author: LOUIS H. POLLAK, District Judge.

text:
    Gregory X. MOORE v. Thomas A. FULCOMER.
    Civ. A. No. 84-5036.
    United States District Court, E.D. Pennsylvania.
    May 10, 1985.

      Gregory X. Moore, pro se.
    Andrew R. Rogoff, Attorney-in-Charge, Special Litigation, Dist. Attorney’s Office, Philadelphia, Pa., for respondent.
   MEMORANDUM

LOUIS H. POLLAK, District Judge.

In a Memorandum dated February 5, 1985, I determined that petitioner in this habeas corpus proceeding had exhausted all appropriate state remedies. Accordingly, I remanded the case to United States Magistrate William F. Hall, Jr. for consideration of the merits of the petition. Soon thereafter, the District Attorney of Philadelphia, one of the respondents herein, moved for reconsideration of my ruling on the question of exhaustion. Petitioner has not replied to that motion for reconsideration.

Petitioner was convicted in the Court of Common Pleas for Philadelphia County of robbery, rape, kidnapping, aggravated assault and criminal conspiracy. Petitioner, through counsel, then appealed to the Superior Court, which, on October 29, 1982, affirmed petitioner’s conviction. Both of the issues raised in petitioner’s current pro se application for habeas corpus were raised in the trial court and were discussed in the opinion of the Superior Court.

Petitioner filed a pro se application for allocatur to the Pennsylvania Supreme Court long after the thirty days allowed for such an application had expired. See 42 Pa.Cons.Stat.Ann.'§ 5571. Petitioner’s application to the Supreme Court noted that it was not timely filed but claimed that petitioner had not been advised by his counsel of the Superior Court decision and did not learn of it through other means until May 1983. The application for allocatur then discussed the legal issues which had been raised in the trial court and the Superior Court as well as a claim that petitioner’s counsel had been ineffective in failing to inform petitioner of the Superior Court action or the time limitations for a proper appeal to the Supreme Court.

In 1984, the Supreme Court denied the application for allocatur “without prejudice to seek relief under the Post Conviction Hearing Act.” There was no elaboration of the basis for the Supreme Court’s decision. Petitioner has not sought relief on these claims through any other state procedure.

Respondent does not dispute that the issues raised in the current petition for habeas corpus were presented to and considered by the trial court and the Superior Court, and, further, that they were raised in the brief submitted by petitioner to the Pennsylvania Supreme Court. However, respondent does disagree with the conclusion embodied in my Memorandum of February 5, 1985, that the untimely presentation of these issues to the Pennsylvania Supreme Court exhausted petitioner’s state remedies.

It is now settled that a habeas corpus petitioner need not pursue remedies which might be available under the Pennsylvania Post Conviction Hearing Act if he has raised the same issues on direct review of his conviction. United States ex rel. Schultz v. Brierley, 449 F.2d 1286 (3d Cir. 1971); United States ex rel. Fletcher v. Maroney, 413 F.2d 16 (3d Cir.1969). However, to exhaust state remedies on direct appeal, the petitioner must present the issues to the highest state court in which decision can be had. E.g., Brown v. Allen, 344 U.S. 443, 73 S.Ct. 397, 97 L.Ed. 469 (1953).

That highest state court need not, however, have ruled on the merits of the claims for them to have been sufficiently presented for purposes of exhaustion. United States ex rel. Geisler v. Walters, 510 F.2d 887, 892 (3d Cir.1975). Under the law in this circuit, a denial of allocatur by the Pennsylvania Supreme Court “constitutes a sufficient presentation for purposes of exhaustion.” United States ex rel. Turner v. Bundle, 438 F.2d 839, 845 (3d Cir.1971).

Respondent notes, however, that state remedies are not exhausted if the denial of leave to appeal by the highest state court “could not be fairly taken as an adjudication of the merits of claims presented and where normal state channels for review were available.” Pitchess v. Davis, 421 U.S. 482, 95 S.Ct. 1748, 1752, 44 L.Ed.2d 317 (1975). Respondent argues that petitioner’s untimely application to the Pennsylvania Supreme Court meant that the denial of allocatur could not be taken as consideration of the merits of the petition, particularly when the Supreme Court denied allocatur “without prejudice to seek relief under the Post Conviction Hearing Act.” Furthermore, respondent asserts that a further channel for direct review of petitioner’s claims is available.

The mechanism for obtaining consideration of the merits of petitioner’s untimely appeal which is suggested by respondent is an appeal nunc pro tunc. Although there is no statute or rule of court which allows such an untimely appeal in Pennsylvania, the appeal nunc pro tunc is occasionally allowed when the appellant establishes that the failure to file a timely appeal was the result of “fraud or its equivalent” or a “breakdown in the court’s operation.” Commonwealth v. Englert, 311 Pa.Super. 78, 457 A.2d 121, 124 (1983). In the present case, respondent argues that the statements in petitioner’s untimely application for allocatur would not have been enough to allow the Supreme Court to determine whether a nunc pro tunc appeal was appropriate. Therefore, in respondent’s view, the Pennsylvania Supreme Court’s order should be read as a direction to petitioner to take his claims that his counsel was ineffective in failing to protect petitioner’s appellate remedies through the procedures established by the Post Conviction Hearing Act. If petitioner satisfies the courts considering his application for post conviction relief that his counsel was ineffective, respondent asserts, petitioner would be permitted to take a nunc pro tunc appeal to the Supreme Court. In support of this scenario, respondent points to the decisions in Commonwealth v. Kersten, 482 A.2d 600, 602 (Pa.Super.1984), and Commonwealth v. Jefferson, 430 Pa. 532, 243 A.2d 412 (1968), which were nunc pro tunc appeals taken after ineffective assistance of appellate counsel had been found through a Post Conviction Hearing Act adjudication of that question.

Respondent’s position would thus require petitioner to adjudicate fully his allegations of ineffective assistance of counsel through the Post Conviction Hearing Act process despite the fact that those ineffective assistance claims are not part of the present habeas corpus petition. Petitioner’s failure, according to respondent, is not that he has failed to exhaust his remedies on the question of ineffective assistance of counsel, but that exhaustion of those remedies is the only means by which petitioner can fully exhaust the necessary state remedies on the substantive issues presented in the habeas corpus petition.

As a preliminary matter, it is necessary to consider the validity of respondent’s assumption that the Pennsylvania Supreme Court’s order cannot be taken to reflect consideration of thé merits of the application for allocatur. Due to the cryptic language used in that order, it is difficult to determine the court’s intention. Although there is some difference of opinion among the federal courts as to the proper construction of a denial of appellate relief when no reasons are given by the court, it has been suggested by the Court of Appeals for the Ninth Circuit in Thompson v. Procunier, 539 F.2d 26, 28 (1976), that:

[W]here a petition for a writ of habeas corpus presenting a federal constitutional question is denied by a state court with no reason given, we will assume that the state court has had an opportunity to pass on the merits of the issue and has resolved it against the petitioner.

See also McClendon v. Jeffes, 578 F.Supp. 115, 119 (E.D.Pa.1983). But see Piercy v. Parratt, 579 F.2d 470, 472 (8th Cir.1978) (declining to adopt the general rule that denial of appeal by the state court without opinion constitutes a denial on the merits). Under this analysis, the cryptic order of the Pennsylvania Supreme Court on petitioner’s application for allocatur would be viewed as a denial of the right to appeal on the merits and not merely as a procedural ruling. This result is not inconsistent with the explicit recognition on the face of petitioner’s application to the Supreme Court that his petition for allocatur was untimely since it is possible for the Pennsylvania Supreme Court to consider the merits of an untimely application as an appeal nunc pro tunc.

However, it is possible that, although the reasons for the denial of allocatur are not expressly stated, the order should be interpreted as a denial of relief on procedural grounds alone. Such a construction of the order focuses upon its recital that the denial of allocatur is “without prejudice to seek relief under the Post Conviction Hearing Act.” This language can be read in two ways. First, it could be viewed, as respondent suggests, as a statement that petitioner should pursue his Post Conviction Hearing Act remedies on the issue of ineffective assistance of counsel and, if successful with respect to that issue, return to the Pennsylvania Supreme Court to seek a nunc pro tunc direct appeal. Second, it may be interpreted as a statement that the Pennsylvania Supreme Court did not and will not consider the merits of the application on direct appeal but that the denial of allocatur should not bar consideration of the two challenges to petitioner's conviction presented in the application for allocatur under the Post Conviction Hearing Act.

Under these interpretations of the quoted language, the Pennsylvania Supreme Court could not fairly be taken to have considered the merits of petitioner’s direct appeal. Consequently, I must consider whether, under either of those two reasons for denial of allocatur, petitioner should be found to have fairly presented his claims to the state’s highest court and, thus, to have exhausted his state remedies.

If the Pennsylvania Supreme Court did not consider the merits of petitioner’s untimely appeal but did not intend its denial of allocatur to bar consideration of the issues raised therein under the Post Conviction Hearing Act, it is proper to conclude that petitioner’s state remedies have been exhausted. As noted earlier, a habeas corpus petitioner is not generally required to pursue Post Conviction Hearing Act remedies once he has attempted to obtain review of these issues through a direct appeal to the Pennsylvania Supreme Court. This rule arises out of the policies underlying the exhaustion requirement of 28 U.S.C. § 2254. The requirement that state remedies be exhausted as a predicate to seeking federal habeas corpus relief is not jurisdictional. It is a policy of comity which reflects federal concerns that state courts be given one full opportunity to rectify constitutional errors without federal intervention. If a state’s highest court, in the exercise of its discretion, declines to review the merits of a conviction challenged on federal grounds, it is not appropriate to require the defendant to pursue state collateral remedies before seeking federal habeas corpus. See United States ex rel. Fletcher v. Maroney, 413 F.2d 16, 18 (3d Cir.1969) (“To require further recourse to the state post-conviction collateral machinery on issues already fully presented on direct appeal would be unnecessarily harsh and judicially wasteful.”).

It has never been suggested that the applicability of this principle should turn upon the Pennsylvania Supreme Court’s statements with regard to the petitioner’s right to apply for relief under the Post Conviction Hearing Act. To require pursuit of collateral state remedies when the state’s highest court specifically states that the denial of appeal is without prejudice to collateral remedies would substantially alter the carefully considered balance which underlies the general rule that post conviction relief need not be pursued when a direct appeal is complete. Such a requirement would mean that in a class of cases, the size of which is wholly controlled by the state supreme court, a petitioner would potentially be forced to raise his federal constitutional claims through two rounds of review in the state court. Since I can find no support for such a result, I conclude that the denial of allocatur without prejudice to an applicant’s right to pursue his substantive claims under the Post Conviction Hearing Act should be viewed for purposes of exhaustion of state remedies as the equivalent of a denial of allocatur which is silent on the question of collateral relief.

That leaves me to consider the question raised by the motion for reconsideration: If the Pennsylvania Supreme Court’s order is construed as a statement that the court will consider an application for a nunc pro tunc appeal after petitioner has pursued his claims of ineffective assistance of counsel through the Post Conviction Hearing Act, is it necessary for petitioner to pursue that avenue for review of his claims by the Pennsylvania Supreme Court prior to the filing of an application for habeas corpus relief in this court? It is generally established that exhaustion of state remedies requires the state courts to have had one full opportunity to consider the federal constitutional issues. Thus, the answer to the question raised by the motion for reconsideration involves consideration of the broader issue of when the state courts can be said to have had a “fair opportunity” to consider a claim. See generally Carter v. Estelle, 677 F.2d 427 (5th Cir.1982); Galtieri v. Wainwright, 582 F.2d 348 (5th Cir. 1978); Allen v. County Court, Ulster County, 568 F.2d 998 (2d Cir.1977); Emmett v. Ricketts, 397 F.Supp. 1025 (N.D. Ga.1975).

A number of courts have held that the filing of an application for a nunc pro tunc appeal is not necessary to exhaust state remedies. E.g., Thomas v. Wyrick, 687 F.2d 235 (8th Cir.1982); Adail v. Wyrick, 671 F.2d 1218 (8th Cir.1982); United States ex rel. Hasan v. Gernert, 395 F.2d 193 (3d Cir.1968); Ross v. Fulcomer, No. 84-5774 (E.D.Pa. May 1, 1985); Choice v. Pennsylvania Board of Parole, 448 F.Supp. 294 (M.D.Pa.1977); United States ex rel. Johnson v. Johnson, 340 F.Supp. 1368 (E.D.Pa.1972); United States ex rel. Brown v. Russell, 318 F.Supp. 76 (E.D.Pa. 1970); United States ex rel. McMullin v. Myers, 257 F.Supp. 812 (E.D.Pa.1966). See also Almeida v. Jeffes, 566 F.Supp. 852 (E.D.Pa.1983) (if time, for appeal has run, no need to file untimely appeal). But several courts have taken the opposite tack. E. g., Miller v. Harvey, 566 F.2d 879 (4th Cir.1977); United States ex rel. Johnson v. Cavell, 468 F.2d 304 (3d Cir.1972); Brown v. Patton, 525 F.Supp. 1062 (E.D.Pa.1981); Dunleavy v. Smith, 501 F.Supp. 14 (S.D.N. Y.1980); United States ex rel. Walker v. Philadelphia County Criminal Courts, 335 F.Supp. 701 (E.D.Pa.1971); Tippett v. Nelson, 331 F.Supp. 383 (C.D.Cal.1971); United States ex rel. Cornitcher v. Rundle, 315 F.Supp. 1300 (E.D.Pa.1970) affd 455 F.2d 514 (3d Cir.1972); Bowen v. Mazurkiewicz, 315 F.Supp. 789 (E.D.Pa.1970); United States ex rel. Herwegh v. Commonwealth, 311 F.Supp. 403 (E.D.Pa.1968) affd, 423 F.2d 1203 (3d Cir.1970); Goodrow v. Elk County Court of Common Pleas, 308 F.Supp. 291 (W.D.Pa.1970); United States ex rel. Cox v. Rundle, 282 F. Supp. 115 (E.D.Pa.1968); United States ex rel. Poulson v. Rundle, 276 F.Supp. 506 (E.D.Pa.1967). However, in many of the latter class of cases the petitioner had not filed a timely appeal from the trial court so that no state appellate court had had the opportunity to consider the merits of his federal constitutional claims.

Whatever result was arrived at, courts considering this issue have generally focused upon the likelihood that the petitioner’s direct appeal would be considered by the state’s highest court if presented nunc pro tunc. This is in keeping with the view that the comity-based exhaustion requirement be confined to those state procedures which are likely to be effective.

It is the duty of the federal courts, when determining whether the remedies have been exhausted, to consider the effectiveness of those remedies and whether the delay and burden on the petitioner inherent in pursuing such remedies are warranted by the interest in assuring that the state courts be allowed ample opportunity to correct their own errors. When these considerations are applied to the present case, it is clear that the further step which respondent contends is necessary to exhaust state remedies is not a procedure which should be required as a predicate to federal court consideration of petitioner’s claims.

First, to require such a step here would place on petitioner the burden created by the state Supreme Court’s ambiguous order. Not only would the petitioner have been required to spend considerable time in this court to discover the meaning of the Pennsylvania Supreme Court’s order but he would also potentially spend more time without reaping any additional benefit for him or for federal comity interests should the state courts construe the Pennsylvania Supreme Court order in a different manner than has been suggested by respondent and thus, deny him the right to pursue the ineffective assistance claim or to file for appeal nunc pro tunc.

Second, if petitioner returns to the state courts and fails to satisfy those courts that ineffective assistance of counsel was the cause of his failure to appeal, he will nonetheless be allowed to return to this court to seek habeas corpus relief. At that point there would be no further avenues for direct review of the federal constitutional claims raised on appeal from his state conviction and he will have fully presented his claims to the state courts but there will have been no further consideration of his substantive claims by those courts and, thus, no benefit to the comity interest underlying the exhaustion requirements. Under such a scenario, no benefit would arise from having required the petitioner to pursue additional state procedures while substantial harm might result due to the significant delay in determination of the federal constitutional issues.

Third, if the petitioner pursues Post Conviction Hearing Act remedies on the question of ineffective assistance of appellate counsel and succeeds in those claims, it is not certain that the Pennsylvania Supreme Court would take the nunc pro tunc direct appeal. Although respondent has identified cases in which this has occurred, there is no right to petition for allocatur nunc pro tunc. It is within the discretion of the Pennsylvania Supreme Court to deny or grant such an appeal just as it would have been within that court’s discretion to grant or deny the petition for allocatur had it been timely filed.

Assuming arguendo that the nunc pro tunc appeal would be allowed, I nonetheless conclude that it is inappropriate to demand use of these extraordinary procedures by petitioner. This is not a case in which the state appellate courts have had no opportunity to consider petitioner’s claims. These issues have been fully analyzed by the Superior Court and they were presented in the brief submitted to the Pennsylvania Supreme Court. Thus, there have been opportunities for the state courts to evaluate these federal constitutional claims and to rectify any perceived errors. Consequently, to require petitioner to pursue further state procedures would do little to advance the comity concerns which motivate the exhaustion requirement.

On the other side of the balance from these comity interests are the interests of the petitioner in prompt consideration of his constitutional claims. To require pursuit of necessarily lengthy Post Conviction Hearing Act remedies on the question of ineffective assistance of appellate counsel to obtain a delayed direct appeal and ultimately arrive at the steps of the federal court would seem to disrespect those claims while inflating the exhaustion requirement beyond proper bounds. The Court of Appeals for the Third Circuit has said in a similar context, “it is the legal issues that are to be exhausted, not the petitioner.” United States ex rel. Geisler v. Walters, 510 F.2d 887, 893 (3d Cir.1975) (quoting from Park v. Thompson, 356 F.Supp. 783, 788 (D.Haw.1973)).

Therefore, I will deny respondent’s motion for reconsideration to the extent it relies upon the proposition that petitioner has not exhausted all appropriate state remedies. It is not clear from that motion, however, whether respondent also wishes to raise a claim that petitioner’s failure to perfect a timely appeal to the Pennsylvania Supreme Court constituted a deliberate bypass of state procedure and thereby waived his right to pursue federal remedies on the issues raised in that appeal. See Fay v. Noia, 372 U.S. 391, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963). See also note 4 supra. Due to this ambiguity, I am unable to consider that question at this time.

I will return this matter to Magistrate Hall for preparation of a Report and Recommendation on the merits of the petition. If respondent wishes to raise the deliberate bypass question, Magistrate Hall shall consider any submissions on that point in his Report and Recommendation on the merits.

      . As noted earlier, a nunc pro tunc appeal has been allowed by the Pennsylvania courts when “fraud or its equivalent” or a “breakdown in the court’s operation" caused the untimely appeal. Therefore, it is possible that petitioner’s application for allocatur could have been deemed an appeal nunc pro tunc on grounds other than ineffective assistance of counsel.

      . The remedies provided under the Pennsylvania Post Conviction Hearing Act are only available when the alleged error "has not been finally litigated or waived.” 42 Pa.Cons.Stat.Ann. § 9543(4). For a claim to have been finally litigated, the Supreme Court must have ruled on the merits of the issue. 42 Pa.Cons.Stat.Ann. § 9544(a)(3). Therefore, the statement that the denial of allocatur is without prejudice to Post Conviction Hearing Act remedies may be an attempt by the court to assure that a court considering a petition under the Post Conviction Hearing Act not conclude that consideration of the merits is barred as having been finally litigated on direct appeal.

      . If the Supreme Court’s order is interpreted as a statement that it has not reviewed the claims oh the merits but that application for relief under the Post Conviction Hearing Act should not be precluded, it is logical to assume that a further attempt to perfect a direct appeal nunc pro tunc would be futile. It is generally established that if state remedies would be futile or ineffective, it is not necessary for a habeas corpus petitioner to exhaust those remedies. E.g., Perry v. Blackledge, 453 F.2d 856 (4th Cir.l971). Thus, under this interpretation of the Pennsylvania Supreme Court’s order, petitioner would have exhausted his state remedies at the present time.

      . It may be that at that point respondent would contend that the failure to perfect a direct appeal to the Pennsylvania Supreme Court constitutes a procedural default by petitioner precluding federal habeas corpus review. However, it is possible for a federal court to consider a state prisoner’s habeas corpus petition even if he has committed a procedural default which caused him to forfeit his appeal to the state’s highest court. The right to bring the federal habeas corpus action will then turn upon whether the petitioner has deliberately bypassed the state procedures. Fay v. Noia, 372 U.S. 391, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963). The standards applied in determining whether a deliberate bypass has occurred are quite different from those used to decide an effective assistance of counsel claim. Therefore, the state proceedings on the latter question would not be determinative of the question whether petitioner’s federal remedies are barred by deliberate bypass of the state appeal. Furthermore, the question of deliberate bypass is governed by the federal standard for waiver of constitutional rights. Therefore, the federal courts would not be bound by any state determination on the question of waiver. E.g., United States ex rel. Snyder v. Mazurkiewicz, 413 F.2d 500 (3d Cir.1969); United States ex rel. Simon v. Murphy, 349 F.Supp. 818 (E.D.Pa. 1972). Consequently, neither the inquiry into the availability of a federal habeas corpus remedy nor the right to such a remedy would be affected by the state proceedings.


source: Caselaw Access Project

author: LATCHUM, Senior District Judge.

license: Public Domain

text:
    Eleanor GILLIKEN, on her own behalf and as executrix of the estate of Ellis G. Gilliken, Plaintiff, v. William G. HUGHES; Administrator of the Marine Division Pension Plan of the International Union of Operating Engineers, Local 25, Marine Division, and the Joint Board of Trustees of the International Union of Operating Engineers, Local 25, Marine Division Pension Plan, Defendants.
    Civ. A. No. 85-85-JLL.
    United States District Court, D. Delaware.
    May 10, 1985.

      Arthur Inden, and Barry M. Willoughby, of Young, Conaway, Stargatt & Taylor, Wilmington, Del., for plaintiff.
    David H. Williams, and Barbara D. Crowell, of Morris, James, Hitchens & Williams, Wilmington, Del., and Harriet E. Cooperman, of Kaplan, Heyman, Green-berg, Engelman & Belgrad, Baltimore, Md., of counsel, for defendants.
   LATCHUM, Senior District Judge.

The plaintiff has brought this suit under section 502 of the Employee Retirement Income Security Act of 1974 (“ERISA” or “the Act”), 29 U.S.C. § 1132, seeking benefits allegedly accrued by her late husband during his years as an employee of various parties to a collective bargaining agreement that apparently provided an employee benefit plan for members of the union in which the plaintiff claims her husband held membership. (See Docket Item [“D.I.”] 1.) The case is now before the Court on the defendants’ motions to strike the plaintiff’s demand for a jury trial (D.I. 7), and to dismiss the plaintiff’s claim for punitive damages (D.I. 8). For the reasons stated herein, the motion to strike the demand for a jury trial will be granted and the motion to dismiss the claim for punitive damages will be denied.

I. The Motion to Strike the Demand for a Jury Trial

The section of ERISA on which the plaintiff relies provides for, inter alia, private enforcement of the Act through civil actions brought by participants in, or beneficiaries of, an employee benefit plan. 29 U.S.C. § 1132. Whether trial can be to a jury in such an action is a question that has generated conflicting authority. See Note, The Right to Jury Trial in Enforcement Actions Under Section 502(a)(1)(B) of ER-ISA, 96 Harv.L.Rev. 737 (1983). In what appears to be the first reported case addressing the question, Stamps v. Michigan Teamsters Joint Council No. 43, 431 F.Supp. 745 (1977), the United States District Court for the Eastern District of Michigan held that jury trial is available because section 502 of ERISA sets forth, in the alternative, two remedies, only one of which provides explicitly for equitable relief, § 502(a)(3); therefore, to avoid rendering superfluous the other remedy, § 502(a)(1)(B), the court reasoned that the other remedy must have been intended by Congress to be legal in nature and thus determinable by jury trial. Id. at 746-47.

That reasoning was rejected by the United States Court of Appeals for the Seventh Circuit in Wardle v. Central States, South east and Southwest Areas Pension Fund, 627 F.2d 820 (1980), cert, denied, 449 U.S. 1112, 101 S.Ct. 922, 66 L.Ed.2d 841 (1981). The court in that case decided that the remedy provided in subsection 502(a)(1)(B) need not be regarded as legal to avoid superfluity because even if 502(a)(1)(B) and 502(a)(3) both provided solely for equitable relief, they would still have to be in separate subsections as a consequence of their differing jurisdictional provisions, the former allowing for concurrent state and federal jurisdiction, the latter vesting jurisdiction exclusively in the federal courts. Wardle, 627 F.2d at 828-29. The court went on to make its own interpretation of congressional intent on the right to jury trial in ERISA suits and concluded,

that Congress’ silence ... reflects an intention that suits for pension benefits by disappointed applicants are equitable. Such suits under the law of trusts have existed for quite a while in state courts ... [and] have been considered equitable in character____ Thus the most reasonable interpretation is that Congress intended to provide general federal jurisdiction over these equitable suits that had traditionally been brought in state courts.

Id. at 829.

Two other federal courts of appeals, the Fifth and Eighth Circuits, have adopted the reasoning of the Seventh Circuit. See In re Vorpahl, 695 F.2d 318, 320-21 (8th Cir. 1982); Calamia v. Spivey, 632 F.2d 1235, 1237 (5th Cir.1980). The Fifth Circuit precedent binds the Eleventh Circuit as well. See Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir.1981); Zittrouer v. Uarco Inc. Group Benefit Plan, 582 F.Supp. 1471, 1478 (N.D.Ga.1984).

The United States Court of Appeals for the Second Circuit has also spoken on this issue but has sent confusing signals. First, it affirmed without opinion a case from the United States District Court for the Southern District of New York which had stated as dictum that whether a plaintiff is entitled to additional monies from a benefit plan is a legal question to be submitted to a jury. Pollock v. Castrovinci, 476 F.Supp. 606, 609 (1979), affd mem., 622 F.2d 575 (2 Cir.1980). But then last year it explicitly rejected that conclusion of the district court’s. Katsaros v. Cody (2 Cir.), 744 F.2d 270, 278-79, cert, denied sub nom. — U.S. —, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984). And yet in the same opinion, the court made the contradictory statement that “the plaintiffs seek equitable relief in the form of removal and restitution as distinguished from damages for wrongdoing or non-payment of benefits^]” id. at 278, indicating that someone seeking additional monies from a benefit plan may indeed have a legal claim and a right to a jury trial in the Second Circuit.

The only other federal appeals court to deal with the jury trial question, albeit in a somewhat oblique manner, is the Ninth Circuit. In Blau v. Del. Monte Corp., 748 F.2d 1348 (1984), that court noted that the plaintiffs’ ERISA claim for wrongful denial of benefits preempted their six common law theories of liability, id. at 1356, and, in addressing the trial judges’ decision to strike the plaintiffs’ demand for a jury trial, the court stated the decision would be reversed upon a showing of abuse of discretion. Id. at 1357. But it made that statement without any discussion of or citation to the conflicting decisional law on the right to jury trial in ERISA cases.

The opinions issuing from federal appellate courts are not the only ones in conflict on this question. As already noted, the federal district courts for the Southern District of New York and the Eastern District of Michigan have ruled that subsection 502(a)(1)(B) does provide for trial to a jury. See Paladino v. Taxicab Industry Pension Fund, 588 F.Supp. 37, 39-41 (S.D.N.Y. 1984); Pollock v. Castrovinci, 476 F.Supp. 606, 609 (S.D.N.Y.1979), affd mem., 622 F.2d 575 (2d Cir.1980); Stamps v. Michigan Teamsters Joint Council No. 43, 431 F.Supp. 745, 746-47 (E.D.Mich.1977). The Northern District of Illinois has held that when an ERISA claim is based on an unconditional and immediate obligation to pay certain amounts, then the claim is legal and a jury demand proper. Ovitz v. Jeffries & Company, Inc., 553 F.Supp. 300, 301 (1982). In contrast, the Northern and Southern Districts of Ohio, the Eastern and Western Districts of Pennsylvania, and the Western District of Michigan, although not bound by any precedent of their own courts of appeals, have followed the reasoning of the majority of the circuit courts and held that jury trials are not available in suits under section 502. Cowden v. Montgomery County Society for Cancer Control, 591 F.Supp. 740, 746-47 (S.D.Ohio 1984); Foulke v. Bethlehem 1980 Salaried Pension Plan, 565 F.Supp. 882, 883 (E.D.Pa. 1983); Diano v. Central States, Southeast and Southwest Areas Health and Welfare and Pension Funds, 551 F.Supp. 861, 861-63 (N.D.Ohio 1982); Gavalik v. Continental Can Co., No. 81-1519, slip op. at 2-3 (W.D.Pa. Sept. 17,1982); Hiebel v. Pension Fund, Central States, Southeast and Southwest Areas, No. M79-53 CA2 (W.D. Mich.1980) (see discussion of case in Diano, supra, 551 F.Supp at 861-62). The District of Maryland and the District of Alaska have indicated that they too are disposed to that point of view. Dameron v. Sinai Hospital of Baltimore, Inc., 595 F.Supp. 1404, 1415-16 (D.Md.1984); Burud v. Acme Electric Co., Inc., 591 F.Supp. 238, 248 n. 9 (D.Alaska 1984).

Having considered the cases on both sides of the issue, this Court concludes that the better reasoned and greater weight of precedent calls for striking the demand for a jury trial. To reach that conclusion, the Court need not decide that Congress intended that there be no jury trials under section 502; it is sufficient to hold that no congressional intent is discernible. That being the case, the only other possible source of a right to a jury trial is the Seventh Amendment to the United States Constitution.

The Supreme Court has explained that the Seventh Amendment “requires trial by jury in actions unheard of at common law, provided that the action involves rights and remedies of the sort traditionally enforced in an action at law, rather than in an action in equity or admiralty.” Pernell v. Southall Realty, 416 U.S. 363, 375, 94 S.Ct. 1723,1729, 40 L.Ed.2d 198 (1974). Looking at the character of ERISA actions by individuals seeking employee benefits, this Court concludes, as did the Seventh Circuit, that they are in the nature of equitable suits formerly brought under the law of trusts. See Wardle, supra, 627 F.2d at 829. Accord In re Vorpahl, 695 F.2d 318, 322 (8th Cir. 1982). Consequently, the Seventh Amendment does not provide a right to a jury trial and the plaintiffs demand will accordingly be stricken.

II. The Motion to Dismiss the Request for Punitive Damages

A motion to dismiss cannot be granted “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). “Moreover, it is well established that, in passing on a motion to dismiss, ... the allegations of the complaint should be construed favorably to the pleader.” Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). This stringent standard governs the Court’s consideration of the substantive issue presented by the defendants’ motion.

As with the question of the availability of jury trials under ERISA, the question of the allowability of punitive damages under the Act has generated judicial opinions which are not entirely consistent with one another. Nevertheless, there seems to be developing a thread of consensus from the disparate ERISA decisions announced to date. That consensus centers on the distinction between suits seeking relief from a fiduciary’s wilful, malicious, wanton, or oppressive breach of duty and suits seeking relief from a fiduciary’s decisions that, though disappointing to a claimant and perhaps demonstrably wrong, do not amount to an egregious breach of duty.

In Russell v. Massachusetts Mutual Life Insurance, 722 F.2d 482 (1983), the Ninth Circuit held that “under appropriate circumstances” ERISA does authorize the award of punitive damages. Id. at 491. The court described those appropriate circumstances as ones in which “the fiduciary, in carrying out its duties and responsibilities under the Act, acted with actual malice or wanton indifference to the rights of a participant or beneficiary.” Id. at 492. The court in a later case specified section 502(a)(2) of the Act as the section under which such an award could be made, noting it in contradistinction to the provisions for compensatory damages under section 502(a)(1)(B). Scott v. Gulf Oil Corp., 754 F.2d 1499, 1501 (9th Cir.1985).

The Eighth Circuit had taken the position that punitive damages were not available in ERISA suits, Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1216, cert, denied, 454 U.S. 968, 102 S.Ct. 512, 70 L.Ed.2d 384 (1981), but later held that an ERISA fiduciary’s fraudulent activity warranted the imposition of substantial punitive damages. Monson v. Century Mfg. Co., 739 F.2d 1293, 1305 (8th Cir.1984).

The United States District Court for the District of Colorado has recently reviewed twelve ERISA cases from other federal district courts and concluded that “[w]here a plan fiduciary fails to perform mandated statutory functions, no punitive damages are allowed[;] [h]owever, in actions against a fiduciary for breach of its fiduciary duties, exemplary damages have not . been foreclosed.” Miner v. International Typographical Union Negotiated Pension Plan, 601 F.Supp. 1390, 1392 (D.Colo.1985). But see Whitaker v. Texaco, Inc., 566 F.Supp. 745, 751 (N.D.Ga.1983).

This Court agrees with that description of the state of the case law on this issue, and it adopts the distinction drawn: while not generally available in section 502 actions, punitive damages may be imposed if a plaintiff proves that there has been a wilful, malicious, wanton, or oppressive breach of fiduciary duty.

In this case, however, it is as yet impossible to determine whether such an imposition is warranted. Based on the sketchy record presently before the Court, it cannot be said that the plaintiff can prove no set of facts which would prompt an award of punitive damages, and thus the defendants’ motion to dismiss that claim is premature and must be denied.

An order will entered in accordance with this memorandum opinion.

      . The motion is made pursuant to Fed.R.Civ.P. 39(a).

      . Though styled as a "motion to strike the plaintiffs request for punitive damages" (D.I. 8), the Court believes this is more properly thought of and expressed as a type of motion to dismiss under Fed.R.Civ.P. 12(b)(6); cf. Miner v. International Typographical Union Negotiated Pension Plan, 601 F.Supp. 1390, 1391 (D.Colo.1985). But cf. Diano v. Central States, Southeast and Southwest Areas Health and Welfare and Pension Funds, 551 F.Supp. 861, 862 (N.D.Ohio 1982).

      . This characterization from Stamps of the remedial provisions of section 502 is somewhat misleading because the section actually provides for more than two types of remedies. See 29 U.S.C. §§ 1132(a)(1)(A); (a)(2).

      . The court in Wardle noted a second reason for disagreeing with the Stamps opinion. Stamps included a quotation from the legislative history of ERISA to the effect that ERISA actions are to be considered as arising under the laws of the United States in a manner similar to actions brought pursuant to section 301 of the Labor-Management Relations Act of 1947; from this the Stamps court concluded that the case law developed under the latter act should guide the development of ERISA case law. Stamps, 431 F.Supp. at 747. But the Wardle court called that conclusion “flawed,” stating that "[t]he quoted statement merely indicates Congress' intent that federal courts should create federal common law in civil actions under § 502(a)(1)(B) of ERISA,” the same way the courts have created common law under section 301 of the Labor-Management Relations Act. Wardle, 627 F.2d 820, 829 (1980).


author: GONZALEZ, District Judge.

text:
    UNITED STATES of America, Plaintiff, v. WESTERN CONTRACTING CORPORATION, Defendant.
    No. 83-6700-Civ-Gonzalez.
    United States District Court, S.D. Florida, N.D.
    May 10, 1985.

      Gary W. Allen, Thomas W. Osborne, Torts Branch, Civ. Div., U.S. Dept, of Justice, Washington, D.C., for plaintiff.
    Courtney Wilder Stanton, Jacksonville, Fla., John M. Kops, Faris, Ellis, Cutrone & Gilmore, New Orleans, La., for defendant.
   ORDER

GONZALEZ, District Judge.

THIS CAUSE is before the court upon the defendant’s Motion for Summary Judgment. The court has carefully considered the motion, the memoranda, the entire record and the oral argument of able counsel. For the reasons set forth below, the Motion will be GRANTED.

On July 16,1957, the United States Navy Department received permission from the United States Department of the Army to lay several underwater marine cables. These armored submarine cables were then laid on the floor of the Atlantic Ocean near the United States Navy Surface Weapons Center, Fort Lauderdale Facility, Port Everglades, Florida. The cables were neither buried nor entrenched in any manner; they merely were laid loosely on the ocean floor.

The parties agree that during 1980, the defendant was under contract to the United States Army Corps of Engineers to conduct dredging operations for improving navigation within the Port Everglades Harbor entrance. Between September and October of 1980, during the performance of dredging activity, several cables within the underwater cable field sustained damage.

The plaintiff maintains that either the unseaworthiness of the dredge, WESTERN CONDOR, or the negligence of those in charge of its operation caused the damage. The defendant disagrees and filed its Motion for Summary Judgment.

To prevail on its Motion for Summary Judgment, the defendant must prove that there is no genuine issue as to the fact that (a) the WESTERN CONDOR was a vessel in navigation; and (b) the plaintiff assumed full responsibility for damage caused by a vessel in navigation to the underwater cable field.

The parties do not contest the fact that the WESTERN CONDOR was, indeed, performing dredging operations at the time.

The court finds that the WESTERN CONDOR was a vessel in navigation at the time of the complained of incident. The law is well settled that a dredge performing dredging operations for the purpose of maintaining or improving navigable waterways is a vessel in navigation. Butler v. Ellis, 45 F.2d 951 (4th Cir.1930); McKie v. Diamond Marine Co., 204 F.2d 132 (5th Cir.1953); Southern Natural Gas Co. v. Gulf Oil Corp., 320 So.2d 917 (La.App. 3rd Cir.1975).

The government, however, maintains that damage to the cable field was not caused by a vessel in navigation since the damage was actually caused by a discharge pipe that broke free from the dredge. By analogy, the plaintiff contends that it was not the pistol that injured the victim, but rather the bullet fired from the pistol. While this argument is creative, it is not persuasive. The damage was clearly the direct result of the WESTERN CONDOR’S dredging operations.

The court further finds that pursuant to the permit issued to the plaintiff by the Department of the Army, the plaintiff assumed full responsibility for damage suffered by the cable field by the defendant’s dredge — a vessel then in navigation.

No obstruction of navigable waterways is permitted under section 10 of the Rivers and Harbors Act of 1899, 33 U.S.C., section 403. The Secretary of the Army, however, is authorized to grant exceptions to this prohibition. 33 U.S.C. § 403. Before the Navy Department could install its Port Everglades underwater cable field, it was required to apply for and obtain necessary approval from the Secretary through the Corps of Engineers. The issued permit was subject to specific conditions. Specifically, the condition at issue herein provides:

(h) That the permittee shall assume full responsibility for any and all damage which may be caused by, or to, navigation by reason of the placing of cables loosely on the bottom.

The permit further reveals that “section h” was unconditional.

The plaintiff maintains, nevertheless, that “section h” does not mean what it clearly says.

The plaintiff maintains that regardless of the express language of “section h”, plaintiff does not assume full responsibility for damages “caused by, or to, navigation by reason of the placing of cables loosely on the bottom.” In other words, the plaintiff asserts that it may recover for damage caused by third parties in “navigation” to the “cables [placed] loosely on the bottom.” The plaintiff, therefore, would have this court find that “section h” is merely surplusage within a government permit.

The plaintiff, United States, argues that Postal Telegraph-Cable Co. v. Bahama Line, Ltd., 1943 A.M.C. 369 (S.D.Fla.1943), is on all fours with the case sub judice. This court disagrees.

In Postal Telegraph, the War Department issued a permit to a private company containing language similar to that found within “section h.” The permit authorized the installation of submarine cable. When the cable field was damaged by a motor vessel, Postal Telegraph sought to recover damages. The defendant argued that as Postal Telegraph assumed responsibility for damages, it was released from liability.

In the Postal Telegraph permit, however, the assumption of risk clause was limited by another clause which provided:

That this authority does not give any property rights either in real estate or material or any exclusive privileges; and that it does not authorize any injury to private property or invasion of private rights, or any infringement of Federal, State or local laws and regulations, nor does it obviate the necessity of obtaining State assent to the work authorized. It merely expresses the assent of the Federal Government so far as concerns the public rights of navigation.

Id. at 370 (Emphasis provided).

The Postal Telegraph court at 370 also noted specifically that “[t]his last quoted sentence clearly negates any intent to make the permit a contract for the benefit of third parties.” The court then determined that the permit merely authorized the plaintiff to lay cable; it did not create a benefit inuring to third parties. Ibid.

The Postal Telegraph decision is distinguishable from the facts herein. The instant permit is an inter-agency permit containing no limiting conditions. This instant permit provides that if the Navy Department wished to lay cables loosely on the bottom of the Atlantic Ocean in the Port Everglades channel, the Navy Department must be responsible for damages caused to the cable field by navigation.

The plaintiff knew the risks inherent to laying cables loosely on the ocean floor in a well-traveled shipping channel. It accepted those risks.

Any damage caused to the cable field by navigation is the sole responsibility of the plaintiff United States and not of the dredge or its owners.

Accordingly, it is hereby

ORDERED AND ADJUDGED that the Motion for Summary Judgment be and the same is GRANTED. Within ten (10) days of the date of this Order, the defendant shall submit a proposed final judgment for this court’s consideration.

      . The plaintiff also argues that as the permit did not require that cables be entrenched, the permittee does not assume risk of damage. None of the permits issued in the plaintiffs supporting case law contain “section h" type clauses. Thus, this argument is not persuasive. See, AT & Tv. Steuart, 1978 A.M.C. 1680 (D.Md.1977); Petition of Potomac Sand and Gravel Co., 253 F.Supp. 268 (D.Md.1966); Thompson v. Consolidated Gas, Electric and Power Co., Ill F.Supp. 719 (D.Md.1953).


author: POLOZOLA, District Judge.

text:
    TRANSLOAD AND TRANSPORT, INC. v. TENNESSEE VALLEY TOWING, INC.
    Civ. A. No. 85-240-B.
    United States District Court, M.D. Louisiana.
    May 13, 1985.
    Kai David Midboe, Baton Rouge, La., for plaintiff.
    Schwab & Walter, John Schwab, Baton Rouge, La., for defendant.
   POLOZOLA, District Judge.

This matter is before the court on the motion of the defendant, Tennessee Valley Towing, Inc. (“TVT”) to dismiss and transfer. No oral argument is required on this motion.

Transload and Transport, Inc. (“Trans-load”) filed this suit against TVT seeking the balance allegedly due on a charter agreement between TVT and Twin City Barge & Towing Co., a subsidiary of the plaintiff corporation. Jurisdiction is based on diversity pursuant to 28 U.S.C. §\1332.

Transload is a Delaware corporation which has its principal place of business in Louisiana. TVT is a Tennessee corporation •with its principal place of business in the Western District of Kentucky. The applicable venue statute is 28 U.S.C. § 1391(c), which provides:

A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes.

The defendant is neither incorporated nor licensed to do business in Louisiana. However, the final voyage made by TVT’s towboat under the charter agreement was down the Mississippi River to New Orleans, then up to Baton Rouge with some of Transload’s barges in tow. Transload contends that this activity in the Baton Rouge area constitutes doing business in the Middle District of Louisiana within the meaning of § 1391(c) because it meets the “transacting of business” test set forth in Louisiana R.S. 13:3201(1), the Louisiana Long Arm Statute. TVT contends, however, that the voyage to Baton Rouge was an isolated incident and is insufficient to constitute doing business. The Court agrees with defendant’s contention.

Whether a corporation is “doing business” within the forum district for purposes of the federal venue statute is a question which must be decided under federal law. Frazier v. Alabama Motor Club, 349 F.2d 456, 458 (5th Cir.1965); Houston Fearless Corp. v. Teter, 318 F.2d 822, 825 (10th Cir.1963); Newton v. Inter-American, Inc., 48 F.R.D. 280, 282 (W.D. La.1969). The generally accepted rule is that a corporation is “doing business” so as to satisfy the federal venue statute if it is amenable to service of process in the district. Transload contends that venue is proper if one of the tests of the state long arm statute is met. However, this argument was rejected by the court in Newton, 48 F.R.D. at 282. The proper interpretation of this rule is that venue is proper if the corporation is doing enough business in the forum district to satisfy the constitutional tests of International Shoe v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), on when it should be subjected to service of process in that district. Frazier, 349 F.2d at 459; Patin v. Sioux City & New Orleans Barge Lines, 253 F.Supp. 984, 986 (W.D.La.1966); C. Wright, A. Miller & E. Cooper, 15 Federal Practice & Procedure § 3811, at 64-65 (1976 & Supp. 1984). In International Shoe, the Supreme Court held that due process was satisfied if the defendant had sufficient minimum contacts with the forum such that maintenance of the suit does not offend “traditional notions of fair play and substantial justice.” The Fifth Circuit set forth certain factors in Frazier which the Court must consider to determine whether or not such minimum contacts exist so as to make venue proper.

[Consideration must be given to such relevant factors as the general character of the corporation, the nature and scope of its business operations, the extent of the authorized corporate activities conducted on its behalf within the forum district, the continuity of those activities, and its contacts within the district.

349 F.2d at 459.

In this case, TVT contracted with Twin City Barge & Towing, plaintiff’s subsidiary, to lease a towboat. The contract was executed by TVT in Kentucky and by Twin City in St. Paul, Minnesota. It provided that the chartered vessel was to be used “on the Upper and Lower Mississippi, Ohio, and Tennessee Rivers, but not the Missouri River or the Intercoastal Canal.” Upon the expiration of the charter, the vessel was to be delivered to St. Louis, Missouri, “unless by mutual agreement another location is designated.”

The vessel was used only on the upper Mississippi River between Cairo, Illinois, and St. Louis, Missouri, or on the Tennessee River until shortly before the expiration of the charter. Upon plaintiffs request, however, TVT made a final voyage with the towboat to New Orleans, where it picked up a few of the plaintiffs barges and towed them to Baton Rouge, Louisiana, Transload’s principal place of business. The chartered vessel was then delivered to Transload in Baton Rouge one day before the expiration of the charter.

The Court has carefully reviewed the contacts TVT had with the Middle District of Louisiana and finds them to be transitory in nature. TVT’s activities in this forum were only casual and isolated, not “continuous and systematic” as required to satisfy the International Shoe test. The totality of contacts between TVT and the forum are insufficient to constitute “doing business” within the meaning of 28 U.S.C. § 1391(c). Thus, venue in the Middle District of Louisiana is improper under the facts of this case.

TVT seeks to have this suit dismissed dr, in the alternative, to have it transferred to the Western District of Kentucky. The Court finds that the Western District of Kentucky is a forum where' this matter could have been brought. The Court further finds that pursuant to 28 U.S.C. § 1404(a), it is in the interest of justice to transfer this action to that district.

Therefore:

IT IS ORDERED that Tennessee Valley Towing, Inc.’s motion to dismiss and transfer be, and it is hereby GRANTED to the extent that this case shall be transferred to the United States District Court for the Western District of Kentucky.

IT IS FURTHER. ORDERED that the Clerk of Court shall transfer this case to the United States District Court for the Western District of Kentucky.

      . This is the rule which was followed by the Fifth Circuit in Frazier v. Alabama Motor Club, 349 F.2d 456, 459 (5th Cir.1965). Some courts, however, require an even higher activity level. See C. Wright, A. Miller & E. Cooper, 15 Federal Practice & Procedure § 3811, at 65 (1976 & Supp. 1984).

      . Fully Found Charter Agreement, § II.

      . Id., § IV.

      . For a similar factual situation, see Patin v. Sioux City & New Orleans Barge Lines, 253 F.Supp. 984 (W.D.La.1966).


author: CANNELLA, District Judge:

text:
    CROWN ZELLERBACH CORPORATION, Plaintiff, v. Sir James GOLDSMITH, CZC Acquisition Corp., GOSL Acquisition Corp., General Oriental Securities Limited Partnership, General Oriental Securities Limited, General Oriental Investments Limited, Compania Financiers Lido, Enderbury Financial, Inc., the Brunneria Foundation, Oriental and American Investments Limited, and O & A Limited, Defendants.
    No. 85 Civ. 2866 (GLG).
    United States District Court, S.D. New York.
    May 14, 1985.

      Sullivan & Cromwell, New York City (William R. Norfolk, of counsel), for plaintiff.
    Skadden, Arps, Slate, Meagher & Flom, New York City (George A. Zimmerman, of counsel), for defendants.
   CANNELLA, District Judge:

Plaintiff’s application for an order enjoining defendants from purchasing any additional shares of Crown Zellerbach Corporation [“Crown”] is denied.

FACTS

The Court, sitting as the Part One Judge, heard oral argument this afternoon from both sides and has carefully considered the brief and affidavit submitted this morning from plaintiff. Defendants are engaged in a well-publicized hostile takeover bid for Crown. Defendants’ original tender offer was withdrawn on April 26, 1985 following Crown’s announcement of a proposed spinoff of certain divisions on the preceding day. The tender offer withdrawal was tempered with the caveat that defendants retain the options to buy more Crown shares on the open market or in private transactions, to. make another bid for the company or to seek control of Crown through other acquisition tactics.

On July 19, 1984, three months prior to defendants’ initial purchases of Crown on the open market, Crown’s board of directors announced the distribution of certain common stock rights. These rights, described as a “poison pill” by defendants, effectively preclude Crown from merging with a third party and engaging in certain other transactions. The rights entitle holders to purchase shares of stock in an acquiring company at a highly deflated price. Crown’s board of directors retained the power to redeem the rights for fifty cents each, unless a potential purchaser acquires beneficial ownership of 20% of Crown’s outstanding shares or makes an offer for 30% of the stock. When defendants withdrew their initial tender offer, they had acquired approximately 9.3% of Crown’s common shares. On May 7 and 8, 1985, defendants acquired an additional 2.8 million shares in privately negotiated purchases, increasing the aggregate holdings of defendant’s group to approximately 19.88% of Crown’s outstanding shares.

Defendants have threatened to trigger the poison pill rights by increasing their beneficial ownership to more than 20%. Defendants have offered a one day moratorium until today at 3:00 p.m. on the purchase of additional shares in order to give the Crown board a “final opportunity” to redeem the stock purchase rights. This high stakes game of “chicken” has been covered in depth by the financial media. See, e.g., Bid for Crown Zellerbach is Intensified, Wall St. J., May 14, 1985, at 1, col. 2; 4, col. 2,

Two lawsuits have been filed concerning this action — one in Nevada federal court and the other in the Southern District of New York. Last week, the Nevada court transferred the remainder of its action here.

DISCUSSION

To obtain injunctive relief plaintiff must establish irreparable harm and either (1) a likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in its favor. See 754 Orange Ave., Inc. v. City of West Haven, Connecticut, 761 F.2d 105, 110 & n. 2 (2d Cir.1985); Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979) (per curiam). Plaintiff argues-that it will be irreparably harmed if the Court does not enjoin defendants’ purchase of additional shares. To establish irreparable harm plaintiff must show the absence of an adequate remedy at law. Buffalo Forge Co. v. Ampco-Pittsburgh Corp., 638 F.2d 568, 569 (2d Cir.1981). As defendants correctly observe, however, the Court has the power to rescind the purchases or grant other necessary relief if defendants’ purchases are ultimately found to be in violation of the securities laws. See J.I. Case Co. v. Borak, 377 U.S. 426, 433, 84 S.Ct. 1555, 1560, 12 L.Ed.2d 423 (1964); Pantry Pride, Inc. v. Rooney, 598 F.Supp. 891, 899 (S.D.N.Y.1984).

Plaintiff has also failed to satisfy the other requirements necessary to obtain injunctive relief. On May 9, 1985, Judge Thompson of the United States District Court for the District of Nevada granted a motion to transfer his case to this district. At the same time, he denied Crown’s application for a temporary restraining order requiring defendants to give Crown 48 hours’ notice before making any additional purchases of Crown stock. The Court was aware of defendants’ purchases of May 7 and 8,1985, but ruled that the Williams Act did not prohibit such purchases. In federal court, a judicial determination at one stage of a proceeding becomes the “law of the case” to be followed in successive stages of the same litigation. The law of the case doctrine ensures the orderly progress of court proceedings. Because this motion was brought on ex parte, with notice to defendants only a few hours before a hearing and with extreme time pressure placed on the Court to issue its decision before 3:00 p.m., the Court believes the more prudent course is to refrain from altering the status quo at this time.

Although the Court is sympathetic to plaintiff’s arguments that defendants’ actions constitute an “end run” around the Williams Act, the instant facts are relatively unique and the law is unsettled. Compare Kennecott Copper Corp. v. Curtiss-Wright Corp., 449 F.Supp. 951 (S.D.N.Y.) (substantial percentage of shares acquired on the open market do not constitute a tender offer), affd, 584 F.2d 1195 (2d Cir. 1978) and Brascan Ltd. v. Edper Equities Ltd., 477 F.Supp. 773 (S.D.N.Y.1979) (same result with private solicitations) with S-G Securities, Inc. v. Fuqua Investment Co., 466 F.Supp. 1114 (D.Mass.1978) (publicly announced intention to acquire a controlling stock of a target company plus subsequent rapid acquisition of large blocks of stock through open market constitute a tender offer for purposes of 15 U.S.C. § 78n(d), Section 14(d) of the Securities Exchange Act) and SEC “eight-prong test” (relatively liberal view of what constitutes a tender offer).

CONCLUSION

Plaintiff’s motion for injunctive relief is denied.

The parties are directed to appear before Judge Gerard L. Goettel for further proceedings in this action at 11:00 a.m. on May 17, 1985 in Courtroom 444.

SO ORDERED.


author: CAFFREY, Chief Judge.

text:
    SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Plaintiff, v. OTTMAN CUSTOM PROCESSORS, INC. and Joseph Piperato, Defendants.
    Civ. A. No. 84-4051-C.
    United States District Court, D. Massachusetts.
    May 15, 1985.

      David A. Snyder, U.S. Dept, of Labor, Solicitor’s Office, Boston, Mass., for plaintiff.
    William W. Hays, Bowditch & Dewey, Worcester, Mass., for defendants.
   MEMORANDUM

CAFFREY, Chief Judge.

This is a petition for adjudication of civil contempt filed December 14, 1984 by the Secretary of Labor against Ottman Custom Processors, Inc. and Joseph Piperato, its president. The petition recites that on November 19, 1984 a United States Magistrate issued a warrant for inspection under the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) herein after OSH Act. The warrant authorized Nelson F. Barnes or any other authorized Department of Labor Compliance Safety and Health Officer to enter and inspect the premises of Ottman Custom Processors, Inc. (“Ottman”) at 1 Blackstone Street, Wilkonsonville, Massachusetts. The application for the warrant and the warrant are appended to the complaint as Exhibits B and A respectively. The complaint further alleges that on November 21,1984 Compliance Officer Barnes served the inspection warrant on Toni Rodriques, the personnel director at Ottman whereupon Rodriques handed a notice of protest to Officer Barnes.

The matter came before the Court for a hearing on an order to show cause issued by the undersigned on January 21, 1985.

At the hearing testimony was heard from Compliance Officer Nelson F. Barnes, called by the Secretary of Labor, and from Toni Rodriquez, Stacey Wright, Joseph Piperato, and Thomas Shea, called by the defendants. Post hearing memoranda of law were filed by the parties and after hearing, I find and rule as follows.

The inspection warrant issued by the Magistrate meets the probable cause standards required by the Supreme Court’s decision in Marshall v. Barlow’s, Inc., 436 U.S. 307, 98 S.Ct. 1816, 56 L.Ed.2d 305 (1978). I further find that respondents refused to allow Officer Barnes to conduct a normal and meaningful inspection of respondents premises, that respondents refused to allow the inspector to privately question employees at respondent’s place of business, and that respondent unreasonably refused Officer Barnes’ request to have employees explain and demonstrate the machines and equipment being used on the premises. I further find that respondents unreasonably delayed Barnes’ access into the working areas of the Ottman work place for about five hours and that the conduct of respondent’s Piperato and Ottman employee, Rodriques totally frustrated reasonable attempts by the Labor Department to inspect those premises as mandated by Congress under the Act. I find and rule that both Ottman and Piperato are guilty of civil contempt consisting of their refusal to comply with the Magistrate’s lawful order. I rule that because of their illegally obstructive conduct that an order should be entered directing Ottman to pay $200 per day and Piperato to pay $100 per day until the Magistrate’s order is fully complied with and I further rule that Ottman should pay the costs of bringing and trying this action.


author: KANE, District Judge.

text:
    GERALNES B.V., a Netherlands corporation; Manikin Investments B.V., a Netherlands corporation; and Dolbos B.V., a Netherlands corporation, Plaintiffs, v. CITY OF GREENWOOD VILLAGE, COLORADO, a municipal corporation; the City Council of the City of Greenwood Village, Colorado; Frederick C. Fisher, individually and as Mayor of the City of Greenwood Village, Colorado; Charles Harmon, Natli Molloy, Baiba Sarkans, James Talman, Dorothy Wilson, Joe Marceny, Henry Seetch and Mari Schmidt, as Members of the City Council of the City of Greenwood Village, Colorado; Paul McMath, individually; Diane Writer, as Chairman of the Planning and Zoning Commission of the City of Greenwood Village, Colorado; Steven L. Schroder, individually and as Director of the Department of Community Development of the City of Greenwood Village, Colorado; Tech Center Building Co., a Colorado partnership; Columbia Savings and Loan Association, a Colorado corporation; United Air Lines, Inc., a Delaware corporation; Rosenberg Real Estate Equity Fund-I, Inc., a Delaware corporation; the Great-West Life Assurance Company, a Canadian corporation; I.T.C. Orchard Plaza Corporation, a Colorado corporation; Block Five Partnership, a Colorado partnership; the Romarlin Co., a New York general partnership; Denver Colorado Associates, a New York general partnership; Country Land Corporation, a New York corporation; the Aremel Company, a New York general partnership; John R. Elkins; Bruce B. Johnson, Defendants.
    Civ. A. No. 83-K-1132.
    United States District Court, D. Colorado.
    May 15, 1985.

      David G. Palmer, Charles Johnson, Holland & Hart, Denver, Colo., for plaintiffs.
    Harris D. Sherman, Andre M. Reiman, James E. Scarboro, Arnold & Porter, Denver, Colo., J. Mark Hannen, Banta, Hoyt, et al., Englewood, Colo., for city defendants.
    Richard 0. Campbell, Montgomery, Little Young, Campbell & McGrew, P.C., Denver, Colo., for United Airlines.
    Alan M. Loeb, Denver, Colo., for Rosenberg Real Estate Equity Fund-1, Elkins and Johnson.
    Joseph M. Montano, Gorsuch, Kirgis, Campbell, Walker & Grover, Denver, Colo., for Great-West Life.
    Patrick F. Kenney, Fairfield and Woods, Denver, Colo., for Columbia Sav.
    Janet C. Perriman, Morrison & Foerster, Denver, Colo., for ITC Orchard Plaza Corp.
   ORDER

KANE, District Judge.

Plaintiffs have moved to disqualify defendants’ counsel, Arnold & Porter, from further participation in this case. The plaintiffs charge that Arnold & Porter, in violation of Disciplinary Rules 1-102(A)(2) and (4), induced violations of Disciplinary Rule 4-101 of Canon 4 of Colorado’s Code of Professional Responsibility. They allege Arnold and Porter has pursued and obtained privileged communications, directly involving disputed issues in this lawsuit, made to attorneys employed by an investment group to which William Pauls belonged and a company to which plaintiffs claim to be successors in interest.

As required by Fullmer v. Harper, 517 F.2d 20 (10th Cir.1975), I held a hearing. The motion was submitted on affidavits, memoranda exhibits and deposition testimony and hearing exhibits. Although the Fullmer decision’s premise concerning the finality of rulings on motions to disqualify has been reversed by Firestone v. Risjord, 449 U.S. 368, 101 S.Ct. 669, 66 L.Ed.2d 571 (1980), the motion raises serious ethical issues which merit discussion. My findings and conclusions herein are prolusory. They are not to be construed as applying to issues other than are involved in this motion. City Consumer Services, Inc. v. Horne, 571 F.Supp. 965, 968 (D.Utah 1983); Greenebaum-Mountain Mrtg. Co. v. Pioneer Title Nt’l. Ins. Co., 421 F.Supp. 1348, 1349 (D.Colo.1976).

Disciplinary Rules 1-102(A)(2) and (4) provide, respectively, that a lawyer shall not circumvent a disciplinary rule through the actions of another or engage in conduct involving dishonesty, fraud, deceit, or misrepresentation. The pertinent parts of DR 4-101 state:

(A) “Confidence” refers to information protected by the attorney-client privilege under applicable law, and “secret” refers to other information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would likely be detrimental to the client.
(B) Except when permitted under DR 4-101(C), a lawyer shall not knowingly:
(1) Reveal a confidence or secret of his client.
(2) Use a confidence or secret of his client to the disadvantage of the client.
(3) Use a confidence or secret of his client for the advantage of himself or of a third person, unless the client consents after full disclosure.
(C) A lawyer may reveal:/
(1) Confidences or secrets when permitted under Disciplinary Rules or required by law or court order____

The attorney-client privilege protects the confidentiality of communications between attorney and client made for the purpose of securing legal advice. The privilege was recognized as early as the reign of Elizabeth I. As originally expressed, it belonged to the attorney who, as a punctilio of honor was obliged to protect a client’s secrets. By the late 1700’s, however, this explanation had been replaced by the contemporary one that the privilege belongs to the client. The purpose of the rule is to encourage clients to speak openly with their attorneys when obtaining legal advice. See 8 J. Wigmore, Evidence, §§ 2290, 2291.

One of the attorneys whom Arnold & Porter interviewed, George Glasier, was formerly employed by Denver Technological Center, Inc., an entity which has apparently neither existed nor owned any interest in the Tech Center since 1979. Glasier reported to DTC, Inc.’s management regarding its relationship with Greenwood Village, as well as other matters. The other attorney interviewed by Arnold & Porter, Leonard R. Liss, was retained by William Pauls who led an investment group which purchased some or all of Denver Technological Center, Inc. The group has also participated in the creation of numerous foreign corporations.

Arnold & Porter interviewed Liss and Glasier and prepared affidavits for their signatures. Glasier signed his affidavit. The conduct of Arnold & Porter became an issue in this case when Liss, the former attorney for the Pauls group, contacted plaintiffs’ -attorneys after becoming worried that he may have divulged a former client’s confidences. Neither Glasier’s nor Liss’s former clients are parties to this suit, nor have plaintiffs alleged that Arnold & Porter violated any confidences of Arnold & Porter’s own former clients.

The trail of corporate entities, through which plaintiffs claim successorship to Denver Technological Center, Inc. and William Pauls, is exceedingly convoluted. See e.g. deposition of Victor M. Seabrook. Approximately thirty corporations in some half a dozen countries, some of which corporations are shielded by national secrecy laws preventing discovery of the owners’ identities are involved.

It is plaintiffs’ burden to establish grounds in support of their attempt to exclude their adversaries’ counsel from further participation in this suit. Plaintiffs have not met their burden. Defense counsel may or may not have obtained information to which former clients of the two attorneys are entitled to protection. Such is not, however, sufficient cause to force defendants to hire and undertake the expensive education of substitute counsel to represent them in this complex litigation. A Colorado attorney may not, other than as allowed by DR 4-101(C), reveal the confidences of a former client. In the case at bar, however, the relationship of the attorneys’ former clients to plaintiffs is not ascertainable.

Plaintiffs have failed to show Arnold & Porter owed any duty to former clients of Liss and Glasier, even if, arguendo, plaintiffs are successors in interest to former clients of Liss and Glasier. Plaintiffs’ sole citation of authority for this assertion is the Ninth Circuit’s 1979 opinion which has been removed from publication pending rehearing, American Protection Insurance Co. v. MGM Grand Hotel — Las Vegas. The MGM case addresses ethical issues which arose during the litigation of the victims’ claims after the destruction by fire of the Las Vegas MGM Grand Hotel. That opinion considered an egregiously underhanded, willful and knowing raid of an opposition’s expert who was privy to opposing counsel’s work product and trial strategies.

Plaintiffs have not shown that Arnold & Porter proceeded in any manner other than with cautious regard for the disciplinary rules. Before interviewing Liss and Glasier, Arnold & Porter asked both attorneys whether they were violating any privileged communications of their former clients. Both Liss and Glasier opined they were not. Although plaintiffs’ counsels’ feathers have apparently been ruffled by Liss and Glasier’s communications with Arnold & Porter, it is not Arnold & Porter’s responsibility after having broached the issue with Liss and Glasier, to protect these attorneys’ former clients’ privileged communications. If either was unsure about the extent of his former client’s privilege, the duty fell not on Arnold & Porter but on him to consult with his former client.

Arnold & Porter also made known to plaintiffs’ counsel their intention to interview the two attorneys. I find no indication that Arnold & Porter induced any breach of Disciplinary Rule 4. There was apparently a misunderstanding between counsel as to the time and place of one interview. Plaintiffs have not, however, shown that Arnold & Porter committed any fraud, deceit or otherwise willfully violated either the Code of Professional Responsibility or rudimentary courtesy.

IT IS ORDERED:

(1) Plaintiffs’ motion to disqualify is denied;

(2) Stay of discovery is lifted;

(3) Discovery cutoff date is extended to June 30, 1985;

(4) Defendants shall file a response to plaintiffs’ motion for partial summary judgment by June 1, 1985; and


author: MORAN, District Judge.

text:
    FEDERAL NATIONAL MORTGAGE ASSOCIATION, Plaintiff, v. Cicero MOORE, III, Shirley Lee Moore, First National Bank of Chicago, as Trustee in Trust Deed Doc. # 25610162, First National Bank of Chicago and General Finance Corp. of Illinois, Defendants.
    No. 84 C 8797.
    United States District Court, N.D. Illinois, E.D.
    May 15, 1985.
    Barry M. Fisher, Fisher & Fisher, Chicago, Ill., for plaintiff.
    Alan I. Ehrenberg, Zenoff, Westler & Zenoff, Chtd., Chicago, Ill., for defendants.
   MEMORANDUM AND ORDER

MORAN, District Judge.

This is an action to foreclose on a mortgage insured by the United States Department of Housing and Urban Development (HUD). Defendants have erected two affirmative defenses to the foreclosure. Essentially, they argue that foreclosure is improper because plaintiff failed to follow notice procedures required by HUD regulations. The parties have filed cross-motions for summary judgment.

I.

Defendants purchased their home on Chicago’s South Side in January 1973. The property was secured by a HUD-insured $23,850.00 mortgage, payable in monthly installments over 30 years at 7% interest. The mortgage was subsequently assigned to plaintiff, the Federal National Mortgage Association. Mr. Moore was laid off his job as a steelworker in September 1980. Even though Mr. Moore was unable to obtain a job with comparable wages, defendants continued to make payments for the next two years, although with some difficulty.

Prompted by a default in the August 1982 payment, the plaintiff had telephone contact in early October 1982 with one of defendants’ children and left a message for defendants to contact plaintiff. While this default was cured, defendants failed to make their October 1982 payment and plaintiff contacted Ms. Moore on November 22, 1982, by telephone. In late December 1982 and early January 1983 plaintiffs again had telephone contacts with defendants’ children.

Plaintiff also had written contact with defendants. In a December 29, 1982 letter plaintiff advised the defendants that they had failed to make October, November and December payments. The letter advised them that plaintiff was considering defendants’ eligibility for an assignment of their mortgage to HUD. An assignment would entitle defendants to forebearance relief, staving off foreclosure. See generally 24 C.F.R. §.203.650-660. In a January 17, 1983 letter plaintiff advised defendants that they did not meet the criteria for a mortgage assignment. The letter stated that defendants had seven days in which to contact HUD and obtain review of this decision.

The events in February 1983 are somewhat unclear. Defendants sent, and their mortgage company, Union National Bank, accepted, two money orders totalling $621.68. These payments appear to have brought their account current through February 1983. The record also contains a February 8, 1983 letter from Union National Bank, rejecting as insufficient two money orders totalling $808.00. The relation between the payment accepted and the payment rejected is unclear.

On March 24, 1983 the defendants’ filed a Chapter 13 bankruptcy petition that sought inclusion of “cumulative current mortgage payments.” The mortgage company filed a proof of claim on May 25,1983, indicating that defendants owed them the March, April and May 1983 payments. On May 27, 1983, Bankruptcy Judge Hertz confirmed a plan that stayed foreclosure proceedings and provided for $138.00 in monthly payments. In October 1983 defendants sent the mortgage company $540.00, intending to cover their March and April 1983 payments. They apparently believed that the $138.00 monthly payment under the bankruptcy plan satisfied all their subsequent obligations.

On August 24, 1984, the bankruptcy court granted the mortgage company’s motion to modify the automatic stay and allowed foreclosure to proceed. Defendants’ offer to enter into a payment plan was rejected on October 2, 1984. This action followed on October 11, 1984.

II.

HUD has promulgated regulations outlining the mortgage servicing responsibilities of mortgagees. 24 C.F.R. § 203.500, et seq. Mortgagees must give mortgagors notice of default:

The mortgagee shall give notice to each mortgagor in default on a form supplied by the Secretary or, if a mortgagee wishes to use its own form, on a form approved by the Secretary, no later than the end of the second month of any delinquencies in payments under the mortgage. If an account is reinstated and again becomes delinquent, the delinquency notice shall be sent to the mortgagor again, except the mortgagee is not required to send a second delinquency notice to the same mortgagor more often than once every six months. The mortgagee may issue additional or more frequent notices of delinquency at its option.

24 C.F.R. § 203.602.

The regulations also require that, mortgagees give notice before beginning foreclosure.

[P]rior to initiating any action required by law to foreclose the mortgage but not before three full monthly payments are due and unpaid, the mortgagee shall notify the mortgagor in a form approved by the Secretary that the mortgagor is in default, the mortgagee intends to foreclose unless the mortgagor cures the default, and the mortgagee is considering whether or not to request the Secretary to accept assignment of the mortgage.

24 C.F.R. § 203.651. If, as in this case, the mortgagee determines that the mortgagor does not meet the prerequisites for assignment of the mortgage to HUD, the mortgagee must advise the mortgagor of the mortgagor’s right to ask HUD directly to accept assignment of the mortgage. 24 C.F.R. § 203.652.

In Illinois, a mortgagee’s failure to comply with the mortgage servicing regulations can be raised in a foreclosure proceeding as an affirmative defense. Bankers Life Co. v. Denton, 120 Ill.App.3d 676, 76 Ill.Dec. 64, 66, 458 N.E.2d 203, 205 (3d Dist.1983).

III.

Plaintiff’s motion for summary judgment is simple. Its position is that defendants were in default as of October 1982. Plaintiff’s phone contacts with Mrs. Robinson and defendants’ children satisfied the delinquency notice requirement of section 203.-606. The December 29, 1982 and the January 17, 1983 letters satisfied the preliminary foreclosure notice requirements of sections 203.651 and 203.652. Plaintiff argues that having satisfied the notice requirements, it is entitled to foreclosure.

Plaintiff’s argument does not survive scrutiny. Plaintiff has not established that the limited contact with the defendants in the two-month period after the October default was notice “on a form supplied by the Secretary ... [or] ... on a form approved by the Secretary.” Section 203.602. The “notice” given defendants was not written, as the regulations appear to contemplate. Plaintiff has not established that telephonic contact was a form of notice approved by the Secretary. It is not even clear what was conveyed to Ms. Moore on November 22, 1982, even though this was the only direct contact with the defendants within the two-month period after the October default.

Second, there is a dispute of material fact as to the date of default. The complaint states that plaintiff was in default from August 1, 1983. Plaintiff’s motion for summary judgment is predicated on an October 1982 default. Defendants state that they became unable to make payments in December 1982. The evidence submitted by the parties in support of their motions for summary judgment suggests that the defendants failed to make their October, November and December payments (plaintiffs motion for summary judgment, exh. B), but advanced the date of the default by making two payments in February 1983 (defendants’ motion for summary judgment, exhs. B-1, B-2). The April 19, 1983 property inspection report, for example, seems to indicate that defendants were only two months behind in their payments as of that date (plaintiff’s motion for summary judgment, exh. A, p. 10). In its May 25, 1983 filing with the bankruptcy court, plaintiff indicated that only March, April and May payments were past due. Defendants further suggest that its October 1983 payment covering the March and April 1983 installments further advanced the date of default

Fixing the date of default or defaults for purposes of this dispute is necessary in order to establish what notice plaintiff was obligated to give. For example, after plaintiff’s December 29, 1982 and January 17, 1983 notices of impending foreclosure, which was based on an October 1982 default, defendants may have cured or advanced the date of their default with the February 1983 payments. If so, before initiating foreclosure, “but not before three full monthly payments [were] due and unpaid,” plaintiff would have been obligated, at a minimum, to have given a new section 203.651 notice of impending foreclosure. Cf. Ferrell v. Pierce, 560 F.Supp. 1344, 1366-68 (N.D.Ill.1983), affd, 743 F.2d 454 (7th Cir.1984). It is undisputed that no formal notice of either delinquency or of impending foreclosure was given defendants after January 1983.

Defendants’ position is that they have met their obligations up to the date of bankruptcy and that plaintiff has failed to give proper notice since then, thus barring foreclosure. The date or dates of default, however, have yet to be established. Thus, inferences must be drawn in favor of the plaintiff when evaluating defendants’ summary judgment motion.

Even if October 1983 is taken as the date of default, defendants did not give adequate notice of delinquency under section 203.602, as established above. Assuming an October 1983 default, plaintiff’s December 29, 1982 preliminary notice of foreclosure may have been timely. Its January 17, 1983 section 203.652 notice that defendants had failed to qualify for a mortgage assignment to HUD, however, improperly stated that defendants had only seven days to contact HUD and apply for a mortgagé assignment, rather than the 15 days provided by the regulations.

The government-insured mortgage loan program has a salutory goal of promoting better housing for lower income individuals. See generally, Ferrell, 743 F.2d at 455-56. As Ferrell notes, the program recognizes that its mortgagors will often have difficulty making full and timely payments. Id. at 456. The notice requirements considered today, as well as the mortgage assignment program, both ensure that financially strapped homeowners will have every opportunity to take informed steps to retain their homes.

Plaintiff did not give the written notice of delinquency that the regulations state it “shall” give each mortgagor in default. Nor did plaintiff give defendants an accurate statement of the amount of time defendants had to contact HUD and apply for a mortgage assignment. Nothing prevents plaintiff from now giving proper notice, reconsidering defendants’ eligibility for a mortgage assignment, and, if necessary, proceeding with foreclosure. For now, defendants have interposed successful affirmative defenses to foreclosure.

Conclusion

Defendants’ motion for summary judgment is granted. Plaintiff’s motion for summary judgment is denied.

      . Records submitted by plaintiff indicate that defendants missed payments with some frequency beginning in mid-1981. On March 1, 1982 defendants’ entered into a forebearance agreement, which was designed to get defendants back on the payment schedule as of July 1982. There is no indication that notices of delinquency or of impending foreclosure were sent in connection with these earlier delinquencies.

      . The record also contains a January 27, 1983 letter from Walter Haas, advising defendants to consider two alternatives to foreclosure; namely, selling their property or giving a deed in lieu of foreclosure. Plaintiff does not argue that this letter satisfied either of the notice requirements.

      . As noted below, however, plaintiff's position is that the date of default is October 1982, even though under the regulations, late payments, if accepted, can advance the date of default. See e.g., 24 C.F.R. § 203.556. See also Ferrell v. Pierce, 560 F.Supp. 1344, 1366-68 (N.D.Ill.1983), aff’d 743 F.2d 454 (7th Cir.1984).

      . Plaintiff may have improperly rejected defendants' tender of $808.00 on February 8, 1983. Absent special circumstances, 24 C.F.R. § 203.-556 requires mortgagees to accept partial payments that amount to more than half of the amount then due. Defendants suggest that only $1,351.40 was due at this point, less than double the amount tendered. If defendants at this point owed for five months (October 1982-February 1983), however, the $808.00 was less than half of the amount due. The need to establish the date or dates of default in this case is evident.

      . If plaintiff did not give sufficient section 203.-602 delinquency notice after the October 1982 default, then it would also have to give such notice after a later default. Section 203.602 notices, however, need only be given once every six months. If plaintiff gave sufficient section 203.602 notice to Ms. Moore on November 22, 1982, it would not be obligated to issue another delinquency notice until May 1983.

      . Plaintiff has not suggested that defendants waived any notice requirement.