author: H. FRANKLIN WATERS, Chief Judge.

text:
    David P. TAYLOR, Plaintiff, v. ARKANSAS LOUISIANA GAS COMPANY, Arkansas Louisiana Exploration Company, Arkla, Inc., Arkla Exploration Company, Arkansas Western Gas Company, Seeco, Inc., J.T. Stephens d/b/a Stephens Production Company and Stephens Production Company, Defendants.
    Civ. No. 83-2310.
    United States District Court, W.D. Arkansas, Fort Smith Division.
    March 19, 1985.

      James F. Dickson, Fayetteville, Ark., for plaintiff.
    Jerry Lee Canfield, Daily, West, Core, Coffman & Canfield, Fort Smith, Ark., for Arkansas Louisiana Gas Co., Arkansas Louisiana Exploration Co., Arkla, Inc., and Arkla Exploration Co.
    Kathleen Burke and E.J. Ball, Ball, Mourton & Adams, Fayetteville, Ark., for Arkansas Western Gas Co., and Seeco, Inc.
    Spence A. Leamons, Fort Smith, Ark., and E.J. Ball, Ball, Mourton & Adams, Fayetteville, Ark., for J.T. Stephens and Stephens Production Co.
   MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

The plaintiff, David P. Taylor, a resident and citizen of the State of New York, is the owner and successor in title and interest to 31 oil and gas leases located in Franklin County, Arkansas. The defendants are successors in title and interest to all mineral rights in the leases in question. There are three groups of defendants involved. The first group — Arkla—is made up of Arkansas Louisiana Gas Company, Arkansas Louisiana Exploration Company, Arkla, Inc., and Arkla Exploration Company. The second group — Stephens—consists of J.T. Stephens d/b/a Stephens Production Company and Stephens Production Company. And the third group — AWG—consists of Arkansas Western Gas Company and See-co, Inc.

The plaintiff is the lessor and the defendants are the lessees to 31 oil and gas leases. Each lease contains one of three types of royalty clauses defining the royalty due the plaintiff for the sale of gas produced under the lease. There are “market price” royalty clauses, “fixed rate” royalty clauses, and “proceeds” royalty clauses. The plaintiff brought this suit pursuant to 28 U.S.C. § 1332 alleging underpayment by the defendants of the royalties owed him pursuant to the oil and gas leases. The parties stipulated as to the facts involved and submitted the case to the court on cross motions for summary judgment. It is the duty of this court to interpret the royalty clauses and determine whether the plaintiff received from the defendants the correct royalty as agreed upon in the leases executed by the parties.

I. Market Price Royalty Clauses.

On October 10,1948, Stephens and Arkla entered into a joint operating agreement pertaining to the Cecil Gas Field in Sebastian and Franklin Counties, Arkansas. This field is the situs of ten natural gas wells owned by Stephens and Arkla and operated by Arkla pursuant to the 1948 agreement. Stephens and Arkla share in the burden of each of these wells regardless of the lessee named in the oil and gas leases. They share equally the cost of royalties of seven wells and on a pro rata share for three wells. Stephens also owns two other wells in the Cecil Field, but it owns them wholly, without any co-ownership by Arkla.

In March and June of 1973, and November of 1974, Stephens and Arkla executed long-term gas purchase contracts pursuant to which Stephens sold to Arkla all of its production from its working interest in all twelve wells mentioned above. These contracts replaced and superseded the earlier 1948 contract. These gas purchase contracts were in existence, within the meaning of NGPA, 15 U.S.C. § 3301(13), on November 8, 1978, and the sale per thousand cubic feet (MCF) for the production under those contracts was the maximum lawful price for which the production and working interest in those wells could be sold under the NGPA, 15 U.S.C. § 3315(b)(1), after November 8, 1978.

Four of the ten wells owned by Stephens and Arkla jointly, as well as two wells wholly owned by Stephens, are situated on property leased from the plaintiff by leases which contain the following royalty clause:

The Lessee shall pay Lessor as royalty for gas the equal one-eighth (Vs) of the value of such gas calculated at the rate of prevailing market price at well per thousand cubic feet while the same is being sold or used off the premises ... (emphasis added).

For the purpose of computing and paying to the plaintiff the royalty due under these leases, Stephens equated the “prevailing market price” with the price recited in the long-term gas sale contract pursuant to which Stephens sold its gas production to Arkla.

Arkla entered the gas produced on premises it leased from the plaintiff into its pipeline for sale directly to consumers and did not sell it on the open market by long-term gas sale contracts or other means. However, in determining the prevailing market price for purposes of computing the royalty owed to the plaintiff for the gas Arkla sold directly to its consumers, Arkla utilized the gas price recited in the long-term gas sale contract by which Stephens sold gas to Arkla. Arkla’s decision to use that contract price as the prevailing market price was not made arbitrarily. A royalty committee, established within the Arkla System with the designated purpose of determining the market value of gas, made the decision to utilize the contract price recited in the Stephens-Arkla gas sale contract as the prevailing market price for the purposes of royalty computation. The committee carefully considered many factors in reaching its conclusion. These factors included: the depth of the well, the volume of gas anticipated from the well, whether the seller is dedicating the gas from one well or many wells, quality of the gas, availability of pipelines, anticipated cost of installing pipelines, vintage of the gas, competition date, current market conditions, prior experience with the seller, any prices dictated by federal regulations, etc. Although Arkla has asserted that all those factors were considered, the committee’s decision that the prices established by the sales contracts were the best evidence of the prevailing market price of the gas from the wells was primarily due to the arm’s length-good faith nature of the Stephens’ gas purchase contracts with Arkla and the fact that both parties own essentially equal interests in the gas subject to such contracts.

The plaintiff asserts that the prices recited in the Arkla-Stephens gas sale contracts were not equal to the prevailing market rate, and, therefore, the royalty payments based on those prices did not satisfy the lease obligations to pay royalties computed at the prevailing market price. Thus, the issue is: whether the lease obligations to pay royalties computed at the prevailing market price were satisfied by the payment of royalties computed at the prices recited in the long-term gas sale contracts executed by Stephens and Arkla.

The use of imprecise royalty language such as prevailing market price at the well in lease contracts leads to confusion arid ambiguous interpretations by the parties. This ambiguity is reflected in the split of opinion among various states concerning the judicial interpretation of market value clauses.

Some states such as Texas and Kansas hold that the market price is “the price that a willing buyer would pay to a willing seller in a free market at the time of production.” See Lightcap v. Mobile Oil Corp., 221 Kan. 448, 562 P.2d 1 (1977). Those states have also noted that the contract price for which the gas is sold is not necessarily equivalent to the prevailing market price. See Texas Oil and Gas v. Vela, 429 S.W.2d 866 (Tex.1968). The Texas court further clarified its interpretation of market price clauses by holding that the language “at the well” limits the time for computing the prevailing market price to the time when the gas is delivered and not the time when the long-term gas sale contracts are executed. See Exxon Corporation v. Middleton, 613 S.W.2d 240 (Tex.1981).

On the other hand, other states, including Arkansas, follow a different rule. In fact, the Arkansas Supreme Court in Hillard v. Stephens, 276 Ark. 545, 637 S.W.2d 581 (1982), considered and specifically rejected the Texas-Kansas interpretation and developed its own comprehensive interpretation.

The first issue to be decided here is whether the “contract price” that Stephens receives according to the gas purchase contract with Ark-La is the “prevailing market price at the well” under the five leases. We hold that it is. The gas lease constitutes a present sale of all of the gas in place at the time such lease is executed; and as the gas leaves the well head, the entire ownership thereof is in the lessee, none being reserved in the lessor. Once the lessee-producer drills a well resulting in the commercial production of natural gas on the leased premises, the lessee-producer has the immediate duty to market the gas. In order to market such gas effectively, it is the custom in the industry and is usually necessary for the lessee-producer to sell the gas under a long-term gas purchase contract. 276 Ark. at 550, 637 S.W.2d 581.
We recognize that the Texas courts have taken a different approach, see Texas Oil and Gas v. Vela, 429 S.W.2d 866 (Tex.1968), and other Texas cases that followed it. 276 Ark. at 551.
We believe that this interpretation of “prevailing market price at the well” is ... the only interpretation that operates fairly for the producer. It is not unfair to the [lessor]. As long as the gas purchase contracts were reasonable when entered into, and as long as the law recognizes long-term gas purchase contracts as binding in the face of escalating prices, the law should not penalize [the lessee-producer] who was forced into the gas purchase contracts in a large measure by its duty to the [lessor] to market the gas efficiently and effectively. 276 Ark. at 552, 637 S.W.2d 581.

These excerpts from the Hillard opinion clearly show that Arkansas law regarding the prevailing market price issue involved in the case presently at bar is established. Such authority is binding upon this court.

This court is bound under the Erie doctrine, in diversity cases such as this one, to follow the Arkansas interpretation unless the Arkansas Supreme Court would follow another interpretation at this time if provided the opportunity to do so. See Atlas Aluminum Corp. v. Borden Chemical Corp., 233 F.Supp. 53 (D.C.Pa.1964). The court does not believe the Arkansas court would change the Hillard interpretation at this time. The Hillard opinion is only three years old and the court has not indicated any retraction from its strong rejection of the Texas-Kansas interpretation. In fact, in a recent Arkansas Supreme Court ease, Diamond Shamrock Corp. v. Harris, 284 Ark. 270, 681 S.W.2d 317 (1984), involving facts distinguishable from, but not completely dissimilar to, these, the court had an opportunity to modify the Hillard rationale, but instead decided the case on another basis without mentioning Hillard.

In the Diamond Shamrock case, Diamond Shamrock Corp. executed a long-term gas purchase contract with Arkla Inc. in 1971 obligating Diamond Shamrock to sell all of its gas production from certain counties to Arkla Inc. in accordance with an agreed pricing standard. Later, in 1974, the plaintiff, Harris, purchased property in one of those counties. However, Harris had no actual knowledge of the DiamondArkla contract. In 1977 Harris executed an oil and gas lease with Diamond Shamrock obligating Diamond to pay royalty to Harris computed according to the market value of gas at the well.

On appeal, Diamond Shamrock contended that the market value of the gas was established by the earlier Diamond-Arkla contract which Harris was not a party to and had no knowledge of.

The Arkansas Supreme Court held that if Diamond Shamrock was relying on the pricing standard found in the 1971 gas purchase agreement with Arkla Inc., then this price should be clearly referred to in the lease agreement royalty clause. To hold otherwise would place Harris in the unfair position of being compensated for the gas produced from his property by a contract to which he was not a party nor had any notice of when negotiating his lease with Diamond Shamrock.

The supreme court affirmed the holding of the trial court that the best evidence of the market value is the price paid other participants in the well.

Because Diamond Shamrock has little, if any, effect on Hillard, this court is confident that Hillard is still good and binding authority in Arkansas, and in this diversity case, this court is bound by Erie to follow it.

In keeping with Hillard, a court presented with facts similar to those now at bar must ascertain (1) whether the lessee/producer attempted to market the gas immediately in an effective manner and (2) whether the contracts were reasonable and executed in good faith and at arm’s length when entered into.

There is no contention that Stephens failed to expeditiously market the gas and it is well settled by Hillard that sales pursuant to long-term gas purchase contracts are effective methods of marketing gas. The only remaining question is whether the contract was reasonable and executed at arm’s length and in good faith. The plaintiff bears the burden of invalidating the long-term contracts by proving them to be unreasonable or by showing that the negotiations were not conducted at arm’s length or in good faith.

The plaintiff asserts that the gas purchase contracts executed by AWG and Seeco and the fair field price established by the Arkansas Public Service Commission (APSC) both serve as evidence that the price per MCF received by Stephens from Arkla pursuant to the long-term contracts was below the prevailing market price. For the following reasons, the court finds this argument unpersuasive.

First, the fair field price was established by the APSC as a utility rate regulation; it was never designed to be exemplary of the prevailing market price for gas at the well. Therefore, it wields little persuasive weight as evidence of the market price.

Second, the gas purchase contracts executed by AWG and Seeco do not conclusively prove that the royalties paid pursuant to the Stephens-Arkla contracts were unreasonable. The AWG contracts were executed at a later date and the royalty computed under these contracts ranged from $0.0027 per MCF to $0.0735 per MCF. That royalty range does not vary broadly from the royalties computed under the Stephens-Arkla contracts.

Third, the gas purchase contracts under which Stephens sold all of the production from its working interest in the wells situated on the leased property to Arkla were in existence on November 8, 1978, within the meaning of NGPA, 15 U.S.C. § 3301(13), and the sale price per MCF for that production was the maximum lawful price for which the production from those wells could be sold under the NGPA, 15 U.S.C. § 3315(b)(1) after November 8, 1978.

The court is not convinced that Arkla and Stephens, by paying royalties computed at the sale price recited in the Arkla-Stephens long-term gas purchase contracts, failed to satisfy the respective obligations imposed upon them by the lease contracts, which were to pay royalties computed on the prevailing market price. The court also finds that the contracts were reasonable when executed. Stephens efficiently and effectively marketed the gas produced, on the leased premises and did so in good faith and at arm’s length with Arkla.

The plaintiff has failed to prove that the gas contracts were not reasonable or were not executed in good faith or at arm’s length. The court finds that the prices recited in the Arkla-Stephens contracts were at least equal to the prevailing market prices at the well at the time of the contracts’ execution. Accordingly, the lessor, Taylor, is not entitled to any additional royalties from Stephens or Arkla under the market price leases.

II. Fixed Price Royalty Clauses.

All three groups of defendants, Arkla, AWG and Stephens, executed some oil and gas leases with the plaintiff which provided for a fixed rate royalty per MCF. Although the respective royalty rates recited in the leases vary from three cents per MCF to seven cents per MCF, the clauses all read basically as follows:

“The Lessee shall pay the Lessor, as royalty ... for gas from each well where gas is found the equal one-eighth (Vs) of such calculated at the rate of four cents per thousand cubic feet, corrected to two pounds above atmospheric pressure while the same is being sold or used off the premises ...” (Stipulated Exhibits No. D (9)-(ll), (20)-(25), and (27)-(29).

The plaintiff contends that the lessees violated Ark.Stat.Ann. § 53-511 et seq. and § 53-514 thereby entitling the plaintiff to cancellation of all the fixed price leases, forfeiture of said leases, and treble damages for the value of the amount of gas wrongfully taken from the royalty interest. Ark.Stat.Ann. § 53-511 reads:

Purchasers to pay same price for royalty gas as operator or lessee is paid for his interest. — It shall be the duty of both the lessee, or his assignee, and any pipe line company, corporation or individual contracting for the purchase of oil or gas under any oil, gas or . mineral lease to protect the royalty or lessors interest by paying to such lessor or his assignees the same price including such premiums, steaming charges, and bonuses of whatsoever name, for royalty oil or gas that is paid such operator or lessee under such lease for the working interest thereunder.

Ark.Stat.Ann. § 53-514 reads:

Forfeiture of lease upon lessee receiving more than share from sale— Purchaser to pay treble value. — Any leaseholder or operator who contracts for the sale of gas or oil to any pipe line company or other purchaser, under and by virtue of the terms of which the lessee receives a greater amount than the royalty owners in proportion to interest therein, or receives a bonus, or by any other means conspires with a purchaser to receive from the sale of said oil and gas more than his just proportionate share therefrom, shall forfeit his rights in and to said leasehold premises. And any pipe line company or other purchaser of oil and gas who contracts with any lessee as above set out to the injury of the royalty owners shall forfeit to the said royalty owners treble value of the amount of oil or gas runs thus wrongfully taken from the royalty interest.

Again the Arkansas Supreme Court has ruled on this precise issue. In fact, the ruling was declared in the same case which propounded the market rate interpretation, Hillard v. Stephens, supra. As in this case the plaintiffs in Hillard contended that they “were entitled to have the royalty payments due them under [the fixed price] leases computed on the ‘proceeds’ received by Stephens under the long-term gas purchase contracts ... because § 511 converted” these leases from fixed price leases into proceeds leases. See 276 Ark. at 553, 637 S.W.2d 581. In addressing this contention, the court stated:

If, ... § 53-511 converts all “fixed price” gas leases into “proceeds” leases, it follows that fixed prices favorable to a lessor or higher “fixed price” leases would be converted into “proceeds” leases. That is not the intent of the statute. Nor is it to prohibit fixed price contracts for oil and gas leases. Absent indications previously referenced, it is clear that §§ 53-511 and 53-514 are inapplicable in this case and could not under the circumstances cause Stephens to forfeit the leases to the Hillards.

The court went on to hold that payment of the fixed price royalty discharges the lessee’s obligation to pay royalty under the leases. Thus, it is established law in Arkansas that fixed price royalty clauses in gas leases are valid and are neither prohibited nor converted into proceeds clauses by Ark.Stat.Ann. §§ 53-511 or 53-514.

Furthermore, we do not believe that the Arkansas Supreme Court would follow any contrary opinion at this time. Thus, for the above stated reasons, the court holds that the royalty payments made pursuant to the fixed price royalty clauses by the defendants, Arkla, AWG, and Stephens, discharged their respective obligations to pay royalty under the leases.

The court also holds that Stephens’ and Seeco’s counterclaims against Taylor fail because there is no proof that payments made by Stephens and Seeco to Taylor in excess of the fixed price recited in the fixed price leases were made due to mutual mistake of fact on the part of both Stephens and Taylor or Seeco and Taylor. This holding is also supported by Hillard. See 276 Ark. 554, 637 S.W.2d 581.

III. Proceeds Royalty Clauses.

Arkansas Western Gas Company (AWG) is an Arkansas business corporation operating as a natural gas distribution utility. Prior to October 1, 1979, AWG had executed eleven oil and gas leases with the plaintiff. The gas produced from the wells located on leased premises was entered directly into AWG’s system and sold to consumers at the fair field price of $1.48 per MCF as established by the Arkansas Public Service Commission. AWG computed and paid to the plaintiff royalty monthly based on that amount.

Seeco is also an Arkansas business corporation, and engages in oil and gas exploration, development, production, and marketing in Arkansas. On September 17, 1977, AWG and Seeco executed a contract which took effect on October 1, 1979. Under the terms of the contract AWG assigned all its oil and gas leases and the natural gas production thereon, including those to which the plaintiff was a party, to Seeco which in turn sold the production from the wells on the leased premises to AWG by long-term gas purchase contracts and spot sales. In addition, Seeco later •sold the production from one well to The Natural Gas Pipeline of America by a long-term gas purchase contract. The leases to which the plaintiff and Seeco and/or AWG are parties utilize one of three royalty clauses. Three of the leases contain “fixed rate” royalty clauses and seven leases contain “proceeds” royalty clauses and one of the leases contains a “gross proceeds at the prevailing market rate” royalty clause.

This court has held, as stated earlier in the opinion, that fixed rate royalty clauses are valid and enforceable and that payment pursuant to such clauses satisfies the lease obligation imposed on the lessee to pay royalty. That holding is equally applicable in regard to Seeco and AWG. In that same regard, any overpayment by Seeco against AWG is not recoverable because no evidence of mutual mistake of fact was presented. Furthermore, no timely counterclaim for such recovery was filed.

Royalty clauses which award the lessor a portion of the proceeds received from the sale of the gas produced from the leased premises are also valid. The proceeds clause utilized in seven of the leases involved in this case reads as follows: “Lessee shall pay Lessor one-eighth of the proceeds received by Lessee at the well for all gas ... produced from the leased premises and sold by Lessee.” This royalty clause was binding on AWG prior to the October 1, 1979, assignment of the leases to Seeco and thereafter it was binding on Seeco.

Prior to October 1, 1979, AWG computed and paid to the plaintiff its royalty based on the fair field price established by the Arkansas Public Service Commission at $1.48 per MCF. The royalty terms calling for a royalty equal to one-eighth of the proceeds are clear and unambiguous. Such lease contracts are valid, but there is at least an implied obligation imposed upon the lessee to make a good faith effort to efficiently and effectively market gas produced on the leased'premises. The court finds that AWG efficiently and effectively marketed the gas and that AWG’s royalty payments, computed on the fair field price of $1.48 per MCF, discharged the obligation to pay royalty which was imposed upon AWG by the lease.

After October 1, 1979, when the lease assignments from AWG to Seeco took effect, Seeco marketed the gas by selling it to AWG pursuant to long-term gas purchase contracts. The sale price recited in the contracts equaled the maximum ceiling price allowed by The Natural Gas Policy Act which became effective November 8, 1978. See 15 U.S.C. § 3301(ff). This contract also provided for price adjustment to maintain the price at the maximum ceiling price allowed by the NGPA. This contract was approved by the APSC and royalty, computed at the contract price, was paid to plaintiff monthly. In addition, the gas produced from two wells which initially began production on August 1, 1980, and January 1, 1982, was sold by spot sales to AWG at the same price as recited in the long-term gas purchase contract and royalty was computed on that price and paid to the plaintiff monthly. On February 22, 1983, the gas production from these two wells was sold by Seeco to The Natural Gas Pipeline Company of America which had recently completed a pipeline in the vicinity of the wells. The gas was sold by a long-term gas purchase contract at the best price available. Royalty based on that price has been paid to the plaintiff monthly. The court finds that Seeco discharged its lease obligation by efficiently and effectively marketing the gas and paying the royalty due to the plaintiff under the lease. There is no question that the gas purchase contracts were made in good faith and at arm’s length.

Only one royalty clause remains unaddressed by this court. It reads as follows: “To pay Lessor ... one-eighth of the gross proceeds at the prevailing market rate, for all gas used off the premises.” It is clear that this clause is a mixture of the “market rate” type clause and the “proceeds” type clause. The gas produced on the leased premises subject to the above royalty clause was marketed by AWG and Seeco just as the gas produced under the proceeds leases discussed earlier was marketed. The court finds that both AWG and Seeco effectively and efficiently marketed this gas and paid royalty to the plaintiff based on the proceeds received from the sale of the gas, thereby discharging the obligation imposed upon them by the lease. The court can make this finding without comprehensively interpreting the ambiguous clause because it also finds that the price received for the gas was at least equal to the prevailing market rate. Thus, in this case, a computation of the royalty based on the proceeds of the sale satisfies the lease obligation whether it be to pay royalty based on the prevailing market rate or the proceeds received.

For the above stated reasons, the court finds that the plaintiff is entitled to no recovery from AWG, Seeco, Arkla, or Stephens. The court also finds that the counterclaims asserted against the plaintiff fail for lack of evidence proving mutual mistake of fact and for lack of timely filing in the case of AWG and Seeco. The court finds it unnecessary to rule on the entitlement of the plaintiff to an accounting by AWG and Seeco because one was provided by each thereby rendering the question moot.

A separate judgment in accordance with this memorandum opinion will be concurrently entered.


source: Caselaw Access Project

author: LASKER, District Judge.

license: Public Domain

text:
    A. SOLOFF & SON, INC., Plaintiff, v. Jerry ASHER, et al., Defendants.
    No. 82 Civ. 1981(MEL).
    United States District Court, S.D. New York.
    March 19, 1985.

      Hill & Barlow, Boston, Mass., and Kieffer & Hahn, New York City (John M. Kahn, Robert G. Dreher, Jeanne M. Kempthorne, Boston, Mass., Michael C. Devine, New York City, of counsel), for plaintiff.
    Mark Schwartz, New York City, for defendants.
   LASKER, District Judge.

A. Soloff & Son, Inc. (“Soloff”) sues the Trustees of the Amalgamated Cotton Garment and Allied Industries Fund (“the Fund”), challenging the Fund’s claim of withdrawal liability asserted under the Employment Retirement Income Security Act of 1974 (“ERISA”) 29 U.S.C. § 1001 et seq. as amended by the Multiemployer Pension Plan Amendments Act of 1980 (“the MPPAA” or “the Act”) 29 U.S.C. § 1381 et seq. Soloff moves for summary judgment challenging the constitutionality of the MPPAA on several grounds. The Fund cross-moves for summary judgment on its counterclaim that, because plaintiff Soloff failed to request arbitration within the time limit set by the Act, see 29 U.S.C. § 1401(a)(1), it is subject to withdrawal liability under the MPPAA. 29 U.S.C. § 1381 et seq.

In two earlier decisions, we held that Soloff had not sought timely arbitration under the Act, 583 F.Supp. 1098 (S.D.N.Y.1984), and that the Act’s 60-day time limit specified for arbitration, 29 U.S.C. § 1401(a)(1), was not unconstitutional. 594 F.Supp. 724 (S.D.N.Y.1984). We reserved decision on Soloff’s motion challenging the constitutionality of the MPPAA, pending the Supreme Court’s determination of such questions in Pension Benefit Guaranty Corp. v. R.A. Gray & Co., — U.S. -, 104 S.Ct. 992, 79 L.Ed.2d 226, (1984). In R.A. Gray, the Supreme Court addressed some constitutional questions, upholding the constitutionality of the MPPAA’s retrospective imposition of withdrawal liability upon multiemployer plan participants. The Court left unresolved, however, a number of issues raised by Soloff’s motion which we now consider. For the reasons set forth below, we conclude, as did the Supreme Court, that the MPPAA is not unconstitutional.

I.

Soloff was a Massachusetts clothing manufacturer which was obligated by a collective bargaining agreement with Local 177 of the Amalgamated Clothing and Textile Workers Union (“the Union”) to make employer contributions to the Fund, a multiemployer pension plan fund. In January 1980 Soloff decided to discontinue its outerwear manufacturing operations and by September 1980 its decision to terminate its business was economically irrevocable. By November 1980 Soloff ceased operating and withdrew from the Fund as a contributing employer.

The MPPAA was enacted on September 26, 1980 and requires all withdrawing participants in multiemployer pension plans to pay a “withdrawal liability”, that is, a proportionate share of their unfunded vested liability, to the Fund. 29 U.S.C. § 1381 et seq. In November 1981 the Fund notified Soloff that it was in default and demanded payment under the MPPAA’s installment provisions within sixty days, after which time the Fund would seek to enforce the MPPAA’s acceleration provisions. 29 U.S.C. § 1399(c)(5).

In the aftermath of the Supreme Court’s decision in R.A. Gray, supra, Soloff challenges the constitutionality of the MPPAA alleging that: (1) the MPPAA constitutes a taking of Soloff’s property without due process of law in violation of the Fifth Amendment; (2) the MPPAA violates the Seventh Amendment by depriving Soloff of its right to a jury trial; and (3) the MPPAA violates the equal protection clause of the Fifth Amendment.

II.

A.

Soloff argues that the MPPAA violates its due process rights in a number of ways. It contends first that the Act constitutes a taking of its property in violation of the Fifth Amendment, by abrogating its collective bargaining agreement with the Union which limited its obligations to contribute to the Fund, and by authorizing the Fund to appropriate more than one-third of Soloff’s net worth for a public purpose.

The Seventh Circuit considered and rejected a similar Fifth Amendment claim in Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247 (7th Cir.1983). It held that the contractual rights of employers are not analogous to the type of rights in specific property protected under the takings clause. Id. at 1276. Moreover, the Second Circuit Court of Appeals, while using a due process analysis, is in accord with this conclusion. See Textile Workers Pension Fund v. Standard Dye & Finishing Co., Inc., 725 F.2d 843, 857-58 (2d Cir.), cert. denied, — U.S. -, 104 S.Ct. 3554, 82 L.Ed.2d 856 (1984); see also Fur Manufacturing Industry Retirement Fund v. Lazar-Wisotzky, Inc., 550 F.Supp. 35, 3 Empl. Ben.Cas. (BNA) 1977, 1979 (S.D.N.Y.1982). We find the Textile and Peick decisions dispositive of this argument and deny Soloff s motion of this ground.

B.

Soloff also claims that the MPPAA violates due process by requiring payment of withdrawal liability before any hearing has been held and before anyone other than the Fund itself has made any finding of liability. Under the statute, however, an employer is permitted to furnish the plan with additional information or point out inaccuracies in the Fund’s determination of liability. See 29 U.S.C. § 1399(b)(2)(A). Once the Fund is notified of such matter, it must undertake a “reasonable review” of such information and notify the employer of its decision, the grounds for its decision, and the reason for any modification in the employer’s withdrawal liability. See 29 U.S.C. § 1399(b)(2)(B). Any dispute between Soloff and the Fund concerning a determination made by the Fund of Soloff’s withdrawal liability under the Act is required to be resolved first through arbitration. See 29 U.S.C. § 1401(a)(1). If Soloff had invoked its right to arbitrate, upon completion of the arbitration proceedings either Soloff or the Fund could have come to the district court to enforce, vacate or modify the arbitrator’s award. See 29 U.S.C. § 1401(b)(2).

The Court of Appeals for this Circuit in Textile, supra, found that the statutory scheme afforded the employer an opportunity to present its position, that the Act therefore was rational, and that it did not violate the employer’s right to due process of law. Id., 725 F.2d at 854, citing, Mathews v. Eldridge, 424 U.S. 319, 349, 96 S.Ct. 893, 909, 47 L.Ed.2d 18 (1976); see also Fur Manufacturing Industry Retirement Fund v. Lazar-Wisotzky, supra, 550 F.Supp. 35, 3 Empl.Ben.Cas. (BNA) at 1979; Ells v. Construction Laborers Pension Trust, 539 F.Supp. 867, 3 Empl.Ben.Cas. (BNA) 1449 (C.D.Cal.1982); Republic Industries v. Central Pennsylvania Teamsters Pension Fund, 534 F.Supp. 1340 (E.D.Pa.1982). The Textile decision is dis-positive, and Soloff s motion based on this argument is denied.

III.

Soloff also claims that the Act violates the Seventh Amendment right to a jury trial. Soloff argues that this is a common law action between two private parties to establish “the liability of one individual to another” to which the Seventh Amendment is fully applicable. The Textile court rejected a similar Seventh Amendment challenge, concluding that the rights and remedies under the MPPAA were not typically enforceable in an action at law and that it was within the prerogative of Congress to vest fact finding in a tribunal other than a jury. See Textile, supra, 725 F.2d at 855, citing, Atlas Roofing Co. v. Occupational Safety & Health Review Commission, 430 U.S. 442, 458-61, 97 S.Ct. 1261, 1270-72, 51 L.Ed.2d 464 (1977); NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 48-49, 57 S.Ct. 615, 629, 81 L.Ed. 893 (1937); accord, Peick v. Pension Benefit Guaranty Corp., supra, 724 F.2d at 1277. The Seventh Amendment’s right to a jury trial does not apply to the statutory scheme of the MPPAA and we deny Soloff’s motion for summary judgment on this ground as well.

IV.

Finally, Soloff alleges that the Act violates equal protection principles by arbitrarily and irrationally imposing greater burdens upon contributors to multiemployer pension plans, such as Soloff, than upon contributors to single-employer plans, and by arbitrarily and irrationally appropriating Soloff’s property for the benefit of Fund contributors who remain as plan participants.

Soloff first claims that the Fund’s assessment of withdrawal liability exceeds 35% of plaintiff’s net worth, and that this is 5% more than the maximum withdrawal liability imposed upon single-employer plan contributors. Soloff also claims that the Act’s “presumptive method” used to calculate its withdrawal liability amounts to a windfall to those employers who have remained in the Fund by directly reducing their obligations.

The legislative history of the MPPAA suggests that Congress recognized the need for this expanded obligation because withdrawals from multiemployer plans unfairly burden the remaining plan contributors with unfunded benefit obligations left behind by the withdrawn employer. See H.R.Rep. No. 869, Part I, 96th Cong., 2d Sess. 60, reprinted in, 1980 U.S.Code Cong. & Ad.News 2918, at 2928; see also Textile Workers Pension Fund v. Standard Dye & Finishing Co., supra, 725 F.2d at 856-57. The district court in Peick v. Pension Benefit Guaranty Corp. considered a similar equal protection claim, and determined that Congress, relying on the Pension Benefit Guaranty Corporation Multiemployer Study Required by P.L. 95-214 (1978), had concluded that the potential exposure of the multiemployer insurance system was unacceptably large, and so adopted “rational” measures designed to neutralize those threats. Id., 539 F.Supp. 1025, 1056-59 (N.D.Ill.1982). As did Judge Sand in Fur Manufacturing, supra, 550 F.Supp. 35, 3 Empl.Ben.Cas. (BNA) at 1978, we find the Peick opinion analytically complete and persuasive on this issue. We agree with the Textile decision which reached the same conclusion as in Peick, though treating the matter in less detail, that the MPPAA is not unconstitutional and deny Soloff’s motion on this ground.

For the foregoing reasons, plaintiff’s motion for summary judgment is denied. The complaint is dismissed. Defendants’ motion for summary judgment on the counterclaim is granted. Submit judgment on notice.

It is so ordered.

      . A plan’s "vested liability” is the actuarial present value of the benefit obligations which have vested. The difference between this amount and the value of the plan’s assets is called its unfunded vested liability. See Peick v. Pension Benefit Guaranty Corp., 724 F.2d 1247, 1255-56 (7th Cir.1983). An employee’s right to collect a pension benefit is "vested" when it survives a pre-retirement termination of employment. See Nachman Corp. v. Pension Benefit Guaranty Corp., 446 U.S. 359, 363-64, 100 S.Ct. 1723, 1727, 64 L.Ed.2d 354 (1980).

      . 29 U.S.C. § 1381 in pertinent part provides:
      (a) If an employer withdraws from a multiemployer pension plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under this part to be the withdrawal liability.
      (b) For purposes of subsection (a) of this section—
      (1) The withdrawal liability of an employer to a plan is the amount determined under section 1391 of this title to be the allocable amount of unfunded vested benefits,....

      . 29 U.S.C. § 1399(c)(5) provides:
      (5) In the event of a default, a plan sponsor may require immediate payment of the outstanding amount of an employer’s withdrawal liability, plus accrued interest on the total outstanding liability from the due date of the first payment which was not timely made____

      . Following the Supreme Court’s decision in Pension Benefit Guaranty Corp. v. R.A. Gray & Co., supra, we granted by endorsement the Fund’s motion for summary judgment. After the Fund moved for a final judgment, however, Soloff requested that judgment be deferred, pending resolution of the three outstanding constitutional issues identified in Soloff s letter dated November 5, 1984.

      . Soloff claims that the contractual rights arising from its collective bargaining have long been recognized as constituting property rights protected by the Fifth Amendment. See e.g., Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); Lynch v. U.S., 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434 (1934).

      . 29 U.S.C. § 1399(b)(2)(A) provides that within 90 days of receiving the plan sponsor's notice of withdrawal liability, an employer:
      (i) may ask the plan sponsor to review any specific matter relating to the determination of the employer’s liability and the schedule of payments.
      (ii) may identify any inaccuracy in the determination of the amount of the unfunded vested benefits allocable to the employer, and
      (iii) may furnish any additional relevant information to the plan sponsor.

      . 29 U.S.C. § 1399(b)(2)(B) provides:
      (B) After a reasonable review of any matter raised, the plan sponsor shall notify the employer of—
      (i) the plan sponsor’s decision,
      (ii) the basis for the decision, and
      (iii) the reason for any change in the determination of the employer’s liability or schedule of liability payments.

      . 29 U.S.C. § 1401(a)(1) provides:
      (1) Any dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration. Either party may initiate the arbitration proceeding within a 60-day period after the earlier of—
      (A) the date of notification to the employer under section 1399(b)(2)(B) of this title, or
      (B) 120 days after the date of the employer’s request under section 1399(b)(2)(A) of this title.

      . 29 U.S.C. § 1401(b)(2) provides:
      (2) Upon completion of the arbitration proceedings in favor of one of the parties, any party thereto may bring an action, no later than 30 days after the issuance of an arbitrator’s award, in an appropriate United States district court in accordance with section 1451 of this title to enforce, vacate or modify the arbitrator’s award.

      . Under the "presumptive method” of section 1391(b), the liability is derived by multiplying the plan’s aggregate unfunded vested liability by a fraction, the numerator of which is the sum of all contributions required to have been made by the withdrawing employer during the previous five years. The denominator is the sum of all contributions made by all the employers during this same period. See Peick, supra, 724 F.2d at 1256.


author: GENE CARTER, District Judge.

text:
    Claire KENERSON, et al., Plaintiffs, v. Charles STEVENSON, M.D. and Carl Lindblade and the Memorial Hospital, Defendants.
    Civ. No. 83-0070-P.
    United States District Court, D. Maine.
    March 19, 1985.
    Dennis Levandoski, Portland, Maine, for plaintiffs.
    John N. Kelly, Graydon G. Stevens, Portland, Maine, for Charles Stevenson.
    John J. Flaherty, Christopher Nyhan, Portland, Maine, for Lindeblade & Hospital.
   MEMORANDUM AND ORDER ON MOTIONS TO DISMISS OF DEFENDANTS, THE MEMORIAL HOSPITAL AND CARL LINDBLADE

GENE CARTER, District Judge.

This wrongful death action- for alleged medical malpractice is before the Court on the motion of the Defendants, The Memorial Hospital and Carl Lindblade, to dismiss the complaint for lack of in personam jurisdiction. The record shows that Plaintiffs’ decedent, Reginald Kenerson, a Maine resident, fell and was injured in New Hampshire in March 1981. As a result of injuries sustained in the fall, he was taken to the Defendant, The Memorial Hospital in North Conway, New Hampshire, of which Defendant Lindblade is president and a trustee, where he was treated by Defendant Stevenson. The record also shows that several hours later, when Kenerson’s condition worsened, Dr. Stevenson consulted by telepohone with a neurosurgeon at the Maine Medical Center in Portland, Maine, and later arranged to have Kenerson transferred to that hospital. He died in Gorham, Maine, en route to the Portland hospital.

Plaintiffs brought suit in Maine Superior Court in February 1983 against Stevenson, the Hospital, and Lindblade. The action was removed to this Court by Defendant Stevenson. In July 1983, after the applicable statute of limitations had run, Defendants, The Memorial Hospital and Lind-blade, filed the pending motions to dismiss. The motions were initially considered by the United States Magistrate, D. Brock Hornby, who recommended by his decision of October 6, 1983, that the motions be granted. After a preliminary review initiated by the Plaintiffs’ Objection to Magistrate’s Recommended Decision, filed on October 21, 1983, this Court entered its Memorandum and Order of January 17, 1984, in which it is noted:

This Court is not fully satisfied that the contacts between Maine and the Defendants set forth in the pleadings and offer of proof are necessarily sufficient to support an exercise of jurisdiction by this Court. They are, however, suggestive of further contacts which, because of the sparsity of the present record, cannot be definitively explored by this Court. The possibility of more extensive contacts is perhaps further reinforced by Defendants’ invocation of a Maine statutory privilege. Since it appears that the statute of limitations has run, dismissal of this suit for lack of personal jurisdiction would probably have the practical effect of forever precluding Plaintiffs’ claim for relief. Because of the importance to the parties of the decision on this motion and because it is difficult to determine the full extent of the Defendants’ contacts with Maine from the existing record, the Court finds it necessary to establish a stronger factual basis before attempting to decide this issue.

Memorandum and Order at 4. Accordingly, the Court ordered that the matter be set for an evidentiary hearing before this Court “for the purpose of developing the facts concerning the circumstances of Defendant’s relationship with the State of Maine.” Id. The Court detailed those specific areas of evidentiary inquiry which it wished the parties to undertake at such hearing. Id. at 4-5.

A prehearing scheduling conference was held before this Court on March 14, 1984, resulting in the filing of this Court’s Report of Prehearing Scheduling Conference and Order on March 16, 1984. The record was supplemented by a Stipulation of counsel, filed on May 22,1984, and the Affidavit of the Defendant Charles Stevenson, filed on May 8, 1984. Also included in the record is the Affidavit of Gary R. Poquette, with attachments, filed on February 24, 1984. Evidence was takén at the hearing on September 6, 1984.

The exercise by this Court of personal jurisdiction over these Defendants must be authorized by Maine law and must conform with federal due process. Wass v. American Safety Equipment Corp., 573 F.Supp. 39, 42 n. 7 (D.Me.1983). This Court has previously stated the law applicable to the required inquiry:

The limits of personal jurisdiction under Maine law are coextensive with the federal due process requirements. See Architectual Woodcraft Co. v. Read, 464 A.2d 210, 212 (Me.1983); Labbe v. Nissen Corp., 404 A.2d 564, 569 (Me.1979).
Due process requirements are satisfied when in personam jurisdiction is asserted over a nonresident corporate defendant that has ‘certain minimum contacts with [the forum] such that the maintenance of the suit does not offend “traditional notions, of fair play and substantial justice.” ’ International Shoe Co. v. Washington, 326 U.S. 310, 316 [66 S.Ct. 154, 158, 90 L.Ed. 95], (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463 [61 S.Ct. 339, 343, 85 L.Ed. 278] (1940). When a controversy is related to or ‘arises out of’ a defendant’s contacts with the forum, the Court has said that a ‘relationship among the defendant, the forum, and the litigation’ is the essential foundation of in personam jurisdiction. Shaffer v. Heitner, 433 U.S. 186, 204 [97 S.Ct. 2569, 2579, 53 L.Ed.2d 683] (1977).
Even when the cause of action does not arise out of or relate to the foreign corporation’s activities in the forum State, due process is not offended by a State’s subjecting the corporation to its in personam jurisdiction when there are sufficient contacts between the State and the foreign corporation. Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 [72 S.Ct. 413, 96 L.Ed. 485] (1952).
Helicopteros Nacionales de Colombia v. Hall, — U.S. -, -, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404 (1984). [footnotes omitted].
Helicópteros and earlier Supreme Court decisions prescribe a three-step analysis. First, the defendant must have some contact with the forum state; if it does not, due process prohibits the exercise of in personam jurisdiction. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295, 100 S.Ct. 559, 566, 62 L.Ed. 490 (1980). If the defendant has forum contacts, the court must proceed to the second step in its analysis: whether the suit arises out of or is related to defendant’s forum contacts? The answer to this question determines the test to be applied in the third step of the analysis. If the suit arises out of or relates to the defendant’s forum contacts, the critical question becomes whether the relationship among the defendant, the forum and the litigation forms a fair and reasonable foundation for the exercise of jurisdiction over the defendant. But if the cause of action does not arise out of and is not related to the defendant’s forum contacts, the court considers only the relationship between the forum state and the foreign defendant. In such a case, Helicópteros seems to hold that the exercise of personal jurisdiction is appropriate only if the defendant has “continuous and systematic general business contacts” with the forum state, Id. — U.S. at-, 104 S.Ct. at 1873.

Jones v. North American Aerodynamics, Inc., 594 F.Supp. 657, 659 (D.Me.1984) (per Cyr, C.J.).

It is clear beyond any doubt that the claim for relief asserted by the Plaintiffs in this ease does not arise out of any acts or activities of the Defendants, The Memorial Hospital or Lindblade, conducted within the State of Maine. All medical treatment received by the Plaintiffs’ decedent, up to the point that the decision was made to transfer the decedent to the Maine Medical Center, was accomplished within the State of New Hampshire and was in respect to an injury received in the State of New Hampshire which resulted in the decedent being presented to the New Hampshire hospital and its resident doctors and staff for treatment. Thus, the claim for relief arises out of and' is not related to contacts the Defendants may have with the forum of Maine.

The operative inquiry, therefore, becomes the substance and significance of the relationship between the forum state (Maine) and the foreign Defendants (The Memorial Hospital and Lindblade). Jurisdiction may be maintained in such circumstance only if the defendants have “continuous and systematic general business contacts” with the State of Maine. Helicopteros Nacionales de Colombia v. Hall, — U.S. -, -, 104 S.Ct. 1868, 1872, 80 L.Ed.2d 404, 411 (1984). The case presents an issue, in short, of “general jurisdiction.”

It is well established in this circuit that' general jurisdiction “may be found in the absence of a relationship between a nonresident defendant’s contacts with the forum and the cause of action where the defendant engages in the ‘continuous and systematic’ pursuit of general business activities in the forum state.” Glater v. Eli Lilley and Co., 744 F.2d 213, 216 (1st Cir.1984); American Freedom Train Foundation v. Spurney, 747 F.2d 1069, 1075 (1st Cir.1984). This is fully consistent with the Maine law on this point. Martin v. Deschenes, 468 A.2d 618 (Me.1983) (“The commission outside the forum state of an act that has consequences in the forum state is by itself an insufficient contact where all the events necessary to give rise to a tort claim occurred outside the forum state.”).

Plaintiffs bear the burden “to prove the facts necessary to sustain jurisdiction.” American Freedom Train Foundation, 747 F.2d at 1075. The Court concludes that the evidentiary filings in this Court, together with testimony taken in the hearing before this Court since the consideration of this matter by the United States Magistrate, establish the existence of “general jurisdiction” over the Defendant, The Memorial Hospital, and over the Defendant, Lindblade, in his representative capacity for the Defendant hospital. A showing has been made that the Defendants had “continuous and systematic general business contacts” with the State of Maine substantial enough to satisfy due process requirements for purposes of the exercise of Maine’s jurisdictional authority over them. Helicopteros, — U.S. at -, 104 S.Ct. at 1873, 80 L.Ed.2d at 412.

The most salient and forceful evidence of such contacts is that in the period 1980-83, the Hospital treated a total of 432 Maine residents as in-patients. This Maine in-patient caseload constituted between seven and eight and one half percent of the hospital’s total annual in-patient caseload over that period. In addition, for the same period, the hospital treated a total of 7,854 Maine residents as out-patients. In the year 1981 this constituted thirteen percent of the hospital’s total out-patient caseload; in 1982, eleven and one half percent; and in 1983, seven percent. Affidavit of Gary R. Pouquette, at 2. Nearly one third of the hospital’s patients transferred to the Maine Medical Center in 1981 were Maine residents. Id. at 3. Ten out of forty-seven patients transferred to other hospitals were Maine residents. Id. After October 29, 1982, the hospital was a participant in the REMIS (Regional Emergency Medical Information System) protocol, which contemplates emergency transfer of patients from the Defendant hospital to the Maine Medical Center in Portland,. Maine, as well as to other hospitals. Finally, the hospital does have a regular relationship with the Maine Department of Human Services by which it receives medical aid or reimbursement from that state agency out of federal funds provided to the agency which are available to qualified residents of Maine who are treated at the Defendant hospital. Such contacts, taken in toto, are sufficient for purposes of satisfaction of due process requirements in respect to exercise of jurisdiction over a foreign defendant. See Lemke v. St. Margaret Hospital, 552 F.Supp. 833 (N.D.Ill.1982).

The Memorial Hospital is an essentially local entity in the respects that its physical facilities are in New Hampshire and its services are generally provided there. By the nature of the functions and services it performs, however, it may fairly be considered to be tacitly holding itself out to provide, and in fact providing, emergency and other medical services to residents of the surrounding region, irrespective of state lines. The evidence establishes that such a tacit solicitation does in fact generate “continuous and systematic general business contacts” with residents of the State of Maine. The hospital cannot reasonably expect, in view of the substantiality of these contacts, not to be “haled into court” in Maine when claims arise from treatment extended to Maine residents on the basis of such a continuous and systematic business practice. See Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). The Memorial Hospital is under a significant obligation to treat whoever requires emergency medical attention. However, the hospital’s acceptance of this institutional obligation is in a legal sense voluntary and does not substantially dilute the “purposeful” quality of its conduct in caring for patients from the State of Maine with the expectation that it will be ultimately paid for the services rendered to such patients.

The Court need not reach the issue of whether an order changing venue to the District of New Hampshire under 28 U.S.C. § 1404 will cure a jurisdictional defect of the type here alleged to be in issue. See Goldlawr v. Heiman, 369 U.S. 463, 82 S.Ct. 913, 8 L.Ed.2d 39 (1962); Schwilm v. Holbrook, 661 F.2d 12 (3d Cir.1981).

Thus, having reviewed and considered the Magistrate’s Recommended Decision on Motion to Dismiss, together with the entire record in this matter, as supplemented by the evidentiary hearing held before this Court, this Court has made a de novo determination of those portions of the Magistrate’s Report and Recommended Decision to which objection is made. See 28 U.S.C. § 636(b)(1)(C). The Recommended Decision of the Magistrate is REVERSED and the Motion to Dismiss for Lack of in person-am Jurisdiction filed on behalf of the Defendants, The Memorial Hospital and Lind-blade, is DENIED.

So ORDERED.

      . The Magistrate denied Plaintiffs’ motion to remand on the grounds that their four month delay in bringing the motion was consistent with a waiver of the right to seek a remand to state court. Recommended Decision, at 2.

      . Paragraphs 12-14 and 17 oft the Complaint show clearly that the claim arises from treatment and diagnosis of decedent that took place in New Hampshire:
      12. Had appropriate steps been taken to examine Reginald Kenerson and ascertain the extent of his injuries in a timely fashion, the seriousness of his head injury would have been known several hours earlier.
      13. Had appropriate steps been taken, defendant Charles Stevenson would have realized the importance of promptly transporting Reginald Kenerson and he would have arrived in Portland in sufficient time to save his life.
      14. Reginald Kenerson’s brain injury and subsequent death was the direct and proximate result of the failure of Charles Stevenson and the Memorial Hospital to take reasonable steps to diagnose the injury.
      17. Defendant Memorial Hospital and its trustees were under a continuing duty to exercise due care to ensure that persons in its employ are so skilled and conscientious that they would not fail to take adequate steps to promptly diagnose a serious head injury.


author: GLASSER, District Judge:

text:
    Florence Campbell DANNHARDT, Plaintiff, v. Paul J. DONNELLY, Jr., Executor of the Estate of Edith M. Campbell, Defendant.
    No. 84 Civ. 1394.
    United States District Court, E.D. New York.
    March 20, 1985.

      Jay D. Lukowski, Robinson, Perlman & Kirschner, P.C., New York City, for plaintiff.
    Thomas G. Sherwood, Albanese, Albanese & Fiore, Garden City, N.Y., for defendant.
   MEMORANDUM AND ORDER

GLASSER, District Judge:

This is one of the unusual cases in which the court’s attention is directed to consideration of the probate exception to federal diversity jurisdiction, i.e., to the power of the federal courts to adjudicate disputes involving wills and estates. In this action, plaintiff Florence Campbell Dannhardt seeks to compel the specific performance of a joint will entered into between her brother and sister-in-law, Harry and Edith Campbell, and executed by them on December 21, 1963. Defendant Paul J. Donnelly, Jr., the executor of a subsequent will executed by Edith Campbell, has moved to dismiss the complaint for lack of subject matter jurisdiction, or alternatively, for this Court to abstain from adjudicating this dispute. Plaintiff has also moved for summary judgment. For the reasons that follow, defendant’s motion is granted in part and denied in part. Insofar as plaintiff’s remaining claim requests a declaration compelling defendant to specifically perform the joint will, plaintiff’s motion for summary judgment on that claim is granted.

Facts

The facts underlying this action are not in dispute. On December 21, 1963, Henry and Edith Campbell executed the joint will which plaintiff seeks to enforce here. The relevant portions of the joint will, which are set out in the margin, designate plaintiff as the Campbells’ sole distributee and as the executrix of their estate.

Henry Campbell predeceased Edith when he died on November 3, 1970, prior to which time the joint will had not been revoked. The joint will was duly admitted to probate, and Edith Campbell thereby received the entire estate of Henry Campbell. On August 27, 1982, Edith Campbell executed a new will (“the second will”), devising her estate to more than thirty individuals and leaving only $3,000 to plaintiff. In addition, the second will named defendant and his brother as the executors of Edith Campbell’s estate. Defendant’s brother subsequently renounced his interest therein.

Edith Campbell died on January 23, 1983, and subsequently defendant filed the second will, which was later admitted to probate. Plaintiff filed objections to the second will, urging that the joint will was the Campbells’ only valid will. Defendant moved in the Surrogate’s Court to dismiss plaintiff’s objections to the second will, contending that plaintiff’s proper remedy was not in Surrogate’s Court, but should be an action for specific performance of the joint will in a court of general jurisdiction. Surrogate Laurino granted defendant’s motion on February 24,1984. On March 14, 1984, the second will was admitted to probate. Plaintiff subsequently filed a claim against Edith Campbell’s estate in the Surrogate’s Court.

It is plaintiff’s position in this litigation that, pursuant to the second and penultimate paragraph of the joint will, supra note 1, that the joint will became irrevocable upon the death of Harry Campbell. Defendant Donnelly, who drafted both the joint will and the second will, disputes this argument, and contends that the language in the second paragraph of the joint will “to the survivor absolutely and without any limitation or restriction whatever” created an absolute unconditional gift of the first decedent’s estate to the surviving testator, thus permitting Edith Campbell to execute a later, enforceable will. In addition, defendant alleges that the phrase “on the death of both of us” in the last clause of paragraph three of the joint will was intended to apply only if Harry and Edith Campbell died simultaneously or died too close in time for the survivor to execute a new will. Thus, defendant, who allegedly knew the testator for some ten years prior to drafting the joint will, alleges that it was always the testators’ intention that the survivor of Harry and Edith Campbell be permitted to execute a new will and that relatives on both sides of the family receive benefits thereby. Defendant further alleges that plaintiff was intended to be the sole beneficiary of the joint will only in the event of the limited circumstances described above.

In her motion for summary judgment, plaintiff seeks an order (1) declaring that she is entitled to receive the entire estate of Edith Campbell pursuant to the provisions of the joint will; (2) directing defendant to pay over the entire estate to plaintiff; and (3) directing defendant to pay to plaintiff all commissions, executor’s fees or other compensation which he or anyone acting under his control may receive for acting as executor of the second will. In opposition, defendant urges that the issue of testators’ intent is a question of fact, the existence of which should preclude a grant of summary judgment in plaintiff’s favor. Plaintiff argues that parol evidence regarding such alleged intent should be excluded because the language of the joint will is unambiguous.

In addition, defendant challenges the subject matter jurisdiction of this Court, contending that jurisdiction lies within the Surrogate’s Court. In the alternative, defendant requests that this Court abstain from exercising jurisdiction over any or all of plaintiff’s claim. Because the existence of subject matter jurisdiction is a prerequisite to the examination of the merits of plaintiff’s claim, I will address the issues presented in defendant’s motion prior to addressing those raised by plaintiff.

Subject Matter Jurisdiction

Without detailing the historical origins of the probate exception to federal jurisdiction, it is sufficient to state that the adjudication of “purely” probate matters is outside the subject matter jurisdiction of the federal courts. Waterman v. Canal-Louisiana Bank & Trust Co., 215 U.S. 33, 44, 30 S.Ct. 10, 12, 54 L.Ed. 80 (1909). However,

[fjederal courts of equity have jurisdiction to entertain suits “in favor of creditors, legatees and heirs” and other claimants against a decedent’s estate “to establish their claims” so long as the federal court does not interfere with the probate proceedings or assume general jurisdiction of the probate or control of the property in the custody of the state court.

Markham v. Allen, 326 U.S. 490, 494, 66 S.Ct. 296, 298, 90 L.Ed. 256 (1946) (emphasis added) (citations omitted). See also 13B C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure, § 3610 at 484, 487 (1984) (“Wright, Miller & Cooper”).

As stated by the Second Circuit:

The standard for determining whether federal jurisdiction may be exercised is whether under state law the dispute would be cognizable only by the probate court. If so, the parties will be relegated to that court; but where the suit merely seeks to enforce a claim inter partes, enforceable in a state court of general jurisdiction, federal diversity jurisdiction will be assumed.

Lamberg v. Callahan, 455 F.2d 1213 (2d Cir.1972). See also Waterman v. Canal-Louisiana Bank & Trust Co., supra, 215 U.S. at 45-46, 30 S.Ct. at 13. Furthermore, “[i]t generally is not considered an interference with state proceedings for a federal court to declare whether a party has the right to share in an estate. Indeed, doing so has been held specifically within the equity jurisdiction of the federal courts.” Wright, Miller & Cooper, supra, § 3610 at 493 (citation omitted).

Two of the aspects of the relief sought by the plaintiff here, namely, the direction by this Court that defendant pay over to plaintiff the entire estate of Edith Campbell and any executor’s fees collected in connection with that estate, are obviously matters which fall exclusively within the probate jurisdiction of the Surrogate’s Court and over which this Court lacks subject matter jurisdiction. See N.Y. Surrogate’s Court Procedure Act (“SCPA”) § 2201 (regarding accounting proceeding) and § 2110 (Surrogate’s Court has sole responsibility of determining attorney’s fees in connection with estate administration); In re Israel’s Estate, 64 Misc.2d 1035, 315 N.Y.S.2d 453, 462 (1970) (accounting proceeding or independent proceeding in Surrogate’s Court are appropriate methods under New York law to deprive fiduciary of statutory fees). See also Giardina v. Fontana, 733 F.2d 1047, 1050-51 (2d Cir.1984) (relief of accounting and imposition of constructive trust sought with respect to estate still subject to probate proceedings not subject to district court’s jurisdiction).

In effect, plaintiff has conceded that she cannot request that this Court compel defendant to pay to her the above amounts and admits that it is the Surrogate’s Court that must ascertain the net amount(s) due to plaintiff in an accounting proceeding. Therefore, it is appropriate to grant defendant’s motion to dismiss insofar as it relates to plaintiff’s requests that defendant pay over to plaintiff the entire estate of Edith Campbell and attendant executor’s fees.

Insofar as the remaining portion of the relief requested by plaintiff seeks a declaration that she is entitled to the entire estate of Edith Campbell, however, it is clear that this Court has the power to entertain plaintiff’s claim. See, e.g., Beach v. Rome Trust Co., 269 F.2d 367, 372 (2d Cir.1959) (prosecution of claim requesting construction of will declaring plaintiff to be owner of stock, and not seeking a distribution of that property, was within district court’s jurisdiction). It is also clear that plaintiff’s claim here would not interfere with the Surrogate’s Court’s present control over the res of Edith Campbell’s estate. This is so because New York law specifically provides that a claimant may prosecute certain claims against an estate in a state court of general jurisdiction. Specifically, SCPA § 1810 provides:

Nothing in this article [Article 18] shall prevent a claimant from commencing an action on his claim at law or in equity, provided that where a claim has been presented and rejected in whole or in part the action must be commenced within 60 days after such rejection.

Plaintiffs claim against Edith Campbell’s estate, discussed supra at 2-3, was filed pursuant to article 18 of the SCPA and, therefore, could have been brought in a state court of general jurisdiction. Thus, plaintiff’s request for relief, insofar as it seeks declaratory relief, is properly within the jurisdiction of this Court. See Hermann v. Ludwig, 186 A.D. 287, 296-97, 174 N.Y.S. 469 (2d Dep’t 1919), aff'd mem., 229 N.Y. 544, 129 N.E. 908 (1920) (remedy for beneficiaries of prior joint will is not to have Surrogate’s Court invalidate second will and probate first will, but to bring action in equity in Supreme Court to compel and sustain performance of joint will contract).

It is therefore appropriate for defendant’s motion to dismiss to be granted in part and denied in part, in a manner consistent with the above analysis. The next issue to be addressed, then, is whether this Court should abstain from considering plaintiff’s request for a declaration that she is entitled to receive the entire estate of Edith Campbell.

Abstention

It is true that in certain cases a federal court should abstain from exercising jurisdiction over matters which, while not strictly within the probate exception to federal jurisdiction, are “on the verge” of falling within that exception. Phillips, Nizer, Benjamin, Krim & Ballon v. Rosenstiel, 490 F.2d 509, 516 (2d Cir.1973) (involving matters on the verge of matrimonial exeeption to federal jurisdiction). The defendant contends that this is such a case.

The parameters of the circumstances when a federal district court should abstain from deciding an issue properly before it have been set out by the United States Supreme Court in Colorado River Water Conservation District v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), and Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). In addition to the traditional categories in which abstention is usually warranted, Colorado described another type of circumstance that warrants abstention, namely, in the “exceptional circumstances” where “considerations of ‘[w]ise judicial administration, giving rise to conservation of judicial resources and comprehensive disposition of litigation’ ” would be best served. Colorado, supra, 424 U.S. at 817-18, 96 S.Ct. at 1246-47.

In the Cone case, the Supreme Court discussed the five factors to be considered in connection with a federal court’s determination as to whether it should abstain from exercising its jurisdiction, based on the existence of such “exceptional circumstances.” Those factors are, in essence:

(1) Assumption by either court of jurisdiction over a res or property, (2) convenience to the parties of one forum over the other, (3) avoidance of piecemeal litigation, (4) the order in which jurisdiction was obtained by the concurrent forums and (5) whether federal or state law provides the rule of decision on the merits.

Giardina v. Fontana, supra, 733 F.2d at 1053. Applying those considerations to the instant case, it is clear that the second and fifth factors are insignificant; both forums are convenient to the parties and either court must apply New York law. The first factor is of no consequence, because in any event, the Surrogate’s Court will distribute the estate. Finally, the third and fourth factors lose their significance in light of the fact that defendant moved to dismiss plaintiff’s objection to the probate of Edith Campbell’s will in the Surrogate's Court because her claim should have been brought in a court of general jurisdiction. See supra at 2. Such a consideration also militated against abstention in Giardina.

In view of the above considerations, I find that plaintiff has not presented a claim which warrants abstention from the exercise of federal jurisdiction. I therefore now turn to the merits of plaintiff’s claim for specific performance of the joint will.

Plaintiffs Motion for Summary Judgment

As discussed above, the only aspect of plaintiff’s claim that is properly before this Court is her request that she be declared to be entitled to the. entire estate of Edith Campbell pursuant to the terms of the joint will. Defendant contends that the presence of allegedly ambiguous language in that will gives rise to several issues of fact regarding the testators’ intent which would preclude summary judgment in plaintiff's favor. In essence, the defendant urges that issues of fact exist as to whether the testators intended (1) under paragraph Third of the will, to leave their estate to plaintiff only in the event of their simultaneous or near-simultaneous death; (2) under paragraph Fourth, to name plaintiff as executrix only in the event of simultaneous death; (3) under the penultimate paragraph, that either joint testator could revoke the joint will by. executing a new will; and (4) that the joint will was to become irrevocable upon the death of Harry Campbell.

Defendant asserts that the language of the joint will supports the conclusion that the testators always intended that the survivor of them could dispose of his or her estate by executing a new will. He urges that this construction is warranted due to the language in paragraph Second of the will, supra note 1, which purportedly conveys the earlier decedent’s estate “to the survivor absolutely and without any limitation or restriction whatever.” Defendant urges that this language created an absolute gift to the survivor, which the survivor could freely convey even if the joint will had not been revoked by both testators. In further support of this argument, defendant claims that the single word “us” in the penultimate paragraph of the will, id., means “either of us,” i.e., that the surviving testator could revoke the will. In addition, defendant maintains that the language in paragraphs Third and Fourth only convey interests to plaintiff in the event of the simultaneous or near simultaneous deaths of the testators, i.e., that these paragraphs constitute common disaster clauses.

These arguments are, however, unpersuasive. Under traditional New York law, a joint will acts as a contract which is binding upon the testators. “As a will an instrument is revokable [sic] at pleasure, but as a contract, if supported by adequate consideration, it is enforceable in equity.” Rastetter v. Hoenninger, 214 N.Y. 66, 71, 108 N.E. 210 (1915). While each of the testators can use the property during his or her lifetime, “after the agreement had been executed by one dying without making a different testamentary disposition of his property and after the acceptance by the other of the benefits of the agreement, the [joint will] became obligatory upon the other and enforceable in equity upon his death.” Id. at 73, 108 N.E. 210. See also Hermann v. Ludwig, supra, 186 A.D. at 296-97, 174 N.Y.S. 469 (“he that dies first dies with the promise of the survivor, that the joint will shall stand”). Thus, if, in violation of á joint will, the surviving testator executes a subsequent will, “the courts will require its executor and beneficiaries ‘to perform the contract’ of their decedent.” Tutunjian v. Vetzigian, 299 N.Y. 315, 319, 87 N.E.2d 275 (1949). The execution of a joint will therefore disables the testators from “making ... a different testamentary disposition after accepting the benefits of the [joint will] agreement.” Rastetter v. Hoenninger, supra, 214 N.Y. at 74, 108 N.E. 210. Furthermore, when the language of a contract is unambiguous, parol evidence as to the intentions of its parties cannot be considered. See Tokio Marine & Fire Ins. Co. v. McDonnell Douglas Corp., 617 F.2d 936, 940 (2d Cir.1980) (citing National Utility Service, Inc. v. Whirlpool Corp., 325 F.2d 779, 781 (2d Cir.1963)).

Defendant’s contentions regarding the intent of the testators with respect to the joint will lack merit for several reasons. First, as plaintiff correctly urges, the purported “absolute gift” language in paragraph Second of the joint will has been held not to permit the revocation of a joint will by a surviving testator. Estate of Opal v. Commissioner, 450 F.2d 1085, 1086-87 (2d Cir.1971) (citing Tutunjian v. Vetzigian, supra). See also Rich v. Mottek, 11 N.Y.2d 90, 94-95, 181 N.E.2d 445, 226 N.Y.S.2d 428 (1962) (language in joint will indicating that survivor would be “sole heir” of first decedent did not negate, irrevocability of joint will). Cf. Matter of Zeh, 18 N.Y.2d 900, 223 N.E.2d 43, 276 N.Y.S.2d 635 (1966) (in absence of language indicating irrevocability, “absolute gift” language of joint will would prevent performance of the joint will); In re Wierzbieniec, 93 A.D.2d 978, 461 N.Y.S.2d 653 (4th Dep’t 1983) (same).

In addition, defendant’s argument that paragraphs Third and Fourth of the will were intended to be common disaster clauses is incredible in view of the fact that the joint will expressly mentions that contingency in the third to last paragraph, supra note 1. Any specific direction with respect to the disposition of property in the event of simultaneous death could have been elaborated upon in that segment of the joint will.

Finally, plaintiff argues most persuasively that defendant’s construction of the joint will would render that instrument meaningless or possibly cause the estate to pass into intestacy. Plaintiff argues:

If defendant’s suppositions are accepted as true, the Joint Will does not provide for any contingent beneficiaries unless there is a common disaster. Thus, according to defendant, if there was no common disaster and the surviving spouse did not execute a new will, the survivor’s estate would pass by intestacy. This result is clearly preposterous since the purpose of executing wills is to avoid intestacy.

Similarly, defendant’s contention that the word “us” in the penultimate paragraph of the will should be read as “either of us” would lead to a nonsensical result.

In view of the above considerations and the undisputed fact that the agreement set forth in the joint will was executed upon the death of Harry Campbell, see Rastetter v. Hoenninger, supra; Tutunjian v. Vetzigian, supra, it is clear that the only meaningful construction of the joint will designates plaintiff as the intended beneficiary of Edith Campbell’s estate. The language of the joint will is unambiguous, thus requiring the exclusion of any extrinsic evidence profferred by defendant. Plaintiff is therefore entitled to specific performance of the joint will, to be effectuated under the supervision of the Surrogate’s Court.

Conclusion

For the reasons set forth above, defendant’s motion to dismiss the complaint is granted with respect to the cause of action seeking to compel defendant to pay plaintiff the entire estate of Edith Campbell and executor’s fees, as those functions fall within the probate court’s jurisdiction. Insofar as defendant’s motion requests dismissal of or abstention from plaintiff’s claim for specific performance, the motion is denied. In addition, plaintiff’s motion for summary judgment compelling defendant to specifically perform the joint will of Harry and Edith Campbell is granted.

SO ORDERED.

      . The provisions of the joint will relevant to this dispute read as follows:
      SECOND: Upon the death of one of us, leaving the other surviving, all the property and estate of every kind and nature and wheresoever situate, of the one so dying first or of which he or she has power of disposal, is hereby given, devised and bequeathed to the survivor absolutely and without any limitation or restriction whatever.

      THIRD: In the event we both die at the same time, all our estate and property, and all property of which we or either of us have power of disposal, is hereby given, devised and bequeathed to FLORENCE DANN-HARDT, sister of HARRY B. CAMPBELL, Jr.; and in the event that one of us survives the other, then upon the death of the survivor of us, all the estate and property owned by such survivor, or of which he or she has power of disposal, irrespective of who owned the same in the beginning, is given, devised and bequeathed to FLORENCE DANNHARDT. All the rest, residue and remainder of our estate and property, and all property of which we or either of us have power of disposal, on the death of both of us is hereby given, devised and bequeathed to FLORENCE DANN-HARDT.
      FOURTH: Upon the death of one of us, leaving the other surviving, the survivor of us is hereby appointed Executor of this as the LAST WILL AND TESTAMENT of the one so dying first and it is directed that he or she shall not be required to give any bond or undertaking, any law to the contrary notwithstanding, and we hereby release and discharge our Executor from any obligation imposed by the law in the administration of our estate, and upon the death of both of us we direct that FLORENCE DANNHARDT, of 1814 Hannington Avenue, Wantagh, New York, is hereby appointed Executrix of us and each of us and of our joint and respective wills as herein expressed, and we direct that she shall not be required to give any bond or undertaking, any law to the contrary of any State notwithstanding, and we hereby release and discharge our Executrix from any obligation imposed by the law in the administration of our estate.
      (Emphasis added).
      The third to last and penultimate paragraphs of the joint will further state:
      If my wife, EDITH MAY CAMPBELL, and I die simultaneously or under such circumstances that it cannot be determined which of us was the survivor, it shall be presumed for the purposes of this will that my said wife survived me.
      We have agreed upon the foregoing disposition of our property, and in consideration thereof, it is further agreed that this will shall be forever binding upon us and each of us, and shall bind our distributees and representatives and that this will shall not be revoked by us or by the survivor of us with the exception only that it may be revoked in writing duly subscribed by us and executed with the formality of a will.

      (emphasis added).

      . See Affidavit of Florence Campbell Dannhardt in Support of Motion for Summary Judgment ("Dannhardt Aff.”), Exhs. F, G, H.

      . Because a copy of the Surrogate’s decision and order are not in the record, it is impossible to determine the basis upon which the Surrogate granted defendant’s motion to dismiss plaintiffs objection to the second will.

      . See Affirmation of Thomas G. Sherwood in support of defendant’s motion for judgment on the pleadings ("Sherwood Aff.”), Exh. 3.

      . Defendant also alleges that he drafted three wills for Edith Campbell during the period between Harry Campbell’s death and the execution of the second will.

      . For an overview of the origin of this concept, see, e.g., Dragan v. Miller, 679 F.2d 712, 713-14 (7th Cir.); cert. denied, 459 U.S. 1017, 103 S.Ct. 378, 74 L.Ed.2d 511 (1982).

      . See, e.g., Plaintiff's Memorandum of Law in Opposition to Defendant’s Motion to Dismiss at pp. 3-4.

      . These categories are:
      (1) avoiding a federal constitutional issue by seeking a state determination of state law; (2) deferring to state resolution of difficult state law questions that involve important public policy or where federal review would be disruptive of state regulation or administration; and (3) declining to restrain state criminal proceedings, collection of state taxes and the like.

        Giardina v. Fontana, supra, 733 F.2d at 1052 (citing Colorado River Water Conservation District v. United States, supra, 424 U.S. at 814-16, 96 S.Ct. at 1244-46).

      . As noted above, the probate court in Giardina specifically dismissed the plaintiffs claim on this basis, holding that it did not have jurisdiction to hear Giardina’s claim because it was not a probate matter. The Court found that this fact "almost [made] out exceptional circumstances for keeping the case in the district court.” 733 F.2d at 1053 (emphasis added). Although it is unclear why the Surrogate’s Court here granted defendant’s motion, that position was, in fact, the only basis for dismissal urged in defendant’s motion and reply papers in the Surrogate’s Court.
      In holding that plaintiff’s claim was properly before the district court, the Giardina court was also impressed by the facts that plaintiff's claim was severable from the Florida probate court's administration of the trust, that no unsettled question of state law existed and that the special expertise of a state court or executive regulatory agency was not necessary to the resolution of that claim. 733 F.2d at 1052. Those considerations are the same in the instant case, and do not require plaintiff’s claim to be adjudicated in the state court.

      . See Defendant’s Statement Pursuant to Local Rule 3(g), ¶¶ 1-5. The other factual issues alleged in defendant’s 3(g) Statement deal with the aspects of plaintiff's claim which have been dismissed, supra at 7.

      . These traditional New York rules with respect to joint wills have been somewhat modified by the recently enacted § 13 — 2.1(b) of the New York Estates, Powers and Trusts Law, which provides:
      A contract to make a joint will, or not to revoke a joint will, if executed after the effective date of this paragraph can be established only by an express statement in the will that the instrument is a joint will and that the provisions thereof are intended to constitute a contract between the parties.
      N.Y. Est. Powers & Trust Law § 13-2.1(b) (McKinney Supp.1984). Although this statute only affects will contracts executed after its effective date of September 1, 1983, its enactment "may nevertheless influence the direction of the courts even in previously existing situations." Margulis v. Teichman, 125 Misc.2d 729, 479 N.Y.S.2d 953 (Surr.Ct. Nassau Co. 1984) (citing Prof. Rohan, McKinney’s Suppl. Prac. Commentaries, EPTL 13-2.1).
      In the Margulis case, however, the court found that the requirements of EPTL § 13-2.1 had been met although that statute was inapplicable to the joint will there is controversy. 479 N.Y.S.2d at 956. This was so because the language of the will expressly stated that the joint testators had "agreed upon” the disposition of their property as set forth therein, and the will contained language indicating irrevocability as well. In addition, the court stated: "It is clear from case law pre-existing the recent amendment to EPTL 13-2.1 that if a joint will expressly recites within its provisions or by a separate instrument that it cannot be altered or revoked, it is contractually binding upon the survivor.” Id., citing Tutunjian v. Vetzigian, supra, and other authorities. The enactment of § 13-2.1 thus did not supplant in any way the traditional rules governing joint wills where irrevocability is expressly provided for in the will.

      . As plaintiff points out in her Reply Memorandum at 8, defendant would have the penultimate paragraph read:
      "We have agreed upon the foregoing disposition of our property, and in consideration thereof, it is further agreed that this will shall be forever binding upon [either of us] and upon each of us, and shall bind our distributees and representatives and that this will shall not be revoked by [either of us] or by the survivor of [either of us] with the exception only that it may be revoked by a writing duly subscribed by [either of us] and executed with the formality of a will.”


author: NANGLE, Chief Judge.

text:
    Joseph W. MILLER and Cathy Miller, Plaintiffs, v. UNITED STATES of America, Defendant.
    No. 84-2698C(1).
    United States District Court, E.D. Missouri, E.D.
    March 20, 1985.

      Joseph and Cathy Miller, pro se.
    Mary Frances Clark, Tax Division, U.S. Dept, of Justice, Washington, D.C., for defendant.
   MEMORANDUM

NANGLE, Chief Judge.

This case is now before this Court on defendant’s motion to dismiss or for summary judgment. This Court grants defendant’s motion for summary judgment.

This is a suit by plaintiffs for refund of an income tax penalty payment of $75.00. It is undisputed that plaintiffs jointly filed a tax return for the year 1983. On said tax return plaintiffs provided their names and address, but placed asterisks in all the other lines. At the bottom of each page of the tax return was an asterisk with the following language placed after it:

This means specific objection is made under the Fifth Amendment, U.S. Constitution. Similar objection is made to the question under the First, Fourth, Seventh, Eighth, Ninth & Fourteenth Amendments for civil issues.

Pursuant to § 6702 of the Internal Revenue Code of 1954, as amended, 26 U.S.C. § 6702, the Internal Revenue Service determined that plaintiffs’ tax return was a “frivolous” return and assessed a $500.00 penalty against them. Section 6702 was added to the Code by Section 326(a) of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub.Law No. 97-248. Plaintiffs were given a notice that the penalty was assessed. Thereafter, plaintiffs made a partial payment of 15% of the penalty ($75.00) and filed a claim for a refund with the Internal Revenue Service. The plaintiffs’ claim for a refund was disallowed on October 17, 1984. On November 20, 1984, plaintiffs filed this suit for a refund. Plaintiffs’ complaint challenges the assessment of the penalty and the statute which authorized said penalty on constitutional grounds.

Assuming, without deciding, that plaintiffs’ complaint was timely filed, plaintiffs’ position is meritless as a matter of law. Plaintiffs’ constitutional objections to § 6702 and § 6703 have recently been rejected by the Eighth Circuit Court of Appeals on more than one occasion. Boomer v. United States, 755 F.2d 696 (8th Cir.1985); Wall v. United States, 756 F.2d 52 (8th Cir.1985); Baskin v. United States, 738 F.2d 975 (8th Cir.1984). Moreover, plaintiffs’ complaint was clearly “frivolous” because it does nothing but claim spurious constitutional objections. See Ueckert v. Commissioner, 721 F.2d 248, 250 (8th Cir.1983).

Defendant seeks an award of attorney’s fees and imposition of sanctions, because plaintiffs filed a complaint which is clearly meritless and frivolous. This request is well taken. Plaintiffs’ claims were raised in bad faith and asserted vexatiously because they are patently frivolous and because plaintiffs intended them to impede the enforcement of the income tax laws when they filed their return. Under these circumstances, an award of defendant’s attorney’s fees and costs is appropriate under Rule 11. Fed.R.Civ.P. 11. Plaintiffs shall pay defendant’s attorney’s fees in the amount of $200.00 and costs.