source: Caselaw Access Project

author: BECHTLE, District Judge.

license: Public Domain

text:
    Donna M. HOUGHTON v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY.
    Civ. A. No. 84-4899.
    United States District Court, E.D. Pennsylvania.
    July 30, 1985.

      Thomas Branca, Norristown, Pa., for plaintiff.
    Albert S. Shaw, Jr., Philadelphia, Pa., for defendant.
   MEMORANDUM AND ORDER

BECHTLE, District Judge.

This case involves a claim by plaintiff that defendant caused to be prepared and received a credit report on plaintiff in violation of the disclosure requirements of the Fair Credit Reporting Act (“FCRA” or “the Act”) and other of plaintiffs constitutional and common law rights. Prior to trial both parties moved for summary judgment on all liability issues. Following argument, the court granted plaintiff’s motion seeking to hold the Fair Credit Reporting Act applicable to the credit report at issue and found defendant had violated the Act’s disclosure requirements. Conversely, defendant’s motion for summary judgment was granted as to all of plaintiff’s remaining claims. All liability issues having been decided, the case was tried before the court without a jury solely on the issue of damages. The court found in favor of plaintiff and awarded compensatory and punitive damages totaling $7,000. Plaintiff subsequently petitioned for attorney’s fees and costs.

The following supplements the court’s bench rulings administered at both the summary judgment hearing and at the bench trial, and rules upon plaintiff’s petition for attorney’s fees and costs.

I. CROSS-MOTIONS FOR SUMMARY JUDGMENT

A. Facts

Summary judgment is proper only when the record clearly establishes that no genuine issue of material fact remains to be tried and that the moving party is entitled to judgment as a matter of law. Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 467, 82 S.Ct. 486, 488, 7 L.Ed.2d 458 (1962); Ely v. Hall’s Motor Transit Co., 590 F.2d 62, 66 (3d Cir.1978). Any doubt respecting the existence of a material fact must be resolved against the moving party, and all inferences must be viewed in the light most favorable to the party opposing summary judgment. Adickes v. S.H. Kress & Company, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970).

Based on these standards, the undisputed facts in this case are as follows:

On November 19, 1977, plaintiff Donna M. Houghton (“plaintiff”) was involved in an automobile collision with Bernice P. Rosenfeld, an insured of defendant New Jersey Manufacturers Insurance Company (“defendant”). On March 16, 1979, plaintiff filed suit against Rosenfeld for injuries resulting from the November 19, 1977 collision, including a claim for lost earnings.

On May 14, 1979, shortly after the case was filed, defendant requested that Equifax Services, Inc. (“Equifax”) conduct an investigation of plaintiff and prepare a written report. Defendant specifically requested that the investigation include: (1) “Activities since date of accident” (2) “Cover fully past history (illness, injuries, hospitalization, etc.)” and (3) “General financial information (income, property, etc.).” Neither Equifax nor defendant notified plaintiff that a report had been requested.

On May 22, 1979, Equifax submitted to defendant a three-page written report (“Equifax Report” or “the Report”). The Report included interviews with three of plaintiff’s neighbors, reference to a previous report regarding a claim made by plaintiff’s mother-in-law, reference to a check made through Montgomery County records, a check for any previous reports on plaintiff, and a check made through existing credit files prepared on plaintiff. A copy of the report was forwarded by defendant to Frederick Fletcher, Esquire, who was retained by defendant to represent its insured Rosenfeld and in November, 1979, the case was settled.

Some four years later, on October 21, 1983, plaintiff first learned of the existence of the 1979 Equifax Report. Plaintiff made written requests to defendant demanding that defendant disclose the substance of the Report to her, which defendant repeatedly refused to do.

On October 18, 1984, plaintiff filed the instant action against defendant alleging: violations of the Fair Credit Reporting Act (“FCRA” or “the Act”), 15 U.S.C. § 1681 et seq. (1982); violation of her right to privacy under the United States and Pennsylvania Constitutions; invasion of privacy under Pennsylvania common law; and intentional infliction of emotional distress.

B. Discussion

1. Plaintiffs Claims Under the FCRA

a. Applicability of the FCRA

Defendant does not deny that it requested and received the Equifax Report without giving notice to plaintiff, nor that it refused to disclose the substance of the Report to plaintiff upon her several requests to do so. Rather, defendant contends that the Equifax Report is not a “consumer report” or “investigative consumer report” within the meaning of the FCRA and therefore the Act does not apply to defendant’s conduct. The court disagrees.

At the heart of the dispute is whether the Equifax Report is a “consumer report” under the Act. 15 U.S.C. § 1681a(d) defines “consumer report” as:

any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, characteristics or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for (1) credit insurance to be used primarily for personal, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under section 1681b of this title.

Defendant contends that under this definition, if the requester of the report does not use or intend to use the report for one of the purposes enumerated in § 1681a(d) then it is not a consumer report. Since it requested the Equifax Report for the purpose of investigating the validity of plaintiff’s injuries allegedly sustained in the November 19, 1977 accident, and not for one of the purposes listed in § 1681a(d), defendant argues that, by definition, the Equifax Report cannot be a consumer report. This contention, however, is based on the mistaken premise that a “consumer report” determination is governed entirely by the purpose for which the information was requested.

The critical phrase here in the definition of “consumer report” is the requirement that the information must be “used or expected to be used or collected in whole or in part ” (emphasis added) for one of the definition’s enumerated transactions. Under this definition, the court’s focus of inquiry is on the purpose for which the credit reporting agency originally collected the information, (for only it “collects” the information), and not, as defendant contends, on the purpose for which it was released. If the information was collected “in whole or in part” for one of the purposes listed in 1681a(d) or 1681(b), regardless of its ultimate use, it is a consumer report. See Heath v. Credit Bureau of Sheridan, Inc., 618 F.2d 693, 696 (10th Cir.1980); Boothe v. TRW Credit Data, 523 F.Supp. 631, 634 (S.D.N.Y.1981).

Defendant’s interpretation of § 1681a(d) was specifically rejected by the court in Boothe, where the court stated:

Defendants would have this court hold that the release of a consumer report to a third party for a purpose not permitted by the Act converts the report into one outside the scope of the Act. Such a holding would render section 1681b, which restricts the release of consumer reports to certain specified circumstances, totally ineffective. The Act applies when the information in question was collected for one of the purposes provided in the Act, and it requires that the information be made available to third parties only for those purposes.

523 F.Supp. at 634. In a later opinion, the court concluded:

An examination of the report issued to plaintiff upon his request ... leads the court to conclude that the information collected by TRW was “expected to be used or collected in whole or in part” for ... credit purposes____ The information in the TRW files included personal and credit information about plaintiff and his wife ... Thus, although TRW may have issued the report ... for reasons not related to credit, the report is a consumer report.

Boothe v. TRW Credit Data, 557 F.Supp. 66, 70 (S.D.N.Y.1982).

In the present case, had the Equifax Report contained only information obtained through interviewing plaintiff’s neighbors and checking into public court records, defendant’s position that the Report is not a consumer report would be persuasive. However, Equifax also obtained information from plaintiff’s credit files—files in existence prior to the request and preparation of the Equifax Report. The consumer reporting agency which originally collected this information, did so, at least “in part”, for the purpose of determining plaintiff’s eligibility for credit or insurance or for employment purposes or for one of the purposes listed in § 1681b. The Act was intended to apply to the release of exactly this type of information. Once a consumer reporting agency collects credit information for one of the purposes listed in 1681a(d) or 1681b, the release of such information, for any reason, creates a consumer report requiring satisfaction of the Act’s disclosure requirements. Heath, 618 F.2d at 696; Boothe, 523 F.Supp. at 634.

Accordingly, the court finds that the Equifax Report was (1) a written communication of information (2) by a consumer reporting agency (Equifax) (3) bearing on plaintiffs (a consumer) credit worthiness, credit standing or credit capacity (4) which was expected to be used or collected at least in part for the purpose of serving as a factor in establishing plaintiffs eligibility for credit or insurance, or for employment, or one of the purposes authorized under § 1681b. As such it is a consumer report under the FCRA.

Even if the credit information was originally collected for the purpose of investigating plaintiffs allegations in her civil suit against defendant's insured, the court nevertheless finds that the Report is a consumer report because it fits squarely within the “business transaction” purpose defined in § 1681b(3)(E).

The Equifax Report, taken as a whole, was prepared by Equifax “in connection with a business transaction” involving defendant, defendant’s insured, and plaintiff, as a result of a business agreement between those parties. Defendant bound itself to a contract for insurance where it agreed, for a premium, to provide its insured a legal defense in court proceedings and certain coverages in respect to other parties, such as plaintiff, who may during the term of the contract make claims under the precise conditions spelled out in that insurance contract. Not all litigation matters, of course, would fall under the “business transaction” purpose merely because persons or issues involving business and commerce are present. For example, an investigation by one spouse against another in the midst of an ongoing divorce action would not amount to a “business transaction.” In fact, the court cannot envision any litigation matters involving purely social, political, or religious issues falling within the parameters of § 1681b(3)(E). Where, as here, however, the party in question has entered into a lawful contractual engagement, that has at its very core the clear prospect and expectation that civil litigation will result and that party for a price pledges its legal and financial resources to the defense of the insured in court, if necessary, the resultant defense of the claim, in court or out, is plainly a “business transaction.” If the report was developed to fulfill part of the obligation to defend, it is consequently for a business transaction purpose.

Accordingly, the court finds that defendant, having a legitimate business need for the information, obtained the Equifax Report in connection with a business transaction involving a consumer, and therefore, pursuant to § 1681a(d) and § 1681b(3)(E), is a consumer report. See Beresh v. Retail Credit Co., Inc., 358 F.Supp. 260, 262 (C.D.Cal.1973).

b. Violations of the FCRA

Plaintiff alleges violations of §§ 1681d(a) and (b) and § 1681q.

Section 1681d(a) provides, in pertinent part:

Disclosure of fact of preparation
(a) A person may not procure or cause to be prepared an investigation consumer report on any consumer unless—
(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics, and mode of living, whichever are applicable, may be made, and such disclosure (A) is made in writing, mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and (B) includes a statement informing the consumer of his right to request additional disclosures under subsection
(b) • • •

It is undisputed that defendant (a person) caused an investigative consumer report to be prepared concerning plaintiff (a consumer) and that defendant failed to disclose the fact of the report’s preparation to plaintiff. As a matter of law, the court finds that defendant violated § 1681d(a) of the Act.

Section 1681(d) provides:

Disclosure on request of nature and scope of investigation
(b) Any person who procures or causes to be prepared an investigative consumer report on any consumer shall, upon request made by the consumer within a reasonable period of time after the receipt by him of the disclosure required by subsection (a)(1) of this section, shall make a complete and accurate disclosure of the nature and scope of the investigation requested. This disclosure shall be made in a writing mailed, or otherwise delivered, to the consumer not later than five days after the date on which the request for such disclosure was received from the consumer or such report was first requested, whichever is the later.

It is undisputed that upon discovering the existence of the Equifax Report, and within a reasonable time thereafter, plaintiff made written requests to defendant for disclosure of the contents of the Report, which defendant repeatedly failed to do. As a matter of law, therefore, the court finds that defendant violated § 1681d(b) of the Act.

Section 1681q provides:

Obtaining information under false pretenses
Any person who knowingly and willfully obtains information on a consumer from a consumer reporting agency under false pretenses shall be fined not more than $5,000 or imprisoned not more than one year, or both.

There are no facts before the court which evidence plaintiffs allegation that defendant obtained the Equifax Report under false pretenses. Defendant, in fact, disclosed to Equifax on the report request form that the information was to be used to investigate an insurance claim. As a matter of law, therefore, the court finds that defendant did not violate § 1681q.

2. Plaintiffs Constitutional Invasion of Privacy Claim

a. Claim Under United States Constitution

Plaintiff alleges that defendant’s conduct violated her right to privacy under the United States Constitution. In Elliott v. Bloor, 425 F.Supp. 1140 (E.D.Pa.1976) (Bechtle, J.), this court noted that in order to maintain an action against a private party for federal constitutional violations, it is necessary to establish that the defendant’s allegedly unconstitutional acts constituted “state action.” Id. at 1144.

This state action requirement may be satisfied if either of two conditions is met. First, state action may be found where “there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself.” Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351, 95 S.Ct. 449, 453, 42 L.Ed.2d 477 (1974); Hollenbaugh v. Carnegie Free Library, 545 F.2d 382, 383 (3d Cir.1976); Broderick v. Associated Hospital Service, 536 F.2d 1, 4 (3d Cir.1976). Second, state action is present where the state and the defendant have entered into a symbiotic relationship, in which the state has “so far insinuated itself into a position of interdependence with [the defendant] that it must be recognized as a joint participant in the challenged activity.... ” Burton v. Wilmington Parking Authority, 365 U.S. 715, 725, 81 S.Ct. 856, 862, 6 L.Ed.2d 45 (1961).

425 F.Supp. at 1144. See also Hudgens v. NLRB, 424 U.S. 507, 513, 96 S.Ct. 1029, 1033, 47 L.Ed.2d 196 (1976); Shelley v. Kraemer, 334 U.S. 1, 13, 68 S.Ct. 836, 842, 92 L.Ed. 1161 (1948). Neither of these conditions can be satisfied in the instant case. Plaintiff, therefore, has failed to state a cause of action for violation of her right to privacy under the federal constitution.

b. Claim Under Pennsylvania Constitution

Plaintiff also alleges that defendant’s conduct violated her right to privacy under the Pennsylvania Constitution. The privacy interest of individuals is explicitly protected under the Pennsylvania Constitution article 1, Section 1. In re June 1979 Allegheny County Investigating Grand Jury, 490 Pa. 143, 415 A.2d 73, 77 (1980). No Pennsylvania court has specifically decided, however, whether state action is a necessary element in maintaining a cause of action for invasion of privacy under the Pennsylvania Constitution. This court, therefore, must decide how Pennsylvania would resolve the issue.

In Commonwealth v. National Gettysburg Battlefield Tower, Inc., 454 Pa. 193, 311 A.2d 588 (1973), the Pennsylvania Supreme Court observed:

Article 1 is entitled “Declaration of Rights” and all of the first twenty-six sections of Article I which state those specific rights, must be read as limiting the powers of government to interfere with the rights provided therein.
[T]he first twenty-six sections of Article I ... merely contain a limitation on the powers of government.

311 A.2d at 592 (emphasis added).

It is apparent from the language of this decision that, if faced with the issue, the Pennsylvania Supreme Court would find that state action is a prerequisite to maintaining an invasion of privacy action under article 1, § 1 of the Pennsylvania Constitution. Since no state claim existed in the present case, plaintiffs state constitutional claim must be dismissed.

3. Plaintiffs Common Law Claim for Invasion of Privacy

In addition to her constitutional privacy claims, plaintiff makes a claim under Pennsylvania common law for invasion of privacy. Pennsylvania has adopted sections 652B to 652E of the Restatement (Second) of Torts (Tent. Draft No. 13, 1967), which separates invasion of privacy into four distinct torts: 652B—intrusion upon seclusion; 652C—appropriation of name or likeness; 652D—publicity given to private life; and 652E—publicity placing person in false light. See Marks v. Bell Telephone Co. of Pa., 460 Pa. 73, 331 A.2d 424, 430 (1975); Fogel v. Forbes, Inc., 500 F.Supp. 1081, 1087 (E.D.Pa.1980) (Broderick, J.). Paragraph 18 of plaintiffs complaint alleges a claim based on § 652D. Section 652 provides:

One who gives publicity to matters concerning the private life of another, of a kind highly offensive to a reasonable man, is subject to liability to the other for invasion of his privacy.

Restatement (Second) of Torts § 652D (Tent. Draft No. 13, 1967). The three elements of this tort are: (1) publicity (2) which is unreasonable and (3) is given to a private fact. See Vogel v. W.T. Grant Company, 458 Pa. 124, 327 A.2d 133, 136 (1974); Wells v. Thomas, 569 F.Supp. 426, 436 (E.D.Pa.1983) (Giles, J.).

Publicity ... means that the matter is made public, by communicating it to the public at large, or to so many persons that the matter must be regarded as substantially certain to become one of public knowledge.
Thus it is not an invasion of the right of privacy, within the rule stated in this Section, to communicate a fact concerning the plaintiffs private life to a single person or even to a small group of persons. On the other hand, any publication in a newspaper or a magazine, even of small circulation, or in a handbill distributed to a large number of persons, or any broadcast over the radio, or statement made in an address to a large audience, is sufficient to give publicity within the meaning of the term as it is used in this Section. The distinction, in other words, is one between private and public communication.

Restatement (Second) of Torts § 652, comment (a) (1977) (emphasis added).

In the present case, viewing the facts most favorably to plaintiff, only a very small group of persons were made privy to the Equifax Report. Communication to this small group does not satisfy the publicity requirement and thus plaintiffs claim must fail. As such, the Court finds it unnecessary to discuss the remaining elements of the tort.

4. Plaintiffs Claim for Intentional Infliction of Emotional Distress

Pennsylvania recognizes the tort of intentional infliction of emotional distress as defined in section 46 of the Restatement (Second) of Torts (1965). Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1273-74 (3d Cir.1979). Section 46(1) provides in pertinent part:

One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm.

The tort involves four elements: (1) the conduct must be extreme and outrageous, (2) the conduct must be intentional or reckless, (3) it must cause emotional distress, and (4) the distress must be severe. Chuy, 595 F.2d at 1273; Denenberg v. American Family Corporation of Columbus, Ga., 566 F.Supp. 1242, 1251-52 (E.D.Pa.1983) (Shapiro, J.).

It has not been enough that the defendant has acted with an intent which is tortious or even criminal, or that he has intended to inflict emotional distress, or even that his conduct has been characterized by “malice,” or a degree of aggravation which would entitle plaintiff to punitive damages for another tort. Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized community.

Kutner v. Eastern Airlines, Inc., 514 F.Supp. 553, 557 (E.D.Pa.1981) (Broderick, J.) (quoting Restatement (Second) of Torts, § 46, comment d).

The court finds that defendant’s conduct was not “outrageous in character” or “so extreme in degree, as to go beyond all possible bounds of decency” or “regarded as atrocious, and utterly intolerable in a civilized community.” Thus, plaintiff has not satisfied the first element of her cause of action.

Furthermore, plaintiff has failed to establish the second, third and fourth elements of her cause of action. There is no basis in the record—even according to plaintiff’s version of the facts—to support the idea that defendant intended to cause plaintiff emotional distress. Likewise, the court finds that whatever emotional distress defendant’s conduct may have caused plaintiff, such distress was not severe.

II. DAMAGES

As noted earlier in this opinion, the court conducted a non-jury trial on damages. Having heard testimony and argument, and for the reasons stated at the bench trial, the court found for plaintiff on her § 1681d(a) claim ($1,000 compensatory damages; and no punitive damages) and on her § 1681d(b) claim ($2,500 compensatory damages and $3,500 punitive damages).

III. ATTORNEY’S FEES

On June 12, 1985, counsel for plaintiff filed a motion praying for costs of the action, together with reasonable attorney’s fees. Pursuant to § 1681n and § 1681o of the Act, plaintiff is entitled to costs as well as reasonable attorney’s fees, as may be determined by the court.

In determining plaintiffs’ legal fee award, this court is bound by the framework for determining such awards which has been set forth in Lindy Brothers Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 487 F.2d 161 (3d Cir.1973) (‘‘Lindy F’) and subsequently refined in Lindy Brothers Builders, Inc. of Philadelphia v. American Radiator & Standard Sanitary Corp., 540 F.2d 102 (3d Cir.1976) (en banc) (“Lindy IF’); Merola v. Atlantic Richfield Co., 493 F.2d 292 (3d Cir.1974); Merola v. Atlantic Richfield Co., 515 F.2d 165 (3d Cir.1975); Prandini v. National Tea Co., 557 F.2d 1015 (3d Cir.1977); Prandini v. National Tea Co., 585 F.2d 47 (3d Cir. 1978); Rodriguez v. Taylor, 569 F.2d 1231 (3d Cir.1977), cert. denied, 436 U.S. 913, 98 S.Ct. 2254, 56 L.Ed.2d 414 (1978); Hughes v. Repko, 578 F.2d 483 (3d Cir.1978); Baughman v. Wilson Freight Forwarding Co., 583 F.2d 1208 (3d Cir.1978) and Walker v. Robbins Hose Co. No. 1, Inc., 622 F.2d 692 (3d Cir.1980); Ursic v. Bethlehem Mines, 719 F.2d 670 (3d Cir.1983). This framework requires that the court make a determination of the number of hours reasonably necessary to perform the legal services for which compensation is sought. Hughes, 578 F.2d at 487. The reasonable number of hours is then multiplied by a reasonable hourly rate for the attorney providing the services, the latter being based on the court’s determination of the attorney’s reputation, status and type of activity for which the attorney is seeking compensation. Lindy 1, 487 F.2d at 167. The sum of the two numbers is the “lodestar” which can then be adjusted upward or downward based on the contingency of success, and the quality of an attorney’s work. In all instances plaintiffs have the burden of establishing entitlement to the award claimed and any adjustment to the “lodestar.” Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Lindy II, 540 F.2d at 117.

At the bench trial, the attorneys for both parties agreed that plaintiff’s counsel could submit a detailed list of services rendered, the houi’s spent, and reasonable costs in preparing plaintiff’s case, which plaintiff’s counsel subsequently submitted with the petition for counsel fees and costs. With this information, the Court has a factual basis upon which to determine how many hours were devoted to various services for which compensation is now sought.

Plaintiff submits that her attorney spent 79.4 hours in preparing the case (63.4 non-trial hours; 16.0 trial hours). After a careful review of the attorney’s time statement, the court finds that in two instances the claimed time is excessive and will be reduced.

Plaintiff’s attorney alleges that he spent approximately 12 hours on legal research. Plaintiff testified that her present counsel represents her in a number of similar claims against other insurance companies. This court, in fact, has one such claim currently before it. There is little in this case, therefore, which required plaintiff’s attorney to engage in extensive research as to legal issues peculiar to only this case. Consequently, the court will reduce the time spent on legal research by five (5) hours.

Plaintiff’s attorney alleges that he spent 16 hours to “attend trial.” The actual trial time of this case could not have exceeded a total of about 8 hours. The court therefore finds a total of 8 trial hours. The remaining time for which compensation is sought is reasonable. Accordingly, the court will allow a total of 58.4 non-trial hours and 8 trial hours.

Having first considered the hours spent and the services performed, it is now necessary to place an hourly value on those services. In arriving at these rates the court has evaluated the status, reputation and experience of plaintiff’s attorney. See Delaware Valley Citizens’ Council for Clean Air v. Commonwealth of Pa., 581 F.Supp. 1412, 1415 (E.D.Pa.1984) (Bechtle, J.), aff’d, 762 F.2d 272 (3d Cir.1985). The court finds the reasonable hourly rate for non-trial time is worth $75.00 per hour and counsel’s trial time is worth $100.00 per hour.

Accordingly, the court finds:

Compensable Hours Hourly Rate
Non-Trial 58.4 $ 75 = $4,380.00
Trial 8 $100 = 800.00
Lodestar $5,180.00

After determining the lodestar amount of the fee, an adjustment may be made. Lindy I, 487 F.2d 161 (3d Cir.1973); Lindy II, 540 F.2d 102 (3d Cir.1976). The adjustment may be based on the contingent nature of the case, the quality of the work performed and the results obtained. Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Lindy I, 487 F.2d at 169; Lindy II, 540 F.2d at 117. Plaintiff has requested that this court use a multiplier of 2. Defendant argues that if any fees are granted to plaintiff the court should adjust the lodestar downward and reduce plaintiff’s fee petition.

Considering the quality of the work performed, the positive result obtained, and most importantly, the risk involved in trying a case of first impression in this district on a close and difficult legal issue concerning the applicability of the FCRA, the court will apply a multiplier of 1.5. Thus, the court awards plaintiff $7,770.00 in counsel fees ($5,180 x 1.5 = $7,770).

Besides attorney’s fees, plaintiff is entitled under the Act to reasonable costs expended. After a careful review of plaintiff’s cost breakdown, the court finds that plaintiff’s request for $1,284.66 in costs is reasonable.

IV. CONCLUSION

For the reasons stated above, defendant’s motion for summary judgment seeking dismissal of plaintiff’s claims under 15 U.S.C. § 1681q, invasion of privacy under the United States and Pennsylvania Constitutions, and in tort for invasion of privacy (publicity given to private life) and intentional infliction of emotional distress, will be granted. Plaintiff's motion as to these claims will be denied. Conversely, the court will grant plaintiff’s motion for summary judgment on her claims arising under 15 U.S.C. § 1681d(a) and § 1681d(b). Defendant’s motion as to these claims will be denied.

Judgment will be entered in plaintiff’s favor for $7,000, representing $3,500 in compensatory damages and $3,500 in punitive damages. The court further awards $7,770 in attorney’s fees and $1,284.66 in costs.

An appropriate Order will be entered.

      . Defendant’s request was submitted to Equifax on a preprinted form provided by Equifax. Defendant disclosed to Equifax on the preprinted request form that the information was to be used to investigate plaintiff's claims in the litigation involving defendant’s insured.

      . As to the credit file check the report stated: "We did check available credit files through a confidential source, and we are unable to come up with any financial irregularities."

      . Section 1681b provides:
      A consumer reporting agency may furnish a consumer report under the following circumstances and no other:
      (1) In response to the order of a court having jurisdiction to issue such an order.
      (2) In accordance with the written instructions of the consumer to whom it relates.
      (3) To a person which it has reason to believe—
      (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or
      (B) intends to use the information for employment purposes; or
      (C) intends to use the information in connection with the underwriting of insurance involving the consumer; or
      (D) intends to use the information in connection with a determination of the consumer’s eligibility for a license or other benefit granted by a government instrumentality required by law to consider an applicant’s financial responsibility or status; or
      (E) otherwise has a legitimate business need for the information in connection with a business transaction involving the consumer.

      . Similarly, the term "expected to be used” must refer to what the credit reporting agency, not the requesting party, believed. See Heath v. Credit Bureau of Sheridan, Inc., 618 F.2d 693, 696 (10th Cir.1980).

      . It is unclear from the record whether Equifax accessed its own credit files on plaintiff, or whether these files were collected by another credit reporting agency and produced to Equifax for their inspection. As to defendant’s liability under the Act, however, it is irrelevant which credit reporting agency collected the credit information on plaintiff.

      . A finding that the Equifax Report falls within the purview of the FCRA does not mean that defendant was not entitled to see the Report. To the contrary, the financial information being relevant to plaintiff’s lost earnings claim, it was clearly discoverable, including the information contained in plaintiffs credit files. The FCRA only required that defendant give notice to plaintiff that it was requesting the Report, and upon her request to see the report, providing her with a copy. These disclosure requirements serve laudable purposes, and are clearly reasonable in light of the lack of prejudice to the requesting party.

      . 15 U.S.C. § 1681a(f) defines "consumer reporting agency" as:
      any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
      It is undisputed that Equifax is a consumer reporting agency.

      . 15 U.S.C. § 1681a(c) provides: "The term‘consumer’ means an individual.”

      . In support of its position that the Equifax Report is not a consumer report, defendant refers to the legislative history and administrative interpretations of the Act. The Supreme Court has suggested that when the language of a statute is clear, “judicial inquiry is complete.” Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981). The Third Circuit recently held that where a statute is plain and unambiguous "an extraordinarily heavy burden" is placed on the party who seeks to vary it by reference to legislative history. Paskel v. Heckler, Nos. 83-1800, 84-1060, 84-1067, slip op. at 7 (3d Cir. September 10, 1984). “[O]veremphasis on legislative guides may lead to a distorted view of the statutory purpose, 'for much less thought is spent on the future implications of committee reports and explanations on the floor than in choosing the words of a statute.’” Slip op. at 8 (quoting Cox, Judge Learned Hand and the Interpretation of Statutes, 60 Harv.L.Rev. 370, 381 (1947) ). After reviewing the legislative history of the Act the court finds no justification in varying from the clear language of § 1681a(d).

      . See Footnote 3, supra, for the text of this provision.

      . The court is not persuaded by those decisions cited by defendant which hold that § 1681b cannot be read to enlarge the definition of consumer report found in § 1681a(d). See, e.g., Ley v. Boron Oil Co., 419 F.Supp. 1240 (W.D.Pa. 1976); Horton v. Pinkerton’s, Inc., No. H-75-C-17 (E.D.Ark. Nov. 19, 1976) (unpublished); McKeel v. Retail Credit Co., Civ. No. 53130 (4th Dist. Idaho, March 10, 1975) (unpublished). Section 1681a(d) plainly includes in the definition of consumer report any of the "other purposes authorized under Section 1681b” of the Act. See Beresh, 358 F.Supp. at 262. Statutory construction mandates that where a statute is plain on its face a court need not interpret the statute to mean otherwise. United States v. Turkette, 452 U.S. 576, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981); Rubin v. United States, 449 U.S. 424, 430, 101 S.Ct. 698, 701, 66 L.Ed.2d 633 (1981).

      . 15 U.S.C. § 1681a(e) defines "investigative consumer report” as:
      a consumer report or portion thereof in which information on a consumer’s character, general reputation, personal characteristics, or mode of living is obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information.
      The Equifax Report was a consumer report in which information on plaintiff’s character, general reputation, etc., was obtained, in part, through personal interviews with plaintiff’s neighbors. As such, the Report was an "investigative consumer report.”

      . Pa. Const. art. 1, section 1 provides, in pertinent part:
      [a]ll men ... have certain inherent and indefeasible rights, among which are those ... of acquiring, possessing, and protecting property and reputation____

      . In the two leading Pennsylvania cases finding a cause of action for invasion of privacy under the Pennsylvania Constitution state action was clearly present. See In re June 1979 Allegheny County Investigating Grand Jury, 490 Pa. 143, 415 A.2d 73 (1980); In re B, 482 Pa. 471, 394 A.2d 419 (1978).

      . Paragraph 18 provides:
      The actions of defendant in supplying said consumer report and/or investigative consumer report to others, sufficiently publicizing said reports, subjects defendant to liability under Pennsylvania common law for invasion of privacy of given [sic] publicity to matters concerning the private life of plaintiff.

      . To the extent plaintiff seeks summary judgment for "intrusion upon seclusion,” such motion is denied for failure to plead this cause of action in the complaint.
      Although now moot, the court wishes to respond to defendant's contention that plaintiff's invasion of privacy tort claim is barred by the one year statute of limitations, 42 Pa.Cons.Stat. § 5523 (Purdon's Supp.1985). Defendant contends that the “discovery rule" does not apply to § 5523. The court, however, sees no reason why the "discovery rule” should not apply. Non-application of the "discovery rule” in the present case would mean that the statute would have run prior to the time plaintiff even knew of the existence of the Equifax Report. Such a patently unfair result is exactly the evil which the "discovery rule” was intended to prevent.

      . To the extent either party seeks summary judgment on issues related to damages, such motions are denied.


author: SENTER, Chief Judge.

text:
    Luther W. BLAYLOCK, Plaintiff, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.
    EC83-469-LS-D.
    United States District Court, N.D. Mississippi, E.D.
    July 30, 1985.

      Stephen M. Corban, Mitchell, Voge, Clayton & Beasley, Tupelo, Miss., for plaintiff.
    James 0. Dukes, Bryant, Stennis & Colingo, P.O., Gulfport, Miss., for defendant.
   MEMORANDUM OPINION GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, AND GRANTING PLAINTIFF’S MOTION FOR LEAVE TO AMEND HIS COMPLAINT TO INCLUDE PREJUDGMENT INTEREST

SENTER, Chief Judge.

Presently before the court are cross-motions for summary judgment and plaintiff’s motion for leave to amend. This action is to recover on an insurance policy issued by defendant to plaintiff’s employer, under which plaintiff was covered. The controversy surrounds one particular exclusion clause contained in the policy. Both parties concede that interpretation of this clause would be dispositive in deciding which party prevails in this lawsuit. The court, having reviewed the memoranda submitted by the parties and being otherwise fully advised, concludes that plaintiff’s motion for summary judgment should be granted, and defendant’s motion for summary judgment should be denied: The court also concludes that, in the interest of justice, plaintiff should be permitted to amend his complaint to include in his prayer for relief prejudgment interest.

A. FACTS.

The parties have stipulated to the relevant facts in an Agreed Statement of Fact. Plaintiff’s employer participated in a group insurance policy under which plaintiff, as an employee, was covered. The policy provided plaintiff with insurance coverage for certain medical expenses. Plaintiff was injured in an automobile accident while acting within the scope of his employment at a time when the policy was in full effect. The employer was at no time covered by workmen’s compensation, either statutorily or voluntarily. Consequently, plaintiff was provided no benefits under that or a similar law. Defendant insurer denied payment of plaintiff’s claim pursuant to an exclusion which denies medical coverage for

(1) Injuries sustained as a result of an accidental bodily injury arising out of or in the course of employment for wage or profit or illness for which benefits are payable under any workmen’s compensation or similar law. (Emphasis added.)

Plaintiff incurred medical expenses of $45,-947.19, $200.00 of which is a deductible to be borne by plaintiff. The total amount due plaintiff would be $44,851.10, due to the policy’s coverage limits. The parties further agreed that prejudgment interest, if applicable, should begin to run as of January 10, 1983.

The center of controversy in this action is the word “or” in the above exclusionary clause. The plaintiff argues that this clause creates only one exclusion for injuries and illnesses that are covered by workmen’s compensation and that his medical expenses are covered since he was ineligible for workmen’s compensation coverage. He argues that the language is clear and unambiguous. In the alternative, plaintiff argues that the language is ambiguous and that the rules of construction and interpretation mandate finding in his favor. Defendant, on the other hand, argues that the language clearly and unambiguously excludes from coverage injuries sustained as a result of employment, whether or not covered by workmen’s compensation. In other words, defendant claims that the above provision is in fact two separate and distinct exclusions: one for injuries sustained in the course of employment, and another for illness for which workmen’s compensation is payable. In short, the controversy is whether the phrase “for which benefits are payable under any workmen’s compensation or similar law” modifies “illness” only or both “injuries” and “illness.” We hold that it modifies both.

B. SUMMARY JUDGMENT.

As a federal court sitting in a diversity action, we are Eñe-bound to follow Mississippi’s rules of construction and interpretation of insurance contracts. Mississippi follows the universal rule that insurance contracts are to be construed most strongly against the drafter, and that unclear and ambiguous language in any insurance contract will be construed in favor of the insured and against the insurer. Courts should construe ambiguous terms in an insurance contract so that the purpose of the policy will not be defeated, and if the terms are reasonably susceptible to two interpretations, the one sustaining indemnity must prevail

It is also well-settled Mississippi law that these rules of construction are applicable only if there is an ambiguity, and that courts should not strain to find an ambiguity “if, in so doing, they defeat probable intentions of the parties.” A court must not create an ambiguity where none exists nor make a new contract for the parties. If the policy is clear and unambiguous, its terms will be enforced as written. Moreover, insurance policies will be interpreted to effect the broad purpose of coverage when this can be done without doing violence to the language of the policy. Such policy must be given a sensible interpretation, and policy terms must be construed in light of the purposes and hazards against which the policy was designed to protect.

The above rules of construction are especially significant in the action sub judice since the clause in issue has not been interpreted by a Mississippi court. Courts in other jurisdictions, however, have been called upon to construe similar provisions, and so we must turn to those decisions for guidance, but to be used within the construction constraints imposed by the Mississippi Supreme Court. We conclude that the more reasoned interpretation of the clause in issue here warrants a finding in favor of plaintiff; We are more persuaded by the decisions which construe this kind of provision as a single exclusion in which the phrase “for which benefits are payable under any workmen’s compensation or similar law” modifies both “accidental bodily injury” and “illness.”

Plaintiff cites several decisions which have favorably construed a similar provision. Benefit Life Ins. Co. of Omaha v. Glisson, for example, was an action to recover under the provisions of a group hospitalization policy. The policy excluded coverage for

(a) accidental bodily injuries arising out of or in the course of the employment of the protected person or his dependents or sickness covered by a Workmen’s Compensation Act or similar litigation____

The defendant insurer presented the same argument as the defendant in the case sub judice: the phrase “covered by the Workmen’s Compensation Act or similar litigation” modified only the word “sickness.” Consequently, defendant argued, plaintiff should not be permitted to recover for injuries sustained while not covered by workmen’s compensation.

In holding defendant liable for plaintiff’s hospital and medical expenses, the court construed the critical word “or” to be “an amplification or explanation of [the] preceding statement.” The court further concluded that in many cases, the disjunctive “or” is construed to mean “and.” The Kansas Supreme Court in another decision has agreed with this interpretation, although a different result was reached since the employee was also covered by the state’s workmen’s compensation statute.

The interpretation requested by defendant here will be nonsensical. If the phrase modifies “illness” only, then the policy would deny medical benefits to employees who are injured while in the course of their employment, regardless of whether or not they are covered by workers’ compensation. It is stipulated by both parties in the Agreed Statement of Fact that the defendant provided plaintiff with coverage for certain medical expenses. As we noted above, the policy must be construed in light of the purpose and hazards against which the policy was designed to protect. Since this policy was issued to cover medical expenses for certain injuries, the insurer should not be permitted to take away in an exclusion the very coverage for which the policy was purchased.

Another factor which this court finds significant is the way the policy sets forth the exclusions. They are separately lettered (a) through (m), with (l) being the clause in issue. Because the drafter apparently intended to set forth each exclusion separately, then if his intent had been to make two exclusions from the clause in issue, he would have separated it by another letter and not included it in another exclusion without using any punctuation to differentiate it.

Construed in light of the purpose of issuing a medical insurance policy and especially noting that all other exclusions in the policy are separately lettered, the court must conclude that the policy covers the plaintiff employee for illness or injuries resulting from his employment, unless he was covered by workmen’s compensation, which he was not here.

But even assuming, arguendo, that this provision could support two conflicting interpretations, basic rules of contract interpretation mandate that we construe the clause so that the purpose of the policy— providing medical benefits to employees— is not defeated, and that the interpretation sustaining indemnity prevails.

The court finds unpersuasive the cases cited by defendant supporting its contention that the clause contains two different exclusions. Defendant’s reliance upon Brezan v. Prudential Ins. Co. of America, is misplaced. The court there was called upon to interpret a clause which excluded from coverage charges incurred in connection with

(a) injury arising out of, or in the course of, any employment for wage or profit, or
(b) disease covered, with respect to such employment, by any workmen’s compensation law, occupational disease law or similar legislation.

The plaintiff sought to apply the workmen’s compensation phraseology to both subsections (a) and (b), excluding occupational injuries covered by workmen’s compensation laws. The court, however, reasoned that the drafters would have combined the two provisions if they had intended for the workmen’s compensation phraseology to apply to both.

We agree that a clause such as the one interpreted in Brezan is clear and unambiguous. The drafters of that provision intended two separate and distinct exclusions. It is just as clear in the action sub judice that the drafters did not intend two separate and distinct exclusions. If they had, they would have separated the two provisions, as the insurer in Brezan did.

In summary, we find that the exclusion clause in issue here is clear and unambiguous. We construe it to exclude injuries sustained from employment or any illness if such injury or illness is covered under workmen’s compensation or a similar law. Since the parties have stipulated that plaintiff’s employer was not Covered by workmen’s compensation or similar law, either by statute or voluntarily, then defendant is liable for medical expenses incurred by plaintiff as a result of injuries sustained while acting within the scope of his employment. The parties have stipulated that the amount of expense for which defendant is liable is $44,851.10.

C. PREJUDGMENT INTEREST.

Fed.R.Civ.P. 15(a) permits amendment to a complaint as a matter of right before any responsive pleading has been filed; subsequent amendments may be granted by the trial judge “when justice so requires.” The federal rules assume a liberal stance in permitting amendment to pleadings. “[U]nless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial.” Among the valid reasons which may allow denial of permission to amend a pleading are undue delay, bad faith, repeated failure to amend, and unfair prejudice to the opposing party. Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 546 (5th Cir.1983). None of these factors supports denial here.

Although this court looks with a jaundiced eye upon the long delay by plaintiff in requesting such amendment, delay alone is not dispositive of the matter. There is no hint of, and defendant does not suggest, bad faith on the part of the plaintiff in filing this motion.

Perhaps the most significant factor to be addressed is unfair prejudice to the opposing party. The court finds that defendant would not be prejudiced in any way by plaintiff’s amendment. The defendant has even conceded in his brief that the requested amendment would not require additional discovery, the introduction of any new evidence, or additional briefing by the parties. Since the prior pleadings have provided defendant adequate notice of the transactions at issue, amendment of those pleadings to include prejudgment interest will in no way unduly prejudice defendant.

The court finds inapposite the cases cited by defendant in support of the proposition that prejudgment interest should not be granted. Both Peel v. American Fidelity Assur. Co. and Randal Craft Realty Co. v. Unijax, Inc. were actions which reached the post-judgment stage before the respective plaintiffs requested prejudgment interest. Indeed, the plaintiff in Randal Craft admitted that it should not receive prejudgment interest “because it failed to make such a request in its initial pleadings or by subsequent amendment.. ” The plaintiff in the case sub judice is not requesting interest for which he has not pleaded; rather, he is simply asking leave to amend his pleading to include such interest.

In the interest of justice and in the absence of prejudice to defendant, this court grants plaintiff’s motion for leave to amend his complaint to include a demand for prejudgment interest from the period beginning January 10, 1983. The court finds that a reasonable rate for prejudgment interest in this cause is 10 percent per annum, compounded annually. Post-judgment interest shall be 7.60 percent per annum until paid.

An order in conformance with this option shall be this day rendered.

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT, DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT, AND GRANTING PLAINTIFF’S MOTION FOR LEAVE TO AMEND HIS COMPLAINT TO INCLUDE PREJUDGMENT INTEREST

In conformance with a Memorandum Opinion this day rendered, IT IS ORDERED:

That plaintiff have judgment against defendant in the sum of $44,851.10 for covered medical expenses incurred as the result of injuries sustained by plaintiff while in the course of his employment;

That plaintiffs motion for leave to amend complaint to include prejudgment interest is granted, and the complaint is so amended;

That plaintiff is awarded prejudgment interest at the rate of 10 percent per annum, compounded annually, from January 10, 1983, to this date;

That the aforesaid judgment, including prejudgment interest, shall bear interest at the rate of 7.60 percent per annum until paid.

      . See Erie Railroad Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).

      . State Farm Mut. Auto. Ins. Co. v. Taylor, 233 So.2d 805 (Miss.1970): Canal Ins. Co. v. Howell, 248 Miss. 678, 160 So.2d 218 (1964).

      . Government Employers Ins. Co. v. Brown, 446 So.2d 1002, 1006 (Miss.1984); McLaurin v. Old Southern Life Ins. Co., 334 So.2d 361 (Miss. 1976); Mavar Shrimp & Oyster Co. v. U.S.F. & G. Co., 187 So.2d 871 (Miss.1966).

      . Aetna Life Ins. Co. v. Evins, 199 So.2d 238, 241 (Miss.1967).

      . Calcasieu-Marine National Bank of Lake Charles v. American Employers' Ins. Co., 533 F.2d 290, 296 (5th Cir.1976); Brander v. Nabors, 443 F.Supp. 764, 769 (N.D.Miss.1978); State Auto. Mut. Ins. Co. of Columbus, Ohio v. Glover, 253 Miss. 477, 176 So.2d 256 (1965); Mississippi Ben. Ass'n v. Majare, 201 Miss. 183, 29 So.2d 110, 112 (1947).

      . Life & Cas. Ins. Co. of Tennessee v. Harvison, 187 So.2d 847 (Miss.1966).

      . Aetna Cas. & Surety Co. v. Head, 240 So.2d 280, 282 (Miss.1970); Gotcher Eng. & Mfg. Co. v. U.S.F. & G. Co., 193 So.2d 115 (Miss.1966); Employers’ Mut. Cas. Co. v. Nosser, 250 Miss. 542, 164 So.2d 426, suggestion of error overruled, 250 Miss. 542, 168 So.2d 119 (1964).

      . Fireman’s Fund Ins. Co. v. McDaniel, 187 F.Supp. 614, 618 (N.D.Miss.1960) (interpreting Mississippi insurance contract).

      . Interstate Life & Accident Co. v. Waters, 213 Miss. 265, 56 So.2d 493, 495 (1952).

      . Monarch Ins. Co. of Ohio v. Cook, 336 So.2d 738, 741 (Miss.1976).

      . 105 Ga.App. 122, 123 S.E.2d 350 (1961).

      . 123 S.E.2d at 325 (quoting previous state court decision).

      . Id. (Citations omitted.)

      . See St. Francis Hosp. and School of Nursing, Inc. v. Eckman, 212 Kan. 131, 510 P.2d 175, 177 (1973). Another case cited by plaintiff is not as similar to this action. The policy provision in issue in Rankin v. New York Life Ins. Co., 240 So.2d 758 (La.App.1971), permitted payment for claims for injuries if "(c) the confinement is not due to an accidental bodily injury arising out of or in the course of employment, or a sickness entitling the employee’s insured dependent to benefits under a Workmen’s Compensation Act or similar legislation.” Defendant argued that the policy excluded coverage for expenses incurred as a result of accidental bodily injury arising out of or in the course of employment. In other words, the insurer argued that the provision contained two different exclusions. The court, however, concluded that it contained only one exclusion which encompassed both accidental injury and sickness. Id. at 762. This result was reached despite the comma between the words "employment” and “or," which could possibly be construed to separate two separate exclusions. There is no comma in the clause in issue in the action sub judice, and that removes any further doubt as to the intent of the drafter.

      . See supra note 10 and accompanying text.

      . See supra note 4 and accompanying text.

      . 507 F.Supp. 962 (E.D.Pa.1981).

      . Id. at 963-64.

      . Id. at 964-65.

      . See generally Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222, 226 (1962).

      . Dussouy v. Gulf Coast Investment Corp., 660 F.2d 594, 598 (5th Cir.1981) (citing Lone Star Motor Import v. Citroen Cars, 288 F.2d 69, 75 (5th Cir.1961)).

      . Wedgeworth v. Fibreboard Corp., 706 F.2d 541, 546 (5th Cir.1983).

      . See, e.g., Spartan Grain & Mill Co. v. Ayers, 517 F.2d 214, 220 (5th Cir.1975) (allowing amendment adding counterclaim 16 months after original answer and counterclaims).

      . See Ayers, 517 F.2d at 220.

      . See Dussouy, 660 F.2d at 599.

      . 680 F.2d 374 (5th Cir.1982).

      . 653 F.2d 1066 (5th Cir.1981).

      . Randal Craft, 653 F.2d at 1070 (emphasis added); see also Peel, 680 F.2d at 378; M.T. Reed Constr. Co. v. Nicholas Acoustics Co., 379 So.2d 308 (Miss.1980).


author: McMILLAN, District Judge.

text:
    E.F. COE t/a Cabana Motel, Plaintiff, v. THERMASOL, LTD., Defendant.
    No. ST-C-82-134.
    United States District Court, W.D. North Carolina, Statesville Division.
    July 31, 1985.

      Anthony S. DiSanti, Finger, Watson, DiSanti & McGee, Boone, N.C., for plaintiff.
    Julia V. Jones, Moore, Van Allen, Allen & Thigpen, Charlotte, N.C., for defendant.
   McMILLAN, District Judge.

This action came on for trial before the court, sitting without a jury, on June 10, 1985. By order filed July 5,1985, the court dismissed plaintiffs complaint as time-barred by North Carolina statutes of limitations. The parties stipulated to the dismissal of the defendant’s second counterclaim. The only claim before the court is defendant’s first counterclaim.

After hearing the evidence and arguments of counsel and reviewing the record, the court finds as follows:

FINDINGS OF FACT

1. Plaintiff is a resident of Watauga County, North Carolina, and is the owner and operator of the Cabana Motel in Boone, Watauga County, North Carolina.

2. Defendant is a New Jersey corporation which manufactures, installs and leases in-room steam bath and whirlpool equipment. Defendant has places of business in New Jersey and in California.

3. On or about January 20, 1978, plaintiff executed an agreement to lease from defendant forty-two steam bath units for use in plaintiff’s Cabana Motel under a monthly rental plan based on the occupancy rate of the motel (the “1978 Lease”). Under the payment plan selected by plaintiff, plaintiff was required to make monthly lease payments for a total of 144 months.

4. On or about March 3, 1978, defendant accepted and executed the 1978 Lease in New Jersey and subsequently constructed and installed the forty-two ThermaSol steam bath units at plaintiff’s motel.

5. The 1978 Lease provided at paragraph 14 that the lease would be enforced and interpreted in accordance with New Jersey law.

6. The 1978 Lease did not include wall liners, which are fiberglass moldings that fit over the walls of bathtubs and showers. Plaintiff received the equipment called for under the 1978 Lease, and an agent of plaintiff signed an “equipment acceptance notice” that stated that the items described in the lease had been received.

7. On November 20, 1981, plaintiff executed a second lease agreement with defendant for the installation and lease of wall liners only (the “1981 Lease”).

8. Defendant’s subcontractor failed to install the wall liners in a timely fashion. Accordingly, defendant never invoiced plaintiff for payment under the 1981 Lease.

9. Defendant’s failure to complete installation under the 1981 Lease is not a breach of the 1978 Lease.

10. Plaintiff made all payments due under the 1978 Lease through February 1982. In March, 1982, plaintiff stopped making payments under the 1978 Lease, thereby defaulting under paragraph 15 of the lease. Plaintiff has made no payment to defendant since February 1982.

11. The written contract between the parties, executed March 3, 1978, contained the following provisions which are pertinent to the controversy:

4. LESSEE MAY ELECT THE DAILY RENTAL, “PLAN A” OR THE DAILY OCCUPANCY RENTAL, “PLAN B” WHEN EXECUTING THIS LEASE. LESSEE WILL MAKE ITS ELECTION BY LESSEE INITIALLING ALONG SIDE EITHER “PLAN A” OR “PLAN B” IN THE INDICATED CIRCLE.
PLAN A—
Lessee will pay rent to Lessor for each ThermaSol Suite commencing as provided in paragraph 3, as follows:
(i) $1.10 per day, payable monthly, in advance, for months one through twenty-four, inclusive;
(ii) $1.25 per day, payable in advance, for months twenty-five through thirty-six, inclusive;
(iii) $1.75 per day, payable monthly, in advance, for months thirty-seven through 120, inclusive.
PLAN B—*
Lessee will pay rent to Lessor for each ThermaSol Suite commencing as provided in paragraph 3, as follows:
(i) $1.50 for each day that each ThermaSol Suite is occupied during months one through twenty-four, inclusive;
(ii) $1.75 for each day that each ThermaSol Suite is occupied during months twenty-five through thirty-six, inclusive;
(iii) $2.50 for each day that each ThermaSol Suite is occupied during months thirty-seven through 144, inclusive.
* Lessee will accurately complete the Monthly Occupancy Report forms supplied by Lessor and forward the completed Occupancy Report to Lessor by the seventh day of the following month. If less than 100% of the premises are ThermaSol Suites, then the monthly occupancy of each ThermaSol Suite will be not less than the monthly occupancy percentage of the premises, which shall not be less than 59% annually. ...
10. The rent payment, as herewith provided, shall be increased or decreased annually after December, 1978, by the percentage of increase or decrease in the Consumer Price Index published by the Bureau of Labor Statistics of the United States Department of Labor or any successor index, as reported for the City and State of New York (the “CPI”). All changes will be based upon the CPI for December of each year of the Lease term as compared to December, 1977. The change will be effective for the first day of the month following the month in which the report is issued and will remain in effect until the CPI is issued for the next December. In no event will the rent be less than that set forth in paragraph 4.
* * * * * * *
REMEDIES UPON THE HAPPENING OF AN EVENT OF DEFAULT
16. Upon the happening of any one or more of the foregoing events of default, then Lessee, in addition to paying any arrears in rent and additional rent, late payment charges, the expenses of retaking possession and removal of the System, reasonable attorney’s fees of 20% of the amount of any claim, court costs and expenses of disposing of the System, will pay Lessor the unpaid rent that would becom.e due during the balance of the Lease term had Lessee elected the Daily Rental Plan, as set forth in paragraph 4A, after giving effect to rent rate changes as a consequence of the operation of paragraph 10, less all amounts realized by Lessor, if any, in Lessor’s disposition of the System, after first deducting all expenses of such disposition____ Lessor may, if in Lessor’s opinion the cost of removal and disposition would exceed the proceeds of disposition, elect not to remove and dispose of the System, and such election by Lessor shall not be a failure to mitigate damages, nor in any way entitle Lessee to a reduction in the amount due____

Plaintiff initialed the contract next to payment Plan B, indicating that his regular payments would be calculated according to the occupancy rate of each room and adjusted for inflation pursuant to paragraph 10. However, under the terms of paragraph 16, in the event of a default, defendant would recover from plaintiff liquidated damages based on payments under Plan A with adjustments for the CPI as provided in paragraphs 10 and 16. Under the liquidated damages clause, incorporating Plan A of paragraph 4, there is no variable for room occupancy. Application of the terms of paragraphs 4, 10 and 16 on the occasion of the default in March of 1982 results in principal damages in the amount of $242,-009.60 and attorney fees of 20% of the amount of principal damages, i.e. $48,-401.92.

12. Defendant did not make material misrepresentations of fact in inducing plaintiff to enter into the 1978 Lease.

13. Plaintiff, in entering into and performing under the 1978 Lease, did not rely on the alleged fact or assumption that wall liners were included in the 1978 Lease.

14. There was no evidence of a mutual mistake of fact by the parties with respect to the terms of the 1978 Lease.

15. Plaintiff is an experienced businessman. There is no evidence of unequal bargaining power in regard to the 1978 Lease.

CONCLUSIONS OF LAW

1. The court has jurisdiction over the parties and over the subject matter based on diversity of citizenship, pursuant to 28 U.S.C. § 1332(a).

2. New Jersey law applies in the enforcement and interpretation of substantive provisions of the 1978 Lease, because the contract provides that New Jersey law applies, and the last act necessary to the contract (the execution of the contract by defendant), took place in New Jersey. See, e.g., Tanglewood Land Company, Inc. v. Wood, 40 N.C.App. 133, 252 S.E.2d 546 (1979); International Harvester Credit Corp. v. Ricks, 16 N.C.App. 491, 192 S.E.2d 707 (1972).

3. By order of July 5, 1983, this court dismissed plaintiff’s complaint as time-barred by the North Carolina statutes of limitations. That order barred all claims for affirmative relief raised by plaintiff.

4. In March 1982 plaintiff defaulted under the terms of the 1978 Lease by nonpayment of rent.

5. Plaintiff has not established misrepresentation or fraud in defense to defendant’s claim for damages under the 1978 Lease.

6. Plaintiff has not established mutual mistake in defense to defendant’s claim for damages under the 1978 Lease.

7. Plaintiff has argued that the liquidated damages clause contained in paragraph 16 of the contract is unenforceable because it is a penalty. Under New Jersey law, which is applicable here, the court is to examine liquidated damages clauses to see if the amount fixed by the clause is a reasonable forecast of the harm and if the harm caused is incapable or very difficult of accurate estimation. Barr and Sons, Inc. v. Cherry Hill Center, Inc., 90 N.J.Super. 358, 217 A.2d 631 (App.Div. 1966). The reasonableness of thé terms is to be judged by the circumstances at the time that the contract was made. Suburban Gas Co. v. Mollica, 21 N.J.Misc. 118, 32 A.2d 462, aff’d. 131 N.J.L. 61, 34 A.2d 892 (1943). In the context of commercial parties with comparable bargaining power, as here, there is a presumption of validity of the clause. Central Steel Drum Company v. Gold Cooperage, Inc., 200 N.J.Super. 251, 491 A.2d 49 (App.Div.1985).

The liquidated damage clause here satisfies both of the tests above. Payment under the lease agreement was based on the occupancy rate of the rooms with adjustments for the inflation through use of the Consumer Price Index (CPI). Neither of these factors is capable of accurate advance prediction. The amount agreed in the signed lease is also reasonable as an estimate of damages. Calculations show that at the time of execution of the contract, the amounts due under this plan for the life of the lease, without any adjustment for inflation, would be between $417,-742.50 (assuming a 100% occupancy rate) and $246,468.07 (assuming the minimum occupancy rate of 59% as provided for in the lease). At the time of execution, the liquidated damages clause would require, again with no consideration for inflation, $240,681.00 plus attorney fees. This figure is arrived at by calculating the lease payments under the optional Plan A of the lease that is based on a daily room rate without regard to occupancy. The amount due under the liquidated damages clause, along with attorney fees, would only be slightly above the minimum amount defendant would receive if the lease went to its conclusion. Therefore, the court concludes that the liquidated damages clause provided a reasonable forecast of the harm.

Under New Jersey law, plaintiff is still liable under this clause despite the presence of numerous acts that could lead to a breach and trigger application of the liquidated damages clause. The general rule that a liquidated damages clause is a penalty if applied to several independent covenants of varying importance does not apply under New Jersey law when the covenants are really interdependent and call for acts with one primary purpose. Suburban Gas, 32 A.2d at 465-68, aff’d. 34 A.2d 892 (1943) (citing 25 C.J.S., Damages § 111 at 1063 (1966)). See, also, Borden Co., Pioneer Ice Cream Division v. Manley, 127 N.J.L. 461, 23 A.2d 281 (1942). A liquidated damages clause triggered by a breach of any of numerous covenants was enforced in Knutton v. Cofield, 273 N.C. 355, 160 S.E.2d 29 (1968). The court is well aware that some jurisdictions refuse to enforce clauses that contain covenants of varying importance even if they all relate to one primary 'purpose. See, e.g., Mayfield v. Hicks, 575 S.W.2d 571 (Tex.Civ. App.1978); Vernitron Corp. v. CF 48 Associates, 104 A.D.2d 409, 478 N.Y.S.2d 933 (1984). A New Jersey court has explicitly rejected this approach in Suburban Gas Co., supra. This case has been cited as authority on other grounds as recently as this year. Central Steel Drum Company v. Gold Cooperage, Inc., supra.

The many covenants contained in the lease signed by plaintiff are all designed to further the primary purpose of leasing the steam bath units. They are inherently interrelated and are similar to the covenants in Suburban Gas Co., supra. Therefore, under New Jersey law the liquidated damages clause is enforceable despite the existence of numerous covenants, any one of which breached would allow defendant to receive liquidated damages.

The liquidated damages clause is also valid despite its provision that defendant may choose not to repossess the steam bath units upon default, but that if it does so, it must deduct from the damages under the clause the amount realized by disposition of the units. Because the steam bath units are costly to install and remove and may be of limited value once removed, it is not unreasonable for defendant to have the option of leaving the units installed, thus giving plaintiff the benefit of his bargain, and collecting an amount reasonably calculated to estimate the damages. Had defendant chosen to remove the units, plaintiff would receive credit for the amount defendant realized from the units after the removal and could challenge the reasonableness of the disposition by the defendant.

Under the terms of the liquidated damages clause, defendant is entitled to all of the rent as calculated under Plan A of the 1978 Lease, with the CPI applied up to the date of breach. Plaintiff complains that the clause fails to provide for a reduction to the present value of the payments, some of which would not become due for many years. The 1978 Lease would require application of the CPI throughout the term of the lease. Under the liquidated damages clause the adjustment for inflation through the CPI ends at the date of breach. Therefore, although no reduction for present value of future payments is made, no upward adjustment is made for inflation. These two factors may not exactly cancel each other out, but the court finds that the clause, which provides for no reduction for present value and no adjustment for inflation, makes a reasonable estimate of the damages.

Defendant is entitled to recover under the liquidated damages clause the sum of $242,009.60 plus attorney fees. The lease provides for the payment of twenty percent (20%) as a reasonable attorney fee. New Jersey law applies to any question of attorney fees because the last act in forming the contract took place there. Nytco Leasing, Inc. v. Dan—Cleve Corp., 31 N.C.App. 634, 230 S.E.2d 559 (1976). Therefore, the limitation under North Carolina law to fifteen percent (15%) of the amount due (N.C.G.S. § 6-21.2) does not apply. Under New Jersey law there is no set cap on the amount that the parties can contract for as attorney fees and “generally a contract which permits an aggrieved party to recover fixed or ‘reasonable’ attorney’s fees as part of any damages is enforceable unless some larger public policy mandates a contrary result.” Center Grove Associates v. Hoerr, 146 N.J.Super. 472, 370 A.2d 55 (App.Div.1977). Plaintiff has not presented any evidence that the percentage here violates public policy and the court does not so find. Therefore, defendant shall recover as a reasonable attorney fee twenty percent (20%) of the amount due, which is computed to be $48,401.92.

The court will enter a judgment in accordance with these findings of fact and conclusions of law.


author: READY, District Judge.

text:
    Samuel P. TORRENCE, Jr., Plaintiff, v. OXFORD MUNICIPAL SCHOOL DISTRICT, and its Board of Trustees, in their individual and official capacities, Gene Meadows, in his individual and official capacity, and Terry Mood, in his individual and official capacity, Defendants.
    Civ. A. No. WC83-6-WK-D.
    United States District Court, N.D. Mississippi, W.D.
    Aug. 1, 1985.

      Richard B. Fields, Memphis, Tenn., for plaintiff.
    S.T. Rayburn, Will A. Hickman, Oxford, Miss., for defendants.
   MEMORANDUM OF DECISION

READY, District Judge.

On January 12,1983, plaintiff, Samuel P. Torrence, Jr., a black, sued Oxford Municipal School District and its Board of Trustees, Gene Meadows, Superintendent of Oxford School District, and Terry Mood, Oxford High School principal, defendants, to redress claims of racial discrimination in employment practices. Federal jurisdiction was founded on 28 U.S.C. §§ 1331, 1343(4) for causes of action arising under Title VII, 42 U.S.C. § 2000e-5f(3), and 42 U.S.C. §§ 1981 and 1983. Plaintiff sought back pay, punitive damages, reinstatement, and attorney’s fees and costs. Defendants denied the allegations of the complaint and, in turn, moved for an award of attorney’s fees against plaintiff for defending the action.

After discovery and pretrial conference, the parties entered into a stipulation of facts contained in a pretrial order dated October 17, 1983. The court conducted an evidentiary hearing on July 29 and 30, 1985, at which time the parties appeared personally and by their attorneys, offered oral and lengthy documentary evidence, and the court heard oral argument of counsel. Being duly advised in the premises, the court now makes findings of fact and conclusions of law pursuant to Rule 52(a), Fed.R.Civ.P., as follows.

I. Findings of Fact

1. Plaintiff, the holder of bachelor’s and master’s degrees in music education, was first hired in 1961 by the defendant board as band and music director of the all-black Central High School. With the advent of desegregation in 1970 of the Oxford public schools, plaintiff in the years following held the positions of assistant band director, and band director of Oxford Junior High School. In 1976, he was assigned as the assistant band director of Oxford High School. In the fall of 1979, plaintiff was appointed high school band director on the recommendation of Superintendent Gene Meadows, but he was not recommended for re-employment at the end of the 1979-80 school year. This action was the result of recommendations by Superintendent Meadows and Terry Mood, the Oxford High School principal.

2. In January 1980, dissatisfaction with the high school band surfaced when a number of parents petitioned the school board expressing concern about the reduced numbers of junior high school students entering the high school band, the low ratings given the band at state contests, and the apparent lack of enthusiasm and pride of students in being band members. The patrons called upon the school board to take appropriate steps to assure that the band program was of proper quality. In April 1980, pursuant to plaintiff’s request, hearings were held before Joseph Blackston, University of Mississippi professor named by the school board to take evidence and make recommendations regarding plaintiff’s further employment as high school band director. On July 3, 1980, Blackston rendered a report (P.Exh. 5), summarizing the problems facing the high school band, the past conflicts, weaknesses, and experience during the years that plaintiff had served as band director. Blackston made specific recommendations as follows:

1. A clearly defined job description for the position should be formulated by school officials, the band director and experts in the music field.
2. Written evaluative procedures should be established and adhered to.
3. An assistant band director should be employed with clearly defined duties.
4. Adequate financial budget should be provided.
5. A public relations program should be supported by all school personnel.

Blackston concluded his recommendations by stating “I do not know if Samuel Torrence can succeed as band director at Oxford High School. He should be given the opportunity, as suggested above. If, given the proper opportunity, and he cannot succeed, then his services should be terminated.”

3. On July 8, 1980, the board, acting on Blackston’s recommendations, employed plaintiff as high school band director for 1980-81. During the next two years, plaintiff served as high school band director, each year receiving the recommendation for re-employment by Superintendent Meadows and Principal Mood. All of Blackston’s recommendations, however, were not immediately carried out. The job description and written evaluative procedures were promptly established. Although seven applicants were interviewed, school officials were unable to employ an assistant high school band director until the fall of 1981, when Mrs. Rebecca Snavely was employed. Plaintiff objected to her appointment, even though she was qualified for the post, and recommended Ken Lewis, who was approached by the administration but was unavailable. There was also a delay in obtaining new band uniforms. In due course, the band’s budget was increased and a public relations program was placed in effect by school personnel.

4. Despite these steps to improve the band program, problems developed from disorganization in planning the program, training and teaching band students. Further, there was a lack of proper discipline and a failure of communication between the band director, the students and parents as well as other school personnel. The statistical record for the three-year period showed student participation in the high school band progressively declining, with extraordinary dropout rates of 73% in 1979-80, 80% in 1980-81, and 86% in 1981-82. According to credible testimony, the dropout rate should not exceed 20%, or at the most, 30%. During each of the years that the Oxford High School band, classed as a BB band, attended state contests, it performed unsatisfactorily. For example, in 1979-80, it scored, on a scale of I to IV, with I being superior and IV fair, a III in concert, III in sight reading, and III in marching. In 1980-81, the band scored IV in concert, III in sight reading, and IV in marching. In 1981-82, the scoring was the lowest grade of IV in each of the three categories. At the same time, individual members performing solo or ensemble work were rated either superior or excellent.

5. On April 1, 1982, Principal Mood advised Superintendent Meadows of his decision not to recommend plaintiff for continued employment, stating that he had observed plaintiff’s performance during the past three years and that his continued employment would not be in the best interest of the band program or the school as a whole. On April 6, 1982, Superintendent Meadows advised the plaintiff that he would not be re-employed for the 1982-83 school year and stated that plaintiff, upon his request, was entitled to a hearing before the school board. Plaintiff engaged an attorney who requested a hearing and a list of the reasons for the non-renewal of plaintiff’s employment. This information was provided. On May 6, 1982, the school board conducted a hearing at which testimony was given by plaintiff and witnesses in his behalf and by Mood and Meadows. After full hearing, a transcript of which has been received into evidence in this court, the school board upheld the non-renewal of plaintiff’s contract. On June 4, 1982, he was notified of this decision which was based upon the following reasons:

1. Having been band director for three years the band program under your direction is progressively declining each year in interest, student participation and quality of performance;
2. Disorganization in planning, direction, teaching, grading and classroom work;
3. Lack of consistent and effectual discipline;
4. Failure to create and maintain good rapport and communication with students, parents, faculty and community;
5. Lack of cooperation with faculty and administration; and
6. No substantial improvement in the band program after three years is evident and no underlying factors exist that might form a firm basis for expected improvement to make the Oxford band program competitive with surrounding bands in Mississippi.

P. Exh. 11.

6. On June 14, 1982, plaintiff filed a charge of racial discrimination with the Equal Employment Opportunity Commission (EEOC) stating that the Oxford school system had discriminated against him because of race and also because he had filed a previous EEOC charge in 1976, upon his failure to be promoted at that time to the position of high school band director. Although plaintiff subsequently withdrew the 1976 charge, he felt that continued harassment had resulted because of the previous filing and “has finally culminated in my discharge.” (P. Exh. 1). On October 26, 1982, EEOC determined there was no reasonable cause to believe plaintiff’s allegations were true and dismissed the charge. On the same date, notice of the right to sue was issued to plaintiff. The present action followed.

7. Upon the recommendation of Mood and Meadows, the school board employed Badrae Hannah, a black, as high school band director for the 1982-83 school year. Hannah, who had been employed at d’Iberville High School, was highly qualified for the position; under his directorship the Oxford High School band showed marked improvement at the state band contest, scoring II in concert, I in sight reading, and II in marching. During the three years that plaintiff was band director, Oxford High School had an enrollment of more than 550 students, 35% of whom were black. Blacks composed 28% of the high school faculty and staff. For the district as a whole, black enrollment was 40% and black faculty and staff was 28%.

At trial, plaintiff testified that his employment was not renewed partly because of the band’s deficiencies in marching and the low ratings received at the state contests. Also, he felt that he was discriminated against on account of race, a feeling based upon objections made by parents of white high school students. Plaintiff acknowledged that there had been a decline in student participation in the band during the three years of his directorship but attributed the decline to factors beyond his control, such as scheduling problems, community unrest, unjustified criticism, and lack of communication between him, the students and the community. Plaintiff’s witnesses, William MeCune and Debra Gibson, who had been members of the Oxford Junior High School band when plaintiff served as the director, were supportive of plaintiff’s efforts and regarded him as an effective director and a positive influence for student development. In opposition to this testimony, Mood and Meadows, both in this court and at the 1982 school board hearing, testified that plaintiff’s contract was not renewed because of his unsatisfactory performance. They detailed a multitude of problems which plaintiff encountered in organizing the band program and his failure to coordinate individual efforts into an effective group. Further, they stated that he was inconsistent in dealing with students in discipline and grading practices and that under plaintiff’s directorship the band performance had steadily declined, reaching the lowest possible rating in all contest categories. Mood testified that he was confronted with a constant flow of students wanting to drop out of the band and that he spent a great deal of time in encouraging them to stay in the program. During many conferences with plaintiff about the problems in the band department, Mood found him to be hostile to suggestions. The principal documented many instances of chaotic conditions when the band marched in public and found that plaintiff had poor rapport with his students, often directing them to do things without explanation. Also, plaintiffs failure to maintain correct discipline in the bandroom was most unsatisfactory. Principal Mood stated that he had recommended Torrence in prior years since it had been determined that he should have three years to establish a good band program, but that plaintiff’s performance had not improved. Superintendent Meadows testified that the primary reason for the non-renewal was the steady decline in student participation and performance of the band. Secondly, he attributed the non-renewal to a decline in band ratings at state contests where the comments of adjudicators showed that there was no improvement from one year to the next. A third reason was the unfortunate disorganization in plaintiff’s planning of an instructional program and his inconsistent grading and teaching. A fourth reason was excessive disciplinary problems that plaintiff had with students. Finally, Meadows was of the opinion that the cause of many complaints he received from parents about lack of planning and coordination in the band program was that plaintiff had no rapport with the community. Meadows agreed with Mood in stating that they had seen no indication of improvement in the band program during the three years that plaintiff had been the band director and that since there had been a steady decline in student participation and band performance, plaintiff’s contract should not be renewed. Both specifically denied that their recommendation was racially motivated. Meadows stated further that he frequently counseled with plaintiff about the band problems and gave suggestions on ways in which the administration might assist. These counseling sessions were held when plaintiff was first employed as high school band director and they continued each year. The superintendent stated that he was unable to communicate with plaintiff, who was more interested in justifying his actions than in seeking solutions for an improved band program.

8. The court finds as a fact that the non-renewal of plaintiff’s contract in April 1982 was, in fact, based upon plaintiff’s unsatisfactory performance as band director and that the reasons proffered by the school board in its June 4, 1982, decision are supported by substantial evidence. The court further finds that plaintiff abandoned any claim that the school officials retaliated against him because of his previous filing of an EEOC charge since he gave no testimony to that effect either at the board hearing or in this court. In any event, there is no factual basis for a claim of retaliatory conduct. The court further finds as a fact that the recommendation of Mood and Meadows not to hire the plaintiff and the school board’s decision upholding such recommendation was not in any way racially motivated.

9. Although the court was impressed with plaintiff’s dedication to music and the earnestness of his manner at trial, nonetheless his inability to develop a high school band that could effectively function, after having three years to achieve such a result, justified the school board in discontinuing his further employment. It is not for this court to say that plaintiff should have been given more time to reach the objective that he and the defendants desired. Suffice it to say that the non-renewal was not actuated by racial considerations and was within the discretion of school officials which this court is bound to respect.

II. Conclusions of Law

1. In a disparate treatment case involving a discharge situation, a Title VII plaintiff carries the initial burden of establishing a prima facie case of discrimination. See Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093-94, 67 L.Ed.2d 207 (1981). Generally, the plaintiff must show that “(1) he belongs to a group protected by the statute; (2) he was qualified for the job from which he was suspended and not rehired; (3) he was terminated; and (4) after his termination, the employer hired a person not in plaintiff's protected class, or retained those, having comparable or lesser qualifications, not in plaintiffs protected class.” Whiting v. Jackson State University, 616 F.2d 116, 120-21 (5th Cir.), reh’g denied, 622 F.2d 1043 (5th Cir.1980). However, this four-part test is not the exclusive method by which a plaintiff may make prima facie proof of discriminatory discharge. Byrd v. Roadway Express, 687 F.2d 85, 86 (5th Cir.), reh’g denied, 691 F.2d 502 (5th Cir.1982). The basic inquiry is whether or not one can infer from the employer’s actions, if unexplained, that those actions were based, more likely than not, on illegal discriminatory factors. Furnco Construction Corp. v. Waters, 438 U.S. 567, 576, 98 S.Ct. 2943, 2949, 57 L.Ed.2d 957 (1978) (quoting Teamsters v. United States, 431 U.S. 324, 358, 97 S.Ct. 1843, 1866, 52 L.Ed.2d 396 (1977)).

Once a plaintiff has established a prima facie case, the defendant must attempt rebuttal by clearly articulating a legitimate, nondiscriminatory reason for the employment decision. Sanchez v. Texas Commission on Alcoholism, 660 F.2d 658, 660 (5th Cir.1981). A defendant does not bear the burden of persuading the court that he was actually motivated by the proffered reasons; rather, an employer need only raise a genuine issue of fact as to whether there was illegal discrimination involved in plaintiff's discharge. If an employer satisfies its burden of production, the burden again shifts to the plaintiff to prove that the proffered reasons are not merely pretextual. Id. at 660-61.

When Title VII and 42 U.S.C. § 1983 are used as parallel remedies in a disparate treatment suit, the same substantive elements are applicable for recovery under both statutes. Nilsen v. City of Moss Point, 701 F.2d 556, 559 n. 3 (5th Cir.1983). The same principles also apply when Title VII disparate treatment claims are brought in conjunction with claims under 42 U.S.C. § 1981. Adams v. McDougal, 695 F.2d 104, 109 (5th Cir.1983).

2. In the instant suit, we conclude that plaintiff did present a prima facie case of disparate treatment as defined under Title VII. However, upon defendants’ articulation of legitimate, nondiscriminatory reasons for non-renewal of Torrence’s contract, the presumption raised by the prima facie ease disappeared. The court holds that plaintiff did not carry his burden of demonstrating that those reasons were a mere pretext, either by casting doubt on their truth or by proving that a discriminatory purpose more likely motivated defendants’ decision. Substantial evidence supports the finding that plaintiff’s non-renewal was because of his unsatisfactory performance. Therefore, plaintiff is not entitled to recovery under Title VII.

3. Upon plaintiff’s failure to prove pretext under Title VII, we must also conclude that no recovery is available under 42 U.S.C. §§ 1981 and 1983.

4. Defendants moved, in the event that judgment was granted in their favor, that plaintiff be required to pay their attorneys’ fees and expenses pursuant to 42 U.S.C. § 1988. The motion is not well taken and is denied. Mr. Torrence’s suit was not frivolously brought. To the contrary, it was brought in good faith, and plaintiff was able to make a prima facie case pursuant to Title VII and 42 U.S.C. §§ 1981 and 1983. See E.E.O.C. v. Christianburg Garment Co., Inc., 550 F.2d 949, 951-52 (4th Cir.1977).

Let an order issue accordingly.

      . All individual defendants are sued both in their individual and official capacities.

      . The signers of the petition were parents of white high school students, including Mrs. Snavely, the wife of Luther Snavely, University of Mississippi band director, who later testified against plaintiff in the 1980 hearing before Professor Blackston.