author: RAYMOND J. BRODERICK, District Judge.

text:
    BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION v. HOTEL RITTENHOUSE ASSOCIATES, et al.
    Civ. A. No. 83-2809.
    United States District Court, E.D. Pennsylvania.
    Oct. 9, 1984.
    See also, 101 F.R.D. 10,

      Gregory M. Harvey, Thomas G. Wilkinson, Jr., Philadelphia, Pa., for plaintiff.
    Charles V. Stoelker, Jr., Philadelphia, Pa., for the Partnership.
    Harold E. Kohn, Philadelphia, Pa., for the Wolgins.
   MEMORANDUM

RAYMOND J. BRODERICK, District Judge.

In this action the Bank of America (the Bank) seeks to foreclose a mortgage on real estate located in the Rittenhouse square area of Philadelphia, known as the Hotel Rittenhouse Project, to recover on a promissory note and mortgage against Hotel Rittenhouse Associates (HRA), Jack L. Wolgin and Jack L. Wolgin Associates-, general partners of HRA, and to recover against Jack L. Wolgin and Muriel Wolgin on a guarantee. The note, mortgage and guarantee were executed in connection with a construction loan for the Hotel Rittenhouse, a hotel-apartment-condominium project. The defendants have counterclaimed on a variety of grounds. The Bank has moved for. summary judgment on these counterclaims which allege violations of the Bank Holding Company Act (Count VII), the federal securities laws (Count IX), and the Equal Credit Opportunity Act (Count XII). The Bank also requests partial summary judgment on Count VIII, which alleges a violation of the Racketeer Influenced and Corrupt Organizations Act.

For the reasons discussed below, the Bank’s motion for summary judgment on Counts VII, IX, and XII will be granted and partial summary judgment will be granted on Count VIII.

A trial court may enter summary judgment if, after a review of all the evidentiary material in the record in a light most favorable to the party opposing the motion, there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir.1981). Where no reasonable resolution of the conflicting evidence and inferences therefrom could result in a judgment for the non-moving party, the moving party is entitled to summary judgment. Tose v. First Pennsylvania Bank, N.A., 648 F.2d 879, 883 (3d Cir.), cert. denied, 454 U.S. 893, 102 S.Ct. 390, 70 L.Ed.2d 208 (1981).

The Bank Holding Company Act

In Count VII of their counterclaim, defendants assert that the Bank’s engagement of an accounting firm at HRA’s expense to perform an overpriced, incompetent audit of HRA’s accounts for an improper purpose constituted an unusual banking practice and an illegal tying arrangement in violation of section 106(b) of the Bank Holding Company Act (BHCA), 12 U.S.C. § 1972 (1980). Section 1972 provides in relevant part:

A bank shall not in any manner extend credit ... on the condition ... that the customer shall ...
(A) obtain some additional credit, property, or service from such bank other than a loan, discount, deposit, or trust service ... [or] (c) provide some additional credit, property, or service to such bank, other than those usually provided in connection with a loan____

Id. Sections 1975 and 1976 authorize a private cause of action for treble damages and/or injunctive relief based on Section 1972. 12 U.S.C. §§ 1975-76 (1980).

The Third Circuit has explained that section 1972 does not prohibit all attempts by banks to use their economic power to protect their investments. Tose v. First Pennsylvania Bank, N.A., supra. Section 1972 prohibits only those “ ‘anticompetitive practices which require bank customers to accept or provide some other service or product or refrain from dealing with other parties in order to obtain the bank product or service they desire.’ ” Id., (quoting S.Rep. No. 1084, 91st Cong., 2d Sess. 17, reprinted in [1970] U.S.Code Cong. & Ad. News, 5519, 5535). Merely establishing that a particular method of protecting against default is not commonly used is not sufficient to establish a violation of section 1972:

Unless the “unusual” banking practice is shown to be an anticompetitive tying arrangement which benefits the bank, it does not fall within the scope of the Act’s prohibitions____[where t]here is no evidence that the bank would benefit in any way other than by getting additional protection for its investment[, t]hat is not a tying arrangement.

Parsons Steel v. First Alabama Bank of Montgomery, 679 F.2d 242, 245-46 (11th Cir.1982) (bank’s conditioning extension of credit bn corporation’s acceptance of a new manager, who would have the option of acquiring majority interest, not a violation of § 1972).

In this case, the Bank and HRA executed a construction loan agreement which required HRA to “[p]ermit Bank’s employees or agents at any reasonable time ... to examine or audit [HRA’s] books, accounts, and records ____” Amended Complaint, Exhibit B, ¶¶ 6.19-6.20. The construction loan agreement further provides that HRA

shall pay upon demand all costs and expenses incurred in connection with Bank’s consideration of whether to make the loan, ... and the ongoing analysis of the loan and monitoring the progress of construction and all problems and questions arising in relation thereto, including all fees and disbursements of all ... accountants ... and other experts retained by Bank to advise it, it being the intent of this provision to ensure that Bank shall not be obliged to pay for any expense incurred in connection with any of the matters referred to in or contemplated by this Agreement.

Amended Complaint, Exhibit B, ¶ 9.16. Defendants do not contend that the Bank’s negotiation of these provisions evidences an unlawful tying arrangement. To do so would be futile, since these terms simply demonstrate the Bank’s legitimate efforts to protect its investment. See Tose, supra (approving conditioning of credit on debt- or’s replacement of chief financial officer with bank’s appointee). Rather, defendants assert that the manner in which the Bank purported to exercise its right to compel an audit constituted a violation of section 1972. However, resolving all factual disputes in defendants’ favor, there is no violation of section 1972 of the BHCA.

The parties agree that by early 1982, the construction project was running behind schedule, and that HRA had requested extra advances and a restructuring of the loan agreement. At this point, the Bank’s loan officer assigned to the HRA account authorized her subordinate to engage Berger & Epstein, an accounting firm, to investigate HRA’s financial situation. Ratley affidavit, p. 2. Defendants contend that Berger & Epstein conducted an over-extensive and incompetent “compilation” which was intended to fabricate defaults against HRA and to support the Bank’s position in future litigation. The evidentiary material produced by defendants, viewed in a light most favorable to the defendants (the non-moving parties), might be considered as supporting the following inferences: (a) that the Berger & Epstein audit was not conducted in accordance with generally accepted accounting standards; (b) chat it was billed at twelve times the originally estimated fee; (c) that it was conducted in a manner which disrupted HRA’s construction operation; and (d) that the Bank’s loan officer had preconceived unfavorable notions about HRA’s financial picture and the internal operations of HRA which the loan officer expressed to Berger & Epstein when their services were engaged. However, even though these inferences might raise genuine issues of fact, none are material to a determination concerning a violation of section 1972.

As heretofore pointed out, section 1972 is concerned solely with anticompetitive tying arrangements. The inferences which defendants seek to prove fall short of showing that the Bank would benefit in any way other than by protecting its investment. It is possible that at trial the defendants may be able to prove some of the accountants’ practices were tortious as to the defendants. But since the construction loan agreement provisions which authorize the Bank to require an audit at HRA’s expense constitute legitimate bank practice, the inferences discussed above cannot serve as a basis for holding that the agreement was a prohibited tying arrangement under section 1972. See B.C. Recreational Industries v. First National Bank, 639 F.2d 828, 834 (1st Cir.1981) (requiring corporation to hire a financial advisor chosen by the bank constitutes legitimate banking practice; even when the advisor allegedly acted to protect the bank’s security at the expense of the corporation’s business interests).

For the reasons heretofore stated, summary judgment will be granted in favor of the Bank on Count VII of defendants’ counterclaim.

The Federal Securities Laws

In Count IX of their counterclaim, defendants allege that the Bank “made false and misleading statements and employed schemes and artifices to defraud” in violation of sections 12(2) and 17(a) of the 1933 Securities Act, 15 U.S.C. §§ 77l (2), 77q(a) (1980), and section 10(b) of the 1934 Securities Exchange Act, 15 U.S.C. § 78j(b) (1980) and Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5 (1978). Defendants assert that the promissory note delivered by HRA in connection with the construetion loan (the Note), the Wolgins’ personal guarantee (Continuing Guaranty), the HRA limited partnership agreement, “as well as certain other documents transferred to Bank of America by HRA and Wolgin in connection with the loan transaction” are “securities.”

In considering the Bank’s motion for summary judgment on these claims, this Court begins with the threshold question of whether any of the documents mentioned by defendants constitute “securities” within the meaning of the federal securities laws. See Tcherepnin v. Knight, 389 U.S. 332, 335-36, 88 S.Ct. 548, 552-53, 19 L.Ed.2d 564 (1967) (definitions of “security” in 1933 and 1934 Acts are “virtually identical”). The 1933 and 1934 acts provide that “unless the context otherwise requires ... ‘security’ means any note ... investment contract ... or, in general, any interest or instrument commonly known as a “security,” or any certificate of interest or participation in ... or ... guarantee of ... any of the foregoing.” 15 U.S.C. §§ 77b, 78c(a)(10) (1980).

Defendants assert that the promissory note evidencing the construction loan in this case is a security. Although the definition of security specifically includes “any note,” the Third Circuit has explained that “there is ... some necessity for finetuning the definition of note to avoid sweeping within the coverage of section 10(b) of the 1934 Act every consumer and business loan financing current operational costs.” Ruefenacht v. O’Halloran, 737 F.2d 320, 325 (3d Cir.1984) (citing Lino v. City Investing Co., 487 F.2d 689 (3d Cir.1973)). In narrowing the class of “notes” which fall within the securities acts, the Third Circuit declined to adopt a specific test. Lino, 487 F.2d at 696 n. 15. See Ruefenacht, supra at 323 (finding the Lino court’s decision not to invoke the “investment contract” analysis set forth in SEC v. W.J. Howey Co., 328 U.S. 293, 66 S.Ct. 1100, 90 L.Ed. 1244 (1946), significant). Instead, the Third Circuit examined the “commercial context” of the transaction and determined that a personal promissory note tendered as partial consideration for rights under a franchise agreement was not a security under the federal Acts. Lino, 487 F.2d at 694-95. Among the facts relied upon by the Third Circuit in this determination were the following: there was no public offering; the issuer was the party claiming to be defrauded; and the notes were not procured for purposes of speculation or investment. Id. The Lino court explained

“[T]he Act is designed to deal with substance over form and to regulate and prohibit fraud involved in the sale of promissory notes where such notes are sold or traded for purposes of speculation or investment in the same way that stock [sic], bonds, or debentures might be traded, sold or exchanged.”

Id. (quoting McClure v. First National Bank of Lubbock, Texas, 352 F.Supp. 454, 457 (N.D.Texas 1973), aff'd 497 F.2d 490 (5th Cir.1974), cert. denied, 420 U.S. 930, 95 S.Ct. 1132, 43 L.Ed.2d 402 (1975)).

As the Ruefenacht court noted, the Third Circuit’s Lino decision spawned a variety of approaches to defining which notes should be considered securities under the Acts. 737 F.2d at 323-25. Each of these tests recognizes the factors identified in Lino and supports, to some extent, a distinction between risk capital or investment transactions and notes evidencing individual commercial loans. Id. (citing Chemical Bank v. Arthur Andersen & Co., 726 F.2d 930, 939 (2d Cir.1984) (notes evidencing loans by commercial banks for current operations presumptively excluded from securities laws); Great Western Bank & Trust Co. v. Kotz, 532 F.2d 1252, 1257 (9th Cir.1976) (test is whether lender supplies “risk capital” to the maker of the note); Bellah v. First National Bank of Hereford, 495 F.2d 1109, 1111-13 (5th Cir. 1974) (adopting distinction between “investment” and “commercial” loan) (further citations omitted). Further, the district courts of the Third Circuit have interpreted Lino as authorizing a distinction between investment and commercial contexts, and as supporting the exclusion of commercial notes from the scope of the securities Acts. Ris po v. Spring Lake Mews, 485 F.Supp. 462, 465-66 (E.D.Pa.1980); Provident National Bank v. Frankford Trust Co., 468 F.Supp. 448, 451 n. 5 (E.D.Pa.1979) (citations omitted). See also Snyco, Inc. v. Penn Central Corp., 551 F.Supp. 949, 953-54 (E.D. Pa.1982).

In this case, the parties negotiated a loan for a specific real estate development project, and HRA executed a promissory note secured by a pledge of collateral. This situation is plainly distinct from a note executed in the acquisition of general investment capital. There was no public offering involved. The Note was given in a commercial context, and does not constitute a “security” within the purview of the federal securities Acts.

Defendants have also asserted that certain documents executed in connection with the construction loan transaction, which they have not identified, are “investment contract[s]” included in the definition of a security under the Acts. In SEC v. Howey, supra, the Supreme Court identified an investment contract as “a contract, transaction, or scheme whereby an individual invests money in a common enterprise with the expectation of gaining profits solely through the efforts of others.” 328 U.S. at 298-99, 66 S.Ct. at 1103. The loan transaction in this case, involving as it did a collateralized note with a fixed interest rate, did not involve the expectation of profits through the efforts of others. The Bank’s extension of credit was motivated by the prospect of interest income, which did not depend upon the entrepreneurial or management efforts of HRA. See United Housing Foundation, Inc. v. Forman, 421 U.S. 837, 95 S.Ct. 2051, 44 L.Ed.2d 621 (1975); Snyco, Inc. v. Penn Central Corp., supra at 954 (seller of distributorship’s contract right to a state percentage of income from sales in one year was not an expectation of sharing in buyer’s profits; hence no security was involved).

The Supreme Court recently refined the Howey analysis by articulating a distinction between documents which are the subject of common trading, which are properly considered securities, and documents which represent the dickered terms in an individual transaction, which are not securities. Marine Bank v. Weaver, 455 U.S. 551, 102 S.Ct. 1220, 1225, 71 L.Ed.2d 409 (1982) (holding that neither certificate of deposit nor agreement granting share in profits in exchange for guaranteeing loan were securities). The negotiated and renegotiated construction loan in this ease had the unique character described in Marine Bank. Further, Marine Bank’s holding that a personal guarantee in the context of such a unique transaction was not a security supports this Court’s determination that the Continuing Guaranty executed by Mr. and Mrs. Wolgin is not a security. Marine Bank, supra. See also Crabtree Investments, Inc. v. Aztec Enterprises, Inc., 479 F.Supp. 448, 451 (M.D.La.1979), reconsid. denied 483 F.Supp. 211 (M.D.La.l980) (“a continuing guaranty agreement is frequently considered as a ‘security device’ in that it secures the obligation of another, but it is clearly not an ‘investment contract’ within the meaning of the statute”). Thus, neither the Continuing Guaranty nor the unspecified documents executed in the loan transaction constitute securities under the Acts.

The HRA Limited Partnership is composed of general partners Jack L. Wolgin and Jack L. Wolgin Associates and the limited partner Abohar, N.V., a Netherlands Antilles corporation owned and controlled by three Kuwaiti nationals, the Brothers Al-Marzook. Defendants have argued that the creation and subsequent modification of the HRA Limited Partnership Agreement constituted transactions in securities which were fraudulently induced by the Bank. This argument warrants separate discussion.

As the Second Circuit recently noted, “a limited partnership interest generally is a security because such an interest involves investment ‘in a common enterprise with profits to come solely from the efforts of others.’ ” Mayer v. Oil Field Systems Corp., 721 F.2d 59, 63 (2d Cir.1983) (quoting Howey, supra, 328 U.S. at 301, 66 S.Ct. at 1104) (further citation omitted). Conversely, courts usually find general partnership interests are excluded from the Howey definition of “investment contracts” by virtue of the rights of general partners to participate in the management of the partnership's affairs. See e.g. Goodwin v. Elkins, 730 F.2d 99, 102-03 (3d Cir.1984) citing Odom v. Slavik, 703 F.2d 212, 215 (6th Cir.1983). In Goodwin v. Elkins, Judge Garth would have held that no general partnership interest created in accordance with Pennsylvania’s partnership laws could qualify as a security because “the role of a general partner, by law, extends well beyond the permitted role of a passive investor.” 730 F.2d at 103 (emphasis supplied by Judge Garth) (footnote omitted). However, both Chief Judge Seitz and Judge Becker chose to base their decision upon the rights of the plaintiff general partner under the particular agreement involved in Elkins. See 730 F.2d at 112 (Seitz, C.J., concurring); Id. at 113 (Becker, J., concurring). Elkins illustrates the Third Circuit’s inclination to look beneath labels to the “commercial reality” of the transaction, in light of the purpose the securities acts were designed to serve. See Howey, 328 U.S. at 298-99, 66 S.Ct. at 1103; Lino, 487 F.2d at 696 n. 15 (rejecting a black and white approach to status of promissory notes under securities acts). See also Gordon v. Terry, 684 F.2d 736, 740-41 & n. 5 (11th Cir.1982) (while acknowledging general distinction between general and limited partnership interests, court did not find label dispositive on security question: “The agreement in this case, however, lacks the attributes of a limited partnership because it permits the partners to control, by majority vote, the general partners’ decisions regarding partnership property.”), cert. denied, 459 U.S. 1203, 103 S.Ct. 1188, 75 L.Ed.2d 434 (1983). As Professor Loss has explained:

[Interests in partnerships may be securities ---- [I]t is substance, not form, that controls ____ The problem, as Judge Frank put it when he was Chairman of the SEC, is to distinguish between the public offering of securities parading as “limited partnership interests” and “an offering of a half interest in a hamburger stand.”

Loss, Fundamentals of Securities Regulation, 198-99 (1983).

HRA’s “sale” of a limited partnership interest to Abohar was the result of a negotiated agreement tailored to meet Jack Wolgin’s need for capital to finance the Hotel Rittenhouse project and Abohar’s interest in protecting its investments. Section 3.03 of the Limited Partnership Agreement states that HRA’s general partners shall not have the power to dispose of or encumber partnership property, remove or appoint a managing operator of the project, or admit additional general partners without the approval of the limited partner Abohar, Inc. See Gordon v. Terry, su pra. The unique quality of the arrangement is apparent in these negotiated terms. See Marine Bank, supra. As such, this transaction is distinguishable 'from, the large scale investment schemes involved in the cases referred to by the Second Circuit in Mayer. See Mayer, supra (class action by limited partners of several limited partnerships against common general partner corporation for fraudulent circumvention of limited partners’ payback rights). The Mayer court’s qualified language is instructive: “Where the investing limited partners exercised no managerial role in the partnership’s affairs, courts have held that limited partnership interests are securities, at least when, as here, there were a considerable number of limited partners.” Mayer, supra, at 65 (emphasis added). (Citing S.E.C. v. Holschuh, 694 F.2d 130, 137 (7th Cir.1982) (corporation’s efforts to finance development of coal leases through public offering of limited partnership interests to outside investors falls within Act’s registration requirements); S.E.C. v. Murphy, 626 F.2d 633, 640-41 (9th Cir.1980) (public offering of limited partnership shares in over 30 limited partnerships subject to registration requirements of securities laws); Goodman v. Epstein, 582 F.2d 388, 406-08 (7th Cir.1978), cert. denied, 440 U.S. 939, 99 S.Ct. 1289, 59 L.Ed.2d 499 (1979) (eight limited partners sued general partners in land development scheme under 10b-5); Hirsch v. DuPont, 396 F.Supp. 1214, 1215-16, 1227-28 (S.D.N. Y.1975), aff'd 553 F.2d 750 (2d Cir.1977) (merger of three brokerage firms created new firm with 74 general partners and “several” limited partners and assets of $400 million)).

The partnership agreement in this case involved two general partners, Jack Wolgin and Jack Wolgin Associates, Inc., and one limited partner, Abohar, Inc. There was no public offering of limited partnership interests. The approval rights reserved to the limited partner give Abohar greater protection than limited partners in a larger enterprise. In addition, the eases referred to by the Second Circuit involved either the registration requirement of the Acts or a claim by the limited partners that the general partner(s) had engaged in some sort of overreaching. In these cases, classifying the interests as securities was consistent with the purposes of the Securities Acts. It is much more unlikely that Congress intended the Acts to address cases such as the present one. See Marine Bank, supra, 455 U.S. at 556,102 S.Ct. at 1223 (Congress did not intend to create a federal cause of action for common fraud).

Because none of the documents referred to by defendants constitutes a security within the federal securities Acts, the Bank’s motion for summary judgment on Count IX of defendants’ counterclaim will be granted.

Racketeer Influenced and Corrupt Organizations Act

In Count VIII of their counterclaim, defendants have asserted a violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (1980). Defendants request partial summary judgment on Count VIII to the extent the claim is predicated upon an alleged violation of the federal securities laws. Because this Court has granted summary judgment on the securities claims (Count IX), defendants’ request for partial summary judgment on Count VIII will also be granted.

Equal Credit Opportunity Act

Count XII of defendants’ counterclaim asserts that the Bank “required the signature of Muriel Wolgin, the spouse of Jack L. Wolgin, on [the Continuing Guaranty] in violation of the Equal Credit Opportunity Act [(ECOA)], 15 U.S.C. § 1691 et seq., and the Regulations promulgated thereunder, 12 C.F.R. § 202.7.”

The relevant section of the ECOA provides “It shall be unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction — (1) on the basis of ... marital status ____” The Federal Reserve Board regulations provide:

Except as provided in this subsection, a creditor shall not require the signature of an applicant’s spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s standard of creditworthiness for the amount and terms of the credit requested.

12 C.F.R. § 202.7(d) (1984) (emphasis added).

The first problem with defendants’ ECOA claim is that HRA was the entity which applied for and received credit, not Jack Wolgin. Because Jack Wolgin signed the Continuing Guaranty as a guarantor, he does not fall within the definition of credit “applicant” under the ECOA. 12 C.F.R. § 202.2(e) (excluding guarantors, sureties, and endorsers). Moreover, even if the execution of the Continuing Guaranty were an application for credit, the regulations do not prohibit requiring the signature of both spouses on a joint application. 12 C.F.R. § 202.7(d), supra. Loan officer Joan Ratley has stated that because the Wolgins offered to execute a joint guarantee, Jack Wolgin was never evaluated on the basis of his individual creditworthiness. Ratley affidavit at 2. Defendants have not produced any evidence to rebut Ms. Ratley’s statement that the Bank did not consider the creditworthiness of Jack Wolgin individually because an individual guarantee was never contemplated.

When the party who moves for summary judgment relies upon affidavits, depositions, or answers to interrogatories, the nonmoving party must produce comparable evidentiary material to contradict the moving party’s showing. Adickes v. S.H. Kress & Co., 398 U.S. 144, 160-61, 90 S.Ct. 1598, 1609-10, 26 L.Ed.2d 142 (1970).

The Bank’s motion for summary judgment on Count XII is therefore granted.

      . Section 3.03 of the HRA Limited Partnership Agreement states that:
      General Partners shall not be empowered or authorized to do the following acts unless and until Marzook or Marzook’s Representative has approved the following acts of the General Partners ... (a) the appointment, or the termination of the appointment, of a managing operator of the project; (b) sale, exchange, lease or other disposition of all or any part of the real property of the Partnership or all or substantially all of the personal Droperty of the Partnership, the encumbering by mortgage, deed of trust or other security agreement, of all or any part of the real property of the Partnership. A reasonable condition of the approval of any sale may be Marzook’s requirement that the Marzook interest in the Partnership be purchased prior to the sale; (c) the admission of any person as a general partner in the Partnership; (d) amending the Partnership Agreement; (e) entering any contract for the expenditure of an amount in excess of $250,000,000 which expenditure will or would be expected to cause the aggregate Constructions Costs to exceed 21 million dollars; (f) entering into any agreement obligating the Partnership on matters calling for Limited Partner approval.
      In the HRA Limited Partnership Agreement, "Marzook” is used to refer to the limited partner ABOHAR. See Introductory Paragraph of Hotel Rittenhouse Associates Amended and Restated Limited Partnership Agreement, dated January 17, 1979.
      The Court also takes note of the fact that the defendants in this case filed a third party complaint against Abohar and its shareholders which alleged that Abohar had forfeited its limned liability by participating in the control of HRA. In effect, defendants claimed that the exercise of the rights reserved in section 3.03 made Abohar into a general partner. See Third Party Complaint. Quoting section 3.03, defendants argued, "These are not the rights of a passive investor, akin to a corporate shareholder. Instead, they are insufficient to give rise to liability as general partners, as alleged by HRA and the Wolgins.” Memorandum in Support of Reply of Third Party Plaintiffs to Motion to Dismiss the Third Party Complaint, at 14.


source: Caselaw Access Project

author: SILER, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. The STEARNS COMPANY, Defendant.
    Civ. A. Nos. 78-62, 78-169.
    United States District Court, E.D. Kentucky, London Division.
    Oct. 9, 1984.

      Louis DeFalaise, U.S. Atty., Jane Graham, Marilyn Daniel, Asst. U.S. Atty., Lexington, Ky., for plaintiff.
    Ben Fowler, William H. Gorin, Frankfort, Ky., for defendant.
   MEMORANDUM

SILER, Chief Judge.

In 1937, Stearns Coal and Lumber Company, now known as The Stearns Company (“Stearns”) conveyed by deed to the United States 46,842.4 acres of land in several tracts in Wayne and McCreary Counties in Kentucky, reserving certain mineral rights. This land was purchased by the United States under the Weeks Act of 1911, as attended by the Clarke-McNary Act of 1924, as part of the Cumberland National Forest (now the Daniel Boone National Forest).

No efforts were made by Stearns to strip mine this property until some date before July 30, 1954, when it made an application with the Secretary of Agriculture to strip mine under the reservation of mineral rights in the deed of conveyance. That was denied on July 22, 1955, after a hearing before a citizens’ Committee of Consultants on the issue of whether it would be in the public interest, but not on the question of whether there was a legal right to mine under the provisions of the deed.

Stearns made no further efforts to strip mine within the national forest until 1976 when it sought to strip mine a nineteen acre tract of land partially within the Daniel Boone National Forest. This was again denied by the Forest Service because: (1) Stearns did not have a legal right to strip mine under its mineral reservation from the deed; and (2) the Surface Mining Control and Reclamation Act of 1977 prohibited such activity on national forest land. After Stearns received a state permit to mine the coal, it brought this suit in May, 1978, for declaratory and other relief that it had the right to strip mine coal within the national forest under its mineral reservation. Subsequently, in November, 1978, the United States brought suit against Stearns for declaratory relief that Stearns did not retain the right under the deed to strip mine coal under the property conveyed. These cases were consolidated for trial and ultimate decisions.

The study for, and eventual purchase of, the Cumberland National Forest in the late 1920’s and into 1930 did not include the Steams land, as Stearns was not interested in the sale of its property. However, as the depression years arrived, Stearns was having problems making a profit in its timber and underground coal mining operations. As a matter of fact, it was losing money in its mining operations. Stearns then sought the sale of the realty to the United States. Negotiations were formalized in October, 1935, and the deed which is the subject of this litigation was executed on December 18, 1937. The sales price for the surface rights to the government was $135,500.84, or $2.85 per acre.

The language in the deed was unambiguous, as asserted by all parties, but it is silent on the question of strip mining. Some pertinent provisions of this very lengthy deed are:

RESERVING, however, from the operation of this conveyance, unto the party of the first part [Stearns], its successors or assigns, the unrestricted use and control for all legal purposes until same are abandoned or surrendered by vendor, or its assigns, of approximately forty (40) acres, ... at the mouth of each of the following mines: # 1, # 4, # 11, # 15 and # 16, Cooperative, Fidelity and Grassy Fork. These reserved areas include mine openings, tipples, trucks, bridges, substation and shops.
* * * * * *
There is, also, RESERVED, the right to the use of all existing or necessary rights-of-way over the land conveyed herein for the removal of timber hereinafter reserved, and the right to use existing rights-of-way, and other rights-of-way as approved by the Forest Officer, over the land herein conveyed for the removal of any timber now or hereafter owned by the Stearns Coal and Lumber Company.
% * * * # *
There is, also, RESERVED, all metaliferous minerals, coal, oil, gas and limestone in, upon and under the described tracts of land; PROVIDED, however, that all operations for mining and removing same same (sic) shall be done and carried on in accordance with the following rules and regulations prescribed by the Secretary of Agriculture, viz:
* * * * * *
2. In prospecting for, and in mining and removing minerals, oil, or gas, and in manufacturing the products, thereof, only so much of the surface shall be occupied, used or disturbed as in (sic) reasonable and, according to recognized good practice, necessary for the purpose.
* * * 4c $
5. The method commonly known as “Hydraulic Mining” is positively prohibited.
6. Payment at the usual rates charged in the locality for sales of National Forest timber, and timber products of the same kind or species, shall be made to the United States for all timber, undergrowth or young growth, cut, destroyed, or damaged in prospecting, mining, drilling, or removing minerals, oil, or gas, or in manufacturing products therefrom, and in the location and construction of buildings or works of any kind for use in connection therewith____ No timber, undergrowth, or reproduction shall be unnecessarily cut, destroyed, or damaged.

Other provisions of the deed provide that every person desiring to prospect for minerals or to mine must exhibit written evidence of the right to mine on the property, all structures for mining have to be approved by the forest officer, and those buildings and structures are to be removed after the mining is completed. Stearns was also responsible for cleaning up after mining operations and for any fires directly or indirectly caused by its activities.

Stearns’ short-term timbering potential on the tracts in the deed had virtually been exhausted, and it was shutting down its mining operations at several locations, when the deed was signed. Although there was knowledge at that time regarding strip or surface mining, Stearns only employed underground mining. Very little surface mining had been conducted in the counties wherein these tracts lay and in adjacent counties, and this type of strip mining had been a very crude type of operation and relatively unprofitable. No surface mining was in existence in this area at the time of the deed, although there had been some in the vicinity of Lily in Laurel County and Silerville (now Strunk) in McCreary County. Both had been discontinued long before this conveyance.

There also had been strip mining in other distant areas, such as western Kentucky, Ohio and Illinois, before 1937, but the topography of the land conveyed in the 1937 deed was quite different from those areas where stripping had gone on, and the Stearns land was not suitable for any strip mining methods which had been conducted prior to 1937, as there was too much overburden and the slopes too steep for commercially feasible and efficient extraction of the coal. All of the prior strip mining had been conducted on relatively flat land, using mechanical shovels or drag lines with much less overburden than was found in these tracts of land.

The purpose of the purchase and the policy of the United States in acquiring the national forest land were for timber production and the protection of navigable waters and environs. There was then no recreational or park policy for the national forests.

During negotiations for the sale of the surface rights, there was no mention, written or oral, between the parties, involving strip mining, except for the proviso prohibiting hydraulic mining, which is a type of very destructive surface mining, using water instead of a machine. In areas such as Ohio where the United States acquired surface rights for the national forests, it took chances that the land would never be strip mined, although that later came about. However, in the sale and acquisition of the property here, it was never the intention of the parties that the mineral owner’s (Stearns’) rights to use the surface in the removal of the minerals would be superior to any competing right of the surface owner (United States). They certainly did not contemplate or envision that these tracts would be mined by stripping or augering, and it was not so provided in the deed or in any other correspondence between the parties before the deed was signed.

By agreement of the parties, Kentucky law is applicable. Since the time of the trial, the Kentucky General Assembly has passed a new statute, KRS 381.940, which provides:

In any instrument heretofore or hereafter executed purporting to sever the surface and mineral estates or to grant a mineral estate or to grant a right to extract minerals, which fails to state or describe in express and specific terms the method of coal extraction to be employed, or where said instrument contains language subordinating the surface estate to the mineral estate, it shall be held, in the absence of clear and convincing evidence to the contrary, that the intention of the parties to the instrument was that the coal be extracted only by the method or methods of commercial coal extraction commonly known to be in use in Kentucky in the area affected at the time the instrument was executed, and that the mineral estate be dominant to the surface estate only for the purposes of coal extraction by the method or methods of commercial coal extraction commonly known to be in use in Kentucky in the area affected at the time the instrument was executed.

This new law appears to be dispositive of this case, if it is constitutional, for there are no express or specific terms in the deed pertaining to the method of coal extraction to be used. Thus, as there is no clear and convincing evidence to the contrary, the Court must hold that the intention of the parties was that the coal was to be extracted only by the methods commonly used in the area affected at the time the instrument was executed, and the mineral estate was dominant to the surface estate only for the commonly known methods of commercial coal extraction, that is, for underground mining. Although there was some slight history of surface pit mining, there was no history of strip mining that would be considered commonly known to be used in the area for commercial coal extraction. Thus, under the statute, the claim of Stearns must fail.

Nevertheless, as the statute might later be found to be invalid, the Court will make further conclusions on the law as developed prior to 1984.

In 1956, the Kentucky Court of Appeals held in Buchanan v. Watson, 290 S.W.2d 40, 43 (Ky.1956), that under the “broad-form” or Mayo deed (named for John C.C. Mayo, the man who got rich in Kentucky from obtaining mining leases in the early part of the century) conveying minerals, the owner of the mineral rights:

has the paramount right to the use of the surface in the prosecution of its business for any purpose of necessity or convenience, unless this power is exercised oppressively, arbitrarily, wantonly, or maliciously, in which event the surface owner may recover for damages so occasioned.

It also held that even where the parties had not contemplated a particular type of mining (strip or auger), where the deed was silent on the method of extraction, it did not preclude the mineral holder from utilizing the only feasible method of extracting the coal. Id. The decision was not new law; it just applied old principles to a new factual situation. See Blue Diamond Coal Co. v. Neace, 337 S.W.2d 725 (Ky.1960); but see Commerce Union Bank v. Kinkade, 540 S.W.2d 861, 864 (Ky.1976) (Stephenson, J., concurring).

That maxim from Buchanan was upheld for years up to the present. See, e.g., Martin v. Kentucky Oak Mining Co., 429 S.W.2d 395 (Ky.1968). The latter decision, responding to many briefs from environmental groups on the question, said, “[Cjonversation is not in issue,” id. at 397, as states such as Pennsylvania and West Virginia, which do not recognize rights to strip and auger mines for holders of minerals under “broad-form” deeds, still allow strip and auger mining. It also followed Buchanan v. Watson, supra, when it stated at 397:

Whether or not the parties actually contemplated or envisioned strip or auger mining is not important — the question is whether they intended that the mineral owner’s rights to use the surface in removal of the minerals would be superior to any competing right of the surface owner.

On the other hand, the parties agree that the deed here is not a “broad-form” deed but is more narrowly written. In construing a deed, if there is no ambiguity in it, it will be strictly enforced according to its terms. If there is any ambiguity, it will be construed most strongly against the grantor, “both upon the grant of the property and the rights and privileges specified,” Buchanan v. Watson, supra at 43, quoting from McIntire v. Marian Coal Co., 190 Ky. 342, 227 S.W. 298, 299 (1921). (In that case, the grantor conveyed the minerals. In this case, the grantor conveyed the surface rights.)

Nevertheless, even when the grant- or conveys the surface rights, if its reservation of minerals is broad enough, it may strip or auger coal upon the land, see Croley v. Round Mountain Coal Co., 374 S.W.2d 852 (Ky.1964), especially when the mineral reservation includes stone, water and all minerals and the grant was made when strip mining was quite common. See Peabody Coal Co. v. Pasco, 452 F.2d 1126, 1131 n. 3 (6th Cir.1971). Although Stearns makes much of the language in the deed that it reserved “all metaliferous metals, coal, oil, gas and limestone in, upon and under the ... land (emphasis added),” as that seemed to be a factor in Croley v. Round Mountain Coal Co., supra, nevertheless, in Peabody Coal Co. v. Pasco, supra at 1131-1132, it was held, in analyzing Kentucky law, that such a phrase was not dispositive of the case, but was, like the words, “necessary or convenient,” from Buchanan, evidence of the intent of the parties as to which estate (mineral or surface) would be superior. In Pasco the 1919 deed was held to preclude strip and auger mining, but a 1914 deed allowed it. In viewing the language from those deeds, it is obvious that the language in the Stearns deed does not follow either. The language in the Stearns deed was not so broad as the 1914 deed which included a waiver of damages to the surface and allowed all rights and privileges in and about the land on the surface or underneath the surface incident to and required by successful and profitable mining. See also Peabody Coal Co. v. Erwin, 453 F.2d 398 (6th Cir.1971). The Erwin analysis was followed in Commerce Union Bank v. Kinkade, supra at 864, as the court held that the language in a mineral deed did not allow strip mining.

One additional point needs to be discussed. Stearns has argued that when the deed specifically prohibited hydraulic mining, by following the maxim of expressio unius est exclusio alterius, the intent of the parties was to allow any other form of mining by failing to exclude it specifically. Although the maxim may be used in certain instances, as stated in Ford v. United States, 273 U.S. 593, 611, 47 S.Ct. 531, 71 L.Ed. 793 (1927), it:

properly applies only when in the natural association of ideas in the mind of the reader that which is expressed is so set over by way of strong contrast to that which is omitted that the contrast enforces the affirmative inference that that which is omitted must be intended to have opposite and contrary treatment.

That court went on to quote Lord Justice Lopes from Colquhoun v. Brooks, 21 Q.B.D. 52, 65, that:

It is often a valuable servant, but a dangerous master to follow in the construction of statutes or documents. The exclusio is often the result of inadvertence or accident, and the maxim ought not to be applied, when its application, having regard to the subject-matter to which it is to be applied, leads to inconsistency or injustice.

Ford v. United States, supra at 612, 47 S.Ct. at 537; cf. Durnin v. Allentown Federal Savings and Loan Ass’n, 218 F.Supp. 716, 719 (E.D.Pa.1963).

In the case at bar, it is quite evident that the parties never discussed mining other than hydraulic methods, so the omission of other methods in the deed has no value in the construction of the instrument.

No ruling is being made on which party has the burden of proof, as that is not a factor in this decision. Both parties have presented proof and the Court has found for the United States by a preponderance of the evidence.

Therefore, as the Court finds from all the language in the deed that the parties did not intend that Stearns would have superior rights to extract the minerals over the surface rights of the government, cf. Greenwood Land & Mining Co. v. Bergland, London Civ. No. 78-626 (E.D.Ky. Oct. 23, 1978) (unpublished opinion by Moynahan, C.J.), appeal pending; United States v. Polino, 131 F.Supp. 772 (N.D.W.Va.1955) (West Virginia law), the Court declares the surface rights of the United States in the deed involved are superior to the mineral rights of Stearns, so Stearns cannot engage in surface mining on the property listed in the deed involved without approval from the United States.

      . There was evidence that H.C. Gillis, a late law partner of this Judge’s father, told William A. Kinne, one of Stearns’ negotiators on the deed, that strip mining would be allowed under the deed, as it only prohibited hydraulic mining. This appears to be hearsay, but it probably is admissible under Rule 803(3), Federal Rules of Evidence, to prove the intent of Stearns through its lawyer. Nevertheless, the Court does not give much weight to that statement, not because it doubts the credibility of N.B. Perkins, the witness who overheard the conversation, but because the statement does not coincide with other evidence concerning intent.


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

text:
    Fitzroy BRYANT, Plaintiff, v. ASSOCIATED PRESS and Daily News Publishing Company, Inc., Defendants.
    Civ. No. 82/261.
    District Court, Virgin Islands, D. St. Croix.
    Oct. 9, 1984.
    Lolita D'Jones, Christiansted, St. Croix, V.I., for plaintiff.
    Frederick G. Watts, St. Thomas, V.I., for defendant Associated Press.
    Adriane J. Dudley, St. Thomas, V.I., for defendant Daily News Pub. Co., Inc.
   MEMORANDUM OPINION AND ORDER

DAVID V. O’BRIEN, District Judge.

THIS MATTER is before the Court on motion of defendants Daily News Publishing Company, Incorporated (hereafter “Daily News”) and the Associated Press (hereafter “A.P.”) for summary judgment pursuant to Fed.R.Civ.P. 56. Plaintiff Fitzroy Bryant (hereafter “Bryant” or “plaintiff”) resists summary judgment in this libel action asserting that questions of material fact are presented requiring resolution by a jury. Since we conclude that no issues of material fact are raised by the present record and that plaintiff has failed as a matter of law to make his case against either the Daily News or the A.P., summary judgment will be granted.

FACTS

The summer of 1982 found the normally pacific isles of St. Kitts and Nevis embroiled in heated, and often violent, disagreement over the desirability of, and framework for, independence from Great Britain. Premier Kennedy Simmonds had been leader of the St. Kitts — Nevis government since February of 1980 when his party, the People’s Action Movement, joined with the Nevis Reform Party to oust the Labour Party government in a general election. On August 29, 1982, Bryant, chairman of the now opposition Labour Party spoke at a rally on St. Kitts organized to protest any move by St. Kitts and Nevis toward independence before holding another general election. During his speech Bryant reportedly called on those in attendance to remove the Simmonds’ government from office and encouraged them to accept any risk in accomplishing that goal.

Several days later another incident further heightened the emotions of Kittitians. In the early hours of Wednesday September 2, 1982, a fire in the capital of Basseterre destroyed the historic Supreme Court building, a picturesque landmark of St. Kitts for some 200 years. The island was in an uproar. Police investigators discovered the fire to have been deliberately set, and Premier Simmonds wasted no time in pointing his finger at leaders of the opposition Labour Party. A tempest of accusations and cross-accusations followed.

At some point the determination was made that Bryant’s August 29th speech was so impassioned as to be criminal. On Saturday, September 4, 1984, just prior to a scheduled public meeting, Bryant was arrested and charged with inciting people to violence.

The next day a printed A.P. wire dispatch reporting on the events in St. Kitts was received via teletype in the Daily News’ newsroom in St. Thomas, U.S. Virgin Islands. The dispatch, in pertinent part reads as follows:

POLITICIAN ARRESTED, 250
CABLES, APW, FOR LD.
BASSE TERRE, ST. KITTS (AP) A rival political leader in this Caribbean British associated state was arrested Saturday afternoon after Premier Kennedy Simmonds said some political leaders were “responsible” for the fire that burned the Supreme Court in Basse Terre last Wednesday.
Labor Party Chairman Fitzroy Bryant was arrested without bail and charged by police with giving speeches that were “inciting people to violence,” but court and police spokesmen declined to reveal further details. He was arrested at his home in St. Kitts at 1:30 P.M. (AST) and taken the [sic] police headquarcers in Basse Terre.
About three thousand Labor Party followers held a protest rally shortly after Bryant’s arrest, but no (no) incident was reported. Police concluded Friday that the fire that burned the two-story Supreme Court building had been maliciously set. Another arson attempt against a People’s Action Movement party office in Charleston, on the off-island of Nevis, is being investigated by police, after a gasoline-soaked rope was found there the same day the Supreme Court burned in Basse Terre ...

Daily News motion, Exhibit B.

The wire editor judged the developments in St. Kitts to be newsworthy in the Virgin Islands and decided to publish the item in the next day’s Daily News. He reviewed the story, composed a headline, and with minor changes, the dispatch as received was published on page 4 of the September 6, 1982 Daily News under the headline “St. Kitts official jailed for arson.” See Daily News Motion, Exhibit A.

On the following day the Daily News was put on notice that the headline accompanying the article was erroneous, as Bryant had not been arrested for arson but instead for inciting people to violence. The Daily News was planning to run a followup A.P. dispatch in the September 8 edition, so it amended the A.P. report to include a correction of the September 6 headline. See Daily News Motion, Exhibit C.

Bryant now brings this action in libel against both the A.P. and the Daily News contending that the article and headline falsely portrayed him as an arsonist and severely damaged his reputation throughout the Caribbean. Bryant asserts that both defendants acted in disregard of the actual truth of the matter, the Daily News in failing to verify the accuracy of its headline and the A.P. in juxtaposing and intertwining its stories so as to leave the general public with the wrong impression.

The A.P. and the Daily News assert that the allegedly libelous publications are privileged within the ambit of the New York Times, infra, rule. They contend that Bryant is a public figure, and, as such, in order to prevail he must prove that defendants acted with “actual malice” toward him. Defendants urge that, on the record, Bryant has failed to make such a showing thus summary judgment should enter on their behalf.

DISCUSSION

A. Plaintiffs Status

The first matter this Court faces is to determine the standard of fault to be applied to these defendants. In weighing the First Amendment values on one hand, with the right of citizens to protect their reputations on the other, the Supreme Court has set down the rule that if the plaintiff is a “public official” or a “public figure”, the balance must be struck in favor of freedom of speech. In New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 725-26, 11 L.Ed.2d 686 (1964) the Supreme Court held that the Constitution requires that, in an action for defamation relating to his official conduct, a “public official” must prove by clear and convincing evidence that an alleged defamatory statement was made with “actual malice”. The Court went on to define this requisite “actual malice” as publishing articles with a knowledge of their falsity or reckless disregard for their truth. Id. The New York Times rule was later expanded by the Court to encompass “public figures” regarding matters of public interest in Curtis Publishing Co. v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967). Later, in refusing to further extend New York Times, supra, to private individuals the Court explained why “public officials” and “public figures” must satisfy a more demanding burden of proof. In Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974) the Court noted that these libel plaintiffs had “voluntarily exposed themselves to increased risk of injury from defamatory falsehood concerning them” and, because of their status, had greater access than private individuals to channels of public communication in order to rebut such a falsehood. Id. at 345, 94 S.Ct. at 3009. The Court then went on to set forth two classifications of “public figures”:

[Tjhose who attain this status have assumed roles of especial prominence in the affairs of society. Some occupy positions of such persuasive power and influence that they are deemed public figures for all purposes. More commonly, those classed as public figures have thrust themselves to the forefront of particular public controversies in order to influence the resolution of the issues involved. In either event, they invite attention and comment.

Id.; at 345, 94 S.Ct. at 3009.

Defendants assert in the case at issue that plaintiff clearly is a limited purpose “public figure” within the second category described above. We agree.

It cannot be disputed that Bryant has been a major and influential participant in St. Kitts politics over the past decade. He served intermittently as a member of the House of Assembly, the legislature of St. Kitts, from 1966 until 1980. During the same period he held a position in the executive branch serving as Minister of Government for Health, Education and Social Affairs from 1967 through 1979. Bryant, as well, served as Attorney General in 1979 and 1980.

Since 1966, Bryant has been a member of the Executive Committee of the Labour Party, the party ousted from power by the Simmonds’ government in 1980. He presently is, and has been since 1979, the Chairman of the Labour Party, which today retains its position as the primary opposition party in St. Kitts. In conjunction with his active party membership, Bryant writes a widely read and aptly named weekly column, “Frankly Speaking”, for the voice of the Labour Party, the Labour Spokesman. Bryant has, thus, not shied from the public light since the Labour Party’s defeat in 1980.

As to be expected, the major political issue facing St. Kitts in recent times has been its move towards independence from Great Britain. The complexities of the matter prompted nationwide emotional debate. Bryant opposed the ruling party’s proposal for achieving independence and, from July, 1982 up until his arrest in September, 1982, he made weekly speeches in support of his opposition. Bryant was attempting to influence as many of the people as possible and admits that his role in the ongoing national debate of 1982 was a visible one.

In light of the foregoing, this Court cannot help but find Bryant to be a “public figure” for the purposes of the New York Times rule. He has clearly “thrust [himself] to the forefront of [a] particular public controversy “i.e., the move toward independence,” in order to influence the resolution of the issues involved.” Id.

Bryant attempts to avoid the “public figure” label on the basis that while he may indeed be a “public figure” in St. Kitts, he is not one in the U.S. Virgin Islands, the situs where the libel and subsequent damage occurred. The argument that one may be a “public figure” for libel purposes in one geographical area but not in another is unique and intriguing. It is not relevant here, however, as it fails to take into account the intimacy of our Caribbean community. The intermigration among the Caribbean islands is well documented. The interest in the often dynamic political developments on nearby islands is not only limited to their expatriates. As was so recently demonstrated in Grenada, Caribbean nations pay keen attention to the politics of one another. While the various island communities and nations may indeed be separated by hundreds of miles of sea, we are in a real sense next door neighbors.

Accordingly, this Court holds Bryant, as a matter of law, to be a public figure in the Virgin Islands under both Gertz considerations. First, he is able to rebut alleged false publications more effectively than any private individual due to his greater access to the media throughout the Caribbean. Id. at 344, 94 S.Ct. at 3009. Second, Bryant has voluntarily entered the political arena, exposed himself to public scrutiny, and, thus made himself subject to Caribbean-wide public comment. Id. at 345, 94 S.Ct. at 3009.

B. Actual Malice

Having decided that Bryant is a public figure for the purposes of libel analysis, we must next turn to see whether he has met the “actual malice” burden of New York Times, supra.

While noting, initially, that at one point summary judgment in libel cases may have been the rule rather than the exception, e.g. Treutler v. Meredith Corp., 455 F.2d 255, n. 1 (8th Cir.1972); Washington Post v. Keogh, 365 F.2d 965 (D.C.Cir.1966), cert. denied, 385 U.S. 1011, 87 S.Ct. 708, 17 L.Ed.2d 548 (1967), more recent commentary lends itself to a contrary position. See Yiamouyiannis v. Consumers Union, 619 F.2d 932 (2d Cir.), cert. denied, 449 U.S. 839, 101 S.Ct. 117, 66 L.Ed.2d 46 (1980). In Hutchinson v. Proxmire, 443 U.S. 111, 120 n. 9, 99 S.Ct. 2675, 2680 n. 9, 61 L.Ed.2d 411 (1979), the Chief Justice indicated in dicta that the question of “actual malice” is particularly inappropriate for summary disposition as it calls into question the defendants’ state of mind. This Court will utilize a neutral approach that, in defamation actions, neither the grant nor the denial of summary judgment is favored and traditional summary judgment standards are to be applied. See Yiamouyiannis, supra; Fed.R.Civ.P. 56.

The question of whether the Daily News or the A.P. acted with “actual malice” toward Bryant is a question of fact. Curtis Publishing Company v. Butts, 388 U.S. 130, 87 S.Ct. 1975, 18 L.Ed.2d 1094 (1967); Zurita v. Daily News, 578 F.Supp. 306 (D.V.I.1984). Further, this Court’s perspective on a motion for summary judgment is to resolve any doubt as to the existence of a genuine issue of material fact against the moving party. Ness v. Marshall, 660 F.2d 517 (3d Cir.1981); Zurita, supra.

The New York Times rule requires Bryant to prove with convincing clarity that the A.P. and the Daily News published the defamatory falsehood with either knowledge of its falsity or with reckless disregard for the truth. See New York Times, supra; Gertz, supra. Where, as here, defendants moved for summary judgment on the issue of “actual malice”, and plaintiff claims material factual issues are presented, this court accepts plaintiffs assertions as true, determines materiality, and applies the “actual malice” standard as set forth above. See Yiamouyiannis, supra. To grant summary judgment, this court must conclude that based on Bryant’s assertions no “reasonable jury could find malice with convincing clarity.” Id. at 939 (quoting Nader v. de Toledano, 408 A.2d 31 (D.C.1979), cert. denied, 444 U.S. 1078, 100 S.Ct. 1028, 62 L.Ed.2d 761 (1980)); see Guam Federation of Teachers, Local 1581 v. Ysrael 492 F.2d 438 (9th Cir.), cert. denied, 419 U.S. 872, 95 S.Ct. 132, 42 L.Ed.2d 111 (1974).

The difficulty now faced by Bryant is that the only facts which we have to apply as to the “actual malice” standard are those presented by defendants. The Daily News supports its motion by affidavits of the wire editor who composed the erroneous headline and the managing editor of the Daily News. The facts as gleaned from these affidavits indicate that at no time prior to publication did the Daily News have any doubt as to the truth of the headline. Further, upon being informed of the error, the paper took immediate steps to remedy same with a correction. Similarly, the A.P. supports its motion with affidavits of its correspondent in St. Kitts, who generated the information, and an employee in Puerto Rico, who drafted the pertinent dispatch. These affidavits indicate that the A.P., as well, operated with no ill will toward Bryant and in the good faith belief that the dispatch was accurate.

The deposition of Daily News Managing Editor Penny Feuerzeig, and the affidavits of various citizens, cited by Bryant, do not contradict the essentials of what happened at the newspaper that evening. A wire editor, working against deadline, made a mistake. It was not a mistake born of malice. It may have been careless, but nothing in the record could lead us to the conclusion that it was more than that. As to the suggestion that Bryant was not a “public figure” in the Virgin Islands, a judge is not required to discard, in decision making, what is widely known to be true in the community in which that judge lives. And in our community of the Virgin Islands, there are thousands of persons from St. Kitts and Nevis who are acutely aware of Bryant, his political career, and the issues in controversy.

CONCLUSION

Bryant is a “public figure” who must make a showing of “actual malice” in order to prevail. He has not done so. No reasonable jury could find otherwise. Summary judgment will enter in favor of both defendants dismissing the complaint with prejudice.

      . The Supreme Court treats both the “public official” and "public figure” determinations as issues of law to be decided by the trial court. See e.g. Time, Inc. v. Firestone, 424 U.S. 448, 96 S.Ct. 958, 47 L.Ed.2d 154 (1976); Gertz v. Robert Welch, Inc., 418 U.S. 323, 94 S.Ct. 2997, 41 L.Ed.2d 789 (1974); Rosenblatt v. Baer, 383 U.S. 75, 86 S.Ct. 669, 15 L.Ed.2d 597 (1966).


author: DAN M. RUSSELL, District Judge.

text:
    Jerry Lee RAYNES, Plaintiff, v. HASSIE-HUNT TRUST, Defendant.
    Civ. A. No. H83-0328(R).
    United States District Court, S.D. Mississippi, Hattiesburg Division.
    Oct. 9, 1984.

      Beth C. Clay, Thomas, Price, Alston, Jones & Davis, Jackson, Miss., for defendant.
    Larry O. Norris, Hattiesburg, Miss., for plaintiff.
   OPINION

DAN M. RUSSELL, District Judge.

This cause is before the Court on defendant’s motion for summary judgment. Under Fed.R.Civ.P. 56(c), a motion for summary judgment shall be rendered “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Id. Once a motion for summary judgment is made and supported with proper affidavits, Fed.R. Civ.P. 56(e) requires the adverse party to “set forth specific facts showing that there is a genuine issue for trial. If he does not respond, summary judgment, if appropriate, shall be entered against him.” Id.

After listening to oral argument and reviewing the submitted deposition excerpts, affidavits, and pleadings, the following undisputed facts are revealed:

1. Plaintiff Raynes is a citizen of Mississippi and there is complete diversity of citizenship. This Court has jurisdiction under 28 U.S.C. § 1332.

2. Defendant Hassie-Hunt Trust (hereinafter referred to as Hunt) is in the business of producing, refining, and marketing oil and gas.

3. Defendant Hunt is the owner of the Harvey “C” Heater Platform located south of Venice, Louisiana.

4. Defendant Hunt contracted with Arrow Contractors of Jefferson, Inc. to provide routine maintenance and repair services on Hunt leases.

5. Plaintiff Raynes was an employee of Arrow Contractors. He entered into employment with Arrow Contractors in the State of Louisiana. He also resided in Louisiana during the normal work week.

6. Defendant Hunt’s own employees can and do at times perform maintenance and repair services.

7. Plaintiff received workmen’s compensation benefits from Arrow Contractors’ insurance carrier.

8. The defendant furnishes the tools as well as assigns and supervises the Arrow crew on their daily work assignments. There is some conflict as to the actual degree of supervision that Hunt exercises over the work performed by Arrow. However, it is not necessary that this conflict be resolved to solve this motion.

LOUISIANA SUBSTANTIVE LAW IS APPLICABLE UNDER MISSISSIPPI’S CONFLICT OF LAWS RULE

In a diversity action, a federal court is to apply the choice-of-law rules of the forum state. Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941); Boardman v. United States Automobile Association, 742 F.2d 847 at 849 (5th Cir. 1984). In the case of Mitchell v. Craft, 211 So.2d 509 (Miss.1968), the Mississippi Supreme Court modified, but did not overrule, earlier cases which decided the question of choice-of-law by the determining factor of where the injury occurred. In Mitchell, the situs of injury was still held determinative of the rights and liabilities of the parties “unless with respect to the particular issue, some other state has a more significant relationship to the occurrence and the parties, in which event the local law of the other state will be applied.” Id. at 516. In determining the significance of the relationship, or so called “center of gravity”, the court adopted guidelines set forth in the Restatement (Second) of Conflict of Laws § 145 (1971).

In the instant case, not only did the injury occur in Louisiana, but most of the significant relationships concerning the occurrence were centered in Louisiana. The only tie plaintiff can assert with Mississippi is that he was a Mississippi citizen at the time of the injury.

The plaintiff, citing Restatement (Second) of Conflict of Laws § 6 (1971), argues “that Mississippi has the most attractive policies for a suit of this nature.” In determining the relevant policies of all interested states, the question is not one of attractiveness but one of relative interest. “The forum should seek to reach a result that will achieve the best possible accommodation of these policies. The forum should also appraise the relative interests of the states involved in the determination of the particular issue. In general, it is fitting that the state whose interests are most deeply affected should have its local law applied.” Restatement (Second) of Conflict of Laws § 6 comment f (1971).

The interests of the State of Louisiana will be directly affected by the decision of this Court, for it is there that the applicable law governing the relationship between the parties has been centered. The contract for employment between the plaintiff and Arrow Contractors and the contract for maintenance and repair between Arrow Contractors and Hunt were entered into, and contemplated performance, in Louisiana. In addition, the injury itself occurred in Louisiana. These factors alone have been held sufficient to “give the state of Louisiana a significant interest in the matter and support the application of the Louisiana Workmen’s Compensation Act.” George v. Home Indemnity Company, 420 F.2d 782, 786 (5th Cir.1969). Therefore, the rights and liabilities of the parties should be determined by the law of Louisiana, the state which has the most substantial relationship to the parties.

TORT LIABILITY OF A PRINCIPAL UNDER LOUISIANA LAW

Under Louisiana law, a principal will be held liable for Workmen’s Compensation benefits to the employees of his contractors who perform work which is part of the principal’s “trade, business or occupation.” Such a principal is considered a statutory employer of his contractor’s employees. Once a statutory employment relationship is determined to exist, “an injured employee’s claim against his statutory employer is limited to Workmen’s Compensation benefits.” Hodges v. Exxon Corp., 727 F.2d 450, 453 (5th Cir.1984). The statutory employer cannot be sued in tort. Blanchard v. Gulf Oil Corp., 696 F.2d 395, 396-397 (5th Cir.1983) (“Blanchard III”). The burden is placed upon the defendant claiming the status of statutory employer to prove where a statutory relationship exists. Reeves v. Louisiana and Arkansas Railway Company, 282 So.2d 503 (La.1973).

This leads us to the issue of whether a statutory employer relationship existed between the plaintiff and defendant. In Blanchard v. Engine Gas and Compressor Service, 613 F.2d 65 (5th Cir.1980) (“Blanchard II”), the court rejected the “essential to business test” and formulated a new test for determining whether a statutory employee relationship existed. The proper standard was held to include:

whether the activity done by the injured employee or his actual immediate employer is part of the usual or customary practice of the principal or others in the same operational business;
Whether the particular principal involved in the case customarily does the type of work performed by the contractor and whether the contractor’s work is an integral part of the work customarily performed by the principal;
Whether the principal, or others engaged in like operational activities, normally subcontract out the work or whether they have employees who can, and customarily do, do the work. Id. at 71.

In the subsequent case of Lewis v. Exxon Corp., 441 So.2d 192, opinion on rehearing, 441 So.2d 197 (La.1983), the Louisiana Supreme Court listed two elements which must be met in order for a principal to be considered a statutory employer. “First, the ‘work’ must be a part of the principal’s ‘trade, business or occupation’. Second, the principal must have been engaged in that trade, business or occupation at the time of the injury.” Id. at 197. Although the language of the two tests may vary, the same analysis is required. “Both tests require a factual determination of whether the actual scope of the work contract under which the alleged statutory employee performed his duties is within the nature and purpose of the principal’s trade, business or occupation.” Hodges v. Exxon Corp., 727 F.2d 450, 453 (5th Cir.1984).

In order for work to be considered a part of the principal’s trade; business or occupation, it must be routine, customary, or necessary for day-to-day operations of the enterprise and not an extraordinary or nonrecurring task. The enterprise must be accustomed to engaging in the work as a part of its regular activities. In addition, the employer should be equipped to handle the project in respect to manpower and equipment. Lewis v. Exxon Corp., 441 So.2d at 198. The court is to focus on the overall project for which the contractor was hired and not on the individual task performed by the worker. Id. at 199; Hodges v. Exxon Corp., 727 F.2d at 454. “General maintenance and repair work which by their 'nature allow the smooth and continued operations of the principal, are within the scope of the statute.” Lewis v. Exxon Corp., 441 So.2d at 198.

Defendant Hunt’s affidavits of Joseph Eugene Inabnett III (Hunt’s district superintendant responsible for the maintenance and operation of its facility), and Spiro Vasilijevich (field foreman of the site of plaintiff’s accident), disclose that the general repair services being performed by Arrow Contractors were regular and customary in the daily operation of Hunt’s business. Such repair and maintenance services, although normally subcontracted, are stated to be capable of, and sometimes are performed by defendant’s own employees. No opposing affidavits have been offered to contradict these facts.

Louisiana jurisprudence is replete with cases involving the petroleum and refining industry where contracted activities of a maintenance and repair nature have been held to be part of the principal’s trade, business or occupation. Hodges v. Exxon Corp., 727 F.2d 450 (5th Cir.1984); (holding that independent contractor’s employee who was injured while working on principal’s chemical reactor was limited to a workmen’s compensation claim against the principal since its employees performed similar maintenance). Barrios v. Engine and Compressor Services, Inc., 669 F.2d 350 (5th Cir.1982); (holding routine maintenance and repair on natural gas compressors which provided pressurized gas to fuel an oil rig was an integral part of the employer’s customary work). Darville v. Texaco, Inc., 674 F.2d 443 (5th Cir.1982); (holding the vacuuming of a petroleum separator to be part of the principal’s regular business, trade or occupation). Traylor v. Shell Oil Co., 400 So.2d 342 (La.App.1981); (holding maintenance and repair work in the form of repairing a catalytic cracker at an oil company’s refinery to be work within the trade, business or occupation of the principal). In particular, see Arnold v. Shell Oil Co., 419 F.2d 43 (5th Cir.1969) and Fontenot v. Stanolid Oil and Gas Co., 243 F.2d 574 (5th Cir.1957) in which the court held “that a heater treater is part of the regular operations of an integrated oil company for purposes of Section 23:1061 of the Louisiana Revised Statutes.” Arnold v. Shell Oil Co., 419 F.2d at 47.

The above cases substantiate the defendant’s assertion that the maintenance and repair work performed by Arrow Contractors is within the trade, business or occupation of Hunt. They also reflect the proposition that the petroleum and refining industry as a whole customarily contracts with others for the performance of such services. When the case law is considered with the defendant’s uncontradicted affidavits that Hunt’s own employees were capable of, and did at times, perform such maintenance and repair work, the court must then conclude that there is no essential dispute of the fact that the plaintiff’s work consisted of services which were regularly performed as an essential and integral part of Hunt’s business. As such, Hassie Hunt Trust is adjudged to be the statutory employer of Plaintiff Raynes. This determination limits Hunt’s liability to Workmen’s Compensation benefits. Such a holding also precludes the assertion of a claim against Hunt based on the strict liability imposed by the Louisiana Civil Code. Davis v. Morrow, 381 So.2d 1258, 1260 (La. App.1980); Henson v. Travelers Insurance Co., 208 So.2d 366 (La.App.1968). Accordingly, the defendant’s motion for summary judgment is hereby granted.

An order in accordance with this opinion shall be provided as set forth in the Local Rules.

      . § 145 The General Principle
      (1) The rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.
      (2) Contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include:
      (a) the place where the injury occurred,
      (b) the place where the conduct causing the injury occurred,
      (c) the domicil, residence, nationality, place of incorporation and place of business of the parties, and
      (d) the place where the relationship, if any, between the parties is centered.
      These contacts are to be evaluated according to their relative importance with respect to the particular issue.

      . § 6 Choice-of-Law Principles
      (1) A court, subject to constitutional restrictions will follow a statutory directive of its own state on choice of law.
      (2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include
      (a) the needs of the interstate and international systems,
      (b) the relevant policies of the forum,
      (c) the relevant policies of other interested states and the relative interests of those states in the determination of a particular issue,
      (d) the protection of justified expectations,
      (e) the basic policies underlying the particular field of law,
      (f) certainty, predictability and uniformity of result, and
      (g) ease in the determination and application of the law to be applied.

      . Brief of Respondent at 6.

      . La.Rev.Stat.Ann. § 23:1061 (West 1950) states:

        “Where any person (in this section referred to as principal) undertakes to execute any work, which is a part of his trade, business, or occupation or which he had contracted to perform, and contracts with any person (in this section referred to as contractor) for the execution by or under the contractor of the whole or any part of the work undertaken by the principal, the principal shall be liable to pay to any employee employed in the execution of the work or to his dependent, any compensation under this Chapter which he would have been liable to pay if the employee had been immediately employed by him; and where compensation is claimed from, or proceedings are taken against, the principal, then, in the application of this Chapter reference to the principal shall be substituted for reference to the employer, except that the amount of compensation shall be calculated with reference to the earnings of the employee under the employer by whom he is immediately employed.
      “Where the principal is liable to pay compensation under this Section, he shall be entitled to indemnity from any person who independently of this Section would have been liable to pay compensation to the employee or his dependent, and shall have a cause of action therefor."
      La.Rev.Stat.Ann. § 23:1032 (West 1950) states:
      “The rights and remedies herein granted to an employee or his dependent on account of an injury, or compensable sickness or disease for which he is entitled to compensation under this Chapter, shall be exclusive of all other rights and remedies of such employee, his personal representatives, dependents, or relations against his employer, or any principal or any officer, director, stockholder, partner or employee of such employer or principal, for said injury, or compensable sickness or disease. For purposes of this Section, the word 'principal' shall be defined as any person who undertakes to execute any work which is a part of his trade, business or occupation in which he was engaged at the time of the injury, or which he had contracted to perform and contracts with any person for the execution thereof.”

      . Blanchard, a contractor's employee, was injured and received workmen's compensation benefits from the contractor's insurance carrier. Blanchard v. Engine Gas and Compressor Services, Inc., 575 F.2d 1140, 1141 n 2 (5th Cir.1978). Summary judgment was granted for the principal, Gulf Oil Company, in a subsequent suit for tort damages. Blanchard III. See also Traylor v. Shell Oil Co., 400 So.2d 342 (La.App.1981).

      . La.Civ.Code.Ann. art. 2322 (West 1979) reads in pertinent part as follows:. "The owner of a building is answerable for the damage occasioned by its ruin, when this is caused by neglect to repair it____”


text:
    James D. GARDNER, Mary Gardner, William D. Gardner, James D. Gardner, Jr., Margaret Gardner Ermine, Kenneth G. Gardner and Francis R. Gardner, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant.
    Civ. A. No. S81-0667(R).
    United States District Court, S.D. Mississippi, S.D.
    Oct. 9, 1984.

      Bobby G. O’Barr, Stanton Fountain, Jr., Biloxi, Miss., for plaintiffs.
    Harry R. Allen, Floyd G. Hewitt, Jr., Bryan, Nelson, Allen, Schroder & Cobb, Gulfport, Miss., for defendant.
   OPINION

DAN M. RUSSELL, District Judge.

This cause is presently before the Court on two motions. The plaintiffs have submitted a motion for partial summary judgment and the defendant has submitted a motion for leave to file an amended answer and for a continuance. For the reasons stated below, the Court grants the plaintiffs’ motion and denies the defendant’s motions.

The defendant has acknowledged in its brief in opposition to the plaintiffs’ motion for partial summary judgment that based upon this Court’s earlier interpretations of Amendatory Endorsement AU7052-1, and its own admissions, that the plaintiffs would be entitled to benefits in the amount of $40,000.00, (1) if the amendatory endorsement was a part of their policy, and (2) if the plaintiffs have satisfied, or the court excuses a contractual condition precedent; that being the exhaustion of all bodily injury liability bonds or insurance policies applicable at the time of the accident by payment of judgments or settlement. This Court is of the opinion that the plaintiffs have met the defendant’s proposed criteria to recovery.

The defendant has alleged that new found evidence indicates that Amendatory Endorsement AU7052-1 is not, and has never been a part of the plaintiffs’ policy. This Court has rendered two opinions in this action, one dated June 6, 1984, and the other March 20, 1984. Both of these opinions interpreted the policy as containing the amendatory endorsement in question. Similarly, this Court rendered the opinion in St. Arnaud, v. Allstate Insurance Co., 501 F.Supp. 192 (S.D.Miss.1980) on October 31, 1980, a case consolidated with the one at bar, and also interpreted the amendatory endorsement as applicable without objection from Allstate as to any inapplicability of that endorsement. In addition, the court file is replete with both indications and admissions by Allstate to the effect that Amendatory Endorsement AU7052-1 is a part of the plaintiffs’ policy. Furthermore, the original complaint in this action was filed December 21, 1981. With almost two years and nine months of discovery time having elapsed, with the plaintiffs’ complaint being amended three times and answered three times by the defendant, surely any allegation by Allstate now that the policy lacks a policy provision that is of vital importance to this litigation has to be considered dilatory. Hall v. Aetna Casualty and Surety Co., 617 F.2d 1108 (5th Cir.1980).

Under Federal Rule of Civil Procedure 15(a), at this stage of the proceedings “a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires.” Fed.R. Civ.P. 15(a). The decision whether to allow amendments to the pleadings lies entirely within the discretion of the trial court. Lamar v. American Finance System of Fulton City, Inc., 577 F.2d 953 (5th Cir.1978); Dunn v. Koehring Co., 546 F.2d 1193 (5th Cir.1977). A refusal by the trial court of leave to amend will not be overturned unless there has been an abuse of discretion. See Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-332, 91 S.Ct. 795, 802-803, 28 L.Ed.2d 77 (1971); Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1961); Nilsen v. City of Moss Point, 621 F.2d 117, 122 (5th Cir. 1980).

Similarly, in Hall v. Aetna Casualty and Surety Co., supra, the fifth circuit affirmed a trial court’s decision refusing leave to amend. In Hall, Aetna argued that the trial court erred by not allowing permission to amend in order to contest coverage. The court, however, disagreed in language equally applicable to the defendant in the case at bar:

Aetna is charged with knowledge of the contents of its own policy. It had ample opportunity to amend its answer throughout the pendency of the case, and the district court was liberal in granting it leave to do so. The trial judge recognized, however, that this final amendment would clearly prejudice the opposing party and simply came too late. The holdings in this court make clear that under circumstances like these the trial court is not guilty of an abuse of discretion when it denies leave to amend. Id. Citing Combee v. Shell Oil Co., 615 F.2d 698 (5th Cir.1980); Lamar v. American Finance System of Fulton County, Inc., 577 F.2d 953 (5th Cir.1978); Dunn v. Koehring Co., 546 F.2d 1193 (5th Cir. 1977); Nevels v. Ford Motor Co., 439 F.2d 251 (5th Cir.1971); Freeman v. Continental Gin Co., 381 F.2d 459 (5th Cir.1967).

Therefore, this Court denies the defendant’s motion to amend and for continuance because the defendant has had ample opportunity to discover whether Amendatory Endorsement AU7052-1 was in fact a part of the policy, and because any amendment at this state of the proceedings, 17 days before trial, would result in undue prejudice to the plaintiffs. 3 Moore’s Federal Practice ¶ 15.08[4] (2d ed. 1984).

In disposing of the defendant’s motion to amend and for continuance the Court has thereby answered in the affirmative the correlative question of whether Amendatory Endorsement AU7052-1 is a part of the plaintiffs’ policy. Thus, the only question remaining is whether the plaintiffs have satisfied the contractual condition precedent of exhausting all bodily injury liability bonds or insurance policies applicable at the time of the accident by payment of judgment or settlement. The defendant contends that the plaintiffs have received only $10,000.00 as settlement from the tortfeasor’s insurer, which is $10,000.00 less than this Court in an earlier opinion found as the “per person” limit. The defendant further contends that since it is unclear which of the plaintiffs received the settlement, it is conceivable that all of the $10,000.00 went entirely to one of the plaintiffs and that that plaintiff would have exhausted the tortfeasor’s limits as to him, but that no other plaintiff would thereby be entitled to recovery.

This Court has held that the language within Amendatory Endorsement Au7052-1, under the “Limits of Liability” section of that policy, is unclear and ambiguous, St. Arnaud v. Allstate Insurance Co., supra, leading this Court to the conclusion that “stacking of the uninsured motorist coverage is allowed to determine the insurer’s limits of liability under the under-insured motorist provision.” Id. at 194. Pearthree v. Hartford Accident & Indemnity Co., 373 So.2d 267 (Miss.1979). See also Government Employees Insurance Co. v. Brown, 446 So.2d 1002 (Miss.1984); Phillips, Underinsured Motorist Coverage in Mississippi, 3 Miss.C.L.Rev. 65, 75-101. (1982). Thus, the contractual condition precedent, being unclear and ambiguous, can be excused.

Furthermore, this Court has ruled that “the maximum amount which all plaintiffs collectively may recover for damages in this cause is $40,000.00” and that “the ‘per person’ $20,000.00 limit of liability refers to all ‘insured’s’ not merely the decedent.” Gardner v. Allstate Insurance Co., Civil Action No. S81-0667(R), Order of August 5, 1984, emphasis added. Therefore, the defendant’s contentions are without merit since this Court’s ruling has treated the plaintiffs collectively and held any recovery by one as recovery by all. The plaintiffs, by accepting $10,000.00 as settlement from the tortfeasor’s insurer, have thus in effect exhausted by payment of settlement all bodily injury liability bonds or insurance policies applicable at the time of the accident, and have thereby met the amendatory endorsement’s contractual condition precedent to recovery thereunder. Therefore, having met the defendant’s proposed criteria to the plaintiffs’ recovery, the condition precedent being held satisfied and excused, the Court finds the plaintiffs are entitled to partial summary judgment as a matter of law in the amount of $40,000.00.

The plaintiffs have also requested prejudgment interest on the above amount from 90 days after the death of Christopher Gardner, or in the alternative, November 7, 1980, the date in which this Court signed the Order in the consolidated case of St. Arnaud v. Allstate Insurance Co., 501 F.Supp. 192 (S.D.Miss.1980). Since the resolution of the issues raised by the plaintiffs’ partial summary judgment motion does not completely dispose of this case, the Court will reserve decision on whether to award prejudgment interest until after trial on any remaining issues before the Court in this matter.

An Order in accordance with this opinion shall be provided as set forth in the Local Rules.

      . The provision of Amendatory Endorsement AU7052-1 containing the condition precedent which the defendant argues must be met provides in full that:
      Allstate shall not be obligated to make any payment because of bodily injury to which this insurance applies and which arises out of the ownership, maintenance or use of an underinsured automobile until after the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident with respect to such automobile have been exhausted by payment of judgments or settlements.

        . See note 1, supra.


author: CHARLES SCHWARTZ, Jr., District Judge.

text:
    Robert M. HOLLIS v. HALTER MARINE, INC.
    Civ. A. No. 84-2036.
    United States District Court, E.D. Louisiana.
    Oct. 9, 1984.

      C. John Caskey, Baton Rouge, La., for plaintiff.
    Russell D. Pulver, Douglas B. Habig, New Orleans, La., for defendant.
   ORDER AND REASONS

CHARLES SCHWARTZ, Jr., District Judge.

This matter came before the Ccurt on the motion of the plaintiff to remand. Following oral argument, and considering the memoranda, the record and the law applicable to this case, the Court granted the plaintiff’s motions for the reasons set forth below.

The plaintiff filed suit in the Civil District Court for the Parish of Orleans against his employer, Halter Marine, Inc. (Halter Marine), for personal injuries which he allegedly sustained in the course of his employment. In his petition for damages, the plaintiff contends that he was a seaman on the date of the alleged accident, and asserts causes of action under the Jones Act, 46 U.S.C. § 688, and under the general maritime law for unseaworthiness of the vessel allegedly involved in the incident. The defendant filed a petition for removal pursuant to 28 U.S.C. § 1441(c).

The plaintiff contends that the removal was improper and that the Court is without jurisdiction over this matter. The plaintiff correctly points out that suits under the Jones Act are nonremovable. Preston v. Grant Advertising, Inc., 375 F.2d 439 (5th Cir.1967). The propriety of removal is determined by examining the plaintiff’s pleadings as they stand at the time the petition for removal is filed. In re Carter, 618 F.2d 1093 (5th Cir.1980). In the absence of any issue of a fraudulent attempt to evade removal, the court determining whether a cause of action under the Jones Act has been alleged is limited to a review of the plaintiff’s pleadings. Preston v. Grant Advertising, Inc., supra.

The defendant contends that this Court should look beyond the allegations of the plaintiff’s complaint to find that he is not a seaman and to recognize plaintiff’s cause of action as one under § 905(b) of the Longshoremen’s and Harbor Workers’ Compensation Act. Yet, the defendant has not asserted that seaman status has been alleged in a fraudulent attempt to evade removal. Indeed, at oral argument, counsel for the plaintiff sufficiently demonstrated that there is a reasonable basis for the allegation of seaman status in the instant case. Defendant’s contentions in this regard are without merit.

Additionally, the defendant contends that a claim for maintenance and cure is implicit in plaintiff’s pleading, and that this claim is “separate and independent” within the meaning of 28 U.S.C. § 1441(c). The plaintiff denies that he is asserting a claim for maintenance and cure. The Court does not read plaintiff’s complaint as including such a claim. In any event, a claim for maintenance and cure is not separate and independent, as contemplated by § 1441(c), from plaintiff’s claims under the Jones Act and general maritime law. The leading case on the interpretation of § 1441(c) is American Fire & Casualty Company v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951), in which the Supreme Court concluded that

where there is a single wrong to plaintiff for which relief is sought, arising from an interlocked series of transactions there is no separate and independent claim or cause of action under 1441(c). 341 U.S. at 14, 71 S.Ct. at 540 (Emphasis supplied.)

To determine whether a claim is separate and independent, the Court should ascertain whether the plaintiff seeks to enforce a right which is unique to the plaintiff and whether the claim seeks to redress a single wrong that occurred to the plaintiff, apart from other wrongs that occurred. Carpenter v. Illinois Central Gulf Railroad Co., 524 F.Supp. 249 (M.D.La.1981). The Fifth Circuit has determined that an unseaworthiness claim is not separate and independent from a Jones Act claim for purposes of removal under § 1441(c). Pate v. Standard Dredging Corp., 193 F.2d 498 (5th Cir.1952). Likewise, we find that the maintenance and cure claim is not “separate and independent,” as contemplated by § 1441(c), from a Jones Act claim arising out of the same occurrence. In cases such as this, there is a single right to the plaintiff, specifically, the right of bodily safety, and a single wrongful invasion of that right. See, American Fire & Casualty Company v. Finn, 71 S.Ct. 534, 539-540, 341 U.S. 6, 13-14, 95 L.Ed. 702 (1951), citing Baltimore S.S. Co. v. Phillips, 274 U.S. 316, 47 S.Ct. 600, 71 L.Ed. 1069 (1927). Since the removal was improvident and the Court is without jurisdiction to adjudicate the matter before it, this case must be remanded in its entirety. 28 U.S.C. § 1447(c).

Accordingly, it is ordered that this matter be and it is hereby remanded to the state court for further proceedings.

      . In support of the contention that plaintiff is not a seaman defendant submits the affidavit of Halter Marine’s yard manager, which describes plaintiffs duties.

      . 28 U.S.C. § 1441(c) provides as follows:
      "Whenever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of act, the entire case may be removed and the district court may determine all issues therein, or in its discretion, may remand all matters not otherwise within its original jurisdiction.

      . This Court recently held that a tort action is not separate and independent from a worker’s compensation claim arising out of the same occurrence. Perrilloux v. E.I. duPont deNemours Company, 593 F.Supp. 393 (E.D.La.1984.)