author: BUA, District Judge.

text:
    CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, Plaintiff, v. John R. STANLEY, Defendant.
    No. 84 C 0142.
    United States District Court, N.D. Illinois, E.D.
    April 15, 1985.

      Robert F. Finke, Daniel Harris, Mayer, Brown & Platt, Chicago, 111., for plaintiff.
    Roger J. McFadden, Roger L. Longtin, Schuyler, Roche & Swimer, Chicago, 111., for defendant.
   ORDER

BUA, District Judge.

Before the Court is plaintiff’s motion for summary judgment pursuant to Fed.R. Civ.P. 56, and its motion for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) or in the alternative to transfer the defendant’s counterclaim to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1404(a). For the reasons stated herein, plaintiff’s motion for summary judgment against defendant is granted. Plaintiff’s motion to transfer is granted and therefore defendant’s counterclaim is transferred to the United States District Court for the Southern District of New York. The Court leaves a decision on plaintiff’s motion for judgment on the pleadings to the transferee court.

I. FACTS

This suit was brought by the plaintiff Continental Illinois National Bank and Trust Company of Chicago (CINB) individually and as loan agent for thirteen other banks against the defendant, John R. Stanley. The suit seeks to recover on Stanley’s personal guaranty in connection with loans made by Continental and the other banks to four companies controlled by Stanley (collectively referred to as “GHR”). The relevant facts, as set forth in CINB’s complaint, Stanley’s Answer and Counterclaim and the affidavit of Robert M. Steck, are not in dispute.

Stanley is the controlling stockholder of GHR. On December 23, 1981, GHR and the Banks entered into a Credit Agreement. As a condition of the Credit Agreement, CINB required Stanley to provide a joint and several personal guaranty. That same day, Stanley executed and delivered to CINB, as loan agent for the Banks, a written, personal guaranty.

The guaranty provides that Stanley “unconditionally ... guarantee^] the full and prompt payment and performance when due, whether by acceleration or otherwise, and at all times thereafter, of all obligations of [GHR] to the Banks ... howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, or now or hereafter existing or due or to become due ... under and in connection with the ... Credit Agreement.” The guaranty further provides that “[t]he right of recovery against [Stanley] under this guaranty is, however, limited to the amount of SEVEN HUNDRED FIFTY MILLION DOLLARS ($750,000,000) plus interest on such amount ... plus all expenses of enforcing this guaranty.”

On April 13, 1982, GHR and the Banks amended the Credit Agreement to provide for an additional loan of $50 million. In January of 1983, GHR filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code which is an automatic act of default under Section 14.-1.11 of the Credit Agreement. Because of these defaults, GHR now owes CINB and the Banks the outstanding principal amount of its loans under the Credit Agreement, $388,444,139.34, plus all accrued interest. As of August 13, 1984, the accrued interest totaled $85,381,264.83 and continues to accrue at a daily rate of $164,847.32. The Banks seek judgment against Stanley on his personal guaranty for unpaid principal and interest in the amount of approximately $474 million as of August 13, 1984. CINB and the Banks also ask for attorneys’ fees and costs in this matter.

Stanley filed an eight-count counterclaim against CINB. The counterclaim alleges that CINB overreached in extending credit to GHR, that CINB wrongfully secured and exercised control over GHR’s finances and operations, and that CINB intentionally prevented GHR from receiving credit from other sources. The counterclaim further alleges that CINB’s activities caused GHR’s inability to perform under the Credit Agreement and thus precipitated GHR’s voluntary bankruptcy proceeding.

Stanley moved, pursuant to 28 U.S.C. § 1404(a), to transfer this action to the United States District Court for the District of Louisiana. CINB opposed the motion to transfer and, in addition, moved to dismiss all counts of the counterclaim on the grounds that Stanley lacked standing to prosecute these claims. The Court denied the Motion to Transfer by its order dated May 25, 1984. Continental Illinois National Bank & Trust Company of Chicago v. Stanley, 585 F.Supp. 610 (N.D.Ill.1984). The Court also granted CINB’s motion to dismiss as to the causes of action arising under the federal antitrust statutes and common law. The motion was denied as to Count IV of the counterclaim which arises under the Bank Holding Company Act Amendments of 1970,12 U.S.C. § 1971, et seq. (“BHCA”). Continental Illinois National Bank & Trust Company of Chicago v. Stanley, 585 F.Supp. 1385 (N.D.Ill.1984). On August 22, 1984, CINB filed an Answer to Count IV of the counterclaim which effectively denied or demanded proof of the factual allegations.

II. DISCUSSION

In support of a motion for summary judgment, the moving party has the burden of showing that there is no dispute as to any genuine issue of material fact and that it is entitled to judgment as a matter of law. Cedillo v. International Association of Bridge & Structural Iron Workers, Local Union No. 1, 603 F.2d 7, 10 (7th Cir.1979). The nonmoving party is entitled to all reasonable inferences that can be drawn in its favor from the evidence in the record. ITT Diversified Credit Corp. v. Kimmel, 508 F.Supp. 140 (N.D.Ill.1981). However, to create a question of fact, an adverse party responding to a properly made and supported summary judgment motion must set forth specific facts showing that there is a genuine issue for trial. Rule 56(e), Fed.R.Civ.P.; Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.1983). A party may not rest on mere allegations or denials of his pleadings; similarly, a bare contention that an issue of fact exists is insufficient to raise a factual issue. Id. Rule 56 clearly requires that an adverse party set forth specific facts showing a genuine issue for trial. Id.

Stanley asserts affirmative defenses which allege that there was a failure of consideration for the personal guaranty; that the guaranty was secured by duress; that plaintiff breached certain implicit covenants contained in the Credit Agreement; that the conduct of certain of the Banks rendered it impossible for GHR to perform under the Credit Agreement; and that CINB has failed to mitigate the damages, if any, it has suffered.

A. Failure of Consideration

Defendant’s Fourth and Eighth Affirmative Defenses allege that Stanley’s personal guaranty is unenforceable for lack of consideration and that CINB failed to provide GHR with sufficient financing in breach of the Credit Agreement. CINB argues that these defenses are meritless because (1) the guaranty recites on its face that it was executed for consideration, and (2) it was executed contemporaneously with and in consideration for the Credit Agreement.

In determining the rights of the parties to a guaranty, as in determining the rights and obligations flowing from any contract, we must look first to the language in the document itself. Blackhawk Hotel Associates v. Kaufman, 80 111. App.3d 462, 465, 35 Ill.Dec. 875, 878, 400 N.E.2d 12, 14-15 (1st Dist.1979). This rule is applicable in cases, like the instant one, where the guaranty agreement contains broad statements of guarantor liability. Bank of Naperville v. Holz, 86 Ill.App.3d 533, 41 Ill.Dec. 604, 608, 407 N.E.2d 1102 (2d Dist.1980).

In the present case, it is undisputed that Stanley executed the personal guaranty at the same time as the original Credit Agreement was executed. Therefore, under well-established Illinois law, there is adequate consideration for a guaranty, where as here, it is executed contemporaneously with the creation of the principal loan. ITT Diversified Credit Corp. v. Kimmel, supra, 508 F.Supp. at 143; First National Bank of Red Bird v. Chapman, 51 Ill.App.3d 738, 740, 9 Ill.Dec. 426, 429, 366 N.E.2d 937, 940 (5th Dist.1977). In addition, the guaranty agreement clearly includes “all obligations of the Debtors to the Banks ... now or hereafter existing or due or to become due ..., under and in connection with the Restated Credit Agreement____” Therefore, even if Stanley argued that the subsequent amendments to the original Credit Agreement were not guaranteed due to a failure of consideration, this argument fails because the guaranty clearly covers all future indebtedness of GHR to the Banks in connection with the original Credit Agreement.

Stanley also alleges a failure of consideration subsequent to the contemporaneous execution of the guaranty. In short, his counterclaim alleges that the full amount of credit which was to be provided by the Banks under the Credit Agreement was not, in fact, extended. However, Stanley does not support this allegation with any affidavit or other source of proof other than his bald assertion that the Banks failed to extend GHR credit up to the maximum limit of $750 million contained in the Credit Agreement. Since Stanley does not meet his burden of establishing by affidavit that there was some understanding or oral agreement that the Banks would extend credit up to the $750 million maximum, the Court finds no genuine issue of material fact regarding the sufficiency of consideration supporting the guaranty and therefore holds, as a matter of law, that Stanley’s guaranty is supported by sufficient consideration.

B. Duress

Stanley argues that CINB’s misconduct subsequent to the guaranty’s execution deprived him of any choice but to provide the guaranty demanded by the Banks. These allegations are contained in Stanley’s counterclaim and state that the threat of imminent bankruptcy and a credit cutoff by the Banks forced Stanley to execute a personal guaranty to back up the credit extension. CINB argues that these allegations merely state that it insisted on Stanley’s personal guaranty as a condition of the Credit Agreement, which is an issue commonly to be bargained for, and therefore no duress occurred.

Duress is defined as including the imposition, oppression, undue influence, or the taking of undue advantage of the business or financial stress of another, whereby his free agency is overcome. Stavins v. Stavins, 70 Ill.App.3d 622, 26 Ill.Dec. 927, 388 N.E.2d 928 (1st Dist.1979). To invalidate an agreement on the basis of duress, a party must show that he was induced by a wrongful act or threat of another to execute an agreement under circumstances which deprived him of the exercise of his free will. Kaplan v. Keith, 60 Ill.App.3d 804, 18 Ill.Dec. 126, 377 N.E.2d 279 (1st Dist.1978). Duress does not exist merely where consent to an agreement is secured because of hard bargaining positions or the pressure of financial circumstances. Higgins v. Brunswick Corp., 76 Ill.App.3d 273, 32 Ill.Dec. 134, 138, 395 N.E.2d 81 (1st Dist.1979). In cases where agreements have been invalidated because of duress, the conduct of the party obtaining the advantage is tainted with some degree of fraud or wrongdoing. Id.

In the present case, Stanley’s allegations of duress are not supported by any affidavits or other sources of proof. At best, the allegation of duress is inferred from the equivocal fact that CINB requested Stanley’s personal guaranty to back up further credit to GHR. This inference is insufficient to avoid a motion for summary judgment. Stanley has an obligation to present specific facts indicating that a genuine issue does exist for trial. Posey v. Skyline, supra, 702 F.2d at 106. This requirement has not been met. The Court has no obligation to hypothesize or speculate about the various implications of Stanley’s factual presentation. Id. Unsupported by other evidence, Stanley’s inference of duress fails to establish a genuine issue of material fact, and therefore, as a matter of law, the Court finds that no duress occurred in the execution of defendant’s personal guaranty.

C. Discharge of Guaranty

Stanley argues that he has been discharged from liability on the guaranty because of the “sorry litany of misconduct” by CINB, as recited in Stanley’s counterclaim and affirmative defenses. This “sorry litany” alleges that: (1) on occasion, CINB declined to extend new credit to GHR; (2) on other occasions CINB extended credit only on terms and conditions GHR found disagreeable; (3) CINB sometimes exercised its broad powers under the Credit Agreement in a manner GHR found undesirable; and (4) CINB failed to mitigate its damages, if any.

CINB counters that these allegations are conclusory and unsupported by affidavits. In addition, any defense which GHR would have against CINB cannot be asserted by Stanley as a defense to his personal guaranty.

As the Court has stated, in the absence of an ambiguity, the plain language of the contract controls and no extrinsic evidence need be adduced. Black-hawk Hotel Associates v. Kaufman, supra, 80 Ill.App.3d at 465, 35 Ill.Dec. 875, 400 N.E.2d 12. In the present case, the personal guaranty covers all of GHR’s liabilities “notwithstanding any right or power of any Debtor or anyone else to assert any claim or defense as to the invalidity or unenforceability of any such obligation, and no such claim or defense shall affect or impair the obligations of the undersigned hereunder.” This language clearly prevents Stanley from asserting nonperformance by CINB of its agreement with GHR as a defense to his personal guaranty. In addition, the allegations of CINB’s misconduct in Stanley’s counterclaim and affirmative defenses are not supported by affidavits or other sources of proof. The bald assertions of misconduct cannot be used to avoid a motion for summary judgment properly made by CINB. Posey v. Skyline Corp., supra, 702 F.2d at 105. Therefore, the Court finds that, as a matter of law, Stanley is not discharged from his personal guaranty due to CINB’s alleged misconduct.

D. Transfer of Stanley’s Counterclaim

CINB has moved for judgment on the pleadings regarding Stanley’s counterclaim or in the alternative to transfer the counterclaim to the United States District Court for the Southern District of New York. In support of its motion to transfer, pursuant to 28 U.S.C. § 1404(a), CINB cites an existing action in the transferee district brought by GHR against the Banks. That action contains allegations identical to those contained in Stanley’s counterclaim, as originally filed. After CINB’s motion to dismiss the counterclaim for lack of standing, the only count remaining here involves the anti-competitive tying arrangement provision of the Bank Company Holding Act. 12 U.S.C. § 1972(1)(C) and (E).

Stanley argues that CINB has failed to show that his compulsory counterclaim here can be severed and then transferred to the Southern District of New York. However, since CINB’s motion for summary judgment based on Stanley’s personal guaranty is granted here, there is no problem with severing and the counterclaim may be transferred along with the other remaining issues, if the proper factors are met under § 1404(a).

In order to show that a § 1404(a) transfer is proper, the moving party must establish that (1) venue is proper in the transferor court; (2) venue is proper in the transferee court, and (3) the transfer is for the “convenience of the parties and witnesses, in the interest of justice.” Central States, Southeast and Southwest Areas Pension Fund v. Brown, 587 F.Supp. 1067, 1069 (N.D.Ill.1984). Although the party seeking transfer bears the burden of establishing that a transfer of venue is proper, the burden under § 1404(a) is substantially less than a transfer under the doctrine of forum non conveniens. Id.; see Norwood v. Kirkpatrick, 349 U.S. 29, 75 S.Ct. 544, 99 L.Ed. 789 (1955).

In the present case, the remaining count of Stanley’s counterclaim is based on a federal statute, and therefore venue under 28 U.S.C. § 1391(b) is proper where all defendants reside or where the claim arose. In addition, under § 1391(c), a corporation may be sued where it is incorporated, licensed to do business, or doing business. Venue is proper in this district because plaintiff-counterdefendant CINB resides here and in the Southern District of New York because CINB does business there.

Since the counterclaim was filed by Stanley as defendant-counterplaintiff, CINB will be treated as plaintiff-counterdefendant when moving for transfer here. While CINB chose this district for its claim against Stanley, CINB’s choice does not constitute consent or waiver to venue here regarding the counterclaim. Independent Bankers Ass’n. of America v. Conover, 594 F.Supp. 635, 640 (N.D.Ill.1984). Indeed, the Court believes that it would be unfair to CINB and the Banks to have to litigate two lawsuits instead of one when GHR’s claim in the Southern District of New York and Stanley’s counterclaim here arise out of the same controversy, i.e., CINB’s alleged misconduct in relation to the Credit Agreement. Id. Stanley offers nothing in the way of factual allegations which show that he will be inconvenienced by the transfer. Therefore, the unfairness and inconvenience to CINB outweighs the inconvenience to Stanley.

In addition, the interests of justice would be best served if the counterclaim was transferred to the Southern District of New York for consolidation with part of GHR’s action there. As a general rule, cases should be transferred to districts where related actions are pending. SEC v. First Nat. Finance Corp., 392 F.Supp. 239, 241 (N.D.Ill.1975). The counterclaim’s transfer would prevent a duplicity of actions arising out of a single controversy. Stanley’s allegations in Count IV of the counterclaim are identical to the allegations contained in the Fourth Claim for Relief Against The Bank Defendants in GHR’s action in the Southern District of New York. Since the consolidation of Count IV of Stanley’s counterclaim with the Fourth Claim in GHR’s action would prevent a duplicity of actions, the Court finds a § 1404(a) transfer to be appropriate. Accordingly, CINB’s motion to transfer Count IV of Stanley’s counterclaim to the Southern District of New York is granted.

III. CONCLUSION

Plaintiff’s motion for summary judgment on its complaint is granted. Its motion to transfer defendant’s counterclaim, pursuant to 28 U.S.C. § 1404(a), to the United States District Court for the Southern District of New York is granted. Therefore, the Court does not reach plaintiff’s motion for judgment on the pleadings regarding defendant’s counterclaim.

Accordingly, the Court enters judgment in plaintiff’s favor and against defendant in the amount of $513,883,302.17: $388,444,-139.34 for principal; $85,381,264.83 for interest through August 13, 1984; and $40,-057,898.00 for interest from August 13, 1984 to April 12, 1985. In addition, pursuant to Section 18.8 of the Credit Agreement, the Court awards plaintiff CINB its reasonable attorneys’ fees and costs incurred in this action.

IT IS SO ORDERED.


source: Caselaw Access Project

author: CALDWELL, District Judge.

license: Public Domain

text:
    Dennis MORGAN, Plaintiff, v. George WILKINSON, Warden, et al., Defendants.
    Civ. A. No. 83-1368.
    United States District Court, M.D. Pennsylvania.
    April 15, 1985.
    Dennis Morgan, pro se.
    James W. Walker, Asst. U.S. Atty., Scranton, Pa., for defendants.
   MEMORANDUM AND VERDICT

CALDWELL, District Judge.

This is an action filed by the plaintiff pursuant to 28 U.S.C. § 1331 and the Eighth Amendment to the United States Constitution. Plaintiff complains that on August 25, 1983, while he was incarcerated in the federal penitentiary at Lewisburg, he was the victim of an unprovoked attack when he was assaulted and injured by the defendants, who were or are employed at the institution. The case was tried non-jury on March 26, 1985 and this memorandum is our decision in the case pursuant to Federal Rule of Civil Procedure 52(a).

On and before August 25, 1983, plaintiff was confined to a cell in the administrative segregation unit of the prison as a result of disciplinary action taken against him in April. Due to misbehavior by some of the inmates in the cell block area on days just prior to the time in question, the authorities decided to transfer plaintiff and seven other inmates to a cell block on the lower floor of the building.

According to plaintiff and two other inmates, who were confined in the cell across from his, after plaintiffs hands were cuffed behind his back through the food slot in his cell door, his cell was entered by some or all of the defendants and he was thereupon punched, kicked and beaten. Plaintiff’s cellmate, who also had been handcuffed, was taken from the area before the attack on plaintiff occurred. The cellmate submitted an affidavit and corroborated the testimony that plaintiff was handcuffed before the cell door was opened.

The testimony submitted on plaintiff’s behalf was that, following the attack in the cell, plaintiff was dragged violently to the basement, and was further assaulted in the process. Another inmate witness who was already in a basement cell stated that plaintiff was being pummeled as he came through the gate into the area. He further testified that plaintiff was thrown into his cell. Plaintiff complains that once in the cell, he was shackled, hand and foot, to a cot, where he remained from about 4:30 p.m. on Thursday, August 25 until 11:30 a.m. on Saturday, August 27, 1985, when members of his family arrived for a visit. His injuries, according to his own testimony and an affidavit of his sister, consisted of black eyes, swollen and bruised face and lip, and various bruises to the body.

The version of the defendants and their witnesses paints a different picture. According to them plaintiff’s cellmate complied with their handcuffing request, but plaintiff refused to be handcuffed through the food slot and was very uncooperative. After permitting the cellmate to exit and be moved from the area, several of the defendants attempted to persuade plaintiff to cooperate, but he continued in his refusal. Two or three corrections officers then entered his cell and again sought to gain his cooperation, but plaintiff would not obey their directions and assaulted one of the officers by kicking him in the groin. At this point the officers forcibly handcuffed plaintiff by overcoming his physical resistance, and they testified that they used only the force necessary to subdue and handcuff him. Still resisting, plaintiff was partially carried downstairs and because of his actions was shackled to the bed. According to the defendants the shackles and restraints were removed at 11:55 p.m. the same evening, upon plaintiff’s assurance at that point that he would behave. The defendants denied assaulting the plaintiff during his transfer to the basement.

As the foregoing discussion shows, the fact finder was faced with conflicting testimony and a classic case of credibility. After weighing all of the evidence we have resolved the case for the defendants. Plaintiff and three prisoner witnesses, one of whom was his cellmate, indicated that plaintiff was handcuffed before his cell was opened and before force was used against him. Three defendants and one co-worker witness testified that plaintiff refused handcuffing and had to be subdued. Similar conflict continued concerning the circumstances of plaintiffs movement to the basement and placement in a cell there. Significantly, records maintained in the institution reflect that plaintiffs restraints were checked every fifteen minutes and were removed about seven hours later. This version is confirmed by at least three witnesses, two of whom removed not only plaintiffs restraints, but those placed on three other inmates who were unruly. At least two inmate witnesses corroborated plaintiffs testimony as to the length of time he was in restraints.

A registered physician’s assistant, who impressed us as disinterested, examined the plaintiff and the other inmates who were relocated soon after they were moved on August 25. He noted that plaintiff had no serious injuries, was not bleeding, and required no treatment. According to this witness plaintiff had a slight laceration of the lip and an abrasion of the neck and knee, but was alert and oriented. Moreover, institutional records show, and this witness confirmed, that a physician’s assistant was also in the area where plaintiff was confined on Friday, August 26, and Saturday, August 27, and that plaintiff made no request for medical care. Plaintiff admitted that when he was moved he had noticed the presence of a physician’s assistant but did not recall being examined.

A plaintiff in a civil action has the burden of proving his case by a fair preponderance of the evidence. Eastern Associated Coal v. Aetna Casualty & Surety Co., 632 F.2d 1068 (3d Cir.1980); Compagnie des Bauxites de Guinee v. Insurance Co. of North America, 551 F.Supp. 1239 (W.D.Pa.1982). In this case not only did plaintiff fail in this respect, but we found the weight of the credible evidence to favor the defendants. The veracity of plaintiff and his witnesses, except his sister, was impeached by proof of prior crimes under Federal Rule of Evidence 609. Also plaintiff provided no reasonable explanation of what would have motivated a group of correctional officers to attack a helpless, cooperative inmate. The evidence established that plaintiff and his witnesses were closely associated in the prison environment and this affected the weight to be attached to their testimony. The records maintained contemporaneously at the institution also refuted some of the important testimony given on plaintiff’s behalf, particularly the amount of time he was restrained and the extent of his injuries.

We believe that defendants used only that force which was required to overcome plaintiffs actions and resistance. While we do not doubt plaintiff may have sustained minor injuries in the melee, we conclude the actions of the defendants do not constitute an assault in the legal sense and we found that their actions were justified under the circumstances.

Based on the foregoing discussion we will enter a verdict and judgment in favor of the defendants.


author: LIVAUDAIS, District Judge.

text:
    Henry S. DIERKER, Jr. and Frances Dierker v. GYPSUM TRANSPORTATION, LIMITED and the vessel, M/V GYPSUM DUCHESS.
    Civ. A. No. 84-1437.
    United States District Court, E.D. Louisiana.
    April 15, 1985.

      Donald M. Pierce, Gertler & Gertler, New Orleans, La., for plaintiff.
    Robert H. Murphy, Chaffe, McCall, Phillips, Toler & Sarpy, New Orleans, La., for defendant.
   ORDER AND REASONS

LIVAUDAIS, District Judge.

This matter came before the court on motion of defendants, Gypsum Transportation Limited and the M/Y Gypsum Duchess, for summary judgment. Having reviewed the memoranda of counsel and the law, the motion is GRANTED for the following reasons.

On August 17, 1983, Henry S. Dierker, Jr. witnessed the fatal crushing of Daniel Hunt, a fellow ship repairman, while aboard the M/V Gypsum Duchess. At the time of the incident, Dierker was standing on a catwalk above the main deck, approximately 40 feet from the place where Hunt was caught in the unloading machinery of the lower hold. Dierker sued Gypsum Transportation and the M/V Gypsum Duchess, alleging negligence and contending he sustained emotional and psychological injuries as a result of witnessing Hunt’s death. Dierker’s wife also sued for loss of society. It is uncontested that plaintiffs were unrelated to Hunt by blood or marriage and that Dierker suffered no physical injury aboard the vessel.

Defendants have moved for summary judgment, claiming that no cause of action has been stated under either Louisiana law or 33 U.S.C. § 905(b), the Longshoremen’s and Harbor Workers’ Compensation Act. In response to defendants’ motion, plaintiffs contend that a bystander mental anguish claim is within the scope of § 905(b) and that recovery in the instant fact setting is possible if the “modern” rule of Dillon v. Legg, 68 Cal.2d 728, 441 P.2d 912, 69 Cal.Rptr. 72 (1968), is employed.

Negligence actions under the Longshoremen’s and Harbor Workers’ Compensation Act, 33 U.S.C. § 905(b), are clearly governed by federal law. Scindia Steam Navigation Co. v. De Los Santos, 451 U.S. 156, 101 S.Ct. 1614, 68 L.Ed.2d 1 (1981); Hall v. Hvide Hull No. 3, 746 F.2d 294 (5th Cir.1984). A survey of the maritime jurisprudence, however, fails to reveal a similar set of facts where damages for bystander mental anguish have been sought.

The legislative history to the 1972 revision of the Act provides a useful starting point. That history assumes that vessel liability to § 905(b) plaintiffs turns on “accepted principles of tort law and the ordinary process of litigation ... ”, that the Act shall place a § 905(b) plaintiff “in the same position he would be if he were injured in non-maritime employment ashore ... ”, and that the Act is not to “be applied differently in different ports depending on the law of the State in which the port may be located.” H.R.Rep. No. 92-1441, 92d Cong., 2d Sess. (1972), 3 U.S.Code Cong. & Admin.News pp. 4698, 4703-4705. These considerations dictate an approach to issues in § 905(b) actions that recognizes common land-based tort concepts independent of those variations among state approaches that might jeopardize uniformity of federal law. One means to an implementation of such an approach is the Restatement (Second) of Torts (1965). Another means, one that merely tests the basic viability of a complaint, lies in a successive application of the different tort rules currently employed by the states. While this latter form of analysis may be of little assistance in circumstances where different rules result in conflicting outcomes, it is clear here that plaintiffs’ complaint fails under the most lenient tests presently in use, as it does under the Restatement (Second).

§ 313(2) of the Restatement (Second) precludes liability unless Dierker was himself subject to an “unreasonable risk of bodily harm”. This would appear to be the case given Dierker’s position at the time of the accident and his failure to contend that he was so endangered. Even if defendants had breached such a duty owed Dierker, there could be no recovery under the Restatement (Second) 436(3) which conditions liability on the existence of a close familial relationship between the bystander and the accident victim.

Of those states permitting claims based on bystander mental anguish, most require a showing of actual (impact rule) or threatened (zone-of-danger rule) physical injury to the bystander plaintiff. See Annot., 29 A.L.R.3d 1337 (1970). Although a growing number of jurisdictions have adopted the “foreseeability” rule of Dillon v. Legg, supra, recovery has been uniformly denied where the plaintiff bystander and accident victim were not of the same immediate family. See Annot., 94 A.L.R.3d 486 (1979). As such, it is apparent that plaintiffs are without a cause of action in the large majority of jurisdictions and in all probability they would be unable to pursue their lawsuit in any state.

Plaintiffs’ reliance on Haught v. Maceluch, 681 F.2d 291 (5th Cir.1982), is misplaced. The Haught court was, under Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), “in effect, sitting as a Texas court.” Haught, 681 F.2d at 296. More important, the bystander plaintiff and accident victim in Haught “were closely related — indeed, as a mother and child in childbirth their relationship was unitary.” Id. at 299.

It is also worth noting that defendants’ attempt to employ Sea-Land Services, Inc. v. Gaudet, 414 U.S. 573, 94 S.Ct. 806, 39 L.Ed.2d 9 (1974), is inappropriate. Although the Gaudet Court held that a widow, entitled under general maritime law to recover for the loss of her husband’s services and society, could not recover damages for her mental anguish, it did so in the context of a wrongful death action. Such suits are derivative in nature and are “independent of any action the decedent may have had for his own personal injuries.” Id. 414 U.S. at 578, 94 S.Ct. at 811. Even a wrongful death plaintiff may not be barred from mental anguish damages where personal participation in the events of the accident entitle her to also claim in her own right under general maritime law. Complaint of Farrell Lines, Inc., 389 F.Supp. 194 (S.D.Ga.1975). Plaintiffs who have sustained psychological injuries in the course of maritime employment have been permitted compensatory damages. Smith v. Atlas Off-Shore Boat Service, Inc., 653 F.2d 1057 (5th Cir.1981); Borras v. Sea-Land Service, Inc., 586 F.2d 881 (1st Cir.1978); In re Sincere Navigation Corp., 329 F.Supp. 652 (E.D.La.1971) aff’d in part on other grounds sub nom., Matter of SS Helena, 529 F.2d 744, 754 (5th Cir.1976); Petition of United States, 418 F.2d 264 (1st Cir.1969). It is, therefore, unnecessary to hold that no set of facts exists which sets forth a bystander mental anguish cause of action under § 905(b).

A final and not unimportant consideration is the land-based law of the situs of the incident. Lewis v. Timco, Inc., 716 F.2d 1425, 1431 (5th Cir.1983). Plaintiffs clearly have no cause of action under Louisiana law. LeConte v. Pan American World Airways, Inc., 736 F.2d 1019 (5th Cir.1984); Blackwell v. Oser, 436 So.2d 1293 (La.Ct.App.) writ denied, 442 So.2d 453 (La.1983); Jumonville v. Frank’s Petroleum, Inc., 422 So.2d 1261 (La.Ct.App. 1982), writ denied, 429 So.2d 130 (La.1983). It is, therefore, unlikely that the granting of defendant’s motion will frustrate Louisiana policy.

Accordingly, the motion of defendants, Gypsum Transportation Limited and the M/V Gypsum Duchess, for summary judgment is GRANTED.

      . It is important to note that, in light of Scindia Steam, supra, caution is in order when attempting to use the Restatement (Second) within the context of a § 905(b) negligence action. See Helaire v. Mobil Oil Co., 709 F.2d 1031 (5th Cir.1983). There do not, however, appear to be any maritime concerns or policies that are particularly relevant here. Bystander mental anguish claims are not discussed in the reported maritime case law or specifically governed by statute or regulation. Given these considerations and the directive that the Section employed not be subject to varying interpretations by different courts, the Restatement (Second) would seem to provide a convenient, if not ideal, source of uniform "landbased” law.

      . Section 313 states,
      (1) If the actor unintentionally causes emotional distress to another, he is subject to liability to the other for resulting illness or bodily harm if the actor
      (a) should have realized that his conduct involved an unreasonable risk of causing the distress, otherwise than by knowledge of the harm or peril of a third person, and
      (b) from facts known to him should have realized that the distress, if it were caused, might result in illness or bodily harm.
      (2) The rule stated in Subsection (1) has no application to illness or bodily harm of another which is caused by emotional distress arising solely from harm or peril to a third person, unless the negligence of the actor has otherwise created an unreasonable risk of bodily harm to the other.

      . Section 436 states,
      (1) If the actor’s conduct is negligent as violating a duty of care designed to protect another from a fright or other emotional disturbance which the actor should recognize as involving an unreasonable risk of bodily harm, the fact that the harm results through the internal operation of the fright or other emotional disturbance does not protect the action from liability.
      (2) If the actor’s conduct is negligent as creating an unreasonable risk of causing bodily harm to another otherwise than by subjecting him to fright, shock, or other similar and immediate emotional disturbance, the fact that such harm results solely from the internal operation of fright or other emotional disturbance does not protect the actor from liability.
      (3) The rule stated in Subsection (2) applies where the bodily harm to the other results from his shock or fright at harm or peril to a member of his immediate family occurring in his presence.


author: McMILLAN, District Judge.

text:
    NATIONAL ASSOCIATION FOR the ADVANCEMENT OF COLORED PEOPLE, INC., and its affiliate, the Statesville Branch; Charles Roman and Willie Beatty, Plaintiffs, v. CITY OF STATESVILLE, NORTH CAROLINA; City Council of Statesville, N.C.; its Successors and Agents; David L. Pressly, Mayor; Council Members Ralph W. Grose, Reese Childers, Frank Crowson, Max Kyles, John Gregory, and William T. Gill and their Succors and Agents; Iredell County Board of Elections, and its members James A. Dobson, Jr., Chairman; Charles C. Lynn and L. Hugh West, Jr. and their Successors and Agents; and Ruby Mosser, Supervisor of the Iredell County Board of Elections, and her Successors and Agents, Defendants.
    No. ST-C-84-149.
    United States District Court, W.D. North Carolina, Statesville Division.
    April 15, 1985.

      Angus B. Thompson, Jr., Lumberton, N.C., Romallus Murphy, Greensboro, N.C., Charles E. Carter, Assoc. General Counsel NAACP, Margaret Ford, Asst. General Counsel NAACP, NAACP Special Contributions Fund, Brooklyn, N.Y., for plaintiffs.
    Jack R. Harris and Gary W. Thomas, Statesville, N.C., for defendants, City of Statesville, City Council of Statesville, David L. Pressly, Jr., Mayor, Council Members, Ralph W. Grose, Reece Childers, Frank Crowson, Max Kyles, John Gregory & William T. Gill.
    Robert N. Randall, Mooresville, N.C., for defendants, Iredell Co. Bd. of Elections, & members James A. Dobson, Jr., Charles C. Lynn, L. Hugh West, Jr., their successors & agents, & Ruby Mosser, Supervisor of Iredell Co. Bd. of Elections, her successors & agents.
   ORDER

McMILLAN, District Judge.

By consent order entered separately this day, the parties have resolved the major issues in this case. The current at-large method of electing members of the City Council for the City of Statesville has been declared to violate Section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C. § 1973. The parties have achieved a significant settlement by creating a new city council composed of members representing a combination of single districts (wards) and the city at-large.

The court congratulates the parties, particularly the defendants, for their hard work and open-mindedness in reaching these agreements.

Six of the council members of the newly constituted city council will each represent one of six wards. The boundaries of those wards are established by the consent order. (The “ward system” had existed previously for the sole purpose of determining residency of the candidate but not as a requirement for residency of the person voting for that candidate.) Two of those wards have been designed to contain a black majority voting age population. In this way, the black people of Statesville will have the opportunity to elect at least two members of their choice to the city council in the next election. The new plan provides that the “ward seats” shall be for four years apiece and that election for those seats shall be staggered, with three wards voting for their council representative at a time, so that in 1985, wards 2, 3 and 5 will elect their representatives for a four-year term and ward 4 will elect its representative for a two-year term. In 1987, wards 1, 4 and 6 will elect their representatives for a four-year term; in 1989, wards 2, 3 and 5 will elect their representatives for a four-year term, and so on.

Under the compromise plan, there are also provisions for two at-large seats on the council. Those council members shall be voted on in a city-wide election.

The issue which the parties pose for the court to resolve is “the least dilutive or discriminatory method and term for electing the two at-large members to the City Council.”

By the terms of the consent order,
An evidentiary hearing shall be held for the Court to determine whether the at-large members to the council shall be on staggered terms, elected pursuant to G.S. 163-293(a)(l) (Defendants’ position), or whether the at-large members to the council shall be elected as a group, pursuant to G.S. 163-292(a)(2) (Plaintiffs’ position). The Court in deciding which method the at-large members of this Council are to be elected, shall also decide the term; and least dilutive or discriminatory effect on minority voters, shall be the basis on which method or term the Court chooses to order. If the Court chooses the at-large staggered method, the City Council shall appoint a member to one of the at-large seats for a two-year term. If the Court chooses the at-large group method, elections shall be held in the year 1985 for the at-large group consisting of two members.

On March 25, 1985, this court held an evidentiary hearing on the issue presented. Plaintiffs presented the testimony of Dr. Paul Luebke, an Associate professor of Sociology at the University of North Carolina at Greensboro, who was qualified as an expert in political sociology. Defendants presented the testimony of Professor Michael Vasu, an Associate Professor of Political Science at North Carolina State University in Raleigh, who was qualified as an expert in computer-assisted statistical analysis of elections and applications to the election systems.

In advocating its preference for a staggered-term method of electing the at-large council members, defendants state that the court should give some deference to the “legislative plan” offered by defendant City Council of Statesville for resolution of the problem. They cite as authority the opinion of the three-judge court in Gingles et al. v. Edmisten et al., 590 F.Supp. 345 (E.D.N.C.1984), in which the court deferred to the legislative scheme for curing the districting defects found in that court’s earlier order of January 27, 1984. That case and the principle of judicial deference are not applicable here. By the terms of their own consent order, the parties have defined this court’s job as being to determine the method that would have the least dilutive or discriminatory effect on minority voters, not merely the method which would be sufficient to cure the violations of the Voting Rights Act. Therefore, the court will address the merits of the respective positions of the parties with no deference being accorded either position at the outset.

The expert witnesses for both sides recognized the unfortunate but real phenomenon of “racial polarization” in voting patterns. The statistics in Statesville and across North Carolina show that there is a demonstrable unwillingness by the majority (here white) race to vote for minority (here black) candidates. See, Gingles et al. v. Edmisten et al., supra, at 355, 367-369. The converse conclusion could not be reached based on the figures available to that court or this one. Id. at 369.

Plaintiff’s expert testified that, given such racial polarization in voting, it would be extremely difficult with only one seat at stake, for a black person to be elected in a majority white electorate such as any candidate for one of the at-large seats in Statesville would face. He opined that black voting strength would be less diluted where more than one seat was being filled in the election. He gave two primary reasons: (1) This allows black voters to “single shot,” i.e. to vote for only one candidate though two seats are being filled, thus giving disproportionate weight to their one vote (assuming that white voters exercise both their available votes); and (2) This allows black voters to make inter-racial coalitions and agreements whereby blacks agree to cast their second vote for a particular white candidate if that white candidate supports the black candidate, resulting in some “white votes” for the black candidate that he or she would not normally receive.

Dr. Luebke went on to state that as to the preferable term of office for the at-large members, four-year terms were preferable to and less dilutive of minority voting strength than two-year terms because (1) two-year seats would be “cheapened” in comparison to four-year seats and (2) it takes up to twice as much financial and educational resources (which statistics show are less available to the black electorate than to the white electorate) to conduct election campaigns twice as often.

In response, defendants’ expert, Professor Vasu, stated that he felt that the representation problem in Statesville would be corrected as much as possible by the new combination ward/at-large voting method. Utilizing past election results, he did a number of voting simulations from which he concluded that, assuming “strategic voting” (single shot voting by blacks and “retaliatory” “strategic voting” by whites), the options advocated by both sides would achieve essentially the same results in terms of black voting power. Professor Vasu testified that he felt that the staggered voting system was preferable because were the group method to be approved and elections held every four years, one group of three wards would, on alternate two years, have neither at-large nor ward candidates to elect and would only have the mayoral election in which to participate. This factor, he said, probably would dilute all voter participation. Assuming “single shot” voting by all blacks and assuming no counter-reaction by whites, however, Professor Vasu agreed that under the group method, black voters have a greater opportunity than under the staggered method for electing their preferred candidate.

The ability to “single shot” has been recognized both by the courts and by Congress as a legitimate voting strategy on the part of minority groups. The presence of “anti-single shot provisions” in voting laws and practices is a factor which is recognized as one which “may enhance the opportunity for discrimination against the minority group” and which therefore may be used to establish a violation of the Voting Rights Act. U.S. Congressional and Administrative News (97th Congress, Second Session, 1982) Volume 2, Legislative History, pp. 177, 207.

It is never possible to predict accurately how people in large numbers will vote. The known factor in this context, however, is that single shot voting is a possibility with the group method of electing the at-large members, whereas it is not a possibility with the staggered method. Though inter-racial coalitions may be possible under the staggered method, they are more likely to occur under the immediate pressures created by having two seats available in the same election year. The extent of lowered voter participation by all groups in the years in which residents of certain wards would have no office to vote for other than mayor is necessarily speculative; furthermore, its effects may be forestalled by good planning and encouragement by the city, and it is not a factor which has been shown to have a uniquely discriminatory impact on minority voters (which is the issue raised by this ease and the consent order).

Given the lack of certainty as to any particular outcome in any given election under any of the options, the court must base the decision (as to which method is least dilutive of minority voting strength) on the tendency or likelihood of a particular method to prevent dilution of the minority vote. Based on the known factors (ability to “single shot” and opportunity to make effective coalitions), the court finds that the group method of electing the at-large members to the city council is the least dilutive and discriminatory. Elections at four-year rather than two-year intervals are less demanding of resources scarce in the black community and are therefore less dilutive or discriminatory. The court therefore finds that the proper terms for the at-large city council members are four-year terms.

IT IS THEREFORE ORDERED, pursuant to the requirements of the consent order entered this day, that the at-large members to the Statesville City Council shall be elected as a group and that they shall hold office for four-year terms.

CONSENT ORDER

Plaintiffs have brought an action challenging the form and method of election of council members to the City Council for the City of Statesville, N.C., on the grounds that said form and method of election is in violation of Section 2 of the Voting Rights Act of 1965, as amended, 42 U.S.C. 1973, the Fourteenth and Fifteenth Amendments to the United States Constitution, and 42 U.S.C. 1981.

Counsels for the Plaintiffs and Defendants now come before the Court and show to the Court the following facts and the Court finds the following facts:

1. That the Plaintiff, National Association for the Advancement of Colored People, Inc., through its affiliate, the States-ville Branch, an unincorporated association, having members in the City of Statesville, N.C., has organizational injury because the present method of electing members to the City Council of Statesville causes a class of minority voters protected by 42 U.S.C. 1973 to have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice; and, the function of the Plaintiff organization being the protection of the civil rights of its individual members.

2. That Plaintiff, Willie Beatty, is a black citizen and registered voter of the City of Statesville, Iredell County, and a member of the National Association for the Advancement of Colored People, Statesville Branch.

3. That at the commencement of this action, Plaintiff, Charles Roman, was a black citizen and registered voter of the City of Statesville, Iredell County, North Carolina, and a member of the National Association for the Advancement of Colored People, Statesville Branch; though Plaintiff, Charles Roman, is no longer a citizen and registered voter of the City of Statesville, Iredell County, North Carolina, having changed his residence to the State of South Carolina after this action was commenced; but remains a member of the National Association for the Advancement of Colored People, Statesville Branch.

4. The Defendant, City of Statesville, is a municipal corporation, incorporated under the laws of the State of North Carolina, governed by the Mayor, Defendant, David L. Pressly, and council members, Defendants, Ralph W. Grose, Reece Childers, Frank Crowson, Max Kyles, John Gregory, and William T. Gill.

5. The Defendant, Iredell County Board of Elections, consisting of Defendants, James A. Dobson, Jr., Charles C. Lynn, and L. Hugh West; and Supervisor of Elections, Defendant, Ruby Mosser, is responsible for conducting and certifying the results of primary and general elections for the City of Statesville, North Carolina.

6. That all parties have been properly served and are properly before the Court.

7. That with regard to the Second Claim for Relief in Plaintiffs’ Complaint, the present at-large, ward residency, election and run-off election method, provided for in the City Charter, and codified as Chapter 289 of the 1977 Session Laws of the North Carolina General Assembly, causes a class of minority voters protected by 42 U.S.C. 1973 to have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice, and therefore in violation of Section 2 of the Voting Rights Act, as amended.

8. That the City Charter of the City of Statesville be amended to provide six (6) single-member wards, a description of which are set forth in Exhibit “A” attached hereto, and incorporated by reference herein. The process of redistricting in the City of Statesville was begun prior to the commencement of this action, but the wards as described in Exhibit “A” were adopted after the commencement of this action.

9. That the City of Statesville shall have one (1) council member elected from each ward, and that the candidates for each ward seat must be a resident of the ward in which he or she seeks to be elected, and voted upon only by residents of the ward to which seat he or she seeks to be elected pursuant to N.C.G.S. 163-293(a)(l).

10. That the six (6) ward council seats shall be staggered and open for election for the years and terms as indicated below:

Year 1985: Wards: 2, 5 and 3 for four year term
Ward: 4 for two year term
Year 1987: Wards: 1, 4 and 6 for four year term and open for election every four years thereafter
Year 1989: Wards: 2, 5 and 3 for four year term and open for election every four years thereafter.

11. That an evidentiary hearing be held for the Court to decide the least dilutive or discriminatory method and term for electing the two at-large members to the City Council. The Plaintiffs’ position is that the at-large group method, pursuant to G.S. 163-293(a)(2) has the least dilutive or discriminatory effect on minority voting strength. The Defendants’ position is that the staggered at-large method, pursuant to G.S. 163-293(a)(l) has the least dilutive or discriminatory effect on minority voting strength.

12. That should the Court decide with the Plaintiffs’ position, the at-large elections shall take place in year 1985; and that should the Court decide with the Defendant’s position, the City Council shall appoint a member to one of the at-large seats in 1985 for a two-year term, the Court to decide the term and year of election thereafter for this and the other at-large seat.

13. Plaintiffs shall be entitled to reasonable attorney fees and litigation expense in this action in the discretion of the Court, as provided by 42 U.S.C. § 19731(e), and other applicable federal law. The award of attorney fees as to all Defendants shall be against Defendant, City of Statesville only.

From the foregoing findings of fact, the Court concludes as a matter of law:

A. The Court has jurisdiction of this matter, pursuant to 28 U.S.C. 1331 and 1343, and 28 U.S.C. 2201 and 2202.
B. All parties are properly before the Court.
C. That the present at-large, ward residency, election and run-off election method, provided for in the City Charter of Statesville, N.C., and codified as Chapter 289 of the 1977 Session Laws of the North Carolina General Assembly, causes a class of minority voters protected by 42 U.S.C. 1973 to have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice in violation of Section 2 of the Voting Rights Act, as amended.
D. That Plaintiffs and Defendants mutually agree to further settle this matter, pursuant to an evidentiary hearing, from which the Court will decide the method of election and terms, for electing two at-large members to the Council with the least dilutive or discriminatory effect on minority voters; and the Court has jurisdiction over said evidentiary hearing for the purpose of determining which method of election and terms, least dilute or discriminate against the minority voters, with regard to the two at-large members to serve on the City Council.
FROM THE FOREGOING FINDINGS OF FACT AND CONCLUSIONS OF LAW, IT IS, THEREFORE, ORDERED, ADJUDGED and DECREED THAT:
1. The present at-large, ward residency, election and run-off election method provided for in the City Charter of the City of Statesville, Iredell County, North Carolina, violates Section 2 of the Voting Rights Act, as amended.
2. The City of Statesville shall implement before the 1985 election of members to the City Council the following method of election:
A. There shall be six (6) single-member wards which are described in Exhibit “A” attached hereto and incorporated by reference.
B. There shall be one council member elected from each ward, and the candidates for each ward seat must reside in the ward which he or she seeks to be elected, to be voted upon only by the qualified voters who reside in the ward to which the candidates seek to be elected from pursuant to N.C.G.S. 163-293(a)(l).
C. Ward seats number 2, 5 and 3 shall be open for election in year 1985 for four year terms, and shall be open for election every four years thereafter. Ward seat number 4 shall be open for election in the year 1985 for a two-year term; and again open for election in the year 1987 for a four-year term, and shall be open for election every four years thereafter.
D. Ward seats 1, 4 and 6 shall be open for election in the year 1987 for four year term, and open for election every four years thereafter.
E. There shall be two at-large members elected to the City Council,
voted upon by the qualified voters of the entire city.
P. An evidentiary hearing shall be held for the Court to determine whether the at-large members to the council shall be on staggered terms, elected pursuant to G.S. 163-293(a)(l) (Defendants’ position), or whether the at-large members to the council shall be elected as a group, pursuant to G.S. 163-292(a)(2) (Plaintiffs’ position). The Court in deciding which method the at-large members of this Council are to be elected, shall also decide the term; and least dilutive or discriminatory effect on minority voters, shall be the basis on which method or term the Court chooses to order. If the Court chooses the at-large staggered method, the City Council shall appoint a member to one of the at-large seats for a two-year term. If the Court chooses the at-large group method, elections shall be held in the year 1985 for the at-large group consisting of two members.
3. Plaintiffs shall be entitled to reasonable attorney fees and litigation expenses in this action in the discretion of the Court, as provided by 42 U.S.C. 19731(e), and other applicable federal law. The award of attorney fees as to all Defendants shall be against Defendant, City of Statesville, only.
4. This cause is retained for further orders of the Court.

ENTERED BY CONSENT THIS 1 PHE 12 day of April , 1985.

/s/__ James B. McMillan, U.S. District Court Judge

CONSENTED TO:

Angus B. Thompson, Jr. P.O. Box 1167 Lumberton, NC 82359 (919) 738-2431 Romallus 0. Murphy P.O. Box 20383 Greensboro, NC 27420

ATTORNEYS FOR PLAINTIFFS

Jack R. Harris, Attorney for City of Statesville P.O. Box 1111 Statesville, N.C. 28677 704-873-2121 Gary W. Thomas, Of Counsel HARRIS & PRESSLY P.O. Drawer 31 Statesville, N.C. 28677 704-872-7691

ATTORNEYS FOR: City of Statesville, City Council of Statesville, David L. Pressly, Jr., Mayor, Council Members, Ralph W. Grose, Reece Childers, Frank Crowson, Max Kyles, John Gregory, William T. Gill

Robert N. Randall 149 E. Iredell Avenue Mooresville, NC 28115 704-663-3221

ATTORNEY FOR: Iredell County Board of Elections and Its Members, James H. Dobson, Charles C. Lynn, L. Hugh West, Jr. and Ruby Mosser

EXHIBIT A

BOUNDARY DESCRIPTION FOR NEW WARDS

Introduction to New Ward Boundaries —All street boundary descriptions are to be considered from the center line of the street.

EXAMPLE: Where we say Davie Avenue, we mean the center line of Davie Avenue and thus all persons who live on the north side of Davie Avenue would be in Ward 1 and all persons living on the southern side of Davie Avenue/Mocksville Road would vote in Ward 2. The same would also apply for the description following the railroad tracks as a boundary, using the center line of the tracks as a dividing line.

Ward 1 — Boundary Description — Beginning at a point which is the intersection of Radio Road and the northern city limits and following Radio Road in a southerly direction to its intersection with Hartness Road; thence across Hartness Road and following Holland Drive to its intersection with Bost Street; thence following Bost Street in a southeasterly direction to its intersection with Woods Drive; thence following Woods Drive in a southwesterly direction to its intersection with Brevard Street; thence following Brevard Street in a southeasterly direction to its intersection with Tradd Street; thence following Tradd Street in a southerly direction to its intersection with Stockton Street; thence following Stockton Street in a westerly direction to its intersection with North Center Street; thence following North Center Street in a southerly direction to its intersection with East Broad Street; thence following East Broad Street in a northeasterly direction to its intersection with Oak-wood Drive; thence following Oakwood Drive north to its intersection with Davie Avenue, US Highway 21 and 64 East; thence following Davie Avenue/Mocksville Road in a northeasterly direction to the northeast boundary of the city limits; thence following the northeastern boundary and the northern boundary of the city limits to the point of beginning at Radio Road.

Ward 2 — Boundary Description — Beginning at a point in the northeastern city limits lying at the intersection of Fourth Creek and Davie Avenue/Mocksville Road, US 64-21 and running in a southwesterly direction along Davie Avenue/Mocksville Road to its intersection with Oakwood Drive; thence in a southerly direction along Oakwood Drive to its intersection with East Broad Street; thence in a westerly direction along East Broad Street to its intersection with Center Street; thence following South Center Street to its intersection with Front Street; running in a easterly direction along East Front Street to its intersection with Salisbury Road; thence in a southeasterly direction along Salisbury Road to its intersection with Garfield Street; thence following Garfield Street in a southwesterly direction to its intersection of Old Salisbury Road; thence following Old Salisbury Road to its intersection with Opal Street; thence following Opal Street to its intersection crossing of the Southern Railroad track; thence following the railroad tracks to its intersection of 1-77; thence following the center line of 1-77 to a point extended from the deadend of Dogwood Lane; thence with Dogwood Lane in a easterly direction to its intersection with Eastside Drive; thence across Eastside Drive and following Scott Road to its intersection with Huskins Street; thence following in a southerly direction Huskins Street to its intersection with Eastover Drive; thence following Eastside Drive to its intersection with the eastern city limits line; thence following the eastern city limits line in a northerly direction to its point of beginning at the intersection of Fourth Creek and Mocksville Road.

Ward 6 — Boundary Description — Beginning at a point at the eastern city limits line to its intersection with Eastover Drive and following in a westerly direction on Eastover Drive to its intersection with Hus-kins Street; thence in a north northwesterly direction following Huskins Street and Scott Road to its intersection with Eastside Drive; thence across Eastside Drive following Dogwood Lane in a westerly direction to a point extended at the deadend of Dogwood Lane to 1-77; thence along 1-77 in a southerly direction to its intersection with the Southern Railroad tracks; thence following the Southern Railroad tracks in a westerly direction to its intersection with Fourth Street; thence in a southerly direction along Fourth Street to its intersection with Asheville Avenue; thence following Asheville Avenue in a southwesterly direction to its intersection with Sixth Street/Boulevard; thence following Boulevard/Sixth Street in a southerly direction to the western portion of Fayetteville Avenue; thence following Fayetteville Avenue in a westerly direction to its intersection with Lynnwood Drive; thence following Lynnwood Drive in a southerly direction to its intersection with the southern city limits line; thence following the southern city limit line in the eastern city limit line to its point of beginning at Eastover Drive.

Ward 3 — Boundary Description — Beginning at a point in the southern city limit line at its intersection with Lynnwood Drive and following Lynnwood Drive in a northerly direction to its intersection with the western portion of Fayetteville Avenue and following Fayetteville Avenue in an easterly direction to its intersection with Sixth Street (Boulevard); thence following the Boulevard/Sixth Street in a northerly direction to its intersection with Asheville Avenue; thence following Asheville Avenue in a northeasterly direction to its intersection with Fourth Street; thence following Fourth Street in a northerly direction to its intersection and crossing of the Southern Railroad tracks; thence following the railroad tracks in a easterly direction to its intersection and crossing of Opal Street; thence following Opal Street to its intersection with Old Salisbury Road; thence following Old Salisbury Road in a northwesterly direction to its intersection with Garfield Street; thence following Garfield Street in a northeasterly direction to its intersection with Salisbury Road (US 70); thence following Salisbury Road in a northwesterly direction to its intersection with East Front Street; thence following East Front Street in a westerly direction to its intersection with South Center Street; thence following South Center Street to its intersection with West Sharpe Street; thence following West Sharpe Street in a westerly direction to its intersection with South Mulberry Street; thence following South Mulberry Street in a southerly direction to its intersection with Western Avenue; thence following Western Avenue in a westerly direction to its intersection with the Southern Railroad tracks; thence following the Southern Railroad tracks in a westerly direction to its intersection and crossing at Cochran Street; thence following Cochran Street in a southwesterly direction to the intersection of Cochran Street and Industrial Boulevard; thence following Industrial Boulevard in a northwesterly direction to its intersection with Newton Drive (US Highway 70-64); thence following Newton Drive (US Highway 70-64) in a southwesterly direction to its intersection with Park Drive; thence following Park Drive in a southerly direction to its intersection with Vista Terrace/Bristol Road; thence following Bristol Road in a westerly direction to its intersection with the western city limits line; thence following the western and southern city limit line to the point of beginning at the intersection of the southern city limits and Lynnwood Drive.

Ward 5 — Boundary Description — Beginning at a point in the northern city limit line and its intersection with Northside Drive and following Northside Drive in a northeasterly direction to the intersection of Northside Drive and North Center Street (US Highway 115); thence following North Center Street in a southeasterly direction to its intersection with North Race Street; thence following North Race Street in a southerly direction to its intersection with Alexander Street; thence following Alexander Street in a westerly direction to its intersection with Patterson Street; thence following Patterson Street in a southeasterly direction to its intersection with Cherry Street; thence following Cherry Street in a easterly direction to its intersection with Race Street; thence following South Race Street in a southerly direction to its intersection with West Sharpe Street; thence following West Sharpe Street to its intersection with Cochran Street; thence following Cochran Street in a southwesterly direction to its intersection with Industrial Boulevard; thence following Industrial Boulevard in a northwesterly direction to its intersection with Newton Drive (US Highway 70-64); thence following Newton Drive (US 70-64) in a southwesterly direction to its intersection with Park Drive; thence in a southerly direction along Park Drive to its intersection of Vista Terrace and Bristol Road; thence in a westerly direction along Bristol Road to its intersection with the western city limit line; thence following the western and northern city limit line to a point of beginning at the city limit line at its intersection with Northside Drive.

Ward 4 — Boundary Description — Beginning at the intersection of Radio Road and the northern city limit line and following Radio Road in a southerly direction to its intersection with Hartness Road and crossing Hartness Road and following Holland Drive to its intersection with Bost Street; thence following Bost Street in a southeasterly direction to its intersection with Woods Drive; thence following Woods Drive in a southwesterly direction to its intersection with Brevard Street; thence following Brevard Street in a southeasterly direction to its intersection of Tradd Street; thence following Tradd Street in a southerly direction to its intersection with Stockton Street; thence following Stockton Street in a westerly direction to its intersection of North Center Street; thence following North Center Street in a southerly direction to its intersection with West Sharpe Street; thence following West Sharpe Street in a westerly direction to its intersection with South Mulberry Street; thence following South Mulberry street in a southerly direction to its intersection with Western Avenue; thence following Western Avenue to its intersection crossing of the Southern Railroad tracks; thence following the Southern Railroad tracks in a northwesterly direction to its intersection and crossing at Cochran Street; thence following Cochran Street in a northeasterly direction to its intersection of West Sharpe Street; thence following West Sharpe Street to its intersection at South Race Street; thence following South Race Street in a northerly direction to its intersection with Cherry Street; thence following Cherry Street to a westerly direction to its intersection with Patterson Street; thence following Patterson Street in a northerly direction to its intersection with Alexander Street; thence following Alexander Street in a easterly direction to its intersection with North Race Street; thence following North Race Street to its intersection of North Center Street (NC Highway 115); thence following North Center Street (NC Highway 115) to its intersection with Northside Drive; thence following Northside Drive to its intersection with the northern city limit line; thence following the new northern city limit line to the point of beginning at the intersection of Radio Road and the northern city limits which is the point of beginning.


author: MacLAUGHLIN, District Judge.

text:
    Lawrence E. LARSON and Lorice M. Larson, Plaintiffs, v. The ASSOCIATION OF APARTMENT OWNERS OF LAHAINA SHORES, an unincorporated condominium association, and Chaney, Brooks & Company, a Hawaiian limited partnership, Defendants.
    Civ. No. 4-84-990.
    United States District Court, D. Minnesota, Fourth Division.
    April 16, 1985.

      Lawrence R. Commers, Kirk W. Reilly, Macintosh & Commers, Minneapolis, Minn., for plaintiffs.

      V. Owen Nelson, Kay Nord Hunt, Lommen, Nelson, Sullivan & Cole, P.A., Minneapolis, Minn., for defendants.
   MEMORANDUM AND ORDER

MacLAUGHLIN, District Judge.

This matter is before the Court on defendants’ motion to dismiss for lack of personal jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(2).

FACTS

Plaintiffs Lawrence E. Larson and Lorice M. Larson, both residents of Minnesota, were paying guests at the Lahaina Shores Hotel in Lahaina, Maui, Hawaii from February 28, 1983 to March 7, 1983. On March 6, 1983, while walking through the Lahaina Shores parking lot, plaintiff Lawrence Larson fell into an open hole created by the removal of a tree. Larson injured his right knee, right ankle, and right foot, and aggravated a previous circulatory condition. Plaintiffs allege that these injuries were the result of defendants’ negligence in failing to maintain the parking lot and failing to adequately warn hotel patrons of a dangerous condition.

Defendants in the instant action are the Association of Apartment Owners of Lahaina Shores, an unincorporated Hawaiian condominium association, and Chaney, Brooks & Company, a Hawaiian limited partnership. The Lahaina Shores Condominium complex contains both rental and non-rental units. Those units which are rented comprise the Lahaina Shores Hotel, which is managed by the defendant Chaney, Brooks & Company. Neither of the defendants are incorporated in Minnesota nor authorized to do business in Minnesota. Moreover, it is undisputed that neither defendant has any offices, places of business, bank accounts, or real or personal property within the state of Minnesota. Defendants have submitted an affidavit by the general manager of the Lahaina Shores Condominium which states that defendants have no agents in Minnesota, that defendants do not expend funds within Minnesota for the purpose of attracting Minnesota residents to stay at the Lahaina Shores Hotel, and that defendants do not “actively send or provide promotional materials to entities within the State of Minnesota for distribution within the State of Minnesota.” Affidavit of William Soares, February 21, 1985, ¶ 7. The general manager of Lahaina Shores Condominiums further states that he travels to the mainland United States once or twice a year to promote the condominium and the hotel. While on the mainland, he attends trade shows and invites travel agents to view the Lahaina Shores property. He has never entered Minnesota on these trips, nor has he ever actively solicited patrons from Minnesota.

Plaintiffs have brought forth few facts relating to defendants’ connections with the state of Minnesota. Plaintiffs have submitted proof that a number of travel agencies in the Twin Cities have placed travelers with the Lahaina Shores and have carried Lahaina Shores promotional material.

Defendants now move to dismiss plaintiffs’ complaint for lack of personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2). Plaintiffs oppose this motion and in the alternative request that if the Court rules that it does not have personal jurisdiction, the case be transferred to the United States District Court for the District of Hawaii.

DISCUSSION

The personal jurisdiction analysis generally follows two steps. First, the Court must determine whether the facts satisfy the applicable state long arm statute. If they do not, the Court may not assert personal jurisdiction over the defendants to the action. Second, the Court must determine whether the exercise of personal jurisdiction is consistent with the requirements of due process. Scullin Steel Company v. National Railway Utilization Corp., 676 F.2d 309, 312 (8th Cir.1982). In the instant case, plaintiffs have failed to demonstrate facts sufficient to satisfy the Minnesota Long Arm Statute, Minn.Stat. § 543.19.

a. Minnesota Long Arm Statute

The Minnesota Long Arm Statute, Minn.Stat. § 543.19, subd. 1, provides in pertinent part as follows:

As to a cause of action arising from any acts enumerated in this subdivision, a court of this state with jurisdiction of the subject matter may exercise personal jurisdiction over any foreign corporation or any non-resident individual, or his personal representative, in the same manner as if it were a domestic corporation or he were a resident of this state. This section applies if, in person or through an agent, the foreign corporation or non-resident individual:
(b) Transacts any business within the state, or
(d) Commits any act outside Minnesota causing injury or property damage in Minnesota, subject to the following exceptions when no jurisdiction shall be found:
(1) Minnesota has no substantial interest in providing a forum; or
(2) the burden placed on the defendant
by being brought under the state’s jurisdiction would violate fairness and substantial justice____

Subdivision 3 of section 543.19 provides as follows:

Only causes of action arising from acts enumerated in subdivision 1 may be asserted against a defendant in an action in which jurisdiction over him is based upon this section.

The long arm statute is intended to extend the jurisdiction of Minnesota courts over nonresident defendants and foreign corporations to the maximum extent allowed by due process. Vikse v. Flaby, 316 N.W.2d 276, 281 (Minn.1982); State ex rel. Nelson v. Nelson, 298 Minn. 438, 216 N.W.2d 140 (1974). When a defendant challenges jurisdiction, the burden is on the plaintiff to make out a prima facie case of jurisdiction. Hardrives, Inc. v. City of LaCrosse, Wis., 307 Minn. 290, 240 N.W.2d 814, 818 (1976). Once the plaintiff makes a prima facie showing, the burden shifts to the moving party to demonstrate a lack of jurisdiction. Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir.1982). In the instant case, defendants correctly argue that plaintiffs have failed to make out a prima facie case of jurisdiction.

Defendants, relying on the affidavit of the general manager of Lahaina Shores Condominiums, argue that they have not transacted any business in Minnesota, and that jurisdiction is therefore not appropriately based on Minn.Stat. § 543.19, subd. 1(b). This argument is persuasive. Defendants have no offices or agents in Minnesota, and they do not actively send promotional materials into Minnesota. Moreover, defendants haye never entered the state of Minnesota in order to encourage patronage of the Lahaina Shores Condominiums. The only way defendants’ travel brochures enter Minnesota is through the unilateral actions of travel agents who attend trade shows outside Minnesota, or through the defendants’ response to requests for information from Minnesota travel agents. The Court simply cannot conclude on this record that the defendants transact business within the state of Minnesota. In a letter brief subsequent to the hearing on defendants’ motion, counsel for the plaintiffs essentially concedes that the record in this case does not support the argument that defendants transact business within Minnesota so as to satisfy Minn.Stat. § 543.19, subd. 1(b).

Even if the defendants transacted business within Minnesota, plaintiffs do not meet the further requirement of section 543.19 that plaintiffs’ cause of action arises from such activity. Section 543.19 requires such a connection between the cause of action and the activity giving rise to the court’s jurisdiction. Tunnell v. Doelger & Kirsten, Inc., 405 F.Supp. 1338, 1340 (D.Minn.1976) (Devitt, C.J.); Collyard v. Washington Capitals, 477 F.Supp. 1247, 1250 (D.Minn.1979) (Lord, J.). See also Goodman v. Copper Mountain Resort Association, CIVIL 3-82-1461 (D.Minn.1983) (Magnuson, J.); Brennan v. Westinghouse Elevator Co., CIVIL 4-78-398 (D.Minn. 1979) (MacLaughlin, J.). In the instant case, the defendants’ promotional efforts are the activity allegedly giving rise to jurisdiction. Plaintiffs do not contend that they suffered any injury as a result of defendants’ promotional activity. Rather, plaintiffs’ cause of action is based on defendants’ alleged negligence in maintaining the parking lot and in failing to warn of a dangerous condition. There is therefore no nexus between plaintiffs’ cause of action and the activity supporting jurisdiction, so that jurisdiction is not appropriately based on section 543.19, subd. 1(b).

Plaintiffs argue that even if the facts of this case do not fall within section 543.19, subd. 1(b), jurisdiction is appropriate under the section of the Long Arm Statute that covers acts which are committed outside Minnesota but which cause injury or property damage in Minnesota. Id. subd. 1(d). Plaintiffs concede that the original injury or occurred in Hawaii, but argue that because the fall in defendants’ parking lot (coupled with the flight back to Minnesota) aggravated a pre-existing medical condition, there has been “injury or property damage within Minnesota.” This argument is without merit. First, plaintiffs’ “aggravation” argument is strained and unpersuasive. Second, this portion of the Long Arm Statute is designed to cover actions in the nature of products liability suits (e.g., a defective part is placed in a product in a state outside of Minnesota, and the product is then shipped into Minnesota, where it causes injury). In view of the fact that plaintiffs have failed to satisfy the requirements of the Minnesota Long Arm Statute, the Court finds that it has no personal jurisdiction over defendants.

b. Transfer to District of Hawaii

Plaintiffs argue that even if the Court finds that there is personal jurisdiction, the Court should transfer this case to the United States District Court for the District of Hawaii. The authority for such an order is found at 28 U.S.C. § 1406(a) which provides:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

The fact that the Court does not have personal jurisdiction over the defendants does not preclude such an order. Both the United States Supreme Court and the United States Court of Appeals for the Eighth Circuit have held that section 1406(a) authorizes a transfer in such a situation. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962); Mayo Clinic v. Kaiser, 383 F.2d 653 (8th Cir.1967). In the instant case, the United States District Court for the District of Hawaii would clearly have personal jurisdiction over the defendants, and the Court will therefore transfer the action to that district.

Based on the foregoing, IT IS ORDERED that the instant case, CIVIL 4-84-990, be transferred to the United States District Court for the District of Hawaii.

      . There are currently 199 units within Lahaina Shores Condominiums, of which 160 are at this time involved in rental operations.

      . Defendants did state in their answers to plaintiffs’ interrogatories that they have sent informational brochures to Minnesota travel agents on at least two occasions, at the travel agents’ request.

      . The Court also finds that it would be unconstitutional to exercise personal jurisdiction over the defendants. The defendants’ tenuous connections with Minnesota are not "such that ... [they] should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 5.67, 62 L.Ed.2d 490 (1980). In a case with substantially similar facts to the instant action, the Court held that a defendant hotel's "isolated activities in arranging advertisements in telephone directory yellow pages [in Minnesota] and ... the occasional transmittal of promotional material to Minnesota travel bureaus" were not enough to support jurisdiction. Brennan v. Westinghouse Elevator Co., Inc., CIVIL 4-78-398, slip op. at 4 (D.Minn.1979). See also Goodman v. Copper Mountain Resort Association, CIVIL 3-82-1461 (D.Minn.1983) (Magnuson, J.) (activities of advertising in magazines and distributing brochures to travel agents within forum state does not constitute minimum contacts); Scheidt v. Young, 389 F.2d 58 (3d Cir.1968) (New Jersey plaintiff injured at defendant Pennsylvania hotel; no jurisdiction where defendant placed advertisement in New York newspaper that circulated in New Jersey).

      . The long arm statute also provides for jurisdiction over non-residents where the non-resident defendant owns, uses or possesses real or personal property situated in Minnesota, Minn. Stat. § 543.19, subd. 1(a), and where the defendant commits an act in Minnesota causing injury or property damage, id. § 543.19, subd. 1(c). Plaintiffs concede that the facts of the instant case do not fall within either of these provisions.

      . The plaintiffs mistakenly rely on 28 U.S.C. § 1404(a), which provides for changes of venue for the convenience of parties and witnesses and in the interest of justice.


author: PENCE, District Judge.

text:
    Franson D.K.S. TOM, D.M.D., dba Diversified Dental Services, and Dentaguard, Inc., a Hawaii non-profit corporation, Plaintiffs, v. HAWAII DENTAL SERVICE, a Hawaii non-profit corporation, Defendant.
    Civ. No. 82-0361.
    United States District Court, D. Hawaii.
    April 16, 1985.
    As Amended April 18, 1985.

      Pitluck & Kaulukukui, Wayne M. Pit-luck, Thomas K. Kaulukukui, Jr., Russell H. Ando, Honolulu, Hawaii, for plaintiffs.
    Kobayashi, Watanabe, Sugita & Kawashima, Bert T. Kobayashi, Jr., Lex R. Smith, Kale Feldman, Honolulu, Hawaii, for defendant.
   DECISION AND ORDER

PENCE, District Judge.

Facts

Plaintiff Franson Tom is a dentist doing business as Plaintiff Diversified Dental Services. Plaintiff Dentaguard is a nonprofit prepaid dental insurance plan with which Tom is connected.

Defendant Hawaii Dental Service (“HDS”) is a nonprofit prepaid dental insurance plan. Any dentist in the state can belong to it. Most do, and most patients enrolled in an employee dental plan are enrolled with HDS.

HDS is run by managers responsible to a board of directors, most of whom are drawn from among its own member dentists.

HDS reimburses most of the dentist’s fee. Depending on the plan the patient selects, the patient typically still must pay a deductible, or copayment of 30% of the fee.

All member dentists file with HDS a form designating their usual, customary, and reasonable (UCR) fees for each dental procedure. These can be amended once a year. HDS requires its member dentists to agree to charge no more for each procedure than a fee equal to the 90th percentile of all the fee schedules it has received from its members. Thus, HDS sets maximum fee schedules beyond which it will not reimburse a dentist for work performed.

Dr. Tom appeared on the scene several years ago. He began to draw patients away from HDS members, principally by advertising to the public and calling himself a price cutter. He “cut” prices by waiving payment of the deductible by the patient, receiving as “payment in full” only that portion of his fee to be paid by the insurance company (HDS). HDS ultimately prohibited him from doing this, refusing to reimburse him at all if he did, and asserting that in reality he was overbilling the insurer by collecting his entire fee from it, whereas HDS’s policy called for copayment by the patient.

HDS sued Tom for this practice in state court. Tom responded with this suit against HDS claiming price-fixing and monopoly. Tom now moves for partial summary judgment that the setting of maximum price schedules by HDS is per se price-fixing under section 1 of the Sherman Antitrust Act, 15 U.S.C. sec. 1. HDS has moved for partial summary judgment that, (a) as a matter of law, when it sets the maximum price schedules it is not fixing prices, and (b) that plaintiffs have no standing because they have suffered no damage under Sherman I from the claimed illegal acts of price fixing.

Plaintiffs’ Position

Plaintiffs argue that the 90th percentile maximum price schedule provides an artificial means to raise dental fees, rather than letting such fees find their level in the marketplace. They urge that the incentive is for dentists to anticipate or exceed the 90th percentile in their HDS filing. The system encourages dentists to raise their UCR fees annually (which is as often as HDS allows them to be raised) in anticipation of raising the 90th percentile as high as possible, with an ultimate result of continual escalation of dental fees. In 1981, Hawaii dentists had the highest gross income in the country, although the per capital income of the state’s population was relatively low.

Plaintiffs allege that HDS has resisted any attempt to change its structure to allow free competition among member dentists, and has sought to eliminate Tom as a potential competitor by intimidating, harassing, and defaming him. He asserts that HDS has selectively enforced its rules against him, has rejected and failed to pay or delayed paying many of his fee claims, and has interfered with his business by-spreading negative information about his practice to patients and colleagues, filing a bad faith suit in state court, and calling a defamatory press conference to announce the filing of the suit.

The Law

The underlying law on plaintiffs’ price-fixing count is set out in Arizona v. Maricopa County Medical Society, 457 U.S. 332, 102 S.Ct. 2466, 73 L.Ed.2d 48 (1982). There, not unlike here, a medical insurance fee-for-service plan covered the subscribers for medical expenses, and the participating doctors accepted payment from the plan for services rendered to subscribers. Patients of nonmember doctors were covered up to any excess charge over the maximum fee schedule for members.

The plan established a fee schedule. Its board of trustees solicited advice from medical societies about the need to raise fees. The board’s proposed fee schedule then was submitted to the membership for a majority vote.

The Court held, 4-3, that such an agreement among competing physicians setting maximum fees was per se price fixing under section 1 of the Sherman Act.

This court will therefore assume, without deciding, that under Maricopa and its progeny, notably Ratino v. Medical Service of D.C., 718 F.2d 1260 (4th Cir.1983) (suit against medical insurer remanded for factual determination of whether member doctors controlled the insurer), the maximum price schedules set by HDS constituted a per se price-fixing violation of section 1 of the Sherman Act. Nonetheless, without reaching this issue, this court grants the motion of HDS for summary judgment on the issue of “standing”. Plaintiffs have not shown that the alleged price-fixing caused them injury.

Even if the maximum price-fixing system of HDS does tend, over time, to lead to a gradual rise in dental fees, it is not apparent that this damages Dr. Tom’s practice. An alleged conspiracy among other dentists to raise their fees cannot harm one who, far from participating in the conspiracy, attempts, by his own admission, to cut prices. In fact, other dentists’ higher fees should benefit one who keeps fees low by allowing him to lure away patients. Tom is not a patient, he is a competitor. Cf Associated General Contractors of California v. California State Council of Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983).

The injury which must be found in order to validate plaintiffs’ standing to sue under Count I cannot come from the refusal of HDS to allow Dr. Tom to waive the patients’ required insurance deductible (“co-payment”). E.g., Davidowitz v. San Diego County Dental Society, 1983-1 Trade Cases 69,362, 69,365 (S.D.Cal.1983).

In fact, it has been held that waiver of copayments is a fraudulent and deceptive business practice and is actionable by any dentist.

Dental insurers are entitled to write policies containing copayment provisions. Whether or not copayment encourages more conservative use of dental services or achieves some other lawful goal, the carriers are entitled to write a copayment provision and to enforce it. If it is a socially undesirable provision, it is up to government to bar its use. It is not up to dentists to tiptoe around it by overbilling.

Feiler v. New Jersey Dental Ass’n, 191 NJ.Super. 426, 467 A.2d 276, 284 (1983).

Plaintiffs also maintain that they have suffered injury through the alleged acts of intimidation and harassment by HDS, mentioned above. They argue that HDS performed these acts to damage Tom’s business, thereby furthering the price-fixing conspiracy embodied in its setting of maximum prices, and urge that such injury suffices to accord them standing.

However, HDS appears to have been within its rights in engaging in most, if not all, of the numerous acts complained of: For example, HDS unilaterally reduced its payments on Dr. Tom’s submitted claims for work performed by 30%. This action had a reasonable basis. Dr. Tom was waiving the 30% copayment deductible. The insurer, therefore, was losing money in two ways: because of the greater volume of patients engaging Tom’s free (to them) services, and because, arguably, Tom’s “real” fee was actually only 70% of the fee he claimed to the insurer, for he waived the deductible. Feiler, supra.

The same conclusion applies to the HDS suit against Tom for his waiver of copayments, to calling the allegedly defamatory press conference to announce the suit, and to most or all of HDS’s other acts directed against plaintiffs.

Moreover, these “pendent” injuries do not flow from price-fixing or from acts done to further price-fixing. Rather, the acts from which plaintiffs claim injury were responses by HDS to Tom’s policy of waiving the patient deductible for services rendered and collecting his entire fee from HDS.

HDS also seeks summary judgment on certain pendent counts of the complaint. Plaintiffs lack standing to sue HDS for violation of the Hawaii price-fixing law, H.R.S. §§ 480-2 and 480-4, for the same reasons that they lack standing to sue for violation of the federal price-fixing statute, 15 U.S.C. § 1. Summary judgment is therefore granted to defendant HDS on Count III of the amended complaint.

Count V alleges breach of the reimbursement contract between HDS and Tom. As set forth above, HDS did not breach its contract by cutting its payments to Tom for billed services by 30% when Tom waived payment of the “copayment” deductible by the patient. Rather, Tom over-billed HDS by 30%. His actual fee was only 70% of what he told HDS it was. No issue of fact appears. Thus, summary judgment is granted to HDS on this count.

Count VII specifically complains of HDS’s refusal to permit Tom to waive co-payments. As discussed above, courts have held that not only is it not an unreasonable restraint of trade so to refuse, but waiver of copayments is actionable. Summary judgment is granted to HDS on this count also.

Count VIII asserts interference with advantageous business relationships. Apparently, this refers to instances in which HDS contacted patients or others and said negative things about Dr. Tom and his practice. HDS states that in discovery, plaintiffs have produced no instances of such interference other than the refusal to permit Tom to waive patient copayments.

However, this count relates to plaintiffs’ monopoly claim against HDS. That issue is not the subject of these summary judgment motions, which are limited to the price-fixing issue. Issues of fact remain as to what may have been said, to whom, and whether such statements, if any, were made to further a monopolistic plan or practice. Summary judgment on this count is denied.

Since the issue has never been reached because of lack of standing on plaintiffs’ part, plaintiffs’ motion for summary judgment on Count I, perforce, is DENIED.

Defendant’s motions for partial summary judgment on Counts I, III, V, and VII are GRANTED. Defendant’s motion for summary judgment on Count VIII is DENIED.

ORDER

Plaintiffs lack standing to sue Hawaii Dental Service for violation of the Hawaii price-fixing law, H.R.S. secs. 480-2, 480-4, for the same reasons that they lack standing to sue for violation of the federal price-fixing statute, 15 U.S.C. sec. 1. This court’s decision and order of April 16, 1985, is, therefore, amended to grant summary judgment to defendant Hawaii Dental Service on Count III of the amended complaint.

IT IS SO ORDERED.

      . Plaintiffs cite Madden v. California Dental Service, California Superior Court, 3d Dep’t, County of San Francisco, No. 802 299 (March 6, 1985), in which the court found no standing problem. Madden was a suit by purchasers of dental services.

      . The cases cited by the plaintiffs in which antitrust standing was broadened are inapposite, viz, Blue Shield of Virginia v. McCready, 457 U.S. 465, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982); Virginia Academy of Clinical Psychologists v. Blue Shield of Virginia, 624 F.2d 476 (4th Cir. 1980); Ostrofe v. H.S. Crocker Co. (Ostrofe II), 740 F.2d 739 (9th Cir.1984); and Fine v. Barry & Enright Productions, 731 F.2d 1394 (9th Cir.1984).