source: Caselaw Access Project

author: HAIGHT, District Judge:

license: Public Domain

text:
    UNITED STATES of America, v. Anthony VARBARO, Defendant.
    No. 84 Cr. 656-CSH.
    United States District Court, S.D. New York.
    Nov. 13, 1984.

      Rudolph W. Gmliani, U.S. Atty., S.D. N.Y., New York City, for the U.S.; Kenneth I. Schacter, Asst. U.S. Atty., New York City, of counsel.
    Aronwald & Pykett, New York City, for defendant; William I. Aronwald, New York City, of counsel.
   MEMORANDUM OPINION AND ORDER

HAIGHT, District Judge:

In a two-count indictment filed September 7, 1984, defendant, a Westchester County electrical contractor, is charged with bribery of a Staten Island municipal electrical inspector. The indictment charges violations of the Interstate Travel in Aid of Racketeering statute (“the Travel Act”), 18 U.S.C. § 1952, which makes it a crime to use “any facility in interstate ... commerce ... to promote ... any unlawful activity,” and the Mail Fraud statute, 18 U.S.C. § 1341. Defendant moves to dismiss the indictment as a whole and the two counts individually and for an order directing the filing of a bill of particulars and the taking of a pretrial deposition of a key witness.

I.

The ground for dismissal of Count One, charged under the Travel Act, is simply stated: defendant contends that any mailings made in connection with his alleged activities moved within New York State only and that a Travel Act violation cannot be premised upon intrastate mailings. Although the indictment does not specify the origin and destination of the predicate mailings, the Government does not contest that it bases its prosecution only upon intrastate mailings. Instead it argues that the Travel Act applies to any use of the mails. No appellate case is cited on this point of statutory construction.

The language of the Travel Act, the requisite starting point for the interpretation of its provisions, arguably supports either position. The Act subjects to criminal penalty anyone who “travels in interstate or foreign commerce or uses any facility in interstate or foreign commerce, including the mail, with intent to ... (3) ... promote, manage, establish, [or] carry on ... any unlawful activity.” 18 U.S.C. § 1952(a). Section 1952(b) enumerates the specific crimes which constitute, “unlawful activity” for the purposes of § 1952(a). These include bribery.

Defendant notes that the statute requires use of a facility in interstate commerce rather than a facility of interstate commerce. In the realm of securities regulation this difference in prepositions has been used to distinguish between statutes requiring actual interstate activity (“in”) and mere intrastate use of an instrumentality of commerce which otherwise runs interstate (“of”). See Spilker v. Shayne Laboratories, Inc., 520 F.2d 523, 525 (9th Cir.1975), and cases cited therein. This distinction was relied on by Judge Metzner in holding that when a Travel Act prosecution is based on use of the telephone wires, actual interstate calls must be shown to satisfy the “in” interstate commerce requirement. United States v. De Sapio, 299 F.Supp. 436, 448-449 (S.D.N.Y.1969), aff'd., 435 F.2d 272 (2d Cir.1970), cert. denied, 402 U.S. 999, 91 S.Ct. 2170, 29 L.Ed.2d 166 (1971). The Government answers that too much should not be made of the “in-of” distinction, for Congress itself was not particularly careful in its use of this language. The specific example cited is the House Report on the Travel Act, which states that the Act is intended “to prohibit ... the use of the facilities of interstate ... commerce, including the mail, in aid of racketeering enterprises.” (emphasis added). H.R.Rep. No. 966, 87th Cong., 1st Sess., reprinted in, 1961 U.S.Code Cong. & Ad.News 2664, 2664-65. The force of this argument is undercut somewhat by the fact that the drafters of the House Report may not have had the same motive for painstaking scrutiny of their language as do legislators. Their writing is, after all, exegesis rather than text. Nevertheless, the point is well-taken; this discrepancy cautions against excessive reliance on a single preposition.

The Government also raises an affirmative argument in defense of its position. It argues that the language of § 1952 differentiates use of the mail from use of other facilities by referring to the mail separately: “... uses any facility in interstate ... commerce, including the mail____” 18 U.S.C. § 1952(a). It is argued that

by singling out the mail from other facilities in the Act’s language, Congress plainly intended to make clear that it considered the mails , to be a “facility in interstate ... commerce” by its very nature; thus the phrase, “including the mails [sic],” as used in the statute, is intended to be descriptive of a “facility in interstate ... commerce,” whether or not the mails are used in an interstate fashion in that particular case---- Indeed, had Congress intended the construction now urged by Varbaro ... it could easily have used the phrase, “any facility, including the mails, in interstate ... commerce” to make clear that it deemed interstate mailing necessary.

Government’s Memorandum of Law in Opposition at 6-7.

The argument has some merit. The grammatical implication of placing “including the mail” after “commerce” rather than “facility” is to make it appear that the mail is intended to be taken as not merely a facility but a facility in interstate commerce. In opposition, defendants cite of § 17(a) of the Securities Act of 1938, 15 U.S.C. § 77q(a). Section 17(a) forbids securities fraud by way of “any means or instruments or transportation or communication in interstate commerce or by the use of the mails." (emphasis added). The argument is that this statute demonstrates that when Congress intends to hinge liability on any use of the mails it does so by separating entirely the reference to the mails from the reference to a “facility in interstate commerce.” Defendant argues, of course, that the absence of such a separate reference to any use of the mails in § 1952(a) indicates that Congress intended the reference to “mail” to be governed by “facility in interstate ... commerce” and thus to require an interstate mailing.

The statutory language appears to wrestle itself to a draw. Both parties’ arguments are, in isolation, persuasive. Added together, they indicate that drawing any firm conclusion solely from the statutory language is unwise. The references are simply too ambiguous to give a conclusive answer on this relatively subtle point.

It is a familiar principle of statutory construction that when the language of the statute is ambiguous, courts must turn to the legislative history, construing the statute in light of the purposes it was designed to serve. Kokoszka v. Belford, 417 U.S. 642, 650, 94 S.Ct. 2431, 2436, 41 L.Ed.2d 374 (1974). The intent of the drafters, according to the Report of the House Judiciary Committee, was to combat the interstate activities of organized crime. H.R. Rep. No. 966, 87th Cong., 1st Sess., reprinted in 1961 U.S.Code Cong. & Ad.News 2664. The bill grew out of the concern of Attorney General Robert Kennedy with racketeers who lived in one state while managing and profiting from criminal activities in another. The need for federal intervention in the prosecution of such traditionally state crimes was justified by the difficulty local law enforcement officials encountered in prosecuting the out-of-state bosses. As Kennedy’s testimony is summarized in the Report, “[t]he racketeer would be beyond the control of the police in the State of operation and living as a respected citizen in the State of his abode.” Id., at 2665. The Report is at pains to point out that the bill is not intended to pre-empt state prosecution of the predicate unlawful activities. Id.

The Supreme Court has summarized congressional intent thus: “§ 1952 was aimed primarily at organized crime and, more specifically, at persons who reside in one State while operating or managing illegal activities located in another.” Rewis v. United States, 401 U.S. 808, 811, 91 S.Ct. 1056, 1059, 28 L.Ed.2d 493 (1971). In considering somewhat different facts, Rewis warned that “an expansive Travel Act would alter sensitive federal-state relationships, could overextend limited federal police resources, and might well produce situations in which the geographic origin of customers [of gambling operations, the specific crime prosecuted in Rewis], a matter of happenstance, would transform relatively minor state offenses into federal felonies.” Id., at 812, 91 S.Ct. at 1059. Given this risk, courts were counseled that “ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity [citation omitted].” Id. Later Supreme Court pronouncements have re-emphasized congressional preoccupation with interstate criminal activity. See, e.g., Erlenbaugh v. United States, 409 U.S. 239, 245, 93 S.Ct. 477, 481, 34 L.Ed.2d 446 (1972) (“... part[] of a comprehensive federal legislative effort to assist local authorities in dealing with organized criminal activity which, in many instances, had assumed interstate proportions and which in all cases was materially assisted in its operations by the availability of facilities of interstate commerce.”); Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 199 (1979) (“Congress employed its now familiar power under the Commerce Clause of the Federal Constitution to prohibit activities of traditional state and local concern that also have an interstate nexus.”).

Although our Court of Appeals has never directly addressed the specific question before me, its decision in United States v. Archer, 486 F.2d 670 (2d Cir.1973), is instructive in this aspect of Travel Act interpretation. The Archer court dismissed a federal Travel Act prosecution of corruption within the Queens County district attorney’s office, finding that the three interstate telephone calls on which federal jurisdiction was premised — two of which were made by a government agent and the third by a defendant in a futile attempt to contact the agent — were not substantial enough to satisfy the Act’s requirement of interstate activity. It must be emphasized that Archer’s primary concern, the manufacture of federal jurisdiction by federal prosecutors, is not present here. Nevertheless, Archer sheds light on the importance of an interstate nexus to a Travel Act prosecution.

First, it must be noted that Archer is implicitly a ratification of the correctness of Judge Metzner’s holding in De Sapio, supra, that when a telephone call is the jurisdictional premise of a Travel Act. prosecution the call must travel interstate. Otherwise Judge Friendly’s concern with the manufacture of federal jurisdiction by way of the artificial creation of interstate calls would be pointless. Plainly the Archer defendants made plenty of intrastate calls on which federal jurisdiction could be premised, if intrastate calls would suffice. There is no indication in the opinion, however, that telephone calls are the only means of communication with which Archer is concerned. Judge Friendly’s discussion of the legislative history of the bill emphasizes that Congress was concerned with truly interstate crime. 486 F.2d at 679-680. Indeed, in a significant footnote he notes that the expansive jurisdictional language on which the Government now relies was added by Congress “[p]ossibly through inadvertence ... during [the Act’s] rush toward passage.” 486 F.2d at 679 n. 10. He further comments that “the legislative background at least indicates that Congress did not regard the use of interstate facilities for purposes other than travel or transportation as among the central targets of the Act.” 486 F.2d at 680 n. 10.

Archer’s ultimate holding is that the interstate activity on which a Travel Act prosecution is premised must, if it is supplied by governmental activity, have some substantial relationship to the crime. 486 F.2d at 685-686. This holding is premised not upon the narrow ground that the language of the statute requires telephone use to be interstate, as in De Sapio, but upon the impression which emerges so strongly from the legislative history that Congress sought to inhibit only truly interstate crime. See, 486 F.2d at 679-681, 686. Because this is so, the holding has implications stretching beyond governmentally created jurisdictional facts. It implies that every prosecution must involve some interstate activity. There is no hint in either the opinion or the legislative history it cites that mails were exempt from congressional intent. Of course, the role of the mails was not directly an issue in Archer. But Archer’s emphasis on the interstate concerns of Congress is nonetheless instructive.

The contemporary legislative expressions of intent are unambiguous in indicating exclusive congressional concern with interstate crime. The Government argues, however, that these must be tempered with a more recent indication of Congress’s aims. The omnibus crime bill enacted in the last days of the most recent Congress, The Comprehensive Crime Control Act of 1984, contains a provision akin to § 1952. Codified as 18 U.S.C. § 1952A, this new statute makes involvement in “murder-for-hire” a federal crime. The jurisdictional language sanctions “[wjhoever travels in or causes another ... to travel in interstate or foreign commerce, or uses or causes another ... to use the mail or any facility in interstate or foreign commerce ...” in connection with the hiring of a killer. The Government notes that this statute, directed at a problem similar to those which concerned the Travel Act’s drafters, unequivocally premises federal power on any use of the mails. It argues that Congress intends the two statutes to be interpreted identically, citing as authority the Senate Judiciary Committee’s report on. the statute.

It must first be remarked upon that although the two statutes are numbered similarly, they are worded differently. Section 1952A quite clearly premises federal jurisdiction on any use of the mails by separating the reference to the mails from the “facility” reference; as discussed at length above, § 1952 does not. In fact, § 1952A supports defendant’s position, noted earlier, that when Congress wishes to premise federal jurisdiction upon any use of the mails it does so by unambiguously separating the references to the mails and the other facilities of interstate commerce.

Further, I cannot accept the Government’s characterization of the two statutes as “dealing with the same subject matter” so as to imply that they should be identically interpreted. See Hargrave v. Oki Nursery, Inc., 646 F.2d 716, 720 (2d Cir.1980). Section 1952A is aimed at one very specific crime,, the hiring of individuals to commit murder. As the Senate Report discusses at length, the grave nature of this crime makes it of special federal concern. S.Rep. No. 225, 98th Cong., 1st Sess. 304-305 (1983). Indeed, the Senate Committee did not anticipate that all such crimes would be federal concerns but only those of particular seriousness. Id. at 305. In contrast, § 1952 deals with a much wider spectrum of far less serious crimes. It is quite rational to suppose that Congress wished to give prosecutors the statutory tools to reach every murder-for-hire with any federal nexus but to limit federal government involvement in lesser crimes to those with the type of interstate connections which make local prosecution difficult or impossible. See, e.g., Rewis, supra, 401 U.S. at 811, 91 S.Ct. at 1059. Not only is that rational, the statutory histories reveal that it is what was intended.

The Government emphasizes a footnote in the committee report which, it is claimed, indicates congressional intention “that the statutes be construed similarly.” The footnote in question is only marginally pertinent here. It states that the committee “intends the full breadth of the phrase ‘any facility in interstate or foreign commerce’ as used in [the Travel Act] also be applicable here. See Erlenbaugh v. United States, 409 U.S. 239, 93 S.Ct. 477, 34 L.Ed.2d 446 (1972) (interstate newspaper),” and entirely fails to mention the mails. S.Rep. No. 225, supra, at 306 n. 5. Yet even if the footnote stated precisely what the Government claims that it does, two factors would give me pause in retroactively amending § 1952 to include every use of the mails. First, the views of a subsequent Congress on interpretation of a statute cannot override the unmistakable intent of the enacting one. Teamsters v. United States, 431 U.S. 324, 354 n. 39, 97 S.Ct. 1843, 1864 n. 39, 52 L.Ed.2d 396 (1977). I think the intent of the 87th Congress is quite clear. More important is the view of the most recent Congress as expressed in other portions of the very report on which the Government relies. One of the first issues mentioned in the report’s discussion of § 1952A is its encroachment on what has traditionally been regarded as a crime of state concern, murder. The committee more or less apologizes for involving the federal government in murder prosecutions, justifying the intrusion by noting the gravity of the crime and its intention that only the most serious examples will be federally prosecuted. In other words, even in enacting § 1952A Congress sought to upset the traditional distribution of federal and state power as little as necessary to accomplish its aims. The lesson can be well taken here. In enacting § 1952, Congress sought to inhibit crime which, for whatever reason, stretched from one state into another. The interpretation of § 1952 the Government now proposes would intrude the federal government into vast areas of traditional state concern without in the least furthering. Congress’s express aims. The spirit of the drafters of § 1952A is furthered most by the more restrictive interpretation of § 1952.

In conclusion, examination of the legislative history of the statute and its subsequent judicial construction fails utterly to support the prosecution’s position. In enacting the Travel Act, Congress was not acting to safeguard the integrity of the mails. It had a different, very specific, purpose in mind: to provide federal prosecutors with a tool to fight certain types of otherwise “local” crime which were inspired and conducted by individuals who operated beyond the prosecutorial grasp of local law enforcement officials. The idea that an intrastate mailing is sufficient to trigger the Act’s sanctions — at least when, as here, there is no other “interstate nexus” — is wholly inconsistent with this purpose. Further, the idea threatens to expand federal prosecutions far beyond proper bounds. The Government’s theory would convert to federal crimes all instances of the local crimes which are enumerated in § 1952(b) whenever a letter is mailed in the midst of their commission. There is no indication Congress intended this; on the contrary, the Supreme Court has implicitly held that Congress had no intention to alter accepted federal-state relationships and convert “relatively minor state offenses” into federal crimes. Rewis, supra, 401 U.S. at 812, 91 S.Ct. at 1059. The reference to the mail in the statute must be read in light of congressional desire to hamper interstate crime. There is nothing in the history which supports the Government’s theory that use of the mail was intended to be excepted from this general intent. Therefore, when only an intrastate mailing is proven, some other “interstate nexus” must be shown. The Government does not contend that defendant made any interstate travels, communications, or mailings in the course of committing the bribery charged. Count One is dismissed.

II.

The defendant’s second contention is that the mail fraud count, Count Two, should be dismissed because the mailings which the Government intends to prove at trial “could not have furthered the alleged fraudulent scheme” which the statute requires. Defendant’s Memorandum, at 12. The Government will apparently seek to prove that Varbaro handed a Staten Island electrical inspector at a Staten Island work-site one hundred dollars. The mailings which the Government has charged are Varbaro’s initial written application for an electrical inspection, apparently mailed by Varbaro to the Bureau of Electrical Control in Manhattan, and his permit to perform electrical work, mailed by the Bureau to Varbaro. Defendant contends that these were not sufficiently connected with the bribery to satisfy the statute, which requires the mails be used “for the purposes of executing” a scheme to defraud. 18 U.S.C. § 1341.

I must agree with the Government that this motion is premature. Where resolution of a motion depends upon facts which do not emerge clearly from the indictment a trial is necessary. Rule 12(b), Fed.R.Crim.P. Whether the mailings were “incident to an essential part” of the scheme to defraud, Pereira v. United States, 347 U.S. 1, 8, 74 S.Ct. 358, 362, 98 L.Ed. 435 (1954), depends upon the contours of the scheme proven. It may be, as defendant contends, that the scheme did not involve approval of substandard work or that it ended prior to the mailings, but these are questions of fact which must be explored at trial. They may not be raised in a pretrial challenge to the indictment. Rule 12(b), Fed.R.Crim.P.; cf. United States v. DePalma, 461 F.Supp. 778, 794 (S.D.N.Y.1978); United States v. Black, 291 F.Supp. 262, 264 (S.D.N.Y.1968); United States v. Greater Syracuse Board of Realtors, Inc., 449 F.Supp. 887, 899 (N.D.N.Y.1978); United States v. Walker, 514 F.Supp. 294, 302 (E.D.La.1981). Defendant is free to renew his motion at the close of the evidence.

III.

Defendant next challenges the specificity of the indictment. My decision in part I of this opinion moots any objections to the specificity of Count One. The objection to Count Two is that it fails to specify the date, sender, addressee, and content of the mailed items on which the mail fraud charge is premised. In response to this claim, the Government has consented to supply such a list to defense counsel “well in advance of trial.” This will be adequate to cure the defect. See United States v. Margiotta, 646 F.2d 729 (2d Cir.1981), cert. denied, 461 U.S. 913, 103 S.Ct. 189, 77 L.Ed.2d 282 (1983). The Government is directed to supply the defendant before November 19 a list of the dates of máiling, senders and recipients, and contents of the mailings on which Count Two is based.

IV.

Explanation of the fourth ground for dismissal requires recounting the background of this prosecution. Plaintiff was arrested along with a number of other contractors and several electrical inspectors from Richmond and Kings counties. The arrests were apparently the result of an investigation by New York City officials, but the cases were turned over to the Office of the United States Attorney for the Southern District of New York for prosecution. According to his statements at the time of the arrests, New York City Mayor Edward Koch asked federal officials to prosecute because of his belief that state court judges do not consider bribery of public officials a serious crime and do not impose harsh enough sanctions on those extending and accepting bribes.

Defendant contends that this maneuver shows a “reckless disregard for delicate principles of comity and federalism” and “thwarts” New York State public policy by denying to defendant the advantage of a particular defense under state law to a charge of bribery and a particularly helpful state rule of evidence.

Assuming the truth of these allegations — that defendant will in fact be denied certain helpful rules of law — I see nothing in the above which justifies dismissal of the indictment. These cases were consensually passed from local to federal authorities. Thus the risk against which principles of comity are designed to protect, that the federal government will usurp authority which is properly the states’, is not threatened. Defendant has no right to be charged and tried under state authority when his actions constitute both a state and a federal crime. See, United States v. Mandel, 591 F.2d 1347 (4th Cir.1979), cert. denied, 445 U.S. 961, 100 S.Ct. 1647, 64 L.Ed.2d 236 (1980). The charges in the indictment do state a federal crime, namely, mail fraud. See, e.g., United States v. Margiotta, 688 F.2d 108, 121 (2d Cir.1982), cert. denied, 461 U.S. 913, 103 S.Ct. 1891, 77 L.Ed.2d 282 (1983). While it may be true that the evidence will reveal, after trial, the type of small-time, harmless “tipping” seen in United States v. McNeive, 536 F.2d 1245 (8th Cir.1976), that possibility does not justify dismissal of the indictment, although the Government must, of course, prove a federal crime at trial. But the mere fact that a small amount of money is involved does not demonstrate the type of investigative and prosecutorial overreaching which caused the Second Circuit to rebel in United States v. Archer, supra. Nothing in this prosecution gives rise to cause for invocation of the Court’s “supervisory power.” See United States v. Hasting, 461 U.S. 499, 103 S.Ct. 1974, 1978, 76 L.Ed.2d 96 (1983).

V.

The defendant moves for an order directing' the prosecution to file a bill of particulars giving details of the scheme to defraud charged in Count Two. In particular, he wishes to know whether the Government contends that he received a specific quid pro quo in return for his alleged payment to the electrical inspector.

The purpose of a bill of particulars is to insure that a defendant is adequately apprised of the charges made against him, to avoid unfair surprise at trial, and to enable the defendant to prove double jeopardy if necessary. Wong Tai v. United States, 273 U.S. 77, 47 S.Ct. 300, 71 L.Ed. 545 (1929); United States v. Cafaro, 480 F.Supp. 511, 517 (S.D.N.Y.1979). A bill is not to be used to accomplish discovery of the Government’s evidence, United States v. Gottlieb, 493 F.2d 987, 994 (2d Cir.1974), or unduly to restrict the Government’s presentation of proof at trial. Carfaro, supra, 480 F.Supp. at 517.

The Government’s pretrial disclosures have already satisfied the bulk of defendant’s request. It is clear when and to whom the Government contends the bribe was offered. No further disclosure along these lines is warranted. See United States v. Gordon, 493 F.Supp. 814, 816 (N.D.N.Y.1980), aff'd., 655 F.2d 478 (2d Cir.1981). The only remaining question is the purpose for which the Government intends to prove the bribe was offered. Ordinarily a request for such information would constitute an impermissible inquiry into the Government’s theory, United States v. Lavin, 504 F.Supp. 1356, 1361 (N.D.Ill.1981), and defendant has failed to state any reason why the failure to order disclosure will cause him unfair surprise at trial. This request for further disclosure is denied.

VI.

Finally,, the defendant requests a pre-trial deposition of Israel Dembitzer. Dembitzer is the inspector to whom the bribe was allegedly offered. By the time the money changed hands, Dembitzer had apparently begun to work for the Government. He used a Nagra recorder to tape the conversation which transpired when Varbaro gave him the money. Varbaro requests a pretrial deposition pursuant to Rule 15(a), Fed.R.Crim.P.

The rule permits a deposition when exceptional circumstances exist and the interests of justice would be served. Defendant claims that not all of his conversations with Dembitzer were recorded. He argues that the unrecorded conversations with Dembitzer, about which he wishes to elicit testimony, will demonstrate that he was entrapped. He notes that if for some reason Dembitzer is unavailable to testify the tapes of his conversations with defendant will nevertheless be introduced at trial. He will thus be incriminated but have no opportunity to present the evidence of entrapment which would serve as a defense to the charges. He argues that this potential prejudice justifies a deposition to preserve the exculpatory testimony in the event Dembitzer cannot testify.

Rule 15 depositions are not to be used for discovery but for the preservation of testimony. United States v. Steele, 685 F.2d 793, 809 (3d Cir.), cert. denied, 459 U.S. 908, 103 S.Ct. 213, 74 L.Ed.2d 170 (1982). As such, the Rule contemplates that parties take depositions only of their own witnesses, United States v. Rich, 580 F.2d 929, 934 (9th Cir.), cert. denied, 439 U.S. 935, 99 S.Ct. 330, 58 L.Ed.2d 331 (1978), although for a defendant it is enough to show that the testimony is material to his defense. United States v. Bronston, 321 F.Supp. 1269, 1272 (S.D.N.Y.1971). The burden is on the moving party to demonstrate circumstances justifying the depositions. United States v. Whiting, 308 F.2d 537 (2d Cir.1962), cert. denied, 372 U.S. 909, 83 S.Ct. 722, 9 L.Ed.2d 718 (1963).

It is commonly said that depositions are appropriate if a witness “is unavailable to appear at trial.” United States v. Johnpoll, 739 F.2d 702, 709 (2d Cir.1984). Although the rule does not necessarily require a showing of certainty that a witness will be unavailable, surely it requires a showing of a specific reason why the witness might not be available. Unfounded speculation is not enough. There is always the possibility that a witness will not be available. This cannot create “exceptional circumstances.”

Nor are exceptional circumstances created by the fact that this witness possesses potentially exculpatory knowledge. Dembitzer is unusual in that he can allegedly supply inculpatory testimony which does not depend upon his presence — i.e., the tape recordings — and exculpatory testimony which does. Yet a moment’s thought reveals that the argument defendant propounds could be raised in regard to any witness possessing knowledge material to a defense. There is always the risk that such people might disappear, leaving the prosecution’s case intact while decimating the defendant’s. The fact that here one witness is allegedly the source of both does not materially separate it from the ordinary situation. If Dembitzer possessed the exculpatory knowledge while another witness possessed inculpatory knowledge, defendant could not automatically take Dembitzer’s deposition, although in that circumstance Dembitzer’s absence would leave only inculpatory evidence. Nothing is changed by his being the source of both. There is nothing exceptional here.

Defendant has failed to carry his Rule 15(a) burden of showing exceptional circumstances. The motion for a pretrial deposition is denied.

SUMMARY

Count One of the indictment is dismissed. Defendant’s motions to dismiss Count Two, for a bill of particulars, and for a pre-trial deposition are denied. The Government is directed to detail the mailings as described in section III, supra, by November 19, 1984.

It is SO ORDERED.

      . Defendant does not contest that the federal government has the power to impose criminal sanctions on those who use intrastate mailings to aid otherwise unlawful activity, nor would such an objection succeed. See, e.g., Electric Bond & Share Co. v. SEC, 92 F.2d 580, 588 (2d Cir.1937); Holmes v. United States, 134 F.2d 125, 135 (8th Cir.1943). He simply argues that Congress has not chosen to do so.

      . The Government informs me that Judges Edelstein and Owen of this Court recently summarily denied identical motions in substantially similar cases, United States v. Sollitto, 84 Cr. 636 (DNE) and United States v. DiMiceli, 84 Cr. 542 (RO). This appears to be so, but in neither case did the judge file a written analysis of his reasoning, and, with due respect to my brethren, my own analysis leads me to a different conclusion.

      . As noted above, courts have interpreted the "in interstate commerce” language in § 17(a) to require actual interstate use of an "instrumentality” of commerce.


author: WILL, District Judge.

text:
    ECC COMPUTER CENTERS OF ILLINOIS, INC., an Illinois corporation, Plaintiff, v. ENTRE COMPUTER CENTERS, INC., a Delaware corporation, Defendant.
    No. 84 C 7034.
    United States District Court, N.D. Illinois, E.D.
    Nov. 15, 1984.

      Ira J. Bornstein, Harvey J. Barnett & Assoc. Ltd., Chicago, 111., for plaintiff.
    William D. Snapp, Jenner & Block, Chicago, 111., for defendant.
   MEMORANDUM OPINION

WILL, District Judge.

Before us in this diversity action is defendant Entre Computer Centers, Inc.’s (Entre) motion to dismiss for improper venue under Fed.R.Civ.P. 12(b)(3) or, alternatively, to transfer venue under 28 U.S.C. § 1406(a) based on a venue selection provision within a franchise agreement between it and ECC Computer Centers of Illinois, Inc. (ECC). For the reasons hereinafter stated, we find that the venue selection provision is invalid and unenforceable and we, therefore, deny defendant’s motion.

On August 15, 1984, ECC filed a six-count complaint. For purposes of Entre’s motion to dismiss, we take the allegations in the complaint as true and view them, as well as any reasonable inferences to be drawn from them, in the light most favorable to ECC. See Powe v. City of Chicago, 664 F.2d 639, 642 (7th Cir.1981).

ECC is an Illinois corporation with its principal place of business in Chicago, Illinois. It was formed to be in the business of owning and operating computer stores. Entre, a Delaware corporation with its principal place of business in Vienna, Virginia, is a franchisor of computer stores throughout the country. In late 1983, ECC negotiated with Entre for a computer franchise in Chicago. At that time, Entre had only one computer franchisee in Chicago, located on Wells Street near the Loop. On January 28, 1984, ECC entered into an agreement with Entre whereby a proposed computer store would be located in Chicago and after the franchisor (Entre) approved the store’s location, the approved site would be attached as Appendix A to the Franchise Agreement (Agreement). Complaint, Ex. A, ¶ I. When the Franchise Agreement was executed ECC paid $40,000 to Entre as the franchise fee.

After execution of the Agreement, ECC sought a suitable location in the Loop, based upon Entre’s verbal representations that the proposed store would be located in downtown Chicago, even though the exact site had not yet been selected. In March, 1984, ECC notified Entre that it had obtained a proposed long-term lease for space in the Chicago Title and Trust Building at Clark and Washington Streets. Soon thereafter, James J. Edgette, Entre’s vice president of marketing, informed ECC that it had come to Entre’s attention that the existing franchise in downtown Chicago had a two mile radius limit which prevented the establishment of another franchised store without the existing franchisee’s written consent. Entre was unable to obtain such consent. Letter from Edgette to Howard Barnett, president of ECC (Mar. 20, 1984). Edgette offered either to rescind the Agreement and refund the $40,-000 fee or to allow ECC to select another site beyond the two mile limit. Id.

Subsequently, ECC brought this action against Entre claiming fraud (count I) and seeking actual damages of $130,000 and punitive damages of $750,000, scheme to defraud (count II), negligent misrepresentation (count III), mutual mistake of fact (count IV), breach of contract (count V), and violation of the Illinois Franchise Disclosure Act, Ill.Rev.Stat. ch. 121½, § 701, et seq., (the Act) (count VI).

The Agreement contained a venue selection clause, as well as a statement of applicable law, which provided that (1) the Agreement took effect upon the acceptance and execution by Entre in Virginia; (2) the Agreement would be construed under Virginia law which would prevail in the event of any conflict of law; (3) the parties agreed that any action brought either in state or federal court, “shall be brought within the Commonwealth of Virginia and [the parties] do hereby waive all questions of personal jurisdiction or venue for the purposes of carrying out this provision.” Pl. Ex. A (Agreement, ¶ XXII).

The Illinois Franchise Disclosure Act provides that “[a]ny provision in a franchise agreement which designates jurisdiction or venue in a forum outside of Illinois is void with respect to any cause of action which otherwise is enforceable in Illinois.” Ill.Rev.Stat. ch. 121½, § 703.1. ECC claims that the effect of this requirement is to render void and unenforceable the venue selection clause of the Agreement. At issue then is whether venue is properly in this Court for purposes of count VI (alleging violation of the Act). If it is, then we must also consider whether the venue selection provision should be enforced so that the causes of action alleged in' the other five counts need be transferred to Virginia, with Virginia law to be applied.

In urging the enforcement of the contractual venue limitation, Entre claims that federal law, rather than state law, governs enforceability of the provision as it is a procedural matter. Erie R.R. v. Tompkins, 304 U.S. 64, 92, 58 S.Ct. 817, 828, 82 L.Ed. 1188 (1938). Alternatively, it argues that even if enforcement of the provision is considered a substantive issue, requiring the application of Illinois law, including Illinois conflict of laws decisions, Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), that law would lead to application of Virginia substantive law which would recognize the validity of the Agreement’s venue selection provision.

We need not, however, reach the issue of which should apply: The state law applicable under Erie, the Illinois Franchise Disclosure Act, produces the same result as the leading United States Supreme Court decision, The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). Although it is not patently clear whether a court sitting in diversity should follow the Bremen approach towards forum selection or whether Erie mandates application of state law , “[s]ince there is no significant difference between the federal and state rule, it is not necessary to choose between them.” Wellmore Coal Corp. v. Gates Learjet Corp., 475 F.Supp. 1140, 1143 (W.D.Va.1979); Central Contracting Co. v. Maryland Casualty Co., 367 F.2d 341, 344-45 (3d Cir.1966).

Except in certain circumstances, courts must give effect to freely negotiated forum selection clauses, Snyder v. Smith, 736 F.2d 409, 419 (7th Cir.1984), given the realities of commercial dealings and the reasonable expectations of the parties. Nevertheless, “[a] contractual choice-of-forum should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.” Bremen, supra, 407 U.S. at 15, 92 S.Ct. at 1916 (emphasis added). Illinois public policy may be found in its judicial decisions, legislation, and construction. Resorts International, Inc. v. Zonis, 577 F.Supp. 876, 877 (N.D.Ill.1984), citing Marchlik v. Coronet Insurance Co., 40 Ill.2d 327, 332, 239 N.E.2d 799, 802 (1968).

The parties have cited no cases interpreting the venue prohibitions of the Illinois Franchise Disclosure Act, nor have we discovered any. We, therefore, look only to the language of the Act to determine Illinois’ public policy with respect to the forum selection clause at issue here, bearing in mind that the party resisting enforcement of the clause bears the burden of proving its unreasonableness. Clinton v. Janger, 583 F.Supp. 284, 288 (N.D.Ill.1984), citing Bremen, supra; Cruise v. Castleton, Inc., 449 F.Supp. 564 (S.D.N.Y.1978).

The intent of the Act is clearly indicated as follows:

602. Findings and purpose
§ 2. Findings and purpose. (1) the General Assembly finds and declares that the widespread sale of franchises is a relatively new business phenomenon which has created numerous problems in Illinois. Illinois residents have suffered substantial losses where the franchisor or his representative has not provided full and complete information regarding the franchisor-franchisee relationship, the details of the contract between the franchisor and franchisee, the prior business experience of the franchisor and other factors relevant to the franchise offered for sale.
(2) It is the intent of this Act: (a) to provide each prospective franchisee with the information necessary to make an intelligent decision regarding franchises being offered for sale; and (b) to protect the franchisee and the franchisor by providing a better understanding of the business and the legal relationship between the franchisor and the franchisee.

Ill.Rev.Stat. ch. 121½, § 702. Presumably then, the ban on the enforcement of venue and jurisdiction provisions designating fora outside of Illinois, id. at section 703.1, is intended to solve some of the “numerous problems” caused by the sale of franchises in Illinois and to ensure that controversies stemming from such actions will be resolved in Illinois.

In an analogous situation, the Wisconsin Franchise Investment Law prohibited any attempt by the parties to contract out the otherwise applicable Wisconsin law and the District Court held that the law “embodie[d] a public policy of the State of Wisconsin which can best be dealt with by Wisconsin courts.” Lulling v. Barnaby’s Family Inns, Inc., 482 F.Supp. 318, 321 (E.D.Wis.1980), citing Bremen, supra, 407 U.S. at 15, 92 S.Ct. at 1916 (finding it “unreasonable” to require Wisconsin citizens to litigate their claims based on Wisconsin law in Illinois courts). See also Cutter v. Scott & Fetzer Co., 510 F.Supp. 905, 908-909 (E.D.Wis.1981) (refusing to enforce a forum selection clause as Wisconsin’s public policy, enunciated in its Fair Dealership Law, is better interpreted by a Wisconsin court); Sherman v. Pere Marquette Ry. Co., 62 F.Supp. 590, 593 (N.D.Ill.1945) (construing the Federal Employers’ Liability Act, 45 U.S.C. § 51, et seq.,) (“Venue is a privilege which may not be contracted away in the face of a specific statute which prohibits such contracting____”)

Based upon these considerations, we conclude that neither the rationale of Bremen nor the venue prohibitions in the Act permit the enforcement of the forum selection clause in the Agreement. Venue of count VI, therefore, is properly in this Court.

The question remaining for consideration is whether Entre’s alternate motion to transfer under 28 U.S.C. § 1406(a) should be denied as to the remaining counts. 28 U.S.C. § 1406(a) provides:

§ 1406. Cure or waiver of defects
(a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

By its express terms, this section applies only if venue is in the wrong division or district. Such is not the case here, at least with respect to count VI. Even if it were so, the “interest of justice” provisions of section 1406(a), as well as section 1404(a), would work to establish Illinois as the proper and most convenient forum to adjudicate the claims raised in counts I-V, as they arise out of the same set of facts and circumstances as count VI, all of the witnesses, except for Entre’s two employees, reside in Chicago, Aff. of Barnett, ¶ 6, Entre availed itself of the protection of Illinois law by complying with certain of the Act’s provisions, Def. Reply at 13, certain of the negotiations took place in Illinois, and performance of the contract was to take place in Illinois.

Conclusion

Defendant’s motion to dismiss for improper venue is denied. Its alternate motion to transfer under section 1406 is denied. An appropriate order will enter.

      . Several courts have held that state law applies on this issue. See, e.g., Davis v. Pro Basketball, Inc., 381 F.Supp. 1 (S.D.N.Y.1974); Lev v. Aamco Automatic Transmission, Inc., 289 F.Supp. 669 (E.D.N.Y.1969); Leasewell, Ltd. v. Jake Shelton Ford, Inc., 423 F.Supp. 1011 (S.D.Va.1976) (assuming without discussion that state law controlled). Other courts have adopted the Bremen approach. See, e.g., C. Pappas Co. v. E. & J. Gallo Winery, 565 F.Supp. 1015, 1017 (D.Mass.1983) (the enforcement of forum selection clauses is to be decided under federal law)’; Richardson Engineering Co. v. International Business Machines Corp., 554 F.Supp. 467, 469 and n. 3 (D.Vt.1981); Cutter v. Scott & Fetzer Co., 510 F.Supp. 905 (E.D.Wis.1981); Dick Proctor Imports, Inc. v. Sumitomo Corp., 486 F.Supp. 815, 8181 (E.D.Mo.1980) (venue is a matter of procedure and is governed by federal law); Taylor v. Titan Midwest Construction Corp., 474 F.Supp. 145, 147 (S.D.Tex.1979) (noting that in those cases where state law has been applied, the result under state law was substantially the same as it would have been under federal law); St. Paul Fire & Marine Insurance Co. v. Travelers Indemnity Co., 401 F.Supp. 927 (D.Mass.1975); Gaskin v. Stumm Handel GmbH, 390 F.Supp. 361 (S.D.N.Y.1975); In-Flight Devices Corp. v. Van Dusen Air, Inc., 466 F.2d 220, 234 n. 24 (6th Cir.1972).

      . We do not reach plaintiffs alternate argument that the forum selection clause, as part of a form contract with boilerplate language was not freely bargained for and is thus unenforceable. We note that some courts have indicated a willingness to consider this factor in a forum selection analysis. See, e.g., G.H. Miller & Co. v. Hanes, 566 F.Supp. 305 (N.D.Ill.1983); Cutter v. Scott & Fetzer Co., 510 F.Supp. 905, 908 (E.D.Wis.1981).


author: NICKERSON, District Judge.

text:
    LOUIS VUITTON S.A., Gucci Shops, Inc. and Fendi Paola N Sorelle SAS Company, Plaintiffs, v. SPENCER HANDBAGS CORP., Morris Rand, Pinny Rand and Arie Rand, Defendants.
    No. 83 C 1742.
    United States District Court, E.D. New York.
    Nov. 15, 1984.
    Motion to Amend Judgment Denied Dec. 19, 1984.

      Reboul, MacMurray, Hewitt, Maynard & Kristol, New York City (J. Joseph Bainton, Susan L. Arinaga, New York City, of counsel), for plaintiffs.
    Stanley A. Teitler, P.C., New York City (Stanley A. Teitler; Harvey Greene, Richard H. Levenson, New York City, of counsel), for defendants.
   NICKERSON, District Judge.

Plaintiffs Louis Vuitton S.A. (Vuitton), Gucci Shops, Inc. (Gucci), and Fendi Paola N Sorelle SAS Company (Fendi), brought this action for an injunction and damages for trademark infringement and unfair competition in violation of federal and New York state law.

Vuitton is a French corporation, Gucci a New York corporation, and Fendi an Italian corporation. Defendant Spencer Handbags Corp. (Spencer) is a domestic corporation doing business at 141 Spencer Street, Brooklyn, New York. Defendant Morris Rand is a substantial owner and the operator of Spencer. Defendants Pinny Rand and Arie Rand are sons of Morris Rand and do business at 1627 48th Street, Brooklyn, New York, where all three Rands live.

Plaintiffs sought an injunction and damages pursuant to 15 U.S.C. §§ 1114, 1116, 1117 and 1125, New York General Business Law § 368-d and New York common law, claiming infringement of plaintiffs’ trademarks, false designations of origin, false descriptions and unfair competition. The complaint alleged that defendants were offering handbags (virtually identical in appearance though not in quality to those of plaintiffs) imprinted with counterfeit copies of plaintiffs’ trademarks. The court has jurisdiction under 28 U.S.C. §§ 1331 and 1338.

By order dated July 8, 1983, consented to by defendants, the court preliminarily enjoined them pending the trial from infringing plaintiffs’ trademarks or using any false designation of origin or false description to lead people to believe defendants’ products were associated with plaintiffs.

The case was tried to the court commencing October 23, 1984. The chief evidence offered by plaintiffs was a videotape showing a meeting held on April 21, 1983 in a room occupied by Melvin Weinberg in the Plaza Hotel in Manhattan. Weinberg.had been retained by Vuitton to assist it in its efforts to protect its trademarks. He had made contact with David Rochman, a distributor of counterfeit handbags including those purporting to be Vuitton bags. Weinberg had represented to Rochman that he was going to obtain manufacturing facilities that would make large numbers of counterfeit Vuitton bags and promised that Rochman could become a partner in the business and one. of its few distributors. Rochman agreed to bring the Rands to the hotel room to discuss Weinberg’s supplying them with bags that they had previously received from Rochman.

Weinberg arranged, without the knowledge of the Rands or Rochman, to videotape the meeting. The tape shows that the three defendants, Rochman, Weinberg and his assistant Gunnar Askelman attended. The Rands’ remarks revealed that they were highly knowledgeable about the counterfeit bag business and were intent on impressing Weinberg with their business acumen. They repeatedly stressed that they were anxious to build up a large stock of counterfeit Vuitton merchandise, that they paid their suppliers promptly without giving them any trouble, and that they took many precautions to avoid getting caught. They told Weinberg that they never sold to stores in New York but only to loyal “wholesalers” and “hustlers” who would never implicate the Rands. To shield themselves the Rands often took deliveries directly from Rochman’s van into their own van and then transported the goods to a well-protected warehouse. The Rands demonstrated their telephone answering device complete with beeper that prevented callers from discovering who or where the Rands were.

The tape records, among other things, the Rands stating the following. They had been in business with Rochman for eighteen months. They agreed with Rochman that they had been ordering some 800 to 1,000 counterfeit Vuitton bags per week. On each bag they made a profit of $3.00 to $3.50. They had paid or owed Rochman substantial sums of money for those bags. More specifically, Pinny Rand said that he sent Rochman about $8,000 per week. They were eager to receive from Weinberg large numbers of counterfeit Vuitton bags and were well able to pay for them.

They had also been selling counterfeit Gucci and Fendi bags. Pinny Rand said that up until eight months previously he had been doing as much business selling Gucci bags as he had selling Vuitton bags, but that Gucci bags were then harder to sell. He said that he had ordered 3,000 pieces of Fendi goods from Rochman during the week of April 21, 1983.

The tape shows Arie Rand handing over to Pinny Rand some wads of cash that Pinny Rand gave to Rochman in payment for counterfeit Vuitton goods. The tape does not reveal the amount of the cash. From Pinny Rand’s statements on the tape the amount appears to have been $13,608.

Plaintiffs offered credible evidence of specific shipments of counterfeit Vuitton merchandise to defendants. On April 14, 1983, Robert Pariseault, a manufacturer of counterfeit Vuitton goods, shipped a total of 720 cosmetic cases, shoppers and satchels to defendants at 1627 48th Street, Brooklyn, New York, on the orders of Rochman. The invoice for this shipment was $10,016, which Rochman received from plaintiffs. Plaintiffs also proved another, and smaller, shipment by Pariseault of counterfeit Vuitton tote bags to defendants on January 14, 1983 at the same address, delivered by United Parcel Service (UPS). The invoice on this shipment was for $466.80.

Plaintiffs offered into evidence records of UPS for Borsetta Handbags, Inc. (Borsetta) from October 25, 1982 through October 3, 1983. Borsetta manufactured counterfeit Vuitton bags. The UPS records showed that over the year Borsetta shipped a total of 313 pounds of handbags to the Rands’ address at 1627 48th Street in Brooklyn.

The defendants testified that their statements recorded on the tape were untrue. Their version was as follows. Rochman (with whom they had been doing a legitimate handbag business since August or September of 1982) asked them to do him a favor by telling Weinberg falsely they had been doing a large business with Rochman in counterfeit Vuitton bags. Rochman asked them to do this in order to impress Weinberg and induce him to enter into some unrelated large business deal with Rochman. They agreed because they hoped to get more credit, better service and further loyalty in their legitimate bag business from Rochman. They never sold a single counterfeit Vuitton bag or any other counterfeit bag. Rochman gave them the cash that Pinny Rand handed back to Rochman at the meeting. Rochman had notified Pinny Rand that someone would deliver to them at 1627 48th Street, Brooklyn, the boxes referred to in the invoices of Pariseault, but defendants never opened the boxes and never sold any of their contents.

The testimony of defendants is unworthy of belief. The court finds that defendants did in fact sell large quantities of counterfeit Vuitton bags and also sold counterfeit Gucci and Fendi bags. Plaintiffs are entitled to a permanent injunction. Vuitton and Gucci are entitled to money judgments.

The amount of Vuitton’s and Gucci’s recovery is governed by 15 U.S.C. § 1117. That section provides, in pertinent part, that when a violation of any registered trademark has been established the plaintiff shall be entitled to recover “(1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.” In assessing profits the plaintiff is required to prove “defendant’s sales only” and defendant must prove “all elements of cost or deduction claimed.” In assessing damages the court may enter judgment “for any sum above the amount found as actual damages, not exceeding three times such amount,” and that the court, if it finds the amount of recovery “based on profits” to be “inadequate or excessive,” may “in its discretion enter judgment for such sum as the court shall find to be just.” In “exceptional cases” the court may award reasonable attorneys’ fees to the prevailing party.

Since defendants denied that they sold any infringing bags and produced no records, plaintiffs were forced to prove defendants’ profits by the only evidence available, namely, their admissions on the tape. At the meeting defendants stated that they had been doing business with Rochman in counterfeit Vuitton bags for a period of eighteen months. They agreed with Rochman when he said they ordered between 800 and 1,000 such bags per week. While defendants’ appearance on the tape gives the impression that they were speaking with candor, it is possible that in order to interest Weinberg to do business with them they tended to exaggerate the number of bags they sold per week. Moreover, since defendants did not affirmatively state that they ordered this quantity of bags per week but only agreed with Rochman’s statement, the court declines to adopt this figure in assessing profits.

Pinny Rand stated that he sent Rochman $8,000 every week for counterfeit Vuitton bags. He also said that for each satchel that cost them $18 they made a profit of $3. Using these figures to determine the Rands’ profit ratio, the court finds that for the $8,000 worth of merchandise purchased from Rochman per week the Rands cleared a profit of $1,333.33. Plaintiffs claim that they should receive profits for 75 weeks (based on a 50-week work year for eighteen months). The court concludes that the credible evidence shows that defendants made $1,333.33 in profits per week for 75 weeks or a total of $99,-999.75 selling counterfeit Vuittons. The court determines that this amount of recovery is neither inadequate nor excessive. See 15 U.S.C. § 1117.

The Rands said on the tape that until eight months before April of 1983 counterfeit Gucci items sold by them used to be equal to counterfeit Vuitton items. The court takes this to mean that the profit on both types of bags was equal. The court thus finds that for 41.67 weeks defendants made $1,333.33 in profit per week selling counterfeit Gucci 'merchandise for a total of $55,559.86. The court determines that this amount of recovery is neither inadequate nor excessive. See 15 U.S.C. § 1117.

Pinny Rand said he continued to buy, and presumably sell, one counterfeit Gucci model at the time the videotape was made. However, the tape revealed no evidence as to what profits defendants made on that model. The court cannot award profits without any evidentiary basis on which to rest such an award. See Vuitton et Fils, S.A. v. Crown Handbags, 492 F.Supp. 1071, 1077 (S.D.N.Y.1979), aff'd, 622 F.2d 577 (2d Cir.1980).

Plaintiffs have not satisfied their burden of proving either damages or profits as to Fendi. While defendants said on the videotape that they had ordered 3,000 pieces of Fendi merchandise during the week of April 21, 1983, there is no evidence as to whether that merchandise was ever received or sold by defendants. Nor did the Rands make any statements as to the costs or resale price of counterfeit Fendi goods. Fendi may not take a money judgment.

The method the court used to compute defendants’ profits is somewhat less than precise. However, where defendants have denied selling any infringing items and produced no records to aid in assessing profits, “the wrongdoer shall bear the risk of the uncertainty which his own wrong has created.” Bigelow v. RKO Radio Pictures, Inc., 327 U.S. 251, 265, 66 S.Ct. 574, 90 L.Ed. 652 (1946). See also Deering, Milliken & Co. v. Gilbert, 269 F.2d 191, 193-94 (2d Cir.1959); Chesa Int’l, Ltd. v. Fashion Associates, Inc., 425 F.Supp. 234, 238 (S.D.N.Y.) (when a party frustrates proof of profits or damages courts should resolve any doubts about actual assessment of profits or damages against that party), aff'd, 573 F.2d 1288 (2d Cir.1977).

The court finds that defendants’ infringement was willful and that they committed perjury. The court deems this an exceptional case requiring an award of reasonable attorneys’ fees. See, e.g., Quaker State Oil Refining Corp. v. Kooltone, Inc., 649 F.2d 94, 95 (2d Cir.1981); Vuitton et Fils, S.A. v. Crown Handbags, 492 F.Supp. at 1078-79. The court finds the amount of $8,000 to be reasonable. Plaintiffs may also have costs.

The plaintiffs may have judgment against Morris Rand, Pinny Rand and Arie Rand. Morris Rand made many statements about his involvement with his sons’ business. Moreover, he stated that none of his sons made a decision about orders from Rochman without asking him first. However, the evidence on the tape does not show that Spencer manufactured, repaired or sold counterfeit handbags. While Morris Rand complained about the quality of some of the counterfeit merchandise the Rands received, he said only that he paid for the items anyway because, as a manufacturer, he understood the problems of another manufacturer. Morris Rand said that Spencer did no manufacturing of counterfeit bags because he was afraid he’d get caught if he were engaged in such a visible operation.

Defendants ask the court to draw an inference adverse to plaintiffs because they did not call Rochman as a witness. Plaintiffs respond that the inference should be drawn against defendants. On October 22, 1984, the day prior to the commencement of the trial, Stanley A. Teitler, the attorney for defendants, stated to the court that Rochman had “agreed” to testify that “all of the statements” made by defendants during the course of the taped meeting were untrue and were made at Rochman’s request “in order to puff up the situation.” Mr. Teitler said that Rochman was then in Hong Kong on business and believed before he left, “based upon statements made to him by counsel,” that the trial date would be adjourned. Mr. Teitler asked if the court would grant a continuance after completion of the other evidence in the case until Rochman returned to testify. The court said that it would observe the tape when it was introduced and then decide whether to permit the taking of Rochman’s testimony over the telephone.

The next day, October 23, 1984, before the trial started, Mr. Teitler stated to the court that Rochman, who had “no motive to lie” and “would corroborate the testimony of the defendants,” was not in Hong Kong but in Korea and “not locatable.” Mr. Teitler renewed his application for a continuance for the testimony of Rochman. The court reserved decision.

At the end of the first day of trial Mr. Teitler again raised the question of taking Rochman’s testimony. Harvey Greene, who had been counsel of record for defendants and was assisting Mr. Teitler at the trial, said he had been informed that Rochman had been brought from Korea to Arizona as a result of an “emergency,” and that he was about to undergo a double hernia operation. The court then directed the attorneys to find out when Rochman would be available and said that the court would take his testimony over the telephone or in person when he was available.

The following day, October 24, 1984, J. Joseph Bainton, the attorney for plaintiffs, delivered a letter to the court with copies to defendants’ attorney and to Allen Bickart, a Phoenix attorney, stating that Bickart had informed Mr. Bainton that Rochman had been operated on for a hernia and that he might be expected to be available at the Scottsdale Memorial Hospital to testify that day by telephone should either party or the court so desire.

When the trial resumed on the afternoon of October 24, 1984, Mr. Bainton informed the court that subsequent to sending his letter he had received a telephone call from Rochman’s brother-in-law, a Mr. DeCastle, who had also been Rochman’s partner in the business of distributing handbags both counterfeit and genuine. Mr. Bainton reported that DeCastle said he was very concerned because the defendants were harassing Rochman “to get him to tell this court things that were not true” and that DeCastle confirmed that he and Rochman had shipped to defendants counterfeit Vuitton bags, although he could not testify to the quantity. Mr. Bainton said that both Rochman and DeCastle were available to talk to the court by telephone.

The court then directed Mr. Bainton to give the information to the United States Attorney to make such investigation as he saw fit.

Neither party then saw fit to obtain the testimony of either Rochman or DeCastle, neither of whom had been previously deposed. Under the circumstances the court will draw no inference for or against either party because of. the failure to present Rochman’s testimony.

The foregoing constitutes the court’s findings of fact and conclusions of law. The plaintiffs may have judgment in accordance with this memorandum and order. Submit judgment. So ordered.

ON MOTION TO AMEND JUDGMENT

This is an action for trademark counterfeiting under the Lanham Act. 15 U.S.C. § 1051 et seq. After a bench trial, the court issued its findings of fact and conclusions of law in a memorandum and order dated November 15, 1984, familiarity with which is assumed. The court awarded plaintiffs injunctive relief under section 1116 and profits under section 1117. Before the clerk of the court entered judgment, plaintiffs submitted a memorandum in the form of a letter that asked the court to apply a newly enacted statute retroactively and amend the award of profits. The court treats that letter as a motion to amend the judgment under Rule 59(e) of the Federal Rules of Civil Procedure. Defendants oppose the motion also by memorandum in the form of a letter.

When this action began, 15 U.S.C. § 1117 provided that as one remedy for trademark infringement plaintiffs could recover the amount of defendant’s profits. If the court found that amount “either inadequate or excessive” to compensate plaintiffs, the court could in its discretion enter judgment for a sum the court found to be just.

The Trademark Counterfeiting Act of 1984 (the Act) amended section 1117 just before this case went to trial. Pub.L. No. 98-473, Ch. XV, 98 Stat. 1837, 2178 (1984). Effective October 12, 1984, that section provides that in assessing damages, “the court shall, unless the court finds extenuating circumstances, enter judgment for three times such profits or damages” when it finds that defendants “intentionally” used a mark “knowing” it to be counterfeit. Id. § 1503(2)(B) (to be codified at 15 U.S.C. § 1117(b)).

The case was tried to the court starting on October 23, 1984. In their post-trial briefs, plaintiffs stated, and defendants did not dispute, that the earlier version of section 1117 controlled this case. The court determined that defendants wilfully sold items bearing counterfeits of plaintiffs’ trademarks. The court awarded profits under the old section 1117 but declined to treble them finding that the amount was not inadequate. Plaintiffs now say, contrary to their position in their post-trial brief, that the court should apply section 1117(b) retroactively and treble the profits.

Almost two centuries ago the Supreme Court established the general rule that a new statute is presumed to operate prospectively unless Congress clearly expresses a contrary intention. See, e.g., United States v. Heth, 7 U.S. (3 Cranch) 399, 2 L.Ed. 479 (1806). The purpose of this rule was to prevent “the assigning of a quality or effect to acts or conduct which they did not have or did not contemplate when they were performed.” Union Pacific R.R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199, 34 S.Ct. 101, 102, 58 L.Ed. 179 (1913).

The Court recently adopted a different presumption. In Bradley v. School Board, 416 U.S. 696, 94 S.Ct. 2006, 40 L.Ed.2d 476 (1974), the Court held that a court must apply the law in effect at the time it renders its decision, even if the new law does not expressly recite that it is to be applied retroactively. See also Thorpe v. Housing Authority, 393 U.S. 268, 89 S.Ct. 518, 21 L.Ed.2d 474 (1969); Thus, for cases not yet filed, cases pending, and cases on direct review when a statute is enacted, that statute is presumed to operate retroactively. This presumption “may be displaced either by a fair indication that the statute, properly construed, has only prospective effect or by resulting injustice from a retroactive application.” Litton Systems, Inc. v. American Tel. & Tel. Co., 746 F.2d 168, 174 (2d Cir.1984). See Bradley, 416 U.S. at 711, 94 S.Ct. at 2016. In “mere private cases between individuals,” a court must “struggle hard against a construction which will, by retrospective operation, affect the rights of parties.” Bradley, 416 U.S. at 712, 94 S.Ct. at 2016 (quoting United States v. Schooner Peggy, 5 U.S. (1 Cranch) 103, 110, 2 L.Ed. 49 (1801).

The words of section 1117(b) offer little guidance as to whether Congress contemplated its retroactive application. The court thus looks to the legislative history to determine whether Congress’ purpose would be furthered by such application. Congress found that trademark counterfeiting injures both consumers and manufacturers economically and poses a threat to public health and safety. See, e.g., S.Rep. No. 526, 98th Cong., 2d Sess. 1-5 (1984). In order to stop what Congress regarded as a counterfeiting epidemic, the Act imposes criminal penalties, and provides for ex parte seizures of counterfeit goods and mandatory treble damages or profits.

The mandatory treble damages provision serves two purposes: inducement and deterrence. See S.Rep. No. 526, supra, at 6. Because federal prosecutors lack the resources to bring criminal charges against more than a fraction of trademark counterfeiters, civil suits are necessary to enforce the Act. Id. The mandatory treble damages provision is thus designed to encourage private victims to vindicate “both their rights and the public interest in accurate trademark information.” Id. While this provision may induce more trademark owners in the future to bring suits, plaintiffs with suits already pending on the effective date of section 1117(b) obviously need no such inducement. Applying the statute retroactively cannot therefore further this purpose. Cf. Litton, 746 F.2d at 175 (denying retroactive application of statute increasing rate of post-judgment interest).

This case is distinguishable from the Bradley case which permitted the retroactive application of a statute providing for attorneys’ fees in school desegregation cases in order to induce plaintiffs to bring suits for injunctive relief. In deciding to award attorneys’ fees under the new statute the Court considered, among other factors, that defendant’s resources were “formidable” as compared to plaintiffs’, id., 416 U.S. at 718 & n. 25, 94 S.Ct. at 2019 & n. 25, that the plaintiffs were a class of children and defendant was a “publicly funded governmental entity,” id. at 718, 94 S.Ct. at 2019, and that desegregation litigation is of a “kind different from ‘mere private cases between individuals,’ ” id., since school desegregation is a “national policy of high priority.” Id. at 719 n. 27, 94 S.Ct. at 2020 n. 27. None of these considerations applies to this commercial litigation in which the plaintiffs are three wealthy international corporations and defendants are private individuals.

Congress also provided mandatory treble damages to “deter those who might otherwise engage” in trademark counterfeiting by “taking the profit out of this lawless behavior.” S.Rep. No. 526, supra, at 6. To increase the deterrent effect, the treble damage award in section 1117(b) is not designed to compensate plaintiffs but rather to punish defendants. The House and Senate sponsors of the Act said that the sentence in the old section 1117 that reads-damages “ ‘shall constitute compensation and not a penalty’ is inapplicable in counterfeiting cases, since one of the purposes of treble damage awards” is to “provide an adequate penalty for such conduct.” 130 Cong.Rec. H12083 (daily ed. Oct. 10, 1984) (joint statement intended as authoritative explanation of the legislative intent). See also S.Rep. No. 526, supra, at 6 (treble damages provision is form of punitive damages).

Retroactive, application of section 1117(b) cannot further the purpose of specific deterrence. Conduct that has already ceased, such as defendants’ conduct here, cannot be specifically deterred by retroactive application of the statute since deterrence operates prospectively only. While applying this statute retroactively would serve the purpose of general deterrence, so too would the retroactive application of every statute. The court concludes that Congress did not intend to apply these penalties retroactively to further the sole purpose of general deterrence. Cf. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 17, 96 S.Ct. 2882, 2893, 49 L.Ed.2d 752 (1976) (Court would “hesitate to approve the retrospective imposition of liability on any theory of deterrence” where prior law imposed no liability.).

A further consideration counsels against construing 1117(b) to operate retroactively. A “cardinal principle” of statutory construction requires courts to construe statutes, if fairly possible, in a manner that avoids the need to resolve difficult and sensitive questions of constitutional law. See, e.g., United States v. Security Industrial Bank, 459 U.S. 407, 103 S.Ct. 407, 412, 414, 74 L.Ed.2d 235 (1982). If. section 1117(b) must be construed to apply retroactively, this court would have to determine whether the statute runs afoul of either the ex post facto clause, U.S. Const. art. I, § 9, cl. 3; art. I, § 10, cl. 1, or the due process clause of the fifth amendment.

The ex post facto clause prohibits laws that impose punishment for acts not punishable when committed or that impose greater disadvantages upon the offender than those imposed when the act was committed. Weaver v. Graham, 450 U.S. 24, 28-29, 101 S.Ct. 960, 963-964, 67 L.Ed.2d 17 (1981). While the prohibition traditionally applies to criminal statutes, it may also apply to civil penalties that are really criminal penalties in disguise. See Harisiades v. Shaughnessy, 342 U.S. 580, 595, 72 S.Ct. 512, 521, 96 L.Ed. 586 (1952) (citing Burgess v. Salmon, 97 U.S. (7 Otto) 381, 385, 24 L.Ed. 1104). See also Flemming v. Nestor, 363 U.S. 603, 612-621, 80 S.Ct. 1367, 1373-1378, 4 L.Ed.2d 1435 (1960) (analyzing whether Congress designed statute terminating social security benefits to deported aliens as punishment in order to determine if its retroactive application violated ex post facto clause). The due process clause prohibits retrospective civil legislation that results in especially “ ‘harsh and oppressive’ ” consequences. United States Trust Co. v. New Jersey, 431 U.S. 1, 17 n. 13, 97 S.Ct. 1505, 1515 n. 13, 52 L.Ed.2d 92 (1976) (quoting Welch v. Henry, 305 U.S. 134, 147, 59 S.Ct. 121, 126, 83 L.Ed. 87 (1938)).

Congress designed section 1117(b)’s mandatory treble damages provision primarily to punish counterfeiters rather than to compensate victims of counterfeiting. See supra, at 6. While the statute is civil in form, it is closely akin to a penal law in substance. This creates a substantial doubt that its retroactive application would comport with the prohibition against ex post facto laws or the requirements of due process. The court need not, however, decide these issues because the statute may fairly be construed to operate prospectively only. See United States v. Security Industrial Bank, 459 U.S. 70, 103 S.Ct. 407, 74 L.Ed.2d 235 (1982) (declining to construe statute to operate retroactively to avoid having to resolve whether such application violates takings clause of fifth amendment).

The Bradley case, while creating a presumption in favor of retroactivity, does not purport “to hold that courts must always thus apply new laws to pending cases in the absence of clear legislative direction to the contrary.” Bradley, 416 U.S. at 715, 94 S.Ct. at 2018. “Determination of retro-activity remains a matter of statutory construction.” Litton, 746 F.2d at 174. The court finds that the purposes of the mandatory treble damages provision in section 1117(b) would not be furthered by construing it to apply retroactively. Plaintiffs’ motion is denied. Submit judgment in accordance with the court’s order dated November 15, 1984. So ordered.


author: HADEN, Chief Judge.

text:
    Clyde Tolbert DUNCAN, Plaintiff, v. STATE OF WEST VIRGINIA, David W. Knight, Derek Craig Swope and Richard Somyle, Defendants.
    Civ. A. No. 84-1185.
    United States District Court, S.D. West Virginia, Bluefield Division.
    Nov. 16, 1984.
    Clyde Tolbert Duncan, pro se.
   MEMORANDUM OPINION AND ORDER

HADEN, Chief Judge.

Pending before the Court is Duncan’s request to proceed in forma pauperis. Duncan has filed an appropriate affidavit, and it would appear proper to grant such a request. Accordingly, Duncan's request for leave to proceed in forma pauperis is granted.

Substantial defects apparent on the face of Duncan’s complaint raise the issue of whether it is frivolous and, therefore, subject to dismissal under 28 U.S.C. § 1915(d). The facts as stated in the complaint concern the arrest and incarceration of Duncan on or about October 28, 1983, in the Mercer County Jail in Princeton, West Virginia, on the charge of burglary. Bond was set at $10,000, and Duncan, unable to make bail, was remanded to jail. On November 4, 1983, Duncan’s bail was reduced and set at $5,000, and Duncan apparently still could not make bail. .Trial was commenced January 26, 1984, and on January 29, 1984, Duncan was acquitted. Duncan sues for being wrongfully deprived of his liberty during the time he was incarcerated as a pretrial detainee.

Several problems are inherent in this complaint. First, Duncan sues the State of West Virginia for damages under 42 U.S.C. § 1983. The Eleventh Amendment bars actions by individuals against states in federal court. Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974) outlines the history and application of the Eleventh Amendment and the Supreme Court held that the Eleventh Amendment bars actions against states for compensatory damages. This remains the law. Pennhurst State School and Hospital v. Halderman, — U.S.-, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); Scheuer v. Rhodes, 416 U.S. 232, 237, 94 S.Ct. 1683, 1687, 40 L.Ed.2d 90 (1974). Therefore, the Eleventh Amendment bars Duncan’s action against the State of West Virginia.

Secondly, Duncan sues the prosecuting attorneys who presented the case against him. In this context, Imbler v. Pachtman, 424 U.S. 409, 424-29, 96 S.Ct. 984, 992-94, 47 L.Ed.2d 128 (1976), holds that prosecuting attorneys are immune from Section 1983 actions for carrying out their official duties. -

Third, Duncan sues Detective Rick Somyle of the Princeton City Police Department. The complaint states that Somyle took statements from the two state’s witnesses. This constitutes the whole of the allegations against Somyle. No implication of constitutional deprivation arises from this fact. Insofar as Somyle might be considered a “witness” for the prosecution, he would be immune from suit under Section 1983. Briscoe v. LaHue, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983); Burke v. Miller, 580 F.2d 108 (4th Cir.1978).

Although some of the matters discussed constitute defenses, Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 1923, 64 L.Ed.2d 572 (1980); Arebaugh v. Dalton, 730 F.2d 970 (4th Cir.1984), where the complaint on its face raises obvious and complete affirmative defenses, the Court may consider these defenses in ruling under 28 U.S.C. § 1915(d) finding a complaint frivolous. Todd v. Baskerville, 712 F.2d 70, 74 (4th Cir.1983). Further, the Court would note that failure to make reasonable bond, incarceration as a pretrial detainee for ninety days, and acquittal of a criminal charge does not allege a constitutional violation. Duncan’s complaint states an example of due process, not a violation of it. Parratt v. Taylor, 451 U.S. 527, 536-37, 101 S.Ct. 1908, 1913-14, 68 L.Ed.2d 420 (1981); Hudson v. Palmer, — U.S.-, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984).

As the complaint appears frivolous on its face, the Court concludes that dismissal under 28 U.S.C. § 1915(d) is appro-priate.

The Clerk is directed to send a certified copy of this Order to the Plaintiff.


author: BECHTLE, District Judge.

text:
    Thomas M. OLKOWSKI v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA.
    Civ. A. No. 83-6172.
    United States District Court, E.D. Pennsylvania.
    Nov. 16, 1984.
    See also, D.C., 584 F.Supp. 1140.
    Marcel L. Groen, Robert H. Finkel, Bensalem, Pa., for plaintiff.
    James Kilcoyne, Peter C. Paul, Philadelphia, Pa.,, for defendant.
   MEMORANDUM AND ORDER

BECHTLE, District Judge.

Presently before the court are cross-motions for summary judgment. For the reasons stated herein, plaintiff’s motion will be granted and defendant’s motion will be denied.

I. FACTS

The parties have stipulated to all the relevant facts. The defendant is an insurance company. The plaintiff was furnished by his employer, M & S Foreign Car Service (“M & S”), with group term health and life insurance coverage under an “Employer Plan,” underwritten by the defendant. Under this policy, both the plaintiff and his wife had health care insurance coverage. All of the premiums were to be paid by M & S.

The policy provided that upon failure to make timely payment of the insurance premium the insurance coverage would terminate. It provided, further, that in the event that the coverage terminated for any reason, the plaintiff had the privilege of converting his group term health and life insurance coverage to individual life and health policies.

In September 1981, M & S notified the plaintiff that it would pay all necessary premiums under the policy. The premium payment due on August 30, 1981, however, was not made. As a result, the defendant notified M & S a short time later that the policy had lapsed due to the non-payment and that all coverage would terminate as of September 30, 1981. Even though the defendant had in its possession personal information regarding the plaintiff and his wife, including their names, ages, social security numbers, and home address, it never advised plaintiff or his wife that the policy was in jeopardy of lapsing, that it had lapsed, or that plaintiff might consider exercising the conversion option. M & S also failed to inform the plaintiff of the impending lapse or the termination of the insurance policy. The plaintiff was left believing, without any notice to the contrary, that he and his wife were covered by health insurance.

In late December 1981, plaintiffs wife became ill and required extensive medical and hospital care. The expenses amounted to approximately $34,268.86. Eventually, as a result of her illness, she died.

The plaintiff applied to the defendant pursuant to the insurance policy for payment of the billings or for reimbursement to the plaintiff or those individuals who had provided health care to the plaintiffs wife. The defendant denied liability on the ground that, prior to December 1981, the date when the medical expenses were incurred, the policy had lapsed for non-payment of the premiums.

In this lawsuit, the plaintiff seeks to recover the principal sum which would be due and owing to plaintiff under the terms of the policy. The parties agree and stipulate that damages, in the event that the defendant is found liable, total $34,424.11. In support of its claim, the plaintiff asserts that the defendant is liable under the policy since the defendant failed to notify the plaintiff, who relied' on that insurance coverage, of the termination of that coverage.

II. DISCUSSION

Under Pennsylvania law, unless a non-contributory group insurance contract provides that coverage terminates automatically upon the happening of an event, the insurer must give notice of termination to each member of the group. See Poch v. Equitable Life Assurance Society of United States, 343 Pa. 119, 22 A.2d 590 (1941). See also Pa.Stat.Ann. tit. 40 § 756.2(d) (Purdon 1983). The court finds justification for this rule in that the burden on the insurer to send written notification of the termination to each member of the group is slight, and the risk of personal liability for high medical expenses on the insured is great. See generally Poch v. Equitable Life Assurance.

In this case, the insurance policy’s termination provision provided in relevant part:

All of’ your insurance (including any for your dependents) will terminate when: ... (6) you fail to make any required contribution for insurance when due____

The defendant would have this termination provision construed to mean that the insurance coverage terminated automatically when M & S failed to remit the payment when it was due. The defendant argues that if such a construction were adopted, both the insured’s coverage and any duty to notify the insured of the termination automatically terminated on August 30, 1981. In support of its position, the defendant cites numerous Pennsylvania cases where the group policy expressly provided that that coverage automatically terminated upon the happening of an event. See Hanaieff v. Equitable Life Assurance Society of United States, 371 Pa. 560, 92 A.2d 202 (1952); Best v. Equitable Life Assurance Society of United States, 365 Pa. 418, 76 A.2d 220 (1950); Peyton v. Equitable Life Assurance Society of United States, 159 Pa.Super. 318, 48 A.2d 145 (1946).

Under Pennsylvania law, insurance policies are construed against the drafter. Snader v. London & Lancashire Indemnity Co., 360 Pa. 548, 62 A.2d 835 (1949). The court finds that this contract did not provide that coverage will “automatically” terminate upon non-payment of the insurance premium. The defendant indicated that it was aware of the implications of the phrase “automatic termination” because the defendant provided elsewhere in the policy that:

if Prudential does not receive ... proof [of incapacity] within 60 days of any such request then, even if that dependent is still incapacitated, coverage with respect to him shall automatically terminate at the end of such 60 day period----

In contrast, the defendant’s policy did not provide that the coverage terminated automatically when plaintiff failed to make payment when due. In addition, the insurance company gave notice of the policy’s lapse to the employer. The defendant indicated by this conduct that it construed the policy provision to require some notice be given and termination of the coverage was not automatic.

Therefore, the court determines that the insurance policy did not terminate automatically on the non-payment of the insurance premium. The insurer had the continuing obligation to notify the insured of the policy’s impending termination and of the insured’s option to convert. The insurer failed to give the appropriate notification. Thus, the insurer is liable under the policy.

III. CONCLUSION

An Order awarding judgment in the amount of $34,424.11 to the plaintiff and against the defendant will be entered.