author: KANE, District Judge.

text:
    MIAMI INTERNATIONAL REALTY COMPANY, Plaintiff, v. TOWN OF MT. CRESTED BUTTE, COLORADO; Crested Butte Mountain Resort, Inc.; James Dean, Richard Paynter, Robert Pino; Tim Currin; and Ptarmigan Associates, Inc., Defendants.
    Civ. A. No. 83-K-25.
    United States District Court, D. Colorado, Civil Division.
    April 12, 1985.

      B. Lawrence Theis, William E. Walters, III, Walters & Theis, Denver, Colo., for plaintiff.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

On February 14, 1983, plaintiff amended its original complaint to include claims for monetary and injunctive relief for violation of federal antitrust laws. The complaint alleges that defendants conspired to prohibit plaintiff from engaging in the business of selling condominium time shares. Plaintiff’s factual allegations are more fully detailed in my earlier orders of January 23, 1984 (579 F.Supp. 68) and July 11, 1984. A pre-trial conference was held before United States Magistrate Schauer on June 24,1984 and trial to a jury is set commencing February 26, 1986. With the exception of discovery relating to time-sharing and damages experts all preparatory matters have been completed and the case is ready for trial. Defendants now move to dismiss all antitrust damage claims and to strike plaintiff’s damage expert.

In response to the Supreme Court’s opinion in Community Communications Co., Inc. v. City of Boulder, Colorado, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), Congress enacted the Local Government Antitrust Act of 1984 exempting local government entities from damage remedies under section 4, 4A or 4C of the Clayton Act. P.L. 98-544, October 24, 1984, effective September 24, 1984. As the Senate Judiciary Committee noted, before City of Boulder “it was generally assumed” that the state action antitrust immunity doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) applied to both states and their local units of government. Report of the Senate Committee on the Judiciary on the Local Government Antitrust Act, S.Rep. No. 593, 98th Cong., 2d Sess. 1 (1984). City of Boulder, however, provided that for the actions of local government to be subject to state action immunity those actions must be in furtherance of clearly and expressly mandated state policy. 455 U.S. at 51, 102 S.Ct. at 840. The Senate Committee concluded that:

in many instances, the practical impact of Boulder and [its predecessor] Lafayette [v. Louisiana Power & Light Co., 532 F.2d 431 (1976) ] has been to paralyze the decision-making function of local government. The threat of antitrust treble damage actions has caused local officials to avoid decisions that may touch on the antitrust laws even when such decisions have involved critical public services.

Report of the Senate Committee on the Judiciary, supra at 3. Moreover, the Senate Committee concluded that “regardless of whether a local government has violated the antitrust laws, it is inappropriate to assess damages which ultimately must be borne by the taxpayers.” Id. at 6-7.

In response to these concerns Section 3(a) of the Local Government Antitrust Act provides specific exemption for any “local government, or official or employee thereof acting in an official capacity.” Section 4(a) provides exemption from any “claim against any person based on any official action directed by a local government, or official or employee thereof acting in an official capacity.” Evaluation of the applicability of the Act is a matter of first impression in this district and the Tenth Circuit.

Normally, an act is effective from its dáte of passage and applies to all litigation pending on that date. See Bradley v. School Bd. of City of Richmond, 416 U.S. 696, 711-16, 94 S.Ct. 2006, 2016-18, 40 L.Ed.2d 476 (1974). However, section 4(b) provides that subsection 4(a) “shall not apply with respect to cases commenced before the effective date of the Act [September 24, 1984]”. The exemption provided local government entities themselves is a bit more expansive. Section 3(b) provides:

Subsection (a) shall not apply to cases commenced before the effective date of this Act unless the defendant establishes and the court determines, in light of all the circumstances, including the stage of litigation and the availability of alternative relief under the Clayton Act, that it would be inequitable not to apply this subsection to a pending case. In consideration of this section, existence of a jury verdict, district court judgment, or any stage of litigation subsequent thereto, shall be deemed to be prima facie evidence that subsection (a) shall not apply.

Although the complaint was amended to include antitrust claims more than 19 months before the effective date of the Act, defendants Crested Butte Mountain Resort (CBMR), Town of Mt. Crested Butte and James Dean, Richard Paynter and Robert Pino, all town officials, seek exemption from damage remedies pursuant to section 3(a). Plaintiff responds first, that CBMR is not a local government entity. Thus, any exemption afforded Crested Butte Mountain Resort would arise under section 4 rather than section 3. As such, no retroactive exemption would apply to CBMR. Plaintiff argues second, that the facts in this case compel a finding that the section 3(a) exemption should not be retroactively applied to claims raised before the effective date of the Act.

Damage Immunity of CBMR

Crested Butte Mountain Resort argues that it is a local government, or official or employee thereof subject to the damage exemptions of section 3(a). On face examination, CBMR is no more than a private entity. CBMR tries to fit under the provisions of section 3(a) by arguing that most of the allegations against it relate to the actions of its employees, Larkin and McDaniel, while they were serving as members of the Crested Butte town council. Thus, CBMR argues that it must fall under the ambit of section 3(a) because its agents were acting in an official capacity. Plaintiff draws an apt analogy by suggesting that CBMR’s attempt to fit under section 3(a) is akin to trying to hide an elephant in the courtroom. Independent of any of the actions taken by Larkin or McDaniel while serving on the town council, plaintiff alleges numerous actions taken by CBMR in an attempt to drive plaintiff out of business. These allegations include: engaging in formal and informal discussions with town representatives to prepare plans to curtail plaintiffs business, obtaining favorable treatment from the town in the passage and enforcement of ordinances intentionally directed at plaintiffs business, cancel-ling a pre-purchase lift ticket contract with an affiliate of plaintiff, and effecting the arrest and prosecution of plaintiffs representatives. Moreover, a private individual or entity cannot become a public entity by virtue of engaging in a conspiracy with the public entity. • It is beyond cavil that CBMR can be liable for conspiring with a town official in violation of antitrust laws without assuming the cloak of the damage exemption of a governmental entity.

Antitrust immunity might extend to a private entity engaging in anticompetitive activity with a state agency which is immune under the Parker doctrine. See I P. Areeda & D. Turner, Antitrust Law If 212b (1978). The Local Government Antitrust Act of 1984 extends such immunity to private entities acting under the direction of a local government. The Act, however, draws a clear distinction between the local government entity subject to the provisions of section 3 and the private entity subject to the provisions of section 4. Arguably, CBMR could be exempt from damage remedies by virtue of the provisions of section 4(a) which precludes damage claims “against a person based on any official action directed by a local government or official or employee thereof acting in an official capacity.” However, section 4(b) specifically precludes the application of section 4(a) exemptions in cases such as this one which were commenced before the effective date of the Act.

Application of Local Government Immunities to a Pending Case

The other movants, Town of Mt. Crested Butte, Dean, Paynter and Pino, all fall within the ambit of the exemptions in section 3(a). Section 3(b) leaves the determination of retroactive application of the exemption in section 3(a) to the sound discretion of the trial court. The Act directs that the court consider “all the circumstances” in determining whether damage exemptions are appropriately applied in pending cases. Only two factors, however, are specifically enumerated in the text of the statute and the conference committee report. Local Government Antitrust Act of 1984, Conference Report, H.R.Rep. No. 1158, 98th Cong.; 2d Sess. 3-4 (1984) U.S. Code Cong. & Admin.News 1984, 4602, 4626-4627. The specific reference to the stage of the litigation and the availability of other relief under the Clayton Act indicates that these factors are paramount. The explicit language of the statute, however, provides that these two factors are not exclusive. See also 130 Cong.Rec. H12176, H12186-7 (daily ed. October 11, 1984).

The statutory language and legislative history also provide that the stage of the litigation is the most significant factor. If litigation filed before the effective date of the act has advanced to a jury verdict or district court judgment, “a local government defendant would need compelling equities on its side to justify the application of [section 3(a)] to the pending ease.” H.R.Rep. No. 1158 at 3-4, U.S.Code Cong. & Admin.News 1984, at 4627. Conversely, the Act’s exemptions should be applied if a case is filed shortly after September 24, 1984. As the colloquy between two floor managers, Congressmen Seiberling and Ro-dino, indicates “the fact that pretrial discovery has not been completed in a pending case may support a determination that section 3 is applicable.” 130 Cong.Rec. at 12187. Thus, one district court applied section 3(a) exemptions in a case filed only 17 days before the effective date of the Act. Cablevision, Inc. v. City of Jefferson, Missouri, 604 F.Supp. 845 (W.D.Mo.1984).

This case is certainly more difficult as the facts fall somewhere in between the extremes of nascence and senescence. In Jefferson Disposal Co. v. Parrish of Jefferson, Louisiana, 1985-1 Trade Cas. (CCH), ¶ 66,471 (E.D.La. March 5, 1985), the district court applied the Act’s damage exemptions to a case filed in November 1983, in which considerable discovery remained. The antitrust claims here were first raised in an amended complaint filed February 14, 1983. Formal discovery was completed on May 31, 1984, but discovery on a limited basis continues because of delay by plaintiff. See my order in this ease of December 17, 1984 and the discussion of defendants’ motion to strike below. Trial is scheduled for February 26, 1986. Although trial is ten months away, this time gap is not solely attributable to the actions of the parties. While I realize that crowded court dockets can have an affect on litigation, delay in obtaining a trial date occasioned by this court’s case load is a factor beyond the litigants’ control. Such delay is not an indicia of how far toward resolution this case has moved. It should not be a factor in applying section 3 exemptions. Nevertheless, discovery has been reopened and a trial set for today would have to be delayed. Thus, while this case is in a relatively advanced stage, it is not so far along as to compel that section 3 not be applied. I must turn to other circumstances to determine if it would be equitable to apply section 3(a) exemptions.

Defendants argue that relief other than damages under the Clayton Act is readily available to plaintiff, thus compelling application of the exemptions. In addition to the declaratory remedies sought by plaintiff in the complaint, defendants point to the alternative relief of the antitrust damages which could be obtained from private defendants and damages which could be obtained pursuant to the alleged violations of 42 U.S.C. § 1983. Section 3(b), however, restricts relevant alternative relief to remedies under the Clayton Act. The legislative history clearly indicates that Congress contemplated that relevant alternative remedies would consist solely of Clayton Act injunctive relief against the municipal defendant, rather than damage relief from other private defendants. The conference report provides, “where injunc-tive relief is unavailable or incomplete, the burden [faced by the municipality seeking application of section 3 exemptions] would become more difficult.” H.R.Rep. No. 1158 at 3, U.S.Code Cong. & Admin.News 1984, at 4627. Similarly the Seiberling/Ro-dino colloquy concludes that:

[I]n looking to the availability of alternative relief under the Clayton Act—another factor expressly mentioned in the bill—the court could determine whether an injunction would be sufficient to halt continuing injury caused by an ongoing antitrust violation....

130 Cong.Rec. at H12187.

While I am mindful that damage exemptions applied to the town would not foreclose plaintiff’s ability to obtain monetary relief from private defendants, the potential damage liability of other defendants should not enter into the calculus used in determining whether to apply section 3 exemptions to pending cases. The legislative history looks only to alternative remedies available against the local government defendant. Moreover, the liability of each defendant under the Clayton Act is joint and several. See In re Uranium Antitrust Litigation, 617 F.2d 1248, 1257 (7th Cir.1980). Thus, liability of one defendant can not be used to offset the liability of another.

Clearly, injunctive relief alone would not make plaintiff whole. Nevertheless, broad remedies can be fashioned to cure many of the alleged excesses of the town. District courts are granted broad authority to fashion prospective remedies “both to avoid a reoccurrence of the violation and to eliminate its consequences.” National Society of Professional Engineers v. United States, 435 U.S. 679, 697, 98 S.Ct. 1355, 1368, 55 L.Ed.2d 637 (1978). In particular, the town could be enjoined from engaging in various practices and enforcing the various ordinances underlying plaintiff’s claims. Thus, the availability of injunctive relief supports the application of section 3 of the Local Government Antitrust Act to this case.

The other circumstances, delineated in the legislative history, which are relevant to determining the applicability of section 3 exemptions to pending cases include: 1) whether considerable financial harm to the local unit of government would result from a damage award; 2) the degree to which the, local government’s action was directed by or predicated on federal law; and 3) whether the defendant acted in good faith while exercising its normal legislative, regulatory, executive administrative or judicial powers. 130 Cong.Rec. at 12186 (Colloquy between Representatives Crane and Hyde).

With regard to the first factor, the Town of Mt. Crested Butte properly notes that the maximum potential damage award would be devastating to its budget. With less than 350 year round residents and 1,500 property owners the town is not well equipped to incur liability for a significant damage remedy. Plaintiff’s damage prayer when trebled could amount to as much as $9,000,000. At the present rate of post judgment interest of 10.08% per annum, the annual interest payments alone would exceed the town’s 1983 expenditures of $717,419. The town argues that any damage award would significantly hamper its ability to provide basic services. The bulk of its budget now, other than for the defense of this lawsuit, is used to maintain the vital services of the community such as police, fire, maintenance and administration. It is this type of extreme and catastrophic economic impact that Congress intended to eliminate. In this particular case, the economic impact is severe because the alleged damage amount is great and the entity charged with paying it is small. This factor thereby supports the town’s position that the dámage relief of section 3 be applied.

Defendants’ actions clearly were not directed by or predicated on any federal law. Plaintiff views the evidence as reflecting repeated denials of licenses for frivolous reasons, prosecution of sales people acting as on-site solicitors for plaintiff’s project, threats of prosecution and withholding of benefits, the conduct of a town council meeting at which a multifaceted plan to halt plaintiff’s business was discussed and agreed upon, repeated complaints to the state real estate commission by real estate brokers in conjunction with city officials and the passage of at least three ordinances specifically directed at plaintiff’s business. Such actions may reflect violations of plaintiff’s rights which are properly restrained under the Clayton Act. Each of the town’s actions, however, was undertaken pursuant to its authority as a home rule city. See Colo. Const., art. XX, see. 6. The state’s mandate is not sufficiently specific to support immunity under the Parker state action doctrine. See Community Communications v. City of Boulder, supra. Nevertheless, each action taken by the town reflects a legitimate exercise of the police powers it possesses under the laws of the State of Colorado. This factor also weighs in favor of applying section 3 immunity.

Accordingly, I find that in consideration of all relevant circumstances the damage exemptions of the Local Government Antitrust Act of 1984 should be applied in this case.

Motion to Strike

Plaintiff amended its complaint to raise antitrust damage claims on February 14, 1983. On January 16, 1984 plaintiff’s present counsel, Walters & Theis, entered its appearance, replacing plaintiff’s original counsel, Hill & Robbins. Not until April of 1984 did plaintiff begin discussions with the accounting .firm of Laventhol & Hor-wath to perform an analysis concerning the damage issues in this case. On June 1, 1984 plaintiff entered into an agreement to retain Laventhol as plaintiff’s damage expert.

The pre-trial order, dated June 22, 1984, provided that all expert witnesses must have been designated within sixty days. The pre-trial order also provided that following endorsement of an expert witness, written summaries of opinions of expert witnesses and a description of the expert’s qualifications must be provided to opposing counsel within 30 days. By an order dated July 26, 1984, plaintiff was granted until August 6, 1984, in which to provide a summary of Laventhol’s opinion. On August 6, counsel for plaintiff produced to defendants a resume of Laventhol and a letter from an individual in the firm stating, in general terms, what the firm had done to date and its preliminary findings. This information did not include a detailed summary of the opinion. On October 19, 1984, Magistrate Schauer approved yet another stipulated extension of time granting plaintiff until September 15, 1984, to produce a report of Laventhol’s opinion. The order provided that all endorsement and cross-endorsement of experts was to be completed by October 15, 1984. This new time frame included 30 days from the receipt of Laven-thol’s damage report for defendants to endorse damage experts of their own. On December 31, 1984 plaintiff informed defendant that the report from the damage expert was not yet complete but was forthcoming.

Despite the allowance of several extensions of time, plaintiff has failed to comply with the orders relating to certification of damage expert witnesses. Plaintiff suggests that the delay in preparing the damage expert’s report derived from the uncertainty concerning the certification of plaintiff’s time-share expert. Apparently, the damage expert relies on the opinions of the time-share expert. On October 22, 1984 Magistrate Schauer held that the endorsement of plaintiff’s time-share expert should be stricken. On December 17, 1984,1 reinstated the endorsement of the time-share expert, but charged plaintiffs with costs relating to the motion and costs relating to any deposition of the expert.

Plaintiff’s delay concerning its damage expert may be explainable but it cannot be justified or approved. No motions have been filed seeking a stay of matters relating to the damage expert because of an interrelationship with the opinions of the time-share expert. This court can not be expected to read the minds of the parties and their experts when trying to control scheduling matters. Earlier in this order I noted that litigants had been disadvantaged by a docketing backlog. If that backlog is to be controlled, let alone eliminated, parties must comply with scheduling orders. Sanctions need be imposed if orders are to have any import.

The striking of plaintiff’s damage expert may be too severe a remedy. As noted in my order of December 17, 1984, the courts of appeals have suggested that exclusion of a witness is an extreme sanction. See Murphy v. Magnolia Electric Power Ass’n, 689 F.2d 232, 235 (5th Cir.1981); DeMarines v. KLM Royal Dutch Airlines, 580 F.2d 1193, 1201-02 (3d Cir.1978); Eisbach v. Jo-Carroll Electric Cooperative, Inc., 440 F.2d 1171, 1173 (7th Cir.1971). Among the factors which I should consider in deciding whether to exclude the testimony of plaintiff’s damage expert are “the explanation, if any for the failure to name the witness, the importance of the testimony of the witness, the need for time to prepare to meet the testimony, and the possibility of a continuance.” 8 C. Wright & A. Miller, Federal Practice and Procedure, § 2050 at 327 (1970). Plaintiff has not adequately justified its non-compliance with scheduling orders. However, the testimony of a damage expert may be central to plaintiff’s case. Trial is scheduled sufficiently in advance of the date of this order that defendants are not prejudiced by plaintiff’s tardiness concerning the endorsement of Laventhol. Discovery can still be conducted concerning Laventhol’s opinions without delaying trial.

Nevertheless, as noted in my earlier order, if this court is to be able to handle its case load it must be able to manage discovery in an orderly and efficient manner. If parties can freely abuse the court’s attempts to organize and control litigation, then there is no sense in having rules. Discovery concerning plaintiff’s damage expert is reopened upon the following conditions, similar to those imposed concerning plaintiff’s time-share expert: 1) if not already provided, Laventhal’s report shall be provided to defendants within ten (10) days of the date of this order; 2) the matter is referred to Magistrate Schauer to supervise additional discovery; 3) plaintiff shall provide its damage expert for deposition by defendants at plaintiff’s expense; and 4) plaintiff shall pay defendants’ attorney fees in the taking of the damage expert’s deposition. Payment shall be made within ten days of receipt of billing.

Accordingly it is ORDERED that defendant Crested Butte Mountain Resort’s motion to dismiss is denied. The motion to dismiss damage claims against defendants Town of Mt. Crested Butte, Dean, Paynter and Pino is granted. It is further ORDERED that defendants’ motion to strike is denied in part and granted in part as detailed herein.

      . Plaintiff suggests that application of the Local Government Antitrust Act to this case may be constitutionally infirm as retroactive legislation. Analysis of the constitutionality of the retroactive application of a statute begins with the proposition "that a court is to apply the law in effect at the time it renders its decision, unless doing so would result in manifest injustice or there is a statutory direction or legislative history to the contrary.” Bradley v. School Bd. of City of Richmond, 416 U.S. at 711, 94 S.Ct. at 2016. The thrust of the analysis in this opinion is that it would be inequitable and hence unjust not to apply the Local Government Antitrust Act’s immunities in this case. Moreover, the mandate that such actions be applied to pending cases is clearly laid out in the text of the Act. See also Jefferson Disposal Co. v. Parrish of Jefferson, Louisiana, 1985-1 Trade Cas. (CCH), ¶ 66,471 at 65, 362-4 (E.D.La. March 5, 1985).

      . The colloquies between Congressmen Crane and Hyde and Congressmen Seiberling and Ro-dino provide guidance as to factors which should be considered in determining the applicability of section 3(a) exemptions. 130 Cong. Rec. at 12186-7. Congressmen Hyde, Seiberling arid Rodino were all floor managers for the Local Government Antitrust Act. Their statements during the course of debate are particularly useful in gauging legislative intent. See, e.g., Johansen v. United States, 343 U.S. 427, 437, 72 S.Ct. 849, 855, 96 L.Ed. 1051 (1952).
      In the Senate, however, another of the floor managers was more adamant as to the import of the enumerated factors of stage of litigation and availability of alternative relief. Senator Metzenbaum stated:
      I want to make one thing crystal clear for the record about a central aspect of this conference report.
      We found ourselves hung up on the whole question of what happens to pending cases.
      A number of Senators felt quite strongly that a plaintiff who has won a jury verdict should not have that verdict taken away by intervening legislation — others disagreed.
      The Senate language which was accepted by the conferees, reflects hardfought, difficult negotiations among Senators.

        At the conference, the House suggested that additional factors, such as the financial impact on a city, be included. These suggestions were rejected by the Senate conferees.
      I want to say as loudly and as clearly as it is possible to say, as one of those who was intimately involved in these negotiations, that this Senator cannot change what the conferees agreed upon. No other Senator can change what the conferees agreed upon. No statement made upon the House floor can change what the conferees agreed upon. House Members who came to the conference and who made certain proposals and who were rejected in connection with those proposals have now spoken on the floor of the House, attempting to add some new interpretation.
      None of those House Members and none of us here in the Senate have the authority, have the strength, have the legal right to change the legal effect of what the conferees concluded in their language, nor can we change the statement of the managers. Only the statement of the managers accurately reflects the congressional intent in this area, and there is no way of changing that.
      130 Cong.Rec. S14368 (daily ed. October 11, 1984) (statement of Sen. Metzenbaum). Contrary to plaintiffs suggestion. Senator Metzen-baum’s remarks do not eradicate the plain language of the statute directing that all circumstances be considered and enumerating some, but not all, of the relevant factors. The Senator’s statement does, however, help to emphasize the relative importance of the specifically delineated factors.

      . Certainly, the liability of the Town of Mt. Crested Butte could be offset by contribution from other conspirators. But as noted earlier, each defendant is severally liable for any damage award under the Clayton Act.


source: Caselaw Access Project

author: CAFFREY, Chief Judge.

license: Public Domain

text:
    UNITED STATES of America, Plaintiff, v. Lawrence ENTWISLE, Defendant.
    Crim. No. 85-0056-C.
    United States District Court, D. Massachusetts.
    April 12, 1985.

      Peter Mullin, AUSA, for United States.
    Roger Witkin, Boston, Mass., for defendant.
   MEMORANDUM AND ORDER

CAFFREY, Chief Judge.

This is a criminal case in which defendant Lawrence Entwisle has been indicted on several counts of perjury relating to grand jury testimony which he gave in 1981. The allegedly perjurious testimony concerns whether he received certain medical treatment for which he and insurance companies were billed subsequent to a 1978 motor vehicle accident. He was not indicted on the perjury charge until February of 1985. The matter is now before the Court on the defendant’s motion to dismiss for preindictment delay.

On April 10, 1985 the Court held a hearing and heard testimony, which was followed by oral argument concerning the motion. The substance of Entwisle’s claim is that the preindictment delay prejudiced him in two respects: (1) that at all times relevant to his grand jury testimony and until April of 1984 he was an acute alcoholic and consequently has no memory of the accident, his medical treatment, or his grand jury testimony; and (2) that key government witnesses have changed their testimony in material aspects detrimental to the defendant.

Testimony by Entwisle and Ms. Mimi Quinlan, who is a chemical addiction specialist and a treating therapist at the New England Memorial Hospital, establish that Entwisle was an alcoholic from his early teens until April, 1984, when he underwent a period of hospitalization and treatment. With regard to the time period from 1978 to 1984, he testified that he experienced alcoholic “blackouts” and has substantially no memory of the accident, the medical treatment or the substance of his grand jury testimony. Entwisle also testified that he does not know whether, in 1981, he had any recollection of the previous events which were the subject of his grand jury testimony.

No testimony was offered relative to the defendants second claim. At the hearing, the government advised the Court that it only recently received the cooperation of two witnesses who were themselves defendants in an earlier related mail fraud prosecution. Doctor Stephen Hershenow agreed to testify for the government in May of 1983 and Dr. Stuart Rosenthal agreed to cooperate as late as November of 1984. The government stated that it believed the testimony of both doctors was required for a successful prosecution of the instant case. Thus the real delay herein was only from November 1984 to January 1985.

In some limited circumstances, excessive pre-indictment delay may violate a defendant's Fifth Amendment due process rights. United States v. Lovasco, 431 U.S. 783, 97 S.Ct. 2044, 52 L.Ed.2d 752 (1977). A defendant making such a claim “bears the heavy burden of showing that the delay in the indictment caused him actual prejudice and that the delay was undertaken by the government solely to gain tactical advantage over the accused.” United States v. Marler, 756 F.2d 206, (1st Cir.1985).

Defendant Entwisle’s claim regarding his alcoholism and memory loss falls far short of meeting this burden. Entwisle failed to present any evidence that he would have been in a better position to defend himself in 1981 or 1982 than in 1985, i.e. that his memory loss is any more a result of the delay than of his alcoholism at the time. If one finds Entwisle’s testimony to be credible, it follows that he would have had no better memory of these events even if he were indicted immediately. If his testimony as to memory loss is not to be believed, Entwisle has no basis for his claim. Either way, the evidence proves nothing material to his due process claim. In short, Entwisle has failed to show any prejudice due to the delay. Furthermore the defendant has failed to produce even a scintilla of evidence that the government caused the delay to obtain a tactical advantage. Quite to the contrary, the government delay was occasioned by the need to obtain the cooperation of Dr. Hershenow and Dr. Rosenthal. Dr. Rosen-thal, himself, subsequent to his mail fraud conviction, was indicted for perjury on September 26, 1984. After he plead guilty to this perjury indictment on November 20, 1984 and was sentenced on December 21, 1984, he then agreed to testify truthfully as a government witness.

With regard to Entwisle’s second claim, it is clear that the motion must fail for several reasons. Initially, the defendant has failed to produce any evidence as to changes in the relevant testimony. Assuming that material changes did occur, there is no indication that the delay caused “actual impairment of witnesses’ recollections.” Marler, at 214. Rather, any alteration in testimony is likely the product of changed circumstances or agreements between the government and witnesses. The due process rule propounded in Marler is designed to protect defendants from conviction by the testimony of prosecution or defense witnesses whose memories are severely flawed by the passage of time. Id. Where testimony changes due to other reasons, such as an agreement between the government and a witness, the adversary process is adequate to protect the defendant’s rights. See United States v. Dailey, 759 F.2d 192, (1st Cir.1985). As to the second prong of the Marler test, I again note that there is no evidence whatsoever that the government delayed the indictment to gain a tactical advantage.

Accordingly, it is ORDERED:

That defendant Entwisle’s motion to dismiss should be, and, hereby is denied.


author: ELFYIN, District Judge.

text:
    MADER CONSTRUCTION CORPORATION, Plaintiff, v. UNITED STATES DEPARTMENT OF LABOR, Riverview Apartments Company, Jack E. Christian Heating & Plumbing, Inc., R.A.N.J. International Construction, Ltd., Gary Kirton d/b/a Kirton Electric, Hakes Brothers Contractors, Inc., and Gross Plumbing & Heating Co., Inc., Defendants.
    No. Civ-83-819E.
    United States District Court, W.D. New York.
    April 12, 1985.

      Peter G. Ruppar, Buffalo, N.Y., for plaintiff.
    Joseph M. Guerra, III, Asst. U.S. Atty., Buffalo, N.Y., for defendants.
   MEMORANDUM

ELFYIN, District Judge.

This Memorandum supports and supplies the rationale underlying this Court’s Order of October 30, 1984.

Plaintiff (“Mader”) has alleged in its Complaint that it was contacted and informed by the United States Department of Labor and the Department of Housing and Urban Development (“HUD”) September 6, 1979 that these agencies were commencing an investigation into possible violations of the Davis-Bacon Act, 40 U.S.C. § 276a et seq., and of the Contract Work Hours and Safety Standards Act, 40 U.S.C. § 327 et seq., in connection with a project known as the Riverview Apartments. At the time, Mader was the general contractor for this development, a non-union housing project financed in part by HUD. The Department of Labor and HUD allegedly advised Mader that, as general contractor, it would be required to remit to the Department of Labor $79,030 out of a $90,000 job payment escrow fund being withheld from Mader by defendant Riverview Apartments Company (“Riverview”) pending the outcome of the agency wage underpayment investigations.

On September 25, 1979 Mader requested a hearing pursuant to 29 C.F.R. § 5.11(b) with respect to the Department of Labor’s allegations. Before such Department had responded, HUD requested that Riverview remit $79,030 out of the escrow fund to cover the wage underpayment claims. Mader contacted HUD and the Department of Labor to object to such remittance.

On April 14, 1980 Mader received a letter from an assistant administrator of the Department of Labor’s Employment Standards Administration, Wage and Hour Division, which stated that the Department was continuing its investigation and that Mad-er’s request for a hearing would be considered upon completion of the investigation. Mader again contacted the Department March 20, 1981 regarding its request for a hearing. On April 10, 1981 Mader was notified that the investigation files had been transferred to the solicitor’s office for review and referral for a hearing.

A December 5, 1981 Order of Reference granted Mader’s request for a hearing and referred the matter to the Chief Administrative Law Judge for appointment of a presiding officer. On or about February 11, 1982 Mader filed a motion to dismiss the pending administrative proceeding on the ground that the hearing was barred by the two-year statute of limitations contained in the Portal-to-Portal Act, 29 U.S.C. § 255. Mader’s motion was denied by the Administrative Law Judge (the “AU”) August 5, 1982. Mader then petitioned the Administrator of the Wage and Hour Division pursuant to 29 C.F.R. § 5.11(b). The Administrative Law Judge (“the AU”) Au-June 2, 1983.

Mader has commenced the instant action to review the Administrator’s decision. It seeks a declaratory judgment, the dismissal of the Department of Labor’s claims under the Davis-Bacon Act and Contract Work Hours and Safety Standards Act and recovery of the funds which had been withdrawn from the escrow account. The Department of Labor has moved to dismiss the Complaint due to Mader’s failure to exhaust the administrative remedies provided for in 29 C.F.R. § 5.11(b) and 29 C.F.R. Part 7. Mader contends that the decision of the Administrator is final for purposes of judicial review pursuant to 29 C.F.R. §§ 5.11(b) and section 10(c) of the Administrative Procedures Act (“the APA”), 5 U.S.C. § 704. Furthermore, Mader maintains that exhaustion of administrative remedies is not mandated in the ease at bar inasmuch as any further administrative proceedings would be futile.

The procedure-for resolution of disputes of fact or law concerning payment of prevailing wage rates, overtime pay or proper classification had been set forth in 29 C.F.R. § 5.11(b). This section provided in part:

“The administrative law judge’s decision shall be sent to the interested parties and shall be final unless a petition for review of the decision by the Administrator of the Wage and Hour Division is filed by any such parties * * *.
“The Administrator’s decision shall be subject to further review by the Wage Appeals Board, as it may provide in its discretion.”

While it is true that under 29 C.F.R. Part 7, the Wage Appeals Board has discretionary jurisdiction to hear and decide appeals concerning questions of law • and fact from final decisions under Parts 1, 3 and 5, this discretionary authority does not abrogate a party’s duty to pursue administrative remedies.

FTC v. Standard Oil Co. of Cal., 449 U.S. 232, 101 S.Ct. 488, 66 L.Ed.2d 416 (1980) (“Standard Oil ”), provides guidance in determining the finality vel non of agency action and therefore the availability of judicial review. Although the particular issue therein was whether the issuance of a complaint by the Federal Trade Commission (“the FTC”) was final agency action subject to judicial review before administrative adjudication had concluded, the Court’s discussion of the notion of finality as previously addressed in Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), is instructive. In Standard Oil, the respondent company had filed a complaint against the FTC in the United States District Court for the Northern District of California, alleging that the FTC had issued its complaint without having reason to believe that the company had been violating the Federal Trade Commission Act. The company sought an order declaring that the issuance of the complaint was unlawful and requiring that such be withdrawn.

The decision noted the distinction between the type of action deemed “final agency action” under Abbott Laboratories v. Gardner and the issuance of a complaint by the FTC.

“In Abbott Laboratories, for example, the publication of certain regulations by the Commissioner of Food and Drugs was held to be final agency action subject to judicial review or an action for declaratory judgment brought prior to any Government action for enforcement. The regulation required manufacturers of prescription drugs to print certain information on drug labels and advertisements. The regulations were ‘definitive’ statements of the Commissioner’s position * * * and had a ‘direct and immediate ... effect on the day-to-day business’ of the complaining parties. * * * They had ‘the status of law’ and ‘immediate compliance with their terms was expected.’ ” 449 U.S. at 239-240, 101 S.Ct. at 493.

The Court found in Standard Oil that the issuance of the complaint therein by the FTC was materially different from the issuance of an agency regulation and was neither a final agency action nor otherwise directly reviewable. Similarly, in the case at bar I find that the Department of Labor’s denial of Mader’s motion to dismiss the administrative hearing is an interlocutory order, not subject to judicial review under section 10(c) of the APA. This action by the Department of Labor was merely a determination that the agency will reach the merits of the case. While there remains the problem relating to the $79,030 withheld out of the job payment escrow fund, the very reason for such fund is to cover situations such as the one here presented. The legal and practical effect of the agency’s denial of the motion to dismiss is actually de minimis.

The case at bar is similar to Sterling Drug v. Weinberger, 384 F.Supp. 557 (S.D.N.Y.1974), aff'd, 509 F.2d 1236 (2d Cir.1975), wherein the district court was asked to review agency orders on the theory that the agency was barred by the doctrine of res judicata and/or the doctrine of collateral estoppel. It was held that a denial of a motion to dismiss a complaint on the ground of res judicata was not appealable. That court explained that

“had plaintiffs first presented the res judicata argument before the FDA and had it been rejected there, this Court does not believe that plaintiffs could have then immediately appealed this determination to the court of appeals. They should not be permitted to avoid this result simply by sidestepping agency consideration and raising their defense directly before a district court. Instead, the proper procedure is for the plaintiffs to raise this defense in the administrative proceedings and then have the agency determination on this issue (should it be' contrary to plaintiffs’ claim) reviewed on the appeal to the court of appeals from whatever adverse final decision the FDA may make with respect to the withdrawal proceedings.” (Id. at 561.)

Likewise, in the instant case, Mader may not properly sidestep 'a hearing and final order on the merits by approaching this Court on the statute of limitations defense. While plaintiff may assert such defense at a hearing before the Wage Appeals Board, and ultimately in a court, if it should eventually appeal an adverse final order on the merits under section 10(c) of the APA, it would be improper for this Court to rule at this time on the applicability vel non of the Portal-to-Portal Act’s statute of limitations.

Plaintiff has cited United States v. Consolidated Mines & Smelting Co., Ltd., 455 F.2d 432 (9th Cir.1971), for the proposition that

“intra-agency appeals or taking the last step in such appeals was not a prerequisite of judicial worth unless a statute governing the agency’s action requires exhaustion or determines finality, or unless the agency had by its own rule, provided that all agency procedures must be exhausted and that the decision appealed, from remains inoperative pending appeal.” Id. at 451.

However this case is of little help to plaintiff inasmuch as 29 C.F.R. § 5.11(b) clearly sets out the required procedure for appeals within the Wage and Hour Division and furthermore because the above-quoted statement was dicta and was not intended to be broadly applied.

“We also hold that our decision today applies only to mining claims and does not apply to the rule of exhaustion of remedies as it may appear in other decisions of this court, involving other agencies.” Id. at 452.

The instant case clearly calls for the application of the exhaustion doctrine. Judicial intervention into the agency’s processes may deny the agency an opportunity to correct its own mistakes, if any there be, and to apply its expertise. Standard Oil, supra, 449 U.S. at 242, 101 S.Ct. at 494. A failure to exhaust administrative remedies would also lead to a piecemeal process of review which would be inefficient and would often involve a court in issues which, upon completion of the agency process, might prove to be no longer viable. See, McGee v. United States, 402 U.S. 479, 484, 91 S.Ct. 1565, 1569, 29 L.Ed.2d 47 (1971).

Mader has further contended that, assuming it had failed to exhaust administrative remedies, such exhaustion would be futile in this case. Plaintiff has cited two recent decisions of the Wage Appeals Board, In the Matter of Glenn Electric, 78-DBA-119-124 (March 22, 1983), and Matter of J. Slotnik, 80-DBA-164 (March 22, 1983), as indications of a firm policy of the Wage Appeals Board which are adverse to plaintiff’s position and which assertedly renders futile any appeal of the statute of limitations issue to the Wage Appeals Board.

It has been noted that “the exhaustion requirement contemplates an efficacious administrative remedy, and does not obtain when it is plain that any effort to meet it would come to no more than an exercise in futility.” Lodge 1858, American Federation of Gov. Emp. v. Paine, 436 F.2d 882, 896 (D.C.Cir.1970). Exhaustion is “futile” when the administrative remedies do not include the remedy sought by the claimant, or when the agency has already ruled on the very issue raised before the court. See McKeese v. Board of Education, 373 U.S. 668, 83 S.Ct. 1433, 10 L.Ed.2d 622 (1963); Eisen v. Eastman, 421 F.2d 560 (2d Cir.1969), cert. denied, 400 U.S. 841, 91 S.Ct. 82, 27 L.Ed.2d 75 (1970); White v. Shull, 520 F.Supp. 11 (S.D.N.Y.1981). However the case at bar comes before this Court seeking review of the agency’s denial of a motion to dismiss the administrative proceeding. • Despite the holdings of Glenn Electric and J. Slotnik, I find that the appeal to the Wage Appeals Board of a determination adverse to Mader would possibly not be futile. To hold otherwise would not only ignore the function of the Wage Appeals Board but would interrupt the administrative process prior to a hearing and a ruling on the merits.

Mader has not argued that it will suffer irreparable injury, or that the eventual administrative remedy would be inadequate. Moreover, the Department of Labor could find that there have been no violations of the Davis-Bacon Act or Contract Work Hours and Safety Standard Act.

Accordingly the Department of Labor’s motion to dismiss the Complaint was earlier granted.

      . 29 C.F.R. § 5 was revised as of July 1, 1983. The pertinent provisions are now set forth in 29 C.F.R. § 5.11(c).

      . Such section provides:
      "Agency action made reviewable by statute and final agency action for which there is no other adequate remedy in a court are subject to judicial review. A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action. Except as otherwise expressly required by statute, agency action otherwise final is final for the purposes of this section whether or not there has been presented or determined an application for a declaratory order, for any form of reconsideration, or, unless the agency otherwise requires by rule and provides that the action meanwhile is inoperative, for an appeal to superior agency authority.”


author: GEORGE E. WOODS, District Judge.

text:
    NORTH RUSH ASSOCIATES, v. Samuel R. PIERCE, Jr.
    Civ. No. 82-71581.
    United States District Court, E.D. Michigan, S.D.
    April 12, 1985.

      Richard D. Bisio, Southfield, Mich., for plaintiff.
    Ellen E. Christensen, Asst. U.S. Atty., Detroit, Mich., for defendant.
   MEMORANDUM OPINION AND ORDER

GEORGE E. WOODS, District Judge.

I.

The Croydon Hotel is a 440-room building located at North Rush and Ontario Streets in downtown Chicago, just one block off of Michigan Avenue and Chicago’s “Miracle Mile” of upscale stores and office buildings. Built approximately 45 years ago, it served as an apartment building/hotel to accommodate performers on the vaudeville circuit. With demand for lodging for vaudeville performers being what it is, the Croydon could obviously not be expected to return to its former use, but plaintiff North Rush Associates did expect to return the hotel to some of its former glory by redesigning the 440. rooms into 330 full service dwellings. What plaintiff had in mind for this building was to perform a “gut rehab” which would encompass removing all the old components of the building and renovating the interior from scratch. In effect, as one witness testified, this plan would place a new building within the superstructure of the old. From the outside, the Croydon would look much like it did in its halcyon days of greasepaint and seltzer bottles; from the inside, however, the trappings would be more in keeping with this era of hypo-allergenic makeup and mineral water.

Plaintiff filed an application, together with an application fee of $23,163.80, with the Department of Housing and Urban Development (HUD) in the hope of obtaining a conditional commitment for mortgage insurance under HUD’s Section 221(d)(4) multifamily rehabilitation program. This program is- basically an insurance program to protect a lender from losing money on a project. The application (Exhibit 1), filed on about November 5, 1980, also sought to qualify for a permanent mortgage at an interest rate below the prevailing market rate pursuant to the Government National Mortgage Association (GNMA) Tandem Program.

Under the Tandem Program, the original lender (in this case Percy Wilson Mortgage and Finance Corporation) would hold the mortgage at a market interest rate (13.5%) during the construction on the project and would sell the mortgage to the government agency upon completion of construction. Interest at below market rates would begin with HUD’s final endorsement at the completion of construction.

Both the completion of construction and HUD’s final endorsement are prerequisites to qualifying for the low interest rate. To receive the final endorsement, a developer has to have paid its bills and must certify that the project is lien-free. At the final closing, a HUD representative physically endorses the mortgage note and the interest rate is then reduced.

Represented by one of its general partners, Stephen Hayman, and its attorney, Sheldon Winkelman, plaintiff attended a pre-application meeting with HUD’s Chicago personnel. Also attending this meeting were George Gray, a multifamily housing representative with HUD, and Andrew •Erkes of the Percy Wilson Mortgage Company. Sheldon Winkelman testified at trial that Gray, who was responsible for the project from beginning to end, was “somewhat skeptical” over plaintiff’s ability to complete the project at its projected cost. According to Winkelman, plaintiff considered HUD’s negative reaction and reevaluated its position, but arrived at a renewed conviction that the project could be completed and marketed.

Winkelman also testified that plaintiff submitted a second application (Exhibit 3) after later discussions with Gray and Erkes suggested it would have priority obtaining a low interest rate if a subsidy program were instituted in the building. Plaintiff accordingly filed an application to have approximately 20% of the dwelling units occupied by recipients of HUD subsidies. Winkelman was concerned that having two applications “floating around” HUD might delay processing, but Gray and Erkes assured him that the processing would not be slowed down. No evidence was introduced at trial to suggest that this procedure did slow down the processing.

Timing was critical to the project because plaintiff was faced with an eligibility deadline of October 30, 1981 in order to qualify for financing. By that time, HUD would have to have issued a conditional commitment for mortgage insurance.

When an application of this nature is received by HUD, the first step in its processing is a review by a HUD official to ensure that all the appropriate papers have been submitted and the fee paid. Following this review, the application is customarily routed through four branches of the local-HUD office: architectural, cost, valuation and mortgage credit. The first branch, the architectural section, has to be satisfied that the building is sound and that the projected unit sizes are acceptable. Review in this branch might also include a visit to the site of the project. The cost department looks at the proposed cost of the project and determines whether or not it is reasonable. The valuation department, in the words of Winkelman, “goes into the arithmetic of the project” to determine “what’s left after renovation.” Finally, the mortgage credit department looks at the party’s finances to determine whether it has the ability to complete the project.

In addition to the above steps in the process, there are also various levels at which an applicant can enter the process: feasibility, conditional commitment or firm commitment. In an attempt to expedite its application and demonstrate its resolve on this project, plaintiff chose to apply at the conditional commitment stage, thus bypassing the feasibility stage for which no fee is charged.

The parties disagree over just how much trouble this project encountered in the architectural department. Defendant points to the site engineering comments (Exhibit 27) which noted a density of living units far exceeding HUD guidelines and the lack of either on- or off-site parking as indications that the project could not pass muster in the architectural department. Plaintiff argues that these comments were not eonclu-sive as to the department’s assessment of the project and points instead to two HUD worksheets (Exhibit 32, p. 5, § J; Exhibit 33, p. 4, § J) on which two different HUD appraisers had approved the adequacy of the site. Because the Court concludes that this department’s assessment of the project was not the determinative factor in HUD’s eventual rejection of plaintiff's application, it does not view the resolution of this dispute as crucial to the ultimate issues in this case. It should be sufficient to note at this point that the architectural department identified two potential problems with this project which were apparently not insurmountable.

Of greater concern was the valuation department’s negative reaction to plaintiff’s proposed rental income and expenses. Winkelman testified at trial that HUD lowered plaintiff’s income projections and raised its expense estimates, the net effect of which would be to reduce the amount of mortgage money available to plaintiff.

HUD’s disagreement with plaintiff’s income and expense figures involved five areas of concern:

(1) Management expense: HUD estimated this expense to be $87,120.00, based on 5% of effective gross income. Plaintiff argued that a 3% expense ($55,062.00) was more realistic because the proposed management agent, The Hayman Corporation, was owned by two of plaintiff’s sponsors, Stephen and Alan Hayman. This “identity/relationship between sponsor and management agent” justified plaintiff’s lower estimate of this expense, it argued.

(2) Elevator maintenance: HUD estimated this expense to be $32,240.00; plaintiff’s estimate budgeted $13,473.00. Plaintiff argued that, among other things, the automation of the freight elevator would reduce this cost.

(3) Insurance: HUÍ) estimated $36,-300.00 for this expense; plaintiff estimated $14,000.00 on the strength of a quotation from an insurance agent.

(4) Real estate taxes: HUD’s estimate of $287,708.00 was almost $83,000.00 higher than plaintiff’s. Plaintiff challenged this discrepancy chiefly on the ground that HUD had used erroneous “comparables.”

(5)Utilities: Plaintiff’s estimate of $74,-655.00 was just under one-half of the HUD estimate for this category. (Exhibit 4).

Upon being informed of HUD’s position on these areas of dispute, Winkelman attempted to convince HUD’s Chicago office that a mistake had been made. He spoke to George Gray, who offered to do his best to set up a meeting to discuss these issues. A meeting was arranged between Winkel-man, Hayman, Erkes, Gray and Leo Singer, the head of the valuation branch. According to Winkelman, it was “a very unsatisfactory meeting,” as Gray informed him that Singer was unable to attend. When Singer walked by, Winkelman asked him why he could not attend and Singer replied that he was too busy and that his mind was already made up. At Winkelman’s request, the meeting was rescheduled to a time when Singer could attend.

Winkelman came to the rescheduled meeting armed with additional data (Exhibit 4) in support of plaintiff’s position. This. material was presented to Gray, Singer and Benjamin Tessler, deputy multifamily branch chief, without any apparent change in HUD’s position.

Winkelman testified that he continued to press Gray for expeditious treatment of the application and Gray responded that the project was still being reviewed, but it was unlikely HUD’s position would change. Andrew Erkes also testified that he then became aware that HUD was prepared to reject the application. He noted that plaintiff sought to delay the issuance of the rejection letter from the Chicago office out of hope that Washington would overrule the Chicago office’s decision. George Gray also testified that his office was prepared to reject the application in May of 1981 but held off at plaintiff’s request in an attempt to save plaintiff the costs which would result from reopening the application.

The tree having borne no fruit in Chicago, plaintiff decided to take its case to Washington. Winkelman testified that Hal Barron, a partner in North Rush Associates, arranged a meeting in Washington, D.C., with Stephen Larkin, a deputy assistant secretary for congressional relations at HUD. Larkin testified that he was contacted by his friend, Barron, who told him plaintiff had been having problems with this project and wanted him to speak with Winkelman.

Larkin arranged a meeting in September or early October of 1981 and attempted to line up people with the most technical knowledge about the program. Winkelman presented his case at the meeting, Larkin recalled, and the “technical people” asked questions about the project; but as far as Larkin recollected, there was no substantive decision other than the agreement to review the materials and get back to Wink-elman.

Lloyd Wright, a senior appraiser in HUD’s central office, conducted the review of plaintiff’s material. He issued a four-page memorandum (Exhibit 25) which was used as the basis for another memorandum embodying the final conclusions of HUD’s central office. The central office concluded that, with one exception, the Chicago office’s estimates were reasonable. Pertinent provisions of this memorandum follow:

1.Management expense
The sponsor and management agent show an identity of interest. The sponsor proposes to manage the property at 3 percent of Effective Gross Income, which is below the typical prevailing rate. Our experience has been that when an agent accepts a fee less than market, there is a cut back in services. An excerpt from Handbook 4480.1, taken out of context, was used by the sponsor as support for this lower fee. The sentence immediately following the excerpt quoted by the sponsor says, ‘Such expense should be in reasonable relationship to contract management cost or the type management typically employed.’ Should HUD, because of below standard management, foreclosure, or change of ownership during the term of the proposed mortgage find it necessary to hire competent management, the sponsor’s proposed amount would be inadequate and there would be insufficient funds generated from the rents to bear the additional expense. This would contribute to an underwriting loss for the Department. Accordingly, we cannot accept the sponsor’s proposed fee.
2. Elevator maintenance
The sponsor submitted a letter from a maintenance company that updates an elevator maintenance contract originally executed in 1979 for the Croydon Hotel. The documentation as submitted reflects an amount that would be charged for maintenance to be performed during ‘regular working hours of the regular working day of the elevator trade’ but does not reflect charges outside of the alluded to regular working hours. In fact, reference to overtime rates was intentionally crossed out.
Accordingly, the sponsor’s estimate is not supported. Since elevators may breakdown [sic] at night and on weekends, some provisions must be made in the contract to cover services during non-regular working hours. If it can be conclusively demonstrated that overtime and all other incidental costs are included in the quoted amount, we could accept it for processing purposes.
3. Insurance
A letter from an insurance agent was submitted stating that the sponsor’s master contract, which appears to include coverage of other property owned by the sponsor, would be increased $14,000 in order to cover the Croydon property. The possibility exists, that because of other business the sponsor may have with the insurance firm, a discount rate is given. If it can be demonstrated that this is a competitive rate, it would be acceptable for processing.
4. Real estate taxes
A letter from an attorney was submitted that gave a statement of opinion as to what taxes would be. No data was furnished to support this opinion. The sponsor also submitted previously processed HUD cases to support, on a square foot basis, his estimate. Neither the letter which is simply an unsupported opinion, nor the previously processed cases, showing processing dates as far as 6-79, are considered adequate documentation.
5. Gas for cooking, hot water and common area heat
The sponsor submitted a utility analysis prepared by his architect. The analysis did not specifically address the commercial area heat. However, the procedure used to arrive at the gas estimate is considered reasonable and indicates, together with the HUD expense data, that the area office’s estimate may be high on this item by approximately $50 PUPA. In our opinion, based on both the sponsor’s and HUD’s data, an estimate of $200 PUPA before trend is considered reasonable.

(Exhibit 26).

Additional considerations raised by this exhibit will be discussed elsewhere in this Opinion.

The central office’s analysis was reviewed by Edward Winiarski, chief multifamily appraiser, who made the notation, “NO/UNLESS” on the document following the headings for elevator maintenance, insurance and real estate taxes. According to Winiarski’s testimony, this was meant to encourage plaintiff to come back with additional information to support its position.

Plaintiff construes the evidence as having demonstrated that this later analysis was never communicated to the Chicago HUD office or to plaintiff’s representatives themselves. This conclusion is not borne out by the testimony of Sheldon Winkel-man, who noted that Stephen Larkin called him shortly after the Washington meeting to inform him that some but not all of the adjustments plaintiff sought had been made. Winkelman also testified that Lar-kin told him the matter would- be returned to Chicago for processing in light of the deadline. According to Winkelman, however, he never received a response from George Gray when he called to ask Gray where the application stood. This testimony is inconsistent with Winkelman’s earlier statement that his relationship with Gray was excellent, and the Court is not persuaded that the substance of HUD’s rejection was not communicated to plaintiff (through Winkelman) by either Stephen Larkin or George Gray.

The evidence does show, as plaintiff suggests, that Exhibit 26 was not received by HUD’s Chicago office. Plaintiff would use this fact to suggest that defendant thus erred because (1) plaintiff could have supplied the information contemplated by Win-iarski’s “NO/UNLESS” notation had such information been requested, and (2) plaintiff could have provided additional equity in the project if HUD had come forward with a mortgage in an amount less than was originally sought. However, plaintiff introduced nothing at trial to convince the Court that many of its figures were not based on the “sweetheart deals” it had allegedly managed to secure for such expenses as insurance and elevator maintenance. Nor is the Court convinced that the non-receipt of Exhibit 26 by the Chicago HUD office' prevented plaintiff from being able to accept a smaller loan by providing additional equity. The testimony is clear that plaintiff’s principals were in frequent contact with Chicago HUD officials throughout the negotiations in this matter. Andrew Erkes of Percy Wilson Mortgage Company even testified that, beside his one to two contacts per week on this matter, plaintiff was also in touch with HUD officials frequently, a practice he no longer tolerates on the part of his clients because “third party communications tend to be erroneous.” Given this pattern, the Court cannot accept that plaintiff’s representatives and George Gray suddenly fell silent as the deadline approached. On the contrary, the Court is persuaded that sufficient lines of communication existed for plaintiff, either with Lar-kin or Gray, so that the substance of the parties’ respective positions was made known to the other in a timely fashion. In short, the allegation that plaintiff heard nothing until it received a rejection letter after the deadline had passed is not credible.

II.

Defendant suggests as a conclusion' of law that this Court lacks subject matter jurisdiction over this case because, under the Tucker Act, 28 U.S.C. § 1346(a)(2), exclusive jurisdiction rests with the Claims Court. This assertion was considered and rejected by this Court and by the judge originally assigned to this case. The Court accordingly relies on its opinion from the bench, rendered on October 11, 1984, in dismissing this argument.

The Court does agree with defendant, however, that its power of review in this case is not unfettered and that the standard of review is the “narrow abuse of discretion” standard governed by § 701(a)(2) of the Administrative Procedures Act, 5 U.S.C. § 701(a)(2). See, e.g., Rank v. Nimmo, 677 F.2d 692, 699 (9th Cir.1982).

In some respects, this Court’s present role can be profitably compared with its function in reviewing the actions of another executive department, the Department of Health and Human Services, in suits brought by claimants who have been denied Social Security disability benefits. While the analogy is not perfect because the standard of review in those cases is governed by another statute, 42 U.S.C. § 405(g), calling for the Court to uphold the department’s decision as long as it is supported by substantial evidence, there are some similarities.

In a Social Security case, a claimant might contend that he or she is disabled and thus entitled to benefits on the strength of either exertional or non-exer-tional impairments. A typical exertional impairment might be a bad back or some other disorder which prevents a person from lifting a given amount of weight; a non-exertional impairment might be a psychological disorder or sensitivity to environmental pollutants which restricts the individual’s ability to work. In the case of purely exertional impairments, the Secretary is permitted to rely on a “grid,” 20 C.F.R. § 1501 et seq., in order to take administrative notice of the existence of jobs available to a claimant of a certain age, education and prior work experience with a given functional capacity. In the case of a claimant with non-exertional impairments or a claimant whose characteristics do not identically match the description in these medical-vocational guidelines, a non-grid determination must be made, usually by resorting to expert testimony. See, e.g., Kirk v. Secretary of Health and Human Services, 667 F.2d 524, 528 (6th Cir.1981).

In effect, plaintiff’s complaint is similar to that of a Social Security claimant who challenges the Secretary’s reliance on the “grid” when a more particularized review was in order. Plaintiff’s challenges to some of defendant’s conclusions, for example, take issue with HUD’s method-of estimating costs and argue that the peculiarities of the Croydon project required the evaluation of those costs on a square footage basis rather than HUD’s “per unit” method. The difference between this plaintiff and the hypothetical Social Security claimant, however, is that plaintiff here has failed to provide any authority which would justify this Court’s reviewing the wisdom of defendant’s methods and conclusions. Put simply, this Court cannot agree that it was an abuse of defendant’s discretion to use methods of measurement which differed from those urged by plaintiff.

Further, defendant has explained to this Court’s satisfaction its reasons for not accepting plaintiff’s figures on such expense elements as insurance and management fees. Assuming arguendo that plaintiff was able to secure attractive rates oh these elements through “sweetheart deals” or self-management, the Court accepts defendant’s position that it must still estimate expenses at market rates to be assured of its ability to “carry” the project in the event of plaintiff’s default or removal from the project.

These considerations, taken in conjunction with such other findings as defendant’s conclusion that plaintiff was overly optimistic in projecting its occupancy rate, suggest to the Court that defendant did not abuse its discretion in rejecting plaintiff’s application.

Plaintiff’s contention that defendant breached several implied obligations which it assumed is not supported by the law or the facts of this case. As to the law, the Court agrees with defendant that HUD Handbooks “contain mere ‘instructions,’ ‘technical suggestions,’ and ‘items for consideration,’ ” Thorpe v. Housing Authority, 393 U.S. 268, 275, 89 S.Ct. 518, 522, 21 L.Ed.2d 474 (1969) (footnote omitted), which do not rise to the level of legally enforceable duties. See also Harrison v. Housing Authority of College Park, 445 F.Supp. 356, 359 (N.D.Ga.1978), aff'd, 592 F.2d 281 (5th Cir.1979). It is also worth noting that, despite the provision in HUD Handbook 4445.1 that an application for a conditional commitment “shall be issued within 30 days of receipt of commitment application,” all the witnesses with the exception of Winkelman noted their understanding that this particular application could take from six months to a year to process.

Having been responsible for delaying the issuance of a rejection letter in early 1981, it is somewhat disingenuous for plaintiff to now complain about the timing of such a letter or to contend that the application was not reviewed on the merits. The record demonstrates that defendant gave plaintiff’s application considerable attention, both in Chicago and Washington, and made all reasonable efforts to consider the project on the merits from plaintiff’s perspective. The Court is persuaded that the absence of Benjamin Tessler’s signature on the fee-earned memorandum was, as Tes-sler testified it may have been, an administrative oversight, and that there was no basis for the return of plaintiff’s application fee.

For these reasons, judgment shall be entered for defendant.

So ordered.


text:
    Melissa CHRISTENSEN, Plaintiff, v. Patrick K. PHELAN, individually and as a police officer; Joseph Black, individually and as a police officer; City and County of Denver, Colorado, Defendants.
    Civ. A. No. 84-K-309.
    United States District Court, D. Colorado, Civil Division.
    April 15, 1985.

      Jeffrey A. Bogue, Leventhal & Bogue, Denver, Colo., for plaintiff.
    Jonathan A. Cross, Halaby & McCrea, Denver, Colo., Marc Colin, Bruno & Bruno, Lakewood, Colo., for defendants.
   MEMORANDUM OPINION AND ORDER

KANE, District Judge.

Plaintiff alleges that on May 24,1983 she was arrested and beaten by Denver Police officers Patrick K. Phelan and Joseph Black. She seeks recovery from officers Black and Phelan for deprivation of her constitutional rights pursuant to the provisions of 42 U.S.C. § 1983. The complaint also seeks recovery under various pendent state tort claims of negligence, assault, battery, outrageous conduct and punitive damages. Plaintiff explicitly asserts no federal claims against the City and County of Denver. Plaintiff does, however, allege that the city is directly liable for its own negligence in hiring, supervising and retaining Phelan and Black. The complaint also alleges that the city is indirectly and vicariously liable for the acts of its employees. Plaintiff moves to amend the pre-trial order to include this final claim. The motion to amend is granted.

The City and County of Denver has moved for judgment on the pleadings pursuant to the provisions of Rule 12(c), Fed. R.Civ.P. Denver argues that there are no allegations supporting this court’s jurisdiction over the city. Alternatively, in its brief Denver argues that it is immune from suit under the law of the State of Colorado.

When a federal court’s subject-matter jurisdiction is based upon a federal question, the court possesses the power to exercise pendent jurisdiction over state law claims if two conditions are met. First, “[t]he federal claim must have substance sufficient to confer subject matter jurisdiction on the court.” Second, “[t]he state and federal claims must derive from a common nucleus of operative facts, ... such that [plaintiff] would ordinarily be expected to try them all in one judicial proceeding.” United Mine Workers of America v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed.2d 218 (1966). If such power exists, then the grant of pendent jurisdiction is within the sound discretion of the trial court giving due consideration to issues of “judicial economy, convenience and fairness to the litigants.” Id. at 726, 86 S.Ct. at 1139. However, if Congress has expressly or impliedly negated the exercise of pendent jurisdiction, the federal court is without power to decide the pendent claims. See Aldinger v. Howard, 427 U.S. 1, 17-18, 96 S.Ct. 2413, 2421-2422, 49 L.Ed.2d 276 (1976).

Plaintiff presents a substantial federal claim against Phelan and Black alleging that while acting under the color of state law they deprived her of rights, privileges and immunities secured by the Constitution. See Wise v. Bravo, 666 F.2d 1328, 1331 (10th Cir.1981). Plaintiff, however, asserts no independent basis for subject matter jurisdiction over the claims asserted against the City and County of Denver. She, therefore, asks that I exercise pendent party jurisdiction over Denver. The Tenth Circuit has recognized pendent party jurisdiction. Transok Pipeline Co. v. Darks, 565 F.2d 1150, 1154-55, (10th Cir.1977), cert. denied, 435 U.S. 1006, 98 S.Ct. 1876, 56 L.Ed.2d 388 (1978). Generally, the same factors that are relevant to the exercise of jurisdiction over pendent claims apply to the exercise of jurisdiction over pendent parties. See 13B Wright, Miller and Cooper, Federal Practice and Procedure § 3567.2 at p. 160 (2d Ed.1984).

Plaintiff’s claims against the officers themselves and against the city under a theory of respondeat superior derive from a common nucleus of operative facts which would commonly be examined in one proceeding. Thus, this court has the power to exercise pendent jurisdiction under the Gibbs test. However, as in Aldinger:

The question here, which it was not necessary to address in Gibbs or Osborn [v. Bank of the United States, 9 Wheat. 738, 6 L.Ed. 204 (1824)], is whether by virtue of the statutory grant of subject-matter jurisdiction, upon which the [plaintiff’s] principal claim against the [police officers] rests, Congress has addressed itself to the party as to whom jurisdiction pendent to the principal claim is sought. And it undoubtedly has done so.

427 U.S. at 16, 96 S.Ct. at 2421. The assertion of a state law claim of vicarious liability in conjunction with a § 1983 claim has the effect of expanding the scope and coverage of federal law beyond that intended by Congress. The Supreme Court has explicitly ruled that a municipality cannot be sued under § 1983 on a claim of vicarious liability. Monell v. Department of Social Services of the City of New York, 436 U.S. 658, 691, 98 S.Ct. 2018, 2036, 56 L.Ed.2d 611 (1978). Pendent jurisdiction should not be used as a tool to bring into federal court parties whom Congress sought to exclude. Aldinger, supra. See also, Kerby v. Commodity Resources, Inc., 395 F.Supp. 786, 790 (D.Colo.1975) (Pendent jurisdiction should not be used in an attempt to expand the scope of the remedy provided under federal law.) Thus, I decline to exercise jurisdiction over plaintiffs claims of indirect liability against Denver.

Plaintiffs claim that the city was negligent in its hiring and supervision of its police officers derives from facts separate and distinct from those relating to the actions of the officers themselves. Inquiry into the personnel practices of the city is relevant to the city’s liability, but is unrelated to the liability of Phelan and Black. Thus, under the threshold test layed out in Gibbs, supra., this court does not have the power to exercise pendent jurisdiction over plaintiffs claims of direct liability against the city.

While I also find that the state claims asserted against Phelan and Black derive from a similar factual context as plaintiffs section 1983 suit, I decline to exercise pendent jurisdiction over these claims. Several factors compel this conclusion. First, many of the common law claims, particularly outrageous conduct, are not grounded in sure-footed readings of the applicable law by state courts. Gibbs, 383 U.S. at 726, 86 S.Ct. at 1139. Second, consideration of divergent state claims raised in the context of a section 1983 suit will likely lead to jury confusion. Id. at 727, 86 S.Ct. at 1139. Third, the state claims tend to expand the scope of the coverage and remedy provided for under section 1983. Kerby, 395 F.Supp. at 790. Fourth, because it “appears that the state issues substantially predominate ... in terms ... of the remedy sought, the state claims may be dismissed without prejudice and left for resolution to state tribunals.” Gibbs, 383 U.S. at 726-7, 86 S.Ct. at 1139. Finally, I note that plaintiff could bring this suit in state courts, which, as courts of general jurisdiction, are free to consider all federal and state claims.

It is ORDERED that:

1.plaintiffs motion to amend the pretrial order is granted;

2. the City and County of Denver’s motion to dismiss is granted; and

3. sua sponte, all pendent state claims asserted against Phelan and Black are dismissed.


author: JAMES McGIRR KELLY, District Judge.

text:
    FEDERAL DEPOSIT INSURANCE CORPORATION and Continental Illinois National Bank and Trust Company of Chicago v. WH VENTURE v. HALL MANAGEMENT CORPORATION, Hall Real Estate, Inc., and Hall Real Estate Group.
    Civ. A. No. 84-5673.
    United States District Court, E.D. Pennsylvania.
    April 15, 1985.

      Arthur R. Littleton, Frank A. Labor, III, Morgan, Lewis & Bockius, John C. Murphy, Jr., Gen. Counsel, Daniel W. Persinger, Douglas H. Jones, Deputy Gen. Counsels, Philadelphia, Pa., for Federal Deposit Ins. Corp.
    Judah I. Labovitz, Philadelphia, Pa., Richard Levy, Chicago, Ill., for Continental Illinois Nat. Bank & Trust.
    Steven A. Arbittier,. Philadelphia, Pa., for WH Venture.
   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

Presently before the court is WH Venture’s motion to dismiss the plaintiff, Federal Deposit Insurance Corporation (FDIC) as a party to this action. The defendant seeks to challenge the statutory validity of the FDIC’s action to infuse $4.5 billion in permanent financial assistance to the ailing and financially troubled Continental Illinois .National Bank and Trust Company of Chicago. . Upon careful consideration of the parties’ legal positions, I have concluded that WH Venture lacks standing to litigate the validity of the FDIC action and their motion will be denied.

PROCEDURAL HISTORY

This action was originally commenced in the Court of Common Pleas of Philadelphia County by Continental Bank to foreclose on a mortgage issued to WH Venture. In June, 1981, Continental Bank entered into a construction loan agreement with the defendant. The loan was used to develop high rise condominium units in a prime center city Philadelphia location. It appears from the pleadings and answers thereto that the defendant failed to meet the principal and interest payments' when they came due in June, 1984. One month later, Continental instituted action in state court to foreclose on the property. W.H. Venture answered the complaint asserting, inter alia, that they had entered into various oral agreements that modified the express terms of the construction loan agreement. This non-performing loan to WH Venture was but one of many troubled loans that totaled almost $4.5 billion dollars contained in the bank’s loan portfolio. Continental Bank was in severe financial difficulty and the prospect of its imminent demise sent shock waves through the world financial community. Foreign governments began to withdraw billions in deposits from the bank and a severe liquidity crisis developed.

In May 1984, in a joint effort, the FDIC, the Federal Reserve Board and the Comptroller of the Currency injected new capital into the bank thereby stabilizing it. Realizing their effort was but a stop-gap measure, these three parties began to work on a permanent assistance plan to aid the ailing bank. In July 1984, the FDIC adopted a resolution providing for $4.5 billion dollars in permanent financial assistance to Continental Bank. Pursuant to this agreement, the bank would transfer “non-performing loans” with a book-value of $4.5 billion in exchange for the bank’s outstanding debt to the Federal Reserve Bank of Chicago. In addition the FDIC infused $1 billion in new capital into the bank. In accordance with this agreement, in September 1984, Continental Bank assigned the WH Venture loan to the FDIC. Shortly thereafter, the FDIC petitioned to join as a party in interest the mortgage foreclosure proceeding in state court. After the petition was granted, the FDIC removed the suit to federal court pursuant to 12 U.S.C. § 1819.

WH Venture contends that the assignment of its loan was not valid because the FDIC exceeded its statutory authority by the manner in which it transacted the permanent financial assistance program.

If the assignment was not valid, the FDIC should not be a party to the action and this court would be without jurisdiction over the subject matter of this suit. A more fundamental issue first needs to be resolved and that is whether WH Venture has standing to challenge the legality of the FDIC’s permanent assistance plan.

DISCUSSION

In order for WH Venture to invoke the “judicial power” of this court, they must first prove they have standing to challenge the legality of the FDIC’s assistance program. The doctrine of standing assures that the Article III “case or controversy” requirement is satisfied and thus the parties appear before the court having an actual or threatened injury capable of judicial redress. Frissell v. Rizzo, 597 F.2d 840, 843 (3d Cir.1979); cert. denied, 444 U.S. 841, 100 S.Ct. 82, 62 L.Ed.2d 54 (1979). Essentially, the standing doctrine works to prevent the federal judiciary from being converted into a “judicial version of college debating forum.” Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 473, 102 S.Ct. 752, 759, 70 L.Ed.2d 700 (1982).

The Valley Forge College decision is the United States Supreme Court’s most recent pronouncement on the standing issue. The Court held that in order for the party to assert standing, they must show that (1) they have suffered some actual injury or threatened harm; (2) which can be traced to the challenged action, and (3) which is capable of judicial redress. Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758.

Applying this criteria to the WH Venture claim, I find that they fail to meet the requirements and are without standing to challenge the validity of the financial assistance program.

WH Venture contends that it suffered an “injury” when its loan was assigned to the FDIC because of a federal law which works to divest WH Venture’s right to assert certain affirmative defenses against the FDIC. 12 U.S.C. § 1823(e) reads in pertinent part:

(e) Agreements against Interests of Corporation
No agreement which tends to diminish or defeat the right, title or interest of the Corporation in any asset acquired by it under this section, either as security for a loan or by purchase, shall be valid against the Corporation unless such agreement (1) shall be in writing, (2) shall have been executed by the bank and the person or persons claiming an adverse interest thereunder, including the obligor, contemporaneously with the acquisition of the asset by the bank, (3) shall have been approved by the board of directors of the bank or its loan committee, which approval shall be reflected in the minutes of said board or committee, and (4) shall have been, continuously, from the time of its execution, an official record of the bank, (emphasis added)

Its purpose is to protect the FDIC from unverifiable verbal agreements to alter or extinguish the contractual rights vested in the bank by way of its written agreement with the debtor. The FDIC has not yet asserted this section against WH Venture, but it is apparent that if they choose to do so the defendant will be precluded from introducing proof of any oral modification of the loan agreement as a defense to the foreclosure.

Naturally, any time a party to an action loses a potential defense, they can be said to be harmed. It is not, however, “harm” in a general sense that the law is concerned with, rather it is a specific legal harm that the court takes cognizance of in its grant of standing. The law, as enacted by Congress, is presumed to be known by WH Venture. Raley v. Ohio, 360 U.S. 423, 425, 79 S.Ct. 1257, 1259, 3 L.Ed.2d 1344 (1959). Once it entered into the loan agreement with an FDIC lending institution, it knew that only a written agreement modifying the terms could withstand a § 1823(e) defense by the FDIC. The fact that this verbal agreement cannot be resurrected to defeat the FDIC’s interest in the assigned loan was the very result Congress intended. I do not see how this result, which is the natural consequence of a congressional enacted law, can be said to illustrate the “harm or injury” suffered by the defendant. The “harm” that may result to WH Venture does not come from the assignment of the loan but rather from the defendant’s own failure to place in writing the.alleged modifications agreed to by the parties. WH Venture has suffered no legal harm by the imposition of Section 1823(e). Defendant has no more suffered a “legal harm” than has an unsecured creditor who petitions this court to enjoin a debtor from filing for bankruptcy because the creditor would be injured. Clearly, the court could not enjoin that action by law, yet the unsecured creditor is harmed by the filing since the automatic stay prevents him from securing his interest. His status as an unsecured creditor is an infirmity to collecting his debt. While harm in its most broadest sense can be said to have occurred, it is not a legal harm that is recognized under the law. Just as Congress intended to protect certain interests of the debtor, the interests of the FDIC are protected through federal banking laws as enacted by Congress. Any “harm” that WH Venture alleges, occurred not from the transfer of the loan to the FDIC, but from its failure to secure in writing the modification as required by § 1823(e). Even assuming, arguendo, that a legal harm is present, it did not result directly from the challenged action, which is the loan transfer. The harm flows directly from the defendant’s failure to protect its interest as required by federal law, 12 U.S.C. § 1823(e).

The defendant raises another legal reason for allowing it to challenge the validity of the loan transfer by citing the well settled rule of law that when suit is brought against a debtor (WH Venture) by a stranger to the contract (FDIC), the debt- or is entitled to proof that the plaintiff is the owner of the claim. This, of course, prevents the debtor from being subject to the original owner of the debt (Continental Bank) on the same liability in the event there was no actual assignment. Produce Factors Corporation v. Brown, 197 Pa.Super. 626, 179 A.2d 919, 921 (1962); Brown v. Esposito, 57 Pa.Super. 147, 42 A.2d 93, 94 (1945). Thus, an assignee of a contractual right must plead and prove the validity of his ownership claim.

The purpose of making the plaintiff prove the validity of the ownership of the debt is to protect the debtor from multi-lia-bility on the same instrument. Fed.R. Civ.P. 17 provides that the action shall be prosecuted in the name of the real party in interest. Because the only two interested parties in this instant action are before the court, WH Venture is not placed in danger of having to defend its liability on the loan agreement in a subsequent action.

If at the close of trial the defendant believes that the FDIC has not shown it was assigned the loan agreement by the Bank, that issue may be poised to the jury by way of special interrogatories. If, on the other hand, the FDIC asserts ownership and the Bank does not contest that claim, then I see no danger of subsequent litigation being instituted against WH Venture by the Bank on the liability issue of the debt. The issue of ownership is a far cry from the issue of whether the FDIC may infuse capital into - a failing bank.

In the end, the issue remains whether WH Venture has suffered a legal harm which can be traced to the challenged act. I think it has not and accordingly, I con-elude that its motion to dismiss will be denied. The remaining motions to compel eertain discovery and for an extension of time to file briefs are rendered moot.

      . 12 U.S.C. § 1819 reads in pertinent part:
      All suits of a civil nature at common law or in equity to which the Corporation shall be a party shall be deemed to arise under the laws of the United States, and the United States district courts shall have original jurisdiction thereof, without regard to the amount in controversy; ...