC. Atty Benjamin C. Grawe, an associate of Atty Frazer, was also present at this meeting. The purpose of this meeting was for Kovacs retaining Atty Frazer to deal with her income tax problems which resulted from her terminated 1996 OIC.
On March 13, 2002, Atty Frazer initiated discussions with the IRS seeking to reinstate the 1996 OIC. On April 2, 2002, Attys Frazer and Grawe submitted a new OIC. The April 2, 2002 OIC was returned to Attys Frazer and Grawe on June 24, 2002 by Ms. Mary Buckner, IRS process examiner, who stated that it could not be considered because the bankruptcy case was "still open." This caused Attys Frazer and Grawe to re-submit to the IRS the April 2, 2002 OIC on July 8, 2002, together with a copy of Kovacs' bankruptcy discharge, for reconsideration.
Negotiations continued between the IRS and Kovacs, by her attorneys, Frazer, and Grawe.
On July 8, 2002, the IRS mailed to Kovacs a series of notices of intent to levy on Kovacs' assets with respect to her outstanding tax liabilities for the tax years in question and also for 1999. The tax liabilities contained in these notices totaled over $154,000.
On January 30, 2003, the IRS rejected Kovacs' July 8, 2002, OIC. Kovacs appealed that determination, and the appeal was assigned to IRS Appeals Officer Teresa Mulcahy. Communications continued in efforts to resolve this dispute. On August 14, 2003, Ms. Mulcahy sent a letter to Kovacs informing her that the IRS concluded that the tax liabilities for all of the tax years in question were dischargeable debts but the tax liability for 1999 was not a dischargeable debt.[2] The nondischargeable 1999 tax liability was then satisfied by transferring the 2001 tax refund from the discharged 1990 tax year to the non-dischargeable 1999 tax liability, together with credits applied from other discharged tax years.
On January 19, 2005, Kovacs' attorneys filed an administrative claim with the IRS for damages in the amount of $11,822.94. This claim was not responded to by the IRS.
On August 11, 2005, Kovacs filed this adversary proceeding for damages against the United States in an unspecified amount. Whenever reference is made in this decision to the IRS, it shall equally apply to the United States and vice versa.
A trial was held on March 19, 2007.
PHASE II
During the pretrial phase of this adversary proceeding, both sides filed voluminous pleadings, starting with the adversary complaint and over 100 pages of exhibits.
Shortly after Ms. Mulcahy's notice was sent to Kovacs, the IRS on September 8, 2003 sent a notice to Kovacs labeled "Statement of Adjustment to Your Account" informing her that she owed $13,222.43 for 1990 taxes. It appears that this was an inadvertent clerical error by the IRS mailed without knowledge of Ms. *96 Mulcahy's August 14, 2003 letter to Kovacs.
On October 19, 2005, the IRS filed a 23-page motion to dismiss this adversary, supported by an additional 29 pages of exhibits. That motion to dismiss was ultimately denied.
On July 7, 2006, the IRS filed a 41-page motion for summary judgment, supplemented by 226 pages of exhibits. On. August 17, 2006, Kovacs responded to the IRS's motion for summary judgment and in addition filed its own motion for summary judgment, which included 183 pages of exhibits. On September 1, 2006, the IRS responded to Kovacs' motion for summary judgment and, in addition, submitted a 14-page reply with 108 pages of exhibits attached to Kovacs' response to the IRS's motion for summary judgment. The IRS also filed on September 1, 2006 a separate motion to strike, containing 84 pages of exhibits.[3]
On October 30, 2006, the court denied the cross motions for summary judgment and set a trial date. At the October 30, 2006 hearing, the court admonished both sides for submitting an overabundance of pleadings in this case.[4]
PHASE III
At the start of this trial, the IRS conceded that it had willfully violated 11 U.S.C. § 524(a) of the Bankruptcy Code by virtue of its attempts to collect discharged tax debts. Kovacs informed the court that her damages resulting from this violation consist entirely of her attorney's fees and costs. This left, as the only remaining issue in the trial, the issue of damages.
Section 524(a) provides that, upon a discharge being granted to a debtor, such discharge constitutes a permanent injunction against the commencement or continuation of any actions taken by a creditor, including any attempts by the IRS to collect a discharged debt as a personal liability of the debtor. Numerous cases hold that reasonable attorney's fees and costs may be recovered against the IRS for willful violation of § 524. See In re Hardy, 97 F.3d 1384 (11th Cir.1996); In re Riser, 298 B.R. 469, 473-74 (Bankr. M.D.Fla.2003); In re Elias, 98 B.R. 332 (Bankr.N.D.Ill.1989); In re Lowthorp, 332 B.R. 656 (Bankr.M.D.Fla.2005); In re Pinkstaff, 974 F.2d 113 (9th Cir.1992); Jove Engineering, Inc. v. Internal Revenue Service, 92 F.3d 1539 (11th Cir.1996); and In re Price, 42 F.3d 1068 (7th Cir. 1994).[5]
The following is a summary of the pertinent testimony on the issue of damages.
NANCY KOVACS
Most of Kovacs' testimony dealt with tracing the various events leading up to this dispute, encompassing the Phase I period. Kovacs did, however, also testify to receiving invoices for legal services which were provided by Attorneys Frazer and Grawe. She acknowledged having made some payments to her attorneys and *97 further said that she would be liable for any unpaid balance.
ATTORNEY BENJAMIN C. GRAWE
Atty Grawe testified that he worked on the Kovacs' case with Atty Frazer, who was his supervising attorney. He testified as to the nature of the services that he and Atty Frazer performed for Kovacs and that the amount of attorney's fees and costs which was initially requested in Phase I was reduced from $11,822.94 (as contained in Kovacs' administrative claim) to $8,622.09.
Atty Grawe also testified with respect to the issue of dischargeability of taxes for the years in question. He stated that he had contacted Atty Michael D. Schuman, who represented Kovacs in the filing of her bankruptcy petition. However, his contact with Atty Schuman was only for the purpose of obtaining a copy of Kovacs' bankruptcy discharge and for the purpose of obtaining a new OIC. He acknowledged that he did not discuss with Atty Schuman the issue of whether the unpaid taxes were dischargeable.
Atty Grawe stated that he reasonably relied on the IRS with respect to its determination on nondischargeability of the tax years in question. He acknowledged that, when the OIC was first submitted on April 2, 2002 (and again on July 8, 2002), he did not check the box in Item 6 of the OIC labeled "doubt as to liability." He also said that he had never contacted anyone in the Insolvency Unit prior to August of 2003, which was the first time the subject of dischargeability of taxes for the years in question was raised by IRS Appeals Officer Mulcahy.
He also testified that he and Atty Frazer had a conversation about dischargeability for the years in question in this case in April of 2002. They concluded that, when the 1996 OIC had terminated, the taxes for the years in question were nondischargeable because the termination occurred less than 240 days before Kovacs filed her bankruptcy petition and, in their view, it was a "reassessment" of the taxes, causing the 240-day period to start anew for all of the years in question and causing these taxes to be nondischargeable.
AL GROSS
Mr. Gross testified pursuant to a subpoena served upon him by Kovacs. He is a former IRS employee who worked for the IRS for approximately 30 years. He last worked as an advisor in the Offer In Compromise Unit. He stated that he never worked in the IRS Insolvency Unit but had dealings with that unit.
It was Mr. Gross who signed the September 13, 2002 letter informing Kovacs that she defaulted in her 1996 OIC. He testified that he did not recall Kovacs or the Kovacs matter at all.
Upon questioning by Kovacs' attorney, he stated he was unaware of any provision in the Internal Revenue Code which placed the burden upon a taxpayer to determine whether or not a tax liability is dischargeable. He responded to questioning by stating that, in his opinion, there is a burden on the taxpayer to determine if the IRS made a mistake about dischargeability of a tax liability arising out of a bankruptcy. He also stated that, if the taxpayer is represented by an attorney, that burden then falls upon the taxpayer's attorney. He further testified that, if the IRS had not exercised due diligence with respect to the issue of dischargeability of a tax, it is responsible for its own mistakes.
ATTORNEY DOUGLAS H. FRAZER
Atty Frazer's testimony was essentially limited to authenticity of exhibits and affirmance of uncontested facts. This was in accordance with his March 15, 2006 statement *98 filed in this adversary proceeding concerning attorney witnesses, notifying the court that this would be the extent of his testimony.
He testified that he had been a member of the law firm of DeWitt, Ross & Stevens since November of 2003. Prior to that, he had his own firm known as Erazer & Schapiro, which was merged into DeWitt, Ross & Stevens. He also stated that he previously was a trial attorney with the U.S. Department of Justice in the Tax Division and from time to time worked with the IRS Insolvency Unit and handled some bankruptcy cases. He stated that his law practice focuses primarily upon tax matters and that, if he had testified in full in this case, it would be essentially the same as the testimony given by Atty Grawe.
Atty Frazer acknowledged on cross-examination that he had written an article on income taxes in bankruptcy entitled "Taxpayers May Find Relief in Chapter 7 Bankruptcy," which was published in The Milwaukee Journal-Sentinel, a local daily newspaper, in March of 1995. He stated that he had a "working knowledge of the dischargeability rules of bankruptcy." He further stated he believed that the Kovacs' situation was "unusual and unique" and that his article published in The Milwaukee Journal-Sentinel was intended for the general public and has no bearing upon the Kovacs case.
JACK PHILLIPS
Mr. Phillips is a retired IRS field collection officer, having worked in that capacity for his entire 30 years of employment from 1972 to 2002. He testified as an expert witness on behalf of Kovacs. He stated that while he was employed by the IRS, although he never worked in the IRS Insolvency Unit, he did from time to time work with that unit. He said he was familiar with its responsibilities, including determining the issue of tax dischargeability after a taxpayer files for bankruptcy. He said it is the IRS Insolvency Unit's responsibility to determine whether a tax debt is dischargeable, and in his opinion, it was reasonable for Kovacs' attorneys (1) to have relied upon the IRS's determination that' the taxes for the years in question were all nondischargeable debts and (2) to submit a new OIC. He also testified that, in his opinion, the Insolvency Unit rarely makes mistakes on issues of dischargeability of taxes. He added that, if he had a case and the tax payer or tax payer's representative told him they thought the taxes had bee discharged, he would have gone directly to the Insolvency Unit for a determination. On cross examination, he stated that it is not only unreasonable to submit an OIC when taxes have been discharged but that to do so would be "stupid."
TERESA MULCAHY
Teresa Mulcahy, an IRS appeals officer, testified on behalf of the IRS. She has been with the IRS for 27 years. She worked on the Kovacs' case in connection with the appeal of the July 8, 2002 OIC submitted by Kovacs. She acknowledged that, in handling that appeal, her discussions with Atty Grawe were limited to obtaining financial information and that at no time did Atty Grawe raise the possibility that any of the unpaid taxes for the years in question were dischargeable. She stated that she was the person who first raised that possibility in mid-August of 2003 in a conversation she was having with Atty Grawe. She then stated, after talking with Mr. Frank Cox of the IRS Insolvency Division, that the conclusion was made that the unpaid taxes for all of the tax years in question were dischargeable debts, but the unpaid tax for 1999 was a nondischargeable debt.
*99 On cross examination, Ms. Mulcahy said it is reasonable for a taxpayer to rely on the IRS's determination of dischargeability and that it is not appropriate to place a burden upon a taxpayer or a taxpayer's attorneys to discover any mistakes made by the IRS. She added that the IRS Insolvency Unit typically "does not make mistakes on the issue of dischargeability of debts," adding that "whoever looked at whether the taxes should have been discharged made a mistake."
FRANK COX
Mr. Cox was a revenue officer advisor who had worked for the IRS for 32½ years and retired in January of 2004. He worked in the IRS Insolvency Unit for the final 10 years of his career and handled dischargeability of tax issues. He provided testimony at this trial on behalf of the IRS. Mr. Cox explained in detail the IRS Insolvency Unit's procedure in determining what tax debts are dischargeable and what tax debts are not dischargeable. He also explained how the automatic discharge system ("ADS") works in determining dischargeability of taxes for chapter 7 bankruptcy cases. He added that, in some cases, however, the system is unable to handle the issue of dischargeability, and in such cases, it would submit an error report. When that occurred, the issue of dischargeability would be processed by Insolvency Unit specialists. He explained the various factors in making that determination, including a discussion of the 240-day rule, the 3-year rule, and the 2-year rule.[6] He acknowledged that he frequently answered inquiries regarding dischargeability of taxes when he was contacted by taxpayers, counsel for taxpayers, and other IRS agents, in connection with pending OIC matters. He stated that his involvement on the Kovacs case was limited and that he first become involved in this case in August of 2003 in a telephone call from Ms. Mulcahy on the issue of dischargeability of the Kovacs' debts for the years in question. After analyzing the tax debts for the tax years in question, he stated that he could not find anything that stood in the way of discharging these tax debts, but also said that the tax debt for 1999 was not discharged. He stated that, after making this determination, he then took steps to reduce the tax balances for the discharged tax years in question to zero and removed various tax credits which had been inappropriately applied.
On cross-examination, Mr. Cox agreed that the IRS made a mistake in its determination of dischargeability of tax liabilities for the tax years in question and had numerous opportunities between November 2001 and August 2003 to discover its mistake. He confirmed that it is the Insolvency Unit which is the party responsible for this mistake and that there is no obligation on the part of the taxpayer to object to the IRS determination. Mr. Cox did not, however, concede on cross examination that the IRS was totally responsible for this mistake or that the application by the IRS of Kovacs' $300 tax refund for the year 2000 and applied to her outstanding *100 tax liability for the year 1991 which was dischargeable, was a violation of § 524(a) of the Bankruptcy Code, explaining that this was a valid set-off under § 553 of the Bankruptcy Code. He disagreed with the testimony of Mr. Phillips that it was reasonable for a taxpayer's attorney to assume that the tax liabilities for the tax years in question were nondischargeable and further stated it was not reasonable for Kovacs' attorney to conclude that the tax liability fell within the 240-day rule as an "assessment," instead of a "reinstatement." He added that in this case when Kovacs' OIC was terminated on January 29, 2001, it resulted in a reinstatement of the unpaid taxes and not an assessment.
DAMAGES
Kovacs is seeking recovery of $8,622.09 for legal services performed on her behalf in Phase I (prior to the commencement of this adversary proceeding). She also seeks $106,198.37 for her litigation costs in Phases II and III (commencing with this adversary proceeding to the present time). The combined total of Phases I, II, and III sought by Kovacs totals in the aggregate $114,820.46.
The IRS, on the other hand, responds that, if Kovacs is entitled to any recovery against the IRS, it should be limited to Phase I in an amount less than $8,622.09 and no recovery in Phases II and III.
Thus, there is a huge gap between the positions of these parties.
26 U.S.C. §§ 7430 and 7433 of the Internal Revenue Code[7], which are annexed as an appendix to this decision, must be taken into consideration in addressing the issue of damages. However, before addressing the impact of these sections, the court shall initially determine what is the reasonable amount of fees and costs for the representation on behalf of Kovacs: In evaluating the reasonable attorney fees, the court is guided by the reasonable hourly rate which is then multiplied by the reasonable number of hours required to complete the task at hand. In re Hudson, 364 B.R. 875 (Bankr.N.D.N.Y.2007).
Reasonable attorney's fees and costs in Phase I
Kovacs' voluntary, reduction from $11,822.94 as originally asserted in her administrative claim to $8,622.09 is a recognition by her that the legal fees incurred in connection with the nondischargeable tax debt for 1999 are not recoverable against the IRS.
Exhibit 37 contains the billing records for Kovacs' attorneys during Phase I. While there is some duplication of legal services between Attys Frazer and Grawe, it is relatively minimal. The court does not further reduce the hours of legal services in Phase I, which, after Kovacs' voluntary reduction, total 43 hours.
The statutory attorney's fees and costs allowable under 26 U.S.C. § 7430(c)(1)(B)(iii) during this period was $150 per hour.[8] Multiplying this $150 hourly statutory rate by 43 hours results in $6,450, which this court finds constitute Kovacs' reasonable attorney's fees and costs in Phase I.
Kovacs asserts that this court has the authority to award a higher hourly rate where special factors exist. In In re Seay, 369 B.R. 423 (Bankr.E.D.Ark.2007), the
*101 court provided examples of what constitutes special factors which may justify awarding a higher fee. These include: limited availability of qualified attorneys for such proceedings, difficulty of issues presented, and local availability of tax expertise. This court concludes that no such factors or any other factors existed in this case to warrant any increase in the $150 hourly rate provided under § 7430 of the Internal Revenue Code.
Reasonable litigation costs[9]in Phases II and III
Phases II and III comprise Kovacs' litigation costs incurred from the commencement of this adversary proceeding through and including the present time. Because of the overlap of litigation costs in Phases II and III, during the pretrial stages, and in the trial and post-trial itself, Phases II and III are considered collectively.
They total the following:
Fees $103,670.00
Court costs $ 2,528.37
-----------
TOTAL LITIGATION COSTS $106,198.37
All of these shall now be separately addressed.
Atty Douglas H. Frazer
Atty Frazer's legal fees during Phases II and III total 170.3 hours, which he has billed at an hourly rate of $250, representing a total of $42,575. A substantial portion of these fees encompass conferences he had with Atty Grawe. In some cases, there were conferences between Atty Frazer and Atty Van de Kamp, resulting in a duplication of charges.
Atty Frazer's billing rate of $250 per hour exceeds the maximum statutory rates authorized under 26 U.S.C. § 7430 for the periods 2005, 2006, and 2007. The statutory fee caps during these periods under § 7430 were: $150 per hour for 2005; $160 per hour for 2006; and $170 per hour for 2007.
This court concludes as it did in its discussion of Atty Frazer's fees in Phase I that there were no special factors in Phases II and III warranting an increase in Atty Frazer's hourly rate beyond the allowed statutory fee cap.
In addition, adjustments are required not only for duplication of charges but also for excessive charges. This court in convinced that the total hours submitted by Atty Frazer-170.3 hours-are well beyond what was required in this dispute. In addressing the reasonableness of litigation costs, a court mud be alert to the particular circumstances involved. Digital Products, 215 B.R. 478, 482 (Bankr. S.D.Fla.1997) ("The fees must be cost justified by the economics of the situation."). Where a § 524(a) violation is the subject of the dispute, this section must not be utilized as a profit-making endeavor. In re Duling, 360 B.R. 643, 647 (Bankr.N.D.Ohio 2006). That point has also been emphasized by other courts. See In re Taxman Clothing Co., 49 F.3d 310, 316 (7th Cir. 1995), in which Judge Posner declared that: "A bankruptcy is not intended to be a feast for lawyers." See also In re Hutter Construction Co., Inc., 126 B.R. 1005, 1012 (Bankr.E.D.Wis.1991) (Judge Eisenberg, quoting from Unsecured Creditors' Committee v. Puget Sound Plywood, Inc., 924 F.2d 955, 958 (9th Cir.1991), declared that: "A professional must not be free to run up a tab without considering the maximum probable recovery"):
This court concludes that a reasonable fee for Atty Frazer's services in Phases II and III is $20,000.
*102 Atty Benjamin C. Grawe
Atty Grawe's fees during Phases II and III total 19 hours at an hourly rate of $160 per hour for the year 2006 and $170 per hour for the year 2007. This results in a combined total of $3,055, which is in accordance with the hourly rates allowed in 26 U.S.C. § 7430. No adjustments shall be made.
Atty Timothy Van de Kamp
Atty Van de Kamp's legal services in Phases II and III total $13,243, which this court finds excessive. Atty Van de Kamp drafted the complaint in this case, which contained more than 100 pages of attached exhibits, This was unnecessary and inappropriate. At the October 30, 2006, hearing the court noted that Fed. R.Civ.P. 8(a)(2) requires pleadings to contain a short and plain statement of the claim or claims involved, which certainly was not the case here.
Judge Goldgar in In re Fidanovski, 347 B.R. 343, 348 (Bankr.N.D.Ill.2006), stated as follows:
A complaint must allege some facts, true enough. . . . But it need not allege indeed, should not allege "all of the evidence needed to prevail at trial." Bennett v. Schmidt, 153 F.3d 516, 518 (7th Cir.1998) (declaring that plaintiffs should not be "larding their complaints with facts"). A complaint "`does not have to plead evidence'". . . .
Over 20 hours was charged by Atty Van de Kamp for his research in preparation of the adversary complaint for the violation of § 524(a). This court finds this time to have been excessive and unwarranted in light of the potential maximum recovery involved. There also were several occasions where Atty Van de Kamp attended meetings with other members of his firm and where all of the attorneys involved submitted separate billing charges. Sometimes, there was a duplication of charges. Other times, it was triplication of charges. One such example appears on March 7, 2006, where Attys Frazer, Grawe, and Van de Kamp all submitted billing charges for a single conference.
Atty Van de Kamp's reasonable attorney's fees are $7,500.
Atty David V. Meany
Atty Meany's fees in Phases II and III total $16,868 and are based upon the statutory hourly charges provided in 26 U.S.C. § 7430. The court finds his billing rate is reasonable, and no adjustments are made.
Law Clerks/Paralegals
The total amount of billing charges for law clerks/paralegals is $22,624. The bulk of these charges were submitted by Ms. Whitney Valuer. A review of Ms. Vallier's time records reflects a substantial amount of time was devoted to her work on briefs, which the court, under the circumstances of this case, concludes was excessive. Moreover, the court notes among her charges are a number of interoffice conferences primarily with Atty Frazer, but also in some cases with Atty Meany, in which both she and the attorney involved submitted billings. In addition, there were occasions where three parties were engaged in a conference, with all charging for the same conference. By way of example, see conferences held on June 19, 2007; June 20, 2007; July 3, 2007; July 6, 2007; and July 9, 2007.
The court finds that the total reasonable charge for law clerks/paralegals is $12,500.
Jack Phillips
Mr. Phillips testified as an expert witness for Kovacs. His bill, submitted by Hintzke & Associates, Inc., for whom Mr. Phillips was employed, totaled $5,250, based upon 30 hours at an hourly rate of $175.
*103 Mr. Phillips testified that he was paid $25 per hour by. Hintzke & Associates, Inc. He also said that he didn't think he was getting paid for his testimony in court.
The court finds that the requested, haling of $5,250 is unreasonable and that a reasonable rate for Mr. Phillips' services as an expert witness in this case is $100 per hour, resulting in a total allowed expert witness fee of $3,000.
Court costs
The court costs billed totaling $2,528.37 are found to be reasonable, and no adjustment is made.
Summary of reasonable attorney's fees and costs in Phases I, II. and III
The court finds that the total amount of litigation costs in Phases II and III, as adjusted by the court, is $65,451.37. When this is combined with the reasonable attorney's fees of $6,450 in Phase I, the aggregate total of attorney's fees and costs in Phases I, II, and III is $71,901.37.
WHAT PORTION, IF ANY, OF THE REASONABLE ATTORNEY'S FEES AND COSTS SHOULD BE BORNE BY THE IRS?
This question requires an analysis of §§ 7430 and 7433 of the Internal Revenue Code, appearing in the annexed appendix, with respect to the following key points:
1. Did Kovacs exhaust her administrative remedies?
2 Is Kovacs the "prevailing party," is § 524(a) the "most significant issue in this case," and is the IRS's position "substantially justified"?
3. Did the IRS's breach of § 524(a) discharge injunction cause the damages sustained by Kovacs?
4 Did Kovacs "incur", the litigation costs upon which her claim is based?
5. Was any portion of the administrative or court proceedings unreasonably protracted by Kovacs or her attorneys?
6. Did Kovacs reasonably mitigate her damages?
1. Did Kovacs exhaust her administrative remedies?
Sections 7430(b) and 7433(d) of the Internal Revenue Code both require that a party seeking to recover damages must first exhaust such administrative remedies available to that party within the IRS. Kovacs has complied, having first submitted an administrative claim to the IRS. That claim was never responded to, and Kovacs then filed this adversary proceeding after the 6-month period to respond expired following the date that her administrative claim was filed. The IRS has not disputed this requirement. The court concludes that Kovacs did exhaust her administrative remedies.
2. Is Kovacs the "prevailing party" in this adversary proceeding, is 524(a) the "most significant issue" in this case, and is the position of the IRS "substantially justified"?
Section 7430(a) states that a "prevailing party" may recover damages. Subsection (A) of § 7430(c)(4) defines a "prevailing party" as "any party in any proceeding to which subsection (a) applies" and which "has substantially prevailed with respect to the most significant issue or set of issues presented." Subsection (B) of Sec. 7430(c)(4) declares "a party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified." Thus, the court must deal with each of these questions: (1) Who is the prevailing party? (2) What is the most significant issue in this adversary proceeding? (3) Is *104 the position of the IRS substantially justified? All of these inquiries are interrelated.
The IRS conceded at the commencement of the trial that it willfully violated § 524(a). This concession by the IRS, however, did not enable the. IRS to remove this issue from its status as the most significant issue in this case. Much time and expense was incurred, particularly during the pretrial stages of this case, on that issue, as is apparent by extensive discovery and voluminous pleadings all of which focused upon whether the IRS violated § 524(a).
The court concludes that Kovacs is the prevailing party by virtue of the IRS's conduct in continuing its collection efforts, in violation of § 524(a), that the violation of § 524(a) is the most significant issue in this case, and the position of the IRS is not substantially justified. See In re Abernathy, 150 B.R. 688, 695 (Bankr.N.D.Ill.1993) (concluding that the debtor is entitled to attorney's fees from the IRS for its overall conduct in attempting to collect discharged taxes and forcing the debtor to file suit, which conduct was characterized as "outrageous").
3. Did the IRS's breach of 524(a) discharge injunction cause the damages sustained by Kovacs?
Section 7433(b)(1) of the Internal Revenue Code requires that the damages must be "a proximate result" of reckless, intentional or negligent actions of an officer or employee of the IRS.
The IRS, while acknowledging it breached the permanent discharge injunction under § 524(a), maintains that its actions were not the proximate result but simply created a "condition" by which the injury was made possible as a result of a subsequent independent act. The IRS further contends that it was the mistake by Kovacs' attorneys with respect to the issue of dischargeability that was the proximate result and that Kovacs' attorneys should accept responsibility for this mistake.
For purposes of addressing solely the issue of proximate cause, the court finds that the IRS's actions were negligent and a proximate result of the resulting injury to Kovacs. It need not be the sole proximate result caused by the IRS's actions. Section 7433(b) specifically states that it must be "a" proximate result, which the court finds is the case here. Both sides created the problem and the resulting unwarranted damages. The consequences of Kovacs' actions through her attorneys in arriving at an erroneous conclusion on the issue of dischargeability of taxes is a matter this court shall further address in the later portion of this decision.
4. Did Kovacs "incur" litigation costs in this adversary proceeding?
Under Section 7430(a)(2) of the Internal Revenue Code, the prevailing party is entitled to reasonable litigation costs "incurred" in a court proceeding.
The IRS argues that it should not be required to pay any of Kovacs' litigation costs because, under the terms of her contingency fee agreement with her attorneys, she is not legally obligated to pay for such costs unless the court orders such payments, relying upon Grigoraci v. Comm'r of Internal Revenue, 122 T.C. 272, 2004 WL 585801 (2004).
Kovacs has responded by citing the recent holding in In re Seay, 369 B.R. 423 (Bankr.E.D.Ark.2007), in which the bankruptcy court concluded that the attorney's fees Were incurred by the debtor even though under the terms of the debtor's fee agreement with his attorneys the debtor was only obligated to pay upon obtaining a *105 fee award. Seay, in turn, cites Phillips v. Gen. Services Admin., 924 F.2d 1577 (Fed. Cir.1991), which held that if an award of money is obtained by the client and the client is obligated under his agreement with his attorney to turn over such funds to the attorney, in that sense, the client has "incurred" the attorney's fees and costs which may be awarded. Seay distinguished Grigoraci by noting the facts in Grigoraci are dramatically different from those in Seay. The facts in Grigoraci are also far different from the facts in this case. In Grigoraci. the award sought by the taxpayer involved clerical work performed by the taxpayer's office manager and secretaries, who worked in an accounting firm of which the taxpayer was its chief executive officer. No attorney's fees were involved in Grigoraci.
Marre v. U.S., 38 F.3d 823 (5th Cir. 1994), provides further support for Kovacs in holding that a client with a contingency fee agreement who obtains a court award for damages has "incurred" litigation costs.
This court concludes that the results reached in Seay, Phillips, and Marre are sound and that Kovacs' contingency fee agreement with her attorneys does not mean that fees which are ultimately awarded by this court were not "incurred." Upon a court award of fees, such fees are then "incurred."
5. Did Kovacs unreasonably protract the administrative or court proceedings and/or fail to mitigate her damages?
Because unreasonably protracting court proceedings and mitigation are so inextricably intertwined, they are considered together.
Section 7430(b)(3) of the Internal Revenue Code addresses the issue of unreasonably protracting court proceedings, and Section 7433(d)(2) of the Internal Revenue Code deals with mitigation of damages.
This case has been vastly over-lawyered, over-staffed, and over-pleaded in light of the amount which was initially involved. A bankruptcy court has the responsibility to prevent overreaching by attorneys. In re N.S. Garrott & Sons, 54 B.R. 221 (Bankr.E.D.Ark.1985). More emphasis should have been placed by both sides in attempting to reach a prompt resolution instead of engaging in prolonged and costly litigation. In In re Ciccimaro, 364 B.R. 184, 193 n. 3 (Bankr.E.D.Pa. 2007), the court observed that the litigation over attorney's fees in that case might well subsume the underlying dispute and encouraged the parties to seek a consensual resolution. Unfortunately, in the case at bar, the attorney's fees and costs have subsumed the underlying dispute, which claim for damages has dramatically escalated from $11,822.94 to $114,820.46.
In In re Clayton, 235 B.R. 801 (Bankr.M.D.N.C.1998), the court stated that a debtor seeking recovery of damages has a duty to exercise due diligence in mitigating damages. In this case, Kovacs failed to do so. A party seeking recovery of damages is entitled to competent and Comprehensive legal representation, including the need to employ aggressive tactics when required. By the same token, however, such legal services must be reasonably incurred and not become overzealous. In re Kroh Bros. Development Co., 105 B.R. 515, 521 (Bankr.W.D.Mo.1989).
Kovacs asserts that it was the IRS's litigation conduct which unreasonably protracted these proceedings. To some degree, that is true, particularly during Phase II of this adversary proceeding. However, Kovacs also had a substantial role in protracting this litigation. Neither party had a halo over its head. Kovacs' voluminous complaint and exhibits was *106 only the start. The protracted litigation continued throughout the preparation of this case up to the time of trial. As far as this court is able to determine, no serious efforts were made by either party to reach an equitable resolution. The current demand by Kovacs for damages and IRS's response highlight how these parties have become polarized in their positions.
The court recognizes that attorney's fees are not always proportionate to the amount which is involved in the underlying dispute. However, the amount being demanded by Kovacs in this case almost $115,000 is clearly exorbitant and unjustified. A court must determine if the attorney hours which are invested are justifiable given the probable benefit to the client. In re MCorp. Financial, Inc., 160 B.R. 941, 951 (S.D.Tex.1993); In re Arnold, 162 B.R. 775, 778 (Bankr.E.D.Mich. 1993).
In the course of reviewing other cases addressing the amount of damages resulting from willful violations of § 524 by taxing authorities, this court has not found any cases in which courts have awarded damages anywhere close to what is being asked in this case. See In re Bowling, 116 B.R. 659 (Bankr.S.D.Ind.1990) ($5,000 request for attorney's fees found to be excessive and reduced to $1,200); In re Elias (court awarded $2,163.10 for attorney's fees); In re Ramsey, 342 B.R. 658 (Bankr. M.D.Fla.2006) (court awarded $7,888.50 for attorney's fees); In re Hudson, 364 B.R. 875 (Bankr.N.D.N.Y.2007) (court awarded $6,831.25 for attorney's fees).
The IRS also had a major role in causing damages to Kovacs and must shoulder a portion of these damages. The IRS is accountable for more than its initial mistake in concluding that Kovacs' tax debts for tax years in question were not dischargeable, for its actions taken in pursuing collection of these tax debts, and for forcing Kovacs to bring this adversary proceeding. The IRS is also responsible, in part, for its conduct in unreasonably protracting this adversary proceeding and causing unwarranted litigation costs to be incurred by Kovacs.
The question is: How much should the IRS be required to pay?
CONCLUSION
To divide reasonable attorney's fees on a 50/50 basis is overly simplistic.
While the IRS made a mistake on the issue of dischargeability, the record shows that, when the IRS ultimately discovered the mistake, it acted promptly to rectify this error. The court also notes that the IRS did not employ any aggressive collection tactics against Kovacs with respect to the taxes in question, such as initiating garnishment proceedings. Moreover, in determining what are appropriate sanctions for willful violation of § 524, a court must be mindful that such sanctions are remedial in nature and not punitive. In re Johnston, 362 B.R. 730, 741 (Bankr.N.D.W.Va.2007).
On the other hand, Kovacs' attorneys also made a mistake on the issue of dischargeability by their conclusion that the 240-day rule applied. Atty Frazer, a former employee of the U.S. Department of Justice who had worked in the past with the IRS Insolvency Unit, should have been more cautious before reaching that erroneous conclusion. He had other options which could have been pursued. Attys Frazer and Grawe could have consulted an attorney who specialized in bankruptcy matters on the issue of dischargeability. They had that opportunity when they called Atty Schuman, who filed the bankruptcy petition for Kovacs, to obtain a copy of the bankruptcy petition, but never raised with him the question of dischargeability *107 of tax debts. They also could have filed an adversary proceeding for a determination from the bankruptcy court on this issue. In re Malin, 356 B.R. 535 (Bankr.D.Kan.2006), declared that the interest of the debtor-taxpayer made the issue of dischargeability of certain federal income taxes ripe for such determination in order to provide any hardship upon the debtor-taxpayer. Atty Frazer, also having been familiar with the IRS Insolvency Unit, could have contacted that unit directly instead of taking the route of filing a new OIC.
The court concludes that a fair portion of damages to be borne by the IRS is $25,000.
This decision constitutes the court's findings of fact and conclusions of law pursuant to Bankruptcy Rule 7052 of the Federal Rules of Bankruptcy Procedure.
A separate order for judgment shall be entered.
APPENDIX
Effective: December 21, 2000
UNITED STATES CODE ANNOTATED
TITLE 26. INTERNAL REVENUE CODE
SUBTITLE F PROCEDURE AND ADMINISTRATION
CHAPTER 76 JUDICIAL PROCEEDINGS
SUBCHAPTER B PROCEEDINGS BY TAXPAYERS AND THIRD PARTIES
§ 7430. Awarding of costs and certain fees
(a) In general. In any administrative or court proceeding which is brought by or against the United States in connection with the determination, collection, or refund of any tax, interest, or penalty under this title, the prevailing party may be awarded a judgment or a settlement for
(1) reasonable administrative costs incurred in connection with such administrative proceeding within the Internal Revenue Service, and
(2) reasonable litigation costs incurred in connection with such court proceeding.
(b) Limitations.
(1) Requirement that administrative remedies be exhausted. A judgment for reasonable litigation costs shall not be awarded under subsection (a) in any court proceeding unless the court determines that the prevailing party has exhausted the administrative remedies available to such party within the Internal Revenue Service. Any failure to agree to an extension of the time for the assessment of any tax shall not be taken into account for purposes of determining whether the prevailing, party meets the requirements of the preceding sentence.
(2) Only costs allocable to the United States. An award under subsection (a) shall be made only for reasonable litigation and administrative costs which are allocable to the United States and not to any other party.
(3) Costs denied where party prevailing protracts proceedings. No award for reasonable litigation and administrative costs may be made under subsection (a) with respect to any portion of the administrative or court proceeding during which the prevailing party has unreasonably protracted such proceeding.
(4) Period for applying to IRS for administrative costs. An award may be made under subsection (a) by the Internal Revenue Service for reasonable *108 administrative costs only if the prevailing party files an application with the Internal Revenue Service for such costs before the 91st day after the date on which the final decision of the Internal Revenue Service as to the determination of the tax, interest, or penalty is mailed to such party.
(c) Definitions. For purposes of this section
(1) Reasonable litigation costs. The term "reasonable litigation costs" includes
(A) reasonable court costs, and
(B) based upon prevailing market rates for the kind or quality of services furnished
(i) the reasonable expenses of expert witnesses in connection with a court proceeding, except that no expert witness shall be compensated at a rate in excess of the highest rate of compensation for expert witnesses paid by the United States,
(ii) the reasonable cost of any study, analysis, engineering report, test, or project which is found by the court to be necessary for the preparation of the party's case, and
(iii) reasonable fees paid or incurred for the services of attorneys in connection with the court proceeding, except that such fees shall not be in excess of $125 per hour unless the court determines that a special factor, such as the limited availability of qualified attorneys for such proceeding, the difficulty of the issues presented in the case, or the local availability of tax expertise, justifies a higher rate. In the case of any calendar year beginning after 1996, the dollar amount referred to in clause (iii) shall be increased by an amount equal to such dollar amount multiplied by the cost-of-living adjustment determined under section 1 (f)(3) for such calendar year, by substituting "calendar year 1995" for "calendar year 1992" in subparagraph (B) thereof. If any dollar amount after being increased under the preceding sentence is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10.
(2) Reasonable administrative costs. The term "reasonable administrative costs" means
(A) any administrative fees or similar charges imposed by the Internal Revenue Service, and
(B) expenses, costs, and fees described in paragraph (1)(B), except that any determination made by the court under clause (ii) or (iii) thereof shall be made by the Internal Revenue Service in cases where the determination under paragraph (4)(C) of the awarding of reasonable administrative costs is made by the Internal Revenue Service.
Such term shall only include costs incurred on or after whichever of the following is the earliest: (i) the date of the receipt by the taxpayer of the notice of the decision of the Internal Revenue Service Office of Appeals; (ii) the date of the notice of deficiency; or (iii) the date on which the first letter of proposed deficiency which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent.
(3) Attorneys' fees.
(A) In general. For purposes of paragraphs (1) and (2), fees for the services of an individual (whether or not an attorney) who is authorized to *109 practice before the Tax Court or before the Internal Revenue Service shall be treated as fees for the services of an attorney.
(B) Pro bono services. The court may award reasonable attorneys' fees under subsection (a) in excess of the attorneys' fees paid or incurred if such fees are less than the reasonable attorneys' fees because an individual is representing the prevailing party for no fee or for a fee which (taking into account all the facts and circumstances) is no more than a nominal fee. This subparagraph shall apply only if such award is paid to such individual or such individual's employer.
(4) Prevailing party.
(A) In general. The term "prevailing party" means any party in any proceeding to which subsection (a) applies (other than the United States or any creditor of the taxpayer involved)
(i) which
(I) has substantially prevailed with respect to the amount in controversy, or
(II) has substantially prevailed with respect to the most significant issue or set of issues presented, and
(ii) which meets the requirements of the 1st sentence of section 2412(d)(1)(B) of title 28, United States Code (as in effect on October 22, 1986) except to the extent differing procedures are established by rule of court and meets the requirements of section 2412(d)(2)(B) of such title 28 (as so in effect).
(B) Exception if United States establishes that its position was substantially justified.
(i) General rule. A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified.
(ii) Presumption of no justification if Internal Revenue Service did not follow certain published guidance. For purposes of clause (i), the position of the United States shall be presumed not to be substantially justified if the Internal Revenue Service did not follow its applicable published guidance in the administrative proceeding. Such presumption may be rebutted.
(iii) Effect of losing on substantially similar issues. In determining for purposes of clause (i) whether the position of the United States was substantially justified, the court shall take into account whether the United States has lost in courts of appeal for other circuits on substantially similar issues.
(iv) Applicable published guidance. For purposes of clause (ii), the term "applicable published guidance" means
(I) regulations, revenue rulings, revenue procedures, information releases, notices, and announcements, and
(II) any of the following which are issued to the taxpayer: private letter rulings, technical advice memoranda, and determination letters.
(C) Determination as to prevailing party. Any determination under this paragraph as to whether a party is a prevailing party shall be made by agreement of the parties or
(i) in the case where the final determination with respect to the tax, interest, or penalty is made at the administrative *110 level, by the Internal Revenue Service, or
(ii) in the case where such final determination is made by a court, the court.
(D) Special rules for applying net worth requirement. In applying the requirements of section 2412(d)(2)(B) of title 28, United States Code, for purposes of subparagraph (A)(ii) of this paragraph
(i) the net worth limitation in clause
(i) of such section shall apply to
(I) an estate but shall be determined as of the date of the decedent's death, and
(II) a trust but shall be determined as of the last day of the taxable year involved in the proceeding, and
(ii) individuals filing a joint return shall be treated as separate individuals for purposes of clause (i) of such section.
(E) Special rules where judgment less than taxpayer's offer.
(i) In general. A party to a court proceeding meeting the requirements of subparagraph (A)(ii) shall be treated as the prevailing party if the liability of the taxpayer pursuant to the judgment in the proceeding (determined without regard to interest) is equal to or less than the liability of the taxpayer which would have been so determined if the United States had accepted a qualified offer of the party under subsection (g).
(ii) Exceptions. This subparagraph shall not apply to.
(I) any judgment issued pursuant to a settlement; or
(II) any proceeding in which the amount of tax liability is not in issue, including any declaratory judgment proceeding, any proceeding to enforce or quash any summons issued pursuant to this title, and any action to restrain disclosure under section 6110(f).
(iii) Special rules. If this subparagraph applies to any court proceeding
(I) the determination under clause (i) shall be made by reference to the last qualified offer made with respect to the tax liability at issue in the proceeding; and
(II) reasonable administrative and litigation costs shall only include costs incurred on and after the date of such offer.
(iv) Coordination. This subparagraph shall not apply to a party which is a prevailing party under any other provision of this paragraph.
(5) Administrative proceedings. The term "administrative proceeding" means any procedure or other action before the Internal Revenue Service.
(6) Court proceedings. The term "court proceeding" means any civil action brought in a court of the United States (including the Tax Court and the United States Claims Court).
(7) Position of United States. The term "position of the United States" means
(A) the position taken by the United States in a judicial proceeding to which subsection (a) applies, and
(B) the position taken in an administrative proceeding to which subsection (a) applies as of the earlier of
(i) the date of the receipt by the taxpayer of the notice of the decision of the Internal Revenue Service Office of Appeals, or
(ii) the date of the notice of deficiency.
*111 (d) Special rules for payment of costs.
(1) Reasonable administrative costs. An award for reasonable administrative costs shall be payable out of funds appropriated under section 1304 of title 31, United States Code.
(2) Reasonable litigation costs. An award for reasonable litigation costs shall be payable in the case of the Tax Court in the same manner as such an award by a district court.
(e) Multiple actions. For purposes of this section, in the case of
(1) multiple actions which could have been joined or consolidated, or
(2) a case or cases involving a return or returns of the same taxpayer (including joint returns of married individuals) which could have been joined in a single court proceeding in the same court,
such actions or cases shall be treated as 1 court proceeding regardless of whether such joinder or consolidation actually occurs, unless the court in which such action is brought determines, in its discretion, that it would be inappropriate to treat such actions or cases as joined or consolidated.
(f) Right of appeal.
(1) Court proceedings. An order granting or denying (in whole or in part) an award for reasonable litigation or administrative costs under subsection (a) in a court proceeding, may be incorporated as a part of the decision or judgment in the court proceeding and shall be subject to appeal in the same manner as the decision or judgment.
(2) Administrative proceedings. A decision granting or denying (in whole or in part) an award for reasonable administrative costs under subsection (a) by the Internal Revenue Service shall be subject to the filing of a petition for review with the Tax Court under rules similar to the rules under section 7463 (without regard to the amount in dispute). If the Secretary sends by certified or registered mail a notice of such decision to the petitioner, no proceeding in the Tax Court may be initiated under this paragraph unless such petition is filed before the 91st day after the date of such mailing.
(3) Appeal of Tax Court decision. An order of the Tax Court disposing of a petition under paragraph (2) shall be reviewable in the same manner as a decision of the Tax Court, but only with respect to the matters determined in such order.
(g) Qualified offer. For purposes of subsection (c)(4)
(1) In general. The term "qualified offer" means a written offer which
(A) is made by the taxpayer to the United States during the qualified offer period;
(B) specifies the offered amount of the taxpayer's liability (determined without regard to interest);
(C) is designated at the time it is made as a qualified offer for purposes of this section; and
(D) remains open during the period beginning on the date it is made and ending on the earliest of the date the offer is rejected, the date the trial begins, or the 90th day after the date the offer is made.
(2) Qualified offer period. For purposes of this subsection, the term "qualified offer period" means the period
(A) beginning on the date on which the first letter of proposed deficiency *112 which allows the taxpayer an opportunity for administrative review in the Internal Revenue Service Office of Appeals is sent, and
(B) ending on the date which is 30 days before the date the case is first set for trial.
ATTORNEY FEE AWARD LIMITATION UNDER SUBSEC. (C)(1)(B)(III) OF THIS SECTION
l)(B)(iii) of this section for calendar year 2007, see section 3.40 of Revenue Procedure 2006-53, set out as a note under 26 U.S.C.A. § 1.>
Current through. P.L. 110-52 approved 08-01-07
APPENDIX
Effective: July 22, 1998
UNITED STATES CODE ANNOTATED TITLE 26. INTERNAL REVENUE CODE
SUBTITLE F PROCEDURE AND ADMINISTRATION CHAPTER 76 JUDICIAL PROCEEDINGS
SUBCHAPTER B-PROCEEDINGS BY TAXPAYERS AND THIRD PARTIES
§ 7433. Civil damages for certain unauthorized collection actions
(a) In general. If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service recklessly or intentionally, or by reason of negligence disregards any provision of this title, or any regulation promulgated under this title, such taxpayer may bring a civil action for damages against the United States in a district court of the United States. Except as provided in section 7432, such civil action shall be the exclusive remedy for recovering damages resulting from such actions.
(b) Damages. In any action brought under subsection (a) or petition filed under subsection (e), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the lesser of $1,000,000 ($100,000, in the case of negligence) or the sum of
(1) actual, direct economic damages sustained by the plaintiff as a proximate result of the reckless or intentional or negligent actions of the officer or employee, and
(2) the costs of the action.
(c) Payment authority. Claims pursuant to this section shall be payable out of funds appropriated under section 1304 of title 31, United States Code.
(d) Limitations.
(1) Requirement that administrative remedies be exhausted. A judgment for damages shall not be awarded under subsection (b) unless the court determines that the plaintiff has exhausted the administrative remedies available to such plaintiff within the Internal Revenue Service.
(2) Mitigation of damages. The amount of damages awarded under subsection (b)(1) shall be reduced by the amount of such damages which could have reasonably been mitigated by the plaintiff.
(3) Period for bringing action. Notwithstanding any other provision of law, an action to enforce liability created under this section may be brought without regard to the amount in controversy and may be brought only within 2 years after the date the right of action accrues.
(e) Actions for violations of certain bankruptcy procedures.
*113 (1) In general. If, in connection with any collection of Federal tax with respect to a taxpayer, any officer or employee of the Internal Revenue Service willfully violates any provision of section 362 (relating to automatic stay) or 524 (relating to effect of discharge) of title 11, United States Code (or any successor provision), or any regulation promulgated under such provision, such taxpayer may petition the bankruptcy court to recover damages against the United States.
(2) Remedy to be exclusive.
(A) In general. Except as provided in subparagraph (B), notwithstanding section 105 of such title 11, such petition shall be the exclusive remedy for recovering damages resulting from such actions.
(B) Certain other actions permitted. Subparagraph (A) shall not apply to an action under section 362(h) of such title 11 for a violation of a stay provided by section 362 of such title; except that
(i) administrative and litigation costs in connection with such an action may only be awarded under section 7430: and
(ii) administrative costs may be awarded only if incurred on or after the date that the bankruptcy petition is filed.
Current through P.L. 110-52 approved 08-01-07
END OF DOCUMENT
NOTES
[1] The bankruptcy petition was actually filed on July 3, 2001. The IRS was listed as a creditor and also was on the mailing matrix.
[2] Shortly after Ms. Mulcahy's notice was, sent to Kovacs, the' IRS on September 8, 2003 sent a notice to Kovacs labeled "Statement of Adjustment to Your Account" informing her that she owed $13,222.43 for 1990 taxes. It appears that this was an inadvertent clerical error by the IRS mailed without knowledge of Ms. Mulcahy's August 14, 2003 letter to Kovacs.
[3] Complicating matters even further, on September 20, 2006, Kovacs, in opposing IRS's September 1, 2006 pleadings, erroneously filed over 14,000 pages of exhibits. See docket entries 42 and 43.
[4] Atty David V. Meany, on behalf of Kovacs, and Assistant U.S. Attorney Hilarie Snyder of the U.S. Department of Justice, representing the IRS, are the attorneys who tried this case. Neither of these attorneys were involved in the handling of any of the pleadings which the court referred to in the October 30, 2006 hearing.
[5] Jove and Price dealt with § 362, the automatic stay, rather than § 524. However, the reasoning which applies to § 524 violations equally applies to § 362 violations.
[6] An exception to discharge for income tax liabilities can arise by means of a variety of circumstances, including any of the following:
1. Taxes resulting from deficiency assessments made by the IRS within 240 days before filing of a bankruptcy petition ("240-day rule");
2. Unpaid taxes for returns which were filed within three years of date of bankruptcy before filing bankruptcy petition ("3-year rule"); and
3. Unpaid taxes arising out of late filed tax returns which were filed within two years before filing a bankruptcy petition ("2-year rule").
In this case it is the 240-day rule which is involved.
[7] Because §§ 7430 and 7433 of the Internal Revenue Code apply in this case, § 2412 of the Equal Access to Justice Act does not apply. In re Abernathy, 150 B.R. 688, 696, n. 11 (Bankr.N.D.Ill.1993).
[8] Although the IRS in its post-trial brief applied $ 125 per hour as the statutory hourly rate, upon a review of the, rate during this period of time was $150 per hour.
[9] The term "litigation costs" when used for Phases II and III includes both attorney's fees and costs.
|
669 F.Supp.2d 1259 (2009)
Armour D. STEPHENSON, III, et al., Plaintiffs,
v.
HONEYWELL INTERNATIONAL, INC., Defendant.
Case No. 07-2494-JWL.
United States District Court, D. Kansas.
October 5, 2009.
John W. Kurtz, Hubbard & Kurtz, L.L.P., Kirk R. Presley, Monsees, Miller, Mayer, Presley & Amick, PC, Christopher J. Stucky, R. Douglas Gentile, Douthit, Frets, Rouse, Gentile & Rhodes, LLC, Charles H. McKenzie, Accurso Law Firm, Kansas City, MO, Steven H. Mustoe, Mustoe Carter, LLC, Prairie Village, KS, Mark A. Corder, Mark A. Corder, P.A., Olathe, KS, John Harl Campbell, Osage Beach, MO, for Plaintiffs.
Hugh E. Handeyside, V.L. Woolston, Perkins & Coie, Seattle, WA, Jason L. Bush, Thomas G. Kokoruda, William L. Yocum, Polsinelli Shughart PC, Overland Park, KS, for Defendant.
MEMORANDUM AND ORDER
JOHN W. LUNGSTRUM, District Judge.
This diversity action, removed from state court, arises out of an airplane crash occurring on January 21, 2005, in Overland Park, Kansas, that resulted in the deaths of the pilot and all four passengers. This consolidated action encompasses the wrongful death and survival claims under *1260 Kansas law of the heirs and estates of the four passengers against defendant Honeywell International, Inc., whose predecessor company manufactured the airplane's engines.[1] The matter is presently before the Court on plaintiffs' motion for partial summary judgment relating to the survival claims for negligently-inflicted, pre-impact emotional distress,[2] or alternatively, for certification of a question to the Kansas Supreme Court (Doc. # 141); and defendant's motion for summary judgment on those same claims (Doc. # 147). The Court concludes that plaintiffs have not submitted evidence of physical injuries resulting from decedents' alleged pre-impact emotional distress, and that therefore plaintiffs may not recover for such distress under Kansas law. The Court also declines to certify a question to the Kansas Supreme Court. Accordingly, the Court denies plaintiffs' motion in its entirety, grants defendant's motion, and awards defendant summary judgment on plaintiffs' survival claims for pre-impact emotional distress.
I. Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Burke v. Utah Transit Auth. & Local 382, 462 F.3d 1253, 1258 (10th Cir.2006). An issue of fact is "genuine" if "the evidence allows a reasonable jury to resolve the issue either way." Haynes v. Level 3 Communications, LLC, 456 F.3d 1215, 1219 (10th Cir.2006). A fact is "material" when "it is essential to the proper disposition of the claim." Id.
The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Thom v. Bristol-Myers Squibb Co., 353 F.3d 848, 851 (10th Cir.2003) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id. (citing Celotex, 477 U.S. at 325, 106 S.Ct. 2548).
If the movant carries this initial burden, the nonmovant may not simply rest upon his or her pleadings but must "bring forward specific facts showing a genuine issue for trial as to those dispositive matters for which he or she carries the burden of proof." Garrison v. Gambro, Inc., 428 F.3d 933, 935 (10th Cir.2005). To accomplish this, sufficient evidence pertinent to the material issue "must be identified by reference to an affidavit, a deposition transcript, or a specific exhibit incorporated therein." Diaz v. Paul J. Kennedy Law Firm, 289 F.3d 671, 675 (10th Cir.2002).
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut;" rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).
*1261 II. Plaintiffs' Motion for Partial Summary Judgment
In their motion for "partial summary judgment" under Fed.R.Civ.P. 56, plaintiffs do not actually seek a judgment in their favor on any particular claim; rather, they request "a finding that there is a jury-submissible genuine issue of material fact regarding the emotional and physical suffering of the three decedents before impact and, specifically, an issue allowed by Kansas law." In effect, then, plaintiffs seek a declaration or advisory opinion from the Court that a motion for judgment as a matter of law by defendant on these claims would be unsuccessful. Rule 56, however, does not authorize a motion seeking any relief other than summary judgment in the movant's favor. Plaintiffs have not provided any authority suggesting that a court could grant the kind of relief plaintiffs request here. Accordingly, the Court denies plaintiffs' motion for "partial summary judgment."
III. Analysis of Survival Claims for Pre-Impact Emotional Distress
Despite the procedural deficiency of plaintiffs' motion, the Court does address plaintiffs' questionwhether plaintiffs have sufficient evidence to create a jury issue on their survival claims for pre-impact emotional distressbecause defendant has filed its own motion for summary judgment on those claims. Defendant argues that plaintiffs cannot produce evidence of physical injuries resulting from the alleged pre-impact emotional distress suffered by decedents sufficient to support a claim under Kansas law. In opposition to defendant's motion and in support of their claims, plaintiffs have submitted only the following evidence: affidavits stating that decedents died upon impact of the airplane with the ground; an expert's testimony that 21 seconds elapsed between the failure of an engine and the impact; and the following deposition testimony by Dr. Carlos Diaz, an expert medical witness:
The passengers ... were not pilots. They were probably people who didn't think much about airplanes, and who had the usual sort of hesitation in flying because of a little bit of fear of flying, but they trusted the pilot. They trusted what was going on.
AndAnd they wereThey wereIt was a very happy occasion, as you know. They were given this flight as a gift. And they were also a little older. They were older than the pilot.
AndAnd they're sitting strapped in the back completely helpless. TheyThey can't doAt least the pilot can try to save the plane and is trying to do something. They can do nothing.
The plane waswas turning and moving, throwing them against their seat belts. They are fearing for their lives, even above and beyond the fear of a pilot, the fear of almost phobic fear that people who are not pilots may have about an aircraft accident.
They are probably not in real good physical shape. They're very tachycardiac from the fear. They're feeling a lot of rapid heart rate. They're feeling a lot of sensation of shortness of breath, difficulty breathing and tightness in their chest. I mean, they're feeling physical symptoms associated with essentially a panic about impending death.
Thus, plaintiffs have submitted evidence that decedents likely suffered a rapid heart rate (i.e., were "tachycardiac") and difficulty breathing (including shortness of breath and tightness in the chest).[3]
*1262 "Recovery for emotional distress has generally been limited in Kansas." Hopkins v. State, 237 Kan. 601, 612, 702 P.2d 311, 320 (1985). "It has long been the general rule in Kansas that there can be no recovery for emotional distress suffered by the plaintiff which is caused by the negligence of the defendant unless it is accompanied by or results in physical injury to the plaintiff." Hoard v. Shawnee Mission Med. Ctr., 233 Kan. 267, 274, 662 P.2d 1214, 1219-20 (1983); see also Fusaro v. First Family Mtge. Corp., 257 Kan. 794, 806, 897 P.2d 123, 131 (1995) (no recovery unless "accompanied by or resulting in physical injury"); Humes v. Clinton, 246 Kan. 590, 598-99, 792 P.2d 1032, 1038 (1990) (same); Hopkins, 237 Kan. at 612-13, 702 P.2d at 320 (same). The Kansas Supreme Court has noted the following reasons for the "physical injury" requirement:
The temporary emotion of fright, so far from serious that it does no physical harm, is so evanescent a thing, so easily counterfeited, and usually so trivial, that the courts have been quite unwilling to protect the plaintiff against mere negligence, where the elements of extreme outrage and moral blame which have had such weight in the case of the intentional tort are lacking.
Hoard, 233 Kan. at 274, 662 P.2d at 1220 (quoting Prosser, Law of Torts § 54, at 329 (4th ed. 1971)); see also Restatement (Second) of Torts § 436A, cmt. b (listing the same three reasons for the requirement of physical injury, i.e., the normally trivial and evanescent nature of emotional disturbance, the ease of counterfeiting it, and the lack of intent); Bowman v. Doherty, 235 Kan. 870, 875-76, 686 P.2d 112, 118 (1984) (citing these reasons from this comment of Restatement § 436A).[4]
The issue then becomes whether the physical symptoms present hererapid heart rate and difficulty breathingmay provide the "physical injury" required under Kansas law. In Hopkins, the Kansas Supreme Court held that the plaintiffs, who alleged physical distress in the form insomnia, headaches, weight gain, and general physical upset, did not suffer the physical injury or impact necessary for recovery. See Hopkins, 237 Kan. at 612-13, 702 P.2d at 319-20. Subsequently, the supreme court cited Hopkins in noting that "[g]eneralized physical symptoms of emotional distress such as headaches and insomnia are insufficient to state a cause of action." Anderson v. Scheffler, 242 Kan. 857, 860, 752 P.2d 667, 669 (1988) (affirming summary judgment where plaintiff suffered only shock, emotional pain, guilt, recurring nightmares, and depression). Last year, in Ware ex rel. Ware v. ANW Special Educational Cooperative No. 603, 39 Kan.App.2d 397, 180 P.3d 610 (2008), the Kansas Court of Appeals reviewed Kansas cases concerning the "physical injury" requirement and held that the standard was not satisfied in that case by evidence that the plaintiff suffered nightmares, anxiety, nervousness, trembling, *1263 weight gain, sleeping difficulties, and vomiting. See id. at 401-04, 180 P.3d at 614-15; see also Dill v. Barnett Funeral Home, Inc., 2004 WL 292124, at *3 (Kan.Ct.App. Feb. 13, 2004) (unpub. op.) (cited in Ware) (finding insufficient evidence of plaintiff's lack of sleep, recurring dreams, and general fatigue); Reynolds v. Highland Manor, Inc., 24 Kan.App.2d 859, 861-62, 954 P.2d 11, 14 (1998) (no recovery under "physical injury" standard for plaintiff who claimed to have suffered headaches, diarrhea, nausea, crying, shaking, stress, tense muscles, and decreased sexual relations).[5]
The Court concludes that the rapid heart rate and difficulty breathing suffered by decedents in the present action do not constitute "physical injury," but instead represent the kind of generalized symptoms of emotional distress for which recovery has been denied under Kansas law. In fact, this Court has previously held that those very symptoms do not satisfy the physical injury requirement. See Holdren v. General Motors Corp., 31 F.Supp.2d 1279, 1285 (D.Kan.1998) (Lungstrum, J.) (plaintiff claimed difficulty breathing, as well as weakness, fatigue, headaches, gastrointestinal discomfort, affected nerves, and sexual dysfunction); Schweitzer-Reschke v. Avnet, Inc., 874 F.Supp. 1187, 1197 (1995) (Lungstrum, J.) (plaintiff claimed rapid heartbeat, shortness of breath, and a feeling that she could not breathe, as well as diarrhea, vomiting, and anxiety); see also Gilliam v. USD No. 244 Sch. Dist., 397 F.Supp.2d 1282, 1292 (D.Kan.2005) (Lungstrum, J.) (plaintiff did not show physical injury, but only generalized symptoms of nausea, insomnia, nightmares, vomiting, difficulty eating, crying, fatigue, pain, stomach pain, diarrhea, muscle pain, depression, and suicidal thoughts).
Indeed, Dr. Diaz summed up his description of decedents' physical condition by stating that they were "feeling physical symptoms associated with essentially a panic about impending death." Kansas courts have made clear that such generalized symptoms of panic or fright are not sufficient to permit recovery for negligently-inflicted emotional distress.
The Court also rejects plaintiffs' argument that in Ware the Kansas Court of Appeals liberalized or relaxed the "physical injury" requirement by its reference to the requirement of "physical injury or physical manifestation." See Ware, 39 Kan.App.2d at 409, 180 P.3d at 618. In that case, the court did not suggest any intent to alter the rule, which it applied, that the plaintiff must establish a "qualifying physical injury under Kansas law." See id. at 401, 180 P.3d at 613. Moreover, in Ware the court held that various physical symptoms exhibited by the plaintiff in that case did not satisfy the requirement of a physical injury. See id. at 401-02, 180 P.3d at 614. Clearly, the Ware court did not adopt a new rule by which any physical manifestation or symptom of emotional distress may satisfy the "physical injury" requirement.
In summary, the Court concludes that plaintiffs have not offered any evidence that decedents suffered physical injury at the time of or as a result of the alleged pre-impact emotional distress. Accordingly, under existing Kansas law, plaintiffs may not recover for such emotional distress.
*1264 Plaintiffs question whether the Kansas Supreme Court, if faced with the question, might permit recovery for negligently-induced, pre-impact emotional distress without physical injury resulting from that distress. In Fogarty v. Campbell 66 Express, Inc., 640 F.Supp. 953 (D.Kan.1986) (O'Connor, J.), the court rejected that same argument in a case involving a collision between vehicles. In Fogarty, the court noted the Kansas rule that there can be no recovery unless the emotional distress "is accompanied by or results in physical injury," and it considered the question whether the collision itself may constitute the physical injury that "accompanies" the pre-impact emotional distress, thereby permitting recovery for the emotional distress. See id. at 956. The Court noted that recovery had only been permitted in Kansas cases involving prior or contemporaneous physical injury, and that no decision had involved subsequent physical injury not actually caused by the emotional distress. See id. at 956-57. The court reviewed cases in which courts had permitted such recovery for pre-impact emotional distress, but it noted that none of those courts adequately addressed the purposes for the "physical injury" rule noted by the Kansas Supreme Court and listed in the Restatement comment. See id. at 958-62. The court concluded:
Having canvassed the relevant decisions from other jurisdictions, we have found no court that has cogently explained why the Restatement factors ought now to be discounted. In Kansas, where the impact rule has been rather strictly construed, this lack of contrary analysis is especially important. Moreover our conclusion that Kansas law would not permit plaintiff to recover for decedent's pre-impact emotional distress is further buttressed by the Kansas Supreme Court's stringent attitude toward claims for intentional infliction of emotional distress (the tort of outrage).
Id. at 961-62. The court thus predicted that the Kansas Supreme Court would follow other courts that refuse to permit recovery for pre-impact emotional distress in the absence of contemporaneous or resultant physical injury. See id. at 957, 962.
The Fogarty court went on to state that its conclusion "should not be read as an endorsement of the current legal doctrine in this area," and that it would be "logical" to allow recovery for any provable emotional distress. Id. at 962-63. Nevertheless, the court applied the law as it believed the Kansas Supreme Court would:
At the present time, however, we have no indication that the Kansas Supreme Court is prepared to jettison its recently reaffirmed rules restricting recovery for emotional distress. So long as those rules remain in force, their internal logic requires that we deny plaintiff's claim for negligently induced, pre-impact emotional distress not itself resulting in physical injury. If those rules are discarded, such an announcement should properly come from the Kansas Supreme Court.
Id. at 963.
Subsequently, in St. Clair v. Denny, 245 Kan. 414, 781 P.2d 1043 (1989), the Kansas Supreme Court did face a claim for pre-impact emotional distress. The supreme court noted the holding of Fogarty, but it concluded that because there was insufficient evidence in its case that the decedent actually suffered any emotional distress prior to impact, it was "not necessary to test the accuracy of Judge O'Connor's prediction" that the supreme court would not allow recovery for pre-impact emotional distress absent resulting physical injury. See id. at 424, 781 P.2d at 1050. Since St. Clair, Kansas state courts have not addressed *1265 the issue of pre-impact emotional distress.
This Court did address the issue in Cochrane v. Schneider National Carriers, Inc., 968 F.Supp. 613 (D.Kan.1997) (Lungstrum, J.). In Cochrane, in light of the absence of contrary Kansas authority, the Court adopted the "extremely well-reasoned opinion by Judge O'Connor in Fogarty," and concluded for the same reasons that "the Kansas Supreme Court would not at this time recognize plaintiffs' claim for damages for negligently induced, pre-impact emotional distress." See id. at 617; see also Brewer v. Board of County Comm'rs of Coffey County, Kan., 2007 WL 2013561, at *4 (D.Kan. July 10, 2007) (Murguia, J.) (following Fogarty in dismissing claim for pre-impact emotional distress).
In the present case, plaintiffs have not specifically argued that this prediction by Judge O'Connor and this Court concerning a likely ruling by the Kansas Supreme Court is wrong. Rather, they argue simply that the Court should certify the question to the Kansas Supreme Court so that that court might have yet another opportunity to reject the analysis in Fogarty. See K.S.A. § 60-3201 et seq. (Uniform Certification of Questions of Law Act).
The Court declines plaintiffs' request. Plaintiffs have not offered any reasons why the analysis offered in Fogarty and adopted in Cochrane might be flawed or why a different conclusion should have been reached. Plaintiffs have not analyzed Kansas law or even cited to any Kansas cases that might suggest that the supreme court would actually rule in plaintiffs' favor on this issue. Plaintiffs suggest that the weight of authority supports allowing recovery for pre-impact emotional distress, but they cite cases from only nine other jurisdictions, and many of those cases preceded or were dismissed in Fogarty. Plaintiffs have certainly not shown that the overwhelming majority of states allow such damages, or that there is even a predominant trend. It is true that a few courts since Fogarty have ruled in favor of recovery on this issue, but none of those courts adequately explained why the reasons given in the Restatement for the physical injury requirement are no longer valid. See, e.g., In re Jacoby Airplane Crash Litig., 2006 WL 3511162, at *2-5 (D.N.J. 2006) (basing ruling on analysis of New Jersey law); Monk v. Dial, 212 Ga.App. 362, 441 S.E.2d 857, 859 (1994) (citing Georgia case from 1860 for conclusion that the physical injury need not precede the mental pain and suffering in anticipation of a collision); Beynon v. Montgomery Cablevision Ltd. Partnership, 351 Md. 460, 718 A.2d 1161, 1179-83 (1998) (cases permitting recovery fit better with the Maryland Supreme Court's previous liberalization of the physical injury rule); Nelson v. Dolan, 230 Neb. 848, 434 N.W.2d 25, 31 (1989) (following cases that have allowed recovery, no reason to distinguish pre-impact conscious mental anguish from conscious post-injury pain and mental anguish, for which recovery is permitted). Thus, the Fogarty analysis is still sound, and there is no basis found in the more recent cases from other jurisdictions to suggest that the Kansas Supreme Court would now reject the rationale for the physical injury requirement.
The Court also notes that not all recent cases support plaintiffs, as courts in Kentucky and Massachusetts have refused to allow recovery for pre-impact emotional distress since Fogarty was decided. See Steel Technologies, Inc. v. Congleton, 234 S.W.3d 920, 929-30 (Ky.2007); Gage v. City of Westfield, 26 Mass.App.Ct. 681, 532 N.E.2d 62, 71 (1988). Nor have plaintiffs shown that the Kansas Supreme Court's stringent attitude about recovery for intentionally-induced emotion distress, noted by the court in Fogarty, has changed in recent *1266 years. The Kansas Supreme Court has also described recovery for negligently-induced emotional distress as "limited". See Hopkins, 237 Kan. at 612, 702 P.2d at 320. In Ware, decided only last year, the Kansas Court of Appeals refused to create an exception to the physical injury requirement, noting that the requirement is still in effect in Kansas and is not unreasonable, despite some criticism of the rule. See Ware, 39 Kan.App.2d at 411, 180 P.3d at 619.
For these reasons, the Court reaffirms its belief that the Kansas Supreme Court would not permit recovery for negligently-induced, pre-impact emotional distress in the absence of a physical injury caused by or contemporaneous with that distress. Plaintiffs have not offered any reason why the Kansas Supreme Court would in fact rule to the contrary. Accordingly, the Court denies plaintiffs' motion and declines to certify a question on this issue to the Kansas Supreme Court. See Hartford Ins. Co. of the Midwest v. Cline, 427 F.3d 715, 716 (10th Cir.2005) (certification is within the discretion of the federal court) (citing Lehman Bros. v. Schein, 416 U.S. 386, 390-91, 94 S.Ct. 1741, 40 L.Ed.2d 215 (1974)); Pehle v. Farm Bureau Life Ins. Co., 397 F.3d 897, 900 n. 1 (10th Cir.2005) (certification is not compelled, even if issue is novel and state law is unsettled).
Because plaintiffs have not provided evidence that decedents suffered a pre-impact physical injury in this case, they may not recover on their survival claims for pre-impact emotional distress. Summary judgment is awarded in favor of defendant on those claims.
IT IS THEREFORE ORDERED BY THE COURT THAT Plaintiffs' Motion for Partial Summary Judgment and Plaintiffs' Alternative Motion to Certify Question to Supreme Court of Kansas (Doc. # 141) is denied.
IT IS FURTHER ORDERED BY THE COURT THAT defendant's motion for summary judgment (Doc. # 147) is granted, and defendant is awarded summary judgment on plaintiffs' survival claims for pre-impact emotional distress.
IT IS SO ORDERED.
NOTES
[1] The pilot's claims and the claims against a fuel pump manufacturer have been settled.
[2] The estates for three of the passengers brought survival claims in this case. Although only those claims are at issue here, the Court refers to movants generally as "plaintiffs" for ease of reference in this opinion.
[3] Plaintiffs complain that defendant has merely objected to Dr. Diaz's testimony without providing any contrary evidence that decedents suffered no physical injuries. As noted above, however, the movant's burden is merely to point to a lack of evidence. Defendant, in arguing that Dr. Diaz's testimony is inadmissible and in alternatively arguing that such evidence is nevertheless insufficient to support a claim under Kansas law, has met that burden. Plaintiffs bear the burden to prove these claims at trial, and thus plaintiffs bear the burden of producing evidence to support the claims at this stage. Plaintiffs have produced only the evidence stated above in opposition to summary judgment.
Because the Court concludes that the condition described by Dr. Diaz does not constitute "physical injury" sufficient to support plaintiffs' claims for pre-impact emotional distress, the Court need not rule on defendant's argument that Dr. Diaz's testimony is speculative and therefore inadmissible.
[4] The requirement of a physical injury does not apply for willful, wanton, or intentional conduct, see Hoard, 233 Kan. at 274, 662 P.2d at 1220, but plaintiffs have alleged only negligence in the present case.
[5] Moreover, the Ware court refused to abolish the "physical injury" rule or create an exception for post-traumatic stress disorder; the court noted that although some courts have criticized the requirements, other states, including Kansas, still require some objective evidence of emotional injury, and it concluded that such a requirement was not unreasonable. See Ware, 39 Kan.App.2d at 411, 180 P.3d at 619.
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537 U.S. 908
CROWv.WACKENHUT ET AL.
No. 02-5318.
Supreme Court of United States.
October 7, 2002.
1
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT.
2
C. A. 8th Cir. Certiorari denied.
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
MIGUEL ANGEL GARCIA-BONILLA,
Petitioner,
v. No. 02-2118
JOHN ASHCROFT,
Respondent.
On Petition for Review of an Order of
the Board of Immigration Appeals.
(A77-609-974)
Submitted: January 15, 2004
Decided: March 11, 2004
Before WILKINS, Chief Judge, and LUTTIG and
TRAXLER, Circuit Judges.
Petition dismissed by unpublished per curiam opinion.
COUNSEL
Donald L. Schlemmer, Washington, D.C., for Petitioner. Robert D.
McCallum, Jr., Assistant Attorney General, Anthony W. Norwood,
Senior Litigation Counsel, Virginia M. Lum, Attorney, Civil Divi-
sion, Office of Immigration Litigation, UNITED STATES DEPART-
MENT OF JUSTICE, Washington, D.C., for Respondent.
2 GARCIA-BONILLA v. ASHCROFT
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Miguel Angel Garcia-Bonilla petitions for review of an order of the
Board of Immigration Appeals (Board) summarily dismissing his
appeal from an immigration judge’s denial of his applications for asy-
lum, withholding of removal, and protection under the Convention
Against Torture. We dismiss the petition based on Garcia-Bonilla’s
failure to exhaust his administrative remedies.
I.
Garcia-Bonilla illegally entered the United States without inspec-
tion by an immigration officer. On July 27, 1999, the Immigration and
Naturalization Service issued a notice to appear, charging him with
removability under § 212(a)(6)(A)(i) of the Immigration and Nation-
ality Act, see 8 U.S.C.A. § 1182(a)(6)(A)(i) (West 1999), as an alien
present in the United States without being admitted or paroled. At a
hearing before an immigration judge, Garcia-Bonilla conceded that he
was removable as charged but requested asylum, withholding of
removal, and protection under the Convention Against Torture. On
June 18, 2001, the immigration judge denied Garcia-Bonilla’s appli-
cations and ordered his removal from the United States.
Garcia-Bonilla subsequently filed a timely notice of appeal with
the Board. On the notice of appeal form, he listed his reasons for
appeal. Item number six on page two of the notice form asked
whether he would "file a separate written brief or statement in addi-
tion to the ‘Reason(s) for Appeal’ written above or accompanying this
form." J.A. 15. Garcia-Bonilla checked the box indicating that he
would file a separate brief or statement and added the words "within
30 days of receipt of the entire transcript." Id. A shaded box below
the question contained a warning, preceded by a large exclamation
point, that read as follows: "WARNING: Your appeal may be sum-
GARCIA-BONILLA v. ASHCROFT 3
marily dismissed if you indicate in Item #6 that you will file a sepa-
rate written brief or statement and, within the time set for filing, you
fail to file the brief or statement and do not reasonably explain such
failure." Id. Directly beneath the warning was the signature and date
line for the appealing party. Counsel signed and dated the form on
July 18, 2001.
On February 6, 2002, the Board apparently sent a briefing sched-
ule, a copy of the immigration judge’s decision, and the transcript of
Garcia-Bonilla’s immigration court hearing to counsel, and informed
Garcia-Bonilla that his brief must be received by the Board no later
than March 8, 2002. It is undisputed that Garcia-Bonilla failed to file
a separate written brief or statement.
On August 29, 2002, the Board summarily dismissed Garcia-
Bonilla’s appeal. In its order, the Board cited the warning contained
in the notice of appeal and 8 C.F.R. § 3.1(d)(2)(i)(D) (2002), which
provides for summary dismissal if a brief or statement is not filed
after a party has indicated that it would do so. Additionally, the Board
stated that upon review of the record, it was "not persuaded that the
Immigration Judge’s ultimate resolution of this case was in error."
J.A. 8.
II.
In his petition for review, Garcia-Bonilla argues that the Board vio-
lated his due process rights by dismissing his appeal for failure to file
a brief without giving him an opportunity to file one. Specifically, he
claims that he never received the briefing schedule or the transcript
of his hearing before the immigration judge. In light of prudential
considerations affecting our review of agency actions, we hold that
Garcia-Bonilla was required to present this claim to the Board in a
motion to reopen, and therefore that we cannot grant his petition.
8 U.S.C.A. § 1252(d)(1) (West 1999) directs that "[a] court may
review a final order of removal only if . . . the alien has exhausted all
administrative remedies available to the alien as of right." It has been
held that this statutory exhaustion requirement does not apply to
motions to reopen. See Noriega-Lopez v. Ashcroft, 335 F.3d 874, 880-
81 (9th Cir. 2003). Nevertheless, courts may require exhaustion of
4 GARCIA-BONILLA v. ASHCROFT
administrative remedies in some circumstances even when exhaustion
is not statutorily required. See NLRB v. Indus. Union of Marine &
Shipbuilding Workers of Am., AFL-CIO, 391 U.S. 418, 426 & n.8
(1968); Noriega-Lopez, 335 F.3d at 881. Such a prudential require-
ment does not deprive a court of jurisdiction but rather is within the
discretion of the reviewing court. See Montes v. Thornburgh, 919
F.2d 531, 537 (9th Cir. 1990). Exhaustion may be prudentially
required if:
(1) agency expertise makes agency consideration neces-
sary to generate a proper record and reach a proper decision;
(2) relaxation of the requirement would encourage the
deliberate bypass of the administrative scheme; and (3)
administrative review is likely to allow the agency to correct
its own mistakes and to preclude the need for judicial
review.
Id. (internal quotation marks omitted).
Our consideration of these factors here leads us to dismiss Garcia-
Bonilla’s petition. When Garcia-Bonilla received the Board order
stating that he had been "granted the opportunity to submit a brief"
but had failed either to do so or to "reasonably explain his . . . failure
to do so," J.A. 8 (internal quotation marks omitted), he needed only
to move the Board to reopen his case so that he could demonstrate
that he had never received the briefing schedule or transcript. See gen-
erally 8 C.F.R. § 3.2(c) (2003). Doing so would have given the Board
the chance to consider his explanation, make any necessary factual
findings, and decide whether to excuse his failure to file a brief.
Because he bypassed the Board altogether with regard to this claim,
however, the factual premise of the claim—that he never received the
briefing schedule and transcript—is not supported by any administra-
tive findings.* See McGee v. United States, 402 U.S. 479, 488 (1971)
*Garcia-Bonilla has included in the joint appendix an affidavit from
his attorney stating that neither he nor Garcia-Bonilla received any for-
mal communication from the Board prior to its decision. However, that
affidavit, not having been presented to the Board in a motion to reopen,
is not properly before us. See 8 U.S.C.A. § 1252(b)(4)(A) (West 1999)
(providing that "the court of appeals shall decide [a petition for review
of a final order of removal] only on the administrative record on which
the order of removal is based").
GARCIA-BONILLA v. ASHCROFT 5
(holding that "[t]he exhaustion requirement is properly imposed
where . . . the claim to exemption depends on careful factual analysis
and where the registrant has completely sidestepped the administra-
tive process designed to marshal relevant facts and resolve factual
issues in the first instance"); McKart v. United States, 395 U.S. 185,
194 (1969) (explaining that "judicial review may be hindered by the
failure of the litigant to allow the agency to make a factual record, or
to exercise its discretion or apply its expertise"); Rhoa-Zamora v. INS,
971 F.2d 26, 34 (7th Cir. 1992) (holding that "an appellate court is
not the appropriate forum to engage in fact-finding in the first
instance"). Moreover, allowing litigants to proceed directly to this
court with factual claims such as Garcia-Bonilla’s would remove
much of the incentive that would otherwise exist for presenting such
claims to the Board in the first instance and would eliminate the sig-
nificant possibility that the claims could be resolved at the Board
level with no judicial involvement. For all of these reasons, we con-
clude that prudential considerations preclude us from reviewing
Garcia-Bonilla’s challenge to the procedural basis for the Board’s
summary dismissal, and we therefore dismiss his petition.
PETITION DISMISSED
|
UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 07-6773
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
ARTHUR GRAHAM JUSTICE,
Defendant - Appellant.
Appeal from the United States District Court for the Southern
District of West Virginia, at Bluefield. David A. Faber, District
Judge. (1:01-cr-00234-01, 1:04-cv-00702)
Submitted: August 10, 2007 Decided: August 24, 2007
Before WILKINSON and NIEMEYER, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Dismissed by unpublished per curiam opinion.
Arthur Graham Justice, Appellant Pro Se. Michael Lee Keller,
OFFICE OF THE UNITED STATES ATTORNEY, Charleston, West Virginia,
for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Arthur Graham Justice seeks to appeal the district
court’s order accepting the recommendation of the magistrate judge
and denying relief on his 28 U.S.C. § 2255 (2000) motion. The
order is not appealable unless a circuit justice or judge issues a
certificate of appealability. 28 U.S.C. § 2253(c)(1) (2000). A
certificate of appealability will not issue absent “a substantial
showing of the denial of a constitutional right.” 28 U.S.C.
§ 2253(c)(2) (2000). A prisoner satisfies this standard by
demonstrating that reasonable jurists would find that his
constitutional claims are debatable and that any dispositive
procedural rulings by the district court are also debatable or
wrong. See Miller-El v. Cockrell, 537 U.S. 322, 336 (2003);
Slack v. McDaniel, 529 U.S. 473, 484 (2000); Rose v. Lee, 252 F.3d
676, 683 (4th Cir. 2001). We have independently reviewed the
record and conclude that Justice has not made the requisite
showing. Accordingly, we deny a certificate of appealability and
dismiss the appeal. We deny Justice’s motion for bail. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before the court and
argument would not aid the decisional process.
DISMISSED
- 2 -
|
249 F.3d 462 (6th Cir. 2001)
Perry A. March, in his capacity as father of Samson Leo March and Tzipora Josette March, both minor children, Petitioner-Appellee/Cross-Appellant,v.Lawrence E. Levine; Carolyn R. Levine, Respondents-Appellants/Cross-Appellees.
Nos. 00-6326, 00-6551.
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
Argued: March 14, 2001Decided and Filed: April 19, 2001
Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 00-00736, Aleta A. Trauger, District Judge.[Copyrighted Material Omitted][Copyrighted Material Omitted]
John E. Herbison, Nashville, Tennessee, Robert S. Catz, Nashville, TN, for Perry A. March for Appellee.
Gregory D. Smith, James G. Martin III, STITES & HARBISON, Nashville, Tennessee, Mark H. Levine, Los Angeles, California, for Appellants.
Before: KENNEDY and SUHRHEINRICH, Circuit Judges; GAUGHAN, District Judge*.
SUHRHEINRICH, Circuit Judge.
OPINION
1
This appeal involves the International Child Abduction Remedies Act ("ICARA"), 42 U.S.C. §§ 11601-11610 (2000), which is a codification of the Hague Convention on the Civil Aspects of International Child Abduction, opened for signature, Oct. 25, 1980, T.I.A.S. No. 11670, 1343 U.N.T.S. 89, 51 Fed. Reg. 10,493, 10,498 (app. B) (March 26, 1986) (hereinafter "Hague Convention"). The Hague Convention was adopted by the signatory nations "to protect children internationally from the harmful effects of their wrongful removal or retention and to establish procedures to ensure their prompt return to the State of their habitual residence, as well as to secure protection for rights of access." Hague Convention, pmbl.
2
Under the ICARA, a petitioner must establish by a preponderance of the evidence that his children were wrongfully removed or retained in breach of his custody rights under the laws of the Contracting State in which the children habituallyresided before they were removed or retained. Hague Convention, arts. 3, 12; 42 U.S.C. §11603(e)(1)(A). Once wrongful removal is shown, the children must be returned. Hague Convention, art. 12. However, a court is not bound to order return of the children if the respondents establish certain exceptions under the treaty. Hague Convention, art. 13. The ICARA requires that a respondent establish by clear and convincing evidence the grave risk of harm exception under article 13(b),1 and the protection of fundamental freedom provision of article 202. 42 U.S.C. § 11603(e)(2)(A). Notwithstanding these exceptions, the treaty further provides that "[t]he provisions of this Chapter [pertaining to return of children] do not limit the power of a judicial or administrative authority to order the return of the child at any time." Hague Convention, art. 18 (emphasis added).
3
Respondents Lawrence E. Levine and Carolyn R. Levine ("the Levines"), the grandparents of two minors, Samson Leo March and Tzipora Josette March, appeal the order entered by the district court in this action under the ICARA and the Hague Convention which directed the Levines to immediately return the two minor children to their father in Mexico. Petitioner Perry A. March ("March"), the biological father of Samson and Tzipora, cross-appeals portions of the order decided adversely to him. We AFFIRM the district court's order, adopting its well-reasoned opinion. See March v. Levine, F. Supp. 2d , No. 3:00-0736 (M.D. Tenn. Oct.4, 2000).
I.
4
This case involves an American father who moved to Mexico with his two biological children, of whom he had custody. It also involves two American maternal grandparents who obtained court-ordered visitation rights, then removed the children from Mexico and returned with them to the United States, and then retained them after the end of the court-ordered visitation. The father seeks return of his children under the ICARA and the Hague Convention.
5
The mother of the children disappeared in 1996 and her parents, the Levines, believe she was murdered by her husband, March. This is the basis for the Levines' fervent belief that March should not have custody of their grandchildren. However, there have also been allegations that the maternal grandfather, Mr. Levine, killed his own daughter3. March has not been charged, nor apparently has anyone else has been charged, with the murder of the children's mother. The Levines were nevertheless successful in obtaining a default judgment as a discovery sanction against March in a wrongful death action which held that he killed his wife. March vehemently objects to being characterized as a killer and asserts that his wife disappeared, abandoning him and the children.
6
Additional facts are set forth in the district court's opinion. March, F. Supp. 2d at , No. 3:00-0736.
7
On or about June 15, 2000, the Levines arrived in Jalisco, Mexico, to visit theMarch children pursuant to an ex parteorder entered by an Illinois court on May 17, 20004. This Illinois order granted them a thirty-nine day period of uninterrupted visitation with Samson and Tzipora. Although the visitation order did not restrict the Levines' ability to travel with the children, the order did not authorize the Levines to remove the children from Mexico for visitation. The Levines obtained a Mexican court order giving effect to the Illinois visitation order, but the Mexican order explicitly required that the visitation occur in Guadalajara, Mexico. The Levines went to the children's school, accompanied by the Mexican judge and armed police, and took physical possession of the children pursuant to these orders on June 21, 2000. That same night, contrary to the Mexican court order, they left Mexico with the children and returned with them to Tennessee, where the Levines reside. There is an outstanding Mexican arrest warrant against the Levines and their adult son, who is also one of their attorneys on appeal, for the kidnapping of the children.
8
The Illinois court-ordered visitation period expired July 30, 2000. Since that time, the Levines have refused to return the children to their father in Jalisco, Mexico, where the children had resided for more than one year prior to their removal. Instead, the Levines have sought termination of March's parental rights and custody of their grandchildren by instituting proceedings in Tennessee.
9
March filed his Petition for Return of Children under the ICARA on August 3, 2000, asserting that they were wrongfully removed from their habitual residence in Mexico in violation of his custody rights and the Hague Convention. In addition to the return of his children, March requested that the district court expedite matters; enter a provisional order directing the Levines to return his children pending a hearing, or alternatively, that the court grant him immediate rights of access, including telephone contact with the children and a schedule for the children to have time with him until a hearing on the merits; that trial be set in advance of the children's school year; and other relief.
10
The Levines filed a sworn Answer on August 22, 2000. Among numerous defenses raised, the Levines asserted that March should be disentitled from bringing his petition before the court under the fugitive disentitlement doctrine. They also asserted that Mexico is not the habitual residence of the children, as required for the return of children under articles 3 and 12 of the Hague Convention. They further asserted exceptions to return of children under articles 13(b) and 20 of the treaty, i.e., that return of the children to March would present a grave risk of psychological and physical harm as well as place them in an intolerable situation, and that return of the children would violate human rights and fundamental freedoms. In addition, they asserted that full faith and credit were due to various state and Mexican court decisions under a variety of legal theories, including "abstention."
11
On August 30, 2000, March moved for summary judgment or partial summary judgment on the question whether the Levines wrongfully removed or wrongfully retained the children under the ICARA. The next day, the Levines moved to dismiss the petition based on March's inability to establish that Mexico was the children's habitual residence, and the fugitive disentitlement doctrine.
12
On September 1, 2000, the district court ruled that it would decide these pending motions prior to allowing any discovery. More than a month later, and after the court allowed a voluminous amount of evidence into the record in conjunction with the parties' briefs and independently sought information under the terms of the treaty,5 the district court entered a fifty-two page opinion and an order in which it granted March's petition and ordered the Levines to immediately return the children to him. Specifically, the district court held that March had met his burden of establishing wrongful retention. It further held that the Levines had not met their burden of showing exceptions to return of children under the treaty. In addition, it declined to disentitle March from bringing his petition. However, the court, in aid of appellate jurisdiction, stayed its order until October 10, 2000, or until further direction from this Court.
13
Both parties appealed. A panel of this Court ordered a temporary stay of the district court's order until the Levines filed a substantive motion seeking a stay. After the Levines filed such a motion, this Court granted a stay of the district court's order pending resolution of the instant appeal and cross-appeal.
14
Regarding the merits, on appeal before this Court the Levines argue that the district court erred when it declined to disentitle March from pursuing his petition under the fugitive disentitlement doctrine based on various state court orders of contempt. They also contend that the district court erred when it refused to allow discovery or a hearing on the merits prior to ruling on the petition, or otherwise permit them to develop their affirmative defenses. They further argue that the district court erred when it granted summary judgment in favor of March. Finally, in their combined brief replying to March's response to their appeal and responding to March's cross-appeal, the Levines assert that the Younger abstention doctrine is applicable to this case.
15
On cross-appeal, March argues that the district court erred when it failed to address his argument that the Levines have no standing to assert any defenses. He also argues that the district court erred when it considered certain audiotapes as admissible evidence for purposes of ruling on his petition.
II.
16
In addressing the questions raised in this appeal, we must keep in mind the following general principals inherent in the Hague Convention and the ICARA:
17
First, a court in the abducted-to nation has jurisdiction to decide the merits of an abduction claim, but not the merits of the underlying custody dispute. Second, the Hague Convention is generally intended to restore the pre-abduction status quo and to deter parents from crossing borders in search of a more sympathetic court.
18
Friedrich v. Friedrich, 78 F.3d 1060, 1063-64 (6th Cir. 1996) (citations omitted).
A.
19
As a preliminary matter, we need not address the Levines' abstention argument. Having invoked the jurisdiction ofthis Court, and in light of their goal to overturn the district court's order to return the children, the Levines' argument that "this court . . . abstain" is absurd. Final Combined Reply and Resp. Br. on Behalf of the Appellants at 43.
B.
20
The Levines also argue as a threshold matter that the district court erred in declining to disentitle March from bringing his petition based on his fugitive status from various state court contempt orders.
21
Having carefully reviewed the parties' briefs in light of the applicable law, we hold that the district court did not abuse its discretion when it declined to disentitle March for the reasons set forth in its opinion. See March, F. Supp. 2d at , No. 3:00-0736 at 42-51 (applying the factors set forth in Degen v. United States, 517 U.S. 820 (1996) (discussing application of the fugitive disentitlement doctrine), in light of Troxel v. Granville, 530 U.S. 57 (2000) (plurality opinion) (discussing the liberty interests of parents in the care, custody, and control of their children as being "perhaps the oldest of the fundamental liberty interests")). We therefore incorporate and adopt the district court's reasoning as the holding of this Court. However, we wish to comment briefly on the matter.
22
In arguing that March should have been disentitled from accessing the district court to seek return of his children, the Levines point to various state court contempt orders entered in both Illinois and Tennessee. The Illinois contempt orders arose during grandparent visitation proceedings, and stem primarily from March's failure to appear with the children6. The Tennessee orders, on the other hand, pertain to a probate proceeding. These contempt orders stem from March's alleged misconduct in a deposition and orders requiring him to repair some furniture and return various items of personal property, including a beaded evening bag and a baby blanket. The Tennessee contempt orders, among other penalties, ordered March to be imprisoned and fined, and ordered the court clerk to take appropriate action to enforce collection of the $50 per day fine (that then totaled $22,300) for March's failure to deliver the items7.
23
At the outset, we note that, however labeled, none of these contempt orders were "criminal" contempts because the fines at issue were avoidable by performance of the required acts and no definite sentences were imposed. See Hicks ex rel. Feiock v. Feiock, 485 U.S. 624, 631-32 (1988) (holding that the substance of the proceedings and the character of relief determines whether a contempt is of a civil or criminal nature). Furthermore, March is arguably not a fugitivegiven that the orders were entered against him after he moved to Mexico, especially when no order limited his travel at the time he moved. Cf. Degen, 517 U.S. at 823-24, 828 (declining to resolve the question whether Degen was a fugitive in all senses of the word where he had moved to Switzerland about one year prior to being indicted by a federal grand jury). Moreover, the Illinois court relinquished jurisdiction in the visitation proceeding before March filed his ICARA petition invoking the protections of the Hague Convention. The Illinois court thus indicated it has no interest in enforcing its orders.
24
To the extent that civil contempts have formed the basis for disentitlement, such cases are inapposite to the facts here because they involved appellate-level application of the doctrine to an appellant who was a fugitive from contempt orders entered by the district court in the case sub judice. United States v. Barnette, 129 F.3d 1179 (11th Cir. 1997); Empire Blue Cross & Blue Shield v. Finkelstein, 111 F.3d 278 (2d Cir. 1997); Stern v. United States, 249 F.2d 720 (2d Cir. 1957) (per curiam). Here, all the contempt orders were entered by state courts and involved other kinds of proceedings than the Hague Convention petition at issue here. We decline to expand the fugitive disentitlement doctrine "to sanction by dismissal any conduct that exhibited disrespect for any aspect of the judicial system." Ortega-Rodriguez v. United States, 507 U.S. 234, 246 (1993).
25
It is worth re-emphasizing the Degen Court's guidance to courts in deciding whether to disentitle a claimant: there must be "restraint in resorting to inherent power" and its use must "be a reasonable response to the problems and needs that provoke it." Degen, 517 U.S. at 823-24 (citations omitted). As the First Circuit recently recognized in an ICARA case,
26
[A]pplying the fugitive disentitlement doctrine would impose too severe a sanction in a case involving parental rights. Parenthood is one of the greatest joys and privileges of life, and, under the Constitution, parents have a fundamental interest in their relationships with their children. To bar a parent who has lost a child from even arguing that the child was wrongfully removed to another country is too harsh.
27
Walsh v. Walsh, 221 F.3d 204, 216 (1st Cir. 2000) (citations omitted). Given the fundamental rights at issue, we agree that disentitlement will generally be too harsh a sanction in a case involving an ICARA petition.
28
Here, even if the contempts were criminal in nature and March was clearly a fugitive from them, had the district court disentitled March from even arguing his ICARA petition because he did not return a beaded evening bag and a baby blanket it would have been an unreasonable response and an abuse of discretion. An ICARA petitioner should not be disentitled on such patently insignificant grounds. The district court therefore properly rejected the Levines' vindictive attempt to deprive March of his day in court. Malitiis hominum est obviandum.
C.
29
The Levines also argue that the district court erred in granting summary judgment in favor of March. Again, having reviewed the parties' briefs in light of the applicable law, we also hold that the district court did not err in granting summary judgment in favor of March for the reasons set forth in its opinion. March, 136 F. Supp. 2d at 838-55. In brief, the district court found that March met hisburden of establishing his custody rights in his children, that they were wrongfully retained by the Levines beyond the period of court-ordered visitation, and that the children habitually resided in Mexico at the time of their removal and wrongful retention and that the Levines failed to establish genuine issues of material fact on these issues. March, F. Supp. 2d at , No. 3:00-0736 at 7, 9, 16, 18. In regard to the Levines' assertions that the exceptions to return of children under the treaty were applicable, the court found that they had not carried their burden, under the heightened clear and convincing evidence standard, of establishing that there were genuine issues of material fact regarding the treaty exceptions they raised. March, F. Supp. 2d at , No. 3:00-0736 at 39, 41-42. We therefore incorporate and adopt the district court's thorough reasoning as the holding of this Court in regard to this issue as well. We pause only to comment briefly on the Levines' treaty exceptions and the highly unusual nature of this case.
30
When a motion for summary judgment is made and supported by competent admissible evidence, the nonmovant may not rest on his pleadings, but must come forward with affidavits or other admissible evidence setting forth "specific facts showing there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quoting Fed. R. Civ. P. 56(e)). To determine whether a factual dispute is genuine the court inquires "whether 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. at 251-52. A mere scintilla of evidence is insufficient. Id. at 252. Moreover, the evidence presented must be viewed through the prism of the substantive evidentiary burden, i.e., by the preponderance of the evidence or by clear and convincing evidence. Id. at 254. The evidence of the non-movant must be believed and all reasonable inferences must be drawn in the non-movant's favor. Id. at 255.
31
Under the treaty and the ICARA, once the petitioner establishes wrongful removal or retention, as here, the respondent must establish by clear and convincing evidence the narrow exceptions under articles 13b and 20. Hague Convention, arts. 13b, 20; 42 U.S.C. § 11603(e)(2)(A); Friedrich, 78 F.3d at1067. In dicta, the Friedrich court stated:
32
[W]e believe that a grave risk of harm for the purposes of the Convention can exist in only two situations. First, there is a grave risk of harm when return of the child puts the child in imminent danger prior to the resolution of the custody dispute--e.g., returning the child to a zone of war, famine, or disease. Second, there is a grave risk of harm in cases of serious abuse or neglect, or extraordinary emotional dependence, when the court in the country of habitual residence, for whatever reason, may be incapable or unwilling to give the child adequate protection.
33
Id. at 1069.
34
The Levines principally argued, pursuant to article 13(b) of the treaty, that the children should not be returned to March because to return them would present a grave risk of psychological and physical harm to Samson and Tzipora and place them in an intolerable situation. The Levines rely in large part on a default judgment they obtained in a wrongful death action against March after the disappearance of their daughter.
35
We find the circumstances surrounding the entry of this default, like the circumstancessurrounding the Tennessee contempt orders, highly unusual, and suggestive of the home court advantage that the treaty was designed to correct. Specifically, this default judgment was entered as a discovery sanction. The Tennessee court denied a request by March to have his deposition conducted by telephone or videotape.8 Then, when March did not present himself for the deposition locally, the Tennessee court ordered March's answer stricken and precluded him from presenting any testimony regarding defenses, declared that all the Levines' declarations in their petition were true and correct, and entered a default solely on the basis of the allegations contained in the Levines' pleadings. The default judgment declared Janet Levine March dead and that March killed her. Thus, the Levines never proffered evidence of their allegations in the state court proceedings. March, on the other hand, has averred in a sworn declaration that he did not kill his wife, that she drove away one evening, that there is no evidence of which he is aware that she is deceased, and that he is appealing the default judgment.
36
Even assuming that the default judgment would be upheld on appeal, that it should be given preclusive effect in these proceedings, and that it is sufficient to show that there is some risk of harm to the children in being returned to March, this default judgment is not clear and convincing evidence that there is a grave risk of harm to the children in being returned to their father. Our review of the record, like that of the district court, shows no allegations by the Levines over the many years that they pursued visitation with the children that March has harmed them or would harm them. Nor have the Levines made any showing of serious abuse much less neglect of the children by March. At best, the default judgment might raise a tenuous inference that he might hurt his children. Even that inference, however, does not rise to the level of an imminent risk of grave harm. Further, the children are not being returned to any other type of circumstances that would place them in imminent harm, such as to a war zone, or to an area of rampant disease or famine. The Levines also have not shown the Mexican authorities incapable of or unwilling to protect the children. Indeed, the Levines were successful in obtaining the assistance of the Mexican authorities to enforce a visitation order. This demonstrates that the foreign authorities will hear and consider the Levines' arguments should they seek relief under the visitation and custody laws of Mexico.
37
The Hague Convention and the ICARA were specifically designed to discourage those who would remove or retain children in the hopes of seeking a "home court advantage" by ensuring that children wrongfully removed or retained would be returned to their place of habitual residence so that custody determinations are made there. By invoking the treaty's exceptions in this case, what the Levines truly seek is a determination regarding the adequacy of March as a parent in light of his wife's disappearance. This falls squarely within the "forbidden territory" of deciding the merits of the parties' custody dispute. Friedrich, 78 F.3d at 1065. The district court properly recognized the Levines' argument for what it is, and declined to enter this forbidden territory.
D.
38
The Levines argue that the district court erred when it granted summary judgment in favor of March without allowing discovery or an evidentiary hearing. They also complain that they were not allowed to develop their treaty defenses under articles 13 and 20 of the Hague Convention prior to the court's grant of summary judgment in favor of March.
39
We adopt the district court's opinion on this point also. We take a few moments to elaborate, however, since this is apparently a question of first impression.
40
We review for an abuse of discretion a claim that summary judgment was prematurely entered because additional discovery was needed. Vance ex rel. Hammons v. United States, 90 F.3d 1145, 1149 (6th Cir. 1996). However, such an argument is not preserved for appeal unless it is first advanced in the district court by the filing of an affidavit pursuant to Federal Rule of Civil Procedure 56(f), or by the filing of a motion for additional discovery. Id. (citing Plott v. General Motors Corp., 71 F.3d 1190, 1196 (6th Cir. 1995)). Assuming that a motion for discovery without an accompanying affidavit is sufficient,9 the Levines filed such a motion. Nevertheless, the Levines' motion sought discovery only to develop proof regarding the narrow issue of the children's habitual residence, not any of the treaty exceptions to return of the children or any other issue. Therefore, we review the issue raised only as it pertains to their discovery request.
41
"The general rule is that summary judgment is improper if the non-movant is not afforded a sufficient opportunity for discovery." Vance, 90 F.3d at 1148. "If the non-movant makes a proper and timely showing of a need for discovery, the district court's entry of summary judgment without permitting him to conduct any discovery at all will constitute an abuse of discretion." Id. at 1149. Thus, although Vance indicates that summary judgment is improper without discovery, it acknowledges that this is only a general rule.
42
At the same time, however, the plain language of Rule 56 "does not specifically require or even expressly authorize receipt of oral evidence and other types of evidence in a hearing setting." 11 James Wm. Moore et al., Moore's Federal Practice § 56.15[1][a], at 56-200 to 56-201 (3d ed. 2000). Moreover, "oral testimony is not favored in summary judgment proceedings due to the well founded reluctance to turn a summary judgment hearing into a trial." Id. at 56-202. Further, a court has discretion to hear evidence on motions by oral testimony or on affidavits. Fed. R. Civ. P. 43(e). Here, the court properly elected the latter.
43
However, these are not the only concerns at issue in this case. As the district court properly observed, the Hague Convention and the ICARA raise unique concerns:
44
[T]his type of case is appropriate for resolution by summary judgment. Indeed, the language of the Convention supports resolution by such means. Article 11 provides that a court, when faced with a petition under the Convention, should "act expeditiously in proceedings for the return of children." Courts are to place these cases on a "fast track" in order to expedite these proceedings and carry out the purposes of the Convention.
45
The language of the Convention also authorizes courts to "take notice directly of the law of, and of judicial and administrative decisions, formally recognized or not in the State of the habitual residence of the child, without recourse to the specific procedures for the proof of that law or for the recognition of foreign decisions which would otherwise be applicable."
46
There is no requirement under the Hague Convention or under the ICARA that discovery be allowed or that an evidentiary hearing be conducted. Thus, under the guidance of the Convention and the statutory scheme, the court is given the authority to resolve these cases without resorting to a full trial on the merits or a plenary evidentiary hearing.
47
March, F. Supp. 2d at , No. 3:00-0736 at 2-3 (citations omitted).
48
We agree. The petition for return of children at issue here is not a run-of-the-mill case that falls within the general rule so that it may be said that the district court abused its discretion. Rather, this case involves a petition under a unique treaty and its implementing legislation, neither of which expressly requires a hearing or discovery. In fact, the treaty requires not only expeditious action by courts under article 11, as the district court properly noted, but use of "the most expeditious procedures available." Hague Convention, art. 2. Indeed, the drafters of the treaty stressed the emergency nature of these cases: "Its nature is one of emergency because it seeks a speedy and immediate solution to the cases involved." Elisa Perez-Vera, Report of the Special Commission, in 3 Actes et documents de la Quatorzieme Session 172, 179 ¶ 25 (Permanent Bureau of the Hague Conference on Private International Law ed. and trans. 1980) (official English translation)10.
49
In addition to the requirement of expeditious action, the treaty has a number of provisions to help ensure that return proceedings are handled in such a manner and that return of children to their country of habitual residence is likely. For example, the treaty sets forth generous rules regarding authentication of documents and judicial notice. Hague Convention, art. 14. The treaty further provides rights to petitioners when a decision is not rendered within a mere six weeks of filing their petition. Hague Convention, art. 11. Importantly, the treaty also provides that a court may order return of a child at any time, notwithstanding proof of treaty defenses. Hague Convention, art. 18 ("Theprovisions of this Chapter [pertaining to return of children] do not limit the power of a judicial or administrative authority to order the return of the child at any time.").
50
Likewise, the ICARA repeatedly uses the word "prompt" to describe the nature of proceedings for the return of a child wrongfully removed or retained. 42 U.S.C. § 11601(a)(4). Like the treaty itself, the implementing legislation also provides a generous authentication rule. 42 U.S.C. § 11605 ("[N]o authentication of such application, petition, document, or information shall be required in order for the application, petition, document, or information to be admissible in court."). Such a provision serves to expedite rulings on petitions for return of children wrongfully removed and retained. Expeditious rulings are critical to ensure that the purpose of the treaty - prompt return of wrongfully removed or retained children - is fulfilled. Hague Convention, art. 1.
51
We further note that courts in other Contracting States to the treaty have also upheld summary proceedings on review. For example, an Australian court has held that the Convention's primary purpose "is to provide a summary procedure for the resolution of the proceedings and, where appropriate, a speedy return [of children] to the country of their habitual residence." In the Marriage of Gazi, (1992) 16 Fam. L.R. 180, ¶ 9, available at http://scaletext.law.gov.au/html/famdec/0/92/0/ FM000720.htm (last visited March 22, 2001). The Australian court therefore ruled that the trial court "properly adopted a summary form of procedure." Id. (opining that allowing cross-examination of deponents of affidavits may be appropriate in rare cases; noting that it was apparent that the trial court had considered all relevant material before it, including affidavits).
52
Finally, we note that although the district court ruled that it would decide the motions before it without discovery, it nonetheless entered a voluminous amount of evidence into the record from both parties. Indeed, over 1,300 pages were filed with the district court and made part of the record on appeal. Moreover, review of the district court's opinion reveals that the court carefully considered the evidence both parties offered and independently sought information on its own volition. In sum, given the unique nature of this treaty, we hold that the district court did not abuse its discretion when it granted summary judgment in favor of March prior to discovery or an evidentiary hearing.
E.
53
Given our affirmance of the district court's rulings, we need not reach the issues raised in March's cross-appeal.
III.
54
The district court's order that the children be immediately returned to their father in Mexico is AFFIRMED, and our prior order issuing a stay of the district court's order pending resolution of these appeals is VACATED. Because Samson and Tzipora have been separated from their father for almost one year now, we further order that our mandate issue forthwith pursuant to Fed. R. App. P. 41(a), and that the district court take appropriate action to ensure that the children are reunited with their father with all due speed.
Notes:
*
The Honorable Patricia A. Gaughan, United States District Judge for the Northern District of Ohio, sitting by designation.
1
This exception provides that a court is not bound to return a child if the person opposing return establishes that "there is a grave risk that his or her return would expose the child to physical or psychological harm or otherwise place the child in an intolerable situation." Hague Convention, art. 13(b).
2
This provision states that return of a child "may be refused if this would not be permitted by the fundamental principles of the requested State relating to the protection of human rights and fundamental freedoms." Hague Convention, art. 20.
3
This is acknowledged by the Levines. Final Br. on Behalf of Appellants at 28.
4
March moved with his children from Tennessee to Illinois in 1996 after his wife's disappearance. Shortly after he relocated to Illinois, the Levines sought grandparent visitation there. In 1999, March relocated to Mexico.
5
The Hague Convention requires a court to consider social background information of the children provided by the Central Authority of the children's country of habitual residence. Hague Convention, art. 13. Here, the district court requested a variety of such information. It also conducted separate in camera interviews of Samson and Tzipora with the assistance of a licensed clinical psychologist.
6
Most of the Illinois contempt orders were entered after March moved to Mexico. An earlier contempt order was vacated on appeal. See In re Visitation of March, No. 96-D-15334, slip op. at 20-21, 26-27 (Ill. App. Ct. 1st Dis. June 30, 1998) (holding that March's due process rights were violated when the court conducted a hearing without notice to March; that the court improperly granted the grandparents equal, if not superior, visitation rights over those of the natural father; that an injunction preventing March from removing the children from Illinois was improperly entered without notice to him; and vacating the contempt for violation of the injunction).
7
In his sworn declaration pursuant to 28 U.S.C. § 1746, March avers that he is unable to purge himself of the contempt despite his sincere desire to do so because he has looked for the items and has been unable to find them. He also avers that he personally testified to this and submitted sworn affidavits to this effect before the Tennessee court who imposed the contempt orders.
8
At the time, March was living and working in Mexico trying to support his family while defending against the wrongful death claim. March avers that his finances and the necessity of caring for his children did not allow him to travel to Nashville, Tennessee, for the deposition.
9
This Court has recently noted that the plain language of Rule 56(f) requires an affidavit, and that other Circuits have strictly construed the Rule. Cacevic v. City of Hazel Park, 226 F.3d 483, 488-89 (6th Cir. 2000) (declining to address the issue whether an affidavit is necessary because the plaintiffs did not comply with the requirements of the rule). The plain language of Rule 56(f) requires an affidavit that "the party cannot for reasons stated present by affidavit facts essential to justify the party's opposition." Fed. R. Civ. P. 56(f). The Levines did not file a Rule 56(f) affidavit. They filed a motion for discovery. Moreover, although their motion contained a statement that it was signed and verified by the Levines "as an affidavit," the Levines did not sign the document. Thus, if Rule 56(f) requires an affidavit that explains why the party "cannot for reasons stated present by affidavit facts essential to justify the party's opposition," the Levines' argument about discovery as it pertains to the issue of habitual residence is not preserved for review. Nevertheless, because we are constrained to follow Vance, we assume the motion the Levines filed is sufficient to preserve this issue for review.
10
According to the Legal Analysis of the Hague Convention prepared by the Department of State, the Perez-Vera Report "is recognized . . . as the official history and commentary on the Convention and is a source of background on the meaning of the provisions of the Convention." Legal Analysis of the Hague Convention on the Civil Aspects of International Child Abduction, 51 Fed. Reg. 10,494, 10,503 (March 26, 1986); see also Whallon v. Lynn, 230 F.3d 450, 455 n.5 (1st Cir. 2000).
|
337 So.2d 805 (1976)
DIVISION OF BOND FINANCE, Etc., et al., Petitioners,
v.
Honorable Bruce SMATHERS, Etc., et al., Respondents.
No. 49937.
Supreme Court of Florida.
September 17, 1976.
*806 Robert L. Shevin, Atty. Gen., Larry Levy, Asst. Atty. Gen., and Arnold L. Greenfield, Gen. Counsel, Tallahassee, for petitioners.
Jack Shreve, Gen. Counsel, David E. Cardwell, Asst. Gen. Counsel, Jack W. Pierce and S. Sherman Weiss, Tallahassee, for respondents.
Donald M. Middlebrooks, Orlando, for Reubin O'D. Askew, as Governor of the State of Florida, intervening petitioner.
BOYD, Justice.
We have before us an original proceeding in mandamus brought by the Division of Bond Finance of the Department of General Services, the Governor, as the Chairman of the Governing Board of the Division of Bond Finance and the State Treasurer, as Treasurer of the Governing Board of the Division of Bond Finance, against the Secretary of State, the Executive Director of the Department of Natural Resources, and the Department of Natural Resources, questioning the constitutional validity of the following proviso which appears after Item 853 in Section 1 of the General Appropriations Act, Chapter 76-285, Laws of Florida:
"Provided that any future sales of general obligation bonds for environmentally endangered lands shall have as the first priority the repayment of monies expended for debt service from the Land Acquisition Trust Fund."
On June 30, 1976, the Governor vetoed the above proviso because he had been advised through a "Letter of Intent" from the Senate Ways and Means Committee and the House Appropriations Committee that it had been mistakenly included in the General Appropriations Act as the result of a drafting error and because he questioned the constitutional validity of the proviso. Article III, Section 8(a) of the Florida Constitution gives the Governor veto power over specific appropriations in general appropriations bills, but prohibits him from vetoing any qualification or restriction without vetoing the specific appropriation to which it relates. Fearing that the proviso could be construed as a "qualification" or "restriction" which would raise an issue of the validity of the veto, in turn casting doubt over the legality of the Act's appropriations for debt service to which the proviso relates and concerned that such doubt would adversely affect the Environmentally Endangered Lands Bond Program and agreements with the federal government for cooperative acquisition of environmentally endangered lands, the Governor and *807 Cabinet authorized the Division of Bond Finance to initiate proceedings to challenge the constitutionality of the proviso or to declare valid the Governor's veto. Because a proceeding in circuit court followed by appellate litigation might entail harmful delay, the Division brought an original action for mandamus in this Court.
The petition for mandamus requests this Court to command the Secretary of State to expunge the proviso from the "official acts of the legislative department" because it is invalid under the Florida Constitution, or, in the alternative, to determine that the Governor's veto of the proviso is constitutionally effective, under either alternative, thereby preventing the Department of Natural Resources and its Director from applying proceeds of State bonds in the manner of the proviso.
Ordinarily the initial challenge to the constitutionality of a statute should be made before a trial court. However, the remedy of mandamus has been awarded by this Court in original actions before in order to expunge unconstitutional language from a General Appropriations Act. Dickinson v. Stone, 251 So.2d 268 (Fla. 1971). Dickinson provides that the standard for such an award is where the functions of government will be adversely affected without an immediate determination. On its face the assertion by the Governor and the Division that the State Bond Program and Environmentally Endangered Lands Bond Program are jeopardized by the questionable constitutionality of the proviso and the doubt over the effectiveness of the Governor's veto meets the Dickinson standard. Respondents do not challenge the assertion. Indeed, they concede this Court's jurisdiction to entertain the action.[1] We exercise our discretion to entertain it because we perceive that an immediate determination is necessary to protect governmental functions.
We need not consider the issue of the constitutional validity of the Governor's veto because we hold the proviso to be unconstitutional. The Division presents the argument that the proviso is unconstitutional under six sections of the Florida Constitution. We need look no farther than the first of these six sections to resolve the matter. Article VII, Section 11(a) of the Florida Constitution provides:
"§ 11. State bonds revenue bonds (a) State bonds pledging the full faith and credit of the state may be issued only to finance or refinance the cost of state capital projects upon approval by a vote of the electors; provided state bonds issued pursuant to this subsection (a) may be refunded without a vote of the electors at a lower net average interest cost rate. The total outstanding principal of state bonds issued pursuant to this subsection (a) shall never exceed fifty per cent of the total tax revenues of the state for the two preceding fiscal years."
The proviso requires that the proceeds of general obligation bonds for environmentally endangered lands be expended for purposes other than the financing or refinancing of the cost of State capital projects. It is violative of Article VII, Section 11(a) on its face.
Accordingly, a peremptory writ of mandamus shall issue commanding the Secretary of State to expunge from Section 1, Chapter 76-285, Laws of Florida, the following language:
"Provided that any future sales of general obligation bonds for environmentally *808 endangered lands shall have as the first priority the repayment of monies expended for debt service from the Land Acquisition Trust Fund."
and further commanding the Department of Natural Resources and its Director to take no action inconsistent with this opinion.
It is so ordered.
OVERTON, C.J., and ENGLAND, SUNDBERG and HATCHETT, JJ., concur.
NOTES
[1] All parties to this litigation concede that the legislative attempt to condition Item 853 in the appropriation bill has caused, and on a daily basis continues to cause the State to be in arrears on a previously executed contract with the government of the United States for the purchase of environmentally endangered lands in the State, and that it is only by grace of a federal extension of time that a default has not been declared. The parties' representations to the Court persuade us that the functions of State government will indeed be directly and immediately affected in an adverse way if we do not act promptly. We would hesitate long before accepting jurisdiction in different circumstances.
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118 F.3d 559
UNITED STATES of America, Plaintiff-Appellee,v.Leonard WALKER, Defendant-Appellant.
No. 97-1647.
United States Court of Appeals,Seventh Circuit.
Submitted June 17, 1997.*Decided July 17, 1997.
Thomas P. Schneider (on briefs), Office of the United States Attorney, Milwaukee, WI, for Plaintiff-Appellee.
Richard L. Zaffiro, Wauwatosa, WI, for Defendant-Appellant.
Before CUDAHY, FLAUM and KANNE, Circuit Judges.
FLAUM, Circuit Judge.
1
This is the third time that Leonard Walker has been before us. In United States v. Goines, 988 F.2d 750 (7th Cir.1993), we affirmed his conviction for conspiring to distribute cocaine as well as his conviction under 18 U.S.C. § 924(c) for using or carrying a firearm in relation to a drug trafficking offense. With respect to his sentence, we vacated and remanded to the district court with instructions to determine more specifically the amount of drugs attributable to Walker. On remand, the district court made the required findings and reimposed its original sentence, consecutive terms of 151 months' imprisonment on the conspiracy count and 60 months' imprisonment on the firearm count. Walker once again appealed, and we upheld this 211-month sentence in an unpublished order. We also held that we lacked jurisdiction to hear Walker's claim that the Supreme Court's decision in Bailey v. United States, --- U.S. ----, 116 S.Ct. 501, 133 L.Ed.2d 472 (1995), required reversal of his § 924(c) conviction. Because we had already affirmed the conviction, we explained, Walker could only raise the Bailey issue by means of a petition brought pursuant to 28 U.S.C. § 2255.
2
Walker took the hint and filed a § 2255 petition to vacate the firearm conviction. On October 31, 1996, the district court granted the requested relief and instructed the government to notify the court by December 1 whether it intended to retry Walker on the § 924(c) charge. Inexplicably, the government did not respond until December 5, at which time it notified the court that it did not intend to retry Walker. On February 11, 1997, the district court scheduled a sentencing hearing for March 14. On the latter date, the court resentenced Walker on the conspiracy count. Pursuant to section 2D1.1(b)(1) of the United States Sentencing Guidelines, the court imposed a two-level increase in Walker's base offense level for possession of a firearm, an enhancement that yielded a total offense level of 36. Matched with Walker's criminal history category (I), this offense level corresponded to a sentencing range of 188 months to 235 months of imprisonment. The district court opted for the low end of the range and sentenced Walker to 188 months in prison.
3
Walker now appeals his new sentence. He argues that the district court lacked jurisdiction to proceed as it did, and that, by resentencing him on the conspiracy count, the court violated the Constitution's guarantee of due process and its prohibition against double jeopardy. Alternatively, he argues that the district court's factual findings were inadequate to support the firearm enhancement. We affirm.
I.
4
Walker acknowledges that, as a general matter, a defendant who mounts a successful collateral attack on a single count of conviction faces the risk that the district court will look anew at the entire punishment and resentence on a remaining count. See Woodhouse v. United States, 109 F.3d 347 (7th Cir.1997), petition for cert. filed, (June 20, 1997) (No. 96-9483); United States v. Binford, 108 F.3d 723 (7th Cir.), cert. denied, --- U.S. ----, 117 S.Ct. 2530, 138 L.Ed.2d 1029 (1997); United States v. Smith, 103 F.3d 531 (7th Cir.1996), cert. denied, --- U.S. ----, 117 S.Ct. 1861, 137 L.Ed.2d 1061 (1997). Whatever its limitations, this "package" approach to sentencing is particularly appropriate where a § 924(c) conviction has been vacated, for, as we observed in Smith, "[i]f a mandatory sentence for using or carrying a gun is imposed, the otherwise available enhancement for possession of a firearm is not invoked. But if the mandatory sentence is set aside, nothing should prevent the imposition of the enhancement." 103 F.3d at 534-35. Nevertheless, Walker maintains that here the district court exceeded its authority. According to Walker, what distinguishes his case from Smith and its progeny is the fact that, in the latter cases, resentencing took place "as a part of" or "in the context of" the defendant's § 2255 petition. Walker points out that the district court resentenced him more than three months after deciding the merits of his collateral attack. It did so, moreover, on its own initiative rather than in response to a government motion. At the very least, Walker maintains, he had a legitimate expectation that his sentence had become final when the government indicated that it did not intend to retry him on the § 924(c) count and otherwise made no suggestion regarding his sentence as a whole.
5
Section 2255 authorizes a district court, upon affording a petitioner relief, "to resentence ... or correct the sentence as may appear appropriate." 28 U.S.C. § 2255. Our Smith line of cases is premised on the understanding that "sentence" refers to "an aggregate, indivisible term of imprisonment." Binford, 108 F.3d at 728. Despite Walker's efforts to impose jurisdictional constraints upon this power to recalculate the entire sentence, he has not directed us to either a statute or a rule implying such a limitation on the court's authority. Rule 32 of the Federal Rules of Criminal Procedure sets forth a general framework for sentencing, but Walker does not look to Rule 32's timing provisions, and for good reason: those provisions hardly could be called jurisdictional. Rule 32(a) states only that sentencing must take place without "unnecessary delay following completion of the process prescribed by subdivision (b)(6)." Subdivision (b)(6), in turn, lays out a process that begins with the furnishing to the defendant of the presentence report, which must take place "[n]ot less than 35 days before the sentencing hearing-unless the defendant waives this minimum period," Fed.R.Crim.P. 32(b)(6)(A) (emphasis added). Assuming arguendo that there comes a point at which a court that has vacated a single count of conviction loses the power to resentence on an undisturbed count, we believe that a court must be given at a minimum a reasonable time within which to recalculate the sentence. Here the district court's steps did not cross the line: the court provided the government an opportunity to retry Walker; when it became clear that the government would not, a sentencing hearing was scheduled and a resentencing memorandum prepared; resentencing was held less than three weeks after preparation of the memorandum. The most that can be said is that the court might have signaled its intentions more promptly once it became apparent that Walker would not be retried. This delay, however, does not amount to a jurisdictional defect.
6
We are similarly unpersuaded by Walker's constitutional arguments. In the circumstances presented here, as we explained in Smith, "[u]ntil action is taken in regard to the whole sentence, ... [a petitioner does] not have an expectation of finality with regard to his sentence." 103 F.3d at 533. Walker nonetheless would have us hold that his expectation of finality set in on October 31, 1996 when the district court "finally decided" the merits of his § 2255 petition. That we are not inclined to do. Walker's expectation of finality certainly was no greater than that of the appellants in Smith and Woodhouse, each of whom had served his original sentence on the undisturbed conviction by the time his § 924(c) conviction was vacated. Although Walker raises the specter of a court "blowing off dust from the passage of time ... to remake a sentence" and suggests that such blowing of dust would violate norms of fundamental fairness, we can decide that case if and when it comes before us. A judgment embodying Walker's new sentence was entered on March 14, 1997. See Fed.R.Crim.P. 32(d). This new sentence was 23 months shorter than Walker's original sentence. Neither the Due Process nor the Double Jeopardy Clause was violated.
II.
7
Walker also maintains that the district court's factual findings were insufficient to support the firearm enhancement. Because we agree with the government that Walker waived this objection by failing to raise it at his resentencing hearing, we review this contention for plain error, and none can be found here. In applying the two-level increase, the district court referred to the original presentence report as amended, the resentencing memorandum, and the court's own comments at Walker's 1994 sentencing. Walker contends that, because the enhancement was predicated on his coconspirators' possession of firearms, we must vacate his sentence and remand to permit the district court to define with greater precision the scope of Walker's conspiracy agreement. Coming from the individual whose primary responsibility as a conspirator was to supply his coconspirators with firearms, this argument carries a disingenuous ring. See Goines, 988 F.2d at 757, 767-68. In Goines, we concluded that "the evidence supports the existence of the one large conspiracy charged in count one." Id. at 772. Walker's argument amounts to little more than a renewed attack on this conclusion. At resentencing, Walker did not contest that codefendant Taylor carried a gun, and we held in Goines that Taylor's gun "was carried in relation to and as a natural, foreseeable consequence of the conspiracy." 988 F.2d at 774 (emphasis added). In short, there is no need for the district court to reexamine the scope of Walker's agreement to join the conspiracy.
8
Walker's sentence is AFFIRMED.
*
After reviewing the briefs and the record, the panel is unanimously of the view that oral argument is unnecessary. Accordingly, the appeal has been submitted on the briefs and the record alone. See Fed. R.App. P. 34(a); Cir. R. 34(f)
|
75 Ill. App.3d 1020 (1979)
394 N.E.2d 77
In re ESTATE OF HEBER P. HOSTETTER, Deceased. (HEBER P. HOSTETTER, JR., Plaintiff-Appellant,
v.
THE ESTATE OF HEBER P. HOSTETTER, Defendant-Appellee.)
No. 78-495.
Illinois Appellate Court Second District.
Opinion filed August 28, 1979.
Lawrence L. Bruckner, of Dixon, for appellant.
Robert W. Weissmiller and John A. Leemon, both of Mt. Carroll, for appellee.
Judgment affirmed.
Mr. PRESIDING JUSTICE GUILD delivered the opinion of the court:
On October 29, 1951, Heber P. Hostetter executed his last will and testament. On January 6, 1953, Mr. Hostetter died, survived by his wife, Florence S. Hostetter; by his sons John L. Hostetter, Scofield R. Hostetter (an incompetent) and Heber P. Hostetter, Jr.; and by his daughter, Marelene Hostetter Evison. On March 2, 1953, Mr. Hostetter's will was admitted to probate in the circuit court of Carroll County, where the decedent resided and where his real property was located. Letters testamentary were apparently then issued to Florence S. Hostetter and she acted in the capacity of executor of her husband's estate until her death, intestate, on February 16, 1978. John Hostetter was also named *1021 executor of Heber Hostetter's will. However, the record contains no mention of the issuance of letters testamentary to him. As of September 8, 1978, the estate of Heber P. Hostetter had not been closed. Other than an accounting in 1955, no effort was ever made to keep track of the personal estate of the decedent, and no distribution of either personal or real property ever occurred.
On July 12, 1978, a petition for the construction of the decedent's will was filed by Heber P. Hostetter, Jr., as a supplemental proceeding in the probate court. Count I of that petition recited that questions had arisen concerning the meaning of various clauses of the will and that the court should construe those clauses so as to guide the actions of the successor executor, John L. Hostetter. John L. Hostetter filed a motion to strike the petition and, as a consequence, the probate court dismissed count I with prejudice as to the petitioner, who now appeals as to that count only.
Essentially, what is at issue here is the meaning of the fourth, sixth, seventh and ninth clauses of the decedent's will. In pertinent part, those clauses read as follows:
"FOURTH, I give, devise and bequeath unto my said wife, FLORENCE S. HOSTETTER, all the real estate of which I may die seized and possessed, whether now owned or hereinafter acquired and wheresoever situated, to have, hold, use and enjoy the same for and during her natural life * * *
* * *
SIXTH, Subject to the life estate herein bequeathed to my said wife, I give, devise and bequeath unto my said son, John L. Hostetter, my home farm and homestead, containing, approximately, 200 acres, commonly known as WILDERBERG. Inasmuch as it is my intention and desire to make a just and equal division of my estate among my children, said WILDERBERG FARM in the final distribution of my estate shall be charged to my said son at a valuation of THIRTY-TWO THOUSAND $32000.00) DOLLARS and my said son shall pay unto my estate the difference between such valuation and his equal portion of the residuary estate hereunder.
SEVENTH, Subject to the life estate bequeathed to my said wife, I give, devise and bequeath unto my daughter, MARLENE HOSTETTER EVISON, my farm containing, approximately, 184 acres knows as EAST WILDERBERG. For "the reasons above assigned, this farm shall be chargable to my said daughter in the final distribution of my estate at a valuation of TWENTY THOUSAND ($20000.00) DOLLARS, and my said daughter shall pay unto my estate the difference between such valuation and her equal portion of the residuary estate hereunder.
*1022 * * *
NINTH, At the death of my said wife, I direct that my entire personal estate then remaining and not specifically bequeathed, be converted into money and the amount thereof together with the sum of THIRTY TWO THOUSAND ($32000.00) DOLLARS arising from the charge against the WILDERBERG FARM, and the sum of TWENTY THOUSAND ($20000.00) DOLLARS arising from the charge against EAST WILDERBERG FARM, be divided into four equal parts, and I give and bequeath unto my son, HEBER P. HOSTETTER, JR., and my son JOHN L. HOSTETTER, and my daughter, MARELENE HOSTETTER EVISON, each, one of said parts, the remaining part I give and bequeath unto my son, JOHN L. HOSTETTER and my daughter, MARELENE HOSTETTER EVISON, in trust for the uses and purposes following * * *." (Emphasis added.)
Based on these clauses, the petitioner/appellant contends that there is a latent ambiguity in the Will because of an alleged conflict between the expression of the testator in the sixth clause that: "Inasmuch as it is my intention and desire to make a just and equal division of my estate among my children * * *," and the fact that the farms referred to in the sixth and seventh clauses have, due to inflation, actually increased in value more than tenfold over the specific valuations placed on them by the testator. The petitioner contended below that this situation should be cured by the court inserting the present assessed values of the farms into the terms of the sixth and seventh clauses. The trial court did not agree. Neither do we.
1-4 The law in Illinois is clear that a statutorily valid will takes effect at the death of the testator. (In re Estate of Durham (1965), 62 Ill. App.2d 111, 210 N.E.2d 632.) It is equally clear that:
"The construction of a will is not made to depend upon subsequent facts or conditions arising after the will took effect. [Citation.] The courts cannot found a construction of a will on conjecture, but must take the language of the will as they find it. When a condition has arisen in regard to a testator's estate which he had not taken into consideration and which he would probably have provided for if he had thought of it when making his will, the court cannot conjecture what provision he would have made unless that provision is contained in the words he has used in making his will. [Citation.] The intention of the testator is not to be deduced from speculation as to what he would have done had he anticipated a change in the circumstances surrounding him at the time of the execution of the will, since this would amount to making a will for him and not to interpreting the will he has made." (Gridley v. Gridley (1948), 399 Ill. 215, 229, 77 N.E.2d 146, 153.)
*1023 Based on this, it is clear, first of all, that the testator chose to make specific valuations of his two farms in 1951 and at his death in 1953, when the will took effect, those values were not unreasonable. Therefore, there can be no latent ambiguity in the sense depended on by the petitioner. Furthermore, even if this were not the case, the law does not permit the circuit or appellate courts of this State to redraft the clear and unambiguous language of a testator's will merely because of unfortuitous circumstances which may have arisen since the testator's death.
In addition, in the instant case, the other clauses of the testator's will showed a clear intent to discriminate in many regards between the petitioner and his brother John and sister Marelene. For example, they received, under clause eighth, all of the testator's personal furnishings and effects while the petitioner only received his share of the residuary estate. In fact, the only time that he is mentioned in the entire will is in clause ninth.
For the reason set forth above, the order of the circuit court dismissing the petition in this case is affirmed.
Affirmed.
SEIDENFELD and NASH, JJ., concur.
|
949 F.Supp. 62 (1996)
Yvonne GIL DE REBOLLO, Plaintiff,
v.
MIAMI HEAT LIMITED PARTNERSHIP; Florida Basketball Associates, Inc., and Wes Lockard, a/k/a "Burnie", Defendants.
Civil No. 95-2261 (JAF).
United States District Court, D. Puerto Rico.
December 12, 1996.
*63 David Efron, Law Offices David Efron, San Juan, PR, for Plaintiff.
Ricardo F. Casellas, Rodriguez & Casellas, San Juan, PR, for Defendants.
OPINION AND ORDER
FUSTE, District Judge.
Plaintiff, Yvonne Gil de Rebollo, sued for damages stemming from an incident in which she was taken from her seat at a basketball game by the mascot of the Miami Heat, "Burnie", a character performed by codefendant Wes Lockard.
On November 12, 1996, the jury's first verdict erred in finding Mr. Lockard's employer liable without finding him liable. On that form, the damages awarded were $100,000. Because of the legal impossibility of finding an employer liable for the acts of an unaccountable employee, we returned the jury to deliberate again, instructing them to reexamine their charge. See Docket Document No. 69, Instruction No. 19. After some consideration, the jury sent a note to the court requesting advice on the determination of damages. The court's note referred them again to the damages instructions.
On the second verdict form, returned over an hour after the first, the same jury found both defendants liable, but only for a total of $10,000. Ms. Gil de Rebollo now moves for a new trial based on several grounds, most notably, that the jury was biased toward one of the defendants. Defendants argue that this case does not meet the high standard for ordering a new trial, and that the verdict reflected the appropriately minimal damages.
I.
Legal Standards
The standard for ordering a new trial is fairly straightforward, leaving the trial court a great deal of discretion. "The authority to grant a new trial ... is confided almost entirely to the exercise of discretion on the part of the trial court." Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 36, 101 S.Ct. 188, 191, 66 L.Ed.2d 193 (1980). *64 Equally evident is that the abusive exercise of this discretion will lead to reversal. "Denial of a motion for a new trial will be reversed only for abuse of discretion." Conway v. Electro Switch Corp., 825 F.2d 593, 598 (1st Cir.1987). This discretion obviously must reflect the paramount goal of avoiding the miscarriage of justice. A trial judge can only set aside a jury's verdict if he believes that the clear weight of the evidence is such that upholding the verdict will result in a miscarriage of justice. Id. at 598-99 (citations omitted). Jury awards based on passion, prejudice or compromise require the ordering of a new trial. De Léon López v. Corporación Insular de Seguros, 931 F.2d 116, 125 (1st Cir.1991); Phav v. Trueblood, 915 F.2d 764, 767-68 (1st Cir.1990). Passion and prejudice are not appropriate bases for a jury's verdict. Compromise verdicts are those in which jurors resolve their inability to make a determination with any certainty or unanimity on liability by awarding inadequate damages. Phav v. Trueblood, 915 F.2d 764, 768 (1st Cir.1990), citing to Mekdeci v. Merrell Nat'l Laboratories, 711 F.2d 1510, 1513 (11th Cir.1983). An inadequate damages award cannot alone signify a compromise verdict. Other evidence must demonstrate that the inadequate monetary award resulted from a compromise. Mekdeci, 711 F.2d at 1513 (cited with approval in Phav, 915 F.2d at 768); Hadra v. Herman Blum Consulting Eng'rs, 632 F.2d 1242, 1246 (5th Cir.1980), cert. denied, 451 U.S. 912, 101 S.Ct. 1983, 68 L.Ed.2d 301 (1981). Other signs of a compromise verdict are a close question of liability and an odd chronology of jury deliberations. Phav, 915 F.2d at 768.
II.
Analysis
A court's decision regarding a motion for a new trial requires that it infer the jury's intentions from its actions, a necessarily speculative endeavor. See National R.R. Passenger Corp. v. Koch Indus., Inc., 701 F.2d 108, 110 (10th Cir.1983). We conceive of three plausible interpretations of the jury's behavior here.
First, the jury may have rationally reconsidered its decision when it was sent back to deliberate with a new verdict form. We find this to be the least likely scenario. The fact that the jury arrived at a level of damages suffered by Ms. Gil de Rebollo and presented it as a final verdict, and then rationally recalculated the damages to be ten times lower than the initial determination seems unlikely to have been a reasoned change. Certainly during deliberations a jury may swing wildly from one number to another, but the presentation of the first verdict form entailed the gravity of this jury's final decision on the issue of damages. This possibility also appears unlikely because such a swing in damages could only be deliberate if made over the course of a greater length of time than that used by the jury on its second attempt to return a valid verdict.
The second and third interpretations carry a far higher probability. The second is that the jury may have thought Mr. Lockard unaccountable for his interaction with Ms. Gil de Rebollo, but when confronted with the requirements of respondeat superior, they compromised and found him liable, but relieved him of any great monetary burden by reducing the award tenfold. Under this interpretation, the jury's verdict was a compromise verdict, in which they adjusted damages because they had conflicting feelings about liability. Such an interpretation would be supported by the fact that the jury had to deliberate twice and that it expressed uncertainty regarding the awarding of damages.
The third interpretation varies from the second in the motivation imputed to the jury. The jury may have been moved to protect Mr. Lockard from having to pay $100,000, despite their earlier assessment that Ms. Gil de Rebollo had been damaged in that amount. Whether or not they were aware of the legal concept of joint and several liability allowing for the collection of the $100,000 from Miami Heat, the jury clearly wanted to avoid assessing damages of significance against Mr. Lockard. When returned to the jury room, the jury may have realized the requirement to find both defendants liable under respondeat superior principles and section 1803 of the Civil Code, 31 L.P.R.A. § 5142, but then reduced the damages to make up for the fact that the witness with *65 whom they sympathized could be required to pay the judgment or part of it. Such benevolence would adequately explain the tenfold drop in damages from one hour to the next out of sympathy to Mr. Lockard.
III.
Conclusion
Because this verdict appears to have been reached either through compromise or bias, we accordingly grant the motion for a new trial on all issues.
Trial shall be held on February 10, 1997, at 9:30 A.M.
IT IS SO ORDERED.
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Subsets and Splits