text:
    Neal C. GIBRALTER, Plaintiff, v. The CITY OF NEW YORK, Captain Rock, John Doe One and John Doe Two, Defendants.
    No. 84 CV 0436.
    United States District Court, E.D. New York.
    June 18, 1985.

      Zuller & Bondy, New York City, for plaintiff; Thomas L. Bondy, New York City, of counsel.
    Frederick A.O. Schwarz, Corp. Counsel of the City of New York, New York City, for defendants; Donald J. Kravet, New York City, of counsel.
   ORDER

McLAUGHLIN, District Judge.

The attached Report and Recommendation of Hon. Shira A. Scheindlin, United States Magistrate, is hereby adopted as the Opinion of this Court. No objections were filed within the time permitted.

It is hereby ORDERED that: 1) plaintiff’s claim under 42 U.S.C. § 1981 is dismissed; 2) plaintiff’s claim against defendant City of New York under 42 U.S.C. § 1983 is dismissed; 3) the motion of Captain Rock, John Doe I and John Doe II to dismiss claims against them under 42 U.S.C. § 1983 is denied; and 4) discovery in this action is to proceed forthwith under the guidance of Magistrate Scheindlin.

SO ORDERED.

REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE

SHIRA A. SCHEINDLIN, United States Magistrate.

Plaintiff, Neal D. Gibralter, brings this action pursuant to 42 U.S.C. §§ 1981 and 1983 seeking damages for alleged violations of his civil rights. Specifically, plaintiff alleges that the defendants failed to provide him with a safe prison environment while he was an inmate at the New York City Correctional Institution for Men on Riker’s Island (“Rikers Island”). It is further alleged that there exists a de facto policy of the City of New York of failing to provide a safe environment for inmates at Riker’s Island, and that defendant John Doe II is aware of this policy. Finally, plaintiff alleges that John Doe I witnessed, but did not intervene in a fight between plaintiff and another inmate in which plaintiff claims he was injured. This case was referred to me by the Honorable Joseph M. McLaughlin for a Report and Recommendation on defendants’ motions for summary judgment.

I. FACTUAL BACKGROUND

On March 19, 1982, Gibralter was interned at Riker’s Island. Plaintiff alleges that since his internment he has been the victim of a series of assaults and robberies. Plaintiff further asserts that many of these attacks were motivated by “racist reasons” and that prison officials purposely placed him in the particular housing area where racial attacks were likely to occur.

Riker’s Island has an established grievance resolution program that is outlined in the orientation booklet that every inmate, receives upon entering the prison. If an inmate complains about his living conditions or desires help in resolving a problem, “interview slips” are provided to the inmate so that he may request consultation and assistance. If an inmate breaks the rules of the prison, by fighting or taking another’s property for example, a “notice of infraction” is issued by a prison official. Upon issuance of such a notice, the inmate goes before a disciplinary board that determines his punishment, if any. A Captain or supervisory officer, at his discretion, may place an inmate in administrative segregation until the hearing. It is also a policy of the prison to provide medical treatment if needed or requested.

Plaintiff alleges that he has been the victim of a series of eight assaults, beginning with the day after his internment and culminating in the incident of November 6, 1982. Of these eight assaults, plaintiff alleges that five were reported to prison officials, although prison records indicate that only four were reported. The first incident occurred on March 20, 1982, when plaintiff was reprimanded for fighting with another inmate, named Ramirez. Plaintiff pleaded guilty at a disciplinary hearing and received medical treatment for a minor wrist injury. Plaintiff alleges that he had subsequent fights with inmates on August 15, October 1, October 10 and October 30. Although he believes he received medical treatment following the incident of October 10, the institution has no records of any treatment. Plaintiff does not allege that he reported these incidents to any prison official.

On August 1, 1982 plaintiff alleges that he was assaulted by a prison guard when he asked permission to use the washroom. Department of Corrections records reveal that at a disciplinary hearing on July 21, 1982, plaintiff was found guilty of refusing a direct order of a prison official and was given a five day punitive segregation. Medical records reveal that plaintiff first claimed that he was pushed against a wall, and later that he was punched by the officer. Medical treatment was found not to be necessary.

On November 6, 1982, plaintiff and Ramirez were involved in a second fight. Plaintiff asserts that other inmates held him down while Ramirez cut his face and neck with a razor blade. The weapon Ramirez used was a blade fashioned from a BIC disposable razor. Plaintiff alleges that Ramirez had concealed the blade in his toothbrush. Plaintiff sustained superficial lacerations to the left side of his face and was treated with a face suture. Captain Rock testified that it was prison policy that inmates’ lockers be searched every day, although he was not certain when the last search was on or before November 6, 1982. Ramirez claimed, in a report of the incident prepared by prison authorities, that plaintiff struck him with a lock, and that he slashed plaintiff in self-defense. He claimed that he later flushed the razor down the toilet.

Captain Rock testified that he interviewed the two inmates after the fight of November 5 and disciplined both men by issuing infraction notices against them. He determined, however, that it was not necessary to order either inmate transferred to another housing area. He did offer a transfer to both men, but neither accepted.

Captain Rock testified that he was informed of the incident on November 6, although he had heard about it earlier from his colleagues in the institution. No corrections officer witnessed the assault, although two inmates submitted written statements in which they claimed to have witnessed plaintiff strike Ramirez with a lock. Plaintiff did receive an infraction notice for the November 6 incident.

The Department of Corrections has no record of a request by plaintiff for either a transfer or an opportunity to speak with any corrections officials. Plaintiff does allege in his original complaint that he had requested to be transferred prior to November 5, but that those requests were denied.

II. MOTION FOR SUMMARY JUDGMENT

To prevail on their motions, defendants must prove “that there is no genuine issue as to any material fact,” and that they are “entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). See also Harlee v. Hagen, 538 F.Supp. 389, 393 (E.D.N.Y.1982). The court must “resolve all ambiguities and draw all reasonable inferences” against defendants. American International Group, Inc. v. London American International Corp., 664 F.2d 348, 351 (2d Cir.1981). In addition, all facts asserted by the plaintiff, “if supported by affidavits or other evidentiary material, are regarded as true” for the purpose of this motion. 10A Wright & Miller & Kane, Federal Practice and Procedure § 2727 (Civil 2d 1983). Nonetheless, the party who opposes the motion cannot discharge his burden by alleging legal conclusions, nor is he entitled to a trial only on the basis of a hope that he can produce some evidence at that time. See United Transportation Union v. Long Island Railroad and Metropolitan Transportation Association, 509 F.Supp. 1300 (E.D.N.Y.) rev’d on other grounds, 634 F.2d 19 (2d Cir.1980), 455 U.S. 678, 102 5. Ct. 1349, 71 L.Ed.2d 547 (1982).

A. Plaintiffs Claim under 42 U.S.C. § 1981

To sustain a claim under § 1981, plaintiff must show purposeful racial discrimination. General Building Contractors Association v. Pennsylvania, 458 U.S. 375, 391, 102 S.Ct. 3141, 3150, 73 L.Ed.2d 835 (1982). The discrimination complained of must have occurred in connection with one of several activities specified in § 1981.

Although inartfully pleaded, plaintiff is asserting a violation of his right “to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains ... and exactions of every kind, and no other.” 42 U.S.C. § 1981.

Plaintiff, though white, may sue for racial discrimination under § 1981. See McDonald v. Santa Fe Trail Transportation Co., 427 U.S. 273, 96 S.Ct. 2574, 49 L.Ed.2d 493 (1976). In order to sustain his constitutional challenge, however, plaintiff must show purposeful discrimination. A showing of disparate impact to establish discriminatory intent is not sufficient. General Building Contractors Association, 458 U.S. at 390, 102 S.Ct. at 3149. In order to show purposeful intent a court may consider purposeful intent, proof of departures from the normal procedural sequence, history of discriminatory actions, and other relevant factors. See Village of Arlington Heights v. Metropolitan Housing Development Corp., 429 U.S. 252, 264-68, 97 S.Ct. 555, 562-65, 50 L.Ed.2d 450 (1977).

Plaintiff fails to allege any facts which would tend to prove purposeful discrimination by the prison through its officials. His only allegation is his personal belief that alleged assaults by fellow inmates were motivated by racial enmity. Even assuming this to be true, it is at most evidence of disparate impact. It is therefore respectfully recommended that defendant’s motion for summary judgment be granted with respect to that part of plaintiffs claim that sets forth an action under § 1981.

B. Plaintiffs Claim Under 42 U.S.C. § 1983.

Attacks and physical assaults by government officials may constitute violations of constitutionally protected rights. Monroe v. Pape, 365 U.S. 167, 81 S.Ct. 473, 5 L.Ed.2d 492 (1961); Shillingford v. Holmes, 634 F.2d 263, 265 (5th Cir.1981); Johnson v. Glick, 481 F.2d 1028, 1032-33 (2d Cir.), cert. denied 414 U.S. 1033, 94 S.Ct. 462, 38 L.Ed.2d 324 (1973). Government officials may be held liable under § 1983 either for overt acts that are illegal and harmful or for a failure to carry out their duties. Estelle v. Gamble, 429 U.S. 97, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976), cert. denied 434 U.S. 974, 98 S.Ct. 530, 54 L.Ed.2d 465 (1977); Doe v. New York City Dep’t of Social Services, 649 F.2d 134, 141 (2d Cir.1981), cert. denied, — U.S. -, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983); Holmes v. Goldin, 615 F.2d 83 (2d Cir.1980). The issue here is whether prison officials may be held liable for attacks suffered by one inmate at the hands of another inmate, where it is alleged that the officials, by their failure to provide a safe environment for the injured plaintiff, violated that plaintiffs constitutional rights.

1. The City of New York

A municipality cannot be held liable under § 1983 solely on a respondeat superior theory. Monell v. Dep’t of Social Services, 436 U.S. 658, 98 S.Ct. 2018, 56 L.Ed.2d 611 (1978). Rather, a plaintiff who asserts a § 1983 claim against a municipal entity must allege that the complained of action “unconstitutional[ly] implements or executes a policy statement, ordinance, regulation or decision officially adopted and promulgated by that body’s officers” id. at 690, 98 S.Ct. at 2035-36, or that the allegedly unlawful action results from government custom, “even though such a custom has not received formal approval through the body’s official decision-making channels.” Id. at 691, 98 S.Ct. at 2036.

The Second Circuit has added a further gloss on the Monell rule, stating that

to hold a city liable under sec. 1983 for the unconstitutional actions of its employees, a plaintiff is required to plead and prove three elements: 1) an official policy or custom that 2) causes the plaintiff to be subjected to 3) a denial of a constitutional right.

Batista v. Rodriguez, 702 F.2d 393, 397 (2d Cir.1983).

An official policy or custom can be inferred from a municipality’s failure to act as well as from positive actions. Turpin v. Mailet, 619 F.2d 196, 201 (2d Cir.), cert. denied 499 U.S. 1016, 101 S.Ct. 577, 66 L.Ed.2d 475 (1980). Nevertheless, mere failure to supervise employees or to provide proper training is not actionable unless the failure is so severe as to constitute “gross negligence” or “deliberate indifference” to the deprivation of the plaintiff’s rights. Owens v. Haas, 601 F.2d 1242, 1246 (2d Cir.), cert. denied 444 U.S. 980, 100 S.Ct. 483, 62 L.Ed.2d 407 (1979); Leite v. City of Providence, 463 F.Supp. 585, 590-91 (D.R.I.1978).

Of the eight assaults alleged by plaintiff, including the incidents of November 5 and 6, 1982, plaintiff admits that he did not report three of the incidents to prison officials. Plaintiff requested medical treatment on four of these occasions and does not claim that his treatment was inadequate. On one occasion, plaintiff was found guilty of fighting and given a disciplinary infraction notice. On three occasions, plaintiff pleaded guilty.

Of the seven alleged robberies, plaintiff produces no witnesses or documentation. The assailant was “unknown” on five occasions, and there is no allegation that prison officials were informed of the incidents.

Even reading these allegations in a light most favorable to plaintiff, as required in this summary judgment motion, it is difficult to find that prison officials acted with gross negligence or deliberate indifference. Assuming, arguendo, that plaintiff has met this evidentiary burden, he must still establish that some official policy or custom of the city caused the constitutional, violation. It is at this point that plaintiffs claim fails.

Riker’s Island does not have an official policy that encourages fighting among inmates. On the contrary, the prison has an established grievance resolution program, which provides inmates with the opportunity to air complaints through official channels. To hold the city liable in the present action, plaintiff must establish the existence of a custom on the part of prison employees that receives at least tacit approval by city officials.

Plaintiff does not allege that the official grievance resolution channels were unavailable to him. Nor does he allege any facts that would lead to a reasonable inference that city officials knew or should have known that plaintiff had been in a number of fights since his internment at Riker’s Island. In fact, there is no record that plaintiff ever made a formal complaint to prison officials concerning his belief that he was being subjected to unsafe living conditions.

Plaintiff does not allege a persistent pattern or practice by city officials that might amount to a “custom or usage” within the meaning of Adickes v. S.H. Kress & Co., 398 U.S. 144, 168, 90 S.Ct. 1598, 1614, 26 L.Ed.2d 142 (1970) (court rejected petitioner’s attempt to prove a “custom” because petitioner failed to prove that other inmates were subjected to an unsafe environment). The Second Circuit has stated that a policy cannot ordinarily be inferred from a single incident of illegality. Turpin v. Mailet, 619 F.2d at 202; see also Williams v. Vincent, 508 F.2d 541, 546 (2d Cir.1974). If the single incident is unusually brutal or egregious, such as a beating administered by a group of municipal employees, an inference may be drawn that the unlawful action was attributable to inadequate training or supervision. See Owens v. Haas, 601 F.2d at 1242.

Here, plaintiff alleges a series of incidents, none of which were committed by city employees. The question, then, is whether proof of these incidents would be sufficient to establish an official custom. Turpin is instructive in this regard. There, the district court found a police officer guilty of using excessive force in his arrest of a teenage boy. The boy, Turpin, was awarded $3,500 in damages. Soon after the award was ordered, another police officer arrested Turpin, this time for “disorderly conduct.” Turpin alleged that the City of New Haven’s Board of Police Commissioners, in failing to discipline the first officer (he was in fact given a promotion) and being aware of a growing animus toward Turpin, encouraged the violation of his rights by the police. The Second Circuit found that “Turpin’s proof of an official policy of harassment ... boiled down to the Board’s failure to discipline [the first officer].” Turpin, 619 F.2d at 203. It further determined that, as a matter of law, “[although the Board’s failure might suggest a slight disregard for Turpin’s rights, it falls far short of constituting deliberate indifference to those rights ...” Id.

Here, plaintiff’s allegations “boil down” to John Doe. I’s failure to break up the fight between plaintiff and Ramirez on November 5, 1982. City officials could not have known of a pattern of constitutional abuses because there is no evidence that such a pattern existed. Plaintiff alleges individual incidents that cannot be considered sufficient to establish a de facto policy of the City of New York. Because plaintiff does not allege facts sufficient to suggest the necessary causal link between individual incidents of violence and the City’s official decision-making bodies, it is respectfully recommended that the City’s motion for summary judgment be granted.

2. Captain Rock and John Doe II

The Eighth Amendment’s prohibition against cruel and unusual punishment places a responsibility upon prison officials to protect inmates within the prison system from violent assaults by other inmates. Martin v. White, 742 F.2d 469 (8th Cir.1984); Redmond v. Baxley, 475 F.Supp. 1111 (E.D.Mich.1979); Penn v. Oliver, 351 F.Supp. 1292 (E.D.Va.1972). Because prison officials, as custodians of persons placed in the care of the government, are charged with an affirmative duty of care, see Knell v. Bensinger, 522 F.2d 720, 725 (7th Cir.1975), (prison officials must be “sensitive and alert to the protections afforded prisoners by the developing judicial scrutiny of prison conditions and practices”), the non-performance of such custodial duties gives rise to a § 1983 cause of action. Estelle v. Gamble, 429 U.S. at 105, 97 S.Ct. at 291.

In Estelle, a prisoner brought an action for damages against public officials based on inadequate medical treatment. The Court held that to state a cause of action for deprivation of the right to be free from cruel and unusual punishment, a plaintiff must allege more than negligence; the “prisoner must allege acts and omissions sufficiently harmful to evidence deliberate indifference to serious medical needs.” Id. at 106, 97 S.Ct. at 292. (emphasis added). The Supreme Court has indicated that this standard denotes a “species of recklessness or callous neglect.” Redmond v. Baxley, 475 F.Supp. at 1118 (interpreting language in Gregg v. Georgia, 428 U.S. 153, 173, 96 S.Ct. 2909, 2925, 49 L.Ed.2d 859 (1976).

Four years after Estelle, the Fourth Circuit adopted a lesser standard. “Given ... [a] pervasive and unreasonable risk of harm, negligence by prison officials in their performance of their duty of care is a violation of the constitutional right [to be free from cruel and unusual punishment] and actionable under 1983.” Withers v. Levine, 615 F.2d 158, 162 (4th Cir.), cert. denied, 449 U.S. 849, 101 S.Ct. 136, 66 L.Ed.2d 59 (1980).

Subsequent to the Withers decision, the Supreme Court confronted the issue of whether mere negligence will support a claim for relief under 1983. In Parratt v. Taylor, 451 U.S. 527, 533, 101 S.Ct. 1908, 1911, 68 L.Ed.2d 420 (1980), the Court concluded that a finding of negligence could support a 1983 claim. Id. at 535, 101 S.Ct. at 1912. Accordingly, the Court indicated that there are only two essential elements to any 1983 action: “(1) whether the conduct complained of was committed by a person acting under color of state law; and (2) whether this conduct deprived a person of rights, privileges, or immunities secured by the Constitution or laws of the United States.” Id.

The Parratt opinion, however, is not controlling here. First of all, the comments regarding the negligence standard are merely dictum, as the case was dismissed because petitioner had an adequate remedy at state law. Secondly, the case involved a prisoner’s due process rights under the Fourteenth Amendment rather than rights protected by the Eighth Amendment. Justice Powell in his concurring opinion affirmed that Estelle v. Gamble, 429 U.S. 97, 97 S.Ct. 285, 50 L.Ed.2d 251 (1976), is still good law. In Estelle, according to Justice Powell, the Court held that “[‘] deliberate indifference to a prisoner’s serious illness or injury [’] on the part of prison officials is sufficient to constitute an [‘] infliction [’] of cruel and unusual punishment under the eighth amendment.” Parratt, 451 U.S. at 547 n. 3, 101 S.Ct. at 1919 n. 3. (emphasis added). Justice Powell reasoned that the word infliction in the language of the Eighth Amendment indicates that a mental element is necessary before a violation will be found.

The Eighth Circuit has recently followed this standard. In a case similar to plaintiff’s, inmates brought a 1983 suit against the prison superintendent, alleging that he failed to take reasonable steps to protect them from sexual assaults by other inmates. Martin v. White, 742 F.2d 469 (8th Cir.1984). The Court of Appeals ruled that “prison officials may be liable where they are ‘deliberately indifferent to ... a prisoner’s constitutional rights, either because they acted with reckless disregard of his right to bé free from violent attacks by fellow inmates.’ ” Id. at 474 (citations omitted).

In a recent case, the Eastern District of North Carolina applied a similar test. “[Although supervisory officials cannot be held liable on the basis of their employer-employee relationship, liability attaches where their own action or inaction amounts to gross negligence or deliberate indifference and is the proximate cause of the constitutional violation.” Spell v. McDaniel, 591 F.Supp. 1090, 1110 (E.D.N.C.1984). This precise issue has not been presented in this circuit. However, several cases provide guidance.

In McKennon v. Nassau, 538 F.Supp. 737 (E.D.N.Y.1982), an inmate brought a 1983 action against the county for the failure of prison officials to take steps to remedy the increased hazards of assaults by fellow inmates that result from an overcrowded prison. Judge George C. Pratt denied plaintiff’s motions for judgment notwithstanding the verdict after jury had found deliberate indifference on the part of prison employees but failed to find the foreseeability required to prove causation.

In Doe v. New York City Dep’t of Social Services, 649 F.2d 134 (2d Cir.1981), city officials were charged with 1983 liability for failure to protect a child under their care who was abused in a foster home. In reversing a judgment in favor of defendants, the court indicated that when omissions are alleged rather than affirmative actions, a court must find, in addition to a finding of deliberate indifference, that the omissions were “a substantial factor leading to the denial of a constitutionally protected liberty or property interest.” Id. at 141 (citing Rizzo v. Goode, 423 U.S. 362, 96 S.Ct. 598, 46 L.Ed.2d 561 (1976)).

Plaintiff has the burden of proving that defendants acted with either gross negligence or deliberate indifference. Although repeated acts of negligence can be evidence of indifference, Doe, 649 F.2d at 142, gross negligence is a higher standard. Ultimately, it is a question of the defendant’s state of mind and whether he “can meaningfully be termed [‘] culpable [’].” Turpin v. Mailet, 579 F.2d 152 at 166 (2nd Cir.1978).

The court must be cautious in deciding a motion for summary judgment in an action that involves the state of mind of the defendant, because much will depend on the credibility of the witnesses. See 10A Wright & Miller & Kane, Federal Practice and Procedure § 2730 (Civil 2d 1983). Accordingly, this Court must determine whether a reasonable interpretation of the facts exists from which a jury might find that Captain Rock and John Doe II acted with gross negligence or deliberate indifference.

Plaintiff alleges that he suffered a series of assaults, robberies and harassments at the hands of other inmates. He claims that these assaults created a pervasive risk of harm and that both Captain Rock and John Doe II knew or should have known of this risk. In addition, plaintiff alleges that Captain Rock acted unreasonably in not segregating plaintiff after the incident of November 5 and in failing to properly supervise John Doe I.

Whether these actions or inactions occurred through gross negligence or deliberate indifference are questions of fact appropriately left to a jury. Summary judgment is a drastic remedy and should be applied sparingly. See Egelston v. State University College at Geneseo, 535 F.2d 752, 754 (2d Cir.1976); Auletta v. Tully, 576 F.Supp. 191, 194 (N.D.N.Y.1983), aff'd 732 F.2d 142 (2d Cir.1984); Sobel v. Yeshiva University, 477 F.Supp. 1161, 1166 (S.D. N.Y.1979). Therefore, it is respectfully recommended that Captain Rock’s and John Doe II's motions for summary judgment be denied.

3. John Doe I

Because there is an unresolved issue of fact with respect to John Doe I's conduct as it relates to the incident of November 5, 1982, it is respectfully recommended that summary judgment be denied with respect to plaintiff’s action against him. There is sufficient evidence from which a jury might conclude that 1) John Doe Ps failure to intervene in the fight of November 5, 1982 was an act of gross negligence and 2) was a substantial factor in the violation of plaintiff’s constitutional right to be protected from physical assault.

III. CONCLUSION

Because plaintiff has alleged specific acts and omissions by Captain Rock, John Doe I and John Doe II which, if committed with gross negligence or deliberate indifference, would constitute a violation of plaintiff’s Eighth Amendment right to be free from the infliction of cruel and unusual punishment, it is respectfully recommended that Captain Rock’s, John Doe Ps and John Doe IPs motion for summary judgment be denied. Because plaintiff has failed to allege specific facts that demonstrate an official policy or custom on the part of the City of New York to violate plaintiff’s constitutional rights, it is respectfully recommended that the City of New York’s motion for summary judgment be granted.

A copy of this Report and Recommendation is being mailed today to all parties, who are hereby advised that objections to the report may be served and filed with the district court, with a copy to me, within ten (10) days.

      . Exhibit 7. Rules of the Disciplinary Board.

      . See Exhibit 2, Plaintiffs Response to Defendant's Interrogatories. Answer to question 10.

      . Plaintiff has not produced any witnesses or other evidence to support his assertions.

      . Exhibit 1. Deposition of Captain Rubin Rock; Exhibit 3, Notice of Infraction to Inmate dated 11/5/82.

      . Exhibit 2. Answer to question 13.
      Question: "After the November 5, 1982 incident with Hector Ramirez, but prior to the alleged incident of November 6, 1982, did plaintiff request to be segregated from Hector Ramirez?"
      Answer: "No.”

      . 42 U.S.C. 1981 states that,
      All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.

      . Although Estelle seemed to limit the required showing of deliberate indifference to cases where cruel and unusual punishment was alleged, Chief Justice Burger, dissenting in Procunier v. Navarette, 434 U.S. 555, 566-568, 98 S.Ct. 855, 862-863, 55 L.Ed.2d 24 (1978), indicated that liability under 1983 will only be imposed where defendant’s mental state can be characterized as deliberate indifference.

      . In Withers, because of a widespread threat of physical abuse by other inmates, prison officials had a policy of segregating inmates who were considered vulnerable to sexual attack. The plaintiff was such an individual but was inadvertantly housed in a dangerous cell block. Prison officials had access to plaintiff's files yet failed to alert the guards to any need for special care. Presented with these facts, the Fourth Circuit devised a three part test which, if met, would be sufficient to find a prison official liable under 1983. There had to be: 1) a pervasive risk of harm 2) to an identifiable group of prisoners, 3) in a case in which prison officials failed to exercise reasonable care. Id.


source: Caselaw Access Project

author: GOETTEL, District Judge:

license: Public Domain

text:
    BANK ITEC N.V., Plaintiff, v. J. HENRY SCHRODER BANK & TRUST COMPANY, Defendant. Oranje-Nassau Groep B.V., Additional Defendant on Counterclaims.
    No. 84 Civ. 0371 (GLG).
    United States District Court, S.D. New York.
    June 18, 1985.

      Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, Boston, Mass., B.A. Willensky, Breed, Abbott & Morgan, New York City, for plaintiff; Sharon Litwin, David E. Lurie, Boston, Mass., of counsel.
    Spengler, Carlson, Gubar, Brodsky & Frischling, New York City, for defendant; Robert S. Carlson, Sarah S. Gold, Robert Knuts, New York City, of counsel.
   GOETTEL, District Judge:

Throughout my tenure on this Court, the Second Circuit has taken care to instruct the district judges of this circuit that summary judgment is to be applied sparingly. See Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317, 1319-20 (2d Cir.1975); Wards Co. v. Stamford Ridgeway Associates and Trim Fashions, Inc., 761 F.2d 117 (2d Cir., 1985). Of course, I have also noted the Second Circuit’s occasional references to the “salutary purposes of summary judgment.” Meiri v. Dacon, 759 F.2d 989, 998 (2d Cir.1985). Among these is “avoiding protracted, expansive and harassing trials.” Id. Granting summary judgment in this case dutifully serves these purposes.

This action arises out of a complicated multi-party transaction involving a Dutch bank, a New York bank, and a now bankrupt Florida insurance company. The Dutch bank’s corporate parent is a third-party defendant. Before the Court is the defendant New York bank’s motion for partial summary judgment on its breach of contract counterclaim. The motion of the plaintiff’s corporate parent to dismiss the counterclaims against it is also before us. For the reasons stated below, the defendant’s motion for partial summary judgment is granted. That holding forecloses the need to decide the other motion before us.

I. Factual Background

In May 1982, the plaintiff, Bank Itec N.V. (“Itec”), a commercial bank organized under the laws of the Netherlands, loaned approximately $6 million to Christiaan G. Walhof (“Walhof”) to enable him and his Florida holding company, First Florin Corporation (“First Florin”), to purchase all the capital stock of Gulf American Insurance Company (“Gulf American”), a Florida casualty insurer. Subsequently, Itec decided that, as a result of the legal lending limits imposed upon it by the Netherlands Central Bank, Itec could not make such a large loan. Therefore, in mid-August of 1982, Itec approached the defendant, J. Henry Schroder Bank & Trust Company (“Schroder”), with a proposal that the latter loan Walhof $3 million so that it could pay off its loan from Itec. Schroder has claimed that this was a “fronting loan” made merely to accomodate Itec’s desire to comply with the Dutch banking laws.

Out of the negotiations that followed came an agreement between the various parties that required Schroder to loan Walhof and First Florin $3 million. Walhof and First Florin gave Schroder a note (the “Note”) promising to repay the $3 million loan. The agreement also required Walhof to repay his $3 million loan from Itec. In turn, Itec was to assign to Schroder one-half of its rights to various security interests that it held in Gulf American. These included Itec’s title to and interest in a surplus note (the “Surplus Note”) that Gulf American had pledged to Itec as security for Itec’s loan to Walhof. Itec and Schroder entered into a letter agreement (the “Letter Agreement”) reiterating the terms noted above, with Itec guaranteeing Walhof and First Florin’s obligation to Schroder. The pertinent portions of the Letter Agreement are set out in the margin.

On August 27, 1982, the day after the agreement was signed, Itec deposited $3 million in a time deposit account with Schroder’s Grand Cayman branch. For more than a year after the agreements were signed, there were no apparent problems. Indeed, in August 1983, the one-year period of the loan, as well as the other agreements between the parties, was extended for another year, to August 26, 1984.

Relations between the parties took a turn for the worse a month later when Itec informed Schroder that Gulf American was financially unstable and asked Schroder to assist Itec in saving the casualty insurer from insolvency. Schroder declined. On November 3, 1983, Gulf American consented to the appointment of a receiver. Walhof and First Florin failed to make the next interest payment due and owing Schroder, and Schroder informed Itec of this failure. On December 5, 1983, Schroder gave Walhof and First Florin notice of acceleration and Itec notice that within 30 days it would be required to fulfill Walhof’s and First Florin’s obligations under the Note. (Itec had already informed Schroder that no substitute lender could be found and that Itec was constrained by the legal lending limits of the Netherlands’ banking laws from assuming the obligations itself. Itec had also refused to purchase the Surplus Note.)

II. The Litigation

In the beginning of January 1984, Itec repeated its refusal to substitute itself as lender under the Note or to purchase the Surplus Note. Schroder reacted on January 6,1984, by setting off the principal and interest accrued in Itec’s time deposit account against the principal and interest that Schroder claimed to be due and owing under the terms of the Letter Agreement. Itec then filed this action for recovery of the more than $3 million set off from its account. It also moved for a preliminary injunction granting the same relief.

In March 1984, Schroder filed its answer and counterclaims against Itec, against Itec’s parent, Oranje-Nassau Groep, B.V. (“ONG”), and against ONG’s parent, Compagnie Generate d’Industrie et de Participations (“CGIP”). Schroder asserted five counterclaims against Itec: a breach of contract claim, two claims of common law fraud, one claim of a securities law violation, and one RICO claim. The general allegation underlying the four non-contract counterclaims is that, from the time of the original negotiations, Itec either was aware, or should have been aware, of a number of facts concerning itself and Gulf American, which, if conveyed to Schroder, would have caused Schroder not to have made the loan to Walhof and First Florin or to have entered into any agreements with Itec. Schroder’s sixth counterclaim alleged that ONG and CGIP had interfered with Itec’s performance under the Letter Agreement. The complaint also named ONG and CGIP as defendants in one of the common law fraud claims and in the securities law fraud claim.

On April 25, 1984, the Court granted in part Itec’s motion for preliminary injunctive relief. It ordered Schroder to return the $3 million to the time deposit account but ordered Itec to leave those funds in the account until such time as Schroder’s right to a set-off was fully resolved.

On September 18, 1984, this Court issued a memorandum decision granting Itec’s motion to dismiss Schroder’s RICO counterclaim, but denying Itec’s motions to dismiss the four other counterclaims against it. At the same time, the Court denied Schroder’s motion for partial summary judgment on the breach of contract counterclaim.

On September 21, 1984, the Court heard argument on ONG’s motion to dismiss the claims against it for lack of personal jurisdiction, failure to state a claim for relief, and failure to plead fraud with particularity. At oral argument, the parties informed the Court that Schroder had agreed to dismiss its claims against CGIP. The Court reserved decision on ONG’s motion.

On August 28, 1984, Schroder again demanded that Itec perform its obligations under the Letter Agreement. Itec failed to do so within thirty days of this demand. In fact, on September 26, Itec expressly repudiated any obligation to purchase the Surplus Note.

On January 21, 1985, Schroder renewed its motion for partial summary judgment on the breach of contract counterclaim. That motion, together with ONG’s motions to dismiss, is now before the Court.

III. Schroder’s Motion for Partial Summary Judgment

Under New York law, which governs the Letter Agreement (see note 1), an action for breach of contract requires proof of (1) a contract; (2) performance of the contract by one party; (3) breach of the contract by the other; and (4) damages. See Stratton Group Ltd. v. Sprayregen, 458 F.Supp. 1216 (S.D.N.Y.1978). The Court has previously stated,

No one questions the existence of a contract. Nor is there a question that the Letter Agreement obligates Itec either to substitute itself or another lender for the ... Note or to purchase at face value the Surplus Note. Also, there is no question that to date Itec has failed to take either of these steps even though Walhof and First Florin have defaulted on the ... Note.

Bank Itec, N.V. v. J. Henry Schroeder Bank & Trust Co., No. 84-0371, slip op. at 10 (S.D.N.Y. Sept. 18, 1984). Itec’s performance under the Letter Agreement came due not later than thirty days after the August 26, 1984, date of maturity. Itec has since repudiated its obligations under the Letter Agreement. Left unredressed, Itec’s conduct will cause Schroder to suffer substantial damages. Thus Schroder has pleaded and proved every element of a breach of contract claim.

Itec raises three objections to this claim. It first argues that ambiguity in the Letter Agreement raises factual issues that preclude summary judgment. It also attempts to avoid any liability by asserting the defenses of mutual mistake and illegality. Because each of Itec’s objections must be resolved, as a matter of law, in Schroder’s favor, Schroder’s motion for partial summary judgment is granted.

A. Interpretation of the Contract.

Itec contends that a genuine issue of material fact exists with respect to whether its obligation to purchase the Surplus Note is conditioned upon that transaction being in compliance with Dutch law. It argues that the circumstances surrounding the negotiations between Schroder and Itec demonstrate that the parties intended that compliance with Dutch law condition Itec’s obligation. Itec implores the Court to deny summary judgment because a genuine issue of material fact remains regarding the state of Dutch law. The Letter Agreement’s manifest lack of ambiguity both precludes any consideration of the circumstances surrounding the negotiations and mandates a construction of the contract directly contarary to the one advanced by Itec.

When interpreting a contract, a court must defer to unequivocal language expressing the intention of the parties. Breed v. Insurance Co. of North America, 46 N.Y.2d 351, 385 N.E.2d 1280, 1282, 413 N.Y.S.2d 352, 355 (1978). Only if a contract is ambiguous will parole evidence be admitted to aid in its interpretation. Id. Courts thus ascertain whether a contract is ambiguous by examining the agreement on its fact without regard to extrinsic evidence. Id.; Schmidt v. Magnetic Head Corp., 97 A.D.2d 151, 468 N.Y.S.2d 649, 654 (2d Dep’t 1983).

Although it is a rare writing that requires no interpretation, Benson’s Plaza v. Great Atlantic & Pacific Tea Co., 44 N.Y.2d 791, 377 N.E.2d 477, 478, 406 N.Y. S.2d 33, 34 (1978), the Letter Agreement is such a writing. It expressly conditions Itec’s obligation to assume Walhof’s and First Florin’s obligation under the Note on compliance with Dutch law. A sentence that follows immediately after a discussion of Itee’s obligation to find a substitute lender states:

The foregoing undertaking of Bank Itec shall be subject to, and be limited by, the provisions of the Wet Toezicht Kredietwezen, as then in effect, or any similar laws, now or hereafter existing, which regulate banks domiciled in the Netherlands, and any rules, regulations, directives or decrees promulgated thereunder, including particularly the rules governing the legal lending limit of the amount loaned to any one Borrower.

Van Der Lugt Affidavit, Exhibit B. The Letter Agreement next discusses Itec’s obligation to purchase the Surplus Note. That discussion makes no reference whatever to Dutch law. Rather, it provides,

In the event that the Note cannot be assumed by a substitute lender other than Bank Itec and Bank Itec cannot assume all the rights and obligations under the Note as a result of its then prevailing legal lending limit or for any other reason whatsoever, Bank Itec agrees to purchase from the Borrower at face value the surplus note____

Id.

The meaning is clear. Itec’s first obligation is conditioned on compliance with Dutch law; it’s second is not. Any other interpretation would stretch the imagination of even the most quixotic reader. “Unless we have reached the point in commercial life where, as in Alice in Wonderland, words [d]o not mean what they say,” the Letter Agreement must be interpreted in Schroder’s favor. Meinrath v. Singer Co., 482 F.Supp. 457, 460 (S.D.N.Y.1979) (Weinfeld, J.), aff'd without opinion, 697 F.2d 293 (2d Cir.1982).

B. Mutual Mistake.

Itec asserts that both parties to the Letter Agreement mistakenly believed that the purchase of the Surplus Note would comply with Dutch law. It further contends that rescission of the Letter Agreement and Itec’s obligations thereunder is appropriate to remedy the parties’ mutual mistake. However, because Itec accepted benefits under the Letter Agreement, it cannot avail itself of this defense.

The defense of mutual mistake is available when a mistake of fact in contracting is both mutual and substantial. Brauer v. Central Trust Co. 77 A.D.2d 239, 433 N.Y. S.2d 304, 307 (4th Dep’t 1980). Where such a mistake exists, there is an absence of the requisite meeting of the minds and relief may be appropriate. Id.

Both Itec and Schroder presently maintain that they signed the Letter Agreement thinking that Itec’s obligation to purchase the Surplus Note did not, and the actual purchase would not, violate Dutch law. Whether they were mistaken turns on Dutch law. Issues of Dutch law are genuine issues of material fact. See Banco national de Cuba v. Sabbatino, 27 F.R.D. 255, 257 (S.D.N.Y.1961) (mistake about foreign law is a mistake of fact); Huber v. Huber, 26 Misc.2d 539, 209 N.Y.S.2d 637, 640 (Sup.Ct.1960) (same). Assuming the parties were mistaken, and the transaction is illegal, Schroder is, nevertheless, entitled to summary judgment on Itec’s defense of mutual mistake.

A party who accepts benefits under a contract is estopped from seeking rescission or other relief from the terms of that contract. Svenska Taendsticks Fabrik Aktiebolaget v. Bankers Trust Co., 268 N.Y. 73, 196 N.E. 748 (1935); City of Buffalo v. Balcom, 134 N.Y. 532, 37 N.E. 7 (1892); Otis Elevator Co. v. Heggie Realty Co., 107 Misc.2d 67, 437 N.Y.S.2d 832, 833 (Sup.Ct.App.Term 1st Dep’t 1980). An exception is sometimes made if the parties have not greatly altered or changed their positions, so that rescission can return them to the positions they occupied prior to entering into an agreement. D’Antoni v. Goff, 52 A.D.2d 973, 383 N.Y.S.2d 117, 119 (3d Dep’t 1976) (land sale purchase could be easily rescinded); Labasin v. President Realty Holding Corp., 14 A.D.2d 551, 218 N.Y.S.2d 234 (2d Dep’t 1961) (same). However, the New York courts will not rescind a contract if rescission cannot restore the status quo. Holdeen v. Rinaldo, 28 A.D.2d 947, 281 N.Y.S.2d 657, 659 (3d Dep’t 1967).

The parties agree that Itec’s outstanding loans to Walhof and First Florin were reduced by $3 million pursuant to the Letter Agreement. Itec benefitted from that agreement and cannot now rescind it, particularly since, as it acknowledges, rescission cannot return the parties to the positions they occupied prior to the agreement. The defense of mutual mistake is, therefore, unavailing.

C. Illegality.

According to Itec, Dutch law should determine the legality and enforceability of its obligation to purchase the Surplus Note. It further argues that factual issues persist as to whether Itec’s obligation to purchase the Surplus Note is illegal and, therefore, unenforceable under that law. Itec’s argument is misplaced. New York law applies in this context and mandates enforcement of Itec’s obligation.

1. The Applicable Law

A court sitting in a diversity case must apply the choice of law rules of the state in which it sits. Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). The parties disagree as to the effectiveness under New York law of the choice of law clause in the Letter Agreement which states, “This agreement shall be governed by and interpreted in accordance with the laws of New York,” Van Der Lugt Affidavit, Exhibit B. Schroder contends that a choice of law clause in a contract will control if the chosen forum has some significant contact with the contract and if the fundamental policy of the otherwise applicable law is not vitiated. It points to a substantial body of case law that supports its proposition. See Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 793 (2d Cir.1980), cert. denied, 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804 (1981); Hawes Office Systems, Inc. v. Wang Laboratories, Inc., 537 F.Supp. 939, 942 (E.D.N.Y.1982); CBS, Inc. v. Tucker, 412 F.Supp. 1222, 1226 (S.D.N.Y.1976); B.M. Heede, Inc. v. West India Machinery and Supply Co., 272 F.Supp. 236, 240-41 (S.D.N.Y.1967); Levey v. Saphier, 83 Misc.2d 146, 370 N.Y.S.2d 808, 809 (Sup. Ct.1975); Restatement (Second) of Conflict of Laws § 187 (1971). Itec relies on several cases that determine the applicable law by weighing the forum related contacts without regard to the parties’ choice. See Keystone Leasing Corp. v. People’s Protective Life Insurance Co., 514 F.Supp. 841, 847 (E.D.N.Y.1981); Haag v. Barnes, 9 N.Y.2d 554, 175 N.E.2d 441, 443, 216 N.Y.S.2d 65, 68-69 (1961) (“The more modern view is that “the courts ... lay emphasis ... upon the law of the place ‘which has the most significant contacts with the matter in dispute.’ ”). These cases, according to Itec, state the correct choice of law rule.

Not only does the Restatement and the substantial weight of the case law support Schroder’s position, but fundamental policies underlying contract law also counsel its adoption.

Prime objectives of contract law are to protect the justified expectations of the parties and to make it possible for them to foretell with accuracy what will be their rights and liabilities under the contract. These objectives may best be attained in multistate transactions by letting the parties choose the law to govern the validity of the contract and the rights created thereby. In this way, certainty and predictability of result are most likely to be secured. Giving parties this power of choice is also consistent with the fact that, in contrast to other areas of the law, persons are free within broad limits to determine the nature of their contractual obligations.

Restatement (Second) of Conflict of Laws § 187 commente (1971). Absent special circumstances, the parties’ choice of New York law must control.

In this case, Itec and Schroder clearly expressed their intention that the law of New York control the interpretation and enforcement of their contract. In addition, New York had significant contacts with the transactions at issue. Schroder is a New York corporation; it executed the Letter Agreement in New York; and fulfilled its obligations under the contract by transferring monies from an account in New York. Together with the choice of law clause, these significant contacts require the application of New York law. See B.M. Heede, Inc. v. West India Machinery and Supply Co., supra, 272 F.Supp. at 241 (New York law applied because the plaintiff was a New York corporation and the agreement was partially executed in New York).

That the application of Dutch law might alter the substantive outcome of this litigation does not alter this conclusion. Judges in this district have not hesitated to apply New York law when the law of an alternative forum would render a contract unenforceable. In B.M. Heede, Inc. v. West India Machinery and Supply Co., supra, Judge Tenney applied New York law notwithstanding a Puerto Rican statute that would have voided part of the contract. Id. at 239. Although Puerto Rico had the most significant contacts with the transaction, Judge Tenney accepted the parties’ designation of the law of New York as the applicable law. This result corresponds to the general predilection of the New York courts to apply the law that will uphold a contract. Birger v. Tuner, 104 Misc.2d 63, 427 N.Y.S.2d 904, 908 (Civ.Ct.1980). According to Itec, applying Dutch law in this case would do just the opposite — it would void the contract. The Court finds that the New York courts would apply the law of New York to determine the legality and enforceability of Itec’s obligations under the Letter Agreement.

2. The Effect of the Dutch Bank Lending Limits.

The enforceability of an obligation that violates a foreign state’s lending limits is a question of first impression for a court applying New York law. Although the New York courts have considered the enforceability of loan agreements that violate federal bank lending limits, Duncomb v. New York, Housatonic & Northern Railroad Co., 84 N.Y. 190, 205 (1881); Slade v. Bennett, 133 A.D. 666, 118 N.Y.S. 278, 279-80 (1st Dep’t 1909); Washington Heights Federal Savings and Loan Association v. Brooklyn Fur Storage Corp., 5 Misc.2d 997, 161 N.Y.S.2d 674, 676 (Sup.Ct.1957), no New York court has considered the enforceability of an obligation that violates a state or foreign lending limit. The state and federal courts that have confronted such problems have universally applied a single guiding principle: one without knowledge of a statutory lending limit can enforce an obligation which violates that limit. First American National Bank v. Alcorn, Inc., 361 So.2d 481 (Miss.1978) (beneficiary of letter of credit agreement who did not know that that agreement violated the maker’s lending limit could enforce maker’s obligation under the letter of credit); Bank of College View v. Nelson, 106 Neb. 129, 183 N.W. 100 (1921) (borrower who did not know of a bank’s loan limit could enforce the bank’s promise to lend it a sum exceeding its legal limit). In addition, a borrower who knows that a lending limit exists can enforce an obligation that it does not know will exceed that limit. National Farmers Organization, Inc. v. Kinsley Bank, 731 F.2d 1464, 1469 (10th Cir.1984).

Whenever the validity of an obligation that violates a bank lending limit has been questioned, the knowledge of the parties has been dispositive. For example, in Jaynes v. First National Bank, 236 F.2d 258 (9th Cir.1956), a court that refused to enforce a bank’s loan commitment to its cashier stated,

If this were the plight of an innocent borrower who had assumed the bank knew what it was doing when it made a bargain to finance the house ..., we could at least record our sympathy. But here we had a bank cashier who knew the amount of the bank’s capital and surplus. Presumably, he had heard of the ten percent [lending] limitation.

Id. at 260. Although not binding on the New York courts, this approach is both logical and persuasive. One who does not and should not know of an improper transaction cannot be victimized by another’s wrongdoing. See National Farmers Organization v. Kinsley Bank, supra, 731 F.2d at 1469.

Moreover, no variable other than the knowledge of the parties explains the bank lending limit cases. Thus, it apparently matters not whether the person seeking to enforce or avoid an obligation is a borrower, a lender, or a guarantor. Compare National Farmers’ Organization, Inc. v. Kinsley Bank, supra (lender must fulfill its obligation to borrower) with Dove Creek State Bank v. Lawrence Warehouse Co., 157 Colo. 263, 402 P.2d 369 (1965) (en banc) (lender excused). Thus, Schroder’s status as a borrower, a guarantor, a lender, or some hybrid of the three is immaterial. Schroder’s knowledge is dispositive.

The facts in that regard are undisputed. Although Schroder knew of the Dutch lending limits when it executed the Letter Agreement, it did not know that Itec’s agreement to purchase the Surplus Note, or the actual purchase thereof, would (or could) violate those limits. In fact, before signing the Letter Agreement, Schroder received a letter from a Dutch attorney opining that the Surplus Note obligation did not violate applicable Dutch lending law.

Schroder’s ignorance leaves the Court no choice but to enforce Itec’s obligation to purchase the Surplus Note, even if that purchase violates the Dutch Credit Control Act. Itec’s defense of illegality is insufficient as a matter of law.

Nor does equity support Itec’s position. Itec asserts that in August 1982, it mistakenly construed the Dutch regulations governing its legal lending limit. Itec was still unaware of the proper application of the regulations in August 1983, when it asked Schroder to extend the Letter Agreement for another year. In fact, Itec asserts, it only “discovered” the problem when Schroder moved for summary judgment in May 1984. Itec claims to have discovered the truth by telephoning the Dutch Central Bank. Eisman Affidavit ¶¶ 7-8. Why Itec waited two years to make this telephone call is a mystery. Itec’s unexplained ignorance supports our decision.

A court may grant summary judgment only if the memoranda and supporting materials before it disclose “that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c). Although summary judgment is often inappropriate in a breach of contract case, see Heyman v. Commerce and Industry Insurance Co., 524 F.2d 1317 (2d Cir.1975), it is sometimes proper, see R.G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 77 (2d Cir.1984); Grumman Allied Industries, Inc. v. Rohr Industries, Inc., 748 F.2d 729 (2d Cir.1984). New factual issues remain unresolved in this dispute. Those that remain do not prevent the Court from disposing of Itec’s defenses as a matter of law. Schroder is, therefore, entitled to summary judgment on its breach of contract counterclaim.

IV. ONG’s Motion to Dismiss

At oral argument, Schroder indicated that a favorable decision on its motion for summary judgment would moot its claim against ONG. Schroder would then be unable to establish any damages flowing from ONG’s conduct. Accepting Schroder’s representation that its claims against ONG are no longer viable, the Court need not decide ONG’s motion.

V. Conclusion

Schroder’s motion for partial summary judgment is granted. Schroder should submit an order withdrawing its claims against ONG and any other claims that are mooted by this decision. The Court need not decide ONG’s motion to dismiss the claims against it.

SO ORDERED.

      . Reference is made to a promissory note (the quote Note unquote) of even date made by Mr. Christiaan G. Walhof and the First Florin Corp. (collectively the quote Borrower unquote), pursuant to which you are granting a loan to the Borrower in the principal amount of US $3,000,000. The principal amount is repayable on August 26, 1983, or before such date, subject to the conditions set forth in the Note.
      ... Bank Itec N.V. (quote Bank Itec unquote) hereby undertakes that, in the event that on August 26, 1983 the Borrower shall not have paid the principal amount, together with all interest and other charges due thereon under the Note, Bank Itec will, upon notice by Schroder, promptly (but in any event no later than 30 days after the date of said notice) cause all rights and obligations under the Note to be assumed by another lending institution as substitute lender (which may be Bank Itec itself), as a result of which Schroder will receive directly from such substitute lender full payment of the principal amount, together with all interest and other charges due thereon under the Note. Except as hereinafter provided, this undertaking is unconditional, and will not be affected by the financial condition or bankruptcy of Mr. Walhof, the First Florin Corp. or Gulf American Insurance Company.
      The foregoing undertaking of Bank Itec shall be subject to, and be limited by, the provision of the Wet Toezicht Kredietwezen, as then in effect, or any similar laws, now or hereafter existing, which regulate banks domiciled in the Netherlands, and any rules, regulations, directives or decrees promulgated thereunder, including particularly the rules governing the legal lending limit of the amount loaned to any one Borrower. In the event that the Note cannot be assumed by a substitute lender other than Bank Itec and Bank Itec cannot assume all the rights and obligations under the Note as a result of its then prevailing legal lending limit or for any other reason whatsoever, Bank Itec agrees to purchase from the Borrower at face value the surplus note ... so that the proceeds may be applied by Schroder to repayment of the Note, together with all interest and other charges due thereon (and by their respective signatures in the space provided at the end of this letter the Borrower agrees to sell the same to Bank Itec for such purpose).
      ******
      This agreement shall be governed by and interpreted in accordance with the laws of New York.
      Van Der Lugt Affidavit, Exhibit B.

      . In opposing Schroder’s previous motion for partial summary judgment, Itec also emphasized that in December 1983, Schroder had authorized the public auctioning of the Surplus Note. At the December 31, 1983, auction, Itec purchased the Surplus Note for $1,000. Itec claimed that this purchase modified Itec’s obligation under the Letter Agreement to purchase the Surplus Note. In its memorandum decision of September 18, 1984, the Court stated, "Still unresolved ... [is] whether Itec's purchase of the Surplus Note is contingent upon Itec’s remaining in compliance with the Dutch lending laws ... and ... whether Itec’s purchase of the Surplus Note for $1,000, and the December negotiations and agreements relating to that purchase somehow altered Itec's obligations to Schroder.” Bank Itec N. V. v. J. Henry Schroder Bank & Trust Co., No. 84-0371 slip op. at 10 (S.D.N.Y. Sept. 18, 1984).
      Itec did not discuss the December 1983 purchase of the Surplus Note either in its responsive papers or at oral argument on this motion. The Court takes this silence to indicate that Itec no longer contends that this purchase constitutes a viable defense to Schroder’s partial summary judgment motion. Moreover, on reflection, we believe it does not.

      . The decision as to whether a contract is ambiguous is for the court. Zodiac Enterprises, Inc. v. American Broadcasting Co., 81 A.D.2d 337, 440 N.Y.S.2d 240, 241 (1st Dep’t 1981), aff’d, 56 N.Y.d 738, 437 N.E.2d 279, 452 N.Y. S.2d 20 (1982).

      . In the words of a recent Second Circuit decision relating to the granting of summary judgment in breach of contract actions, the “terms of the agreement are ‘wholly unambiguous.’” Wards Co. v. Stamford Ridgeway Associates and Trim Fashions, Inc., 761 F.2d 117, 120 (2d Cir.1985) (quoting Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317, 1320 (2d Cir.1975).

      . In an earlier memorandum decision denying the plaintiff’s motion for summary judgment on the breach of contract claim, the Court indicated that an issue of fact might remain as to whether the purchase of the Surplus Note was conditioned on compliance with Dutch law. See Bank Itec N. V. v. J. Henry Schroder Bank & Trust Co., No. 84-0371, slip op. at 10-11 (S.D.N.Y. Sept. 18, 1984). After careful consideration, the Court has decided to adopt what we take to be the only reasonable interpretation of the Letter Agreement.
      It would appear that the purchase of the Surplus Note, following default, was likely to occur only in the event of a financial disaster. To leave Itec’s obligations, and Schroder’s rights, subject to the imponderables of compliance with Dutch law, would have created an intentional uncertainty in the parties respective positions. The fact that the prior provision concerning a substitute lender was subject to the Netherland’s legal lending limits necessitated an alternate which was not so subject. Since this explanation has factual overtones, we do not rely on it. See Heyman v. Commerce & Industry Insurance Co., 524 F.2d 1317 (2d Cir.1975).

        . Both parties attempt to impute knowledge of the relevant Dutch banking regulations to the other, but neither contends that the other understood the pertinent provisions, if those provisions mean what Itec maintains they mean.

      . The New York State legislature recently enacted a provision giving a choice of law clause designating the law of New York binding effect regardless of whether the agreement hears a reasonable relation to New York. See N.Y.Gen. Oblig.Law § 5-1401(1) (1984 N.Y.Laws Ch. 421). The provision, which applies only to certain substantial contracts, evinces New York’s continued willingness to give effect to the intention of parties, like Schroder and Itec who engage sophisticated counsel to draft an important agreement. See Bellefonte Re-Insurance Co. v. Argonaut Insurance Co., 581 F.Supp. 241, 243 (S.D.N.Y.1984).

      . Because Schroder’s state of mind is undisputed, to presume that Schroder knew of the lending limit violation would be improper. Indeed, were the Court to make a presumption, it would be that Itec, a Dutch bank, knew of the problems relating to the Surplus Note obligation.

      . Itec contends that the Dutch Credit Control Act, the "Wet Toezicht Kredietwezen,” voids any term of an agreement that violates any of its-provisions. Although that allegation must be taken as true on this summary judgment motion, it is not dispositive. In the past, the New York courts have looked to the language and intent behind the particular lending limit statute at issue to determine whether an obligation that violates its prohibitions is void. For example, in Duncomb v. New York, Housatonic & Northern Railroad Co., 88 N.Y. 190 (1881), New York’s Court of Appeals held that the federal bank lending limit statute did not void loans that violated its provisions. More recently, the federal and state courts have looked less to statutory language and intent and more to the circumstances of the particular transaction. For example, in First American National Bank of Iuka v. Alcorn, 361 So.2d 481 (Miss.1978), which involved the federal statute, the statutory intent was not dispositive. See also Jaynes v. First National Bank of Ketchikan, Alaska, 236 F.2d 258 (9th Cir.1956). The language of the Dutch Credit Control Act will not, by itself, prevent the Court from awarding summary judgment in Schroder’s favor.

      . Although "summary judgment is ordinarily inappropriate where an individual’s ... state of mind [is] implicated," Meiri v. Dacon, 759 F.2d 989, 998 (2d Cir.1985), it is appropriate when, as here, a party’s state of mind is not a contested issue. Id.


author: EDELSTEIN, District Judge:

text:
    STERLING NATIONAL BANK & TRUST COMPANY OF NEW YORK, Plaintiff, v. FEDERATED DEPARTMENT STORES, INC., Defendant.
    No. 83 Civ. 6054 (DNE).
    United States District Court, S.D. New York.
    June 19, 1985.

      Neal Fellenbaum, New York City, for plaintiff; Jerrold Gilbert, New York City, of counsel.
    Whitman & Ransom, New York City, for defendant; Paul M. Brown and Michele D. Pinsky, New York City, of counsel.
   OPINION AND ORDER

EDELSTEIN, District Judge:

Plaintiff, Sterling National Bank and Trust Company of New York (“Sterling”), claims that defendant Federated Department Stores (“Federated”) is liable for goods sold and delivered by Grant & Sloan, Inc. (“G & S”). Sterling factored the accounts receivable of G & S. Plaintiff moved this court for leave to amend their complaint to add a charge of conspiracy to defraud. Defendants cross-moved for summary judgment to dismiss the initial claim. The motion for summary judgment is granted and the motion for leave to amend is denied.

DISCUSSION

I. Summary Judgment

G & S is a furniture manufacturer that sold merchandise to Burdine’s, a department store owned by defendant Federated. G & S factored their accounts receivable to Sterling. Factoring is the purchasing of accounts receivable. Sterling seeks to recover $128,609.21 from Federated based on these accounts receivable. The accounts receivable reflect merchandise that Sterling claims was delivered from G & S to a warehouse operated by Best-Way Mini Hall, Inc. (“Best-Way”). Sterling contends that Best-Way was the agent of Bur-dine’s/Federated and that delivery to Best-Way constitutes delivery to Burdine’s/Federated.

Defendant bases its motion to dismiss the initial complaint on a claim that Best-Way was not the agent of Burdine’s. To support this claim, defendant submitted the deposition of the president of Best-Way, Jerry Baldwin. The deposition indicated that Best-Way was not the agent of Bur-dine’s. Specifically, Mr. Baldwin stated that Best-Way was paid by G & S, delivered G & S merchandise to G & S customers other than Burdine’s, received instructions from G & S, and sent receipts to G & S. Deposition of Jerry Baldwin at 8-10. He also stated that Best-Way didn’t “have any contract with Burdine’s whatsoever,” id. at 10, and that it was working on behalf of G & S as their agent, id. at 11.

Once evidence supporting judgment in favor of the moving party is introduced, Rule 56(e) requires the non-moving party to respond by setting forth specific facts showing that there is a genuine issue for trial. As stated by the Second Circuit: “[w]hen the movant comes forward with facts showing that his adversary’s claim is baseless, the opponent cannot rest on the allegations of the complaint but must adduce factual material which raises a substantial question of the veracity or completeness of the movant’s showing or presents countervailing facts.” Beal v. Lindsay, 468 F.2d 287, 291 (2d Cir.1972). If he does not do so, summary judgment, if appropriate, shall be entered against him. Fed.R.Civ.P. 56(e).

Plaintiff has not submitted any affadavit, deposition or other evidence to oppose the evidence offered by defendant. Plaintiff merely refers to the deposition of Jerry Baldwin where it was indicated that Best-Way performed similar services for other vendors who did business with Burdine’s, Deposition of Jerry Baldwin at 22-23 and 25-29, and that Best-Way was on a recommended list of direct delivery agents submitted to vendors by Burdine’s, id. at 28. This does not present facts that would indicate any agency relationship between Best-Way and Burdine’s.

In its memorandum of law, plaintiff states that the testimony of Mr. Baldwin “is clearly tainted by continuing self-interest and must be discounted in its entirety.” Plaintiff’s Memorandum of Law at 12. If the credibility of the movant’s witness is challenged by the opposing party and specific bases for possible impeachment are shown, summary judgment should be denied. There must, however, be more than mere allegations in a memorandum of law to place credibility in issue and preclude summary judgment; specific facts must be produced. Rinieri v. Scanlon, 254 F.Supp. 469, 474 (S.D.N.Y.1966); see Vantage Point, Inc. v. Parker Bros., Inc., 529 F.Supp. 1204, 1214 (E.D.N.Y.1981), aff'd mem., 697 F.2d 301 (2d Cir.1982).

Because defendant has introduced evidence that would make plaintiff’s claim baseless and plaintiff has failed to come forward with any evidence to indicate that there are material issues of fact, summary judgment in favor of the defendant on the original complaint is appropriate and is hereby granted.

II. Amendment of Complaint.

Plaintiff moves to amend the complaint to include a claim of conspiracy to defraud. The claim involves a Direct Delivery Procedures Agreement (“DDPA”) entered into between Burdine’s and G & S. Plaintiff contends that the effect of the DDPA was to shift the responsibility for delivering G & S merchandise and to defer payment by Burdine’s until merchandise had been delivered to customers even if Burdine’s had already been paid by the customer. Plaintiff further contends that G & S and Burdine’s did not disclose information regarding the DDPA to Sterling and that Burdine’s employees made fraudulent misrepresentations to Sterling, thus perpetrating a fraud.

Leave to amend should be given freely. Fed.R.Civ.P. 15(a). Leave should be granted

[i]n the absence of any apparent or declared reason — such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.

Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962). Defendant claims that the action has no merit and that the proposed amendment should not be permitted because it would be futile. This position is based on its contention that Bur-dine’s had no duty to disclose the nature of the DDPA to Sterling and that this lack of a duty precludes any claim of fraudulent failure to disclose.

While it is true that a duty to disclose must be present in order for nondisclosure to constitute fraud, Aaron Ferer & Sons, Ltd. v. Chase Manhattan Bank, N.A., 731 F.2d 112, 123 (2d Cir.1984), such a duty may exist in this case. Plaintiff alleges a conspiracy to defraud between Federated and G & S. The factoring agreement between G & S and Sterling may have created a duty to disclose the nature of the DDPA by G & S. The alleged breach of this duty by G & S would impose liability on G & S’s co-conspirators for aiding in the non-disclosure. The co-conspirators would also be liable for any fraud based on misrepresentation by another co-conspirator. Thus, any liability for fraudulent non-disclosure on the part of Federated would not stem from a duty created by the relationship between Federated and Sterling but from the relationship between Sterling and G & S. See Polyglycoat Corp. v. C.P. C. Distributors, Inc., 534 F.Supp. 200, 204 & n. 6 (S.D.N.Y.1982).

Plaintiff also alleges that employees of Federated made fraudulent misrepresentations to Sterling regarding the relationship between G & S and Federated. Unlike fraudulent nondisclosure, the tort of fraudulent misrepresentation does not require the existence of an independent duty. Compare Restatement (Second) of Torts § 525 (1977) (liability for fraudulent misrepresentation) with id. § 551 (liability for nondisclosure). The duty under the latter arises from making the statement. Thus, Federated may have direct, as opposed to conspiratorial liability for fraudulent misrepresentations.

Defendant also claims that the motion to amend the complaint is not timely. This claim does not reflect the events of this case. The court required the parties to submit a joint pre-trial order before filing the motion to amend so that the delay in filing the motion was in part based on the court’s instruction. Further, the defendant does not point to any prejudice that would result from the filing of the amended complaint but merely states that “such prejudice is manifest.” Defendant’s Memorandum of Law at 14. No witnesses or evidence are claimed to have been lost and the events are not so distant that the memories of the parties or witnesses have been dulled. The motion to amend the complaint is therefore not untimely.

The proposed amended complaint is not satisfactory in one respect. Rule 9(b) of The Federal Rules of Civil Procedure requires that fraud be pleaded with particularity, specifically plaintiff must plead the time, place and content of an alleged false representation. McGinty v. Beranger Volkswagen, Inc., 633 F.2d 226, 228 (1st Cir.1980); Felton v. Walston & Co., 508 F.2d 577, 581-82 (2d Cir.1974). Rule 9(b) also applies to claims of fraudulent nondisclosure. Herm v. Stafford, 663 F.2d 669, 683-84 (6th Cir.1981). The particularity requirement of Rule 9(b) serves three purposes: first, to inhibit the filing of a complaint as a pretext for discovery for unknown wrongs; second, to protect potential defendants from the harm that comes to their reputation when charged with a crime involving moral turpitude; and third, to ensure that allegations of fraud are sufficiently concrete and particularized so that the defendant has notice of what conduct is complained of, thus enabling the defendant to prepare a defense. Gross v. Diversified Mortgage Investors, 431 F.Supp. 1080, 1087 (S.D.N.Y.1977), aff,d mem., 636 F.2d 1201 (2d Cir.1980).

In this light, the Proposed Amended Complaint certainly does not meet the standards set by Rule 9(b) and cannot be accepted. The Proposed Amended complaint contains only conclusory allegations regarding fraudulent representations, Proposed Amended Complaint at H 12, and fraudulent concealment, id. at 1111. Based on the failure to satisfy the pleading requirements of Rule 9(b), the motion to amend the complaint is denied without prejudice.

CONCLUSION

Defendant’s motion for summary judgment is granted and judgment entered for defendant on the claim in the original complaint. Plaintiff’s motion to amend the complaint to include a cause of action for conspiracy to defraud is denied without prejudice based on the failure to comply with Rule 9(b) of the Federal Rules of Civil Procedure.

      . In New York, there is no substantive tort of civil conspiracy. Ahmed v. National Bank of Pakistan, 572 F.Supp. 550, 554 (S.D.N.Y.1983); Powell v. Kopman, 511 F.Supp. 700, 704 (S.D.N.Y.1981), however a limited tort of conspiracy to do an unlawful thing, or to do a lawful thing in an unlawful manner has been recognized, Arlinghaus v. Ritenour, 622 F.2d 629 (2d Cir.), cert. denied, 449 U.S. 1013, 101 S.Ct. 570, 66 L.Ed.2d 471 (1980); Ahmed v. National Bank of Pakistan, supra, 572 F.Supp. at 555. Unlike criminal conspiracy where the conspiracy itself is the crime, a plaintiff in a civil conspiracy action may recover damages only for any overt act or acts. Powell v. Kopman, 511 F.Supp. 700, 704 (S.D.N.Y.1981); Kajtazi v. Kajtazi, 488 F.Supp. 15, 21 (E.D.N.Y.1978). The conspiracy is "the string . whereby the plaintiff seeks to tie together those who, acting in concert, may be held liable for any overt act.’ ” Id. (quoting Rutkin v. Reinfeld, 229 F.2d 248, 252 (2d Cir.), cert. denied, 352 U.S. 844, 77 S.Ct. 50, 1 L.Ed.2d 60 (1956)).

      . Paragraph 12 of the Proposed Amended Complaint alleges that "[ejmployees of Federated made various fraudulent representations to Sterling regarding the relationships between Federated and G & S. Such fraudulent representations were known to be false by the employees of Federated at the time they were made to Sterling.”

      . Paragraph 11 of the Proposed Amended Complaint alleges that ”[t]hrough various devices, employees of Federated, alone and in concert with others, did willfully, intentionally and fraudulently conceal from Sterling the existance, operation and actual and intended effects of the DDPA and the true relationships between Federated and G & S.”


author: PLATT, District Judge.

text:
    Alejo RAMOS, Osvaldo Garcia, Juan Del Rosario, and Andres Diaz, individually and on Behalf of all others similarly situated, Plaintiffs, and Francia Mendez, Hector G. Millet, and Hilda Santos, individually and on Behalf of all others similarly situated, Intervening Plaintiffs, v. FLAGSHIP INTERNATIONAL, INC., and Alan Mandel, in his capacity as General Manager, William Jones, George Wilkie and Tibaldo Rodriguez, in their capacity as Supervisors, Defendants.
    No. 83 CV 683.
    United States District Court, E.D. New York.
    June 19, 1985.

      Puerto Rican Legal Defense & Education Fund, Inc. by Kenneth Kimerling, Juan Cartagena, New York City, for plaintiffs and intervening plaintiffs.
    Bigham Englar Jones & Houston by James B. McQuillan, Lisa J. Savitt, New York City, for defendants.
   MEMORANDUM AND ORDER

PLATT, District Judge.

With respect to plaintiffs’ amended complaint, defendants move for an order pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure “and the inherent power of the Court” dismissing

' (i) all claims brought under 42 U.S.C. § 1981 on the ground that said statute is not applicable to national origin discrimination claims;
(ii) the claims of plaintiffs Andres Diaz, Juan del Rosario and Hector G. Millet under Title VII of the Civil Rights Act of 1964 on the ground that said claims are time-barred; and
(iii) the claim of plaintiff Alejo Ramos against George Wilkie, the claims of plaintiff Osvaldo Garcia against defendants William Jones and Tibaldo Rodriguez, the claim of plaintiff Juan del Rosario against defendant George Wilkie, the claim of plaintiff Andres Diaz against defendant George Wilkie, the claims of intervening plaintiff Francia Mendez against defendants George Wilkie and Tibaldo Rodriguez, the claims of intervening plaintiff Hector G. Millet against defendants William Jones, George Wilkie and Tibaldo Rodriguez, and the claims of intervening plaintiff Hilda Santos against defendants William Jones, George Wilkie and Tibaldo Rodriguez, all on the ground that said claims fail to state claims upon which relief may be granted.

Plaintiffs Alejo Ramos, Osvaldo Garcia, Juan del Rosario and Andres Diaz, and intervening plaintiffs Francia Mendez and Hector G. Millet are all former employees of the Sky Chefs Division of defendant Flagship International, Inc. Intervening plaintiff Hilda Santos is still employed by Sky Chefs.

I.

All the plaintiffs and intervening plaintiffs claim that they have been subjected to a pattern and practice of harassment and unequal terms and benefits of employment because they are Hispanic and because of race, color and/or national origin in violation of 42 U.S.C. § 1981 and Title VII of the Civil Rights Act of 1964.

Section 1981 provides:

“All persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts, to sue, be parties, give evidence, and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other.”

In the amended complaint, plaintiffs Juan del Rosario and Andres Diaz and intervening plaintiffs Francia Mendez, Hector G. Millet and Hilda Santos allege that they are “non-white Hispanic[s]” and plaintiffs Alejo Ramos and Osvaldo Garcia allege that they are “Hispanic[s] of Cuban national origin.”

Citing Ben-Yakir v. Gaylinn Associates, Inc., 585 F.Supp. 543, 544-45 (S.D.N.Y.1982); Rios v. Marshall, 530 F.Supp. 351, 360-61 (S.D.N.Y.1981); Avigliano v. Sumitomo Shoji America, Inc., 473 F.Supp. 506, 514 (S.D.N.Y.1979), aff'd, 638 F.2d 552 (2d Cir.1981), vacated on other grounds, 457 U.S. 176, 102 S.Ct. 2374, 72 L.Ed.2d 765 (1982); Martinez v. Bethlehem Steel Corporation, 78 F.R.D. 125 (E.D.Pa.1978); Jones v. The United Gas Improvement Corp., 68 F.R.D. 1, 10-15 (E.D.Pa.1975), defendants argue that plaintiffs’ claims are based on their “Hispanic national origin” and that § 1981 is not available for relief from discrimination based on national origin.

As indicated above, only two of the plaintiffs, i.e., Messrs. Ramos and Garcia, fail to allege that they are “non-white.” Both of them, however, allege that they are “Hispanic” and add that they are of “Cuban national origin.”

Various courts have advanced different theories in reaching the conclusion that Hispanics may sue under § 1981. Some have emphasized that they belong in essence to a non-white group. See, e.g., Manzanares v. Safeway Stores, Inc., 593 F.2d 968 (10th Cir.1979) (plaintiff of Mexican-American descent held to have a valid cause of action under § 1981 which is “directed to racial discrimination primarily, but is not necessarily limited to the technical or restrictive meaning of ‘race’.”); Ortiz v. Bank of America, 547 F.Supp. 550, 562-64 (E.D.Cal.1982) (the Court held that plaintiff of Puerto Rican descent had a valid cause of action under § 1981 and thus adopted the approach of Manzanares, after a lengthy survey of recent cases and legislative history); Garcia v. Rush-Presbyterian-St. Luke’s Medical Center, 80 F.R.D. 254, 262-64 (N.D.Ill.1978), aff'd, 660 F.2d 1217 (7th Cir.1981) (Mexican and Mexican-American plaintiffs held to state a cause of action under § 1981 because in analyzing discrimination against these groups race, national origin and ethnicity may be indistinguishable). Others have permitted complaints by Hispanics to stand on the theory that they alleged discrimination of a racial character. See, e.g., Bullard v. OMI Georgia, Inc., 640 F.2d 632, 634 (5th Cir.1981) (because distinction between national origin and racial discrimination is difficult to determine, plaintiff’s allegations of racial discrimination were sufficient to survive a motion to dismiss; the Court held that “[a]n attempt to make such a demarcation before both parties have had an opportunity to offer evidence at trial is inappropriate.”); Apodaca v. General Electric Co., 445 F.Supp. 821, 823-24 (D.N. M.1978) (Spanish surnamed plaintiff granted leave to amend complaint pursuant to § 1981 to allege discrimination motivated by racial perception and animus).

Regardless of the historical reasons for the initial enactment of § 1981, the language contained therein is broad enough to encompass not just some citizens or legal residents of other national origin but all persons within the United States who are not accorded the same rights as are enjoyed by “white citizens.”

Assuming, arguendo, that there are discrete identifiable citizens who are undeniably “white” within the meaning of such section, there are unquestionably innumerable groups and classes of individuals within this country who are or are perceived to be of various shades and degrees of “nonwhite” skin color.

In this Court’s view, discrimination practiced against any of such group or class falls within the purview of § 1981. Groups based in national origin are not excluded.

It is a mistake to say that the Supreme Court has not “passed upon” this question. It has, albeit in a different context, in United States v. Bhagat Singh Thind, 261 U.S. 204, 43 S.Ct. 338, 67 L.Ed. 616 (1923), which has an extensive discussion of what was meant by a “white person” in a Naturalization Act of 1790 at the time of its re-enactment in 1870 and 1875 — almost the same time period during which the original version of § 1981 was enacted. In Bhagat, the Court pointed out that, while the phrase “white person” and the word “Caucasian” are often treated as synonymous, “they are not of identical meaning — idem per idem,” id. at 208, 43 S.Ct. at 339, and “that the words ‘free white persons’ are words of common speech, to be interpreted in accordance with the understanding of the common man, synonymous with the word ‘Caucasian’ only as that word is popularly understood.” Id. at 214-15, 43 S.Ct. at 341.

In this Court’s view that analysis is correct and we hold therefore that it is a question of fact for a jury or other trier of fact whether the plaintiffs and those they purport to represent are “popularly understood” to constitute a group or groups “readily distinguishable [other than on sex or religious grounds] from the various groups of persons in this country commonly recognized as white.” United States v. Bhagat, 261 U.S. at 215, 43 S.Ct. at 342, and citizens who enjoy the rights and benefits specified in § 1981 and whether the plaintiffs were purposefully discriminated against by reason thereof.

One hesitates in this field to draw analogies, but to us the problem is one of perception or perhaps one analogous to the “contemporary community standard” rule in obscenity cases and should be treated in such fashion. Section 1981 by its language, conferring as it does its protections on “all persons within the jurisdiction of the United States”, permits in our view of none of the suggested limitations as race, national origin, or alienage. By drawing this conclusion, our reading of § 1981 is in accord with the reading given to it by the Tenth Circuit in Manzanares v. Safeway Stores, Inc., 593 F.2d at 570-72, a pertinent portion of which is quoted below.

Defendants’ motion on this first ground must be and the same hereby is denied.

II.

Defendants argue further that the actions of Messrs, del Rosario, Diaz and Millet under Title VII of the Civil Rights Act of 1964 are time barred under the provisions of § 2000e-5(e) of such Act, which provides in pertinent part:

“A charge under this section shall be filed within one hundred and eighty days after the alleged unlawful employment practice occurred ... except that in the case of an unlawful employment practice with respect to which the person aggrieved has initially instituted proceedings with a State or local agency with authority to grant or seek relief from such practice ... such charge shall be filed ... within three hundred days after the alleged unlawful employment practice occurred, or within thirty days after receiving notice that the State or local agency has terminated the proceedings under the State or local law, whichever is earlier.”

42 U.S.C. § 2000e-5(e) (1984).

The parties concede that Messrs. Diaz, del Rosario and Millet have not exhausted the administrative procedures required by Title VII. These plaintiffs, however, are members of a proposed class, three of which, Ramos, Garcia and Mendez, have assertedly exhausted their administrative remedies.

In Allen v. Amalgamated Transit Union Local 788, 554 F.2d 876, 882-83 (8th Cir.), cert. denied, 434 U.S. 891, 98 S.Ct. 266, 54 L.Ed.2d 176 (1977), the Court of Appeals said in pertinent part:

“The district court denied Title VII relief to all plaintiffs except Ben Allen and Aaron Rutlin, since only they had filed charges with the EEOC and the complaint did not allege a class action or seek class relief. It is settled that a suit by a named member of a class in a class action may seek relief for the entire class without the necessity of other class members pursuing their administrative remedy with the EEOC. See Albemarle Paper Co. v. Moody, 422 U.S. 405, 414 n. 8, 95 S.Ct. 2362 [2370 n. 8, 45 L.Ed.2d 280] (1975); Romasanta v. United Airlines, Inc., 537 F.2d 915, 918 (7th Cir.1976); Macklin v. Spector Freight Systems, Inc., 156 U.S.App.D.C. 69, 478 F.2d 979, 985 n. 11 (1973); Bovoe v. Colgate-Palmolive Co., 416 F.2d 711, 718-20 (7th Cir.1969); Oatis v. Crown Zellerbach Corp., 398 F.2d 496, 499 (5th Cir.1968). In the instant case, although no class action was filed, 13 additional plaintiffs alleged facts demonstrating they were similarly situated and had received the same discriminatory treatment as Ben Allen and Aaron Rutlin. Under such circumstances, particularly where the discrimination is continuing it would be nonsensical to require each of the plaintiffs to individually file administrative charges with the EEOC. Defendants have in no way been placed in jeopardy.”

See also Crawford v. United States Steel Corp., 660 F.2d 663, 666 (5th Cir.1981).

On the above-indicated authorities, defendants’ motion to dismiss the actions of Diaz, del Rosario and Millet under Title VII must be and the same hereby is denied.

III.

Plaintiffs concede that defendants Jones, Wilkie and Rodriguez should not be defendants in the claims where they are not named. Further relief, if any, from their so-called “classwide claims” is inappropriate at this juncture and will have to await the preparation of an appropriate pretrial order or the conclusion of plaintiffs’ case.

Submit order on notice.

SO ORDERED.

      . Although defendants’ cases literally state the proposition argued for, three of these cases are not factually analogous to the case at bar. For example, Rios v. Marshall involved a claim of discrimination against domestic migrant workers, Puerto Ricans and blacks, in favor of Jamaican foreign workers; Avigliano v. Sumitomo Shoji America, Inc. was brought by female clerical workers for discrimination against them in favor of Japanese nationals; and Ben-Yakir v. Gaylinn Associates, Inc. involved a white alien employee alleging discrimination against him as compared with American citizen employees.
      The Jones v. United Gas Improvement Corp. case held that claims of Spanish surnamed individuals were claims of discrimination based on national origin and as such, not included within actionable claims under § 1981. While the Court in Jones did allow black plaintiffs their § 1981 claim, it is not clear to this Court if the Spanish-surnamed individuals might have had a claim if they had argued that the discrimination, they had allegedly suffered was racially based and not based on national origin.
      The Court in Martinez v. Bethlehem Steel Corp. did rule that persons of Hispanic national origin are excluded from filing § 1981 claims but the Court qualified its rationale by stating that it perceived no "practical need” nor “logical reason” to extend the coverage of § 1981 because Hispanic persons can seek redress under Title VII and plaintiff in that case was doing so. Clearly, the fact that Hispanics may seek redress for discrimination under Title VII does not seem a sufficient rationale to rule that they, therefore, have no need for the rights possibly available to them under § 1981.
      Finally, we note that the cases relied upon by the defendants are district level rulings, whereas many of the cases relied upon by plaintiffs, see infra, have been passed upon or issued by higher courts.

      . Section 1981 is derived from the Civil Rights Act of 1866, which was re-enacted as part of the Enforcement Act of 1870, portions of which were subsequently codified in the Revised Statutes of 1874 in which § 1981 appeared in its present-day form. For a more detailed description of its statutory history, see Comment, Developments in the Law — Section 1981, 15 Harv. C.R.-C.L.L.Rev. 29, 35-36 (1980).

      . "Of course, section 1981 makes no mention of race, national origin, or alienage. The only reference is that 'all persons’ shall have described rights and benefits of ‘white citizens.' Thus the standard against whom the measure was to be made were the rights and benefits of white citizens. The measure is group to group, and plaintiff has alleged that the 'group' to which he belongs — those he describes as of Mexican American descent — is to be measured against the Anglos as the standard____ In this holding we consider that Mexican American, Spanish American, Spanish-surname individuals, and Hispanos are equivalents, and it makes no difference whether these are terms of national origin, alienage, or whatever. It is apparent that a group so described is of such an identifiable nature that the treatment afforded its members may be measured against that afforded the Anglos.
      "[S]ection 1981 is directed to racial discrimination primarily, but it is not necessarily limited to the technical or restrictive meaning of 'race.'
      "If 'white citizens’ means a race, which technically does not seem particularly clear, it would seem that a group which is discriminated against because they are somehow different as compared to ‘white citizens’ is within the scope of section 1981. We cannot consider this as a ‘national origin’ case and that alone. Prejudice is as irrational as is the selection of groups against whom it is directed. It is thus a matter of practice or attitude in the community, it is usage or image based on all the mistaken concepts, of ‘race.’
      "It is sufficient for our purposes that as a matter of common knowledge ... a prejudice as alleged in this complaint does exist. It is directed against persons with Spanish surnames. It is a group whose rights can be measured against the standard group or control group referred to in section 1981.”

        Manzanares v. Safeway Stores, Inc., 593 F.2d at 970-72.