author: HALL, District Judge.

text:
    Wesley R. WILKERSON, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    No. TX-84-54-CA.
    United States District Court, E.D. Tex. Texarkana Division.
    Sept. 6, 1985.

      Sherman A. Kusin, Texarkana, Tex., for plaintiff.
    William J. Cornelius, Asst. U.S. Atty., Tyler, Tex., for defendant.
   MEMORANDUM OPINION

HALL, District Judge.

This appeal is brought under 42 U.S.C. § 405(g) (1983) from the Secretary’s final decision denying Plaintiff Wesley R. Wilkerson’s application for social security disability benefits. Because there is substantial evidence to support the Secretary’s denial of disability benefits, the determination of the Secretary is affirmed.

On April 22, 1983 Wilkerson filed an application for disability benefits asserting that as of June 1982 he was disabled due to back injuries, arthritis, and his resultant medicated state. (Exhibit 5). Wilkerson’s request was denied by an Administrative Law Judge (AU) on January 14, 1984 (Tr. 6-13) on the basis that although Wilkerson’s impairments are severe (Tr. 12), “considering [his] residual functional capacity, age, education and work experience, he is not disabled.” (Tr.13). By letter dated March 23, 1984 the decision of the AU was upheld by the Appeals Council. (Tr. 3). Wilkerson then filed this appeal challenging the Secretary’s denial of disability benefits.

The Social Security Act places the burden on the claimant to show that he is disabled. Western v. Harris, 633 F.2d 1204, 1206 (5 Cir.1981); Johnson v. Harris, 612 F.2d 993, 996-997 (5 Cir.1980). However, once a social security claimant shows that he is disabled to the extent that he can no longer perform his former job duties, the burden then shifts to the Secretary to show that there is other substantial gainful employment in the economy which the claimant is capable of performing. Ransom v. Heckler, 715 F.2d 989, 993 (5 Cir. 1983); Loya v. Heckler, 707 F.2d 211, 214 (5 Cir.1983).

Since the AU found that Wilkerson was “unable to perform his past relevant work as a mechanic” (Tr. 13), the burden then shifted to the Secretary to show that there was other substantial gainful employment in the economy which Wilkerson was capable of performing. Ransom v. Heckler, supra at 993; Loya v. Heckler, supra at 214. In making this determination, the Secretary was required to consider Wilkerson’s age, education, and work experience in conjunction with his residual functional capacity. If Wilkerson, considering his age, education, work experience, and functional level, could have engaged in some kind of substantial gainful employment, he should not have been considered disabled; if not, Wilkerson should have been considered disabled. Jason v. Heckler,. 767 F.2d 82, 84 (5 Cir.1985).

The Court’s review in this case is strictly limited to determining whether or not the Secretary’s findings are supported by substantial evidence. Dellolio v. Harris, 705 F.2d 123, 125 (5 Cir.1983); Johnson v. Harris, supra at 997; Demandre v. Califano, 591 F.2d 1088, 1091 (5 Cir.1979), cert. denied, 444 U.S. 952, 100 S.Ct. 428, 62 L.Ed.2d 323 (1979). “Substantial evidence is

more than a scintilla, less than a preponderance, and is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. It must do more than create a suspicion of the existence of the fact to be established. To make a finding of ‘no substantial evidence’, we must conclude that there is a ‘conspicuous absence of credible choices’ or ‘no contrary medical evidence’.” Hemphill v. Weinberger, 483 F.2d 1137 (5 Cir.1973) as cited in Dellolio v. Heckler, 705 F.2d 123, 125 (5 Cir.1983).

Conflicts in the evidence, including medical opinions, are to be resolved by the Secretary, and not by the Court, which is not permitted to substitute its judgment for that of the Secretary’s, even if the Court finds that the evidence preponderates toward a wholly different finding. Patton v. Schweiker, 697 F.2d 590, 592 (5 Cir.1983); Anderson v. Schweiker, 651 F.2d 306, 308 (5 Cir.1981); Olson v. Schweiker, 663 F.2d 593, 595 (5 Cir.1981). This Court may not retry factual issues, reweigh evidence, or substitute [its] judgment for that of the Secretary’s. Dellolio v. Heckler, supra at 125. This Court functions in merely an appellate capacity, for “[t]he Social Security Act imparts substantial discretion to the Secretary.” Anderson v. Schweiker, supra at 308.

The Court finds that there is substantial evidence in the record to support the Secretary’s finding that Wilkerson had residual functional capacity and could therefore engage in substantial gainful employment available in the economy. In determining that Wilkerson was not disabled, the ALJ specifically considered Wilkerson’s age of 52 (Tr. 13); his education beyond the high school level (Tr. 13); his work experience as a mechanic (Tr. 13); and his residual functional capacity “to perform [a] wide range of light work (20 C.F.R. § 404.-1563).” (Tr. 13). In determining that Wilkerson “has the residual functional capacity to perform the physical exertion requirements of work except for work requiring excessive repetitive bending” (Tr. 12), the ALJ relied on the reports of medical experts, Disability Determination Reports and Residual Functional Capacity Assessment Reports.

The record reflects that on April 8, 1982, Dr. Patrick D. Barnes, board certified neurologist, reviewed the medical evidence in Wilkerson’s file and concluded that he could lift and carry 25 pounds frequently and 50 pounds occasionally, could sit, stand and walk about 8 hours per day, could reach, handle, finger, feel, see, hear and speak without limitation and had no environmental limitations. Dr. Barnes further concluded that Wilkerson could climb, balance, kneel, crouch and crawl and could occasionally stoop. (Exhibit 17, Tr. 95, Residual Functional Capacity Evaluation).

On June 10, 1983, Dr. T.C. McCormick reviewed the medical evidence of record in the Wilkerson ease, and filed a Disability Determination Report (Exhibit 16, Tr. 85-87) and Residual Functional Capacity Assessment Report (Exhibit 17, Tr. 91-93). Dr. McCormick concluded that Wilkerson could lift 10 pounds of weight frequently and 20 pounds occasionally and could sit, stand and walk about 6 hours per day. He noted that the claimant could, on occasion, bend, stoop, kneel, squat, crawl, crouch, climb and balance. Dr. McCormick stated: “There are no restrictions for the use of the upper extremeties. The claimant can do simple repetitive grasping, pushing and pulling. Claimant can do fine manipulation. In summary, the claimant can do a wide range of light exertional activities. ” (emphasis added) (Tr. 86). Dr. McCormick’s report also includes a list of some occupations which Wilkerson is capable of performing and which are available within his region of residence: Lapper, Hand Tool (Machine Shop); Tool Grinder (Any Industry); and Profile-Grinder Technician (Any Industry). (Tr.86).

A. Norville Wilkins, M.D., reviewed the medical evidence of record on July 5, 1983 and agreed with Dr. McCormick. His findings are filed in a Disability Determination Report (Exhibit 16, Tr. 82-84) and a Residual Function Capacity Assessment Report (Exhibit 17, Tr. 88-90). Dr. Wilkins concluded that Wilkerson should be able to perform the following jobs which exist “in ample numbers in the general economy”: Tune-up Mechanic (Auto Service); Supervisor, Garage (Auto Service); and Locksmith (Any Industry). (Tr. 83).

The final evidence in the record which supports the Secretary’s position is the medical evidence taken by Dr. Charles W. Barrier on May 13,1983, marked as Exhibit 22. (Tr. 146-150). Dr. Barrier’s examination reflects that Wilkerson’s “neurological exam [was] normal” and that he had the ability to engage in somewhat limited body movement.

The AU also considered Wilkerson’s statements concerning his pain from back problems. (Tr. 25-29). The AU, however, did not consider Wilkerson’s complaints of pain to be sufficiently credible to affect the determination that he has sufficient residual capacity to do light work. This it was within the AU’s province to do, because it is “within the discretion of the administrative law judge to determine the disabling nature of pain.” Jones v. Heckler, 702 F.2d 616, 622 (5 Cir.1983); Shelton v. Schweiker, 510 F.Supp. 191, 193 (E.D.Tx.1981). In this regard, the AU also considered and rejected the allegation that the effect of the pain medication Wilkerson is taking is to significantly limit his ability to perform substantial gainful employment. The AU, in rejecting Wilkerson’s testimony about the disabling nature of the pain medication, cites to Wilkerson’s testimony that his usual daily activities include occasional driving, visiting, lawn mowing, fishing and hunting. (Exhibit 12, Tr. 67). The AU also found the fact that Wilkerson applied for work in 1982 to be significant in determining that he was not disabled because “[t]he reasonable inference is that he thought he could work or he would not have sought employment.” (Tr. 11).

Although the Court has only contained in this opinion an enumeration of the evidence which supports the substantial evidence standard, this Court notes that it has reviewed the record as a whole. And having reviewed the pleadings and the transcript of the record, the Court is of the opinion, constrained by the substantial evidence test, that there is substantial evidence in the record to support the Secretary’s decision denying Mr. Wilkerson benefits under the Social Security Act.

Accordingly, the Court AFFIRMS the determination of the Secretary.

It is, therefore, ORDERED, ADJUDGED, and DECREED that the decision of the Secretary be AFFIRMED.

      . Residual functional capacity is defined as what a claimant can still do despite his limitations. 20 C.F.R Cir.1983)


source: Caselaw Access Project

author: ARNOW, Senior District Judge.

license: Public Domain

text:
    Ramon GOMEZ, Plaintiff, v. HAWKINS CONCRETE CONSTRUCTION CO., C.D. Hawkins, and O’Gwen L. King, Defendants.
    No. PCA 84-4132 WEA.
    United States District Court, N.D. Florida.
    Sept. 11, 1985.

      Robert M. Ervin and Robert King High, Jr., Ervin, Varn, Jacobs, Odom & Kitchen, Tallahassee, Fla., for plaintiff.
    Malcolm D. Young, Jr. and R. Hal Meeks, Jr., Atlanta, Ga., for Hawkins.
    Robert P. Gaines, of Beggs & Lane, Pensacola, Fla., for O’Gwen L. King.
   MEMORANDUM DECISION

ARNOW, Senior District Judge.

In this suit plaintiff sued Hawkins Concrete Construction Company, C.D. Hawkins, and O’Gwen L. King. His claim against Hawkins Concrete Construction Company was disposed of by summary judgment in his favor. His claims against Hawkins and King remained for trial before the court without a jury, and that trial has been held.

King is a lawyer. Gomez sues him for breach of fiduciary duty and for negligence. Hawkins is sued for fraud in the inducement.

The court has jurisdiction pursuant to 28 U.S.C. § 1332.

Gomez is a citizen of Venezuela. He came into the United States with money that he wanted to invest. He was attracted to this area through a resident of it with whom he became acquainted in Venezuela and he liked the area.

Along the way he became acquainted with Hawkins and with King. He employed King to prepare a power of attorney for him. In 1982 he employed King to represent him in litigation with his ex-wife. That representation was in existence at all times material to the complaint of Gomez against King.

Hawkins was an officer and one of the owners of Hawkins Concrete Construction Company. His company had obtained a berthing pier construction job in Norfolk, Virginia from the U.S. Navy.

The company was thinly capitalized. It had difficulty in obtaining a performance bond. King, who was a man of some substance, was approached for financial assistance. He provided it. Through his efforts, and financial contributions, the bond was arranged. In return, King became a part owner of the company. He, Hawkins and G. Thomas Gurr became equal shareholders in it.

The company had a serious cash flow problem due largely to a wage-rate dispute with the Navy. Claim had been made against the company under the Bacon-Davis Act for underpayment of wages on the Norfolk job. This was a labor intensive contract and the wage claim was a serious matter with potential grave financial consequences to the company.

The company needed badly an infusion of money. King approached Gomez about providing money for the company and, in October, 1982, Gomez agreed to lend $700,-000.00 to the company.

An agreement was drafted by King, dated October 22, 1982, and was entered into between the company by Hawkins, as president, and Gomez.

At one time the three shareholders of the company had been Hawkins, King and G. Thomas Gurr, with each of them owning one-third of the stock. Because of a requirement of the bonding company, Hawkins had been forced to divest himself of ownership of his stock. At the time the negotiations with Gomez commenced, and throughout consummation of the transaction, he owned no stock in the company. Under his agreement with the company, he remained as president of it, and had the right to receive one-third of the profits, and the right to obtain back the stock at some later date.

The October 22, 1982, agreement named Hawkins as an existing stockholder—the other two named - were Gurr and King.

Under the agreement, Gomez would lend the company a total of $700,000.00. His rate of interest was 3% above prime. As part of the agreement, the profits of the company were to be divided equally between Hawkins, Gurr, King, and Gomez. In addition, Gomez was given an option to own 25% of the stock. He also had a right, if he desired, to terminate the agreement after the Norfolk and Pensacola contracts were satisfied and to receive one-half of the value of 25% of the stock.

Gomez received the company’s notes for the money lent. The notes were unsecured.

The company’s financial condition went from bad to worse until the company ultimately became insolvent. The notes were not paid and Gomez has received summary judgment against the company on them. According to matter at trial, execution on the judgment has been returned nulla bona. It was not contended at trial that the judgment is collectible.

The negotiations respecting the loan by Gomez were conducted, to large extent, by King. While Hawkins attended one meeting with Gomez and King, his participation in it was minimal.

There is conflict in the testimony of Gomez and King.

King testified he advised Gomez that, because of his interest in the company, he could not represent him in the loan transaction, and that he should get another lawyer. He also testified that he advised him fully and completely about the company and its financial condition.

Gomez testified that King told him it was a good investment and that he, King, was involved in it and would look after him in the transaction. According to Gomez, King did not suggest he get another lawyer, and he trusted King and relied upon him to look after him in the matter. In making the loan, he testified, he also relied on his belief that Hawkins, whom he understood was an efficient businessman, was a part owner of the company and so was also at risk.

The monies that were evidenced by the notes given for the $700,000.00 under the stipulated facts were paid to the company as follows:

Check for $100,000.00 presented for payment on October 7, 1982.
Check for $75,000.00 presented for payment on October 18, 1982.
Check for $75,000.00 presented for payment on October 26, 1982.
Check for $400,000.00 presented for payment on November 1, 1982.
Check for $50,000.00 presented for payment on December 8, 1982.

While there are other conflicts in the testimony, the plaintiff, insofar as his claim against King is concerned, relies on King’s alleged failure to disclose to him the following information:

The company’s liabilities at the time of the loan exceeded its assets.
Hawkins was “not an owner” of the company.
The wage claim and dispute on the Norfolk job.
The repossession of a crane and some other equipment by creditors of Hawkins Concrete Company.
The payment by Hawkins Concrete Company to various people to guarantee some of the loans it had made.

King testified he had disclosed all of these matters to Gomez. Gomez said that none were disclosed to him and that he would not have made the loans had he known these matters.

In weighing this conflict, this court finds the testimony of Gomez respecting these items to be the credible and believable testimony.

Gomez had been a successful businessman in Venezuela. In at least one other instance in this country he made a loan and required that it be secured by a mortgage. When asked about it, he testified it was natural to obtain security.

For him to have made an unsecured and sizable investment of this kind, he must have believed from his conversation with King that it was a good investment. His statement that he trusted and relied on King in connection with it, and that he believed Hawkins was a part owner, is credible and believable—nothing else justifies this unsecured loan for this much money to a company about which he knew nothing other than what King told him.

It almost strains credulity that he would make this sizable unsecured loan relying on advice from King that it was a good investment and on his belief that Hawkins was a part owner of the company. To conclude that he would have made the loan had King disclosed to him the matters Gomez said he did not know strains that credulity to the breaking point. It is incredible that he would have made this loan had he known the matters he said would have caused him not to make it.

Under King’s version he did not serve as attorney for Gomez in the transaction. Yet King conducted the negotiations, went ahead with the transaction, prepared the agreement, and prepared the promissory notes. Thus, he used his legal ability and, while he says his legal ability was exerted in behalf of the company, it still remains he did it all knowing that Gomez had no lawyer. He must have known, and this court concludes he knew, that Gomez was relying on him in the transaction and in the preparation of these papers. The conclusion reached by this court is that he was, in fact, performing legal services as an attorney for Gomez in connection with this loan transaction.

Even if it be considered that King was not representing Gomez in a particular loan transaction, though then representing him in other matters, such would make no difference in King’s responsibilities to Gomez.

It is not disputed he was at the time representing Gomez in other legal matters. Under the Code of Professional Responsibility, since he was representing Gomez in other matters at that time, he was in a fiduciary relationship insofar as Gomez was concerned in connection with this particular loan transaction whether or not he was representing him in it.

As the Code of Professional Responsibility contemplates, and as expert opinion received at trial points out, once King’s professional obligations had attached and were in effect, the duties he owed in conflict situations would remain and be the same whether in a particular transaction he was representing not Gomez but Hawkins Concrete Construction Company.

In the situation here presented, King, as the attorney, found himself as a minimum in dual representation—of Gomez and of Hawkins Concrete Construction Company—so there was conflict of interest. Moreover, King had personal financial interest in the company and financial exposure by virtue of guarantees which he had given which were affected by the financial condition of the company.

Under the situation here presented, King could not and should not have undertaken to act as attorney in connection with the loan transaction without making full and complete disclosure of all facts known to him regarding the financial condition of the company. Particularly is this so where, in an instance of this kind, the attorney himself had a financial interest in the company to whom the loan was to be made. It was King’s professional obligation in the factual situation here involved to make full and complete disclosure to Gomez and obtain the informed consent of Gomez before acting as attorney in the transaction.

In order for non-disclosures by King to be material in this suit they must have resulted in damage to Gomez. The non-disclosures which plaintiff relies on in this suit, and which Gomez stated caused him to make the loans, are only those referred to in this decision. But the evidence concerning them establishes both breach of fiduciary duty and negligence allowing Gomez to recover from King.

While the Code of Professional Responsibility does not undertake to define liability of lawyers for professional conduct, it constitutes some evidence of standards required of them. Woodruff v. Tomlin, 616 F.2d 924, 936 (6th Cir.1980).

King contended before this court that, for there to be recovery on a breach of fiduciary duty, the attorney must have received property from the client. While the authorities cited on the subject deal with situations where the attorney has received property from his client, such does not mean there cannot be breach of the fiduciary relationship in other factual situations.

The test is whether the attorney has entered into a transaction with his client of advantage to himself. If he has done so, then the question of the fiduciary relationship comes into play and is applicable. In such a situation the attorney has the burden of showing not only that he used no undue influence but that he gave his client all the information and advice which would have been his duty to give if he himself had not been interested and that the transaction was as beneficial to the client as it would have been had the client dealt with a stranger. Bolles v. O’Brien, 59 So. 133, 134 (Fla.1912).

The loan transaction with Gomez was of advantage to King. He was substantially involved in the company and the company needed money. The loan of the money by Gomez was for the benefit of the company but it was also for the benefit of King and the others who were involved with King in the company.

Respecting the charge of negligence, King contends he could only have been guilty of negligence were he representing Gomez in the loan transaction, as a claim of negligence can only arise out of a matter entrusted to the attorney for the attorney to handle.

This court concludes that King was, in fact, representing Gomez in the transaction. However, beyond that it also concludes that King should be liable on the claim of negligence by Gomez. In this factual situation King owed an obligation to Gomez under the Code of Professional Responsibility. If he failed to discharge that obligation—as this court holds—then the claim of negligence against him is established. Evidence that King did not conduct himself in this situation as reasonably as an attorney should respecting the Code of Professional Responsibility is evidence of failure to use due care as an attorney. Under the factual situation here presented King did not use the degree of care required of .an attorney and is liable for his negligence in not so doing.

On the question of negligence, the following statement from Drawdy v. Sapp, 365 So.2d 461, 462 (Fla. 1st DCA 1978) is instructive:

We affirm. Generally in a suit against an attorney for negligence the plaintiff must prove 1. the attorney’s employment, 2. his neglect of a reasonable duty, and 3. that such negligence resulted in and was the proximate cause of loss to the client.

Here King was employed by Gomez. Under that employment, and by virtue of the Code of Professional Responsibility, it became his duty to advise and counsel fully with Gomez on all aspects relating to the financial condition of the company when he was dealing with Gomez on a loan to that company, even though he was not serving as Gomez’ attorney in the particular loan transaction. Here, under the holding of this court, King neglected to perform that duty and the result of his neglect was a proximate cause of loss to the client. Under Drawdy, supra, that neglect is negligence and in this suit was a proximate cause of loss to the client.

The conclusion that this court reaches concerning the question of breach of fiduciary duty and of negligence is bolstered by the expert opinion testimony at trial.

In an earlier memorandum decision in this case, this court, quoting approvingly from 7 American Jurisprudence 2d, Attorneys at Law, § 122, p. 191, reached the conclusion that the rule of reliance by a client on the acts and words of his attorney within the scope of the confidential relationship is applicable only while the relationship exists and with reference to the matter involved in the relationship, and that the parties may deal at arms length with each other respecting matters outside the scope of those involved in the relationship.

Cited to the court just prior to trial was the case of Florida Bar v. Davis, 474 So.2d 1165 (Fla.1985). In this case there was involved a loan transaction by an attorney with his client. The attorney, while representing the client in another matter, obtained a loan from his client. Disciplinary action was brought and the attorney was found guilty of violating the Code of Professional Responsibility as adopted in Florida. Under this holding, the court concludes that the reliance it placed on the American Jurisprudence reference was misplaced, and that, as pointed out in this decision, the attorney may be held liable here for violation of the disciplinary rules in a matter in which he is not representing the client where there is at the time representation of the client in other matters.

The court recognizes that this recent Florida decision dealt with a disciplinary matter. As previously pointed out, however, while the Code of Professional Responsibility does not undertake to define civil liability of lawyers for professional misconduct, it constitutes some evidence of standards required of them. Woodruff, supra.

King was at substantial financial risk with the company. Under the evidence, his losses eventually were more than those of Gomez. It may be that, at least to some extent, he overlooked or ignored his professional obligations to Gomez because of the exigency of the situation confronting him and the other owners of the company.

But his failure to discharge those obligations, for whatever reason, may neither be overlooked nor ignored.

King is liable to Gomez both for breach of fiduciary duty and negligence and, consequently, for the damages proximately caused thereby. The damages to be awarded are the $700,000.00, and prejudgment interest thereon, as pointed out hereafter.

Respecting Hawkins, Gomez testified at trial that it was important to him that Hawkins be an owner of the company because he wanted him at financial risk in it.

Contention was made at the trial that, since Hawkins was still actively involved in the management of the company, and had rights respecting it, and was at some risk because of personal guarantees, this misrepresentation that he was a stockholder could not be material. However, Gomez, questioned closely respecting it, adhered to his position that, had he known Hawkins had divested himself of ownership in the company, he would not have made the loan.

To this court, his testimony is credible and believable. Under his version, he was relying on King and on his belief that Hawkins had ownership interest in the company.

Insofar as the claim against Hawkins is concerned, he is charged with fraud in the inducement. In order for the plaintiff to prevail, he must establish that Hawkins made a false statement concerning a material fact, that it was made with knowledge that it is false, and that it was made with intention to induce another—in this case, Gomez—to act on it with consequent injury. 27 Fla.Jur.2d, Fraud and Deceit, § 7 (1985).

Insofar as the charge of fraud is concerned, the fact is “material” if but for the misrepresentation the complaining party would not have entered into the transaction. Hauben v. Harmon, 605 F.2d 920, 924 (5th Cir.1979). This court concludes from the testimony that in this case the question whether Hawkins was in fact a shareholder was a material fact.

Under the testimony presented at trial, Hawkins was present at only one meeting prior to the conclusion of negotiations of the loan with Gomez. He played only a small part in that meeting. Gomez testified that, at that meeting, Hawkins made no representations of any kind to him.

Hawkins is sought to be charged with the misrepresentation contained in the agreement to the effect he was a stockholder in the company. Hawkins at trial testified that he did not know that statement was included in the agreement. Under his testimony, believable to this court, he relied on King in preparing the agreement, and he signed the agreement without reading it and without knowing what was contained in it.

For the plaintiff to recover on his claim against Hawkins, he must establish that the false statement was made by Hawkins with knowledge that it was false and with intention to induce Gomez to act upon it. Plaintiff has failed in his burden—he has not established the statement was made by Hawkins with intention to induce plaintiff to act upon it.

Hawkins testified that at the meeting, in which he was present with Gomez, King made some of the contested statements to Gomez. In this respect, Hawkins was not credible. However, that does not mean that he was not credible and believable when he said that he did not read the agreement King had prepared.

At trial the other misrepresentation claimed was based on the contention that the agreement with the company provided for Gomez to obtain 25% of the stock and that this was a misrepresentation because the stock was owned by shareholders and not owned by the company. The contention was that Hawkins, on behalf of the company, had made a personal misrepresentation when the agreement said the company could deliver the stock.

There was no evidence at trial that the stockholders in the company did not intend to convey the stock under the agreement. To the contrary, the testimony at trial established that the shareholders of the company understood the agreement and were prepared to comply with it so that the company could comply with the agreement. It does not appear from the evidence that this was a misrepresentation.

Judgment will be entered for Hawkins.

In this case plaintiff seeks prejudgment interest. In an earlier ruling in this case, based on authorities cited to it, the court concluded that based on Florida law prejudgment interest should not be allowed in this tort case.

Cited now to the court is the case of Argonaut v. May, 474 So.2d 212 (Fla.1985), [10 FLW 353].

In that case the court had before it a suit in which Argonaut Insurance Company had paid the owners of the Colony Club Apartments for damages from a fire caused by the negligence of a May Plumbing Company employee. The company then filed a subrogation action against May Plumbing Company and recovered. The trial court awarded prejudgment interest.

The opinion of the District Court of Appeal reversed, holding that the comparative negligence factor made the award of damages uncertain and thus unliquidated.

The Supreme Court had jurisdiction because it said that the Argonaut holding directly and expressly conflicted with the decision of another district court of appeal, Bergen v. State, 415 So.2d 765 (Fla. 1st DCA 1982).

Resolving the conflict, the Supreme Court in this case followed the holding in the Bergen case to the effect that for the purpose of assessing prejudgment interest a claim becomes liquidated and susceptible of prejudgment interest when a verdict has the effect of fixing damages as of a prior date.

Thus, in Argonaut, the Supreme Court applied the Bergen ruling in a tort case that was not a conversion case.

Argonaut, being of recent vintage, is not yet final. Plaintiff, though citing it, points out that a motion for rehearing has been filed so that the case does not yet have finality.

Nonetheless, study of the decision, and of the earlier cases cited in it, convinces this court that its earlier holding was in error and that, in the instant case, under Florida law prejudgment interest may be obtained.

In most tort cases the claims for damages are not fixed either in time or in amount. In this somewhat unusual case, the amount of damages is fixed at $700,-000.00, and the time is fixed with certainty because the times when the amounts of money comprising the $700,000.00 were lent to the company are fixed. The judgment of this court fixes the amount of the damages as of a prior date and so the claim for the purpose of assessing prejudgment interest is liquidated.

Argonaut points out, in a footnote, that prejudgment interest in Florida is not recoverable on awards for personal injury.

It also points out, however, Florida, since at least before the turn of the century, has adopted the position that prejudgment interest is merely another element of pecuniary damages. After discussion, the court concluded that:

In short, when a verdict liquidates damages on a plaintiffs out-of-pocket, pecuniary losses, plaintiff is entitled, as a matter of law, to prejudgment interest at the statutory rate from the date of that loss.

Under the principles enunciated in this and other Florida cases, prejudgment interest, considered as an element of damages as a matter of law, should be awarded in this case. There is no uncertainty. The amount of the damages is established as of a date certain prior to the date of entry of a judgment. Computation of prejudgment interest here involves merely a mathematical calculation. As Argonaut points out, the legislature has established a statutory interest rate which controls prejudgment interest. Section 687.01, Florida Statutes. Under that Florida statute, as amended effective July 1,1982, and so applicable to all times pertinent in the present case, the rate of interest is 12% per annum.

Bergen is a conversion case. Argonaut is a negligence case. The court had no difficulty applying the Bergen holding in Argonaut.

This court now concludes that, even though Argonaut is not yet final, in Florida the Bergen holding is not confined to tort conversion cases, but extends also to a negligence case such as the one before this court.

Under the stipulated facts before the court Gomez lent Hawkins Concrete Construction Company $100,000.00 on October 7, 1982; $75,000.00 on October 18, 1982; $75,000.00 on October 26, 1982; $400,-000.00 on November 1, 1982; and $50,-000.00 on December 8, 1982.

Gomez is entitled to recover damages in the principal amount of $700,000.00, together with prejudgment interest at the rate of 12% per annum on the following amounts from the following dates to the date of this judgment:

Interest on $100,000.00 from October 7,1982 $ 35,145.21
Interest on $75,000.00 from October 18,1982 26,087.67
Interest on $75,000.00 from October 26,1982 25,890.41
Interest on $400,000.00 from November 1,1982 137,293.15
Interest on $50,000.00 from December 8,1982 16,553.42
TOTAL $240,969.86

Under current federal law, the rate of interest applicable to and accruing on this judgment is 7.91% per annum.

Judgment will be entered in accordance with the foregoing.

      . Sometimes referred to herein as Hawkins Concrete Company, or the company.

      . The court does point out that in Zorn v. Brit-ton, 120 Fla. 304, 162 So. 879 (1935), a suit arising from an accident resulting in both personal injury and property damage, the court disallowed the claim for prejudgment interest. In so doing, the court said that, although it would normally be awarded for property damages, the jury had lumped the award in a general verdict so that it was impossible to ascertain the amount of the property damages.


author: VINING, District Judge.

text:
    Peter J. MALLEN, Plaintiff, v. MERRILL LYNCH FUTURES, INC., f/k/a Merrill Lynch Commodities, Inc., and Robert P. Spanos, Defendants.
    Civ. A. No. C83-1786A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Sept. 11, 1985.
    Gerald B. Kline and Gilbert H. Deitch, Bauer, Deitch & Raines, P.C., Atlanta, Ga., for plaintiff.
    Paul W. Stivers, Rogers & Hardin, Atlanta, Ga., for defendants.
   ORDER

VINING, District Judge.

The plaintiff brought this action against Merrill Lynch Futures, Inc. (“Merrill Lynch”), a futures commission merchant, and its registered representative, Robert P. Spanos, alleging violations of the federal and state securities laws and common law fraud, negligence, and breach of fiduciary duty. By order dated March 27, 1985, this court held that the stock index contracts traded by the defendant on the plaintiffs behalf were “commodities” and not “securities” and, consequently, dismissed the plaintiffs federal and state securities claims raised in Counts I, II, III, and IV. See Mallen v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 605 F.Supp. 1105 (N.D. Ga.1985). Prior to the order, on March 25, 1985, the plaintiff moved to amend his complaint to include a claim under the Commodity Exchange Act. The court granted that motion on May 7, 1985.

In its order of March 27, 1985, the court directed the parties to submit legal memoranda on the issue of whether this court has jurisdiction over the plaintiffs remaining state claims of common law fraud, negligence, and breach of fiduciary duty raised in Counts V, VI, and VII of the complaint. The issue before the court is whether the application of federal commodities laws preempts the plaintiffs state common law claims by creating an exclusive remedy. In other words, when Congress granted exclusive regulatory jurisdiction to the CFTC, did it also create an exclusive federal remedy, thereby preempting state statutory and common law claims otherwise available to the defrauded investor?

Federal regulation of a field of commerce should not be deemed preemptive of a state regulatory power unless either the nature of the regulation permits no other conclusion or Congress has made its intent to preempt state regulation unmistakably clear. Florida Lime and Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963). A court cannot infer an intent to preempt merely from the comprehensive character of complex legislation. New York State Department of Social Services v. Dublino, 413 U.S. 405, 415, 93 S.Ct. 2507, 2513-14, 37 L.Ed.2d 688 (1973). It will not be presumed that a federal statute is intended to supersede the exercise of state power unless there is a clear manifestation of congressional intent. The exercise of federal supremacy is not lightly to be presumed. Schwartz v. Texas, 344 U.S. 199, 202-03, 73 S.Ct. 232, 235, 97 L.Ed. 231 (1952).

This court divides its analysis into two parts. First, the court will examine the exclusiveness of the remedies provided in the 1974 Act. Second, the court will undertake an analysis of the 1982 Act to determine whether Congress intended the amendments to preclude common law remedies.

I. THE 1974 ACT

In 1974, Congress extensively amended the Commodity Exchange Act (CEA) and created the Commodity Futures Trading Commission (CFTC). The 1974 Act also granted the CFTC “exclusive jurisdiction” over the regulation of commodities, thus preempting all would-be regulators at every level of government. See Johnson, The Commodity Futures Trading Commission Act: Preemption as Public Policy, 29 Vand.L.Rev. 1, 2 (1976).

While Congress granted the CFTC exclusive jurisdiction, it also provided a savings clause, which provided, “Nothing in this section shall supersede or limit the jurisdiction conferred on courts of the United States or any State.” 7 U.S.C. § 2. The legislative history of the savings clause is sparse. Johnson, supra, at 32. Courts and commentators, however, who have conducted exhaustive research have concluded that state common law claims are not preempted by the CEA. See, e.g., Patry v. Rosenthal & Co., 534 F.Supp. 545, 551 (D.Kan.1982) (citing commentators who have arrived at this conclusion).

This court will follow the reasoning in Patry:

After considering the statutory language and legislative history, the case law, and the scholarly commentary, the Court concludes that state common law claims such as are raised by the plaintiff in this case are not preempted by the CEA. While the federal scheme may be so pervasive as to preempt any action under state regulatory statutes, the Court cannot find any evidence that Congress intended to go so far as to preempt state common law claims. In fact, the legislative history would seem to indicate that Congress adopted the savings clause partly to insure no preemption of such claims. The CFTC itself recognizes the role of private lawsuits in combating commodities fraud, and this Court is unable to see how private common law suits such as this could interfere with or obstruct in any way the regulatory scheme embodied in the CEA.

Id. Numerous courts have come to the same result. See, e.g., Kerr v. First Commodity Corp. of Boston, 735 F.2d 281, 288 (8th Cir.1984) (the continued existence of common law fraud actions does not conflict with regulatory scheme established by the Act); Kotz v. Bache Halsey Stuart, Inc., 685 F.2d 1204, 1207-08 (9th Cir.1982) (retention of common law fraud actions is in no way inconsistent with the scheme for regulation established in the 1974 Act); United States v. Brien, 617 F.2d 299, 310 (1st Cir.), cert. denied, 446 U.S. 919, 100 S.Ct. 1854, 64 L.Ed.2d 273 (1980) (“While courts have held that the CFTA preempts state regulation of commodity futures, ... it has also been held that the CFTA does not preempt state general antifraud statutes.”); Bishop v. Commodity Exchange, Inc., 564 F.Supp. 1557, 1563 (S.D.N.Y.1983) (“We have found nothing in the legislative history indicating Congressional concern that state statutes prohibiting fraud in commodity transactions ... would hinder uniform application of the CEA.”). See also W & W Farms, Inc. v. Chartered Systems Corp. of New York, Ltd., 542 F.Supp. 56, 60 (N.D.Ind.1982); Witzel v. Chartered Systems Corp. of New York, Ltd., 490 F.Supp. 343, 347-48 (D.Minn. 1980). In Patry v. Rosenthal & Co., 534 F.Supp. 545, 550 (D.Kan.1982), the court stated that it was unable to discover any cases holding that state common law claims were preempted by the CEA when they do not conflict with federal law. This court’s research indicates that this statement is still true.

The only time that courts have held that a state statute is preempted by the federal statutory scheme is when it conflicts with the federal law. See, e.g., Paine, Webber, Jackson & Curtis, Inc. v. Conaway, 515 F.Supp. 202 (N.D.Ala.1981); State v. Monex International, Ltd., 527 S.W.2d 804 (Tex.Civ.App.1975). If a conflict exists between a state regulation and the role of the CFTC, preemption is proper. Taylor v. Bear Stearns, Co., 572 F.Supp. 667, 674 (N.D.Ga.1983). In the instant case, clearly there is no conflict between the state common law remedies and the federal statutory scheme. This court, therefore, holds that the 1974 Act does not preempt state common law causes of action by creating an exclusive remedy.

II. THE 1982 ACT

On January 11, 1983, Congress passed the Futures Trading Act of 1982, Pub.L. 97-444, which, among other things, responded to the Supreme Court’s decision in Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982), by providing a private cause of action for violations of the CEA. The defendant argues that several new provisions indicate congressional intent to preempt state causes of action. The court does not find this argument persuasive.

First, section 12(e), 7 U.S.C. § 16(e), does not purport to be an exhaustive list of nonpreempted actions. All three of the listed nonpreempted areas involve criminal prosecutions or administrative sanction-type proceedings, in which the regulations set forth in the Commodity Exchange Act do not apply. None of the three listed nonpreempted areas involves civil private causes of action, and, thus, this section simply means that the remedies provided under this chapter are not applicable in proceedings in which the regulations under this chapter do not apply.

Second, section 22, 7 U.S.C. § 25, provides an exclusive remedy for “rights of action authorized by this subsection.” In other words, section 22 limits only the remedies available for violations pursuant to section 22. See 7 U.S.C. § 25(a)(2); 7 U.S.C. § 25(b)(5). Phrases such as “under this chapter” and “of this chapter” indicate Congress’ intention to provide that the remedies under section 22 are the only remedies that the Act authorizes. Nowhere in the Act, however, does it say that these remedies are the only remedies available to a plaintiff.

Finally, the court finds the defendants’ arguments about 7 U.S.C. § 18 (reparations proceedings), 7 U.S.C. § 7a(11) (arbitration), and 7 U.S.C. § 13a-2 are without merit.

While the court can find no cases that have specifically addressed the possibility of state remedies under the 1982 Act, two recent law review articles discuss this point. See Sackheim, Parameters of Express Private Rights of Action for Violations of the Commodity Exchange Act, 28 St. Louis U.L.J. 51, 71-99 (1984); Raisler & Geldermann, The CFTC’s New Reparation Rules, 40 Bus.Lawyer 537 (1985). Mr. Sackheim indicates that “the exercise of pendent jurisdiction over a state claim in an action where the subject matter jurisdiction is predicated on a federal statute such as the [Commodity Exchange Act] is discretionary with the district court.” Sackheim, supra, at 96-97, citing United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). He then states:

Thus in actions commenced in federal court under the federal commodity laws pursuant to the exclusive grant of jurisdiction as provided for in [7 U.S.C. § 25] of the [Commodity Exchange Act] the district court may, in its discretion, exercise jurisdiction over related state claims and pendent parties under appropriate circumstances.

Sackeim, supra, at 98 (footnote omitted); see generally, id. at 96-98.

Messrs. Raisler and Geldermann agree with Sackheim when they state, “Among the principal advantages to customers who file an action under [7 U.S.C. § 25] ... [is] the possibility of asserting pendent state claims, such as common law fraud or violations of state antifraud statutes____” Raisler & Geldermann, supra, at 579 (citations omitted).

The Supreme Court has indicated that a state law can be preempted in two ways. Congress may intend to occupy a given field or the state law may conflict with federal law. See Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 104 S.Ct. 615, 621, 78 L.Ed.2d 443 (1984). This court finds that Congress did not intend to occupy the field of commodities law. Congress has legislated a great deal in the area of securities law, but the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as the amendments thereto and rules promulgated thereunder, do not preempt state causes of action in this field. This court will not presume that Congress intended to treat commodities different from securities. The court also can find no instances in which the plaintiff’s state law claims conflict with federal law.

The Supreme Court has held that “[preemption of state law by federal statute or regulation is not favored ‘in the absence of persuasive reasons—either that the nature of the regulated subject matter permits no other conclusion, or that Congress has unmistakably so ordained.’ ” Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317, 101 S.Ct. 1124, 1130, 67 L.Ed.2d 258 (1981), quoting Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142, 83 S.Ct. 1210, 1217, 10 L.Ed.2d 248 (1963).

III. SUMMARY

In summary, this court holds that the federal commodities laws do not preempt recovery under state law theories by creating an exclusive remedy.


author: JOSÉ A. CABRANES, District Judge:

text:
    CONNECTICUT FUND FOR THE ENVIRONMENT; Natural Resources Defense Council v. The JOB PLATING COMPANY, INC.
    Civ. No. H-83-963(JAC).
    United States District Court, D. Connecticut.
    Sept. 17, 1985.

      Katherine H. Robinson, Hartford, Conn., for plaintiff Connecticut Fund for the Environment.
    James Thornton, New York City, for plaintiff Natural Resources Defense Council.
    Sharon Holland Purtill, Law Offices of Peter Jay Alter, Glastonbury, Conn., for defendant Job Plating Co., Inc.
   RULING ON PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT AND ON DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

JOSÉ A. CABRANES, District Judge:

This is a citizen suit under the federal Clean Water Act against the operator of an electroplating plant that concededly discharges pollutants into the Quinnipiac River. The suit was brought against the Job Plating Company of Plainville, Connecticut, by the Connecticut Fund for the Environment and the Natural Resources Defense Council.

The environmental organizations contend that Job Plating violated the Clean Water Act on 174 occasions by discharging effluents in excess of the amount permitted by its National Pollutant Discharge Elimination System permit. The plaintiffs seek a declaratory judgment that Job Plating has violated the Clean Water Act, an injunction to prevent further violations, and civil penalties of up to $10,000 per violation payable to the United States Treasury. They also seek costs and attorneys’ fees.

Job Plating does not deny that it has exceeded the discharge levels authorized by its NPDES permit. However, the company asserts that this action should nonetheless be dismissed for any of five reasons. The court finds none of these arguments to be persuasive.

First, Job Plating contends that the suit was not brought within the applicable statute of limitations. The court finds, however, that the action is governed by the five-year statute of limitations applicable to government suits under the Clean Water Act rather than by the shorter statute of limitations that would be provided by state law. Accordingly, the action is timely.

Second, Job Plating asserts that penalties for past violations cannot be recovered in citizen suits under the Clean Water Act. The court finds that, while private damages may not be recoverable under the Act, civil penalties (including fines) may be obtained on behalf of the United States.

Third, Job Plating argues that the court, in an exercise of its discretion, should defer in this matter to the Connecticut Department of Environmental Protection. However, the court finds that no such deference is called for where, as here, the suit does not raise complex issues of fact that are peculiarly within the agency’s expertise.

Fourth, Job Plating contends that the action should be dismissed because, under the Clean Water Act, a citizen suit is precluded by a state’s “diligent prosecution” of the same matter. The court finds that there was no “diligent prosecution” in this case, however, because the state’s suit against Job Plating was initiated only after the citizen suit.

Finally, Job Plating argues that its NPDES permit is unenforceable because it was not properly promulgated. The court, noting that Job Plating failed to take advantage of earlier opportunities to challenge its permit, holds that the validity of the permit cannot be raised in this action.

Accordingly, the court finds that Job Plating is liable to the plaintiffs for violation of the Clean Water Act. The court defers a decision with respect to the relief that ought to be granted as a result of this ruling.

I.

This action, a citizen suit brought pursuant to Section 505 of the Clean Water Act (“Act”), 33 U.S.C. § 1365, was commenced on November 17, 1983. The plaintiffs are environmental organizations some of whose members meet the standing requirements established for citizen suits pursuant to Article III of the United States Constitution and 33 U.S.C. § 1365. See Endorsement Ruling (entered Mar. 28, 1985) on Defendant’s Motion for Judgment on the Pleadings (filed Dec. 28, 1984); Certified Official Transcript of Oral Ruling delivered at a Hearing Held on November 19, 1984 (filed Nov. 26,1984) (discussion of standing requirements in the context of this case); Sierra Club v. SCM Corporation, 747 F.2d 99, 103-07 (2d Cir.1984) (standard for standing for citizen suits brought under 33 U.S.C. § 1365); Friends of the Earth v. Consolidated Rail Corp., 768 F.2d 57, 60 (2d Cir.1985) (recent case applying Sierra Club v. SCM Corporation standard for standing and upholding standing in conditions similar to this case). The defendant is a Connecticut corporation that operates an electroplating plant in Plainville, Connecticut, and concededly dicharges effluents into the Quinnipiac River.

The plaintiffs allege that the defendant violated its National Pollutant Discharge Elimination System (“NPDES”) permit, see 33 U.S.C. § 1342(a), (b) (authorizing state issuance of NPDES permits pursuant to approval of the state’s program by the Administrator of the federal Environmental Protection Agency [“EPA”] ). Specifically, the plaintiffs contend, based on the Discharge Monitoring Reports (“DMRs”) that the defendant is required to file by law, that the defendant exceeded the permissible discharge allowed under its NDPES permit on 174 occasions. See 33 U.S.C. § 1318; 40 C.F.R. § 122.410); Plaintiffs’ Statement Pursuant to [Local] Rule 9[c] in Support of Their Motion for Summary Judgment (“Plaintiffs’ Statement”), ¶ 4, Exhibit D attached to Notice of Motion (filed Mar. 2, 1984). The plaintiffs seek declaratory relief with respect to the defendant’s alleged past violations of its NPDES permit, injunctive relief preventing future violations, civil penalties of up to $10,000 per violation payable to the United States pursuant to 33 U.S.C. §§ 1319(d), 1365(a), and costs and attorney’s fees pursuant to 33 U.S.C. § 1365(d).

On March 2, 1984, the plaintiffs filed a motion for partial summary judgment accompanied by a statement of undisputed facts, exhibits, an affidavit and a memorandum of law. On May 11, 1984, the defendant filed a memorandum in opposition to plaintiffs’ motion. The defendant filed a motion to dismiss accompanied by exhibits, an affidavit and a memorandum of law. Each of the parties thereafter filed several additional papers concerning the outstanding motions. On November 19, 1984 (after the transfer of this case to me), oral argument was held on the pending motions. The motion for partial summary judgment and motion to dismiss became ripe for decision as of March 28, 1985, the date on which the plaintiffs’ standing was upheld.

II.

The following material facts are undisputed:

1. On February 23, 1976, the Connecticut Department of Environmental Protection (DEP) issued NPDES permit number CT0022284 to the defendant. The permit was reissued on March 23, 1978. See Plaintiffs’ Statement, ¶ 3 and Exhibit A (NPDES permits).

2. The defendant is required by its NDPES permit to file monthly DMRs. These reports indicate whether the defendant, on the basis of the results of specific tests, is in compliance with its permit. See Plaintiffs’ Statement, ¶ 4; Exhibit D attached to Plaintiffs’ Statement (copies of DMRs).

3. The defendant reported in its DMRs that, between May 1978 and November 17, 1983, it had on 174 occasions discharged substances in excess of the amounts allowed by its permit. See Plaintiffs’ Statement, ¶ 5.

4. On September 9, 1983, the plaintiffs sent a Notice of Intent to Sue to the Administrator of EPA, DEP and the defendant pursuant to 33 U.S.C. § 1365(b)(1)(A). See Affidavit of Alfred J. Mastriani (executed May 8, 1984) (“Mastriani Aff.”), ¶ 7, Ex. B.

5. Neither the EPA nor the DEP had filed any action against the defendant as of November 17, 1983, the date this action was filed. See Mastriani Aff., ¶¶ 8-10.

6. On December 9, 1983, the Commissioner of DEP issued an Order to Abate Pollution, No. 3639 to the defendant. Mastriani Aff. ¶ 9, Ex. C.

7. On February 9, 1984, Mike Harder, Senior Sanitary Engineer for the Water Compliance Unit, DEP, sent a letter to the defendant that stated that the defendant was in violation of DEP’s Abatement Order and that the matter had been referred to the Attorney General’s Office for further action. See Mastriani Aff. If 10, Ex. D.

8. The plaintiffs have never contacted the defendant and requested that they be permitted to join in negotiations with the DEP and the defendant, nor have they been denied the opportunity to so join in. See Mastriani Aff., ¶ 11.

9. On March 19, 1984 the State of Connecticut, through DEP, instituted a civil action in the Connecticut Superior Court against the defendant to enforce Abatement Order No. 3639. See Mastriani Aff., Ex. E (copy of complaint). The defendant was served with the Summons and Complaint on March 23, 1984, and counsel filed an appearance on April 3, 1984 on behalf of the defendant. On April 6, 1984, the plaintiffs’ counsel was informed by the defendant’s attorney of the suit by DEP. See Mastriani Aff., ¶ 13.

10. The state’s suit in the Connecticut Superior Court seeks enforcement of Order No. 3639, issued on December 9, 1983, requiring submission of an engineering report and subsequent placement of approved waste water treatment facilities in operation by May 31, 1984; the instant citizen suit seeks penalties for violation of effluent limitations set forth in NPDES Permit No. CT0022284, and an injunction against future violations of the permit limits. See Affidavit of Richard F. Webb (executed June 19, 1985) (“Webb Aff.”), ¶ 2(c).

11. The state’s suit has been resolved, with no penalties assessed against the defendant and the filing of a Stipulated Judgment in the Superior Court on June 6,1984. See Webb Aff., 112(c), Attachment (Stipulated Judgment).

III.

The defendant raises five arguments in favor of its motion to dismiss and in opposition to the plaintiffs’ motion for summary judgment: (1) that this action is barred by the applicable statute of limitations; (2) that 33 U.S.C. § 1365 precludes retrospective relief in citizen suits; (3) that the DEP has primary jurisdiction over this lawsuit; (4) that the court does not have jurisdiction over this lawsuit because the state has diligently prosecuted an action against the defendant within the meaning of Section 1365(b)(1)(B), which makes the lack of such prosecution a prerequisite for a citizen suit; and (5) that the defendant’s NPDES permit is invalid because it was not properly promulgated and therefore cannot be enforced against the defendant. If the defendant fails to prevail on at least one of these arguments, partial summary judgment on the issue of liability must enter in favor of the plaintiffs. See Section IV, infra. Each of these arguments shall be addressed seriatim.

A. Statute of Limitations

The Act provides no statute of limitations for actions brought under it. The defendant argues that state law should supply the applicable statute of limitations for state-promulgated NPDES permits. See Memorandum of Law in Support of Motion to Dismiss (filed May 11, 1984) (“Defendant’s Memorandum I”) at 21-23; Defendant[] Job Plating Company, Inc. Supplemental Memorandum of Law in Support of Motion to Dismiss (filed Sept. 19, 1984) (“Defendant’s Memorandum III”) at 1-3. In this case, the defendant contends that the applicable statute of limitations is one year pursuant to Conn.Gen.Stat. § 52-585 (civil penalty actions), or three years under the statute governing nuisance actions. See Defendant’s Memorandum I at 22-23; Defendant’s Memorandum III at 3. The defendant maintains that the federal five-year statute of limitations applicable to civil penalty actions, 28 U.S.C. § 2462, does not apply to citizen suits under the Act because that statute covers only actions brought on behalf of the United States; Section 1365(a) refers to “citizen actions” as brought on the “[citizen’s] behalf[.]” Defendant’s Memorandum I at 21-22; Defendant’s Memorandum III at 1-2.

The plaintiffs, citing cases on point, claim either that the five-year limitations period of 28 U.S.C. § 2462 uniformly should apply to citizen (and government) suits under the Act or that no statute of limitations is applicable to citizen suits. See Plaintiffs’ Memorandum in Opposition to Defendant’s Motion to Dismiss and Response to Defendant’s Opposition to Plaintiffs’ Motion for Summary Judgment (filed June 21, 1984) (“Plaintiffs’ Memorandum II”) at 11-13; Plaintiffs’ Supplemental Memorandum on Statutes of Limitations (filed Oct. 12, 1984) (“Plaintiffs’ Memorandum III”) at 1-6; Memorandum of Law and Index of Cases (filed June 19, 1985) (“Plaintiffs’ Memorandum IV”) at 2.

Our Court of Appeals recently has held that

[w]hen Congress creates a federal cause of action but does not expressly provide an applicable statute of limitations, [it is to be] assume[d] that Congress intended the courts to adopt the limitation period of an analogous cause of action ... and “resort to state law remains the norm for borrowing of limitations periods.” ... But where the application of a state statute of limitations would “frustrate or interfere with the implementation of national policies” or “be inconsistent with the underlying policies of the federal statute, courts should borrow a timeliness rule from federal law.

Monarch Long Beach Corp. v. Soft Drink Workers, Local 812, International Brotherhood of Teamsters, 762 F.2d 228, 230 (2d Cir.1985) (“Soft Drink Workers ”) (emphasis supplied) (citations omitted).

The defendant has not drawn to the court’s attention any case in which a court has applied a state statute of limitations to a citizen suit under the Act. In contrast, several courts specifically have refused to apply state limitations periods because to do so would frustrate the federal policy of uniform enforcement of the Act. See Chesapeake Bay Foundation v. Bethlehem Steel Corporation, 608 F.Supp. 440, 446-50 (D.Md.1985) (“Chesapeake Bay I”); Student Public Interest Research Group of New Jersey, Inc. (“NJSPIRG”) v. Tenneco Polymers, 602 F.Supp. 1394, 1398-99 (D.N.J.1985) (“NJSPIRG /”); NJSPIRG v. Monsanto Co., 600 F.Supp. 1474, 1477 (D.N.J.1985) (“NJSPIRG II”); Sierra Club v. Simkins Industries, Inc., 617 F.Supp. 1120, 1124-25 (D.Md.1985).

The court concludes that application of the state statute of limitations to citizen suits under the Act is inappropriate, precisely for the reason noted by the Court of Appeals in Soft Drink Workers. See Chesapeake Bay I, supra, 608 F.Supp. at 446-50 (noting that application of a state statute of limitations to citizen suits would be inconsistent with the five-year statute of limitations available for similar suits seeking identical relief initiated by the federal government pursuant to the Act); NJSPIRG I, supra 602 F.Supp. at 1398-99 (same).

Three of the cases that have dealt with the appropriate statute of limitations for citizen suits under the Act, including one in this Circuit, have applied the five-year limitations period of 28 U.S.C. § 2462. See Friends of the Earth v. Facet Enterprises, Inc., 618 F.Supp. 532, 22 Env’t Rep.Cas. (BNA) 1143, 1145-46 (W.D.N.Y.1984) (“Friends of the Earth ”) (defendant argued for five-year limitations period under federal law or, in the alternative, a three-year period under state law; plaintiff argued for no statute of limitations); Chesapeake Bay I, supra, 608 F.Supp. at 449-50; Sierra Club v. Simkins Industries, Inc., supra, at 1124-25. Two others, NJSPIRG I and NJSPIRG II, found both state statutes of limitations and Section 2462 to be inapplicable and concluded that there is no statute of limitations for actions brought pursuant to the Act.

This court assumes without deciding that 28 U.S.C. § 2462 is not directly applicable to citizen suits brought under the Act. See Bertha Building Corp. v. National Theatres Corp., 269 F.2d 785, 788-89 (2d Cir.1959) (Section 2462 applies only to actions brought on behalf of the United States and qui tarn actions), cert. denied, 361 U.S. 960, 80 S.Ct. 585, 4 L.Ed.2d 542 (1960); but cf. Friends of the Earth, supra, 618 F.Supp. 532, 22 Env’t Rep.Cas. (BNA) at 1145-46 (holding Section 2462 to be directly applicable to citizen suits under the Act). However, a citizen suit brought under the Act is closely analogous to an action brought under the same Act on behalf of the United States. See Chesapeake Bay I, supra, 608 F.Supp. at 449-50; Soft Drink Workers, supra, 762 F.2d at 230-32. Accordingly, the five-year statute of limitations period of Section 2462 ought to be applied in citizen suits brought pursuant to Section 1365.

B. Penalties for Past Violations

The defendant contends that 33 U.S.C. § 1365(a) only permits prospective relief in citizen suits and, therefore, no remedy is available for past violations of an NPDES permit. Defendant’s Memorandum I at 20-21. To support its position that only prospective (injunctive) relief for ongoing violations is appropriate, the defendant points to the language of Section 1365(a) that authorizes citizen suits against “any person ... who is alleged to be in violation [of an NPDES permit,]” id. (emphasis added), and invokes cases holding that damages are not available in citizen actions under Section 1365. See Middlesex County Sewerage Authority v. National Sea Clammers, 453 U.S. 1, 14, 17-18, 101 S.Ct. 2615, 2623, 2624-25, 69 L.Ed.2d 435 (1981); City of Evansville, Indiana v. Kentucky Liquid Recycling, 604 F.2d 1008, 1014 (7th Cir.1979), cert. denied, 444 U.S. 1025, 100 S.Ct. 689, 62 L.Ed.2d 659 (1980). The plaintiffs, on the other hand, contend that, although damages may not be recoverable in citizen suits brought under Section 1365, liability and remedies (including fines) may be imposed on the defendant for past violations of NPDES permits. Plaintiffs’ Memorandum II at 13-14; Plaintiffs’ Memorandum IV at 5-7.

Every court but two that has considered this issue has ruled in favor of the plaintiffs’ position for the reason that Section 1365 explicitly authorizes district courts “to apply any appropriate civil penalties under [33 U.S.C.] section 1319(d)” and because the remedies obtainable in citizen suits should be coextensive with those available in suits initiated by the federal government. See Sierra Club v. Aluminum Company of America, 585 F.Supp. 842, 853-54 (N.D.N.Y.1984) (Miner, J.); NJSPIRG II, supra, 600 F.Supp. 1476-77; Sierra Club v. C.G. Manufacturing, Inc., Civ. No. 84-1784-Z (D.Mass. Apr. 12, 1985) (Zobel, J.) at 3-6; Chesapeake Bay Foundation, Inc. v. Gwaltney of Smith-field, Ltd., 611 F.Supp. 1542 (E.D.Va.1985) (Merhige, J.) (“Chesapeake Bay II”) at 1544-46; NJSPIRG v. Anchor Thread Company, 22 Env’t Rep.Cas. (BNA) 1150, 1154 (D.N.J.1984) (“NJSPIRG III”); Sierra Club v. Raytheon Company, 22 Env’t Rep.Cas. (BNA) 1050, 1058-65 (D.Mass. 1984). See also Friends of the Earth, supra, 618 F.Supp. 532, 22 Env’t Rep.Cas. (BNA) at 1146; NJSPIRG v. Fritzsche, Dodge & Olcott, Inc., 759 F.2d 1131, 1138 (3d Cir.1985) (“NJSPIRG IV”); NJSPIRG I, supra, 602 F.Supp. at 1399. Accord, Illinois v. Outboard Marine, Inc., 680 F.2d 473, 480-81 (7th Cir.1982) (Wisdom, J., sitting by designation).

The cases relied upon by the defendant only state the undisputed proposition that private damages are not recoverable by plaintiffs in citizen suits brought under Section 1365; in fact, those very cases refer to the availability of civil penalties for past violations in such suits. See Middle-sex County Sewerage Authority v. National Sea Clammers Association, supra, 453 U.S. at 14, n. 25, 17-18, n. 27, 101 S.Ct. at 2623, n. 25, 2625, n. 27; City of Evansville, Indiana v. Kentucky Liquid Recycling, supra, 604 F.2d at 1014, n. 16. See also NJSPIRG II, supra, 600 F.Supp. at 1474 (noting distinction of cases cited by defendant); Chesapeake Bay II, supra, at 1551-53 (same); Sierra Club v. C.G. Manufacturing, Inc., supra, at 3-6 (same).

Two cases contrary to the plaintiffs’ position, Hamker v. Diamond Shamrock Chemical Co., 756 F.2d 392, 395-99 (5th Cir.1985) (dicta in case involving, one-time discharge not subject to any permit); Pawtuxet Cove Marina, Inc. v. Ciba-Geigy Corp., 21 Env’t Rep.Cas. (BNA) 1393 (D.R.I.1984), are inapposite and unpersuasive. See Chesapeake Bay II, supra, at 1550-52 (criticizing and distinguishing Hamker v. Diamond Shamrock Chemical Co. and Pawtuxet Cove Marina, Inc. v. Ciba-Geigy Corp.); Sierra Club v. Simkins Industries, Inc., supra at 1131-32 (distinguishing Hamker v. Diamond Shamrock Chemical Co. on its facts).

Accordingly, the court finds that the plaintiffs in this action may obtain relief for the defendant’s past violations of its NPDES permit.

C. Primary Jurisdiction

The defendant contends that the doctrine of primary jurisdiction should cause the court, in an exercise of its discretion, to defer to DEP’s abatement proceeding. See Defendant’s Memorandum I at 17-19. The plaintiffs, on the other hand, argue that the doctrine of primary jurisdiction has no application to this case because of the absence of complex issues of fact with which the court is unfamiliar and with respect to which the agency arguably is expert. See Far East Conference v. United States, 342 U.S. 570, 574-75, 72 S.Ct. 492, 494-95, 96 L.Ed. 576 (1952); Skoller v. Blue Cross-Blue Shield of Greater New York, 584 F.Supp. 288, 290 (S.D.N.Y.1984) (Lasker, J.).

Assuming arguendo that the doctrine of primary jurisdiction may be applied to require a deference of some kind to state administrative agencies in matters treated by federal law, the factors that would lead the court to invoke that doctrine are not present in this case. The court is not faced with complex issues of fact, but rather with a straightforward enforcement action in which legal issues are presented. In fact, the drafters of Section 1365 unequivocally asserted that “[ejnforcement of pollution regulations is not a technical matter beyond the competence of the courts.” Senate Comm, on Public Works, Federal Water Pollution Control Act Amendments of 1972, S.Rep. No. 92-414, 92d Cong., 2d Sess., reprinted in 1972 U.S.Code Cong. & Ad.News 3668, 3747 (1972). See Board of Education of the City School District of the City of New York v. Harris, 622 F.2d 599, 606-07 (2d Cir.1979) (“It is well established that the courts need not defer to an agency where the issue involved is a strictly legal one, involving neither the agency’s particular expertise nor its fact finding prowess.”), cert. denied sub nom., Hufstedler v. Board of Education of the City School District of the City of New York, 449 U.S. 1124, 101 S.Ct. 940, 67 L.Ed.2d 110 (1981).

A case relied upon by the defendant, Montgomery Environmental Coalition Citizens Coordinating Committee on Friendship Heights v. Washington Suburban Sanitary Commission, 607 F.2d 378, 381-82 (D.C.Cir.1979), is clearly distinguishable on its facts. In that case, the relevant NPDES permit had yet to be promulgated by the administrative agency, and administrative proceedings were pending on technical issues concerning the permit. In contrast, in this case, the NPDES permit already has been issued by DEP and the plaintiffs seek only its enforcement in this action. To the extent that any proceedings before DEP are relevant to this case, they involve the issue of diligent prosecution discussed in Section III.D., infra.

The court concludes that the doctrine of primary jurisdiction does not prevent it from exercising jurisdiction over this action to enforce an NPDES permit.

D. Diligent Prosecution

The defendant contends that the state, by bringing an abatement action against it in state court, was “diligently prosecuting” an action within the meaning of 33 U.S.C. § 1365(b)(1)(B), and such purported diligent prosecution precludes a citizen suit pursuant to Section 1365(a). See Section 1365(b)(1)(B); Defendant’s Memorandum I at 9-17. The plaintiffs maintain that a state proceeding brought several months after the commencement of this action and since concluded does not constitute “diligent prosecution” that would bar this action. Furthermore, the plaintiffs maintain that the state’s action differed from this suit in important respects and that the state suit was intended to supplement, not preclude, this action. See Plaintiffs’ Memorandum II at 3-5; Webb Aff.; Plaintiffs’ Memorandum IV at 3-5.

On its face, the diligent prosecution provision of Section 1365(b)(1)(B) does not apply to a case in which the state did not take any enforcement action until after the citizen suit was filed. The language of Section 1365(b)(1)(B) (captioned “Notice”), to the effect that “[n]o action may be commenced ... if the ... State has commenced” an action, clearly contemplates action prior to the filing of a citizen suit. Only where there has been such prior action is it possible to consider whether that action is “diligent prosecution” that would preclude the filing of the citizen suit. See Sierra Club v. Simkins Industries, Inc., supra, at 1125 (state administrative action initiated after the filing of a citizen suit does not fall within the ambit of Section 1365(b)(1)(B)). See also Friends of the Earth v. Consolidated Rail Corp., supra, slip op. at 62-63 (Section 1365(b)(l)(B)’s language should be strictly construed).

Apart from Sierra Club v. Simkins Industries, Inc., supra, in which the state agency acted after the citizen suit had been filed in federal court, all the cases that have considered Section 1365(b)(1)(B)’s diligent prosecution provision (and the analogous provision of the Clean Air Act, 42 U.S.C. § 7604(b)(1)(B)) deal with enforcement actions that commenced (and usually culminated) prior to the institution of the citizen suit. See Hudson River Sloop Clearwater, Inc. v. Consolidated Rail Corporation, 591 F.Supp. 345, 346-53 (N.D.N.Y.1984), rev’d sub. nom, Friends of the Earth v. Consolidated Rail Corp., supra (state administrative action is not “diligent prosecution” under Section 1365(b)(1)(B)); Sierra Club v. SCM Corporation, 572 F.Supp. 828, 829-31 (W.D.N.Y.1983); Love v. New York State Department of Environmental Conservation, 529 F.Supp. 832, 843-44 (S.D.N.Y.1981); Gardeski v. Colonial Sand & Stone Company, Inc., 501 F.Supp. 1159, 1161-68 (S.D.N.Y.1980); NJSPIRG IV, supra, 759 F.2d at 1132-39; Baughman v. Bradford Coal Co., 592 F.2d 215, 216-19 (3d Cir.), cert. denied, 441 U.S. 961, 99 S.Ct. 2406, 60 L.Ed.2d 1066 (1979).

The court concludes that, in accordance with the unambiguous language of Section 1365(b)(1)(B), actions taken by the state after the filing of a citizen suit may not be considered as constituting “diligent prosecution” pursuant to that section.

E. Validity of NPDES Permits Issued by DEP

The defendant’s final argument goes to the very validity and enforceability of the NPDES permits issued by DEP. Specifically, the defendant contends that because certain “guidelines” that DEP used to set the effluent standards in the NPDES permit allegedly were not properly promulgated under the Uniform Administrative Procedure Act, Conn.Gen.Stat. §§ 4-177— 4-182, the standards are not enforceable in this action. See Memorandum of Law in Support of Defendant’s Motion in Opposition to Plaintiffs’ Motion for Summary Judgment (filed May 11, 1984) (“Defendant’s Memorandum II”) at 5-12. The plaintiffs counter that an attack on the defendant’s NPDES permit is inappropriate in this proceeding and that, in any case, the provisions of the NPDES permit are valid and enforceable. See Plaintiffs’ Memorandum III at 5-11.

The defendant has failed to avail itself of two different fora in which it might have challenged its NPDES permit. First, the defendant did not commence an administrative challenge to the NPDES permit within 30 days of its issuance by DEP, as permitted by statute. See Conn.Gen.Stat. §§ 22a-430, 22a-436; Water Resources Commissioner v. Connecticut Sand and Stone Corporation, 170 Conn. 27, 31-32, 364 A.2d 208 (1975) (failure to pursue a timely administrative challenge to DEP order under predecessor statute precluded a subsequent challenge); Costle v. Meadow Haven, Inc., 32 Conn.Supp. 121, 342 A.2d 373, 373-74 (Conn.Super.1975) (same).

By failing to challenge its NPDES permit under state law at a time when its purported legal deficiency should have been as apparent to the defendant as it is now, the defendant is precluded from doing so in this action.

Second, the defendant could have filed an application for review (in the United States Court of Appeals), challenging EPA’s approval of the state’s allegedly invalid NPDES permit program. See 33 U.S.C. § 1369(b)(1); Peabody Coal Company v. Train, 518 F.2d 940, 941-43 (6th Cir.1975) (dismissal of challenge to state plan under Section 1369(b)(1) as untimely); Sun Enterprises, Ltd. v. Train, 532 F.2d 280, 290-291 (2d Cir.1976) (same with respect to a federal permit, see note 8, infra ).

This case is clearly distinguishable from Sierra Club v. Indiana-Kentucky Electric Corporation, 716 F.2d 1145, 1148-51 (7th Cir.1983), in which state environmental standards under the different procedures of the Clean Air Act were held to be unenforceable in a federal action because a state court had found that the standards had not been properly promulgated pursuant to state law. In contrast, in this case, there is no ruling by a state court that any NPDES permits issued by the DEP are invalid for procedural reasons. Furthermore, Sierra Club v. Indiana-Kentucky Electric Corporation, supra, 716 F.2d at 1150-51, stands for the proposition that state courts are the preferred, if not the mandatory, forum in which to challenge a state’s promulgation of environmental standards.

For the reasons stated above, the defendant may not raise the issue of the validity of its NPDES permit in this enforcement proceeding. Cf. Adamo Wrecking Co. v. United States, 434 U.S. 275, 287, 98 S.Ct. 566, 574, 54 L.Ed.2d 538 (1978) (“narrow inquiry” in criminal enforcement proceeding concerning violation of environmental standard does not include examination of the validity of the procedures used to promulgate that standard).

IV. Summary Judgment for Plaintiffs

Courts have granted summary judgment for plaintiffs in numerous citizen suits brought pursuant to Section 1365 on the issue of liability. The decisions in these cases were based on findings of strict liability derived from discharge data reported in defendants’ DMRs that exceeded levels allowed by NPDES permits. See, e.g., NJSPIRG I, supra, 602 F.Supp. at 1399-1400, NJSPIRG v. Fritzsche, Dodge & 01-■cott, 579 F.Supp. 1528, 1528-39 (D.N.J.), aff'd, NJSPIRG IV, supra, 759 F.2d at 1139; NJSPIRG III, supra, 22 Env’t Rep. Cas. (BNA) at 1151-54; Sierra Club v. Raytheon Co., supra, 22 Env’t Rep.Cas. (BNA) at 1051-52, 1055; Chesapeake Bay Foundation v. Gwaltney of Smith-field, Ltd., Civ. No. 84-0366-R (E.D.Va. Aug. 28, 1984) (Merhige, J.); Chesapeake Bay I, supra, at 1556-60; Sierra Club v. Simkins Industries, Inc., supra, at 1126-27. It is undisputed that the defendant’s DMRs show that the defendant violated the terms of its NPDES permit on at least 174 occasions. In these circumstances, the plaintiffs’ Motion for Summary Judgment should be granted.

Conclusion

For the reasons stated above, the plaintiffs’ Motion for Partial Summary Judgment is granted and the defendant’s Motion to Dismiss is denied.

If the parties are unable to reach agreement by October 15, 1985 on the relief that ought to be granted as a result of this ruling, the parties shall file by that date proposed orders and memoranda with respect to the relief that would be appropriate in these circumstances. In preparing their papers on the issue of relief, the parties shall acquaint themselves with decisions by other district courts on the subject. See, e.g., Chesapeake Bay II, supra, at 1552-65.

It is so ordered.

      . This case originally was assigned to the docket of Judge M. Joseph Blumenfeld, Senior United States District Judge. With the consent of Judge Blumenfeld and other transferor judges, and pursuant to an Order of Transfer and Reassignment (entered Aug. 2, 1984 by Chief Judge T.F. Gilroy Daly) this case and other similar pending cases brought by the plaintiffs in this District were transferred to my docket. Nineteen such cases are now pending, not including several in which consent decrees have been entered. This case is one of three in which summary judgment motions have been fully briefed and argued.

      . The EPA Administrator has issued the necessary approval to the DEP to issue NPDES permits. See Plaintiffs’ Statement Pursuant to [Local] Rule 9[c] in Support of Their Motion for Summary Judgment ¶ 3, attached to Notice of Motion (filed Mar. 2, 1984).

      . Bertha Building Corp. v. National Theatres Corp., 269 F.2d 785 (2d Cir.1959), cert. denied, 361 U.S. 960, 80 S.Ct. 585, 4 L.Ed.2d 542 (1960) is distinguishable because it interpreted Section 2462 (in dicta) in an era preceding the advent of citizen suits. A citizen suit is analogous to a qui tam action (to which Section 2462 is applicable) but in some ways is closer to a suit on behalf of the government, in contrast with the private action that was considered in Bertha Building Corp. v. National Theatres Corp. For example, whereas the penalties in a purely private action or a qui tam action inure in whole or in part to a prevailing plaintiff, the penalties in a citizen suit under Section 1365 inure exclusively to the United States Treasury. See Chesapeake Bay I, supra, 608 F.Supp. at 449-50. In other words, our Court of Appeals, if faced with the question today, probably would include citizen suits within the ambit of Section 2462. In any case, as noted herein, the prevailing standard permits the application of analogous federal statutes of limitations in circumstances where there is no explicit federal limitation and application of a state limitations period is inappropriate. This issue is not discussed in Bertha Building Corp. v. National Theatres Corp., supra.

      . The defendant goes on to claim that injunctive relief is inappropriate because the plaintiffs have failed to allege current violations by the defendant of its NPDES permit, and therefore that the plaintiffs are entitled to no relief. See Defendant’s Memorandum I at 21. Assuming arguendo that the defendant’s view of relief obtainable pursuant to Section 1365(a) were correct, the plaintiffs sufficiently have alleged ongoing violations by the defendant of its NPDES permit. See Affidavit of James Thornton (executed Mar. 1, 1984), ¶ 11 attached to Notice of Motion (filed Mar. 2, 1984);. Complaint (filed Nov. 17, 1983), ¶ 17. Such violations may well be considered at a later stage of these proceedings. In any event, prospective relief for the effects of past violations is available pursuant to Section 1365. See Illinois v. Outboard Marine Corporation, Inc., 680 F.2d 473, 478-81 (7th Cir.1982) (Wisdom, J., sitting by designation) (remedies available for violations of expired permit in suit under Section 1365).

      . 33 U.S.C. § 1365(b)(1)(B) provides in pertinent part:
      No action may be commenced—
      (1) under subsection (a)(1) of this section—
      ******
      (B) if the Administrator [of EPA] or State has commenced and is diligently prosecuting a civil or criminal action in a court of the United States, or a State to require compliance with the standard, limitation, or order, but in any such action in a court of the United States any citizen may intervene as a matter of right, [emphasis supplied]

      . 33 U.S.C. § 1365(b)(1)(A) requires that potential citizen plaintiffs provide notice to EPA, the state, and the potential defendant of the alleged violations sixty days prior to commencing an action pursuant to Section 1365(a). This notice provision is intended to give EPA and the state a chance to institute action that might preclude the need for a citizen suit. In this case, there is no dispute that proper notice was given and that the state took no action until after the plaintiffs commenced their suit. See Section I, ¶¶ 4-9, supra.

      . Assuming arguendo that, contrary to the clear wording of Section 1365(b)(1)(B), the commencement of an action by the state in state court after the commencement of a citizen suit may under some circumstances come within the ambit of Section 1365(b)(1)(B), the action commenced by the state against the defendant probably does not constitute “diligent prosecution” that would preclude the plaintiffs’ action. The plaintiffs contend that the state action cannot constitute such "diligent prosecution” because of basic differences in scope and objectives between that suit and their own. See Plaintiffs’ Memorandum II at 3-5; Webb Aff. They assert that the state action was intended to supplement, not to preclude, their action and that "the state’s action referred only to the scheduling order, and its resolution does not require compliance with the permit in the future or impose penalties for its past violation." Id. at 4. Cf. Brewer v. City of Bristol, 577 F.Supp. 519, 525-26 (E.D.Tenn.1983) (citizen suit should not be dismissed on ground of “diligent” state prosecution where state's suit may not adequately protect rights of parties).

      . The defendant claims that the state statutory provisions do not comport with due process in a case such as this, where the defendant allegedly did not encounter problems with its NPDES permit until more than 30 days after DEP issued the permit. Assuming arguendo that the defendant did not have constructive notice that, given its levels of effluent discharge, the NPDES permit might be questionable, there is no indication in the record that it ever attempted to initiate any formal action concerning the validity of the permit with DEP or in the state courts. See Sun Enterprises, Ltd. v. Train, 532 F.2d 280, 290-92 (2d Cir.1976) (dismissal of challenge under 33 U.S.C. § 1342(b) to a federal permit; no equitable tolling for untimely challenge to discharge permit where defect allegedly arose after the 90-day statute of limitations expired because defendant had actual or constructive knowledge of the defect and, in any event, defendant failed to take any action within 90 days of when it admitted knowledge of the defect). In light of this failure to make any challenge, timely or otherwise, to the validity of its NPDES permit until faced with an enforcement action in federal court, the defendant is estopped from attacking the validity of its NPDES permit under state law in this forum.

      . Presumably, the defendant also could have instituted an action in state court to compel DEP to promulgate the regulations that it thought were necessary.

      . The Commissioner of DEP has rejected administrative challenges to the legality of the state’s NPDES permit process. See Proposed Decision and Final Decision, In re United Technologies Corporation, Pratt & Whitney Aircraft Group, NPDES permit #CT 000 1376, Exhibits 1 and 2, attached to Affidavit of Katherine H. Robinson (executed Jan. 14, 1985) ("Robinson Aff. I’’); Proposed Decision and Final Decision, In re United Technologies Corporation, Pratt & Whitney Aircraft Group, NPDES permit It 000 1384, attached to Affidavit of Katherine H. Robinson (executed Aug. 13, 1985) ("Robinson Aff. II"). The appeals of the final decision in those cases, see Robinson Aff. I, Ex. 3; Robinson Aff. II, Ex. 3, have been withdrawn. See Robinson Aff. I, ¶ 5; Robinson Aff. II, ¶ 6.

      . Cf. Appalachian Power Co. v. Environmental Protection Agency, 579 F.2d 846, 854-55 (4th Cir.1978) (suggesting in dictum that failure to pursue a challenge in state court could deny the party standing to raise the challenge in federal court.
      Assuming arguendo that the defendant properly could attack the validity of its NPDES permit in this proceeding and that regulations underlying the permit were not properly promulgated, it is still unlikely that the defendant could prevail on this issue. First, there is authority to support the proposition that NPDES permits are enforceable prior to the adoption of supporting regulations. See Natural Resources Defense Council v. Train, 510 F.2d 692, 709 (D.C.Cir. 1974) (validity of permits issued by EPA prior to promulgation of regulations); United States v. Velsicol Chemical Corp., 438 F.Supp. 945, 950 (W.D.Tenn.1976) (same in enforcement action); United States v. Cutter Laboratories, Inc., 413 F.Supp. 1295, 1295-99 (E.D.Tenn.1976) (same). This case is clearly distinguishable from Sierra Club v. Indiana-Kentucky Electric Corporation, supra, 716 F.2d at 1153-54 (standards that state improperly promulgated under the Clean Air Act have no interim application; remedy is for EPA to implement standards). As noted above, the standards in that case had been successfully challenged in state court on procedural grounds whereas the standards in this case have not.
      Second, the defendant would not necessarily prevail, even if it is correct in arguing that the NPDES permit’s discharge limits are invalid. In this respect, the defendant’s argument proves too much. If the NPDES permit is indeed invalid, every discharge by the defendant might be illegal because no discharge is permitted in the absence of an NPDES permit. See 33 U.S.C. §§ 1311(a), 1342. The defendant’s argument that its NPDES permit, which it alleges to be invalid but never bothered to challenge, allows it to discharge effluents but imposes no enforceable duty on it to limit its discharge is unpersuasive. The result suggested by the defendant would allow it to flout its NPDES permit that it relied on and tacitly accepted for years until faced with a citizen suit in federal court that seeks to enforce the permit.

      . The defendant’s bald assertion that ‘DMR's cannot be used as the basis for strict liability under the [Act] since these reports do not accurately reflect the amount of effluents being discharged due to laboratory error[,]” see Defendant’s Memorandum III at 17, does not present a disputed issue of material fact required to avoid summary judgment pursuant to Rule 56, Fed.R. Civ.P. See Quinn v. Syracuse Model Neighborhood Corp., 613 F.2d 438, 445 (2d Cir.1980) (“litigant opposing summary judgment ‘may not rest upon mere conclusory allegations’ ... [but] must bring to the district court’s attention some affirmative indication that his version of relevant events is not fanciful”). The absence from the record of any significant evidence supporting the defendant's assertion clearly distinguishes this case from Friends of the Earth, supra, 618 F.Supp. 532, 22 Env’t Rep.Cas. at 1146 (summary judgment based on data in DMRs not appropriate where "defendant ... offered a multitude of justifications for the alleged violations, along with convincing arguments why many of the alleged violations should not actually constitute violations [e.g., typographical mistakes in the DMRs].”) The defendant’s feeble attempt to dispute the accuracy of its DMRs is less substantial than similar challenges in the cases cited in the accompanying text in which summary judgment was granted based only on defendants’ DMRs.


author: EDGAR, District Judge.

text:
    William E. TICKEL, Jr., Plaintiff, v. COMMISSIONER OF INTERNAL REVENUE, Defendant.
    No. CIV-1-85-335.
    United States District Court, E.D. Tennessee, S.D.
    Sept. 17, 1985.
    Supplemental Order Oct. 30, 1985.

      William E. Tickel, Jr., pro se.
    John W. Gill, Jr., U.S. Atty., Knoxville, Tenn., Paul M. Predmore, Atty., Tax Div., Dept, of Justice, Washington, D.C., for defendant.
   MEMORANDUM

EDGAR, District Judge.

This matter presently appears before the Court on defendant’s motion to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6). Jurisdiction of the Court arises under 26 U.S.C. § 6703(c)(2) and § 7422. This is a suit brought by a taxpayer for the recovery of a penalty assessed for an allegedly frivolous tax return wherein a partial payment of the penalty was made.

Defendant comes before this Court seeking dismissal on the basis of lack of personal jurisdiction over the Commissioner of Internal Revenue and for failure to state a claim upon which relief can be granted. The Court will treat each of these matters separately.

The first claim by defendant is that the Commissioner of Internal Revenue is not a proper party but, rather, the United States of America is the only proper defendant. 26 U.S.C. § 7422(f)(1). The defendant is correct that the Commissioner is an improper party, but 26 U.S.C. § 7422(f)(2) provides that a court shall order that the pleadings be amended to substitute the United States as a party for the Commissioner of Internal Revenue. Therefore, the Court will order that the United States be substituted for the Commissioner of Internal Revenue and that proper service be made on the new defendant. The Commissioner of Internal Revenue will be dismissed as a party defendant.

The defendant next claims that the plaintiff has not stated a claim upon which relief can be granted. Specifically, the defendant makes two claims under this heading. First, the defendant argues that the plaintiff’s argument that the Sixteenth Amendment was not validly ratified is incorrect. Second, the defendant claims that the frivolous return statute, 26 U.S.C. § 6702, was properly applied to the plaintiff. As to the first matter, the Court references all parties to its decision of September 10, 1985, in William E. Tickel v. Commissioner of Internal Revenue, Civil 1-85-307, for disposition of the claim on the Sixteenth Amendment. The Court holds here, as it did there, that the Sixteenth Amendment was properly ratified and that the statutes promulgated thereunder are effective.

The other line of attack for the defendant is that the frivolous return statute was properly applied to plaintiff. In the current matter, the frivolous return penalty was assessed against the defendant for an allegedly frivolous return when the plaintiff filed a Form 1040X, known as an amended return, for tax year 1981. As this Court stated in its memorandum filed August 21, 1985 in Beard v. Internal Revenue Service, Civil 1-85-28, the Court is not presently satisfied that the frivolous return statute was meant to apply to amended returns. As it is within the discretion of the Commissioner of Internal Revenue to accept an amended return; there is a potential for abuse of discretion since the Commissioner can accept the amended return and then assess the frivolous return penalty. Therefore, the Government’s motion to dismiss on this ground will be DENIED.

An appropriate order will be entered herewith.

ORDER

Upon motion of the defendant pursuant to Federal Rules of Civil Procedure 12(b)(2) and (6), it is ORDERED that:

1. The United States of America is substituted as a party defendant for the Commissioner of Internal Revenue and service of process shall be made on the new defendant;

2. The plaintiff’s claim that the Sixteenth Amendment was not effectively ratified is hereby dismissed; and

3. The defendant’s motion to dismiss for failure to state a claim upon which relief can be granted is hereby denied.

IT IS SO ORDERED.

SUPPLEMENTAL ORDER

The Court finding that the controlling questions in the present proceedings are ones of law relating to whether it is an abuse of discretion on the part of the Commissioner of the Internal Revenue to accept amended returns, Forms 1040X, which are frivolous, and whether 26 U.S.C. § 6702 is applicable to amended returns, Form 1040X, it is ORDERED that:

1. The parties shall prepare briefs by December 2,1985, for the Court addressing the above questions; and

2. The defendant will not be required to respond to the plaintiff’s written interrogatories, request for admissions, and notice to produce documents, until the Court has ruled on the above legal questions.

IT IS SO ORDERED.