author: SCOTT O. WRIGHT, District Judge.

text:
    Terry HUMPHREY, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 83-4422-CV-C-5.
    United States District Court, W.D. Missouri, C.D.
    Sept. 4, 1984.

      David Kite, Mid-Missouri Legal Services, Inc., Jefferson City, Mo., for plaintiff.
    Frederick O. Griffin, Jr., Asst. U.S. Atty., Kansas City, Mo., for defendant.
   ORDER

SCOTT O. WRIGHT, District Judge.

This is a proceeding under Title II of the Social Security Act, 42 U.S.C. § 401 et seq., and Title XVI of the Social Security Act, 42 U.S.C. § 1381 et seq. Section 405(g) provides for judicial review of a “final decision” of the Secretary of Health and Human Services under both Title II and Title XVI. Plaintiff is appealing the Secretary’s decision terminating his disability insurance benefits as of September, 1982, and rejecting his application for Supplemental Security Income. For the reasons set forth below, the Secretary’s decision will be reversed and plaintiff will be retroactively entitled to all accrued disability and supplemental security income benefits.

I. Background

On April 20, 1973, disability benefits were granted to plaintiff on the basis of a severe back injury. On March 23,1982, the Social Security Administration initiated a routine review of plaintiff’s disability status. On July 13, 1982, the state agency informed plaintiff that his disability insurance benefits were to be terminated as of September, 1982. This decision was upheld after reconsideration and plaintiff requested a hearing. On October 26, 1982, plaintiff filed an application for Supplemental Security Income. On July 6, 1983, a hearing was held before Lawrence E. Ehrhart, Administrative Law Judge. Plaintiff was represented by counsel at the hearing.

Plaintiff was the only live witness at the hearing. He testified that he was 42 years old at the time of the hearing, had a G.E.D., and had prior work experience as a welder, service station attendant, and small engine repairman. In 1973, plaintiff sustained a serious back injury while on the job. He has undergone six separate operations on his back. He worked for one week in 1983 and wound up in the hospital after aggravating his back condition.

In addition to chronic back pain, plaintiff complained of constant pain in his groin and legs, severe headaches, numbness of the left arm and hand, and frequent bouts of depression. He wears a back brace and takes prescribed medication for his pain and depression. He cannot remain standing for more than half an hour and cannot remain seated for more than half an hour. Plaintiff spends his days watching TV and reading. He occasionally goes fishing, but cannot sit still long enough to do so for more than a short while. He does not drive a car because of the constant pain in his legs.

The medical evidence revealed that plaintiff’s back problems had not improved since the initial determination of his disability. In March, 1983, plaintiff was admitted to Lake of the Ozarks General Hospital with an acute back strain and severe back pain. Dr. Tietjen, an orthopedic surgeon, indicated that plaintiff suffered from lower lumbar nerve, root stretch and that this condition was not likely to improve. Dr. Mason noted that, in addition to his recurrent back problems, plaintiff has had a right inguinal hernia and bilateral shoulder surgery. After spending several days in the hospital and receiving treatment with muscle relaxants, plaintiff was released to recuperate at home.

In 1982, plaintiff spent five days in the Boone Hospital Center and seventeen days in Columbia Regional Hospital. Dr. Silvers, a neurologist, examined plaintiff on both occasions. In addition to noting plaintiff’s chronic back and neck pain, Dr. Silvers found that plaintiff suffered from muscle contraction headaches, situational depression, alcohol abuse, and associopathy.

Finally, plaintiff was found to be “permanently and totally disabled” in the opinion of the agency’s own medical consultant, Dr. Scherr. After a single examination, Dr. Scherr found that plaintiff “has x-ray evidence of an unstable lumbar segment which might well cause him considerable pain ... I cannot deny that he has disabling back pain, because he has had so many lumbar surgeries ... If indeed he does have this much pain, it is probably true that he is permanently and totally disabled.”

Despite the overwhelming evidence of disabling exertional and non-exertional impairments, the AU found that plaintiff was no longer disabled. The AU acknowledged that the medical evidence established a severe strain of the lower back due to multiple operations, muscle contraction headaches, considerable pain, and sociopathy, yet stated that plaintiff had no nonexertional limitations. Accordingly, the AU applied the “grid” and ruled that although incapable of performing past relevant work, plaintiff was able to perform sedentary work. This decision was upheld by the Appeals Council on October 6, 1983. Thus, the AU’s ruling stands as the Secretary’s final decision in this case.

II. Standard of Review

The form and scope of judicial review of the Secretary’s decision is narrowly defined. Under 42 U.S.C. § 405(g), the Secretary’s ruling is conclusive if it is supported by substantial evidence. Clark v. Heckler, 733 F.2d 65, at 68 (8th Cir.1984). Substantial evidence is defined as such evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971); McMillian v. Schweiker, 697 F.2d 215, 221 (8th Cir.1983). This standard of review, however, is “more than a mere rubber-stamp of the Secretary’s decision.” Id. at 220.

In a disability benefits termination proceeding, the Secretary bears the initial burden of showing that there was a clear and specific error in the prior determination or that the claimant’s condition has significantly improved. Rush v. Schweiker, 738 F.2d 909 (8th Cir.1984). Moreover, where the claimant’s condition has improved but his impairments remain severe enough to prevent him from performing past relevant work, the Secretary bears the burden of showing that the claimant can engage in some kind of substantial gainful activity. Ledoux v. Schweiker, 732 F.2d 1385, at 1387 (8th Cir.1984); O’Leary v. Schweiker, 710 F.2d 1334, 1337 (8th Cir. 1983); McDonald v. Schweiker, 698 F.2d 361, 364 (8th Cir.1983). To meet this latter burden, the Secretary need not find a specific job opening for the claimant, but must prove that substantial gainful employment is realistically within the mental and physical capabilities of the claimant. McMillian v. Schweiker, 697 F.2d at 221.

If the claimant has exertional impairments only, the AU may apply the medical-vocational guidelines and the so-called “grid,” 20 C.F.R. § 404.1569 & Appendix 2, to determine whether the claimant has the residual functional capacity for substantial gainful activity. Heckler v. Campbell, 461 U.S. 458, 103 S.Ct. 1952, 76 L.Ed.2d 66 (1983). Where the claimant has a combination of exertional and nonexertional impairments, however, the grid is inapplicable; rather, the AU must propound a properly phrased hypothetical question to a vocational expert. Id. 103 S.Ct. at 1955 n. 5; Nelson v. Heckler, 712 F.2d 346, 348 (8th Cir.1983); McDonald v. Schweiker, 698 F.2d at 364-65. The vocational expert’s response will constitute substantial evidence to support a denial of benefits “only where the hypothetical question sets forth all of the claimant’s physical and mental impairments.” McMillian v. Schweiker, 697 F.2d at 221.

III. Opinion

The Court finds that the Secretary’s decision terminating plaintiff’s disability status is defective in two fundamental respects and, therefore, cannot stand.

First, the AU utterly failed to consider plaintiff’s substantial non-exertional impairments. Despite uncontradicted evidence of plaintiff’s severe back pain, muscle contraction headaches, and sociopathic personality, the AU bluntly concluded that plaintiff had no non-exertional limitations and that the “grid” was applicable. This conclusion flies in the face of the agency’s own regulations, 20 C.F.R. §§ 404.1545, 416.945, as well as a long line of cases decided by the United States Court of Appeals for the Eighth Circuit. See, e.g., Clark v. Heckler, 733 F.2d 65, at 68-69 (8th Cir.1984) (psychiatric impairment is a nonexertional impairment); Ledoux v. Schweiker, 732 F.2d 1385, at 1387-1388 (8th Cir.1984) (anxiety syndrome and allegations of pain are non-exertional impairments); Nunn v. Heckler, 732 F.2d 645, at 647-649 (8th Cir.1984) (pain is a non-exertional impairment); Nelson v. Schweiker, 712 F.2d 346, 348 (8th Cir.1983) (where non-exertional impairments exist, the “grid” is inapplicable); McDonald v. Schweiker, 698 F.2d 361, 364-65 (8th Cir. 1983) (non-exertional pain and psychological problems); McCoy v. Schweiker, 683 F.2d 1138, 1148-49 (8th Cir.1982) (evaluation of non-exertional impairments calls for vocational expert testimony).

In view of the agency’s own regulations and the Eighth Circuit’s consistent pronouncements, the Court is wholly unable to understand why the ALJ refused to recognize plaintiff’s non-exertional impairments. Cf Heaney, Why the High Rate of Reversals in Social Security Disability Cases, 7 Hamline L.Rev. 1 (1984). In any event, the AU’s application of the grid and failure to consult a vocational expert clearly was error.

Second, and more important, the record in this case is fundamentally inadequate to support the Secretary’s decision to terminate plaintiff’s benefits. Uncontradicted evidence revealed that plaintiff had undergone six operations on his lower back. During plaintiff’s most recent hospitalization, his physician declined to perform further back surgery because plaintiff’s chronic injury was beyond repair. Indeed, the sole evidence supporting the AU’s decision was a RFC checklist. It is well-settled that little weight is afforded these checklists. Nunn v. Heckler, 732 F.2d 645, at 649; McCoy v. Schweiker, 683 F.2d at 1147 n. 8. Moreover, even the agency’s own medical consultant, Dr. Scheer, found plaintiff to be permanently and totally disabled. Finally, the AU did not give any serious consideration to the uncontradicted evidence concerning plaintiffs substantial non-exertional impairments, including his sociopathic personality, chronic back pain, and muscle contraction headaches. Thus, it is clear not only that the Secretary’s decision is unsupported by substantial evidence, but also that the evidence conclusively shows plaintiff’s continuing disability. Anderson v. Heckler, 738 F.2d 959, at 960 (8th Cir.1984). Consequently, the Secretary’s decision will be reversed and plaintiff will be retroactively entitled to all accrued disability and supplemental security income benefits.

In the final analysis, this Court is left wondering why the Social Security Administration decided to review plaintiff’s disability status in the first instance and how the AU arrived at his groundless conclusion that plaintiff was no longer disabled. Seldom has there been so little supporting evidence in a disability benefits termination proceeding. It bears emphasis that even the agency’s own medical consultant, Dr. Scherr, found plaintiff’s disability to be a continuing one. The Court considers this piece of evidence especially significant in view of the fact that, at the behest of the agency, Dr. Scherr ordinarily finds claimants to be no longer disabled even in the face of overwhelming contrary evidence. E.g., Wright v. Heckler, No. 82-4340, slip op. at 3-6 (W.D.Mo. Aug. 27, 1984). Nevertheless, the agency decided to terminate plaintiff’s benefits in the instant case on the basis of nothing more than a RFC checklist. As a result, plaintiff was forced to exhaust his administrative appeal, await his turn at judicial review, and, in the interim, endure. In the process, plaintiff has needed the experienced hand of counsel to guide him through this bureaucratic nightmare. In short, the government’s position herein lacks substantial justification. Accordingly, the Court believes that, to the extent allowed by EAJA, plaintiff should be entitled to recover from the government his reasonable attorney’s fees incurred in the instant proceeding. Cornella v. Schweiker, 728 F.2d 978, 988 (8th Cir.1984).

Therefore, it is hereby

ORDERED that the Secretary’s decision terminating plaintiff’s disability insurance benefits and rejecting his application for supplemental security income benefits is reversed. It is further

ORDERED that the Secretary shall reinstate plaintiff’s disability status and shall pay plaintiff all accrued benefits since September, 1982. It is further

ORDERED that the government shall bear the costs and attorney’s fees incurred by plaintiff in this proceeding. It is further

ORDERED that within twenty (20) days of this date, plaintiff’s counsel shall submit an affidavit itemizing his fees incurred in the proceedings before this Court.


source: Caselaw Access Project

author: SHADUR, District Judge.

license: Public Domain

text:
    Wallace CLARK and Lucille Clark, Plaintiffs, v. CITY OF CHICAGO, et al., Defendants.
    No. 84 C 3604.
    United States District Court, N.D. Illinois, E.D.
    Sept. 5, 1984.

      P.R. Behnke, Gozdecki, Zido & Behnke, Chicago, 111., for plaintiffs.
    Gregory E. Kulis, Asst. Corp. Counsel, City of Chicago, James D. Montgomery, Corp. Counsel, City of Chicago, Chicago, 111., for defendants.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Wallace Clark (“Clark”) and his wife Lucille (“Mrs. Clark”) sue the City of Chicago (“City”), Donald T. Podgorny (“Podgorny”), Stephan J. Wilke (“Wilke”), Richard J. Brzeczek (“Brzeczek”) and Francis A. Nolan (“Nolan”), claiming injury from the issuance of a parking citation and Clark’s ensuing arrest and detention on charges of disorderly conduct and resisting a law enforcement officer. Their nine-count Complaint asserts claims under 42 U.S.C. §§ 1983, 1985 and 1986, several theories of pendent state law claims by Clark, and two pendent loss-of-consortium claims by Mrs. Clark.

Defendants have moved under Fed.R. Civ.P. (“Rule”) 12(b)(6) to dismiss the Complaint entirely as to City, Brzeczek and Nolan and to dismiss all but the Section 1983 claim as to Podgorny and Wilke. In an oral bench ruling June 28 this Court (1) struck all Complaint references to Sections 1985 and 1986 and (2) refused to dismiss City, Brzeczek and Nolan from Count I’s Section 1983 claim. This opinion deals with the Complaint’s various state law claims.

Facts

In April 1982 Clark and his grandson were seated in his lawfully parked automobile near 34th and Halsted Streets in Chicago. Chicago police officers Podgorny and Wilke first falsely cited Clark for illegal parking, then — without probable cause— forced Clark to go to the district police station, subjecting him in the process to unprovoked physical and verbal abuse. They then — again without reasonable cause — charged Clark with disorderly conduct and resisting an officer and detained him for a period of time. All charges against Clark have been decided in his favor.

City, Brzeczek and Nolan have engaged in a pattern of failures in the training and discipline of Chicago police officers. Those failures have created a climate that has encouraged the unlawful conduct exemplified by Podgorny’s and Wilke’s actions against Clark.

As a result of the conduct already described, Clark has suffered and will continue to suffer serious physical and mental injury. Mrs. Clark has in turn sustained a loss of consortium.

Clark’s Pendent State Law Claims

Whenever plaintiffs stray from the mandates of Rule 8(a)(2) (“a short and plain statement of the claim”) and Rule 8(e) (“simple, concise, and direct” averments), both the defendants and the court are disadvantaged in dealing with the complaint. Clark’s Complaint is no exception. Its factual allegations are unduly repetitive, and it multiplies a single episode into a plethora of claims besides the Count I claim already upheld under Section 1983:

1. Count II asserts all defendants violated Clark’s rights under the due process clause of the Illinois Constitution, 111. Const, art. I, § 2.
2. Count III advances a claim against all defendants for false arrest and imprisonment.
3. Count IV charges all defendants based on the Podgorny-Wilke assault and battery.
4. Count V is a malicious prosecution action against all defendants.
5; Count VI runs against City for negligence of its duties in the hiring, training, supervising and disciplining of police officers.
6. Count VII charges City with willful and wanton disregard of its duties in the hiring, training, supervising and disciplining of police officers.

Count II

Defendants’ position as to Count II is summarized succinctly at R. Mem. 3:

There is not [a] common law claim for violation of one’s state constitutional rights, just as there is not [a] cause of action which may be brought directly under the United States Constitution.
Clarks add nothing to the analytical process, for their Mem. 2-3 simply contrasts— without citation of any authority at all— Count I’s federal constitutional claim under Section 1983 with Count II’s state constitutional claim.

Defendants’ proposition is flawed even under federal law. Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) upheld a damage action directly under the Fourth Amendment against federal agents who under color of their authority had violated plaintiff's constitutional rights. In part Bivens (id. at 397, 91 S.Ct. at 2005) rested on language in Marburg v. Madison, 5 U.S. (1 Cranch) 137, 163, 2 L.Ed. 60 (1803):

The very essence of civil liberty certainly consists in the right of every individual to claim the protection of the laws, whenever he receives an injury.

True enough the availability of a direct remedy under the federal Constitution against a state actor {Bivens involved federal actors), given the previously-upheld existence of Section 1983 rights against the same state actor, poses other considerations. But it must be remembered Count II purports to set out a pendent claim, as to which state law provides the rules of decision. And on that score the real question is whether Illinois law as to the Illinois Constitution parallels the Bivens analysis as to the United States Constitution.

At least two post-Bivens Illinois Appellate Court decisions have decided that question in the affirmative, upholding private claims brought directly against municipalities and state actors under the Illinois Constitution. Newell v. City of Elgin, 34 Ill.App.3d 719, 724, 340 N.E.2d 344, 349 (2d Dist.1976) (a search violating Ill. Const. art. I, § 6); Melbourne Corp. v. City of Chicago, 76 Ill.App.3d 595, 602-03, 31 Ill.Dec. 914, 919-20, 394 N.E.2d 1291, 1296-97 (1st Dist.1979) (conduct amounting to a “constitutional tort,” though defendant escaped liability because it had been neither knowing nor malicious in violating any clearly-established constitutional rights). Because Count II can be read as charging knowing or malicious conduct in violation of the Illinois Constitution’s due process guaranty, the count must survive at this time.

Counts III Through VII

Not only Count II (see n. 6) but every other pendent claim advanced by Clark implicates the Immunity Act. Under Illinois law only the Act provides municipalities and their employees immunity from suit. Clark v. City of Chicago, 88 Ill. App.3d 760, 764, 43 Ill.Dec. 892, 896, 410 N.E.2d 1025, 1029 (1st Dist.1980); Melbourne, 76 Ill.App.3d at 603, 31 Ill.Dec. at 920, 394 N.E.2d at 1297. Three of the Act’s provisions require scrutiny in connection with Complaint Counts III through VII.

Act ¶ 2-109 provides:

A local public entity is not liable for an injury resulting from an act or omission of its employee where the employee is not liable.

Thus any immunity available to a municipal employee under the Act is available to the municipality as well. Melbourne, 76 Ill. App.3d at 604, 31 Ill.Dec. at 921, 394 N.E.2d at 1298.

Act ¶ 2-202 reads:

Á public employee is not liable for his act or omission in the execution or enforcement of any law unless such act or omission constitutes willful and wanton negligence.

That provision does not afford qualified immunity from liability for all acts or omissions of a public employee while on duty, but only for those connected with the actual execution or enforcement of a law. Arnolt v. City of Highland Park, 52 Ill.2d 27, 33, 282 N.E.2d 144, 147 (1972). Whether a public employee is executing or enforcing a law at the critical time is “a factual determination which in every case must be made in light of the circumstances involved.” King v. City of Chicago, 66 Ill.App.3d 356, 358, 23 Ill.Dec. 386, 388, 384 N.E.2d 22, 24 (1st Dist.1978). Similarly, whether or not the public employee “is guilty of willful and wanton conduct is a question of fact for the jury and should rarely be ruled upon as a matter of law.” Glover v. City of Chicago, 106 Ill.App.3d 1066, 1075, 62 Ill.Dec. 597, 604, 436 N.E.2d 623, 630 (1st Dist.1982).

Finally, Act H 2-204 provides:

Except as otherwise provided by statute, a public employee, as such and acting within the scope of his employment, is not liable for an injury caused by the act or omission of another person.

No state court decision has been found construing that provision, but this Court’s colleague Judge Prentice Marshall has held Act 112-204 required dismissal of a complaint seeking to impose on a supervisor, acting within the scope of his employment, respondeat superior liability for a police officer’s having shot the decedent without probable cause or other justification. Means v. City of Chicago, 535 F.Supp. 455, 465 (N.D.Ill.1982).

Clearly Counts III through V survive against Podgorny, Wilke and City in light of the Act and cases construing it. As to the individuals, only the familiar standard of Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957) (reaffirmed this past Term in Hishon v. King & Spalding, — U.S. -, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59 (1984)) need be addressed. Certainly Clark can conceivably prove a set of facts establishing either that Podgorny and Wilke were not executing or enforcing a law when Clark suffered his alleged injury or that they were guilty of willful or wanton negligence. Either showing would negate the immunity accorded the officers by Act ¶ 2-202. That would in turn render unavailable to City any immunity under Act 112-109. Because no other provision of the Act immunizes City, Clark can maintain a direct action against City based upon its agents’ conduct. See Arnolt, 52 Ill.2d 27, 282 N.E.2d at 144; Hampton v. City of Chicago, 484 F.2d 602, 610-11 (7th Cir.1973), cert. denied, 415 U.S. 917, 94 S.Ct. 1413, 39 L.Ed.2d 471 (1974).

As to Brzeczek and Nolan, however, Counts III-V must fall. They are named only on respondeat superior grounds, and the Means reading of Act 112-204 (the only sensible one) insulates them from such liability.

This opinion turns then to Counts VI and VII, directed only against City for the harm allegedly suffered at the hands of Podgorny and Wilke. Precisely the same analysis that preserved Counts III-V as against City also saves Counts VI and VII: Because Clark may be able to prove facts that would not insulate Podgorny and Wilke under Act ¶ 2-202, City cannot escape liability under Act ¶ 2-109 at this early stage of the litigation.

Punitive Damages

Counts III-V and VII seek an award of punitive damages against City. City correctly contends such relief is barred under Act ¶ 2-102:

Notwithstanding any other provision of law, a local public entity is not liable to pay punitive or exemplary damages in any action brought directly against it by the injured party.

All Clarks’ claims against City are direct actions. Though Clarks’ lawyers did not acknowledge their mistake as they should have (their memorandum opted instead for total silence), the punitive damages prayers are stricken.

Attorneys’ Fees

Each of Counts II through VII also asks for attorneys’ fees. Again defendants are right in saying Illinois law (this time unbroken case law, though they do not cite it) does not permit such an award as to the kinds of state law claims involved here.

Clark responds with the irrelevancy that 42 U.S.C. § 1988 may permit recovery on the pendent state claims (perhaps even if Clark were to lose on his Section 1983 claim). See Church of Scientology of California v. Cazares, 638 F.2d 1272, 1291 (5th Cir.1981) and cases cited there. That is indeed an irrelevancy, because any such recovery must come (if at all) under Section 1988, not under the pendent claims as such. Consequently the fee claims are stricken from Counts II through VII.

Mrs. Clark's Pendent State Law Claims

Complaint Counts VIII and IX assert claims against all defendants for Mrs. Clark’s loss of consortium resulting from her husband’s alleged injuries. Those allegations raise the vexed question of pendent party jurisdiction.

Hixon v. Sherwin-Williams Co., 671 F.2d 1005, 1008-09 (7th Cir.1982) and Johnson v. Miller, 680 F.2d 39, 41 (7th Cir.1982) strongly suggested such jurisdiction was moribund (if not indeed entirely dead) in this Circuit. Most recently, however, Judge Posner (again, as in the earlier cases, speaking for the court) has retreated from that position where the principal claim is grounded in federal question, rather than diversity, jurisdiction. Bernstein v. Lind-Waldock & Co., 738 F.2d 179 at 187-188 (7th Cir.1984). But even there the Court of Appeals treads gingerly (id. at 187):

[I]f the pendent party concept retains any vitality today ... when there is greater concern with avoiding unnecessary federal inroads into state jurisdiction than when the concept first emerged, it survives as a convenience to a party who has a substantive federal claim ... rather than as a service to the cause of judicial economy.

That surely addresses only the propriety of a proper plaintiff who asks to add a pendent party defendant. But Mrs. Clark, who lacks a federal claim altogether, does not fall within the terms of the Bernstein rationale.

It is true, as this Court has held in a different context, that Mrs. Clark’s loss-of-consortium action is wholly derivative from Clark’s allegations of injury. Jarvis v. Stone, 517 F.Supp. 1173, 1177 (N.D.Ill.1981) and cases cited there. Her claims, however, involve added substantive elements and a wholly different measure of damages from those advanced by Clark. This Court’s assumption of jurisdiction would afford no judicial economy here, nor would it provide “a convenience to a party who has a substantive federal claim” —Clark himself (except of course in the purely derivative sense that what benefits Mrs. Clark would benefit him).

Indeed the plain implication of Zahn v. International Paper Co., 414 U.S. 291, 94 S.Ct. 505, 38 L.Ed.2d 511 (1973) is that joinder of Mrs. Clark’s claims is jurisdictionally impermissible. As the Court there said (id. at 301, 94 S.Ct. at 512), quoting the Court of Appeals decision below, “one plaintiff may not ride in on another’s coattails.”

At best the grounds for pendent party jurisdiction here are weak, at worst wholly nonexistent. And even if this Court were arguably to have the power to assume jurisdiction over Mrs. Clark’s claims (a doubtful proposition), the proper exercise of its discretion to do so (see Gibbs, 383 U.S. at 725-26, 86 S.Ct. at 1138-39) calls for dismissal of Counts VIII and IX.

Conclusion

Defendants’ motions to dismiss are denied as to:

1. Clark’s Count II claims under the Illinois Constitution; and
2. Clark’s claims against City in Counts III through VII.

Defendants’ motions to dismiss are granted as to:

1. Clark’s claims against Brzeczek and Nolan in Counts III through V;
2. Mrs. Clark’s claims for loss of consortium in Counts VIII and IX;
3. Clark’s prayer for punitive damages against City; and
4. Clark’s claims for attorney’s fees as to all pendent state law claims.

Defendants are ordered to file their answer to the surviving portions of the Complaint on or before September 19, 1984.

      . Defendants’ motion in the latter respect had plainly misread either the direct-action thrust of Count I as to those defendants or the holdings of Monell v. Department of Social Services, 436 U.S. 658, 690-91, 98 S.Ct. 2018, 2035-36, 56 L.Ed.2d 611 (1978) and its variants in this circuit. See, e.g., Crowder v. Lash, 687 F.2d 996, 1005-06 (7th Cir.1982); Estate of Eklund v. Har

        diman, 580 F.Supp. 410, 412-14 (N.D.Ill.1984); Means v. City of Chicago, 535 F.Supp. 455, 462-63 (N.D.Ill.1982).

      . As with every Rule 12(b)(6) motion, Clarks well-pleaded factual allegations are taken as true, with all reasonable factual inferences drawn in their favor. Wolfolk v. Rivera, 729 F.2d 1114, 1116 (7th Cir.1984). No actual findings of fact are made or implied.

      . Clark's state law claims derive from the same "nucleus of operative fact” as Count I’s Section 1983 claim. That renders the state claims properly within this Court’s jurisdiction. See United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966).

      . That delinquency on the part of both counsel is really unfair to this Court’s law clerks, who have the responsibility for generating first drafts of opinions for this Court’s further research and sentence-by-sentence revision. In the decisional process the available resources are much like a funnel, with the very wide mouth being the time of lawyers for the litigants in all the cases on a judge’s calendar, and the very narrow tube that provides input for the judge being the time of the two law clerks. To force the law clerks (let alone the judge) to do the lawyers’ work is to waste the second scarcest resource in the system (the scarcest, of course, is the judge’s own time, and the lawyers' default in that respect often causes a waste of the judge’s time as well).

      . If the substantive content of the Illinois Constitution’s due process clause proves identical to that of the Fourteenth Amendment, Count II could add nothing whatever to Count I. In that case this Court might well consider eliminating Count II from the case, either under the discretion implied by Gibbs or as introducing needless confusion and complexity for the jury.

      . One other aspect of Melbourne is worth noting. It appeared to acknowledge (76 Ill.App.3d at 602-03, 31 Ill.Dec. at 919-20, 394 N.E.2d at 1296-97) that had plaintiff in fact suffered a constitutional tort, the provisions of the Illinois Local Governmental and Governmental Employees Tort Immunity Act (the “Immunity Act” or simply the "Act,” Ill.Rev.Stat. ch. 85, ¶¶ 1-101 to 10-101, cited simply "Act ¶ — ") would be inapplicable.

      . As with the earlier discussion (see n. 4), this analysis owes nothing to the litigants. All the groundwork was laid by this Court’s law clerk, Will Buck.

      . In response to defendants’ contention that no respondeat superior liability exists against City, Brzeczek and Nolan, Clarks’ Mem. 4 misses the point entirely by invoking Monell. That definition of Section 1983’s scope is irrelevant where state law provides the rules of decision (as it does on pendent claims).

      . Defendants also point to the like reading of Section 1983 in City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 259-71, 101 S.Ct. 2748, 2755-62, 69 L.Ed.2d 616 (1981). Even though City of Newport is really irrelevant here (because only state law claims are involved), defendants can scarcely be faulted — given Clarks' own misunderstanding of how Monell interacts (or more accurately does not interact) with Count V — for discussing it.

      . If Clark is successful in this case, the Illinois law of collateral estoppel would afford Mrs. Clark (suing in state court) the benefit of any issues necessarily decided here and common to her action. See Illinois State Chamber of Commerce v. Pollution Control Board, 78 Ill.2d 1, 34 Ill.Dec. 334, 398 N.E.2d 9 (1979).


author: BARRINGTON D. PARKER, District Judge.

text:
    Celestine J. TAYLOR, Plaintiff, v. Margaret M. HECKLER, Defendant.
    Civ. A. No. 83-398.
    United States District Court, District of Columbia.
    Sept. 5, 1984.

      Lawrence E. Williams, Jr., Neighborhood Legal Services Program, Washington, D.C., for plaintiff.
    Deborah A. Robinson, Joseph W. LoBue, James N. Owens, Newman T. Halvorson, Jr., Asst. U.S. Attys., Washington, D.C., for defendant.
   MEMORANDUM OPINION REVERSING AND SETTING ASIDE DECISION OF SECRETARY OF HEALTH AND HUMAN SERVICES

BARRINGTON D. PARKER, District Judge.

Plaintiff Celestine Taylor seeks review under 42 U.S.C. §§ 405(g) and 1383(c)(3) of the Secretary of Health and Human Services’ (“Secretary”) decision denying her application for disability insurance benefits under Title II of the Social Security Act (Act) and for Supplemental Security Income benefits under Title XVI of the Act. Both applications hinge on Ms. Taylor’s claim that she is disabled under the Act.

In November 1983, this Court reviewed and reversed the Secretary’s decision denying benefits to the plaintiff and remanded the matter to the agency, ruling that the Secretary’s decision was not supported by substantial evidence. After giving careful review to the record, this Court finds that because the Administrative Law Judge (AU) and the Secretary failed to apply the appropriate standards on remand, the second decision denying benefits to the plaintiff must also be set aside.

When Ms. Taylor applied for social security and insurance benefits in 1981, she was 42 years old and claimed to be suffering from such severe physical impairments and pain and her treating physician concluded that she was “totally and permanently disabled.” (Rec. at 225.) The Secretary, however, rejected the conclusion that Ms. Taylor was totally and permanently disabled, finding that she was able to perform “light work” 20 C.F.R. § 404.1567(b). The Court reversed the Secretary’s determination and ordered the AU, in considering the evidence on remand, to refrain from allowing his lay observations concerning Ms. Taylor’s claim of constant pain from entering into his decision. Moreover, this Court explicitly ordered that the claimant’s assertions of pain be given serious consideration and clearly instructed the AU to indicate why any probative evidence introduced by plaintiff was not credited. See Order of Reversal and Remand, November 17, 1983.

Unexplainably, the AU failed to carry out these directives. He found that the plaintiff “has hypertensive cardiovascular disease with cardiomegaly, chest pain of unknown noncardiac origin, mild degenerative arthritis of the left hip, moderate obesity, and status post cerebrovascular accident” (Rec. at 234), and that the plaintiff “is unable to perform her past relevant work as a nurse’s aide.” Id. Nonetheless, Ms. Taylor was found ineligible for benefits because the “[claimant has the residual function capacity to perform sedentary and light work activities.” Id. With respect to the plaintiff’s claim of pain, the AU merely concluded that it was “contraindicated by objective medical findings and [is] less than fully credible.” Id. Moreover, he dismissed the conclusion of plaintiff’s treating physician, Dr. Batipps, finding that his opinions were “not accompanied by objective findings to support the conclusion that claimant is totally disabled.” Id. at 233.

The AU’s decision was upheld by the Appeals Council. The Council reasoned that in regard to the issue of pain, “the symptoms alleged are still not controlling for purposes of evaluating disability.” Appeals Council’s Amended Decision (Rec. at 240). Indeed, the Council specifically held that “[p]ain is not an impairment, but a symptom.” Id.

A.

Standard of Review

This Court is well aware that its role in reviewing the Secretary’s decision is limited; it must not re-weigh the evidence and must defer to the Secretary’s final decision as to “the findings of fact and the reasonable inferences to be drawn therefrom,” Reyes v. Secretary of Health, Education & Welfare, 476 F.2d 910, 914 (D.C. Cir.1973), so long as the decision is supported by “substantial evidence” as provided by 42 U.S.C. § 405(g). Parker v. Harris, 626 F.2d 225, 231 (2nd Cir.1980). The requisite “substantial evidence” has been construed to be “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971) {quoting Consolidated Edison Co. v. NLRB, 305 U.S. 197, 229, 59 S.Ct. 206, 216, 83 L.Ed. 126 (1938)).

But neither is this Court merely to “rubberstamp” administrative decisions. Davis v. Heckler, 566 F.Supp. 1193, 1195 (D.D.C. 1983). And “if it is found, in scrutinizpng] the whole record ... [that] reliance is placed on one portion of the record in disregard of overbalancing evidence to the contrary, the Court may then interfere with the Secretary’s conclusion.” Perli v. Schweiker, 543 F.Supp. 394 (S.D.N.Y.1982).

B.

Failure to Consider All Relevant Evidence

The AU’s failure to evaluate probative evidence submitted by plaintiff or to explain why he deemed plaintiffs claim of pain not credible is “good cause” to reverse the Secretary’s decision on grounds that it is unsupported by substantive evidence. Gyurko v. Harris, 487 F.Supp. 1121, 1126 (D.C.Conn.1980). The Secretary’s silence on these issues directly contravenes this Court’s previous order. Moreover, this silence becomes even more disturbing in light of plaintiff’s well-articulated complaints of pain. Contrary to the AU’s statement that the plaintiff’s physician offered no “objective findings” supporting his conclusion that Ms. Taylor is totally disabled, the evidence showed claimant suffered from “abnormal” EEG readings “indicating a structural lesion” in the head region. (Rec. at 186.) Likewise, the Appeals Council, citing a 1981 report of Dr. Gradi’s, an associate of Dr. Batipps, recommending that the claimant merely “take two Aspirin, twice daily,” (Rec. at 240), failed to explain why it did not credit Dr. Gradi’s 1982 report concluding that Ms. Taylor suffered from a structural lesion. (Rec. at 186.) Nor did the Secretary explain why she did not credit Ms. Taylor’s many examples of debilitating pain. (Rec. at 45 to 60.) Finally, the AU and the Appeals Council never responded to the numerous medical problems that Dr. Batipps and his associates diagnosed to be so severe as to render plaintiff permanently disabled. See Plaintiff’s Motion to Reverse Agency Decision at 8, filed April 18, 1984.

The AU must evaluate all the relevant evidence. Cotter v. Harris, 642 F.2d 700, 704 (3rd Cir.1981). It is not enough for the AU merely to hold that claimant’s complaints and records were given “serious consideration” and say no more. (Rec. at 233.) What is required of

the AU [is] not only an expression of the evidence ... considered which supports the result, but also some indication of the evidence which was rejected. In the absence of such an indication, the reviewing court cannot tell if significant probative evidence was not credited or simply ignored.

Cotter v. Harris, 642 F.2d 705. Furthermore, it is the AU’s obligation to “examine the record for conflicting evidence. Upon finding conflicting evidence, he should compare the probative value of the treating physician’s opinion with the probative value of the conflicting evidence.” Bluvband v. Heckler, 730 F.2d 886, 893 (2d Cir.1984). Nothing has been presented or shown in this proceeding suggesting that the AU and the Appeals Council applied this balancing test in considering Ms. Taylor’s application for relief.

C.

Failure to Apply Proper Standard for Evaluating Pain

It is clear that the AU’s decision hinged largely on the plaintiff’s presentation of “objective evidence” to prove her claim of severe pain. (Rec. at 233.) Likewise, the Appeals Council upheld the AU’s determination on the authority of Social Security Ruling 82-58 (SSR-82-58), a policy statement dealing with the evaluation of pain in regard to disability claims. The relevant parts of that statement conclude that

Symptoms will not have a significant effect on a disability determination or decision unless medical signs or findings show that a medical condition is present that could reasonably be expected to produce the symptoms which are alleged or reported. However, once such a medical condition (e.g., disc disease) is objectively established, the symptoms are still not controlling for purposes of evaluating disability. Clinical and laboratory data and a well-documented medical history must establish findings which may reasonably account for the symptom in a particular impairment. Objective clinical findings ... must be present.

The Secretary’s proposition that objective clinical findings are a necessary component for proving pain has been rejected by eight federal appellate courts. Moreover, in the Eighth Circuit, the Secretary, after acknowledging that some adjudicators have misinterpreted SSR-82-58, has clarified the standard for evaluating allegations of pain and other subjective complaints. The Court agreed that the Secretary’s clarification was “a correct statement of the law concerning the evaluation of pain and other subjective complaints for determining disability.” Polaski v. Heckler, 739 F.2d 1320 at 1322 (8th Cir.1984). The Secretary resoundingly declared that “direct medical evidence of the cause and effect relationship between the impairment and the degree of claimant’s subjective complaints need not be produced. The adjudicator may not disregard a claimant’s subjective complaints solely because the objective medical evidence does not fully support them.” Id. at 1322. Instead, the absence of objective medical findings “is just one factor to be considered in evaluating the credibility of the testimony and complaints.” Id. The Secretary also explained that:

the adjudicator must give full consideration to all of the evidence presented relating to subjective complaints, including the claimant’s prior work record, and observations by third parties and treating and examining physicians relating to such matters as:
(2) the duration, frequency and intensity of the pain...

Id. The Secretary agreed to transmit forthwith this clarification of SSR-82-58 to relevant adjudications, personnel within the Social Security Administration, administrative law judges, and the Appeals Council within the Eighth Circuit. Id. at 1322.

Although the District of Columbia Circuit has never faced this issue, prior decisions suggest that it would join its sister circuits if confronted with the opportunity. Diabo v. HEW, 627 F.2d 278, 282 (D.C.Cir.1980), accord Davis v. Heckler, 566 F.Supp. 1193, 1198 (D.D.C.1983). Furthermore, in light of the Secretary’s clarification of SSR-82-58, this Court holds that a claimant need not prove his claim of pain by objective clinical findings.

This Court fully acknowledges that the Secretary need not accept without qualification claimants’ assertions of pain. The Secretary “is not obliged to accept without question the credibility of such subjective evidence.” Marcus v. Califano, 615 F.2d at 27. Yet it is also well-established that subjective pain may serve as the basis for establishing disability. Id. This potential conflict is reconciled when the appropriate standard of review — “substantial evidence” —is applied. See Parker v. Harris, 626 F.2d at 231. It is the AU’s duty to consider “all material facts” in determining disability. 20 C.F.R. § 404.1520(a). But substantial evidence is not confined only to a review of quantitative evidence, “[i]t is a qualitative standard as well, as the evidence must address the necessary statutory test for disability benefits eligibility provided in 42 U.S.C. § 423(d)(1)(A).” Davis v. Heckler, 566 F.Supp. at 1195.

The AU and the Appeals Council, however, would have this Court change this standard. They would qualify “substantial evidence” with the caveat that claims of disabling pain be proven by objective, clinical evidence. This is a burden that Congress never intended and the courts have not imposed. Bittle v. Richardson, 441 F.2d at 1195. Moreover, “[t]he broad purposes of the Act require a liberal construction in favor of disability [and] the intent [of the Act] is inclusion rather than exclusion.” Floyd v. Finch, 441 F.2d 73, 105 (6th Cir.1971) (citation omitted). Therefore, while disability claims must be supported by medically acceptable clinical and laboratory diagnostic techniques, 42 U.S.C. § 423(d)(3), “this does not mean that medical opinion must necessarily be supported by ‘objective’ clinical or laboratory findings.” McLaughlin v. Secretary of Health, Ed., 612 F.2d 701, 704 (2d Cir.1975). This is because “[disregard of a claimant’s subjective complaints of pain ... is not justified solely because there exists no objective evidence in support of such complaints.” Northcutt v. Califano, 581 F.2d at 166. These Circuit Court rulings subsequently have been endorsed by the Secretary in the Eighth Circuit. Polaski v. Heckler, supra.

In the present case, Ms. Taylor claims that when the pain is present “[y]ou cannot concentrate on your thinking. Your head is hurting. Your eyes is blurry. The only thing you can do is stay in a comfortable place” (Rec. at 45-46), that “if I am hurting real bad, I don’t get a chance to look at [the television] because the noise vibration ... everything has to be quiet” (id. at 51), and that “[s]ometimes ... I call my daughter to help me get out of bed.” (id: at 53). The medication her doctors prescribed to relieve her of the pain “was making me queasy, and I was walking like I was in space. I couldn’t walk straight. I walked like I was on a high or something.” (Id. at 49.) Ms. Taylor’s treating physician, after examining claimant, diagnosed that pain rendered her completely and permanently disabled. The AU, however, never discussed why he discounted Ms. Taylor’s serious complaints of pain. Under the prevailing law, the AU and the Appeals Council placed too much emphasis on the need to prove disability by objective proof. It was erroneous for the AU to hold that claimant’s opinions must be “corroborated by credible objective evidence” (Rec. at 233) and for the Appeals Council to require that claims of pain must be established with objective clinical findings. The Secretary thus committed reversible error by holding the claimant to the wrong standard of proof. Reynolds v. Heckler, 570 F.Supp. 1064 (D.C.Ariz.1983).

An appropriate order will be entered.

ORDER

Based on this Court’s Memorandum Opinion filed on this date, it is

ORDERED

That the amended decision of the Secretary of Health and Human Services, dated February 28,1984, denying disability insurance benefits and supplemental security income benefits to plaintiff Celestine J. Taylor, is reversed and set aside.

That the defendant is directed to pay retroactively, beginning with the date of the plaintiff’s initial application, all disability insurance benefits under Title II of the Social Security Act, and all supplemental security income benefits under Title XVI of the Act which are owed to the plaintiff; such payments shall commence forthwith.

      . The administrative record of the first decision was filed on May 16, 1983, and supplemented by additional filings on March 7, 1984 and on Feb. 29, 1984. The pages in these filings are sequentially numbered, and are cited as Rec. at-.

      . Diorio v. Heckler, 721 F.2d 726 (11th Cir.1983); Rhodes v. Schweiker, 660 F.2d 722 (9th Cir. 1981); Marcus v. Califano, 615 F.2d 23 (2d Cir. 1979); Northcutt v. Califano, 581 F.2d 164 (8th Cir.1978); Bittel v. Richardson, 441 F.2d 1193 (3rd Cir.1971); Sayers v. Gardner, 380 F.2d 940 (6th Cir.1967); Page v. Celebreeze, 311 F.2d 757 (5th Cir.1963); Gotshaw v. Ribicoff, 307 F.2d 840 (4th Cir. 1962).


text:
    Beverly K. BELTON, for Herself and Next Friend of Panya Belton, a Minor, Plaintiffs, v. COMMISSIONER OF INTERNAL REVENUE SERVICE, Defendant.
    Civ. A. No. 81-1109.
    United States District Court, District of Columbia.
    Sept. 5, 1984.

      John A. Turner, Jr., Dixon & Turner, Washington, D.C., for plaintiffs.
    Patricia A. Scott-Clayton, Edward Snyder, Gregory S. Hrebiniak, Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendant.
   MEMORANDUM ORDER

BARRINGTON D. PARKER, District Judge.

Plaintiff, Beverly Belton, on behalf of herself and her daughter, seeks an award of attorneys’ fees and expenses under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d). Ms. Belton brought suit against the Internal Revenue Service (“IRS”) to recover approximately $350 that was wrongfully levied upon and seized from accounts owned by her and her daughter, Panya Belton, which were deposited in the Riggs National Bank. Following the filing of cross motions for summary judgment, this Court granted the plaintiff’s motion on June 30, 1982, and ordered the IRS to refund the funds. 562 F.Supp. 30. Plaintiff now seeks $13,147.50 in attorneys fees in connection with this successful litigation. This Court grants plaintiff’s application for attorneys’ fees, but reduces the fee award to $1,500.

In June 1977 the IRS seized approximately $350 from plaintiff’s account at Riggs National Bank. The seizure arose from a tax debt assessed by the IRS against Ms. Belton’s former husband, who had been found liable for failure to pay withholding and unemployment taxes for a business he previously owned and operated. The IRS wrongly believed that Ms. Belton was a co-owner of the business and thus jointly liable for the unpaid taxes. Acting on this misinformation, the IRS seized funds in a bank account owned by the plaintiff and another, and held in trust for her minor child. The monies held in these two accounts were then applied toward the husband’s debt. The plaintiff then contacted the IRS and, following an investigation, was informed by an IRS officer that the levy and seizure was in error. The officer advised Ms. Belton to file a claim for refund, which she did in July, 1977. When plaintiff received no response from the IRS, she made a second request in December, 1977. When that request was met with silence, plaintiff then filed suit in May 1981 for recovery of the wrongfully seized funds. The Government argued that the funds were seized because of the tax liability of plaintiff’s former husband, and that the one-year statute of limitations, 26 U.S.C. § 6532(c)(2), barred her cause of action. This Court rejected the Government’s argument and found for plaintiff.

The EAJA provides that in civil actions brought by or against the United States, the courts shall award attorneys fees to qualified prevailing parties against the United States “unless the position of the United States as a party to the proceeding was substantially justified or special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(3). The government has the burden of proving that its position was “substantially justified” and the applicable standard is slightly more stringent than one of reasonableness. Spencer v. National Labor Relations Board, 712 F.2d 539, 557-558 (D.C.Cir.1983). The government’s position in litigation also must have “a reasonable basis in law and fact.” Nunes-Correia Haig, 543 F.Supp. 812, 817 (D.D.C. 1982).

The government, in opposing the propriety of an award of fees, advances three arguments: first that its defense that Ms. Belton’s action was time barred “substantially justified” the government’s litigation; second, that “special circumstances” prohibit the award of attorneys’ fees; third, that the amount sought is unreasonable.

The government argues first that the seizure of Ms. Belton’s bank account was not wrongful, and also contends that the statute of limitations prevented plaintiff’s suit. Neither of the government’s positions substantially justified its decision to press forward against Ms. Belton’s complaint. With respect to the merits, the government admitted in its response to plaintiff’s interrogatories that it had no evidence indicating Ms. Belton was a cosigner or guarantor of her former husband’s business; that documents relevant to plaintiff’s action had been destroyed; and finally, the government’s attorney from the Tax Division of the Department of Justice conceded that Ms. Belton’s accounts had been wrongfully seized. See Defendant’s Supplemental Response to Plaintiff’s First Set of Interrogatories, filed Nov. 3, 1981.

Next, the government contends that its position was substantially justified because it had no reason to believe that the doctrine of estoppel would be invoked to overcome the statute of limitations barrier. Yet estoppel is a well-known doctrine incorporating the idea “that no man may take advantage of his own wrong.” Glus v. Brooklyn E. Disk Terminal, 359 U.S. 231, 232, 79 S.Ct. 760, 761, 3 L.Ed.2d 770 (1959). Accordingly, “a defendant cannot avail himself of the bar of the statute of limitations, if it appears that he has done anything that would tend to lull the plaintiff into inaction, and thereby permit the limitation prescribed by the statute to run against him.” Alley v. Dodge Hotel, 551 F.2d 442, 446 (D.C.Cir.1977), cert. denied, 431 U.S. 958, 97 S.Ct. 2684, 53 L.Ed. 277 (1977). Here, where estoppel is invoked against the government, the plaintiff has a heavier burden of establishing affirmative misconduct. Heckler v. Community Health Services of Crawford County, Inc., — U.S.-,-, 104 S.Ct. 2218, 2223, 81 L.Ed.2d 42 (1984). The government, knowing that Ms. Belton relied on IRS assurances that her money would be refunded, should have easily recognized the applicability of the estoppel doctrine.

Second, the government claims that special circumstances render the claim for attorneys’ fees unjust. Yet the arguments the government presents echo strongly those put forth above. The government again maintains that the Court’s use of estoppel was unforeseeable and raises specious factual and procedural issues such as the plaintiff was negligent in bringing suit so long after her funds were seized and that the suit was time barred.

Ms. Belton twice sought a refund from the IRS, and it admitted that her bank accounts had been wrongfully seized. She relied on IRS advice and assurance that her money would be refunded. Only when it became clear that the IRS was not responding to her requests did Ms. Belton initiate this suit. These circumstances made it particularly unreasonable that the government challenged Ms. Belton’s cause of action. Given these underlying factual and legal issues the government was not “advancing in good faith the novel but credible extensions and interpretations of the law that often underlie vigorous enforcement efforts.” See S.Rep. No. 96-253, 96th Cong., 1st Sess. at 7.

Lastly, the government argues that the more than $13,000 in fees claimed by plaintiff’s attorney is unreasonable. This Court agrees with plaintiffs that $75 per hour is a reasonable rate in the District of Columbia for an attorney such as the plaintiff’s who has an LL.M degree in addition to the J.D. degree, and has practiced law at least since 1976. But the documentation falls short of the mandate in Copeland v. Marshall, 641 F.2d 880, 892 (D.C. Cir.1980). The record shows that discovery was initiated by the plaintiff, that his counsel filed a motion for summary judgment, and responded to the government’s cross-motion, in which the government vigorously contested Ms. Belton’s claim. After reviewing plaintiff’s submitted record, the difficulty of the issue's involved, the level of skill required, and the experience, reputation and ability of the attorneys, Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), this Court concludes that 20 hours is a reasonable calculation of the time expended by plaintiff’s attorney, and the Court awards $1,500, which is considered to be fair and reasonable under the circumstances.


author: BELEW, District Judge.

text:
    SID RICHARDSON CARBON & GASOLINE CO., a Texas Corporation, and Perry R. Bass v. INTERNORTH, INC., a Delaware Corporation.
    Civ. A. No. 4-83-534-K.
    United States District Court, N.D. Texas, Fort Worth Division.
    Sept. 5, 1984.

      Kelly, Appleman, Hart & Hallman by Robert C. Grable, Fort Worth, Tex., for plaintiffs.
    Miller, Keeton, & Bristow by Robert Brown, Houston, Tex., for defendant.
   MEMORANDUM OPINION

BELEW, District Judge.

This action is before the Court upon Plaintiffs’ Motion for Preliminary Injunction and upon Defendant’s Motion to Refer Issues to the Federal Energy Regulatory Commission and for Stay.

Background

In their Original and First Supplemental Complaints, Plaintiffs/producers have sought declaratory and injunctive relief, as well as money damages from Defendant/purchaser for breach of certain gas purchase contracts. Under the terms of these two contracts, Defendant is obligated to purchase Plaintiffs’ interest in natural gas produced from five gas wells in Pecos County, Texas, and two wells in Ward County, Texas.

The contracts provide that Defendant is obligated to purchase all of Plaintiffs’ interest in the “allowable volume” of gas production from each of the wells subject to the contracts, during each contract year, which is the calendar year. The pertinent provisions of both of the contracts are as follows:

“13. ‘Allowable Volume ’ means a volume of gas allocated by any duly constituted authority having jurisdiction to any Gas Production Unit of Seller under a valid order prorating gas production.” (Art. I, § 31).
“(f) Northern agrees to purchase and receive from Seller during each Contract Year, the Allowable Volume of Gas Well Gas attributable to Seller’s interest committed hereunder in all connected and producing Gas Production Units.” (Art. IV/§ 2[f]).
“(g) Should Northern in any Contract Year fail to purchase and receive all of the Allowable Volume assigned to Seller’s Lands committed hereunder and same was available for delivery, then Northern shall pay Seller for the difference between (1) the Allowable Volume attributable during the Contract Year to Seller’s Lands, and (2) the quantity of Gas Well Gas actually received by Northern during the Contract Year from Seller’s Lands, said difference hereinafter referred to as ‘Allowable Deficiency’. Payment for such Allowable Deficiency shall be made at the price in effect hereunder at the end of the Contract Year in which the Allowable Deficiency was incurred.” (Art. IV, § 2[g]).
“Section 2. Payment of Deficient Volumes. If Northern shall fail in any Contract Year during the term of this Contract to purchase a quantity of gas that Northern is obligated to purchase under the provision of Article IV of this Contract, then Northern shall, within sixty (60) days after the end of such Contract Year, send a statement to Seller showing the amount due Seller by reason of such deficient purchases and Northern shall make payment for such deficient purchases to Seller within twenty-five (25) days after delivery of such statement. Such payment shall be at the price per Mcf in effect hereunder at the end of the Contract Year in which such deficient purchase occurred.” (Art. VII, § 2).

The above provisions are commonly referred to as “take-or-pay” clauses, and together they require InterNorth to pay Plaintiffs for a minimum quantity of natural gas. That minimum quantity being their respective interests in the allowables assigned each well by the Railroad Commission, whether taken or not during each contract year.

Plaintiffs have alleged inter alia that the Defendant has violated the terms of these contracts, first, by refusing to pay the “allowable deficiencies” incurred for each of the affected wells for the contract year ending December 31, 1982, and, second, by unilaterally implementing a policy of withholding twenty percent of the amount payable to Plaintiff under the contracts for natural gas actually delivered and sold to the Defendant by the Plaintiffs. It is the latter breach for which Plaintiffs now seek a preliminary injunction. In essence, Plaintiffs have asked this Court to enjoin the Defendant from withholding twenty percent of the amount payable to Plaintiffs for current sales of natural gas under the contracts.

The Defendant’s Motion to Refer and for a Stay

The Defendant has moved for this Court to stay this cause and to refer all the relevant issues involved to the Federal Energy Regulatory Commission (FERC). This Court has concluded that Defendant’s motion is not well-founded, and that any delay which would accompany a stay in these proceedings pending a nonbinding decision by a federal agency would be patently unfair to the Plaintiffs. The Court, thus, exercises its discretion in favor of retaining this cause without either referring it to the FERC or staying any of the proceedings.

The Plaintiff’s Motion for Preliminary Injunction

Case law has established a four-part test for determining whether a preliminary injunction should issue under Rule 65(a) Fed. R.Civ.P. Plaintiff must show:

(1) a substantial likelihood that the moving party will prevail on the merits;
(2) a substantial threat that the moving party will suffer irreparable injury if the injunction is not granted;
(3) the threatened injury to the moving party must outweigh the threatened harm the injunction may do to the non-moving party; and
(4) granting the injunction must not disserve the public interest.

Piedmont Heights Civic Club, Inc. v. Moreland, 637 F.2d 430, 435 (5th Cir.1981). As the parties seeking the preliminary injunction, the Plaintiffs in this action bear “the burden of persuasion on all four factors ...” Id.

Defendant does not deny that it has refused to either purchase the minimum quantity of gas or to pay for the gas not taken. Rather, Defendant asserts what appear to be alternative arguments which purportedly justify its actions.

First, Defendant argues that pursuant to Article IV of the contracts, InterNorth has indeed paid Plaintiffs for natural gas not actually received and that such payments were made when InterNorth did not take the “Allowable Volume” of natural gas produced from the wells. Thus, commencing with its December, 1983, invoices, InterNorth began to deduct twenty percent of each month’s production from the amounts due Plaintiffs. Defendant maintains that the contracts afford Defendant certain “make-up rights” and that this action was taken pursuant to Article IV, § 2(d) of the contracts. However, Plaintiffs maintain and this Court believes it to be clear that this portion of the contract does not apply to make-up rights. Rather, the make-up rights of the contract are stated in Article IV, § 4(b) which provides:

If [InterNorth] shall have paid for Gas-Well Gas which it did not receive, it shall have the right, during the five (5) Contract Years immediately following the Contract Year in which [InterNorth] was deficient, to receive all or any part of such quantity of Gas-Well Gas by taking in excess of the quantity it is required to take during such five (5) Contract Years; provided, that [InterNorth] shall pay Seller any difference in price between that upon which payments were made and that applicable at the time of taking the gas.

Defendant’s method of making the disputed twenty percent offsets does not follow the contractual make-up procedures. The contractual make-up procedures permit the taking of gas volumes in excess of the minimum quantity required by contract but do not permit dollar deductions for gas actually taken.

It further appears that Defendant has not attempted to follow any of the other make-up procedures provided for in Article IV, § 4. This Court must therefore conclude, for the purposes of Plaintiffs’ motion for preliminary injunction, that the contract itself does not provide for the disputed twenty percent offsets.

Defendant’s second argument is that take-or-pay clauses are void and unenforceable under the law, notwithstanding the fact that these contracts were negotiated at arms length among parties of relatively equivalent bargaining strengths. Defendant reasons that Plaintiff's sale of gas to InterNorth is a “first sale” of gas within the meaning of the Natural Gas Policy Act, 15 U.S.C. § 3301, et seq. [NGPA], As a “first sale,” it is subject to 15 U.S.C. § 3314 which establishes a maximum lawful price ceiling for such gas. Under present market conditions, Defendant argues, the majority of the deficiency payments made by Defendant to Plaintiffs are not made up in subsequent takes of gas in excess of the Allowable Volumes for contract years during the five-year make-up period. Thus, Defendant argues that paying for gas not actually taken elevates the effective price of the gas actually received by Defendant beyond the maximum price permissible under the NGPA. In addition, Defendant argues that even if deficiency payments for gas not actually taken are made up in subsequent years, InterNorth must pay any differential between the price in effect during the year in which the deficiency was incurred and the prevailing price at the time the gas is made up. By that time, Plaintiffs have received the value represented by the use and enjoyment of the interim of the funds earlier paid by Defendant. This “interest factor” allegedly raises the effective price of the gas taken by Defendant under the contracts above the maximum lawful price under the NGPA and thereby renders the take-or-pay clauses illegal and unenforceable.

Thus, Defendant’s argument is that its twenty percent offsets are supported by Defendant’s equitable or common-law right of offset to recoup prior, allegedly unenforceable and illegal, take-or-pay payments.

Although this creative argument has a certain sophistic appeal, the Court has found no judicial or administrative authority to support it. What authority the Court has found supports the Plaintiffs’ position that take-or-pay clauses do not violate the NGPA. See Southport Exploration, Inc. v. Producer’s Gas Company, No. 83-C-550-BT (N.D.Okla. June 1, 1984). It thus appears to this Court that Defendant’s unauthorized twenty percent deduction, which is primarily based upon a claim that take- or-pay provisions are void, is simply a breach of contract and that Plaintiffs have a substantial likelihood of prevailing when this case is tried on the merits.

Irreparable Harm

Under the Natural Gas Act, Plaintiffs must continue their service to Defendant despite Defendant’s breach of contract. If this preliminary injunction were denied, Plaintiffs would have to continue providing as to Defendant but would be denied the current use of the proceeds of production that are necessary for the substantial investment in deep, expensive gas wells, such as the ones covered by the contracts. The Court concludes that such would cause irreparable harm to the Plaintiffs.

Balance of Equities

The Court concludes that the equities in this case favor the Plaintiffs. A preliminary injunction granted by this Court will not impose any new obligation on Defendant. Instead, it will merely require the Defendant to pay Plaintiffs, as per contractual terms, for gas actually taken by the Defendant. This appears to be particularly fair since most of the gas involved is “old flowing gas” in interstate commerce and is therefore held far below the market clearing price by mandatory federal controls. See Section 104 of the NGPA.

In fact, the evidence and testimony adduced at the hearing revealed that the current price paid by Defendant for gas produced from the Price A-l Well is $.4804/MCF (Plaintiffs’ Exhibit 4) and $1.25/MCF for gas produced from the Price B-2 Well (Plaintiffs’ Exhibit 5). On the other hand, Defendant’s weighted average cost of gas is approximately $2.70/MCF and its weighted average resale price is approximately $3.50/MCF (testimony of Ms. Cole). Thus, it appears that the gas at issue is among the cheapest gas in Defendant’s system.

The Public Interest

It is difficult to determine exactly what is or is not in the public’s best interest within the context of a dispute such as the one in the ease at bar. Here, the Defendant has apparently decided that it can improve on the bargained for contractual terms in issue. Thus, the Defendant has attempted to rewrite the contracts while knowing that Plaintiffs are prevented by federal law from employing self-help measures to counter Defendant’s unilateral actions. The Court therefore concludes that it is in the public’s best interest to prevent such planned breaches of contract by a utility, such as the Defendant, who could otherwise breach their contracts and then hide behind the Natural Gas Act.

Conclusion

Although Defendant has argued that this case is simply a collections lawsuit and that Plaintiffs are therefore not entitled to a preliminary injunction, this Court disagrees. Not only is Defendant refusing to honor the bargained for take-or-pay provisions of the contracts, it is withholding twenty percent of the payments for gas actually produced and taken. As a practical matter, there is nothing but the equitable power of this Court to prevent the Defendant from continuing to receive gas from the Plaintiffs, pursuant to federal law, while withholding one hundred percent of the payments pending trial on the merits.

This Court has therefore concluded that, pending trial on the merits of this case, the Defendant should pay Plaintiffs the applicable price under the contracts for one hundred percent of the natural gas delivered and sold to Defendant by Plaintiffs, without making any deduction to the full amount owed.

An Order for Preliminary Injunction will be issued.

      . For purposes of this action, the named Defendant “InterNorth," is considered to be the same as "Northern,” which is a division of Inter-North and which is sometimes referred to in the contracts that are the subject of this action.


author: KEVIN THOMAS DUFFY, District Judge:

text:
    The EXCHANGE NATIONAL BANK OF CHICAGO, Plaintiff, v. EMPRESA MINERA DEL CENTRO DEL PERU S.A. and Banco Popular Del Peru, Defendants.
    No. 83 Civ. 8287 (KTD).
    United States District Court, S.D. New York.
    Sept. 6, 1984.

      Baker & McKenzie, New York City, for plaintiff; Richard Franklin, Arthur W. Rovine, New York City, of counsel.
    White & Case, New York City, for defendants; P.B. Konrad Knake, F. Ellen Zeifer, New York City, of counsel.
   MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, District Judge:

Plaintiff Exchange National Bank of Chicago (“Exchange”) brought this action on a promissory note issued by defendant Empresa Minera del Peru, S.A. (“Centromin”) and guaranteed by defendant Banco Popular del Peru (“Banco Popular”). Defendants move to dismiss for lack of subject matter jurisdiction claiming immunity under the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602, et seq. (“the Act” or “FSIA”). Alternatively, defendants assert lack of in personam jurisdiction.

On May 2, 1980, Centromin issued to Caterpillar Americas Co. (“Caterpillar”) a negotiable promissory note for the principal sum of $498,216.23 plus interest in order to finance the purchase of various machinery and replacement parts manufactured in the United States by Caterpillar. The note was payable in New York, New York. The terms of the agreement with Caterpillar were negotiated in Peru by Centromin and a dealer for Caterpillar equipment, Enrique Ferreyros y Cia, S.A. (“Enrique”). Upon receipt of the promissory note from Centromin, Caterpillar negotiated the promissory note to Chase Bank International who in turn negotiated the note to Central National Bank in Chicago (“Central”). Thereafter, Central merged with and changed its name to Exchange.

Centromin is an entity organized and existing under the laws of Peru with its principal place of business in Lima, Peru. It is wholly-owned and controlled by the Peruvian government. Banco Popular is also organized and existing under the laws of Peru with its principal place of business in Lima, Peru. The majority of the ownership interest of Banco Popular is owned by the government of Peru. Neither Centromin nor Banco Popular have offices in the United States.

Centromin remitted to Exchange only five of the eight semi-annual payments of principal and interest. The sixth and seventh payments, due May 2, 1983 and November 2, 1983 respectively, were not made. On November 7, 1983, Exchange exercised the option under an acceleration clause to demand immediate payment in full of the remaining unpaid principal. On May 2, 1984, Banco Popular as guarantor made a partial payment in the amount of $3,113.85. When no additional payments were forthcoming, plaintiff commenced this action. Defendants now move pursuant to the Foreign Sovereign Immunities Act to dismiss the action for lack of subject matter jurisdiction and personal jurisdiction. For the reasons that follow, defendants’ motion is granted.

DISCUSSION

The Foreign Sovereign Immunities Act provides that a foreign state “shall be immuñe from the jurisdiction of the courts of the United States and of the States except as provided in sections 1605 to 1607 ____” 28 U.S.C. § 1604; see 28 U.S.C. § 1330.

Plaintiff does not dispute that defendants fall within the definition of an “agency or instrumentality” of a foreign state. See 28 U.S.C. §§ 1603(a), 1603(b)(2). Instead, Exchange asserts that defendants are subject to jurisdiction under the exceptions to foreign sovereign immunity set forth in the Act. See 28 U.S.C. § 1605. The exception relevant to this case provides for subject matter jurisdiction in actions which are based:

upon a commercial activity carried on in the United States by a foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

28 U.S.C. § 1605(a)(2).

“Commercial activity carried on in the United States by a foreign state” is further defined by the Act as “commercial activity carried on by such state ... and having substantial contact with the United States.” 28 U.S.C. § 1603(e) (emphasis supplied). The purchase of the equipment by Centromin was made pursuant to negotiations between Centromin and Caterpillar's dealer, Enrique, which transpired in Peru. The promissory note was executed in Peru. Thus, the only potential contacts with the United States includes the fact that the ultimate seller, Caterpillar, exists under the laws of the United States and the fact that the note was made payable in New York. These two contacts do not satisfy the Act’s definition of “commercial activity.” See Verlinden B.V. v. Central Bank of Nigeria, 488 F.Supp. 1284, 1296 (S.D.N.Y.1980) (provision for payment in United States is insufficient), aff'd on other grounds, 647 F.2d 320 (2d Cir.1981), rev’d on other grounds, 461 U.S. 480, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983); Export Credit Corp. v. Diesel AutoParts Corp., 502 F.Supp. 207, 209 (S.D.N.Y.1980) (guarantor’s promise to pay in United States is insufficient). Cf. Plaza Realty Investors v. Bailey, 484 F.Supp. 335, 346 (S.D.N.Y. 1979) (personal jurisdiction is not conferred as a result of making a note payable in foreign state); American Recreation Group, Inc. v. Woznicki, 87 A.D.2d 600, 448 N.Y.S.2d 51, 52 (2d Dep’t 1982) (fact that note payable within forum is insufficient as a matter of due process). Thus, subject matter jurisdiction does not exist based on the first clause of 28 U.S.C. § 1605(a)(2).

The second subdivision of 28 U.S.C. § 1605(a)(2) confers jurisdiction on the court when the action is predicated on an “act performed in the United States in connection with a commercial activity of the foreign state elsewhere.” 28 U.S.C. § 1605(a)(2). This clause has been interpreted according to legislative history as intending to cover conduct of the foreign state “which relates either to a regular course of commercial conduct elsewhere or to a particular commercial transaction concluded or carried out in part elsewhere.” H.R.Rep. No. 1487, 94th Cong., 2d Sess. 19 (1976), reprinted in 1976 U.S.Code Cong. & Ad.News 6604 at 6617.

In order for this exception to attach, the “act” — defendants’ nonpayment of the obligation — must be deemed to have occurred in the United States and the failure to pay must be in connection with commercial activity transpiring elsewhere — here, the purchase of mining equipment from Caterpillar.

I cannot say, however, that the situs of the “act” (or the failure to act) occurred in New York where the debt was due. See Shaffer v. Heitner, 433 U.S. 186, 200, 97 S.Ct. 2569, 2577, 53 L.Ed.2d 683 (1977) (citing Harris v. Balk, 198 U.S. 215, 223, 25 S.Ct. 625, 626, 49 L.Ed. 1023 (1905)) (debt owed is an intangible form of property that travels with the debtor.). The decision to withhold payment on the note was made in Peru. Therefore, the second subdivision of 28 U.S.C. § 1605(a)(2) does not apply either.

Finally, plaintiff asserts that defendants are not immune by operation of the third clause in 28 U.S.C. § 1605(a)(2) which provides that subject matter jurisdiction exists in an action based on defendants’ commercial activity outside the United States causing a direct effect in the United States. Again, the only connection alleged by plaintiff is defendants’ nonpayment of a note that was to be paid in New York. The direct effect of defendants’ repudiation of the promissory note was clearly felt in the United States where Exchange, an American entity, suffered its monetary loss. See Texas Trading & Milling Corp v. Federal Republic of Nigeria, 647 F.2d 300, 312 (2d Cir.1981).

Before jurisdiction can be exercised over a foreign sovereign, however, due process dictates that there exist certain minimum contacts between the sovereign, the cause of action and the forum state “such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantive justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citations omitted). Thus, to exercise jurisdiction over Peru or its agents or instrumentalities — here, Banco Popular and Centromin — I must find that they “purposefully avail[ed]” themselves of the “privilege of conducting business within the forum State.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). There is nothing to indicate that the defendants availed themselves of the privilege of doing business in the United States. The fact that Centromin has a New Jersey subsidiary is irrelevant as to Centromin’s contacts. Furthermore, I reject totally plaintiff’s attempt to create contacts by hypothesizing about the manner in which Centromin planned to finance its purchase before Caterpillar agreed to accept a promissory note.

Centromin’s ongoing contacts with United States importers, purchasing agents and freight forwarders — all alleged by plaintiff without foundation — are irrelevant to my inquiry since the defendants’ contacts must be in connection with the plaintiff’s cause of action. See East Europe Domestic International Sales Corp. v. Terra, 467 F.Supp. 383, 388 (S.D.N.Y.), aff'd, 610 F.2d 806 (2d Cir.1979).

Finally, with respect to Banco Popular, contacts with correspondent banks in New York are insufficient to sustain the exercise of personal jurisdiction. See Amigo Foods Corp. v. Marine Midland Bank— New York, 39 N.Y.2d 391, 348 N.E.2d 581, 583, 384 N.Y.S.2d 124, 127 (1976). Thus, it is likewise insufficient to support jurisdiction under the FSIA exception since both are based on a minimum contacts standard.

Accordingly, I conclude that subject matter jurisdiction is lacking under the Act because defendants do not have the requisite minimum contacts with the United States. Furthermore, although it is unnecessary to reach the issue, because there is no subject matter jurisdiction, there is also no personal jurisdiction. See 28 U.S.C. § 1330(b); Texas Trading, 647 F.2d at 313. In sum, defendants’ motion is granted and plaintiff’s complaint is dismissed.

SO ORDERED.


author: CLARKE, District Judge.

text:
    Timothy Allen ROSSMAN, Administrator of the Estate of Paula K. Rossman, deceased, and Jodi S. Rossman, Plaintiffs, v. CONSOLIDATED INSURANCE COMPANY, an Indiana corporation, The Protective Casualty Insurance Company, a Missouri corporation, State Farm Mutual Automobile Insurance Company, an Illinois corporation, and Prudential Property and Casualty Insurance Company, a New Jersey corporation, Defendants.
    Civ. A. No. 83-829-N.
    United States District Court, E.D. Virginia, Norfolk Division.
    Sept. 6, 1984.

      John W. Drescher, Virginia Beach, Va., for Rossman.
    Henry C. Morgan, Virginia Beach, Va., for Richards.
    Palmer S. Rutherford, Norfolk, Va., for Consol. Ins. Co.
    John Crandley, Virginia Beach, Va., for State Farm.
    J.C. Fears, Jr., Norfolk, Va., for Protective Cas. Ins. Co.
    Alan Rashkind, Norfolk, Va., for Prudential.
   OPINION

CLARKE, District Judge.

This matter comes before the Court on the motion to dismiss filed by Consolidated Insurance Company (Consolidated) pursuant to Rule 12(b)(2), (4) and (5) of the Federal Rules of Civil Procedure. Consolidated contends that the plaintiffs’ Complaint does not allege sufficient contacts by Consolidated with the Commonwealth of Virginia so as to confer in personam jurisdiction upon this Court.

The plaintiffs, Timothy Allen Rossman, Administrator of the Estate of Paula K. Rossman, Deceased, and Jodi S. Rossman, have brought this civil action against Kelly Lee Richards and four insurance companies. The Complaint alleges that the plaintiff, Jodi Rossman, was severely injured and the plaintiff’s decedent, Paula Ross-man, was killed due to the negligent driving of the defendant Kelly Lee Richards. Two of the four defendant insurance companies had issued policies covering the automobile driven by Mr. Richards one such being Consolidated, and the other two of the four companies had issued policies insuring the automobile of the plaintiff. Plaintiff alleges that Consolidated has denied coverage to Kelly Lee Richards and this action seeks a declaration by the Court that Consolidated had effective coverage on Richards at the time of the accident.

The defendant Consolidated admits by affidavit of its Vice President that it had issued an insurance policy covering the automobile driven by the defendant Kelly Richards. Consolidated is a corporation incorporated under the laws of the State of Indiana; it sold the policy at issue to Richard’s father in Illinois. Consolidated contends that because it does not participate in any business activities in the Commonwealth of Virginia, the plaintiffs cannot obtain personal jurisdiction over it in this Court. Consequently, it argues, the plaintiffs’ service of process on the Secretary of the Commonwealth of Virginia is insufficient. It requests this Court to dismiss the action against Consolidated.

The plaintiffs seek to exercise jurisdiction pursuant to the Virginia Long Arm Statute, Va.Code § 8.01-328.1(A)(1), (2), and (7). The purpose of this statute is to assert jurisdiction over non-residents of Virginia to the extent permissible under the due process clause of the United States Constitution, see, e.g., Peanut Corp. of America v. Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir.1982); Carmichael v. Snyder, 209 Va. 451, 164 S.E.2d 703 (1968). Due process only permits a state to exercise jurisdiction over a nonresident defendant if there exist certain “minimum contacts” between the defendant and the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 290, 100 S.Ct. 559, 563, 62 L.Ed.2d 490 (1980).

The defendant, Consolidated, has attested that it is not qualified to do business in Virginia; it maintains no offices in Virginia, and it permits no agents to act on its behalf in Virginia. The policy that is the subject of this action was written in the state of Illinois, delivered to the defendant’s father in Illinois, and all premiums were paid in the state of Illinois. Furthermore, Consolidated understood that the insured automobile was garaged in Illinois, although in fact it was garaged in Virginia. Consolidated argues, therefore, that it has no minimum contacts with the Commonwealth of Virginia.

It is undisputed that Consolidated contracted to insure the vehicle that was involved in this accident. The policy, issued to Richard D. Richards, specifically names the automobile and indicates that Kelly Lee Richards was the principal driver of the automobile. Nonetheless, Consolidated argues that it is not required to defend the present lawsuit in the forum in which it has been brought.

While there is no objective, mechanical test for determining the presence or absence of the minimum contacts necessary to maintain jurisdiction, a court’s examination must focus on the relationship between the defendant and the forum state. See, e.g., Keeton v. Hustler Magazine, Inc., — U.S.-, 104 S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984); Rush v. Savchuk, 444 U.S. 320, 332, 100 S.Ct. 571, 579, 62 L.Ed.2d 516 (1980). That relationship must be such that it is “reasonable ... to require the corporation to defend the particular suit which is brought there.” International Shoe Co. v. Washington, 326 U.S. at 317, 66 S.Ct. at 158.

In considering the nature of the contact between Consolidated and the Commonwealth of Virginia, the Court is required to consider the factors enumerated in World-Wide Volkswagen, 444 U.S. at 292, 100 S.Ct. at 564. These include the burden on the defendant in defending the case, the forum State’s interest in adjudicating the dispute, see McGee v. International Life Insurance Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223 (1957), the plaintiff’s interest in obtaining convenient and effective relief, see Kulko v. California Superior Court, 436 U.S. 84, 92, 98 S.Ct. 1690, 1696, 56 L.Ed.2d 132 (1978), the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies, id. at 93, 98 S.Ct. at 1697. See World-Wide Volkswagen, 444 U.S. at 292-93, 100 S.Ct. at 564-65.

The Court notes that Virginia has a substantial interest in providing relief for its citizens when insurance companies legally obligated to them refuse to pay claims. As the Supreme Court wrote in McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223,

It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant State in order to hold it legally accountable. When claims were small or moderate individual claimants frequently could not afford the cost of bringing an action in a foreign forum — thus in effect making the company judgment proof. Often the crucial witnesses ... will be found in the insured’s locality.

Id. at 223, 78 S.Ct. at 201. See also Vishay Intertechnology, Inc. v. Delta International Corp., 696 F.2d 1062, 1069 (4th Cir. 1982) (interest of forum state is a relevant factor in ascertaining whether minimum contacts requirement is met).

The most widely-quoted articulation of the minimum contacts test is found in World-Wide Volkswagen, 444 U.S. at 298, 100 S.Ct. at 567. In that case, the plaintiffs brought a products liability suit in an Oklahoma state court against the New York automobile wholesaler and retailer that sold them their defective automobile. Holding that Oklahoma did not have personal jurisdiction over the residents of New York, the Court stated,

[T]he foreseeability that is critical to due process- analysis is not the mere likelihood that a product will find its way into the forum State. Rather, it is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.

Id. at 298, 100 S.Ct. at 567.

Consolidated’s “conduct and connection with the forum state” in this case are minimal. Because Consolidated has not transacted business in Virginia, a finding of minimum contacts must be predicated on the sole fact it insured an automobile that ended up in Virginia and caused harm in this state. Counsel has not cited, and this Court is not aware of, any controlling case that allows the Court to exercise jurisdiction over a non-resident insurer of automobiles with no presence in the state, whose assured is in an accident in the state. A recent Fourth Circuit decision had very similar facts, however, and this Court finds its analysis applicable.

In August v. HBA Life Insurance Co., 734 F.2d 168 (4th Cir.1984), the plaintiff held a health insurance policy that had been issued to him in Arizona while an Arizona resident. He then moved to Virginia along with the members of his family covered by the policy. A loss occurred and a claim was submitted from Virginia. The insurance company denied the claim and solicited an agreement from the plaintiff that would have reduced the coverage afforded by the policy. The plaintiff sued the company in Virginia state court and obtained a default judgment. He later filed a petition in bankruptcy in the Bankruptcy Court in the Eastern District of Virginia. As part of that proceeding he filed a complaint for turnover of property, praying the Court to order the insurance company to pay the sum due under the default judgment. The Bankruptcy Court dismissed the complaint, ruling that the insurance company lacked sufficient contact with Virginia to satisfy due process requirements, see In re August, 17 B.R. 628 (Bkrtcy.E.D.Va.1982), and the District Court affirmed.

The Fourth Circuit reversed and remanded the opinion, holding that Virginia may validly exercise its long-arm jurisdiction over the insurance company. August v. HBA Life Insurance, 734 F.2d at 173. In so holding, the Court noted that:

HBA was in the business of selling insurance against events which might well occur outside Arizona as its insured moved about. Insurance by its nature involves the assertion of claims, and resort to litigation is often necessary. As pointed out in McGee, the burden of bringing an action in a foreign forum may make insurance valueless, particularly as to small or moderate claims. 355 U.S. at 223, 78 S.Ct. at 201.

August v. HBA Life Insurance Co., 734 F.2d at 172.

The Court ultimately decided that the plaintiff’s move into Virginia from Arizona was not by itself sufficient to support in personam jurisdiction over the insurance company. Because, however, the company had received premiums from the Augusts in Virginia and had solicited an agreement reducing the policy coverage in Virginia, the Court found sufficient minimum contacts for the exercise of jurisdiction.

These additional factors are not present in the case at hand. Consolidated received premiums from the owner of the car in Illinois and not from the driver in Virginia. Nonetheless, this Court determines that an automobile liability policy is sufficiently different from a health insurance policy to distinguish the August Court’s requirement of additional factors. A health insurance policy is typically sued upon where the insured resides, while an automobile liability policy is sued upon where an accident takes place. The insurer providing health insurance may not, then, “reasonably anticipate being haled into court” in a jurisdiction other than the one where the policy was sold. See World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. The issuer of an automobile liability policy, on the other hand, is far more likely to foresee answering to suit in a foreign forum. An accident may take place anywhere a car travels.

As the New York Supreme Court wrote upon finding a New York insurance company subject to the jurisdiction of a Louisiana state court,

[The New York insurance company] knows that the carnage of automobile accidents is not limited to New York and that its insureds will invariably be involved in accidents all over the country. In insuring the New York resident against accidents wherever he drives, the insurer in a sense also agrees to insure the public. Under these circumstances, this Court is of the opinion that the mere issuance of the policy in New York, in the context of a mobile society and the peculiar public character of insurance, is a sufficient purposeful act or contact to satisfy the minimum contacts required in the International Shoe case ... even though the contacts here are admittedly tenuous.

Labruzzo v. State Wide Insurance Co., 77 Misc.2d 455, 353 N.Y.S.2d 98, 102 (1974).

The holding of this Court is that an automobile liability insurer must answer to suit in Virginia if its assured causes injury here. This holding is not inconsistent with the August decision. In that opinion, the Court of Appeals stated in dicta that:

[t]here are decisions indicating that an automobile liability insurer subjects itself to an injured person’s suit on the policy in any state where the automobile caused injury. Pugh v. Oklahoma Farm Bureau Mutual Insurance Co., 159 F.Supp. 155 (E.D.La.1958). See Bevins v. Comet Casualty Co., 71 Ill.App.3d 758 [28 Ill. Dec. 333], 390 N.E.2d 500 (1979), Labruzzo v. State-Wide Insurance Co., 77 Misc.2d 455, 353 N.Y.S.2d 98 (Sup.Ct. Queens Co.1974); Jarstad v. National Farmers Union Property & Casualty Co., 92 Nev. 380, 552 P.2d 49, 53-54 (1976).

August, 734 F.2d at 172-73.

The first of the decisions referenced above by the Fourth Circuit involved a situation nearly identical to the case at bar. In Pugh v. Oklahoma Farm Bureau Mutual Insurance Co., 159 F.Supp. 155 (E.D.La. 1958), the District Court held that an Oklahoma insurance company was subject to the jurisdiction of a Louisiana state court. The insurer’s only contact with Louisiana had been its presence on the insurance policy of an Oklahoma resident’s automobile that was involved in an accident in Louisiana. The court determined that such contact, although minimal, was sufficient to enable Louisiana to assert its jurisdiction over the insurer. The court reasoned:

The commission of a single act or the existence of a single circumstance may be sufficient to render the company liable to suit within the state.
Since the accident within the state is sufficient to justify maintenance of the suit for damages against the nonresident motorist, it would seem that the same accident should justify maintenance of suit against his nonresident liability insurer who, after all, is the real party in interest.

Id. at 158-59. See Lumbermen’s Mutual Casualty Company v. Elbert, 348 U.S. 48, 51, 75 S.Ct. 151, 153, 99 L.Ed. 59 (1954) (naming an automobile liability insurer as “not merely a nominal defendant but the real party in interest”). For an indication of the weight that Virginia places on the proposition that insurance companies are the real parties in interest in automobile accident litigation, see Surratt v. Thompson, 212 Va. 191, 183 S.E.2d 200 (1971) (abolishing the doctrine of interspousal tort immunity in automobile accident cases because presence of insurance does away with concern for disrupting family tranquility). See also Smith v. Kauffman, 212 Va. 181, 183 S.E.2d 190 (1971) (permitting child to maintain action against his parent, noting that domestic harmony is not threatened when there is insurance coverage.)

The Pugh Court ultimately determined that “traditional notions of fair play and substantial justice,” see International Shoe, 326 U.S. at 316, 66 S.Ct. at 158, would not be offended by requiring the Oklahoma insurance company to answer to suit in Louisiana. If the defendant company had feared unfair treatment in Louisiana, the court reasoned, it could have excluded Louisiana from the coverage of its policy. Because it did not do so, it could not deny courts of that state the right to determine its liability on claims arising from accidents occurring in Louisiana. 159 F.Supp. at 159.

This Court agrees with the reasoning of the Eastern District of Louisiana, and finds in this case that it is reasonable for Consolidated to have expected that it would be called upon to defend a lawsuit in Virginia. The very nature of the product sold by insurance companies is such that the companies should expect litigation in many forums. The particular policy that is at issue here provides for out-of-state coverage for auto accidents. It is apparent therefore, that Consolidated anticipated accidents in more than one state. The issuance by Consolidated of the insurance policy covering Kelly Lee Richards’ automobile is a sufficiently purposeful act to satisfy the minimum contacts requirement.

The other factors that this Court is required to consider in determining whether traditional notions of fair play and substantial justice are offended by maintenance of this suit further support the Court’s holding. They include the plaintiff’s interest in obtaining convenient and effective relief if he is entitled to it and the interstate judicial system’s interest in the efficient resolution of controversies. The controversy at issue here, an automobile accident, took place in Virginia. The witnesses, the plaintiffs, and the defendant driver all reside in Virginia. The trial on the merits of the tort will take place in Virginia. If a judgment is rendered for the plaintiff against Kelly Lee Richards, it will be rendered in a court located in Virginia. It would be neither convenient, effective, nor efficient to require the parties to travel to a distant forum to collect such a judgment.

This Court finds that due process would not be offended by requiring Consolidated to defend this lawsuit in Virginia. Accordingly, the motion to dismiss filed by the defendant, Consolidated Insurance Company, is DENIED.

The Clerk shall mail a copy of this Order to counsel of record for each of the parties.