author: HOLDERMAN, District Judge:

text:
    UNITED STATES of America, Plaintiff, v. Doris THOMAS, et al., Defendants. Doris THOMAS, Cross-Plaintiff, v. VILLAGE OF MAYWOOD, et al., Cross-Defendants. Carol JAROCKI, et al., Intervenors-Plaintiffs, v. UNITED STATES of America, Defendant.
    No. 83 C 3752.
    United States District Court, N.D. Illinois, E.D.
    Aug. 27, 1985.

      Linda A. Wawzenski, Asst. U.S. Atty., Chicago, Ill., for the U.S.
    Peter M. Rosenthal, Ancel Glick Diamond Murphy & Cope, Chicago, Ill., for the Village of Maywood.
    David R. Smith, Cole & Smith, Chicago, Ill., for Doris Thomas.
   MEMORANDUM OPINION AND ORDER

HOLDERMAN, District Judge:

This is an action to foreclose several mortgage liens on property located in the Village of Maywood, Cook County, Illinois (the “property”). The property houses a restaurant-banquet facility and several apartment units which are operated by defendant Doris Thomas Anderson (“Anderson”).

The United States has moved for reconsideration of its motion for summary judgment, originally presented to Judge Leigh-ton of this Court. Intervening plaintiffs Carol Jarocki, Emil Marunde, Trudy Smith and Rudolph Kullmann and Richard Kull-mann, as co-administrators of the estate of Margarethe Marunde (hereinafter “Inter-venors”) have also moved for summary judgment.

For the reasons stated below, the United States’ motion for reconsideration is granted; summary judgment will be entered for the United States. The Intervenors’ motion for summary judgment is also granted.

DISCUSSION

I. Intervenors’Motion.

Intervenors were the beneficiaries of a land trust which formerly held title to the property. On January 14, 1978, at the direction of the beneficiaries, the Chicago Title and Trust Company conveyed title to Anderson in fee simple. In return, Anderson executed a note (the “Note”) in the principal amount of $40,000, bearing infer-est at the annual rate of nine and one-half percent. Monthly payments, commencing January 15,1978, were due on the 15th day of each month in the amount of $372.86, with the principal balance remaining due and unpaid on December 15, 1987 to be paid on that date. The Note was secured by a trust deed in the nature of a mortgage which was duly recorded.

Payments were made on the Note on a regular basis (although in irregular amounts) from January of 1978 through July of 1979. Payment then ceased until October of 1979, then ceased again. Anderson again made regular payments on the Note from January of 1980 through March of 1981. Payment on the Note then came to a halt until November of 1981 when Anderson made one final payment of $765.12.

Intervenors have calculated that had Anderson made regular monthly payments in accordance with the Note’s provisions, the remaining balance on the mortgage would have been $36,704.92 on August 15, 1981. Instead, on that date the principal and interest due amounted to $36,762.25. This state of default was not cured by Anderson’s last payment in November of 1981. As of March 15, 1985, Intervenors contend, Anderson owed Intervenors the sum of $35,362.50 in principal and $12,672.60 in interest. In addition, interest continues to run at the per diem rate of $9.33.

Anderson does not dispute that she is in default under the Note. As a defense to summary judgment, Anderson states that she discontinued payment “due to the uncertainty with respect to the rehabilitation of the subject property.” Anderson’s brief in response to Intervenors’ motion for summary judgment states that she intended to tender to Intervenors the sum of $26,477.13 (the amount which Anderson contends would be due had she not defaulted) within forty-five days of the date of her brief.

Anderson’s “uncertainty” with respect to rehabilitation of the property, of eourse, is no excuse for nonpayment of the Note. In fact, Anderson executed the Note and was obliged to make payment thereunder before she was even aware that government funds were available for rehabilitation. Similarly, Anderson’s tardy tendering of part of the amount in default is not a basis upon which this Court can deny Intervenors’ right to foreclose.

The trust deed securing Intervenors’ mortgage provided as follows:

Mortgagors shall pay each item of indebtedness herein mentioned, both principal and interest, when due according to the terms hereof. At the option of the Holders of the Note, and without notice to Mortgagors, all unpaid indebtedness secured by this Trust Deed shall, notwithstanding anything in the Note or in this Trust Deed to the contrary, become due and payable (a) immediately in the case of default in making payment of any installment of principal or interest on the Note or (b) when default shall occur and continue to three days in the performance of any other agreement of the Mortgagors herein contained, (emphasis added)

Intervenors exercised their right to accelerate by filing their complaint.

Summary judgment, of course, is appropriate only when the “pleadings, depositions, answers to interrogatories, and admissions on-file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). No genuine issue of material fact exists regarding Intervenors’ right to foreclose their mortgage. No other party to this action has contested Intervenors’ right to summary judgment foreclosing their mortgage or Intervenors’ right to a declaration that their lien on the property is superior to the equitable interest of any other party to this action. Summary judgment for Intervenors, therefore will be granted.

II. HUD’s Motion.

The heart of this case, however, is unrelated to the Intervenors’ Note and mortgage. The case commenced when the United States, acting through the Department of Housing and Urban Development (“HUD”), filed suit to foreclose on its mortgage on the property. The events leading up to the filing of HUD’s complaint are not in dispute.

HUD’s Section 312 program was designed to provide low-cost loans for rehabilitation purposes to persons who might not otherwise qualify for such sizeable funds. (See generally 24 C.F.R. Part 510). Sometime during 1979 Anderson learned that HUD rehabilitation funds were available and that her property might be eligible for a low-interest loan. Anderson’s initial loan application for $440,000, prepared with the help of personnel at the Maywood Community Development Department, was turned down by HUD. Her second application, dated September 13, 1979, requested the sum of $332,950. This application was approved. On October 30, 1979, Anderson, doing business as Chez Louisienne, executed and delivered her note in the amount of the loan. The note was secured by a mortgage on Anderson’s property. The note bore interest at the rate of 3% per annum, provided for payment of monthly installments, and authorized the holder to accelerate the maturity should any installment remain unpaid on the due date of the next installment. The mortgage was recorded on December 29, 1979 in the Office of the Recorder of Deeds of Cook County, Illiois.

HUD’s policies and regulations require that a local public agency administer Section 312 projects. At loan'settlement, the local agency secures the borrower’s endorsement and deposits the loan proceeds check in a rehabilitation escrow account. All disbursements from the escrow account are made payable jointly to the payee and the borrower; i.e., the borrower must endorse any use of the loan proceeds. The local public agency is in charge of obtaining the borrower’s endorsement on checks drawing funds from the escrow account and then transmitting the endorsed check to the payee.

There is no allegation that HUD failed to follow its procedures with regard to Anderson’s loan. Anderson does contend that she never “directly” received the funds, never had control over the funds, and endorsed checks when instructed to do so only to ensure that contractors get paid. That the funds were received in accordance with HUD procedures and used to rehabilitate Anderson’s property, however, is not in dispute.

According to the terms of the promissory note, monthly installments were to commence on April 1, 1980. Anderson contends that she was assured, however, that payments on the note would not be due until the project was completed.

Problems beset the project from the start. In order to save money, the rehabilitation project was bidded in component parts, which delayed the starting date. The general contractor turned out to be incompetent, and his contract had to be terminated. The Village realized, however, that despite the cost-cutting efforts, a “critical shortage” of funds was still apparent; between June of 1981 and January of 1982 the Village committed approximately $160,-000 in Community Development Block Grant funds to the project.

Anderson failed to make any payments on the loan in 1980. In January of 1981 Anderson and the Village jointly requested HUD’s forbearance in declaring the loan in default and a temporary suspension of payments. HUD agreed to a term of forbearance until July 31, 1981, two weeks after the expected completion date. In return for HUD’s forbearance, Anderson executed an Extended Repayment Agreement in which she acknowledged the default and promised to begin monthly payments on August 1, 1981. Anderson has not made any payment of principal or interest under this Agreement. In short, Anderson has not made any payment to HUD whatsoever. On June 1,1983 the United States filed this foreclosure action.

Fourteen months after suit was filed, Anderson’s counsel submitted to HUD a reinstatement proposal. HUD rejected the proposal since it lacked any commitment by the borrower to invest money in the project, detailed operating budgets or management proposals. Anderson’s counsel, Mr. Smith, was informed of the deficiencies in the reinstatement proposal.

Mr. Smith then submitted a “Phase II Workout Proposal” which apparently again lacked a specific commitment from Anderson for investment of definite amounts of money and detailed operating budgets and management proposals. Phase II was also rejected by HUD.

Anderson has raised three affirmative defenses in her Answer to the foreclosure action. First, the Answer states that HUD violated its own regulations by failing to avoid foreclosure proceedings through alternative methods of financing, i.e., HUD failed to consider modifying, recasting, extending or refinancing the note and mortgage. Next, the Answer states that the loan funds “were at no time directed to [or] personally received by Defendant.” Finally, Anderson has raised the affirmative defense that HUD failed to comply with its statutory mandate to further national housing policies and to fulfill its duty to supervise Section 312 projects in such a manner as to avoid foreclosure. Anderson has also counterclaimed for damages allegedly suffered as a result of HUD’s failure to conduct its activities in accordance with its “Rehabilitation Financing Handbook.”

A. Alternative Methods of Financing.

Anderson’s primary defense to summary judgment is that HUD failed to avoid foreclosure by considering alternative methods of financing or salvaging the project prior to foreclosing, in violation of its obligations under the National Housing Act, 42 U.S.C. § 1441. Essentially Anderson contends that HUD’s rejection of her refinancing proposal, submitted fourteen months after commencement of this action, was arbitrary and capricious and in total disregard of HUD’s statutory obligation to promote national housing policies.

Anderson has not identified any statute, regulatory provision or national housing policy that requires HUD to consider alternatives to foreclose. Moreover, Anderson has ignored the action HUD took in order to keep the rehabilitation project afloat. In response to Anderson’s acknowledgment that the loan was in default and request for forbearance, HUD agreed to suspend obligations under the note for sixteen months while the project was completed.

Finally, HUD’s rejection of Anderson’s workout proposal was not arbitrary. The correspondence between Mr. Smith and HUD representatives clearly shows that HUD might have considered a workout proposal if it included a specific monetary commitment by the borrower, and detailed operating budgets and management proposals. HUD’s letter of October 3, 1984 to Mr. Smith clearly evinces HUD’s willingness to entertain a workout proposal provided it contained the requisite components:

Based upon your conversation with Mr. Jensen, it is our present understanding that the “Phase I Report and Recommendations” (April 1984) previously submitted to HUD on behalf of Ms. Thomas (and forwarded by our office to CMS) was not intended by your client to be a work-out proposal, but rather was submitted solely for the purpose of opening up a dialogue as to terms of a work-out arrangement for this loan that would be satisfactory to the Department. It is our further understanding that, prior to tendering a second submission, which would set forth a developed work-out proposal, with specific monetary commitments by the mortgagor, you would like the opportunity to discuss the parameters of acceptable workout arrangements with appropriate representatives of the Department. It is in response to that request that you are advised that Ms. Guthrie of CMS is the appropriate HUD contact person. Of course, HUD would not enter into any workout arrangement unless it was determined to be in the best interest of the Department.
Following your discussion with CMS, if you intend to submit a workout proposal for this loan on behalf of Ms. Thomas, you should send your comprehensive written proposal to Assistant U.S. Attorney Ann Wallace, with copies to both Ms. Guthrie and to this office. In light of the fact that this foreclosure action has already been protracted, we would ask that you submit any workout proposal to Ms. Wallace by COB October 19, 1984.

Defense counsel was provided with Ms. Guthrie’s address and telephone number.

On October 23, 1984, Mr. Smith submitted the Phase II proposal. The proposal neither proposed any monetary commitment by Anderson nor included detailed operating budgets and management proposals. HUD has also represented, and Anderson has not contradicted, that the Phase II proposal required HUD to commit an additional $210,000 to the project. HUD informed Mr. Smith of the apparent defects in the proposal and justifiably wanted to know whether Smith’s client could comply with its requirements before setting up a meeting.

Mr. Smith responded to HUD's letter merely by complaining about the “vague” questions posed by HUD. He further lamented that HUD’s questions

provide no guidance as to what kind of information HUD is looking for which would make a proposal for Ms. Thomas acceptable to them. For example: the item 1 in your letter request [sic] specific committments [sic] for definite amounts of money. In this regard, please advise me as to what kind of committments [sic] HUD is looking for and definite amounts of money to do what? Item 2 of your letter refers detail [sic] operating budgets and management proposals. I am puzzled by this statement because the terminology used is appearing to request more than one budget and more than one proposal. The question that we have is why.

Negotiations on the work-out arrangement faltered at this point.

Anderson apparently believes that more than fourteen months after suit commenced she could propose a work-out arrangement with HUD that did not comply with HUD’s minimum requirements for such an arrangement, and then use HUD’s rejection of the proposal to defend against summary judgment. Anderson is mistaken. As the Seventh Circuit recently noted:

[Ojnce proceedings are commenced, any further business judgments made by HUD in its continued prosecution of the foreclosure action are immaterial and collateral to HUD’s decision to foreclose and, therefore, wholly discretionary. The availability of judicial review of HUD’s discretionary decisions was not meant to afford the defaulting mortgagor an opportunity to resist foreclosure by seeking review of the efforts taken by the parties during the course of litigation in attempting to cure the default and resolve related fiscal problems and thereby prolong the foreclosure proceedings.

United States v. OCCI Co., 758 F.2d 1160, 1165 (7th Cir.1985).

In sum, Anderson has not raised a genuine issue of fact to support the affirmative defense that HUD acted arbitrarily or capriciously, or abused its discretion, by not exploring alternatives to foreclosure. As Judge Getzendanner of this Court has stated:

HUD indicated its reasons for rejecting defendant’s workout proposal, and defendants could have made a second proposal responsive to HUD’s concerns. HUD was not obligated to formulate its own plan, at least on the facts presented in this case.

United States v. American National Bank & Trust Co. of Chicago, 595 F.Supp. 324, 325 (N.D.Ill.1983). The facts presented in this case similarly did not oblige HUD to formulate a plan to rescue the rehabilitation project.

B. Non-Receipt of Funds.

Anderson’s second affirmative defense claims that the funds directed for the rehabilitation project “were at no time directed to nor personally received by Defendant.” The gist of this defense apparently is that the Village and not Anderson had control over the funds and so HUD should look to the Village, not Anderson, for recovery of the debt. Although Anderson concedes that she signed disbursement checks for work done on the project, she contends that “she was ordered to do so” by Village officials so that work would not come to a halt.

The fact that Anderson never had cash in her hands is no affirmative defense to HUD’s motion. Anderson received the entire benefit of the rehabilitation loan. Moreover, Anderson’s attempt throughout the pleadings to characterize her position as that of a naive automoton who only did as she was told by scheming Village officials has no support in the record. In short, Anderson’s second affirmative defense must fail.

C. National Housing Policy.

Anderson’s third affirmative defense is that HUD failed to fulfill national housing policy by not supervising and monitoring the rehabilitation project. A similar argument was raised by the defendant in United States v. Winthrop Towers, 628 F.2d 1028 (7th Cir.1980). The Seventh Circuit held that, absent an agreement requiring HUD to inspect and approve of construction, HUD’s negligence in so doing did not constitute an affirmative defense to a foreclosure action. Id. at 1038. The argument was also raised as a counterclaim in a recent case before Judge McMillen of this Court, where HUD was alleged to have negligently inspected the work site and negligently permitted disbursements to be paid. Judge McMillen noted that “HUD had no affirmative or contractual obligation to make inspections except for its own benefit and protection.... Failure to perform this function is not actionable.” United States v. LaSalle National Bank, No. 84 C 2294 (N.D.Ill. Feb. 6, 1985), slip op. at 4. Anderson has cited no contrary authority; indeed, as noted above, Mr. Smith has apparently conceded that HUD’s failure to supervise does not constitute an affirmative defense to this action. See fn. 3, supra at p. 9. Anderson’s third affirmative defense, therefore, does not bar summary judgment.

D. Anderson’s Counterclaim.

Finally, Anderson has raised the counterclaim that HUD violated its “Rehabilitation Financing Handbook” when it failed to monitor, supervise and inspect the rehabilitation project. Defendant contends that as a result of HUD’s violation of its duty to monitor, supervise and inspect the project, she suffered “great humiliation, embarrassment, the loss of personal financial resources and incurrence of debt....”

As noted by the Seventh Circuit in Burroughs v. Hills, 741 F.2d 1525 (7th Cir.1984), “Uncertainty often exists whether a handbook is meant to be, or is inadvertently made to be, an independent source of legal rights or claims against the United States Government and its officials.” Id. at 1529. The Seventh Circuit held that HUD’s “Property Disposition Handbook” had no binding force but was entitled to notice to the extent that it was an official interpretation of statutes or regulations with which it did not conflict. Id. In denying plaintiffs any cause of action under the HUD handbook, the Court noted that “[ejfforts to enforce implied causes of action under the National Housing Legislation or the HUD Handbook, have frequently come under consideration of appellate courts, and have always failed.” Id. at 1532.

The government concedes that the Handbook’s procedures called for HUD inspections of the construction work, instead of- or in addition to inspections by the Village (which were carried out). The government contends, however, first that the HUD handbook conferred no legal rights upon Anderson entitling her to sue for a violation thereof; and second, even if it did confer legal rights, Anderson has not established that she suffered any injury by reason of HUD’s failure to supervise and inspect the rehabilitation project.

HUD s Rehabilitation Handbook, like the Property Distribution Handbook at issue in Burroughs, appears to have been drafted for the internal use of HUD and the local public agencies assisting HUD in the administration of the Section 312 loan program. In particular, HUD’s duty to inspect under Chapter 20 of the Handbook was designed to protect HUD, not the borrower, from payments for unsatisfactory work on a project. The Court holds, therefore, that the Rehabilitation Handbook did not confer any legal rights upon Anderson upon which she can base a cause of action against HUD.

Since this holding disposes of the counterclaim against HUD, the Court need not decide whether Anderson suffered injury by reason of HUD’s alleged failure to inspect and supervise. The Court notes, however, that the record is bereft of any evidence of emotional distress suffered by Anderson as a result of HUD’s alleged failure to inspect or supervise. No evidence has been presented to show that an inspection by HUD would have benefitted the project. In fact, an inspection eventually carried out by HUD at Anderson’s request failed to reveal a single instance in which a contractor was paid improperly, or work was performed unsatisfactorily, or an inspection by Village officials was deficient.

In sum, Anderson’s affirmative defenses and counterclaim must be dismissed and summary judgment in favor of the United States be granted.

CONCLUSION

For the reasons set forth herein, Inter-venors’ and the United States’ motions for summary judgment are GRANTED.

      . Anderson executed a trust deed for the property to the Maywood-Proviso State Bank as Trustee on June 26, 1981 and therefore is not the legal titleholder. Anderson is the beneficiary of tile trust, however, and this suit seeks to extinguish whatever claim Anderson may have in the property.

      . Intervenors are instructed to submit a short accounting statement showing how they calculated (1) the sum of 148,034.10 ($35,362.50 as principal and $12,672.60 as interest) as the amount due and owing on March 15, 1985; and (2) the sum of $9.33 as the amount of interest accruing daily on the debt.

      . Indeed, Anderson appears to have conceded that this claim is the only defense to summary judgment. The following colloquy took place between Judge Leighton and defense counsel on April 25, 1985:
      THE COURT: Tell me this: could you say it very briefly, what are the questions of fact that are present in this case that would preclude grant of the plaintiffs motion for summary judgment? What are the issues of fact to be resolved?
      MR. SMITH: Well, I believe we touched on most of them, Your Honor. No. 1 is the obligation that HUD had and still has, I believe, to before initiating a foreclosure proceeding, that they at least try to work out a way of salvaging the problem. That has not been done.
      ******
      THE COURT: That is one. Now, what are the other issues of fact as to other categories of legal questions? What are the issues of fact?
      MR. SMITH: As far as a defense to the summary judgment, I believe that is in essence the basic one.
      There are some other things that we mentioned in our filings, the lack of inspection on the part of HUD when they had an obligation to do so because the reason for — whether or not that is an actual defense to a summary judgment might be a question, but the point we were trying to bring out is that had they inspected the property, the joint inspections that their own regulations require, then maybe the project could have been terminated at a point in time when no one was out a lot of money.
      Again, I don't say that is necessarily a defense to the summary judgment. But I believe that read as a whole all of these things would be defenses to plaintiff’s motion.
      THE COURT: Anything else now?
      MR. SMITH: I believe that is all with respect to the plaintiff ...
      Anderson now adamantly claims that she did not "abandon" any claims at the hearing before Judge Leighton. It is difficult to understand this contention in light of the clear language to the contrary. The Court, however, will consider each of the affirmative defenses proffered.


source: Caselaw Access Project

author: ROBERT J. McNICHOLS, Chief Judge.

license: Public Domain

text:
    Joseph HENNESSEY and Helen Hennessey, individually and as parents and next friends of Elizabeth Hennessey, a minor, Plaintiffs, v. STATE OF WASHINGTON, DEPARTMENT OF SOCIAL AND HEALTH SERVICES, Carol Winterburn, individually and as Counselor for the Department of Social and Health Services, State of Washington; and Mike Padelford, Administrator, Pasco Community Services Office, Department of Social and Health Services, Defendants.
    No. C-84-525 RJM.
    United States District Court, E.D. Washington.
    Aug. 27, 1985.
    (Richard H. Bennett), R. Henry Bennett, Inc., Everett, Wash., for plaintiffs.
    Don G. Daniel, Asst. Atty. Gen., State of Wash., Olympia, Wash., for State of Wash., Dept, of S.H.S. and Carol Winterburn.
   MEMORANDUM AND ORDER

ROBERT J. McNICHOLS, Chief Judge.

This is a civil rights action brought pursuant to 42 U.S.C. §§ 1983, 1985(3) and 1988 against the State of Washington, Department of Social and Health Services and two of its employees. The operative facts are as follows. On or about October 4, 1983 plaintiffs’ four year old daughter, Elizabeth, was taken to Dr. Nancy Johnson for treatment of a shattered front tooth. Two days later on October 6th, Elizabeth returned with a similar injury. On both occasions, a bicycle accident was given as the cause of injury.

Dr. Johnson suspected child abuse. She immediately notified Child Protective Services. Defendant Carol Winterburn, a DSHS caseworker, responded to the call. Ms. Winterburn felt that the evidence indicated possible child abuse and she contacted the Kennewick Police Department. On October 7, 1983, Elizabeth was taken into protective custody by the police department and temporary foster care was arranged for her by Ms. Winterburn.

Further investigation was conducted that same day by Officer Larson of the Ken-newick Police Department who was accompanied by Ms. Winterburn. From all indications it appeared to both Officer Lawson and Ms. Winterburn that Elizabeth had in fact sustained her injuries in a fall from her bicycle. Officer Lawson and Ms. Win-terburn reported their findings to the Benton County Prosecutor, Les Ching, together with a recommendation that protective custody be removed. Prosecutor Ching concurred with their recommendation and he removed Elizabeth from protective custody at approximately 5:00 p.m. on October 7.

At some point in her discussions with Prosecutor Ching, Ms. Winterburn expressed concern that Elizabeth’s recurring accidents might be due to developmental problems. Ms. Winterburn suggested to the plaintiffs that further evaluation of Elizabeth might be in order to determine the cause of Elizabeth’s accidents. This suggestion understandably was met with some degree of opposition from plaintiffs. Ms. Winterburn renewed her concerns with Prosecutor Ching who agreed that further evaluation of Elizabeth was warranted. On October 9, 1983 Ms. Winterburn filed a request for a dependency petition to obtain a court ordered evaluation of Elizabeth. Apparently, Elizabeth remained in her parents’ custody pending the outcome of the proceedings. The proceedings were eventually terminated in favor of the plaintiffs on January 12, 1984 on the motion of the prosecuting attorney based upon a lack of supporting evidence. This action followed.

All defendants have moved for summary judgment pursuant to Rule 56 Fed.R.Civ.P. The motions are based on several grounds and I will address each one in turn.

Jurisdiction

A threshold issue presented by the defendants is that the court lacks subject matter jurisdiction over this action. Defendants’ argument is based upon the longstanding “domestic relations” exception to federal court jurisdiction. This exception has its roots in early judicial construction of the diversity statute. Csibi v. Fustos, 670 F.2d 134 (9th Cir.1982). A fair reading of Csibi would seem to limit its application to such cases. But see Firestone v. Cleve land Trust Co., 654 F.2d 1212 (6th Cir.1981) (holding that federal question suits which are in substance domestic relations actions will not be entertained in federal court.)

Apart from the confusion over whether the domestic relations exception is only applicable to diversity actions, I believe that under the facts of this case the exception does not apply. As a jurisdictional limitation the exception has been narrowly construed. Csibi at 137. Only those cases most closely resembling ecclesiastical actions have been considered absolutely outside federal court jurisdiction. Id. Cases including those where a federal court is asked to grant a divorce or annulment, determine support payments, or award custody of a child are considered to be “at the core” of the exception. Id. As such, federal courts must decline jurisdiction in those cases concerning domestic relations only when “the primary issue concerns the status of parent and child or husband and wife.” Buechold v. Ortiz, 401 F.2d 371 (9th Cir.1968).

In this action, plaintiffs seek redress for alleged violations of their constitutional rights. Plaintiffs do not challenge the competency of the state court in settling a domestic dispute. Nor is this an area which is particularly suited to state regulation and control. Cf., Csibi at 137. In this case, the subject of domestic relations is peripheral to the issues presented. Federal courts are not ousted of their jurisdiction merely because the suit arises in a domestic relations context. Elam v. Montgomery County, 573 F.Supp. 797 (S.D.Ohio 1983). Accordingly, I hold that this court does have jurisdiction over this action and I will now turn to the defendants’ other contentions.

Plaintiffs’ § 1985 Claims

Defendants have not tailored their present motion for summary judgment to address plaintiffs’ claim under 42 U.S.C. § 1985(3). Presumably this claim is to be disposed of by the other grounds upon which defendants rely. Nevertheless, this claim may be dealt with quite summarily at the outset. Section 1985(3) is directed towards conspiracies which are motivated by racial or other class-based discriminatory animus. Mollnow v. Carlton, 716 F.2d 627 (9th Cir.1983), cert denied, 465 U.S. 1100, 104 S.Ct. 1595, 80 L.Ed.2d 126 (1984). The plaintiffs have neither alleged nor offered any evidence to indicate that the defendants were so motivated. Accordingly, plaintiffs’ § 1985(3) claims are dismissed' for failure to state a claim upon which relief can be granted. Fed.E.Civ.P. 12(b)(6).

DSHS

Defendant DSHS, relying on Quern v. Jordan, 440 U.S. 332, 99 S.Ct. 1139, 59 L.Ed.2d 358 (1979) argues that suits against the State of Washington under 42 U.S.C. § 1981 et. seq are barred by the eleventh amendment. Defendant DSHS further contends that this immunity is extended to departments of state government citing Sykes v. State of California (Dept. of Motor Vehicles), 497 F.2d 197 (9th Cir.1974). Defendant’s argument has merit.

Further research indicates that the only erosion of the eleventh amendment immuni-\ ty doctrine relied upon by defendant, is that local government units are not considered part of the state for Eleventh Amendment purposes. Monell v. New York City Dept. of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Plaintiffs do not allege that DSHS is a “local” government entity. Thus, their reliance on Monell is misplaced. Although a state may waive its Eleventh Amendment immunity, clearly the State of Washington has not done so. McConnell v. Critchlow, 661 F.2d 116 (9th Cir.1981). Accordingly, plaintiffs’ claims against DSHS must fail.

Carol Winterburn

Plaintiffs’ allegations as to Carol Winterburn appear to be that after investigating the circumstances surrounding their daughter’s injury and determining that there was no basis for suspecting child abuse, Ms. Winterburn divulged false and misleading information to the Benton County Deputy Prosecutor, Les Ching. This in turn caused the prosecutor to initiate dependency proceedings which were ultimately dismissed in plaintiffs’ favor. It is complained that this conduct deprived plaintiffs of their constitutional rights. I have serious doubts as to whether the above conduct standing alone would constitute a violation. of plaintiffs’ constitutional rights. Cf. Duchesne v. Sugarman, 566 F.2d 817 (2nd Cir.1977). However, this is an issue I need not now decide. The state bases its motion for summary judgment on immunity and thus, for purposes of this motion I will assume that plaintiffs have stated an otherwise cognizable claim under section 1983.

All of the allegations against Carol Winterburn arise from her activities in preparing and presenting this case to County Prosecutor Ching. As such, the state argues that Ms. Winterburn is absolutely immune from civil rights liability under the absolute immunity doctrine enunciated in Imbler v. Pachtman, 424 U.S. 409, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976). In Imbler, the question presented to the Court was whether a prosecutor who was acting within the scope of his duties in initiating and pursuing a criminal prosecution was amenable to suit under 42 U.S.C. § 1983. The Court held that he was not. The Court reasoned that imposing § 1983 liability on a prosecutor would have a debilitating effect on the criminal justice system. Of chief concern to the Court was the fact that imposing such liability on prosecutors would undermine the vigorous and fearless performance of his duties and dissipate his energies toward the defense of civil suits. Id. at 424-25, 96 S.Ct. at 992.

The reasoning of Imbler has been extended to child protective service caseworkers. The leading case in this area is Whelehan v. County of Monroe, 558 F.Supp. 1093 (W.D.N.Y.1983). Following the “functional comparability” test set forth by the Supreme Court in Butz v. Economou, 438 U.S. 478, 98 S.Ct. 2894, 57 L.Ed.2d 895 (1978), the court held that the roles of social services employees in reporting incidents of suspected child abuse were sufficiently analogous to the role of a prosecutor to warrant the extension of absolute immunity to them. The court’s rationale is instructive:

If social service workers were required to guard against possible section 1983 claims arising from such decisions their evaluation of the information at hand could be easily colored and, it may be expected, sometimes at the expense of the life or well-being of abused or neglected children. Such a result cannot be countenanced for the administration of remedial child-protective laws anymore than for prosecutors’ enforcement of the criminal laws.

Id. at 1099.

The reasoning of Whelehan is grounded in sound public policy and I expressly adopt it here. In so doing I am mindful that this is an area where the emotional stakes are high. The outrage and frustration that arises when the state intervenes in matters of family intimacy is obvious. Nevertheless, underlying the doctrine of absolute immunity is a recognition that the interests of particular individuals must sometimes be subordinated to the interests of society as a whole. Demery v. Kupperman, 735 F.2d 1139 (9th Cir.1984), cert denied, — U.S. -, 105 S.Ct. 810, 83 L.Ed.2d 803 (1985). It is the responsibility of the Department of Social and Health Services to protect the health and welfare of the children of this state. They must be free to do so unhampered by the threat of civil suits of this nature. Accordingly, plaintiffs’ claims against Carol Winterburn are dismissed.

Mike Padelford

Defendants argue that plaintiffs’ claims against Mike Padelford are nothing more than an attempt to impose liability upon him under a theory of respondeat superior. Defendants rely on Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976) and its progeny for the proposition that such claims do not establish a cause of action under § 1983. It is beyond dispute that a superior cannot be held liable under § 1983 for the constitutional deprivation caused by his subordinates, absent a showing that he participated or directed the deprivation. Ybarra v. Reno Thunderbird Mobile Home Village, 723 F.2d 675 (9th Cir.1984).

Plaintiffs advance various theories of liability in support of their claims against Mike Padelford. Again assuming that plaintiffs have in fact suffered a deprivation of their constitutional rights, the only theory that is somewhat supported by the record is that Mike Padelford was aware of his subordinate’s activities and failed to take appropriate action to prevent their occurrence. Such acquiesence has been held to state a claim under § 1983. McClelland v. Facteau, 610 F.2d 693 (10th Cir.1979). This circuit has tacitly approved such a claim. Ybarra at 680.

This theory is nonetheless unavailing to the plaintiffs because Padelford is covered by the same absolute prosecutorial immunity as is his subordinate. His failure to take affirmative steps to prevent Ms. Win-terburn’s conduct is precisely the type of conduct to which immunity should attach. The protective services worker assigned to a particular case is infinitely more familiar with the facts involved and second guessing by a superior who is understandably fearful of civil liability would undermine the entire system. It would present anomalous results if Ms. Winterburn were allowed to act with impunity in preparing her case only to have her superior prevent the institution of any formal proceedings. Therefore, plaintiffs’ claims against defendant Padelford must also be dismissed.

This Order addresses only the Federal claims asserted. What, if any, claims may be available through state procedures is not a matter for comment by this court. This action is dismissed. The Clerk shall enter judgment accordingly.

IT IS SO ORDERED.

      . Several pendent state law claims are also asserted including claims for slander, intentional infliction of emotional distress and malicious prosecution. For reasons that follow, I believe that summary judgment must be entered in favor of all defendants on plaintiffs’ federal causes of action. Therefore, plaintiffs’ pendent state law claims will also be dismissed. Jason v. Fonda, 698 F.2d 966 (9th Cir.1982).

      . CPS is a departmental unit of the Department of Social and Health Services (DSHS) and will be referred to hereafter as DSHS.

      .In Csibi the court noted that the Supreme Court has assumed jurisdiction over domestic relations cases on at least two occasions involving statutes granting broader jurisdictional power. Citing De La Rama v. De La Rama, 201 U.S. 303, 26 S.Ct. 485, 50 L.Ed. 765 (1906) and Simms v. Simms, 175 U.S. 162, 20 S.Ct. 58, 44 L.Ed. 115 (1899). The court concluded that domestic relations cases are within Article III judicial power of the federal courts, but outside the power bestowed by Congress in the diversity statute. Id at 136 n. 4. For a thorough analysis of this perplexing problem see Spindel v. Spindel, 283 F.Supp. 797 (E.D.N.Y.1968).


author: KEHOE, District Judge.

text:
    Thomas MODZELEWSKI, Plaintiff, v. Larry DUGAN, I.R.S. Revenue Officer, Defendant.
    No. 85-8159-CIV.
    United States District Court, S.D. Florida.
    Aug. 27, 1985.

      Thomas Modzelewski, pro se.
    Steven Kwartin, Trial Atty., Tax Div., Dept, of Justice, Washington, D.C., for defendant.
   ORDER OF DISMISSAL

KEHOE, District Judge.

THIS MATTER arose before the Court upon Defendant’s motion to dismiss the complaint. The Plaintiff has responded in opposition.

The Plaintiff has elected to appear pro se. Although the complaint fails to set forth any jurisdictional basis, and is somewhat confusing, it appears that the Plaintiff has brought suit because the Defendant, Internal Revenue Service agent Du-gan, filed a notice of Federal Tax Lien against the Plaintiffs real property. According to the Defendant’s motion to dismiss, the tax lien was imposed because the Plaintiff failed to timely pay income tax and a penalty imposed by the I.R.S. Apparently, the Plaintiff had filed an I.R.S. form and supporting affidavit for tax year 1981 in which he stated that he was exempt from withholding with respect to federal income taxes pursuant to 26 U.S.C. § 3402(a). The I.R.S. subsequently determined that as a wage earning employee, income taxes should properly be withheld from his salary, and imposed a $500.00 penalty pursuant to 26 U.S.C. 6682 for the filing of a false affidavit. The I.R.S. then sent a demand for payment of the tax and penalty. According to the complaint, Plaintiff did not pay the tax or penalty, but attempted to discuss the matter with agent Dugan by phone and through letters. The I.R.S., through agent Dugan, then filed a notice of Federal Tax Lien against the Plaintiff’s property in order to secure payment of the tax and penalty. In his reply to the motion to dismiss, Plaintiff denies that he is liable for the tax or the penalty, and reasserts his position, also stated in the complaint, that it is the responsibility of the I.R.S. to prove his tax and penalty liability before a tax lien is imposed. He also protests that no hearing was held with respect to his tax liability.

The Court has determined that the complaint must be dismissed because it fails to state a claim upon which relief may be granted, and because the court lacks jurisdiction over this action.

First, the Plaintiff has failed to state any facts alleging that agent Dugan acted outside the scope of his employment. The Plaintiff has not alleged that the Defendant acted contrary to the procedures set forth in the Internal Revenue Service statutes and regulations which specifically address eligibility determination for income tax withholding. Furthermore, the Plaintiff has failed to set forth any facts alleging that the Defendant committed a common-law tort against the Plaintiff. Therefore, the Court need not address the question of the agent’s possible immunity to such an action, if facts in support of such an action were properly alleged.

Secondly, it appears that the Plaintiff filed this action in an attempt to have his arguments concerning the tax and penalty issues heard by an impartial tribunal. However, this Court has no jurisdiction over this matter at this time. The law is well established that until a taxpayer pays a disputed tax assessment and penalty in full, a suit in United States District Court concerning the penalty is improper, and must be dismissed for lack of jurisdiction. Mora v. United States, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1460), affirming 357 U.S. 63, 78 S.Ct. 1079, 2 L.Ed.2d 1165 (1958). Group Life and Health Insurance Co. v. U.S., 660 F.2d 1042 (5th Cir.1981). As the Ninth Circuit Court of Appeals held in Thompson v. United States, 308 F.2d 628, 634 (9th Cir.1962):

The Internal Revenue Act provides for complete and exclusive relief to taxpayers who feel aggrieved by the rulings of the Commissioner. Thus, it is clear that Congress has provided two, and only two, basic procedures by which a taxpayer may challenge the legality of a tax or an assessment: (1) he may decline to pay and, provided the proper steps are taken, he may have a determination of his problem before collection and payment of the tax. 26 U.S.C. § 6213. This is commonly known as the Tax Court route, the decision in which may be reviewed on the record before the Court of Appeals; or (2) the taxpayer may pay the disputed tax and after exhausting the procedures on his claim for refund, he may sue in the United States District Court to recover the taxes paid. 26 U.S.C. § 7422 [Citations omitted and emphasis supplied.]

The Plaintiff has not asserted in his complaint that he has paid the tax and the penalty in full. Neither has the Plaintiff stated that he has exhausted the administrative procedures on a claim for a refund. Therefore, a suit in United States- District Court is improper. 26 U.S.C. § 7422(a).

Thirdly, the Anti-Injunction Act, 26 U.S.C. § 7421 et seq. provides that a taxpayer may not initiate a suit for the purpose of restraining the assessment or collection if any tax, unless the taxpayer can demonstrate, first, that under no circumstances can the Government prevail, and second, that the taxpayer will be irreparably harmed if the injunction is not granted. Kemlon Products and Development Co. v. United States, 638 F.2d 1315 (5th Cir.1981). So far as this'Complaint may be construed as an action to enjoin collection of the penalty assessed against Plaintiff, it is clear that the Plaintiff has failed to allege circumstances such that the Government cannot possibly prevail in this claim. As the Plaintiff may either pursue his remedies through the Tax Court, or pay the tax and penalty and follow the appropriate administrative and judicial procedures for a refund, it is equally clear that he has failed to demonstrate that he will be irreparably harmed by collection of the tax and penalty-

It is therefore

ORDERED AND ADJUDGED that the Plaintiffs complaint is DISMISSED for lack of subject matter jurisdiction, and for failure to state a cause of action with respect to the actions of the Defendant agent Dugan. The Dismissal is without prejudice to the Plaintiff to file an amended complaint.


author: REGAN, District Judge.

text:
    JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Plaintiff, v. Timothy SCHWERTMANN, Defendant.
    No. 85-1146C(B).
    United States District Court, E.D. Missouri, E.D.
    Sept. 19, 1985.

      John P. Emde, St. Louis, Mo., for plaintiff.
    Paul C. Hetterman, St. Louis, Mo., for defendant.
   ORDER

REGAN, District Judge.

This matter is before the Court on motion of defendant to dismiss Count I of the complaint for lack of subject matter jurisdiction.

Count I seeks relief based on defendant’s alleged breach of a covenant not to compete which is contained in the collective bargaining agreement between plaintiff and the labor organization representing plaintiff’s employees. The thrust of the motion is that Section 301(a) of the Labor-Management Relations Act, 29 U.S.C. § 185(a) on which jurisdiction is premised, applies only to suits between employers and labor organizations. We do not agree. In our judgment, the statute applies to suits against individuals as well, where, as here, the suit is for breach by the individual (not the union) of a collective bargaining contract.

Accordingly, IT IS HEREBY ORDERED that defendant’s motion to dismiss Count I should be and it is HEREBY OVERRULED.


author: POLOZOLA, District Judge.

text:
    David D. PALAY v. BEECH HOLDINGS, INC.
    Civ. A. No. 84-986-B.
    United States District Court, M.D. Louisiana.
    Sept. 24, 1985.

      Floyd J. Falcon, Jr., Avant & Falcon, Baton Rouge, La., for David D. Palay.
    Rutledge C. Clement, Jr., Phelps, Dunbar, Marks, Claverie & Sims, New Orleans, La., for defendant.
   POLOZOLA, District Judge.

This matter is before the Court on the motion of the defendant, Beech Holdings, Inc. (“Beech”) for summary judgment. No oral argument is required on this motion. For reasons which follow, defendant’s motion for summary judgment is hereby granted.

David D. Palay was elected Vice President and General Manager of Baton Rouge Aircraft, Inc. (“BRAI”), a marketing subsidiary of Beech, on January 11, 1983. He was also elected a Director of BRAI. Pa-lay contends that his election to the above positions constituted a contract of employment for a term of one year. In May, 1983, the defendant terminated Palay’s employment, although he received severance pay through August 3, 1983. Palay then filed this suit against Beech seeking damages for wrongful termination of employment as well as for injury to his reputation.

Beech argues in its motion for summary judgment that Palay was never employed on an annual basis or for any other term and thus was terminable at will. Under Louisiana law, an employee who is not hired for a fixed term may be terminated at any time, with or without cause. Hoover v. Livingston Bank, 451 So.2d 3, 5 (La.App. 1st Cir.1984). Thus, Beech contends that Palay has no cause of action for breach of contract. The Court agrees.

La.R.S. 12:82(C) provides: “Election or appointment of an officer shall not of itself create contract rights.” However, La.R.S. 12:82(E) states that “[a]ny officer or agent may be removed by the board of directors with or without cause at any time, without prejudice, however, to the contract rights of the person so removed.’’ (emphasis added) Palay argues that these two sections, read together, indicate that election alone is not enough to create a contractual right to a position, but such a right may be created if other relevant facts show that the parties intended to create that right.

Palay admits that he was never advised by any of his superiors at Beech that his employment was for a one year term. He contends, however, that three facts show that he was elected for a one year term: (1) he had been re-elected each year since 1978; (2) each year he was required to sign a written acceptance of the position; and (3) he was paid an annual salary.

The by-laws of BRAI provide that “[a]ll directors shall hold office until respective successors are elected or until his earlier resignation or removal.” The by-laws further provide that corporate officers “shall be chosen annually by the board of directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve, or his successor shall be elected and qualified.” The resolution whereby Palay was elected stated he was to serve “for the ensuing year and/or until [his] successor shall have been duly elected and qualified.” On May 23, 1983, William H. Simpson was elected and qualified as Vice President/General Manager and Director of BRAI as a successor to Palay. Thus, Palay’s employment was properly terminated by the election and qualification of Simpson under the terms of the by-laws and the 1983 resolution electing Palay.

The mere fact that elections previously had been held only annually is not sufficient to change the clear wording of the by-laws and resolution. Furthermore, the expression of salary at an annual rate does not create a contract for a year’s employment. Griffith v. Sollay Foundation Drilling, 373 So.2d 979, 982 (La.App.3d Cir.1979); Weaver v. Purple Shield Life Insurance Co., 356 So.2d 519, 521 (La.App. 1st Cir.1977).

Palay further asserts that he was employed for a one year term based on a “personal service contract” in which he is listed as Vice President/General Manager. The contract to which Palay refers, however, is the 1983 Sales & Service Agreement between Beech Aircraft and BRAI. This contract can create no contractual rights in favor of Palay as neither Palay nor Beech Holdings is a party to the contract.

Summary judgment “may be granted only if it appears from pleadings, depositions, admissions and affidavits, considered in the light most favorable to the non-moving party, that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Galindo v. Prescision American, 754 F.2d 1212, 1216 (5th Cir.1985); United States v. An Article of Drug, 725 F.2d 976, 984 (5th Cir.1984). The burden is on the moving party to show that no genuine issue of material fact exists and that it is entitled to summary judgment as a matter of law.

Once this burden has been successfully discharged by the mover, the burden then shifts to the non-moving party to counter the mover’s affidavits with opposing affidavits or other competent evidence setting forth specific facts to show that there is a genuine issue of material fact which precludes the court from granting a summary judgment. Federal Rule of Civil Procedure 56(e); Robin Construction Co. v. United States, 345 F.2d 610 (3d Cir.1965). The nonmoving party must rebut the mover’s affidavits and documentary evidence with “significant probative evidence.” Ferguson v. National Broadcasting Co., 584 F.2d 111, 114 (5th Cir.1978).

In support of its motion Beech has submitted the affidavits of E.F. Sturm, Executive Vice President and General Manager of Beech, and of Ron Lance, Beech’s Personnel Manager; the corporate resolution replacing Palay; and, the corporate by-laws. This evidence clearly established that Palay’s employment was for an indefinite period, i.e., until a successor was elected and qualified. Beech has further established that a successor was elected and qualified on May 23, 1983.

After considering this evidence set forth by Beech, the Court finds that Beech has discharged its burden of establishing that there is no genuine issue of material fact in dispute. Thus, the burden shifts to Palay to show, through specific facts, that there is a genuine issue of material fact in dispute which would preclude the Court from granting Beech’s motion for summary judgment. Palay states in his affidavit in opposition to this motion that Beech did not hire a successor to replace Palay. However, Palay fails to set forth any facts or documentary evidence to support this assertion. Such an assertion is not sufficient to prevent a court from granting summary judgment. Paw Kadair, Inc. v. Sony Corp., 88 F.R.D. 280 (M.D.La.1980), aff'd. 694 F.2d 1017 (5th Cir.1983).

Beech Holding, Inc. has submitted admissible evidence which establishes a prima facie case in favor of summary judgment. Palay has failed to submit any relevant, admissible and probative evidence in rebuttal. The Court thus finds that there is no genuine issue of material fact in dispute, and Beech is entitled to summary judgment as a matter of fact and law.

Therefore:

IT IS ORDERED that the motion of defendant, Beech Holding, Inc., for summary judgment be, and it is hereby GRANTED.

Judgment shall be entered dismissing plaintiff’s ease with prejudice.

      . By-laws of Baton Rouge Aircraft, Inc., Article III, § 3.

      . By-laws of Baton Rouge Aircraft, Inc., Article IV, § 2.

      . It is not necessary to discuss Palay’s claim for alleged reputational injury since such injury is asserted as an element of damage for wrongful termination. See paragraph 13 of plaintiffs original state court petition.


author: ANN C. WILLIAMS, District Judge.

text:
    BRUNSWICK CORPORATION, Plaintiff, v. RIEGEL TEXTILE CORPORATION, Defendant.
    No. 83 C 8726.
    United States District Court, N.D. Illinois, E.D.
    Sept. 30, 1985.

      Lloyd Mason, Wood, Dalton, Phillips, Erwin C. Heininger, Ned Robertson, Mayer, Brown & Platt, Chicago, Ill., John G. Hei-movics, Brunswick Corp., Skokie, Ill., for plaintiff.
    Alan I. Greene, Robert F. Ward, Pamela J. Kempin, J.D. Gleming, Chadwell & Kay-ser, Chicago, III, for defendant.
   MEMORANDUM OPINION AND ORDER

ANN C. WILLIAMS, District Judge.

This action was brought by Brunswick Corporation (“Brunswick”) under 35 U.S.C. § 146 to review a decision by the Board of Patent Interferences (“Board”) whereby the Board awarded priority of invention to Riegel Textile Corporation (“Riegel”). Presently before the court are two motions; Riegel’s motion for a pretrial ruling and Brunswick’s motion to compel the production of documents and the inspection of equipment. Before proceeding to discuss the merits of those motions, a brief summary of the pertinent facts is in order. Further reference to the facts will be provided as needed.

This dispute concerns a method of drawing and blending textile fiber and metal filaments to produce antistatic yarn, which is used to produce antistatic fabric. Garments made of antistatic fabric are useful, if not necessary, in oil refineries, laboratories and other locations where volatile gases are used or produced. Static-free garments reduce the danger that sparks of static electricity will ignite such explosive gases.

Brunswick is the assignee of William G. Klein, whose application for a patent on a process of blending metal and textile fibers was filed on April 20, 1970. Riegel is the assignee of Reid C. Goodbar and Arthur M. Pressley, whose application was filed on August 14, 1970. On November 21, 1972, the Patent Office issued a patent on the process to Riegel. Subsequently, however, on March 6, 1975, the PTO declared patent interference proceeding No. 98,935 to determine priority of invention between the conflicting claims of Brunswick and Riegel. In that interference proceeding, the motion period ended on August 6, 1975 and discovery closed October 1977.

On November 4, 1983, over eight years later, the Board issued its unanimous decision awarding priority to Riegel. The Board found that Brunswick’s patent application did not disclose the process at issue and thus Brunswick had no right to make the claims made in its application. Riegel, consequently, was entitled to priority. The Board also found that Riegel had failed to prove either conception or reduction to practice prior to the filing date of Riegel’s patent application. In addition, Brunswick was barred from pursuing its fraud on the Patent Office claim against Riegel because Brunswick had failed to file a motion to dissolve raising that issue during the motion period. Finally, the Board found it unnecessary to decide Brunswick’s claim of derivation. See Goodbar v. Klein, 221 U.S. P.Q. 624 (Bd.Pat.Int.1983).

Brunswick filed suit under 35 U.S.C. § 146 seeking review of the Board’s decision. After filing suit, Brunswick served Riegel with a document request seeking, at least in part, documents relating to Brunswick’s claims of fraud on the Patent Office and derivation. Brunswick sought also to examine and videotape Riegel’s draw frames used in producing antistatic yarns. Riegel refused to produce the requested documents or to allow the inspection and videotaping. Brunswick then filed its motion to compel the production of documents and the inspection of equipment. Riegel, in addition to responding to Brunswick’s motion to compel, filed a motion for pretrial ruling. In that motion, Riegel seeks to limit the evidence in this proceeding to the evidence presented to the Board, except for such evidence as is shown to have been unavailable for submission to the Board. Riegel’s motion, if granted, would effectively preclude further discovery in this action. These two motions, then, overlap to a considerable degree.

Brunswick’s and Riegel’s disagreement begins with a dispute over the nature of a § 146 proceeding. Brunswick contends that a § 146 proceeding is a trial de novo wherein evidence, in addition to the evidence presented to the Board, may be freely introduced. From this premise, Brunswick concludes that discovery should not be limited. Riegel, on the other hand, argues that a § 146 proceeding is essentially an appellate proceeding. Subject to certain exceptions, evidence therein is limited to that presented to the Board. Resolution of these opposing contentions will provide a framework for deciding both motions before the court.

Both parties are in part correct as to the nature of a § 146 proceeding. A § 146 civil action is a hybrid in that it has characteristics of both a trial de novo and an appellate review. Velsicol Chemical Co. v. Monsanto Co., 579 F.2d 1038, 1043 (7th Cir.1978); Rex Chainbelt, Inc. v. Borg-Warner Corp., 477 F.2d 481, 484 (7th Cir.1973). A § 146 proceeding is conducted as a trial de novo in that, in part, either party may introduce “live” testimony of witnesses whose depositions are already part of the record of the proceeding before the Board. Velsicol Chemical Corp. v. Monsanto Co., 579 F.2d 1038, 1045 (7th Cir.1978). In addition, either party may introduce other evidence that was not before the Board. Rex Chainbelt, Inc. v. Borg-Warner Corp., 477 F.2d 481, 484 (7th Cir.1973). The right to present new evidence is not, however, unlimited. New evidence is permitted when the additional evidence was unavailable during the interference proceeding or when necessitated by special circumstances. Piher, S.A. v. CTS Corp., 664 F.2d 122, 125 (7th Cir.1981). Examples of “special circumstances” given by the courts are an intervening change in the law, the introduction of a new issue or the admission of other new evidence which requires new evidence in response. Id.; Velsicol Chemical Corp. v. Monsanto Co., 579 F.2d 1038, 1046 n. 10 (7th Cir.1978). The proponent of new evidence not available during the interference proceeding must show that the new evidence was unavailable in spite of the proponent’s diligence in preparing its case. Id. at 1046.

On the other hand, a § 146 proceeding is essentially an appellate action. Rex Chainbelt v. Borg-Warner Corp., 477 F.2d 481, 484 (7th Cir.1973). The district court’s scope of review is quite narrow: Morgan v. Daniels, 153 U.S. 120, 125, 14 S.Ct. 772, 773, 38 L.Ed. 657 (1894) (emphasis added). A § 146 proceeding, because of it's appellate characteristics, is subject to the general rules of waiver and estoppel. Standard Oil Co. v. Montedison, S.p.A., 540 F.2d 611, 616 (3d Cir.1975). Thus, a district court may not consider an issue ancillary to the issue of priority unless the issue was raised and decided during the interference proceeding. Id.; Nitto Boseki Co. v. Owens-Corning Fiberglass Corp., 589 F.Supp. 527, 532 (D.Del.1984).

Upon principle and authority, therefore, it must be laid down as a rule that, where the question decided in the patent office is one between contesting parties as to priority of invention, the decision there made must be accepted as controlling upon that question of fact in any subsequent suit between the same parties, unless the contrary is established by testimony which in character and amount carries thorough conviction.

In sum, a § 146 proceeding, is, on the whole, an appellate proceeding and only becomes a trial de novo in limited circumstances. With this premise in mind, the court now turns to the motion at issue.

MOTION FOR PRETRIAL RULING

Riegel, in its motion for pretrial ruling, seeks to limit the evidence in this proceeding to the evidence presented to the Board during the interference proceeding. As to the issue of Brunswick’s right to make the claims made in its patent application, Rie-gel argues that the evidence should be limited to that before the Board except where it is shown that the newly submitted evidence was not available for submission to the Board. As to Brunswick’s claims of fraud and derivation, Riegel urges this court to rule that no evidence on those issues may be submitted because the Board did not decide either of those two issues.

Riegel’s arguments have considerable merit. As discussed previously, a district court, in a § 146 proceeding, may not consider an issue ancillary to priority unless the issue was presented and decided by the Board. Consideration of Riegel’s motion, then, must begin with this court’s determination of what was decided by the Board.

As to the issue of Brunswick’s right to make the claims made in interference, that issue is properly before this court. Both sides presented evidence on that issue during the interference proceeding Goodbar v. Klein, 221 U.S.P.Q. 624 (Bd.Pat.Int. 1983). In its opinion, the Board discussed the right to make issue at length. Id. at 625-28. The Board clearly made a decision on that issue, finding that Brunswick had no right to make the claims in interference. Id. at 625, 628. Thus, both sides may present, at least, the evidence on this issue that it presented to the Board. To present any additional evidence, the proponent must show either that the new evidence was unavailable during the interference proceeding in spite of the proponent’s diligence or that presentation of new evidence is justified by special circumstances as discussed previously. Velsicol Chemical Corp. v. Monsanto Co., 579 F.2d 1038, 1046, n. 10 (7th Cir.1978).

As to Brunswick’s claim that Riegel committed fraud on the Patent Office, that claim is not properly before this court. The Board did not address whether Riegel had committed the acts charged by Brunswick. Goodbar v. Klein, 221 U.S.P.Q. 624 (Bd.Pat.Int.1983). Rather, the Board simply decided that Brunswick was precluded from pursuing that claim because of Brunswick’s failure to raise the fraud claim during the motion period. Id. at 625, 631. Thus, the only issue relating to Riegel’s alleged fraud on the Patent office that is before this court is whether the Board’s conclusion precluding Brunswick from pursuing that claim is erroneous.

Brunswick, however, has presented three arguments urging this court to consider its fraud on the Patent Office claim. First, Brunswick argues that the procedural rules relating to interference proceedings in effect when the Board rendered its decision, November 4, 1983, were different than the rules in effect during the motion period, the summer of 1975. The earlier rules, Brunswick contends, precluded motions based on evidence extrinsic to official records and printed publications. Thus, the earlier rules precluded Brunswick from raising Riegel’s fraud by way of motion.

Brunswick’s argument centers on two procedural rules.. Rule 231 and Rule 258(a), and the changes in those rules. In 1983, Rule 231, in pertinent part, provided that:

Within the period set in the notice of interference for filing motions any party to an interference may file a motion seeking:
(1) To dissolve as to one or more counts, except that such motion based on facts sought to be established by affidavits, declarations or evidence outside of official records and printed publications will not normally be considered....

37 C.F.R. § 1.231(a)(1) (1982). In 1975, Rule 231 provided:

Within the period set in the notice of interference for filing motions any party to an interference may file a motion seeking:
(1) To dissolve as to one or more counts, except that such motion based on facts sought to be established by affidavits, declarations or evidence outside of official records and printed publications will not normally be considered....

37 C.F.R. § 1.231(a)(1) (1975). Obviously, these two versions of Rule 231 are identical.

In 1983, Rule 258, in pertinent part, provided that:

(a) In determining priority of invention, the Board of Patent Interferences will consider only priority of invention on the evidence submitted, and matters ancillary thereto. A party shall be entitled to raise a matter which is ancillary to priority only if:
(1) The matter was raised by the party in a motion under § 1.231(a), and:
(i) The motion was transmitted to and decided by the primary examiner; or
(ii) Consideration of the motion was deferred to final hearing; or
(iii) The motion was dismissed as being based on facts sought to be established by affidavits, declarations or evidence outside of official records and printed publications, or as being based on a ground which would require the taking of testimony; or
(2) The matter was raised by the party in opposition to a motion under § 1.231(a)-(2), (3), (4) or (5) which was granted over his opposition; or
(3) The party shows good reason why the matter was not raised as specified in paragraphs (a)(1) or (a)(2) of this section.
(b) To prevent manifest injustice the Board of Patent Interferences may in its discretion consider a matter which is ancillary to priority even though it would not otherwise be entitled to consideration under paragraph (a) of this section.

37 C.F.R. § 1.258 (1981).

In 1975, that same rule, in part, provided: ... A party shall not be entitled to raise such nonpatentability unless he has duly presented a motion for dissolution under § 1.231 upon such ground or shows good reason (e.g., that such nonpatentability became evident as a result of evidence extrinsic to an involved application) why such a motion was not presented; however, to prevent manifest injustice the Board of Patent Interferences may in its discretion consider a matter of this character even though it was not raised by motion under § 1.231_

37 C.F.R. § 1.258(a) (1969). Although dissimilar in wording, the 1975 and 1983 versions of Rule 258, as they relate to the issue pertinent here, are substantially identical. Under both versions of Rule 258, Brunswick had to file a motion during the motion period to preserve its right to pursue the fraud claim. Under either version, Brunswick having not filed a timely Rule 231 motion, could proffer a “good reason” to the Board for its failure to file a motion and then present its fraud claim. Last, under either version, Brunswick could have argued that its fraud claim had to be heard to prevent manifest injustice. The effect of both versions of Rule 258 is the same.

Brunswick’s argument that the Board would not have permitted such a motion under the version of Rule 258 in effect in 1975 is erroneous. The case law after 1975, when the rule was the same, indicates the contrary. See, e.g., Phillips v. Matthews, 197 U.S.P.Q. 776, 780 (Bd.Pat.Int.1977); Johnson v. Bednar, 201 U.S.P.Q. 778, 786 (Bd.Pat.Int.1976); Carter v. Blackburn, 201 U.S.P.Q. 544, 547 (Bd.Pat.Int.1976). Neither In re Decision Dated Aug. 12, 1968, 160 U.S.P.Q. 154 (Comm.Pat.1968), nor Collard v. Brown v. Burignier, 99 U.S.P.Q. 168 (Comm.Pat.1948), cited by Brunswick, persuade this court otherwise. Brunswick’s additional citation to and argument under Driscoll v. Cebalo, 731 F.2d 878 (Fed.Civ.1984), is simply a mischaracterization of that case.

Turning to the second argument in support of the fraud claim, Brunswick asserts that it did in fact raise the fraud issue before the Board. Brunswick refers to its motion for production of documents, its list of witnesses and documents on which it intended to rely, certain deposition testimony included in the record and its final brief as evidence that it properly raised the fraud issue. However, the rules clearly require a motion during the motion period. Brunswick, not having followed the required procedure, could not raise the issue of fraud indirectly or by inference.

Brunswick’s final argument supporting its fraud claim is that this court, in the exercise of its discretion, can hear that issue to prevent manifest injustice. Brunswick primarily relies on Standard Oil Co. v. Montedison, S.p.A., 540 F.2d 611 (3d Cir.1976), on remand, 431 F.Supp. 1064 (D.Del.1977). Standard Oil, however, involved a very different set of facts than are present here. In that case, the petitioner sought to amend its § 146 proceeding complaint to add a claim for fraud on the patent office. Petitioner asserted that the new claim was based on new information uncovered since the original § 146 complaint had been filed with the district court. 540 F.2d at 615. Here, in contrast, the Board found that, “[t]he evidence which [Brunswick] relies upon for his fraud allegation was known to him prior to the declaration of this interference....” Goodbar v. Klein, 221 U.S.P.Q. 624, 631 (Bd.Pat.Int. 1983). Standard Oil is inapplicable to the situation here.

None of the arguments advanced by Brunswick are persuasive. Brunswick is barred from pursuing before this court its claim of fraud on the patent office. No evidence will be allowed on that issue.

As to Brunswick’s claim of derivation, Brunswick urges that evidence be allowed on that issue in spite of the Board’s holding. The Board stated, “based on the holdings that we have made on the questions already considered above, we deem it unnecessary to reach the question of derivation.” Goodbar v. Klein, 221 U.S.P.Q. 624, 631 (Bd.Pat.Int.1983). Clearly, the Board did not decide the issue of derivation. The Board found it unnecessary to reach that issue because other already decided issues, such as the right to make issue, were dis-positive. The Board did not reach the derivation claim and consequently that claim is not before this court. No evidence will be allowed on that issue.

In conclusion, then, new evidence on the right to make issue may be presented, provided that the proponent of the new evidence shows that the new evidence was unavailable in spite of the proponents due deligence. As to Brunswick’s fraud and derivation claims, no evidence on those claims may be presented.

MOTION TO COMPEL

A decision on Brunswick's motion to compel follows from the preceding discussions and holding. Rule 26 of the Federal Rules of Civil Procedure permits discovery of admissible material as well as inadmissible material “reasonably calculated to lead to the discovery of admissible evidence.” Having decided that no evidence on the issues of fraud and derivation will be permitted, no discovery directed to those issues will be allowed.

This court has reviewed the disputed document requests made by Brunswick. As to Requests 5, 6, 10 and 11, those requests are directed exclusively to discovery of evidence relevant to the fraud and derivation issues and will not be allowed. As to Request 13, this court, on the record before it, is unable to determine the relevancy of those documents. Accordingly, that request is denied. As to Request 16, Riegel urges that responsive documents are subject to an attorney-client privilege. Riegel should identify the documents it claims are privileged so this court can rule on the applicability of the privilege.

Finally, Brunswick has requested that it be allowed to inspect and videotape the draw frames used by Riegel to produce antistatic yarn. Brunswick offers two reasons for allowing the videotaping; aiding the court’s understanding and the relevance of the current process used by Rie-gel. The court declines to allow the videotaping on the first ground urged. Further, this court fails to see the relevancy of such videotaping in the proceeding where the issue is Brunswick’s right to make the claims made in intereference. Brunswick’s request for inspection and videotaping will be denied.

Having fully considered the matters before it, this court finds and it is hereby ordered that Riegel’s motion for a pretrial ruling is granted, and Brunswick’s motion to compel is granted in part and denied in part.

      . Title 35 U.S.C. § 146 provides:
      Any party to an interference dissatisfied with the decision of the Board of Patent Appeals and Interferences on the interference, may have remedy by civil action, if commenced within such time after such decision, not less than sixty days, as the Commissioner appoints or as provided in section 141 of this title, unless he has appealed to the United States Court of Appeals for the Federal Circuit, and such appeal is pending or has been decided.
      In such suits the record in the Patent and Trademark Office shall be admitted on motion of either party upon the terms and conditions as to costs, expenses, and the further cross-examination of the witnesses as the court imposes, without prejudice to the right of the parties to take further testimony. The testimony and exhibits of the record in the Patent and Trademark Office when admitted shall have the same effect as if originally taken and produced in the suit.

      . See 37 C.F.R. § 1.207(b)(3).

      . See 37 C.F.R. § 1.287(a)-(c).

      . This court is not, of course, expressing any opinion on the admissibility of any evidence which will be presented.

      . The disputed document requests made by Brunswick are as follows:
      "5. All documents, whenever prepared or compiled, that relate or refer to, or depict, analyze, evaluate or describe the equipment, methods and/or techniques used or considered for use by Riegel to produce antistatic yarn subsequent to August 14, 1970, including any change in equipment, method or technique adopted by Riegel and the dates of such use.
      6. All documents not produced under other paragraphs of this request which relate or refer to, or depict, analyze, evaluate or describe any mechanism such as eyelet, pigtail or spoon guides allegedly used by Riegel in guiding metal filaments relative to organic or natural fibers while both types of materials are simultaneously being fed through the draw rolls of a draw-frame machine for drawing yarn and the means by which tension is placed on such materials during the drawing process, including any photographs, mechanical drawings, shop orders or purchase orders relating to such mechanisms or such means.
      10. All documents which relate or refer to the purported invention of the method and apparatus for antistatic yarn production disclosed in Patent Application No. 63,755 filed on behalf of Goodbar and Pressley on or about August 14, 1970, including any drafts or such application and any comments or changes in such drafts prior to the submission of the application to the Patent Office. (See Klein Exhibit 12 in the Interference Proceeding.)
      11. All documents prior to March 6, 1975 (the date of the declaration of interference No. 98,935) which relate or refer to any suggestion, comment, claim or charge that any claim in Riegel’s patent No. 3,703,073 was or might be invalid or otherwise defective because the subject matter had been conceived or originated at Brunswick, rather than Riegel, including but not limited to, any meeting on or about January of 1973 between John Heimovics and D.J. Too-mey of Pennie & Edmonds, Riegel’s patent counsel. (See Joint Appendix, pp. 281 et seq., Brunswick Corporation v. Riegel Textile Corporation, case No. 84-1334 in the U.S. Court of Appeals for the Seventh Circuit.)
      13. Retained copies of the 40 documents from Dr. Roger R. Varin’s files attached to paper No. 153, of Goodbar’s Motion for in camera review dated October 28, 1980, in interference proceeding No. 98,935 (see list attached and 599 F.2d 431).
      16. All documents that relate or refer to antistatic yarn contained in files designated by "PE Case Numbers” as follows:
      “015 — Fabric with Static Electricity Dissipating Properties”
      "018 — Microwave Protective Fabric"
      "019 — Microwave Monitor for ‘Riegelstat’ fabrics”
      (See Klein Exh. 13a in Interference Proceeding.)”