text:
    David L. O’NEAL and Connie L. O’Neal, Petitioners, v. UNITED STATES of America, Steven Weida and Phillip Clelland, Agents, Internal Revenue Service, and Internal Revenue Service, Respondents.
    Civ. No. F 84-191.
    United States District Court, N.D. Indiana, Fort Wayne Division.
    Jan. 30, 1985.

      David L. O’Neal, petitioner, pro se.
    Peter Sklarew, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., David H. Miller, Asst. U.S. Atty., Fort Wayne, Ind., for respondents.
   ORDER

WILLIAM C. LEE, District Judge.

This matter is before the court on respondents’ motion to dismiss the petition to quash an Internal Revenue Service (“IRS”) summons issued to the General Telephone Company (“GTE”). For the following reasons, the motion to dismiss will be granted.

Petitioners are proceeding pro se. Pro se pleadings are to be liberally construed. Haines v. Kerner, 404 U.S. 519, 92 S.Ct. 594, 30 L.Ed.2d 652 (1972). The district court’s role is to ensure that the claims of pro se litigants are given “fair and meaningful consideration.” Matzker v. Herr, 748 F.2d 1142 at 1146 (7th Cir. 1984); Caruth v. Pinkney, 683 F.2d 1044, 1050 (7th Cir.1982). This court also recognizes that federal courts have historically exercised great tolerance to ensure that an impartial forum remains available to plaintiffs invoking the jurisdiction of the court without the guidance of trained counsel. Pro se motions and petitions such as the petitioners’ are held to less stringent pleading requirements; rigor in the examination of such motions, petitions and pleadings is inappropriate.

The facts of this case appear to be as follows. On May 11, 1984, the IRS issued a summons to GTE requesting the production of

All books and records, which include information relative to the installation, subscriber credit reports, payment records, location and number of telephones and toll records for all telephone service at 506 North Posey Street, Windfall, Indiana 46076 (317) 945-7698.
The toll records are requested for the six month period prior to the service of this summons. It is also requested that the telephone numbers on the toll records be identified as to the name and address of the subscriber.

The address and phone number listed in the summons belong to the petitioners (“O’Neals”). The O’Neals claim that they are members of the Constitutional Rights Protection Association (“CRPA”) which is a group of “like-minded individuals [who] have been outspoken, but legal critics of the tyranny, abuse and infringement of the First Amendment Rights of Individuals commonly practiced by agents of [the] Internal Revenue Service.” Complaint, It 6.3 (emphasis in the original). The O’Neals believe that the summons was issued “for the sole and improper purpose of obtaining a list or partial list of ‘possible’ members of the [CRPA], so that the I.R.S. can then selectively harass and intimidate individual members or people they suspect may be members of the [CRPA],” id. at ¶ 6.5, as the phone at the number listed in the summons has been used for CRPA purposes. Disclosure of the members’ names would have a chilling effect on the first amendment rights of the CRPA members. The O’Neals therefore seek to quash the summons.

The respondents have moved to dismiss the petition to quash, contending that the O’Neals have failed to allege the necessary elements of a first amendment claim. It is this motion to dismiss which the court now addresses.

Although the respondents have characterized their motion as a motion to dismiss, it is clear that the issues presented by this motion are best addressed after reference is made to the exhibits and other pleadings in this case. When matters outside the pleadings are presented to and not excluded by the court, a motion to dismiss will be converted into a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure. See F.R.Civ.P. 12(b).

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may only be granted if “the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). Thus, summary judgment serves as a vehicle with which the court “can determine whether further exploration of the facts is necessary.” Hahn v. Sargent, 523 F.2d 461, 464 (1st Cir.1975).

In making this determination, the court must keep in mind that the entry of summary judgment terminates the litigation, or an aspect thereof, and must draw all inferences from the established or asserted facts in favor of the non-moving party. Peoples Outfitting Co. v. General Electric Credit Corp., 549 F.2d 42 (7th Cir.1977). A party may not rest on the mere allegations of his pleadings or the bare contention that an issue of fact exists. Posey v. Skyline Corp., 702 F.2d 102, 105 (7th Cir.), cert. denied, — U.S.-, 104 S.Ct. 392, 78 L.Ed.2d 336 (1983). See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). See also Atchison, Topeka & Santa Fe Railway Co. v. United Transportation Union, 734 F.2d 317 (7th Cir.1984); Korf v. Ball State University, 726 F.2d 1222 (7th Cir.1983). See generally C. Wright, Law of Federal Courts, § 99 (4th ed. 1983); 6 Moore’s Federal Practice, § 56.15 (2d ed. 1984).

Thus, the moving party must demonstrate the absence of a genuine issue of material fact. The court views all evidence submitted in favor of the non-moving party. Even if there are some disputed facts, where the undisputed facts are the material facts involved and those facts show one party is entitled to judgment as a matter of law, summary judgment is appropriate. Egger v. Phillips, 710 F.2d 292, 296-97 (7th Cir.1983); Collins v. American Optometric Assn., 693 F.2d 636, 639 (7th Cir.1982). Further, if the court resolves all factual disputes in favor of the non-moving party and still finds summary judgment in favor of the moving party is correct as a matter of law, then the moving party is entitled to summary judgment in his favor. Egger, 710 F.2d at 297. See also Bishop v. Wood, 426 U.S. 341, 348, 348 n. 11, 96 S.Ct. 2074, 2079, 2079 n. 11, 48 L.Ed.2d 684 (1976).

With these principles in mind, the court turns to the question of whether the O’Neals’ assertion of a ehilling of CRPA members’ first amendment rights can withstand the motion for summary judgment in light of the facts presented.

The power to issue IRS summonses is governed by chapter 78 of the Internal Revenue Code of 1954, 26 U.S.C. §§ 7601-7609. In 26 U.S.C. § 7601, the Code imposes a duty on the Secretary of the Treasury to “inquire after and concerning all persons ... who may be liable to pay any internal revenue tax.” Pursuant to that duty, § 7602 provides that

For the purpose of ascertaining the correctness of any return, making a return where none is made, determining the liability of any person for any internal revenue tax ... or collecting any such liability, the Secretary or his delegate is authorized—
(1) To examine any books, papers, records, or other data which may be relevant to such inquiry;
(2) To summon ... any ... person the Secretary or his delegate may deem proper, to appear before the Secretary or his delegate at a time and place named in the summons and to produce such books, papers, records, or other data ... as may be relevant or material to such inquiry____

According to the respondents’ memoranda, GTE stands ready and willing to comply with the summons, pending this court’s determination of the validity of the petition to quash. Thus, the court does not perceive the issue in this case to be whether the statutory provisions for issuance of an IRS summons have been followed. The O’Neals do not seriously contest the ability of the IRS to subpoena telephone records in most cases. Rather, the issue here is whether a properly issued IRS summons may be quashed when it is alleged to chill the first amendment associational rights of CRPA members.

The first amendment right to freedom of association has been recognized in a long line of Supreme Court cases beginning with NAACP v. Alabama, 357 U.S. 449, 78 S.Ct. 1163, 2 L.Ed.2d 1488 (1958). Since that seminal case, the Court has “repeatedly found that compelled disclosure [of membership lists], in itself, can seriously infringe on privacy of association and belief guaranteed by the First Amendment.” Buckley v. Valeo, 424 U.S. 1, 64, 96 S.Ct. 612, 656, 46 L.Ed.2d 659 (1976). Thus, in order to justify a compelled disclosure, the interests of the state in seeking such disclosure must bear a “relevant correlation,” Bates v. City of Little Rock, 361 U.S. 516, 525, 80 S.Ct. 412, 417, 4 L.Ed.2d 480 (1960), or a “substantial relation,” Gibson v. Florida Legislative Comm., 372 U.S. 539, 546, 83 S.Ct. 889, 893, 9 L.Ed.2d 929 (1963), to the information required to be disclosed. Despite this strict test, “we have acknowledged that there are governmental interests sufficiently important to outweigh the possibility of infringement, particularly when the ‘free functioning of our national institutions’ is involved.” Buckley, 424 U.S. at 66, 96 S.Ct. at 657, quoting Communist Party v. Subversive Activities Control Board, 367 U.S. 1, 97, 81 S.Ct. 1357, 1411, 61 L.Ed.2d 625 (1961).

However, this strict test is not to be applied in every case of alleged infringement of associational rights. Rather, a plaintiff must make a showing of a demonstrable injury. In NAACP v. Alabama, for example, the NAACP “made an uncontroverted showing that on past occasions revelation of the identity of its rank-and-file members [had] exposed these members to economic reprisals, loss of employment, threat of physical coercion, and other manifestations of public hostility.” 357 U.S. at 462, 78 S.Ct. at 1172. In Bates v. City of Little Rock, 361 U.S. 516, 80 S.Ct. 412, 4 L.Ed.2d 480 (1960), the Court cited to “substantial uncontroverted evidence that public identification of persons in the community as members of the organization had been followed by harassment and threats of bodily harm. There was also evidence that fear of community hostility and economic reprisals that would follow public disclosure of the membership lists had discouraged new members from joining the organizations and induced former members to withdraw.” Id. at 524, 80 S.Ct. at 417. These uncontroverted findings of harassment and withdrawal or discouragement of membership supported freedom of association claims, while “highly speculative” claims of infringement would not. Buckley, 424 U.S. at 69-70, 96 S.Ct. at 659.

Thus, the elements of a first amendment freedom of association claim are twofold: plaintiff must show (1) a compelled disclosure of the association’s membership list; and (2) a factual showing of harassment, membership withdrawal or discouragement of new members, or other consequences which objectively suggest an impact (or “chilling”) on the members’ associational rights. This is often called “the prima facie case for an arguable first amendment claim.” The government may then attempt to point out the substantial relationship between the government interest in seeking the information and the information sought. If such a relationship is proven, the court must then balance between the government’s and plaintiff’s interests.

Compelled Disclosure

The court finds that the O’Neals have failed to prove the element of a compelled disclosure. The summons at issue is not a request for a list of all CRPA members; it simply requests the names and addresses of the people called from the O’Neal residence. While the names of some CRPA members may be revealed incidentally, there is no suggestion that all of the members’ names will be revealed. Further, the summons involved here seeks the names of people who are not members, as the O’Neals have never contended that their phone is used exclusively for CRPA business. The summons seeks to discover all persons who may have information pertaining to the O’Neals’ tax liability. The indirect disclosure of members which such a neutral request may occasion is a far cry from the laws mandating the revelation of membership lists or names which were struck down in NAACP v. Alabama and Bates v. Little Rock.

A second distinction which mitigates against a finding of compelled disclosure is that the summons is directed to GTE in order to obtain records about two individuals — the O’Neals — and not about the CRPA. The summons does not contain a request for a membership list, nor can the neutral nature of the' summons be construed as such a request. This distinction is crucial, for the eases seem uniform in holding that, while an IRS summons of a tax reform organization’s records might produce a “readily apparent” chilling effect, see United States v. Grayson County State Bank, 656 F.2d 1070, 1074 (5th Cir. 1981), cert. denied, 455 U.S. 920, 102 S.Ct. 1276, 71 L.Ed.2d 460 (1982), a summons directed to records of individual taxpayers do not directly implicate the associational rights of the organization’s members absent a factual showing of infringement. See Kroll v. United States, 573 F.Supp. 982, 987 (N.D.Ind.1983) (tax organization); Voss v. United States, 573 F.Supp. 957, 961-62 (D.Colo.1983) (tax organization); United States v. Meininger, 101 F.R.D. 700, 703, 703 n. 7 (D.Neb.1984) (tax organization). Cf. United States v. Manufacturers Bank of Southfield, 518 F.Supp. 495, 498 (E.D.Mich.1981), remanded, 709 F.2d 1511 (6th Cir.1983) (church).

The O’Neals argue that the investigation of their liability is merely an IRS guise for obtaining the names of other CRPA members so that the IRS can then begin harassing them. However, such an argument was specifically rejected in Voss. Nor does the admission by Special Agent Weida, in his declaration filed in David L. O’Neal v. United States of America, No. IP-83-1845 C (S.D.Ind.), prove this intent to harass. That case involves a similar petition to quash an IRS summons directed to the Union State Bank to produce records of a bank account maintained by David O’Neal in the name of CRPA. Agent Weida declared that the bank records “will disclose the names of various members or other persons affiliated with the CRPA who may be able to provide testimony and further information on the relationship between [O’Neal] and the CRPA ... and specifically whether [O’Neal] derived any income directly or indirectly from or through the CRPA during these periods.” That declaration does not indicate an intent to harass the members as to their own tax liabilities, but simply to seek out sources of information concerning the O’Neals’ income. The summons to GTE is similarly designed to discover information about the O’Neals, which is completely consistent with the purposes of 26 U.S.C. § 7602. The fact that some CRPA members’ names may be revealed by such discovery does not constitute compelled disclosure of the CRPA’s membership list.

Requisite Factual Showing

Even if the incidental revelation of some CRPA members could constitute a compelled disclosure of CRPA’s membership list so as to satisfy the first element of a first amendment claim, petitioners completely fail to show the factual basis for a fear of a chilling of CRPA members’ rights. As was noted earlier, the NAACP v. Alabama and Bates cases involved uncontroverted factual assertions of harassment, threats, withdrawal from the organization, and reductions in new membership or fund-raising activities. The case law involving first amendment claims against IRS summonses is unanimous in requiring factual assertions detailing the adverse effects of the summons in order to constitute a prima facie showing of arguable first amendment infringement. See In re First National Bank, Englewood, Colo., 701 F.2d 115 (10th Cir.1983); United States v. Citizens State Bank, 612 F.2d 1091, 1094 (8th Cir.1980); United States v. The Freedom Church, 613 F.2d 316, 320 (1st Cir. 1979); Voss v. United States, 573 F.Supp. at 961-62; United States v. Manufacturers Bank of Southfield, 518 F.Supp. at 498. The proof offered must be “objective” — an allegation of “apprehension,” Manufacturers Bank, 518 F.Supp. at 498, or subjective deterrence of membership or contribution, id.; see also Buckley v. Valeo, 424 U.S. at 71-72, 96 S.Ct. at 659-60, is not sufficient to meet this burden. Further, “the mere possibility of an IRS investigation or audit is not the sort of harm which would preclude disclosure of membership lists.” Manufacturers Bank, 518 F.Supp. at 498. However, affidavits from members detailing adverse effects of the summons on the organization’s activities may be enough. See In re First National Bank, 701 F.2d at 118; Citizens State Bank, 612 F.2d at 1094.

Here, the O’Neals have failed to present sufficient objective facts to justify a finding that an infringement of CRPA member associational rights might arguably occur if the summoned information is provided to the IRS. The sum total of the allegations is an affidavit signed by the O’Neals stating that “the summons directed to General Telephone Company will destroy the free exchange of ideas by and between the members of the CRPA," and the various statements in the complaint and in the memorandum in opposition to the motion to dismiss. These allegations are insufficient for at least two reasons. First, they are conclusory and do not detail in any way how the summons has actually impacted (or threatens to impact) on CRPA activities. These claims lack the specificity of the claims in Bates and NAACP v. Alabama. Second, the allegations were made exclusively by the O’Neals, who cannot possibly have personal knowledge of what other members of CRPA or potential members might feel or think in light of the summons. Thus, the O’Neals have failed to prove the requisite factual basis necessary for establishing a prima facie first amendment violation.

In summary, then, the O’Neals have failed to show either of the elements of a first amendment claim. They have failed to establish that the IRS summons constitutes a compelled disclosure of the CRPA membership list, and have failed to show that disclosure of the information requested will in fact result in a chilling of first amendment associational rights. Having failed to establish their prima facie burden of proof, the O’Neals cannot demand that the government establish a compelling need for the information requested. The first amendment grounds for the petition to quash fail.

The O’Neals make two other allegations in their memorandum in opposition which need only brief discussion. The first involves a claim that this summons violates the fourth amendment’s prohibitions against unreasonable searches and seizures because it is merely a “fishing expedition” into the papers of the O’Neals and CRPA. First, the court finds that the government has a legitimate interest in seeking the information requested, as it will help to determine the O’Neals’ tax liability. Thus, it is not a “fishing expedition.” Second, the case law cited by the O’Neals, involving four very old cases of the Supreme Court, is inapplicable and unpersuasive. Congress has specifically authorized the issuance of IRS summons in 26 U.S.C. § 7602, and the issuance of this summons was consistent with relevant statutory and constitutional provisions.

The second claim is that this summons was not issued in accordance with administrative procedure required by the Code (the fourth part of the Powell test). The rationale behind this argument is that, because the real purpose behind the summons is to obtain the names of CRPA members, the IRS should have issued a “John Doe” summons pursuant to 26 U.S.C. § 7609(f). The court notes that this summons does not appear to fall under § 7609(f), as it specifically identifies David L. O’Neal as the person who is being investigated, and thus is not a summons which “does not identify the person with respect to whose liability the summons is issued.” 26 U.S.C. § 7609(f). At least two courts agree that a summons in connection with the investigation of a named taxpayer does not need to follow the “John Doe” summons procedures of § 7609(f), even if the summons has the further effect of discovering information that would aid in identifying unnamed taxpayers and investigating their tax liabilities. See United States v. Tiffany Fine Arts, Inc., 718 F.2d 7, 12-14 (2d Cir.1983), aff'd., — U.S. -, 105 S.Ct. 725, 83 L.Ed.3d 678 (1985); United States v. Barter Systems, Inc., 694 F.2d 163 (8th Cir.1982). A similar position was adopted by the Eleventh Circuit in United States v. Gottlieb, 712 F.2d 1363, 1369 (11th Cir.1983). In light of this precedent, the court is not persuaded by, and specifically rejects, the rationale of United States v. Thompson, 701 F.2d 1175 (6th Cir.1983), cited by the O’Neals.

Thus, the O’Neals have failed to present a petition to quash which has any merit, The motion to dismiss will be converted into a motion for summary judgment, and will be granted in its entirety,

Conclusion

For the reasons stated above, the converted motion to dismiss is hereby GRANTED.

      . The O’Neals, in their memorandum opposing the motion to dismiss, allege that the four-part test of United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112 (1964), has not been met. However, Powell established the four-part standard (that the investigation will be conducted pursuant to a legitimate purpose; that the inquiry may be relevant to that purpose; that the information sought is not already in the Commissioner’s possession; and that the administrative steps required by the Code have been followed) as the prima facie case the government must prove in a summons enforcement proceeding under 26 U.S.C. § 7604. As this case involves a challenge to the issuance of a summons under 26 U.S.C. § 7602, Powell is not directly applicable, although some courts have stated that the IRS must exhibit good faith throughout the summons process. See United States v. LaSalle Bank, 437 U.S. 298, 318, 98 S.Ct. 2357, 2368, 57 L.Ed.2d 221 (1978); United States v. Grayson County State Bank, 656 F.2d 1070, 1073 (5th Cir.1981), cert. denied, 455 U.S. 920, 102 S.Ct. 1276, 71 L.Ed.2d 460 (1982). However, the O’Neals’ argument suggesting a lack of good faith is simply the first amendment claim; thus, the analysis of whether the summons was issued in good faith pursuant to Powell and LaSalle Bank centers on whether the summons was issued to obtain the CRPA membership list in violation of the first amendment. The court therefore implicitly answers the question of good faith under Powell by examining the merit of the first amendment claim.

      . Although no court has specifically cited compelled disclosure as an element of a first amendment claim, as freedom of association may be violated in ways other than compelled disclosure of membership lists, the court nevertheless separates out this aspect of Bates and NAACP v. Alabama because of the peculiar nature of this case. The O’Neals contend that the IRS summons will expose the names of CRPA’s members. It seems logical in this instance to require the O’Neals to show that in fact the CRPA membership list will be disclosed.

      . Some of these statements are: "Compelled disclosure of the names and addresses of all toll records (which the summons seeks) will have a chilling effect on the rights of [CRPA] members,” Complaint, ¶7.2; "exposing these telephone callers to IRS scrutiny will chill the members cherished First Amendment rights,” Memorandum, p. 2; "compelled disclosure ... would expose [CRPA] members to harassment by government officials ... and similar reprisals from private persons who might disapprove of or actively oppose [CRPA] purposes,” Memorandum, p. 6; "[CRPA] will not be able to attract new members, much less retain existing ones, if the price is unwanted, unwelcome, and unjustified exposure,” Memorandum, p. 7.

      . Because the O'Neals have failed to prove their prima facie case, this court need not require the government to point out the substantial relationship between its interest and the information sought. However, the compelling interest of the government is readily apparent. As the Supreme Court stated in Bull v. United States, 295 U.S. 247, 259, 55 S.Ct. 695, 699, 55 L.Ed.2d 695 (1935), "taxes are the lifeblood of government." The collection of taxes is an essential part of the process of keeping that lifeblood flowing, and is thus a governmental interest "sufficiently important to outweigh the possibility of infringement [of first amendment rights], particularly when the ‘free function of our natural institution’ is involved." Buckley, 424 U.S. at 66, 96 S.Ct. at 657, quoting Communist Party v. Subversive Activities Control Board, 367 U.S. 1, 97, 81 S.Ct. 1357, 1411, 61 L.Ed.2d 625 (1961). Seeking information on the O'Neals’ tax liability via a summons to GTE is substantially and directly related to the compelling government interest in collecting taxes. Weighed against the lack of any factual showing of a chilling effect, the government interest would clearly prevail.

      . The O’Neals cite United States v. Louisville and Nashville R. Co., 236 U.S. 318, 35 S.Ct. 363, 59 L.Ed. 598 (1915); Harriman v. I.C.C., 211 U.S. 407, 29 S.Ct. 115, 53 L.Ed. 253 (1908); I.C.C. v. Brimson, 154 U.S. 447, 14 S.Ct. 1125, 38 L.Ed. 1047 (1894); United States v. Lee, 106 U.S. 196, 1 S.Ct. 240, 27 L.Ed. 171 (1882).

      . The respondents cite to United States v. Miller, 425 U.S. 435, 96 S.Ct. 1619, 48 L.Ed.2d 71 (1976), where the Court held that a bank depositor had no fourth amendment interest in bank records relating to his account. There the Court stated that "this Court has repeatedly held that the Fourth Amendment does not prohibit the obtaining of information revealed to a third party and conveyed by him to Government authorities,” so that "the issuance of a subpoena to a third party does not violate the rights” of the subject to the records (in Miller, the bank depositor). Id. at 433-34, 96 S.Ct. at 1624. The court finds this authority persuasive and applicable here by analogy.


source: Caselaw Access Project

author: FRANK A. KAUFMAN, Chief Judge.

license: Public Domain

text:
    Edward O. UHRIG v. UNITED STATES of America, et al.
    Civ. No. K-83-1313.
    United States District Court, D. Maryland.
    Jan. 30, 1985.

      Edward O. Uhrig, plaintiff, pro se.
    J. Frederick Motz, U.S. Atty., and Max
    H. Lauten, Asst. U.S. Atty., Baltimore, Md., and Gregory S. Hrebiniak, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendants.
   FRANK A. KAUFMAN, Chief Judge.

This case involves a third motion to quash two third-party recordkeeper Internal Revenue Service summonses. Plaintiff’s prior two motions to quash these same two summonses were denied in this Court’s earlier two opinions, first in Uhrig v. United States, 592 F.Supp. 349 (D.Md. 1984), and (D.Md. Oct. 31, 1984).

In this Court’s said first opinion, filed June 30, 1984, plaintiff’s motion to quash was denied, inter alia, because there had been no “Justice Department referral” of his case which, pursuant to Section 7602(c)(1), would- have precluded enforcement of the summonses.

In his second motion to quash dated July 28,1984 and filed on July 30, 1984, plaintiff claimed that after this Court filed its aforementioned June 30, 1984 opinion, there had been a referral to the Justice Department on July 6, 1984. However, this Court determined, in its October 31, 1984 opinion, there had been no such referral to the Justice Department on July 6, 1984, and that, therefore, plaintiff’s motion should again be denied.

In his third motion to quash the same two summonses, plaintiff points out — and the Government so concedes — that since July 6, 1984, plaintiff’s case has been referred to the Justice Department. Yet, for the reasons set forth infra, plaintiff’s motion to quash the third-party recordkeeper summonses must again be denied.

As this Court discussed at length in its earlier opinion, the old “criminal purpose” defense to enforcement of summonses was abolished by Section 333(a) of TEFRA, Godwin v. United States, 564 F.Supp. 1209 (D.Del.1983), and was replaced by the new “bright line” test set forth in 26 U.S.C. Section 7602(c)(1). That statute provides:

(1) Limitation of authority. — No summons may be issued under this title, and the Secretary may not begin any action under section 7604 to enforce any summons, with respect to any person if a Justice Department referral is in effect with respect to such person.

(Emphasis added.)

The said statutory language makes it clear that a Justice Department referral which occurs after both issuance of the summons and commencement of an enforcement action does not invalidate the summons or bar the enforcement action.

The Internal Revenue Service issued the summonses in question on April 10, 1983 and July 6, 1983. Plaintiff instituted the within case, seeking to quash the summonses, on April 21, 1983. The Government, in this case, filed its quest for enforcement of the summonses on February 27, 1984. Plaintiff’s case was not referred to the Justice Department until September of 1984, months after both, the issuance of the summonses and the commencement of enforcement action by the Government.

Accordingly, plaintiff’s motion to quash the two third-party recordkeeper summonses is hereby again denied.

      . Plaintiff's second motion could also have been denied for the same reasons plaintiffs third motion is hereby being denied, i.e., because if there had been a referral to the Justice Department on July 6, 1984, such referral would have occurred after issuance of the summonses and commencement by the Government of an enforcement action.

      . Cf. United States v. Commonwealth Federal Savings and Loan, 529 F.Supp. 1246 (E.D.Pa. 1982); United States v. Morgan Guaranty Trust Co., 524 F.Supp. 24 (S.D.N.Y.1981).


author: WALINSKI, District Judge.

text:
    Gerald GURTZWEILER, et al., Plaintiff, v. UNITED STATES of America, Defendant.
    No. C 85-7028.
    United States District Court, N.D. Ohio, W.D.
    Jan. 30, 1985.
    Constance Snyder, Toledo, Ohio, for plaintiff.
    Asst. U.S. Atty., Toledo, Ohio, for defendant.
   MEMORANDUM and ORDER

WALINSKI, District Judge.

This matter came to be heard on briefs filed by both parties at the request of the Court. On January 11, 1985 the plaintiffs filed the instant complaint and an application for a temporary stay of administrative action and request for immediate hearing. The complaint seeks judicial review of an order of the Food and Nutrition Service (FNS) of the United States Department of Agriculture which permanently disqualified the plaintiffs from participating in the Federal Food Stamps Program. The motion to stay will be considered and evidence of irreparable harm will be heard at a hearing set for February 1, 1985. 7 U.S.C. § 2023. After a pretrial conference held on January 17, 1985, the Court ordered the parties to submit briefs prior to the hearing on the question of what factors should be considered in deciding on a motion to stay an administrative order pending judicial review.

Authority for stay of a FNA order pending judicial review is found in 7 U.S.C. § 2023. In pertinent part, 7 U.S.C. § 2023(a) provides:

During the pendency of such judicial review [of FNA action], or any appeal therefrom, the administrative action under review shall be and remain in full force and effect, unless an [sic] application to the court on not less than ten days’ notice, and after hearing thereon and a showing of irreparable injury, the court temporarily stays such administrative action pending disposition of such trial or appeal.

Similar language appears in the regulation implementing 7 U.S.C. § 2023, which reads:

(d) Stay of Action. Pending the judicial review, or any appeal from the judicial review, the administrative action under review shall remain in force, unless the firm makes application to the court and, after a hearing on the action showing irreparable injury, the court temporarily stays the administrative action under review pending disposition of the de novo trial or an appeal from the trial.

7 C.F.R. § 279.10(d).

The first matter to be addressed by the Court is whether a stay can be issued without a finding that plaintiffs show a probability of success on the merits. Plaintiffs argue that 7 U.S.C. § 2023 and 7 C.F.R. § 279.10(d) contain no explicit language referring to a showing of the probability of success on the merits. Plaintiffs submit further that the general requirements for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure are inapplicable here in light of the plain language of the statute and the implementing regulation. (PI. Memo, at 506).

As authority for this contention, the plaintiffs cite a case which is directly on point. In Factor v. United States, 556 F.Supp. 567 (D.Mass.1983), the court specifically found that a temporary stay pending judicial review of an action by the FNS, disqualifying a retail grocery business from participating in the food stamp program, could be granted without a showing of the probability of a success on the merits. The court distinguished the temporary stay set forth in the statute and regulations from a preliminary injunction pursuant to Rule 65. The Factor court concluded that “[t]he interpretation of the statute adopted here is consistent with its apparent purpose of providing for a genuine opportunity for de novo hearing in the district court. The stay, in effect, is designed to protect the statutory right to such a hearing.” Id. at 569.

This Court finds the reasoning of the Factor decision unpersuasive in light of the statute’s clear mandate that an administrative action “shall remain in full force and effect” until a showing is made for the need of a stay. 7 U.S.C. § 2023. Moreover, there is controlling authority in the Sixth Circuit that likelihood of success on the merits is one of the factors to be considered in deciding on a motion to stay. Ruling on a Motion to stay an administrative action, the Court of Appeals for the Sixth Circuit in Hamlin Testing Lab. Inc. v. United States Atomic Energy Comm’n, 337 F.2d 221 (6th Cir.1964), set out the following:

The major factors to be considered in passing on a motion to stay an administrative order pending judicial review have recently been enumerated in Virginia Petroleum Jobbers Ass’n v. FPC, 104 U.S.App.D.C. 106, 259 F.2d 921, 925 (1958). See also Liberty Nat’l Bank & Trust Co. of Oklahoma City v. Board of Governors, 312 F.2d 392 (C.A.10, 1962); Associated Sec. Corp. v. SEC, 283 F.2d 773 (C.A.10, 1960); Eastern Air Lines, Inc. v. CAB, 261 F.2d 830 (C.A.2, 1958). Three of the factors enumerated in Virginia Petroleum are relevant to the motion before us, first, the likelihood of petitioner prevailing on its petition for review after full hearing thereon, second, whether irreparable damage will be suffered by petitioner if a stay is now denied, and third, whether the public interest calls for our discretion to be exercised to deny the stay.

Id. at 222. More recently in an unreported food stamp suspension case similar to the instant suit, the Sixth Circuit denied the plaintiffs motion for a stay stating:

Specifically, plaintiff has failed to demonstrate that he is likely to prevail on the merits in the district court’s de novo review, or on appeal of the district court’s denying his motion for a stay.

Semir Sitto, dba Summerset Market v. United States of America, No. 82-8029, decided June 1, 1982. Binding authority in this Circuit therefore directs the Court to consider the likelihood of success on the merits in determining whether to grant a stay of an administrative action.

The second and final question presented to the Court asks for clarification of the irreparable harm criteria. The federal government contends that proof of the economic loss of food stamp customers’ business because of disqualification is not the “kind of irreparable harm contemplated by 7 U.S.C. § 2023.” (D. memo, at 5). It is argued that there will be a loss of food stamp business any time a store is disqualified from participating in the program. If a showing of economic loss was sufficient to invoke a stay under 7 U.S.C. § 2023, the federal government contends issuance of a stay would be automatic. The Court agrees. It is clear that the statute contemplates that the plaintiff make a showing of something beyond the customary economic loss of food stamp business to prove irreparable harm. This conclusion is supported by several unreported district court opinions denying stays in the face of similar arguments. See Green Village Market v. United States of America, Civil Action No. 83-cv-1714-DT (Cook, J.); Azeezeh Arraf, dba Fair Food Market v. United States of America, et al., Civil Action No. 83-cv-0537-DT (Thornton, J.).

In summary, the Court finds that the major factors to be considered in deciding the motion to stay, sub judice, are: 1) the likelihood of the plaintiff prevailing on the merits in this Court’s de novo review; 2) whether irreparable harm will be suffered by the plaintiff, beyond the customary economic loss of food stamp business, if a stay is denied; and 3) whether the public interest would be served by issuing the stay.

IT IS SO ORDERED.


author: CALDWELL, District Judge.

text:
    Carl A. MAULFAIR, Plaintiff, v. UNITED STATES of America, Defendant.
    Civ. A. No. 84-1382.
    United States District Court, M.D. Pennsylvania.
    Jan. 31, 1985.

      Keith L. Kilgore, Spitler & Kilgore, Lebanon, Pa., for plaintiff.
    Harry A. Nagle, Asst. U.S. Atty., Lewis-burg, Pa., for defendant.
   MEMORANDUM

CALDWELL, District Judge.

Plaintiff, Carl A. Maulfair, alleges in his complaint that the defendant, The United States of America, negligently failed to diagnose from routine annual chest x-rays taken as part of plaintiffs employment with the Veterans Administration a cancerous tumor in his left lung. He asserts he has been forced to undergo medical treatment he would not have had if the tumor had been diagnosed promptly. Defendant has filed a motion for summary judgment contending that the action is time barred by 28 U.S.C. § 2401(b). Plaintiff has filed a motion for judgment on the pleadings. We deny plaintiffs motion and dispose of defendant’s motion as follows.

Summary judgment may only be granted if “there is no genuine issue as to any material fact” and the “moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The court must resolve any doubts as to the existence of genuine issues of fact against the moving party, and inferences to be drawn from the evidentiary sources submitted to the court must be resolved in favor of the non-moving party. Shabazz v. Odum, 591 F.Supp. 1513 (M.D.Pa.1984).

Plaintiff’s complaint, filed on October 16, 1984, alleges that the Veterans Administration Medical Center in Lebanon, Pennsylvania, where he worked, gave him chest x-rays on February 9, 1978 and January 25, 1979. The reports on each x-ray stated that no abnormality was revealed. (Complaint, Ml 4-8). In March of 1979, after plaintiff became ill, his family physician ordered an x-ray which showed a spot on plaintiff’s left lung. (Ml 9-11). On April 16, 1979, a malignant tumor was removed from the lung. (1113).

The Federal Tort Claims Act waives the sovereign immunity of the United States and imposes certain procedural steps on the claimant. An aggrieved party must first present his claim to the appropriate administrative agency before bringing suit in a district court. 28 U.S.C. § 2675. Additionally, 28 U.S.C. § 2401(b) provides a limitations period for actions against the government. That section provides, in relevant part, as follows:

A tort claim against the United States shall be forever barred unless it is presented in writing to the appropriate Federal agency within two years after such claim accrues____

Defendant asserts that plaintiff knew about his claim against the United States by at least November 14,1979. That is the date on a handwritten letter from plaintiff to the Office of Worker’s Compensation concerning an altercation between plaintiff and a co-worker at the Medical Center. In discussing that incident, unrelated to this cause of action, plaintiff referred to his surgery of April, 1979, and stated the following about the x-ray taken on January 27, 1979:

The one of Jan. showed the tumor (I was never notified by anyone to have this checked out).

(Affidavit of Raymer Kent, Assistant Chief of the Personnel Service at the Medical Center, with attached letter). Plaintiff filed a claim for malpractice with the Veterans Administration on January 8, 1982, (Affidavit of Stephen Minichuk with attached claim form), more than two years after he knew about the failure to diagnose. Thus, defendant contends plaintiffs suit is barred.

The plaintiff has filed no evidentiary material in opposition. He does not question the authenticity of the letter. He merely relies upon the allegations of his complaint that in April of 1980 his family physician asked to see the Veterans Administration x-rays, requested that a radiologist examine them, and that it was then determined that these x-rays showed the cancer which was removed on April 16, 1979. (Complaint, ¶¶ 16-18). Hence, according to plaintiff, the claim against the agency came within two years of its discovery.

The purpose of a motion for summary judgment is to pierce the pleadings. Walnorch v. McMonagle, 412 F.Supp. 270 (E.D. Pa.1976). Plaintiff cannot rely upon the allegations of his complaint to oppose defendant’s motion. Even if we considered these allegations, they are insufficient to overcome defendant’s proof that plaintiff knew he had a claim on November 14,1979, but failed to do anything about it until January 8, 1982. All that plaintiff’s contentions show is that plaintiff’s doctor ordered the Veterans Administration x-rays on April 14, 1980 and that the x-rays showed the malignancy later removed. They do not prove that plaintiff did not know about his claim before then. Buttressed by plaintiff’s own words, we reject his contention that he could not have known about his claim until these x-rays had been examined by a doctor.

This case falls well within the rule of United States v. Kubrick, 444 U.S. 111, 100 S.Ct. 352, 62 L.Ed.2d 259 (1979), dealing with when a claim accrues within the meaning of 28 U.S.C. § 2401(b). Kubrick also sets forth sound reasons why statutes of limitations should be strictly followed. We will issue an appropriate order.

ORDER

AND NOW, this 31st day of January, 1985, it is ordered that:

1. Plaintiff’s motion for judgment on the pleadings or, in the alternative, for summary judgment be and is hereby denied.
2. Defendant’s motion. for summary judgment be and is hereby granted.
3. The Clerk of Court shall close this file.


author: COHILL, District Judge.

text:
    PITTSBURGH NATIONAL BANK, a national banking association, Plaintiff, v. WELTON BECKET ASSOCIATES and Turner Construction Company, John Swenson Granite Company, Inc., Georgia Marble Setting Company, Georgia Marble Company, Defendants, v. LITTELL STEEL COMPANY and Ragnar-Benson, Inc., Vermont Marble Company, Third-Party Defendants.
    Civ. A. No. 84-1987.
    United States District Court, W.D. Pennsylvania.
    Jan. 31, 1985.

      Anthony Picadio, Tucker & Arensberg, Pittsburgh, Pa., for plaintiff.
    Robert G. Simasek, Pittsburgh, Pa., for Vermont Marble Co.
    Rosenberg, Kirshner, Kaleugher & Winikoff, P.A., William R. Haushalter, Pittsburgh, Pa., for Littell Steel Co.
    Joseph William Conway, Sarver, Pa., for Elsa Benson, Inc. & Ragnar Benson, Inc.
    Lindsay, McGinnis, McCandless & McCabe, Robert F. McCabe, Jr., Pittsburgh, Pa., for Welton Becket Associates.
    Robert S. Garrett, Egler, Anstandig, Garrett & Riley, Pittsburgh, Pa., for Turner Construction Co.
    Eric P. Reif, Reed, Smith, Shaw & McClay, Pittsburgh, Pa., for John Swenson Granite Co., Inc.
    William K. Herrington, Pittsburgh, Pa., for Georgia Marble Co.
    Berkman, Ruslander, Pohl, Lieber & En-gel, Alan Garfinkel, Alison G. Poccia, Pittsburgh, Pa., for Littell Steel Co.
   OPINION

COHILL, District Judge.

Presently before us are the Rule 12 motions of Defendant, Turner Construction Company (“Turner”), attacking the complaint filed by Plaintiff, Pittsburgh National Bank (“PNB”) in the Court of Common Pleas of Allegheny County, Pennsylvania and removed to this court pursuant to 28 U.S.C. § 1441 on the basis of diversity jurisdiction. 28 U.S.C. § 1332. Turner’s motions include a motion to strike, a motion to dismiss for failure to state a claim upon which relief can be granted and a motion for a more definite statement.

The underlying action arises out of alleged design and construction defects in the exterior granite facade of PNB’s headquarters in Pittsburgh, Pennsylvania. The building was begun in 1969 and completed in 1972. In approximately November of 1983, PNB discovered that the granite panels on the exterior of the building were slipping and that, in order to prevent further damage, the anchorage system and granite panels would have to be repaired or replaced. PNB brought this action against both Turner, the general contractor for the building project, and Welton Becket Associates (“Welton Becket”), the project architect, for breach of contract and negligence.

Motion for More Definite Statement

Pursuant to Rule 12(c) .Fed.R.Civ.P., Turner requests that this court order PNB to make a more definite statement of the claims alleged in paragraphs 18, particularly subsections b, c, f, and g, and 32, particularly subsections b, d and e, of the complaint. Turner asserts that these paragraphs are too vague and general to provide it with a sufficient basis from which to prepare its defense. Paragraph 18 alleges breach of contract generally, then specifically enumerates in seven (7) subsections particular instances of alleged breach. Paragraph 32 alleges negligence in provision of services generally, then specifically enumerates in five (5) subsections particular instance of alleged negligence.

After removal to federal court, the complaint becomes subject to the requirements of the Federal Rules of Civil Procedure as if it had originally been commenced in this court. Fed.R.Civ.P. 81(c); Ciotti v. Aetna Casualty & Surety Company, 511 F.Supp. 647, 648 (E.D.Pa.1981). Rule 12(e) provides as follows:

(e) Motion for More Definite Statement. If a pleading to which a responsive pleading is permitted is so vague or ambiguous that a party cannot reasonably be required to frame a responsive pleading, he may move for a more definite statement before interposing his responsive pleading. The motion shall point out the defects complained of and the details desired. If the motion is granted and the order of the court is not obeyed within 10 days after notice of the order or within such other time as the court may fix, the court may strike the pleading to which the motion was directed or make such order as it deems just.

Fed.R.Civ.P. 12(e) (Emphasis added).

In order to construe the language of Rule 12(e), we must look to the general rules of pleadings provided in Rule 8. Rule 8(a)(2) calls for a “short and plain statement of the claim ...” Similarly, Rule 8(e)(1) calls for “simple, concise and direct” averments. Courts have interpreted Rule 8 as a provision allowing for a flexible approach to framing pleadings and purposely avoiding the technical pleading requirements of the old codes. 5 C. Wright & A. Miller, Federal Practice and Procedure § 1215 (1969). See Conley v. Gibson, 355 U.S. 41, 48, 78 S.Ct. 99, 103, 2 L.Ed.2d 80, 86 (1957). Under the Federal Rules notice pleading standard, complaints must be liberally construed. American Medicorp, Inc. v. Humana, Inc., 445 F.Supp. 573 (E.D.Pa.1977). As long as it provides fair notice of the nature and basis of the claim asserted and a general indication of the type of litigation involved, subsequent discovery and pretrial procedures will narrow and shape the issues and provide relevant facts. Conley, 355 U.S. at 47, 48, 78 S.Ct. at 103; Heisman v. Giordano, 343 F.Supp. 1258, 1259 (E.D.Pa.1972); Lewis v. U.S. Slicing Machine Co., 311 F.Supp. 139, 140 (W.D.Pa.1970).

The complaint filed by PNB states the nature of its claims as breach of contract and negligent construction. It specifies the acts and omissions supporting its claims generally. Fed.R.Civ.P. 84 states that its Appendix of Forms gives examples of sufficient complaints demonstrating the simplicity and brevity contemplated by the rules. Form 9, an example of a negligence complaint, alleges negligent driving. It does not specify in what manner the Defendant was allegedly negligent. If this form is sufficient, surely PNB’s complaint enumerating negligent selection of an anchorage system, procurement of materials, use of reasonable care and skill, adequate inspection, and attention to safety details would be sufficient. Likewise, PNB’s allegations in breach of contract sufficiently notify Turner of the claims against it to prepare its responsive pleadings. Consequently, Turner’s motion for a more definite statement must be denied.

Motion to Strike

Turner also argues that, with respect to paragraph 14 of the Complaint, Plaintiff has been too specific in its allegations. In contrast to Turner’s above discussed motion for a more definite statement, Turner here argues that, by incorporating by reference an engineering report, Plaintiff has violated Rule 8(a)’s mandate to provide a short and plain statement of the claim. The report at issue contains thirty-one (31) pages of text and six (6) appendices consisting of photographs, plans and drawings.

The court is granted the power to strike under Rule 12(f):

(f) Motion to Strike. Upon motion by a party before responding to a pleading or, if no responsive pleading is permitted by these rules, upon motion made by a party within 20 days after the service of the pleading upon him or upon the court’s own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.

Fed.R.Civ.P. 12(f). Such motions, however, are not favored and will not be granted absent a showing of prejudice resulting to the adverse party. Allegheny County Sanitary Authority v. United States Environmental Protection Agency, 557 F.Supp. 419, 426 (W.D.Pa.1983), aff'd, 732 F.2d 1167 (3d Cir.1984).

In support of its motion, Turner cites two cases in which courts granted motions to strike. In the first case, the Court of Appeals for the Tenth Circuit struck a portion of a complaint which alleged facts and circumstances occurring subsequent to the transaction which allegedly caused Plaintiff’s damage. Blazer v. Black, 196 F.2d 139, 143 (10th Cir.1952). As such, those portions had no relevance to the statement of the Plaintiff’s claim. Blazer is clearly distinguishable on its facts from the present action.

More closely on point is the second case cited by Turner in support of its motion. In that case, the court granted a motion to strike what it terms “excessively verbose and extraneous pleadings.” Johns-Manville Sales Corp. v. Chicago Title & Trust Co., 261 F.Supp. 905, 908 (N.D. Ill.1966). The court noted that the Plaintiff devoted 69 paragraphs, 39 pages and 24 exhibits to the statement of a single count. Id. Here, the Plaintiff managed to state six (6) counts in 14 pages. We do not believe that a mere reference in one paragraph to an indisputably material report gives rise to the redundance necessary to support a motion to strike. Turner has not alleged, nor do we find, that the incorporation by reference of the engineering report at issue here causes the complaint to be excessively verbose to the point of prejudicing the Defendant, Turner.

Motion to Dismiss

Finally, Turner argues that the complaint should be dismissed pursuant to Fed.R. Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. This motion is set forth as to the Complaint generally, but Turner offers no support for dismissal of any theory except the implied warranty allegations set forth in paragraphs 17 and 18 of the Complaint.

With regard to implied warranties, Turner argues that Pennsylvania law provides no basis for an action against a contractor or subcontractor engaged in the construction of a non-residential building. Turner contends that, while Pennsylvania has permitted recovery against contractors of residential buildings under implied warranty theories, the policy rationale behind recovery in such instances does not apply to commercial construction cases. In support of its argument, Turner relies on Elderkin v. Gaster, 447 Pa. 118, 288 A.2d 771 (1972) which mentions unequal knowledge of the parties as part of its reasoning behind discarding the common law doctrine of caveat emptor in favor of implied warranty. Elderkin dealt solely with the application of implied warranties in residential construction. Elderkin, 288 A.2d at 777. Consequently, Turner argues implied warranties are limited to the construction of private dwellings and case law to the contrary should be disregarded since it does not recognize this distinction.

PNB refutes Turner’s argument that Elderkin intended to limit the application of implied warranties to residential construction. It notes that the Elderkin court relied on at least one commercial construction case which found a cause of action under Pennsylvania law for implied warranty. Elderkin, 288 A.2d at 775 n. 12. In addition, PNB cites subsequent case law specifically addressing the issue of extending implied warranties beyond the construction of residential dwellings. Sports Management Group v. Allensville Planning Mill, 16 D. & C.3d, 760, 765 (Mifflin County 1980). Finally, PNB cites a recent federal court decision recognizing the existence, under Pennsylvania law, of implied warranty actions in large-scale construction contracts. Cluett, Peabody & Co. v. Campbell, Rea, Hayes & Large, 492 F.Supp. 67 (M.D.Pa.1980).

On a motion to dismiss, made pursuant to Fed.R.Civ.P. 12(b)(6), for failure to state a claim, the burden of proof lies with the moving party. Johnsrud v. Carter, 620 F.2d 29, 33 (3d Cir.1980). The court must construe liberally all allegations made in the complaint since such a motion results in a determination on the merits at an early stage of Plaintiff’s case. Columbia Pictures Industries, Inc. v. Redd Home, Inc., 749 F.2d 154, at 161 (3d Cir.1984); Mortensen v. First Federal Savings & Loan Ass’n, 549 F.2d 884, 891 (3d Cir.1977). The motion 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.” Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 746, 96 S.Ct. 1848, 1853, 48 L.Ed.2d 338 (1976) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957).

Turner has offered no proof whatsoever to support its motion to dismiss generally. We deny that aspect of the motion, without further consideration, for failure to meet the burden of proof required of a moving party.

Turning now to Turner’s motion to dismiss paragraphs 17 and 18 of the Complaint, we focus on Pennsylvania’s implied warranty law as it applies to commercial construction situations. Although case law on this issue is sparce, we note that at least two Pennsylvania courts have recognized implied warranties recently in commercial construction situations. Sports Management Group, 16 D. & C. at 765; Metropolitan Edison v. United Engineers, 4 D. & C.3d 473 (Phila. County 1977). Likewise, an earlier Pennsylvania decision, relied on by the Elderkin court, acknowledged the existence of implied warranties in other than residential construction cases. Bodan v. Fickett, 24 D. & C.3d 115 (Cumberland County 1982). Finally, a federal court in this district has recognized the existence of implied warranties of fitness in construction contracts. Cluett, 492 F.Supp. at 74 n. 8.

Despite the above-cited cases, and notwithstanding Turner’s inability to point out Pennsylvania cases holding to the contrary, Turner would have this court dismiss Plaintiff’s action for failure to state a claim. Turner maintains that the policy rationale behind implied warranties permits us to impose them only in residential construction cases. On the contrary, we believe that important policy considerations justify extension of warranties beyond the realm of residential construction. The same rationale applies to commercial situations as applies to residential: once construction has begun, the vendee has “no other reasonable choice but to rely on the skill and integrity of the builder.” Bodan v. Fickett, 24 D. & C.3d at 116. Many defects in construction would not arise until long after construction is complete. If the vendee has no implied warranty of fitness or performance in a workmanlike manner, he would have no remedy against the builder who undoubtedly is in a better position to guard against defects. Elderkin, 288 A.2d at 777.

When a vendee reasonably relies upon the expertise of the builder to construct a structure suitable for his needs, the law should impose an implied warranty to protect the vendee. See Kellogg Bridge Co. v. Hamilton, 110 U.S. 108, 3 S.Ct. 537, 26 L.Ed. 86 (1884). The strongest policy consideration behind implying a warranty in this situation is the protection of the party to a contract who stands in a position of unequal knowledge. Id. at 116, 3 S.Ct. at 542. A builder who by virtue of his occupation holds himself out as competent to construct the vendee’s building occupies a far superior position than the individual who hired him. Although the vendee may have an opportunity to inspect the final product, it would be unreasonable to expect him to discover latent defects. The builder alone has the knowledge and ability to recognize and guard against' these defects. This inequality of knowledge arises whether the builder is hired to construct a home or a commercial structure. We cannot, therefore, agree with Turner that Pennsylvania cases implying warranties in other than residential construction situations are irrational and should not be followed. Consequently, we also deny Turner’s motion to dismiss paragraphs 17 and 18 of the complaint. An appropriate order will follow.