author: BUA, District Judge.

text:
    Doshia PRICE, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 84 C 9055.
    United States District Court, N.D.Illinois, E.D.
    Jan. 7, 1986.
    Brian G. Hubka, Chicago, 111., for plaintiff.
    Anton R. Valukas, U.S. Atty. by William Clabault, Asst. U.S. Atty., Chicago, 111., for defendant.
   ORDER

BUA, District Judge.

This action was brought by Doshia Price pursuant to Sections 216(i), 223, and 205(g) of the Social Security Act, 42 U.S.C. §§ 416(i), 423, and 405(g), to review a final decision of the Secretary of Health and Human Services (“the Secretary”) denying plaintiff Social Security Disability Benefits. Before the Court are the parties’ cross-motions for summary judgment. The issue before the Court is whether there is substantial evidence to support the final decision of the Secretary.

For the reasons stated below, this Court finds that the Secretary has met the requisite burden of proof in denying plaintiff’s claim for Disability Benefits. Therefore, the Secretary’s decision is affirmed.

I. FACTS

Doshia Price is 49 years old with a 9th grade education. Price was the victim of polio at age 13 and was left with a residual motor weakness of the right upper and lower extremities. Despite this physical impairment, plaintiff has been employed at relevant times past as clerk, cashier, presser, and most recently as manager of a cleaners. Her prior employment required walking, standing, sitting, and lifting. In addition to the previously mentioned physical ailments and hypertension, plaintiff alleges a history of chronic pain in the right knee, lower back, leg muscles, ankles, hands and wrists.

On November 5, 1982, she was admitted to the hospital for an elective total replacement of the right knee. Three months later she was readmitted to the hospital for a myelogram as part of an evaluation for chronic low back pain. During this same hospitalization, she was placed under general anesthesia for a closed manipulation of her right knee. Despite the total knee prosthesis, physical therapy, and the second surgical procedure, claimant continues to walk with a limp and intermittently requires the use of a cane. On December 7, 1982, one month after her knee operation, plaintiff filed an application for a period of disability based on arthritis and hypertension. The application was denied, both initially and on reconsideration by the Office of Disability Operations of the Social Security Administration. Plaintiff, with her attorney, appeared before an Administrative Law Judge (“ALJ”) who considered the case de novo and on May 30, 1984 denied Price’s claim. The Appeals Council affirmed the decision of the AU and Price sought judicial review of the case which is before this Court on their cross-motions for summary judgment.

II. DISCUSSION

The term disability is defined in Section 223(d)(1)(A) of the Social Security Act as an “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A). For purposes of paragraph (d)(1)(A), “an individual ... shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy____” 42 U.S.C. § 423(d)(2)(A). The Code defines physical or mental impairment as “an impairment that results from anatomical, physiological, or psychological abnormalities which are demonstrable by medically acceptable clinical and laboratory diagnostic techniques.” 42 U.S.C. § 423(d)(3).

Establishment of a disability which would entitle plaintiff to benefits under the Social Security Act is a two-step process. A medically determinable impairment must be shown to exist followed by a factual determination that the impairment renders the plaintiff unable to perform substantial gainful employment. McNeil v. Califano, 614 F.2d 142 (7th Cir.1980); Lieberman v. Califano, 592 F.2d 986 (7th Cir.1979).

In weighing the evidence to determine whether or not a disability exists, the ALJ must weigh all the evidence and may not ignore evidence which suggests an opposite conclusion. Garcia v. Califano, 463 F.Supp. 1098, 1105 (N.D.Ill.1979). Where a line of evidence contrary to the agency’s position is rejected, “a minimal level of articulation of the AU’s assessment of the evidence is required.” Zblewski v. Schweiker, 732 F.2d 75, 78, 79 (7th Cir. 1984). In the event that the AU must assess the credibility of physicians’ statements or testimony, he “rationally may give greater weight to the opinion of a consulting physician,” Stephens v. Heckler, 766 F.2d 284 (7th Cir.1985), or the AU may decide against the treating physician’s assessment if it appears that the “personal physician ... might have been leaning over backwards to support the application for disability benefits.” Cummins v. Schweiker, 670 F.2d 81, 84 (7th Cir.1982).

It is generally accepted that the burden of proof rests upon the plaintiff to establish the existence of a disability. Johnson v. Weinberger, 525 F.2d 403 (7th Cir.1975). If the plaintiff does establish, by a preponderance of the evidence, an entitlement to disability insurance benefits, the burden of going forward temporarily shifts to the Secretary to produce evidence that the claimant has the ability to engage in some other substantial gainful activity existing in the national economy. McNeil v. Califano, 614 F.2d 142 (7th Cir.1980); Slaven v. Harris, 508 F.Supp. 280 (S.D. Ohio 1981).

The review of this Court is limited to a determination as to whether the Secretary’s findings regarding the plaintiffs claims are supported by substantial evidence from the record as a whole. Substantial evidence has been defined as “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971). Therefore, since it finds that the AU’s decision was supported by substantial evidence, the Court grants the defendant’s motion for summary judgment.

Since the plaintiff’s surgery in the fall of 1982, Price has claimed a number of ailments. These ailments include the inability to bend, stoop, stand, and sit for any sustained period of time. It is documented that she must take stairs one at a time and requires assistance with bathing and certain aspects of dressing. Testimony that she cannot stand to do the dishes, laundry, or housework is not contradicted. She testified further that she is unable to sit for any period longer than 20 minutes due to spasms in the legs. She has given up driving, though she admits to riding in a car for short distances as a passenger. For all practical purposes, she is confined to home where she spends a large portion of her day watching television in the prone position.

Plaintiff’s claim for disability on the grounds of exertional impairment relies on the continued distress in her right knee, despite a prosthesis, and the need for daily pain medication. Moreover, plaintiff alleges nonexertional impairments, including severe lower back pain, sciatica, muscular spasms, and chronic pain in the hands and the wrists. In view of these limitations, it is uncontested that she is unable to perform her past relevant work. The decision, therefore, turns upon whether the AU has accorded proper weight to the testimony of the treating and consulting physicians and met the burden of going forward to produce evidence showing that the claimant has the ability to engage in some other substantial gainful activity.

The medical record does not establish the requisite nonexertional and exertional impairments which would prevent the claimant from engaging in any substantial gainful activity. Approximately ten months after plaintiff’s knee operation, her treating physician concluded “[d]ue to the arthritis, surgeries as described, distress in the lower back and hands, it is felt that she is unable to return to any type of work at the present time.” Plaintiff relies heavily on this conclusion by the treating physician when she alleges that the Secretary erred in deliberately ignoring his uncontradicted testimony. A physician’s conclusion is not dispositive. See 20 C.F.R. § 404.1527. “It is a proposition about how particular medical impairments produce reductions in physical exertion, and how such reductions in exertion affect the ability to work.” Garrison v. Heckler, 765 F.2d 710, 713 (7th Cir.1985). Moreover, it was not stated that the claimant would not be able to return to any work in the future. The physician acknowledges that Price is both ambulatory and capable of full weight bearing. At the administrative hearing, the claimant testified to not having fallen in a period of six months. In an attempt to establish objective evidence in support of plaintiff’s nonexertional complaints of low back pain, her treating physician scheduled her for two diagnostic procedures. A myelogram demonstrated no definite abnormalities and was thus interpreted as negative. Electromyographic studies were considered non-diagnostic stating only that “... a possible root lesion at L4-5 may be considered on the right.”

Upon claimant’s request, a consulting physician examined Price. The examination included a radiographic survey of the lumbosacral spine which in pertinent part concluded: “No bony abnormalities or early degenerative changes are noted.” Moreover, physical examination by the consulting physician demonstrated 90 degrees of flexion and 180 degrees of extension of the right knee. A straight leg raising test on the right was negative. The consulting physician did note that the claimant had moderate difficulty in getting on and off the examining table. No medical evidence to support impairment of the hands was found. Grip strength and digital dexterity were unimpaired. The examination by the examining and treating physicians were consistent with one another. Little, if any, additional objective medical evidence supporting plaintiff’s multiple complaints was brought out by the consulting physician.

Plaintiff’s nonexertional claims are based on postural limitations and chronic pain. With regard to such allegations, the Secretary is required to use the standard enunciated in the Social Security Disability Benefits Reform Act of 1984. Section 3(a)(1) of the 1984 Act, which amends Section 223(d)(5), 42 U.S.C. § 423(d)(5), states: “An individual’s statement as to pain or other symptoms shall not alone be conclusive evidence of disability as defined in this section; there must be medical signs and findings, established by medically acceptable clinical or laboratory diagnostic techniques, which show the existence of a medical impairment____” Although the Court takes into consideration the clinical opinions of the examining and treating physicians as to the nature and extent of the claimant’s pain, the Court nevertheless recognizes the difficulty in objectively and quantitatively assessing the extent of the plaintiff’s chronic pain. Various indirect considerations must be taken into account in the evaluation of nonexertional limitations. Observations by the physical therapist treating the claimant noting that she was ambulating well, as well as plaintiff’s own testimony that she was capable of lifting 10 pounds, could stand for 5-10 minutes, occasionally walked without a cane, and regularly sits through one-hour church services serve, at a minimum, as evidence to support the findings of the ALL

The question remaining before the Court therefore is not whether Price has a physical limitation, she clearly does. It is not whether the limitation prevents her from doing her previous job; it clearly does. The question instead is whether the medical record establishes that the claimant is capable of sedentary work.

As alluded to previously, Price’s impairment cannot be stated in precise terms. The Court takes cognizance of the fact that the identical limitation in two different individuals may manifest differently. It is with such recognition that the Social Security Administration has established guidelines to be followed in these particular cases. It has been recognized by other courts that "... all ultimate findings in disability cases are arbitrary to a significant degree. The statute requires the Agency to find disability or no disability when the world cannot be put so neatly into two discrete packages.” Stephens v. Heckler, supra. The Social Security Administration has developed regulations known as a Grid which translate a claimant’s particular age, skills, and education into a finding of disabled or not disabled. Where the plaintiff is found to have exertional and nonexertional impairments, both must be considered and the Grid is used as a guideline. Appendix 2, § 200.00(e)(2).

Plaintiff argues that the Grid merely serves as a starting point and each nonexertional impairment successively limits the number of jobs performable by plaintiff. She further alleges that a flexible application of the Grid would take into consideration cumulative diminishment of work capacity and concludes that, with chronic pain and significant postural limitations, she could not perform all jobs included in the sedentary category. It must be recognized, as plaintiff points out, that the Grid serves merely as a guideline and is not conclusive on the question of disability. It does not follow that, since plaintiff cannot perform all jobs in the sedentary category, that she can perform no job in the national economy.

Plaintiff ultimately bears the burden of establishing by a preponderance of the evidence her entitlement to disability benefits. Ragan v. Finch, 435 F.2d 239, 241 (6th Cir.1970), cert. denied, 402 U.S. 986, 91 S.Ct. 1685, 29 L.Ed.2d 152 (1971). Since plaintiff failed to establish the requisite nonexertional limitations, it was not error for the ALJ to mechanically apply the Grid and deny disability.

IT IS SO ORDERED.


source: Caselaw Access Project

author: JARVIS, District Judge.

license: Public Domain

text:
    Sandra L. STANLEY, Plaintiff, v. Wanda H. COBB, Defendant.
    No. Civ. 3-85-942.
    United States District Court, E.D. Tennessee, N.D.
    Jan. 7, 1986.
    Robert J. English, Knoxville, Tenn., for plaintiff.
    Robert E. Dunphy, Jack M. Tallent, II, Knoxville, Tenn., for defendant.
   MEMORANDUM

JARVIS, District Judge.

This case arises out of personal injuries sustained as the result of a rear-end collision which occurred on or about December 23, 1984, in Knoxville, Tennessee. This matter is presently before the Court on motion of Robert E. Dunphy [“Dunphy”], attorney of record for Wanda H. Cobb [“Cobb”], to withdraw as counsel of record for Cobb, along with the lawfirm of Morton, Lewis, King & Krieg. Dunphy has been retained by American International Group [“American”] pursuant to a contract of insurance between American and the defendant. The applicable policy limits in this case for American are 115,00o. The underinsured motorist carrier, Nationwide Mutual Insurance Company [“Nationwide”] has filed a response to Dunphy’s motion.

The basis for Dunphy’s motion is that he has paid the policy limits for American of $15,000 to the Clerk of this Court and, thus, having tendered the full limits of the policy, Dunphy requests this Court to allow him to withdraw from further defense of this matter pursuant to American’s request.

The pertinent language of the insurance contract between American and Cobb is set forth in Part A, Liability Coverage, in which it is provided as follows:

We will pay damages for bodily injury or property damage for which any covered person becomes legally responsible because of an auto accident. We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted.

The above language clearly indicates that the contractual duty of the insurer to the insured is to settle or defend, as they consider appropriate, any claim or suit asking for damages against the insured. No other options are set forth and the policy clearly limits the choices to: (1) defense of the insured or (2) to settlement of the claims. However, the contract does further provide that the duty to settle or defend ends when the limit of liability for the coverage has been exhausted. In view of the stated two options, this Court is of the opinion that the limit of liability may not be exhausted in a manner other than that specified by the policy, i.e., to either settle or defend.

This Court’s view of the language of this insurance policy appears to be supported by Professor Appleman, who has concluded as follows:

Following the 1966-1972 policy revisions, generally, once the primary insurer exhausts its policy limits either by way of settlement or payment of judgment, and not by payment into court, it has no further duty to defend, and the costs of further defense lie with the excess insurer.

Appleman Insurance Law and Practice, (Berdal ed.) § 4691, pp. 274-75 (1979) (emphasis in original).

Counsel for Nationwide also points out that the contract of insurance between American and Cobb might have been drafted in such a fashion as to permit the relief Dunphy now seeks from this Court. In support of that position, Nationwide cites the case of Batdorf v. Transamerica Title Insurance Company, 41 Wash.App. 254, 702 P.2d 1211 (1985), the reasoning of which this Court finds persuasive. In that case, the court interpreted a policy in which the company was obligated to defend the insured but which policy specifically reserved the option of either settling the claim or paying the amount of the policy in full. That court held, “ ‘[T]he policy clearly gave Transamerica the option to settle adverse claims, pay its insured the policy limits or defend to judgment.’ ” Id., 702 P.2d at 1213 (emphasis in original).

Unlike the policy in Batdorf there are no provisions in American’s policy in this case which give the insuror the right to avoid the obligation of defense by paying into court any definite sum of money. In the absence of a clause specifically granting the insuror that option, the contract of insurance in the case sub judice must be interpreted by its plain meaning, and any ambiguity must be resolved against the drafter of the contract. See, Webb v. Insurance Company of North America, 581 F.Supp. 244 (D.C.Tenn.1984). Thus, Dunphy’s motion must be denied.

Order accordingly.

      . Although the declarations sheet [Doc. 6, Attachment] reflects that the limits of $10,000 per person and $20,000 per accident are applicable, a statutory change in the year that the accident took place raised the policy limits to $15,000 per person and $30,000 per accident. See, Tennessee Code Annotated § 55 — 12—102(l)(A)(i)(b).

      . A suit based upon the same facts has been previously filed and is pending in the Circuit Court for Knox County, Tennessee, in the case styled Sandra L. Stanley, et al. v. Wanda H. Cobb, Docket No. 1-291-85. The $15,000 was originally paid to the Clerk for the Circuit Court for Knox County and, by Order dated December 6, 1985, the Clerk for the Circuit Court for Knox County paid to the Clerk for the United States District Court for the Eastern District of Tennessee, Northern Division, the $15,000 previously paid to it on behalf of the defendant by American.


author: COHILL, Chief Judge.

text:
    LAUREL PIPE LINE COMPANY, a Ohio Corporation, Plaintiff, v. BETHLEHEM MINES CORPORATION, a West Virginia Corporation, Defendant.
    Civ. A. No. 84-2415.
    United States District Court, W.D. Pennsylvania.
    Jan. 8, 1986.
    John David Rhodes, Thompson, Rhodes & Cowie, Pittsburgh, Pa., for plaintiff.
    Stanley R. Geary, Rose, Schmidt, Dixon & Hasley, Pittsburgh, Pa., for defendant.
   OPINION

COHILL, Chief Judge.

Plaintiff, an Ohio corporation with its principal place of business in Pennsylvania, owned an easement over certain land subject to Defendant’s underground mining operations. Plaintiff alleges, in its complaint, that Defendant is a West Virginia corporation, that Defendant conducted underground mining operations in the vicinity of Plaintiff’s easement on October 16, 1982, and that as a result of Defendant’s activity, Plaintiff’s pipeline ruptured. Count I of the complaint sounds in negligence and Count II in strict liability, both of which are common law tort theories. Neither count mentions any federal or state law specifically. The complaint generally avers that this Court has jurisdiction under 28 U.S.C. § 1332 based on diversity and under 30 U.S.C. § 1270, the Surface Mining Control and Reclamation Act of 1977 (“SMCRA”).

Subsequent to filing the complaint, Plaintiff has conceded a lack of diversity since it has determined through discovery that the Defendant, although incorporated in West Virginia, has its principal place of business in Pennsylvania. Plaintiffs only remaining basis for federal jurisdiction is under SMCRA.

Defendant has filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction, which motion is the subject of this opinion. In its brief, Defendant argues that under SMCRA, Pennsylvania was subject to interim federal regulation from May 8, 1978 until July 31, 1982, the date on which Pennsylvania’s state regulations were conditionally approved. Thus, according to the legislative intent of SMCRA, after July 31, 1982, Defendant alleges that it was subject only to Pennsylvania law. Defendant also argues that, even if SMCRA still governed its conduct after conditional approval, the interim regulations did not regulate subsidence or the surface effects thereof. Since we find Defendant’s first argument persuasive, we will not address the second argument.

Section 520 of SMCRA provides a private right of action for citizens to compel compliance with the Act and to collect damages where a violation of the Act has caused him damage.

a) Except as provided in subsection (b) of this section, any person having an interest which is or may be adversely affected may commence a civil action on his own behalf to compel compliance with this chapter—
(1) against the United States or any other governmental instrumentality or agency to the extent permitted by the eleventh amendment to the Constitution which is alleged to be in violation of the provisions of this chapter or of any rule, regulation, order or permit issued pursuant thereto, or against any other person who is alleged to be in violation of any rule, regulation, order or permit issued pursuant to this subchapter; or
(2) against the Secretary or the appropriate State regulatory authority to the extent permitted by the eleventh amendment to the Constitution where there is alleged a failure of the Secretary or the appropriate State regulatory authority to perform any act or duty under this chapter which is not discretionary with the Secretary or with the appropriate State regulatory authority.
The district courts shall have jurisdiction, without regard to the amount in controversy or the citizenship of the parties.
f) Any person who is injured in his person or property through the violation by any operator of any rule, regulation, order, or permit issued pursuant to this chapter may bring an action for damages (including reasonable attorney and expert witness fees) only in the judicial district in which the surface coal mining operation complained of is located. Nothing in this subsection shall affect the rights established by or limits imposed under State Workmen’s Compensation laws.

SMCRA was designed to establish a nationwide program for regulation of coal mining operations. However, as clearly indicated by the manner in which the Act was structured, the purpose of the federal regulation was to insure that every state implemented a program of regulation which met the minimum standards Congress deemed necessary to protect society and the environment. In Hodel v. Virginia Surface Mining and Reclamation Association, 452 U.S. 264, 101 S.Ct. 2352, 69 L.Ed.2d 1 (1981), the Court explains the legislative scheme behind SMCRA.

The Secretary of the Interior (Secretary) has primary responsibility for administering the Act by promulgating regulations and enforcing its provisions. A two-stage program for the regulation of surface mining — an interim phase and a permanent phase — is established; and environmental protection pérformance standards are prescribed. Ultimately, a regulatory program is to be adopted for each State, either by approval of a State’s proposed permanent program that meets federal minimum standards, or by adoption of a federal program for any State that chooses not to submit a program. Enforcement of the permanent programs rests either with the participating State or with the Secretary as to nonparticipating States.

452 U.S. at 267, 101 S.Ct. at 2355.

Thus, in participating states, enforcement rests with the state and not with the federal government. The state is given primary responsibility for achieving the purposes of SMCRA. In re Permanent Surface Mining Regulation Litigation, 653 F.2d 514, 519 (D.C.Cir.), cert. denied, 454 U.S. 822, 102 S.Ct. 106, 70 L.Ed.2d 93 (1981).

Pennsylvania is a participating state. Included in its approved program is a chapter entitled the Bituminous Mine Subsidence and Land Conservation Act. 52 P.S. §§ 1406.1 — 1406.21. (Purdons Supp. 1985). It provides for private actions to compel enforcement and award damages as follows:

(a) Commonwealth Court and the courts of common pleas shall have the power to award injunctions to prevent violations of this act and otherwise to provide for its enforcement upon suit brought by the department or the county commissioners of any county, the mayor of any city, borough or incorporated town, or the board of township commissioners or supervisors of any township in which the mining of bituminous coal is conducted, or upon the suit of any property owner affected by such bituminous coal mining, without the necessity of posting a bond on application for a permanent injunction, but a bond may be required on the granting of a temporary restraining order.
(b) Except as provided in subsection (d), any person having an interest which is or may be adversely affected may commence a civil action on his own behalf to compel compliance with this act or any rule, regulation, order or permit issued pursuant to this act against the department where there is alleged a failure of the department to perform any act which is not discretionary with the department or against any other person who is alleged to be in violation of any provision of this act or any rule, regulation, order or permit issued pursuant to this act. Any other provision of law to the contrary notwithstanding, the courts of common pleas shall have jurisdiction of such actions, and venue in such actions shall be as set forth in the Rules of Civil Procedure concerning actions in assumpsit.
(f) The court, in issuing any final order in any action brought pursuant to subsection (b), may award costs of litigation (including attorney and expert witness fees) to any party, whenever the court determines such award is appropriate. The court may, if a temporary restraining order or preliminary injunction is sought, require the filing of a bond or equivalent security under the Rules of Civil Procedure.

52 P.S. § 1406.13 (Emphasis added). See Deluca v. Buckeye Coal Co., 463 Pa. 513, 345 A.2d 637 (1975) (construing this section as providing a private right of action in state court for damages as well as injunctive relief).

This section also provides for actions by the department in either state or federal court. Private citizens may intervene in those actions but may not initiate them,

(d) No action pursuant to subsection (b) may be commenced prior to sixty days after the plaintiff has given notice in writing of the violation to the department and to any alleged violator, nor may such action be commenced if the department has commenced and is diligently prosecuting a civil action in a court of the United States or a state to require compliance with this act or any rule, regulation, order or permit issued pursuant to this act, but in any such action in a court of the United States or of the Commonwealth any person may intervene as a matter of right.

52 P.S. § 1406.13(d).

Since we find that SMCRA has given primacy to states which have adopted approved state regulation, and Pennsylvania has adopted such regulations, which do not provide for private actions in federal court unless initiated by the State Department of Environmental Resources, we find that we have no subject matter jurisdiction under § 520 of SMCRA. 30 U.S.C. § 1270. Thus, we will dismiss this action for lack of subject matter jurisdiction and instruct the Plaintiff to proceed in state court in accordance with 52 P.S. § 1406.13.

An appropriate order will follow.


author: COHEN, Senior District Judge:

text:
    Luciano and Marie DiSALVATORE, Plaintiffs, v. The AETNA CASUALTY AND SURETY COMPANY, Defendant.
    Civ. A. No. 83-3071.
    United States District Court, D. New Jersey.
    Jan, 9, 1986.
    Uliase, Aberman & Mandel, P.C. by Samuel Mandel, Cherry Hill, N.J., for plaintiffs.
    Cozen, Begier & O’Connor, P.C. by Thomas McKay, III, Westmont, N.J., for defendant.
   OPINION

COHEN, Senior District Judge:

This diversity action, in which the plaintiffs, Luciano and Marie DiSalvatore, holders of a homeowner’s insurance policy, seek, inter alia, damages against their insurance carrier, is before the Court on a motion by the defendant, Aetna Casualty and Surety Company (“Aetna”), for partial summary judgment pursuant to Fed.R. Civ.P. 56. For the reasons set forth below, the motion shall be granted in part and denied in part.

Reduced to their barest essentials, the facts of this case are not complex. Plaintiffs’ home was destroyed by fire on August 27, 1982. At that time, the residence was covered by an insurance policy carried by the defendant. On May 10, 1983, the plaintiffs were notified that their insurance policy was void, and their claim was denied. Thereafter, the plaintiffs filed the instant suit.

The complaint contains claims for breach of contract (Count I), breach of the duty of good faith and fair dealing (Counts II & III), intentional infliction of emotional distress (Count II), fraud in the inducement (Count IV), and negligence (Count V). Defendant has asserted the affirmative defense of arson and fraud, maintaining that the claim was denied because defendant discovered evidence that plaintiffs were “involved” in the fire.

By its present motion, the defendant seeks summary judgment on the claims for compensatory and punitive damages contained in Counts II, III and IV of the complaint, and on the claim for counsel fees. Defendant’s motion raises a number of important issues regarding the availability of causes of action by an insured to recover extracontractual damages from his insurer. We shall discuss defendant’s motion with respect to plaintiffs’ claims for damages and for counsel fees separately.

Three of the theories under which the plaintiffs seek damages have been challenged by the defendant herein. With respect to the plaintiffs’ claim for damages arising out of the alleged breach of the duty of good faith and fair dealing (Counts II & III), the defendant urges that no cause of action for such a breach exists under New Jersey law. Similarly, with respect to the plaintiffs’ claim for damages arising out of an alleged intentional infliction of emotional distress (Count II), the defendant argues that New Jersey does not recognize such a tort. The third theory challenged by the defendant is that contained in Count IV of the complaint, which the defendant reads as an attempt to bring a private cause of action under the New Jersey Consumer Frauds Act, N.J.S.A. 56:8-1 et seq. and the New Jersey Unfair Claim Settlement Practices Act, N.J.S.A. 17:29B-1 et seq.

ACTION FOR BREACH OF THE DUTY OF GOOD FAITH AND FAIR DEALING

Under New Jersey law there is implied in every contract a duty of good faith and fair dealing. E.g., Onderdonk v. Presbyterian Homes of New Jersey, 85 N.J. 171, 425 A.2d 1057 (1981). Insurance contracts are no exception. E.g., Fireman’s Fund Insurance Co. v. Security Insurance Co., 72 N.J. 63, 367 A.2d 864 (1976). The New Jersey Supreme Court, however, has not yet addressed the issue of the availability of a cause of action to redress an alleged breach of this duty in a situation where an insured contends that his insurer has wrongfully failed to pay benefits due him under the contract.

At the outset, we note that an action for breach of the duty of good faith and fair dealing in this “first-party” situation sounds both in tort and in contract, and might appropriately be considered an action in either. Most accurately, however, it would seem that such an action is best characterized as one for a tort arising from a contract. See Caruso v. Republic Insurance Co., 558 F.Supp. 430, 434-35 (D.Md. 1983). The parties in the present ease have each characterized the plaintiffs’ claims pertaining to the duty of good faith and fair dealing as sounding in tort. We shall adopt this characterization.

As is not infrequently the case, California courts led the way in recognizing the new tort. In Fletcher v. Western National Life Insurance Co., 10 Cal.App.3d 376, 89 Cal.Rptr. 78 (1970), a California appeals court extended the well-established duty of an insurer to act reasonably and in good faith in settling third-party claims against its insureds to the first-party situation. In Gruenberg v. Aetna Insurance Co., 9 Cal.3d 556, 574, 510 P.2d 1032, 1037, 108 Cal.Rptr. 480, 485, (1973), the California Supreme Court followed the Fletcher court’s reasoning, and concluded that an independent tort action exists against insurance companies for breach of the implied duty of good faith and fair dealing.

Some of the courts of other jurisdictions, which have considered the issue of recognition of this new tort since Gruenberg, have adopted the California approach, and have recognized the new action, while other courts have refused to do so. See generally, Bess & Doherty, Survey of Bad Faith Claims in First Party and Industrial Proceedings, 1982 Ins.Counsel J. 368 (survey of jurisdictions addressing the existence of the tort). Our role in this diversity action, which the parties agree is governed by New Jersey law, is to attempt to predict whether the highest court of New Jersey would permit an award of extracontractual damages in a first-party insurance dispute. In this regard, we are guided, but not bound, by the rulings of the lower state courts concerning the underlying substantive law. E.g., Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967). See generally, C. Wright, The Law of Federal Courts, § 58 (4th ed. 1983).

This Court believes that the New Jersey Supreme Court would recognize the tort action advanced by the plaintiffs herein. Arguments in favor of adopting the bad faith tort center around the unequal bargaining positions of the parties to a typical insurance contract. See, e.g., Rodgers v. Pennsylvania Life Insurance Co., 539 F.Supp. 879, 883 (S.D.Iowa 1982); Fletcher, supra, 10 Cal.App.3d at 404, 89 Cal.Rptr. at 95. New Jersey has long recognized the superior bargaining power of an insurance company as compared with that of its insured, e.g. Sparks v. St. Paul Insurance Co., 100 N.J. 325, 335, 495 A.2d 406 (1985) and considers insurance policies “contracts of adhesion.” Allen v. Metropolitan Life Insurance Co., 44 N.J. 294, 305, 208 A.2d 638 (1965). Recognition of an action permitting an insured to recover damages in excess of the actual amount owed under the contract would provide an effective means of countering the existing incentives for an insurance company to wrongfully delay or deny payment. See Note, The Availability of Excess Damages for Wrongful Refusal to Honor First Party Insurance Claims — An Emerging Trend, 45 Fordham L.Rev. 164 (1976). We believe that the New Jersey Supreme Court would provide insureds with this avenue for relief when insurance companies withhold payments maliciously and without probable cause. See Polito v. Continental Casualty Co., 689 F.2d 457, 463 (3d Cir. 1982) (concluding that New Jersey courts would recognize claims by insureds for consequential damages for breach of implied duty of good faith and fair dealing). See also Rodgers, supra at 879 (predicting that the Iowa Supreme Court would recognize the new tort).

Nothing in the New Jersey Unfair Claim Settlement Practices Act, N.J.S.A. 17:29B-1 et seq., leads us to believe that recognition of an action in tort based upon breach of the duty of good faith and fair dealing has been precluded by legislative preemption. But cf., D’Ambrosio v. Pennsylvania National Mutual Casualty In surance Co., 494 Pa. 501, 431 A.2d 966 (1981) (Pennsylvania’s Unfair Insurance Practices Act need not be supplemented by a judicially created cause of action). Furthermore, nothing in the New Jersey case law which bears on the distinction between third-party insurance disputes and first-party actions compels a decision against recognizing the action herein. Although it is clear that the insured and his insurer are in an adversarial position in first-party actions, as contrasted with the relationship in cases involving third-party claims, this difference does not require that the courts ignore the difference in bargaining power between the parties. We recognize that a fiduciary relationship exists between an insured and his insurer in cases involving settlements with third-party claimants, Rova Farms Resort Inc. v. Investors Insurance Co., 65 N.J. 474, 492, 323 A.2d 495 (1974) while such a relationship does not necessarily exist in a first-party situation. See Kocse v. Liberty Mutual Insurance Co., 152 N.J.Super. 371, 378, 377 A.2d 1234 (Law Div.1977) (mere presence of a fiduciary duty regarding one aspect of an insurance contract does not necessarily mean that such a duty governs all aspects of the agreement). This difference does not vitiate our decision, however, since our holding is based upon the existence of a duty of fair dealing, and not upon a fiduciary relationship.

ACTION FOR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS

Count II of the complaint alleges the tort of intentional infliction of emotional distress. The defendant herein has moved for summary judgment with respect to this Count, contending that no cause of action for this tort is recognized in New Jersey, in the context of a first-party insurance dispute.

In Polito, supra at 464, the Third Circuit predicted that the New Jersey Supreme Court would recognize the potential liability of insurance companies under this theory. Defendant relies upon two recent New Jersey cases to maintain that this explicit prediction has been undercut. Because we disagree with defendant’s argument regarding the validity of the Polito prediction, we shall deny this aspect of defendant’s motion.

Neither Garden State Community Hospital v. Watson, 191 N.J.Super. 225, 465 A.2d 1225 (App.Div.1983), nor Milcarek v. Nationwide Insurance Co., 190 N.J.Super. 358, 463 A.2d 950 (App.Div.1983), upon which defendant relies, addresses the question of the existence of such a tort in any detail, and in each case the court concludes that the issue must be directed to the state’s highest court. 191 N.J.Super. at 277, 465 A.2d 1225; 190 N.J.Super. at 370, 463 A.2d 950. Of course, whether the plaintiffs’ proofs establish that the conduct of the defendant meets the high standard required for recovery under the emotional distress theory, see Hafner v. Hafner, 135 N.J.Super. 328, 333-34, 343 A.2d 166 (Law. Div.1975) (recovery conditioned on a showing of conduct that is so outrageous as to go beyond all possible bounds of decency and to be regarded as utterly intolerable in a civilized society), remains to be seen. We hold here only that such a theory is available to plaintiffs.

FRAUD IN THE INDUCEMENT

The defendant reads Count IV of the complaint as an attempt to bring a private cause of action under the New Jersey Consumer Frauds Act, N.J.S.A. 56:8-1 et seq., and the New Jersey Unfair Claim Settlement Practices Act, N.J.S.A. 17:29B-1 et seq., and contends that such private causes of action are not permitted. Plaintiffs do not dispute that private causes of action are unavailable under these statutes, but maintain that Count IV of the complaint alleges only the common law action for fraud in the inducement. Because a genuine issue may be said to exist with respect to fraudulent inducement by the defendant, Count IV of the plaintiffs’ complaint shall be allowed to stand as an allegation of such common law fraud only, and the defendant’s motion with respect to this Count shall be denied.

THE CLAIM FOR COUNSEL FEES

[4] The defendant contends that New Jersey law does not permit the award of attorneys’ fees in first-party insurance disputes, and therefore moves for summary judgment with respect to this aspect of plaintiffs’ complaint. Plaintiffs urge that the Third Circuit’s holding in Polito, supra at 465, that the plaintiff therein was entitled to an award of attorneys' fees, binds this Court to allow such relief. Subsequent to the Polito decision, however, the Appellate Division of the New Jersey Superior Court reversed the Miller v. New Jersey Insurance Underwriting Assn., 177 N.J.Super. 584, 427 A.2d 135 (Law Div. 1981), decision upon which the Polito court had relied. 188 N.J.Super. 175, 193-94, 457 A.2d 23 (App.Div.1983); certif. denied, 94 N.J. 508, 468 A.2d 169 (1983). In view of this reversal, and having the benefit of the recent New Jersey Superior Court decision in Ellmex Construction Co., supra at 349-50 (affirming the denial of counsel fees), this Court holds that counsel fees are not recoverable in New Jersey in an action by an insured to compel payment under an insurance policy. See also Enright v. Lubow, 202 N.J.Super. 58, 493 A.2d 1288 (App.Div.1985). Accordingly, defendant’s motion for summary judgment with respect to this portion of plaintiffs’ complaint shall be granted. The Court shall enter an appropriate order.

ORDER

This matter having come before the Court on a motion by the defendant, Aetna Casualty and Surety Company, for partial summary judgment; and

For the reasons set forth in this Court’s opinion filed this date; and

For good cause shown;

IT IS On this 9th day of January, 1986,

ORDERED that said motion be and the same is hereby DENIED with respect to Counts II, III and IV of the Complaint; and it is

FURTHER ORDERED that said motion be and the same is hereby GRANTED with respect to the claim for counsel fees contained in the Complaint.

      . The negligence claim is based on the failure to name the Beneficial Business Credit Corporation as a mortgagee on the insurance contract. Since plaintiffs have indicated a willingness to consent to an order dismissing these allegations, see Plaintiffs’ Brief at 30, we shall not consider Count V in our opinion.

      . The motion originally included a request for summary judgment on the plaintiffs’ claim for prejudgment interest. In light of the very recent Ellmex Construction Co. v. Republic Ins. Co., 202 N.J.Super. 195 (App.Div.1985), 494 A.2d 339 decision, however, the defendant conceded that New Jersey law does permit the award of such interest, and withdrew this portion of the motion at oral argument, which was heard on October 4, 1985.


author: LOVELL, District Judge.

text:
    Lori A. KING, Plaintiff, v. ARCO METALS COMPANY, a Delaware corporation, et al., Defendants. Charles E. DARLING, Plaintiff, v. ARCO METALS COMPANY, a Delaware corporation, et al., Defendants.
    Nos. CV 84-40-M-CCL, CV 84-45-M-CCL.
    United States District Court, D. Montana, Missoula Division.
    Jan. 9, 1986.

      Andree LaRose, Whitefish, Mont., for plaintiffs.
    Donald C. Robinson, Poore, Roth & Robinson, Butte, Mont., for Arco.
    Joan Junkel, Missoula, Mont., for Union defendants.
    R. Michael Labelle, Powers & Lewis, Washington, D.C., for union defendants.
   OPINION AND ORDER

LOVELL, District Judge.

Plaintiffs in this action are two former employees of defendant Arco Metals in Columbia Falls, Montana, who instituted this action after being discharged from their employment positions. Named in the second amended complaint, in addition to ARCO, are the local 320 of the Aluminum, Brick and Glass Workers International Union and the Aluminum Workers Trades Council of Columbia Falls, AFL-CIO (“Union defendants”). Plaintiffs allege claims of wrongful discharge, negligent misrepresentation, constructive fraud, and breach of collective bargaining agreement against ARCO, and breach of the duty of fair representation against the Union defendants.

Before the Court is the Union defendants’ motion to dismiss for failure to file within the applicable period of limitations. The basis for this motion is the six-month statute of limitations adopted by the United States Supreme Court for the filing of unfair labor practice claims against a union for breach of the duty of fair representation. DelCostello v. International Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct. 2281, 76 L.Ed.2d 476 (1983).

The Union defendants have admitted the facts as alleged in the complaint for the purposes of this motion. Plaintiff Lori King was hired by ARCO’s predecessor, the Anaconda Aluminum Company, in April, 1976; she was laid off on March 7, 1983. On March 11, 1983, plaintiff King was notified that she had no “recall” rights, meaning that she would not be rehired by ARCO. On March 30, 1983, plaintiff King filed a grievance with her union alleging that ARCO's actions violated her rights under the collective bargaining agreement between the company and the union. The union handled the grievance without settlement and on April 18, 1983, informed plaintiff King that it would not take her case to arbitration.

Plaintiff Charles E. Darling was hired by the Anaconda Aluminum Company in January, 1975, and was laid off by ARCO on February 6, 1983. On or before June 6, 1983, Plaintiff Darling was passed up for recall and was notified on October‘27,1983, that he had no recall rights. Plaintiff Darling did not file a grievance with the Union for the reason that the Union’s actions as to plaintiff King would have made a grievance futile.

The initial complaints of plaintiffs King and Darling were filed on March 2, 1984, and March 12, 1984, respectively; however, the union defendants were not named in either complaint. On June 6, 1984, the two cases were consolidated for pretrial discovery and motions. On March 11, 1985, plaintiffs filed their second amended complaint which, for the first time, named the two unions as defendants.

DelCostello v. International Brotherhood of Teamsters, supra, decided on June 8, 1983, held that the six-month limitation period expressed in Section 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b), is applicable to an employee’s suit against an employer and union, for breach of collective bargaining agreement and the duty of fair representation, respectively. It is clear from the facts of this case that the plaintiffs’ causes of action accrued prior to DelCostello, but that they did not file suit until some time after Del-Costello. The union defendants take the position that DelCostello should be applied to bar the plaintiffs’ claims herein, for the reason that plaintiffs “slept on their rights” following the Supreme Court’s directive that the six-month limitation period applies to cases of this nature.

Plaintiffs, on the other hand, submit that DelCostello is not to be applied retroactively within the Ninth Circuit and that they reasonably relied upon the five-year limitation period contained in § 27-2-215, M.C.A. The basis for plaintiffs’ contention is the dictum contained in a footnote in Lumber, Production & Industrial Workers’ Local No. 3038 v. Champion International Corp., 486 F.Supp. 812, 813 (D.Mont.1980) suggesting that the five-year period would apply to such actions. A different case in the District of Montana held that the applicable limitation period was six months, pursuant to § 39-13-404, M.C.A. Nunnally v. International Brotherhood of Electrical Workers, 588 F.Supp. 1309 (D.Mont.1984). In neither opinion did the district court cite any authority upon which it based its determination. Moreover, Nunnally was reversed by the Ninth Circuit Court of Appeals on September 30, 1985. Nunnally v. IBEW, 774 F.2d 1174 (9th Cir.1985), unpublished decision.

Prior to DelCostello, the timeliness of actions brought under Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, was to be determined by reference to the “appropriate state statute of limitations.” International Union, UAW v. Hoosier Cardinal Corp., 383 U.S. 696, 704-705, 86 S.Ct. 1107, 1113, 16 L.Ed.2d 192, 199 (1966). The Ninth Circuit Court of Appeals has characterized the union’s duty of fair representation as one “having its source in national labor statutes.” Price v. Southern Pacific Trans. Co., 586 F.2d 750, 753 (9th Cir.1978). As such, the court has applied state statutes of limitation for actions upon a liability created by statute. Id.; accord, Edwards v. Teamsters Local Union No. 36, 719 F.2d 1036, 1039 (9th Cir.1983), cert. den. 465 U.S. 1102, 104 S.Ct. 1599, 80 L.Ed.2d 130 (1984).

Under the rule of Price and Edwards, the appropriate period of limitation for actions brought in the District of Montana alleging breach of the duty of fair representation, prior to DelCostello, would have been two years. Section 27-2-21 l(l)(c), M.C.A. (1985), provides that “[wjithin two years is the period prescribed for the commencement of an action upon ... a liability created by statute.” Assuming the non-existence of DelCostello, plaintiffs in this case were within the two-year limitation period when they filed their action against the union defendants in March, 1985.

The critical issue is whether DelCostello should be applied retroactively to bar the plaintiffs’ action against the union. The Ninth Circuit Court of Appeals has consistently refused to give DelCostello retroactive effect. Edwards v. Teamsters Local Union No. 36, supra.; Barina v. Gulf Trading & Transportation Co., 726 F.2d 560 (9th Cir.1984); McNaughton v. Dillingham Corp., 722 F.2d 1459 (9th Cir.1984), cert. den., — U.S. -, 105 S.Ct. 291, 83 L.Ed.2d 227; Rodriquez v. Union Carbide Corp., 735 F.2d 365 (9th Cir.1984); Scoggins v. Boeing Co., Inc., 742 F.2d 1225 (9th Cir.1984). In two cases, where the effect was to lengthen the period of limitation, the court has applied DelCostello retroactively. Glover v. United Grocers, Inc., 746 F.2d 1380 (9th Cir.1984), cert. den., — U.S. -, 105 S.Ct. 2357, 86 L.Ed.2d 258; Aragon v. Federated Dept. Stores, 750 F.2d 1447 (9th Cir.1985). In its most recent decision, the court stated:

Until quite recently, we had repeatedly refused to give DelCostello retroactive effect. [Citations omitted.] However, we have now made it clear that DelCostello is to be given retroactive effect when doing so serves to lengthen rather than shorten the limitations period that would otherwise be applicable under state law. [Citations omitted.]

Peterson v. Kennedy, et al., 771 F.2d 1244, 1251 (9th Cir.1985). Thus, the express directives of the Ninth Circuit would appear to require this Court to refuse to apply DelCostello retroactively.

There is one significant distinction between this case and the cases cited above. In every case in which the court declined to apply DelCostello’s 6-month limitation period, the plaintiffs had filed their complaints before DelCostello was handed down. In this case, the initial complaints were filed nine months after DelCostello, and the second amended complaint naming the unions for the first time was filed a full 21 months after DelCostello. This presents circumstances which the Ninth Circuit Court has not confronted.

That Court has, however, decided an analogous case. In Scoggins v. Boeing Co., Inc., supra., 742 F.2d 1225, plaintiff filed suit against his employer and union, alleging claims similar to these. The court dismissed the plaintiffs claim against his employer under the authority of United Parcel Service, Inc. v. Mitchell, 451 U.S. 56, 101 S.Ct. 1559, 67 L.Ed.2d 732 (1981). The court stated that prior to Mitchell, the statute of limitations for hybrid Section 301 actions in Washington State was three years. In Mitchell, the Supreme Court held that a state limitation period for vacation of an arbitral award controlled the employee’s Section 301 action against his employer. (Under Washington law that period is three months.) DelCostello followed two years later, setting forth a six-month limitation period as to claims against both an employer and a union.

In Scoggins, the plaintiff filed his case eight months after Mitchell, 16 months after receiving notice of the union’s decision not to pursue his grievance, and 18 months before DelCostello. The court refused to apply DelCostello retroactively, but applied Mitchell to bar the plaintiff’s cause of action.

Although Scoggins was not aware of the shorter statute of limitations period when his cause of action accrued in August, 1980, Scoggins slept on his rights after the Mitchell decision. Unlike the plaintiff in Singer [v. Flying Tiger Line, Inc., 652 F.2d 1349 (9th Cir.1981)], who did not know the “correct” statute of limitations until several years after he filed his lawsuit, Scoggins knew the correct statute of limitations eight months before he filed his lawsuit. Unlike the plaintiff in Barina [v. Gulf Trading and Transp. Co., supra.], who quickly filed his lawsuit after the Court announced in Mitchell the shorter statute of limitations, Scoggins delayed filing his lawsuit until eight months after the Mitchell decision. It is not inequitable to hold Scoggins to the shorter statute of limitations period applicable under Mitchell.

Scoggins v. Boeing Co., Inc., 742 F.2d at 1228.

I conclude that the retroactivity doctrine should be applicable only to pending suits. This construction equates the positions of all litigants. There is no reason to extend the limitation period to a length- greater than six months beyond DelCostello for those plaintiffs whose claims arose prior to DelCostello. Once DelCostello was decided, plaintiffs knew what the appropriate limitation period was and no longer needed to rely on the dictum contained in Lumber Prod. Ind. Workers v. Champion, supra. Plaintiffs slept on their rights in failing to promptly file their action against the Union defendants once DelCostello was decided.

THEREFORE, IT IS HEREBY ORDERED that the motion of the Union defendants is GRANTED, and the complaint is DISMISSED with prejudice as to said defendants.

IT IS FURTHER ORDERED that plaintiffs’ motion to file a supplemental brief is DENIED.

       That Section provides in pertinent part that “no complaint shall issue based upon any unfair labor practice occurring more than six months prior to the filing of the charge with the Board and the service of a copy thereof upon the person against whom such charge is made.”


text:
    LaVonne Simac HOHN, Plaintiff, v. KAISER CEMENT CORPORATION, Defendant.
    No. CV 85-16-BU-CCL.
    United States District Court, D. Montana, Butte Division.
    Jan. 10, 1986.
    Charles A. Smith, Helena, Mont., for plaintiff.
    Thomas E. Hattersley, Gough, Shanahan, Johnson & Waterman, Helena, Mont., for defendant.
   MEMORANDUM AND ORDER

LOVELL, District Judge.

Plaintiff LaVonne Simac Hohn brought this diversity suit against her former employer for wrongful discharge. The complaint alleges state law causes of action for breach of the duty of good faith and fair dealing implicit in employment contracts and for intentional infliction of emotional distress. Defendant Kaiser Cement moves for dismissal, asserting that federal labor-contract law preempts plaintiff’s state law tort claims.

The Supreme Court recently reexamined the preemption doctrine in Allis-Chalmers v. Lueck, 471 U.S. -, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). Under the rule set forth in Allis-Chalmers, this case must be dismissed because resolution of plaintiff’s state law claims turns upon the interpretation of a collective bargaining agreement.

BACKGROUND

At all times relevant to this action, plaintiff was a member of Local 435 of the United Cement, Lime, Gypsum and Allied Workers International Union. During the period of plaintiff’s employment with defendant, she worked under a collective bargaining agreement negotiated between her union and her employer.

Plaintiff began working at Kaiser Cement’s Montana City plant in March 1980. She worked as a laborer for one week and then as a custodian for the next six months. At plaintiff’s request, she subsequently was reassigned as a laborer. On October 15, 1980, plaintiff sustained a back injury while at work, forcing her to discontinue working. In March 1981, a state workers’ compensation evaluation panel determined plaintiff could return to her job if she avoided heavy work. After defendant offered to place plaintiff on “light duty” status, she obtained a release from her personal physician for that type of work. Plaintiff performed light duty from May 18, 1981 until October 16, 1981. On that date, plaintiff’s supervisor directed her to shovel some loose cement into a wheelbarrow and to haul it away. Plaintiff responded she could not do so. Plaintiff was sent home and instructed to report to defendant’s industrial relations manager on October 19, 1981. On October 19, defendant discharged plaintiff, effective October 16, for refusing to perform work within her laborer classification.

Plaintiff’s union filed several grievances on her behalf — challenging her termination as unjust, seeking back pay and seeking a less demanding position. At the union’s request, plaintiff was reconsidered as an incapacitated employee. The union and defendant agreed plaintiff should be examined by a certain physician to determine whether she could perform the duties required for a different job. Plaintiff refused to submit to that medical examination. For this reason, defendant deemed plaintiff to have voluntarily severed her employment as of February 28, 1982.

The union determined that plaintiff had forfeited her job and pursued only the issue of back pay under the grievance procedure established by the collective bargaining agreement. The question of back pay ultimately was submitted to arbitration. Plaintiff’s termination was not arbitrated.

On January 23, 1985, plaintiff commenced this action in federal district court on the basis of diversity of citizenship. She alleges defendant breached its duty to deal fairly and in good faith with her under her employment contract by discharging her without cause. She further alleges such wrongful termination, in and of itself, constituted intentional infliction of emotional distress. Thus, plaintiff’s claim concerning emotional distress is substantially dependent on her claim for breach of the implied covenant of good faith and fair dealing.

Several sections of the collective bargaining agreement in question are relevant to the Court’s consideration of this matter. These sections are as follows: “[T]his agreement shall become effective and remain in full force ... from May 1, 1981, to and including April 30, 1984.” Article III, Section 3.1(a). “The Company reserves the right to discharge, suspend, or otherwise discipline an employee for good and legitimate reasons.” Article XI, Section 11.1. “Any employee who becomes incapacitated and, on the basis of competent medical opinion cannot perform the duties of his or her regular job, may ... move to any position within the bargaining unit that he or she should be capable of performing.” Article XII, Section 12.1 (emphasis added). “In the event that no satisfactory adjustment of the grievance can be made by the ... Company and the ... Union, then the matter may be referred by the Union to a Board of Arbitration.” Article XVI, Section 16.2 “It is understood that it shall be the function of the Board of Arbitration to make decisions relating to the alleged violations of the terms of this agreement.” Article XVI, Section 16.6

DISCUSSION

Defendant moves to dismiss the claims advanced against it, asserting these state tort claims are preempted by federal labor law, in particular by Section 301 of the Labor Management Relations Act. 29 U.S.C. § 185. Plaintiff responds by arguing her state law claims fall within a recognized exception to the preemption doctrine. Specifically, she contends her state law claims arise independent of any labor contract between defendant and herself.

The federal courts recognize an exception to the preemptive effect of Section 301 exists where the state cause of action at issue is premised on state law obligations independent of a labor contract. See, Allis-Chalmers v. Lueck, 471 U.S. -, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). The issue of whether the state torts alleged in this case are sufficiently independent of federal labor-contract law to avoid preemption is a question of federal law. Allis-Chalmers, 471 U.S. at -, 105 S.Ct. at 1912, 85 L.Ed.2d at 217.

In Allis-Chalmers, an employee brought an action against his employer, which was responsible for administration of a nonoccupational disability insurance plan pursuant to a collective bargaining agreement. The employee alleged bad faith in the handling of his insurance claim.

As set forth in Allis-Chalmers, the analysis to determine whether sufficient independence exists must focus on whether the state law tort action “confers non-negotiable state law rights on employers or employees independent of any right established by contract, or, instead, whether evaluation of the tort claim is inextricably intertwined with consideration of the terms of the labor contract.” 471 U.S. at-, 105 S.Ct. at 1912, 85 L.Ed.2d at 216. The Supreme Court found the state tort action at issue in Allis-Chalmers, the implied duty of good faith attendant employment contracts, derived from the contract and was defined by the contractual obligation of good faith. Any attempt to assess tort liability under those circumstances, therefore, “inevitably” would involve interpretation of the terms of the collective bargaining agreement. 471 U.S. at -, 105 S.Ct. at 1914, 85 L.Ed.2d at 219. The Court held that when resolution of a state law claim is substantially dependent upon an interpretation of a collective bargaining agreement, the claim must either be treated as a Section 301 claim or dismissed as preempted. 471 U.S. at -, 105 S.Ct. at 1916, 85 L.Ed.2d at 221.

The instant ease presents precisely such a situation as that presented in Allis-Chalmers. The Montana courts have found an “implied covenant of good faith and fair dealing” attendant in contracts of employment. Gates v. Life of Montana Insurance Co., — Mont. —, 668 P.2d 213 (1983) ; Dare v. Montana Petroleum Marketing Co., — Mont. —, 687 P.2d 1015 (1984) . Breach of this implied duty of good faith is a tort under state law. Gates, 668 P.2d at 215.

Plaintiff’s state tort claims are completely dependent upon resolution of questions of contract interpretation. The collective bargaining agreement provides defendant may discharge employees for good cause. Plaintiff’s refusal to submit to an examination by a physician selected by defendant and her union is inconsistent with the contract provision requiring that any determination an employee is incapacitated be based on competent medical opinion. The question of whether defendant dealt fairly and in good faith with plaintiff is inextricably intertwined with interpretation of the labor contract itself. As the Montana tort law regarding good faith purports to define the meaning of the contract relationship, the law is preempted in those labor contracts falling within the scope of Section 301 of the Labor Management Relations Act. Thus, plaintiff’s state law claim for breach of the implied covenant of good faith and fair dealing is preempted.

The Court’s analysis of the state law bad faith claim also is dispositive of the tort claim regarding intentional infliction of emotional distress. The complaint contains no allegations of post-termination tortious conduct. Rather, plaintiff merely alleges that her wrongful discharge, in and of itself, constituted intentional infliction of emotional distress. As stated above, the question of whether plaintiff’s termination was wrongful is inextricably connected with interpretation of the collective bargaining agreement.

Plaintiff’s reliance on Garibaldi v. Lucky Food Stores, Inc., 726 F.2d 1367 (9th Cir.1984), cert. denied, — U.S. -, 105 S.Ct. 2319, 85 L.Ed.2d 839 (1985), is misplaced. In Garibaldi, the Ninth Circuit concluded that a wrongful termination claim was not preempted by federal labor law because it was based on a violation of state public policy. Garibaldi claimed he had been discharged in retaliation for reporting an illegal shipment of adulterated milk to health officials after his supervisors ordered him to deliver it. The Court of Appeals reasoned that a state claim for wrongful discharge poses no threat to the collective bargaining process where it furthers a state interest in protecting the general public transcending the employment relationship. Garibaldi, 726 F.2d at 1374.

Plaintiff herein does not allege that her termination interferes with any state public policy independent of the employment relationship. Rather, she argues her discharge violates the state’s important public policy in protecting its citizens from an employer’s bad faith conduct in making decisions relating to the employment relationship. Were plaintiff correct, nearly all wrongful discharge actions would fall within an exception to the preemption doctrine, a result which the Supreme Court indicated that it did not embrace in Allis-Chalmers, 471 U.S. at -, 105 S.Ct. at 1915-16, 85 L.Ed.2d at 220-21.

For these reasons,

IT IS ORDERED that defendant’s motion to dismiss the above-entitled action, on the ground plaintiff's claims are preempted by federal labor law, is GRANTED.


author: YOUNG, District Judge.

text:
    John A. NOTINI, and Winifred K. Notini, Plaintiffs, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 84-3205-Y.
    United States District Court, D. Massachusetts.
    Jan. 10, 1986.
    George P. Jeffreys, Lowell, Mass., for plaintiffs.
    Frederick E. Dashiell, Asst. U.S. Atty., for defendant.
   MEMORANDUM AND ORDER

YOUNG, District Judge.

The plaintiffs, John Notini (“Notini”) and Winifred Notini, brought this action to obtain judicial review of a final decision of the Secretary of Health and Human Services (the “Secretary”) denying them Social Security Retirement benefits for the years 1979, 1980, and 1981. The Secretary found that John Notini had “excess earnings” for these years. The Notinis argue that this decision is not supported by substantial evidence. As there are no disputed issues of material fact, both sides have moved for summary judgment. Fed.R.Civ.P. 56.

I.

Albert H. Notini & Sons, Inc. (the “Company”) was founded by Notini’s grandfather. The Company deals in supplying tobacco and confectionary products to retailers. The business employs over 150 people. Notini, who is now 73 years old, has worked for the Company almost 60 years. Prior to 1979, Notini was the Company’s chief executive officer, and under his guidance the Company prospered, reporting an average of $70 million in gross revenues during the years in question here. (Tr. 123) The Company has 650 shares of common stock outstanding. Notini owns 220 shares, while his brothers Arthur and Robert own 215 shares each. (Tr. 21) The three brothers comprise the Company’s board of directors. (Tr. 21)

For most of his working life Notini has been an extremely hard working man. Pri- or to 1979, Notini regularly worked seven day weeks, averaging 70 to 80 hours per week. (Tr. 34) As chief executive officer and plurality stockholder, Notini managed and supervised virtually every aspect of the Company’s business. Towards the end of 1976, as his health began to wane, Notini first contemplated retirement. Knowing that he would need to teach someone “the ropes” of the business, Notini hired Richard Flanagan as comptroller of the Company in January, 1977. (Tr. 23) By 1979, Notini apparently felt that Flanagan and his brothers were capable of running the Company, so he elected to retire.

On the advice of his doctors and family, Notini decided to ease the transition to retirement by working part-time. (Tr. 121) Beginning in 1979, Notini worked no more than 12 hours a week, although he was sometimes at the business premises as much as 15 to 20 hours a week. (Tr. 37) He had no specific schedule, nor any specific duties. (Tr. 121) Almost all of the work he had previously done as chief executive officer was attended to by Mr. Flanagan or Arthur Notini. According to Notini, his activities while at work mostly involved opening the mail, socializing, running to the bank and occasionally talking to customers. In his words, he “puttered around.” (Tr. 121) Although he attended two or three directors meetings a year, Notini did not render any significant managerial contribution to the Company, nor did he control the day to day decisions of the Company. (Tr. 121-123) For his efforts the Company paid Notini wages of $4,410 in 1979, $4,960 in 1980, and $5,500 in 1981. In May, 1982, the board voted Notini a $100,000 bonus. The corporate minutes and Notini’s testimony indicate that the reason for the bonus was that 1981 had been a very good year for the Company. (Tr. 35, 97)

Notini first applied for Retirement Insurance benefits in November, 1976. In his application he stated that he had earned $163,000 during 1975. Beginning in February, 1977, the month Notini became eligible for benefits, suspensions were imposed on his and Winifred Notini’s benefits because of his estimated earnings. Subsequently, benefit payments were made to Notini and his wife, effective January, 1979, based upon Notini’s estimate that he would earn no more than $4,500 for that year. In May, 1982, the Secretary required Notini to file annual reports of earnings for the years 1979-1981 inclusive. In November, 1982, the Secretary notified Notini that the services he rendered the Company were worth more than the wages paid, and that his benefits for those years would be based on estimated earnings of $37,925. (Tr. 129) Mr. Notini has exhausted all administrative remedies in attempting to appeal this finding of excess earnings. (Tr. 2, 4, 129) He thus brings this appeal in the district court pursuant to 42 U.S.C. § 405(g).

II.

Section 203(b) of The Social Security Act, 42 U.S.C. § 403(b), empowers the Secretary to impose deductions against an individual’s social security benefits under certain circumstances. Deductions are authorized “on the basis of such individual’s wages and self-employment income ... if ... he is charged with excess earnings under the provisions of subsection (f)____” Subsection (f), as was applicable to the years 1979, 1980 and 1981, defined excess earnings as 50% of the amount in excess of $4,500, $5,000, and $5,500 respectively. In addition, subsection (f)(4) provides that an individual will be presumed “to have rendered services for [excess wages] ... until it is shown to the satisfaction of the Secretary that such individual did not render such services ... for more than such amount.” 42 U.S.C. § 403(f)(4). The Secretary’s regulations require an applicant to provide “convincing” evidence that he or she is entitled to receive payment of benefits. 20 CFR § 404.708.

III.

The Social Security Act directs this Court to affirm the decision of the Secretary so long as it is supported by “substantial evidence.” 42 U.S.C. § 405(g). However, even under this limited standard of review it is the duty of the Court to ensure that the Secretary has fairly characterized the evidence and exercised her discretion in accordance with the law. In this ease, Notini argues that the Secretary’s decision must be reversed. Viewing the record as a whole, the Court agrees, at least in part.

The Administrative Law Judge’s reasoning is summarized in the following excerpt from his opinion:

[T]he claimant’s part-time work activity in 1979, 1980 and 1981 was substantial and was of significant value to the corporation. Consequently, the value of the services the claimant rendered to the corporation during those years was not accurately reflected in the wages reportedly paid to the claimant for 1979,1980 and 1981 ...

(Tr. 10) It is important to note that the Administrative Law Judge did not find that Notini’s testimony was not credible, or that there was some hidden scheme to secretly funnel payments to Notini. As the quoted language makes clear, he simply found that Notini was underpaid. The question then is whether the statute authorizes deductions under these circumstances.

The Secretary argues that she has the power to “ignore the form of a business arrangement and consider the substance of the arrangement.” Weisenfeld v. Richardson, 463 F.2d 670, 672 (3rd Cir.1972); Ludeking v. Finch, 421 F.2d 499, 502 (8th Cir.1970). True as that proposition may be, all the cases cited by the Secretary involve judicial review of the Secretary’s decision to recharacterize or reallocate monies actually paid to a beneficiary or his family. None of these cases support the proposition that undistributed corporate profits may be redistributed by the Secretary. Instead, to the extent that there is a rule at all it appears to be that “where corporate profits remain undistributed and are not available ‘at any time’ for the personal use of the applicant, the Secretary has no authority to allocate any portion of the funds to the applicant.” Letz v. Weinberger, 401 F.Supp. 598, 602 (D.Colo.1975). This Court need not go so far as to declare a blanket prohibition against reallocation of undistributed corporate earnings. In this case it is enough to note that there is insufficient evidence to warrant such a reallocation under any standard. The record discloses that no corporate distributions were made, in any form, during the entire period covered (through 1984). Thus, there was no plan to “hide” Notini’s salary in dividends until after he turned age 70. Likewise, the record does not suggest that the capitalized earnings of the company were unusually high during 1979-1981. Finally, there is no evidence that the value of Notini’s stock was inordinately affected by his failure to draw a full salary. Therefore, the Court rules that the Secretary’s decision to allocate undistributed profits to Notini on the grounds that he was “underpaid” was not in accordance with law and was an abuse of discretion.

The Secretary next argues that the $100,000 bonus paid Notini in 1982 actually represents compensation for the years 1979-1981. As to 1979 and 1980, there is not substantial evidence to support this theory. The Secretary reads too much into the fact that Notini’s salary was set at the maximum allowed by the statute. Absent a showing of fraud, “an applicant for retirement benefits may arrange his income for the avowed purpose of qualifying for such benefits.” Bryan v. Mathews, 427 F.Supp. 1263, 1268 (D.D.C.1977) Notini has provided “convincing” evidence that he had no excess earnings in 1979 and 1980. The analysis for 1981 stands on a different footing, however. Although Notini has suggested that he was given the bonus because of his 50 years with the Company, the weight of the evidence, including testimony by Notini himself, indicates that the bonus was prompted by the Company’s success in 1981. Significantly, the Company reported Notini’s bonus as part of his 1981 salary on its corporate tax return. (Tr. 87) Moreover, the bonuses to Notini and his brothers were not granted in proportion to their stock holdings in the Company. Thus, substantial evidence supported characterization of any part of the $100,000 bonus as 1981 compensation. Although the Secretary reached her 1981 income figure along a slightly different path, the Court finds the differences insignificant and rules that there is substantial evidence to support the Secretary’s finding of excess earnings in 1981.

Accordingly, the Secretary’s determination of excess earnings is REVERSED as to 1979 and 1980, and AFFIRMED as to 1981. The case is Remanded to the Secretary to calculate and pay Mr. and Mrs. Notini’s benefits in accordance with this opinion.

      . The Secretary arrived at this figure by dividing Notini’s 1978 income of $151,700 by 25%.

      . There is no excess earnings deduction for beneficiaries over age 70. Thus, Notini has been entitled to full benefits (subject, the Court assumes, to the alleged overpayment) since January, 1983.


author: MAHON, District Judge.

text:
    BROWNING CORPORATION INTERNATIONAL v. Doyce LEE, Commissioner of Insurance for the State of Texas (Successor to Tom Bond and E.J. Voorhis, former Commissioners of Insurance), and James P. Odiorne, Liquidator, (Succesor to Anthony G. Harris, former Liquidator.)
    Civ. A. No. 4-85-472-E.
    United States District Court, N.D. Texas, Fort Worth Division.
    Jan. 13, 1986.

      Sterling W. Steves, Steves, Leonard & Jones, Fort Worth, Tex., for plaintiff.
    Aliene D. Evans, Asst. Atty. Gen., Ins., Banking & Securities Div., Austin, Tex., Robert R. Bodoin, McLean Sanders Price Head & Ellis, Fort Worth, Tex., for defendants.
   MEMORANDUM OPINION AND ORDER

MAHON, District Judge.

Before the Court is Defendants Doyce Lee, Commissioner of Insurance for the State of Texas and James T. Odiorne, Liquidator’s motion to dismiss for failure to state a claim and for lack of jurisdiction to which the plaintiff has responded. A hearing was held on the motion on January 2, 1986. After carefully considering the arguments of counsel, the briefs filed, the record and the applicable law, the Court makes the following determination.

The suit was filed on July 26, 1985 and is the third in a series of related suits involving the Ministers’ Benefit Trust (“MBT”), an entity established in 1978 pursuant to a trust agreement by employer-churches and church schools to provide certain benefits to its eligible employees. Plaintiff is a third party administrator of the trust. In this suit, plaintiff seeks (1) a declaratory judgment that the MBT is an employee benefit plan under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”); and (2) an injunction against Defendant Odiorne, enjoining him from administering the affairs of the MBT and from prosecuting the claims now pending before the 200th Judicial District Court, Travis County, Texas.

The first suit was brought in 1980 by the Attorney General of Texas against the MBT, its trustee and the members of its Benefit Committee, alleging that the MBT was engaged in the insurance business in Texas without complying with the rules and regulations of the State Insurance Board. The MBT was duly served but failed to answer and a default judgment was entered against it. The other parties agreed to the rendition of a judgment finding the law and facts to be as alleged by the State. On January 5, 1981, a “Consent Permanent Injunction and Order Appointing Permanent Receiver” was filed declaring that the MBT be permanently enjoined from conducting insurance or any other business; that the MBT was insolvent and unable to remedy its insolvency; and that it was necessary to appoint the liquidator for the State Board of Insurance as receiver of the MBT pursuant to Tex.Ins.Code Ann. art. 21.28 (Vernon’s 1981). The MBT has never attempted, either directly or by collateral attack, to set aside this judgment.

The second suit was filed on July 28, 1981 by Anthony G. Harris, after being appointed permanent receiver of the MBT, against Bob Browning, Plaintiff Browning Corporation International, the trustee of the MBT and the members of the Benefit Committee of the MBT. After Anthony Harris resigned as Liquidator, Defendant Odiorne replaced him as plaintiff in this lawsuit. The complaint alleges mismanagement, preferential payment of claims and the charging of grossly excessive fees. This case is presently set for trial in the 200th Judicial District Court for January 27, 1986.

In the present suit, plaintiff seeks a declaration that the MBT is an employee benefit plan governed by ERISA. Because ER-ISA displaced applicable state law in the regulation of private employee benefit plans, if the MBT is such a plan, then it is governed by ERISA and not by Texas insurance law. As such, plaintiff asserts that the state district court had no jurisdiction to appoint a receiver for the MBT and presently has no jurisdiction to determine the receiver’s claims against representatives and third-party administrators of the MBT.

In their motion to dismiss, defendants claim that (1) the complaint fails to state a claim because plaintiff has no standing to assert the rights of the MBT and (2) this Court lacks subject matter jurisdiction because both the U.S. Department of Labor and the state district court have already determined that the MBT is an insurance company and not an employee benefit plan within the meaning of ERISA. In the event this Court does have jurisdiction to hear plaintiff’s claims, defendants argue that such claims should be raised as a defense in the state court proceeding and request this Court to decline to exercise its jurisdiction. In response, plaintiff argues that federal courts have exclusive jurisdiction to determine whether an employee benefit plan is subject to ERISA.

Not only has plaintiff been unable to cite and the Court unable to find any case authority for plaintiff’s proposition that federal courts have exclusive jurisdiction over whether a particular plan is covered by ERISA but in fact this determination has been made in both federal and state fora. Compare Bell v. Employee Security Benefit Ass’n, 437 F.Supp. 382 (D.Kan.1977) with Felts v. Graphic Arts Employee Benefit Trust, 680 S.W.2d 891 (Tex.Civ.App. — Houston 1984, no writ). Congress has granted state courts concurrent jurisdiction with federal courts in actions brought by a participant or beneficiary of a plan governed by ERISA to recover benefits or enforce his rights under the plan. See 29 U.S.C. §§ 1132(a)(1)(B), 1132(e)(1). Although this is not such an action, Congress recognized state courts as competent to resolve certain claims arising under ERISA. Furthermore, in order for state courts to be able to effectively enforce their insurance laws over companies allegedly engaged in the business of insurance, they must be able to determine whether a particular entity claiming to be an employee benefit plan under ERISA is such a plan. Accordingly, the Court holds that state courts as well as federal courts are of competent jurisdiction to determine whether a particular plan is governed by ERISA and therefore not by state law.

The Court further finds that it is in the best interests of all concerned that this Court decline jurisdiction over this matter and permit the 200th Judicial District Court in Travis County, Texas to adjudicate plaintiff’s claims. First, plaintiff’s claim that the MBT is an employee benefit plan within the meaning of ERISA should have been raised as a defense in the pending state court proceeding. That case was filed over six and one-half months after the consent judgment and order appointing permanent receiver was filed in the previous state court proceeding and after the U.S. Department of Labor concluded that the MBT did not constitute an employee benefit plan under ERISA. Second, plaintiff’s claims that the appointment of a receiver as well as the actions taken by the receiver are void should likewise have been raised in the pending state court proceeding as a counterclaim. Instead of filing a counterclaim in that suit, plaintiff elected to wait more than four and one-half years after the receiver was appointed to challenge his appointment. The MBT, its trustee and the members of its Benefit Committee all consented to the appointment of a permanent receiver. Third, the pending state court proceeding is set for trial on the merits for January 27, 1986. The present case does not, at this time, have a trial setting and the earliest possible setting it could be given is the early part of January, 1987. To stay the state court proceeding on the eve of trial so that this Court may hopefully in a year from now, make a determination that the state court is equally as competent to make would not only severely prejudice the other parties to that lawsuit, but also create undue delay for what is already an old case.

Finally, the Court finds that plaintiff will suffer no prejudice by having his claims adjudicated in state court. As stated above, plaintiffs claims in this suit can and should have been asserted as defenses and counterclaims in the state court proceeding. Plaintiffs eleventh hour request to stay the state court proceeding until this Court determines whether the MBT is an ERISA plan can be seen as a last ditch effort on the part of plaintiff to thwart a final trial on the merits in the state court proceeding, sufficient to warrant the imposition of sanctions. The Court, however, will give plaintiff the benefit of the doubt and not impose sanctions for the filing of this suit. Nevertheless, in light of all the surrounding circumstances, the Court finds it to be in the best interests of justice to decline from exercising jurisdiction over plaintiffs claims so that they can be more expeditiously adjudicated in state court.

Accordingly, for the aforementioned reasons, the Court hereby ORDERS that defendants’ motion to dismiss be GRANTED and that this case be DISMISSED.


author: ALLEN SHARP, Chief Judge.

text:
    Michael D. CRAIG, Plaintiff, v. Leroy WITUCKI, Michael Samp, John Doe I and John Doe II, Defendants.
    No. S 85-182.
    United States District Court, N.D. Indiana, South Bend Division.
    Jan. 13, 1986.
    Douglas D. Seely, Jr., Mishawaka, Ind., for plaintiff.
    John P. Gourley, Wilfred J. Mayette, James J. Olson, Mishawaka, Ind., for defendants.
   ORDER

ALLEN SHARP, Chief Judge.

This case was filed pursuant to 42 U.S.C. § 1983 for alleged deprivation of plaintiff’s constitutional rights. In his complaint plaintiff alleges that each defendant is an officer on the Police Department of the City of Mishawaka and while acting in their official capacity assaulted plaintiff on or about March 19, 1983 and violated his rights to due process and equal protection as guaranteed by the Fourteenth Amendment of the Constitution of the United States. The defendants filed a motion for summary judgment on November 1, 1985 to which no response has been filed as required by Rule 7 (b) of the Rules of the United States District Court for the Northern District of Indiana. Accordingly, this motion is subject to summary ruling. This court has been compelled to do extensive independent research on the question here presented. The sole issue raised in defendants’ motion for summary judgment is whether this action is barred for failure to file a notice of claim as required by the Indiana Tort Claims Act, I.C. § 3Jj.-Jj-16.5-l et seq.

Section 34-4-16.5-7 of the Indiana Code provides that a claim against a political subdivision is barred unless notice is filed within 180 days after the loss occurs. The Supreme Court of Indiana recently held that the notice requirement of I.C. § 34-4-16.5-7 must be complied with if a municipality’s employees acting in the scope of their employment are named as defendants, even though the municipality itself is not a named defendant, because of the provisions contained in I.C. § 34-4-16.5-5 . Poole v. Clase, 476 N.E.2d 828 (Ind.1985). In this case, the named defendants were allegedly acting in the scope of their employment when the alleged assault occurred. Accordingly, the Indiana Tort Claims Act would have required plaintiff to serve the requisite notice on the City of Mishawaka if the plaintiff’s claim of assault was based upon Indiana law. Plaintiff admits this was not done. This case, however, is not based on Indiana law but rather is brought pursuant to 42 U.S.C. § 1983 for alleged violations of plaintiff’s constitutional rights. The issue therefore is whether the Indiana Tort Claims Act should be applied to Section 1983 actions.

The defendants maintain that the Supreme Court of the United States in Wilson v. Garcia, — U.S. -, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985) held that all Section 1983 actions are to be considered “tort” actions and that the Indiana Tort Claims Act should therefore apply. The court finds this argument unpersuasive for several reasons. First, in Wilson v. Garcia, the issue before the Supreme Court was what statute of limitations should be applied to § 1983 actions since none was contained in the federal statute. Upon reviewing the alternatives, the Court found that § 1983 provided a remedy for injuries to personal rights and therefore held that § 1983 claims are best characterized as personal injury tort actions. Characterizing § 1983 actions as “tort actions” for purposes of determining an appropriate statute of limitations is one thing. Saying that the Supreme Court intended that any state statute applying to “tort actions” would apply to § 1983 actions just because they are characterized as such for one purpose is quite another. Section 1983 was intended to provide a federal remedy, independently enforceable whether or not it duplicates a parallel state remedy. 105 S.Ct. at 1949; Monroe v. Pape, 365 U.S. 167, 173, 81 S.Ct. 473, 476, 5 L.Ed.2d 492 (1961). Congress did not impose any procedural prerequisite for filing a section 1983 action and to impose state procedural require-merits on a § 1983 claim would diminish the board remedial purpose intended by Congress.

Second, this plaintiff alleges infringement of his constitutional rights and brought his claim under § 1983 which provides for a federal remedy. This ease is in a federal forum under federal question jurisdiction. Accordingly, the action is governed by federal law and its benefits cannot be denied by state statutes, common law rules or decisional law. See, e.g., Beauregard v. Wingard, 230 F.Supp. 167 (D.Cal.1964).

Finally, the only other case that this court could find that dealt with the issue of a state law required notice when a plaintiff alleges deprivation of constitutional rights held that the failure to give notice could not bar the action. Lively v. Cullinane, 451 F.Supp. 999, 1000 (D.D.C.1976). This court finds such holding appropriate under such circumstances.

Accordingly, defendants’ motion for summary judgment is DENIED. Failure to file notice as required by the Indiana Tort Claims Act cannot bar an action under 42 U.S.C. § 1983. SO ORDERED.

      . Section 34-4-16.5-5 provides as follows:
      "(a) A judgment rendered with respect to or a settlement made by a governmental entity bars an action by the claimant against an employee whose conduct gave rise to the claim resulting in that judgment or settlement. (b) Subject to the provisions of IC 34-4-16.5-4, IC 34-4-16.5-13, IC 34-4-16.5-14, and IC 34-4-16.5-15, the governmental entity shall pay any judgment, compromise, or settlement of a claim or suit against an employee when the act or omission causing the loss is within the scope of his employment, regardless of whether the employee can or cannot be held personally liable for the loss and when the governor, in the case of a claim or suit against a state employee, or the governing body of the political subdivision, in the case of a claim or suit against an employee of a political subdivision, determines that paying the judgment, compromise, or settlement is in the best interest of the governmental entity. (C) The governmental entity shall provide counsel for and pay all costs and fees incurred by or on behalf of an employee in defense of a claim or suit for a loss occurring because of acts or omissions within the scope of his employee can or cannot be held personally liable for the loss.

      (d) Nothing contained in this chapter shall be construed as a waiver of the eleventh amendment to the Constitution of the United States, as consent by the state of Indiana or its employees to be sued in any federal court, or as consent to be sued in any state court beyond the boundaries of the state of Indiana.”