text:
    Edward NUNNELLEY, Plaintiff, v. DOUGLAS COUNTY, Walter S. Kibbe, Stanton R. Lamb, Jerry Maple, the City of Reno and John Doe Reno Police Officers I, II, III, IV and V, Defendants.
    CV-R-85-264-ECR.
    United States District Court, D. Nevada.
    Oct. 23, 1985.

      G.C. Backus, Reno, Nev., for plaintiff.
    Brent T. Kolvet, Dist. Atty., Minden, Nev., and Victor Alan Perry, Reno, Nev., for Douglas County, Walter S. Kibbe, Jerry Maple, Stanton R. Lamb.
    Shamberger, Georgeson, McQuaid & Thompson, Reno, Nev., for City of Reno.
   ORDER

EDWARD C. REED, Jr., District Judge.

Plaintiff Edward Nunnelley filed suit alleging that defendants Douglas County, Walter Kibbe, Stanton Lamb, Jerry Maple, the City of Reno, and John Doe Reno Police Officers, I, II, III, IV, and V, violated his civil rights. Defendants Douglas County, Walter Kibbe, Stanton Lamb and Jerry Maple move this Court to dismiss the complaint for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). A motion to dismiss a complaint requires the Court to determine whether the claim as alleged, without regard to the weight of the evidence, and assuming as true all facts pleaded, states a claim for which relief can be granted. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957).

The thrust of Nunnelley’s claim, brought pursuant to 42 U.S.C. § 1983, is that defendants Kibbe and Lamb wrongfully arrested him, used excessive force in the arrest, and denied him his right to bail and counsel.

DOUGLAS COUNTY

In support of their motion to dismiss the complaint against Douglas County, defendants argue that the mere employment of alleged tortfeasors is insufficient as a matter of law to subject Douglas County to liability under § 1983. Defendants cite as authority Monell v. New York City Department of Social Services, 436 U.S. 658, 691, 98 S.Ct. 2018, 2036, 56 L.Ed.2d 611 (1978).

Under Monell, Douglas County would be amenable to suit under § 1983 for a deprivation of Nunnelley’s constitutional rights if that deprivation resulted from official policy, practice or custom. Id. Accordingly, to sufficiently allege a claim against Douglas County under § 1983, Nunnelley must allege that the actions complained of were done under color of the customs and practices of Douglas County, and that the defendants’, actions deprived Nunnelley of his constitutional rights. See Morrison v. Jones, 607 F.2d 1269, 1275-76. (9th Cir.) (per curiam) cert. denied, 445 U.S. 962, 100 S.Ct. 1648, 64 L.Ed.2d 237 (1980). Nunnelley makes no such allegation. Thus, there is no federal claim for relief against Douglas County.

Although it is not entirely clear from the complaint, Nunnelley argues in his opposition to the motion to dismiss that Douglas County is named as a party-defendant only on the pendent state claims. He asserts that because NRS § 41.0337 requires Douglas County be named as an indispensable party for any state tort claims against its employees, this Court has jurisdiction over the county.

The theory of pendent jurisdiction gives this Court the constitutional “power to hear ... non-federal claims along with ... federal ones” as long as the claims “arise from a ‘common nucleus of operative fact.’ ” Owen Equipment and Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402, 57 L.Ed.2d 274 (1978). Nunnelley’s state tort claims arise from a common nucleus of operative facts. As stated above, however, Douglas County is not a party to any federal claim. If Nunnelley had been able to plead a federal claim against the county, this Court would have had jurisdiction under the theory of “pendent claim” jurisdiction. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Because, however, Nunnelley named Douglas County merely as a “pendent party”, this Court is not permitted to exercise jurisdiction. See Ayala v. United States, 550 F.2d 1196, 1199-1200 (9th Cir.1977), cert. dismissed 435 U.S. 982, 98 S.Ct. 1635, 56 L.Ed.2d 76 (1978). Courts in the Ninth Circuit must adhere to the rule barring the adjudication of pendent party claims. Id. at 1200.

Nunnelley argues that Hirst v. Gertzen, 676 F.2d 1252 (9th Cir.1982), dictates that Douglas County is a proper party because it is an indispensable party to Nunnelley’s state law claims. Nunnelley misreads the case. That court held that the district court would have jurisdiction over the state law claim if there was federal jurisdiction over all indispensable parties to the state law cause of action. See id. at 1265. Thus, absent federal jurisdiction over the indispensable party, the federal court would have no jurisdiction over that party on the pendent state claims.

Nunnelley failed to allege that any of the actions were done under color of the customs and practices of Douglas County. This Court, therefore, lacks an independent basis of federal jurisdiction over Douglas County. We will, accordingly, dismiss the complaint against Douglas County.

KIBBE AND LAMB

The gravamen of defendants’ argument in support of their motion to dismiss the complaint against Kibbe and Lamb is that Nunnelley’s claims of excessive force and unlawful arrest are remedied by state tort law and, thus, 42 U.S.C. § 1983 relief is precluded. To support their argument that Nunnelley has no § 1983 relief, defendants rely on Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981); Hudson v. Palmer, — U.S. -, 104 S.Ct. 3194, 82 L.Ed.2d 393 (1984); and the withdrawn decisions of Haygood v. Younger, 718 F.2d 1472 (9th Cir.1983), withdrawn, 729 F.2d 613 (9th Cir.1984); and Bretz v. Kelman, 722 F.2d 503 (9th Cir.1983), withdrawn, 729 F.2d 613 (9th Cir.1984). We find defendants’ argument without merit.

As the Ninth Circuit points out, “Parratt and Hudson did not decide ... whether the availability of some remedial relief in state court might be imposed as a bar to federal relief under 1983 in the myriad fact situations that might present themselves in other cases against state and local government officials. Parratt and Hudson dealt with relatively minor infractions of prisoners’ interests in their personal property, and did not deal with official assaults, batteries or other invasions of personal liberty.” Haygood v. Younger, 769 F.2d 1350, 1357 (9th Cir.1985) (cite omitted). More recently, the Ninth Circuit squarely faced the issue before this Court and held that a § 1983 claim based upon a violation of the Fourth Amendment where police use excessive force during arrest procedures is not barred by Parratt. Robins v. Harum, 773 F.2d 1004, 1008-10 (9th Cir.1985).

We find, therefore, that the allegations- in Nunnelley’s complaint state a § 1983 claim for damages. The mere existence of state tort remedies for use of excessive force does not necessitate the dismissal of this complaint against Kibbe and Lamb.

ABSOLUTE IMMUNITY OF KIBBE AND LAMB

Defendants next argue that Nunnelley was arrested on a facially valid arrest warrant and, thus, no cause of action lies under 42 U.S.C. § 1983 for unlawful arrest. Defendants also assert that Nunnelley’s arrest pursuant to a warrant constituted a court order and thus, Kibbe and Lamb are entitled to absolute immunity. Accordingly, defendants argue that the claims based on the warrant (Counts One and Two of the complaint) should be dismissed.

Defendants are correct. In Baker v. McCollan, 443 U.S. 137, 99 S.Ct. 2689, 61 L.Ed.2d 433 (1979), the Supreme Court held that when an arrest is made on a facially valid arrest warrant and the § 1983 claim is based in part on an intentional failure to investigate and determine that the wrong man was imprisoned, no § 1983 claim lies. Id. at 143, 99 S.Ct. at 2694. The Court found that although the allegations may give rise to a relief under state tort law, no claims arise under the United States Constitution. Id. at 144, 99 S.Ct. at 2694.

This is precisely what Nunnelley alleges in his complaint. Complaint at 4. Nunnelley attempts to save his claim by asserting state tort claims in his opposition to the motion to dismiss. He is correct that state tort law is his only basis for relief. However, his complaint only alleges violations of his constitutional rights in Counts One and Two. Accordingly, the motion to dismiss Counts One and Two will be granted. See Fed.R.Civ.P. 8(a).

COUNSEL AND BAIL

Defendants argue that Nunnelley’s allegations of denial of the right to counsel and to bail (Count Four of the complaint) fail to state a claim under § 1983. Defendants are correct. Nunnelley has no absolute right to bail, only a Fourteenth Amendment due process right to have a state’s bail system administered without caprice or discrimination. Kelly v. Springett, 527 F.2d 1090, 1093 (9th Cir.1975). Nunnelley’s complaint fails to allege that defendants administered Nevada’s bail system with caprice or discrimination. Thus, no basis for relief lies under § 1983.

Nunnelley also alleges no facts to support his claim that he was denied the right to counsel. He does assert that the defendants’ misconduct denied him the right to counsel, but there are no factual allegations to support this conclusion. Although he asserts that defendants violated NRS § 171.178 and NRS § 171.153, Nunnelley does not demonstrate that the violations, if such occurred, led to any violation of his constitutional rights. Nunnelley’s complaint is woefully short of the requirements of Fed.R.Civ.P. 8(a). He cannot now argue and assert that which he has never alleged. The defendants’ motion to dismiss Count Four of the complaint will be granted.

MAPLE

Defendants argue that although Nunnelley alleged that Maple failed to supervise his two deputies, that Nunnelley failed to allege an affirmative link between the misconduct alleged and Maple’s alleged failure to train and supervise. Nunnelley alleged that the two deputies used excessive force in arresting him. He further alleges that this misconduct was a result of Maple’s failure to train and supervise them.

In accordance with the standard by which we view motions to dismiss, we find that if Nunnelley can prove the facts alleged, he may be entitled to relief. Thus, the motion to dismiss Maple will be denied.

CONCLUSION

IT IS, THEREFORE, HEREBY ORDERED that the motion to dismiss the complaint against Douglas County is GRANTED.

IT IS FURTHER ORDERED that the motion to dismiss the complaint against Kibbe and Lamb as to Count Three is DENIED.

IT IS FURTHER ORDERED that the motion to dismiss the complaint against Kibbe and Lamb as to Counts One and Two is GRANTED.

IT IS FURTHER ORDERED that the motion to dismiss the complaint as to Count Four is GRANTED.

IT IS FURTHER ORDERED that the motion to dismiss the complaint against Maple is DENIED.

      . Defendants filed their motion to dismiss on June 28, 1985. The Ninth Circuit voted to withdraw the Haygood and Bretz decisions and consolidated them for rehearing en banc on March 28, 1984.

      . If an arrest is made in bad faith, there may be a cause of action under § 1983. See Bretz v. Kelman, 773 F.2d 1026, 1030 (9th Cir.1985). Nunnelley fails to allege any facts supporting a claim of bad faith. He merely alleges that Kibbe and Lamb were not sure whether Nunnelley was guilty and that Nunnelley’s arrest was an "experiment.” Complaint at 5.

      . In his opposition to defendants’ motion to dismiss, Nunnelley asserts for the first time that he was denied the equal protection of Nevada's bail laws. His complaint fails to assert any such facts and, accordingly, the Court will not consider such an assertion. See Fed.R.Civ.P. 8(a).


source: Caselaw Access Project

author: LAFFITTE, District Judge.

license: Public Domain

text:
    CULEBRA ENTERPRISES CORP., etc. Plaintiffs, v. Miguel A. RIVERA RIOS, et al., Defendants.
    Civ. No. 79-425 HL.
    United States District Court, D. Puerto Rico.
    Oct. 29, 1985.
    Jaime Sifre, San Juan, P.R., for plaintiffs.
    Miguel de la Cuétara, Atty., Marta Quiñones de Torres, Asst. Sol. Gen., Dept, of Justice, San Juan, P.R., for defendants.
    Alberto Tellechea, U.S. Atty., for Kenneth Black, etc.
    Esteban J. Núñez Hoyo, and John Mudd, Rio Piedras, P.R., for Dept, of Justice of P.R.
   OPINION AND ORDER

LAFFITTE, District Judge.

We are presented with plaintiffs’ Rule 59 motion requesting a new trial and Rule 60(b) motion requesting relief from this Court’s July 9, 1985 judgment dismissing plaintiffs’ claim for damages and denying their claim for attorney’s fees. In light of a recent First Circuit opinion on attorney’s fees, the Court grants plaintiffs’ Rule 60(b) motion. On reconsideration we find that plaintiffs are prevailing parties within the meaning of 42 U.S.C. § 1988, and are entitled to attorney’s fees. The Court does not reconsider and hereby reaffirms its decision dismissing plaintiffs’ claim for damages. Plaintiffs’ Rule 59 motion for new trial is DENIED.

Plaintiffs are several corporations owning property on the island of Culebra. They brought this action for injunctive and monetary relief under 42 U.S.C. §§ 1983, 1985 and 1986 against defendants, members of the Puerto Rico Planning Board, members of Culebra’s Conservation and Development Authority and Culebra’s Mayor.

Between 1966 and 1970 plaintiffs individually purchased property on Culebra. Collectively, they own 406 cuerdas of land. In August, 1975 the Puerto Rico Planning Board rezoned the island of Culebra. As a result of their action the vast portion of plaintiffs’ property was zoned “P”, for public use only, and the remaining portion was zoned RO-25-C, for agriculture use. In November, 1977 plaintiffs submitted to the Planning Board their development plan to sell their property in 5 cuerdas lots and asked for a modification of the “P” zoning. This proposal was denied by the Board in December 1977, and the denial was reaffirmed in May, 1978.

Plaintiffs filed this action for injunctive and monetary relief in 1979. They claim that defendants’ zoning regulation “froze” their property, preventing them from implementing their development plans without just compensation and in violation of due process. They allege that the regulation has no purpose and is arbitrary, capricious and in violation of the law. In support of this allegation, plaintiffs quote the deposition of defendant Luis E. Biaggi, a member of the Puerto Rico Planning Board:

Q. Which is the public use that was going to be given to these lands zoned as “P”.
A. None, as I understand.
Q. None, so, in your opinion there is no public use considered, nor will it be considered in the lands of the plaintiff located in “P”?
A. No. that I understand.
Q. And what is the justification in this case for the “P”, if there is no public use?
A. I don’t know the reasons why the Board established... I indicated this ... previously.
Q. Look, you declare that you do not know of any public use for these lands zoned in “P”.
A. Ahum.
Q. And that you have never known of that public use.
A. Yes.
Q. Since when do you know that, that there is no public use for these lands zoned “P”? That there is no public use considered? Since when this is of your knowledge?...
A. Since 1977 up to date.
(Plaintiffs’ translation from Spanish.)

Following a series of settlement negotiations, the parties submitted to the Court a Partial Settlement Stipulation dated August 16, 1984. On July 16, 1984, the defendants, the Planning Board of Puerto Rico, approved an amendment to the zoning map of Culebra rezoning the property from “P” to “RO-25-C.” This amendment became effective August 15, 1984. By the Settlement Stipulation defendants gave plaintiffs special authorization to sell their property in 5 cuerda lots in accordance with their plan for development. By this Settlement Stipulation plaintiffs succeeded on their claim for injunctive relief. However, they specifically reserved their rights to sections 1983 and 1988 damages and attorneys fees. Defendants denied all liability.

In this Court's June 25, 1985 opinion we considered only plaintiffs’ Section 1983 claim for damages and attorney’s fees. We did not consider whether the claim for injunctive relief was valid because this claim had been mooted by the August Settlement Stipulation.

We dismissed plaintiffs’ claim for damages on the grounds that plaintiffs were unable to establish a constitutional right or privilege deprived by defendants’ zoning regulation. It is well settled in the First Circuit that a section 1983 claim for damages for violation of due process does not lie against a local planning board for rejecting a development proposal, whether or not the rejection was erroneous or in violation of state law. Creative Environments, Inc. v. Estabrook, 680 F.2d 822 (1st Cir.1981); Raskiewizc v. The Town of Boston, 754 F.2d 38 (1st Cir.1985); Chiplin Enterprises, Inc. v. City of Lebanon, 712 F.2d 1524 (1st Cir.1983). Only by establishing a constitutional entitlement to the use of property or by establishing unconstitutional discrimination by local officials can a party make out a Section 1983 claim for damages. See Creative Enterprises, Inc., supra; Roy v. City of Augusta, Maine, 712 F.2d 1517 (1st Cir.1983) (plaintiff stated a 1983 claim against local officials who denied him an operating license in defiance of a state court ruling causing plaintiff to lose a business opportunity); Cordeco Development Corp. v. Santiago Vazquez, 539 F.2d 256 (1st Cir.1976) (Plaintiff established a 1983 claim against Puerto Rican officials for denying him a permit to extract sand, while granting such permits to a more influential politically connected rival). Plaintiffs here failed to establish a constitutional entitlement or unconstitutional discrimination and, so, their 1983 claim for damages was dismissed.

Since we dismissed plaintiffs’ claim under section 1983, we held that plaintiffs were not “prevailing parties” within the meaning of section 1988, the attorney’s fees act, and were not entitled to attorneys fees. On reconsideration of this decision denying fees, we must now consider plaintiffs’ section 1983 claim for injunctive relief. We are presented with the issue whether a party to a settlement agreement concerning the injunctive relief, such as plaintiffs, may be considered “prevailing parties” under section 1988 even though the Court has issued a formal judicial order dismissing the claim for damages.

Section 1988 authorizes an award of attorneys fees to a party who prevails in a section 1983 action either for monetary or injunctive relief. The Civil Rights Attorney’s Fees Act provides:

In any action or proceeding to enforce a provision of sections 1981, 1982, 1983, 1985, and 1986 of this title, the court, in its discretion, may allow the prevailing party a reasonable attorney’s fee as part of the costs.

The statute does not set forth a standard for determining when a party has prevailed for purposes of the Act. When a claim is settled by agreement of the parties prior to a formal judicial determination, plaintiffs may be considered a “prevailing party” for attorney’s fees purposes if their lawsuit served as a catalyst to settle a significant issue in the litigation. Nadeau v. Helgemoe, 581 F.2d 275, 278-79 (1st Cir.1978), see also, Coalition For Basic Human Needs v. King, 691 F.2d 597 (1st Cir.1982); De Arroyo v. Romero Barcelo, 765 F.2d 275 (1st Cir.1985).

To determine whether plaintiffs are prevailing parties they must meet both a factual and legal test. Nadeau, at 281. The factual test is met with proof that the lawsuit and the attorneys’ efforts were a “necessary and important factor” in achieving the settlement. Id., at 281. The chronological sequence of events is an important factor in determining whether the defendants guided their actions in response to plaintiffs’ suit. Id. The legal test requires plaintiffs to establish that the action was not “frivolous, unreasonable or groundless.” Id. [quoting Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 422, 98 S.Ct. 694, 701, 54 L.Ed.2d 648 (1978)]. In Christiansburg, the Supreme Court explained this standard as claims which are “unjustified” or “without foundation.” Id. at 422, 98 S.Ct. at 701.

In De Arroyo v. Romero Barcelo, supra, issued the day after our opinion denying attorney’s fees, the First Circuit clarified the legal prong of this two part test. Similar to the claim presented here, plaintiffs in De Arroyo filed a section 1983 action for damages and injunctive relief. They alleged that defendants had unreasonably restricted their property in preparation for a proposed highway when, in fact, defendants were aware that funding for the project was unavailable. After a series of settlement conferences, the parties reached an agreement removing the restrictions from their property. Plaintiffs then presented their claim for attorney’s fees to the district court. The lower court found that plaintiffs had prevailed on both the factual and legal test. The First Circuit affirmed the award of attorney’s fees.

The circuit court explained that “to meet the legal test the plaintiff need not establish a legal entitlement to the relief sought in the complaint.” Id. at 283. It is enough for plaintiffs to establish that they had “at least a colorable claim.” The court acknowledged that plaintiffs could not prevail on their claim for damages and a summary dismissal on the merits of this portion of plaintiffs’ suit would have been appropriate. However, plaintiffs had a “colorable claim” for injunctive relief based on First Circuit decisions in Pamel Corp. v. Puerto Rico Highway Authority, 621 F.2d 33 (1st Cir.1980) and Citadel Corp. v. Puerto Rico Highway Authority, 695 F.2d 31 (1st Cir.1982). Pamel held that a valid 1983 claim for injunctive relief could be made against a local planning board who enacts a zoning regulation which “exceeds the permissible bounds of police power ... [and] regulate with oppressive or arbitrary severity.” Accord, Citadel, supra. Following this decision, the court in De Arroyo found that the excessive period during which the plaintiff’s property was affected by the highway regulations, together with the absence of any valid explanation for the regulations, indicate that plaintiffs had a valid 1983 claim for injunctive relief. Id. at 283, [citing the district court opinion De Arroyo v. Barcelo, No. 80-2415 (D.P.R.1982) ].

In the present action plaintiffs succeeded on a significant issue of the litigation through the August, 1984 Settlement Stipulation. By this settlement defendants agreed to down zone plaintiffs’ property and to authorize the sale of 5 cuerda lots in accordance with their development plan.

Plaintiffs have also met both prongs of the test used to determine an entitlement to attorneys fees. They are prevailing parties as a matter of fact because their attorneys were an important and necessary factor in achieving defendants’ concessions. The attorneys actively pursued the litigation of the case until a settlement was reached. The agreement came about only after a series of settlement conferences and pre-trial meetings. Defendants argue that the lawsuit did not influence their decision to rezone Culebra from “P” to “RO-25C.” Even though this were true, the lawsuit and the attorney’s efforts were an important factor in obtaining from defendants a special authorization to sell the property in 5 cuerda lots in accordance with plaintiffs’ development plan.

Plaintiffs also meet the legal test because their claim is neither “frivolous, unreasonable or groundless.” The First Circuit has held in Pamel, supra, and Citadel, supra, that a valid section 1983 claim for injunctive or declaratory relief lies against a local planning board whose zoning regulations are “oppressive” or “arbitrary.” Plaintiffs supported their claim for injunctive relief with evidence that the planning board had no reason or purpose for zoning their property “P.” This “P” zoning remained in effect from 1977 to 1984 when it was rezoned as part of the settlement agreement. Evidence similar to this was sufficient to find a “colorable” claim for injunctive relief in De Arroyo. Though we previously held that plaintiffs had no valid section 1983 claim for damages, had we considered plaintiffs’ action for injunctive relief at that time we would have found that plaintiffs had a “colorable” claim. On reconsideration we find that plaintiffs are “prevailing parties” within the meaning of section 1988 and are entitled to attorneys fees. Consequently, Part III of this Court’s Opinion and Order, 613 F.Supp. 146, denying plaintiffs’ claim for attorney’s fees is hereby VACATED AND SET ASIDE.

Plaintiffs are to submit a verified fee application within twenty days hereof. See Grendel’s Den, Inc. v. Larkin, 749 F.2d 945 (1st Cir.1984).

IT IS SO ORDERED.

      . De Arroyo v. Romero Barcelo, 765 F.2d 275 (1st Cir.1985) was issued June 26, 1985. This Court’s decision, Culebra Enterprises Corp. v. Rivera Rios, et al., 613 F.Supp. 146 (D.P.R.1985) was issued June 25, 1985.


author: JOSEPH H. YOUNG, District Judge.

text:
    FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION v. Frank E. WILLIAMS, Jr., et al.
    Civ. No. Y-83-1422.
    United States District Court, D. Maryland.
    Oct. 30, 1985.

      Neil J. Dilloff, Baltimore, Md., for plaintiff.
    Jacob A. Stein, Rockville, Md., and Robert Flanagan, Baltimore, Md., for defendants.
    Thomas J. O’Halloran, pro se.
   MEMORANDUM

JOSEPH H. YOUNG, District Judge.

Following a hotly contested jury trial, resulting in a verdict for the plaintiff, defendants filed motions seeking various types of relief. Those motions requiring judicial review at this time are:

1. Motion of defendant Reeves for a new trial.
2. Motion of defendant Reeves for judgment notwithstanding the verdict.
3. Motion of defendant Fisher for judgment notwithstanding the verdict or in the alternative for a new trial.
4. Motion of defendant Reeves and Fisher for relief from judgment.

After a review of defendant’s post-trial motions and the memoranda submitted by the parties, defendants’ motions for judgment notwithstanding the verdict, a new trial, and relief from judgment will be denied without oral argument.

I.

Defendant Reeves and Fisher seek judgment notwithstanding the verdict on numerous grounds. Defendants rely on Bangor Punta Operations, Inc. v. Bangor and Aroostook R. Co., 417 U.S. 703, 94 S.Ct. 2578, 41 L.Ed.2d 418 (1974), but are not entitled to judgment on the basis of that case. Bangor Punta is readily distinguishable from this case, its holding is not applicable, and it provides no basis for relief. The circumstances which support the court’s application of the principle of equity — prohibiting a shareholder from recovering damages for prior corporate mismanagement if he acquired shares from those who participated in the alleged wrongdoing — simply are not present here. This is not a case where “a [private] shareholder purchases all or substantially all of the shares of a corporation from a vendor at a fair price and then seeks to have the corporation recover against the vendor for prior corporate mismanagement.” Id., at 710, 94 S.Ct. at 2582 (citing Home Fire Insurance Co. v. Barber, 67 Neb. 644, 661-62, 93 N.W. 1024, 1030-31 (1903)) (Pound, J.) (brackets added).

The Supreme Court’s decision in Bangor Punta prevented a purchaser of corporate stock from subsequently realizing a windfall that would have resulted if the buyer (at fair market value) had been permitted to recover in a civil action for previous corporate mismanagement already accounted for in the sale price of the stock. Unlike the defendants in Bangor Punta, the defendants here were not vendors from whom County Federal was acquired. Defendants Reeves and Fisher were no longer employed by County Federal at the time of its merger with Metropolitan nor did they have a financial interest in County Federal. Thus, the FSLIC will not recover from these defendants for wrongs previous owners of County Federal inflicted upon themselves. Id., at 712, 94 S.Ct. at 2583.

Defendant Reeves makes much of the fact that the FSLIC stands in the shoes of County Federal and Metropolitan as an assignee of their claims. Defendants contend that Metropolitan has never had a cognizable claim against the defendants to assign to the FSLIC because the Assistance Agreement between the FSLIC and Metropolitan insured that Metropolitan would not be harmed by its acquisition of County Federal and the alleged wrongdoing by the defendants. However, this argument breathes too much life into the fiction that the FSLIC is situated in this suit only as an assignee of the claims of County and Metropolitan, a position advanced by both parties at various times during this litigation. As the Court has consistently stressed in prior rulings, the FSLIC is not simply a private assignee of, or successor to, County Federal’s claims. This is not a case involving the private acquisition of the stock or assets of a business enterprise on the open market for fair market value. Instead the transactions here are part of an agency supervised and subsidized merger undertaken to stabilize the savings and loan industry generally, as well as to salvage an insolvent member association in exchange for the right to pursue certain claims against those allegedly responsible, at least in part, for the institution’s precarious financial position. In effect, the right to pursue these claims served as some consideration for the assistance given to Metropolitan to facilitate the merger by the FSLIC. Thus, as the principle beneficiary of any recovery, the FSLIC will not be unjustly enriched if it is allowed to recapture part of the money provided to subsidize the merger between County Federal and Metropolitan.

Moreover, the FSLIC remained a party throughout the series of transactions which resulted in County Federal’s acquisition by Metropolitan and the assignment of various claims which provide the basis for this litigation. As regulator and supervisor, the FSLIC has been an indispensible party throughout the merger and stabilization process. Metropolitan has simply been a vehicle through which the FSLIC has attempted to maintain and insure the efficient utilization of County Federal’s assets. Therefore, the Court will not take a formalistic view of County Federal’s merger with Metropolitan as a single and discrete private acquisition for fair market value. The FSLIC’s subsidization and supervision of the merger qualifies the FSLIC as a party to the acquisition for the purpose of resolving the issue of the applicability of the Bangor Punta holding in this case. The pursuit of claims against the current defendants and others was provided for in the Assistance Agreement executed by the FSLIC and Metropolitan, and served as some consideration for the plaintiff’s financial assistance and assurances to Metropolitan. Thus, recovery by the plaintiff here is not the unexpected gain, windfall, or unjust enrichment condemned by the Court in Bangor Punta. See Meyers v. Moody, 693 F.2d 1196, 1208 (5th Cir.1982). Accordingly, judgment notwithstanding the verdict will not be granted on the basis of Bangor Punta.

II.

Defendants have also moved for judgment notwithstanding the verdict on the ground that the FSLIC failed to adequately establish the requisite causal connection between the defendants’ wrongful acts and the losses sustained by County Federal. However, there is significant testimony and documentary evidence in the record which refer to the manner in which the acts and omissions of the defendants caused injury to County Federal.

In determining the sufficiency of the evidence on a motion for judgment notwithstanding the verdict, “the court is not free to weigh the evidence or to pass on the credibility of witnesses or to substitute its judgment of the facts for that of the jury. Instead, it must view the evidence most favorably to the party against whom the motion is made and give that party the benefit of all reasonable inferences from the evidence.” Wright and Miller, 9 Federal Practice and Procedure: Civil § 2524, at 543-545 (1971 ed. & 1985 Supp.). The evidence presented and the inferences reasonably drawn therefrom form a sufficient basis upon which the jury could find proximate cause. Therefore, the Court may not grant defendants’ motions on this basis.

III.

Defendant Reeves also seeks judgment with regard to plaintiff’s fraud claim in Count III on the ground that the plaintiff failed to establish the essential elements of fraud by clear and convincing evidence. However, the jury was properly instructed that liability on the plaintiff’s fraud count required it to find that the plaintiff had proven each and every element of fraud by clear and convincing evidence.

There is extensive testimony and documentary evidence in the record relating'to the filing of false and deceptive reports to the Federal Home Loan Bank Board and false certifications concerning the status of various construction projects financed with loans from County Federal. The evidence indicates that these misrepresentations were not merely occasional inadvertent acts of negligence, but rather were part of a persistent pattern of misrepresentation occurring over a period of years despite repeated warnings from numerous sources. The jury could reasonably infer from the evidence presented that defendant Reeves, as a director and chief executive officer of the association, had knowledge of the misrepresentations and was responsible for them.

Defendant Reeves seems to suggest circumstantial evidence, regardless of how substantial and compelling, may not be sufficient to establish fraud by clear and convincing evidence as a matter of law. Although the Court is aware of the general reluctance of courts to infer fraud in the absence of very compelling evidence, see Teledyne Industries, Inc. v. Podell, 546 F.2d 495 (2d Cir.1976), the Court is unaware of any case which supports the proposition that fraud may not be inferred or that it may not be established clearly and convincingly by circumstantial evidence. Accepting defendant's argument that there was no direct evidence of defendant Reeves’ participation in the preparation and filing of false reports does not require the Court to grant defendant Reeves’ motion for judgment notwithstanding the verdict. Having been instructed on the elements of fraud and the standard of proof which must be met by a plaintiff alleging fraud, the jury determined that there was clear and convincing evidence of fraud on the part of defendant Reeves and the Court will not substitute its judgment for that of the jury. Accordingly, the Court will deny defendant’s motion for judgment notwithstanding the verdict as to the common law fraud claim in Count III and the statutory fraud claim in Count I.

IV.

Defendant Reeves also advances the argument that he is entitled to judgment with regard to punitive damages because there is insufficient evidence to support the jury’s punitive damage award in this case. Again, the jury was properly instructed on the appropriate legal standard to be applied in their consideration of punitive damages. The jury determined, on the basis of the evidence properly before it that the character of defendant’s conduct entitled the plaintiff to punitive damages. The Court will not second guess the jury’s resolution of this issue. It is enough to simply note that there is evidence in the record upon which a reasonable jury could conclude that defendant’s conduct was malicious or reckless thereby entitling it to award plaintiff punitive damages. Therefore, defendant will not be afforded relief on the basis of insufficiency of the evidence on the issue of punitive damages.

V.

Judgment will not be granted on the basis of defendant Reeves’ contention that the plaintiff failed to prove the reasonableness of certain costs associated with the management and disposition of acquired County Federal assets to satisfy amounts owing on several delinquent or defaulted loans. There is sufficient evidence in the record to sustain the determination that those costs and the award of compensatory damages based thereon were reasonable.

VI.

Defendant also seeks judgment notwithstanding the verdict on the ground that plaintiff’s specific damage claim should not have been submitted to the jury. Defendant Reeves raises several objections to the submission of these claims to the jury and to the jury’s award of compensatory damages based upon these claims. Defendant’s objections on this issue rely substantially on arguments already raised in the context of presenting other grounds for relief. The Court has stated that the holding in Bangor Punta does not apply in this case and therefore analogies to Bangor Punta provide no basis for relief here. Similarly, defendant’s argument concerning the sufficiency of the evidence is subject to the same infirmities noted earlier. Moreover, defendant’s contentions concerning the possibility that there were intervening causes of the losses suffered by County Federal were put before the jury for its consideration at trial. The evidence regarding these claims, without any consideration of the credibility of witnesses or the weight of the evidence, does not lead to only one conclusion that reasonable people could reach; therefore, the Court will not substitute it’s judgment for that of the jury. See Nationwide Mutual Insurance Co. v. McLoughlin, 429 F.2d 1317 (4th Cir. 1970); Neugebauer v. A.S. Abell Co., 474 F.Supp. 1053, 1071 (D.Md.1979). The Court will deny judgment for defendants based on defendants’ objection to plaintiff’s specific damage claims.

VII.

Defendants have advanced the argument that they should be granted judgment on Count I because there is no civil cause of action for violations of the criminal provisions of the United States Code which form the basis of Count I. The Court is aware of Fiorino v. Turner, 476 F.Supp. 962 (D.Ma.1979) and Olympic Capital Corporation v. Newman, 21 & F.Supp. 646, 657 (C.D.Ca.1967) where the respective district courts found that no civil cause of action exists for violations of 18 U.S.C. §§ 1001 and 1014. However, the Seventh Circuit has allowed civil suits involving claims based upon violations of these and similar criminal statutory provisions to proceed although it, and the district courts cited above, had not given the issue a comprehensive or thorough treatment. See Katin v. Apollo Savings, 460 F.2d 422 (7th Cir.1971), cert. denied, 406 U.S. 918, 92 S.Ct. 1767, 32 L.Ed.2d 117 (1972); FSLIC v. Krueger, 435 F.2d 633 (7th Cir.1970).

Additionally, there is a basis in the legislative history of the statutes for inferring a Congressional intent to provide a civil remedy in favor of the FSLIC. See S.Rep. No. 2730, 84 Cong. 2d Sess., reprinted in 1956 U.S.CODE CONG. & AD. NEWS 3662, 3663, 3665. The existence of congressional intent to create a cause of action may be sufficient to recognize a private cause of action, see Touche Ross & Co. v. Redington, 442 U.S. 560, 568, 99 S.Ct. 2479, 2485, 61 L.Ed.2d 82 (1979), particularly where, as here, a statute is enacted for the benefit of federal savings and loan association depositors generally, and for the FSLIC specifically, and where the implication of a civil cause of action is consistent with the purpose of the legislative scheme. Cort v. Ash, 422 U.S. 66, 78, 95 S.Ct. 2080, 2087, 45 L.Ed.2d 26 (1975).

Moreover, the Court is not aware of defendants having raised this issue prior to the filing of motions for judgment notwithstanding the verdict. Thus, defendants’ failure to raise and preserve this issue in their motion for a directed verdict following a seven week trial, see Wright and Miller, 9 Federal Practice Procedure: Civil § 2537, at 598 (1971 ed. and 1985 Supp.), as well as the Court’s resolution of the merits of the claim require that defendants’ motion for judgment notwithstanding the verdict be denied.

VIII.

Defendant Reeves has filed a motion for relief from judgment along with a memorandum in support of this motion and defendant Fisher has joined in the Reeves motion. Defendants seek relief from judgment on the ground that a satisfaction of judgment was entered with regard to the defendant directors prior to judgment being entered against defendants Reeves and Fisher, and that satisfaction of a judgment entered against one or more tortfeasors discharges all tortfeasors liable for the same harm under Maryland law. (Reeves Memorandum in Support of Motion for Relief from Judgment, pp. 3-4 (citing Bell v. Allstate Insurance Co., 265 Md. 727, 729-30, 291 A.2d 478 (Ct.App.1972)) and Grantham v. Board of County Commissioners, 251 Md. 28, 38, 246 A.2d 548 (Ct.App.1968)). However, defendants will not be afforded relief from judgment.

Count I involves the violation of certain federal criminal statutes and is therefore governed by federal law. Count II is a claim for breach of fiduciary duty and has already been determined to be governed by federal law in the Court’s prior rulings in this case. FSLIC v. Williams, Y-33-1422, slip. op. (January 9, 1985). Therefore, federal law will be applied to resolve the issue concerning the effect of the satisfaction of judgment against the defendant directors on the claims against the defendants.

Even assuming arguendo, that defendants and the outside directors were liable to County Federal for the same harm, defendants Reeves and Fisher are not relieved from the judgments against them by the satisfaction of the consent judgments against the outside directors under the Second Restatement of Torts. The Second Restatement provides the substantive context of the federal common law the Court will apply to determine the effect of the satisfaction of the consent judgment because it is most consistent with the modern American point of view on this issue. Restatement (Second) of Torts § 885 comment b (1979), gives effect to the intent of the parties, and is consistent with the purposes of the federal legislation in the area of federally insured savings and loan associations as reflected in the criminal and regulatory statutes to which plaintiff’s claims relate.

The application of Second Restatement principles to the facts of this case suggest that the discharge of the judgment against the outside directors should be treated as a release, Restatement 2d Torts § 886 (1979), and that the release should not discharge others arguably responsible for the same harm unless it is agreed that it will discharge them. Id., § 885(1). Therefore, defendants Reeves and Fisher may not be relieved from judgment on Counts I and II, because the Court is satisfied, and the circumstances surrounding the FSLIC's settlement with, the defendant directors amply indicate, that the intent and understanding among all parties was that the settlement did not constitute full satisfaction of the FSLIC’s claims. See McPherson v. Amalgamated Sugar Co., 271 F.2d 809, 811 (9th Cir.1959).

Moreover, the evidence in this case permitted the jury reasonably to find that the injury to County Federal was divisible and to apportion damages accordingly. The evidence would also permit a finding that the directors and these defendants were liable for different losses or only part of the same loss. Therefore, each defendant would be liable only for the damage created by him and the discharge of one defendant tortfeasor would not release the others from liability for the damages for which they may be responsible. See Restatement 2d Torts §§ 881, 433A; see also, Edmonds v. Compagnie Generale Transatlantique, 443 U.S. 256, 260 n. 8, 99 S.Ct. 2753, 2756 n. 8, 61 L.Ed.2d 521 (1979) (principles of joint and several liability inapplicable where injury is divisible and the causation of each part can be separately assigned); Kizer v. Peter Kiewit Sons’ Co., 489 F.Supp. 835, 840 (N.D.Ca.1980) (admiralty case referring to § 881 as common law rule in case with divisible harm).

Defendants’ motions must be denied with regard to the state common law claim in Count III on the same basis because Maryland law is not inconsistent with the federal law on this point. Under Maryland law, the full satisfaction of a judgment against one tortfeasor discharges others who are liable for the same harm, Bell, 265 Md. at 729-30, 291 A.2d 478; Grantham, 251 Md. at 38, 246 A.2d 548, so that a plaintiff will be unjustly enriched by being allowed multiple recoveries for the same injuries. See Cox v. Maryland Electric Rys Co., 126 Md. 300, 305-06, 95 A. 43 (1915). This rule however does not apply where, as here, there has been a determination that the injury is divisible and has been apportioned among the remaining defendants. Cf. Huff v. Harbaugh, 49 Md.App. 661, 671, 435 A.2d 108 (Ct.Sp.App.1981) (release of one wrongdoer will not discharge the other from liability for his share of the transaction where the wrong consists of separate and distinct, although closely related injuries).

Finally, defendants are not entitled to relief from judgment on Count IV which involves plaintiff's claim for breach of contract. The law upon which defendants rely relates solely to judgment on tort claims and could not entitle them to relief from judgment for breach of contract.

IX.

Defendants have moved for a new trial on the grounds that the verdict is excessive, uncertain, ambiguous, and otherwise improper. Those motions will be denied.

A new trial should not be granted unless it is quite clear that the jury has reached a seriously erroneous result. Coffiran v. Hitchcock Clinic, Inc., 683 F.2d 5, 6 (1st Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571, 74 L.Ed.2d 933 (1982). Defendants’ motions will not be granted because the verdict was based on sufficient evidence, see LaSueur Creamery v. Haskon, Inc., 660 F.2d 342, 353 (8th Cir.), cert. denied sub nom, Haskon, Inc. and Hercules, Inc. v. LaSueur, Inc., 455 U.S. 1019, 102 S.Ct. 1716, 72 L.Ed.2d 138 (1981), and therefore could reasonably have been reached. Raynor Bros. v. American Cyanimid Co., 695 F.2d 382, 385 (9th Cir.1982). The verdict is not excessive in light of the evidence in the record concerning plaintiff’s damage claims nor is the result improper. As noted earlier, there is evidence upon which the jury could find the defendants liable for distinct injuries, a possibility conceeded by counsel for defendant Reeves during discussions with the Court on the record.

More importantly, the Court harbors serious reservations about whether defendants have standing to challenge the apportionment of damages by the jury since they have not been injured by it. See Ohio Valley Bank v. Greenebaum Sons Bank & Trust Co., 11 F.2d 87, 90 (4th Cir.1926). As a result of the apportionment by the jury, each defendant has been exposed to a smaller judgment than would have been entered against each of them if a joint verdict had been returned. The right to complain of the verdict here rests exclusively with the plaintiff because the plaintiff is the only party who could have been aggrieved by the apportionment of damages. See id.

Defendants’ motions for a new trial will be denied.

      In 1956, §§ 657 and 1006 of Title 18 were amended and as part of the report relating to that amendment, the Senate Judiciary Committee adopted a statement by the United States Savings and Loan League which states in pertinent part:
      It is hoped that this bill [the Senate version of the House bill that ultimately passed] if enacted will reduce losses to institutions insured by the FSLIC and, correspondingly, reduce the contingent liability of the Federal Savings and Loan Insurance Corporation.
      S.Rep. No. 2730, 84 Cong. 2d Sess., reprinted in 1956 U.S.CODE CONG. & AD.NEWS 3662, 3663. The report also includes a letter from the Chairman of the Federal Home Loan Bank Board which states:
      It is felt that for the protection of the interest of the Government and the Federal Savings and Loan Insurance Corporation and the protection of the interest of the public and of institutions insured by the [FSLIC], the scope of Sections 657 and 1006 should be extended____

        Id., at 3665.


author: BARRINGTON D. PARKER, District Judge:

text:
    Bernard GOLDSTEIN, as Assignee of La Boucherie Bernard Ltd., and Individually, Plaintiff, v. S & A RESTAURANT CORPORATION, Defendant.
    Civ. A. No. 84-2093.
    United States District Court, District of Columbia.
    Oct. 30, 1985.

      Lawrence Singer, Roberts & Singer, Washington, D.C., for plaintiff.
    Joel R. Kaswell, Kathryn R. Schmeltzer, Barry H. Gottfried, Fisher, Wayland, Cooper & Leader, Washington, D.C., for defendant.
   MEMORANDUM OPINION

BARRINGTON D. PARKER, District Judge:

This matter comes before the Court on defendant’s Motion for Summary Judgment. After consideration of the pleadings and the record, and for the reasons outlined below, the Court grants defendant’s motion,

I.

BACKGROUND

Plaintiff, Bernard Goldstein, is the majority stockholder of La Boucherie Bernard Ltd. (“La Boucherie”), a District of Columbia corporation, now bankrupt. Defendant Steak & Ale Restaurant (“S & A”) is a Delaware corporation, maintaining its principal place of business in Texas. La Boucherie and S & A entered into an arrangement whereby La Boucherie was to supply meat for S & A restaurants throughout the eastern United States and in Texas. By 1981, La Boucherie was supplying approximately 120 such restaurants.

At all relevant times, the arrangement between the parties operated as follows. S & A purchased raw meat, which it stored in warehouses located in Nebraska and Colorado. La Boucherie would draw from this inventory, ship the meat to its Maryland warehouse, and after processing the meat, distribute it to designated S & A restaurants. Within seven days of receiving the meat at its warehouse, La Boucherie was to pay S & A for the raw meat, receiving payment later for the processed meat that it delivered to the individual S & A restaurants.

In the spring of 1981, La Boucherie fell behind in its payments to S & A. By his own admission, Goldstein owed $1.15 million by June 24, 1981. (Deposition of Bernard Goldstein, Mar. 21, 1985, vol. I, at 148-49 and Exhibit 16 thereto) (“Goldstein depo.”). This arrearage was caused, at least in part, by his decision to divert funds to his real estate ventures. Goldstein depo., vol. I, at 51-52. Meanwhile, S & A had been making substantial payments to La Boucherie, remitting approximately $3.2 million between April 1 and June 19, 1981.

On June 22, 1981, to cover its account through May 31, 1981, La Boucherie, through Goldstein, tendered three postdated checks. No current payments were made. Again on July 1, 1981, Goldstein tendered three more postdated checks to cover the previous month. This time, however, the checks were not accepted. Instead, S & A demanded and received from Goldstein a 30-day, $1 million note. Shortly thereafter, Goldstein left on a trip to Europe.

On July 10, 1981, while Goldstein was abroad, S & A removed approximately 60 restaurants from the role of outlets that were supplied by La Boucherie. On July 13, S & A filed suit in this Court, seeking to attach La Boucherie’s inventory of meat held in Maryland. In return for S & A’s voluntary dismissal of that suit, Robert Goldstein, Bernard Goldstein’s son, executed an agreement with S & A, modifying their earlier arrangement. The agreement, dated July 14, 1981, acknowledged that La Boucherie owed S & A approximately $1.4 million, gave control of the Maryland inventory to S & A, contained a promise to pay S & A $1 million by August 4, 1981, and affirmed that that agreement was not in derogation of any other rights as between the parties.

Upon his return to this country, Gold-stein Senior traveled to Dallas, Texas, where he signed another agreement, dated July 21, 1981, acknowledging an indebtedness of $1.3 million as well as a limitation of La Boucherie’s service area to 59 restaurants, and stating that the current relationship between La Boucherie and S & A could be terminated upon ten days’ notice. By the end of August 1981, La Boucherie paid S & A approximately $1 million, using borrowed funds.

In October 1981, S & A informed La Boucherie that the latter was being terminated as a supplier of meat in ten days’ time. After some negotiation, it was settled that La Boucherie was to continue as a supplier through December 1981. That agreement was confirmed in a letter dated October 19, 1981.

This action, filed in July 1984, seeks relief for what plaintiff believes was a wrongful termination in 1981 of its contractual relationship with S & A. Plaintiff’s complaint raises four causes of action. The first alleges breach of contract; the second, breach of fiduciary duties; the third, breach of a “duty of good faith and fair dealing”; and the fourth, misrepresentation. All four claims press the same theory of damages — that, because of defendant’s alleged wrongdoing, La Boucherie lost profits, suffered injury to its business reputation, and was forced into bankruptcy. As recompense for these wrongs, plaintiff seeks $12 million in compensatory and $50 million in punitive damages.

Crucial to plaintiffs theory of the case is his assertion that the agreements executed in July and October 1981 are the products of duress or undue influence and, hence, are nullities. Indeed, plaintiff admits in his pleadings that “what is principally in dispute are not the underlying facts but rather the interpretation of these facts and their application to the legal standards governing the issues to be resolved.” Plaintiff’s Statement of Facts to Which There is a Genuine Issue. In making this admission, plaintiff as much as concedes that this case is one that is ripe for summary adjudication.

II.

ANALYSIS

For defendant to prevail on summary judgment, he must show that there is no issue of material fact genuinely in dispute and that he is entitled to judgment as a matter of law, even when the facts, and all inferences to be drawn therefrom, are seen in the light most favorable to plaintiff. Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970); U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962); Perry v. Block, 684 F.2d 121, 126 (D.C.Cir.1982); Weisberg v. United States Dep’t of Justice, 627 F.2d 365, 368 (D.C.Cir.1980). As the moving party, moreover, defendant bears the burden of proof as to the absence of any issue of material fact, even if he would not have to bear that burden at trial. Lee v. Flintkote Co., 593 F.2d 1275, 1281 nn. 34 & 35 (D.C.Cir.1979). Yet it is by no means unknown for a defendant to be granted summary judgment on a contract action where, as here, the plaintiff seeks to avoid the force of a contractual agreement by raising the defense of fraud or duress. See, e.g., Dresser v. Sunderland Apts. Tenants Assoc., Inc., 465 A.2d 835 (D.C.App.1983); Sind v. Pollin, 356 A.2d 653 (D.C.App.1976).

The terms of the written agreements in question present no ambiguity and require no extrinsic evidence to elucidate their meaning. Plaintiff seeks to avoid the effect of these writings by alleging that they were the products of duress, undue influence, or fraud. Yet a mere recitation of conclusory allegations is insufficient to raise a genuine issue of material fact where the record does not support those allegations. Bloomgarden v. Coyer, 479 F.2d 201, 208 (D.C.Cir.1973); Richardson v. Rivers, 335 F.2d 996, 999 (D.C.Cir.1964); Edwards v. Consol. Rail Corp., 567 F.Supp. 1087, 1091 (D.D.C.1983). See also Calamari & Perillo, Contracts § 9-39 (2d ed. 1977) (claim of unconscionability mandates hearing on merits only if real issues of fact raised). Where the nonmoving party raises factual issues irrelevant to the legal issues presented, the moving party is entitled to judgment as a matter of law.

A. Claims for Breach of Contract and “Duty of Good Faith and Fair Dealing”

In its first and third claims, plaintiff alleges that defendant’s termination of plaintiff as a distributor constituted a breach of contract and of a “duty of good faith and fair dealing.” Because modern contract law looks upon every contractual relationship as embodying a duty of good faith and fair dealing, D.C.Code Ann. § 28:1-203 (Michie 1981 & Supp. 1985); Restatement (Second) of Contracts § 205 (1981); A. Corbin, Contracts § 654A (Supp.1984), plaintiff's third claim is really part and parcel of his first claim.

Both parties presuppose the existence of a contract between them prior to the events of June-October 1981. Yet if such a contract existed at all, it was, in the formal sense, only a contract at will. Accordingly, under traditional contract principles, and under the U.C.C., it could be terminated by either party at will. D.C. Code Ann. § 28:2-309(2). Moreover, at least where one party is in breach, the wronged party can terminate the agreement without notice or warning. See, e.g., Fromm Sales Co. v. Troy Sunshade Co., 159 A.2d 860, 862-63 (Md.1960) (termination of distributorship agreement proper where terminated party failed to meet its financial obligations). That La Boucherie was seriously in default by June 1981 is uncontested. Plaintiff nevertheless asserts in his pleadings that any default was “cured” and that S & A did not investigate La Boucherie’s financial condition and, hence, lacked a “satisfactory business reason” for terminating the latter’s distributorship. In pressing this theory, however, plaintiff misreads what is meant by “good faith” in a commercial setting. “ ‘Good faith’ in the case of a merchant means honesty in fact and the observance of reasonable commercial standards of fair dealing in the trade.” D.C.Code Ann. § 28:2-103(1)(b). All evidence in the record points to the fact that S & A was justifiably insecure about its continuing relationship with La Boucherie and the latter’s ability to meet its financial obligations. S & A was not required to investigate La Boucherie’s financial health, and its decision to terminate La Boucherie was well within the bounds of good faith. Cf D.C.Code Ann. § 28:2-609(1) (party may suspend performance of contract until it receives adequate assurance of the other party’s ability to perform).

Plaintiff argues that the July 21 and October 19, 1981 agreements are unconscionable in that they were one-sided in their operation: defendant both terminated 59 of 120 restaurants that plaintiff supplied and arranged for the termination of the remaining restaurants upon 10 days’ notice. To this end, plaintiff cites D.C.Code Ann. § 28:2-302, which empowers courts to disregard the operation of unconscionable contracts or clauses therein. Ironically, however, if this Court were to disregard the two agreements, what would be left would be an arrangement terminable at will, not upon 10 days’ notice.

Even apart from the fact that the July and October agreements did not diminish any rights that plaintiff possessed prior to the execution of those agreements, it cannot be said that those agreements were unconscionable. The principle embodied in U.C.C. § 2-302 is “one of the prevention of oppression and unfair surprise.” Official Comment 1. Unconscionability presupposes both the absence of meaningful choice on the part of one party and contract terms unreasonably favorable to the other party. Williams v. Walker-Thomas Furniture Co., 350 F.2d 445, 449 (D.C.Cir.1965); cited in Neves v. Riley, 447 F.Supp. 306, 309 (D.D.C.1978) and Urban Investments, Inc. v. Branham, 464 A.2d 93, 99 (D.C.App.1983). For the most part, the doctrine of unconscionability is limited in its application to agreements that are so one-sided that it can be said that no real meeting of the minds ever occurred with regard to the contract or terms in question. Calamari & Perillo, supra, § 9-40. The doctrine was not intended to “disturb[] [the] allocation of risks because of superior bargaining power.” Id. at 326 (citing U.C.C. § 2-302, Comment 1). A review of the documents in question, the parties’ prior dealings with one another, and the record before the Court reveals no material fact that would support a finding that there is a genuine issue as to whether the two agreements were the product of a meeting of the minds.

In a related argument, plaintiff contends that the July and October agreements were the products of duress or undue influence and are, hence, unenforceable. Before discussing whether either agreement is voidable for duress, we note that plaintiff’s reliance upon the doctrine of undue influence is clearly misplaced. “Undue influence is unfair persuasion of a party who is under the domination of the person exercising the persuasion or who by virtue of the relation between them is justified in assuming that that person will not act in a manner inconsistent with his welfare.” Restatement (Second) of Contracts § 177(1). At the core of the doctrine is a concern for protecting a party who is either “subservient” to, or has placed trust in, another party. Calamari & Perillo, supra, § 9-10. In all cases, either some confidential relation between the parties exists, or one party stands in such a weakened position in relation to the other that he is susceptible to unfair persuasion. Calamari & Perillo, supra, § 9-11; Restatement (Second) of Contracts § 177, Comment a. See, e.g., Odorizzi v. Bloomfield School Dist., 246 Ca.App.2d 123, 54 Cal.Rptr. 533 (1966) (teacher accused of homosexuality coerced into resigning). It is hard to imagine how such an “astute [businessman],” Goldstein depo., vol. I, at 38-39, can assert that he was subservient to, or dependent upon, his trading partner.

As distinct from that of undue influence, the doctrine of duress focuses, not upon the relationship between the parties, but upon the means used by one party to gain the other’s assent. Specifically, it is a settled principle of law that one party cannot threaten another if “the threat is a breach of the duty of good faith and fair dealing under a contract with the recipient.” Restatement (Second) of Contracts § 176(1)(d). Yet, “[h]ard bargaining between experienced adversaries of relatively equal power ought not to be discouraged. Parties are generally held to the resulting agreement, even though one has taken advantage of the other’s adversity, as long as the contract has been dictated by general economic forces.” Restatement (Second) of Contracts § 176, Comment f. To call into play the doctrine of duress requires that a threat be wrongful. Rizzi v. Fanelli, 63 A.2d 872, 874 (D.C.Mun.App.1949). While “any threat which deprives a party to a contract of the free exercise of his will constitutes duress[,]” id. (citing 17 C.J.S. Contracts § 168), the modern trend is to focus upon the alternatives available to the party receiving the threat. Restatement (Second) of Contracts § 175(1) & Comment b (victim must have “no reasonable alternative”).

Plaintiff maintains generally that S & A took advantage of La Boucherie’s financial straits in order to wrest a hard bargain. Whether or not S & A actually took advantage of La Boucherie is not, however, a question that demands resolution by trial. “Financial pressures, even in the context of unequal bargaining power, do not constitute economic duress.” Grubel, 387 N.Y.S.2d at 443. If the means used are themselves lawful — and no one argues that S & A is guilty of any illegality — proof of “business compulsion” requires “a showing that the victim’s financial straits were caused by the other party.” National American Corp. v. Federal Republic of Nigeria, 448 F.Supp. 622, 644 (S.D.N.Y.1978), aff'd, 597 F.2d 314 (2d Cir.1979) (emphasis added). The most that can be said here is that S & A may have threatened to terminate La Boucherie if the requisite documents were not signed. But since any contract existing between the parties was terminable at will, S & A, if it indeed made such a threat, did no more than threaten to exercise its rights under the existing contract. Such a threat does not amount to duress. Board of Trustees of Nat’l Training School for Boys v. O.D. Wilson Co., Inc., 133 F.2d 399, 400 n. 4 (D.C.Cir.1943); Blake Const. Co., Inc. v. C.J. Coakley Co., Inc., 431 A.2d 569, 577 n. 5 (D.C.App.1981); Joseph F. Egan, Inc. v. City of New York, 18 A.D.2d 357, 239 N.Y.S.2d 420, 423 (N.Y.App.Div.1963). Even a threatened breach of contract is not coercive unless the threat, if carried out, would result in irreparable harm to the threatened party. Sind, 356 A.2d at 657. Applying the law to the undisputed facts of this case, the Court can find no evidence to support a claim that La Boucherie was the victim of duress, economic or otherwise.

Even if La Boucherie has been the victim of duress, “duress merely renders a contract voidable. Thereafter, the victim may ratify the agreement by accepting its benefits.” National American Corp., 448 F.Supp. at 645. See also Blum v. Blum, 59 Md.App. 584, 477 A.2d 289, 294 (1984); Restatement (Second) of Contracts § 175; Calamari & Perillo, supra, § 9-8. While delay in disaffirming a contract may preclude avoidance of the contract’s operation, Blum, 477 A.2d at 294; Egan, 239 N.Y.S.2d at 423; Restatement (Second) of Contracts § 381, the acceptance of benefits under the contract necessarily bars denial of its validity. National American Corp., 448 F.Supp. at 644; Blum, 477 A.2d at 294, Grubel, 387 N.Y.S.2d at 443, Restatement (Second) of Contracts § 380, § 381, Comment a. It was five months after signing the July 21 agreement, and two months after signing the October 19 agreement, that La Boucherie was terminated as a distributor. During that time, it is undisputed that La Boucherie continued to reap the benefits of its relationship with S & A. Consequently, La Boucherie must be said to have ratified the agreements in question.

B. Claim for Breach of Fiduciary Duties

In its second claim, plaintiff asserts that S & A breached fiduciary duties that it owed plaintiff by virtue of the “close relationship” between the parties. Such a claim simply does not lie where two business partners have dealt with one another at arm’s length. See Restatement (Second) of Contracts § 177(1) and Comment a; Calamari & Perillo, supra, § 9-10. Cf. Bell v. Bell, 38 Md.App. 10, 379 A.2d 419, 423 (1977) (no fiduciary relationship existed between husband and wife when element of trust and confidence was lost); Sind, 356 A.2d at 655 (no fiduciary relationship between joint venture partners when they terminated agreement and when neither was in position of trust).

C. Claim for Misrepresentation

In its fourth and final claim for relief, plaintiff maintains that, in soliciting the $1 million note, S & A misrepresented the fact that business relations were to continue as usual. We need not be concerned with whether S & A dealt with La Boucherie truthfully or not, for plaintiff fails in other respects to make out a prima facie case of misrepresentation. In order for plaintiff to survive summary judgment on this claim, there would have to be in the record some evidence that plaintiff took action in reliance upon some alleged misrepresentation by defendant and that, as a result of this action, plaintiff incurred damages. Dresser, 465 A.2d at 839. No such detrimental reliance presents itself in the record before the Court. Even if plaintiff tendered his note in the hopes that past defaults would be forgiven, La Boucherie owed to S & A a sum equivalent to the face value of the note, as plaintiff has acknowledged. Ironically, plaintiff asserts elsewhere in his pleadings that the note was in satisfaction for money owed. If plaintiff owed the monies represented by the note and would have had to tender payment eventually, it cannot be said either that plaintiff took action in reliance upon any alleged misrepresentation or that plaintiff sustained any injury as a result of taking that action. In the absence of such detrimental reliance, plaintiff fails to state a claim. King v. Indus. Bank of Washington, 474 A.2d 151, 155 (D.C.App.1984).

III.

CONCLUSION

Plaintiff and defendant entered into a series of unambiguous agreements, by whose operation plaintiff was put in the situation he now complains of. Because the record reveals nothing but that plaintiff was a sophisticated businessman who could look after his own interests, plaintiff cannot avail himself of any doctrinal shield with which to deflect the force of those agreements. Accordingly, on the undisputed facts of the record, defendant is entitled to judgment as a matter of law.

An appropriate order will be entered.

      . Originally, Goldstein owned and operated a business known as District Hotel Supply, Inc. In 1975, he formed La Boucherie and, in 1976, merged the two corporations under the single name "La Boucherie Bernard, Ltd.” Goldstein is suing as assignee of the now defunct company.

      . La Boucherie continued for a time to supply S & A with chicken products.

      . Plaintiffs Third Amended Complaint was filed May 17, 1985.

      . Plaintiff spends much time in his pleadings suggesting that S & A was somehow improperly motivated when it decided to terminate La Boucherie as a distributor. Such allegations are plainly not relevant and will not enable plaintiff to withstand summary judgment. See, e.g., Grubel v. Union Mut. Life Ins. Co., 54 A.D.2d 686, 387 N.Y.S.2d 442 (1976) (absent wrongful threat, contracting party’s motives irrelevant to analysis of duress or undue influence).

        . Since the instant case involves sales of goods, it is governed by the Uniform Commercial Code ("U.C.C.”), as adopted in D.C.Code Ann. § 28:2-101 et seq. In situations that it does not expressly cover, however, the U.C.C. does not displace the common law of contracts. D.C.Code Ann. § 28:1-103; G & R Corp. v. American Security & Trust Co., 523 F.2d 1164, 1171 (D.C.Cir.1975).

      . Both parties point to a letter of May 8, 1981 as memorializing their contractual relationship. That letter only acknowledges a certain pricing agreement; it does not satisfy the applicable Statute of Frauds, D.C.Code Ann. § 28:3502.

      . Whether or not any contract entered into by La Boucherie and S & A was for a definite period or of indefinite duration, it was in any event not performable within one year and, hence, was unenforceable absent a signed writing. D.C.Code Ann. § 28:3502. No such writing setting forth the terms of any ongoing relationship between the parties has been produced for the Court. See supra note 6.

      . In the area of employment contracts, as well, an at-will agreement is terminable only in good faith. See, e.g., Savodnik v. Korvettes, Inc., 488 F.Supp. 822, 824 (E.D.N.Y.1980); Monge v. Beebe Rubber Co., 114 N.H. 130, 316 A.2d 549, 551 (N.H.974); 3A A. Corbin, Contracts § 684 (1960 & Supp.1984).

      . That section of the Code, it should be noted, contemplates a situation where a definite contract, calling for a specific performance, has been entered into and where one party has given some indication that it will not be able to perform its part of the bargain. In such a case, the other party may demand assurance of return performance before performing itself. The instant case, in contrast, involves an at-will arrangement, which, by definition, is terminable at any time, so long as the terminating party does not act in bad faith. A party in such a situation need not wait for assurances, while merely suspending its own performance.

      . Plaintiff states in his Opposition that the two agreements were unconscionable in that they provided for termination without notice, citing D.C.Code Ann. § 28:2-309. That provision only provides that an agreement dispensing with notice is invalid if its operation would be unconscionable; plaintiff begs the question. Moreover, the Court, having read both documents, is at a loss to divine why plaintiff asserts that neither agreement provided for notice, when both clearly did.

      . Such as that between husband and wife, or between clergyman and parishioner.

      . A threat is also improper if "the threatened act would harm the recipient and would not significantly benefit the party making the threat____” Restatement (Second) of Contracts § 176(2)(a). Inasmuch as plaintiff contends that the July and October agreements were lopsided, plaintiff cannot then argue that S & A did not "significantly benefit” from those agreements.

      . To the contrary, there is evidence in the record — from plaintiffs own testimony — that La Boucherie continued at “full production” until January 1, 1983. Deposition of Bernard Gold-stein, In re Boucherie Bernard, Ltd., Case No. 83-108 (Aug. 11, 1983) at 16 (submitted as Exhibit 2 to Plaintiff’s Statement of Material Facts).

      . Plaintiff contends that, had S & A informed him of its "true intent," he would have cancelled his trip to Europe and, presumably would have smoothed things over with S & A, thus avoiding the eventual termination of his distributorship. Opposition at 41. Such a claim is too speculative to merit serious consideration, much less a trial.


author: JAMES C. FOX, District Judge.

text:
    Charles R. HASSINGER, Administrator of the Estate of Stanley H. Hassinger, III, Plaintiff, v. TIDELAND ELECTRIC MEMBERSHIP CORPORATION, Coleman Company, Inc., and Coast Catamaran Corporation, Defendants. Janet Mead PROCTOR, Administratrix of the Estate of Robert Diego Proctor, Plaintiff, v. TIDELAND ELECTRIC MEMBERSHIP CORPORATION, Coleman Company, Inc., and Coast Catamaran Corporation, Defendants.
    Nos. 83-1077-CIV-5, 83-1078-CIV-5.
    United States District Court, E.D. North Carolina, Raleigh Division.
    Oct. 31, 1985.

      McNeill Smith, H. Miles Foy and E. Garrett Walker, Smith Moore Smith Schell & Hunter, Greensboro, N.C., for plaintiffs.
    George R. Ragsdale, Moore, Ragsdale, Liggett, Ray & Foley, Armistead J. Maupin, Maupin, Taylor & Ellis, Raleigh, N.C., and Robert M. Hughes, III, Seawell, Daughton Hughes & Tims, Norfolk, Va., for defendants.
   MEMORANDUM OF DECISION

JAMES C. FOX, District Judge.

I. BACKGROUND

These cases arise from the electrocutions of three men, Stanley H. Hassinger, III, Robert D. Proctor, and Stuart L. Powell, which occurred on June 5, 1982, at Silver Lake in Okraeoke, North Carolina. The men were killed while beaching Hassinger’s 18-foot Hobie Cat sailboat when the top of the mast contacted an overhead power line. Named as defendants in this action are Tideland Electric Membership Corporation (“Tideland”), as the owner and operator of the electric power line, and Coleman Company, Inc. (“Coleman”), and Coast Catamaran Corporation (“Coast”), as the alleged designers, manufacturers and sellers of the Hassinger Hobie Cat sailboat. By order dated April 18, 1985, this court denied defendants’ motions to dismiss for lack of admiralty jurisdiction, as well as defendants Coleman and Coast’s motion to dismiss plaintiffs’ strict liability claim. In this same order, however, the court granted defendant Tideland’s motion to dismiss plaintiffs’ federal question claims. These cases are presently before the court on defendant Coleman’s motion for summary judgment, filed pursuant to Rule 56 of the Federal Rules of Civil Procedure. As the basis for its motion, Coleman asserts the following:

1. It did not design, manufacture, or market the eighteen-foot Hobie Cat; furthermore, because it did not manufacture or sell the sailboat, it made no warranties in connection therewith. AND,
2. The defendant Coast is not an instrumentality, conduit or alter ego of Coleman, and therefore Coleman has no liability for Coast’s acts.

This motion has been thoroughly briefed by all necessary parties, and is now ripe for disposition.

II. FACTS

The facts, well summarized at pages 3-24 of plaintiffs’ Brief in Opposition to Motion for Summary Judgment, as taken from various depositions and answers to interrogatories, demonstrate the following:

In 1976 Coleman acquired 100% of Coast’s shares of common stock, and installed one of its own officers, Douglas Campbell, as president of Coast. Since 1976, Coleman has elected all the directors of Coast, some of whom also have been officers of Coleman.

After Campbell became president of Coast in 1976, he instituted a Product Development Committee (hereinafter PDC), which was comprised of Coast employees and met monthly; chief executive officers from Coleman regularly received copies of the committee’s minutes. The PDC was responsible for all design changes in Coast’s existing products, as well as initiating, controlling, and monitoring all future new product projects. As President of Coast, Campbell was ultimately responsible for the actions taken by the PDC. Campbell, however, reported on a regular basis all matters under his supervision and direction to Larry Jones, President of Coleman. In fact, any capital expenditure by Coast (e.g. purchase of equipment, buildings, machinery, land, etc.) exceeding $50,-000 was required to be approved by Larry Jones. Furthermore, Campbell’s salary was determined by the Compensation Committee of Coleman’s Board of Directors; additionally, his compensation included participation in a profit-sharing bonus plan adopted by Coleman.

Coleman provides many services to Coast; specifically, these services include travel, legal, public, personal and industrial relations, distributions, credit, insurance, and accounting and information systems. In 1976 Hal Pfountz, a lawyer with Coleman, was assigned, with Campbell’s consent, to correlate and follow up on all of Coast’s product liability matters. This involvement included assisting in the coordination and preparation of litigation in which Coast was involved, even in cases in which Coleman was not a named defendant. In addition, Pfountz served as legal adviser of the Coast Catamaran design department. In this capacity, he made recommendations as to whether a warning label ought to be applied to the mast, whether a fiberglass tiller should be adopted, whether testing ought to be conducted for an insulating mast plug and how extensive that testing ought to be, and whether a fiberglass mast ought to be pursued by Coast Catamaran. He also was a participant in the decision for Coast Catamaran to send a warning letter to all power companies in 1979.

In addition to these services, the finances of Coast and Coleman are also intertwined. Coast lends money to Coleman, if Coleman needs it, and vice versa. In its answer to plaintiffs’ interrogatory no. 41, Coleman stated that:

This defendant and Coast Catamaran Corporation maintain separate books and bank accounts. Coast deposits funds which it accumulates in bank accounts maintained in its name which are thereafter transferred to this defendant on a periodic basis. Coast draws up funds from bank accounts in its name which are provided by this defendant as needed. A balance between the acquisition from Coast and deposits to Coast is maintained as a loan in favor of the appropriate company with interest at prime. This loan is carried forward at the end of each accounting period based upon transactions during that time. There have been no capital contributions by this defendant to Coast; however, this defendant paid in excess of $3,000,000.00 for the capital stock of Coast.

Furthermore, Coleman does not have to request Coast’s permission before withdrawing money from Coast’s bank accounts.

Finally, the Hobie Cat and Coleman trademarks frequently are published jointly. See, e.g., 1980 and 1982 Coleman Annual Reports; Retail Sales Brochure for Hobie Cat 18 sailboats; Hobie 18 Assembly Manual; Business Cards used by Coast’s salesmen; Retail Dealer Cards.

III. LAW APPLICABLE TO THE ISSUE OF WHETHER THE SEPARATE CORPORATE ENTITY OF COAST OUGHT TO BE DISREGARDED

The plaintiffs argue that the law applicable to this issue is the law of California, the state of incorporation of Coast Catamaran. The court does not agree, however, and finds that North Carolina law governs in this diversity action.

The doctrine of conflicts of law is a question of local common law, and therefore “[w]hen this conflict question is presented, the federal court is bound to decide it according to the law of conflicts of the State in which it ... [is] sitting.” Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 491, 61 S.Ct. 1020, 1021, 85 L.Ed. 1477 (1941). See also Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). The choice of law rule in North Carolina for personal injury and wrongful death actions is clear — “North Carolina courts have unequivocally adhered to the lex loci delicti rule.” Santana, Inc. v. Levi Strauss and Co., 674 F.2d 269, 272 (4th Cir.1982). The “lex loci delicti,” or “place of the wrong,” “is the state where the last event necessary to make an actor liable for an alleged tort takes place.” Black’s Law Dictionary 820 (5th ed. 1979). Santana, 674 F.2d at 272. With respect to contract actions, the law of the state “where the contract is made is the rule by which the validity of it, its exposition, and consequences are to be determined.” Fast v. Gulley, 271 N.C. 208, 155 S.E.2d 507, 509 (1967). Furthermore, as to breach of warranty actions, “liability is determined in accordance with the law of the place of sale.” Richard W. Cooper Agency, Inc. v. Irwin Yacht and Marine Corp., 46 N.C.App. 248, 264 S.E.2d 768 (1980).

In applying these choice of law rules, there is no question but that North Carolina law applies to each of plaintiffs’ claims. The decedents were electrocuted in Okracoke, North Carolina, and the Has-singer Hobie Cat was purchased in Raleigh, North Carolina. Therefore, the court finds that North Carolina law is applicable to the issue of whether the separate corporate entity of Coast ought to be disregarded.

IV. DISREGARDING THE SEPARATE CORPORATE ENTITY OF COAST CATAMARAN

Summary judgment under Rule 56 of the Federal Rules of Civil Procedure should be granted only when it is clear that no issue of fact is involved. Though the evidentiary facts are not disputed, if conflicting inferences could be drawn from those facts, summary judgment cannot be granted. See, e.g., Phoenix Savings & Loan, Inc. v. Aetna Casualty & Surety Co., 381 F.2d 245, 249 (4th Cir.1967). The court finds that there are no issues of fact involved herein. Resolution of the issue presently before the court requires a construction of the meaning of North Carolina law and whether, as a matter of law, with respect to the design, manufacture and sale of the Hassinger Hobie Cat, Coast was a mere instrumentality of Coleman.

In disregarding a corporate entity, North Carolina applies what is called the “alter ego” or “instrumentality” doctrine. This doctrine states that “when a corporation is so dominated by another corporation that the subservient corporation becomes a mere instrument, and is really indistinct from the controlling corporation, then the corporate veil of the dominating corporation will be disregarded, if to retain it results in injustice.” National Bond Finance Co. v. General Motors Corp., 238 F.Supp. 248 (W.D.Mo.1964), aff'd, 341 F.2d 1022 (8th Cir.1965), quoted in Pilot Title Insurance Co. v. Northwestern Bank, 11 N.C.App. 444, 450, 181 S.E.2d 799, 803 (1971). Complete stock ownership, identical boards of directors, common officers, and transaction of business for each other, do not make one corporation liable for the action of another. 11 N.C.App. at 450, 181 S.E.2d at 803; Henderson v. Security Mortgage & Finance Co., 273 N.C. 253, 160 S.E.2d 39, 44 (1968); Huski-Bilt, Inc. v. First Citizens Bank & Trust Co., 271 N.C. 662, 668, 157 S.E.2d 352, 358 (1967); B-W Acceptance Corp. v. Spencer, 268 N.C. 1, 149 S.E.2d 570 (1966). The control necessary to invoke the “instrumentality rule” is “such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal. [Furthermore,] [i]t must be kept in mind that the control must be shown to have been exercised at the time the acts complained of took place in order that the entities be disregarded at the time.” 1 Fletcher, Cyclopedia Corporations, perm, ed., p. 204 et seq., quoted in Huski-Bilt, Inc., 271 N.C. at 670-71, 157 S.E.2d at 358. Finally, “such control must have been used ... to commit fraud or wrong, to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act in contravention of [a] plaintiffs legal rights”; also this control “must proximately cause the injury ... complained of.” Lowendahl v. Baltimore & O.R. Co., 247 App.Div. 144, 287 N.Y.S. 62, 76 (1936), aff'd, 272 N.Y. 360, 6 N.E.2d 56, quoted in Huski-Bilt, Inc., 271 N.C. at 670-71, 157 S.E.2d at 358. Only when these elements are present — complete domination and control at the time the act complained of took place, which is used to commit a fraud, violation of a legal duty or a dishonest act in contravention of a plaintiffs legal rights, which in turn proximately causes the injury — will the corporate entity be disregarded and the corporation and the shareholder be treated as one and the same person.

North Carolina law thus recognizes that under some circumstances the corporate entity may properly be disregarded and personal liability imposed on the shareholder or shareholders of whom the corporation is the alter ego. See, e.g., Pilot Title Insurance Co. v. Northwestern Bank, 11 N.C.App. 444, 181 S.E.2d 799 (1971); Henderson v. Security Mortgage & Finance Co., 273 N.C. 253, 160 S.E.2d 39 (1968). These circumstances are present, however, only when the corporate entity is a mere shell, device, or puppet of the shareholder or shareholders.

In Pilot Title Insurance Company, defendant Northwestern endorsed certain assets to Park Road Professional Center, Inc. (“Park Road”). In holding that Northwestern completely dominated Park Road and therefore in endorsing the assets from the loan agreement in question to Park Road, it did nothing more than endorse these assets to itself, the court found the following facts—

The named president of Park Road was named only for the purpose of executing the loan agreement in question; furthermore, this loan agreement was the only thing he ever engaged in on behalf of Park Road. The president’s own testimony established that he knew nothing about the affairs of Park Road, and little about the loan agreement he had signed. Additionally, the corporate charter of Park Road was in a state of suspension at all pertinent times. Its only stock certificate was lost. Its purported president had never seen any minute books, tax returns or corporate records. No corporate secretary attested the signature of the purported president of Park Road to the loan agreement. No corporate seal was affixed thereto. And finally, no corporate officer, or anyone else verified or signed the answer in the case on behalf of Park Road. 11 N.C.App. 444, 181 S.E.2d at 804. Accordingly, the court found that Park Road was a “corporate phantom” which “exists as a mere puppet and device.” Therefore, the requisite complete domination and control, not only of finances, but of policy and business practices in respect to the transaction attacked, was found to exist.

The critical factor in the alter ego determination in Henderson v. Security Mortgage & Finance Company, was that, as testified to by the corporate president, no effort was made to operate the corporation as an entity separate and distinct from his private interests. 273 N.C. at 260, 160 S.E.2d at 44. The corporate entity therefore was found to be a “mere device or puppet in ... [the shareholders’] hands.” Id. Because usury was involved in Henderson, the element of fraud was also clearly present; the existence of this element was also critical to the court’s determination. “[W]hen the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend crime, the law will regard the corporation as an association of persons.” U.S. v. Milwaukee Refrigerator Transit Co., C.C., 142 F. 247, 255 (1905), quoted in Henderson, 273 N.C. 253, 160 S.E.2d at 44-45.

These two cases demonstrate the very limited set of circumstances in which the corporate entity may properly be disregarded in North Carolina. Such a disregard of Coast Catamaran, the corporate entity herein, is not warranted in the case at bar. Plaintiffs’ evidence in a light most favorable to them does not show complete domination and control by Coleman at the time the Hassinger Hobie Cat was designed, manufactured and sold. Coleman does not so dominate the finances, policies and practices of Coast Catamaran that Coast has no separate mind, will or existence of its own.

Under the alter ego test stated above, plaintiffs’ evidence fails to allege sufficient facts to raise the alter ego question in two respects. First, plaintiffs’ evidence is insufficient to show the requisite control by Coleman in Coast’s manufacturing and design process. Coast’s Product Development Committee, which is comprised of Coast employees, is responsible for all design changes in Coast’s existing products, as well as initiating, controlling, and monitoring all future new product projects. Furthermore, the president of Coast, Douglas Campbell, is ultimately responsible for the actions taken by this committee. Although Campbell’s salary is determined by Coleman, and he reports all matters under his supervision and direction on a regular basis to the president of Coleman, Coleman does not so dominate Coast as to the manufacture and sale of Catamarans that Coast has no separate mind, will or existence of its own. Plaintiffs’ evidence is simply insufficient to show that Coast is a corporate phantom which exists as a mere puppet and device of Coleman with respect to the manufacture and design process. North Carolina cases are clear that this type of control is required in order to invoke the instrumentality doctrine.

Secondly, even assuming plaintiffs have presented the requisite demonstration of control by Coleman of Coast, they have failed to present any evidence that such “control” was used to commit a fraud or wrong or to perpetrate the violation of a statutory or other positive legal duty, or a dishonest and unjust act. Even if complete control exists, some additional circumstances of fraud are necessary in order to invoke the instrumentality doctrine. Ram Textiles, Inc. v. Hillview Mills, Inc., 47 N.C.App. 593, 267 S.E.2d 700, 703 (1980); Huski-Bilt, Inc. v. First Citizens Bank & Co., 271 N.C, 662, 157 S.E.2d 352 (1967).

Accordingly, the court holds that the evidence considered in the light most favorable to plaintiffs does not entitle them to have the jury pass on the instrumentality or alter ego claim and therefore defendant Coleman’s motion for summary judgment is GRANTED.

SO ORDERED.

      . A detailed account of the facts surrounding this accident can be found in this order, and therefore will not be repeated herein.

      . There is no real dispute on this point. The question herein is whether or not Coleman is liable as the designer, manufacturer and seller of the Hobie Cat because Coast is its alter ego.

      . Douglas Campbell has been corporate vice-president of Coleman since 1977.

      . Larry Jones, President of Coleman; Lawrence Keller, Senior Vice-President for Corporate Development and Law of Coleman; and John Reiff, Secretary of Coleman.

      . In 1976, the PDC members were: Hobie Alter, Jim Black, Jerry Blakely, Sandy Banks, Chuck Conrey, Drew Holland, and Fred Weishar.

        . Campbell could not recall the dollar limitations for 1976 at the time of his deposition, but related that the 1984 policy required him to inform Coleman when capital expenditures exceeded $50,000.

      . Campbell received bonuses pursuant to this plan every year except one between the years of 1976 and 1984.

      . The plaintiffs also argue that Ogg v. City of Springfield, 121 Ill.App.3d 25, 76 Ill.Dec. 531, 458 N.E.2d 1331 (1984), which found Coleman liable for injuries caused by an accident involving a Hobie Cat, is controlling. The case applied Illinois law, however, which is not applicable to the case at bar.

      . The corporate president and his wife were the sole shareholders of the corporate entity.