author: MARQUEZ, District Judge.

text:
    TUCSON ELECTRIC POWER COMPANY, INC., Plaintiff, v. WESTINGHOUSE ELECTRIC CORPORATION, Defendant.
    No. CIV 83-471 TUC ACM.
    United States District Court, D. Arizona, Tucson Division.
    Nov. 9, 1984.

      Daryl A. Audilett, Kimble, Gothreau, Nelson & Cannon, P.C., Tucson, Ariz., for plaintiff.
    Douglas L. Irish, Lewis & Roca, Phoenix, Ariz., for defendant.
   ORDER

MARQUEZ, District Judge.

This matter is before the court on a Motion for Summary Judgment filed by the defendant Westinghouse.

Plaintiff, Tucson Electric, entered into an agreement on April 1977 with defendant Westinghouse for a boresonic inspectioh of a low pressure rotor for an electrical generator. Following the inspection, Westinghouse recommended the replacement of the rotor. Plaintiff ordered the new rotor from defendant at a cost of over one million dollars. Westinghouse provided all of its inspection data to plaintiff in March of 1978. In July of 1982 plaintiff notified defendant that the inspection had been performed incorrectly. This suit followed in June 1983.

The original complaint alleged the negligent inspection of the rotor, negligent misrepresentation, breach of contract, and strict, liability for innocent misrepresentation. On July 23, 1984 plaintiff moved to amend the complaint to include a claim for constructive fraud. This was an attempt by the plaintiff to avoid defendant’s motion for summary judgment filed in April. This court permitted the amended complaint to be filed. Discovery in this case has already been completed.

Defendant’s grounds in support of its motion for summary judgment are based on the April 1977 contract. That contract expressly limits warranties for any claim based on contract or tort including negligence to a reperformance of the inspection. The contract precludes the recovery of incidental or consequential damages. The reinspection period is limited to one year. Defendant contends that these provisions preclude recovery by plaintiff of the damages sought, the cost of the new rotor plus damages related to its installation.

Plaintiff’s opposition to this motion asserts the theory of unconscionability. It claims that these contract provisions are unenforceable for that reason. Both parties request that this court apply the Arizona Uniform Commercial Code standard of unconscionability even though it does not directly apply. This court requested additional briefing as to the statute of limitations and agreed to withhold decision on this matter pending decision in another case presently before the Arizona Supreme Court.

The court has received the supplemental briefs and has reexamined the file. It no longer appears that the state court case will have any impact on this matter. This court will therefore proceed to rule on the motion for summary judgment.

The issue of unconscionability will not be decided in this case. It is the conclusion of this court that the issue is not properly raised. At no time prior to the filing of the opposition papers did plaintiff indicate that this theory was to be pursued. It is not a part of the complaint nor can it be inferred from the allegations in the complaint.

When faced with a new theory raised for the first time in opposition to a motion for summary judgment, the Courts of Appeal have reached two different methods of deciding the issue. In Murphy v. White Hen Pantry Co., 691 F.2d 350 (7th Cir.1982), the court upheld the district courts refusal to allow an amended complaint to include a new theory in order to avoid summary judgment. The new theory was asserted in the opposition to a motion for summary judgment and in a motion to amend the complaint. Discovery had been completed before the motion to amend the complaint was filed. The court stated:

The liberal pleading policy in the Rules prevents dismissal of a meritorious action for purely formal or technical reasons. The district court is not required, however, to speculate over the nature of plaintiffs’ claim or to refuse to enter summary judgment for the defendant simply because the plaintiffs may, theoretically, be entitled to recover under a cause of action based on facts never alleged in the complaint.

Id. at 353.

In the present case, there are no facts asserted in the complaint indicating a theory of unconscionability. Plaintiff was permitted to amend their complaint but failed to assert this theory into this case. The issue of unconscionability is therefore not properly before this court. The court notes that the plaintiff has not even attempted to amend the complaint to allege facts or theories of unconscionability.

The second method of dealing with this problem was stated in the 5th Circuit case of Sherman v. Hillbauer, 455 F.2d 1236 (5th Cir.1972). In that case, the court required the district court to treat.a new theory raised only in papers opposing a summary judgment motion as a motion to amend the complaint filed out of time. Because of the liberality of Rule 15 of the Federal Rules of Civil Procedure, such an amendment should be permitted whenever justice so requires.

Even if this court treats the opposition papers as a motion to amend the complaint, this court will still not consider the argument. A complaint will not be amended if to do so would be frivolous or meritless and futile. Slavin v. Benson, 493 F.Supp. 32 (S.D.N.Y.1980); Klamath-Lake Pharmaceutical Ass’n v. Klamath Medical Service Bureau, 701 F.2d 1276, 1292-93 (9th Cir.1983). To allow unconscionability to enter the case at this point would be futile.

The contract provisions claimed to be unconscionable were in an agreement entered into in April 1977. Suit was not filed until June 1983. A.R.S. § 47-2302, the applicable U.C.C. provision on unconscionability in Arizona law dictates that the contract terms must be found to be unconscionable at the time the contract was entered. This court can consider the facts at that time only, not subsequent events. The traditional policy of the statute of limitations is to not only prevent plaintiffs from sitting on their rights but also to avoid prejudice to each side from loss of evidence due to the mere passage of time. Based on this policy and the dictates of the statute it must be concluded that the issue of unconscionability accrues for statute of limitations purposes at the time the contract is entered. See, 35 Park Ave. Corp. v. Campagna, 48 N.Y.2d 813, 424 N.Y.S.2d 123, 399 N.E.2d 1144 (1979). A.R.S. § 12-548 imposes a six-year statute of limitations for claims based on a written contract. Since this amendment would only relate back to the time the original complaint was filed, June 1983, it would be outside the six-year period and therefore barred.

Neither party here believes that the 35 Park Ave. case is applicable here. This court disagrees. Plaintiff claims that it is asserting unconscionability in a defensive manner and therefore the statute of limitations is not applicable. McQueen v. First National Bank of Mesa City, 36 Ariz. 74, 283 P. 273 (1929). The theory is not being used defensively here at all but for offensive purposes. The affidavits attached to defendants supplemental Rule 11(i) statement indicate that a lower price was given for the inspection with the limiting language than would have been without such a limitation. Therefore, in effect, the plaintiff is attempting to partially rescind a contract for which it received consideration. By waiting until the opposition, plaintiff is attempting to do that which it would not be permitted to do by a direct attack in the complaint. There is no defensive assertion of the theory and therefore the court concludes that the statute of limitations applies.

It would then serve no purpose to treat the opposition papers as a motion to amend the complaint filed out of time. Accordingly, the issue of unconscionability is not properly before the court and will not be considered in regard to the motion for summary judgment.

Plaintiff next asserts that defendant is estopped from asserting the one year limitation period in the contract. Following the inspection, the defendant made alternative recommendations in December of 1977. Plaintiff was told to either replace the rotor or to return it to service for a period of two years at slower speeds, then to re-inspect it. Even if estoppel as to the one-year period was found to be present, it would not preclude the granting of summary judgment. The contract limits remedies to a reinspection of the rotor and in no case may damages exceed the contract price. The supplemental briefing indicates that plaintiff had a second opinion of the inspection on July 17, 1981. Yet, not until July 22,1982 was any written request for claims made to the defendant and not until June of 1983 was legal action taken. Even had defendant originally misled the plaintiff, there could not havé been any reliance justified after July 17, 1981. Since no formal action was taken for over a year after this date, the estoppel argument must fail.

This court is then left with a situation where the parties contracted to limit their remedies. They contracted away recovery of incidental and consequential damages as well as claims based on negligence. Since the contract terms control, defendant is entitled to summary judgment as to the breach of contract and negligence claims.

Plaintiff’s other theories of recovery presently before this court (defendant expressly withheld application of the summary judgment motion on the new claim of-constructive fraud) are negligent misrepresentation and strict liability for innocent misrepresentation. These claims are not based on the original April 1977 contract but rather on the theory that statements made after the inspection were designed to induce plaintiff to purchase a new rotor which it did not need.

This court is not certain whether Arizona law permits recovery for innocent misrepresentation under the Restatement of Torts 2nd § 552C. There have been no cases cited indicating that the Arizona courts have adopted this provision nor has the courts own research provided any cases. This issue need not be decided however, because even if such a claim were available, it would be barred here by the statute of limitations. Since plaintiff is seeking a return of the rotor purchase price plus costs during installation work, it appears that the claim would fall under the general statute of limitations, A.R.S. § 12-550, which provides only four years.

The misrepresentation, assuming one occurred, would have been in December of 1977 when defendant informed the plaintiff of its two alternatives. Since there is no allegation here of intentional concealment of the facts, the statute is not tolled for any period. See, A.R.S. § 12-543. The complaint was not filed until well over four years after the time of the misrepresentations. This cause of action is therefore also barred.

The final cause of action subject to this motion is negligent misrepresentation. The Arizona Supreme Court has held that this claim is one “governed by the law of negligence.” Van Buren v. Pima Community College, 113 Ariz. 85, 87, 546 P.2d 821, 823 (1976). In Hall v. Romero, 685 P.2d 757 (1984), the Arizona Court of Appeals held that the two-year statute of limitations was applicable, A.R.S. § 12-542. The statute then begins to run when plaintiff knew or should have known of the misrepresentation. Plaintiff had in its possession the entire report and information about the inspection by March of 1978. The record is clear that the sole basis that plaintiff asserts for its claim that defendant made misrepresentations is a re-evaluation of the data collected by the defendant. Although the new rotor was ordered in December of 1977, it was not delivered and installed until two years later. The cost of the inspection was minimal compared to the expense of the new rotor. It would seem that the reinspection, since no new data would have been collected, should be even less costly.

Plaintiff then had several months prior to the actual delivery of the rotor to have the re-evaluation, yet no effort was made to obtain one for an extended period of time. Although plaintiff claims its policy was to rely on the original equipment manufacturers recommendation this does not appear from the record to be a common practice. The record also shows that despite defendants being considered “leaders in the field”, plaintiff does not appear to have had problems finding a suitable expert for the re-evaluation. It seems clear that others were available to perform the inspection but plaintiff made a conscious choice not to pursue a re-evaluation.

Since the potential cost of replacement was so high yet the expense of re-evaluation so low, it is the conclusion of the court that plaintiff should have obtained the second opinion prior to the installation of the new rotor. Plaintiff should then have known of the misrepresentations in 1978 or 1979, far more than two years before the suit was filed. This claim is therefore barred by the statute of limitations.

Accordingly, defendants are entitled to summary judgment on the four cases of action of negligence, negligent misrepresentation, strict liability for innocent misrepresentation and breach of contract. There remains in this case only a claim for constructive fraud.

IT IS ORDERED that defendant’s motion for partial summary judgment is granted.


source: Caselaw Access Project

author: TAURO, District Judge.

license: Public Domain

text:
    George HOGAN, et al., Plaintiffs, v. Margaret HECKLER, et al., Defendants, and Don CARTER, et al., Plaintiffs, v. Joseph GALLANT, et al., Defendants.
    Civ. A. Nos. 80-883-T, 83-0119-F.
    United States District Court, D. Massachusetts.
    Nov. 13, 1984.

      Steven A. Hitov, Western Mass Legal Services, Springfield, Mass., Nancy Nemon, Deputy Regional Atty., Dept, of HHS, Boston, Mass., for Carter.
    Judith C. Saltzman, Greater Boston Legal Services, Boston, Mass., for Hogan.
    Ralph A. Child, Asst. U.S. Atty., Boston, Mass., Felix Baxter, Jose I. Sandoval, Lewis K. Wise, Dept, of Justice, Civil Div., Washington, D.C., H. Reed Witherby, Asst. Atty. Gen., Boston, Mass., Carol Booth, Andrea Mintz, Developmental Disabilities Law Center, Springfield, Mass., William H. Simon, Legal Services Institute, Jamaica Plain, Mass., Mark Coven, Greater Boston Elderly Legal Services, Boston, Mass., Gill Deford, Nat’l Senior Citizens Law Centre, Los Angeles, Cal., for Heckler.
   MEMORANDUM

TAURO, District Judge.

Plaintiffs in these consolidated actions contend that the Massachusetts Medicaid program’s six-month “spenddown” requirement for certain Medicaid applicants violates provisions of the Social Security Act and federal regulations. The case is before the court on plaintiffs’ motions for class certification and partial summary judgment and defendants’ motion for summary judgment. For the reasons stated below, the plaintiffs’ motions are granted and the defendants’ motion is denied.

I.

Background

Title XIX of the Social Security Act established the Medicaid program in 1965 “for the purpose of providing federal financial assistance to States that choose to reimburse certain costs of medical treatment for needy persons.” Harris v. McRae, 448 U.S. 297, 301, 100 S.Ct. 2671, 2680, 65 L.Ed.2d 784 (1980). States that participate in the program must provide medical assistance to the “categorically needy” — those who receive federally subsidized cash assistance grants (AFDC or SSI). 42 U.S.C. § 1396a(a)(10)(A) (1982). Participating States may, but are not required to, provide medical assistance to the “medically needy” — families with dependent children (AFDC-related) or the aged, blind or disabled (SSI-related) who do not qualify for AFDC or SSI but whose income and resources are insufficient to meet the cost of medical care. 42 U.S.C. § 1396d(a). The medically needy include those whose incomes are below the Medicaid level set by the State as well as those whose incomes exceed that level, but who have offsetting medical expenses. 42 C.F.R. § 435.831 (1983). The amount that an applicant’s income exceeds the Medicaid income limit is called the “spenddown” amount, as it is the amount that the applicant must spenddown in medical expenses before he or she may qualify for assistance.

Massachusetts has chosen to participate in the Medicaid program and to provide coverage for the medically needy. Mass.Gen.Laws Ann. ch. 118E (West Supp.1984). Massachusetts calculates the spenddown amount over a six-month period. An individual, therefore, must incur medical expenses equal to six times his monthly excess before Medicaid will begin to reimburse him. For example, a person whose monthly income exceeds Medicaid limits by one hundred dollars must incur six hundred dollars in medical expenses before becoming eligible for Medicaid.

Plaintiffs in Hogan v. Heckler, No. 80-883-T, filed suit in 1980, challenging several aspects of Massachusetts’ Medicaid program for the medically needy. Plaintiffs’ first objection involved § 1903(f) of the Medicaid Act, 42 U.S.C. § 1396b(f), which bars a State from setting the income limits for the medically needy any higher than four-thirds of the AFDC limit in the State. In Massachusetts, where SSI benefits generally exceed AFDC benefits by more than four-thirds, this provision leads to the anomolous result that aged, blind, or disabled persons with high medical expenses, but who do not qualify for SSI, are left with less income for their non-medical expenses than SSI recipients. This court found the classification to be without a rational basis and thus unconstitutional. Hogan v. Harris, 501 F.Supp. 1129 (D.Mass.1980). The Supreme Court reversed in Schweiker v. Hogan, 457 U.S. 569, 102 S.Ct. 2597, 73 L.Ed.2d 227 (1982). The Court noted that “[p]owerful equities unquestionably support the [plaintiffs’] claim of unfair treatment,” id. at 589, 102 S.Ct. at 2609, but found the scheme rational. Since Massachusetts could permissibly withhold all benefits to the medically needy, the Court reasoned that the State’s qualification on assistance to the medically needy was constitutional. Id. at 593, 102 S.Ct. at 2612.

Left unaddressed by those decisions was plaintiffs’ contention that Massachusetts’ six-month spenddown policy for the medically needy violates the Medicaid statute’s provisions mandating comparability of treatment between the medically needy and the categorically needy. 42 U.S.C. § 1396a(a)(10), (a)(17). Since Massachusetts uses a one-month budget period for the SSI-related categorically needy, plaintiffs contend that Massachusetts must also apply a one-month budget period to the spenddown of a medically needy applicant. Alternatively, plaintiffs argue that applicants should be allowed to anticipate six months of medical expenses against six months of excess income.

II.

Plaintiffs

Plaintiffs seek to represent a class composed of all Massachusetts SSI-related medically needy who would be subjected to the State’s six-month spenddown requirement in order to qualify or requalify for Medicaid benefits. Since neither defendant apparently opposes the plaintiffs’ motion for class certification- and, in any event, plaintiffs satisfy the requirements of Fed.R.Civ.P. 23, certification is allowed.

Among the named plaintiffs is Don Carter, a quadraplegic who requires the services of a personal care attendant (“PCA”) to accomplish the functions of daily living. Mr. Carter receives a veteran’s pension and Social Security disability benefits totalling $743.76 per month. His PCA services cost $202.00 per week or about $875.27 per month. The Department of Public Welfare (“Department”) has calculated that Mr. Carter has “éxcess” income of $390.76 per month. To qualify for Medicaid, Mr. Carter must incur medical expenses equal to six times his monthly excess, or about $2300.

The Department’s policy leaves Mr. Carter with two options. He can go begging for credit, trying to find a PCA who is willing to work for months without getting paid. Mr. Carter was successful at this for awhile, but on the evening of November 1, 1982, his PCA, having gone unpaid for the three previous weeks, abandoned him. Mr. Carter’s second option is to obtain higher cost medical care so that his “excess” income is spent down faster. This is what he ended up doing, although not by choice. After he was abandoned by his PCA, Mr. Carter was admitted for emergency care at the Western Massachusetts Hospital, where he remained for two months while his expenses caught up with the Department’s projection of his income. The cost of the Department’s six-month spenddown policy is measurable, therefore, both in terms of its potentially devastating impact on a human being, as well as by predictably higher expenditures of tax dollars for persons like Mr. Carter, who are forced into high-cost institutional care.

Massachusetts has apparently recognized the problems of people like Mr. Carter and has proposed a “targeted” one-month spenddown for the chronically ill and disabled who require ongoing, non-acute health care. 1983 Mass.Acts ch. 720. In July 1984, the Department submitted this proposal to the Secretary of Health and Human Services for approval. The Department argues against giving such relief to all class members for two reasons. First, it asserts that the class consists primarily of applicants who are not significantly-burdened by the existing scheme because their medical expenses are only occasionally greater than their excess incomes in a given month. Second, the Department estimates that a one-month spenddown for all medically needy applicants could cost an additional $208 million per year. The plaintiffs challenge the Department’s characterization of the class as well as its cost estimate of a universal remedial program.

HI.

Eligibility Methodology

Section 1396a(a)(10)(C)(i)(III) of the Medicaid statute requires that States use the “same methodology” to determine the income and resource eligibility for both the medically needy and the categorically needy. Plaintiffs maintain that Massachusetts, by employing a six-month spenddown period for the SSI-related medically needy and a one-month budget period for SSI applicants, uses different eligibility methodologies for the two groups.

The Department maintains that it does use the same methodology in determining the income and resource eligibility for both SSI and for SSI-related Medicaid. Its position is that the calculation of the spend-down — the amount of medical expenses that must be incurred for eligibility — is an extra step unique to Medicaid and distinct from the methodology of determining income. The Department’s argument ignores the reality of the situation. The spenddown amount is a critical factor in determining the resource and income eligibility of a medically needy applicant. Plainly, the amount an applicant must spend on medical bills is income not available for food, clothing and shelter. The Medicaid statute recognizes this and mandates that States shall “provide for flexibility in the application of [eligibility] standards with respect to income by taking into account, except to the extent prescribed by the Secretary, the costs ... incurred for medical care or for any other type of remedial care recognized under State law____” 42 U.S.C. § 1396a(a)(17).

Massachusetts’ six-month spenddown requirement means that medically needy applicants who demonstrate need in particular months may not receive benefits, or may have to wait several months before receiving benefits. The State’s one-month budget period for SSI, on the other hand, enables the categorically needy to get aid in any month they demonstrate financial need. Realistically, therefore, the length of the spenddown period is part of the methodology for evaluating income eligibility. The methodologies the Commonwealth uses in determining the eligibility of the categorically and medically needy are so substantively different as to constitute the type of disparate treatment that is prohibited by law.

This interpretation of the “same methodology” requirement of § 1396a(a)(10)(C)(i)-(III) is buttressed by the legislative history of the provision. The “same methodology” language was added to the Medicaid law by the Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. No. 97-248, 96 Stat. 324 (“TEFRA”) after the Omnibus Budget Reconciliation Act of 1981, Pub.L. No. 97-35, 95 Stat. 357 (“OBRA”) had deleted language requiring States to use comparable eligibility standards for their medically needy programs.

Prior to OBRA, § 1396a(a)(10)(C)(i) required that if a State provided medical assistance to the medically needy, the State had to provide

(i) for making medical assistance available to all individuals who would, except for income and resources, be eligible for [AFDC or SSI], and who have insufficient (as determined in accordance with comparable standards) income and resources to meet the costs of necessary medical and remedial care and services

42 U.S.C. § 1396a(a)(10)(C)(i) (1976).

OBRA deleted this comparability language and substituted the requirement that

(i) the plan must include a description of (I) the criteria for determining eligibility of individuals in the group for such medical assistance and (II) the amount, duration, and scope of medical assistance made available to individuals in the group.

95 Stat. 807 (1981).

The Managers of the OBRA Conference Committee Report indicated that the purpose of the statutory change was to provide States “with flexibility in establishing eligibility criteria and scope of services within the medically needy program to address the needs of different population groups more appropriately.” H.R.Rep. 97-208, 97th Cong., 1st Sess. 971, reprinted in 1981 U.S.Code Cong. & Ad.News 1333 (emphasis added).

Pursuant to the statutory change, the Department of Health and Human Services adopted an interim final rule allowing States vast flexibility with their medically needy programs. The regulation provided that

States are no longer required to apply a uniform methodology for treating income and resources in such matters as deemed income, interest, court-ordered support payments, and infrequent and irregular income. Rather, the State plan must specify the methodology that will be used; and that methodology must be reasonable____

46 Fed.Reg. 47,980 (1981).

With this regulation, the Secretary had gone beyond the intent of Congress in OBRA. So, in TEFRA in 1982, Congress responded by adding part III to the subsection — the current language requiring States to úse the same methodology for the categorically and medically needy. The report of the House Committee on Energy and Commerce states:

Section 106(e)(2) of the Committee bill clarifies the treatment of income and resource standards and methodologies for the medically needy. The 1981 Reconciliation Act gave the States certain specified flexibility in designing their medically needy programs. They are no longer required to cover all eligibility groups — However, the 1981 Reconciliation Act made no changes in the applicable income and resource .eligibility rules.'
Unfortunately, the Department, in its interim final rule of September 30, 1981, 46 Fed.Reg. 47976, assumed that the conferees had intended to give the States extensive flexibility in this area as well. This is simply incorrect. When the Statement of Managers of the conference committee report spoke of providing the States “with flexibility in establishing eligibility criteria and scope of services within the medically needy program to address the needs of different population groups more appropriately,” (H.R.Rep. 97-208, p. 971), it was referring to the service package and coverage group provisions, not inviting a wholesale rewriting of current income and resource standards and methodologies. This amendment makes clear that the Department had no authority to alter the rules that applied before September 30, 1981 with respect to medically needy income levels, medically needy resource standards, and the methodology for treating medically needy income and resources. The Committee bill reaffirms the financial - requirements previously in effect for the medically needy____

H.R.Rep. No. 97-757, Part I, 97th Cong. 2d Sess. 13 (1982).

This legislative history demonstrates that Congress did not intend to alter the comparability requirement between the medically and categorically needy. See also infra pt IV. Moreover, it shows that the “methodology” that Congress had in mind related, at least implicitly, to budget periods, as the HHS regulation specifically referred to “such matters as infrequent and irregular income.” The method by which infrequent income is accounted for is simply the flipside of the method by which infrequent medical expenses are accounted for.

The interpretation is also supported by the other courts that have addressed the question. The Massachusetts Superior Court and a federal district court have recently ruled that budget periods are part of the methodology for determining eligibility and must be the same for the medically and categorically needy under 42 U.S.C. § 1396-a(a)(10)(C)(i)(III). Rivera v. Atkins, No. 83-684 (Mass.Sup.Ct.Hamden Co. Mar. 26, 1984) (invalidating six-month spenddown for the AFDC-related medically needy) (appeal pending); Coleman v. Miller, No. 82-C-6259 (N.D.Ill. Feb. 23, 1984) (same) (appeal pending); see also Brogan v. Miller, 537 F.Supp. 139 (N.D.Ill.1982) (invalidating six-month spenddown for SSI-related medically needy because, inter alia, it was not comparable to categorically needy budget period).

IV.

Comparability of Standards

Plaintiffs also contend that the State’s six-month spenddown policy violates 42 U.S.C. § 1396a(a)(17) which requires that a State plan

include reasonable standards (which shall be comparable for all groups ...) for determining eligibility for and the extent of medical assistance under the plan which (A) are consistent with the objectives of this subchapter, (B) provide for taking into account only such income and resources as are ... available to the applicant or recipient and :..
(C) provide for reasonable evaluation of any such income or resources ____

When Congress deleted the comparability language from § 1396a(a)(10)(C), see supra, the Managers of OBRA stated that “it is not the intention of the conferees to alter the requirements under section 1902(a)17 [42 U.S.C. § 1396a(a)(17)] of the Social Security Act relating to comparable treatment of income and resources between categorically needy and medically needy programs.” 127 Cong.Rec. S9218 (daily ed. Aug. 3, 1981) (statement of Senator Dole).

Several federal courts, relying on § 1396a(a)(17) and/or the comparability language of § 1396a(a)(10)(C) (pre-OBRA) have invalidated state Medicaid provisions that applied more restrictive standards to the medically needy than the categorically needy. See Beltran v. Myers, 701 F.2d 91 (9th Cir.) (per curiam) (transfer of assets rule invalidated), cert. denied, — U.S. -, 103 S.Ct. 3115, 77 L.Ed.2d 1369 (1983); Calkins v. Blum, 675 F.2d 44 (2nd Cir.1982) (per curiam) (different income disregards held invalid); Caldwell v. Blum, 621 F.2d 491 (2nd Cir.1980) (transfer of assets rule invalidated), cert. denied, 452 U.S. 909, 101 S.Ct. 3039, 69 L.Ed.2d 412 (1981); Fabula v. Buck, 598 F.2d 869 (4th Cir.1979) (same); Greklek v. Toia, 565 F.2d 1259 (2nd Cir.1977) (per curiam) (different treatment of work-related expenses invalidated), cert. denied, 436 U.S. 962, 98 S.Ct. 3081, 57 L.Ed.2d 1128 (1978).

Massachusetts’ six-month spenddown and budget period for the medically needy is not comparable to its one-month budget period for the categorically needy. Schweiker v. Hogan, supra, is not to the contrary. In Schweiker, the Supreme Court noted that § 1396a(a)10 and § 1396a(a)(17) “did not require that the medically needy be treated comparably to the categorically needy in all respects.” 457 U.S. at 587, 102 S.Ct. at 2609. Schweiker made an exception in the comparability requirement to uphold a specific statutory limitation on the level of medically needy benefits. Here, the statutory comparability requirement conflicts with a state regulation, not with another command of Congress.

V.

Federal Regulations

Plaintiffs and defendants rely on various federal regulations to support their respective claims. Plaintiffs cite 42 C.F.R. § 435.401(c) (1983), which provides that a State agency “must not use requirements for determining eligibility for optional coverage groups that are ... (2) For aged, blind, and disabled individuals, more restrictive than those used under SSI____” Defendants rely on 42 C.F.R. § 435.831 (1983), which provides that “[t]he agency must use a prospective period of not more than 6 months to compute income.”

Defendants maintain that the agency’s specific authorization of a six-month budget period should be read to supercede the more general restriction, which they contend applies to eligibility matters other than budget periods. Plaintiffs respond that this authorization is limited by the statute and other regulations and thus should be ignored or held unlawful. This court agrees.

VI.

Conclusion

The court holds that 42 U.S.C. § 1396a(a)(10) and (17) require Massachusetts to employ the same budget period for the evaluation of income and medical expenses for SSI recipients as it does for SSI-related Medicaid applicants. Plaintiffs’ motion for partial summary judgment is, therefore, allowed. Defendants’ motion for summary judgment is denied.

      . Mass.Gen.Laws ch. 118E, § 10 provides, in pertinent part:
      In any case where the monthly income of a recipient or beneficiary is in excess of the exemptions allowed, the recipient or beneficiary shall be liable, to pay to the provider of medical care or services an amount which shall be equal to the excess income for a period of six consecutive months, which includes the period when such service was provided.

      . Plaintiffs (or their spouses) had worked and were receiving Social Security benefits in amounts that made them ineligible for SSI benefits. The Medicaid income limit (at four-thirds of the AFDC limit) was, for them, lower than the SSI benefit level. Therefore, plaintiffs did not qualify for Medicaid until their income, after deducting medical expenses, was lower than the benefits received by SSI recipients. In other words, if plaintiffs had not worked and not qualified for Social Security, they would have qualified for SSI benefits and would have had more income available for non-medical expenses.

      . The court was informed by counsel that Mr. George Hogan, another named plaintiff, died in early August 1984.

      . The Department made this calculation by subtracting $333.00, the Massachusetts income standard for one, and a $20.00 income disregard from Mr. Carter’s $743.76 monthly income. See 105 C.M.R. §§ 506.110, 506.410 (1983).

      . The hardship wrought by the Department’s six-month spenddown period is compounded by the fact that even if Mr. Carter does meet his spenddown, he must reapply for assistance (and meet the spenddown) every six months.

      . Persons like Mr. Carter are also apt to seek out long-term institutional care for which the State provides a one-month spenddown. 106 C.M.R. §§ 506.600-620 (1983).

      . The Department submitted a request that the Secretary waive several regulations to enable the State to implement its project. The Department’s submission to the Secretary noted that a six-month spenddown policy:
      may well impose a hardship on many chronically ill and disabled individuals who require medical services on a daily, weekly or monthly basis in order to remain in the community. It may be extremely difficult or impossible for many of these individuals to both pay medical expenses sufficient to meet their six-month spenddown and maintain funds needed for food, shelter, and family support. They may instead find themselves having to choose between: foregoing necessary non-institutional medical care; submitting to costly and inappropriate hospitalization in order to incur medical expenses in excess of the six-month spenddown liability; or entering a nursing home in order to receive Medicaid coverage via a one-month spenddown. All of these options are ultimately more costly, both socially and economically. The individual is forced by financial imperatives either to physically suffer or to submit to unnecessarily intensive or restrictive inpatient care, the cost of which will likely be borne by Medicaid and Medicare.
      Department of Public Welfare, Preventing Unnecessary Institutionalization of the Chronically Ill and Disabled: A One Month Spenddown Program, iv-v (July 5, 1984).

      . The defendants argue that the Secretary’s approval of the State’s proposal would make plaintiffs’ claims moot with regard to a portion of the plaintiff class.

      . Section 1396a(a)(10)(C)(i) provides, in pertinent part, that if a State Medicaid plan provides medical assistance to the medically needy, then the plan must describe
      ... (Ill) the single standard to be employed in determining income and resource eligibility for all such [medically needy] groups, and the methodology to be employed in determining such eligibility, which shall be the same methodology which would be employed under the supplemental security income program in the case of groups consisting ’of aged, blind, or disabled individuals in a State in which such program is in effect, and which shall be the same methodology which would be employed under the appropriate State plan ... to which such group is most closely categorically related in the case of other groups....

      . Plaintiffs also maintain that the State’s six-month spenddown policy offends the reasonableness requirement of § 1396a(a)(17). The policy is unreasonable, according to plaintiffs, because "it pretends that SSI-related medically needy applicants have their projected income available to them on the date of application, even though that presumption never comports with reality.” Plaintiffs’ Brief at 17. Two courts have relied on this logic, at least in part, to invalidate six-month spenddowns. See Coleman v. Miller, supra; Brogan v. Miller, supra. Although the six-month spenddown in Massachusetts acts extraordinarily harshly on some of the plaintiffs, see supra, it is unnecessary for this court to reach the reasonableness issue, given its disposition of plaintiffs' other claims.

      . Plaintiffs concede that 42 C.F.R. § 435.831, and a six-month spenddown period, could be lawful for some applicants if the State allowed six months worth of expenses to be anticipated against six months worth of excess income. Plaintiffs rely on Coleman v. Miller, supra, in which the court found it unnecessary to invalidate this regulation. The court ruled that if the State could lawfully use a six-month measure of prospective income, then it "would be reasonable to compute eligibility on a six-month prospective basis so long as the same prospective basis is applied to anticipated medical expenses.” Coleman v. Miller, slip op. at 14 n. 8; see also Brogan v. Miller, supra at 146 n. 15 (using same reasoning). Plaintiffs note that this solution would be permissible only for those applicants with consistent, recurring medical needs, and not for those with sporadic needs.
      Defendants argue that a State may provide medical assistance to a medically needy applicant only if the applicant actually incurs medical expenses equal to his or her spenddown, unless the Secretary authorizes the State to project expenses. Defendants rely on Williams v. St. Clair, 610 F.2d 1244, 1248 (5th Cir.1980), which noted that Congress has not required States to take into account anticipated medical expenses.


author: McCURN, District Judge.

text:
    Joseph C. BARTOLOMIE, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 81-CV-287.
    United States District Court, N.D. New York.
    Nov. 13, 1984.

      John S. Hogg, Hamilton, N.Y., for plaintiff.
    Frederick J. Scullin, Jr., U.S. Atty., Syracuse, N.Y., for defendant; Edward Broton, Asst. U.S. Atty., Albany, N.Y., of counsel.
   MEMORANDUM-DECISION AND ORDER

McCURN, District Judge.

The above matter comes to me following a Report and Recommendation by Magistrate Ralph W. Smith, Jr., duly filed on the 24th day of April 1984. Following ten days from the service thereof the Clerk has sent me the entire file, including the objections filed by the plaintiff herein.

Magistrate Smith has recommended that the complaint be dismissed for lack of subject matter jurisdiction, the plaintiff having failed to comply with the jurisdictional time requirements set forth in 42 U.S.C. § 405(g).

This action was brought by the plaintiff under 42 U.S.C. 405(g) seeking a reversal of a decision by the Secretary of Health and Human Services (Secretary) finding plaintiff ineligible for disability benefits.

Plaintiff applied for disability insurance benefits for a period of disability beginning April 30, 1979. Plaintiff’s claim was denied initially and on reconsideration, and on timely application was heard de novo before an Administrative Law Judge (ALJ) rendering a decision denying benefits on July 9, 1980. The plaintiff then retained the services of John S. Hogg, an attorney at law experienced in social security matters. The plaintiff by his attorney then timely filed a request for review with the Appeals Council. The decision of the Secretary was approved by the Appeals Council on September 25, 1980. On October 2, 1980 a certified letter, dated September 25, 1980, was mailed to the plaintiff at his home address and a copy allegedly mailed to Attorney Hogg. The letter informed the plaintiff that there was no basis for granting a request for review and that the hearing decision stands as the final decision of the Secretary. The letter further informed the plaintiff that he had 60 days in which to commence a civil action from the date of receipt of the letter and that it was presumed that the letter was received within 5 days after the date of the letter unless a reasonable showing was otherwise made. On October 6, 1980, the copy of the letter was allegedly received and signed for by plaintiff.

On December 29, 1980, Attorney Hogg wrote the Appeals Council inquiring as to the status of the claimant’s case. On January 30,1981 the Appeals Council responded to Attorney Hogg’s letter enclosing a copy of its decision of September 25, 1980. This was received by Attorney Hogg on February 4, 1981 and the complaint in the instant action was filed on March 31, 1981. The defendant then moved to dismiss the complaint on the ground that the court lacked jurisdiction, the complaint having been filed more than 60 days after the claimant’s mailing to him of the notice of adverse decision by the Secretary. 42 U.S.C. § 405(g). Despite plaintiff’s objection that motion was granted by Howard G. Munson, Chief Judge, by Order filed August 5, 1981. Thereafter, upon application of the plaintiff, Chief Judge Munson’s Order was vacated by Order of this court filed on December 3, 1981 and the defendant was directed to answer the complaint with permission to raise the same jurisdictional issue. Defendant then answered and filed a separate motion to dismiss which was opposed by plaintiff.

It appeared upon the argument of that motion that plaintiff denied that he had in fact signed the postal receipt for delivery of the Appeals Council notice, as alleged, on October 6, 1980 and denied that he had ever received notice of same until response to his attorney’s inquiry which was received on February 4, 1981. It was plaintiff’s contention that therefore his complaint was filed timely and well within the 60 day requirement. This court then referred the matter to Magistrate Smith to hold an evidentiary hearing and make a determination of fact in regard thereto.

The court now has before it Magistrate Smith’s Report and Recommendation wherein he finds that the plaintiff did receive notice on October 6, 1980 based upon his finding that the signature on the October 6, 1980 delivery notice was that of plaintiff. The Magistrate further found that his representative and counsel of record, Mr. Hogg, did not receive the said notice, apparently as a result of the lack of a street address and proper zip code. The Magistrate then went on to recommend that the complaint be dismissed for lack of subject matter jurisdiction pursuant to the time requirement set forth in 42 U.S.C. § 405(g).

The plaintiff objects to the Magistrate’s report on three grounds. First, he alleges that the complaint was filed within 60 days of the plaintiff’s effective receipt of the determination of the Appeals Council. Second, he alleges that there was no evidence in the record that the document which was mailed to the claimant on October 2, 1980 was, in fact, a decision made by the Appeals Council. Third, he puts forth the proposition that when a claimant is represented by counsel limitation of time is measured from the date of receipt of notification by counsel.

The second contention of plaintiff, i.e., that the September 24 notice mailed October 2 was ineffective because of lack of proof that an Appeals Council member prepared or issued the document as a decision of the Appeals Council, is without merit.

As to the argument that the complaint was timely filed, the court notes that jurisdiction under 42 U.S.C. § 405(g) exists when the complaint is filed within 60 days of the receipt thereof rather than mailing, as set forth by Magistrate Smith. Receipt thereof is presumed to be 5 days after the date of such notice unless there is reasonable showing to the contrary. 20 C.F.R. § 422.210(c). The Magistrate’s report errs when it states that the complaint must be filed within 65 days of mailing. It must be filed within 60 days of receipt. Matsibekker v. Heckler, 738 F.2d 79 (2d Cir.1984). There is a presumption that receipt occurred 5 days thereafter. Here, the Appeals Council notice of decision was dated September 25, 1980. The presumption that it was received 5 days thereafter has been rebutted by the Secretary’s proof that it was not even mailed until October 2, 1980. This fact is of no moment, however, because suit was not commenced until March 31, 1980. Sixty days had elapsed in any event.

The decisive question revolves around the actual date of receipt. The Magistrate has found that it was received on October 6, 1980. The Magistrate based his decision primarily on Exhibit D which purportedly contained the signature of the plaintiff which the Magistrate found was a facsimile of and corresponded to other signatures of the plaintiff contained in the Secretary’s file.

However, the court finds that the third basis for objection made by plaintiff to the Magistrate’s report is well taken. The Magistrate found, and there is ample support in the record and I accept his finding, that notice was never served on or received by the plaintiff’s attorney. The Secretary’s regulations require that a representative of claimant shall be sent notice and a copy of any administrative action, determination, or decision. 20 C.F.R. 404.-1715(a)(1).

Here it is undisputed that plaintiff was represented by an attorney and the Secretary was aware of same. Although the regulation does require notice of administrative action, determination, or decision to be sent to a representative (attorney), it does not provide that the failure to send such notice will negate notice to the claimant. Logic and elementary fairness, however, dictate otherwise. This principle has been adopted by the New York Court of Appeals in Bianca v. Frank, 43 N.Y.2d 168, 401 N.Y.S.2d 29, 371. N.E.2d 792, where the court observed:

... [Fundamental policy considerations ... require that once counsel has appeared in a matter a Statute of Limitations or time requirement cannot begin to run unless that counsel is served with the determination or the order or judgment sought to be reviewed____
Indeed, once a party chooses to be represented by counsel in an action or proceeding, whether administrative or judicial, the attorney is deemed to act as his agent in all respects relevant to the proceeding. Thus any documents, particularly those purporting to have legal effect on the proceeding, should be served on the attorney the party has chosen to handle the matter on his behalf. This is not simply a matter of courtesy and fairness; it is the traditional and accepted practice which has been all but universally codified____ Matter of Bianca v. Frank, 43 N.Y.2d 168, 173.

Although examination of the federal case law reveals no decisions directly on point, support for the requirement for notice to an attorney of record can be found in Penner v. Schweiker, 701 F.2d 256 (3rd Cir.1983); Chiaradonna v. Schweiker, 569 F.Supp. 1471 (Ed. PA 1983).

Accordingly, the court finds that the plaintiff did not receive the notice required by 42 U.S.C. § 405(g) until February 4, 1981, and that the action herein was timely commenced within 60 days thereof. The court finds that subject matter jurisdiction is present here.

It is therefore,

ORDERED, that the matter is referred back to Magistrate Smith for consideration of whether the Secretary’s filing of ineligibility of the plaintiff for disability benefits is supported by substantial evidence and for his Report and Recommendation to the court thereon.

SO ORDERED.


author: SPRIZZO, District Judge:

text:
    In re AM INTERNATIONAL, INC. SECURITIES LITIGATION. Lou RONCARATI, and Ronald Roncarati, on behalf of themselves and all others similarly situated, Plaintiffs, v. Roy L. ASH, John P. Birkelund, James R. Mellor, Robert H. Lander, James H. Combes, Paul E. Gray, Arthur F. Kelly, Richard Paget, C.L. Davis, W.R. Driver, F.R. Eckley, H. Knowlton, R.Q. Armington, R.E. Murphy, P.E. Priest, Price Waterhouse, Price Waterhouse (United Kingdom), Price Waterhouse (Australia), Price Waterhouse (Canada), Price Waterhouse International, Blanchard Chauveau Et Associes Sa, Defendants.
    MDL No. 494 (JES).
    United States District Court, S.D. New York.
    Nov. 13, 1984.
    David B. Gold, A Professional Law Corp., San Francisco, Cal., for plaintiffs; David B. Gold, Richard A. Rogoff, San Francisco, Cal., of counsel.
    Kaye, Scholar, Fierman, Hays & Handler, New York City, for defendant Ash; David Klingsberg, Milton Sherman, New York City, of counsel.
    Freedman, Levy, Kroll & Simonds, Washington, D.C., for defendant Mellor; Michael I. Smith, Thomas C. Lauerman, Marc B. Dorfman, Washington, D.C., of counsel.
    Finley, Kumble, Wagner, Heine, Under-berg & Casey, New York City, for defendant Lander; Stuart K. Lesansky, Michael D. Dempsey, Lawrence J. Blades, Elizabeth D. Mann, New York City, of counsel.
    Paul, Hastings, Janofsky & Walker, Los Angeles, Cal., Burns, Summit Rovins & Feldesman, New York City, for defendant Combes; William Campbell, Todd E. Gordinier, Los Angeles, Cal., Stuart A. Summit, Ira G. Greenberg, New York City, of counsel.
    Fried, Frank, Harris, Shriver & Jacobson, New York City, for defendants Gray & Driver.

      Cahill Gordon & Reindel, New York City, for defendants Birkelund, Knowlton, Kelly and Paget; Thomas F. Curnin, Thomas R. Jones, Joel E. Davidson, New York City, of counsel.
    LeBoeuf, Lamb, Leiby & MacRae, New York City, for defendant Priest; Taylor R. Briggs, William G. Primps, Lawrence W. Pollack, New York City, of counsel.
    Donovan, Leisure, Newton & Irvine, New York City, for defendant Price Water-house; Louis C. Lustenberger, Jr., David R. Jewell, Daniel J. Thomasch, Eldon Olson, General Counsel, Allen I. Young, Associate General Counsel, New York City, of counsel.
    Olwine, Connelly, Chase, O’Donnell & Weyher, New York City, for defendants Price Waterhouse (United Kingdom, Australia, Canada); Price Waterhouse World Firm and Blanchard Chauveau; James E. Tolan, Christopher Brady, Erica B. Baird, New York City, of counsel.
   OPINION & ORDER

SPRIZZO, District Judge:

Plaintiffs Lou and Ron Roncarati filed this action on behalf of all persons who allegedly lost money in connection with stock purchased in AM International, Inc. (“AMI”) between May 1, 1978 and September 16, 1979. Plaintiffs originally sued to represent a class of purchasers who bought stock between May 1, 1978 and September 23, 1981. Because another class action is pending covering the period of September 17, 1979 to September 23, 1981, see Dubowski v. Ash, 82 Civ. 1732, the Court limited the Roncarati class period to purchases made prior to September 17, 1979. Therefore, this action is limited to claims based upon AMI’s Annual Report and Form 10-K for 1978, and 1978 interim financial statements and Form 10-Qs. See Amended Complaint ¶ 61(a) & (d).

Defendants are officers and directors of AMI, some of whom were members of AMI’s Audit Committee; Price Water-house, AMI’s independent auditor for fiscal 1978; and various foreign Price Water-house firms. The action was transferred to this Court on April 20, 1982 by order of the Judicial Panel on Multidistrict Litigation, pursuant to 28 U.S.C. § 1407. On January 24, 1983 plaintiffs filed an amended complaint, and on March 3, 1983 plaintiffs filed a motion for class certification.

Seventeen of the twenty-one defendants filed motions to dismiss the amended complaint, for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) and for failure to plead fraud with the requisite particularity pursuant to Fed.R.Civ.P. 9(b). Five of those defendants — the foreign Price Waterhouse defendants — also filed motions to dismiss for lack of in personam jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). The Court heard oral argument on the motions on July 18 and 19, 1983. Decision on the motions was stayed at the request of the parties pending possible settlement. In July of 1984 the parties informed the Court that they no longer wished the Court to defer a decision on the motions.

DISCUSSION

The amended complaint alleges violations of section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), Rule 10b-5 promulgated thereunder, 17 C.F.R. § 240.10b-5, and section 20 of the Exchange Act, 15 U.S.C. § 78t, as well as a fraud claim arising under state law, all based upon alleged false statements made with respect to the financial condition of AMI for the 1978 fiscal year.

To state a claim of fraud under section 10(b), a plaintiff must allege with some specificity acts from which an intent to deceive, manipulate, or defraud may reasonably be inferred. Decker v. Massey-Ferguson, Ltd., 681 F.2d 111, 115 (2d Cir.1982), citing Ernst & Ernst v. Hochfelder, 425 U.S. 185, 192 n. 7, 96 S.Ct. 1375, 1380 n. 7, 47 L.Ed.2d 668 (1976); see also Crystal v. Foy, 562 F.Supp. 422, 424-25 (S.D.N.Y.1983). Conclusory allegations that a defendant’s conduct is fraudulent are insufficient. Decker, supra, 681 F.2d at 114; Crystal, supra, 562 F.Supp. at 424; see also Ross v. A.H. Robins Company, Inc., 607 F.2d 545, 557 (2d Cir.1979). While the amended complaint may set forth facts with sufficient specificity with respect to the alleged false presentation of AMI’s financial condition for years subsequent to 1978, the fraud allegations which relate to fiscal 1978 are too generic and unspecific to be sustained.

In paragraph 56 of the amended complaint, plaintiffs allege that in November 1981 Arthur Anderson issued a Special Investigative Report on AMI which, according to plaintiffs, stated that:

As of the fiscal year ended July 31, 1980, adjustments reducing reported income should have been made aggregating between $41 and $53 million, plus an uncalculated amount related to intangible assets of Jaquard which ... should also have been written off. Arthur Anderson also reported that a substantial portion of these adjustments should have been recorded in financial statements for fiscal years prior to 1980. It further determined that AMI (1). placed “intense” pressure on division operating and accounting management to prepare budgets that were acceptable to top management and to report results consistent therewith, (2) permitted, and in some cases instructed, operating and accounting personnel to intentionally overstate reported financial and accounting results, and (3) encouraged nonreporting of adverse accounting information.

Amended Complaint ¶ 56 (emphasis in original). Plaintiffs then allege that on December 17, 1981 AMI announced a loss of $245 million for fiscal 1981, “of which at least $203 million was attributable to special adjustments, a substantial portion of which AMI admitted should have been recorded in prior fiscal years.” Id. ¶ 59.

These generic statements are the sole predicate for plaintiffs’ claim that the more particularized allegations of fraud which pertain to 1979 and 1980 should also be deemed to apply to 1978. See also Transcript of Oral Argument at 32-34 (July 18, 1983). Moreover, while the impact of the alleged false statements is quantified for other years, as to 1978 plaintiffs’ complaint repeatedly asserts only that the impact of the misstatements or omissions was in a “material amount” not yet determined. See, e.g., Amended Complaint ¶¶ 63, 127, 128, 132, 143, 146, 147, 149; see also id. ¶ 116-117, 157(a)-(b).

These allegations are clearly insufficient to meet the requirements of Rule 9(b) and Decker, supra. This Court cannot draw any permissible inference of fraud, with respect to any defendant based on these allegations for the year 1978, especially since it is far more reasonable to conclude that the prior years referred to in the An derson report, are the years 1979 and 1980 as to which specific allegations of fraud are made. As the Second Circuit stated in Decker, supra, 681 F.2d at 118, the amended complaint “fails to provide an adequate factual substantiation for its accusations and fails to concretize acceptably the alleged fraud.” The amended complaint is therefore dismissed as to all defendants.

It is SO ORDERED.

      . Defendants Lander, Birkelund, Kelly, Knowlton, Paget, and Priest also filed motions pursuant to Fed.R.Civ.P. 56. Lander also moved pursuant to Fed.R.Civ.P. 12(c), and Priest moved to strike certain allegations pursuant to Fed.R.Civ.P. 12(f). Because the Court dismisses the amended complaint for failure to plead fraud with the requisite particularity pursuant to Fed.R.Civ.P. 9(b), it is unnecessary to address these motions. For the same reason the Court need not address the motions to dismiss for lack of in personam jurisdiction or the motion for class certification.

      . On October 9, 1984 the Court denied motions to dismiss by AMI, its internal management, and those directors who were members of its Audit Committee, with respect to the 1979, 1980, and 1981 fiscal years. Therefore the Dubowski class action complaint and the complaint in Madison Fund, Inc. v. Ash, 81 Civ. 7024, will continue as to these years. The Court also denied a motion by Price Waterhouse with respect to the 1980 year and granted a motion by Price Waterhouse to dismiss claims against it based upon the 1979 and 1981 fiscal years. The Court also granted the motion to dismiss for insufficiency made by Price Waterhouse’s foreign subsidiaries as to 1979, 1980, and 1981. See Transcript at 8-20 (October 9, 1984).

      . In paragraph 63 of the Amended Complaint plaintiffs allege that earnings for fiscal 1978 were overstated in "a material amount not yet calculated, but in excess of $5 million." Because this is the only dollar amount ascribed to fiscal 1978, and because no factual basis is stated to support this allegation, it is clearly insufficient.