author: ALEXANDER HARVEY, II, District Judge.

text:
    UNITED STATES of America v. John Anthony WALKER, Jr., et al.
    Crim. No. H-85-0309.
    United States District Court, D. Maryland.
    Aug. 15, 1985.

      Michael Schatzow and Robert N. McDonald, Asst. U.S. Attys., Baltimore, Md., for the Government.
    Fred Warren Bennett, Federal Public Defender and Thomas B. Mason, Asst. Federal Public Defender, Baltimore, Md., for defendant John Anthony Walker, Jr.
   MEMORANDUM DECISION

ALEXANDER HARVEY, II, District Judge.

Among the motions filed by defendant John Anthony Walker, Jr. in this criminal case is a motion to suppress all evidence allegedly seized by the government in violation of the Fourth Amendment. In particular, defendant seeks to suppress evidence seized in the early evening óf May 19,1985, when, without a warrant, government agents opened a paper shopping bag and removed and opened a package contained therein. Defendant John Walker and his son Michael Lance Walker have been charged here in a five-count indictment with espionage and related offenses.

The government opposes the motion to suppress by asserting first that the evidence seized was abandoned property and secondly that in any event the seizure and search of this bag can be justified on the basis of probable cause coupled with exigent circumstances. Memoranda in support of and in opposition to this pending motion have been filed by the parties and reviewed by the Court. It has been agreed that the Court will first rule on the abandonment issue on the basis of the testimony and other evidence presented at the pretrial suppression hearing, including defendant’s proffer. If this ruling is unfavorable to the government, the Court will then permit the government and defendant to present further testimony in support of or in opposition to portions of the proffer and also in support of or in opposition to the government’s alternative theory that the seizure of this evidence is supported by probable cause.

The testimony and other evidence presented discloses that the documents which the government seeks to introduce in evidence at trial were found in a large, brown bag of the sort used in grocery stores. The discovery and seizure of this bag and the documents contained therein resulted from surveillance of defendant undertaken by agents of the Federal Bureau of Investigation (hereinafter the “FBI”). As disclosed by Agent Wolfinger’s affidavit, on the evening of May 19, 1985, defendant drove his Chevrolet van from Norfolk, Virginia to Montgomery County, Maryland. Once in Montgomery County, defendant was observed by FBI agents as he drove along Partnership Road. At approximately 8:30 p.m., defendant brought his van to a stop on Partnership Road about 300 yards south of the intersection of Partnership Road and Whites Ferry Road. Defendant left a large brown grocery-type bag at the base of and to the rear of a utility pole. According to defendant, he left the bag to be picked up by his contact. About two minutes after this stop, defendant’s vehicle resumed its travel.

At approximately 9:19 p.m., two FBI agents arrived at the location on Partnership Road where defendant and his van had made the two-minute stop. As the agents began to examine the area just vacated by defendant, one of the FBI agents, Agent Bray, came upon the brown grocery bag in question. The bag was found in an open area at the base of a utility pole which is located on the west side of Partnership Road, about 300 yards south of the intersection created by Partnership and Whites Ferry Roads. The bag was found in underbrush some 12 feet from the road.

Following discovery of this object and without applying for a warrant, the agent made a quick inspection of the bag and noted that it contained various items of trash. Among the trash and at the very bottom of the bag, the agents discovered a package wrapped in a white plastic trash bag secured with tape. Inside the plastic package was a sealed manila envelope. That envelope contained the documents which defendant now asks this Court to suppress. The question presented is whether this was abandoned property.

In Abel v. United States, 362 U.S. 217, 240-41, 80 S.Ct. 683, 697-98, 4 L.Ed.2d 668 (1960), the Supreme Court held that the government’s warrantless search and seizure of abandoned property did not violate the Fourth Amendment. Under this and subsequent cases, one who abandons property may not be heard to complain of its seizure without a warrant.

The test for determining whether property is abandoned was most recently discussed by a judge in this Circuit in United States v. Masiello, 491 F.Supp. 1154 (D.S.C.1980). In that case, District Judge (now Circuit Judge) Chapman adopted the definition of abandonment contained in United States v. Colbert, 474 F.2d 174 (5th Cir.1973), an en banc decision of the Fifth Circuit. As the Court said in that case, the issue is not abandonment in the strict property right sense, but whether the person prejudiced by the search “had voluntarily discarded, left behind or otherwise relinquished his interest in the property in question so that he could no longer retain a reasonable expectation of privacy with regard to it at the time of the search.” See 474 F.2d at 176; see also, United States v. Williams, 569 F.2d 823, 826 (5th Cir.1978). Whether a person has maintained a reasonable expectation of privacy in the property seized is a question which must be judged by objective standards. United States v. Kendall, 655 F.2d 199, 201 (9th Cir.1981).

Applying these principles to the facts here, this Court finds and concludes that defendant John Walker had abandoned the grocery bag and all of its contents when law enforcement authorities came upon the bag and seized it on May 19,1985. The location where the bag was discovered, a roadside in a sparsely populated rural setting, clearly supports a finding of abandonment. A person who would leave at such a location what had all the appearances of a bag of trash could hardly have retained a reasonable expectation of privacy with regard to the contents of the bag. No attempt was made by defendant to protect the bag from damage from the elements or from removal by a passer-by or disturbance by an animal. Defendant had driven to the area where the bag was discovered, had made a brief stop, had placed the unprotected bag in the open and had left.

Relying on his proffer, defendant argues that he intended to return to the scene if his contact did not pick up the bag and asserts that in fact he did so return. But these circumstances hardly change the result. For some 2xk hours (and I am here accepting defendant’s proffer as to when he first returned), the bag was in a location where it could have been retrieved by any passer-by, as indeed it was by law enforcement officers.

The very nature of the grocery bag itself and of its contents supports a finding of abandonment. The bag can only be described as a trash or refuse container. The bag held items which included a soft drink bottle, a soap wrapper, a yellow tissue, a plastic napkin wrapper and similar items. No one who came upon the bag would have been justified in concluding that the last person in control of it had a reasonable expectation of privacy insofar as the bag and its contents were concerned. Garbage or trash is generally considered to be abandoned property. See United States v. Mustone, 469 F.2d 970 (1st Cir.1972); and Magda v. Benson, 536 F.2d 111 (6th Cir. 1976).

Counsel for defendant argue that his intention was not to abandon his rights in the shopping bag and its contents, but instead to transfer this property to a specific third party, or, if that failed, to retrieve it himself. But this is not a case where a defendant took reasonable steps to protect his property until it was delivered into the hands of some one else. There is little doubt that defendant intended that this property should appear to be abandoned trash. By leaving it out in the open, alongside a road, in a rural setting, he was no longer retaining a reasonable expection of privacy in the bag and its contents. Defendant’s subjective expectation of privacy under the facts here is not one that society is prepared to recognize as reasonable. See Katz v. United States, 389 U.S. 347, 361, 88 S.Ct. 507, 516, 19 L.Ed.2d 576 (1967). (Harlan, J., concurring).

There is some similarity here between the facts of this case and those in United States v. Williams, supra. There, the defendant believing that he was under surveillance, unhooked a trailer containing marijuana from his tractor and drove away. The warrantless search of the trailer was upheld by the Fifth Circuit on the ground that this was abandoned property, even though the defendant later returned to reclaim his property. Here, the defendant, believing that he might be under surveillance, took evasive action and then similarly left the property out in the open in a rural setting, intending to return. When the evidence here is considered objectively, it is apparent that defendant no longer had a reasonable expectation of privacy in the bag and its contents when he left it in the location where it was later discovered by law enforcement authorities. The evidence discloses that for 2lk hours, he gave up any such interest in the property, which remained unprotected in the open for that period of time.

The government has argued alternatively that defendant had no standing to contest the seizure by law enforcement agents of the bag in question, citing Rakas v. Illinois, 439 U.S. 128, 143-44 n. 12, 99 S.Ct. 421, 430 n. 12, 58 L.Ed.2d 387 (1978); and Rawlings v. Kentucky, 448 U.S. 98, 104-06, 100 S.Ct. 2556, 2561-62, 65 L.Ed.2d 633 (1980). Whether the analysis in this case is undertaken in terms of the concept of abandonment, or in terms of the concept of standing, the result is precisely the same. Indeed, as the Supreme Court said in the Rawlings case, the two inquiries merge into one, namely whether governmental officials violated any legitimate expectation of privacy held by the defendant. 448 U.S. at 106, 100 S.Ct. at 2562.

In United States v. Ramapuram, 632 F.2d 1149 (4th Cir.1980), the Fourth Circuit applied the principles of Rawlings in finding that the defendant had no legitimate expectation of privacy in a broken down automobile which had been placed in an open field. In upholding rulings made by the late Judge Blair of this Court, Circuit Judge Murnaghan found that the defendant had not taken precautions customarily taken by those seeking privacy and that neither his possessory interest nor his correlative right as the owner to exclude others was sufficient in that case to raise defendant’s expectations of privacy to a level of constitutional legitimacy. See 632 F.2d at 1156.

In United States v. Pruitt, 464 F.2d 494 (9th Cir.1972), the Ninth Circuit upheld seizure of marijuana in boxes found in a clump of trees, even though the officer who had made the search conceded at the time that he realized that the boxes were not being abandoned. The following comments made by the Court in that case are pertinent here:

Any casual passerby would feel perfectly free to ascertain what it was that he had found. The only justified expectation of those who had secreted [the property] was that the cache would remain secure against intrusion only so long as it remained undiscovered.

464 F.2d at 496.

For all these reasons, this Court concludes that this was abandoned property, or alternatively that defendant cannot challenge this seizure. Defendant no longer retained a reasonable expectation of privacy with respect to this bag and its contents when it was seized. Accordingly, agents of the FBI could legally seize this property without a warrant. Defendant’s motion to suppress will accordingly be denied. An appropriate Order will be entered. In view of this ruling, there is no need for an evidentiary hearing on the issue of probable cause.


source: Caselaw Access Project

license: Public Domain

text:
    UNITED STATES of America v. John Anthony WALKER, Jr., et al.
    Crim. No. H-85-0309.
    United States District Court, D. Maryland.
    Aug. 15, 1985.
    Michael Schatzow and Robert N. McDonald, Asst. U.S. Attys., Baltimore, Md., for the Government.
    Fred Warren Bennett, Federal Public Defender and Thomas B. Mason, Asst. Federal Public Defender, Baltimore, Md., for defendant John Anthony Walker.
   MEMORANDUM DECISION

ALEXANDER HARVEY, II, District Judge.

Charged in this case with espionage and related crimes, defendant John Anthony Walker, Jr., has asked this Court, inter alia, to suppress certain statements made by him during a conversation with federal law enforcement authorities after he was arrested. Defendant argues that the statements were obtained in violation of rights secured to him by the Fifth Amendment to the Constitution of the United States. Defendant’s motion seeks only to bar use of these statements in the government’s casein-chief. Defendant has conceded in his brief that the statements were voluntarily-made. However, it is urged that law enforcement officers did not comply with Miranda v. Arizona, 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694 (1966) and Edwards v. Arizona, 451 U.S. 477, 101 S.Ct. 1880, 68 L.Ed.2d 378 (1981), and that the statements should be suppressed pursuant to those rulings of the Supreme Court.

The relevant facts are as follows. In the early morning of May 20, 1985, defendant was arrested in Rockville, Maryland by several agents of the Federal Bureau of Investigation (the “FBI”). At that time, defendant was searched and advised of the identities of the arresting agents. Also, the agents informed defendant that he was under arrest for the crime of espionage. Immediately thereafter, an FBI agent informed defendant of his Miranda rights by reading to defendant the contents of the standard FBI form entitled “Interrogation: Advice of Rights” (Form FD 395, as revised 6/22/77). Defendant stated that he understood his rights and would sign that portion of the form which would evidence that he had been informed of his rights. Defendant read the form himself, stated once again that he understood his rights, and signed the form. Defendant also stated that he did not wish to waive his rights. He crossed out that portion of the form which indicates a waiver of rights by the suspect.

Defendant was then moved to the Baltimore Office of the FBI. At about 6:00 a.m. (some two hours after his arrest in Rock-ville), defendant was told that he would be questioned about the charges of espionage for which he had been arrested. An FBI agent showed defendant the advice-of-rights form referred to earlier. Defendant invoked his Miranda rights for the second time. He stated that he recognized the form, that he understood his rights, and that he wished to make no statement until he had spoken with an attorney. Five to ten minutes after defendant had invoked his Miranda rights for a second time, FBI agents showed defendant a copy of a document which had been seized by the FBI on May 19, 1985. After viewing the document, defendant stated that he had no comment to make. The agents did not then question defendant any further.

About one hour later, at 7:15 a.m., defendant, while he was waiting to be transferred to the Marshal’s lock-up, himself initiated a conversation with the agents by addressing a question to the agent. One of the agents present responded to defendant’s question, and defendant then replied to the agent’s response.

After making this reply, defendant refused to make further comment until he consulted with an attorney., The matter was not pursued further by the agents. Defendant now asks that the Court suppress the entire conversation which he had with the FBI agents at or about 7:15 a.m. on this particular morning. The Court has had an opportunity to review a report concerning what defendant said to the agents on this occasion. His comment was brief and exculpatory. Nevertheless, since the government has indicated that it wishes to use this evidence in the trial, the issue is here joined as to whether it should be suppressed.

Whenever a suspect is taken into custody and the authorities wish to interrogate him, the suspect is entitled to the procedural safeguards set out in Miranda v. Arizona, supra. One of these safeguards is the suspect’s right to consult with an attorney. Under Miranda, once a suspect expresses his desire to consult with an attorney, the suspect cannot be subjected to further interrogation, until counsel has been made available to him or until the suspect validly waives his earlier request for assistance of counsel. Edwards v. Arizona, 451 U.S. 477, 484, 101 S.Ct. 1880, 1884, 68 L.Ed.2d 378 (1981).

The rigid rule of Edwards requires two separate inquiries by the Court. First, a court must determine whether defendant actually invoked his Fifth Amendment right to counsel. Secondly, if the defendant did invoke his right to counsel, a court may admit his response to further questioning only on a finding first that defendant himself initiated further discussions with the authorities, and secondly that he knowingly and intelligently waived the right to counsel which he had previously invoked. Smith v. Illinois, — U.S. -, -, 105 S.Ct. 490, 492-93, 83 L.Ed.2d 488, 493-94 (1984). In recent years, the Supreme Court has repeatedly emphasized this restraint on police interrogation. See, e.g., Solem v. Stumes, 465 U.S. 638, 104 S.Ct. 1338, 79 L.Ed.2d 579 (1984); Oregon v. Bradshaw, 462 U.S. 1039, 103 S.Ct. 2830, 77 L.Ed.2d 405 (1983). It is apparent from these recent Supreme Court decisions that this bar on subsequent interrogation after a suspect has invoked his Miranda right to have counsel present is not affected by the fact that subsequent questioning may not be coercive. Rather, all interrogation must cease. Smith v. Illinois, supra.

Furthermore, for purposes of the Fifth Amendment and the Miranda safeguards, interrogation encompasses much more than mere questioning of a suspect. As the Supreme Court has stated in Rhode Island v. Innis, 446 U.S. 291, 300, 100 S.Ct. 1682, 1689, 64 L.Ed.2d 297 (1981):

... [T]he Miranda safeguards come into play whenever a person in custody is subject to either express questioning or its functional equivalent. That is to say, the term “interrogation” under Miranda refers not only to express questioning but also to any words or actions on the part of the police (other than those normally attendant to arrest and custody) that the police should know are reasonably likely to elicit an incriminating response ... from the suspect.

Innis, supra at 300-01, 100 S.Ct. at 1689.

Applying these principles to the facts here, this Court concludes that the statements made by defendant to FBI agents at or about 7:15 a.m. on May 20, 1985, must be suppressed. Suppression is mandated by the Supreme Court cases of Edwards v. Arizona, supra and Rhode Island v. Innis, supra. Under Edwards, when an accused has invoked his right to have counsel present during custodial interrogation, a valid waiver of that right cannot be established by showing merely that he later responded to custodial interrogation. See 451 U.S. at 484, 101 S.Ct. at 1884. This rule has been regarded as a per se bar to further interrogation after a suspect has asserted his right to counsel. See Clark v. Marshall, 600 F.Supp. 1520, 1528 (N.D. Ohio, 1985). Only when the suspect himself later initiates the further conversation with the police may there be further interrogation of him by the authorities. Edwards, supra, 451 U.S. at 485, 101 S.Ct. at 1885.

In this case, defendant clearly invoked his right to counsel. Moreover, it was the law enforcement officers who initiated the functional equivalent of further questioning when defendant was shown a copy of an incriminating document seized on May 19, 1985. As the Supreme Court made clear in the Innis case, the Miranda safeguards apply to either express questioning or its functional equivalent. See 446 U.S. at 300, 100 S.Ct. at 1689. Thus, actions taken by the police which the police should know are reasonably likely to elicit an incriminating response from the suspect amount to the functional equivalent of express questioning. Id. at 300, 100 S.Ct. at 1689.

Here, when the agents showed defendant the document in question only ten minutes after he had invoked his Miranda right to counsel, they had to know that such act was reasonably likely to elicit an incriminating response from the defendant. The document itself was incriminating in nature, and the mere showing of it to the defendant was the functional equivalent of an express question directed to him concerning his espionage activities. A response was implicitly called for, and in fact a response was later forthcoming. The mere fact that there was a delay of approximately one hour before the defendant responded by commenting on the document he had been shown is not sufficient to constitute a waiver of defendant’s right to have counsel present before he made any statement at all. Indeed, in the Edwards case there was a delay of some 24 hours, and it was found that there was no waiver. Similarly, the facts here do not show that there was any waiver by defendant of his right to counsel, a right he had earlier invoked when his Miranda rights were read to him.

Edwards and subsequent cases make clear that law enforcement authorities must cease custodial interrogation as soon as a defendant invokes his Miranda safeguards. The agents did not do so here when they showed defendant the document in question. It was thus the agents who initiated the later interrogation (or the functional equivalent thereof) in this case, and such interrogation directly led to the statements in question.

Under Edwards and Innis then, these statements cannot be used by the government as a part of its case-in-ehief. However, they may be used for impeachment purposes in cross-examination of defendant if he testifies, or, if relevant for rebuttal. See Harris v. New York, 401 U.S. 222, 91 S.Ct. 643, 28 L.Ed.2d 1 (1971). Accordingly, defendant’s motion to suppress the statements made on May 20, 1985, will be granted. An appropriate Order will be entered.


author: ROBERT L. CARTER, District Judge.

text:
    Efrain Neito CAMARA, Petitioner, v. Charles SCULLY, Superintendent Green Haven Correctional Facility, Respondent.
    No. 83 Civ. 9404 (RLC).
    United States District Court, S.D. New York.
    Sept. 4, 1985.

      Prisoners’ Legal Services, New York City, for petitioner; Randolph Z. Volkell, David C. Leven, of counsel; Peggy J. Gartenbaum (law student), on the brief.
    Kenneth Gribetz, Dist. Atty. of Rockland County, New York City, for respondent; John S. Edwards, Barbara Branch, of counsel.
   OPINION

ROBERT L. CARTER, District Judge.

I

Petitioner, convicted of murder and conspiracy in the first degree on May 16, 1974, petitions this court for a writ of habeas corpus. The case was referred to Magistrate Ruth Washington for report and recommendation. Magistrate Washington reviewed the voluminous record of this 13 year old case, along with memoranda of law submitted by petitioner and the District Attorney of Rockland County, and filed her report and recommendation on July 8, 1985, recommending that the petition be granted. The basis for the Magistrate’s determination appears to be her conclusion that there was insufficient evidence for adjudging petitioner guilty beyond a reasonable doubt, and that the cumulative effect of a series of acts of prosecutorial misconduct so seriously and wrongfully damaged petitioner’s credibility as to render the trial fundamentally unfair in violation of the 14th Amendment to the Constitution of the United States. These conclusions are contrary to those reached by the New York Court of Appeals in its review of this record. People v. Arce, 42 N.Y.2d 179, 397 N.Y.S.2d 619, 366 N.E.2d 279 (1977).

The District Attorney filed objections to the Magistrate’s report on August 2, 1985. Petitioner has moved to strike the objections on the basis of untimeliness and for costs and fees incident to this motion. The motion is denied. As indicated in his affidavit, John Edwards, Executive District Attorney for Rockland County, called the court’s deputy clerk on July 16, 1985, requesting an extension beyond the allotted 10 day period to file objections to the Magistrate’s report. He was granted an extension until July 26, 1985. On July 25, 1985, a further extension to August 2, 1985, was granted. The objections were filed and served on August 2; 1985, and are therefore timely.

In view of the objections, the court is required to review the record de novo. Based on such review, the court declines to adopt the Magistrate’s report and recommendation and concludes that the petition must be denied and dismissed.

A brief summary of the facts may be instructive. Petitioner and a codefendant, George Arce, were tried for the murder of two men. Petitioner took the witness stand as did Rafael Martinez Perez, an accomplice, who testified for the prosecution. They both agreed that early Monday morning, April 30, 1973, the two of them drove in Perez’s car to Rockland County, parked at Mt. Ivy Diner adjacent to an exit of the Palisades Parkway from which they could monitor traffic going southbound on that highway. A blue Mustang, driven by John Morales, with Manuel Carrero sitting in the passenger seat, appeared. Perez and petitioner drove onto the highway in pursuit of the Mustang. Perez caused his car to collide with Morales’ car. When Morales left his car, he was shot dead, and Carrero, the passenger who tried to run away, was also killed. Both also agreed that no other car or persons were involved in the incident. Perez and petitioner were apprehended by the police when attempting to leave the area on foot. The two men disagreed on the issue of culpability. Perez testified that Camara shot Morales, and at Camara’s instructions, he shot Carrero. According to Camara, after the collision, Morales and Perez got into an argument. Morales drew a gun. Perez struggled with him and the gun went off, and then Perez shot Carrero.

During the trial the prosecutor sought to introduce incriminating statements made by Camara’s codefendant, George Arce, who did not testify. He asked a series of objectionable questions of Camara. Camara was asked about his use of illegal drugs, to which Camara responded in the negative. The prosecutor pursued the matter by asking if he sold illegal drugs. Objections to this question was sustained. The prosecutor asked Camara whether he had told the police about the shooting when picked up. Objection to that question was sustained, although the objection to a similar question by codefendant Arce’s counsel had been overruled, and petitioner had responded in the negative.

The prosecutor on cross-examination asked Camara whether he wanted to know exactly what Perez was saying to the District Attorney so that he could work out a plea and say the same thing Perez was saying and say the same thing when Camara testified against Arce. After a bench conference, the question was withdrawn and the court instructed the jury to disregard it. The prosecutor also made some inflammatory remarks on summation, but petitioner made no objection to these remarks.

This case was appealed to the Appellate Division, Second Department and affirmed with one judge dissenting. 50 A.D.2d 932, 377 N.Y.S.2d 201 (2d Dep’t.1975). Judge Margett in dissent found the “comments made by the prosecutor during summation were so prejudicial as to deprive defendant of a fair trial”. Id., 377 N.Y.S.2d at 202. The case was appealed to the Court of Appeals and affirmed without dissent. People v. Arce, supra, 42 N.Y.2d 179, 397 N.Y.S.2d 619, 366 N.E.2d 279 (1977).

II

After conviction in a criminal case, a reviewing court is required to consider the evidence in the light most favorable to the prosecution. United States v. Ayala, 769 F.2d 98, 103 (2d Cir.1985); United States v. Esdaille, 769 F.2d 104, 108 (2d Cir.1985); United States v. Borello, 766 F.2d 46 (2d Cir.1985); United States v. Singh, 628 F.2d 758 (2d Cir.1980), cert. denied, 449 U.S. 1034, 101 S.Ct. 609, 66 L.Ed.2d 496 (1980). Moreover, the same rule applies when reviewing a habeas corpus petition of a defendant in state custody. The evidence must be viewed in the light most favorable to the prosecution. Mallette v. Scully, 752 F.2d 26, 32-33 (2d Cir.1984). The Magistrate failed to apply this standard. On the contrary, she considered the evidence in the light most favorable to petitioner, as if she were considering a motion to dismiss or motion for acquittal at the close of the prosecution’s case and before conviction. In applying the wrong yardstick, she committed plain error.

A federal court on a petition for writ of habeas corpus may interfere in state criminal proceedings only to correct errors of constitutional dimension, Wainwright v. Goode, 464 U.S. 78, 83, 104 S.Ct. 378, 382, 78 L.Ed.2d 187 (1983); Engle v. Isaacs, 457 U.S. 1141, 102 S.Ct. 2976, 73 L.Ed.2d 1361 (1982); Smith v. Phillips, 455 U.S. 209, 102 S.Ct. 940, 71 L.Ed.2d 78 (1982), and in ruling on the petition, the federal reviewing court is not to overturn a factual conclusion of a state court unless the conclusion is not “fairly supported by the record.” Wainwright v. Goode, supra, 464 U.S. at 83, 104 S.Ct. at 382, quoting from Sumner v. Mata, 449 U.S. 539, 545-547, 101 S.Ct. 764, 768-769, 66 L.Ed.2d 722 (1981).

This case has been considered and examined fully by three state courts. The New York State Court of Appeals, unlike the Magistrate, found “overwhelming proof to contradict” defendant’s story that he was an innocent bystander. People v. Arce, supra 42 N.Y.2d at 186, 397 N.Y.S.2d at 622, 366 N.E.2d at 282. It cited the testimony of Henry Goldman and Rocco Marino as contradicting defendant’s version of the facts. It relied on the testimony of a Felix Burgos, whose testimony the Magistrate discounts as tainted, and Burgos’ fiancee, Minerva Cuadro, who testified that they had seen Arce, Perez and Camara together the night before the killings, in contradiction to Camara’s testimony that he had never met Arce until after his arrest. The car identified by those two witnesses as the one in which they had seen Arce and Camara was identified as a vehicle rented by Arce.

The Magistrate sets forth these findings in her report. Then adds “According to petitioner’s counsel, however, the record shows that Goldman ... did not see someone specifically inspecting the rear of the car.” Report and Recommendation at 14. She further adds: “Counsel points out that the record indicated witness Marino saw nothing relevant to petitioner’s alleged involvement in the crime and that therefore his testimony was not confirmatory.” Id. The Magistrate found the Court of Appeals’ reliance on the testimony of Felix Burgos, a friend of codefendant Arce for ten years, to support its finding that the evidence established petitioner’s guilt beyond a reasonable doubt, suspect because of Burgos’ own interest in not being prosecuted. Further, the Magistrate considered the testimony of Cuadro, relied on by the Court of Appeals, inadequate because such reliance occurred two years after Cuadro recanted her testimony concerning the points the Court of Appeals recited. Id. 14-15. This approach was error.

The testimony of Goldman and Marino can readily be read as showing that petitioner lied, and Marino’s testimony clearly confirms Goldman’s version of what happened. That they might be read differently is beside the point. We are bound by the state court’s reading unless it is clearly erroneous and the error is of constitutional dimension. That the state courts read the evidence at odds with the Magistrate’s view presents no constitutional issue. Moreover, as to the recantation of Cuadro, such reversals are in general “looked upon with the utmost suspicion.” United States ex rel. Rice v. Vincent, 491 F.2d 1326, 1332 (2d Cir.1974). Reliance on testimony which has been recanted, even if considered erroneous, cannot carry consequences constituting constitutional deprivation.

The Court of Appeals also found the testimony of Perez sufficiently corroborated to go to the jury. Under federal standards, Perez’s testimony need not be corroborated. It is sufficient if the jury believes the defendant guilty beyond a reasonable doubt. Hence no issue of constitutional dimension can be taken with the Court of Appeals applying a stricter state standard and finding it having been met.

The Court of Appeals found that whether Burgos was an accomplice was a question of fact. The trial judge submitted the issue to the jury with appropriate instructions.

The fact that a defendant is silent at the time of his arrest may not be used to impeach him at trial, Doyle v. Ohio, 426 U.S. 610, 96 S.Ct. 2240, 49 L.Ed.2d 91 (1976), and the questions put by the prosecutor to Camara in this regard were unquestionably improper. As the Court of Appeals pointed out, however, the trial judge, after sustaining the objection, immediately advised the jury that when arrested, a defendant is under no legal obligation to say anything to the police and no unfavorable inferences were to be taken against him because Camara was silent. The judge underscored this comment by reminding the jury that as he had advised them previously, a defendant “does not have to prove or disprove anything.” The Court of Appeals on the basis of these curative instructions found the improper questions put by the prosecutor to be harmless error. People v. Arce, supra, 397 N.Y.S.2d at 624, 366 N.E.2d at 284. That conclusion in the circumstances of this case seems eminently correct and clearly does not reach the constitutional level warranting federal interference.

Finally, on the issue of prejudicial remarks during summation, which seems to have influenced the Magistrate to conclude that Camara had been denied a fair trial, petitioner did not raise this issue as a basis for issuance of the writ. If this was an appropriate issue, therefore, it was waived. Even if not waived, improper prosecutorial statements cannot provide the basis for federal habeas corpus relief. As this court has indicated in discussing that issue raised in a petition for a writ of habeas corpus filed by Camara’s codefendant Arce:

It is, however, well established that federal habeas corpus relief is not available on the basis of improper prosecutorial statements at trial ‘unless the errors, either singly or together, were so fundamentally unfair as to deny the defendant a fair trial.’ Orr v. Schaeffer, 460 F.Supp. 964, 966 (S.D.N.Y.1978) (footnote omitted); see also Donnelly v. DeChristoforo, 416 U.S. 637, 94 S.Ct. 1868, 40 L.Ed.2d 431 (1974); Malley v. Manson, 547 F.2d 25 (2d Cir.1976), cert. denied, 430 U.S. 918, 97 S.Ct. 1335, 51 L.Ed.2d 598 (1977); United States ex rel. Colon v. Follette, 366 F.2d 775 (2d Cir.1966). The prosecutor’s summation at Arce’s trial was not so prejudicial. See Malley v. Manson, supra, at 28. The record shows that, with but one exception, counsel for petitioner made no objections during the prosecutor’s summation. Indeed, the single objection which was made was sustained by the trial judge, who gave a curative instruction. While failure so to objéct does not work a waiver of the right to raise a claim on federal habeas corpus, it is nonetheless, a factor to be considered in determining the extent of the prejudice caused by the prosecutor’s statement. Id. It is noteworthy, moreover, that during his summation Arce’s counsel made remarks concerning the credibility of his own witness which were analogous to those now objected to by Arce.

Arce v. Henderson, 477 F.Supp. 71, 74 (S.D.N.Y.1979) (Sweet, J.), aff'd, 636 F.2d 1200 (2d Cir.1980), cert. denied, 451 U.S. 914, 101 S.Ct. 1989, 68 L.Ed.2d 305 (1981).

While the prosecutor was clearly overzealous, the trial court throughout was careful to advise the jury that the questions were not evidence and no inference could be taken because a question was asked, and that the jury had to consider the question together with its response. Every time the prosecutor overstepped appropriate bounds, the judge sustained objections and carefully advised the jury to disregard and not be influenced by the impropriety.

These instructions were proper and were sufficiently curative to offset any prejudice the prosecutor’s acts may have injected into the trial. I am satisfied that the errors committed by the prosecutor in light of the curative action of the trial court were harmless beyond a reasonable doubt and, therefore, even if of constitutional dimension, are not sufficient to warrant issuance of the petition. Chapman v. California, 386 U.S. 18, 24, 87 S.Ct. 824, 828, 17 L.Ed.2d 705 (1967).

The petition for a writ of habeas corpus is denied and the petition is dismissed.

IT IS SO ORDERED.


author: O’KELLEY, District Judge.

text:
    Carolyn Osborne ROSS v. William H. MATHIS, et al.
    Civ. A. No. C-84-1309-A.
    United States District Court, N.D. Georgia, Atlanta Division.
    Sept. 11, 1985.

      John C. Gray, Atlanta, Ga., for plaintiff. Paul W. Stivers, Atlanta, Ga., for defendants.
   ORDER

O’KELLEY, District Judge.

Presently pending is defendants’ motion for arbitration and to stay this action pending arbitration. The court held a hearing on the matter on August 7, 1985. Upon review, the court grants defendants’ motion.

Plaintiff Carolyn Ross brings this action against defendants William H. Mathis and Bear Stearns and Company claiming violations of the Securities Exchange Act of 1934 (the 1934 Act), 15 U.S.C. §§ 78a, et seq., Rule 10b-5, 17 C.F.R. § 240.10b-5; the Racketeer Influenced and Corrupt Organizations Act, (RICO), 18 U.S.C. §§ 1961 et seq., and also for breach of fiduciary duty and contract, and negligence. The facts as Ross alleges them in her complaint are as follows. She was a very rich widow when she met Mathis, a stockbroker with Bear Stearns. The two developed “a close and trusting relationship,” (Complaint at 8), and apparently were romantically involved. Ross moved to Atlanta from Birmingham, Alabama to be with Mathis. Their relationship continued until late 1978 or early 1979. They remained friends until 1984.

Soon after their relationship began, they discussed ways to invest Ross’ inheritance, approximately $1,000,000.00. Ross allegedly informed Mathis that she wanted safe investments to produce a steady income. Mathis assured Ross that if she entrusted the money to him, he would invest it so that she would receive $5,000 per month for life. He also stated that most of her money would be placed in long-term municipal bonds. In reliance on his statements, Ross put approximately $900,000.00 into a trading account with Bear Stearns to be managed by Mathis. She also opened a discretionary stock account which authorized Mathis to act in Ross’ behalf. Mathis told Ross that she need not read her statements and that he would keep her informed.

Initially, Mathis invested Ross’ money in municipal bonds and made some small speculative investments which did not involve much risk. Later, however, Mathis began to violate Ross’ expressed investment goals, by inter alia investing large amounts into highly speculative investments without informing her, selling her municipal bonds to finance these purchases and keep a steady cash flow, and by trading excessively. Ross was unaware of this because she followed Mathis’ instructions not to open the statements, and believed his continuing representations. In August, 1983, Ross became aware of problems with the account. .In October, 1983, she received a margin notice from Bear Stearns about her problems. She phoned Mathis, who was unresponsive, although at first he expressed concern. Ross finally closed her account and transferred it to a different broker. Currently, it is valued at $90,-000.00.

Defendants denied Ross’ allegations apd filed a motion to sever and stay and a demand for arbitration. Ross opposed this motion. After the United States Supreme Court’s decision in Dean Witter Reynolds, Inc. v. Byrd, — U.S. -, 105 S.Ct. 1238, 84 L.E.2d 158 (1985), defendants moved to amend their prior motions by withdrawing their request for severance and to stay arbitration. They now request that all claims be arbitrated and this litigation stayed until after arbitration. Ross opposes this request.

Defendants seek arbitration based on a clause in the Customer’s Agreement between Ross and Bear Stearns. The clause reads in pertinent part as follows:

7. ... Any controversy arising out of or relating to my cash and/or margin accounts to [sic] transactions with you for me or this agreement or the breach thereof shall be settled by arbitration in accordance with the rules, then in effect, of the National Association ... as I may elect. If I do not make such election by registered mail addressed to you at your main office within 5 days after demand by you that I make such election, then you may make such election. Judgment upon any award rendered by the arbitrators may be entered in any court having jurisdiction thereof.

(Customer’s Agreement, Ex. A to Defendants’ Motion to Sever and Stay, at 2). Ross signed the Agreement.

The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (the Arbitration Act) governs arbitration agreements made in contracts which concern transactions involving commerce. Under § 2, a written provision in a contract

to settle by arbitration a controversy thereafter arising out of such contract ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Id. § 2. Section 3 permits the court to stay proceedings pending arbitration if the court is “satisfied that the issue involved ... is referable to arbitration” under an arbitration agreement. Id. § 3. If a party to an agreement refuses to arbitrate, the other side may bring an action to compel, and the court after hearing the parties and “being satisfied that the making of the agreement for arbitration or the failure to comply therewith is not in issue,” shall direct the parties to arbitrate. Id. § 4. “If the making of the arbitration agreement or the failure ... to perform the same be in issue, the court shall proceed summarily to the trial thereof.” Id.

The Arbitration Act was designed to alleviate traditional judicial hostility to arbitration and to establish a federal policy in favor of arbitration. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., — U.S. -, 105 S.Ct. 3346, 87 L.E.2d 444 (1985). By its terms, the Arbitration Act does not provide for discretion. It “mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Byrd, 105 S.Ct. at 1241 (emphasis in original).

The court first must determine whether the parties agreed to arbitrate the dispute. Mitsubishi, 105 S.Ct. at 3354. To do so, it must look to the body of substantive federal law of arbitration. Moses H. Cone Mem. Hosp. v. Mercury Constr. Co., 460 U.S. 1, 22, 103 S.Ct. 927, 940, 74 L.Ed.2d 765 (1983). That law dictates that questions of arbitrability be addressed with healthy regard for the federal policy favoring arbitration; doubts regarding the scope of the agreement should be resolved in favor of arbitration. Mitsubishi, 105 S.Ct. at 3354 (citing Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct at 941-42). The parties’ intentions control, but those intentions are generously construed to support arbitrability. Mitsubishi, 105 S.Ct. at 3354. The court should be attuned to well grounded claims that “the agreement to arbitrate resulted from the sort of fraud or overwhelming economic power that would provide grounds ‘for the revocation of any contract.’ ” Id.

Initially, the court notes that the agreement covers Ross’ other causes of action including those under the 1934 Act, Rule 10b-5, and RICO. The agreement provides that any controversy arising out of the accounts, the agreement, or for breach thereof, will be settled by arbitration. (Customer Agreement, at 2). All of Ross’ allegations, including her statutory claims, arise out of the defendants’ handling of accounts governed by the agreement. Thus, the agreement covers all of Ross’ claims.

Ross argues that her claims should not be arbitrated for several reasons. First, she argues that the claims against Mathis should not be arbitrated because he is not a party to the agreement. Although Mathis did not sign the agreement, the causes of action against him may be arbitrated. Every allegation against him arises out of his handling of Ross’ account as a Bear Stearns employee. Her damages are predicated on Mathis’ alleged breach of a myriad of state and federal duties concerning her account at Bear Stearns. Ross’ assertions based upon her trust in Mathis due to their relationship do not change this fact. Any breach of trust dealt with Mathis’ actions regarding Ross’ accounts with Bear Stearns. Thus, her case against Mathis is based solely on her account, which the arbitration agreement covers.

Ross also argues that no agreement to arbitrate existed, claiming that no contractual relationship is present. She submitted an affidavit stating that Mathis instructed her to sign the agreement, telling her that it was a mere formality and that she did not need to read it. She also alleged that she did not understand or agree that she could not seek an attorney’s assistance or file a lawsuit if she had a dispute. Additionally, she claimed that she never agreed to arbitrate, and that she did not read the agreement. Defendants contend that Ross alleges that the entire agreement was procured by fraud, undue influence, and like claims, but not that the arbitration clause was so obtained. Thus, she is not entitled to a jury trial and the claims must go to arbitration.

A claim of fraud in the inducement of the making of the entire contract can be decided by the arbitrator. Only if fraud is alleged in the making of the specific arbitration clause itself will the court become involved in the determination. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404, 406, 87 S.Ct. 1801, 1806, 1807, 18 L.Ed.2d 1270 (1967). If a plaintiff claims duress, unconscionability, coercion, or confusion in signing the customer agreement, an arbitrator may decide these issues because they go to the formation of the contract as a whole, rather than to the issue of misrepresentation in the signing of the agreement to arbitrate. Merrill Lynch, Pierce Fenner & Smith v. Haydu, 637 F.2d 391, 398 (5th Cir. Unit B 1981). The party resisting arbitration has the burden of showing entitlement to a jury trial. Id. at 398 n. 12.

In the instant case, Ross clearly is claiming that the entire agreement was procured by fraud. Although she alleges that she did not read the agreement and did not have knowledge of nor agree to the arbitration clause itself, her complaint is that she was induced into signing the entire agreement. Additionally, at the hearing Ross’ attorney admitted that she was denying the validity of the entire agreement, not only the arbitration clause. Thus, Prima Paints dictates that the issue of the agreement’s existence and validity go to arbitration. See also Ruby-Collins Inc. v. City of Huntsville, 748 F.2d 573, 576 (11th Cir.1984); Ultracashmere Houses, Ltd v. Meyer, 664 F.2d 1176, 1184 n. 17 (11th Cir.1981).

Ross also contests the arbitrability of her claims under the 1934 Act, Rule 10b-5, and RICO. Notwithstanding the agreement’s technical applicability to the causes of action, a question exists as to the arbitrability of 1934 Act and RICO claims. To comprehend the current state of the law, the court will review the judicial treatment of statutory claims arbitrability. In the landmark case of Wilko v. Swan, 346 U.S. 427, 74 S.Ct. 182, 98 L.Ed. 168 (1953), the Supreme Court held that claims arising out of the Securities Act of 1933, 15 U.S.C. §§ 77a et seq. (the 1933 Act), are nonarbitrable. The Court based this holding primarily on two provisions in the 1933 Act. Section 12 states that any person who violates the 1933 Act’s strictures “shall be liable to the person purchasing such security from him, who may sue either at law or in equity in any court of competent jurisdiction.” 1933 Act § 12, 15 U.S.C. § Til. Section 14 provides that

Any condition, stipulation, or provision binding any person acquiring any security to waive compliance with any provision of this subchapter or of the rules and regulations of the Commission shall be void.

1933 Act, § 14, 15 U.S.C. § 77n.

The combination of these provisions caused the Court to hold 1933 Act claims nonarbitrable. First, § 12 grants a private right of action to one injured by a violation of the 1933 Act. Second, § 14 prohibits a person protected by the 1933 Act from waiving any provision of that Act. A person thus cannot waive his statutory right to sue in a court. 346 U.S. at 434-35, 74 S.Ct. at 186-87. An agreement to arbitrate does just that, and is invalid. Id. The Court conceded that the Arbitration Act propounds a strong federal policy in favor of arbitration. Id. at 438, 74 S.Ct. at 188. The language of the 1933 Act, and its purpose of protecting securities purchasers, mandated that the Court deny arbitration of 1933 Act claims. Id.

Lower federal courts expanded the holding in Wilko to encompass complaints brought under the 1934 Act. See, e.g., Belke v. Merrill Lynch, Pierce Fenner & Smith, 693 F.2d 1023, 1025 (11th Cir.1982); Sibley v. Tandy Corp. 543 F.2d 540, 543 & n. 3 (5th Cir.1976). In Scherk v. Alberto Culver Co., 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974), however, the Court questioned Wilko’s applicability to 1934 Act claims, because its provisions differ from those of the 1933 Act, and because the latter, unlike the former, expressly gives a private right of action. 417 U.S. at 513-14, 94 S.Ct. at 2454-55. Notwithstanding its concerns, the Court did not hold that Wilko was inapplicable in a 1934 Act case. Instead, the Court found that claims under the 1934 Act in an international transaction were arbitrable. Id. at 515-20, 94 S.Ct. at 2455-58.

Defendants cite Byrd as authority for the arbitrability of 1934 Act claims. Unfortunately, the Court did not decide the issue in Byrd. While noting that Scherk questioned Wilko’s applicability to 1934 Act claims, the Court declined to resolve the question because the issue was not properly before it. Byrd, 105 S.Ct. at 1240 n. 1. In his concurrence, Justice White noted that this was a question of substantial doubt, id. at 1244, and that it remained open, id. He stated that the 1933 Act provided for a private right of action, which the 1934 Act did not, although one has been implied by the courts. Wilko’s solicitude for the federal securities cause of action is not necessarily appropriate when the cause is judicially implied and not statutorily created. Also, the Acts differ; the 1934 Act is narrower and limits actions to federal court. Id.

Most recently, the Court dealt with the arbitrability of antitrust claims in an international setting in Mitsubishi. The Court noted that statutory claims as a whole are not free from arbitration merely because they are based on statutes. 105 S.Ct. at 3353. Courts must rely on congressional intent expressed in a particular statute to identify claims that are nonarbitrable. Parties should be held to arbitration unless congressional intent is otherwise. Id. at 3355.

The preceding discussion makes clear that the trend in Supreme Court decisions is toward arbitrability of an increasing variety of statutory claims. The Court has stressed repeatedly the importance of the Arbitration Act and the favor with which federal policy views arbitration. Mitsubishi, 105 S.Ct. at 3354; Byrd, 105 S.Ct. at 1242; see e.g., Moses H. Cone, 460 U.S. at 24, 103 S.Ct. at 941. Additionally, Mitsu bishi requires arbitration of statutory claims unless the statute evinces congressional intent to be exempt from arbitration. Mitsubishi, 105 S.Ct. at 3355.

In the instant action, the framework espoused by Mitsubishi indicates that 1934 Act claims should be arbitrable. Mitsubishi requires the court to conduct a two-step inquiry, first determining whether the parties’ agreement to arbitrate reaches statutory issues and if so, whether legal constraints outside the agreement foreclose arbitration. Id. The court earlier determined that the agreement to arbitrate covered the statutory claims. A consideration of the second step hinges upon Congress’ intent in enacting the 1934 Act. That Act contains a provision forbidding waiver of any right secured therein. 1934 Act § 29(a), 15 U.S.C. § 78cc(a). This language is similar to § 14 in the 1933 Act. Unlike the 1933 Act, the 1934 Act does not provide expressly for a private right of action. See Byrd, 105 S.Ct. at 1240 n. 1.

This distinction between the statutes is crucial. A party “should be held to [its bargain to arbitrate] unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue.” Mitsubishi, 105 S.Ct. at 3355. In the 1933 Act, Congress displayed just such an intent. Waiver of a privilege afforded by the statute, the private right of action, is prohibited. The 1934 Act also disapproves waiver of statutory rights, but the private right of action is a judicial, not statutory, creation. The anti-waiver provision thus does not cover the right of action, and a party is free to waive it. In the instant action, the parties agreed to arbitrate all issues arising out of Ross’ margin accounts. She thus waived her right to litigate these matters exclusively in federal court. The 1934 Act claims are arbitrable.

Defendants also urge the court to submit Ross’ RICO claims to arbitration. This arbitrability of RICO allegations is an open question in this circuit. Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352, 1361 (11th Cir.1985). Unlike the 1934 Act, RICO grants an explicit private right of action. 18 U.S.C. § 1964(c). Unlike both Acts, RICO does not include a non-waiver provision. Nothing in RICO shows Congress’ intent to “preclude a waiver of judicial remedies.” Mitsubishi, 105 S.Ct. at 3355. Thus, RICO claims may be arbitrated.

In holding that 1934 Act and RICO claims are arbitrable, the court is aware of public policy considerations implicit in both statutes. The 1934 Act’s purpose is to provide a healthy environment for the securities exchange market. Its enforcement is necessary to protect the market and the public. RICO was enacted to prevent and reverse infiltration of legitimate business by organized crime elements. S.A. Mineracao da Trindade-Samitri v. Utah Int’l, Inc., 576 F.Supp. 566 (S.D.N.Y.1983), aff'd 745 F.2d 190 (2d Cir.1984).

Obviously, these are important policies. The policies espoused by the Arbitration Act, however, also are important. The trend of Supreme Court cases has been stressing the significance of the Arbitration Act, allowing it to prevail over other policy considerations. Finally, the Court in Mitsubishi has indicated the paramount importance of the Arbitration Act by requiring any other statute claiming to override it to clearly indicate that intent. Mitsubishi, 105 S.Ct. at 3353-55. These factors demonstrate that absent contrary congressional intent, statutory claims are arbitrable. The court finds that all claims are arbitrable. The Arbitration Act thus mandates that this court order the parties to proceed to arbitration. Defendants’ motion to compel arbitration and stay this litigation is granted.

      . In Moses H. Cone, the Court noted that plaintiff had disputes with the builder and the architect for indemnification. The latter dispute was not subject to arbitration because no arbitration agreement existed between plaintiff and the architect. In Brown v. Dean Witter Reynolds, Inc.,
        601 F.Supp. 641 (S.D.Fla.1985), the court held that the arbitration clause was broad enough to include disputes arising out of business between plaintiff and other employees who did not sign the agreement.
      The instant suit is more similar to the Brown case in that the causes of action arose out of the employee defendants' dealings with plaintiffs accounts which the contract covered. In Cone, the architect was not employed by the builder and was not covered by the contract.

      . Ross originally did not assert that an arbitration agreement was nonexistent, but did so only after defendants filed their motion.

      . Ross cited Par-Knit Mills Inc. v. Stockbridge Fabrics Co., 636 F.2d 51 (3d Cir.1980) to support her contention. The court in Par-Knit held that if any doubt was present as to the existence of an express unequivocal agreement to arbitrate, the court should give the party opposing arbitration all reasonable doubts and should submit the matter to the jury. Id. at 54. Of course, Par-Knit is not binding on this court. Additionally, the federal "bias'’ in favor of arbitration expressed in Moses H. Cone, Byrd, and Mitsubishi indicate that Par-Knit’s formulation is incorrect.

      . But see Barrentine v. Arkansas-Best Freight System Inc., 450 U.S. 728, 744-45, 101 S.Ct. 1437, 1446-47, 67 L.Ed.2d 641 (1981) (claims under Fair Labor Standards Act (FLSA) not arbitrable); Alexander v. Gardner-Denver Co., 415 U.S. 36, 56-57, 94 S.Ct. 1011, 1023-24, 39 L.Ed.2d 147 (1974) (Title VII claims not arbitrable). In his dissenting opinion in Mitsubishi, Justice Stevens pointed to these cases as examples of the natural distinction between statutory and contractual rights. 105 S.Ct. at 3365-66. He asserted that statutory rights should be nonarbitrable. Id. Of course, the majority in Mitsubishi did not agree.
      One distinction between the Court’s handling of Alexander and Barrentine on the one hand and Mitsubishi on the other is that the latter dealt with international transactions.
      Another difference is that Barrentine and Alexander concerned not the Arbitration Act but statutes encouraging collective bargaining and arbitration of labor disputes. Barrentine, 450 U.S. at 734-35, 101 S.Ct. at 1441-42; Alexander, 415 U.S. at 47, 94 S.Ct. at 1019. An arbitration clause in a collective bargaining agreement concerns workers as union members. 450 U.S. at 737, 101 S.Ct. at 1443; 415 U.S. at 51, 94 S.Ct. at 1021. A claim under Title VII and the FLSA devolve on a worker as an individual. 450 U.S. at 739, 101 S.Ct. at 1444; 415 U.S. at 51, 94 S.Ct. at 1021. In Alexander, the Court found that Title VII provided for non-judicial review but clearly granted the right to a de novo hearing in court. 415 U.S. 47-48, 94 S.Ct. at 1019-20. Finally, the Court stressed that Congress placed special emphasis on these statutes. 450 U.S. at 740-41, 101 S.Ct. at 1444-45; 415 U.S. at 51, 94 S.Ct. at 1021. The FLSA protects workers from substandard wages and oppressive hours, 450 U.S. at 739, 101 S.Ct. at 1444; Title VII vindicates workplace deprivations of constitutionally protected rights, 415 U.S. at 51, 94 S.Ct. at 1021. Both statutes override the labor law provisions in question.
      The cases noted that a labor law arbitrator might be unfamiliar with FLSA and Title VII law. 450 U.S. at 743-44, 101 S.Ct. at 1446-47; 415 U.S. at 57, 94 S.Ct. at 1024. This is one argument against arbitrating statutory securities claims. Whether the distinctions set forth supra will remain viable after Mitsubishi must be decided in future cases.

      . The discussion of arbitrability of 1934 Act claims includes violations of Rule 10b-5. The Court in Wilko found that the 1933 Act provided a wide variety of fora in which a litigant could sue. 346 U.S. at 435, 74 S.Ct. at 186. The 1934 Act provides access only to federal court. Byrd, 105 S.Ct. at 1244 (White, J., concurring) (citing 15 U.S.C. § 78aa).

      . Congress may have omitted a RICO nonwaiver provision because in a typical scenario it would be unnecessary. For example, a shopkeeper is approached by an organized crime henchman for protection money. Any "contract" between the two undoubtedly would not contain an agreement to arbitrate. In the instant case, the parties signed a contract with such a clause. The RICO claims arose under the contract and are covered by the agreement. Congress did not provide that such a waiver is void. Perhaps with the increased use of RICO outside the traditional organized crime situations and in "normal” contractual relationships, a nonwaiver provision would be warranted. Until Congress so finds, however, the court will not imply one.

      . The United States Court of Appeals for the Second Circuit affirmed the decision in S.A. Mineracao. The court did not pass upon the arbitrability of RICO claims. See 579 F.Supp. 1049 (S.D.N.Y.1984) (certification of the appeal).
      Both the district and appellate decisions were rendered prior to Byrd and Mitsubishi.

      . Ross does not allege that her state law claims are non-arbitrable, but that no contract exists. Thus, no dispute exists concerning the arbitrability of the state law contentions.

      . Parties to a contract are free to exclude statutory claims from arbitration. Mitsubishi, 105 S.Ct. at 3355. The parties of course might not know which statutory claims they may have later. Until Congress explicitly states its intent to bar arbitration in certain statutory litigation, the court must adhere to the Mitsubishi ruling and require arbitration.


author: DAVID V. O’BRIEN, District Judge.

text:
    Leonard DOMINIC, Plaintiff, v. HESS OIL VIRGIN ISLANDS CORP. and Shell Oil Co. of Puerto Rico, Ltd., Defendants. and HESS OIL VIRGIN ISLANDS CORP., Third Party Plaintiff, v. COMMUNICATIONS SYSTEMS & MAINTENANCE CORPORATION, Third Party Defendant.
    Civ. No. 1984/202.
    District Court of Virgin Islands, D. St. Croix.
    Sept. 17, 1985.

      Britain H. Bryant and Stacy L. White, Christiansted, St. Croix, Virgin Islands, for Hess Oil Virgin Islands Corp.
    Wilfredo Geigel and Michael F. Ross, Christiansted, St. Croix, Virgin Islands, for Communications Systems & Maintenance Corp.
   MEMORANDUM OPINION ■

DAVID V. O’BRIEN, District Judge.

We deal in this case with yet another indemnification agreement dispute between Hess Oil Virgin Islands Corporation (“HOVIC”) and businesses which do construction and maintenance work at its St. Croix refinery. HOVIC has continually refined its contract documents as each court has interpreted these agreements, seeking to close any and all loopholes to make them legally airtight.

In this case, HOVIC has succeeded.

I FACTS

Leonard Dominic (“Dominic”) was working for Communications Systems & Maintenance Corporation (“CS&M”) at the HOVIC refinery on July 12, 1983, when he was injured. He alleged that he was working with a cleaning solvent when he became ill, lost consciousness and fell. He claimed that HOVIC failed to warn him of the hazard involved in the inhalation of the solvent, and that this proximately caused his injuries.

CS&M was involved at HOVIC pursuant to a standard contract with attached indemnification clause made a part of that contract. This contract provided that CS&M would:

indemnify, hold harmless and defend HOVIC and its affiliates, successors and assigns, specifically including but not limited to St. Croix Petrochemical Corporation, up to the gross sum of the first $3,000,000 for each occurrence, from and against any and all demands, liability, losses, damages and/or expenses which HOVIC or SCPC may suffer or SCPC may be liable by reason of injury (including death) to any person or damage to any property arising out of or in any manner connected with the operation to be performed under this purchase order, whether or not due in whole or any part to any act, omission or negligence of HOVIC or SCPC or any of its representatives or employees or by any other person. Seller agrees to this notwithstanding and regardless of the Virgin Islands Comparative Negligence Statute, Title 5, V.I.C. Section 1451.

When Dominic filed this action against HOVIC, it in turn tendered the defense to CS&M. When CS&M rejected the tender, HOVIC filed a third party action and proceeded to defend itself while pressing its contractual indemnification claim against CS&M.

Dominic, meanwhile, discovered that Shell Oil Company or an affiliate might also have potential liability as the manufacturer of the cleaning solvent which he claimed caused his injuries. He promptly added Shell as a defendant.

After considerable discovery, HOVIC sensed an opportunity to settle its case with Dominic. Negotiations led to a settlement for $50,000, with Dominic free to continue his case against Shell. HOVIC notified CS&M that it had reached the settlement and demanded it be indemnified for the settlement amount. CS&M ignored the letter. HOVIC completed the settlement without the involvement of either CS&M or CS&M’s insurance carrier.

Now, HOVIC moves for summary judgment on its indemnity claim, arguing that the agreement is clear and unambiguous, that CS&M rejected the tender of the defense, was made aware of the settlement, and either expressly rejected participation or ignored all entreaties that it become involved.

CS&M claims that there are material factual matters still in dispute, i.e., whether HOVIC was a statutory employer and thus not liable to Dominic as a matter of law, whether the settlement was reasonable, whether the agreement was against public policy, issues of reasonable notice, and intent of the parties.

II. DISCUSSION

A. The Public Policy Argument

CS&M’s contention that the agreement in question, which indemnifies HOV-IC against its own negligence, is void against public policy, would come as a surprise to the Third Circuit. This appellate court has resolved so many disputes involving these agreements, that the public policy issue has long been put to rest. See Eastern Airlines, Inc. v. INA, 758 F.2d 132 (3d Cir.1985). Repeatedly the circuit court has held that there is no public policy which prevents judicial enforcement of an agreement to shift liability for the consequences of one’s own negligence. See also United States v. Seckinger, 397 U.S. 203, 211, 90 S.Ct. 880, 885, 25 L.Ed.2d 224 (1970). CS&M offers us no authority which would effectively counter the steady stream of Third Circuit opinions upholding agreements for indemnity similar to that herein.

B. Failure to Raise Defenses

CS&M also argues that HOVIC should have raised the defense that it was a statutory employer under the borrowed servant doctrine, as applied in the Virgin Islands by Vanterpool v. HOVIC, 589 F.Supp. 334 (D.V.I.1984), affirmed as to that issue, 766 F.2d 117 (3d Cir.1985). HOVIC urges strongly that CS&M has waived any right to criticize, or exonerate itself by reason of HOVIC’s legal strategy, by rejecting the tender of defense. HOVIC also notes that Dominic did not meet the test enunciated in Vanterpool, supra, by the Third Circuit at 121 et. seq.

There is no doubt that CS&M should have accepted the tender. The indemnification agreement specifically provides for such a defense against claims arising out of CS&M’s on-site work at HOVIC. Dominic’s complaint clearly states a claim which would come within the requirement. As we were forcefully told in C.H. Heist v. American Home Assurance Company, 640 F.2d 479, 483 (3d Cir.1981), the duty to defend comes into play if the allegations of the complaint “state on their face a claim ... which ... potentially applies.” (Citing C. Raymond Davis & Sons, Inc. v. Liberty Mutual Insurance Co., 467 F.Supp. 17, 19 (E.D.Pa.1979). See also Pacific Indemnity Co. v. Linn, 766 F.2d 754, 766 (3d Cir. 1985).

Had CS&M met its initial obligation to take over the defense of HOVIC, there is no question it would be entitled to dictate litigation strategy and raise such defenses as it considered appropriate. By failing to even defend, however, we find that CS&M is estopped from criticizing HOVIC’s strategy as a means of escaping obligations under the indemnity agreement. This is parallel to the situation where an insurer refused to defend an insured under a contract of insurance. Maneikis v. St. Paul Insurance Co. of Illinois, 655 F.2d 818, 821 (7th Cir.1981). It ill befits CS&M to carp at HOVIC over the manner in which it defended itself, after violating its contractual duty to HOVIC in the first instance. As stated, CS&M’s duty can be compared to that of an insurer to whom the defense of an insured under a contract of insurance has been tendered.

... only three options are available to a liability insurer requested to defend an insured against claims which the insurer believes exceed policy coverage. The insurer can (1) seek a declaratory judgment regarding its obligations before or pending trial of the underlying action, (2) defend the insured under a reservation of rights, or (3) refuse either to defend or seek a declaratory judgment at the insurer’s peril that it might later be found to have breached its duty to defend.

Maneikis v. St. Paul Insurance Co. of Illinois, supra, at 821.

CS&M adopted the third option and refused either to defend or seek a declaratory judgment. What occurred thereafter occurred at its peril.

C. Reasonableness of the Settlement

While we say CS&M ignored its obligations at its own peril, that is not to suggest that CS&M cannot make certain arguments concerning HOVIC’s settlement with Dominic. As stated earlier, the case against HOVIC was settled for $50,000. CS&M now claims that not only was the settlement unreasonable, but HOVIC had no liability of any kind to Dominic and accordingly, no reason to settle with him. While we have held that CS&M waived any right to criticize HOVIC’s litigation strategy and defenses raised, the issues of liability and reasonableness may be pressed.

Of course, it is difficult to ascertain whether HOVIC was actually liable to Dominic, since it contested liability until settlement, and no fact finder made a determination in that regard. What is clear, however, is that HOVIC was potentially liable to Dominic as the possessor of land, having invited him to work there, or as the supplier of a dangerous chattel for his use. See generally, Restatement (Second) of Torts, Chapters 13 and 14.

The argument advanced by CS&M and discussed earlier is that HOVIC should have raised the statutory employer defense approved by Vanterpool v. HOVIC, supra. If it had done so, CS&M maintains, it would not have had any liability to Dominic, and the indemnification would not come into force. Although we held earlier that CS&M is estopped from citing HOVIC’s failure to advance this defense as an excuse for its own breach, we must still discuss the matter in the context of the potential liability of HOVIC had the defense been raised. The easy answer is that HOVIC would have been liable, since Dominic did not meet the standard required by the Third Circuit in Vanterpool v. HOVIC, supra. In order to become a borrowed employee, Dominic would have to have come under HOVIC’s control and direction. He did not. He never signed a loanee form as Vanterpool had done, and HOVIC conceded that it had never considered him a loanee, or borrowed employee. Under such circumstances, it would have been frivolous for HOVIC to make the claim that Dominic was a borrowed employee, since that notion would never have survived a motion to strike it as an affirmative defense. In the absence of such a defense, HOVIC was potentially liable to Dominic.

We recognize that the Third Circuit has yet to rule whether an indemnitee, such as HOVIC, need show only potential liability to recover from an indemnitor, such as CS&M. M & O Marine, Inc. v. Marquette Co., 730 F.2d 133, 135 (3d Cir. 1984). Some courts have adopted an exception to the general rule and allowed the indemnitee, who settles with the injured party, to secure indemnification upon proof of only potential liability. Parfait v. Jahncke Service, Inc., 484 F.2d 296 (5th Cir.1973), cert. denied, 415 U.S. 957, 94 S.Ct. 1485, 39 L.Ed.2d 572 (1974). But, to fall within this category, as M & O Marine v. Marquette Co., supra, explains at 136, the indemnitee (HOVIC) would have to offer the indemnitor (CS&M) the choice of either approving the settlement or taking over the defense.

Since HOVIC tendered the defense and it was rejected, the inference is clear that when the Third Circuit is confronted with a situation as herein, it will permit proof of only potential liability to suffice. See also the dissent by Judge Seitz in Frederick v. HOVIC, 642 F.2d 53, 56 (3d Cir.1981), which discusses actual and potential liability in this context. We find that the record demonstrates HOVIC’s potential liability and that this is sufficient to actuate its right to indemnity.

Other than CS&M’s claim that the settlement was unreasonable because HOVIC had no liability to Dominic, CS&M cites no other facts from the record to demonstrate unreasonableness. A review of the discovery in the case discloses that Dominic was applying the cleaning solution when he became ill and fell. He felt a sharp pain in his shoulder, ribs and left arm, underwent sweating, nausea, fever, and began discharging blood. He was out of work for several months and still suffers some of those symptoms. His medical experts have diagnosed possibly permanent injury to the hand and shoulder. He feels weaker and cannot play soccer as he once did. His workmen’s compensation lien, which must be paid from his settlement funds, is approximately $25,000. Thus, after that payment and the attorneys’ fees and other costs, he will have very little remaining from the HOVIC settlement.

This Court has conducted numerous trials of cases against HOVIC similar to the one at issue herein, and we have been involved in pre-trial settlements of similar cases. Judgments or settlements in the amount of hundreds of thousands of dollars is not unusual. HOVIC acted reasonably in cutting its losses for $50,000.

CONCLUSION

CS&M’s challenge to the indemnification agreement is quite limited. It does not deny its execution, or what it says, or that CS&M freely entered into it hoping to obtain substantial work at the refinery. There is no ambiguity whatsoever as to what it is intended to do by way of protection for HOVIC. CS&M offers us no explanation whatsoever why it rejected the tender of the defense, which might have strengthened its position before the Court at the present time. Having discussed and discarded the arguments made by CS&M, we will enter summary judgment in favor of HOVIC in the amount of $50,000, together with its costs of defense of the action by Dominic, and its costs of prosecution of the third party complaint against CS&M.


author: BROOKS, District Judge.

text:
    INLAND OIL & TRANSPORT CO., Plaintiff, v. CITY OF MOUNT VERNON, Defendant.
    No. EV 78-133-C.
    United States District Court, S.D. Indiana, Evansville Division.
    Sept. 20, 1985.
    Hubert I. Binowitz, Goldstein & Price, St. Louis, Mo., for plaintiff.
    Phil Siegel, Combs & Siegel, Evansville, Ind., Henry C. Hudson, Mt. Vernon, Ind., Hawley, Hudson & Almon, R. Lawrence Daly, Lynn, Wright & Daly, Evansville, Ind., for defendant.
   MEMORANDUM ORDER

BROOKS, District Judge.

This matter comes before the Court upon a motion by the Fourth Party Defendant, Bessie E. Hironimus d/b/a Hironimus Food Center (hereinafter “Hironimus”) to dismiss the Fourth Party Complaint. In the present complaint, the City of Mount Vernon (hereinafter “Mt. Vernon”) as the Third Party Defendant and Fourth Party Plaintiff is seeking indemnification or in the alternative, contribution should ah adverse judgment be rendered against the City of Mt. Vernon.

FACTUAL SUMMARY

The present fourth party complaint stems from the third amended third party complaint of Inland Oil and Transport Co. (hereinafter “Inland”), which alleges that Mt. Vernon is liable to Inland as a result of negligence and its breach of implied warranty of workmanlike performance in providing Inland’s vessel a reasonably safe mooring place. Mt. Vernon, by way of its fourth party complaint, brought in Hironimus as a fourth party defendant. Hironimus is averring that these theories of liability are the same which were alleged against Hironimus in an earlier summary judgment proceeding before this Court. This Court on 24 August 1984 granted Hironimus’ motion for summary judgment and entered final judgment in favor of Hironimus on the aforementioned theories of liability. In the prior proceeding, this Court found that the original action filed by Albert L. Muller against Inland was based in Federal Admiralty law, to-wit: the Longshoremens’ and Harbor Workers’ Compensation Act (hereinafter “LHWCA”). Pursuant to the LHWCA this Court found that Hironimus could not be liable to Inland, the vessel owner, on theories of negligence and breach of an implied warranty of workmanlike performance.

In resolving Hironimus' motion to dismiss the Court must focus on two issues:

(A) Whether Hironimus may successfully defend against the Fourth Party •Complaint by asserting collateral estoppel.
(B) Whether the LHWCA prohibits a non-vessel (Mt. Vernon) from seeking indemnification from the stevedore-employer Hironimus on the basis of an implied contract of indemnity.

A. WHETHER HIRONIMUS MAY SUCCESSFULLY DEFEND AGAINST THE FOURTH PARTY COMPLAINT BY ASSERTING COLLATERAL ESTOPPEL

While Federal Rules of Civil Procedure 12(b) does not expressly prescribe collateral estoppel as a ground for pre trial dismissal, “it is generally held that in the interest of efficient and expeditious judicial administration, res judicata [and, as a corollary, collateral estoppel] can be raised and considered via pre trial motion to dismiss.” Pyles v. Keane, 418 F.Supp. 269 (S.D.N.Y. 1976); see, Thistlethwaite v. City of New York, 362 F.Supp. 88, 91 (S.D.N.Y.1973).

Hironimus is attempting to employ the defensive use of collateral estoppel. As a prerequisite, however, the party against whom the doctrine is asserted must have had a full and fair opportunity to litigate the issue in a prior proceeding. Speaker Sortation Systems, Division of ATO, Inc. v. United States Postal Service, 568 F.2d 46, 48 (7th Cir.1978); Butler v. Stover Bros. Trucking Co., 546 F.2d 544, 551 (7th Cir.1977). The effect of successfully asserting collateral estoppel against a party who had a fair and full opportunity to prove a claim and has failed in that effort, should not be permitted to go to trial on the merits of that claim a second time. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971). Therefore, due to the severe effect of the doctrine, it is imperative that each element of the doctrine be satisfied.

One element of collateral estoppel is that the issues in the present action be identical to the issues on the prior adjudication. Oldham v. Pritchett, 599 F.2d 274 (8th Cir.1979). Hironimus is alleging that the issues in the earlier proceeding, in which Hironimus was a third party defendant, are the same as in the present action. Hironimus further reasons that since this Court dismissed Inland’s third party suit against it, then accordingly, the present suit should be dismissed. This reasoning must fail.

The issues that were litigated in the prior adjudication are not identical to the issues presented herein. For the Court in the prior adjudication determined that Albert L. Muller was a longshoreman pursuant to 33 U.S.C. § 905; that Hironimus was an employer under the LHWCA; and Inland was precluded from recovering either directly or indirectly from Hironimus (Memorandum Order of August, 1984). Mt. Vernon, on the other hand, is not seeking to relitigate those particular prior issues or allegations. Instead, Mt. Vernon seeks indemnification or, in the alternative, contribution in the event an adverse judgment is reached against it. As noted supra, before one can apply collateral estoppel one must have had a full and fair opportunity to litigate the issues in a prior proceeding. Butler, 546 F.2d 544; Speaker Sortation Systems, 568 F.2d 46. This Court, in the prior adjudication, did not address the issue of Mt. Vernon recovering from Hironimus on these theories of indemnification and contribution. Consequently, collateral estoppel may not successfully be applied against Mt. Vernon.

B. WHETHER THE LHWCA PROHIBITS A NON-VESSEL (MT. VERNON) FROM SEEKING INDEMNIFICATION FROM THE STEVEDORE-EMPLOYER (HIRONIMUS) ON THE BASIS OF AN IMPLIED CONTRACT OF INDEMNITY

This issue has presented varied results among the federal circuit and district courts that have been confronted with the same. See Fitzgerald v. Compania Naviera LaMolinera, 394 F.Supp. 402 (E.D.La. 1974); Spadola v. Viking Yacht Co., 441 F.Supp. 798 (S.D.N.Y.1977); Crutchfield v. Atlas Offshore Boat Serv., Inc., 403 F.Supp. 920 (D.C.La.1975); Gould v. General Mills, Inc., 411 F.Supp. 1181 (W.D.N. Y.1976). The LHWCA, 33 U.S.C. § 905(b) provides in pertinent part:

(b) In the event of injury to a person covered under this Act caused by the negligence of a vessel, then such person, or anyone otherwise entitled to recover damages by reason thereof, may bring an action against such vessel as a third party in accordance with the provisions of section 33 of this Act [33 USCS § 933], and the employer shall not be liable to the vessel for such damages directly or indirectly and any agreements or warranties to the contrary shall be void. If such person was employed by the vessel to provide stevedoring services, no such action shall be permitted if the injury was caused by the negligence of persons engaged in providing stevedoring services to the vessel. If such person was employed to provide shipbuilding, repairing, or breaking services and such person’s employer was the owner, owner pro hac vice, agent, operator, or charterer of the vessel, no such action shall be permitted, in whole or in part or directly or indirectly, against the injured person’s employer (in any capacity, including as the vessel’s owner, owner pro hac vice, agent, operator, or charterer) or against the employees of the employer. The liability of the vessel under this subsection shall not be based upon the warranty of seaworthiness or a breach thereof at the time the injury occurred. The remedy provided in this subsection shall be exclusive of all other remedies against the vessel except remedies available under this Act. (Emphasis added)

Preliminarily, this Court must determine whether Section 905(b) applies to non-vessels. The Second Circuit in Zapico v. Bucyrus Erie Co., 579 F.2d 714, 721 (2nd Cir.1978) held that § 905(b) explicitly cuts off indemnity only to a vessel. The court in Zapico, after reviewing the legislative history, elaborated further:

There is no assurance ... that if Congress had considered non-vessels, it would have cut them off as well in order to make compensation payments the sole liability of the employer and to stop triangular suits once and for all. The ship owners got a quid pro quo for the loss of their indemnity rights ... no such quid pro quo was offered to non-vessels. Given the clear statutory language and the absence of legislative history at varianee with it we would hesitate to hold that § 905(b) by its own force cuts off the availability of Ryan [Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 76 S.Ct. 232, 100 L.Ed. 133 (1956) ] indemnity to non-vessel in all cases where the concurring negligence of a stevedoring company has caused injuries to the latter’s employees, ... for example, although we do not intend these to be exclusive where there is a direct contractual relationship between the 3rd party and the stevedore or where the 3rd party is designated as a beneficiary of an express contract between the stevedore and a vessel. Zapico, 579 F.2d 714, 721-22.

In Pippen v. Shell Oil Co., 661 F.2d 378, 387 (5th Cir.1981), the Fifth Circuit stated that “§ 905(b) expressly cuts off indemnity only to a vessel and makes no specific reference to the right of a third-party non-vessel ... to bring an indemnity action against the employer.” The Fifth Circuit, however, did not adopt the Second Circuit’s rule, in toto, for the non-vessel. [Pippen ] failed to show that an indemnity agreement existed between it and the employer].

Other federal district courts have given § 905(b) a broad construction and have extended to non-vessels the prohibition of indemnity claims against stevedores. Fitzgerald, 394 F.Supp. 402; Spadola, 441 F.Supp. 798.

This Court follows the view espoused in Pippen and Zapico, and concludes that Mt. Vernon is not prohibited by the LHWCA from asserting indemnity claims against Hironimus. This standing alone, however, will not cause the fourth party complaint to be dismissed, for Mt. Vernon must prove a contractual relationship with Hironimus. Zapico.

Thus, our focus turns to § 905(a) of the LHWCA, which provides that the liability of an employer subject to the compensation provisions of the LHWCA:

... Shall be exclusive and in place of all other liability of such employer to the employee ... and anyone otherwise entitled to recover damages from such employee, at law or in admiralty on account of such injury or death ... (Emphasis added).

Hence, the question is whether Mt. Vernon’s Fourth Party action for indemnity against Hironimus is based solely on account of the injury to Muller, the injured longshoreman.

Only where there exists an independent contractual relationship which creates an independent duty on the part of the employer to indemnify the Fourth Party Plaintiff can the exclusive liability provision of the LHWCA be overcome. Zapico, at 722; Ocean Drilling & Exploration Co. v. Berry, Brothers Oilfield Service, Inc., 377 F.2d 511, 512 (5th Cir.) cert. denied, 389 U.S. 849, 88 S.Ct. 102, 19 L.Ed.2d 118 (1967).

In order to succeed, Mt. Vernon must establish either an express or implied contractual right to indemnification from Hironimus. In re General Dynamics Asbestos Cases, 539 F.Supp. 1106, 1109 (D.Conn. 1982).

Three different sets of circumstances may give rise to a right to indemnification. First, an express agreement may create a right to indemnification. W. Prosser, Law of Torts, § 51 (4th Ed. 1971). SECOND, a contractual right to indemnification may be implied from the notice of the relationship between the parties. Ryan Stevedoring Co. v. Pan-Atlantic SS. Corp., 350 U.S. 124, 133-34, 76 S.Ct. 232, 237-38. 100 L.Ed. 133 (1956). THIRD, a tort based right to indemnification may be found where there is a great disparity in the fault of the parties. Zapico at 718.

Mt. Vernon is seeking indemnification on the second theory. Mt. Vernon is alleging that Hironimus is a licensee of the City.

Indiana law provides that the right to indemnity and the corresponding obligation to indemnity generally spring from contract, express or implied, and in the absence of an express or implied contract a right to indemnity generally does not exist. McClish v. Niagara Machine and Tool Works, 266 F.Supp. 987 (S.D.Ind.1967).

When indemnity is the subject of an express contract, Indiana takes the broad view that parties may lawfully bind themselves to indemnity against future acts of negligence, whether the negligence indemnified against be that of the indemnitor or his agents or that of the indemnitee or his agents. Loper v. Standard Oil Co., 138 Ind.App. 84, 211 N.E.2d 797 (1965). In the absence of express contract, however, Indiana follows the general rule that there can be no contribution or indemnity as between joint tort feasors. Jackson v. Record, 211 Ind. 141, 5 N.E.2d 897 (1935); City of Gary v. Bontrager Construction Co., 113 Ind. App. 151, 47 N.E.2d 182 (1943).

There are, however, exceptions to the stated general rule. The exceptions arise whereby the right to indemnity is implied. McClish, 266 F.Supp. 987.

The relevant exception in the case at bar is that one who is constructively liable to a third person by operation of some special statute or rule of law which imposes upon him a non-delegable duty, but who is otherwise without fault, is entitled to indemnity from one who directly causes the harm. McClish, 266 F.Supp. 987, Indiana cases have held that a municipality, charged with the non-delegable duty of maintaining its streets and sidewalks in a reasonably safe condition for travel, may have indemnity against the tort feasor whose wrongful act or omission actually created the hazard which resulted in liability, thus being imposed upon the municipality. McNaughton et al v. City of Elkhart, 85 Ind. 384 (1882); Town of Centerville v. Woods et al, 57 Ind. 192, (1887); State v. Thomas et al, 169 Ind.App. 13, 346 N.E.2d 252 (1976).

Consequently, this case differs from Pippen, 661 F.2d 378, in that Mt. Vernon has produced some evidence of an implied contract of indemnity, to-wit: its status as a municipality and Hironimus as a licensee. The court in Pippen affirmed an order granting summary judgment, for the non-vessel third party, for plaintiff failed to show that a contract for indemnity existed. Thus, in reviewing the dismissal of Mt. Vernon’s complaint pursuant to Federal Rules of Civil Procedure 12(b)(6), this Court must consider the complaint in a light most favorable to Mt. Vernon, with every inference drawn in its favor. A complaint is subject to dismissal only if it is clear from the face of the complaint that under no circumstances may relief be granted. Pointer v. American Oil Company, 295 F.Supp. 573 (S.D.Ind.1968).

Hence, with this standard, this Court finds that Mt. Vernon is asserting a claim for which relief may be had. Accordingly this Court FINDS that Hironimus’ motion to dismiss is DENIED.

IT IS SO ORDERED.