author: KINNEARY, District Judge.

text:
    Deanna L. RILEY, et al., Plaintiffs, v. The HEIL COMPANY, Defendant.
    No. C-2-83-166.
    United States District Court, S.D. Ohio, E.D.
    Sept. 25, 1985.

      Daniel C. Connor, Columbus, Ohio, for plaintiffs.
    Douglas M. Bricker, Knepper, White, Arter & Hadden, Columbus, Ohio, for defendant.
   OPINION AND ORDER

KINNEARY, District Judge.

This matter comes before the Court to consider the motion of the defendant to stay these proceedings.

This is a products liability action in which the plaintiffs are citizens of Ohio and the defendant, the Heil Company, is a Wisconsin corporation. Defendant is insured by the Ideal Mutual Insurance Company, a New York corporation. Ideal is not a party to the present action.

In February, 1985, Ideal was placed in liquidation in New York and a permanent injunction was issued prohibiting all proceedings against Ideal within the United States. Also in February, 1985, Ideal was placed in ancillary liquidation in Wisconsin pursuant to Wisconsin’s version of the Uniform Insurers Liquidation Act, Chapter 645, Wis.Stat. On the same day, the Circuit Court of Dane County Wisconsin issued an injunction restraining all persons asserting claims arising out of policies issued by Ideal to insureds residing in Wisconsin from further asserting their claims except by submission to administrative liquidation proceedings.

As the present case is a diversity action, this Court is bound to apply Ohio law. The relevant Ohio Revised Code section governing the effect to be given to foreign court injunctions of civil actions against the insurer or liquidator provides in pertinent part:

The courts of this state shall give full faith and credit to injunctions against the liquidator or the company or the continuation of existing actions against the liquidator of the company, when such injunctions are included in an order to liquidate an insurer issued pursuant to corresponding provisions in other states.

O.R.C. § 3903.24.

The Court observes that the Ohio and Wisconsin statutes governing the liquidation of insurance companies are substantially similar. See O.R.C. Chapter 3903 and Wis.Stat. Chapter 645. Thus, the Court believes that the injunction issued under Wisconsin law is entitled to be given effect pursuant to O.R.C. § 3903.24. However, the Court could find no Ohio court authority interpreting or applying the above recently enacted provision of Ohio law. The defendant argues that this provision requires the Court to stay the current proceeding pursuant to the Wisconsin court injunction until the plaintiff presents an appropriate claim to the Wisconsin ancillary liquidator. However, the plaintiffs maintain that the above section does not apply to the present action as neither the Wisconsin liquidator nor the insurer is a party.

Absent any Ohio authority, the Court believes that the best approach to resolving this issue is to balance the plaintiffs’ interest in having a convenient forum in which to litigate their claim with the state’s interest in providing an efficient means for liquidation of insolvent insurance companies. The Court recognizes that Wisconsin has a substantial interest in maintaining an orderly and efficient process of liquidating insolvent insurance companies so as to protect the interests of the company’s owners, policyholders, and creditors, and members of the public. Metropolitan Life Insurance Co. v. Board of Directors of Wisconsin Insurance Security Fund, 572 F.Supp. 460, 473 (W.D.Wis.1983); Blackhawk Heating & Plumbing Co., Inc. v. Geeslin, 530 F.2d 154, 159 (7th Cir.1976). Thus, a motion to stay a proceeding involving an insurer or liquidator may be appropriate in order to avoid a disruption of the statutory liquidation process.

However, in the present case, the Court is unconvinced that the continuation of this proceeding would be disruptive of the liquidation process. Indeed, after reviewing Wisconsin Stat. 645 et seq., the Court believes that continuation of this litigation is consistent with the statutory scheme established by the Wisconsin legislature.

The defendant correctly asserts that the plaintiffs are permitted to file a claim in the Wisconsin liquidation proceeding. Wis. Stat. § 645.63 allows the filing of a claim on a contingent judgment. The comment to this section states:

... the claim of a third party who has not reduced his claim against the policyholder to judgment is only technically and superficially contingent, if contingent at all, and should be treated as if it were an ordinary claim____ Unliquidated and undetermined claims should be regarded as absolute and unqualified claims.

Wis.Stat. § 645.63, comment. Thus, it is clear the plaintiffs would be able to file a claim with the ancillary liquidator even if the judgment has not been rendered. However, this does not end the inquiry.

The language of Wis.Stat. § 645.64(1) suggests that the third party is not required to bring a claim. The statute provides, in pertinent part:

Whenever any third party asserts a cause of action against an insured of an insurer in liquidation, the third party may file a claim with the liquidator. (Emphasis added.)

This section further provides that if the third party elects to pursue his claim in the liquidation proceeding, he must release the insured from liability on his cause of action up to the amount of the applicable policy limit. See Wis.Stat. § 645.64(1). The legislative committee’s comment to this section is particularly enlightening with respect to the operation of this section.

Third party claims raise tortuous and difficult problems, and this section has surely not completely solved them. The goal was to devise a more subtle and discriminating method of handling third party claims than now exists, which would both do greater equity and also encourage quick termination of the liquidation____
This section provides for the third party claimant to make a choice between pursuing his claim against the insured and presenting his claim in the liquidation. At first blush it would seem harsh and unnecessary to force such a choice. But this is not the case. Before he is to choose, the claimant has every opportunity to determine whether the insured is individually financially responsible. If he is, the claimant can proceed against him, rather than take his chances in the liquidation.

Wis.Stat. § 645.64, comment.

Wis.Stat. § 645.64(2) also allows the insured to file a claim in the liquidation.

Whether or not the third party files a claim, the insured may file a claim on his or her own behalf in the liquidation. If the insured fails to file a claim by the date for filing claims specified in the order of liquidation or within 60 days after mailing of the notice required by § 645.47(l)(b), whichever is later, the insured is an unexcused later filer.

The relevant comment to this section states:

The fact that a third party claim often remains unsettled for a long time should not prevent the insured from getting such protection from his policy as others have received from theirs, so long as it does not unreasonably delay the liquidation ... the amount [of the claim] should not be paid to the insured but withheld for future payments to him. If he wins the litigation, the fund would fall back into the unallocated funds of the liquidator except for allowable defense costs.

Wis.Stat. § 645.64, comment Sub. (3). Finally, the Court notes that Wis.Stat. § 645.-49(1) specifically permits the liquidator to intervene in out-of-state law suits which may affect the liquidation.

In examining Wisconsin’s statutory insurance liquidation scheme, the Court believes that the Wisconsin legislature intended to encourage but not require third parties and insureds to file their claims with the liquidator. The inducement to file is the risk attendant upon non-filing. Failure to make timely filings exposes the third party to the risk of an insolvent insured while the insured bears the risk of a reduced priority in the subsequent distribution of assets and funds. Given this statutory framework, the Court believes that continuation of this litigation without a filing of the claim with the liquidator does not threaten the interests of Ideal’s owners, creditors, other policyholders or members of the public. Rather, under Wisconsin law, it effectively shifts the risk and costs of not filing to the respective parties. Of course, the defendant may choose to file a claim with the liquidator in order to minimize the risk of bearing the cost of an adverse judgment which otherwise would have been covered by Ideal but for its insolvency. In such a circumstance, it might be appropriate for the Court to stay this action. However, it would be entirely inappropriate to issue a stay because the plaintiffs opt to proceed against the insured instead of against the liquidator when such a option was specifically contemplated by the drafters of the Wisconsin insurance liquidation statutes. Finally, the Court notes that if the liquidator believes that this proceeding in some way jeopardizes the liquidation, the liquidator has the authority to intervene in order to protect the interests of creditors and policyholders of the insolvent insurer.

The Court acknowledges the authority cited by the defendant (Janak v. Allstate Insurance Co., 319 F.Supp. 215 (W.D.Wis. 1970); Cummings Wholesale Electric Co., Inc. v. Home Owners Insurance Co., 492 F.2d 268 (7th Cir.) cert. denied, 419 U.S. 883, 95 S.Ct. 149, 42 L.Ed.2d 123 (1974) and Metropolitan Life, 572 F.Supp. 460), but does not believe that abstention is appropriate when the pending litigation is not in conflict with Wisconsin’s statutory insurance liquidation process. Moreover, a stay of this proceeding would be unduly burdensome upon the plaintiffs as it would require pursuit of the present action in an inconvenient forum. Whereas the Court finds that Wisconsin law does not require the plaintiffs to proceed with their claim in the liquidation proceeding and continuation of this proceeding does not impair the defendant’s interests nor disrupt the Wisconsin liquidation proceeding, the defendant’s motion for a stay of this proceeding is DENIED.

WHEREUPON, upon consideration and being duly advised, the Court finds that the defendant’s motion to stay this action is without merit and it is, therefore, DENIED.

IT IS SO ORDERED.


source: Caselaw Access Project

author: GETZENDANNER, District Judge:

license: Public Domain

text:
    Robert A. SCHEINFELD, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant.
    No. 84 C 9551.
    United States District Court, N.D. Illinois, E.D.
    Sept. 25, 1985.

      Mark A. Orloff, Chicago, 111., for plaintiff.
    Milton J. Pfetzer, Lake Forest, 111., for defendant.
   MEMORANDUM OPINION AND ORDER

GETZENDANNER, District Judge:

This action on a casualty insurance contract, coupled with a claim for defamation and tortious breach of a duty to act fairly and in good faith, is before the court on a motion to dismiss Count IV of Plaintiff’s Amended Complaint. Jurisdiction is predicated on the basis of diversity under 28 U.S.C. § 1332. Plaintiff Robert Scheinfeld is alleged to be a Texas resident, and defendant American Family Mutual Insurance Company is alleged to have been organized under Wisconsin law and to have its principal place of business there. It is apparent from the relief sought that the amount in controversy satisfies the jurisdictional requirement, though this is not expressly stated. For the reasons stated below, the court grants the motion.

For purposes of the present motion, the facts alleged in plaintiff’s complaint are taken as true. In Count I, plaintiff alleges that on or about December 1982, American Family issued a two-year “Businessowners Package Policy” of insurance on Scheinfeld’s business property. Plaintiff further alleges that on December 31, 1983, Scheinfeld’s business office in Chicago, Illinois was burglarized, resulting in loss of property and business income; that these losses were insured against by American Family; that Scheinfeld performed all conditions precedent to performance of American Family’s policy obligations; and that American Family breached the insurance contract by knowingly, willfully, and intentionally failing to pay the claim despite Scheinfeld’s demands. Count I closes with a prayer for more than $17,983 in property and income loss, plus interest, costs, and attorney’s fees.

Count II repeats the allegations of Count I, adding that American Family’s “delay in responding” and “refusal to pay” constitutes “unreasonable and vexatious action within the meaning of” section 155 of the Illinois Insurance Code, Ill.Rev.Stat., ch. 73, fl 767. That section reads, in pertinent part:

In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:
(a) 25% of the amount which the Court or jury finds such party is entitled to recover against the company, exclusive of all costs:
(b) $5,000;
(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount if any, which the company offered to pay in settlement of the claim prior to the action.

Count II closes with a prayer for $17,983 plus interest, costs, and attorney’s fees, as well as $10,000 “pursuant to” fl 767.

Count III repeats the allegations of the first two counts, adding that after Scheinfeld filed his policy claim, American Family employees, with reckless disregard for the truth, made defamatory statements about Scheinfeld, including statements that his community reputation was not good and that he was stealing goods and services from others. In Count III, plaintiff further alleges that American Family’s statements damaged Scheinfeld’s community reputation, resulting in lost business, expenditures to defend himself, and severe mental distress. Count III closes with a prayer for special, actual, and general damages, plus punitive damages in excess of $75,000, costs, and attorney’s fees.

After being granted leave, Scheinfeld amended his complaint by adding a fourth count to allege a tortious breach of a “duty of good faith and fair dealing.” Count IV repeats most of the allegations of Count I, including the allegation that American Family “knowingly, willfully and intentionally fail[ed] to pay plaintiff’s claim.” Count IV then alleges that “[t]he actions of [American Family] and its employees in its investigation and denial of plaintiff’s claim have been wilful, reckless, unfair and in bad faith” as a direct and proximate result of which Scheinfeld “has been injured.” Count IV closes with a prayer for $17,983 plus interest and costs, in addition to more than $100,000 in compensatory and more than $500,000 in punitive damages. The basis of American Family’s motion to dismiss is that Count IV fails to state a cause of action under applicable Illinois law and that, even if such a claim is stated, Illinois law would limit Scheinfeld’s damages to those recoverable under his contract of insurance and section 155 of the Illinois Insurance Code.

A motion to dismiss for failure to state a claim should be granted only if it appears “beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct. 594, 596, 30 L.Ed.2d 652 (1972) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). In deciding the motion, the court must presume all factual allegations of the complaint to be true and make all reasonable inferences in favor of the non-movant. 2A J. Moore, Moore’s Federal Practice, 1112.07[2.-5] (2d ed. 1985). Nonetheless, “conclusory allegations unsupported by any factual assertions will not withstand a motion to dismiss.” Briscoe v. LaHue, 663 F.2d 713, 723 (7th Cir.1981), aff'd, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983). Because jurisdiction in this case rests solely on diversity of citizenship, the rule of Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) requires the court to apply state substantive law, which in this case is the law of Illinois.

American Family has argued that any recovery by Scheinfeld under a duty of good faith and fair dealing is limited to that allowed by section 155 of the Illinois Insurance Code, Ill.Rev.Stat, ch. 73, H 767. In an earlier case, this court found the statutory remedies under section 155 to preempt any common-law recovery for an alleged breach of the duty of good faith and fair dealing in an insurer’s conduct towards its insured. Shaw v. Equitable Life Assurance Society, No. 82 C 1421 (N.D.Ill. Oct. 29, 1982). Since then, two other judges of this district who had similarly held reconsidered the issue and have held that section 155 preempts punitive but not compensatory damages for cases alleging such a tort. UNR Industries, Inc. v. Continental Insurance Co., 607 F.Supp. 855 (N.D.Ill.1984) (Hart, J.); Barr Co. v. Safeco Insurance Co., 583 F.Supp. 248 (N.D.Ill.1984) (Moran, J.). Two other judges apparently adhere to the view that section 155 preempts all tort claims against an insurer predicated on a tortious refusal to pay. Aabye v. Security-Connecticut Life Insurance Co., 586 F.Supp. 5 (N.D.Ill. 1984) (Aspen, J.); Abbott Laboratories v. Granite State Insurance Co., 573 F.Supp. 193 (N.D.Ill.1983) (Shadur, J.). One judge has declined to find that section 155 preempts any common-law remedies in tort at all. Roberts v. Western-Southern Life Insurance Co., 568 F.Supp. 536 (N.D.Ill. 1983) (Marshall, J.).

As noted by Judge Hart in UNR, 607 F.Supp. at 865, every Illinois Appellate Court addressing the issue has agreed that § 155 of the Illinois Insurance Code preempts a punitive damage award for an insurer’s bad faith and unfair dealing in refusing to settle a claim. Fisher v. Fidelity & Deposit Co. of Maryland, 125 Ill. App.3d 632, 80 Ill.Dec. 880, 466 N.E.2d 332 (5th Dist.1984); Kinney v. St. Paul Mercury Insurance Co., 120 Ill.App.3d 294, 75 Ill.Dec. 911, 458 N.E.2d 79 (1st Dist.1983); McCall v. Health Care Service Corp., 117 Ill.App.3d 107, 72 Ill.Dec. 640, 452 N.E.2d 893 (4th Dist.1983); Hoffman v. Allstate Insurance Co., 85 Ill.App.3d 631, 40 Ill. Dec. 925, 407 N.E.2d 156 (2d Dist.1980); Debolt v. Mutual of Omaha, 56 Ill.App.3d 111, 13 Ill.Dec. 656, 371 N.E.2d 373 (3d Dist.1978). Under this court’s Erie obligations, the uniform result adopted by these decision cannot be disregarded absent “persuasive data that the highest court of the state would decide otherwise.” West v. AT & T, 311 U.S. 223, 237, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940), quoted in UNR, 607 F.Supp. at 865-66. While plaintiff has made some cogent arguments about the full availability of common-law remedies for an insurer’s bad faith conduct, none of those arguments are sufficiently persuasive to overcome the combined weight of the above authority.

In contrast to the uniform rule regarding the preemption of punitive damages, (the Illinois Appellate Courts, along with the federal courts from this district, are split as to whether section 155 preempts a plaintiff’s right to claim compensatory damages from an insurer’s willful breach of bad faith and fair dealing. See UNR, 607 F.Supp. at 866-68; Barr, 583 F.Supp. at 256; Hoffman, 40 Ill.Dec. 659, 407 N.E.2d at 159; McCall, 70 Ill.Dec. at 643, 452 N.E.2d at 896 (4th Dist.1983) (all holding that section 155 does not preempt compensatory damages). Cf. Fisher, 80 Ill.Dec. at 887, 466 N.E.2d at 339 (holding that section 155 preempts punitive damages recovery without discussing compensatory damages). While other appellate panels have consistently held that section 155 preempts all tort recovery, see UNR, 607 F.Supp. at 867 (citing cases), those cases generally do not distinguish between compensatory and punitive damages, and appear to grow out of a situation where the compensatory damages sought were no different than those recoverable on the insurance contract. The court finds the analyses of Judge Hart and Judge Moran in UNR and Barr, respectively, to be persuasive and holds that section 155 does not preempt compensatory damages from an insurer’s bad faith actions in all cases. The question then is whether the plaintiff has stated a claim in tort for such compensatory damages here.

An Illinois court in 1975 first recognized such an independent cause of action in tort based on an insurer’s breach of the duty of good faith and fair dealing toward its insured. Ledingham v. Blue Cross Plan for Hospital Care of Hospital Service Corp., 29 Ill.App.3d 339, 350, 330 N.E.2d 540 (5th Dist.1975), rev’d on other grounds, 64 Ill.2d 338, 1 Ill.Dec. 75, 356 N.E.2d 75 (1976). Basing its opinion chiefly on a line of California cases, the Ledingham court stated that in unusual cases breach of contract can constitute an independent willful tort, and held that one such case involves breach of the duty implied by law for each party to an insurance contract to act in good faith and to deal fairly with the other. 330 N.E.2d at 548. Although finding no bad faith on the facts, the Court noted that such a claim could be stated where a plaintiff alleges

threatened and actual bad faith refusals to make payments under the policy, maliciously employed by defendants in concert with false and threatening communications directed to the policyholder for the purposes of causing him to surrender his policy or disadvantageous^ settle a nonexistent dispute____

330 N.E.2d at 549 (quoting from Fletcher v. Western National Life Insurance Co., 10 Cal.App.3d 376, 401, 89 Cal.Rptr. 78, 93 (1970).

Although Ledingham has been criticized in other Illinois appellate districts for its failure to address the possible preemptive effects of the Illinois Insurance Code, see, e.g., Tobolt v. Allstate Insurance Co., 75 Ill.App.3d 57, 30 Ill.Dec. 824, 832-33, 393 N.E.2d 1171, 1179-80 (1st Dist.1979), the Illinois Supreme Court has cited Ledingham as authority for the proposition that conduct that breaches a contract may constitute an independent tort. See Kelsay v. Motorola, Inc., 74 Ill.2d 172, 187, 23 Ill. Dec. 559, 566, 384 N.E.2d 353, 360 (1978). The tort of an insurer’s bad faith conduct towards an insured, as opposed to the availability of common-law recovery for the tort, has been recognized in at least four of the five appellate districts of Illinois, including the First District in which this court sits. See, e.g., Pekin Insurance Co. v. Home Insurance Co., 134 Ill.App.3d 31, 89 Ill.Dec. 72, 479 N.E.2d 1078 (1st Dist. 1985). As the Pekin court declared, “It is well established that an insurer has a duty to exercise good faith and to deal fairly with all parties an insured by its policies ____ Further, an insurer who breaches this duty will be liable for the tort of bad faith.” 479 N.E.2d at 1080.

Despite the Pekin court’s characterization of this duty as “well established,” the decision in Ledingham relied mostly on case law from outside Illinois, and Ledingham rarely has been applied due to the uniform case law which holds section 155 of the Insurance Code to preempt punitive damage awards for an insurer’s unreasonable and vexatious conduct. Indeed, many of the Illinois cases can be read as simply assuming the existence of the tort for purposes of discussing the preemption issue.

A further problem with Ledingham is the obscurity of its underlying rationale. As pointed out in Debolt v. Mutual of Omaha, 56 Ill.App.3d 111, 13 Ill.Dec. 656, 660, 371 N.E.2d 373, 377 (3d Dist.1978), the reviewing court in Ledingham relied on law enunciated in the “duty to settle” cases which arise when an insurer is “granted by contract the right to complete control over the negotiation and litigation of claims against its insured.” Where an insurer in bad faith ignores the interest of its insured in avoiding a judgment beyond the excess of the policy limits, the insured suffers monetary damages “not recoverable in an action on the contract” and is therefore allowed to recover those damages for “breach of an implied duty of good faith.” 371 N.E.2d at 377, 13 Ill.Dec. at 660. The Debolt court found this line of cases inapplicable where an insured attempts to predicate a tort upon an insurer’s simple refusal to pay, however unjustified, since the insured in such situations can maintain an action on the contract at any time to obtain the benefits owed. Id.

Even those courts following Ledingham have recognized the tort of an insurer’s bad faith conduct only in exceptional circumstances. According to Pekin, an Illinois court “will only recognize a bad faith claim when an insurer has acted in a vexatious, unreasonable, or outrageous manner towards its insured parties.” Pekin, 89 Ill.Dec. at 74, 479 N.E.2d at 1080. Faced with a punitive damages allegation that “defendant has wilfully and wrongfully breached its fiduciary duties ... by deliberately and wrongfully” denying coverage, an earlier panel of Illinois appellate judges has written: “This is insufficient to allege anything more than a breach of contract. Most refusals to conform to a contract are deliberate: if recovery is allowed, they obviously are wrongful. The plaintiff has not alleged outrageous conduct____” Florsheim v. Travelers Indemnity Co., 75 Ill. App.3d 298, 310, 30 Ill.Dec. 876, 886, 393 N.E.2d 1223, 1233 (1st Dist.1979). The only case outside the “duty to settle” context where a bad faith claim has succeeded is Hoffman v. Allstate Insurance Co., 85 Ill.App.2d 631, 40 Ill.Dec. 925, 407 N.E.2d 156 (2d Dist.1980), where an insurer took possession of plaintiff’s damaged car, towed it to an unknown location, informed plaintiff that the car was a total loss but then spuriously deducted from the plaintiff’s recovery expenses for bringing the car up to retail standards. When plaintiff asked to view the car for the purpose of having it appraised, the insurer refused to reveal its location. The court found these allegations sufficient to withstand a motion to dismiss.

The present Count IV alleges merely that American Family’s “actions ... in its investigation and denial of plaintiff’s claim have been wilful, reckless, unfair and in bad faith and in breach of [its] duty to act fairly and in good faith. The term “wilful” may be considered equivalent to “deliberate,” the term “reckless” is conclusory, and the allegations of “unfair” and “bad faith” actions simply mirror the name of the tort. All are unsupported by any allegation of fact to give them meaning other than a reference to American Family’s “actions ... in its investigation and denial” of plaintiff’s claim. Investigation would normally occur after any insurance policy claim is made, and denial is precisely what gives rise to an action on the contract in the first place.

As noted by this court in a similar case, while malice itself may be “averred generally” in a complaint, Fed.R.Civ.P. 9(b), an allegation of specific conduct constituting the tort of bad-faith breach of contract must accompany a malice averment. Shaw v. Equitable Life Assurance Society, No. 82 C 1421 (N.D.Ill. Oct. 29, 1982) (order granting motion to strike). Sheer bad faith, without some accompanying vexatious or outrageous conduct which inflicts damages not recoverable in a contract action, has never been held under Illinois law to constitute the tort of bad-faith breach of contract by an insurer. At the very least, a plaintiff should allege that the insurer must have known that it was liable on the contract but nonetheless refused to pay, and also have known that the insured would suffer substantial damage from the refusal. See Barr, 583 F.Supp. at 259; Urfer v. Country Mutual Insurance Co., 60 Ill.App.3d 469, 17 Ill.Dec. 744, 376 N.E.2d 1073 (4th Dist.1978). Scheinfeld has not alleged either of these facts.

Scheinfeld’s Count IV is more laconic than the conclusory allegations of bad faith upheld against a 12(b)(6) motion in Kelly v. Stratton, 552 F.Supp. 641, 643 (N.D.Ill.1982), and certainly briefer than those in Barr, 583 F.Supp. at 259, or UNR, 607 F.Supp. at 858, both of which involved alleged misrepresentation. Count IV similarly falls far short of the extensively alleged misdeeds contemplated by the Ledingham court when it first enunciated the tort of bad faith conduct towards an insured. 330 N.E.2d at 549.

Construing all inferences in Scheinfeld’s favor, American Family’s unspecified “actions” could also be taken to refer to the allegations regarding defamation from Count III. Scheinfeld has not incorporated those allegations into Count IV, however, and appears to base his tort claim solely on American Family's bad faith “investigation and denial” of his claim. While American Family’s post-denial behavior in defaming Scheinfeld might satisfy the element of outrageous conduct for stating a tort claim based on an insurer’s bad faith conduct, any bad faith claim based on defamation would merely duplicate the recovery already requested in Count III and unnecessarily complicate issues. Since the tort requires “outrageous” conduct, adding such a count would not appear to lighten Scheinfeld’s burden of proof in Count III, and the obscure nature of the duty would pose numerous problems in formulating coherent jury instructions. If plaintiff uncovers legal authority or can allege specific facts which would support compensatory damages beyond those already sought, plaintiff may seek leave to amend.

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

It is so ordered.


author: NORDBERG, District Judge.

text:
    VIDMAR BUICK COMPANY, an Illinois corporation, Plaintiff, v. GENERAL MOTORS CORPORATION, a Delaware corporation, Defendant.
    No. 85 C 6051.
    United States District Court, N.D. Illinois, E.D.
    Sept. 26, 1985.

      David J. Griffin, Rhoda Elvove Markovitz, Griffin & Griffin, Ltd., Chicago, 111., for plaintiff.
    Bruce Meckler, Pope, Ballard, Shepard & Fowle, Ltd., Chicago, 111., for defendant.
   MEMORANDUM OPINION AND ORDER

NORDBERG, District Judge.

This matter is before the court upon the Motion of plaintiff Vidmar Buick Company (“Vidmar”) for Remand or, in the alternative, for Reconsideration of the State Court Order Transferring Venue. For the reasons set forth below, Vidmar’s motion is denied.

I. Removability of Vidmar’s Claim in the Initial Complaint

Vidmar contends that its claim in the initial complaint filed in state court on April 16, 1985 was removable, and that defendant General Motors Corporation (“GM”) failed to remove this claim from state court within thirty days of receipt of the initial complaint, as required under 28 U.S.C. § 1446(b). Vidmar presents two arguments in support of its contention that its claim in the initial complaint was removable: (1) Vidmar’s claim was separate and independent from the claims of co-plaintiffs Stillwell Buick and Gartner Buick, and the entire case was therefore removable under 28 U.S.C. § 1441(c); and (2) under Mielke v. Allstate Insurance Co., 472 F.Supp. 851 (E.D.Mich.1979), GM should not have waited for a state court order transferring venue because it was obvious, from the face of the complaint, that Vidmar improperly sued GM in DuPage County with co-plaintiffs Stillwell and Gartner.

As for Vidmar’s first argument, the court finds that the claim or cause of action of Vidmar in the initial complaint is not separate and independent from those of co-plaintiffs Stillwell and Gartner. In American Fire & Casualty Co. v. Finn, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702 (1951), the Supreme Court interpreted the “separate and independent” requirement of § 1441(c). The Court concluded that:

[W]here there is a single wrong to plaintiff, for which relief is sought, arising from an interlocked series of transactions, there is no separate and independent claim or cause of action under § 1441(c).

Finn, 341 U.S. at 14, 71 S.Ct. at 540. While Finn involved one plaintiff and multiple defendants, the “single wrong” test adopted by the Court also applies in a case, such as the instant case, involving multiple plaintiffs and one defendant. See Layden v. Zantop Air Transport, Inc., 265 F.Supp. 743, 748 (N.D.Ill.1967).

In this case, the three plaintiff automobile dealers allege that GM violated the Motor Vehicle Franchise Act, Ill.Rev.Stat. ch. I21V2, § 751 et seq., when GM established another Buick dealership in the plaintiffs’ market area. The plaintiffs allege that one happening — the establishment of an additional Buick franchise in the Bolingbrook, Illinois area — adversely affected all three plaintiffs. Following Finn, the court finds that Vidmar’s claim or cause of action in the initial complaint is not separate from those of co-plaintiffs Stillwell and Gartner.

The court finds Vidmar’s second argument without merit. GM properly waited for a state court order transferring venue before removing Vidmar’s cause of action to federal court. It was not unambiguously obvious on the face of the complaint that Vidmar’s cause of action was removable. In addition, the removal statute contemplates situations in which defendants wait for enabling state court orders before removing to federal court.

II. Removability of Vidmar’s Case After the State Court Order Transferring Venue

The three plaintiff dealerships filed their initial complaint against GM in Du-Page County, Illinois. On May 23, 1985, GM filed a Motion to Dismiss Vidmar, asserting that Section 762 of the Motor Vehicle Franchise Act, which provides that “... a proceeding ... shall be commenced by the objecting franchisee in the Circuit Court of the County in which the objecting franchisee has its principal place of business,” mandated that Vidmar commence its suit in Will County, Illinois. On June 18, 1985, the state court denied GM’s Motion to Dismiss, but entered an order, sua sponte, transferring Vidmar’s complaint to the Circuit Court of Will County pursuant to Section 762. GM removed Vidmar’s complaint to this court on July 1, 1985, less than thirty days after the state court order transferring venue, as required under 28 U.S.C. § 1446(b).

Vidmar asserts that GM may not remove Vidmar’s claim under Section 1446(b) because the state court order did not amount to an “amended pleading, motion, order or other paper” which would commence the thirty-day period of time for filing a removal petition. According to Vidmar, the “amended pleading, motion, order or other paper” referred to in Section 1446(b) must be one that has been filed by the plaintiff. Vidmar cites a long line of cases, starting with Powers v. Chesapeake & Ohio Railway, 169 U.S. 92, 18 S.Ct. 264, 42 L.Ed. 673 (1898), which hold that, apart from fraudulent joinder, when a plaintiff states a non-removable case in his initial complaint, only a voluntary act of the plaintiff will make the case removable.

It is obvious that the plain language of Section 1446(b) does not mandate the voluntary/involuntary distinction. In fact, there has been some debate as to whether Congress intended to abolish the distinction when it amended Section 1446(b) in 1949, adding what is now the second paragraph in sub-section (b).

The majority of cases, some of which were decided after the 1949 amendment, follow the voluntary/involuntary distinction; however, most of these cases involve a directed verdict against a nondiverse defendant without a voluntary act on the part of the plaintiff. See, e.g., Self v. General Motors Corp., 588 F.2d 655 (9th Cir.1978); Weems v. Louis Deryfus Corp., 380 F.2d 545 (5th Cir.1967). See also cases cited in 14A Wright, Miller and Cooper, Federal Practice and Procedure: Jurisdiction and Related Matters, § 3723, n. 18 (1985). The underlying purpose of the voluntary/involuntary rule in these cases is “to protect plaintiff’s choice of forum as long as he wants it protected.” Ford Motor Credit Co. v. Aaron-Lincoln Mercury, 563 F.Supp. 1108, 1117 (N.D.Ill.1983). See also Self, 588 F.2d at 659.

To protect the plaintiffs choice of forum in the present case would lead to an unfair result because Vidmar’s choice of forum was improper under Illinois law. Indeed, this case is not unlike those cases, specifically excepted from the voluntary/involuntary rule, in which the plaintiff has fraudulently or improperly joined a party to defeat diversity.

In Wecker v. National Enameling & Stamping Co., 204 U.S. 176, 27 S.Ct. 184, 51 L.Ed. 430 (1907), the case in which the Supreme Court accepted and applied the theory of fraudulent joinder of parties defendant, the Court commented:

[T]he Federal courts should not sanction devices intended to prevent a removal to a Federal court where one has that right, and should be equally vigilant to protect the right to proceed in the Federal court as to permit the state courts, in proper cases, to retain their own jurisdiction.

Wecker, 204 U.S. at 186, 27 S.Ct. at 188. In a more recent case, Picquet v. Amoco Production Co., 513 F.Supp. 938 (M.D.La. 1981), plaintiffs created, and transferred a small per cent of their interest in land to, a Delaware corporation immediately prior to their suit against another Delaware corporation. The court concluded:

[Considering the congressional purpose, the protection of the noncitizen who is obliged to sue or to be sued in the state of his adversary, a federal district court ought to inquire into improper or fraudulent joinder of plaintiffs as well as improper or fraudulent joinder of defendants where the motive is to defeat federal jurisdiction.

Picquet, 513 F.Supp. at 943.

In the present case, Vidmar improperly joined with Stillwell and Gartner in their suit in DuPage County. Under Section 762 of the Illinois Motor Vehicle Franchise Act, the proper venue for Vidmar’s suit was Will County while the proper venue for Stillwell and Gartner, the nondiverse plaintiff, was DuPage County. Had Vidmar properly initiated its suit against GM in Will County, GM would have been able to remove the suit immediately on the basis of the complete diversity of Vidmar and GM.

Vidmar’s filing of its suit in an improper venue in order to join with Stillwell and Gartner, a nondiverse plaintiff, falls within the category of devices intended to prevent removal which federal courts should not sanction, and, as such, it also falls within the exception to the voluntary/involuntary rule. The state court order, therefore, did amount to an order which, under section 1446(b), would commence the thirty-day period of time for filing a removal petition, and GM properly filed within thirty days of the state court order transferring venue.

III. Validity of the State Court Order Transferring Venue

Vidmar contends that the court should reconsider and vacate the state court order transferring venue for two alternative reasons: (1) GM waived its venue objection as to Vidmar when it first filed a general appearance; and (2) DuPage County was the proper venue for Vidmar’s suit under the Illinois Code of Civil Procedure, 111.Rev. Stat. ch. 110, § 1-101 et seq.

Vidmar’s first argument is clearly without merit. Section 2-104(b) of the Illinois Code of Civil Procedure does not require a defendant to object to venue before filing a general appearance; rather, it provides:

All objections of improper venue are waived by a defendant unless a motion to transfer to a proper venue is made by a defendant on or before the date upon which he or she is required to appear or within any further time that may be granted him or her to answer or move with respect to the complaint—

In the case which Vidmar cites in support of its position, Nemanich v. Dollar Rent-A-Car Service, Inc., 90 Ill.App.3d 484, 45 Ill.Dec. 845, 413 N.E.2d 178 (1980), the court stated that a general appearance waives an objection to venue; however, in a later decision, Mauro v. Peterson, 122 Ill. App.3d 466, 470, 77 Ill.Dec. 941, 461 N.E.2d 564 (1984), the court found the Nemanich court’s statement to be unsupported dictum, and held that under § 2-104 a general appearance does not waive venue objections.

Vidmar also argues that venue was proper in DuPage County. Under Section 762(b) of the Illinois Motor Vehicle Franchise Act, venue is proper “in the Circuit Court of the County in which the objecting franchise has its principal place of business____” Section 2-101 of the Illinois Code of Civil Procedure, the general venue provision, provides:

Except as otherwise provided in this Act, every action must be commenced (1) in the county of residence of any defendant who is joined in good faith and with probable cause for the purpose of obtaining a judgment against him or her and not solely for the purpose of fixing venue in that county, or (2) in the county in which the transaction or some part thereof occurred out of which the cause of action arose. (Emphasis added.)

In addition, Section 2-103(c) provides that “[a]ny action which is made local by any statute must be brought in the county designated in the statute.”

Under Section 2-101, venue would be proper in DuPage County; under Section 2-103(c), venue would not be proper in Du-Page County due to Section 762(b) of the Motor Vehicle Franchise Act which makes Vidmar’s action local. Vidmar contends that the court should read Sections 2-103(c) and 2-101 in pari materia so as to allow multiple objecting franchisees whose principal places of business are in different counties to sue a franchiser in a single cause of action. Vidmar relies on Lawless v. Village of Park Forest South, 108 Ill.App.3d 191, 63 Ill.Dec. 936, 438 N.E.2d 1299 (1982), in which the court held that Sections 2-101 and 2-103(a) should be read in pari materia and that 2-101 should prevail over 2-103(a) in order to prevent a multiplicity of lawsuits.

Lawless did not address Section 2-103(e), but 2-103(a). In People ex rel. Village of Northbrook v. Highland Park, 35 Ill. App.3d 435, 342 N.E.2d 196 (1976), the court addressed the conflict between Sections 2-101 and 2-103(c) and held that Section 2-101 is a general statute which defers to the more specific Section 2-103(c) by virtue of its introductory language, “Except as otherwise provided in this Act____” Village of Northbrook, 35 Ill.App.3d at 448, 342 N.E.2d 196. Taking into consideration Village of Northbrook, Section 2-103(c) of the Code of Civil Procedure and Section 762(b) of the Motor Vehicle Franchise Act, the court finds that venue for Vidmar’s suit against GM was proper in Will County, not DuPage County.

IV. Conclusion

For reasons set forth in this opinion, Vidmar’s Motion for Remand, or, in the Alternative, for Reconsideration of the State Court Order Transferring Venue, is denied. GM properly removed Vidmar’s complaint to federal court pursuant to § 1446(b), and the case may now proceed in federal court.

      . 28 U.S.C. § 1446(b) provides:
      If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable. (Emphasis added.)

      . It is not disputed that Vidmar’s principal place of business is located in Will County, Illinois.

      . See supra n. 1.

      . See Defendant’s Memorandum in Opposition to Plaintiff’s Motion for Remand or, in the Alternative, for Reconsideration of the State Court Order Transferring Venue, filed August 16, 1985, pp. 8-11. See also 14A Wright, Miller and Cooper, Federal Practice and Procedure: Jurisdiction and Related Matters § 3723 (1985). The Seventh Circuit has not yet ruled on this question, and, for reasons stated in the ensuing discussion, the court does not find it necessary to decide at this time whether the voluntary/involuntary distinction survived the 1949 amendment. The court finds only that this case falls within the exception to the voluntary/involuntary distinction and, therefore, the distinction does not apply in this case even if it survived the 1949 amendment.

      . Courts have also suggested, as an additional purpose for the voluntary/involuntary rule, the prevention of the removal of cases in which the state court proceedings are not yet final, such as where the plaintiff may appeal a directed verdict dismissing a nondiverse defendant. Quinn v. Aetna Life & Casualty Co., 616 F.2d 38 (2d Cir.1980). However, the Self court, and other courts, have suggested that the finality of state court proceedings is not a proper basis for the voluntary/involuntary rule. Self, 588 F.2d at 658.
      GM, in its brief, asserts that finality is the policy behind the voluntary/involuntary rule, and that because an order transferring venue is an interlocutory order, not appealable as of right in Illinois, such an order satisfies the voluntary/involuntary rule. Vidmar, on the other hand, asserts that the fact that the order could not be appealed without the permission of the Illinois Appellate Court is not fatal, and that absent a final ruling of the state court conclusively establishing the transfer of venue, removal to federal court is premature and improper. This court, in finding the instant case similar to those cases in which the plaintiff fraudulently or improperly joins a party to destroy diversity, need not decide whether finality of the state court proceedings is a proper basis for the voluntary/involuntary rule, and need not address the finality arguments of Vidmar and GM.

      . See infra discussion in Section III.


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

text:
    INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, AFL-CIO DISTRICT LODGE 201, et al., Plaintiffs, v. DAVID MANUFACTURING COMPANY, Defendant.
    No. 2C 83-3120.
    United States District Court, N.D. Iowa, C.D.
    Oct. 2, 1985.
    Mark S. Soldat, Algona, Iowa, for plaintiffs.
    Ted Enabnit, Mason City, Iowa, for defendant.
   FINDINGS OF FACT, CONCLUSIONS OF LAW AND JUDGMENT

DONALD E. O’BRIEN, Chief Judge.

This matter comes before the Court on the parties’ pleadings and after trial to the Court in Fort Dodge, Iowa on June 18, 1985. Plaintiff’s complaint prays for an order vacating or modifying the arbitration award entered by Arbitrator Sinicropi on July 27, 1983 upholding the defendant’s no fault absenteeism policy, which the plaintiffs allege violates their collective bargaining agreement (CBA). Plaintiffs contend that defendant’s adoption and application of the no fault absenteeism policy violates the discipline for just cause clause of the CBA.

Following a hearing on motions for judgment on the pleadings submitted by both parties, this Court entered an order on May 18, 1984, granting defendant’s motion and dismissing the action. Plaintiffs then filed a motion to alter or amend the judgment, which was resisted. After a hearing on October 26, 1984, this Court modified its previous order and denied defendant’s motion for judgment on the pleadings and reinstated the matter for trial to determine whether or not the record made before the arbitrator was sufficient to support the arbitrator’s conclusions. The matter was tried to the Court on June 18, 1985, where exhibits and testimony of witnesses was received and arguments of counsel were heard. The Court now makes the following findings of fact and conclusions of law with respect thereto.

FINDINGS OF FACT

International Association of Machinists and Aerospace Workers, AFL-CIO, Local Lodge No. 2645 (“Union”) is a labor organization which has had a CBA with David Manufacturing Company (“Company”) since at least March 13, 1981. Article XIV of this CBA provides a method of adjusting grievances between the parties. Under this article the parties are required to pursue four steps, the last of which is arbitration. The arbitrator’s ruling is “final and binding”.

The term “grievance” includes “disputes concerning the existence of just cause for discharge or discipline ... ”. Under Article X the company has “the right to discipline and/or discharge [only] for just cause ... ”. On May 11, 1981, the company did establish a disciplinary policy governing absenteeism. On February 2, 1983, the company enforced this disciplinary policy against three employees. The Union pursued the Article XIV grievance procedure through step 4, a hearing having been held before Arbitrator Anthony K. Sinicropi on June 29, 1983. This Court adopts the additional findings of fact set out in the arbitrator’s decision as follows.

The facts in this case are not disputed. On February 2, 1983 the grievants, who worked on a day shift 7:00 a.m. to 5:30 p.m., left work early because of a seven-inch snowfall and, as a result, they were charged with two and three-quarters hours of unexcused time under the absence policy. The grievants were members of a car pool and, because of what they considered to be unsafe driving conditions and because they lived some twelve miles from the plant, they asked to be excused early. While they were not denied the right to leave early, the company did count the time they missed work by reason of their early departure as unexcused time. It is this time which is being contested.

The weather conditions indeed were adverse, but the parties disagree that at the time of the grievants’ departure that road conditions were so critical so as to require early departure from work. The company closed the plant at 4:00 p.m. and sent all employees home. Other employees who left early were also charged with unexcused time, but they did not grieve. The unexcused time charged against the grievants began at approximately 1:10 p.m. when they left work and they were charged for the time missed from 1:10 p.m. until 4:00 p.m. — the time when the plant closed.

CONCLUSIONS OF LAW

The Court is aware of its limitations when reviewing an arbitration award. “It is not the function of a reviewing court to look at the merits of the claim,” Vulcan-Hart Corp. v. Stove, Furnace and Allied Appliance Workers Local 110, 671 F.2d 1182, 1184 (8th Cir.1982). The Court does not engage in de novo review of the merits of the arbitration award, United Steel Workers of America v. Mueller Brass Co., 479 F.Supp. 413, 416 (N.D.Miss.1979); indeed, the arbitrator’s ruling is final and binding as long as he considered and decided only the particular issues presented. See Section II, § 14.2, Joint Exhibit A.

If the question is one which was properly submitted to arbitration and if the award draws its essence from the CBA, the court may not review the merits or refuse to enforce the award. Zeviar v. Local 2427, Airline, Aerospace and Allied Employees, 733 F.2d 556, 559 (8th Cir.1984). Thus, once an issue is properly before the arbitrator, the party seeking to vacate the award must meet a heavy burden.

However, the arbitrator is not without limits, either. He is confined to interpretation and application of collective bargaining agreements and does not sit to dispense his own brand of justice. Yet, arbitrators must be afforded flexibility to decide a wide variety of situations since the contract’s draftsman may never have thought of what specific remedy should be afforded to meet particular contingencies. Crusco v. Fisher, 458 F.Supp. 413, 419 (S.D.N.Y.1978).

The arbitrator in the instant case was called upon to resolve a dispute involving a clause in the CBA granting the employer the right to establish and enforce reasonable rules of conduct and a clause indicating that discipline must be for just cause. These clauses are contained in Article X of the CBA. The plaintiffs had challenged the company’s initiation of a new absenteeism policy contending that the policy was in violation of Article X and that it imposed discipline without “just cause”. The arbitrator found that the new, no fault policy was a reasonable exercise of the company’s management rights and that the policy was within the company’s right to establish reasonable rules of conduct and further found that the policy had been applied in a fair and consistent manner.

It is the arbitrator’s obligation to resolve any conflicts in contract construction and interpretation: Such a decision will not be interfered with “unless it can be said with positive assurance that the contract is not susceptible to the arbitrator’s interpretation.” Vulcan-Hart Corp. v. Stone, Furnace and Allied Appliance Workers Local 110, 671 F.2d 1182, 1184 (8th Cir.1982). After reading the arbitrator’s decision, the Court is convinced that the arbitrator implicitly decided that a violation of a reasonable no fault absence policy was “just cause” for discharge. Furthermore, the Court concludes that the arbitrator was within the scope of his authority when he made this determination.

However, the above conclusion does not serve to dispose of this matter. Plaintiffs contend that there were no facts in the record before the arbitrator from which he could logically conclude that the company consistently applied the no fault absenteeism policy. Thus, should this Court examine the record and determine that no factual support exists to support the arbitrator’s determinations, his award must be vacated. Storer Broadcasting Co. v. American Federation of Television and Radio Artists, 600 F.2d 45, 47 (6th Cir. 1979).

In this Court’s order of December 24, 1984, the Company’s motion for judgment on the pleadings was denied because there remained factual disputes as to whether there was any record support for the arbitrator’s decision that the company’s policy was consistently applied. As there was no transcript available from the proceedings before Arbitrator Sinicropi, the Court heard testimony which was confined to the evidence presented to the arbitrator.

The Union attempted to show from the testimony of Employee Robert Bonner that the Company was unreasonable and inconsistent in its application of the absenteeism policy. Mr. Bonner stated that on the day of the snow storm, he informed the Company that he would not be able to come to work and yet he was never given counted time. However, no time sheets or other records were produced to corroborate the statement, and Mr. Bonner himself indicated on cross-examination that he never checked his records. Therefore, the Court is not inclined to view Robert Bonner’s testimony as evidence that the policy was inconsistently enforced.

Indeed, while it may not have decided the grievance in the same manner, the Court is convinced from the evidence at trial that there was sufficient support in the record for the arbitrator’s decision that the Company’s policy was reasonable as adopted and as applied.

IT IS THEREFORE ORDERED that the decision of Arbitrator Sinicropi is hereby upheld.


author: H. FRANKLIN WATERS, Chief Judge.

text:
    Burt COLE and Ronnie Clark, Plaintiffs, v. Dave WILLIAMS, Oklahoma District Attorney Investigator of Adair County; Lloyd King, Chief of Police, Westville, Oklahoma; Ron Gifford; Russell Neff; the City of Westville, Oklahoma, A Municipal Corporation; and the Board of County Commissioners of the County of Adair, Oklahoma, Defendants.
    Civ. No. 84-5190.
    United States District Court, W.D. Arkansas, Fayetteville Division.
    Oct. 4, 1985.

      Robert L. Whitlock, Everett & Whitlock, Prairie Grove, Ark., for plaintiffs.
    Ronald G. Woodruff, Fayetteville, Ark., and David Harris, Stilwell, Okl., for defendants King, Gifford, Neff and City of West-ville, Okl.
    Linda L. Gray, Asst. Atty. Gen., Oklahoma City, Okl., for defendant Dave Williams.
    W.W. Bassett, Jr., Bassett Law Firm, Fayetteville, Ark., for defendant Adair County.
   MEMORANDUM OPINION

H. FRANKLIN WATERS, Chief Judge.

This is an action brought by the plaintiffs against the defendants under the provisions of 42 U.S.C. § 1983 for an alleged violation of their civil rights by the defendants under color of state law. The case was tried to a jury, and at the close of plaintiffs’ case, the court granted motions for a directed verdict made in behalf of defendants King, Neff and the City of Westville, and dismissed the cause of action as to them.

The evidence shows that on Sunday, February 12, 1984, Dave Williams, an investigator for the office of the District Attorney of Adair County, Oklahoma, proceeded to the Westville, Oklahoma, area to attempt to locate and apprehend a Robert Cole for whom that office had a felony warrant outstanding. When he arrived in the West-ville area, he talked with Irene Walker who claimed to know Robert Cole and asked her to go with him to attempt to identify him. She agreed, and they proceeded in his automobile, along with Mr. Williams’ wife, toward the home of Robert Cole’s parents. As they neared that residence, they met a car which, as it turned out, was occupied by at least plaintiffs Burt Cole and Ronnie Clark. Both Dave Williams and Irene Walker testified that at the time they met and passed the car, there were three persons in it, and Ms. Walker identified one of them as Robert Cole, the fugitive. Mr. Williams, because he did not wish to endanger Ms. Walker and his wife during an attempted arrest, drove further down the dirt road on which they were traveling where he let them out of the car to wait until he had made the arrest. After he had passed the car in which the plaintiffs were riding, they pulled on to another dirt road off of the one on which they had been traveling, they claimed to allow one of the passengers to “go to the bathroom.”

Williams pulled his car partially across the road on which they originally had been traveling, and when the Cole-Clark car proceeded past him, he claims that he tried to flag them down, but that they pulled around him and continued down the dirt road. He turned his vehicle around and followed them to the residence of John Gullick.

The evidence indicates that Burt Cole, who was driving the vehicle in which he and the other plaintiff were riding at the time, pulled the vehicle behind the Gullick house where it was barely visible from the road. Williams proceeded to the Gullick residence and placed both of the individuals under arrest, at the time telling them that they had harbored a fugitive and had “run a roadblock.” The testimony at the trial shows that there was a great deal of dispute about what occurred at this point. John Gullick, the resident, testified that the plaintiffs came to his house and told him that the “law was after them” and that they asked Gullick to “hide them.” Be that as it may, the court believed then and believes now that there were questions of fact about which reasonable minds could differ, and that, thus, a jury question had been made in relation to facts which were important for a determination of this matter.

Although the evidence indicates that Williams did not know it at the time, it now appears that he had followed the plaintiffs from Oklahoma across the Oklahoma-Arkansas line to a point a short distance on the Arkansas side of the line where the arrests were made.

After the arrests, Williams called the Westville police station and a short while later received assistance from defendants Gifford and King. The remaining individual defendant, Russell Neff, arrived with King, but, as already indicated, the court found that the evidence indicated that he played no part in the arrest or the decision to transport the individuals back to West-ville, so he was dismissed from the case before it went to the jury.

After the arrests had been made by Williams, defendants Gifford and King transported the plaintiffs back to the Westville jail where they were each incarcerated for a brief period of time, Cole until 11:00 a.m. the next morning, and Clark for, according to his testimony, 30 minutes to an hour. The charges lodged against them were subsequently either not prosecuted or dismissed.

At the close of the evidence, the court determined that a jury question had been made in relation to whether the plaintiffs had been falsely arrested by Williams, and the jury was instructed in this regard. Because of the provisions of Ark.Stat.Ann. § 43-515 which states an officer from another state who makes a “fresh pursuit” arrest in Arkansas “shall without unnecessary delay take the person arrested before a magistrate of the county in which the arrest was made who shall conduct a hearing for the purpose of determining the lawfulness of the arrest ...,” the court determined that the defendants Williams, Gifford and King had violated this provision of law, and the jury was so instructed. The jury was then given an interrogatory asking if the jury found that the arrest by Dave Williams was an unlawful one, and the jury found that it was in respect to the arrest of each of the plaintiffs. The jury then was given interrogatories asking them to fix damages for the unlawful arrest, and a separate interrogatory asking that the jury assess damages in relation to failure by the defendants to take the plaintiffs before a magistrate as required by the Arkansas statute cited above. The jury fixed damages as follows: Burt Cole, for false arrest, $6,000.00; Ron Clark, for false arrest, $5,000.00; Burt Cole, for failure to take before a magistrate, $5,000.00; Ron Clark, for failure to take before a magistrate, $5,000.00.

Defendant Williams has filed a motion for judgment notwithstanding the verdict, motion for a new trial, or motion for remittitur of damages, and defendants Gifford and King have moved for judgment notwithstanding the verdict, for a new trial, for remittitur of damages, and for amendment of the judgment.

The court will first address the questions raised by the motion of Gifford and King in relation to the judgment that was entered in this case. After the jury verdict, the attorney for the plaintiffs submitted to the court a precedent which called for a judgment in the total amount of $21,000.00 against defendants Williams, King and Gifford, jointly and severally. Frankly, without giving the matter as much consideration as the court should have, the judgment was signed and it was clearly erroneous. The court does not mean to indicate that it believes to any degree whatsoever that there was any wrongdoing on the part of the attorney for the plaintiffs, but the judgment was not accurate in view of the instructions given to the jury and the state of the evidence at the close of the trial, so the motion for amendment of judgment filed in behalf of Gifford and King will be granted.

In this regard, the jury was instructed by the court:

Plaintiffs’ first claim under the civil rights act is based on their arrest by defendant Dave Williams. This claim is against defendant Dave Williams only....

Then, in further instructions, the court advised the jury that they would be allowed to consider any damages suffered by the plaintiffs because of the failure by defendants Williams, Gifford and King to take the plaintiffs before a magistrate as required by Ark.Stat.Ann. § 43-515. Thus, irrespective of what the court does in relation to the other motions now under consideration, defendants Gifford and King are entitled to an amendment of the judgment so as to provide that they are not jointly and severally liable for any damages flowing from what the jury found to be a false arrest by Williams.

In the court’s view, that was the easy question posed by these filings. Much more difficult questions are raised by the motions of each of the defendants for a judgment notwithstanding the verdict and for a new trial. First, defendant Williams contends that the judgment against him should be set aside for the reason that the law of Oklahoma provides an adequate relief for the plaintiff through a statutory and common law tort action, citing Ingraham v. Wright, 430 U.S. 651, 97 S.Ct. 1401, 51 L.Ed.2d 711 (1977), and Parratt v. Taylor, 451 U.S. 527, 101 S.Ct. 1908, 68 L.Ed.2d 420 (1981), and their progeny. While the court might feel that the arguments raised by this defendant “ought to be the law,” we are not convinced that it yet is. This is not a case in which it is claimed that the plaintiffs have adequate administrative remedies or other procedures provided for by state law to insure that their rights are protected. The court does not believe that the law yet is that plaintiffs cannot sue in federal court under section 1983 for the mere reason that they could also sue the defendants in state court, and the court does not believe that the cases cited hold that. Thus, the court finds no merit in this contention.

However, the court finds a great deal of merit in the position of each of the defendants that the evidence simply does not support a verdict against any of them in the total amount of $10,000.00 for the failure of the defendants to take the plaintiffs before a magistrate as required by Arkansas law. Under the evidence in this case, this violation could have been no more than a violation of a procedural right and, in fact, the jury was, in effect, so instructed. The jury was told that in the event that they found that the plaintiffs sustained no actual damages, they could award only a nominal sum. In spite of this, the jury returned verdicts in favor of each of the plaintiffs in the amount of $5,000.00 because of the failure to take them before a magistrate.

The evidence in the case shows, without dispute, that they suffered no damages because of this technical violation of Arkansas law. The evidence was that the arrest took place on Sunday, and if the defendants had chosen to take them before an Arkansas magistrate, this could not have been accomplished before Monday morning. They would have been incarcerated during this period of time.

In fact, it was learned from the testimony of the plaintiffs themselves that they suffered no additional damages because of the failure to take them before a magistrate. In fact, each of them testified unequivocally that the embarrassment, stress, and other damages which they claimed they suffered were caused by the arrest and incarceration, and, to no degree, by the technical violation of their right to be taken immediately before a magistrate. As a matter of fact, after seeing these two plaintiffs testify, the court has no difficulty in determining that, prior to seeing a lawyer, they did not have the slightest inkling that they had such a right and the court can find without the slightest doubt that this failure had nothing to do with their damages, if any. The court recognized this at the close of all of the evidence, but because it appeared at that time that the jury was going to be required to consider other aspects of the case, the court chose to submit this matter to the jury in an abundance of caution. The motion for judgment notwithstanding the verdict will be granted in relation to the jury verdict awarding the plaintiffs damages for defendants’ failure to take them before an Arkansas magistrate immediately after their arrest. The plaintiffs will each be granted nominal damages of One Dollar ($1.00) for this technical violation of their rights.

That leaves the question of whether there is sufficient evidence to support the jury’s verdict that Williams had falsely arrested the plaintiffs, and that they suffered a total of $11,000.00 by such arrest. Speaking frankly, it would not be a great overstatement to say that the court was astounded by the jury verdict in this case, and has little doubt that if it had been the trier of fact, plaintiffs’ claims would have been dismissed out of hand. Since that is true, the question arises as to whether that justifies the court in granting either a judgment notwithstanding the verdict or a new trial. The court believes that the answer is clear in relation to whether a judgment notwithstanding the verdict can be granted in view of the evidence in this case. While the court personally does not believe that the plaintiffs were entitled to one red cent in this case, in order to do its duty as it saw it, the court had to, we believe, determine that there was a jury question to be decided. The evidence was, to a great degree, in dispute about what happened on the roadway at the time that Williams tried to stop the plaintiffs and at their subsequent arrest, so those were matters properly to be determined by a jury, and they were determined by this jury adversely to defendant Williams.

The Court of Appeals for the Eighth Circuit, the court whose decisions are binding on this one, has said, in Jeanes v. Milner, 428 F.2d 598 (1970), that judgment notwithstanding the verdict should be sparingly granted because to do so deprives the parties of their right to a jury trial. The test which this court must follow in ruling on the motion for judgment notwithstanding the verdict is well stated in 9 Wright & Miller, Federal Practice and Procedure: Civil § 2524 as follows:

The question is not whether there is literally no evidence supporting the party against whom the motion is directed, but whether there is evidence upon which the jury could properly find a verdict for that party. In determining whether the evidence is sufficient, 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.

(Citing numerous cases, including cases from the Court of Appeals for the Eighth Circuit.)

The Court of Appeals for the Second Circuit, in Simblest v. Maynard, 427 F.2d 1 (1970), stated the test that is to be applied in words that have been oft repeated:

Simply stated, it is whether the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable men could have reached.

Thus, in view of the disputed evidence in this case, the court has no choice when it applies what is clearly the law but to overrule the motion for judgment notwithstanding the verdict.

In view of the court’s feeling about this case as set forth above, the question of whether a new trial can be granted is much closer. In this regard, after reviewing the cases, it becomes evident that trial courts in every other jurisdiction of the country have a great deal more discretion in granting motions for a new trial than in the eighth circuit. The law in almost every jurisdiction except this circuit is well stated in 11 Wright & Miller, Federal Practice and Procedure: Civil § 2803 et seq.:

Rule 59 gives the trial judge ample power to prevent what he considers to be a miscarriage of justice. It is his right, and indeed his duty, to order a new trial if he deems it to be in the interest of justice to do so____ Ultimately the motion invokes the sound discretion of the trial court, and appellate review of its rulings is quite limited.

Then, in section 2806, in discussing the trial court’s discretion in granting a new trial on the ground that the verdict was against the weight of the evidence, the article states:

The power of a federal judge to grant a new trial on the ground that the verdict was against the weight of the evidence is clear____
The matter is complicated because of the recurrent tendency on the part of courts to confuse the standard for a new trial with that for a directed verdict or a judgment notwithstanding the verdict. This has two consequences, both of which are undesirable. Occasionally courts state that a verdict should be directed whenever the court would be justified in setting aside a verdict and granting a new trial. This is far too lax a test to use for a directed verdict, as has been discussed in detail in connection with Rule 50. Other courts say that a new trial may be granted on this ground only if a verdict might have been directed.
This puts the new trial standard far too high. Despite occasional misstatements of this kind, most courts have recognized the clear distinction between the two kinds of motion and the standards applicable to each.
Thus on a motion for a new trial — unlike a motion for a directed verdict or for judgment notwithstanding the verdict— the judge may set aside the verdict even though there is substantial evidence to support it. He is not required to take that view of the evidence most favorable to the verdict-winner____ But on a motion for a new trial on the ground that the verdict is against the weight of the evidence, the judge is free to weigh the evidence for himself.

That seemed to be the law in the eighth circuit until 1972, Bates v. Hensley, 414 F.2d 1006 (1969). However, in Fireman’s Fund Insurance Co. v. Aalco Wrecking Co., Inc., 466 F.2d 179 (1972), the Court of Appeals for the Eighth Circuit narrowed drastically, in this court’s view, a trial court’s discretion to grant a new trial. The law in the eighth circuit, after Fireman’s Fund, appears to be that a trial court may not grant a motion for a new trial unless it finds that at the very least the court can say that the verdict is against the “clear weight,” “overwhelming weight,” or “great weight” of the evidence. See Fireman’s Fund, supra, at 186-87, and Goldsmith v. Diamond Shamrock Corp., 767 F.2d 411 (1985), at 416. In fact, if the court means what it says in Fireman’s Fund, the test might even be more severe than that. At p. 187, the court, in deciding to overrule the trial court’s granting of a new trial, said:

The evidence is such that reasonable men may differ as to the result, therefore, the determination should properly be left for the jury.

If that is the test, the court has a great deal of difficulty distinguishing that test from the one that applies to the granting of a motion for a directed verdict or for judgment notwithstanding the verdict. If that is, indeed, the law, it appears that Rule 59 is superfluous. Be that as it may, this court recognizes its role in the federal judiciary system, and recognizes that it is not its function to state what the law is in this respect, but that it must, if it understands the clear directives of the court of appeals, follow them. In this case, while the court would not have reached the verdict that the jury did, as already indicated, the court cannot quite say that the verdict is against the “clear weight” of the evidence, nor the “overwhelming weight” of the evidence, nor the “great weight” of the evidence, and certainly cannot say that reasonable minds cannot differ as to the result. For these reasons, although the court believes that the verdict was a “bad one” when viewed from the court’s perspective, it believes that it cannot meet the tests which it understands were laid down by Fireman’s Fund, supra, and Goldsmith, supra. The motion for new trial will also be denied.

In summary, the court, finds that it should not have signed the judgment awarding a joint and several judgment against all of the defendants, but, instead, that the judgment for false arrest should be awarded against defendant Williams only. Additionally, for the reasons set forth above, the court finds that there was not sufficient evidence to support the jury’s award of a total of $10,000.00 for damages allegedly suffered by the plaintiffs for the failure to take them before a magistrate at the time of their arrest as required by Arkansas law. Instead, the court awards each of them the sum of One Dollar ($1.00) against the defendants, jointly and severally, for this technical violation of their rights. For the reasons stated above, with the exceptions set forth above, the motions for directed verdict and for a new trial are denied.

That leaves the question of the proper attorneys’ fees to be awarded in this case. The attorneys for the two defendants dismissed from the action at the close of the case have moved that they be awarded their fees. The court finds, without question, that such requests are without merit. Unlike plaintiffs, the law is that defendants may not be awarded attorneys’ fees unless the court can say that the claim was frivolous, unreasonable, or without foundation. See numerous cases cited at note 189 of the annotation to 42 U.S.C.A. § 1988.

That leaves the question of the attorney’s fees to be awarded to the attorney for the plaintiffs in this case. Plaintiffs’ attorney has filed a motion and affidavit requesting attorney’s fees in the amount of $11,550.00 for 154 hours at $75.00 per hour, and $1,371.00 for expenses. Since the plaintiffs are the prevailing parties in this case, they are entitled to receive reasonable attorney’s fees, and the court finds that the $75.00 per hour rate requested by Mr. Whitlock is appropriate under the circumstances. However, because the court personally knows the attorney for the plaintiffs, and knows him to be an honest man, it has a great deal of reluctance in questioning the number of hours allegedly spent in this case, but, under the circumstances, it feels that it must. Plaintiffs’ attorney has requested that he be paid for 154 hours. That is more than 19 eight-hour days doing nothing more than work on this case. In the court’s view, this was not a particularly difficult case to prepare and try and if the the attorney for the plaintiffs did, indeed, spend the number of hours on this case which he requests, the court must conclude that such time was not reasonably spent.

For example, plaintiffs’ attorney requests eight hours for drafting the complaint and another two for amending it. He requests a total of four hours for discussing the case with his law partner, and another four for discussing it with a lawyer who he asked to “stand in for him” at depositions which he did not attend, and another two hours for reviewing those depositions. In fact, because the court was called upon to rule in relation to discovery controversies that arose shortly before trial, the court knows that the “stand-in” was necessary only because the court set a deadline for the depositions to be taken after the court came to believe that the plaintiffs and their attorney had not cooperated with defendants in making themselves available for depositions and in getting the matter ready for trial. In fact, the court believed at the time that the evidence of non-cooperation had reached the point that the court set a discovery deadline and advised that it would seriously consider the harsh remedy of dismissing the action if such deadline was not met. The above are only examples of why the court feels that it has no choice but to question the fee request in this case, and in fact, has an obligation to do so.

Plaintiffs’ attorney is entitled to a reasonable fee, and the court will now attempt to determine what is reasonable under the circumstances. The statement lists conferences and interviews totaling 51 hours, or well over a full work week doing nothing but interviewing witnesses and engaging in conferences, and this does not include the four hours for discussing the matter with a stand-in for the depositions and the four hours discussing his case with his law partner. The court believes that, with the limited facts present in this case, plaintiffs’ attorney was not justified in spending more than 24 hours or three full work days in interviews and conferences. Plaintiffs’ attorney will be awarded $1,800.00 for this item.

For the reasons already stated, the court does not believe that it was reasonable to confer with the attorney who stood in at the depositions discussed above so the four hours claimed for this will be denied. Likewise, for the reasons already stated, the court finds that the additional attorney would not have been necessary if the plaintiffs had cooperated in discovery and trial preparation as they should have, so the $450.00 claimed as an expense representing the amount paid to the other attorney will not be allowed. Likewise, the court simply does not believe that it is “fair” for the defendants to be required to pay for the four hours that the plaintiffs’ attorney and his partner discussed this case, so those items will not be allowed.

Plaintiffs’ attorney claims a total of 26.5 hours or almost three and one-third eight-hour days researching this case. As already indicated, section 1983 cases have come, in these modern times, to be commonplace, and three and one-third workdays researching this question would not appear to be justified. The court will grant eight hours, or $600.00, for this item.

A total of ten hours is claimed for drafting the complaint and amended complaint in the case. If better than a working day was spent drafting the complaint, it would not appear to be justified. A complaint no more complex than this one should not have taken three hours, but the court will allow three hours, or $225.00, for drafting the complaint and amended complaint.

Four and one-half hours is claimed to “review answers of Lloyd King and Ron Gifford and research the basis of their motions to dismiss.” This item was not included in the research discussed above. In addition, another two hours is claimed to review the answer of Dave Williams, and still another two hours to review the answers to amended complaints. The court will allow three hours, or $225.00, for these services.

Two hours is claimed to “review interrogatories propounded by defendants.” Apparently all that was done was that they were reviewed, because the file reflects that the interrogatories were propounded to the defendants on June 10, 1985, and they had still not been answered when the discovery controversy which the court alluded to above arose shortly before the trial. It is noteworthy that there is no claim for answering interrogatories — only reviewing them. No fee will be allowed for this item.

This leaves a claim for four hours to review defendants’ motion to dismiss, 1.5 hours to complete interrogatories to defendants, two hours to prepare pre-trial information sheet, three hours to prepare jury instructions, three and one-half hours to review defendants’ pre-trial information sheets and lists of proposed witnesses, nine hours for trial preparation, and 16 hours for trial. The court will allow 16 hours for trial and four hours for trial preparation, 1.5 hours for interrogatories to defendants, one hour to prepare pre-trial information sheet and list of proposed witnesses, 1.5 hours to prepare requested jury instructions, and one hour to review defendants’ pre-trial information sheet and list of witnesses. In summary, the total fees allowed will be $4,725.00.

In addition, the plaintiffs have requested a total of $1,371.00 in claimed expenses, including the $450.00 for the “stand-in” attorney already disallowed. In addition, $150.00 is claimed for witness fees, presumably for five witnesses. However, the record reflects that a total of seven persons were called to the witness stand by the plaintiffs, but notes that three of these were the defendants, and doubts that they were paid a witness fee. Two of the remaining four were the plaintiffs themselves who are not entitled to witness fees. That leaves two witnesses, Littlejohn and Halfacre, who are entitled to fees for a total of $60.00.

One Hundred Dollars ($100.00) is claimed for “Deliver of Subpoenas” and another $500.00 for “Travel” with no further itemization. The court cannot determine what these expenses are for and declines to approve them at this time. The attorney for the plaintiffs may furnish substantiation of these costs within ten (10) days from the date of this opinion if he desires.

That leaves a claim of $111.00 for “Court Reporter (appearance Fee 7/23/85” [sic]. The discovery controversies which the court has discussed above which required the court’s intervention occurred on August 1, 1985. During that controversy, documents were filed which showed an aborted deposition on July 18, 1985, for which the plaintiffs did not show, although no notice that this was to occur was given to the attorneys for the defendants until after they had appeared for the deposition. At that time, certain documents were filed with the court which included a transcript of the July 18, 1985, aborted deposition. At the time, the court was of the understanding that no depositions had been taken and a deadline of August 8, 1985, was set. If the fee of $111.00 is the cost of that deposition, it will not be allowed. In any event, even if it was for a deposition taken by plaintiffs, it will not be allowed unless it was used during the course of the trial. The record does not reflect that any depositions were used during the trial, and the court does not recall any being used, even for impeachment purposes. For this reason, this item will be disallowed.

As to expenses, plaintiffs will be reimbursed for the $60.00 filing fee and $60.00 for witness fees. No other items of expenses will be allowed except that, as indicated above, plaintiffs may supply, if they desire, proper itemization and substantiation for the costs for delivering subpoenas and for travel.

Because the plaintiffs have technically prevailed on all points, including the technical violation of their right to be taken before a magistrate upon their arrest, and for the further reason that it would be impossible to equitably divide the fees and expenses among them, based on the record in this case, the court finds that the defendants shall be jointly and severally liable for such fees and expenses assessed.

A separate judgment in accordance with this memorandum opinion will be contemporaneously entered.