text:
    David W. GALVIN and Alice I. Galvin, Plaintiffs, v. FIRST NATIONAL MONETARY CORPORATION, Defendant.
    No. 84 CV 969.
    United States District Court, E.D. New York.
    Oct. 4, 1985.

      Stanford A. Schwartz, East Meadow, N.Y., Andrew J. Conner, James E. Black-wood, Erie, Pa., for plaintiffs.
    Simon, Deitch, Tucker, Weisman, Friedman & Trogan, Southfield, Mich, by Martin C. Weisman and Kenneth F. Silver, Walter, Consten & Schurtman, New York City by David B. Wolf, for defendant.
   MEMORANDUM AND ORDER

McLAUGHLIN, District Judge.

This is an action for damages brought by the Galvins on behalf of themselves and all other New York residents who, at any time between May 1981 and July 1982, invested through agents or representatives of defendant First National Monetary Corporation (“FNMC”) in “cash forward” contracts offered by FNMC. Plaintiffs allege violations of the Commodity Exchange Act (“CEA”), 7 U.S.C. §§ 6b and 6h, (Count I); violations of 7 U.S.C. § 6h and Reg. § 30.-03, (Count II); common law fraud (Count III); and violations of the Uniform Commercial Code (“UCC”) 2-302 (Count IV). Defendant moves to dismiss Counts I, II and IV for failure to state a claim. Fed.R. Civ.P. 12(b)(6). For the reasons set forth below, defendant’s motion is granted in part, and denied in part.

Facts

Defendant FNMC is a Michigan corporation engaged in the trading of gold, silver and other precious metals pursuant to standardized contracts demonimated as “cash forward” contracts. At all times relevant to this action, FNMC was a registered commodity trading advisor with the United States Commodity Futures Trading Commission (“CFTC”).

The Galvins purchased precious metals through FNMC’s “cash forward” program, and ultimately lost in excess of $40,000. In this action, they allege that (1) the FNMC “cash forward” program constitutes an illegal futures contract since it was not traded on a designated contract market or through contract market makers as required by the CEA, 7 U.S.C. §§ 6 and 6h (Count I); (2) FNMC’s conduct in soliciting such accounts and in dealing with plaintiffs (and other class members) constituted fraudulent, misleading and deceitful conduct within the meaning of the CEA and CFTC’s anti-fraud regulations (Count II); (3) FNMC committed common law fraud by using high-pressure and misleading sales techniques to lure persons unfamiliar with the precious metals market to trade in such contracts under a contractual agreement that was “unfair and burdensome” to these consumers (Count III); and (4) the contracts were so one-sided, unfair, misleading and burdensome as to be unconscionable and unenforceable, thus entitling plaintiffs to rescissionary relief under UCC 2-302 (Count IV).

Defendant FNMC moves to dismiss Counts I, II and IV, claiming that (1) its “cash forward” program is a leverage transaction, rather than a futures contract, and thus, is not subject to the regulations regarding futures; (2) even if this Court were to determine that the “cash forward” program is not a leverage transaction, no private right of action exists under 7 U.S.C. § 6h and Reg. § 30.02; and (3) while U.C.C. § 2-302 creates a defense, it does not give a right of action. In the alternative, defendant urges that this action be stayed pending a final decision on the leverage issue by the CFTC.

Discussion

1. Leverage v. Futures Contracts

The problem of differentiating between a futures contract and a leverage agreement has plagued both Congress and the CFTC for years. See generally Breyer v. First National Monetary Corp., 548 F.Supp. 955, 963-64 (D.N.J.1982). Indeed, Philip McB. Johnson, Chairman of the Commodity Futures Trading Commission, (the administrative body to which Congress has delegated the task of resolving the problem) has noted that “differing opinions exist over the nature of leverage contracts and their distinction, if any, from futures contracts even though they are off-exchange instruments.” See H.R.Rep. No. 565, 97th Cong., 2d Sess., reprinted in [1982] U.S. Code Cong. & Ad.News 3871, 3957, 3963 (“H.P.Rep. No. 565”). Nonetheless, this Court is called upon to decide whether the FNMC “cash forward” contract is a leverage contract that may be legally traded off a designated contract market, or a futures contract that may not.

A futures contract is, in its seminal sense, a contract of sale of a commodity for future delivery. One Court describes a futures contract as follows:

Among the distinguishing characteristics of a futures contract is its standardized form as to quantity and other terms. The standardization, set by the designated contract market, facilitates trading of the contracts. Although many of the traders never intend to take delivery of the underlying commodity, the contracts provide for uniform delivery points and delivery dates. Trading must take place on a licensed exchange designated by the CFTC as a “contract market” and prices are established by the competitive trading on the exchange.

Breyer v. First National Monetary Corp., supra, 548 F.Supp. at 963.

A leverage contract, on the other hand, is defined by Congress, albeit circuitously, as

A standardized contract commonly known to the trade as a margin account, margin contract, leverage account, or leverage contract, or ... any contract, account, arrangement, scheme, or device that the Commission determines serves the same function or functions as such a standardized contract, or is marketed or managed in substantially the same manner as such a standardized contract.

7 U.S.C. § 23(a) (emphasis added). Thus, the distinction between a leverage contract and a futures contract hinges, in large part, upon trade usage. See Breyer v. First National Monetary Corp., supra, 548 F.Supp. at 964.

On April 29, 1983, the CFTC found that the FNMC “cash forward” contract is, in fact, a futures contract subject to the regulations of the CEA. In the Matter of First National Monetary Corporation, CFTC No. 79-56, Comm.Fut.L.Rep. (CCH) ¶ 21,707, [1983], Defendant is presently pursuing an administrative appeal of that decision.

Notwithstanding the CFTC’s decision, however, defendant urges this Court to hold as a matter of law that the cash forward contract is a leverage contract. Defendant contends that this Court has the benefit of affidavits from members of the trade which were not made available to the CFTC.

Having considered the affidavits and memoranda submitted by each party, however, I find that there are material issues of fact which must be resolved at trial, not the least of which is the credibility of the affiants. In short, I find that the issues of fact and law involved are simply too complex to be determined on the record presently before the Court. Accordingly, the motion for summary judgment is denied.

2. Private Cause of Action

Alternatively, defendant argues that, even if its contract with plaintiffs is not a leverage agreement, counts I and II must still be dismissed because no implied private right of action exists for violations of 7 U.S.C. §§ 6h and 17 C.F.R. § 30.02 (the anti-fraud provisions).

In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran (“Curran"), 456 U.S. 353, 102 S.Ct. 1825, 72 L.Ed.2d 182 (1982), the Supreme Court held that implied actions are available to plaintiffs alleging violations of certain provisions of the CEA. Id. at 388, 102 S.Ct. at 1884. Curran, however, did not deal with the newly amended § 6h of the CEA (upon which plaintiffs rely). Accordingly, this Court must conduct an independent inquiry into the validity of a private right of action under that section. See Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2088, 45 L.Ed.2d 26 (1975).

Perhaps the most relevant inquiry in this regard is whether Congress intended such a remedy. Curran, supra, 456 U.S. at 378, 102 S.Ct. at 1839.

Section 4h of the CEA provides that:

It shall be unlawful for any person falsely to represent such person to be a member of a contract market... or to be a registrant ..., in soliciting or handling any order or contract for the purchase or sale of any commodity in interstate commerce or for future delivery, or falsely to represent in connection with the handling of any such order or contract that the same is to be or has been executed on, or by or through a member of, any contract market.

7 U.S.C. § 6h.

Unhappily, the legislative history regarding § 6(h) is sparse. Nonetheless, after examining the congressional reports submitted with the 1982 amendments to the CEA, this Court discerns a decided trend in favor of private causes of action as a secondary enforcement mechanism under the Act. See, e.g., H.R.Rep. No. 565, supra, [1982] U.S.Code Cong. & Ad.News at 3965. The following comment is illustrative: “the right of an aggrieved person to sue a violator of the Act is critical to protecting the public and fundamental to maintaining the credibility of the futures market.” Id. at 3905-06.

In short, I cannot say as a matter of law that “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957) (footnote omitted). Accordingly, the motion to dismiss Counts I and II is denied.

3. Unconscionability

In Count IV of the complaint, plaintiff demands rescission of the cash forward contract, together with a restoration of all commissions, fees and charges imposed by FNMC in connection with the contract, on the ground that the contract was unconscionable and thus, unenforceable as a matter of law. Defendant moves to dismiss this claim, arguing that the doctrine of unconscionability is in the nature of an affirmative defense, and does not give rise to a cause of action. I agree.

The New York courts consistently hold that “UCC § 2-302 merely gives the court the right of refusal to enforce an unconscionable contract. It makes no provision for damages, and none may be recovered thereunder.” Vom Lehn v. Astor Art Galleries, Ltd., 86 Misc.2d 1, 380 N.Y.S.2d 532, 541 (Suffolk County 1976). See Pearson v. National Budgeting Systems, Inc., 31 A.D.2d 792, 297 N.Y.S.2d 59, 60 (First Dep’t 1969). Moreover, the same result is reached under traditional common law unconscionability theory. Cf. Cowin Equipment Co., Inc. v. General Motors Corp., 734 F.2d 1581, 1582 (11th Cir.1984).

Accordingly, defendant’s motion to dismiss Count IV of the complaint is granted.

Request to Stay Proceedings

As previously mentioned, defendant has filed an administrative appeal from the CFTC’s April 29, 1983 determination that the FNMC cash forward agreement is a futures contract. Accordingly, defendant requests that this action be stayed until the Commission has issued a final ruling. Plaintiffs urge this Court to deny defendant’s request for a stay, however, since the common law fraud claim asserted in their complaint is unaffected by the outcome of the administrative proceedings, and since such proceedings may continue for an indefinite amount of time.

The record is unclear as to the current status of the CFTC proceeding. Accordingly, to enable the Court to assess the propriety of staying this action, defendant is hereby directed to advise the court within thirty days of this Order regarding the status of the related CFTC proceedings and the date by which a decision is anticipated.

SO ORDERED.

      . Defendant submitted matters outside the complaint, i.e., three affidavits from members of the trade, to support its contention that the cash forward contract is a leverage agreement. Accordingly, the parties agree that as to that issue, the motion shall be treated as one for summary judgment and disposed of as provided in Fed.R. Civ.P. 56.


source: Caselaw Access Project

author: KINNEARY, District Judge.

license: Public Domain

text:
    Charles J. ERDMAN, Jr. and Ruth A. Erdman, Plaintiffs, v. UNITED STATES of America, Defendant.
    No. C-2-83-1170.
    United States District Court, S.D. Ohio, E.D.
    Oct. 7, 1985.

      Michael J. Johrendt, Columbus, Ohio, for plaintiffs.
    Albert R. Ritcher, Asst. U.S. Atty., Columbus, Ohio, for defendant.
   OPINION AND ORDER

KINNEARY, District Judge.

This is a taxpayer’s action wherein the plaintiffs, Charles and Ruth Erdman, seek a tax refund to recover $25,484 for the 1976 tax year. Jurisdiction in this present action is based upon 28 U.S.C. § 1346(a)(1). The defendant, the United States, moves to dismiss the complaint for lack of subject matter jurisdiction.

In October, 1977 the plaintiffs filed a refund claim for the entire amount of the tax paid for the year 1976 based on the deductibility of a loss which had not been claimed on the original return. Thereafter, the Internal Revenue Service (“IRS”) commenced a review of plaintiffs’ federal income tax return for the years 1974, 1975 and 1976. The tax dispute was finally settled with the Appellate Division of the IRS in December, 1982. The audit and settlement were complex as the plaintiffs were involved in over 50 separate entities including corporations, subchapter S corporations, limited partnerships and general partnerships. The resulting settlement resolved all but two issues. With respect to the remaining issues, the United States reserved the right to make adjustments to income or losses stemming from two small corporations (hereinafter referred to as “builder’s profits”) while the plaintiffs reserved the right to pursue their claim for a refund through judicial processes.

The plaintiffs maintain that the IRS promised, as a part of the settlement, to issue Statutory Notices of Deficiency with respect to the remaining two issues. Pursuant to 26 U.S.C. §§ 6212-13, issuance of such notices would have enabled the taxpayers to litigate both issues in the Tax Court where prepayment of the tax liability is not a precondition to suit. However, due to some unspecified procedural difficulty, the IRS only issued a Statutory Notice of Deficiency for the builder’s profit and a Notice of Disallowance with respect to the plaintiffs’ refund claim. The plaintiffs then brought separate actions in the Tax Court and before this Court to resolve the outstanding issues. As of this date, the plaintiffs have not paid the tax liability, interest and penalties related to their claim for refund and the 1976 tax year.

The IRS moves for dismissal on the ground that 28 U.S.C. § 1346(a)(1), the pertinent jurisdictional statute in the present action, requires the prepayment of any outstanding tax liability before proceeding with an action in federal district court. 28 U.S.C. § 1346(a)(1) provides:

The district court shall have original jurisdiction ... of any civil action against the United States for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected____

Although the precise meaning of this statute was once disputed, it is now well-settled that prepayment of at least the outstanding tax liability is a necessary precondition to invoke jurisdiction under § 1346(a)(1). Flora v. United States, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960).

The plaintiffs do not dispute this interpretation of section 1346 but contend that the IRS is estopped by its conduct from asserting the jurisdictional defect. More specifically, the plaintiffs argue that the IRS represented that both issues would be included in the Statutory Notice of Deficiency which would enable the plaintiffs to litigate the issues in Tax Court without prepayment of the tax. The plaintiffs maintain that if they had known that they would not be able to proceed with the current issue in Tax Court, they would not and could not have executed the settlement agreement because of an inability to prepay the tax liability. Rather, the government would have had to issue the Statutory Notice of Deficiency covering all three years and the plaintiffs would have been in the position to litigate all of the issues in Tax Court.

In support of its position, the plaintiffs refer the Court to Miller v. United States, 500 F.2d 1007 (2d Cir.1974) which held that the IRS was estopped from asserting the affirmative defense that the statute of limitations had expired where the IRS inadvertently sent to taxpayers a notice of claim disallowance which led the taxpayers to believe that the period for filing suit had been extended. Likewise, in Smale & Robinson, Inc. v. United States, 123 F.Supp. 457 (S.D.Cal.1954) and Tonkonogy v. United States, 417 F.Supp. 78 (S.D.N.Y.1976), the United States was estopped from raising certain claims or defenses where the taxpayer detrimentally relied upon a misrepresentation by a government agent acting within the apparent scope of his duties.

The Court recognizes the emerging line of authority which holds that the government can be estopped on the basis of affirmative misconduct. See Pierce v. Apple Valley, Inc., 597 F.Supp. 1480 (S.D.Ohio 1984). However, the Court believes that the plaintiffs’ reliance upon estoppel is misplaced in this current action. Unlike the above cases cited by the plaintiff which involved conduct by government officials which estopped them from raising IRS rules and procedures as a means to defeat a taxpayer’s claim or defense, plaintiffs seek to use estoppel to create jurisdiction in a federal district court.

Section 1346 constitutes a specific waiver of sovereign immunity and provides the jurisdictional basis for suits to recover certain overpayments of income taxes. As such, the statute must be strictly construed. United States v. Sherwood, 312 U.S. 584, 61 S.Ct. 767, 85 L.Ed. 1058 (1941). Moreover, it is well established that the jurisdictional prerequisites to suit in federal court cannot be waived by the conduct of the parties or by estoppel. United States v. Rochelle, 363 F.2d 225, 230-31 (5th Cir.1966); Potomac Passengers Assoc. v. Chesapeake & Ohio Railroad Co., 520 F.2d 90, 95 (D.C.Cir.1975); United States v. Acres of Land, 438 F.Supp. 1070, 1074 (D.Md.1977); Wright, Federal Practice and Procedure § 3522 (2d ed. 1984). Thus, it is clear that the plaintiffs cannot rely upon the alleged misconduct of the government to sidestep the Congressionally mandated prerequisites for bringing an action under section 1346.

Whereas the plaintiffs have failed to prepay their 1976 tax liability, they have failed to comply with the statutory prerequisites for bringing an action under section 1346. Consequently, this Court lacks subject matter jurisdiction to hear this case and must GRANT the United States’ motion to dismiss.

WHEREUPON, upon consideration and being duly advised, the Court finds that the United States’ motion to dismiss for lack of subject matter jurisdiction is meritorious and it is, therefore, GRANTED. This action is hereby dismissed in its entirety.

IT IS SO ORDERED.


author: RICE, District Judge.

text:
    Larry WILLIAMS, Plaintiff, v. MID-AMERICA FEDERAL SAVINGS AND LOAN ASSOCIATION, Defendant.
    No. C3-84-1000.
    United States District Court, S.D. Ohio, W.D.
    Sept. 30, 1985.

      Thomas Angelo, III, Dayton, Ohio, for plaintiff.
    Michael E. Solimine, Robert P. Bartlett, Dayton, Ohio, for defendant.
   DECISION AND ENTRY SUSTAINING IN PART AND OVERRULING IN PART DEFENDANT’S MOTION FOR SUMMARY JUDGMENT (DOC. # 12); TRIAL DATE AND CERTAIN TRIAL PROCEDURES SET

RICE, District Judge.

This Decision and Entry sets forth the reasoning of the Court with respect to Defendant’s Motion for Summary Judgment (Doc. # 12). The substance of this decision was relayed by the Court in a telephone conference call with counsel for both parties.

At issue in this case is a loan which Plaintiff sought to procure from Defendant in 1984. Under the authority of 15 U.S.C. § 1691b(a), certain classes of transactions “not primarily for personal, family or household purposes” are exempted from the requirements of the Equal Credit Opportunity Act (ECOA). Extensions of credit “primarily for business or commercial purposes” are exempted from the ECOA pursuant to 12 C.F.R. § 202.3(a)(4). Both the statutory language of 15 U.S.C. § 1691b(a) and the language of this regulation, as well as the reasons put forth in Defendant’s Motion for Summary Judgment, support the Court’s conclusion that the loan transaction at issue was made “primarily for business purposes.” Although new regulations have been proposed by the Federal Reserve to further the purposes of the ECOA, these proposed regulations envision no change in this definition of the business exemption to the ECOA. 50 Fed.Reg. 10890, 10891-92, 10901. The Court is also aware of a new proposed official staff interpretation which could possibly impact upon the Court’s decision that this loan transaction involved business credit. 50 Fed.Reg. 10911. The Court does not, however, believe that it would be proper to find this proposed official staff interpretation to supersede the current regulatory and statutory authority cited supra.

When a transaction is found to involve business credit, compliance with the notification procedures of 12 C.F.R. § 202.9 is not required. 12 C.F.R. § 202.3(e)(2). Written or oral notification to an applicant is still required to an applicant after business credit is denied. Id. A current official staff interpretation counsels that a creditor must provide this oral or written notification of denial within a reasonable time of the decision to deny credit. 12 C.F.R. Part 202, App. at 44.

Plaintiff believes that he received oral notification in June of 1984 of Defendant’s initial decision to deny his loan application. (Williams deposition, p. 29). Defendant’s position is that the decision to deny Plaintiff’s loan was taken in the first part of June. (Doc. # 14, Exh. 1, Todd deposition at 24). The applicable law thus reveals that a genuine issue of fact remains for resolution by the jury, namely, whether Defendant’s oral notification to Plaintiff was given within a reasonable time of its decision to deny business credit to Plaintiff. Accordingly, Defendant’s Motion for Summary Judgment, insofar as it pertains to Count 1 of Plaintiff’s Complaint, is overruled.

With respect to Count 2 of Plaintiff’s Complaint, Defendant’s Motion for Summary Judgment must be sustained. Count 2 deals with timely notification of approval of a loan under 15 U.S.C. § 1691(d)(1) and 12 C.F.R. § 202.9(a)(i). As the transaction at issue herein is found to be business credit, 12 C.F.R. § 202.3(e)(2) provides that compliance with 12 C.F.R. § 202.9 is not required unless “adverse action” has been taken by an issuer of credit. No such “adverse action,” as defined in 15 U.S.C. § 1691(d)(6), is complained of in Count 2. Accordingly, Defendant’s Motion for Summary Judgment with respect to Count 2 is sustained, due to the exemption of business credit from the notification requirement cited by Plaintiff.

Defendant has also moved for summary judgment with respect to Count 3 of Plaintiff’s Complaint, which alleges a violation of the prohibition of 15 U.S.C. § 1691(a)(1) against race-based discrimination by creditors such as Defendant. Defendant argues both that this anti-discrimination prohibition is inapplicable to business credit, and that, even if it is applicable, there are no facts on this record to support Plaintiff’s claim of discrimination. Assuming without deciding that the anti-discrimination provisions of the ECOA would apply to business credit, the Court finds that there is no support in the record for Plaintiff’s claim of race discrimination. Plaintiff’s assertion in his deposition that race is the only reason he can think of for the treatment which he received from Defendant is, without more, insufficient to raise a material issue as to a genuine fact as to race discrimination. (Williams deposition, p. 51-52) Accordingly, Defendant’s Motion for Summary Judgment must be sustained with respect to Count 3 of Plaintiff’s Complaint.

Based on the aforesaid, Defendant’s Motion for Summary Judgment is sustained with respect to Counts 2 and 3 and overruled with respect to Count 1. A one-day jury trial on Count 1 on the issue of reasonableness is set for October 31,1985. Counsel are directed to follow the pre-trial procedures set forth in this Court’s Decision and Entry of September 23, 1985. (Doc. #19).


author: BROOKS, District Judge.'

text:
    EVANSVILLE BRANCH NAACP, Constance Clemmons, Lana Burton and Inez Vick, Plaintiffs, v. Edward J. SIMCOX, Secretary of State, State of Indiana, Defendant.
    No. EV 85-51-C.
    United States District Court, S.D. Indiana, Evansville Division.
    Oct. 21, 1985.

      Grover G. Hankins, Michael H. Sussman, Charles F. Sanders, Asst. Gen. Counsel, NAACP Special Contribution Fund, Brooklyn, N.Y., and Franklin Breckenridge, Elkhardt, Ind., Dennis Hayes, Indianapolis, Ind., for plaintiffs.
    Arthur Thaddeus Perry, Deputy Atty. Gen., Indianapolis, Ind., for defendant.
   ORDER

BROOKS, District Judge.'

This matter is before the Court upon the motion of the defendant, Edwin J. Simcox, to dismiss this action pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted, or in the alternative for summary judgment pursuant to Rule 56 Federal Rules of Civil Procedure. Both parties have submitted briefs to the Court outlining their respective positions and the Court now deems the matter ripe for ruling.

This case involves yet another lawsuit arising out of the disputed November 6, 1985 election for Representative to the United States House of Representatives for the Eighth Congressional District of Indiana. Based upon the original certified election returns from the various county clerks it appeared that Frank McCloskey had defeated the challenger Richard McIntyre by less than One Hundred (100) votes. Due to the closeness of the election and what was alleged to arithmetical errors in the certificate from Gibson County, both candidates sought recounts in all or part of each county in the district. However, prior to the completion of the district wide recount and based upon what was purported to be a . corrected certificate from Gibson County, the defendant, Edwin J. Simcox, on December 13, 1984 certified Richard McIntyre as the winner of the election.

Thereafter, recounts conducted pursuant to Indiana Code Section 3-1-27-1 et seq. were commenced and concluded in the remaining fourteen (14) counties in the district including Vanderburgh County. Not surprisingly, substantial controversy surrounded these recounts because of the differing standards applied to the ballots by the various recount commissions. In Vanderburgh County, which is the focus of the instant action, over three thousand eight hundred (3,800) ballots were invalidated by the recount commissioners due to alleged noncompliance with state election laws. On or about January 25, 1985, the Clerk of the Vanderburgh Circuit Court certified the recount vote totals to the defendant Simcox as required by state law. Thereafter, on February 4, 1985 Simcox sent a letter to the House of Representatives advising the Clerk of the House that the state recount proceedings had been completed and that the December 13, 1984 certificate of election showing Richard McIntyre the winner “was and remains correct”.

Notwithstanding these proceedings under state law, the House of Representatives, acting through the House Administration Committee, had by this time determined to conduct its own recount of the Eighth Congressional District race. In conducting its own recount, the House chose to ignore the decisions made by the various county recount commissions and in fact applied its own set of rules, which provided among other things that ballots such as those invalidated by the Vanderburgh County recount commissioners would be counted where the intent of the voter could be discerned. As a result of this Congressional recount the vote totals for both candidates increased dramatically and it was determined that McCloskey had won by four (4) votes. On May 1, 1985 the House seated McCloskey.

Plaintiffs commenced this action on February 26, 1985. In their fifty two (52) paragraph complaint plaintiffs allege that this action is brought on behalf of the named plaintiffs individually and as representatives of a class of black voters who were unconstitutionally deprived of their votes in the November 6, 1984 election. Specifically; plaintiffs allege that the Vanderburgh County recount commissioners invalidated in excess of three thousand eight hundred (3,800) ballots; that nine (9) out of the designated fifty four (54) precincts in Vanderburgh County which were recounted are located within the 4th Ward; that of the over three thousand eight hundred (3,800) ballots invalidated, one thousand eighty nine (1,089) of those were from the 4th Ward; that ninety per cent (90%) of the voting population within the 4th Ward is black; that as a result of the decisions of the recount commission virtually all of the votes cast within certain precincts of the 4th Ward were invalidated; that the majority of other counties within the Eighth Congressional District, did not invalidate ballots with the same defects as those which existed in the 4th Ward; and that as a result of this inconsistency in recounting the ballots a disproportionate percentage of black voters within the district have been disenfranchised.

With respect to the sole defendant in this case, Simcox, plaintiffs allege that he has violated their rights in several respects. First, plaintiffs allege that he has certified the results of the election, without including the disqualified black votes in this tally. Second, plaintiffs contend that defendant’s action in so certifying violated due process and equal protection in that it disenfranchised a significant proportion of the black voting population within the Eighth District. Finally, plaintiffs allege that defendant has violated Title 42 United States Code §§ 1973 et seq. and 1983 et seq. by failing to adhere to the Indiana Election Code and by refusing to uniformly enforce the election laws with respect to the invalidation of ballots.

Based upon the above allegations, plaintiffs contend that they have no adequate remedy at law, and they seek to enjoin the defendant from invalidating any of the ballots cast in the November 6, 1984 election except on conditions set by the Court or from certifying any candidate as the winner of the Congressional race until such time as all ballots, except those disqualified by the Court, have been counted.

Defendant has filed a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6) Federal Rules of Civil Procedure or in the alternative for summary judgment pursuant to Rule 56 Federal Rules of Civil Procedure. In his motion and supporting briefs, defendant points to several deficiencies in plaintiffs’ complaint. First, it is argued that the actions of which plaintiffs complain, i.e. the invalidation of numerous ballots in Vanderburgh County, were actions taken, not by Simcox, but by the Vanderburgh County recount commissioners. Thus, it is contended that the commissioners’ actions can give rise to no claim against Simcox. Second, defendant points to the fact that the certificate of election issued to McIntyre was issued pri- or to the invalidation of any votes in Vanderburgh County and that no subsequent certificate was ever issued. Finally, defendant argues that the issues presented by plaintiffs’ complaint are moot for the reason that Congress has now conducted its own recount and declared which candidate is entitled to be seated. The Court having examined the motion, plaintiffs’ response thereto, and being duly advised in the premises finds that the moton is well taken.

Several problems become apparent upon a close reading of plaintiffs’ complaint. Perhaps the major deficiency is that the acts of which plaintiffs really complain are by law reserved to the court appointed recount commissioners and not the Secretary of State. In the case sub judice the clerks of the circuit courts of the various counties certify to the Secretary of State the number of votes given to each candidate. (I.C. 3-1-26-6). The Secretary then compares the number of votes cast for each candidate and certifies to the Governor the person having the highest number of votes as duly elected. (I.C. 3-1-26-9). This procedure was followed after the November 6, 1984 election and culminated in Simcox’s certification of McIntyre as the winner on December 13, 1984. None of these actions impacted in any manner upon plaintiffs’ vote and plaintiffs have not alleged wrongdoing up to this point. After Simcox’s certification, however, recounts were instituted. The duties of the recount commissioners are to recount the votes expeditiously (I.C. 3-1-27-11) and report the results of their recount to the circuit court clerk. (I.C. 3-1-27-14). The court clerks then forward the recount results to the Secretary of State who tabulates and corrects the totals, if necessary, and certifies a new winner if the tabulation shows that a different candidate is entitled to a certificate of election. (I.C. 3-1-27-15).

In the present case, the only certificate issued by Simcox was based upon the original vote totals submitted by the county clerks, and although the number of votes each candidate received changed after the recount, the ultimate' result was not changed. This is precisely what Simcox’s letter of February 4, 1985 advised the House, despite plaintiffs’ characterization of the letter as a “de facto ” certificate. Furthermore, there is no duty imposed upon the Secretary of State to make a de novo determination of the validity of the recount commissioners’ actions. By law, he is simply required to correct the tabulation of votes for each candidate and to issue a new certificate if necessary. Thus, it can hardly be said that Simcox’s actions deprived plaintiffs of their votes.

Furthermore, it would appear to this Court that this case is moot. Article III, Section 2 of the Constitution limits federal jurisdiction to actual cases or controversies. Nebraska Press Ass’n v. Stuart, 427 U.S. 539, 546, 96 S.Ct. 2791, 49 L.Ed.2d 683 (1976); United States v. Wisconsin, 771 F.2d 244 (7th Cir.1985). Here the House of Representatives has conducted its own recount; ignoring both Indiana’s original tabulation of the votes and recount. Unquestionably, the House has the power to do so. McIntyre v. Fallahay, 766 F.2d 1078 (7th Cir.1985). The House in conducting its recount counted all, or substantially all, of the ballots voted in the district, including those which plaintiffs contend were wrongfully invalidated by the recount commissioners. Thus, plaintiffs have not been disenfranchised since the final arbiter has made its decision as to which ballots count, a decision which is not reviewable in any court. Roudebush v. Hartke, 405 U.S. 15, 92 S.Ct. 804, 31 L.Ed.2d 1 (1972), Barry v. United States ex. rel. Cunningham, 279 U.S. 597, 49 S.Ct. 452, 73 L.Ed. 867 (1929); McIntyre v. Fallahay, supra.

Finally, although plaintiffs contend that this action was brought in part because they had no adequate remedy at law, the Court does not agree. Ind.Code § 3-1-26-7 provides that any duly qualified voter may bring an action in mandamus to compel the county clerk Or the secretary of state, as the case may be, to correct the certification of votes in any given election. Although this provision does not on its face apply to the certification of votes after a recount, the Court is nevertheless of the opinion that such procedure could be used to challenge the certification of votes after a recount, since the recount certificate supercedes for all purposes all previous returns made in any form of the votes recounted. (I.C. 3-1-27-14). However, the statutory provision allowing a mandamus action to be brought is a “nonclaim statute”. State Ex Rel. Bodine v. County Election Board, 466 N.E.2d 773 (Ind.App. 1984). Failure to comply with the time limitations imposed, forever bars the action. Bodine, supra. In the present case, plaintiffs failed to bring a mandamus action, or any other action, within fifteen (15) days after the completion of the recount in Vanderburgh County. Thus, even if the Court were to treat this action as one for mandamus, it would be untimely.

Based upon all of the foregoing, the Court finds that defendants’ motion to dismiss should be and hereby is GRANTED for the reason that plaintiffs’ complaint fails to state a claim upon which relief can be granted, and the claims presented are MOOT.

Accordingly, this action is ordered DISMISSED with each party to bear their own costs of the action.


author: BARTELS, Senior District Judge.

text:
    BARRETT TREATY LIMITED, Plaintiff, v. UNITED STATES of America, Defendant.
    No. 85 CIV 1565.
    United States District Court, E.D. New York.
    Oct. 23, 1985.

      Abruzzo, Clancy & Hayes, Huntington, N.Y., for plaintiff; Raymond J. Clancy, Huntington, N.Y., of counsel.
    Raymond J. Dearie, U.S. Atty., E.D.N.Y., Brooklyn, N.Y., for defendant; Michael Cavanagh, Asst. U.S. Atty., Brooklyn, N.Y., of counsel.
   MEMORANDUM-DECISION AND ORDER

BARTELS, Senior District Judge.

This is an action by a party other than the taxpayer, under 26 U.S.C. § 7426, to recover monies levied upon by the Internal Revenue Service. Defendant United States of America moves to dismiss for lack of subject matter jurisdiction on the ground that there has been no waiver of the United States’ sovereign immunity since the plaintiff failed to file the action within the applicable statute of limitations which is a condition of the United States’ consent to be sued. The facts, construed in a light most favorable to the plaintiff, are as follows.

This case involves two corporations— Barrett Treaty Limited (BT Limited), a Bermuda corporation which is plaintiff herein, and Barrett Treaty Corporation (BT Corporation), a New York corporation which is not party to this suit. According to plaintiff, the two entities have no common stockholders and are unrelated, although plaintiff does admit that it “works with BARRETT TREATY CORP. on various transactions.” Elenidis Aff. 117. The history of problems with the IRS recited by plaintiff concerns BT Corporation for the most part rather than plaintiff BT Limited and is found in the affidavit of Philip Elenidis, BT Corporation’s accountant, submitted by plaintiff BT Limited in opposition to defendant’s motion.

According to the Elenidis affidavit, BT Corporation filed a tax return on September 15, 1982, along with a check for $24,058 in payment of its 1981 taxes. The return apparently was not received by the IRS and in August 1983 BT Corporation sent the IRS a replacement check and a copy of the return. On December 15, 1983, BT Corporation received a letter from the IRS asking BT Corporation to show reasonable cause why its return was filed late, to which BT Corporation responded on December 23, 1983. Then on December 30, 1983, the IRS sent BT Corporation a Final Notice and Demand For Payment of penalties and interest in the amount of $15,-348.84 for late filing, warning that if BT Corporation took no action within 10 days to resolve the matter, its property would be subject to levy pursuant to § 6331 of the Internal Revenue Code, 26 U.S.C. § 6331. Three months later, in late March 1984, the IRS served a Notice of Levy on the Chemical Bank of Huntington, New York, in the amount of $15,783.33, including penalties and interest to date, naming BT Corporation as the delinquent taxpayer.

According to plaintiff, BT Corporation does not and never did have an account at the Huntington Chemical Bank. Rather it was plaintiff, BT Limited, who maintained an account there and thus, according to plaintiff, the government’s levy was wrongfully made on plaintiff’s account rather than on BT Corporation’s property.

Strangely, plaintiff BT Limited seems to have taken no action to recover its money after the allegedly wrongful levy. Instead, it was BT Corporation, through its accountant, Elenidis, who sought to resolve the matter informally with the IRS. Later, in January 1985, it was again BT Corporation which filed a petition in the United States Tax Court, in its own name, for refund of the monies levied. It is significant that in its petition, BT Corporation claimed that the monies levied were from “Petitioner’s account” at “Petitioner’s bank”, and that the only ground asserted for a refund was that BT Corporation was entitled to an abatement of the penalties, not that the account levied belonged to BT Limited or anyone else. The Tax Court dismissed BT Corporation’s petition on March 15, 1985, for lack of jurisdiction since the IRS did not issue in this case a Notice of Deficiency, 26 U.S.C. § 6212, which is a prerequisite to Tax Court jurisdiction.

In the interim, on January 15,1985, Elenidis, this time on behalf of plaintiff BT Limited, sent a letter to the IRS claiming a refund of the levied money on the ground that the account belonged to BT Limited and not BT Corporation, further asserting that BT Limited was an unrelated entity not liable for any taxes. Elenidis thus has taken two different and conflicting positions regarding the ownership of the bank account. Receiving no answer from the IRS to the Elenidis letter, BT Limited filed this action under § 7426 of the Internal Revenue Code. 26 U.S.C. § 7426.

Section 7426(a)(1) provides the following: If a levy has been made on property ..., any person (other than the person against whom is assessed the tax out of which such levy arose) who claims an interest in or lien on such property and that such property was wrongfully levied upon may bring a civil action against the United States in a district court of the United States.

Section 6532(c) of Title 26 requires that such non-taxpayer suits be commenced within nine months of the date of levy unless the non-taxpayer has filed a request with the IRS for return of the property. If such. a request is made within the nine month period, the period is extended for twelve months from the filing of the request, or alternatively, for six months from the mailing by the IRS of a notice of disallowance, whichever is shorter. No such request was made here.

The United States has waived its sovereign immunity in § 7426 to permit this type of action, but the conditions which limit its consent must strictly be complied with. Soriano v. United States, 352 U.S. 270, 275-76, 77 S.Ct. 269, 272-73, 1 L.Ed.2d 306 (1957); DeJesus v. Department of the Treasury, 34 AFTR 2d 74-5090 (E.D.N.Y. 1971). As one court has explained the policy behind this limitation:

The obvious reason for a short statute of limitations is to resolve doubts concerning the status of the taxpayer’s account swiftly. If someone else successfully claims property already credited against the taxpayer’s tax liability, the United States must look to other assets of the taxpayer to satisfy the taxpayer’s liability. I.R.C. § 6532(c) protects the legitimate interest of the United States in requiring other claimants of the seized property to bring their claims quickly.

United Sand and Gravel Contractors, Inc. v. United States, 624 F.2d 733, 739 (5th Cir.1980). If a suit is commenced beyond the statutory period, the district court is without jurisdiction to entertain the action. American Honda Motor Co., Inc. v. United States, 363 F.Supp. 988 (S.D.N.Y. 1973).

In this case, the IRS’s levy occurred on March 29, 1984, and plaintiff’s suit was filed on April 30, 1985, some four months beyond the nine month period of limitation. Plaintiff’s letter claim for a refund, made on January 15, 1985, did not extend the period since it, too, was sent beyond the nine month period. Plaintiff argues, however, that BT Corporation’s prior dealings with the IRS concerning the assessments against it, out of which the levy arose, were sufficient to “put the government on notice as to what was at issue” and to give the government an opportunity to investigate the matter. Pl.Mem. in Opp., at p. 1.

That argument is unpersuasive, particularly since, in those negotiations, Elenidis was representing BT Corporation. Accepting as true all the facts alleged in plaintiffs papers, the court finds nothing in the history of BT Corporation’s dealings with the IRS to indicate that the IRS was given notice that anyone other than BT Corporation held an interest in the Chemical Bank account, at least until BT Limited made its request for a refund on January 15, 1985. In fact, until that time, BT Corporation consistently claimed that the money belonged to it and gave the IRS no reason to believe otherwise. In any ease, the IRS is not obligated to investigate the possible existence of third persons’ interests in the property upon which it levies. American Honda Motors Co. v. United States, 363 F.Supp. at 993 (no requirement that the IRS seek to discover security interests in property even where third person’s security interest was publieally recorded).

For notice to be timely, plaintiff must either file suit or make demand for a refund within nine months of the levy, in conformance with 26 U.S.C. §§ 7426 and 6532(c). Plaintiff has done neither in this ease and the court therefore has no option but to dismiss the action for lack of jurisdiction.

SO ORDERED.

      . Apparently, a Notice of Deficiency is not required where, as here, the assessment is for penalties and interest. 26 U.S.C. § 6212(a). See Fendler v. C.I.R., 441 F.2d 1101 (9th Cir.1971). In any case, plaintiffs arguments that the assessment against BT Corporation was procedurally defective are irrelevant since, for the purposes of an action under § 7426, the assessment upon which the levy is based is conclusively presumed to be valid. 26 U.S.C. § 7426(c).

      . Since the court finds that plaintiffs letter was untimely, it need not reach the issue, raised by the government, of the adequacy of that refund claim.


author: BROOKS, District Judge.

text:
    Dean A. HOSTETTLER, Plaintiff, v. PIONEER HI-BRED INTERNATIONAL, INC., Defendant.
    No. TH 84-184-C.
    United States District Court, S.D. Indiana, Terre Haute Division.
    Oct. 25, 1985.

      Paul Watts, Spencer, Ind., for plaintiff.
    Michael K. McCrory, Indianapolis, Ind., for defendant.
   MEMORANDUM ORDER

BROOKS, District Judge.

This matter is before the Court upon the motion of the defendant, Pioneer Hi-Bred International, Inc. (hereinafter “Pioneer”) for summary judgment pursuant to Rule 56 Federal Rules of Civil Procedure. The Court having considered the motion and supporting brief, plaintiff’s brief in opposition thereto, and the pleadings filed in this cause, and now being duly advised in the premises finds that the motion should be granted.

Plaintiff, Dean A. Hostettler (hereinafter “Hostettler”) commenced this action on May 10, 1984 in the Greene Circuit Court. Pioneer, a corporation organized and existing under the laws of the State of Iowa, removed the case to this Court on June 11, 1984. In his complaint Hostettler alleges that he was employed by Pioneer as a Field Manager at its Worthington, Indiana plant in August 1983. On or about August 5, 1983 Hostettler’s employment was terminated. Hostettler contends that his termination was unlawful and improper in that it breached both implied and express contracts of employment as well as an implied convenant of good faith and fair dealing and that it was in retaliation for the reporting of certain alleged irregularities concerning his supervisors. Hostettler further alleges that Pioneer has published and stated incorrect and misleading information concerning his termination to his detriment and that Pioneer has violated Indiana Code Section 22-6-3-1 and that their actions were in willful and wanton disregard of his rights. Accordingly Hostettler seeks an award of both compensatory and punitive damages.

Pioneer has filed its motion for summary judgment, contending that, based upon the pleadings submitted, as well as the answers to requests for admissions and interrogatories, it cannot be disputed that it is entitled to judgment as a matter of law. Pioneer’s first contention is that Hostettler was, as a matter of law, an employee “at will” whose employment was terminable with or without cause at any time. Thus, Pioneer asserts, it is clear that Hostettler may not state a claim for breach of an employment contract or an implied covenant of good faith and fair dealing. Secondly, it is argued that, contrary to plaintiff’s position, Pioneer’s employee handbook does not as a matter of law constitute an employment contract which would give rise to a cognizable claim. With respect to Hostettler’s defamation claims Pioneer contends that the documents of which Hostettler complains are incapable as a matter of law of being considered defamatory. Finally, Pioneer points out that plaintiff may not maintain a private civil action for an alleged violation of Indiana Code Section 22-6-3-1 for the reason that the statute is a criminal statute whose enforcement is reserved to the State of Indiana.

Plaintiff seeks to refute the above arguments in several ways. First, he points out that he was a “regular” employee as defined in the employee handbook and thus is entitled to the presumption that he was hired for a determinate period. Second, Hostettler contends that he provided additional consideration in return for annual employment in that he moved to Worthington on very short notice to take the field manager position, and worked unusually long hours during the summer. Third, Hostettler argues that even if he was an “at will” employee, the provisions of the employee handbook should be binding on Pioneer in any event because of the independent consideration which Pioneer had already received and because Pioneer benefited from other considerations; i.e. a stable work force, good employer-employee relations, and higher productivity. Finally, Hostettler contends that because defendant in its answer to plaintiff’s complaint, said it was without sufficient knowledge or information concerning Hostettler’s claim of defamation, summary judgment is inappropriate. The Court finds plaintiff’s arguments wholly without merit.

A long line of Indiana cases have discussed the definition and import of an “at will” classification of an employee. It is clear that, absent certain recognized exceptions, an employment agreement, the tenure of which cannot be determined from the terms of the contract, is one “at will” and may be terminated at any time by either party for any reason. Hamblen v. Danners, Inc., 478 N.E.2d 926 (Ind.App. 1985); Mead Johnson and Co. v. Oppenheimer, 458 N.E.2d 668 (Ind.App.1984); Campbell v. Eli Lilly and Company, 413 N.E.2d 1054 (Ind.App.1980); Martin v. Platt, 386 N.E.2d 1026 (Ind.App.1979). Exceptions, recognized by the Indiana courts, to the “at will” doctrine involve situations where the employee is discharged in retaliation for exercising a statutorily conferred right or for fulfilling a statutorily imposed duty. Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425 (1973); Campbell v. Eli Lilly, supra; or where the employee has supplied independent consideration which results in a detriment to him and a corresponding benefit to the employer, Hamblen v. Danners, supra; Ohio Table Pad Co. of Indiana, Inc. v. Hogan, 424 N.E.2d 144 (Ind.App.1981); or in certain cases where there is promissory estoppel. Pepsi-Cola General Bottlers, Inc. v. Woods, 440 N.E.2d 696 (Ind.App.1982).

In the case sub judice plaintiff contends that he is not an “at will” employee because he was a “regular” as opposed to a “temporary” employee as defined by the employee handbook. This argument the Court finds unavailing. The employee’s handbook indicates that:

You are considered a regular employee if you are hired for a specific job and it is expected that your normal work week will be at least 40 hours on a 12-month basis. Employees hired on a temporary basis will be considered temporary employees until they are notified that their status has been changed to that of a regular employee. (Plaintiff's Ex. A to Memorandum in Opposition to Motion for Summary Judgment).

Regardless of plaintiff’s expectations, the Court cannot find that the above provision gives rise to an employment contract for a definite term. There is no promise of employment for a period of one year. Hamblen v. Danners, supra. In fact, at most the provision can be interpreted as only informing a potential employee that he could expect to work an average of 40 hours per week based upon a twelve (12) month period if he were a “regular” employee. Conversely, if he were a temporary employee he could not expect to work any average number of hours. Thus, in the absence of a promise for employment for a definite period of time, the existence or non-existence of any provision of the employee handbook is immaterial. Mead Johnson Co. v. Oppenheimer, supra; Shaw v. S.S. Kresge Co., 167 Ind.App. 1, 328 N.E.2d 775 (1975). Accordingly, the Court finds that plaintiff was an “at will” employee terminable for any reason, or no reason, and that the existence of the employee handbook is immaterial. As such plaintiff may not assert a cause of action for breach of an express or implied contract of employment.

Plaintiff has retorted that despite his status as an “at will” employee, he may still maintain an action for breach of the contract because defendant breached an implied covenant of good faith and fair dealing, discharged him in retaliation for his reporting of alleged irregularities, and because he provided additional consideration in return for continued employment. In all of these respects, plaintiff is in error.

It cannot be seriously disputed that Indiana does not recognize that an employer owes a duty of good faith and fair dealing to an employee at will. Perry v. Hartz Mountain Corp., 537 F.Supp. 1387 (S.D.Ind.1982); Campbell v. Eli Lilly, supra. Therefore, since the Court has previously found that Hostettler was an employee “at will” Pioneer owed no such duty to Hostettler. Furthermore, it is clear that only discharge in retaliation for the exercise of a statutorily conferred right on a statutorily imposed duty is sufficient to avoid the “at will” doctrine. Campbell, supra. Accepting Hostettler’s allegation that he reported irregularities and was discharged for doing so, he has failed to demonstrate a statutory source for the alleged right he claims to have exercised, nor has he demonstrated a statutory source for the duty he claims to have fulfilled. Thus, the Court must conclude that Hostettler fails to fall within the exception to the employment at will rule recognized by Frampton and Campbell.

Hostettler also stringently argues that he has provided various forms of additional consideration in return for his continued employment. First, he points to the fact that he moved from Northern Indiana to the Worthington plant on very short notice at Pioneer’s request. However, as the Court noted in Ohio Table Pad, supra, “[t]he acts and actions involved in moving one’s household to a new location ... will not constitute independent consideration to support a contract of permanent employment ...” Id. at 146. Second, Hostettler puts forth the proposition that he has supplied additional consideration in working unusually long summer hours as a field manager and that Pioneer should be es-topped from failing to comply with the provisions of the employee handbook because they have benefited from other considerations such as a stable work force, better employer-employee relations, and higher productivity. Such arguments are disingenuous. Hostettler moved from Northern Indiana in 1979 to take a position as a field manager. Such a position would in all likelihood require additional hours to be worked during the summer due to the nature of Pioneer’s business. To assert now that such hours were not ‘‘part of the job” but comprised additional consideration for continued employment borders on the ludicrous. Much the same can be said of plaintiff’s other averments of additional consideration. Undoubtedly, to the extent that Pioneer dealt with its employees in a fair and equitable manner it benefited from a stable work force, better employer-employee relations and perhaps higher productivity. However, those factors are insufficient to impose upon Pioneer an employment contract with Hostettler which they did not make. Furthermore, Hostettler has failed to establish that he did anything which would justify estopping Pioneer because of their receipt of the above claimed benefits.

Finally, Hostettler has put forth two other basis for imposing liability upon Pioneer. First, is the alleged violations of Indiana Code Section 22-6-3-1. The simple answer to this claim is that Hostettler lacks standing to bring an action for violation of Indiana Code Section 22-6-3-1 for the reason that such proceedings are to be prosecuted in the name of the State of Indiana by the prosecuting attorney. I.C. 34-4-32-1. Second, is plaintiff’s claim that he has been, in essence, defamed by certain incorrect or misleading information published by Pioneer. The Court has carefully examined both of the alleged publications upon which plaintiff relies. The first is an undated copy of a newspaper article which reports, among other things, that plaintiff is still at his job as field manager. How this innocuous comment defames plaintiff under any of the traditional basis for maintaining an action for libel or slander is beyond the understanding of this Court even if the statement is inaccurate. The second document relied upon is a termination exit interview form which indicates that the reason for plaintiff’s termination was “other employment”. Again, this rather innocuous comment, even if it is incorrect, as it may be assumed to be, is not the stuff of which defamation actions are made. Furthermore, since the form itself is distributed internally by Pioneer for processing of personnel matters, it is protected under a theory of qualified privilege. Weenig v. Wood, 169 Ind.App. 413, 349 N.E.2d 235 (1976). Accordingly, plaintiff’s complaint in these respects must also fail.

Based upon all of the foregoing, the Court finds that there are no genuine issues of material fact, and that defendant is entitled to summary judgment. Therefore, Pioneer’s motion for summary judgment is GRANTED.


author: SWEET, District Judge.

text:
    KALISH & RICE, INCORPORATED, Plaintiff, v. REGENT AIR CORPORATION, Defendant.
    No. 85 Civ. 3600 (RWS).
    United States District Court, S.D. New York.
    Oct. 25, 1985.

      Galland, Kharasch, Morse & Garfinkle, P.C., Washington, D.C. (Robert H. Morse, of counsel), Callan, Regenstreich & Kosher, Brooklyn, N.Y. (Bruce Regenstreich, of counsel), for plaintiff.
    Patrick J. Monaghan, Jr., New York City, for defendant.
   OPINION

SWEET, District Judge.

Plaintiff Kalish & Rice, Inc. (“K & R”) has moved for summary judgment against the defendant Regent Air Corporation (“Regent”) pursuant to Rule 56, Fed.R. Civ.P. seeking payment of $260,000 for advertising and marketing services allegedly rendered by K & R. For the reasons stated below, which constitute the findings of fact and conclusions of law, K & R’s motion for summary judgment will be granted.

Facts

Summary judgment may be granted only where there are no genuine issues of material fact. Rodrigues v. Village of Larchmont, New York, 608 F.Supp. 467, 471 (D.C.N.Y.1985). The undisputed facts set forth by both K & R and Regent are as follows. K & R, a Pennsylvania corporation, is an advertising and marketing firm with its principal place of business at 1845 Walnut Street, Philadelphia, Pennsylvania. The defendant, Regent, a Delaware corporation, is an airline which operates scheduled passenger service between Los Angeles, California and Newark, New Jersey. It maintains offices at 4 West 58th Street, New York, New York, as well as in Los Angeles, California.

In March of 1984, K & R entered into an oral agreement to provide advertising and marketing services for Regent. For the first six months of this business relationship, K & R billed Regent at its standard hourly rates, and Regent paid K & R on a weekly basis for all work performed on its behalf. In August 1984, K & R agreed to perform these services on a credit basis, and one month later the parties amended their agreement to create a procedure which required K & R to submit cost estimates of all work to be performed which a Regent officer or other authorized employee would then initial signifying approval for the work.

The parties conducted business on this approval and credit procedure from September through December of 1984, until Regent’s account with K & R accumulated unpaid bills for services totalling $242,940. Although invoices were sent throughout these months, most were unpaid, and in January of 1985, Allan Kalish (“Kalish”), president of K & R, initiated discussions with J. Roger Faherty (“Faherty”), chairman of the board of Regent, in order to come to an agreement about settlement of the account. Despite the fact that no agreement had been reached as to the resolution of the debt, on February 6, 1985 Kalish received an unsecured promissory note in the mail from Regent signed by Faherty. Along with the note for $260,000 payable on March 6, 1985, Kalish also received a check in the amount of $2,889.97. Although the check was accepted in partial payment of the amount owed, K & R discussed the promissory note with its parent company, The Earle Palmer Brown Companies, and rejected the offer of this obligation to satisfy the outstanding debt. Kalish rejected the note first orally in March, and then by letter to Faherty on April 9, 1985, with a detailed explanation of why the note was unacceptable. The note had thus been in K & R’s possession from February 6,1985 to April 9,1985, a total of 63 days.

Discussion

There is no dispute as to the facts briefly outlined above and no dispute as to the existence of this $260,000 debt which Regent owes K & R. The single issue posed by Regent is whether or not K & R’s 63 day retention of the note was acceptance of the obligation in satisfaction of Regent’s debt. According to K & R, as a matter of law there was never any acceptance of the promissory note. According to Regent, the retention of the promissory note for 63 days constituted an acceptance of the instrument in satisfaction of the debt and the Uniform Commercial Code Section 3-802 suspended the underlying obligation and any right to bring a claim based upon that debt until the instrument is due.

The question of whether retention of the note was acceptance turns on the common law of offer and acceptance and not to Article 3 of the Uniform Commercial Code. While the promissory note in question does fall into the category of negotiable instruments governed by Article 3, Regent’s citation of Section 3-802(l)(b) bypasses the issue of whether the note was ever accepted by K & R. Section 3-802(l)(b) provides as follows:

(1) Unless otherwise agreed where an instrument is taken for an underlying obligation
* * # * * *
(b) in any other case the obligation is suspended pro tanto until the instrument is due or if it is payable on demand until its presentment. If the instrument is dishonored action may be maintained on either the instrument or the obligation; discharge of the underlying obligor on the instrument also discharges him on the obligation.

This section suspends collection or action on the debt only “where the instrument is taken” for the underlying obligation, leading the inquiry back to the question of whether K & R ever took the obligation in satisfaction of the money owed. On this question, Article 3 of the Code provides no guidance because it contains no provisions on the mode of acceptance, and in such cases common law contract doctrines govern.

Because federal jurisdiction in this case is based on diversity of citizenship, we apply the forum state’s substantive law, including the conflict of laws principles is applicable. Klaxon v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). New York has adopted a “center of gravity” or “grouping of contacts” approach for choice of law questions in contract actions in which elements of the claim have occurred in jurisdictions outside the state. Fleet Messenger Service, Inc. v. Life Insurance Company of North America, 315 F.2d 593 (2d Cir.1963). Under this approach, the court must determine which jurisdiction has the most significant relationship to the matter in dispute, or which has the greatest interest in the transaction. Index Fund Inc. v. Insurance Company of North America, 580 F.2d 1158, 1162 (2d Cir.1978).

Courts applying the significant contacts approach have considered a myriad of factors, including the place from which the offer and acceptance were made, and the state with the greatest interest in the outcome of the litigation. Bache & Co., Inc., v. International Controls Corporation, 339 F.Supp. 341, 348 (S.D.N.Y.1972). Under this New York conflict of laws analysis, Pennsylvania law governs' the determination of whether K & R accepted Regent’s promissory note. Although Regent’s offer of the promissory note emanated from Los Angeles, delivery of the note was made to K & R’s Philadelphia offices, and the last act necessary to accept or reject the offer occurred in Philadelphia. In addition, Pennsylvania seems to have the greatest interest in the outcome of the litigation because all of the services pursuant to the contract were performed there, and the State has an interest in applying its laws to a controversy concerning a debt owed to one of its corporate citizens. Therefore, Pennsylvania law decisions will determine the significance of K & R’s retention of the promissory note.

In Pennsylvania the general contract law principle applies that an offeree need not respond to an offer and that silence is not tantamount to an acceptance. Acme Markets, Inc. v. International Association of Machinists and Aerospace Workers, Local Lodge No. 724, 506 F.Supp. 92 (E.D.Pa.1980). An acceptance must be unequivocal to be valid. Mellon Bank, N.A. v. Aetna Business Credit, Inc., 619 F.2d 1001 (3d Cir.1980), unless there are special circumstances to indicate that silence should be construed as acceptance, such as where the offeree had a duty to respond, and the offeror was justified in expecting a reply. Acme Markets, Inc. v. International Association of Machinists and Aerospace Workers, Local Lodge No. 724, supra, 506 F.Supp. at 99.

There are no such special circumstances present to make K & R’s silence into acceptance of the note. The parties had conducted their business dealings on a cash basis until five months prior to the accrual of the underlying debt. The facts demonstrate that Kalish sought to resolve the problem of Regent’s open balances in his communications with Faherty and never induced Faherty to believe that the offer of an unsecured $260,000 promissory note would be acceptable to K & R or its parent company. In addition, this silence was of limited duration, because Kalish did reject the offered note, first in a conversation with Regent and then in the detailed letter to Faherty of April 9, 1985 spelling out K & R’s objections to the note as a form of payment.

Regent’s note was thus never accepted . as payment of the debt which it concededly owes to K & R. Therefore, the Uniform Commercial Code section 3-802 suspending the underlying obligation is inapplicable because no note was “taken” by K & R in satisfaction of the debt. K & R is entitled to summary judgment as a matter of law on its contract claim.

Submit judgment on notice.

IT IS SO ORDERED.

      . To support this conclusion, K & R cites Josephine & Anthony Corp. v. Horwitz, 58 A.D.2d 643, 396 N.Y.S.2d 53 (2d Dept.1977), a case which discusses New York contract law. This case is, however, rendered irrelevant by the court’s resolution of the choice of law questions presented.

      . Citations to the Uniform Commercial Code reflect uniform provisions in effect in Delaware, New York and Pennsylvania unless otherwise noted.

      . Section 3-104 in relevant part defines negotiable instruments as follows:
      (1) Any writing to be a negotiable instrument within this Article must
      (a) be signed by the maker or drawer; and
      (b) contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation or power given by the maker or drawer except as authorized by this Article; and
      (c) be payable on demand or at a definite time; and
      (d) be payable to order or to bearer.
      (2) A writing which complies with the requirements of this section is
      (d) a "note” if it is a promise other than a certificate of deposit.

      . Section 1-103 demonstrates that the common law acts as a backdrop for specific Code provisions and remains in force unless displaced:
      Unless displaced by the particular provisions of this Act, the principles of law and equity, including the law merchant and the law relafive to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause shall supplement its provisions.


author: DONALD E. O’BRIEN, Chief Judge.

text:
    UNITED STATES of America, Plaintiff, v. Gerald A. DUCHENE, Defendant.
    Civ. No. 84-823-E.
    United States District Court, S.D. Iowa, C.D.
    Oct. 29, 1985.
    Jerry L. Jones, VA Staff Atty., Des Moines, Iowa, for plaintiff.
    Gerald A. Duchene, pro se.
   ORDER

DONALD E. O’BRIEN, Chief Judge.

This is an action in which the plaintiff, United States of America, seeks to recover an overpayment of Veterans Administration educational benefits. Plaintiff filed a motion for summary judgment on June 26, 1985.

As a courtesy to the defendant, this Court entered an order dated July 29, 1985 granting the defendant an additional ten days to respond. As a further courtesy to the defendant, this Court entered a second order dated September 19, 1985, calling the defendant’s attention to Local Rule 2.2.6, which requires a resistance to such a motion. In this second order, the Court gave the defendant an additional ten days within which to file a resistance. No resistance has been filed by the defendant. Therefore, the Court will consider the plaintiff’s motion for summary judgment without input from the defendant pursuant to the Court’s order of September 19, 1985.

Federal Rule of Civil Procedure 56(e) states in part as follows:

An adverse party ... must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

The Court will now consider the pleadings filed in this case to determine whether summary judgment is appropriate.

The defendant received Veterans Administration educational benefits from June 21, 1981 through August 31, 1981, at the rate of $493.00 per month. The defendant was enrolled in the food dispensing technology program at South Seattle Community College. Subsequently, the college informed the Veterans Administration that the defendant had terminated his course on July 16, 1981, and received nonpunitive grades. The defendant did not file an appeal or request for waiver of the debt, and has not repaid any amount of the debt.

The benefits defendant applied for and received are provided for by statute, 38 U.S.C. §§ 1651-1686, 1770-1799. Section 1780(a) provides:

(a) Payment of educational assistance or subsistence allowances to eligible veterans or eligible persons pursuing a program of education or training, other than a program by correspondence, in an educational institution under chapter 31, 34, or 35 of this title shall be paid as provided in this section and, as applicable, in section 1508, 1682, 1691, or 1732 of this title. Such payments shall be paid only for the period of such veteran’s or person’s enrollment in, and pursuit of, such program____

Implementing regulations are codified at 38 C.F.R. §§ 21.1020-21.4507. The particular provision controlling § 21.4135(e) provides:

(e) Course discontinued; course interrupted; course terminated; course not satisfactorily" completed or withdrawn from (sections 21.4136 and 21.4137).
(1) If the individual withdraws from all courses or receives all nonpunitive grades and in either case there are no mitigating circumstances as provided in section 21.4136(k) or 21.4137(h), benefits will be terminated or reduced effective first date of the term in which the withdrawal occurs or the term for which the grades are assigned or December 1, 1976, whichever is the later.
(2) If the individual withdraws from all other courses other than courses in paragraph (e)(3) of this section and with mitigating circumstances, as provided in section 21.4136(k) or 21.4137(h), or withdraws from all course such that a punitive grade is or will be assigned for those courses:
(i) residence training: last date of attendance.
(ii) independent study: official date of change of status under the practices of the institution.

The affidavits accompanying plaintiff’s motion for summary judgment demonstrate that the defendant received nonpunitive grades for the summer term beginning June 22, 1981. Thus, 38 C.F.R. § 21.-4135(e)(i) requires termination effective the first day of the term, which was June 22, 1981. This resulted in an overpayment of $1,117.47. In the complaint the plaintiff prays for this amount, together with prejudgment interest and administrative costs pursuant to 38 U.S.C. § 3115, plus interest from the date of judgment and costs of suit.

Under Fed.R.Civ.P. 56(c), summary judgment should not be entered unless the moving party has established its right to a judgment with such clarity as to leave no room for controversy and unless the other party is not entitled to recover under any discernible circumstances. Bradsher v. Missouri Pacific Railroad, 679 F.2d 1253, 1256 (8th Cir.1982). Having considered all the pleadings and affidavits filed in this action, the Court decides that the plaintiff’s motion for summary judgment should be granted.

IT IS THEREFORE ORDERED that plaintiff’s motion for ammary judgment is hereby granted.

IT IS FURTHER ORDERED that plaintiff is awarded the principal balance of $1,117.47, prejudgment interest from November 3, 1983 amounting to $340.96, and administrative costs of $15.99.

IT IS FURTHER ORDERED that the plaintiff is hereby awarded interest from the date of judgment and the costs of suit.


text:
    Cam Xuan TRAN, et ano., Plaintiffs, v. ANTOINE AVIATION COMPANY, INC., et al., Defendants.
    No. 85 Civ. 102 (RWS).
    United States District Court, S.D. New York.
    Oct. 31, 1985.
    Lawrence N. Weiss, P.C., Randy A. Dusek, New York City, for plaintiffs.
    Kroll, Pomerantz & Cameron, New York City, for defendant; Antoine Aviation Co., Robert R. MacDonnell, of counsel.
    Harold M. Foster, New York City, for defendant Alphonse Hotel Corp.
   OPINION

SWEET, District Judge.

Presently pending before the court are two motions for a stay brought by the defendants Alphonse Hotel Corporation (“Alphonse”) and Din Truong Tran (“Din Tran”) in this diversity action filed on January 4, 1985, in which plaintiff Cam Xuan Tran (“Cam Tran”) seeks damages arising out of an automobile accident. The motions will be granted in part and denied in part as set forth below.

Alphonse and Din Tran are insured by the Union Indemnity Insurance Company of New York (“Indemnity”) which is currently in liquidation and as to which a stay was issued by the Honorable Ira Gammerman on July 16, 1985 purporting to stay “all parties to law suits in this state and other states and territories of the United States .. from proceeding with any pretrial conference, trial, application for judgment, proceeding on judgments or settlements in .. proceedings in which Union Indemnity is obligated to defend a party insured .. for a period of 180 days from the date hereof.” Matter of Union Indemnity Insurance Company of New York, Index No. 41-292/1985, Supt.Ct.N.Y.Co.

In addition, there is currently pending a proceeding before the Workman’s Compensation Board to determine whether or not Cam Tran was an employee of Alphonse at the time of the accident and whether he was acting in the course of his employment. Cam Tran initiated the proceeding which he then discontinued, and Alphonse has now reinstated the action before the Board.

Alphonse and Din Tran appeal to the discretion of the court to determine whether the pretrial order date will be stayed because of the existence of these two proceedings. Therefore, this court must weigh any possible injury to Cam Tran caused by the delay against any possible prejudice to the defendants which might be caused by proceeding with this action despite the presence of the Workman’s Compensation Board hearing and the State Court bankruptcy stay.

The effect of a stay on Cam Tran’s present condition should be given serious consideration. Cam Tran is a Vietnamese who is paraplegic as a result of the accident which occurred on June 14, 1982, and he is allegedly living in a state of destitution and squalor.

As to the Workman’s Compensation Board hearing, the balance of interests predominates against Alphonse. Initially coverage was denied, and if coverage is again raised in this action, it will be determined in a fashion presumably binding on the parties in the administrative proceeding. Similarly, any Workman’s Compensation Board determination which occurred before our decision would be given res judicata effect in this court, United States v. Utah Construction & Mining Co., 384 U.S. 394, 421-22, 86 S.Ct. 1545 1559-60, 16 L.Ed.2d 642 (1966); Wickham Contracting Co. v. Board of Education of the City of New York, 715 F.2d 21, 26 (2d Cir.1983) provided that these findings are made in adjudicatory proceedings where the Board makes discrete findings of fact. Arizona Grocery Co. v. Atchinson, Topeka & Santa Fe Ry., 284 U.S. 370, 52 S.Ct. 183, 76 L.Ed. 348 (1932); International Telephone and Telegraph Corporation v. American Telephone and Telegraph Company, 444 F.Supp. 1148, 1158 (S.D.N.Y.1978). The litigants seeking to preclude this court’s consideration of an issue or claim will have to demonstrate that the relevant issues were properly before the Workman’s Compensation Board and that the parties had full opportunity to litigate these issues. Whitman Electric v. Local 363, International Brotherhood Electrical Workers AFL-CIO, 398 F.Supp. 1218 (S.D.N.Y.1974).

As to the state court stay, however, the balance of the equities tips in favor of granting the defendants a short pretrial delay. While the state courts have no power to stay the federal court’s exercise of its own power, Donovan v. City of Dallas, 377 U.S. 408, 412-13, 84 S.Ct. 1579, 1582, 12 L.Ed.2d 409 (1964); see also General Atomic Company v. Felter, 434 U.S. 12, 17, 98 S.Ct. 76, 78, 54 L.Ed.2d 199 (1977), this court will observe the stay as a matter of comity because violating the stay might deprive Alphonse and Din Tran of their bargained-for protection granted under their now cancelled policy. A delay will permit the state courts to determine whether the state’s insurance fund will assume the bankrupt insurer’s responsibility to defend Alphonse and Din Tran.

While Cam Tran has noted Niemczyk v. Coleco Industries, Inc., 581 F.Supp. 717 (N.D.N.Y.1984), in which a stay was denied under similar circumstances, the court in Niemczyk took care to note that “Coleco [defendant] is a multi-million dollar corporation well equipped to finance its own legal affairs.” Id. at 718. In this case one defendant, Din Tran, is being sued in his personal capacity and may be prejudiced by failure to respect the state court stay. It is of no avail to suggest, as did the Niemczyk Court, that the defendants’ interests are protected because of the possibility that they may bring a subsequent breach of contract action against an insurance company already in liquidation proceedings.

All pretrial discovery will be completed and a final pretrial conference will be held on December 18, 1985.

IT IS SO ORDERED.


author: KEEP, District Judge.

text:
    Mohammad MAKARIAN, Petitioner, v. James B. TURNAGE, Jr., District Director, Immigration and Naturalization Service, Respondent.
    Civ. No. 85-2194-K(IEG).
    United States District Court, S.D. California.
    Nov. 7, 1985.

      Bert D. Greenberg and Daniel G. Gold, Frank, Greenberg & Simone, Beverly Hills, Cal., for petitioner.
    Peter K. Nunez, U.S. Atty., and Beth L. Levine, Asst. U.S. Atty., San Diego, Cal., for respondent.
   ORDER

KEEP, District Judge.

Petitioner, Mohammad Markarian, is being held without bail by the Immigration and Naturalization Service (INS) pending completion of deportation proceedings presently before the Ninth Circuit. Petitioner filed a petition on September 13, 1985, seeking habeas corpus relief in the federal court. This order denies the petition.

PROCEDURAL HISTORY

Petitioner, a native and citizen of Iran, entered the United States on August 6, 1977 as a nonimmigrant student, attending Donnelly College in Kansas City, Kansas. Following his marriage to Maria Ann Franco, a United States citizen, petitioner’s status was adjusted to that of a permanent resident on August 24, 1978 and petitioner received his alien registration card (green card).

According to petitioner’s wife, within two weeks of receiving his green card, petitioner beat his wife and threw her out of their apartment. Administrative Record [hereinafter cited as AR] 213. Petitioner’s wife filed for annulment alleging that petitioner married her only to obtain his green card. AR 215. Petitioner, however, then sought a divorce, the decree of divorce becoming final on June 11, 1979.

Although the record is not entirely clear, petitioner states in his declaration in support of this petition that he moved from Kansas City to San Diego in August of 1979. Declaration at 2. The record indicates that petitioner notified the Postal Service but not the INS of the change of address.

In October of 1979, petitioner received notice through the mail from the INS that his permanent resident status was to be rescinded for lack of a bona fide marriage to a United States citizen and that failure to respond would authorize the INS to make the status adjustment without further notice. Although petitioner states that the Legal Aid Office in Chula Vista, California was to handle the matter for him, the INS received no response and rescinded his permanent resident status in January of 1980. Petitioner claims never to have received the January, 1980 rescission notice. A December, 1980 order to show cause why petitioner should not be deported was mailed to petitioner but the letter was returned. The notice and order were mailed to petitioner’s Kansas City address, the last known address of which the INS had notice.

Petitioner states that he began employment in August of 1980 with National Steel and Shipbuilding Company in San Diego and that his green card was validated at that time.

While in the San Diego area, petitioner married his second wife, Margo Verhock, in October of 1982. The marriage was soon stormy. Petitioner left Margo because of her alleged infidelities, and states that he went to Montana to attend college. Petitioner returned approximately a month later, but attempts at reconciliation failed. According to his wife and police reports, petitioner threatened to kill his wife, child and in-laws; he also threatened to blow up his wife’s house and to throw acid in her face. Additionally, petitioner beat his father-in-law in an extortion attempt. AR 270-73, 299-300. Petitioner pled guilty to disturbing the peace in May of 1983 and was put on probation for one year. Petitioner and his second wife subsequently were divorced.

Based on various incidents allegedly in violation of his probation (e.g., further extortion attempts), petitioner was ordered to appear in court to show cause why his probation should not be revoked. Petitioner states that he did not receive notice of the order because it was sent to an old address. Declaration at 3. Petitioner failed to appear at the order to show cause hearing. The court revoked his probation and issued a bench warrant for his arrest on May 30, 1984.

After his arrest on August 8, 1984, a search of petitioner’s storage locker yielded various weapons, photographs of petitioner dressed in paramilitary garb and brandishing weapons, and printed material dealing with such activities as the manufacture of explosive devices and guerrilla warfare.

On August 23, 1984, after finding that petitioner had violated the terms of his probation by carrying weapons and committing violent acts on others, San Diego County Municipal Court Judge Cazares sentenced petitioner to 90 days’ custody and extended probation for three years.

While petitioner was in custody pursuant to his probation violation, the INS served him with the December 1980 order to show cause why he should not be deported. The INS then assumed custody of petitioner.

The District Director ordered petitioner held without bond. On October 19, 1984, the Immigration Judge denied petitioner’s request for a bond redetermination, finding ample evidence in the record (e.g., proclivity toward violence, possession of weapons, and alleged boasts to his wife about terrorist affiliations, AR 299-300) to suggest that petitioner was engaged in subversive or terrorist activities. On February 1, 1985, the Board of Immigration Appeals agreed that petitioner should be detained without bail pending resolution of the deportation issue on the grounds that petitioner constitutes a poor bail risk and a threat to national security.

Petitioner’s habeas corpus petition seeks his release pending the final decision as to his deportability from the United States.

NEED FOR EVIDENTIARY HEARING

A person detained by the INS pursuant to an order of deportation may obtain judicial review in the district courts by habeas corpus proceedings. 8 U.S.C. § 1105a(a)(9); Johns v. Department of Justice, 653 F.2d 884, 895 (5th Cir.1981). Although the district court may, if necessary, hold a hearing regarding evidence not reflected in the record, a habeas petition directed at the INS usually is reviewed only by reference to the administrative record. Johns, 653 F.2d at 896. See also O’Rourke v. Warden, 539 F.Supp. 1131, 1135 (S.D.N.Y.1982) (scope of habeas review limited to whether INS decision has reasonable foundation in the record), cited with approval by the Ninth Circuit in National Center for Immigrants Rights v. I.N.S., 743 F.2d 1365, 1371 (9th Cir.1984).

Townsend v. Sain, 372 U.S. 293, 83 S.Ct. 745, 9 L.Ed.2d 770 (1963) requires that the district court hold an evidentiary hearing regarding a state prisoner’s habeas petition if:

(1) the state hearing did not resolve the merits of the factual dispute;
(2) the record as a whole does not fairly support the state factual determination;
(3) the state fact-finding procedure did not provide a full and fair hearing;
(4) the petitioner makes a substantial allegation that new evidence has been discovered;
(5) the state courts did not adequately develop the material facts; or
(6) it otherwise appears for any reason that the state did not afford the petitioner a full and fair hearing on the facts.

372 U.S. at 313-18, 83 S.Ct. at 757-60. The Townsend criteria generally apply to federal prisoners as well. Kaufman v. United States, 394 U.S. 217, 227, 89 S.Ct. 1068, 1074, 22 L.Ed.2d 227 (1969).

This court finds that the administrative record in the instant case reveals that petitioner has had numerous opportunities to present his version of the facts and that the material facts have been fully developed. The record reveals the pertinent facts regarding the custody determination; none of the Townsend criteria are apparent. Accordingly, this court holds that an evidentiary hearing is unnecessary.

THE STANDARD OF REVIEW

The district courts do not review bond determinations pending the Resolution of deportation proceedings de novo. Rather, the agency’s exercise of discretion is presumed correct and the district court merely decides whether “any basis in fact” exists for the agency determination. United States ex rel. Barbour v. District Dir. of I.N.S., 491 F.2d 573, 577-78 (5th Cir.), cert. denied, 419 U.S. 873, 95 S.Ct. 135, 42 L.Ed.2d 113 (1974). See also Hernandez-Avila v. Boyd, 294 F.2d 373, 376 (9th Cir. 1961) (finding by agency that petitioner should be deported sufficient to hold him pending judicial review of his status; bail determination by agency pending deportation review “can be overturned only when there is abuse of discretion”); O’Rourke, 539 F.Supp. at 1135 (district court review of bail decision in habeas corpus proceedings “limited to the determination whether the agency’s decision is supported by, or has a reasonable foundation in, the record”).

REVIEW OF THE AGENCY’S DECISION IN THIS CASE

Pending a final decision of deport-ability, an alien may be held in custody or released on bond of not less than $500 or released on conditional parole. 8 U.S.C. § 1252(a). The Attorney General and his delegates have “wide discretion” in determining whether and under what conditions to release a person pending the final deportability determination. United States ex rel. Barbour, 491 F.2d at 577. Generally, however, a person should be detained without bail only upon a finding that he is a poor bail risk or a threat to national security. See Barbour, 491 F.2d at 576-77; O’Rourke, 539 F.Supp. at 1135.

This court finds the BIA’s decision to hold petitioner without bail is supported by facts on the record which indicate that petitioner is a poor bail risk. Factors to be considered in evaluating the risk of flight posed by an individual pending final resolution of deportation include: family ties and community roots in the United States; employment history; length of time in United States; length of time remaining to complete deportation proceedings; criminal record; prior history of immigration violations; manner of entry into this country; and prior history of attending court proceedings. O’Rourke, 539 F.Supp. at 1135— 36. See also Hernandez-Avila, 294 F.2d at 376-77 (wherein the court found defendant was a poor bail risk when he had no ties to the community and a history of avoiding prosecution).

The record reveals that on various occasions petitioner has failed to respond to governmental requests that he appear and that the government has been unable to locate him for substantial periods of time. Petitioner attempts to explain these failures to appear and failures to locate him as not his fault. However, this court holds that the BIA reasonably found that the pattern demonstrates a lack of responsibility as well as disrespect for governmental proceedings. Petitioner’s failure to adhere to the terms of his probation for disturbing the peace likewise evidences his disregard of the law. Given the history of family violence, discord and threats, the BIA certainly had support in the record for finding petitioner’s asserted family ties to his daughter to be insubstantial. The record also indicates that petitioner probably has not worked since 1982 and that he has been collecting unemployment. AR 59-60, 256, 272. In sum, a significant foundation exists in the record for the BIA’s decision that petitioner’s presence pending the deportation proceedings cannot be assured other than by keeping petitioner in custody. This court finds no abuse of discretion in that determination.

Similarly, this court cannot say that no basis in the record exists for the BIA’s determination that petitioner is a threat to national security. Petitioner attempts to justify the guns found in plaintiff’s storage locker as “commonly used in game hunting;” the photographs of plaintiff in paramilitary clothing he states were taken on an “outing” with a friend, a Vietnam veteran; the guerrilla literature he states belonged to someone else. Taken in conjunction with petitioner’s history of recourse to violence and his wife’s statement of petitioner’s boasts of terrorist affiliations, however, these items reasonably support the BIA’s finding that petitioner constitutes a threat to national security.

Accordingly, the court holds that the BIA has not abused its discretion in affirming the INS decision to hold petitioner without bond pending resolution of deportation proceedings in the Ninth Circuit, and petitioner’s habeas corpus petition is denied.

IT IS SO ORDERED.